The Royal Skandia USD Protected Return 3 Fund …...1 The Royal Skandia USD Protected Return 3 Fund...

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The Royal Skandia USD Protected Return 3 Fund BrochureFor Royal Skandia Life Assurance Limited (Royal Skandia) Portfolio Bonds onlyAvailable for investment from 11 November 2013 to 13 December 2013

Not available in Hong Kong, Singapore or the UK

This brochure was last reviewed in November 2013. Please confirm with your financial adviser that it is the most up-to-date document for your product or servicing needs.

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In this brochure you will find details of how the Royal Skandia USD Protected Return 3 Fund (“the Fund”) works, its benefits, the various parties involved in managing your investment and information on any potential risks. Please read this brochure in conjunction with the relevant Royal Skandia Portfolio Bond product brochure and the Policy Terms.

Please note: the Royal Skandia USD Protected Return 3 Fund invests in a ‘certificate’ provided by BNP Paribas (see ‘Who is BNP Paribas?’ on page 6). All values in this brochure (including the potential return) are calculated assuming that BNP Paribas does not default. Please refer to page 12 for a summary of the risks associated with investment into the Fund.

ContentWhy choose the Royal Skandia USD Protected Return 3 Fund? 3

What is the Royal Skandia USD Protected Return 3 Fund? 4

What does the Fund invest in? 5

Who is BNP Paribas? 6

Credit ratings of the linked companies 7

Which companies is the investment linked to? 8

What is the S&P 500 Index? 10

How is the average growth of the S&P 500 Index calculated? 10

What are the risks associated with investment into the Fund? 12

Is this Fund right for you? 13

How might the Fund perform? 14

How to invest in the Fund 16

Important information 18

The Royal Skandia USD Protected Return 3 Fund

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Investing can be very rewarding when markets are rising, but in recent times stock markets have been volatile and interest rates at a record low. So how can you find a way to make your money work for you with the opportunity of beating inflation, whilst limiting equity market risk?

The USD Protected Return Fund from Royal Skandia could be the answer.

The Royal Skandia USD Protected Return 3 Fund is designed so that you can potentially take advantage of US stock market performance with the comfort of knowing that the Fund is designed to protect your investment capital and returns.

Regardless of market volatility, the Fund can earn you an attractive minimum return each year. What’s more, if the average quarterly growth of the US stock market over the term of the Fund works out to be greater than the minimum targeted return, you will instead receive the higher amount of growth.

If this potential for return and capital protection is attractive, and if you are happy to leave your money invested until the Fund’s Maturity Date, you can invest in the Royal Skandia USD Protected Return 3 Fund via a Royal Skandia Portfolio Bond.

It is important to remember that whilst the Fund is designed to give you a fixed minimum return and provide you with capital protection, this is not guaranteed. You should also bear in mind that the protection only applies if you keep your investment in this Fund until the maturity date of the Fund and as long as the companies involved do not default. (Please see ‘Protected but not guaranteed’ and ‘What does the Fund invest in?’ on page 5 for more details.)

Why choose the Royal Skandia USD Protected Return 3 Fund?

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The Royal Skandia USD Protected Return 3 Fund has two aims:

1. To protect the amount you have invested and provide you with a fixed minimum return of 5% each year at maturity. The minimum annual return is compounded. This means that 5% each year growth is reinvested into the Fund, making the potential final protected return available at maturity 27.628% of your initial investment.

2. Give you the potential to take advantage of the performance of the US stock market. If the average growth of the S&P

500 Index during the Reference Term is higher than this final protected return at maturity, you will receive the average growth of the Index instead. (See page 10 for information about the S&P 500 Index and how the average growth of the Index is calculated.)

It’s possible that neither of these aims may be achieved. It’s important you understand that there are some circumstances in which you could lose some or all of the money you have invested. Please see page 12 for more details about risks and page 14 for examples of possible outcomes.

The ‘Definitions of key words’ in the table below lists the important investment dates and definitions. The start date for measuring the S&P 500 Index is the Index Reference Date, but you can invest in this Fund at any time from 11 November 2013 until 13 December 2013.

