UBS (Lux) Real Estate Euro Core Fund Euro Zone Report and accounts. For the period 1 January to 31 March 2009

UBS (Lux) Real Estate Euro Core Fund Euro Zone Report and accounts For the period 1 January to 31 March 2009

Cachan

Contents Page Fund summary 5 Fund manager s report 6 Eurozone economic and property market review and outlook 9 Unaudited consolidated financial statements 11 Global Real Estate contact details 19

Fund summary For the period 1 January to 31 March 2009 Fund vision Our vision is to be one of the leading open-end real estate funds in Europe. We aim to deliver market-leading performance to our investors and to provide high quality properties to our occupiers. In conjunction with local acquisition and asset management expertise, our research-driven process seeks to enable the UBS (Lux) Real Estate - Euro Core Fund - Euro Zone (UBS Euro Core, the Fund) to outperform at the country, sector and asset level. Investment aims Seeks income and long-term capital growth Seeks to enhance property returns through active management Aims to outperform its benchmark by 175 basis points Concentrates its tactical focus on countries and sectors with the potential to outperform Purchases core assets in the office, retail and light industrial/logistics real estate sectors in the eurozone Seeks long-term investments with strong covenants, long lease profiles and growth potential Seeks to maximise investor returns through optimal fund structure and finance Focuses on markets and sectors where our acquisition expertise and operational skills can benefit our investors most Fund position (as at 31 March 2009) Net Asset Value (NAV) (EUR million) 497.2 Gross Asset Value (GAV) (EUR million) 574.8 Total return (%) 2008 - Class A - distribution units -2.50% Total return (%) 2008 - Class B - accumulation units -2.50% Income return (%) 2008 - Class A - distribution units 1.19% NAV price (Class A - distribution units) (EUR/unit) 8.777 NAV price (Class B - accumulation units) (EUR/unit) 9.783 Number of investors 70 Number of properties 16 Gearing (% of GAV) 7.1 Capital cash (% of GAV) 4.1 As at 31 March 2009 Source: UBS Global Asset Management, Global Real Estate UBS Euro Core country allocation by capital value % France 51 Spain 20 Netherlands 18 Germany 8 Italy 3 As at 31 March 2009 Source: UBS Global Asset Management, Global Real Estate UBS Euro Core sector allocation by capital value % Office 74 Retail 26 As at 31 March 2009 Source: UBS Global Asset Management, Global Real Estate 5

Fund manager s report For the period 1 January to 31 March 2009 Mark Gifford Performance update UBS Euro Core generated a total return of -2.50% during 1Q09, comprising a capital return of -3.69% and an income return of +1.19% following further falls in the portfolio valuation as the outward yield shift persisted. In the Netherlands and Germany, rising yields negatively impacted valuations. These markets have now moved more into line with those that had corrected earlier, notably Spain and France. In the Netherlands, the correction had commenced in 4Q08, whereas in Germany, whilst values had fallen in 2008, the movement had been much less severe than Spain and France. The valuation of Metromar declined due to the Fund obtaining vacant possession of a unit to facilitate the letting to H&M. In addition, the forecast turnover rent decreased due to lower consumer expenditure. Portfolio update Going forward, any positive fund performance is most likely to be achieved through proactive leasing and asset management. We have been working hard with our local asset management teams in each country with a view to implementing each property s individual business plan as well as seeking to maintain values by focusing on tenant initiatives. We remain focused upon extending or renegotiating leases prior to their expiry and upon achieving a balanced lease expiry profile for the Fund. At the Metromar shopping centre in Seville, we have signed a new lease with H&M, the international fashion retailer. We will undertake works to create a single flagship 2,000sqm unit for H&M. We will also create a new boutique unit adjacent to the new H&M entrance, which will be available for re-letting. We believe that a letting to H&M on this level will improve pedestrian footfall on the lower level of the centre where the store is located. In addition, the new Metro train link to the centre of Seville opened on 2 April and initial indications are that this has had a positive impact on footfall at Metromar as we had anticipated it would. In the Bergamo retail warehouse, we have signed a new lease with Hao Mai, an Italian/Chinese retailer and heads of terms for a new lease with a DIY chain for the accommodation previously occupied by Unieuro. A new lease has also been signed with the existing tenant in the rest of the property which extends their lease term significantly. On completion of these leasing initiatives, the property will be fully let on long-term leases at market rents and will include a turnover rent provision. Works have commenced on the property s façade and to enable the split of the property to accomodate the new tenants. In the Delft retail park, works to split the existing Swiss Sense unit into three have been completed and the units have been handed over to the new tenants. These new leases will assist in improving the level of rents receivable, the security of income as well as the attractiveness of the park to consumers. As at 31 March 2009 NAV price as at 31 March 2009 NAV price as at 31 Dec 2008 Total return on 1Q09 Total return on year to 31 Dec 2008 Class A distribution units EUR 8.777/unit EUR 9.113/unit -2.50% 1-8.84% 1 Class B accumulation units EUR 9.783/unit EUR 10.034/unit -2.50% -8.84% Distribution as at 31 March 2009 Distribution as at 31 Dec 2008 Income return on 1Q09 Income return on year to 31 Dec 2008 Class A distribution units EUR 0.108/unit EUR 0.103/unit 1.19% 4.44% 2 1 Calculated on the basis that distributions are immediately re-invested in the Fund without deductions 2 Included in the total return disclosed above for Class A distribution units 6

