Investment Update. 1 April Highlights Global stock markets fall again. Rising fears of a trade war between the US and China

Transcription

1 Investment Update 1 April 2018 Highlights Global stock markets fall again Rising fears of a trade war between the US and China Sterling benefits from Brexit progress

2 World Markets Update United Kingdom The UK equity market fell by 1.8% in March, with healthcare and utilities the only positive performing sectors. Technology was the laggard, down almost 19%, while basic materials, telecoms and consumer services were all down around 5%. Uncertainties around the Brexit negotiations continued to weigh on UK equities. Investor concerns were compounded by the strengthening pound, which hurt UK exporters as their overseas earnings are worth less when converted into sterling. Chancellor Phillip Hammond delivered his Spring Statement, promising the light at the end of the tunnel. UK growth was forecast to be 1.5% in 2018, up from 1.4% previously forecast by the Office for Budget Responsibility. There was positive news on UK productivity growth. An expansion of 0.8% in the fourth quarter of 2017 followed a 0.9% pickup in the previous quarter, the strongest sixmonth growth period since before the global financial crisis. The Bank of England s Monetary Policy Committee (MPC) kept interest rates on hold. The latest labour market data showed the unemployment rate at 4.3%, the lowest since Hiring intentions and vacancies point to further robust jobs growth to come. Markets are pricing in an interest rate hike in the next two months. In company news, software firm Micro Focus saw its share price halve after a series of profit warnings and the departure of its chief executive. Shares in online food order and delivery service Just Eat fell by over 20% after it announced a pretax loss for Kingfisher, the multinational retailer that owns B&Q, delivered lowerthanexpected pretax profits and earnings per share in the year to 31 January, driving its share price 19% lower. UK retailers struggled, with profit warnings from Moss Bros, Mothercare and Carpetright. The share price of biopharmaceutical company Shire was boosted by 18% late in the month after Japanese rival Takeda said it was considering a possible takeover offer. Shares in packaging company Smurfit were ahead 14% in March after its board rejected an "unsolicited and highly opportunistic" takeover bid from International Paper. Burberry s share price rose by 10% in March on favourable investor reaction to a strategy of focussing on luxury products and cutting costs. SUMMARY North America Shares in large US companies were down in March, primarily driven by the fears of a trade war between the US and China. The worst performing sectors were technology, materials and financials, while utilities and energy performed strongly. US President Donald Trump announced plans to impose duties on up to $60bn of Chinese imports and limit its investment in the US. China reacted by announcing plans to impose its own tariffs of $3 billion on US products. China described the move as a bid to safeguard China s interests while balancing losses caused by the new US tariffs. As expected, the US Federal Reserve (Fed) raised the target for the federal funds rate by 25 basis points to % at its March meeting. GDP projections were pushed higher, with growth expected to come in at 2.7% this year, 2.4% in 2019, and 2.0% in The unemployment rate is now expected to fall to 3.8% this year, and 3.6% in 2019 and 2020 well below officials estimate of the natural rate of 4.5%. Officials now project three interest rate hikes in 2019, and two more in Looking at inflation, the Personal Consumption Expenditures price index reached 1.6% in February and is likely to continue to push towards the central bank s target of 2%, which it has not exceeded since April The central bank s median forecast suggested core price growth will modestly overshoot its 2% target next year, supporting arguments for further increases in shortterm interest rates. Among the factors lifting price growth in February was higher healthcare prices a key development given the role healthcare has played in suppressing overall inflation. However, it must be noted that the rebound has only taken those rates back to more normal levels after a period of unusual weakness. US equities prices continued to fall in March SUMMARY Threat of a trade war between the US and China grows Fed hikes interest rates to % UK equities hurt by Brexit uncertainty and strengthening sterling Productivity shows marked improvement MPC keeps interest rates on hold for now The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 2