In the period between the day you invest in this Fund and the Index Reference Date your investment will earn 5% each year up to and including 20 December 2013 subject to credit risk (see ‘What does the fund invest in?’ on page 5.)

What is the Royal Skandia USD Protected Return 3 Fund?

Definitions of key words

Protection 100% assuming no default of any companies as described on pages 6 and 7 and you stay invested until the Maturity Date.

Reference Term The time period between Index Reference Date and Final Index Reference Date used to calculate the S&P 500 Index average growth.

Index Reference Date 20 December 2013The date the calculation of the average performance of the S&P 500 Index starts.

Quarter end dates 20 March 2014 and quarterly thereafter up until and including the Final Index Reference Date (for measuring average S&P 500 growth).

Final Index Reference Date 20 December 2018The final measurement date for the calculation of the average performance of the S&P 500 Index.

Return at Maturity Either 5% each year growth of your initial investment reinvested (equal to a 27.628% final return) or average growth of S&P 500 over the Reference Term, whichever is higher (see page 14 for examples). Additional 5% each year growth is earned in the period between the day you invest in this Fund and the Index Reference Date.

Maturity Date 4 January 2019

Issuer BNP Paribas Arbitrage Issuance BV

Currency USD

Index S&P 500

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Unlike direct investments in assets such as stocks or bonds, where any gains and losses are based on their performance in the market, the Fund invests in a ‘certificate’ provided by BNP Paribas. A certificate is a type of investment product which aims to provide capital growth whilst also offering protection of the original investment, if held until the end of a fixed term.

The Fund invests in a certificate on 11 November 2013 (the day the Fund opens to investment) until 4 January 2019 (the Maturity Date).

Whilst BNP Paribas is the provider of the certificate, the return and capital protection it provides are also linked to six US-based companies: Assured Guaranty Corporation, The Coca-Cola Company, Goodyear Tyres & Rubber Company, MBIA Inc, Safeway Inc and US Steel Corporation. Please see pages 7-9 for details of all of the companies.

Your money is not invested in the companies themselves, but each of them represents one sixth of the Fund’s capital protection and return at maturity. What this means is that the credit risk of these companies is spread so that if one of these companies were to default whilst you are invested in this Fund, you would lose one sixth of your investment in the Fund and one sixth of your return at maturity. If two of these companies were to default whilst you are invested in this Fund, you would lose two sixths of your investment in this Fund and two sixths of your return at maturity, and so on. (See ‘What is a default?’)

You could lose all of your money whilst invested in this Fund if all six companies were to default or if BNP Paribas was unable to meet its obligations (by going into liquidation for example).

The term default in this document refers to a ‘credit event’. A credit event for the US companies documented in this brochure is either a failure to pay or bankruptcy of the company.

The failure to pay by a company means its inability to promptly pay interest or capital when due. Bankruptcy means any administrative document, statement, action or decision confirming that the company either:

1) can no longer meet its financial obligations (i.e. becomes insolvent or is incapable of paying debts when due), or

2) has their competent bodies meeting to pronounce on a resolution relative to the dissolution (except by merger), the liquidation or the bankruptcy of the company.

A bankruptcy of the provider, BNP Paribas, is its inability to repay outstanding debts.

What does the Fund invest in?What is a default?

Protected but not guaranteed

Although the Royal Skandia USD Protected Return 3 Fund offers protection for your initial capital and returns as long as you leave it invested until the Maturity Date, it does not provide a guarantee. If any of the parties involved in this investment were to go into liquidation or be unable to meet their financial obligations whilst you are invested in this Fund, you could lose some or all of the money you have invested. You can invest in this Fund from 11 November 2013. Please see ‘What does the Fund invest in?’ below for more details.

Neither Royal Skandia nor any Old Mutual Group Company provides any guarantee whatsoever in respect of your initial investment premium and the subsequent value of this Fund.

The Fund is priced in USD ($). If your Portfolio Bond is denominated in a different currency to the Fund, its value may rise and fall purely as a result of exchange rate fluctuations and the value at maturity may be less than the value of your initial investment. The potential risks associated with this investment are summarised on page 12.

