Fund changes

Here you can keep up to date, and find everything you need to know about changes to our funds. This could be, for example, a change to a fund’s objective, risk rating or charges; or a change to the investment adviser, the fund’s name or underlying investment approach.

What’s changing?

The Financial Conduct Authority (FCA) has asked all UK Fund Managers to carry out an annual review of the funds they manage so the overall value delivered to customers can be assessed. The reports can be viewed here.

Various fund managers announced temporary suspensions on trading in their property funds earlier this year because of valuation uncertainty related to the impact of the Coronavirus outbreak. Our life and pension property funds invest in some of these suspended funds so we’ve had to restrict withdrawals from, and payments into, our property funds. Our other funds have not been affected by these restrictions.

Property valuers are now able to provide accurate valuations for the properties held in the funds, which they had not been able to do.  Because of that, fund managers are starting to resume trading in their property funds. Suspensions began to lift from 17th September 2020.



Pension Policies beginning with ‘ZU’

For policies beginning with ‘ZU’, we’re beginning to lift trading restrictions on pension property funds. This is being carried out on a fund-by-fund basis at the earliest possible opportunity following resumption of trading in the underlying property funds in which they invest. This is because managers of underlying property funds are lifting suspensions at different times. As we lift the trading restrictions on our life and pension property funds, we’ll list them below.

We’re writing to affected customers to update them.


What this means for customers

DEFERRED WITHDRAWALS

We’re beginning to process deferred withdrawal requests from our life and pension property funds where restrictions have been lifted, and we have prior agreement to proceed.

We’ll only contact those customers who asked us to do so.  If they still want to proceed we’ll carry out the transaction at the next available price date. If we’re unable to contact the customer, we won’t process the withdrawal.

PAYING IN

Since 17 April 2020, unless we’ve been instructed otherwise, existing regular payments that would otherwise have been invested in the affected life and pension property funds are being redirected as follows:

  • Payments into a Scottish Widows Group Self Invested Personal Pension (GSIPP) are being redirected to a cash account
  • Payments into a Scottish Widows Group Stakeholder Plan (GSP) are being redirected to a money market fund
  • Payments into a Scottish Widows Master Trust arrangement are being redirected to the scheme’s default investment option
  • Payments into an Occupational Money Purchase (OMP) scheme or to a Mercer Master Trust arrangement are being redirected to a fund selected by the scheme’s trustees

For GSIPP and GSP, once restrictions are lifted, future regular payments will again be invested in the relevant property funds, unless we’ve been instructed to redirect to a different fund. If customers wish to invest their regular payments in one or more other funds, they’ll need to provide us with a new instruction to do so.

For Scottish Widows Master Trust, OMP and Mercer Master Trust, the trustees will decide whether future regular payments continue to be directed to the fund they selected when the restrictions were introduced, to the relevant property fund or funds or to another investment option. Members will receive letters outlining the position for their particular scheme.

CUSTOMER ACTION

Customers should note that cash accounts and money market funds are not designed to be used as long-term investment options. Where payments have been redirected to one of these options while the trading restrictions applied, it is important that customers consider reinvesting the value of these payments in one or more of the other investment options we make available.

LIFESTYLE STRATEGIES

Automatic rebalancing in lifestyle strategies that invest in the affected property funds did not happen while the restrictions applied. When the restrictions are lifted we’re rebalancing the lifestyle strategies to the relevant investment mix.


Property funds available for policies beginning with ‘ZU’ now trading as normal

We’ll update the list below of funds that have resumed normal trading as restrictions are lifted:


Fund Date restrictions lifted
SW Threadneedle Pension Property CS1 17/09/2020
Property CSW 17/09/2020
SW Legal & General Hybrid Property (70:30) (Active & Passive) CS1 30/09/2020
SW L&G Property CS1 30/09/2020
SW Legal & General Property CSW 30/09/2020
Tarmac Property 26/10/2020
SW Property 1CSW 26/10/2020
SW UK Property CS1 26/10/2020
SW Property 2CSW 26/10/2020
SW Property CSW 26/10/2020
SW Property CS1 26/10/2020

All other life and pension products

For life and pension products, except for policies beginning with ‘ZU’, we began to lift trading restrictions on our life and pension property funds on 28th September. This is being carried out on a fund-by-fund basis at the earliest possible opportunity following resumption of trading in the underlying property funds in which they invest. This is because managers of underlying property funds are lifting suspensions at different times. As we lift the trading restrictions on our life and pension property funds, we’ll list them below.

We’re writing to affected customers to update them.

What this means for customers

DEFERRED WITHDRAWALS

We’re beginning to process deferred withdrawal requests from our life and pension property funds where restrictions have been lifted, and we have prior agreement to proceed. Withdrawals will be priced at the date the restrictions are removed from the fund.

We’ll only contact those customers who asked us to do so. If they still want to proceed we’ll carry out the transaction at the next available price date. If we’re unable to contact the customer, we won’t process the withdrawal.

PAYING IN

Pensions (except Retirement Account and policies beginning with ‘ZU’) and life products

Existing regular contributions have continued to be invested in our life and pension property funds throughout this period.

In addition, for property funds trading as normal, we’ll accept new instructions to set up regular payments, increases to existing regular payments, single payments and transfer payments into the funds from 30th September.

Retirement Account

Since 17 April 2020, unless we’ve been instructed otherwise, existing regular payments that would otherwise have been invested in the affected pension property funds are being redirected to the customer’s Control Account.

From 30th September, we’ll be directing future regular payments back to the life and pension property funds if normal trading has resumed, unless we’ve been instructed to redirect to a different fund. If customers wish to invest their regular payments in one or more other funds, they’ll need to provide us with a new instruction to do so.

Customers should note that the Control Account is not designed to be used as a long-term investment option. Where payments have been redirected to the Control Account, it is important that customers consider reinvesting the value of these payments in one or more of the other investment options we make available.


Life and pension property funds now trading as normal (for property funds available for policies beginning ‘ZU’ trading as normal – see above)

We’ll update the list below as restrictions are lifted:

Fund Date restrictions lifted
SW Property Pension 28/09/2020
SW Property Life 28/09/2020
HIFML UK Property 28/09/2020
CM Property Life 28/09/2020
CM UK Property Pension 28/09/2020
HLL Property 28/09/2020
CM Property Life 28/09/2020
CM UK Property Pension 28/09/2020
LTSB Property Pension 28/09/2020
LTSB Property Life 28/09/2020

Retirement Account Fund Supermarket

Not all property funds are available at this time because fund managers are lifting suspensions at different times. As fund managers lift the suspension on their property funds, we’ll list them here.

We’re writing to affected customers to update them.

If you are invested in one of the property funds listed below through the Retirement Account Fund Supermarket, you can now buy, sell or switch units in these funds.

If you were previously investing regular amounts in one or more of the funds, during the suspension period those amounts were redirected to your Control Account. Money in your Control Account is currently not earning any interest, so we strongly recommended that you consider reinvesting these amounts elsewhere. Unless you’ve made a change to your regular investment instruction, now that the suspension has been lifted, we’ll start directing any future regular investments to the property fund(s) in accordance with your previous instruction.

Funds which have had their suspensions lifted and are now available for trading:


Fund Date restrictions lifted
Threadneedle UK Prop Aut Tr Feeder 2 Acc 17/09/2020
Threadneedle UK Prop Aut Tr Feeder 2 Inc 17/09/2020
Legal & General UK Property Feeder I Acc 13/10/2020
Legal & General UK Property Feeder I Inc 13/10/2020
Aberdeen UK Property Feeder UT I AC NAV 16/11/2020
Aberdeen UK Property Feeder UT I INC 16/11/2020
SLI UK Real Estate Feeder P1 Acc 16/11/2020
SLI UK Real Estate Feeder P1 Inc 16/11/2020
ASI Glbl Rl Est Fd P 1 Acc GBP Unhedged 16/11/2020
ASI Glbl Rl Est Fd P 1 Inc GBP Unhedged 16/11/2020

HBOS UK Property Fund; Scottish Widows Pooled Property ACS Fund 1; and Scottish Widows Pooled Property ACS Fund 2.

We are pleased to confirm that the suspension of dealing in the HBOS UK Property Fund, Scottish Widows Pooled Property ACS Fund 1 and Scottish Widows Pooled Property ACS Fund 2 was lifted on 23rd September 2020. This follows consultation with the funds’ Investment Adviser, Aberdeen Standard Investments (ASI), and their Depositaries.

Scottish Widows took the decision to temporarily suspend all dealing in the funds at 12 noon on 17th March 2020 to safeguard the interests of customers due to valuations uncertainty as a result of the impact of COVID-19 on property markets. Suspension of dealing meant we could not buy, sell, transfer, switch or exchange shares or units in the funds from that date. The suspension was in common with other authorised open-ended property funds operating in the UK.

The funds’ Standing Independent Valuers have now removed the material valuation uncertainty clause in their valuation reports for most property sectors. This means that none of the assets held by the funds are subject to the material uncertainty clause.

Some Scottish Widows life and pension funds invest in our regulated property funds. We will be issuing information regarding lifting trading restrictions on these life and pension funds as soon as it is available.

Proposed OEIC Fund changes

We’re proposing changes to some of our fixed interest and multi-asset funds to allow our fund managers greater flexibility to help meet the funds’ investment objectives, and aim for delivering improved investment returns.

These changes require approval from OEIC and ISA investors in the funds. We are therefore mailing investors with details of the change and asking them to vote.

  • For the fixed interest funds we would like to add the use of derivatives for investment purposes in the funds. We also wish to add bonds and other fixed interest securities from emerging market countries to some of the funds.
  • For the multi-assets funds we would like to add a wider range of asset classes and strategies, such as property and absolute return funds. (Absolute return funds aim to provide positive returns regardless of market conditions, although this isn’t guaranteed.)

To enable derivative investment within the Scottish Widows fixed interest funds listed below we are creating new funds. If the votes are successful we will merge the existing funds with the new funds and move investors to those new funds.

