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For professional investors and advisers only

Schroder UK Property Fund

Report and Audited Consolidated Financial StatementsFor the Period Ended 31 March 2013

SchroderS GroupSchroders is a global asset management company with £236.5 (€279.7/US$359.2) billion under management at 31 March 2013. Our clients include corporations, insurance companies, local and public authorities, charities, pension funds, high net worth individuals and retail investors.

Our aim is to apply specialist asset management skills in serving the needs of our clients worldwide. With one of the largest networks of offices of any dedicated asset management company and over 300 portfolio managers and analysts covering investment markets, we offer our clients a comprehensive range of products and services.

Schroder property InveStment manaGementSchroders has managed property funds since 1971 and had £10.5 (€12.4/US$15.9) billion under management at 31 March 2013. Schroder Property Investment Management Limited is the Investment Manager of the Schroder UK Property Fund.

Our property team employs around 100 people across nine European offices. We manage a broad range of open and closed ended property funds offering investors exposure to both diversified and sector focused portfolios.

Photography: Monks Cross, York.

Schroder UK Property FundReport to 31 March 2013

1

contentS

03 Key Information Summary*

07 Fund Director’s Report* Market Overview Performance Analysis Investment Strategy Review of Portfolio Activity

26 Report of the Authorised Corporate Director and statement of responsibilities*

27 Investment Manager’s Statement of Responsibility

28 Independent Property Valuers’ Reports

29 Depositary’s Report and Statement of Responsibilities

30 Portfolio Statement*

32 Independent Auditors’ Report

33 Statement of Total Return

33 Statement of Change in Net Assets Attributable to Shareholders

34 Balance Sheet

34 Cash Flow Statement

35 Notes to the Financial Statements

43 Unaudited Additional Information

48 Unaudited General Information

52 Key Service Providers*

*Collectively these comprise the Authorised Corporate Director’s Report


2

Photography: Mermaid Quay, Cardiff.


3

Key InformatIon Summary

The Schroder UK Property Fund (SPF or the Fund) is Schroders’ fl agship property fund launched in 19711. It provides investors with diversifi ed exposure to over £1.2 billion of UK commercial property and is managed by our highly experienced property team.

SPF seeks to provide investors with a blend of income and capital growth through investment in UK property. Its aim is to return 0.5% per annum (net of fees) above its benchmark2 over rolling three year periods. It is currently outperforming over one, two and three years.

For the fi rst time in its 42 year history1 it is available to a broad range of domestic and international professional investors seeking to benefi t from Schroders’ expertise.

Schroder UK Property Fund Benchmark2

3

-3

-2

-1

0

1

2

3

4

5

6

7

5 years (% p.a.)

3 years (% p.a.)

2 years (% p.a.)

1 year

% Net of Fees

1.8

4.1

2.8

4.7

-1.4-2.0

6.1

0.3

Benchmark2Schroder UK Property Fund

% Net of Fees

1.80.3

6.45.3

10.2 8.8 8.711.5

-30.4-27.3

-352009

20102011

20122013 3

-30

-25

-20

-15

-10

-5

0

5

10

15

Source: Schroders/AREF/IPD UK Quarterly Property Fund Index, 31 March 2013. Past performance is not a guide to future returns. 1 Prior to the fund’s conversion to a Property Authorised Investment Fund (PAIF) on 31 July 2012, the Fund was known as the Schroder Exempt Property Unit Trust. 2 Benchmark shown is the AREF/IPD UK Quarterly Property Fund Index – All Balanced Property Fund Index Weighted Average, The Fund benchmark has changed

over time and a composite for 10 years is available upon request. Performance is calculated on a net asset value (NAV) to NAV price basis plus income distributed, compounded monthly, net of fees and based on an unrounded NAV per share.

3 From 31 March 2012 to 31 July 2012 Schroder Exempt Property Unit Trust returned 0.7%. From 1 August 2012 to 31 March 2013 Schroder UK Property Fund returned 1.1%. The composite return of these two time periods before and after conversion to a PAIF is 1.8%, which is the quoted annual return for the Fund to end March 2013.

Fund performance to 31 March 2013 12 month performance to 31 March

performance


4

Scotland

North East

Yorkshire andHumberside

NorthWest

Wales

EastMidlands

East Anglia

South EastSouth West

Greater London

Retail – 28.0% GAV

Offices – 38.6% GAV

Industrial – 17.7% GAV

Other property and cash – 15.7% GAV

t

Mi

NoWWWW

tt LLtt

West Midlands

a portfolIo dIverSIfIed acroSS the uK1

1 Map shows location of assets, both directly owned and those invested in via collective investment schemes. Marker is not proportionate to asset values. GAV: gross asset value.

Key InformatIon Summary (continued)


5

High quality and diversified assets

Top 10 largest holdings

Holding Sector NAV %

Bracknell Regeneration Partnership2 Retail 5.2%

QVC, Chiswick Park, London W4 Offices 4.9%

Acorn Industrial Estate, Crayford Industrial 3.9%

Mermaid Quay, Cardiff Other – leisure 3.9%

Matrix Park Royal, London NW10 Industrial 3.8%

Monks Cross Shopping Park, York Retail warehouse 3.7%

Davidson House, Reading Offices 3.6%

Kensington Village, London W14 Offices 3.2%

West End of London Property Unit Trust (WELPUT)3 Offices 3.2%

Fujitsu Office Complex, Manchester Offices 3.1%

Other assets and cash 61.5%

1 Look through analysis. 2 50:50 joint venture with Legal & General. 3 Schroder in house fund. Data subject to rounding. Source: Schroders, IPD, 31 March 2013.

3.8%

3.7%

3.4%

2.8%

2.8%

2.1%

1.9%

1.8%

1.6%

1.6%

74.5%

B&Q Plc

Sungard Availability Services (UK) Ltd

Sportsdirect.com Retail Ltd

Homebase Ltd

763 other Tenants

Fujitsu Services Ltd

Lloyds TSB Bank Plc

QVC Ltd

Universal Music Operations Ltd

Regus (UK) Ltd

Pendragon Plc

1

6.4%

3.7%

1.6%

16.3%

16.5%

16.6%

5.6%

16.9%

0.7%

9.1%

6.6%

Offices – Rest of UK

Industrial – South East

Industrial – Rest of UK

Other

Cash

Standard Retail – South East

Standard Retail – Rest of UK

Shopping Centres

Retail Warehouses

Offices – Central London

Offices – South East

Diversified tenant base

Tenant profile % (contracted rent)

Diversified sector and regional allocation

Segment % GAV


6

1 For the 8 month period to 31 March 2013, the gross distribution per share was £0.837070.

2 Total distributions paid per share over last 12 months, divided by latest NAV per share. Calculated gross of tax and net of all fees, expenses and liabilities (actual, estimated or contingent). For the 8 month period to 31 March 2013 the annualised distribution yield was 3.9%

3 The net asset value of the scheme property represents the valuations as provided by the independent standing valuers and does not include rent incentive adjustments.

4 Gearing is reported on a look through basis during the period under review. All debt was held in indirect investments during the period.

5 To first break or expiry, whichever is sooner.6 Expressed as a % of open market rental value.7 Includes all directly held properties, all joint ventures plus the quoted initial

yield on the indirect funds. Excludes land and development.

8 From 31 March 2012 to 31 July 2012 Schroder Exempt Property Unit Trust returned 0.7%. From 1 August 2012 to 31 March 2013 Schroder UK Property Fund returned 1.1%. The composite return of these two time periods before and after conversion to a PAIF is 1.8%, which is the quoted annual return for the Fund to end March 2013.

9 Total Expense Ratio, as defined by the Association of Real Estate Funds, as % NAV. For the 8 month period to 31 March 2013, the TER was 0.86%.

10 For the 8 month period to 31 March 2013 the number of share subscriptions was 203,772 with a value of £6.9m.

11 For the 8 month period to 31 March 2013 the number of shares redeemed was nil with a nil value.

12 For the 8 month period to 31 March 2013 the number of shares matched on the secondary market was 2,658,650 with a value of £79.2m.

Portfolio Profile

Performance numbers prior to 1 August 2012 relate to the Schroder Exempt Property Unit Trust which was converted to Schroder UK Property Fund.

As at/For the period to

31 March 2013

As at/For the period to

31 March 2012

Financial Information

Gross Asset Value (GAV) £1,285.0m £1,321.7m

Net Asset Value (NAV) £1,228.0m £1,248.2m

NAV per share/unit £31.99 £32.69

Number of shares/units in issue 38,389,736 38,185,964

Gross annual distribution per share/unit1 £1.278533 £1.340935

Distribution yield2 4.0% 4.1%

Total Net asset value of scheme property3 £1,153.9m £1,207.8m

Highest price per unit in the period 1 August 2012 to 31 March 2013 £32.48 n/a

Lowest price per unit in the period 1 August 2012 to 31 March 2013 £31.99 n/a

Portfolio Details

Gearing (% NAV)4 5.0% 6.1%

Average unexpired lease length5 7.1 Years 7.4 Years

Void rate6 8.5% 7.6%

Benchmark – void rate6 9.1% 7.8%

Net initial yield7 5.6% 5.4%

Reversionary yield7 6.8% 6.8%

Performance

Annual Total Return8 1.8% 6.4%

Benchmark Total Return 0.3% 5.3%

Fund total expense ratio

Total Expense Ratio9 0.86% 0.81%

Liquidity

Annual number of shares/unit subscriptions10 203,772 96,766

Annual value of subscriptions10 £6,856,246 £3,309,437

Annual number of shares/units redeemed11 0 528,340

Annual value of shares/units redeemed11 £0 £16,597,516

Annual number of shares/units matched on the secondary market12 3,334,793 1,601,732

Annual value of shares/units matched on the secondary market12 £100,604,373 £50,665,773

Key InformatIon Summary (continued)


7

fund dIrector’S report

The past year to 31 March 2013 has been a challenging environment across the global economy. Against this backdrop I am pleased to report that it has been a year of great progress for the Schroder UK Property Fund (SPF or the Fund).

We worked closely with our investors and the Regulator (at that time the Financial Services Authority, “FSA”) to convert Schroder Exempt Property Unit Trust (SEPUT) to a Property Authorised Investment Fund (PAIF). The conversion opens up the Fund to a broad investor base, including domestic and international professional investors, for the first time in its 42 year history. This should meet a growing demand for investment into high quality real assets such as UK commercial property.

During this period, the Fund outperformed its benchmark over rolling one, two and three year periods.

marKet overvIewThe year to 31 March 2013 was plagued by risk, with the US fiscal cliff, Chinese hard landing and the eurozone collapse all looming over the global economy. This had negative implications for UK commercial property, as uncertainty about the global economic recovery weighed on both investor sentiment and occupational demand. This was reflected in the performance of UK commercial property, where the IPD (Investment Property Databank) All Property income return of 6.0% was partly offset by a 2.8% fall in capital values, leading to a total return of 3.0%1 in the year to 31 March 2013.

Investment MarketThe investment market was dominated by two overriding themes. The first was the continued importance of foreign capital. This is particularly evident in the central London office market where cross border flows accounted for 57% of all transactions in London in 20122. Whilst London continues to be the focus of the majority of this foreign capital, increasingly we are seeing some foreign investors target the regions. The US investor BioMed Realty Trust purchased a science park in Cambridge for £127 million, whilst we have also seen global funds active in the student housing sector.

Another persistent feature of the investment market has been the widening of the yield gap between prime and secondary property and the polarisation between London and the rest of the UK. In 2012, most investors expressed a preference for prime assets with long income streams, whilst yields rose in most markets outside of central London as demand for regional

Ian Mason Fund Director

1 Source: IPD Quarterly Index, Q1 2013. 2 Source: Real Capital Analytics.


8

markets remained subdued. The terms of banks actively lending to commercial property remained prohibitive on all but the best stock and this exacerbated the prime/secondary divide. However, from early 2013 we have seen a definite increase in the availability of property debt. Cushman & Wakefield estimate that greater lending by banks and new entrants such as debt funds and insurers will boost lending capacity in Europe by around 20% in 2013, compared with 2012. This increase has put downward pressure on loan margins and we expect that some lenders will be willing to lend again on secondary assets.

Occupational Market2012 was the high street’s annus horribilis, with a number of high profile retailers going into administration. The demise of HMV and Peacocks (amongst many others) is symptomatic of some of the difficulties facing the retail sector; the former losing market share to the internet while the latter was undermined by high debt financing costs.

The office market is growing increasingly polarised. In central London, demand has remained fairly resilient although the occupier base is seemingly undergoing a structural change. The TMT sector drove robust levels of take-up in the West End and fringe central London, particularly ‘Silicon Roundabout’ to the East, whilst in the City the growth of the insurance industry is largely offsetting the decline in investment banking. Most provincial office markets remain subdued although there have been some pockets of growth that have defied the wider malaise. These include technology clusters such as Cambridge which has also benefited from the growth of the IT and creative sectors.

