Stocks and Shares Junior ISA

April 2017

Key Features and Terms and Conditions of the Stocks and Shares Junior ISA

This document should be read in conjunction with an up-to-date Key Investor Information Document (KIID) for the fund in which you want to invest. You should read both documents carefully so that you understand and are comfortable with what you are buying, and then keep them safe for future reference. You should always ensure that you have up-to-date copies of both documents before you invest.

No advice has been given by Scottish Friendly in respect of this plan. We have not assessed whether this Junior ISA is suitable for your financial needs and therefore you will not benefit from the protection of the Financial Conduct Authority (FCA) rules on assessing suitability. If you are in any doubt about the suitability of this product for yourself, you should contact your financial adviser. Helping you decide

What is the purpose of this document? The Financial Conduct Authority is a financial services regulator. It requires us, Scottish Friendly, to give you this important information to help you to decide whether our Stocks and Shares Junior ISA is right for you. You should read this document carefully so that you understand what you are buying and then keep it safe for future reference.

What questions should I ask before I open a Junior ISA? In this document we have given you the answers to some important questions.

What should I do now? Please read: The Key Features of the Stocks and Shares Junior ISA The Terms and Conditions which is included in this leaflet The Scottish Friendly UK Growth Fund and Managed Growth Key Investor Information Document Please keep this with your investment documentation which we will send you. The Terms and Conditions in this document, together with the application form, form our standard client agreement upon which we intend to rely. For your own benefit and protection you should read these terms carefully before completing the application form. If you do not understand any point, please ask for further information. No advice has been given by Scottish Friendly in respect of this plan. We have not assessed whether this Junior ISA is suitable for your financial needs and therefore you will not benefit from the protection of the FCA rules on assessing suitability. If you are in any doubt about the suitability of this product for yourself, you should contact your financial adviser.

Stocks and Shares Junior ISA Page 1 April 2017 Key Features of the Stocks and Shares Junior ISA

Its aims To provide a child with a tax-free lump The Managed Growth Fund invests sum at the start of their adult life. in equities and fixed interest securities To achieve growth by investing in both in the UK and other international stocks and shares through a choice stock markets. Fixed interest securities of two investment funds. may comprise government securities such as gilts or corporate bonds and Your investment these may be denominated in sterling If you take out a stocks and shares and other foreign currencies. The use Junior ISA, you can invest up to £4,128 of derivatives, stock lending or borrowing in the current tax year, less any amounts may also take place when deemed subscribed to a Junior Cash ISA with appropriate to achieve the objectives another Junior ISA manager. Scottish of the fund. Friendly only offers investment into a Your money is pooled together with Stocks and Shares Junior ISA. other OEIC investors giving a combined You can invest monthly by Direct Debit purchasing power that means your or you can make a lump sum payment risk is spread across a wide portfolio by cheque or both. The minimum of investments. monthly payment is £10 and the The fund accumulates any income from minimum lump sum cheque is £50. the investment and this is reflected in Anyone, such as parents, grandparents, the daily share price. uncles, aunts or family friends may also Risks contribute to the child’s Junior ISA Once money has been paid into the provided the maximum that is invested Junior ISA, it is locked in. It can only does not exceed £4,128 in the current be taken out by the child when he tax year. or she reaches the age of 18. Any Your money buys shares in the payment made to the Junior ISA Scottish Friendly UK Growth Fund or cannot be returned to the donor. the Scottish Friendly Managed Growth The value of the child’s investment, and Fund, both sub-funds of an Open-Ended the income it earns, can go down as Investment Company (OIEC) called well as up and the child could get back Scottish Friendly Investment Funds. less than you put in. The value of the The UK Growth Fund invests in a wide child’s investment is not guaranteed. range of UK shares. A proportion may If you’re investing regularly for a also be held in cash. particular purpose, you may not achieve your target if you do not keep up your payments.

