VALUE STATEMENTS - aegonam.com

VALUE STATEMENTSAEGON ASSET MANAGEMENT UK ICVC ('UK OEIC') WITH A YEAR END OF 31 JULY

AEGON ASSET MANAGEMENT UK INVESTMENT PORTFOLIOS ICVC ('PAIF') WITH A YEAR END OF 31 MARCH

AEGON ASSET MANAGEMENT UK UNIT TRUST ('FEEDER') WITH A YEAR END OF 31 MARCH

PUBLISHED NOVEMBER 2021

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Table of Contents

IntroductionUpdate on funds not providing value in 2020Helpful terms

EquitiesAegon Ethical Equity FundAegon Sustainable Equity FundAegon UK Equity Absolute Return FundAegon UK Equity FundAegon UK Equity Income FundAegon UK Opportunities FundAegon UK Smaller Companies Fund

Fixed incomeAegon Ethical Corporate Bond FundAegon High Yield Bond FundAegon Investment Grade Bond FundAegon Sterling Corporate Bond FundAegon Strategic Bond Fund

Multi-assetAegon Diversified Monthly Income FundAegon Ethical Cautious Managed FundAegon Sustainable Diversified Growth Fund

PropertyAegon Property Income Fund ('PAIF')Aegon Property Income Feeder Fund ('Feeder')

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The Value Statement is produced each year for every fund in our UK product ranges, covering the 12-month period to 31 July. The purpose of this value statement is to provide investors with a clear understanding of whether each fund offers value for money to its investors.

In the UK, we manage the following product ranges:

• Aegon Asset Management UK ICVC - ('UK OEIC') with a year end of 31 July

• Aegon Asset Management UK Investment Portfolios ICVC - ('PAIF') with a year end of 31 March

• Aegon Asset Management UK Unit Trust - ('Feeder') with a year end of 31 March

Why do we produce a Value Statement?The UK regulator, the Financial Conduct Authority (‘FCA’), introduced new rules in 2019 requiring asset management firms to consider, confirm and communicate whether they are delivering value for money in regard to the UK funds they are managing.

The FCA provided seven criteria that should be used in the assessment, which essentially cover quality of service delivered, costs, performance and how these compare to the market.

The Board of Aegon Asset Management UK plc takes responsibility for this process and has approved this statement. The Board of Directors is responsible for the overall governance of these UK funds. The Board of Directors includes external directors to ensure oversight and challenge of the funds is independent, comprehensive and in the best interests of investors.

The Chairman of the Board of Directors has overall responsibility for delivering this assessment.

As permitted by FCA regulations, we have elected to produce a combined Value Statement. This means we will produce Value Statements for the above product ranges as at 31 July, to coincide with the UK OEIC fund range’s annual reporting period.

The FCA requires managers to assess the following criteria:

1. Quality of service – we consider some of the measurements within this section to be ‘baseline’ criteria. This includes factors such as:

a. ensuring the fund is managed within investment parameters, providing sufficient liquidity to enable investors to buy and sell the fund.

b. being readily available to investors, for example by phone, post or fax.

c. having a website that is accessible to all investors, which provides a variety of information to enable investors to understand the funds offered for investment.

In our research framework ESG factors are systematically integrated into our bottom-up research process for fixed income and equity issuers. We aim to develop our own holistic house view of issuers' ESG profiles. By integrating ESG considerations with economic factors, and drawing from specialized ESG research sources, the research teams seek to identify financially material ESG factors and arrive at an independent, comprehensive view of the investment1.

We seek to answer three key questions:

a. What is the potential economic impact of the ESG issue and its associated effect on the issuer’s long-term growth potential, profitability or creditworthiness?

b. Are ESG risks and opportunities accurately reflected in valuations?

c. Is engagement beneficial to generate long- term economic value?

2. Performance – how each fund has performed, net of charges, over the past year and over the time period referred to in the fund’s objective.

3. AFM costs – highlighting the fund’s charging components and whether these are appropriate.

4. Economies of scale – the extent to which economies of scale have been achieved and whether they have been passed on to investors.

5. Comparable market rates – how the fund’s charges compare to similar funds in the industry.

6. Comparable services – to ensure a consistent pricing structure is applied for similar funds at Aegon Asset Management UK.

7. Classes of units – whether share classes, and their associated charges, are appropriate and available for investment.

8. Other considerations – we assess other criteria that we consider are important in the assessment of each fund, for example: liquidity.

Introduction

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1. Please note that the integration of ESG factors into the investment process does not mean that all funds seek responsible investing outcomes or invest according to responsible policies. For funds which invest according to sustainable and ethical policies please see our reports on the Sustainable and Ethical funds within our range.

Update on funds not providing value in 2020Diversified Growth Fund – This fund has been reviewed and investors were notified in January 2021 that on 1 April 2021 the Fund would be renamed the Aegon Sustainable Diversified Growth Fund. This name change and our incorporation of our sustainability criteria into the investment policy of the Fund marked the formal culmination of changes to the strategy’s investment process which had been ongoing for some time. The Fund has introduced a small number of sustainability-based exclusions to its investment universe and also requires each security that is proposed for the strategy to be analysed from a sustainability perspective by the AAM Responsible Investing team. The portfolio has therefore evolved over the last year to reflect these characteristics which we believe will better equip the strategy to meet its investment objective. The objective, the risk characteristics and the asset allocation process underpinning this multi asset strategy remain unchanged.

Property Investment Fund (PAIF) and its Feeder - In July investors of both these Funds were informed that the Funds will close on 9 August 2021, with the properties to be sold and the resultant proceeds returned to investors as quickly as possible, whilst trying to maximise returns. The first capital distribution was made on 12 August and it is envisaged that liquidating these funds in their entirety may take up to 24 months.

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Additional ChargesThese are the charges on top of the Annual Management Charge ('AMC') that form part of the Ongoing Charges Figure ('OCF'). These items include audit fees and regulation fees.

Annual Management Charge ('AMC')This is the charge by Aegon Asset Management UK plc for managing the fund and providing its overall service.

Transaction costsThese are the costs incurred when buying and selling underlying assets in the portfolio.

Investment Association Sector ('IA Sector')The Investment Association has created a range of sectors and has grouped funds deemed to have similar objectives and strategies into the same sector. For example, funds investing in UK smaller companies can be found in the IA UK Smaller Companies Peer group.

Investment objectiveThis describes what the fund is aiming to achieve over a stated period. Typically, this will be to achieve income and / or capital growth over a seven-year period.

Environmental. Social and Governance (ESG) We incorporate Environmental, Social and Governance (ESG) factors into the investment decision-making across our fund range to mitigate risk and uncover opportunities.

