SUPPLEMENTARY INVESTOR INFORMATION DOCUMENT. Information on the Regular Withdrawal Facility

Transcription

1 DIVERSIFIED PORTFOLIO FUND SUPPLEMENTARY INVESTOR INFORMATION DOCUMENT Information on the Regular Withdrawal Facility Terms and Conditions of the Regular Withdrawal Facility and the Scottish Widows Individual Savings Account (ISA) Important information you need to read

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3 THIS SUPPLEMENTARY INVESTOR INFORMATION DOCUMENT (SIID) IS DESIGNED TO BE READ ALONGSIDE THE KEY INVESTOR INFORMATION DOCUMENT (KIID) FOR THE SCOTTISH WIDOWS DIVERSIFIED PORTFOLIO FUND. THIS IS A SUB FUND (CALLED FUND THROUGHOUT THE REST OF THIS SIID) OF OUR INVESTMENT SOLUTIONS OPEN ENDED INVESTMENT COMPANY (OEIC). TOGETHER, THE SIID AND KIID SUMMARISE IMPORTANT INFORMATION ABOUT THIS FUND AND PROVIDE ANSWERS TO SOME IMPORTANT QUESTIONS. Please read this SIID, the Diversified Portfolio Fund KIID and the Terms and Conditions of the Regular Withdrawal facility before you sign the application form and keep them with the other documents we provide. If you are considering making an investment via our Individual Savings Account (ISA), then you should read the ISA Terms and Conditions on page 18. This SIID does not replace the full OEIC Prospectus which contains full terms and conditions. This is available on request, free of charge, and is also available on our website, You must be a UK resident to invest in our Diversified Portfolio Fund. If you become a resident of the United States you will not be able to continue holding your investment with us. The information in this SIID is correct as at the date of printing. For details of other funds we have available please speak to your financial adviser. 1

4 WHAT IS AN OEIC? An OEIC is an Open Ended Investment Company, also known as an Investment Company with Variable Capital (ICVC). These are known as open ended investments because they expand and contract by issuing or cancelling shares depending on demand. Your money, along with that from other investors, buys shares in the Fund. The number of shares you get depends on the amount you invest, the level of initial charge/entry charge we make and the share price. The share price will move up and down in line with the value of the investments that the Fund holds. This Fund offers accumulation shares only so any income received by the Fund is retained in the Fund and has the effect of increasing the share price. The base currency of this Fund is sterling. WHAT ARE THE AIMS OF THE FUND? The Diversified Portfolio Fund aims to give a total return, primarily through growth, in excess of the Bank of England base rate over any period of five consecutive years. The specific objectives and investment policy for the Fund are set out in the KIID. SUMMARY OF THE INVESTMENT POLICY OF THE FUND The fund manager aims to minimise volatility by investing in a diverse and global range of investments. In addition the fund manager can make changes to the Fund asset allocation within certain limits. The Fund will have exposure to equities (including UK, overseas and emerging markets equities), bonds (including UK government bonds, other UK and overseas fixed interest securities and high yield bonds), property and cash. The Fund may also have exposure to commodities, private equity and other asset classes. The Fund may achieve exposure to these assets by investing either directly or indirectly, for example through other funds such as collective investment schemes. Please see Important Notes on page 14 for information on the use of derivatives for efficient portfolio management purposes. The specific objectives and investment policy of this Fund are also set out in the Diversified Portfolio Fund KIID. The full investment objective and policy can be found in the OEIC Prospectus which is available on request, free of charge, and is also available on our website, WHAT INVESTMENT CAN I MAKE? Your investment can be made directly into the Fund or via an ISA or ISA transfer. Your investment must be at least 10,000. You can t make monthly payments into this Fund. You can keep your investment for as long as you choose as it has no fixed term. You should aim to keep it for the medium to long term (at least five to ten years). The minimum investment you can make is 10,000. You may need to invest more than this in order to support the level of regular withdrawals that you require. Please speak to your financial adviser for more information. Your investment can be split between investing in the Fund directly (in the OEIC) and investing via an ISA. If you are splitting your investment in this way you must invest at least 1,000 into either the OEIC or ISA and your total investment must still be at least 10,000. Any additional investments will be treated as a new and separate investment in the Fund. If you want to make an additional investment, please see your financial adviser. High yield bonds are also known as non-investment grade bonds. Non-investment grade bonds have not been awarded the minimum rating required to meet the investment grade rating. Therefore they are considered higher risk bonds with a higher credit rating. Credit ratings indicate the likelihood that an issuer will be able to make their payments. 2

