January 2013

AXA Framlington Europe ex UK Fundg p

Europe – Moving from a vicious circle to a virtuous circle?to a virtuous circle?

Mark Hargraves – Fund Manager

This communication is for professional advisers only and must not be reliedupon by retail clients. Circulation must be restricted accordingly.

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Introduction to AXA Framlingtong

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European – Core Investment Team

European sector specialistsMark Hargraves Continental EuropeFund Manager

Consumer

Marie Chaperon7 yrs’ experience

Olivier Eugène12 yrs’ experience

Energy Materials

Hervé Mangin13 yrs’ experience

17 years’ experience in asset management Joined AXA Framlington in 2000 as fund manager and became

Head of the Continental European team in 2001 Previously worked for Abbey National, Hambros Fund

Management and United Friendly Asset Management BSc (Hons) Geography Masters in Finance from London

Utilities/HealthcareTech/Business Services

Chrysoula Zervoudakis Pan EuropeanFund Manager 25 years’ experience in asset management Joined AXA Framlington and started managing French and Pan

BSc (Hons) Geography. Masters in Finance from London Business School. Associate member of CFA institute of UK

Financials

Khiem Lé13 yrs’ experience

Guillaume Robiolle15 yrs’ experience

Joined AXA Framlington and started managing French and Pan–European funds in 2004

Previously Associate Partner in the European equities management team at Invesco

BSc (Hons) Economics and MBA from Manchester Business School

VincentVinatier13 yrs’ experience

Telecoms

Bruno Grandsard11 yrs’ experience

ChrysoulaZervoudakis25 yrs’ experience

IndustrialsGilles Guibout EurozoneFund Manager 16 years’ experience in asset management Joined AXA IM in 2006, and is responsible for AXA Framlington

Eurozone Equity Franchise Europe OpportunitiesEurozone Equity Franchise, Europe Opportunities 1995-2006 San Paolo Asset Management – Fund Manager

European Equities Institut Supérieur de Gestion (1995) and graduated in Economics

and Italian from the University of Paris X-Nanterre. Member of the Société Française des Analystes Financiers

Source: AXA IM as at 31/10/2012. Years relate to investment experience.

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AXA Framlington Europe ex UK FundPerformance – 5 years to 30/11/2012

120AXA Framlington European R Inc (MF) FTSE World Europe ex UK TR EUR (IN)

90

100

110AXA Framlington European R Inc (MF) FTSE World Europe ex UK TR EUR (IN)

60

70

80

50Nov-07 May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12

1 year 3 years 5 years 10 years

Quartile ranking 1 1 1 1

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Source: AXA IM & Lipper, Bid to Bid, Net Income, Net Fees in GBP as at 30/11/2012. Comparative benchmark: FTSE World Europe ex UK. Past performance is not a guide to future returns.

AXA Framlington Core European Equity StrategiesKey attributes

Core style Consistent profile in alpha delivery in both Bull and Bear phases Growth oriented philosophy focusing on companies with high

ROIC

Long term investor mindset

Low turnover - average holding period between 3 and 5 years

In depth knowledge of companies built over a significant period p g p g p

High active share Fundamental stock picking

Conviction based approach not driven by benchmark

Core strategies with consistent and regular outperformance through various cycles

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Step 1. Corporate Lifecycle AnalysisFocusing on companies with high ROIC

Proven Success Mature Resurgent SuccessFuture Success

ROICtime

ROIC < 0 Investment Phase Building the franchise

Sustainable and High ROIC Sales and profits growth Improving market share through competitive

ROIC converging to cost of capital

Competition business model at

Resurgent growth in ROIC & Earnings

Restructuring Phase: asset sales/new g High EPS growth advantage & innovation

Leadership in growing markets Pricing power Internationalisation

risk Commoditisation market share

losses Low revenue and profit growth

business mix Management Change Improved perception of company and

industry growth trends

Investing in the most attractive stages of a company corporate lifecycle

Source: AXA IM – For illustration purposes only

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Europe - Economic and market perspectivesp p p

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Europe – 2008-2012 … not pretty …

