UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-06637 | |||||||
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The UBS Funds | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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One North Wacker Drive, Chicago, IL |
| 60606-2807 | ||||||
(Address of principal executive offices) |
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Tammie Lee, Esq. UBS Asset Management (Americas) Inc. 1285 Avenue of the Americas New York, NY 10019 | ||||||||
(Name and address of agent for service) | ||||||||
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Copy to: | ||||||||
Bruce Leto, Esq. Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103-7098 | ||||||||
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Registrant’s telephone number, including area code: | 212-821 3000 |
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Date of fiscal year end: | June 30 |
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Date of reporting period: | December 31, 2016 |
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Item 1. Reports to Stockholders.
The UBS Funds
Semiannual Report | December 31, 2016
Table of contents | Page | ||||||
President's letter | 1 | ||||||
Market commentary | 3 | ||||||
UBS Dynamic Alpha Fund | 5 | ||||||
UBS Global Allocation Fund | 22 | ||||||
UBS International Sustainable Equity Fund | 35 | ||||||
UBS U.S. Large Cap Equity Fund | 41 | ||||||
UBS U.S. Small Cap Growth Fund | 49 | ||||||
UBS Total Return Bond Fund | 58 | ||||||
UBS Municipal Bond Fund | 70 | ||||||
Explanation of expense disclosure | 78 | ||||||
Statement of assets and liabilities | 82 | ||||||
Statement of operations | 90 | ||||||
Statement of changes in net assets | 94 | ||||||
Financial highlights | 98 | ||||||
Notes to financial statements | 112 | ||||||
General information | 140 |
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President's letter
February 17, 2017
Dear Shareholder,
After Donald Trump's surprise victory in the US presidential election, many investors may wonder about the implications for financial markets. We believe that political developments in Washington, D.C. will likely have two distinct implications for investors over the coming year. The first relates to how markets will react to new government policies, especially budget and protectionist trade policies that may influence interest rate and inflation expectations. The second pertains to federal regulatory changes that will likely continue to shape the way we invest. In light of the likely policy developments ahead, we continue to believe in the importance of investment planning that is oriented around long-term goals.
The push-and-pull relationship between central bank interest rate policy and government spending is likely to define the challenge for markets in 2017. For most of 2016, market participants did not regard low interest rates, slow demand growth or low inflation as likely to change any time soon. But with his campaign commitment to use government spending and lower tax rates to spur demand growth, President Trump's administration appears to have altered the policy balance, and the "lower interest rates for longer" narrative. Even prior to recent political developments, the structural imbalances and unintended consequences caused by low interest rates and quantitative easing were starting to be seen by some market observers as outweighing the benefits. Consequently, we see increased government spending on the horizon—perhaps in the form of fiscal stimulus aimed at infrastructure development. Combined with protectionist trade policies, we believe that increased fiscal stimulus is potentially inflationary and that this developing trend could have a significant impact on financial markets over the coming year.
It is often the case that incoming Presidential administrations move to halt or delay a predecessor's unfinished regulatory projects—particularly when there is a shift in the party that controls the executive branch. This theme may prove especially relevant as the Trump administration settles in. President Trump has stated his commitment to deregulation across vast and varying sectors of the economy. Some deregulation may focus on the financial industry, so investors should watch for notices about regulatory changes. We encourage you to carefully read any mail that you receive pertaining to your investments, and to reach-out to your financial advisor with any questions that you may have.
As we embark on 2017, it may be helpful to remember the axiom that changes also bring opportunities. For investors, this is doubly true. While government policies may influence financial markets, they may also create opportunities for active asset managers to exploit on shareholders' behalf. And, as regulatory changes to the investment environment may cause some confusion, they may also create an opportunity to engage with your advisor on your long-term investment plan. We believe that there are compelling opportunities across global asset classes and that the right strategies in the hands of skilled investment professionals have the power to deliver better investment outcomes. At UBS Asset Management, we embrace the responsibility of helping our clients meet their financial objectives and thank you for your continued trust in our skill and commitment to serve you.
1
President's letter
Sincerely,
Mark E. Carver
President
The UBS Funds
Managing Director
UBS Asset Management (Americas) Inc.
The views expressed are those of UBS Asset Management (Americas) Inc. as of February 17, 2017. The views are subject to change based on market conditions; they are not intended to predict or guarantee the future performance of the markets, any individual security or market segment, or any UBS mutual fund.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. A prospectus or summary prospectus for the funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our web site at www.ubs.com/am-us.
2
The markets in review
A continued modest economic expansion
The US economy faced a number of headwinds but overcame these challenges and continued to expand during the reporting period. That being said, the overall pace was fairly tepid. The US Commerce Department reported that gross domestic product ("GDP") grew at a 0.8% seasonally adjusted annualized rate during the second quarter of 2016. GDP growth then improved to 3.5% during the third quarter—the strongest reading since the third quarter of 2014. Finally, the Commerce Department's initial reading showed that fourth-quarter 2016 GDP grew 1.9%.1
After taking its first step to normalizing monetary policy in late 2015, the US Federal Reserve Board ("Fed") kept rates unchanged during its first seven meetings in 2016. Then, as widely anticipated, the Fed raised interest rates 0.25% in December 2016 to a range between 0.50% and 0.75%. In its statement following the December meeting the Fed said, "The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data."
From a global perspective, the International Monetary Fund ("IMF") maintained its forecast for generally modest growth. In the IMF's October 2016 World Economic Outlook Update it said, "The forces shaping the global outlook—both those operating over the short term and those operating over the long term—point to subdued growth for 2016 and a gradual recovery thereafter, as well as to downside risks." From a regional perspective, the IMF estimates 2017 growth in the eurozone will be 1.5%, versus 1.7% in 2016. Japan's economy is expected to expand 0.6% in 2017, compared to 0.5% in 2016. Elsewhere, the IMF projects that overall growth in emerging market countries will be 4.6% in 2017, versus 4.2% in 2016.
Global equities generate positive results
The global equity market was highly volatile at times but produced positive results during the reporting period. Global equities rallied sharply over the first half of the period as commodity prices rose and global central banks continued to pursue their highly accommodative monetary policies. After a period of weakness in October 2016, US equities rallied sharply following the November elections given expectations for improving growth due to increased infrastructure spending in the Trump administration. However, international equities posted mixed results over the last two months of the year. All told, the US stock market, as measured by the S&P 500 Index,2 gained 7.82% for the six months ended December 31, 2016. International developed equities, as measured by the MSCI EAFE Index (net),3 rose 5.67% during the period, while emerging market equities, as measured by the MSCI Emerging Markets Index (net),4 returned 4.49% for the same period.
1 Based on the Commerce Department's initial estimate announced on January 27, 2017, after the reporting period had ended.
2 The S&P 500 Index is an unmanaged, weighted index composed of 500 widely held common stocks varying in composition and is not available for direct investment. Investors should note that indices do not reflect the deduction of fees and expenses.
3 The MSCI EAFE Index (net) is an index of stocks designed to measure the investment returns of developed economies outside of North America. Net total return indices reinvest dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
4 The MSCI Emerging Markets Index (net) is a market-capitalization-weighted index composed of different emerging market countries in Europe, Latin America and the Pacific Basin. Net total return indices reinvest dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
3
The markets in review
The overall fixed income market produced weak results
The global fixed income market produced generally weak results during the reporting period. In the US, Treasury yields moved sharply higher after the November elections as investors anticipated an uptick in growth and inflation. Additionally, in December the Fed increased its projection for the number of rate hikes it would make in 2017. For the six-month period, the yield on the US 10-year Treasury rose from 1.49% to 2.45% (bond yields and prices move in the opposite direction). The overall US bond market, as measured by the Bloomberg Barclays US Aggregate Index,5 declined 2.53% for the six months ended December 31, 2016. Returns of riskier fixed income securities were mixed. High yield bonds, as measured by the BofA Merrill Lynch US High Yield Cash Pay Constrained Index,6 gained 7.46% during the reporting period. In contrast, emerging markets debt, as measured by the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global),7 declined 0.64% during the same period.
5 The Bloomberg Barclays US Aggregate Index is an unmanaged broad-based index designed to measure the US dollar-denominated, investment-grade, taxable bond market. The index includes bonds from the Treasury, government-related, corporate, mortgage-backed, asset-backed and commercial mortgage-backed sectors. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The BofA Merrill Lynch US High Yield Cash Pay Constrained Index is an unmanaged index of publicly placed, non-convertible, coupon-bearing US dollar-denominated, below investment grade corporate debt with a term to maturity of at least one year. The index is market-capitalization-weighted, so that larger bond issuers have a greater effect on the index's return. However, the representation of any single bond issuer is restricted to a maximum of 2% of the total index. Investors should note that indices do not reflect the deduction of fees and expenses.
7 The J.P. Morgan Emerging Markets Bond Index Global (EMBI Global) is an unmanaged index which is designed to track total returns for US dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds. Investors should note that indices do not reflect the deduction of fees and expenses.
4
UBS Dynamic Alpha Fund
Portfolio performance
For the six months ended December 31, 2016, Class A shares of UBS Dynamic Alpha Fund (the "Fund") returned 1.95% (Class A shares returned -3.68% after the deduction of the maximum sales charge), while Class P shares returned 2.07%. For purposes of comparison, the BofA Merrill Lynch US Treasury 1-5 Year Index returned -1.27% during the same time period, the MSCI World Index (net) returned 6.81%, and the Citigroup One-Month US Treasury Bill Index returned 0.12%. (Class P shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 7; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund produced a positive absolute return during the reporting period, driven by both market and currency allocation decisions.
During the review period, we used derivatives for risk management purposes and as a tool to help enhance returns across various strategies. With respect to our active currency strategy, utilizing currency forwards had a direct positive impact on Fund performance. We used a variety of equity and fixed income options, futures, and swaps to implement our market allocation strategy. Derivatives were just one tool, among others, that we used to implement our market allocation strategy. These derivatives, in aggregate, added to performance during the reporting period.
Portfolio performance summary1
What worked:
• Overall, the Fund's equity positioning was positive for returns.
– The Fund's long exposure to global equities (US, developed ex-US and emerging markets) contributed to performance over the reporting period. A number of equity markets ended 2016 at all-time highs amid improving economic data and resurgent investor confidence.
– The Fund benefited from certain relative value trades, such as being long developed ex-US equities versus US equities and long Russell 1000 Value versus S&P 500. Long-forgotten value stocks performed strongly following the outcome of the US Presidential election, and developed ex-US equities strengthened amid a reduction in geopolitical risks and further commitments to accommodative monetary policy.
• Overall, the Fund's fixed income positions were positive for performance.
– The Fund's preference for global corporate bonds and European high yield bonds added value. Global yields rose and spreads compressed during the reporting period.
– The Fund benefited from certain relative value trades, such as long German bunds versus French government bonds and long U.S. Treasury Inflation-Protected Securities ("TIPS") versus U.S. Treasuries.
1 For a detailed commentary on the market environment in general during the reporting period, see pages 3-4.
5
UBS Dynamic Alpha Fund
• Overall, the portfolio's active currency strategy was beneficial for results.
– The Fund's long positions in the US dollar relative to the euro and the New Zealand dollar contributed to performance. Both positions benefited from a stronger US dollar amid US reflation, better economic growth expectations and a Federal Reserve Board (Fed) rate hike in December 2016.
– The Fund's long position in the Indian rupee relative to the Korean won proved beneficial for performance. The rupee was more resilient during this volatile time period amid Reserve Bank of India interventions and strong macro fundamentals.
What didn't work:
• Certain equity positions detracted from results.
– A preference for emerging market equities over US equities and emerging market minimum volatility equities over broad emerging market equities detracted from performance. Relative to other global markets, emerging market equities came under pressure amid increased uncertainty surrounding the results of the US presidential election.
– The Fund's relative value trade of long US versus Canadian equities detracted from performance. Canadian energy and financial stocks performed particularly well in the wake of rising interest rates and a rebound in crude oil prices from earlier year lows.
• Certain fixed income positions detracted from results.
– The Fund's long exposure to Australian duration detracted from results as the economy fared better than expected given lower commodity prices. This resulted in fewer rate cuts than expected.
– The Fund's performance was negatively impacted by certain relative value trades, such as long positions in U.S. Treasuries versus both Italian and German government bonds. U.S. Treasury yields rose sharply in the last two months of the year amid greater inflation expectations and a revision in anticipated moves by the US Fed.
• Certain currency trades performed poorly during the reporting period.
– The largest detractor from performance was the Fund's overweight in the Mexican peso relative to the Canadian dollar. Despite solid fundamentals, the peso struggled amid protectionist and trade concerns upon the result of the US presidential election.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2016. The views and opinions in the letter were current as of February 17, 2017. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our website at www.ubs.com/am-us.
6
UBS Dynamic Alpha Fund
Average annual total returns for periods ended 12/31/16 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | 1.95 | % | (1.88 | )% | 2.60 | % | 0.85 | % | |||||||||||
Class C2 | 1.56 | (2.49 | ) | 1.86 | 0.10 | ||||||||||||||
Class P3 | 2.07 | (1.69 | ) | 2.86 | 1.14 | ||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (3.68 | )% | (7.24 | )% | 1.45 | % | 0.28 | % | |||||||||||
Class C2 | 0.56 | (3.47 | ) | 1.86 | 0.10 | ||||||||||||||
BofA Merrill Lynch US Treasury 1-5 Year Index4 | (1.27 | ) | 1.09 | 0.80 | 2.77 | ||||||||||||||
MSCI World Index (net)5 | 6.81 | 7.51 | 10.41 | 3.83 | |||||||||||||||
Citigroup One-Month US Treasury Bill Index6 | 0.12 | 0.21 | 0.07 | 0.64 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2016 prospectuses were as follows: Class A—1.46% and 1.36%; Class C—2.24% and 2.11%; Class P—1.23% and 1.11%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc., the Fund's investment advisor ("UBS AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses, and dividend expense and security loan fees for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses, and dividend expense and security loan fees for securities sold short), through the period ending October 27, 2017, do not exceed 1.35% for Class A shares, 2.10% for Class C shares and 1.10% for Class P shares. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses to the extent such reimbursement can be made during the three years following the period during which such fee waivers and expense reimbursements were made, provided that the reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. The fee waiver/expense reimbursement agreement may be terminated by the Fund's Board of Trustees at any time and also will terminate automatically upon the expiration or termination of the Fund's advisory contract with the Advisor. Upon termination of the fee waiver/expense reimbursement agreement, however, the UBS AM (Americas)'s three year recoupment rights will survive.
1 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 distribution and service fees.
3 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
4 The BofA Merrill Lynch US Treasury 1-5 Year Index is an unmanaged index designed to track US Treasury securities with maturities between 1 and 5 years. Investors should note that indices do not reflect the deduction of fees and expenses.
5 The MSCI World Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. Net total return indices reinvest dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The Citigroup One-Month US Treasury Bill Index is an unmanaged index representing monthly return equivalents of yield averages of the last one month Treasury Bill issue. Investors should note that indices do not reflect the deduction of fees and expenses.
Prior to February 17, 2015, if an investor sold or exchanged shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged was deducted at the time of the transaction, except as noted otherwise in the prospectus. For sales or exchanges taking place on or after February 17, 2015 but prior to August 3, 2015, there was a reduction in the redemption holding period from 90 days to 30 days. Effective August 3, 2015, the 1.00% redemption fee imposed on sales or exchanges of any class of shares of the funds made during the holding periods specified in the prospectus was eliminated. Please refer to the prospectus for further information.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit www.ubs.com/us-mutualfundperformance.
7
UBS Dynamic Alpha Fund
Portfolio statistics—December 31, 2016 (unaudited)
1 The Fund's portfolio is actively managed and its composition will vary over time.
Top ten holdings1
Percentage of net assets | |||||||
U.S. Treasury Inflation Indexed Note (TIPS), 0.625%, due 01/15/26 | 14.2 | % | |||||
JPMorgan Chase & Co., 3.200%, due 01/25/23 | 0.8 | ||||||
Citigroup, Inc., 3.875%, due 10/25/23 | 0.5 | ||||||
Morgan Stanley, 2.650%, due 01/27/20 | 0.5 | ||||||
Adani Abbot Point Terminal Pty. Ltd., 6.750%, due 11/01/18 | 0.4 | ||||||
Goldman Sachs Group, Inc. (The), 1.375%, due 07/26/22 | 0.4 | ||||||
Mellon Capital III, 1.875%, due 09/05/66 | 0.4 | ||||||
Ford Motor Credit Co. LLC, 3.000%, due 06/12/17 | 0.4 | ||||||
Verizon Communications, Inc., 6.550%, due 09/15/43 | 0.3 | ||||||
GE Capital International Funding Co. Unlimited Co., 4.418%, due 11/15/35 | 0.3 | ||||||
Total | 18.2 | % |
Top five issuer breakdown by country or territory
of origin1
Percentage of net assets | |||||||
United States | 34.8 | % | |||||
United Kingdom | 5.2 | ||||||
Netherlands | 3.2 | ||||||
Australia | 3.0 | ||||||
France | 1.7 | ||||||
Total | 47.9 | % |
8
UBS Dynamic Alpha Fund
Industry diversification—December 31, 2016 (unaudited)1
Bonds Corporate bonds | Percentage of net assets | ||||||
Air freight & logistics | 0.12 | % | |||||
Automobiles | 0.08 | ||||||
Banks | 8.85 | ||||||
Beverages | 1.40 | ||||||
Biotechnology | 0.70 | ||||||
Capital markets | 1.93 | ||||||
Chemicals | 0.54 | ||||||
Commercial services & supplies | 0.12 | ||||||
Communications equipment | 0.15 | ||||||
Construction & engineering | 0.51 | ||||||
Consumer finance | 0.60 | ||||||
Diversified financial services | 1.36 | ||||||
Diversified telecommunication services | 2.07 | ||||||
Electric utilities | 2.35 | ||||||
Electrical equipment | 0.07 | ||||||
Energy equipment & services | 0.25 | ||||||
Equity real estate investment trusts (REITs) | 0.70 | ||||||
Food & staples retailing | 0.28 | ||||||
Food products | 0.42 | ||||||
Gas utilities | 0.64 | ||||||
Health care equipment & supplies | 0.45 | ||||||
Health care providers & services | 0.42 | ||||||
Hotels, restaurants & leisure | 0.07 | ||||||
Household products | 0.08 | ||||||
Independent power and renewable electricity producers | 0.19 | ||||||
Industrial conglomerates | 0.47 | ||||||
Insurance | 3.93 | ||||||
Internet software & services | 0.35 | ||||||
IT services | 0.14 | ||||||
Life sciences tools & services | 0.08 | ||||||
Machinery | 0.13 | ||||||
Media | 1.30 | ||||||
Metals & mining | 0.61 | ||||||
Multi-utilities | 0.58 | ||||||
Oil, gas & consumable fuels | 4.27 | ||||||
Pharmaceuticals | 1.37 | ||||||
Real estate management & development | 0.06 | ||||||
Road & rail | 0.46 | ||||||
Software | 0.46 | ||||||
Specialty retail | 0.18 | ||||||
Technology hardware, storage & peripherals | 0.56 | ||||||
Tobacco | 0.95 | ||||||
Transportation infrastructure | 0.64 | ||||||
Water utilities | 0.44 | ||||||
Wireless telecommunication services | 0.82 | ||||||
Total corporate bonds | 42.15 | % |
Bonds—(Continued) | Percentage of net assets | ||||||
Asset-backed securities | 0.17 | % | |||||
Collateralized debt obligation | 0.002 | ||||||
Collateralized mortgage obligation | 0.002 | ||||||
Non-U.S. government obligations | 0.27 | ||||||
U.S. treasury obligation | 14.23 | ||||||
Total bonds | 56.82 | % | |||||
Exchange traded funds | 5.44 | ||||||
Short-term investments | 29.94 | ||||||
Investment of cash collateral from securities loaned | 0.31 | ||||||
Total investments | 92.51 | % | |||||
Cash and other assets, less liabilities | 7.49 | ||||||
Net assets | 100.00 | % |
1 Figures represent the direct investments of UBS Dynamic Alpha Fund. Figures may be different if a breakdown of the underlying investment companies and exchange traded funds was included.
2 Amount represents less than 0.005%.
9
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds: 56.82% | |||||||||||
Corporate bonds: 42.15% | |||||||||||
Australia: 2.99% | |||||||||||
Adani Abbot Point Terminal Pty. Ltd., 6.750%, due 11/01/181 | AUD | 1,025,000 | $ | 750,786 | |||||||
APT Pipelines Ltd., 4.200%, due 03/23/251 | $ | 20,000 | 19,914 | ||||||||
4.200%, due 03/23/252 | 310,000 | 308,661 | |||||||||
Aurizon Network Pty. Ltd., 2.000%, due 09/18/241 | EUR | 220,000 | 236,428 | ||||||||
Australia & New Zealand Banking Group Ltd., 4.500%, due 03/19/241 | $ | 250,000 | 255,703 | ||||||||
Australia Pacific Airports Melbourne Pty. Ltd., 1.750%, due 10/15/241 | EUR | 150,000 | 166,815 | ||||||||
BHP Billiton Finance USA Ltd., 5.000%, due 09/30/43 | $ | 110,000 | 122,632 | ||||||||
Commonwealth Bank of Australia, 1.125%, due 03/13/17 | 370,000 | 370,029 | |||||||||
National Australia Bank Ltd., 2.000%, due 11/12/241,3 | EUR | 250,000 | 269,680 | ||||||||
2.750%, due 03/09/17 | $ | 400,000 | 401,174 | ||||||||
Origin Energy Finance Ltd., 2.500%, due 10/23/201 | EUR | 325,000 | 364,433 | ||||||||
5.450%, due 10/14/211 | $ | 235,000 | 247,561 | ||||||||
QBE Insurance Group Ltd., 2.400%, due 05/01/181 | 205,000 | 205,224 | |||||||||
6.750%, due 12/02/441,3 | 395,000 | 415,540 | |||||||||
Santos Finance Ltd., 8.250%, due 09/22/703 | EUR | 205,000 | 224,177 | ||||||||
Scentre Group Trust 1, 1.375%, due 03/22/231 | 300,000 | 327,186 | |||||||||
1.500%, due 07/16/201 | 150,000 | 164,421 | |||||||||
SGSP Australia Assets Pty. Ltd., 2.000%, due 06/30/221 | 125,000 | 139,184 | |||||||||
3.250%, due 07/29/261 | $ | 200,000 | 187,800 | ||||||||
Suncorp-Metway Ltd., 1.700%, due 03/28/171 | 195,000 | 194,786 | |||||||||
Telstra Corp. Ltd., 4.800%, due 10/12/211 | 150,000 | 163,736 | |||||||||
Transurban Finance Co. Pty. Ltd., 1.875%, due 09/16/24 | EUR | 100,000 | 110,356 | ||||||||
Total Australia corporate bonds | 5,646,226 | ||||||||||
Belgium: 0.67% | |||||||||||
AG Insurance SA, 3.500%, due 06/30/471,3 | 300,000 | 303,163 | |||||||||
Anheuser-Busch InBev SA/NV, 0.875%, due 03/17/221 | 480,000 | 518,424 | |||||||||
1.500%, due 03/17/251 | 310,000 | 339,315 | |||||||||
RESA SA, 1.000%, due 07/22/261 | 100,000 | 105,527 | |||||||||
Total Belgium corporate bonds | 1,266,429 | ||||||||||
Bermuda: 0.11% | |||||||||||
Bacardi Ltd., 2.750%, due 07/03/231 | 170,000 | 198,847 |
Face Amount | Value | ||||||||||
Brazil: 0.12% | |||||||||||
Vale SA, 5.625%, due 09/11/42 | $ | 260,000 | $ | 229,775 | |||||||
Canada: 0.91% | |||||||||||
Bank of Montreal, 6.020%, due 05/02/18 | CAD | 275,000 | 217,538 | ||||||||
Bank of Nova Scotia (The), 4.100%, due 06/08/17 | 300,000 | 226,428 | |||||||||
Bell Canada, Inc., 4.750%, due 09/29/44 | 50,000 | 38,324 | |||||||||
Nexen Energy ULC, 6.400%, due 05/15/37 | $ | 205,000 | 248,999 | ||||||||
Royal Bank of Canada, 2.980%, due 05/07/191 | CAD | 200,000 | 153,860 | ||||||||
Suncor Energy, Inc., 6.500%, due 06/15/38 | $ | 300,000 | 382,719 | ||||||||
TELUS Corp., 3.750%, due 01/17/25 | CAD | 75,000 | 58,281 | ||||||||
Thomson Reuters Corp., 1.300%, due 02/23/17 | $ | 180,000 | 180,008 | ||||||||
Yamana Gold, Inc., 4.950%, due 07/15/24 | 225,000 | 220,500 | |||||||||
Total Canada corporate bonds | 1,726,657 | ||||||||||
Cayman Islands: 0.71% | |||||||||||
Hutchison Whampoa International 09 Ltd., 7.625%, due 04/09/191 | 125,000 | 139,844 | |||||||||
Noble Holding International Ltd., 7.200%, due 04/01/25 | 195,000 | 182,813 | |||||||||
Principal Financial Global Funding II LLC, 4.500%, due 01/26/17 | EUR | 300,000 | 316,709 | ||||||||
Tencent Holdings Ltd., 3.375%, due 05/02/192 | $ | 200,000 | 204,841 | ||||||||
Thames Water Utilities Cayman Finance Ltd., 5.375%, due 07/21/253 | GBP | 90,000 | 113,323 | ||||||||
Transocean, Inc., 6.800%, due 03/15/38 | $ | 150,000 | 116,250 | ||||||||
XLIT Ltd., 5.250%, due 12/15/43 | 100,000 | 103,152 | |||||||||
Yorkshire Water Services Bradford Finance Ltd., 6.000%, due 04/24/253 | GBP | 130,000 | 162,424 | ||||||||
Total Cayman Islands corporate bonds | 1,339,356 | ||||||||||
Curacao: 0.05% | |||||||||||
Teva Pharmaceutical Finance IV BV, 3.650%, due 11/10/21 | $ | 85,000 | 85,744 | ||||||||
Czech Republic: 0.15% | |||||||||||
NET4GAS sro, 2.500%, due 07/28/211 | EUR | 255,000 | 287,808 | ||||||||
Finland: 0.33% | |||||||||||
Elenia Finance OYJ, 2.875%, due 12/17/201 | 230,000 | 261,575 |
10
