UBS ETF (CH) Part I Prospectus. Umbrella fund under Swiss law (Category Other Funds for Traditional Investments)

Transcription

1 A. SBI Domestic Government 1-3 Currency Launch date Smallest Flat fee p.a. quotient 2 Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing B. SBI Domestic Government 3-7 UBS ETF (CH) Umbrella fund under Swiss law (Category Other Funds for Traditional Investments) Prospectus with integrated fund contract December 2017 Currency quotient 2 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing C. SBI Domestic Government 7-15 Currency quotient 2 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing D. SBI Domestic Swiss Pfandbrief 1-5 Currency quotient 3 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing E. SBI Domestic Swiss Pfandbrief 5-10 Currency quotient 3 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing Part I Prospectus This prospectus, gether with the fund contract which forms an integral part there, the Key Invesr Information Document and the latest annual or semiannual report (if published after the latest annual report), serves as the basis for all subscriptions units the umbrella fund/sub-funds. Only the information contained in the prospectus, the Key Invesr Information Document or the fund contract shall be deemed be valid. 1. Information on the umbrella fund 1.1 General information on the umbrella fund UBS ETF (CH) is a contractually based umbrella fund governed by Swiss law established under the Other funds for traditional investments category the Swiss Collective Investment Schemes Act (CISA) 23 June 2006 and subdivided in the following sub-funds: A. SBI Domestic Government 1-3 B. SBI Domestic Government 3-7 C. SBI Domestic Government 7-15 D. SBI Domestic Swiss Pfandbrief 1-5 E. SBI Domestic Swiss Pfandbrief 5-10 F. SMI G- SLI H. SMIM I. SPI Mid J. SPI K. SXI Real Estate L. SXI Real Estate Funds M. MSCI Switzerland N. MSCI Switzerland hedged EUR O. MSCI Switzerland hedged USD P. MSCI Switzerland IMI Socially Responsible Q. CMCI Oil SF (CHF) A-dis R. CMCI Oil SF (USD) A-dis S. CMCI Oil SF (EUR) A-dis T. Gold U. Gold (EUR) hedged V. Gold (CHF) hedged W. Platinum X. Palladium Y. Silver The fund contract was drawn up by the fund management company with the agreement the cusdian bank and approved by the Swiss Financial Market Supervisory Authority (FINMA) on 30 Ocber The umbrella fund is based upon a investment contract (fund contract) under which the fund management company is obliged provide invesrs with a stake in the corresponding sub-fund in proportion the fund units acquired by them and manage this fund at its discretion and in its own name in accordance with the provisions the law and the fund contract. The cusdian bank is party the contract in accordance with the tasks conferred upon it by law and the fund contract. Invesrs are only entitled an interest in the assets and income the subfund in which they hold units. Any liabilities attributable individual subfunds are borne solely by the individual sub-fund concerned. In accordance with the fund contract, the fund management company is entitled establish, liquidate or merge unit classes at any time, subject the agreement the cusdian bank and the approval the supervisory authority. Each sub-fund is currently subdivided in the following unit classes: F. SMI Currency quotient 4 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing G. SLI Currency quotient 6 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing H. SMIM Currency quotient 7 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing I. SPI Mid Currency quotient 8 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing J. SPI Currency quotient 9 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing K. SXI Real Estate Currency quotient 10 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing L. SXI Real Estate Funds Currency quotient 11 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing M. MSCI Switzerland Currency quotient 12 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing N. MSCI Switzerland hedged EUR Currency quotient 12 Launch date Smallest Flat fee p.a. Form income (EUR) A-dis EUR % p.a. 5 Bearer Distributing O. MSCI Switzerland hedged USD Currency quotient 12 Launch date Smallest Flat fee p.a. Form income (USD) A-dis USD % p.a. 5 Bearer Distributing P. MSCI Switzerland IMI Socially Responsible Currency quotient 13 Launch date Smallest Flat fee p.a. Form income (CHF) A-dis CHF % p.a. 5 Bearer Distributing 1

2 T. Gold Currency quotient (USD) A-dis USD Approx. 50 ounces U. Gold (EUR) hedged Currency quotient (EUR) A-dis EUR Approx. 1/10 ounce V. Gold (CHF) hedged Currency quotient (CHF) A-dis CHF Approx. 1/10 ounce W. Platinum Currency quotient (USD) A-dis USD Approx. 1/10 ounce X. Palladium Currency quotient (USD) A-dis USD Approx. 1/10 ounce Y. Silver Currency quotient (USD) A-dis USD Approx. 10 ounces Launch date Smallest Flat fee p.a. Form income % p.a. 5 Bearer Distributing Launch date Smallest Flat fee p.a. Form income % p.a. 5 Bearer Distributing Launch date Smallest Flat fee p.a. Form income % p.a. 5 Bearer Distributing Launch date Smallest Flat fee p.a. Form income % p.a. 5 Bearer Distributing Launch date Smallest Flat fee p.a. Form income % p.a. 5 Bearer Distributing Launch date Smallest Flat fee p.a. Form income % p.a. 5 Bearer Distributing 1 For readability purposes no distinction will be made between genders. Any terms referring persons, e.g. invesr, shall denote both male and female persons. 2 Of the value the SBI Domestic Government tal return the respective maturity segment 3 Of the value the SBI Domestic Swiss Pfandbrief tal return the respective maturity segment 4 Of the value the SMI price index 5 Flat fee charged by the fund management company. This is appropriated for management purposes, asset management and marketing and distribution the sub-funds and also for all tasks the cusdian bank. 6 Of the value the SLI price index 7 Of the value the SMIM price index 8 Of the value the SPI Mid price index 9 Of the value the SPI price index 10 Of the value the SXI Real Estate price index 11 Of the value the SXI Real Estate Funds price index 12 Of the value the tal return net MSCI Switzerland price index 13 Of the value the tal return net index MSCI Switzerland IMI Extended SRI 5% Issuer Capped 14 The sub-funds the CMCI Oil SF series are currently not subdivided by unit class The sub-funds the CMCI Oil SF series listed below are currently not subdivided by unit class. The specific features are listed here, however, for the purposes clarity: O. CMCI Oil SF (CHF) A-dis 14 Currency Initial issue Launch date value Smallest Flat fee p.a. Form income CHF % p.a. 5 Bearer Distributing R. CMCI Oil SF (USD) A-dis 14 Currency Initial issue Launch date value Smallest Flat fee p.a. Form income USD % p.a. 5 Bearer Distributing S. CMCI Oil SF (EUR) A-dis 14 Currency Initial issue Launch date value Smallest Flat fee p.a. Form income EUR % p.a. 5 Bearer Distributing Detailed information on the unit classes is contained in the fund contract (cf. Part II, 6) The unit classes are not segmented assets. Accordingly, the possibility that a unit class may be liable for the liabilities another unit class cannot be ruled out, even though costs as a rule may only be charged the specific unit class benefiting from a specific service. 