5 WHAT ARE THE GENERAL RISKS OF INVESTING IN AN OEIC OR ISA? The value of your investment is not guaranteed and can go up and down depending on investment performance. You might get back less than has been illustrated or less than you invest. There s no guarantee that the Fund will achieve growth in excess of the Bank of England base rate over any period of five consecutive years. In addition the base rate will change from time to time and it might go down or up. The Fund will invest in a wide range of asset classes, including collective investment schemes which may themselves invest in a range of other assets. The Fund s assets are likely to vary from time to time and each category of assets has individual risks associated with them. The value of the Fund will depend on the combined performance of all the assets held by it. A rise in the value of one asset class may not result in an increase in the Fund s value. Similarly, a fall in the value of one asset class may not result in a fall in the value of the Fund if others have risen by more. Investing in equities generally has the potential for higher capital growth over the longer term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that the value of your investment might fall. Exchange rate changes might cause the value of any overseas investments to go up or down. Some of the companies and governments who issue the bonds and other fixed interest securities that the Fund may invest in might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments or their credit rating falls, the value of your investment might reduce. In addition a small proportion of the Fund may be invested in fixed interest securities which carry a higher risk. Fluctuations in interest rates are likely to affect the value of the fixed interest securities held by the Fund. If long-term interest rates rise, the value of your investment might fall and vice versa. This Fund may invest in stockmarkets which are generally less well regulated and developed than those in the UK and there is less investor protection. This might result in a greater risk that the value of your investment might go down. Investments in these markets might be bought and sold less frequently, which might cause large changes in their prices. The Fund invests indirectly in property. Property is a less liquid asset than other assets such as fixed interest securities or equities and values could be affected if properties need to be sold in a short timescale. Property valuation is generally a matter of judgement by an independent valuer rather than fact and values can go up or down. Tax rules can change. You can decide in the first 30 days that you don t want your investment. You might not get all your money back if the value of your investment has fallen. In exceptional circumstances we may need to suspend any dealing in shares in our OEIC funds. Please see the full OEIC Prospectus for further information. Inflation may reduce the real value of your money in the future. The specific risks for the Diversified Portfolio Fund are set out in the KIID. You can also find details of risks in the full Prospectus which is available on request, free of charge, and is also available on our website, CAN I INVEST VIA AN ISA? You can invest via a Stocks and Shares ISA, or by ISA transfer. If you invest via an ISA you have no personal liability to tax on any profit made or tax on any income received (please see What about tax? on page 8). You can invest in a Stocks and Shares ISA if you re 18 or over and resident in the UK for tax purposes. There are currently three types of ISA: Stocks and Shares ISA which may include units or shares in unit trusts, cash, investment trusts and/or OEICs, and certain life insurance policies which qualify for the Stocks and Shares ISA; Cash ISA which may include cash (where your money is invested and earns interest), and certain life insurance policies which qualify for the Cash ISA. Innovative Finance ISA. Scottish Widows Unit Trust Managers will accept Cash ISA transfers into a Stocks and Shares ISA. Please contact us for more details. Scottish Widows Unit Trust Managers Limited does not offer a Cash ISA or an Innovative Finance ISA. 3

6 WHAT S THE MAXIMUM AMOUNT I CAN INVEST? There are no maximum amounts for investing directly in an OEIC Fund or via an ISA transfer. Please see the HMRC website ( for details of the current ISA limits. You can only invest in one cash ISA and/or one stocks and shares ISA in any tax year. Subject to the overall ISA limit, there are no restrictions on the amount that you can invest in a Cash ISA, Stocks and Shares ISA or Innovative Finance ISA or a combination of them. You can decide on the balance of your investments, provided you keep within the overall limit. HM Treasury decide the maximum ISA payment limits and the limits may change. HOW CAN I INVEST? You should ensure that you have read the Diversified Portfolio Fund KIID. You will be required to sign a declaration to confirm that you have read the latest version of this KIID before you invest or make additional investments. You can invest directly in the Fund in your own name, or jointly with up to three other people. For ISA investments, applications must be in one person s name only. You can make your payment by cheque. If you are investing by ISA transfer your payment must be by cheque from the other ISA manager. Your payment, including ISA transfers, will normally be invested using the next price following receipt and acceptance of your correctly completed application form and payment. When you invest we might make a dilution adjustment (see What is Dilution Adjustment? on page 6), which will have the effect of increasing the share price and would mean you get fewer shares. WHAT DOCUMENTS WILL I RECEIVE? Once your application has been accepted, you will receive a: Contract Note; Cancellation Notice; Regular Withdrawal Confirmation. You will also receive: an annual Statement; a six-monthly Short Report; an Income Tax voucher (OEIC customers only); and a Capital Gains Statement (OEIC customers only). You will get this after the end of each tax year, starting from the year in which you take your first withdrawal. Share certificates will not be issued. WHAT DOES THE FUND INVEST IN? This Fund has exposure to different types of assets. These include fixed interest securities (including corporate bonds), equities, property and cash. Equity investments may offer a share in the profits of a company in the form of dividend payments. A dividend is simply the sum of money that a company decides to divide among its shareholders. The Fund may also have exposure to commodities, private equity and other asset classes. Derivatives (contracts which have a value linked to the price of another asset) may be used for transactions in respect of efficient portfolio management. This means they can be used, for example, to help reduce risk (including hedging to help manage the effect of fluctuations in currency exchange rates), to help reduce cost, or to help generate extra capital or income for the fund. Information on their use can be found in the KIID. Further details are in the Prospectus. 4

