assessment of value

Assessment of ValueFor funds with accounting year ends of 30 September or 31 October

ASSESSMENT OF VALUE REPORT

2

Letter from the Board ................................................................................... 4

Introduction .................................................................................................... 5

Solution Fund Summaries ...........................................................................7 AdventurousSolutionFund ...................................................................................................................... 8 BalancedSolutionFund ............................................................................................................................. 9 CautiousSolutionFund ............................................................................................................................ 10 DefensiveSolutionFund ........................................................................................................................... 11 DiscoverySolutionFund .......................................................................................................................... 12 DynamicSolutionFund ............................................................................................................................ 13 StrategicSolutionFund ............................................................................................................................14

Multi-Manager Fund Summaries ............................................................ 15 Multi-Manager Global Real Estate Securities .................................................................................... 16 Multi-ManagerInternationalEquity ...................................................................................................... 17 Multi-ManagerUKEquityFocus ...........................................................................................................18 Multi-ManagerUKEquityIncome ........................................................................................................ 19 Multi-ManagerUKEquityGrowth .......................................................................................................20

IPS Fund Summaries ................................................................................... 21 IPS Growth Portfolio ................................................................................................................................22 IPSIncomePortfolio ................................................................................................................................ 23 IPSHigherIncomePortfolio ..................................................................................................................24

Other .............................................................................................................. 25 Asset Allocator Fund ................................................................................................................................ 26

Glossary ........................................................................................................ 27

Contents

3


SincelaunchingourbusinesslastDecember,ourkeyfocushasbeenourclients.Placingyourneedsattheheartofeverythingwedoisourpriorityandwe’recommittedtodeliveringtheresultsyoushouldexpect.

Oneofthefirstthingswedidasabusinesswastotakeoverresponsibilityfor16fundspreviouslymanagedbyScottishWidowsUnitTrustManagersLimited(SWUTM).Sincethenwe’vebeenworkingwithournewinvestmentadviser,SchroderInvestmentManagementLimited(SIM),tolookathowwecanimproveinvestmentperformance.

Today we’re publishing our first Assessment of Value. This assessmentfollowsnewrequirementsfromourregulator,theFinancialConductAuthority(FCA).Wewelcomethisinitiativeas it’sdesignedtostrengthengovernanceandtransparencyforyouas a client of our funds.

Wehopethefindingspublishedinthisreportandfuturereportswillgiveyouconfidenceinourabilitytoproviderobustoversightandeffectivemanagementofourfunds.

Howweapproachedtheassessment;We’rekeentodemonstratetransparencyineverythingwedo.Forafairandtransparentassessment,weaskedindependentspecialiststohelpusreviewhowourfundsfaredagainstthesevencriteriasetoutbytheFCA:

• Performance• AuthorisedFundManagerCosts• Economies of Scale• ComparableMarketRates• ComparableServices• ClassesofShares• QualityofService

Someofthesecriteriarequireustocomparethefundstosimilarfundsmanagedbyotherassetmanagers(knownasapeergroup).TodothisweusedfundcategoriesdefinedbyMorningstar,anindependentfinancialresearchcompany.WealsousedMorningstardata for the comparisons.

The data for this report was collected on 30 June 2020. At this point we’d been responsible for day-to-day management of the funds for sevenmonths,butthereportassessesvaluebothforthisperiodandfurtherbacktowhenScottishWidowsUnitTrustManagersLimited(SWUTM)providedoversightandmanagement.

Whattheassessmenttoldus;Theassessmentshowedthat,overall,our16fundsaredeliveringvaluebutthereareareasforimprovement.

Acrossthe112individualcriteriaweidentified:

• 79areaswherewe’redeliveringvalue• 29areaswhereimprovementswererequired,

andwe’vealreadytakenaction• 4areaswherewehaveenhancedoversight.

Performance;Onthewhole,one,threeandfiveyearperformancehasnotbeenasgoodaseitherthebenchmarkorthepeergroup.TheBoardisdisappointedinthisasitisnotwhereyouwouldexpectour funds to be. This meant performance was identified as one area thatneedsimprovingacrossallthefundsandweknowthissubjectisreally important to you.