1.2 Listing unit classes the sub-funds/the sub-funds the umbrella fund on SIX Swiss Exchange This prospectus serves as listing prospectus for the listing sub-fund units on SIX Swiss Exchange. The fund management company is responsible for the information contained in this prospectus. To the best the fund management company s knowledge and belief, the information in this prospectus is correct and no significant circumstances have been omitted. Units are listed on SIX Swiss Exchange in order enable invesrs buy and sell units on a liquid, regulated secondary market, i.e. on the sck exchange, in addition being able subscribe and redeem units directly from the fund management company and its distriburs. Details regarding the purchase units in the primary and secondary markets are given in section 5.2. A. SBI Domestic Government 1-3 B. SBI Domestic Government 3-7 C. SBI Domestic Government 7-15 Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit classes (CHF) A-dis began on 3 December 2010 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly the value the price index the SBI Domestic Government for the respective maturity segment. D. SBI Domestic Swiss Pfandbrief 1-5 E. SBI Domestic Swiss Pfandbrief 5-10 Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 30 August 2012 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly ¼ the value the price index the SBI Domestic Swiss Pfandbrief for the respective maturity segment. F. SMI Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 5 December 2003 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/100 the price index the SMI. G. SLI Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 14 September 2007 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/10 the price index the SLI. H. SMIM Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 8 April 2010 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/10 the price index the SMIM. I. SPI Mid Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 21 July 2011 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/10 the price index the SPI Mid. J. SPI Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 21 July 2011 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/10 the price index the SPI. K. SXI Real Estate Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 6 April 2011 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/50 the price index the SXI Real Estate. L. SXI Real Estate Funds Units unit class (CHF) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis began on 9 November 2009 and is conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly one-third the price index the SXI Real Estate Funds. M. MSCI Switzerland Units unit class (CHF) A-dis are listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis will begin in November 2013 and be conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/150 the MSCI Switzerland Net Return CHF Index. N. MSCI Switzerland hedged EUR Units unit class (EUR) A-dis are listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (EUR) A-dis will begin in November 2013 and be conducted in euro. The initial issue value for units unit classes with (EUR) A-dis corresponds roughly 1/10 the Net Total Return Index the MSCI Switzerland, 100% hedged EUR. O. MSCI Switzerland hedged USD Units unit class (USD) A-dis are listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (USD) A-dis will begin in November 2013 and be conducted in US dollars. The initial issue value for units unit classes with (USD) A-dis corresponds roughly 1/100 the Net Total Return Index the MSCI Switzerland, 100% hedged USD. P. MSCI Switzerland IMI Socially Responsible Units unit class (CHF) A-dis are listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (CHF) A-dis will begin in September 2017 and be conducted in Swiss francs. The initial issue value for units unit classes with (CHF) A-dis corresponds roughly 1/100 the MSCI Switzerland IMI Extended 5% Issuer Capped Net Total Return CHF Index. Q. CMCI Oil SF (CHF) A-dis R. CMCI Oil SF (USD) A-dis S. CMCI Oil SF (EUR) A-dis Units the sub-funds CMCI Oil SF (CHF) A-dis, CMCI Oil SF (USD) A-dis and CMCI Oil SF (EUR) A-dis are listed on SIX Swiss Exchange ( SIX ). Trading in units the sub-fund CMCI Oil SF (USD) A-dis began on 18 June 2010 and is conducted in US dollars. Trading in units the subfund CMCI Oil SF (EUR) A-dis began on 9 July 2010 and is conducted in euro. Trading in units the sub-fund CMCI Oil SF (CHF) A-dis began on 2

3 10 September 2010 and is conducted in Swiss francs. The initial issue value for units sub-fund CMCI Oil SF (CHF) A-dis corresponds CHF 50, for units sub-fund CMCI Oil SF (USD) A-dis USD 50 and for units subfund CMCI Oil SF (EUR) A-dis EUR 50. T. Gold U. Gold (EUR) hedged V. Gold (CHF) hedged For the sub-funds Gold Gold (EUR) hedged and Gold (CHF) hedged, units unit class (EUR) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading in unit class (CHF) A-dis Gold (CHF) hedged began on 22 December Trading in unit class (USD) A-dis Gold began on 12 January Trading in the unit class (EUR) A-dis Gold (EUR) hedged began on 29 January Trading is carried out in the relevant ing currency the sub-fund. The initial issue value for the A-dis unit class corresponds roughly one-tenth an ounce gold in the respective currency (for the hedged unit classes). shall not exceed a spread 2% (1% above and below the intraday net asset value). Under normal market conditions, bond ETFs should not exceed a spread 1% (0.5% higher or lower than the intraday net asset value) for bonds with a residual term 3 years, or 0.5% (0.25% higher or lower than the intraday net asset value) for bonds with a residual term less than 3 years. The companies selected by the cusdian bank as market makers for trading units are listed on the Internet at etfs/etf-private/how--trade/our-partners/market-maker.html. The following companies, among others, have concluded a market maker contract: UBS AG, business area Investment Bank Commerzbank AG The cusdian bank may nominate further companies as market makers or terminate contracts with existing market makers at any time. The current market makers are listed on the Internet at the above-mentioned link and notification will also be sent the Swiss Financial Market Supervisory Authority (FINMA). Clearing will be carried out via SIX SIS AG SIS. W. Platinum Units unit class (USD) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (USD) A-dis began on 10 September 2010 and is conducted in Swiss francs. The initial issue value for unit classes with (USD) A-dis is equivalent around 1/10 an ounce in the equivalent value the relevant currency. X. Palladium Units unit class (USD) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (USD) A-dis began on 30 November 2010 and is conducted in Swiss francs. The initial issue value for unit class (USD) A-dis is equivalent around 1/10 an ounce in the equivalent value the relevant currency. Y. Silver Units unit class (USD) A-dis were listed on SIX Swiss Exchange ( SIX ). Trading units in unit class (USD) A-dis