Stocks and Shares Junior ISA Page 2 The tax treatment of Junior ISAs Is this investment right for my child? depends on individual circumstances You should consider this investment and tax law may change in future. if you (or anyone else) wants to make As the two funds available are actively regular payments or a lump sum managed, these funds contain a greater payment into an investment for a child, degree of risk than a fund that simply for whom you have responsibility, and tracks the stock market and will depend where the investment’s performance is on the manager’s ability to select stocks linked to UK and international stocks and and shares that can grow. shares. The funds are not suitable if you do not wish to take any risk with your

The Managed Growth Fund is exposed money. Whilst your investment may be to and can hold currencies other than locked away on your child’s behalf for sterling. As a result, exchange rate up to 18 years (depending on the age of movements may affect your investment your child when you set up your Junior as well as price movements. ISA) you should be thinking of investing There are no cancellation rights for over at least five years. this investment. If you are in any doubt about the In some circumstances, for example suitability of this investment for your if the fund is experiencing significant child, you may wish to contact an buying or selling, the financial interests independent financial adviser. of existing investors may be protected Within the tax-free Junior ISA umbrella by the charging of a dilution levy when you can invest in one or more of the shares are bought or sold. See page 7 following two forms of savings or for more details. investment: Details of all the risks are available Stocks and Shares (either directly or via within the full prospectus which is a collective investment scheme such as available on request. an OIEC, a unit trust, an investment trust or via a life policy). Questions and answers A Cash Deposit Account (not offered by Scottish Friendly). Who can apply? What are the tax advantages? You are eligible to apply if your child is under 18, didn’t qualify for a Child Trust A Junior ISA is a savings or investment Fund and is a UK resident. plan where your Junior ISA proceeds are free from UK income tax and capital What is a Junior ISA?? gains tax. However, as with any tax-free The Junior ISA is an Individual Savings investment such as a pension or ISA, Account for children and allows any any UK dividend income is received after the deduction of corporation tax. investments to grow free of tax. It can be taken out by anyone with parental When the Junior ISA plan value is paid responsibility for a child and which allows out to the child at the age of 18, the any investments to grow free of tax. lump sum is free of any tax charge. When the child turns 18, the plan value can be accessed and becomes the legal property of the child.

Stocks and Shares Junior ISA Page 3 How much can I or anyone invest Who can invest in a Junior ISA? in a Junior ISA? Once setup anyone can invest in a Anyone can make single payments from child’s Stocks and Shares Junior ISA: £50 by one-off Direct Debit or monthly parents, guardians, grandparents, payments from £10 by regular Direct aunts, uncles, family friends. Debit. How can I pay into the Junior ISA? The maximum you can invest in a Stocks You or anyone else can make single and Shares Junior ISA for any Year is payments by cheque or monthly £4,128 minus anything you have paid payments by Direct Debit. If investing with into a Cash ISA in that Year. a single payment, your application should Anyone can invest in a Junior ISA but it be returned directly with your cheque. If can only be set up (opened) by someone you wish to invest monthly, complete and with parental responsibility for the child. return the Direct Debit on the application form. Top-up contributions during the What types of Junior ISA does tax year should be made in writing Scottish Friendly offer? accompanied with a cheque. Scottish Friendly offers a Stocks and Shares Junior ISA with a choice of Can regular payments be changed? investment into our OIEC funds. These Yes. You can increase, decrease Key Features relate specifically to or stop your payments at any time investment into the UK Growth Fund without penalty. and Managed Growth Fund which are Just let us know in writing if you wish two of our OIEC Funds. to alter your monthly payment and we Who can open a Junior ISA? will do the rest.

A Stocks and Shares Junior ISA can Who has control over the be set up by anyone with parental Stocks and Shares Junior ISA? responsibility for a child who is a UK The person that set up the Junior resident. Alternatively, a child over the ISA who has parental control over the age of 16 may open a Junior ISA on child can control the Junior ISA. This their own behalf. The person opening person will be known as the registered the account will be the Account’s contact. Only one person can be the registered contact until the child turns registered contact however this can 16 or the registered contact signs be transferred to another person with over responsibility to another adult parental responsibility when requested with parental responsibility. A Scottish in writing. Friendly Junior ISA may not be opened in the name of a child who already has a Stocks and Shares Junior ISA or a Child Trust Fund.