3 World Markets Update continued Europe March was a tumultuous month for European equities. Political worries, concerns about a possible trade war between the US and China and mixed economic data all contributed to intramonth volatility. However, over the month as a whole, shares in the region fell only slightly in local currency terms. At the sector level, financials and basic materials companies suffered the sharpest declines, while utilities and consumer goods did comparatively well. In terms of country performance, Poland and Greece were the biggest fallers, while the Czech Republic made a small gain. The Italian elections in early March led to a hung parliament. Despite both the populist Five Star Movement and Eurosceptic Northern League making substantial gains, no clear majority emerged. Initially, investors reaction to the news was relatively muted but Italian stocks fell after Matteo Salvini, the leader of the Northern League, ruled out forming a coalition government with the centreleft Democratic Party, which could pave the way for an alliance between the Democratic Party and the Five Star. Salvini also reiterated his party s view that the euro was a flawed currency. In contrast, the German grand coalition vote provided a bit more certainty. Chancellor Angela Merkel secured a fourth term after her Christian Democratic Union struck a deal with the Social Democratic Party. The Eurozone s March data pointed to a slower, albeit still healthy, pace of expansion. The composite purchasing managers index (PMI), which measures activity in the manufacturing and services sectors, fell more sharply than expected. The blame was attributed to cold weather, skill shortages and a strong euro. Meanwhile, new orders also slowed. Business confidence in Germany and France waned. Turning to corporate news, heightened concerns over data privacy and increased regulation of technology companies acted as a drag on the sector s performance. News that Brussels is preparing to crack down on social media companies ahead of next year s European Parliament elections had a particularly negative effect on tech stocks. European shares fall in March SUMMARY Political uncertainty remains after Italian election Other Overseas In line with most other major equity markets, Japanese stocks fell in March. At sector level, steel & nonferrous metals companies fared worst, while electric power & gas performed comparatively well. The overall declines came despite a revised estimate for fourthquarter growth, which showed that the Japanese economy grew an at annualised rate of 1.6% between October and December. The improvement was ascribed to increased domestic demand and private investment. Turning to politics, pressure began to mount on Japanese Prime Minister Shinzo Abe, as questions were raised over the controversial sale of public land to a family acquaintance. Both Abe and Finance Minister Taro Aso faced an interrogation from within their own Liberal Democratic Party. The country s tax chief resigned after it came to light that finance ministry documents relating to the sale in a division he oversaw at the time were doctored prior to submission. Meanwhile, in monetary policy news, Japan s central bank kept its interest rate unchanged and maintained its monetary stimulus, as widely expected. In China, export growth accelerated in the first two months of the year, easing worries that the country s economy will slow sharply as Beijing continues its financial tightening. India s financial sector remained under pressure, as the probe into the alleged US$2 billion fraud at Punjab National Bank widened. US President Donald Trump s administration filed a dispute with the World Trade Organisation against India s export subsidies, which it said hurt American workers and manufacturers. Elsewhere, Australia s gross domestic product (GDP) growth slowed to 2.4% yearonyear in the fourth quarter, as falling exports overshadowed rebounding household consumption. As a group, emerging markets declined in line with their developed counterparts. Greece and Indonesia were among the worst performers, while stocks in Qatar and Egypt did relatively well. Japanese stocks fall in March SUMMARY Japanese economic growth improves, but government is mired in controversy Emerging markets suffer declines ECB hastens the end of stimulus measures The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 3

4 World Markets Update continued Commodities The oil price rose again during March, with Brent crude (which is generally extracted from Europe, Africa and the Middle East) surpassing $70 per barrel towards the end of the month. Oil prices have risen by around 30% over the last year. In March, the appointment of John Bolton as Donald Trump s new US national security adviser led to fears that he would introduce sanctions against Iran, which could result in reduced supplies from the country. Mr Bolton has previously been a strong proponent of sanctions and favours repealing the nuclear deal that was struck with the US when Barack Obama was president. Meanwhile, the political and economic crisis in Venezuela has resulted in a fall in oil supply. Some reports indicate that production has fallen by as much as half a million barrels per day compared to the same period two years ago. As global economic growth continues to stoke demand for oil, fears about falling supplies have resulted in rising prices. Other commodities performed less well over the month. Prices of zinc and copper both fell, mainly due to concerns that the effects of the trade war between China and the US would lead to a fall in demand for raw materials. Currencies Sterling strengthened against the US dollar, the euro and the Japanese yen. The UK government was perceived to have made some progress on Brexit negotiations, with a preliminary agreement with the European Union on transition expected to begin in 12 months. Reports that the Bank of England is poised to hike interest rates in May, together with positive economic news, provided a further fillip. The Japanese yen also performed relatively well, at one point strengthening to its highest level in 17 months against the US dollar. The yen which is considered a safe haven currency in times of uncertainty firmed in the wake of US President Donald Trump s tariff announcement against China, which prompted fears of a trade war. Indices Performance Statistics Index Performance Change % over March Performance Change % year to date FTSE AllShare (UK) FTA British Govt Over 15 Years FTSE World (ex UK) ( ) FTSE World Europe (ex UK) ( ) Dow Jones Composite Source: Financial Express, to Capital return performance. The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 4

