Workplace Target fund range performance report

Transcription

1 For intermediary and employer use only Workplace Target fund range performance report Covering quarter two 2018

2 Contents Introduction 3 Quarterly fund news 4 Market review quarter two Workplace Target range overview 7 Our retirement target approaches 8 Flexible Target range 10 Universal Balanced Collection 10 Adventurous Tracker 11 Growth Tracker 12 Balanced Tracker 13 Ethical Managed 14 Annuity Target range 15 Universal Balanced Collection 15 Adventurous Tracker 16 Growth Tracker 17 Balanced Tracker 18 Target 19 Growth Tracker 19 In-house default fund 20 Aegon Default Equity and Bond 20 Interim Retirement Target range 21 Interim Retirement (Flexible Target) fund 21 Interim Retirement (Ethical Target) fund 22 Interim Retirement (Annuity Target) fund 23 Interim Retirement ( Target) fund 24 Our Fund Governance 25 The information contained in this report constitutes a factual review of performance only and is correct as at 30 June It shouldn t be taken as a recommendation or advice. This communication is for financial advisers only. It mustn t be distributed to, or relied on by, customers. There s no guarantee that fund objectives will be met. The value of an investment may go down as well as up and investors may get back less than originally invested. Page 2 of 25

3 Introduction This document details the key drivers of world markets in the most recent quarter and goes on to report on our Workplace Target fund range available via Aegon Retirement Choices (ARC). Markets and funds change constantly, so the information it contains may have changed by the time you read this. The value of the funds in this report may go down as well as up for a number of reasons, for example market and currency movements. Investors may get back less than originally invested. The information in this document is a factual review and shouldn't be taken as a recommendation or advice. It's correct to the best of our knowledge at the time of writing. Please note: from Q1 2018, all performance data shown in this report is now sourced from Financial Express. Page 3 of 25

4 Quarterly fund news Changes to the Universal Balanced Collection We've made some changes to the Universal Balanced Collection (UBC) and all funds which use the UBC as part of their investment strategy across our pension fund ranges. The changes were completed on 30 April What s changing from 30 April 2018? The Balanced Passive fund was replaced by the Aegon Diversified fund and its allocation will increase from 65% to 70%. The External Balanced Collection (EBC) was removed and replaced by 4 of the 5 funds that it currently invests in. This will account for 15% of the UBC as opposed to 20% that was allocated to the EBC. The UBC s investment in the Kames Asset Allocator remained unchanged at 15%. For more information on the changes that are due to take place, please visit our website at the following URL: Page 4 of 25