began on 30 November 2010 and is conducted in Swiss francs. The initial issue value for unit class (USD) A-dis is equivalent around 10 ounces in the equivalent value the relevant currency. Conversion The minimum investment for units all classes is one unit. There is currently no minimum subscription amount for additional subscriptions. The unitholders may request at any time that their units be converted in another unit class the same sub-fund based on the net asset values the two unit classes affected if the conditions for holding the unit class in which the conversion is take place are met. Market makers The market makers task is ensure that there is a market for trading units the sub-funds and, within this context, enter bid and ask rates for the sub-funds units in the SIX Swiss Exchange trading system. FINMA requires the cusdian bank ensure that the difference ( spread ) between the indicative net asset value per sub-fund unit calculated on the basis the net asset value per sub-fund unit and adjusted take trading-induced changes in the prices the scks in the SXI Real Estate Funds Broad for the sub-fund SXI Real Estate Funds ( Intraday net asset value ) and the prices the scks in the SXI Real Estate Broad for the subfund SXI Real Estate and in the underlying gold price for the sub-funds Gold, Gold (EUR) hedged and Gold (CHF) hedged as well as in the underlying platinum price for the sub-fund Platinum, the underlying palladium price for the sub-fund Palladium, the underlying silver price for the sub-fund Silver as well as the prices the scks contained in the UBS Bloomberg CMCI WTI Crude Oil Hedged CHF Index, the UBS Bloomberg CMCI WTI Crude Oil Hedged EUR Index and the UBS Bloomberg CMCI WTI Crude Oil USD Index for the sub-funds CMCI Oil SF (CHF) A-dis, CMCI Oil SF (EUR) A-dis and CMCI Oil SF (USD) A-dis and the price at which invesrs buy and sell units via SIX Swiss Exchange is reduced an appropriately low level as set out below. FINMA also requires the cusdian bank ensure that the difference ( spread ) between the indicative net asset value per unit calculated on the basis the net asset value per sub-fund unit and adjusted take trading-induced changes in the prices the scks included in the SMI for the sub-fund SMI, in the prices the scks included in the SLI for the sub-fund SLI, in the prices scks included in the SMIM for the subfund SMIM as well as the prices the scks included in the SBI Domestic Government for the sub-funds Swiss Bond Index Domestic Government 1-3, Swiss Bond Index Domestic Government 3-7 and Swiss Bond Index Domestic Government 7-15, Swiss Bond Index Swiss Domestic Pfandbrief 1-5 and Swiss Bond Index Swiss Domestic Pfandbrief 5-10 as well as in the prices the scks included in the SPI Mid for the sub-fund SPI Mid, the prices the scks included in the SPI Index ( SPI ) for the sub-fund SPI and the prices the scks included in the MSCI Switzerland for the sub-fund MSCI Switzerland, in the prices scks included in the MSCI Switzerland hedged EUR for the sub-fund MSCI Switzerland hedged EUR, in the prices the scks included in the MSCI Switzerland hedged USD for the sub-fund MSCI Switzerland 100% hedged USD, in the prices the scks included in the MSCI Switzerland IMI Extended SRI 5% Issuer Capped for the sub-fund MSCI Switzerland IMI Socially Responsible and the price at which invesrs buy and sell units via SIX Swiss Exchange is reduced an appropriately low level as set out below. Pursuant the agreement concluded between SIX Swiss Exchange and the market makers, the latter shall undertake maintain a market for umbrella fund units within a certain framework and under normal conditions, and, within this context, enter bid and ask prices for umbrella fund units in the SIX Swiss Exchange trading system, which as a rule, and under normal conditions, Investment objective and investment policy the sub-funds the umbrella fund A. SBI Domestic Government 1-3 B. SBI Domestic Government 3-7 C. SBI Domestic Government 7-15 The sub-fund aims replicate the price and return performance the SBI Domestic Government gross fees. The sub-funds invest their assets primarily in bonds denominated in Swiss francs and other fixed-income or floatingrate debt paper and rights issued by the Swiss Confederation that are included in the SBI Domestic Government and bonds denominated in Swiss francs and other fixed-income or floating-rate debt paper and rights that are not included in the SBI Domestic Government, but for which notification their inclusion in the SBI Domestic Government has been given, as well as other investments as permitted under the fund contract. The benchmarks differ for each sub-fund in terms the bonds maturities and the other fixed and variable-rate debt paper and rights issued by the Swiss Confederation (1-3, 3-7 and 7-15 years). In principle, the aim is match the performance the Mid Price Total Return Indices (symbols: SBGM1T, SBGM3T and SBGM7T), although unlike the Mid Price Total Return Indices, the income (coupons the bonds held) may be paid out on the distribution dates. SBI is a registered trademark SIX Swiss Exchange AG. The ETF issuer (UBS Fund Management (Switzerland) AG) and the index provider (SIX Swiss Exchange AG) are independent one another. The SBI reflects the price performance bonds denominated in Swiss francs (CHF) that are listed on SIX Swiss Exchange. The SBI has strict acceptance criteria. Each bond must have a residual term at least one year and an issue volume at least CHF 100 million. In addition, only bonds with a fixed interest rate are considered, and every bond must have a rating BBB or higher. The SBI Domestic Government is a sub-index the SBI and includes domestic government bonds denominated in Swiss francs. It is subdivided in the following sub-indices structured according the maturities denoted in their name. 1 3 years 3 7 years 7 15 years Each bond included in the respective index is weighted by its market capitalisation. The composition the indices is regularly reviewed by SIX Swiss Exchange. The main risks the fund are that the return and value the units are subject changes arising from fluctuations in the returns and value the held in the sub-indices the SBI Domestic Government. Deviations can result from various facrs. A tracking error can also occur, e.g. due varying reinvestment dates when coupon payments are received, as can transaction costs and rounding differences. Such facrs include costs and expenses incurred. Furthermore, concentration limits and other legal or supervisory restrictions can play a role. The illiquidity certain can be a further reason why it may not be possible acquire all scks in the index according their weighting or acquire them at all. Under these circumstances, the fund management company will try maintain a representative selection scks from the index, with the aid quantitative methods. These methods include, for example, considering the addition individual a subfund based on their particular investment characteristics or their liquidity. As at 31 May 2017 The SBI Domestic Government 1-3 comprises one Swiss government bonds with a residual term 1-3 years. The SBI Domestic Government 3-7 comprises four Swiss government bonds with a residual term 3-7 years. The SBI Domestic Government 7-15 currently includes eight Swiss government bonds with a residual term 7-15 years. All information on the SBI Domestic Government Indexes is available on the SIX Swiss Exchange AG websites: All master data on the indices Index regulations Fact sheet Daily index composition Hisrical closing prices for all types calculation on a daily basis. The respective sub-fund physically replicates the index and aims hold all the scks included in the index (full index replication). In order replicate the index, the sub-fund holds a portfolio that includes all or nearly all scks the underlying index. The sub-fund can invest in all scks in its reference index in proportion their weighting in the index. Depending on each sub-fund s investment objective, the sub-fund is required carry out the corresponding corrections or reweighting its investments when changes are made the index. The fund management company monirs such index changes and carries out the necessary adjustments for the relevant sub-fund.

