UBS (CH) Property Fund Swiss Mixed «Sima»

Transcription

1 UBS (CH) Property Fund Swiss Mixed «Sima» Investment fund under Swiss law (Category «Real Estate Funds») Prospectus with integrated fund contract October 2017 Part I Prospectus This prospectus, together with the fund contract which forms an integral part thereof, the simplified prospectus and the latest annual or semi-annual report (if published after the latest annual report), serves as the basis for all subscriptions of units of the real estate fund. Only the information contained in the prospectus, the simplified prospectus or the fund contract shall be deemed to be valid. 1 Information on the real estate fund 1.1 General information on the real estate fund UBS (CH) Property Fund Swiss Mixed «Sima» is an investment fund governed by Swiss law established under the Real estate funds category of the Swiss Collective Investment Schemes Act (CISA) of 23 June The fund contract was drawn up in 1950 and the fund was approved for public distribution in and from Switzerland by the Swiss Financial Market Supervisory Authority (FINMA) in The real estate fund is based upon a collective investment contract (fund contract) under which the fund management company is obliged to provide investors with a stake in the real estate fund in proportion to the fund units acquired by them and to manage this fund at its discretion and in its own name in accordance with the provisions of the law and the fund contract. The custodian bank is party to the contract in accordance with the tasks conferred upon it by law and the fund contract. In accordance with the fund contract, the fund management company is entitled to establish, liquidate or merge unit classes at any time, subject to the agreement of the custodian bank and the approval of the supervisory authority. The real estate fund is not subdivided into unit classes. 1.2 Investment objective and investment policy of the real estate fund Investment objective The investment objective of the real estate fund is principally to maintain its long-term value and to make appropriate income distributions Investment policy UBS (CH) Property Fund Swiss Mixed Sima invests primarily in real estate assets throughout Switzerland and in other investments as permitted under the fund contract. Detailed information on the investment policy and its restrictions is contained in the fund contract (cf. Part II, 7-15) Material risks The material risks of the real estate fund are its sensitivity to economic developments, changes in the Swiss real estate market, limited liquidity, interest-rate developments, environmental risks, competition and pricing Use of derivatives The fund management company does not use derivatives. 1.3 Profile of the typical investor The real estate fund is appropriate for investors with a long-term horizon who are focused on income and have moderate risk tolerance. The primary objective is to maintain the value of the units and to provide partial protection against inflation. 1.4 Tax regulations relevant for the real estate fund The real estate fund has no legal personality in Switzerland. It is subject to neither income tax nor capital gains tax. Real estate funds with direct property holdings are an exception to this rule. The income from direct property holdings is liable to direct federal tax with respect to the fund itself; consequently unitholders are tax-exempt in this regard. Capital gains from direct property holdings are also only taxable with respect to the real estate fund. The fund management company may apply for a refund of all Swiss federal withholding tax levied on the real estate fund s domestic income on behalf of the real estate fund. Any income and capital gains realised abroad may be subject to the relevant withholding tax deductions imposed by the country of investment. These taxes are, as far as possible, reclaimed by the fund management company on behalf of investors resident in Switzerland under the terms of double taxation treaties or other such agreements. Income distributions made by the real estate fund (to investors domiciled in Switzerland and abroad) are subject to Swiss federal withholding tax (tax at source) at a rate of 35%. Capital gains made with separate coupons are not subject to withholding tax. Investors domiciled in Switzerland may reclaim Swiss withholding tax by declaring it in their tax returns, or by submitting a separate application for a refund. Investors domiciled outside Switzerland may reclaim Swiss withholding tax under the terms of a double taxation treaty between Switzerland and the respective investor s country of residence, provided such a treaty exists. Withholding tax cannot be reclaimed if no such treaty exists. Taxation and other tax implications for an investor who holds, buys or sells fund units are defined by the tax laws and regulations relevant for the investor, namely those of the investor s country of domicile. This can result in different tax consequences for the investor depending on the country involved. Potential investors are therefore advised to ask their tax advisors or fiduciaries for advice on the relevant tax consequences. Under no circumstances can the fund management company and custodian bank assume any responsibility for any particular tax consequences for the investor in connection with the buying, selling or holding of fund units. The real estate fund has the following tax status: International automatic exchange of information in tax matters (automatic exchange of information) For the purposes of the automatic exchange of information in accordance with the Common Standard on Reporting and Due Diligence for Financial Account Information (CRS) of the Organisation for Economic Co-Operation And Development (OECD), the Fund qualifies as a non-reporting financial institution. FATCA The real estate fund is registered with the tax authorities in the United States as a Registered Deemed-Compliant Financial Institution under a Model 2 IGA as provided for by Sections of the U.S. Internal Revenue Code (Foreign Account Tax Compliance Act, including related ordinances, FATCA). 