SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
☒
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
☐
TRANSITION REPORT PURSUANT TO SECTION
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from
to
Commission file number 1-36764
A. Full title of the plan: UBS 401(k) PLAN
B. Name of issuer of the securities held
pursuant to the plan and the address of its principal executive office:
UBS GROUP AG
Bahnhofstrasse
45
CH-8098,
Zurich, Switzerland
UBS 401(k) PLAN
Financial Statements and
Supplemental Schedule
As of December 31, 2017 and
2016 and
For the Year Ended
December 31, 2017
With Report of Independent
Registered Public Accounting Firm
UBS 401(k)
PLAN
Financial Statements and
Supplemental Schedule
December 31, 2017 and
2016
and Year Ended December 31, 2017
TABLE OF CONTENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Participants and the Plan
Administrator of the UBS 401(k) Plan
Opinion on the Financial
Statements
We have audited the accompanying
statements of net assets available for benefits of the UBS 401(k) Plan (the
“Plan”) as of December 31, 2017 and 2016, and the related statement of changes
in net assets available for benefits for the year ended December 31, 2017, and
the related notes (collectively referred to as the “financial statements”). In
our opinion, the financial statements present fairly, in all material respects,
the net assets available for benefits of the Plan at December 31, 2017 and
2016, and the changes in its net assets available for benefits for the year
ended December 31, 2017, in conformity with U.S. generally accepted accounting
principles.
Basis for Opinion
These financial statements are the
responsibility of the Plan’s management. Our responsibility is to express an
opinion on the Plan’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the
Plan in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud.
The Plan is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. As part of our audits we are
required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness
of the Plan’s internal control over financial reporting. Accordingly, we
express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our
audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
Supplemental Schedule
The accompanying supplemental
schedule of assets (held at end of year) as of December 31, 2017, has been
subjected to audit procedures performed in conjunction with the audit of the
Plan’s financial statements. The information in the supplemental schedule is
the responsibility of the Plan’s management. Our audit procedures included
determining whether the information reconciles to the financial statements or
the underlying accounting and other records, as applicable, and performing
procedures to test the completeness and accuracy of the information presented
in the supplemental schedule(s).
In forming our opinion on the
information, we evaluated whether such information, including its form and
content, is presented in conformity with the Department of Labor’s Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. In our opinion, the information is fairly stated, in all
material respects, in relation to the financial statements as a whole.
/s/ Ernst & Young LLP
We have audited the UBS 401(k) Plan
since 1979.
New York, New York
June 28, 2018
UBS 401(k)
PLAN
Statements
of Net Assets Available for Benefits
As of December 31, 2017
and 2016
|
|
2017
|
2016
|
|
|
|
|
ASSETS
|
|
|
|
Investments, at fair value
|
|
$5,730,880,801
|
$4,843,934,122
|
Notes receivable from participants
|
|
58,010,015
|
57,169,771
|
Investment income receivable
|
|
1,850,562
|
2,064,933
|
Receivable for securities sold
|
|
1,661,518
|
365,308
|
Taxes receivable
|
|
717,658
|
544,282
|
Contributions receivable
|
|
|
|
Contributions receivable
|
|
1,735,772
|
2,177,778
|
Company, net of forfeitures
|
|
78,280,179
|
77,013,074
|
Total assets
|
|
5,873,136,505
|
4,983,269,268
|
|
|
|
|
LIABILITIES
|
|
|
|
Accrued expenses
|
|
2,671,554
|
2,586,612
|
Payable for securities purchased
|
|
88,468
|
24,666
|
Total liabilities
|
|
2,760,022
|
2,611,278
|
|
|
|
|
Net assets available for benefits
|
|
$5,870,376,483
|
$4,980,657,990
|
The accompanying notes are an integral part of these financial
statements.
UBS 401(k)
PLAN
Statement of
Changes in Net Assets Available for Benefits
For the Year Ended
December 31, 2017
|
2017
|
|
|
ADDITIONS TO NET ASSETS
|
|
Investment income
|
|
Net appreciation in the fair value of investments
|
$778,155,853
|
Dividend and interest income
|
84,224,885
|
Net investment income
|
862,380,738
|
Interest income on Notes receivable from participants
|
2,920,949
|
Contributions
|
|
Participants
|
275,589,226
|
Company, net of forfeitures
|
127,678,584
|
Total contributions
|
403,267,810
|
Total additions
|
1,268,569,497
|
|
|
DEDUCTIONS FROM NET ASSETS
|
|
Distributions to participants
|
371,863,093
|
Administrative expenses
|
6,987,911
|
Total deductions from net assets
|
378,851,004
|
|
|
Net increase in net assets available for benefits
|
889,718,493
|
|
|
Net assets available for benefits
|
|
Beginning of year
|
4,980,657,990
|
End of year
|
$5,870,376,483
|
The
accompanying notes are an integral part of these financial statements.
UBS 401(k)
PLAN
Notes to
Financial Statements
December 31, 2017 and
2016
NOTE
1
DESCRIPTION OF THE PLAN
The following description of the UBS
401(k) Plan (the Plan) provides only general information. Participants should
refer to the Summary Plan Description for a more complete description of the
provisions of the Plan and detailed definitions of various Plan terms.
