Key Features of the Scottish Widows range of Individual Savings Accounts (ISAs)

Transcription

1 Investments Key Features of the Scottish Widows range of Individual Savings Accounts (ISAs) ISAs

2 These Key Features give you the main points about our range of Individual Savings Accounts (ISAs).These Key Features should be read with your other ISA documents. Our ISAs invest in our Open Ended Investment Company (OEIC) sub-funds (sub-funds are funds within our OEICs and are referred to as funds throughout the remainder of this document). Information which applies to all of the funds is given on pages 1 to 9.This is followed by sections giving specific details of each individual fund. Please read the relevant section for the fund(s) you are investing in carefully before you sign the application form and keep this booklet with your other ISA documents. Its aims Each fund aims to provide one of the following: capital growth, or income, or a combination of income and capital growth. Each fund has different investment aims. These are set out later under the headings on pages 11 to 25 of this brochure. Your investment You can make payments up to the yearly ISA limits set by the Government.These payments can be monthly, at least one single payment, or a combination of both. Your money will buy shares in one or more funds of a Scottish Widows ISA. You can keep your ISA for as long as you choose. You should aim to keep it for at least five years. 1

3 Risk factors What you get back depends on investment performance, and isn t guaranteed. Past performance isn t a guide to future performance. The value of your ISA and any income from it is not guaranteed and can go up and down depending on investment performance. If you cash in your ISA you might get back less than you ve invested.this could happen if, for example, investment performance is lower than illustrated. Tax rules can change. The favourable tax treatment of ISAs may not be maintained. In the case of ISA transfers, any income or growth you receive may be reduced. This could happen if, for example, the markets rise while the transfer is awaiting completion. You can decide in the first 30 days that you don t want your ISA. If you ve made a single payment, you might not get all your money back if the value of your ISA has fallen. If you make monthly payments you will receive all your money back. Each fund may have other specific risks. These are set out later under the headings Specific risk factors on pages 11 to 25 of this brochure. 2

4 Questions & Answers 3 WHAT IS A SCOTTISH WIDOWS ISA? You can invest in an ISA if you re 18 or over and resident in the UK for tax purposes. This is a single payment or monthly payment investment which can fluctuate in value and, while readily accessible without penalty, is designed for the medium to long-term. There are two types of investments, known as components, that are currently available within an ISA: stocks and shares component - which may include unit trusts, investment trusts, Open Ended Investment Companies (OEICs) and certain insurance policies; cash component - which may include cash (where your money is invested and earns interest), and certain insurance policies. There are two types of ISA a Maxi and a Mini. The next question explains the difference between the two. The Scottish Widows ISAs are stocks and shares ISAs. You can choose to open one as a Maxi or Mini ISA. It s a way of saving money without you having any personal liability to tax on any profit made, or tax on any income received. (Please see What about tax? on page 8.) Our ISAs invest in OEIC funds which are a type of fund where many people invest together. The fund is divided into shares, which you can buy and sell. If you have income shares the income is paid directly to you. If you have accumulation shares they automatically keep the income they earn. This is reflected in the price of your shares. For further information see Where are my payments invested? on page 5. WHAT IS THE DIFFERENCE BETWEEN A MAXI AND A MINI ISA? A Maxi ISA: must invest in a stocks and shares component, and can also invest in a cash component; allows you to invest up to 7,000 in the current tax year (a tax year runs from 6 April in one year to 5 April the next) but no more than 3,000 in the cash component; must be managed by just one ISA manager. You can only pay into one Maxi ISA in a tax year. Mini ISAs currently allow you to: invest up to 4,000 in a stocks and shares component and up to 3,000 in a cash component; pay into two Mini ISAs in this tax year, but not more than one of each type; spread your investments among Mini ISAs, with two different ISA managers in the current tax year. You can choose a different ISA manager for your stocks and shares and cash Mini ISAs. You can t pay into both a Maxi ISA and a Mini ISA in the same tax year.