2 Information on the fund management company 2.1 General information on the fund management company UBS Fund Management (Switzerland) AG, Basel, is the fund management company. It has been active in the fund business since its formation as a limited company in The subscribed share capital of the fund management company amounts to CHF 1 million. The share capital is divided into registered shares and is fully paid up. UBS Fund Management (Switzerland) AG is a wholly owned subsidiary of UBS Group AG. Board of Directors André Müller-Wegner, Chairman of the Board 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 Franz Gysin Independent Member Thomas Rose Managing Director, UBS AG, Basel und Zürich Andreas Schlatter Independent Member Executive Board André Valente, Managing Director and Delegate of the Board of Directors Daniel Brüllmann, Head of Real Estate Funds 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 As at 31 July 2017, the fund management company managed a total of 310 securities funds and 6 real estate funds in Switzerland with total assets of CHF billion. The fund management company also provides the following services: Administration services for collective investments. Representation of foreign collective investments. 2.2 Delegation of specific tasks Property management and technical maintenance have been delegated to Wincasa AG, Winterthur; Livit AG, Zurich; Apleona GVA AG, Wallisellen; Privera AG, Berne and to de Rham & Cie S.A., Lausanne. All of the property management companies have many years of experience in the property sector. The exact nature of their duties is set out in the management and administration agreements concluded by UBS Fund Management (Switzerland) AG with these property managers. 2.3 Exercising membership and creditors rights The fund management company exercises the membership and creditors rights associated with the investments of the managed funds independently and exclusively in the interests of investors. Upon request, the fund management company shall provide investors with details concerning the exercise of membership and creditors rights. Regarding existing routine business, it is up to the fund management company whether to exercise the membership and creditors rights itself or whether to delegate them to the custodian bank or a third party. 1

2 For all other matters that could affect the long-term interests of investors, for example when exercising membership and creditors rights accruing to the fund management company as shareholder or creditor of the custodian bank or any other related legal entity, the fund management company shall exercise the voting right itself or give clear instructions. It may use information received from the custodian bank, the portfolio manager, the company, voting rights advisors or other third parties or information that has appeared in the press. It is up to the fund management company to decide whether to waive its entitlement to exercise membership and creditors rights. 3 Information on the custodian bank UBS Switzerland AG is the custodian bank. The bank was founded in 2014 as a stock corporation with its registered office in Zurich and as of 14 June 2015 assumed the Private and Corporate Banking business as well as the Wealth Management business booked in Switzerland of UBS AG. As a universal bank, UBS Switzerland AG offers a wide range of banking services. UBS Switzerland AG is a subsidiary of UBS AG. With consolidated total assets of CHF 935,016 million and published capital and reserves of CHF 53,621 million as at 31 December 2016, UBS AG is financially one of the strongest banks in the world. It employs 60,785 staff worldwide and has an extensive network of offices. The custodian bank may delegate the safekeeping of the fund s assets to thirdparty or collective depositaries in Switzerland, provided this is in the interest of proper safekeeping. The custodian bank may transfer financial instruments only to third-party or collective depositaries subject to regulatory supervision. This requirement does not apply to compulsory custody in a place where it is not possible to transfer the financial instruments to a regulated third-party or collective depositary, notably due to binding legal constraints or the specific characteristics of an investment product. Third-party and collective depositaries mean that the fund management company no longer has sole ownership of deposited securities, but only coownership. If the third-party and collective depositary is not subject to regulatory supervision, they are unlikely to meet the requirements for Swiss banks. The custodian bank shall be liable for any losses caused by the appointed agent unless the bank is able to prove that due care was exercised in the selection, instruction and supervision of the agent. The custodian bank has been registered with the tax authorities in the United States as a Reporting Financial Institution under a model 2 IGA as provided for by Sections of the U.S. Internal Revenue Code (Foreign Account Tax Compliance Act (FATCA)), including related ordinances. 4 Information on third parties 4.1 Paying agents in Switzerland The paying agents are UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zurich, and its offices in Switzerland. 4.2 External auditors The fund assets will be audited by Ernst & Young Ltd., Basel. 4.3 Expert assessors The fund management company has appointed the following independent expert assessors with the approval of the supervisory authority: Marcel Scherrer, certified architect ETH Andreas Bleisch, Dr. rer. pol., certified engineer ETH Pascal Marazzi-de Lima, certified architect ETH as employees of Wüest Partner AG, Bleicherweg 5, 8001 Zurich. Wüest Partner AG has many years of experience in valuing properties and a relevant knowledge of the market. The precise duties involved are set out in an agreement between UBS Fund Management (Switzerland) AG and the expert assessors / Wüest Partner AG. 5 Further information 5.1 General information Securities no ISIN CH Listing on SIX Swiss Exchange Financial year 1 January to 31 December Accounting currency Swiss franc (CHF) Units Units do not take the form of actual certificates but exist purely as book entries. 