Fund Fact Sheet. for members of the Hewlett-Packard Limited Pension Scheme

Transcription

1 Fund Fact Sheet for members of the Hewlett-Packard Limited Pension Scheme 31 December 29

2 Introduction This fact sheet gives you details of the investment funds available to you as a member of the Hewlett-Packard Limited Pension Scheme. The fund summaries provide you with information on the aim, the performance and the risk profile of each fund. You should read this fact sheet in conjunction with your Investment Guide, which includes a glossary of investment terms. If you want more information on any of the funds, website addresses are available on the Hewlett-Packard Limited Pension Scheme website:. Market Indices Returns 3 Months to 31 December 29 Sterling Returns Local Currency Returns % UK Overseas US European Japanese Pacific (ex-japan) Emerging Markets UK Gilts Over 1 Years UK Corporate Bonds Overseas Bonds Index-Linked Gilts Over Years Property Sterling Cash Commodities Commentary The final quarter of 29 saw further consolidation of the improving trend in the global economy seen in the previous three months, and further signs that an extended global recession had been averted. The strength of the anticipated recovery still remains uncertain, although concerns about a double-dip or W shaped pattern have reduced somewhat. were up again this quarter across all major markets in both sterling and local currency terms. The exception being Japanese equities to the unhedged investor. Property continued its positive momentum posting strong positive returns for the second quarter in succession. The price of Brent crude oil rose by 17.8%, and of gold by 9.4% per ounce over the quarter. The S&P GSCI Commodity Index rose by 7.4% in sterling terms, and the IPD UK Monthly Property Index rose by 9.4%. These figures may suggest that the prospect of inflation is beginning to appear. Bond markets delivered mixed results over the quarter, as sterling non-gilts and index-linked gilts produced marginally positive returns, whilst long-dated fixed interest gilts experienced negative returns. Page

3 The range of funds The table below shows the performance history for all of the current funds, after the deduction of investment management fees, and has been sourced from the investment managers. The outperformance target for each manager against their benchmark is also shown. Past performance is not a guide to the future and the value of investments can go down as well as up. Passive funds are in orange, multi-manager active funds are purple, the diversified growth fund is pink and other funds are in light blue. Performance Quarter 4 to 31/12/9 Performance 1 Year to 31/12/9 Performance Since inception to 31/12/9 Investment Funds Fund Fund Fund Outperformance Target 1 LIFESTYLE DEFAULT OPTION % % % % % p.a. % p.a. % p.a. Schroders Diversified Growth Fund LIFESTYLE OPTIONS % % % % % p.a. % p.a. % p.a. SEI Global Equity 4/6 Fund Global Equity 4/6 Fund n/a Schroders Diversified Growth Fund /SEI 4/6 Equity Fund SEI/Aviva Fund SELF-SELECT FUNDS % % % % % p.a. % p.a. % p.a. Schroders Diversified Growth Fund SEI World (Ex-UK) Equity Fund SEI UK Equity Fund SEI Global Equity 4/6 Fund World (Ex-UK) Equity Index Fund n/a UK Equity Index Fund n/a Global Equity 4/6 Fund n/a Consensus Index Fund n/a Aviva Property Fund Over Year Index-Linked Gilts Fund n/a Pre-Retirement Fund n/a Cash Fund n/a All figures are shown net of fees. 1 The L&G funds are passively managed and aim to track the performance of the benchmarks. 2 The Schroder Diversified Growth Fund aims to match the benchmark performance of RPI + % p.a. Key to symbols Fund type Fund type Symbols Passive Fund Active Multi Manager Fund Growth Property Diversified Growth Fund Property Fund Balanced Lifestyle Defensive Page