7 WHAT ARE THE CHARGES? Our charges cover remuneration to your adviser, expenses, profit, managing the investments and any other adjustments. The charges for the Diversified Portfolio Fund are: Initial Charge/Entry Charge (Please note, this is called the entry charge in the KIID.) Ongoing Charge The Ongoing Charge is the sum of the following charges: Annual Management Charge Other Expense Charges Details of the charges for this Fund are shown in the KIID. Initial charge/entry charge An initial charge/entry charge, which is a percentage of your payment, is deducted before shares are bought. (please note that the Initial Charge is called the Entry Charge in the KIID). This charge is the maximum that might be taken out of your money before it is invested and it covers the cost of setting up your investment. Annual management charge The annual management charge, which is a percentage of the Fund value, is deducted from the Fund to cover investment management fees, accounting fees and the Authorised Corporate Director (ACD) s own management costs. The annual management charge is calculated daily and is reflected in the share price of the Fund each day. It is included in the Ongoing Charge for the Fund. Any remuneration to an adviser is borne out of the initial charge/entry charge and annual management charge. Other expenses Each year there are additional costs, collectively referred to as other expenses. These include depositary fees and expenses, custodian fees, registrar fees, audit fees and regulatory fees. These other expenses are deducted as a percentage of the Fund value, or charged to the Fund as a fixed fee, and are included in the Ongoing Charge for the Fund. Some of these charges may vary from time to time and therefore the Ongoing Charge figures will fluctuate throughout the investment period. The other expenses will also be made up of underlying Fund charges. There are transaction costs incurred by the Fund when the fund manager buys and sells investments and these are paid from the Fund s capital. These costs are not included in the Ongoing Charge. In addition to these transaction costs, the Ongoing Charge does not include the initial charge/entry charge, interest on borrowing, payments incurred because of financial derivative instruments, entry/ exit commissions, soft commissions or any other fees paid directly by the investor. The annual management charge and other expenses are taken from the income of the Fund. Ongoing charge As noted previously, the ongoing charge is made up of the annual management charge and other expenses. As the Ongoing Charge includes the annual management charge and other expenses, it shows the annual operating expenses of the Fund. All funds covered under European legislation must highlight the Ongoing Charge to help customers compare the annual operating expenses of different funds. Details of the charges for the Fund are shown in the KIID. Early withdrawal charge/exit charge We do not currently charge an exit fee when you sell part or all of your investment, or transfer your ISA to another manager. 5

8 Fund switching We will make a charge if you: switch funds; switch your investment from an OEIC to an ISA (or vice versa); or if you do both. This charge is usually 0.5% of the value of the shares you are switching and is in place of the initial charge/entry charge of the fund into which you are switching. If you switch into the Cautious Growth Fund, Balanced Growth Fund, Progressive Growth Fund or Adventurous Growth Fund you will pay the full initial charge/entry charge that applies to those funds. (We may launch further funds in this range, so please contact us if you are considering a switch or ask your adviser for details of the funds available.) Please refer to the OEIC Prospectus for full details of the charges. Additional charges information We can change, at any time, most of the charges we make. We will give you notice in line with FCA rules where appropriate. We may do this if our costs turn out to be unexpectedly high, compared to our charges. Charges could increase if: a tax rule or law increases our costs or decreases our income from charges; our staff or overhead costs are more than we expect; or our income from charges is less than we expect. WHAT IS DILUTION ADJUSTMENT? The dilution adjustment referred to earlier might affect the number of shares you receive or how much you get back when you cash them in or take regular withdrawals. You usually buy or sell shares in the Fund at a price based on the mid-point between the buying and selling prices of the underlying investments but revised for any dilution adjustment. A dilution adjustment is an adjustment which might be made to the share price of the Fund. The adjustment reflects the difference between the buying and selling prices of the investments of the Fund and any costs incurred, including taxes. A dilution adjustment means that the impact of buying or selling investments is met by those moving into or out of the Fund, rather than by other investors in the Fund. The ACD s policy in relation to the Fund is to apply a dilution adjustment within the criteria laid down in the Prospectus. CAN I CHANGE MY MIND? When you make your initial single payment, you will be given 30 days to cancel if you are not completely satisfied with your investment. The 30 day cancellation period starts from the day you receive your cancellation notice. If you cancel, we ll give you your money back (including a full refund of the initial charge/entry charge) less any fall in the investment value. This amount is calculated using the next price released after we receive your written instructions. You might not get back what you paid in. If you invest via an ISA and you change your mind within 30 days, you ll be free to make another ISA investment in the same tax year. If you have transferred another ISA to Scottish Widows and you decide to cancel within 30 days, you have the following three options: the ISA can be closed, and the proceeds returned to you; or the ISA can be transferred back to the original manager, although the original manager may not accept it; or the ISA can be transferred to any other manager. The amount returned to you or transferred on cancellation will be your original transfer amount including the initial charge/entry charge less any fall in the investment value. This amount is calculated using the next price released after we receive your written instructions. You might not get back what you initially transferred. Please send your request to the address on the cancellation notice. If you do not cancel your investment it will continue. 6