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. In so far as physical units are still in existence on 1 July 2016, forced redemption shall take place in accordance with 5 prov. 6 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. Appropriation of income In principle, net income will be distributed to investors within four months of the close of the financial year at no charge. As a rule, capital gains are not distributed but are retained in the fund for reinvestment. 5.2 Terms for the issue and redemption of fund units and trading Units may be issued at any time. They may only be issued in tranches. The fund management company shall determine the planned number of new units to be issued, the subscription ratio for existing investors, the issuing terms for the subscription right and all other terms in a separate issuing prospectus. Investors may redeem their units at the end of a financial year, subject to 12 months notice. Under certain conditions the fund management company may repay the proceeds from units redeemed during a financial year ahead of schedule (cf. 17 prov. 2 of the fund contract). If investors wish to have early redemption, they must provide written notice to this effect. Ordinary and early unit redemptions are made within three months of the close of the financial year (cf. 5 prov. 5 of the fund contract). The net asset value of the real estate fund is calculated at the market value at the end of the financial year and each time units are issued. The net asset value of a unit shall be based on the market value of the fund s assets, less any liabilities of the real estate fund and any tax likely to be due should the real estate fund be liquidated, divided by the number of units in circulation. It will be rounded to CHF In accordance with Art. 64 CISA, Art. 88 para. 2 CISA, Art. 92 and 93 of the Collective Investment Schemes Ordinance (CISO) and the SFAMA guidelines governing real estate funds (link: the fund s real estate will be regularly assessed by independent experts accredited by the supervisory authorities, using dynamic earnings value methods. Valuation takes place at the price likely to be attained with a sale conducted with proper care. If properties belonging to the fund assets are acquired or sold, the market value of the properties in the fund assets must be checked by the expert assessors. The market value of individual properties represents the likely price to be attained in normal transactions, assuming that the sale/purchase is conducted with proper care. In each individual case, and particularly when fund properties are bought and sold, the opportunities available will be taken in the best way possible in the interest of the fund. This may lead to differences in valuations. The issue price corresponds to the net asset value calculated with reference to the issue, plus the issuing commission. The issuing commission is defined under prov The redemption price corresponds to the net asset value calculated with reference to the redemption, minus the redemption commission. The redemption commission is defined under prov Incidental costs relating to the purchase and sale of investments (real estate sales taxes, notary costs, fees, brokerage commissions in line with the market, duties, etc.) incurred by the real estate fund in connection with the investment of the amount paid in or with the sale of a portion of the assets corresponding to the units redeemed will be charged to the fund s assets. The incidental costs are defined under prov. 5.3 below. The issue and redemption prices are rounded to CHF Units do not take the form of actual certificates but exist purely as book entries. Unit certificates that have already been issued shall remain valid. They should be returned in the event of an application for redemption. 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. In so far as physical units are still in existence on 1 July 2016, forced redemption shall take place in accordance with 5 prov. 6 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. The fund management company ensures the regular trading of the real estate fund units on the SIX Swiss Exchange. The fund management company shall publish the net asset value of the fund units in the fund s official publication at the same time as notification is provided to the bank or securities dealer responsible for ensuring the regular stock-exchange trading of the units. 5.3 Remuneration and incidental costs Remuneration and incidental costs charged to the investor (excerpt from 18 of the fund contract) Issuing commission accruing to the fund management company, custodian bank and/or distributors in Switzerland and abroad maximum of 5% Redemption commission accruing to the fund management company, custodian bank and/or distributors in Switzerland and abroad maximum of 2% Incidental costs in favour of the real estate fund s assets that accrue to the fund from the investment of an amount paid in or the sale of investments (excerpt from 17 of the fund contract) Addition to net asset value: maximum 5% Deduction from net asset value: maximum 5% Remuneration and incidental costs charged to the fund s assets (excerpt from 19 of the fund contract) Flat fee charged by fund management company maximum of 1% This is used for the management of the real estate fund and the real estate companies, asset management of the real estate fund and to compensate the custodian bank for the provision of its services. Further, the fund management company s flat fee is used to pay for discounts pursuant to prov of the prospectus. 19 of the fund contract provides details on the remuneration and incidental costs that are not included in the flat fee. The actual flat fee rate is stated in the relevant annual and semi-annual reports Payment of retrocessions and discounts The fund management company and its agents do not pay retrocessions to third parties as compensation for the distribution activities in respect of real estate fund units in or from Switzerland. 2