Effective
December 31, 2014, the UBS Financial Services Inc. 401(k) Plus Plan (the
Plus Plan) was merged with the UBS Savings and Investment Plan (the SIP Plan)
and formed a single plan named the UBS 401(k) Plan. Effective January 1,
2015, the Plan was amended and restated to reflect the newly formed plan. The
assets of the Plus Plan were transferred to the assets of the UBS 401(k) Plan
on January 1, 2015, and during the period ending February 28, 2015.
The final assets were transferred as of February 28, 2015.
General
UBS AG (the Company) is the Plan
sponsor for the Plan. The Plan, a defined-contribution plan, provides
retirement benefits to eligible employees of the Company’s United States
operations including eligible employees of UBS Americas Holdings LLC and
subsidiaries of UBS Americas Holdings LLC. Subject to certain exceptions, all
full- and part-time employees on the Company’s U.S. payroll platform are
eligible to participate in the Plan upon completion of one hour of service. The
Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA), as amended.
The Company’s Plan is
administered by the Plan administrator (Head of Benefits Americas Region).
Northern Trust Company (the Trustee) is the Plan’s trustee; Alight (formerly
Aon Hewitt) is the Plan’s record-keeper; and Mercer serves as the Plan’s
investment advisor.
The Plan may invest
in mutual funds, common and collective trust funds, money market funds, the UBS
Group AG Common Stock (UBS Stock Fund) and short-term investments. In addition
to these investment options, the Plan allows participants to maintain
Self-Directed Brokerage Accounts.
Plan
Amendments
Effective December 1, 2015 the
Plan was amended and restated effective January 1, 2016 for the following:
•
The Company’s Plan administrator
(Head of Benefits Americas Region) has the authority to make any amendment to
the Plan which (i) makes changes as required by applicable law;
(ii) adopts technical or clarifying amendments; or (iii) does not in
any significant respect increase benefits or cost to the Company
•
To impose a 20% cap on the amount
of employee and employer contributions that may be allocated to the Common
Stock Fund (as defined in the Plan) and to impose a 20% cap on the amount of
any reallocation/transfer that may be allocated to the Common Stock Fund (as
defined in the Plan)
The Plan was amended
effective January 1, 2017 to include auto enrollment of 3% of eligible
compensation. Participants have up to 90 days (from date of employment) to
enroll in the plan or opt out and not contribute. If the participant does not
opt out or enroll within 90 days of employment they will be automatically set
up to contribute 3% of their eligible compensation via payroll deductions. The
funds will be invested in the age appropriate Target Retirement Fund (the Plans
Qualified Default Investment Alternative). In addition, the match formula was
changed to $1 for $1 up to 6% of eligible contributions, with an annual cap of
$3,000 per participant.
Administrative
Expenses
The Plan’s administrative expenses
are paid by the Plan or the Company, as provided by the Plan’s provisions.
Administrative expenses paid by the Plan or the Company include recordkeeping,
trustee, legal, audit, and investment consulting fees. Administrative fees
(recordkeeping fees) associated with Self-directed mutual fund window are paid
by the plan participants that invest in the Self-directed window. Expenses
related to the Plan’s investments (investment management fees and commissions)
are charged to the specific Plan’s investments fund to which the expense
relates. For the years ended December 31, 2017 and 2016 the Plan
administration fees (including fees associated with the self-directed window)
were charged to participants’ accounts after one full calendar year of being a
terminated employee, beneficiaries or alternate payees.
NOTE
1
DESCRIPTION OF THE PLAN
(continued)
Participant
Contributions
A participant’s contributions can
consist of “pre-tax contributions,” which reduce the participant’s taxable
compensation and “after-tax contributions/401(k) Roth contributions,” which do
not reduce a participant’s taxable compensation, and “rollovers,” which are
transfers from other tax-qualified retirement plans.
Plan participants may
elect to contribute to the Plan on a pre-tax, after-tax, and/or Roth basis, an
amount ranging from 1% to 85% of their eligible compensation, including from 1%
to 85% of their discretionary annual incentive bonus, subject to the maximum
allowable contribution limit established by the Code. The maximum allowable
combined pre-tax and Roth 401(k) contributions was $18,000 for 2017. As a
result of the Economic Growth and Tax Relief Reconciliation Act, the maximum
allowable combined pre-tax and Roth 401(k) contributions for participants who
attained age 50 on or before December 31, 2017 was $24,000. These limits
are subject to change in future years to be consistent with IRS limitations.
Subject to certain
limitations, the Company contributes an amount (the Company Match) up to 75% of
the first 4% of each participant’s eligible annual compensation which the
participant contributes to the Plan for Plan years prior to January 1, 2017 and
up to 100% of the first 6% of each participants eligible annual compensation
which the participant contributes to the Plan for Plan year 2017. The Plan has
a $3,000 annual maximum limit, a three-year cliff vesting requirement and an
end of year employment requirement on the Company Match.
Company
Contributions
The Company uses pre-tax, Roth
401(k), and after-tax contributions in determining the amount of the Company’s
matching contribution for each participant. For Plan years prior to January 1,
2017 the Company’s Match was calculated by multiplying each participant’s
pre-tax, Roth 401(k), and after-tax contributions (up to 4% of eligible
compensation) by 75% and is limited to $3,000 on an annual basis. For Plan
years beginning January 1, 2017 the Company Match is calculated by multiplying
each participant's pre-tax, Roth 401(k) and after-tax contributions (up to 6%
of eligible compensation) by 100% and is limited to $3,000 on an annual basis.
Company Match contributions are contributed on a payroll basis based on the
participants contributions and year to date annual eligible retirement
earnings.