5 The payment limits are decided by the Inland Revenue each year and may change. HOW FLEXIBLE IS IT? You can make at least one single payment, monthly payments, or a combination of both, subject to lower and upper limits (see How much can I pay in? on page 5). If you invest by a single payment, and the fund you invest in has income shares, you can choose to have income paid to you. If you re investing monthly, you can change the amount at any time, subject to lower and upper limits, but you can t take an income from your ISA. You can decide to stop making monthly payments, either permanently or temporarily. Please contact us for more details (see How to contact us at the back of this brochure). Your payment(s) can be divided each tax year between up to five of the funds that we make available for ISAs. You may be able to exchange shares that you already have, for shares in a Scottish Widows ISA. You can cash in some or all of your shares in your ISA at any time, subject to lower limits. IS THIS A CAT-MARKED ISA? No. WHAT MIGHT I GET BACK? You ll get back the current value of your ISA when you decide to cash it in. This value isn t guaranteed. We ll normally calculate it using the next price after receiving your request.when you cash in some or all of your ISA, we might make a dilution adjustment, or deduction for Stamp Duty Reserve Tax (SDRT), which could reduce what you get back (see What are the charges? on page 7). What you get back will depend on: how much you ve paid in; how long each payment has been invested; how well our investments have performed; whether you ve taken an income (where the fund you invest in has income shares); whether you ve already cashed in any of your ISA; how much we ve charged and expenses met by the fund. The tables later on show how charges could affect what you might get back. You can switch funds within your ISA at any time, or transfer its value to another ISA manager.there may be a charge for switching or transferring. Please contact us for more details (see How to contact us at the back of this brochure). 4

6 5 CAN I TAKE MONEY OUT? You can cash in your ISA at any time. You can take money out at any time, as long as this still leaves at least 500 worth of shares in each fund. Taking money out will reduce the value of your ISA. We ll transfer the money to your bank account or send you a cheque, normally within five working days after we receive your written instructions. If you invest by single payment, and the fund you invest in has income shares, you can choose to have income paid to you: This income is paid by bank credit or cheque. Income payments by cheque are not available for some funds. Income payments are made up solely of interest or dividend payments. This income is paid either every month, every three months or every six months, depending on the fund you invest in. Please see the Mutual Funds Factsheet (form number 43537) for further details. If you invest up to the Government s yearly ISA limit and then make a withdrawal or take an income, you won t be able to reinvest that amount back into an ISA in the same tax year. We ll normally cash in your shares using the next price calculated after your signed instructions reach our administration department (see Where are my payments invested? ). We may make a dilution adjustment, or deduction for SDRT, which could reduce what you get back (see What are the charges? on page 7). HOW MUCH CAN I PAY IN? The Government has set upper limits on the total amount you can pay into an ISA in each tax year. For investments in stocks and shares they are currently 7,000 for a Maxi ISA, and 4,000 for a Mini ISA. We have set lower limits for payments into your ISA. These are: 1,000 for the first single payment 100 for single payments after the first, and 50 for monthly payments. You make monthly payments by direct debit and single payments by cheque, debit card or debit authority. WHERE ARE MY PAYMENTS INVESTED? The Scottish Widows ISAs invest in the Scottish Widows OEIC funds. These are funds within a Scottish Widows Investment Company with Variable Capital (ICVC). There are four Scottish Widows ICVCs as follows: Scottish Widows Managed Investment Funds ICVC; Scottish Widows Overseas Growth Investment Funds ICVC; Scottish Widows Tracker and Specialist Investment Funds ICVC; Scottish Widows UK and Income Investment Funds ICVC. We invest your payments, after the initial charge has been deducted, in the fund(s) you choose. Some of these funds aim to give growth, some aim to give income and some aim to give a mixture of both. Please see the section Specific