9 HOW WILL I KNOW HOW MY INVESTMENT IS DOING? Every year we ll send you a statement and valuation for your investment. If your investment is held in joint names, the statement will only be issued to one of you. Twice a year you ll receive a copy of the Short Report for the Investment Solutions Funds OEIC. You can contact us for further copies of the half-yearly and yearly Short or Long Reports. These are available free of charge and can also be downloaded from our website at You can get an up-to-date valuation by phoning us on You can check the Fund price on our website at The value of your investment is calculated by multiplying the number of shares you hold by the share price. CAN I TAKE REGULAR WITHDRAWALS? Investing in the Diversified Portfolio Fund allows you to take regular withdrawals. For more information, please see Information on, and Terms and Conditions of, the Regular Withdrawal Facility on pages CAN I TAKE MONEY OUT? Yes. In addition to taking regular withdrawals you can sell some or all of your shares at any time. We sometimes refer to this as taking ad hoc withdrawals from your investment. If you do not wish to sell all of your shares you must leave at least 500 worth of shares. We ll normally cash in your shares using the next price calculated after we receive your instructions. We might make a dilution adjustment, which could reduce what you get back. Money you take out will be transferred to your bank account, or we ll send you a cheque, normally within five working days after we receive your written instructions. The liquidity of each fund (ie the ability to sell shares on any given day) is monitored regularly to ensure that it complies with the fund s underlying obligations and investment strategy. In times where we experience very high levels of requests from investors to cash in their shares, we may defer these requests at a particular valuation point to the next valuation point in order to protect the interests of continuing investors. Please see the full OEIC Prospectus for further information. If you request the cancellation of a very large number of shares, we may cancel the shares and transfer assets out of the relevant fund to you. Please see the full OEIC Prospectus for further information. For Stocks and Shares ISAs, each investment you make counts towards the maximum overall limit for the tax year, even if you then make a withdrawal. This means that, if you invest up to the Government s yearly ISA limit then take a withdrawal, you won t be able to reinvest that amount back into an ISA in the same tax year. If you want to sell some or all of your shares, please contact us using the details on page 12. If you make any ad hoc withdrawals from your investment your remaining investment value will reduce and you may therefore wish to review your level of regular withdrawals. WHAT MIGHT I GET BACK? You ll get back the current value of your investment when you decide to cash it in. This value isn t guaranteed. We ll normally calculate it using the next price after receiving your written request. What you get back will depend on: how much you ve paid in; how long the payment has been invested; how well the Fund has performed; the level and frequency of any regular withdrawals; whether you ve already cashed in any of your shares; how much we ve charged and the expenses met by the Fund; and whether any dilution adjustment is applied. WILL I RECEIVE AN INCOME? The Fund aims to achieve growth rather than income, however you can take regular withdrawals from the Fund please see page 15. Your money will buy accumulation shares and any income received by the Fund will be reinvested in the Fund and will be reflected in the share price. 7

10 HOW IS THE SHARE PRICE CALCULATED? The value of shares in the Fund is based on the value of the Fund s investments, allowing for charges and expenses. Where there are both buying and selling prices of these investments we use the mid-point. The price of a share is the total Fund value divided by the number of shares, adjusted for charges. We might make a dilution adjustment. HOW FLEXIBLE IS MY INVESTMENT? You can take regular withdrawals from the Fund. Please see page 15 for more information. You can cash in part or all of your investment at any time. You can switch some or all of the value of the shares you own in the Fund to our other OEIC funds that are available, subject to minimum investment requirements. A switching charge will apply. This charge is usually 0.5% of the value of the shares you are switching and is in place of the initial charge/entry charge for the fund into which you are switching. If you switch into the Cautious Growth Fund, Balanced Growth Fund, Progressive Growth Fund or Adventurous Growth Fund you will pay the full initial charge/entry charge that applies to those funds. We may launch further funds in this range, so please contact us if you are considering a switch, or ask your adviser for details of the funds available. The ongoing charge for the fund(s) you switch into might be different to that for the Fund from which you are switching. Details of the ongoing charge for each fund are shown in the relevant KIID. A switch between funds in an OEIC, or from an OEIC to an ISA, is regarded as a disposal for Capital Gains Tax purposes. A switch between funds in an ISA is not subject to Capital Gains Tax. (Please see What about tax? for more information). Please speak to your financial adviser for details of the range of funds available. You can transfer your ISA to another manager. There is currently no charge for transferring. CAN I TRANSFER MY ISA? You can ask to transfer part or all of a previous year s investment to another ISA manager. You will need to contact the other ISA manager to arrange this. If you want to transfer an ISA investment made in the current tax year you can only transfer the whole amount. To transfer to us from another ISA manager, you will need to complete and sign a Scottish Widows ISA transfer application form and send it to us. We ll then send it to your current ISA manager. If you transfer between ISAs, or switch funds within the ISA, you won t lose any of your ISA benefits. Charges may apply on transferring an ISA from one provider to another. These charges can include, for example, exit charges, initial charges/entry charges and transaction costs. We currently do not make an exit charge to cover any transaction costs associated with the transfer. There is the potential for loss of growth or income depending on market movements while your transfer is awaiting completion. You can ask to transfer between the three types of ISA (Cash, Stocks and Shares and Innovative Finance). If you transfer your ISA in the same tax year that you subscribed to it, the amount that you have transferred will count towards your overall investment limit for that tax year and your subscriptions will be treated as if they had been made directly in to the new ISA. Following the transfer you can continue to invest provided that the total amounts subscribed do not exceed the overall annual allowance for that tax year. You can only invest in one Cash ISA, one Stocks and Shares ISA and one Innovative Finance ISA in a tax year. If you transfer an ISA but the ISA is from a previous tax year, the amount that you have transferred will not count towards your overall investment limit for that tax year. WHAT ABOUT TAX? The tax regime applicable to the Fund is that of the United Kingdom. This regime applies to the taxation of both income and capital gains within the Fund. Tax rules can change. The tax regime applicable to you will depend on your individual circumstances, which may change. The following information applies to UK individuals. If you are uncertain of your tax position you should seek professional advice. This information represents our interpretation of the law and HM Revenue & Customs practice as at the date of publication. The taxation implications described assume that there are no changes in tax or other laws affecting the Fund or its investors. 8

