Fund descriptions, their charges and risk warnings

Transcription

1 Fund descriptions, their charges and risk warnings This document was produced in March 2015 and is accurate at that date. When reviewing your fund choices you should refer to up-to-date information, available online at or by calling the helpdesk on To help you choose your investment fund(s) we have detailed the full fund descriptions, their charges and their associated risk warnings in this document. The are ordered by risk rating, then alphabetical order. Please see the table on the next page for more information on risk ratings. You can choose more than one fund to invest in, up to a maximum of 10. You can switch your existing from one fund choice to another, or redirect future contributions into different fund choices, whenever you choose. In certain circumstances we may delay this switching. Please read your Choosing your investment brochure for further information and guidance on fund selection. The value of an investment is not guaranteed and can go up and down. You could get back less than you have paid in. If you feel you would like advice, you can pay for financial advice from a financial adviser. If you don t have an adviser, you can contact the following organisations: Unbiased: Institute of Financial Planning: or at GOV.UK provides impartial UK Government information on pensions at workplace-personal-pensions

2 Approaches to investment risk Friends Life calculates its risk ratings using historical performance data, based upon the methods set by European Union rules. We also carry out further research using information from the fund s investment manager(s). We review each fund s risk rating annually and these may change over time. The timing of your investment decisions is very important and you should consult a financial adviser. Past performance is not a guarantee of future performance. Our risk ratings go from 1 to 7, with 1 being the lowest and 7 the highest. As a point of reference, a fund with a risk rating of 4 (medium ) would typically experience the you would expect from a fund invested in a range of different (for example shares, and ) without any bias to a particular investment type. Remember that all investment carry some element of risk but this varies from fund to fund. Risk rating 7 Highest 6 High 5 Medium to high 3 Low to medium 2 Low 1 Lowest Risk rating description The historical performance of with this risk rating has typically experienced the highest of all the Friends Life has rated. This means that these have the highest potential for substantial changes in value compared with other Friends Life. The historical performance of with this risk rating has typically experienced high compared with other Friends Life has rated. This means that these have a high potential for substantial changes in value compared with other Friends Life. The historical performance of with this risk rating has typically experienced medium to high compared with other Friends Life has rated. This means that these have a medium to high potential for substantial changes in value compared with other Friends Life. The historical performance of with this risk rating has typically experienced medium compared with other Friends Life has rated. This means that these have a medium potential for substantial changes in value compared with other Friends Life. The historical performance of with this risk rating has typically experienced low to medium compared with other Friends Life has rated. This means that these have a low to medium potential for substantial changes in value compared with other Friends Life. The historical performance of with this risk rating has typically experienced low compared with other Friends Life has rated. This means that these have a low potential for substantial changes in value compared with other Friends Life. The historical performance of with this risk rating has typically experienced the lowest of all the Friends Life has rated. This means that these have the lowest potential for substantial changes in value compared with other Friends Life. Please note These investment risk ratings are based on our interpretation of investment risk and are only meant as a guide. These of investment risk are not guaranteed and may change in the future. The colours in this table may be different to those used online, however, the ratings and approach to investment risk remain the same. 2

3 Fund risk warnings There are associated with investing in, or types of. In this document we show which risk warning or warnings apply to each fund. These are all explained below. Please note that not all of these warnings apply to each fund and there is no direct relationship between the number of fund risk warnings and the investment risk rating for each fund shown on the previous page. Risk warning code A B C D E F G Risk warning description Investment is not guaranteed: The value of an investment is not guaranteed and can go down as well as up. You could get back less than you have paid in. Price: At times, the way a fund s price is calculated may need to change to ensure that those moving into and out of the fund and existing unitholders/shareholders are treated fairly and are not disadvantaged by any large cash flows. Suspend trading: Fund managers have the ability, in certain circumstances, to suspend trading in their for as long as necessary. When this occurs we will need to delay the cashing in or switching of units in the relevant fund. You may not be able to access your money during this period. The circumstances in which we may delay a switch, withdrawal or transfer can include but are not limited to the following: If a large number of customers want to take money out of the same fund at the same time. If there are practical problems selling the assets in which a fund is invested. If the fund (or part of it) is managed by an external company, they may insist on a delay. Stock lending: Where a fund is involved in the temporary transfer of securities, there is a risk that the borrower may not be able to return the security to its owner. This may have a negative effect on the performance of the fund. Derivatives: Most can invest in derivatives for the purpose of efficient portfolio management or risk reduction. For that also use derivatives for investment purposes, we apply an additional risk warning due to the possible increase in the risk and of the fund. Currency risk: Where a fund invests in share classes or securities priced in currencies other than the fund s base currency, changes in exchange rates can contribute to the value of the investment going up or down. Emerging : Where a fund invests in emerging, it is likely to be more volatile than one that invests in developed. These may not be as strictly regulated and securities may be harder to buy and sell than those in more developed. These may also be politically unstable, which can result in the fund carrying more risk. Smaller : Where a fund invests in the shares of smaller, these shares can be more volatile and may be harder to buy and sell than larger company shares, which can result in the fund carrying more risk. Fixed : Where a fund invests in fixed securities, such as corporate or government, changes in rates can contribute to the value of the investment going up or down. If rates rise, the value is likely to fall. Bonds with a lower credit rating are known as sub-investment grade or junk. These carry an increased risk that the issuer of the bond will be unable to continue the payments or return the capital at maturity. Specialist: Where a fund invests only in a specific or limited range of industry sectors, it may carry more risk than that invest across a broader range or variety of sectors. These can be more volatile and carry higher risk due to their lack of diversification. Derivatives: Where a fund uses derivatives for investment purposes, there may be an increase in the risk and of the fund. Some derivative also expose investors to counterparty or default risk where another party is unable to meets its obligations and pay what is due. This could result in the loss of the value of the derivative itself. 3