4 In addition, the assignment costs, i.e. the fixed payment the management fee on an annual basis from the sub-fund s assets, may lead relative outperformance in falling markets and underperformance by the sub-fund versus the index in rising markets, as 1/365 the annual management fee is assigned and deducted from the fund s assets on a rotating basis each day. In addition, from a statistical standpoint, the index components can never be replicated as whole numbers. Component shares are nearly always calculated 100% with decimal places. It is common practice in the industry that decimal places are rounded and that the remaining money is held in cash. Coupon payments can also lead the cash component rise as reinvestment in the index on the one hand or the reinvestment in the index component on the other cannot take place on the same day and at the same conditions. Transaction costs are incurred by the sub-fund for the purchase and sale when index adjustments are made. These are not taken in when the index is calculated. The fund management company may make use derivatives. Even under extraordinary market circumstances, however, the use derivatives may not alter the sub-fund s investment goals or lead a change in their investment prile. Commitment approach I (simplified procedure) shall be used for the measurement risk. Derivatives are used solely hedge investment positions. Only basic forms derivatives, i.e. call or put options, credit default swaps (CDS), swaps and forward transactions (futures and forwards), may be used as described in detail in the fund contract (cf. 12 and the relevant product appendix in the Special Section), provided their underlying are permissible investments in accordance with the investment policy. The derivatives can be traded on a sck exchange or another regulated market open the public or concluded as over-the-counter (OTC) transactions. Besides market risk, derivatives are also subject counterparty risk, i.e. the risk that the contracting party is unable meet its obligations and causes a financial loss as a result. With a CDS, the default risk a credit position is transferred from the risk seller the risk buyer, who receives compensation in the form a premium. The level this premium depends on a number facrs including the likelihood a loss occurring and the maximum loss; as a rule both facrs are difficult assess, which in turn increases the risk associated with CDSs. The sub-fund may act as a risk buyer or seller. Even under extraordinary market circumstances, the use these instruments may not result in the sub-fund s assets being leveraged, nor may it be tantamount a short sale. Detailed information on the investment policy and its restrictions is contained in the fund contract (cf. part II; 7 15 as well as the relevant product appendix in the Special Section). D. SBI Domestic Swiss Pfandbrief 1-5 E. SBI Domestic Swiss Pfandbrief 5-10 The sub-fund aims replicate the price and return performance the SBI Domestic Swiss Pfandbrief gross fees. The sub-funds invest their assets primarily in bonds denominated in Swiss francs and other fixed-income or floating-rate debt paper and rights issued by Pfandbriefbank schweizerischer Hypothekarinstitute AG and Pfandbriefzentrale der schweizerischen Kannalbanken AG that are included in the SBI Domestic Swiss Pfandbrief and in bonds denominated in Swiss francs and other fixed-income or floating-rate debt paper and rights that are not included in the SBI Domestic Swiss Pfandbrief, but for which notification their inclusion in the SBI Domestic Swiss Pfandbrief has been given, as well as other investments as permitted under the fund contract. The benchmarks differ for each sub-fund in terms the bonds maturities and the other fixed and variable-rate debt paper and rights issued by Pfandbriefbank schweizerischer Hypothekarinstitute AG and Pfandbriefzentrale der schweizerischen Kannalbanken AG (1-5 and 5-10 years). In principle, the aim is match the performance the Bid Price Total Return Indices (symbols: SM15T and SM51T), although unlike the Bid Price Total Return Indices, the income (coupons the bonds held) will be paid out on the distribution dates. SBI is a registered trademark SIX Swiss Exchange AG. The ETF issuer (UBS Fund Management (Switzerland) AG) and index provider (SIX Swiss Exchange AG) are independent one another. The SBI reflects the price performance bonds denominated in Swiss francs (CHF) that are listed on SIX Swiss Exchange. The SBI has strict acceptance criteria. Each bond must have a residual term at least one year and an issue volume at least CHF 100 million. In addition, only bonds with a fixed interest rate are considered, and every bond must have a rating BBB or higher. The SBI Domestic Swiss Pfandbrief is a sub-index the SBI and includes bonds denominated in Swiss francs issued by Pfandbriefbank schweizerischer Hypothekarinstitute AG and Pfandbrief zentrale der schweizerischen Kannalbanken AG. It is sub-divided in sub-indices structured by the following maturities: 1 5 years 5 10 years Each bond included in the respective index is weighted by its market capitalisation. The composition the indices is regularly reviewed by SIX Swiss Exchange. The main risks the respective sub-fund are that the return and value the units are subject changes arising from fluctuations in the returns and value the contained in the sub-indices the SBI Domestic Swiss Pfandbrief. Deviations can result from various facrs. A tracking error can also occur, e.g. due varying reinvestment dates when coupon payments are received, transaction costs and rounding differences. Such facrs include costs and expenses incurred. Furthermore, concentration limits and other legal or supervisory restrictions can play a role. The illiquidity certain can be a further reason why it may not be possible acquire all the scks in the index according their weighting or acquire them at all. Under these circumstances, the fund management company will try maintain a representative selection scks from the underlying index, with the aid quantitative methods. These methods include, for