Sustainable Investing with ETFs

Exposure to stocks and bonds of companies with high sustainability profiles

UBS Asset Management UBS Exchange Traded Funds

For qualified investors only

November 2016

1

Table of contents

• The Big Picture of Sustainable Investing

• Sustainable Indexed Investing

• Portfolio Applications

• UBS ETF - Sustainable Value Proposition

• Appendix:

• MSCI ESG Scope of Research • MSCI World SRI Index Breakdowns

The Big Picture of Sustainable Investing

Section 1

3

Overarching ESG framework

Sustainable investing is founded on three pillars

Source: European Responsible Investing Fund Survey 2015, KPMG. UBS Asset Management. For illustration purpose only.

Sustainable Investing

Environmental Recognize companies that focus on offering products or services

that contribute to environmentally sustainable economy

Social Recognize companies that support

development of human capital, implement best production

practices and safety principles

Governance Recognize companies with strong

corporate governance

• Climate change

• Renewable and clean energy

• Low carbon

• Forestry investing

• Water investments

• Fossil fuel exclusion

• Social and community impact

• Solidarity funds

• Social entrepreneurship

• Microfinance investing

• Engagement investing

• Business ethics

4

Growing importance of sustainable investing

Global sustainable investments reached USD 21 trillion1

$8'758

$3'740

$589

$134

$40

$13'608

$6'572

$945

$180

$53

0 2'000 4'000 6'000 8'000 10'000 12'000 14'000 16'000

Europe

UnitedStates

Canada

Australia /New

Zealand

Asia

Proportion of SRI assets by region (USD bn)

2014 2012

+15% CAGR

+16% CAGR

+26% CAGR

+32% CAGR

+25% CAGR

Source: Global Sustainable Investment Review 2014. 1) Professionally managed assets in all the regions covered by Global Sustainable Investment Association member organizations, incl. public and private investments that consider environmental, social and governance (ESG) factors in portfolio selection and management. ESG factors aligned with GSIA.

5

UBS becomes a market leader in SRI ETFs in Europe

UBS ETF29.5%

BNP Paribas10.8%

Invesco1.8%

iShares51.2%

Lyxor6.7%

UBS SRI ETFs with fund volume of more than USD 1bn as of October 2016

UBS ETF15.1%

BNP Paribas19.7%

Invesco2.5%

iShares62.7%

UBS ETF19.8%

BNP Paribas13.2%

Invesco2.9%

iShares64.2%

UBS ETF38.5%

BNP Paribas9.9%Invesco

1.1%

iShares39.1%

Lyxor0.4%

Amundi11.0%

2015

EUR 1'360mn

2012

EUR 310mn

2013

EUR 400mn

2014

EUR 798mn

Source: Morningstar, UBS Asset Management.

Data as of end- March 2016.

Sustainable Indexed Investing

Section 2

7

Index solutions development truly innovative

Source: UBS Asset Management. For illustration purpose only.

Launch of Domini 400 Social Index

KLD Analytics

1990

Launch of global Dow

Jones Sustainability

Indexes

1999

Versatility

Evolution

Milestones in the history of the indexed Socially Responsible Investing

MSCI acquires RiskMetrics and KLD to incorporate

the ESG

2010

Launch of Calvert Social

Index

2000

MSCI introduces currency

hedged SRI indices

2013

Barclays and MSCI

introduce a fixed income and currency hedged SRI

indices

2015

Launch of FTSE4Good

Series

2000

S&P Dow Jones as well as Barclays and MSCI introduce

green bond indices

2014 Launch of S&P Global Water

Index

2007

8

UBS ETF partners up with the leading index providers

Source: MSCI. UBS Asset Management. As of May 2016.