3 The fund management company and its agents may, upon request, pay discounts directly to investors. Discounts may serve to reduce fees or costs charged to the respective investors. Discounts are permitted provided they are paid from the fund management company s fees and therefore do not generate any additional costs for the fund assets; granted on the basis of objective criteria granted at the same time and on equal terms to all investors who meet the objective criteria and request discounts. The objective criteria for the granting of discounts by the fund management company are the following: a) The minimum investment in real estate funds named UBS (CH) Property Fund ; b) The existence of a written agreement with UBS, such as discount agreement. The criteria set out in a) and b) must be cumulatively fulfilled. Collective investments or fund management companies that invest in these real estate funds are not entitled to request discounts, with the exception of collective investments of the promoter UBS. The fund management company shall disclose the amount of each discount free of charge upon request of the investor Total expense ratio The coefficient of the entire costs charged on an ongoing basis to the fund assets (total expense ratio or TER) stood at: Business year (TER REF ) GAV (TER REF ) NAV (TER REF ) MV (Market Value) (v) any trust, entity or other structure formed for the purpose of allowing US Persons to invest in this fund. The fund management company and the custodian bank may refuse or restrict the sale, placement or transfer of units to individuals or legal entities in certain countries or areas. 5.7 Detailed regulations Further information on the real estate fund, such as the valuation of the fund s assets, a list of all remuneration and incidental costs charged to investors and the real estate fund and the appropriation of net income, is set out in detail in the fund contract. The fund management company: UBS Fund Management (Switzerland) AG, Basel The custodian bank: UBS Switzerland AG, Zurich Part II Fund Contract I. Name of the fund; name and domicile of the fund management company and the custodian bank % 1.21% n.a % 1.17% n.a % n.a. 0.93% Fee-sharing agreements and soft commissions The fund management company has not concluded any commission-sharing agreements. The fund management has not concluded any soft commission agreements Investments in associated collective investments No issuing and redemption commission in accordance with 19 section 6 of the fund contract are charged in respect of investments in collective investments that are managed directly or indirectly by the fund management company itself or by a company with which it is associated through common management or control or by a direct or indirect shareholding. 5.4 Publications of the real estate fund Further information on the real estate fund may be found in the latest annual or semi-annual report. Up-to-date information is also available on the Internet at The prospectus with integrated fund contract, the simplified prospectus as well as the annual and semi-annual reports may be obtained free of charge from the fund management company, custodian bank and all distributors. Notification of changes to the fund contract, a change of fund management company or custodian bank, as well as the liquidation of the real estate fund shall be published by the fund management company with Swiss Fund Data AG ( Net asset values are published for each day units are issued or redeemed. They can be viewed at any time at Swiss Fund Data AG ( and are updated annually after presentation of the audited closing statement for the year. 5.5 Insurance of properties As a general rule, the properties owned by this real estate fund are insured in the event of fire and water damage and damages that are attributable to causes under civil liability law. Shortfalls in rental income that occur as a result of fire and water damage are included in this insurance cover. However, earthquake damage and its consequences are not included in this insurance cover. 5.6 Sales restrictions When units of this real estate fund are issued or redeemed abroad, the provisions valid in the country in question shall apply. The fund is authorised for distribution in the following countries: The fund is authorised for public distribution in Liechtenstein. The paying agent in Liechtenstein is Liechtensteinische Landesbank Aktiengesellschaft, Städtle 44, FL-9490 Vaduz. Notification of changes to the fund contract or prospectus, fund management company or custodian bank, as well as of the liquidation of the real estate fund shall be published by Swiss Fund Data AG ( Net asset values are published for each day units are issued or redeemed. They can be viewed at any time at Swiss Fund Data AG ( and are updated annually after presentation of the audited closing statement for the year. The prospectus with integrated fund contract, the simplified prospectus and the annual and semi-annual reports may be obtained, in German and free of charge, from the paying agent in Liechtenstein. With reference to the units distributed in Liechtenstein, the place of performance and jurisdiction is Vaduz. Participating Shares will not be offered from within the United States or to Investors who are US Persons. A US Person is any person 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 A contractually based investment fund of the type Real estate funds (the real estate fund ) has been established under the name of UBS (CH) Property Fund Swiss Mixed Sima in accordance with Article 25 ff. in association with Article 58 ff. of the Swiss Collective Investment Schemes Act (CISA) of 23 June UBS Fund Management (Switzerland) AG, Basel, is the fund management company. 3. UBS Switzerland AG, Zurich, is the custodian bank. II. Rights and obligations of the contracting parties A Fund contract 2 The legal relationship between the investor on the one hand and the fund management company and the custodian bank on the other is governed by this fund contract and the applicable provisions of Swiss legislation concerning collective investment schemes. B Fund management company 3 1. The fund management company manages the real estate fund at its own discretion and in its own name, but for the account of the investors. In particular, it shall make all decisions relating to the issuing of units, the investments and their valuation. It calculates the net asset value, sets the issue and redemption prices of units and also determines the distribution of income. The fund management company shall exercise all rights associated with the real estate fund. 2. The fund management company and its agents shall act in good faith and have a duty to exercise due diligence and provide information. They act independently and exclusively in the interests of investors. They take any organisational steps that may be required to ensure the proper conduct of business and shall ensure transparent accounting and the supply of appropriate information regarding this real estate fund. They shall disclose all fees and costs payable directly or indirectly by the investors and how said fees and costs have been used. They shall also provide investors with full, clear and accurate information about any compensation paid for distributing collective investments in the form of commission, brokerage fees and other monetary benefits. 