While some funds are not explicitly mandated to make ethical value judgements or to impose ESG-related restrictions, the judgement we make reflects the extent to which we believe ESG issues impact a stock or bond's investment case, either positively or negatively. To do that, our fund managers / analysts draw upon the expertise of our dedicated responsible investment team with whom they work closely.

Helpful terms

Responsible investment (RI) This is an umbrella term that covers various tools and approaches to incorporating environmental, social and governance (ESG) considerations into investment decision-making processes. It may include ESG integration and active ownership as well as dedicated, RI-focused capabilities. Related terms may include sustainable or ESG investing. More information can be found in the Responsible Investment section of our website www.aegonam.com

LiquidityFunds invest in underlying securities according to their investment mandate. They also keep a small amount of cash to assist in payment of expenses incurred by the fund. Some underlying securities take longer to sell than others – this can be influenced by a range of factors, such as which index and country the security is purchased from, how many shares are in issue and market conditions. It can take from a few days to a couple of weeks to sell securities and receive the proceeds. However, there are instances where this can take longer. Liquidity measures how quickly the fund can sell its holdings and receive the cash proceeds. Securities are generally sold to facilitate investor sell instructions. In extreme conditions, the fund may need to temporarily suspend dealing while it sells the required underlying holdings to facilitate the sell instructions. This can happen during extreme volatility, while the Portfolio Manager is seeking favourable prices and / or in instances when a significant proportion of the fund needs to be sold.

Performance comparatorsFunds will generally be compared with their peers in the appropriate IA Sector. The funds may also be compared against a benchmark index. In these instances, the benchmark may act as a constraint, a target or just for comparison purposes. In most instances the funds are measured against a benchmark index and / or Investment Association ('IA') sector for comparison purposes. For example, the UK Opportunities Fund’s performance is compared with the IA All UK Companies Peer group.

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are geared towards international growth added value, as did some stocks that are focused more on the UK domestic economy.

Having no exposure to the pharmaceutical sector (driven by the Fund’s ethical criteria) also added value. In contrast, having limited exposure to banks and no exposure to mining (again driven by the ethical criteria) detracted.

Performance of the Fund covering different time periods can be found in the factsheet. Below is a link to the fundpage for the Fund.

www.aegonam.com/ethicalequityfund

7 year performance chart


The Board of Directors believe that over the longer term (seven-years to 31 July 2021) the Fund has met its objective.

3. AFM CostsThere are no entry costs, exit costs or performance fees associated with this Fund. Below are the costs incurred by an investor in each share class of the Fund:

B share class (%)

Annual Management Charge 0.75

Additional Charges 0.02

Ongoing Charges 0.77

Transaction Costs 0.22

Total Cost of Investment 0.99

The Board of Directors believe that the charges are justified in the context of the overall value delivered to the investors in the Fund.

Overall Value AssessmentThe Board of Directors believe that the Fund provides good overall value for its investors.

1. Quality of ServiceThe Board of Directors believe that, based on the areas assessed, the Fund offers a good quality of service.

There have been instances when the release of the daily prices has been delayed. This has typically been during periods of extra market volatility and one-off delays, rather than due to systemic issues. While this causes the publication of the daily price to be delayed on those impacted days, it ensures that the Fund is priced accurately.

Furthermore, the impact of Covid-19, caused a delay in our call centre answering response times during the earlier part of the year. A recruitment and training plan was put in place to ensure this was back to normal later in the year.

The Fund benefits from the implementation of a screen which tailors the investment universe to include only businesses which meet certain criteria and that can be regarded as an ‘ethical’ investment, for which there is no additional Annual Management Charges. More details of this process are noted in Appendix D of the Prospectus.

We have concluded that the low level of breaches, pricing errors and complaints for the Fund does not raise material concerns.

2. PerformanceThe investment objective is to provide a combination of income and capital growth over any seven-year period.

We compare the Fund's performance with the performance of other funds within the Investment Association All UK Companies Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.

The comparison should be performed over at least a seven-year period to provide the most useful long-term comparison.

The Fund has achieved its investment objective over the seven-year period. The Fund has also outperformed its peer group sector median over the one-year period to 31 July 2021.

The UK equity market rallied strongly over the year as economies reopened following the successful development of a vaccine. Ongoing central bank support and an end to Brexit uncertainty also helped the market. In this environment, ‘growth’ stocks and their ‘value’ counterparts took turns to outperform, although over the year as a whole growth was the clear winner.

We continue to adhere to detailed, bottom-up fundamental analysis, with a long-term focus. Both stock selection and sector allocation contributed positively to the Fund’s performance over the year. Within stock selection, the Fund benefited from a number of themes. For example, a number of the Fund’s holdings that

Aegon Ethical Equity Fund

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4. Economies of ScaleThe Board of Directors have assessed economies of scale ('EoS') for the Fund considering various factors, in line with our value assessment framework. The Board of Directors believe that there are two key areas where EoS can be delivered to investors, namely a) global organisational structure and b) efficiencies due to increasing Fund size.

Aegon Asset Management is a global organisation whereby pooled research, pooled resources and globally negotiated vendor contracts are utilised. In the absence of being part of a global structure, the Fund would be likely to have higher costs.

The Board of Directors believe that, with more assets in the Fund, EoS can be passed on to Fund investors. Certain legal, regulatory and administrative costs are fixed (i.e. not directly related to fund size) and are directly charged to the Fund. Therefore, with increasing Fund size, the relative impact of these costs is reduced.

Due to the current size of the Fund, we do not believe there are sufficient EoS to reduce the already competitive Annual Management Charge (‘AMC'). However, as part of the annual value assessment, we will continually review the position and pass on EoS benefits to investors where possible.

5. Comparable Market RatesThe Board of Directors compared the Fund’s Annual Management Charge (‘AMC') and Ongoing Charges Figure (‘OCF’), at a share class level, against other relevant funds within the same Investment Association (‘IA’) peer group.

While the AMC is in line with the IA sector median, the OCF is lower than the IA sector median due to the Board of Directors’ decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice. Investors can see this when they compare the Fund with similar funds managed by other providers.

The Board of Directors believe that the Fund’s costs are fair, reasonable and very competitive.

6. Comparable ServicesThe Board of Directors believe that we are charging a consistent price for this strategy when compared to our offering in different markets.

Source: Lipper, as at 31 July 2021, B Acc (GBP) share class, NAV to NAV, noon prices, income reinvested, net of ongoing charges, excluding entry or exit charges.

Performance comparator: Investment Association All UK Companies Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within the Investment Association All UK Companies Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe and comprising ethical and non-ethically screened funds, demonstrating the value of the Fund’s ethical screen against non-ethically screened funds. This comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

7. Classes of unitsThe Board of Directors believe the share classes available for this Fund and the associated charges are fair and appropriate.

