Your Investment Options

Transcription

1 Retirement Investments Insurance Your Investment Options Funds that work as hard as you do

2 We are Aviva Helping our customers save for the future and manage the risks of everyday life. When it comes to building the best financial future for you and your family, you may have some big questions: When will I be able to retire? Have I enough saved to help me cope with the unexpected? How can I sustain my income in retirement? When can I buy my first home? Will I outlive my savings? Will I be able to provide for my children s education? Could my money be working harder than it is in the bank? Whatever your reasons for investing, helping you achieve your financial goals is at the heart of everything we do. We want to help you make the most of your money with investment funds that work as hard as you do. You can be confident that when you choose Aviva you re with the right people. We re part of the Aviva Group, a leading global financial services company with 320 years experience protecting our customers. Today, we focus on making the lives of our 33 million customers better 1. We offer you access to a range of investment funds from award winning, world class fund managers. Through our range of funds you can be as hands on as you like in building your portfolio with our Managed by You range of funds, or you can opt for our ready-made Managed for You funds. We are confident that our approach will enable you to find the solution that best meets your needs. It s all about good thinking - in a way that completely makes sense to you. 1. Source: All figures sourced from Aviva Annual Accounts Aviva, for funds that work as hard as you do. 2

3 Helping you make the right choice Choosing the right funds depends on the amount of risk you are willing to take, how long you want to invest for, and the amount of control you want over what you invest in. We recognise that investing isn t always simple, so in this booklet we aim to make your investment decision easier by explaining the funds in straightforward language so you understand their key benefits and key risks. Combined with the experience of your financial broker this booklet can help you make the right decision about the mix of investments to choose to best suit your circumstances. The technical terms used in this brochure are explained in the brochure and/or in the glossary at the back. 5 reasons to invest with Aviva 4 World class fund partners 8 Your fund choices at a glance 10 Risk rating, annual management charges and availability 11 Our Managed for You range of funds 12 Our AIMS Fund Range 13 AIMS Target Return Fund (Ireland) 14 AIMS Target Income Fund (Ireland) 16 Our Multi-Asset Fund Range 19 Our Aviva Investors Multi-Asset Fund (MAFs) range 21 MAF Cautious (Risk 3) 21 MAF Strategic (Risk 4) 21 MAF Dynamic (Risk 5) 21 Our Legal and General (L&G) Multi-Index Funds 24 L&G Multi-Index III Fund 25 L&G Multi-Index IV Fund 25 L&G Multi-Index V Fund 25 Our Merrion Investment Management Multi-Asset Fund Merrion Multi-Asset 70 Fund 27 Our Managed by You funds 30 Cash Fund 32 Bond Fund 34 Long Bond Fund 34 Corporate Bond Fund 34 L&G Euro Bond Index Fund 35 Irish Property Fund 36 UK Property Fund 37 High Yield Equity Fund 38 Asia Pacific Equity Income Fund 38 Emerging Market Equity Income Fund 39 Eurozone Equity Income Fund 39 L&G World Equity Index Fund 40 L&G Europe (excl. UK) Index Fund 40 L&G Emerging Markets Equity Index Fund 40 Understanding risk 42 Understanding our risk ratings 43 We re committed to quality service 45 Important notes on investing 46 Financial Services Compensation Scheme 46 Next steps 47 Glossary 48 3

4 5 reasons to invest 5 reasons to invest with Aviva 1. A rich tradition We ve been meeting the needs of Irish customers since Today, Irish people from all walks of life entrust their savings, investments and pensions to us - from companies, to parents and grandparents, to you. 2. Global strength Aviva Ireland is part of the Aviva Group, a leading global financial services group with 33 million customers in 16 countries worldwide. Aviva Life & Pensions UK Limited is rated A+ (Stable) by Standard & Poor s, A1 (Stable) by Moody s and AA- (Stable) by Fitch for its financial strength. Source: Aviva.com 27 September Multi award-winning fund managers When you invest with Aviva you can be confident that your money is being managed by award winning investment managers. Our fund partners are recognised for their expertise, innovation and track record. The CEO of Aviva Investors and architect of the AIMS Target Income Fund and the AIMS Target Return Fund, Euan Munro, was named the Innovator of the last 20 Years by Financial News at their 20th Anniversary Awards for Excellence in European Finance in May Some other awards received by our fund manager partners include: Aviva Investors Merrion Investment Legal & General Investment Management (LGIM) Managers WINNER Investment Manager of the Year 4. Two ways to invest There are two ways to invest depending on how much control you want over your savings and investments: 1. Pick a ready made Managed for You fund 2. Pick your own funds from our Managed by You fund range. With no fund switch charges across the majority of our products you have the flexibility to change funds at no cost. 4

5 5 reasons to invest 5. We make it easy You don t need to be a financial expert to invest: Managed by world-class fund managers, our Managed for You funds are a range of ready-made funds focused on delivering specific investment outcomes. See pages for more details. You can start investing from as little as 100 a month with our Regular Saver product and Personal and Executive pension. We have easy access options: With our easy access options on Investment Bond and Regular Saver products you can access your money without early encashment charges. Our tools make it simple and fast: Sometimes even knowing where to start can be difficult when investing. We have lots of helpful tools on to allow you and your financial broker to make the right investment decisions for you. When you do take out an Aviva savings, investments or pensions product you can keep track of your policy s performance and holdings. Aviva online You can access your policy information online through our new customer online offering Aviva Online. With Aviva Online, you can: see the current value of your policy see the funds you re invested in see how much money you have invested in each fund access our online customer calculators 5

6 How do I get started? In order to sign up for Aviva Online, you will need to provide us with your address. Shortly after your new policy is up and running, you ll receive an asking if you d like to activate your online account. To ensure you receive this invitation, please include your address when completing your application form. If you have an existing policy with us you can contact the Customer Service Centre on to see if your policy is eligible for online access and to update your address. Further product information is available in the Life & Pensions section of Our fund centre In our fund centre you can: view daily fund prices and performance download regular fund factsheets highlighting where your fund is invested and how it s performing chart the performance of your funds Our fund centre can be accessed at 6

7 Our risk profiler Before investing you need to decide how comfortable you are with investment risk and the level of risk you re willing and able to take with your own money. Our risk profiler may help you with this. Of course we d recommend you speak with your financial broker before making any financial decisions. Our risk profiler can be found on 7

8 You re in good hands World class fund managers Aviva Investors We offer a range of funds to choose from with our main investment manager Aviva Investors, the global asset management company of the Aviva Group. With a presence in 16 countries and an experienced team of over 1,300 employees, they manage almost 400 billion on behalf of customers worldwide 1. This gives them the size and scale to successfully seek out opportunities that allow them to meet the specific outcomes customers value such as delivering reliable fund growth or providing a regular income. They value creativity and empower their investment teams to find and execute great ideas. Indepth research and robust risk management underpin every investment decision they make. 1. Source: Aviva Investors 30 September 2016, based on exchange rates as at 30 September Legal & General Investment Management (LGIM) Legal & General Investment Management (LGIM) is the investment management arm of Legal & General Group (L&G), a FTSE 100 company, with a heritage dating back to LGIM, now established for over 40 years, is one of Europe s largest asset managers 2 and a major global investor, with total assets of trillion 3. LGIM works with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors. It provides investment expertise across the full spectrum of asset classes including fixed income, equities, multi-asset, commercial property and cash. 2. Source: IPE Source: L&G at 30 June 2016, including derivative positions and advisory assets. Merrion Investment Managers Operating since 1986, Merrion Investment Managers (MIM), which is Irish-based with a global outlook, is Ireland s number 1 performing, independent pension and investment fund manager and manages approx. 1 billion in client assets 4. Their flagship fund, the Merrion Managed Fund, is the number 1 performing, global multi-asset fund in the Irish market Source: Merrion Investment Management 30 November Source: MoneyMate 30 November 2016 based on MoneyMate 20 Year returns figure. Aviva Investors Global Services Limited, registered in England No Registered Office: St Helen s, 1 Undershaft, London, EC3P 3DQ. Authorised and regulated in the UK by the Financial Conduct Authority and a member of the Investment Association. Legal & General Investment Management (LGIM) is the appointed Investment Manager of the L&G Multi-Index EUR Funds. LGIM is authorised and regulated by the Financial Conduct Authority. Merrion Capital Investment Managers Limited (trading as Merrion Investment Managers) is regulated by the Central Bank of Ireland. 8