4 Risk warning code H I J K L M N O Risk warning description Cash/Money market : These are not cash deposit accounts but invest in money market instruments and short-term and can fall in value. In a low rate environment, the charges applied to a cash fund may be greater than its return, so you could get back less than you have paid in. Physical : Where a fund directly invests in physical, these properties are not easy to buy or sell. In exceptional circumstances, we may need to delay the cashing in or switching of units in the fund and you may not be able to access your money during this period. The value of properties held is generally a matter of the valuer s opinion rather than fact. Index-: Where a fund invests in index-, changes in inflation rates can contribute to the value of the investment going up or down. If inflation falls, the value is likely to fall. High cash : Due to the way some are managed there may be periods when they have large cash holdings. This can be a deliberate asset allocation decision or while suitable investment opportunities are researched and selected. A fund s growth potential may be less during this period. Reinsured : Where a fund invests in an underlying fund operated by another insurance company through a reinsurance agreement, if the other insurance company were to become insolvent, you could lose some or all of the value of your investment in this fund. Ethical: Where a fund invests only in sectors and securities that meet its agreed ethical criteria, it may carry more risk than which are free from these restrictions. The ethical invested in can be involved in new and innovative technologies or new and can therefore have a higher risk profile than organisations involved in more mainstream activities. Alternative : Where a fund invests in alternatives, it may carry more risk, as these instruments are generally priced less regularly and may be harder to buy and sell than in more conventional asset classes. Alternatives include commodities, hedge, private equity, Convertible : Where a fund invests in convertible, it will experience the associated with holding until conversion, at which point it will experience the associated with holding equities. To compensate for having additional value through the option to convert from a bond to an equity, a convertible bond typically has a coupon rate lower than that of a similar, non-convertible bond. 4

5 Fund charges The you can choose from To help you get a better understanding of the available to choose from, we have outlined some high-level details below. Please take note of the following points before reading the table: The annual management charge (AMC) that applies to your is based on regular contributions. If the AMC of your chosen fund changes, we will notify you. The level of annual management charge (AMC) is taken from each fund over the lifetime of your account. This charge covers expenses such as administration costs and investment charges and may change over time. The AMC is made up of two parts: a scheme annual management charge which is taken out of the value of your pension plan over its lifetime to cover administration costs and investment charges and may change over time. Please refer to your scheme information for details of the scheme annual management charge. for certain, an annual fund manager charge applied by fund managers for managing the fund. The charge varies according to the you invest in. The extra AMC is shown in the fund tables on pages 6 to 8. The additional expenses charge is shown as a fixed percentage, but this will normally vary from day to day. The percentage shown is to give you an indication of the additional expenses that may be incurred by a particular fund, but you should be aware that on any given day it may be slightly more or less than this percentage. Please note there may be circumstances when the fund managers decide to increase the level of AMC. If this happens, you can switch to another fund with an AMC at or below the previous level at no extra cost. We may even choose to close the fund concerned, but please be assured that whatever action we take, we will write to you to inform you and explain the choices you have at the time. Important Information Please also take note of the following points before reading the table: The risk rating is an indication of how volatile the fund is likely to be, and how much the value of the fund may vary from day to day. We have also included the appropriate fund type alongside each fund. These are explained in the Choosing your investment brochure. 5

6 Funds Fund 7 Highest Fund type Extra AMC Additional expenses FL BlackRock Emerging Markets Equity (Aquila C) Index 0.18% 0.06% FL JPM Life All-Emerging Markets Equity Actively managed 0.85% 0.00% FL JPM Natural Resources Actively managed 0.75% 0.18% 6 High FL Baillie Gifford Japanese Equity Pension Actively managed 0.45% 0.05% FL BlackRock European Equity Index (Aquila C) Index 0.00% 0.00% FL BlackRock Japanese Equity Index (Aquila C) Index 0.00% 0.00% FL BlackRock Pacific Rim Equity Index (Aquila C) Index 0.00% 0.00% FL BlackRock UK Smaller Companies Actively managed 0.75% 0.17% FL First State Asia Pacific Leaders Actively managed 0.75% 0.04% FL Lazard European Alpha Actively managed 0.35% 0.08% FL Legal & General (PMC) Global Real Estate Equity Index Index 0.35% 0.00% FL Old Mutual UK Mid Cap Actively managed 0.70% 0.18% FL Schroder Tokyo Actively managed 0.75% 0.17% FL UK Smaller Companies Actively managed 0.00% 0.00% FL Aberdeen World Equity Actively managed 0.75% 0.15% FL Adventurous Index Fund of Funds Fund of 0.00% 0.01% FL Artemis UK Special Situations Actively managed 0.75% 0.05% FL Baillie Gifford International Actively managed 0.20% 0.04% FL Baillie Gifford North American Equity Pension Actively managed 0.45% 0.00% FL Baillie Gifford UK Equity Core Pension Actively managed 0.30% 0.00% FL BlackRock (40:60) Global Equity Index (Aquila C) Index 0.00% 0.00% FL BlackRock (50:50) Global Equity Index (Aquila C) Index 0.00% 0.00% FL BlackRock UK Equity Actively managed 0.20% 0.02% FL BlackRock UK Equity Index (Aquila C) Index 0.00% 0.00% FL BlackRock UK Special Situations Actively managed 0.75% 0.17% FL BlackRock US Equity Index (Aquila C) Index 0.00% 0.00% FL BlackRock World ex UK Equity Index (Aquila C) Index 0.00% 0.00% FL BNY Mellon Long-Term Global Equity Actively managed 0.63% 0.06% FL Global Equity Actively managed 0.00% 0.00% FL Global Equity Fund of Funds Fund of 0.30% 0.05% FL HSBC Amanah Global Equity Index Index 0.30% 0.00% FL Invesco Perpetual High Income Actively managed 0.75% 0.19% FL Lazard Multicap UK Income Actively managed 0.30% 0.06% FL Legal & General (PMC) Ethical UK Equity Index Index 0.20% 0.00% FL M&G American Actively managed 0.75% 0.17% 6

