a choice of funds to make your pension work harder axa ... · step 1: your investment journey to...

INVESTOR PENSION FUNDS GUIDEA choice of funds to make your pension work harderAXA: your partner in pensions

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http://www.pensionsnetwork.com

AXA PROFILE

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AXA helps people get the best out of life

Across the world:

■ We have 50 million customers worldwide

■ We manage more than £546 billion for them (as at 31.12.2003)

AXA is a people business. Our 130,000-strong team helps providefinancial solutions for customers at every stage of life. 30,000 of themalso give time and skills to local community projects.

We are a large, strong organisation with a human face.

Information correct as at 31 December 2003


Investor Pension Funds USING THIS GUIDE

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Using the Investor pension funds guideWhat it is for and why it is important

Step Section What’s important in here? Page

1 Your investment journey The three different ways 4you can invest with AXA.

2 Your attitude to risk It explains risk in terms of your 8pension plan. It is important to understand that we define risk as the risk to your capital before charges have been made.

3 Our risk categories and Make sure you understand how 9risk grades we grade each fund.

4 Our Investor 43 different funds across 9 levels 10pension funds of risk.

Their aims, who manages them and what they cost.

This guide describes the investment funds available for AXA’s Investor range ofpension products.

Your financial adviser can help if things are not clear.

A little extra help

Investing can often be a complex and confusing area when it comes to theterminology used.

So you may like to refer to the glossary at the back of the brochure, whichexplains some of the investment jargon in plain English. You will find it on page 22.

How the guide works: four simple steps


Step 1: Your investment journey to retirement

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We want to make life easier for you

A journey - like a good story - has abeginning, middle and end. Youcertainly know the final destination:your retirement. But what happensalong the journey is equally important.

Choosing the right pension fund canbe difficult. From funds specialising ininvesting in UK fixed interest securitiesto those focusing on specific globalareas such as the Far East. Sometimes a huge choice can be daunting.

We are here to help make life easier foryou on your investment journey to retirement.

We have three great ways tobuild your retirement fund

Unlike some pension providers, we offeryou three distinct ways of choosing yourpension investment funds:

- AXA Investment Managers UK - AXA Choice - AXA Partners

First, you could choose from AXA’s widerange of pension funds, managed byAXA Investment Managers UK. Second,there is a halfway house. AXA Choiceenables you to take advantage of thetalents of some of the UK’s leading fundmanagers. The over-riding investmentsectors for our two Choice funds aredecided by AXA, but we choose andmanage the leading fund managers inthese sectors to make the detailedinvestment decisions when it comes tostock selection. Finally, AXA Partnersprovides access to a range of speciallyselected pension funds from the widerinvestment world, using leading nameslike Baillie Gifford, Close FundManagement, JPMorgan Fleming,Framlington and Newton.

YOUR INVESTMENT JOURNEY Investor Pension Funds


Your investment destinationsHow AXA’s Investor range offers you more

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Freedom to choose the best option

Freedom to choose isn’t something allpension providers believe in. Manycompanies insist you invest with them,and that’s it. AXA’s Investor range offersyou more, much more. Three verydifferent destinations for your tax-efficient pensions savings.

You might like the first destination, anddecide to stay there. That’s AXA IM UK.Or you may prefer the fact that we letexternal fund managers select individualholdings for particular funds.

Alternatively, you might like to leave allthe investment decisions to some of themost influential names in the business.It’s all about choice: it’s your pension,and your retirement, after all.

Investor Pension Funds YOUR INVESTMENT JOURNEY

Destination One:

AXA Investment Managers UK

Destination Two:

AXA Choice

Destination Three:

AXA Partners

You might like AXA to do all the investment work for you. AXA Investment Managers UK is based in the City of London.It is part of AXA Investment Managers, which operates frommajor centres around the world. Many of AXA IM UK’s pensioninvestment funds have track records stretching back to the1970s. There is a huge range of choice for pension fundclients. But we recognise that some customers feel thatputting all their eggs in the ‘AXA basket’ isn’t for them. Youmay want to complement investments in AXA funds withinvestments from other leading fund managers.

We recognise that no investment organisation can deliver topperformance, year-in, year-out. That’s why we created AXA Choice. Here, AXA Investment Managers UK decide theover-riding sectors in which the funds will invest, and then wepass your money to specialist fund managers from outside ofthe AXA Group. These fund managers then choose the stockswithin our prescribed sectors which they feel will achieve themost growth.

It’s also true that no investment fund can deliver outstandingperformance year-in, year-out. But it is also true that some fundmanagers have better track records than others. That’s why wecreated AXA Partners. Here, to compliment AXA's funds, you willfind a range of externally-managed pension funds from some ofthe most respected names in specialist fund management. Eachfund management organisation has a different style and eachfund has been selected from a rigorous, disciplined process.

They are:

- Baillie Gifford - Framlington- Close Fund Management - Newton- JPMorgan Fleming

Turn the page to find out more about them.


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YOUR INVESTMENT JOURNEY Investor Pension Funds

Meet the fund managersGreat investment companies with different investment styles

The fact is that some pension funds have better track records thanothers. That’s why our three step approach is such a great concept.We acknowledge that there are other great institutions out there, allseeking to provide excellent investment returns for their clients.

These pages provide a general overview of the six key fundmanagers you can invest with through AXA. These introductionshave been written for you by the fund managers. For furtherinformation, please refer to the websites listed below each summary.

AXA Investment Managers

Who are they?AXA Investment Managers (AXA IM) is a dedicatedasset manager within the AXA Group, a world leaderin financial protection and wealth management.