Campo Sentilo At Varcarcel, the office property in Madrid, we have agreed terms for a new five year lease on the whole propery with Global Dominion, the existing tenant. The lease was due to expire in February 2010, and the tenant was interested in remaining in occupation but did not occupy the whole property. They had been seeking to sub-let one and a half floors but due to the short lease term, they found it difficult to find sub-tenants willing to lease accomodation. The new five-year lease will now expire in 2014 and removes a potential expiry in 2010, a year in which the Fund has a greater exposure exposure to lease expiries/breaks. Low vacancy rate As a result of the above leasing initiatives the Fund continues to benefit from a low vacancy rate. As at 31 March 2009, the vacancy rate was 3.9%, reflecting some vacancy created whilst we implement the leasing initiatives in Bergamo and Metromar. Once the signed agreements become effective, the vacancy rate will fall back to 2.6%. Lease expiries update As shown in the charts below, the Fund has a particular exposure to lease breaks and expiries in 2010. This is in part due to the Fund's exposure to the French office market where the typical lease structure includes a 3/6/9 year term with the tenant having the option to break every third year. Several key tenants form a significant proportion of the lease breaks or expiries in 2010. There are several reasons why we hope that each of these tenants is committed to the occupation of their building, and we hope that they will renew their leases and remain in occupation. In each case, they have made a strong commitment to the buildings in terms of capital expenditure, either through undertaking works to the property or by relocating staff to the property from multiple other locations or through ownership of adjacent properties. Furthermore, the properties are well located from a transport perspective and offer competitive rental levels which we feel provides an advantage in the event that some space is vacated, particularly in an economic downturn when companies are seeking to reduce costs. The Fund has been working to create a more evenly distributed lease expiry profile. This was achieved in part with the successful renegotiation of the lease with Global Dominion in Madrid. The signing of a new five year lease has moved the lease expiry from 2010 to 2014. We are currently in discussion with several key tenants with a view to agreeing terms for new leases and thereby remove the risk of future vacancy upon lease expiry. Profile of lease expiries (assuming no breaks are exercised) Profile of lease expiries (with breaks) 25 40 20 35 30 Income % 15 10 Income % 25 20 15 5 10 5 0 09 10 11 12 13 14 15 16 17 18 19 20 21 0 09 10 11 12 13 14 15 16 17 18 19 20 21 Source: UBS Global Asset Management, Global Real Estate As at 31 March 2009 Source: UBS Global Asset Management, Global Real Estate As at 31 March 2009 7