4 Lifestyle (Default option) Lifestyle (Options) Schroders Diversified Growth Fund SEI Global Equity 4/6 Fund Global Equity 4/6 Fund Fees:.7% Inception date: 7/2/28 Fees:.6% Inception date: 31//28 Fees:.18% Inception date: 22//28 Fund Description The objective of the Schroder Life Diversified Growth Fund is to target a return of RPI + % p.a. over a five to seven year period. The Fund supports goals where there is a desire to grow assets to a similar extent as long-term investments, but with reduced volatility. Not applicable. The objective of the Schroder Life Diversified Growth Fund is targeted return of RPI + % p.a. over a five year period. The Global Equity 4/6 Fund is invested in equities, both domestic and international, and is expected to capture the return premium provided by global equity markets over time. SEI is a manager of managers and has the responsibility for selecting, monitoring and replacing the underlying investment managers in this fund. 6% MSCI World Index, 4% FTSE All Share Index. Outperform the benchmark by 1.% 1.9% over rolling three year periods gross of fees. This option uses the passive manager to manage the equity allocation in the growth phase. The Fund benchmark is based on 6% in overseas equities and 4% in UK equities. Composite benchmark: 4% FTSE All Share, 21.% FTSE World North America, 21% FTSE World Europe (ex-uk), 9.9% FTSE World Japan, 8.1% FTSE Developed Asia-Pacific (ex-japan). Performance Total return for Quarter 4 to 31/12/9: 4.3% Target 2.% Total return for one year to 31/12/9: 26.% Target 7.4% Annualised total return since inception to 2.4% 31/12/9: Target 6.2% Total return for Quarter 4 to 31/12/9: 4.% 4.7% Total return for one year to 31/12/9: 21.8% 22.1% Annualised total return since inception to -6.3% 31/12/9: -2.% Total return for Quarter 4 to 31/12/9: 3.8% 3.8% Total return for one year to 31/12/9: 2.9% 2.7% Annualised total return since inception to 31/12/9: -3.% -3.7% RISK PROFILE The design of the Diversified Growth Fund is likely to be of specific interest to members with mid to long-term horizons. As this Fund invests in a broad range of asset classes (including alternatives that do not fit into mainstream categories of equities, bonds, cash and property), this Fund is expected to have lower volatility of returns than pure equity returns but has the potential to generate similar returns to equities. The design of the Global Equity 4/6 Fund may be appropriate for investors with moderate to higher levels of risk tolerance and/or longer term horizons. As the Fund invests in equities and seeks to outperform its benchmark return, it is likely to be subject to greater volatility than many other funds. However, it has the potential to provide higher returns than other funds over the longer term. In addition, there is a risk that some currencies may fluctuate in value relative to sterling. The design of the Global Equity 4/6 Fund is likely to be of specific interest to members with mid to long-term horizons. As it invests in equities it has the potential to provide higher returns than other funds over the longer term. However, as it aims to track its benchmark the risk of underperformance against the benchmark is small relative to an active manager. In addition, there is a risk that some currencies may fluctuate in value relative to sterling. Performance commentary The DGF has a return target of generating RPI +% over a full market cycle (an average of five years duration). However, over short-time periods it is likely that the Fund will deviate substantially from this target. Over the fourth quarter of 29 Schroder posted a return of 4.3% and it outperformed the RPI and the comparative equity benchmark by 1.8% and.% respectively. Emerging markets and commodities were the largest contributors to the Fund s performance over the fourth quarter of 29. The Fund s exposure to commodities increased due to strong returns delivered during the three month period to the end of December 29 and the manager taking a positive view on commodities as an asset class that will benefit from the improved global economy. SEI is a manager of managers and has the responsibility for selecting, monitoring and replacing the underlying investment managers in this Fund. The SEI Fund is made up of various underlying funds. SEI underperformed the benchmark by.7% over the fourth quarter of 29. The Fund benefited from the strong performance of Global Developed and US markets, however the gains were more than offset by the weak performance of Japanese and UK. The Fund performed in line with the benchmark over the fourth quarter of 29 delivering a return of 3.8%. All underlying funds delivered returns in line with the benchmark or marginally ahead of the benchmark. Page 3

