Annual Report 2016/2017

Transcription

1 Asset management UBS Funds Annual Report 2016/2017 Investment Fund under Swiss law with multiple sub-funds (umbrella fund) Audited annual report as of 30 September 2017 VVA Aktien Schweiz VVA Aktien Euro Länder VVA Aktien USA VVA Obligationen I VVA Obligationen II

2

3 Audited annual report as of 30 September 2017 Table of contents Page ISIN Organization 2 Notices to investors 3 Report of the independent auditor 8 VVA Aktien Schweiz 9 F / CH F (EUR hedged) / CH F (USD hedged) / CH VVA Aktien Euro Länder 16 F / CH F ( hedged) / CH F (USD hedged) / CH VVA Aktien USA 23 F / CH F ( hedged) / CH F (EUR hedged) / CH VVA Obligationen I 30 F / CH F (EUR hedged) / CH F (USD hedged) / CH VVA Obligationen II 37 F / CH F (EUR hedged) / CH F (USD hedged) / CH Appendix to Supplementary information 44 Sales restrictions Units of these Umbrella fund may not be offered, sold or distributed within the United States. Investors who are US persons must not be offered, sold or supplied with any units of this Umbrella fund. A US person is someone who: (i) is a United States person within the meaning of Section 7701(a)(30) of the US Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder; (ii) is a US person within the meaning of Regulation S under the US Securities Act of 1933 (17 CFR (k)); (iii) is not a Non-United States person within the meaning of Rule 4.7 of the US Commodity Futures Trading Commission Regulations (17 CFR 4.7(a)(1)(iv)); (iv) is in the United States within the meaning of Rule 202(a)(30)-1 under the US Investment Advisers Act of 1940, as amended; or (v) any trust, entity or other structure formed for the purpose of allowing US Persons to invest in this fund. Internet address 1

4 Organization Fund Management UBS Fund Management (Switzerland) AG Aeschenplatz 6, 4002 Basel Board of Directors André Müller-Wegner, Chairman (since 21 November 2016) Managing Director, UBS AG, Basel and Zurich Karin Oertli Küng, Chairwoman (until 21 November 2016) Group Managing Director, UBS AG, Basel and Zurich Reto Ketterer, Vice-chairman Managing Director, UBS AG, Basel and Zurich André Valente, Delegate Managing Director, UBS Fund Management (Switzerland) AG, Basel Michael Kehl (until 14 August 2017) Managing Director, UBS AG, Basel and Zurich Thomas Rose Managing Director, UBS AG, Basel and Zurich Martin Tschopp (until 25 January 2017) Managing Director, UBS AG, Basel and Zurich Christian Eibel (until 14 August 2017) Executive Director, UBS AG, Basel and Zurich Markus Lesmann (until 21 November 2016) Executive Director, UBS AG, Basel and Zurich Franz Gysin (since 14 August 2017) Independent Member Andreas Schlatter (since 14 August 2017) Independent Member Executive Board André Valente Managing Director Karsten Illy Deputy Managing Director and Head of Fund Operations Daniel Brüllmann Head Real Estate Funds André Debrunner Head of Fund Reporting & Information Management Eugène Del Cioppo Head of Business Development & Client Management Christel Müller Head of ManCo Oversight & Risk Management Thomas Reisser Head of Compliance Beat Schmidlin Head of Legal Services Custodian bank UBS Switzerland AG, Zurich Auditors Ernst & Young Ltd, Basel Delegation of investment decisions UBS Switzerland AG, Zurich Delegation of other duties UBS Fund Management (Switzerland) AG jointly operates and utilises a fund administration platform with UBS Fund Services (Luxembourg) S.A. UBS Fund Services (Luxembourg) S.A. is responsible for the processing of master data under this arrangement. The precise terms of the work carried out are set out in an agreement between the parties. In addition, various IT services connected with the maintenance and upkeep of the hardware and software components of the fund administration platform (e.g. technical installations, configurations, system tests, archiving of data) are also furnished by UBS Fund Services (Luxembourg) S.A. in Luxembourg. The specific scope of these services is governed by an agreement between the parties. All other fund management duties and the monitoring of other delegated duties are carried out in Switzerland. Paying agents UBS Switzerland AG, Zurich and its branches in Switzerland 2 Annual Report as of 30 September 2017

