Birmingham Event

Source UK Services Limited
110 Cannon Street, London

EC4N 6EU
T +44 (0)20 3370 1100
F +44 (0)20 3370 1101
www.SourceETF.com
Authorised and regulated by the Financial Conduct Authority
For Professional Advisors Only
Introduction to ETFs
Dominic Clabby
30 September 2015
Todays agenda
What are ETFs?
Who uses ETFs and why?
Choosing an ETF
Why Source?
What are exchange traded funds?

Open-ended funds
Typically regulated UCITS funds
Bought and sold throughout the day
on a stock exchange, like shares
or
Bought and sold at daily NAV like

mutual funds
Typically passive
Designed to track a
Source EURO STOXX Optimised Banks UCITS ETF
benchmark index, after fees
EURO STOXX Optimised Banks Index

Source EURO STOXX Optimised Banks UCITS ETF
5
Strong growth in European assets
h
rowt
.a. g
p
25%
Data: ETFGI
ETFs are a growing share of

European and US fund assets
Data: Deutsche Bank European Monthly ETF Market Review, August 2015
Why are ETFs so popular?

Flexible
Liquid
Transparent
Cost-efficient
Ideal tools for implementing and modifying your asset allocation
Who uses ETFs and why?

56% of UK professional
Reasons for using ETFs and ETCs
investors use ETFs1
Long-term Tactical Long/short

broad
adjustment strategy
exposure
Liquidity
mgmt
Sector
rotation
Cash
Transition
equitisation
mgmt
Based on interviews with 100 UK investors (including asset managers, private banks, pension funds, wealth managers, insurance companies and
family offices) conducted by Prescient in November and December 2014
1
Where is the growth in Europelisted ETPs?

2015 YTD net new assets
Data: ETFGI, August 2015
10
Top European providers

Provider
AUM (US$ billion)
Market share
iShares
223.9
45.3%
Db X / db ETC
60.6
12.3%
Lyxor
51.7
10.5%
UBS ETFs
26.2
5.3%
Amundi
21.2
4.3%
Source
19.4
3.9%
Vanguard
17.8
3.6%
ETF Securities
13.1
2.6%
SPDR ETFs
12.5
2.5%
Commerzbank
7.7
1.6%
Data: ETFGI, as at Aug 2015. ETFs and ETCs.
11
Choosing an ETF
Performance
Does the ETF deliver the expected performance

i.e. index performance less fees
Tracking
Does the ETF track the index accurately?
Transparency
Can I see what assets the ETF holds?
Trading costs
Bid / offer spread
Any broker commissions
Source EURO STOXX Optimised Banks UCITS

ETF
Ongoing charge
0.30%
12-month ETF performance
2.63%
12-month index performance
2.95%
Tracking difference
-0.30%
Tracking error
0.01%
Average bid-offer spread
0.08%
Performance data from 31 August 2014 to 31 August 2015. Tracking difference is the proportional difference between the ETF and the benchmark index
performance. Spread is the average between 1 and 24 September 2015 on the LSE. Past performance is not a reliable indicator of future performance.
12
Common approaches to index replication
How it
works
Physical
Synthetic (physical with swap overlay)
Synthetic (swap-based with collateral)
The ETF owns the constituents of the

benchmark index
It may lend out some constituents
(stock lending)
It may own only a sample of the index
constituents (optimisation)
The ETF owns a portfolio of listed

securities, not necessarily from benchmark
index
The ETF contracts with a counterparty, who
agrees to pay any difference between
portfolio performance and index
performance (unfunded swap contract)
The ETF exchanges investment proceeds

for index performance (funded swap
contract)
To reduce counterparty exposure, swap
counterparty pledges collateral, held in a
segregated account
Pros
Stock lending may enhance returns

Optimisation may reduce operational costs
Accurate index tracking
Accurate index tracking
Cons
High operational costs (dividend

reinvestment, rebalancing)
Stock lending introduces counterparty risk
Optimisation may cause tracking error
Use of swaps introduces counterparty risk

(see overleaf)
ETF does not own securities

Use of swaps introduces counterparty risk
Securities lent out

(collateral posted)
Exposure to swap
counterparty (max
10%)
Exposure to swap
counterparty (max
10%)
Securities (some or
all of index
constituents)
Securities
(listed portfolio)
Collateral held
on behalf of fund
13
Why Source?
An independent provider focused exclusively on ETFs
Competitive, high quality core benchmark products
A unique range of smart beta and active exposure
Over 40 products listed on SIX, spanning equity, fixed income and commodities
ETFs are what we do
14
Low-cost exposure to major equity

indices
Europe
UK
<S100> FTSE 100, 0.35% total cost
<S250> FTSE 250, 0.35% total cost
China
<SX5S> EURO STOXX 50, 0.05% total cost

<S600> STOXX Europe 600, 0.19% total cost
<MXEU> MSCI Europe, 0.20% total cost
<CHNP> FTSE China A50, max 1.11% total cost
US
<SPXP> S&P 500, 0.05% total cost
Japan
<S400> JPX-Nikkei 400, 0.25% total cost
Global developed markets

<MXWO> MSCI World, 0.35% total cost
Global emerging markets

<MXFP> MSCI Emerging Markets, 0.85% total cost
Developed markets
Total cost includes the annual ongoing charge (management, custody, administration) plus transaction costs where known
15
Our GBP product range

Equities
Commodities
Fixed Income
Major benchmarks
Emerging markets
PIMCO Sterling Short Maturity
Gold
S&P 500
MSCI Emerging Markets
PIMCO Short-Term High Yield
Platinum
EURO STOXX 50
FTSE China A50
PIMCO EM Advantage Local Bond

Index
Palladium
FTSE 100
FTSE 250
JPX-Nikkei 400
Smart beta
Goldman Sachs Equity Factor
Index Europe
MSCI World
Goldman Sachs Equity Factor

Index World
Europe
Income-focused
MSCI Europe
US Energy Infrastructure MLP
STOXX Europe 600
US sectors
STOXX Europe 600 Optimised

Banks
9 S&P 500 sectors
EURO STOXX Optimised Banks
16
Where to buy and sell Source ETFs
17
For more information
If you have any questions about Source funds, please contact a member
of our UK team or visit our website
Call us on: 020 3370 1144
Email: UKInfo@SourceETF.com
Visit our website at: www.SourceETF.co.uk
18
Important information
Investors in Source products should note that the price of your investment may go down as well as up. As a result you may not get back the amount of capital you invest.
Investors in Source products should note that the price of your investment may go down as well as up. As a result, you may not get back the amount of capital you invest. This
factsheet is intended for individuals who are familiar with investment terminology. Please contact your financial adviser if you need an explanation of the terms used. This factsheet is
not for distribution to, or for the attention of, US or Canadian persons. When making an investment decision, you should rely solely on the KIID and prospectus, which can be
downloaded at www.SourceETF.com . Other languages are available. The investment policy is set out in the prospectus supplement. Without limitation, this factsheet does not
constitute an offer or a recommendation to enter into any transaction.
Investment strategies involve numerous risks. Investors should consult their own business, tax, legal and accounting advisors with respect to this proposed transaction and they
should refrain from entering into a transaction with us unless they have fully understood the associated risks and have independently determined that the transaction is appropriate for
them. In no way should Source UK Services Limited be deemed to be holding itself out as a financial adviser or a fiduciary.
Source ETFs are issued by Source Markets plc, an Irish domiciled company with limited liability regulated by the Central Bank of Ireland. The ETFs entitle the holder to receive a
return linked to the performance of the benchmark index. Investors are therefore at risk that the level of the index may cause any amounts payable under the product to be less than
the amount paid for the ETFs. The historical level of the index should not be taken as an indication of the indexs future performance during the term of the ETFs. Investment risks
from market and currency losses as well as high volatility and concentration risk cannot be excluded. The performance of the ETF may differ from the performance of the index.
This document has been communicated by Source UK Services Limited, 110 Cannon Street, London, EC4N 6EU, authorised and regulated by the Financial Conduct Authority.
2015 Source UK Services Limited. All rights reserved
19

EC4N 6EU
T +44 (0)20 3370 1100
F +44 (0)20 3370 1101
www.SourceETF.com

EC4N 6EU
T +44 (0)20 3370 1100
F +44 (0)20 3370 1101
www.SourceETF.com
For Professional Advisors Only
Defining and using smart beta

Dr Christopher Mellor, CFA
30 September 2015
What is smart beta?

It depends who you talk to
Between alpha and beta (Towers Watson)
The middle of the passive-to-active spectrum (Morningstar)
Investment strategies based on one or more of the five equity factors (SSGA)
Indices that are not weighted by market capitalisation (Russell)
Terrible name, interesting trend

The Economist, July 2013
23
What is smart beta?