Ournewinvestmentadviser,SchroderInvestmentManagementLimited(SIM),isoneoftheleadingassetmanagersintheUnitedKingdomwithastrongclientfocustodeliverpositiveoutcomes.

Workingwiththemmeanswecanbenefitfromtheirextensiveanalytical resources and the economies of scale that come from being asignificantinvestmentmanager.Itgivesusconfidencethatwecandeliverthelong-termrisk-adjustedreturnsyouexpect.Andwhilethelastsevenmonthsistooshortawindowtoreallyassesswhatwe’reachieving,wehopetheappointmentofournewinvestmentadviserprovidescomfortthatwe’reheadedintherightdirection.

AuthorisedFundManagerCosts; The assessment showed that the charges associated with running the funds are appropriate and fair. We’llcontinuetoreviewchargesacrossallofourfundrangestoensuretheyremaincompetitiveandappropriate.

EconomiesofScale;Theassessmentshowedthat,generally,asassetshaveincreasedinourfunds,theOngoingChargesFigure(OCF)hasreduced.Thisisacleardemonstrationofhowwe’vepassedonanyeconomiesofscaletoyou.Theassessmenthighlighted,however,theCautiousSolutionfund,DefensiveSolutionfund,DiscoverySolutionfundandtheMulti-ManagerUKEquityFocusfundasnotdeliveringeconomiesofscaleasefficientlyaswewouldhaveexpected.

ThesefundsarenowunderenhancedoversightandtheBoardhasinstructed for a detailed action plan to be presented.

ComparableMarketRates;The assessment showed that our investmentchargesarebroadlyinlinewiththepeergroupacrossall16 funds.

ComparableServices; This does not apply to our fund ranges as they arenotavailabletootherclients(forexampleinstitutionalclients).This means it does not feature in our assessment.

ClassesofShares;Weidentifiedthatfeesfortheretailshareclasses(classAshares)oftheAssetAllocatorfund,SolutionsfundsandMulti-Managerfundswerenotconsistent.WehavetakenremedialactionandreducedtheAnnualManagementCharge(AMC)ontheseshare classes.

QualityofService;Welookedattheoverallexperienceweandoursuppliersprovidetoassesswhetherornotthiswasinlinewithwhatyoushouldexpect.Theassessmentconcludedthattheydoprovidevalue.

Werecognisetherearealwaysopportunitiesforimprovementandwewillcontinuallystrivetomeetyourexpectations.Forexample,inNovemberweareintroducingaClientAdvisoryBoardwhichwillenableclientstohaveregularinputontheserviceweprovide.We’recommittedtoimprovingourservicesandyourfeedbackis the best way to understand where we could be doing better. Wewillalsobeenhancingourdigitalcapabilitiestoimprovetheserviceweprovideyou.

You can find out more about our conclusions in the body of this report.

Letter from the Board

4


Marcus Brookes ChiefInvestmentOfficer

Introduction

1. Performance2. Authorised Fund Manager Costs 3. Economies of Scale 4. Comparable Market Rates 5. Comparable Services 6. Classes of Shares 7. Quality of Service

It is the responsibility of the ACD Board to apply effective oversight and to challenge the assessments. To ensure this oversight is rigorous and impartial the Board includes independent non-executive directors.

To add further independent analysis and to ensure we took a robust approach to assessing value, we also called on the experience of Broadridge Financial Solutions, an external third party.

How we assessed value based on the FCA’s criteriaPerformanceWe have compared each fund’s performance against its peers to 30 June 2020. Performance data was sourced from Morningstar and we identified the peer group based on each fund’s asset allocation, objectives and risk profile. All funds within the corresponding Morningstar category were included for comparison.

We also looked at each fund’s current risk profile relative to its investment objective to determine if its absolute performance was in line with what we would expect.

Authorised Fund Manager CostsWe looked at each element of the funds’ costs and the cost of providing the service which make up our Ongoing Charges Figure (OCF).

Economies of Scale We reviewed the size of each fund relative to its ongoing charges. We then looked at whether our purchasing power – our size and reputation – could have achieved lower costs or a better quality of service for the same cost.