5 Schroders Diversified Growth Fund /SEI 4/6 Equity Fund SEI/Aviva Fees:.7% Inception date: 7/2/28 Fees:.39% Inception date: 31//28 Fees:.61% Inception date: 31//28 The objective of the Schroder Life Diversified Growth Fund is to target a return of RPI + % p.a. over a five to seven year period. The Fund supports goals where there is a desire to grow assets to a similar extent as long-term investments, but with reduced volatility. Not applicable. The objective of the Schroder Life Diversified Growth Fund is targeted return of RPI +% p.a. over a five year period Total return for Quarter 4 to 31/12/9: 4.3% Target 2.% Total return for one year to 31/12/9: 26.% Target 7.4% Annualised total return since inception to 2.4% 31/12/9: Target 6.2% The design of the Diversified Growth Fund is likely to be of specific interest to members with mid to long-term horizons. As this Fund invests in a broad range of asset classes (including alternatives that do not fit into mainstream categories of equities, bonds, cash and property), this Fund is expected to have lower volatility of returns than pure equity returns but has the potential to generate similar returns to equities. The DGF has a return target of generating RPI +% over a full market cycle (an average of five years duration). However, over short-time periods it is likely that the Fund will deviate substantially from this target. Over the fourth quarter of 29 Schroder posted a return of 4.3% and it outperformed the RPI and the comparative equity benchmark by 1.8% and.% respectively. Emerging markets and commodities were the largest contributors to the Fund s performance over the fourth quarter of 29. The Fund s exposure to commodities increased due to strong returns delivered during the three month period to the end of December 29 and the manager taking a positive view on commodities as an asset class that will benefit from the improved global economy. This choice has a blend of passive and active management with half invested in the SEI Equity Fund and half in s Equity Fund for the growth phase. Both Funds have 6% in overseas equities and 4% in UK equities. Composite benchmark of % Global Equity 4/6 Fund and % SEI Global Equity 4/6 Fund. To outperform the benchmark by.7%.9% over rolling three year periods gross of fees Total return for Quarter 4 to 31/12/9: 3.9% 4.3% Total return for one year to 31/12/9: 21.3% 21.4% Annualised total return since inception to -4.9% 31/12/9: -3.1% The 4/6 Equity Fund is made up of % Global Equity 4/6 Fund (passive) and % SEI Global Equity 4/6 Fund (active). Please refer to the risk profiles for these two Funds. The fund underperformed the benchmark over the three month period to the end of December 29 delivering a return of 3.9% versus the benchmark return o 4.3% largely due to the underperformance of the SEI Fund. The SEI Fund is made up of various underlying funds. The SEI Fund benefited from strong performance of Global Developed and US markets, however the gains were more than offset by weak performance of Japanese and UK Within the fund all underlying funds delivered returns in line with the benchmark or posted small positive tracking errors. Primarily uses SEI s Equity Fund (4% UK equities, 6% overseas equities) for the growth phase, but has an exposure to property managed by Aviva for diversification. Composite benchmark of 9% SEI Global Equity 4/6 Fund and 1% Aviva Property Fund. To outperform the benchmark by 1.4% 1.8% over rolling three year periods gross of fees Total return for Quarter 4 to 31/12/9: 4.4%.1% Total return for one year to 31/12/9: 19.7% 2.% Annualised total return since inception to -6.% 31/12/9: -3.1% The SEI/Aviva Fund is made up of 9% SEI Global Equity 4/6 Fund (active) and 1% Aviva Property Fund. Please refer to the risk profiles for these two Funds. Over the fourth quarter of 29 the Fund underperformed the benchmark by.7% due to weak performance of the SEI Fund. The SEI Fund is made up of various underlying funds. The SEI Fund benefited from strong performance of Global Developed and US markets, however the gains were more than offset by weak performance of Japanese and UK. As the property market continued its positive performance Aviva delivered a strong absolute and relative return outperforming the benchmark by.3% over the three month period to the end of December 29. Fund Description Performance RISK PROFILE Performance commentary Page