9 We re focused on you Your investment options By knowing what s important to customers, we work with our award winning fund managers to provide funds that aim to cater for your real needs. We take a collaborative approach, acting as a single team to bring together the breadth of their global resources with our local knowledge and experience for the benefit of customers. 9

10 Your fund choices at a glance Managed for You funds a simpler way to invest Expertly managed funds focused on delivering the outcomes that matter most to you You know it s an important goal to make the best of your financial future. But, trying to fit this goal into your daily life may seem like a challenge. You may want to speak with your financial broker about our Managed for You funds if you: are looking for ways to reduce the amount of time you spend researching investment options and market conditions. want the peace of mind of knowing that investment experts are managing your money day-to-day, month-to-month so you don t have to. want a ready-made portfolio with wide diversification that is designed to meet a specific investment outcome, whether that s growth with a specific level of return in mind, growth with a level of risk in mind or you just want to aim to generate a regular income 1 from your investments. are willing to accept that you need to take risks with your investments for the potential of higher returns. want a fund that is actively monitored and rebalanced to reflect the fund manager s view of the market. Aviva Investors Multi-Strategy (AIMS) Fund range I want to know the level of return or income that I can potentially achieve AIMS Target Return Fund (Ireland) AIMS Target Income Fund (Ireland) 1 An all weather fund that aims to provide growth An all weather fund that aims to provide regular income regardless of the market environment regardless of the market environment 1. Available through our actively marketed ARF/AMRF product and our Investment Bond product only. Our Multi-Asset fund range I want to access a broad range of investment markets and cost is important to me Aviva Investors Multi-Asset Funds (MAFs) range Three Multi-Asset funds managed to different levels of risk L&G s Multi-Index Fund range Three Multi-Index funds managed to different levels of risk Merrion Multi-Asset 70 Fund A Multi-Asset fund that aims to generate high growth with a medium to high level of risk WARNING: The value of your investment may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: The income you get from this investment may go down as well as up. WARNING: These funds may be affected by changes in currency exchange rates. Managed by You funds you re in control If you re confident in your ability to build and manage your own portfolio, our Managed by You range of funds cover a range of assets and risk profiles with both active and passive options. 10

11 Risk ratings, annual management charges and availability Fund Risk rating (01 October 2016) Annual Management Charge (AMC) Investment Bond Regular Saver Aviva Personal Pension Aviva Executive Pension Aviva Retirement Bond ARF / AMRF Corporate Plan Trustee Investment Plan Group Buy Out Bond Group PRSA Simple PRSA Select PRSA AIMS Target Return Fund (Ireland) AIMS Target Income Fund (Ireland) 4/7 4/7 0.35% higher than our standard AMC % higher than our standard AMC 4 4 MAF Cautious (Risk 3) 3/7 Standard AMC MAF Strategic (Risk 4) 4/7 Standard AMC MAF Dynamic (Risk 5) 5/7 Standard AMC L&G Multi-Index III Fund 3/7 0.05% lower than our standard AMC L&G Multi-Index IV Fund 4/7 0.05% lower than our standard AMC L&G Multi-Index V Fund 5/7 0.05% lower than our standard AMC Merrion Multi-Asset 70 Fund 5/7 Standard AMC Cash Fund 1/7 Standard AMC Bond Fund 4/7 Standard AMC Long Bond Fund 4/7 Standard AMC Corporate Bond Fund 3/7 Standard AMC L&G Euro Bond Index Fund 4/7 0.05% lower than our standard AMC Irish Property Fund 4/7 0.25% higher than our standard AMC 1 UK Property Fund 4/7 0.25% higher than our standard AMC High Yield Equity Fund 5/7 Standard AMC Asia Pacific Equity Income Fund 6/7 Standard AMC Emerging Market Equity Income Fund 6/7 Standard AMC Eurozone Equity Income Fund 6/7 Standard AMC L&G Europe (excl. UK) Index 0.05% lower than our 6/7 Fund standard AMC L&G Emerging Markets 0.05% lower than our 6/7 Equity Index Fund standard AMC L&G World Equity Index Fund 2 5/7 0.05% lower than our standard AMC Except on Simple and Group PRSAs where the AMC is our standard annual management charge. 2. Launching shortly. We will update this guide when this fund is launched. Other charges may apply on your product. Your financial broker will be able to give you more details on your fund and product charges and the tax treatment of your product. Where a fund invests in another fund(s), additional charges may apply. These charges may vary depending on the specific investments in each fund. Where these charges are applied, the charges are reflected in the unit price. As a result, the overall charge may be higher than shown in the product documentation. Some funds described in this brochure may not be available on older products. Please contact your financial broker or our Customer Service Centre on or csc@aviva.com to see what funds are available to you if your product is not listed in the table above. 11

12 Our Managed for You range of funds Expertly managed funds focused on delivering the outcomes that matter most to you. 12

13 Our AIMS Fund Range All weather funds that aim to deliver more certain investment outcomes regardless of the market environment Understanding Target Return Funds In recent years, many investors have turned to target return funds. This is a way of investing that aims to generate positive returns in all market conditions. It uses investment techniques that can profit from both the ups and downs in markets. Understanding Target Income Funds In today s exceptionally low interest rate environment, consumers are forced to either accept high levels of risk to generate a decent income from their investment, or accept very low income. A target income fund may be a good alternative. These funds aim to generate regular income regardless of the market environment. They use investment techniques that can generate income whether markets rise or fall. 13

14 Our Managed for You funds AIMS Target Return Fund (Ireland) An all weather fund that aims to provide growth regardless of the market environment Risk Rating (01 October 2016) Structure of the fund The AIMS Target Return Fund (Ireland) invests in the Aviva Investors Multi-Strategy (AIMS) Target Return Fund (the underlying fund), a sub fund of the Aviva Investors Luxembourg SICAV. A small proportion of the fund may also be held in cash for liquidity purposes. As the AIMS Target Return Fund (Ireland) is principally invested in the AIMS Target Return Fund (the underlying fund), it is important that you understand the operation, risks and benefits of investing in the underlying fund. Hence the following information refers to the underlying fund. The AIMS Target Return Fund (the underlying fund): Targets a gross annual return of: Fund managers aim to achieve less than: 5% above ECB base rate (or equivalent) over any three-year period 1 ½ the volatility of global equities over any three-year period 1,2 1. There is no guarantee that the fund will achieve these targets. Your capital is at risk when you invest in this fund. 2. Volatility is a measure of the extent that the price of a fund, company share price, or equity market index moves up and down over a period of time. 14

15 Our Managed for funds Key benefits Aims to grow your investment In an uncertain world, the fund aims to provide a positive return in all market conditions. It targets annual gross returns of 5% above the ECB base rate (or equivalent) over any three-year period. Aims to provide returns in a range of market conditions The fund managers combine a diverse mix of strategies that are expected to work well together whether markets are rising or falling. Seeks to manage volatility The fund invests in a range of different investment strategies and the fund managers aim to achieve less than half the volatility of global equities over any three-year period. Harnesses the best investment ideas from Aviva Investors The fund harnesses the idea generation and investment expertise of the whole of Aviva Investors. The fund offers access to investment ideas from Aviva Investors experienced fund managers, strategists and economists across all asset classes. Diversified, global investment Diversification means not putting all your eggs in one basket (or asset class/strategy). The fund can invest anywhere in the world, providing a diversified mix of strategies. WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 15

