This document is for investment professionals only. It is not to be viewed by or used with retail clients. AVIVA INVESTORS UK PROPERTY FUND

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1 This document is for investment professionals only. It is not to be viewed by or used with retail clients. AVIVA INVESTORS UK PROPERTY FUND QUARTERLY BULLETIN JUNE 2018 FUND SUMMARY AIM: The Fund is a Property Authorised Investment Fund for tax purposes and aims to provide a combination of income and growth through exposure to property. Fund size: m Number of properties: 25 ANDREW HOOK Fund Manager Andrew is the Fund Manager for the Aviva Investors UK Property Fund. Prior to assuming his current role in December 201, Andrew managed real estate funds across the UK and Europe for over 9 years. Before joining Aviva Investors Andrew spent five years at Curzon Global Partners as an associate director working across acquisitions, asset management and investment strategy. Forum, St Pauls, London The fund continues to progress on upgrading its existing holdings to create a more resilient portfolio. The Q2 disposal of Broadway Plaza and Q3 disposal of Soho Square will allow us to reinvest in line with Fund strategy Fund performance (as at 30 June 2018) Share Class Type Income or Accumulation Launch 3 months % months % 1 year % 3 years % 5 years % 10 years % Class 1 Retail Accumulation 01/11/ Class 1 Retail Income 02/09/ Class 2 Inst Accumulation 10/12/ Class 2 Inst Income 10/12/ Class Retail Accumulation 10/12/ Class Retail Income 10/12/ Past performance is not a guide to future performance Source: Lipper, a Thomson Reuters Company. Performance figures are net of fees, bid to bid, net income reinvested at pay date. Performance is cumulative over 3, 5 and 10 years. The fund may trade on an offer-price basis or a bid-price basis depending on cash flows at any particular time. This will have impacted performance over certain time periods. On 18 August 2017, the Aviva Investors Property Trust (the Trust) converted to a Property Authorised Investment Fund (PAIF), the Aviva Investors UK Property Fund, with the same investment strategy. Performance prior to 18 August 2017 is that of the Aviva Investors Property Trust. DIRECT PROPERTY SECTOR COMPOSITION % FUND POSITION AS AT 30 JUNE High St Retail Retail Warehouses Shopping Centres Industrial London Offices Regional Offices Leisure Direct Property 85.0% Cash 13.79% Other Assets 0.2% avivainvestors.com 1

2 DIRECT PROPERTY PERFORMANCE 25 properties with a net initial yield of 3.19% YTD 3 months 1 year years (ann) 5 years (ann) Aviva Investors UK Property Fund 2 Acc DTAP Unweighted Average Net outperformance / underperformance Past performance is not a guide to future performance Source: Data is Aviva Investors/IPD 30 June The IPD benchmark quoted includes other Authorised Property Unit Trust Funds (APUT), similar to the Aviva Investors UK Property Fund. The constituents of this index are also part of the IPD Quarterly Version of the Balanced Monthly Index Funds Universe. The benchmark is calculated and provided by IPD and refers to the performance of Direct Property assets only. These assets consist of direct property excluding REITs and cash and are shown gross of fees. FUND ACTIVITY Over the quarter the fund returned 1.1% (unit 2 accumulation). During Q the slowdown in the positive movement in the property investment market continued. Underlying pressures in the occupational market, particularly in the retail sector which has seen a number of high profile CVAs and insolvencies, continue to impact on capital values, albeit the overall trend remains broadly positive. We expect to see further weakness in the retail sector over the coming quarter, but we expect overall performance to remain positive as stronger assets should continue to outperform the market as a whole. Both disposals and new lettings contributed to positive performance for the Fund over the quarter. Notably, part completion of the Pavilion Centre refurbishment at the retail park in Brighton led to completion of a new 15 year lease with Hobbycraft Trading and a new 20-year lease was agreed with Aldi. These two new leases led to a significant valuation increase. In addition, an offer to let 3 floors at St Vincent Street in Glasgow from a central government entity meant that a further 2.2% of the Fund s void was placed under offer. PROPERTY IN FOCUS Property: Soho Square, London Deal type: Sale Initiative: 20 Soho Square sale completed on 2 July following successful delivery of the asset s business plan. The price achieved was above valuation. Soho Square had previously been the largest asset in the Fund. As such the sale had the dual effect of significantly reducing the Fund s London and office sector weightings from June while providing the opportunity for reinvestment in line with Fund strategy. Property: Broadway Plaza, Birmingham Deal type: Sale Initiative: This Leisure property was sold as the Fund Managers sought to take advantage of a buoyant market, and it was considered to be in a non- core area of Birmingham for the Fund s long term strategy. Significant asset management activity had been completed and as such the disposal came at an opportune time, crystallising the value added through this activity and capitalising on strong market appetite for high quality leisure stock. As a result, the price achieved was ahead of valuation. avivainvestors.com 2