Final Index Reference Date20 December 2018

Index Reference Date20 December 2013

13 December 2013Fund closed to investment

11 November 2013Fund open to investment

4 January 2019Maturity Date

5% per annum compounded growth (27.628% final return)_

Your exposure to risk begins from the day you are invested in the Fund

5% per annum growth (from the day you are invested in the Fund)_

Timeline of the Fund

Reference Term: period over which the S&P 500 performance is averaged

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The BNP Paribas group (www.bnpparibas.com) has a presence in 80 countries with nearly 200,000 employees, including more than 150,000 in Europe.

It ranks highly in its three core activities:• Retail Banking

• Investment Solutions

• Corporate & Investment Banking.

In Europe, the group has four domestic markets (Belgium, France, Italy and Luxembourg) and BNP Paribas Personal Finance is the leader in consumer lending.

The BNP Paribas group is rolling out its integrated retail banking model across Mediterranean basin countries, in Turkey, Eastern Europe and a large network in the western part of the United States.

In its Corporate & Investment Banking and Investment Solutions activities, the BNP Paribas group also enjoys top positions in Europe, a strong presence in the Americas and solid and fast-growing businesses in Asia.

Who is BNP Paribas?

In this brochure, BNP Paribas refers to both BNP Paribas Arbitrage Issuance BV and BNP Paribas SA.

The issuer of the certificates the Fund invests in is BNP Paribas Arbitrage Issuance BV, a company which is part of the BNP Paribas group.

BNP Paribas Arbitrage Issuance BV is a wholly-owned subsidiary of BNP Paribas SA, which is the holding company within the BNP Paribas group. BNP Paribas SA acts as a guarantor of the certificates. The role of a guarantor is that if the issuer fails to make a payment under the certificates when due, the guarantor will make the relevant payment instead. However, this does not mean that there is a capital guarantee.

The following information is supplied by BNP Paribas, and is correct as at 14 October 2013.

Is BNP Paribas financially strong?

The BNP Paribas group is robust and resilient. It has a well-balanced business model, with strong Retail Banking activities, a significant Corporate and Investment Banking business and finally Investment Solutions that offers a broad range of high value added products and services in activities related to the gathering, management, development, protection and administration of clients’ savings and assets. The BNP Paribas group has a large footprint across nearly 80 countries with strong positions in four prosperous “domestic” markets - France, Belgium, Italy and Luxembourg.

The BNP Paribas group’s market share in these four countries stands on average around 10%. These four countries all have a high rate of household personal savings (three times that of households in the US), which helps to maintain the BNP Paribas group’s liquidity. Also, the countries have relatively low levels of personal indebtedness (less than half the US ratio) which helps to limit the credit risk involved with the BNP Paribas group’s lending activities.

BNP Paribas SA is rated ‘A2’ by Moody’s at the time of the publication of this document. Moody’s describes a single A rating as upper-medium investment grade and subject to low credit risk. Among the A rating (A1, A2, A3) A1 is the best rating. BNP Paribas SA is also rated ‘A+‘ by Standard & Poor’s, another leading credit rating agency in the industry. These ratings mean that the ratings agencies believe BNP Paribas SA has a strong capacity to meet its financial commitments. However, these ratings can only be used as a guide and can change at any time.

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The creditworthiness of organisations is rated by independent credit-rating agencies. They are used throughout the financial world to assess the risk that companies, and countries, may not be able to pay their debts. Moody’s, one of the investment industry’s leading credit rating agencies, has ratings starting at Aaa and going down to C. These long term ratings can improve or deteriorate whilst you are invested in this Fund. Even if the ratings change, BNP Paribas will continue to use the linked companies and you will still be exposed to the credit risk of these linked companies.

The six companies across which the credit risk for the Fund has been spread represent a sample of different industry sectors in the US with different credit ratings. The credit ratings of companies can change at any time and this has no impact on the minimum fixed return or capital protection offered by the Fund at Maturity unless these companies default.

Credit ratings of the linked companies

Name Sector/Industry Moody’s Long Term Obligation rating

S&P Long Term Credit Rating

Assured Guaranty Corporation

Financial/Insurance A3 AA-

The Coca-Cola Company Consumer Staples/Beverages AA3 AA-

Goodyear Tyres & Rubber Company Cyclical/Auto part and equipment BA3 BB-

MBIA Inc Financial/Financial Services BA3 BBB

Safeway Inc Consumer Staples/Food Retailers BAA3 BBB

US Steel Corporation Basic materials/Iron and steel BA3 BB-

Source: Moody’s and S&P and is correct as at 14 October 2013.