5 Notices to investors Amendments to the fund contract VVA Aktien Schweiz VVA Aktien Euro Länder VVA Aktien USA VVA Obligationen I VVA Obligationen II Summary of and reason for key amendments The amendments to the fund contract result from the revision of the provisions under the Ordinance of the Swiss Financial Market Supervisory Authority on Collective Investment Schemes (CISO-FINMA) and the subsequent amendment to the Model Fund Contract of the Swiss Funds & Asset Management Association (SFAMA). A number of other amendments have been made, as described below. 1. The fund management company ( 3) Prov. 2 was amended to clarify that the fund management company and its agents shall provide investors with full, accurate and comprehensible information on compensation payments for the distribution of collective investments in the form of commissions, brokerage fees and other soft commissions. The following paragraph was added to prov. 3 to bring it into line with the SFAMA Model Fund Contract: If foreign law requires an agreement on cooperation and the exchange of information with foreign supervisory authorities, the fund management company may delegate investment decisions to asset managers abroad only if such an agreement exists between FINMA and the relevant foreign supervisory authorities for the investment decisions concerned. 2. The custodian bank ( 4) Prov. 2 was expanded to include a statement that the custodian bank and its agents shall disclose all charges and fees incurred directly or indirectly by investors and the appropriation of such charges and fees. They shall notify investors of compensation for the distribution of collective investment schemes in the form of commissions, brokerage fees and other soft commissions in a full, truthful, and comprehensible manner. 3. The investors ( 5) The following was added to prov. 1: There are no restrictions in terms of investor eligibility. Restrictions are possible for individual classes in accordance with 6 prov. 4. The fund management company ensures together with the custodian bank that the investors meet the requirements in respect of investor eligibility. The following note regarding physical bearer instruments under prov. 8 was removed, as it had become obsolete: Unit certificates made out to the bearer and structured in the form of securities should be presented to the fund management company or its agents by no later than 30 June 2016 in order to be converted into book-entry units of the same class. Insofar as physical units are still in existence on 1 July 2016, forced redemption shall take place in accordance with 5 prov. 7 a). In the event that such units have not been returned within the defined period, an amount corresponding to the amount of the unit certificates in Swiss francs shall be immediately deposited for the investors concerned. 4. Units and unit classes ( 6) Prov. 6 was amended to clarify that the fund management company and the custodian bank must proceed with a forced conversion or redemption if investors fail to redeem or transfer their units within 30 calendar days of a request to do so, even though they do not meet the conditions for holding units. 5. Compliance with investment restrictions ( 7) The following paragraph was deleted in prov. 1: The individual sub-funds must comply with the investment restrictions six months following the expiry of the subscription period (launch). 6. Securities lending ( 10) The wording of this paragraph was amended based on the SFAMA Model Fund Contract to bring it into line with CISO-FINMA, which came into force on 1 January The paragraph now reads as follows: 10 Securities lending 1. The fund management company may lend all types of securities which are listed on an exchange or are traded on another regulated market open to the public for the sub-funds account. However, it may not lend securities acquired under a reverse repo transaction. 2. The fund management company may lend securities in its own name and for its own account to a borrower ( principal ), or appoint an intermediary to put the securities at the disposal of the borrower either Annual Report as of 30 September

