Annual Report Standard Life Investments UK Real Estate Trust

Transcription

1 Annual Report Standard Life Investments UK Real Estate Trust for the half year ended 30 June 2017 (unaudited)

2 Contents 3 Trust Information* 5 Statement of Manager s Responsibilities 6 Manager s Statement* 7 Standard Life Investments UK Real Estate Accumulation Feeder Fund 29 Standard Life Investments UK Real Estate Income Feeder Fund 45 Alternative Investment Fund Disclosures * These items comprise the Manager s Report for the purposes of the rules contained in the Collective Investment Schemes sourcebook ( the Sourcebook ).

3 Standard Life Investments UK Real Estate Trust Trust Information General Standard Life Investments UK Real Estate Feeder Trust (the Trust ) is an authorised unit trust in umbrella form and is authorised by the Financial Conduct Authority with effect from 6 March Funds There are are curently two sub-funds (Funds) in the Trust, the Standard Life Investments UK Real Estate Accumulation Feeder Fund ("the Accumulation Feeder") and the Standard Life Investments UK Real Estate Income Feeder Fund ("the income Feeder"), both of which are wholly invested in the relevant Share Class of the Standard Life UK Real Estate Fund ( the PAIF ). All sub-funds are non-ucits. Investment background It is intended that the sub-funds will be feeders of PAIF at all times, investing solely in the PAIF ("the Master fund"), as such, its investment objective is to carry on Property Investment Business and to manage cash raised for investment in the Property Investment Business. Objective The objective of the sub-funds is to invest primarily in UK commercial property through the PAIF to provide a combination of income and capital growth over the long term. 3

4 Standard Life Investments UK Real Estate Trust Trust Information (continued) Risk Profile Investors should be aware of the following risk factors observed in the Master Fund: (a) Investment property is less liquid than other asset classes such as bonds or equities. Selling property can be a lengthy process so investors in the PAIF should be aware that they may not be able to sell their investment when they want to; (b) Investment property transaction charges are higher than those which apply in other asset classes. Investors should be aware that a high volume of transactions would have a material impact on the PAIF returns; and (c) Property valuation is a matter of judgement by an independent valuer and is therefore a matter of the valuer s opinion rather than fact. Reporting dates Record dates Interim 30 June Interim Last day of each month Annual 31 December Annual 31 December Payment dates Interim Annual Last day of each month 15 February Manager Directors of the Secretary of the Trustee Manager ACD Standard Life Investments A.S. Acheson H.S. Kidd Citibank Europe plc (Mutual Funds) Limited S.A. Fitzgerald UK Branch 1 George Street J. Lowe 1 North Wall Quay Edinburgh S. Campbell Dublin 1 EH2 2LL L. Scott D.E. Thomas S.R. Wemyss Independent Auditors** Registrar Investment Adviser Standing Independent Valuers* KPMG Standard Life Investments Standard Life Investments C B Richard Ellis Limited 15 Canada Square (Mutual Funds) Limited Limited St Martin s Court Canary Wharf 1 George Street 1 George Street 10 Paternoster Row London Edinburgh Edinburgh London E14 5GL EH2 2LL EH2 2LL EC4M 7HP JLL Limited 30 Warwick Street London W1B 5NH * For the property investment held within the Master Fund Standard Life Investments UK Real Estate Fund, the PAIF. ** Prior to 1 January 2017 the Independent Auditors were PricewaterhouseCoopers LLP. 4

5 Standard Life Investments UK Real Estate Trust Statement of Manager s Responsibilities The Regulations require the Manager to prepare financial statements for each annual and half-yearly accounting period which give a true and fair view of the financial position of the Trust and its sub-funds and of its net revenue and net losses on the property of the Trust and its sub-funds for the year. In preparing the financial statements the Manager is required to: select suitable accounting policies and then apply them consistently; comply with the disclosure requirements of the Statement of Recommended Practice for Financial Statements of Authorised Funds issued by the IMA in May 2014; follow generally accepted accounting principles and applicable accounting standards; make judgements and estimates which are prudent; keep proper accounting records which enable it to demonstrate that the financial statements as prepared comply with the above requirements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Trust and its subfunds will continue in operation. The Manager is responsible for the management of the Trust and its sub-funds in accordance with the Trust Deed, Prospectus and the Sourcebook and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Manager confirms that suitable accounting policies have been used and applied consistently and reasonable and prudent judgements and estimates have been made in the preparation of the financial statements for the half year ended 30 June The financial statements of Standard Life Investments UK Real Estate Accumulation Feeder Fund and Standard Life Investments UK Real Estate Income Feeder Fund have been prepared on a going concern basis. 5