example, considering the addition individual a sub-fund based on their particular investment characteristics or their liquidity. As at 31 May 2017 SBI Domestic Swiss Pfandbrief 1-5 comprises 62 bonds issued by Pfandbriefbank schweizerischer Hypothekarinstitute AG and Pfandbriefzentrale der schweizerischen Kannalbanken AG, with a residual term 1-5 years. SBI Domestic Swiss Pfandbrief 5-10 comprises 68 bonds issued by Pfandbriefbank schweizerischer Hypothekarinstitute AG and Pfandbriefzentrale der schweizerischen Kannalbanken AG, with a residual term 5-10 years. All information on the SBI Domestic Swiss Pfandbrief indices is available on the SIX Swiss Exchange websites: All master data on the indices Index regulations Fact sheet Daily index composition Hisrical closing prices for all types calculations on a daily basis. The respective sub-fund physically replicates the index and aims hold all the scks included in the index (full index replication). In order replicate the index, the sub-fund holds a portfolio that includes all or nearly all scks the underlying index. The sub-fund can invest in all scks in its benchmark index in proportion their weighting in the index. Depending on each sub-fund s investment objective, the sub-fund is required carry out the corresponding corrections or reweighting its investments whenever changes are made the index. The fund management company monirs such index changes and carries out the necessary adjustments for the relevant sub-fund. In addition, cost accruals, i.e. the fixed deduction the management fee on an annual basis from the sub-fund s assets, may lead a relative outperformance in falling markets and underperformance by the sub-fund versus the index in rising markets, as 1/365th the annual management fee is routinely accrued and deducted from the fund s assets each day. In addition, the index components can never be replicated in mathematical terms as whole numbers. Component shares are nearly always calculated 100% with decimal places. It is common practice in the industry that decimal places are rounded and that the remaining money is held in cash. Coupon payments can also cause an increase in the cash component as reinvestment in the index on the one hand and the reinvestment in the index component on the other cannot take place on the same day and on the same terms and prices. Transaction costs are incurred by the sub-fund for the purchase and sale when index adjustments are made. These are not taken in when the index is calculated. The fund management company uses derivatives hedge investment positions. Even under extraordinary market circumstances, the use derivatives may not result in a deviation from the sub-fund s investment objectives or a change in their investment prile. Due the envisaged use derivatives, the sub-funds qualify as simple investment funds. The Commitment Approach I (simplified procedure) is used for the measurement risk. Only basic forms derivatives, i.e. call or put options, credit default swaps (CDS), swaps and forward transactions (futures and forwards), may be used as described in detail in the fund contract (cf. 12 and the relevant product appendix in the Special Section), provided their underlying are permissible investments in accordance with the investment policy. The derivatives can be traded on a sck exchange or another regulated market open the public or concluded as over-the-counter (OTC) transactions. Besides market risk, derivatives are also subject counterparty risk, i.e. the risk that the contracting party is unable meet its obligations and causes a financial loss as a result. With a CDS, the default risk a credit position is transferred from the risk seller the risk buyer, who receives compensation in the form a premium. The level this premium depends on a number facrs including the likelihood a loss occurring and the maximum size the loss; as a rule both facrs are difficult assess, which in turn increases the risk associated with CDSs. The sub-fund may act as both a risk buyer or seller. Even under extraordinary market circumstances, the use these instruments may not result in the sub-fund s assets being leveraged, nor may it be tantamount a short sale. Detailed information on the investment policy and its restrictions is contained in the fund contract (cf. part II; 7 15 as well as the relevant product appendix in the Special Section). F. SMI The sub-fund aims replicate the price and return performance the SMI gross fees. This fund invests its assets in scks companies which are included in the SMI and in scks which are not in the SMI but for which notification their inclusion in this index has been given, and in other investments permitted under the fund contract. SMI is a registered trademark SIX Swiss Exchange AG. The ETF issuer (UBS Fund Management (Switzerland) AG) and the index provider (SIX Swiss Exchange AG) are independent one another. The SMI was introduced on 30 June 1988 with a standardisation level pegged at 1,500 points. It contains the 20 largest and most liquid shares in the SPI. It comprises shares in blue chips with registered fices in Switzerland or in the Principality Liechtenstein. Foreign firms may be incorporated by way an exception if their shares have a primary listing on the SIX and their operational headquarters are located in Switzerland. The SMI is a free-float, capital-weighted index and s for around 85% the free-float capitalisation in the Swiss equity market. The SMI is available primarily as a non-dividend-adjusted index (price index) but is also published as a tal return index with the ticker SMIC. The calculation is carried out in real time. Each new trade in a sck contained in the SMI leads a recalculation the index. To ensure a high level liquidity, a special admission and exclusion procedure based mainly on the criteria market capitalisation and liquidity is used. The composition the index is reviewed once a year. The changes the index- 4

5 basket composition are made once a year after prior notice at least two months on the third Friday in September after close trading. The number equities and free-float shares are adjusted on two regular adjustment dates a year: the third Friday in March and the third Friday in September (after close trading). As per 18 September the weight scks which exceed 18% in the SMI will be capped 18% at each quarterly index review. Between the index review scks will be capped 18% as soon as two scks in the index exceed the weight 20%. In the event major market changes as a result capital events such as mergers or new listings, the Management Committee SIX may decide at the request the Index Commission that a security should be admitted the SMI outside the accepted period. For the same reasons, a security may also be excluded if the requirements for remaining in the SMI are no longer met. The main risks the fund are that the return and value the units are subject changes arising from fluctuations in the returns and value the shares contained in the SMI. As at 19 September 2017, the six largest holdings by market capitalisation were weighted as follows in the SMI: NESTLE N 21.00% NOVARTIS N 18.02% ROCHE GS 17.50% UBS GROUP N 6.39% RICHEMONT N 