AEGON Asset ManagementAEGON Asset Management

Is it too late to join the high yield party?s oo a e o jo e g y e d pa y?May 2011

K i T lf Fi d I P d S i liKevin Telfer – Fixed Income Product Specialist

Richard Dixon– Head of Pooled Sales Continental Europe

ForewordThis offering should not be considered a public offering in or from the grand duchy of Luxembourg, and the fund is not registered as a foreign fund with the Luxembourg regulatory authorities This memorandum may not be reproduced or used for any purpose other than thisauthorities. This memorandum may not be reproduced or used for any purpose other than this private placement, nor provided to any person other than the recipient thereof.

2

AEGON Asset Management: credentialso Proven performance track record

o UK Lipper Fund Awards 2011, Best High Yield Bond Fund (GBP)

o AEGON High Yield Global Bond Fund, Best Fund at the Lipper Fund Awards 2011 Switzerland

o AEGON High Yield Global Bond Fund, Best Fund (3 years) at the Lipper fund Awards 20011 g , ( y ) ppNetherlands

o AEGON High Yield Bond Fund, highly commended at the Portfolio Adviser Awards 2011

o Winner of 2006 Citywire’s ‘UK Corporate Bond Manager of the Year’ award

o Investment Week's UK Corporate Bond Fund Manager of the Year 2006

3

AEGON High Yield Global Bond performance

30

4033.78%

0

10

20

grow

th

20.30%

-20

-10

0

Per

cent

age

g

-50

-40

-30

50

Nov

-07

Jan-

08

Mar

-08

May

-08

Jul-0

8

Sep

-08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep

-09

Nov

-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep

-10

Nov

-10

Jan-

11

Mar

-11

AEGON High Yield Global BondA Inc EUR Lipper Global Bond Global High YieldAEGON High Yield Global Bond A Inc EUR Lipper Global Bond Global High Yield

S Li Hi d i ht bid t bid t 29 A il 2011 P t f i t id t th f t F d l h d N b 2007

4

Source: Lipper Hindsight, bid to bid, as at 29 April 2011. Past performance is not a guide to the future. Fund launched November 2007

Macro backdropo Rates will go higher, but not aggressively

o Don’t subscribe to double-dipo Don t subscribe to double dip

o Headwinds persistent

• Europe

• MENA

• Stimulus withdrawal

o Volatility to remain elevated

o Complacency a concerno Complacency a concern

5

Exposure to interest rates hikes?

o Steep yield curve implies rate tightening cycle is expected

-3

1,800

2,000

o Yield curve flattens as interest rate hikes slow the economy

-2

-11,400

1,600

d)

o High yield credit spreads tend to widen around 3 years into

0

800

1,000

1,200

urve

% (i

nver

te

Spr

ead

bps

cycle

o Currently only at start of cycle

1

2400

600

Yiel

d C

uS

30

200

n-85

n-86

n-87

n-88

n-89

n-90

n-91

n-92

n-93

n-94

n-95

n-96

n-97

n-98

n-99

n-00

n-01

n-02

n-03

n-04

n-05

n-06

n-07

n-08

n-09

n-10

n-11

2yrs 5yrs 4yrs

S AEGON A t M t B A M ill L h Bl b J 2011

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

US High Yield Spread LHS 2s10s (inverted) RHS

6

Source: AEGON Asset Management, BoA, Merrill Lynch, Bloomberg, January 2011.

High yield returns: volatile over short periods…

25.00%

30.00%

10 00%

15.00%

20.00%

retu

rns

(%)