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Continued) | |||||||||||
Finland—(Concluded) | |||||||||||
Teollisuuden Voima OYJ, 2.500%, due 03/17/211 EUR | 125,000 | $ | 135,681 | ||||||||
4.625%, due 02/04/191 | 195,000 | 221,612 | |||||||||
Total Finland corporate bonds | 618,868 | ||||||||||
France: 1.71% | |||||||||||
APRR SA, 2.250%, due 01/16/201 | 300,000 | 335,720 | |||||||||
Arkema SA, 1.500%, due 01/20/251 | 100,000 | 108,636 | |||||||||
AXA SA, 3.375%, due 07/06/471,3 | 250,000 | 267,333 | |||||||||
Banque Federative du Credit Mutuel SA, 3.000%, due 09/11/251 | 100,000 | 113,001 | |||||||||
BNP Paribas SA, 2.700%, due 08/20/18 | $ | 215,000 | 217,760 | ||||||||
2.875%, due 03/20/261,3 | EUR | 115,000 | 126,016 | ||||||||
Credit Logement SA, 0.834%, due 03/16/171,3,4 | 150,000 | 123,892 | |||||||||
Electricite de France SA, 5.625%, due 01/22/242,3,4 | $ | 180,000 | 170,550 | ||||||||
6.950%, due 01/26/392 | 95,000 | 119,067 | |||||||||
Engie SA, 4.750%, due 07/10/211,3,4 | EUR | 300,000 | 350,608 | ||||||||
Orange SA, 5.875%, due 02/07/221,3,4 | GBP | 170,000 | 219,460 | ||||||||
Sanofi, 0.000%, due 01/13/201 | EUR | 300,000 | 315,594 | ||||||||
Total Capital International SA, 1.550%, due 06/28/17 | $ | 495,000 | 495,798 | ||||||||
TOTAL SA, 2.625%, due 02/26/251,3,4 | EUR | 165,000 | 163,266 | ||||||||
Transport et Infrastructures Gaz France SA, 2.200%, due 08/05/251 | 100,000 | 112,375 | |||||||||
Total France corporate bonds | 3,239,076 | ||||||||||
Germany: 0.47% | |||||||||||
Allianz SE, 4.750%, due 10/24/231,3,4 | 100,000 | 116,128 | |||||||||
alstria office REIT-AG, 2.250%, due 03/24/211 | 400,000 | 445,393 | |||||||||
Deutsche Bank AG, 2.850%, due 05/10/19 | $ | 275,000 | 273,722 | ||||||||
Lanxess AG, 0.250%, due 10/07/211 | EUR | 50,000 | 52,228 | ||||||||
Total Germany corporate bonds | 887,471 | ||||||||||
Hong Kong: 0.25% | |||||||||||
AIA Group Ltd., 1.750%, due 03/13/181 | $ | 470,000 | 467,969 |
Face Amount | Value | ||||||||||
Ireland: 1.02% | |||||||||||
Aquarius & Investments plc for Swiss Reinsurance Co. Ltd., 6.375%, due 09/01/241,3 | $ | 200,000 | $ | 209,051 | |||||||
GE Capital International Funding Co. Unlimited Co., 2.342%, due 11/15/20 | 374,000 | 373,142 | |||||||||
4.418%, due 11/15/35 | 604,000 | 631,924 | |||||||||
Perrigo Co. plc, 4.000%, due 11/15/23 | 200,000 | 198,037 | |||||||||
PGH Capital plc, 5.750%, due 07/07/211 | GBP | 180,000 | 246,710 | ||||||||
Shire Acquisitions Investments Ireland DAC, 2.400%, due 09/23/21 | $ | 185,000 | 178,539 | ||||||||
3.200%, due 09/23/26 | 100,000 | 93,318 | |||||||||
Total Ireland corporate bonds | 1,930,721 | ||||||||||
Italy: 0.57% | |||||||||||
Autostrade per l'Italia SpA, 1.125%, due 11/04/211 | EUR | 110,000 | 119,698 | ||||||||
CDP Reti SpA, 1.875%, due 05/29/221 | 155,000 | 167,623 | |||||||||
Intesa Sanpaolo SpA, 3.875%, due 01/16/18 | $ | 320,000 | 324,217 | ||||||||
4.375%, due 10/15/191 | EUR | 100,000 | 116,248 | ||||||||
UniCredit SpA, 6.375%, due 05/02/231,3 | $ | 340,000 | 343,400 | ||||||||
Total Italy corporate bonds | 1,071,186 | ||||||||||
Japan: 0.19% | |||||||||||
Bank of Tokyo-Mitsubishi UFJ Ltd. (The), 2.350%, due 09/08/191 | 200,000 | 199,814 | |||||||||
Sumitomo Mitsui Financial Group, Inc., 2.934%, due 03/09/21 | 155,000 | 155,681 | |||||||||
Total Japan corporate bonds | 355,495 | ||||||||||
Jersey: 0.43% | |||||||||||
AA Bond Co. Ltd., 2.875%, due 01/31/221 | GBP | 174,000 | 215,567 | ||||||||
4.720%, due 07/31/181 | 10,000 | 12,942 | |||||||||
Gatwick Funding Ltd., 5.250%, due 01/23/241 | 140,000 | 207,820 | |||||||||
Heathrow Funding Ltd., 4.600%, due 02/15/181 | EUR | 250,000 | 276,603 | ||||||||
HSBC Bank Capital Funding Sterling 2 LP, 5.862%, due 04/07/203,4 | GBP | 75,000 | 97,629 | ||||||||
Total Jersey corporate bonds | 810,561 | ||||||||||
Luxembourg: 0.40% | |||||||||||
Actavis Funding SCS, 1.300%, due 06/15/17 | $ | 95,000 | 94,947 | ||||||||
3.450%, due 03/15/22 | 220,000 | 223,083 | |||||||||
4.750%, due 03/15/45 | 165,000 | 161,678 | |||||||||
Belfius Financing Co. SA, 1.103%, due 02/09/173 | GBP | 135,000 | 165,823 |
11
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Continued) | |||||||||||
Luxembourg—(Concluded) | |||||||||||
Glencore Finance Europe SA, 1.875%, due 09/13/231 | EUR | 100,000 | $ | 105,322 | |||||||
Total Luxembourg corporate bonds | 750,853 | ||||||||||
Mexico: 0.28% | |||||||||||
America Movil SAB de CV, 5.000%, due 03/30/20 | $ | 185,000 | $ | 197,950 | |||||||
5.125%, due 09/06/731,3 | EUR | 145,000 | 160,457 | ||||||||
Petroleos Mexicanos, 5.500%, due 02/24/251 | 140,000 | 161,003 | |||||||||
Total Mexico corporate bonds | 519,410 | ||||||||||
Netherlands: 3.20% | |||||||||||
ABN AMRO Bank NV, 4.875%, due 01/16/191 | GBP | 150,000 | 200,640 | ||||||||
Achmea BV, 2.500%, due 11/19/201 | EUR | 380,000 | 434,119 | ||||||||
4.250%, due 02/04/251,3,4 | 105,000 | 104,016 | |||||||||
Allianz Finance II BV, Series XW, 4.375%, due 02/17/173,4 | 175,000 | 184,427 | |||||||||
Bharti Airtel International Netherlands BV, 4.000%, due 12/10/181 | 255,000 | 286,544 | |||||||||
Coca-Cola HBC Finance BV, 2.375%, due 06/18/201 | 245,000 | 275,498 | |||||||||
Cooperatieve Rabobank UA, 1.700%, due 03/19/18 | $ | 330,000 | 329,946 | ||||||||
2.500%, due 05/26/261,3 | EUR | 265,000 | 289,571 | ||||||||
5.500%, due 06/29/201,3,4 | 250,000 | 265,794 | |||||||||
Demeter Investments BV for Swiss Life AG, 4.375%, due 06/16/251,3,4 | 215,000 | 231,882 | |||||||||
Deutsche Telekom International Finance BV, 1.500%, due 04/03/281 | 70,000 | 74,702 | |||||||||
6.500%, due 04/08/22 | GBP | 74,000 | 114,287 | ||||||||
EDP Finance BV, 2.000%, due 04/22/251 | EUR | 155,000 | 160,103 | ||||||||
ELM BV for Swiss Reinsurance Co. Ltd., 2.600%, due 09/01/251,3,4 | 130,000 | 131,050 | |||||||||
Heineken NV, 2.125%, due 08/04/201 | 285,000 | 321,546 | |||||||||
Nomura Europe Finance NV, 1.500%, due 05/12/211 | 180,000 | 196,497 | |||||||||
Petrobras Global Finance BV, 3.250%, due 04/01/191 | 410,000 | 439,679 | |||||||||
Redexis Gas Finance BV, 1.875%, due 04/27/271 | 210,000 | 213,910 | |||||||||
2.750%, due 04/08/211 | 175,000 | 200,758 | |||||||||
Ren Finance BV, 2.500%, due 02/12/251 | 180,000 | 197,326 | |||||||||
Shell International Finance BV, 1.250%, due 11/10/17 | $ | 310,000 | 310,099 | ||||||||
4.375%, due 05/11/45 | 335,000 | 338,664 | |||||||||
Siemens Financieringsmaatschappij NV, 5.125%, due 02/20/17 | EUR | 145,000 | 153,791 |
Face Amount | Value | ||||||||||
TenneT Holding BV, 6.655%, due 06/01/173,4 | EUR | 150,000 | $ | 161,660 | |||||||
Teva Pharmaceutical Finance Netherlands II BV, 1.125%, due 10/15/241 | 110,000 | 111,768 | |||||||||
Teva Pharmaceutical Finance Netherlands III BV, 2.800%, due 07/21/23 | $ | 230,000 | 215,855 | ||||||||
Vonovia Finance BV, 4.000%, due 12/17/211,3,4 | EUR | 100,000 | 108,470 | ||||||||
Total Netherlands corporate bonds | 6,052,602 | ||||||||||
Norway: 0.29% | |||||||||||
DNB Bank ASA, 3.200%, due 04/03/172 | $ | 200,000 | 200,956 | ||||||||
Statoil ASA, 3.125%, due 08/17/17 | 190,000 | 192,155 | |||||||||
4.800%, due 11/08/43 | 140,000 | 151,902 | |||||||||
Total Norway corporate bonds | 545,013 | ||||||||||
Portugal: 0.06% | |||||||||||
Caixa Geral de Depositos SA, 3.750%, due 01/18/181 | EUR | 100,000 | 109,313 | ||||||||
Singapore: 0.13% | |||||||||||
United Overseas Bank Ltd., 3.750%, due 09/19/241,3 | $ | 250,000 | 254,775 | ||||||||
Spain: 0.57% | |||||||||||
Aigues de Barcelona Finance SAU, 1.944%, due 09/15/211 | EUR | 175,000 | 192,717 | ||||||||
Canal de Isabel II Gestion SA, 1.680%, due 02/26/251 | 100,000 | 107,258 | |||||||||
Santander International Debt SAU, 1.375%, due 03/25/171 | 300,000 | 316,795 | |||||||||
Santander Issuances SAU, 3.250%, due 04/04/261 | 100,000 | 107,334 | |||||||||
Telefonica Emisiones SAU, 4.710%, due 01/20/201 | 300,000 | 357,359 | |||||||||
Total Spain corporate bonds | 1,081,463 | ||||||||||
Sweden: 0.41% | |||||||||||
Nordea Bank AB, 1.875%, due 11/10/251,3 | 140,000 | 152,027 | |||||||||
PGE Sweden AB, 1.625%, due 06/09/191 | 100,000 | 108,459 | |||||||||
Svenska Handelsbanken AB, 5.125%, due 03/30/201 | $ | 115,000 | 124,264 | ||||||||
5.125%, due 03/30/202 | 175,000 | 189,097 | |||||||||
Swedbank Hypotek AB, 2.375%, due 04/05/171 | 200,000 | 200,460 | |||||||||
Total Sweden corporate bonds | 774,307 | ||||||||||
Switzerland: 0.20% | |||||||||||
Credit Suisse AG, 3.000%, due 10/29/21 | 380,000 | 383,265 |
12
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Continued) | |||||||||||
United Kingdom: 5.14% | |||||||||||
Anglian Water Services Financing plc, 4.500%, due 02/22/261 | GBP | 100,000 | $ | 142,401 | |||||||
Aon plc, 2.875%, due 05/14/26 | EUR | 155,000 | 178,253 | ||||||||
4.750%, due 05/15/45 | $ | 200,000 | 201,770 | ||||||||
Arqiva Financing plc, 4.040%, due 06/30/201 | GBP | 225,000 | 294,613 | ||||||||
4.882%, due 12/31/321 | 130,000 | 179,683 | |||||||||
Aviva plc, 0.100%, due 12/13/181 | EUR | 120,000 | 126,447 | ||||||||
5.125%, due 06/04/501,3 | GBP | 180,000 | 222,370 | ||||||||
Barclays Bank plc, 2.250%, due 05/10/171 | $ | 200,000 | 200,487 | ||||||||
6.625%, due 03/30/221 | EUR | 110,000 | 141,821 | ||||||||
Barclays plc, 4.375%, due 09/11/24 | $ | 350,000 | 346,750 | ||||||||
BAT International Finance plc, 0.875%, due 10/13/231 | EUR | 120,000 | 126,020 | ||||||||
1.750%, due 07/05/211 | GBP | 100,000 | 124,915 | ||||||||
2.375%, due 01/19/231 | EUR | 250,000 | 288,329 | ||||||||
BP Capital Markets plc, 1.375%, due 05/10/18 | $ | 170,000 | 169,451 | ||||||||
2.750%, due 05/10/23 | 90,000 | 88,264 | |||||||||
British Telecommunications plc, 0.625%, due 03/10/211 | EUR | 250,000 | 265,718 | ||||||||
BUPA Finance plc, 3.375%, due 06/17/211 | GBP | 110,000 | 145,880 | ||||||||
6.125%, due 09/16/203,4 | 90,000 | 118,693 | |||||||||
Centrica plc, 5.250%, due 04/10/751,3 | 125,000 | 156,992 | |||||||||
Coca-Cola European Partners plc, 1.125%, due 05/26/241 | EUR | 140,000 | 149,024 | ||||||||
Diageo Capital plc, 3.875%, due 04/29/43 | $ | 120,000 | 114,085 | ||||||||
EE Finance plc, 4.375%, due 03/28/191 | GBP | 145,000 | 192,326 | ||||||||
GlaxoSmithKline Capital plc, 1.500%, due 05/08/17 | $ | 240,000 | 240,349 | ||||||||
HSBC Holdings plc, 5.100%, due 04/05/21 | 385,000 | 415,730 | |||||||||
Imperial Brands Finance plc, 2.950%, due 07/21/202 | 305,000 | 306,646 | |||||||||
9.000%, due 02/17/221 | GBP | 75,000 | 124,738 | ||||||||
Liverpool Victoria Friendly Society Ltd., 6.500%, due 05/22/431,3 | 270,000 | 324,842 | |||||||||
Lloyds Banking Group plc, 1.000%, due 11/09/231 | EUR | 436,000 | 450,120 | ||||||||
National Grid Electricity Transmission plc, 4.000%, due 06/08/271 | GBP | 130,000 | 187,005 | ||||||||
Northern Gas Networks Finance plc, 5.875%, due 07/08/19 | 75,000 | 104,077 | |||||||||
Northumbrian Water Finance plc, 1.625%, due 10/11/261 | 100,000 | 117,777 |
Face Amount | Value | ||||||||||
Prudential plc, 1.375%, due 01/19/181 GBP | 170,000 | $ | 210,956 | ||||||||
5.000%, due 07/20/551,3 | 100,000 | 120,709 | |||||||||
Royal Bank of Scotland Group plc, 3.875%, due 09/12/23 | $ | 200,000 | 191,837 | ||||||||
Royal Bank of Scotland plc (The), 6.934%, due 04/09/18 | EUR | 290,000 | 327,549 | ||||||||
Santander UK Group Holdings plc, 1.125%, due 09/08/231 | 150,000 | 157,008 | |||||||||
Santander UK plc, 4.000%, due 03/13/24 | $ | 200,000 | 207,740 | ||||||||
Scottish Widows Ltd., 5.500%, due 06/16/231 | GBP | 100,000 | 132,889 | ||||||||
Sky plc, 2.500%, due 09/15/261 | EUR | 150,000 | 170,636 | ||||||||
Southern Gas Networks plc, 2.500%, due 02/03/251 | GBP | 115,000 | 147,615 | ||||||||
SSE plc, 3.875%, due 09/10/201,3,4 | 100,000 | 122,380 | |||||||||
Standard Chartered plc, 4.000%, due 07/12/221,3 | $ | 350,000 | 350,944 | ||||||||
State Grid Europe Development 2014 plc, Series A, 1.500%, due 01/26/221 | EUR | 125,000 | 135,364 | ||||||||
Thames Water Utilities Finance Ltd., 5.125%, due 09/28/37 | GBP | 185,000 | 315,588 | ||||||||
Vodafone Group plc, 1.250%, due 08/25/211 | EUR | 210,000 | 229,328 | ||||||||
Wales & West Utilities Finance plc, 6.750%, due 12/17/363 | GBP | 50,000 | 67,565 | ||||||||
Western Power Distribution West Midlands plc, 5.750%, due 04/16/321 | 100,000 | 170,270 | |||||||||
WPP Finance 2010, 3.750%, due 09/19/24 | $ | 185,000 | 185,963 | ||||||||
WPP Finance 2013, 0.430%, due 03/23/181 | EUR | 210,000 | 221,520 | ||||||||
Total United Kingdom corporate bonds | 9,711,437 | ||||||||||
United States: 20.44% | |||||||||||
21st Century Fox America, Inc., 6.200%, due 12/15/34 | $ | 295,000 | 346,072 | ||||||||
ABB Finance USA, Inc., 2.875%, due 05/08/22 | 205,000 | 206,858 | |||||||||
Abbott Laboratories, 3.750%, due 11/30/26 | 205,000 | 203,472 | |||||||||
4.900%, due 11/30/46 | 220,000 | 225,355 | |||||||||
AbbVie, Inc., 1.375%, due 05/17/24 | EUR | 405,000 | 431,739 | ||||||||
2.900%, due 11/06/22 | $ | 160,000 | 157,860 | ||||||||
4.400%, due 11/06/42 | 120,000 | 112,680 | |||||||||
Aetna, Inc., 3.500%, due 11/15/24 | 215,000 | 217,864 | |||||||||
Albemarle Corp., 1.875%, due 12/08/211 | EUR | 265,000 | 292,571 | ||||||||
Alphabet, Inc., 1.998%, due 08/15/26 | $ | 500,000 | 458,206 |
13
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Continued) | |||||||||||
United States—(Continued) | |||||||||||
Altria Group, Inc., 4.250%, due 08/09/42 | $ | 460,000 | $ | 451,829 | |||||||
American Express Credit Corp., 2.375%, due 05/26/20 | 95,000 | 94,881 | |||||||||
American International Group, Inc., 3.375%, due 08/15/20 | 285,000 | 293,380 | |||||||||
4.500%, due 07/16/44 | 115,000 | 113,179 | |||||||||
Amgen, Inc., 4.400%, due 05/01/45 | 110,000 | 105,357 | |||||||||
Anadarko Petroleum Corp., 3.450%, due 07/15/24 | 85,000 | 83,340 | |||||||||
4.850%, due 03/15/21 | 70,000 | 74,997 | |||||||||
Anheuser-Busch InBev Worldwide, Inc., 3.750%, due 01/15/22 | 390,000 | 406,674 | |||||||||
Apache Corp., 4.750%, due 04/15/43 | 345,000 | 354,701 | |||||||||
Apple, Inc., 1.300%, due 02/23/18 | 90,000 | 90,055 | |||||||||
3.850%, due 08/04/46 | 330,000 | 315,509 | |||||||||
AT&T, Inc., 3.000%, due 02/15/22 | 170,000 | 168,172 | |||||||||
4.750%, due 05/15/46 | 380,000 | 359,333 | |||||||||
5.000%, due 03/01/21 | 370,000 | 397,619 | |||||||||
5.550%, due 08/15/41 | 220,000 | 228,667 | |||||||||
Baltimore Gas & Electric Co., 3.500%, due 08/15/46 | 60,000 | 53,869 | |||||||||
Bank of America Corp., 1.375%, due 09/10/211 | EUR | 270,000 | 296,220 | ||||||||
3.875%, due 08/01/25 | $ | 520,000 | 528,052 | ||||||||
5.875%, due 02/07/42 | 135,000 | 162,880 | |||||||||
Berkshire Hathaway Finance Corp., 1.300%, due 05/15/18 | 135,000 | 134,635 | |||||||||
Berkshire Hathaway, Inc., 1.300%, due 03/15/24 | EUR | 100,000 | 108,175 | ||||||||
3.125%, due 03/15/26 | $ | 180,000 | 178,572 | ||||||||
Branch Banking & Trust Co., 1.350%, due 10/01/17 | 265,000 | 264,733 | |||||||||
Burlington Northern Santa Fe LLC, 3.000%, due 03/15/23 | 235,000 | 237,618 | |||||||||
5.400%, due 06/01/41 | 135,000 | 159,066 | |||||||||
Celgene Corp., 3.875%, due 08/15/25 | 150,000 | 151,949 | |||||||||
CF Industries, Inc., 3.400%, due 12/01/212 | 130,000 | 128,510 | |||||||||
5.150%, due 03/15/34 | 175,000 | 148,750 | |||||||||
Charter Communications Operating LLC, 4.464%, due 07/23/22 | 195,000 | 203,573 | |||||||||
Cisco Systems, Inc., 1.400%, due 02/28/18 | 105,000 | 105,167 | |||||||||
Citigroup, Inc., 3.875%, due 10/25/23 | 885,000 | 910,892 | |||||||||
4.600%, due 03/09/26 | 110,000 | 113,539 |
Face Amount | Value | ||||||||||
Coca-Cola Co. (The), 1.875%, due 09/22/26 | EUR | 105,000 | $ | 120,562 | |||||||
Comcast Corp., 4.750%, due 03/01/44 | $ | 65,000 | 69,579 | ||||||||
ConocoPhillips Co., 2.200%, due 05/15/20 | 320,000 | 317,339 | |||||||||
4.200%, due 03/15/21 | 160,000 | 169,818 | |||||||||
Consumers Energy Co., 3.250%, due 08/15/46 | 50,000 | 44,042 | |||||||||
CVS Health Corp., 5.125%, due 07/20/45 | 255,000 | 283,637 | |||||||||
Daimler Finance North America LLC, 2.450%, due 05/18/202 | 150,000 | 149,595 | |||||||||
Diamond 1 Finance Corp., 3.480%, due 06/01/192 | 270,000 | 275,548 | |||||||||
8.350%, due 07/15/462 | 310,000 | 381,113 | |||||||||
Dominion Resources, Inc., Series D, 2.850%, due 08/15/26 | 90,000 | 84,134 | |||||||||
DTE Energy Co., 6.375%, due 04/15/33 | 50,000 | 61,037 | |||||||||
Duke Energy Carolinas LLC, 4.000%, due 09/30/42 | 200,000 | 198,227 | |||||||||
Eaton Corp., 4.150%, due 11/02/42 | 130,000 | 126,825 | |||||||||
Ecolab, Inc., 5.500%, due 12/08/41 | 240,000 | 281,733 | |||||||||
Enable Midstream Partners LP, 3.900%, due 05/15/24 | 150,000 | 142,119 | |||||||||
Energy Transfer Partners LP, 6.050%, due 06/01/41 | 270,000 | 276,784 | |||||||||
Enterprise Products Operating LLC, 4.850%, due 03/15/44 | 160,000 | 161,237 | |||||||||
5.200%, due 09/01/20 | 125,000 | 136,385 | |||||||||
ERAC USA Finance LLC, 5.625%, due 03/15/422 | 145,000 | 159,553 | |||||||||
ERP Operating LP, 3.375%, due 06/01/25 | 205,000 | 203,260 | |||||||||
Exelon Corp., 3.400%, due 04/15/26 | 165,000 | 161,662 | |||||||||
Express Scripts Holding Co., 2.250%, due 06/15/19 | 195,000 | 194,927 | |||||||||
Exxon Mobil Corp., 3.567%, due 03/06/45 | 65,000 | 61,223 | |||||||||
4.114%, due 03/01/46 | 90,000 | 91,992 | |||||||||
FedEx Corp., 1.625%, due 01/11/27 | EUR | 150,000 | 160,279 | ||||||||
4.550%, due 04/01/46 | $ | 60,000 | 60,342 | ||||||||
Fifth Third Bank, 2.875%, due 10/01/21 | 345,000 | 348,780 | |||||||||
Five Corners Funding Trust, 4.419%, due 11/15/232 | 235,000 | 248,164 | |||||||||
Ford Motor Credit Co. LLC, 3.000%, due 06/12/17 | 680,000 | 683,946 | |||||||||
Freeport-McMoRan, Inc., 3.550%, due 03/01/225 | 350,000 | 325,500 | |||||||||
3.875%, due 03/15/23 | 150,000 | 137,625 |
14
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Continued) | |||||||||||
United States—(Continued) | |||||||||||
General Electric Co., 1.875%, due 05/28/27 | EUR | 120,000 | $ | 136,943 | |||||||
4.125%, due 10/09/42 | $ | 120,000 | 121,424 | ||||||||
4.375%, due 09/16/20 | 97,000 | 104,184 | |||||||||
Series A, 6.750%, due 03/15/32 | 147,000 | 195,426 | |||||||||
General Motors Financial Co., Inc., 3.200%, due 07/06/21 | 240,000 | 237,786 | |||||||||
Georgia Power Co., 5.400%, due 06/01/40 | 125,000 | 142,597 | |||||||||
Gilead Sciences, Inc., 2.050%, due 04/01/19 | 110,000 | 110,308 | |||||||||
4.750%, due 03/01/46 | 85,000 | 87,775 | |||||||||
4.800%, due 04/01/44 | 165,000 | 171,007 | |||||||||
Glencore Funding LLC, 2.500%, due 01/15/192 | 9,000 | 8,980 | |||||||||
Goldman Sachs Group, Inc. (The), 1.375%, due 07/26/221 | EUR | 685,000 | 744,472 | ||||||||
5.150%, due 05/22/45 | $ | 170,000 | 178,446 | ||||||||
Hartford Financial Services Group, Inc. (The), 4.300%, due 04/15/43 | 155,000 | 143,308 | |||||||||
HCP, Inc., 3.875%, due 08/15/24 | 190,000 | 189,679 | |||||||||
Home Depot, Inc. (The), 4.875%, due 02/15/44 | 110,000 | 123,356 | |||||||||
Honeywell International, Inc., 1.850%, due 11/01/21 | 200,000 | 195,255 | |||||||||
Illinois Tool Works, Inc., 2.650%, due 11/15/26 | 265,000 | 252,922 | |||||||||
International Business Machines Corp., 3.375%, due 08/01/23 | 260,000 | 266,767 | |||||||||
JPMorgan Chase & Co., 3.200%, due 01/25/23 | 1,490,000 | 1,505,077 | |||||||||
3.625%, due 12/01/27 | 360,000 | 348,700 | |||||||||
Juniper Networks, Inc., 4.500%, due 03/15/24 | 180,000 | 183,860 | |||||||||
Kinder Morgan Energy Partners LP, 5.000%, due 10/01/21 | 125,000 | 132,979 | |||||||||
5.000%, due 03/01/43 | 305,000 | 293,580 | |||||||||
Kinder Morgan, Inc., 5.625%, due 11/15/232 | 80,000 | 87,720 | |||||||||
Kraft Heinz Foods Co., 4.875%, due 02/15/252 | 145,000 | 156,340 | |||||||||
5.000%, due 06/04/42 | 190,000 | 194,199 | |||||||||
Kroger Co. (The), 3.875%, due 10/15/46 | 60,000 | 54,508 | |||||||||
Liberty Mutual Group, Inc., 2.750%, due 05/04/261 | EUR | 140,000 | 152,169 | ||||||||
4.250%, due 06/15/232 | $ | 270,000 | 282,393 | ||||||||
Lowe's Cos., Inc., 4.250%, due 09/15/44 | 215,000 | 217,622 | |||||||||
Marathon Oil Corp., 3.850%, due 06/01/25 | 175,000 | 169,483 |
Face Amount | Value | ||||||||||
McDonald's Corp., 2.750%, due 12/09/20 | $ | 125,000 | $ | 126,847 | |||||||
Medtronic, Inc., 3.150%, due 03/15/22 | 220,000 | 225,074 | |||||||||
4.625%, due 03/15/45 | 75,000 | 80,944 | |||||||||
Mellon Capital III, 1.875%, due 09/05/663 | GBP | 600,000 | 698,090 | ||||||||
Merck & Co., Inc., 1.875%, due 10/15/26 | EUR | 125,000 | 142,593 | ||||||||
3.700%, due 02/10/45 | $ | 65,000 | 61,849 | ||||||||
Metropolitan Life Global Funding I, 1.250%, due 09/17/211 | EUR | 465,000 | 510,375 | ||||||||
Microsoft Corp., 2.400%, due 08/08/26 | $ | 150,000 | 141,568 | ||||||||
3.500%, due 11/15/42 | 155,000 | 141,224 | |||||||||
3.700%, due 08/08/46 | 220,000 | 206,673 | |||||||||
Molson Coors Brewing Co., 3.000%, due 07/15/26 | 80,000 | 75,512 | |||||||||
Mondelez International, Inc., 2.375%, due 01/26/21 | EUR | 310,000 | 352,601 | ||||||||
Monongahela Power Co., 5.400%, due 12/15/432 | $ | 105,000 | 122,499 | ||||||||
Morgan Stanley, 2.500%, due 04/21/21 | 235,000 | 232,244 | |||||||||
2.650%, due 01/27/20 | 850,000 | 853,470 | |||||||||
4.350%, due 09/08/26 | 185,000 | 188,503 | |||||||||
6.375%, due 07/24/42 | 85,000 | 109,048 | |||||||||
NBCUniversal Media LLC, 4.375%, due 04/01/21 | 550,000 | 593,682 | |||||||||
Occidental Petroleum Corp., 4.625%, due 06/15/45 | 85,000 | 88,269 | |||||||||
Oncor Electric Delivery Co. LLC, 7.000%, due 05/01/32 | 181,000 | 244,828 | |||||||||
Oracle Corp., 2.400%, due 09/15/23 | 390,000 | 377,388 | |||||||||
Pacific Gas & Electric Co., 6.050%, due 03/01/34 | 320,000 | 399,904 | |||||||||
PacifiCorp, 6.000%, due 01/15/39 | 215,000 | 273,115 | |||||||||
PepsiCo, Inc., 1.350%, due 10/04/19 | 125,000 | 123,990 | |||||||||
Pfizer, Inc., 5.200%, due 08/12/20 | 240,000 | 266,457 | |||||||||
Philip Morris International, Inc., 4.250%, due 11/10/44 | 200,000 | 197,087 | |||||||||
Phillips 66, 4.650%, due 11/15/34 | 115,000 | 119,528 | |||||||||
Phillips 66 Partners LP, 4.680%, due 02/15/45 | 90,000 | 83,409 | |||||||||
Plains All American Pipeline LP, 3.650%, due 06/01/22 | 70,000 | 70,316 | |||||||||
PNC Bank NA, 2.700%, due 11/01/22 | 250,000 | 245,823 | |||||||||
PPL Capital Funding, Inc., 4.700%, due 06/01/43 | 235,000 | 235,840 |
15
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Concluded) | |||||||||||
United States—(Concluded) | |||||||||||
Procter & Gamble Co. (The), 2.450%, due 11/03/26 | $ | 150,000 | $ | 143,514 | |||||||
Reynolds American, Inc., 4.450%, due 06/12/25 | 110,000 | 115,993 | |||||||||
5.700%, due 08/15/35 | 50,000 | 57,332 | |||||||||
Roche Holdings, Inc., 2.625%, due 05/15/261 | 200,000 | 192,095 | |||||||||
Schlumberger Holdings Corp., 3.000%, due 12/21/202 | 175,000 | 178,562 | |||||||||
Sempra Energy, 6.000%, due 10/15/39 | 180,000 | 214,126 | |||||||||
Southern Co. (The), 3.250%, due 07/01/26 | 220,000 | 213,795 | |||||||||
4.400%, due 07/01/46 | 190,000 | 187,551 | |||||||||
Southwestern Electric Power Co., 6.200%, due 03/15/40 | 230,000 | 275,664 | |||||||||
Spectra Energy Partners LP, 3.375%, due 10/15/26 | 50,000 | 47,752 | |||||||||
SunTrust Bank, 1.350%, due 02/15/17 | 320,000 | 320,016 | |||||||||
SunTrust Banks, Inc., 2.350%, due 11/01/18 | 210,000 | 211,821 | |||||||||
2.700%, due 01/27/22 | 310,000 | 309,820 | |||||||||
Swiss Re Treasury US Corp., 4.250%, due 12/06/422 | 110,000 | 107,215 | |||||||||
Teachers Insurance & Annuity Association of America, 4.900%, due 09/15/442 | 115,000 | 124,162 | |||||||||
Thermo Fisher Scientific, Inc., 2.400%, due 02/01/19 | 160,000 | 161,159 | |||||||||
Time Warner Cable LLC, 4.500%, due 09/15/42 | 150,000 | 135,603 | |||||||||
5.000%, due 02/01/20 | 455,000 | 482,610 | |||||||||
U.S. Bank NA, 1.350%, due 01/26/18 | 310,000 | 309,424 | |||||||||
Unilever Capital Corp., 1.375%, due 07/28/21 | 100,000 | 95,956 | |||||||||
Union Pacific Corp., 4.050%, due 11/15/45 | 85,000 | 85,370 | |||||||||
UnitedHealth Group, Inc., 2.700%, due 07/15/20 | 110,000 | 111,575 | |||||||||
Valero Energy Corp., 4.900%, due 03/15/45 | 200,000 | 198,934 | |||||||||
Verizon Communications, Inc., 2.625%, due 02/21/20 | 552,000 | 556,939 | |||||||||
3.000%, due 11/01/21 | 130,000 | 130,865 | |||||||||
4.500%, due 09/15/20 | 140,000 | 149,707 | |||||||||
6.550%, due 09/15/43 | 510,000 | 635,873 | |||||||||
Virginia Electric & Power Co., Series C, 4.000%, due 11/15/46 | 130,000 | 129,328 | |||||||||
Wachovia Corp., 5.750%, due 02/01/18 | 565,000 | 588,998 |
Face Amount | Value | ||||||||||
Walgreens Boots Alliance, Inc., 3.800%, due 11/18/24 | $ | 190,000 | $ | 193,145 | |||||||
Walt Disney Co. (The), 1.850%, due 07/30/26 | 50,000 | 44,987 | |||||||||
Wells Fargo & Co., 2.100%, due 07/26/21 | 280,000 | 272,204 | |||||||||
Williams Partners LP, 4.300%, due 03/04/24 | 230,000 | 232,005 | |||||||||
4.900%, due 01/15/45 | 90,000 | 83,028 | |||||||||
Xcel Energy, Inc., 4.800%, due 09/15/41 | 240,000 | 255,259 | |||||||||
Zimmer Biomet Holdings, Inc., 3.550%, due 04/01/25 | 110,000 | 107,001 | |||||||||
Total United States corporate bonds | 38,630,940 | ||||||||||
Virgin Islands, British: 0.35% | |||||||||||
CNPC General Capital Ltd., 3.400%, due 04/16/232,5 | 250,000 | 247,805 | |||||||||
Sinopec Capital 2013 Ltd., 3.125%, due 04/24/231 | 430,000 | 418,405 | |||||||||
Total Virgin Islands, British corporate bonds | 666,210 | ||||||||||
Total corporate bonds (cost $83,324,186) | 79,641,777 | ||||||||||
Asset-backed securities: 0.17% | |||||||||||
United Kingdom: 0.09% | |||||||||||
Tesco Property Finance 4 plc, 5.801%, due 10/13/401 | 137,827 | 163,220 | |||||||||
United States: 0.08% | |||||||||||
American Airlines Pass-Through Trust, Series 2014-1, Class B, 4.375%, due 10/01/22 | 110,884 | 110,607 | |||||||||
Delta Air Lines Pass-Through Trust, Series 2007-1, Class A, 6.821%, due 08/10/22 | 36,918 | 42,456 | |||||||||
153,063 | |||||||||||
Total asset-backed securities (cost $391,490) | 316,283 | ||||||||||
Collateralized debt obligation: 0.00%6 | |||||||||||
Cayman Islands: 0.00%6 | |||||||||||
LNR CDO Ltd., Series 2006-1A, Class FFX, 7.592%, due 05/28/437 (Cost $8,099,715) | 8,000,000 | 0 | |||||||||
Collateralized mortgage obligation: 0.00%6 | |||||||||||
United States: 0.00%6 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-7, Class B11, 3.169%, due 04/25/353 (Cost $28,518) | 232,620 | 7,419 |
16
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Concluded) | |||||||||||
Non-U.S. government obligations: 0.27% | |||||||||||
Denmark: 0.07% | |||||||||||
DONG Energy A/S, 3.000%, due 11/06/30151,3 | EUR | 120,000 | $ | 127,692 | |||||||
Germany: 0.10% | |||||||||||
FMS Wertmanagement AoeR, 1.000%, due 08/16/19 | $ | 200,000 | 196,347 | ||||||||
Saudi Arabia: 0.10% | |||||||||||
Kingdom of Saudi Arabia, 2.375%, due 10/26/212 | 200,000 | 194,000 | |||||||||
Total Non-U.S. government obligations (cost $526,071) | 518,039 | ||||||||||
U.S. treasury obligation: 14.23% | |||||||||||
U.S. Treasury Inflation Indexed Note (TIPS), 0.625%, due 01/15/26 (Cost $27,555,447) | 26,200,000 | 26,883,884 | |||||||||
Total bonds (cost $119,925,427) | 107,367,402 | ||||||||||
Shares | |||||||||||
Exchange traded funds: 5.44% | |||||||||||
iShares Edge MSCI Minimum Volatility Emerging Markets ETF | 120,044 | 5,871,352 | |||||||||
Wisdomtree Europe Hedged SmallCap Equity Fund | 170,600 | 4,406,103 | |||||||||
Total exchange traded funds (cost $10,432,005) | 10,277,455 |
Shares | Value | ||||||||||
Short-term investments: 29.94% | |||||||||||
Investment company: 4.79% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $9,050,559) | 9,050,559 | $ | 9,050,559 | ||||||||
Face Amount | |||||||||||
U.S. treasury obligations: 25.15% | |||||||||||
U.S. Treasury Bills 0.406%, due 04/27/178 | $ | 26,000,000 | 25,954,916 | ||||||||
0.451%, due 03/30/178 | 21,600,000 | 21,574,253 | |||||||||
Total U.S. treasury obligations (cost $47,542,215) | 47,529,169 | ||||||||||
Total short-term investments (cost $56,592,774) | 56,579,728 | ||||||||||
Shares | |||||||||||
Investment of cash collateral from securities loaned: 0.31% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $587,063) | 587,063 | 587,063 | |||||||||
Total investments: 92.51% (cost $187,537,269) | 174,811,648 | ||||||||||
Cash and other assets, less liabilities: 7.49% | 14,146,121 | ||||||||||
Net assets: 100.00% | $ | 188,957,769 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 787,282 | |||||
Gross unrealized depreciation | (13,512,903 | ) | |||||
Net unrealized depreciation of investments | $ | (12,725,621 | ) |
For a listing of defined portfolio acronyms, counterparty abbreviations and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 77. Portfolio footnotes begin on page 21.