An exercise was carried out in 2020 and 2021 to transfer investors from the higher AMC charging class A into class B. Those investors who were originally in class A subsequently benefited from lower fees in class B.

8. Other considerationsWe recognise that it is important for investors to be able to buy into and sell out of the Fund without any liquidity obstacles.

Therefore, providing liquidity to investors is an important input to the overall value offered by the Fund.

Aegon Asset Management UK plc assesses fund liquidity levels under both normal and stressed liquidity conditions. We consider multiple factors including sector, region, market capitalisation and bid/ask spreads when reviewing fund liquidity. This assessment is done in conjunction with consideration for investor concentration levels, investor type, performance levels, market events and collateral requirements, so there is a holistic understanding of the liquidity profile.

Under stressed liquidity environments, we convene daily liquidity meetings covering market liquidity, valuations, flows and potential outflows to proactively manage liquidity. Processes and procedures are in place to manage suspensions and return proceeds to investors as soon as possible.

We are also very active in the Corporate Governance of the securities held by the Fund. We vote on resolutions on behalf of the Fund, and actively vote against proposals where we believe they are not in the best interests of our investors.

Over the 12-month period to 31 July 2021, we voted at 74 company meetings for securities that the Fund held. In 12% of these meetings we voted against at least one resolution; we abstained at least once in 15%; and we voted for the resolutions in the remainder of the meetings.

The Board of Directors are comfortable that there is nothing to declare to investors from the assessment of other considerations.

This document does not constitute financial advice. If you do need advice on the information provided in this document you may wish to talk to an independent financial adviser.

Past performance is not a guide to future performance. Outcomes, including the payment of income, are not guaranteed.

Aegon Ethical Equity Fund

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benefiting the share prices of companies with exposure to these themes, many of which the Fund invests in.

We also added value by positioning the Fund to benefit from economies re-opening.


www.aegonam.com/sustainableequityfund



The Board of Directors believe that over the longer term (seven years to 31 July 2021) the Fund has met its objective.

3.AFM CostsThere are no entry costs, exit costs or performance fees associated with this Fund. Below are the costs incurred by an investor in each share class of the Fund:

B share class (%) S share class (%)

Annual Management Charge 0.75 0.40

Additional Charges 0.07 0.07

Ongoing Charges 0.82 0.47

Transaction Costs 0.80 0.80

Total Cost of Investment 1.62 1.27

Trading in mid-cap and small cap equities held by the Fund can at times result in higher transaction costs than large cap equity funds.





The Fund benefits from an enhanced level of ESG analysis in determining the sustainability investment criteria, for which there is no additional Annual Management Charges. More details of this process are noted in Appendix D of the Prospectus.



We compare the Fund's performance against the performance of other funds within the Investment Association Global Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.


The Fund has met its objective over the seven-year period.

Over the 12-month period to 31 July 2021, the Fund generated a strong positive return and comfortably outperformed its benchmark.

Global equity markets performed strongly over the year to 31 July 2021. Successful Covid-19 vaccines, coupled with ongoing support from central banks, were the main drivers of the positive environment.

Both sector allocation and stock selection added value over the period although the latter was by far the largest contributor to the Fund’s strong relative outperformance. While stock selection successes came from a wide variety of sources, it was noticeable that a number of positive ESG trends continued to accelerate,

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While the AMC is in line with the IA sector median, the OCF is lower than the IA sector median due to the Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice. Investors can see this when they compare the Fund to similar funds managed by other providers.





8. Other considerationsWe recognise that it is important for investors to be able to buy into and sell out of the Fund without any liquidity obstacles. Therefore, providing liquidity to investors is an important input to the overall value offered by the Fund.









Performance comparator: Investment Association Global Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon Sustainable Equity Fund

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The Fund benefited from a number of key themes, including stocks with strong ESG credentials and the ability to disrupt their industries. Merger & Acquisition activity also helped performance with a number of the Fund’s holdings rallying after becoming the subject of a bid approach.


www.aegonam.com/ukequityabsolutereturnfund



The Board of Directors believe that over the longer term (three-years to 31 July 2021) the Fund has met its objective.


B share class (%)






The Fund has exposure to mid-cap & small cap equities. The Fund also uses derivates for risk management and shorting options. This combination can at times result in higher transaction costs






2. PerformanceThe investment objective is to achieve a positive absolute return over any 36-month period in all market conditions. By investing in the Fund, capital is at risk. There is no guarantee that the Fund will deliver positive returns over this, or any, time period.

We compare the Fund's performance against the Sterling Over Night Index Average (SONIA) 1 Month. Comparison against this rate will allow investors to determine whether the Fund has delivered total returns in excess of cash. SONIA gives an indication of what a cash investment could have provided.

The comparison should be performed over at least a 36-month period to provide the most appropriate comparison.

Over the three-year period to 31 July 2021, the Fund has met its investment objective of achieving a positive absolute return.

The Fund also significantly outperformed its SONIA 1 Month benchmark over one and three years to 31 July 2021.


Throughout the period the Fund remained uncorrelated to equity markets with our long book generating the bulk of the positive return while our short book also contributed. Both our Themes and Best Ideas modules added value while the performance of our Pair Trades was subdued in comparison.

Aegon UK Equity Absolute Return Fund

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The AMC is slightly above the IA sector median, while the OCF is in line with the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.









Over the 12-month period to 31 July 2021, we voted at 6 company meetings for securities that the Fund held. We didn’t vote against any resolutions, abstained at least once in 33%; and we voted for the resolutions in the remainder of the meetings.

The Board of Directors believe that there is nothing to declare to investors from the assessment of other considerations.




Performance comparator: Sterling Over Night Index Average (SONIA) 1 Month. Investors are invited to compare the Fund’s performance against this index. Comparison against this rate will allow investors to determine whether the Fund has delivered total returns in excess of cash. SONIA gives an indication of what a cash investment could have provided. The comparison should be performed over at least a 36-month period to provide the most appropriate comparison.

Aegon UK Equity Absolute Return Fund

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from the growth arena, exposure to economically-sensitive holdings also generated decent returns, with a number of names issuing upbeat trading statements.


www.aegonam.com/ukequityfund



The Board of Directors believe that over the longer term (over seven years to 31 July 2021) the Fund has met its objective.


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We compare the Fund's performance against the performance of other funds within the Investment Association All UK Companies Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.


The Fund has achieved its investment objective over the seven-year period. The Fund performed broadly in line with its peer group sector median over the one-year period to 31 July 2021.