Comparable Market Rates We looked at the fees we charge our clients for investing in our funds and compared them to the fees for the other funds within the comparison group.

Comparable Services For each fund we reviewed if we offer alternative funds with a similar mandate within Scottish Widows Schroder Personal Wealth (ACD) Limited. If we did, we asked ourselves if the fees were comparable.

Classes of Shares We reviewed all share classes within each fund to identify whether any of them were more expensive than other classes similar funds that we manage.

Quality of ServiceWe looked at the overall client experience. For example, whether the funds have ever breached their investment guidelines, the level of operational errors (if any), and the number of client complaints. We reviewed not only the services provided by us, but also those from external providers including the Depositary, Custodian, Auditor, Investment Adviser, Transfer Agent and Fund Administrator. For external companies we also considered the level of fees relative to the service provided, whether they have the resources to support our business, and whether they respond to our queries in a timely fashion. We reviewed all key performance indicators that affect our clients to make sure they were in line with expectations.

The FCA has introduced new rules requiring us to review and analyse our funds annually to ensure each fund provides value to our clients. It has identified seven areas (“criteria”) that we should consider:

5Pastperformanceisnotaguidetofutureperformance.Investmentvalueandincomefromitmayfallaswellasrise, asaresultofmarketandcurrencymovements.Youmaynotgetbacktheamountoriginallyinvested.



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Areasdeliveringvalue Areaswhereimprovementwasrequiredandactionhasbeentaken

Areaswhereenhancedoversightisinplace

Summary of resultsTheresultsforeachcriteriabyfundisillustratedinthefollowingdiagram:

Solution Funds Multi-Manager Funds InvestmentPortfolioServiceFunds(IPS) Other

Adventurous Balanced Cautious Defensive Discovery Dynamic StrategicGlobal Real Estate

International Equity

UK Equity Focus

UK Equity Growth

UK Equity Income

Growth IncomeHigher Income

Asset Allocator

Performance ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Authorised Fund Manager

Costs● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Economies of Scale ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

ComparableMarketRates ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

ComparableServices ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

ClassesofShares ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Quality of Service ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Solution Funds Summaries

7


8

AdventurousSolutionFundObjective:Toprovidecapitalgrowththroughinvestmentinotherfunds, toprovideexposuretoarangeofdifferentassetclasses.

Performance TheAdventurousSolutionfund’sperformanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group. This is understandably concerning. This has beenduetoboththedecisionsabouthowtheinvestmentswerespreadacrossdifferentassetclasses,andtheperformanceoftheindividualfundsithasinvestedin.

ThefundperformanceisnotwheretheBoardwouldlikeittobeandactionhasbeentakento address performance concerns.

AuthorisedFundManagerCostsWehavereviewedthefund’son-goingcostsandhaveconcludedthatthechargesassociated with running the fund are appropriate and fair.

Economies of ScaleTheAdventurousSolutionfundhasdemonstratedeconomiesofscalethroughareductionintheOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-yearperiod.

ComparableMarketRatesOurassessmentfoundthatthefund’sOngoingChargesFigure(OCF)ismarginallylowerthanitspeersalthoughthefundismuchsmallerinsize.Onthewhole,ourratesarecomparablewiththemarketaverageandthereforedemonstratevaluetoourclients. Wewillcontinuetomonitorcostsonanon-goingbasis.

ComparableServicesThisfundisnotavailableinanyotherformtootherclients(suchasinstitutionalclients)andtherefore,thiscriteriadoesnotapply.

ClassesofSharesWehavereviewedtheshareclassesavailableandasaresultreducedtheAnnualManagementCharge(AMC)ontheAshareclass.TheAandGshareclassesareverysimilarinpurposeso,wewillconsiderrationalisingtheminthefuturetoachievebetteroutcomesfor clients.

QualityofServiceWelookedattheoverallclientexperience.WereviewedthefundservicesprovidedbytheDepositary,Custodian,Auditor,InvestmentAdviser,TransferAgentandFundAdministrator.Wereviewedkeyperformanceindicatorsthataffectclientsandanalysediftheywereinlinewithexpectations.Ourassessmentconcludedthattheseservicesprovidevaluetoourclients.