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Which companies is the investment linked to?

Assured Guaranty Corporation (Investment Grade S&P AA-)

Assured Guaranty Corporation (AGC), is an insurance company, which provides insurance and reinsurance against principal and interest payment defaults on debt obligations in the United States public finance market and the global infrastructure and structured finance markets.

Source: www.reuters.com as at 14 October 2013

The Coca-Cola Company (Investment Grade S&P AA-)

The Coca-Cola Company, incorporated on September 5, 1919, is a beverage company. The Company owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages, such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks.

The company owns and markets a range of nonalcoholic sparkling beverage brands, which includes Coca-Cola, Diet Coke, Fanta and Sprite.


Safeway Inc(Investment Grade S&P BBB)

Safeway Inc. (Safeway), incorporated on July 23, 1986, is a food and drug retailer in North America. As of December 29, 2012, the Company had 1,641 stores. The Company’s United States retail operations are located principally in California, Hawaii, Oregon, Washington, Alaska, Colorado, Arizona, Texas, the Chicago metropolitan area and the Mid-Atlantic region. Safeway’s Canadian retail operations are located principally in British Columbia, Alberta and Manitoba/Saskatchewan. In support of its retail operations, the Company has a network of distribution, manufacturing and food-processing facilities. Safeway owns and operates GroceryWorks.com Operating Company, LLC (GroceryWorks), an online grocery channel doing business under the names Safeway.com and Vons.com (collectively Safeway.com). Safeway also has a 49% interest in Casa Ley, S.A. de C.V. (Casa Ley), which operates 195 food and general merchandise stores in Western Mexico. Blackhawk Network, Inc. (Blackhawk), a subsidiary of Safeway, provides gift cards, prepaid products and payment services to consumers through a network of retail store locations in the United States, Canada, Europe, Mexico and Australia and various online channels. In addition, Blackhawk provides card production services and a secondary market for prepaid cards.


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US Steel Corporation(High Yield S&P BB-)

United States Steel Corporation is an integrated steel producer of flat-rolled and tubular products with production operations in North America and Europe. The Company uses iron ore and coke as primary raw materials for steel production.

Source: www.bloomberg.com as at 14 October 2013

MBIA Inc (Investment Grade S&P BBB)

MBIA Inc. (MBIA), incorporated on November 12, 1986, together with its consolidated subsidiaries, operates the financial guarantee insurance businesses in the industry and is a provider of asset management advisory services. These activities are managed through three business segments: United States public finance insurance, structured finance and international insurance, and advisory services. The Company’s United States public finance insurance business is operated through National Public Finance Guarantee Corporation and its subsidiaries (National), its structured finance and international insurance business is primarily operated through MBIA Insurance Corporation and its subsidiaries (MBIA Corp.), and its asset management advisory services business is primarily operated through Cutwater Holdings, LLC and its subsidiaries (Cutwater). It also manages certain business activities through its corporate, asset/liability products, and conduit segments. The corporate segment includes revenues and expenses that arise from general corporate activities. Funding programs managed through the asset/liability products and conduit segments are in wind-down.

Source:www.reuters.com as at 14 October 2013

The Goodyear Tyres & Rubber Company (High Yield S&P BB-)

The Goodyear Tyres & Rubber Company, incorporated on August 29 1898, is a manufacturer of tyres. The Company, together with subsidiaries and joint ventures, develops, manufactures, markets and distributes tyres for a range of applications. The Company also manufactures and markets rubber-related chemicals for various applications. The Company is an operator of commercial truck service and tyre retreading centers. During the year ended December 31 2011, the Company operated approximately 1,400 tyre and auto service center outlets where it offered its products for retail sale and provided automotive repair and other services. The Company manufactures its products in 53 manufacturing facilities in 22 countries, including the United States.