There are many names for essentially the same thing
Smart beta
Factor-based indices
Strategic beta
Alternative beta
Enhanced beta
Non-traditional indices
Smart passive
Alternative beta
Non-market-cap indices
Alternatively-weighted indices
Advanced beta
Engineered beta
Beta plus
Second generation indices
Enhanced indices
24
Back to basics: what is beta?

Buying the market
Passive, long-only exposure to a particular market segment
Market cap weighted indices
Some examples:
FTSE 100, S&P 500, SMI, MSCI World, MSCI Emerging Markets, FTSE China A50
Pros and cons:
Market cap weighted indices are good at measuring market performance
Used to benchmark
But market cap weighted indices overweight overpriced stocks and underweight undervalued stocks when
markets are extended (e.g. Tech was 25% of S&P 500 in 1999)
25
Deviating from the benchmark

There are two ways that you can move away from benchmark
Filtering, e.g. selecting only stocks with high dividend yield
Note that standard beta indices apply simple filtering (e.g. by size, country of listing, etc.)
Alternative weighting, e.g. weighting a bond portfolio by GDP rather than market cap
or a combination of both
Can be done on a discretionary basis (human intervention) = Active Management
Can be done on a systematic basis (rules based indices) = Smart Beta
26
Defining smart beta

Beta
Simple filtering to
ensure investability
Market cap
weighting
e.g.
S&P 500
Euro STOXX
50
e.g.
Sectors
Small/mid cap
indices
Smart beta
Active / quantitative
Alternative
filtering
Alternative
weighting
e.g.
factors
fundamentals
e.g.
factors
fundamentals
risk
e.g.
JPX-Nikkei 400
MSCI Europe Value
STOXX Exporters
e.g.
FTSE RAFI
Goldman Sachs
Equity Factor
Indices
MSCI Minimum
Volatility
Market timing /
signals
e.g.
Morgan
Stanley MEMO
Plus
JP Morgan
Macro Hedge
Human
discretion /
sophisticated
quant process
e.g.
Man GLG
Europe Plus
PIMCO Source
Short Maturity
ETFs
27
However you define it, smart beta

assets are growing
Morningstar data suggests
Assets in global strategic beta ETPs
US$ 418 bn in strategic

beta ETPs globally (16% of
ETP assets)
Deutsche Bank estimates
US$ 410 bn in enhanced

beta ETFs (25% of equity
ETFs)
But still only around 1.3% of

global fund assets
Morningstar data from Morningstar database as

at Dec 2014. Deutsche Bank data from Deutsche
Bank ETF Annual Review & Outlook Reports, Dec
2014. Share of global fund assets is Morningstar
strategic beta assets as at Dec 2014, as
percentage of total global fund assets from ICI as
at Q3 2014.
Data: Morningstar database, Feb 2015
28
Dividend and style exposure

dominate
Morningstar Strategic Beta by sub-category
Deutsche Bank Enhanced Beta assets
Data: Morningstar database, Feb 2015
Data: Deutsche Bank ETF Annual Review & Outlook Reports, Dec 2014
29
Smart beta in a portfolio
What does smart beta mean for

investors?
More choice of market-type exposure
Existing exposure can be sliced and diced in more precise ways
More control over risk and reward
Portfolios can be tweaked to express different views e.g. lower risk, value
More opportunity to outperform or underperform
Understanding how to select and combine products is key
31
Products are typically tools or

strategies
Tools
Allow investors to isolate a particular factor / risk
premium / theme
Strategies
Designed to replace traditional beta exposure
Typically broad and diversified
Often single factor products
Often multi-factor or multi-asset
Dont specifically target outperformance
May specifically target outperformance or better risk-
May be used short-term / tactically

More likely to be satellite products
Examples include STOXX International Exposure
adjusted returns
Likely to be core products

Examples include fundamental indices and multi-factor
strategies (GS EFI)
indices and MSCI Europe Value
Can I use it to generate

outperformance in my portfolio?
Does it outperform?
32
Conclusion
There is no single, accepted definition of smart beta
In practice, the term is used for a wide range of passive products with alternative filtering and/or weighting
schemes
The key question is where each product fits in a portfolio

A tool to isolate specific market characteristics?
A broader investment strategy designed to replace beta benchmarks?
Source is a pioneer in smart beta ETFs
Carefully selected range of products
Expert partners
33
Selected Source smart beta

products
Goldman Sachs Equity Factor Indices:

Efficient factor exposure can be a challenge
Systematic factors are wellknown sources of
outperformance
2004
However
Different factors perform
negatively correlated
Efficient exposure must be

diversified across factors,
and consider the
correlations between them
2006
2007
2008
2009
2010
2011
2012
2013
2014
Best
Size
4.5%
Moment
um
6.9%
Low
Beta
6.6%
Moment
Quality
um
11.4%
22.5%
Low
Beta
3.1%
Size
1.3%
Size
5.7%
Quality
9.8%
Low
Beta
4.2%
Size
20.6%
Size
4.3%
Quality
6.8%
Low
Beta
0.4%
Low
Beta
5.2%
Quality
2.2%
Moment
um
2.8%
Value
1.1%
Value
5.4%
Low
Beta
-1.4%
Moment
um
2.6%
Low
Beta
-2.0%
Low
Beta
1.4%
Low
Beta
7.6%
Size
0.5%
Value
3.0%
Moment
um
1.3%
Value
1.8%
Low
Beta
-1.1%
Moment
um
4.3%
Size
-8.1%
Value
-0.7%
Quality
-7.0%
Quality
0.7%
Size
-3.3%
Quality
-1.7%
Size
-0.3%
Size
-0.8%
Quality
-1.5%
Quality
-2.9%
Quality
0.7%
Value
-16.5%
Size
-3.5%
Moment
um
-28.0%
Value
-1.3%
Value
-7.4%
Value
-3.2%
Quality
-5.1%
Value
-2.9%
well at different times
Some factors are
2005
Value
31.7%
Moment Moment Moment Moment

um
um
um
um
4.9%
11.7%
3.5%
8.5%
Low
Beta
4.7%
Worst
Data: Goldman Sachs International
35
Goldman Sachs Equity Factor Indices

Broad, long-only equity exposure, emphasising five systematic factors
Low beta
Size
Value
Momentum
Quality
Efficient portfolio construction, taking correlations between factors into account
Controlled risk versus market cap-weighted benchmarks
Choice of indices: World and Europe
36
GS EFI World: persistent outperformance
Actual performance
Sep 2004 to Aug 2015

1y
3y (ann.)
5y (ann.)
MSCI World Daily Net TR Index
-0.74%
-4.11%
13.39%
10.95%
Ratio GS EFI World NTR / MSCI World Daily Net TR Index
3.52%
Beta-adjusted outperformance*
3.07%
GS EFI World NTR
Return (ann.)
Volatility
Sharpe ratio
Max
drawdown
13.86%
11.07%
9.30%
6.41%
14.55%
16.71%
0.52
0.29
-52.08%
-57.82%
2.20%
2.52%
2.72%
3.78%
3.94%
3.47%
Source: Bloomberg/Goldman Sachs International, 31 August 2015. Performance of GS EFI World prior to 21 October 2013 has been simulated by Goldman Sachs International. Simulated performance is
calculated using the index rules, published at www.source.info, but has at times used different data sources and a slightly different methodology. Past performance (actual or simulated) is not a reliable
indicator of future performance. Performance does not include fund costs (0.65% per annum for the Source Goldman Sachs Equity Factor Index World UCITS ETF, 0.45% per annum for a typical ETF
tracking MSCI World Daily Net TR Index). * Performance of GS EFI World divided by performance of MSCI World Daily Net TR Index (adjusted so as to have similar beta).
3737
JPX-Nikkei 400
A benchmark gaining rapid acceptance
Index construction
Focused on shareholder value as well as size

Used as a benchmark by the Japanese
Government Pension Investment Fund
Over $1.8 billion in Europe-listed ETFs1

Low cost exposure
Quantitative ranking
Qualitative factors
Return on Equity
40%
External directors
Operating Profit
40%
Adoption of IFRS
Market capitalisation 20%
0.20% per annum management fee
Earnings disclosure in
English
Choice of share classes

JPY (unhedged)
Top 400 companies
EUR-hedged
Weighted by free-float market capitalisation
USD-hedged share classes
As at end of July 2015
38
PIMCO EM Advantage Local Bond Index