  • The new funds will have a different regulatory status to the current funds. There are currently two regulatory structures under which funds can be authorised in the UK by the FCA for investment by retail investors: UCITS and NURS.

  • The new funds are NURS funds whereas the current are UCITS. UCITS stands for Undertakings in Investments in Transferrable Securities and is established under an EU Directive. Funds authorised as UCITS are subject to certain investment and borrowing restrictions. NURS stands for Non UCITS Retail Scheme fund and has wider investment powers than a UCITS fund.

The tables below provide key dates and details of the impacted funds along with links to the relevant Voting Documents which provide detailed information on our proposed changes. We will update the tables for any other impacted funds shortly before we contact investors.

The changes won’t alter the risk profile or the charges of the funds, such as the annual management charge.

We believe the proposals for change are in the best interests of our investors. We need investor approval, and at least 75% of votes must be cast in favour to make the change.


Key Dates

Date Event Funds Affected
21st July Communications to advisers and customers will begin.
  • 21st July – We’ll mail advisers with clients invested in the affected fixed interest funds in the Scottish Widows Tracker and Specialist Investment Funds ICVC & Scottish Widows UK and Income Investment Funds ICVC.
  • 23rd July – We’ll begin to mail customers invested in the affected funds in Scottish Widows Tracker and Specialist Investment Funds ICVC & Scottish Widows UK and Income Investment Funds ICVC.
  • International Bond Fund
  • Corporate Bond Fund
  • Gilt Fund
  • High Income Bond Fund
  • Strategic Income Fund
28th July We’ll begin to mail customers invested in the HBOS UK Investment Funds ICVC and HBOS Specialised Investment Funds ICVC. The last mailing to customers in either of these ICVC will be issued on 11th August.
  • Corporate Bond Fund
  • Cautious Managed Fund
29th July We’ll mail advisers with clients invested in the Scottish Widows Managed Investment Funds ICVC.
5th August We’ll begin to mail customers invested in the Scottish Widows Managed Investment Funds ICVC. The last mailing to customers will be issued on the 11th August.
  • Balanced Growth Portfolio
  • Dynamic Income Portfolio
  • Managed Income Portfolio
  • Momentum Income Portfolio
  • Stockmarket Growth Portfolio
  • Strategic Growth Portfolio
4th September

Extraordinary General Meetings (EGMs) will be held for each of the affected funds. A full list of the funds and the times of the EGMs can be found in the Fund details table below.

  • Investors can vote in person, or
  • Return their Proxy (voting) Form by 2nd September.*

* due to Covid 19 restrictions, we’re encouraging investors to submit their vote by post.

All funds detailed above.
7th September The result of the investor votes will be available and we’ll update the Fund details table. All funds detailed above
5th October Subject to investor approval the changes detailed in the respective Voting Documents will become effective.
  • Customers invested in either the Scottish Widows Tracker and Specialist Investment Funds ICVC and or the Scottish Widows UK and Income Investment Funds ICVC will see their funds move to the Scottish Widows Investment Solutions Funds ICVC.
  • Our fund managers will have greater flexibility to help meet the funds’ investment objectives, and aim for delivering improved investment returns.
All funds detailed above

Fund details

Fund Current ICVC New ICVC Voting Document EGM Time Result of Vote
Corporate Bond Fund HBOS UK Investment Funds ICVC N/A 60232 1:00pm Approved
Cautious Managed Fund HBOS Specialised Investment Funds ICVC N/A 60231 1:10pm Approved
International Bond Fund Scottish Widows Tracker and Specialist Investment Funds ICVC Scottish Widows Investment Solutions Funds ICVC 60229 1:20pm Approved
Corporate Bond Fund Scottish Widows UK and Income Investment Funds ICVC Scottish Widows Investment Solutions Funds ICVC 60230 1:30pm Approved
Gilt Fund Scottish Widows UK and Income Investment Funds ICVC Scottish Widows Investment Solutions Funds ICVC 60230 1:40pm Approved
High Income Bond Fund Scottish Widows UK and Income Investment Funds ICVC Scottish Widows Investment Solutions Funds ICVC 60230 1:50pm Approved
Strategic Income Fund Scottish Widows UK and Income Investment Funds ICVC Scottish Widows Investment Solutions Funds ICVC 60230 2:00pm Approved
Balanced Growth Portfolio Scottish Widows Managed Investment Funds ICVC N/A 60233 2:10pm Approved
Dynamic Income Portfolio Scottish Widows Managed Investment Funds ICVC N/A 60233 2:20pm Approved
Managed Income Portfolio Scottish Widows Managed Investment Funds ICVC N/A 60233 2:30pm Approved
Momentum Income Portfolio Scottish Widows Managed Investment Funds ICVC N/A 60233 2:40pm Approved
Stockmarket Growth Portfolio Scottish Widows Managed Investment Funds ICVC N/A 60233 2:50pm Approved
Strategic Growth Portfolio Scottish Widows Managed Investment Funds ICVC N/A 60233 3:00pm Approved

Detailed Fund Information

To access the latest investment documentation for the funds, for example Key Investor Information Documents (KIIDs), Supplementary Investor Information Documents (SIIDs) and prospectuses please visit www.scottishwidows.co.uk/kiids/ for the Scottish Widows funds and www.scottishwidows.co.uk/kiids/kiids-hbos.html for the Halifax funds.


Effect on Income Distributions from SWUTM OEIC Funds

The 5 SWUTM fixed income OEIC funds will see a reduction in income (yield) figure at the point of transfer to the new ICVC. This is due to a regulatory accounting convention which requires SWUTM to revalue the assets in the merging fund at prevailing market value in the receiving fund. Overall the total value of shares won’t be impacted. Investors will notice this from statements and income values. The affected funds are as follows:

  1. International Bond Fund
  2. Corporate Bond Fund
  3. Gilt Fund
  4. High Income Bond Fund
  5. Strategic Income Fund.

The change we have made has not resulted in any longer term negative impacts and are reflective of interest rates available in bond markets at the current time. The funds are therefore reflecting an income yield reduction that would have occurred over time, but on an accelerated basis. In other words, a more gradual reduction would have been seen without these changes, and the income levels noted would have been achieved anyway.


Additional information

If the vote is successful and regular payments are normally made between 1st and 5th of the month to one of the affected fixed interest funds in either the Scottish Widows Tracker and Specialist Investment Funds ICVC or the Scottish Widows UK and Income Investment Funds ICVC, the regular payment will be collected on the 6th of the month in October 2020. After October, payments will return to their usual date.

We’re offering the option to switch investment free of charge into another fund or funds within our fund range. For details on how to do this for investment in a:


Life and Pension investors

Several of our Life and Pension Funds invest via the OEIC funds listed in the table above.

Changes we proposed making to some of our fixed interest and multi-asset OEIC funds were approved by OEIC and ISA customers on the 4th of September 2020.

The successful vote means that we will be making the changes outlined above. We are also taking this opportunity to update the aims of the affected life and pension funds, to explain they invest via the OEIC and to give detail on how the OEIC fund is invested. We have detailed the funds and their updated aims below in table 1.

There are a further 6 life and pension funds which don’t invest via the OEIC funds. We are making the same change to these funds, so will add derivatives to the funds which invest in fixed interest securities (also known as bonds) and will add a wider range of asset classes and strategies to the multi asset funds. We’ll write to investors in these 6 funds detailed in table 2 below shortly after the 7th September to notify them of the changes we are making.

There is no action required by investors in any of our Life and Pension Funds.


Fixed interest funds

From 5th October 2020, our fund managers will be able to invest using derivatives. This gives them greater flexibility when seeking to meet the funds’ aims. Derivatives have a number of benefits but also have risks. Overall, the use of derivatives isn’t intended to change the risk profile of the funds. We’ll also add bonds and other fixed interest securities from emerging market countries to some of the funds. The changes being made will result in no changes to the funds’ risk profile.


Multi asset funds

From the 5th October our fund managers will be able to invest in a wider range of asset classes and strategies, such as absolute return funds and funds from other investment managers. (Absolute return funds aim to provide positive returns regardless of market conditions, although this isn’t guaranteed.) The changes will give our fund managers greater flexibility when seeking to meet the funds’ aims. They might also use derivatives to pursue their investment objectives. Overall, the use of derivatives isn’t intended to change the risk profile of the funds. We’ll also add bonds and other fixed interest securities from emerging market countries to some of the funds. The changes being made will result in no changes to the funds’ risk profile.


Table 1

The Life and Pension Funds in the following list invest in the underlying assets via our fixed interest and multi-asset OEIC funds. These Life and Pension Funds will continue to invest via the OEIC funds and there is no action needed for Life and Pension investors. We will not be writing to investors in these funds.

Fund Name Fund Type New Fund Aim
SWIS Index Linked Fund Life

The fund invests via the SWUTM UK Index Linked Gilt OEIC Fund. The OEIC Fund aim is:

The Fund aims to provide income and capital growth by investing in UK government Index-Linked bonds (gilts).

The benchmark index for the Fund is the FTSE Actuaries Government Securities UK Index Linked TR All Stocks (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK government Index-Linked bonds. The Fund may also invest in other types of index-linked securities, including those issued by other governments as well as supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

In addition the Fund may invest in collective investment schemes, including those managed by the ACD and its associates, cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

SWIS Overseas Bond Fund Life

The fund invests via the SWUTM International Bond OEIC Fund. The OEIC Fund aim is:

To give an income and also capital growth by investing in global fixed interest and index-linked securities.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the JPM Global Government Bond Index (the “Index”) by 0. 75% per annum on a rolling 3 year basis, before deduction of fees.

The Fund will invest in fixed interest and index linked securities from global markets.

At least 50% of the securities will be in Sterling and non-Sterling investment grade government bonds including supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations).

The Fund may also invest in Sterling and non-Sterling investment grade corporate bonds, index linked government and supranational bonds, non-investment grade bonds, emerging market bonds, cash (including cash like investments) asset backed securities such as securitised loans and covered bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The Fund Manager may adjust the currency exposure of the Fund by using derivatives.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result, the Fund’s performance may differ from the Index.