The Company manufactures and sells tyres under the Goodyear, Dunlop, Kelly, Debica, Sava and Fulda brands and other Goodyear-owned brands, and the private-label brands of certain customers.


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The Fund matures on 4 January 2019. The S&P 500 Index is averaged over the Reference Term. Average growth is calculated as follows. We check the Index level at three-monthly intervals beginning three months after the Index Reference Date (20 December 2013) and ending at the Final Index Reference Date (20 December 2018). The final average index level will be the sum of these 20 figures, divided by 20. (If any

of the check dates fall on a non-business day, we will use the level on our next business day.)

If the S&P 500 quarterly average growth turns out to be more than the Fund’s 27.628% final protected return, what you get back will be the average growth over the Reference Term. Using the average growth over the Reference Term can

protect you against equity markets falling but it may limit the potential returns available in rising equity markets.

The final average growth calculation does not take into account the effect of any dividends arising from the stocks which form components of the Index.

How is the average growth of the S&P 500 Index calculated?

The table on page 11 gives an illustrative example of how the calculation of the quarterly average performance over 20 quarters would work. The total index level for all 20 quarterly dates is 2,600. Dividing 2,600 by 20 quarters produces an average index level of 130, which represents a 30% increase on the initial Index level. Average growth of 30% over the Reference Term is higher than the protected final return of 27.628%, so an investment of $100,000 in this example would return $130,000.

Most experts consider the S&P 500 one of the best benchmarks available to judge overall U.S. market performance. It is an index of 500 US stocks, weighted by market value. It provides a broad snapshot of the overall U.S. equity market; in fact, 75% of all U.S. equity is tracked by the S&P 500.

The Index selects its companies based upon their market size, liquidity, and sector. Most of the companies in the Index are solid ‘mid cap’ or ‘large cap’ corporations. This means their market capitalization is between $2 and $10 billion (mid) or more than $10 billion (large). Source: www.standardandpoors.com

What is theS&P 500 Index?

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Quarter Index level Quarter Index level

Index Reference Date 11

1 12

2 13

3 14

4 15

5 16

6 17

7 18

8 19

9 20 Final Index Reference Date

10 TOTAL

Please note: these figures are not based on past performance, nor are they an indicator of potential investment performance – they are only intended to illustrate how the growth is calculated and what the possible return could be for one specific case and do not include charges relating to your Royal Skandia Portfolio Bond.

Illustrative calculation example

117.61

125.65

130.98

149.84

162.43

194.84

181.76

162.93

175.35

144.00

2,600.00

100.00

89.26

109.37

122.85

115.22

109.19

98.06

91.72

104.28

106.12

108.54

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What are the risks associated with investment into the Fund?

Accessing your investment before maturity

• If you cancel your investment instruction or switch all or part of your investment in the Fund any time before the Maturity Date, the amount you switch will not be subject to protection and may be less than you invested.

• The value switched or returned to you will depend on the market price offered by BNP Paribas on that day. It will not reflect the full value of any performance up to that point as this only applies on maturity.

• The value when switching out of the Fund is determined by BNP Paribas at that time and may differ materially from any previous price you may have seen in quarterly valuations of your Portfolio Bond.

• If the Fund is suspended, Royal Skandia may not be able to sell the investment before the Maturity Date, meaning you may not be able to redeem the investment when you want to.

• If you wish to withdraw all or part of the money from your Portfolio Bond, the withdrawal may be subject to early withdrawal charges.

Investment risks

• The value of investments can fall as well as rise.

• The charges relating to your Royal Skandia Portfolio Bond will reduce the overall level of returns.

• The Fund is denominated in USD, so if your Portfolio Bond is not denominated in USD its value may rise and fall purely as a result of exchange rate fluctuations.

Market disruptions

• The calculation of the return may be adjusted to take account of market and/or trading disruption.

• Market disruption for this Fund would mean for example a time when the S&P 500 Index is not published or the Fund does not issue a price.

Credit risk

• If BNP Paribas is not able to meet its obligations from the day you invest in the Fund, you could lose some or all of the money invested in the Fund. Investor protection schemes do not cover the investment or credit risk associated with this Fund.