Industrial demand was fairly tepid in 2012, with rents broadly flat across most markets. One ray of light is the UK car manufacturing industry which is enjoying something of a renaissance and now exports more cars than it imports at any time since 1976. This is prompting a host of matching initiatives in the supply chain, some of which is creating demand for industrial units in the regions.

fund dIrector’S report (continued)

Building 8, Chiswick Park, London, W4.


9

Market OutlookThere was a notable pick-up in sentiment in the first few weeks of 2013 as the major tail risks were judged to have receded, and this sentiment fuelled a rally in the UK stock market. Similarly, in the property investment market, there has been talk of a move from prime to secondary, or to be more accurate, moving away from long bond-like leases, up the risk curve to buildings where returns are more dependant on property fundamentals. More debt has become available, but even without this, the weight of equity targeting the sector remains strong and we anticipate that any quality assets (perceived as ‘good secondary’) will be bid for competitively.

It is, however, important to understand that what is driving other markets (such as corporate bonds and equities) is more a hunt for yield rather than a conviction that a significant economic recovery is imminent. The underlying economy in the UK remains weak. While the economy showed some signs of improvement in early 2013, we expect occupier demand in most markets to remain subdued.

One area where performance has been more resilient is ‘alternative’ property sectors, such as student accommodation, healthcare and leisure. In these sectors demand tends to be less correlated to the broader economic cycle and some are benefiting from long term structural change. ‘Alternative’ property sectors outperformed the traditional property sectors in the past year and we expect this trend to continue.

We do believe that UK property will continue to enjoy strong and sustained support from investors. As the chart below shows, it provides a relatively high and secure income stream and with a rally in investment market sentiment, we would expect valuations to stabilise and even in some instances to have strengthened before the end of the second quarter. Prospects for the market in 2013 could be as high as 7 – 8% with industry participants becoming more positive in recent quarters. Members of the Investment Property Forum1 (IPF) now expect total returns of 7.3% pa over the next 5 years, compared to 6.4% pa from the same survey in November 2012.

Current yields versus long term ranges2

18

15

12

9

6

3

0

%

Cas

h

10-y

r G

ilt

UK

Cor

pora

teB

ond

AA

A

UK

Cor

pora

teB

ond

BB

B

UK

Equ

ities

CB

RE

Prim

e

IPD

All

Pro

pert

yA

vera

ge

CB

RE

Sec

onda

ry

In their search for yield, investors are naturally attracted to the benefits of property as a traditional, core element of a diversified portfolio. Income remains a key driver of total returns, but being a real asset, a well structured portfolio of good quality assets will pick up growth as and when the UK economy recovers. We believe that prime long lease real estate is starting to look expensive and therefore risky. We prefer good quality assets with shorter lease structures, where there are asset management opportunities to protect and drive income going forwards.

1 The Investment Property Forum (IPF) is a UK property investment organisation for individual members. It comprises 1,900 professionals all active in the property investment market. These members include investment agents, fund managers, bankers, lawyers, researchers, academics, actuaries and other related professionals. The IPF regularly publish research articles produced by its members. One of these is the Survey of Independent Forecasts for UK Commercial Property Investment which is published four times per year. The report produces a consensus forecast by taking the average of in-house forecasts provided by its Property Advisor and Fund Manager members.

2 Longest time period selected for each data series, based on availability of data, so ‘long term’ covers varying time periods. Shortest time period relates to secondary UK real estate (13 years). Other data covers 15 year periods or longer. Source: Schroders, Datastream, March 2013.


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performance analySISIn the twelve months to end March 2013 SPF outperformed its benchmark, All Balanced Funds in the IPD UK Pooled Fund Indices, by +1.4%. It was also ahead of benchmark over the last two and three year periods. Performance can be broken down and analysed in a variety of ways and the following performance tree, produced independently by IPD, summarises each of these:

Components of SPF’s property total return

Source: IPD, 31 March 2013.

Components of property total return: SPF vs Benchmark %

15.0

10.0

5.0

0.0

-5.0

-10.0

SPF

Retail Office Industrial Other All Property

Bmk

Income Return Rental Growth Yield Impact Total Return

SPF Bmk SPF Bmk SPF Bmk SPF Bmk


Trust Total Return

SPF: 1.8Benchmark: 0.3Relative: 1.4

Income Return

SPF: 5.5Benchmark: 6.0Relative: -0.5

Rental Value Growth

SPF: -0.6Benchmark: -0.7Relative: 0.2

Yield Impact


Held

SPF: 1.5

Purchased

SPF: n/a

Development

SPF: -0.1

Sold

SPF: 0.5

Indirect

SPF: 0.2

Capital Growth


Attribution RelativeReturn:

Structure Score

SPF: 0.9

Attribution RelativeReturn:

Property Score

SPF: 1.1

Property Total Return

SPF: 3.6Benchmark: 1.4Relative: 2.1

Source: IPD, 31 March 2013.


11

Income: SPF’s income return was below benchmark by 0.5%, the initial yield is also similarly below benchmark. Segments where the Fund are significantly below benchmark are South East offices and rest of UK industrials. During the year one of the vacant industrial units at Deykin avenue was sold; after year end Hartlebury Industrial Estate was purchased yielding circa 10% which should re-align this segment with benchmark. South East offices are skewed by the QVC building on Chiswick Park, which is in a “half rent” rent free period and yields 3.8%. The total return of this asset has, however, compensated for the low income return.

Rental Growth: On average SPF rents fell marginally over the year, however, they fell less than benchmark. They were held up by stronger than average rental growth in City offices, in particular, Shepherdess Walk benefitted from the strong market of “Silicon Roundabout.” The rest of UK office rental values held firm, compared to falls in the benchmark. Other also saw stronger than average rental growth, this was due to the re-letting and rent review activity at Mermaid Quay, Cardiff which resulted in a re-rating across the scheme.

Yield movement: SPF yields rose less than those in the benchmark, due to the Fund having more prime assets than average, yields on prime assets having risen (values fallen) less than more secondary assets. SPF’s structural skew to Central London and South East offices and industrial is proving to be defensive. As at March 2013 SPF’s equivalent yield was 6.7% compared to 7.6% in the benchmark.

Attribution of SPF’s property total return %

StructureProperty

2.5

2

1.5

1

0.5

0

-0.5

-1

St R

etai

ls –

Sou

th E

ast

St R

etai

ls –

Res

t of U

K

Sho

ppin

g C

entr

es

Ret

ail W

areh

ouse

s

Offi

ces

– C

ity

Offi

ces

– W

est E

nd

Offi

ces

– S

outh

Eas

t

Offi

ces

– R

est o

f UK

Indu

stria

ls –

Sou

th E

ast

Indu

stria

ls –

Res

t of U

K

Oth

er –

Com

mer

cial

All

prop

erty

SPF benefitted from a positive score for both structure and stock selection (property). The positive structure score was almost entirely down to our under weight position to shopping centres, the worst performing segment of the market. From a stock selection point of view our retail warehouses under performed the rest of the Fund, due to the fashion park exposure through Monks Cross, York and the indirect investments in Hercules Unit Trust and the Henderson Retail Warehouse Fund. The other retail warehouses performed well, but not strong enough to out weigh the fashion park effect.

Overall, positive contributions to outperformance from both structure and property demonstrates an effective investment process with both Top Down research and Bottom Up stock selection and asset management dovetailing well over the last 12 months.


12

InveStment StrateGyWe believe that property markets are fragmented and inefficient. We aim to achieve the Fund’s performance objective through detailed research and analysis, coupled with our extensive network of contacts and asset management skills.

Our dedicated property research team identifies those sectors, regions and property characteristics which are expected to outperform the property market. The development of proprietary research tools has helped to identify locations with favourable market dynamics. This helps the investment team shape the portfolio by targeting particular sectors and properties which in aggregate could meet the Fund’s performance objective. Throughout the process we remain focused on the quality of the assets – and their value – when managing the portfolio. We aim to generate the majority of the target outperformance through good stock selection and asset management, but sector strategy has always been an important component of our overall policy, while style characteristics, such as a structured income profile, are an increasingly important overlay.

Our strategy is focused on four areas:

– Sector and geographical allocation. The overweight central London offices/underweight retail/increasing non mainstream sector strategy (see chart overleaf) has served us well over the past three to four years. The retail sector is undergoing a structural shift and it is expected there will be a significant number of losers.


Cash

Other

Industrial – Rest of UK

Industrial – South East

Offices – Rest of UK

Offices – South East

Offices – Central London

Retail Warehouses

Shopping Centres


Standard Retail – South East -0.2%

% gross asset value Underweight Overweight

-3.7%

-4.4%

-4.2%

2.6%

7.6%

1.1%

7.3%

-5.9%

0.4%

-0.5%

Tactical sector allocations as at 31 March 2013

Sector weightings relative to benchmark1

1 Benchmark shown is the AREF/IPD UK Quarterly Property Fund Index – All Balanced Property Fund Index Weighted Average.


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Traditional high streets have been under pressure for over a decade as consumers and retailers gravitate to larger schemes, convenience locations and online. We believe retail schemes need to offer convenience and/or experience if they are going to succeed in tomorrow’s retail market. Elsewhere, London’s global influence continues to create demand from a diverse range of corporations, business services, technology and media companies for central London offices. Regionally, we prefer the South East over the rest of the UK because of the relative dynamism of London’s (globally-driven) economy relative to the rest of the UK. Central London offices and retail property remain attractive to both domestic and overseas investors and valuations continue to increase. The same is not generally the case elsewhere. South East industrial property is similarly relatively attractive for its yield, occupational demand and alternative land use value. We continue to emphasise these sector and geographical allocations in the portfolio.

– Benefiting from structural themes. We have uncovered mispriced opportunities by looking outside the mainstream sectors for assets which have sound tenants with good business models and long leases. Past purchases have included car showrooms and convenience retail (both at initial yields of over 7%). Student accommodation has been a longstanding investment, although the initial yield has now fallen to a still-above-average 6.7%1. Our most recent purchase which completed in the fourth quarter of 2012 was an investment in healthcare. These sectors are less correlated with the economic cycle and are benefiting from long term structural changes such as the UK’s demographic profile. These assets often offer a liquidity premium with yields above average, because they are less well understood by investors. They also benefit as these investments enter the mainstream, as yields move towards the average. This was the case with retail warehouses in the 1990s and we have started to see this with student accommodation in the last decade.

– Positioning for growth. While the UK economy faces challenges, owning properties with good fundamentals is crucial for generating income today and rental growth in the future. Investors’ search for safety has led to prime property appearing full priced. We think that better value lies in good quality property outside ‘prime’ where rents are affordable and active management can add value. We research growth sectors of the economy, areas where there are good matches between skilled jobs and an appropriately skilled staff base. An example of this is the ‘Silicon Roundabout’ near Old Street in London and specialist engineering hubs in Gloucester and the Cotswolds. Recent investments such as Shepherdess Walk, London NW1 and Turner Rise Retail Park, Colchester fit this category. These are properties which provide a high income return and are let off low rental levels with opportunities to improve the quality of the space and/or tenant mix. We have also been looking for value in the regions, where sustainable income is more important as the prospects for rental growth are less certain. The aim is to build a portfolio capable of capturing growth in the next phase of the economic cycle.

– Income. An equally important theme that runs through the Fund is income. We continue to ensure SPF has a diversified, secure and good quality income stream through our active approach to asset management. As the chart shows opposite, this is important for providing consistent returns from year to year to a core fund strategy. Given our relatively weak economy, we also continue to take a defensive stance and favour those parts of the market where rents are affordable and which offer a high income return. This, again, has drawn us into the under-researched sectors

1 Source: UNITE.


14

which provide high and growing income streams quite often with rental increases which are either fixed or linked to inflation. We have slowly been building a bedrock of income with a defined growth profile to support our overall objective of increasing the sustainable income distribution up towards 5%. Such a strategy takes time to evolve but the benefits should start to be seen throughout 2013.

Components of UK property market returns: next phase – the occupier?

Rental value growth Yield (capital value) impactIncome return Benchmark

% rolling 12m IPD Monthly return

-40

-30

-20

-10

0

10

20

30

40

Mar 88 Mar 90 Mar 92 Mar 94 Mar 96 Mar 98 Mar 00 Mar 02 Mar 04 Mar 06 Mar 08 Mar 10 Mar 13

Capital markets cycle Capital markets cycleOccupier markets cycle

Artist’s impression of the proposed new Bracknell town centre.

Source: IPD/ Schroders.

Fund director’s report (continued)


15

revIew of portfolIo actIvItyThe role of asset managementCareful stock selection is not just about the investments we buy, but as much about the investments we choose to hold in the portfolio. Every investment is held for its ability to contribute to the overall strategy and objective of the Fund, be that income, to capture rental growth or to be able to add value through active asset management at some stage through the performance cycle. SPF is a core fund, but our strategy does not preclude active asset management from being central to our investment approach. We drive performance through a highly focused approach to the delivery of annual business plans enshrined in the objectives of each investment manager.