5 Market review quarter two 2018 All developed equity markets experienced gains over the second quarter of 2018 despite mixed economic news and continued fears of a global trade war. US equities led the way despite lingering fears of further trade sanctions from the Donald Trump administration. Rising tensions in the Middle East, partly heightened by the withdrawal of the United States from the Iran nuclear deal, pushed the price of oil higher. UK equities followed close behind as investor sentiment improved slightly to see the FTSE post the largest quarterly rise in 1. Trade disagreements between China and the US weighed heavily on Asian equities excluding Japan steering the region towards more modest gains relative to other developed markets. European equities rose but were held back by economic and political uncertainties. Markets reacted to sector-specific fears around the potential effects of new trade tariffs on car manufacturers in the region, while political uncertainty in Italy, Spain and Germany caused further ripples. Japanese equities rose as an April summit between Prime Minister Shinzo Abe and President Donald Trump went smoothly and tensions in the Korean peninsula eased. Emerging market equities fell over the quarter as investors turned to more safe haven investments amidst growing concerns surrounding the looming threat of a US-Chinese trade war. Elsewhere, Argentina and Saudi Arabia gained emerging market status after being classified previously as frontier markets. In fixed interest, UK government bonds made modest gains as better-than-expected gross domestic product (GDP) data for the first quarter was released. Corporate bonds lagged behind government bonds on the back of heightened global economic risks. returns were broadly flat as the Bank of England (BoE) held interest rates at 0.5% and inflation fell to 2.4% Return FTSE All Share TR in GB FTSE World Europe ex UK GTR in GB S&P 500 TR in GB TSE TOPIX TR in GB FTSE Asia Pacific ex Japan GTR in GB FTSE Emerging GTR in GB FTSE Actuaries UK Conventional Gilts All Stocks TR in GB IBOXX UK Sterling Non-Gilts All Maturities TR in GB LIBOR LIBID GBP 1 Week TR in GB How did the major markets perform over 12 months? Global equity markets continued to perform positively over the 12 months to the end of June US equities led developed markets with positive economic news outweighing geo-political concerns and threats of global trade war over the period. Japanese equities followed close behind on the back of a strengthening currency. UK equities also made gains as Brexit negotiations continue to dominate news. Asia ex Japan equities and emerging markets equities made gains despite tensions surrounding North Korea and economic concerns in China. European equities lagged behind over the period with political risk across the region impacting returns. Fixed interest assets delivered modest returns as riskier investments proved more popular for investors Return FTSE All Share TR in GB FTSE World Europe ex UK GTR in GB S&P 500 TR in GB TSE TOPIX TR in GB FTSE Asia Pacific ex Japan GTR in GB FTSE Emerging GTR in GB FTSE Actuaries UK Conventional Gilts All Stocks TR in GB IBOXX UK Sterling Non-Gilts All Maturities TR in GB LIBOR LIBID GBP 1 Week TR in GB Source: Financial Express, produced by Aegon. Charts compiled using total return indices to 30 June Figures in sterling so include the effect of currency fluctuations. Past performance is no guide to future performance. Page 5 of 25

6 What were the key events in the major markets in quarter two? Here s a round-up of some of the key events that shaped the investment returns we ve seen across the major markets. In the UK, the Office of National Statistics (ONS) revised its initial estimates for Q1 economic growth upwards from 0.1% to 0.2%. This came on the back of better than expected construction data and a boost in consumer spending as a result of the summer heatwave and the royal wedding. The bank of England (BoE) surprised markets by holding interest rates at 0.5%. However, the Monetary Policy Committee hinted at rises later in the year with three of the nine members voting to raise rates to 0.75%. Despite continued fears of a global trade war fuelled by US trade sanctions, data released in Q2 was positive for US economic growth, with economists predicting that the US is on course for GDP growth of 2.9% for However, the International Monetary Fund (IMF) released a report explaining that the US Republican s $1.5 trillion tax-cut package and $300 billion boost to spending may result in a dramatic rise in interest rates and market volatility around the world. Unemployment for the region hit 3.8%, the lowest rate in 18 years. In Europe, European Central Bank (ECB) President, Mario Draghi, confirmed he expected inflation rates to continue at record lows into summer GDP for Eurozone slid to 0.4% over Q1 following its 0.7% rise in Q The Italian economy grew steadily in line with an increase in household spending, despite three months of political deadlock and a resulting coalition government between two far-right Eurosceptic parties, the Lega and Five Star Movement (M5S). In France, the economy underperformed expectations with data released in Q2 showing Q1 GDP at 0.2%. While historically crisis-ridden Greece saw a spark in its stock and bond markets, as investors celebrated a debt relief deal between the country and its Eurozone creditors. In Japan, unemployment fell to 2.2% in the latter stages of Q2 2018, its equal-lowest rate since October The IMF predicted that Japan s rapidly ageing population could drag down the region s average annual GDP growth by 1% over the next thirty years. Data released in Q1 showed that the Japanese economy grew by only 0.2% in the first three months of the year, meaning Japan is now set to be the slowest growing G7 economy this year. In the Asia Pacific region, the increasing fears of a US-China trade war were felt across the region. Currencies also took a hit, with the New Zealand dollar dropped 0.4% against the dollar, its lowest since December This is in line with slow GDP growth and a subdued rate of inflation. In Australia however, Q2 data shows GDP growth bounced back to 3.1% in Q1 as mining commodity exports boomed, marking a strong start to 2018 for the region. In Malaysia, 92 year old Mahathir Mohamed had an unexpected victory over incumbent Najib Razak in the May election. It was the first change of government in the country for over 60 years. In Emerging markets, Chinese growth began to slow, with consumer spending, investment and exports all decelerating as the US imposed $50 billion worth of tariffs on Chinese imports. South Korea and Russia, both closely tied to Beijing through exports, saw their currencies weaken as a result. India also appeared exposed as the rupee was sent tumbling against the dollar as a result of increasing oil prices. The World Bank predicted a steady 1.5% rise in economic growth in Russia throughout 2018, which could accelerate if the rise in oil prices is offset by oil production cuts. In fixed interest markets, the European Central Bank (ECB) confirmed its expectation to stop its current bond-buying programme later this year, resulting in a rapid sell-off of European debt markets. In the UK, the Bank of England s monetary policy committee (MPC) confirmed its intention to hold interest rates at 0.5%, leading to a jump in Sterling in response. Political uncertainty across the globe, including impending US trade tariffs and elections across Europe, saw investors turn to the relative safety of government bonds over corporates. Page 6 of 25