5 World Markets Update continued Bond Markets Global bond prices fell in the first two weeks of the month. While the Fed s 0.25 percentage point rise in interest rates to a range between 1.5% and 1.75% was widely expected, investor interest was focussed on its projections for further rate hikes. Accordingly, Jerome Powell s first postmeeting press conference as Fed chair was dissected for indications as to the direction of travel. After the conference, bond prices moved to reflect a high likelihood that the Fed would raise rates a total of three times by the end of the year. However, later in the month trade worries began to dominate the attention of investors, who were unnerved by growing tensions between the world s two largest economies, the US and China, after President Donald Trump announced a raft of tariffs on Chinese imports. While the level of these tariffs was considered to be economically insignificant in the grand scheme of things, they served to heighten concerns of retaliation, leading to a potential trade war which could harm global growth. Core government bond prices benefited from a flight to safety as a result. The yield on 10year US Treasuries (which moves in the opposite direction to prices) fell from 2.87% to 2.75% over the month. Meanwhile, the 10year German Bund yield was lower, moving from 0.61% to 0.50%, and the 10year UK Gilt fell from 1.53% to 1.39%. Corporate bonds underperformed government bonds, but still produced positive returns. The main driver was the aforementioned threat of an escalating trade war, which made investors nervous about holding riskier assets. However, there were also worries emanating from evidence of slower economic activity. Property UK commercial property was slightly weaker during February (the latest data available) although total returns were similar to the same period in Despite significant differences across the sectors, capital values and rental growth remain positive. Industrials continue to outperform the other sectors and retail remains the weakest. The retail sector has hit the headlines in recent months and there has been no letup in the bad news. Since the start of the year, Maplin, Toys R Us and Homebase have already announced that they plan to close some or all of their stores. The casual dining sector has also come under scrutiny, with Jamie s Italian and Byron s burger chain following also announcing some closures. Carpetright, the flooring and beds retailer, became the latest casualty in March when it announced it was exploring a company voluntary arrangement (CVA) that will allow it to exit leases or to negotiate lower rents for its stores. An aggressive store opening strategy under former leadership has led to some poorly located stores and unsustainable rents. Around 200 of its 409 stores may be up for closure. The fashion retailer New Look also announced a CVA during March following weaker trading last year. Around 60 of its 593 stores are expected to close and it will also look to revise lease terms for a further 15% to 55% of its shops. There was some better news in the offices sector, where flexible office providers continue to take up space, which has supported rents. While WeWork remains the biggest player in this market, competitors such as The Office Group and the International Workplace Group continue to take up office space in the main UK cities. According to Cushman & Wakefield, flexible workspace providers accounted for more than 20% of all office leases in London during 2017, in comparison to 8.5% in Falling deskspace requirements, electronic archiving, hotdesking and working from home have continued to reduce fixed space requirements for businesses. The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 5