1) ESG Rating of A or higher, see Appendix I; 2) ESG rating of BBB or higher; see Appendix I

MSCI ESG research is the key foundation in deriving SRI indices

• MSCI has 40+ years experience based on legacy ESG firms IRRC, KLD & Innovest

• One of the largest ESG providers with a global staff of over 200 supporting ESG research processes

• Assets tracking the MSCI ESG index family have grown globally to USD 45bn at the end of 2015

• MSCI is a signatory to the PRI (Principles for Responsible Investment)

• Broad offering for key equity as well as fixed income markets through a joint venture with Barclays

Parent Index

Asset Class

MSIC ESG

Research

ESG Equity & Fixed Income Index Families

UBS ETFs

MSCI ACWI Barclays Global

Aggregate

Equity Fixed Income

MSCI ESG Research EQ: 5'700 companies; FI: 9'000 issuers

and 350'000 securities

MSCI SRI Indexes1)

MSCI Sustainability Indexes

MSCI Global Norms Indexes

MSCI Environmental Indexes

Barclays MSCI SRI Indexes

Barclays MSCI Sustainability

Indexes2)

Barclays MSCI ESG Weighted Indexes

Barclays MSCI Green Bond Indexes

MSCI World SRI MSCI USA SRI MSCI Japan SRI MSCI Pacific SRI

MSCI Emerging Markets SRI MSCI EMU SRI MSCI UK IMI SRI Barclays MSCI Sustainability

9

MSCI SRI index methodology

Source: MSCI. UBS Asset Management. For illustration purpose.

1 See Appendix I

2 See Appendix I

3 MSCI UK IMI Extended SRI and Barclays MSCI Sustainable ESG

Rating min. BBB and ESG Score min. 2

4 Narrower universes (incl. UK, Emerging Markets,

EMU) apply the 5% capping rule on single issuer to ensure proper diversification.

ESG research with its three dimensions

Intangible Value Assessment (IVA)

MSCI ESG Rating1

37 ESG Issues

ESG Rating (AAA-CCC)

ESG Score (0-10)

30 ESG Indicators

ESG Controversies

MSCI ESG Score2

Targeting of 25% market cap

IVA ESG rating ≥ A

IM ESG score ≥ 4

MSCI Parent Index

(e.g. MSCI World)

MSCI SRI

Index

(e.g. MSCI SRI World4)

Step 1

Business Involvement Screening

Exclusion of certain activities

Step 2

Positive Screening3

A minimum IVA rating of A and Controversy Score of 4

Targeting of 25% market cap in each sector

10

1. Business Involvement Screening

Source: MSCI , UBS Asset Management. For illustration purpose.

MSCI SRI indices exclude companies that are involved in particular activities.

• Alcohol: All 'Producers' (Alcohol Revenue > USD 500 million OR Alcohol Revenue >5%)

• Tobacco: All 'Producers' AND All 'Distributors', 'Retailers' or 'Suppliers' that earn >15% of

revenues from Tobacco-related products.

• Gambling: Operations/ Gambling Support AND (Gambling Revenue > USD 500 million

or Gambling Revenue > 5%)

• Nuclear Power: Utility/ Nuclear Fuel Enrichment/ Nuclear Reactor Design/ Nuclear

Uranium Mine/ (Nuclear Supplier AND Nuclear Revenue >15%)

• Adult Entertainment: Any Producer + (Revenue > USD 500 million OR Revenue >5%)

• GMO: Involvement in GMO and earning any revenue from it

• Weapons: Revenue of >5% OR Weapons Revenue > USD 500 million

• Controversial Weapons: Landmine, Cluster Bomb, Depleted Uranium, Nuclear

Weapon Systems or Components, Bio-Chemical Weapons Systems or Components

Business Involvement

Exclusion of companies involved in particular activates:

Identifies the nature

and extent of

company business

activities to support

particular ESG

portfolio formation

process

11

2. Intangible Value Assessment (IVA) ESG Rating

ESG Rating1)

Environment • Climate Change • Carbon Emissions • Energy Efficiency • …

Rating of companies (AAA to CCC) based on the extensive list of 37 key issues

Social • Labour Management • Health and Safty • Social Opportunities • Human Capital • …

Governance • Corporate Behavior • Business Ethics • Anti-competitive

Practices • …

Source: MSCI , UBS Asset Management. For illustration purpose.

1) See Appendix I for the detail list.

Assessment of how well a company deals with ESG issues within the peer group

The ESG issues fall into three broad categories. Each GICS sector assigns different significance to issues reflecting their materiality, e.g.