GDP-weighted exposure to emerging market government debt
Weights countries by GDP rather than debt
Exposure by country
issuance
Avoids over-allocation to highly indebted

countries
Includes India and China (excluded from other

major benchmarks)
Uses currency forwards where local bond markets

are inaccessible
Data: PIMCO, as at 30 January 2015
39
Key risks of Source smart beta

ETFs
No capital protection: you may not get back the amount you invest
No guarantee that smart beta indices will outperform traditional market
capitalisation weighted indices
40
Investors in Source products should note that the price of your investment may go down as well as up. As a result you may not get back the amount of capital you invest.
Investors in Source products should note that the price of your investment may go down as well as up. As a result, you may not get back the amount of capital you invest. This
factsheet is intended for individuals who are familiar with investment terminology. Please contact your financial adviser if you need an explanation of the terms used. This factsheet is
not for distribution to, or for the attention of, US or Canadian persons. When making an investment decision, you should rely solely on the KIID and prospectus, which can be
downloaded at www.SourceETF.com . Other languages are available. The investment policy is set out in the prospectus supplement. Without limitation, this factsheet does not
constitute an offer or a recommendation to enter into any transaction.
Investment strategies involve numerous risks. Investors should consult their own business, tax, legal and accounting advisors with respect to this proposed transaction and they
should refrain from entering into a transaction with us unless they have fully understood the associated risks and have independently determined that the transaction is appropriate for
them. In no way should Source UK Services Limited be deemed to be holding itself out as a financial adviser or a fiduciary.
Source ETFs are issued by Source Markets plc, an Irish domiciled company with limited liability regulated by the Central Bank of Ireland. The ETFs entitle the holder to receive a
return linked to the performance of the benchmark index. Investors are therefore at risk that the level of the index may cause any amounts payable under the product to be less than
the amount paid for the ETFs. The historical level of the index should not be taken as an indication of the indexs future performance during the term of the ETFs. Investment risks
from market and currency losses as well as high volatility and concentration risk cannot be excluded. The performance of the ETF may differ from the performance of the index.
This document has been communicated by Source UK Services Limited, 110 Cannon Street, London, EC4N 6EU, authorised and regulated by the Financial Conduct Authority.
2015 Source UK Services Limited. All rights reserved
41
Index disclaimers
The Source Goldman Sachs Equity Factor Index World UCITS ETF is not sponsored, endorsed, sold, or promoted by Goldman Sachs International or any of its affiliates (individually and collectively, Goldman). Goldman makes no
representation or warranty, express or implied, regarding the advisability of investing in securities generally or in the ETF particularly, or the ability of the Index to track general market performance. The index is sponsored by Goldman Sachs
International. Goldman Sachs International has contracted with Axioma, Inc. (the weight calculation agent) to determine on its behalf the component stocks of the index and their corresponding weights, based on a methodology developed by
Goldman Sachs International. Axioma, Inc. does not endorse, promote or guarantee the quality, accuracy and/ or completeness of the index or any product linked to the index and shall have no liability in relation to the index or any product
linked to the Index. The ETF is not issued, underwritten, offered, sponsored, endorsed, sold or promoted by the Russell Investment Group. The Russell Investment Group makes no representation or warranty, express or implied, to the owners
of the ETF or any member of the public regarding the advisability of trading or investing in the ETF. The Russell Investment Groups only relationship to Goldman Sachs International with respect to the ETF is the calculation and certain
servicing of the index. Russell Investment Group has no obligation to take the needs of the owners of the ETF into consideration in the calculating or servicing of the index. Russell Investment Group is not responsible for and has not
participated in the determination of the timing of, prices at, or quantities of the ETF to be listed, purchased or sold, or in the determination or calculation of the equation by which the ETF is to be converted into cash. Russell Investment Group
has no obligation or liability in connection with the administration, marketing, issuance, underwriting or trading of the ETF.
The JPX-Nikkei Index 400 and its Total Return Index (hereinafter collectively referred to as the Index) are copyrighted materials calculated using a methodology independently developed and created by Japan Exchange Group, Inc. and
Tokyo Stock Exchange, Inc. (hereinafter collectively referred to as the JPX Group) and Nikkei Inc. (hereinafter referred to as Nikkei), and the JPX group and Nikkei jointly own the copyrights and other intellectual property rights subsisting in
the Index itself and the methodology used to calculate the Index. The JPX Group and Nikkei own the trademarks and other intellectual property rights with respect to the marks used to indicate the Index. The ETF is arranged, managed and
sold exclusively at the risk of the manager, and the JPX Group and Nikkei do not guarantee the ETF and shall assume no obligation or responsibility with respect to the ETF. The JPX Group and Nikkei shall not be obliged to continuously
publish the Index and shall not be liable for any errors, delays or suspensions of the publication of the Index. The JPX Group and Nikkei shall have the right to change the composition of the stocks included in the Index, the calculation
methodology of the Index or any other details of the Index and shall have the right to discontinue the publication of the Index. The directors of the company, the manager and the investment manager together the responsible parties do not
guarantee the accuracy and/or the completeness of any description relating to the Index or any data included therein and the responsible parties shall have no liability for any errors, omissions, or interruptions therein. The responsible parties
make no warranty, express or implied, as to the fund, to any shareholder in the ETF, or to any other person or entity in respect of the Index described herein. The JPX Group and Nikkei make no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the Index or any data included herein. Without limiting any of the foregoing, in no event shall JPX Group and Nikkei have any liability for any
special, punitive, indirect, or consequential damages or for any lost profits, even if notified of the possibility of such damages.
PIMCO and PIMCO Emerging Markets Advantage Local Currency Bond Index are trademarks of Pacific Investment Management Company LLC. Bank of America Merrill Lynch, Pierce, Fenner & Smith Incorporated (BofA Merrill Lynch) is
acting as the calculation agent for the index, does not determine the equation for the index, has no role in the determination of the timing of, pricing of, or quantities of PIMCOs products or their redemption, or make any representation
regarding the advisability of investing in PIMCOs products. The index and related data are as is. BofA Merrill Lynch makes no warranties, and does not warrant/guarantee the suitability, quality, accuracy, merchantability, fitness for a particular
use, timelines and/or completeness of the index or any data included in, related to, or derived therefrom, or of the products based on or linked to the index. BofA Merrill Lynch and its affiliates have no liability in connection with PIMCOs
products or services, or the composition of the index (including its ability to track the performance of market sectors or suitability as the basis for PIMCOs product), its calculation or use, and has not sponsored, endorsed, passed on, or
recommended PIMCO or any of its products or services. The PIMCO EM Advantage Local Bond Index relies on information from an unaffiliated third party provider, Markit LLC. PIMCO does not make any warranty or representation as to the
accuracy and/or completeness of that information and takes no responsibility for the impact of any inaccuracy of such data.
42

EC4N 6EU
T +44 (0)20 3370 1100
F +44 (0)20 3370 1101
www.SourceETF.com

EC4N 6EU
T +44 (0)20 3370 1100
F +44 (0)20 3370 1101
www.SourceETF.com
Asset management
UBS ETFs
UK edition
For professional investors only
The case for currency hedged

ETFs
UBS ETFs ETFs how you want
Andrew
them Walsh, Head of UBS ETF Sales UK & Ireland
September, 2015
Contents
Section 1
UBS ETFs A leading provider in Europe
Section 2
Background and impact of currency movements
Section 3
Currency hedging in fixed income
Section 4
Comparison of Hedging options
Section 5
UBS ETFs currency hedged ETFs
Section 6
UBS ETFs currency hedging methodology
Section 7
Conclusion
Section 8
Appendix
46
Section 1
UBS ETFs A leading provider in Europe
UBS Global Asset Management At a Glance

UBS Global Asset Management offers a variety of investment styles and
strategies backed by our global resources and know-how.
Our investment capabilities cover equities, fixed income, global investment
solutions, fund services, alternative and quantitative investments, global real estate,
as well as infrastructure and private equity.
For over 30 years, the management of index-linked portfolios has been one of the
core competencies of UBS Global Asset Management.
With assets under management of approximately GBP 458 billion and 3,900
employees in 24 countries, we rank as one of the leading fund providers. 1
A leadingfund house in Europe, the largest mutual fund manager in Switzerland 2
andone of the largest fund of hedge funds and real estate investment managers in
the world.
1
2
Source: UBS, 31 March 2015

Source: Morningstar/Swiss Fund Data Swiss Promoters report (as of 31 March 2015)
48
UBS Global Asset Management Passive Assets

Passively managed assets: 148bn1
Total index AuM by asset class
Total index AuM growth (CHF bn)
Total index AuM by vehicle
Source: UBS Global Asset Management. Data as at 30 June 2015.