4.64% ZURICH INSURANCE N 4.43% The fund management company may make use derivatives. Even under extraordinary market circumstances, however, the use these instruments may not alter the fund s investment goals or lead a change in its investment prile. Due the planned use derivatives, Commitment Approach I (simplified process) shall be used in risk measurement. Derivatives are used solely hedge investment positions. Only basic forms derivatives, i.e. swaps and forward transactions (futures and forwards), may be used as described in detail in the fund contract (cf. 12), provided their underlying are permissible investments in accordance with the investment policy. The derivatives can be traded on a sck exchange or another regulated market open the public or concluded as over-the-counter (OTC) transactions. Besides market risk, derivatives are also subject counterparty risk, i.e. the risk that the contracting party is unable meet its obligations and causes a financial loss as a result. For OTC transactions, the fund can reduce counterparty risk by the counterparty being required provide collateral in the form liquid assets. The same possibility exists for the counterparty, in that it requests collateral from the investment fund. This collateral provided by the investment fund is exposed counterparty risk the extent that the collateral provided by the investment fund exceeds the scale the outstanding claims the counterparty. However, the collateral received shall not be taken in for the purposes the risk diversification provision 15 the fund contract. Even under extraordinary market circumstances, the use these instruments may not result in the fund s assets being leveraged, nor may it be tantamount a short sale. G. SLI The sub-fund aims replicate the price and return performance the SLI gross fees. This fund invests its assets in scks companies which are included in the SLI and in scks which are not in the SLI but for which notification their inclusion in this index has been given, and in other investments permitted under the fund contract. SLI is a registered trademark SIX Swiss Exchange AG. The ETF issuer (UBS Fund Management (Switzerland) AG) and the index provider (SIX Swiss Exchange AG) are independent one another. The SLI is a free-float, capital-weighted index The SLI is available primarily as a non-dividend-adjusted index (price index) but is also published as a tal return index with the ticker SLIC. The calculation is carried out in real time. Each new trade in a sck contained in the SLI leads a recalculation the index. The SLI contains the 30 largest, most liquid scks on the Swiss equity market (domestic scks) replicated by the SPI family. For the performance and price indices the SLI, the standardisation level was pegged at 1,000 points at 31 December The SLI was launched on 2 July The index weighting an individual sck is limited by means a 9/4.5 capping model. This means that the index weighting each the four largest capitalisation scks is capped at a maximum 9%. The index weighting all lower-ranked shares is if necessary capped at 4.5%. The cap is calculated using a capping facr, which as a rule remains constant for three months. To ensure a high level liquidity, a special admission and exclusion procedure based on the criteria free-float market capitalisation and liquidity (cumulated order book sales) is used. The index-basket adjustments arising from this procedure are, as a rule, made once per year. The changes the index-basket composition are made once a year after prior notice at least two months on the third Friday in September after close trading. The number equities and free-float figures are adjusted on two adjustment dates a year (on the third Friday in March and in September after close trading). The capping facrs are adjusted on a quarterly basis (the third Friday in March, June, September and December after close trading). The capping facrs are calculated five trading days before the respective adjustment date. For the March and September reviews, the calculation is based on the actual new number shares and free-float figures. The four shares be capped at 9% are determined during the September review and they remain valid for all adjustment dates during this period. In the event major market changes as a result capital events such as mergers or new listings, the Executive Committee SIX can decide at the request the Index Commission that a security should be admitted the SLI outside the accepted period as long as it clearly fulfils the criteria. For the same reasons, a security can also be excluded if the requirements for remaining in the SLI are no longer met. The main risks the fund are that the return and value the units are subject changes arising from fluctuations in the returns and value the shares held in the SLI. As at 31 May 2017, the six largest holdings by market capitalisation were weighted as follows in the SLI: NESTLE N 10.03% NOVARTIS N 9.54% ROCHE GS 9.41% UBS GROUP N 8.72% ABB LTD N 4.89% RICHEMONT N 4.85% The fund management company may make use derivatives. Even under extraordinary market circumstances, however, the use these instruments may not alter the fund s investment goals or lead a change in its investment prile. Derivatives are used solely hedge investment positions. Commitment approach I (simplified procedure) shall be used for the measurement risk. Only basic forms derivatives, i.e. swaps and forward transactions (futures and forwards), may be used as described in detail in the fund contract (cf. 12), provided their underlying are permissible investments in accordance with the investment policy. The derivatives can be traded on a sck exchange or another regulated market open the public or concluded as over-the-counter (OTC) transactions. Besides market risk, derivatives are also subject counterparty risk, i.e. the risk that the contracting party is unable meet its obligations and causes a financial loss as a result. For OTC transactions, the fund can reduce counterparty risk by the counterparty being required provide collateral in the form liquid assets. The same possibility exists for the counterparty, in that it requests collateral from the investment fund. This collateral provided by the investment fund is exposed counterparty risk the extent that the collateral provided by the investment fund exceeds the scale the outstanding claims the counterparty. However, the collateral received shall not be taken in for the purposes the risk diversification provision 15 the fund contract. Even under extraordinary market circumstances, the use these instruments may not result in the fund s assets being leveraged, nor may it be tantamount a short sale. H. SMIM The sub-fund aims replicate the price and return performance the SMIM gross fees. This sub-fund invests its assets in scks companies which are included in the SMIM and in scks which are not in the SMIM but for which notification their inclusion in this index has been given, and in other investments permitted under the fund contract. In principle, the aim is match the performance the SMIM Total Return Index (symbol: SMIMC), although, unlike the SMIM Total Return Index, the income (dividends