3. The fund management company can delegate investment decisions and specific tasks, provided that this is in the interest of efficient management. It shall only delegate responsibilities to individuals who are qualified to discharge their duties properly and shall ensure that such duties are discharged correctly with regard to both the instructions provided and monitoring and control. The fund management company shall be liable for the actions of its agents as if they were its own actions. The fund management company may delegate investment decisions only to asset managers that are subject to recognised supervision. 4. The fund management company may, subject to the consent of the custodian bank, submit amendments to this fund contract to the supervisory authority (cf. 26). 5. The fund management company can merge the real estate fund with other real estate funds pursuant to the provisions set down under 24 and can liquidate such pursuant to the provisions set down under The fund management company is entitled to receive the remuneration stipulated in 18 and 19. It is further entitled to be released from any liabilities assumed in the proper performance of its duties and to be reimbursed for expenses incurred in connection with such liabilities. 7. The fund management company is liable to investors for ensuring that the real estate companies belonging to the real estate fund comply with the provisions of the CISA and the fund contract. 8. The fund management company, its agents and associated individuals and legal entities may not take on any real estate assets from the real estate fund or assign any real estate assets to it. The supervisory authority may, in justified individual cases, approve exceptions to the ban on transactions with associated individuals and companies, provided the exception is in the interest of investors and provided that, in addition to the valuation of the real estate fund s permanent valuation expert, the market conformity of the purchase and sale price of the real estate asset and the transaction costs is confirmed by an independent valuation expert appointed by the permanent valuation expert or its employer, by the fund management company and by the custodian bank of the real estate fund.

4 Following the execution of the transactions, the fund management company draws up a report containing information on the individual real estate assets acquired or transferred as well as their value on the date of acquisition or sale, the valuation report of the permanent valuation expert, and the report on market conformity of the purchase or sales price of the independent valuation expert, pursuant to Art. 32 prov. 1 (c) CISO. The external auditors shall confirm in their audit that the fund management company has acted in good faith when investing in real estate. The fund management company shall mention the approved transactions with associated parties in the real estate fund s annual report. C Custodian bank 4 1. The custodian bank is responsible for the safekeeping of the fund assets, particularly unpledged mortgage notes and shares of real estate companies. The custodian bank shall be responsible for the issue and redemption of fund units as well as payments on behalf of the real estate fund. It may instruct third parties to manage accounts for the ongoing management of real estate assets. 2. In the case of transactions which relate to the real estate fund s assets, the custodian bank shall ensure that the countervalue is transferred to it within the customary periods. It shall inform the fund management company if the countervalue is not provided within the customary period and request that the counterparty replace the affected asset where this is possible. 3. The custodian bank shall manage the requisite records and accounts in such a way as to be able to identify the assets in custody for each individual fund at any time. Where assets cannot be held in safekeeping, the custodian bank shall check the fund management company s ownership and maintain corresponding records. 4. The custodian bank and its agents act in good faith and have a duty to exercise due diligence and provide information. They act independently and exclusively in the interests of investors. They take any organisational steps that may be required to ensure the proper conduct of business and shall ensure transparent accounting and the supply of appropriate information regarding this real estate fund. They shall disclose all fees and costs payable directly or indirectly by the investors and how said fees and costs have been used. They shall also provide investors with full, clear and accurate information about any compensation paid for distributing collective investments in the form of commission, brokerage fees and other monetary benefits. 