1
AuM reported in official UBS financial statements CHF 206bn. Difference to above quoted AuM largely due to exclusion of index element in multiassets.
Above quoted AuM includes CHF 0.8bn of basket strategies.
49
UBS ETFs A Leading Provider in Europe

ETFs the way you want them
14 years of ETF experience
In 2001 UBS Global Asset Management launched the first four

ETFs (EURO STOXX 50, FTSE, USA, Japan)
UBS ETF benefits from the expertise of UBS Global Asset
Management (team with over 30 years of experience in indexed
portfolio management)
#4 in Europe1
5 Core markets / exchanges
UK
CH
London Stock Exchange (LSE) (84 listings)2
DE
IT
Deutsche Brse AG (Xetra) (73 listings)2
JP
Tokyo Stock Exchange (TSE) (10 listings)2
UBS ETF has 17.1bn in ETFs under management1

Net inflows of 4.2bn in 20151
One of Europe's leading providers of physically replicated ETFs1
UBS offers GBP-hedged ETFs and is the largest provider of
currency hedged ETFs (>50 ETFs) in Europe1
A suite of seven SRI ETFs tracking a selection of MSCI indices
SIX Swiss Exchange (229 listings)2
Borsa Italiana (69 listings)2
Overall 179 ETFs are offered: equities, fixed income,

commodities, precious metals, hedge funds, real estate and
multi asset portfolio
Broad range of physically (88%) and synthetically (12%)
Source: ETFGI, 28 August 2015.
Source: UBS Global Asset Management, September 2015. Listings include
share classes
in various
currencies
replicated
ETFs
(accumulating
and distributing share classes)
Broad selection
1
2
50
UBS ETFs European ETF Market

UBS ETFs One of Europe's leading providers of physically replicated
ETFs
As of end August 2015, the European ETF

industry had 1,516 ETFs from 45 providers
on 25 exchanges.
Inflows in August 2015 amounted to
7,132m. Assets under management
increased to 309.2bn.
UBS ETFs ranks fourth in Europe, with
17.1bn in assets under management. UBS
ETFs had inflows in 2015 until end August of
4.2bn.
From all providers, 75% of European ETF
assets under management were invested in
physically replicated ETFs, and 25% in
synthetically replicated ETFs.
UBS ETFs is the third-biggest provider of
physically replicated ETFs in Europe,
and the seventh-largest provider of
synthetically replicated ETFs (relating to
UCITS conform ETFs).
Source: UBS Global Asset Management, ETFGI, 28 August 2015
51
Section 2
Background and impact of Currency movements
Global equity portfolios example of foreign currency

holdings
Typical globally diversified equity portfolios
Global equities
Foreign currency risk
* SEK 1.37%, HKD 1.25%, SGD 0.64%, DKK 0.47%, NOK 0.34%, ILS 0.19%, NZD 0.34%
MSCI World Index
Portfolios with global equities are exposed to several currency risks at the same time.
Exchange rate fluctuations primarily have a major impact on the investment returns of GBP, EUR, CHF,
and JPY investors.
GBP investors are exposed to foreign currency risks of 90.80%.
For USD investors, almost half of the portfolio is exposed to foreign currencies.
Source: UBS Global Asset Management
53
Past trends in currency markets

Exchange-rate developments against the GBP
Currency trends versus the GBP
(Sep.'10 Sep.'15; 28 Sep. 2010 = 100)
CHF floor
removal
Total
Return
JPY/GBP: -28 %
EUR/GBP : -14%
USD/GBP: +4%
US Hike?
CHF/GBP: +3%
ECB QE
Abeonomics
The key currencies, Japanese yen (JPY) and Euro (EUR), have significantly fallen in value against
the British pound (GBP) over the last 5 years. Only the Swiss Franc (CHF) and the US dollar yielded
marginally positive performances against the GBP over this period.
Clients with home currency GBP and foreign equity, benefit from currency hedging when
foreign currencies are getting weaker.
Source: Bloomberg, data as of 25/09/2015
54
Numerical example Eurozone equities

Impact of currency hedging on portfolio returns: MSCI EMU (Sep. '10
Sep. '15)
Performance of MSCI EMU Indices and the EURGBP
exchange rate
Estimated index annualized return
currency
hedged
return
Currency fluctuations have a major impact on the investment returns, due to currency volatility (weakening EUR due to ECB
monetary stimulus - > asset purchase program running over Mar. '15 to Sep. 16')
The MSCI EMU unhedged GBP has delivered an annualized return of 3.45% compared to an annual return of 6.38% for the
MSCI EMU in its base currency (EUR).
If the MSCI EMU GBP hedged exposure had been chosen the annual return would have been 6.72%.
The hedge ratio (kept constant intra-month) of the currency hedge as well as interest rate differential (cost of currency hedge) can
have a negative or positive impact on the performance -> positive in case of EURGBP in the last few years
Source: Bloomberg, data as of 25/09/2015. Performance based on the period: 28/09/2010 25/09/2015
55
Section 3
Currency hedging in fixed income
Local Currency Fixed Income
Foreign Fixed Income
(Valuation Change + Accrued Interest)
(Valuation Change + Accrued Interest +

Currency P&L)
Return components the role of exchange rate
Source: Barclays POINT, UBS Global Asset Management. Data as of 31 August 2015.
Past performance is not a reliable indicator of future results.
57
Currency movements now more important than ever before

- one exposure, different funding currencies
"Global" monetary easing programs

(Fed, BoE, BoJ, ECB,)
Foreign investment performance vs. currency

"wars"
58
The ECB QE results in weaker EUR (unhedged GBP investor has FX loss)
Unhedged GBP investor
Hedged GBP investor
Foreign investment the latest example (QE ECB)
59
Local Currency
Benchmark:
4.82%
Currency Hedged
Benchmark:
4.78%
ETF: 4.78%
ETF: 4.78%
Tracking quality example (live track since May 30,

2014)
Average TE =
0.15%
Source: Barclays POINT, UBS Global Asset Management. Data from 30 May 2014 to 31 March 2015.
Average TE =
0.16%
60
Hedge frequency driven by trade-off between tracking error and trading

costs
Currency hedging accuracy is defined by.

i.
the frequency a profit or loss resulted of a currency hedge

transaction is rolled and,
ii.
the ratio between the Hedge Nominal on t-1 and the

Total Net Assets of the foreign currency portfolio on t
Annualized Tracking Error
Avg. spread
between Libor
USD 12m and
Libor EUR 12m
36bps
Operational framework monthly hedging process

Hedge Ratiot:
Hedge Nominalfc,t-1:
Total Net Assetsfc,t:
t:
t-1:
monthly),
fc:
proportion of Hedge Nominal on t-1 and the Total Net Assets on t

the amount in foreign currency sold forward on t-1
the total net assets in foreign currency on t
the current business day
last business day of the previous month (hedge frequency =
previous business day ( hedge frequency = daily)
foreign currency is the local currency of the portfolio
Trade-off between Hedge Frequency and Tracking

Error / Trading Costs
The Hedge Ratio is defined as the nominal amount to be

hedged relative to the ETF's asset under management
Predefined (by index provider) hedging methodology
decides about the ETFs' hedging quality
The higher the hedge frequency and the closer the hedge
ratio to 100%, the lower the Tracking Error
The higher the hedge frequency, the higher the turnover
and hence the higher portfolio trading costs
Source: Barclays POINT, UBS Global Asset Management. Data from 08 April 2014 to 31 March 2015.
Past performance is not a reliable indicator of future results. For illustrative purpose only.
61
Section 4
Comparison of hedging options
Comparison of hedging options

Currency exposure can be hedged in a number of ways
Hedging on portfolio level
UBS currency hedged ETFs
Benefits
Disadvantages
Currencies
Forwards
Certificates
Reduced foreign currency

risk
Simple access and
transparency
One-time transaction
Currency hedging in fund
format
Can positively impact
performance compared to
unhedged ETF
Higher fees than for nonhedged index
Can negatively impact
performance compared to
unhedged ETF
Can positively influence

Various hedging methods
performance
possible, e.g. daily hedge
Lower fees
Quicker trading
Can positively impact
Possibly lower costs
performance compared to a
hedge portfolio/product
Various hedging methods

and products available on
the market
Quicker trading
Additional foreign currency Exact hedge only through

short intervals
risk
High minimum investment
Can negatively impact
performance compared to a Greater risk due to use of
hedge portfolio/product
OTC derivatives
Counterparty and
operational risk
Less transparency
Only suitable for
professional investors
Portfolio management
resources required
Issuer risk
Less transparency
Only suitable for
professional investor
Portfolio management
resources required
E.g. CHF, EUR, GBP, USD
Various currencies
Various currencies
One-time
Multiple
Multiple
from 0.15% p.a.
n.a.
n.a.
Transaction costs One-time