• Carbon emission is mostly relevant for the Utilities and Materials sectors

• Water stress is critical in the Consumer Staples industry

• Health and safety fatalities have been mostly predominant in the Energy and Industrials sector

• Business ethics and money fraud issues have high meaning in the Financials and Industrials

12

ESG Rating Report Example

Source: MSCI ESG Manager. UBS Asset Management.

13

3. ESG Controversy Score

Source: MSCI , UBS Asset Management. For illustration purpose.

1) See Appendix I for the detail list.

Evaluation of company's ongoing operations, products and services, on an absolute basis

ESG controversies fall into broad five categories which also include violations of global norms such as the UN Global Compact initiative.

• Controversies include a broad list of issues which are relevant from the ESG criteria and reflect a company's ongoing impact

• The severity of controversy is evaluated from very severe to low and scores below 4 imply that a company faces very severe controversies which classify it as ineligible for the SRI index

• Examples of controversies may include: recall of vehicles due to diagnosed malfunction; incidents happening during a production process due to lack of proper policies; etc.

ESG Score1)

Scoring of ongoing companies' controversies (0-10) based on a list of 30 indicators:

Environment • Toxic Emissions • Energy & Climate

Governance • Bribery & Fraud • Govn. Structures

Customers • Customer Relations • Privacy & Data Security

Human Rights & Community • Civil Liberties • Human Rights

Labor Rights & Supply Chain • Health & Safety • Child Labor

14

ESG Controversy Score Report Example

Source: MSCI ESG Manager. UBS Asset Management. Data as of 14 July 2016.

Portfolio Applications

Section 3

16

Why to add SRI investments to a portfolio?

ESG research addresses a wide-ranging number of ESG-related issues

Source: UBS Asset Management. For illustrative purpose only.

Can I reduce carbon exposure in my portfolio through the SRI investing?

Can I get more exposure to companies that consider efficient use of clean technologies or support renewable energy?

Are the companies I invest in committed to having the highest standards with regards to production safety and labour rights?

Do the companies I invest in respect human rights and civil liberties?

Are the companies in my portfolio known to be involved in any anti-competitive practices?

Is the management of these companies involved in any bribery or fraud cases?

E

S

G

17

A. Fostering human rights and labour rights

MSCI SRI indices have a higher Impact Monitor (Controversy) score

Among others the MSCI ESG Impact Monitor considers the below controversies and indicators:

1. Human Rights & Community:

Impact on Human Rights of Local Communities

Civil Liberties

Human Rights Concerns

2. Labour Rights & Supply Chain:

Child Labour

Collective Bargaining & Union

Discrimination & Workforce Diversity

Health & Safety

Labour Management Relations

Supply Chain Labour Standards

7

7.5

8

8.5

9

9.5

10

HumanRightsLocal

CommScore

HumanRights Civil

LibertiesScore

HumanRights

ConcernsScore

HumanRightsOtherScore

LaborRights

Child Score

LaborRights

DiversityScore

LaborRights Emp

Score

LaborRights MgtRel Score

LaborRightsLaborStandScore

LaborRightsOthersScore

MSCI Emerging Markets

7

7.5

8

8.5

9

9.5

10

HumanRightsLocal

CommScore

HumanRights Civil

LibertiesScore

HumanRights

ConcernsScore

HumanRightsOtherScore

LaborRights

Child Score

LaborRights

DiversityScore

LaborRights Emp

Score

LaborRights MgtRel Score

LaborRightsLaborStandScore

LaborRightsOthersScore

MSCI Emerging Markets SRI

Source: MSCI ESG Manager. UBS Asset Management. March 2016.

