UK AND INCOME INVESTMENT FUNDS ICVC

Transcription

1 UK AND INCOME INVESTMENT FUNDS ICVC INTERIM SHORT REPORT FOR THE SIX MONTH PERIOD ENDED 31 AUGUST 2015

2 SCOTTISH WIDOWS UK AND INCOME INVESTMENT FUNDS ICVC The Company Scottish Widows UK and Income Investment Funds ICVC Registered Office 15 Dalkeith Road Edinburgh EH16 5WL Incorporated in Great Britain under registered number IC Authorised and regulated by the Financial Conduct Authority. Authorised Corporate Director (ACD), Authorised Fund Manager & Registrar Scottish Widows Unit Trust Managers Limited Registered Office: Charlton Place Andover SP10 1RE Head Office: 15 Dalkeith Road Edinburgh EH16 5WL Authorised and regulated by the Financial Conduct Authority and a member of The Investment Association (previously the Investment Management Association) Investment Adviser Aberdeen Asset Investments Limited Registered Office: Correspondence Address: Bow Bells House 40 Princes Street 1 Bread Street Edinburgh London EH2 2BY EC4M 9HH Authorised and regulated by the Financial Conduct Authority and a member of The Investment Association (previously the Investment Management Association) Depositary State Street Trustees Limited Registered Office: Correspondence Address: 20 Churchill Place 525 Ferry Road Canary Wharf Edinburgh London EH5 2AW E14 5HJ Authorised and regulated by the Financial Conduct Authority. Independent Auditors PricewaterhouseCoopers LLP Level 4, Atria One 144 Morrison Street Edinburgh EH3 8EX

3 SCOTTISH WIDOWS UK AND INCOME INVESTMENT FUNDS ICVC INTRODUCTION Twice a year we are required to send you a Short Report of the Investment Company with Variable Capital (ICVC) in which you re invested. The report covers how the Funds in the ICVC have performed and how they are invested. It also includes a review from the Funds managers. Short Reports are important as not only do they keep you up-to-date with Fund activity and Fund managers opinion, but they also contain important information about any changes to how Funds operate. However, please note that Short Reports don t contain any details about the value of your personal investment. Information that is personal to you is sent to you annually in your OEIC or ISA statement. The statement gives you the value of your investment. You can also get an up to-date value of your investment by registering at CONTENTS Corporate Bond Fund 3 Environmental Investor Fund 6 Ethical Fund 8 Gilt Fund 10 High Income Bond Fund 12 High Reserve Fund 15 SafetyPlus Fund 17 Strategic Income Fund 19 UK Equity Income Fund 21 UK Growth Fund 23 UK Select Growth Fund 25 Long reports are available on request. If you would like a copy, please telephone Client Services on or download the Financial Statements from the website which is a website maintained by Scottish Widows plc on behalf of Scottish Widows Unit Trust Managers Limited. Daily fund prices can also be found at the above website. PROSPECTUS CHANGES During the period and up to the date of this report, the following changes were made to the Company and therefore the following changes were reflected in the Prospectus of Scottish Widows UK and Income Investment Funds ICVC: With effect from 24 July 2015, the risk wording in the Prospectus was updated as explained further below in the Important Information section. With effect from 24 July 2015, the Prospectus and Instrument of the Company were updated by: adding a definition of a US resident investor (the US Person ); and adding a restriction on such a US Person holding shares in the Company. With effect from 24 July 2015, the Prospectus was updated to explain that the ACD may choose to make use of the Delivery Versus Payment exemption within the FCA s client money and asset (CASS) rules. This period means that when Shares are purchased or redeemed there could be a time (up to close of business the day after the ACD has received the proceeds from any such transaction) where the payment or redemption monies for these Shares is not protected under the CASS rules. If in the unlikely event that the ACD became insolvent during this period, there is a risk that the impacted investor may not receive back the payment or redemption monies. With effect from 24 July 2015, the available eligible securities markets were updated for the UK Equity Income Fund by the addition of a number of US markets and a Swiss Market. With effect from 24 July 2015, the Prospectus and Instrument of the Company were updated to: (i) amend the investment objective of the Environmental Investor Fund and the Ethical Fund (each a Fund and together the Funds ), which are both sub-funds of the Scheme, to remove references to (a) a positive commitment to the protection and preservation of the natural environment in the investment objective of the Environmental Investor Fund and (b) positive ethical attributes in the investment objective of the Ethical Fund; In addition further amendments were made to the Prospectus on this date to: (i) amend the investment policy of the Funds to remove references to (a) a positive commitment to the protection and preservation of the natural environment in the investment policy of the Environmental Investor Fund an (b) positive ethical attributes in the investment policy of the Ethical Fund; (ii) include a specific reference in the investment policy of each Fund to the existing power to invest in international companies; (iii) remove references in the investment policy of each Fund to the Advisory Body as being responsible for agreeing the environmental/ethical (as appropriate) criteria which determine each Fund s investment universe; and (iv) update the environmental/ethical (as appropriate) criteria set out in the investment policy of each Fund to reflect current Environmental, Social and Governance issues and to permit each Fund to use a negative screening process rather than both negative and positive criteria. A copy of the Prospectus is available on request. 1

4 SCOTTISH WIDOWS UK AND INCOME INVESTMENT FUNDS ICVC IMPORTANT INFORMATION High Income Bond It is our intention to change the wording in the investment policy for the High Income Bond Fund to clarify the extent to which the Fund may hold non-investment grade securities. The relevant part of this fund s investment policy will be amended to state The majority of the Fund will be invested in non-investment grade securities, including corporate bonds and other investment securities. The current investment policy allows the Authorised Corporate Director (ACD) to invest in non-investment grade securities at its discretion. Please note that this is a clarification to the wording of the investment policy and not a change to the strategy or risk profile of the High Income Bond Fund. The proposed change has been approved by the FCA and we have agreed with the Depositary of the UK and Income Investment Funds ICVC to provide shareholders with 30 days notice. This change will therefore be effective from 3 December This change will be consistent with the objective and policy description in the High Income Bond Fund s Key Investor Information Document (KIID) which already discloses that the majority of the fund will be invested in non-investment grade securities. The KIID for the High Income Bond can be found on our website at Fund risk wording review: We have reviewed the risk wordings in the Prospectuses for all Funds alongside wording in the Key Investor Information Documents (KIIDs). As a result of our review we have added further risk wording to the Prospectuses and we recommend you read the risk section of the Prospectus for the Fund(s) you are invested in within the Company. The Prospectuses can be found on the following web page: Please note there have been no changes to the risk profiles of the Funds or to the investment strategies or objectives of the Funds in the Company. 2