TER
Unhedged
0.3 - 0.45% p.a.
Certificates included: currency certificates, warrants and mini-futures. One-off transaction cost for the product, the monthly transaction cost (spread ) for the hedge impacts fund
performance.
63
Section 5
UBS ETFs currency hedged equity ETFs

Suite of sterling-hedged equity ETFs listed on the LSE
The most recent trends on the international currency markets, brought about in no
small part by the massive central bank intervention, represent major challenges for
investors, in particular as regards currency management.
UBS Global Asset Management now offers currency hedged share classes on a selection
of its physically replicated ETFs on equity indices. With this transparent currency
hedging strategy, it is possible to reduce currency risk and optimize portfolio
returns.
Currency hedged UBS ETFs
GBP
EUR
MSCI Japan
MSCI Japan
MSCI Canada
MSCI Canada
n/a
USD
CHF
SGD
MSCI Japan
MSCI Japan
MSCI Japan
MSCI Canada
MSCI Canada
MSCI Canada
MSCI United Kingdom MSCI United Kingdom MSCI United Kingdom MSCI United Kingdom
MSCI EMU
n/a
MSCI EMU
MSCI EMU
MSCI EMU
MSCI USA
MSCI USA
n/a
MSCI USA
MSCI USA
MSCI Switzerland
MSCI Switzerland
MSCI Switzerland
n/a
MSCI Switzerland
MSCI Australia
MSCI Australia
MSCI Australia
MSCI Australia
n/a
65

ETFs hedged to the GBP
Fund name
Distributio
TER
n1
ISIN
Trading
LSE
Bloomberg
currency
code
ticker
UBS ETF (LU) MSCI Canada hedged GBP UCITS ETF
dis
0.43
LU0937838836
%
GBp
UC57
UC57 LN
UBS ETF (LU) MSCI Canada hedged GBP UCITS ETF
acc
0.43% LU0950673797
GBp
UC58
UC58 LN
UBS ETF (LU) MSCI EMU hedged GBP UCITS ETF
dis
0.33% LU0937835733
GBp
UC59
UC59 LN
UBS ETF (LU) MSCI EMU hedged GBP UCITS ETF
acc
0.33% LU0950669688
GBp
UC60
UC60 LN
UBS ETF (LU) MSCI Japan hedged GBP UCITS ETF
dis
0.45% LU0969638401
GBp
UC61
UC61 LN
UBS ETF (LU) MSCI Japan hedged GBP UCITS ETF
acc
0.45% LU0969638583
GBp
UC62
UC62 LN
UBS ETF (LU) MSCI Switzerland hedged GBP UCITS ETF
dis
0.30% LU0977261246
GBp
UC70
UC70 LN
UBS ETF (LU) MSCI Switzerland hedged GBP UCITS ETF
acc
0.30% LU0977261162
GBp
UC69
UC69 LN
UBS ETF (IE) MSCI Australia hedged GBP UCITS ETF
dis
0.50% IE00BD4TY907
GBp
UC71
UC71 LN
UBS ETF (IE) MSCI Australia hedged GBP UCITS ETF
acc
0.50% IE00BD4TYB29
GBp
UC72
UC72 LN
UBS ETF (IE) MSCI USA hedged GBP UCITS ETF
dis
0.30% IE00BD4TYH80
GBp
UC73
UC73 LN
UBS ETF (IE) MSCI USA hedged GBP UCITS ETF
acc
0.30% IE00BD4TYJ05
GBp
UC74
UC74 LN
dis=distributing, acc = accumulating

Source: UBS Global Asset Management, 2014
66
The benchmark indices include Barclays, Markit and SBI and UBS ETFs
trade on the key European exchanges
Fund
currency
UBS ETF Barclays share classes

UBS ETF (LU) Barclays Capital US Treasury 1-3 UCITS ETF (USD) A-dis
UBS ETF (LU)
UBS ETF (LU)

UBS ETF (LU)
CHF) A-acc
UBS ETF (LU)
USD) A-acc
Barclays Capital US Treasury 7-10 UCITS ETF (USD) A-dis

Barclays Euro Area Liquid Corporates 1-5 UCITS ETF (EUR) A-dis
Barclays Euro Area Liquid Corporates 1-5 UCITS ETF (hedged to
Barclays Euro Area Liquid Corporates 1-5 UCITS ETF (hedged to
USD
USD
USD
USD
EUR
CHF
AuM in GBP
Mn
TER
Inception
date
91
0.21%
02.02.2012
13
0.22%
26.01.2012
12
0.21%
26.01.2012
18
0.22%
0.18%
02.02.2012
30.05.2014
87
USD
0.23%
0.23%
Replicati
on
ISIN
Physical
LU0721552544
Physical
LU0721552627
Physical
LU0721552890
Physical
Physical
LU0721552973
LU1048314196
31/03/2015 SIX
Physical
LU1048314865
30.01.2015 SIX
BI, XETRA, LSE,

01.12.2014 SIX
Physical
LU1048314436
Physical
LU1048314949
30.01.2015 SIX
Physical
LU1048315755
31/03/2015 XETRA, SIX
Physical
LU1048315243
Inception LSE, SIX

01.12.2014
date
Exchange
BI,XETRA,
XETRA,LSE,
LSE,
BI,
24.01.2012 SIX
SIX
30.05.2014
BI, XETRA, LSE,
30.09.2014 SIX
24.01.2012 BI,
SIX
30.05.2014
XETRA
BI, XETRA,
LSE,
31.10.2014 LSE,
SIX
24.01.2012 SIX
BI, XETRA, LSE,
24.01.2012 SIX
BI, XETRA, LSE,

24.01.2012 SIX
Replicati
Physical LU1048315326
on
ISIN
Exchange
BI, XETRA, LSE,
SIX
BI, XETRA, LSE,
SIX
BI, XETRA, LSE,
SIX
BI, XETRA, LSE,
SIX
BI, XETRA
UBS Fixed Income ETFs sovereign and corporate

range
UBS ETF (LU) Barclays US Liquid Corporates

acc
acc
dis
UBS
ETF Markit share classes
1-5 UCITS ETF (USD) A-dis

1-5 UCITS ETF (hedged to CHF) A-
1-5 UCITS ETF (hedged to EUR) A-
1-5 UCITS ETF (hedged to GBP) A-
USD
0.18%
CHF
0.23%
198
EUR
GBP
Fund
currency
0.23%
AuM in GBP
Mn
0.23%
TER
USD
EUR
21
CHF
EUR
EUR
GBP
EUR
190
3
8
0.17%
0.18%
0.23%
0.17%
0.23%
0.23%
0.17%
UBS ETF (LU) Markit iBoxx Germany 7-10 UCITS ETF (EUR) A-dis
EUR
0.17%
UBS ETF (LU) Markit iBoxx Liquid Corporate UCITS ETF (EUR) A-dis
EUR
57
0.22%
UBS
UBS
UBS
UBS
UBS
UBS
UBS
ETF
ETF (LU)
(LU)
ETF (LU)
ETF
ETF (LU)
(LU)
ETF (LU)
ETF (LU)
Markit
iBoxx
Germany
1-3 UCITS
ETF
(EUR)
A-dis
Barclays
US Liquid
Corporates
UCITS
ETF
(USD)
A-dis
Barclays US Liquid Corporates UCITS ETF (hedged to CHF) A-acc
Markit
iBoxx
Germany
3-5 UCITS
ETF
(EUR)
A-disto EUR) A-acc
Barclays
US Liquid
Corporates
UCITS
ETF
(hedged
Barclays US Liquid Corporates UCITS ETF (hedged to GBP) A-dis
Markit iBoxx Germany 5-10 UCITS ETF (EUR) A-dis
Governments
Corporates
Physical
Physical
Physical
Physical
Physical
Physical
Physical
LU0721553351
LU1048316647
LU1048317538
LU0721553435
LU1048317025
LU1048317298
LU0721553518
Physical
LU0721553609
Physical
LU0721553864
BI - Borsa Italiana; DB Deutsche Brse XETRA; LSE London Stock Exchange; SIX - SIX Swiss
Exchange
Source: UBS Global Asset Management. Data as of 31 March 2015.