18

B. Lower carbon emissions (1/2)

MSCI SRI indices significantly reduce the carbon emissions across sectors

0

200

400

600

800

1'000

1'200

1'400

Utilities Energy Materials Industrials ConsumerStaples

ConsumerDiscretionary

Financials InformationTechnology

HealthCare

TelecomServices

MSCI USA Carbon Emissions (mn t CO2e)

Carbon Emission Scope 1 Carbon Emission Scope 2

0

10

20

30

40

50

60

70

80

Utilities Energy Materials Industrials ConsumerStaples

ConsumerDiscretionary

Financials InformationTechnology

HealthCare

TelecomServices

MSCI USA Socially Responsible Index Carbon Emissions (mn t CO2e)

Carbon Emission Scope 1 Carbon Emission Scope 2

The MSCI ESG Intangible Value Assessment caculates the carbon footprint at company level based on two dimensions:

Scope 1: All direct GHG emissions from sources owned or controlled by the company:

Fossil fuels burned on site

Entity-owned or leased vehicles

Scope 2: Indirect GHG emissions from consumption:

Electricity, heat, or steam

Transmission and distribution (T&D) losses associated with some purchased utilities

Source: MSCI ESG Manager. UBS Asset Management. March 2016.

19

B. Lower carbon emissions (2/2)

The MSCI SRI indices deliver a substantial relative reduction across carbon metrics1)

159'655

354'726

182'806

277'553

148'885

121'228

322'513

82'084

159'636

131'953111'268

86'988

50'648

128'965

0

100'000

200'000

300'000

400'000

MSCI World MSCI EmergingMarkets

MSCI Pacific MSCI EMU MSCI UK IMI MSCI USA MSCI Japan

Standard Socially Responsible

Total Carbon Emissions (tons CO2) -50.1%

212

354

293

227

139

211

260

116

171

130115

91 97107

0

100

200

300

400

MSCI World MSCI EmergingMarkets

MSCI Pacific MSCI EMU MSCI UK IMI MSCI USA MSCI Japan

Standard Socially Responsible

Carbon Intensity (tons CO2 / USD M sales)

Source: MSCI ESG Manager. UBS Asset Management. March 2016. 1) See Appendix III

-49.8%

20

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

World World SRI USA USA SRI EMU EMU SRI Japan Japan SRI UK IMI UK IMI SRI Pacific Pacific SRI EM EM SRI

Since Sep. 28, 2007 inUSD

Since Sep. 28, 2007 inUSD

Since May 26, 2010 inEUR

Since Sep. 28, 2007 inJPY

Since May 31, 2011 inGBP

Since Sep. 28, 2007 iinUSD

Since May 31, 2011 inUSD

Outer Bars - annualized performance of TR net indices since inception (left-hand scale)Inner Bars - Sharpe ratios of TR net indices since inception (right-hand scale)

C. Improved portflio risk/return characteristics MSCI SRI indices have delivered better relative performance* on a risk-adjusted basis

Source: MSCI. UBS Asset Management. Data as of 30 April 2016. Past performance is not reliable indicator for future results. *) The meta-study "The Performance of Socially Responsible Investment" (by Emma Sjöström, Stockholm School of Economics) shows that of twenty‐one studies done recently in academia, five studies report that SRI outperforms conventional investments, seven conclude that SRI investment products have similar performance relative to their conventional peers. Three studies find that SRI generates inferior performance relative to its conventional peers. Finally, six studies report mixed results.

UBS ETF - Sustainable Value Proposition

Section 4

22

SRI investing grows considerably as ESG related issues create risks as well as opportunities and play a more and more significant role in the investment decision.

SRI investing has just become available in a passive format helping to fuel the growing demand for the SRI solutions

MSCI SRI benchmarks build on a rigorous and comprehensive ESG research combining all three SRI pillars

The MSCI SRI benchmark indices offer modest tracking error and solid risk-adjusted performance relative to their parent indices

UBS SRI ETFs allow cost efficiently and flexible to:

– Align the portfolio with personal values

– Create a positive impact on the environment

– Improve the portfolio risk/return

UBS offers a broad range of SRI ETFs and funds for both equity as well as fixed income markets, including currency hedged share classes

SRI - Doing well by doing good!

UBS SRI ETFs deliver financial and social return

Source: UBS Asset Management. UBS Asset Management is a signatory to the Principles for Responsible Investment (PRI)

23

UBS SRI ETFs: Consistent core building blocks

Unique and broad offering

Source: UBS Asset Management, June 2016.