SWIS UK Gilt Fund Life

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

SWIS Corporate Bond Fund Life

The fund invests via the HIFML Corporate Bond OEIC Fund. The OEIC Fund aim is:

To provide above average income by investing in investment grade corporate bonds and other fixed interest securities.

The Fund is actively managed by the Fund Manager who selects a portfolio to provide a running yield with the aim of outperforming the gross redemption yield of the iBOXX Sterling Corporate and Collateralised Index (the “Index”) by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a diversified portfolio of investment grade corporate bonds. At least 70% of the Fund will be invested in Sterling denominated investment grade corporate bonds.

The Fund may also invest in Sterling and non-Sterling denominated non-investment grade corporate bonds; government and supranational bonds (these are a type of security issued by two or more governmental organisations); covered bonds; emerging market bonds and asset backed securities such as securitised loans.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

The Fund may invest in cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

80% of the Fund’s assets will be sterling denominated or hedged back to sterling. The extent of hedging of the remaining 20% is at the discretion of the Fund Manager. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

SWIS International Fixed Income Fund Life

The fund invests via the SWUTM International Bond OEIC Fund. The OEIC Fund aim is:

To give an income and also capital growth by investing in global fixed interest and index-linked securities.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the JPM Global Government Bond Index (the “Index”) by 0. 75% per annum on a rolling 3 year basis, before deduction of fees.

The Fund will invest in fixed interest and index linked securities from global markets.

At least 50% of the securities will be in Sterling and non-Sterling investment grade government bonds including supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations).

The Fund may also invest in Sterling and non-Sterling investment grade corporate bonds, index linked government and supranational bonds, non-investment grade bonds, emerging market bonds, cash (including cash like investments) asset backed securities such as securitised loans and covered bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The Fund Manager may adjust the currency exposure of the Fund by using derivatives.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result, the Fund’s performance may differ from the Index.

Scottish Widows Corporate Bond Fund Life

The fund invests via the SWUTM Corporate Bond OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing in investment grade corporate bonds and other fixed interest securities.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the iBOXX Sterling Corporate and Collateralised Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a diversified portfolio of investment grade corporate bonds. At least 70% of the Fund will be invested in Sterling denominated investment grade corporate bonds.

The Fund may also invest in Sterling and non-Sterling denominated non-investment grade corporate bonds; government and supranational bonds (these are a type of security issued by two or more governmental organisations); covered bonds; emerging market bonds and asset backed securities such as securitised loans.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

80% of the Fund’s assets will be sterling denominated or hedged back to sterling. The extent of hedging of the remaining 20% is at the discretion of the Fund Manager.

Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows Fixed Interest Life

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows High Income Bond Life

The fund invests via the SWUTM High Income OEIC Fund. The OEIC Fund aim is:

To provide a high level of income and the potential for capital growth by investing in non-investment grade corporate bonds and other fixed interest securities denominated in Euros, Sterling or US Dollars.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Bloomberg Barclays Global High Yield Index hedged back to Sterling Index by 1.5% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in non-investment grade corporate bonds denominated in Euros, Sterling or US Dollars.

The Fund may also invest in government bonds, investment grade corporate bonds, supranational bonds (these are a type of security issued by two or more governmental organisations), covered bonds , emerging market bonds and asset backed securities such as securitised loans denominated in Euros, Sterling or US Dollars. Additionally the Fund may invest in cash and cash like investments.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The Fund’s investments may be hedged to achieve the currency exposure that reflects the currency composition of the Index. . Hedging involves the use of derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows Indexed Stock Fund Life

The fund invests via the SWUTM UK Index Linked Gilt OEIC Fund. The OEIC Fund aim is:

The Fund aims to provide income and capital growth by investing in UK government Index-Linked bonds (gilts).

The benchmark index for the Fund is the FTSE Actuaries Government Securities UK Index Linked TR All Stocks (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK government Index-Linked bonds. The Fund may also invest in other types of index-linked securities, including those issued by other governments as well as supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

In addition the Fund may invest in collective investment schemes, including those managed by the ACD and its associates, cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management.  They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index.  As a result the Fund’s performance may differ from the Index.

Scottish Widows Strategic Income Bond Life

The fund invests via the SWUTM Strategic Income OEIC Fund. The OEIC Fund aim is:

To provide income with some potential for capital growth by investing in a diversified portfolio of fixed interest securities.

The benchmark for the Fund is a blended return of the iBOXX Sterling Corporate and Collateralised Index and Bloomberg Barclays Pan European High Yield Index ex Financials (Issuer Constrained) Index (the “Benchmark”). 70% of the Benchmark will consist of the iBOXX Sterling Corporate and Collateralised Index and 30% of the Bloomberg Barclays Pan European High Yield Index ex Financials (Issuer Constrained) Index.

The Fund is actively managed by the Investment Adviser who chooses investments with the aim of outperforming the Benchmark by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 55% of the Fund will invest in investment grade corporate bonds denominated in Sterling or Euros. The Fund may also invest in corporate bonds denominated in other currencies, government bonds, non-investment grade corporate bonds, covered bonds, supranational bonds (these are a type of security issued by two or more governmental organisations), emerging market bonds, asset backed securities such as securitised loans, cash and cash like investments. Not more than 45% of the Fund can be invested in non-investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they will be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Benchmark. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Benchmark and providing the Fund Manager with flexibility to seek to outperform the Benchmark. As a result the Fund’s performance may differ from the Benchmark.

Halifax Gilt and Fixed Interest Fund Life

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Halifax Cautious Managed Fund Life

The fund invests via the HIFML Cautious Managed OEIC Fund. The OEIC Fund aim is:

To achieve growth by investing in an actively managed range of shares and fixed interest securities.

The portion of the Fund in shares will be invested passively In the UK share market. These investments will consist of large medium and small sized UK companies. The fixed interest securities portion of the Fund will be actively managed and at least 80% of this will consist of investment grade sterling and euro denominated securities including gilts and corporate bonds. The Fund may also include non-investment grade fixed interest securities.

The Fund may also invest in cash.

A proportion of the shares, fixed interest and cash exposure may be achieved by investing in collective investment schemes including those managed by the HBOS Investment Fund Managers Limited (HIFML) and its associates. These may be actively or passively managed.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management). This includes using derivatives to make short term changes to the permitted currency exposures of the Fund.

St.Andrew’s Life Gilt and Fixed Interest Fund Life

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Halifax Life Index-Linked Gilt Fund Life

The fund invests via the SWUTM UK Index Linked Gilt OEIC Fund. The OEIC Fund aim is:

The Fund aims to provide income and capital growth by investing in UK government Index-Linked bonds (gilts).

The benchmark index for the Fund is the FTSE Actuaries Government Securities UK Index Linked TR All Stocks (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK government Index-Linked bonds. The Fund may also invest in other types of index-linked securities, including those issued by other governments as well as supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

In addition the Fund may invest in collective investment schemes, including those managed by the ACD and its associates, cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Halifax Fixed Interest Fund Life

The fund invests via the SWUTM Corporate Bond OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing in investment grade corporate bonds and other fixed interest securities.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the iBOXX Sterling Corporate and Collateralised Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a diversified portfolio of investment grade corporate bonds. At least 70% of the Fund will be invested in Sterling denominated investment grade corporate bonds.

The Fund may also invest in Sterling and non-Sterling denominated non-investment grade corporate bonds; government and supranational bonds (these are a type of security issued by two or more governmental organisations); covered bonds; emerging market bonds and asset backed securities such as securitised loans.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

80% of the Fund’s assets will be sterling denominated or hedged back to sterling. The extent of hedging of the remaining 20% is at the discretion of the Fund Manager.

Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Formerly Lloyds TSB Island Equity Fund Life

The fund invests via the SWUTM Stockmarket Growth OEIC Fund. The OEIC Fund aim is:

To provide capital growth by investing in other funds to provide exposure to a range of different asset classes.

At least 60% of the Fund will provide exposure to shares. This can include funds which may consist of UK, overseas and emerging markets shares.

A maximum of 40% of the Fund will provide exposure to fixed interest securities. This may include sterling denominated investment grade bond funds which may consist of corporate, government and index-linked bonds. The Fund may also invest in overseas and emerging markets corporate and government bond funds, and high yield bond funds.

A maximum of 17% of the Fund will provide exposure to property. This may include UK and overseas property funds.

The Fund may also provide exposure to absolute return strategies, commodities and (directly or indirectly) cash and cash like investments.

The funds may be actively or passively managed and may include up to 100% investment in funds which have been or are currently managed or advised by Scottish Widows Unit Trust Managers (SWUTM) and/or an associate of SWUTM.

Derivatives may be used for the purpose of managing the Fund in a way that is designed to reduce risk or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The funds in which the Fund invests may use techniques which are not employed by the Fund itself, for example the use of derivatives for investment purposes and stock lending.

Formerly Lloyds TSB Fixed Interest Fund Life

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Clerical Medical Global Bond Fund Pension

The fund invests via the SWUTM International Bond OEIC Fund. The OEIC Fund aim is:

To give an income and also capital growth by investing in global fixed interest and index-linked securities.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the JPM Global Government Bond Index (the “Index”) by 0. 75% per annum on a rolling 3 year basis, before deduction of fees.

The Fund will invest in fixed interest and index linked securities from global markets.

At least 50% of the securities will be in Sterling and non-Sterling investment grade government bonds including supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations).

The Fund may also invest in Sterling and non-Sterling investment grade corporate bonds, index linked government and supranational bonds, non-investment grade bonds, emerging market bonds, cash (including cash like investments) asset backed securities such as securitised loans and covered bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The Fund Manager may adjust the currency exposure of the Fund by using derivatives.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result, the Fund’s performance may differ from the Index.

Clerical Medical Index Linked Fund Pension

The fund invests via the SWUTM UK Index Linked Gilt OEIC Fund. The OEIC Fund aim is:

The Fund aims to provide income and capital growth by investing in UK government Index-Linked bonds (gilts).