3 FUND STATISTICS The direct property portfolio as at 30 June 2018 Offices % Industrial % Retail % Shopping Centre % Retail Warehouse % Other % Total % London City London Outer London West End North East North West Scotland South East South West West Midlands Yorkshire & Humberside Total Source: Aviva Investors as at 30 June 2018 TOP TEN HOLDINGS AS AT 30 JUNE 2018 (LISTED BY SIZE OF ASSET) TOP TEN TENANTS AS AT 30 JUNE 2018 LONDON W1 20 Soho Square 1 1 TESCO STORES LTD EALING Ealing Cross, 85 Uxbridge Road 2 2 CRM STUDENTS LIMITED HAYES Lombardy Retail Parke 3 3 MORGAN STANLEY UK GROUP LONDON Forum, St Pauls 4 4 ALEXANDER DENNIS LTD EXETER Guildhall Shopping Centre 5 5 WATSON BURTON LLP MANCHESTER - The Corn Exchange 7 BIRMINGHAM - 2 Colmore Row 7 8 CROYDON - Prologis Park 8 9 BRIGHTON - The Pavilion Centre 9 10 YORK Spurriergate & 1-3 High Ousegate 10 = Total: 7.4 per cent of fund = Next Holdings Ltd B&Q Plc H&M Hennes & Mauritz UK Limited Briggs Equipment UK Ltd J Sainsbury plc Total percentage of rent: 34. per cent Source: Aviva Investors as at 30 June 2018 Source: Aviva Investors as at 30 June 2018 avivainvestors.com 3

4 MARKET REVIEW Q2 was another quarter of solid returns for direct real estate Continue to expect return prospects to weaken in the near term at an aggregate level, but believe a major correction to real estate values not likely Higher-quality assets are expected to out-perform on income and capital growth Yield-driven investor demand for the sector remains robust RECENT MARKET MOVEMENT Though slowing a little compared to recent quarters, Q2 was another quarter of solid returns for direct real estate in aggregate with the market delivering an all-property total return of 2.2% according to the IPD Monthly Index (IPDMI). This equates to a return of 9.1% on an annualised basis, a figure that is just off the 9.3% annualised return delivered by the index since its inception in This marks the seventh consecutive quarter of strong returns following the Brexit-inspired weakness of mid-201. Property yields again moved a little lower over the course of the quarter with the all-property equivalent yield dropping by 5bps to 5.8%. It has now dropped below the levels that prevailed prior to the Brexit referendum and is less than 50bps above the record lows set in mid While such low yields make it difficult for total return investors to anticipate the returns that they require, for investors concerned with income, there remains an attractive, if shrinking, spread over bond yields. Strong demand from such investors has been the major support for pricing in the market with industrial & logistics assets particularly sought after. According to the IPDMI, the industrial equivalent yield declined by 1bps to 5.5% over the course of Q2, its lowest level on record. In the second quarter, industrials delivered a total return of 5.1%, well ahead of the 0.5% return from the retail sector and the 1.% delivered by offices. This marks the twelfth consecutive quarter where industrials were the bestperforming sector. RETAIL Retail sales growth has been on a slowing trend for much of the past two years or so, though the unusually hot weather and the World Cup interrupted this trend during the second quarter. According to the official data, retail sales in volume terms rose by 2.1% in the three months to the end of June, the strongest growth since February This was largely driven by sales in food stores which, at 2.2% q-o-q, enjoyed their strongest three-month period since May 2001 as the weather and the football encouraged food and drink sales. Nonetheless, while Q2 s bounce was a welcome fillip for sales, growth at such levels is unlikely to be maintained. Instead we expect sales growth to return to the relatively muted levels seen in recent quarters. Meanwhile conditions in retail lettings markets remain very difficult and, against a backdrop of structural change due to the rise of online shopping, even strong retailers face a challenging time. Retail rental prospects appear weak as a consequence, especially for secondary locations. The IPDMI estimates that, following a couple of years when rents were effectively flat, rental decline has returned to the retail sector of late. It recorded a decline of 0.5% during Q2 to leave rents down by 0.2% compared to a year before. OFFICES Q2 was a strong quarter for lettings in Central London. According to CBRE, total take-up amounted to 3.5m sqft in the second quarter, well above the 10-year average of 3.1m. Demand was led by an owner-occupier deal for the Chinese embassy at Royal Mint Court EC3 and strong demand from