Your Investment Options

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1 Your Investment Options Hewlett-Packard Buy Out Plan A choice of funds to help you meet your retirement goals This guide shows you the range of investment options available through the Hewlett-Packard Buy Out Plan (the Plan ) and answers some of the questions you may have. There are a number of investment options and this guide will help you decide what is right for you. We understand that it can be difficult for members to select the investment option that works best for them so, under the Plan, the funds from your previous pension arrangement will be invested in the fund or funds that the Trustees of the Hewlett-Packard Limited Pension Scheme ( HP Scheme ) deem to be the closest equivalent fund to your existing fund choice under the HP Scheme. Please refer to the table below for further information. If your existing funds under the HP Scheme were invested in one of the Lifestyle Options, your funds under the Plan will be invested in a broadly similar Lifestyle Option as set out on pages 3 and 4. Lifestyle Options manage your investments for you and automatically move your funds to safer investments as you approach retirement. This is not a recommendation that any of the new Plan funds or Lifestyle Options will be right for you and you may wish to review your investment choice. You should seek independent financial advice if you wish to review your fund choices as neither the Trustees nor BlackRock can provide you with such advice. Once the transfer is complete, you can move your money to different funds at any time by speaking to us. You can find our member helpline on page 7. Current HP Scheme funds LGIM 40:60 SEI Global 40:60 LGIM UK Equity SEI UK Equity LGIM World (ex UK) SEI World (ex UK) Equity LGIM Consensus Schroders Diversified Growth LGIM Over 5 year Index Linked Gilt LGIM Pre-Retirement Aviva Property LGIM Cash Hewlett-Packard Buy Out Plan funds DC Aquila 40:60 DC Aquila UK Equity DC Aquila World (ex UK) DC Aquila Consensus DC Diversified Growth DC Aquila Over 5 year Index Linked Gilt DC Pre-Retirement DC Property DC Cash In addition to the funds in the table above, you have access to the full BlackRock fund range, details of which can be found in the table at the back of this leaflet. Your Investment Options Hewlett-Packard Buy Out Plan 1

2 PART I Balancing Risk and Reward Any investment involves some sort of risk, but what do we mean by risk? When most people think about risk, they think of it in terms of danger and potential loss. Of course, taking a risk can be dangerous but it can also be rewarding (racing drivers, mountainclimbers and other extreme sports enthusiasts will agree with this). Risk can mean uncertainty too not being able to predict exactly what might happen in the future is a risk we live with every day. All these concepts of risk can be applied to investments. It is certainly difficult to predict exactly what will happen over time share prices fluctuate, interest rates vary and some investments are more rewarding (and more risky) than others. Understanding these different types of investment risk and, importantly, identifying your attitude to them is essential if you are to make the decisions that are right for you. What risk means when you are saving for retirement and what you need to consider There are three main risks you need to be aware of when you are choosing how to invest your pension fund: Investment risk is the risk of your pension savings falling in value. Inflation risk is the risk that your investments may grow at a rate less than the rate of increases in the cost of living (inflation). For example, if inflation is, let s say 4% over time and your investments are only growing at 2%, rising prices will erode the value of your pension savings. Lifestyle an investment programme that aims to take account of these risks Lifestyle automatically switches your pension savings from higher risk, more volatile funds, such as equity funds into lower risk alternatives (such as bond funds and cash funds) as you approach your chosen retirement date. More details about the different types of investment; equities, bonds and cash are given on pages 5 and 6. Key features and benefits of Lifestyle Aims to beat the potentially damaging effects of inflation on the value of your pension savings by investing in growth assets, such as equities, during the early years. We call this the Accumulation Phase. Switches to lower investment risk assets as you move towards your chosen retirement date with the aim of protecting your fund against the effect of falls in the stock market. We call this the Pre-Retirement Phase. Gives you peace of mind as an automated solution it removes the worry of having to remember when you need to start switching to lower investment risk funds as you approach retirement. Hewlett-Packard Buy Out Plan Lifestyle Options There were a number of Lifestyle options under the HP Scheme with the key differences between the options being: The funds used during the Accumulation Phase; ` ` The number of years before your chosen retirement date that funds commence switching to lower risk assets. Pension conversion risk When you retire you ll probably use most of your built-up savings to buy a pension, which will provide you with your income in retirement. The amount you will get depends on a number of factors, including interest rates and the level of inflation when you retire. Pension conversion risk is the risk that you will not know exactly the amount of pension income you will be able to buy until you reach retirement. These risks may seem daunting, which is why most schemes offer a Lifestyle investment programme. 2 Your Investment Options Hewlett-Packard Buy Out Plan