OverallconclusionFollowing our assessments,andtakingintoaccountallsevencriteria,webelievethefundisdeliveringvalue.

Areasdeliveringvalue

AreaswhereimprovementwasrequiredandactionhasbeentakenAreas where enhanced oversightisinplace

Performance

Authorised Fund ManagerCosts

Economies of Scale

ComparableMarketRates

ComparableServices

ClassesofShares

QualityofService

At a glance

Balanced Solution Fund Objective:Toprovidecapitalgrowththroughinvestmentinotherfunds, toprovideexposuretoarangeofdifferentassetclasses.

Performance TheBalancedSolutionfund’sperformanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group. This is understandably concerning. This has beenduetoboththedecisionsabouthowtheinvestmentswerespreadacrossdifferentassetclasses,andtheperformanceoftheindividualfundsithasinvestedin.

ThefundperformanceisnotwheretheBoardwouldlikeittobeandactionhasbeentaken to address performance concerns.

AuthorisedFundManagerCostsWehavereviewedthefund’son-goingcostsandhaveconcludedthatthechargesassociatedwith running the fund are appropriate and fair.

Economies of ScaleThe Balanced Solution fund has demonstrated economies of scale through a reduction in theOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-yearperiod.

ComparableMarketRatesOurassessmentshowedthatthefundismarginallymoreexpensivethanitspeergroupaverage.Butafterreviewingcostsassociatedwiththefund,weconcludedthatoverallthefundisprovidingvaluetoclients.Wewillcontinuetomonitorcostsonanon-goingbasis.



QualityofServiceWelookedattheoverallclientexperience.WereviewedthefundservicesprovidedbytheDepositary,Custodian,Auditor,InvestmentAdviser,TransferAgentandFundAdministrator.Wereviewedkeyperformanceindicatorsthataffectclientsandanalysediftheywereinlinewithexpectations.Ourassessmentconcludedthattheseservicesprovidevaluetoourclients.


9

OverallconclusionFollowing our assessments,andtakingintoaccountallsevencriteria,webelievethefundisdeliveringvalue.



At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

CautiousSolutionFund Objective:Toprovideanincomewiththepotentialforsomecapital growththroughinvestmentinotherfunds,toprovide exposuretoarangeofdifferentassetclasses.

Performance TheCautiousSolutionfund’sperformanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group. This is understandably concerning.



Economies of ScaleTheassessmenthighlightedthattheCautiousSolutionfundisnotdeliveringeconomiesofscaleasefficientlyaswewouldhaveexpected.ThisfundisnowunderenhancedoversightandtheBoardhaveinstructedforadetailedactionplantobepresented.

ComparableMarketRatesOurassessmentshowedthatthefundismarginallymoreexpensivethanthepeergroupaverage.Butafterreviewingcostsassociatedwiththefund,weconcludedthatoverallthefundisprovidingvaluetoclients.Wewillcontinuetomonitorcostsonanon-goingbasis.



QualityofServiceWelookedattheoverallclientexperience.WereviewedtheservicesprovidedbytheDepositary,Custodian,Auditor,InvestmentAdviser,TransferAgentandFundAdministrator.Wereviewedkeyperformanceindicatorsthataffectclientsandanalysediftheywereinlinewithexpectations.Ourassessmentconcludedthattheseservicesprovidevaluetoourclients.


Overallconclusion Following our assessmentstakingintoaccountallsevencriteria,we conclude that the funddemonstratesvalue,butenhancedoversightisinplacetoreviewtheeconomies of scale.



10

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

DefensiveSolutionFund Objective:Toprovideanincomewiththepotentialforsomecapital growththroughinvestmentinotherfunds,toprovide exposuretoarangeofdifferentassetclasses.

Performance TheDefensiveSolutionfund’sperformanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group. This is understandably concerning. This has beenduetoboththedecisionsabouthowtheinvestmentswerespreadacrossdifferentassetclasses,andtheperformanceoftheindividualfundsithasinvestedin.