Quarterly NNM (€bn) over 5 years European

2

4

Quarterly NNM (€bn) over 5 years ‐ European domiciled actively managed cross‐border funds

‐4

‐2

0

‐10

‐8

‐6

0

10

%

Relative Performance of MSCI Europe Ex UK to MSCI Worldfrom 31/12/07 to 31/12/12

‐16

‐14

‐12

Q4 2007 Q3 2008 Q2 2009 Q1 2010 Q4 2010 Q3 2011 Q2 2012

Equities Euroland Equities Europe

-20%

-30

-20

-10

Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

MSCI Europe ex UK TR EurosMSCI World TR euros

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Source: Left-hand chart: AXA IM as at 30/09/2012. Right-hand chart: Lipper as at 31/12/2012.

Europe – Moving from a vicious circle to a virtuous circle?

Tail riskreduction

StructuralF d fl Structural reformFund flows

Valuation

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Europe – What a difference a few months can make

FT Person of the Year:Mario DraghiMario Draghi

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What about fundamentals? Issues being addressed …. slowly …

Current account deficits

(2)

Fiscal crisisUnit labour costs

(1)(3)Cumulative Annual Government Deficit as % of GDP

(2008 2012)

(1)

(2008-2012)

2008 2012 %ch

Banking crisis

(4)2008 2012 %ch

Loans €10.8tn €11.4tn +5%

Total assets €28.4tn €27.2tn -4%

Tangible equity €543bn €968bn +87%

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Source: (1) Thomson Reuters Datastream as at 04/01/2013. (2) Societe Generale as at 14/11/2012. (3) Deutsche Bank, OECD as at 07/12/2012. (4) KBW, December 2012.

It has been a painful process …

Italy GDP (1) Spain GDP (2) Unemployment (3)

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Source: (1) (2) Deutsche Bank, OECD as at 07/12/2012 . (3) Thomson Reuters Datastream as at 04/01/2013. Photos: Reuters, January 2013.

Europe – Unable to reform? Not true …

Early1990’s

Late1990’s

20081990 s 1990 s

“Sick man of Europe”

“Bad bank” Fiscal reforms

Supply side reformHartz reforms

Pension reformWage cuts

Fiscal reform

-2000

0

2000

4000

-10000

-8000

-6000

-4000

-120002003 2004 2005 2006 2007 2008 2009 2010 2011

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Source: Sweden: Societe Generale as at 14/11/2012. Germany: Thomson Reuters Datastream as at 04/01/2013. Ireland: Central Statistics Office as at December 2012.

Upside potential is huge

Impact on GDP per capita of a broad set of reforms in selected countries

“Never let a good crisisgo to waste”

R h E l%

Rahm EmanuelChief of Staff to President Obama

November 2008

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Source: Societe Generale as at 14/11/2012.

Implications for equity investors

LONGER TERM

Europe is cheap in relative terms and “investible” again

Low growth, low interest rates here to stay

Supporting long duration quality stocks … a new “Nifty 50”?

Reduction in tail risk opens selective value opportunities … eg European financials

TACTICAL CONSIDERATIONS

Risk on/risk off will remain a feature

Risk on growth disappointment remains

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Balancing macro vs micro

Spanish retail sales – ouch! Inditex share price – what crisis?

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Source: Bloomberg as at 03/01/2013.

European equities in 4 charts

Return on equity %European valuation premium/discount relative to USA %

-20

-10

0

10

10

12

14

16

18

20

-50

-40

-30

75 80 85 90 95 00 05 10

Sector Neutral Premium / Discount %Premium / Discount %

0

2

4

6

8

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

012e

013e

014e

75 80 85 90 95 00 05 10

80

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 20 20 20

10

Free cash flow yield %Net debt to equity %

30

40

50

60

70

2

0

2

4

6

8

0

10

20

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

e20

13e

2014

e -8

-6

-4

-2

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

e20

13e

2014

e

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Source: MSCI, Morgan Stanley Research as at 28/12/2012.

