Over the course of December 2025, the NAV of the Fund increased by 0.6% (A Acc GBP), underperforming the UK Real Estate Index*, which increased by 0.8%. Since its launch, the Fund has increased by 1.1% (A Acc GBP), outperforming the UK Real Estate Index* which has fallen by 16.8% in the same period.

The strategy of the Fund is to invest in a diversified portfolio of thematic real assets. The Fund’s 22 investments are set to benefit from four socio-economic mega trends: ageing population (15.3% portfolio weight), digitalisation (27.7%), generation rent (16.3%), and urbanisation (12.9%). It will also invest in REITs with assets that encompass more than one of these trends (24.2%).

Within each mega trend, the Fund Manager undertakes fundamental research to identify the most attractive investment opportunities. Combining top-down analysis of socio-economic mega trends with bottom-up fundamental research has yielded good results for the Fund.

In the twelve-month period ending December 2025, NAV increased by 12.2%. Over the year, digitalisation was the best performing mega trend, up 31.1%. Ageing population and multi-theme assets were next, up 27.4% and 19.7%, respectively. Generation rent and urbanisation delivered negative returns, falling by 8.5% and 11.8%, respectively.

Looking back over the last twelve months, 2025 was a positive year for the Fund, which delivered a double-digit return, supported by strong income and healthy operational performance across its holdings. Distribution growth outpaced inflation, with the Fund’s A Inc share class delivering 6.2% growth vs 3.4% for UK CPI inflation and the Fund’s yield, at c. 5%, remained a key attraction over the year. The Fund also showed a low correlation to equity markets at a time when volatility was high.

One of the big themes of the year was the return of meaningful M&A activity to the UK REIT market, which started 2025 trading at unusually cheap levels despite solid business models. Six companies held in the Fund were involved in M&A transactions spanning care homes, logistics, GP surgeries and student accommodation. Confidence in the sector was also reflected in a sizeable equity raise late in the year, when Blackstone accepted Tritax Big Box shares above the prevailing market price as part-payment for assets. This was a clear signal that long-term investors still see strong potential in UK property.

Rental trends were mixed across sub-sectors. The private rental market remained buoyant, helped by the generation rent mega trend, while purpose-built student accommodation softened slightly. Even so, the broader direction of travel was positive, with rental growth supporting both income and capital values.

The macro backdrop for 2026 looks more supportive than it did a year ago, with inflation forecast to fall and bond yields expected to ease in response. In 2025, the Bank of England reduced interest rates by 100 basis points, with markets pricing in two 25 basis point cuts in 2026. 5-year interest rate swaps also fell from 4.1% to 3.7%. Against this backdrop, the Fund Manager expects M&A activity to continue. Private equity remains interested in high-quality platforms with established brands, development pipelines and long-term tenant relationships. There is also room for further consolidation within the listed market itself, as REITs consider public-to-public mergers that improve scale, liquidity and efficiency. For investors, these transactions can help unlock value and sharpen the operational focus of the resulting businesses.

Another theme likely to carry over from 2025 is the outperformance of high-quality, well-located assets. Prime stock remains in short supply and that shortage is most obvious in the London office market, where virtually no grade-A space is available in the best locations. The same dynamic is visible in logistics, care homes and parts of retail. Strong demand and limited supply are expected to keep rental growth ahead of inflation again next year.

The Fund Manager enters 2026 feeling positive about the future growth of the Fund. Indicative dividend yields remain around 5%, dividend forecasts point to growth of about 4% or more, and analyst price targets suggest approximately 20% potential upside. UK REITs continue to trade close to a 30% discount to net asset value, and historically, investors who have bought at this level have gone on to generate strong returns over the following years. If the sector can combine these attractive return prospects with the stability demonstrated in 2025, it could offer an appealing combination of income, resilience and upside. The Fund Manager would like to thank shareholders for their support in 2025.

*MSCI UK IMI Core Real Estate Net Total Return GBP.