6 Self-select funds Schroders Diversified Growth Fund SEI World (Ex-UK) Equity Fund SEI UK Equity Fund Fees:.7% Inception date: 7/2/28 Fees:.7% Inception date: 31//28 Fees:.7% Inception date: 31//28 Fund Description The objective of the Schroder Life Diversified Growth Fund is to target a return of RPI + % p.a. over a five to seven year period. The Fund supports goals where there is a desire to grow assets to a similar extent as long-term investments, but with reduced volatility. Not applicable. The objective of the Schroder Life Diversified Growth Fund is targeted return of RPI + % p.a. over a five year period. The World (Ex-UK) Equity Fund invests in equity and equity related securities listed on recognised markets around the world. It achieves this by investing in other pooled funds managed by SEI. SEI is a manager of managers and has the responsibility for selecting, monitoring and replacing the underlying investment managers in this Fund. MSCI AC World Index Ex UK. The UK Equity Fund invests in equity securities listed on recognised markets in the UK. At all times the Fund s investment in equity securities will represent at least 6% of the Fund s net assets. SEI is a manager of managers and has the responsibility for selecting, monitoring and replacing the underlying investment managers in this Fund. FTSE All Share Index. Outperform the benchmark by 1.6% 2.% over a rolling three year period, gross of fees. Outperform the benchmark by 1.3% 1.7% over a rolling three year period, gross of fees. Performance Total return for Quarter 4 to 31/12/9: 4.3% Target 2.% Total return for one year to 31/12/9: 26.% Target 7.4% Annualised total return since inception to 2.4% 31/12/9: Target 6.2% Total return for Quarter 4 to 31/12/9: 4.1% 4.3% Total return for one year to 31/12/9: 16.3% 17.1% Annualised total return since inception to -6.2% 31/12/9: -2.3% Total return for Quarter 4 to 31/12/9: 4.1%.% Total return for one year to 31/12/9: 3.9% 3.1% Annualised total return since inception to -6.7% 31/12/9: -2.9% RISK PROFILE The design of the Diversified Growth Fund is likely to be of specific interest to members with mid to long-term horizons. As this Fund invests in a broad range of asset classes (including alternatives that do not fit into mainstream categories of equities, bonds, cash and property), this Fund is expected to have lower volatility of returns than pure equity returns but has the potential to generate similar returns to equities. The design of the World (Ex-UK) Equity Fund may be appropriate for investors with higher levels of risk tolerance and/or longer-term horizons. As the Fund invests in equities and seeks to outperform its benchmark return, it is likely to be subject to greater volatility than many other funds. However, it has the potential to provide higher returns than other funds over the longer term. In addition, there is a risk that some currencies may fluctuate in value relative to sterling. The design of the UK Equity Fund may be appropriate for investors with moderate to higher levels of risk tolerance and/or longer-term horizons. As the Fund invests in equities and seeks to outperform its benchmark return, it is likely to be subject to greater volatility than many other funds. However, it has the potential to provide higher returns than other funds over the longer term. Performance commentary The DGF has a return target of generating RPI +% over a full market cycle (an average of five years duration). However, over short-time periods it is likely that the Fund will deviate substantially from this target. Over the fourth quarter of 29 Schroder posted a return of 4.3% and it outperformed the RPI and the comparative equity benchmark by 1.8% and.% respectively. Emerging markets and commodities were the largest contributors to the Fund s performance over the fourth quarter of 29. The Fund s exposure to commodities increased due to strong returns delivered during the three month period to the end of December 29 and the manager taking a positive view on commodities as an asset class that will benefit from the improved global economy. The SEI World ex UK Fund s performance over the fourth quarter was.2% behind the benchmark. The Fund benefited from the strong performance of the Global Developed and US markets however, the gains were move than offset by underperformance of Japanese equities. The UK Equity Fund underperformed the benchmark returning 4.1% versus the benchmark return of.%. The Fund benefited from positive stock selection, particularly in the Financials and Industrials sectors, however, the gains were more than offset by defensive positioning of some of the underlying managers. Page

7 SEI Global Equity 4/6 Fund World (Ex-UK) Equity Index Fund UK Equity Index Fund Fees:.6% Inception date: 31//28 Fees:.22% Inception date: 1/4/23 Fees:.1% Inception date: 1/4/23 The Global Equity 4/6 Fund is invested in equities, both domestic and international, and is expected to capture the return premium provided by global equity markets over time. SEI is a manager of managers and has the responsibility for selecting, monitoring and replacing the underlying investment managers in this Fund. 6.% MSCI World Index, 4.% FTSE All Share Index. Outperform the benchmark by 1.% 1.9% over a rolling three year period, gross of fees Total return for Quarter 4 to 31/12/9: 4.% 4.7% Total return for one year to 31/12/9: 21.8% 22.1% Annualised total return since inception to -6.3% 31/12/9: -2.% The design of the Global Equity 4/6 Fund may be appropriate for investors with moderate to higher levels of risk tolerance and/or longer-term horizons. As the Fund invests in equities and seeks to outperform its benchmark return, it is likely to be subject to greater volatility than many other funds. However, it has the potential to provide higher returns than other funds over the longer term. In addition, there is a risk that some currencies may fluctuate in value relative to sterling. SEI is a manager of managers and has the responsibility for selecting, monitoring and replacing the underlying investment managers in this Fund. The SEI Fund is made up of various underlying funds. SEI underperformed the benchmark by.7% over the fourth quarter of 29. The Fund benefited from strong performance of Global Developed and US markets, however the gains were more than offset by the weak performance of Japanese and UK. The World (Ex-UK) Equity Index Fund provides access to overseas equity markets via index funds, and aims to capture global equity market returns (excluding the UK). FTSE World (Ex-UK) Index Total return for Quarter 4 to 31/12/9: 4.% 3.9% Total return for one year to 31/12/9: 16.8% 16.4% Annualised total return since inception to 1.7% 31/12/9: 1.7% The design of the World (Ex-UK) Equity Index Fund is likely to be of specific interest to members with mid to long-term horizons. As it invests in equities it has the potential to provide higher returns than other funds over the longer term. However, as it aims to track its benchmark the risk of underperformance against the benchmark is small relative to an active manager. In addition, there is a risk that some currencies may fluctuate in value relative to sterling. Over the fourth quarter of 29 the Fund delivered a return of 4.% posting a small positive tracking error relative the to the benchmark return. The UK Equity Index Fund aims to capture the returns of the UK equity market. It tracks the FTSE All Share Index and is invested only in UK equities. FTSE All Share Index Total return for Quarter 4 to 31/12/9:.%.% Total return for one year to 31/12/9: 3.7% 3.1% Annualised total return since inception to 1.9% 31/12/9: 1.9% The design of the UK Equity Index Fund is likely to be of specific interest to members with mid to long-term horizons. As it invests in equities it has the potential to provide higher returns than other funds over the longer term. However, as it aims to track its benchmark the risk of underperformance against the benchmark is small relative to an active manager. The UK Equity Fund performed in line with the benchmark, returning.% over the three month period to 31 December 29. Fund Description Performance RISK PROFILE Performance commentary Page 6