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7 Standard Life Investments UK Real Estate Accumulation Feeder Fund Standard Life Investments UK Real Estate Accumulation Feeder Fund Trust Profile and Information Launch date 18 March 2016 Investment Policy The sub-fund will invest all or substantially all of its assets in the feeder accumulation shares of the Standard Life Investments UK Real Estate Fund, ("the PAIF"). To the extent that the sub-fund is not fully invested in the PAIF, the subfund will hold its remaining assets in cash. Risk Profile Investors should be aware of the following risk factors: (a) The sole investment of the sub-fund is shares in the relevant share class of the PAIF. If the value of the investment in the PAIF declines, or is otherwise adversely affected, this will have an adverse effect on the value of the sub-fund. Past performance is no guide to the future; (b) Where an initial charge or redemption charge is imposed, an investor who realises his units after a short period may not (even in the absence of a fall in the value of the relevant investments) realise the amount originally invested. In particular, where a redemption charge is payable, investors should note that the percentage rate at which the redemption charge is calculated is based on the market value rather than the initial value of the units. If the market value of the units has increased the redemption charge will show a corresponding increase. The units therefore should be viewed as medium to long term investments; (c) Investors are reminded that in certain circumstances their right to redeem units (including a redemption by way of switching) may be suspended. In exceptional circumstances, the Manager may (following consultation with the Trustee) suspend the issue, cancellation, sale and redemption of units in any and all sub-funds (or classes). In particular, if the issue, cancellation, sale and redemption of shares in the relevant class of the PAIF should be suspended, then the Manager will suspend the issue, cancellation, sale or redemption of units to reflect the position in the relevant class of the PAIF. (d) Inflation will, over time, reduce the value of investments in real terms. (e) The sub-fund may employ leverage that will magnify gains and losses and result in greater volatility in the value of Scheme Property as a result of market movements. Cautionary note It should be remembered that past performance is not a guide to future performance. The value of investments may go down as well as up and, therefore, investors may not get back the amount originally invested. 7

8 Standard Life Investments UK Real Estate Accumulation Feeder Fund Investment Report Fund Manager: George Shaw Standard Life Investments UK Real Estate Accumulation Feeder Fund is a Feeder as defined by COLL 11.1 and holds shares in the PAIF. The Investment report of the PAIF ("the Master fund") has been provided below. Copies of the Report and Accounts are available online at standardlifeinvestments.com. Market background The PAIF funds market backround is reproduced below: UK commercial real estate enjoyed a robust start to 2017, delivering positive returns for investors over the last six months. The UK economy was resilient following the EU referendum but has become more subdued so far in Having fallen back during 2016, capital values for UK real estate moved ahead in 2017, with capital growth of 2.0% over the six months to end June, according to the MSCI/IPD Monthly Index. Rental values were also positive, giving a timely boost to overall returns. The industrials sector provided much of this upturn, as it continued to outperform offices and retail. Inflationary pressures may prove to be a significant headwind, with static wage growth despite a tight labour market leading to further polarisation in the retail sector. According to Propertydata's figures, investment activity totalled 24 billion in the first half of Overseas investors remained the most significant investors in the UK, with purchases totalling 12.8 billion, representing nearly 53% of the overall figure. At a sector level, London offices remained dominant in terms of activity, attracting 8.2 billion of inward investment. There was also strong demand for industrial assets and a number of large portfolio transactions dominated the alternatives sector. Performance The PAIF funds performance is reproduced below: The UK Real Estate Fund returned 2.80% over the period, compared with a total return of 3.41% from the IA Commercial Property Funds peer group.* The Authorised Property Unit Trust ( APUT )/Property Authorised Investment Fund ( PAIF ) MSCI Benchmark for Q illustrating the relative performance of the underlying direct property assets is not currently available. Initial estimates indicate that the Fund s underlying direct property assets provided a total return of 2.2% over Q and 4.7% for the first half of In line with the market, the Fund s industrial assets provided the strongest performance, with performance in South East industrials particularly strong. *Source: IA/Morningstar/Standard Life Investments; SLI performance based on PAIF Platform 1 Acc; Peer Group comprises of 10 Comparable property funds in the IA Property Peer. 8