Emerging Markets Equity

Fixed Income

Developed Markets

US

ASSET CLASS EXPOSURE SHARE CLASS

h GBP

h EUR

h CHF

USD

USD

USD

• Consistent core building blocks for Equity and Fixed Income

• Diversified equity exposure for Developed Markets (World, USA, EMU, Pacific, Japan, UK) and Emerging Markets

• Currency hedged share classes in CHF, EUR, USD and GBP

• European exchanges listings at SIX Swiss Exchange, LSE, Borsa Italiana, EuroNext and Xetra

• Physically replicated ETFs

24

UBS SRI ETFs: Sustainable value proposition

Data as of 28 October 2016. * Morningstar Sustainability Rating: Morningstar assigns Sustainability Ratings by ranking all scored funds within a Morningstar Category by their Portfolio Sustainability Scores. The ranked funds are then divided into five groups, based on a normal distribution and each fund receives a rating: "High" (top 10%), Above Average (next 22.5%); Average (next 35%); Below Average (next 22.5%) and Low (bottom 10%).

Fund Name FeeAuM

(CHFm)

NAV

Ccy.Replication Distribution ISIN Bloomberg

Morningstar

Sustainbility

Rating*

Socially Reponsible Equities

UBS ETF (LU) MSCI World Socially Responsible UCITS ETF 0.38% 210 USD Physical Yes LU0629459743 WSRUSA SW High

UBS ETF (LU) MSCI USA Socially Responsible UCITS ETF 0.33% USD Physical Yes LU0629460089 ASRUSA SW

UBS ETF (LU) MSCI USA Socially Responsible hedged CHF UCITS ETF 0.43% CHF Physical Yes LU1273642733 USSRT SW

UBS ETF (LU) MSCI USA Socially Responsible hedged CHF UCITS ETF 0.43% CHF Physical No LU1273641503 USSRS SW

UBS ETF (LU) MSCI USA Socially Responsible hedged EUR UCITS ETF 0.43% EUR Physical Yes LU1280303014 USSRF SW

UBS ETF (LU) MSCI EMU Socially Responsible UCITS ETF 0.28% EUR Physical Yes LU0629460675 ESREUA SW

UBS ETF (LU) MSCI EMU Socially Responsible hedged CHF UCITS ETF 0.38% CHF Physical Yes LU1273642907 EUSRT SW

UBS ETF (LU) MSCI EMU Socially Responsible hedged CHF UCITS ETF 0.38% CHF Physical No LU1273642816 EUSRS SW

UBS ETF (LU) MSCI EMU Socially Responsible hedged USD UCITS ETF 0.38% USD Physical No LU1280300770 EUSRU SW

UBS ETF (LU) MSCI Japan Socially Responsible UCITS ETF 0.40% JPY Physical Yes LU1230561679 JPSRF SW

UBS ETF (LU) MSCI Japan Socially Responsible hedged CHF UCITS ETF 0.50% CHF Physical Yes LU1273488475 JPSRT SW

UBS ETF (LU) MSCI Japan Socially Responsible hedged EUR UCITS ETF 0.50% EUR Physical No LU1273488715 JPSRE SW

UBS ETF (LU) MSCI Japan Socially Responsible hedged USD UCITS ETF 0.50% USD Physical No LU1273489440 JPSRU SW

UBS ETF (IE) MSCI United Kingdom IMI Socially Responsible UCITS ETF 0.28% GBP Physical Yes IE00BMP3HN93 UKSRF SW

UBS ETF (IE) MSCI UK IMI Socially Responsible hedged CHF UCITS ETF 0.38% CHF Physical Yes IE00BZ0RTB90 UKSRT SW

UBS ETF (IE) MSCI UK IMI Socially Responsible hedged EUR UCITS ETF 0.38% EUR Physical No IE00BYNQMK61 UKSRE SW

UBS ETF (IE) MSCI UK IMI Socially Responsible hedged USD UCITS ETF 0.38% USD Physical No IE00BYNQMM85 UKSRU SW

