THE TAYLOR WIMPEY PERSONAL CHOICE PLAN PENSION INVESTOR S GUIDE Your Taylor Wimpey company pension is provided by.
PAGE 1 INTRODUCTION PAGE 3 SECTION 1 PENSION INVESTMENT APPROACHES PAGE 19 SECTION 2 SCOTTISH WIDOWS PENSION FUNDS PAGE 35 WHAT NEXT?
INTRODUCTION YOU MIGHT EXPECT YOUR EMPLOYER TO SAY HOW YOUR COMPANY PENSION WILL BE INVESTED. BUT THAT S NOT THE CASE INSTEAD, YOU ARE FREE TO CHOOSE WHAT HAPPENS WITH YOUR PENSION FUND. You have two options: Simply choose one of Pension Investment Approaches based on your feelings about risk, and let manage this through to your retirement (see section 1 of this guide), or Be very hands-on selecting from a range of investment funds (see section 2 of this guide). The following two sections of the guide explain what s involved with both options: Section 1 Pension Investment Approaches Section 2 Pension Funds If you don t make an investment choice, will automatically invest your pension fund for you, using their default investment approach, the Balanced Pension Investment Approach (Targeting Flexible Access). For more details on this approach, please see pages 3, 6 and 14 of this guide. WHAT IF I WANT TO CHANGE MY INVESTMENT CHOICE? You can change your investment choice at any time free of charge during the term of your plan. However, this would override any Pension Investment Approach that you chose at the start. WILL MY INVESTMENT CHOICES AFFECT THE CHARGES ON MY PLAN? Currently, the charges are the same whether you choose a Pension Investment Approach, or make a selection from the range of investment funds. For more information please refer to the Key Features of the Taylor Wimpey Personal Choice Plan. 1
INVESTMENT RISK AND REWARD Generally, the greater the potential reward from an investment, the greater the risk that its value could fall. So, choosing to invest your pension plan in assets with potentially higher returns, for example buying shares (also known as equities) through the stockmarket, could reward you with a high return, but could also lose a large part, or even all, of your investment. Choosing to invest your pension plan in assets which have a very low risk tends to give very low returns. The diagram below gives an indication of the general risk and reward for different types of investments. Within each investment type, the level of risk can vary depending on the specific investment you choose to invest in. Please remember that with investments like these, there are no guarantees, and there is a risk that the value of your plan could go down as well as up, depending on investment performance (and currency exchange rates where a fund invests overseas) and may fall below the amount paid in. Potential investment return low high Shares Bonds Cash low Risk high 2
SECTION 1 PENSION INVESTMENT APPROACHES Not everyone wants to be actively involved with picking investments and keeping a close eye on what s happening in the market. If this sounds like you, one of the specially designed Pension Investment Approaches may be just what you need. Simply tell which one suits you best. CHANGES TO PENSIONS Changes introduced from April 2015 allow you greater flexibility in how you can take benefits from your pension pot. Investors in UK pensions have three ways to use their pension pot at age 55 or above to provide for their retirement. You can choose one or more of the following: 1. Annuity Purchase buying one or more annuities to provide a regular and secure income for life. 2. Pension Encashment taking all (or part of) a pension pot as a cash lump sum, 25% of which will be tax-free with the remainder subject to tax. 3. Flexible Access adopting a flexible approach by using a suitable product to keep a pension pot invested and then taking income as it is needed. has conducted significant customer research and worked with independent research specialists Moody s Analytics to identify how we can help meet our customers needs in this new pensions environment. HOW THE PENSION INVESTMENT APPROACHES WORK We ve a number of options available in our existing Pension Investment Approach risk categories, to take account of the retirement choices available to you. We offer three different retirement outcomes, designed to prepare your pension investment in its last five years for whichever retirement choice you expect to make. In addition to the retirement outcome designed for those planning to buy an annuity, we have a 2nd outcome for those who plan to encash their fund, and a 3rd outcome for customers who will want flexible access and plan to move into a suitable product so they can stay invested. This means that you have two selections to make when you make your investment choice: The level of risk you are comfortable with Adventurous, Balanced or Cautious. The type of retirement outcome you are likely to want when you retire Targeting Annuity, Targeting Encashment or Targeting Flexible Access. Here are our Pension Investment Approaches in full: ADVENTUROUS RISK CATEGORY BALANCED RISK CATEGORY CAUTIOUS RISK CATEGORY Adventurous (Targeting Annuity) Balanced (Targeting Annuity) Cautious (Targeting Annuity) Adventurous (Targeting Encashment) Balanced (Targeting Encashment) Cautious (Targeting Encashment) Adventurous (Targeting Flexible Access) Balanced (Targeting Flexible Access) Cautious (Targeting Flexible Access) We realise that some customers may not be sure how they will want to provide for their retirement, especially those who are still some years from taking benefits from their pension pot. So we have made it easy for you to change towards a different retirement outcome (or to a different risk category) if your plans and objectives change as you get closer to retirement. NEED HELP CHOOSING? If you re unsure which approach may suit you best, use Investment Decision Tool to find your match. It asks you 10 simple questions to help you decide your risk approach. www.scottishwidows.co.uk/taylorwimpey 3
LIFESTYLE SWITCHING EXPLAINED Our Pension Investment Approach risk categories all work in a similar way: the difference between them is how much investment risk they take in trying to help your pension fund grow. In the earlier years, more of your money is invested in equities to increase the potential for growth. We then begin to gradually reduce your exposure to risk once you are 15 years from your selected retirement date, because this should help to protect what you ve built up if there are any market downturns. Until five years from retirement the investment glidepath for your selected risk category is the same, regardless of which retirement outcome you are targeting. In the final five years leading up to your selected retirement date your investment will gradually move into one of three carefully selected packages of lower-risk investments. These are different for each retirement outcome, tailored to suit whichever option you have chosen. The graph below is meant to demonstrate how this works, showing a typical Pension Investment Approach investment glidepath. Please note that this graph indicates how the overall level of risk changes at different stages, not the likely performance of an investment. HOW A PENSION INVESTMENT APPROACH INVESTMENT GLIDEPATH WORKS 5 years from retirement the glidepath diverges Level of Risk 15 years from retirement level of risk starts to fall Up to 5 years from retirement the glidepath is the same, regardless of which retirement outcome has been chosen 15 10 5 0 Years to Retirement Retirement Targeting Flexible Access Targeting Annuity Targeting Encashment Our Pension Investment Approaches are covered in more depth over the following pages, including a fuller explanation in the Pension Investment Approaches (PIAs) Options section on page 9. We are confident that our PIAs allow our customers to benefit from the greater flexibility now available, while retaining our Pension Investment Approaches well-established structure. 4