6 indirectly on a fiduciary basis ( agent ) or directly ( finder ). 3. The fund management company shall enter into securities lending transactions only with first-class, supervised borrowers and agents specialising in transactions of this type, such as banks, brokers and insurance companies, as well as approved, recognised central counterparties and central securities depositories which can guarantee the proper execution of the securities lending transactions. 4. If the fund management company must observe a period of notice (which may not exceed seven bank business days) before it may again legally repossess the securities lent, it may not lend more than 50% of a particular security eligible for lending. However, if the borrower or the intermediary provides the fund management company with a contractual assurance that the latter may legally repossess the securities lent on the same or the next bank business day, the fund management company may lend its entire holdings of a particular type of security eligible for lending. 5. The fund management company shall conclude an agreement with the borrower or intermediary whereby the latter shall pledge or transfer collateral in order to secure the restitution of securities in favour of the fund management company in accordance with Art. 51 CISO-FINMA. The value of the collateral must be adequate and at all times equal to at least 105% of the market value of the securities lent. The collateral issuer must have a high credit rating and the collateral may not be issued by the counterparty or by any company belonging to or dependent on the corporate group of the counterparty. The collateral must be highly liquid, it must be traded at a transparent price on an exchange or other regulated market open to the public, and it must be subject to valuation at least on each trading day. In managing the collateral, the fund management company and its agents must satisfy the obligations and requirements listed under Art. 52 CISO-FINMA. In particular, they must adequately diversify collateral in terms of countries, markets and issuers, with the adequate diversification of issuers meaning that the collateral held from any one issuer may not exceed 20% of the net asset value. This does not affect exceptions for assets that are publicly guaranteed or issued in accordance with Art. 83 CISO. In addition, in the event of default by the counterparty, the fund management company and its agents must be able to obtain the power and authority of disposal over the furnished collateral at all times and without the counterparty s involvement or consent. The furnished collateral is to be held in safekeeping by the custodian bank. The furnished collateral may be held in safekeeping on behalf of the fund management company by a supervised third-party custodian, provided ownership of the collateral is not transferred and the third-party custodian is independent of the counterparty. 6. The borrower or intermediary is liable for ensuring the prompt, unconditional payment of any income accruing during the securities lending period, as well as for the assertion of other proprietary rights, and for the contractually agreed return of securities of the same type, quantity and quality. 7. The custodian bank ensures that the securities lending transactions are settled in a secure manner, in line with the agreements, and, in particular, monitors compliance with the requirements relating to collateral. In addition, it carries out the administrative duties assigned to it under the safe-custody regulations during the term of the lending transaction and asserts all rights associated with the lent securities, unless such duties have been ceded under the terms of the standardised framework agreement. 8. The prospectus has further details on the collateral strategy. 7. Securities repurchase agreements ( 11) The wording of this paragraph was amended based on the SFAMA Model Fund Contract to bring it into line with CISO-FINMA, which came into force on 1 January The paragraph was amended as follows: 11 Securities repurchase agreements 1. The fund management company may enter into securities repurchase agreements for the sub-funds account. Securities repurchase agreements may be concluded as either repo or reverse repos. A repo is a legal transaction in which one party (borrower or repo seller) temporarily transfers ownership of securities in return for payment to another party ( lender or repo buyer ); the lender undertakes to return securities of the same type, quantity and quality as well any income accrued throughout the course of the repurchase agreement to the borrower upon maturity. During the term of the repurchase agreement, the price risk associated with the securities is borne by the borrower. From the perspective of the counterparty (lender), a repo is a reverse repo. Reverse repos are an instrument used by the fund management company to invest cash, whereby it acquires securities for investment purposes and at the same time agrees to return securities of the same type, quantity and quality and to transfer all income received during the term of the reverse repurchase agreement. 2. The fund management company may conclude repurchase agreements in its own name and for its own account with a counterparty ( principal ), or may appoint an intermediary to conclude repurchase agreements with a counterparty either indirectly on a fiduciary basis ( agent ) or directly ( finder ). 3. The fund management company shall conclude repo transactions only with first-class, supervised counterparties and intermediaries specialising in transactions of this type, such as banks, brokers and insurance companies, as well as approved, recognised central counterparties and collective depositories which can ensure the proper execution of the repo transactions. 4. The custodian bank ensures that the repurchase transactions are settled in a secure and contractually agreed manner. It ensures on a daily basis that fluctuations in the value of the securities used in repo transactions are compensated for in cash or 4 Annual Report as of 30 September 2017