7 Workplace Target range overview Three ways to prepare savings for retirement All the Workplace Target funds use a two stage investment strategy that aims to grow savings in the early years (the growth stage), then prepare savings for retirement in the final six years (the retirement target stage). The range offers three retirement target approaches Flexible Target, Annuity Target, and Target which reflect the mix of retirement income options open to savers in the wake of pension freedoms. The Flexible Target approach moves assets into a cautious multi-asset mix as investors approach retirement, with approximately 26% equity, 49% fixed interest, and 25% cash on retirement. We ve designed this approach for investors and schemes seeking to take advantage of the greater flexibility offered by the new pension freedoms. It's designed to offer a balance between risk and returns to suit those approaching retirement. The Annuity Target strategy is designed for schemes who believe most employees will buy an annuity on retirement. These funds move savers into 75% long gilts and 25% cash on retirement. Finally, the Target strategy is designed for savers who plan to cash-in their savings on retirement. This is aimed at schemes where most members have very small pots, or are likely to use other sources to create their retirement income (for example those who also have defined benefit pension income). It moves savers fully into cash on retirement. What s in the Workplace Target range? The Workplace Target fund range broadens choice for employers and scheme members and each fund type offers one or more glidepath option, targeting flexibility, annuity, or cash on retirement. Fund (Platform fund options) Flexible Target Annuity Target Target Balanced Tracker (0.05%) Growth Tracker (0.05%) Adventurous Tracker (0.05%) Universal Balanced Collection (0.10%) Ethical Managed (0.40%) The strategies are primarily designed for those workplace investors who do not make an active investment choice or receive advice. Schemes can also use our in-house default fund (see page 20). We ll continue to offer our existing range of lifestyle funds for workplace investors. For more information, please see our website at Page 7 of 25

8 Our retirement target approaches Our Workplace Target funds are designed for use as scheme default funds. The information below details how each of our retirement target approaches changes as investors near retirement. We review our Workplace Target funds regularly and may change them if we believe it s in the best interest of investors. There s no guarantee the funds will achieve their objectives. Investors may get back less than they originally invested. The Flexible Target stage In the six years before the investor s target retirement year (the Flexible Target stage), we ll progressively move them into less risky investments. We ll also move part of their investment into a cash fund in the final two years to cater for their maximum tax-free cash entitlement, currently 25% of their pension pot. 100% 80% % of fund 60% 40% 20% 0% Years to retirement Growth fund Flexible Target Source: Aegon UK The Annuity Target stage In the six years before an investor s target retirement year (the Annuity Target stage), we ll progressively move their investments into long gilts and cash with the aim of giving them more certainty about the size of annuity (pension) they ll be able to buy when they retire and to cater for their maximum tax-free cash entitlement, currently 25% of their pension pot. 100% 80% % of fund 60% 40% 20% 0% Years to retirement Growth fund Long gilts Source: Aegon UK Page 8 of 25