WHAT INVESTMENTS DO WE USE? The same types of investments are used in all the Pension Investment Approaches, but in different proportions at different times. The tables below show how each approach will be invested at key points in the term to retirement. The target split of investments used and actual percentage holdings within each approach may change. Years to Retirement Adventurous Targeting Annuity Highest risk Target Split of Investments Used Overseas Shares 15 yrs+ 75% 25% UK Shares Bonds Cash* 10 yrs 63.8% 21.2% 15% 5 yrs 52.5% 17.5% 30% Lowest risk 0 yrs 75% 25% % 100 90 80 70 60 50 40 30 20 10 0 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash Years to Retirement Adventurous Targeting Encashment Highest risk Target Split of Investments Used Overseas Shares 15 yrs+ 75% 25% UK Shares Bonds Cash* 10 yrs 63.8% 21.2% 15% 5 yrs 52.5% 17.5% 30% Lowest risk 0 yrs 100% % 100 90 80 70 60 50 40 30 20 10 0 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash Years to Retirement Adventurous Targeting Flexible Access Highest risk Target Split of Investments Used Overseas Shares 15 yrs+ 75% 25% UK Shares Bonds Cash* 10 yrs 63.8% 21.2% 15% 5 yrs 52.5% 17.5% 30% Lowest risk 0 yrs 21% 9% 45% 25% % 100 90 80 70 60 50 40 30 20 10 0 *Please read our explanation of cash as an asset class on page 8 of this guide. 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash 5
Years to Retirement Highest risk Balanced Targeting Annuity Target Split of Investments Used Overseas Shares UK Shares Bonds Cash* 15 yrs+ 63.8% 21.2% 15% 10 yrs 52.5% 17.5% 30% 5 yrs 30% 10% 60% Lowest risk 0 yrs 75% 25% % 100 90 80 70 60 50 40 30 20 10 0 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash Years to Retirement Balanced Targeting Encashment Highest risk Target Split of Investments Used Overseas Shares UK Shares Bonds Cash* 15 yrs+ 63.8% 21.2% 15% 10 yrs 52.5% 17.5% 30% 5 yrs 30% 10% 60% Lowest risk 0 yrs 100% % 100 90 80 70 60 50 40 30 20 10 0 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash Years to Retirement Balanced Targeting Flexible Access Highest risk Target Split of Investments Used Overseas Shares UK Shares Bonds Cash* 15 yrs+ 63.8% 21.2% 15% 10 yrs 52.5% 17.5% 30% 5 yrs 30% 10% 60% Lowest risk 0 yrs 21% 9% 45% 25% % 100 90 80 70 60 50 40 30 20 10 0 *Please read our explanation of cash as an asset class on page 8 of this guide. 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash 6
Years to Retirement Highest risk Cautious Targeting Annuity Target Split of Investments Used Overseas Shares UK Shares Bonds Cash* 15 yrs+ 52.5% 17.5% 30% 10 yrs 30% 10% 60% 5 yrs 30% 10% 60% Lowest risk 0 yrs 75% 25% % 100 90 80 70 60 50 40 30 20 10 0 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash Years to Retirement Cautious Targeting Encashment Highest risk Target Split of Investments Used Overseas Shares UK Shares Bonds Cash* 15 yrs+ 52.5% 17.5% 30% 10 yrs 30% 10% 60% 5 yrs 30% 10% 60% Lowest risk 0 yrs 100% % 100 90 80 70 60 50 40 30 20 10 0 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash Years to Retirement Cautious Targeting Flexible Access Highest risk Target Split of Investments Used Overseas Shares UK Shares Bonds Cash* 15 yrs+ 52.5% 17.5% 30% 10 yrs 30% 10% 60% 5 yrs 30% 10% 60% Lowest risk 0 yrs 21% 9% 45% 25% % 100 90 80 70 60 50 40 30 20 10 0 *Please read our explanation of cash as an asset class on page 8 of this guide. 15 yrs+ 10 yrs 5 yrs 0 yrs Overseas Shares UK Shares Bonds Cash Please note that, whichever fund you are investing in, the value of your investment can go down as well as up, and could fall below the amount(s) paid in. This also applies to cash and near-cash funds which invest in securities, as these securities can fluctuate more than you might expect. Cash or near-cash funds do not guarantee a positive return, nor do they provide complete protection for your investment. 7
CASH AS AN ASSET CLASS Two of the funds we use in our Pension Investment Approaches invest in cash as an asset class. These funds are often referred to as simply cash or near-cash funds. Cash as an asset class (or as a type of fund) does not mean the same thing as money in a normal bank account. A cash fund may hold different types of cash-like assets that have similar characteristics to bank deposits such as a fixed rate of interest, quick access and low risk of capital loss. But an investment in a cash fund is not like putting money in a bank account. Cash funds mainly hold investments that mature (i.e. pay out) in the short term (weeks), but can hold assets with slightly longer periods to maturity. A longer period to maturity often means the fund manager is trying to earn a slightly higher return by taking a little more risk, which leads to the potential for slightly higher returns and risks than a bank deposit account. The fund will fluctuate in value because of, among other things, charges and possible falls in interest payments, so investors can get back less than they invest. There is also the risk that this type of fund will not keep pace with inflation, which would mean prices in shops rise quicker than your investment increases in value, so its spending power is reduced. WHAT IF YOU WANT TO CHANGE INVESTMENT CHOICE? You can currently change your investment choice for free at any time during the term of your plan, however this would override any Pension Investment Approach that you choose at the start. HOW MUCH DOES YOUR PLAN COST? A Total Annual Fund Charge will be collected from your plan. Any personal illustrations take this charge into account. WHAT NEXT? To help you identify which of our Pension Investment Approaches may suit you best, have a look at our Investment Decision Tool. You can find it at www.scottishwidows.co.uk/idt Alternatively you can choose from a wide range of investment funds. When you join, simply indicate your preferred investment choice on the application form provided. We may change the selection of funds that we make available. Please be aware that the definitions and investment approach rating for specific funds may change in the future. Please also read the Pension Investment Approaches (PIAs) Options section, which begins on the next page. This provides a more complete description of our Pension Investment Approaches, including more details about the funds you will be investing in, the associated risks and a fuller explanation of the changes we introduced following the changes to pension rules introduced in April 2015. 8
PENSION INVESTMENT APPROACHES (PIAs) OPTIONS When the Pension Investment Approaches (PIAs) were launched in 2006, we put in place a regular review process. A key part of this process is to identify any changes which we feel will ensure the PIAs continue to meet our customers needs and help them to achieve their long-term objectives. Our 2014 review focused squarely on how the PIAs should be updated to reflect the new, more flexible ways our customers can access their pension pots from April 2015. We used considerable customer research and worked extensively with independent research specialists Moody s Analytics to help us fully understand what our customers want and assess how we can help meet their needs. We made some significant changes as a result, changes which we believe are appropriate and effective in helping our PIA customers prepare for their retirement under rules that were introduced in April 2015. WHAT ARE THE OPTIONS AVAILABLE? In broad terms, investors in UK pensions have three ways to use their pension pot to provide for their retirement. They can use one or more of the following: 1. Annuity Purchase buying one or more annuities to provide a regular and secure income for life. 2. Encashment taking all (or part of) a pension pot as a cash lump sum, 25% of which will be tax-free and the remainder subject to tax. 3. Flexible Access adopting a flexible approach by using a suitable product to keep a pension pot invested and then withdrawing an income as it is needed. conducted extensive research in the second half of 2014 to help us understand how our customers will want to use this flexibility to their advantage. The research found that our customers objectives are: Top priorities: Provide financial security in retirement Provide for any dependants after death Secondary priorities: Maximise growth potential Minimise tax Provide an inheritance 9