With over e292 billion of assets under management,AXA IM is a multi-specialist asset manager offering abroad range of investment solutions. However theyfocus only on specific areas of expertise where theyadd real value to their clients.

What’s special about how theymanage investments?AXA Investment Managers’ believe that superior returns on investment solutions can begained through:

- focusing their investment resources where theyhave a clear and competitive advantage,

- fundamental, in-depth research, and as such they have three dedicated research areas investment strategy, equities and fixed income,

- empowered investment teams, specialised by investment type or product.

Figures as at 31 December 2003.

More information: www.axa-im.co.uk

Baillie Gifford

Who are they?

Baillie Gifford is one of the UK’s leading privatelyowned investment management companies. Itmanages assets for both UK and internationalclients in both institutional and retail markets.

What’s special about how theymanage investments?

Baillie Gifford’s investment approach has beenconsistently applied across the firm for manyyears. Put simply, they are active investorsbuying shares in well-run companies with strongprospects for growth. They have a strong focuson individual companies and build their portfoliosfrom the bottom up. They run concentratedportfolios in a committed manner, backing theirskills and judgement.

More information: www.bailliegifford.com

Past performance is not a guide to future performance.


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Investor Pension Funds YOUR INVESTMENT JOURNEY

Close Fund Management

Who are they?

Close Fund Management is the specialistinvestment management arm of the Close BrothersGroup, a substantial merchant banking group.Founded in the City of London at the end of the19th century, Close Brothers has built an enviablereputation for high quality service, integrity and anuncompromising level of professionalism.


Close Fund Management has substantialexpertise in providing investment vehicles thathelp investors gain exposure to equity marketswhilst managing the risks. Its Close UK Escalator100 is a good example of the company’spioneering and innovative skills.

More information: www.closefm.com

Framlington

Who are they?

Framlington has built its reputation by deliveringa range of specialist investment solutions to adiverse and international client base. For threedecades it has developed its business basedupon high standards of service, innovation andinvestment returns.


Framlington has a core style and sticks to it. Theinvestment style is widely known as ‘growth at areasonable price’. The company believes thateffective stock selection is the key to success.Framlington manages money on behalf ofpension funds and invests in quality growthcompanies at what it defines as a reasonableprice. Original research is at the heart of their processes.

More information: www.framlington.co.uk

JPMorgan Fleming

Who are they?

JPMorgan Fleming Asset Management hasexperience dating back to 1873. It is one of the largest asset management houses in theworld, managing over US$500 billion acrossEurope, the Americas and Asia.


JPMorgan Fleming Asset Management has stronglocal knowledge of investment markets. Investmentmanagers and analysts based in each countryprovide first-hand insights into local market trends,the changing business environment and a range offactors that influence the way a company or aneconomy behaves. This information is fed into aglobal network supported by four major investmentmanagement hubs, based in New York, London,Tokyo and Hong Kong. JPMorgan Fleming adoptsdisciplined, proven and strictly team-basedinvestment processes.

Figures as at 1 September 2003.

More information: www.jpmorganfleming.com

Newton

Who are they?

Newton has managed money for over twodecades and is owned by Mellon FinancialCorporation, one of the largest assetmanagement companies in the world. Newtonmanages money on behalf of pension funds,charities, institutions and private individuals.


Newton pursue a global thematic investmentapproach. It is applied across all the assets theymanage. Thematic investing helps recognise trendsthat are likely to influence stock markets around theworld. Their economists, analysts and fundmanagers all work together to identify the themesthat form the bedrock of their investment portfolios.

More information: www.newton.co.uk

Past performance is not a guide to future performance.


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Step 2: Your attitude to riskMake sure you know exactly what we mean

Risk means different things todifferent people

Here’s how we define it

People have different ideas aboutwhat is meant by investment ‘risk’.

For the purposes of this guide, ourdefinition of risk is simply the risk toyour capital before charges have beentaken. By ‘capital’, we mean the valueyou build up in your pensionarrangement. Wherever you invest,there is always a degree of risk.

Plan charges are met by cancellationof units and this will impact on thelevel of capital if charges are greaterthan fund growth. Our productcharges are not taken into accountwhen risk grading funds.

And some types of investments canbe more risky than others. Our aim isto tell you all you need to know -and perhaps even a little more - tohelp make sensible decisions aboutyour future.

Think about your personalfinancial situation and risk

Everyone’s personal financial situation isdifferent. For some people, a pensionmay not be the only source of incomein retirement. For others, it may be.

So consider the following questions:

■ Do you have dependants?

■ Do you have other financialcommitments, such as a mortgage loan?

■ Do you have savings or otherpension arrangements?

■ Do you have some flexibility overwhen you can retire?

The answers you give to thesequestions may have an impact onhow you view risk and on thepension funds you choose.

Think about risk at different timesin your life

Risk can also mean different things todifferent people at different times intheir lives.

For example, your investment needsmay change, particularly as youapproach retirement.

In this case, you may need to protectthe retirement fund you have built-upand move your money to a lower-riskfund. If you have several decades to go until you retire, choosing a lower-riskfund could be a bad idea because itmay not achieve the level of growth you need to fulfil your personal objectives.

Changing your fund with yourattitude to risk

It’s important that the funds you investin reflect your current lifestage. Thismeans that you may need to changethe funds that you invest in.

If you are keen to keep on top of yourinvestment then you can choosewhich funds are best for you, andwhen you invest in them. Currently,there is no charge for switchingbetween funds so you can make surethat your exposure to risk reflects yourcurrent needs. Speak to your financialadviser if you are unsure.