The benchmark index for the Fund is the FTSE Actuaries Government Securities UK Index Linked TR All Stocks (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK government Index-Linked bonds. The Fund may also invest in other types of index-linked securities, including those issued by other governments as well as supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

In addition the Fund may invest in collective investment schemes, including those managed by the ACD and its associates, cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Clerical Medical UK Gilt Fund Pension

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Clerical Medical Corporate Bond Fund Pension

The fund invests via the HIFML Corporate Bond OEIC Fund. The OEIC Fund aim is:

To provide above average income by investing in investment grade corporate bonds and other fixed interest securities.

The Fund is actively managed by the Fund Manager who selects a portfolio to provide a running yield with the aim of outperforming the gross redemption yield of the iBOXX Sterling Corporate and Collateralised Index (the “Index”) by 0. 75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a diversified portfolio of investment grade corporate bonds. At least 70% of the Fund will be invested in Sterling denominated investment grade corporate bonds.

The Fund may also invest in Sterling and non-Sterling denominated non-investment grade corporate bonds; government and supranational bonds (these are a type of security issued by two or more governmental organisations); covered bonds; emerging market bonds and asset backed securities such as securitised loans.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

The Fund may invest in cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

80% of the Fund’s assets will be sterling denominated or hedged back to sterling. The extent of hedging of the remaining 20% is at the discretion of the Fund Manager. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

Clerical Medical International Fixed Income Fund Pension

The fund invests via the SWUTM International Bond OEIC Fund. The OEIC Fund aim is:

To give an income and also capital growth by investing in global fixed interest and index-linked securities.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the JPM Global Government Bond Index (the “Index”) by 0. 75% per annum on a rolling 3 year basis, before deduction of fees.

The Fund will invest in fixed interest and index linked securities from global markets.

At least 50% of the securities will be in Sterling and non-Sterling investment grade government bonds including supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations).

The Fund may also invest in Sterling and non-Sterling investment grade corporate bonds, index linked government and supranational bonds, non-investment grade bonds, emerging market bonds, cash (including cash like investments) asset backed securities such as securitised loans and covered bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The Fund Manager may adjust the currency exposure of the Fund by using derivatives.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result, the Fund’s performance may differ from the Index.

Formerly Lloyds TSB Fixed Interest Fund Pension

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows PM UK Long-Dated Corporate Bond Fund Pension

The fund invests via the SWUTM Corporate Bond PPF OEIC Fund. The OEIC Fund aim is:

To provide a return consistent with the variations in market annuity rates with the aim of reducing annuity conversion risk.

The benchmark index for the Fund is the iBoxx Sterling: Non Gilt Over 15 Year index (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in long dated Sterling denominated investment grade corporate bonds.

In aiming to reduce the risk of annuity conversions, the Fund Manager will refer to target duration and credit ratings as part of the fund management strategy. The targets will be identified at the Fund Manager’s discretion and may change in line with market annuity rates and fixed interest yields.

The Fund may also invest in other investment grade corporate bonds, government bonds, supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and emerging market bonds. In addition the Fund may invest in cash and cash like investments.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they will be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

The Fund does not provide any guarantee of the level of pension in retirement or the cost of buying that pension. It may not be effective for those who intend to buy an inflation-linked pension and does not provide protection against changes in the cost of buying a pension that arise from changes in life expectancy.

Halifax Gilt and Fixed Interest Fund Pension

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Halifax Index-Linked Gilt Fund Pension

 

The fund invests via the SWUTM UK Index Linked Gilt OEIC Fund. The OEIC Fund aim is:

The Fund aims to provide income and capital growth by investing in UK government Index-Linked bonds (gilts).

The benchmark index for the Fund is the FTSE Actuaries Government Securities UK Index Linked TR All Stocks (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK government Index-Linked bonds. The Fund may also invest in other types of index-linked securities, including those issued by other governments as well as supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

In addition the Fund may invest in collective investment schemes, including those managed by the ACD and its associates, cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows Corporate Bond Fund Pension

The fund invests via the SWUTM Corporate Bond OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing in investment grade corporate bonds and other fixed interest securities.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the iBOXX Sterling Corporate and Collateralised Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a diversified portfolio of investment grade corporate bonds. At least 70% of the Fund will be invested in Sterling denominated investment grade corporate bonds.

The Fund may also invest in Sterling and non-Sterling denominated non-investment grade corporate bonds; government and supranational bonds (these are a type of security issued by two or more governmental organisations); covered bonds; emerging market bonds and asset backed securities such as securitised loans.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

80% of the Fund’s assets will be sterling denominated or hedged back to sterling. The extent of hedging of the remaining 20% is at the discretion of the Fund Manager.

Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows Fixed Interest Pension

The fund invests via the SWUTM Gilt OEIC Fund. The OEIC Fund aim is:

To provide income and the potential for capital growth by investing UK Government bonds (gilts).

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE Actuaries UK Conventional Gilts All Stocks Index by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows High Income Bond Pension

The fund invests via the SWUTM High Income OEIC Fund. The OEIC Fund aim is:

To provide a high level of income and the potential for capital growth by investing in non-investment grade corporate bonds and other fixed interest securities denominated in Euros, Sterling or US Dollars.

The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Bloomberg Barclays Global High Yield Index hedged back to Sterling Index by 1.5% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in non-investment grade corporate bonds denominated in Euros, Sterling or US Dollars.

The Fund may also invest in government bonds, investment grade corporate bonds, supranational bonds (these are a type of security issued by two or more governmental organisations), covered bonds , emerging market bonds and asset backed securities such as securitised loans denominated in Euros, Sterling or US Dollars. Additionally the Fund may invest in cash and cash like investments.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The Fund’s investments may be hedged to achieve the currency exposure that reflects the currency composition of the Index. . Hedging involves the use of derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows Indexed Stock Fund Pension

The fund invests via the SWUTM UK Index Linked Gilt OEIC Fund. The OEIC Fund aim is:

The Fund aims to provide income and capital growth by investing in UK government Index-Linked bonds (gilts).

The benchmark index for the Fund is the FTSE Actuaries Government Securities UK Index Linked TR All Stocks (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in a portfolio of UK government Index-Linked bonds. The Fund may also invest in other types of index-linked securities, including those issued by other governments as well as supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

In addition the Fund may invest in collective investment schemes, including those managed by the ACD and its associates, cash and cash like investments.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they may be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

Scottish Widows Pension Protector Fund Pension

The fund invests via the SWUTM Corporate Bond PPF OEIC Fund. The OEIC Fund aim is:

To provide a return consistent with the variations in market annuity rates with the aim of reducing annuity conversion risk.

The benchmark index for the Fund is the iBoxx Sterling: Non Gilt Over 15 Year index (the “Index”). The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the Index by 0.35% per annum on a rolling 3 year basis, before deduction of fees.

At least 80% of the Fund will invest in long dated Sterling denominated investment grade corporate bonds.

In aiming to reduce the risk of annuity conversions, the Fund Manager will refer to target duration and credit ratings as part of the fund management strategy. The targets will be identified at the Fund Manager’s discretion and may change in line with market annuity rates and fixed interest yields.

The Fund may also invest in other investment grade corporate bonds, government bonds, supranational bonds (these are a type of fixed interest security issued by two or more governmental organisations) and emerging market bonds. In addition the Fund may invest in cash and cash like investments.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Where the Fund’s investments are non-Sterling denominated they will be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Index. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Index and providing the Fund Manager with flexibility to seek to outperform the Index. As a result the Fund’s performance may differ from the Index.

The Fund does not provide any guarantee of the level of pension in retirement or the cost of buying that pension. It may not be effective for those who intend to buy an inflation-linked pension and does not provide protection against changes in the cost of buying a pension that arise from changes in life expectancy.

Scottish Widows Strategic Income Bond Pension

The fund invests via the SWUTM Strategic Income OEIC Fund. The OEIC Fund aim is:

To provide income with some potential for capital growth by investing in a diversified portfolio of fixed interest securities.

The benchmark for the Fund is a blended return of the iBOXX Sterling Corporate and Collateralised Index and Bloomberg Barclays Pan European High Yield Index ex Financials (Issuer Constrained) Index (the “Benchmark”). 70% of the Benchmark will consist of the iBOXX Sterling Corporate and Collateralised Index and 30% of the Bloomberg Barclays Pan European High Yield Index ex Financials (Issuer Constrained) Index.

The Fund is actively managed by the Investment Adviser who chooses investments with the aim of outperforming the Benchmark by 0.75% per annum on a rolling 3 year basis, before deduction of fees.

At least 55% of the Fund will invest in investment grade corporate bonds denominated in Sterling or Euros. The Fund may also invest in corporate bonds denominated in other currencies, government bonds, non-investment grade corporate bonds, covered bonds, supranational bonds (these are a type of security issued by two or more governmental organisations), emerging market bonds, asset backed securities such as securitised loans, cash and cash like investments. Not more than 45% of the Fund can be invested in non-investment grade corporate bonds.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment objective. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management). Where the Fund’s investments are non-Sterling denominated they will be hedged back to Sterling. Hedging involves the use of the derivatives to offset the effect of currency exchange rates.

The Fund Manager is limited in the extent to which positions can vary to those of the Benchmark. The limits help to provide a balance between the spread of assets within the Fund and risk management. They also provide a balance between the amount the Fund can vary from the Benchmark and providing the Fund Manager with flexibility to seek to outperform the Benchmark. As a result the Fund’s performance may differ from the Benchmark.


Table 2

Fund Name Fund Type New Fund Aim
SWIS Gilt and Fixed Interest Life

The Fund aims to provide capital growth by investing in a range of fixed interest securities.

The Fund will include Sterling investment grade corporate and government bonds.

The Fund may also invest in Sterling and non-Sterling: denominated government and supranational bonds (these are a type of security issued by two or more governmental organisations); index-linked bonds; and non-investment grade bonds. In addition the Fund may invest in non-Sterling investment grade bonds and asset backed securities such as securitised loans.