7 securities (marked to market). In addition, during the term of the repurchase transaction it carries out the administrative duties assigned to it under the safe-custody regulations, and asserts all rights associated with the securities used in the repo transaction, unless such duties have been ceded under the standardised framework agreement. 5. For repos, the fund management company may use all types of securities which are listed on an exchange or are traded on another regulated market open to the public. However, securities that were taken over as part of a reverse repo transaction may not be used for repos. 6. If the fund management company must observe a period of notice (which may not exceed seven bank business days) before it may again legally repossess the securities used in the repo transaction, it may not lend for repos more than 50% of its holdings of a particular security eligible for lending for each sub-fund. However, if the counterparty or intermediary provides a contractual guarantee to the fund management company that the latter may again have legal control of the securities under the repurchase agreement on the same or following bank working day, then the entire holding of a particular security eligible for repos transactions may be used. 7. Repurchase transactions in the form of repos are deemed to be borrowing pursuant to 13, unless the money received is used to acquire securities of the same type, quality, credit rating, and maturity in conjunction with the conclusion of a reverse repo. 8. With regard to reverse repos, the fund management company may only acquire collateral in accordance with Art. 51 CISO-FINMA. The collateral issuer must have a high credit rating and the collateral may not be issued by the counterparty or by any company belonging to or dependent on the corporate group of the counterparty. The collateral must be highly liquid, it must be traded at a transparent price on an exchange or other regulated market open to the public, and it must be subject to valuation at least on each trading day. In managing the collateral, the fund management company and its agents must satisfy the obligations and requirements listed under Art. 52 CISO-FINMA. In particular, they must adequately diversify collateral in terms of countries, markets and issuers, with the adequate diversification of issuers meaning that the collateral held from any one issuer may not exceed 20% of the net asset value. This does not affect exceptions for assets that are publicly guaranteed or issued in accordance with Art. 83 CISO. In addition, in the event of default by the counterparty, the fund management company and its agents must be able to obtain the power and authority of disposal over the furnished collateral at all times and without the counterparty s involvement or consent. The furnished collateral is to be held in safekeeping by the custodian bank. The furnished collateral may be held in safekeeping on behalf of the fund management company by a supervised third-party custodian, provided ownership of the collateral is not transferred and the third-party custodian is independent of the counterparty. 9. Claims in connection with reverse repos are deemed to be liquid assets pursuant to 9, and are not deemed to constitute the granting of a loan pursuant to The prospectus has further details on the collateral strategy. 8. Derivatives ( 12) The wording of this paragraph was amended based on the SFAMA Model Fund Contract to bring it into line with CISO-FINMA, which came into force on 1 January The paragraph now reads as follows: 12 Derivatives 1. The fund management company may make use of derivatives. It shall ensure that the economic effect of using derivatives does not result in a deviation from the investment objectives as stated in this fund contract and in the prospectus or alter the investment profile of the sub-funds, even in exceptional market circumstances. In addition, the securities underlying the derivatives must be permitted investments under this fund contract for the relevant sub-fund. In connection with collective investment schemes, derivatives may be used only for currency hedging purposes, with the exception of the hedging of market, interest rate and credit risks in the case of collective investment schemes for which the risks can be determined and measured unequivocally. 2. Commitment Approach II shall be used for the measurement of risk. A sub-fund s overall exposure to derivatives may not exceed 100% of its net assets, and overall exposure may not exceed a total of 200% of its net assets. Given the possibility of temporary borrowing of at most 10% of net assets in accordance with 13 prov. 2, the total exposure of a sub-fund may be up to 210% of its net assets. The overall exposure is calculated on the basis of Art. 35 CISO-FINMA. The provisions stipulated in this paragraph shall apply to the individual sub-funds. 3. The fund management company may, in particular, use basic forms of derivatives such as call or put options, the expiration value of which is linearly dependent on the positive or negative difference between the market value of the underlying and the strike price, and is zero if the difference is preceded by the opposite sign (+ or -), credit default swaps (CDS), swaps, the payments of which are dependent on the value of the underlying or on an absolute amount in both a linear and a path-independent manner, as well as future and forward transactions, the value of which is linearly dependent on the value of the underlying. It may also use combinations of basic forms of derivatives, as well as derivatives whose financial effect cannot be described by a basic form of derivative or a combination of basic forms of derivatives (exotic derivatives). 4. a) Counter positions in derivatives based on the same underlying as well as counter positions in derivatives and in investments in the same underlying may be netted ( netting ), irrespective of the maturity date of the derivatives, provided that the derivative transaction was concluded with the sole purpose of eliminating the risks associated with the derivatives Annual Report as of 30 September