16 Our Managed for You funds AIMS Target Income Fund (Ireland) An all weather fund that aims to provide regular income regardless of the market environment Risk Rating (01 October 2016) Structure of the fund Our AIMS Target Income Fund (Ireland) invests in the Aviva Investors Multi-Strategy (AIMS) Target Income Fund (the underlying fund), a sub fund of the Aviva Investors Luxembourg SICAV. A small proportion of the fund may also be held in cash for liquidity purposes. It s important to note that, while the underlying fund aims to preserve capital, charges are likely to erode the value of your capital in the AIMS Target Income Fund (Ireland) in today s low interest rate environment. If you invest in the AIMS Target Income Fund (Ireland) through an Approved Retirement Fund (ARF), your annual mandatory income payment will also erode the value of your capital. Details on the operation of AIMS Target Income Fund (Ireland) is covered in the Key Features document for the products under which it is available. As the AIMS Target Income Fund (Ireland) is principally invested in the AIMS Target Income Fund (the underlying fund), it is important that you understand the operation, risks and benefits of investing in the underlying fund. Hence the following information refers to the underlying fund. The AIMS Target Income Fund (the underlying fund): Targets a gross annual income of: Fund managers aim to achieve less than: 4% ½ above ECB base rate (or equivalent) 1 the volatility of global equities over any three-year period 1,2 1. There is no guarantee that the fund will achieve these targets. The key features document for your product will explain how the AIMS Target Income Fund (Ireland) will operate. This is available on or from your local financial broker. 2. Volatility is a measure of the extent that the price of a fund, company share price, or equity market index moves up and down over a period of time. 16

17 Our Managed for funds Key benefits Regular income The fund aims to provide an income in all market conditions. It targets a gross annual income of 4% above the ECB base rate (or equivalent). Please note you may have a choice of receiving or accumulating this income in the AIMS Target Income Fund (Ireland). Your income options will depend on the product you are invested in. The Key Features document for the AIMS Target Income Fund (Ireland) for your specific product will explain this in detail. You can download a copy of the Key Features document for your specific product on or request a copy from your financial broker. Aims to provide an income in a range of market conditions The fund managers combine income from a wide range of assets such as shares, bonds and Real Estate Investment Trusts (REITs) in a diverse mix of strategies that are expected to work well together whether markets are rising or falling. This variety of income sources helps the fund to meet its income target irrespective of market conditions. Seeks to manage volatility The fund invests in a range of different investment strategies and the fund managers aim to achieve less than half the volatility of global equities over any three-year period. Harnesses the best investment ideas from Aviva Investors The fund harnesses the idea generation and investment expertise of the whole of Aviva Investors. The fund offers access to investment ideas from Aviva Investors experienced fund managers, strategists and economists across all asset classes. Diversified global investment Diversification means not putting all your eggs in one basket (or asset class). The fund can invest anywhere in the world, providing a diversified mix of strategies. The fund also seeks to obtain income from a wide range of assets such as shares, bonds and Real Estate Investment Trusts (REITs). WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 17

18 Our Managed for You funds Key risks of investing in our AIMS Target Return Fund (Ireland) and AIMS Target Income Fund (Ireland) The funds are subject to market fluctuations The value of the funds and the income from the AIMS Target Income Fund (Ireland) are subject to market fluctuations. This could lead to values being adversely and unpredictably affected by various factors including political and economic events. As such, the value of your investments and the income from them may go down as well as up. Your investment may be subject to significant short-term market fluctuations. The funds are designed for the medium to long-term investor. The funds aims are not guaranteed The aims of the funds are not guaranteed and you may suffer losses or lower income than expected. The funds make extensive use of derivatives and leverage The funds make significant use of derivatives. Where derivatives do not perform as expected, the funds could suffer significant losses. Certain derivatives will add leverage and can cause large fluctuations in the fund value. They can also result in the fund(s) facing greater potential losses than the initial investment. Leverage can magnify gains or losses. It may also impair liquidity, forcing a sale of investments and causing the fund(s) to fail to achieve their objectives. Currency risk The funds may invest outside of the eurozone or hold currencies other than euro. So, the value of your investment and the income from the AIMS Target Income Fund (Ireland) may fall or rise depending on changes in the exchange rates of currencies to which the funds are exposed. Counterparty risk Losses may occur if an organisation with which the funds transact becomes insolvent or fails to meet its obligations. This risk may be reduced by obtaining assets as collateral from these organisations. These losses will be passed on to the investor. Please see the understanding risks section Further details of the risks your funds may be exposed to can be found in the understanding risk section of the brochure on page 42. More detail on the risks the underlying funds are exposed to and the operation of the funds can be viewed in the latest Key Investor Information Document (KIID) and Prospectus. Please note charges and subscription details in these reports relate to the underlying funds and do not apply to Irish investors in the AIMS Target Return Fund (Ireland) or the AIMS Target Income Fund (Ireland). These documents are available on request from your financial broker. Learn more We have a range of customer literature to help you understand these funds. These documents are available through your financial broker or you can download them on 18

19 Our Managed for funds Multi-Asset funds Effortless investing Understanding Multi-Asset funds Ready made investment portfolio in a single fund Multi-Asset funds invest across a number of different asset types which may include equities, bonds, property, cash and alternatives. This gives you a greater degree of diversification than investing in a single asset class. Diversifying across a broad range of asset classes, styles, sectors and regions can help cushion against any shocks that come with investing in a single asset class. It also enhances the potential for investing in a better performing asset class, while spreading the risk of investing in lower performing asset classes. However, investors should remember that diversification does not fully protect you from market risk. 19

20 Our Managed for You funds Our Multi-Asset fund range Experts managing your portfolio every day, so you don t have to There are hundreds of funds available in the market. You can choose between funds with exposure to different asset classes from equities to property, different countries from Ireland to Brazil or different sectors from food to energy. With so many variables to consider many people don t even know where to start. Making the time to do the investment research to select the right funds for you, monitor their performance and rebalance your portfolio to adapt to changing market conditions can be a challenge. Through our Multi-Asset fund range our expert investment professionals will do the hard work for you. They will select the investments to hold in each fund, review the performance of the investments held within each fund and rebalance the funds to adapt to the changing market environment. This means you can invest with confidence knowing that our fund managers are bringing a wealth of experience and expertise to managing each portfolio every day, so you don t have to. A range of funds to suit all kinds of investors There are a range of Multi-Asset funds to choose from. The funds offer wide diversification, are easy to understand and are available at competitive charges. Each fund seeks to remain within a certain risk level over the medium to long-term (as measured by the fund s volatility 1 ), albeit there is no guarantee that these funds will remain within that risk level. If your risk profile or circumstances change it is easy to switch between the funds. We also offer access to the Merrion Multi-Asset 70 Fund which has an excellent long-term track record of performance versus its peers. 2 Our Multi-Asset fund range at a glance Range available Charges Assets under management in Multi-Asset funds Aviva Investors MAF range You have three funds to choose from to suit your attitude to risk, whether you re a: 1. Cautious investor 2. Balanced investor 3. Adventurous investor The funds are available at our standard annual management charge Over 100 billion (Source: Aviva Investors 30 September 2016) Legal & General s Multi-Index range You have three funds to choose from to suit your attitude to risk, whether you re a: 1. Cautious investor 2. Balanced investor 3. Adventurous investor The annual management charge on these funds is 0.05% lower than our standard annual management charge Nearly 40 billion (Source: Legal and General Investment Management 30 June 2016) Merrion s Multi-Asset 70 Fund A Multi-Asset fund that aims to suit the more adventurous investor The fund is available at our standard annual management charge Over 400 million (Source: Merrion Investment Managers 31 October 2016) 1. Volatility is a measure of the extent that the price of a fund moves up and down over a period of time. Generally the higher the volatility the greater the potential return but also the higher the potential risk of loss. 2. Source: MoneyMate 30 November 2016 (based on Merrion Managed Fund 20 year performance). 20

21 Our Managed for funds Aviva Investors Multi-Asset Funds (MAFs) Great value, ready-made funds designed to suit your attitude to risk MAF Cautious (Risk 3) The fund s primary aim is to meet its risk target of a rolling five year volatility of between 2% and 5% per year. This aim may not be achieved. Risk rating (01 October 2016) 3/7 This actively managed fund is designed for people looking for medium to long-term capital growth but with relatively low exposure to market volatility. The fund gives exposure to many different asset classes including but not limited to cash, bonds, equities, property and alternatives (for example absolute return funds and commodities). The fund may make use of derivatives (and leverage) with the aim of helping it to achieve its objectives. While the fund tends to have a high allocation to more defensive or cautious investments, it will be subject to what are expected to be modest fluctuations in value. MAF Strategic (Risk 4) The fund s primary aim is to meet its risk target of a rolling five year volatility of between 5% and 10% per year. This aim may not be achieved. Risk rating (01 October 2016) 4/7 This actively managed fund is designed for people looking for medium to long-term capital growth through a balanced mix of investments that offer potential for growth and investments that are more defensive in nature. The fund gives exposure to many different asset classes including but not limited to cash, bonds, equities, property and alternatives (for example absolute return funds and commodities). The fund may make use of derivatives (and leverage) with the aim of helping it to achieve its objectives. The fund will be subject to fluctuations in value. MAF Dynamic (Risk 5) The fund s primary aim is to meet its risk target of a rolling five year volatility of between 10% and 15% per year. This aim may not be achieved. Risk rating (01 October 2016) 5/7 This actively managed fund is designed for people looking for medium to long-term capital growth. The fund gives exposure to many different asset classes including but not limited to cash, bonds, equities, property and alternatives (for example absolute return funds and commodities). The fund may make use of derivatives (and leverage) with the aim of helping it to achieve its objectives. The fund tends to have a high allocation to growth seeking assets such as equities, properties and higher risk bonds and will be subject to large fluctuations in value. 21