Disciplined stock selection accounted for the majority of the Fund’s positive performance over the period. Sector allocation was more subdued in comparison; our underweight exposure to energy and financials in particular, detracted.

The strong returns within stocks selection came from a range of themes. For example, a number of the Fund’s holdings that are geared towards international growth added value, as did some stocks that are focused more on the UK domestic economy. Away

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Both the AMC and the OCF are significantly lower than the IA sector median, helped by the Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice. Investors can see this when they compare the Fund to similar funds managed by other providers.














Performance comparator: Investment Association All UK Companies Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon UK Equity Fund

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www.aegonam.com/ukequityincomefund





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2. PerformanceThe investment objective is to achieve an income return along with the potential for some long-term (more than seven years) capital growth.

We compare the Fund's performance against the performance of other funds within the Investment Association UK Equity Income Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.


The Fund has achieved its investment objective over the seven-year period. The Fund underperformed its peer group sector median over the one-year period to 31 July 2021.

Income strategies generally came under pressure during the one-year period due to a combination of dividend cuts, and a relative re-rating of higher-growth companies. This affected Fund performance given it clearly has an income bias and tends to have more of a focus on mature companies which are not as highly valued as growth stocks. In particular, we generally position the Fund with an overweight to defensive yield areas of the UK equity market and focus on good quality companies with strong cash-generative businesses.

Performance picked up in the second half of the period as news of successful vaccine trials boosted sentiment, coupled with the subsequent market rotation towards value stocks.

The main driver of the robust positive performance was disciplined stock selection, although sector allocation also contributed positively.

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Both the AMC the OCF are significantly lower than the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.













Source: Lipper, as at 31 July 2021, B Inc (GBP) share class, NAV to NAV, noon prices, income reinvested, net of ongoing charges, excluding entry or exit charges.

Performance comparator: Investment Association UK Equity Income Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon UK Equity Income Fund

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www.aegonam.com/ukopportunitiesfund





B share class (%)






Trading in mid-cap and small cap equities held by the Fund can at times result in higher transaction costs than large cap equity funds.







2. PerformanceThe investment objective is to provide a combination of income and capital growth over any seven year period.

We compare the Fund's performance against the performance of other funds within the Investment Association All UK Companies Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.


The Fund has achieved its investment objective over the seven-year period.

The Fund has also outperformed its peer group sector median over the one-year period to 31 July 2021. The UK equity market rallied strongly over the year as economies reopened following the successful development of a vaccine. Ongoing central bank support and an end to Brexit uncertainty also helped the market. In this environment, ‘growth’ stocks and their ‘value’ counterparts took turns to outperform, although over the year as a whole growth was the clear winner.

The Fund’s outperformance was due mainly to disciplined stocks selection, with returns coming from a range of themes. For example, a number of the Fund’s holdings that are geared towards international growth added value, as did some stocks that are focused more on the UK domestic economy. Away from the growth arena, exposure to economically-sensitive holdings also generated decent returns, with a number of names issuing upbeat trading statements.

Aegon UK Opportunities Fund

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The AMC is in line with the IA sector median and the OCF is lower than the median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.









Over the 12-month period to 31 July 2021, we voted at 52 company meetings for securities that the Fund held. In 23% of these meetings we voted against at least one resolution; we abstained at least once in 19%; and we voted for the resolutions in the remainder of the meetings..





Performance comparator: Investment Association All UK Companies Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon UK Opportunities Fund

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underweight in the ‘financial distress’ theme, however, which was detrimental to relative performance.

Disciplined stock selection was a key driver of the Fund’s positive return, with strong returns coming from a variety of sources.


www.aegonam.com/uksmallercompaniesfund





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We compare the Fund's performance against the performance of other funds within the Investment Association UK Smaller Companies Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.

The comparison should be performed over at least a seven-year period to provide the most useful long- term comparison.

The Fund has achieved its investment objective over the seven-year period; it has generated a robust positive return.

The Fund underperformed its peer group sector median over the one-year period to 31 July 2021.


The Fund produced a strong positive return over the period. Throughout the year the Fund was skewed towards strong balance sheet growth and retained exposure to names with significant ongoing potential despite the volatile backdrop. As we moved into 2021, we invested in the economic recovery theme and reduced defensive exposure. In general, our positioning added value and helped the Fund achieve a strong positive return. We remained

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%

Aegon UK Smaller Companies B Acc

UK Smaller Companies Median

Numis Smaller Companies Exc Inv Com TR

0

10

20

30

40

50

60


%

Aegon UK Smaller Companies B Acc

UK Smaller Companies Median

Numis Smaller Companies Exc Inv Com TR






The AMC is in line with IA sector median and the OCF is significantly lower than the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.














Performance comparator: Investment Association UK Smaller Companies Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison

Aegon UK Smaller Companies Fund

19

banks stepped in towards the end of the period to reassure markets that inflationary pressures were transitory in their opinion.

In this volatile environment the Fund outperformed its peer group median. Actively managing our exposure to corporate bond risk, coupled with disciplined stock selection were the main drivers of the relative outperformance. For example, while the Fund was not able to take part in all areas of the market rally during the first half of the period, it nonetheless performed well with strong stock selection ensuring that performance remained above median.

Another key theme in the Fund was our activity in the primary market, which we successfully targeted as means of adding value to the Fund.


www.aegonam.com/ethicalcorporatebondfund





B share class (%)











We compare the Fund's performance against the performance of other funds within the Investment Association Sterling Corporate Bond Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe comprising ethical and non-ethically screened funds, demonstrating the value of the Fund's ethical screen against non-ethically screened funds.


The Fund has achieved its objective over seven years.

Over the 12 months to 31 July 2021, the Fund delivered a robust positive return and finished ahead of the peer group sector median.

Bond markets performed well over the period as a whole, although levels of volatility remained very high. The market found support from the ongoing stimulus measures implemented by global central banks and governments. However, the positive news on vaccines and the subsequent recovery in economies led to concerns about rising inflation. These concerns remained in place until central

Aegon Ethical Corporate Bond Fund

20

0

10

20

30

40

50

60


Aegon Ethical Corporate Bond Acc BSterling Corporate Bond IA sectorMarkit iBoxx Sterling Collateralized & Corp

-2

-1

0

1

2

3

4


%

Aegon Ethical Corporate Bond Acc B

Sterling Corporate Bond IA sector

Markit iBoxx Sterling Collateralized & Corp









While the AMC is in line with the IA sector median, the OCF is lower than the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.






Aegon Asset Management UK plc assesses fund liquidity levels under both normal and stressed liquidity conditions. We consider multiple factors including sector, region, credit rating and bid/ask spreads when reviewing fund liquidity. This assessment is done in conjunction with consideration for investor concentration levels, investor type, performance levels, market events and collateral requirements, so there is a holistic understanding of the liquidity profile.