5. The custodian bank may delegate the safekeeping of the fund s assets to third-party or collective depositaries in Switzerland, provided this is in the interest of proper safekeeping. The custodian bank shall verify and monitor the third-party or collective depositary to which the task has been delegated to ensure that it: a) has a suitable operating structure and the financial guarantees and professional qualifications necessary to manage the type and complexity of assets that have been entrusted to them; b) is subject to regular external audits which ensure that the financial instruments are in their possession; c) keeps the assets received from the custodian bank in safekeeping in such a way that they can be clearly identified at all times as belonging to the fund assets by means of regular reconciliation of holdings by the custodian bank; d) adheres to the regulations applicable to the custodian bank as regards the performance of the tasks delegated to it and the avoidance of conflicts of interest. The custodian bank shall be liable for any loss/damage caused by its agents where the bank cannot demonstrate that it exercised due care and diligence in selecting, instructing and monitoring the agent in question. The prospectus includes information on the risks associated with the transfer of custody to third-party and collective depositaries. The custodian bank may delegate the safekeeping of the fund s financial instruments only to third-party or collective depositaries subject to regulatory supervision in accordance with the above. This provision shall not apply in cases where assets have to be held in safekeeping at a location at which the transfer of the assets to third-party or collective depositaries subject to supervision is not possible, for example due to mandatory legal provisions or the specific characteristics of an investment product in particular. The investors shall be informed in the prospectus about the safekeeping of assets by third-party or collective depositaries which are not subject to supervision. 6. The custodian bank shall ensure that the fund management company complies with the law and the fund contract. It shall check whether the calculation of net asset value, issue and redemption prices of units and investment decisions are being carried out in accordance with the law and the fund contract, and whether the net income is appropriated as stipulated in the fund contract. The custodian bank shall not be responsible for any investment selection made by the fund management company within the scope of the investment guidelines. 7. The custodian bank shall be entitled to receive the remuneration stipulated in 18 and 19. It is further entitled to be released from any liabilities assumed in the proper performance of its duties and to be reimbursed for expenses incurred in connection with such liabilities. 8. The custodian bank, its agents and associated individuals and legal entities may not take on any real estate assets from the real estate fund or assign any real estate assets to it. The supervisory authority may, in justified individual cases, approve exceptions to the ban on transactions with associated individuals and companies, provided the exception is in the interest of investors and provided that, in addition to the valuation of the real estate fund s permanent valuation expert, the market conformity of the purchase and sale price of the real estate asset and the transaction costs is confirmed by an independent valuation expert appointed by the permanent valuation expert or its employer, by the fund management company and by the custodian bank of the real estate fund. The external auditors shall confirm in their audit that the fund management company has acted in good faith when investing in real estate. D The investors 5 1. There are no restrictions as regards investors. 2. Upon execution of the contract and remittance of a cash payment, investors shall acquire a claim against the fund management company for an interest in the real estate fund s assets and income. This claim is evidenced in the form of units. 3. Investors are only obliged to remit payment for the units of the real estate fund subscribed by them. Investors shall not be held personally liable in respect of the liabilities of the real estate fund. 4. Investors may at any time request that the fund management company supply them with information regarding the basis on which the net asset value per unit is calculated. The fund management company shall also supply further information regarding specific transactions it has carried out, such as the exercise of membership and creditors rights, or regarding risk management, to any investor claiming an interest in such matters at any time. Investors shall be entitled to submit an application to the court having jurisdiction in the domicile of the fund management company for the external auditors, or another entity with appropriate expertise, to investigate and report on any facts or circumstances for which disclosure is required. 5. Investors shall be entitled to terminate the fund contract at the end of a financial year subject to twelve months notice and request that their units held in the real estate fund be redeemed in cash. Under certain conditions, the fund management company may repay the proceeds from units redeemed during a financial year ahead of schedule (cf. 17 prov. 2). Ordinary and early unit redemptions are made within three months of the close of the financial year. 6. An investor s units must be compulsorily redeemed at the prevailing redemption price by the fund management company in collaboration with the custodian bank if: a) this is required to safeguard the reputation of the financial centre, notably in relation to combating money laundering; b) the investor no longer meets the legal or contractual requirements to participate in this real estate fund. 7. 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. In so far as physical units are still in existence on 1 July 2016, forced redemption shall take place in accordance with 5 prov. 6 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. 8. In addition, an investor s units may be compulsorily redeemed at the prevailing redemption price by the fund management company in collaboration with the custodian bank if: a) the investor s participation in the real estate fund may materially affect the economic interests of the other investors, particularly if their participation may result in tax disadvantages for the real estate fund in Switzerland or abroad; b) investors have acquired or hold units in breach of the provisions of domestic or foreign legislation applicable to them or provisions of this fund contract or the prospectus. E Units and unit classes 6 1. The fund management company may, subject to the approval of the custodian bank and the supervisory authority, create different unit classes, or merge or liquidate unit classes at any time. All unit classes shall be entitled to a share in the undivided assets of the fund, which are not segmented. This share may vary due to class-specific costs charged or distributions or on account of classspecific income, and the net asset value per unit may therefore vary from class to class. Any class-specific costs charged shall be met by the aggregate assets of the real estate fund. 2. The creation, liquidation or merger of unit classes shall be announced in the official publication specified for the fund. Only mergers of unit classes shall be deemed to constitute an amendment to the fund contract pursuant to The various unit classes may, in particular, differ in terms of cost structure, reference currency, currency hedging, distribution or reinvestment of income, minimum investments and investor group. Remuneration and costs shall only be charged to unit classes that benefit from the services they cover. Remuneration and costs which cannot be unequivocally attributed to a particular unit class shall be charged to the individual unit classes in proportion to their share of the fund s assets. 