The Fund may also include cash and cash like investments.

Investment in the asset classes may be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment aim. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

A proportion of the exposure to fixed interest securities may also be achieved by investing in other funds. These may be actively or passively managed.

Derivatives may also be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Clerical Medical UK Government Long Maturity Pension

The Fund aims to provide capital growth by investing in UK Government bonds (gilts).

At least 80% of the Fund will invest in UK Government bonds (gilts). The Fund may also invest in index-linked government bonds, investment grade corporate bonds and supranational bonds (these are a type of security issued by two or more governmental organisations). A small portion of the Fund may be invested in bonds denominated in currencies other than Sterling.

Investment in the asset classes will be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment aim. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

The Fund may also include a small proportion in cash and cash like investments.

A small proportion of the exposure to bonds may be achieved by investing in other funds.

Derivatives may also be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Clerical Medical Gilt and Fixed Interest Pension

The Fund aims to provide capital growth by investing in a range of fixed interest securities.

The Fund will include Sterling investment grade corporate and government bonds.

The Fund may also invest in Sterling and non-Sterling: denominated government and supranational bonds (these are a type of security issued by two or more governmental organisations); index-linked bonds; and non-investment grade bonds. In addition the Fund may invest in non-Sterling investment grade bonds and asset backed securities such as securitised loans.

The Fund may also include cash and cash like investments.

Investment in the asset classes may be direct, and indirect using derivatives as an additional way for the Fund to invest with the aim of meeting the Fund’s investment aim. The extent of derivative use for investment purposes is dependent on market conditions and will be limited as the intention is that this should not change the risk profile of the Fund.

A proportion of the exposure to fixed interest securities may also be achieved by investing in other funds. These may be actively or passively managed.

Derivatives may also be used for the purpose of managing the Fund in a way that is designed to reduce risk (for example by hedging) or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

Balanced Growth Portfolio Pension

To provide capital growth by investing in other funds to provide exposure to a range of different asset classes.

Between 30% and 70% of the Fund will provide exposure to shares. This can include funds which may consist of UK, overseas and emerging markets shares.

Between 20% and 60% of the Fund will provide exposure to fixed interest securities. This will include sterling denominated investment grade bond funds which may consist of corporate, government and index-linked bonds. It may also consist of overseas, including emerging markets, corporate and government bond funds, and high yield bond funds.

A maximum of 17% of the Fund will provide exposure to property. This may include UK and overseas property funds.

The Fund may also provide exposure to absolute return strategies*, commodities and (directly or indirectly) cash and cash like investments.

Scottish Widows determines the percentage of the Fund normally allocated to each asset class based on its medium to long term outlook for that asset class. Scottish Widows may review and change this from time to time based on their view at that time.

The Fund Manager may make shorter term changes to the above, by allocating more or less to specific asset classes, based on their short term view of the asset class.

The underlying funds used by the Fund may be managed on an active or passive** basis and can include those managed by Scottish Widows and its associates.

Derivatives may be used in a way that is designed to reduce risk or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The funds in which the Fund invests may use techniques which are not employed by the Fund itself, for example the use of derivatives for investment purposes and stock lending.

*Absolute return strategies aim to provide positive returns regardless of market conditions.

** Active management is where the fund manager seeks to add value by making decisions on which investments to buy, sell or hold depending on, for example company, market or economic factors.

Passive management is where the fund manager aims to match a benchmark and will buy, sell or hold investments depending on the components of that benchmark.

Strategic Growth Portfolio Pension

To provide capital growth by investing in other funds to provide exposure to a range of different asset classes.

At least 60% of the Fund will provide exposure to shares. This can include funds which may consist of UK, overseas and emerging markets shares.

A maximum of 40% of the Fund will provide exposure to fixed interest securities. This will include sterling denominated investment grade bond funds which may consist of corporate, government and index-linked bonds. The Fund may also consist of overseas, including emerging markets, corporate and government bond funds, and high yield bond funds.

A maximum of 17% of the Fund will provide exposure to property. This may include UK and overseas property funds.

The Fund may also provide exposure to absolute return strategies*, commodities and (directly or indirectly) cash and cash like investments.

Scottish Widows determines the percentage of the Fund normally allocated to each asset class based on its medium to long term outlook for that asset class. Scottish Widows may review and change this from time to time based on their view at that time.

The Fund Manager may make shorter term changes to the above, by allocating more or less to specific asset classes, based on their short term view of the asset class.

The underlying funds used by the Fund may be managed on an active or passive** basis and can include those managed by Scottish Widows and its associates.

Derivatives may be used in a way that is designed to reduce risk or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The funds in which the Fund invests may use techniques which are not employed by the Fund itself, for example the use of derivatives for investment purposes and stock lending.

*Absolute return strategies aim to provide positive returns regardless of market conditions.

** Active management is where the fund manager seeks to add value by making decisions on which investments to buy, sell or hold depending on, for example company, market or economic factors.

Passive management is where the fund manager aims to match a benchmark and will buy, sell or hold investments depending on the components of that benchmark.

Stockmarket Growth Portfolio Pension

To provide capital growth by investing in other funds to provide exposure to a range of different asset classes.

At least 60% of the Fund will provide exposure to shares.  This can include funds which may consist of UK, overseas and emerging markets shares.

A maximum of 40% of the Fund will provide exposure to fixed interest securities. This may include sterling denominated investment grade bond funds which may consist of corporate, government and index-linked bonds. The Fund may also consist of overseas, including emerging markets, corporate and government bond funds, and high yield bond funds.

A maximum of 17% of the Fund will provide exposure to property. This may include UK and overseas property funds.

The Fund may also provide exposure to absolute return strategies*, commodities and (directly or indirectly) cash and cash like investments.

Scottish Widows determines the percentage of the Fund normally allocated to each asset class based on its medium to long term outlook for that asset class. Scottish Widows may review and change this from time to time based on their view at that time.

The Fund Manager may make shorter term changes to the above, by allocating more or less to specific asset classes, based on their short term view of the asset class.

The underlying funds used by the Fund may be managed on an active or passive** basis and can include those managed by Scottish Widows and its associates.

Derivatives may be used in a way that is designed to reduce risk or cost and/or generate extra income or growth (often referred to as efficient portfolio management).

The funds in which the Fund invests may use techniques which are not employed by the Fund itself, for example the use of derivatives for investment purposes and stock lending.

*Absolute return strategies aim to provide positive returns regardless of market conditions.

** Active management is where the fund manager seeks to add value by making decisions on which investments to buy, sell or hold depending on, for example company, market or economic factors.

Passive management is where the fund manager aims to match a benchmark and will buy, sell or hold investments depending on the components of that benchmark.

Following a review of investment strategy, linked to the introduction of a new Responsible Investment policy, we have decided to stop our securities lending programme. Securities lending meant that shares and other securities held by a fund could be loaned to other firms for a fee. Based on historic activity levels and anticipated future opportunities, this decision is not expected to make a material impact on returns to the funds.

We regularly review and adapt our pension funds as the market environment and our longer-term outlook changes, and as we see new opportunities for customers emerging.

It’s clear the investment outlook is shifting, exacerbated by the Covid-19 impact, and we expect lower projected returns and potentially continued volatility. So we’re introducing a number of asset allocation changes to the Scottish Widows Pension Portfolio Funds and Scottish Widows Retirement Portfolio Funds which we believe will mean they’re better equipped to overcome these challenges.


Funds the changes apply to

  • SW Pension Portfolio 1
  • SW Pension Portfolio 2
  • SW Pension Portfolio 3
  • SW Pension Portfolio 4
  • SW Pension Portfolio A
  • SW Pension Portfolio B
  • SW Pension Portfolio C
  • SW Retirement Portfolio 10-40
  • SW Retirement Portfolio 30-60
  • SW Retirement Portfolio 50-80
  • SW Retirement Portfolio 70-100

We believe asset allocation has the biggest impact on the long-term performance of multi-asset funds. It involves dividing a fund’s investments among different asset categories, such as equities (also known as shares), bonds, property etc. Our asset allocation team is responsible for selecting the assets we use and combining them into what they determine is the most effective blend. They also decide on the allocations between different market segments (e.g. US equities versus Emerging Market equities).

The asset allocation changes we’re introducing represent our longer-term view of the potential returns from different asset types over the lifetime of our funds. We’re aiming to deliver improved investment returns for the same level of risk and at no additional charge by:

  • Introducing a new asset allocation approach for equities
  • Diversifying the investments in the funds into a wider range of asset types
  • Introducing currency hedging on a portion of our overseas equities
  • Integrating environmental, social and governance (ESG) considerations

We’ve worked hard with our fund manager partners to ensure we can make these enhancements without any increase in charge to customers. The changes will be implemented in phases (from early Q3 2020) and will be completed by Q4 2020.


Introducing a new asset allocation approach for equities

In common with many pension providers, our funds currently hold a significant proportion in UK equities – often called a “home bias”. It has generally been the view that investors may feel more comfortable about their home market and be more optimistic about their domestic economy.

As a result, we’ve a higher concentration in UK equities than an index such as the MSCI World Index. This type of index is comprised of the largest companies by the value of their shares or “market-cap”. This means countries like the UK will have a lower weighting in the index because it has fewer big companies in terms of the value of their shares, and a high weighting in regions like the US which has some of the world’s biggest companies by share value.

We’ve taken steps to gradually reduce the UK equity exposure in our funds over the years and our Pension Portfolio Funds and Retirement Portfolio Funds currently have just under 30% of their equity allocation in UK equities. We now consider a further reduction to around 20% achieves an appropriate balance between our customers’ preference to be ‘overweight’ to their home market and a global market cap weight.

In addition, we are amending our approach to overseas equities weightings. We currently allocate to overseas markets purely on the basis of expected contribution to risk and return. As such, our funds deviate significantly from a market-cap benchmark. Our starting point will be to allocate regional weights on a pro-rata market-cap (ex-UK) basis and adjust from that position based on our long-term return assumptions for each region.