Massy Appointment of Acting Assistant Portfolio Manager Lily Lin has joined the team as Acting Assistant Portfolio Manager from May 2009 to cover Mary Brooking, who is now on maternity leave. Lily will be responsible for assisting Mark Gifford in the day-to-day running of the Fund. Lily joined UBS Global Asset Management in 2006 as an Associate in the Global Real Estate Continental Europe transactions team, focusing on the Nordics and Benelux region. She has five years investment experience working for a number of institutions. Redemptions The Fund received some redemption requests during 2008 and only one further redemption request was received in 1Q09. The Fund is managing the process, having regard to the interests of both redeeming and continuing Unitholders. To enable the Fund to make redemption payments, we have considered a hold/sell analysis of the Fund s existing properties, assessing the Fund s debt levels and reviewing opportunities to continue to raise equity from new investors. The current market environment and restricted liquidity not only creates a very difficult environment to achieve property sales but also to secure any debt financing. This may impact the timing of meeting redemptions. Client reporting changes You will be aware that we currently provide investors with a preliminary Quarterly Update report when issuing the Fund s NAV every quarter. We also provide a Report and Accounts for the period then ended, including a Manager s report and financial statements. In order to reduce the Fund s administration costs to the benefit of investors, we intend to streamline the quarterly reports we provide in future. Every quarter, investors will continue to receive the preliminary Quarterly Update, which includes details of Fund activity and key Fund facts. In addition, beginning from 3Q09, and applying to the March and September quarter ends, we intend to provide investors with unaudited financial statements only. We will continue to provide a half yearly report (ended June) with unaudited financial statements, and a comprehensive annual report (ended December) with audited financial statements. 8

Eurozone property market review and outlook For the period 1 January to 31 March 2009 In 1Q09, it became clear that the eurozone economy had entered into a recession. In the eurozone, GDP contracted by 2.5% in 1Q09 after a 1.6% contraction in 4Q08. In particular, the contraction of the German economy 1 by 3.8% quarter on quarter had a very negative effect on the eurozone economy. Despite the rally in world stock markets during March, we believe the outlook for both the European economy and its real estate markets remains negative. With debt financing still in short supply, the volume of eurozone commercial real estate transactions completed in 1Q09 fell approximately 44% to EUR 11.5 billion 2 when compared to 4Q08. Real estate prices fell further and yields continued to rise during 1Q09. Since its low point in mid 2007, prime office yields have moved out between 110bps in Frankfurt and up to 290bps in Madrid. Occupier markets have softened considerably since 4Q08 with associated pressure on rents. In Madrid, prime rents have already fallen by 15% since the peak of the rental market. In Germany and the Netherlands, prime office rents have weathered the pressures on prime head line rents relatively well through the provision of incentives, but as the recession continues we expect the pressure on rents to increase. As shown in the chart below, prime office buildings have lost between c. 20% (Helsinki) and almost 50% (Madrid) of their capital value since 2Q07. Most of the capital value decline has come from yield shift but we expect that declining rents will create additional pressure on valuations. The retail sector has not been immune from the economic downturn. Sentiment surveys are at their lowest level ever, and although data has shown an upward blip in 1Q09, levels still remain at record lows. Retailers are trying to respond quickly by concentrating their activities on best locations and shopping centres but, they are also showing greater sensitivity to costs, including rents and service charges. In a recessionary environment, value retailers are still expanding their activities but we believe this would not support rental growth in many cases 3. Retail yields are still under pressure due to required illiquidity premium for bigger lot sizes. However, we expect less pressure on rents in well established shopping centres 4. We expect the market environment to remain challenging for the rest of the year. Occupier markets are expected to stay weak, keeping downward pressure on rents and investors should concentrate on core properties. We also expect more motivated or even distressed sellers later in the year because loan-to-value ratios will continue to come under pressure from the expected continuing decline in valuations. This challenging situation could create opportunities for buyers as prices would still decrease faster than valuations. 1 UBS Investment Research, European Economic Comment 15 May 2009 2 CB Richard Ellis, European investment quarterly. 3 PMA, European Retail Markets, Spring 2009 4 UBS Global Real Estate Research Europe s view Prime office capital value falls in the current cycle 2Q07 1Q09 % 10 0-10 -20-30 -40-50 Amsterdam Frankfurt Helsinki Madrid Milan Paris Yield shi Rental decline Source: UBS Global Asset Management, Global Real Estate Research Europe 9