8 Consensus property Global Equity 4/6 Fund Consensus Index Fund Aviva Property Fund Fees:.18% Inception date: 22//28 Fees:.1% Inception date: 1/4/23 Fees:.7% Inception date: 1/4/26 Fund Description The Global Equity 4/6 Fund provides access to the UK and overseas equity markets via index funds and aims to capture global equity market returns. Composite benchmark: 4% FTSE All Share, 21.% FTSE World North America, 21% FTSE World Europe (ex-uk), 9.9% FTSE World Japan, 8.1% FTSE Developed Asia-Pacific (ex-japan). The Consensus Index Fund combines the mid to long-term growth potential of UK and international equities with the relative security of gilts, overseas bonds and cash. CAPS Pooled Balanced Fund Median. The Aviva Pooled Pensions Limited Property Fund, launched in 1972, is a value oriented sector balanced fund with a highly active approach. The Fund invests solely in UK commercial property across the major property sectors of retail, office and industrial/warehouse. IPD/PPFI All Balanced Funds Index Median. Outperform the product benchmark by 1.% p.a. gross of fees over three years. Performance Total return for Quarter 4 to 31/12/9: 3.8% 3.8% Total return for one year to 31/12/9: 2.9% Total return for Quarter 4 to 31/12/9: 3.% 3.% Total return for one year to 31/12/9: 2.4% 2.4% Annualised total return since inception to 1.7% 31/12/9: 1.7% Total return for Quarter 4 to 31/12/9: 8.4% 8.1% Total return for one year to 31/12/9:.7% 1.3% Annualised total return since inception to -4.% 31/12/9: -8.% 2.7% Annualised total return since inception to 31/12/9: -3.% -3.7% RISK PROFILE The design of the Global Equity 4/6 Fund is likely to be of specific interest to members with mid to long-term horizons. As it invests in equities it has the potential to provide higher returns than other funds over the longer term. However, as it aims to track its benchmark the risk of underperformance against the benchmark is small relative to an active manager. In addition, there is a risk that some currencies may fluctuate in value relative to sterling. The design of the Consensus Index Fund is likely to be of specific interest to members with mid to long-term horizons. As a balanced fund it invests mainly in equities and this Fund will be subject to less volatility than a pure equity fund but has the potential to provide greater growth than bonds and cash funds. As it aims to track its benchmark the risk of underperformance against the benchmark in each market is small relative to an active manager. In addition, there is a risk that some currencies may fluctuate in value relative to sterling. The design of the Property Fund is likely to be of specific interest to members with mid to long-term horizons. The Fund invests in commercial property and is designed to provide a combination of capital growth and income. Property has different risk and return characteristics to both equities and bonds and therefore provides diversification. However, property is a relatively illiquid asset and it may take several months to receive your cash after deciding to disinvest. Performance commentary The Fund performed in line with the benchmark over the fourth quarter of 29 delivering a return of 3.8%. All underlying funds delivered returns in line with the benchmark or marginally ahead of the benchmark. The Consensus Fund closely tracked the benchmark over the quarter returning 3.%. All major markets delivered positive returns, with the exception of Japanese equities. Emerging Markets were the top performer. Bond funds delivered mixed returns with the Index-Linked fund posting a return of 1.6% and the Overseas Bond fund delivering -2.9% over the quarter. The Aviva s Property Fund continued to deliver positive returns outperforming the benchmark by.3% over the fourth quarter of 29. Although, as in previous quarters, above average cash holding proved to be a drag on the Fund s performance, the losses were move than offset by gains from positive sector and stock selection. Page 7