As part of our research at the time, we used the 2015 Retirement Report, which provided further evidence that customers will use the new pensions freedoms in different ways. Here is how our customers responded when asked how they plan to use their pension fund: 33% 13% 11% Would take a proportion of their pensions savings as cash. Would invest their fund and draw an income each year. Would purchase an annuity. 9% 8% 26% Would take it all as cash. Would use it to fund Buy-to-let property purchase. Are currently unsure of their exact plans. Source: Retirement Report 2015 In summary, our research clearly shows that pension investors have a variety of priorities at retirement, and therefore offers our customers a suitable variety of options to meet their needs. 10
RISK CATEGORIES The risk categories that we offer to customers are Adventurous, Balanced and Cautious. Our research shows that there is no benefit from changing the PIAs investment mix any earlier than five years before your selected retirement date. However, the PIAs offer three distinct retirement outcomes. This new structure will help our customers to prepare effectively for their retirement. For customers who plan to purchase an annuity, we offer our risk categories with a Targeting Annuity retirement outcome designed for those who will want an annuity. Those customers who expect to take their pension pot as a cash lump sum are offered a Targeting Encashment retirement outcome (option 2 in all cases). And customers who intend to draw down income or are unclear about their exact retirement income route can benefit from a 3rd option, our Targeting Flexible Access retirement outcome. Our PIA structure is as follows: ADVENTUROUS RISK CATEGORY BALANCED RISK CATEGORY CAUTIOUS RISK CATEGORY Adventurous Targeting Annuity Balanced Targeting Annuity Cautious Targeting Annuity Adventurous Targeting Encashment Balanced Targeting Encashment Cautious Targeting Encashment Adventurous Targeting Flexible Access Balanced Targeting Flexible Access Cautious Targeting Flexible Access FLEXIBILITY This structure offers customers flexibility when managing their finances in retirement. Many of our customers will not be sure how they will want to take their income in retirement, especially those who are some years from taking their pension. So customers are able to change direction towards a different retirement outcome or move into a different risk category if their plans and objectives change. Please note if you change towards a different retirement outcome in the last five years there are risks associated with selling and buying assets that may affect the value of your investment. This also applies if you change your attitude to risk at any stage. INVESTMENT GLIDEPATHS We also focus on when customers should begin to move towards their chosen retirement outcome. This movement should only happen in the last five years leading up to retirement. Therefore, for each risk category (Adventurous, Balanced and Cautious), the investment glidepath will be the same up to five years from retirement, regardless of which retirement outcome a customer is moving towards. The glidepaths will then diverge during the final five years, according to which retirement outcome the customer has chosen. HOW A PENSION INVESTMENT APPROACH INVESTMENT GLIDEPATH WORKS 5 years from retirement the glidepath diverges Level of Risk 15 years from retirement level of risk starts to fall Up to 5 years from retirement the glidepath is the same, regardless of which retirement outcome has been chosen Targeting Flexible Access Targeting Annuity Targeting Encashment 15 10 5 0 Years to Retirement Retirement Please note that this graph indicates how the overall level of risk changes at different stages, not the likely performance of an investment. 11
Our Targeting Annuity option offers a combination of 75% Pension Protector Fund and 25% Cash Fund. This is specifically designed for customers who wish to take 25% of their fund as a tax-free cash lump sum and buy an annuity with the remaining 75%. Our analysis indicates that this combination is a sound choice for those customers who want to choose this route. For customers who intend to take their pension fund in a cash lump sum our analysis indicates that a more suitable asset-mix at retirement would be 100% in Cash and/or near-cash * money market investments (which means investments that can be converted into cash quickly and easily). We provide this for those selecting the Targeting Encashment retirement outcome through a 100% investment in Pension Portfolio Five, which invests in two near-cash funds and has been primarily created for this purpose. and Moody s Analytics analysed a wide spectrum of possible asset-mixes for those selecting our Targeting Flexible Access retirement outcome. For our PIA customers who intend to have the flexibility of staying invested during retirement, we identified a suitable asset-mix to prepare their pension for ongoing investment. Overall, the asset-mix which we believe is best suited for this is 30% Equities, 45% Bonds and 25% Cash. We deliver this through a combination of 75% Pension Portfolio Four and 25% Pension Portfolio Five. More information on the aims, and both the general and specific risks associated with the underlying funds can be found in the table on pages 16-18. *By near-cash we mean investing in assets that can be converted into cash quickly and easily. Please remember that, whichever investment you are in, the value of your investment can go down as well as up, and could fall below the amount(s) paid in. This also applies to money market, cash and near cash funds which invest in securities, as these securities can fluctuate more than a customer might expect. Cash or near-cash funds do not guarantee a positive return, nor do they provide complete protection for your investment. WILL WE EVER USE DIFFERENT INVESTMENTS? Yes if, as part of our investment fund review process, we think it would be of long-term benefit to our customers, we may decide in future to alter the asset classes or funds used by our PIAs. 12
THE NUTS AND BOLTS We don t actually invest directly in the investments shown e.g. in UK shares and corporate bonds. Instead we invest in funds that have the blends we need. These funds are grouped together under five Portfolios. Currently the Portfolios are as follows. Asset classes Overseas Equities - SSgA Europe ex UK Equity Index Fund - SSgA North America Equity Index Fund - SSgA Japan Equity Index Fund Funds - SSgA Asia Pacific Ex Japan Equity Index Fund - SSgA Emerging Markets Equity Index Fund UK Equities - SSgA UK Equity Index Fund Corporate Bonds - SWUTM Corporate Bond Tracker Fund Global Corporate Bonds (hedged) - Aberdeen Global Corporate Bond Tracker Fund Cash - Aberdeen Liquidity Fund (Lux) Ultra Short Duration Sterling Fund - Aberdeen Global Liquidity Fund Sterling Sub Fund Pension Portfolio One Pension Portfolio Two Pension Portfolio Three Pension Portfolio Four 75% 63.8% 52.5% 30% 25% 21.2% 17.5% 10% 11.3% 22.5% 45% 3.7% 7.5% 15% Pension Portfolio Five 100% In the last 15 years before you retire, we gradually start switching to lower risk investment funds. The funds used during the five years leading up to your selected retirement date will depend on which retirement outcome you have selected, be this Targeting Annuity, Targeting Encashment or Targeting Flexible Access. The table on the next page shows you which funds are used for each risk category and the different retirement outcomes. 13
ADVENTUROUS RISK CATEGORY 15 years+ at 10 years at 5 years at 0 years Adventurous Targeting Annuity Pension Portfolio 1 Pension Portfolio 2 Pension Portfolio 3 Pension Protector 75% Cash 25% Adventurous Targeting Encashment Pension Portfolio 1 Pension Portfolio 2 Pension Portfolio 3 Pension Portfolio 5 Adventurous Targeting Flexible Access Pension Portfolio 1 Pension Portfolio 2 Pension Portfolio 3 Pension Portfolio 4 75% Pension Portfolio 5 25% BALANCED RISK CATEGORY 15 years+ at 10 years at 5 years at 0 years Balanced Targeting Annuity Pension Portfolio 2 Pension Portfolio 3 Pension Portfolio 4 Pension Protector 75% Cash 25% Balanced Targeting Encashment Pension Portfolio 2 Pension Portfolio 3 Pension Portfolio 4 Pension Portfolio 5 Balanced Targeting Flexible Access Pension Portfolio 2 Pension Portfolio 3 Pension Portfolio 4 Pension Portfolio 4 75% Pension Portfolio 5 25% CAUTIOUS RISK CATEGORY 15 years+ at 10 years at 5 years at 0 years Cautious Targeting Annuity Pension Portfolio 3 Pension Portfolio 4 Pension Portfolio 4 Pension Protector 75% Cash 25% Cautious Targeting Encashment Pension Portfolio 3 Pension Portfolio 4 Pension Portfolio 4 Pension Portfolio 5 Cautious Targeting Flexible Access Pension Portfolio 3 Pension Portfolio 4 Pension Portfolio 4 Pension Portfolio 4 75% Pension Portfolio 5 25% 14