• Each one of the companies linked to the certificate as defined on page 7 represents one sixth of the capital protection and return at maturity from the day your investment instruction is accepted and you are invested in this Fund. This means that should any one of these companies default whilst you are invested in this Fund, you would lose one sixth of your investment in the Fund and one sixth of your return at maturity. If two of these companies default whilst you are invested in this Fund, you would lose two sixths of your investment in the Fund and two sixths of your return at maturity, and so on.

• Your premium is at risk as soon as it is invested in the Fund.

• Neither Royal Skandia nor any Old Mutual Group Company can assume responsibility for the obligations of third parties.

• In the unlikely event that Royal Skandia goes into liquidation or ceases trading whilst you are invested in this Fund, you will lose some or all of your money. However, if this were to happen, the Isle of Man has a statutory compensation scheme. The Life Assurance (Compensation of Policyholders) Regulations 1991 provides policyholder protection for policies issued by all authorised life assurance companies based on the Isle of Man. This would apply to your Royal Skandia Portfolio Bond. The scheme provides protection for up to 90% of the value of your Royal Skandia policy, less any charges that apply at that time. For more information about this compensation scheme please visit our website

www.skandiainternational.com

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Is this Fund right for you?

An investment in this Fund will expose you to different risks from those normally associated with an investment in traditional asset class funds. Please see a summary of risk factors on page 12. You should not invest in this fund unless you are able and willing to accept the risks associated with it, including a loss of capital.

We believe that decisions about your financial future are so important that you should always seek professional financial advice.

If you have any doubt whether this Fund is suitable for you, you should obtain expert advice from your financial adviser.

This Fund may not be suitable for you if:

You cannot risk locking in your investment until the Maturity Date.

You cannot risk losing any of your capital or growth allocated to this Fund – whilst the Fund aims to protect your capital and give you growth, this is not guaranteed.

This is your only investment, rather than a part of an investment portfolio.

This Fund may be suitable for you if:

You are looking for a fixed minimum protected return.

You are looking for the potential to protect your capital.

You do not need access to this part of your portfolio before the Maturity Date.

You are looking for an investment with performance opportunities linked to US equity markets.

You have a minimum of US$5,000 to invest into this Fund, and a minimum of $75,000 (Executive Portfolio Bond) and $37,500 (Collective Portfolio Bond) to invest if setting up a new Portfolio Bond.

You accept all the risks involved with the Fund.

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Example 1

The average growth of the S&P 500 Index since launch of the Fund is 0% and none of the companies linked to the certificate have defaulted.

This means that at maturity of the Fund you will receive $127,628, which is 100% of $100,000 plus $27,628, which is the fixed return of 5% each year compounded (equal to 27.628% final return).

You will not receive the average growth of the S&P 500 Index because the 27.628% final return is better than the average growth of the S&P 500 Index. See ‘How is the average growth of the S&P 500 index calculated?’ on page 10.

Amount of fixed return at maturity assuming no default

Value at maturity of the Fund of the average growth of S&P 500 Index

Number of defaults since the date you invested in this Fund

Impact of defaults on the return at maturity of the Fund

Impact of defaults on the capital value at maturity of the Fund

Value of payment at maturity of the Fund

$27,628 $0 0 $0 $0 $127,628

Example 2

The average growth of the S&P 500 Index since launch of the Fund is 50% and none of the companies linked to the certificate have defaulted.

This means that at the maturity of the Fund you will receive $150,000. This is 100% of $100,000 plus $50,000 which represents the average growth of the S&P 500 Index.

You will not receive the fixed return because, as shown on the table below, the fixed return of 5% each year compounded (equal to 27.628% final return) would give you less than the average growth of the S&P 500 Index.







$27,628 $50,000 0 $0 $0 $150,000

The examples on these pages illustrate how the Fund might perform in various circumstances. They are based on a value of $100,000 at the Index Reference Date (for example including any growth between when you invested in the Fund and the Index Reference Date). They assume that you hold the investment

until the maturity date. All the returns shown are after all the Fund charges and expenses have been taken. However, these examples do not reflect the impact of Royal Skandia Portfolio Bond charges.

Please note that the projected values are not guaranteed and are only intended to be used as a guide in financial planning. Actual benefits will depend upon the rate of investment return. All values (including the potential return) are calculated assuming that BNP Paribas will not default.