Stocks and Shares Junior ISA Page 4 When the child turns 16 the child may Can anyone make withdrawals the become the registered contact and take Stocks and Shares Junior ISA? control over the Junior ISA - although they Before the child turns 18 there is no legal cannot make withdrawals until they are right of access to the assets within the 18. Should the child wish to take control Junior ISA. Therefore any value within the of their Junior ISA they can simply write plan is locked in until the child turns 18. to Scottish Friendly at the address on page 11 and we will transfer the registered Can I transfer to another Junior ISA? contact to the child’s name (having verified Yes. As the child can only ever have their identity). The current registered one Stocks and Shares Junior ISA, you contact cannot legally object to the child may want to transfer the proceeds of becoming the new registered contact. his or her existing Junior ISA to another provider. All transfers will be made in Where will you invest the plan cash after selling the proceeds of your money? existing investment.

Your money buys shares in the Scottish Can the child have more than one Friendly UK Growth Fund or the Scottish Junior ISA over different tax years? Friendly Managed Growth Fund where No, unlike an (adult) ISA the child can it is pooled with other investors to buy only have one Cash Junior ISA and one shares in carefully selected companies as Stocks and Shares Junior ISA over their well as some Government-backed fixed lifetime as a child, that is up to age 18. interest securities. Because your money This means that should you wish to is spread over so many companies, pay contributions to another provider the risk of it being affected by a single you will first have to transfer the child’s underperforming share is reduced. existing Junior ISA to the new provider. Investment in fixed interest securities What happens when the also provides additional security for child turns 18? your investment in times of stock market When the child turns 18 the Junior ISA volatility. Your shares are held in the will become an (adult) ISA meaning name of Scottish Friendly as nominee. that the assets will become their legal The Managed Growth Fund launched property and the child (now 18) will have 31 May 1999. The UK Growth Fund was full control over the assets within the ISA launched on 21 May 2001. The base and can make partial or full withdrawals. currency of these funds is Sterling. These You should note that before we can funds are sub-funds of Scottish Friendly allow withdrawals or any other activity Investment Funds (the ‘Company’). The under the ISA the child will be required Company is an investment company to sign our ISA terms and conditions with variable capital incorporated under and their identity will be verified in the OEIC regulations. This company is accordance with the money laundering incorporated in Scotland. Both funds are regulations that apply at that time. managed by SVM Asset Managers based You should note that any regular in and founded in 1990. payments into the Junior ISA by Direct Debit or Standing Order will automatically cease when the child turns 18.

Stocks and Shares Junior ISA Page 5 What happens to the Stocks and A. Regular monthly payments Shares Junior ISA if the child dies? If you invest a monthly payment of £25 The full value of the shares in the for 18 years, the table below shows how Scottish Friendly UK Growth Fund much your investment would be worth, and/or Managed Growth Fund will be after charges, if it performs each year by: paid to the child’s estate and the tax advantages will end. 2% 5% 8%

How can I find out how much the £5,590 £7,370 £9,850 Junior ISA is worth? We will send the child a valuation B. Lump sum investment statement of his/her Junior ISA once If you invest a single payment of £3,000 a year. This statement will show the for 18 years, the table below shows how activity that has taken place since any previous statement and include the much your investment would be worth, number of shares the child owns and after charges, if it grows each year by: the value of the investments. The value of the investment, and the income it 2% 5% 8% earns, can go down as well as up and £3,210 £5,420 £9,000 the child could get back less than you put in. The value of the investment is not guaranteed. For both the regular monthly payments and lump sum investment examples The price of shares is calculated every shown above, please note: working day and quoted daily in the Financial Times and The Herald and on These figures are only examples and are our website www.scottishfriendly.co.uk not guaranteed - they are not minimum or maximum amounts. What the child What could the Stocks and Shares will get back depends on how your Junior ISA savings be worth in investment grows and the tax treatment the future? of your investment. The illustrations below give you an idea of how much your investments could be They could get back more or less worth in the years ahead. They assume than this. an investment in the Managed Growth These yearly growth rates are our Fund or the UK Growth Fund. The final reasonable estimate of what our amount will depend on how much you investments might achieve and are the invest, the actual charges over the full maximum permitted by the Financial term of your investment and the actual Conduct Authority. Scottish Friendly’s rate at which your investment grows. actual charges have been deducted in calculating the figures shown. Do not forget that inflation will reduce what you can buy with the value of your Junior ISA in the future.