7 ISA Fund Information on pages 10 to 25 for details of the range of funds available. Each fund invests in different types of investments described in the on pages 11 to 25. Some of these funds invest in fixed interest securities (including corporate bonds). Fixed interest securities are loans made to, for example, governments, who are then expected to pay interest at a fixed rate over a set period of time, with the loan due back at the end of the period. Corporate bonds are loans made to companies. The Balanced Growth Portfolio, Dynamic Income Portfolio, Managed Income Portfolio, Momentum Income Portfolio, Stockmarket Growth Portfolio and Strategic Growth Portfolio funds invest in a range of funds managed or operated within the Lloyds TSB Group. The Balanced Portfolio, Cautious Portfolio, Opportunities Portfolio and Progressive Portfolio funds invest in a range of funds offered by the Russell Investment Group. These funds are managed by a wide selection of fund managers. Single payments will normally be invested using the next price following receipt and acceptance of your correctly completed application and payment. If you re paying by monthly direct debit, your first payment will be collected on a date approximately 15 working days after receipt by our administration department of your correctly completed mandate form. Future payments will be collected on this date each month, or next working day if this falls on a weekend or bank holiday. This date may be changed by us subject to a variation of no more than 4 days after the proposed collection date. Shares will normally be bought using the next price. Share certificates will not be issued. We calculate the value of each fund daily on normal business days in the UK except for: the Cautious Portfolio, Balanced Portfolio, Progressive Portfolio and Opportunities Portfolio funds which are valued on normal business days in the UK and Ireland; the High Income Bond Fund which is valued on normal business days in the UK and the USA. The value is usually based on the midpoint between the buying and selling prices of investments in the fund. The price of a share is the total fund value divided by the number of shares, adjusted for charges. When you invest we may make a dilution adjustment, or deduction for SDRT, which could mean you get fewer shares (see What are the charges? on page 26). We may change the selection of funds that we make available. For more information please contact Scottish Widows on the number quoted in the How to contact us section at the back of this brochure. WHAT HAPPENS TO MY ISA IF I DIE? The money will remain invested until we receive instructions from your legal representatives. The tax benefits of your ISA will stop from the date of your death. 6

8 7 WHAT ARE THE CHARGES? Our charges cover commission, expenses, profit, managing the investments and any other adjustments. An initial charge is deducted before shares are bought. It varies between 0% and 5% of each payment that you make, depending on the fund you invest in (see What are the charges? on page 26). Management and expense charges vary between 1.10% and 2% a year of the value of your fund, depending on the fund you invest in (see What are the charges? on page 26).We take these daily from the value of your fund.these charges are normally taken from the income of the fund(s) you have invested in. However, part or all of the yearly management charge may be taken from the fund s capital. Examples of the effect of charges for a single payment are included in the What you might get back tables on page 27. An example of the effect of charges if monthly payments are made is shown for the UK Growth Fund on page 28. You can switch into another Scottish Widows fund at any time: the initial charge and the management and expense charges for the fund you switch into might be different to those for the fund from which you are switching. Please see 'What are the charges?' on page 26. please contact us for details of any discounts that might apply to the initial charge of the fund you are switching into. We may be liable to Stamp Duty Reserve Tax (SDRT) on funds containing UK equities (equities are shares listed on the stockmarket). This is effectively a tax incurred when shares in the fund are purchased or cashed in. We will normally pay this out of the value of the fund. However, on large investments or encashments we may deduct it from the amount invested or from what you get back. 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. You usually buy or sell shares in the fund at a price based on the midpoint between the buying and selling prices of the underlying investments (underlying investments are, for example, the equities and/or fixed interest securities held by the fund). A dilution adjustment is an adjustment which might be made to the share price of the fund when there are large amounts of cash going into or coming out 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 and selling investments is met by those moving into or out of the fund, rather than by those who remain. The Authorised Corporate Director (ACD)'s policy is to apply a dilution adjustment within the criteria laid down in the Prospectus.

9 We have the power to change, at any time, most of the charges we make.we will give you 90 days notice.we may use this power if our costs turn out to be unexpectedly high, compared to our charges. Charges could increase if, for example: tax rules change; our staff or overhead costs are more than we anticipate; or our income from charges is less than we anticipate. HOW MUCH WILL THE ADVICE COST? Your Financial Adviser will give you details about the cost. The amount will depend on the size of your investment and in the case of regular savings the period for which you make them. It will be paid for out of the charges. CAN I TRANSFER MY ISA? You may be able to transfer all, or part, of the value of your ISA to another ISA manager. You must tell us in writing if you wish to transfer. You may also be able to transfer from another ISA manager to a Scottish Widows ISA. You ll 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. Charges may apply on transferring an ISA from one provider to another. These charges can include, for example, exit charges, initial charges and transaction costs. Scottish Widows do not make exit charges or charges to cover any transaction costs associated with the transfer. Please see What are the charges? on page 7 for details of our charges. WHAT ABOUT TAX? You don t have any personal liability to income tax or capital gains tax on an ISA investment. There s no need to declare your ISA to the Inland Revenue. Where an OEIC fund makes interest payments the ISA Manager can reclaim tax which has been deducted from the interest. However, please note we are unable to claim the 10% tax credit on UK dividends. Your investment can no longer be held as an ISA after your death and its value will form part of your estate for inheritance tax purposes. The value to an investor of the tax advantages of an ISA will depend on personal circumstances, which may change. Tax rules can change. If you transfer in or out of your ISA, or switch funds, you won t lose any of your ISA tax benefits. 8