67
Section 6

Currency hedging methodology of UBS ETF
Hedging of foreign currency in the desired home currency
UBS ETF hedge the foreign currencies of the standard indices in the selected home currency by selling each foreign currency
forward at the one-month forward rate. The sum of the sold forwards as at the last trading day of the month corresponds to the
market capitalization weighting of the securities contained in the standard index.
These are valued in both of the respective currencies two trading days before the first calendar day of the following month. The
hedged value remains constant over the entire month.
The two components of currency-hedged index returns

1. The return of the non-currency hedged indices in the selected home currency.
2. The profit or loss arising from the forward contract in the selected home currency.
Month 1
Month 2
2 2 3
1 2 3 4 5 6 7 8 9 0
2 2 3 3
1 2 3 4 5 6 7 8 9 0 1
3
Sale of foreign currency forward at one-month forward

rate
Valuation of securities contained in index
2
1 The securities contained in the index
are valued.
Foreign currency forwards are sold at

the one-month forward rate.
Hedged amount remains constant over

the entire month.
69
Impact on currency hedged ETF performance

Performance is impacted by direct and indirect costs
Direct costs
Description
Performance impact
Higher TER due to currency

hedging management (physical
replication)
Spread on currency forwards
These costs deteriorate

the performance
Potential inaccuracy of the

currency hedge, due to intramonthly changes of the
underlying (e.g. unhedged
equity index)
Over- / underinvestment in
equities
Over- / underhedge, due to
market volatility
Positive or negative effect

on performance (example
of a positive effect: The
underlying index is
decreasing while gaining
a positive return out of
the currency hedge at the
same time)
Indirect costs
A reliable estimate of cost in advance for the currency hedge is almost impossible.
Higher drag-level for swap based ETFs (synthetic replication). Currency hedging management costs and spread for currency forwards are included in the drag-level.
70
Section 7
Currency hedged UBS ETFs conclusion
Currency hedged UBS ETFs conclusion

Why buy UBS currency hedged ETFs?
Mitigate foreign currency risk.
Currency hedging in a single transaction.
Transparent currency hedging methodology.
No use of futures or other derivative instruments.
Simple access and transparency.
Products replicated physically.
72
UBS ETFs Further Information

Website
www.ubs.com/etf
Factsheets
www.ubs.com/etf
Brochures
www.ubs.com/etf
For illustration purpose only
Market data:
Bloomberg: UETF <GO>
Reuters: ETFV
73
UBS ETFs Awards
Past performance is not a reliable indicator for future performance.

74
Contact Information
UBS ETF Sales Team UK & Ireland
Andrew Walsh
UBS Global Asset Management (UK)
Ltd.
Global Asset Management
Florian Cisana
UBS Global Asset Management (UK)
Ltd.
UBS Exchange Traded Funds

Executive Director
Head UBS ETF Sales UK & Ireland
UBS Exchange Traded Funds

Director
UBS ETF Sales UK & Ireland
21 Lombard Street
EC3V 9AH London
United Kingdom
21 Lombard Street
EC3V 9AH London
United Kingdom
Tel. +44 20790 15901

Mobile +44 78180 47240
andrew.walsh@ubs.com
Tel. +44 20790 15398

Mobile +44 78800 96848
florian.cisana@ubs.com
UBS Global Asset Management (UK) Ltd.

21 Lombard Street
London EC3V 9AH
Internet
www.ubs.com/etf
ubs-etf-uk@ubs.com
Market data
Reuters, Bloomberg (UETF)
75
Section 8
Appendix
UBS ETFs Product Range (1/7)

Equities
Data Source: UBS Global Asset Management as of 28 August 2015.

All UBS ETFs mentioned in this product overview are UCITS compliant, have UK Reporting Fund status and are SIPP and ISA eligible.
77

Equities

78

Equities

79

Equities

80

Fixed Income

81

Fixed Income

82

Commodities and Alternatives

83
UBS ETFs Risk Information

UBS ETFs investing in equities
UBS Exchange Traded Funds invest in equities and may therefore be subject to high fluctuations in value. For this reason, an investment horizon of at least five years and
corresponding risk tolerance and capacity are required. All investments are subject to market fluctuations. Every fund has specific risks, which can significantly increase under
unusual market conditions. The funds assets are passively managed. As a result, the net asset value of the funds assets is directly dependent on the performance of the
underlying equities. Losses that could be avoided via active management will not be offset.
UBS ETFs investing in Real Estate Funds
The funds invest in real estate funds under Swiss law that are denominated in CHF and invest exclusively in Swiss properties. The price of the underlying fund units is not
determined by estimates of market value but by investor supply and demand. All investments are subject to market fluctuations. Every fund has specific risks, which may
increase considerably in unusual market conditions. Please contact your client advisor if you wish to receive further information on the investment risks associated with this
product.
UBS ETFs investing in Metals
The UBS Exchange Traded Fund investing in metals may be subject to considerable fluctuations in value. Investors therefore require an investment horizon of at least five years
and corresponding risk tolerance and capacity. All investments are subject to market fluctuations. All funds have specific risks, which may significantly increase under unusual
market conditions. The funds assets are passively managed. As a result, the net asset value of the funds assets is directly dependent on the performance of the underlying
equities. Losses that could be avoided via active management will not be offset.
UBS ETFs investing in Agriculture, Oil and Commodities
The Fund delivers the returns of a broadly diversified commodity index and may therefore be subject to high fluctuations in value. For this reason, an investment horizon of at
least five years and corresponding risk tolerance and capacity are required. The returns payable on the Fund are dependant on payments received by the Fund from the Swap
Counterparty under the terms of the Relevant Swap and, therefore, are subject to the credit risk of the Swap Counterparty. In the event that the Swap Counterparty defaults
under the terms of the Relevant Swap, the Fund may suffer a loss. Assets are passively managed meaning losses that could be avoided via active management will not be
offset. The net asset value of the Funds assets are materially dependent on the performance of the underlying investments. In case the currency of the product is different
from your reference currency, the return may increase or decrease as a result of currency fluctuations. All investments are subject to market fluctuations. Every fund has
specific risks, which can significantly increase under unusual market conditions.
UBS ETFs investing in HFR
The Fund delivers the returns of a broadly diversified hedge fund index and may therefore be subject to high fluctuations in value. For this reason, an investment horizon of at
least five years and corresponding risk tolerance and capacity are required. The returns payable on the Fund are dependant on payments received by the Fund from the Swap
Counterparty under the terms of the Relevant Swap and, therefore, are subject to the credit risk of the Swap Counterparty. In the event that the Swap Counterparty defaults
under the terms of the Relevant Swap, the Fund may suffer a loss. Assets are passively managed meaning losses that could be avoided via active management will not be
offset. The net asset value of the Funds assets are directly dependent on the performance of the underlying investments. In case the currency of the product is different from
your reference currency, the return may increase or decrease as a result of currency fluctuations
UBS ETFs investing in Fixed Income
This UBS Exchange Traded Fund invests in government bonds of a single country and may therefore be subject to fluctuations in value. For this reason, an investment horizon of
at least five years and corresponding risk tolerance and capacity are required. All investments are subject to market fluctuations. Every fund has specific risks, which can
significantly increase under unusual market conditions. As a result, the net asset value of the funds assets is directly dependent on the performance of the underlying index.
Losses that could be avoided via active management will not be offset.
84
UBS ETFs Disclaimer