How might the Fund perform?

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Example 4

The average growth of the S&P 500 Index since launch of the Fund is equal to 50%, and one of the companies linked to the certificate has defaulted in year 5.

This means that at maturity of the Fund you would receive $125,000. This is five sixths of $100,000 ($83,334) plus $41,667, which is five sixths of the average growth of the S&P 500 Index.

Please note each company that is linked to the certificate represents one sixth of the capital and return.







$27,628 $50,000 1 -$8,333 -$16,666 $125,000

Example 3

The average growth of the S&P 500 Index since launch of the Fund is equal to 0% and two of the companies linked to the certificate have defaulted in year 3.

This means that at maturity of the Fund you will receive $85,085. This is four sixths of $100,000 ($66,667) plus $18,419 which is four sixths of the fixed 5% each year compounded return (equal to 27.628% final return).

Please note each company that is linked to the certificate represents one sixth of the capital and return.







$27,628 $0 2 -$9,209 -$33,333 $85,085

Please note: in the event that BNP Paribas is unable to meet its obligations (by for example, going into liquidation), you may lose all of your contribution or receive back less than you invested, and no return will be paid. In addition to this, each one of the companies linked to the certificate represents one sixth of capital protection and return at maturity. This means that should all of these companies default, you would lose your entire investment in the fund and return at maturity. Please see ‘What is a default?’ on page 5.

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You can only access the Fund through Royal Skandia’s Portfolio Bonds – either an Executive or Collective Bond. At Royal Skandia we sell our products through financial advisers because we believe it’s important that our customers receive professional advice from a suitably qualified individual or firm. In the first instance please speak to your financial adviser about opening a bond or using your current Royal Skandia Bond to invest in this Fund.

Please read this fund brochure in conjunction with the relevant Royal Skandia Executive or Collective Bond brochure, which together with your Royal Skandia Portfolio Bond Policy Terms will provide you with information on the benefits and rights applicable to your investment in the relevant Royal Skandia Bond.

If you and your financial adviser decide this Fund is appropriate for you, your application for the Bond, or dealing

instructions for existing Bonds, must be submitted and accepted by Royal Skandia before 13 December 2013.

Your investment will be allocated to the Fund on the first dealing date available to us following the receipt of your investment instruction as explained in the relevant Royal Skandia Portfolio Bond Policy Terms.

The Index Reference Date (the date the calculation of the average performance of the S&P 500 Index will start) is 20 December 2013. Your investment will begin growing at 5% a year from the day you invest in the Fund until the Maturity Date. It will also be subject to the risks involved as soon as you invest in the Fund.

When the Fund matures, the value of your investment at maturity will be switched into the Royal Skandia Deposit Account without any tax implication, from where

it is available for further investment within your Royal Skandia Bond.

You should remember that charges apply to the Royal Skandia Executive and Collective Bonds and that these charges will reduce the overall levels of returns on your investment. You should ensure that you have sufficient money invested, either in other funds or in cash, to cover the Bond charges. You can find more details on charges in the relevant Royal Skandia Portfolio Bond Policy Terms. If your Bond is not denominated in USD, its value may rise and fall purely as a result of exchange rate fluctuations.

This Fund is not available to investors in Hong Kong, Singapore or the UK.

How to invest in the Fund

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You can switch all or part of your investment out of this Fund at any time after you invest, but the protection level and return would not apply, so the amount switched could be less than the amount originally invested. If you choose to switch your investment from the Fund, the price you receive will depend on the market price at that time. While this may reflect some growth, it will not reflect the full value of any potential returns built up at that point. The market price will be determined by BNP Paribas at the time of the switch and because of market movements, it may differ materially from any previous price you may have seen in quarterly valuations of your Royal Skandia Bond.

You should also be aware that if the Fund is suspended for any reason, you may not be able to switch out of or withdraw the investment from the Fund when you want to and you may have to hold it until maturity.

If you wish to withdraw all or part of the money from your Royal Skandia Portfolio Bond, the withdrawal may be subject to early withdrawal charges. (See your Royal Skandia Portfolio Bond Policy Terms for more details on early withdrawal charges.)

