UBS Investment Funds Annual Financial Statements For the year ended 30 June 2014 The Responsible Entity of UBS Investment Funds is UBS Global Asset Management (Australia) Ltd (ABN 31 003 146 290) (AFS Licence No.222 605). The Responsible Entity’s registered office is Level 16 Chifley Tower, 2 Chifley Square, Sydney NSW 2000. The UBS Investment Funds consists of 14 separate Schemes: UBS Property Securities Fund ARSN 090 431 271 UBS Australian Share Fund ARSN 090 427 213 UBS International Share Fund ARSN 090 431 735 UBS Australian Small Companies Fund ARSN 107 739 873 UBS Global Property Securities Fund ARSN 110 631 171 UBS Global Quantitative Share Fund ARSN 117 975 676 UBS Defensive Investment Fund ARSN 090 430 881 UBS Balanced Investment Fund ARSN 090 430 210 UBS Emerging Markets Equity Fund (AUD) ARSN 121 926 458 UBS-HALO Australian Share Fund ARSN 145 223 007 UBS Clarion Global Property Securities Fund ARSN 115 202 358 UBS Tactical Beta Fund - Conservative ARSN 157 926 460 UBS Tactical Beta Fund - Growth ARSN 157 926 166 UBS Tactical Beta Fund - Balanced ARSN 158 859 173 Global Asset Management Annual Financial Statements
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UBS Investment FundsAnnual Financial StatementsFor the year ended 30 June 2014
The Responsible Entity of UBS Investment Funds is UBS Global Asset Management (Australia) Ltd (ABN 31 003 146 290) (AFS Licence No.222 605). The Responsible Entity’s registered office is Level 16 Chifley Tower, 2 Chifley Square, Sydney NSW 2000.
The UBS Investment Funds consists of 14 separate Schemes:
UBS Property Securities FundARSN 090 431 271
UBS Australian Share FundARSN 090 427 213
UBS International Share FundARSN 090 431 735
UBS Australian Small Companies FundARSN 107 739 873
UBS Global Property Securities FundARSN 110 631 171
UBS Global Quantitative Share FundARSN 117 975 676
UBS Defensive Investment FundARSN 090 430 881
UBS Balanced Investment FundARSN 090 430 210
UBS Emerging Markets Equity Fund (AUD)ARSN 121 926 458
UBS-HALO Australian Share FundARSN 145 223 007
UBS Clarion Global Property Securities FundARSN 115 202 358
UBS Tactical Beta Fund - ConservativeARSN 157 926 460
UBS Tactical Beta Fund - GrowthARSN 157 926 166
UBS Tactical Beta Fund - Balanced
ARSN 158 859 173
Global Asset ManagementAnnual Financial Statements
UBS Investment Funds Annual Financial Statements For the year ended 30 June 2014
Contents Page Directors' Report ........................................................................................................................................................................................ 2 Statements of Comprehensive Income ...................................................................................................................................................... 7 Statements of Financial Position .............................................................................................................................................................. 11 Statements of Changes in Equity ............................................................................................................................................................. 13 Statements of Cash Flows ........................................................................................................................................................................ 15 Notes to the Financial Statements ............................................................................................................................................................ 20 1 General information....................................................................................................................................................................... 20 2 Summary of significant accounting policies .................................................................................................................................... 20 3 Dividend/Trust distribution income ................................................................................................................................................. 29 4 Net gains/(losses) on financial instruments held at fair value through profit or loss ........................................................................ 30 5 Auditor's remuneration .................................................................................................................................................................. 32 6 Net assets attributable to unitholders ............................................................................................................................................ 34 7 Distributions to unitholders ............................................................................................................................................................ 38 8 Financial assets held at fair value through profit or loss ................................................................................................................. 42 9 Receivables .................................................................................................................................................................................... 44 10 Financial liabilities held at fair value through profit or loss ............................................................................................................. 45 11 Payables ......................................................................................................................................................................................... 46 12 Derivative financial instruments ..................................................................................................................................................... 47 13 Financial risk management ............................................................................................................................................................. 54 14 Offsetting financial assets and financial liabilities ......................................................................................................................... 116 15 Related party transactions ............................................................................................................................................................ 129 16 Reconciliation of change in net assets attributable to unitholders to net cash inflows/(outflows) from operating activities .......... 135 17 Events occurring after the reporting date ..................................................................................................................................... 139 18 Contingent assets and liabilities and commitments ...................................................................................................................... 139 19 Investment in subsidiaries ............................................................................................................................................................ 139 Directors' Declaration ............................................................................................................................................................................ 140 Independent Auditor's Report to the Unitholders of UBS Investment Funds .......................................................................................... 141
UBS Investment Funds Directors' Report For the year ended 30 June 2014
2
Directors' Report
The directors of UBS Global Asset Management (Australia) Ltd, the Responsible Entity of UBS Property Securities Fund, UBS Australian Share Fund, UBS International Share Fund, UBS Australian Small Companies Fund, UBS Global Property Securities Fund, UBS Global Quantitative Share Fund, UBS Defensive Investment Fund, UBS Balanced Investment Fund, UBS Emerging Markets Equity Fund (AUD), UBS-HALO Australian Share Fund, UBS Clarion Global Property Securities Fund, UBS Tactical Beta Fund - Conservative, UBS Tactical Beta Fund - Growth and UBS Tactical Beta Fund - Balanced ("the Schemes") present their report together with the financial statements of the Schemes for the financial year ended 30 June 2014.
Schemes information
The Schemes are Australian Registered Schemes. UBS Global Asset management (Australia) Ltd, the Responsible Entity of the Schemes, is incorporated and domiciled in Australia. The registered office of the Responsible Entity is located at Level 16 Chifley Tower, 2 Chifley Square, Sydney NSW 2000.
Directors
The following persons held office as directors of UBS Global Asset Management (Australia) Ltd during the financial year up to the date of this report:
B J Doherty, Chairman (Appointed 08 October 2013)
K R Sotorp, Chairman (Resigned as Chairman 08 October 2013 and Resigned 25 May 2014 as Director)
A L Anderson
J D Males
B A Heap (Resigned 20 September 2013)
A L Flockart (Appointed 08 October 2013)
T C Cooke (Appointed 08 October 2013)
R Buehlmann (Appointed 19 September 2014)
Principal activities
During the financial year, the Schemes continued to invest funds in accordance with their current Product Disclosure Statements and the provisions of the Schemes' Constitutions.
The Schemes did not have any employees during the financial year.
There were no significant changes in the nature of the Schemes' activities during the financial year.
Review and results of operations
There have been no significant changes to the operations of the Schemes since the previous financial year. The Schemes continued to invest funds in accordance with target asset allocations as set out in the governing documents of the Schemes and in accordance with the provisions of the Schemes' Constitutions.
The performance of the Schemes, as represented by the results of its operations, was as follows:
Total distributions paid and payable 8,775 8,318 40,543 41,749 1,706 3,014 1,221 2,611
Total distributions (cents per unit) 3.61 2.90 6.22 5.85 0.80 1.57 1.95 3.67
Total return (including both capital and distribution return) for the financial year assuming reinvestment of all distributions back into the Schemes (%) 11.50 30.00 16.67 24.86 21.04 34.58 23.34 7.97
UBS Investment Funds Directors' Report (continued) For the year ended 30 June 2014
Profit/(loss) before finance costs attributable to unitholders 7,188 7,993 10,815 13,538 14,265 15,473 111,829 127,979
Total distributions paid and payable 26 2,317 764 895 6,294 4,349 24,283 27,789
Total distributions (cents per unit) 0.04 3.29 1.26 1.34 5.23 3.69 3.95 4.51
Total return (including both capital and distribution return) for the financial year assuming reinvestment of all distributions back into the Schemes (%) 16.77 19.63 20.61 29.54 10.88 13.14 15.43 20.94
Profit/(loss) before finance costs attributable to unitholders 1,892 3,577 1,981 10,212 22,846 11,732 3,934 1,547
Total distributions paid and payable 104 173 738 9,822 1,626 200 2,194 1,784
Total distributions (cents per unit) 0.28 0.47 5.39 25.93 1.04 0.21 4.65 12.36
Total return (including both capital and distribution return) for the financial year assuming reinvestment of all distributions back into the Schemes (%) 8.76 20.19 16.89 29.65 15.99 15.90 10.75 10.95
UBS Tactical Beta
Fund - Growth UBS Tactical Beta Fund - Balanced
2014 2013 2014 2013 $'000 $'000 $'000 $'000
Profit/(loss) before finance costs attributable to unitholders 2,667 789 10,663 4,777
Total distributions paid and payable 1,866 560 4,612 3,126
Total distributions (cents per unit) 8.17 7.79 4.58 5.07
Total return (including both capital and distribution return) for the financial year assuming reinvestment of all distributions back into the Schemes (%) 15.60 17.00 13.28 -
Significant changes in state of affairs
In the opinion of the directors, there were no significant changes in the state of affairs of the Schemes that occurred during the financial year other than those changes identified in the financial statements for the financial year ended 30 June 2014.
UBS Investment Funds Directors' Report (continued) For the year ended 30 June 2014
4
Likely developments and expected results of operations
The Schemes will continue to be managed in accordance with their investment objectives and guidelines as set out in the governing documents of the Schemes and in accordance with the provisions of the Schemes' Constitutions.
Further information on likely developments in the operations of the Schemes and the expected results of those operations have not been included in this report because the Responsible Entity believes it would be likely to result in unreasonable prejudice to the Schemes.
Indemnification and insurance of officers and auditors
No insurance premiums are paid for out of the assets of the Schemes in regards to insurance cover provided to either the officers of UBS Global Asset Management (Australia) Ltd or the auditors of the Schemes. So long as the officers of UBS Global Asset Management (Australia) Ltd act in accordance with the Schemes' Constitutions and the Corporations Act 2001, the officers remain indemnified out of the assets of the Schemes against losses incurred while acting on behalf of the Schemes. The auditors of the Schemes are in no way indemnified out of the assets of the Schemes.
Fees paid to the Responsible Entity or its associates
Fees paid to the Responsible Entity and its associates out of the Schemes assets during the financial year are disclosed in the Statements of Comprehensive Income under Expenses - Responsible Entity's fees. Responsible Entity's fees are further discussed in Note 15.
No fees were paid out of the Schemes' assets to the directors of the Responsible Entity during the financial year.
Interests in the Schemes
The movements in units on issue in the Schemes during the financial year is disclosed in Note 6 of the financial statements.
The value of the Schemes' assets and liabilities is disclosed on the Statements of Financial Position and derived using the basis set out in Note 2 of the financial statements.
Environmental regulation
The operations of the Schemes are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law.
Reporting period and comparative information
UBS Tactical Beta Fund – Conservative and UBS Tactical Beta Fund – Growth were registered with Australian Securities and Investments Commission ("ASIC") on 4 May 2012 and commenced operations on 14 May 2012. UBS Tactical Beta Fund – Balanced was registered with ASIC on 21 June 2012 and commenced operations on 12 October 2012.
The comparative information for UBS Tactical Beta Fund - Conservative and UBS Tactical Beta Fund - Growth are for the period from 14 May 2012 to 30 June 2013. The comparative information for UBS Tactical Beta Fund - Balanced are for the period from 12 October 2012 to 30 June 2013.
All other Schemes’ comparative information is for the financial year ended 30 June 2013 unless stated otherwise.
Events occurring after the reporting date
Except as disclosed in Note 17 in the financial statements, no other matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may significantly affect:
(i) the operations of the Schemes in future financial years, or
(ii) the results of those operations in future financial years, or
(iii) the state of affairs of the Schemes in future financial years.
Rounding of amounts to the nearest thousand dollars
The Schemes are entities of the kind referred to in Class Order 98/100 (as amended) issued by the Australian Securities and Investments Commission relating to the ''rounding off'' of amounts in the directors' report and financial report. Amounts in the directors' report and financial report have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated.
UBS Investment Funds Directors' Report (continued) For the year ended 30 June 2014
5
Single set of financial statement
The Schemes are of the kind referred to in Class Order 06/441 dated 29 June 2006 issued by the Australian Securities and Investments Commission and in accordance with that Class Order, Schemes with a common Responsible Entity (or related responsible entities) can include their financial statements in adjacent columns in a single set of financial statements.
Proceeds from redeeming units in a Scheme can be applied to a acquire units in other Schemes included in these financial statement. All the Schemes are open-ended.
Auditor's Independence Declaration
A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 6.
This report is made in accordance with a resolution of the directors.