0.00%

5.00%

10.00%

eld

quar

terly

r

-15.00%

-10.00%

-5.00%

US

Hig

h Yi

e

-20.00%

Sep

-87

Mar

-89

Sep

-90

Mar

-92

Sep

-93

Jan-

95

Sep

-96

Mar

-98

Sep

-99

Mar

-01

Sep

-02

Mar

-04

Sep

-05

Mar

-07

Sep

-08

Mar

-10

S M ill L h & Bl b D b 2010

S S S S S S S S

7

Source: Merrill Lynch & Bloomberg, December 2010

…attractive over the long term20.00% Annualised returns over rolling

5 year periods US Equity US High Yield

Average 9.9% p.a 8.6% p.a

Volatility 9 3% 4 1%15.00%

ear

retu

rns

Volatility 9.3% 4.1%

10.00%

annu

alsi

ed 5

ye

5.00%

US

Hig

h Y

ield

a

0.00%

-5.00%

Dec

-91

Jun-

92

Dec

-92

Jun-

93

Dec

-93

Jun-

94

Dec

-94

Jun-

95

Dec

-95

Jun-

96

Dec

-96

Jun-

97

Dec

-97

Jun-

98

Dec

-98

Jun-

99

Dec

-99

Jun-

00

Dec

-00

Jun-

01

Dec

-01

Jun-

02

Dec

-02

Jun-

03

Dec

-03

Jun-

04

Dec

-04

Jun-

05

Dec

-05

Jun-

06

Dec

-06

Jun-

07

Dec

-07

Jun-

08

Dec

-08

Jun-

09

Dec

-09

Jun-

10

Dec

-10

S M ill L h Bl b d S&P D b 2010

8

Source: Merrill Lynch, Bloomberg and S&P, December 2010

High yield spreads and default rates

2,00020.00%

1,50015.00%

pse %

1,00010.00%

Spr

ead

bp

Def

ault r

ate

5005.00%

00.00%

an 1

985

ay 1

986

ep 1

987

an 1

989

ay 1

990

ep 1

991

an 1

993

ay 1

994

ep 1

995

an 1

997

ay 1

998

ep 1

999

an 2

001

ay 2

002

ep 2

003

an 2

005

ay 2

006

ep 2

007

an 2

009

ay 2

010

ep 2

011

S M d ' I t S i M ill L h d AEGON A t M t t J 2011

Ja Ma

Se Ja Ma

Se Ja Ma

Se Ja Ma

Se Ja Ma

Se Ja Ma

Se Ja Ma Se

Global Speculative DR Average DRHY Spreads Average Spread

Projected Global Speculative DR

9

Source: Moody's Investors Service, Merrill Lynch, and AEGON Asset Management as at January 2011

Non financials: default spread premiums

150

200 o DSP is spread received over that needed to cover historic defaults

50

100

um (b

ps)

historic defaults

o Credit spreads still offer value

-50

0

spre

ad p

rem

iu value

o Only CCCs are not rewarding investors

-150

-100

Def

ault

s rewarding investors

-250

-200

AA A BBB BB B CCC

EUR USD

S D t h B k F b 2011 C l l ti b d d f lt t i 1970 d i 40% t

10

Source: Deutsche Bank, February 2011. Calculations based on average default rate exposure since 1970 and assuming 40% recovery rate.

High yield opportunities – careful stock analysis

Factor Factor

Source of risk Operating leverage Financial leverageSource of risk Operating leverage Financial leverage

Profit predictability Unpleasant surprises Recurring, diversified profits

Debt trajectory Growing leverage Strong cash flow

Business model sustainability Long term structural decline Viable after bond maturityBusiness model sustainability Long term structural decline Viable after bond maturity

Bonds issued by Leveraged buy outs Publicly listed companies

Cost of trading Small illiquid deals Good visibility

11

Is it too late to join the high yield party?o All the right ingredients for this party to

continue

• Parents not due back for some time

• Still plenty of food and drink

o Stick to your principles, do not be lured into bad behaviour

• Or you might regret it tomorrowOr you might regret it tomorrow

o Chose your friends wisely and avoid the trouble makers

o Be prepared to take some time out if things get out of control

o Enjoy yourself!

1212

DisclaimerThis document and information contained here is confidential and has been prepared and is intended for use on a confidential basis. It may not be reproduced, redistributed or passed on to any other persons or published in whole or in any part for any purpose.

This document is not intended for retail distribution and is directed only at investment professionals. It should not be distributed to, or relied upon by, private investors. The information in this document is based on our understanding of the current and historical positions of the markets. The views expressed should not be interpreted as recommendations or advice. Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and is not guaranteed

This document should not be considered a public offering in or from the Grand Duchy of Luxembourg. The fund is not registered as a foreign fund with the Luxembourg regulatory authorities and is to qualified investors only; it is strictly for private use by its holder and may not be passed on to any third parties or otherwise publicly distributed Subscriptions will not be accepted from any persons other than the person topassed on to any third parties or otherwise publicly distributed. Subscriptions will not be accepted from any persons other than the person to whom this document has been delivered, by the Fund or its representative.

This document has not been produced in accordance with any prospectus requirements and has not been approved or disapproved by the financial services regulatory authorities in the country in which it is being offered. Accordingly there is no requirement to publish or make available a Prospectus.

The High Yield Global Bond Fund is a sub-fund of the AEGON VCIC. AEGON Investment Company (Ireland) plc, is an umbrella type open-ended investment company with variable capital registered in the Republic of Ireland (no: 442106), registered office at 25-28 North Wall Quay, International Financial Services Centre, Dublin 1. Board of Directors: Helen Webster (UK), David Healey (Ireland), Mike Kirby (Ireland). AEGON Investment Company (Ireland) plc is regulated by the Central Bank of Ireland.

AEGON Asset Management includes AEGON Asset Management UK plc (no: 113505) and AEGON Investment Management UK Ltd (no:AEGON Asset Management includes AEGON Asset Management UK plc (no: 113505) and AEGON Investment Management UK Ltd (no: 212159). Both are registered in Scotland and have their registered office at AEGON House, 3 Lochside Avenue, Edinburgh Park, Edinburgh, EH12 9SA. AEGON Asset Management UK plc is authorised and regulated by the Financial Services Authority, (FSA reference no: 144267). AEGON Asset Management is the Investment Manager and Marketing Agent for AEGON Investment Company (Ireland) plc. AEGON Investment Management UK Ltd is an appointed representative of Scottish Equitable plc, an AEGON company, whose registered office is 1 Lochside Crescent Edinburgh Park Edinburgh EH12 9SE (FSA reference no: 165548)Lochside Crescent, Edinburgh Park, Edinburgh, EH12 9SE (FSA reference no: 165548).

13FP ID No: 2011/11794