MONTHLY X-RAY FRAMLINGTON EQUITIES AXA Lifetime Distribution Fund Key points SEPTEMBER 2019 . The Fund returned +1.56% in September. The FTSE All-Share Index rebounded strongly in September from the previous month’s weakness, rising 2.95%. This material is for professional . We increased our holdings of Serica Energy and Legal & General, while we reduced the investors only holdings of Aveva, HSBC, and Smith & Nephew. Market snapshot . The FTSE All-Share Index rebounded strongly in September from the previous month’s weakness, rising 2.95%, bolstered by strength across the large, mid and small cap segments of the market. The FTSE 100 Index was up 2.97%, marginally outperforming the FTSE SmallCap Index, which rose 2.88%, while the FTSE 250 (ex-Investment Companies) Index gained 3.12%. Year-to-date, returns for the FTSE All-Share Index were 14.4%. Markets were buoyed by dovish action from the US Federal Reserve (Fed) and the European Jamie Forbes-Wilson Central Bank (ECB). The Fed cut interest rates by a further 25 basis points (bps) and did little to curb anticipations of future additional cuts. The ECB cut the deposit rate by 10bps to -0.50% Fund Manager introduced a tiered reserve charging system, relaunched quantitative easing (QE) at a pace of Matthew Huddart €20 billion per month, extended the maturities of each TLTROs and made the rates/QE guidance open-ended. Elsewhere the perception that US-China trade negotiations improved Fund Manager slightly bolstered confidence. No progress was made on Brexit negotiations. Parliament passed a law that prevents government from leaving the EU with no deal and parliamentary prorogation was declared unlawful, with sessions resuming. The prime minister continued to push for an early election and indicated the UK will leave on 31 October. Oil temporarily spiked 20% following drone attacks on two oil facilities in Saudi Arabia, but reversed most of the move as production was restored quickly and as economic growth softened. Fund in focus . In corporate news: there were more profit warnings, including from Quixant, Alfa Financial, Fund Size Xaar, Pearson, GRC International, and OnTheMarket; Thomas Cook filed for insolvency, stranding 600,000 Britons overseas; US private equity group Lovell Minnick made a £261 £977m million bid for Charles Taylor; Hong Kong Stock Exchange launched a bid for London Stock Exchange; and Tullow Oil announced a second significant oil discovery off the coast of Guyana. Target underlying investments . A month of two halves for bonds in September. Rates markets initially sold off, reversing some of August’s strong performance with an improvement in sentiment around trade negotiations 50-60% UK equities between the US and China which was supportive for risk assets. This positive sentiment reversed as the oil price spiked following an attack on a Saudi oil facility as well some poor 40-50% UK index-linked gilts economic data, particularly from Germany. Central banks were very much in focus as both the ECB and FOMC met and delivered additional monetary stimulus. In the UK, political Typical number of holdings developments continued to be the markets’ obsession; 10-year gilts rallied early in the month to 40bps on a ‘no deal’ departure fears before trading back to 75bps as MPs passed the Benn Act 60-80 UK equities designed to prevent a ‘no deal’ Brexit. 10-year gilts closed almost unchanged on the month at 50bps and were the best-performing developed market in September. 18-22 UK index-linked gilts . Inflation markets tracked nominals posting modest negative returns over the month with 10-year breakevens largely unchanged. UK inflation markets received plenty of attention following the Share types announcement by the chancellor of some proposed measures to reform the retail price index (RPI). The long end of the index linked market underperformed on the announcement but Income shares following some very good pension fund buying flows quickly reversed the underperformance. Whilst some uncertainties will remain until the announcement of the results of a consultation in Accumulation shares Q1 2020, the market has returned to pre-announcement trading levels. The Debt Management Income payment frequency 1 Office (DMO) issued £500 million 30-year index-linked bonds in late September which was well received by investors. Monthly . The UK’s Consumer Price Index inflation rate fell unexpectedly sharply to 1.7%, while the Retail Price Index measure of inflation dipped to 2.6%. Pence per share unit income distribution 1 Fund performance £0.01 . The Fund posted a return of +1.56% in September (A Acc share class, net of fees, sterling). 2 Ongoing charges figure (OCF) Fund activity . We increased our holdings of Serica Energy and Legal & General. 0.31% . We reduced the holdings of Aveva, HSBC, and Smith & Nephew. 1Regular payments are not guaranteed and will Outlook fluctuate in value. The central asset mix of the Fund is 55% UK equities and 45% index-linked gilts. 2 . Within the equity portfolio, our approach remains to look for opportunities to buy into strong The ongoing charges for the A Acc share class companies at attractive valuations, particularly in situations where we perceive short-term are the charges you will pay over a year for as market sentiment to be overly pessimistic. long as you hold your investment. Past performance is not a guide to future performance. www.axa-im.co.uk FRAMLINGTON EQUITIES MONTHLY X-RAY AXA Lifetime Distribution Fund Fund aim/objective Fund asset allocation breakdown (%) FTSE 100 38.7% The AXA Lifetime Distribution Fund is a cautiously managed portfolio investing FTSE 250 13% in large capitalisation UK companies FTSE Small Cap 1.5% and UK government index-linked gilts FTSE Fledgling 0% with the aim of providing a monthly FTSE AIM 2.6% income and the opportunity for capital UK index-linked gilts 40.2% growth. Other 1.5% Cash 2.5% Equity portfolio breakdown by industry (%) Consumer Services 8.8% Technology 7% Industrials 17.5% Consumer Goods 8.4% Oil & Gas 13.7% Telecommunications 2.9% Financials 25.1% Utilities 3% Health Care 13% Basic Materials 0.7% Top Three industry overweights 4* Life Insurance +4.8% The AXA Lifetime Distribution Financial Services +2.9% Fund helps to combat retirement Construction & Materials +2.4% risks identified by our market 4* research; a diversified portfolio to Top Three industry underweights Equity Investment Instruments -5.2% help manage market volatility Banks -3.6% whilst providing a regular income Travel & Leisure -3.3% stream and potential for capital growth to help beat inflation. Top ten Holdings 4 Fund GlaxoSmithKline plc 3.8% Royal Dutch Shell Plc Class B 2.7% BP p.l.c. 2.6% Government Of United Kingdom 0.625% 22-mar-2040 2.2% Rio Tinto plc 2.2% Government Of United Kingdom 0.125% 22-mar-2046 2.2% Government Of United Kingdom 0.625% 22-nov-2042 2.1% Government Of United Kingdom 0.25% 22-mar-2052 2.1% Government Of United Kingdom 1.25% 22-nov-2032 2.1% Government Of United Kingdom 1.25% 22-nov-2027 2.1% Source 4: Factset TBR Methodology as at 30/09/2019. Total 24% * Relative to the FTSE All-Share Index. This communication is intended for professional investors use only and should not be relied upon by retail clients. Circulation must be restricted accordingly. This communication does not constitute an offer to buy or sell any AXA Investment Managers group of companies’ (‘the Group’) product or service and should not be regarded as a solicitation, invitation or recommendation to enter into any investment transaction or any other form of planning. It is provided to you for information purposes only. The views expressed do not constitute investment advice, do not necessarily represent the views of any company within the Group and may be subject to change without notice. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding. Before making an investment, investors should read the relevant Prospectus and the Key Investor Information Document, which provide full product details including investment charges and risks. 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