5 FUND PROFILE Fund objectives and investment policy This Fund aims to give either an income, while having regard to the capital value, or growth (when income is kept within the Fund). To do so by investing mainly in investment grade corporate bonds and other fixed interest securities issued by companies primarily in the UK and also Europe. Investment grade bonds have achieved or exceeded a minimum credit rating awarded by a credit rating agency. Therefore they are considered lower risk than bonds with a lower credit rating. Credit ratings indicate the likelihood that an issuer will be able to make their payments. Investors should aim to hold their investment in this Fund for the medium to long-term (at least five to ten years). Any income received by the Fund in respect of accumulation shares is retained in the Fund and has the effect of increasing the share price. Any income received by the Fund in respect of Income shares will be paid out to you. The Fund is allowed to use derivatives (contracts which have a value linked to the price of another asset) for the following reasons: To help reduce risk; To help reduce cost; and To help generate extra capital or income for the Fund with an acceptably low level of risk. We calculate the value of this Fund at 8am daily on working days in the UK. Our dealing times are from 9am to 5pm each working day. Instructions received before 5pm will receive the next day s price. Synthetic risk and reward profile There are several different ways of measuring risk. The table below uses an industry standard measure of fund risk based on measuring a fund s volatility using its returns over the past five years. Volatility is generated by both rising and falling prices. Volatility doesn t tell you how much a fund has lost or gained; it indicates how volatile its returns were historically. The Fund s ranking may change over time and may not be a reliable indication of its future risk profile. This is a separate measure to Scottish Widows Investment Approaches (where we use our own methodology to take an overall look at funds risks and aims and categorise our funds as Secure, Cautious, Balanced, Progressive, Adventurous or Specialist). You can read more about them at investmentapproaches Typically lower rewards, lower risk CORPORATE BOND FUND Typically higher rewards, higher risk This Fund is ranked at 4* because it has experienced medium levels of volatility over the past 5 years. *As disclosed in the key investor information document dated 25 June INVESTMENT ADVISER S REVIEW The government bond market started the review period strongly, with yields falling materially in March and prices rising on investor nervousness. The onset of quantitative easing (QE), falling commodity prices, softer economic data and ongoing global conflicts all contributed to an environment of ever-falling yields and positive returns from conventional bonds. However, corporate bonds weakened after the European Central Bank (ECB) commenced purchases of government bonds early in March. This was a result of widening yield spreads that is, the failure of corporate bond yields to keep up with the rapid fall in government yields. From April onwards, bond markets were volatile. Part of this move could be explained by commodity price moves and oil in particular, which moved higher and partly by investor positioning (long positions having been built up by fixed income investors in anticipation of Eurozone QE). In May and June, government bond yields continued to move higher a continuation of the aforementioned unwinding of long investor positioning. Meanwhile, investment grade markets in Europe lost ground, largely due to uncertainty caused by an escalation of concerns over Greek debt negotiations. August was a poor month for investment grade corporate bonds, with yield spreads widening sharply as the market digested concerns over China and the impact of slowing economic growth on global gross domestic product and commodity prices. Throughout the review period, the Scottish Widows Corporate Bond Fund was overweight relative to benchmark in financials and higher-yielding corporates, and was positioned with a broadly neutral duration. Bonds issued by banks and insurers were among our key overweight positions, and these were generally positive for performance, although latterly the insurance sector was weak. High yield bonds added value for most of the review period, as this asset class continued to attract new flows of investment. Returns from stock selection were mixed. Holdings in the banking sector such as Royal Bank of Scotland and Lloyds added significant value, as did Italian utility Enel SPA. Meanwhile, market allocation to technology, media and telecoms and multiutilities detracted from performance. Insurer Aviva was the largest detractor in August, as completion of its merger with Friends Life drew closer. Looking ahead, corporate bond valuations have become cheaper, driven by negative sentiment broadening out from commodity-related issues to a more general rise in risk aversion. While this may be an over-reaction, deflationary forces currently dominating markets may prevent an upturn in sentiment on corporate debt in the near-term. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. 3

6 CORPORATE BOND FUND (CONTINUED) Distribution XD dates Payment dates 31/03/15 15/05/15 30/04/15 15/06/15 31/05/15 15/07/15 30/06/15 15/08/15 31/07/15 15/09/15 31/08/15 15/10/15 Ongoing charges figure A Accumulation A Income B Accumulation B Income G Accumulation G Income W Accumulation (Gross) The Ongoing Charges Figure (OCF) is the total expenses paid by each share class in the period, annualised, against its average net asset value. It excludes the cost of buying or selling assets for the Fund (unless these assets are shares of another fund). The OCF can fluctuate as underlying costs change. Details of investments Investments Corporate Bonds Mortgage-Backed Securities Asset-Backed Securities Government Bonds Derivatives 0.00 (0.02) Net other assets Total net assets Net asset value NAV per NAV per NAV share share percentage change (p) (p) % A Accumulation (3.77) A Income (5.04) B Accumulation (3.67) B Income (5.04) G Accumulation (3.77) G Income (5.04) W Accumulation (Gross) (2.97) Performance record 01/03/15 01/03/14 01/03/13 29/02/12 01/03/11 01/03/10 to to to to to to 28/02/14 28/02/13 28/02/12 28/02/11 Corporate Bond Fund A Accumulation (3.76) Corporate Bond Sector Average Return (2.32) Source: Lipper for Corporate Bond Fund and Corporate Bond Sector Average Return (funds which invest at least 80% of their assets in Sterling denominated (or hedged back to Sterling), triple BBB minus or above corporate bond securities (as measured by Standard & Poor s or an equivalent external rating agency). This excludes convertibles, preference shares and permanent interest bearing shares (PIBs)). Basis: Net revenue reinvested and net of expenses. Past performance is not a reliable indicator of future results. The value of an investment and any revenue from it is not guaranteed and can go down as well as up depending on investment performance and currency exchange rates. Top five holdings 1. Barclays Bank 1.52 Barclays Bank % 21/05/ % 21/05/ Imperial Tobacco 1.19 UK Treasury 1.23 Finance 9% 17/02/ % 22/01/ Bank of America 0.97 Imperial Tobacco % 31/07/2028 Finance 9% 17/02/ AXA 5.453% 0.91 UK Treasury 1.02 Perpetual 4.25% 07/12/ Electricite de France 0.90 Bank of America % 17/10/2041 7% 31/07/2028 Number of holdings: 328 Number of holdings: 372 Please note: negative figures are shown in brackets. Summary of portfolio by credit ratings Rating block Investment grade (AAA to BBB-) Non-Investment grade (BB+ to C) Unrated Total bonds Other Total net assets The credit ratings used in the above table have been supplied by Standard & Poor s, Moody s or Fitch Ratings. 4