Performance comparator: Investment Association Sterling Corporate Bond Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe and comprising ethical and non-ethically screened funds, demonstrating the value of the Fund’s ethical screen against non-ethically screened funds. This comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon Ethical Corporate Bond Fund

21

Performance of the Fund covering different time periods can be found in the factsheet. Below is a link to the fundpage for the Fund..

www.aegonam.com/highyieldbondfund



The Board of Directors believe that over the longer term (seven years to 31 July 2021) the Fund has met its objective
















We compare the Fund's performance against the performance of other funds within the Investment Association Sterling High Yield Bond Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.


The Fund has achieved its objective over the seven-year period.

Over the 12 months to 31 July 2021, the Fund posted a robust positive return and outperformed its peer group sector median.

The high yield bond market rallied strongly over the period. The ongoing stimulus packages from global central banks and governments, coupled with successful development of Covid-19 vaccines and a conclusion to Brexit negotiations, were the main drivers of performance.

The robust performance was due partly to our overweight risk stance. In particular, our overweight exposure to B-rated and CCC-rated debt added value for the majority of the period. Given the strength seen in the CCC-rated area, we began to reduce the size of our weighting in this area towards the end of the period although we remained overweight overall.

Another trend witnessed over the period was the strong performance of cyclically exposed names within the Fund; as we moved into 2021, we looked to increase our exposure to some of the more Covid-19 impacted sectors such as gaming and transportation, which subsequently added value.

Aegon High Yield Bond Fund

22

-10

-5

0

5

10

15

20

25

30

35

4045


%

Aegon High Yield Bond Acc B

Sterling High Yield IA sector

ICE BofA Global High Yield GBP Hedged

0

2

4

6

8

10

12

14

16


%

Aegon High Yield Bond Acc BSterling High Yield IA sectorICE BofA Global High Yield GBP Hedged


The Board of Directors believe that, with more assets in the Fund, EoS can be passed on to Fund investors. Certain legal, regulatory and administrative costs are fixed (i.e. not directly related to fund size) and are directly charged to the Fund. Therefore, with increasing Fund size, the relative impact of these costs is reduced. Due to the current size of the Fund, we do not believe there are sufficient EoS to reduce the already competitive Annual Management Charge (‘AMC'). However, as part of the annual value assessment, we will continually review the position and pass on EoS benefits to investors where possible.


While the AMC is lower than the IA sector median, the OCF is significantly lower than the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.












Performance comparator: Investment Association Sterling High Yield Bond Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon High Yield Bond Fund

23

As the period progressed, we continued to focus on using the non-sterling flexibility of the Fund to identify good opportunities in dollars and euros, particularly through the primary market.


www.aegonam.com/investmentgradebondfund
















We have concluded that the low level of breaches, pricing errors and complaints for the Fund does not raise material concerns..


We compare the Fund's performance against the performance of other funds within the Investment Association Sterling Corporate Bond Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.



Over the 12-month period to 31 July 2021, the Fund outperformed its peer group sector median.

Bond markets performed well over the period as a whole, although levels of volatility remained very high. The market found support from the ongoing stimulus measures implemented by global central banks and governments. However, the positive news on vaccines and the subsequent recovery in economies led to concerns about rising inflation. These concerns remained in place until central banks stepped in towards the end of the period to reassure markets that inflationary pressures were transitory in their opinion.

We focused throughout the period on disciplined bottom-up stock selection as a means of adding value to the Fund. We made good use of the Fund’s non-sterling flexibility and held a sizeable weighting to euro and dollar names. In general, the Fund’s exposure to subordinated financial bonds added to performance.

Aegon Investment Grade Bond Fund

24

0

10

20

30

40

50

60


%

Aegon Investment Grade Bond B Acc



-2

-1

0

1

2

3

4

5


%

Aegon Investment Grade Bond B AccSterling Corporate Bond IA sectorMarkit iBoxx Sterling Collateralized & Corp






The AMC and OCF are slightly above the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.







Under stressed liquidity environments, we convene daily liquidity meetings covering market liquidity, valuations, flows and potential outflows to proactively manage liquidity. Processes and procedures are in place to manage suspensions and return proceeds to investors as soon as possible. We are also very active in the Corporate Governance of the securities held by the Fund. We vote on all resolutions on behalf of the Fund, and actively vote against proposals where we believe they are not in the best interests of our investors.





Performance comparator: Investment Association Sterling Corporate Bond Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon Investment Grade Bond Fund

25

We continued to benefit from our exposure to the financial sector, and in select areas that had been hit hard by the pandemic but subsequently rallied on the successful vaccine news.


www.aegonam.com/sterlingcorporatebondfund


















We compare the Fund's performance against the performance of other funds within the Investment Association Sterling Corporate Bond Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.



Over the 12 months to 31 July 2021, the Fund generated a robust positive return and outperformed its peer group sector median.

Bond markets performed well over the period as a whole, although levels of volatility remained very high. The market found support from the ongoing stimulus measures implemented by global central banks and governments. However, the positive news on vaccines and the subsequent recovery in economies led to concerns about rising inflation. These concerns remained in place until central banks stepped in towards the end of the period to reassure markets that inflationary pressures were transitory in their opinion.

The Fund performed well in the volatile environment, with our focus on disciplined, bottom-up issue selection the main driver of returns. As part of our disciplined approach we focused on selling positions that we felt offered little further upside (particularly after the strong rally seen in the first half of the period) and using the proceeds to invest in names that offered good opportunities in the prevailing market environment.

Aegon Sterling Corporate Bond Fund

26

0

10

20

30

40

50

60


%

Aegon Sterling Corporate Bond Acc B



-2

-1

0

1

2

3

4

5


%

Aegon Sterling Corporate Bond Acc B




















Performance comparator: Investment Association Sterling Corporate Bond Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon Sterling Corporate Bond Fund

27

Our exposure to high yield bonds added value, as did our overweight positions in financials and a selection of cyclical sectors that would benefit the most from an economic recovery. In terms of government bonds, we again actively managed our exposure to these assets, given the volatile conditions.


www.aegonam.com/strategicbondfund




3.AFM CostsThere are no entry costs, exit costs or performance fees associated with this Fund. Below are the costs incurred by an investor in each share class of the Fund:







Transaction costs for the Fund are in line with what we would expect from this active, unconstrained, flexible strategy. The Fund invests across the breadth of the fixed income universe, and in turn, we expect portfolio turnover levels to be heightened versus our other traditional fixed income funds with smaller universes.







We compare the Fund's performance against the performance of other funds within the Investment Association Strategic Bond Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.