6 Scottish Widows pension funds, managed by Aberdeen Asset Management Performance Statistics 1 April 2018 Funds Launch Date Size of Fund ( m) Adventurous Solution 24/10/ Balanced Portfolio 28/01/ Balanced Solution 24/10/ Building Society * 01/07/ Cash 01/07/ Cautious Managed 01/11/ Cautious Portfolio 28/01/ Cautious Solution 24/10/ Consensus 02/03/ Corporate Bond 28/07/ Defensive Managed 01/11/ Defensive Solution 24/10/ Discovery Solution 24/10/ Diversified Assets 01/08/ Dynamic Property 01/08/ Dynamic Solution 24/10/ Emerging Markets 01/11/ Environmental 09/05/ Ethical 25/10/ European 02/11/ European Real Estate 01/11/ Fixed Interest 01/07/ Formerly Lloyds TSB American 01/10/ Formerly Lloyds TSB Cash 01/12/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

7 Formerly Lloyds TSB European 01/01/ Formerly Lloyds TSB Far East 01/11/ Formerly Lloyds TSB Fixed Interest 01/11/ Formerly Lloyds TSB FTSE 100 Tracker 01/01/ Formerly Lloyds TSB Guaranteed Deposit 01/11/ Formerly Lloyds TSB Island 01/03/ Formerly Lloyds TSB Managed Pension 01/11/ Formerly Lloyds TSB Pension Managed 23/10/ Formerly Lloyds TSB Property 01/02/ Formerly Lloyds TSB UK Equity 01/01/ Fundamental Index Emerging Markets Equity 14/11/ Fundamental Index Global Equity 14/11/ Fundamental Index UK Equity 14/11/ Fundamental Low Volatility Index Emerging Markets Equity 14/11/ Fundamental Low Volatility Index Global Equity 14/11/ Fundamental Low Volatility Index UK Equity 14/11/ Global Equity 09/05/ High Income Bond 28/07/ Indexed Stock 19/04/ International 01/07/ International Equity Tracker * 28/09/ Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 7

8 Scottish Widows pension funds, managed by Aberdeen Asset Management Performance Statistics 1 April 2018 Funds Launch Date Size of Fund ( m) Japanese 02/11/ Mixed 01/07/ Multi Manager Diversity 26/05/ Multi Manager Select Boutiques 26/05/ MultiManager Global Real Estate 01/06/ MultiManager International Equity 25/10/ MultiManager UK Equity Focus 25/10/ MultiManager UK Equity Growth 25/10/ MultiManager UK Equity Income 25/10/ North American 02/11/ Opportunities Portfolio 28/01/ Pension Portfolio Four 06/02/ Pension Portfolio One 06/02/ Pension Portfolio Three 06/02/ Pension Portfolio Two 06/02/ Pension Protector 28/07/ PM Cash 21/04/ PM Consensus 02/03/ PM Emerging Markets Equity 02/01/ PM Index Linked Gilt Tracker 25/11/ PM Managed 03/09/ PM Property 21/04/ PM Protection 01/07/ PM Stock Exchange Equity Fund 01/05/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

9 PM UK Equity Cap 08/02/ PM UK Index 02/01/ PM UK Long Corporate Bond 30/03/ Premier Pension Portfolio 1 31/12/ Premier Pension Portfolio 2 31/12/ Premier Pension Portfolio 3 31/12/ Premier Pension Portfolio 4 31/12/ Premier Pension Portfolio 5 31/12/ Premier Pension Portfolio A 31/12/ Premier Pension Portfolio B 31/12/ Premier Pension Portfolio C 31/12/ Progressive Portfolio 28/01/ Property 01/07/ Retirement Portfolio /11/ Retirement Portfolio /11/ Retirement Portfolio /11/ Retirement Portfolio /11/ Specialist Global Equity 13/12/ Strategic Income Bond 28/07/ Strategic Solution 24/10/ UK All Share Tracker 06/04/ Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 9

10 Scottish Widows pension funds, managed by Aberdeen Asset Management Performance Statistics 1 April 2018 Funds Launch Date Size of Fund ( m) UK Equity 01/07/ UK Equity Index * 07/01/ UK Fixed Interest Tracker 06/04/ UK Opportunities 01/06/ UK Real Estate 01/06/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 10