17
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Forward foreign currency contracts
Counterparty | Contracts to deliver | In exchange for | Maturity date | Unrealized appreciation/ (depreciation) | |||||||||||||||
GSI | CNY | 11,615,000 | USD | 1,651,500 | 03/27/17 | $ | (14,310 | ) | |||||||||||
GSI | EUR | 8,855,000 | USD | 9,445,345 | 03/27/17 | 84,689 | |||||||||||||
GSI | USD | 9,713,175 | INR | 662,050,000 | 03/27/17 | (49,688 | ) | ||||||||||||
JPMCB | JPY | 191,700,000 | USD | 1,671,408 | 03/27/17 | 24,329 | |||||||||||||
JPMCB | USD | 896,511 | EUR | 855,000 | 03/27/17 | 7,313 | |||||||||||||
JPMCB | USD | 930,084 | JPY | 109,000,000 | 03/27/17 | 6,440 | |||||||||||||
MSC | KRW | 14,170,000,000 | USD | 12,123,546 | 03/27/17 | 390,148 | |||||||||||||
MSC | NZD | 17,245,000 | USD | 12,381,496 | 03/27/17 | 430,920 | |||||||||||||
MSC | USD | 2,312,934 | COP | 7,030,741,922 | 03/27/17 | (2,984 | ) | ||||||||||||
MSC | USD | 11,818,021 | MXN | 241,930,000 | 03/27/17 | (274,929 | ) | ||||||||||||
HSBC | TWD | 27,200,000 | USD | 858,965 | 03/27/17 | 11,830 | |||||||||||||
SSB | CHF | 16,635,000 | USD | 16,536,065 | 03/27/17 | 115,154 | |||||||||||||
SSB | GBP | 7,340,000 | USD | 9,356,746 | 03/27/17 | 292,057 | |||||||||||||
SSB | USD | 1,054,858 | CHF | 1,075,000 | 03/27/17 | 6,307 | |||||||||||||
WBC | CAD | 21,290,000 | USD | 16,253,497 | 03/27/17 | 381,218 | |||||||||||||
WBC | USD | 6,353,317 | AUD | 8,500,000 | 03/27/17 | (231,484 | ) | ||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 1,177,010 |
Futures contracts
Expiration date | Cost/ (proceeds) | Value | Unrealized appreciation/ (depreciation) | ||||||||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
US Ultra Bond, 9 contracts (USD) | March 2017 | $ | (1,457,776 | ) | $ | (1,442,250 | ) | $ | 15,526 | ||||||||||
5 Year US Treasury Notes, 320 contracts (USD) | March 2017 | (37,833,773 | ) | (37,652,500 | ) | 181,273 | |||||||||||||
10 Year US Treasury Notes, 177 contracts (USD) | March 2017 | (22,118,741 | ) | (21,997,781 | ) | 120,960 | |||||||||||||
Index futures buy contracts: | |||||||||||||||||||
EURO STOXX 50 Index, 174 contracts (EUR) | March 2017 | 5,844,668 | 6,002,189 | 157,521 | |||||||||||||||
Mini MSCI Emerging Markets Index, 181 contracts (USD) | March 2017 | 7,953,683 | 7,773,045 | (180,638 | ) | ||||||||||||||
Russell 1000 Value Index, 78 contracts (USD) | March 2017 | 4,333,087 | 4,304,430 | (28,657 | ) | ||||||||||||||
S&P 500 Index, 32 contracts (USD) | March 2017 | 17,939,696 | 17,889,600 | (50,096 | ) | ||||||||||||||
TOPIX Index, 44 contracts (JPY) | March 2017 | 5,510,001 | 5,714,823 | 204,822 | |||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
S&P/Toronto Stock Exchange 60 Index, 33 contracts (CAD) | March 2017 | (4,406,590 | ) | (4,408,848 | ) | (2,258 | ) | ||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
Australian Government 10 Year Bond, 329 contracts (AUD) | March 2017 | 30,297,548 | 30,328,997 | 31,449 | |||||||||||||||
Canadian Government 10 Year Bond, 148 contracts (CAD) | March 2017 | 15,313,810 | 15,159,900 | (153,910 | ) | ||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
Euro-Bobl, 210 contracts (EUR) | March 2017 | (29,261,328 | ) | (29,539,780 | ) | (278,452 | ) | ||||||||||||
Euro-Bund, 101 contracts (EUR) | March 2017 | (17,161,946 | ) | (17,452,041 | ) | (290,095 | ) | ||||||||||||
Long Gilt, 4 contracts (GBP) | March 2017 | (608,229 | ) | (620,292 | ) | (12,063 | ) | ||||||||||||
Net unrealized depreciation on futures contracts | $ | (284,618 | ) |
18
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Credit default swap agreements on corporate issues—buy protection9
Counterparty | Referenced obligation | Notional amount | Termination date | Payments made by the Fund10 | Upfront payments received | Value | Unrealized appreciation/ (depreciation) | ||||||||||||||||||||||||
BB | METRO AG bond, 3.375%, due 03/01/19 | EUR | 455,000 | 06/20/20 | 1.000 | % | $ | 1,974 | $ | (1,584 | ) | $ | 390 | ||||||||||||||||||
CITI | HSBC Bank plc bond, 4.000%, due 01/15/21 | EUR | 325,000 | 03/20/20 | 1.000 | 7,128 | (5,726 | ) | 1,402 | ||||||||||||||||||||||
JPMCB | Bayer AG bond, 5.625%, due 05/23/18 | EUR | 585,000 | �� | 03/20/18 | 1.000 | 3,586 | (6,311 | ) | (2,725 | ) | ||||||||||||||||||||
JPMCB | Pfizer, Inc. bond, 4.650%, due 03/01/18 | USD | 1,345,000 | 06/20/20 | 1.000 | 36,545 | (33,303 | ) | 3,242 | ||||||||||||||||||||||
$ | 49,233 | $ | (46,924 | ) | $ | 2,309 |
Credit default swap agreements on corporate issues—sell protection11
Counterparty | Referenced obligation | Notional amount | Termination date | Payments received by the Fund10 | Upfront Payments (made)/ received | Value | Unrealized appreciation | Credit spread12 | |||||||||||||||||||||||||||
CITI | Glencore International AG bond, 6.500%, due 02/27/19 | EUR 355,000 | 06/20/19 | 1.000 | % | $ | 12,964 | $ | 522 | $ | 13,486 | 0.956 | % | ||||||||||||||||||||||
CITI | Standard Chartered Bank plc bond, 0.000%, due 03/20/20 | EUR 325,000 | 03/20/20 | 1.000 | (823 | ) | 1,666 | 843 | 0.858 | ||||||||||||||||||||||||||
GSI | Freeport-McMoRan, Inc. bond, 3.550%, due 03/01/22 | USD 290,000 | 12/20/19 | 1.000 | 8,530 | (8,321 | ) | 209 | 2.021 | ||||||||||||||||||||||||||
JPMCB | Lanxess AG bond, 4.125%, due 05/23/18 | EUR 595,000 | 06/20/19 | 1.000 | 4,995 | 11,344 | 16,339 | 0.288 | |||||||||||||||||||||||||||
JPMCB | Teck Resources Ltd. bond, 3.150%, due 01/15/17 | USD 420,000 | 12/20/19 | 1.000 | 24,540 | (4,901 | ) | 19,639 | 1.416 | ||||||||||||||||||||||||||
JPMCB | Teck Resources Ltd. bond, 3.150%, due 01/15/17 | USD 90,000 | 03/20/20 | 1.000 | 4,662 | (1,689 | ) | 2,973 | 1.615 | ||||||||||||||||||||||||||
$ | 54,868 | $ | (1,379 | ) | $ | 53,489 |
Centrally cleared credit default swap agreements on credit indices—buy protection9
Referenced obligation | Notional amount | Termination date | Payments made by the Fund10 | Value | Unrealized depreciation | ||||||||||||||||||
iTraxx Europe Series 25 Index | EUR | 4,070,000 | 06/20/21 | 1.000 | % | $ | (66,855 | ) | $ | (19,320 | ) |
19
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
Centrally cleared credit default swap agreements on credit indices—sell protection11
Referenced obligation | Notional amount | Termination date | Payments made by the Fund10 | Value | Unrealized appreciation | Credit spread12 | |||||||||||||||||||||
iTraxx Europe Crossover Series 26 Index | EUR | 9,000,000 | 12/20/21 | 5.000 | % | $ | 915,749 | $ | 142,913 | 2.881 | % |
Options written activity for the period ended December 31, 2016 was as follows:
Number of contracts | Premiums received | ||||||||||
Put options outstanding at June 30, 2016 | — | $ | — | ||||||||
Put options written | 150 | 218,625 | |||||||||
Put options terminated in closing purchase transactions | (150 | ) | (218,625 | ) | |||||||
Put options expired prior to exercise | — | — | |||||||||
Put options outstanding at December 31, 2016 | — | $ | — |
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of December 31, 2016 in valuing the Fund's investments. In the event a Fund holds investments for which fair value is measured using the NAV per share practical expedient (or its equivalent), a separate column will be added to the fair value hierarchy table; this is intended to permit reconciliation to the amounts presented in the Portfolio of investments.
Description | Unadjusted quoted prices in active markets for identical investments (Level 1) | Other significant observable inputs (Level 2) | Unobservable inputs (Level 3) | Total | |||||||||||||||
Assets | |||||||||||||||||||
Corporate bonds | $ | — | $ | 79,641,777 | $ | — | $ | 79,641,777 | |||||||||||
Asset-backed securities | — | 316,283 | — | 316,283 | |||||||||||||||
Collateralized debt obligation | — | — | 0 | 0 | |||||||||||||||
Collateralized mortgage obligation | — | 7,419 | — | 7,419 | |||||||||||||||
Non-U.S. government obligations | — | 518,039 | — | 518,039 | |||||||||||||||
U.S. treasury obligation | — | 26,883,884 | — | 26,883,884 | |||||||||||||||
Exchange traded funds | 10,277,455 | — | — | 10,277,455 | |||||||||||||||
Short-term investments | 9,050,559 | 47,529,169 | — | 56,579,728 | |||||||||||||||
Investment of cash collateral from securities loaned | 587,063 | — | — | 587,063 | |||||||||||||||
Forward foreign currency contracts | — | 1,750,405 | — | 1,750,405 | |||||||||||||||
Futures contracts | 711,551 | — | — | 711,551 | |||||||||||||||
Swap agreements, at value | — | 929,281 | — | 929,281 | |||||||||||||||
Total | $ | 20,626,628 | $ | 157,576,257 | $ | 0 | $ | 178,202,885 | |||||||||||
Liabilities | |||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | (573,395 | ) | $ | — | $ | (573,395 | ) | |||||||||
Futures contracts | (996,169 | ) | — | — | (996,169 | ) | |||||||||||||
Swap agreements, at value | — | (128,690 | ) | — | (128,690 | ) | |||||||||||||
Total | $ | (996,169 | ) | $ | (702,085 | ) | $ | — | $ | (1,698,254 | ) |
20
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2016 (unaudited)
At December 31, 2016, there were no transfers between Level 1 and Level 2. At June 30, 2016, $1,601,058 and $(1,190,970) of futures contracts were classified within Level 2 of the fair value hierarchy pursuant to the Fund's fair valuation procedures for foreign portfolio holdings.
Level 3 rollforward disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period ended December 31, 2016:
Collateralized debt obligation | |||||||
Assets | |||||||
Beginning balance | $ | 0 | |||||
Purchases | — | ||||||
Issuances | — | ||||||
Sales | — | ||||||
Accrued discounts (premiums) | (1,903 | ) | |||||
Total realized gain (loss) | — | ||||||
Change in net unrealized appreciation (depreciation) | 1,903 | ||||||
Transfers into Level 3 | — | ||||||
Transfers out of Level 3 | — | ||||||
Ending balance | $ | 0 |
The change in net unrealized appreciation (depreciation) relating to the Level 3 investments held at December 31, 2016 was $1,903.
Portfolio footnotes
1 Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
2 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
3 Variable or floating rate security. The interest rate shown is the current rate at the period end and changes periodically.
4 Perpetual investment. Date shown reflects the next call date.
5 Security, or portion thereof, was on loan at the period end.
6 Amount represents less than 0.005%.
7 Illiquid investment at the period end.
8 Rate shown is the discount rate at the date of purchase unless otherwise noted.
9 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced obligation or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced obligation.
10 Payments made or received are based on the notional amount.
11 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced obligation.
12 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity. Credit spreads are unaudited.
See accompanying notes to financial statements.
21
UBS Global Allocation Fund
Portfolio performance
For the six months ended December 31, 2016, Class A shares of UBS Global Allocation Fund (the "Fund") increased 3.33% (Class A shares returned -2.37% after the deduction of the maximum sales charge), while Class P shares increased 3.37%. In contrast, the Fund's benchmark, the 60% MSCI All Country World Index (net)/40% Citigroup World Government Bond Index (Hedged in USD), returned 2.75% during the same time period. For comparison purposes, the MSCI All Country World Index (net) returned 6.55% and the Citigroup World Government Bond Index (Hedged in USD) returned -2.78%. (Class P shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 24; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund produced a positive absolute return during the reporting period and outperformed the benchmark. Positive performance was primarily due to our active market and currency allocation strategy.
During the review period, we used derivatives for risk management purposes and as a tool to help enhance returns across various strategies. With respect to our active currency strategy, utilizing currency forwards had a direct positive impact on Fund performance. We used a variety of equity and fixed income options, futures, and swaps to implement our market allocation strategy. Derivatives were just one tool, among others, that we used to implement our market allocation strategy. These derivatives, in aggregate, added to performance during the reporting period.
Portfolio performance summary1
What worked:
• Overall active equity positions added to performance.
– The Fund's long exposure to global equities (US, developed ex-US and emerging markets) contributed to performance over the reporting period. A number of equity markets ended 2016 at all-time highs amid improving economic data and resurgent investor confidence.
– The Fund also benefited from certain relative value trades, such as being long developed ex-US equities versus US equities and long Russell 1000 Value versus S&P 500. Long-forgotten value stocks performed strongly following the outcome of the US Presidential election and developed ex-US equities strengthened amid a reduction in geopolitical risks and further commitments to accommodative monetary policy.
• Certain active fixed income positions were positive for performance.
– The Fund's preference for global corporate bonds over sovereigns added value. Global yields rose and credit spreads compressed during the reporting period.
– The Fund benefited from certain relative value trades, such as long German bunds versus French government bonds.
1 For a detailed commentary on the market environment in general during the reporting period, see pages 3-4.
22
UBS Global Allocation Fund
• Overall, the portfolio's active currency positions were additive for performance.
– The Fund maintained a preference for the US dollar relative to the euro and the New Zealand dollar. Both positions benefited from a stronger US dollar amid US reflation, better economic growth expectations and a Federal Reserve Board ("Fed") rate hike in December 2016.
– The Fund maintained an overweight to the Indian rupee relative to the Taiwanese dollar. This was beneficial for performance as the rupee was more resilient during this volatile time period amid Reserve Bank of India interventions and strong macro fundamentals.
• Overall, the portfolio's bottom-up security selection was positive for results.
– Positive security selection came from within US equities, non-US equities and emerging market equities.
What didn't work:
• Certain equity trades detracted from performance during the reporting period.
– A preference for emerging market equities over US equities and emerging market minimum volatility equities over broad emerging market equities detracted from performance. Relative to other global markets, emerging market equities came under pressure amid increased uncertainty surrounding the results of the US presidential election.
– The Fund's relative value trade of long Spanish versus Italian equities detracted from performance. We expected the Spanish market to outperform on the back of relative political and economic momentum. We decided to close the position after Mariano Rajoy was re-elected Prime Minister of Spain, and Prime Minister Mateo Renzi of Italy resigned after a national referendum in that country.
• Certain fixed income allocations detracted from results.
– The Fund's long exposure to Australian duration detracted from results as the economy fared better than expected given lower commodity prices. This resulted in fewer rate cuts than expected.
– The Fund's performance was negatively impacted by an allocation to emerging market debt and certain relative value trades, such as long US Treasuries versus Italian government bonds.
• Certain active currency positions were negative for results relative to the benchmark.
– The largest detractor from performance was the Fund's overweight in the Mexican peso relative to the Canadian dollar. Despite solid fundamentals, the peso struggled amid protectionist and trade concerns upon the result of the US presidential election.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2016. The views and opinions in the letter were current as of February 17, 2017. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our website at www.ubs.com/am-us.
23
UBS Global Allocation Fund
Average annual total returns for periods ended 12/31/16 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | 3.33 | % | 1.39 | % | 5.52 | % | 2.04 | % | |||||||||||
Class C2 | 2.89 | 0.51 | 4.69 | 1.24 | |||||||||||||||
Class P3 | 3.37 | 1.57 | 5.79 | 2.31 | |||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (2.37 | )% | (4.18 | )% | 4.34 | % | 1.46 | % | |||||||||||
Class C2 | 1.89 | (0.48 | ) | 4.69 | 1.24 | ||||||||||||||
MSCI All Country World Index (net)4 | 6.55 | 7.86 | 9.36 | 3.56 | |||||||||||||||
Citigroup World Government Bond Index (Hedged in USD)5 | (2.78 | ) | 3.75 | 3.59 | 4.25 | ||||||||||||||
60% MSCI All Country World Index (net)/40% Citigroup World Government Bond Index (Hedged in USD)6 | 2.75 | 6.39 | 7.20 | 4.25 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2016 prospectuses were as follows: Class A—1.46% and 1.30%; Class C—2.25% and 2.05%; Class P—1.19% and 1.05%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. Effective October 28, 2016, the Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc., the Fund's investment advisor ("UBS AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, and extraordinary expenses to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, and extraordinary expenses), through the period ending October 27, 2017, do not exceed 1.20% for Class A shares, 1.95% for Class C shares and 0.95% for Class P shares; Prior to October 28, 2016 UBS Global Allocation Fund's expense caps were 1.35%, 2.10% and 1.10% for Class A, C, and P shares, respectively. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses to the extent such reimbursement can be made during the three years following the period during which such fee waivers and expense reimbursements were made, provided that the reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. The fee waiver/expense reimbursement agreement may be terminated by the Fund's Board of Trustees at any time and also will terminate automatically upon the expiration or termination of the Fund's advisory contract with the Advisor. Upon termination of the fee waiver/expense reimbursement agreement, however, the UBS AM (Americas)'s three year recoupment rights will survive.
1 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 distribution and service fees.
3 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
4 The MSCI All Country World Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. Net total return indices reinvest dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
5 The Citigroup World Government Bond Index (Hedged in USD) is an unmanaged market capitalization-weighted index designed to measure the performance of fixed-rate, local currency, investment-grade sovereign bonds with a one-year minimum maturity and is hedged back to the US dollar. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The 60% MSCI All Country World Index (net)/40% Citigroup World Government Bond Index (Hedged in USD) is a unmanaged blended benchmark compiled by the Advisor. Investors should note that indices do not reflect the deduction of fees and expenses.
Prior to February 17, 2015, if an investor sold or exchanged shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged was deducted at the time of the transaction, except as noted otherwise in the prospectus. For sales or exchanges taking place on or after February 17, 2015 but prior to August 3, 2015, there was a reduction in the redemption holding period from 90 days to 30 days. Effective August 3, 2015, the 1.00% redemption fee imposed on sales or exchanges of any class of shares of the funds made during the holding periods specified in the prospectus was eliminated. Please refer to the prospectus for further information.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit www.ubs.com/us-mutualfundperformance.
24
UBS Global Allocation Fund
Portfolio statistics—December 31, 2016 (unaudited)
Top ten equity holdings1
Percentage of net assets | |||||||
Amazon.com, Inc. | 1.1 | % | |||||
Facebook, Inc., Class A | 1.0 | ||||||
British American Tobacco plc | 0.8 | ||||||
Microsoft Corp. | 0.7 | ||||||
Roche Holding AG | 0.6 | ||||||
Alphabet, Inc., Class A | 0.5 | ||||||
Royal Dutch Shell plc, Class A | 0.5 | ||||||
Toronto-Dominion Bank (The) | 0.5 | ||||||
JPMorgan Chase & Co. | 0.5 | ||||||
Deutsche Telekom AG | 0.5 | ||||||
Total | 6.7 | % |
Top ten long-term fixed income holdings1
Percentage of net assets | |||||||
U.S. Treasury Notes, 0.750%, due 02/28/18 | 1.2 | % | |||||
U.S. Treasury Notes, 1.125%, due 01/15/19 | 0.9 | ||||||
New Zealand Government Bond, 2.079%, due 09/20/25 | 0.8 | ||||||
Japan Government Twenty Year Bond, 0.400%, due 03/20/36 | 0.6 | ||||||
U.S. Treasury Notes, 2.000%, due 11/30/22 | 0.4 | ||||||
U.S. Treasury Notes, 1.125%, due 06/30/21 | 0.4 | ||||||
France Government Bond OAT, 0.500%, due 05/25/26 | 0.4 | ||||||
U.S. Treasury Notes, 1.375%, due 09/30/23 | 0.4 | ||||||
U.S. Treasury Notes, 1.625%, due 02/15/26 | 0.4 | ||||||
Japan Government Five Year Bond, 0.100%, due 12/20/19 | 0.4 | ||||||
Total | 5.9 | % |
Top five issuer breakdown by country or territory of origin1,2
Percentage of net assets | |||||||
United States | 30.2 | % | |||||
Japan | 5.8 | ||||||
United Kingdom | 4.6 | ||||||
France | 2.6 | ||||||
Germany | 2.2 | ||||||
Total | 45.4 | % |
1 The Fund's portfolio is actively managed and its composition will vary over time.
2 Figures represent the direct investments of UBS Global Allocation Fund. If a breakdown of the underlying investment companies and exchange traded funds was included, the country or territory of origin breakdown would be as follows: United States: 35.1%, Japan: 5.9 %, United Kingdom: 6.1%, France: 3.0%, and Germany: 2.4%.
25
UBS Global Allocation Fund
Industry diversification—December 31, 2016 (unaudited)1
Common stocks | Percentage of net assets | ||||||
Aerospace & defense | 0.78 | % | |||||
Airlines | 0.34 | ||||||
Auto components | 0.58 | ||||||
Automobiles | 1.12 | ||||||
Banks | 3.84 | ||||||
Beverages | 0.39 | ||||||
Biotechnology | 1.61 | ||||||
Capital markets | 0.86 | ||||||
Chemicals | 1.51 | ||||||
Communications equipment | 0.15 | ||||||
Construction & engineering | 0.19 | ||||||
Construction materials | 0.19 | ||||||
Consumer finance | 0.17 | ||||||
Diversified financial services | 0.88 | ||||||
Diversified telecommunication services | 0.99 | ||||||
Electric utilities | 0.45 | ||||||
Electrical equipment | 0.33 | ||||||
Electronic equipment, instruments & components | 0.14 | ||||||
Energy equipment & services | 0.19 | ||||||
Equity real estate investment trusts (REITs) | 0.48 | ||||||
Food & staples retailing | 1.26 | ||||||
Food products | 0.40 | ||||||
Health care equipment & supplies | 0.64 | ||||||
Health care providers & services | 1.19 | ||||||
Hotels, restaurants & leisure | 1.34 | ||||||
Household durables | 0.78 | ||||||
Industrial conglomerates | 0.91 | ||||||
Insurance | 2.00 | ||||||
Internet & direct marketing retail | 1.38 | ||||||
Internet software & services | 1.89 | ||||||
IT services | 1.32 | ||||||
Life sciences tools & services | 0.44 | ||||||
Machinery | 1.01 | ||||||
Marine | 0.21 | ||||||
Media | 0.81 | ||||||
Metals & mining | 1.26 | ||||||
Oil, gas & consumable fuels | 3.29 | ||||||
Personal products | 0.65 | ||||||
Pharmaceuticals | 1.73 | ||||||
Professional services | 0.23 | ||||||
Real estate management & development | 0.28 | ||||||
Road & rail | 0.61 | ||||||
Semiconductors & semiconductor equipment | 2.93 | ||||||
Software | 2.06 | ||||||
Specialty retail | 1.36 |
Common stocks—(Continued) | Percentage of net assets | ||||||
Technology hardware, storage & peripherals | 0.58 | % | |||||
Textiles, apparel & luxury goods | 0.16 | ||||||
Tobacco | 1.13 | ||||||
Trading companies & distributors | 0.34 | ||||||
Wireless telecommunication services | 0.66 | ||||||
Total common stocks | 48.04 | % | |||||
Bonds | |||||||
Non-U.S. government obligations | 5.30 | ||||||
U.S. treasury obligations | 6.13 | ||||||
Total bonds | 11.43 | % | |||||
Investment companies | |||||||
UBS Global Corporate Bond Relationship Fund | 10.62 | ||||||
UBS-HALO Emerging Markets Equity Relationship Fund | 7.25 | ||||||
Total investment companies | 17.87 | % | |||||
Exchange traded funds | 9.40 | ||||||
Short-term investment | 9.62 | ||||||
Options purchased | 0.19 | ||||||
Investment of cash collateral from securities loaned | 4.48 | ||||||
Total investments | 101.03 | % | |||||
Liabilities, in excess of cash and other assets | (1.03 | ) | |||||
Net assets | 100.00 | % |
1 Figures represent the breakdown of direct investments of UBS Global Allocation Fund. Figures would be different if a breakdown of the underlying investment companies and exchange funds traded was included.
