Wesleyan With Profits Fund

The Wesleyan With Profits fund is invested in a range of assets, including equities, property, fixed interest and cash. The return on these investments is one of the factors that affects the value of your with profits investment.

The fund's value will change based on the returns we make from our investments and other profits and losses from other areas of the business, including our subsidiary companies. You get your share of profits in the form of regular bonuses added to your policy, which once added are guaranteed (unless a Market Value Reduction (or MVR) is in place - see What are Final Bonuses for more information).

You may also be entitled to a final bonus. The value of any final bonus is based on our investment returns and the profits and losses we experience over the period of your investment.

It is also subject to the effects of smoothing and any MVR that may be in place at the time. You should refer to your terms and conditions and the relevant With Profits Guide for your policy for further details on this (see Market Value Reduction for more information).

One of the main aims of the With Profits Fund is to reduce the effect of short-term fluctuations on the value of your policy.

In order to achieve this, we don't pass on the full amount of the investment returns, and other profits and losses, as they arise. Instead, we apply any changes to the value of your investment over time, cushioning the impact in a process known as smoothing.

The diagram below demonstrates how smoothing works:

• In periods of good investment returns, some of the returns may be retained within the fund
• What we have kept back would then be gradually applied to your policy during periods of poor investment return to help cushion the fall in your share of the Fund

In the long term, we aim to pass on all of the investment returns, profits and losses from our business activities attributable to the With Profits Fund.

So, if investment returns remain high, then payouts are likely to be higher. Similarly, if investment returns remain low, then payouts are likely to be lower.

In the long term, we aim to pass on all of the investment returns, profits and losses from our business activities attributable to the With Profits fund. So, if investment returns remain high, then payouts are likely to be higher. Similarly, if investment returns remain low. then payouts are likely to be lower.

With Profits Regular Bonuses

We usually add regular bonuses throughout the period of your investment. We will review the bonus rate that will apply to your type of policy annually. The method used to add this depends on the type of product you hold - please refer to the relevant guide for futher information on this.

We don't promise to add any regular bonuses, however once we add a regular bonus it is guaranteed (subject to any MVRs in place).

You can keep track of the regular bonuses that have already been added. We send you an annual statement, which gives you the current value.

Annual Bonus Rates for Unitised With Profits policies

Year	2016	2015	2014	2013	2012
Life Fund	2.50%	2.50%	3.00%	3.00%	2.50%
With Profits ISA	3.00%	3.00%	3.50%	3.50%	3.25%
Pension Fund (Series 1)	3.75%	3.75%	4.25%	4.25%	3.75%
Pension Fund (Series 2 & above)	3.00%	3.00%	3.50%	3.50%	3.00%

The annual bonus rates above are effective from 2 April the following year e.g. 2016 rates wiill be effective from 2 April 2017. The bonus rates are gross of annual manangement charges (AMC).

Annual Bonus Rates for Conventional With Profits policies (not available on new policies)

	2016	2015	2014	2013	2012
Life Fund	1.25%	1.25%	1.75%	1.75%	1.50%
	(2.00%)	(2.00%)	(2.50%)	(2.50%)	(2.00%)
Pension Fund	0.20%	0.20%	0.30%	0.30%	0.30%
	(0.40%)	(0.40%)	(0.50%)	(0.50%)	(0.50%)

The annual bonus rates above are effective from 2 April the following year e.g. 2016 rates will be effective from 2 April 2017.

We declare two annual bonus rates. One rate is a percentage of the sum assured, and the second rate (in brackets above) is a percentage of the annual bonus that the policy already has. For conventional policies we add the annual bonus to the sum assured and any existing bonuses where previously declared.

These bonus rates are specific to the conventional With Profits policies. Three parts make up these policies:

1. Sum assured - this is a value that the policy set up with and is guaranteed

2. Annual bonus - this is the bonus that gets added each year, it is based on the bonus rates declared. Once it has been added to the policy it is guaranteed

3. Final bonus - this is paid when the policy ends but it is not guaranteed

With Profits policies are designed to smooth out the highs and lows of the stock markets. As mentioned, this process involves holding back some of the investment returns in periods of growth.

Then, on maturity you may be entitled to a final bonus, depending on what policy you hold. The diagram here shows how your final bonus would be applied, based on the smoothed investment returns at maturity or when the policy is cashed in, if you are entitled to one.

The final bonus can enhance the final investment sum that you receive significantly above the regular bonuses that are paid.

For further information on MVRs, please click read more on the link below.