3 The table below sets out the HP Scheme Lifestyle options based on the funds used during the Accumulation Phase (and switching period) and the Lifestyle option you will be transferred to under the Hewlett-Packard Buy Out Plan: The chart shows how your savings will be split across the different funds in the Lifestyle options. Lifestyle Option 5 years HP Scheme Lifestyle Options Accumulation Fund and switch period SEI Global Equity 40/60 Fund 5 or 10 years Hewlett-Packard Buy Out Plan Lifestyle Option Lifestyle Option 5 or 10 years % Invested LGIM Global Equity 40/60 Fund 5 or 10 years Lifestyle Option 5 or 10 years 40 LGIM/SEI 40/60 Equity Fund 5 or 10 years SEI/Aviva Property Fund 5 or 10 years Schroders Diversified Growth Fund 5 years Lifestyle Option 5 or 10 years Lifestyle Option 5 or 10 years Diversified Growth Lifestyle 5 years Years to Retirement DC Aquila (40/60) Global Equity Index Fund 1 0 DC Pre-Retirement Fund DC Cash Fund The Lifestyle Option and Diversified Growth Lifestyle Option are described in more detail below. Lifestyle Option The Lifestyle Option automatically and gradually switches from global equities to bonds and cash over the 5 or 10 years before you retire, depending on which HP Scheme Lifestyle Option you are in at the moment. The funds used are listed below. The DC Aquila (40:60) Global Equity Index Fund is run on a passive basis. This means the fund is designed to mirror the performance of two stock market indexes: 40% is invested against the FTSE All Share (UK Equities) and 60% FTSE World Ex-UK. (Overseas Equities) Accumulation Phase DC Aquila (40:60) Global Equity Index Fund Pre-Retirement Phase DC Pre-Retirement Fund DC Cash Fund Lifestyle Option 10 years % Invested Years to Retirement DC Aquila (40/60) Global Equity Index Fund DC Pre-Retirement Fund DC Cash Fund The Pre-Retirement Phase is either 5 or 10 years leading up to your chosen retirement date. Your Investment Options Hewlett-Packard Buy Out Plan 3

4 Diversified Growth Lifestyle Option The Diversified Growth Lifestyle Option automatically and gradually switches from the DC Diversified Growth Fund to bonds and cash over the 5 years before you retire. The funds used are listed below. The DC Diversified Growth Fund aims to generate long-term growth in your pension s savings and relatively smooth year-on-year returns (whatever the market conditions may be) by using a broad range of investments to smooth out the impact of market peaks and troughs. Accumulation Phase DC Diversified Growth Fund Pre-Retirement Phase DC Pre-Retirement Fund DC Cash Fund The Pre-Retirement Phase is 5 years leading up to your chosen retirement date. The chart shows how your savings will be split across the different funds in the Diversified Growth Lifestyle option. Diversified Growth Lifestyle Option 5 years % Invested PART II What kind of investor are you? Having identified the main risks, the next stage is to determine your attitude to those risks. Are you prepared to live with some degree of investment risk if it means a better chance of achieving higher returns? Are you totally risk averse and don t want to risk your capital under any circumstances? Or are you somewhere in between? Try our investor questionnaire to help you to find out what kind of investor you may be and to help you decide on the investment choices that are right for you. Please note: how close you are to retirement should be an important factor in your decision-making. Generally, the longer you have until retirement, the higher the risk you may be prepared to take in return for the potential of greater rewards as you have time to ride out the ups and downs from riskier investments. Investor Questionnaire 1. What best describes your outlook? A I m aiming to live the high life when I retire and I m willing to take a higher level of investment risk to get it B I want my retirement days to be enjoyable but I ll settle for a little less to spend if that means less investment risk C I want to keep my investment risks as low as possible, even if that means a smaller pension Years to Retirement DC Diversified Growth Fund 1 0 DC Pre-Retirement Fund DC Cash Fund 2. How long will it be before you retire? A More than 10 years B 5 to 10 years C Less than 5 years 3. What do you expect to happen to your pay / salary? A My salary should increase substantially over the years You may feel that an automated programme, such as Lifestyle, will meet your needs, but if you d like to understand more about your own attitude to risk and the full range of investment options available within the Plan, please read Part II. B My salary should increase in line with price rises but I m not expecting it to get much higher C I don t think my salary will increase. In fact it might even decrease as I may reduce my working hours 4 Your Investment Options Hewlett-Packard Buy Out Plan