Diversifying the investments in the funds into a wider range of asset types

Our latest review tested how a change in our asset allocation could affect future returns in a broad range of investment scenarios under different potential future economic and market conditions. Our asset allocation team considered the full range of available asset classes, then refined the list to those we believed could add most value for the same level of risk. This testing has resulted in the inclusion of the following new asset classes:

  • An allocation to Emerging Market Government Debt (EMGD). These are bonds issued by governments in emerging market countries (those with developing economies) in both US dollars and local currencies. The investment case for EMGD can include higher yield and potentially higher income, as well as adding a diversification benefit.
  • An allocation to Global Real Estate Investment Trusts (REITs). REITs are publicly-traded companies that own, operate or develop income-producing property, such as apartment buildings or shopping centres, which generate rent. This asset class is something of a hybrid of property and equities, offering the benefit of exposure to the property sector, with the liquidity of equities. REITs act as a diversifier and often generate reliable income.
  • A small allocation to Cash improved the risk characteristics of the portfolios without having a material impact on potential growth, as well as increasing liquidity.

Introducing currency hedging on a portion of our overseas equities

Currency movements can play a substantial role in the returns of a multi-asset portfolio. Foreign currency ‘hedging’ tries to reduce the risk that arises from future adverse movements in an exchange rate between Sterling and a foreign currency. The global bonds in our Pension Portfolio and Retirement Portfolio funds are already hedged to sterling. We will now be adding currency hedging for around 50% of our overseas developed market equity exposure to help optimise returns in flat or more volatile markets. This provides an overall reduction in risk, which means we can achieve greater diversification with the other asset classes.


Integrating environmental, social and governance (ESG) considerations

As environmental, social and governance (ESG) risks and opportunities become better researched and understood, it is clear that these factors can have a financial impact on investment portfolios. Our customers look to us to exercise our judgement on the most appropriate way of investing over the long term. So where we believe ESG factors pose risks to their investments, or offer potential opportunities, we will incorporate them into our decision-making.

We’re taking our next step towards integrating ESG considerations into our pension funds by supporting the transition to a low-carbon economy. We’ll be achieving this by investing 10% of the equities allocation in our Pension Portfolio Funds and Retirement Portfolio Funds into a new fund – the BlackRock ACS Climate Transition World Equity Fund. We’ve collaborated with BlackRock on the design of the fund and it delivers on the ESG investment themes that most resonate with pension savers according to research we recently carried out among 18-60 year olds.

Through this fund, we’ll be backing businesses that decrease carbon emissions, increase clean technology revenue, reduce water consumption and improve waste management.

We’ve restricted trading in our life and pension property funds.

The extraordinary events of Covid-19 are having an impact on the property market as surveyors aren’t able to accurately value properties. This has resulted in fund managers suspending dealing in their property funds to protect customers’ interests.

Our life and pension property funds invest in some of these suspended funds so we’ve had to restrict withdrawals from, and payments into, our property funds.

We’re writing to all affected customers. Our other funds are not affected by these restrictions.

What this means for customers

Making withdrawals

We’re deferring withdrawals from our life and pension property funds, apart from those listed below. That means withdrawals will be deferred until the fund restrictions are lifted, or from 6 months of receipt of the instructions (from 12 months for policies beginning with ‘ZU’), whichever is sooner.

The exceptions to this are:

  • Critical illness claims
  • Maturities
  • Death claims
  • Retirement claims
  • Income withdrawals from ‘drawdown’ plans
  • Annuity payments (from investment-linked annuities)

Paying in

Pensions (except Retirement Account and policies beginning with ‘ZU’) and life products

  • Any regular contributions which are currently being invested in our life and pension property funds will continue to be invested in those funds.
  • The managers of the suspended property funds will continue to calculate an indicative fund value and provide us with daily prices for their funds. These will be used to calculate a price for the Scottish Widows life and pension property funds, which will then be reflected in the investment of any ongoing regular contributions.
  • We’re not accepting new instructions to set up regular payments, increases to existing regular payments, or single payments into our life and pension property funds. If we receive any such requests, we’ll ask customers to choose an alternative fund or we’ll refund the payment(s). The exception is our lifestyle strategies where investments will continue to be automatically switched into the property funds where applicable.
  • Any pension transfer requests into the affected funds will be rejected.

Retirement Account

For Retirement Account customers, any regular, single or transfer payments to be invested into our pension property funds will be redirected to the Control Account.

Policies beginning with ‘ZU’

Regular, single and transfer payments into our pension property funds will be redirected to an alternative fund or account depending on the type of policy:

  • Group Self Invested Personal Pension (GSIPP)
    Payments will be redirected to a cash account until we’re instructed otherwise by the customer or their adviser.
  • Group Stakeholder Plan (GSP)
    Payments will be redirected to a money market fund until we’re instructed otherwise by the customer or their adviser.
  • Master Trust
    Payments will be redirected to the scheme’s default lifestyle, as instructed by the Master Trust’s scheme trustees.
  • Occupational Money Purchase (OMP) and Mercer Master Trust
    Payments will be redirected to a fund selected by the scheme’s trustees.

Automatic rebalancing in lifestyle strategies that invest in the affected property funds will be suspended until normal trading resumes.

Control Account, cash accounts and money market funds

These options are not designed to be used as long-term investments. It’s important for customers to consider reinvesting payments redirected to these investment options in another investment fund or funds.

How long will the trading restrictions last?

The managers of the suspended property funds aim to lift the suspensions when normal market conditions return. Once this happens, we’ll remove our restrictions and reinstate normal trading in our life and pension property funds. We’ll write to all affected customers to let them know.

Japan’s financial markets close on various days throughout the year to mark national holidays. In May, the holidays fall on 3 consecutive days from 4th to 6th May 2020.

What this means for customers

OEICs and ISAs

Our three Japanese OEIC funds, which invest exclusively in Japanese equities, will be unavailable for trading on these dates. These funds are:

  • Halifax Japanese Fund
  • Scottish Widows Japan Growth Fund
  • Scottish Widows Japan Equity Fund

Any investors in these OEICs, including those invested via an ISA, who want to buy or sell ahead of the market closure should submit their instructions before the following cut off points:

Fund Name Time/ Date for Client Instruction to be accepted

Halifax Japanese Fund

11:59hrs Friday 1st May 2020

Scottish Widows Japan Growth

17:00hrs Thursday 30th April 2020

Scottish Widows Japan Equity Fund

17:00hrs Thursday 30th April 2020

Regular Payments

Any regular payments that would normally be invested into the impacted OEIC funds will be processed after the Japanese markets are re-opened.

Other OEIC funds with some exposure to Japanese equities

Customers investing in other OEICs that are not 100% invested in Japanese shares will continue to be able to buy and sell shares in the funds as usual while the markets are closed.

Life and pension investments

Our life and pension customers will be able to transact normally throughout the period, including in funds that invest exclusively in Japanese shares. For these funds, prices will be published as normal.

If your Retirement Account is invested in one or more of the suspended funds through the Retirement Account Fund Supermarket, you won’t be able to buy or sell shares in these funds, including switches between funds, during the suspension period. If you are making regular investments in these funds, these will be redirected to your Control Account. Money held in the Control Account does not currently earn any interest, so you should consider how these amounts should be invested, and may wish to take financial advice.

If you are invested in a fund that’s suspended, we’ll write to you and where possible contact your adviser when the suspension ends. We will also post updates on this page.

These are the Fund Supermarket funds currently suspended:

Fund Date of Suspension

Kames Property Income Feeder Acc

17/03/2020

Kames Property Income Feeder Inc

17/03/2020

Janus Henderson UK Prop PAIF Feeder I Inc

17/03/2020

Janus Henderson UK Prop PAIF Feeder I Acc

17/03/2020

Commercial Lg Inc Feeder Trust I Net Acc

17/03/2020

Commercial Lg Inc Feeder Trust J Net Inc

17/03/2020

Aviva Investors UK Property Feeder 2 Acc

18/03/2020

Aviva Investors UK Property Feeder 2 Inc

18/03/2020

Aberdeen UK Property Feeder UT I AC NAV

18/03/2020

Aberdeen UK Property Feeder UT I INC

18/03/2020

SLI UK Real Estate Feeder Institutnl Acc

18/03/2020

SLI UK Real Estate Feeder P1 Acc

18/03/2020

SLI UK Real Estate Feeder P1 Inc

18/03/2020

SLI UK Real Estate Platform One Acc

18/03/2020

Legal & General UK Property Feeder I Acc

18/03/2020

Legal & General UK Property Feeder I Inc

18/03/2020

Threadneedle UK Prop Aut Tr Feeder 2 Acc

18/03/2020

Threadneedle UK Prop Aut Tr Feeder 2 Inc

18/03/2020

BMO Property Growth & Income I Acc

18/03/2020

BMO Property Growth & Income I Inc

18/03/2020

BMO UK Property Feeder 2 Acc

18/03/2020

BMO UK Property Feeder 2 Inc

18/03/2020

ASI Glbl Rl Est Fd P 1 Acc GBP Unhedged

18/03/2020

ASI Glbl Rl Est Fd P 1 Inc GBP Unhedged

18/03/2020

Q&As

We’ve answered questions you may have about this change.

Read more

Scottish Widows has taken the decision to temporarily suspend all dealing in the following Funds with effect from 12 noon on 17th March 2020:

  • HBOS UK Property Fund
  • Scottish Widows Pooled Property ACS Fund 1
  • Scottish Widows Pooled Property ACS Fund 2

These Funds are available for investment by Scottish Widows life and pension customers. We will issue more information about how these customers are affected as soon as this is available.

The decision has been made to safeguard the interests of customers and has been agreed with the Funds’ depositaries.

Suspension of dealing means we cannot buy, sell, transfer, switch or exchange shares in the Funds until further notice.