10 CAN I CHANGE MY MIND? You can change your mind within 30 days of receiving your cancellation notice. If you have made monthly payments, we ll give you your money back. If you have made a single payment, we ll give you your money back less any fall in the value of your ISA. If you change your mind within 30 days, you ll be free to make another ISA investment in the same tax year. HOW WILL I KNOW HOW MY ISA IS DOING? Every six months we ll send you a statement and valuation of your ISA. Every six months you ll receive a copy of the Authorised Corporate Director (ACD) s Report for the ICVC you invest in. Further copies of the half-yearly and yearly ACD s Report can be obtained by contacting us. You can get an up-to-date valuation by phoning us on the number quoted on page 31. You can check the fund prices and up-todate yields* in some national newspapers, including the Financial Times, or by checking our website at *There are two types of yield: The estimated income (or running) yield gives you an indication of the current yearly income that you could expect, as a percentage of your investment. The estimated gross redemption yield gives you an indication of the yearly return you might get back, over the long term, taking account of the combined effect of income and capital gain or loss (after charges are allowed for). Both are based on current investments of the fund, excluding any bonds or other fixed interest securities which are currently in payment default and assume that there are no future payment defaults. The gross redemption yield also assumes that each bond or other fixed interest security is held for the full term of the loan. If the income yield is higher than the gross redemption yield, there is a greater risk that you might get back less than you ve invested. The value of your ISA is calculated by multiplying the number of shares you hold by the share price.we might also make a dilution adjustment and/or SDRT charge when you cash in some or all of your ISA. 9

11 Specific ISA Fund Information The following pages give you specific ISA fund information.the funds available at the date of publication are listed below, along with details of where you can find the aims and specific risk factors, additional to those on pages 1 and 2, which are applicable to each fund. Please be aware that these definitions and the approaches for specific funds may change in the future.you can find tables showing how charges and expenses will affect all the funds listed below on pages 29 and 30.You can also find tables showing examples of What you might get back on pages 27 and 28. Fund Names Page American Growth 11 American Select Growth 11 American Smaller Companies 11 Balanced Growth Portfolio 12 Balanced Portfolio 12 Cautious Portfolio 13 Corporate Bond 13 Dynamic Income Portfolio 14 Emerging Markets 14 Environmental Investor 15 Ethical 15 Euroland 15 European Growth 15 European Select Growth 16 Gilt 16 Global Growth 16 Global Select Growth 17 High Income Bond 17 High Reserve 18 Japan Growth 18 Japan Select Growth 19 Latin American 19 Managed Income Portfolio 20 Momentum Income Portfolio 20 Opportunities Portfolio 21 Pacific Growth 21 Progressive Portfolio 22 Stockmarket Growth Portfolio 22 Strategic Growth Portfolio 23 Strategic Income 23 UK Equity Income 24 UK Growth 24 UK Select Growth 25 UK Smaller Companies 25 UK Tracker 25 For other important information (including how to contact us) please read pages at the end of this brochure. 10

12 AMERICAN GROWTH FUND To give long-term capital growth by investing in a wide portfolio of mainly North American company shares. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. AMERICAN SELECT GROWTH FUND To give long-term capital growth by investing in a select portfolio of mainly North American company shares. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. By investing in a select portfolio there might be greater fluctuations in the value of your shares than with a wider portfolio. AMERICAN SMALLER COMPANIES FUND To give long-term capital growth by investing in a range of shares and other investments of mainly North American smaller companies. 11 The fund invests in smaller companies whose shares and other investments are bought and sold less frequently and there might be lower trading volumes than for larger companies. This might cause large changes in the prices of these investments and so their value could fall by large amounts. The price variations of shares and other investments in smaller companies might be greater than those of large companies. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down.