5 4. If you wanted to increase your chances of improving your pension, would you? A Take a big risk with a small amount of money B Take a small risk with a bigger amount of money C I wouldn t be happy taking any risk 5. Investing in company shares is generally acknowledged as the best way of providing growth that beats the effects of inflation over the long-term. Are you happy to put your money in funds that invest in company shares? A Yes, for me the risks are worth it B Yes, but I also want some less risky investments C No, the risk makes me nervous 6. Just two months after you put money into a long-term investment, it falls by 20%. You still think it s a good investment. What do you do? A Buy more. It was always a good investment and now it s a cheap one too! B Hold tight and wait for it to bounce back C Sell it. It would worry me too much to hold onto it. 7. Which would you choose? A 20% chance of winning 50,000 B 50% chance of winning 15,000 C 2,000 guaranteed cash If you answered: Mostly A You appear to be an Adventurous Investor. You appear to want your capital to grow as much as possible and seem to be prepared to take a risk in order to achieve your financial goals, to ride out the ups and downs of the market over the long term. The fund range available to you is risk-rated from 1 (very low risk) to 7 (very high risk) in terms of capital risk so you may wish to avoid funds that are rated 1 or 2. Mostly B You appear to be a Balanced Investor. You seem to be comfortable taking some risks to help your capital grow but you don t want to see your investments going up and down like a rollercoaster. This suggests that you may prefer investment options which don t rise and fall too sharply. The fund range available to you is risk-rated from 1 (very low risk) to 7 (very high risk) in terms of capital risk so you may wish to avoid funds that are rated 1 or 7. Mostly C You appear to be a Cautious Investor. You appear to want your investments to grow but you do not seem to be willing to take many risks to help make this happen. Protecting the value of your investments seems to be more important to you than trying to grow them in the long term. The fund range available to you is risk-rated from 1 (very low risk) to 7 (very high risk) in terms of capital risk so you may wish to avoid funds that are rated 4 (medium risk) or above. What does this mean for you and your pension plan? Our range of investment options caters for different attitudes to risk and the requirement to balance risk with reward according to an individual s needs and goals. Our funds invest in a wide range of asset classes (types of investment), which carry different levels of risk, including: cash, bonds and equities (company shares). Equity Funds Equity funds invest in company shares. The fund participates in the profits of the companies it invests in and, if the value of the companies go up, the value of the fund will go up. But if the value of the companies goes down, so does the value of the fund. An equity fund can be spread across many countries and company types; it can concentrate on one geographic area (such as the UK, Asia, Europe or the US), or particular sectors, such as smaller companies, for example. Your Investment Options Hewlett-Packard Buy Out Plan 5