You may also like to consider one ofour Lifestyle Funds. You will find moreinformation on page 17.

YOUR ATTITUDE TO RISK Investor Pension Funds


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Step 3: Our risk categories and risk gradesMake sure you know what we mean.

Your attitude to risk really matters

Over the page, you will find moreinformation on the Investor range ofpension funds.

Before you begin to choose yourparticular fund, make sure youidentify your personal attitude toinvestment risk.

Categories and grades

Each fund aims to satisfy one of fiveinvestor attitudes: Protected, HighlySecure, Moderately Secure, ModeratelySpeculative and Speculative. The fundsare graded on a scale of 1 to 9.

The lowest level of risk is 1, thehighest is 9. So pension funds gradedat level 9 are more likely to experiencesharp falls or rises in capital value overthe short term, compared with thosein level 1.

Investor Pension Funds OUR RISK CATEGORIES

You need a high level of capital security for your pensionfund investment. Pension funds in this category aredesigned to make sure your retirement fund is protectedfrom fluctuations in capital value before all charges havebeen taken. They are usually chosen as a temporaryfund to protect against a volatile market or where youhave spent many years building up a pension fund.

You are prepared to experience slight fluctuations in thevalue of your capital. Funds in this category are usuallychosen to consolidate gains made from other funds.

You fully appreciate the long term benefits of investing inshares and are prepared to experience variations in thevalue of your capital.

You fully appreciate the capital growth potential thatshares can provide. You are prepared to acceptincreased variations in the value of your capital thatcomes with share-based investments, both in the UKand overseas.

You fully appreciate the significant growth potential thatinvestments in this category offer, but also accept the realrisk of large fluctuations in the value of your capital. Youwould usually invest here as part of a wider portfolio.

Speculative(Grades 8/9)

Moderately Speculative(Grades 5/6/7)

Moderately Secure(Grades 3/4)

Highly Secure(Grade 2)

Protected (Grade 1)



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Step 4: Our Investor Pension FundsHuge choice, different levels of risk

OUR INVESTOR PENSION FUNDS Investor Pension Funds

The funds are:

With Profits

Managed Funds

UK Equity Funds

Fixed InterestFunds

GeographicalFunds

Other Funds ■ Cash

■ Reserve

■ AXA Close UKEscalator 100**

■ With Profits*

■ RetirementDistributionFund

■ Fixed Interest

■ Index-linked

■ AXA Baillie GiffordManaged**

■ AXA FramlingtonExempt Balanced**

■ Choice Income*

■ Managed

■ AXA NewtonInternational Bond**

■ Global Distribution

■

■

■

■

■

■

■

■

■

■

Category

Grade

Protected

1

Highly Secure

2

Moderately Secure

3 4

Our Investor Pension Fund range andrisk – essential questions answered

How do I read the table?

We have put the 43 funds into the categories shown basedon our current view of their potential long-term performance.

The suitability of any fund will depend on your personalcircumstances and objectives.


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Investor Pension Funds OUR INVESTOR PENSION FUNDS

■ AXA NewtonManaged**

■ Global Managed

■ Lifestyle RetirementFunds (Seven funds)

■ AXA JPMF PremierEquity Growth Fund*

■ AXA Newton Higher Income**

■ Ethical

■ Higher Income

■ UK Equity

■ UK Tracker

■ Property

■ Choice Growth*

■ Global Equity

■ Overseas

■ AXA JPMF Global*

■ AXA FramlingtonAmerican Growth**

■ AXA NewtonContinentalEuropean*

■ Europe

■ Japan

■ North America

■ Pacific

■ AXA JPMFUK Dynamic*

■ UK Opportunities

■ AXA NewtonOriental*

■ AXA FramlingtonHealth*

Moderately Speculative Speculative

5 6 7 8 9

Can the table give me advice on choosing a fund?

No. It is not designed to provide advice on the suitability of any ofthe funds for your personal situation.

This table – like the rest of this brochure – is for informationpurposes only.

How accurate are the risk grades?

They are simply a general guide. Unit prices can go down as well as up and are not guaranteed. Past performance is not a guide tofuture performance.

Unusual movements in investment markets – especially overprolonged periods – may mean the above risk categories may notprove to be accurate.

Where can I get more information on each fund?

Simply turn the page.

Important information

The charges for the plan you are considering could have an impacton the risk grading of some investment funds.The risk grades do not take account of our plan charges, which aremet by cancelling units. By their nature, low risk funds are likely toachieve lower rates of growth. In some circumstances this couldmean that the growth of your investment does not cover the plancharges. This would increase the overall risk to your initial investment.

** These funds are not available for stakeholder pensions

** These funds may be available for stakeholder pensions. Pleasespeak to your financial adviser


Protected Funds

You need a high level of capital security foryour pension fund investment.

Pension funds in this category are designedto make sure your retirement fund isprotected from fluctuations in capital valuebefore all charges have been taken. Theyare usually chosen as a temporary fund toprotect against a volatile market or whereyou have spent many years building up apension fund.

Cash

Fund Manager: AXA IM UK

Aim: to provide customers with a secure,temporary home for their investments whilelonger-term strategies are determined.

AXA risk grade: 1Profile: established in 1980, the fund consists ofcash deposits in various institutions, which mayinclude banks, building societies, discount housesand local authorities. Investments are also madein what are described as ‘near cash instruments’such as certificates of deposit, floating rate notesand Treasury Bills.

Highly Secure Funds

You are prepared to experience slightfluctuations in the value of your capital.Funds in this category are usually chosen toconsolidate gains made from other funds.