Where any of the following general risks apply to a fund, they will be indicated beside the aims of the fund shown in the following table. Any specific risks associated with a fund will also be shown here. EM This fund invests in emerging markets so might invest in stockmarkets which are generally less well regulated than those in the UK. This may result in a greater risk that the value of the units might go down. The investments in these markets might also be bought and sold infrequently therefore resulting in large changes in their prices. EQ This fund invests in company shares (often referred to as equities ). Investing in company shares generally has the potential for higher capital growth over the longer term than investing in say, corporate bonds and other fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that the value of the investment will fall. FI Some of the securities in which this fund invests might default or their credit rating might fall. The value of those investments will usually fall should an issuer default or receive a reduced credit rating. Fluctuations in interest rates are likely to affect the value of the securities held by the fund. If long-term interest rates rise, the value of the units is likely to fall and vice versa. OS FIG Exchange rate changes might cause the value of any overseas investment to go up or down. This fund may invest more than 35% in government or public securities issued by a single issuer. There could be a risk, for example, that they can t repay the amount borrowed. If they don t repay, the value of the fund will fall. 15
OUR PENSION PORTFOLIO AND INVESTMENT FUNDS AIMS Our pension portfolio and investment funds aim to achieve results that are suited to the Pension Investment Approach chosen and your selected retirement outcome. Fund Aim Risks Pension Portfolio One Pension Fund Pension Portfolio Two Pension Fund The Fund aims to provide long-term growth by investing in UK and overseas equities. The underlying funds will use full replication or sampling techniques to track an index. The exposures are currently gained through holdings in passive index tracking funds managed by State Street and Aberdeen Asset Management. The asset mix of the Fund will be reviewed periodically by, and may be amended if a review indicates that it would be in the investors best interests to do so. This means in future the Fund could be invested in different funds and additional asset types, though the Fund will continue to invest predominantly in equities. The Fund aims to provide long-term growth by investing predominantly in UK and overseas equities. It also has some exposure to bonds. The underlying funds will use full replication or sampling techniques to track an index. The exposures are currently gained through holdings in passive index tracking funds managed by State Street and Aberdeen Asset Management. The asset mix of the Fund will be reviewed periodically by, and may be amended if a review indicates that it would be in the investors best interests to do so. This means in future the Fund could be invested in different funds and additional asset types, though the Fund will continue to invest predominantly in equities. EQ OS EM EQ OS EM FI 16
Fund Aim Risks Pension Portfolio Three Pension Fund The Fund aims to provide long-term growth by investing primarily in a range of UK and overseas equities, but with a significant proportion in fixed interest securities. EQ OS FI Pension Portfolio Four Pension Fund The underlying funds will use full replication or sampling techniques to track an index. The exposures are currently gained through holdings in passive index tracking funds managed by State Street and Aberdeen Asset Management. The asset mix of the Fund will be reviewed periodically by, and may be amended if a review indicates that it would be in the investors best interests to do so. This means in future the Fund could be invested in different funds and additional asset types, though the Fund will continue to invest generally in equities. The Fund aims to provide long-term growth by investing mainly in UK and overseas equities and fixed interest securities. The underlying funds will use full replication or sampling techniques to track an index. The exposures are currently gained through holdings in passive index tracking funds managed by State Street and Aberdeen Asset Management. The asset mix of the Fund will be reviewed periodically by, and may be amended if a review indicates that it would be in the investors best interests to do so. This means in future the Fund could at times invest more or less in equities than fixed interest securities. It could also be invested in different funds and additional asset types, which would reduce the level of investment in equities and/or fixed interest securities. EQ OS FI 17
Fund Aim Risks Pension Portfolio Five Pension Fund The Fund aims to provide high levels of capital security by investing mainly in high quality short to medium term securities. These include fixed or floating rate debt instruments such as deposits, commercial paper, medium term notes, asset backed securities and bonds. The exposures are currently gained through holdings in passive index tracking funds managed by Aberdeen Asset Management. The asset mix of the Fund will be reviewed periodically by, and may be amended if a review indicates that it would be in the investors best interests to do so. This means in future the Fund could be invested in different funds and additional asset types, though the Fund will continue to invest mainly in short to medium term securities. Specific risk Some of the securities in which this Fund invests might default or their credit rating might fall. The value of those investments will usually fall should an issuer default or receive a reduced credit rating. Fluctuations in interest rates are likely to affect the value of the securities held by the Fund. If interest rates rise, the value of the units is likely to fall and vice versa. The Fund therefore carries a relatively modest risk to capital. Pension Protector Fund The fund may be suitable for investors approaching retirement who intend to purchase a conventional pension annuity. The fund invests mainly in long-dated UK fixed interest securities. The prices of these are one of the key factors affecting the cost of buying a pension and so any investment in the fund should rise and fall broadly in line with changes in the cost of buying such a pension in retirement. The fund does not provide any guarantee of the level of pension in retirement or the cost of buying that pension. It may not be effective for those who intend to buy an inflation linked pension and does not provide protection against changes in the cost of buying a pension that arise from changes in life expectancy. FI FIG Cash Fund The fund aims to provide long-term growth consistent with high levels of capital security by investing mainly in short-term securities. Specific risk The fund can invest in highquality, mostly short-term debt instruments such as fixed deposits, certificates of deposit, commercial paper and floating rate notes. It carries a relatively modest risk to capital. Please note that, whichever fund you are investing in, the value of your investment can go down as well as up, and could fall below the amount(s) paid in. This also applies to cash and near-cash funds which invest in securities, as these securities can fluctuate more than you might expect. Cash or near-cash funds do not guarantee a positive return, nor do they provide complete protection for your investment. 18