Company Match
contributions and earnings are invested according to the participant’s
investment elections in effect for Company contributions, which can be
different or similar to their pre-tax, Roth 401(k), and after-tax contribution
elections.
The Company also
provides a Retirement Contribution (basic profit-sharing contribution) equal to
a percentage of the participant’s eligible compensation based on the
participant’s years of service with the Company as of the beginning of the plan
year. The Plan has a three-year cliff vesting requirement and an end of year
employment requirement on the Company contribution.
The Qualified
Deferred Payment (QDP) feature is a supplemental profit-sharing contribution
provided to participants who satisfy certain eligibility requirements. The
contribution amount is based on a participant’s age at the beginning of the
plan year. QDP contributions and earnings are invested according to the
participant’s investment elections in effect for Company contributions, which
can be different or similar to their pre-tax, Roth 401(k), and after-tax
contribution elections.
If a participant has
not selected his or her investment elections, the Company Contributions are
invested in the age-appropriate Vanguard Target Date Retirement Fund, the
default investment option. The determination of the Target Date Fund is based
on the participant’s year of birth.
NOTE
1
DESCRIPTION OF THE PLAN
(continued)
Participant
Accounts
Under the Plan, each participant has
two accounts—an employee account (Employee Account) and a company account
(Company Account). The Company Account is funded; per payroll for the Company
Match, annually for the Company Retirement Contribution and, per specific
payrolls for the QDP. The participant can change their investment elections for
Company Contributions (Company Match, Company Retirement Contribution, and QDP)
as well as their own contributions (pre-tax, 401(k) Roth and After-tax) at any
time. In addition they can make different investment elections for their
Company Contributions, before-tax contributions, Roth 401(k) contributions and
after-tax contributions.
The participant’s
Employee Account reflects any contributions made by the participant (such as
before-tax contributions, Roth 401(k) and after-tax contributions), in addition
to income, gains, losses, withdrawals, distributions, loans, and expenses
attributable to these contributions.
The participant’s
Company Account reflects his/her share of the Company’s contributions from the
Company match, the Company retirement contribution, and the QDP for each plan
year and the income, gains, losses, withdrawals, distributions, and expenses
attributable to these Company contributions.
Vesting
Participants are fully vested in
their Employee Account. A participant becomes 100% vested in his or her Company
Account after three years of service, or, while in service as an employee:
attaining age 65, attaining age 55 with 10 years of service, becoming totally
and permanently disabled, or upon death.
Forfeited
Accounts
Forfeited balances of terminated
participants’ unvested Company Accounts contributions are used to reduce the
Company’s total contributions to the Plan. For the years ended
December 31, 2017 and 2016 total forfeitures of $5,264,100 and $4,220,059
respectively were used to reduce the Company contributions. The remaining
balances in the forfeiture account as of December 31, 2017 and December 31,
2016, were $3,597,834 and $2,231,782, respectively.
Payment
of Benefits
Upon the termination of employment
for any reason, including death, a participant or his or her beneficiary may
receive a distribution of the entire vested account balance, which is generally
a lump-sum cash payment. However, if any portion of such participant’s account
is invested in the UBS Stock Fund, then the participant may elect to receive
such portion in UBS shares. If the account balance is greater than $1,000, the
participant may elect to defer the lump-sum distribution until a date not to
extend beyond April 1 of the year following the year that the participant
attains age 70
1
/
2
.
A participant may
elect to withdraw all or part of their account balance after attaining age 59
1
/
2
, as provided
by the Plan.
After-tax
contributions, including any income and loss thereon, may be withdrawn by
participants at any time in accordance with the Plan’s provisions. Withdrawals
of pre-tax contributions, Roth 401(k), or vested Company contributions are
permitted, subject to certain limitations as set forth in the Code. All
withdrawals or a portion thereof are subject to taxation as set forth in the
Code.
Notes
Receiveable from Participants
Notes receivable from participants represent
participant loans which are permitted under certain conditions provided for by
the Plan. Participants can borrow up to the lesser of 50% of their vested
account balance or $50,000. The $50,000 limit is reduced by the excess of the
participant’s highest outstanding loan balance from his or her account during
the 12-month period before the loan is made (even if repaid) over the
participant’s outstanding loan balance on the date the loan is made. The loan
repayment shall not exceed a five-year period, except for loans related to the
purchase of a primary residence. These loans shall not exceed 25 years. The
interest rates on the loans range from 5.00% to 12.50%. All loans, including
interest, are to be repaid in level amounts through payroll deductions to be no
less frequent than quarterly over the life of the loan.
NOTE
1
DESCRIPTION OF THE PLAN
(continued)
Plan
Termination
The Company has not expressed any
intent to terminate the Plan, although it reserves the right to terminate the
Plan at any time, subject to the provisions of ERISA. In the event the Plan is
wholly or partially terminated, or upon the complete discontinuance of
contributions under the Plan by any entity of the Company, each participant
affected shall become fully vested in his/her Company Account. Any unallocated
assets of the Plan then held by the Trustee shall be allocated among the
appropriate Company Accounts and Employee Accounts of the participants and will
be distributed in a manner determined by the Company.
NOTE
2 SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of
Accounting
The accompanying financial statements
are prepared on the accrual basis of accounting in conformity with U.S.
generally accepted accounting principles (U.S. GAAP).
Payment of
Benefits
Benefits to participants are recorded
when paid.