26
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks: 48.04% | |||||||||||
Australia: 0.56% | |||||||||||
Rio Tinto Ltd. | 20,298 | $ | 877,418 | ||||||||
Wesfarmers Ltd. | 36,178 | 1,100,185 | |||||||||
Total Australia common stocks | 1,977,603 | ||||||||||
Austria: 0.41% | |||||||||||
Erste Group Bank AG* | 49,831 | 1,459,549 | |||||||||
Bermuda: 0.92% | |||||||||||
Jardine Matheson Holdings Ltd. | 22,000 | 1,215,500 | |||||||||
Marvell Technology Group Ltd. | 65,400 | 907,098 | |||||||||
Norwegian Cruise Line Holdings Ltd.* | 26,700 | 1,135,551 | |||||||||
Total Bermuda common stocks | 3,258,149 | ||||||||||
Canada: 1.50% | |||||||||||
Canadian Pacific Railway Ltd. | 5,264 | 751,541 | |||||||||
Husky Energy, Inc.* | 75,067 | 910,767 | |||||||||
Suncor Energy, Inc. | 54,264 | 1,774,245 | |||||||||
Toronto-Dominion Bank (The) | 37,714 | 1,860,069 | |||||||||
Total Canada common stocks | 5,296,622 | ||||||||||
Cayman Islands: 0.26% | |||||||||||
Sands China Ltd. | 206,400 | 896,986 | |||||||||
Denmark: 0.21% | |||||||||||
AP Moller—Maersk A/S, Class B | 472 | 753,195 | |||||||||
Finland: 0.18% | |||||||||||
Sampo OYJ, Class A | 14,072 | 630,881 | |||||||||
France: 1.72% | |||||||||||
Credit Agricole SA | 81,775 | 1,014,028 | |||||||||
Renault SA | 12,505 | 1,112,438 | |||||||||
Schneider Electric SE | 16,648 | 1,158,546 | |||||||||
Societe Generale SA | 29,632 | 1,458,076 | |||||||||
Thales SA | 6,610 | 641,042 | |||||||||
Vinci SA | 9,870 | 672,210 | |||||||||
Total France common stocks | 6,056,340 | ||||||||||
Germany: 2.21% | |||||||||||
Deutsche Telekom AG | 105,110 | 1,809,583 | |||||||||
Fresenius SE & Co. KGaA | 21,911 | 1,712,778 | |||||||||
Infineon Technologies AG | 36,726 | 638,271 | |||||||||
KION Group AG | 19,618 | 1,091,606 | |||||||||
MTU Aero Engines AG | 4,883 | 564,382 | |||||||||
SAP SE | 10,973 | 956,516 | |||||||||
thyssenkrupp AG | 43,295 | 1,031,806 | |||||||||
Total Germany common stocks | 7,804,942 | ||||||||||
Hong Kong: 0.61% | |||||||||||
AIA Group Ltd. | 270,917 | 1,528,483 | |||||||||
Power Assets Holdings Ltd. | 70,000 | 616,996 | |||||||||
Total Hong Kong common stocks | 2,145,479 | ||||||||||
Ireland: 1.27% | |||||||||||
Allergan plc* | 8,072 | 1,695,200 | |||||||||
ICON plc* | 15,219 | 1,144,469 |
Shares | Value | ||||||||||
Mallinckrodt plc* | 8,673 | $ | 432,089 | ||||||||
Ryanair Holdings plc ADR* | 14,492 | 1,206,604 | |||||||||
Total Ireland common stocks | 4,478,362 | ||||||||||
Italy: 1.12% | |||||||||||
Autogrill SpA | 81,581 | 737,248 | |||||||||
Banca Mediolanum SpA | 218,115 | 1,568,159 | |||||||||
Intesa Sanpaolo SpA | 635,575 | 1,623,086 | |||||||||
Total Italy common stocks | 3,928,493 | ||||||||||
Japan: 4.59% | |||||||||||
ABC-Mart, Inc. | 17,900 | 1,013,887 | |||||||||
Inpex Corp. | 91,000 | 911,752 | |||||||||
KDDI Corp. | 70,600 | 1,787,728 | |||||||||
Matsui Securities Co. Ltd. | 111,700 | 962,412 | |||||||||
Mitsui Fudosan Co. Ltd. | 43,000 | 995,208 | |||||||||
ORIX Corp. | 98,900 | 1,543,475 | |||||||||
Shin-Etsu Chemical Co. Ltd. | 19,400 | 1,505,025 | |||||||||
Sony Corp. | 63,400 | 1,776,556 | |||||||||
Sumitomo Electric Industries Ltd. | 65,800 | 949,490 | |||||||||
THK Co. Ltd. | 26,300 | 581,919 | |||||||||
Tokyo Electron Ltd. | 15,800 | 1,493,142 | |||||||||
Toyota Industries Corp. | 22,900 | 1,091,363 | |||||||||
Toyota Motor Corp. | 26,400 | 1,553,619 | |||||||||
Total Japan common stocks | 16,165,576 | ||||||||||
Jersey: 0.68% | |||||||||||
Glencore plc* | 236,557 | 808,566 | |||||||||
Shire plc | 27,715 | 1,599,866 | |||||||||
Total Jersey common stocks | 2,408,432 | ||||||||||
Netherlands: 1.41% | |||||||||||
Koninklijke Ahold Delhaize NV | 47,716 | 1,006,072 | |||||||||
Koninklijke DSM NV | 18,988 | 1,138,500 | |||||||||
LyondellBasell Industries NV, Class A | 10,500 | 900,690 | |||||||||
Unilever NV CVA | 40,295 | 1,659,123 | |||||||||
Wright Medical Group NV* | 12,236 | 281,183 | |||||||||
Total Netherlands common stocks | 4,985,568 | ||||||||||
Norway: 0.30% | |||||||||||
Telenor ASA | 71,641 | 1,070,216 | |||||||||
Singapore: 0.50% | |||||||||||
Broadcom Ltd. | 9,990 | 1,765,932 | |||||||||
Spain: 0.53% | |||||||||||
Banco Bilbao Vizcaya Argentaria SA | 19,281 | 130,180 | |||||||||
Banco Santander SA | 180,940 | 944,523 | |||||||||
Mediaset Espana Comunicacion SA | 67,223 | 789,000 | |||||||||
Total Spain common stocks | 1,863,703 | ||||||||||
Switzerland: 0.59% | |||||||||||
Roche Holding AG | 9,066 | 2,070,855 | |||||||||
United Kingdom: 4.42% | |||||||||||
Anglo American plc* | 77,247 | 1,104,311 | |||||||||
Aon plc | 5,800 | 646,874 |
27
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks—(Continued) | |||||||||||
United Kingdom—(Concluded) | |||||||||||
Ashtead Group plc | 61,411 | $ | 1,195,790 | ||||||||
BP plc | 278,367 | 1,748,231 | |||||||||
British American Tobacco plc | 51,443 | 2,929,955 | |||||||||
HSBC Holdings plc | 208,863 | 1,690,879 | |||||||||
Lloyds Banking Group plc | 759,790 | 585,322 | |||||||||
London Stock Exchange Group plc | 32,111 | 1,153,174 | |||||||||
Noble Corp. plc | 22,300 | 132,016 | |||||||||
Rio Tinto plc | 16,210 | 630,980 | |||||||||
Royal Dutch Shell plc, Class A | 67,864 | 1,875,528 | |||||||||
Tesco plc* | 322,969 | 823,319 | |||||||||
Worldpay Group plc1 | 322,267 | 1,071,940 | |||||||||
Total United Kingdom common stocks | 15,588,319 | ||||||||||
United States: 24.05% | |||||||||||
Abbott Laboratories | 15,488 | 594,894 | |||||||||
Activision Blizzard, Inc. | 14,849 | 536,197 | |||||||||
Adobe Systems, Inc.* | 3,523 | 362,693 | |||||||||
Aflac, Inc. | 8,969 | 624,242 | |||||||||
Allstate Corp. (The) | 16,385 | 1,214,456 | |||||||||
Alnylam Pharmaceuticals, Inc.* | 11,429 | 427,902 | |||||||||
Alphabet, Inc., Class A* | 2,447 | 1,939,125 | |||||||||
Alphabet, Inc., Class C* | 1,372 | 1,058,937 | |||||||||
Amazon.com, Inc.* | 4,966 | 3,723,854 | |||||||||
American Express Co. | 7,868 | 582,861 | |||||||||
Apple, Inc. | 12,472 | 1,444,507 | |||||||||
Arista Networks, Inc.* | 5,548 | 536,880 | |||||||||
Bank of America Corp. | 16,742 | 369,998 | |||||||||
Biogen, Inc.* | 1,861 | 527,742 | |||||||||
Bio-Rad Laboratories, Inc., Class A* | 2,267 | 413,229 | |||||||||
Catalent, Inc.* | 22,277 | 600,588 | |||||||||
Caterpillar, Inc. | 7,121 | 660,402 | |||||||||
CBS Corp. (Non-Voting), Class B | 14,417 | 917,210 | |||||||||
Celgene Corp.* | 9,153 | 1,059,460 | |||||||||
Centene Corp.* | 7,579 | 428,289 | |||||||||
Cigna Corp. | 4,233 | 564,640 | |||||||||
Colfax Corp.* | 17,800 | 639,554 | |||||||||
Cooper Cos., Inc. (The) | 4,063 | 710,741 | |||||||||
Danaher Corp. | 8,706 | 677,675 | |||||||||
Digital Realty Trust, Inc. | 10,000 | 982,600 | |||||||||
Ecolab, Inc. | 7,339 | 860,278 | |||||||||
Electronic Arts, Inc.* | 7,142 | 562,504 | |||||||||
Eli Lilly & Co. | 11,381 | 837,073 | |||||||||
Emergent BioSolutions, Inc.* | 9,937 | 326,331 | |||||||||
EOG Resources, Inc. | 9,073 | 917,280 | |||||||||
Estee Lauder Cos., Inc. (The), Class A | 8,443 | 645,805 | |||||||||
Expedia, Inc. | 4,171 | 472,491 | |||||||||
Facebook, Inc., Class A* | 31,763 | 3,654,333 | |||||||||
FleetCor Technologies, Inc.* | 5,969 | 844,733 | |||||||||
Fortive Corp. | 10,938 | 586,605 | |||||||||
General Electric Co. | 32,584 | 1,029,654 | |||||||||
General Motors Co. | 36,259 | 1,263,264 | |||||||||
Gilead Sciences, Inc. | 8,649 | 619,355 | |||||||||
Gulfport Energy Corp.* | 9,097 | 196,859 | |||||||||
Halliburton Co. | 9,833 | 531,867 |
Shares | Value | ||||||||||
Hess Corp. | 4,644 | $ | 289,275 | ||||||||
Home Depot, Inc. (The) | 11,640 | 1,560,691 | |||||||||
Honeywell International, Inc. | 8,390 | 971,981 | |||||||||
Integrated Device Technology, Inc.* | 19,993 | 471,035 | |||||||||
Jabil Circuit, Inc. | 21,466 | 508,100 | |||||||||
JPMorgan Chase & Co. | 21,321 | 1,839,789 | |||||||||
Kroger Co. (The) | 22,021 | 759,945 | |||||||||
Laboratory Corp. of America Holdings* | 4,682 | 601,075 | |||||||||
Laredo Petroleum, Inc.* | 52,247 | 738,773 | |||||||||
Lexicon Pharmaceuticals, Inc.*,2 | 34,642 | 479,099 | |||||||||
Lincoln National Corp. | 15,546 | 1,030,233 | |||||||||
MacroGenics, Inc.* | 4,126 | 84,335 | |||||||||
Marsh & McLennan Cos., Inc. | 10,098 | 682,524 | |||||||||
Martin Marietta Materials, Inc. | 2,972 | 658,387 | |||||||||
Mastercard, Inc., Class A | 11,443 | 1,181,490 | |||||||||
Maxim Integrated Products, Inc. | 12,058 | 465,077 | |||||||||
Medicines Co. (The)* | 13,974 | 474,278 | |||||||||
MetLife, Inc. | 12,878 | 693,995 | |||||||||
Micron Technology, Inc.* | 52,859 | 1,158,669 | |||||||||
Microsoft Corp. | 37,262 | 2,315,461 | |||||||||
Mondelez International, Inc., Class A | 31,741 | 1,407,078 | |||||||||
Morgan Stanley | 21,811 | 921,515 | |||||||||
Newell Brands, Inc. | 22,062 | 985,068 | |||||||||
NextEra Energy, Inc. | 8,228 | 982,917 | |||||||||
NIKE, Inc., Class B | 10,848 | 551,404 | |||||||||
Norfolk Southern Corp. | 5,043 | 544,997 | |||||||||
NVIDIA Corp. | 7,556 | 806,527 | |||||||||
Oasis Petroleum, Inc.* | 64,678 | 979,225 | |||||||||
ON Semiconductor Corp.* | 40,475 | 516,461 | |||||||||
O'Reilly Automotive, Inc.* | 3,885 | 1,081,623 | |||||||||
PDC Energy, Inc.* | 7,060 | 512,415 | |||||||||
PepsiCo, Inc. | 13,174 | 1,378,396 | |||||||||
Philip Morris International, Inc. | 11,597 | 1,061,009 | |||||||||
Priceline Group, Inc. (The)* | 461 | 675,854 | |||||||||
PTC, Inc.* | 10,018 | 463,533 | |||||||||
Qorvo, Inc.* | 9,476 | 499,669 | |||||||||
salesforce.com, Inc.* | 11,048 | 756,346 | |||||||||
SBA Communications Corp., Class A* | 5,741 | 592,816 | |||||||||
ServiceNow, Inc.* | 10,818 | 804,210 | |||||||||
Sherwin-Williams Co. (The) | 3,371 | 905,923 | |||||||||
Silicon Laboratories, Inc.* | 7,262 | 472,030 | |||||||||
Simon Property Group, Inc., REIT | 4,000 | 710,680 | |||||||||
Skyworks Solutions, Inc. | 6,969 | 520,306 | |||||||||
SM Energy Co. | 21,749 | 749,905 | |||||||||
Starbucks Corp. | 18,328 | 1,017,571 | |||||||||
Take-Two Interactive Software, Inc.* | 10,436 | 514,390 | |||||||||
TG Therapeutics, Inc.*,2 | 11,329 | 52,680 | |||||||||
TJX Cos., Inc. (The) | 15,053 | 1,130,932 | |||||||||
T-Mobile US, Inc.* | 9,207 | 529,495 | |||||||||
TransDigm Group, Inc. | 1,883 | 468,792 | |||||||||
U.S. Bancorp | 10,643 | 546,731 | |||||||||
Union Pacific Corp. | 8,291 | 859,611 | |||||||||
United Technologies Corp. | 9,940 | 1,089,623 | |||||||||
UnitedHealth Group, Inc. | 5,520 | 883,421 | |||||||||
Verisk Analytics, Inc.* | 9,803 | 795,709 | |||||||||
Vertex Pharmaceuticals, Inc.* | 6,686 | 492,558 |
28
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks—(Concluded) | |||||||||||
United States—(Concluded) | |||||||||||
Visa, Inc., Class A | 20,141 | $ | 1,571,401 | ||||||||
Walgreens Boots Alliance, Inc. | 9,228 | 763,709 | |||||||||
Walt Disney Co. (The) | 10,925 | 1,138,603 | |||||||||
Western Digital Corp. | 8,977 | 609,987 | |||||||||
Xilinx, Inc. | 9,942 | 600,199 | |||||||||
Yum! Brands, Inc. | 10,459 | 662,368 | |||||||||
Yum! China Holdings, Inc.* | 10,459 | 273,189 | |||||||||
Total United States common stocks | 84,792,196 | ||||||||||
Total common stocks (cost $159,932,342) | 169,397,398 | ||||||||||
Face amount | |||||||||||
Bonds: 11.43% | |||||||||||
Non-U.S. government obligations: 5.30% | |||||||||||
Australia: 0.22% | |||||||||||
Commonwealth of Australia, 4.500%, due 04/15/203 | AUD | 625,000 | 486,205 | ||||||||
4.500%, due 04/21/333 | 122,000 | 102,152 | |||||||||
5.500%, due 04/21/233 | 230,000 | 195,557 | |||||||||
783,914 | |||||||||||
Austria: 0.07% | |||||||||||
Republic of Austria, 1.200%, due 10/20/251,3 | EUR | 87,000 | 99,090 | ||||||||
3.150%, due 06/20/441,3 | 86,000 | 132,119 | |||||||||
231,209 | |||||||||||
Belgium: 0.07% | |||||||||||
Kingdom of Belgium, 3.750%, due 06/22/453 | 161,000 | 258,671 | |||||||||
Canada: 0.07% | |||||||||||
Government of Canada, 2.250%, due 06/01/25 | CAD | 206,000 | 160,861 | ||||||||
2.750%, due 12/01/64 | 82,000 | 69,127 | |||||||||
229,988 | |||||||||||
Finland: 0.03% | |||||||||||
Republic of Finland, 0.500%, due 04/15/261,3 | EUR | 85,000 | 90,719 | ||||||||
France: 0.85% | |||||||||||
France Government Bond OAT, 0.500%, due 05/25/263 | 1,462,000 | 1,523,708 | |||||||||
2.500%, due 05/25/303 | 625,000 | 785,014 | |||||||||
3.250%, due 05/25/453 | 481,000 | 696,768 | |||||||||
3,005,490 | |||||||||||
Ireland: 0.01% | |||||||||||
Republic of Ireland, 2.000%, due 02/18/453 | 28,000 | 31,572 |
Face amount | Value | ||||||||||
Italy: 0.75% | |||||||||||
Italy Buoni Poliennali Del Tesoro, 0.950%, due 03/15/23 | EUR | 1,020,000 | $ | 1,067,561 | |||||||
1.650%, due 03/01/321,3 | 60,000 | 59,185 | |||||||||
2.500%, due 12/01/24 | 142,000 | 160,962 | |||||||||
4.000%, due 02/01/373 | 379,000 | 490,546 | |||||||||
4.250%, due 02/01/193 | 720,000 | 826,338 | |||||||||
4.750%, due 09/01/441,3 | 25,000 | 35,594 | |||||||||
2,640,186 | |||||||||||
Japan: 1.16% | |||||||||||
Japan Government Five Year Bond, 0.100%, due 12/20/19 | JPY | 155,000,000 | 1,336,017 | ||||||||
Japan Government Twenty Year Bond, 0.400%, due 03/20/36 | 231,350,000 | 1,928,098 | |||||||||
2.300%, due 06/20/27 | 80,000,000 | 843,828 | |||||||||
4,107,943 | |||||||||||
Netherlands: 0.06% | |||||||||||
Kingdom of the Netherlands, 2.750%, due 01/15/471,3 | EUR | 139,000 | 212,088 | ||||||||
New Zealand: 0.76% | |||||||||||
New Zealand Government Bond, 2.079%, due 09/20/253,4 | NZD | 3,873,844 | 2,697,783 | ||||||||
Spain: 1.07% | |||||||||||
Kingdom of Spain, 2.150%, due 10/31/251,3 | EUR | 515,000 | 581,280 | ||||||||
3.450%, due 07/30/661,3 | 350,000 | 402,973 | |||||||||
3.750%, due 10/31/18 | 920,000 | 1,040,226 | |||||||||
4.200%, due 01/31/371,3 | 404,000 | 565,920 | |||||||||
4.800%, due 01/31/241,3 | 880,000 | 1,174,170 | |||||||||
3,764,569 | |||||||||||
United Kingdom: 0.18% | |||||||||||
UK Gilt, 2.000%, due 09/07/253 | GBP | 487,000 | 644,952 | ||||||||
Total Non-U.S. government obligations (cost $19,789,743) | 18,699,084 | ||||||||||
U.S. treasury obligations: 6.13% | |||||||||||
U.S. Treasury Bonds, 2.500%, due 02/15/46 | $ | 590,000 | 522,985 | ||||||||
2.750%, due 11/15/42 | 885,000 | 834,097 | |||||||||
2.875%, due 05/15/43 | 1,045,000 | 1,007,196 | |||||||||
2.875%, due 08/15/45 | 50,000 | 48,003 | |||||||||
3.000%, due 11/15/45 | 275,000 | 270,605 | |||||||||
8.000%, due 11/15/21 | 645,000 | 825,365 | |||||||||
U.S. Treasury Notes, 0.750%, due 02/28/18 | 4,375,000 | 4,364,404 | |||||||||
0.875%, due 10/15/18 | 510,000 | 507,438 | |||||||||
1.125%, due 01/15/19 | 3,210,000 | 3,203,098 | |||||||||
1.125%, due 06/30/21 | 1,580,000 | 1,527,783 | |||||||||
1.250%, due 03/31/21 | 1,065,000 | 1,039,501 |
29
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face amount | Value | ||||||||||
Bonds—(Concluded) | |||||||||||
U.S. treasury obligations—(Concluded) | |||||||||||
1.375%, due 10/31/20 | $ | 780,000 | $ | 769,837 | |||||||
1.375%, due 09/30/23 | 1,500,000 | 1,418,730 | |||||||||
1.625%, due 12/31/19 | 770,000 | 773,382 | |||||||||
1.625%, due 02/15/26 | 1,490,000 | 1,390,082 | |||||||||
1.750%, due 05/15/23 | 680,000 | 661,524 | |||||||||
2.000%, due 11/30/22 | 1,575,000 | 1,562,592 | |||||||||
3.125%, due 04/30/17 | 895,000 | 902,514 | |||||||||
Total U.S. treasury obligations (cost $22,101,754) | 21,629,136 | ||||||||||
Total bonds (cost $41,891,497) | 40,328,220 | ||||||||||
Shares | |||||||||||
Exchange traded funds: 9.40% | |||||||||||
iShares Edge MSCI Minimum Volatility Emerging Markets ETF | 331,200 | 16,198,992 | |||||||||
iShares JP Morgan USD Emerging Markets Bond ETF2 | 153,700 | 16,940,814 | |||||||||
Total exchange traded funds (cost $34,157,426) | 33,139,806 | ||||||||||
Investment companies: 17.87% | |||||||||||
UBS Global Corporate Bond Relationship Fund*,5 | 2,645,316 | 37,443,658 | |||||||||
UBS-HALO Emerging Markets Equity Relationship Fund*,5 | 695,083 | 25,575,709 | |||||||||
Total investment companies (cost $60,728,387) | 63,019,367 |
Shares | Value | ||||||||||
Short-term investment: 9.62% | |||||||||||
Investment company: 9.62% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $33,919,965) | 33,919,965 | $ | 33,919,965 | ||||||||
Number of contracts | |||||||||||
Options purchased: 0.19% | |||||||||||
Put options: 0.19% | |||||||||||
S&P 500 Index, strike @ USD 2,200.00, expires March 2017 (cost $520,215) | 158 | 663,600 | |||||||||
Shares | |||||||||||
Investment of cash collateral from securities loaned: 4.48% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $15,810,979) | 15,810,979 | 15,810,979 | |||||||||
Total investments: 101.03% (cost $346,960,811) | 356,279,335 | ||||||||||
Liabilities, in excess of cash and other assets: (1.03)% | (3,633,525 | ) | |||||||||
Net assets: 100.00% | $ | 352,645,810 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 20,714,788 | |||||
Gross unrealized depreciation | (11,396,264 | ) | |||||
Net unrealized appreciation of investments | $ | 9,318,524 |
For a listing of defined portfolio acronyms, counterparty abbreviations and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 77. Portfolio footnotes begin on page 34.
30
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Forward foreign currency contracts
Counterparty | Contracts to deliver | In exchange for | Maturity date | Unrealized appreciation/ (depreciation) | |||||||||||||||
CITI | RUB | 129,375,388 | USD | 2,076,152 | 03/27/17 | $ | 3,263 | ||||||||||||
CITI | THB | 84,200,000 | USD | 2,364,836 | 03/27/17 | 14,468 | |||||||||||||
GSI | CNY | 35,065,000 | USD | 4,985,781 | 03/27/17 | (43,200 | ) | ||||||||||||
GSI | EUR | 12,330,000 | USD | 13,152,016 | 03/27/17 | 117,924 | |||||||||||||
GSI | USD | 5,941,315 | INR | 404,960,000 | 03/27/17 | (30,393 | ) | ||||||||||||
HSBC | TWD | 276,200,000 | USD | 8,722,289 | 03/27/17 | 120,131 | |||||||||||||
JPMCB | AUD | 460,000 | USD | 343,945 | 03/27/17 | 12,646 | |||||||||||||
JPMCB | GBP | 2,765,000 | USD | 3,524,562 | 03/27/17 | 109,866 | |||||||||||||
JPMCB | HKD | 8,430,000 | USD | 1,086,463 | 03/27/17 | (962 | ) | ||||||||||||
JPMCB | JPY | 304,300,000 | USD | 2,653,154 | 03/27/17 | 38,619 | |||||||||||||
JPMCB | NOK | 10,910,000 | USD | 1,295,001 | 03/27/17 | 30,922 | |||||||||||||
JPMCB | USD | 1,818,966 | CHF | 1,855,000 | 03/27/17 | 12,160 | |||||||||||||
JPMCB | USD | 901,323 | HKD | 7,000,000 | 03/27/17 | 1,640 | |||||||||||||
JPMCB | USD | 553,431 | ILS | 2,100,000 | 03/27/17 | (6,987 | ) | ||||||||||||
JPMCB | USD | 1,793,445 | JPY | 210,700,000 | 03/27/17 | 16,882 | |||||||||||||
JPMCB | USD | 1,619,412 | SGD | 2,310,000 | 03/27/17 | (24,917 | ) | ||||||||||||
MSC | KRW | 2,106,000,000 | USD | 1,801,848 | 03/27/17 | 57,985 | |||||||||||||
MSC | NZD | 26,415,000 | USD | 18,965,336 | 03/27/17 | 660,060 | |||||||||||||
MSC | USD | 7,693,116 | COP | 23,385,150,000 | 03/27/17 | (9,925 | ) | ||||||||||||
MSC | USD | 10,563,092 | MXN | 216,240,000 | 03/27/17 | (245,735 | ) | ||||||||||||
SSB | CHF | 9,285,000 | USD | 9,229,778 | 03/27/17 | 64,275 | |||||||||||||
WBC | CAD | 11,440,000 | USD | 8,733,678 | 03/27/17 | 204,844 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 1,103,566 |
31
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Futures contracts
Expiration date | Cost/ (proceeds) | Value | Unrealized appreciation/ (depreciation) | ||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Ultra Bond, 40 contracts (USD) | March 2017 | $ | 6,477,718 | $ | 6,410,000 | $ | (67,718 | ) | |||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
2 Year US Treasury Notes, 209 contracts (USD) | March 2017 | (45,338,901 | ) | (45,287,688 | ) | 51,213 | |||||||||||||
10 Year US Treasury Notes, 58 contracts (USD) | March 2017 | (7,150,834 | ) | (7,208,313 | ) | (57,479 | ) | ||||||||||||
Index futures buy contracts: | |||||||||||||||||||
EURO STOXX 50 Index, 479 contracts (EUR) | March 2017 | 16,222,905 | 16,523,268 | 300,363 | |||||||||||||||
Russell 1000 Value Index, 210 contracts (USD) | March 2017 | 11,666,004 | 11,588,850 | (77,154 | ) | ||||||||||||||
TOPIX Index, 27 contracts (JPY) | March 2017 | 3,381,137 | 3,506,823 | 125,686 | |||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
E-mini S&P 500 Index, 16 contracts (USD) | March 2017 | (1,800,404 | ) | (1,788,960 | ) | 11,444 | |||||||||||||
FTSE 100 Index, 69 contracts (GBP) | March 2017 | (5,853,578 | ) | (5,995,010 | ) | (141,432 | ) | ||||||||||||
Mini MSCI Emerging Markets Index, 124 contracts (USD) | March 2017 | (5,412,848 | ) | (5,325,180 | ) | 87,668 | |||||||||||||
S&P/Toronto Stock Exchange 60 Index, 62 contracts (CAD) | March 2017 | (8,285,373 | ) | (8,283,290 | ) | 2,083 | |||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
Australian Government 3 Year Bond, 193 contracts (AUD) | March 2017 | 15,564,668 | 15,524,973 | (39,695 | ) | ||||||||||||||
Canadian Government 10 Year Bond, 372 contracts (CAD) | March 2017 | 38,488,806 | 38,104,614 | (384,192 | ) | ||||||||||||||
Euro Schatz, 33 contracts (EUR) | March 2017 | 3,894,108 | 3,900,668 | 6,560 | |||||||||||||||
Long Gilt, 46 contracts (GBP) | March 2017 | 7,006,659 | 7,133,353 | 126,694 | |||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
Euro-Bund, 105 contracts (EUR) | March 2017 | (18,047,926 | ) | (18,143,211 | ) | (95,285 | ) | ||||||||||||
10 Year Mini Japanese Government Bond, 21 contracts (JPY) | March 2017 | (2,701,000 | ) | (2,700,218 | ) | 782 | |||||||||||||
Net unrealized depreciation on futures contracts | $ | (150,462 | ) |
Centrally cleared credit default swap agreements on credit indices—sell protection6
Referenced obligation | Notional amount | Termination date | Payments made by the Fund7 | Value | Unrealized appreciation | Credit spread8 | |||||||||||||||||||||
CDX.NA.HY Series 27 Index | USD | 25,200,000 | 12/20/21 | 5.000 | % | $ | 1,600,900 | $ | 518,189 | 3.553 | % |
Options written
Expiration date | Premiums received | Value | |||||||||||||
Put options | |||||||||||||||
S&P 500 Index, 158 contracts, strike @ USD 1,975.00 | March 2017 | $ | 126,005 | $ | (169,850 | ) |
32
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Options written activity for the period ended December 31, 2016 was as follows:
Number of contracts | Premiums received | ||||||||||
Call and/or put options outstanding at June 30, 2016 | 891 | $ | 171,748 | ||||||||
Call and/or put options written | 158 | 126,005 | |||||||||
Call and/or put options expired prior to exercise | (891 | ) | (171,748 | ) | |||||||
Call and/or put options outstanding at December 31, 2016 | 158 | $ | 126,005 |
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of December 31, 2016 in valuing the Fund's investments. Certain investments that are measured at fair value using the net asset value per share practical expedient (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation to the amounts presented in the Portfolio of investments.
Description | Investments measured at fair value using the net asset value per share (or its equivalent) practical expedient | Unadjusted quoted prices in active markets for identical investments (Level 1) | Other significant observable inputs (Level 2) | Unobservable inputs (Level 3) | Total | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Common stocks | $ | — | $ | 169,397,398 | $ | — | $ | — | $ | 169,397,398 | |||||||||||||
Non-U.S. government obligations | — | — | 18,699,084 | — | 18,699,084 | ||||||||||||||||||
U.S. treasury obligations | — | — | 21,629,136 | — | 21,629,136 | ||||||||||||||||||
Exchange traded funds | — | 33,139,806 | — | — | 33,139,806 | ||||||||||||||||||
Investment companies | 63,019,367 | — | — | — | 63,019,367 | ||||||||||||||||||
Short-term investment | — | 33,919,965 | — | — | 33,919,965 | ||||||||||||||||||
Options purchased | — | 663,600 | — | — | 663,600 | ||||||||||||||||||
Investment of cash collateral from securities loaned | — | 15,810,979 | — | — | 15,810,979 | ||||||||||||||||||
Forward foreign currency contracts | — | — | 1,465,685 | — | 1,465,685 | ||||||||||||||||||
Futures contracts | — | 712,493 | — | — | 712,493 | ||||||||||||||||||
Swap agreements, at value | — | — | 1,600,900 | — | 1,600,900 | ||||||||||||||||||
Total | $ | 63,019,367 | $ | 253,644,241 | $ | 43,394,805 | $ | — | $ | 360,058,413 | |||||||||||||
Liabilities | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | — | $ | (362,119 | ) | $ | — | $ | (362,119 | ) | |||||||||||
Futures contracts | — | (862,955 | ) | — | — | (862,955 | ) | ||||||||||||||||
Options written | — | (169,850 | ) | — | — | (169,850 | ) | ||||||||||||||||
Total | $ | — | $ | (1,032,805 | ) | $ | (362,119 | ) | $ | — | $ | (1,394,924 | ) |
At December 31, 2016, there were no transfers between Level 1 and Level 2. At June 30, 2016, $81,454,809 of foreign investments, including futures contracts, and $(2,911,305) of futures contracts were classified within Level 2 of the fair value hierarchy pursuant to the Fund's fair valuation procedures for foreign portfolio holdings.
33
UBS Global Allocation Fund
Portfolio of investments
December 31, 2016 (unaudited)
Portfolio footnotes
* Non-income producing security.
1 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
2 Security, or portion thereof, was on loan at the period end.
3 Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
4 Debt security whose principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. The interest rate paid by the securities is fixed, while the principal value rises or falls based on changes in an index. Thus, if inflation occurs, the principal and interest payments on the securities are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest payments decrease, although the securities' principal amounts will not drop below their face amounts at maturity. In exchange for the inflation protection, the securities generally pay lower interest rates than typical government securities from the issuer's country. Only if inflation occurs will securities offer a higher real yield than a conventional security of the same maturity.
5 The table below details the Fund's investments in funds advised by the same Advisor as the Fund. The Advisor does not earn a management fee from the affiliated UBS Relationship Funds.
Security description | Value 06/30/16 | Purchases during the six months ended 12/31/16 | Sales during the six months ended 12/31/16 | Net realized gain during the six months ended 12/31/16 | Change in net unrealized appreciation/ (depreciation) during the six months ended 12/31/16 | Value 12/31/16 | Net income earned from affiliate for the six months ended 12/31/16 | ||||||||||||||||||||||||
UBS Global Corporate Bond Relationship Fund | $ | 40,307,836 | $ | — | $ | 3,000,000 | $ | 187,477 | $ | (51,655 | ) | $ | 37,443,658 | $ | — | ||||||||||||||||
UBS-HALO Emerging Markets Equity Relationship Fund | 27,386,277 | — | 4,000,000 | 137,563 | 2,051,869 | 25,575,709 | — | ||||||||||||||||||||||||
$ | 67,694,113 | $ | — | $ | 7,000,000 | $ | 325,040 | $ | 2,000,214 | $ | 63,019,367 | $ | — |
6 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced obligation.
7 Payments made or received are based on the notional amount.
8 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity. Credit spreads are unaudited.
See accompanying notes to financial statements.
34
UBS International Sustainable Equity Fund
Portfolio performance
For the six months ended December 31, 2016, Class A shares of UBS International Sustainable Equity Fund (the "Fund") returned 4.95% (Class A shares returned -0.84% after the deduction of the maximum sales charge), while Class P shares returned 5.09%. The Fund's benchmark, the MSCI World ex USA Index (net) (the "Index"), returned 5.91%. (Class P shares have lower expenses than other share classes in the series. Returns for all share classes over various time periods are shown on page 37; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund posted a positive absolute return and underperformed its benchmark during the reporting period, primarily due to sector allocation. Stock selection was a drag on results, albeit to a small extent.
Portfolio performance summary1
What worked:
• Stock selection in the consumer discretionary and financials sectors contributed to performance.
• Norsk Hydro is an aluminum manufacturer and renewable energy producer. The company benefited from higher growth expectations, as well as expectations of increased US infrastructure investments following Donald Trump's election in the US.
• Sumitomo Mitsui Financial Group is a Japanese bank holding/financial services company. The company presented a new medium-term plan, including improvements in governance, capital allocation policy and headcount reduction.
• Ashtead Group is a construction and industrial equipment rental company with networks in the US and UK. Ashtead Group has a strong financial position and, compared with smaller competitors, benefits from better buying power and fleet availability. We expect the non-residential construction market to continue to grow in the US, and Ashtead Group is expected to benefit with its dominant position in the tool rental market.
• Nordea Bank is a universal pan-Nordic bank with a diversified business model. The management team increased the company's dividend distribution rate and currently offers a 12% return on equity, which is expected to improve due to additional cost cutting. A higher-than-expected capital ratio for the third quarter of 2016 improved investors' confidence in the dividend policy.
• From a sector allocation perspective, average underweights to consumer staples and utilities contributed to the Fund's performance. On average, overweights to information technology and financials were also beneficial for results.
What didn't work:
• Stock selection in the energy, information technology and consumer staples sectors detracted from performance during the reporting period.
• Capita provides technology and back-office support solutions for businesses and public services. The UK-based company suffered from the "Brexit" vote and expectations of further cuts in public spending. We met with the new Chairman in October 2016 to understand the Board's view on its current challenges and its strategic position, which reaffirmed our positive longer-term outlook for the company.
1 For a detailed commentary on the market environment in general during the reporting period, see pages 3-4.
35
UBS International Sustainable Equity Fund
• Santos Limited is a gas producer with operations in Australia, Papua New Guinea, Malaysia, Indonesia and Vietnam. Highly leveraged, the company suffered from the recent low oil-price environment but delivered on cost cutting and divestment initiatives in 2016. The company shows strong efforts to manage its environmental impact and performs well on safety metrics.
• KDDI Corp. provides a full range of telecommunication services in Japan, from fixed line to cellular. The company presented mixed results during the reporting period as the number of subscribers declined. Despite lower revenue due to pressure for lower tariff plans, we expect lower operating expenditures that lead to higher margins. We also expect a continued increase in its dividend pay-out.
• Average overweights to the healthcare and real estate sectors, as well as underweights to the consumer discretionary and energy sectors, detracted from the Fund's performance during the reporting period.
Portfolio highlights
• Zurich Insurance provides a full range of insurance services, as well as non-insurance financial products such as mutual funds. The thesis for owning Zurich Insurance is that we expect operating improvement in general insurance and cost reduction results. Zurich Insurance is a cash-driven company, with more than 2.4 billion Swiss francs in cash remittance in 2016.
• Weir Group is an engineering company providing solutions to customers in the minerals, oil and gas, and power markets. Despite short-term trading conditions, Weir Group remains a high-quality business exposed to attractive long-term structural trends. We expect its return on equity and margins to recover in the upcoming years. The company is well-managed, and profitability remained reasonable during the downturn in oil prices.