22 Our Managed for You funds Key benefits A fund to suit you The Aviva Investors range of MAFs aim to meet the needs of customers with three different risk profiles. If your attitude towards risk or your circumstances change you can speak to your financial broker about switching to another MAF that targets a higher or lower level of risk. Simplifying fund choice Deciding where to invest your money can be complicated, particularly with so many funds available in the market each with a different approach and risk profile. The risk targeted MAFs make investment choice easier with three ready-made funds to choose from with different risk targets to suit customers with different risk profiles. Great value MAFs are competitively priced at the Aviva standard annual management charge. You can speak with your financial broker about the charges that are applicable to your product. Greater diversification MAFs ensure that your portfolio is spread amongst various geographic locations and investments. The funds give exposure to many different asset classes including but not limited to cash, bonds, equities, property and alternatives (for example absolute return funds and commodities). The risk target of the fund 1, the prevailing market environment and views of the fund manager will dictate the fund s allocation to different investment types. This wide diversification aims to reduce risk. Monitored and managed for you Aviva Investors Multi-Asset team will monitor your investment and review the performance of the investments held within the fund. This team has been managing this type of fund for over a decade and they manage 100 billion in Multi-Asset funds. 2 Access to the full range of Aviva Investors in-house resources The asset allocation of the funds is based on Aviva Investors House View, populated using predominantly internally sourced building blocks with portfolios constructed by their fund managers. This breadth and depth gives Aviva Investors the ability to undertake the entire investment process in-house. Truly global approach Aviva Investors seek investment opportunities for clients from around the world, offering a globally diversified approach that avoids any home market bias, for example over exposure to Irish equities or Irish property. Responsive, active asset allocation Aviva Investors investment expertise enables them to respond quickly to changes in the market outlook. They adjust portfolio positions as required, rather than on a quarterly or annual basis, using direct investments, active funds, passive funds or derivatives as appropriate when investing in each asset class. 1. Risk Target: Each of the three funds target a specific level of volatility over a rolling five year period. 2. Source: Aviva Investors as at 30 September WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 22

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24 Our Managed for You funds Legal and General (L&G) Multi-Index Funds Straightforward, low cost investing Structure of the L&G Multi-Index Funds Our L&G Multi-Index Funds invest in the L&G Multi-Index EUR Funds (the underlying funds), sub funds of the L&G ICAV. Unless otherwise stated when we refer to the fund we are referring to the underlying fund. The investment objective of these funds is to generate capital growth through exposure to a diversified range of asset classes, predominantly in other collective investment schemes. This includes collective investment schemes managed by L&G (including other sub funds of the ICAV) and/or other fund managers. The funds may also hold direct investments. The funds are expected to have a level of risk which broadly corresponds with a level of the UCITS synthetic risk and reward indicator (SRRI). However as the funds are managed on a forward looking basis there is no guarantee that this will be achieved over any time period and there may be periods where the funds fall outside of the risk and reward indicators. Aviva Fund Aviva Fund invests in Expected level of risk 1 L&G Multi-Index III Fund L&G Multi-Index EUR III Fund 3 L&G Multi-Index IV Fund L&G Multi-Index EUR IV Fund 4 L&G Multi-Index V Fund L&G Multi-Index EUR V Fund 5 1. Based on UCITS SRRI (Synthetic Risk and Return Indicator). Please see the Glossary for further details. 24

25 Our Managed for funds L&G Multi- Index III Fund Our L&G Multi-Index III Fund invests in the L&G Multi-Index EUR III Fund (the underlying fund), a sub fund of the L&G ICAV. Risk rating (01 October 2016) 3/7 The fund is designed for people looking for medium to long-term capital growth but with relatively low exposure to market volatility. Legal & General Investment Management (LGIM) actively manage the asset allocation of the fund and principally use passive investments to get exposure to different asset classes. These asset classes include, but are not limited to; equities, fixed income, alternatives and cash. The fund may also use derivatives for efficient portfolio management and hedging purposes. While the fund tends to have a high allocation to more defensive or cautious investments, it will be subject to what are expected to be modest fluctuations in value. L&G Multi- Index IV Fund Our L&G Multi-Index IV Fund invests in the L&G Multi-Index EUR IV Fund (the underlying fund), a sub fund of the L&G ICAV. Risk rating (01 October 2016) 4/7 This fund is designed for people looking for medium to long-term capital growth and a balanced mix between investments that offer potential for growth and investments that are more defensive in nature. LGIM actively manage the asset allocation of the fund and principally use passive investments to get exposure to different asset classes. These asset classes include, but are not limited to; equities, fixed income, alternatives and cash. The fund may also use derivatives for efficient portfolio management and hedging purposes. The fund will be subject to fluctuations in value. L&G Multi- Index V Fund Our L&G Multi-Index V Fund invests in the L&G Multi-Index EUR V Fund (the underlying fund), a sub fund of the L&G ICAV. Risk rating (01 October 2016) 5/7 The fund is designed for people looking for medium to long-term capital growth. LGIM actively manage the asset allocation of the fund and principally use passive investments to get exposure to different asset classes. These asset classes include, but are not limited to; equities, fixed income, alternatives and cash. The fund may also use derivatives for efficient portfolio management and hedging purposes. The fund tends to have a high allocation to growth seeking assets such as equities and will be subject to large fluctuations in value. 25

26 Our Managed for You funds Key benefits Simplifying fund choice Deciding where to invest your money can be complicated, particularly with so many funds available in the market. Our Multi-Index Funds make investment choice easier with three ready-made funds to choose from that aim to remain within a certain risk level over the medium to long-term to suit customers with different attitudes to risk.. A mix of assets to diversify your portfolio No doubt you ve heard the saying, don t put all your eggs in one basket. In investing terms, this means don t put all your money in just one type of investment or market. The Multi-Index funds offer the benefits of investing in a variety of different types of assets, including but not limited to; equities, fixed income, alternatives and cash. Designed to meet your risk tolerance These funds are designed to help give you peace of mind that your investment does not take more risk than you re comfortable with. The funds seek to remain within the same risk level over the medium to long-term. Your financial broker can help you determine your attitude to risk and select which of the three funds might be appropriate for you. If your attitude towards risk or your circumstances change, your broker can assist you in considering whether you should switch to another Multi-Index fund that offers a higher or lower level of risk. Low-cost straightforward building blocks The Multi-Index funds principally combine investments from LGIM s flagship range of low cost index funds, as well as carefully selected in-house actively managed funds. This means that they can deliver a sophisticated portfolio at a low cost that is still easy to understand. The annual management charge on these funds is 0.05% lower than our standard annual management charge. For details of the charges that apply to your product please contact your financial broker. Prepared for a range of market conditions LGIM regularly review the mix of investments within the Multi- Index funds with the aim of adapting the funds allocations to different market and economic environments. If the investment landscape changes, they aim to achieve the funds objectives without taking on more or less risk than its risk profile allows. WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 26