To calculate the daily share price of the Funds, the properties owned by the Funds are regularly valued by a Standing Independent Valuer using recognised professional valuation standards. Markets around the world have experienced huge disruption as COVID-19 spreads and trading in the UK property market is being severely impacted. As a result the Funds’ Standing Independent Valuers have informed Aberdeen Standard Investors (ASI), the Investment Advisers to the Funds, that it is not currently possible to provide accurate and reliable valuations for the properties held in the Funds.

It has, therefore, not been possible to produce a price for the Funds which we can say with any confidence reflects the true value of the assets.

To protect the interests of customers, we have suspended dealing in the Funds.

This action reflects the exceptional circumstances in the UK property market and the need to protect customer interests by suspending trading when there is material uncertainty regarding how the assets should be valued. We will aim to lift the suspension as soon as confidence returns to the market and there is more certainty regarding asset valuations, taking into account the best interests of customers.

Various fund managers have announced they are temporarily suspending trading in their property funds because of valuation uncertainty related to the impact of the Coronavirus outbreak. This means we will be unable to buy and sell shares in these funds, during the suspension period.

The following property funds are currently suspended:

  • M&G Property
  • Kames Property Fund
  • L&G UK Property Funds and Feeder Funds
  • Standard Life Investments UK Real Estate Fund
  • Aviva Investors Property Fund
  • Janus Henderson UK Property Fund
  • Aberdeen UK Property Fund
  • Threadneedle UK Property

Some of our plans invest in these funds, and we’re currently considering what action to take in response. We’ll provide an update here shortly. We’re also considering the position for our own Scottish Widows Property Funds and will post updates here when we can.

If you are invested in one of the suspended funds through the Retirement Account Fund Supermarket, you won’t be able to buy or sell shares in these funds, including switches between funds, during the suspension period. If you are making regular investments in these funds, these will be redirected to your Control Account. You should consider how these amounts should be invested, and may wish to take financial advice.

Neil Woodford’s flagship Woodford Equity Income Fund is being wound up. The first tranche of the wind-up proceeds has now been paid out, and the rest of the assets will be sold in further tranches over the coming months. Some Scottish Widows life and pensions customers are invested in this fund through the SW Woodford Equity Income Funds.

We’ve reinvested the amount paid to us on customers’ behalf into the Royal London UK Equity Income Fund, as we previously outlined we would do. We’ve chosen this fund because it also invests in UK company shares, is similar to the closing fund and has lower charges.

This means customers in the SW Woodford Equity Income Fund are temporarily partly invested in the Woodford Equity Income Fund, and partly in the Royal London UK Equity Income Fund.

Each future tranche of cash returned from the former Woodford Equity Income Fund will also be reinvested in the Royal London UK Equity Income Fund until all wind up proceeds from Woodford’s administrators have been received.

At that point we’ll close the SW Woodford Equity Income Fund and switch customers in this fund into the SW Royal London UK Equity Income Fund, free of charge.

We continue to allow customers to switch out of the SW Woodford Equity Income Fund, free of charge, to any other fund in our range. We believe this could remove any uncertainty for customers. Customers should speak to a financial adviser if they are unsure what to do.

Please read The Scottish Widows Pension Funds Investor’s Guide for full details of the Scottish Widows Pension Fund range.

Please read The Scottish Widows Life Funds Investor’s Guide for full details of the Scottish Widows Life Fund range.

We’re making changes to our Balanced, Cautious, Opportunities and Progressive Portfolio Funds. From 28th February 2020:

  • Schroders Investment Management (Schroders) will take over from Aberdeen Asset Investments Limited as the Funds’ Investment Adviser.
  • Scottish Widows Unit Trust Managers Limited (SWUTM) will replace Russell Investments Limited in determining which type and percentage of asset classes the Funds invest in over the medium to long term.
  • Schroders will select the Funds’ underlying multi-manager funds, and they may make short-term asset class changes when appropriate.
  • For the Balanced Portfolio Fund we’ll change the Investment Association sector that’s used to measure the Fund’s performance*.

We expect Schroders to make changes to some of the underlying funds, to reflect their market views and economic forecasts. This will result in a short term increase in transaction costs to the Funds, but we believe these changes will benefit the Funds over the longer term.

We are writing to all affected customers, explaining that if they believe these Funds still meet their investment needs they don’t need to do anything. The changes don’t alter the risk profile or the ongoing charges of the Funds, such as the annual management charges. We’re updating all the Funds’ investment policies to clarify these new roles and responsibilities. We have also updated the investment objective of the Balanced Portfolio Fund to incorporate a minor amendment to clarify the objective of this Fund.

For more on the background to our change of Investment Adviser, along with information on transaction costs and a detailed Q&A, please see our August announcement below: ‘New Investment Advisers of our OEIC and ISA Funds’.

* Investment Association sectors group funds with broadly similar characteristics to compare performance. More information can be found at www.theinvestmentassociation.org/fund-sectors

What changed in 2019

We’re changing the Investment Adviser for the Scottish Widows High Reserve OEIC Fund. Schroders Investment Management (Schroders) will take over from Aberdeen Asset Investments Limited on 28th February 2020.

With the change of Investment Adviser, the Fund’s annual income target will change. This is so that bonds and shares can be measured separately to better reflect returns that might be available from these different types of asset in the Fund. We’re updating the Fund’s investment objective to show this and also clarifying roles and responsibilities.

We expect the new Investment Adviser to change some of the individual assets currently held within the Fund to reflect their views, economic forecasts and the market. This will result in a short-term increase in transaction costs to the Fund, however we believe these changes will benefit the Fund over the longer term.

We are writing to all affected customers, explaining that if they believe the Fund still meets their investment needs they don’t need to do anything. The changes don’t alter the risk profile or the ongoing charges of the Fund, such as the annual management charge.

How is the income target changing?

We are changing the income target so that it’s better aligned to the Fund’s assets, which are mainly equities (or shares) and fixed interest bonds.

The current target aims ‘to deliver performance in excess of 110% of the dividend yield of the FTSE All Share Index each year before deduction of fees’. The FTSE ALL Share Index is purely for equities, so does not include any bonds.

The income target from 28th February 2020 will change to:

‘The Fund is actively managed by the Investment Adviser who chooses investments which, collectively, aim to provide an income return in excess of 110% of the Benchmark income yield, each year before deduction of fees. The Benchmark income yield is based on 75% of the FTSE All Share Index dividend yield and 25% of the yield of the iBOXX Sterling Corporate and Collateralised Index. Index Yields are calculated by totaling the annual income paid and dividing it by the respective total value of each index.’

The key change is including the yield of the iBOXX Sterling Corporate and Collateralised Index as 25% of the benchmark. This iBOXX index is a bond index, so now the overall benchmark is a mix of bond and equity yields, which is a more accurate reflection of the Fund’s asset mix.

As an indication, the forecast annual income target based on the current ‘FTSE All Share only’ target during September 2019 was 4.73%, whereas under the new combined target it would have been 4.56%. Please note that these figures are purely for illustrative purposes and don’t indicate any future income target.

Further information

For more on the background to our change of Investment Adviser, along with information on transaction costs and a detailed Q&A, please see our August announcement below: ‘New Investment Advisers of our OEIC and ISA Funds’.

It was announced on Tuesday 15th October that Neil Woodford’s flagship Woodford Equity Income Fund will be wound up, with the assets sold over an extended period of time from January 2020. Some Scottish Widows life and pensions customers are invested in the fund through the SW Woodford Equity Income Funds.

In light of these developments, the SW Woodford Equity Income Life and Pension Funds are now closed to new investments, and we plan to fully close the funds when the Woodford Equity Income Fund is wound up and the administrator pays out the proceeds.

We’re writing to all customers invested in the SW Woodford Equity Income Funds, offering them the option to switch into an alternative fund from our fund range. We believe this can help to remove any uncertainty for our customers.

The Woodford Equity Income Fund continues to price daily, and these prices will be reflected in the prices of the SW Woodford Equity Income Fund. As with all investments, prices can rise as well as fall and there is the potential for it to be worth less than the original investment.

If customers don’t select an alternative fund, when the Woodford Equity Income Fund closes we’ll reinvest the amount paid to us on their behalf into the SW Royal London UK Equity Income Fund, which we’ve chosen because it also invests in UK company shares, is similar to the closing fund and has lower charges.

Any regular payments being made into the SW Woodford Equity Income Fund will be paid into the SW Royal London UK Equity Income Fund from 25th October 2019, unless or until customers give us an alternative instruction. We’re asking all affected customers who are making regular payments to review the SW Royal London UK Equity Income Fund to determine whether it’s suitable for their investment needs. If they prefer, they can select a different fund from our fund range.

We are adopting a different approach for a small number of customers who are already invested in the maximum number of funds for their plan. For these customers, any future regular payments into the SW Woodford Equity Income Fund will be invested proportionally across the other funds they have chosen. Customers can change how they invest their regular premiums at any time.

If there are any further developments we will update this page as soon as possible.

Please read this guide for full details of the Scottish Widows Pension Fund range.
Please read this guide for full details of the Scottish Widows Life Fund range.

We’re replacing Aberdeen as the Investment Manager of most of our funds. Our actively managed funds, where the Investment Manager seeks to add value by making decisions on which investments to buy, sell or hold will move to Schroders, with the exception of the HBOS Ethical OEIC (including the Clerical Medical Ethical, Clerical Medical Evergreen and Halifax Ethical life and pension funds which invest in the OEIC), which will move to Hermes Investment Management.

We believe these appointments will benefit you through the prospect of improved future performance. The funds will continue to be managed within their existing risk profile.

The new Investment Managers will take on the relevant funds over a period of time from the end of September 2019. Aberdeen will continue to manage our property and tracker funds until April 2022. Acting within a set of restrictions specified and monitored by us, they’ll be responsible for the day-to-day asset management of these funds with the aim of achieving the funds’ investment objectives.

Scottish Widows will retain ownership of these funds and will remain responsible for defining the funds’ aims, determining the Investment Managers’ performance targets and the strict parameters on how they should be run. Their performance will be regularly monitored.