11 SW pension funds, managed by other fund managers Performance Statistics 1 April 2018 Funds Launch Date SW Allianz European Equity Dividend 14/11/ Size of Fund ( m) SW Artemis UK Select 19/09/ SW Artemis UK Smaller Companies 19/09/ SW Artemis US Select 14/11/ SW Aviva Investors High Yield Bond 14/11/ SW Aviva Investors Strategic Bond 14/11/ SW Aviva MultiStrategy ('AIMS') Target Income 14/11/ SW Baillie Gifford Japanese Equity Fund 21/04/ SW Baillie Gifford Managed 01/11/ SW Baillie Gifford Multi Asset Growth 14/11/ SW Baillie Gifford North American Equity Fund 21/04/ SW BlackRock Gold & General 05/12/ SW BlackRock Managed 07/07/ SW BlackRock UK 19/09/ SW BlackRock UK Smaller Companies 19/09/ SW BlackRock UK Special Situations Fund 21/04/ SW Fidelity 50:50 Special Situations 18/09/ SW Fidelity American 19/09/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 11

12 SW pension funds, managed by other fund managers Performance Statistics 1 April 2018 Funds Launch Date Size of Fund ( m) SW Fidelity Asia 19/09/ SW Fidelity European 19/09/ SW Fidelity Global Special Situations 18/09/ SW Fidelity Managed 07/07/ SW Fidelity Money Builder Income 21/04/ SW Fidelity Special Situations (2006) 18/09/ SW Henderson Cautious Managed 19/01/ SW Henderson Fixed Interest Monthly Income Fund 19/01/ SW Henderson Global Equity Income 19/01/ SW Henderson UK Property Fund 01/06/ SW Insight Global Absolute Return 14/11/ SW Invesco Perpetual Corporate Bond 19/09/ SW Invesco Perpetual Distribution 01/11/ SW Invesco Perpetual Global Bond 19/09/ SW Invesco Perpetual High Income 19/09/ SW Invesco Perpetual Managed 07/07/ SW Investec Cautious Managed 25/10/ SW Investec Diversified Growth 14/11/ SW JPM Emerging Markets 21/04/ SW JPM Europe Dynamic (exuk) 21/04/ SW JPM Global Macro Balanced 01/11/ SW JPM Natural Resources 21/04/ SW Jupiter Distribution 19/01/ SW Jupiter Income 19/01/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

13 SW Jupiter UK Growth 25/10/ SW Liontrust UK Smaller Companies 14/11/ SW Newton Global Equity 19/09/ SW Newton Global Income 05/12/ SW Newton International Bond 19/09/ SW Newton Managed 07/07/ SW Newton Real Return 05/12/ SW Newton UK Income 19/09/ SW Nordea 1 GBP Diversified Return 14/11/ SW Payden Absolute Return Bond 14/11/ SW Royal London UK Equity Income 14/11/ SW Schroder Diversified Growth 13/12/ SW Schroder Gilt & Fixed Interest 19/09/ SW Schroder Global Cities Real Estate 01/06/ SW Schroder Income Maximiser 03/12/ SW Schroder Managed 07/07/ SW Schroder Tokyo 19/09/ SW Schroder UK Alpha Plus 19/01/ SW Schroder UK Mid /10/ SW Schroder US Smaller Companies 19/09/ SW SLI Global Absolute Return Strategies 05/12/ Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 13

14 SW pension funds, managed by other fund managers Performance Statistics 1 April 2018 Funds Launch Date Size of Fund ( m) SW SSgA 50:50 Global Equity Index 03/11/ SW SSgA Asia Pacific Ex Japan Equity Index 21/04/ SW SSgA Emerging Markets Equity Index 05/12/ SW SSgA Europe ex UK Equity Index 21/04/ SW SSgA Index Linked Gilts All Stocks Index 21/04/ SW SSgA Index Linked Gilts Over 5 Years Index 21/04/ SW SSgA International Equity Index 02/10/ SW SSgA Japan Equity Index 21/04/ SW SSgA North America Equity Index 21/04/ SW SSgA Sterling Corporate Bonds All Stocks Index 21/04/ SW SSgA Strategic Diversities 05/12/ SW SSgA UK Conventional Gilts Over 15 Years Index 21/04/ SW SSgA UK Equity Index 02/10/ SW Threadneedle UK Social Bond 14/11/ SW Veritas Asian 14/11/ SW Woodford Equity Income 14/11/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 14