Economies of ScaleTheassessmenthighlightedthattheDefensiveSolutionfundisnotdeliveringeconomiesofscaleasefficientlyaswewouldhaveexpected.ThisfundisnowunderenhancedoversightandtheBoardhaveinstructedforadetailedactionplantobepresented.

ComparableMarketRatesOurassessmentshowedthatthefundismarginallymoreexpensivethanthepeergroupaverage.Butafterreviewingcostsassociatedwiththefund,weconcludedthatoverallthefundisprovidingvaluetoclients.Wewillcontinuetomonitorcostsonanon-goingbasis.





OverallconclusionFollowing our assessmentstakingintoaccountallsevencriteria,we conclude that the funddemonstratesvalue,butenhancedoversightisinplacetoreviewtheeconomies of scale.



11

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

DiscoverySolutionFundObjective:Toprovideanincomewiththepotentialforsomecapital growththroughinvestmentinotherfunds,toprovide exposuretoarangeofdifferentassetclasses.

Performance TheDiscoverySolutionfund’sperformanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group. This is understandably concerning. This has beenduetoboththedecisionsabouthowtheinvestmentswerespreadacrossdifferentassetclasses,andtheperformanceoftheindividualfundsithasinvestedin.



Economies of ScaleTheassessmenthighlightedthattheDiscoverySolutionfundisnotdeliveringeconomiesofscaleasefficientlyaswewouldhaveexpected.ThisfundisnowunderenhancedoversightandtheBoardhaveinstructedforadetailedactionplantobepresented.

ComparableMarketRatesOurassessmentfoundthatthefund’sOngoingChargesFigure(OCF)ismarginallylowerthanthepeergroupaverage.Ourratesarethereforecomparablewiththemarketaverageanddemonstratevaluetoourclients.Wewillcontinuetomonitorcostsonanon-goingbasis.


ClassesofSharesWehavereviewedtheshareclassesavailableandasaresultreducedtheAnnualManagementCharge(AMC)ontheAshareclass.TheAandGshareclassareverysimilarinpurposeso,wewillconsiderrationalisingtheminthefuturetoachievebetteroutcomesfor clients.






12

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

DynamicSolutionFundObjective:Toprovidecapitalgrowththroughinvestmentinotherfunds, toprovideexposuretoarangeofdifferentassetclasses.

Performance TheDynamicSolutionfund’sperformanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group. This is understandably concerning. This has beenduetoboththedecisionsabouthowtheinvestmentswerespreadacrossdifferentassetclasses,andtheperformanceoftheindividualfundsithasinvestedin.



Economies of ScaleTheDynamicSolutionfundhasdemonstratedeconomiesofscalethroughareductionintheOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-year period.

ComparableMarketRatesOurassessmentshowedthatthefundismarginallymoreexpensivethanthepeergroupaverage.However,afterreviewingcostsassociatedwiththefund,weconcludedthatoverallthefundisprovidingvaluetoclients.Wewillcontinuetomonitorcostsonanon-goingbasis.





OverallconclusionFollowing our assessmentstakingintoaccountallsevencriteria,we conclude that the fund isdeliveringvalue.



13

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

Strategic Solution FundObjective:Toprovidecapitalgrowththroughinvestmentinotherfunds, toprovideexposuretoarangeofdifferentassetclasses.

Performance TheStrategicSolutionfund’sperformanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group. This is understandably concerning. This has beenduetoboththedecisionsabouthowtheinvestmentswerespreadacrossdifferentassetclasses,andtheperformanceoftheindividualfundsithasinvestedin.



Economies of ScaleThe Strategic Solution fund has demonstrated economies of scale through a reduction in the OngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-year period.

ComparableMarketRatesOurassessmentshowedthatthefundismarginallymoreexpensivethanthepeergroupaverage.However,afterreviewingcostsassociatedwiththefund,weconcludedthatoverallthefundisprovidingvaluetoclients.Wewillcontinuetomonitorcostsonanon-goingbasis.