11 Investing directly in an OEIC: This Fund aims to produce capital growth rather than income. It is designed this way to offer potentially tax efficient returns and provides the opportunity for investors to use their annual Capital Gains allowance to minimise tax. Capital Gains Tax Capital gains are made when you sell your shares and make a profit. Capital Gains Tax will be payable if your total gains, after deduction of allowable losses, from all sources in any tax year are more than your personal annual Capital Gains exemption allowance for that year. Capital gains tax rate is currently 18% or 28% depending on your annual income. We have no responsibility for deducting Capital Gains Tax on your behalf. You must declare any taxable gains to HM Revenue & Customs. You will be issued with a Capital Gains Statement once you commence withdrawals. This will have information that will help you to complete your tax return but you will need to speak to your tax adviser for advice on any tax issues. Income Tax Although the Fund is primarily designed to produce returns through capital growth rather than income, the Fund will make some dividend distributions. These distributions will be added to the Fund and will have the effect of increasing the share price. Dividend distributions are classed as taxable income and, therefore, you should declare the total amount received to HM Revenue and Customs (HMRC). Depending on your personal circumstances you may have a liability to pay tax on the total amount received to HMRC. Inheritance Tax When you die the value of your shares in the Fund will normally form part of your estate for inheritance tax purposes. The money will remain invested until we receive instructions from your legal representatives. You must declare your OEIC investments to HM Revenue & Customs. Investing via an ISA: The value to an investor of the tax advantages of an ISA will depend on personal circumstances, which may change. There s no need to declare your ISA to HM Revenue & Customs. The favourable tax treatment of ISAs may not be maintained. Capital Gains Tax You will have no liability to Capital Gains Tax on any profits made from your ISA investment. Income Tax This Fund makes dividend distributions which will be added to the Fund and will have the effect of increasing the share price. Dividends received on shares held in an ISA are tax free. Inheritance Tax On death, the tax benefits of an ISA cease and your investment can no longer be held as an ISA. Its value will normally form part of your estate for inheritance tax purposes. WHAT HAPPENS TO MY INVESTMENT IF I DIE? If your investment is held in joint names, it will continue to be held by the surviving holder(s). The tax benefits of an ISA cease from the date of death. The eligible spouse or civil partner of a deceased ISA investor will be entitled to an additional ISA allowance equal to the value of the deceased s ISA on date of death. This entitlement will be in addition to their own annual ISA allowance. Your personal representatives may ask us for information about the value of your investment, which we will provide. When your personal representatives have proved that they are legally entitled to the money invested, they may instruct us to cash in your investment, or transfer it to another name. Until the shares are sold, they will be affected by daily price movements as normal. The value of your investment is treated as part of your estate, so your personal representatives may need to declare it for inheritance tax purposes. Transfers of holdings on death can only be made to UK residents. 9

12 SPECIFIC FUND INFORMATION The objectives and investment policy and specific risk factors for the Diversified Portfolio Fund are in the KIID. There you will also find details of the fund s charges. INVESTMENT APPROACHES AT A GLANCE While there are a number of ways to evaluate risk, we use the following definitions to help you decide on the appropriate investment approach for you. The Diversified Portfolio Fund has been categorised using these investment approaches, and falls into the Balanced category. Please be aware that we review the investment approach definitions regularly, so these may change over time. You can find information on current investment approaches and notification of any changes at SECURE CAUTIOUS BALANCED PROGRESSIVE ADVENTUROUS SPECIALIST These investments provide safety to the amount invested and can be expected to offer relatively low growth over the medium to long-term. They cannot fall in actual value, but can fall in real value due to the effects of inflation. These investments are expected to have a relatively modest risk to the capital value and/or income. They have the potential to provide income, and/or, over the medium to long-term, relatively modest capital growth. The capital value may fluctuate, although some products may offer an element of capital protection. These investments carry a risk of loss to capital value but have the potential for capital growth and/ or income over the medium to long-term. Typically they do not have any guarantees and will fluctuate in capital value. These investments are expected to have a relatively significant risk of loss to capital value, but with the potential of relatively more capital growth over the medium to long term. They do not offer any guarantees and will fluctuate in capital value. These investments carry a relatively much higher risk of capital loss but with the potential for relatively higher capital growth over the medium to long term. They may be subject to a considerable level of fluctuation in capital value. They do not offer any guarantees. These investments carry a very high risk of capital loss, but with the potential for a higher return over the long term. They are very volatile and are only suitable for clients who can afford to, and are prepared to, risk the entire capital value. They do not offer any guarantees. SECURE CAUTIOUS BALANCED PROGRESSIVE ADVENTUROUS SPECIALIST INVESTMENT PERIODS We categorise investment periods as follows: INCREASING RISK Short-term: Up to 5 years Medium-term: Between 5 and 10 years Long-term: Over 10 years 10