Notes
Receivable from Participants
Notes receivable from participants
represent participant loans that are recorded at their unpaid principal balance
plus any accrued but unpaid interest. Interest income on notes receivable from
participants is recorded when it is earned. Related fees are recorded as
administrative expenses and are expensed when they are incurred. No allowance
for credit losses has been recorded as of December 31, 2017 or 2016. If a
participant ceases to make loan repayments and the Plan administrator deems the
participant loan to be a distribution, the participant loan balance is reduced
and a benefit payment is recorded.
Use of
Estimates
The preparation of the accompanying
financial statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Valuation
of Investments and Income Recognition
Purchases and sales of securities are
recorded on a trade-date basis. Interest income is recorded on the accrual
basis and dividends are recorded on the ex-dividend date. Net
appreciation/depreciation includes the Plan’s gains and losses on investments
bought and sold as well as held during the year.
Investments held by
the Plan (except for fully benefit-responsive investment contracts) are stated
at fair value. 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. (See Note 3 for a discussion of fair value
measurement).
New
Accounting Pronouncement
In February 2017, the Financial
Accounting Standard Board issued Accounting Standards Update 2017-06,
Plan
Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution
Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965):
Emploee Benefit Plan Master Trust Reporting
. ASU 2017-06 relates primarily
to reporting by an employee benefit plan for its interest in a master trust and
is not applicable for the Plan.
NOTE
3
FAIR VALUE MEASUREMENT
Fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction (i.e., exit price).
The fair value
hierarchy prioritizes the inputs to valuation techniques used to measure fair
value into three broad levels. The fair value hierarchy gives the highest
priority to quoted prices (unadjusted) in active markets for identical
financial instruments (Level 1) and the lowest priority to unobservable
inputs (Level 3). In some cases, the inputs used to measure fair value might
fall in different levels of the fair value hierarchy. The level in the fair
value hierarchy within which the fair value measurement in its entirety falls
is determined based on the lowest level input that is significant to the fair
value measurement in its entirety. Assessing the significance of a particular
input to the fair value measurement in its entirety requires considerable judgment
and involves considering a number of factors specific to the financial
instruments.
Level 1
: Inputs are quoted prices
(unadjusted) in active markets for identical financial instruments that the
reporting entity has the ability to access at the measurement date. An active
market for the financial instrument is a market in which transactions for the
financial instrument occur with sufficient frequency and volume to provide
pricing information on an ongoing basis.
Level 2:
Inputs other than quoted
prices included within Level 1 that are observable for the financial
instrument, either directly or indirectly.
Level 3
: Unobservable inputs for the financial instrument
The following is a
description of the valuation methodologies used for assets measured at fair
value. There have been no changes in the methodologies used at
December 31, 2017 and 2016.
Mutual funds:
Funds that are actively traded on an exchange are priced at the net
asset value (NAV) of shares held by the Plan at year end. Funds that are not
actively traded on an exchange are priced at NAV using inputs that corroborate
the NAV with observable (i.e., ongoing redemption and/or subscription activity)
market-based data.
Common and
collective trust funds:
Funds that are actively
traded on an exchange are priced at the NAV of shares held by the Plan at year
end. Funds that are not actively traded on an exchange are priced at NAV using
inputs that corroborate the NAV with observable (i.e., ongoing redemption
and/or subscription activity) market-based data.
Self Directed
Brokerage Accounts:
Mutual funds and money market
funds valued at the list price at NAV of shares held by the Plan at the
valuation date.
Money market
funds:
Funds record their corresponding value at $1
NAV. Investments are valued at amortized cost unless this would not represent
fair value.
UBS Stock Fund:
Actively traded securities are valued at the closing price reported
on the active market on which the individual securities are traded.
Short-term
investments:
Funds that are actively traded on an
exchange are priced at the net asset value (NAV) of shares held by the Plan at
year end. Funds that are not actively traded on an exchange are priced at NAV
using inputs that corroborate the NAV with observable (i.e., ongoing redemption
and/or subscription activity) market-based data.
NOTE
3
FAIR VALUE MEASUREMENT
(Continued)
The methods described
above may produce a fair value calculation that may not indicate net realizable
value or reflect future fair values. Furthermore, while the Plan believes its
valuation methods are appropriate and consistent with other market
participants, the use of different methodologies or assumptions to determine
the fair value of certain financial instruments could result in a different
fair value measurement at the reporting date.
There were no
transfers between levels in 2017 and 2016.