13 BALANCED GROWTH PORTFOLIO To give long-term capital growth by investing in a balance of equity and fixed interest funds within the Lloyds TSB Group. The portfolio will invest mainly in the UK but with a significant proportion overseas. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Some of the companies and governments that we invest in who issue bonds and other fixed interest securities 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 will reduce. In addition a small proportion of the portfolio will be invested in fixed interest securities which carry a higher than average risk. Fluctuations in interest rates are likely to affect the value of the fixed interest securities held by the portfolio. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas investments held by the portfolio to go up or down. BALANCED PORTFOLIO FUND To give long-term capital growth by investing in a range of funds offered by the Russell Investment Group, and managed by a wide selection of fund managers. These funds invest in a balance of shares in companies and high quality fixed interest securities (including corporate bonds) in the UK and overseas markets. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Some of the bonds and other fixed interest securities held by the funds are issued by companies and governments that might not be able to meet their payments, or whose credit rating might fall. If they don t meet their payments or their credit rating falls, the value of your investment will fall. Exchange rate changes might cause the value of any overseas investments to go up or down. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. 12

14 CAUTIOUS PORTFOLIO FUND To give income, with the potential for some capital growth, by investing in a range of funds offered by the Russell Investment Group, and managed by a wide selection of fund managers. These funds invest mainly in high quality fixed interest securities (including corporate bonds), but also in shares in companies in the UK and overseas markets. Some of the bonds and other fixed interest securities held by the funds are issued by companies and governments that might not be able to meet their payments, or whose credit rating might fall. If they don t meet their payments or their credit rating falls, the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. CORPORATE BOND FUND To give either an income or growth (when income is kept within the fund). To do so by investing mainly in high quality corporate bonds and other fixed interest securities issued primarily by companies operating in the UK. The fund may also invest in Europe. Some of the companies and governments that we invest in who issue bonds and other fixed interest securities might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments, the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. 13 More than 35% of the fund may be invested in fixed interest securities issued by a single government. If they can t repay the amount borrowed, the value of your investment will fall.

15 DYNAMIC INCOME PORTFOLIO To give an income with some potential for long-term capital growth. To do so by investing mainly in fixed interest securities with a significant proportion in equities. The portfolio will invest mainly in the UK but with a significant proportion overseas. Investments are held in funds within the Lloyds TSB Group. Some of the companies and governments that we invest in who issue fixed interest securities might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments, the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. In addition a proportion of the portfolio will be invested in fixed interest securities which carry a higher than average risk. Fluctuations in interest rates are likely to affect the value of the fixed interest securities held by the portfolio. If long-term interest rates rise the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas investments and income from them to go up or down. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. EMERGING MARKETS FUND To give long-term capital growth by investing mainly in shares of companies operating in developing countries worldwide. The 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 shares in the fund might fall. Shares in these markets might be bought and sold less frequently and there might be lower trading volumes. This might cause large changes in the prices of these investments and so their value could fall by large amounts. Exchange rate changes might cause the value of any overseas investments to go up or down. This risk is greater for emerging markets countries, which might be subject to greater political and economic changes. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. 14

16 ENVIRONMENTAL INVESTOR FUND To give long-term capital growth by investing in companies, mainly in the UK, which show a positive commitment to the protection and preservation of the natural environment. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. ETHICAL FUND To give long-term capital growth by investing in companies, mainly in the UK, with positive ethical practices. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. EUROLAND FUND To give long-term capital growth by investing in a select portfolio of mainly company shares, primarily in Euroland. By Euroland, we mean countries within the European Economic and Monetary Union, who are either in the process of replacing, or have replaced, their national currencies with the Euro. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. By investing in a select portfolio there might be greater fluctuations in the value of your shares than with a wider portfolio. EUROPEAN GROWTH FUND To give long-term capital growth by investing in a wide portfolio of, mainly, Continental European company shares. 15 term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down.

17 EUROPEAN SELECT GROWTH FUND To give long-term capital growth by investing in a select portfolio of, mainly, Continental European company shares. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. By investing in a select portfolio there might be greater fluctuations in the value of your shares than with a wider portfolio. GILT FUND To give an income, whilst having regard to the capital value, by investing in mainly UK Government and other fixed interest securities. 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 shares is likely to fall and vice versa. More than 35% of the fund will be invested in securities issued by the UK Government. There could be a risk, for example, if it (or any other company or government in whose securities the fund may invest) can t repay the amount borrowed or if their credit rating falls. If they don t repay, or their credit rating falls, the value of your investment will fall. GLOBAL GROWTH FUND To give long-term capital growth by investing in a wide portfolio of mainly company shares in any geographical area, including the UK. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. 16