Over the 12 months to 31 July 2021, the Fund produced a strong positive return and significantly outperformed its peer group sector median.

Bond markets performed well over the period although levels of volatility remained very high. The market found support from the central bank and governments. However, the positive news on vaccines and the subsequent recovery in economies led to concerns about rising inflation. These concerns remained in place until central banks stepped in towards the end of the period to reassure markets that inflationary pressures were transitory in their opinion.

Throughout the period, we took full advantage of the Fund’s global, unconstrained remit to capitalise on the relatively constructive backdrop. In terms of risk, we were heavily tilted towards Europe (at the expense of the US) particularly during the first half of the period. This left the Fund well positioned to benefit from the positive performance of the peripheral and core markets in Europe, both in corporate and government bonds.

Aegon Strategic Bond Fund

28

-10

-5

0

5

10

15

20

25

30

35

40

45


%

Aegon Strategic Bond Acc BSterling Strategic Bond IA sector

Bloomberg Barclays Global Aggregate GBP Hedged

-4

-2

0

2

4

6

8

10

12


%

Aegon Strategic Bond Acc BSterling Strategic Bond IA sectorBloomberg Barclays Global Aggregate GBP Hedged







The AMC is slightly above the IA sector median, while the OCF is lower than the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.












Performance comparator: Investment Association Strategic Bond Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds investing in a similar but not identical investment universe. The comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon Strategic Bond Fund

29



The Board of Directors believe that over the longer term (five years to 31 July 2021) the Fund has met its objective.


B share class (%)













2. PerformanceThe investment objective is to generate income with a target yield of approximately 5% per annum with the potential for capital growth over the medium term (being any five-year period).

The Fund has met its objective over five years.

Over the one-year period to 31 July 2021, the Fund generated an attractive level of income; the historic yield, based on the 12 monthly distributions to 31 July 2021, was 4.35%.

Global equity markets and higher risk areas of the bond markets (ie, high yield and investment grade bonds) performed strongly over the year to 31 July 2021. Successful Covid-19 vaccines, coupled with ongoing support from central banks, were the main drivers of the positive environment.

It was a challenging environment for income-generating funds with the yield offered by bonds remaining low and many companies forced to cut or suspend their dividend payments. We took full advantage, however, of the Fund’s flexibility to invest across asset classes, with the strong total return achieved over the year coming from a variety of areas, including bonds issued by banks, global equity income, high yield bonds and listed infrastructure.

The Fund also benefited from its exposure to the property market, which also performed well over the year although the recovery was more gradual and not broad based.


www.aegonam.com/diversifiedincomefund

Aegon Diversified Monthly Income Fund

30

-4

-2

0

2

4

6

8

10

12

14

16


%

Aegon Diversified Month Inc B Inc

Mixed Investment 20-60% Shares Median

-10

0

10

20

30

40

50

60


%

Aegon Diversified Month Inc B Inc






The AMC is significantly below the IA sector median and the OCF is around half that of the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.




Source: Lipper, as at 31 July 2021, B Inc (GBP) share class, NAV to NAV, noon prices, income reinvested, net of ongoing charges, excluding entry or exit charges.

Performance comparator: Investment Association Mixed 20-60 Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds holding similar equity ranges. The comparison should be performed over a five-year period to provide the most useful medium term comparison.



Aegon Asset Management UK plc assesses fund liquidity levels under both normal and stressed liquidity conditions. We consider multiple factors including sector, region, credit rating, market capitalisation and bid/ask spreads when reviewing fund liquidity. This assessment is done in conjunction with consideration for investor concentration levels, investor type, performance levels, market events and collateral requirements when assessing fund liquidity levels, so there is a holistic understanding of the liquidity profile.







Aegon Diversified Monthly Income Fund

31

Fund was also able to capitalise on. In the bonds portfolio, actively managing our exposure to corporate bond risk, coupled with disciplined stock selection were the main drivers of returns.


www.aegonam.com/ethicalcautiousmanagedfund





B share class (%)














We compare the Fund's performance against the performance of other funds within the Investment Association Mixed 20-60% Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds holding similar equity and bond ranges. The comparison should be performed over at least a seven-year period to provide the most useful long- term comparison.

The Fund has met its objective over the seven-year period.

The Fund also performed well over the 12-month period to 31 July 2021, outperforming median in the IA sector.

Global equity markets and higher risk areas of the bond markets (ie, high yield and investment grade bonds) performed strongly over the year to 31 July 2021. Successful Covid-19 vaccines, coupled with ongoing support from central banks, were the main drivers of the positive environment.

Within the equity portfolio, the Fund benefited from its exposure to companies with international growth characteristics as well as names that were more focused on the UK domestic economy. Merger and acquisition activity was also a key theme which the

Aegon Ethical Cautious Managed Fund

32

0

10

20

30

40

50

60


%

Aegon Ethical Cautious Managed Acc B


50% FTSE All-Share TR - 50% iBoxx £ Non-Gilts

-5

0

5

10

15

20


%

Aegon Ethical Cautious Managed Acc B


50% FTSE All-Share TR - 50% iBoxx £ Non-Gilts






The AMC is slightly above the IA sector median, while the OCF is significantly lower than the IA sector median. The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.






Aegon Asset Management UK plc assesses fund liquidity levels under both normal and stressed liquidity conditions. We consider multiple factors including sector, region, credit rating, market capitalisation and bid/ask spreads when reviewing fund liquidity. This assessment is done in conjunction with consideration for investor concentration levels, investor type, performance levels, market events and collateral requirements when assessing fund liquidity levels, so there is a holistic understanding of the liquidity profile.







Source: Lipper, as at 31 July 2021, B Acc (GBP) share class, NAV to NAV, noon prices, income reinvested, net of ongoing charges, excluding entry or exit charges.Performance comparator: Investment Association Mixed 20-60% Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with Funds holding similar equity ranges. The above comparison should be performed over at least a seven-year period to provide the most useful long term comparison.

Aegon Ethical Cautious Managed Fund

33

Within bond markets our weighting to corporate bonds aided overall returns, with both investment grade and high yield exposure adding value.


www.aegonam.com/diversifiedgrowthfund



The Board of Directors believe that over the longer term (five years to 31 July 2021) the Fund has met its objective.


B share class (%)






This is an actively-managed multi asset fund with a bespoke portfolio of, typically, around 150 individual securities. It adjusts its asset allocation through those individual security weightings and hedges its overseas currency exposure back to base currency on all holdings. Its transaction costs reflect its activity in global bond, equity and foreign exchange markets, activity which is designed to deliver its investment objective.


1. Quality of ServiceThe Board of Directors concluded that, based on the areas assessed, the Fund offers a good quality of service.