flexible office providers. And it was enough to drive a decline in availability, interrupting the upward trend of the past couple of years or so. CBRE recorded total available space of 13.8m sqft in June, below the 10- year average of 15m. Meanwhile prime rents, which have been under downward pressure of late, were estimated to be unchanged over the course of Q2 in all Central London sub-markets. Nonetheless, we remain cautious on the outlook for Central London in the next couple of years. Increasing supply and uncertain demand look likely to spark a resumption of rental declines with secondary stock set to suffer worst. Leasing conditions remain robust in the major regional markets meanwhile and most appear relatively defensive in the near term. Low vacancy should help them to cope with increased construction activity as well as economic and political uncertainty. Rental growth has been more muted in these markets and rents look well supported. In June, regional rental growth was running at 1.3% y-o-y on the IPDMI. INDUSTRIAL Recent quarters have brought signs that, having held up surprisingly well in the wake of the Brexit referendum, the manufacturing sector is losing momentum. According to the official data, year-onyear growth in manufacturing production slowed to just 1.1% in May, down from 2.% in February and from a recent peak of 4.9% in October last year. By contrast, leasing activity in the logistics sector enjoyed a strong start to 2018 having struggled a little in the latter part of last year. According to Gerald Eve, take-up in the sector amounted to 11.5m sqft in Q1, a 20% increase on Q4 s total and 5% above the 5-year quarterly average. The sector has been enjoying a sustained period of robust leasing activity for a number of years now and this has driven a marked decline in availability and put upward pressure on rents. According to the IPDMI, rental growth was running at 5% y-o-y in June. Growth is especially robust in the South- East at 7% y-o-y with growth in the rest of the UK running at a more modest 2.3%. SUMMARY We continue to expect return prospects to weaken in the near term as the key factors underpinning the market turn gradually less favourable. The first of these is real estate s yield advantage over fixed-income assets which, though still generous, has been shrinking in recent quarters as gilt yields move a little higher and real estate yields drift lower. In addition, we continue to expect occupier markets to deteriorate in the face of a sluggish economic backdrop. Though industrial occupier markets are structurally well placed, current rates of rental growth appear unsustainable. And it is difficult to pinpoint a sector that can take up the running. Coming quarters are likely to remain very difficult for the consumer economy and for retail rents. In the office sector meanwhile, Central London rents appear vulnerable to new supply and Brexit uncertainty, though regional markets appear considerably more defensive. Nonetheless, the likelihood of a severe correction to real estate pricing still seems low, with yield-driven investor demand set to remain robust in the low interest rate environment. Downside risks to the market include geopolitical tensions, hard Brexit and the possibility of significantly higher interest rates in response to strong global economic growth. avivainvestors.com 4

5 ECONOMIC ACTIVITY Global growth remains robust, driven by the US Though the US s share of global output has tended to decline in recent decades due to the strong growth enjoyed by many emerging markets, it remains nonetheless a dominant force in the global economy. And currently it is a very important factor in the robust growth being enjoyed by the global economy. Fundamentally, the US economy is now in its strongest position since 2008 and, with tax cuts and fiscal expansion providing a considerable further boost, 2018 looks set to be another year of above-trend growth. This strong growth in what is still the world s largest economy in nominal terms looks set to drive world growth in 2018 to over 4%, its fastest pace of increase since This should provide a strong backdrop for risk assets such as equities and real estate. Next year, growth is expected to ease a little from this level as tighter monetary conditions come to be felt in the major economies. And aided by above-trend growth in the Euro-zone and Japan The robust global outlook is also buoyed by above-trend expansion in the Euro-zone and Japan, major economies that have often exhibited chronic weakness in recent times. Of course, trend growth in these economies is relatively modest, in part due to significant demographic headwinds, and recent rates of expansion have brought a sharp decline in spare capacity. This is especially true of the Euro-zone where annualized growth has risen to up to 3% in recent quarters, far ahead of the estimate of trend growth of little over 1%. In Japan, growth faltered in the early part of the year as domestic demand weakened after contributing