Such a strategy has been key to driving the out performance we have achieved over the last three years. This has involved both refurbishment and development as an important (but measured) part of the Fund’s strategy. Looking forward, a key feature of the SPF portfolio is the ability to continue to invest to create “tomorrow’s core” investments. At a time when the investment market rally suggests increased competition, and therefore pricing risk, the ability to invest equity into opportunities such as the care home portfolio, Bracknell and evolving opportunities in Croydon, gives SPF a competitive edge.

Purchases and Sales During the year ended 31 March 2013

PurchasesName Sector Type Lot size

Suffolk, Care homes1 Other Direct Between £25m and £50m

SalesName Sector Type Lot size

London, Parker Tower2 Central London Offices Direct Between £25m and £50m

Henderson UK Retail Warehouse Fund

Retail Warehouse Indirect Between £10m and £25m

Birmingham, Deykin Avenue

Rest of UK Industrial Direct Under £10m

1 Conditional agreement to fund the development of five care homes in partnership with Care UK and Suffolk County Council. Development expected to commence in the second half of 2013.

2 London, Parker Tower was sold in May 2012 prior to the conversion to the Schroder UK Property Fund and has been included for information to cover the 12 month period to 31 March 2013.

The above three sales were part sales so the adjoining assets are still owned by the Fund as at 31 March 2013.

Portfolio Turnover Ratio (PTR)The AREF Code of Practice requires the publication of the PTR which indicates how much of the turnover of the portfolio has been driven by investment in and withdrawals from the Fund. For the 12 month period to 31 March 2013 the PTR is 3.78%.


16

Davidson House, Reading.


17Schroder UK Property FundReport to 31 March 2013

18

retaIlSPF’s overweight/underweight retail positions relative to benchmark

Standard Retail – South East


Shopping Centres

Retail Warehouses

0

5

10

15

20

25

6.6

3.8

1.9

19.2

8.39.0

5.9

18.6

6.4

3.7

1.6

16.3

6.7 7.46.0

20.5

SPF Benchmark SPF Benchmark

2012 2013

Traditional high streets have been under pressure for some years as consumers and retailers gravitate to larger schemes, convenience locations and online. The retail sector is undergoing a structural shift and there will be a significant number of losers. As a result, we have maintained our underweight position to the retail sector.

We do, however, remain firmly of the view that the high street is not dead. We are a nation of consumers but how we spend and what we spend disposable income on, is changing in what is now described as a “multi-channel” world.

We recognise these changes as opportunities to realign the SPF portfolio with the new economic forces, recognising that demand to occupy traditional retail space will be much lower going forward and that on occasions, there is a need to challenge the IPD sector benchmarks. Our themes are about spending for convenience, or spending for experience rather than standard retail, shopping centres and out of town retail parks.

One strategy we have been pursuing has been to maintain our exposure to the consumer but to sell “retail” and invest in the growth of the leisure experience. At a benchmark level this means we have increased our underweight position to retail and increased our exposure to “other” (which is how leisure is defined by IPD).

Our convenience strategy focuses on parades of shops in affluent suburban locations where rents are still affordable to today’s retailers. At our parade in Southsea on the south coast, we combined the ex-Clintons unit with the adjoining unit to secure a letting to Tesco Metro, thereby cementing this location as a popular destination for local shoppers.

We believe the concept of showrooms will become increasingly recognised as part of multi-channel selling. Our portfolio of car showrooms have not only performed well for the Fund by providing a 7% yield with annual fixed uplifts, but proved the concept as they are an



19

important “touch-point” between manufacturer and customer, even though the point of sale may be via the internet. Arguably it is the ultimate in “click and collect”!

At Turner Rise Retail Park, Colchester, acquired in November 2011, we have continued to implement the business plan and secured a letting to an internet retailer of furniture and bedding who is rolling out a network of “showrooms” so that customers can experience the goods before buying. The affordability of the rents we were able to offer was an important consideration for a unit that also becomes a collection point and a storage facility for holding stock on site rather than in a logistics warehouse. In addition, we have obtained consent to widen the planning use of a unit to include food and have secured a letting to Iceland.

Bracknell

Following the successful opening of the Waitrose supermarket in Bracknell town centre, Marks & Spencer and Cineworld have also exchanged conditional contracts to become anchor tenants for the new 550,000 sq ft regeneration scheme. These lettings are a major step forward in the regeneration of Bracknell and we expect other large retailers such as H&M will also commit to pre-lettings in the near future.

Whilst we still need to reach a prudent threshold of pre lets before construction can begin, we are, together with Legal & General (our joint venture partner) actively pursuing the strategy of developing a major extension of the existing town centre investment. This will be the first, exciting step to creating a unique, new retail and leisure experience in the affluent South East, as well as providing an attractive return profile of potential profit as a reward for the risk being taken by the Fund.


At the end of 2012, we took the opportunity to sell £16.2m of Henderson Retail Warehouse Fund in two tranches and a discount to net asset value of 10%. This was a reflection of our strategy to down weight our exposure to both fashion parks and also indirect investments.

Holding Sector Lot Size

Bracknell Regeneration Partnership JV Shopping Centre and

Standard Retail

Over 50m

York – Monks Cross JV Retail Warehouse Between £25m and £50m

Norwich – Hall Road Retail Park Direct Retail Warehouse Between £25m and £50m

The Hercules Unit Trust (HUT) Indirect Retail Warehouse Between £25m and £50m

Motor Retail LP JV (Other) – Standard retail Between £10m and £25m

Frimley – Albany Park Direct Retail Warehouse Between £10m and £25m

Ipswich – Interchange Retail Park Direct Retail Warehouse Between £10m and £25m

Henderson UK Retail Warehouse Fund (HRWF) Indirect Retail Warehouse Between £10m and £25m

Loughton – 202-226 High Road Direct Standard Retail Between £10m and £25m

Southsea – 2-42 Palmerston Road Direct Standard Retail Between £10m and £25m

Colchester – Hythe Riverside Park Direct Retail Warehouse Between £10m and £25m

Colchester – Turner Rise Direct Retail Warehouse Between £10m and £25m

Bristol – Maggs House Direct Standard Retail Between £5m and £10m

Exeter – 232–240 High Street Direct Standard Retail Between £5m and £10m

Shipley – 20-40 Market Square Direct Standard Retail Between £5m and £10m

Stanmore – Buckingham House, The Broadway Direct Standard Retail Between £5m and £10m

Woodley – 81-107 Crockhamwell Road Direct Standard Retail Between £5m and £10m

Dunfermline – Duloch Park District Centre Direct Standard Retail Under £5m

Birmingham – 42-60 High Street, Harborne Direct Standard Retail Under £5m

Enfield – 30-38 London Road Direct Standard Retail Under £5m

Kingston Upon Thames – 167/181 Clarence Street Direct Standard Retail Under £5m

London SW14 – 270-282 Upper Richmond Road, East Sheen Direct Standard Retail Under £5m

Retail Portfolio at 31 March 2013


20

offIceSPF’s overweight/underweight office positions relative to benchmark

Offices – South EastOffices – Central London Offices – Rest of UK

0

5

10

15

20

16.0 16.5

5.9

12.6

8.9

4.8

16.5 16.6

5.6

13.9

8.9

4.5


2012 2013

We have maintained our overweight position to offices but with a deliberate tilt to the growth of central London and the defensive characteristics of the South East.

Investments into the regions such as the Lloyds Bank HQ, Cardiff, and Fujitsu Office Complex, Manchester have been held for the security of high quality long-lease income (Fujitsu has attractive fixed uplifts embedded in the lease). Whilst in the longer term, the quality of the buildings and the affordability of the rents, should respond well, as and when the economic recovery moves to these strategic regional capitals.

London W1, 82 Dean Street, Soho A high specification refurbishment was completed following lease expiry. The improved office space was marketed from October 2011. Despite a weak letting market, six of the seven floors are now let, with the final floor currently under offer. Lettings achieved to date are above the initial business plan rental levels and we estimate we have generated a total return to the Fund of 14% pa since the old lease expired in October 2010. More importantly we have repositioned a Grade B building as Grade A, 200 yards from the proposed new entrance to Crossrail, at a time when the market is predicting a new wave of rental growth. We are also proud to say that, as part of the project, the EPC rating was improved from an E (pre refurbishment) to a C, reducing carbon emissions and providing energy cost savings for our customers. The building utilizes energy efficient lighting and allows for sub-metering of energy and water consumption. It was also designed to minimise the consumption of water through low flush toilets and Eco tap fittings. Car parking spaces have been converted to provide cycle racks, showers and a drying room for cyclists.

London W14, Kensington Village A rolling refurbishment took place on each of the floors following a series of lease expiries. Successful letting activity has resulted in rental value growing from £27.50 to the most recent letting at £33 per square foot over the past two



21

years. It is now fully let with the main tenant being Universal Music Operations Limited. The investment has increased in value by 17.8% over this period.

London W4, QVC, Building 8, Chiswick Park Our strategy has been to improve the quality and quantum of SPF’s distribution yield. This can take time, particularly where new income streams are created but rent free periods are granted. The granting of a lease should protect and enhance value and the expiry of the rent free period will then trigger an increase in the distributable income. One example is the rent free period granted to QVC, occupier of 8 Chiswick Park, which expired in February 2013. From March, the distribution yield increased by an annualised 0.2%.

London WC1, Parker Tower was sold by the Fund in the second quarter of 2012 for £31 million (£596 capital value per sq ft). The property comprised 55,000 sq ft office space which was located in Holborn in the mid town area of central London. It was let to British Telecommunications Plc but only until September 2012 and they had already vacated the building. The property accounted for 2.2% SPF’s net asset value and therefore would have created a significant void. We considered a number of asset management initiatives, such as refurbishing the office space or converting the property to residential accommodation. However, in the current market environment we did not believe the risks associated with these initiatives were justified or profitable compared to the sale price achieved from a residential developer.

West End of London Property Unit Trust (WELPUT) Whilst SPF’s strategy is to reduce its weighting to indirect investments, the holding in WELPUT has proved to be one of the better performers in the portfolio over the 12 months to March 2013 generating trust level returns of 14.7%. Its strategy has focused on the key growth areas of central London using local market knowledge and specialist skills to extract value add from its portfolio, at a time when bidding for prime assets is extremely competitive. The trust has redemption windows in 2014 and 2017.


London W4 – Building 8, Chiswick Park Direct South East Office Over 50m

London SE1 – Palace House Direct South East Office Between £25m and £50m

London W14 – Kensington Village Direct Central London Office Between £25m and £50m

London W1 – 81-82 Dean Street Direct Central London Office Between £25m and £50m

West End of London Property Unit Trust (WELPUT) Indirect Central London Office Between £25m and £50m

Cardiff – St William House Direct Rest of UK Office Between £25m and £50m

Manchester – Fujitsu Office Complex, Central Park Direct Rest of UK Office Between £25m and £50m

Reading – Davidson House Direct South East Office Between £25m and £50m

Croydon – Gateway Site Direct South East Office Between £10m and £25m

London WC2 – Craven House, 117-123 Kingsway Direct Central London Office Between £10m and £25m

London EC1 – 4-7 Chiswell Street Direct Central London Office Between £10m and £25m

London EC2 – 11/12 Appold Street Direct Central London Office Between £10m and £25m

London EC3 – Lombard Street Direct Central London Office Between £10m and £25m

London N1 – Shepherdess Walk Direct Central London Office Between £10m and £25m

Croydon – AMP House Direct South East Office Between £10m and £25m

London WC2 – 53 Parker Street Direct Central London Office Between £5m and £10m

Bracknell – Bracknell Beeches Direct South East Office Between £5m and £10m

Reading – New Century Place Direct South East Office Between £5m and £10m

Slough – Capital Point, 33 Bath Road Direct South East Office Between £5m and £10m

City of London Office Unit Trust (CLOUT) Indirect Central London Office Under £5m

Cranford – Europa House, Bath Road Direct South East Office Under £5m

Office Portfolio at 31 March 2013


22

InduStrIalSPF’s overweight/underweight industrial positions relative to benchmark

Industrial – Rest of UKIndustrial – South East

0

5

10

15

20

16.7

1.2

8.06.7

16.9

0.7

9.6

6.7


2012 2013

Our sector strategy for industrial mirrors that for offices, with a defensive skew to the South East. We do, however, increasingly feel that as the economy stabilises, there should be opportunities to back the resilience of “UK Plc” and acquire dominant multi-let industrial estates in the regions for attractive yields, where rents are both affordable and capital values are below replacement costs.

Over the year a number of new lettings and rent reviews took place. Most notable was the rent review for Cable & Wireless in Matrix, Park Royal, London NW10 where contracted rent increased by 13%.

An industrial unit at Deykin Avenue, Birmingham was sold to an owner occupier for around £6.5 million. The unit had not been occupied since 2009 following the tenant’s administration and there were limited future letting prospects. The proceeds have been used to invest in good quality income producing assets.