Stocks and Shares Junior ISA Page 6 What are the charges? continuing shareholders may be protected by the charging of a ‘dilution A management charge of 1% a year of levy’ when shares are bought or sold. the fund value is taken into account in the The dilution levy will be paid into daily calculation of the Fund share price. the fund for the benefit of investors. In addition, a number of other fees The dilution levy for the fund will be are payable out of the fund. These calculated by reference to the costs of include audit, custody, regulator’s and dealing in the underlying investments of depository fees. The actual charges will that fund, including any dealing spreads, vary from year to year and also differ commissions and transfer taxes. between the Managed Growth Fund How will charges and expenses and the UK Growth Fund. The estimated affect my investment? effect of these fees as at 31 December A. Regular Monthly Payments 2016 was 0.59% per annum, allowing for tax relief, which is also taken into The effect of these charges on your account in the daily calculation of the monthly payment of £25, assuming share price of the fund. an average rate of growth of 5% a year, is set out below: We have taken account of all these charges in the figures shown in these examples. They could increase in the At the Investment Actual Effect of What you end of to date deductions deductions might get future if our costs increase more than year £ to date £ to date £ back £ expected. 1 300 2 2 305 In addition, there are transaction expenses incurred by the Fund when the 3 900 23 23 947 fund manager buys and sells the Fund’s 5 1,500 65 69 1,630 investments and these are paid out of 10 3,000 275 317 3,550 the capital of the Fund. 15 4,500 656 822 5,820 These expenses include the commission the fund manager pays its stockbroker. 18 5,400 979 1,290 7,370 The net asset value of a fund is determined from the value midway The last line in the table shows that if between the buying and selling prices you withdraw your investments after of the fund’s underlying assets. This 18 years, the effect of the total charges mid-price does not fully reflect the actual and expenses could amount to £1,290. prices the fund must pay or receive to Putting it another way, this would buy or sell assets, and so purchases have the same effect as bringing the or sales of assets cause the value to investment growth from 5% a year be reduced for continuing investors. In down to 3.3% a year. the unlikely event you are making an especially large purchase or sale, or if the fund is experiencing significant buying or selling, the effect is called ‘dilution’. In such circumstances, the financial interests of existing and

Stocks and Shares Junior ISA Page 7 B. Lump Sum Investment Documentation The effect of these charges on your We will send the child a statement single payment of £3,000, assuming confirming their investment. We will an average rate of growth of 5% a year, also send them a valuation of the is set out below: investment twice a year. The Report will show the activity that has taken At the Investment Actual Effect of What you place since their previous statement end of to date deductions deductions might get and include the number of shares year £ to date £ to date £ back £ the child owns. A copy of the funds’ 1 3,000 49 49 3,100 prospectus is available on request.

3 3,000 154 161 3,310 Cancellation rights 5 3,000 265 292 3,530 There are no cancellation rights available 10 3,000 579 718 4,160 under this plan.

15 3,000 948 1,320 4,910 Investment income 18 3,000 1,200 1,790 5,420 Any investment income earned is automatically reinvested. Tax reclaimed The last line in the table shows that if on this income is also reinvested on the you withdraw your investment after child’s behalf. 18 years, the effect of the total charges and expenses could amount to £1,790. Withdrawals You cannot make withdrawals from this Putting it another way, this would investment within the Junior ISA although have the same effect as bringing the you may transfer to another provider. investment growth from 5% a year down to 3.3% a year. Switching If you wish to switch your investment to Further information a different Scottish Friendly OEIC fund (contact us or visit our website for details Share Prices of these), simply let us know in writing. The price of shares is calculated every We normally switch shares between business day by dividing the total value funds on the first 12 noon valuation of the assets of the relevant fund by the after we receive your instructions. number of shares in existence. Share The first switch in anyone calendar year prices are quoted daily in the Financial is free, thereafter subsequent switches Times and The Herald and on our will attract a levy of up to 3% of the website: www.scottishfriendly.co.uk shares being exchanged. We will buy or sell shares for you at the next 12 noon valuation following receipt of your instructions. This is known as forward pricing.