27 Our Managed for funds Merrion Multi-Asset 70 Fund Strong long-term track record of performance 1 for the more adventurous investor Merrion Multi-Asset 70 Fund Our Merrion Multi-Asset 70 Fund invests in the Merrion Managed Fund (the underlying fund). Unless otherwise stated when we refer the fund we are referring to the underlying fund. Risk rating (01 October 2016) 5/7 The Merrion Managed Fund is an actively managed global Multi-Asset (equities, bonds, property, alternatives and cash) fund that takes a strategic view that a 60-80% allocation to return seeking assets is most appropriate for medium to long term investors (>5 years). Key benefits Diversification The fund provides investors with significant diversification by asset, region, sector and individual securities. Three pillar investment process Fund performance has been driven by a long established and robust three-pillar investment process based on macro, valuation and technical analysis. Strong long-term track record The Merrion Managed Fund is the number 1 performing, global Multi-Asset fund in the Irish market Source: MoneyMate 30 November 2016 based on MoneyMate 20 Year returns figure. WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 27

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29 Our Managed for You funds Your investment options Key risks of investing in our Multi-Asset range of funds (MAFs, Multi-Index Funds and Merrion Multi-Asset 70 Fund) The funds are subject to market fluctuations The value of the funds are subject to market fluctuations. This could lead to values being adversely and unpredictably affected by various factors including political and economic events. As such, the value of your investments may go down as well as up. Your investment may be subject to significant short-term market fluctuations. The funds are designed for the medium to long-term investor. Volatility targets are not guaranteed Where the fund targets a certain level of volatility, there is no guarantee that the specific volatility target will be met. This means that the risk ratings of the funds may be different than expected. Capital and returns are not guaranteed The capital and returns on the funds are not guaranteed. Currency risk The funds may invest outside of the eurozone or hold currencies other than euro. So, the value of your investment may fall or rise depending on changes in the exchange rates of currencies to which the funds are exposed. Counterparty risk Losses may occur if an organisation with which the fund transacts becomes insolvent or fails to meet its obligations. This risk may be reduced by obtaining assets as collateral from these organisations. These losses will be passed on to the investor. These funds may use derivatives The funds may make use of derivatives and leverage. Where derivatives do not perform as expected, the fund(s) could suffer significant losses. More information on the use of derivatives and leverage can be found in the customer fund brochure where available or the fund factsheet which are available from your financial broker or can be downloaded on Please see the understanding risks section Further details of the risks your funds may be exposed to can be found in the understanding risk section of the brochure on page 42. Learn more We have a range of customer literature to help you understand these funds. These documents are available through your financial broker or you can download these on 29

30 Our Managed by You range of funds If you re a confident investor and want to build and monitor your own portfolio - we offer a range of funds across asset classes and risk profiles with both active and passive choices. 30

31 Understanding active funds Active management is an approach to managing funds where a fund manager actively picks securities, asset classes or collective investment schemes she or he feels are likely to deliver good investment returns. In this type of fund, a fund manager often seeks to outperform a specific benchmark. Understanding passive funds An index tracking fund, sometimes called a tracker fund or a passive fund, is one that simply aims to replicate the performance of a given market, represented by an index. Investors typically use index tracking funds as a core part of a broader portfolio. An index tracking fund offers a cost-effective, simple way for customers to access market returns. 31

32 Understanding cash funds These funds typically place money on deposit at banks or in money market securities that pay a variable rate of interest. These types of funds offer the least risk, with little volatility, but offer the least potential for profit. They are largely influenced by the prevailing interest rate environment and inflation and charges may erode the returns they provide to you. Cash Fund This fund invests in cash and various money market securities. Risk rating (01 October 2016) 1/7 The fund invests in term deposits, call deposits and AAA rated money market funds. The fund can only deposit money with institutions above a certain credit rating. There is no unit price guarantee on this fund. If interest rates are lower than the annual management charge the unit price of the fund will fall and the cash fund will make a loss. Key benefits Cash funds offer the least capital risk, so may be suitable for customers seeking to shield their investments from the effects of stock and property market volatility. Key risks Inflation can eat into the real returns offered by the cash funds. In today s low interest rate environment the returns on cash funds are likely to be negative given interest rates are lower than the annual management charge on the funds. Further details of the risks your funds may be exposed to can be found in the understanding risk section of the brochure on page 42. WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 32

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34 Understanding bond funds Fixed interest or bond funds invest predominately in bonds that are issued by governments and/or companies as a way of borrowing money. Effectively by investing in a fixed interest fund or bond fund, you are lending money to a variety of governments and/or companies. The loan is due to be repaid at a future date but in the meantime the governments and/or companies pay interest on the loans and this interest is added to the fund. Because these funds are loans to governments and/or companies they are typically less risky than investing in equities. However, the long term returns are likely to be lower and there is a risk that the value of your investment could fall. Our actively managed bond funds Bond Fund This fund invests principally in a portfolio of government fixed interest bonds. Risk rating (01 October 2016) 4/7 The fund principally invests in Eurozone government bonds but can also invest in index linked government bonds, non- Eurozone government bonds and cash. The fund is managed against a Eurozone government bond benchmark of 5 year+. Any non Eurozone currency risk will normally be hedged. Long Bond Fund This fund invests principally in a portfolio of government fixed interest bonds. Risk rating (01 October 2016) 4/7 The fund principally invests in Eurozone government bonds but can also invest in index linked government bonds, non- Eurozone government bonds and cash. The fund is managed against a Eurozone government bond benchmark of 10 years+. Any non Eurozone currency risk will normally be hedged. Corporate Bond Fund This fund invests principally in a portfolio of high quality corporate bonds. Risk rating (01 October 2016) 3/7 The fund invests principally in investment grade corporate bonds i.e. bonds issued by companies with a high credit rating. The fund can also invest in bonds issued by governments and cash. The fund has exposure across a range of sectors. Any non Eurozone currency risk will normally be hedged. 34

35 Our Managed by funds Our passively managed bond fund L&G Euro Bond Index Fund Our Euro Bond Index Fund invests in the L&G Euro Treasury Bond Index Fund (the underlying fund) a sub fund of the L&G ICAV. The following information refers to the underlying fund. Risk rating (01 October 2016) 4/7 The investment objective of the fund is to provide investors with a return in line with the Euro government bond market, as represented by the Barclays Euro Treasury Index This is the index the fund tracks as at 1 February 2017 and may be subject to change. Key benefits Bond funds have historically offered less volatile returns than equity or property funds. The assets are managed by fund managers experienced in the fixed interest sector who will provide professional expertise when deciding on which bonds to include in the fund. Bond funds are typically less dependent on stockmarket performance than equity funds. Key risks Lower historic long-term returns than other asset classes such as property and equities. Fluctuations in interest rates can affect value. Generally when interest rates rise bond values fall and vice versa. As your investment may be subject to short-term market fluctuations, your investment should be viewed as a medium to long-term investment. For fixed interest funds that invest outside the Eurozone, any currency exchange rate movement may cause the value of your investment to fall as well as rise. Further details of the risks your funds may be exposed to can be found in the understanding risk section of the brochure on page 42. WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 35

36 Understanding property funds In a property fund, investors money is pooled to purchase a range of different properties. The investment return from property comes from capital growth and rental income. These funds may also have holdings in property related securities such as Real Estate Investment Trusts (REITs) and cash instruments. REITs are companies that sell like a stock on a major exchange and invest in real estate directly. Investing in REITs can offer a more liquid, dividend-paying means of participating in the real estate market than investing directly in property. There are broadly three sectors in the commercial property asset class. These include: Offices: headquarter buildings, high rise blocks, business centres and science parks. Industrial: workshops, factories, warehouses and distribution centres. Retail: shops, showrooms, shopping centres, supermarkets and restaurants. Important: The cash weighting in our property funds depends on a number of factors and may vary over time. The cash proportion of the funds can be significant while the fund managers are seeking suitable investment opportunities. Withdrawals and switches from funds investing directly or indirectly in property may be deferred for up to 6 months. Property funds may have liquidity and concentration risks which are not captured by their risk rating. Our actively managed property funds Irish Property Fund This fund invests principally in high quality Irish commercial property, property-related securities and cash. Risk rating (01 October 2016) 4/7 The fund offers access to industrial, retail and office properties. Aviva Investors size and presence gives them privileged access to opportunities not available to smaller managers in the Irish property market. Once they have invested, their expertise helps enhance the value of their investments. This includes redevelopment, repositioning and transforming Irish commercial property assets. 36