7 CORPORATE BOND FUND (CONTINUED) Distribution First Second Third Fourth Fifth Sixth interim interim interim interim interim interim 31/03/15 30/04/15 31/05/15 30/06/15 31/07/15 31/08/15 (p) (p) (p) (p) (p) (p) A Accumulation A Income B Accumulation B Income G Accumulation G Income W Accumulation (Gross)

8 FUND PROFILE Fund objectives and investment policy To give long-term capital growth by investing primarily in UK companies which show a commitment to the protection and preservation of the natural environment. These companies are selected according to a broad range of negative environmental screening criteria. Investors should aim to hold their investment in this Fund for the medium to long-term (at least five to ten years). Any income received by the Fund is retained in the Fund and has the effect of increasing the share price. The Fund is allowed to use derivatives (contracts which have a value linked to the price of another asset) for the following reasons: To help reduce risk; To help reduce cost; and To help generate extra capital or income for the Fund with an acceptably low level of risk. We calculate the value of this Fund at 8am daily on working days in the UK. Our dealing times are from 9am to 5pm each working day. Instructions received before 5pm will receive the next day s price. Synthetic risk and reward profile There are several different ways of measuring risk. The table below uses an industry standard measure of fund risk based on measuring a fund s volatility using its returns over the past five years. Volatility is generated by both rising and falling prices. Volatility doesn t tell you how much a fund has lost or gained; it indicates how volatile its returns were historically. The Fund s ranking may change over time and may not be a reliable indication of its future risk profile. This is a separate measure to Scottish Widows Investment Approaches (where we use our own methodology to take an overall look at funds risks and aims and categorise our funds as Secure, Cautious, Balanced, Progressive, Adventurous or Specialist). You can read more about them at investmentapproaches Typically lower rewards, lower risk ENVIRONMENTAL INVESTOR FUND Typically higher rewards, higher risk This Fund is ranked at 5* because it has experienced medium to high levels of volatility over the past 5 years. *As disclosed in the key investor information document dated 25 June INVESTMENT ADVISER S REVIEW UK equities fell during the review period, despite the market benchmark having reached several all-time highs. Market sentiment was initially buoyed by a resounding yet unexpected Conservative victory at the polls. Also whetting risk appetites were positive economic data, an improving corporate earnings outlook, and news of further stimulus in China and Japan. Also supporting share prices was the start of the European Central Bank s larger-than-expected quantitative easing programme and news of Greece s third bailout. Overshadowing all this was China s unexpected yuan devaluation towards the period-end, which had triggered a global sell-off. Investor sentiment had already been fragile on worries that the slowing Chinese economy would hurt global growth prospects, as well as on lingering uncertainty over the timing of the US Federal Reserve s impending interest rate hike. Compounding these market jitters was Greek Prime Minister Alexis Tsipras decision to hold snap elections. In more recent economic news closer to home, the British manufacturing sector showed an improvement in July but questions remain over its sustainability. Retail sales were buoyed in August by more upbeat consumer confidence. However, the services sector slowed by more than expected, while construction activity eased. The unemployment rate also deteriorated in the second quarter, in tandem with slowing wage growth. For the half-year to end-august, the fund fell by 5.67%. Detractors from relative return included Rolls-Royce, Aggreko and Standard Chartered. Rolls-Royce share price was weak on the back of a succession of profit warnings, highlighting end market weakness and short-term customer uncertainty to invest. Aggreko reported a series of challenged contracts, which hurt its financial results in the near term. Standard Chartered s shares suffered from the negative sentiment surrounding emerging markets. Conversely, contributors to relative return were Aveva, Glencore and Dignity. Aveva rebounded smartly from recent weakness, posting reassuring results despite challenging end markets. Not holding Glencore, a fairly large index constituent, helped performance as its share price suffered on the back of weak commodity prices. Dignity performed well in the quarter, following strong results and a further acquisition of 36 funeral locations. Looking ahead, the stockmarket is likely to face further external headwinds in the near term. While most major central banks accommodative policies remain in place, the US Federal Reserve s next policy step is still unclear. In addition, the global economy seems to have hit a bump, with China s slowdown hurting exporters worldwide, while weak commodity prices continue to weigh on emerging markets. Our mid-term outlook for equities is broadly unchanged, with the low oil price is positive for business profitability. Over the longer term, we believe that businesses that are globally competitive and possess genuine pricing power should prosper. Any further market volatility will provide opportunities for us to add to our preferred holdings. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions.

9 ENVIRONMENTAL INVESTOR FUND (CONTINUED) Ongoing charges figure A Accumulation G Accumulation X Accumulation The Ongoing Charges Figure (OCF) is the total expenses paid by each share class in the period, annualised, against its average net asset value. It excludes the cost of buying or selling assets for the Fund (unless these assets are shares of another fund). The OCF can fluctuate as underlying costs change. Details of investments Investments Industrials Financials Consumer Services Consumer Goods Basic Materials Technology Utilities Health Care Telecommunications Oil & Gas Net other assets Total net assets Net asset value NAV per NAV per NAV share share percentage change (p) (p) % A Accumulation (4.52) G Accumulation (4.52) X Accumulation (3.81) Performance record 01/03/15 01/03/14 01/03/13 29/02/12 01/03/11 01/03/10 to to to to to to 28/02/14 28/02/13 28/02/12 28/02/11 Environmental Investor Fund A Accumulation (5.67 ) (8.08 ) Source: Lipper for Environmental Investor Fund. Basis: Net revenue reinvested and net of expenses. Past performance is not a reliable indicator of future results. The value of an investment and any revenue from it is not guaranteed and can go down as well as up depending on investment performance and currency exchange rates. Top five holdings 1. Prudential 3.80 Prudential Unilever 3.77 Rolls-Royce Rolls-Royce 3.60 Sage Sage 3.53 Unilever Experian 3.50 Pearson 3.81 Number of holdings: 40 Number of holdings: 40 7