8 or investments acquired, no material risks are disregarded in the process and the conversion amount of the derivatives is determined pursuant to Art. 35 CISO-FINMA. b) If the derivatives in hedging transactions do not relate to the same underlying as the asset that is to be hedged, in addition to the rules under (a), the condition that the derivative transactions may not be based on an investment strategy that serves to generate a profit must also be met ( hedging ). The derivative must also lead to a proven reduction in the risk, the risks associated with the derivative must be offset, the derivatives, underlying instruments or assets to be offset must relate to the same category of financial instruments, and the hedging policy must also be effective even under extraordinary market conditions. c) If mainly interest rate derivatives are used, the amount of the total investment to be offset by derivative positions can be calculated using internationally recognised duration netting rules, provided the rules lead to the correct determination of the investment fund s risk profile, the main risks are taken into consideration, the application of these rules does not lead to an unjustified leverage effect, no interest arbitration strategies are pursued and the leverage effect of the fund is increased neither by the application of these rules nor by investments in short-term positions. d) Derivatives that are used purely to hedge foreign currency risks and do not lead to a leverage effect or involve additional market risks can be offset without the requirements under b) in the calculation of the total derivatives exposure. e) Payment obligations arising from derivatives must be covered at all times with cash or cash equivalents, debt securities and rights, or equities, which are traded on a stock exchange or other regulated market open to the public in accordance with the legislation concerning collective investment schemes. f) If the fund management company enters into physical delivery obligations relating to an underlying instrument arising from derivatives, they must be covered by equivalent underlyings, or by other investments, if the investments and underlyings are highly liquid and can be bought or sold at any time if delivery is required. The fund management company must have unrestricted access to these underlying securities or assets at all times. 5. The fund management company may use both standardised and non-standardised derivatives. It may conclude transactions in derivative financial instruments on an exchange or other regulated market open to the public, or in OTC (over-the-counter) trading. 6. a) The fund management company may only engage in OTC transactions with financial intermediaries subject to supervision which specialise in these transactions and can ensure proper execution. If the counterparty is not the custodian bank, the counterparty or guarantor must have a high credit rating. b) It must be possible reliably and verifiably to value an OTC derivative on a daily basis and to sell, liquidate or close out the derivative at market value at any time. c) If no market price is available for an OTC-traded derivative, it must be possible to determine the price at any time based on the market value of the underlyings, using appropriate valuation models that are recognised in practice. Moreover, before the conclusion of such transactions, specific offers must be obtained from at least two potential counterparties and the most favourable offer must be accepted, under due consideration of the price, credit rating, risk distribution and the range of services offered by the counterparties. Deviations from this principle are permitted for reasons relating to risk diversification, or where other parts of the contract such as credit rating or the range of services offered by the counterparty render another offer more advantageous overall for the investors. In addition, the requirement to obtain offers from at least two potential counterparties may be waived in exceptional cases if this is in the best interests of the investors. The conclusion of the transaction and pricing must be clearly documented. d) In the context of OTC transactions, the fund management company and its agents may only accept collateral that satisfies the requirements under Art. 51 CISO-FINMA. The collateral issuer must have a high credit rating and the collateral may not be issued by the counterparty or by any company belonging to or dependent on the corporate group of the counterparty. The collateral must be highly liquid, it must be traded at a transparent price on an exchange or other regulated market open to the public, and it must be subject to valuation at least on each trading day. In managing the collateral, the fund management company and its agents must satisfy the obligations and requirements listed under Art. 52 CISO-FINMA. In particular, they must adequately diversify collateral in terms of countries, markets and issuers, with the adequate diversification of issuers meaning that the collateral held from any one issuer may not exceed 20% of the net asset value. This does not affect exceptions for assets that are publicly guaranteed or issued in accordance with Art. 83 CISO. In addition, in the event of default by the counterparty, the fund management company and its agents must be able to obtain the power and authority of disposal over the furnished collateral at all times and without the counterparty s involvement or consent. The furnished collateral is to be held in safekeeping by the custodian bank. The furnished collateral may be held in safekeeping on behalf of the fund management company by a supervised third-party custodian, provided ownership of the collateral is not transferred and the thirdparty custodian is independent of the counterparty. 7. In complying with the statutory and contractual investment restrictions (maximum and minimum limits), derivatives must be factored in in accordance with the legislation on collective investment schemes. 6 Annual Report as of 30 September 2017