SECTION 2 SCOTTISH WIDOWS PENSION FUNDS IF YOU DO NOT WISH TO CHOOSE A PENSION INVESTMENT APPROACH, YOU CAN SELECT UP TO 10 OF THE SCOTTISH WIDOWS INVESTMENT FUNDS DETAILED IN THIS SECTION OF THE GUIDE. With a comprehensive range of funds from ready-made investment portfolios to specialist funds, has a wide choice of funds to match different investment needs. Our range is grouped into the following categories: 1. SCOTTISH WIDOWS FUNDS, MANAGED BY ABERDEEN ASSET MANAGEMENT defines the objectives for these funds and determines how they should be run. The management of the funds is delegated to a subsidiary of Aberdeen Asset Management plc. For the majority of the funds, is responsible for defining the fund objectives and determining how the funds should be run. In some cases, Aberdeen defines the fund objectives and determines how the funds should be run. 2. SW FUNDS, MANAGED BY OTHER FUND MANAGERS The SW funds are managed by selected and wellestablished fund managers. These fund managers define the SW funds objectives and determine how they should be run. Covering a wide range of asset classes, geographical locations, sectors and management styles, our carefully selected SW pension funds provide building blocks to create bespoke investment portfolios. These include balanced managed funds, for investors who might prefer a ready-made investment portfolio, and a large number of specialist funds suitable for investors with specific investment requirements. 19
SCOTTISH WIDOWS FUNDS, MANAGED BY ABERDEEN ASSET MANAGEMENT Funds available ABI classification sector Fund short code Cash Fund Money Market CA Consensus Fund Mixed Investment 40% 85% Shares CN Corporate Bond Fund Sterling Corporate Bond CB Environmental Fund UK All Companies EN Ethical Fund UK All Companies EF European Fund Europe excluding UK Equities EE Fixed Interest Fund UK Gilts FI Global Equity Fund Global Equities GL Indexed Stock Fund UK Index-Linked Gilts IS International Fund Global Equities IN Japanese Fund Japan Equities JE Mixed Fund Mixed Investment 40% 85% Shares MX North American Fund North America Equities US Pension Protector Fund Sterling Long Bond PF Property Fund UK Direct Property PY Strategic Income Bond Fund Sterling Strategic Bond SI UK All Share Tracker Fund UK All Companies AS UK Equity Fund UK All Companies EQ UK Fixed Interest Tracker Fund UK Gilts LG 20
SW FUNDS, MANAGED BY OTHER FUND MANAGERS For investors who aim to enhance returns by accessing a particular investment style, offer a broad range of funds from well-established fund managers. These include balanced managed funds, for investors who may prefer a ready-made investment portfolio, and a large number of specialist funds suitable for investors with specific investment requirements. BLACKROCK Funds available ABI classification sector Fund short code SW BlackRock Managed Fund Mixed Investment 40% 85% Shares XA NEWTON Funds available ABI classification sector Fund short code SW Newton Global Equity Fund * Global Equities TE SW Newton Managed Fund Mixed Investment 40% 85% Shares TA * This was previously called the SW Newton International Growth Fund. SCHRODERS Funds available ABI classification sector Fund short code SW Schroder Managed Fund Mixed Investment 40% 85% Shares UA STATE STREET GLOBAL ADVISORS Funds available ABI classification sector Fund short code SW SSgA Asia Pacific ex Japan Equity Index Fund Asia Pacific excluding Japan Equities CT SW SSgA Europe ex UK Equity Index Fund Europe excluding UK Equities DZ 21
SW SSgA Index Linked Gilts All Stocks Index Fund UK Index-Linked Gilts CX SW SSgA Index Linked Gilts Over 5 Years Index Fund UK Index-Linked Gilts CY SW SSgA International Equity Index Fund Global Equities CO SW SSgA Japan Equity Index Fund Japan Equities CU SW SSgA North America Equity Index Fund North America Equities CV SW SSgA Non Gilts Sterling Bond All Stock Index Fund * Sterling Corporate Bond CW SW SSgA UK Conventional Gilts Over 15 Years Index Fund UK Gilts CZ SW SSgA UK Equity Index Fund UK All Companies CP SW SSgA 50:50 Global Equity Index Fund Global Equities CG * This was previously called the SW SSgA Sterling Corporate Bond All Stocks Index Fund. 22
INVESTMENT APPROACHES AT A GLANCE While there are a number of ways to evaluate risk, uses the following definitions to help you decide on the appropriate investment approach. Please be aware that review the investment approach definitions and the investment approach for the funds regularly, so these may change. You can find information on current investment approaches and notification of any changes at www.scottishwidows.co.uk/investmentapproaches SECURE CAUTIOUS BALANCED PROGRESSIVE ADVENTUROUS SPECIALIST These investments provide safety to the amount invested and can be expected to offer relatively low growth over the medium to longterm. They cannot fall in actual value, but can fall in real value due to the effects of inflation. These investments are expected to have a relatively modest risk to the capital value and/ or income. They have the potential to provide income, and/or, over the medium to longterm, relatively modest capital growth. The capital value may fluctuate, although some products may offer an element of capital protection. These investments carry a risk of loss to capital value but have the potential for capital growth and/or income over the medium to long-term. Typically they do not have any guarantees and will fluctuate in capital value. These investments are expected to have a relatively significant risk of loss to capital value, but with the potential of relatively more capital growth over the medium to long-term. They do not offer any guarantees and will fluctuate in capital value. These investments carry a relatively much higher risk of capital loss but with the potential for relatively higher capital growth over the medium to longterm. They may be subject to a considerable level of fluctuation in capital value. They do not offer any guarantees. These investments carry a very high risk of capital loss, but with the potential for a higher return over the long-term. They are very volatile and are only suitable for clients who can afford to, and are prepared to, risk the entire capital value. They do not offer any guarantees. SECURE CAUTIOUS BALANCED PROGRESSIVE ADVENTUROUS SPECIALIST INCREASING RISK INVESTMENT PERIODS categorise investment periods as follows: Short-term: Up to 5 years Medium-term: Between 5 and 10 years Long-term: Over 10 years 23
SCOTTISH WIDOWS FUNDS AVAILABLE CAUTIOUS Cash Fund Corporate Bond Fund Fixed Interest Fund UK Fixed Interest Tracker Fund SW SSgA Non Gilts Sterling Bond All Stock Index Fund BALANCED Pension Protector Fund Strategic Income Bond Fund SW SSgA Index Linked Gilts All Stocks Index Fund SW SSgA Index Linked Gilts Over 5 Years Index Fund SW SSgA UK Conventional Gilts Over 15 Years Index Fund PROGRESSIVE Consensus Fund Indexed Stock Fund Mixed Fund Property Fund SW BlackRock Managed Fund SW Newton Managed Fund SW Schroder Managed Fund ADVENTUROUS Environmental Fund Ethical Fund European Fund Global Equity Fund International Fund North American Fund UK All Share Tracker Fund UK Equity Fund SW Newton Global Equity Fund SW SSgA Europe ex UK Equity Index Fund SW SSgA International Equity Index Fund SW SSgA North America Equity Index Fund SW SSgA UK Equity Index Fund SW SSgA 50:50 Global Equity Index Fund SPECIALIST Japanese Fund SW SSgA Asia Pacific ex Japan Equity Index Fund SW SSgA Japan Equity Index Fund may change the selection of funds that they make available. Please be aware that the definitions or investment approach rating for specific funds may change in the future. 24