7 Fund FL MFS Meridian Global Equity Actively managed 0.70% 0.15% FL Newton Global Equity Actively managed 0.35% 0.12% FL Newton Higher Income Actively managed 0.45% 0.04% FL Newton UK Equity Actively managed 0.20% 0.11% FL Schroder European Opportunities Actively managed 0.75% 0.10% FL Stewardship Actively managed 0.00% 0.00% FL Stewardship Income Actively managed 0.00% 0.00% FL Stewardship International Actively managed 0.00% 0.00% FL UK Equity Actively managed 0.00% 0.00% FL Baillie Gifford Managed Actively managed 0.20% 0.06% FL Balanced Fund of Funds Fund of 0.30% 0.04% FL Balanced Index Enhanced Fund of Funds Fund of 0.00% 0.02% FL BlackRock Consensus (Aquila C) Index 0.00% 0.00% FL BlackRock DC Diversified Growth Actively managed 0.65% 0.12% FL BlackRock Market Advantage Strategy Actively managed 0.20% 0.03% FL BlackRock Over 15 Year Corporate Bond Index (Aquila C) Index 0.00% 0.00% FL BlackRock Overseas Bond Index (Aquila C) Index 0.00% 0.00% FL Cautious Managed Actively managed 0.00% 0.00% FL Investec Cautious Managed Actively managed 0.75% 0.10% FL Kames High Yield Bond Actively managed 0.55% 0.05% FL Newton Multi-Asset Balanced Fund Actively managed 0.20% 0.11% FL Newton Real Return Actively managed 0.75% 0.04% FL Property Actively managed 0.00% 0.00% FL Schroder Life Intermediated Diversified Growth Actively managed 0.65% 0.05% FL Standard Life Global Absolute Return Strategies Actively managed 0.75% 0.09% FL Stewardship Managed Actively managed 0.00% 0.00% 3 Low to medium Fund type FL Artemis Strategic Bond Actively managed 0.50% 0.08% FL BlackRock Over 15 Year Gilt Index (Aquila C) Index 0.00% 0.00% FL BlackRock Over 5 Year Index-Linked Gilt Index (Aquila C) Index 0.00% 0.00% FL Cautious Fund of Funds Fund of 0.30% 0.04% FL Cautious Index Fund of Funds Fund of 0.00% 0.02% FL Defensive Index Fund of Funds Fund of 0.00% 0.01% FL F&C Ethical Bond Actively managed 0.25% 0.04% FL Fidelity Moneybuilder Income Actively managed 0.40% 0.19% FL Fixed Interest Actively managed 0.00% 0.00% FL Invesco Perpetual Corporate Bond Actively managed 0.50% 0.18% Extra AMC Additional expenses 7

8 Fund FL Investec Strategic Bond Actively managed 0.55% 0.11% FL Kames Sterling Corporate Bond Actively managed 0.30% 0.07% FL Kames Strategic Bond Actively managed 0.40% 0.06% FL M&G Feeder of Property Actively managed 0.65% 0.16% FL M&G Optimal Income Actively managed 0.63% 0.16% FL Pre-retirement Fixed Interest Actively managed 0.00% 0.00% 1 Lowest FL BlackRock Institutional Sterling Liquidity Actively managed 0.00% 0.00% FL Cash Actively managed 0.00% 0.00% With-profits Fund type FL FP With Profits Fund With-profits 0.00% 0.00% Extra AMC Additional expenses 8

9 Funds FL BlackRock Emerging Markets Equity (Aquila C) 7 Highest BlackRock state that the fund's objective is to achieve a return that is consistent with the return of the MSCI Emerging Markets Index. Risk warnings A, B, C, D, L FL BlackRock Japanese Equity Index 6 High (Aquila C) BlackRock state that the fund invests in the shares of Japanese and aims to achieve a return that is consistent with the return of the FTSE All World Japan Index. Risk warnings A, B, D, L FL JPM Life All-Emerging Markets Equity 7 Highest JP Morgan state that the fund is a pooled life fund investing primarily in emerging equities, either directly or through other. Under normal circumstances, the fund is fully invested with cash holdings kept to a minimum. Normally the fund only invests in the JPM Emerging Markets Fund, a UK authorised open-ended investment company. Risk warnings A, B, C, D, E, L FL JPM Natural Resources 7 Highest JP Morgan state that the fund aims to provide capital growth over the long term. The fund invests primarily in the shares of throughout the world engaged in the production and marketing of commodities. The fund will have exposure to smaller and may invest in emerging. Other instruments permitted include, but are not limited to, fixed securities, cash and cash equivalents. Risk warnings A, B, C, D, E, F, N FL Baillie Gifford Japanese Equity 6 High Pension Baillie Gifford state that the fund gains exposure to Japanese equities by investing in the Baillie Gifford Japanese Fund, a collective investment scheme managed by Baillie Gifford & Co Limited which aims to achieve capital growth through investment in Japan in any economic sector, but with the ability also to invest up to (but no more than) 10% in value of the fund in collective investment schemes and deposits. Risk warnings A, B, D, L FL BlackRock European Equity Index 6 High (Aquila C) BlackRock state that the fund invests in the shares of in Europe and aims to achieve a return that is consistent with the return of the FTSE All World Developed Europe ex UK Index. Risk warnings A, B, D, L FL BlackRock Pacific Rim Equity 6 High Index (Aquila C) BlackRock state that the fund invests in the shares of in the Pacific Rim and aims to achieve a return that is consistent with the return of the FTSE All World Developed Asia Pacific ex Japan Index. Risk warnings A, B, D, L FL BlackRock UK Smaller Companies 6 High BlackRock state that the fund aims to achieve long-term capital growth. The fund invests primarily in the equity securities of smaller incorporated, or listed on a stock exchange, in the UK which the manager considers to have above average growth prospects. Smaller are those whose market capitalisations are similar to that of in the Numis Smaller Companies + AIM ex Investment Trusts Index at the time of the fund s investment. The fund has the flexibility to invest outside of the asset class set out above. The manager has discretion to select the fund's. Risk warnings A, D FL First State Asia Pacific Leaders 6 High First State state that the fund aims to achieve long-term capital growth. The fund invests in shares of based in or having significant operations in the Asia Pacific region including Australia and New Zealand excluding Japan. The fund invests in shares of large and mid-sized in the region. These generally have a total stock market value of at least US$1 billion. The manager may use their discretion when deciding which should be held by the fund. Risk warnings A, B, C, D market 9