9 8. The prospectus has further details on: the implications of derivatives within the investment strategy; the effect of using derivatives on the sub-fund s risk profile; the counterparty risks associated with derivatives; the higher volatility arising from the use of derivatives and the increased total investment (leverage); credit derivatives; the collateral strategy. 9. Risk diversification ( 15) Prov. 3 was expanded to state that in addition to derivatives, the fund management company may also invest in structured products up to a total of up to 25% of the assets of the sub-fund in securities and money market instruments of the same issuer. Prov. 5 was expanded to include the statement that if claims arising from OTC transactions are hedged using collateral in the form of liquid assets in accordance with Articles CISO-FINMA, such claims are not included in the calculation of counterparty risk. The condition in prov. 9 in respect of exceptions granted by supervisory authorities was deleted. 10. Remuneration and incidental costs charged to investors ( 18) The paragraph is to be expanded to include a statement to the effect that investors are not charged a redemption commission when redeeming units. 12. Appropriation of net income ( 22) Prov. 2 was amended as follows with respect to waiving and carrying forward distributions: The distribution can be waived and the entire net income can be carried forward to a new account if the net income of the current financial year and the income carried forward from earlier financial years in the collective investment scheme or unit class amounts to less than 1% of the net asset value of the collective investment scheme or unit class and the net income from the current financial year and the income carried forward from previous financial years in the collective investment scheme or unit class amounts to less than one unit of the accounting currency of the collective investment scheme or unit class. 13. Mergers ( 24) The requirements for a merger in connection with the consistency requirement for fund contracts with regard to the appropriation of net income and capital gains were amended to clarify that the latter is generated from the sale of assets and rights. They were also extended by the criterion investment techniques. A reservation in favour of the provisions of 19 prov. 2 was also included. The amendments to the fund contract were published on 15 and 21 December 2016 on the homepage of Swiss Fund Data AG and were approved by the Swiss Financial Market Supervisory Authority (FINMA) on 8 February The amendments took effect on 15 February Appropriation of net income ( 22) In line with the SFAMA Model Fund Contract, a new prov. 4 was introduced, which reads as follows: 4. Pursuant to the provisions in the prospectus, the fund management company and its agents as well as the custodian bank may pay retrocessions as compensation for distribution activities in respect of fund units and discounts in order to reduce the fees and costs attributable to investors and charged to the fund. Annual Report as of 30 September

10 Report of the independent auditor As statutory auditors, we have audited the enclosed annual financial statements of the investment fund VVA with the sub-funds Aktien Schweiz Aktien Euro Länder Aktien USA Obligationen I Obligationen II consisting of the statements of assets and the income statements, information on the appropriation of net profit and the disclosure of costs as well as further details in accordance with Art. 89, para. 1 b h of the Swiss Federal Act on Collective Investment Schemes for the fiscal year ending 30 September Responsibilities of the Board of Directors of the fund management company The fund management company s Board of Directors is responsible for preparing the annual financial statements in accordance with the Swiss Federal Act on Collective Investment Schemes, its related ordinances, the fund contract and the prospectus. These responsibilities entail the structuring, implementation and maintenance of an internal control system, pertaining to the preparation of annual financial statements free of material misstatements as a result of violations or errors. The Board of Directors is also responsible for selecting and applying correct accounting methods and making appropriate estimates. Responsibilities of the statutory auditors Our responsibility is to express an opinion on the annual financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss accounting standards. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the annual financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the valuations contained in the annual financial statements and other details. The task of selecting checks lies at the sole discretion of the auditors. This involves assessing the risks of material misstatements appearing in the annual financial statements as a result of violations or errors. When assessing these risks, the auditors consider the internal control system, insofar as it is important in the preparation of the annual financial statements, in order to identify the appropriate checks, but not to express an opinion on the existence and validity of the internal control system. An audit also includes assessing the accounting principles used and the plausibility of the estimates made, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Auditor s opinion In our opinion, the annual financial statements for the fiscal year ending 30 September 2017 comply with the Swiss Federal Act on Collective Investment Schemes, its related ordinances, the fund contract and the prospectus. Reporting based on other legal provisions We hereby confirm that we meet the legal requirements for approval as well as for independence in accordance with the Federal Law on the Recognition and Supervision of Auditors and that no circumstances exist which are inconsistent with our independent status. Basel, 29 January 2018 Ernst & Young Ltd Sandor Frei Licensed expert auditor (Principal auditor) Michael Gurdan Licensed expert auditor This report is an English translation of the original German version. In case of discrepancies the original version takes precedence. 8 Annual Report as of 30 September 2017