• During the reporting period, we initiated new positions in Nintendo, Tullow, SK Hynix, Koninklijke Ahold Delhaize, Bank Central Asia and Cia de Saneamento Basico do Estado de Sao Paulo. We sold the Fund's positions in NXP Semiconductor, Olympus, Mahindra & Mahindra, Industrial and Commercial Bank of China, ARM and Banco Bilbao Vizcaya Argentaria during the reporting period.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2016. The views and opinions in the letter were current as of February 17, 2017. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our website at www.ubs.com/am-us.
36
UBS International Sustainable Equity Fund
Average annual total returns for periods ended 12/31/16 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | 4.95 | % | (1.07 | )% | 7.05 | % | 0.83 | % | |||||||||||
Class C2 | 4.57 | (1.81 | ) | 6.25 | 0.07 | ||||||||||||||
Class P3 | 5.09 | (0.80 | ) | 7.31 | 1.08 | ||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (0.84 | )% | (6.55 | )% | 5.84 | % | 0.26 | % | |||||||||||
Class C2 | 3.57 | (2.78 | ) | 6.25 | 0.07 | ||||||||||||||
MSCI World ex USA Index (net)4 | 5.91 | 2.75 | 6.07 | 0.86 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2016 prospectuses were as follows: Class A—2.37% and 1.25%; Class C—3.15% and 2.00%; Class P—2.12% and 1.00%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. UBS Asset Management (Americas) Inc., the Fund's investment advisor ("UBS AM (Americas)" or the "Advisor"), has agreed irrevocably to waive its fees and reimburse certain expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) do not exceed 1.25% for Class A shares, 2.00% for Class C shares and 1.00% for Class P shares. This fee waiver and expense arrangement may only be amended or terminated by shareholders.
1 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 distribution and service fees.
3 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
4 The MSCI World ex USA Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets excluding the United States. Net total return indices reinvest dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
Prior to February 17, 2015, if an investor sold or exchanged shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged was deducted at the time of the transaction, except as noted otherwise in the prospectus. For sales or exchanges taking place on or after February 17, 2015 but prior to August 3, 2015, there was a reduction in the redemption holding period from 90 days to 30 days. Effective August 3, 2015, the 1.00% redemption fee imposed on sales or exchanges of any class of shares of the funds made during the holding periods specified in the prospectus was eliminated. Please refer to the prospectus for further information.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit www.ubs.com/us-mutualfundperformance.
37
UBS International Sustainable Equity Fund
Portfolio statistics and industry diversification—December 31, 2016 (unaudited)
1 The Fund's portfolio is actively managed and its composition will vary over time.
Top ten holdings1
Percentage of net assets | |||||||
Zurich Insurance Group AG | 3.0 | % | |||||
Sumitomo Mitsui Financial Group, Inc. | 2.7 | ||||||
Koninklijke DSM NV | 2.6 | ||||||
Prudential plc | 2.6 | ||||||
Weir Group plc (The) | 2.6 | ||||||
LyondellBasell Industries NV, Class A | 2.5 | ||||||
Norsk Hydro ASA | 2.5 | ||||||
Mirvac Group, REIT | 2.6 | ||||||
Nordea Bank AB | 2.5 | ||||||
Toyota Motor Corp. | 2.5 | ||||||
Total | 26.1 | % |
Top five issuer breakdown by country or territory of origin1
Percentage of net assets | |||||||
Japan | 17.6 | % | |||||
United Kingdom | 13.9 | ||||||
Germany | 10.0 | ||||||
Netherlands | 9.4 | ||||||
France | 5.8 | ||||||
Total | 56.7 | % |
Common stocks | Percentage of net assets | ||||||
Airlines | 1.37 | % | |||||
Auto components | 1.20 | ||||||
Automobiles | 4.49 | ||||||
Banks | 12.79 | ||||||
Biotechnology | 1.90 | ||||||
Building products | 1.21 | ||||||
Chemicals | 7.50 | ||||||
Construction materials | 0.63 | ||||||
Diversified telecommunication services | 1.01 | ||||||
Electrical equipment | 1.53 | ||||||
Electronic equipment, instruments & components | 0.78 | ||||||
Equity real estate investment trusts (REITs) | 2.54 | ||||||
Food & staples retailing | 0.95 | ||||||
Food products | 1.01 | ||||||
Health care equipment & supplies | 1.63 | ||||||
Household durables | 1.04 | ||||||
Household products | 2.27 | ||||||
Insurance | 10.25 | ||||||
IT services | 0.90 | ||||||
Machinery | 5.25 | ||||||
Marine | 2.44 | ||||||
Media | 2.43 | ||||||
Metals & mining | 2.54 | ||||||
Oil, gas & consumable fuels | 4.86 | ||||||
Personal products | 3.29 | ||||||
Pharmaceuticals | 6.35 | ||||||
Professional services | 1.16 | ||||||
Real estate management & development | 1.36 | ||||||
Semiconductors & semiconductor equipment | 3.44 | ||||||
Software | 2.62 | ||||||
Technology hardware, storage & peripherals | 1.45 | ||||||
Trading companies & distributors | 1.93 | ||||||
Water utilities | 1.15 | ||||||
Wireless telecommunication services | 2.11 | ||||||
Total common stocks | 97.38 | % | |||||
Preferred stock | 1.18 | ||||||
Short-term investment | 1.10 | ||||||
Total investments | 99.66 | % | |||||
Cash and other assets, less liabilities | 0.34 | ||||||
Net assets | 100.00 | % |
38
UBS International Sustainable Equity Fund
Portfolio of Investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks: 97.38% | |||||||||||
Australia: 4.46% | |||||||||||
Mirvac Group, REIT | 398,667 | $ | 612,797 | ||||||||
Santos Ltd. | 159,907 | 463,895 | |||||||||
Total Australia common stocks | 1,076,692 | ||||||||||
Brazil: 1.15% | |||||||||||
Cia de Saneamento Basico do Estado de Sao Paulo* | 31,500 | 278,639 | |||||||||
China: 2.38% | |||||||||||
Ping An Insurance Group Co. of China Ltd., H Shares | 115,000 | 575,408 | |||||||||
Denmark: 3.14% | |||||||||||
AP Moller—Maersk A/S, Class B | 369 | 588,832 | |||||||||
Novo Nordisk A/S, Class B | 4,705 | 169,680 | |||||||||
Total Denmark common stocks | 758,512 | ||||||||||
France: 5.81% | |||||||||||
AXA SA | 10,011 | 252,756 | |||||||||
Ingenico Group SA | 2,352 | 187,841 | |||||||||
Sanofi | 3,764 | 304,691 | |||||||||
Schneider Electric SE | 5,307 | 369,318 | |||||||||
Valeo SA | 5,031 | 289,208 | |||||||||
Total France common stocks | 1,403,814 | ||||||||||
Germany: 8.77% | |||||||||||
Bayerische Motoren Werke AG | 5,184 | 484,303 | |||||||||
Carl Zeiss Meditec AG | 10,716 | 394,807 | |||||||||
Infineon Technologies AG | 19,461 | 338,218 | |||||||||
Merck KGaA | 4,370 | 456,098 | |||||||||
SAP SE | 5,106 | 445,090 | |||||||||
Total Germany common stocks | 2,118,516 | ||||||||||
Hong Kong: 1.36% | |||||||||||
Sun Hung Kai Properties Ltd. | 26,000 | 328,583 | |||||||||
India: 2.18% | |||||||||||
ICICI Bank Ltd. ADR | 41,400 | 310,086 | |||||||||
Infosys Ltd. ADR | 14,600 | 216,518 | |||||||||
Total India common stocks | 526,604 | ||||||||||
Indonesia: 2.87% | |||||||||||
Bank Central Asia Tbk. PT | 469,500 | 540,156 | |||||||||
Indocement Tunggal Prakarsa Tbk. PT | 133,000 | 152,028 | |||||||||
Total Indonesia common stocks | 692,184 | ||||||||||
Italy: 2.26% | |||||||||||
Intesa Sanpaolo SpA | 214,097 | 546,746 | |||||||||
Japan: 17.56% | |||||||||||
Astellas Pharma, Inc. | 12,500 | 173,636 | |||||||||
Canon, Inc. | 12,400 | 349,587 | |||||||||
Kao Corp. | 6,700 | 317,645 | |||||||||
KDDI Corp. | 20,100 | 508,971 | |||||||||
Kubota Corp. | 23,400 | 334,057 | |||||||||
Nintendo Co. Ltd. | 900 | 188,971 | |||||||||
Panasonic Corp. | 24,700 | 251,385 | |||||||||
Shin-Etsu Chemical Co. Ltd. | 4,300 | 333,588 |
Shares | Value | ||||||||||
Sumitomo Mitsui Financial Group, Inc. | 16,900 | $ | 644,911 | ||||||||
THK Co. Ltd. | 14,000 | 309,767 | |||||||||
Toyota Motor Corp. | 10,200 | 600,262 | |||||||||
Unicharm Corp. | 10,500 | 229,765 | |||||||||
Total Japan common stocks | 4,242,545 | ||||||||||
Jersey: 1.90% | |||||||||||
Shire plc | 7,941 | 458,399 | |||||||||
Netherlands: 9.35% | |||||||||||
ASML Holding NV | 2,684 | 301,320 | |||||||||
Koninklijke Ahold Delhaize NV | 10,948 | 230,834 | |||||||||
Koninklijke DSM NV | 10,591 | 635,025 | |||||||||
LyondellBasell Industries NV, Class A | 7,163 | 614,442 | |||||||||
Unilever NV CVA | 11,572 | 476,470 | |||||||||
Total Netherlands common stocks | 2,258,091 | ||||||||||
Norway: 5.69% | |||||||||||
Norsk Hydro ASA | 128,270 | 613,472 | |||||||||
Statoil ASA | 28,294 | 519,003 | |||||||||
Telenor ASA | 16,287 | 243,305 | |||||||||
Total Norway common stocks | 1,375,780 | ||||||||||
South Korea: 0.80% | |||||||||||
SK Hynix, Inc.* | 5,200 | 192,449 | |||||||||
Spain: 4.25% | |||||||||||
Banco Bilbao Vizcaya Argentaria SA | 65,325 | 441,055 | |||||||||
Mediaset Espana Comunicacion SA | 50,004 | 586,899 | |||||||||
Total Spain common stocks | 1,027,954 | ||||||||||
Sweden: 3.72% | |||||||||||
Assa Abloy AB, Class B | 15,787 | 293,019 | |||||||||
Nordea Bank AB | 54,571 | 606,771 | |||||||||
Total Sweden common stocks | 899,790 | ||||||||||
Switzerland: 4.79% | |||||||||||
Novartis AG | 2,520 | 183,376 | |||||||||
Roche Holding AG | 1,079 | 246,465 | |||||||||
Zurich Insurance Group AG* | 2,643 | 727,779 | |||||||||
Total Switzerland common stocks | 1,157,620 | ||||||||||
Taiwan: 1.01% | |||||||||||
Uni-President Enterprises Corp. | 147,000 | 243,563 | |||||||||
United Kingdom: 13.93% | |||||||||||
Ashtead Group plc | 23,946 | 466,275 | |||||||||
Aviva plc | 47,919 | 287,245 | |||||||||
Capita plc | 42,758 | 279,810 | |||||||||
Croda International plc | 5,824 | 229,393 | |||||||||
easyJet plc | 26,770 | 331,563 | |||||||||
Prudential plc | 31,645 | 634,714 | |||||||||
Reckitt Benckiser Group plc | 3,760 | 319,085 | |||||||||
Tullow Oil plc* | 50,000 | 192,686 | |||||||||
Weir Group plc (The) | 26,821 | 624,724 | |||||||||
Total United Kingdom common stocks | 3,365,495 | ||||||||||
Total common stocks (cost $24,088,207) | 23,527,384 |
39
UBS International Sustainable Equity Fund
Portfolio of Investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Preferred stock: 1.18% | |||||||||||
Germany: 1.18% | |||||||||||
Jungheinrich AG (cost $309,454) | 9,900 | $ | 284,083 | ||||||||
Short-term investment: 1.10% | |||||||||||
Investment company: 1.10% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $266,851) | 266,851 | 266,851 | |||||||||
Total investments: 99.66% (cost $24,664,512) | 24,078,318 | ||||||||||
Cash and other assets, less liabilities: 0.34% | 81,976 | ||||||||||
Net assets: 100.00% | $ | 24,160,294 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 1,339,070 | |||||
Gross unrealized depreciation | (1,925,264 | ) | |||||
Net unrealized depreciation of investments | $ | (586,194 | ) |
For a listing of defined portfolio acronyms, counterparty abbreviations and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 77. Portfolio footnotes begin below.
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of December 31, 2016 in valuing the Fund's investments. In the event a Fund holds investments for which fair value is measured using the NAV per share practical expedient (or its equivalent), a separate column will be added to the fair value hierarchy table; this is intended to permit reconciliation to the amounts presented in the Portfolio of investments.
Description | Unadjusted quoted prices in active markets for identical investments (Level 1) | Other significant observable inputs (Level 2) | Unobservable inputs (Level 3) | Total | |||||||||||||||
Assets | |||||||||||||||||||
Common stocks | $ | 23,527,384 | $ | — | $ | — | $ | 23,527,384 | |||||||||||
Preferred stock | 284,083 | — | — | 284,083 | |||||||||||||||
Short-term investment | 266,851 | — | — | 266,851 | |||||||||||||||
Total | $ | 24,078,318 | $ | — | $ | — | $ | 24,078,318 |
At December 31, 2016, there were no transfers between Level 1 and Level 2. At June 30, 2016, $21,825,231 of foreign investments were classified within Level 2 of the fair value hierarchy pursuant to the Fund's fair valuation procedures for foreign portfolio holdings.
Portfolio footnotes
* Non-income producing security.
See accompanying notes to financial statements.
40
UBS U.S. Large Cap Equity Fund
Portfolio performance
For the six months ended December 31, 2016, Class A shares of UBS U.S. Large Cap Equity Fund (the "Fund") returned 10.46% (Class A shares returned 4.40% after the deduction of the maximum sales charge), while Class P shares returned 10.55%. The Fund's benchmark, the Russell 1000 Index (the "Index"), returned 8.01% over the same time period. (Class P shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 44; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund outperformed the Index primarily due to stock selection.
Portfolio performance summary1
What worked:
• Stock selection within the information technology sector was the largest driver of outperformance during the six months ended December 31, 2016.
– Micron Technology was the top stock contributor for the reporting period. The company's outperformance was driven by a continued recovery in both DRAM and NAND Flash memory pricing. This in turn resulted from more rational supply and pricing practices in the industry, as well as increased demand for memory. Micron raised earnings guidance during the period after experiencing stronger-than-expected demand in several segments.
– Western Digital outperformed on the basis of a positive pre-earnings announcement for the September 2016 quarter. The company raised guidance on revenues, gross margins and earnings per share. It also repriced some of its debt at a lower interest rate, further boosting long-term earnings power. Western Digital also benefited from improving demand and pricing power in the NAND Flash memory market, as smartphone companies continue to offer larger configurations to their customers.
• Several financial stocks made a positive contribution to Fund performance. The sector benefited from the rise in interest rates that followed the US presidential election.
– Lincoln National rallied following a strong quarterly earnings report in which the life insurer reported solid results across its four main operating segments and indicated a greater-than-expected excess capital position. (For details, see "Portfolio highlights.")
– MetLife performed well based on the market's anticipation of potential deregulation, which should benefit insurance companies as a whole.
– US Bancorp rallied following a quarterly earnings report that indicated strong deposit growth and continued best-in-class operating margins for the company.
• In addition, stock selection in the consumer discretionary sector, as well as an underweight to utilities, contributed positively to Fund performance.
1 For a detailed commentary on the market environment in general during the reporting period, see page 3-4.
41
UBS U.S. Large Cap Equity Fund
What didn't work:
• Philip Morris was the largest detractor from Fund performance during the six months. The company's stock experienced a pullback after the results of the presidential election led to a strengthening of the US dollar. Investors are concerned that currency headwinds could affect the company going forward. (For details, see "Portfolio highlights.")
• Stock selection in the real estate sector made a negative contribution to Fund returns.
– Simon Property Group detracted from relative performance. Like many real estate investment trusts (REITs), Simon underperformed over the six months due to a "risk-on" market environment that left defensive stocks out of favor. We continue to find this name attractive. While there is downward pressure, in general, around mall traffic in the US, Simon has exposure to higher-end malls, which we believe will survive and thrive in this environment.
– Digital Realty Trust also lagged during the period. We sold out of the position before year-end 2016.
• Although the Fund benefited from strong stock selection within the energy sector, Gulfport Energy was a rare detractor for the reporting period. The company underperformed after announcing its acquisition of Vitruvian, which was not well-received by investors. The market was also concerned about the sudden shift from Gulfport's Utica core basin to a new basin, which seemed to indicate a loss of focus and overdiversification.
• The Fund's position in Alnylam Pharmaceuticals was negative for performance. The company's novel treatment for amyloidosis, an RNA-silencing platform known as Revusiran, was discontinued based on safety concerns. However, Alnylam has seven other programs in mid- to late-stage clinical trials, all of which use newer generation technologies. We continue to believe in Alnylam's platform, and we anticipate that good results will support higher stock prices.
• An overweight to consumer staples stocks and stock selection within the financial sector were negative contributors, as well.
Portfolio highlights
• Philip Morris is a leading player in the global cigarette and tobacco market. We believe the market underappreciates the persistence and predictability of the company's cash flows and its returns to shareholders. Philip Morris's regulatory and consumption risk is well-diversified across 180 markets around the globe. The company has proven its ability to accurately model demand for its products in spite of the complexities surrounding regulation, taxation and demographics.
• Mondelez International manufactures and markets snack food and beverage products worldwide. The company's cookies and chocolate products are experiencing strong category growth in developing markets. We believe Mondelez is well-positioned to benefit from its geographic exposure and strong operations in the BRICS countries (Brazil, Russia, India, China and South Africa), as well as in next wave markets like Indonesia and the Middle East. In addition, we see potential for restructuring in the company's developed markets business, which represents an attractive opportunity to improve profit margins.
42
UBS U.S. Large Cap Equity Fund
• Lincoln National continues to operate effectively despite the challenging low-interest-rate environment. Price increases in the group insurance business should improve margins, as should the fee-based accumulation businesses. We believe the market is overlooking the stable returns from the company's variable annuity business, which has never offered the more lucrative guarantees that are now causing headaches and weak results for competitors. We expect that Lincoln National will continue to use free cash flow to repurchase shares, which is accretive to book value given the stock's significant discount to book value per share.
• The fundamentally improved competitive position of General Motors allows the company to earn a return close to its cost of capital in what is still a structurally challenged industry. This is an asset-heavy company that has attractive opportunities to optimize its balance sheet, deploy capital strategically and increase operating efficiency. The demand cycle for autos appears to have room to run for several years, barring a significant decline in global growth. GM's product refresh cycle should boost medium-term demand, pricing and brand image.
• The Walt Disney Company has spent considerable capital recently on strategic acquisitions like Lucasfilm and Marvel, as well as capital projects like new cruise ships and theme park expansions at the Magic Kingdom and Disney California Adventure. While new projects will continue, the level of spending should decline as the company shifts to harvesting returns from prior investments and returning cash to shareholders. Disney has superior content in a changing media distributions model. ESPN is the crown jewel in its content assets and should be able to weather any potential disruption to viewing patterns because of the immediacy of sports viewing. Finally, we like Disney's ability to refresh and reinvent content for new generations, a legacy dating back to the company's founding in the 1920s.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2016. The views and opinions in the letter were current as of February 17, 2017. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our website at www.ubs.com/am-us.
43
UBS U.S. Large Cap Equity Fund
Average annual total returns for periods ended 12/31/16 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | 10.46 | % | 10.89 | % | 13.96 | % | 5.23 | % | |||||||||||
Class C2 | 10.02 | 10.07 | 13.11 | 4.44 | |||||||||||||||
Class P3 | 10.55 | 11.12 | 14.23 | 5.50 | |||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | 4.40 | % | 4.79 | % | 12.68 | % | 4.63 | % | |||||||||||
Class C2 | 9.02 | 9.07 | 13.11 | 4.44 | |||||||||||||||
Russell 1000 Index4 | 8.01 | 12.05 | 14.69 | 7.08 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2016 prospectuses, supplemented from time to time, were as follows: Class A—1.93% and 0.95%; Class C—2.68% and 1.70%; Class P—1.64% and 0.70%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. Effective March 23, 2016, the Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc., the Fund's investment advisor ("UBS AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the period ending October 27, 2017, do not exceed 0.95% for Class A shares, 1.70% for Class C shares and 0.70% for Class P shares; prior to March 23, 2016, the fees were not to exceed 1.20% for Class A shares, 1.95% for Class C shares and 0.95% for Class P shares. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses to the extent such reimbursement can be made during the three years following the period during which such fee waivers and expense reimbursements were made, provided that the reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. The fee waiver/expense reimbursement agreement may be terminated by the Fund's Board of Trustees at any time and also will terminate automatically upon the expiration or termination of the Fund's advisory contract with the Advisor. Upon termination of the fee waiver/expense reimbursement agreement, however, the UBS AM (Americas)'s three year recoupment rights will survive.
1 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 distribution and service fees.
3 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
4 The Russell 1000 Index is designed to measure the performance of the large-cap segment of the US equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected. Investors should note that indices do not reflect the deduction of fees and expenses.
Prior to February 17, 2015, if an investor sold or exchanged shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged was deducted at the time of the transaction, except as noted otherwise in the prospectus. For sales or exchanges taking place on or after February 17, 2015 but prior to August 3, 2015, there was a reduction in the redemption holding period from 90 days to 30 days. Effective August 3, 2015, the 1.00% redemption fee imposed on sales or exchanges of any class of shares of the funds made during the holding periods specified in the prospectus was eliminated. Please refer to the prospectus for further information.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit www.ubs.com/us-mutualfundperformance.
44
UBS U.S. Large Cap Equity Fund
Portfolio statistics and industry diversification—December 31, 2016 (unaudited)
Top ten holdings1
Percentage of net assets | |||||||
Philip Morris International, Inc. | 4.2 | % | |||||
Walt Disney Co. (The) | 3.1 | ||||||
Mondelez International, Inc., Class A | 2.9 | ||||||
General Motors Co. | 2.7 | ||||||
Lincoln National Corp. | 2.6 | ||||||
Amazon.com, Inc. | 2.6 | ||||||
PepsiCo, Inc. | 2.5 | ||||||
Facebook, Inc., Class A | 2.3 | ||||||
Marsh & McLennan Cos., Inc. | 2.3 | ||||||
LyondellBasell Industries NV, Class A | 2.1 | ||||||
Total | 27.3 | % |
Top five issuer breakdown by country or territory of origin1
Percentage of net assets | |||||||
United States | 88.6 | % | |||||
Ireland | 2.6 | ||||||
Netherlands | 2.6 | ||||||
Bermuda | 2.6 | ||||||
Jersey | 1.2 | ||||||
Total | 97.6 | % |
Common stocks | Percentage of net assets | ||||||
Aerospace & defense | 1.47 | % | |||||
Auto components | 1.23 | ||||||
Automobiles | 2.71 | ||||||
Banks | 4.10 | ||||||
Beverages | 2.48 | ||||||
Biotechnology | 3.01 | ||||||
Chemicals | 2.09 | ||||||
Communications equipment | 0.90 | ||||||
Consumer finance | 1.94 | ||||||
Diversified financial services | 1.25 | ||||||
Electronic equipment, instruments & components | 1.60 | ||||||
Energy equipment & services | 1.88 | ||||||
Equity real estate investment trusts (REITs) | 1.76 | ||||||
Food & staples retailing | 3.65 | ||||||
Food products | 2.91 | ||||||
Health care equipment & supplies | 0.49 | ||||||
Health care providers & services | 3.92 | ||||||
Hotels, restaurants & leisure | 1.30 | ||||||
Household durables | 2.52 | ||||||
Insurance | 8.35 | ||||||
Internet & direct marketing retail | 4.79 | ||||||
Internet software & services | 2.35 | ||||||
IT services | 2.00 | ||||||
Life sciences tools & services | 1.72 | ||||||
Machinery | 2.67 | ||||||
Media | 4.74 | ||||||
Oil, gas & consumable fuels | 5.76 | ||||||
Pharmaceuticals | 6.56 | ||||||
Semiconductors & semiconductor equipment | 8.51 | ||||||
Software | 3.21 | ||||||
Technology hardware, storage & peripherals | 1.50 | ||||||
Tobacco | 4.22 | ||||||
Wireless telecommunication services | 1.23 | ||||||
Total common stocks | 98.82 | % | |||||
Short-term investment | 0.40 | ||||||
Investment of cash collateral from securities loaned | 0.84 | ||||||
Total investments | 100.06 | % | |||||
Liabilities, in excess of cash and other assets | (0.06 | ) | |||||
Net assets | 100.00 | % |
1 The Fund's portfolio is actively managed and its composition will vary over time.
45
UBS U.S. Large Cap Equity Fund
Portfolio of Investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks: 98.82% | |||||||||||
Aerospace & defense: 1.47% | |||||||||||
United Technologies Corp. | 3,693 | $ | 404,827 | ||||||||
Auto components: 1.23% | |||||||||||
Delphi Automotive plc | 5,040 | 339,444 | |||||||||
Automobiles: 2.71% | |||||||||||
General Motors Co. | 21,463 | 747,771 | |||||||||
Banks: 4.10% | |||||||||||
JPMorgan Chase & Co. | 3,534 | 304,949 | |||||||||
U.S. Bancorp | 7,943 | 408,032 | |||||||||
Wells Fargo & Co. | 7,581 | 417,789 | |||||||||
1,130,770 | |||||||||||
Beverages: 2.48% | |||||||||||
PepsiCo, Inc. | 6,529 | 683,129 | |||||||||
Biotechnology: 3.01% | |||||||||||
Alnylam Pharmaceuticals, Inc.* | 5,248 | 196,485 | |||||||||
Biogen, Inc.* | 969 | 274,789 | |||||||||
Emergent BioSolutions, Inc.* | 3,605 | 118,388 | |||||||||
Lexicon Pharmaceuticals, Inc.*,1 | 15,761 | 217,975 | |||||||||
TG Therapeutics, Inc.*,1 | 4,563 | 21,218 | |||||||||
828,855 | |||||||||||
Chemicals: 2.09% | |||||||||||
LyondellBasell Industries NV, Class A | 6,712 | 575,755 | |||||||||
Communications equipment: 0.90% | |||||||||||
Arista Networks, Inc.* | 2,573 | 248,989 | |||||||||
Consumer finance: 1.94% | |||||||||||
American Express Co. | 7,210 | 534,117 | |||||||||
Diversified financial services: 1.25% | |||||||||||
Voya Financial, Inc. | 8,776 | 344,195 | |||||||||
Electronic equipment, instruments & components: 1.60% | |||||||||||
Dolby Laboratories, Inc., Class A | 4,899 | 221,386 | |||||||||
Jabil Circuit, Inc. | 9,314 | 220,462 | |||||||||
441,848 | |||||||||||
Energy equipment & services: 1.88% | |||||||||||
Halliburton Co. | 7,804 | 422,119 | |||||||||
Noble Corp. plc | 16,458 | 97,431 | |||||||||
519,550 | |||||||||||
Equity real estate investment trusts (REITs): 1.76% | |||||||||||
Simon Property Group, Inc., REIT | 2,727 | 484,506 | |||||||||
Food & staples retailing: 3.65% | |||||||||||
Kroger Co. (The) | 16,129 | 556,612 | |||||||||
Walgreens Boots Alliance, Inc. | 5,425 | 448,973 | |||||||||
1,005,585 | |||||||||||
Food products: 2.91% | |||||||||||
Mondelez International, Inc., Class A | 18,128 | 803,614 |
Shares | Value | ||||||||||
Health care equipment & supplies: 0.49% | |||||||||||
Wright Medical Group NV* | 5,845 | $ | 134,318 | ||||||||
Health care providers & services: 3.92% | |||||||||||
Cigna Corp. | 2,326 | 310,265 | |||||||||
Laboratory Corp. of America Holdings* | 2,351 | 301,822 | |||||||||
UnitedHealth Group, Inc. | 2,930 | 468,917 | |||||||||
1,081,004 | |||||||||||
Hotels, restaurants & leisure: 1.30% | |||||||||||
Norwegian Cruise Line Holdings Ltd.* | 8,440 | 358,953 | |||||||||
Household durables: 2.52% | |||||||||||
Lennar Corp., Class A | 7,268 | 312,015 | |||||||||
Newell Brands, Inc. | 8,568 | 382,561 | |||||||||
694,576 | |||||||||||
Insurance: 8.35% | |||||||||||
Allstate Corp. (The) | 6,560 | 486,227 | |||||||||
Lincoln National Corp. | 10,905 | 722,674 | |||||||||
Marsh & McLennan Cos., Inc. | 9,257 | 625,681 | |||||||||
MetLife, Inc. | 8,680 | 467,765 | |||||||||
2,302,347 | |||||||||||
Internet & direct marketing retail: 4.79% | |||||||||||
Amazon.com, Inc.* | 949 | 711,627 | |||||||||
Expedia, Inc. | 2,676 | 303,137 | |||||||||
Priceline Group, Inc. (The)* | 208 | 304,940 | |||||||||
1,319,704 | |||||||||||
Internet software & services: 2.35% | |||||||||||
Facebook, Inc., Class A* | 5,630 | 647,732 | |||||||||
IT services: 2.00% | |||||||||||
Visa, Inc., Class A | 7,069 | 551,523 | |||||||||
Life sciences tools & services: 1.72% | |||||||||||
Bio-Rad Laboratories, Inc., Class A* | 2,608 | 475,386 | |||||||||
Machinery: 2.67% | |||||||||||
Caterpillar, Inc. | 5,701 | 528,711 | |||||||||
Colfax Corp.* | 5,807 | 208,645 | |||||||||
737,356 | |||||||||||
Media: 4.74% | |||||||||||
CBS Corp. (Non-Voting), Class B | 7,196 | 457,810 | |||||||||
Walt Disney Co. (The) | 8,151 | 849,497 | |||||||||
1,307,307 | |||||||||||
Oil, gas & consumable fuels: 5.76% | |||||||||||
EOG Resources, Inc. | 5,508 | 556,859 | |||||||||
Gulfport Energy Corp.* | 9,870 | 213,587 | |||||||||
Hess Corp. | 2,161 | 134,609 | |||||||||
Laredo Petroleum, Inc.* | 14,690 | 207,716 | |||||||||
Oasis Petroleum, Inc.* | 17,489 | 264,783 | |||||||||
SM Energy Co. | 6,096 | 210,190 | |||||||||
1,587,744 |
46
UBS U.S. Large Cap Equity Fund
Portfolio of Investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks—(Concluded) | |||||||||||
Pharmaceuticals: 6.56% | |||||||||||
Allergan plc* | 2,124 | $ | 446,061 | ||||||||
Catalent, Inc.* | 16,065 | 433,113 | |||||||||
Eli Lilly & Co. | 6,102 | 448,802 | |||||||||
Mallinckrodt plc* | 5,586 | 278,295 | |||||||||
Medicines Co. (The)* | 5,978 | 202,893 | |||||||||
1,809,164 | |||||||||||
Semiconductors & semiconductor equipment: 8.51% | |||||||||||
Broadcom Ltd. | 1,369 | 241,998 | |||||||||
Integrated Device Technology, Inc.* | 8,491 | 200,048 | |||||||||
Marvell Technology Group Ltd. | 25,310 | 351,050 | |||||||||
Maxim Integrated Products, Inc. | 5,019 | 193,583 | |||||||||
Micron Technology, Inc.* | 19,803 | 434,082 | |||||||||
ON Semiconductor Corp.* | 15,485 | 197,588 | |||||||||
Qorvo, Inc.* | 3,175 | 167,418 | |||||||||
Silicon Laboratories, Inc.* | 2,863 | 186,095 | |||||||||
Skyworks Solutions, Inc. | 2,442 | 182,320 | |||||||||
Xilinx, Inc. | 3,171 | 191,433 | |||||||||
2,345,615 | |||||||||||
Software: 3.21% | |||||||||||
Activision Blizzard, Inc. | 5,274 | 190,444 | |||||||||
Electronic Arts, Inc.* | 2,752 | 216,747 | |||||||||
PTC, Inc.* | 6,239 | 288,679 | |||||||||
Take-Two Interactive Software, Inc.* | 3,841 | 189,323 | |||||||||
885,193 |
Shares | Value | ||||||||||
Technology hardware, storage & peripherals: 1.50% | |||||||||||
Western Digital Corp. | 6,107 | $ | 414,971 | ||||||||
Tobacco: 4.22% | |||||||||||
Philip Morris International, Inc. | 12,731 | 1,164,759 | |||||||||
Wireless telecommunication services: 1.23% | |||||||||||
T-Mobile US, Inc.* | 5,895 | 339,022 | |||||||||
Total common stocks (cost $24,937,949) | 27,249,629 | ||||||||||
Short-term investment: 0.40% | |||||||||||
Investment company: 0.40% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $109,583) | 109,583 | 109,583 | |||||||||
Investment of cash collateral from securities loaned: 0.84% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $230,632) | 230,632 | 230,632 | |||||||||
Total investments: 100.06% (cost $25,278,164) | 27,589,844 | ||||||||||
Liabilities, in excess of cash and other assets: (0.06)% | (15,718 | ) | |||||||||
Net assets: 100.00% | $ | 27,574,126 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 3,315,724 | |||||
Gross unrealized depreciation | (1,004,044 | ) | |||||
Net unrealized appreciation of investments | $ | 2,311,680 |
For a listing of defined portfolio acronyms, counterparty abbreviations and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 77. Portfolio footnotes begin on page 48.