6 Bond Funds Bond Funds effectively make loans to companies, governments or local authorities. These investments generally pay interest to the lender and the loan is repaid at the end of the term. There are many other names for this type of investment, for example: fixed interest gilts (loans to the government), and corporate bonds (loans to companies). The main benefit of these investments is that the fund normally receives a regular, stable income, however, the fund value can go down as well as up depending on market circumstances. Cash Funds When most people think of savings, they think of cash a deposit account in a bank or a building society. But, over the long term, cash savings have struggled to beat inflation. Over longer periods cash has usually given lower returns than equities or bonds. Cash is generally seen as the safe option as when you invest in cash you do get interest. However, if your interest rate is less than the inflation rate, then the real value of your money is actually going down. Cash funds can also be invested in money market instruments. These usually pay a slightly higher rate of interest, which is fixed for a short time, normally a few weeks or months. You should also be aware that the value of cash on deposit or invested in money securities could be affected if the institutions it s invested with become insolvent or have other financial difficulties. So why would you ever choose to invest in cash? The main reason is to shelter your investments in the short term. When you re coming up for retirement you may want to protect your money from a fall in the stock market. At that point, cash can be very attractive. If you look at the last 40 years (this being the average number of working years for someone in the UK), equities have returned two and a half times more than an investment in cash. Risk/reward summary 1. Aiming for high returns usually means accepting more risk. 2. The higher the returns you aim for, the greater the chance of risk to your capital (losing some or all of your initial investment). 3. Investing for the long-term usually means you can afford to take more risk and ride out the ups and downs of market values. 4. Investing in company shares (equities) is generally acknowledged as the best way of providing growth that beats the effects of inflation over the long term although it does involve capital risk. 5. While there is a risk attached to equities, investing over the long-term gives you more time to recover from any losses should there be a fall in the stock market. Keeping a check on your pension Whichever option you choose, it is important that you monitor your pension account from time to time. There s every chance that your circumstances and attitude to risk are likely to change as you progress through your working life, which means you might want to adjust your investment choices over time. Keeping you informed Each year we will send you a benefit statement showing you the value of your fund. If you need information more often than this, you can apply for online access to daily valuations on our website Your Fund Choices The range of funds available to you is outlined below. You will find more details in our fund factsheets by visiting our web site We have included the Annual Management Charge ( AMC ) and an indication of the Fund s risk rating in the table on the following pages. Unless otherwise specified, all funds are managed by BlackRock. Investment Risk Rating 1 (Very Low), 2 (Low), 3 (Low-Medium), 4 (Medium), 5 (Medium-High), 6 (High), 7 (Very High). 6 Your Investment Options Hewlett-Packard Buy Out Plan

7 Suitability BlackRock has not considered the suitability of you transferring to the Hewlett-Packard Buy Out Plan or the investment options under the Plan in relation to your individual circumstances or risk tolerance. All of the information necessary for you to make a decision should be available in the Joiners Pack (of which this Investment Options leaflet is a part) together with any information given to you by the Trustees of the HP Scheme, to which you should refer. Do you need more help? You can call our member helpline: and we will give you as much help and information as we can. If you need specific advice regarding investments, you may wish to speak to an independent financial adviser but you will have to pay an adviser for their services. There are a number of organisations that can provide you with names of authorised IFAs in your area, such as IFA Promotion. Neither the Trustees nor BlackRock can provide you with financial advice. Your Investment Options Hewlett-Packard Buy Out Plan 7

8 Table of mapped funds Fund Name / Investment Objectives Multi Asset Funds DC Diversified Growth This Fund targets a consistent investment return of 3.5% above the Bank of England base rate measured over rolling 3 year periods by utilising a multi-asset flexible investment approach. The focus on getting the asset mix right in order to achieve the target means this Fund will generally hold a variety of different types of assets at any one time. Investment Charges (AMC %p.a.) Risk Rating DC Aquila Consensus Index Invests primarily in shares of both UK and overseas companies and to a lesser extent in gilts, index-linked gilts, corporate bonds, overseas bonds and cash. The Fund aims to produce a return in line with its benchmark Global Equity Funds DC Aquila (40:60) Global Equity Index Invests primarily in UK and overseas equities and aims to produce a return in line with its benchmark. Approximately 40% of the Fund is invested in shares of UK companies and the remaining 60% is split between shares of companies in the US, Europe ex-uk and the Far East. The fund aims to provide a return consistent with its benchmark DC Aquila World (Ex-UK) Equity Index Invests in shares of overseas companies (Europe ex-uk, Japan, Far East, US and Canadian markets) according to market capitalisation weightings and aims to produce a return in line with its benchmark UK Equity Fund DC Aquila UK Equity Index Invests in shares of UK companies and aims to produce a return in line with its benchmark Fixed Income Funds DC Pre Retirement Invests mainly in long dated UK government bonds (around 50%) and long dated UK corporate bonds (around 50%) and aims to produce a return in excess of its benchmark. DC Aquila Over 5 Year Index Linked Gilt Index Invests in index-linked UK government bonds with a maturity period of 5 years or longer and aims to produce a return in line with its benchmark. Cash DC Cash Aims to produce a return in excess of its benchmark principally from a portfolio of Sterling denominated cash, deposits and money-market instruments. Sector Funds DC Property The Fund has a diversified exposure to a range of commercial property assets such as offices, shopping centres, retail warehouse parks and industrial estates. The Fund gains its exposure to these assets by investing in a number of underlying pooled property funds Your Investment Options Hewlett-Packard Buy Out Plan