The Fund benefits from an enhanced level of ESG analysis in determining the sustainability investment criteria, for which there is no additional Annual Management Charges. More details of this process are noted in Appendix D of the Prospectus.


2. PerformanceThe Fund’s investment objective is to deliver a total return (capital growth plus income) that exceeds the UK Retail Prices Index by at least 4% per annum over any five-year period.

UK Retail Price Index ('UK RPI') is selected as a commonly accepted measure of UK inflation. We consider that exceeding RPI by at least 4% over five years is a challenging but attractive objective. It is therefore the target benchmark in relation to which the Fund is managed. Comparison of the Fund's performance against the target benchmark will allow investors to determine whether, and to what extent, the Fund has delivered returns in excess of inflation.

We note that the Fund, while generating robust positive returns, was slightly behind its objective of exceeding UK RPI by at least 4% over the five-year period to 31 July 2021. Throughout this period, the Fund retained a strong exposure to investments that are capable of generating attractive and dependable levels of growth and/or income. These investments covered a broad range of assets such as equities, bonds and alternatives. We amended the size of the allocations to each asset class in accordance with our view of the prevailing economic and market backdrop. It is clear, however, that our asset allocations have not added enough value relative to the investment objective.

Over the one-year period to 31 July 2021, the Fund significantly outperformed the target benchmark, delivering double digit positive returns.

The outperformance was attributable to a number of areas as we took full advantage of the Fund’s flexibility to invest across asset classes. Overall, our weighting in equity markets was the strongest contributor, and specifically our exposure to sustainability names.

Aegon Sustainable Diversified Growth Fund

34

0

10

20

30

40

50

60


%

Aegon Sustainable Diversified Growth Fd B Acc GBP

UK Retail Prices Index plus 4%

0

2

4

6

8

10

12

14

16


%

Aegon Sustainable Diversified Growth Fd B Acc GBP

UK Retail Prices Index plus 4%




The Board of Directors believe that, with more assets in the Fund, EoS can be passed on to Fund investors. Certain legal, regulatory and administrative costs are fixed (i.e. not directly related to fund size) and are directly charged to the Fund. Therefore, with increasing fund size, the relative impact of these costs is reduced.







Target Benchmark: RPI+4%. UK RPI is selected as a commonly accepted measure of UK inflation. We consider that exceeding RPI by at least 4% over 5 years is an attractive return and therefore an appropriate target benchmark in relation to which the Fund is managed. Comparison of the Fund’s performance against the target benchmark will allow investors to determine whether and to what extent the Fund has delivered returns in excess of inflation. Any comparison of the Fund's performance against this benchmark should be performed over a five-year period to provide the most useful medium term comparison.



8. Other considerationsWe recognise that it is important for investors to be able to buy into and sell out of the Fund without any liquidity obstacles.

Therefore, providing liquidity to investors is an important input to the overall value offered by the Fund. Aegon Asset Management UK plc assesses fund liquidity levels under both normal and stressed liquidity conditions. We consider multiple factors including sector, region, credit rating, market capitalisation and bid/ask spreads when reviewing fund liquidity. This assessment is done in conjunction with consideration for investor concentration levels, investor type, performance levels, market events and collateral requirements when assessing fund liquidity levels, so there is a holistic understanding of the liquidity profile.




The Board of Directors believe there is nothing to declare to investors from the assessment of other considerations.



Aegon Sustainable Diversified Growth Fund

35

The Fund announced it’s closure during July 2021 and formally closed on 9th August 2021, with 44% of the capital being returned to investors on 12th August 2021. Further capital is to be returned as the assets are liquidated and sold.

The Fund has sold £89m of assets in Q2 and £124.5m since the start of 2021, with the proceeds having already been returned to investors. We have a liquidation plan which we hope will see most remaining assets sold in the next 12 months, with just a few likely to take 24 months.

The under performance over the last year to 31 July, compared to our peers, is attributed to three beow reasons.

1. We have 3.5% industrial asset allocation compared to the MSCI benchmark of 36.5%. Our peers have a similar level to the MSCI benchmark. Industrials delivered a 12 month return of 25.5% to July 2021, so being underweight in the sector has limited performance.

2. Active value assets are still seeing price corrections and not as much investor appetite compared to more core assets, so valuations are still moving out for these assets.

3. As we continue to sell assets from the Fund, we have a true reflection of what the market will pay for our assets which is leading to further downward valuation movement as they are marked to market.


www.aegonam.com/propertyincomefund



The Board of Directors believe that over the longer term (seven years to 31 July 2021) the Fund has not met its objective.

Overall Value AssessmentOverall, the Board of Directors felt that the PAIF and Feeder were not delivering value and that the situation was likely to significantly deteriorate.

During the dealing suspension, every effort was made to raise liquidity as soon as possible, whilst these funds and the market were constantly being reviewed.

During 2021, it was felt that redemption requests would increase further due to investor sentiment deterioration; which would lead to even more property sales required and a resultant portfolio having increased risk and less diversification – which would greatly reduce the Fund’s ability to achieve its objective.

Therefore, following approval by the Depository and the FCA, in July the investors were informed that the PAIF and Feeder would close on 9 August 2021.

The focus now is on liquidating the portfolio and returning the capital to investors as quickly and orderly as possible. The website is updated with the dates for capital distributions. Our call centre and Client Services teams are assisting with any investor queries.

1. Quality of ServiceThe Board of Directors believe that, based on the areas assessed, the Fund does not offer a good overall quality of service. This is mostly due the lack of liquidity prior to closure.

Our Client Services and call centre teams are making every effort to ensure investors are updated and queries are resolved regarding capital distributions being made as the portfolio is liquidated.

The website is also regularly updated with the latest factsheets and when capital distributions are being made.




2. PerformanceThe Fund aims to provide a combination of income and capital growth over any seven-year period.

We compare the Fund's performance against the performance of other funds within the Investment Association UK Direct Property Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.

The comparison should be performed over at least a seven-year period (or since inception) to provide the most useful long-term comparison.

Aegon Property Income Fund ('PAIF')

36

-12

-10

-8

-6

-4

-2

0

2


%

Aegon Property Income B Gross Acc

IA UK Direct Property

0

5

10

15

20

25

30

35


%

Aegon Property Income B Gross Acc


Jul-21


B share class (%)





PER charge 1.90


The property expense ratio (PER) includes the other costs, in addition to the ongoing charges, incurred by the Fund. These costs are associated with the day to day operation of the direct property assets. The cost of investing and managing direct property assets are generally higher than for other asset classes. These costs are estimated and details of how the PER is calculated can be found in the latest Report and Accounts on our website (www.aegonam.com).