B J Doherty A L AndersonChairman Director
Sydney 19 September 2014
6
UBS Investment Funds Statements of Comprehensive Income For the year ended 30 June 2014
The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes. 7
Financial liabilities held at fair value through profit or loss 10 - - - - 124 5,213 136 172
Total liabilities (excluding net assets attributable to unitholders) 93 179 469 334 2,227 8,782 2,307 1,280
Net assets attributable to unitholders 6 23,115 21,284 25,997 4,627 185,061 114,453 50,074 25,626
UBS Tactical Beta
Fund - Growth UBS Tactical Beta Fund - Balanced
2014 2013 2014 2013 Notes $'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 16(b) 9,909 3,421 36,553 8,970
Receivables 9 473 338 2,832 1,976
Financial assets held at fair value through profit or loss 8 18,292 7,978 81,659 56,898
Total assets 28,674 11,737 121,044 67,844
Liabilities
Distributions payable 7 1,108 311 4,216 2,604
Payables 11 16 3 43 21
Financial liabilities held at fair value through profit or loss 10 74 124 340 598
Total liabilities (excluding net assets attributable to unitholders) 1,198 438 4,599 3,223
Net assets attributable to unitholders 6 27,476 11,299 116,445 64,621
UBS Investment Funds Statements of Changes in Equity For the year ended 30 June 2014
In accordance with AASB 132 Financial Instruments: Presentation, net assets attributable to unitholders are classified as a liability rather than equity. As a result, there was no equity at the beginning and the end of the financial year. Changes in net assets attributable to unitholders are disclosed in Note 6. The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Total equity at the beginning of the financial year - - - - - - - -
Profit/(loss) for the financial year attributable to unitholders - - - - - - - -
Other comprehensive income for the financial year attributable to unitholders - - - - - - - -
Total comprehensive income for the financial year attributable to unitholders
Transactions with owners in their capacity as owners - - - - - - - -
Total equity at the end of the financial year - - - - - - - -
UBS Investment Funds Statements of Changes in Equity (continued) For the year ended 30 June 2014
In accordance with AASB 132 Financial Instruments: Presentation, net assets attributable to unitholders are classified as a liability rather than equity. As a result, there was no equity at the beginning and the end of the financial year. Changes in net assets attributable to unitholders are disclosed in Note 6. The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Transaction costs on financial instruments held at fair value through profit or loss (14) (8) (38) (60)
Performance fee rebate received - - - -
Payments for other expenses - - (3) -
Net cash inflows/(outflows) from operating activities 16(a) (7,874) (7,286) (14,926) (53,320)
Cash flows from financing activities
Proceeds from applications by unitholders 23,324 10,755 51,120 68,741
Payments for redemptions by unitholders (8,245) (40) (5,613) (5,937)
Distributions paid (717) (8) (3,000) (522)
Net cash inflows/(outflows) from financing activities 14,362 10,707 42,507 62,282
Net increase/(decrease) in cash and cash equivalents 6,488 3,421 27,581 8,962
Cash and cash equivalents at the beginning of the financial year 3,421 - 8,970 -
Effects of changes in foreign currency exchange rates on cash and cash equivalents - - 2 8
Cash and cash equivalents at the end of the financial year 16(b) 9,909 3,421 36,553 8,970
UBS Investment Funds Notes to the Financial Statements For the year ended 30 June 2014
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Notes to the Financial Statements
1 General information
These financial statements cover UBS Property Securities Fund, UBS Australian Share Fund, UBS International Share Fund, UBS Australian Small Companies Fund, UBS Global Property Securities Fund, UBS Global Quantitative Share Fund, UBS Defensive Investment Fund, UBS Balanced Investment Fund, UBS Emerging Markets Equity Fund (AUD), UBS-HALO Australian Share Fund, UBS Clarion Global Property Securities Fund, UBS Tactical Beta Fund - Conservative, UBS Tactical Beta Fund -Growth and UBS Tactical Beta Fund - Balanced ("the Schemes") as individual entities.
The Responsible Entity of the Schemes is UBS Global Asset Management (Australia) Ltd ("the Responsible Entity''). The Responsible Entity’s registered office is Level 16 Chifley Tower, 2 Chifley Square, Sydney NSW 2000. The Responsible Entity is incorporated and domiciled in Australia.
The financial statements of the Schemes for the financial year ended 30 June 2014 were authorised for issue in accordance with a resolution of the directors of the Responsible Entity dated 19 September 2014. The directors of the Responsible Entity have the power to amend and reissue the financial statements.
UBS Tactical Beta Fund – Conservative and UBS Tactical Beta Fund – Growth were registered with Australian Securities and Investments Commission ("ASIC") on 4 May 2012 and commenced operations on 14 May 2012. UBS Tactical Beta Fund – Balanced was registered with ASIC on 21 June 2012 and commenced operations on 12 October 2012.
The comparative information for UBS Tactical Beta Fund - Conservative and UBS Tactical Beta Fund - Growth are for the period from 14 May 2012 to 30 June 2013. The comparative information for UBS Tactical Beta Fund - Balanced are for the period from 12 October 2012 to 30 June 2013.
All other Schemes’ comparative information is for the financial year ended 30 June 2013 unless stated otherwise.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all financial periods presented, unless otherwise stated.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 in Australia.
The Schemes are for-profit entities for the purpose of preparing the financial statements.
The financial statements are prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated.
The Statements of Financial Position are presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and are not distinguished between current and non-current. All balances are generally expected to be recovered or settled within twelve months, except for investments in financial assets and net assets attributable to unitholders where the amount expected to be recovered or settled within twelve months after the end of the financial year cannot be reliably determined.
Compliance with Australian Accounting Standards and International Financial Reporting Standards (IFRS)
The financial statements of the Schemes comply with Australian Accounting Standards as issued by the Australian Accounting Standards Board and also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
New and amended standards adopted by the Schemes
The Schemes have applied the following major accounting standards and amendments (to the extent that is relevant to the Schemes) for the first time for the financial year:
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13
AASB 13 establishes a single source of guidance under Australian Accounting Standards for all fair value measurements and defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. AASB 13 does not change when an entity is required to use fair value but rather provides guidance on how to measure fair value when it is required or permitted. The application of AASB 13 has not materially impacted the Schemes' financial statements for the financial year.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements
AASB 124 Related Party Disclosures was amended whereby the individual key management personnel disclosures are no longer required, to achieve consistency with the international equivalent standard and remove duplication of the requirements with the Corporations Act 2001. Therefore the Schemes have no longer included these disclosures in its financial statements for the financial year.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
21
2 Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
AASB 2012-2 Amendments to Australian Accounting Standards -Disclosures - Offsetting Financial Assets and Financial Liabilities
AASB 2012-2 amends AASB 7 Financial Instruments: Disclosures requiring expanded disclosures about recognised financial instruments that are currently offset in the Statements of Financial Position and/or are subject to enforceable master netting agreements (or similar) irrespective of whether they are currently offset. Where applicable, the additional disclosures are provided in the notes to the financial statements for the financial year.
Change in accounting policy - Early adoption of AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities
AASB 2013-5, effective for financial years beginning on or after 1 January 2014, has been early adopted by the Schemes (where applicable) for the financial year ended 30 June 2014.
AASB 2013-5 provides amendments to AASB 10 Consolidated Financial Statements, AASB 12 Disclosure of Interests in Other Entities and AASB 127 Separate Financial Statements. The amendments provide an exception to consolidation to qualifying investment entities and require them to measure unconsolidated subsidiaries at fair value through profit or loss. The amendments also introduce new disclosure requirements for investment entities that have controlled investees.
AASB 10 introduces a new control model that is applicable to all investees. Among other things, it requires the consolidation of an investee if the Schemes controls the investee on the basis of de facto circumstances. An exception however exists where an entity meets the definition of an investment entity.
AASB 12 requires new disclosures applicable to all investees. Among other things, it introduces new disclosure requirements related to investment entities. The adoption of AASB 12 has changed the level of disclosure of the Schemes elsewhere in the financial statements but has not impacted the financial position and the results of operations of the Schemes.
AASB 127 prescribes accounting and disclosure requirements for separate financial statements. Among other things, it requires an investment entity to present separate financial statements as its only financial statements where it measures all of its subsidiaries at fair value through profit or loss and to disclose that fact. The adoption of amended AASB 127 has not materially impacted the financial statements of the Schemes.
Management determines that the Schemes are qualifying investment entities due to the following factors:
• The Schemes obtain and manage funds for the purpose of providing investors of the Schemes with management services;
• The Schemes' business purpose, which is communicated directly to the investors, is to invest funds solely for returns from capital appreciation and investment income;
• The Schemes measure and evaluate the performance of substantially all of its investments on a fair value basis;
• The Schemes have multiple investments and multiple investors; and
• Although all units attributable to unitholders are recognised as debt rather than equity, unitholders are still exposed to variable returns.
The Schemes made the investment entity assessment at 1 July 2013. As a consequence, the Schemes have applied the investment entity exemption and therefore is no longer required to consolidate its subsidiaries. Investments in subsidiaries are now measured at fair value through profit or loss. These separate financial statements are the only financial statements presented by the Schemes. This represents a change in accounting policy and requires retrospective application. Comparative information has been restated in accordance with the provisions of the standards.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
22
2 Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
The Schemes presented consolidated financial statements for the year ended 30 June 2013. The following shows the adjustments made to each key line item of the Statements of Financial Position and the Statements of Comprehensive Income for the year then ended as a result of the investment entity exemption:
2013 2013 UBS Australian Share Fund (Consolidated) Adjustment (Restated) $'000 $'000 $'000
Assets
Cash and cash equivalents 41,225 (7,273) 33,952
Receivables 9,894 187 10,081
Financial assets held at fair value through profit or loss 1,053,823 (10,982) 1,042,841
Total assets 1,104,942 (18,068) 1,086,874
Liabilities
Distributions payable 7,949 (115) 7,834
Payables 3,224 (251) 2,973
Other liabilities 78 (78) -
Net assets attributable to non-controlling interest 17,624 (17,624) -
Total liabilities (excluding net assets attributable to unitholders) 28,875 (18,068) 10,807
Net assets attributable to unitholders 1,076,067 - 1,076,067
2013 2013 UBS Australian Share Fund (Consolidated) Adjustment (Restated) $'000 $'000 $'000
Investment income
Dividend/Trust distribution income 47,683 (927) 46,756
Interest income 788 (144) 644
Net gains/(losses) on financial instruments held at fair value through profit or loss 204,180 (2,203) 201,977
Total investment income/(loss) 252,651 (3,274) 249,377
Expenses
Responsible Entity Fees 10,033 (1,088) 8,945
Transaction costs 1,697 (167) 1,530
Total expenses 11,730 (1,255) 10,475
Profit/(loss) before finance cost attributable to unitholders 240,921 (2,019) 238,902
Finance costs attributable to unitholders
Distributions to unitholders 41,749 - 41,749
Distributions to non-controlling interests 565 (565) -
Increase/(decrease) in net assets attributable to unitholders 197,076 77 197,153
Increase/(decrease) in net assets attributable to non-controlling interests 1,531 (1,531) -
Profit/(loss) for the financial year attributable to unitholders - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
23
2 Summary of significant accounting policies (continued)
Dividend/Trust distribution income 25,830 (2,808) 23,022
Interest income 869 (412) 457
Net gains/(losses) on financial instruments held at fair value through profit or loss 127,088 (21,083) 106,005
Swap income (loss) 766 (766) -
Net foreign exchange gain 4,999 (3,990) 1,009
Other income 165 (165) -
Total investment income/(loss) 159,717 (29,224) 130,493
Expenses
Responsible Entity Fees 5,390 (3,245) 2,145
Transaction costs 945 (576) 369
Other expenses 4 (4) -
Total expenses 6,339 (3,825) 2,514
Profit/(loss) before finance cost attributable to unitholders 153,378 (25,399) 127,979
Finance costs attributable to unitholders
Distributions to unitholders 27,789 - 27,789
Distributions to minority interests 1,938 (1,938) -
Increase/(decrease) in net assets attributable to unitholders 98,662 1,528 100,190
Increase/(decrease) in net assets attributable to non-controlling interests 24,989 (24,989) -
Profit/(loss) for the financial year attributable to unitholders - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
24
2 Summary of significant accounting policies (continued)
(b) Financial instruments
(i) Classification
The Schemes' investments are categorised as held at fair value through profit or loss. They comprise:
• Financial instruments held for trading
These include derivative financial instruments including futures, forward currency contracts, options and interest rate swaps.
• Financial instruments designated at fair value through profit or loss
These include financial assets and financial liabilities that are not held for trading purposes and which may be sold. These are investments in exchange traded debt and equity instruments, unlisted trusts, unlisted equity instruments and commercial papers.
Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Schemes' documented investment strategy. The Schemes' policy is for the Responsible Entity to evaluate the information about these financial instruments on a fair value basis together with other related financial information.
Information on the fair value basis is provided internally to the Schemes' key management personnel. In addition, the designation of financial assets and financial liabilities at fair value through profit or loss will reduce any measurement or recognition inconsistencies and any accounting mismatch that would otherwise arise.
Receivables/payables comprise amounts due to or from the Schemes.
(ii) Recognition/derecognition
The Schemes recognise financial assets and financial liabilities on the date they become party to the contractual agreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date.
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:
• the rights to receive cash flows from the asset have expired;
• the Schemes retain the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' agreement; or
• the Schemes have transferred its rights to receive cash flows from the asset and either:
(a) has transferred substantially all the risks and rewards of the asset; or
(b) has neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the assets.
Any gains or losses arising on derecognition of the asset (calculated as the difference between the disposal proceeds and the carrying amount of the asset) are included in the Statements of Comprehensive Income in the financial year the asset is derecognised as realised gains or losses on financial instruments.
(iii) Measurement
Financial assets and liabilities held at fair value through profit or loss
Financial assets and liabilities held at fair value through profit or loss are measured initially at fair value excluding any transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately. Subsequent to initial recognition, all instruments held at fair value through profit or loss are measured at fair value with changes in their fair value recognised in the Statements of Comprehensive Income.
The fair value of financial assets and liabilities traded in active markets is based on their quoted market prices at the end of the financial year without any deduction for estimated future selling costs. Financial assets are priced at current bid prices, while financial liabilities are priced at current asking prices.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
The Schemes' financial instruments that are valued based on active markets generally include listed instruments ranging from listed equity and/or debt securities to listed derivatives, where applicable.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
25
2 Summary of significant accounting policies (continued)
(b) Financial instruments
Investments in other unlisted unit trusts are recorded at the redemption value per unit as reported by the managers of such trusts.