18 GLOBAL SELECT GROWTH FUND To give long-term capital growth by investing in a select portfolio of mainly company shares in any geographical area, including the UK. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. By investing in a select portfolio there might be greater fluctuations in the value of your shares than with a wider portfolio. HIGH INCOME BOND FUND To give either an income or growth (when income is kept within the fund). To do so by investing primarily in corporate bonds and other fixed interest securities issued by companies and governments operating in the USA, the UK and Europe. The majority of the fund will be in securities with a higher than average risk. The fund invests in companies who issue bonds and other fixed interest securities which carry a higher than average risk that they might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas income received by the fund to go up or down. This might affect the amount of income paid to you or added to the fund. Part or all of the yearly management charge may be taken daily from the capital of the fund which could result in the value of your investment reducing. More than 35% of the fund may be invested in fixed interest securities issued by a single government. If they can t repay the amount borrowed, the value of your investment will fall. 17

19 HIGH RESERVE FUND To give an income, and the potential for long-term capital growth, by investing mainly in shares and fixed interest securities (including corporate bonds) in the UK, but may include Europe. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Some of the companies and governments that we invest in who issue bonds and other fixed interest securities might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments, the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Part or all of the yearly management charge may be taken daily from the capital of the fund which could result in the value of your investment reducing. More than 35% of the fund may be invested in fixed interest securities issued by a single government. If they can t repay the amount borrowed, the value of your investment will fall. JAPAN GROWTH FUND To give long-term capital growth by investing in a wide portfolio of mainly Japanese company shares. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. 18

20 JAPAN SELECT GROWTH FUND To give long-term capital growth by investing in a select portfolio of mainly Japanese company shares. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Exchange rate changes might cause the value of any overseas investments to go up or down. By investing in a select portfolio there might be greater fluctuations in the value of your shares than with a wider portfolio. LATIN AMERICAN FUND To give long-term capital growth by investing in mainly shares of companies operating in Latin American countries. The 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 shares in the fund might fall. Shares in these markets might be bought and sold less frequently and there might be lower trading volumes. This might cause large changes in the prices of these investments and so their value could fall by large amounts. Exchange rate changes might cause the value of any overseas investments to go up or down. This risk is greater for investment in Latin American countries, which might be subject to greater political and economic changes. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. 19

21 MANAGED INCOME PORTFOLIO To give an income, or growth (when income is kept in the portfolio). To do so by investing predominantly in fixed interest securities. A small proportion of the portfolio will be invested in equities. The portfolio will invest mainly in the UK but with a significant proportion overseas. Investments are held in funds within the Lloyds TSB Group. Some of the companies and governments that we invest in who issue fixed interest securities might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments, the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. In addition a proportion of the portfolio will be invested in fixed interest securities which carry a higher than average risk. Fluctuations in interest rates are likely to affect the value of the fixed interest securities held by the portfolio. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas income received by the portfolio to go up or down. This might affect the amount of income paid to you or added to the portfolio. MOMENTUM INCOME PORTFOLIO To give an income with some potential for long-term capital growth. To do so by investing mainly in fixed interest securities. A proportion of the portfolio will be invested in equities. The portfolio will invest mainly in the UK but also overseas. Investments are held in funds within the Lloyds TSB Group. Some of the companies and governments that we invest in who issue fixed interest securities might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments, the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. In addition a proportion of the portfolio will be invested in fixed interest securities which carry a higher than average risk. Fluctuations in interest rates are likely to affect the value of the fixed interest securities held by the portfolio. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas income received by the portfolio to go up or down. This might affect the amount of income paid to you or added to the portfolio. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. 20

22 OPPORTUNITIES PORTFOLIO FUND To give long-term capital growth by investing in a range of funds offered by the Russell Investment Group, and managed by a wide selection of fund managers. These funds invest at least 80% in shares in companies with the remainder in high quality fixed interest securities (including corporate bonds) in the UK and overseas markets. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Some of the bonds and fixed interest securities held by the funds are issued by companies and governments that might not be able to meet their payments, or whose credit rating might fall. If they don t meet their payments or their credit rating falls, the value of your investment will fall. Exchange rate changes might cause the value of any overseas investments to go up or down. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. PACIFIC GROWTH FUND To give long-term capital growth by investing in the stockmarkets of Asia and Australasia, excluding Japan. The fund may invest in emerging 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 shares in the fund might go down. Investments in these markets might be bought and sold less frequently and there might be lower trading volumes. This might cause large changes in the prices of these investments and so their value could fall by large amounts. Exchange rate changes might cause the value of any overseas investments to go up or down. This risk is greater for emerging markets countries, which might be subject to greater political and economic changes. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. 21