AXA Framlington European Fund(Europe ex UK strategy)(Europe ex UK strategy)

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AXA Framlington European FundStrong risk adjusted returns attributes

Ex-ante tracking error**Risk and return summary*

1 year(ann) %

3 years(ann) %

5 years(ann) %

Performance - net 27.77 7.98 1.81

3

3.5

4

vs B

ench

mar

k

Comparative benchmark 13.80 2.27 -0.62

Excess returns 13.97 5.71 2.42

Tracking error - 6.31 6.41 2

2.5

3

te B

eta

of P

ortfo

lio

Predicted Tracking Error

Volatility - 18.18 23.64

Benchmark volatility - 18.87 23.85

Information ratio - 0.90 0.38

1.5Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12

Ex a

nt

Time Period

Low ex-ante tracking-error ranging 2-5%

Low Turnover reflecting our long term investment philosophy and “investor” mindset

2011 2010 2009

Annual returnover (%) 38.74 43.25 56.17

*Source AXA IM as at 30/11/2012. Comparative benchmark: FTSE World Europe ex UK. ** Northfield/AXA-IM/FactSet as at 30/11/2012. NB: Past performance is not a guide to future returns.

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AXA Framlington European Fund – Style Overview (1/2)

Value Growth Other6

2.9

1.7

2.7 3.0

1.50 9

2.1

4.3

2

4

-1.3-0.8

0.20.9

-0.4 -0.4 -0.1

-2

0

-2.5

-5.3

-2.2

-3.4

-6

-4

o A E y

Book to

Price

Div

idend

Yie

ld

Earn

ings

Yie

ld

Fre

e C

ash

flow

Yie

ld

Sale

s to

Price

EB

ITD

Ato

Price

RO

E

Inco

me

to S

ale

s

3 Y

ear

Sale

sG

row

th(H

isto

ric)

12M

Sale

sG

row

th(F

orw

ard

)

3 Y

ear

EP

SG

row

th(H

isto

ric)

12M

EP

SG

row

th(F

orw

ard

)

FY

1 E

arn

ings

Re

visio

ns

Mark

et C

ap

Short

Term

Mom

entu

m(3

m)

Mediu

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erm

Mom

entu

m(1

2m

)

De

bt/E

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Fore

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Sale

s

The Style Chart shows a series of standardised scores (Weighted Welch’s T-Tests) comparing the fund and comparative benchmark exposures to each of the factors. These are used to highlight areas where the fund and comparative benchmark are statistically significantly different. Generally speaking, a reading of +/- 2 is considered significant and +/- 3 very significant. Higher numbers are expected when the investment universe is small. In the chart, price ratios (e.g. P/E) are inverted into yields for these tilts so that high scores indicate high Value exposure across all Value factors, for consistency of interpretation.

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Source: Northfield & AXA IM as at 30/11/2012

AXA Framlington European Fund – Style Overview (2/2)

Fund BmkBmk Data

Coverage %Fund Data

Coverage %Price to Book 1.5 1.3 92.6Dividend Yield % 2.5 3.7 99.9Price to Earnings 14.4 13.0 95.2Price to Free Cash Flow 8.5 9.1 88.4Price to Sales 1 0 0 8 98 5

100.097.690.8

86.3

98 9Price to Sales 1.0 0.8 98.5

Price to EBITDA 7.8 5.2 79.4ROE % 18.5 14.4 95.5Income to Sales % 11.2 9.5 97.23 Year Sales Grow th % (Historic) 5.2 2.5 98.3

98.9

77.893.598.998.4

12M Sales Grow th % (Forw ard) 5.9 4.2 99.23 Year EPS Grow th % (Historic) 14.1 10.3 84.812M EPS Grow th % (Forw ard) 10.1 9.8 94.1FY1 Earnings Revision Ratio -2.9 -8.1 100.0Market Cap (British Pounds in millions) 34,528 36,490 100.0100.0

99.3100.0

99.082.1

Short Term Momentum (3m) % 6.3 4.3 100.0Medium Term Momentum (12m) % 17.3 8.0 99.8Debt/Equity % 99.0 106.4 92.9Foreign Sales % 69.1 69.5 99.1

99.498.490.8100.0

The table above displays the weighted average scores for these factors and weighted harmonic averages for price ratios. In the table, P/Es (not yields) are used for ease of interpretation.