Stocks and Shares Junior ISA Page 8 Transfer out Solvency II Directive information At your written request, we will transfer Under this directive, we are required your Junior ISA investment to another to provide you with a Solvency and Junior ISA Manager without the loss of Financial Condition Report and when tax relief in line with current Junior ISA available you can access this via our rules. Transfer payments will be met by website www.scottishfriendly.co.uk/ selling shares in the fund, at the next customer-centre/solvency-two valuation point following receipt of What happens if Scottish Friendly completed written instructions from your becomes insolvent? new Junior ISA Manager. We will then pay the proceeds to the new manager If you buy a Scottish Friendly Junior within 4 working days. ISA and we cannot pay the full amount due, you may be entitled Taxation to compensation under the Financial Any income and capital gains generated Services Compensation Scheme. from investments in a Junior ISA are free The first £50,000 of a claim in relation of UK income tax and capital gains tax. to the plan value is protected in full. Income allocations will be in the form You can get further information from the of interest or dividend distributions. Financial Services Compensation Scheme Interest distributions are received net at:Financial Services Compensation of a 10% Income Tax credit. Scheme, 10th Floor, Beaufort House, 15 St Botolph Street, London EC3A 7QU. The above is based on Scottish Friendly’s Tel 0800 678 1100*. www.fscs.org.uk understanding of current tax law and practice. Tax law may change in the future and may reduce the amount the *Free from a UK landline. child gets back or increase the amount of tax they pay. The regime of taxation of any gains received by an investor depends on tax law applicable to their individual circumstances. If an investor is unclear about his/her position, he/she should seek professional advice.

Money Laundering Regulations 2007 Under these regulations, there is a requirement to prove the identity of people who wish to take out a life, pension or investment contract. You may therefore be asked to supply documents as evidence of your identity and/or your address.

Stocks and Shares Junior ISA Page 9 How to contact us Authorised Corporate Director Here are our contact details if you The Authorised Corporate Director have any queries or require any further of the Scottish Friendly Investment information, including the full Prospectus Funds OEIC is Scottish Friendly Asset and Accounts: Managers Limited, Scottish Friendly House, 16 Blythswood Square, Scottish Friendly Asset Managers G2 4HJ. The Scottish Friendly OEIC is Limited, Scottish Friendly House, incorporated in the . 16 Blythswood Square, Glasgow G2 4HJ. Tel: 0333 323 5433 Depository The Depository of the Scottish Friendly Your client category Investment Funds OEIC is J.P. Morgan We are required to categorise our clients Europe Limited, 25 Bank Street, Canary and this determines the level of detail and Wharf, London, E14 5JP. information that you will receive. We will treat you as a ‘Retail Client’ in respect of Language and law the services we will provide you, which The contractual terms and conditions means that you will benefit from the and all communications in relation to highest level of consumer protection. this plan will be supplied in English. In legal disputes, the law of Scotland How to complain will apply. If you wish to complain about any aspect of the service you have received, please Auditors contact us. Details can be found in the Deloitte LLP, Lomond House, ‘How to contact us’ section. If you are 9 George Square, Glasgow, G2 1QQ not satisfied with our response to your complaint, you can contact the Financial Supervisory Authority Ombudsman Service, Exchange Tower, The Financial Conduct Authority, Harbour Exchange Square, London E14 25 The North Colonnade, Canary Wharf, 9SR. Tel: 0800 023 4567 (free from a UK London E14 5HS. land line) or 0300 123 9123. Calls cost no more than calls to numbers starting with 01 or 02 and if you are calling from a mobile phone, calls will count towards any inclusive minutes you have rather than being charged separately. In accordance with The Alternative Dispute Resolution (ADR) Regulations, you may also use the EU online dispute resolution (ODR) platform https:// webgate.ec.europa.eu/odr The certified provider used by Scottish Friendly is the Financial Ombudsman Service.