47
UBS U.S. Large Cap Equity Fund
Portfolio of Investments
December 31, 2016 (unaudited)
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of December 31, 2016 in valuing the Fund's investments. In the event a Fund holds investments for which fair value is measured using the NAV per share practical expedient (or its equivalent), a separate column will be added to the fair value hierarchy table; this is intended to permit reconciliation to the amounts presented in the Portfolio of investments.
Description | Unadjusted quoted prices in active markets for identical investments (Level 1) | Other significant observable inputs (Level 2) | Unobservable inputs (Level 3) | Total | |||||||||||||||
Assets | |||||||||||||||||||
Common stocks | $ | 27,249,629 | $ | — | $ | — | $ | 27,249,629 | |||||||||||
Short-term investment | 109,583 | — | — | 109,583 | |||||||||||||||
Investment of cash collateral from securities loaned | 230,632 | — | — | 230,632 | |||||||||||||||
Total | $ | 27,589,844 | $ | — | $ | — | $ | 27,589,844 |
At December 31, 2016, there were no transfers between Levels 1 and Level 2.
Portfolio footnotes
* Non-income producing security.
1 Security, or portion thereof, was on loan at the period end.
See accompanying notes to financial statements.
48
UBS U.S. Small Cap Growth Fund
Portfolio performance
For the six months ended December 31, 2016, Class A shares of UBS U.S. Small Cap Growth Fund (the "Fund") returned 13.68% (Class A shares returned 7.45% after the deduction of the maximum sales charge), while Class P shares returned 13.85%. The Fund's benchmark, the Russell 2000 Growth Index (the "Index"), returned 13.12% over the same time period. (Class P shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 52; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund slightly outperformed the Index primarily due to stock selection decisions.
Portfolio performance summary1
What worked:
• Wix.com was the Fund's top performing stock during the six months ended December 31, 2016.
– Wix.com is an operator and developer of a web platform that allows businesses and individuals to develop customized websites and applications. The company's share price was up sharply after Wix.com reported sales and earnings ahead of expectations and raised guidance for the year. The quality and value of Wix.com's offering was evidenced by strong conversions of the user base to paid subscribers despite limited promotional activity and price increases.
• Stock selection within the financial sector was positive for performance during the period. The rising interest rate environment represents a potentially positive change in the fundamental backdrop for this industry.
– Webster Financial provides a wide range of financial services to individuals and businesses across southern New England and eastern New York State. The company's shares outperformed as 10-year U.S. Treasury rates rose dramatically after the presidential election. We believe that a sustained upward movement in rates will allow the bank to expand its net interest margin and drive earnings growth. (For details, see "Portfolio highlights.")
– Rising rates also drove shares of Columbia Banking System higher for the six-month period. The full-service commercial bank serves small and medium-sized businesses, professionals and other individuals through offices in Washington State.
– National Bank Holdings Corporation, a provider of services through community banking franchises, was another strong post-election performer. The company serves retail and business customers in Colorado, the greater Kansas City region and Texas.
• An overweight to energy stocks—as well as stock selection within the sector—made a positive contribution to Fund returns.
– Shares of US Silica Holdings, a producer and distributor of industrial silica and sand proppants, traded higher for the six months. Investors expect the company to benefit from the consistent increase in active horizontal drilling oil rigs along with the higher volume of proppants being utilized on a per-well basis. These trends may allow the company to raise prices and drive additional growth in EBITDA (earnings before interest, tax, depreciation and amortization).
1 For a detailed commentary on the market environment in general during the reporting period, see pages 3-4.
49
UBS U.S. Small Cap Growth Fund
• The Fund benefited from holding several names that rose on investors' anticipation of potential infrastructure spending and faster economic growth.
– EMCOR contributed to relative returns during the six-month period. The company provides mechanical and electrical construction and facilities services to a broad range of commercial, industrial, utility and institutional customers. (For details, see "Portfolio highlights.")
What didn't work:
• Stock selection within the healthcare sector was the largest negative contributor during the reporting period.
– Acadia Healthcare, which operates behavioral health centers, underperformed after reporting disappointing same-facility sales growth for the third quarter of 2016. The share price also suffered from a negative article about Acadia's largest competitor that cast a pall on the entire behavioral health industry. UK regulatory concerns about Acadia's acquisition of the Priory Group were a further drag on performance.
– DexCom, a medical device company, focuses on the design and development of continuous glucose monitoring systems for people with diabetes. The company's shares fell during the period on concerns over the potential for a loss of market share. Medtronic, a competitor, announced a potentially disruptive launch of a hybrid closed loop insulin pump and sensor system.
– Seres Therapeutics, a clinical-stage biotechnology company, failed its Phase 2 endpoint for a drug designed to treat bacterial infections. The stock was down sharply on the unexpected news, and we sold the name during the reporting period.
• The Fund held certain information technology names that detracted from performance.
– Rapid7 is a provider of security and network data analytics solutions. The company saw its shares fall during the period due to lower-than-expected sales and earnings guidance for the fourth quarter of 2016, as well as concerns about trends in cybersecurity spending.
– Callidus Software made a negative contribution to performance. The company provides software solutions that focus on incentive compensation management. Shares declined despite Callidus posting better-than-expected quarterly results. Investors were concerned when the company lowered the top end of its fiscal year earnings guidance.
Portfolio highlights
• 8x8 Inc. is one of the leading providers of unified communications as a service. The company's cloud-based solutions provide communications and collaboration on a unified platform that includes voice, video, contact center and desktop. 8x8's solutions allow enterprises to easily deploy and scale their communications platforms as needed without large upfront expenses.
• Gigamon designs and markets networking products and solutions. The company provides high-density networking traffic switches that replicate, filter, stream, monitor, analyze and record information. Gigamon's customers include enterprises, data centers and service providers worldwide. Increasing data speeds, virtualization complexity and a growing number of security breaches are increasing demand for the improved visibility that Gigamon's solutions can provide. We believe the company will see additional growth from (1) enhancing the functionality and scalability of its solutions, (2) deepening existing relationships, and (3) investing in its global distribution network.
50
UBS U.S. Small Cap Growth Fund
• Proofpoint, a global provider of enterprise software solutions, offers an integrated suite of on-demand solutions that include secure communications, archiving, compliance and cybersecurity. The company's software as a service (SaaS) model delivers 95% recurring revenues at greater than 90% renewal rates. Proofpoint's main competitor was acquired by Google and is being shut down.
• Burlington Stores is an off-price retailer that operates roughly 540 locations across the US. We believe the company has the opportunity to improve its productivity and margins while sustaining a low single-digit rate of comparable sales (comps). Burlington's sales productivity per square foot is 65% below that of its peers, and its margin of earnings before interest and tax (EBIT) is 500 basis points lower than its peers'. The company anticipates growing square footage by 3% to 4% per year on the back of 25 new store openings, and we believe it could conceivably approach 1,000 stores. We also think Burlington will pursue enhanced merchandising by moving toward better brands and more profitable categories, such as women's sportswear and home.
• Webster Financial has one of the largest deposit market shares in Connecticut, as well as a desirable retail footprint ranging from Westchester County, NY to Boston. The company's capital position is strong, and its asset quality is stable to improving. We believe growth will be fueled by several factors over the next couple of years, including: (1) growing transaction account balances in all lines of business, (2) growing core business banking loans, (3) expediting the reduction of nonperforming assets, (4) increasing non-interest income and (5) optimizing expenses across the business. We expect Webster to realize efficiencies through branch consolidations and closures, as well as by optimizing its ATM network. The company is a potential takeover target.
• EMCOR specializes in the design, integration, installation, start-up, operation and maintenance of systems for multiple needs. These include the generation and distribution of electrical power; lighting; low-voltage systems such as security and fire alarms; voice and data communications; heating, ventilation and air conditioning (HVAC); and plumbing and piping systems. EMCOR also supports the operation of customers' facilities unrelated to their construction programs. The company continues to capitalize on strong growth opportunities in the higher margin commercial, health care, and gaming and hospitality markets. It is seeing continued strong demand for mobile and site-based facilities services.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2016. The views and opinions in the letter were current as of February 17, 2017. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our website at www.ubs.com/am-us.
51
UBS U.S. Small Cap Growth Fund
Average annual total returns for periods ended 12/31/16 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | 13.68 | % | 6.37 | % | 13.67 | % | 7.32 | % | |||||||||||
Class C2 | 13.25 | 5.59 | 12.82 | 6.52 | |||||||||||||||
Class P3 | 13.85 | 6.69 | 13.98 | 7.60 | |||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | 7.45 | % | 0.54 | % | 12.39 | % | 6.71 | % | |||||||||||
Class C2 | 12.25 | 4.59 | 12.82 | 6.52 | |||||||||||||||
Russell 2000 Growth Index4 | 13.12 | 11.32 | 13.74 | 7.76 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2016 prospectuses were as follows: Class A—1.54% and 1.25%; Class C—2.29% and 2.00%; Class P—1.18% and 1.00%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc. the Fund's investment advisor ("UBS AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses, and dividend expense and security loan fees for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses, and dividend expense and security loan fees for securities sold short), through the period ending October 27, 2017, do not exceed 1.24% for Class A shares, 1.99% for Class C shares and 0.99% for Class P shares. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses to the extent such reimbursement can be made during the three years following the period during which such fee waivers and expense reimbursements were made, provided that the reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. The fee waiver/expense reimbursement agreement may be terminated by the Fund's Board of Trustees at any time and also will terminate automatically upon the expiration or termination of the Fund's advisory contract with the Advisor. Upon termination of the fee waiver/expense reimbursement agreement, however, the UBS AM (Americas)'s three year recoupment rights will survive.
1 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 distribution and service fees.
3 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
4 The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the US equity universe. It includes those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the small-cap growth segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth characteristics. Investors should note that indices do not reflect the deduction of fees and expenses.
Prior to February 17, 2015, if an investor sold or exchanged shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged was deducted at the time of the transaction, except as noted otherwise in the prospectus. For sales or exchanges taking place on or after February 17, 2015 but prior to August 3, 2015, there was a reduction in the redemption holding period from 90 days to 30 days. Effective August 3, 2015, the 1.00% redemption fee imposed on sales or exchanges of any class of shares of the funds made during the holding periods specified in the prospectus was eliminated. Please refer to the prospectus for further information.
The Fund invests in IPOs which may have a magnified impact on performance.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit www.ubs.com/us-mutualfundperformance.
52
UBS U.S. Small Cap Growth Fund
Portfolio statistics—December 31, 2016 (unaudited)
Top ten holdings1
Percentage of net assets | |||||||
Universal Display Corp. | 1.9 | % | |||||
8x8, Inc. | 1.9 | ||||||
Webster Financial Corp. | 1.8 | ||||||
Proofpoint, Inc. | 1.8 | ||||||
US Silica Holdings, Inc. | 1.8 | ||||||
EMCOR Group, Inc. | 1.7 | ||||||
Burlington Stores, Inc. | 1.7 | ||||||
Spirit Airlines, Inc. | 1.7 | ||||||
Generac Holdings, Inc. | 1.7 | ||||||
Gigamon, Inc. | 1.7 | ||||||
Total | 17.7 | % |
Top five issuer breakdown by country
or territory of origin1
Percentage of net assets | |||||||
United States | 91.5 | % | |||||
Israel | 2.4 | ||||||
Canada | 1.6 | ||||||
Bermuda | 1.1 | ||||||
Cayman Islands | 0.6 | ||||||
Total | 97.2 | % |
1 The Fund's portfolio is actively managed and its composition will vary over time.
53
UBS U.S. Small Cap Growth Fund
Industry diversification—December 31, 2016 (unaudited)1
Common stocks | Percentage of net assets | ||||||
Airlines | 1.72 | % | |||||
Auto components | 1.41 | ||||||
Banks | 8.16 | ||||||
Biotechnology | 6.27 | ||||||
Building products | 1.18 | ||||||
Communications equipment | 2.68 | ||||||
Construction & engineering | 1.74 | ||||||
Construction materials | 1.61 | ||||||
Diversified consumer services | 1.48 | ||||||
Electrical equipment | 3.39 | ||||||
Electronic equipment, instruments & components | 2.51 | ||||||
Energy equipment & services | 3.37 | ||||||
Equity real estate investment trusts (REITs) | 1.16 | ||||||
Food & staples retailing | 1.07 | ||||||
Food products | 3.54 | ||||||
Health care equipment & supplies | 4.75 | ||||||
Health care providers & services | 2.67 | ||||||
Health care technology | 1.28 | ||||||
Hotels, restaurants & leisure | 4.13 | ||||||
Internet software & services | 2.98 | ||||||
Life sciences tools & services | 0.48 | ||||||
Machinery | 1.94 | ||||||
Media | 3.18 | ||||||
Multiline retail | 1.45 | ||||||
Oil, gas & consumable fuels | 3.36 | ||||||
Paper & forest products | 1.16 | ||||||
Personal products | 0.32 | ||||||
Pharmaceuticals | 0.83 | ||||||
Professional services | 2.70 | ||||||
Road & rail | 0.90 | ||||||
Semiconductors & semiconductor equipment | 5.36 | ||||||
Software | 11.97 | ||||||
Specialty retail | 5.71 | ||||||
Thrifts & mortgage finance | 1.14 | ||||||
Total common stocks | 97.60 | % | |||||
Exchange traded fund | 1.25 | ||||||
Short-term investment | 2.15 | ||||||
Investment of cash collateral from securities loaned | 5.26 | ||||||
Total investments | 106.26 | % | |||||
Liabilities, in excess of cash and other assets | (6.26 | ) | |||||
Net assets | 100.00 | % |
1 Figures represent the breakdown of direct investments of UBS U.S. Small Cap Growth Fund. Figures would be different if a breakdown of the underlying investment companies and exchange traded funds was included.
54
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks: 97.60% | |||||||||||
Airlines: 1.72% | |||||||||||
Spirit Airlines, Inc.* | 50,615 | $ | 2,928,584 | ||||||||
Auto components: 1.41% | |||||||||||
Tenneco, Inc.* | 38,472 | 2,403,346 | |||||||||
Banks: 8.16% | |||||||||||
BankUnited, Inc. | 57,134 | 2,153,380 | |||||||||
Columbia Banking System, Inc. | 61,759 | 2,759,392 | |||||||||
FB Financial Corp.* | 21,421 | 555,875 | |||||||||
National Bank Holdings Corp., Class A | 89,426 | 2,851,795 | |||||||||
South State Corp. | 29,244 | 2,555,926 | |||||||||
Webster Financial Corp. | 56,035 | 3,041,580 | |||||||||
13,917,948 | |||||||||||
Biotechnology: 6.27% | |||||||||||
Array BioPharma, Inc.* | 141,441 | 1,243,267 | |||||||||
Bluebird Bio, Inc.* | 14,784 | 912,173 | |||||||||
Exact Sciences Corp.*,1 | 171,887 | 2,296,410 | |||||||||
Five Prime Therapeutics, Inc.* | 20,956 | 1,050,105 | |||||||||
Kite Pharma, Inc.*,1 | 17,968 | 805,685 | |||||||||
Ligand Pharmaceuticals, Inc.*,1 | 20,582 | 2,091,337 | |||||||||
Loxo Oncology, Inc.*,1 | 38,063 | 1,222,393 | |||||||||
Sage Therapeutics, Inc.* | 21,033 | 1,073,945 | |||||||||
10,695,315 | |||||||||||
Building products: 1.18% | |||||||||||
NCI Building Systems, Inc.* | 128,724 | 2,014,531 | |||||||||
Communications equipment: 2.68% | |||||||||||
Ciena Corp.* | 97,129 | 2,370,919 | |||||||||
Lumentum Holdings, Inc.* | 57,046 | 2,204,828 | |||||||||
4,575,747 | |||||||||||
Construction & engineering: 1.74% | |||||||||||
EMCOR Group, Inc. | 42,000 | 2,971,920 | |||||||||
Construction materials: 1.61% | |||||||||||
Summit Materials, Inc., Class A* | 115,397 | 2,745,303 | |||||||||
Diversified consumer services: 1.48% | |||||||||||
Grand Canyon Education, Inc.* | 43,313 | 2,531,645 | |||||||||
Electrical equipment: 3.39% | |||||||||||
EnerSys | 36,468 | 2,848,151 | |||||||||
Generac Holdings, Inc.* | 71,779 | 2,924,276 | |||||||||
5,772,427 | |||||||||||
Electronic equipment, instruments & components: 2.51% | |||||||||||
Fabrinet* | 25,300 | 1,019,590 | |||||||||
Universal Display Corp.* | 57,787 | 3,253,408 | |||||||||
4,272,998 | |||||||||||
Energy equipment & services: 3.37% | |||||||||||
Patterson-UTI Energy, Inc. | 102,160 | 2,750,147 | |||||||||
US Silica Holdings, Inc. | 52,746 | 2,989,644 | |||||||||
5,739,791 |
Shares | Value | ||||||||||
Equity real estate investment trusts (REITs): 1.16% | |||||||||||
Education Realty Trust, Inc. | 46,900 | $ | 1,983,870 | ||||||||
Food & staples retailing: 1.07% | |||||||||||
Casey's General Stores, Inc. | 15,277 | 1,816,130 | |||||||||
Food products: 3.54% | |||||||||||
B&G Foods, Inc. | 50,950 | 2,231,610 | |||||||||
Blue Buffalo Pet Products, Inc.* | 57,506 | 1,382,444 | |||||||||
Dean Foods Co. | 110,955 | 2,416,600 | |||||||||
6,030,654 | |||||||||||
Health care equipment & supplies: 4.75% | |||||||||||
ABIOMED, Inc.* | 20,066 | 2,261,037 | |||||||||
DexCom, Inc.* | 12,256 | 731,683 | |||||||||
iRhythm Technologies, Inc.* | 4,800 | 144,000 | |||||||||
K2M Group Holdings, Inc.* | 110,367 | 2,211,755 | |||||||||
Zeltiq Aesthetics, Inc.*,1 | 63,343 | 2,756,687 | |||||||||
8,105,162 | |||||||||||
Health care providers & services: 2.67% | |||||||||||
Acadia Healthcare Co., Inc.* | 40,919 | 1,354,419 | |||||||||
Envision Healthcare Corp.* | 31,907 | 2,019,394 | |||||||||
MEDNAX, Inc.* | 17,705 | 1,180,215 | |||||||||
4,554,028 | |||||||||||
Health care technology: 1.28% | |||||||||||
HMS Holdings Corp.* | 120,557 | 2,189,315 | |||||||||
Hotels, restaurants & leisure: 4.13% | |||||||||||
Buffalo Wild Wings, Inc.* | 11,160 | 1,723,104 | |||||||||
ClubCorp Holdings, Inc. | 145,364 | 2,085,973 | |||||||||
Del Frisco's Restaurant Group, Inc.* | 90,780 | 1,543,260 | |||||||||
Popeyes Louisiana Kitchen, Inc.* | 28,025 | 1,694,952 | |||||||||
7,047,289 | |||||||||||
Internet software & services: 2.98% | |||||||||||
LogMeIn, Inc. | 23,161 | 2,236,195 | |||||||||
Wix.com Ltd.* | 63,882 | 2,845,943 | |||||||||
5,082,138 | |||||||||||
Life sciences tools & services: 0.48% | |||||||||||
Charles River Laboratories International, Inc.* | 10,684 | 814,014 | |||||||||
Machinery: 1.94% | |||||||||||
Colfax Corp.* | 35,139 | 1,262,544 | |||||||||
Woodward, Inc. | 29,572 | 2,041,947 | |||||||||
3,304,491 | |||||||||||
Media: 3.18% | |||||||||||
AMC Entertainment Holdings, Inc., Class A | 78,103 | 2,628,166 | |||||||||
IMAX Corp.* | 89,210 | 2,801,194 | |||||||||
5,429,360 | |||||||||||
Multiline retail: 1.45% | |||||||||||
Ollie's Bargain Outlet Holdings, Inc.* | 86,683 | 2,466,131 |
55
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2016 (unaudited)
Shares | Value | ||||||||||
Common stocks—(Concluded) | |||||||||||
Oil, gas & consumable fuels: 3.36% | |||||||||||
Callon Petroleum Co.* | 165,129 | $ | 2,538,033 | ||||||||
Diamondback Energy, Inc.* | 8,516 | 860,627 | |||||||||
Matador Resources Co.* | 90,164 | 2,322,624 | |||||||||
5,721,284 | |||||||||||
Paper & forest products: 1.16% | |||||||||||
Boise Cascade Co.* | 88,117 | 1,982,633 | |||||||||
Personal products: 0.32% | |||||||||||
elf Beauty, Inc.*,1 | 18,612 | 538,631 | |||||||||
Pharmaceuticals: 0.83% | |||||||||||
Horizon Pharma plc* | 30,675 | 496,322 | |||||||||
Pacira Pharmaceuticals, Inc.* | 28,548 | 922,100 | |||||||||
1,418,422 | |||||||||||
Professional services: 2.70% | |||||||||||
Kforce, Inc. | 80,092 | 1,850,125 | |||||||||
WageWorks, Inc.* | 38,013 | 2,755,943 | |||||||||
4,606,068 | |||||||||||
Road & rail: 0.90% | |||||||||||
Saia, Inc.* | 34,570 | 1,526,266 | |||||||||
Semiconductors & semiconductor equipment: 5.36% | |||||||||||
Cavium, Inc.* | 38,457 | 2,401,255 | |||||||||
Integrated Device Technology, Inc.* | 113,512 | 2,674,343 | |||||||||
MACOM Technology Solutions Holdings, Inc., H Shares* | 29,365 | 1,359,012 | |||||||||
Semtech Corp.* | 85,618 | 2,701,248 | |||||||||
9,135,858 | |||||||||||
Software: 11.97% | |||||||||||
8x8, Inc.* | 220,748 | 3,156,696 | |||||||||
Callidus Software, Inc.* | 123,316 | 2,071,709 | |||||||||
CyberArk Software Ltd.* | 28,722 | 1,306,851 | |||||||||
Ellie Mae, Inc.* | 22,544 | 1,886,482 | |||||||||
Gigamon, Inc.* | 63,721 | 2,902,491 |
Shares | Value | ||||||||||
Proofpoint, Inc.* | 42,516 | $ | 3,003,755 | ||||||||
Rapid7, Inc.*,1 | 117,792 | 1,433,529 | |||||||||
Synchronoss Technologies, Inc.* | 71,919 | 2,754,498 | |||||||||
Ultimate Software Group, Inc. (The)* | 10,408 | 1,897,899 | |||||||||
20,413,910 | |||||||||||
Specialty retail: 5.71% | |||||||||||
Burlington Stores, Inc.* | 35,048 | 2,970,318 | |||||||||
Children's Place, Inc. (The) | 27,626 | 2,788,844 | |||||||||
Finish Line, Inc. (The), Class A | 98,690 | 1,856,359 | |||||||||
Five Below, Inc.* | 53,155 | 2,124,074 | |||||||||
9,739,595 | |||||||||||
Thrifts & mortgage finance: 1.14% | |||||||||||
Essent Group Ltd.* | 60,041 | 1,943,527 | |||||||||
Total common stocks (cost $140,986,923) | 166,418,331 | ||||||||||
Exchange traded fund: 1.25% | |||||||||||
iShares Russell 2000 Growth ETF1 (cost $2,142,642) | 13,850 | 2,132,069 | |||||||||
Short-term investment: 2.15% | |||||||||||
Investment company: 2.15% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $3,660,307) | 3,660,307 | 3,660,307 | |||||||||
Investment of cash collateral from securities loaned: 5.26% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $8,969,598) | 8,969,598 | 8,969,598 | |||||||||
Total investments: 106.26% (cost $155,759,470) | 181,180,305 | ||||||||||
Liabilities, in excess of cash and other assets: (6.26)% | (10,671,827 | ) | |||||||||
Net assets: 100.00% | $ | 170,508,478 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 32,163,710 | |||||
Gross unrealized depreciation | (6,742,875 | ) | |||||
Net unrealized appreciation of investments | $ | 25,420,835 |
For a listing of defined portfolio acronyms, counterparty abbreviations and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 77. Portfolio footnotes begin on page 57.
56
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2016 (unaudited)
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of December 31, 2016 in valuing the Fund's investments. In the event a Fund holds investments for which fair value is measured using the NAV per share practical expedient (or its equivalent), a separate column will be added to the fair value hierarchy table; this is intended to permit reconciliation to the amounts presented in the Portfolio of investments.
Description | Unadjusted quoted prices in active markets for identical investments (Level 1) | Other significant observable inputs (Level 2) | Unobservable inputs (Level 3) | Total | |||||||||||||||
Assets | |||||||||||||||||||
Common stocks | $ | 166,418,331 | �� | $ | — | $ | — | $ | 166,418,331 | ||||||||||
Exchange traded fund | 2,132,069 | — | — | 2,132,069 | |||||||||||||||
Short-term investment | 3,660,307 | — | — | 3,660,307 | |||||||||||||||
Investment of cash collateral from securities loaned | 8,969,598 | — | — | 8,969,598 | |||||||||||||||
Total | $ | 181,180,305 | $ | — | $ | — | $ | 181,180,305 |
At December 31, 2016, there were no transfers between Levels 1 and Level 2.
Portfolio footnotes
* Non-income producing security.
1 Security, or portion thereof, was on loan at the period end.
See accompanying notes to financial statements.
57
UBS Total Return Bond Fund
Portfolio performance
For the six months ended December 31, 2016, Class P shares of the UBS Total Return Bond Fund (the "Fund") returned -1.55%. For comparison purposes, the Bloomberg Barclays US Aggregate Bond Index (the "Index") returned -2.53%. (Please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on the redemption of Fund shares, while index returns do not reflect the deduction of fees and expenses.)
Special Note
UBS Total Return Bond Fund is a newly organized open-end mutual fund. The Fund's Class P shares acquired the assets and liabilities of Fort Dearborn Income Securities, Inc., a closed-end fund (the "Predecessor Fund"), prior to the opening of business on May 23, 2016. The Predecessor Fund was also managed by the Advisor, and the day-to-day management of, and investment decisions for, the Fund and the Predecessor Fund are made by the same portfolio management team. The Funds had generally similar investment objectives and strategies. For the purpose of this report, we will comment on the performance of the UBS Total Return Bond Fund for the six-month period ending December 31, 2016.
Market commentary
The second half of 2016 was marked by a sharp increase in US interest rates due to the surprise election of Donald J. Trump as the 45th President, whose fiscal policies are expected to be both expansionary and inflationary. For the period, two-year, 10-year, and 30-year U.S. Treasury yields rose 61 basis points (bps), 94 bps and 74 bps, respectively, to close 2016 at 1.20%, 2.43% and 3.05%, respectively. The Federal Reserve Board ("Fed") raised its policy rate at its December meeting by 0.25% to a range of 0.50% to 0.75%. In particular, the Fed cited improvement in the labor market, a continued decrease in the unemployment rate and an uptick in inflation. The Fed's updated projections are calling for three more 0.25% rate hikes in 2017. Investor demand globally for higher yields caused most spread sectors to outperform Treasuries over the reporting period, with the more rate-sensitive sectors underperforming the more credit-sensitive sectors. For example, the Bloomberg Barclays US Corporate Investment Grade Index returned -1.46% over the reporting period, compared to the Bloomberg Barclays US Corporate High Yield Index return of 7.40%. The US dollar benefited from the December Fed hike and the expectation for higher inflation in 2017 and appreciated 6.5% in the second half of 2016. Finally, oil prices ended the second half of the year 11% higher to close the year at nearly $54 per barrel. This increase was partially driven by hopes that a deal between OPEC and other major oil exporters to cut production in 2017 will be delivered as promised.
Portfolio performance summary1
What worked:
• Corporate exposure was additive to performance. The Fund was overweight lower-quality corporates versus higher-quality corporates during the reported period. This positioning was based on our belief that higher-yielding, lower-quality bonds would attract investors' demand for yield. This benefited performance, as lower-quality corporates outperformed higher-quality corporates for the reporting period.
• Commercial mortgage-backed security ("CMBS") exposure was additive to performance. The Fund was overweight CMBS on the back of strong fundamentals and attractive valuations. This positioning benefited performance as the sector experienced strong investor demand.
1 For a detailed commentary on the market environment in general during the reporting period, see pages 3-4.
58
UBS Total Return Bond Fund
What didn't work:
• Agency residential mortgage-backed security ("RMBS") exposure detracted from performance. The Fund's tactical positioning to agency RMBS throughout the reporting period detracted from performance, particularly in the fourth quarter, when rates rose significantly and agency RMBS underperformed.
• Emerging market currency exposure was a headwind for performance. The Fund's tactical long exposure to the Mexican peso detracted from performance, particularly in the fourth quarter, when the peso depreciated due to the surprise election of Donald Trump as President.
A number of derivatives were used during the reporting period. Interest rate futures and options were utilized for the management of duration and yield curve positioning. Overall, these derivatives detracted from performance. Credit derivatives—such as total return swaps, credit default swaps and options on credit default swaps—were utilized to manage exposure across different fixed income sectors. These instruments were utilized in an effort to reduce the Fund's risk, but also to increase net investment income. Overall, the use of these instruments was slightly negative for performance during the period. Currency instruments, such as foreign exchange forward positions and options, were utilized as part of the fund's currency management strategy. Overall, the use of currency instruments was additive for performance during the period.
Market outlook
With 2016 behind us, we look ahead to 2017 for potential areas of risk and return, where political uncertainty remains a dominant theme. President Trump's proposed policies, while still vague in detail, appear to be both pro-growth and inflationary. This, coupled with a Fed that appears to be growing more hawkish, may portend higher rates in the US in 2017. Meanwhile, a potential break-up of the European Union simply cannot escape the headlines following the surprise "Brexit" results in June 2016, the Italian "no" vote in December 2016, and Presidential elections in France and Germany in 2017. Given these concerns, as well as continued economic uncertainty in China and recent agreements by oil producers to curtail production in 2017, the fundamental backdrop for high-conviction investing in the new year and beyond appears opaque at best. Yet investors' insatiable demand for yield continues to support markets, putting downward pressure on yields and grinding spreads even tighter. Meanwhile, monetary policy for the time being remains quite accommodative. We continue to look for areas of opportunity and dislocation, searching for high conviction risk-adjusted returns globally. Within rates, we expect lower yields predominantly outside the US; within currencies, a stronger US dollar; and within credit, modest overweight allocations to various spread sectors (e.g., US high yield bonds, US securitized product), while remaining wary of potential spikes in volatility.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2016. The views and opinions in the letter were current as of February 17, 2017. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at (800) 647-1568 or by visiting our website at www.ubs.com/am-us.