You don’t need to do anything. We’ll update our webpage with key information as the changes are made. Please check the website regularly to keep up to date with progress on the funds you’re invested in.

What’s changing?

The change of Investment Manager will apply to a number of Scottish Widows, Halifax and Clerical Medical funds.

We expect the new Investment Managers will change some of the assets currently held within the actively managed funds to reflect their views of assets in the funds, economic forecasts and the market.

Changes to assets within the actively managed funds will result in a short term increase in transaction costs to the funds, however, these will be capped and monitored by us to limit their impact on short term performance. More information on transaction costs and the limits that apply can be found below.

Your fund or funds within your unit-linked savings policy, protection plan, bond, endowment or pension plan may invest directly in assets, or indirectly through another fund (such as one of our OEIC funds), or through a range of funds for a multi-asset portfolio. If the fund invests directly in assets or via one of our OEIC funds then there may be a short term increase in transaction costs to the fund. If the fund is a multi-asset portfolio fund which invests in several other funds, then only some, or even none, of these underlying funds may be affected by this change. Where this is the case, the fund will bear minimal or no increase in transaction costs. If you’d like to understand how you’re invested you can call us.

There is also no change to external funds managed by third party fund managers, other than Aberdeen.

Example of the effect on a multi-asset portfolio fund

Example of the effect on a multi-asset portfolio fund

We’re currently assessing all of the Aberdeen-owned funds we invest in on a fund-by-fund basis and we’ll update this page with key information as the changes are made.

Some of our multi-asset funds, invest in a tactical asset allocation (TAA) fund managed on our behalf by Aberdeen. TAA involves adjusting the long-term asset allocation within a portfolio to capture shorter-term relative value opportunities in markets. Schroders will take over the management of this underlying tactical asset allocation fund in Q1 2020.

What’s not changing?

There won’t be a change to the funds’ annual management charges.

Our Governed Investment Strategies (GIS) and Pension Investment Approaches (PIA) also won’t change. GIS and PIA regularly rebalance and gradually move your pension into lower risk investments as you approach your selected retirement date.

Our Scottish Widows’ investment specialists will continue with long and medium-term strategic asset allocation for a number of Scottish Widows funds and portfolios to determine the optimal mix of asset classes, based on the expected return of those asset classes over five years and longer.

Transaction costs

Transaction costs may increase in the short term for some of the actively managed funds as investments are bought and sold with the aim of generating higher returns.

Read more

Thinking of cashing in?

We recognise that you may have an immediate need to cash in some or all of your policy or pension plan, and may have questions about the impact of transaction costs on short term fund performance.

Read more

Q&As

We’ve answered here questions you may have about this change.

Read more

We’re replacing Aberdeen as the Investment Adviser to most of our funds. Our actively managed funds, where the Investment Adviser seeks to add value by making decisions on which investments to buy, sell or hold will move to Schroders. The Halifax Ethical fund’s Adviser will be Hermes Investment Management.

We believe these appointments will benefit you through the prospect of improved future performance. The funds will continue to be managed within their existing risk profile.

The new Investment Advisers will take on the relevant funds over a period of time from the end of September 2019. Aberdeen will continue to manage our passive and property funds until April 2022. Acting within a set of restrictions specified and monitored by us, they’ll be responsible for the day-to-day asset management of these funds with the aim of achieving the funds’ investment objectives.

Scottish Widows will retain ownership of these funds and will remain responsible for defining the investment objectives and policies, determining the Investment Advisers’ performance targets and the strict parameters on how they should be run. Their performance will be regularly monitored.

You don’t need to do anything. We’ll update our webpage with key information as the changes are made. Please check the website regularly to keep up to date with progress on the funds you’re invested in.

What’s changing?

The change of Investment Adviser will apply to a number of Scottish Widows and Halifax funds.

We expect the new Investment Advisers will change some of the assets currently held within the actively managed funds to reflect their views of assets in the funds, economic forecasts and the market.

Changes to assets within the actively managed funds will result in a short term increase in transaction costs to the funds, however, these will be capped and monitored by us in order to limit their impact on short term performance. More information on transaction costs and the limits that apply can be found below.

There won’t be a change to the funds’ annual management charges.

Transaction costs

Transaction costs may increase in the short term for some of the actively managed funds as investments are bought and sold with the aim of generating higher returns.

Read more

Thinking of cashing in?

We recognise that you may have an immediate need to cash in some or all of your investment in a fund and may have questions about the impact of transaction costs on short term fund performance.

Read more

Q&As

We’ve answered here questions you may have about this change.

Read more

The Financial Conduct Authority, the regulator of the asset management industry, has set new standards for disclosure of fund objectives and identified other changes to help investors’ understanding and ability to compare fund performance.

Following this, we’ve reviewed our funds’ objectives and policies and we’re making updates to add clarification on the funds’ strategies, the assets they hold and how the funds seeks to achieve their objective.

Where a fund has a benchmark (the index against which the performance of the fund is measured), we’re making that clear in the fund’s objective. For other funds which don’t have a benchmark index, we’re suggesting an Investment Association sector of similar funds which can be used to compare performance.

You don’t need to do anything. We’ll update our webpage with key information as the changes are made. Please check the website regularly to keep up to date with progress on the funds you’re invested in.


Changes to our Halifax Funds

We’ve listed here the changes made to the objective and policy for each fund.

Read more

Changes to our Scottish Widows Funds

We’ve listed here the changes made to the objective and policy for each fund.

Read more

Update: January 2020

The Extraordinary General Meetings (EGMs) for each fund took place on 29th August 2019, and the votes for each fund were carried.

What happens after the proposal was approved?

The Managed Growth Funds have been merged into new corresponding funds within the Scottish Widows Investment Solutions Funds ICVC and kept under the management of Scottish Widows Unit Trust Managers Limited (SWUTM).

Background - as at July 2019

The Managed Growth Funds are currently sub funds of the Investment Portfolio ICVC. The aim of the proposal is to keep those Funds under the management of Scottish Widows Unit Trust Managers Limited (SWUTM).

To keep the Managed Growth Funds under SWUTM’s management, it’s necessary to merge the Managed Growth Funds into new corresponding funds within the Scottish Widows Investment Solutions Funds ICVC. The Investment Portfolio ICVC will then move to its new fund manager.

Why are we proposing to merge the funds?

Lloyds Banking Group (LBG) have entered into a new joint venture (JV) with Schroders plc. The JV is targeted towards high net worth individuals with an adviser actively providing investment advice. As the Managed Growth Funds were designed to support LBG Retail customers using a non-advised online product we believe that SWUTM is best placed to maintain the Managed Growth Funds going forward and provide continuity for investors.

The merger won’t alter your investment. It won’t affect how the funds are managed, or change the Funds’ objectives or policies.

There will be no changes to the asset allocation, charges or risk profile of your investment, as a result of the fund merger. The merger will not be treated as a disposal for tax purposes, meaning you’ll not be liable to pay any Capital Gains Tax as a result of the merger. The tax treatment of your investment will be unchanged.

Update: January 2020

The Extraordinary General Meetings (EGMs) for each fund took place on 29th August 2019 and the votes for all seven Solution funds were carried.

What happens now the vote is successful?

On 9th December 2019, in accordance with FCA requirements, the Authorised Corporate Director (ACD) for the Investment Portfolio and Multi-Manager Investment Companies with Variable Capital (ICVCs) changed from SWUTM to Scottish Widows Schroder Personal Wealth (ACD) Limited (SWSPWA). We wrote to you in October 2019 if you’re invested in funds within one or both of these ICVCs. If you hold ISA investments in these funds, SWSPWA also became your ISA Manager on that date.

Background

We’re proposing to merge our seven Solution funds in the Scottish Widows Investment Solutions Funds ICVC (Investment Company with Variable Capital) into the Investment Portfolio ICVC. Both ICVCs are currently managed by Scottish Widows Unit Trust Managers Limited (SWUTM). SWUTM is the Authorised Corporate Director (ACD) for both of the ICVCs.

By the end of 2019, subject to Financial Conduct Authority (FCA) approval, we aim to move the management of the Solution funds to a new joint venture between Lloyds Banking Group and Schroders plc. Scottish Widows is part of Lloyds Banking Group.

Why are we proposing to merge the funds?

We want to merge these funds to allow us to move the management of the Solution funds to a new company by the end of 2019. To do this, we need to move the Solution funds into the Investment Portfolio ICVC, which will then move across to the new company, subject to FCA approval.

This change won’t affect how the funds are managed, their objectives or policies. The new Solution funds will mirror the existing Solution funds. As part of this change there will be some changes to how your Account is administered and also changes to the service providers of the ICVCs. View more information about those changes.

Why do we want to move the ICVC to a new company?

Lloyds Banking Group have entered into a new joint venture with Schroders plc, called Schroders Personal Wealth, which continues our commitment in developing new capabilities to support you with your investments and financial planning. This joint venture brings together Lloyds Banking Group’s multi-channel and digital capabilities with Schroders’ strengths in active asset management and platform technology.

This joint venture aligns the expertise of Schroders Personal Wealth in portfolio construction, and the investment management strength of Schroders Investment Management, in providing adviser services to multi-asset funds.

Schroders is a global asset and wealth manager, who delivers a broad range of investment strategies designed to meet the diverse needs of investors. They are focused on providing investment solutions for wealth customers.

We believe that the investment capability and development of wealth management solutions that Schroders Personal Wealth provide will be beneficial in generating future returns for investors.

Further information

Independent advice

If you’re unsure about how any of these changes may affect your investments, we recommend that you speak to an independent adviser. If you don’t have an adviser you can find one at unbiased. Remember a financial adviser may charge for any advice they give.

You can find free and impartial money guidance from the government at www.moneyadviceservice.org.uk or by calling free:

0800 138 7777

Monday to Friday from 8am to 8pm, and Saturday from 9am to 1pm.

Glossary

It’s difficult to avoid jargon in financial services, so you may have come across some unfamiliar expressions. We’ve explained them here.

See glossary