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Source: Northfield & AXA IM as at 30/11/2012.

Appendix – Portfolio characteristicspp

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AXA Framlington European Fund Geographic and Sector breakdowns

Geographic breakdown (%) Sector breakdown (%)

AUSTRIA

BELGIUM

CYPRUS

DENMARK

Energy

Materials

DENMARK

FINLAND

FRANCE

GERMANY

GREECE

Industrials

ConsumerDiscretionary

ConsumerGREECE

IRELAND

ITALY

LUXEMBOURG

NETHERLANDS

Staples

Healthcare

FinancialsNETHERLANDS

NORWAY

PORTUGAL

SPAIN

SWEDEN

InformationTechnology

TelecomServices

Strategy Comparative benchmark

0 5 10 15 20 25 30

SWEDEN

SWITZERLAND

0 5 10 15 20 25

Utilities

gy p

Source AXA IM as at 30/11/2012. Comparative benchmark: MSCI Europe ex UK..

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AXA Framlington European FundTop 10 holdings and market cap breakdown

Market cap breakdown (%)*Top 10 Holdings Fund %

Comparativebenchmark %

Difference%

93.1

94 3Large Cap

Top 10 Holdings Fund % benchmark % %

Nestle S.A. 4.2 4.8 -0.6

Novo Nordisk A/S 3.5 1.4 2.1

4.8

94.3

5.7

MediumCap

Roche Holding AG 3.5 3.1 0.4

BNP Paribas S.A. 3.3 1.2 2.1

Societe Generale 2 7 0 6 2 2

0.0

0.0Small Cap

Fund

Comparative benchmark

Societe Generale 2.7 0.6 2.2

Allianz SE 2.6 1.3 1.3

Anheuser-Busch InBev 2.4 1.6 0.8

0 20 40 60 80 100Total S.A. 2.2 2.4 -0.1

ING Groep N.V. 2.2 0.8 1.4

Industria de Diseno Textil S A 2 1 0 7 1 4Large Cap => 3bn EUR

Mid Cap 0.5bn EUR – 3bn EUR

Small Cap < 0.5bn EUR

Industria de Diseno Textil S.A. 2.1 0.7 1.4

TOTAL 28.7 17.6 11.1

Source AXA IM as at 30/11/2012. Comparative benchmark: MSCI Europe ex UK. Past performance is not a guide to future returns.*Remaining assets held in cash.

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AXA Framlington European Fund Top 10 overweight and underweight

Fund Comparative

benchmark Difference Fund Comparative

benchmark DifferenceTop 10 overweight positions weight % weight % % Top 10 underweight positions weight % weight % %

Societe Generale 2.7 0.6 2.2 Sanofi S.A. -- 2.3 -2.3

Novo Nordisk A/S 3.5 1.4 2.1 Siemens AG -- 1.9 -1.9

BNP Paribas S.A. 3.3 1.2 2.1 Novartis AG 1.4 3.1 -1.7

Bureau Veritas S.A. 1.7 0.1 1.6 Banco Santander S.A. -- 1.7 -1.7

Fresenius Medical Care AG & Co. KG 1.8 0.3 1.5 ENI S.p.A. -- 1.3 -1.3

Royal Dutch Shell PLC 1.5 -- 1.5 UBS AG -- 1.3 -1.3

Industria de Diseno Textil S.A. 2.1 0.7 1.4 Telefonica S.A. -- 1.2 -1.2

ING Groep N.V. 2.2 0.8 1.4 Banco Bilbao Vizcaya Argentaria -- 1.0 -1.0

Chr. Hansen Holding A/S 1.4 -- 1.4 Daimler AG -- 1.0 -1.0

Allianz SE 2.6 1.3 1.3 ABB Ltd. -- 0.9 -0.9

TOTAL 22.8 6.4 16.5 TOTAL 1.4 15.7 -14.3TOTAL 22.8 6.4 16.5 TOTAL 1.4 15.7 14.3

Source AXA IM as at 30/11/2012. Comparative benchmark: MSCI Europe ex UK.