15 Scottish Widows life funds, managed by Aberdeen Asset Management Performance Statistics 1 April 2018 These life funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their advisers or Scottish Widows for information on fund availability. Funds Launch Date Adventurous Solution 24/10/ Size of Fund ( m) Balanced Portfolio 28/01/ Balanced Solution 24/10/ Cash 01/07/ Cautious Managed 01/11/ Cautious Portfolio 28/01/ Cautious Solution 24/10/ Consensus 02/11/ Corporate Bond 28/07/ Defensive Managed 01/11/ Defensive Solution 24/10/ Discovery Solution 24/10/ Diversified Assets 01/08/ Dynamic Property 01/08/ Dynamic Solution 24/10/ Emerging Markets 01/11/ Environmental 09/05/ Ethical 25/10/ European 02/11/ European Real Estate 01/11/ Fixed Interest 01/07/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at If less than 5 years are available, performance figures are shown in blue. No performance information is shown for funds with less then four full quarters of performance history. Performance figures are in sterling on a single pricing basis, with income (where applicable) reinvested net of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). 15 Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. All information is sourced from Scottish Widows or the relevant fund management group unless otherwise stated.

16 Scottish Widows life funds, managed by Aberdeen Asset Management Performance Statistics 1 April 2018 These life funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their advisers or Scottish Widows for information on fund availability. Funds Launch Date Formerly Lloyds TSB American 01/11/ Size of Fund ( m) Formerly Lloyds TSB Balanced 01/10/ Formerly Lloyds TSB Cash 01/10/ Formerly Lloyds TSB Equity 07/03/ Formerly Lloyds TSB European Growth 01/11/ Formerly Lloyds TSB Fixed Interest ex BHL 07/03/ Formerly Lloyds TSB Fixed Interest ex TSB 01/10/ Formerly Lloyds TSB German Growth 01/10/ Formerly Lloyds TSB Homebuyers 06/04/ Formerly Lloyds TSB Income S1 01/10/ Formerly Lloyds TSB Income S2 01/11/ Formerly Lloyds TSB Island Equity 10/01/ Formerly Lloyds TSB Japan Growth 01/11/ Formerly Lloyds TSB Managed ex BHL 01/09/ Formerly Lloyds TSB Managed ex TSB 07/03/ Formerly Lloyds TSB Managed Investment Fund S1 30/11/ Formerly Lloyds TSB Managed Investment S2 31/10/ Formerly Lloyds TSB Money Fund 07/03/ Formerly Lloyds TSB Options Equity 01/01/ Formerly Lloyds TSB Options Managed 01/01/ Formerly Lloyds TSB Options Money 01/01/ Formerly Lloyds TSB Pacific Basin 01/11/ Formerly Lloyds TSB Property ex BHL 02/10/ Formerly Lloyds TSB Smaller Companies and Recovery 01/02/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

17 Formerly Lloyds TSB Worldwide Growth 01/10/ Fundamental Index Emerging Markets Equity 14/11/ Fundamental Index Global Equity 14/11/ Fundamental Index UK Equity 14/11/ Fundamental Low Volatility Index Emerging Markets Equity 14/11/ Fundamental Low Volatility Index Global Equity 14/11/ Fundamental Low Volatility Index UK Equity 14/11/ Global Equity 15/05/ High Income Bond 28/07/ Indexed Stock 19/04/ International 01/07/ International Equity Tracker * 28/09/ Japanese 02/11/ Mixed 01/07/ MultiManager Global Real Estate 01/06/ MultiManager International Equity 25/10/ MultiManager UK Equity Focus 25/10/ MultiManager UK Equity Growth 25/10/ MultiManager UK Equity Income 25/10/ North American 02/11/ Opportunities Portfolio 28/01/ Progressive Portfolio 28/01/ Property 01/07/ Strategic Income Bond 28/07/ Source: Financial Express as at If less than 5 years are available, performance figures are shown in blue. No performance information is shown for funds with less then four full quarters of performance history. Performance figures are in sterling on a single pricing basis, with income (where applicable) reinvested net of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. All information is sourced from Scottish Widows or the relevant fund management group unless otherwise stated. 17