UBS Global Asset Management (UK) Ltd is a subsidiary of UBS AG. Registered in England. UBS Global Asset Management (UK) Ltd and UBS Global Asset Management
Funds Ltd are authorised and regulated by the Financial Conduct Authority. UBS Global Asset Management Life Ltd is authorised by the Prudential Regulation Authority
and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Telephone calls may be recorded.
This document is for Professional Clients only. It is not to be distributed to or relied upon by Retail Clients under any circumstances.
The document has not been prepared in line with the FCA requirements designed to promote the independence of investment research and is not
subject to any prohibition on dealing ahead of the dissemination of investment research.
The Luxembourg and Irish domiciled funds are recognised scheme under section 264 of the Financial Services and Markets Act 2000. They seek UK Reporting Fund Status.
The protections offered by the UKs regulatory system, and compensation under the Financial Services Compensation Scheme, will not be available.
The Switzerland domiciled funds are not recognised under section 264 of the Financial Services and Markets Act and are therefore subject to the restrictions on promotion
in section 238 of the Financial Services and Markets Act.
The returns payable to the fund are dependent on payments received by the fund from the swap counterparty under the terms of the relevant swap and, therefore are
subject to credit risk of the swap counterparty. In the event that the swap counterparty defaults under the terms of the relevant swap, the funds may suffer a loss.
This material supports the presentation(s) given. It is not intended to be read in isolation and may not provide a full explanation of all the topics that were presented and
discussed. Care has been taken to ensure the accuracy of the content, but no responsibility is accepted for any errors or omissions. Please note that past performance is
not a guide to the future. The value of investments and the income from them may go down as well as up, and investors may not get back the original amount invested.
This document is a marketing communication. Any market or investment views expressed are not intended to be investment research.
The document has not been prepared in line with the FCA requirements designed to promote the independence of investment research and is not subject to any
prohibition on dealing ahead of the dissemination of investment research. The information contained in this document should not be considered a recommendation to
purchase or sell any particular security and the opinions expressed are those of UBS Global Asset Management and are subject to change without notice. Furthermore,
there can be no assurance that any trends described in this document will continue or that forecasts will occur because economic and market conditions change
frequently. This document does not create any legal or contractual obligation with UBS Global Asset Management. The recipient agrees that this information shall remain
strictly confidential where it relates to the Investment Manager's business. The prior consent of UBS Global Asset Management (UK) Ltd should be obtained prior to the
disclosure of commercially sensitive information to a third party (excluding the professional advisors of the recipient). Information reasonably deemed to be commercially
sensitive and obtained from UBS Global Asset Management (UK) Ltd should not be disclosed. This information is supplied with a reasonable expectation that it will not be
made public. If you receive a request under the Freedom of Information Act 2000 for information obtained from UBS Global Asset Management (UK) Ltd we ask that you
consult with us. We also request that any information obtained from UBS Global Asset Management (UK) Ltd in your possession is destroyed as soon as it is no longer
required. This document may not be reproduced, redistributed or republished for any purpose without the written permission of UBS AG.
This document is issued by [UBS Global Asset Management (UK) Ltd] and is intended for limited distribution to the clients and associates of UBS Global Asset
Management. Use or distribution by any other person is prohibited. Copying any part of this publication without the written permission of UBS Global Asset Management
is prohibited. Care has been taken to ensure the accuracy of its content, but no responsibility is accepted for any errors or omissions herein.
UBS 2015. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. E3
85

EC4N 6EU
T +44 (0)20 3370 1100
F +44 (0)20 3370 1101
www.SourceETF.com
Myths and misconceptions

of indexing with Exchange
Traded Funds (ETF)s
Todd Schlanger, CFA
Investment Strategy Group
Vanguard Asset Management, Limited
This document is directed at investment professionals and should not be distributed to, or relied upon
by retail investors. The value of investments, and the income from them, may fall or rise and investors
may get back less than they invested.
"The
b
to ju est way
st
i
fund buy a l n my vie
ow-c
and
ost i w is
keep
regul
ndex
arly
buyin
o
you'l
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Active / Passive Debate
Vanguard becomes largest mutual fund family

(Globally)
88
Passive is gaining traction in the UK

Funds under management (FUM) in passively-managed funds (GBP millions, %)
Source: Investment Association, data as at 31 December 2014. UK-domiciled funds under management. Market data includes money invested in the underlying funds in which
funds of funds invest, but excludes money invested in fund of funds themselves (other than funds of overseas funds) to avoid double-counting.
89
Active tends to underperform on average

Percentage of active equity managers underperforming their benchmark,
2000 to 2014
Equities
Fixed income

Sources: Vanguard calculations, using data from Morningstar, Inc.
Notes: Fund universe includes funds available for sale in the UK, filtered according to the description above, from the following Morningstar categories: UK equity flex cap, large-cap blend,
large-cap growth, large-cap value, mid-cap, small-cap; Europe equity Europe OE: flex-cap, large-cap blend, large-cap growth, large-cap value, mid-cap, small-cap; Euro zone equity flexcap, large-cap, mid-cap, small-cap; Global flex-cap, large-cap blend, large-cap growth, large-cap value, mid-cap, small-cap; US equity flex-cap, large-cap blend, large-cap growth, large-cap
value, mid-cap, small-cap; Emerging markets equity emerging markets; Europe bond EUR diversified; US bond USD diversified; Global bond global un-hedged bond; UK bonds UK
diversified, UK government. Performance is for periods ending on 31 December 2014. Performance is calculated relative to prospectus benchmark. Fund performance is shown in GBP terms,
net of fees, gross of withholding tax, with income reinvested, based on closing NAV prices.
90
Investing as a zero-sum game

Costs
Probability
Median post-cost
return
Benchmark return
Return
Underperforming benchmark
Outperforming benchmark
After costs, more than half of all assets underperform
Source: The Vanguard Group Inc.

91
Myths and misconceptions of indexing
Active works best in inefficient markets

Active can outperform in bull/bear markets
Returns matter more than costs
I dont invest in average funds
Active managers can better manage risks in a portfolio
92
Indexing only works in efficient markets?

Percentage of active equity managers underperforming their benchmark,
2005 to 2014

Source: Vanguard calculations, using data from Morningstar, Inc.
Notes: Fund universe includes funds available for sale in the UK, filtered according to the description above, from the following Morningstar categories: High yield; Small-cap; Emerging
markets. Performance is for periods ending on 31 December 2014. Performance is calculated relative to prospectus benchmark. Fund performance is shown in GBP terms, net of fees,
gross of withholding tax, with income reinvested, based on closing NAV prices.
93
Debunking the market cycle myth

Percentage of active equity funds underperforming prospectus benchmark

Source: Vanguard calculations, based on data from Morningstar, Inc to 31 December 2014
Notes: Displays the percentage of surviving funds that underperform their prospectus benchmark over the time period shown. Bull and bear markets are the local peak or trough in the global
equity market, defined as the MSCI All Country World IMI. The fund universe and categories are as defined slide 4. Returns are calculated in GBP net of fees, gross of tax, with income
reinvested. Past performance is not a reliable indicator of future results.
94
Low cost investments tend to outperform higher

cost investments
Average annualised return (%)
Average annual returns over the ten years to 31 December 2014

Source: Vanguard calculations, using data from calculations using Morningstar, Inc.
Notes: All mutual funds in each Morningstar category were ranked by their expense ratios as of 31 December 2014. They were then divided into four equal groups, from the lowestcost to the highest-cost funds. The chart shows the ten-year annualised returns for the median funds in the lowest cost and highest cost quartiles. Returns are in sterling terms with
income reinvested, net of expenses, excluding loads and taxes. Both actively managed and indexed funds are included. For funds with both income and accumulation share classes,
we use only accumulation share classes to avoid double counting.
95
Fund leadership is quick to change

Rank persistence of UK active equity funds

Source: Vanguard calculations, using data from Morningstar, Inc.
Performance is relative to prospectus benchmark. The first period was the 5-years ending 2009 and the second period was the 5-years ending 2014. The fund universe
includes all UK active equity funds available for sale in the UK. Returns are in GBP, net of fees, gross of tax, with income reinvested.
96
Actively managed portfolios tend to increase volatility
Past performance is no guarantee of future results.

Source: Vanguard calculations, using data from Morningstar, Inc. Data to 31 December, 2014.
Notes: The fund universe includes all active equity funds available for sale in the UK, investing in the equity classes as defined from the following Morningstar categories: UK equity flex cap,
large-cap blend, large-cap growth, large-cap value, mid-cap, small-cap; Global flex-cap, large-cap blend, large-cap growth, large-cap value, mid-cap, small-cap; Global bond global unhedged bond; GBP diversified UK diversified, Returns are in GBP terms, calculated net of fees, gross of tax withholding, with income reinvested.
97
Myths and misconceptions of indexing

Active works best in inefficient markets
- Relative performance often weaker as a result of higher costs
Active can outperform in bull/bear markets
- Timing market cycles is difficult and no evidence to support
Returns matter more than costs
- Costs reduce returns pound for pound
I dont invest in average funds
- Little performance persistence makes selection difficult
Active managers can better manage risks in a portfolio
- Active funds tend to have higher volatility
98
Key takeaways
Investing as a zero sum game
Myths and misconceptions
Relevance to mutual fund investors
Inefficient markets
The record of active management
Bull/bear market
Performance
Returns over costs
Cyclicality
Average fund
Survivorship bias
Active is less risky
Persistence
Other benefits of indexing
Comparing active to passive
More control over risks
The role of cost
Greater diversification
Relative performance
Portfolio consistency
99
Appendix
100
Active performance can be cyclical
Percentage of UK active equity managers underperforming their benchmarks

5-year periods
10-year periods

Sources: Vanguard calculations, using data from Morningstar, Inc. Data to 31 December 2014.
Notes: Fund universe includes funds available for sale in the UK, filtered according to the description above, from the following Morningstar
categories: UK equity flex cap, large-cap blend, large-cap growth, large-cap value, mid-cap, small-cap.
101
Survivorship bias can impact results

Excess return of dead funds over broad market benchmark
From January 2000 to fund closure date
Middle 50% of funds
Median