At December 31,
2017, the investments held by the Plan within the fair value hierarchy are as
follows:
|
|
Investments at Fair Value as of December 31, 2017
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Mutual funds
|
|
$1,150,874,866
|
|
—
|
|
—
|
|
$1,150,874,866
|
Self Directed Brokerage Account
|
|
1,125,372,383
|
|
—
|
|
—
|
|
1,125,372,383
|
UBS Stock Fund
|
|
267,052,960
|
|
—
|
|
—
|
|
267,052,960
|
|
|
$2,543,300,209
|
|
$ —
|
|
$ —
|
|
$2,543,300,209
|
Investments measured at NAV:
|
|
|
|
|
|
|
|
|
Money market funds
(a)
|
|
|
|
|
|
|
|
$339,389,729
|
Short-term investment funds
(b)
|
|
|
|
|
|
|
|
33,638,585
|
U.S. equity funds
(c)
|
|
|
|
|
|
|
|
775,477,164
|
Non-U.S. equity funds
(c)
|
|
|
|
|
|
|
|
239,404,343
|
U.S. bond funds
(d)
|
|
|
|
|
|
|
|
389,676,007
|
Non-U.S. bond funds
(e)
|
|
|
|
|
|
|
|
27,106,517
|
Target date funds
(f)
|
|
|
|
|
|
|
|
1,382,888,247
|
Total investments, at NAV
|
|
|
|
|
|
|
|
$3,187,580,592
|
Total investments at fair value
|
|
|
|
|
|
|
|
$5,730,880,801
|
At December 31,
2016, the investments held by the Plan within the fair value hierarchy are as
follows:
|
|
Investments at Fair Value as of December 31, 2016
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Mutual funds
|
|
$1,083,428,074
|
|
—
|
|
—
|
|
$1,083,428,074
|
Self Directed Brokerage Account
|
|
980,223,048
|
|
—
|
|
—
|
|
980,223,048
|
UBS Stock Fund
|
|
241,932,060
|
|
—
|
|
—
|
|
241,932,060
|
|
|
$2,305,583,182
|
|
$ —
|
|
$ —
|
|
$2,305,583,182
|
Investments measured at NAV:
|
|
|
|
|
|
|
|
|
Money market funds
(a)
|
|
|
|
|
|
|
|
$337,040,004
|
Short-term investment funds
(b)
|
|
|
|
|
|
|
|
40,317,999
|
U.S. equity funds
(c)
|
|
|
|
|
|
|
|
753,404,179
|
Non-U.S. equity funds
(c)
|
|
|
|
|
|
|
|
140,163,039
|
U.S. bond funds
(d)
|
|
|
|
|
|
|
|
243,473,104
|
Non-U.S. bond funds
(e)
|
|
|
|
|
|
|
|
24,719,218
|
Target date funds
(f)
|
|
|
|
|
|
|
|
999,233,397
|
Total investments, at NAV
|
|
|
|
|
|
|
|
$2,538,350,940
|
Total investments at fair value
|
|
|
|
|
|
|
|
$4,843,934,122
|
(a) Money market funds are designed
to protect capital with low-risk investments and includes cash, bank notes,
corporate notes, government bills, and various short-term debt instruments.
(b) Short-term investment funds
invest in short-term fixed-income securities and other securities with
debt-like characteristics emphasizing short-term maturities and high quality.
Under normal circumstances, there are no redemption restrictions; redemptions
can be made daily with no notice period required. Plan sponsor-initiated
activity may require 15 days prior written notice for the short-term investment
funds.
NOTE
3
FAIR VALUE MEASUREMENT
(Continued)
(c) Equity common/collective trust
funds seek to maintain portfolio diversification and approximate the risk and
return characterized by certain equity indices. Under normal circumstances,
redemptions for participant activity may be made daily with no notice period
required. Plan sponsor-initiated activity may require prior written notice of 3
to 15 days.
(d) U.S. bond common/collective
trust funds seek to maintain an overall diversified portfolio whose investment
return matches the performance of certain bond indices. Under normal
circumstances, redemptions for participant activity may be made daily with no
notice period required. Plan sponsor-initiated activity may require prior
written notice of 15 days.
(e) Non-U.S bond common/collective
trust funds seek to provide investment returns of a diversified portfolio of
international government bonds and match the performance of an index. Under
normal circumstances, redemptions for participant activity may be made daily
with no notice period required. Plan sponsor-initiated activity may require
prior written notice of 15 days.
(f) Target date common/collective
trust funds are pre-mixed portfolios of diversified assets (stocks, bonds and
other investments). They are designed for participants who expect to retire in
or close to the target year stated in each option’s name. With the exception of
the Target Retirement Income Fund, over time, the portfolio mix of each fund
will gradually shift to more fixed income securities as the target year
approaches. Upon reaching the target year, the fund will be blended into the
Target Retirement Income Fund, which is designed to provide those participants
who are withdrawing money from the Plan with an appropriate blend of growth,
income and inflation protection. Under normal circumstances, redemptions for
participant activity may be made daily with no notice period required. Plan
sponsor-initiated activity may require prior written notice of 3 days.
The above provides a
general description of the investments. Participants should refer to the
Investment Options Guide for information on the investment objectives and
strategy of each investment option.
NOTE
4 RISKS AND
UNCERTAINTIES
The Plan invests in several
investment instruments that are exposed to various risks, such as interest
rate, market, and credit risks. Due to the level of risk associated with
certain investment securities, it is quite possible for the value of investment
securities to change in the near term. The changes could materially affect
participants’ account balances and the amounts reported in the statements of
net assets available for benefits.
NOTE 5 RELATED-PARTY
TRANSACTIONS
For the year ended December 31,
2017, the Plan makes certain investments through the Trust, which are
considered to be party-in-interest transactions for which a statutory exemption
from the prohibited transaction regulation exists. They are as follows:
–
Notes receivable from participants are
considered to be party-in-interest transactions.
–
Investments in certain funds sponsored by UBS
Asset Management, a wholly owned subsidiary of the Plan sponsor, are considered
to be party-in-interest transactions. The Plan offers UBS mutual funds, a
collective investment trust, and a separately managed account as part of the
investment fund line-up.
–
The Plan invests in common stock of UBS Group
AG. These transactions qualify as party-in-interest transactions. The Plan
received a total common stock dividends payment of $9,148,945 for 2017.