18 Scottish Widows life funds, managed by Aberdeen Asset Management Performance Statistics 1 April 2018 These life funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their advisers or Scottish Widows for information on fund availability. Funds Launch Date Size of Fund ( m) Strategic Solution 24/10/ UK Equity 01/07/ UK Equity Index 07/01/ UK Opportunities 01/06/ UK Real Estate 01/06/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at If less than 5 years are available, performance figures are shown in blue. No performance information is shown for funds with less then four full quarters of performance history. Performance figures are in sterling on a single pricing basis, with income (where applicable) reinvested net of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. All information is sourced from Scottish Widows or the relevant fund management group unless otherwise stated. 18

19 SW life funds, managed by other fund managers Performance Statistics 1 April 2018 These life funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their advisers or Scottish Widows for information on fund availability. Funds Launch Date SW Allianz European Equity Dividend 14/11/ Size of Fund ( m) SW Artemis UK Select 19/09/ SW Artemis UK Smaller Companies 19/09/ SW Artemis US Select 14/11/ SW Aviva Investors High Yield Bond 14/11/ SW Aviva Investors Strategic Bond 14/11/ SW Aviva MultiStrategy ('AIMS') Target Income 14/11/ SW Baillie Gifford Multi Asset Growth 14/11/ SW BlackRock Managed 07/07/ SW BlackRock UK 19/09/ SW BlackRock UK Smaller Companies 19/09/ SW BlackRock UK Special Situations 21/04/ SW Fidelity Asia 19/09/ SW Fidelity 50:50 Special Situations 18/09/ SW Fidelity American 19/09/ SW Fidelity European 19/09/ SW Fidelity Global Special Situations 18/09/ SW Fidelity Managed 07/07/ SW Fidelity Money Builder Income 21/04/ SW Fidelity Special Situations (2006) 18/09/ SW Henderson Cautious Managed 19/01/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at If less than 5 years are available, performance figures are shown in blue. No performance information is shown for funds with less then four full quarters of performance history. Performance figures are in sterling on a single pricing basis, with income (where applicable) reinvested net of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). 19 Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. All information is sourced from Scottish Widows or the relevant fund management group unless otherwise stated.

20 SW life funds, managed by other fund managers Performance Statistics 1 April 2018 These life funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their advisers or Scottish Widows for information on fund availability. Funds Launch Date SW Henderson Fixed Interest Monthly Income Fund 19/01/ SW Henderson Global Equity Income 19/01/ Size of Fund ( m) SW Henderson UK Property Fund 01/06/ SW Insight Global Absolute Return 14/11/ SW Invesco Perpetual Corporate Bond 19/09/ SW Invesco Perpetual Distribution 01/11/ SW Invesco Perpetual Global Bond 19/09/ SW Invesco Perpetual High Income 19/09/ SW Invesco Perpetual Managed 07/07/ SW Investec Cautious Managed 25/10/ SW Investec Diversified Growth 14/11/ SW JPM Emerging Markets 21/04/ SW JPM Europe Dynamic (exuk) 21/04/ SW JPM Global Macro Balanced 01/11/ SW JPM Natural Resources 21/04/ SW Jupiter Distribution 19/01/ SW Jupiter Income 19/01/ SW Jupiter UK Growth 25/10/ SW Liontrust UK Smaller Companies 14/11/ SW Newton Global Equity 19/09/ SW Newton International Bond 19/09/ SW Newton Managed 07/07/ SW Newton UK Income 19/09/ SW Nordea 1 GBP Diversified Return 14/11/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