10 FUND PROFILE Fund objectives and investment policy To give long-term capital growth by investing primarily in UK companies that demonstrate ethical attributes and practices. These companies are selected according to a broad range of negative ethical screening criteria. Investors should aim to hold their investment in this Fund for the medium to long-term (at least five to ten years). Any income received by the Fund is retained in the Fund and has the effect of increasing the share price. The Fund is allowed to use derivatives (contracts which have a value linked to the price of another asset) for the following reasons: To help reduce risk; To help reduce cost; and To help generate extra capital or income for the Fund with an acceptably low level of risk. We calculate the value of this Fund at 8am daily on working days in the UK. Our dealing times are from 9am to 5pm each working day. Instructions received before 5pm will receive the next day s price. Synthetic risk and reward profile There are several different ways of measuring risk. The table below uses an industry standard measure of fund risk based on measuring a fund s volatility using its returns over the past five years. Volatility is generated by both rising and falling prices. Volatility doesn t tell you how much a fund has lost or gained; it indicates how volatile its returns were historically. The Fund s ranking may change over time and may not be a reliable indication of its future risk profile. This is a separate measure to Scottish Widows Investment Approaches (where we use our own methodology to take an overall look at funds risks and aims and categorise our funds as Secure, Cautious, Balanced, Progressive, Adventurous or Specialist). You can read more about them at www. scottishwidows.co.uk/investmentapproaches Typically lower rewards, Typically higher rewards, lower risk higher risk This Fund is ranked at 5* because it has experienced medium to high levels of volatility over the past 5 years. *As disclosed in the key investor information document dated 25 June ETHICAL FUND 8 INVESTMENT ADVISER S REVIEW UK equities fell during the review period, despite the market benchmark having reached several all-time highs. Market sentiment was initially buoyed by a resounding yet unexpected Conservative victory at the polls. Also whetting risk appetites were positive economic data, an improving corporate earnings outlook, and news of further stimulus in China and Japan. Also supporting share prices was the start of the European Central Bank s larger-than-expected quantitative easing programme and news of Greece s third bailout. Overshadowing all this was China s unexpected yuan devaluation towards the period-end, which had triggered a global sell-off. Investor sentiment had already been fragile on worries that the slowing Chinese economy would hurt global growth prospects, as well as on lingering uncertainty over the timing of the US Federal Reserve s impending interest rate hike. Compounding these market jitters was Greek Prime Minister Alexis Tsipras decision to hold snap elections. In more recent economic news closer to home, the British manufacturing sector showed an improvement in July but questions remain over its sustainability. Retail sales were buoyed in August by more upbeat consumer confidence. However, the services sector slowed by more than expected, while construction activity eased. The unemployment rate also deteriorated in the second quarter, in tandem with slowing wage growth. For the half-year to end-august, the fund fell by 3.76%. Detractors from relative return included Aggreko, Standard Chartered and Pearson. Aggreko reported a series of challenged contracts, which hurt its financial results in the near term. Standard Chartered s shares suffered from the negative sentiment surrounding emerging markets. Pearson weakened after a good performance recently, as it suffered some contract losses in its US schools testing business. Conversely, contributors to relative performance included our holding in Aveva, Dignity and Glencore. Aveva rebounded smartly from recent weakness, posting reassuring results despite challenging end markets. Dignity performed well in the quarter, following strong results and a further acquisition of 36 funeral locations. Not holding Glencore, a fairly large index constituent, helped performance as its share price suffered on the back of weak commodity prices. Looking ahead, the stockmarket is likely to face further external headwinds in the near term. While most major central banks accommodative policies remain in place, the US Federal Reserve s next policy step is still unclear. In addition, the global economy seems to have hit a bump, with China s slowdown hurting exporters worldwide, while weak commodity prices continue to weigh on emerging markets. Our mid-term outlook for equities is broadly unchanged, with the low oil price is positive for business profitability. Over the longer term, we believe that businesses that are globally competitive and possess genuine pricing power should prosper. Any further market volatility will provide opportunities for us to add to our preferred holdings. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions.

11 ETHICAL FUND (CONTINUED) Ongoing charges figure A Accumulation B Accumulation G Accumulation X Accumulation The Ongoing Charges Figure (OCF) is the total expenses paid by each share class in the period, annualised, against its average net asset value. It excludes the cost of buying or selling assets for the Fund (unless these assets are shares of another fund). The OCF can fluctuate as underlying costs change. Details of investments Investments Industrials Consumer Services Financials Consumer Goods Technology Utilities Basic Materials Health Care Telecommunications Oil & Gas Net other assets Total net assets Net asset value NAV per NAV per NAV share share percentage change (p) (p) % A Accumulation (2.99) B Accumulation (2.87) G Accumulation (3.00) X Accumulation (2.26) Performance record 01/03/15 01/03/14 01/03/13 29/02/12 01/03/11 01/03/10 to to to to to to 28/02/14 28/02/13 28/02/12 28/02/11 Ethical Fund A Accumulation (3.76 ) (0.86 ) (10.19 ) Source: Lipper for Ethical Fund. Basis: Net revenue reinvested and net of expenses. Past performance is not a reliable indicator of future results. The value of an investment and any revenue from it is not guaranteed and can go down as well as up depending on investment performance and currency exchange rates. Top five holdings 1. AVEVA 3.91 Prudential Compass 3.84 Sage Prudential 3.78 Compass Sage 3.48 Pearson HSBC 3.41 Standard Chartered 3.64 Number of holdings: 36 Number of holdings: 75 Please note: negative figures are shown in brackets. 9

12 FUND PROFILE Fund objectives and investment policy This Fund aims to give either an income, while having regard to the capital value, or growth (when income is kept within the Fund). To do so by investing primarily in UK Government and other fixed interest securities. Investors should aim to hold their investment in this Fund for the medium to long-term (at least five to ten years). Any income received by the Fund in respect of accumulation shares is retained in the Fund and has the effect of increasing the share price. Any income received by the Fund in respect of Income shares will be paid out to you. The Fund is allowed to use derivatives (contracts which have a value linked to the price of another asset) for the following reasons: To help reduce risk; To help reduce cost; and To help generate extra capital or income for the Fund with an acceptably low level of risk. We calculate the value of this Fund at 8am daily on working days in the UK. Our dealing times are from 9am to 5pm each working day. Instructions received before 5pm will receive the next day s price. Synthetic risk and reward profile There are several different ways of measuring risk. The table below uses an industry standard measure of fund risk based on measuring a fund s volatility using its returns over the past five years. Volatility is generated by both rising and falling prices. Volatility doesn t tell you how much a fund has lost or gained; it indicates how volatile its returns were historically. The Fund s ranking may change over time and may not be a reliable indication of its future risk profile. This is a separate measure to Scottish Widows Investment Approaches (where we use our own methodology to take an overall look at funds risks and aims and categorise our funds as Secure, Cautious, Balanced, Progressive, Adventurous or Specialist). You can read more about them at www. scottishwidows.co.uk/investmentapproaches Typically lower rewards, lower risk GILT FUND Typically higher rewards, higher risk This Fund is ranked at 4* because it has experienced medium levels of volatility over the past 5 years. *As disclosed in the key investor information document dated 25 June INVESTMENT ADVISER S REVIEW UK government bonds have exhibited a fair degree of volatility in the six months to 31 August. On the one hand, the market was buffeted by worries over economic growth and geopolitical problems. All of these factors served to heighten risk aversion, encouraging a flight to the perceived safety and quality of the Gilt market. Against that, however, bouts of optimism over economic growth, a rise in inflation expectations and the increasing likelihood of UK interest rate rises all acted to depress Gilt prices and raise yields. The portfolio began the review period with a long duration. While this was taken back to neutral in April, we reverted to long duration in May. In terms of asset allocation we were underweight Gilts versus German and Australian bonds throughout the review period. In terms of stock selection we were overweight 30-year Gilts versus five- and 10-year Gilt, expecting longer maturity bonds to outperform. That position was closed during June. We sold our positions in Ireland, Italy and Spain in mid-june as uncertainty over Greece increased dramatically. Our long overall duration position was beneficial as yields fell. Against that, off-benchmark holdings in overseas government bonds generally cost the Fund as they tended to underperform their sterling equivalents, particularly over the latter part of the review period. Our short- to medium-term view is bullish when it comes to core markets and we have expressed this via a long duration position in German Bunds. We have an overall preference for Bunds and have also maintained our cross-market position into Australia. The portfolio is also positioned to take account of our view that long-dated issues could underperform given upcoming supply events. This relates to uncertainty surrounding the potential changes to the Debt Management Office remit following the UK Budget. Looking ahead, investment prospects remain favourable, given positive survey measures and strong corporate finances, but fiscal consolidation will continue to drag on growth. Overall, we expect the economy to expand by 2.6% this year and 2.8% next. With headline inflation likely to average only 0.3% this year, rising to 1.7% next, the Bank of England looks set to raise rates gradually from the first quarter of Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. 10