37 Our Managed by funds UK Property Fund The UK Property Fund principally invests in the Aviva Investors Property Trust. The UK Property Fund has a level of hedging that aims to, as closely as possible, remove exposure to changes in the exchange rate between sterling and euro. The Aviva Investors Property Trust invests principally in a portfolio of direct property, property related securities, cash, government and other public securities and units in collective investment schemes. Risk rating (01 October 2016) 4/7 The Trust is designed to provide a diversified portfolio of high-quality assets as a core for UK property investments. Property investments include industrial, retail, office and leisure. The Trust was launched over twenty years ago in September 1991 and was the UK s first authorised property unit trust. Key benefits Historically commercial property funds have offered less volatile returns than investing in equity funds. Potential for higher returns than cash or bond funds. Property funds are typically less dependent on stockmarket performance than equity funds. They offer diversified exposure to the property market with access to a wide range of property sectors. As well as income received from property rentals, profit can be gained in the long-term through capital growth generated from the properties in the fund. The assets are managed by fund managers experienced in the property sector who will provide professional expertise when deciding on which properties to include in the fund. There are no requirements for the investor to be directly involved in the management of the property or employing a successful exit strategy (e.g. selling or renting the property). Key risks Commercial property can be difficult to sell in a downturn. These funds are subject to significant liquidity risk as a notice or deferral period may be applied on encashments from property funds. Property is a cyclical asset class and has a strong correlation to the economic cycle. Typically property funds are more volatile than bonds or cash. The returns on property funds can be adversely affected by difficult economic environments. For property funds that invest outside the Eurozone, any currency exchange rate movement may cause the value of your investment to fall as well as rise. The value of the property is based on opinion rather than fact. The cash weighting of a property fund depends on a number of factors and may vary over time. Property related securities may have gearing. Further details of the risks your funds may be exposed to can be found in the understanding risk section of the brochure on page 42. WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 37

38 Understanding equity funds Equity funds invest across a range of different company shares, such as Apple or Nestlé. Equity funds have the potential to make money in two ways: 1. They can receive capital growth through increases in the share prices of the companies they invest in, and 2. They can receive income in the form of dividends from the companies they invest in. They offer the greatest potential for both gains and losses. Share prices are impacted by a number of economic and company specific factors. These usually reflect the market s perceived value of a company. Share prices rise and fall on a daily basis based on investor demand. This means that the value of your investment can go up or down, often quickly and often by significant amounts. That s why equities are considered long-term investments and their performance is not guaranteed. Some of our funds only invest in certain regions - others invest in companies all over the world. Our actively managed equity funds High Yield Equity Fund This fund invests principally in a portfolio of companies. Risk rating (01 October 2016) 5/7 The fund is concentrated, investing in around 40 companies to maximise the impact of the fund s investment process. The fund aims to provide an annualised income yield higher than its global benchmark. The fund invests mainly in companies judged to offer above average dividend yield and with the potential of long-term growth. The fund has generated strong returns versus both its peers and the market since launch in 2001 (Source: MoneyMate Longboat Analytics 31 January 2017). Asia Pacific Equity Income Fund This fund invests principally in a portfolio of companies in the Asia Pacific region excluding Japan. Risk rating (01 October 2016) 6/7 The fund aims to provide an annualised income yield higher than its benchmark. The fund invests mainly in companies judged to offer above average dividend yield and with the potential of long-term growth. 38

39 Our Managed by funds Emerging Market Equity Income Fund This fund invests in the Aviva Investors Emerging Markets Equity Income Fund (the underlying fund), a sub fund of the Aviva Investors Luxembourg SICAV. A small proportion of the fund may also be held in cash for liquidity purposes. The following information refers to the underlying fund. Risk rating (01 October 2016) 6/7 The objective of the fund is to earn income and increase the value of the shareholder s investment over time. The fund invests mainly in equities and equity-related securities of companies in developing or emerging markets. The fund may use derivatives for hedging and for efficient portfolio management. Eurozone Equity Income Fund This fund invests principally in a portfolio of companies in the Eurozone region. Risk rating (01 October 2016) 6/7 The fund aims to provide an annualised income yield higher than its benchmark. The fund invests mainly in companies judged to offer above average dividend yield and with the potential of long-term growth. Aviva Investors manage our actively managed equity funds. As managers of around 72 billion of equities 1, they often have privileged access to the companies in which the fund invests. 1. Source: Aviva Investors 30 September

40 Our Managed by You funds Our low cost range of index tracking equity funds L&G World Equity Index Fund 1 Our L&G World Equity Index Fund invests in the L&G World Equity Index Fund (the underlying fund) a sub fund of the L&G ICAV. The following information refers to the underlying fund. The investment objective of the fund is to provide investors with a return in line with the performance of the developed world equity market as currently represented by the MSCI World Index (Net Total Return US dollars) 2. The base currency of the index the fund tracks is in US Dollars therefore any currency exchange rate movement may cause the value of your investment to fall as well as rise. Risk rating (01 October 2016) 5/7 L&G Europe (excl. UK) Index Fund Our L&G Europe (excl. UK) Index Fund invests in the L&G Europe Ex. UK Equity Index Fund (the underlying fund) a sub fund of the L&G ICAV. The following information refers to the underlying fund. The investment objective of the fund is to provide investors with a return in line with the performance of European equity markets, excluding the UK, as currently represented by the MSCI Europe Ex. UK Index (Net Total Return) 2, 3. Risk rating (01 October 2016) 6/7 L&G Emerging Markets Equity Index Fund Our L&G Emerging Markets Equity Index Fund invests in the L&G Emerging Markets Equity Index Fund (the underlying fund) a sub fund of the L&G ICAV. The following information refers to the underlying fund. The investment objective of the fund is to provide investors with a return in line with the performance of the Emerging Markets equity market, as currently represented by the MSCI Emerging Markets Index (Net Total Return US dollars) 2. The base currency of the index the fund tracks is in US Dollars therefore any currency exchange rate movement may cause the value of your investment to fall as well as rise. Risk rating (01 October 2016) 6/7 1. Launching shortly. We will update this guide when this fund is launched. 2. This is the index the fund tracks as at 1 February 2017 and may be subject to change. 3. The MSCI Europe ex UK Index includes countries from Europe and the eurozone. Legal & General Investment Management (LGIM) manage our index tracking funds. They are one of Europe s largest index fund managers 1, with 361 billion in assets under management in index tracking funds Source: IPE Source: L&G at 30 June 2016, including derivative positions and advisory assets.

41 Our Managed by You funds Key benefits Historically, equities have been the best performing asset class making them a good choice for investors with a long-term investment horizon who can accept the increased risks associated with investing in equities. Equities have historically offered the best protection against the effects of inflation. Low correlation to other asset classes so they can be a valuable addition to a balanced portfolio. The assets are managed by fund managers experienced in the equity sector who will provide professional expertise in deciding on which companies to include in the fund. Key risks Historically equities are the most volatile or highest risk asset class. The values of assets are subject to market fluctuations. This could potentially lead to values being adversely and unpredictably affected by various factors including political and economic events. Share prices can and do go up and down on a regular basis. For equity funds that invest outside the Eurozone, any currency exchange rate movement may cause the value of your investment to fall as well as rise. Further details of the risks your funds may be exposed to can be found in the understanding risk section of the brochure on page 42. WARNING: The value of your investments may go down as well as up. WARNING: If you invest in these funds you may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. 41

