Asset management ab UBS Funds Annual Report 2015 Investment Company under Luxembourg Law (SICAV) R.C.S. Luxembourg N° B 115 477 Audited annual report as of 31 December 2015 UBS (Lux) Institutional SICAV UBS (Lux) Institutional SICAV – Emerging Markets Equity Passive UBS (Lux) Institutional SICAV – Global Allocation Europe Audited annual report as of 31 December 2015 Table of contents Page ISIN Management and Administration 2 Features of the Company 3 Independent auditor’s report 5 UBS (Lux) Institutional SICAV 7 UBS (Lux) Institutional SICAV – Emerging Markets Equity Passive 9 AA LU0322728865 BA LU0322729327 FA LU0322728352 XA LU0322730093 UBS (Lux) Institutional SICAV – Global Allocation Europe 25 BA LU0260667190 Notes to the Financial Statements 27 Global Exposure (unaudited) 33 Facts and conditions (unaudited) 34 Sales restrictions Shares of this Company may not be offered, sold or delivered within the United States of America. 1 Management and Administration Registered office Custodian bank and main paying agent 33A, avenue J.F. Kennedy, UBS (Luxembourg) S.A., L-1855 Luxembourg 33A, avenue J.F. Kennedy, R.C.S. Luxembourg N° B 115 477 L-1855 Luxembourg Board of Directors Administrative agent Tobias Meyer, Chairman UBS Fund Services (Luxembourg) S.A., Executive Director, UBS AG, Basel and Zurich 33A, avenue J.F. Kennedy, L-1855 Luxembourg Kai Gammelin, Member Executive Director, UBS AG, Basel and Zurich Thomas Portmann, Member Independent Auditor of the Company and the Executive Director, UBS Fund Management Management Company (Switzerland) AG, Basel ERNST & YOUNG S.A., 35E, avenue J.F. Kennedy, Management Company L-1855 Luxembourg UBS Fund Management (Luxembourg) S.A., The sales prospectus, the KIID, the articles of association of the 33A, avenue J.F. Kennedy, Company, annual and semi-annual reports as well as the portfolio L-1855 Luxembourg movements of the Company mentioned in this publication are avail- R.C.S. Luxembourg N° B 154 210 able free of charge at the sales agencies and at the registered office of the Company. Portfolio Manager UBS (Lux) Institutional SICAV – Emerging Markets Equity Passive UBS AG, UBS Asset Management, Basel and Zurich UBS (Lux) Institutional SICAV Annual Report as of 31 December 2015 2 Features of the Company UBS (Lux) Institutional SICAV (hereinafter called the – Share classes EM and EP for which the flat fee is “Company”) was incorporated on 30 March 2006 as an directly deducted from the subfund’s NAV and covers open-ended investment fund in the form of a “Société all expenses. These shares will have an issue price of d’Investissement à Capital Variable” (SICAV) pursuant 100 000 (in each subfund’s reference currency). This to Part I of the Luxembourg law relating to Undertak- class aims exclusively at financial products (i.e. fund-of- ings for Collective Investment of 17 December 2010 as funds or other pooled structures according to various amended. legislations). This share class has a high initial value aim- ing at facilitating day-to-day operations of these pooled The Articles of Association were published in the structures. ”Mémorial, Recueil des Sociétés et Associations”, herein- – Share class FA, for which the portfolio management, after called ”Mémorial”, the official gazette of the Grand distribution, custody and administration fees are Duchy of Luxembourg, on 14 April 2006 and deposited charged outside the Company, directly at the level of at the Commercial and Company Register of the District the agreement concluded by the investor. These shares Court in Luxembourg for inspection. Each amendment will have an issue price of 10 000 (in each subfund’s ref- will be published in the “Mémorial”. Such amendments erence currency). This class aims exclusively at financial become legally binding in respect of all shareholders products (i.e. fund-of-funds or other pooled structures subsequent to their approval by the general meeting of according to various legislations). This share class has a shareholders. high initial value aiming at facilitating day-to-day opera- tions of these pooled structures. In addition, it features The Company can offer to investors various subfunds the same characteristics as the share class XA. (“umbrella construction”), which invest in accordance – Share classes XA, YD and YA, for which the portfolio with the investment policy described in the sales pro- management, distribution, custody and administration spectus. The specific details on each subfund are defined fees are charged outside the Company, directly at the in the prospectus, which will be updated on the incep- level of the agreement concluded by the investor. tion of each new subfund. The share classes offered have the following character- With effect from 16 May 2011, the Company has istics: appointed UBS Fund Management (Luxembourg) S.A. as – Share classes DA, CA, YD and YA hedge the foreign its Management Company. currency exposure of the respective