The Schemes' financial instruments that are valued based on inactive or unquoted markets generally include unlisted instruments ranging from investments in unlisted unit trusts, unlisted equity and/or debt securities to over the counter derivatives, where applicable.
Receivables/payables
Receivables/payables are measured initially at fair value plus transaction costs.
Subsequently, short-term receivables/payables are carried at their initial fair values.
(iv) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
(c) Net assets attributable to unitholders
Units are redeemable at the unitholders option and are classified as financial liabilities due to mandatory distributions. The units can be put back to the Schemes at any time for cash based on the redemption price. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unit price) at the end of the financial year if unitholders exercised their right to put the units back to the Schemes. Because the Schemes' redemption unit price is based on different valuation principles to that applied in financial reporting, a valuation difference may exist.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held at call with banks or other financial institutions.
(e) Investment income
Interest income and interest expenses are recognised in the Statements of Comprehensive Income for all debt instruments using the effective interest method.
Dividend income is recognised on the ex dividend date.
Trust distributions are recognised on an entitlements basis.
(f) Net gains/(losses) on financial instruments held at fair value through profit or loss
Net gains/(losses) on financial assets and financial liabilities held at fair value through profit or loss arising on a change in fair value are calculated as the difference between the fair value at the end of the financial year and the fair value at the previous valuation point. This includes both realised and unrealised gains and losses.
(g) Expenses
All expenses, including Responsible Entity's fees, are recognised in the Statements of Comprehensive Income on an accruals basis.
(h) Income tax
Under current legislation, the Schemes are not subject to income tax provided the unitholders are presently entitled to the income of the Schemes and the Schemes fully distribute their net taxable income.
(i) Distributions
In accordance with the Schemes' Constitutions, the Schemes distribute their distributable income, and any other amounts determined by the Responsible Entity, to unitholders by cash or reinvestment. The distributions are recognised in the Statements of Comprehensive Income as Finance costs attributable to unitholders.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
26
2 Summary of significant accounting policies (continued)
(j) Increase/(decrease) in net assets attributable to unitholders
Non-distributable income is transferred directly to net assets attributable to unitholders and may consist of unrealised changes in the net fair value of financial instruments, accrued income not yet assessable, expenses provided or accrued for which are not yet deductible, net capital losses and tax free or tax deferred income. Net capital gains on the realisation of any investments (including any adjustments for tax deferred income previously taken directly to net assets attributable to unitholders) and accrued income not yet assessable will generally be included in the determination of distributable income in the same year in which it becomes assessable for tax.
(k) Foreign currency translation
(i) Functional and presentation currency
Items included in the Schemes' financial statements are measured using the currency of the primary economic environment in which they operate (the "functional currency''). This is the Australian dollar, which reflects the currency of the economy in which the Schemes compete for funds and are regulated. The Australian dollar is also the presentation currency of the Schemes.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statements of Comprehensive Income.
(l) Accrued income
Accrued income may include amounts for dividends, trust distributions and interest. Dividends and trust distributions are accrued when the right to receive payment is established. Interest is accrued at the end of the financial year from the time of last payment.
(m) Receivables
Receivables may include income receivable and amounts are generally received within 30 days of being recorded as receivables.
Trades are recorded on trade date and normally settled within three business days. Sales of securities and investments that are unsettled at the end of the financial year are included in receivables.
(n) Payables
Payables include liabilities and accrued expenses owing by the Schemes which are unpaid as at the end of the financial year.
Trades are recorded on trade date, and normally settled within three business days. Purchases of securities and instruments that are unsettled at the end of each financial year are included in payables.
The distribution amount payable to unitholders as at the end of each financial year is recognised separately in the Statements of Financial Position as unitholders are presently entitled to the distributable income as at 30 June 2014 under the Schemes' Constitutions.
(o) Applications and redemptions
Applications received for units in the Schemes are recorded net of any entry fees payable prior to the issue of units in the Schemes. Redemptions from the Schemes are recorded gross of any exit fees payable after the cancellation of units redeemed.
Unit redemption prices are determined by reference to the net assets of the Schemes divided by the number of units on issue.
(p) Goods and services tax (GST)
Expenses of various services provided to the Schemes recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the expense in the Statements of Comprehensive Income.
Responsible Entity's fees payable and other payables are stated inclusive of the GST receivable. The net amount of GST recoverable from the taxation authority is included in receivables in the Statements of Financial Position.
Cash flows relating to GST are included in the Statements of Cash Flows on a gross basis.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
27
2 Summary of significant accounting policies (continued)
(q) Use of judgements and estimates
The preparation of the Schemes' financial statements requires it to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. However, estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Schemes' financial instruments are valued primarily based on the prices provided by independent pricing services.
When the fair values of the reported financial instruments cannot be derived from active markets, they are determined using prices obtained from inactive or unquoted markets and/or other valuation techniques. The inputs to these valuation techniques (if applicable) are taken from observable markets to the extent practicable. Where observable inputs are not available, the inputs may be estimated based on a degree of judgements and assumptions in establishing fair values.
Where appropriate, the outcomes of the valuation techniques that are used in establishing fair values are validated using prices from observable current market transactions for similar instruments (without modification or repackaging) or based on relevant available observable market data.
The determination of what constitutes 'observable' requires significant judgement by the Schemes. The Schemes consider observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
In addition, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates and judgements. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
For certain other financial instruments, including amounts due from/to brokers, accounts payable and the carrying amounts approximate fair value due to the immediate or short-term nature of these financial instruments.
(r) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2014 financial year and have not yet been applied in the financial statements. The directors' assessment of the impact of these new standards (to the extent relevant to the Schemes) and interpretations is set out below:
(i) AASB 9 Financial Instruments (2009 or 2010 version), AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2012-6 Amendments to Australian Accounting Standards - Mandatory Effective Date of AASB 9 and Transition Disclosures, AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments, and AASB 2014-1 Amendments to Australian Accounting Standards, Part E Financial Instruments (effective from 1 January 2018)
AASB 9 Financial Instruments addresses the classification, measurement, recognition and derecognition of financial assets and financial liabilities. It has now introduced revised rules around hedge accounting. The Standard is not applicable until 1 January 2017 but is available for early adoption. The Schemes do not expect this to have a significant impact on the recognition and measurement of the Schemes' financial instruments as they are carried at fair value through profit or loss. The derecognition rules have not been changed from the previous requirements, and the Schemes do not apply hedge accounting. The Schemes do not intend to early adopt AASB 9
(ii) AASB 2012-3 Amendments to Australian Accounting Standard - Offsetting Financial Assets and Financial Liabilities (effective 1 January 2014)
In June 2012, the AASB approved amendments to the application guidance in AASB 132 Financial Instruments: Presentation, to clarify some of the requirements for offsetting financial assets and financial liabilities in the Statements of Financial Position. These amendments are effective from 1 January 2014. The adoption of the amendments will not have a significant impact on the financial statements of the Schemes. The Schemes do not intend to early adopt this amendment.
(iii) AASB 1031 Materiality, AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments, Part B Materiality (effective 1 January 2014), and AASB 2014-1 Amendments to Australian Accounting Standards, Part C Materiality (effective 1 July 2014).
The AASB decided to withdraw AASB 1031. Part B of AASB 2013-9 deletes references to AASB 1031 in various Australian Accounting Standards (including Interpretations). Part C of AASB 2014-1 deletes references to AASB 1031 in various other Australian Accounting Standards. Once all references to AASB 1031 have been deleted from all Australian Accounting Standards, AASB 1031 will be withdrawn. The adoption of the new rules will not impact the financial statements of the Schemes. Early adoption is not permitted.
(iv) AASB 2014-1 Amendments to Australian Accounting Standards, Part A Annual Improvements 2010-2012 and 2011-2013 Cycles (effective 1 July 2014)
Part A of AASB 2014-1 makes various amendments and editorial corrections to various Australian Accounting Standards, particularly in relation to the meaning of effective IFRSs and in relation to the clarification of the definition of a related party. The adoption of the amendments will not impact the financial statements of the Schemes.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
28
2 Summary of significant accounting policies (continued)
(r) New accounting standards and interpretations (continued)
(v) IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017)
The IASB issued IFRS 15 in May 2014. The AASB is expected to issue an equivalent Australian standard shortly. IFRS 15 contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five step analysis of transactions to determine whether, how much and when revenue is recognised. The AASB’s version of IFRS 15 is expected to supersede (to the extent relevant to the Schemes) AASB 18 Revenue. The adoption of the new replacement standard is not expected to have a significant impact on the financial statements of the Schemes.
(s) Rounding of amounts
The Schemes are entities of the kind referred to in Class Order 98/100 (as amended), issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest thousand, unless otherwise indicated.
(t) Comparative information
Where appropriate, comparative disclosures have been reclassified to be consistent with the current year's presentation. Such reclassifications have not affected the Statements of Comprehensive Income or Statements of Financial Position.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
Net gains/(losses) on financial instruments held for trading - (13) 37 212 2,127 (4,777) 934 150
Net gains/(losses) on financial instruments designated at fair value through profit or loss 2,133 3,282 1,447 9,236 13,564 18,272 1,479 (33)
Total net gains/(losses) on financial instruments held at fair value through profit or loss 2,133 3,269 1,484 9,448 15,691 13,495 2,413 117
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
31
4 Net gains/(losses) on financial instruments held at fair value through profit or loss (continued)
UBS Tactical Beta
Fund - Growth UBS Tactical Beta Fund - Balanced
2014 2013 2014 2013 $'000 $'000 $'000 $'000
Net gains/(losses) on financial instruments held for trading 674 49 1,964 343
Net gains/(losses) on financial instruments designated at fair value through profit or loss 1,263 400 5,336 2,239
Total net gains/(losses) on financial instruments held at fair value through profit or loss 1,937 449 7,300 2,582
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
32
5 Auditor's remuneration
During the financial year the following professional fees were paid or payable for services provided by the auditor of the Schemes. These fees were paid for by the Responsible Entity and are not passed on to the Schemes.
UBS Property Securities
Fund UBS Australian Share
Fund UBS International Share
Fund 2014 2013 2014 2013 2014 2013 $ $ $ $ $ $
Assurance services
Audit services Ernst & Young Audit and review of financial statements 13,259 13,259 13,259 15,474 13,259 13,259
Total remuneration for assurance services 13,259 13,259 13,259 15,474 13,259 13,259
UBS Australian Small Companies Fund
UBS Global Property Securities Fund
UBS Global Quantitative Share Fund
2014 2013 2014 2013 2014 2013 $ $ $ $ $ $
Assurance services
Audit services Ernst & Young Audit and review of financial statements 13,259 13,259 13,259 8,315 8,315 8,315
Total remuneration for assurance services 13,259 13,259 13,259 8,315 8,315 8,315
UBS Defensive Investment Fund
UBS Balanced Investment Fund
UBS Emerging Markets Equity Fund (AUD)
2014 2013 2014 2013 2014 2013 $ $ $ $ $ $
Assurance services
Audit services Ernst & Young Audit and review of financial statements 13,259 13,259 13,259 15,474 8,315 8,315
Total remuneration for assurance services 13,259 13,259 13,259 15,474 8,315 8,315
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
Audit services Ernst & Young Audit and review of financial statements 8,315 8,315 7,760 7,760 8,315 8,315
Total remuneration for assurance services 8,315 8,315 7,760 7,760 8,315 8,315
UBS Tactical Beta Fund - Growth
UBS Tactical Beta Fund - Balanced
2014 2013 2014 2013 $ $ $ $
Assurance services
Audit services Ernst & Young Audit and review of financial statements 8,315 8,315 8,315 8,315
Total remuneration for assurance services 8,315 8,315 8,315 8,315
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
34
6 Net assets attributable to unitholders
As stipulated within the Schemes' Constitutions, each unit represents a right to an individual share in the Schemes and does not extend to a right to the underlying assets of the Schemes. There are no separate classes of units and each unit has the same rights attaching to it as all other units of the Schemes.
Movements in number of units and net assets attributable to unitholders during the financial year were as follows:
Units issued upon reinvestment of distributions - - - -
Increase/(decrease) in net assets attributable to unitholders - - 6,051 1,651
Closing balance 103,408 62,423 116,445 64,621
Capital risk management
The Schemes manage their net assets attributable to unitholders as capital, notwithstanding net assets attributable to unitholders are classified as a liability. The amount of net assets attributable to unitholders can change significantly on a daily basis as the Schemes are subject to daily applications and redemptions at the discretion of unitholders.
Liquid assets include cash and cash equivalents, listed equities, listed trusts, redeemable preference shares and any other securities that are readily convertible to cash under normal market conditions.
In accordance with the Schemes' investment policy, the Schemes hold certain portion of the net assets attributable to unitholders in liquid assets.