9 Table of additional funds Fund Name / Investment Objectives Multi Asset Funds DC Balanced Growth Invests mainly in equities and to a lesser extent government securities, cash and other fixed interest investments, in the UK and overseas. The Fund aims to produce a return in excess of its benchmark. The Benchmark will evolve over time to reflect market, industry and internal views and developments as to an appropriate asset mix for a broadly invested fund. Investment Charges (AMC %p.a.) Risk Rating DC Diversified Growth Plus This Fund targets a consistent investment return of 4.5% above the Bank of England base rate over rolling 3 year periods by utilising a multi-asset flexible investment approach. The focus on getting the asset mix right in order to achieve the target means this Fund will generally hold a variety of different assets at any one time DC Cautious Diversified Growth This Fund targets a consistent investment return of 2% above the Bank of England base rate over rolling 3 year periods by utilising a multi-asset flexible investment approach. The focus on getting the asset mix right in order to achieve the target means this Fund will generally hold a variety of different assets at any one time DC Aquila Balanced Index Invests in company shares within the UK (around 55%) and overseas (around 20%) as well as British government fixed income and index-linked gilts (around 25%). The Fund aims to produce a return in line with its benchmark Global Equity Funds DC 70/30 Global Growth DC 60/40 Global Growth DC 50/50 Global Growth DC Strategic Accumulation Invests mainly in UK equities (around 70%) and overseas equities (around 30%). The overseas equities are split between geographical regions in fixed percentages. The Fund aims to produce a return in excess of its benchmark. Invests mainly in UK equities (around 60%) and overseas equities (around 40%). The overseas equities are split between geographical regions in fixed percentages. The Fund aims to produce a return in excess of its benchmark. Invests mainly in UK equities (around 50%) and overseas equities (around 50%). The overseas equities are split between geographical regions in fixed percentages. The Fund aims to produce a return in excess of its benchmark. Invests mainly in UK equities (around 50%) and overseas equities (around 50%). The overseas equities are invested using a global sector based approach to identify preferred companies in each industry. The Fund aims to produce a return in excess of its benchmark. The benchmark will evolve over time to reflect the current investment thinking as to the most appropriate fund for the "Accumulation" phase of Lifestyle. Globalisation Invest mainly in the equities of the world s largest companies using a global sector approach to identify preferred companies in each industry. The Fund aims to produce a return in excess of its benchmark. Investment in this Fund involves a higher than usual degree of risk. DC Overseas Equity Invests mainly in overseas equities, using a global sector based approach to identify preferred companies in each industry. The Fund aims to produce a return in excess of its benchmark. Investment in this Fund involves a higher than usual degree of risk. DC Aquila (70:30) Global Equity Index Invests primarily in UK and overseas equities and aims to produce a return in line with its benchmark. Approximately 70% of the Fund is invested in shares of UK companies. The remaining 30% is invested in shares of overseas companies according to average pension fund weightings Your Investment Options Hewlett-Packard Buy Out Plan 9