Certain officers and employees of the Plan’s
sponsor (who may also be participants in the Plan) perform administrative
services related to the Plan’s operation, record keeping and financial
reporting. The Plan’s sponsor pays these individuals’ salaries and also pays
certain other administrative expenses on the Plan’s behalf. The foregoing
transactions are not deemed prohibited party-in-interest transactions because
they are covered by statutory and administrative exemptions from the Code and
ERISA’s rules on prohibited transactions.
The Plan is a result of the merger
and renaming of the SIP Plan and the Plus Plan, effective January 1, 2015.
Both the SIP Plan and the Plus Plan have a current favorable determination
letter issued by the IRS, dated July 29, 2014 and September 9, 2014,
respectively, stating that the SIP Plan and the Plus Plan are qualified under
Section 401(a) of the Code and, therefore, the related trust is exempt
from taxation.
The IRS announced in
2015 (in its Announcement 2015-19) that it is discontinuing the determination
letter program, except in certain limited circumstances. However, it
subsequently noted (in Notice 2016-03) that determination letters issued prior
to January 4, 2016, in response to a timely submission will no longer have
an expiration date. Thus, the favorable letters issued to the SIP Plan and the
Plus Plan continues to be entirely valid on an ongoing basis. Although the Plus
Plan no longer exists by reason of its merger into the Plan, the favorable
determination letter issued to it still constitutes evidence that it was
qualified as to form on the date of merger.
The Plan
Administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and therefore believes the Plan is
qualified and the related trust is tax-exempt.
In addition, UBS AG
(the Plan Sponsor) and fiduciaries (as applicable) continue to routinely
consult with outside benefits counsel and other appropriate third parties to
ensure that (i) required amendments to the Plan are adopted on a timely
basis, and (ii) any discretionary amendments to the Plan conform to all
applicable legal requirements. In the absence of a determination letter
program, this sort of ongoing due diligence will necessarily replace formal
regulatory approval from the IRS for all sponsors of all qualified retirement
plans in the United States. If the IRS were ever to re-open the determination
letter program in whole or in part, the Plan sponsor would avail itself of that
option. From the perspective of operational compliance, the suspension of the
determination letter program has no implications, since a favorable letter only
applies to the form of a plan document. However, the Plan’s sponsor (as
settlor) and fiduciaries continue to take all appropriate steps in accordance
with their respective roles to safeguard the qualified status of the Plan as a
matter of operation.
U.S. GAAP requires
Plan management to evaluate uncertain tax positions taken by the Plan. The
financial statement effects of a tax position are recognized when the position
is more-likely-than-not, based on the technical merits, to be sustained upon
examination by the IRS. The Plan administrator has analyzed the tax positions
taken by the Plan, and has concluded that as of December 31, 2017, there
are no uncertain positions taken or expected to be taken. The Plan has
recognized no interest or penalties related to uncertain tax positions.
Note
7
RECONCILIATION
OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of
net assets available for benefits per the financial statements to the Form 5500
as of:
|
|
December 31,
|
|
|
2017
|
2016
|
Net assets available for benefits per the financial statements
|
|
$5,870,376,483
|
$4,980,657,990
|
Less: Benefits payable to participants
|
|
(3,784,611)
|
(2,173,146)
|
Net assets available for benefits per Form 5500
|
|
$5,866,591,872
|
$4,978,484,844
|
The accompanying
financial statements present benefits distributions to participants on a cash
basis. The Form 5500 requires benefits distributions to be reported as a
benefits payable in the plan year. Therefore, the adjustment from cash basis
to accrual basis for benefits distributions represents a reconciling item.
Note 7
RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
(Continued)
The following is a reconciliation of net increase
in net assets per the financial statements to the Form 5500 for the year ended
December 31, 2017:
Net increase in net assets available for benefits per the
financial statements
|
|
$ 889,718,493
|
Add: Benefits payable to participants at December 31, 2016
|
|
2,173,146
|
Less: Benefits payable to participants at December 31, 2017
|
|
(3,784,611)
|
Net increase in net assets per Form 5500
|
|
$ 888,107,028
|
Management has evaluated its
subsequent event disclosure through the date the Plan’s financial statements
are available to be issued. The Plan was amended with respect to Before-Tax
Contributions and After-Tax Contributions (including Roth Contributions) made
on or after January 1, 2018, Matching Contributions will be limited as follows
(regardless of the level of Company or Affiliated Employer profit in the
applicable Plan Year) for any Participant who is eligible for Matching
Contributions in the applicable Plan Year: (i) for the Plan Year ending
December 31, 2018, Matching Contributions will be limited to $4,500; (ii) for
the Plan Year ending December 31, 2019, Matching Contributions will be limited
to $5,850; and (iii) for the Plan Year ending December 31, 2020, and each Plan
Year thereafter, Matching Contributions will be limited to $8,000. In addition,
Matching Contributions for any such Participant with respect to a Plan Year
shall not exceed 100% of such Participant’s Before-Tax Contributions and
After-Tax Contributions (including Roth Contributions) up to 6% of
Compensation.”