9 bonds cash Over Year Index-Linked Gilts Fund Pre-Retirement Fund Cash Fund Fees:.1% Inception date: 1/4/23 Fees:.1% Inception date: 22//28 Fees:.12% Inception date: 1/4/23 The Over Year Index-Linked Gilts Fund aims to offer some protection against changes in annuity prices as you approach your pension date and is designed to capture the returns of the UK gilt market. It tracks the FTSE A Index-Linked (Over Year) Index and invests in medium to long-term gilts. FTSE-A Index-Linked Over Year Index Total return for Quarter 4 to 31/12/9: 1.% 1.% Total return for one year to 31/12/9:.%.6% Annualised total return since inception to 6.2% 31/12/9: 6.3% The Over Year Index-Linked Gilts Fund is more appropriate for those approaching retirement, or those who do not want to be exposed to the volatility of the stock market. It should be subject to less volatility than either balanced or equity funds but is unlikely to produce as high an expected return over the longer term. As the cost of purchasing a pension is closely linked to long-term bonds, investing in a bond carries less risk than other asset classes. This Fund aims to track its benchmark so the risk of underperformance against the benchmark is small relative to an active fund. The Over Year Index-Linked Fund closely tracked the benchmark and returned 1.% over the fourth quarter of 29. The Pre-Retirement Fund aims to invest in assets that reflect the investments underlying a typical non inflation-linked pension annuity product. There is no guarantee of full protection against investment driven changes to annuity prices but investing in a similar way to annuity providers offers some protection. 1% Over 1 Year Gilts Index Fund and 9% AAA-AA-A Corporate Bond Over 1 Year Index Fund Total return for Quarter 4 to 31/12/9: -2.1% -1.9% Total return for one year to 31/12/9: 9.% 8.7% Annualised total return since inception to 31/12/9: 7.8% 7.7% The Pre-Retirement Fund is more appropriate for those approaching retirement, or those who do not want to be exposed to the volatility of the stock market. It should be subject to less volatility than either balanced or equity funds but is unlikely to produce as high an expected return over the longer term. As the cost of purchasing a pension is closely linked to long-term bonds, investing in bonds carries less risk than other asset classes. This Fund aims to track its benchmark so the risk of underperformance against the benchmark is small relative to an active fund. The Pre-Retirement Fund returned -2.1% posting a small tracking error relative to the benchmark return due to underperformance of the Corporate Bond Fund. The Cash Fund delivers competitive rates of return from cash deposits and other short-term investments. It is likely to be of specific interest to investors who want a cash sum on their pension date and offers security of capital over the short-term, rather than growth in the longer term. Libid 7 Day Total return for Quarter 4 to 31/12/9:.1%.1% Total return for one year to 31/12/9:.6%.6% Annualised total return since inception to 4.1% 31/12/9: 4.1% The Cash Fund is appropriate for those approaching retirement who plan to take part of their pension entitlement as a cash lump sum. The Fund generally invests in highly rated short-term debt instruments, where the risk of capital loss is significantly lower than other asset classes. However, the interest earned will vary and over a longer period the returns are not expected to be as high as either bonds or equities. The Cash Fund closely tracked its benchmark over the three month period to the end of December 29 returning.1% which is in line with the benchmark return. Fund Description Performance RISK PROFILE Performance commentary Page 8

10 Risk v reward Between different types of assets (or asset classes) there are different levels of risk and potential return as shown in the diagram below. So, for example, equities have a very different risk and return profile to cash. Even within an asset class there are different levels of risk and potential reward that depend on what the fund manager is trying to achieve. For each type of asset there is a benchmark against which fund managers can evaluate their performance. A passive fund, which simply aims to match the benchmark for the asset class it is investing in, has a lower potential risk and reward profile than a fund that aims to outperform the benchmark significantly. Regional equities Overseas equities UK equities Alternative/ Balanced funds Property Potential long-term investment return Gilts UK/corporate bonds Cash Risk Page 9

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