9 The Target stage In the six years before an investor s target retirement year (the Target stage), we ll progressively move them into less risky investments and then into cash. On their selected retirement date, the fund will be 100% invested in cash. 100% 80% % of fund 60% 40% 20% 0% Years to retirement Growth fund Flexible Target Source: Aegon UK Page 9 of 25

10 Flexible Target range Universal Balanced Collection (Flexible Target) fund This fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in a well-diversified mix of international equities with the remainder in bonds and cash. It invests in seven different funds, which means it doesn t rely on the performance of one manager alone. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 0.4% 0.4% 3.5% 8.5% 5.2% 26.5% Global Emerging Market Equities Japanese Equities 9.7% Global Fixed Interest Asia Pacific ex Japan Equities 22.2% 23.3% Other UK Fixed Interest Universal Balanced Collection (Flexible Target) (ARC) n/a n/a ABI Mixed Investment 40%-85% Shares pension sector median n/a n/a Page 10 of 25

11 Adventurous Tracker (Flexible Target) fund This fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in a mix of UK and international equities (company shares). It s designed to track the markets it invests in, so performance should be similar to those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 4.9% 8.5% 32.5% 49.7% Japanese Equities Asia Pacific ex Japan Equities Aegon Adventurous Tracker (Flexible Target) (ARC) n/a n/a Composite of 50% FTSE All-Share TR/50% FTSE World ex UK TR n/a n/a Page 11 of 25

12 Growth Tracker (Flexible Target) fund This fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in global equities (company shares) with the remainder (around 25%) in UK and overseas bonds (a blend of UK corporate, UK index-linked, conventional government and overseas bonds). It s designed to track the markets it invests in, so performance should be similar to those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 3.7% 0.1% 7.1% 6.3% 37.1% Japanese Equities Asia Pacific ex Japan Equities UK Fixed Interest 18.1% Global Fixed Interest 24.3% Aegon Growth Tracker (Flexible Target) (ARC) n/a n/a Composite of 37.5% FTSE All Share TR/37.5% FTSE World ex UK TR/13.3% Markit iboxx Non Gilts All Stocks GBP TR/9% FTSE Gilts All Stocks TR/2.8% FTSE Index-linked Over 5 Years TR n/a n/a Page 12 of 25

13 Balanced Tracker (Flexible Target) fund This fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in a mix of global equities (company shares) and UK and overseas bonds (a blend of UK corporate, UK index-linked, conventional government and overseas bonds). It s designed to track the markets it invests in, so performance should be similar to those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 2.5% 0.3% 4.3% 13.7% 35.1% UK Fixed Interest Japanese Equities Asia Pacific ex Japan Equities 16.6% Global Fixed Interest 25.3% Aegon Balanced Tracker (Flexible Target) (ARC) n/a n/a Composite of 25% FTSE All Share TR/25% FTSE World ex UK TR/26.5% Markit iboxx Non Gilts All Stocks GBP TR/18% FTSE Gilts All Stocks GBP TR/5.5% FTSE Index-linked Over 5 Years TR n/a n/a Page 13 of 25

14 Ethical Managed (Flexible Target) fund This fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in a diversified portfolio of UK equities (shares of companies), fixed interest securities (bonds), and cash, which meet the fund s predefined ethical criteria. Its ethical criteria means the fund may have a bias towards small and medium sized companies. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 0.6% 0.7% 8.0% 5.9% 2.8% Global Emerging Market Equities UK Fixed Interest Asia Pacific ex Japan Equities 15.7% 66.2% Global Fixed Interest Ethical Managed (Flexible Target) (ARC) n/a n/a Composite of 50% FTSE All Share TR/50% ABI Mixed Investment 20%-60% Shares sector average n/a n/a Page 14 of 25

15 Annuity Target range Universal Balanced Collection (Annuity Target) fund This fund is aimed at those who intend to buy an annuity on retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in a well-diversified mix of international equities with the remainder in bonds and cash. It invests in seven different funds, which means it doesn t rely on the performance of one manager alone. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 0.4% 0.4% 3.5% 8.5% 5.2% 26.5% Global Emerging Market Equities Japanese Equities 9.7% Global Fixed Interest Asia Pacific ex Japan Equities 22.2% 23.3% Other UK Fixed Interest Universal Balanced Collection (Annuity Target) (ARC) n/a n/a ABI Mixed Investment 40%-85% Shares pension sector n/a n/a Page 15 of 25