10 FL Lazard European Alpha 6 High Lazard state that the fund aims to achieve long-term capital growth by investing in shares of Continental European. The fund has discretion as to the shares it holds. The fund invests in shares of the largest in Continental Europe. The manager favours with attractive economic conditions and competitive value. The fund invests in shares of with good management structures and attractive financial data, and which sell for low prices relative to the financial strength of the (i.e. are undervalued) and can be readily bought and sold in the. Risk warnings A, B, C, D, E FL Legal & General (PMC) Global 6 High Real Estate Equity Index Legal & General state that the fund aims to track the Sterling total return (less withholding tax) of the FTSE EPRA/NAREIT Global Real Estate Index. This index captures the performance of a wide range of listed real estate and real estate investment trusts (REITs). The fund invests in the shares of listed real estate. These are primarily involved in the ownership, development or disposal of income producing assets. Risk warnings A, B, C, D, E, F, N FL Old Mutual UK Mid Cap 6 High Old Mutual state that the objective of the fund is to provide capital growth from investing primarily in a portfolio of medium sized UK. Medium sized are defined for this purpose as those that are members of the FTSE Mid 250 Index. The fund may also invest in transferable securities, units in collective investment schemes, warrants, money market instruments, deposits and derivatives. Risk warnings A, B, D FL Schroder Tokyo 6 High Schroders state that the fund s objective is to achieve capital appreciation through participation in the growth of the Japanese economy. Investment will be based primarily on Japan s economic strengths and on sectors benefiting from structural change in the economy. These opportunities are likely to be found across a broad range of industries. Investment will be in directly held transferable securities. The fund may also invest in collective investment schemes, warrants and money market instruments. The fund may also invest in other financial instruments and hold cash on deposit. Risk warnings A, B, D FL UK Smaller Companies 6 High The fund's objective is to provide capital growth. The manager seeks to achieve this by investing mainly in equities of UK smaller. This will normally mean that the UK's largest by market capitalisation are excluded from the fund. A proportion of the assets may comprise convertible stocks and other permitted investment vehicles which are to UK smaller. Risk warnings A, B, D FL Aberdeen World Equity Aberdeen state that the objective of the fund is to generate a combination of income and capital growth by investing in around the world. Risk warnings A, B, C, D FL Adventurous Index Fund of Funds This fund aims to achieve long-term capital growth by investing mainly in equity index tracking of multiple regions (including emerging ). A small proportion of the fund can also be invested in fixed index tracking, cash and other money market instruments. Assets held by fixed index tracking can include UK and overseas corporate and government. Risk warnings A, B, C, D, E, L FL Artemis UK Special Situations Artemis state that the objective of the fund is to achieve long-term capital growth by exploiting special situations. The fund will principally invest in the shares of which have headquarters in the UK, or carry out a significant part of their activities in the UK and are quoted on a regulated stock market outside the UK. The fund may also invest in the shares of listed, quoted and/or traded in the UK but domiciled elsewhere. The fund has discretion in its choice of and is not restricted by the size of the company or the industry it trades in. It may also invest in derivatives to meet its investment objective, to protect the value of the fund, reduce costs and/or generate additional income. Risk warnings A, B, C, D, G FL Baillie Gifford International Baillie Gifford state that the fund aims to achieve capital growth. The policy is to invest mainly in shares of worldwide excluding the UK. Risk warnings A, B, C, D market 10

11 FL Baillie Gifford North American Equity Pension Baillie Gifford state that the fund objective is to invest in any economic sector in the USA and Canada using a diversified approach across sectors and size categories with the aim of achieving capital growth. Risk warnings A, B, D, L FL Baillie Gifford UK Equity Core Pension Baillie Gifford state that the fund's aim is to achieve above average total returns by investing in UK equities. The manager may invest in transferable securities, money market instruments, deposits, units in collective investment schemes, derivative instruments and forward transactions with the aim of spreading investment risk. Risk warnings A, D, L FL BlackRock (40:60) Global Equity Index (Aquila C) BlackRock state that the fund invests primarily in equities in both the UK and overseas. The fund has approximately 40% invested in the shares of UK. The remaining 60% is invested in overseas. The fund aims to provide returns consistent with the in which it invests and provides broad exposure to countries around the world. Risk warnings A, B, C, D, L FL BlackRock (50:50) Global Equity Index (Aquila C) BlackRock state that the fund invests primarily in equities in both the UK and overseas. The fund has approximately 50% invested in the shares of UK. The remaining 50% is invested in overseas. The fund aims to provide returns consistent with the in which it invests and provides broad exposure to countries around the world. Risk warnings A, B, C, D, L FL BlackRock UK Equity BlackRock state that the fund aims to maximise the return through a combination of capital growth and income generation on the fund s assets. The fund will largely invest in the equity securities of UK. The fund may invest in all economic sectors within the UK. The manager has discretion to select the fund's. Risk warnings A, B, D FL BlackRock UK Equity Index (Aquila C) BlackRock state that the fund invests in the shares of UK and aims to achieve a return that is consistent with the return of the FTSE All-Share Index. Risk warnings A, D, L FL BlackRock UK Special Situations BlackRock state that the fund aims to achieve long-term capital growth. The fund invests primarily in the equity securities of incorporated or listed in the UK and will normally have an emphasis on small and medium sized. Small and medium sized are those whose market capitalisation is lower than that of the in the FTSE 100 Index. The fund has the flexibility to invest outside of the asset class set out above. The manager has discretion to select the fund's. Risk warnings A, D FL BlackRock US Equity Index (Aquila C) BlackRock state that the fund invests in the shares of US and aims to achieve a return that is consistent with the return of the FTSE All World USA Index. Risk warnings A, B, D, L FL BlackRock World ex UK Equity Index (Aquila C) BlackRock state that the fund aims to achieve returns in line with global equity, excluding the UK. Within each of those, the fund aims to generate returns consistent with those of each country s primary share market. The fund aims to achieve a return in line with the FTSE All World Developed ex UK Index. Risk warnings A, B, C, D, L FL BNY Mellon Long-Term Global Equity BNY Mellon state that the objective of the fund is to achieve long-term capital appreciation through in predominantly equity securities of located throughout the world. The fund will invest anywhere in the world, invest in company shares and similar and have complete freedom to invest without reference to any benchmark or index. The fund may also invest in emerging. Risk warnings A, B, C, D market 11