59
UBS Total Return Bond Fund
Average annual total returns for periods ended 12/31/16 (unaudited)
6 months | 1 year | 5 years | 10 years or Inception1 | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A2 | N/A | N/A | N/A | (3.08 | )% | ||||||||||||||
Class C3 | N/A | N/A | N/A | (3.19 | ) | ||||||||||||||
Class P4 | (1.55 | )% | 2.68 | % | 2.61 | % | 5.50 | ||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A2 | N/A | N/A | N/A | (6.69 | )% | ||||||||||||||
Class C3 | N/A | N/A | N/A | (3.91 | ) | ||||||||||||||
Bloomberg Barclays US Aggregate Index5 | (2.53 | )% | 2.65 | % | 2.23 | % | (3.20 | ) |
The annualized gross and net expense ratios as in the October 28, 2016 prospectuses were as follows: Class A—1.21% and 0.75%; Class C—1.71% and 1.25%; Class P—1.21% and 0.50%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc., the Fund's investment advisor ("UBS AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the period ending October 27, 2017, do not exceed 0.75% for Class A shares, 1.25% for Class C shares and 0.50% for Class P shares. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses to the extent such reimbursement can be made during the three years following the period during which such fee waivers and expense reimbursements were made, provided that the reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. The fee waiver/expense reimbursement agreement may be terminated by the Fund's Board of Trustees at any time and also will terminate automatically upon the expiration or termination of the Fund's advisory contract with the Advisor. Upon termination of the fee waiver/expense reimbursement agreement, however, UBS AM (Americas)'s three year recoupment rights will survive.
1 Inception date of A and C shares of UBS Total Return Bond Fund and the index is September 26, 2016. 10 years fund performance is shown for Class P Shares, and the 10 years index performance of the Bloomberg Barclays US Aggregate Index is 4.34%.
2 Maximum sales charge for Class A shares is 3.75%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class C shares is 0.75% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 distribution and service fees.
4 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
5 The Bloomberg Barclays US Aggregate Index is an unmanaged broad based index designed to measure the US dollar-denominated, investment-grade, taxable bond market. The index includes bonds from the Treasury, government-related, corporate, mortgage-backed, asset-backed and commercial mortgage-backed sectors. Investors should note that indices do not reflect the deduction of fees and expenses.
The Board of Trustees approved a temporary redemption fee of 2% following the reorganization of Fort Dearborn Income Securities Inc. with the class P shares of the Fund. The temporary redemption fee was in effect for 90 days following the date of the reorganization or until August 22, 2016.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit www.ubs.com/us-mutualfundperformance.
60
UBS Total Return Bond Fund
Portfolio statistics—December 31, 2016 (unaudited)
Top ten holdings1
Percentage of net assets | |||||||
FNMA, 3.500%, TBA | 7.5 | % | |||||
GNMA, 3.500%, TBA | 4.2 | ||||||
FHLMC, 3.000%, TBA | 3.3 | ||||||
FHLMC, 4.000%, TBA | 2.6 | ||||||
U.S. Treasury Notes, 1.250%, due 10/31/21 | 2.5 | ||||||
GNMA, 3.000%, TBA | 2.2 | ||||||
Kingdom of Spain, 1.300%, due 10/31/26 | 2.1 | ||||||
FNMA, 4.500%, TBA | 1.8 | ||||||
Capital Auto Receivables Asset Trust, Series 2016-1, Class D, 4.030%, due 08/21/23 | 1.8 | ||||||
Drive Auto Receivables Trust, Series 2015-DA, Class C, 3.380%, due 11/15/21 | 1.8 | ||||||
Total | 29.8 | % |
Top five issuer breakdown by country
or territory of origin1
Percentage of net assets | |||||||
United States | 82.9 | % | |||||
Spain | 2.1 | ||||||
United Kingdom | 1.7 | ||||||
Brazil | 1.5 | ||||||
Netherlands | 1.4 | ||||||
Total | 89.6 | % |
1 The Fund's portfolio is actively managed and its composition will vary over time.
61
UBS Total Return Bond Fund
Industry diversification—December 31, 2016 (unaudited)1
Bonds Corporate bonds | Percentage of net assets | ||||||
Automobiles | 0.88 | % | |||||
Banks | 5.95 | ||||||
Beverages | 0.57 | ||||||
Biotechnology | 0.77 | ||||||
Capital markets | 1.55 | ||||||
Chemicals | 1.58 | ||||||
Commercial services & supplies | 0.41 | ||||||
Communications equipment | 0.30 | ||||||
Consumer finance | 1.34 | ||||||
Diversified financial services | 0.97 | ||||||
Diversified telecommunication services | 2.87 | ||||||
Electric utilities | 1.96 | ||||||
Electrical equipment | 0.34 | ||||||
Electronic equipment, instruments & components | 0.29 | ||||||
Equity real estate investment trusts (REITs) | 0.34 | ||||||
Food & staples retailing | 0.34 | ||||||
Health care equipment & supplies | 0.14 | ||||||
Health care providers & services | 0.20 | ||||||
Household durables | 0.65 | ||||||
Household products | 0.17 | ||||||
Industrial conglomerates | 0.65 | ||||||
Insurance | 1.43 | ||||||
Internet & direct marketing retail | 0.46 | ||||||
Life sciences tools & services | 0.26 | ||||||
Machinery | 0.14 | ||||||
Media | 2.31 | ||||||
Metals & mining | 0.18 | ||||||
Oil, gas & consumable fuels | 3.87 | ||||||
Paper & forest products | 0.17 | ||||||
Pharmaceuticals | 1.17 | ||||||
Real estate management & development | 0.28 | ||||||
Road & rail | 0.54 | ||||||
Semiconductors & semiconductor equipment | 0.38 | ||||||
Software | 0.45 | ||||||
Specialty retail | 0.17 | ||||||
Technology hardware, storage & peripherals | 0.78 | ||||||
Thrifts & mortgage finance | 0.45 | ||||||
Tobacco | 0.41 | ||||||
Trading companies & distributors | 1.20 | ||||||
Wireless telecommunication services | 0.31 | ||||||
Total corporate bonds | 37.23 | % |
Bonds—(Continued) | Percentage of net assets | ||||||
Asset-backed securities | 8.69 | % | |||||
Collateralized mortgage obligations | 2.40 | ||||||
Commercial mortgage-backed securities | 6.04 | ||||||
Mortgage-backed securities | 28.70 | ||||||
Municipal bonds | 1.70 | ||||||
Non-U.S. government obligations | 5.73 | ||||||
U.S. treasury obligations | 7.46 | ||||||
Total bonds | 97.95 | % | |||||
Preferred stock | 0.18 | ||||||
Short-term investment | 20.04 | ||||||
Total investments | 118.17 | % | |||||
Liabilities, in excess of cash and other assets | (18.17 | ) | |||||
Net assets | 100.00 | % |
1 The Fund's portfolio is actively managed and its composition will vary over time.
62
UBS Total Return Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds: 97.95% | |||||||||||
Corporate bonds: 37.23% | |||||||||||
Brazil: 0.99% | |||||||||||
Caixa Economica Federal, 2.375%, due 11/06/171 | $ | 555,000 | $ | 548,063 | |||||||
Canada: 1.15% | |||||||||||
Barrick Gold Corp., 4.100%, due 05/01/23 | 100,000 | 102,480 | |||||||||
NOVA Chemicals Corp., 5.250%, due 08/01/231 | 360,000 | 363,600 | |||||||||
Rogers Communications, Inc., 5.000%, due 03/15/44 | 160,000 | 170,833 | |||||||||
Total Canada corporate bonds | 636,913 | ||||||||||
Cayman Islands: 0.65% | |||||||||||
Seagate HDD Cayman, 5.750%, due 12/01/34 | 150,000 | 127,875 | |||||||||
XLIT Ltd., 6.375%, due 11/15/24 | 200,000 | 233,171 | |||||||||
Total Cayman Islands corporate bonds | 361,046 | ||||||||||
Curacao: 0.10% | |||||||||||
Teva Pharmaceutical Finance IV BV, 3.650%, due 11/10/21 | 57,000 | 57,499 | |||||||||
Germany: 0.55% | |||||||||||
Unitymedia GmbH, 6.125%, due 01/15/251 | 300,000 | 308,250 | |||||||||
Ireland: 0.34% | |||||||||||
Shire Acquisitions Investments Ireland DAC, 2.400%, due 09/23/21 | 100,000 | 96,507 | |||||||||
3.200%, due 09/23/26 | 100,000 | 93,318 | |||||||||
Total Ireland corporate bonds | 189,825 | ||||||||||
Luxembourg: 0.82% | |||||||||||
Actavis Funding SCS, 3.800%, due 03/15/25 | 200,000 | 199,980 | |||||||||
INEOS Group Holdings SA, 5.875%, due 02/15/191 | 250,000 | 255,625 | |||||||||
Total Luxembourg corporate bonds | 455,605 | ||||||||||
Mexico: 0.58% | |||||||||||
Petroleos Mexicanos, 3.500%, due 01/30/23 | 350,000 | 320,425 | |||||||||
Netherlands: 1.41% | |||||||||||
EDP Finance BV, 4.900%, due 10/01/191 | 439,000 | 460,021 | |||||||||
LYB International Finance BV, 4.875%, due 03/15/44 | 120,000 | 124,038 | |||||||||
Teva Pharmaceutical Finance Netherlands III BV, 3.150%, due 10/01/26 | 220,000 | 202,070 | |||||||||
Total Netherlands corporate bonds | 786,129 |
Face Amount | Value | ||||||||||
Norway: 0.91% | |||||||||||
Eksportfinans ASA, 5.500%, due 06/26/17 | $ | 500,000 | $ | 507,075 | |||||||
Singapore: 0.29% | |||||||||||
Flex Ltd., 5.000%, due 02/15/23 | 150,000 | 159,641 | |||||||||
United Kingdom: 1.67% | |||||||||||
Aon plc, 3.875%, due 12/15/25 | 220,000 | 223,942 | |||||||||
HSBC Holdings plc, 3.400%, due 03/08/21 | 260,000 | 264,170 | |||||||||
Lloyds Banking Group plc, 4.582%, due 12/10/25 | 200,000 | 200,700 | |||||||||
Royal Bank of Scotland Group plc, 3.875%, due 09/12/23 | 250,000 | 239,796 | |||||||||
Total United Kingdom corporate bonds | 928,608 | ||||||||||
United States: 27.77% | |||||||||||
21st Century Fox America, Inc., 7.750%, due 12/01/45 | 50,000 | 69,218 | |||||||||
Abbott Laboratories, 3.750%, due 11/30/26 | 80,000 | 79,404 | |||||||||
AbbVie, Inc., 2.500%, due 05/14/20 | 200,000 | 199,938 | |||||||||
ADT Corp. (The), 3.500%, due 07/15/22 | 240,000 | 228,600 | |||||||||
AEP Texas Central Co., Series E, 6.650%, due 02/15/33 | 155,000 | 191,174 | |||||||||
Alabama Power Co., 6.000%, due 03/01/39 | 100,000 | 123,912 | |||||||||
Ally Financial, Inc., 6.250%, due 12/01/17 | 250,000 | 259,375 | |||||||||
Anadarko Petroleum Corp., 5.550%, due 03/15/26 | 150,000 | 167,670 | |||||||||
Anheuser-Busch InBev Finance, Inc., 4.900%, due 02/01/46 | 295,000 | 316,751 | |||||||||
AT&T, Inc., 3.600%, due 02/17/23 | 700,000 | 705,242 | |||||||||
4.350%, due 06/15/45 | 230,000 | 204,545 | |||||||||
AXA Financial, Inc., 7.000%, due 04/01/28 | 65,000 | 77,585 | |||||||||
Bank of America Corp., 4.200%, due 08/26/24 | 300,000 | 305,249 | |||||||||
6.110%, due 01/29/37 | 125,000 | 146,315 | |||||||||
Biogen, Inc., 4.050%, due 09/15/25 | 150,000 | 154,234 | |||||||||
Boston Properties LP, 2.750%, due 10/01/26 | 210,000 | 191,715 | |||||||||
Burlington Northern Santa Fe LLC, 5.150%, due 09/01/43 | 200,000 | 229,258 | |||||||||
Capital One Financial Corp., 4.200%, due 10/29/25 | 140,000 | 140,279 | |||||||||
CF Industries, Inc., 3.450%, due 06/01/23 | 150,000 | 134,850 |
63
UBS Total Return Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Continued) | |||||||||||
United States—(Continued) | |||||||||||
Charter Communications Operating LLC, 3.579%, due 07/23/20 | $ | 150,000 | $ | 152,929 | |||||||
Cisco Systems, Inc., 5.900%, due 02/15/39 | 130,000 | 164,821 | |||||||||
Citigroup, Inc., 5.500%, due 09/13/25 | 500,000 | 548,806 | |||||||||
Comcast Corp., 6.950%, due 08/15/37 | 130,000 | 177,037 | |||||||||
ConocoPhillips Co., 4.200%, due 03/15/21 | 130,000 | 137,977 | |||||||||
Devon Energy Corp., 5.000%, due 06/15/45 | 110,000 | 107,856 | |||||||||
Diamond 1 Finance Corp., 4.420%, due 06/15/211 | 100,000 | 103,387 | |||||||||
DISH DBS Corp., 7.875%, due 09/01/19 | 150,000 | 166,500 | |||||||||
DR Horton, Inc., 4.000%, due 02/15/20 | 227,000 | 233,242 | |||||||||
Eaton Corp., 2.750%, due 11/02/22 | 190,000 | 187,967 | |||||||||
Enterprise Products Operating LLC, 2.850%, due 04/15/21 | 105,000 | 105,710 | |||||||||
Exelon Corp., 3.400%, due 04/15/26 | 300,000 | 293,930 | |||||||||
Ford Motor Co., 7.450%, due 07/16/31 | 225,000 | 281,896 | |||||||||
Frontier Communications Corp., 8.500%, due 04/15/20 | 250,000 | 262,500 | |||||||||
General Electric Co., Series D, 5.000%, due 01/21/212,3 | 349,000 | 362,157 | |||||||||
General Motors Co., 6.600%, due 04/01/36 | 180,000 | 205,455 | |||||||||
General Motors Financial Co., Inc., 3.000%, due 09/25/17 | 250,000 | 252,339 | |||||||||
Georgia-Pacific LLC, 8.000%, due 01/15/24 | 75,000 | 95,629 | |||||||||
Gilead Sciences, Inc., 3.650%, due 03/01/26 | 75,000 | 75,940 | |||||||||
Goldman Sachs Group, Inc. (The), 5.750%, due 01/24/22 | 305,000 | 342,561 | |||||||||
Home Depot, Inc. (The), 2.125%, due 09/15/26 | 100,000 | 92,095 | |||||||||
Illinois Tool Works, Inc., 2.650%, due 11/15/26 | 80,000 | 76,354 | |||||||||
International Lease Finance Corp., 5.875%, due 08/15/22 | 220,000 | 238,700 | |||||||||
7.125%, due 09/01/181 | 400,000 | 431,000 | |||||||||
JPMorgan Chase & Co., Series 1, 7.900%, due 04/30/182,3 | 200,000 | 207,100 | |||||||||
Kimberly-Clark Corp., 3.200%, due 07/30/46 | 110,000 | 95,435 |
Face Amount | Value | ||||||||||
Kinder Morgan, Inc., 5.550%, due 06/01/45 | $ | 40,000 | $ | 41,995 | |||||||
6.500%, due 09/15/20 | 100,000 | 112,032 | |||||||||
7.250%, due 06/01/18 | 300,000 | 319,653 | |||||||||
Kroger Co. (The), 6.900%, due 04/15/38 | 150,000 | 191,505 | |||||||||
Lennar Corp., 4.750%, due 05/30/25 | 130,000 | 126,750 | |||||||||
Liberty Mutual Group, Inc., 4.250%, due 06/15/231 | 200,000 | 209,180 | |||||||||
Life Technologies Corp., 6.000%, due 03/01/20 | 135,000 | 146,976 | |||||||||
MetLife, Inc., 6.400%, due 12/15/36 | 35,000 | 37,800 | |||||||||
Microsoft Corp., 2.375%, due 02/12/22 | 250,000 | 248,750 | |||||||||
Morgan Stanley, 4.350%, due 09/08/26 | 140,000 | 142,651 | |||||||||
4.875%, due 11/01/22 | 350,000 | 374,701 | |||||||||
NCR Corp., 5.000%, due 07/15/22 | 200,000 | 204,000 | |||||||||
Netflix, Inc., 5.500%, due 02/15/22 | 240,000 | 258,600 | |||||||||
Oncor Electric Delivery Co. LLC, 3.750%, due 04/01/451 | 100,000 | 95,673 | |||||||||
Pacific Gas & Electric Co., 2.950%, due 03/01/26 | 200,000 | 195,658 | |||||||||
PacifiCorp, 6.000%, due 01/15/39 | 150,000 | 190,545 | |||||||||
Prudential Financial, Inc., 6.625%, due 06/21/40 | 70,000 | 88,771 | |||||||||
Quicken Loans, Inc., 5.750%, due 05/01/251 | 260,000 | 252,850 | |||||||||
Realogy Group LLC, 5.250%, due 12/01/211 | 150,000 | 153,750 | |||||||||
Regency Energy Partners LP, 5.500%, due 04/15/23 | 500,000 | 516,250 | |||||||||
Reynolds American, Inc., 7.250%, due 06/15/37 | 175,000 | 228,951 | |||||||||
Sprint Capital Corp., 6.875%, due 11/15/28 | 200,000 | 197,500 | |||||||||
SunTrust Bank, 7.250%, due 03/15/18 | 220,000 | 233,337 | |||||||||
SunTrust Banks, Inc., 2.700%, due 01/27/22 | 110,000 | 109,936 | |||||||||
Synchrony Financial, 4.500%, due 07/23/25 | 90,000 | 92,329 | |||||||||
Texas Instruments, Inc., 1.850%, due 05/15/22 | 220,000 | 211,343 | |||||||||
Time Warner Cable, Inc., 8.750%, due 02/14/19 | 210,000 | 236,576 | |||||||||
Time Warner, Inc., 2.950%, due 07/15/26 | 190,000 | 176,725 | |||||||||
Union Pacific Corp., 4.050%, due 11/15/45 | 70,000 | 70,304 |
64
UBS Total Return Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Corporate bonds—(Concluded) | |||||||||||
United States—(Concluded) | |||||||||||
UnitedHealth Group, Inc., 4.625%, due 07/15/35 | $ | 100,000 | $ | 108,833 | |||||||
Valero Energy Corp., 7.500%, due 04/15/32 | 140,000 | 171,717 | |||||||||
Williams Partners LP, 6.300%, due 04/15/40 | 145,000 | 154,532 | |||||||||
Windstream Services LLC, 7.750%, due 10/15/20 | 220,000 | 226,160 | |||||||||
Total United States corporate bonds | 15,450,970 | ||||||||||
Total corporate bonds (cost $20,841,712) | 20,710,049 | ||||||||||
Asset-backed securities: 8.69% | |||||||||||
United States: 8.69% | |||||||||||
Americredit Automobile Receivables Trust, Series 2016-4, Class D, 2.740%, due 12/08/22 | 525,000 | 515,537 | |||||||||
AmeriCredit Automobile Receivables Trust, Series 2016-3, Class D, 2.710%, due 09/08/22 | 600,000 | 589,730 | |||||||||
Capital Auto Receivables Asset Trust, Series 2016-2, Class D, 3.160%, due 11/20/23 | 475,000 | 474,264 | |||||||||
Series 2015-4, Class D, 3.620%, due 05/20/21 | 125,000 | 127,447 | |||||||||
Series 2016-1, Class D, 4.030%, due 08/21/23 | 975,000 | 997,757 | |||||||||
Drive Auto Receivables Trust, Series 2016-CA, Class A2, 1.410%, due 01/15/191 | 300,000 | 299,996 | |||||||||
Series 2016-AA, Class B, 3.170%, due 05/15/201 | 585,000 | 590,136 | |||||||||
Series 2015-DA, Class C, 3.380%, due 11/15/211 | 975,000 | 990,846 | |||||||||
Series 2016-CA, Class D, 4.180%, due 03/15/241 | 175,000 | 173,579 | |||||||||
Santander Drive Auto Receivables Trust, Series 2013-5, Class C, 2.250%, due 06/17/19 | 74,756 | 75,001 | |||||||||
Total asset-backed securities (cost $4,854,772) | 4,834,293 | ||||||||||
Collateralized mortgage obligations: 2.40% | |||||||||||
United States: 2.40% | |||||||||||
FREMF Mortgage Trust, Series 2015-K48, Class B, 3.636%, due 08/25/481,2 | 500,000 | 479,767 | |||||||||
Series 2015-K50, Class B, 3.779%, due 10/25/481,2 | 350,000 | 339,007 | |||||||||
Series 2016-K55, Class B, 4.160%, due 04/25/491,2 | 525,000 | 515,738 | |||||||||
Total collateralized mortgage obligations (cost $1,334,234) | 1,334,512 |
Face Amount | Value | ||||||||||
Commercial mortgage-backed securities: 6.04% | |||||||||||
United States: 6.04% | |||||||||||
BXHTL Mortgage Trust, Series 2015-JWRZ, Class GL2, 4.392%, due 05/15/291,2 | $ | 500,000 | $ | 493,953 | |||||||
COMM Mortgage Trust, Series 2015-DC1, Class A5, 3.350%, due 02/10/48 | 300,000 | 302,005 | |||||||||
Commercial Mortgage Pass-Through Certificates, Series 2014-CR14, Class C, 4.602%, due 02/10/472 | 250,000 | 256,664 | |||||||||
GS Mortgage Securities Trust, Series 2014-GSFL, Class D, 4.604%, due 07/15/311,2 | 500,000 | 500,562 | |||||||||
Hilton USA Trust, Series 2016-SFP, Class B, 3.323%, due 11/05/351 | 400,000 | 394,858 | |||||||||
JPMBB Commercial Mortgage Securities Trust, Series 2015-C30, Class A5, 3.822%, due 07/15/48 | 250,000 | 260,188 | |||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2014-C17, Class B, 4.464%, due 08/15/472 | 500,000 | 520,091 | |||||||||
Starwood Retail Property Trust, Series 2014-STAR, Class C, 3.204%, due 11/15/271,2 | 125,000 | 123,197 | |||||||||
VNDO Mortgage Trust, Series 2013-PENN, Class D, 3.947%, due 12/13/291,2 | 500,000 | 510,190 | |||||||||
Total commercial mortgage-backed securities (cost $3,394,453) | 3,361,708 | ||||||||||
Mortgage-backed securities: 28.70% | |||||||||||
United States: 28.70% | |||||||||||
FHLMC, 3.000%, TBA | 1,825,000 | 1,810,947 | |||||||||
3.500%, TBA | 625,000 | 639,563 | |||||||||
4.000%, TBA | 1,375,000 | 1,443,475 | |||||||||
#E01127 6.500%, due 02/01/17 | 273 | 274 | |||||||||
FNMA, 3.000%, TBA | 75,000 | 74,452 | |||||||||
3.000%, TBA | 525,000 | 520,368 | |||||||||
3.500%, TBA | 4,100,000 | 4,199,630 | |||||||||
#MA2864 3.500%, due 01/01/47 | 425,000 | 436,204 | |||||||||
4.000%, TBA | 850,000 | 891,985 | |||||||||
#AE1568 4.000%, due 09/01/40 | 216,543 | 227,516 | |||||||||
4.500%, TBA | 950,000 | 1,021,440 | |||||||||
#688066 5.500%, due 03/01/33 | 47,917 | 54,311 | |||||||||
#793666 5.500%, due 09/01/34 | 205,360 | 230,473 | |||||||||
#802481 5.500%, due 11/01/34 | 38,756 | 43,511 |
65
UBS Total Return Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Bonds—(Continued) | |||||||||||
Mortgage-backed securities—(Concluded) | |||||||||||
United States—(Concluded) | |||||||||||
#596124 6.000%, due 11/01/28 | $ | 51,393 | $ | 58,924 | |||||||
GNMA, 3.000%, TBA | 1,200,000 | 1,214,160 | |||||||||
3.500 | %, TBA | 2,225,000 | 2,311,330 | ||||||||
4.000 | %, TBA | 725,000 | 769,515 | ||||||||
#781029 6.500%, due 05/15/29 | 14,630 | 16,936 | |||||||||
Total mortgage-backed securities (cost $15,871,523) | 15,965,014 | ||||||||||
Municipal bonds: 1.70% | |||||||||||
State of California, GO Bonds, 7.300%, due 10/01/39 | 250,000 | 353,097 | |||||||||
State of Illinois, GO Bonds, 5.877%, due 03/01/19 | 560,000 | 593,449 | |||||||||
Total municipal bonds (cost $950,715) | 946,546 | ||||||||||
Non-U.S. government obligations: 5.73% | |||||||||||
Brazil: 0.51% | |||||||||||
Federative Republic of Brazil, 6.000%, due 04/07/26 | 275,000 | 284,969 | |||||||||
Chile: 0.37% | |||||||||||
Republic of Chile, 3.250%, due 09/14/21 | 200,000 | 207,000 | |||||||||
Colombia: 0.52% | |||||||||||
Republic of Colombia, 8.125%, due 05/21/24 | 230,000 | 287,500 | |||||||||
Indonesia: 0.69% | |||||||||||
Republic of Indonesia, 5.875%, due 03/13/201 | 140,000 | 152,775 | |||||||||
6.625%, due 02/17/371 | 200,000 | 231,500 | |||||||||
384,275 | |||||||||||
Mexico: 0.29% | |||||||||||
United Mexican States, 4.000%, due 10/02/23 | 100,000 | 100,250 | |||||||||
6.750%, due 09/27/34 | 50,000 | 59,375 | |||||||||
159,625 | |||||||||||
Peru: 0.75% | |||||||||||
Republic of Peru, 7.350%, due 07/21/25 | 325,000 | 418,031 | |||||||||
Spain: 2.12% | |||||||||||
Kingdom of Spain, 1.300%, due 10/31/261,4 | EUR | 1,130,000 | 1,181,130 |
Face Amount | Value | ||||||||||
Turkey: 0.48% | |||||||||||
Republic of Turkey, 4.875%, due 10/09/26 | $ | 290,000 | $ | 267,887 | |||||||
Total Non-U.S. government obligations (cost $3,302,882) | 3,190,417 | ||||||||||
U.S. treasury obligations: 7.46% | |||||||||||
U.S. Treasury Bonds, 2.250%, due 08/15/46 | 685,000 | 574,490 | |||||||||
2.875%, due 08/15/45 | 410,000 | 393,622 | |||||||||
2.875%, due 11/15/46 | 200,000 | 192,619 | |||||||||
U.S. Treasury Inflation Indexed Bond (TIPS), 1.000%, due 02/15/46 | 100,000 | 102,412 | |||||||||
U.S. Treasury Inflation Indexed Note (TIPS), 0.125%, due 04/15/21 | 635,000 | 651,307 | |||||||||
0.125%, due 07/15/26 | 300,000 | 292,508 | |||||||||
U.S. Treasury Notes, 0.750%, due 10/31/18 | 395,000 | 392,087 | |||||||||
1.250%, due 10/31/21 | 1,435,000 | 1,390,117 | |||||||||
1.500%, due 08/15/26 | 150,000 | 137,736 | |||||||||
1.750%, due 11/30/21 | 25,000 | 24,789 | |||||||||
Total U.S. treasury obligations (cost $4,157,507) | 4,151,687 | ||||||||||
Total bonds (cost $54,707,798) | 54,494,226 | ||||||||||
Shares | |||||||||||
Preferred stock: 0.18% | |||||||||||
United States: 0.18% | |||||||||||
JPMorgan Chase & Co., 5.450%, due 03/01/183 (cost $102,000) | 4,000 | 98,600 | |||||||||
Short-term investment: 20.04% | |||||||||||
Investment company: 20.04% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $11,149,093) | 11,149,093 | 11,149,093 | |||||||||
Total investments: 118.17% (cost $65,958,891) | 65,741,919 | ||||||||||
Liabilities, in excess of cash and other assets: (18.17%) | (10,106,535 | ) | |||||||||
Net assets: 100.00% | $ | 55,635,384 |
66
UBS Total Return Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 549,368 | |||||
Gross unrealized depreciation | (766,340 | ) | |||||
Net unrealized depreciation of investments | $ | (216,972 | ) |
For a listing of defined portfolio acronyms, counterparty abbreviations and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 77. Portfolio footnotes begin on page 69.
Forward foreign currency contracts
Counterparty | Contracts to deliver | In exchange for | Maturity date | Unrealized appreciation/ (depreciation) | |||||||||||||||
JPMCB | CAD | 1,540,000 | USD | 1,152,703 | 01/30/17 | $ | 5,336 | ||||||||||||
JPMCB | EUR | 1,325,000 | USD | 1,386,675 | 01/30/17 | (10,118 | ) | ||||||||||||
Net unrealized depreciation on forward foreign currency contracts | $ | (4,782 | ) |
Futures contracts
Expiration date | Cost/ (proceeds) | Value | Unrealized appreciation/ (depreciation) | ||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Ultra Bond, 16 contracts (USD) | March 2017 | $ | 2,593,257 | $ | 2,564,000 | $ | (29,257 | ) | |||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
Ultra 10 Year US Treasury Bond, 5 contracts (USD) | March 2017 | (672,493 | ) | (670,313 | ) | 2,180 | |||||||||||||
2 Year US Treasury Notes, 13 contracts (USD) | March 2017 | (2,812,248 | ) | (2,816,938 | ) | (4,690 | ) | ||||||||||||
10 Year US Treasury Notes, 17 contracts (USD) | March 2017 | (2,123,151 | ) | (2,112,781 | ) | 10,370 | |||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
Australian Government 3 Year Bond, 50 contracts (AUD) | March 2017 | 4,014,290 | 4,022,014 | 7,724 | |||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
Euro-Bund, 11 contracts (EUR) | March 2017 | (1,868,399 | ) | (1,900,717 | ) | (32,318 | ) | ||||||||||||
Net unrealized depreciation on futures contracts | $ | (45,991 | ) |
Total return swap agreements5
Counterparty | Notional amount | Termination date | Payments made by the Fund6 | Payments received by the Fund6 | Upfront payments | Value | Unrealized appreciation | ||||||||||||||||||||||||
CITI | USD | 2,000,000 | 03/20/17 | 3 month LIBOR | —7 | $ | 809 | $ | 8,292 | $ | 9,101 |
67
UBS Total Return Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Options written
Expiration date | Premiums received | Value | |||||||||||||
Foreign exchange put options | |||||||||||||||
Foreign Exchange Option, Sell USD/CAD, Notional Amount USD 1,800,000, strike @ CAD 1.34, counterparty: CITI | January 2017 | $ | 23,143 | $ | (9,231 | ) | |||||||||
Foreign Exchange Option, Sell USD/GBP, Notional Amount USD 2,200,000, strike @ GBP 0.81, counterparty: CITI | March 2017 | 27,952 | (40,331 | ) | |||||||||||
Foreign Exchange Option, Sell USD/JPY, Notional Amount USD 1,400,000, strike @ JPY 115.00, counterparty: CITI | February 2017 | 19,453 | (18,494 | ) | |||||||||||
Total options written | $ | 70,548 | $ | (68,056 | ) |
Options written activity for the period ended December 31, 2016 was as follows:
Number of contracts | Premiums received | ||||||||||
Call options outstanding at June 30, 2016 | 130 | $ | 38,545 | ||||||||
Call options written | — | — | |||||||||
Call options terminated in closing purchase transactions | (130 | ) | (38,545 | ) | |||||||
Call options expired prior to exercise | — | — | |||||||||
Call options outstanding at December 31, 2016 | — | $ | — |
Premiums received | |||||||
Swaptions & foreign exchange options outstanding at June 30, 2016 | $ | 105,847 | |||||
Swaptions & foreign exchange options written | 467,392 | ||||||
Swaptions & foreign exchange options terminated in closing purchase transactions | (502,691 | ) | |||||
Swaptions & foreign exchange options expired prior to exercise | — | ||||||
Swaptions & foreign exchange options outstanding at December 31, 2016 | $ | 70,548 |
68
UBS Total Return Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of December 31, 2016 in valuing the Fund's investments. In the event a Fund holds investments for which fair value is measured using the NAV per share practical expedient (or its equivalent), a separate column will be added to the fair value hierarchy table; this is intended to permit reconciliation to the amounts presented in the Portfolio of investments.