13 GILT FUND (CONTINUED) Distribution XD dates Payment dates 31/05/15 31/07/15 31/08/15 31/10/15 Ongoing charges figure A Accumulation A Income B Income G Accumulation G Income W Accumulation (Gross) The Ongoing Charges Figure (OCF) is the total expenses paid by each share class in the period, annualised, against its average net asset value. It excludes the cost of buying or selling assets for the Fund (unless these assets are shares of another fund). The OCF can fluctuate as underlying costs change. Details of investments Investments Sterling Denominated Bonds Euro Denominated Bonds Australian Dollar Denominated Bonds Mexican Peso Denominated Bonds Derivatives Net other assets Total net assets Net asset value NAV per NAV per NAV share share percentage change (p) (p) % A Accumulation (1.07) A Income (1.36) B Income (1.36) G Accumulation (1.06) G Income (1.33) W Accumulation (Gross) (0.50) Distribution First Second interim interim 31/05/15 31/08/15 (p) (p) A Accumulation A Income B Income G Accumulation G Income W Accumulation (Gross) Performance record 01/03/15 01/03/14 01/03/13 29/02/12 01/03/11 01/03/10 to to to to to to 28/02/14 28/02/13 28/02/12 28/02/11 Gilt Fund A Accumulation (0.84) (2.37) UK Gilt Sector Average Return (1.54) Source: Lipper for Gilt Fund and UK Gilt Sector Average Return (funds which invest at least 95% of their assets in Sterling denominated (or hedged back to Sterling) government backed securities, with a rating the same or higher than that of the UK, with at least 80% invested in UK government securities (Gilts)). Basis: Net revenue reinvested and net of expenses. Past performance is not a reliable indicator of future results. The value of an investment and any revenue from it is not guaranteed and can go down as well as up depending on investment performance and currency exchange rates. Major holdings 1. UK Treasury UK Treasury % 22/01/ % 07/09/ UK Treasury UK Treasury % 22/07/ % 22/07/ UK Treasury 8.08 UK Treasury % 22/07/ % 22/01/ UK Treasury 7.77 UK Treasury % 07/06/ % 07/09/ UK Treasury 7.14 UK Treasury % 22/01/ % 22/07/ UK Treasury 5.49 UK Treasury % 07/12/2040 2% 22/01/ UK Treasury 5.34 UK Treasury % 07/09/ % 07/09/ UK Treasury % 07/12/2040 Number of holdings: 51 Number of holdings: 65 Please note: negative figures are shown in brackets. Summary of portfolio by credit ratings Rating block Investment grade (AAA to BBB-) Total bonds Other Total net assets The credit ratings used in the above table have been supplied by Standard & Poor s, Moody s or Fitch Ratings. 11

14 FUND PROFILE Fund objectives and investment policy This Fund aims to give either an income or growth (when income is kept within the Fund). To do so by investing predominantly in corporate bonds and other fixed interest securities issued by companies and governments operating in the USA, the UK and Europe. The majority of the Fund will be in non-investment grade bonds with a higher than average risk. Non-investment grade bonds have not been awarded the minimum rating required to meet the investment grade rating. Therefore they are considered higher risk than bonds with a higher credit rating. Credit ratings indicate the likelihood that an issuer will be able to make their payments. Investors should aim to hold their investment in this Fund for the medium to long-term (at least five to ten years). Any income received by the Fund in respect of accumulation shares is retained in the Fund and has the effect of increasing the share price. Any income received by the Fund in respect of Income shares will be paid out to you. The Fund is allowed to use derivatives (contracts which have a value linked to the price of another asset) for the following reasons: To help reduce risk; To help reduce cost; To help generate extra capital or income for the Fund with an acceptably low level of risk; and To help manage the effect of fluctuations in exchange rates with Sterling. We calculate the value of this Fund at 2pm daily on working days in the UK and the USA. Instructions received before 12pm will receive the price calculated on that day. Instructions received after 12pm will receive the price calculated on the next working day. Synthetic risk and reward profile There are several different ways of measuring risk. The table below uses an industry standard measure of fund risk based on measuring a fund s volatility using its returns over the past five years. Volatility is generated by both rising and falling prices. Volatility doesn t tell you how much a fund has lost or gained; it indicates how volatile its returns were historically. The Fund s ranking may change over time and may not be a reliable indication of its future risk profile. This is a separate measure to Scottish Widows Investment Approaches (where we use our own methodology to take an overall look at funds risks and aims and categorise our funds as Secure, Cautious, Balanced, Progressive, Adventurous or Specialist). You can read more about them at www. scottishwidows.co.uk/investmentapproaches Typically lower rewards, lower risk HIGH INCOME BOND FUND Typically higher rewards, higher risk This Fund is ranked at 3* because it has experienced low to medium levels of volatility over the past 5 years. *As disclosed in the key investor information document dated 25 June INVESTMENT ADVISER S REVIEW Returns from US high yield were broadly negative for much of the review period a reflection of geopolitical and economic uncertainty (primary focus on the Chinese slowdown and effects on commodity markets), as well as the impact from a continued unhealthy global oil supply/demand situation on the influential energy sector. In March, CCC and lower-rated corporate bonds underperformed significantly. The coal sector was very weak, while the metals and mining and energy (to a lesser extent) sectors added to the underperformance. In contrast, the food and beverage sector outperformed, boosted by a large rally in Heinz bonds following the company s proposed mega merger with Kraft Foods. In contrast, high yield delivered positive returns in April and May. This was driven by a recovery in the energy sector, resulting specifically from a rebound in benchmark oil prices. Asset class returns were also boosted by a series of weaker-than-expected macroeconomic reports, cementing an extension in the low for longer interest rate environment backdrop. May was the first monthly period of 2015 where returns were not dominated by oil price swings, with the asset class less volatile than other sub-sectors of the fixed income universe. From a credit quality perspective, higher quality B and BB rated bonds performed better. Improving economic conditions in the US raised expectations for the Federal Reserve s first interest rate hike, with yields across fixed income rising during April through June. This delivered an overlay headwind to high yield, further dragging down a total returns profile that was already hampered by the aforementioned global macro growth and commodity price level headwinds. In July, global high yield as an asset class delivered a slightly negative monthly return, completely driven by the commodityheavy sectors of energy and metals & mining. Practically all other sectors generated positive return, notably led by the wireless, health-care and pharmaceutical sectors. Finally, in August, returns further deteriorated as a result of intensifying China economic slowdown concerns as well as emerging market economies more broadly and the cumulative effect (lowered demand) on commodity markets. This produced materially weakened investor confidence and increased investment outflows from the US high yield asset class. In recent years, a significant proportion of US high yield issuance has come from energy exploration and production companies, many of whom had been hit hard by the 2015 yearto-date collapse in benchmark crude oil prices. Accordingly, the Fund has deployed a conservative position across energy throughout this review period. Specifically, during this period, the Fund has sustained a -200bps area underweight position across the energy sector compared to the global high yield benchmark. 12