42 Understanding risk Understanding risk When you invest, it s essential that you re comfortable with the choices you make. It s important that you understand the level of risk you are taking with your money not just its potential for return. Capital risk, i.e. how much money could you lose if you invest in this fund, is the most common risk many investors are aware of. While capital risk is important there are also other risks you need to consider when investing your money. No investment is risk free, for example a low risk cash fund may be subject to shortfall risk, counterparty risk and inflation risk. Market risk: This refers to the threat of financial loss due to issues that affect the overall performance of the financial markets. These factors can include recessions, natural disasters, political turmoil, changes in interest rates and terrorist attacks. For example, equity markets in Ireland and most developed markets fell sharply in 2008 as international economic conditions deteriorated. Inflation risk: This refers to the threat of rising prices reducing the buying power of your investment. If beating inflation is important to you, you may want to speak with your financial broker about investing in funds higher up the risk scale such as property, equities or Multi-Asset funds. These funds have historically provided growth that stays ahead of inflation over the long term. However, taking on additional risk means you could also lose some or all of your investment. Counterparty risk: The value of investments with any fund manager may be affected if any of the institutions with whom money is placed suffers insolvency or any other financial difficulties. The value of your units will reflect the value of the assets recovered from that manager. Aviva will not use any of our assets to make up any shortfall. Shortfall risk: This means failing to meet your investment goal if the return made on your investment is too low. It s important to think about your investment goals and objectives before deciding what type of funds to invest in. Here you can decide how much you ll actually need to provide your desired level of income at retirement, to fund your child s university education, or whatever your reason for investing is. Then you can work with your financial broker to decide how much you ll need to invest, how long you need to invest and what types of funds you need to invest in to achieve the returns you need. It s important to remember that past performance is no guarantee of future returns, and just because an investment fund achieved a specific rate of growth in the past this does not mean it will achieve the same return in the future. Liquidity risk: Liquidity risk is the risk of not being able to access your money when you need it. In certain circumstances we may need to delay switches, withdrawals or transfers out of a fund, this particularly applies to property funds. The circumstances in which we may delay a switch, withdrawal or transfer can include but is not limited to the following: If a large number of customers want to take money out of the same fund at the same time. If there are practical problems selling the assets in which a fund is invested. If the fund manager insists on a delay. 42 Encashment of units from funds that invest directly or indirectly in property may be deferred for a period not exceeding six months. For all other funds, encashments of units may be deferred for a period not exceeding three months Currency risk: If your money is invested outside the Eurozone, you ll face currency risk. If the foreign currency declines in value against the Euro, you ll experience a loss. You can aim to reduce currency risk by diversifying your fund across international markets. You can also reduce it by just focusing on funds that invest in the Eurozone, but then your investment has more exposure to the Eurozone. Securities lending: Funds may engage in securities lending. Securities lending is an activity whereby a security is transferred from a lender (in this case a unit-linked fund) to a borrower on a temporary basis. The lender receives collateral with a value equal to or in excess of the value of the securities on loan. In the event of a default, the lender can sell the assets provided as collateral and use the proceeds to purchase replacement securities. Securities lending is expected to increase the investment returns in the fund. Securities lending may also increase the level of risk in the fund. Derivatives risk: Where a fund makes use of derivatives and they do not perform as expected, the fund could suffer significant losses. Certain derivatives may add leverage and can cause large fluctuations in the fund s value. They can also result in the fund facing greater potential losses than the value of the initial investment. Leverage may also impair liquidity, forcing the fund manager to sell investments at a loss and causing the fund to fail to achieve its objectives. Concentration risk: The risk of loss arising from a large position in a single asset or market exposure. When you invest, it s essential that you re comfortable with the choices you make. It s important that you understand the level of risk you are taking with your money not just its potential for return.

43 Understanding our risk ratings Our risk ratings are based on a scale of 1 to 7 with 1 being the lowest risk and 7 the highest risk. As a general rule the higher the rating the more risk that is taken with your investment to achieve a greater potential reward, however the risk of loss of your investment will also increase. The risk ratings stated in this brochure are as at 01 October These ratings are not guaranteed and may change over time. Typically lower returns Typically higher returns Rating ESMA volatility bands (see below for explanation) 0-0.5% 0.5-2% 2-5% 5-10% 10-15% 15-25% 25% + Risk of expected investment loss Very Low Risk Low Risk Low to Medium Risk Medium Risk Medium to High Risk High Risk Very High Risk Return aim In line with deposits In line with or slightly better than deposits Excess of deposits and possibly beats inflation Average returns higher than deposit rates and inflation Above average returns higher than deposits or inflation Significantly higher than deposits and inflation with high return potential over the long-term The highest return potential over the long-term Based on a European standard scale The ratings are generally based on a standard scale derived by using guidelines provided by the European Securities and Markets Authority (ESMA). Based on volatility The ESMA rating system looks at an investment fund s volatility over the last 5 years and then categorises them according to volatility bands. Volatility refers to the potential ups and downs that a fund may experience over time. In more detail, volatility is a measure of how the fund return is different from the average return of that fund over a period of time. Generally, the larger the difference from the average return (i.e. the higher the volatility), the riskier the fund. Investment markets cannot be accurately predicted as unexpected events do happen but volatility can give an indication of the potential ups and downs that a fund has experienced previously. 43

44 Understanding our risk ratings Assumes investments are held for five years In line with the ESMA guidelines, our volatility scale generally assumes that investments are held for five years. If an investment is held for a shorter time horizon it typically will have a greater level of risk than the volatility scale shows. If the underlying investment strategy of a fund changes, the risk rating will be based on the historical volatility of the fund s new strategy. Independent sources In the majority of cases we source these ratings from MoneyMate or FE, independent investment data management companies. However, where the fund does not have a five year track record we source the ratings from: the underlying fund manager where they calculate ESMA risk ratings, or the risk target of the fund where the fund specifically targets a level of risk that s consistent with the ESMA risk scale, and where the fund does not yet have a five year track record of performance internally, where we blend the track record of the fund with a relevant benchmark to derive a five year track record. The funds section of provides the most up-to-date risk ratings of our funds. Warnings You should be aware the indicator is based on historical data and may not be a reliable indication of the future risk profile of the fund. The lowest category does not mean risk free. The risk category shown is not guaranteed and may change over time. Aviva Life & Pensions UK Ltd reserves the right to change their funds. The suitability of an investment portfolio should be reviewed with your financial broker regularly to ensure that it remains appropriate to your attitude to risk and investment needs. 44

45 We re committed to quality service We re committed to quality service We re committed to the provision of the highest possible standards of customer service. If you do have a complaint we ll try to do everything we can to make sure you get the best possible service. We ll always listen to your complaint, think about how you would like us to resolve it and make sure you re happy with how we handle it. What if you are unhappy with our response? Once we ve dealt with your complaint we ll send you a final response. If you re not happy with the outcome you may of course refer your case to the Financial Services Ombudsman or the Pensions Ombudsman, who act independently of us and provide a free service as an impartial adjudicator. Our final letter will tell you which office to contact: The Financial Services Ombudsman Bureau, 3rd Floor, Lincoln House Lincoln Place Dublin 2 Lo Call: Phone: Fax: enquiries@financialombudsman.ie Website: Office of the Pensions Ombudsman, 4th Floor, Lincoln House Lincoln Place Dublin 2 Phone: Fax: info@pensionsombudsman.ie Website: 45

46 Important notes on investing Important notes on investing From time to time, some of the funds may hold a proportion of their assets in cash. Investment values and unit prices are not guaranteed; they can fall as well as rise, and you may not get back the full amount invested. There may be circumstances where the number and/or amount of investor withdrawals from the fund leads to a need to sell a proportion of the underlying assets. In such circumstances, Aviva Life & Pensions UK Limited reserves the right to adjust the unit price of the funds, to reflect the costs involved in selling the necessary assets. As a result, investors withdrawing money would bear the costs of realising all or part of their investment. For funds holding a significant proportion of property-related assets, given the costs associated with buying and selling properties, this adjustment can be significantly higher than that applying to funds invested in other asset classes. Property investments cannot be sold as easily or quickly as equities or bonds so, in order to protect the interest of the remaining investors, in some circumstances, encashment of units from funds that invest directly or indirectly in property may be deferred for a period not exceeding six months. For all other funds, encashment of units may be deferred for up to three months. Please see a copy of your policy conditions for further information. We reserve the right to change the fund charges and fees subject to any legislative limits. Should any increase in the fund charges occur you (or trustees, if written under trust) will be given 30 days notice of such an increase. The fund charges apply to the value of the investments and are deducted daily from the fund and/or taken monthly by cancellation of units. Aviva Life & Pensions UK Limited may close, split or replace any existing funds to set up new funds at any time. Where we replace or set up a new fund the annual management charge applying to the new funds may differ from the annual management charge applying to the existing funds in which you re invested. When your fund choice includes the AIMS Target Income Fund (Ireland): Your policy will be closed to transactions across all your funds on certain days around the date the income is declared by us. The fund will be closed for an extended period in December. These policy closed days are to facilitate fairness in the administration of the monthly income. You can find out when the policy closed days are from us or your financial broker. Any regular withdrawal will be monthly (not quarterly, half yearly or yearly). Supplementary conditions will apply. Please see the relevant Aviva Investors Multi-Strategy (AIMS) Target Income Fund (Ireland) Key Features for further details. Financial Services Compensation Scheme The UK Financial Services Compensation Scheme (FSCS) provides protection to consumers by allowing them to claim compensation in the event that a UK authorised financial services firm (such as Aviva Life & Pensions UK Limited) is unable to meet claims made against it. Aviva Life & Pensions UK Limited trading as Aviva Life & Pensions Ireland has been covered by the FSCS for policies issued since the 1 January In the unlikely event that we cannot meet our financial obligations, you may be entitled to compensation from the FSCS for policies issued since the 1 January 2015 depending on the type of product (or type of fund in the case of investment products) and the circumstances of the claim. For further information, see uk or telephone