AXA Close UK Escalator 100

Fund Manager: Close Fund Management

Aim: To provide investors with an exposure tosome of the rise in the FTSE 100 share indexcoupled with protecting capital against falls. Productcharges may reduce the value of your investmentas units will be cancelled to meet our charges.

AXA risk grade: 2Profile: The managers provide security by investinga significant proportion of the fund in cash and otherassets that are designed to protect the capitalinvested. Any capital growth comes from the fundinvesting in futures and options (which are types ofderivative) that seek to produce growth from pricerises in the shares of some of the UK’s leadingcompanies. The protection applies on set quarterlydates. Investment or encashment outside thesedates may mean that the price you receive is lowerthan that quoted for the next quarterly protectionday. Please note that the current quarter days arethe third Fridays in March, June, September andDecember. The value of the investment could bereduced if:

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Pension Fund FactsMake sure you know what each fund is designed to achieve

This section covers important information on the pension funds we offer.

Here you can find out who manages each fund and its aim. There is also ashort profile of each pension fund. Please note that some of the funds haveadditional charges. For your convenience, where additional charges apply,these are listed at the bottom of the fund profile.

Please refer to your illustration for details about charges for your plan.

Charges are made by cancelling units.

The funds are shown in alphabetical order, split between our risk categories.


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a) the growth in the unit price is less thanour charges as we will cancel units to meetour charges over time, so you will havefewer units, or

b) the growth in the underlying fund is lessthan the additional fund managementcharges and tax charges for the underlyingfund.

Additional Annual Management Charge: 0.3% paFurther information: please see thesection ‘Is there anything else I shouldknow?’ (page 21) for more information onthis fund.

ReserveFund Manager: AXA IM UK

Aim: long-term growth with a high level of capital security.

AXA risk grade: 2

Profile: established in 1989, this is acautiously managed fund which invests infixed interest, property and cash. The fundcan also invest in UK shares.

Moderately Secure FundsYou fully appreciate the long-termbenefits of investing in shares and areprepared to experience variations inthe value of your capital.

AXA Baillie Gifford ManagedFund Manager: Baillie Gifford

Aim: to achieve above average returns overthe long-term.

AXA risk grade: 4

Profile: the fund invests in a balancedportfolio of UK and overseas equities andfixed income securities. The fund isdiversified by holding different asset classes,by investing internationally, and by holdingcompanies operating in a wide range ofindustries. Baillie Gifford believes that theselection of companies within a portfolio isthe most important ingredient in producingabove-average long-term performance.

Additional Annual Management Charge: 0.3% pa

AXA Framlington Exempt Balanced

Fund Manager: Framlington

Aim: capital growth through investments ina broad range of securities.

AXA risk grade: 4

Profile: invests in all or any economicsectors in all or any parts of the world. These,in the manager’s opinion, show ‘aboveaverage profitability, management quality and growth, balancing risk and return’.


AXA Newton International Bond

Fund Manager: Newton

Aim: to maximise the total return from incomeand capital growth in the world bond markets.

AXA risk grade: 4

Profile: Highly focused fund investingpredominantly in international governmentbonds. Uses a distinctive, thematicinvestment process with a proactive andcommitted approach to stock selection and currency management.


Choice IncomeFund Manager: AXA MultiManager

Aim: to achieve an above average level ofincome and to maintain capital over themedium to long-term.

AXA risk grade: 4

Profile: the fund aims to attain this objectivethrough actively managed investments inequity and fixed-income portfolios managedby top fund managers who run, on behalf ofthe AXA Choice Income Fund, speciallytailored retail and institutional investments.The fund will invest primarily in the UK,although up to 20% of the fund’s assets may be invested overseas.


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Fixed InterestFund Manager: AXA IM UK

Aim: to provide long-term growth from bothreinvested income and capital.

AXA risk grade: 3

Profile: established in 1980, the fundinvests mainly in UK Government stock. We have categorised this fund as‘moderately secure’ because occasionallygovernment-backed bonds can falldramatically in price.

Global Distribution

Fund Manager: AXA IM UKAim: to provide an ongoing income togetherwith capital growth over the medium to long-term.AXA risk grade: 4Profile: the fund invests in equities from theUS, UK, Europe, Japan and the Far East. It also invests in index-linked governmentbonds from around the world.

Index-linked Fund Manager: AXA IM UK

Aim: long-term growth that keeps pace with inflation.

AXA risk grade: 3

Profile: established in 1984, the fundinvests almost entirely in index-linked gilts.Index-linked gilts are issued by the UKgovernment and produce an income andcapital return linked to the Retail PricesIndex. Occasionally, government-backedbonds like these can also fall dramatically inprice. The fund manager may also invest inUK fixed interest stocks.

Managed


Aim: long-term growth from a globallydiversified portfolio of securities and UK property.

AXA risk grade: 4

Profile: established in 1980, the fund iscomposed of a professionally managed mixof holdings in the UK and overseas. Thisapproach to investment means that the fundenjoys the benefits of a very wide range ofassets, spreading risk across hundreds ofindividual holdings. Retirement

Distribution


Aim: steady long-term growth arising fromreinvested income and capital growth froma diversified portfolio of UK securities.

AXA risk grade: 3

Profile: the fund invests primarily in UKholdings, such as shares, fixed interestsecurities, convertible bonds andindex-linked gilts. Established in 1992, the Retirement Distribution Fund is thelargest pension investment fund of its kind.

With Profits Fund Manager: AXA IM UK

Aim: steady capital growth over themedium to long-term.