UBS ETF (LU) MSCI Pacific Socially Responsible UCITS ETF 0.40% 36 USD Physical Yes LU0629460832 PSRUSA SW High

UBS ETF (LU) MSCI Emerging Markets Socially Responsible UCITS ETF 0.53% 229 USD Physical Yes LU1048313891 MSRUSA SW High

Sustainable Corporate Bonds

UBS ETF (LU) Barclays MSCI US Liquid Corporates Sustainable UCITS ETF 0.20% USD Physical Yes LU1215461085 CBSUSF SW

UBS ETF (LU) Barclays MSCI US Liquid Corp. Sustainable hedged CHF UCITS ETF 0.25% CHF Physical Yes LU1215461754 CBSUST SW

UBS ETF (LU) Barclays MSCI US Liquid Corp. Sustainable hedged EUR UCITS ETF 0.25% EUR Physical No LU1215461325 CBSUSE SW

UBS ETF (LU) Barclays MSCI US Liquid Corp. Sustainable hedged GBP UCITS ETF 0.25% GBP Physical Yes LU1215461598 CBSUSH SW

High

High

High

High

High

302

90

107

30

85

Appendix I

ESG Scope of Research

26

Intangible Value Assessment (IVA) ESG Rating: AAA-CCC

Source: MSCI ESG Rating Methodology, April 2016.

MSCI ESG Rating process calculates each company’s exposure to key ESG risks based on a granular breakdown of a company’s businesses. To arrive at a final letter rating, the weighted averages of the Key Issue Scores are aggregated and companies’ scores are normalized by their GICS sub-industries. These assessments of company performance are not absolute but are explicitly intended to be relative to the standards and performance of a company’s industry peers.

By The MSCI ESG Rating process covers the following 10 themes capturing 37 ESG issues: 3 Pillars 10 Themes 37 ESG Key Issues

Environment

Climate Change

Carbon Emissions Energy Efficiency Product Carbon Footprint Financing Environmental Impact Climate Change Vulnerability

Natural Resources

Water Stress Biodiversity & Land Use Raw Material Sourcing

Pollution & Waste

Toxic Emissions & Waste Packaging Material & Waste Electronic Waste

Environmental Opportunities Opportunities in Clean Tech Opportunities in Green Building Opportunities in Renewable Energy

Social

Human Capital Labour Management Health & Safety Human Capital Development Supply Chain Labour Standards

Product Liability Product Safety & Quality Chemical Safety Financial Product Safety Privacy & Data Security Responsible Investment Health & Demographic Risk

Stakeholder Opposition Controversial Sourcing

Social Opportunities Access to Communications Access to Finance Access to Health Care Opportunities in Nutrition & Health

Governance

Corporate Governance Board Pay Ownership Accounting

Corporate Behavior Business Ethics Anti-Competitive Practices Corruption & Instability Financial System Instability

27

ESG Controversies Score: 0-10

Source: MSCI ESG Controversies Methodology, May 2016.

MSCI ESG Controversies is designed to provide timely and consistent assessments of ESG controversies involving publicly traded companies and fixed income issuers. The evaluation framework used in ESG Controversies is designed to be consistent with international norms represented in numerous widely accepted global conventions, including the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, and the UN Global Compact. The MSCI ESG Impact Monitor covers the following five categories of stakeholder impact with 30 specific indicators:

Environment Social Governance

Environment Customers Human Rights and Community

Labour Rights and Supply Chain

Governance

• Biodiversity & Land Use

• Toxic Emissions & Waste

• Energy & Climate Change

• Water Stress • Operational Waste

(Non-Hazardous) • Supply Chain

Management • Other

• Anticompetitive Practices

• Customer Relations • Privacy & Data

Security • Marketing &

Advertising • Product Safety &

Quality • Other

• Impact on Local Communities

• Human Rights Concerns

• Civil Liberties • Other

• Labour Management Relations

• Health & Safety • Collective Bargaining

& Union • Discrimination &

Workforce Diversity • Child Labour • Supply Chain Labour

Standards • Other

• Bribery & Fraud • Governance Structures • Controversial

Investments • Other

28

ESG carbon investigation

Carbon emissions is one of the 37 key IVA ESG issues This issue evaluates the extent to which companies may face increased costs linked to carbon pricing or regulatory caps. Scores are based on exposure to GHG intensive businesses and emerging regulations; carbon reduction targets and mitigation programs; and carbon intensity over time and vs. peers.

