11 December 2008

The Invista Property Portfolio Fund is an external fund that Standard Life International invests in through the Standard Life International Invista Property Portfolio Fund, which is one of a range of insured funds accessible through the International Bond.

The Invista Property Portfolio Fund invests mainly in physical assets, such as buildings and land. An increase in requests from customers to withdraw their money may require some properties to be sold. In much the same way as selling residential property, it can take time to convert property into cash and it is important that the selling process is carefully controlled to help the fund manager achieve the best price for the asset and therefore the best deal for investors.

The Manager of the Invista Property Portfolio Fund suspended all unit dealing in December 2007 saying that it "no longer feels that it is in the interests of all unit holders to permit these redemptions until buyers of certain of the fund's assets can be identified and who in each instance are prepared to pay a fair price".

On Monday 17 December 2007, Standard Life International introduced a queuing system for switches and surrenders from the Standard Life International Invista Property Portfolio Fund. Standard Life International will endeavour to process such requests as quickly as possible. However, while the Fund remains suspended, we are unable to give a date as to when this will be.

Withdrawals for the purposes of paying death claims will not be required to queue.

How does this affect customers with an investment in the Standard Life International Invista Property Portfolio Fund?

If, like many customers, you continue to view commercial property as part of a medium to long-term investment, the introduction of a queuing system can help to protect your investment. (Note that the value of your investment may fall as well as rise.)

If you wish to switch out of the Standard Life International Invista Property Portfolio Fund, your request will be placed in a queue and will be processed as Invista release funds to us.

When will dealing in the fund resume?

At the time of writing, dealing in the Invista Property Portfolio Fund remains suspended and we are unable to give a date as to when dealing will resume. Consequently, requests for surrenders or switches from the Standard Life International Invista Property Portfolio Fund will remain in the queue for the time being.

What action is Standard Life International taking?

To protect customers invested in the Standard Life International Invista Property Portfolio Fund, we closed this fund to new monies on Wednesday 1 October 2008.

We are in regular contact with Invista to monitor the sitation. On 28 October 2008 Invista contacted us stating that it is "impossible to predict exactly when dealing can recommence but we will continue to do all we can to monetise assets (net asset value) and achieve normal dealings again as soon as practicable".

They also stated the view that "conditions in the commercial property market have become yet more challenging but we remain committed to working to restore liquidity in [the fund] as soon as we can while ensuring the steps we take to achieve that have the best interests of all our unitholders uppermost".

What is the future outlook for property funds?

The re-pricing of the UK property market as continued throughour 2008 with uncertainty and heightened risk aversion resulting from the ongoing credit market problems having a significant impact on sentiment and overall confidence in the sector. At the same time, slowing demand from tenants and occupiers may cause reductions in rental income at a faster pace than previously anticipated. Both of these factors are likely to result in a further challenging period ahead for property investors, before an expected improvement in returns during 2010 as the economy recovers.

Standard Life Investments believes that UK commercial property, with its stable income return and low correlation to other asset classes, continues to offer good medium to long term investment prospects and is a suitable choice for many customers as part of a diversified investment portfolio.

Past performance is not a reliable guide to future performance.

More Information

We will post any further updates on the status of the fund on this web page. We will also contact customers currently invested in the fund when the queuing system is removed.

If you require more information about property investment through your International Bond, please call the Dublin Client Services team on 0845 300 4273. The telephone lines are open between 9am and 5pm, Monday to Friday. Calls may be monitored/recorded and call charges vary. Should you require advice, please speak to your financial adviser.