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AXA Framlington European FundSector and stock attributions – 2012 (to end November)

Sector attribution (%) Stock attribution (%)

Top 10 attributors

Portfolio stock

return %

Total effect

%Societe Generale 29.56 0.65Industria de Diseno Textil S.A. 65.53 0.64T l f i S A 0 64 0 57

0.0

0.0

ConsumerDiscretionary

ConsumerStaples

Telefonica S.A. -0.64 0.57Novo Nordisk A/S 36.07 0.54Bureau Veritas S.A. 50.45 0.52Continental AG 74.79 0.47Gemalto N.V. 84.01 0.46BNP Paribas S A 13 65 0 40

0.0

0.0

-0.1

Energy

Financials

HealthcareBNP Paribas S.A. 13.65 0.40Essilor International S.A. 33.86 0.39Anheuser-Busch InBev 41.61 0.35

Portfolio stock

Total effect

0.0

0.0

0.0

Industrials

InformationTechnology

Materials

Sector allocation

Stock selection

Bottom 10 attributors return % %Royal Dutch Shell PLC (CL A) -6.67 -0.48Fresenius Medical Care AG & Co. KGaA -1.17 -0.30Deutsche Bank AG -11.29 -0.19Sanofi S.A. 0.00 -0.18UBS AG 4 81 0 16

-0.1

0.0

0 0

TelecomServices

Utilities

Cash UBS AG -4.81 -0.16Munich Reinsurance Company 0.00 -0.15Banco Bilbao Vizcaya Argentaria S.A. -15.45 -0.13Swiss Re AG 0.00 -0.12ASML Holding N.V. 0.00 -0.12Michelin 0.00 -0.11

0.0

-0.2

-4 1 6 11

Cash

Total

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Source AXA IM and FactSet as at 30/11/2012. Comparative benchmark: MSCI Europe ex UK. NB: Past performance is not a guide to future returns.

Michelin 0.00 0.11

Important notice

This communication is intended for Investment Professional use only and should not be relied upon by retail clients. Circulation must be restricted accordingly. Any reproduction of this information, in whole or in part, is prohibited.

This communication does not constitute an offer to sell or buy any units in the Fund. Information relating to investments is based on research and analysis undertaken or procured by AXA Investment Managers UK Limited for its own purposes and may have been made available to other members of the AXA Group of Companies which, in turn, may have acted on it. Whilst every care is taken over these comments, no responsibility is accepted for errors and omissions that may be contained therein. It is therefore not to be taken as a recommendation to enter into any investment transactions.

This communication should not be regarded as an offer, solicitation, invitation or recommendation to subscribe for any AXA investment service or product and is provided to you for information purposes only. The views expressed do not constitute investment advice and do not necessarily represent the views of any company within the AXA Investment Managers Group and may be subject to change without notice. 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.

Information relating to investments may have been based on research and analysis undertaken or procured by AXA Framlington for its own purposes and may have been made available to other expertises within the AXA Investment Managers Group, who in turn may have acted upon it. Information in this document may be updated from time to time and may vary from previous or future published versions of this document.

Past performance is not a guide to future performance. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested. Changes in exchange rates will affect the value of investments made overseas. Investments in newer markets and smaller companies offer the possibility of higher returns but may also involve a higher degree of risk. The price of units and the income from them can go down as well as up and investors may not get back the amount originally invested. An initial charge is usually made when you purchase units. Your investment should be for the

di t l t i t i ll 5 10 Ch i h t ill ff t th l f t t i t tmedium to long term i.e. typically 5-10 years. Changes in exchange rates will affect the value of trust investments overseas.

AXA Framlington is an expertise of AXA Investment Managers UK Limited. Issued by AXA Investment Managers UK Limited which is authorised and regulated by the Financial Services Authority. Registered in England and Wales No: 01431068 Registered Office: 7 Newgate Street, LondonEC1A 7NX. Telephone calls may be recorded for quality assurance purposes.

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