Refer to Note 13 Financial Risk Management for further details.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
38
7 Distributions to unitholders
The distributions for the financial year were paid/payable as follows:
2014 2014 2013 2013 UBS Property Securities Fund $'000 CPU $'000 CPU
Distributions
30 September 1,030 0.40 3,000 1.00
31 December 1,504 0.60 1,754 0.60
31 March 983 0.40 1,132 0.40
30 June (payable) 5,258 2.21 2,432 0.90
8,775 3.61 8,318 2.90
2014 2014 2013 2013 UBS Australian Share Fund $'000 CPU $'000 CPU
Distributions
30 September 11,325 1.70 11,287 1.50
31 December 15,110 2.30 14,211 2.00
31 March 5,834 0.90 8,417 1.20
30 June (payable) 8,274 1.32 7,834 1.15
40,543 6.22 41,749 5.85
2014 2014 2013 2013 UBS International Share Fund $'000 CPU $'000 CPU
Distributions
31 December 179 0.10 394 0.20
18 February 82 0.05 - -
24 June - - 2,467 1.28
30 June (payable) 1,445 0.65 153 0.09
1,706 0.80 3,014 1.57
2014 2014 2013 2013 UBS Australian Small Companies Fund $'000 CPU $'000 CPU
Distributions
30 September 470 0.75 490 0.56
31 December 751 1.20 860 1.10
31 March - - 756 1.20
30 June (payable) - - 505 0.81
1,221 1.95 2,611 3.67
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
39
7 Distributions to unitholders (continued)
2014 2014 2013 2013 UBS Global Property Securities Fund $'000 CPU $'000 CPU
Distributions
13 July 2012 - - 1,314 1.79
30 September - - 201 0.30
31 December - - 199 0.30
31 March - - 201 0.30
24 May - - 402 0.60
30 June (payable) 26 0.04 - -
26 0.04 2,317 3.29
2014 2014 2013 2013 UBS Global Quantitative Share Fund $'000 CPU $'000 CPU
Distributions
31 December 158 0.26 179 0.26
31 May - - 510 0.74
30 June (payable) 606 1.00 206 0.34
764 1.26 895 1.34
2014 2014 2013 2013 UBS Defensive Investment Fund $'000 CPU $'000 CPU
Distributions
30 September 1,070 0.90 1,059 0.90
31 December 956 0.80 1,291 1.10
31 March 238 0.20 1,300 1.10
30 June (payable) 4,030 3.33 699 0.59
6,294 5.23 4,349 3.69
2014 2014 2013 2013 UBS Balanced Investment Fund $'000 CPU $'000 CPU
Distributions
30 September 1,545 0.25 1,587 0.25
31 December 1,551 0.25 1,565 0.25
31 March 1,562 0.25 1,859 0.30
30 June (payable) 19,625 3.20 22,778 3.71
24,283 3.95 27,789 4.51
2014 2014 2013 2013 UBS Emerging Markets Equity Fund (AUD) $'000 CPU $'000 CPU
Distributions
31 December 37 0.10 18 0.05
30 June (payable) 67 0.18 155 0.42
104 0.28 173 0.47
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
40
7 Distributions to unitholders (continued)
2014 2014 2013 2013 UBS-HALO Australian Share Fund $'000 CPU $'000 CPU
Distributions
30 September 87 1.50 892 1.50
16 December 112 1.70 - -
31 December - - 530 1.00
10 January - - 4,070 7.67
21 January - - 4,000 9.09
31 March 91 0.40 - -
30 June (payable) 448 1.79 330 6.67
738 5.39 9,822 25.93
2014 2014 2013 2013 UBS Clarion Global Property Securities Fund $'000 CPU $'000 CPU
Distributions
31 December - - 125 0.14
30 June (payable) 1,626 1.04 75 0.07
1,626 1.04 200 0.21
2014 2014 2013 2013 UBS Tactical Beta Fund - Conservative $'000 CPU $'000 CPU
Distributions
30 June 2012 - - 337 6.73
30 September 70 0.20 - -
11 December - - 111 0.42
31 December 79 0.20 - -
31 March 43 0.10 236 1.00
30 June (payable) 2,002 4.15 1,100 4.21
2,194 4.65 1,784 12.36
2014 2014 2013 2013 UBS Tactical Beta Fund - Growth $'000 CPU $'000 CPU
Distributions
30 June 2012 - - 207 4.14
30 September 29 0.20 - -
31 December 39 0.20 14 0.26
19 March 690 3.04 - -
31 March - - 28 0.40
30 June (payable) 1,108 4.73 311 2.99
1,866 8.17 560 7.79
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
41
7 Distributions to unitholders (continued)
2014 2014 2013 2013 UBS Tactical Beta Fund - Balanced $'000 CPU $'000 CPU
Distributions
30 September 148 0.20 - -
31 December 159 0.20 174 0.30
31 March 89 0.10 348 0.60
30 June (payable) 4,216 4.08 2,604 4.17
4,612 4.58 3,126 5.07
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
42
8 Financial assets held at fair value through profit or loss
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
47
12 Derivative financial instruments
In the normal course of business, the Schemes may enter into transactions in various derivative financial instruments to gain or reduce exposure to relevant markets and currencies as well as to manage certain risks. A derivative is a financial instrument or other contract which is settled at a future date and whose value changes in response to the change in a specified interest rate, equity market or index, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable.
Derivative financial instruments require no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.
Derivative transactions include a wide assortment of instruments, such as forward currency contracts, futures, options and interest rate swaps. Derivatives are considered to be part of the investment process. The use of derivatives is an essential part of the Schemes' portfolio management. Derivatives are not managed in isolation. Consequently, the use of derivatives is multifaceted and may include:
• hedging to protect assets of the Schemes against fluctuations in market values or to reduce volatility;
• a substitution for trading of physical securities; or
• adjusting asset exposures within the parameters set in the investment strategies, and adjusting the duration of fixed interest portfolios or the weighted average maturity of cash portfolios.
While derivatives are used for trading purposes, they are not used to gear (leverage) a portfolio unless expressly permitted under the Schemes' investment policy. Gearing a portfolio would occur if the level of exposure to the markets exceeds the underlying value of the Schemes.
The Schemes known as UBS Property Securities Fund, UBS Global Quantitative Share Fund, UBS Emerging Markets Equity Fund (AUD) held no derivatives as at 30 June 2014. The Schemes hold the following derivative instruments:
(a) Futures
Futures are contractual obligations to buy or sell financial instruments on a future date at a specified price established in an organised market. The futures contracts are collateralised by cash or marketable securities. Changes in futures contracts' values are usually settled net daily with the exchange. Interest rate futures are contractual obligations to receive or pay a net amount based on changes in interest rates at a future date at a specified price, established in an organised financial market.
(b) Options
An option is a contractual arrangement under which the seller (writer) grants the purchaser (holder) the right, but not the obligation, either to buy (a call option) or sell (a put option) at or by a set date or during a set period, a specific amount of securities or a financial instrument at a predetermined price. The seller receives a premium from the purchaser in consideration for the assumption of future securities price risk. Options held by the Schemes are exchange-traded. The Schemes are exposed to credit risk on purchased options to the extent of their carrying amount, which is their fair value.
(c) Forward currency contracts
Forward currency contracts are primarily used by the Schemes to hedge against foreign currency exchange rate risks on its non-Australian dollar denominated trading securities. The Schemes agree to receive or deliver a fixed quantity of foreign currency for an agreed upon price on an agreed future date. Forward currency contracts are valued at the prevailing bid price at the end of each financial year. The Schemes recognise a gain or loss equal to the change in fair value at the end of each financial year.
(d) Swaps
An interest rate swap is an agreement between two parties to exchange their interest obligations (payments) or receipts at set intervals on a notional principal amount over an agreed time period.
The fair value of interest rate swaps is the estimated amount that the entity would receive or pay to terminate the swap at the end of the financial year, taking into account current interest rates and the current creditworthiness of the swap counterparties.
A credit default swap is a financial agreement between two parties which allows the transfer of third party credit risk. The buyer of a credit default swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the debt security. A credit default swap is considered insurance against non-payment.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
48
12 Derivative financial instruments (continued)
Outstanding notional contracts on derivatives are as follows:
UBS Property Securities Fund Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Nil - - -
- -
UBS Property Securities Fund Fair Value 2013
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Nil - - -
- -
UBS Australian Share Fund Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Nil - - -
- -
UBS Australian Share Fund Fair Value 2013
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Buy
Futures 20,147 241 -
241 -
UBS International Share Fund Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 45,071 103 409
103 409
UBS International Share Fund Fair Value 2013
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 37,647 238 188
238 188
An overview of the risk exposures relating to derivatives is included in Note 13.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
49
12 Derivative financial instruments (continued)
UBS Australian Small Companies Fund Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Buy
Futures 4,812 7 -
7 -
UBS Australian Small Companies Fund Fair Value 2013
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Buy
Futures 6,850 65 -
65 -
UBS Global Property Securities Fund Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 143,688 596 41
596 41
UBS Global Property Securities Fund Fair Value 2013
An overview of the risk exposures relating to derivatives is included in Note 13.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
52
12 Derivative financial instruments (continued)
UBS Tactical Beta Fund - Conservative Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 7,756 12 59
Buy
Swaps 6,548 654 -
Futures 14,371 226 22
Sell
Futures 7,840 1 55
893 136
UBS Tactical Beta Fund - Conservative Fair Value 2013
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 5,930 24 49
Buy
Swaps 6,336 141 -
Futures 5,794 35 123
Sell
Futures 2,913 58 -
258 172
UBS Tactical Beta Fund - Growth Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 9,832 51 40
Buy
Swaps 3,009 301 -
Futures 8,999 116 14
Sell
Futures 2,746 - 20
468 74
UBS Tactical Beta Fund - Growth Fair Value 2013
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 4,889 13 85
Buy
Futures 3,154 42 39
Sell
Futures 946 19 -
74 124
An overview of the risk exposures relating to derivatives is included in Note 13.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
53
12 Derivative financial instruments (continued)
UBS Tactical Beta Fund - Balanced Fair Value 2014
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 30,269 125 154
Buy
Futures 30,347 462 50
Swaps 12,332 1,227 -
Sell
Futures 18,524 3 136
1,817 340
UBS Tactical Beta Fund - Balanced Fair Value 2013
Contract/ notional Assets Liabilities
$'000 $'000 $'000
Forward foreign exchange contracts 22,204 79 339
Buy
Futures 4,718 91 259
Swaps 15,295 317 -
Sell
Futures 8,397 167 -
654 598
An overview of the risk exposures relating to derivatives is included in Note 13.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
54
13 Financial risk management
(a) Objectives, strategies, policies and processes
The Schemes' activities may expose them to a variety of financial risks: market risk (including price risk and foreign exchange risk), concentration risk and liquidity risk.
The Schemes' overall risk management program focuses on ensuring compliance with the Schemes' Product Disclosure Statements and seeks to maximise the returns derived for the level of risk to which the Schemes are exposed. Financial risk management is carried out by an Investment Manager under policies approved by the Board of Directors of the Responsible Entity (the "Board'').
The Schemes use different methods to measure different types of risk to which they are exposed. These methods include sensitivity analysis in the case of foreign exchange risk and price risk.
As part of its risk management strategy, the Schemes may use derivatives and other investments, including equity price and futures, swaps, options and forward currency contracts, to manage exposures resulting from changes in interest rates, foreign currencies, equity price,and exposures arising from derivative transactions.
(b) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: price risk, foreign currency risk and interest rate risk. Market risk is managed and monitored using sensitivity analysis, and minimised through ensuring that all investment activities are undertaken in accordance with established mandates, investment strategies and guidelines.
The market risk disclosures are prepared on the basis of the Schemes' direct investments and not on a look through basis for investments held in the Schemes.
The sensitivity of the Schemes' net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) to price risk, foreign exchange risk and interest rate risk is measured by the reasonably possible movements approach. This approach is determined based on management's best estimate, having regard to a number of factors, including historical levels of changes in interest rates and foreign exchange rates, historical correlation of the Schemes' investments with the relevant benchmarks and market volatility. However, actual movements in the risk variables may be greater or less than anticipated due to a number of factors, including unusually large market shocks resulting from changes in the performance of the economies, markets and securities in which the Schemes invest. As a result, historic variations in the risk variables are not a definitive indicator of future variations in the risk variables.
Net assets attributable to unitholders may include investments in debt and equity securities and related derivatives.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
Derivatives assets held for trading - - 1 2 2,251 437 893 258
Derivatives liabilities held for trading - - - - 124 5,213 136 172
Securities designated at fair value through profit or loss 22,702 20,809 25,254 4,635 180,117 116,402 31,880 20,064
UBS Tactical Beta Fund - Growth
UBS Tactical Beta Fund - Balanced
2014 2013 2014 2013 $'000 $'000 $'000 $'000
Derivatives assets held for trading 468 74 1,817 654
Derivatives liabilities held for trading 74 124 340 598
Securities designated at fair value through profit or loss 17,824 7,904 79,842 56,244
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
56
13 Financial risk management (continued)
(b) Market risk (continued)
(i) Price risk
Price risk is the risk that the fair value of future cash flows of equities will fluctuate because of changes in market prices (other than those arising from interest rate risk or foreign exchange risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
Price risk exposure arises from the Schemes' investment portfolio. The investments are classified on the Statement of Financial Position as held at fair value through profit or loss. All securities investments present a risk of loss of capital. Except for equities sold short, the maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. Possible losses from equities sold short can be unlimited.
The Investment Manager mitigates this price risk through diversification and a careful selection of securities and other financial instruments within specified limits.
The Schemes' overall market positions are monitored on a daily basis by the Schemes' Investment Manager.