subfund against their respective reference currency. The Company can issue several share classes for each – Share classes AA, BA, CA, DA, EM, EP, FA, XA, YA, of the subfunds. In general, all share classes presently AA-T1 and RA are reinvesting their dividends and in issue are reserved to institutional investors having other income, rather than distributing it on a regular concluded an agreement (such as, but not limited to basis. a portfolio management agreement) with UBS Asset – Shares of classes AD, AD-T2, YD and RD are distribut- Management or one of its authorised delegates. This ing shares, which entitle the shareholder to a periodic, does explicitly not apply to share classes RA and RD usually annual, distribution of income and/or capital which can be offered to the public as well. gains. – Shares of classes BD-UK and AD-UK are distributing Currently, the following share classes are offered: shares, which entitle the shareholder to a periodic, – Share classes AA, AA-T1, AD-UK, AD-T2, CA, RA and usually annual, distribution of income and/or capital RD, for which the flat fee is directly deducted from the gains and for which the members of the Board of subfund’s NAV and covers all expenses. Directors intend to apply to the British tax authorities – Share classes BA, DA and BD-UK, for which the HM Revenue and Customs that this share class should portfolio management and distribution fees are be approved as “distributing share classes” for the charged outside the Company, directly at the level purposes of Part XVII, Section V of the Income and of the agreement concluded by the investor. The Corporation Taxes Act 1988 (“Offshore Funds”) for all share classes only bear operational and administrative “settlement periods”. expenses such as administration and Custodian fees. UBS (Lux) Institutional SICAV Annual Report as of 31 December 2015 3 – All share classes will be issued in registered form only, The Company is a single legal entity. With respect to the except for the share classes AA-T1 and AD-T2, which shareholders, each subfund is regarded as being sepa- will be issued as bearer shares only. However, begin- rate from the others. The assets of a subfund can only ning from September 2012, the Board of Directors be used to offset the liabilities which the subfund con- reserves the right to issue registered shares only and cerned has assumed. upon an appropriate circular resolution, to convert the share classes AA-T1 and AD-T2 issued in bearer The Board of Directors of the Company is empow- form into the shares in the registered form. Any ered at any time to establish new subfunds and/or to certificates in circulation at the time of the conversion liquidate existing ones, as well as to establish different certifying the investor’s ownership of the bearer share classes with specific characteristics within these shares shall become certificates certifying the right subfunds. The sales prospectus will be updated each time of the relevant investor to convert his bearer shares a new subfund or an additional equity class is issued. into registered shares and will be withdrawn by the Company upon redemption by the investor. The share- The Company is unlimited with regard to duration and holders shall not be allowed to request the conversion total assets. of registered shares into bearer shares. – The Administrative Agent will ensure that bearer The financial year of the Company ends on 31 December. shares can be issued and transferred only to institu- tional investors. The ordinary general meeting takes place annually on 20 March at 10 a.m. at the registered office of the Generally, the shareholder may convert any time into Company. If 20 March is not a business day in another subfund or share class of the same subfund. Luxembourg, the ordinary general meeting will take However, the following exceptions apply: place on the next business day. – The conversion is only possible into shares issued; no conversion is possible if the issue of shares by the Only the information contained in the sales prospectus subfund has been suspended. and in one of the documents referred to therein shall be – The right to convert shares is subject to compliance deemed to be valid. with any conditions applicable to the share class or cat- egory of share into which conversion is to be effected. Information on whether a subfund of the Company – The conversion of RA and RD shares into other classes is listed on the Luxembourg Stock Exchange can of shares is not permitted. be obtained from the Administrative Agent or the – Conversions can only be made for a definite number Luxembourg Stock Exchange website (www.bourse.lu). of shares. – Due to technical restrictions conversions from the fol- The issue and redemption of shares of the Company lowing classes: AA, CA, BA, DA, YA and XA shares are subject to the regulations prevailing in the country into the following classes: AA-T1 and AD-T2 shares concerned.