Fund Suspension Update - Global Strategic Balanced broker fund

We previously advised that the proposal to split the liquid and illiquid assets of the underlying Strategic Growth fund into separate cells had been approved at a shareholder meeting held on 14 August 2013. We can now confirm that the Directors have completed the split and we have placed an instruction to sell our full holding within the liquid cell. 

Please note that this represents only a small proportion of the underlying Strategic Growth fund. In relation to the Global Strategic Balanced broker fund (the 'Broker' fund) this equates to 20.15% of the total fund value. 

The next steps 

We will be taking the following actions to allow affected policyholders the swiftest possible access to the recovered proceeds. We believe these actions are in the best interests of our policyholders at this time, as we have no additional information regarding timescales for when further liquid proceeds may become available. 

• Beginning immediately we will undertake the process of applying the sale proceeds from the liquid cell to the Broker fund
• Having applied the proceeds, we will temporarily lift the suspension and re-price the Broker fund. The unit price will be based on the new value of the Broker fund, which will effectively be equal to the sale proceeds received from the liquid cell meaning the unit price will be significantly lower compared with the last price before the suspension
• All Annual Management Charges relating to the Broker fund, which should have accrued over the suspension period, will be waived by RL360 and will not be factored in to the new unit price
• The new price will be applied from the point of the original suspension, which was 25 February 2013, onwards
• Standard charges relating to affected policies (such as the monthly policy fee/management charge) which have not been taken during the period of the suspension, will begin to be deducted once the Broker fund has re-priced. Percentage charges will be based on the reduced value of the Broker fund within each policy
• In order to catch up with all relevant transactions on affected policies it will take our systems a series of working days to complete this process due to the length of time the Broker fund has been suspended. We expect the process to take 3-4 weeks to fully complete

Important 

During this period (i.e. between the date of our letter and when we next write to policyholders advising the process is complete), policyholders will not be able to access their unit holding in the Broker fund. They will be unable to withdraw, switch or surrender the value in the Broker fund. It will remain frozen in their policy. This will not, however, affect any other funds which they may hold in their policy in addition to the Broker fund. 

• When the catch up process has completed we will then switch the remaining units held in the Broker fund into the SPI USD Balanced Managed S1 fund. This actively pricing fund will become part of the policy, and at that point policyholders will be able to switch the holding as they would do with any other fund
• Once the switch has finalised, we will write again to policyholders providing them with a copy of their updated valuation statement, and advise them of what their options are

The SPI USD Balanced Managed S1 fund is the closest alternative available to the affected policies, according to investment objective. The fund is part of the legacy Scottish Provident International internal fund range. The day to day management of the range is overseen by the RL360 Finance & Investment Committee. 

Letters have been issued to affected policyholders providing details of the latest information supplied. A copy has been sent to their servicing adviser for information. Sample letters can be viewed opposite. 

To read the fund updates previously issued in regard to this matter click on the links below: 

8 March 2013 click here. 

5 July 2013 click here. 

25 September 2013 click here.