9 Standard Life Investments UK Real Estate Accumulation Feeder Fund Investment Report (continued) Investment activity The PAIF funds investment activity is reproduced below: During the reporting period, we added to the Fund s existing holding at the IO Centre, Sutton, by acquiring three units in an adjacent trade-counter scheme for 4.3 million. We also completed the disposal of Tesco on Church Street, Tiptree, for around 14.3 million, following the tenant s implementation of a buyback option. Finally, we sold a Q Park car park in Sheffield for 19.0 million. Ongoing asset-management activity remained a key focus, as we sought to implement initiatives aimed at income and value enhancement. For example, we completed new leases with Sushi Shop at Hampstead High Street, London, and Snap Fitness at Gateway Shopping Park, Trowbridge. In the office sector, we secured a new lease to existing tenant JLT Management at Church Street, Birmingham, extending their occupational space and lease commitment. Finally, in the industrials sector, we achieved rental uplifts with Office Depot at Belvedere and New England Seafood at Cox Lane, Chessington. The following tables show the purchases and sales made to the portfolio in the year to 30 June 2017: Purchases Cost '000 Standard Life Investments UK Real Estate Fund (Feeder Accumulation shares) 35,918 Sales Proceeds '000 Standard Life Investments UK Real Estate Fund (Feeder Accumulation Shares) 179,445 9

10 Standard Life Investments UK Real Estate Accumulation Feeder Fund Investment Report (continued) Outlook and future strategy The PAIF funds outlook and future strategy is reproduced below: UK real estate continues to provide an elevated yield compared with other asset classes and the market has stabilised following the post-referendum upheaval last year. Furthermore, lending to the sector is at a lower level than in 2007/2008 and liquidity remains reasonable. In addition, development remains relatively constrained by historic standards and existing vacancy rates are below average levels in most markets. This should all help to maintain positive returns. In this environment, real estate s steady and secure income is likely to be the key driver of returns. Sentiment is likely to drive the market in the short term, as the political and economic impact associated with the UK s withdrawal from the European Union continues to evolve. The retail sector continues to face a series of headwinds that may hold back recovery in weaker locations due to oversupply and structural issues. Given the backdrop of continuing heightened macro uncertainty, investors are becoming more risk averse and better quality assets are once again broadly outperforming poorer quality assets. Currently, around 80% of the Fund s assets by value are within the Neutral to Very Heavy classification on our three-year House View. We are currently analysing a number of new investment opportunities, as we seek new assets that provide an attractive blend of high-quality income and asset management opportunities. Finally, we will continue to implement asset management initiatives in order to enhance income and capital growth. 10

11 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (unaudited) 30 June December 2016 pence per unit pence per unit Retail accumulation Change in net assets per share Opening net asset value per share Return before operating charges* 4.87 (0.31) Operating charges** (0.94) (1.46) Property charges#~ (0.21) (0.32) Return after operating charges* 3.72 (2.09) Distributions (2.36) (4.06) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 2.60% -1.44% Other information Closing net asset value ( 000) 113, ,380 Closing number of shares 76,988,333 91,038,565 Operating charges**** 1.30% 1.31% Property expense ratio#~ 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ## Launched at an inspecie value equivalent to the mid value of the underlying investment in order to retain continuity with the equivalent class in the Feeder Fund on the 18 March ^ The pence per unit values relate to the period from 18 March to 31 December 2016 reflecting a partial year. 11