14

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

Multi-Manager Fund Summaries

15


Global Real Estate Securities Objective:TheFund’saimistoprovideacombinationofincomeandcapitalgrowthbyinvestinginglobalpropertysecurities.

Performance TheMulti-ManagerGlobalRealEstateSecuritiesfundperformanceover1,3and5yearsisbehindtheaverageperformanceofotherfundsinitspeergroup.Thisisunderstandablyconcerning.



Economies of ScaleThe Multi-Manager Global Real Estate Securities fund has demonstrated economies of scale throughareductionintheOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-yearperiod.



ClassesofSharesWehavelookedatchargesacrosstheshareclassesinthemulti-managerfundrangeandourassessmentsconcludedthattherearenoothershareclassesthatservebroadlythesamepurposeasthosethatarecurrentlyavailable.However,wehavereducedtheAnnualManagementCharge(AMC)fortheretailshareclass(A)andwewillconsiderrationalising theshareclassesacrosstherangeinthefuturetoachievebetteroutcomesforclients.




Multi-Manager



16

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

InternationalEquityObjective:TheFund’saimistoprovidecapitalgrowthandsomeincome byinvestinginglobalshares.

Performance TheMulti-ManagerInternationalEquityfundperformanceover1,3and5yearsisbehindtheaverageperformanceofotherfundsinitspeergroup.Thisisunderstandablyconcerning.

ThefundperformanceisnotwheretheBoardwouldlikeittobeandactionhasbeentakentoaddressperformanceconcerns.


Economies of ScaleTheMulti-ManagerInternationalEquityfundhasdemonstratedeconomiesofscalethroughareductionintheOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-yearperiod.



ClassesofSharesWehavelookedatchargesacrosstheshareclassesinthemulti-managerfundrangeandourassessmentsconcludedtherearenoothershareclassesthatservebroadlythesamepurposeasthosethatarecurrentlyavailable.However,wehavereducedtheAnnualManagementCharge(AMC)fortheretailshareclass(A)andwewillconsiderrationalisingtheshareclassesacrosstherangeinthefuturetoachievebetteroutcomesforclients.




Multi-Manager



17

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

UKEquityFocusObjective:TheFund’saimistoprovidecapitalgrowthandsomeincome byinvestinginUKshares.

Performance TheMulti-ManagerUKEquityFocusfundperformanceover1,3and5yearsisbehindtheaverageperformanceofotherfundsinitspeergroup.Thisisunderstandablyconcerning.



Economies of ScaleTheassessmenthighlightedthattheMulti-ManagerUKEquityFocusfundisnotdeliveringeconomiesofscaleasefficientlyaswewouldhaveexpected.ThisfundisnowunderenhancedoversightandtheBoardhaveinstructedforadetailedactionplantobepresented.



ClassesofSharesWehavelookedatchargesacrosstheshareclassesinthemulti-managerfundrangeandourassessmentsconcludedtherearenoothershareclassesthatservebroadlythesamepurposeasthosethatarecurrentlyavailable.However,wehavereducedtheAnnualManagementCharge(AMC)fortheretailshareclass(A)andwewillconsiderrationalisingtheshareclassesacrosstherangeinthefuturetoachievebetteroutcomesforclients.




Multi-Manager



18

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

UKEquityIncomeObjective:TheFundaimstoprovideanincometogetherwithsome capitalgrowthbyinvestinginUKshares.

Performance TheMulti-ManagerUKEquityIncomefundperformanceover1,3and5yearsisbehindtheaverageperformanceofotherfundsinitspeergroup.Thisisunderstandablyconcerning.



Economies of ScaleTheMulti-ManagerUKEquityIncomefundhasdemonstratedeconomiesofscalethroughareductionintheOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-yearperiod.







Multi-Manager

£



19

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

UKEquityGrowthObjective:TheFund’saimistoprovidecapitalgrowthwithsomeincomebyinvestinginUKshares.

Performance TheMulti-ManagerUKEquityGrowthfundperformanceover1,3and5yearsisbehindtheaverageperformanceofotherfundsinitspeergroup.Thisisunderstandablyconcerning.