13 RISK AND REWARD INDICATOR The KIID for the Diversified Portfolio Fund also includes a Risk and Reward Indicator for the fund. This indicator is a different measure to that of our own investment approach definitions explained above. The indicator is a legally required score that we must provide for each fund. The score (between 1 and 7) indicates the level of volatility a fund has experienced over the preceding 5 years. Volatility is a measure of the rise and fall in prices and income. The following explains our interpretation of what each score means: 1. very low levels of volatility over the past 5 years 2. low levels of volatility over the past 5 years 3. low to medium levels of volatility over the past 5 years 4. medium levels of volatility over the past 5 years 5. medium to high levels of volatility over the past 5 years 6. high levels of volatility over the past 5 years 7. very high levels of volatility over the past 5 years Please note that the indicator can change on a regular basis. 11

14 OTHER INFORMATION HOW TO CONTACT US If you ve any questions at any time or any changes you want to make to your investment, please contact us. You can phone us, send us a fax, or write to us. Call us on during the following times: Monday to Friday 8am 6pm We may record and monitor calls to help us to improve our service. OEIC Dealers Fax Number Website Address Scottish Widows Unit Trust Managers Limited, PO Box 28015, 15 Dalkeith Road, Edinburgh EH16 5WL HOW TO COMPLAIN If you ever need to complain, first contact us at Scottish Widows Unit Trust Managers Limited using the details shown earlier. If you re not satisfied with our response, you can complain to: The Financial Ombudsman Service, Exchange Tower, London E14 9SR Telephone Website complaint.info@financial-ombudsman.org.uk Complaining to the Ombudsman won t affect your legal rights. 12

15 LAW AND LANGUAGE For legal purposes the law of England and Wales will apply. Any communication sent to you will be in English. ABOUT THIS SUPPLEMENTARY INVESTOR INFORMATION DOCUMENT This information represents our interpretation of the law and HM Revenue & Customs practice as at the date of publication. The amount and taxation of benefits described assumes that there is no change in tax or other laws affecting a fund or its investors. MANAGEMENT AND REGULATION The ACD, Registrar and ISA Manager is Scottish Widows Unit Trust Managers Limited whose business address is PO Box 28015, 15 Dalkeith Road, Edinburgh EH16 5WL. Scottish Widows Unit Trust Managers Limited is authorised and regulated by the Financial Conduct Authority. The Depositary is State Street Trustees Limited, 525 Ferry Road, Edinburgh EH5 2AW. The Depositary is authorised and regulated by the Financial Conduct Authority. The Investment Adviser is Aberdeen Asset Investment Limited. Authorised and regulated by the Financial Conduct Authority in the United Kingdom. Member of the Aberdeen Asset Management group of companies. Registered in England and Wales No Registered Office: Bow Bells House, 1 Bread Street, London EC4M 9HH. The Auditors are PricewaterhouseCoopers LLP, Level 4, Atria One, 144 Morrison Street, Edinburgh, EH3 8EX. The Competent Regulatory Authority is the Financial Conduct Authority (FCA) whose business address is 25 The North Colonnade, Canary Wharf, London E14 5HS. As ISA manager we are regulated by HM Revenue & Customs, FEE AND COMMISSION SHARING ARRANGEMENTS The investment adviser, a subsidiary of Aberdeen Asset Management plc, is authorised to, and has, entered into commission sharing arrangements with certain third party brokers, where a broker remunerated out of the assets of the scheme has agreed to split its remuneration with another broker and which results in that other broker meeting expenses through this commission sharing arrangement that should normally be met out of the assets of the scheme. Scottish Widows Unit Trust Managers Limited may enter into fee sharing arrangements. INVESTOR CASH BALANCES Any investor cash balances (which is money held on behalf of an investor) shall be deposited with a member of Lloyds Banking Group or with such other bank or building society as we may nominate from time to time. The cash will be held in a segregated account, separate from any account used to hold money belonging to us in our own right. We will not, however, be responsible for any acts or omissions of the bank or building society. If the bank or building society becomes insolvent, we will have a claim on behalf of our clients against the bank or building society. If the bank or building society cannot pay all of its creditors, any shortfall may have to be shared pro rata between them. However, you may be entitled to compensation under the Financial Services Compensation Scheme, details of which are available on request. Interest will not be paid on any cash held in client money accounts (an account where investors money may be held). CLIENT MONEY AND ASSET RULES In some circumstances, depending on the nature of your transaction with us, we will make use of the Delivery versus Payment exemption within the Financial Conduct Authority s client money and asset (CASS) rules. This means that when you pay money into, or withdraw money from, your investment there could be a period of time (up to the end of the business day after the date we have received the money) where your money is not protected under the CASS rules. In such cases, if we were to become insolvent during that period, there is a risk that you may not receive your money back. 13