UBS (Lux) Real Estate Euro Core Fund Euro Zone Fonds commun de placement Unaudited consolidated financial statements for the period 1 January to 31 March 2009 Massy

Unaudited consolidated financial statements For the period 1 January to 31 March 2009 UBS (Lux) Real Estate Euro Core Fund Euro Zone Contents Page Management and administration of the Fund 13 Unaudited consolidated statement of net assets 14 Unaudited consolidated statement of operations 15 Unaudited consolidated statement of changes in net assets 16 Unaudited statement of changes in units in issue and statistical information 17 Unaudited consolidated statement of real estate investments 18 12

Management and administration of the Fund For the period 1 January to 31 March 2009 UBS (Lux) Real Estate Euro Core Fund Euro Zone Management Company UBS (Lux) Open-End Real Estate Management Company S.à r.l. 33A Avenue J.F. Kennedy 1855 Luxembourg City Luxembourg Real Estate Manager UBS Global Asset Management (UK) Ltd 21 Lombard Street London EC3V 9AH United Kingdom Custodian & Administrative Agent RBC Dexia IS Bank 14, Porte de France 4360 Esch sur Alzette Luxembourg Domiciliary, Paying, Registrar & Transfer Agent UBS Fund Services (Luxembourg) S.A. 33A Avenue J.F. Kennedy 1855 Luxembourg City Luxembourg Independent Auditor of the Fund PricewaterhouseCoopers S.à r.l. 400 route d Esch 1014 Luxembourg City Luxembourg Legal Advisors NautaDutilh Avocats Luxembourg 2, rue Jean Bertholet L 1233 Luxembourg Linklaters Loesch Luxembourg 35 Avenue J.F. Kennedy P.O. Box 1107 1011 Luxembourg City Luxembourg Linklaters London One Silk Street London EC2Y 8HQ United Kingdom Independent Valuer DTZ Debenham Tie Leung 48 Warwick Street London W1B 5NL United Kingdom 13

Unaudited consolidated statement of net assets As at 31 March 2009 UBS (Lux) Real Estate Euro Core Fund Euro Zone Assets At 31-Mar-09 At 31-Dec-08 Non-current assets Real estate investment properties 512,026 528,771 Deferred debt financing costs 429 457 Formation costs 899 975 Current assets Cash and cash equivalents 56,869 51,895 Accounts receivable 2,106 3,053 Other current assets 2,504 1,674 Total assets 574,833 586,825 Liabilities Non-current liabilities Long-term debt 40,575 40,575 Unrealised (gain)/loss in fair value of long-term debt 646 40 Unrealised (gain)/loss on interest rate swap 1,469 829 Current liabilities Deferred income and charges 1,474 2,036 Accounts payable and accrued expenses 17,090 14,420 Distributions payable 2,660 2,565 Other liabilities 4,880 2,603 Deferred tax liabilities 8,727 9,089 Taxation 66 100 Total liabilities 77,587 72,258 Total net assets 497,246 514,567 Unitholders' equity Capital calls subscribed: Class A (1) 261,152 262,974 Capital calls subscribed: Class A (2) 2,790 2,790 Capital calls subscribed: Class B (1) 311,819 311,820 Capital calls subscribed: Class B (2) 6,714 6,714 Bid/offer spread retained within the Fund 475 475 Retained profit/(loss) (70,204) (7,018) Profit/(loss) for the year (12,840) (52,150) Less: distributions payable (2,660) (11,038) Total unitholders' equity 497,246 514,567 14