12 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (continued) (unaudited) 30 June December 2016 pence per unit pence per unit Institutional accumulation Change in net assets per share Opening net asset value per share Return before operating charges* 4.16 (0.34) Operating charges** (0.52) (0.81) Property charges#~ (0.18) (0.28) Return after operating charges* 3.46 (1.43) Distributions (1.98) (3.41) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 2.79% -1.14% Other information Closing net asset value ( 000) 820, ,815 Closing number of shares 644,815, ,511,514 Operating charges**** 0.83% 0.84% Property expense ratio#~ 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ## Launched at an inspecie value equivalent to the mid value of the underlying investment in order to retain continuity with the equivalent class in the Feeder Fund on the 18 March ^ The pence per unit values relate to the period from 18 March to 31 December 2016 reflecting a partial year. 12

13 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (continued) (unaudited) 30 June December 2016 pence per unit pence per unit Standard Life accumulation Change in net assets per share Opening net asset value per share Return before operating charges* 1.63 (0.21) Operating charges** (0.02) (0.03) Property charges#~ (0.07) (0.11) Return after operating charges* 1.54 (0.35) Distributions (0.76) (1.30) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 3.11% -0.70% Other information Closing net asset value ( 000) 21,104 22,893 Closing number of shares 41,224,674 46,105,044 Operating charges**** 0.08% 0.09% Property expense ratio#~ 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ## Launched at an inspecie value equivalent to the mid value of the underlying investment in order to retain continuity with the equivalent class in the Feeder Fund on the 18 March ^ The pence per unit values relate to the period from 18 March to 31 December 2016 reflecting a partial year. 13

14 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (continued) (unaudited) 30 June December 2016 pence per unit pence per unit Standard Life B accumulation Change in net assets per share Opening net asset value per share Return before operating charges* 1.61 (0.21) Operating charges** Property charges#~ (0.07) (0.11) Return after operating charges* 1.54 (0.32) Distributions (0.75) (1.29) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 3.10% -0.64% Other information Closing net asset value ( 000) 405, ,769 Closing number of shares 791,945, ,979,081 Operating charges**** 0.00% 0.01% Property expense ratio#~ 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ## Launched at an inspecie value equivalent to the mid value of the underlying investment in order to retain continuity with the equivalent class in the Feeder Fund on the 18 March ^ The pence per unit values relate to the period from 18 March to 31 December 2016 reflecting a partial year. 14

15 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (continued) (unaudited) 30 June December 2016 pence per unit pence per unit Standard Life A accumulation Change in net assets per share Opening net asset value per share Return before operating charges* 1.61 (0.21) Operating charges** Property charges# (0.07) (0.11) Return after operating charges* 1.54 (0.32) Distributions (0.74) (1.30) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 3.11% -0.64% Other information Closing net asset value ( 000) 1 1 Closing number of shares 2,200 2,200 Operating charges**** 0.00% 0.01% Property expense ratio# 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ## Launched at an inspecie value equivalent to the mid value of the underlying investment in order to retain continuity with the equivalent class in the Feeder Fund on the 18 March ^ The pence per unit values relate to the period from 18 March to 31 December 2016 reflecting a partial year. 15

16 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (continued) (unaudited) 30 June December 2016 pence per unit pence per unit Platform 1 accumulation Change in net assets per share Opening net asset value per share Return before operating charges* 1.64 (0.12) Operating charges** (0.22) (0.35) Property charges# (0.07) (0.11) Return after operating charges* 1.35 (0.58) Distributions (0.79) (1.36) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 2.74% -1.16% Other information Closing net asset value ( 000) 134, ,193 Closing number of shares 265,816, ,605,071 Operating charges**** 0.88% 0.89% Property expense ratio# 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ## Launched at an inspecie value equivalent to the mid value of the underlying investment in order to retain continuity with the equivalent class in the Feeder Fund on the 18 March ^ The pence per unit values relate to the period from 18 March to 31 December 2016 reflecting a partial year. 16