10 Fund Name / Global Equity Funds (continued) DC Aquila (60:40) Global Equity Index DC Aquila (50:50) Global Equity Index DC Aquila (30:70) Currency Hedged Global Equity Index Investment Objectives Invests primarily in UK and overseas equities and aims to produce a return in line with its benchmark. Approximately 60% of the Fund is invested in shares of UK companies and the remaining 40% is split equally between shares of companies in the US, Europe ex-uk and the Far East. The fund aims to provide a return consistent with its benchmark. Invests primarily in UK and overseas equities and aims to produce a return in line with its benchmark. Approximately 50% of the Fund is invested in shares of UK companies and the remaining 50% is split equally between shares of companies in the US, Europe ex-uk and the Far East. The fund aims to provide a return consistent with its benchmark. Invests primarily in equities, both in the UK and overseas markets. Approximately 30% is invested in the shares of UK companies, 60% of the assets are invested at market capitalisation weights into developed equities with the currency exposure hedged back to Sterling and the remaining 10% is invested into Emerging Market Equities. Investment Charges (AMC %p.a.) Risk Rating UK Equity Funds DC UK Growth Invests mainly in UK equities and aims to produce a return in excess of its benchmark DC UK Equity Optimum A more concentrated portfolio of UK stocks than our core UK equity funds, this Fund aims to invest in those shares where we have most investment conviction. Investment in this Fund involves a higher than usual degree of risk. DC Alpha Smaller Companies Invests mainly in equities of UK smaller companies and aims to produce a return in excess of its benchmark. Investment in this Fund involves a higher than usual degree of risk. DC UK Dynamic Invests mainly in UK equities and aims to produce a return in excess of the Benchmark. Investment in this Fund involves a higher than usual degree of risk. DC UK Special Situations Invests mainly in equities of UK equities which appear to be undervalued or out of favour and aims to produce a return in excess of the Benchmark. Investment in this Fund involves a higher than usual degree of risk. DC UK Income Aims to provide an above-average and growing income for re-investment without sacrificing the benefits of long-term capital growth by investing primarily in the shares of UK companies. Investment in this fund involves a higher than usual degree of risk. DC UK Focus The Fund seeks to maximise total returns by investing in a highly concentrated portfolio, primarily consisting of UK equities. Investment in this Fund involves a higher than usual degree of risk Regional Equity Funds DC American Growth Invests mainly in US equities and aims to produce a return in excess its benchmark DC European Growth Invests mainly in European equities (not including the UK) and aims to produce a return in excess of its benchmark DC Japanese Growth Invests mainly in Japanese equities and aims to produce a return in excess of its benchmark DC Pacific Growth Invests mainly in Pacific Basin equities (not including Japan) and aims to produce a return in excess of its benchmark. DC Institutional Emerging Markets Invests mainly in equities in the world's emerging economies such as Latin America and Eastern Europe and aims to provide a return in excess of its benchmark. Given the volatile nature of these markets, investment in this Fund involves a higher than usual degree of risk Your Investment Options Hewlett-Packard Buy Out Plan

11 Fund Name / Regional Equity Funds (continued) DC Aquila US Equity Index DC Aquila Pacific Rim Equity Index DC Aquila Japanese Equity Index DC Aquila European Equity Index DC Aquila Emerging Markets Equity Index Investment Objectives This fund invests in the shares of US companies and aims to achieve a return that is consistent with the return of the FTSE All-World USA Index. This index is widely regarded as the benchmark for UK pension fund investment in shares of companies in the US. This fund invests in the shares of companies in the Pacific Rim and aims to achieve a return that is consistent with the return of the FTSE All-World Developed Asia Pacific ex-japan Index. This index is widely regarded as the benchmark for UK pension fund investment in shares of companies in the Pacific Rim. This fund invests in the shares of Japanese companies and aims to achieve a return that is consistent with the return of the FTSE All-World Japan Index. This index is widely regarded as the benchmark for UK pension fund investment in shares of companies in Japan. This fund invests in the shares of companies in Europe and aims to achieve a return that is consistent with the return of the FTSE All-World Developed Europe ex-uk Index. This index is widely regarded as the benchmark for UK pension fund investment in European company shares. The Fund objective is to achieve a return that is consistent with the return of the MSCI Global Emerging Markets Index. Investment Charges (AMC %p.a.) Risk Rating Fixed Income Funds DC Index Linked Gilt Matched Invests mainly in index linked UK government bonds and aims to produce a return in line with its benchmark. DC Long Gilt Matched Invests mainly in long dated UK government bonds and aims to produce a return in line with its benchmark. DC Aquila Over 15 Year Gilt Index Invests in UK government bonds with a maturity period of 15 years or longer and aims to produce a return in line with its benchmark. DC Sterling Bond Invests mainly in UK government and corporate bonds and may also invest in other fixed interest securities and currencies hedged into Sterling. The Fund aims to produce a return in excess of its benchmark. High Income Bond Aims to achieve capital growth from the reinvestment of income from a portfolio of mainly UK and European Union corporate bonds and government securities. DC Aquila Corporate Bond All Stocks Index DC Aquila Over 15 Year Corporate Bond Index DC International Fixed Interest This fund invests in investment grade corporate bonds denominated in sterling and aims to achieve a return consistent with the iboxx Non-Gilts Index. This index covers the broad spectrum of investment grade corporate bonds in issue. This fund invests in investment grade corporate bonds denominated in sterling with a maturity period of 15 years or longer and aims to produce a return in line with its benchmark. Invests mainly in overseas fixed interest securities, cash and money market instruments in currencies other than Sterling. The Fund aims to produce a return in excess of its benchmark. DC Global Bond Invests mainly in UK and overseas fixed interest securities including currencies and other money market instruments. The Fund aims to produce a return in excess of its benchmark Your Investment Options Hewlett-Packard Buy Out Plan 11

