I would stop watering it! The main thing is to get trees and shrubs to get their roots down into the soil and find their own water. Unless you are on very free-draining soil most perennial plants should not need watering except under drought conditions. The best way to help trees get established is to incorporate compost or well-rotted manure into the planting hole. Water the hole well - several gallons. Then plant the tree, water in well and then mulch the surface with either more compost, grass cuttings (only 2-3" deep) chipped bark or any other suitable material. This stops the water evaporating from the soil. If the soil is thin, sandy and dry it is sometimes necessary to give it more water. But only about once a fortnight, especially through a hot summer. It is better to give them a good solid soaking less often than just a sprinkle daily. I have a deep loamy soil so once plants go in they very rarely get another watering - unless it is v hot weather. Strawberry trees are quite drought-tolerant so it might be that it is getting too much water - and that is stopping it taking up nutrients from the soil. It could be that you are on a clay soil and the water is building up beneath. I would stop watering, mulch it with compost and maybe put a couple of handfuls of blood, fish and bone or another general fertiliser around the tree before you mulch. Give it a month or two and see if it cheers up!!

I'm assuming you're talking about Arbutus, Rohima, but if you have Arbutus menzeisii, this variety requires acid soil. A. unedo and A. andrachnoides don't. If you have the first variety, the yellowing could be due to iron shortage.
As for watering, I agree with Hoya that you should certainly not be watering daily - but as its a tree, you should be ensuring it gets a good couple of gallons a week, unless you're having a lot of rain. Trees do need watering during their first two years, but not daily. Please, if you have time, read my blog on watering generally, it's not very long so won't take much time - find it by clicking on my avatar and selecting blogs on my home page - there aren't many to choose from.

Thank you both Hoya and Bamboo. The tree is Arbuts Unedo. My soil is acid but i think you are both right .The leaves only started yellowing when i started watering daily. I thought i was doing the right thing during the hot dry weather we have been blessed with. Well thats one less chore for me to do. Will give it some fish,blood and bone with some mulch, ease off the with the water and hope it recovers. Thank you both again.

Bamboo, i have just read your blog and have decided not to give it any fertilizer and just go easy on the water. I did give it some blood,fish and bone in the spring so that should still be working.

Important thing is to soak it well with water when you do do it, then don't give it any at all for up to a week, depending on how hot it is.