Scottish Widows Property Authorised Contractual Scheme Prospectus

Where appropriate, the Sub-Fund may also invest, directly or indirectly, in shares and fixed-income securities and other transferable securities (including closed-end sub-funds), equity deposits, deposits, money market instruments, cash deposits, derivatives and other regulated collective investment undertakings. Unregulated collective investment schemes, stocks/repurchase agreements, borrowings and hedging may also be used. The ACD is also responsible for the selection of collective investment schemes used by the Fund. These may be actively or passively managed collective investment schemes**, which may include up to 100% investments in collective investment schemes managed, advised or operated by group companies. The Fund generally invests in a combination of derivatives such as financial futures, foreign exchange futures, warrants and other financial instruments (where permitted), cash or quasi-cash instruments (including those in foreign currencies) and other investments (in particular shares and units of other collective investment undertakings). Long-term capital growth through investments mainly in regulated multi-manager collective investment schemes. The fund invests in a balance of fixed income funds and equity funds (up to a maximum of 60% in equity funds). These investments will be diversified across various geographies, including the UK and other international markets. The Morningstar Document Library is a comprehensive resource for investment documents, from prospectuses to annual reports. By combining more than 20 years of experience in data collection with state-of-the-art technology, Morningstar provides its clients with accurate and timely documents that enable them to meet regulatory requirements and provide excellent service to investors.

The Fund may also invest in indexed government securities as well as other transferable securities, cash or cash-related instruments, deposits, money market instruments, other collective investment schemes and warrants. The fund aims to provide exposure primarily to equities, which may include the UK, overseas or emerging markets. The Fund may also offer exposure to any or all of the following asset classes: bonds (which may include UK government bonds, indexed securities, other sterling-denominated fixed income securities, covered bonds, high-yield bonds and foreign bonds), private equity, hedge funds, commodities and UK or foreign real estate. The fund aims to gain exposure to different asset classes mainly by investing in regulated and non-regulated collective investment schemes, which can include up to 100% in collective investment schemes managed, advised or operated by group companies. An equity fund can be selected if it aims to achieve above-average income and/or capital growth. The selected equity funds invest mainly in stocks that have a broad diversification by country, industry and company. A fixed income fund may be chosen if it aims to achieve a high level of return. The selected fixed income funds will invest primarily in government and corporate bonds issued from a number of international markets and denominated in various currencies.

The Fund may, at the discretion of the DCA, also invest in other regulated collective investment undertakings that are consistent with the objectives of the Fund. Non-sterling fixed-rate investments can again be hedged in pounds sterling. The fund will offer exposure to UK and foreign equities, sterling-denominated fixed income securities and foreign bonds. The Fund may also invest in other investments that are authorized under the FCA rules for this type of system and that are consistent with the objectives of the Fund. The Fund may also invest in equity-linked securities (other than securities linked to Japanese shares), which are preferred shares, rights issues, American Depositary Receipts and Global Depositary Receipts, as well as debentures related to shares, cash, cash, deposits, other collective investment schemes and warrants. Note 1: As this is a system for investments in securities and which cannot invest more than 10% of the value of the Assets of the Scheme in unauthorized securities, no more than 5% in warrants and no more than 10% in other collective investment schemes. The use of derivatives for this type of system is limited to efficient portfolio management. The Sub-Fund aims to achieve capital growth by investing in a portfolio of collective investment schemes in order to gain exposure to a wide range of fixed income, equity and real estate asset investments in the UK and around the world, with some exposure to absolute return strategies*. Provide a level of income compatible with a high level of capital certainty through investments in financial instruments in which a system of non-UCITS retail investors equivalent to a money market system is invested (see note 1).

At least 70% of the Sub-Fund will invest directly in commercial properties in the UK market and will aim to generate capital growth through property development and market value appreciation, as well as generate additional income from the leasing of its real estate assets. The fund is a short-term variable net asset value (NAV) MMF, which is a form of eligible MMF. It will invest in assets in which a short-term VNAV fund is authorised to invest and, therefore, its investment objective and policy fulfil the conditions set out in the definition of eligible MMFs. Where appropriate, the Fund may also invest directly in securities, certificates of participation, money market instruments, cash-related derivatives, derivatives and other collective investment undertakings. Stocks/pensions, borrowings, hedging and other techniques approved by the FCA may also be used. At present, there is no provision for derivatives to be used for purposes other than the effective management of the Fund`s portfolio (including hedging), although derivatives may be used with at least 60 days` notice to shareholders to pursue their investment objective in the future and for effective portfolio management (including hedging). Where derivatives are used to achieve the Investment Objective of the Fund, the use of derivatives is not expected to increase the risk profile. OTC instruments such as index-based total return swaps can be used for real estate and commodity exposures. Credit default swaps can be used to obtain large credit exposures. When selecting properties for inclusion in the Sub-Fund, the Investment Advisor shall take into account the individual characteristics of the property, such as return potential, location and valuation, and shall ensure that the Sub-Fund is appropriately diversified across different locations, property types and tenant types. The sub-fund will invest primarily in commercial real estate. Exposure to commercial real estate can be acquired directly or indirectly through securities and other collective investment undertakings.

This direct or indirect real estate exposure will be mainly in the UK, but the sub-fund may also hold a stake overseas. .