At 30 June 2014, if the equity prices had increased/(decreased) by the percentage indicated below, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
UBS Property Securities Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 18,924 (18,924) 20,498 (20,498)
UBS Australian Share Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 110,211 (110,211) 106,229 (106,299)
UBS International Share Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 24,876 (24,876) 16,176 (16,176)
UBS Australian Small Companies Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 9,325 (9,325) 7,784 (7,784)
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
57
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Global Property Securities Fund As at 30 June 2014 As at 30 June 2013
Increased by 10%
$'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10%$'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 4,951 (4,951) 4,325 (4,325)
UBS Global Quantitative Share Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 6,214 (6,214) 5,182 (5,182)
UBS Defensive Investment Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 13,429 (13,429) (6,297) (9,005)
UBS Balanced Investment Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 79,831 (79,831) 60,713 (60,713)
UBS Emerging Markets Equity Fund (AUD) As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 2,270 (2,270) 2,081 (2,081)
UBS-HALO Australian Share Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 2,566 (2,566) 475 (475)
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
58
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Clarion Global Property Securities Fund As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 18,012 (18,012) 11,640 (11,640)
UBS Tactical Beta Fund - Conservative As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 3,829 (3,829) 1,905 (1,905)
UBS Tactical Beta Fund - Growth As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Decreased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 2,399 (2,399) 880 (880)
UBS Tactical Beta Fund - Balanced As at 30 June 2014 As at 30 June 2013
Increased by 10% $'000
Decreased by 10% $'000
Increased by 10% $'000
Increased by 10% $'000
Increase/(decrease) in net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) 9,478 (9,478) 5,282 (5,282)
The above analysis is performed on the same basis for both 2014 and 2013 financial years for each of the respective Schemes.
(ii) Foreign exchange risk
The foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Schemes may hold assets denominated in currencies other than the Australian dollar, the functional currency. The Product Disclosure Statement and fund guidelines dictate what and how much foreign currency exposure may be assumed. The sensitivity analysis following is prepared on the basis of asset level exposure excluding currency hedges. It is therefore potentially exposed to foreign exchange risk, as the value of the securities denominated in other currencies will fluctuate due to changes in exchange rates. The risk is measured using sensitivity analysis.
As stated in Note 13(a) above, as part of their risk management strategy, some of the Schemes use forward foreign exchange contracts to manage exposures resulting from changes in foreign currencies. Refer to Note 12 for forward foreign exchange contracts held in each of the respective Schemes.
In accordance with the Schemes' policy, the Investment Manager monitors the Schemes' currency position on a regular basis.
The foreign exchange risk disclosures have been prepared on the basis of the Schemes' direct investments and not on a look through basis for investments held indirectly through unit trusts. Consequently the disclosure of currency risk in the note may not represent the true currency risk profile of the Schemes where the Schemes have significant investments in indirect trusts which also have exposure to the currency markets.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
59
13 Financial risk management (continued)
(b) Market risk (continued)
The tables below summarise the Scheme's exposure to foreign exchange risk.
Total liabilities (excluding net assets attributable to unitholders) 25,717 - - 27 2,215 661 28,620
Net assets attributable to unitholders 648,667 1,009 1,724 484 42,224 2,754 696,862
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
67
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Emerging Markets Equity Fund (AUD)
Australian
Dollars US Dollars Euro Japanese
Yen British Pounds
Other currencies Total
A$'000 A$'000 A$'000 A$'000 A$'000 A$'000 A$'000
2014
Assets
Cash and cash equivalents 36 109 - - - 267 412
Receivables 5 1 - - - 88 94
Listed equities - 5,733 - - - 16,969 22,702
Total assets 41 5,843 - - - 17,324 23,208
Liabilities
Distributions payable 67 - - - - - 67
Payables 26 - - - - - 26
Total liabilities (excluding net assets attributable to unitholders) 93 - - - - - 93
Net assets attributable to unitholders (52) 5,843 - - - 17,324 23,115
UBS Emerging Markets Equity Fund (AUD)
Australian
Dollars US Dollars Euro Japanese
Yen British Pounds
Other currencies Total
A$'000 A$'000 A$'000 A$'000 A$'000 A$'000 A$'000
2013
Assets
Cash and cash equivalents 30 522 - - - 71 623
Receivables 9 3 - - - 19 31
Listed equities - 5,282 - - - 15,527 20,809
Total assets 39 5,807 - - - 15,617 21,463
Liabilities
Distributions payable 155 - - - - - 155
Payables 24 - - - - - 24
Total liabilities (excluding net assets attributable to unitholders) 179 - - - - - 179
Net assets attributable to unitholders (140) 5,807 - - - 15,617 21,284
UBS Emerging Markets Equity Fund other currencies of $17,324 ('000) comprised of currencies such as Korean Won, Hong Kong Dollar, Taiwanese Dollar, South African Rand and Mexican Peso.
UBS-HALO Australian Share Fund
There was no significant direct foreign exchange risk for UBS-HALO Australian Share Fund as at 30 June 2014 (2013: Nil).
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
Total liabilities (excluding net assets attributable to unitholders) 2,730 226 26 - 164 77 3,223
Net assets attributable to unitholders 45,069 18,412 162 57 725 196 64,621
UBS Property Securities Fund
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
AUD/HKD 2014 10% (2013: 10%) 375 433 (307) (354)
AUD/SGD 2014 10% (2013: 10%) 126 300 (103) (245)
The possible impact against other currencies not disclosed above is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
75
13 Financial risk management (continued)
(b) Market risk (continued)
UBS International Share Fund
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
The possible impact against other currencies not disclosed above is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Global Property Securities Fund
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
AUD/USD 2014 10% (2013: 10%) 53 85 (43) (69)
AUD/EUR 2014 10% (2013: 10%) 3 6 (3) (5)
AUD/JPY 2014 10% (2013: 10%) 13 32 (10) (26)
AUD/GBP 2014 10% (2013: 10%) (10) 1 8 (1)
AUD/CAD 2014 10% (2013: 10%) (2) (8) 1 6
AUD/HKD 2014 10% (2013: 10%) (71) (105) 58 86
AUD/SEK 2014 10% (2013: 10%) - (3) - 3
AUD/SGD 2014 10% (2013: 10%) 6 1 (5) (1)
The possible impact against other currencies not disclosed above is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
76
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Global Quantitative Share Fund
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
The possible impact against other currencies not disclosed above is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
77
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Defensive Investment Fund
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
AUD/USD 2014 10% (2013: 10%) (153) (207) 125 169
AUD/EUR 2014 10% (2013: 10%) 774 514 (634) (421)
AUD/JPY 2014 10% (2013: 10%) (8) 8 6 (6)
AUD/GBP 2014 10% (2013: 10%) 220 94 (180) (77)
AUD/CAD 2014 10% (2013: 10%) (106) (148) 87 121
AUD/CNY 2014 10% (2013: 10%) - 335 - (274)
AUD/MXN 2014 10% (2013: 10%) 192 197 (157) (161)
AUD/CHF 2014 10% (2013: 10%) (736) - 602 -
AUD/KRW 2014 10% (2013: 10%) - 165 - (135)
AUD/MYR 2014 10% (2013: 10%) - 225 - (184)
AUD/HKD 2014 10% (2013: 10%) (8) 60 6 (49)
AUD/NOK 2014 10% (2013: 10%) - (308) - 252
AUD/CZK 2014 10% (2013: 10%) - (165) - 135
AUD/NZD 2014 10% (2013: 10%) (157) - 128 -
AUD/PHP 2014 10% (2013: 10%) 283 - (232) -
The possible impact against other currencies not disclosed above is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
78
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Balanced Investment Fund
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
The possible impact against other currencies not disclosed above is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
79
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Emerging Markets Equity Fund (AUD)
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
AUD/USD 2014 10% (2013: 10%) 649 645 (531) (528)
AUD/HKD 2014 10% (2013: 10%) 321 272 (263) (223)
AUD/IDR 2014 10% (2013: 10%) 105 210 (86) (172)
AUD/KRW 2014 10% (2013: 10%) 379 203 (310) (166)
AUD/MXN 2014 10% (2013: 10%) 164 98 (134) (80)
AUD/TWD 2014 10% (2013: 10%) 308 160 (252) (131)
AUD/ZAR 2014 10% (2013: 10%) 191 77 (157) (63)
AUD/BRL 2014 10% (2013: 10%) 97 72 (80) (59)
AUD/MYR 2014 10% (2013: 10%) 83 137 (68) (112)
AUD/TRY 2014 10% (2013: 10%) 94 108 (77) (88)
AUD/THB 2014 10% (2013: 10%) 33 211 (27) (173)
AUD/PHP 2014 10% (2013: 10%) 148 185 (121) (152)
AUD/RUB 2014 10% (2013: 10%) 1 1 (1) -
The possible impact against other currencies not disclosed above is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Clarion Global Property Securities Fund
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
AUD/USD 2014 10% (2013: 10%) 203 97 (166) (80)
AUD/EUR 2014 10% (2013: 10%) (50) (23) 41 19
AUD/JPY 2014 10% (2013: 10%) 82 38 (67) (31)
AUD/GBP 2014 10% (2013: 10%) 70 (10) (58) 8
AUD/CAD 2014 10% (2013: 10%) - (4) - 3
AUD/HKD 2014 10% (2013: 10%) (206) (152) 169 125
AUD/SEK 2014 10% (2013: 10%) 59 10 (48) (8)
AUD/SGD 2014 10% (2013: 10%) 42 9 (34) (7)
The possible impact against other currencies is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
80
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Tactical Beta Fund - Conservative
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
AUD/USD 2014 10% (2013: 10%) 719 410 (589) (336)
AUD/PHP 2014 10% (2013: 10%) 94 29 (77) (24)
AUD/PLN 2014 10% (2013: 10%) - 29 - (23)
AUD/MXN 2014 10% (2013: 10%) 41 19 (34) (16)
AUD/GBP 2014 10% (2013: 10%) 32 - (27) -
AUD/JPY 2014 10% (2013: 10%) 17 2 (14) (2)
AUD/HKD 2014 10% (2013: 10%) (16) (3) 13 3
AUD/SEK 2014 10% (2013: 10%) (13) (8) 11 6
AUD/CNY 2014 10% (2013: 10%) (10) (11) 8 9
AUD/CHF 2014 10% (2013: 10%) (189) (14) 154 12
AUD/EUR 2014 10% (2013: 10%) (72) (67) 59 55
AUD/CAD 2014 10% (2013: 10%) (22) (71) 18 58
AUD/NZD 2014 10% (2013: 10%) (271) (113) 221 93
The possible impact against other currencies is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
81
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Tactical Beta Fund - Growth
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
AUD/USD 2014 10% (2013: 10%) 666 280 (545) (229)
AUD/EUR 2014 10% (2013: 10%) (101) (61) 83 50
AUD/JPY 2014 10% (2013: 10%) (42) (24) 34 19
AUD/GBP 2014 10% (2013: 10%) 19 (7) (16) 6
AUD/SGD 2014 10% (2013: 10%) (9) (3) 7 3
AUD/SEK 2014 10% (2013: 10%) (14) (3) 11 2
AUD/HKD 2014 10% (2013: 10%) (25) (10) 21 8
AUD/CAD 2014 10% (2013: 10%) (28) (31) 23 25
AUD/MXN 2014 10% (2013: 10%) 21 8 (17) (6)
AUD/PHP 2014 10% (2013: 10%) 52 6 (42) (5)
AUD/PLN 2014 10% (2013: 10%) - 6 - (5)
AUD/ZAR 2014 10% (2013: 10%) (7) (5) 6 4
AUD/TWD 2014 10% (2013: 10%) (7) (7) 5 6
AUD/INR 2014 10% (2013: 10%) (7) (7) 6 6
AUD/BRL 2014 10% (2013: 10%) (7) (8) 6 6
AUD/CNY 2014 10% (2013: 10%) (9) (9) 7 7
AUD/KRW 2014 10% (2013: 10%) (14) (11) 11 9
AUD/CHF 2014 10% (2013: 10%) (125) (16) 103 13
AUD/NZD 2014 10% (2013: 10%) (147) (51) 121 42
AUD/NOK 2014 10% (2013: 10%) (7) - 6 -
The possible impact against other currencies is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
82
13 Financial risk management (continued)
(b) Market risk (continued)
UBS Tactical Beta Fund - Balanced
At 30 June 2014, had the Australian dollar weakened/strengthened as illustrated below against the various currencies to which the Scheme is exposed, with all other variables held constant, the net assets attributable to unitholders (and profit/(loss) before finance costs attributable to unitholders) would have changed by the following amounts, approximately and respectively:
AUD Weakened AUD Strengthened
Increase/(decrease) in net assets attributable to unitholders (and
profit/(loss) before finance costs attributable to unitholders 30 June 2014 30 June 2013 30 June 2014 30 June 2013 $'000 $'000 $'000 $'000
The possible impact against other currencies is considered immaterial individually and therefore has not been included in the above table. The analysis is performed on the same basis for both 2014 and 2013 financial years.
(c) Concentration risk
Concentration of risk arises when a number of financial instruments are entered into with the same counterparty, or where a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have similar economic conditions. These similarities would cause the counterparties' liabilities to meet the contractual obligations to be similarly affected by certain changes in the risk variables.
The concentration of risk is monitored by the Investment Manager to ensure it is within acceptable limits by reducing the exposures or by other means as deemed appropriate.