PENSION FUNDS INFORMATION The unit-linked funds aim to provide long-term growth in the price of units. This is generated by a combination of capital growth as well as income that is added to the fund. A proportion of each unit-linked fund may be held in cash to provide liquidity or while awaiting suitable investments. The unit-linked funds can invest in other unit-linked funds or in collective investment schemes (for example open-ended investment companies (OEICs) or unit trusts) to achieve exposure to meet the stated fund aims. There are charges associated with investing in the funds. The current charge for all investment funds is 0.4% a year of the value of the fund. do reserve the right to alter fund charges (within permitted stakeholder limits) but you would be notified in advance of any such change and Taylor Wimpey would have already agreed such changes. Some funds may use derivatives (contracts which have a value linked to the price of another asset) to help reduce risk or reduce cost, or to help generate extra capital or income. This is normally referred to as Efficient Portfolio Management (EPM). It is not intended that this will cause the risk profile of these funds to change, but using derivatives might not achieve the described outcomes and may result in greater fluctuations in the values of these funds. The funds may engage in securities lending. This is where a fund lends out some of its assets with an agreement that the borrower will return them after a limited period. The borrower pays a fee which is added to the fund after the costs associated with the lending have been deducted. The fund receives other assets and possibly a cash payment as security during the lending period for the assets lent. There is a risk that the borrower may be unable to return the fund s assets and if this happens, the other assets would be sold. If the sale proceeds and any other payments due to the fund were not enough to replace the assets lent, the fund would go down in value. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). The value of your investment could fall below the amount(s) paid in. There may be restrictions on the amount you can invest in certain funds. Please contact for details of any restrictions that apply. may change the selection of funds that they make available. may delay a request to sell your units in certain circumstances. The period of delay will not be more than six months if the units to be cancelled include units which relate to a fund which holds directly or indirectly assets in the form of real or heritable property. It will not be more than one month in all other cases. This may happen in exceptional circumstances where, for example, there is an unusually high demand for units to be cashed in. For more details please see the relevant Policy Provisions for your investment with. ABI SECTOR INFORMATION ABI sectors are designed by the Association of British Insurers. They aim to group funds with similar characteristics and can help investors compare funds. However, they are not designed to reflect the risk level of funds. For more information about how we classify the risk level of the funds in this guide, please see page 26. The Mixed Investment Shares sectors reflect the maximum and minimum amount of a fund that can be invested in shares. Please note that fund managers may often invest at or near the maximum amount in shares. Funds in the Mixed Investment Shares sectors can hold a range of other investments in addition to shares (for example bonds, property and cash) and may use a range of different investment strategies. The Mixed Investment Shares sectors group together funds that are broadly similar (on the basis of their shares content) for comparison purposes. To give fund managers flexibility, the criteria for each sector overlap. So funds may sometimes meet the requirements for more than one sector. UK shares are investments in companies quoted on the UK stock market. Overseas shares are investments in companies quoted on non-uk stock markets. Further fund information can be found in the Investment Choices section of www.scottishwidows.co.uk/taylorwimpey 25
Where any of these general risks apply to a fund, this will be indicated beside the aims of the funds shown in the next section. Any specific risks associated with a fund will also be shown here. EQ FI FIG HY OS EM PY SP This fund invests in company shares (often referred to as equities ). Investing in company shares generally has the potential for higher capital growth over the longer term than investing in say, corporate bonds and other fixed interest securities. However there might be considerable fluctuations in equity prices and there is a greater risk that the value of the investment will fall. Some of the securities in which this fund invests might default or their credit rating might fall. The value of those investments will usually fall should an issuer default or receive a reduced credit rating. Fluctuations in interest rates are likely to affect the value of the securities held by the fund. If long-term interest rates rise, the value of the units is likely to fall and vice versa. This fund may invest more than 35% in government or public securities issued by a single issuer. There could be a risk, for example, that they can t repay the amount borrowed. If they don t repay, the value of the fund will fall. This fund invests in high yielding fixed interest securities, which carry an increased risk of default and, for which, there is a higher risk that the issuer s credit rating may fall. The value of these investments will usually fall should an issuer default or receive a reduced credit rating or should the likelihood of these events increase. Exchange rate changes might cause the value of any overseas investment to go up or down. This fund invests in emerging markets so might invest in stockmarkets which are generally less well regulated than those in the UK. This may result in a greater risk that the value of the units might go down. The investments in these markets might also be bought and sold infrequently therefore resulting in large changes in their prices. This fund invests in property and land. This can be difficult to sell, so it may not be possible to cash in the investment when you want to. may have to delay acting on your instructions to sell the investment. The value of property is generally a matter of a valuer s opinion rather than fact and values can go up or down. Property transactions tend to be larger and more complex than for other asset classes. As a result the proportion of cash held while awaiting suitable investment opportunities could be greater than for other funds. This fund has a select portfolio, which has a limited number of stocks. By investing in a select portfolio there might be greater fluctuations in the value of the units than with a wider portfolio. 26
This section lists each fund within its ABI sector. These sectors are designed by the Association of British Insurers and aim to group funds with similar characteristics and can help investors compare funds. ASIA PACIFIC EXCLUDING JAPAN EQUITIES SECTOR Fund Fund aim Fund risks SW SSgA Asia Pacific ex Japan Equity Index Fund State Street Global Advisors describe their fund s aim as follows: The fund aims to track the FTSE All-World Developed Asia Pacific ex Japan Index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of equities constituting the above Index although stock index futures can be used for efficient portfolio management. EQ OS EUROPE EXCLUDING UK EQUITIES SECTOR Fund Fund aim Fund risks European Fund The fund invests via the SWUTM European Growth OEIC Fund. The European Growth OEIC Fund aim is: EQ OS To achieve long-term capital growth by investing predominantly in a portfolio of companies which are part of the MSCI Europe ex UK Index (the Index ). The fund seeks to deliver performance, before deduction of management fees, in excess of the Index with a similar level of overall volatility, over the long term. The fund may only take limited positions away from the Index. This means there are limitations on the extent to which the fund s investment in various sectors* may differ to the Index. These limited positions can be more than is held in the Index (overweight) or less than is held in the Index (underweight). * A sector is a business area, industry or economy which shares the same characteristics. Company shares are typically grouped into different sectors depending on the company s business, for example travel and leisure or telecommunications. SSgA Europe ex UK Equity Index Fund State Street Global Advisors describe their fund s aim as follows: the fund aims to track the FTSE World Europe ex UK Index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of equities constituting the above Index although stock index futures can be used for efficient portfolio management. EQ OS 27