11 VVA Aktien Schweiz Category Other Funds for Traditional Investments Three-year comparison ISIN Net fund assets in Class F CH Net asset value per unit in Issue and redemption price per unit in Number of units outstanding Class F (EUR hedged) CH Net asset value per unit in EUR Issue and redemption price per unit in EUR Number of units outstanding Class F (USD hedged) CH Net asset value per unit in USD Issue and redemption price per unit in USD Number of units outstanding see Supplementary information Performance 1 Currency 2016/ / /2015 Class F 15.6% -1.6% -1.5% Class F (EUR hedged) EUR 15.8% -1.6% - Class F (USD hedged) USD 17.5% -1.6% - 1 The sub-fund (in accordance with the Fund Contract) does not have a benchmark, which means that the performance of the fund cannot be compared with a benchmark. Historical performance is no indicator of current or future performance. The performance data does not take account of any commissions and costs charged when subscribing and redeeming units. Report of the Portfolio Manager The strategy aims at replicating the risk and return of a well-diversified Swiss equities portfolio. As an indication for the development of Swiss equities, the Swiss Market Index (hereafter referred to as SMI) showed a positive performance during the reporting year from 1 October 2016 to 30 September The sub-fund does not have an official benchmark, but due to its structure it has certain proximity to the SMI Index. The performance of the sub-fund was positive in the reporting year. The allocations to the different single stocks and the industry and sector weightings are determined by the SMI. Neither preference nor caution were implemented regarding stock picking, industry or sector. VVA Aktien Schweiz Annual Report as of 30 September

12 Statement of assets Market values Bank deposits at sight Securities Shares and other equity instruments Bonds, convertible bonds, warrant bonds and other debt securities and rights Units of other collective investment schemes Derivative financial instruments Other assets Total fund assets Loans Other liabilities Net fund assets Statement of income Income Income from bank assets Negative interest Income from securities from shares and other equity instruments from bonds, convertible bonds, warrant bonds and other debt securities and rights from units of other collective investment schemes Purchase of current net income on issue of units Total income Expenses Interest payable Commission remuneration of the Fund Management in accordance with the fund contract Class F Commission remuneration of the Fund Management in accordance with the fund contract Class F (EUR hedged) Commission remuneration of the Fund Management in accordance with the fund contract Class F (USD hedged) Payment of current net income on redemption of units Total expenses Net income Realized capital gains and losses Realized result Unrealized capital gains and losses Total result Allocation of result Net income of the financial year Balance carried forward from previous year Interim distribution to investors Available for distribution Result earmarked for distribution to the investor Balance carried forward Changes in net fund assets Net fund assets at the beginning of the financial year Ord. annual distribution Interim distribution Balance of unit movements Total result Net fund assets at the end of the reporting period Realized capital gains and losses may include income and expenses which were received from Swinging Single Pricing. 2 Contains the interim distribution in 2016: Interim distribution Class F (coupon No. 13 / gross 0.50 / ex-date / value date ) Interim distribution Class F (EUR hedged) (coupon No. 2 / gross EUR 0.34 / ex-date / value date ) Interim distribution Class F (USD hedged) (coupon No. 2 / gross USD 0.34 /ex-date / value date ) 2 10 VVA Aktien Schweiz Annual Report as of 30 September 2017

13 Development of the outstanding units Class F Number Number Situation at the beginning of the financial year Units issued Units redeemed Situation at the end of the period Difference between units issued and units redeemed Class F (EUR hedged) Number Number Situation at the beginning of the financial year Units issued Units redeemed Situation at the end of the period Difference between units issued and units redeemed Class F (USD hedged) Number Number Situation at the beginning of the financial year Units issued Units redeemed Situation at the end of the period Difference between units issued and units redeemed Distribution for 2016/2017 Class F (Against coupon no ex-date ) Accrued income per unit Gross Less federal withholding tax Net per unit (payable from ) Class F (EUR hedged) (Against coupon no. 4 - ex-date ) Accrued income per unit EUR Gross EUR Less federal withholding tax EUR Net per unit (payable from ) EUR Class F (USD hedged) (Against coupon no. 4 - ex-date ) Accrued income per unit USD Gross USD Less federal withholding tax USD Net per unit (payable from ) USD VVA Aktien Schweiz Annual Report as of 30 September