Two significant lettings were completed in Woking Business Park, Surrey for 51,000 and 32,000 sq ft units. We are also working with the local council who have just approved the building of a new access road adjacent to the park. This will improve the road communication to the park, broadening its appeal beyond the existing tenant base.

Other initiatives included Hackbridge Industrial Estate, where in the second quarter of 2011 we received outline planning consent for a mixed use residential led scheme. The site had a number of lease expiries let to industrial tenants. We marketed the scheme to potential purchasers for either development of the first phase or an outright purchase of the whole scheme and received interest in both strategies. We are in the process of selecting a party and hope to conclude this shortly.



23


Crayford – Acorn Industrial Estate Direct South East Industrial Between £25m and £50m

Hackbridge – Felnex Trading Estate Direct South East Industrial Between £25m and £50m

London E16 – Electra, Canning Town Direct South East Industrial Between £25m and £50m

London NW10 – Matrix, Park Royal Direct South East Industrial Between £25m and £50m

London UB6 – Greenford Direct South East Industrial Between £10m and £25m

Woking – Woking Business Park Direct South East Industrial Between £10m and £25m

Welwyn Garden City – Quadrant Park Direct South East Industrial Between £10m and £25m

Dunstable – Chiltern Park Direct South East Industrial Between £5m and £10m

Dunstable – Arenson Centre Direct South East Industrial Between £5m and £10m

Birmingham – Deykin Avenue Direct Rest of UK Industrial Under £5m

Cannock – Walkmill Lane, land site Direct Rest of UK Industrial Under £5m

Livingston – Limefields, 2nd land site Direct Rest of UK Industrial Under £5m

Livingston – Limefields, land site Direct Rest of UK Industrial Under £5m

London UB6 – Greenford, land site Direct South East Industrial Under £5m

York – Alexandra Court, James Street Direct Rest of UK Industrial Under £5m

Sutton – Kimpton Industrial Estate JV South East Industrial Under £5m

Industrial Portfolio at 31 March 2013


24

alternatIve SectorSSPF’s overweight/underweight other position relative to benchmark

other

0

2

4

6

8

10

12

8.2

10.4

9.18.7


2012 2013

Over the period the Fund has increased its exposure to alternative sectors (or other as IPD define them) and moved to an overweight position (versus the benchmark) by diversifying into the care home sector1.

Leisure and student accommodation are also two of the major sub-sectors of “other” and SPF’s investments in these sectors have delivered strong returns over the year to 31 March 2013. Tenants in our leisure investments West India Quay, London E14 and Mermaid Quay, Cardiff have enjoyed strong turnover over the past year. This has resulted in good tenant demand for these locations and driven rental growth.

Suffolk Care Homes1

We identified healthcare as an attractive non-mainstream sector where the drivers of demand differ from the economic and business cycle and are set to benefit from the UK’s ageing demographic profile. The sector is less vulnerable to the fluctuations of the economy or the impact of the internet. It also offers an attractive income return.

SPF has agreed to fund five new care homes in Suffolk for around £28 million. The care homes will be located on freehold sites in Framlingham, Haverhill, Mildenhall, Lowestoft and Ipswich. These are affluent areas in the UK with an ageing population. The care homes will be state of the art 60 and 80 bed care homes let to Care UK, one of the leading providers of health and social services in the UK. They are the outsourced providers of Suffolk County Council’s elderly care provision. Care UK will take 30 year leases on the care homes which will be index-linked. It is envisaged the investment funding will begin in the second half of this year and will yield over 7.0% on cost from the outset, further boosting the income profile of the Fund.

1 Conditional agreement to fund the development of five care homes in partnership with Care UK and Suffolk County Council. Development expected to commence in the second half of 2013 and no equity was invested at 31 March 2013.



25


Cardiff – Mermaid Quay Direct Other – leisure Between £25m and £50m

London E14 – West India Quay JV Other – leisure Between £25m and £50m

UNITE UK Student Accommodation Fund Indirect Other – student accommodation

Between £10m and £25m

Croydon – Car Park Direct Other – car park Under £5m

Hartlepool – Jacksons Landing, land site Direct Other – leisure Under £5m

Suffolk Care homes2 Direct Other – care homes Under £5m

Prior to investing in this sector we fully researched the business model of health care operators with a focus on the affordability and long term sustainability of their cost base including rent. We believe the rental levels agreed with Care UK are affordable and provide a significant buffer should their operating costs increase or their occupancy rates be low. This should help to maintain a strong income return from these care homes.

SPF’s weighting to non mainstream sectors

IPD benchmark segments

1 Once fully funded Other Standard retail

1

0

1

2

3

4

5

6

7

8

0.2

% of Funds total GAV

2.8

2.2

6.1

1.5

6.3

StudentAccommodation

Car Parking Care homes Leisure Car showrooms Convenienceretail

As the chart shows, our strategic research is leading us to challenge the benchmark sector positions where we have a conviction that these positions are overweight to risk (retail) but mis-aligned to growth areas of the economy such as leisure, education and health. Benchmark definitions can disguise both risk and opportunity in alternatives as well as the traditional mainstream sectors.

Alternatives Portfolio at 31 March 2013

2 Conditional agreement to fund the development of five care homes in partnership with Care UK and Suffolk County Council. Development expected to commence in the second half of 2013 and no equity was invested at 31 March 2013.


26

The Financial StatementsWe are pleased to present the Report and Audited Consolidated annual financial statements of the Schroder UK Property Fund for the period ended 31 March 2013.

The FundSchroder UK Property Fund (the “Fund”) is an investment Fund with variable capital incorporated in England and Wales under registered number IC000945 and authorised by the FCA (Financial Conduct Authority, previously the Financial Services Authority) with effect from 31 July 2012. The Fund has an unlimited duration. The shareholders are not liable for any debts of the Fund.

The investment objective of the Fund is to carry on Property Investment Business and to manage cash raised from investors for investment in the Property Investment Business, with the intention of achieving a blend of income and capital growth. The Fund’s target return is to achieve 0.5 per cent per annum (net of all fees and expenses) above the benchmark over rolling three year periods. The Fund will seek to diversify risk by holding a mixed portfolio of retail, office, industrial and other property throughout the UK.

The policy for achieving these objectives is that the Fund will invest in UK properties. The Fund may also invest in transferable securities (including REITs, government bonds and unquoted companies), units in collective investment schemes, units in unregulated collective investment schemes (which may include unauthorised property unit trusts and limited partnerships), money market instruments, deposits, cash and near cash.

Authorised StatusFrom 31 July 2012 the Fund was authorised as an Open-Ended Investment Fund under Regulation 12 of the Open-Ended Investment Companies Regulations 2001.

Annual General MeetingsThe Fund will not be holding any Annual General Meetings.

Statement of ResponsibilitiesThe Collective Investment Schemes Sourcebook of the FCA requires the Authorised Corporate Director (ACD) to prepare financial statements for each accounting period which give a true and fair view of the financial position of the Fund at the period end and of the net income and net gains or losses on the scheme property of the Fund for the period then ended.

In preparing the financial statements the ACD is required to:

• follow applicable accounting standards;

• make judgements and estimates that are reasonable and prudent;

• select suitable accounting policies and then apply them consistently;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Fund will continue in operation for the foreseeable future; and

• comply with the Instrument of Incorporation and the Statement of Recommended Practice for Authorised Funds.

The ACD is required to keep proper accounting records and to manage the Fund in accordance with the Regulations and the Instrument of Incorporation.

The ACD is responsible for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We hereby approve the Report and Consolidated Financial Statements of the Schroder UK Property Fund for the period 1 August 2012 to 31 March 2013 in accordance with the requirements of the Collective Investment Schemes Sourcebook of the FCA.

Schroder Unit Trusts Limited 26 July 2013

report of the authorISed corporate dIrector and Statement of reSponSIbIlItIeS

Schroder UK Property FundAudited Consolidated Financial Statements 31 March 2013

27

The ACD has delegated to the Investment Manager the function of managing the investment and reinvestment of the assets of the Fund.

On 31 July 2012, the ACD appointed Schroder Property Investment Management Limited (“Schroder Property”) to provide investment management, property management and advisory services to the ACD. Schroder Property is a member of the same group as the ACD.

The Investment Manager has discretionary responsibility for implementing investment policy and is responsible to investors for the performance of the Fund. Adherence to such policies are monitored quarterly through reporting by the Investment Manager to the Property Investment Risk Committee which is an integral part of the Schroders Investment Risk Framework (SIRF). The Investment Manager is also responsible for marketing the Fund, pricing and accounting for the Fund, providing all relevant information to valuers, managing agents and the team responsible for pricing the

Fund and for providing performance information to IPD. All delegated appointments by the Investment Manager are on an advisory basis.

Subject to the investment objectives and restrictions contained in the OEIC Regulations and the COLL Sourcebook and the investment and borrowing guidelines contained in this prospectus, the Investment Manager has discretion to take investment decisions and to deal in investments in relation to the investment management of the Fund, without prior reference to the ACD. As required by COLL, the Investment Manager must obtain the consent of the Depositary for the acquisition or disposal of immovable property.

Legal and product limitsThe prospectus, which has been approved by the FCA, sets out the nature of permitted investments and the broad parameters within which the fund must be managed. If one of these is breached, depending on the nature of the breach, they are typically reportable to the FCA and subject to agreed remedies. These are shown as legal limits in the table below.

Other risk controls such as product limits shown in the table below are also monitored as part of SIRF which is a Group-wide control process which is designed to ensure that products and portfolios are managed in a manner that is consistent with their performance objectives and corresponding risk profiles.

From time to time the Investment Manager may propose revisions to the Product limits in order to control better the risks which may impact the Fund’s ability to achieve its objectives. Any changes will require the approval of SIRF and the ACD.

The Investment Manager confirms that these limits have not been breached in the period to 31 March 2013.

InveStment manaGer’S Statement of reSponSIbIlIty

Legal limits

Minimum 60% its assets (NAV) must form part of its Property Investment Business

Minimum 60% its income must come from the Property Investment Business

Maximum aggregate investment in indirect vehicles: 40% NAV

Maximum 15% of the NAV invested in a single asset

Maximum 20% of the NAV committed to development (on/off balance sheet)

Maximum borrowing (on/off balance sheet): 25% NAV

Investment on and off balance sheet in shorter/medium term leaseholds (less than 50 years): 20% NAV

Maximum speculative development: 15% NAV

Product limits

Sector exposure: less than +/- 15% GAV (retail, office, industrial, other property) vs benchmark

Investment in a single indirect vehicle: 15% NAV

Aggregate investment in indirect vehicles: 35% NAV

Aggregate investment in joint ventures: 35% NAV

Investment in UK property related listed securities: aggregate 10% NAV – individual 2.5% NAV

Maximum investment in undeveloped and non income producing land: 10% NAV

Maximum on and off balance sheet percentage income from non government tenant: 10%

Investment in undeveloped and non income producing land: 10% NAV

Maximum on balance sheet uncommitted cash: 10% NAV

Maximum on and off balance sheet debt: 25% NAV

Schroder UK Property FundAudited Consolidated Financial Statements 31 March 2013

BNP Paribas Real EstateAs Standing Independent Valuer for the Fund, we have valued immovables held by the Fund as at 31 March 2013 in accordance with The Royal Institution of Chartered Surveyors and International Valuation Standards (RICS) and in accordance with the COLL 8.4.13R of the Collective Investment Schemes Sourcebook. Schroder Unit Trusts Limited, as ACD of the Fund, has been provided with a full valuation certificate and report. The immovables have been valued on the basis of Market Value as defined by the RICS Valuation Standards subject to existing leases.

Details of the nature and extent of the immovables, the tenure and tenancies, permitted uses, town planning consents and related matters, have been supplied by the Investment Manager Schroder Property Investment Management Limited (SPrIM). The majority of the properties form the subject of detailed reports from ourselves. We have seen copies of all the leases but we have not examined the title documents and we have therefore assumed that the Fund’s interests are not subject to any onerous restrictions, to the payment of any unusual outgoings or to any charges, easements or rights of way, other than those to which we have referred in our reports. We rely upon the Investment Manager to keep us advised of any changes that may occur in the investments. We are not instructed to carry out structural surveys nor test any of the service installations. Our valuations therefore have regard only to the general condition of the properties evident from our inspections. We have assumed that no materials have been used in the buildings which are deleterious, hazardous or likely to cause structural defects. We are not instructed to carry out investigations into pollution hazards which might affect the properties and our valuations assume the properties are not adversely affected by any form of pollution.

In our opinion the aggregate of the market values of the 41 immovables owned by the Fund as at 31 March 2013 is £760.455 million. This figure represents the aggregate of the values attributable to the individual immovables and should not be regarded as a valuation of the portfolio as a whole in the context of a sale as a single lot.

In the case of the immovables in the course of development, our valuations reflect the stage reached in construction and the costs already incurred at the date of valuation. We have had regard to the contractual liabilities of the parties involved in the developments and any cost estimates which have been prepared by professional advisers.