Stocks and Shares Junior ISA Page 10 The Stocks and Shares Cash ISA – a Cash Individual Savings Junior ISA Terms and Account managed under the regulations; Conditions Client Account – A bank account held These Terms, together with the by us with the Bank under the Client Application Form, form a legal agreement Money Regulations; between you and Scottish Friendly Asset Child – the child under who’s name the Managers Limited (the Account Manager) Junior ISA will be set up and who does which sets out how your Junior Individual not have a Child Trust Fund opened in Savings Account will be operated. their name. 1. Definitions FCA – the Financial Conduct Authority; The following words and expressions, Junior ISA – A Junior Individual when used in these Terms, have the Savings Account managed under meanings set out opposite them: the Regulations; Accounts or Junior ISA – a Scottish OEIC Shares – shares in a Scottish Friendly Individual Savings Account Friendly OEIC which may be held in governed by these Terms and which is a an Account; Stocks and Shares Junior ISA; Registered Contact – the person taking Account investments – Shares, Units out the Junior ISA for the child, normally and any other investments held in the person with parental responsibility; an Account; Regulations – the Individual Savings Account Manager or Scottish Friendly – Account Regulations 1998, as from time Scottish Friendly Asset Managers Limited; to time amended and in force; Application Form – a Scottish Friendly Scottish Friendly OEIC – an Open-Ended Junior ISA or UK Growth Fund or Investment Company operated by the Managed Growth Fund OEIC Investment Account Manager (and, in the case of application form or transfer application an umbrella company, a sub-fund of form; such company); Assets – investments, income, interest, Society – Scottish Friendly Assurance cash deposits and any other rights and Society Limited, the parent company entitlement from time to time held within of the Account Manager; the Account; Subscription – A payment, in sterling, Associate – any holding company of the to be applied to the Account; Account Manager or a subsidiary of any such holding company (as defined in the Terms – these Terms (as amended Companies Act 1985); from time to time), together with the Application Form; Bank – Lloyds Banking Group plc, having it’s Head Office at The Mound, We, us and our – the Account Manager, Edinburgh, EH1 1YZ, incorporated in Scottish Friendly Asset Managers Limited; Scotland with registered number 95000; Year – a tax year beginning on 6 April in Business day – Any day except a any calendar year and ending on 5 April Saturday, Sunday, a Bank Holiday in the following year; in England and other days at the ACD’s discretion;

Stocks and Shares Junior ISA Page 11 You and your – a registered contact who will comply with the Regulations, has opened an Account on behalf of a principles and the rules of the FCA in child under these Terms. These Terms particular the principles of Treating will be governed by and construed in Customers Fairly. You will receive at accordance with Scottish law. least 3 months’ notice of any change with an explanation of why the Reference to any statutory provision change is necessary and its potential or regulation includes any modification impact on you. You will also be or reenactment. reminded of your right to transfer or Any headings and subheadings are not end your policy before the change is a legally binding part of these Terms. implemented. Where appropriate, the words in the 3. Application to Open an Account singular will include the plural, and the masculine will include the feminine. A. An application to open an Account must be made in writing on an 2. Account Manager Application Form. Subject to the A. Scottish Friendly Asset Managers Regulations, the Account will Limited agrees to act as Account be managed in accordance with Manager for your Account. We do not your directions set out in your review the Account portfolio and we do Application Form. not give advice about your Account. We B. These Terms will come into force when are regulated by FCA in the conduct of your Application Form is accepted by our investment business. us, and your first investment is made. B. Our address is Scottish Friendly Asset On acceptance, each new Account will Managers Limited, Scottish Friendly be designated by us as either a Stocks House, 16 Blythswood Square, and Shares Junior ISA or a UK Growth Glasgow G2 4HJ. Fund or Managed Growth Fund OEIC C. We may assign to any appropriate Investment outside an Junior ISA. Associate all of its benefits and You can only subscribe to one Stocks obligations under these Terms. and Shares Junior ISA for each child You will be notified of any such for which you are the registered assignment. contact. We reserve the right to reject any application. D. We may appoint any person (whether or not an Associate) to advise on C. Payments into the Account can be or perform any of its functions or from any source of funds. responsibilities under these Terms and D. You (or anyone else) may invest one or may provide information about you more lump sums in the Account during and the Account to any such person. the Year. In addition, or alternatively, We will satisfy ourselves that any when provided in the Application Form person to whom we delegate any of you (or anyone else) may make regular our functions or responsibilities under contributions by Direct Debit under these Terms is competent to carry out a monthly investment plan. You must those functions or responsibilities. submit with your Application Form a E. We may amend these Terms by cheque for the full amount of the writing to you. Any amendments