on equities held) may be paid out on the distribution dates. SMIM is a registered trademark SIX Swiss Exchange AG. The issuer (UBS Fund Management (Switzerland) AG) and the index provider (SIX Swiss Exchange AG) are independent one another. The SMIM is a free-float, capital-weighted index. The SMIM is available primarily as a non-dividendadjusted index (price index) but is also published as a tal return index with the ticker SMIMC. The calculation is carried out in real time. Each new trade in a sck contained in the SMIM leads a recalculation the index. On 31 December 1999, the standardisation level for the SMIM was pegged at 1,000 points for the tal return and 100 points for the price index. These levels were introduced on 15 November To increase tradability and comparison with other indices, on 2 August 2005 the price index was reset the level on 31 December 1999 at 1,000 points. The SMIM contains the 30 largest mid-cap scks in the Swiss equity market that are not included in the blue chip SMI index. Like all other SIX equity indices, it is free-float-capital weighted, and only the tradable shares are taken in in its calculation. The components are selected according market capitalisation and turnover in the given shares, with the SPI EXTRA forming the basis for the SMIM. The most recently paid price is taken in when calculating the index. If no price has been paid on the day the index is calculated, the previous day s reference rate shall apply. Only prices generated via the SIX Swiss Exchange electronic order book shall be taken in. To ensure a high level liquidity, a special admission and exclusion procedure based mainly on the criteria market capitalisation and liquidity is used. The composition the index is reviewed once a year. After prior notice at least two months has been given, changes are made on the third Friday in September (after close trading). The number equities and free-float shares are adjusted on two regular adjustment dates a year: the third Friday in March and the third Friday in September (after close trading). In the event major market changes as a result capital events such as mergers or new listings, the Management Committee SIX may decide at the request the Index Commission that a security should be admitted the SMIM outside the accepted period. For the same reasons, a security may also be excluded if the requirements for remaining in the SMIM are no longer met. The main risks the fund are that the return and value the units are subject changes arising from fluctuations in the returns and value the shares held in the SMIM. Deviations can result from various facrs. Such facrs include costs and expenses incurred. Furthermore, concentration limits and other legal or supervisory restrictions can play a role. The illiquidity certain can be a further reason why it may not be possible acquire all scks in the index according their weighting or acquire them at all. Under these circumstances, the aim is maintain a representative selection scks from the index, with the aid quantitative methods. These methods include, for example, considering the addition individual a sub-fund based on their particular investment characteristics or their liquidity. As at 31 May 2017, the six largest holdings by market capitalisation were weighted as follows in the SMIM : 5

6 PARTNERS GROUP N 8.51% SONOVA N 5.72% KUEHNE+NAGEL INT N 5.72% SCHINDLER PS 5.52% LINDT N 5.03% BALOISE N 4.83% All information on the SMIM is available on the SIX Swiss Exchange AG websites: All master data on the index Index regulations Fact sheet Selection list Daily index composition Entries and exits since launch Hisrical closing prices for all types calculation on a daily basis. The sub-fund physically replicates the index and aims hold all the scks included in the index (full index replication). In order replicate the index, the sub-fund holds a portfolio that includes all or nearly all scks the underlying index. The sub-fund can invest in all scks in its reference index in proportion their weighting in the index. Depending on each sub-fund s investment objective, the sub-fund is required carry out the corresponding corrections or reweighting its investments when changes are made the index. The fund management company monirs such index changes and carries out the necessary adjustments for the relevant sub-fund. In addition, the assignment costs, i.e. the fixed payment the management fee on an annual basis from the sub-fund s assets, may lead relative outperformance in falling markets and underperformance by the sub-fund versus the index in rising markets, as 1/365 the annual management fee is assigned and deducted from the fund s assets on a rotating basis each day. In addition, from a statistical standpoint, the index components can never be replicated as whole numbers. Component shares are nearly always calculated 100% with decimal places. It is common practice in the industry that decimal places are rounded and that the remaining money is held in cash. Dividend payments can also lead the cash component rise as reinvestment in the index on the one hand or the reinvestment in the index component on the other cannot take place on the same day and at the same conditions. Transaction costs are incurred by the sub-fund for the purchase and sale when index adjustments are made. These are not taken in when the index is calculated. The fund management company may make use derivatives. Even under extraordinary market circumstances, however, the use derivatives may not alter the sub-fund s investment goals or lead a change in its investment prile. Derivatives are used solely hedge investment positions. Commitment approach I (simplified procedure) shall be used for the measurement risk. Only basic forms derivatives, i.e. call or put options, credit default swaps (CDS), swaps and forward transactions (futures and forwards), may be used as described in detail in the fund contract (cf. 12 and the relevant product appendix in the Special Section), provided their underlying are permissible investments in accordance with the investment policy. The derivatives can be traded on a sck exchange or another regulated market open the public or concluded as over-the-counter (OTC) transactions. Besides market risk, derivatives are also subject counterparty risk, i.e. the risk that the contracting party is unable meet its obligations and causes a financial loss as a result. With a CDS, the default risk a credit position is transferred from the risk seller the risk buyer, who receives compensation in the form a premium. The level this premium depends on a number facrs including the likelihood a loss occurring and the maximum loss; as a rule both facrs are difficult assess, which in turn increases the risk associated with CDSs. The sub-fund may act as a risk buyer or seller. Even under extraordinary market circumstances, the use these instruments may not result in the sub-fund s assets being leveraged, nor may it be tantamount a short sale. I. SPI Mid The sub-fund aims replicate the price and return performance the SPI Mid gross fees. This sub-fund invests its assets in scks companies which are included in the SPI Mid and in