16 Adventurous Tracker (Annuity Target) fund This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in an equal mix of UK and international equities (company shares). It s designed to track the markets it invests in, so performance should be similar those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 4.9% 8.5% 32.5% 49.6% Japanese Equities Asia Pacific ex Japan Equities Aegon Adventurous Tracker (Annuity Target) (ARC) n/a n/a Composite of 50% FTSE All Share TR/50% FTSE World ex UK TR n/a n/a Page 16 of 25

17 Growth Tracker (Annuity Target) fund This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage), it aims to grow long-term savings by investing mainly in global equities (company shares) with the remainder (around 25%) in UK and overseas bonds (a blend of UK corporate, UK index-linked, conventional government and overseas bonds). It s designed to track the markets it invests in, so performance should be similar to those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 3.7% 6.9% 6.4% 37.5% 0.1% Japanese Equities Asia Pacific ex Japan Equities 17.6% UK Fixed Interest Global Fixed Interest 24.5% Aegon Growth Tracker (Annuity Target) (ARC) n/a n/a Composite of 37.5% FTSE All Share TR/37.5% FTSE World ex UK TR/13.3% Markit iboxx Non Gilts All Stocks GBP TR/9% FTSE Gilts All Stocks TR/2.8% FTSE Index-linked Over 5 Years TR n/a n/a Page 17 of 25

18 Balanced Tracker (Annuity Target) fund This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing in an equal mix of global equities (company shares) and UK and overseas bonds (a blend of UK corporate, UK index-linked, conventional government and overseas bonds). It s designed to track the markets it invests in, so performance should be similar those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 0.3% 2.4% 4.2% 14.1% 16.1% 35.8% UK Fixed Interest Global Fixed Interest Japanese Equities Asia Pacific ex Japan Equities 24.9% Aegon Balanced Tracker (Annuity Target) (ARC) n/a n/a Composite of 25% FTSE All Share TR/25% FTSE World ex UK TR/26.5% Markit iboxx Non Gilts All Stocks GBP TR/18% FTSE Gilts All Stocks GBP/5.5% FTSE Index-linked Over 5 Years n/a n/a Page 18 of 25

19 Target Growth Tracker ( Target) fund This fund is aimed at those who plan to cash in their savings at retirement. It uses a two-stage investment process. In the early years (the growth stage), it aims to grow long-term savings by investing mainly in global equities (company shares) with the remainder (around 25%) in UK and overseas bonds (a blend of UK corporate, UK index-linked, conventional government and overseas bonds). It s designed to track the markets it invests in, so performance should be similar to those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 3.7% 6.3% 7.0% 37.4% 0.1% Japanese Equities Asia Pacific ex Japan Equities UK Fixed Interest 17.8% Global Fixed Interest 24.3% Aegon Growth Tracker ( Target) (ARC) n/a n/a Composite of 37.5% FTSE All Share TR/37.5% FTSE World ex UK TR/13.3% Markit iboxx Non Gilts All Stocks GBP TR/9% FTSE Gilts All Stocks TR/2.8% FTSE Index-linked Over 5 Years TR n/a n/a Page 19 of 25

20 In-house default fund Aegon Default Equity and Bond Lifestyle (ARC) This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in global equities (company shares) with the remainder (around 25%) in UK and overseas bonds (a blend of UK corporate, UK index-linked, conventional government and overseas bonds). It s designed to track the markets it invests in, so performance should be similar to those markets in the growth stage. In the growth stage, the fund invests in a mix of investments designed to grow an investor s pension. The chart below shows where the fund invested on 30 June % 0.1% 3.7% 6.3% 7.1% 37.1% 18.1% UK Fixed Interest Global Fixed Interest Japanese Equities Asia Pacific ex Japan Equities 24.3% Aegon Default Equity & Bond Lifestyle (ARC) Page 20 of 25