Stocks and Shares Junior ISA Page 12 initial subscription (in the case of amount paid from your bank or building a lump sum investment) and/or society. If you receive a refund you are a Direct Debit Instruction to a Bank not entitled to, you must pay it back or Building society (in the case of when Scottish Friendly asks you to. You regular contributions). can cancel a Direct Debit at any time by simply contacting your bank or building E. You will be sent an acknowledgement society. Written confirmation may be when you make a lump sum required. Please also notify us. contribution or set up a monthly investment plan. This will be sent C. We reserve the right to reduce or to you on the day following your waive the minimum subscription. application being received by us. 5. Maximum Subscription 4. Minimum Subscription The maximum you can subscribe in A. Lump Sums either a Cash or Stocks and Shares Junior ISA for the tax year 2017/2018 The minimum initial investment is is £4,128. as specified in the Application Form. Additional lump sum contributions 6. Cancellation are subject to the minimum specified There are no cancellation rights available in the Application Form. under this plan. B. Monthly Investment Plans 7. Investment Objective The minimum monthly contribution The investment objective of the is as specified in the Application Form. Account will correspond to the Monthly Direct Debits will normally be qualifying investments specified collected on the date specified on the in your Application Form. Application form of each month and invested by us on the next dealing 8. Account Investments day for contributions under A. The Account includes Investments investment plans. and any cash balances, all income and Direct Debit Guarantee other rights, and the benefit of any tax relief in respect of such investments. This Guarantee is offered by all banks and building societies that accept B. Cash contributions and any other instructions to pay Direct Debits. If there cash held under the Account will be are any changes to the amount, date or deposited, pending investment. If this frequency of your Direct Debit Scottish takes longer than one business day we Friendly will notify you 5 working days in segregate all Client Account money advance of your account being debited from our funds and hold it with the or as otherwise agreed. If you request Bank. No interest will be paid on cash Scottish Friendly to collect a payment, held pending investment. In the event confirmation of the amount and date will of the Bank becoming insolvent or be given to you at the time of the request. unable to make its payments to us your If an error is made in the payment of your money may be at risk although you Direct Debit, by Scottish Friendly or your may be entitled to compensation up to bank or building society, you are entitled the Financial Services Compensation to a full and immediate refund of the Scheme limit of £85,000.

Stocks and Shares Junior ISA Page 13 C. We will automatically reinvest OEIC in which your Account is all income in respect of Account invested. We reserve the right investments net of any tax liability. to debit the Account with our standard charge for making such 9. Title arrangements (currently £20 per A. The Account Investments will be communication with you). beneficially owned by the child at B. Subject to any applicable law or all times. regulation and if you so request, B. OEIC Shares in the Junior ISA will we will arrange for you to be able be registered either in the name of to attend any meetings of direct a nominee of the Account Manager investors in any Scottish Friendly (which may be an Associate) or jointly OEIC in which your Account is in the name of such a nominee and in invested, to exercise voting rights, the name of the child. and to receive, in addition to the C. No OEIC share certificates will be documents referred to in paragraph A issued. We (or a nominee, which may above, any other information issued be an Associate) will hold any title to investors. We reserve the right to documents or documents evidencing debit your Account with our standard title to the Account Investments. charge for making such arrangements D. We will not lend Account Investments (see paragraph A). or the title documents to a third party and will not borrow against the C. Subject to any applicable law or security of Account Investments or regulation, we may exercise any such documents. voting rights attaching to Account Investments unless you have elected 10. Taxation to exercise such rights yourself. We will make all necessary claims for tax relief relating to the Account. 13. Withdrawals However, the fund in which you invest A. You cannot make any withdrawals in receives UK dividend income net from a Junior ISA. When the child of Corporation Tax. turns 18 and the Junior ISA becomes an ISA then withdrawals can be 11. Statements made. Before making any payments We will send the child a statement every to the child, they have to complete 6 months, showing the value of the and adult ISA application and we Account and details of all transactions will need to verify their identity. in the Account since the previous statement. The statements will not B. You can however transfer your include a measure of performance. We Junior ISA to another Junior ISA may produce a consolidated statement if provider (see on the next page). you have more than one Account. 14. Charges 12. Reports and Voting A. There are no initial charges. A. If you so request, we will arrange for B. Management Fees: Holdings of you to receive copies of the annual OEIC Shares are also subject to reports and accounts available to management fees, charges and investors in any Scottish Friendly expenses. These are deducted from