For Royal Skandia Portfolio Bonds set up on a life assurance basis, early withdrawal charges will be applied on the death of the relevant life assured because death brings the contract, and therefore your investment into this Fund, to an end.

What if I need to access my money during the next five years or I want to invest my money in other funds available through Royal Skandia Portfolio Bonds?

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Important information

* The Fund has a maximum capacity. If this is reached prior to the ‘Closed to investment’ date published in the brochure the Fund will close at that time. In the case of an early closure, if your investment instruction or your money is received after the Fund is closed, we will inform you immediately and seek new investment instructions.

For new Royal Skandia Portfolio Bond applications:

You can either continue with your application and choose an alternative investment instruction or cancel your application.

For an additional investment to your existing Royal Skandia Portfolio Bond:

You can choose an alternative investment instruction or cancel your additional investment.

If the total subscription to the Fund is low and Royal Skandia decides that continuing the Fund is not in the best interests of investors, we may decide not to continue with the Fund. If we do not continue with the Fund we will contact you within 14 working days of the Index Reference Date seeking your further instructions. You should be aware that you may get back less than you paid due to market movements.

** These fees are calculated based on the amount of your initial investment into the Fund plus any growth until the Index Reference Date. They are paid at the Index Reference Date.

*** This fee is calculated based on the amount of your initial investment into the Fund plus any growth until the Index Reference Date and is taken annually. If you withdraw your investment early, future annual fees are not taken.

Any returns shown in this brochure are after all the Fund charges and expenses have been taken but before any Portfolio Bond charges.

Important dates, charges and minimum investment levels

Open to investment 11 November 2013

Closed to investment* 13 December 2013

Index Reference Date (first date on which S&P 500 is checked)

20 December 2013

Quarter end dates (for measuring average S&P 500 growth)

20 March 2014 and quarterly thereafter up until and including the Final Index Reference Date

Final Index Reference Date (last date on which S&P 500 is checked)

20 December 2018

Maturity date 4 January 2019

Initial adviser fee** Up to 3%

Royal Skandia establishment fee** 3%

Annual Royal Skandia fund administration fee*** 0.5%

Minimum investment in Fund $5,000

Minimum investment in Portfolio Bond $75,000 (Executive Bond)$37,500 (Collective Bond)

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Neither the BNP Paribas group nor any of its affiliates in any way endorse this Fund, its suitability for investors or the promotional material associated with the Fund and do not make any representation or warranty regarding the accuracy, completeness or adequacy of such information and no liability to any party is accepted by the BNP Paribas group or any of its affiliates in connection with such information. You have no relationship with, or direct recourse to the BNP Paribas group or any of its affiliates. Your relationship is solely with Royal Skandia Life Assurance Limited.

Royal Skandia has the right to replace the Certificate with a similar alternative or to discontinue the Fund if it believes it would be in the interest of the Fund’s holders to do so. BNP Paribas has the right to vary the terms of the Certificate.

Please ensure that you read this brochure carefully, for a complete description of the Fund and the Certificate. Information on the Certificate can be found in the section ‘What does the Fund invest in?’ on page 5.

Neither Royal Skandia nor the BNP Paribas group offer investment advice or make any recommendations regarding investments.

Please speak with your financial adviser for more information about this Fund and the Royal Skandia range of bonds. You should be aware that your financial adviser may receive a payment if you agree that this Fund is suitable for you and you invest in it.

This brochure is issued by Royal Skandia Life Assurance Limited.

Skandia International, part of Old Mutual Wealth, is the international group of companies which provides offshore and

cross-border investment solutions.

www.skandiainternational.com

Calls may be monitored and recorded for training purposes and to avoid misunderstandings.

Royal Skandia Life Assurance Limited is registered in the Isle of Man under number 24916C. Registered and Head Office: Skandia House, King Edward Road, Onchan, Isle of Man, IM99 1NU, British Isles. Phone: +44 (0)1624 655 555 Fax: +44 (0)1624 611 715.

Authorised and regulated by the Isle of Man Insurance & Pensions Authority.

Royal Skandia Life Assurance Limited is a member of the Association of International Life Offices.

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