17 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (continued) (unaudited) 30 June December 2016 pence per unit pence per unit Institutional S accumulation Change in net assets per share Opening net asset value per share^^ Return before operating charges* Operating charges** (0.18) (0.02) Property charges# (0.07) (0.01) Return after operating charges* Distributions (0.78) (0.06) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 2.88% 0.56% Other information Closing net asset value ( 000) Closing number of shares 277,045 2,200 Operating charges**** 0.71% 0.72% Property expense ratio# 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices^^^ Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ^^ Launched at 50p on 15 December ^^^ The pence per unit values relate to the period from the 15 December to 31 December 2016 reflecting a partial year. 17

18 Standard Life Investments UK Real Estate Accumulation Feeder Fund Comparative Tables (continued) (unaudited) 30 June December 2016 pence per unit pence per unit Institutional A accumulation Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.39) (0.61) Property charges# (0.07) (0.11) Return after operating charges* 1.16 (0.68) Distributions (0.81) (1.41) Retained distributions on accumulation unit Closing net asset value per share * after direct transaction costs of:***# Performance+ Return after charges 2.34% -1.36% Other information Closing net asset value ( 000) 1 1 Closing number of shares 2,398 2,398 Operating charges**** 1.58% 1.59% Property expense ratio# 0.29% 0.29% Direct transaction costs***# 0.17% 0.16% Prices Highest share price Lowest share price ~ Property charges have been left separate to the OCF to aid comparison between funds. ** The operating charges include all costs borne by the Trust, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. The Investment Report performance figure has been calculated based on the PAIF performance. # Property expense ratio and transaction costs in the Accumulation Feeder Fund relate to the underlying class in the PAIF. ^ The pence per unit values relate to the period from 18 March to 31 December 2016 reflecting a partial year. 18

19 Standard Life Investments UK Real Estate Accumulation Feeder Fund Financial Statements Statement of Total Return for the period ended 30 June 2016 (unaudited) Income: 30 June June 2016 '000 '000 '000 '000 Net capital losses 22,399 (71,962) Revenue 28,701 11,675 Expenses (4,902) (2,544) Interest and similar charges (2) 0 Net revenue before taxation 23,797 9,131 Taxation (4,645) (1,674) Net revenue after taxation 19,152 7,457 Total return before distributions 41,551 (64,505) Distributions (24,054) (10,055) Change in net assets attributable to unitholders from investment activities 17,497 (74,560) Statement of Change in Net Assets Attributable to Unitholders for the period ended 30 June 2016 (unaudited) 30 June June 2016 '000 '000 '000 '000 Opening net assets attributable to unitholders 1,618,054 - Inspecie transfer from Ignis feeder* - 778,418 Inspecie transfer from SLI feeder** - 1,045,004 Amounts receivable on issue of units 42,044 39,516 Amounts payable on cancellation of units (207,538) (130,808) (165,494) 1,732,130 Dilution adjustment 1,818 (221) Change in net assets attributable to unitholders from investment activities (see above) 17,497 (74,560) Retained distribution on accumulation units 23,870 9,939 Closing net assets attributable to unitholders 1,495,745 1,667,288 * The Feeder Fund at 18 March 2016 provided the assets to form the Accumulation Feeder Fund by way of an in specie creation. ** The SLI Acumulation Feeder Fund at 20 May 2016 merged with the Ignis Accumulation Feeder Fund by way of an in specie creation. The sub-fund's name changed after this date to the Standard Life Investments UK Real Estate Accumulation Feeder Fund. 19

20 Standard Life Investments UK Real Estate Accumulation Feeder Fund Financial Statements (continued) Balance Sheet for the period ended 30 June 2016 (unaudited) 30 June December 2016 '000 '000 '000 '000 Assets Investment assets 1,493,951 1,615,079 Current assets: Debtors 4,234 5,456 Cash and bank balances 3, ,348 6,104 Total assets 1,501,299 1,621,183 Liabilities Creditors (5,554) (3,129) (5,554) (3,129) Total liabilities (5,554) (3,129) Net assets attributable to unitholders 1,495,745 1,618,054 20

21 Standard Life Investments UK Real Estate Accumulation Feeder Fund Portfolio Statement as at 30 June 2017 Bid-market Percentage value of total Holding '000 net assets Collective Investment Schemes (99.82%) 1,493, Standard Life Investments UK Real Estate Fund (Feeder Accumulation 1,270,396,673 Shares) * 1,493, Total investment assets 1,493, Net other assets 1, Total Net Assets 1,495, All investments are in a regulated collective investment schemes within the meaning of the FCA rules unless otherwise stated. The percentage figures in brackets show the comparative holding as at 31 December