encouragingly to growth during Temporary factors such as the weather appear to have been behind this, however, and survey data continue to suggest a robust outlook for business and consumer confidence. Sustained inflation to bring tighter monetary policy With above-trend growth set to continue both this year and next, spare capacity in the global economy is set to be eroded further bringing upward pressure on prices and wages. In contrast to much of the period since the global financial crisis, when deflation not inflation was the greater concern for policymakers, inflation looks set to make a sustained return towards levels consistent with the targets of the major central banks, typically in the region of 2% per year. In countries where the cycle is most advanced, notably the US, inflation is already at or above these levels. By contrast, in economies where recovery was slower to take hold, such as the Eurozone and in Japan, inflation pressures have been slower to build. These patterns are also showing up in the monetary policy response of the world s major central banks with the tightening cycle already well under way in the US but yet to really get going in most other economies. We expect further tightening from the Federal Reserve (Fed) during this year and next with policy settings to become modestly restrictive during The European Central Bank (ECB) has recently provided an unusual degree of guidance on its policy intentions with asset purchases expected to stop at the end of 2018 while policy rates are not expected to rise until the second half of In Japan, where inflation pressures remain relatively muted, we do not now expect any adjustment to its policy of yield curve control until Though pressure for early rate rises has eased in the UK of late Despite low interest rates and the strong global backdrop, the UK continues to be a growth laggard among the world s major developed economies. While weakness in the early part of the year may have been partly weather related, more recent months have brought little sign of improvement. The Bank of England remains of the view that Brexit uncertainty constitutes a supply-side shock for the UK and has significantly downgraded its estimate of the economy s growth potential, to just 1.5% per year, a long way short of what was widely assumed before 201 s Brexit referendum. But it appears that demand growth is failing even to meet this level. With inflation also falling faster that the Bank had expected, this growth disappointment has seen the pressure for early rate rises ease considerably. Of course, the outlook for the UK, both in the near term and longer, continues to be dominated by Brexit negotiations and what sort of deal, if any, is struck with the EU. Though the March 2019 exit date is now coming into view, the recent cabinet resignations demonstrate that the final shape of the Withdrawal Agreement remains extremely uncertain. UK and OECD GDP Growth (per cent YoY) UK Real Gross Domestic Product OECD Real Gross Domestic Product Source: Thompson Reuters Datastream UK inflation (per cent YoY) RPI Harmonised CPI RPI: All items excluding mortgage interest (RPIX) Source: Thompson Reuters Datastream Risks The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Where funds are invested in real estate, investors may not be able to switch or cash in an investment when they want because real estate may not always be readily saleable. If this is the case we may defer a request to switch or cash in shares. Investors should also bear in mind that the valuation of real estate is generally a matter of valuers opinion rather than fact. In unusual market conditions, funds invested in real estate may have difficulty selling investments, which may cause them to suffer losses, defer redemption payments or suspend dealing in shares. Important Information Except where stated as otherwise, the source of all information is Aviva Investors as at 30 June Unless stated otherwise any opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. The Aviva Investors UK Property Fund is a sub-fund of the Aviva Investors Property Funds ICVC. For further information please read the latest Key Investor Information Document and Supplementary Information Document. The Prospectus and the annual and interim reports are also available on request. Copies can be obtained free of charge from Aviva Investors UK Fund Services Limited, St Helens, 1 Undershaft, London EC3P 3DQ or by contacting our Relationship Management Team on * or them on fundandsalessupport@avivainvestors.com. You can also download copies from our website *Telephone calls may be recorded for training and monitoring purposes, and to comply with applicable law and regulations. Issued by Aviva Investors UK Fund Services Limited, the Authorised Fund Manager. Registered in England No Authorised and regulated by the Financial Conduct Authority. Firm Reference No Registered address: St Helen s, 1 Undershaft, London EC3P 3DQ. An Aviva company. J39327-RA18/0801/ avivainvestors.com 5