16 COMPENSATION OEIC funds are not directly covered by the Financial Services Compensation Scheme (FSCS), however Scottish Widows Unit Trust Managers Limited (SWUTM) is covered as the Authorised Corporate Director (ACD). The FSCS will not cover financial loss in the course of normal OEIC investment business if SWUTM is still solvent, including losses due to counterparty failure. However an investor may be entitled to compensation from the FSCS if SWUTM cannot meet its obligations (for example, if SWUTM were to become insolvent or unable to meet the claims against it resulting in you suffering a financial loss). A customer s entitlement to a claim depends on the type of business and the circumstances of the claim. Customers would be potentially covered by the FSCS for 100% of their claim up to a maximum of 50,000. If a customer holds more than one investment with SWUTM, this limit applies to the total value of all claims the customer has against the firm. Further information about compensation arrangements is available from the Financial Services Compensation Scheme, who can be contacted or or via their website at We may enter into certain derivative transactions in respect of the Financial Conduct Authority (FCA) Collective Investment Schemes Sourcebook for the purpose of the efficient portfolio management of the Fund. Derivatives (contracts which have a value linked to the price of another asset) may be used for transactions in respect of efficient portfolio management. This means they can be used, for example, to help reduce risk (including hedging to help mange the effect of fluctuations in currency exchange rates), to help reduce cost, or to help generate extra capital or income for a fund. Information on their use for a fund can be found in the KIID. Further details are in the Prospectus. We may also write call or put options, with a view to generating additional benefit for the Fund, on property which the Fund holds or may properly hold. An option is a type of derivative that allows the holder to buy or sell assets at an agreed price at a specified time in the future. They are sold by one party to another and offer the buyer the right, but not the obligation, to buy (call) or sell (put) an asset at an agreed price during a certain period of time or on a specific date. The Depositary may, at our request, enter into stocklending, this is to say a transaction by way of disposal of property in the Fund and re-acquisitions of equivalent property but only in accordance with the FCA s Collective Investment Schemes Sourcebook. MONEY LAUNDERING REGULATIONS Under these regulations, there s a requirement to prove the identity of people who wish to take out a life, pension or investment contract. You may therefore be asked to supply documents as evidence of your identity and your address. Please see the application form for further details. IMPORTANT NOTES If an application is received which is not fully completed and does not have all of the details required by the regulations, it will be returned to you and your investment will not be opened. However, in some circumstances we will still be able to open your investment and will write to you for the missing information. The Diversified Portfolio Fund will be managed in accordance with the Investment & Borrowing Powers set out in the Prospectus of the Investment Solutions OEIC, and to comply with the regulations within the FCA s Collective Investment Schemes Sourcebook. Copies of the Prospectus and the Instrument of Incorporation relating to the Investment Solutions OEIC are available from the Authorised Corporate Director for inspection during Normal Business Hours. Copies will be supplied to any shareholder on request. The Fund detailed in this SIID is a sub fund of the Investment Solutions OEIC which is managed by Scottish Widows Unit Trust Managers Limited and which is authorised under Regulation 14 of the Open Ended Investment Companies Regulations Full terms and conditions are available in the OEIC Prospectus. This is available on request from us. Charges, terms and limits may change. 14

17 INFORMATION ON THE REGULAR WITHDRAWAL FACILITY REGULAR WITHDRAWALS When you invest in the Fund, you have choices about how your regular withdrawals are set up. You decide: how frequently withdrawals are paid (monthly, quarterly or yearly); when they should start which can be anytime after you have held your investment for one year and up to five years; how much is paid this must be at least 25 a month, 75 a quarter or 300 a year and not more than 4% of your investment that is used to buy shares (this will be after we have taken the initial charge/entry charge). You can change the amount and frequency of your regular withdrawals (within specified limits) or stop them at any time by contacting us using the details on page 12. You can do this before your withdrawals are due to start or after they have started. We ll automatically sell enough of your shares to create the payment you ve selected. Your shares will be sold five working days prior to the 15th of the month and we will normally cash in your shares using the next available price. Your regular withdrawals will normally be paid into your bank or building society account via BACS credit on the 15th of the month in which the regular withdrawal has been requested, or the next working day if the 15th is a non-working day. If a withdrawal results in the value of your Fund falling below 500, no further regular withdrawals will be possible and we will contact you to discuss your options. You will not be subject to income tax on any withdrawals made from the Fund, however, all withdrawals from an OEIC may be disposals for Capital Gains Tax purposes and, depending on your own circumstances, you may be liable to Capital Gains Tax. Withdrawals from investments in an ISA will not be subject to Capital Gains Tax. OEIC customers will receive a Capital Gains Statement. This will be issued after the end of each tax year, starting from the year in which regular withdrawals commence. RISKS OF THE REGULAR WITHDRAWAL FACILITY Any withdrawals you take will reduce the value of your remaining investment and they could be greater than any fund growth achieved. The higher the level of withdrawals you take, the more likely it is that they could be greater than any growth achieved. This could result in your capital being eroded. The sooner you start taking withdrawals, the sooner your capital could be eroded. More frequent withdrawals could also result in your capital being eroded sooner. With the exception of ISA investments, withdrawals in any tax year may be subject to Capital Gains Tax if you have used your Capital Gains exemption allowance for that tax year. If you fully use your ISA allowance in any tax year and then make withdrawals from your ISA, the ISA cannot subsequently be topped up in the same tax year. 15