Stocks and Shares Junior ISA Page 14 the property of the Scottish Friendly proceeds shall be segregated from OEICs and not from your Account. our funds pending payment as Client The Annual Management Charge Money and held with the Bank. In the is 1/365% deducted daily from the event of the Bank becoming insolvent unit price. or unable to make its payments to us C. We reserve the right to discount or this money may be at risk although waive any charges. the child’s estate may be entitled to compensation up to the Financial D. We may increase charges but only Services Compensation Scheme limit after giving you three months’ of £85,000. written notice including an explanation of why the charges have B. Upon receipt of the death certificate, been increased and the potential the grant of probate or appropriate impact on your investment. You will legal confirmation, we will transfer also be reminded of your right to the cash balance of the Account to transfer or end your policy before the the child’s personal representatives. charge is applied. These Terms are binding on the child’s personal representatives. We E. We shall be entitled to deduct and may at our discretion accept or reject retain all charges payable under instructions received from the child’s these Terms, and may apply any personal representatives. cash or sell any Account Investments to pay such charges or to pay any tax 17. Void Junior ISA Accounts liabilities under the Account. The Account will be managed in 15. Transfer to New Junior ISA accordance with the Regulations, which Account Manager take precedence over these Terms. A. You may instruct us to transfer the We will notify you if, as a result of any whole of your Account to another failure to comply with the Regulations, approved account manager, within the Account is or becomes void. such time as shall be agreed, subject When an Account is voided, we will sell to and in accordance with the the Account Investments and pay you Regulations. the proceeds together with any cash B. Only cash may be transferred, and we balance held in the Account. We may will convert Account Investments into deduct any charges or other amounts cash after receiving your instructions. due to us, any tax liabilities under the We may deduct from the transfer any Account, and any additional expenses sums due to it. incurred in terminating the Account.

16. Death 18. Information for the A. The Account ceases to be exempt Account Manager from tax on the death of the child You must provide us with all information and will terminate. When written which we reasonably request for the notification of the death is received, purposes of the Account and, in particular, we will sell the Account Investments you must immediately inform us in and hold the proceeds on deposit writing of any change of tax status or in Sterling (earning interest). These other material change in circumstance.

Stocks and Shares Junior ISA Page 15 19. Notices and Instructions 21. Complaints A. Notices and instructions to us For further information, or if you wish should be in writing and signed to complain about any aspect of the by the registered contact. Notices service you have received, please and instructions sent by facsimile contact Scottish Friendly Asset will be accepted. Managers Limited, Scottish Friendly House, 16 Blythswood Square, Glasgow B. Notices and other documents to be G2 4HJ. If your complaint is not dealt given to the registered contact will with to your satisfaction, you can write be posted to their last registered to the Financial Ombudsman Scheme. address for and will be considered This will not affect your right to take received two days after posting. legal action. C. We are entitled to treat as valid 22. Compensation instructions given by the registered contact, or on their behalf, even if that If Scottish Friendly is unable to meet is not the case because of the wrong its liabilities, compensation may be doing of another person, unless that payable by the Financial Services other person is an employee or agent Compensation Scheme. The first of the Account Manager. £50,000 of a claim in relation to the value of the plan is protected in full. 20. Liability Further information on the Scheme A. You indemnify us against all liabilities can be obtained from the Financial incurred by us in connection with the Services Compensation Scheme. Account, other than liabilities caused Tel: 0800 678 1100 www.fscs.org.uk as a direct result of our negligence, knowing default, or breach of the rules of FCA or of these Terms. B. We are liable for our negligence, knowing default, and for any breach of the rules of FCA or of these Terms. We are not liable for any loss caused through a fall in value of Account Investments. C. We accept no responsibility for the Account until cleared funds are received, nor for any loss or delay caused in the payment of funds to us. D. For the purposes of this paragraph 20, references to you include your (or the child’s) personal representatives and references to the Account Manager includes its nominees.

Stocks and Shares Junior ISA Page 16 Scottish Friendly Asset Managers Limited, Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. www.scottishfriendly.co.uk Authorised and regulated by the Financial Conduct Authority. Details can be found on the FS register – Registration No. 188832. Member of The Investment Association.

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