12 FL Global Equity The fund aims to achieve capital growth, with some income generation, by investing mainly in listed global equities. The fund may also invest in other equities, warrants, convertibles, derivatives, money market instruments and short-term. The fund may invest directly or indirectly. Risk warnings A, B, C, D, E, O FL Global Equity Fund of Funds This fund aims to achieve capital growth. It invests in a diversified portfolio of actively and/or passively managed underlying which invest in equities of any region, including emerging. These can also invest in fixed securities, derivatives and cash. Risk warnings A, B, C, D, E, G, L, O FL HSBC Amanah Global Equity Index HSBC state that the fund's objective is to grow money in line with the performance of the 100 largest global engaged in Shariah compliant activities. The fund adopts a passive equity investment strategy that mirrors and tracks the Dow Jones Islamic Market Titans 100 Index. The Islamic Market Titans Index consists of Shariah compliant that have been endorsed by the Dow Jones Shariah Supervisory Committee. There is a rigorous investment process to ensure adherence to Shariah principles, which HSBC Amanah s Central Shariah Committee closely monitors. The committee has approved investment in listed whose activities do not contravene the tenets of Islam and where any non Shariah compliant revenue that might be earned is purified. Risk warnings A, B, C, F, L, M FL Invesco Perpetual High Income Invesco Perpetual state that the objective of the fund is to generate a high level of income together with capital growth. The fund invests primarily in shares of UK but may include some international. In pursuing this objective, the manager may include that they consider appropriate which include transferable securities, money market instruments, warrants, collective investment schemes, deposits and other permitted and transactions. The fund is actively managed within its objectives and is not constrained by a benchmark. Risk warnings A, B, C, D, N FL Lazard Multicap UK Income Lazard state that the fund aims to achieve capital growth by investing in shares of UK. The fund has discretion as to the UK company shares it can hold. The fund invests mainly in shares of large UK which pay above average dividends or whose dividends are expected to grow at a faster than average rate. The fund may also invest in smaller UK which have been identified by the manager as having the potential to provide superior returns. Risk warnings A, B, D, E, O FL Legal & General (PMC) Ethical UK Equity Index Legal & General state that the fund aims to track the Sterling total return of the FTSE4Good UK Equity Index (including reinvested income, less withholding tax) to within +/- 0.5% per annum for two years in three. Risk warnings A, B, D, F, I, L, M, N FL M&G American M&G state that the fund s objective is long-term capital growth through investment wholly or mainly in securities of North American (including Canadian) issuers. When not wholly invested as above, it may only invest in which are listed, registered or trading within North America. Risk warnings A, B, D FL MFS Meridian Global Equity MFS state that the fund s objective is capital appreciation. The fund invests primarily in equity securities of located in developed and emerging market countries. The fund may invest in it believes to have above average earnings growth potential compared to other (growth ), in it believes are undervalued compared to their perceived worth (value ), or in a combination of growth and value. The fund generally focuses its in larger, but may invest in of any size. The fund may use derivatives for investment purposes and efficient portfolio management or risk reduction. Risk warnings A, B, C, D, G market 12

13 FL Newton Global Equity Newton, (a BNY Mellon company), state that the objective of the fund is to achieve capital growth from a portfolio of international securities. The fund may invest anywhere in the world, including in emerging, in of all sizes and within any industry. The fund will limit investment in other mutual to 10%. Risk warnings A, B, C, D FL Newton Higher Income Newton, (a BNY Mellon company), state that the objective of the fund is to generate increasing income with long-term capital growth. The fund will invest predominantly in the shares of UK of all sizes and within any industry. The manager seeks to invest in company shares targeting higher than average dividends and with good prospects for growth. The fund may invest up to 20% in securities from outside the UK. The fund will typically invest in fewer than 70 securities and limit investment in other mutual to 10%. Risk warnings A, B, D FL Newton UK Equity Newton, (a BNY Mellon company), state that the objective of the fund is a total return comprised of long-term capital growth and income generation by investing in shares and similar of listed or located in the UK. The fund may invest in of all sizes and within any industry. The fund may invest up to 20% in securities from outside the UK. The fund will typically invest in fewer than 70 securities and limit investment in other mutual to 10%. Risk warnings A, B, D FL Schroder European Opportunities Schroders state that the fund aims to achieve long-term growth by investing in a wide range of large and medium sized across all European countries (excluding the UK) and in all economic sectors. It will invest flexibly between these countries. The fund aims to maximise the overall rate of return with capital growth as the primary goal. The manager seeks to invest in a diversified list of. Industry groups exhibiting above average growth prospects, strong financial characteristics and proven management are emphasised. A stock selection process seeks to balance value and growth without imposing restrictions upon the size of market capitalisation. Additional diversification is provided by a flexible country allocation strategy. Risk warnings A, B, C, D FL Stewardship The fund aims to provide exposure to an ethically screened portfolio of assets in order to produce capital growth. The fund will mainly be invested in UK equities. The ethical screening criteria of the fund will mean that its are more restricted than a non-ethical fund. The fund may also invest in other equities, warrants, convertibles, money market instruments and short-term. Risk warnings A, B, D, F, M, O FL Stewardship Income The objective of the fund is to generate income with the prospect of capital growth. The manager seeks to achieve this by investing mainly in an ethically screened and diversified spread of UK equities. The ethical screening applied to the fund means that a number of the UK's largest are screened out on ethical grounds. As a result, the fund will usually include significant exposure to medium and smaller. The manager may also invest in other such as corporate and derivatives. Investment is concentrated in UK whose products and operations are considered to be of long-term benefit to the community both at home and abroad, and will generally exclude those considered to be involved with harmful products and practices or which trade extensively with oppressive regimes. Risk warnings A, D, E, F, M FL Stewardship International The fund's objective is to provide capital growth. The manager seeks to achieve this by investing mainly in an ethically screened and diversified spread of global equities. The ethical screening applied to the fund means that a number of the largest are screened out on ethical grounds. The fund does not normally hedge currency exposure. Investment is concentrated in in any market whose products and operations are considered to be making a positive contribution to society and seeks to avoid which, on balance, are felt to be harming the world, its people, or its wildlife. Risk warnings A, B, C, D, E, F, M FL UK Equity The fund aims to achieve capital growth by mainly investing in UK listed equities. The fund may also invest in other equities, warrants, convertibles, derivatives, money market instruments and short-term. Risk warnings A, B, D, O market 13

