Aviva Irl With Profit Fund Celebration Bond

Fund Update
Aviva Irl With Profit Fund
Celebration Bond
Fund Background
Historically, Aviva Ireland’s With-Profit Fund has invested in a wide range of assets. These have included
equities, property, bonds and cash. However, as a result of the global financial crisis, the majority of the Fund’s
equities were sold in October 2008 in favour of government bonds. This was done in order to help protect
investors from further falls in investment markets.
Investment Mix
The asset mix of the Fund at 31 December 2010 is as follows:
Aviva Irl
With-Profit Fund
Mix 31/12/10*
Main With-Profit Fund Mix
31.12.10
Cash
5.9%
Bonds
85.0%
Equities
0.7%
Property
8.4%
*Source: Aviva Investors (December 2010)
As can be seen from the above chart, the Fund is
now mainly invested in government bonds. The
remainder of the Fund is mainly invested in Irish
property and cash. It is unlikely that the Fund will
increase either its equity or property holdings in the
future. Therefore, the majority of the Fund’s assets
will continue to be invested in government bonds
and cash.
Fund Performance
The following chart shows
the gross investment returns
earned on the Aviva Irl With-
Profit Fund since the year
2000:
Source: Aviva Investors (January 2011)
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Return 4.9% -2.0% -8.6% 9.8% 12.1% 16.0% 11.0% 1.1% -18.7% 0.8% -0.80%
IMPORTANT INFORMATION IS CONTAINED OVERLEAF – PLEASE TURN OVER

The investment returns achieved in recent years
have been influenced by a number of factors. The
unprecedented falls in the world’s financial markets
in 2008 resulted in a gross return for that year of
–18.7%. In order to help protect the Fund from
further investment losses, the Fund’s equities were
sold in favour of bonds as discussed above. Over
the long-term, bonds have historically tended to
produce lower investment returns than equities
and property. In 2009, the Fund’s bond holding
did achieve a reasonably stable investment return,
but this was offset by further falls in Irish property
values. In 2010, the poor performance of Irish
government bonds offset the positive performance
of French and German bonds, while, a further fall
in property values resulted in an overall slightly
negative return. As the Fund’s investment strategy
is now to invest predominantly in bonds, it is
expected that relatively low investment returns will
be earned for the foreseeable future.
Market Value Adjustments
For Unitised With-Profit (UWP) investments such as
your Celebration Bond, a Market Value Adjustment
(MVA) currently applies. The purpose of an MVA
is to ensure that withdrawals or switches from
the Fund do not receive more than their share of
the Fund’s underlying assets. If an MVA were not
applied then investors who exit the Fund would
be benefiting at the expense of those who remain.
The level of the MVA is regularly reviewed. Please
contact us on the telephone number provided at
the end of this document if you require further
information.
Annual Bonus Rates
Premiums paid into Celebration Bond policies were
used to purchase units in the Unitised With-Profit
Fund. Each year, the aim is to increase the price
of these units through the addition of an annual
bonus. However, an annual bonus of 0% currently
applies to all Aviva Irl With-Profit investments.
This means that guarantees remain unchanged
from their level at the end of 2008. Although the
rate of bonus for future years has not yet been
determined, it is unlikely in the short-term that
there will be any significant increase in annual
bonuses.
Terminal Bonus Rates
The aim of a terminal bonus is to pay out any
profits that have been earned over the lifetime
of an investment that have not yet been added
through annual bonuses. We regularly review
terminal bonus rates and aim to update them at
least twice a year. Terminal bonus rates are not
guaranteed and may be changed at any time
during the year. Since the end of 2008 there have
been reductions in terminal bonus rates. This
reflects the impact on the Fund’s assets of the
negative return earned in 2008, and the relatively
low returns that have subsequently been achieved.
For further details
contact your Financial Adviser
or our Customer Services Department
Phone 1890 64 64 64 or
E-mail: csc@aviva.ie
All information correct as at January 2011.
Warning: Past performance is not a reliable guide to future performance.
Warning: The value of your investment may go down as well as up.
Warning: The income you get from this investment may go down as well as up.
Warning: This product may be affected by changes in currency exchange rates.
Warning: Withdrawals and switches from this fund may be deferred for up to 3 months.
Aviva Life & Pensions Ireland Limited. A private company limited by shares.
Registered in Ireland No. 252737 Registered Office One Park Place, Hatch Street, Dublin 2.
Member of the Irish Insurance Federation. Aviva Life & Pensions Ireland Limited is regulated by the Central Bank of Ireland.
Aviva Life & Pensions Ireland Limited is a subsidiary of Aviva Life Holdings Ireland Limited, a joint venture company between Aviva Group Ireland plc and Allied Irish Banks, p.l.c.
Life & Pensions One Park Place, Hatch Street, Dublin 2. Phone (01) 898 7000 Fax (01) 898 7329
www.aviva.ie
Telephone calls may be recorded for quality assurance purposes.
1.303.01.11