12 Fund Name / Investment Objectives Sector Funds DC Gold & General Funds invest in the equities of gold mining and precious metal related companies. This is a specialist fund which aims to achieve long-term capital growth and performance tends to be volatile. Investment in the fund involves a higher than usual degree of risk. External Multi Asset Funds INVESCO Pensions Managed Invests mainly in equities and to a lesser extent government securities, cash and other fixed interest investments, in the UK and overseas. The Fund aims to produce a return in excess of its benchmark. Newton Real Return The Fund aims to achieve capital growth in sterling terms over the long term from an unconstrained, actively managed multi asset strategy. The Fund has maximum flexibility at the asset allocation level and emphasis is placed on long term investing. The Fund is intended to have lower absolute volatility than traditional equity biased funds, but will exhibit volatility relative to its benchmark. Standard Life GARS Aims to provide positive returns in all market conditions over the medium to long term. asset allocation includes conventional and alternative investments including advanced derivative techniques which are used for both efficient portfolio management and to meet the fund's objective. Threadneedle Pensions Mixed LGIM Consensus Index External Global Equity Funds INVESCO Pensions Global Equity JP Morgan Global Dynamic Newton Overseas Equity Fund Invests mainly in equities and to a lesser extent in government securities and other fixed interest investments in the UK and overseas, and in property and cash. The Fund aims to produce a return in excess of its benchmark. Invests mainly in equities and to a lesser extent in government securities and other fixed interest investments in the UK and overseas, and in cash. The Fund aims to produce a return in line with its benchmark. Invests mainly in UK and overseas equities and aims to produce a return in excess of its benchmark. Aims to maximise long-term capital growth by investing primarily in equities throughout the world. The investment team aims to uncover stocks with the strongest growth and value attributes through a quantitative screen. These ideas are then validated by regional and sector specialists. Invests in stocks and shares quoted on major stock markets of the world, excluding the UK. Investment in this Fund involves a higher than usual degree of risk. Russell Global Equity Comprises 45% of the Russell UK Equity Fund and 55% of the Russell World Equity Fund. The Fund aims to outperform the benchmark. Russelll World Equity Offers exposure to specialist global equity managers, under a multi-manager approach. These managers typically take more aggressive positions on stocks and sectors. The fund aims to outperform the benchmark. Threadneedle Pensions Managed Equity Invests mainly in UK and overseas equities and aims to produce a return in excess of its benchmark. UBS Overseas Equity Invests primarily in a diversified portfolio of overseas equities. Investment in this fund involves a higher than usual degree of risk. HSBC Amanah Pension Fund Invests in company shares from around the world and is compliant with Islamic Shariah principles. Investment Charges (AMC %p.a.) Risk Rating Your Investment Options Hewlett-Packard Buy Out Plan

13 Fund Name / Investment Objectives External Global Equity Funds (continued) LGIM Global Equity (60:40) Index Index Invests mainly in UK equities (around 60%) and overseas equities (around 40%) and aims to track the return of its benchmark. LGIM Global Equity (50:50) Index LGIM Ethical Global Equity Index LGIM Overseas Consensus Index LGIM World (ex UK) Index Index Invests mainly in UK equities (around 50%) and overseas equities (around 50%) and aims to track the return of its benchmark. Invests mainly in overseas equities within the FTSE4Good Global Equity Index and aims to track the return of its benchmark. Invests mainly in overseas equities, aims to keep the mix of investments broadly in line with the overseas equity component of the average UK pooled pension fund. The fund aims to produce a return in line with its benchmark. Investment Charges (AMC %p.a.) Risk Rating Invests mainly in overseas equities and aims to track the return of its benchmark External UK Equity Funds Aegon Ethical Invests mainly in UK equities, avoiding investing in companies that do unacceptable harm to people, animals or the environment and is suited to those investors who have particularly strong ethical beliefs. The Fund aims to produce a return in excess of its benchmark. Investment in this fund involves a higher than usual degree of risk. Newton UK Equity Fund Invests in a range of UK company shares. Investment in this Fund involves a higher than usual degree of risk. Russell UK Equity Invests under a multi-style, multi-manager approach. It is broadly diversified, with market-like characteristics and provides exposure to the UK stock market. The Fund aims to outperform the benchmark. Threadneedle Pensions UK Equity Invests mainly in UK equities and aims to produce a return in excess of its benchmark UBS UK Equity Invests primarily in a limited number of UK equities. The Fund maintains flexibility where appropriate and may invest in other types of asset from time to time. Investment in this fund involves a higher than usual degree of risk. LGIM Ethical UK Equity Index Invests mainly in UK equities within the FTSE4Good Index and aims to track the return of its benchmark. LGIM UK Equity Index Invests mainly in equities within the FTSE All Share Index and aims to produce a return in line with its benchmark External Regional Equity Funds INVESCO Pensions European Equity JP Morgan Continental Europe Select Equity Invests mainly in European equities (not including the UK) and aims to produce a return in excess of its benchmark. Aims to achieve strong returns by investing in the shares of companies across Europe, excluding the UK. The investment team uses in-depth research and optimisation techniques to assess which companies are under or overvalued compared to their future earnings potential. JP Morgan Asia Equity Aims to achieve strong long-term investment returns by investing in the shares of companies across the Asia-Pacific region excluding Japan. The investment team conducts extensive company visits across the region to assess the opportunities in the market, and look to hold quality companies that are generating above average growth and whose share price is at an attractive valuation Your Investment Options Hewlett-Packard Buy Out Plan 13