Impact • Contribution to climate change

Risk / Opportunity • Increased costs linked to carbon pricing or trading • Facility retrofits or operational disruptions due to regulatory caps

Exposure Metrics • Extent to which companies operate in jurisdictions where regulations on carbon emissions are stringent or becoming more stringent

• Extent to which companies’ main business activities are carbon-intensive based on economic input-output model estimating total GHG emissions relative to sales

Metrics • Efforts to reduce exposure through comprehensive carbon policies and implementation mechanisms, including carbon reduction targets, production process improvements, and installation of depollution or emissions capture equipment, and/or switch to cleaner energy sources.

• Targets: i) Carbon Improvement Targets; ii) Aggressiveness of target in the context of current performance; iii)

Demonstrated track record of achieving carbon reduction targets • Migration: i) Programs or actions to reduce the emissions intensity of core operations • Performance: i) Trend in GHG emissions intensity; ii) GHG emissions intensity vs. peers (GHG Emissions - metric

tons CO2e and GHG Emissions Intensity - metric tons CO2e / USD million sales)

Sectors • Energy; Materials; Industrials; Consumer Staples; Financials; Utilities

Data Sources • Company disclosure and news searches • Carbon Disclosure Project (CDP) • Environment regulatory agencies (EPA, EEA) • Comprehensive Environmental Data Archive (CEDA) • Eurostat – Air Emissions Accounts

Source: MSCI. UBS Asset Management.

Appendix II

MSCI World SRI Index Breakdowns

30

MSCI World SRI

Source: MSCI, UBS Asset Management. Data as of 31 March 2016.

0% 5% 10% 15% 20%

AUT

NZL

PRT

IRL

ISR

NOR

FIN

BEL

SGP

DNK

ITA

SWE

HKG

ESP

NLD

AUS

CHE

DEU

CAN

FRA

GBR

JPN

USA

MSCI World SRI MSCI World

Country breakdown

0% 5% 10% 15% 20%

Utilities

TelecommunicationServices

Materials

Energy

ConsumerStaples

Industrials

HealthCare

ConsumerDiscretionary

InformationTechnology

Financials

MSCI World SRI MSCI World

Sector breakdown

55% 60%

31

MSCI World SRI

Source: MSCI, UBS Asset Management. Data as of 31 March 2016.

Top 15 Overweights Top 15 Underweights

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

United Parcel Service

Allianz

Westpac

SAP

Nike

Vodafone

Novo Nordisk

McDonalds

Gilead Sciences

IBM

Cisco

Walt Disney

Roche Holdings

Procter & Gamble

Microsoft

MSCI World SRI MSCI World

0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

Pfizer

Coca Cola

Jpmorgan Chase

Verizon Communications

Alphabet A

Alphabet C

Amazon Com

Wells Fargo & Co

Nestle

AT&T

Facebook

General Electric

Johnson & Johnson

Exxon

Apple

MSCI World SRI MSCI World

32

UBS ETF – Contact Information

Raimund Müller, CIIA UBS AG Asset Management UBS Exchange Traded Fund Executive Director Head UBS ETF Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 39 81 Mobile +41-79-588 21 53 raimund.mueller@ubs.com

Dominik Blunschi UBS AG Asset Management UBS Exchange Traded Fund Director UBS ETF Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 88 06 Mobile: +41-79-587 89 71 dominik.blunschi@ubs.com

Giovanna Cilia UBS AG Asset Management UBS Exchange Traded Fund Director UBS ETF Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 53 68 Mobile +41-79-608 65 86 giovanna.cilia@ubs.com

Adrian Steiner, CAIA UBS AG Asset Management UBS Exchange Traded Fund Associate Director UBS ETF Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 55 39 Mobile +41-79-608 68 52 adrian-zb.steiner@ubs.com

33

UBS AG Asset Management P.O. Box CH-8098 Zürich

Email ubs-etf@ubs.com

www.ubs.com/etf

UBS ETF – Contact Information

34

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 fund’s assets are passively managed. As a result, the net asset value of the fund’s 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 fund’s assets are passively managed. As a result, the net asset value of the fund’s 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 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 Fund’s 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 dependent 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 Fund’s 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 fund's assets is directly dependent on the performance of the underlying index. Losses that could be avoided via active management will not be offset.