14 FL Baillie Gifford Managed Baillie Gifford state that the fund aims to achieve above average returns, mainly through capital growth, over the long term. The policy is to invest in large, medium and smaller sized in any economic sector worldwide, either directly or indirectly. Investment will mainly be in shares of, and other. Investment may also be in other transferable securities and money market instruments. Derivatives may be used to protect or increase the value of the fund. Risk warnings A, B, C, D, E, G FL Balanced Fund of Funds This fund aims to provide returns in excess of inflation. It invests in a diversified portfolio of actively and/or passively managed underlying with between 40% and 85% invested in equities of any region, including emerging. The remainder is invested in that can invest in any type of fixed securities (including index-), and -related securities, derivatives and cash. Risk warnings A, B, C, D, E, G, I, J, L, N, O FL Balanced Index Enhanced Fund of Funds This fund aims for long-term growth by investing in which invest in all the main asset classes, including, but not limited to, equities, fixed securities (including index-), and -related securities, derivatives and cash. It can invest in any geographic region including emerging. The fund is made up of a number of other with the aim to invest at least 70% in passively managed index tracker which perform in a similar way to the index they track. The remainder is invested in actively managed and other instruments. Risk warnings A, B, C, D, E, G, I, J, L, N, O FL BlackRock Consensus (Aquila C) BlackRock state that the fund provides a low-cost alternative to traditional balanced fund management. It aims to produce consistent investment performance in line with the average UK pension fund and to avoid any violent swings between the upper and lower ends of the pension fund performance league tables. Risk warnings A, B, C, D, E, J, L FL BlackRock DC Diversified Growth BlackRock state that the fund utilises a multi-asset flexible investment approach. This means that the fund will generally hold a variety of different types of assets at any one time. The fund may use derivatives for investment purposes. Risk warnings A, B, C, D, E, G, K, L, N FL BlackRock Market Advantage Strategy BlackRock state that the objective of the fund is to provide a total return, which reflects the total return of worldwide equities. This objective will be effected through strategic exposure to multiple asset classes. The policy is to gain exposure to equities, fixed-income securities, and commodities globally. The fund will invest in derivatives, collective investment schemes, equity and fixed income securities. The fund may also invest in deposits, cash and money market instruments, and may include sub-investment grade securities. The fund may also invest up to 100% of its value in collective investment schemes. The fund may invest more than 20% of its value in emerging. The fund may also invest in derivatives for investment purposes and/or efficient portfolio management. Risk warnings A, B, C, D, E, G, J, N FL BlackRock Over 15 Year Corporate Bond Index (Aquila C) BlackRock state that the fund invests in investment grade corporate denominated in Sterling. The fund aims to achieve a return consistent with the Markit iboxx Non-Gilts Over 15 Years Index. This index consists of with maturity periods of 15 years or longer. Risk warnings A, E, L FL BlackRock Overseas Bond Index (Aquila C) BlackRock state that the fund invests in fixed securities issued by foreign national governments. The fund aims to achieve a return consistent with JPMorgan GBI Global ex UK Index. Risk warnings A, B, E, L market 14

15 FL Cautious Managed The fund aims to provide exposure to a diversified portfolio of assets in order to generate capital growth and income. The fund may invest in equities, warrants,, convertibles, money market instruments, short-term, commodities, private equity, hedge and direct. The fund may invest directly or indirectly. Risk warnings A, B, C, D, E, I, J, N, O FL Investec Cautious Managed Investec state that the fund aims to generate a combination of income and long-term capital growth by investing conservatively in a diversified portfolio of equities, and other fixed securities. At all times the fund s equity exposure will be limited to a maximum of 60% of the fund value. Bonds held may be corporate or government and of any duration and may be investment grade or sub investment grade. Up to 5% of the fund may be invested in units or shares in other collective investment schemes. The fund may also invest, at the manager's discretion, in other transferable securities. Use may be made of stock lending and borrowing. Risk warnings A, B, D, E, J, N FL Kames High Yield Bond Kames Capital state that the fund's objective is to maximise total return. The fund invests predominately in high yield, selected investment grade and cash. The fund may hold Sterling and other currency denominated hedged back to Sterling. The fund may also invest in deposits, money market instruments, derivative instruments and forward transactions. Derivatives and forward transactions will be used for the purposes of efficient portfolio management (including hedging) and to meet the investment objectives of the fund. Risk warnings A, B, C, E, G FL Newton Multi-Asset Balanced Fund Newton, (a BNY Mellon company), state that the objective of the fund is to achieve a balance between capital growth and income generation predominantly from a portfolio of UK and international securities. The manager adopts a mixed portfolio approach comprising company shares (and similar equity ) and (and similar debt ). The manager may invest anywhere in the world, with a bias towards the UK. The fund may also invest in derivative instruments, forward transactions and collective investment schemes. Investment in derivatives may be for investment purposes as well as for efficient portfolio management. Risk warnings A, B, C, D, E, G FL Newton Real Return Newton, (a BNY Mellon company), state that the objective of the fund is to achieve significant real rates of return in Sterling terms predominantly from a portfolio of UK and international securities. The fund may invest anywhere in the world into a mixture of cash, equities, corporate and government fixed securities (of any duration or credit rating), deposits, money market instruments, derivatives, forward transactions and collective investment schemes. The manager follows a broad multi-asset approach and emphasises real return. The fund may use derivatives for investment purposes as well as for efficient portfolio management or risk reduction. Risk warnings A, B, C, D, E, G, J, K, N, O FL Property The fund aims to generate capital growth and income by investing mainly in UK commercial. The fund may also invest in UK listed equities, including real estate investment trusts, shares issued by that own, develop or manage direct and index certificates. The fund may also invest in money market instruments, short-term, derivatives and in other direct. Risk warnings A, F, I, N market 15