Concentration of risk is managed by industry sector for equity instruments and by counterparty for debt instruments and selected derivatives. Where related parties exist, the Schemes will be disclosed individually.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
83
13 Financial risk management (continued)
(c) Concentration risk (continued)
Based on the concentration of risk that is managed by industry sector and/or counterparty the following investments can be analysed by the industry sector and/or counterparty as at 30 June 2014 and 30 June 2013:
UBS Property Securities Fund %
As at 30 June 2014
Diversified Real Estate Investment Trusts 36.57
Retail Real Estate Investment Trust 29.41
Utilities 21.50
Industrial Real Estate Investment Trust 9.62
Others - aggregated concentration made up of other securities less than 5% 2.90
Total 100.00
UBS Property Securities Fund %
As at 30 June 2013
Retail Real Estate Investment Trust 51.60
Diversified Real Estate Investment Trusts 35.85
Industrial Real Estate Investment Trust 8.11
Others - aggregated concentration made up of other securities less than 5% 4.44
Total 100.00
UBS Australian Share Fund %
As at 30 June 2014
Financials 43.49
Energy 12.99
Utilities 9.30
Materials 9.14
Managed Investment Scheme - UBS Australian Small Companies Fund 6.76
Industrials 5.88
Consumer Staples 5.39
Others - aggregated concentration made up of other securities less than 5% 7.05
Total 100.00
UBS Australian Share Fund %
As at 30 June 2013
Financials 47.64
Materials 10.38
Industrials 10.34
Energy 10.05
Consumer Staples 5.59
Managed Investment Scheme - UBS Australian Small Companies Fund 5.75
Others - aggregated concentration made up of other securities less than 5% 10.25
Total 100.00
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
84
13 Financial risk management (continued)
(c) Concentration risk (continued)
UBS International Share Fund %
As at 30 June 2014
Financials 22.95
Health care 13.64
Consumer Staples 12.93
Consumer Discretionary 11.14
Industrials 10.73
Information Technology 9.42
Energy 8.67
Materials 5.85
Others - aggregated concentration made up of other securities less than 5% 4.67
Total 100.00
UBS International Share Fund %
As at 30 June 2013
Financials 21.71
Industrials 14.79
Consumer Staples 13.17
Information Technology 11.65
Health care 11.63
Consumer Discretionary 8.74
Energy 8.26
Others - aggregated concentration made up of other securities less than 5% 10.05
Total 100.00
UBS Australian Small Companies Fund %
As at 30 June 2014
Consumer Discretionary 33.80
Financials 20.04
Materials 14.49
Health care 11.85
Industrials 6.74
Information Technology 6.09
Others - aggregated concentration made up of other securities less than 5% 6.99
Total 100.00
UBS Australian Small Companies Fund %
As at 30 June 2013
Consumer Discretionary 41.47
Materials 15.20
Financials 15.17
Health care 12.25
Telecommunication Services 6.00
Information Technology 5.12
Others - aggregated concentration made up of other securities less than 5% 4.79
Total 100.00
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
85
13 Financial risk management (continued)
(c) Concentration risk (continued)
UBS Global Property Securities Fund %
As at 30 June 2014
Retail Real Estate Investment Trusts 28.12
Specialised Real Estate Investment Trusts 12.09
Diversified Real Estate Activities 11.75
Residential Real Estate Investment Trusts 11.48
Office Real Estate Investment Trusts 11.36
Diversified Real Estate Investment Trusts 9.82
Industrial Real Estate Investment Trusts 5.92
Others - aggregated concentration made up of other securities less than 5% 9.46
Total 100.00
UBS Global Property Securities Fund %
As at 30 June 2013
Retail Real Estate Investment Trusts 25.94
Diversified Real Estate Activities 17.15
Specialised Real Estate Investment Trusts 15.52
Residential Real Estate Investment Trusts 10.85
Office Real Estate Investment Trusts 10.84
Diversified Real Estate Investment Trusts 10.80
Real Estate Operating Companies 7.23
Others - aggregated concentration made up of other securities less than 5% 1.67
Total 100.00
UBS Global Quantitative Share Fund %
As at 30 June 2014
Financials 16.59
Information Technology 14.60
Health care 12.75
Energy 10.98
Consumer Discretionary 10.34
Industrials 8.77
Consumer Staples 8.73
Materials 8.14
Utilities 5.47
Others - aggregated concentration made up of other securities less than 5% 3.63
Total 100.00
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
86
13 Financial risk management (continued)
(c) Concentration risk (continued)
UBS Global Quantitative Share Fund %
As at 30 June 2013
Financials 19.51
Consumer Discretionary 14.12
Information Technology 11.83
Energy 10.70
Consumer Staples 10.12
Health care 9.90
Industrials 9.46
Materials 6.77
Utilities 5.43
Others - aggregated concentration made up of other securities less than 5% 2.16
Total 100.00
UBS Defensive Investment Fund %
As at 30 June 2014
Managed Investment Scheme - UBS Australian Bond Fund 24.04
Non-Global Industry Classification Standard Sector 18.92
Managed Investment Scheme - UBS Australian Share Fund 11.34
Managed Investment Scheme - SSGA Global Fixed Income Index Trust 10.03
Managed Investment Scheme - UBS International Share Fund 8.90
Managed Investment Scheme - UBS Property Securities Fund 6.32
Managed Investment Scheme - UBS Diversified Credit Fund 6.24
Managed Investment Scheme - UBS Dynamic Alpha Strategy Fund A (AUD) 5.31
Others - aggregated concentration made up of other securities less than 5% 8.90
Total 100.00
UBS Defensive Investment Fund %
As at 30 June 2013
Managed Investment Scheme - UBS Australian Bond Fund 24.66
Managed Investment Scheme - UBS Global Credit Fund 20.64
Non-Global Industry Classification Standard Sector 18.26
Managed Investment Scheme - UBS Australian Share Fund 10.59
Managed Investment Scheme - UBS Property Securities Fund 6.26
Managed Investment Scheme - UBS International Share Fund 5.51
Managed Investment Scheme - UBS Dynamic Alpha Strategy Fund A (AUD) 5.32
Others - aggregated concentration made up of other securities less than 5% 8.76
Total 100.00
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
87
13 Financial risk management (continued)
(c) Concentration risk (continued)
UBS Balanced Investment Fund %
As at 30 June 2014
Managed Investment Scheme - UBS Australian Share Fund 24.28
Managed Investment Scheme - UBS International Share Fund 23.90
Managed Investment Scheme - UBS Australian Bond Fund 8.68
Managed Investment Scheme - UBS Global Quantitative Share Fund 7.64
Managed Investment Scheme - UBS Cash Fund 7.42
Managed Investment Scheme - UBS Global Property Securities Fund 5.58
Managed Investment Scheme - UBS Alpha Dynamic Strategy Fund A (AUD) 5.53
Non-Global Industry Classification Standard Sector 5.48
Others - aggregated concentration made up of other securities less than 5% 11.49
Total 100.00
UBS Balanced Investment Fund %
As at 30 June 2013
Managed Investment Scheme - UBS Australian Share Fund 23.13
Managed Investment Scheme - UBS International Share Fund 16.23
Financials 12.84
Managed Investment Scheme - UBS Australian Bond Fund 9.08
Managed Investment Scheme - UBS Global Opportunities Share Fund 7.80
Managed Investment Scheme - UBS Global Credit Fund 7.58
Managed Investment Scheme - UBS Global Quantitative Share Fund 7.13
Managed Investment Scheme - UBS Alpha Dynamic Strategy Fund A (AUD) 5.66
Others - aggregated concentration made up of other securities less than 5% 10.55
Total 100.00
UBS Emerging Markets Equity Fund (AUD) %
As at 30 June 2014
Information Technology 27.80
Financials 21.17
Consumer Discretionary 17.82
Industrials 12.46
Health Care 6.50
Consumer Staples 5.07
Others - aggregated concentration made up of other securities less than 5% 9.18
Total 100.00
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
88
13 Financial risk management (continued)
(c) Concentration risk (continued)
UBS Emerging Markets Equity Fund (AUD) %
As at 30 June 2013
Financials 23.99
Consumer Discretionary 17.71
Information Technology 16.07
Industrials 10.36
Consumer Staples 8.91
Materials 7.02
Telecommunication Services 6.54
Others - aggregated concentration made up of other securities less than 5% 9.40
Total 100.00
UBS-HALO Australian Share Fund %
As at 30 June 2014
Financials 44.67
Energy 20.45
Utilities 11.56
Industrials 7.50
Materials 6.06
Consumer Staples 5.67
Others - aggregated concentration made up of other securities less than 5% 4.09
Total 100.00
UBS-HALO Australian Share Fund %
As at 30 June 2013
Financials 50.85
Industrials 14.43
Energy 12.39
Materials 9.14
Utilities 5.02
Others - aggregated concentration made up of other securities less than 5% 8.17
Total 100.00
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
89
13 Financial risk management (continued)
(c) Concentration risk (continued)
UBS Clarion Global Property Securities Fund %
As at 30 June 2014
Retail Real Estate Investment Trusts 22.64
Office Real Estate Investment Trusts 15.03
Real Estate Other 13.66
Diversified Real Estate Investment Trusts 11.27
Specialised Real Estate Investment Trusts 10.45
Residential Real Estate Investment Trusts 9.44
Industrial Real Estate Investment Trust 6.43
Real Estate Operating Companies 6.36
Others - aggregated concentration made up of other securities less than 5% 4.72
Total 100.00
UBS Clarion Global Property Securities Fund %
As at 30 June 2013
Retail Real Estate Investment Trusts 30.36
Diversified Real Estate Investment Trusts 15.96
Office Real Estate Investment Trusts 15.61
Specialised Real Estate Investment Trusts 15.02
Residential Real Estate Investment Trusts 11.70
Industrial Real Estate Investment Trust 5.86
Real Estate Operating Companies 5.26
Others - aggregated concentration made up of other securities less than 5% 0.23
Total 100.00
UBS Tactical Beta Fund - Conservative %
As at 30 June 2014
Non-Global Industry Classification Standard Sector 29.05
Managed Investment Scheme - SSgA Global Broad Investment Grade Fixed Income Trust 28.70
Managed Investment Scheme - SSgA Global Fixed Income Index Trust 16.11
Managed Investment Scheme - SSgA Australian Fixed Income Index Trust 14.96
Financials 8.86
Others - aggregated concentration made up of other securities less than 5% 2.32
Total 100.00
UBS Tactical Beta Fund - Conservative %
As at 30 June 2013
Non - Global Industry Classification Standard Sector 27.03
Managed Investment Scheme - SSgA Global Fixed Income Index Trust 24.47
Managed Investment Scheme - SSgA Australian Fixed income Index Trust 20.17
Others - aggregated concentration made up of other securities less than 5% 0.43
Total 100.00
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
90
13 Financial risk management (continued)
(c) Concentration risk (continued)
UBS Tactical Beta Fund - Growth %
As at 30 June 2014
Non-Global Industry Classification Standard Sector 57.37
Financials 22.02
Managed Investment Scheme - SSgA Global Broad Investment Grade Fixed Income Trust 9.94
Others - aggregated concentration made up of other securities less than 5% 10.67
Total 100.00
UBS Tactical Beta Fund - Growth %
As at 30 June 2013
Non - Global Industry Classification Standard Sector 53.57
Financials 22.83
Managed Investment Scheme - SSgA Global Broad Investment Grade Fixed Income Trust 18.47
Managed Investment Scheme - SSgA Australian Fixed Income Index Trust 5.13
Total 100.00
UBS Tactical Beta Fund - Balanced %
As at 30 June 2014
Non-Global Industry Classification Standard Sector 45.52
Financials 15.11
Managed Investment Scheme - SSgA Global Broad Investment Grade Fixed Income Trust 14.81
Managed Investment Scheme - SSgA Global Fixed Income Index Trust 12.66
Managed Investment Scheme - SSgA Australian Fixed Income Index Trust 10.09
Others - aggregated concentration made up of other securities less than 5% 1.81
Total 100.00
UBS Tactical Beta Fund - Balanced %
As at 30 June 2013
Non - Global Industry Classification Standard Sector 42.02
Managed Investment Scheme - SSgA Global Fixed Income Index Trust 17.24
Financials 14.22
Managed Investment Scheme - SSgA Australian Fixed Income Index Trust 13.64
Managed Investment Scheme - SSgA Global Broad Investment Grade Fixed Income Trust 12.78
Others - aggregated concentration made up of other securities less than 5% 0.10
Total 100.00
(d) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. This risk is controlled through the Schemes' investment in financial instruments, which under normal market conditions are readily convertible to cash. In addition, the Schemes maintain sufficient cash and cash equivalents to meet normal operating requirements.
Investors can submit redemption requests for the Schemes at any time which results in some liquidity risk. However, while the time allowed for the satisfaction of redemption requests varies from Scheme to Scheme, the Responsible Entity has the power to suspend redemptions in certain circumstances, including if the relevant Scheme is not liquid (as set out in section 601KA of the Corporations Act 2011).
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
91
13 Financial risk management (continued)
(d) Liquidity risk (continued)
The Schemes may, from time to time, invest in indirect physical securities and derivative contracts traded over the counter, which may be illiquid. As a result, the Schemes may not be able to liquidate quickly its investments in these instruments at an amount close to their fair value to meet its liquidity requirements or to respond to specific events such as a deterioration in the creditworthiness of any particular issuer.
In accordance with the Schemes' policy, the Investment Manager monitors the Schemes' liquidity position on a daily basis.
The table below analyses the Schemes' financial liabilities including derivative financial liabilities that are settled on a net basis into relevant maturity groupings based on the remaining period at the end of the financial year to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.
To determine each Scheme's liquidity risk position as at 30 June 2014, the net basis table below should be read in conjunction with the gross basis table on page 97 to page 101.