Economies of ScaleTheMulti-ManagerUKEquityGrowthfundhasdemonstratedeconomiesofscalethroughareductionintheOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-yearperiod.







Multi-Manager



20

At a glance

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

IPS Fund Summaries

21


IPS Growth PortfolioObjective:TheaimoftheFundistoachievecapitalgrowthbyinvestingindirectlythroughcollectiveinvestmentschemesand/or directly in a wide range of asset classes.

Performance Thefundisnotusedasastandaloneproduct,itisusedinconjunctionwithIPSIncomeorIPSHigherIncomeinvariousproportions.Theperformancehasbeenfavourablerelativetotheaverageperformanceofitspeersover1,3,and5yearperiods.However,duetothenatureofthisfund,peer-relativeassessmentislessmeaningful.



Economies of ScaleThe IPS Growth portfolio has demonstrated economies of scale through a reduction in the OngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-year period.

ComparableMarketRatesOurassessmentfoundthatthefund’sOngoingChargesFigure(OCF)ismarginallylowerthanthepeergroupaverage.Ourratesarecomparablewiththemarketaverageanddemonstratevaluetoourclients.Wewillcontinuetomonitorcostsonanon-goingbasis.


ClassesofSharesThefundisdesignedforuseasacomponentwithintheSchrodersPersonalWealthPersonalDiscretionaryPortfolioService(PDPS)andisnotsuitableforinvestmentoutsideofthis.Therearethereforenoothershareclassesthatservebroadlythesamepurposeasthosethatarecurrentlyavailable.




At a glanceAreasdeliveringvalue


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Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

IPS Income PortfolioObjective:TheFundaimstoprovideincomewithsomepotentialforcapitalgrowthbyinvestingindirectlythroughcollectiveinvestmentschemesand/ordirectlyinawiderangeofassetclasses.

Performance Thefundisnotusedasastandaloneproduct,itisusedinconjunctionwithIPSGrowthinvariousproportions.Performanceover1,3and5yearsisbehindtheaverageperformanceofotherfundsinitspeergroup.However,duetothenatureofthisfund,peer-relativeassessment is less meaningful.



Economies of ScaleThe IPS Income portfolio has demonstrated economies of scale through a reduction in the OngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-year period.






At a glance

23



Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService


IPSHigherIncomePortfolioObjective:TheFundaimstoprovideahighlevelofincomebyinvestingindirectlythroughcollectiveinvestmentschemesand/or directly in a wide range of asset classes.

Performance Thefundisnotusedasastandaloneproduct,itisusedinconjunctionwithIPSGrowthinvariousproportions.Performanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group.



Economies of ScaleTheIPSHigherIncomeportfoliohasdemonstratedeconomiesofscalethroughareductionintheOngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-yearperiod.

ComparableMarketRatesOurassessmentfoundthatthefund’sOngoingChargesFigure(OCF)ismarginallylowerthanthepeergroupaverage.Ourratesarecomparablewiththemarketaverageanddemonstratevaluetoourclients.Wewillcontinuetomonitorcostsonanon-goingbasis.





At a glance

£



24

Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService


Other

25


Asset Allocator FundObjective:TheFundprovidesatacticalinvestmentstrategy.TheFundaimstoachievethisbyseekingatotalreturn(incomeandgrowth)byinvestingdirectlyorindirectlyinawiderangeofassetclassesandgeographicregions(includingemergingmarkets).TheFund‘sexposurecanvarysignificantlyatthefundmanager’sdiscretion.

Performance TheAssetAllocatorfundisnotusedasastandaloneproduct,itisusedinconjunctionwithmodelportfolios.However,performanceover1,3and5yearsisbehindtheaverageperformance of other funds in its peer group.


Authorised Fund Manager CostsWehavereviewedthefund’son-goingcostsandhaveconcludedthatthechargesassociatedwith running the fund are appropriate and fair.

Economies of ScaleThe Asset Allocator fund has demonstrated economies of scale through a reduction in the OngoingChargesFigure(OCF)inlinewithanincreaseinthevalueofitsassetsoverafive-year period.