No allowance is made in our valuations for the costs of realisation, any liability for tax which might arise on the event of disposal or for any mortgage or similar financial encumbrance over the property. Our valuations exclude VAT.

BNP Paribas Real Estate 31 March 2013

AllsopsAs Independent Valuer for the Fund, we have valued immovables held by the Fund as at 31 March 2013 in accordance with The Royal Institution of Chartered Surveyors and International Valuation Standards (RICS) and in accordance with the COLL 8.4.13R of the Collective Investment Schemes Sourcebook. Schroder Unit Trusts Limited, as ACD of the Fund, has been provided with a full valuation certificate and report. The immovables have been valued on the basis of Market Value as defined by the RICS Valuation Standards subject to existing leases.

We have been provided with information from the relevant Property Managers including tenancy schedules and floor areas and assumed that the Fund’s interests are not subject to any onerous restrictions, to the payment of any unusual outgoings or to any

charges, easements or rights of way, other than those to which we have referred in our reports. We rely upon the Property Manager to keep us advised of any changes that may occur in the investments. We are not instructed to carry out structural surveys nor test any of the service installations. Our valuations therefore have regard only to the general condition of the properties evident from our inspections. We have assumed that no materials have been used in the buildings which are deleterious, hazardous or likely to cause structural defects. We are not instructed to carry out investigations into pollution hazards which might affect the properties and our valuations assume the properties are not adversely affected by any form of pollution.

In our opinion the aggregate of the market values of the 10 immovables owned by the Fund as at 31 March 2013 is £66.355 million. This figure represents the aggregate of the values attributable to the individual immovables and should not be regarded as a valuation of the portfolio as a whole in the context of a sale as a single lot.

In the case of the immovables in the course of development, our valuations reflect the stage reached in construction and the costs already incurred at the date of valuation. We have had regard to the contractual liabilities of the parties involved in the developments and any cost estimates which have been prepared by professional advisers.

No allowance is made in our valuations for the costs of realisation, any liability for tax which might arise on the event of disposal or for any mortgage or similar financial encumbrance over the property. Our valuations exclude VAT.

Allsops LLP 31 March 2013Refer to the Portfolio Statement for a listing of those properties valued by BNP Paribas Real Estate and Allsops LLP.

Independent property valuerS’ reportS

28 Schroder UK Property FundAudited Consolidated Financial Statements 31 March 2013

Statement of ResponsibilitiesThe depositary is responsible for the safekeeping of all of the property of the Fund (other than tangible moveable property) which is entrusted to it and for the collection of revenue that arises from that property.

It is the duty of the depositary to take reasonable care to ensure that the Fund is managed in accordance with the FCA’s Collective Investment Schemes Sourcebook (COLL), as amended, the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended (‘the OEIC Regulations’), the Fund’s instrument of incorporation and prospectus, in relation to the pricing of, and dealings in, shares in the Fund; the application of revenue of the Fund; and the investment and borrowing powers applicable to the Fund.

Depositary’s ReportHaving carried out such procedures as we consider necessary to discharge our responsibilities as depositary of the Fund, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Fund, acting through the ACD:

(i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Fund’s shares and the application of the Fund’s revenue in accordance with COLL and, where applicable, the OEIC Regulations, the instrument of incorporation and prospectus of the Fund, and

(ii) has observed the investment and borrowing powers and restrictions applicable to the Fund.

Natwest PLC 26 July 2013

depoSItary’S report and Statement of reSponSIbIlItIeS

29Schroder UK Property FundAudited Consolidated Financial Statements 31 March 2013

portfolIo Statement

Direct Properties Sector

Market Value

£’000 at 31 March

2013

Total net assets

%

Direct properties up to £10m

Exeter – 232–240 High Street Standard Retail

Bristol – Maggs House* Standard Retail

Shipley – 20-40 Market Square* Standard Retail

Stanmore – Buckingham House, The Broadway* Standard Retail

Woodley – 81-107 Crockhamwell Road* Standard Retail

Dunfermline – Duloch Park District Centre* Standard Retail

Birmingham – 42-60 High Street, Harborne* Standard Retail

Enfield – 30-38 London Road* Standard Retail

Kingston Upon Thames – 167/181 Clarence Street Standard Retail

London SW14 – 270-282 Upper Richmond Road, East Sheen*

Standard Retail

Bracknell – Bracknell Beeches South East Office

Reading – New Century Place South East Office

Slough – Capital Point, 33 Bath Road South East Office

Cranford – Europa House, Bath Road South East Office

London WC2 – 53 Parker Street Central London Office

Dunstable – Chiltern Park Industrial

Dunstable – Arenson Centre Industrial

Birmingham – Deykin Avenue Industrial

Cannock – Walkmill Lane, land site Industrial

Livingston – Limefields, land sites Industrial

London UB6 – Greenford, land site Industrial

York – Alexandra Court, James Street Industrial

Hartlepool – Jacksons Landing, land site Other – leisure

Croydon – Car Park Other – car park

Total Market Value up to £10m 127,815 10.4%

Direct properties between £10m and £25m

Loughton – 202-226 High Road* Standard Retail

Southsea – 2-42 Palmerston Road* Standard Retail

Ipswich – Interchange Retail Park Retail Warehouse

Colchester – Hythe Riverside Park Retail Warehouse

Colchester – Turner Rise Retail Warehouse

Croydon – AMP House South East Office

London WC2 – Craven House, 117-123 Kingsway Central London Office

London EC1 – 4-7 Chiswell Street Central London Office

London EC2 – 11/12 Appold Street Central London Office

London EC3 – Lombard Street Central London Office

London N1 – Shepherdess Walk Central London Office

Frimley – Albany Park Retail Warehouse

London UB6 – Greenford Industrial

Woking – Woking Business Park Industrial

Welwyn Garden City – Quadrant Park Industrial

Total Market Value between £10m and £25m 212,340 17.3%

*Properties valued by Allsop LLP All direct properties not asterixed are valued by BNP Paribas Real Estate.


Direct Properties Sector

Market Value

£’000 at 31 March

2013

Total net assets

%

Direct properties between £25m and £50m

Norwich – Hall Road Retail Park Retail Warehouse

York – Monks Cross Retail Warehouse

Cardiff – St William House Rest of UK Office

Croydon – Gateway Site South East Office

Manchester – Fujitsu Office Complex Rest of UK Office

Reading – Davidson house South East Office

London SE1 – Palace House South East Office

London W14 – Kensington Village Central London Office

London W1 – 81-82 Dean Street Central London Office

Crayford – Acorn Industrial Estate Industrial

Hackbridge – Felnex Trading Estate Industrial

London E16 – Electra, Canning Town Industrial

London NW10 – Matrix, Park Royal Industrial

Cardiff – Mermaid Quay Other – leisure

Total Market Value between £25m and £50m 517,400 42.1%

Direct properties greater than £50m

London W4 – Building 8, Chiswick Park South East OfficeTotal Market Value greater than £50m 60,675 4.9%

Total Direct Properties 918,230 74.8%

Joint Ventures

Bracknell Regeneration Partnership Retail 63,796

London E14 – West India Quay Other – leisure 29,000

Motor Retail LP Standard retail 24,926

Bracknell – Eagle House1 Office 1,536

Sutton – Kimpton Industrial Estate Industrial 1,378

Total Joint Ventures 120,636 9.8%

Collective Investment Schemes

West End of London Property Unit Trust (WELPUT) Central London Office 39,259

Hercules Unit Trust (HUT) Retail Warehouse 27,804

UNITE UK Student Accommodation FundOther – student

accommodation16,748

Henderson UK Retail Warehouse Fund (HRWF) Retail Warehouse 13,634

City of London Office Unit Trust (CLOUT) Central London Office 545

Austral House Unit Trust (AHUT)1 Central London Office 294

Basinghall Street Unit Trust (BSUT)1 Central London Office 84

Total Collective Investment Schemes 98,368 8.0%

Portfolio of investments 1,137,234 92.6%

Net other assets (including cash) 90,810 7.4%

Net Assets 1,228,044 100.0%

1 These investments are in the process of being wound up.

portfolIo Statement (continued)


We have audited the consolidated financial statements of Schroder UK Property Fund (the “Fund”) for the period from 1 August 2012 to 31 March 2013 which comprise the statement of total return, the statement of change in net assets attributable to shareholders, the balance sheet, the cashflow statement, the related notes and the distribution table. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and the Statement of Recommended Practice ‘Financial Statements of Authorised Funds’ issued by the Investment Management Association (the “Statement of Recommended Practice for Authorised Funds”).

Respective responsibilities of ACD and auditorsAs explained more fully in the ACD’s Responsibilities Statement the ACD is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Fund’s shareholders as a body in accordance with paragraph 4.5.12 of the Collective Investment Schemes sourcebook as required by paragraph 67(2) of the Open-Ended Investment Companies Regulations 2001 and for no other purpose. We do not, in giving these opinions, accept or assume

responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Fund’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the ACD; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statementsIn our opinion the consolidated financial statements:

– give a true and fair view of the financial position of the Fund at 31 March 2013 and of the net revenue and the net capital losses of the scheme property of the Fund for the period then ended; and

– have been properly prepared in accordance with the Statement of Recommended Practice for Authorised Funds, the Collective Investment Schemes sourcebook and the Instrument of Incorporation.

Opinion on other matters prescribed by the Collective Investment Schemes sourcebookIn our opinion:

– we have obtained all the information and explanations we consider necessary for the purposes of the audit; and

– the information given in the Investment Manager’s Report for the financial period for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Collective Investment Schemes sourcebook requires us to report to you if, in our opinion:

– proper accounting records for the Fund have not been kept; or

– the financial statements are not in agreement with the accounting records and returns.

PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 26 July 2013

Notes:(a) The maintenance and integrity of the Schroders

website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Independent audItorS’ reportTo the Shareholders of Schroder UK Property Fund


Notes

Consolidated Period from

1 August 2012 to 31 March 2013

£’000


Period from 1 August 2012 to

31 March 2013 £’000

Income

Net capital losses 4 (17,235) (16,748)

Revenue 5 48,279 43,942

Expenses 6 (17,428) (14,462)

Loss attributable to minority interest 4 –

Net revenue before taxation 30,855 29,480

Taxation 8 – –

Net revenue after taxation 30,855 29,480

Total return before distribution 13,620 12,732

Finance costs: distributions 7 (33,254) (31,880)

Change in net assets attributable to shareholders from investment activities

(19,634) (19,148)

Statement of chanGe In net aSSetS attrIbutable to ShareholderSFor the period 1 August 2012 to 31 March 2013

Notes



£’000



31 March 2013 £’000

Opening net assets attributable to shareholders – –

Transfer of net assets on 1 August 2012 1 1,240,822 1,240,336

Amounts receivable on issue of shares 6,856 6,856

Amounts payable on cancellation of shares – –

Net amounts receivable on issue of shares 6,856 6,856

Change in net assets attributable to shareholders from investment activities

(19,634) (19,148)

Closing net assets attributable to shareholders 1,228,044 1,228,044

Statement of total returnFor the period 1 August 2012 to 31 March 2013


Notes

Consolidated As at 31 March

£’000


As at 31 March 2013 £’000

ASSETS

Investment Assets

Investment Property 918,230 814,594

Investment in Collective Investment Schemes 98,368 98,368

Investment in Subsidiaries 9 – 109,407

Investment in Joint Ventures 120,636 120,636

Total Investment Assets 1,137,234 1,143,005

Debtors 10 29,195 27,862

Cash and cash equivalents 11 90,875 83,626

Total other assets 120,070 111,488

Total assets 1,257,304 1,254,493

LIABILITIES

Creditors 12 24,034 22,489

Distribution payable 4,240 3,960

Net assets attributable to third party minority investors

986 –

Total liabilities 29,260 26,449

Net assets attributable to shareholders 1,228,044 1,228,044

caSh flow StatementFor the period from 1 August 2012 to 31 March 2013

Notes



£’000



31 March 2013 £’000

Net cash inflow from operating activities 15 30,269 29,909

Servicing of finance

Interest received 305 290

Distributions paid (29,211) (27,920)

Total cash outflow from servicing of finance (28,906) (27,630)

Financial investments

Purchases of investments (7,886) (9,951)

Sales of investments 22,504 29,903

Capital expenditure (9,289) (7,609)

Total cash inflow from financial investments 5,329 12,343

Financing

Amounts received on issue of shares 6,856 6,856

Total cash inflow from financing 6,856 6,856

Increase in cash in the period 14 13,548 21,478

Net cash at the start of the period 14 77,327 62,148

Net cash at the end of the period 14 90,875 83,626

balance SheetAs at 31 March 2013


1. Accounting policiesAll assets and liabilities of the Schroder Exempt Property Unit Trust (the ‘Trust’) were transferred to the newly formed authorised Open Ended Investment Company (OEIC) called Schroder UK Property Fund (‘SPF’ or the Fund) on 31 July 2012. In accordance with The prospectus, the assets and liabilities of the Trust were transferred at net book value to SPF and were accounted for by the Merger Method of accounting.