Unaudited consolidated statement of operations For the period 1 January to 31 March 2009 UBS (Lux) Real Estate Euro Core Fund Euro Zone Period end 31-Mar-09 Year end 31-Dec-08 Income Rental income 9,145 36,549 Other property related income 1,887 7,566 Interest income 167 2,507 Total income 11,199 46,622 Expenses Direct property expenditure 2,024 6,137 Direct property taxation 493 2,481 Property valuation fees (132) 219 Management and performance fees 1,637 6,270 Custodian and fund administrative fees 27 117 General and administrative expenses 215 1,217 Interest on debt 437 2,423 Amortisation of formation costs 76 296 Amortisation of financing costs 28 373 Legal and professional fees 294 2,231 Total expenses 5,099 21,764 Net operating profit/(loss) before taxation 6,100 24,858 Taxation 64 292 Deferred tax liabilities charge/(credit) (361) (1,920) Net operating profit/(loss) after taxation 6,397 26,486 Unrealised gain/(loss) Net unrealised gain/(loss) on real estate investment properties (17,991) (76,444) Net unrealised gain/(loss) on fair value of long-term debt (606) (1,113) Net unrealised gain/(loss) on interest rate swap (640) (1,079) Total unrealised gain/(loss) for the year (19,237) (78,636) Net profit/(loss) for the year (12,840) (52,150) 15

Unaudited consolidated statement of changes in net assets For the period 1 January to 31 March 2009 UBS (Lux) Real Estate Euro Core Fund Euro Zone Period end 31-Mar-09 Year end 31-Dec-08 Net assets at the beginning of the period 514,567 596,235 Net increase/(decrease) in net assets resulting from operations Net operating profit/(loss) after taxation 6,397 26,486 Net unrealised gain/(loss) on real estate investment properties (17,991) (76,444) Net unrealised gain/(loss) on fair value of long-term debt (606) (1,113) Net unrealised gain/(loss) on interest rate swap (640) (1,079) Total net increase/(decrease) in net assets resulting from operations (12,840) (52,150) Net increase/(decrease) in net assets resulting from capital transactions Capital contributions at NAV Class A (1) units Class A (2) units 2,790 Class B (1) units Class B (2) units 6,714 Capital redemptions at NAV Class A (1) units (1,821) (520) Class A (2) units Class B (1) units (27,939) Class B (2) units Distributions Class A (1) units (2,631) (10,947) Class A (2) units (29) (91) Bid/offer spread retained within Fund 475 Total net increase/(decrease) in net assets resulting from capital transactions (4,481) (29,518) Net assets at the end of the period 497,246 514,567 16

Unaudited statement of changes in units in issue and statistical information For the period 1 January to 31 March 2009 UBS (Lux) Real Estate Euro Core Fund Euro Zone Number of units at the beginning of the period Number of units subscribed over the period 1 Number of units redeemed over the period 1 Total number of units at the end of the period Class A (1) units 24,557,519 (200,000) 24,357,519 Class A (2) units 268,977 268,977 Class B (1) units 28,125,344 28,125,344 Class B (2) units 607,706 607,706 Total 53,559,546 (200,000) 53,359,546 Statistical information For the period 1 January to 31 March 2009 Total net asset value Total units in issue Net asset value per unit EUR Distribution payable per unit EUR Class A (1) units 213,787 24,357,519 8.777 0.108 Class A (2) units 2,361 268,977 8.777 0.108 Class B (1) units 275,153 28,125,344 9.783 N/A Class B (2) units 5,945 607,706 9.783 N/A Total 497,246 53,359,546 1 Units issued and redeemed during the year Units issued in respect of quarterly dealing day on 31 December 2008: Class A (1) units 200,000 at EUR 9.113 per unit 17

Unaudited consolidated statement of real estate investment properties As at 31 March 2009 UBS (Lux) Real Estate Euro Core Fund Euro Zone At 31-Mar-09 At 31-Dec-08 Cost of real estate investments purchased 580,286 580,286 Associated costs of acquisition 38,847 38,507 Real estate investments at cost 619,133 618,793 Net unrealised gain/(loss) on real estate investment properties (108,605) (90,614) Adjustment to reflect treatment of lease incentives 1 1,498 592 Real estate investments at fair value 512,026 528,771 Real estate investment properties comprise commercial properties within the eurozone area: Cost 31-Mar-09 Open market value 31-Mar-09 Insured value 31-Mar-09 France 318,625 268,550 182,909 Italy 14,916 16,200 19,398 Spain 2 130,639 101,146 87,577 Germany 48,028 39,500 45,706 Netherlands 106,925 86,630 78,465 Total 619,133 512,026 414,055 Real estate investments are recorded at their estimated open market values as determined by DTZ Debenham Tie Leung. A statement giving the changes in real estate investments for the year can be obtained, upon request, from the registered office of the Fund. 1 An adjustment relating to lease incentives straight-lined over the related lease agreements has been included to retain the fair value of the real estate investment properties. The adjustment will reverse over the remaining period of the relevant lease agreements. 2 An adjustment to value has been made to reflect the need to improve the fire safety system in the Spanish office property. 18