15 HIGH INCOME BOND FUND (CONTINUED) INVESTMENT ADVISER S REVIEW (CONTINUED) For the review period, the High Income Bond Fund struggled due to the aforementioned global macroeconomic headwinds, delivering a -3.31% all-in return for the period. Nevertheless, the Fund s active decision to underweight the metals & mining and energy sectors delivered sector allocation benefits. Furthermore, the Fund s active decision to possess overweight sector allocations to the telecom wireless, chemicals and media/entertainment industries were beneficial. In terms of stock selection, strong individual performance was generated from Lukoil (energy), Kratos (aerospace), Carrizo Oil & Gas (energy) and McGraw Hill. Negative credit selections included Verso (paper), Alpha Natural Resources (metals & mining) and Cenveo (media-entertainment). Looking ahead through the remainder of 2015 and much of 2016, the energy sector is expected to remain price volatile due to a sustained supply demand imbalance tilted to overabundant global supply. Nevertheless, energy sector high yield bonds are already priced to reflect much of this risk, offering certain potentially favourable total return based upon historical precedent. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Distribution XD dates Payment dates 31/03/15 15/05/15 30/04/15 15/06/15 31/05/15 15/07/15 30/06/15 15/08/15 31/07/15 15/09/15 31/08/15 15/10/15 Ongoing charges figure A Accumulation A Income X Accumulation The Ongoing Charges Figure (OCF) is the total expenses paid by each share class in the period, annualised, against its average net asset value. It excludes the cost of buying or selling assets for the Fund (unless these assets are shares of another fund). The OCF can fluctuate as underlying costs change. Details of investments Investments US Dollar Denominated Bonds Sterling Denominated Bonds Euro Denominated Bonds United States Equities Derivatives (1.31) 2.20 Net other assets Total net assets Net asset value NAV per NAV per NAV share share percentage change (p) (p) % A Accumulation (3.34) A Income (5.58) X Accumulation (2.66) Summary of portfolio by credit ratings Rating block Investment grade (AAA to BBB-) Non-Investment grade (BB+ to C) Unrated Total bonds Other Total net assets The credit ratings used in the above table have been supplied by Standard & Poor s, Moody s or Fitch Ratings. 13

16 HIGH INCOME BOND FUND (CONTINUED) Performance record 01/03/15 01/03/14 01/03/13 29/02/12 01/03/11 01/03/10 to to to to to to 28/02/14 28/02/13 28/02/12 28/02/11 High Income Bond Fund A Accumulation (3.31) (0.54) High Yield Sector Average Return (1.29) Source: Lipper for High Income Bond Fund and High Yield Sector Average Return (funds which invest at least 80% of their assets in Sterling denominated (or hedged back to Sterling) fixed interest securities and at least 50% of their assets in below BBB minus fixed interest securities (as measured by Standard & Poor s or an equivalent external rating agency), including convertibles, preference shares and permanent interest bearing shares (PIBs)). Basis: Net revenue reinvested and net of expenses. Past performance is not a reliable indicator of future results. The value of an investment and any revenue from it is not guaranteed and can go down as well as up depending on investment performance and currency exchange rates. Top five holdings 1. Cenveo 6% 1.28 iheartcommunications /08/ % 01/03/ Blue Racer Finance 1.16 Intelsat % 15/11/2022 Luxembourg 7.75% 01/06/ OneMain Financial 1.16 Numericable % 15/12/2021 6% 15/05/ First Data 1.16 Avanti % 15/08/2023 Communications 10% 01/10/ Momentive 1.05 Icahn 1.13 Performance Materials Enterprises Finance 3.88% 24/10/ % 01/02/2022 Number of holdings: 268 Number of holdings: 306 Please note: negative figures are shown in brackets. Distribution First Second Third Fourth Fifth Sixth interim interim interim interim interim interim 31/03/15 30/04/15 31/05/15 30/06/15 31/07/15 31/08/15 (p) (p) (p) (p) (p) (p) A Accumulation A Income X Accumulation

