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Market Value Reduction (MVR)

Market Value Reductions (MVRs)

During periods of extreme stock market volatility, we may need to apply a Market Value Reduction (MVR) to protect our With Profits Fund policyholders.

An MVR ensures that the sum an investor receives when they 'cash-in' their policy (for example: through a withdrawal or switch) is fair and does not have a detrimental impact on other policyholders who remain invested in the fund.

As a result, an investor who cashes in their policy while an MVR is applied could receive a lower pay-out when compared to a period without an MVR applied, and they may not receive the full value of their bonuses.

At Wesleyan, the decision to apply an MVR is rare.

As shown by the graph below, in the last 10 years we've only had an MVR in place once - from October 2008 to December 2009 - when the UK stock market's value plummeted.

If we hadn't applied an MVR during this short period, the excess pay-outs to investors choosing to cash-in their policy would have reduced the value of the funds held by continuing policyholders, which would have been unfair.

We have not applied an MVR since, despite other significant stock market dips. We are long-term investors with a track record of only applying an MVR when absolutely necessary. Should we ever need to apply an MVR in the future we will aim to remove it as soon as possible.

If you would like more information about Market Value Reduction (MVR), please contact your Wesleyan Financial Services Consultant.

Remember that the value of investments and any income can go down as well as up and you may get back less than you invested.

UK-Stock-Market-07-19

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