4. The real estate fund is not subdivided into unit classes. 5. Units shall not take the form of actual certificates but shall exist purely as book entries. The investor shall not be entitled to request the issue of a unit certificate. Where unit certificates have been issued, they should be returned with the redemption application at the latest. III. Investment policy guidelines Investment principles A Compliance with investment guidelines 7 1. In selecting individual investments and to implement the investment policy in accordance with 8, the fund management company must adhere to the principle of balanced risk diversification and must observe the percentage limits defined below. These relate to fund assets at market values and are to be observed at all times. This real estate fund must adhere to the investment restrictions no later than two years after the expiry of the subscription period (launch). 2. If the limits are exceeded due to changes in the market, the investments must be restored to the permitted level within a reasonable period of time, taking due account of the investors interests. 4

5 B Investment policy 8 1. The fund management company shall invest the assets of this real estate fund in real estate assets throughout Switzerland, i.e., in property including accessories, but also in participating interests in and claims against real estate companies the sole purpose of which is to acquire and sell, and let and lease their own properties, provided at least two-thirds of capital and votes are incorporated in the real estate fund. Properties may be conventionally co-owned, provided the fund management company can exert a controlling influence, i.e., if it controls the majority of ownership units and votes. 2. The following investments are permitted for this real estate fund: a) properties including accessories; Properties include a. residential properties, i.e. properties used for residential purposes b. properties for commercial use c. buildings for mixed use d. condominiums e. building land (including properties for demolition) and buildings under construction; undeveloped properties must be accessible and suitable for immediate development, as well as have a valid construction permit for development. Construction work must be able to be commenced before the expiry of the relevant construction permit. f. plots with building rights (incl. buildings and building easements) Properties may be conventionally co-owned provided the fund management company can exert a controlling influence, i.e., if it controls the majority of co-ownership units and votes. b) participating interests in and claims against real estate companies the sole purpose of which is to acquire and sell or let and lease their own properties provided at least two-thirds of capital and votes are incorporated in the real estate fund; c) units in other real estate funds (including real estate investment trusts) and real estate investment companies and certificates that are traded on a stock exchange or another regulated market open to the public. Subject to 19 the fund management company may acquire units of target funds managed directly or indirectly by itself or by a company with which it is affiliated through common management or control or by a significant direct or indirect shareholding; d) mortgage notes and other contractual mortgage liens. 3. The fund management company may arrange for buildings to be constructed for the account of the fund. In such an event, it may, for the time required for preparation, construction or renovation, credit the income statement of the real estate fund with a market rate of interest for building land and buildings under construction, provided costs do not exceed the estimated market value. C Securing liabilities and available short-term liquid assets 9 1. In order to secure the liabilities, the fund management company must hold an appropriate portion of the fund s assets in short-term fixed income securities or available short-term liquid assets. It may hold these securities and assets in the accounting currency of the real estate fund as well as in other currencies in which the liabilities are denominated. 2. Liabilities include loans taken up, obligations arising during the course of business as well as all obligations in connection with redeemed units. 3. Short-term fixed income securities include claims with a term or residual term to maturity of up to 12 months. 4. Short-term assets include cash as well as post office and sight and time deposits with maturities of up to twelve months and agreed credit limits with a bank of up to 10% of net fund assets. Credit limits must be taken into account in the maximum permitted pledged amount pursuant to 14 prov In order to secure planned construction projects, fixed income securities with a term or residual term to maturity of up to 24 months may be held. Investment techniques and instruments A Securities lending 10 The fund management company does not conduct any securities lending transactions. B Securities repurchase agreements 11 The fund management company does not conduct any repo transactions. C Derivatives 12 The fund management company does not use derivatives D Borrowing and lending The fund management company may not grant loans for the real estate fund s account, with the exception of claims against real estate companies belonging to the real estate fund, mortgage notes and other contractual mortgage liens. 