14 Inventory of Fund assets Security Purchases 1 Sales Market value 3 in % 3 Thereof Quantity/ Quantity/ in in lending Nominal Nominal Quantity/Nominal Securities traded on an exchange Bearer shares Switzerland SIKA AG 0.60 (BR)* SWATCH GROUP 2.25(BR)* SWISS RE AG 0.10* Total Switzerland Total Bearer shares Other shares Switzerland ROCHE HLDGS AG GENUSSCHEINE NPV* Total Switzerland Total Other shares Registered shares Switzerland ABB LTD 0.12 (REGD)* ACTELION 0.50(REGD)* ADECCO GROUP AG 0.1 (REGD)* CREDIT SUISSE GRP 0.04(REGD)* GEBERIT 0.10(REGD)* GIVAUDAN AG 10* JULIUS BAER GRUPPE 0.02 (REGD)* LAFARGEHOLCIM LTD 2 (REGD)* LONZA GROUP AG 1(REGD)* NESTLE SA 0.10(REGD)* NOVARTIS AG 0.50(REGD)* RICHEMONT(CIE FIN) 1.00 (REG) SER A * SGS LTD 1(REGD)* SWISS LIFE HLDG 5.1(REGD)* SWISSCOM AG 1(REGD)* SYNGENTA 0.1(REGD)* UBS GROUP 0.10 (REGD)* ZURICH INSURANCE GRP 0.10* Total Switzerland Total Registered shares Rights Switzerland CREDIT SUISSE GRP RIGHTS * Total Switzerland 0.00 Total Rights 0.00 Notes, fixed rate PHILIP MORRIS INTERNATIONAL INC % * Total 0.00 Total Notes, fixed rate 0.00 Medium term notes, fixed rate DEUTSCHE BAHN FINANCE BV % * Total 0.00 Total Medium term notes, fixed rate 0.00 Bonds, fixed rate BASEL-STADT, CANTON OF % * BASELLANDSCHAFTLICHE KANTONALBANK % * PFANDBRIEFBK SCHWEIZERISCHER HYPO INST % * Total Total Bonds, fixed rate Bonds, zero coupon COCA-COLA CO/THE-REG-S % * Total Total Bonds, zero coupon Total Securities traded on an exchange VVA Aktien Schweiz Annual Report as of 30 September 2017

15 Security Purchases 1 Sales Market value 3 in % 3 Thereof Quantity/ Quantity/ in in lending Nominal Nominal Quantity/Nominal Securities traded neither on an exchange nor on a regulated market Investment certificates, open end Global UBS (CH) MONEY MARKET FUND - I-M1** Total Global Total Investment certificates, open end Total Securities traded neither on an exchange nor on a regulated market Total securities and similar instruments (thereof in lending 0.00) Bank deposits at sight Derivative financial instruments Other assets Total fund assets Short-term bank liabilities Other liabilities Net fund assets Valuation categories Market value as of in % Market value in % of the total Previous year fund assets 3 Investments valued at prices paid on the main market Investments valuation based on market-observed parameters Investments valued with suitable valuation models taking account of the current market circumstances Total Purchases include the following transactions: allotment from subscription / allotment from option rights / option rights / allotment of subscription rights from underlying stocks / bonus securities / change of corporate names / conversions / purchases / share exchange between companies / stock splits / stock dividends / optional dividends / transfers / transfer due to redenomination in euro / subscriptions in kind 2 Sales include the following transactions: cancellation as a result of expiry / draws by lot / exercise of rights / options / repayments / reverse-splits / sales / share exchange between companies / transfers / transfer due to redenomination in euro / redemptions in kind 3 Divergences in the totals may be attributed to rounding differences * valued at prices paid on the main market (art. 88 para. 1 CISA) ** valuation based on market-observed parameters Derivative financial instruments CISO-FINMA Art. 23 Exposure-increasing derivatives open at the end of the period under review Instrument Number Currency Coverage Variation margin in % of of contracts in in total assets Futures on indices/commodities/currencies SWISS MARKET INDEX FUTURE * Derivatives on currencies open at the end of the period under review Sale Sale Purchase Purchase Maturity Replacement in % of Currency Amount Currency Amount value in total assets Forward exchange transactions** EUR USD USD EUR USD EUR USD EUR There may be differences in the way the figures mentioned above are rounded off. * valued at prices paid on the main market (art. 88 para. 1 CISA) ** valuation based on market-observed parameters Transactions in exposure-increasing derivatives during the period under review Instrument Currency Purchase/ Sale/ Contracts Contracts Futures on indices/commodities/currencies SWISS MARKET INDEX FUTURE SWISS MARKET INDEX FUTURE SWISS MARKET INDEX FUTURE SWISS MARKET INDEX FUTURE SWISS MARKET INDEX FUTURE VVA Aktien Schweiz Annual Report as of 30 September

16 Transactions in derivatives on currencies during the period under review Sale Sale Purchase Purchase Maturity Currency Amount Currency Amount Forward exchange transactions EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD USD EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD USD EUR USD EUR USD EUR USD USD EUR USD EUR EUR USD USD EUR USD EUR EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD USD EUR EUR USD EUR USD USD EUR USD EUR USD USD EUR USD EUR USD EUR VVA Aktien Schweiz Annual Report as of 30 September 2017