scks which are not in the SPI Mid but for which notification their inclusion in this index has been given, and in other investments permitted under the fund contract. In principle, the aim is match the performance the SPI Mid Total Return Index (symbol: SMCI), although unlike the SPI Mid Total Return Index, the income (dividends from shares held) may be paid out on the distribution dates. SPI Mid is a registered trademark SIX Swiss Exchange AG. The issuer (UBS Fund Management (Switzerland) AG) and the index provider (SIX Swiss Exchange AG) are independent one another. The SPI Mid is calculated and published as a tal return and price index every three minutes. The SPI Mid baseline value was pegged at 1,000 points for the tal return index and at 100 points for the price index as at 1 June It was introduced on 3 January The SPI Mid is a sub-index the SPI for selected medium-sized companies (measured by free-float market capitalisation) and comprises 80 mid caps. A selection list in which all SPI are ranked and which forms the basis for the rankings is available on the SIX Swiss Exchange website. Rankings are determined on the basis average free-float capitalisation (relative the capitalisation the entire SPI ). The most recently paid price is taken in when calculating the index. If no price has been paid on the day the Index is calculated, the bid price shall apply. Should no such price be available, the previous day s price shall be used. Only prices generated via the SIX Swiss Exchange electronic order book shall be taken in. To ensure a high level liquidity, a special admission and exclusion procedure based mainly on the criteria market capitalisation and liquidity is used. The composition the index is reviewed once a year. The changes the index-basket composition are made once a year after prior notice at least two months on the third Friday in September after close trading. The number equities and free-float shares are adjusted on two regular adjustment dates a year: the third Friday in March and the third Friday in September (after close trading). In the event major market changes as a result capital events such as mergers or new listings, the Management Committee SIX may decide at the request the Index Commission that a security should be admitted the SPI Mid outside the accepted period. For the same reasons, a security can also be excluded if the requirements for remaining in the SPI Mid are no longer met. The main risks the fund are that the return and value the units are subject changes arising from fluctuations in the returns and value the shares held in the SPI Mid. Deviations can result from various facrs. Such facrs include costs and expenses incurred. Furthermore, concentration limits and other legal or supervisory restrictions can play a role. The illiquidity certain can be a further reason why it may not be possible acquire all scks in the index according their weighting or acquire them at all. Under these circumstances, the aim is maintain a representative selection scks from the index, with the aid quantitative methods. These methods include, for example, considering the addition individual a sub-fund based on their particular investment characteristics or their liquidity. As at 31 May 2017, the six largest holdings by market capitalisation were weighted as follows in the SPI Mid: SWISS LIFE HOLDING AG N 4.90% SONOVA N 4.15% KUEHNE+NAGEL INT N 4.15% SCHINDLER PS 4.00% LINDT N 3.65% BALOISE N 3.51% All information on the SPI Mid is available on the SIX Swiss Exchange AG websites: resp. All master data on the index Index regulations Fact sheet Selection list Daily index composition Entries and exits since launch Hisrical closing prices for all types calculation on a daily basis. The sub-fund physically replicates the index and aims hold all the scks included in the index (full index replication). In order replicate the index, the sub-fund holds a portfolio that includes all or nearly all scks the underlying index. The sub-fund can invest in all scks in its reference index in proportion their weighting in the index. Depending on each sub-fund s investment objective, the sub-fund is required carry out the corresponding corrections or reweighting its investments when changes are made the index. The fund management company monirs such index changes and carries out the necessary adjustments for the relevant sub-fund. In addition, the assignment costs, i.e. the fixed payment the management fee on an annual basis from the sub-fund s assets, may lead relative outperformance in falling markets and underperformance by the sub-fund versus the index in rising markets, as 1/365 the annual management fee is assigned and deducted from the sub-fund s assets on a rotating basis each day. In addition, from a statistical standpoint, the index components can never be replicated as whole numbers. Component shares are nearly always calculated 100% with decimal places. It is common practice in the industry that decimal places are rounded and that the remaining money is held in cash. Dividend payments can also lead the cash component rise as reinvestment in the index on the one hand or the reinvestment in the index component on the other cannot take place on the same day and at the same conditions. Transaction costs are incurred by the sub-fund for the purchase and sale when index adjustments are made. These are not taken in when the index is calculated. The fund management company may make use derivatives. Even under extraordinary market circumstances, however, the use derivatives may not alter the sub-fund s investment goals or lead a change in its investment prile. Derivatives are used solely hedge investment positions. Commitment approach I (simplified procedure) shall be used for the measurement risk. Only basic forms derivatives, i.e. call or put options, credit default swaps (CDS), swaps and forward transactions (futures and forwards), may be used as described in detail in the fund contract (cf. 12 and the relevant product appendix in the Special Section), provided their underlying are permissible investments in accordance with the investment policy. The derivatives can be traded on a sck exchange or another regulated market open the public or concluded as over-the-counter (OTC) transactions. Besides market risk, derivatives are also subject counterparty risk, i.e. the risk that the contracting party is unable meet its obligations and causes a financial loss as a result. Even under extraordinary market circumstances, the use these instruments may not result in the sub-fund s assets being leveraged, nor may it be tantamount a short sale. J. SPI The sub-fund aims replicate the price and return performance the SPI gross fees. This sub-fund invests its assets in scks companies which are included in the SPI and in scks which are not in the SPI but for which notification their inclusion in this index has been given, and in other investments permitted under the fund contract. In principle, the aim is match the performance the SPI Total Return Index (symbol: SXGE), although unlike the SPI Total Return Index, the income (dividends from shares held) may be paid out on the distribution dates. 6