23 PROGRESSIVE PORTFOLIO FUND To give long-term capital growth by investing in a range of funds offered by the Russell Investment Group, and managed by a wide selection of fund managers. These funds invest up to 85% in shares in companies with the remainder in high quality fixed interest securities (including corporate bonds) in the UK and overseas markets. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Some of the bonds and other fixed interest securities held by the funds are issued by companies and governments that might not be able to meet their payments, or whose credit rating might fall. If they don t meet their payments or their credit rating falls, the value of your investment will fall. Exchange rate changes might cause the value of any overseas investments to go up or down. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. STOCKMARKET GROWTH PORTFOLIO To give long-term capital growth by investing predominantly in equities. A limited proportion of the portfolio will also be invested in fixed interest securities. The portfolio will invest in both UK and overseas markets. Investments are held in funds within the Lloyds TSB Group. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Some of the companies and governments that we invest in who issue fixed interest securities 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 will reduce. In addition a small proportion of the portfolio will be invested in fixed interest securities which carry a higher than average risk. Fluctuations in interest rates are likely to affect the value of the fixed interest securities held by the portfolio. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas investments held by the portfolio to go up or down. 22

24 STRATEGIC GROWTH PORTFOLIO To give long-term capital growth by investing mainly in equities but also in fixed interest securities. The portfolio will invest in both UK and overseas markets. Investments are held in funds within the Lloyds TSB Group. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Some of the companies and governments that we invest in who issue fixed interest securities 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 will reduce. In addition a small proportion of the portfolio will be invested in fixed interest securities which carry a higher than average risk. Fluctuations in interest rates are likely to affect the value of the fixed interest securities held by the portfolio. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas investments held by the portfolio to go up or down. 23 STRATEGIC INCOME FUND To give either an income or growth (when income is kept within the fund). To do so by investing primarily in UK and European corporate bonds and other fixed interest securities. The majority of the fund will be in high quality securities but a significant proportion will be in securities with a higher than average risk. The fund invests in companies who issue bonds and other fixed interest securities which carry a higher than average risk that they might not be able to meet their payments, or their credit rating might fall. If they don t meet their payments, the value of your investment and any income you take will reduce. If their credit rating falls, the value of your investment will fall. Fluctuations in interest rates are likely to affect the value of the bonds and other fixed interest securities held by the fund. If long-term interest rates rise, the value of your shares is likely to fall and vice versa. Exchange rate changes might cause the value of any overseas income received by the fund to go up or down. This might affect the amount of income paid to you or added to the fund. Part or all of the yearly management charge may be taken daily from the capital of the fund which could result in the value of your investment reducing. More than 35% of the fund may be invested in fixed interest securities issued by a single government. If they can t repay the amount borrowed, the value of your investment will fall.

25 UK EQUITY INCOME FUND To give an income together with some capital growth over the long-term by investing, mainly, in a portfolio of UK company shares. The fund may also invest in fixed interest securities. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. Part or all of the yearly management charge may be taken daily from the capital of the fund which could result in the value of your investment reducing. UK GROWTH FUND To give long-term capital growth by investing in a wide portfolio of mainly UK company shares. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. 24

26 UK SELECT GROWTH FUND To give long-term capital growth by investing in a select portfolio of mainly UK company shares. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. By investing in a select portfolio there might be greater fluctuations in the value of your shares than with a wider portfolio. UK SMALLER COMPANIES FUND To give long-term capital growth by investing in a range of shares and other investments of mainly UK smaller companies. The fund invests in smaller companies whose shares and other investments are bought and sold less frequently and there might be lower trading volumes than for larger companies. This might cause large changes in the prices of these investments and so their value could fall by large amounts. The price variations of shares and other investments in smaller companies might be greater than those of large companies. term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. UK TRACKER FUND To give long-term capital growth by aiming to track the capital performance of the UK equity market, as currently represented by the Financial Times Stock Exchange 100 Index. The fund normally invests in all of the companies included in the Index. Specific Risk Factors term than investing in, say, fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that you might not get all your money back. 25