21 Interim Retirement Target range Interim Retirement (Flexible Target) fund This fund is designed for those invested in a Flexible Target fund who have reached their target retirement year, but haven t yet taken their pension benefits. In their target retirement year, they will automatically be transferred into this fund. While investors decide how they want to take a retirement income, it aims to keep risk low and make sure they re not reliant on the success of just one investment type. It does this by investing in a mix of investments (company shares, bonds and cash) and countries. It s designed to track the markets it invests in, so performance should be similar to those markets. This fund is designed as a short-term investment. The chart below shows where the fund invested on 30 June % 32.4% UK Fixed Interest Other 0.3% 0.3% 1.1% 4.1% Global Fixed Interest Global Emerging Market Equities 9.8% 26.0% Aegon Interim Retirement (Flexible Target) (ARC) n/a n/a Page 21 of 25

22 Interim Retirement (Ethical Target) fund This fund is designed for investors in the Ethical Managed (Flexible Target) fund who have reached their target retirement year, but haven t yet taken their benefits. In their target retirement year investors are automatically transferred into this interim fund. It aims to provide medium to long-term growth by investing in a mix of investments (company shares, bonds and cash) that meet the fund s pre-defined ethical criteria. Its ethical criteria means the fund may have a bias towards small- and medium-sized companies. This fund is designed as a short-term investment. The chart below shows where the fund invested on 30 June % 3.0% 4.9% 23.7% 27.2% UK Fixed Interest Global Fixed Interest Japanese Equities Other 6.9% 18.6% 14.5% Aegon Interim Retirement (Ethical Target) (ARC) n/a n/a Page 22 of 25

23 Interim Retirement (Annuity Target) fund This fund is designed for those invested in an Annuity Target fund who have reached their target retirement year but have not yet bought an annuity (pension) as planned. In their target retirement year, they will automatically be transferred into this fund. It aims to help preserve the size of pension investors can buy through an annuity by investing 75% of the fund in long-dated UK government bonds (gilts). The remaining 25% of the fund is invested in cash and certificates of deposit, so investors can take the maximum tax-free cash lump sum they re entitled to when they retire, based on current legislation. This fund is designed as a short-term investment. The chart below shows where the fund invested on 30 June % 23.4% UK Fixed Interest Other 75.5% Aegon Interim Retirement (Annuity Target) (ARC) n/a n/a Page 23 of 25

24 Interim Retirement ( Target) fund This fund is designed for those invested in a Target fund who have reached their target retirement year but have not yet cashed in their pension savings as planned. In their target retirement year, they will automatically be transferred into this fund. The fund aims to provide a return in line with money market interest rates, before charges, by investing in short-term, sterling denominated money market instruments such as bank deposits, certificates of deposit and short-term fixed interest securities. Like other funds in the ABI Deposit and Treasury sector, the fund can only invest in very shortterm investments so the rates of return may be lower than for cash funds able to invest in riskier, longer-term cash securities. This fund is designed as a short-term investment. The chart below shows where the fund invested on 30 June % Other 95.5% Aegon Interim Retirement ( Target) (ARC) n/a n/a Page 24 of 25

25 Our Fund Governance As part of getting the UK ready for retirement we re dedicated to making sure our insured funds are able to meet their commitments to you. Rigorous governance is our highest priority, and is underpinned by our Funds Promise: We aim to offer high quality funds which meet their objectives. We monitor funds to check if they perform as expected. We take action if funds don t meet expectations. We give you the facts you need to make decisions. Funds Promise Find out more about our fund governance process on our website Which funds does our promise apply to? Our funds promise applies to insured funds available to UK investors. These funds typically have a name starting with Aegon or Scottish Equitable. This includes all the funds in the Workplace Target range. The value of investments that don t come with a guarantee can fall as well as rise and investors may get back less than originally invested. Aegon UK Aegon UK Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No ). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number An Aegon company AEGON UK plc INV /18