(a) Basis of accounting All of the financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice for Authorised Funds issued by the IMA in October 2010 (SORP 2010). The principle accounting policies, which have been applied consistently throughout the period are set out below.

(b) Consolidation Consolidated Financial Statements have been prepared in accordance with FRS 2 ‘Accounting for Subsidiary Undertakings’. The Consolidated Statement of Total Return, Consolidated Statement of Change in Net Assets attributable to Shareholders’, Consolidated Balance Sheet and Consolidated Cash Flow Statement include the financial statements of each sub-fund and its subsidiary undertakings. Intra-group transactions are eliminated fully on consolidation.

(c) Basis of valuation of investments (i) Properties owned by the Fund,

including investments in properties owned through partnerships and trusts for land, are independently valued on a market value basis in accordance with Royal Institute of Chartered Surveyors guidance. Development properties in the course of development are independently valued having

regard to the stage reached in the construction and taking account of any agreed letting and of any contractual liabilities to advance further monies. Where legal completion of a purchase is not fully executed at the date of the Consolidated balance sheet, but takes place subsequently, or in the case of development properties purchased for development where no work has yet taken place, the property is shown at cost unless, in the opinion of the Manager, there may be a material difference between cost and valuation on completion.

(ii) Collective Investment Schemes are valued at the net asset value as provided by the relevant managers, in accordance with industry practice.

(d) Property purchases and sales Acquisitions and disposals of investment properties and collective investment schemes are recognised where, by the end of the accounting period, there is a legally binding, unconditional and irrevocable contract.

(e) Recognition of revenue Rental revenue, deposit interest, and other revenue is accounted for on an accruals basis. The cost of any up front lease incentives offered is recognised as a reduction in rental income and allocated over the shorter of the lease term or the period until the first rent review date in accordance with UITF28. Service charge income and expenses are included in rental revenue and other property operating expenses respectively. Interest receivable and payable are accounted for on an accruals basis.

(f) Treatment of management expenses Fees are recognised on an accruals basis and are charged in full to the Statement of Total Return. The Manager has allocated 50% of the

management fees to income and the remaining 50% to capital for the calculation of distributable income.

(g) Treatment of development and acquisition expenses In accordance with Generally Accepted Accounting Practice in the UK, development and acquisition expenses have been treated as costs of purchasing property investments and are accordingly treated as capital.

(h) Cash flow statement In accordance with the requirements of FRS 1 (Revised) and the IMA SORP 2010, a consolidated cash flow statement has been provided.

(i) Tax The Fund qualifies as a Property Authorised Investment Fund (PAIF) for tax purposes. Accordingly, the income generated by its property investment business will be exempt from tax. Any dividend income it receives from United Kingdom companies or, in general, from non-United Kingdom companies will also be exempt from tax.

The Fund would, however, be subject to corporation tax in the event that there should be a net balance of other income, which will generally consist of interest but could include other property income, less deductible expenses (including interest distributions).

Under the PAIF regulations, the Fund make distributions gross to the sole share class in an issue during the period.

2. Distribution Policies(a) Basis of distribution Revenue is generated by the Fund’s investments during each accounting period. Where revenue exceeds expenses, the net income of the Fund is available to be distributed to shareholders. All income is distributed, at share class level, to the shareholders

noteS to the fInancIal StatementS


in accordance with the Fund’s prospectus on a monthly basis.

Revenue attributable to accumulation shareholders is retained at the end of the distribution period and represents a reinvestment of revenue.

(b) Apportionment to multiple share classes The allocation of revenue and expenses to each share class is based on the proportion of the Fund’s assets attributable to each share class on the day the revenue is earned or the expenses are suffered.

(c) Expenses In determining the net revenue available for distribution, expenses related to the purchase and sale of investments are capitalised and do not reduce distributions.

3. Risk Management Policies(a) Market risk and valuations of property The exposure to market risk arising from the prevailing general economic conditions and market sentiment, may affect the balance sheet and total return of the Fund. Immovable property and immovable property-related assets are inherently difficult to value due to the individual nature of each property. As a result, valuations are subject to uncertainty and are a matter of an independent valuers’ opinion. There is no assurance that the estimates resulting from the valuation process will reflect the actual sales price even where a sale occurs shortly after the valuation date.

Market risk is minimised through holding a geographically diversified portfolio that invests across various property sectors. The Manager adheres to the investment guidelines and investment and borrowing powers established in the prospectus,

scheme particulars and in the rules governing the operation of open ended investment companies.

(b) Credit and liquidity risk The Fund can be exposed to credit risk arising from the possibility that another party fails to fulfil its obligations and liquidity risk surrounding its capacity to meet its liabilities.

Investments in immovable property are relatively illiquid and more difficult to realise than most equities or bonds. If an asset cannot be liquidated in a timely manner then it may be harder to attain a reasonable price. The liquidity risk, derived from the liability to shareholders, is minimised through holding cash which can meet the usual requirements of share redemptions.

The Investment Manager’s policy for managing this risk is to:

1. Operate a strict share redemption policy such that shareholders may only serve notice to redeem at the end of each quarter.

2. Raise sufficient cash resources within the Fund to finance a limited number of redemptions.

3. Review the need for and maintain as appropriate a borrowing facility.

4. Reserve the right to defer payment of redemptions.

(c) Currency risk All financial assets and financial liabilities of the Fund are in Sterling, thus the Fund has no exposure to currency risk at the balance sheet date.

(d) Interest rate risk The Fund has the ability to access debt facilities, but did not have any debt facilities during the period. The Fund held £90.9 million of consolidated cash at the end of the period and this is exposed to interest rate risk.

noteS to the fInancIal StatementS (continued)


4. Net capital gains/losses



£’000



31 March 2013 £’000

Losses in the period on investment properties (4,139) (2,173)

Losses in the period on Collective Investment Schemes

(2,023) (3,502)

Losses in the period on Joint Ventures (11,073) (11,073)

Net capital losses (17,235) (16,748)

5. Revenue



£’000



31 March 2013 £’000

Bank and deposit interest 327 299

Rental revenue 34,997 30,746

Income from collective investment schemes 7,825 8,084

Service charge income 4,919 4,635

Other income 211 178

Total revenue 48,279 43,942

6. Expenses



£’000



31 March 2013 £’000

Investment Management fees 5,125 4,800

Depositary fee 174 136

Valuers fee 189 154

Audit fee 150 150

Service charge expense 5,723 4,852

Other Fund level expenses 262 168

Other property operating expenses 5,805 4,202

Total expenses 17,428 14,462


7. Finance Costs



£’000



31 March 2013 £’000

August 2012 4,066 4,066

September 2012 4,767 4,011

October 2012 3,901 3,901

November 2012 4,512 3,864

December 2012 3,813 3,926

January 2013 4,042 4,042

February 2013 4,110 4,110

March 2013 4,043 3,960

Gross distribution for the period 33,254 31,880

Difference between net revenue after taxation and the distribution paid is analysed as follows:



£’000



31 March 2013 £’000

Net revenue after taxation for the period 30,854 29,480

Expenses charged to capital 2,400 2,400

Gross distribution 33,254 31,880

8. TaxationThe Fund qualifies as a Property Authorised Investment Fund (PAIF) for tax purposes. Accordingly, the income generated by its property investment business will be exempt from tax. Any dividend income it receives from United Kingdom companies or, in general, from non-United Kingdom companies will also be exempt from tax.

The Fund would, however, be subject to corporation tax in the event that there should be a net balance of other income, which will generally consist of interest but could include other property income, less deductible expenses (including interest distributions).

Under the PAIF regulations, the Fund makes property income distributions and interest distributions net of basic rate income tax except where the investor is entitled to gross payment. As at 31 March 2013 the Fund had two authorised share classes: the gross share class on which distributions were made without deduction of income tax, and the net share class of which no shares were in issue during the period.



£’000



31 March 2013 £’000

(a) Analysis of charge in period

Corporation tax at 20% – –

Current tax charge – –



(b) Factors affecting the current tax charge for the period Taxable income is charged at the standard rate of corporation tax for authorised funds (20%). The reconciliation of the income statement tax charge to the standard rate on profits before tax is set out below:

Consolidated Period from 1

August 2012 to 31 March 2013

£’000

Schroder UK Property Fund Period from 1

August 2012 to 31 March 2013

£’000


Corporation tax at 20% 2,724 2,546

Effects of:

Revenue not subject to taxation (2,724) (2,546)

Current tax charge for the year (note 8a) – –

(c) Provision for deferred tax There was no provision required for deferred tax at the balance sheet date.

9. Investment in subsidiariesPercentage ownership

by SPF at 31 March 2013

Valuation at 1 August

2012 £’000

Capital contributions

£’000

Capital distribution

£’000

Net capital gains/

(losses) £’000

Valuation at 31 March

2013 £’000

Croydon Gateway Unit Trust 98.0 44,754 2,065 – 478 47,297

Parker Tower Unit Trust 99.0 18,267 – (18,247) – 20

Schroder Emerging Retail Property Unit Trust

99.0 73,310 – (73,301) – 9

Hackbridge Unit Trust 99.0 30,956 – – (129) 30,827

Lombard Street Unit Trust 99.0 19,442 – – 840 20,282

Capital Point Slough Unit Trust

99.0 9,075 – – 226 9,301

City Property Unit Trust 96.1 2,514 – (2,046) (77) 391

Hackbridge Limited 100.0 – 1,280 – – 1,280

198,318 3,345 (93,594) 1,338 109,407

At 31 March 2013, SPF’s holding in each of Parker Tower Unit Trust (PTUT), Schroder Emerging Retail Property Unit Trust (SERPUT), Hackbridge Unit Trust (HackUT), Lombard Street Unit Trust (LSUT) and Capital Point Slough Unit Trust (CPSUT) stood at 99.0%. The Fund owns two shares in Hackbridge Limited representing 100.0% of the shares in issue. Hackbridge Limited is a Jersey registered limited Company incorporated on 1 May 2005. Hackbridge Limited holds the remaining 1.0% interests in PTUT, SERPUT, HackUT LSUT and CPSUT. The Fund’s holding in Croydon Gateway Unit Trust stood at 98.0%, with a minority interest of 2.0% held by an external investor. The Fund’s holding in the City Property Unit Trust stood at 96.1% with the remaining 3.9% being held by an external investor. This minority interest is de-minimis.

10. Debtors

Consolidated As at

31 March 2013 £’000


As at 31 March 2013

£’000

Rent receivable net of provision for doubtful debt 979 900

Distributions due from property related investments 2,419 2,700

Tenant deposits 4,580 4,580

UITF 28 accrued rents receivable 6,998 5,734

UITF 28 unamortised lease incentives 6,482 6,482

Monies due from managing agents 5,066 5,030

Other debtors and prepayments 2,671 2,436

Total Debtors 29,195 27,862


11. Cash and cash equivalents

Consolidated As at

31 March 2013 £’000


As at 31 March 2013

£’000

Cash and cash equivalents 48,875 41,626

Bank deposits 42,000 42,000

Total cash and cash equivalents 90,875 83,626

12. Creditors

Consolidated As at

31 March 2013 £’000


As at 31 March 2013

£’000

Trade creditors 171 108

Deferred Rental Income 9,647 9,029

Tenant deposits 4,580 4,580

VAT payable 1,931 1,679

Amounts due on properties 2,165 2,165

Accrued SPF investment management fee 1,110 1,110

Other creditors and accruals 4,430 3,818

Total Creditors 24,034 22,489

13. Contingent liabilities and commitmentsThere were no contingent liabilities or commitments as at 31 March 2013.

14. Reconciliation of movement in net cash



£’000



31 March 2013 £’000

Cash and cash equivalents

As at 1 August 2012 77,327 62,148

Cashflows 13,548 21,478

As at 31 March 2013 90,875 83,626



15. Reconciliation of net revenue before taxation to net cash inflow from operating activities



£’000



31 March 2013 £’000


Increase in debtors (593) (1,925)

Increase in creditors 7 2,354

Net cash inflow from operating activities 30,269 29,909

16. Related parties(a) Fees receivable by the Depositary As depositary, Natwest plc is entitled to a fee equivalent to 0.0224% per annum on the first £500 million of the Fund’s Net Asset Value (NAV) and 0.0125% per annum on any excess over £500 million of the Fund’s NAV.

(b) Fees receivable by the ACD and the Investment Manager The remuneration of the ACD and the Investment Manager is set out within the Fund prospectus. These fees are charged in full to the Statement of Total Return. 50% of such fees are allocated to capital and not deducted from distributions for the purpose of determining the value of such distributions.

The Investment Manager also earns commission from individual shareholders of the Fund which utilise its matched bargain service. Such commission is not included in these financial statements.