22 Standard Life Investments UK Real Estate Accumulation Feeder Fund Distribution Tables Retail accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April* 01/05/2017 Group /05/2017 Group Special** May** 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group * During the prior accounting year an early dividend was paid in March to accommodate the creation of the dual feeder structure and the move from dual priced to single priced classes. This means the March distribution is for a shorter period (18 days compared to 31 days). The April distribution is for a longer period (43 days compared to 30 days). ** During the prior accounting year the Ignis PAIF initiated a Takeover of the SLI PAIF creating the Fund. To facilitate this, both funds and feeders distributed on the 20 May 2016 ensuring the natural distribution at the 31 May 2016 was maintained. Investors can see the monthly return combining the Special distribution and the May 2016 distribution - a combined 31 days. 22

23 Standard Life Investments UK Real Estate Accumulation Feeder Fund Distribution Tables (continued) Institutional accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April* 01/05/2017 Group /05/2017 Group Special** May** 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group * During the prior accounting year an early dividend was paid in March to accommodate the creation of the dual feeder structure and the move from dual priced to single priced classes. This means the March distribution is for a shorter period (18 days compared to 31 days). The April distribution is for a longer period (43 days compared to 30 days). ** During the prior accounting year the Ignis PAIF initiated a Takeover of the SLI PAIF creating the Fund. To facilitate this, both funds and feeders distributed on the 20 May 2016 ensuring the natural distribution at the 31 May 2016 was maintained. Investors can see the monthly return combining the Special distribution and the May 2016 distribution - a combined 31 days. 23

24 Standard Life Investments UK Real Estate Accumulation Feeder Fund Distribution Tables (continued) Standard Life accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April* 01/05/2017 Group /05/2017 Group Special** May** 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group * During the prior accounting year an early dividend was paid in March to accommodate the creation of the dual feeder structure and the move from dual priced to single priced classes. This means the March distribution is for a shorter period (18 days compared to 31 days). The April distribution is for a longer period (43 days compared to 30 days). ** During the prior accounting year the Ignis PAIF initiated a Takeover of the SLI PAIF creating the Fund. To facilitate this, both funds and feeders distributed on the 20 May 2016 ensuring the natural distribution at the 31 May 2016 was maintained. Investors can see the monthly return combining the Special distribution and the May 2016 distribution - a combined 31 days. 24

25 Standard Life Investments UK Real Estate Accumulation Feeder Fund Distribution Tables (continued) Standard Life B accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April* 01/05/2017 Group /05/2017 Group Special** May** 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group * During the prior accounting year an early dividend was paid in March to accommodate the creation of the dual feeder structure and the move from dual priced to single priced classes. This means the March distribution is for a shorter period (18 days compared to 31 days). The April distribution is for a longer period (43 days compared to 30 days). ** During the prior accounting year the Ignis PAIF initiated a Takeover of the SLI PAIF creating the Fund. To facilitate this, both funds and feeders distributed on the 20 May 2016 ensuring the natural distribution at the 31 May 2016 was maintained. Investors can see the monthly return combining the Special distribution and the May 2016 distribution - a combined 31 days. 25

26 Standard Life Investments UK Real Estate Accumulation Feeder Fund Distribution Tables (continued) Standard Life A accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April* 01/05/2017 Group /05/2017 Group Special** May** 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group * During the prior accounting year an early dividend was paid in March to accommodate the creation of the dual feeder structure and the move from dual priced to single priced classes. This means the March distribution is for a shorter period (18 days compared to 31 days). The April distribution is for a longer period (43 days compared to 30 days). ** During the prior accounting year the Ignis PAIF initiated a Takeover of the SLI PAIF creating the Fund. To facilitate this, both funds and feeders distributed on the 20 May 2016 ensuring the natural distribution at the 31 May 2016 was maintained. Investors can see the monthly return combining the Special distribution and the May 2016 distribution - a combined 31 days. 26