2. The fund management company may take up loans for the real estate fund s account. E Encumbrance of properties The fund management company may pledge properties and transfer liens as security. 2. However, the encumbrance of all properties may not, on average, exceed a third of their market value. To safeguard the level of liquidity the encumbrance may exceptionally and temporarily be increased to half of the market value, provided this does not encroach upon the interests of the investors. In this case, the external auditors must issue a statement on the conditions pursuant to Art. 96 prov. 1bis CISO as part of their audit of the real estate fund. During the transition period ending on 28 February 2018, the encumbrance of all properties in existing real estate funds, and thus also in the UBS (CH) Property Fund Swiss Mixed Sima, may not exceed 50% of the market value. Investment restrictions A Risk diversification and its limits Investments are allocated by property type, type of use, age, building structure and location. 2. The investments must be spread across at least ten properties. Developments that have been built according to the same construction standards are considered to be single properties, as are neighbouring lots. 3. The market value of a property may not exceed 25% of the fund s assets. 4. When pursuing the investment policy as specified under 8, the fund management company shall also observe the limits in terms of the fund s assets as set out below: a) Building land, including demolition projects, and buildings under construction, up to 30% b) Properties with building rights, up to 30% c) Mortgage certificates and other contractual mortgage liens, up to 10% d) Units in other real estate funds and real estate investment companies, up to 25% e) Total investments under a) and b) above, up to 40% IV. Calculation of net asset value as well as issue and redemption of units and expert assessors A Calculation of net asset value and consultation of expert assessors The net asset value of the real estate fund is calculated at the market value in Swiss francs at the end of the financial year and each time units are issued. 2. The fund management company appoints independent expert assessors to monitor the market values of the properties belonging to the real estate fund at the end of each financial year and each time units are issued. To this end, the fund management company shall appoint at least two individuals or one legal entity as independent expert assessors, subject to the approval of the supervisory authority. The expert assessors must visit the properties at least once every three years. Before acquiring/selling property, the fund management company shall obtain a valuation. No new valuation is necessary for the sale of a property, if the existing valuation is no older than three months and conditions have not changed significantly. 3. Investments listed on a stock exchange or traded on another regulated market open to the public shall be valued at the current prices paid on the main market. Other investments or investments for which no current market price is available are valued at the price likely to be obtained if a sale were conducted with proper care at the time of the valuation. In such cases the fund management company shall use appropriate and recognised valuation models and principles to determine the market value. 4. Open-end collective investments are valued using their redemption price or net asset value. If they are traded on a stock exchange or another regulated market open to the public, the fund management company may value them pursuant to prov The value of short-term fixed income securities which are not traded on a stock exchange or another regulated market open to the public is calculated as follows: the valuation of the investments is successively adjusted to the redemption price thereof, beginning with the net acquisition price, while the investment return calculated on it is kept constant. In the event of significant changes in market conditions, the valuation basis for the individual investments is adjusted to the new market return. If no current price is available, as a rule the valuation of money market instruments with similar features (quality and domicile of the issuer, currency of issue, maturity) is used. 6. Post office and bank deposits shall be valued using their exposure amount plus accrued interest. In the event of significant changes in market conditions or the credit rating, the valuation basis for bank deposits on demand is adjusted in line with the new conditions. 7. The valuation of properties for the real estate fund is conducted in line with current SFAMA guidelines on real estate funds. 8. Buildings under construction are valued according to the market value principle. The fund management company shall obtain end-of-financial-year valuations for buildings under construction reported at market value. 9. The net asset value of a unit shall be based on the market value of the fund s assets, less any liabilities of the real estate fund and any tax likely to be due should the real estate fund be liquidated, divided by the number of units in circulation. It will be rounded to CHF B Issue and redemption and trading of units Units may be issued at any time, but only in tranches. The fund management company shall first offer new units to existing investors. 2. Units shall be redeemed in accordance with 5 prov. 5. The fund management company may repay, ahead of schedule, the proceeds from units redeemed during a financial year following the close of such if a) the investor requests this in writing at the time notice is given; b) all requests from investors for early redemption can be met. The fund management company shall also ensure that units in the real estate fund can be traded regularly on- or off-exchange via a bank or a securities dealer. The prospectus governs the details. 3. The issue and redemption prices of units are based on the net asset value per unit defined in 16. In the case of unit issues, an issuing commission may be added to the net asset value pursuant to 18. In the case of unit redemptions, a redemption commission may be deducted from the net asset value pursuant to 18. 5