17 FUND PROFILE Fund objectives and investment policy This Fund aims to give an income, and the potential for longterm capital growth, by investing mainly in shares and fixed interest securities in the UK, including Gilts and corporate bonds. The Fund may also invest in Europe. Investors should aim to hold their investment in this Fund for the medium to long-term (at least five to ten years). Any income received by the Fund in respect of accumulation shares is retained in the Fund and has the effect of increasing the share price. Any income received by the Fund in respect of Income shares will be paid out to you. The Fund is allowed to use derivatives (contracts which have a value linked to the price of another asset) for the following reasons: To help reduce risk; To help reduce cost; and To help generate extra capital or income for the Fund with an acceptably low level of risk. We calculate the value of this Fund at 8am daily on working days in the UK. Our dealing times are from 9am to 5pm each working day. Instructions received before 5pm will receive the next day s price. Synthetic risk and reward profile There are several different ways of measuring risk. The table below uses an industry standard measure of fund risk based on measuring a fund s volatility using its returns over the past five years. Volatility is generated by both rising and falling prices. Volatility doesn t tell you how much a fund has lost or gained; it indicates how volatile its returns were historically. The Fund s ranking may change over time and may not be a reliable indication of its future risk profile. This is a separate measure to Scottish Widows Investment Approaches (where we use our own methodology to take an overall look at funds risks and aims and categorise our funds as Secure, Cautious, Balanced, Progressive, Adventurous or Specialist). You can read more about them at Typically lower rewards, lower risk HIGH RESERVE FUND Typically higher rewards, higher risk This Fund is ranked at 5* because it has experienced medium to high levels of volatility over the past 5 years. *As disclosed in the key investor information document dated 25 June INVESTMENT ADVISER S REVIEW Looking first at equities, the UK stock market fell during the review period, underperforming many global markets. Investor sentiment was initially buoyed by a resounding yet unexpected Conservative victory at the polls. Also whetting investors appetite for risk were positive economic data, an improving corporate earnings outlook, and news of further economic stimulus measures in Europe and Japan. However, overshadowing these positive factors was China s unexpected decision to devalue its currency towards the end of the reporting period, which triggered a global sell-off. Investor sentiment had already been fragile, based on worries that the slowing Chinese economy would hurt global growth prospects. There has also been lingering uncertainty over the timing of the US Federal Reserve s impending interest rate hike. This sell-off took most global equity markets into negative territory for the reporting period. Meanwhile, corporate bonds weakened early in March after the European Central Bank (ECB) commenced purchases of government bonds. This was a result of widening yield spreads that is, the failure of corporate bond yields to keep up with the rapid fall in government yields. From April onwards, bond markets were volatile. Part of this move could be explained by commodity price moves and oil in particular, which moved higher and partly by investor positioning (long positions having been built up by fixed income investors in anticipation of Eurozone QE). In May and June, government bond yields continued to mover higher a continuation of the aforementioned unwinding of long investor positioning. Meanwhile, investment grade markets in Europe lost ground, largely due to uncertainty caused by an escalation of concerns over Greek debt negotiations. August was a poor month for investment grade corporate bonds, with yield spreads widening sharply as the market digested concerns over China and the impact of slowing economic growth on global gross domestic product and commodity prices. Both the corporate bond and UK equity portions of the portfolio lost ground over the period. Within corporate bonds, we held a relatively large number of high yields bonds, which added value for most of the review period, as this asset class continued to attract new flows of investment. Bonds issued by banks and insurers were among our other key positions, and these were generally positive for performance. Positions in Royal Bank of Scotland and Lloyds Banking Group added significant value, although holdings in the technology, telecoms and utilities sectors detracted from performance. Within the equity portfolio, the Fund benefited from its holding in Persimmon. The house-building company released a positive trading update in July, based on continued strength in the UK housing market. Conversely, mining company BHP Billiton had a negative influence on returns over the six months. The share price was driven down over the period in response to the slump in commodity prices. Overall, we believe the portfolio s current blend of corporate bonds and equities leaves the Fund well placed to participate in any further market gains, while providing investors with the required level of income. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions.

18 HIGH RESERVE FUND (CONTINUED) Distribution XD dates Payment dates 31/05/15 31/07/15 31/08/15 31/10/15 Ongoing charges figure A Accumulation A Income The Ongoing Charges Figure (OCF) is the total expenses paid by each share class in the period, annualised, against its average net asset value. It excludes the cost of buying or selling assets for the Fund (unless these assets are shares of another fund). The OCF can fluctuate as underlying costs change. Details of investments Investments Corporate Bonds Financials Consumer Goods Consumer Services Health Care Oil & Gas Industrials Basic Materials Telecommunications Utilities Technology Asset- Backed Securities Mortgage-Backed Securities Government Bonds Derivatives (0.02) 0.04 Net other assets Total net assets Net asset value NAV per NAV per NAV share share percentage change (p) (p) % A Accumulation (6.26) A Income (8.44) Performance record 01/03/15 01/03/14 01/03/13 29/02/12 01/03/11 01/03/10 to to to to to to 28/02/14 28/02/13 28/02/12 28/02/11 High Reserve Fund A Accumulation (6.84) (0.57) UK Equity & Bond Income Sector Average Return (3.84) Source: Lipper for High Reserve Fund and UK Equity & Bond Income Sector Average Return (funds which invest at least 80% of their assets in the UK, between 20% and 80% in UK fixed interest securities and between 20% and 80% in UK equities. These funds aim to have a yield in excess of 120% of the FTSE All-Share Index). Basis: Net revenue reinvested and net of expenses. Past performance is not a reliable indicator of future results. The value of an investment and any revenue from it is not guaranteed and can go down as well as up depending on investment performance and currency exchange rates. Top five holdings 1. Royal Dutch Shell B 4.16 Royal Dutch Shell B GlaxoSmithKline 4.02 GlaxoSmithKline HSBC 3.86 HSBC AstraZeneca 3.30 BP British American 2.86 AstraZeneca 3.09 Tobacco Number of holdings: 254 Number of holdings: 249 Summary of portfolio by credit ratings Rating block Investment grade (AAA to BBB-) Non-Investment grade (BB+ to C) Total bonds Other Total net assets The credit ratings used in the above table have been supplied by Standard & Poor s, Moody s or Fitch Ratings. Distribution First Second interim interim 31/05/15 31/08/15 (p) (p) A Accumulation A Income Please note: negative figures are shown in brackets. 16