16 FL Schroder Life Intermediated Diversified Growth Schroders state that the fund supports goals where there is a desire to grow assets to a similar extent to equities, but with reduced. The fund can invest in a broad array of asset classes, equities, and a range of diversifiers. The fund may also invest in a wide range of including transferable securities, derivatives, cash, deposits, collective investment schemes, warrants and money market instruments. Derivatives may be used for investment purposes. Risk warnings A, B, C, D, E, G, L, N, O FL Standard Life Global Absolute Return Strategies Standard Life state that the objective of the fund is to deliver a positive absolute return in the form of capital growth over the medium to longer term in all market conditions. The current policy of the fund is to invest in permitted derivative contracts (including futures, options, swaps, forward currency contracts and other derivatives), transferable and fixed securities, cash and other collective investment schemes. The fund may use derivatives to meet its objective and for efficient portfolio management. Risk warnings A, B, C, D, E, G, J, K, N, O FL Stewardship Managed The fund aims to provide exposure to a diversified portfolio of ethically screened assets in order to generate capital growth and income. The ethical screening criteria of the fund will mean that its are more restricted than a non-ethical fund. The fund may invest in UK and international equities, warrants,, convertibles, money market instruments and short-term. The fund may invest directly or indirectly. Risk warnings A, B, C, D, E, F, M, N, O FL Artemis Strategic Bond 3 Low to medium Artemis state that the fund seeks to achieve a total return by investing predominantly in fixed income. The fund may selectively invest in other. Equal emphasis is given to the security of capital and income although from time to time one may take prominence over the other in accordance with the strategy being pursued. The fund will principally invest in UK fixed- securities with the aim of achieving a total return. The fund has discretion in its choice of and is not restricted by the size of the company or the industry it trades in. The fund can also invest in other fixed securities and preference shares. The fund may seek to profit from short positions in assets. It may also invest in derivatives to meet its investment objective, to protect the value of the fund, reduce costs and/or generate additional income. Risk warnings A, B, C, D, E, G FL BlackRock Over 15 Year Gilt Index (Aquila C) 3 Low to medium BlackRock state that the fund invests in UK Government fixed income securities (gilts) that have a maturity period of 15 years or longer. The fund aims to achieve a return consistent with the FTSE UK Gilts Over 15 Years Index, which is widely regarded as the benchmark for UK pension fund investment in the longer dated end of the UK gilt market. Risk warnings A, E, L FL BlackRock Over 5 Year Index-Linked Gilt Index (Aquila C) 3 Low to medium BlackRock state that the fund invests in UK Government index- fixed income securities that have a maturity period of 5 years or longer. The fund aims to achieve a return consistent with the FTSE UK Index-Linked Gilts Over 5 Years Index, which is widely regarded as the benchmark for UK pension fund investment in the longer dated end of the UK index- gilt market. Risk warnings A, E, J, L FL Cautious Fund of Funds 3 Low to medium This fund aims to provide returns in excess of inflation while providing stability and diversification of risk. It invests in a diversified portfolio of actively and/or passively managed underlying with between 20% and 60% invested in equities of any region, including emerging. The remainder is invested in that can invest in any type of fixed securities (including index-), and -related securities, derivatives and cash. Risk warnings A, B, C, D, E, G, I, J, L, N, O market 16

17 FL Cautious Index Fund of Funds 3 Low to medium This fund aims to provide returns in excess of inflation while providing stability and diversification of risk. It invests between 20% and 60% in equity index tracking of multiple regions (including emerging ), with the remainder invested in fixed index tracking, cash and other money market instruments. Assets held by fixed index tracking can include UK and overseas corporate and government. Risk warnings A, B, C, D, E, L FL Defensive Index Fund of Funds 3 Low to medium This fund aims to reduce the risk of capital loss by investing mainly in fixed index tracking, cash and other money market instruments. Up to 35% of the fund can also be invested in equity index tracking of multiple regions (including emerging ). Assets held by fixed index tracking can include UK and overseas corporate and government. Risk warnings A, B, C, D, E, K, L FL F&C Ethical Bond 3 Low to medium F&C state that the fund's objective is to maximise returns through investment primarily in fixed securities of an ethically screened and diversified universe of. The fund will invest in investment grade and high yield securities. Government securities are generally excluded. The fund may also invest in warrants, collective investment schemes, money market instruments and derivatives. Non-Sterling denominated issues are permitted and any currency exposure will normally be hedged back to Sterling. To manage risk the fund will aim to achieve a wide degree of diversification across the available issuers and the manager will adopt a rigorous credit management process. Derivatives may be used to hedge investment risk, replicate investment positions and generate additional return in a risk controlled manner. This will include the use of currency forwards, rate swaps and single name credit default swaps. Risk warnings A, B, C, D, E, F, G, M FL Fidelity Moneybuilder Income 3 Low to medium Fidelity state that the fund aims to generate an attractive level of income. The fund invests primarily in Sterling denominated (or hedged back to Sterling). The fund has the freedom to invest outside the fund's principal geographies, market sectors, industries or asset classes. Investments may be made in issued in currencies other than the fund s denominated currency. Exposure to currencies may be hedged. The fund can invest in issued by governments, and other bodies. The fund has discretion in its choices of within its objectives and policies. Risk warnings A, B, C, E, J FL Fixed Interest 3 Low to medium The fund aims to achieve long-term growth from a combination of income generation and capital growth. The fund invests mainly in UK Government securities and other Sterling denominated fixed and index- securities. Non-Sterling may also be held with any foreign currency exposure typically hedged back to Sterling. The fund can also invest in money market instruments and short-term. Risk warnings A, B, E, J, O FL Invesco Perpetual Corporate Bond 3 Low to medium Invesco Perpetual state that the objective of the fund is to generate a combination of income and capital growth over the medium to long term. The fund seeks to achieve its objective by investing primarily in investment grade corporate debt securities. The fund may also invest in government, unrated and sub-investment grade debt securities, cash, cash equivalents, money market instruments, collective investment schemes and other transferable securities. Derivative instruments can be used for investment purposes and for efficient portfolio management. They may include derivatives on currencies, rates and credit, and can be used to achieve both long and short positions. Risk warnings A, B, E, G market 17