AXA risk grade: 3

Profile: the term ‘with profits’ comes fromthe early part of the last century when lifeassurance companies shared a proportion oftheir profits with investors. The With ProfitsFund is designed for investors who feeluncomfortable with the way stockmarketsfluctuate from day to day. In this fund, yourmoney is protected from the normal ups anddowns of stockmarkets and your investmentgrows through the addition of bonuses.

Additional costs: for With Profitsinvestment, there are additional costs to the fund which we currently estimate reducethe return by 0.3% each year. If you chooseto invest in the With Profits Fund, this willbe reflected in the bonus rates added toyour plan.

Further information: please see thesection ‘Is there anything else I shouldknow?’ (page 20) for more information onthis fund.



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Moderately Speculative Funds

You fully appreciate the capital growth potential that shares canprovide. You are prepared to acceptincreased variations in the value ofyour capital that comes with share-based investments, both in theUK and overseas.

AXA Framlington American GrowthFund Manager: Framlington

Aim & Profile: the fund aims to achievecapital growth through investment,principally in US, Canadian and Mexicanlarge and medium sized companies which show above average profitability,management quality and growth.

AXA risk grade: 7


AXA JPMF Global

Fund Manager: JPMorgan Fleming AssetManagement

Aim: to provide capital growth over the long-term by investing throughout the world in any economic sector.

AXA risk grade: 6

Profile: the fund invests throughout the worldin any sector of industry and commerce. Thefund mainly invests in ‘blue chip’ companies.


AXA JPMF Premier Equity GrowthFund Manager: JPMorgan Fleming Asset Management

Aim: to provide long-term capital growththrough investment in stocks and shares.

AXA risk grade: 5

Profile: the fund is managed using a rigorousand disciplined investment process that attemptsto add value by focusing on the best growthand value stocks. The fund currently investspredominantly in a portfolio of UK equities.


AXA Newton Continental EuropeanFund Manager: Newton

Aim: To achieve capital growth from acarefully selected portfolio of continentalEuropean equities.

AXA risk grade: 7

Profile: the fund invests on a globalthematic basis with a focused portfolio ofaround 50 predominantly ‘blue chip’European stocks and with the freedom totake strong over and underweight positions.


AXA Newton Higher Income


Aim: to achieve long-term capital growthprimarily through the reinvestment ofincreasing income.

AXA risk grade: 5

Profile: the fund will invest in high yieldingequities with strong cash flow and dividendgrowth.


AXA Newton Managed


Aim: to maximise the total return fromincome and capital growth from a portfolio of UK, EC and International securities.

AXA risk grade: 5

Profile: with it’s active management stylethe fund invests on a global basis in bothequities and fixed interest securities. Themain focus is on long-term growth themesand the fund then tries to identify valuewithin these themes.




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Choice Growth

Fund Manager: AXA MultiManager

Aim: to achieve capital growth over themedium to long-term.

AXA risk grade: 6

Profile: the fund aims to attain this objectivethrough actively managed investments inequity portfolios managed by top fundmanagers who run, on behalf of the AXAChoice Growth Fund, specially tailored retailand institutional investments. The fund willinvest at least 50% of its assets in the UK,with the balance being invested overseas.


EthicalFund Manager: AXA IM UK

Aim: medium to long-term capital growth

AXA risk grade: 5

Profile: established in 1998, the fund investsin a carefully selected portfolio of companieswhich aim to or already satisfy a number ofpredetermined ethical criteria. The fund setsout to achieve a realistic balance betweenmeeting ethical criteria and achieving thebest possible investment returns.

Europe


Aim: to provide capital growth by investingin a wide spread of European shares,excluding the UK.

AXA risk grade: 7

Profile: established in 1986, the fundprimarily consists of continental Europeanshares identified as having significantgrowth potential.

Global Equity


Aim: to achieve capital growth from a widespread of global shares.

AXA risk grade: 6Profile: established in 1980, the fundinvests in shares on a global basis,including the UK.

Global Managed


Aim: long-term growth from a globallydiversified portfolio of securities.

AXA risk grade: 5

Profile: established in 1989, this is amanaged fund which normally invests in UKand overseas shares. At least 80% of thefund is normally in equities and more than50% of the fund is in sterling assets.

Higher Income


Aim: long-term growth from both incomeand capital.

AXA risk grade: 5

Profile: the fund consists of UK sharesidentified as ‘higher yield’, which - in verysimple terms - means they aim to produceattractive dividend income which isreinvested in the fund.

Japan


Aim: to provide long-term capital growth.

AXA risk grade: 7

Profile: established in 1984, the fundinvests primarily in Japanese shares, butcan also invest in other assets.



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Lifestyle Funds

The Funds:Lifestyle Retirement Fund 2010Lifestyle Retirement Fund 2015Lifestyle Retirement Fund 2020Lifestyle Retirement Fund 2025Lifestyle Retirement Fund 2030Lifestyle Retirement Fund 2035Lifestyle Retirement Fund 2040


AXA risk grade: 5 (initially)

Important note: the year stated after eachfund represents the end date for thatparticular fund. When the fund is between 6and 9 years from the end date, it moves torisk grade 4. With 5 years or fewer to go tothe end date, the fund moves to risk grades3 to 2. So our Lifestyle Retirement Fund2010 (above) has already moved into riskgrade 4.


North America



AXA risk grade: 7

Profile: established in 1980, the fundinvests in North American company shares. The fund invests primarily in the US, butmay also invest in Canada.

Overseas


Aim: to achieve long-term capital growth.

AXA risk grade: 6

Profile: established in 1980, the fundinvests in the world’s major stockmarkets,concentrating on North America, Europeand the Far East. It does not invest in UK shares.

