Moneybox Questions

Marketing of the Fund 
Q: We've heard from a former Standard Life tied adviser that SL advisers were 
told to refer to the fund as a cash fund in the sales process- is this true?
A: We would not comment on the allegations of an ex-employee. We market this fund 
as the Pensions Sterling Fund, which invests not only in deposits but also in a range of 
short-dated money market instruments.

Q: We've heard that Standard Life advisers were not informed that the fund was 
invested in asset backed securities until an emergency meeting was held at SL on 
January 13th - is this true?
A: It has been detailed in our customer literature that the fund was invested not only in 
deposits but also in a range of short-dated money market instruments. As a matter of 
course, all our advisers would use this literature. More detailed information on the 
assets within the fund has been provided to professional advisers.

Q: When you described in March 2008 documentation the Sterling Pension fund 
as 100% cash, did you have any a) securities with a maturity longer than 365 
days in the fund b) any asset backed securities?
A: The March 2008 quarterly report for the Pensions Sterling Fund, which was 
available on the SLI website, details that the fund “also holds other short-term assets”.
  
Q: Is SL in contact with the FSA concerning the marketing of this fund? 
A: We are in regular contact with the FSA as part of our business as usual processes. 

Fund Management 
Q: Why was the fund manager, Louise Mackenzie, removed from the fund in 
September 08? 
A: As part of our business as usual approach to fund management, we move managers 
to allow them to gain wider experience. Our approach to fund management is based 
around a team ethos. Louise Mackenzie is still one of our fund managers.

Q: Did SL look to lower its holding of mortgage backed securities when problems 
with this type of asset came to light in the summer of 2007?
A: Yes – from summer 2007 we began two courses of action. 1) we did not participate 
in any new issues and bought no more holdings in this type of asset and 2) we looked 
to reduce our exposure to disposals in the market. Overtime, we have reduced our 
holdings to the current level of about 40%.

Q: How is SL determining the daily valuations of the fund? 
A: The daily valuations are carried out externally by our independent third party fund 
administrator using their established, standard industry procedures.

Q: Are the daily valuations externally or internally audited, and if so, when was 
the last audit? 
A: As above, the daily valuations are carried out externally. Additionally our external 
auditors review all of our processes and fund accounts as part of the normal business 
cycle.

Q: As per your letter to investors (Jan 09), what does "a re-evaluation of market 
data" mean vis a vis the valuation of the fund?  Does it mean previous valuations 
were wrong?

A: No, due to the shortage of liquidity and exceptional volatility in global financial 
markets in recent months, the value of asset-backed securities has fallen and there has 
been limited trading of these securities.  In normal circumstances our third party 
administrator values the assets at the prices on which they trade in the open market.  
The lack of trading in these assets has reduced the information available to value these 
assets accurately on a regular basis.  As soon as sufficiently reliable information was 
available, the securities held in the fund were revalued. This has led to the reduction in 
the unit price.

Q: What happened on December 23rd to make SL aware of problems with the 
fund? 
A: See above.

Q: Is it true that SL didn't know of problems with Pension Sterling in September 
when it created the Managed Cash Fund in September 2008?
A: We revalued the fund in September 2008 to reflect current market values after the 
Lehman Brothers bankruptcy. The fund continued to perform in line with its 
objectives and we continued to monitor available market data after that point.

Q: Is SL expecting to make further devaluations to Pension Sterling? 
A: It is impossible to predict with certainty when markets will improve. However, we 
believe that the strong underlying credit quality of the asset backed securities within 
the fund mean that it will generally recover over time. In the shorter term, the fund 
will continue to fluctuate in line with market movements.

Remediation 
Q: How many people transacted between Dec 23 and Jan 14 and will receive 
remediation? How will they be remediated and when? Is SL contacting these 
people or will they need to contact you? Is SL considering extending the 
remediation?  

A: We will be carrying out a remediation exercise to ensure that no customer is 
disadvantaged by the delay in implementing the new fund price between the 23rd 
December and 13th January. We are currently finalising the details of this exercise and 
will write out to advisers and affected customers once our plans are complete.


Additional Question

Q: Are any of the assets in the fund mortgage backed securities?
A: Yes. The Pension Sterling Fund holds a mixture of assets, including cash deposits, 
Treasury bills, asset-backed securities, including mortgage backed securities. These 
are all highly rated – 93% are Aaa.