18 FL Investec Strategic Bond 3 Low to medium Investec state that the fund aims to generate an income primarily through investment in high quality (investment grade ). Bonds held may be corporate or government and of any duration and may be investment grade or sub investment grade. The fund may, in addition to its other investment powers, use cash and near cash (which includes money market instruments and deposits) and exchange traded and over the counter derivatives and forward currency contracts for hedging and investment purposes. The fund may also invest, at the manager's discretion, in other transferable securities. Use may be made of stock lending and borrowing. Derivatives may be used for the purposes of efficient portfolio management and meeting the investment objectives. Risk warnings A, B, C, E, G, J FL M&G Feeder of Property 3 Low to medium M&G state that the aim of the fund is to maximise long-term total return (the combination of income generation and growth of capital) solely through investment in the M&G Property Portfolio. The M&G Property Portfolio invests in a diversified portfolio of commercial mainly in the UK, seeking to add value through strategic asset allocation, stock selection and asset management. The M&G Property Portfolio may also invest in other related assets, including collective investment schemes, transferable securities, derivatives and debt instruments as well as government debt, money market instruments and cash. Derivatives may be used for investment purposes as well as for efficient portfolio management. Risk warnings A, B, E, F, G, I, K FL Kames Sterling Corporate Bond 3 Low to medium Kames Capital state that the fund's objective is to maximise total return. The fund invests mainly in Sterling denominated. This encompasses investment grade corporate, government and cash. Up to 10% of the fund may be invested in high yield. The fund may also invest in deposits, money market instruments, derivative instruments and forward transactions. Derivatives and forward transactions will be used for the purposes of efficient portfolio management (including hedging) and to meet the investment objectives of the fund. Risk warnings A, E, G FL Kames Strategic Bond 3 Low to medium Kames Capital state that the fund's objective is to maximise total return. The fund invests in global debt instruments denominated in any currency, ranging from AAA government through to high yield and emerging market corporate. At least 80% of the fund will be invested in Sterling and other currency denominated hedged back to Sterling. The fund may also invest in deposits, money market instruments, derivative instruments and forward transactions. Derivatives may be used for the purposes of efficient portfolio management (including hedging) and to meet the investment objectives of the fund. Risk warnings A, B, C, E, G, J, K FL M&G Optimal Income 3 Low to medium M&G state that the aim of the fund is to generate a total return based on exposure to optimal income streams in investment through strategic asset allocation and specific stock selection. The fund will be at least 50% invested in debt instruments, but may also invest in other assets including collective investment schemes, money market instruments, cash, near cash, deposits, equities and derivatives. Derivative instruments may be used for both investment purposes and efficient portfolio management. Risk warnings A, B, C, D, E, G FL Pre-retirement Fixed Interest 3 Low to medium The fund aims to achieve long-term growth from a combination of income generation and capital growth. The fund invests mainly in UK Government and UK Government backed index- securities and Sterling denominated overseas government backed index- securities. The fund may also invest in other Sterling denominated fixed securities and non-sterling with any foreign currency exposure typically hedged back to Sterling. The fund can also invest in money market instruments and short-term. Risk warnings A, E, J, O market 18

19 FL BlackRock Institutional Sterling Liquidity 1 Lowest BlackRock state that the fund aims to maximise the income generated on investment consistent with maintaining capital and ensuring its underlying assets can easily be bought or sold in the market in normal market conditions. It will do this by maintaining a portfolio of high quality short term money market instruments. The fund invests in a broad range of fixed income securities and money market instruments. It may also invest in deposits with credit institutions. Risk warnings A, E, H FL Cash 1 Lowest The fund aims to provide short-term liquidity by investing in money market instruments, and cash. It may invest in short-term issued or backed by the UK Government or supranational agencies as well as commercial paper, cash and near cash assets such as deposits and certificates of deposit. Risk warnings A, E, H FL FP With Profits Fund With-profits The Friends Life FP With Profits Fund aims for longer-term growth by investing in a broad and diverse mix of securities. The unit price increases in line with the rate of regular bonus we declare. This rate is reviewed at least once a year and may go down or up at any time. We show the bonus series and the current rate of unit price increase in your personal illustration. After a year s continuous investment in the fund, we may pay a final bonus when we cash in units to provide benefits on death, at retirement, if there is a transfer to another approved arrangement or if you switch all your out of the fund. The performance of the FL FP With Profits Fund depends on the investment profits and losses the fund makes and on the decisions we take about their distribution. We don t guarantee future bonuses. Please see Cost of guarantees and Market Value Reduction below. Before investing, it s important you read our With-Profits Summary. If you haven t received this, please contact us now. The summary explains the main points about with-profits, our current approach to managing the FL FP With Profits Fund and deciding on bonus, and the factors that can influence the value of your investment. Cost of guarantees We may set aside some of the underlying investment value each year. This is to help cover the cost of the guarantees we provide to you and other with-profits policyholders (we explain the guarantees we provide to you under the 'Market Value Reduction' heading). It has the same effect as reducing the investment return each year on the fund. We regularly review the amount we need to set aside and it can go up or down. If we don t need all of the amount set aside, we ll use it to improve returns. If your personal illustration shows some or all of your contributions invested in the FL FP With Profits Fund, the illustrations of future benefits allow for this. The With-Profits Summary Supplementary Information page on our website at shows how much we re currently setting aside. Market Value Reduction In certain circumstances, such as periods of stock market, we may need to apply a Market Value Reduction (MVR) if you cash in or switch your units out of the fund. This is because we also have to safeguard the s of the remaining policyholders in the fund. By applying an MVR we are in effect lowering the unit price to ensure that it more accurately reflects the value of the fund s underlying. We guarantee we won t apply this reduction at your original selected retirement date or on death. market 19

20 At Friends Life we want you to feel confident about your financial future, ready to face life s challenges and take its opportunities too. We know that everyone has their own individual outlook so, wherever we can, we use our knowledge and experience to offer products, services and options that suit your particular needs. And we aim to make it as easy as possible for you to deal with us. For our complete range of products and services visit Friends Life and Pensions Limited An incorporated company limited by shares and registered in England and Wales, number Registered office: Pixham End, Dorking, Surrey RH4 1QA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Telephone calls may be recorded. Friends Life is a registered trade mark of the Friends Life group. MPEN6/N FD v2.11 Nov 2014