defined benefits fund accelerated class. overview markets today unknown risks needed opportunity to...

DEFINED BENEFITS FUND

ACCELERATED CLASS

Overview

Markets today Unknown risks Needed opportunity to overcome market

concerns 21st Century replacement for With Profits

Today's Presentation

An overview of Traded Life Policies (TLP’s) as an asset class

What are TLP’s? Why TLP’s are an important asset class Why people sell their policies The TLP market place How TLP’s are purchased How TLP’s are valued within a fund

What are TLP’s?

United States Issued Life Assurance Policies United Kingdom Issued Endowment Policies Policy purchased at discount from fixed maturity value,

generating guaranteed profit when the policy pays out

Example Holdings

Axa Clerical Medical Commercial Union Sun Life American General Life Norwich Union Prudential John Hancock Life Standard Life Pacific Life Friends Provident

Important Asset Class?

TLPs offer a fixed return to the investor Unaffected by other investment fluctuations Returns in the fund are extremely smooth Natural maturity point eliminating the need to find a

future buyer Net historic returns 9% p.a.

Market Today

Policies purchased from those aged 65 or over More accurate and finite life expectancy tables Policies in force two years plus – beyond contestability Regulated market maker gives competitive pricing and

protects buyer and seller

Why do people sell their policies?

Estate planning Change original beneficiary Strip out accumulated value to provide

income replace with cheaper term Key-Man Premiums no longer affordable

Market Growth

----------- 1990 $50 million

------------ 1999 $ 1 billion

------------ 2001 $ 4 billion

------------ 2006 $12 billion

Issued US Life Policies $13,000 billion

How are TLP’s purchased?

A life expectancy (LE) is obtained Illustration made to establish future premium

liability Offer made for policy – US law requires 3 offers

before a policy is traded

Next Step

Funds deposited in US based Escrow Account Life Assured, Policyholder and Beneficiaries sign transfer Policy transferred to new owner Funds released from Escrow to the seller Insurance Company notes new beneficiaries and purchase is complete

Calculations

Establish life expectancy (LE) Calculate future premium liability Create an actuarial model to unwind future profits

Example of Policy Selected for Fund

LE 64 Months Sum Assured $1,000,000 Purchase Price $ 629,215 Includes Premium to LE $ 97,275 Net Purchase Price $ 531,940

Return 58.93%

81 Year old – New York Life.

Life Expectancy

Annual Premium $ 18,239

Expected Return $370,785

Annual Return

13.10%

11.05%

9.56%

Months

Low LE 54

Average LE 64

High LE 74

Open Ended Investment

Aurora is an open ended investment Flexible investment term Shares redeemable upon demand Monthly fund valuations provided Regulated mutual fund

Disaster Scenario!

Annual Premium $18,239

Population LE 110 monthsLE x 2128 months

Annual Return 3.53%Annual Return 4.69%

Invest

USD class minimum $10,000 110% allocation from day one $11,000 invested 7 Year investment recommended - (No exit charges

after 7 years) 1.25% p.a. management charge Target 7 – 9% annual growth

10% EXTRA ALLOCATION

• INVEST $50,000

• DAY ONE BECOMES $55,000

• YEAR END TARGET MINIMUM

•17%

HOT OFF THE PRESS!

November 2007 - Annual return 9.35%

Investor with enhancement and $100,000

Return at end of First Year 20.3%

AURORA

Should you have any questions or require any further information please contact:

PCP Support

Tel: +357 25817488 Fax: +357 25749755 Website: www.pcpfunds.com Email: support@pcpfunds.com