PacificFund Manager: AXA IM UK


AXA risk grade: 7

Profile: established in 1984, the fundinvests throughout the Far East region,excluding Japan.

PropertyFund Manager: AXA IM UK

Aim: to achieve long-term capital growth.

AXA risk grade: 5

Profile: established in 1980, the fundinvests in commercial properties such asshops and offices. It achieves its growthfrom rental income and increases inproperty values.


UK Equity


Aim: long-term growth from UK shares.

AXA risk grade: 5

Profile: the shares of large, successful and well-managed UK companies form the backbone of a top quality portfolio of investments.

UK TrackerFund Manager: administered by AXA IMUK, currently managed by Barclays GlobalInvestment Ltd.

Aim: the fund’s aim is to achieve a capitalreturn as close as practically possible to theFTSE UK All-Share Index.

AXA risk grade: 5

Profile: the fund aims to track the FTSE UKAll-Share Index, which measures theperformance of every company listed on theLondon Stock Exchange. Investments maynot necessarily be made into everycompany on the Exchange, but the spreadof companies and the amount of moneyinvested in each of them is designed so thatthe fund should track the performance ofthe whole Index.



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Speculative Funds

You fully appreciate the significantgrowth potential that investments inthis category offer, but also accept thereal risk of large fluctuations in the valueof your capital. You would usuallyinvest here as part of a wider portfolio.

AXA Framlington HealthFund Manager: Framlington

Aim: the fund aims to achieve capital growthby investing in healthcare, medical servicesand medical product companies worldwide.

AXA risk grade: 9

Profile: the fund manager invests subject to ethical guidelines. Investment will be inproducers of pharmaceuticals, biotechnologyfirms, medical device and instrumentmanufacturers, distributors of healthcareproducts, care providers and managers, and other healthcare service companies.


AXA JPMF UK Dynamic

Fund Manager: JPMorgan Fleming

Aim: The fund’s aim is to maximise long-term capital growth by investingprimarily in UK equities.

AXA risk grade: 8

Profile: the fund is designed for investorslooking for aggressive exposure to the UK stock market. It focuses purely onmaximising capital growth and is notrestricted by benchmarks or confined bysize, sector, or style. The fund managerstake care to diversify the portfolio by neverholding less than 50 stocks and exposure to any one sector is limited to 35% of thetotal fund value.


AXA Newton Oriental


Aim: To achieve capital growth by investing in Asian and Pacific marketsincluding Australia and New Zealand butexcluding Japan.

Profile: a concentrated portfolio of ‘bluechips’ largely focused on North Asia.Emphasis on companies that arerestructuring. The active management styleadopted for this fund enables swift reactionsto the fast moving Far Eastern markets.

AXA risk grade: 8


UK Opportunities


Aim: the fund’s aim is to achieve capitalgrowth over the medium to long-term.

AXA risk grade: 8

Profile: the fund will invest primarily inshares of quoted UK companies. The fundwill hold a relatively concentrated portfoliochosen on the outlook for those particularcompanies rather than on a thematic orsector basis.



Is there anything else I should know?Important information about the pension funds

Investor Pension Funds FURTHER INFORMATION

19

AXA’s Lifestyle Retirement Fundrange and ‘Default Investments’

Our Lifestyle Retirement Funds offeran alternative to having to changeyour investment funds as your needschange. With these funds, the fundschange themselves.

You select the pension fund with theyear that is closest to your retirementdate. If your planned retirement datefalls between the dates of twodifferent funds, you can invest partly inone, partly in another. The funds workby steadily changing as the years passby. Funds with dates several decadesinto the future, (such as 2035 or2040) concentrate on investing almostwholly in equities. As time goes by, thefunds will gradually change to includelower risk investments such asgovernment bonds. So, as youapproach retirement, the funds aim toensure that the value of your plan isbeing increasingly protected frompotential stock market volatility.

Under our stakeholder pension range,the Lifestyle Retirement Funds are thedefault investment. This means that,for all stakeholder plans, if you do notadvise us of the pension fund(s) thatyou wish to invest in, your money willbe invested in the most appropriateLifestyle Fund for your retirement date.

General information on the AXA funds■ This guide should be read in

conjunction with the relevantpension product literature and plandocumentation. Copies areavailable on request.

■ The funds available to any contractmay change at any time.

■ Investment is in accordance withthe regulations applicable to unit-linked funds.

■ In investing and managing eachfund AXA Investment Managers UK pay attention to any stated aimor objective of the fund butotherwise have full discretion inrelation to management of thefund’s investments.

■ Unit prices, which reflect the valueof investments, can go down aswell as up and are not guaranteed.

■ Some of the funds’ investmentsmay be held in foreign currencyand the value of an investment can rise and fall in line withexchange rates.

■ The funds may hold as much cashas the fund managers feelappropriate to their particularmarkets at any time.

■ In poor investment conditions wecan refuse to move investmentsinto or out of:

1) any unit-linked fund for up toone month; or

2) any fund which invests inproperty for up to six months.

This could mean that you may notbe able to cash in or switch yourinvestment during this period.Afterwards, if you still want tomove your investment, we use thebid value of the units as at the daythe investment is actually moved.

■ The funds may invest in whole orin part in authorised unit trusts orother collective investment vehicles


FURTHER INFORMATION Investor Pension Funds

20

with similar objectives. These collectiveinvestment vehicles may be operatedby a member or associate of AXA.

Important information on the AXAChoice Fund range

There are additional fundmanagement charges for these funds.These additional charges are statedunder the fund descriptions in the'Pension Funds Facts' section of thisbrochure, starting on page 12.