Comparable Market RatesOurassessmentfoundthatthefund’sOngoingChargesFigure(OCF)ismarginallylowerthanthepeergroupaverage.Ourratesarethereforecomparablewiththemarketaverageanddemonstratevaluetoourclients.Wewillcontinuetomonitorcostsonanon-goingbasis.

Comparable ServicesThisfundisnotavailableinanyotherformtootherclients(suchasinstitutionalclients)andtherefore,thiscriteriadoesnotapply.

Classes of SharesAspartofourassessments,wehavereducedtheAnnualManagementCharge(AMC)for theretailshareclass(A)andwewillconsiderrationalisingtheshareclassesacrosstherangeinthefuturetoachievebetteroutcomesforclients.

Quality of ServiceWelookedattheoverallclientexperience.WereviewedtheservicesprovidedbytheDepositary,Custodian,Auditor,InvestmentAdviser,TransferAgentandFundAdministrator.Wereviewedkeyperformanceindicatorsthataffectclientsandanalysediftheywereinlinewithexpectations.Ourassessmentconcludedthattheseservicesprovidevaluetoourclients.

Overall conclusion Following our assessmentstakingintoaccountallsevencriteria,we conclude that the fund isdeliveringvalue.

At a glance


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Performance


Economies of Scale


ComparableServices

ClassesofShares

QualityofService

Glossary

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GlossaryWearetransparentineverythingthatwedobutwerecognise thatsometimesthereareindustrytermsthatstillneedexplaining.Wehopethishelps.

ACD–(AuthorisedCorporateDirector)AnACDisacorporatebodygivenpowersanddutiesunderFCAregulationstooperateanICVC.TheACDisresponsiblefortheadministrationandaccountancyaswellasprovidingthelegalframeworkaroundthefunds,includingcompliance.OurACDisScottishWidowsSchroderPersonalWealth(ACD)Limited.

ACDBoardOurACDboardisresponsibleforallactivitiesrelatingtothefunds.

AnnualManagementCharge(AMC)Theannualfeetakenbythefundmanagerformakinginvestmentdecisions,usuallyapercentageoftheamountinvested.

AuthorisedFundManager(AFM)Theinvestmentmanagementcompanythatprovidesresearchandanalysisinpurchasingportfolio securities on behalf of the fund.

BenchmarkAstandard,(usuallyanindexoramarketaverage)thataninvestmentfund’sperformanceismeasuredagainst.Thebenchmarkmustbedisclosedinthefundprospectus.

ClassesofSharesAfundcanhavedifferentclassesofshares.Theseclasseswillvarybyhowtheyaredistributed and whether they are accumulation or income in nature. Share classes will typicallyhavedifferentannualmanagementchargesandongoingchargesfigures.

Economies of ScaleAneconomicprinciplestatingthatasvolumeofproductionincreases,thecostofproducingeachincrementalunitdecreases.Asappliedtothefundbusiness,theimplicationisthatasassetsincrease,thepercentagecostofmanagingand/orservicingthose assets decreases.

FinancialConductAuthority(FCA)TheFCAregulatesauthorisedinvestmentfunds.TheFCAistheUKregulatorofFinancialServicesandrequiresfirmstoadheretostrictrules,principlesandguidance.

ICVC(InvestmentCompanywithVariableCapital)Atypeofinvestmentfund,structuredasacompany,thatcancreatesharesfornewinvestorsandwhichwillbuysharesbackfromaninvestoriftheywishtosell.

OngoingChargesFigure(OCF)TheOCFismadeupoftheAnnualManagementCharge(AMC)andotheroperatingcosts.Otheroperatingcostsincludethecostsforotherservicespaidforbythefund,suchasthefeespaidtothetrustee(ordepositary),custodian,auditorandregulator.

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If you have any questions on the assessment please contact your adviser.

Schroders Personal Wealth is a trading name of Scottish Widows Schroder Personal Wealth (ACD) Limited. Registered in England and Wales No. 11722973. Authorised and regulated by the Financial Conduct Authority number 834833. Registered Office: 25 Gresham Street, London EC2V 7HN.

SPW00172 (09 /20)

assessment of value

Documents