47 Next steps To learn more about our range of products or funds, talk to your Financial Broker or Advisor. You can find your local financial broker on Call Visit us online Connect with us: Facebook.com/avivaireland twitter.com/avivaireland youtube.com/avivaireland Be well advised The world of investing can seem complex. Always remember that you re not on your own. Your financial broker is there to help. He or she will work with you to identify your goals, involving you in the process so that you always make well informed decisions. A financial broker will also help you find the most appropriate fund to suit your individual needs and requirements. You can find your local financial broker on 47

48 Glossary Absolute return Absolute return funds are funds that aim to produce positive returns in rising and falling markets (this is not guaranteed). These funds frequently invest in derivatives. Active management An approach to investment where a fund manager actively picks securities, asset classes or collective investment schemes she or he feels are likely to deliver good investment returns. Alternative investment An investment that is not one of the three traditional asset types (equities, bonds and cash). Commercial property is an example of an alternative asset class. Assets, asset classes A category of similar types of financial instruments or investments, such as equities, bonds, cash or property. Asset allocation The blend of investments held within a portfolio. Benchmark A benchmark is a standard against which the performance of a fund can be measured. For example, the fund manager of an Irish equity fund may be benchmarked against the ISEQ index of Irish shares. Bonds (fixed income) A type of IOU issued by governments, public companies or other institutions. The issuer agrees to repay the borrowed amount on an agreed date. Bonds usually pay a fixed interest rate over that time, so the bond holder earns an income from the bond. Collateral Financial institutions can ask to temporarily borrow a stock or bond from a fund. In order to borrow the stock or bond, the financial institution must pay a fee and provide collateral to the fund. Collateral refers to an asset or assets given by the borrower to the lender until the loan is repaid. The fund keeps the collateral to secure repayment in case the borrower fails to return the loaned stock or bond. The value of the collateral must be equivalent to or exceed the value of the loaned stock or bond. The borrowed stock or bond is returned to the fund and the collateral is returned to the borrower following the end of the loan period. Collective investment schemes Collective investment schemes pool funds together under one umbrella and then manage them together. Investors pay into the scheme, which then buys assets such as equities or bonds on their behalf. The monetary value of these assets is divided by the number of units issued when the fund is created to give an initial unit value. This value then fluctuates as the underlying assets trade daily and investors put money in or take money out. Commodities Some funds may invest in companies involved in the production and/or exploration of oil, precious metals, and softs (corn, wheat, maize). They may also invest in funds that track the prices of individual commodities Currency hedging An investment made or strategy implemented to reduce the risk of the funds exposure to non Eurozone currencies. 48

49 Glossary Derivatives Derivatives are financial instruments whose values are linked to the value of an underlying asset or index. Derivatives allow a fund to gain more exposure to the asset and so can result in larger losses due to changes in the value of the underlying assets. Futures, options and swaps are common types of derivatives which are either traded using a specialist exchange (exchangetraded derivatives) or between two counterparties without an exchange (over-the-counter derivatives). Diversification A strategy of spreading investment risk across a wide variety of assets in order to reduce the effect of a fall in the value of one asset on the wider portfolio. Equities (shares) A financial instrument that gives the holder part ownership in a company. Futures An agreement to buy an equity, bond, commodity or other financial asset at a future date for a specified price. Fund In a fund, customers money is pooled with that of other investors. In turn, the fund could invest in anything from company shares to government bonds, property or a mixture of different assets or strategies. A fund manager oversees the fund and makes the decisions about which assets it should hold, in what quantities and when they should be bought and sold. Gearing Property related securities such as REITs may be held within property funds. These securities may borrow money with the hope of enhancing returns. If markets fall, gearing can however magnify the negative impact on performance. ICAV An ICAV is an Irish Collective Asset-management Vehicle. The ICAV is a corporate vehicle designed for Irish investment funds. An ICAV must be registered and authorised by the Central Bank of Ireland. The structure provides a tailor-made corporate fund vehicle for both UCITS and alternative investment funds. Index tracking, passive investments An investment fund that aims to deliver the investment returns of a specific market index, such as the FTSE 100 (which measures the performance of the top 100 companies in the UK by stockmarket capitalisation). Unlike actively managed funds, they don t tend to try to outperform a market index. They also tend to have lower fees and be more transparent. Leverage Leverage occurs when a fund s exposure to underlying assets is greater than the amount invested (using borrowings or financial instruments such as derivatives), resulting in the fund facing greater potential gains and losses than the initial investment. Macro analysis Macro analysis focuses on how investment performance is affected by factors such as economic growth, interest rates and currency market movements. Options A type of derivative providing the holder with the right to buy/sell an underlying financial asset by a certain date at a specific price. REITs (Real Estate Investment Trusts) A real estate investment trust (REIT) is a company that owns, and in most cases operates, income producing real estate. SICAV (Société d Investissement à Capital Variable) A SICAV is a type of open-ended investment fund in which the amount of capital in the fund varies according to the number of investors. SICAV is an acronym for Société d investissement à Capital Variable which can be translated as `investment company with variable capital. 49

50 Glossary SRRI The Synthetic Risk and Reward Indicator (SRRI) was defined in 2009 by the Committee of European Securities Regulators (CESR now ESMA (European Securities and Markets Authority) with the aim of providing investors with a method of assessing a fund s risk. The SRRI measures the historic volatility of the fund. A higher SRRI rating means the fund experienced large fluctuations in its price over the last five years (high volatility). A lower SRRI rating means that the fund s price did not fluctuate dramatically but changed in value at a more steady pace over a period of time (low volatility). The SRRI is calculated based on the fund returns over the last 5 years. The table below shows the mapping between the volatility and the SRRI level as at October 2016: SRRI level Annualised volatility SRRI level Annualised % % % % % % 25%+ volatility Swaps A contractual agreement where two parties agree to swap payments to each other on certain dates at a set price for a specific period of time. Swaps are often used in connection with interest rates such as swapping to a fixed interest rate from a variable rate. Target Return Fund This type of fund targets a specific level of return above an interest rate or similar reference rate rather than being dependent on the performance of an equity or bond index. Target Income Fund This type of fund targets a specific level of income above an interest rate or similar reference rate rather than being dependent on the performance of an equity or bond index. Technical analysis Technical analysis involves the examination of asset price movements to identify trends and the timing of entering and exiting an investment, as well as consideration of factors such as market volatility and investor sentiment indicators. Net Total Return When measuring the performance of a fund (or an index), net total return is the actual return of the fund (or index) over a given period of time. Net total return includes any interest earned, dividends earned and capital growth (or loss). UCITS Undertakings for Collective Investments in Transferable Securities (UCITS) provides a single European regulatory framework for an investment vehicle which means it is possible to market the vehicle across the EU irrespective of which country it is domiciled in. UCITS is designed to enhance the single market while maintaining a high level of investor protection. Valuation analysis Valuation analysis is the estimation of how much assets are worth relative to each other and relative to historical measures of value, and how much assets are worth in absolute terms. Volatility Volatility is a measure of the extent that the price of a fund, company share price, or equity market index moves up and down over a period of time. Yield Yield is the income return on an investment, an example of this is dividends received from a company for investing in their shares. 50

51 This brochure has been produced by Aviva Life & Pensions UK Limited. Great care has been taken to ensure the accuracy of the information it contains. However, the company cannot accept responsibility for its interpretation, nor does it provide legal or tax advice. This brochure is based on Aviva s understanding of current law, tax and Revenue practice February This brochure is not a legal document and should there be any conflict between the brochure and the policy document the latter will prevail. Aviva Life & Pensions UK Limited, February