Global Real Estate contact details Portfolio management Senior Portfolio Manager Mark Gifford Tel. +44-20-7901 5343 Email mark.gifford@ubs.com Acting Assistant Portfolio Manager Lily Lin Tel. +44-20-7901 5013 Email lily.lin@ubs.com Client service EMEA Head of Business Development EMEA Tilman Hickl Tel. +49-89-206 095 120 Email tilman.hickl@ubs.com Continental Europe (ex CH, DE & AT) Roberto Varandas Tel. +44-20-7901 5060 Email roberto.varandas@ubs.com UK Dana Eisner Tel. +44-20-7901 5291 Email dana.eisner@ubs.com Switzerland (CH) Dominic von Felten Tel. +41-44-234 6021 Email dominic.von-felten@ubs.com Germany/Austria (DE & AT) Tilman Hickl Tel. +49-89-206 095 120 Email tilman.hickl@ubs.com Americas Head of Business Development US Tom Anathan Tel. +1-860-616 9128 Email thomas.anathan@ubs.com To express an interest in participating in the Fund's secondary market, please contact: Dealing team Barry Channon Tel. +44-20-7901 5384 Email barry.channon@ubs.com 19

UBS Global Asset Management (UK) Ltd is a subsidiary of UBS AG. Registered in England and authorised and regulated by the Financial Services Authority: UBS Global Asset Management (UK) Ltd, UBS Global Asset Management Funds Ltd, UBS Global Asset Management Life Ltd. Telephone calls may be recorded. This document is for Professional Clients only. It is not to be distributed to or relied upon by Retail Clients under any circumstances. This document is issued by UBS Global Asset Management (UK) Ltd and is intended for limited distribution to the clients and associates of UBS Global Asset Management. Use or distribution by any other person is prohibited. Copying any part of this publication without the written permission of UBS Global Asset Management is prohibited. Care has been taken to ensure the accuracy of its content, but no responsibility is accepted for any errors or omissions herein. Please note that past performance is not a guide to the future. UBS Global Asset Management (UK) Ltd 21 Lombard Street London EC3V 9AH Tel. +44-20-7901 6012 Fax +44-20-7901 5431 www.ubs.com/realestate With property investment, the underlying assets are very illiquid. In certain circumstances, redemptions might be delayed if a property is not readily saleable and there is insufficient cash within the portfolio. You should also be aware that property valuation is a matter of judgement by a valuer. This communication shall not be deemed to be an offer or the solicitation of an offer to buy any security, nor shall any such security be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale could be unlawful under the laws of such jurisdiction. This document is a marketing communication. Any market or investment views expressed are not intended to be investment research. The document has not been prepared in line with the FSA requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this document should not be considered a recommendation to purchase or sell any particular security and the opinions expressed, in particular in the section headed Eurozone property market review and outlook, are those of UBS Global Asset Management, Global Real Estate Research, Europe, and are subject to change without notice. The views expressed in this document are the views of UBS Global Asset Management, Global Real Estate Research, Europe. The statements contained herein that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimates and projections about the industry in which UBS operates and the belief and assumptions made by UBS words such as expects, anticipates, should, intends, plans, believes, seeks, estimates, projects and variations of such words and similar expressions are intended to identify such forward looking statements. These statements are not guarantees of future performance and involve certain risk, uncertainties and assumptions which are difficult to predict. Furthermore, there can be no assurance that any trends described in this document will continue or that forecasts will occur because economic and market conditions change frequently. Performance returns shown are calculated using net asset values per unit, are net of fees and assume that income is reinvested. All figures reflect data as at 31 March 2009. Published 29 May 2009. UBS 2009. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.