UBS Property Securities Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 5,258 - - -
Payables 489 - - -
Net assets attributable to unitholders 197,009 - - -
Total financial liabilities 202,756 - - -
As at 30 June 2013
Distributions payable 2,432 - - -
Payables 530 - - -
Net assets attributable to unitholders 209,531 - - -
Total financial liabilities 212,493 - - -
UBS Australian Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 8,274 - - -
Payables 2,563 - - -
Net assets attributable to unitholders 1,112,519 - - -
Total financial liabilities 1,123,356 - - -
As at 30 June 2013
Distributions payable 7,834 - - -
Payables 2,973 - - -
Net asset attributable to unitholders 1,076,067 - - -
Total financial liabilities 1,086,874 - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
92
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS International Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 1,445 - - -
Payables 394 - - -
Financial liabilities held for trading 409 - - -
Net assets attributable to unitholders 250,037 - - -
Total financial liabilities 252,285 - - -
As at 30 June 2013
Distributions payable 153 - - -
Payables 778 - - -
Financial liabilities held for trading 188 - - -
Net assets attributable to unitholders 164,262 - - -
Total financial liabilities 165,381 - - -
UBS Australian Small Companies Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Payables 1,084 - - -
Net assets attributable to unitholders 93,626 - - -
Total financial liabilities 94,710 - - -
As at 30 June 2013
Distributions payable 505 - - -
Payables 251 - - -
Net assets attributable to unitholders 77,711 - - -
Total financial liabilities 78,467 - - -
UBS Global Property Securities Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 26 - - -
Payables 44 - - -
Financial liabilities held for trading 41 - - -
Net assets attributable to unitholders 51,013 - - -
Total financial liabilities 51,124 - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
93
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS Global Property Securities Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2013
Payables 257 - - -
Financial liabilities held for trading 2,025 - - -
Net assets attributable to unitholders 41,847 - - -
Total financial liabilities 44,129 - - -
UBS Global Quantitative Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 606 - - -
Payables 54 - - -
Net assets attributable to unitholders 62,218 - - -
Total financial liabilities 62,878 - - -
As at 30 June 2013
Distributions payable 206 - - -
Payables 44 - - -
Net assets attributable to unitholders 52,226 - - -
Total financial liabilities 52,476 - - -
UBS Defensive Investment Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 4,030 - - -
Payables 378 - - -
Financial liabilities held for trading 147 - - -
Net assets attributable to unitholders 140,696 - - -
Total financial liabilities 145,251 - - -
As at 30 June 2013
Distributions payable 699 - - -
Payables 244 - - -
Financial liabilities held for trading 185 - - -
Net assets attributable to unitholders 130,052 - - -
Total financial liabilities 131,180 - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
94
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS Balanced Investment Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 19,625 - - -
Payables 374 - - -
Financial liabilities held for trading 825 - - -
Net assets attributable to unitholders 781,892 - - -
Total financial liabilities 802,716 - - -
As at 30 June 2013
Distributions payable 22,778 - - -
Payables 1,995 - - -
Financial liabilities held for trading 886 - - -
Net assets attributable to unitholders 696,862 - - -
Total financial liabilities 722,521 - - -
UBS Emerging Markets Equity Fund (AUD)
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 67 - - -
Payables 26 - - -
Net assets attributable to unitholders 23,115 - - -
Total financial liabilities 23,208 - - -
As at 30 June 2013
Distributions payable 155 - - -
Payables 24 - - -
Net assets attributable to unitholders 21,284 - - -
Total financial liabilities 21,463 - - -
UBS-HALO Australian Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distributions payable 448 - - -
Payables 21 - - -
Net assets attributable to unitholders 25,997 - - -
Total financial liabilities 26,466 - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
95
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS-HALO Australian Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2013
Distributions payable 330 - - -
Payables 4 - - -
Net assets attributable to unitholders 4,627 - - -
Total financial liabilities 4,961 - - -
UBS Clarion Global Property Securities Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distribution payable 1,626 - - -
Payables 477 - - -
Financial liabilities held for trading 124 - - -
Net assets attributable to unitholders 185,061 - - -
Total financial liabilities 187,288 - - -
As at 30 June 2013
Distribution payable 75 - - -
Payables 3,494 - - -
Financial liabilities held for trading 5,213 - - -
Net assets attributable to unitholders 114,453 - - -
Total financial liabilities 123,235 - - -
UBS Tactical Beta Fund - Conservative
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distribution payable 2,002 - - -
Payables 169 - - -
Financial liabilities held for trading 59 - - -
Net assets attributable to unitholders 50,074 - - -
Total financial liabilities 52,304 - - -
As at 30 June 2013
Distribution payable 1,100 - - -
Payables 8 - - -
Financial liabilities held for trading 49 - - -
Net asset attributable to unitholders 25,626 - - -
Total financial liabilities 26,783 - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
96
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS Tactical Beta Fund - Growth
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distribution payable 1,108 - - -
Payables 16 - - -
Financial liabilities held for trading 40 - - -
Net assets attributable to unitholders 27,476 - - -
Total financial liabilities 28,640 - - -
As at 30 June 2013
Distribution payable 311 - - -
Payables 3 - - -
Financial liabilities held for trading 85 - - -
Net asset attributable to unitholders 11,299 - - -
Total financial liabilities 11,698 - - -
UBS Tactical Beta Fund - Balanced
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Distribution payable 4,216 - - -
Payables 43 - - -
Financial liabilities held for trading 154 - - -
Net assets attributable to unitholders 116,445 - - -
Total financial liabilities 120,858 - - -
As at 30 June 2013
Distribution payable 2,604 - - -
Payables 21 - - -
Financial liabilities held for trading 339 - - -
Net asset attributable to unitholders 64,621 - - -
Total financial liabilities 67,585 - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
97
13 Financial risk management (continued)
(d) Liquidity risk (continued)
The table below analyses the Schemes' derivative financial instruments that are settled on a gross basis into relevant maturity groupings based on the remaining period at the end of the financial year to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
UBS Property Securities Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
At 30 June 2014
Nil - - - -
At 30 June 2013
Nil - - - -
UBS Australian Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Nil - - - -
As at 30 June 2013
Futures
- Outflows - - - -
- Inflows 241 - - -
UBS International Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
At 30 June 2014
Nil - - - -
At 30 June 2013
Nil - - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
98
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS Australian Small Companies Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Futures
- Outflows - - - -
- Inflows 7 - - -
As at 30 June 2013
Futures
- Outflows - - - -
- Inflows 65 - - -
UBS Global Property Securities Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
At 30 June 2014
Nil - - - -
At 30 June 2013
Nil - - - -
UBS Global Quantitative Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
At 30 June 2014
Nil - - - -
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
At 30 June 2013
Nil - - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
99
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS Defensive Investment Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Futures
- Outflows (108) - (144) -
- Inflows 523 3 - -
As at 30 June 2013
Futures
- Outflows (220) (397) - -
- Inflows 284 134 - -
Options
- Outflows (116) - - -
- Inflows - - - - UBS Balanced Investment Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Futures
- Outflows (1,181) - (740) -
- Inflows 2,979 - - -
As at 30 June 2013
Futures
- Outflows (971) (1,990) - -
- Inflows 2,085 - - -
UBS Emerging Markets Equity Fund (AUD)
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Nil - - - -
As at 30 June 2013
Nil - - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
100
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS-HALO Australian Share Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Futures
- Outflows - - - -
- Inflows 1 - - -
As at 30 June 2013
Futures
- Outflows - - - -
- Inflows 2 - - - UBS Clarion Global Property Securities Fund
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2013
Nil - - - -
As at 30 June 2013
Nil - - - -
UBS Tactical Beta Fund - Conservative
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Futures
- Outflows (50) - (27) -
- Inflows 226 1 - -
At 30 June 2013
Futures
- Outflows (57) (66) - -
- Inflows 93 - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
101
13 Financial risk management (continued)
(d) Liquidity risk (continued)
UBS Tactical Beta Fund - Growth
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Futures
- Outflows (21) - (13) -
- Inflows 116 - - -
At 30 June 2013
Futures
- Outflows (18) (21) - -
- Inflows 61 - - -
UBS Tactical Beta Fund - Balanced
Less than 3 months $'000
3-12 months
$'000
12-60 months
$'000
Over 60 months
$'000
As at 30 June 2014
Futures
- Outflows (118) - (68) -
- Inflows 463 2 - -
At 30 June 2013
Futures
- Outflows (105) (154) - -
- Inflows 258 - - -
(e) Estimation of fair values of financial assets and financial liabilities
The carrying amounts of all the Schemes' financial assets and financial liabilities at the end of the financial year approximated their fair values.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Schemes' accounting policy on fair value measurement is set out in Note 2. The methods and assumptions used in the determination of the fair value of each class of financial instruments are also set out in Note 2.
Note 2(q) outlines further the nature of management's judgements, estimates and assumptions that might have been used in the determination of the fair values of each class of these financial instruments.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
102
13 Financial risk management (continued)
(f) Fair value hierarchy
The Schemes are required to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); quoted prices for similar securities in active and/or inactive markets; market-corroborated inputs; inputs that are developed based on available market data and reflect assumptions that markets would use when pricing similar securities.
• Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes ''observable'' requires significant judgement by the Schemes. The Schemes consider observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
All fair value measurements disclosed are recurring fair value measurements.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
103
13 Financial risk management (continued)
(f) Fair value hierarchy (continued)
The table below sets out the Schemes' financial assets and financial liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date.
UBS Property Securities Fund - as at 30 June 2014 Level 1 Level 2 Level 3 Total $'000 $'000 $'000 $'000
Financial assets held at fair value through profit or loss
(ii) Financial assets designated at fair value through profit or loss:
Listed equities 4,002 - - 4,002
Listed property trusts 185,243 - - 185,243
Total 189,245 - - 189,245
UBS Property Securities Fund - as at 30 June 2013
Level 1 Level 2 Level 3 Total
$'000 $'000 $'000 $'000
Financial assets held at fair value through profit or loss
(ii) Financial assets designated at fair value through profit or loss:
Listed equities 6,376 - - 6,376
Listed unit trusts 280 - - 280
Listed property trusts 198,323 - - 198,323
Total 204,979 - - 204,979
UBS Australian Share Fund - as at 30 June 2014 Level 1 Level 2 Level 3 Total $'000 $'000 $'000 $'000
Financial assets held at fair value through profit or loss
(ii) Financial assets designated at fair value through profit or loss:
Financial liabilities held at fair value through profit or loss
(i) Financial liabilities held for trading:
Forward foreign exchange contracts - 339 - 339
Futures 259 - - 259
Total 259 339 - 598
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
115
13 Financial risk management (continued)
(f) Fair value hierarchy (continued)
The fair value of investments that are accounted for using quoted market prices in active markets, are classified as level 1 instruments. The level 1 instruments include all active listed equities and exchange traded derivatives that are traded on recognised stock exchanges.
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. The observable inputs include prices and/or those derived from prices. The level 2 instruments include investment-grade corporate bonds, and over-the-counter derivatives. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
Level 2 investments could include those that are not traded in active markets and/or are subject to transfer restrictions (e.g. redemption restrictions). Valuations for these investments may be adjusted to reflect illiquidity and/or non transferability, which are generally based on available market information. Typically, prices of units in unlisted managed investment trusts that are either published on the investment manager’s website and/or circulated among market participants as executable quotes are categorised as level 2. Investments classified within level 3 have significant unobservable inputs, as they are infrequently traded. Level 3 instruments include certain unlisted unit trusts and corporate debt securities. As observable prices are not available for these securities, the Schemes have applied valuation techniques to derive fair value.
Level 3 instruments could include distressed debt instruments, certain private equity and real estate investments that are not based on market inputs or securities that are in an inactive/illiquid market and are valued using models and internal data. Level 3 investments may be adjusted to reflect illiquidity and/or restrictions, however, the adjustments are not based on available market information. Level 3 instruments also include those that have stale price that is, where the pricing for a particular security has remained static for an extended period of time.
Level 3 valuations are reviewed quarterly by the relevant management. The management considers the appropriateness of the valuation inputs, methods and techniques used in the valuations. The valuation inputs are generally sourced from independent third party pricing sources without adjustment such as stock exchanges, pricing agencies and/or fund managers. Where the inputs are considered stale, unobservable, proprietary or from an inactive market, they are categorised as level 3.
Where a valuation model technique is used, the Schemes consider other liquidity, credit and market risk factors, and adjust the model as deemed necessary. There have been no changes to the valuation techniques used for financial instruments classified as levels 2 and 3.
There have been no transfers of movement in Level 3 during the year. The following table presents the transfers between levels during the financial year ended 30 June 2014 (2013: Nil):
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
116
14 Offsetting financial assets and financial liabilities
The disclosures set out in the tables below show the recognised financial instruments that are currently offset in the Statements of Financial Position and/or are subject to master netting agreements (or similar) irrespective of whether they are offset.