27 Standard Life Investments UK Real Estate Accumulation Feeder Fund Distribution Tables (continued) Platform 1 accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April* 01/05/2017 Group /05/2017 Group Special** May** 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group * During the prior accounting year an early dividend was paid in March to accommodate the creation of the dual feeder structure and the move from dual priced to single priced classes. This means the March distribution is for a shorter period (18 days compared to 31 days). The April distribution is for a longer period (43 days compared to 30 days). ** During the prior accounting year the Ignis PAIF initiated a Takeover of the SLI PAIF creating the Fund. To facilitate this, both funds and feeders distributed on the 20 May 2016 ensuring the natural distribution at the 31 May 2016 was maintained. Investors can see the monthly return combining the Special distribution and the May 2016 distribution - a combined 31 days. 27

28 Standard Life Investments UK Real Estate Accumulation Feeder Fund Distribution Tables (continued) Institutional S accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April 01/05/2017 Group /05/2017 Group May 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group *** Launched on 15 December Institutional A accumulation Ex date Classification Franked Unfranked Net income Equalisation Distribution Prior Year Pay date of holding % % pence per unit pence per unit pence per unit pence per unit January 01/02/2017 Group /02/2017 Group February 01/03/2017 Group /03/2017 Group March 01/04/2017 Group /04/2017 Group April* 01/05/2017 Group /05/2017 Group Special** May** 01/06/2017 Group /06/2017 Group June 01/07/2017 Group /07/2017 Group * During the prior accounting year an early dividend was paid in March to accommodate the creation of the dual feeder structure and the move from dual priced to single priced classes. This means the March distribution is for a shorter period (18 days compared to 31 days). The April distribution is for a longer period (43 days compared to 30 days). ** During the prior accounting year the Ignis PAIF initiated a Takeover of the SLI PAIF creating the Fund. To facilitate this, both funds and feeders distributed on the 20 May 2016 ensuring the natural distribution at the 31 May 2016 was maintained. Investors can see the monthly return combining the Special distribution and the May 2016 distribution - a combined 31 days. 28

29 Standard Life Investments UK Real Estate Income Feeder Fund Standard Life Investments UK Real Estate Income Feeder Fund Trust Profile and Information Launch date 18 March 2016 Investment Policy The sub-fund will invest all or substantially all of its assets in the feeder income shares of the Standard Life Investments UK Real Estate Fund, ("the PAIF"). To the extent that the sub-fund is not fully invested in the PAIF, the sub-fund will hold its remaining assets in cash. Risk Profile Investors should be aware of the following risk factors: (a) The sole investment of the sub-fund is shares in the relevant share class of the PAIF. If the value of the investment in the PAIF declines, or is otherwise adversely affected, this will have an adverse effect on the value of the sub-fund. Past performance is no guide to the future; (b) Where an initial charge or redemption charge is imposed, an investor who realises his units after a short period may not (even in the absence of a fall in the value of the relevant investments) realise the amount originally invested. In particular, where a redemption charge is payable, investors should note that the percentage rate at which the redemption charge is calculated is based on the market value rather than the initial value of the units. If the market value of the units has increased the redemption charge will show a corresponding increase. The units therefore should be viewed as medium to long term investments; (c) Investors are reminded that in certain circumstances their right to redeem units (including a redemption by way of switching) may be suspended. In exceptional circumstances, the Manager may (following consultation with the Trustee) suspend the issue, cancellation, sale and redemption of units in any and all sub-funds (or classes). In particular, if the issue, cancellation, sale and redemption of shares in the relevant class of the PAIF should be suspended, then the Manager will suspend the issue, cancellation, sale or redemption of units to reflect the position in the relevant class of the PAIF. (d) Inflation will, over time, reduce the value of investments in real terms. (e) The sub-fund may employ leverage that will magnify gains and losses and result in greater volatility in the value of Scheme Property as a result of market movements. Cautionary note It should be remembered that past performance is not a guide to future performance. The value of investments may go down as well as up and, therefore, investors may not get back the amount originally invested. Interim Report & Financial Statemennts 29