In addition, effective with respect to
Compensation paid in Plan Years beginning on or after January 1, 2018, each
individual who is eligible for a Retirement Contribution under Section 5.4 for
a Plan Year (including an Eligible Employee who on December 31, 2011 was
eligible to receive a Retirement Contribution under the Savings and Investment
Plan, and is continuously employed by an Employer after December 31, 2011)
shall receive a Retirement Contribution for each applicable Plan Year in
accordance with the following applicable schedule, based upon the individual’s
Compensation paid solely during the portion of the Plan Year in which such
individual was an Eligible Employee (both for purposes of determining whether
the Eligible Employee has Compensation greater than $200,000 in the Plan Year,
and the percentage of Compensation to be contributed on his behalf) and the
individual’s attained Period of Service as of the first day of the applicable
Plan Year:
SCHEDULE A: ELIGIBLE PARTICIPANTS WITH COMPENSATION NO MORE THAN
$200,000 IN PLAN YEAR
|
Number of Years in the Period of Service
As of the First Day of the Plan Year
|
|
Percentage of Compensation to be
Contributed as Retirement Contribution
|
Less than 10
|
|
2.0
|
10, but less than 15
|
|
3.0
|
15 or more
|
|
3.5
|
NOTE 8
SUBSEQUENT EVENTS
(continued)
SCHEDULE B: ELIGIBLE PARTICIPANTS WITH COMPENSATION GREATER THAN
$200,000 IN PLAN YEAR
|
Number of Years in the Period of Service As of the First Day of
the Plan Year
|
Percentage of Compensation to be Contributed as Retirement
Contribution in 2018 Plan Year
|
Percentage of Compensation to be Contributed as Retirement
Contribution in 2019 Plan Year
|
Percentage of Compensation to be Contributed as Retirement
Contribution in 2020 Plan Year and thereafter
|
Less than 10
|
2.0
|
2.0
|
2.0
|
10 or more
|
3.0
|
2.5
|
2.0
|
The Plan is hereby
amended as follows, effective as of January 1, 2017 unless otherwise indicated
below:
1.
Section 3.3(d) of the Plan is revised to read as
follows:
"(f) Any Employee who is employed by an Employer and is classified by the
Employer as an "intern" shall become an Eligible Employee upon
completion of at least a five (5) consecutive month Period of Service. For the
avoidance of doubt, the above rule regarding completion of at least a five (5)
consecutive month Period of Service shall apply to any Employee who is employed
by an Employer as part of the "career comeback program" or any
similar program regardless of whether the Employee is classified as an
"intern."
2.
Effective January 1, 2016, a new Section 7.5(d)
is added to the Plan that reads as follows:
"(d) N2 Transaction. With respect to an individual who became an Employee
as part of the Group Technology/Group Infrastructure CIO function between
August 10, 2015 and March 7, 2016 upon closing of the N2 transaction, the
individual's period of service with Computer Science Corporation and/or
AT&T which ended immediately prior to the closing of the N2 transaction
shall be included in determining the individual's Period of Service for
purposes of determining the individual's vesting under Section 7.4."
Effective January 1, 2016, a new Section 7.5(e) is added to the Plan that reads
as follows:"(e)
Allegis
. With respect to an individual from Allegis
who became an Employee as part of the Professional Recruiting or Campus
Recruiting (Junior Talent) function from March 21, 2016 through June 27, 2016,
the individual's period of service with Allegis which ended immediately prior
to becoming an Employee shall be included in determining the individual's
Period of Service for purposes of determining the individual's vesting under
Section 7.4."
3.
Effective January 1, 2017, a new Section 7.5(f)
is added to the Plan that reads as follows:
"(f)
AT&T
Services Inc. With respect to an individual from
AT&T Services Inc. who became an Employee as part of the Group Technology/Group
Infrastructure CIO function from August 1, 2017 to August 8 2017, the
individual's period of service with AT&T Services Inc. which ended
immediately prior to becoming an Employee shall be included in determining the
individual's Period of Service for purposes of determining the individual's
vesting under Section 7.4."
4.
Effective January 1, 2017, a new Section 7.5(g)
is added to the Plan that reads as follows:
"(g)
Accenture
LLP With respect to an individual from Accenture LLP
who became an Employee as part of the Group Corporate Communications Americas
function on October 2, 2017, the individual's period of service with Accenture
LLP which ended immediately prior to becoming an Employee shall be included in
determining the individual's Period of Service for purposes of determining the
individual's vesting under Section 7.4."
NOTE 8
SUBSEQUENT EVENTS
(continued)
5.
Section 8.1(a) of the Plan is revised to read as
follows:
(a) (a) Eligibility For Distribution. Following the occurrence of
(i) a Participant’s Severance Date for any reason other than death, or (ii) the
Participant’s Disability, the Participant shall be entitled to affirmatively
elect to receive a distribution of his Vested Account Balance. A Participant
may make a separate distribution election with respect to amounts held in his
Roth Contributions Account, provided that (i) in no event may a Participant
take a partial distribution from his Roth Contributions Account, and (ii) in the
event a Participant makes a separate distribution election with respect to
amounts in his Roth Contributions Account, such amounts must be distributed or
commence to be distributed at the same time or before the remainder of his
Vested Account.