GLOBAL EQUITIES SECTOR Fund Fund aim Fund risks Global Equity Fund The fund invests via the SWUTM Global Growth OEIC Fund. The Global Growth OEIC Fund aim is: To achieve long-term capital growth by investing predominantly in a portfolio of companies which are part of the MSCI World Index or the MSCI Emerging Markets Index (the Indices ). The fund seeks to deliver performance, before deduction of management fees, in excess of a blended return of the Indices, with a similar level of overall volatility, over the long term. Of the two Indices, the fund will invest almost exclusively in companies that are part of the MSCI World Index. The fund may only take limited positions away from the Indices. This means there are limitations on the extent to which the fund s investment in various sectors* may differ to the Index. These limited positions can be more than is held in the Index (overweight) or less than is held in the Index (underweight). EQ OS * A sector is a business area, industry or economy which shares the same characteristics. Company shares are typically grouped into different sectors depending on the company s business, for example travel and leisure or telecommunications. International Fund SW Newton Global Equity Fund The fund aims to achieve long-term growth by investing mainly in overseas company shares. The fund may invest in some UK-based companies with international interests. The fund can also invest in fixed interest securities. The fund aims for long-term growth from a portfolio of international securities. Investment is solely through the Newton International Growth OEIC fund. EQ FI OS EM EQ OS SW SSgA 50:50 Global Equity Index Fund The fund aims to provide long-term growth and provides broad exposure to countries around the world. The fund invests primarily in equities, both in the UK and overseas markets. The fund has approximately 50% invested in the shares of UK companies. The remaining 50% is invested in overseas companies split evenly between the US, Europe ex UK and Far East. These asset exposures are through the SSgA Global Equity (50:50) Index Fund. Investment is made on an index-tracking basis. EQ OS SW SSgA International Equity Index Fund The fund aims to achieve long-term growth by investing primarily in shares of companies listed in the FTSE World ex UK Index. The fund invests primarily in company shares in overseas equity markets. Investment is solely through the SSgA International Equity Index Fund and is made on an index-tracking basis. EQ OS 28
JAPAN EQUITIES SECTOR Fund Fund aim Fund risks Japanese Fund The fund invests via the SWUTM Japan Growth OEIC Fund. The Japan Growth OEIC Fund aim is: EQ OS To achieve long-term capital growth by investing predominantly in a portfolio of companies which are part of the MSCI Japan Index (the Index ). The fund seeks to deliver performance, before deduction of management fees, in excess of the Index with a similar level of overall volatility, over the long term. The fund may only take limited positions away from the Index. This means there are limitations on the extent to which the fund s investment in various sectors* may differ to the Index. These limited positions can be more than is held in the Index (overweight) or less than is held in the Index (underweight). * A sector is a business area, industry or economy which shares the same characteristics. Company shares are typically grouped into different sectors depending on the company s business, for example travel and leisure or telecommunications. SW SSgA Japan Equity Index Fund State Street Global Advisors describe their fund s aim as follows: the fund aims to track the FTSE World Japan Index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of equities constituting the above Index although stock index futures can be used for efficient portfolio management. EQ OS MIXED INVESTMENT 40% 85% SHARES SECTOR Fund Fund aim Fund risks Consensus Fund Mixed Fund The fund aims to achieve long-term growth by investing in a balanced portfolio of UK and overseas company shares, fixed interest stocks, index-linked stocks and cash deposits. Investment in these assets is made through a range of index-tracking funds, or where appropriate, through direct investment, again on an index-tracking basis. The percentage of the fund invested in each asset class will be based on the average amount invested in each class in accordance with a benchmark of UK balanced funds. The fund aims to achieve long-term growth by investing in a mixed portfolio of UK and overseas company shares, fixed interest stocks, index-linked stocks, property and cash deposits. The fund is likely to invest mainly in company shares and property. EQ FI OS EQ FI OS 29
MIXED INVESTMENT 40% 85% SHARES SECTOR (CONTINUED) Fund Fund aim Fund risks SW BlackRock Managed Fund SW Newton Managed Fund SW Schroder Managed Fund The fund aims to achieve capital growth on your investment as well as the generation of some income, where market conditions allow. The fund may invest in shares, fixed income securities, money market instruments, funds and cash. The fixed income securities and money market instruments will be issued by governments, government agencies, companies and supranationals. The fund will invest in the full range of fixed income securities and money market instruments which may include investments with a relatively low credit rating or which are unrated. Investment may be made globally in any and all economic sectors, although under normal market conditions, there will be an emphasis on the United Kingdom. The fund can use derivatives as part of its investment strategy and this can increase the risk within the fund. The fund aims for long-term growth from a balance between capital growth and income from a portfolio of UK and international securities. The fund invests in a range of Newton OEIC funds. The fund aims for long-term growth from a balanced exposure to UK and overseas company shares and fixed interest securities through a range of Schroder authorised unit trusts. EQ FI OS EQ FI OS EQ FI OS MONEY MARKET SECTOR Fund Fund aim Fund risks Cash Fund The fund aims to provide long-term growth consistent with high levels of capital security by investing mainly in short-term securities. Specific risks The fund can invest in high-quality, mostly short-term debt instruments such as fixed deposits, certificates of deposit, commercial paper and floating rate notes. It carries a relatively modest risk to capital. 30
NORTH AMERICA EQUITIES SECTOR Fund Fund aim Fund risks North American Fund The fund invests via the SWUTM American Growth OEIC Fund. The American Growth OEIC Fund aim is: To achieve long-term capital growth by investing predominantly in a portfolio of companies which are part of the S&P 500 Index (the Index ). The fund seeks to deliver performance, before deduction of management fees, in excess of the Index with a similar level of overall volatility, over the long term. The fund may only take limited positions away from the Index. This means there are limitations on the extent to which the fund s investment in various sectors* may differ to the Index. These limited positions can be more than is held in the Index (overweight) or less than is held in the Index (underweight). EQ OS * A sector is a business area, industry or economy which shares the same characteristics. Company shares are typically grouped into different sectors depending on the company s business, for example travel and leisure or telecommunications. SW SSgA North America Equity Index Fund State Street Global Advisors describe their fund s aim as follows: the fund aims to track the FTSE World North America Index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of equities constituting the above Index although stock index futures can be used for efficient portfolio management. EQ OS STERLING CORPORATE BOND SECTOR Fund Fund aim Fund risks Corporate Bond Fund The fund aims to achieve long-term growth by investing primarily in high quality, investment grade corporate bonds and other fixed interest securities issued by companies in the UK and Europe. FI FIG SW SSgA Non Gilts Sterling Bond All Stock Index Fund State Street Global Advisers describe their fund s aim as follows: the fund aims to track the Barclays Sterling Aggregate 100 mm Non Gilts Index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of bonds constituting the above Index although stock index futures can be used for efficient portfolio management. FI 31