(c) Outstanding balances were due to the following which are considered to be related parties under FRS8:


As at 31 March 2013

£’000

Natwest plc 36

Schroder Property Investment Management Ltd 1,110

Schroder Unit Trusts Limited 154

(d) Distributions: gross distributions were receivable in the period from the following investments which are considered related under FRS8 as they are managed or administered by an associate of the ACD.


Period From 1 August

2012 to 31 March 2013

£’000

Bracknell Property Unit Trust 1,704

Croydon Gateway Property Unit Trust 484

Motor Retail Limited Partnership 1,421

Lombard Street Unit Trust 328

Capital Point Slough Unit Trust 793

West End of London Property Unit Trust 1,022

Schroder Emerging Retail Property Unit Trust 2,432


(e) Schroder UK Property Fund Feeder Trust The Manager of the Schroder UK Property Fund Feeder Trust, which invests solely into the Schroder UK Property Fund, is part of the same group as the ACD of the Schroder UK Property Fund. During the period from 1 August 2012 to 31 March 2013, the Schroder UK Property Fund Feeder Trust was paid gross distributions totalling £0.2 million.

17. Financial instrumentsThe primary financial instruments held by the Fund at 31 March 2013 were property related investments, cash, short term assets and liabilities to be settled in cash. The Fund did not hold, and was not a counterparty to, any derivative instruments either during the year or at the year end.

The policies applied to the management of the financial instruments are set out in note 3. The fair values of the Fund’s assets and liabilities are represented by the values shown in the balance sheet on page 16. There is no material difference between the value of the financial assets and liabilities, as shown in the balance sheet, and their fair value.

dIStrIbutIon tableMonthly distributions payable for the 8 months ended 31 March 2013 in pence per unit. There were two share classes at 31 March 2013, a gross share class and a net share class which was dormant during the period.

Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

Gross Income Shares

Gross revenue 10.647800 10.502600 10.211300 10.110900 10.268290 10.566479 10.711900 10.315792

Income tax – – – – – – – –

Net revenue 10.647800 10.502600 10.211300 10.110900 10.268290 10.566479 10.711900 10.315792

Equalisation – – – – – – – –

Final distribution payable 10.647800 10.502600 10.211300 10.110900 10.268290 10.566479 10.711900 10.315792



Primary creations and redemptionsDuring the period to 31 March 2013, 203,772 shares were created and nil shares redeemed on the primary market. At 31 March 2013, nil shares were awaiting either creation or redemption.

Quarterly Volume of Secondary Market Trades

(£ million)

0

10

20

30

40

50

60

Q113

Q412

Q312

Q212

Q112

Q411

Q311

Q211

Q111

Q410

Q310

Q210

Q110

Q409

Q309

Q209

Q109

Q408

Q308

Q208

46.3

8.9

24.021.4

12.013.415.4

9.8

14.9

8.110.2

31.6

59.5

15.7

6.3

1.42.51.82.4

6.7

Source: Schroders, 31 March 2013.

Gross Annual DistributionPaid per share/unit

Date

Gross Annual Distribution per share/unit1

Net Asset Value per share/unit

Distribution Yield2

31 March 2013 £1.278533 £31.99 4.0%

31 March 2012 £1.340935 £32.69 4.1%

31 March 2011 £1.326611 £32.01 4.1%

31 March 2010 £1.543322 £30.30 5.1%

31 March 2009 £1.598533 £29.45 5.4%

Source: Schroders, 31 March 2013. Gross Annual distribution information up to 31 July 2012 relates to the Schroder Exempt Property Unit Trust which was converted to the Schroder UK Property Fund on 1 August 2012. 1 Distributions are gross of tax but net of expenses and fees. They are stated on a paid basis at the time of reporting. 2 The yield is calculated by dividing the annual distributions paid by net asset value per unit at the end of the period.

The yield is stated on a paid basis at the time of reporting.

unaudIted addItIonal InformatIon


Cash and Gearing

Date

Amount in Cash (Capital)

at the end of each year

Gearing(% of NAV)

31 March 2013 £80.7 million 5.0%

31 March 2012 £52.8 million 6.1%

31 March 2011 £125.6 million 6.9%

31 March 2010 £43.4 million 16.3%

31 March 2009 £5.9 million 20.3%


CashThe Fund is restricted to holding a maximum on balance sheet uncommitted cash balance of 10% of NAV. There is no minimum restriction. As at 31 March 2013, the Fund had counterparty exposure to Barclays (£12.0m) and Santander (£30.0m) through its bank deposits as per note 11 of the financial statements. The Fund’s counterparty exposure is governed by Schroder Group policies.

GearingThe Fund is restricted to holding a maximum borrowing ( on/off balance sheet) of 25% of NAV. At 31 March 13 the Fund had nil gearing on balance sheet. The Fund was exposed to 5.0% by NAV of gearing solely through its indirect holdings. The Investment Manager monitors specific details of the variable rate loans or interest terms of the gearing within the indirect investments and specific details of the interest rate swaps, as is made available by the respective managers. Such information is not published here, but will be made available if appropriate. Figures for gearing are shown gross as the Fund does not have a restriction requiring a minimum amount of cash to be held on the balance sheet. For information, the net amount of gearing (gross debt minus cash) was -1.9%.

Fund share of indirect borrowing by holding

Collective Investment Schemes (CIS)

CIS Total NAV

£ Millions

CIS Total debt£ Millions

Debt as a % of NAV (CIS)

SPF Share of debt

£ Millions

SPF Share of debt

as a % of SPF NAV


625.0 439.5 70.3% 9.6 0.8%

Hercules Unit Trust 879.5 629.0 71.5% 19.9 1.6%

Teesland IDG Sutton Unit Trust 3.2 4.7 146.9% 2.3 0.1%

UNITE UK Student Accommodation Fund

685.3 624.3 86.1% 15.4 1.3%

West End of London property Unit Trust

658.3 246.2 37.4% 14.7 1.2%

Total 61.9 5.0%

Source: Schroders/AREF/IPD Property Fund Index, 31 March 2013. Total NAV, Total debt and Debt as a percentage of NAV are as published in AREF/IPD Property Fund Index and reflect the total for the collective investment schemes. SPF share of debt and SPF share of debt as a percentage of SPF NAV are as calculated by Schroders.

DerivativesThe Fund is entitled to use derivatives but did not use any during the period. Derivatives may be used by the Investment Manager for the purposes of efficient portfolio management. The aim of reducing risks or costs will allow the Investment Manager to enter into exposures

unaudIted addItIonal InformatIon (continued)

44 Schroder UK Property FundReport to 31 March 2013

of permissible assets using derivatives or forwards as an alternative to selling or purchasing underlying assets. The maximum permissible derivative exposure will be determined by Schroder Group Compliance and the Property Investment Risk Committee in conjunction with the Fund’s Investment Committee. The Fund will follow accounting policies agreed with the auditors and consistent with the prospectus in its treatment of derivatives.

Monthly Share/Unit PricesDate Net Asset Value Bid Price Offer Price

31 March 2013 £31.99 £31.41 £33.51

28 February 2013 £32.07 £31.49 £33.60

31 January 2013 £32.08 £31.50 £33.61

31 December 2012 £32.07 £31.49 £33.60

30 November 2012 £32.19 £31.61 £33.73

31 October 2012 £32.25 £31.67 £33.79

30 September 2012 £32.26 £31.67 £33.79

31 August 2012 £32.40 £31.81 £33.95

31 July 2012 £32.48 £31.90 £34.02

30 June 2012 £32.42 £31.83 £33.96

31 May 2012 £32.55 £31.96 £34.10

31 April 2012 £32.65 £32.07 £34.21

Source: Schroders, 31 March 2013. The monthly share/unit price is issued on the first working day of the month, based on closing values at the end of the previous month. Over the last 12 months, the highest offer price was £34.21 and the lowest bid price was £31.41

Shareholder BreakdownInternal investors are those entities managed or controlled by companies within the same group as the Investment Manager of the Fund. The proportion of internal and external investors is set out within the below table:

Number of Shareholders

Total % Holding by Shares in

Issue

Internal Investors 133 50.9%

External Investors 128 49.1%

Total Investors 261 100%

Corporate Pension Funds 168 56.3%

Local Authority Pension Funds 37 30.2%

Pooled Funds 3 3.7%

Charities 42 5.8%

Common Investment Funds 3 2.9%

SIPPs 2 0.0%

UK Corporate 1 0.2%

Insurance Companies 5 0.9%

Total 261 100%

Largest Investors by Ownership Band:

Less than 1% of units in issue 233 54.1%

1% or greater but less than 2% 22 30.2%



8% or greater – –

Total 261 100%


Largest Investor 4.0%

Largest Three Investors 9.1%

Largest Five Investors 13.7%

Largest Ten Investors 22.6%


LiquidityDetails of indirect holdings (Collective Investment Schemes)

Closed-ended investment

NAV of holding (£’000)

% of SPF NAV

% ownership

of CISTermination

Date

Terms of any extension/

additional information

Hercules Unit Trust (HUT)

27,804 2.3% 3.2%

September 2020

(Redemption Window

September 2013)

The Trust can be extended for successive periods of whole years of up to ten years in total, with the agreement of the unitholders by Extraordinary Resolution.

Henderson UK Retail

Warehouse Fund (HRWF)13,634 1.1% 2.2%

December 2015

If 75% of unitholders agree the Fund can be extended. If this is not obtained, the Fund will enter a 2 year orderly wind down period.

West End of London Property

Unit Trust (WELPUT)

39,259 3.2% 6.0%

July 2021 (Redemption Window July

2014 and July 2017)

The Trust can be extended for successive periods of whole years of up to ten years in total, with the agreement of the unitholders by Extraordinary Resolution.

Open-ended investment

UNITE

16,748 1.4% 2.5%n/a – UNITE

is an open ended Fund.

Units can be redeemed at any time (subject to limitations imposed by UNITE). The price that redeeming unitholders receive for their redemption units shall by at a discount of 2% to the NAV.

unaudIted addItIonal InformatIon (continued)

Shareholder Breakdown


Total Expense Ratio (as defined by AREF Code of Practice)

Fees and expenses table % GAV % NAV

Fund Management Fees 0.63% 0.66%

Fund Operating expenses 0.18% 0.20%

Total Expense Ratio1 0.81% 0.86%

Property Expense Ratio2 0.49% 0.51%

Real Estate Expense Ratio3 1.30% 1.37%

Transactions Costs4 0.04% 0.04%

Performance Fees Charged N/A N/A

1 The Total Expense Ratio (TER) is the sum of the fund management fees and the fund operating expenses as a ratio of the NAV and GAV.

2 The Property Expense Ratio (PER) is the total property expenses incurred by the fund (such as service charge short falls, lease costs and maintenance and repairs) as a ratio of the NAV and GAV

3 The Real Estate Expense Ratio is the sum of the TER and PER as a ratio of the NAV and GAV.4 Transaction costs include tax, professional fees and other costs associated with the purchase and sale of property

holdings. During the year to 31 March 2013, the sales and purchases as set out within the Fund Director’s Report yielded transaction costs of £0.5m.


unaudIted General InformatIon

General InformationSCHRODER UK PROPERTY FUND (the “Fund”) is an investment company with variable capital incorporated in England and Wales under registered number IC000945 and authorised by the FSA with effect from 31 July 2012. The Fund has an unlimited duration. Shareholders are not liable for the debts of the Fund.

Accordingly, the information in this document is directed at eligible counterparties, authorised persons, professional clients, existing investors in the Fund and clients and newly accepted clients of other firms within the Schroder Group, where appropriate steps have been taken to ensure that investment in the Fund is suitable, where necessary. This material should not be relied upon by persons of any other description. In any case, a recipient who is in any doubt about investment in the Fund should consult an authorised person who specialises in investments of this nature.

The Fund’s past performance is not a guide to the future.

LiquidityThe Fund invests in real property, the value of which is generally a matter of a valuer’s opinion. There is no recognised market for shares in the Fund and an investment is not readily realisable. It may be difficult to trade in the shares or to sell them at a reasonable price. The price of shares and the income from them may fluctuate upwards or downwards and cannot be guaranteed.

The table on page 46 sets out the percentage by NAV of the Fund’s investment in closed-ended structures as well as a brief summary of the liquidation process for these assets.

Socially Responsible Investment and SustainabilityResponsible Property Investment (RPI) is at the heart of our investment philosophy. We believe that a successful responsible investment programme should deliver enhanced returns to investors, improved business performance to tenants and tangible benefits to local communities and wider society. A copy of Schroders RPI Policy can be found at www.schroders.com/getfunddocument?oid=1.9.678022

Purchase of SharesShares can be purchased in the Schroder UK Property Fund through the primary or secondary market. Depending on the type of investor, the purchase of shares will be through either the Schroder UK Property Fund or the Schroder UK Property Fund Feeder Trust. Corporate bodies (excluding nominees acquiring shares) may only invest in the Schroder UK Property Fund indirectly through the Feeder Fund. Shares in the Schroder UK Property Fund can be transferred between corporate and non corporate bodies through the Feeder Fund on the secondary market.