UBS ETFs investing in Multi Asset Portfolios The Fund is highly dynamic and may exhibit above-average potential growth and investment performance, depending on the economic environment. For this reason, an investment horizon of at least five years and corresponding risk tolerance and capacity are required. The Fund is exposed to the investment risk arising from the Reference Strategy underlying the Swaps. In the event that the swap counterparty defaults under the terms of the relevant swap, the Fund may suffer a loss. The Fund’s assets are passively managed. As a result, the net asset value of the Fund’s assets is materially dependent on the performance of the underlying investments. Losses that could be avoided via active management will not be offset. The Reference Strategy is a rules based Algorithm designed to target consistent returns but may not be effective in delivering such returns.

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UBS ETFs – Disclaimer

For marketing and information purposes by UBS.

For qualified investors only. The information and opinions contained in this document have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith, but is not guaranteed as being accurate, nor is it a complete statement or summary of the securities, markets or developments referred to in the document. UBS AG and / or other members of the UBS Group may have a position in and may make a purchase and / or sale of any of the securities or other financial instruments mentioned in this document.

UBS funds under Luxembourg and Irish law.

The MSCI indexes are the exclusive property of MSCI INC. (“MSCI”). MSCI and the MSCI index names are service mark(s) of MSCI or its affiliates and have been licensed for use for certain purposes by UBS AG (“UBS”). The financial securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such financial securities. The full prospectus of the UBS ETF Sicav contains a more detailed description of the limited relationship MSCI has with UBS and any related financial securities. No purchaser, seller or holder of this product, or any other person or entity, should use or refer to any MSCI trade name, trademark or service mark to sponsor, endorse, market or promote this product without first contacting MSCI to determine whether MSCI’s permission is required. Under no circumstances may any person or entity claim any affiliation with MSCI without the prior written permission of MSCI.

“Barclays Indices” are trademarks of Barclays Capital or its affiliates and have been licensed for use in connection with UBS Exchange Traded Funds. UBS Exchange Traded Funds based on Barclays Indices are not sponsored or endorsed by Barclays Capital or its affiliates. Neither Barclays Capital nor its affiliates make any representation regarding the advisability of investing in UBS Exchange Traded Funds.

Before investing in a product please read the latest prospectus carefully and thoroughly. Units of UBS funds mentioned herein may not be eligible for sale in all jurisdictions or to certain categories of investors and may not offered, sold or delivered in the United States. The information mentioned herein is not intended to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not a reliable indicator of future results. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units. Commissions and costs have a negative impact on performance. If the currency of a financial product or financial service is different from your reference currency, the return can increase or decrease as a result of currency fluctuations. This information pays no regard to the specific or future investment objectives, financial or tax situation or particular needs of any specific recipient. The details and opinions contained in this document are provided by UBS without any guarantee or warranty and are for the recipient's personal use and information purposes only. This document may not be reproduced, redistributed or republished for any purpose without the written permission of UBS AG. Source for all data and charts (if not indicated otherwise): UBS Asset Management

This document contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to our future business development. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.

Representative in Switzerland for UBS funds established under foreign law: UBS Fund Management (Switzerland) AG, P.O. Box, CH-4002 Basel. Paying agent: UBS Switzerland AG, Bahnhofstrasse 45, CH-8001 Zurich. Prospectuses, simplified prospectuses or key investor information, the articles of association or the management regulations as well as annual and semi-annual reports of UBS funds are available free of charge from UBS AG, P.O. Box, CH-4002 Basel or from UBS Fund Management (Switzerland) AG, P.O. Box, CH-4002 Basel.

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