STERLING LONG BOND SECTOR Fund Fund aim Fund risks Pension Protector Fund This fund may be suitable for investors approaching retirement who intend to purchase a conventional pension annuity. The fund invests mainly in long-dated UK fixed interest securities. The prices of these are one of the key factors affecting the cost of buying a pension and so any investment in the fund should rise and fall broadly in line with changes in the cost of buying such a pension in retirement. The fund does not provide any guarantee of the level of pension in retirement or the cost of buying that pension. It may not be effective for those who intend to buy an inflation-linked pension and does not provide protection against changes in the cost of buying a pension that arise from changes in life expectancy. FI FIG STERLING STRATEGIC BOND SECTOR Fund Fund aim Fund risks Strategic Income Bond Fund The fund aims to achieve long-term growth by investing primarily in UK and European corporate bonds and other fixed interest securities. The majority of securities will be high quality, investment grade, but a significant proportion will be higher risk securities. FI FIG HY OS UK ALL COMPANIES SECTOR Fund Fund aim Fund risks Environmental Fund Ethical Fund To give long-term capital growth by investing in primarily UK companies which show a commitment to the protection and preservation of the natural environment. The fund may also invest in international companies applying environmental commitment. The companies are selected according to a range of negative environmental screening criteria. Negative screening means using a fund s agreed screening criteria to exclude undesirable investments, such as shares in companies whose practices may be harmful to the environment. To give long-term capital growth by investing in primarily UK companies that demonstrate ethical attributes and practices. The fund may also invest in international companies demonstrating ethical practices. The companies are selected according to a broad range of negative ethical screening. Negative screening means using a fund s agreed screening criteria to exclude undesirable investments, such as shares in companies which sell weapons or tobacco. EQ OS SP EQ OS SP 32
UK ALL COMPANIES SECTOR (CONTINUED) Fund Fund aim Fund risks UK All Share Tracker Fund UK Equity Fund SW SSgA UK Equity Index Fund The fund aims to achieve long-term growth by investing in a portfolio that aims to track the performance of the UK Equity market as represented by the FTSE All Share Index. The fund will invest mainly in company shares. The fund invests via the SWUTM UK Growth OEIC Fund. The UK Growth OEIC Fund aim is: To achieve long-term capital growth by investing predominantly in a portfolio of companies which are part of the FTSE All Share Index (the Index ). The fund seeks to deliver performance, before deduction of management fees, in excess of the Index with a similar level of overall volatility, over the long term. The fund may only take limited positions away from the Index. This means there are limitations on the extent to which the fund s investment in various sectors* may differ to the Index. These limited positions can be more than is held in the Index (overweight) or less than is held in the Index (underweight). * A sector is a business area, industry or economy which shares the same characteristics. Company shares are typically grouped into different sectors depending on the company s business, for example travel and leisure or telecommunications. The fund aims to achieve long-term growth by investing primarily in shares of companies listed in the FTSE All Share Index. The fund invests primarily in company shares. Investment is solely through the SSgA UK Equity Index Fund and is made on an index-tracking basis. EQ EQ EQ UK DIRECT PROPERTY SECTOR Fund Fund aim Fund risks Property Fund The fund aims to achieve long-term growth by investing mainly in high-quality freehold and long leasehold commercial and industrial properties. Property transactions tend to be larger and more complex than for other asset classes. As a result the proportion of cash held while awaiting suitable investment opportunities could be greater than for other funds. PY 33
UK GILTS SECTOR Fund Fund aim Fund risks Fixed Interest Fund The fund aims to achieve long-term growth by investing mainly in UK fixed interest securities. The fund may also invest in overseas fixed interest securities. FI FIG OS UK Fixed Interest Tracker Fund The fund aims to achieve long-term growth by investing in a portfolio that aims to track the performance of the UK fixed interest market as represented by the FTSE-A UK Gilts All Stocks Index. The fund will invest mainly in UK Government fixed interest securities. FI FIG SW SSgA UK Conventional Gilts Over 15 Years Index Fund State Street Global Advisors describe their fund s aim as follows: the fund aims to track the FTSE Actuaries British Government Over 15 Years index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of bonds constituting the above Index although stock index futures can be used for efficient portfolio management. FI FIG UK INDEX-LINKED GILTS SECTOR Fund Fund aim Fund risks Indexed Stock Fund The fund aims to achieve long-term growth by investing mainly in UK index-linked securities. FI FIG SW SSgA Index Linked Gilts All Stocks Index Fund State Street Global Advisors describe their fund s aim as follows: the fund aims to track the FTSE Actuaries British Government Index Linked All Stocks Index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of bonds constituting the above Index although stock index futures can be used for efficient portfolio management. FI FIG SW SSgA Index Linked Gilts Over 5 Years Index Fund State Street Global Advisors describe their fund s aim as follows: the fund aims to track the FTSE Actuaries British Government Over 5 Years Index Linked Gilts Index, or its recognised replacement or equivalent. The fund will primarily invest in a sample of bonds constituting the above Index although stock index futures can be used for efficient portfolio management. FI FIG 34
IMPORTANT NOTES funds are not in any way sponsored, endorsed, sold or promoted by FTSE International Limited ( FTSE ) or by the London Stock Exchange Plc (the Exchange ) or by The Financial Times Limited ( FT ) and neither FTSE nor Exchange nor FT makes any warranty or representation whatsoever, expressly or implied, either as to the results to be obtained from the use of the FTSE All Share ( the Index ) and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTSE. However, neither FTSE nor the Exchange nor FT shall be liable (whether in negligence or otherwise) to any person for any error in the Index and neither FTSE or Exchange or FT shall be under any obligation to advise any person of any error therein. FTSE, FT-SE and Footsie are trade marks of the London Stock Exchange Plc and The Financial Times Limited and are used by FTSE International Limited under licence. All-World, All-Share and All-Small and FTSE4Good are trade marks of FTSE International Limited. WHAT NEXT? We hope the information given in this guide will help you make investment decisions with confidence. When you join either: Indicate your preferred Pension Investment Approach on the application form provided; or If you do not wish to choose a Pension Investment Approach, you can select up to ten investment funds from wider range, together with the percentage of each contribution that is to go into each fund. This investment option can be made using the application form; or If you do not want to choose an investment option, will automatically invest your plan using the Balanced Pension Investment Approach Targeting Flexible Access. You can alter your investment choice free of charge later if you wish. When your plan starts will send you: Confirmation of your membership and your investment choice(s). Details on what to do if you change your mind. A personal illustration based on your chosen contributions and retirement date. Plan documents to keep safely for the future. Once a year will also send you an up-to-date pension benefits statement which shows the value of your plan, so you can see how your pension plan is doing. 35