UBS Australian Share Fund
Financial assets - 30 June 2014
Gross amounts
Gross amounts of recognised
financial liabilities set off
in the Statements of
Financial Position
Net amounts of financial assets
presented in Statements of
Financial Position
Amounts related to recognised
financial instruments that
don't meet offsetting
criteria Cash
collateral
Marketable security
collateral Net amount $'000 $'000 $'000 $'000 $'000 $'000 $'000
Nil - - - - - - -
UBS Australian Share Fund
Financial liabilities - 30 June 2014
Gross amounts
Gross amounts of recognised
financial assets set off in the Statements of
Financial Position
Net amounts of financial liabilities
presented in Statements of
Financial Position
Amounts related to recognised
financial instruments that
don't meet offsetting
criteria Cash
collateral
Marketable security
collateral Net amount $'000 $'000 $'000 $'000 $'000 $'000 $'000
Nil - - - - - - -
UBS Australian Share Fund
Financial assets - 30 June 2013
Gross amounts
Gross amounts of recognised
financial liabilities set off
in the Statements of
Financial Position
Net amounts of financial assets presented in
Statements of Financial Position
Amounts related to recognised
financial instruments that
don't meet offsetting
criteria Cash
collateral
Marketable security
collateral Net amount $'000 $'000 $'000 $'000 $'000 $'000 $'000
Futures 241 - 241 - - - 241
Closing balance 241 - 241 - - - 241
UBS Australian Share Fund
Financial liabilities - 30 June 2013
Gross amounts
Gross amounts of recognised financial assets set off in the Statements of
Financial Position
Net amounts of financial liabilities
presented in Statements of
Financial Position
Amounts related to recognised
financial instruments that
don't meet offsetting criteria
Cash collateral
Marketable security
collateral Net amount $'000 $'000 $'000 $'000 $'000 $'000 $'000
Nil - - - - - - -
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
117
14 Offsetting financial assets and financial liabilities (continued)
UBS International Share Fund
Financial assets - 30 June 2014
Gross amounts
Gross amounts of recognised
financial liabilities set off
in the Statements of
Financial Position
Net amounts of financial assets
presented in Statements of
Financial Position
Amounts related to recognised
financial instruments that
don't meet offsetting
criteria Cash
collateral
Marketable security
collateral Net amount $'000 $'000 $'000 $'000 $'000 $'000 $'000
Schemes where financial assets and liabilities were not required to disclose in the table above held nil derivatives as at 30 June 2014 and 30 June 2013 were UBS Property Securities Fund, UBS Global Quantitative Share Fund and UBS Emerging Markets Equity Fund (AUD).
The agreements, where relevant, could include derivative clearing agreements, global master repurchase agreements and others. Similar financial instruments could include derivatives, sale and repurchase agreements, reverse sale and repurchase agreements, securities lending agreements, short sales.
The International Swaps and Derivatives Association ("ISDA"), master netting agreements or similar agreements do not generally meet the criteria for offsetting. This is because they create a right of set-off of recognised amounts that is enforceable only following an event of default, insolvency or bankruptcy of the entity or the counterparties.
From time to time, the Schemes may receive or pledge collateral which could be in the form of cash or marketable securities or both in respect of the above instruments. Such collateral, if transacted, is generally subject to the industry standard in terms of ISDA's Credit Support Annex. This means that collateral received/pledged can be re-pledged or sold during the term of the transaction but have to be returned on maturity of the transaction. The terms also generally give each counterparty the right to terminate the related transactions on the counterparty's failure to post collateral.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
129
15 Related party transactions
Responsible Entity
The Responsible Entity of the Schemes is UBS Global Asset Management (Australia) Ltd, whose immediate and ultimate holding company is UBS AG, a publicly listed company incorporated in Switzerland.
Key management personnel
The directors of UBS Global Asset Management (Australia) Ltd are considered key management personnel. The directors of the Responsible Entity in office at any time during the financial year and up to the date of this report are listed as follows:
(a) Directors
B J Doherty, Chairman (Appointed 08 October 2013)
K R Sotorp, Chairman (Resigned as Chairman 08 October 2013 and Resigned 25 May 2014 as Director)
A L Anderson
J D Males
B A Heap (Resigned 20 September 2013)
A L Flockart (Appointed 08 October 2013)
T C Cooke (Appointed 08 October 2013)
R Buehlmann (Appointed 19 September 2014)
(b) Other key management personnel
In addition, the Responsible Entity, UBS Global Asset Management (Australia) Limited is considered to be a key management personnel with the authority for the strategic direction and management of the Schemes.
Relationship with UBS AG Australia Branch and UBS Securities Australia Limited
On a non exclusive basis, the Schemes use the services of UBS AG Australia Branch, a related company, for futures trading and clearing, fixed income trading and underwriting services. The Schemes also use the services of UBS Securities Australia Limited, a related company for equity broking services.
Fees paid to these related companies for their services are on normal commercial terms and conditions.
Responsible Entity's fees and other transactions The Responsible Entity received a total fee of $19,830,084 for administering and managing the Schemes in accordance with the Schemes' Constitutions for the financial year ended 30 June 2014 (2013: $19,102,005).
The Responsible Entity received a performance fee of $1,356,225 from UBS Australian Small Companies Fund. The Scheme pays a performance fee to the Responsible Entity in accordance with the Scheme's Product Disclosure Statement. Where Schemes invest into UBS Australian Small Companies Fund and are managed by the Responsible Entity, the performance fee is calculated after rebating fees charged in the underlying Schemes.
Where the Schemes invest into other schemes managed by the Responsible Entity, the Responsible Entity's fee is calculated after rebating fees charged in the underlying Schemes.
In addition to the Responsible Entity's fees, the Responsible Entity is entitled to be reimbursed out of the Schemes for costs including expenses in connection with the keeping and preparation of accounting records and the maintenance of the registers. For the financial year ended 30 June 2014, all these costs and expenses have been borne by the Responsible Entity.
The Responsible Entity's fees paid and payable or rebateable (inclusive of GST, net of RITC) calculated in the manner described above are disclosed in the Statements of Comprehensive Income. Amounts payable to the Responsible Entity at the financial year end are detailed in Note 11. Any fee rebates receivable from the Responsible Entity are included in Receivables - Other receivables in Note 9.
All related party transactions are conducted on normal commercial terms and conditions.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
130
15 Related party transactions (continued)
Related party unitholdings
The related party unitholdings (including units held by UBS Global Asset Management (Australia) Ltd, its related parties and other schemes managed by UBS Global Asset Management (Australia) Ltd) are recorded at ex-redemption price, which are recognised after provision for distributions at the financial year end. Related parties that held no units in the Schemes are UBS Defensive Investment Fund, UBS-HALO Australian Share Fund and UBS Tactical Beta Fund - Balanced. Related parties that held units in the Schemes are listed as follows:
UBS Property Securities Fund
Number of units held opening
Number of units held
closing Fair value of investment
Interest held
Number of units
acquired
Number of units
disposed
Distributions paid/payable
by the Schemes2014 Unitholder (Units) (Units) $ % (Units) (Units) $
UBS Global Quantitative Share Fund 57,662,613 48,396,880 92.88 92.78 709,868 836,908
UBS Global Opportunities Share Fund - 52,957,737 - 94.45 20,171,026 443,315
UBS IQ Research Preferred Australian Share Fund (ETF) 41,330,507 - - - 4,548,377 -
UBS Global Credit Fund 15,222,171 51,455,839 14.97 27.20 2,163,094 1,674,653
705,319,905 581,262,836 41,950,772 17,139,073
Other transactions within the Schemes
From time to time directors of UBS Investment Funds, or their director related entities, may invest in or withdraw from the Schemes. These investments or withdrawals are on the same terms and conditions as those entered into by other Schemes' investors and are trivial in nature.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
135
16 Reconciliation of change in net assets attributable to unitholders to net cash inflows/(outflows) from operating activities
(a) Reconciliation of change in net assets attributable to unitholders to net cash inflows/(outflows) from operating activities
Increase/(decrease) in net assets attributable to unitholders 13,035 46,047 134,469 197,153 33,007 44,260 16,750 7,189
Proceeds from sale of financial instruments held at fair value through profit or loss 47,254 75,637 298,636 550,137 90,391 72,805 38,379 73,282
Purchase of financial instruments held at fair value through profit or loss (20,578) (44,378) (220,467) (384,101) (144,209) (47,270) (36,895) (35,482)
Net (gains)/losses on financial instruments held at fair value through profit or loss (10,689) (44,765) (136,615) (201,977) (33,061) (43,164) (18,056) (7,938)
(a) Reconciliation of change in net assets attributable to unitholders to net cash inflows/(outflows) from operating activities
Increase/(decrease) in net assets attributable to unitholders 7,162 5,676 10,051 12,643 7,971 11,124 87,546 100,190
Proceeds from sale of financial instruments held at fair value through profit or loss 21,029 38,071 69,816 27,033 51,142 27,649 230,861 95,353
Purchase of financial instruments held at fair value through profit or loss (23,589) (28,237) (69,982) (20,176) (50,303) (20,511) (223,339) (48,725)
Net (gains)/losses on financial instruments held at fair value through profit or loss (5,042) (7,915) (9,314) (12,567) (8,177) (11,136) (68,894) (106,005)
Distribution payments were satisfied by the issue of units under the distribution reinvestment plans 190 67 414 9,715 5 8 - 359
Distribution receipts were satisfied by the issue of units under distribution reinvestment plans - - - 15 - 57 578 518
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
138
16 Reconciliation of change in net assets attributable to unitholders to net cash inflows/(outflows) from operating activities (continued)
UBS Tactical Beta
Fund - Growth UBS Tactical Beta Fund - Balanced
2014 2013 2014 2013 $'000 $'000 $'000 $'000
(a) Reconciliation of change in net assets attributable to unitholders to net cash inflows/(outflows) from operating activities
Increase/(decrease) in net assets attributable to unitholders 801 229 6,051 1,651
Proceeds from sale of financial instruments held at fair value through profit or loss 3,689 1,700 5,251 2,293
Purchase of financial instruments held at fair value through profit or loss (11,904) (9,028) (21,478) (55,985)
Net (gains)/losses on financial instruments held at fair value through profit or loss (1,937) (449) (7,300) (2,582)
Distributions to unitholders 1,866 560 4,612 3,126
Net foreign exchange (gains)/losses (92) 173 (290) 494
Net change in receivables (182) (224) (582) (1,810)
Reinvested distribution income (120) (250) (1,204) (528)
Net change in payables 5 3 14 21
Net cash inflows/(outflows) from operating activities (7,874) (7,286) (14,926) (53,320)
(b) Components of cash and cash equivalents
Cash as at the end of the financial year as shown in the Statements of Cash Flows is reconciled to the Statements of Financial Position as follows:
Cash and cash equivalents 9,909 3,421 36,553 8,970
(c) Non-cash financing and operating activities
Distribution payments were satisfied by the issue of units under the distribution reinvestment plans 352 241 - -
Distribution receipts were satisfied by the issue of units under distribution reinvestment plans 120 250 1,204 528
As described in Note 2(j), income not distributed is included in net assets attributable to unitholders. The change in this amount each financial year (as reported in (a) above) represents a non-cash financing cost as it is not settled in cash until such time as it becomes distributable.
UBS Investment Funds Notes to the Financial Statements (continued) For the year ended 30 June 2014
139
17 Events occurring after the reporting date
No significant events have occurred since the end of the financial year which would impact on the financial position of the Schemes disclosed in the Statements of Financial Position as at 30 June 2014 or on the results and cash flows of the Schemes for the financial year ended on that date.
18 Contingent assets and liabilities and commitments
There are no outstanding contingent assets and liabilities or commitments as at 30 June 2014 (2013: Nil).
19 Investment in subsidiaries
The Schemes have the following unconsolidated entities:
Principal activities Country of domicile Fair value Equity holding **
30 June 30 June 30 June 30 June 2014 2013 2014 2013 $'000 $'000 % %
UBS Australian Share Fund
UBS Australian Small Companies Fund Australia Australia 74,498 60,008 79.53 77.32
Principal activities Country of domicile Fair value Equity holding **
30 June 30 June 30 June 30 June 2014 2013 2014 2013 $'000 $'000 % %
UBS Balanced Investment Fund
UBS Global Property Securities Fund Australia Australia 42,075 33,464 82.44 80.10
UBS Global Quantitative Share Fund Australia Australia 57,663 48,397 92.88 92.78
UBS Emerging Markets Equity Fund (AUD) Australia Australia 22,409 20,515 97.13 96.47
UBS Global Opportunities Share Fund Australia Australia - 52,958 - 94.45
UBS Dynamic Alpha Strategy Fund A (AUD) Australia Australia 41,701 38,404 6.27 68.68
UBS International Share Fund Australia Australia 180,295 110,229 72.25 67.24
** The proportion of ownership or equity holding is equal to the proportion of voting power held and the exposure %.
The Schemes acquire units in the above entities at their redemption price which reflects the fair value of the investments.
The Schemes qualify for and have applied the investment entity exemption and therefore are no longer required to consolidate their subsidiaries.
The Schemes account for the above investments at fair value through profit or loss and include them as part of the financial statements caption of 'Financial assets held at fair value through profit or loss', with any changes in its fair value taken to profit or loss and recorded as part of 'Net gains/(losses) on financial instruments held at fair value through profit or loss'.
As at the reporting date, the Schemes and their subsidiaries did not impose any significant restrictions, borrowing arrangements, regulatory requirements, or contractual arrangements on the ability of an entity to transfer funds to the Schemes in the form of dividends or to repay loans or advances made to the entity by the Schemes.
As at the reporting date, the Schemes and their subsidiaries do not have any current commitments or intentions to provide financial or other support to an entity, including commitments or intentions to assist the entity in obtaining financial support.
UBS Investment Funds Directors' Declaration For the year ended 30 June 2014
140
Directors' Declaration
In the opinion of the directors of the Responsible Entity:
(a) the financial statements and notes set out on pages 7 - 139 are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the financial position of the Schemes as at 30 June 2014 and of their performance, as represented by the results of their operations and cash flows, for the financial year ended on that date;
(b) there are reasonable grounds to believe that the Schemes will be able to pay their debts as and when they become due and payable.
(c) the financial statements are in accordance with the Schemes' Constitutions.
(d) the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as disclosed in Note 2(a).
This declaration is made in accordance with a resolution of the directors.
B J Doherty A L AndersonChairman Director
Sydney
19 September 2014
141
Independent Auditor's Report to the Unitholders of UBS Investment Funds
142
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UBS Global Asset Management (Australia) Ltd is a subsidiary of UBS AG