The Dealing Day for subscription for shares is the first business day of each month. Application forms, top-up forms and cleared funds must be received by the Registrar before the cut-off point for subscriptions. Forms received after this time will be carried forward to the following dealing day for subscription. Applicants may amend or withdraw an application form or a top up form at any time up until the cut-off point for subscriptions. Thereafter, applicants have no right to amend or withdraw their application. Settlement is due by midday on the business day

before the relevant dealing day for subscription. Applicants are required to transfer funds via CHAPS or another form of electronic payment unless the Registrar agrees to an alternative method of payment. The Investment Manager has the power to limit the creation of new shares having regard to the amount of unallocated cash being held in the Fund from time to time.

Details of the investor’s waiting list is to be found in the SPF prospectus in section 2.1 and has been summarised below:

Applicants may be placed on a waiting list prior to the issue of Shares. The ACD may elect to limit the number of shares issued on any dealing day for subscription, and if so, shares will be allocated to valid applicants pro rata to the number of shares applied for. Where applicants do not receive shares to satisfy their full application the unallocated application will be carried forward to the next dealing day for subscription at which shares are issued. Where the issue of shares is limited at any dealing day for subscriptions applicants may instruct the ACD to seek to arrange for the shortfall in the application to be met on the secondary market for such time until the next dealing day for subscription. If the shortfall in shares applied for is not met on the secondary market, shares will be issued in line with the allocation made at the dealing day for subscription on which shares are issued, with orders carried over from previous dealing days taking priority.

There were no redemption notices received at 31 March 2013 that were not settled. Further, there were no suspension of valuations and/or redemptions at 31 March 2013.


Redemption of SharesRedemption forms must be received by the Registrar before the relevant cut-off point for redemptions, that is midday on the date falling three months prior to the business day before the relevant dealing day for redemption. Once a redemption form has been received, this can be settled either by cancelling shares or placing on the secondary market. Either way, redeeming shareholders will only receive the prevailing bid price. Valid instructions will be processed by the Registrar at the bid price on the relevant dealing day for redemption (that falls three months after the relevant cut-off point for redemption), except in the case where dealing has been suspended as set out in section 2.21 of the prospectus.

Where the ACD considers it to be in the best interests of the shareholders, the ACD may defer redemptions on a dealing day to any one or more of the subsequent eight dealing days for redemption i.e. the deferral period is a maximum of 24 months from the original dealing day for redemption. A redemption will be deferred within this timeline to a dealing day for redemption when the Fund has sufficient liquidity to enable it to meet the redemption, providing it is in the best interests of the shareholders to do so.

The ACD can, in extreme market circumstances, as set out within section 6.5 of the prospectus, fair value any assets within the Fund to a realisable value.

Secondary MarketThe ACD has appointed the Secondary Market Facilitator, SMF (Schroder Property Investment Management Limited) to facilitate transfers of shares on the secondary market in accordance with the following:

Shareholders or potential investors wishing to buy shares on the secondary market should complete an application form (potential investors) or top-up form (existing shareholders), detailing their secondary market requirement in the investment details section. Shareholders wishing to sell shares should complete a redemption form specifying they wish to sell via the secondary market. All completed forms should be provided to the SMF via the Registrar. Potential investors should also provide the Registrar with any documents required for anti-money laundering purposes. The forms are available from www.schroders.com/spf or from the Investment Manager.

The SMF will not charge a redeeming shareholder commission, but the redeeming Shareholder will be responsible for costs in connection with the transfer of its shares such as the preparation and execution of relevant documentation and any taxation. The SMF, at its discretion, has the right to charge the buyer commission at a rate of 0.20 per cent applied to the net consideration, subject to a minimum of £50 for each and every trade. Where applicable, stamp duty reserve tax is payable by the buyer on the net consideration at the prevailing rate.

The SMF operates a share matching service between sellers and buyers of shares. A waiting list of sellers and buyers is kept and matching operated on the following basis:

a. First, price: shares available from sellers seeking the lowest price per share will be offered to buyers by order of the date of receipt of the relevant form.

b. Secondly, notification date: Where there are multiple sellers looking to sell for any given price, preference will be given to sellers by order of the date of receipt of the relevant form.

Where there are multiple buyers looking to buy at the same price, for which relevant forms were received on the same date, matching will be allocated pro rata to the number of shares applied for. In all cases matching will be allocated subject to any minimum trade requirements stipulated by a party.

The SMF, when matching shares may apply a minimum economic trade at its discretion which is shares to the value of £50,000 or such other amount as the SMF determines from time to time. The SMF will arrange the exchange of shares between sellers and buyers in the first 12 business days of every month. The SMF will contact the seller and buyer to obtain confirmation that the terms of the arrangement are acceptable before proceeding with the transaction. The seller and buyer are required to confirm acceptance of the terms by return email within 24 hours.

Investors may wish to note that other matching services are provided by third party brokers. All trades are however subject to registration on the terms set out above.

Fund CodesCode

Bloomberg SCEXPUT LN ISIN GB00B8215Z66 Sedol B8215Z6

Prices for the Schroder UK Property Fund can be obtained from http://www.schroders.com/spf.

DistributionsThe income of the Fund, after deduction of all expenses and liabilities (actual, estimated or contingent) of the Fund including any deductions in respect of taxes, is distributed to shareholders in proportion to the number of shares held by them. Distributions are calculated on a monthly basis, with the distributions


unaudIted General InformatIon (continued)

paid to shareholders on the last working day of the following month.

During the period all distributions were paid gross. The prospectus does not provide the ability for either the ACD or Investment Manager to defer or suspend distributions.

Schroder UK Property Fund Feeder TrustThe Schroder UK Property Fund Feeder Trust is an umbrella unit Trust whose objective is to achieve a blend of income and capital growth by investing solely in the Schroder UK Property Fund. Investors into the Feeder Trust receive monthly distributions. The Feeder Trust is subject to corporation tax on property and interest distributions it receives from the Schroder UK Property Fund at a rate of 20%.

Management fees and other expensesDetails of fees and expenses incurred by the Fund are set out within Section 5 of the Fund prospectus and further in notes 6 and 16 of the audited report and accounts. In summary:

• The Annual Management Charge is 0.30% of NAV and 0.40% of the Gross Asset Value (GAV) of directly held property and capital monies (made up of 0.05% of NAV payable to the ACD and 0.25% of NAV and 0.40% of GAV payable to the Investment Manager). The annual management charge is allocated 50% to income and 50% to capital.

• The Depositary receives 0.0224% per annum of the first £500m of NAV and 0.0125% of the balance.

• The Standing Independent Valuer will receive an initial fee of 0.03% of the first valuation of a property on purchase, capped at £20,000 and thereafter a fee of 0.03% of the valuation per annum.

• The Registrar is paid a transaction based fee subject to a minimum of £75,000 per annum.

• The Investment Manager bears the cost of employing managing agents to collect rents and perform the usual property manager’s duties as delegated by the Investment Manager.

There is no performance fee and no fee rebates are payable. The table on page 47 shows the Fund’s expense ratios as required by the AREF Code of Practice as at 31 March 2013.

Bid/Offer spreadsAs at 31 March 2013, the offer spread was 4.75% premium to NAV. The bid spread was -1.8% discount to NAV. Our key principles when setting bid and offer prices are to review prices regularly, to treat shareholders equitably and to adopt a consistent approach.

Our assumption, when calculating the offer price, is that new money will be invested in line with strategy, principally into direct property at full purchase cost. We make an allowance for capital expenditure to maintain the existing portfolio. Capital expenditure may vary but in normal circumstances is considered to be 10% of investment. The bid price assumes full sale costs are incurred on direct assets, while indirect assets are marked to market. Cash is priced at a zero spread.

Valuation and Pricing policyA detailed explanation of our pricing methodology is contained within the prospectus and further information is available upon request from the Investment Manager. The Fund prospectus, along with the notes to the financial statements, sets out:

• the methodology used to value the properties and other investments of the Fund and

• the valuation of direct properties having to be undertaken monthly.

It should further be noted that the Fund’s investment in the Henderson UK Retail Warehouse Fund is held at a stale price one month in arrears on account of the receipt of the NAV of this investment being received after the valuation date of the Fund.

For the valuation of the Fund’s investment in Hercules Unit Trust and WELPUT, an unadjusted price is used in accordance with market practice. For the valuation of the Fund’s investment in UNITE a capital only price is taken which is issued by the UNITE Fund Manager.

AREF Code of PracticeThe Fund is a member of the Association of Real Estate Funds (AREF). The aim of the Code of Practice is to achieve high standards of transparency across the unlisted sector and promote consistency of reporting to allow investors to compare different funds. The Fund completes the AREF/IPD Pooled Property Questionnaire each quarter, which is made available to all investors and which forms the basis of its entry in IPD Property Fund Vision handbook. SPF’s page on the AREF website can be found at http://www.aref.org.uk/funds/schroder-uk-property-fund

The Investment Manager believes that these Report and Accounts, together within supporting documents referred to herein, achieves the AREF standard of Best Practice for reporting.


Fund documentationA copy of all Fund documentation including the prospectus and regular reports is available at www.schroders.com/spf or available from the Investment Manager upon request.

A copy of Schroders AAF controls report which has been externally audited is available from the Investment Manager upon request.

Conflicts of interestThe Investment Manager is responsible for identifying all conflicts of interest and for referring such matters to Schroder Group Compliance or such other parties in accordance with the Group’s conflict of interest policy.

Insurance and service charge rebatesService charge remuneration employed by the Investment Manager earned by the managing agents forms part of their overall remuneration. Insurance commission rebates are calculated on an annual basis and rebates (if any) are distributed to shareholders.

Disaster recoverySchroder Group has a disaster recovery plan which is audited, externally, on an annual basis as part of the AAF controls report.

Additional InformationThe Fund may be suitable for professional investors who wish to hold a direct property portfolio but do not want to commit the considerable executive time and expertise necessary to organise and supervise such a portfolio and/or are not of a sufficient size to obtain a viable property portfolio with an appropriate spread of risk. The property in the Fund is professionally and actively managed by chartered surveyors employed by the Investment Manager, Schroder Property Investment Management Limited.

We welcome the opportunity to meet shareholders, potential shareholders and their advisers to explain more fully the strategy and progress of the Fund. Please contact the Investment Manager who can also provide copies of the prospectus, application forms and latest share prices, at the address below.

Schroder UK Property Fund Schroder Property Investment Management Limited 31 Gresham Street London EC2V 7QA Tel: +44 (0)20 7658 6000Schroder Property Investment Management Limited is authorised and regulated by the Financial Conduct Authority

Manager ContactsFor general information and queries on secondary market availability, please contact:

Tom Dorey Head of Property Product [email protected] +44 (0)20 7658 3020

Ian MasonFund [email protected] +44 (0)20 7658 6618

For valuations, to place trades, tax reclaims, dividend/distribution information, please contact the Registrar:

Northern Trust Global Services Ltd. Schroder Unit Trusts Limited – Schroder UK Property Fund PO BOX 3733 Wootton Bassett Swindon SN4 4BGTel: +44 (0) 870 870 8059 Fax: +44 (0) 20 7643 3892 Email: [email protected]


Authorised Corporate Director Schroder Unit Trusts Limited 31 Gresham Street London EC2V 7QA

Investment Manager Schroder Property Investment Management Limited 31 Gresham Street London EC2V 7QA

Schroder Unit Trusts Limited and Schroder Property Investment Management are authorised and regulated by the FCA.

Registrar Northern Trust Global Services Limited 50 Bank Street Canary Wharf E14 5NT

Depositary National Westminster Bank plc 135 Bishopsgate London EC2M 3UR

Standing Independent Valuers BNP Paribas Real Estate Advisory & Property Management Limited 90 Chancery Lane London WC2A 1EU

Allsops LLP 33 Wigmore Street London W1U 1BZ

Legal Adviser Eversheds LLP One Wood Street London EC2V 7WS

Independent Auditor PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT

Property Managers Jones Lang LaSalle 40 Berkeley Square Bristol BS8 1HU

Deloitte Real EstateAsset and Property Management Abbots House Abbey Street Reading RG1 3BD

Changes to key service providers during the periodPrior to 1 August 2012 there was no ACD as the Fund existed as an unauthorised unit trust. Following conversion to an authorised fund, the Trustee role became that of a depositary which was fulfilled by National Westminster Bank PLC (Natwest), a wholly owned subsidiary of Royal Bank Of Scotland PLC. Prior to this, the Trustee was Royal Bank of Scotland PLC. There were no further changes to key service providers during the period.

The terms of all appointments including remuneration and termination provisions can be made available upon request.

Key ServIce provIderS


53

West India Quay, London.


S c h r o d e r U K P r o P e r t y F U n d

Issued in July 2013 by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA which is authorised and

regulated by the Financial Conduct Authority. w43758

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