18 TERMS AND CONDITIONS OF THE REGULAR WITHDRAWAL FACILITY These are the Terms and Conditions of our Regular Withdrawal Facility. You should read them together with the Key Investor Information Document (KIID) for the Scottish Widows Diversified Portfolio Fund. 1. DEFINITIONS: the Fund: means the Scottish Widows Diversified Portfolio Fund. we/us/our: Scottish Widows Unit Trust Managers Limited. you/your: the shareholder or his/her legal successor(s). 2. ABOUT REGULAR WITHDRAWALS A regular withdrawal is an ongoing request from you to cash-in fixed amounts from your investment in the Fund at a specific frequency and is subject to us agreeing to your request. You must select regular withdrawals when you make an investment in the Fund and must select the amount you wish to receive and whether this is to be on a monthly, quarterly or yearly basis. Your regular withdrawals cannot start until 12 months after you have made your investment in the Fund and, unless we agree otherwise, they must start within five years of your investment. You can change the amount or frequency of your regular withdrawals by writing to us. You can do this before your regular withdrawals are due to start or after they have started. 3. REGULAR WITHDRAWAL LEVELS We reserve the right to set a minimum amount that needs to be taken from the Fund for each regular withdrawal. We will advise you of any such minimum amount before you invest in the Fund. We reserve the right to set a maximum level of your investment that can be taken from the Fund as regular withdrawals. We will advise you of any such maximum level before you invest in the Fund. We have the right to change the minimum amount or maximum level in the future. 4. REGULAR WITHDRAWALS CONFIRMATION STATEMENT At the start of your investment in the Fund we will send you a statement confirming the regular withdrawals you have selected. If you subsequently change your regular withdrawals, we will issue another statement confirming the amended regular withdrawal details. We will not issue a contract note for each regular withdrawal. 5. REGULAR WITHDRAWALS ON DEATH If you die while you are invested in the Fund, we will stop any regular withdrawals pending instructions from your legal representatives. If you have a joint investment regular withdrawals will continue and we will contact the other joint shareholder(s) and advise them of their options. 6. MINIMUM HOLDING REMAINING IN THE FUND You must own at least 500 worth of shares in the Fund. If a withdrawal results in the value of your investment falling below 500, no further regular withdrawals will be possible and we will contact you to discuss your options. 7. ADDITIONAL PAYMENTS INTO THE FUND Any additional payments into the Fund will be treated as a separate investment and you will be asked to set up a separate regular withdrawal agreement. 8. PAYMENT OF REGULAR WITHDRAWALS TO YOUR BANK OR BUILDING SOCIETY ACCOUNT Your regular withdrawals will be generated by selling an appropriate number of shares from your investment at the frequency agreed with you. Your regular withdrawals will normally be paid into your bank or building society account via BACS credit on the 15th of the month in which the regular withdrawal has been requested,or the next working day if the 15th is a non-working day. 16

19 Your shares will normally be sold five working days prior to the 15th of the month and we will normally cash in your shares using the next available price. No cheques will be issued. You will need to let us know about any changes to the level or frequency of your regular withdrawals by the 1st of the month for the changes to be effected in the same month as your request. 9. LIABILITY We will not be liable for any loss incurred by you in relation to the Fund, except to the extent that any such loss is directly caused by our negligence, wilful default or fraud, or that of our employees, and no warranty is given by us to the performance or profitability of the investment held by you. We will not be liable in respect of any acts or omissions of any person, firm or company through whom transactions are effected for your investment in the Fund. Nothing under these terms and conditions shall restrict any liability we have under the Financial Services and Markets Act EVENTS OUTSIDE OUR CONTROL We have no responsibility or liability to you for any loss or damage caused by us or suffered by you as a consequence of our failure to perform our obligations resulting from any breakdown, failure or malfunction of any telecommunications or computer services or systems, industrial disputes, act or regulations of any governmental or supranational bodies or authorities, or any acts or circumstances not reasonably within our control. 11. DELEGATION AND ASSIGNMENT The agreement constituted under these Terms and Conditions is personal to you and you cannot assign or transfer it to anyone else. We may delegate any of our functions and responsibilities under these Terms and Conditions to another party without prior consent so long as we are satisfied that any such party is competent to carry out those functions and responsibilities. 12. CHANGING THESE TERMS AND CONDITIONS We may need to change these Terms and Conditions: in order to stay within legislation, regulations or HM Revenue & Customs requirements; to protect existing shareholders; to ensure the efficient administration of your regular withdrawals. We will comply with any legal requirements in connection with giving you notice about a change. If there are no legal requirements in force, we will still give you reasonable notice (at least 30 days) of the change. We may terminate the Regular Withdrawal Facility for the Fund by giving one month s notice to you. 13. COMPLAINTS Should you ever need to complain about your Scottish Widows Regular Withdrawal Facility or any advice you have received about regular withdrawals, details about how to complain are shown in your SIID. 14. LAW The law of England and Wales will apply to these Terms and Conditions. IMPORTANT NOTES These Terms and Conditions apply to the Scottish Widows Regular Withdrawal Facility and will come into effect on receipt of your fully completed and signed application. If an application is received and this is not fully completed and does not have all of the details we require, it may be returned to you and the regular withdrawals may not commence at the time you have requested. However, in some circumstances we will still be able to commence your regular withdrawals and will write to you for the missing information. Important investor information including details of the risks that apply to the Fund and on making regular withdrawals can be found in the SIID (including the additional section Information on the Regular Withdrawal Facility ) which should be read in conjunction with these Terms and Conditions. You should read these Terms and Conditions along with any other documentation on the Fund before you sign your application form. 17