Source: Vanguard calculations, using data from Morningstar, Inc., FTSE and Barclays. Displays the cumulative annualised performance of those equity funds that were merged or liquidated
within our sample, relative to the prospectus benchmark most commonly used within that funds Morningstar Category. We measure performance from 1 January 2000 or the funds inception,
whichever is later, and continue each funds measurement period up until the month-end prior to it being merged or liquidated. Fund universe is as described in slide 4, limited to those funds
that were merged or liquidated from January 2000 to December 2014. Figure displays the middle 50% distribution of these funds returns prior to dying. Performance is measured in sterling
terms, net of fees, gross of tax withholding, with income reinvested.
102
The role of costs

Ongoing charges by fund category
Category
Active
Index
Difference
Global equity
1.31
0.23
1.08
U.K. equity
0.97
0.51
0.45
European equity
1.69
0.29
1.40
Eurozone equity
1.35
0.32
1.03
U.S. equity
1.31
0.21
1.10
Emerging market equity
1.34
0.26
1.07
Global bonds
0.86
0.19
0.66
GBP Diversified bonds
0.63
--
n/a
GBP Government bonds
0.56
0.31
0.25
EUR Diversified bonds
0.80
0.65
0.15
USD Diversified bonds
0.90
0.65
0.25
Notes: The average expense ratio quoted for each category of funds represents the asset-weighted average expense ratio based on information in latest available annual
report at 31 December 2014. Fund expenses are weighted by the share-class AUM, reflecting the typical investors experience in that fund. Fund universe includes funds
available for sale in the UK, filtered according to the description above, from the following Morningstar categories: UK equity flex cap, large-cap blend, large-cap growth,
large-cap value, mid-cap, small-cap; Europe equity Europe OE: flex-cap, large-cap blend, large-cap growth, large-cap value, mid-cap, small-cap; Euro zone equity flexcap, large-cap, mid-cap, small-cap; Global flex-cap, large-cap blend, large-cap growth, large-cap value, mid-cap, small-cap; US equity flex-cap, large-cap blend, large-cap
growth, large-cap value, mid-cap, small-cap; Emerging markets equity emerging markets; Europe bond EUR diversified; US bond USD diversified; Global bond global
un-hedged bond; UK bonds UK diversified, UK government. Performance is for periods ending on 31 December 2014. Performance is calculated relative to prospectus
benchmark. Source: Vanguard calculations, based on data from Morningstar, Inc. Data as of 31 December 2014. Past performance is not a reliable indicator of future results.
103
Lower costs tend to equate to higher returns
10 year annualised excess returns (%)
Performance of UK active equity funds relative to ongoing charges
Expense ratio (%)

Source: Vanguard calculations , using data from Thompson Reuters Datastream and Morningstar, Inc.
Returns on the vertical axis are the 10-year annualised excess return over each funds prospectus benchmark, through December 31 2014. Total expense ratio on the horizontal axis is from the
latest available annual report as at 31 December 2012. Fund universe and categories as defined in earlier charts. Performance is shown in sterling, net of fees gross of tax, with income
reinvested.
104
Distribution of equity fund performance

Prospectus benchmark
Outperforming / outperforming adjusted for survivorship bias

Sources: Vanguard calculations, using data from Morningstar, Inc. Displays the distribution of fund excess returns, relative to their prospectus
benchmark, for the 15 year period ending 31 December 2014. Fund universe is as defined on page 13. Performance is shown in GBP, net of fees, gross
of tax, with income reinvested.
105
Distribution of bond fund performance

Prospectus benchmark
Outperforming / outperforming adjusted for survivorship bias

Sources: Vanguard calculations, using data from Morningstar, Inc. Displays the distribution of fund excess returns, relative to their prospectus
benchmark, for the 15 year period ending 31 December 2014. Fund universe is as defined on slide 13. Performance is shown in GBP, net of fees,
gross of tax, with income reinvested. Past performance is not a reliable indicator of future results.
106
Adding passive can help reduce client risk

Client asks questions
Client pulls some assets
Client pulls most assets
Active portfolio
Client pulls all assets
Risk of losing clients
Market
return
Portfolios periodic return
Client asks questions
Client pulls some assets
Client pulls most assets
Adding
passive
Client pulls all assets
Risk of losing clients
Market
return
Portfolios periodic return

Source: Vanguard .
107
Indexing offers additional benefits in portfolio construction
Indexing can permit greater control of asset class risks in a portfolio

Using a concentrated active fund can lead to a portfolio with risk and return characteristics differing
from the equity market
Greater diversification
Actively managed funds tend to hold fewer securities with varying degrees of return correlation
Portfolio consistency
An index fund should maintain its style consistency by closely tracking the characteristics of the index
and market
108
This document is directed at professional investors and should not be distributed to, or relied upon by retail investors.
This document is designed for use by, and is directed only at persons resident in the UK.
The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any
jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the
person making the offer or solicitation is not qualified to do so.
The information on this document does not constitute legal,
tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions.
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a
reliable indicator of future results.
The opinions expressed in this presentation are those of individual speakers and may not be representative of Vanguard Asset Management, Limited
Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.
2015 Vanguard Asset Management, Limited. All rights reserved.
VAM-2015-09-25-2923
109

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ETFs in Portfolio Contruction
Philip Bailey
or,
How to save your clients money.
whilst charging them more.
Philip Bailey
Who are Assetfirst?
S ubsidi ary of:P rovisio Weal th Management

A dvi ser Charging adopted in March 2008
P ioneers of a E TFinvesting in the retail sect or
Founders of assetfirst - a uni que outsourced investment soluti on f or I FA s
Assetfirst
Virtual Investment Committee

Risk tailored portfolios
Disciplined Strategic asset allocation
Active Tactical asset allocation & regular
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Enabling bespoke portfolios
Subscription fees paid by the IFA, not
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Assetfirst vs Risk Targeted Multi-Asset

Sectors. Five years to 31st July 2015
29September2015
115
Risk verses Return Asset Allocation Technique
29/09/15
116
Asset Allocation
How Different Asset Classes perform
29/09/15
117
Rigorous independent research
Bespoke
Detailed asset allocation research
Robust methodology
Stress tested portfolio design
Strategic Asset Allocation
Back tested performance
Expected Risk (Standard Deviation)
Risk Graded Model Portfolios
Expected Annualised Risk and Return
Asset Mix
Geometric
Return
Annual Standard
Deviation
Defensive
6.5%
7.2%
Defensive to Balanced
7.5%
9.2%
Balanced
8.0%
10.7%
Balanced to Aggressive
8.6%
12.7%
Aggressive
9.4%
16.3%
Balanced High Yield
7.0%
9.7%
About Fund Selection
29/09/15
121
10 year: Median Fund vs Benchmark
29/09/15
122
The devils in the fees !
29/09/15
123
ETF Application
29/09/15
124
ETFs Perfect tool for Portfolio Construction
High Liquidity
Low cost Average Equity TER 37bps
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managers
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Ensure accurate asset allocation
Easier control of portfolio risk.
29/09/15
126
29/09/15
127
Pure Asset Allocation
29/09/15
128
Pure Asset Allocation
29/09/15
129
Purer Asset Allocation
29/09/15
130
The 5 Ps - Passive Portfolios Produce Predictable Performance
Expected Annualised Risk and Return
Asset Mix
Geometric
Return
Annual Standard
Deviation
Defensive
6.5%
7.2%
Defensive to Balanced
7.5%
9.2%
Balanced
8.0%
10.7%
Balanced to Aggressive
8.6%
12.7%
Aggressive
9.4%
16.3%
Balanced High Yield
7.0%
9.7%
Balanced Model
Save your clients money whilst charging more.

3rd Party
Costs
Average
underlying
Fund TER
Total Costs
on 10m
total client
portfolio
Regulatory
Risk
500 +
VAT
0.40%
40,000
Low
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nil
1.15% *
115,000
High
Fund of Funds
nil
1.71% *
171,000
Medium
Discretionary
Fund Manager
0.75%
1.15% *
190,000
Low
nil
1.15% *
115,000
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Management
Method
assetfirst
Guided
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Model
Portfolios
Dont forget the Adviser Fee (1%) and Wrap Fee (.25%). Total Assetfirst cost 1.55%
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How ETF based portfolios can benefit your business
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Legal disclaimer
This communication is for professional advisers only

and is not intended to be used by retail clients.
No liability is accepted for any loss or damage

occurring as a result of reliance on any statement,
opinion or any error or omission contained in the
preceding presentation.
Any statement or opinion reflects our understanding of

current or proposed legislation and regulation which
may change without notice.
These presentations should not be seen as a

substitute for professional advice.

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