19 FUND PROFILE Fund objectives and investment policy This Fund aims to give long-term capital growth, normally by investing primarily in share of companies included in the Financial Times Stock Exchange 100 Index (FTSE 100 Index). The Fund may move away from the policy of being primarily invested in shares when market conditions indicate that a better return is expected to be achieved by being invested in cash, near cash and/or deposits and with or without options. To give a level of protection against major stock market falls through the use of a Safety Price. By Safety Price we mean the lowest possible selling price which is guaranteed not to fall for a period of time, the Safety Period, normally 12 months. The Safety Price is set at 95% of the share price at the start of each Safety Period. Important Notes If the share price of class A shares rises 10% above the share price at the start of the Safety Period, we will raise the Safety Price and start a new Safety Period. You can check the up-to-date Safety Price and end date for the Safety Period on our website at Investors should aim to hold their investment in this Fund for the medium to long-term (at least five to ten years). Any income received by the Fund is retained in the Fund and has the effect of increasing the share price. The Fund is allowed to use derivatives (contracts which have a value linked to the price of another asset) for the following reasons: To help reduce risk; To help reduce cost; To help generate extra capital or income for the Fund with an acceptably low level of risk. To help manage the effect of fluctuations in exchange rates with Sterling. We calculate the value of this Fund at 8am daily on working days in the UK. Our dealing times are from 9am to 5pm each working day. Instructions received before 5pm will receive the next day s price. Synthetic risk and reward profile There are several different ways of measuring risk. The table below uses an industry standard measure of fund risk based on measuring a fund s volatility using its returns over the past five years. Volatility is generated by both rising and falling prices. Volatility doesn t tell you how much a fund has lost or gained; it indicates how volatile its returns were historically. The Fund s ranking may change over time and may not be a reliable indication of its future risk profile. This is a separate measure to Scottish Widows Investment Approaches (where we use our own methodology to take an overall look at funds risks and aims and categorise our funds as Secure, Cautious, Balanced, Progressive, Adventurous or Specialist). You can read more about them www. scottishwidows.co.uk/investmentapproaches SAFETYPLUS FUND Typically lower rewards, lower risk Typically higher rewards, higher risk This Fund is ranked at 3* because it has experienced low to medium levels of volatility over the past 5 years. *As disclosed in the key investor information document dated 25 June INVESTMENT ADVISER S REVIEW UK equities fell during the review period, despite the market benchmark having reached several all-time highs. Sentiment was initially buoyed by a resounding yet unexpected Conservative victory at the polls. Whetting risk appetites were positive economic data, an improving corporate earnings outlook, and news of further stimulus in China and Japan. The start of the European Central Bank s larger-than-expected quantitative easing programme and news of Greece s third bailout also offered support to share prices. Overshadowing all this was China s unexpected yuan devaluation towards the period-end, which had triggered a global sell-off. Investor confidence had already been fragile on worries that the slowing Chinese economy would hurt global growth prospects, as well as on lingering uncertainty over the timing of the US Federal Reserve s impending interest rate hike. Compounding these market jitters was Greek prime minister Alexis Tsipras decision to hold snap elections. In more recent economic news, the British manufacturing sector showed an improvement in July but questions remain over its sustainability. Retail sales were buoyed in August by more upbeat consumer confidence. However, the services sector slowed by more than expected, while construction activity eased. The unemployment rate also deteriorated in the second quarter, in tandem with slowing wage growth. At the end of August, 98.78% of the fund was invested in cash investments (net of other liabilities), while 1.22% was invested in call options. In the current climate, the cash and call strategy remains the most efficient way of meeting the fund s aim due to the prohibitive cost of protection via derivatives. A large proportion of the portfolio continues to be invested in cash-like investments, these provide the protection required but will significantly limit the extent of FTSE 100 exposure. The safety price for A-class shares was The domestic economy should continue to perform strongly, driven by consumption and business investment. By contrast, the external outlook is challenging; after a one-off boost in the second quarter, net trade is set to become a drag on growth again. With the monetary policy committee split three ways, the outlook for interest rates is very uncertain. The first rise could come next February, but the risks of delay perhaps until May have risen. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. 17

20 SAFETYPLUS FUND (CONTINUED) Ongoing charges figure A Accumulation X Accumulation The Ongoing Charges Figure (OCF) is the total expenses paid by each share class in the period, annualised, against its average net asset value. It excludes the cost of buying or selling assets for the Fund (unless these assets are shares of another fund). The OCF can fluctuate as underlying costs change. Details of investments Investments Short Term Deposit Options Contracts Net other liabilities (0.19) (5.60) Total net assets Net asset value NAV per NAV per NAV share share percentage change (p) (p) % A Accumulation (4.39) X Accumulation (4.08) Performance record 01/03/15 01/03/14 01/03/13 29/02/12 01/03/11 01/03/10 to to to to to to 28/02/14 28/02/13 28/02/12 28/02/11 SafetyPlus Fund A Accumulation (4.39) (3.91) (3.91) 4.67 Protected Sector Average Return (4.09) (3.57) 4.27 Source: Lipper for SafetyPlus Fund and Protected Sector Average Return (funds, other than money market funds, which principally aim to provide a return of a set amount of capital back to the investor (either explicitly protected or via an investment strategy highly likely to achieve this objective) plus the potential for some investment return). Basis: Net revenue reinvested and net of expenses. Past performance is not a reliable indicator of future results. The value of an investment and any revenue from it is not guaranteed and can go down as well as up depending on investment performance and currency exchange rates. Portfolio holdings 1. Sumitomo Mitsui 5.70 Sumitomo Mitsui 5.16 Trust Bank Trust Bank 0.43% 0.45% 01/09/ /03/ Standard Chartered 5.35 Credit Agricole % 03/12/ % 09/03/ DZ Bank 5.35 Macquarie Bank % 18/09/ % 14/05/ Skandinaviska 5.35 National Bank of 4.64 Enskilda Banken Abu Dhabi 0.55% 08/09/ % 20/04/ Bank Of Nova Scotia 4.76 Bank of Montreal % 12/10/ % 08/04/ Nationwide 4.75 Credit Industriel 4.64 Building Society 0.51% 16/03/ % 07/10/ Mizuho Corporate 4.75 Bank of Nova Scotia 4.64 Bank 0.48% 17/09/ % 07/04/ Citibank 4.75 Standard Chartered % 03/11/ % 08/05/ DNB 4.75 Sumitomo Mitsui % 28/10/2015 Banking 0.52% 30/03/ ING Bank 4.75 BNP Paribas % 11/11/ % 28/04/ National Bank Of 4.75 Bank of Tokyo 4.64 Abu Dhabi 0.59% Mitsubishi 0.53% 20/10/ /05/ Sumitomo Mitsui 4.75 DZ Bank 0.51% 4.64 Banking 0.01% 18/05/ /11/ Bank Of 4.75 Mizuho Corporate 4.64 Tokyo-Mitsubishi Bank 0.01% 0.57% 18/11/ /04/ Natixis 0.63% 4.75 ING Bank /10/ % 11/05/ HSBC France 4.75 Citibank 0.54% % 06/11/ /05/ Macquarie Bank 4.75 Natixis % 16/11/ % 01/04/ Nordea Bank 4.16 Landesbank Hessen % 14/09/2015 Thüringen 0.51% 03/03/ Credit Agricole 4.16 HSBC Bank 1% % 09/09/ /04/ Credit Industriel 3.57 Nordea Bank % 01/10/2015 Finland 0.53% 12/03/ Svenska Handelsbanken 2.97 Svenska Handelsbanken % 03/09/ % 03/03/ Sumitomo Trust 2.97 Sumitomo Trust 2.58 & Banking 0.50% & Banking 0.54% 07/09/ /03/ Landesbank Hessen Sumitomo Trust 2.58 Thüringen 0.54% & Banking 0.48% 30/10/ /04/ Svenska Handelsbanken % 03/06/ Svenska Handelsbanken % 07/04/ Credit Suisse % 17/03/ Natixis % 02/03/2015 Number of holdings: 29 Number of holdings: 28 Please note: negative figures are shown in brackets. 18