UBS 401(K) PLAN
EIN: 13-2638166
Plan #: 002
Schedule H,
Line 4(i)—Schedule of Assets (Held at End of Year)
As of December 31,
2017
Identity of Issue, Borrower, Lessor or Similar Party
|
Description of Investment and Interest Rate
|
Share / Par Value
|
Current Value
|
SSGA S&P 500 INDX FD-DV
|
Common and collective trust funds
|
32,297,748
|
738,358,826
|
VANGUARD TARGET RET 2030
|
Common and collective trust funds
|
5,551,530
|
313,328,346
|
VANGUARD TARGET RET 2020
|
Common and collective trust funds
|
4,450,357
|
229,949,941
|
VANGUARD TARGET RET 2040
|
Common and collective trust funds
|
3,839,572
|
232,447,684
|
VANGUARD TARGET RET 2035
|
Common and collective trust funds
|
2,548,186
|
149,858,806
|
VANGUARD TARGET RET 2025
|
Common and collective trust funds
|
2,521,037
|
136,388,094
|
VANGUARD TARGET RET 2050
|
Common and collective trust funds
|
1,702,695
|
103,864,371
|
SSGA DAILY EXTENDED MARKET
|
Common and collective trust funds
|
2,042,812
|
80,454,106
|
VANGUARD TARGET RET 2045
|
Common and collective trust funds
|
1,564,831
|
95,423,375
|
MONDRIAN INTL VALUE EQUITY
|
Common and collective trust funds
|
5,668,455
|
69,438,574
|
OPPENHEIMER
|
Common and collective trust funds
|
1,679,374
|
95,589,962
|
SSGA BC AGGREGATE INDEX
|
Common and collective trust funds
|
3,140,150
|
44,100,263
|
PRUDENTIAL – DV
|
Common and collective trust funds
|
747,307
|
120,675,142
|
LSV SCV, CT – DV
|
Common and collective trust funds
|
652,874
|
6,972,691
|
SSGA GLBL ALLCAP EX-US
|
Common and collective trust funds
|
6,077,448
|
74,375,808
|
SSGA LCG, CT – DV
|
Common and collective trust funds
|
479,500
|
18,071,871
|
SSGA LCV, CT – DV
|
Common and collective trust funds
|
372,326
|
12,073,776
|
INVESCO STABLE VAL - DV
|
Common and collective trust funds
|
144,446,496
|
144,446,496
|
VANGUARD TARGET RET INCOME
|
Common and collective trust funds
|
1,334,725
|
56,392,133
|
LOOMIS SAYLES GLOBAL BOND
|
Common and collective trust funds
|
2,591,445
|
27,106,517
|
VANGUARD TARGET RET 2015
|
Common and collective trust funds
|
404,201
|
19,543,135
|
VANGUARD TARGET RET 2060
|
Common and collective trust funds
|
604,681
|
22,161,551
|
VANGUARD TARGET RET 2055
|
Common and collective trust funds
|
386,258
|
23,530,810
|
|
|
|
2,814,552,278
|
GE LARGE CAP GROWTH
|
Mutual funds
|
2,826,608
|
275,142,251
|
ROTHSCHILD SMID CAP VALUE
|
Mutual funds
|
5,281,082
|
199,660,451
|
TIME SQUARE SMID GROWTH
|
Mutual funds
|
2,194,508
|
117,045,683
|
ARTISAN INTL GROWTH
|
Mutual funds
|
8,534,159
|
134,851,208
|
SMALL CAP GROWTH
|
Mutual funds
|
2,444,838
|
86,391,719
|
GLOBAL ALLOCATION
|
Mutual funds
|
1,136,675
|
67,416,188
|
UBS DC - EAGLE - DV
|
Mutual funds
|
3,180,618
|
253,179,406
|
DIVERSIFIED INF - DV
|
Mutual funds
|
1,414,647
|
17,187,960
|
|
|
|
1,150,874,866
|
Identity of Issue, Borrower, Lessor or Similar Party
|
Description of Investment and Interest Rate
|
Share / Par Value
|
Current Value
|
SELF DIRECTED BROKERAGE ACCOUNTS
|
Self Directed Brokerage Accounts
|
–
|
1,125,372,383
|
NTAM US COLLECTIVE GOVT STIF
|
Money market funds
|
339,389,729
|
339,389,729
|
*UBS CO STOCK FD-DV
|
UBS stock fund
|
14,521,640
|
267,052,960
|
CAMBIAR LARGE CAP VALUE
|
Short term investments
|
467
|
467
|
CLEARING ACCOUNT-DV
|
Short term investments
|
5,923,423
|
5,925,735
|
GE LARGE CAP GROWTH
|
Short term investments
|
5,187,738
|
5,187,738
|
*UBS CO STOCK FD-DV
|
Short term investments
|
4,071,107
|
4,071,107
|
TIME SQUARE SMID GROWTH
|
Short term investments
|
2,677,720
|
2,677,720
|
ROTHSCHILD SMID CAP VALUE
|
Short term investments
|
2,091,183
|
2,091,183
|
SMALL CAP GROWTH
|
Short term investments
|
1,176,808
|
1,176,808
|
INVESTMENT BANKING CLEARNG
|
Short term investments
|
1,310,778
|
1,310,778
|
ARTISAN INTL GROWTH
|
Short term investments
|
3,179,143
|
3,179,143
|
*UBS CORE BOND PLUS FD
|
Short term investments
|
|
–
|
SSGA BC AGGREGATE INDEX
|
Short term investments
|
9,299
|
9,299
|
EAGLE - DV
|
Short term investments
|
8,008,607
|
8,008,607
|
|
|
|
33,638,585
|
Total investments at fair value
|
|
|
5,730,880,801
|
*Participant loans
|
|
–
|
58,010,015
|
* Party-in-interest.
Note: Cost information is not
required because investments are participant directed.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator of the UBS 401(k) Plan has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized.
UBS
401(k) Plan
By:
_/s/ Michael O’Connor______________
Name:
Michael O’Connor
Title:
Plan Administrator
Date: June 28, 2018
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