21 SW Payden Absolute Return Bond 14/11/ SW Royal London UK Equity Income 14/11/ SW Schroder Gilt & Fixed Interest 19/09/ SW Schroder Global Cities Real Estate 01/06/ SW Schroder Income Maximiser 03/12/ SW Schroder Managed 07/07/ SW Schroder Tokyo 19/09/ SW Schroder UK Alpha Plus 19/01/ SW Schroder UK Mid /10/ SW Schroder US Smaller Companies 19/09/ SW Threadneedle UK Social Bond 14/11/ SW Veritas Asian 14/11/ SW Woodford Equity Income 14/11/ Source: Financial Express as at If less than 5 years are available, performance figures are shown in blue. No performance information is shown for funds with less then four full quarters of performance history. Performance figures are in sterling on a single pricing basis, with income (where applicable) reinvested net of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. All information is sourced from Scottish Widows or the relevant fund management group unless otherwise stated. 21

22 OEIC funds, managed by Aberdeen Asset Management Performance Statistics 1 April 2018 These OEIC funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their adviser or Scottish Widows for information on fund availability. 22 Funds Launch Date Size of Fund ( m) Yield Yield % # Type Adventurous Solution 24/10/ H American Growth 30/11/ E Balanced Portfolio 28/01/ E Balanced Solution 24/10/ H Cash 30/04/ H Cautious Portfolio 28/01/ E Cautious Solution 24/10/ E Corporate Bond 18/08/ E Defensive Solution 24/10/ E Discovery Solution 24/10/ H Dynamic Solution 24/10/ H Emerging Markets 02/06/ H Environmental Investor 29/06/ H Ethical 12/09/ H European Growth 28/06/ H European Select Growth 14/02/ H Gilt 04/12/ E Global Growth 01/11/ H Global Select Growth 14/02/ H High Income Bond 16/08/ E High Reserve 04/01/ H International Bond 16/07/ E International Equity Tracker 02/03/ E Japan Growth 31/05/ H Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 7 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

23 Latin American 02/06/ H Opportunities Portfolio 28/01/ H Pacific Growth 09/03/ H Progressive Portfolio 28/01/ H Strategic Income 28/01/ E Strategic Solution 24/10/ H UK All Share Tracker 02/03/ H UK Equity Income 16/10/ H UK Fixed Interest Tracker 02/03/ E UK Growth 01/11/ H UK Index Linked Tracker 02/11/ C UK Select Growth 12/08/ H UK Smaller Companies 10/05/ H UK Tracker 01/11/ H Source: Financial Express as at If less than 5 years are available, performance figures are shown in blue. Performance figures are in sterling on a single pricing basis, with income (where applicable) reinvested net of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). # Yields may vary, data as at Effective Yield: The yield quoted for bond funds is determined by the effective yield of the underlying assets. 'Effective yield' is defined by the IMA, and takes account of all expected cash flows over the lifetime of each underlying asset, including differences between the purchase and redemption prices. Historic Yield: The yield quoted for equity funds is an historic yield based on distributions paid over the previous 12 month period.coupon: The yield for the UK Index Linked Tracker is calculated on a coupon basis. This takes into account only the expected coupons for each underlying asset. The past performance information for OEICs funds include the performance of the Unit Trusts which existed prior to their conversion to OEICs. Where the performance of the Unit Trust is included we have used the bid price on the units. These funds are available to existing customers who already hold shares in these funds. New customers should contact their adviser or Scottish Widows for information on fund availability. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. For further information on any of the above Scottish Widows OEIC funds contact your Financial Adviser or telephone our contact centre on We may record and monitor to help us improve our service. This fund is available to existing customers who already hold shares in the fund. New customers should contact their adviser or Scottish Widows for information on fund availability. 23

24 SafetyPlus is a registered trademark of Scottish Widows Limited. For further information on Scottish Widows OEIC Funds contact: Depository State Street Trustees Ltd 525 Ferry Rd, Edinburgh, EH5 2AW Manager Registrar Scottish Widows Unit Trust Managers Ltd PO Box Dalkeith Road Edinburgh EH16 5WL Auditor PricewaterhouseCoopers LLP Chartered Accountants Southwalk Towers 32 London Bridge Street London SE1 9SY 24

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28 Scottish Widows Limited. Registered in England and Wales No Registered Office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Scottish Widows Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number /18