Important information on theAXA Partners fund range

These funds invest in the underlyingcollective investment schemes(described as ‘underlying funds’below) operated by the investmentcompanies shown. The AXA funds arenot managed by or reassured to theoperator or manager of that scheme.Nor are they directly linked to theunderlying funds as they may not befully invested in the underlying funds.In particular our funds may hold cash.

The profiles described relate to theunderlying fund.

Investment in the AXA funds will besubject to the Fund Managementcharges under the AXA plan and notthose applicable to the underlyingfunds. The underlying funds will,however, be subject to fees andexpenses of operation which willaffect the value of the AXA funds.

There are additional fund managementcharges under these funds. Theseadditional charges are stated under thefund descriptions from the ‘PensionFunds Facts’ section of this brochure(page 12).

The underlying funds will be managedand operated in accordance with theirpublished scheme particulars and the

regulations applicable to that type of investment.

You can ask us for full details of theunderlying funds.

The With Profits Fund

If you invest in the With Profits Fund,you are entitled to a share of theprofits of AXA Sun Life plc. You receiveyour share of the profits as bonusesthat are added to your plan.

The amount available for bonuses is affected by several factors whichinclude the cost of meeting anyguarantees provided under newand existing policies in the WithProfits Fund.

The bonuses that are paid toinvestors in this fund are directlylinked to the returns made during theterm of the investment. You shouldbe aware that in the last few yearsinvestments generally have seenlower levels of returns and if thiscontinues, then it is likely that we willhave to reduce their bonus rates.

We place with profits investments fornew plans into our new With ProfitsFund. But if you’re paying into anexisting plan, we will place any withprofits investments into the fund yourpolicy is currently invested in. If yourplan started before 1 April 2001 thiscould be our old With Profits Fund.

Bonuses

We add regular bonuses to your planat least monthly by increasing theunit price.

The regular bonus rate is set in linewith the returns we expect to receivefrom the relevant assets of the WithProfits Fund, while smoothing out anyrise and fall in those returns.


Investor Pension Funds FURTHER INFORMATION

21

Please remember that future bonusescannot be guaranteed as they comefrom profits we have not yet earned.We regularly review our bonus ratesand may change them at any time.

When benefits are paid, we may also add:

■ a terminal bonus; and

■ a reorganisation bonus if your planstarted before 1 April 2001.

Market Value Reduction

If the investment performance of the With Profits Fund is lower thanthat reflected in the bonuses we havealready added, we may reduce thevalue of your units if you:

■ decide to retire earlier or later thanthe date you selected as yourchosen retirement age;

■ move the value of your plan toanother pension plan; or

■ switch out of the With Profits Fund.

This is called a ‘market valuereduction’ (MVR). We make thisadjustment to protect otherplanholders so they do not lose outfinancially as a result of your actions.

If we apply an MVR, you can normally choose to delay the actionto a later date.

We will not apply an MVR when youdie. And if you retire at your chosenretirement age, we will not apply anMVR except to any one-off payments,transfer payments and switches youhave made into the With Profits Fundin the previous five years.

If you would like more informationplease ask for a copy of our WithProfits Guide.

The Property Fund

The value of properties and otherinvestments held in the PropertyFund is generally a matter of avaluer’s opinion and not fact. Fromtime to time valuations within thisfund are carried out by independentchartered surveyors.

Derivatives

Derivatives - including forward currencycontracts and warrants - will only beused for efficient portfolio managementor the reduction of risk. The use ofderivatives may diminish returns ormake returns more variable than theywould otherwise be. If the derivative ispurchased through a counterparty, thefailure of that counterparty could affectthe value of the fund and invalidateany attaching protection. Warrantsoften involve a high degree of gearing.This means that a relatively smallmovement in the price of an asset mayresult in a disproportionately largemovement in price. This can be bothfavourable and unfavourable.

AXA Close UK Escalator 100

This fund aims to provide a level ofprotection to your capital by lockingin gains and offering a protected unitprice on the next quarterly date.

The value of your investment could bereduced if:

(a) the growth in the unit price is lessthan our charges as we will cancelunits to meet our charges over time,so you will have fewer units, or

(b) the growth in the underlying fundis less than the additional fundmanagement charges and tax chargesfor the underlying fund.


22

Like many industries and professions, the investment world has its own jargon.

This glossary covers many investment terms you may have seen used in thisbrochure and some others that you may find in associated communications fromAXA and other investment organisations. What follows are not strict ‘technical’definitions of these terms, but they should give you enough information tounderstand what can often be complicated and confusing terminology.

GlossaryYour guide to investment in plain English

Investor Pension Funds GLOSSARY

Asset Investment funds are full of assets. An asset issomething that you can normally buy and sell, such asshares of a company or government bonds or property.

Asset allocation or asset mixThe mix of different things that make up an investment portfolio.

For example, 60% may be in shares and 20% in fixed-interest investments and 20% in propertyinvestments. The asset mix can also refer to where in theworld your money is invested - the geographical assetallocation. For example, 50% of a fund’s shares may be inthe UK, another 40% in North America and 10% in Japan.

Asset managementWhat goes on when we buy and sell assets for theinvestment funds. This includes research, building up investment portfolios and keeping an eye on their progress.

Bear market A bear market is when share values fall over a longperiod. So if the stockmarket is ‘bearish’ it means thatshare prices look set to fall.

Benchmark, benchmarkingThis is simply how we compare like with like. Eachfund has a benchmark ‘league table’ of similarinvestment funds. We benchmark in two different ways:

■ by asset allocation; and ■ by performance.