4. Economies of ScaleThe Board of Directors have assessed economies of scale ('EoS') for the Fund considering various factors, in line with our value assessment framework. The Board believe that there are two key areas where EoS can be delivered to investors, namely a) global organisational structure and b) efficiencies due to increasing Fund size.


The Board of Directors believe that, with more assets in the Fund, EoS can be passed on to Fund investors. Certain legal, regulatory and administrative costs are fixed (i.e. not directly related to fund size) and are directly charged to the Fund. Therefore, with increasing fund size, the relative impact of these costs is reduced.



The AMC and the OCF are significantly below the IA sector median.

A waiver of 0.15% was put in place on the AMC in November 2020 in recognition of the illiquid status of the Fund. This has reduced the AMC to 0.60% and still remains in place.

The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.

The Board of Directors believe that the Fund’s costs are fair and reasonable.



8. Other considerationsThe Board of Directors believe that there is nothing to declare to investors from the assessment of other considerations.



Source: Lipper, as at 31 July 2021, B Acc (GBP) share class, NAV to NAV (dual priced funds, bid to bid). Aegon Asset Management Property Income Fund, B Gross (Acc) shares. Investment Association UK Direct Property Sector average source Lipper. The Fund was previously measured against a median of a bespoke group of peers.

Performance comparator: Investment Association UK Direct Property Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe. The above comparison should be performed over at least a seven-year period (or period since inception) to provide the most useful long term comparison.

Aegon Property Income Fund ('PAIF')

37

The comparison should be performed over at least a seven-year period (or period since inception) to provide the most useful long- term comparison.

The Fund announced it’s closure during July 2021 and formally closed on 9th August 2021, with 44% of the capital being returned to investors on 12th August 2021. Further capital is to be returned as the assets are liquidated and sold.

The Fund has sold £89m of assets in Q2 and £124.5m since the start of 2021, with the proceeds having already been returned to investors. We have a liquidation plan which we hope will see most remaining assets sold in the next 12 months, with just a few likely to take 24 months.

The under performance over the last year to 31 July, compared to our peers, is attributed to three beow reasons.

1. We have 3.5% industrial asset allocation compared to the MSCI benchmark of 36.5%. Our peers have a similar level to the MSCI benchmark. Industrials delivered a 12 month return of 25.5% to July 2021, so being underweight in the sector has limited performance.

2. Active value assets are still seeing price corrections and not as much investor appetite compared to more core assets, so valuations are still moving out for these assets.

3. As we continue to sell assets from the Fund, we have a true reflection of what the market will pay for our assets which is leading to further downward valuation movement as they are marked to market.


www.aegonam.com/propertyincomefund



0

5

10

15

20

25

30

35


Aegon Property Income Feeder B AccIA UK Direct Property

-12

-10

-8

-6

-4

-2

0

2


Aegon Property Income Feeder B Acc


Overall Value AssessmentOverall, the Board of Directors felt that the PAIF and Feeder were not delivering value and that the situation was likely to significantly deteriorate.

During the dealing suspension, every effort was made to raise liquidity as soon as possible, whilst these funds and the market were constantly being reviewed.

During 2021, it was felt that redemption requests would increase further due to investor sentiment deterioration; which would lead to even more property sales required and a resultant portfolio having increased risk and less diversification – which would greatly reduce the Fund’s ability to achieve its objective.

Therefore, following approval by the Depository and the FCA, in July the investors were informed that the PAIF and Feeder would close on 9 August 2021.

The focus now is on liquidating the portfolio and returning the capital to investors as quickly and orderly as possible. The website is updated with the dates for capital distributions. Our call centre and Client Services teams are assisting with any investor queries.

1. Quality of ServiceThe Board of Directors believe that, based on the areas assessed, the Fund does not offer a good overall quality of service. This is mostly due the lack of liquidity prior to closure.

Our Client Services and call centre teams are making every effort to ensure investors are updated and queries are resolved regarding capital distributions being made as the portfolio is liquidated.

The website is also regularly updated with the latest factsheets and when capital distributions are being made.




2. PerformanceThe investment objective is to provide income with potential for capital growth over any seven year period by investing in the Aegon Property Income Fund, which invests mainly in commercial property. We compare the Fund's performance against the performance of other funds within the Investment Association UK Direct Property Sector. Comparison of the Fund against this sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe.

Aegon Property Income Feeder Fund ('Feeder')

38

The Board of Directors believe that over the longer term (seven years to 31 July 2021) the Fund has not met its objective.


B share class (%)





PER charge 1.89


The property expense ratio (PER) includes the other costs, in addition to the ongoing charges, incurred by the Fund. These costs are associated with the day to day operation of the direct property assets. The cost of investing and managing direct property assets are generally higher than for other asset classes. These costs are estimated and details of how the PER is calculated can be found in the latest Report and Accounts on our website (www.aegonam.com).







The AMC and OCF are significantly below the IA sector median.

A waiver of 0.15% was put in place on the AMC in November 2020 in recognition of the illiquid status of the Fund. This has reduced the AMC to 0.60% and still remains in place.

The Board of Directors' decision to absorb significant costs into its own cost base, namely the Transfer Agent and Fund Accounting costs, which is more favourable to investors than normal market practice, has contributed to a reduction in the additional charges. Investors can see this when they compare the Fund to similar funds managed by other providers.

The Board of Directors believe that the Fund’s costs are fair and reasonable.



8. Other considerationsThe Board of Directors believe that there is nothing to declare to investors from the assessment of other considerations.



Source: Lipper, as at 31 July 2021, B Acc (GBP) share class, NAV to NAV (dual priced funds, bid to bid). Aegon Property Income Fund, B Gross (Acc) shares. Investment Association UK Direct Property Sector average source Lipper. The Fund was previously measured against a median of a bespoke group of peers.

Performance comparator: Investment Association UK Direct Property Sector. Investors are invited to compare the Fund’s performance against the performance of other funds within this Sector. Comparison of the Fund against this Sector will give investors an indication of how the Fund is performing compared with funds investing in a similar but not identical investment universe. The above comparison should be performed over at least a seven-year period (or period since inception) to provide the most useful long term comparison.

Aegon Property Income Feeder Fund ('Feeder')

39

www.aegonam.com

All data is sourced to Aegon Asset Management UK plc unless otherwise stated. In most instances the data sourced is as at 31 July 2021.

Aegon Asset Management UK plc is authorised and regulated by the Financial Conduct Authority.

Adtrax Code: 3885171.1 Exp. date; 31 October 2022.

If you have any questions about the information contained in this document you can contact us at our Investor Helpdesk on 0800 358 3009.

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VALUE STATEMENTS - aegonam.com