14 Fund Name / Investment Objectives External Regional Equity Funds (continued) JP Morgan All- Emerging Markets Equity Aims to achieve long-term investment growth by investing in companies in the world s less developed economies, including Latin America, Asia, Eastern Europe and South Africa. The investment team looks for high quality companies with sustainable earnings growth. LGIM Europe (ex UK) Index LGIM North American Index Invests mainly in European equities (excluding the UK) and aims to track the return of its benchmark. Investment Charges (AMC %p.a.) Risk Rating Invests mainly in North American equities and aims to track the return of its benchmark LGIM Japan Index Invests mainly in Japanese equities and aims to track the return of its benchmark LGIM World Emerging Markets Equity Index LGIM Asia Pacific (ex Japan) Index Invests mainly in equities within the FTSE All-World Emerging Markets Index and aims to track the return of its benchmark. Invests mainly in Pacific Basin equities (excluding Japan) and aims to track the return of its benchmark External Fixed Income Funds Standard Life Corporate Bond Fund This Fund aims to provide long term growth by investing predominantly in Sterling denominated corporate bonds. The fund may also invest a proportion of assets in other fixed interest securities such as overseas bonds, gilts and money market instruments. LGIM Pre-Retirement Invests in UK government and corporate bonds. The mix of assets is adjusted over time to reflect the investments underlying a typical non-inflation linked pension product. The fund aims to track the return of its benchmark. Russell Sterling Corporate Bond Invests under a multi-manager, risk-controlled approach to fixed income investing. The fund invests in primarily non-government Sterling denominated fixed income securities and aims to outperform the benchmark Your Investment Options Hewlett-Packard Buy Out Plan

15 Notes Your Investment Options Hewlett-Packard Buy Out Plan 15

16 Past performance is not a guide to future performance. The value of investments and the income from them can fluctuate and are not guaranteed. Investors may not get back the amount invested. Rates of exchange may cause the value of investments to go up or down. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Any objective or target will be treated as a target only and should not be considered as an assurance or guarantee of performance of a fund or any part of it. A fund s objectives and policies include a guide to the main investments to which a fund is likely to be exposed but a fund is not necessarily restricted to holding these investments only. Subject to a fund s objectives, a fund may hold any investments and utilise any investment techniques, including the use of derivatives, permitted under the FSA s New Conduct of Business Sourcebook which contain the rules by which investment of the funds is governed. The BlackRock Pensions Limited notional fund units have a single unit price. The unit prices are normally calculated on each business day. For performance reporting, notional units are valued at special closing prices on the last working day of each quarter to enable comparison with the relevant benchmark index. Issued by BlackRock Pensions Limited, which is authorised and regulated by the Financial Services Authority. BlackRock Pensions Limited, 33 King William Street, London EC4R 9AS. Phone: Fax: Registered in England number BlackRock is a trading name of BlackRock Pensions Limited. Further Information Telephone: uk.ops@blackrock.com Website: blackrock.co.uk/pensions/hpbuyout 10401BR Dec10