First, we can compare the fund’s asset allocation withthe average of other funds of its type. At any time afund is either underweight, neutral or overweight in itsholdings of a particular asset. Here’s an example. Anaverage investment fund in a league table has 50% inUS shares. Our investment fund has 45% in US shares.So we say that our fund is underweight in US shares.And if our fund also had 50% it would be neutral. If ithad 60% it would be overweight in US shares.

Second, we can benchmark by performance. Forexample, to compare a UK Equity Fund with similar

investment funds we measure how it performed againstother funds in a league table of UK equity funds.

Blue chipThis term is used to describe the shares of the largest,most consistently profitable companies in any particularmarket. This list changes over time. In the UK, mostblue chip shares form part of the FTSE 100 index.

BondsThese are issued by governments or companies inorder to raise funds. In exchange, the investor (or buyerof the bond) is paid a set amount of interest regularly.This is why they are also known as fixed-interestsecurities. Bonds issued by the UK Government andtraded on the stockmarket are known as gilts. Bondsissued by companies usually carry a higher rate ofinterest since they don’t have the Government’sguarantee behind them. Bond prices move up anddown with market conditions. Bonds in this contextshould not be confused with financial services productssuch as investment or life assurance bonds sold byfinancial services organisations.

BourseThis is another word for a continental Europeanstockmarket, such as the DAX in Germany or the CAC40 in France.

Bull marketA bull market is a period of rising share values. If thestockmarket is ‘bullish’ it is usually looking goodbecause share prices look set to rise.

Capital growthThis is a term used to describe the aim of most of theinvestment funds in this brochure. It simply means theincrease in the value of an investment fund.

CashThis is money invested at competitive rates of interest.

CityLondon’s financial centre, the City of London. It is alsoknown as the ‘square mile’.


Investor Pension Funds GLOSSARY

23

DerivativesDerivatives has become a catch-all generic term thathas been used to describe specific types of financialinstruments. In very basic terms these are financialinstruments, such as 'options' and 'futures', whoseworth is normally dependent on future value ofstockmarkets and individual shares.

DiversificationThis means spreading risk by investing in manydifferent assets.

DividendThis is a payment from a company’s profits to its shareholders.

Dow JonesThe main US stockmarket league table, whichmeasures the performance of the top 30 US company shares.

EquitiesInvestment jargon for company shares.

Fixed interest or fixed-interest securities Please see the explanation for bonds.

FlotationWhen a company’s shares are sold on the stockmarketfor the first time.

It is also called a new issue.

FTSE All-Share indexThis index shows the share prices of the top 700companies in the UK.

FTSE 350 indexThis index shows the share prices of the UK’s top 350 companies. It is often used to choose high-yield shares.

FTSE 100 indexThis index shows the share prices of UK’s top 100companies. It is also known as the ‘Footsie’.

Fund ManagerFund managers look after investment funds forcustomers like you. They create portfolios, buy and sellassets and monitor the performance of the investmentfunds they manage.

GiltsPlease see the explanation for bonds.

High-yield or high-yielding sharesThese are the shares of companies that pay dividendsthat are higher than average.

HoldingsThe same as assets. The items that make up aninvestment fund.

IncomeThe money shareholders receive from dividends isdescribed as income.

It can also mean the interest payments fromgovernment bonds and other investments.

Index-linked gilts or index-linked securitiesThese are bonds issued by the UK Government thatpay regular interest payments, which rise and fall inline with the Retail Prices Index.

Market sectorStockmarkets are divided into market sectors, showingdifferent industries and services. For example,chemicals, engineering and telecommunications.

NeutralPlease see the explanation for benchmark.

PortfolioThe assets in a particular investment fund.

OverweightPlease see the explanation for benchmark.

QuartileThis basically means 25%. For example, if a fundperformed in the ‘top quartile’, this means that out of100 funds, the fund was in the top 25 in terms of itsperformance over a given period of time.

SecuritiesAnother term used for both stocks and shares.

SharesOwning shares in a company means you own part of it. It also means you can have a share of thecompany’s profits by receiving dividends. You alsohave a share in the value of the company’s assets,through its share price.

StocksIn the UK, stocks can mean both shares and Governmentbonds. Many years ago, stocks meant UK Governmentbonds only, hence the phrase ‘stocks and shares’. In theUS, shares are widely known as stocks. Some UK-basedfund management offices use the US terminology.

Stock selectionChoosing individual shares from a specific area of the market.

UK fixed interestPlease see the explanation for bonds.

UnderweightPlease see the explanation for benchmark.

UnitsEach fund is made up of units. Units are your personalshare of the investment fund. Unit prices rise and fallwith the overall value of the investment fund.

Volatile, volatilityStockmarkets are described as volatile if they move upand down quickly. An asset that has many variations inits price is also described as volatile.


AXA is a worldwide insurance group. In the UK, one of the AXA companies is AXA Sun Life plc, the provider of your plan. AXA Sun Life plc is a company limited by shares. Authorised and regulated by the Financial Services Authority. Registered in England No. 3291349. Registered office: 107 Cheapside, London, EC2V 6DU.

A member of the AXA Sun Life Marketing Group which markets life insurance, pension and investment products. The telephone number of our Administration Centre is 0845 300 3809. As part of our commitment to quality service, telephone calls may be recorded.

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www.axa.co.uk

AXA helps people get the best out of life. To achieve this, we provide

different financial solutions for each stage of life. Whether the need is pensions,

life insurance, investments, or long-term care, we can help.

At AXA, this is what we mean by financial protection.



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