Description | Unadjusted quoted prices in active markets for identical investments (Level 1) | Other significant observable inputs (Level 2) | Unobservable inputs (Level 3) | Total | |||||||||||||||
Assets | |||||||||||||||||||
Corporate bonds | $ | — | $ | 20,710,049 | $ | — | $ | 20,710,049 | |||||||||||
Asset-backed securities | — | 4,834,293 | — | 4,834,293 | |||||||||||||||
Collateralized mortgage obligations | — | 1,334,512 | — | 1,334,512 | |||||||||||||||
Commercial mortgage-backed securities | — | 3,361,708 | — | 3,361,708 | |||||||||||||||
Mortgage-backed securities | — | 15,965,014 | — | 15,965,014 | |||||||||||||||
Municipal bonds | — | 946,546 | — | 946,546 | |||||||||||||||
Non-U.S. government obligations | — | 3,190,417 | — | 3,190,417 | |||||||||||||||
U.S. treasury obligations | — | 4,151,687 | — | 4,151,687 | |||||||||||||||
Preferred stock | 98,600 | — | — | 98,600 | |||||||||||||||
Short-term investment | 11,149,093 | — | — | 11,149,093 | |||||||||||||||
Forward foreign currency contracts | — | 5,336 | — | 5,336 | |||||||||||||||
Futures contracts | 20,274 | — | — | 20,274 | |||||||||||||||
Swap agreements, at value | — | 8,292 | — | 8,292 | |||||||||||||||
Total | $ | 11,267,967 | $ | 54,507,854 | $ | — | $ | 65,775,821 | |||||||||||
Liabilities | |||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | (10,118 | ) | $ | — | $ | (10,118 | ) | |||||||||
Futures contracts | (66,265 | ) | — | — | (66,265 | ) | |||||||||||||
Options written | — | (68,056 | ) | — | (68,056 | ) | |||||||||||||
Total | $ | (66,265 | ) | $ | (78,174 | ) | $ | — | $ | (144,439 | ) |
At December 31, 2016, there were no transfers between Level 1 and Level 2.
Portfolio footnotes
1 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
2 Variable or floating rate security. The interest rate shown is the current rate at the period end and changes periodically.
3 Perpetual investment. Date shown reflects the next call date.
4 Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
5 Illiquid investment at the period end.
6 Payments made or received are based on the notional amount.
7 Payment is based on the performance of the underlying Markit iBoxx USD Liquid Leveraged Loan Index.
See accompanying notes to financial statements.
69
UBS Municipal Bond Fund
Portfolio performance
For the six months ended December 31, 2016, Class A shares of UBS Municipal Bond Fund (the "Fund") declined 4.00% (Class A shares returned -6.14% after the deduction of the maximum sales charge), while Class P shares fell 3.88%. For comparison purposes, the Fund's benchmark, the Bloomberg Barclays Municipal Bond Index (the "Index"), returned -3.91%, and the Bloomberg Barclays Municipal Managed Money Intermediate (1-17) Index declined 4.16% over the same time period. (Class P shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 71; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder could pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund posted a negative return during the reporting period and modestly underperformed its benchmark. This was primarily due to an overall underweight to the 5 to 20-year portion of the municipal yield curve and a slight overweight to AAA-rated municipal securities.
Portfolio performance summary1
What worked:
• Positioning in several parts of the municipal yield curve was additive for performance. In particular, an overweight to the one-year portion of the curve was beneficial, as was an underweight to the three-year portion of the curve. The Fund's strategic cash position was also rewarded. (The yield curve plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates.)
• An overweight to A-rated municipal bonds was beneficial, as were slight underweights to AA-rated and BBB-rated municipal bonds.
• An underweight to pre-refunded bonds was additive for results. The Fund's strategic overweight cash position was also rewarded.
What didn't work:
• An overall underweight to the 5 to 20-year portion of the municipal yield curve was detrimental to results.
• A slight overweight to AAA-rated municipal securities was not rewarded as they underperformed the Index.
• Underweights to the hospital and transportation sectors detracted from results as they outperformed the Index. Positioning in the local general obligation ("GO") bond sector was also a headwind for returns.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2016. The views and opinions in the letter were current as of February 17, 2017. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our website at www.ubs.com/am-us.
1 For a detailed commentary on the market environment in general during the reporting period, see pages 3-4.
70
UBS Municipal Bond Fund
Average annual total returns for periods ended 12/31/16 (unaudited)
6 months | 1 year | Inception1 | |||||||||||||
Before deducting maximum sales charge | |||||||||||||||
Class A2 | (4.00 | )% | (0.10 | )% | 1.73 | % | |||||||||
Class C3 | (4.24 | ) | (0.49 | ) | 1.25 | ||||||||||
Class P4 | (3.88 | ) | 0.25 | 1.98 | |||||||||||
After deducting maximum sales charge | |||||||||||||||
Class A2 | (6.14 | )% | (2.30 | )% | 0.65 | % | |||||||||
Class C3 | (4.96 | ) | (1.23 | ) | 1.25 | ||||||||||
Bloomberg Barclays Municipal Bond Index5 | (3.91 | ) | 0.25 | 2.09 | |||||||||||
Bloomberg Barclays Municipal Managed Money Intermediate (1-17) Index6 | (4.16 | ) | (0.27 | ) | 1.82 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2016 prospectuses were as follows: Class A—1.15% and 0.65%; Class C—1.65% and 1.15%; Class P—0.89% and 0.40%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc., the Fund's investment advisor ("UBS AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the period ending October 27, 2017, do not exceed 0.65% for Class A shares, 1.15% for Class C shares and 0.40% for Class P shares. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses to the extent such reimbursement can be made during the three years following the period during which such fee waivers and expense reimbursements were made, provided that the reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. The fee waiver/expense reimbursement agreement may be terminated by the Fund's Board of Trustees at any time and also will terminate automatically upon the expiration or termination of the Fund's advisory contract with the Advisor. Upon termination of the fee waiver/expense reimbursement agreement, however, the UBS AM (Americas)'s three year recoupment rights will survive.
1 Inception date of all shares of UBS Municipal Bond Fund and the indices is November 10, 2014.
2 Maximum sales charge for Class A shares is 2.25%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class C shares is 0.75% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 distribution and service fees.
4 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
5 The Bloomberg Barclays Municipal Bond Index is an unmanaged index designed to measure the total return of the US dollar denominated tax exempt bond market. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The Bloomberg Barclays Municipal Managed Money Intermediate (1-17) Index is an unmanaged sub-index of the Barclays Municipal Managed Money Index, which is a rules-based, market-value-weighted index designed to track the performance of municipal securities issued by state and local municipalities whose interest is exempt from federal income tax and the federal alternative minimum tax. Investors should note that indices do not reflect the deduction of fees and expenses.
Prior to February 17, 2015, if an investor sold or exchanged shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged was deducted at the time of the transaction, except as noted otherwise in the prospectus. For sales or exchanges taking place on or after February 17, 2015 but prior to August 3, 2015, there was a reduction in the redemption holding period from 90 days to 30 days. Effective August 3, 2015, the 1.00% redemption fee imposed on sales or exchanges of any class of shares of the funds made during the holding periods specified in the prospectus was eliminated. Please refer to the prospectus for further information.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder could pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit www.ubs.com/us-mutualfundperformance.
71
UBS Municipal Bond Fund
Portfolio statistics—December 31, 2016 (unaudited)
Summary of municipal securities by state1
Percentage of net assets | |||||||
Long-term municipal bonds | |||||||
Arizona | 1.29 | % | |||||
California | 5.95 | ||||||
Colorado | 1.50 | ||||||
Connecticut | 0.97 | ||||||
District of Columbia | 1.01 | ||||||
Florida | 11.43 | ||||||
Hawaii | 4.10 | ||||||
Illinois | 14.91 | ||||||
Kentucky | 2.38 | ||||||
Louisiana | 1.09 | ||||||
Maryland | 3.03 | ||||||
Massachusetts | 5.02 | ||||||
Michigan | 2.97 | ||||||
Minnesota | 0.85 | ||||||
Mississippi | 0.25 | ||||||
Nebraska | 3.14 | ||||||
Nevada | 1.79 | ||||||
New Jersey | 7.13 | ||||||
New York | 6.97 | ||||||
Pennsylvania | 7.22 | ||||||
Rhode Island | 1.63 | ||||||
Tennessee | 0.99 | ||||||
Texas | 10.56 | ||||||
Washington | 3.26 | ||||||
Wisconsin | 0.43 | ||||||
Total long-term municipal bonds | 99.87 | % | |||||
Short-term investment | 0.04 | ||||||
Total investments | 99.91 | % | |||||
Cash and other assets, less liabilities | 0.09 | ||||||
Net assets | 100.00 | % |
1 The Fund's portfolio is actively managed and its composition will vary over time.
72
UBS Municipal Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Long-term municipal bonds: 99.87% | |||||||||||
Arizona: 1.29% | |||||||||||
Salt River Project Agricultural Improvement and Power District, Electric System Revenue Bonds, Series A, 5.000%, due 01/01/23 | $ | 1,325,000 | $ | 1,541,465 | |||||||
California: 5.95% | |||||||||||
Antelope Valley-East Kern Water Agency, COP, Series A-2, 0.660%, due 06/01/371 | 200,000 | 200,000 | |||||||||
California Health Facilities Financing Authority Revenue Bonds, Series C, 0.700%, due 10/01/421 | 2,700,000 | 2,700,000 | |||||||||
California State Public Works Board Revenue Bonds, Series F, 5.000%, due 05/01/26 | 1,500,000 | 1,766,175 | |||||||||
Golden State Tobacco Securitization Corp., Enhanced Tobacco Settlement, Asset-Backed Revenue Bonds, Series A, 5.000%, due 06/01/32 | 1,000,000 | 1,124,840 | |||||||||
5.000%, due 06/01/33 | 650,000 | 728,097 | |||||||||
Irvine Unified School District, Community Facilities District No. 09-1 Revenue Bonds, Series B, 0.740%, due 09/01/511 | 400,000 | 400,000 | |||||||||
West Covina Public Financing Authority, Lease Revenue Bonds, Series B, 0.700%, due 05/01/341 | 200,000 | 200,000 | |||||||||
7,119,112 | |||||||||||
Colorado: 1.50% | |||||||||||
City and County of Denver, Department of Aviation, Airport System Revenue Bonds, Series A, 5.000%, due 11/15/23 | 1,545,000 | 1,791,273 | |||||||||
Connecticut: 0.97% | |||||||||||
Connecticut Health & Educational Facilities Authority, Fairfield University Revenue Bonds, Series M, 5.000%, due 07/01/182 | 1,100,000 | 1,162,403 | |||||||||
District of Columbia: 1.01% | |||||||||||
District of Columbia, GO Bonds, Series E, 5.000%, due 06/01/25 | 1,000,000 | 1,202,770 | |||||||||
Florida: 11.43% | |||||||||||
Central Florida Expressway Authority Revenue Bonds, Series B, 5.000%, due 07/01/34 | 1,000,000 | 1,133,340 |
Face Amount | Value | ||||||||||
Jea Water & Sewer System Revenue Bonds, Series A-1, 0.710%, due 10/01/381 | $ | 100,000 | $ | 100,000 | |||||||
Miami-Dade County Revenue Bonds, 5.000%, due 10/01/26 | 1,000,000 | 1,178,400 | |||||||||
Pinellas County Health Facilities Authority, Baycare Health Revenue Bonds, Series A-1, 0.770%, due 11/01/381 | 1,000,000 | 1,000,000 | |||||||||
School Board of Volusia County, Certificates Refunding, Master Lease Program, COP, Series B, 5.000%, due 08/01/31 | 1,000,000 | 1,132,600 | |||||||||
School District of St. Lucie County, Sales Tax Revenue Bonds, AGM, 5.000%, due 10/01/26 | 1,020,000 | 1,183,639 | |||||||||
South Florida Water Management District, COP, Series 2015, 5.000%, due 10/01/34 | 1,000,000 | 1,126,900 | |||||||||
The School Board of Broward County, COP, Series B, 5.000%, due 07/01/30 | 2,000,000 | 2,274,920 | |||||||||
The School Board of Miami-Dade County, COP, Series A, 5.000%, due 05/01/31 | 1,000,000 | 1,126,070 | |||||||||
Series D, 5.000%, due 02/01/23 | 1,000,000 | 1,137,930 | |||||||||
5.000%, due 11/01/31 | 1,000,000 | 1,127,540 | |||||||||
The School Board of Palm Beach County, COP, Series B, 5.000%, due 08/01/31 | 1,000,000 | 1,138,200 | |||||||||
13,659,539 | |||||||||||
Hawaii: 4.10% | |||||||||||
City & County of Honolulu, Wastewater System Revenue Bonds, Series B, 5.000%, due 07/01/35 | 1,500,000 | 1,731,690 | |||||||||
State of Hawaii, GO Bonds, Series A, 5.000%, due 09/01/27 | 1,025,000 | 1,226,976 | |||||||||
Series FG, 5.000%, due 10/01/28 | 1,615,000 | 1,941,925 | |||||||||
4,900,591 | |||||||||||
Illinois:14.91% | |||||||||||
City of Chicago O'Hare International Airport, Senior Lien Revenue Bonds, Series B, 5.000%, due 01/01/30 | 1,000,000 | 1,116,480 | |||||||||
5.000%, due 01/01/31 | 1,050,000 | 1,169,175 | |||||||||
5.250%, due 01/01/29 | 500,000 | 567,845 | |||||||||
Series C, 5.000%, due 01/01/23 | 2,900,000 | 3,282,800 |
73
UBS Municipal Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Long-term municipal bonds—(Continued) | |||||||||||
Illinois—(Concluded) | |||||||||||
County of Cook, GO Bonds, Series A, 5.000%, due 11/15/20 | $ | 1,830,000 | $ | 1,996,164 | |||||||
Illinois Finance Authority, Sherman Health Systems Revenue Bonds, Series A, 5.500%, due 08/01/172 | 1,000,000 | 1,026,190 | |||||||||
Illinois State Toll Highway Authority Revenue Bonds, Series B, 5.000%, due 01/01/27 | 1,000,000 | 1,164,300 | |||||||||
5.000%, due 01/01/40 | 1,000,000 | 1,096,360 | |||||||||
State of Illinois, GO Bonds, 5.000%, due 08/01/18 | 3,450,000 | 3,567,196 | |||||||||
Series B, 5.250%, due 01/01/18 | 1,000,000 | 1,027,270 | |||||||||
State of Illinois, Sales Tax Revenue Bonds, 5.000%, due 06/15/22 | 1,105,000 | 1,243,059 | |||||||||
NATL-RE, 5.750%, due 06/15/20 | 510,000 | 572,235 | |||||||||
17,829,074 | |||||||||||
Kentucky: 2.38% | |||||||||||
Kentucky Property & Buildings Community Project No. 87 Revenue Bonds, AGC, 5.250%, due 02/01/192 | 2,635,000 | 2,844,193 | |||||||||
Louisiana: 1.09% | |||||||||||
Consolidated Government of the City of Baton Rouge and Parish of East Baton Rouge, Pollution Control, Exxon Project Revenue Bonds, 0.670%, due 03/01/221 | 1,300,000 | 1,300,000 | |||||||||
Maryland: 3.03% | |||||||||||
State of Maryland, GO Bonds, 5.000%, due 06/01/26 | 2,180,000 | 2,599,170 | |||||||||
Series B, 4.500%, due 08/01/17 | 1,000,000 | 1,021,000 | |||||||||
3,620,170 | |||||||||||
Massachusetts: 5.02% | |||||||||||
Massachusetts Water Resources Authority Revenue Bonds, Series C, 5.000%, due 08/01/35 | 1,000,000 | 1,160,100 | |||||||||
The Commonwealth of Massachusetts, Consolidated Loan of 2002, GO Bonds, Series C, NATL-RE, 5.500%, due 11/01/17 | 1,000,000 | 1,037,950 | |||||||||
The Commonwealth of Massachusetts, Consolidated Loan of 2016, GO Bonds, Series A, 5.000%, due 03/01/34 | 1,125,000 | 1,279,238 |
Face Amount | Value | ||||||||||
The Commonwealth of Massachusetts, GO Bonds, Series B, 5.000%, due 07/01/22 | $ | 780,000 | $ | 900,931 | |||||||
5.000%, due 07/01/27 | 1,325,000 | 1,628,650 | |||||||||
6,006,869 | |||||||||||
Michigan: 2.97% | |||||||||||
Michigan Finance Authority Revenue Bonds, 5.000%, due 06/01/172 | 1,150,000 | 1,169,665 | |||||||||
Michigan Municipal Bond Authority, Clean Water Revolving Fund Revenue Bonds, 5.000%, due 10/01/17 | 1,160,000 | 1,195,357 | |||||||||
State Building Authority of Michigan, Facilities Program Revenue Bonds, Series I, 5.000%, due 04/15/21 | 1,060,000 | 1,190,783 | |||||||||
3,555,805 | |||||||||||
Minnesota: 0.85% | |||||||||||
State of Minnesota, Trunk Highway, GO Bonds, Series B, 4.000%, due 08/01/17 | 1,000,000 | 1,018,080 | |||||||||
Mississippi: 0.25% | |||||||||||
Mississippi Business Finance Corp., Gulf Opportunity Zone, Industrial Development, Chevron USA, Inc., Project Revenue Bonds, Series E, 0.740%, due 12/01/301 | 300,000 | 300,000 | |||||||||
Nebraska: 3.14% | |||||||||||
Douglas County Hospital Authority No. 2 Revenue Bonds, 5.000%, due 05/15/25 | 1,250,000 | 1,463,475 | |||||||||
Public Power Generation Agency, Whelan Energy Center Unit-2 Revenue Bonds, Series A, 5.000%, due 01/01/24 | 2,000,000 | 2,287,600 | |||||||||
3,751,075 | |||||||||||
Nevada:1.79% | |||||||||||
Clark County, Las Vegas-Mccarran International Airport Revenue Bonds, Series C, 5.000%, due 07/01/27 | 1,815,000 | 2,139,976 | |||||||||
New Jersey: 7.13% | |||||||||||
New Jersey Economic Development Authority, School Facilities Construction Revenue Bonds, Series GG, 5.000%, due 09/01/22 | 500,000 | 520,555 | |||||||||
Series II, 5.000%, due 03/01/22 | 750,000 | 789,705 | |||||||||
Series XX, 5.000%, due 06/15/22 | 1,000,000 | 1,053,880 |
74
UBS Municipal Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Long-term municipal bonds—(Continued) | |||||||||||
New Jersey—(Concluded) | |||||||||||
New Jersey Turnpike Authority Revenue Bonds, Series A, 5.000%, due 01/01/27 | $ | 1,000,000 | $ | 1,145,760 | |||||||
Series E, 5.000%, due 01/01/34 | 860,000 | 959,528 | |||||||||
State of New Jersey, GO Bonds, 5.000%, due 06/01/18 | 500,000 | 524,095 | |||||||||
Series Q, 5.000%, due 08/15/19 | 1,500,000 | 1,618,110 | |||||||||
Series T, 5.000%, due 06/01/20 | 750,000 | 820,612 | |||||||||
State of New Jersey, Various Purpose, GO Bonds, 5.000%, due 06/01/20 | 1,000,000 | 1,094,150 | |||||||||
8,526,395 | |||||||||||
New York: 6.97% | |||||||||||
City of New York, GO Bonds, Series E, 5.000%, due 08/01/26 | 1,000,000 | 1,204,660 | |||||||||
City of New York, Tax Exempt, GO Bonds, Series I, 5.000%, due 08/01/17 | 1,040,000 | 1,064,502 | |||||||||
New York City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, 0.670%, due 06/15/361 | 500,000 | 500,000 | |||||||||
New York City Transitional Finance Authority Revenue Bonds, Subseries B-1, 5.000%, due 08/01/33 | 1,000,000 | 1,149,400 | |||||||||
Subseries E-1, 5.000%, due 02/01/32 | 1,000,000 | 1,162,320 | |||||||||
New York State Dormitory Authority, Northern Westchester Hospital Association Revenue Bonds, 0.700%, due 11/01/341 | 835,000 | 835,000 | |||||||||
New York State Dormitory Authority, Sales Tax Revenue Bonds, Series A, 5.000%, due 03/15/25 | 2,000,000 | 2,411,720 | |||||||||
8,327,602 | |||||||||||
Pennsylvania: 7.22% | |||||||||||
City of Philadelphia, GO Bonds, Series A, 5.000%, due 08/01/22 | 1,000,000 | 1,127,210 | |||||||||
Commonwealth of Pennsylvania, GO Bonds, 5.000%, due 08/15/21 | 1,700,000 | 1,912,024 | |||||||||
5.000%, due 09/15/25 | 1,500,000 | 1,750,050 | |||||||||
Pennsylvania Turnpike Commission Revenue Bonds, Series A-1, 5.000%, due 12/01/24 | 1,500,000 | 1,754,850 | |||||||||
Pennsylvania Turnpike Commission, Oil Franchise Tax Revenue Bonds, Series A, 5.000%, due 12/01/22 | 1,000,000 | 1,153,940 |
Face Amount | Value | ||||||||||
Philadelphia Municipal Authority, City Agreement Revenue Bonds, Series A, 5.000%, due 11/15/17 | $ | 910,000 | $ | 938,902 | |||||||
8,636,976 | |||||||||||
Rhode Island: 1.63% | |||||||||||
Tobacco Settlement Fing Corp., Asset-Backed Revenue Bonds, Series A, 4.000%, due 06/01/17 | 850,000 | 860,056 | |||||||||
5.000%, due 06/01/21 | 1,000,000 | 1,088,800 | |||||||||
1,948,856 | |||||||||||
Tennessee: 0.99% | |||||||||||
State of Tennessee, GO Bonds, Series B, 5.000%, due 08/01/23 | 1,000,000 | 1,185,890 | |||||||||
Texas: 10.56% | |||||||||||
Austin Community College District Public Facility Corp., Round Rock Campus Revenue Bonds, 5.000%, due 08/01/24 | 1,000,000 | 1,159,150 | |||||||||
Dallas Area Rapid Transit, Sales Tax Revenue Bonds, Series B, 5.000%, due 12/01/22 | 1,600,000 | 1,863,520 | |||||||||
Denton Independent School District, GO Bonds, PSF-GTD, 5.000%, due 08/15/27 | 1,185,000 | 1,422,829 | |||||||||
Garland Independent School District, GO Bonds, PSF-GTD, 5.000%, due 02/15/25 | 1,200,000 | 1,438,356 | |||||||||
Lower Neches Valley Authority Industrial Development Corp., Exxon Mobil Project Revenue Bonds, 0.650%, due 05/01/461 | 300,000 | 300,000 | |||||||||
North Texas Tollway Authority Revenue Bonds, Series A, 5.000%, due 01/01/27 | 3,030,000 | 3,465,714 | |||||||||
Texas Transportation Commission Revenue Bonds, Series A, 5.000%, due 10/01/25 | 1,000,000 | 1,207,630 | |||||||||
Texas Transportation Commission, GO Bonds, Series A, 5.000%, due 10/01/29 | 1,500,000 | 1,772,730 | |||||||||
12,629,929 | |||||||||||
Washington: 3.26% | |||||||||||
Central Puget Sound Regional Transit Authority, Sales Tax and Motor Vehicle Excise Tax Revenue Bonds, Series S-1, 5.000%, due 11/01/24 | 1,000,000 | 1,197,430 | |||||||||
State of Washington, GO Bonds, Series 7A, 5.000%, due 08/01/27 | 1,400,000 | 1,683,556 |
75
UBS Municipal Bond Fund
Portfolio of investments
December 31, 2016 (unaudited)
Face Amount | Value | ||||||||||
Long-term municipal bonds—(Concluded) | |||||||||||
Washington—(Concluded) | |||||||||||
State of Washington, Motor Vehicle Fuel Tax, GO Bonds, Series 5D, 4.000%, due 07/01/17 | $ | 1,000,000 | $ | 1,015,520 | |||||||
3,896,506 | |||||||||||
Wisconsin: 0.43% | |||||||||||
Shawano School District, GO Bonds, AGC, 4.250%, due 03/01/182 | 500,000 | 518,230 | |||||||||
Total long-term municipal bonds (cost $121,847,511) | 119,412,779 |
Shares | Value | ||||||||||
Short-term investment: 0.04% | |||||||||||
Investment company: 0.04% | |||||||||||
JPMorgan U.S. Government Money Market Fund, Capital Shares (cost $46,177) | 46,177 | $ | 46,177 | ||||||||
Total investments: 99.91% (cost $121,893,688) | 119,458,956 | ||||||||||
Cash and other assets, less liabilities: 0.09% | 106,312 | ||||||||||
Net assets: 100.00% | $ | 119,565,268 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 178,124 | |||||
Gross unrealized depreciation | (2,612,856 | ) | |||||
Net unrealized depreciation of investments | $ | (2,434,732 | ) |
For a listing of defined portfolio acronyms, counterparty abbreviations and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 77. Portfolio footnotes begin below.
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of December 31, 2016 in valuing the Fund's investments. In the event a Fund holds investments for which fair value is measured using the NAV per share practical expedient (or its equivalent), a separate column will be added to the fair value hierarchy table; this is intended to permit reconciliation to the amounts presented in the Portfolio of investments.
Description | Unadjusted quoted prices in active markets for identical investments (Level 1) | Other significant observable inputs (Level 2) | Unobservable inputs (Level 3) | Total | |||||||||||||||
Assets | |||||||||||||||||||
Long-term municipal bonds | $ | — | $ | 119,412,779 | $ | — | $ | 119,412,779 | |||||||||||
Short-term investment | 46,177 | — | — | 46,177 | |||||||||||||||
Total | $ | 46,177 | $ | 119,412,779 | $ | — | $ | 119,458,956 |
At December 31, 2016, there were no transfers between Level 1 and Level 2.
Portfolio footnotes
1 Variable or floating rate security. The interest rate shown is the current rate at the period end and changes periodically.
2 Security is prerefunded or escrowed to maturity. The maturity date shown is the earlier of the reset date or the date of the prerefunded call.
76
The UBS Funds
December 31, 2016 (unaudited)
Portfolio acronyms
ADR American Depositary Receipt
AGC Assured Guaranty Corporation
AGM Assured Guaranty Municipal
CDO Collateralized Debt Obligation
COP Certificate of Participation
CVA Dutch Certification—Depository Certificate
ETF Exchange Traded Fund
FHLMC Federal Home Loan Mortgage Association
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
GO General Obligation
LIBOR London Interbank Offered Rate
NATL-RE Reinsured by National Public Finance Guarantee Corporation
PSF-GTD Permanent School Fund Guaranteed
REIT Real Estate Investment Trust
TBA To Be Announced. TBA security is purchased on a forward commitment basis with an approximate principal amount (generally +/-1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement, when the specific mortgage pools are assigned.
TIPS Treasury Inflation Protected Securities. TIPS are debt securities issued by the US Treasury whose principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. The interest rate paid by the TIPS is fixed,while the principal value rises or falls based on changes in a published Consumer Price Index ("CPI"). Thus, if inflation occurs, the principal and interest payments on the TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest payments decrease, although the TIPS principal amounts will not drop below their face amounts at maturity. In exchange for the inflation protection, the TIPS generally pay lower interest rates than typical US Treasury securities. Only if inflation occurs will TIPS offer a higher real yield than a conventional Treasury security of the same maturity.
Counterparty abbreviations
BB Barclays Bank plc
CITI Citibank NA
GSI Goldman Sachs International
HSBC HSBC Bank plc
JPMCB JPMorgan Chase Bank
MSC Morgan Stanley & Co.
SSB State Street Bank
WBC Westpac Banking Corp.
Currency abbreviations
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
CNY Chinese Yuan
COP Colombian Peso
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
ILS Israel New Shekel
INR Indian Rupee
JPY Japanese Yen
KRW Korean Won
MXN Mexican Peso
NOK Norwegian Krone
NZD New Zealand Dollar
RUB Russian Ruble
SGD Singapore Dollar
THB Thai Baht
TWD New Taiwan Dollar
USD United States Dollar
See accompanying notes to financial statements.
77
The UBS Funds
December 31, 2016 (unaudited)
Explanation of expense disclosure
As a shareholder of the Funds, you incur two types of costs: (1) transactional costs (as applicable); including sales charges (loads); and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees (if applicable); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example below is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, July 1, 2016 to December 31, 2016.
Actual expenses
The first line for each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over a period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on that Fund's actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not that Fund's actual return for each class of shares. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs (as applicable), such as sales charges (loads). Therefore, the second line in the table for each class of shares is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
This projection assumes that annualized expense ratios were in effect during the period July 1, 2016 to December 31, 2016.
78
The UBS Funds
December 31, 2016 (unaudited)
Beginning account value July 1, 2016 | Ending account value December 31, 2016 | Expenses paid during period* 07/01/16 – 12/31/16 | Expense ratio during period | ||||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,019.50 | $ | 6.87 | 1.35 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,018.40 | 6.87 | 1.35 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,015.60 | 10.67 | 2.10 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,014.62 | 10.66 | 2.10 | |||||||||||||||||||
Class P | Actual | 1,000.00 | 1,020.70 | 5.60 | 1.10 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.66 | 5.60 | 1.10 | |||||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,033.30 | 6.66 | 1.30 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,018.65 | 6.61 | 1.30 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,028.90 | 10.48 | 2.05 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,014.87 | 10.41 | 2.05 | |||||||||||||||||||
Class P | Actual | 1,000.00 | 1,033.70 | 5.38 | 1.05 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.91 | 5.35 | 1.05 | |||||||||||||||||||
UBS International Sustainable Equity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,049.50 | 6.46 | 1.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,018.90 | 6.36 | 1.25 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,045.70 | 10.31 | 2.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,015.12 | 10.16 | 2.00 | |||||||||||||||||||
Class P | Actual | 1,000.00 | 1,050.90 | 5.17 | 1.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,020.16 | 5.09 | 1.00 | |||||||||||||||||||
UBS U.S. Large Cap Equity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,104.60 | 5.04 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,020.42 | 4.84 | 0.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,100.20 | 9.00 | 1.70 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,016.64 | 8.64 | 1.70 | |||||||||||||||||||
Class P | Actual | 1,000.00 | 1,105.50 | 3.71 | 0.70 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.68 | 3.57 | 0.70 |
* Expenses are equal to each Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
79
The UBS Funds
December 31, 2016 (unaudited)
Beginning account value July 1, 2016 | Ending account value December 31, 2016 | Expenses paid during period* 07/01/16 – 12/31/16 | Expense ratio during period | ||||||||||||||||||||
UBS U.S. Small Cap Growth Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,136.80 | $ | 6.68 | 1.24 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,018.95 | 6.31 | 1.24 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,132.50 | 10.70 | 1.99 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,015.17 | 10.11 | 1.99 | |||||||||||||||||||
Class P | Actual | 1,000.00 | 1,138.50 | 5.34 | 0.99 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,020.21 | 5.04 | 0.99 | |||||||||||||||||||
UBS Total Return Bond Fund | |||||||||||||||||||||||
Class A1 | Actual | 1,000.00 | 969.20 | 1.86 | 0.75 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.42 | 3.82 | 0.75 | |||||||||||||||||||
Class C1 | Actual | 1,000.00 | 968.10 | 3.10 | 1.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,018.90 | 6.36 | 1.25 | |||||||||||||||||||
Class P | Actual | 1,000.00 | 984.50 | 2.50 | 0.50 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,022.68 | 2.55 | 0.50 | |||||||||||||||||||
UBS Municipal Bond Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 960.00 | 3.21 | 0.65 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.93 | 3.31 | 0.65 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 957.60 | 5.67 | 1.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,019.41 | 5.85 | 1.15 | |||||||||||||||||||
Class P | Actual | 1,000.00 | 961.20 | 1.98 | 0.40 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,023.19 | 2.04 | 0.40 |
* Expenses are equal to each Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
1 UBS Total Return Bond Fund Class A and Class C commenced operations on September 30, 2016. Actual expense is equal to the Fund's annualized net expense ratios from the commencement of investment operations date, multiplied by the average account value over the period, multiplied by 92 divided by 365 (to reflect the actual days in the period). For comparability purposes, hypothetical expense assumes that the Fund was in operation for the entire six-month period ended December 31, 2016. Thus, the hypothetical expense is equal to the Fund's annualized net expense ratio, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
80
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81
The UBS Funds
Financial Statements
Statement of assets and liabilities—December 31, 2016 (unaudited)
UBS Dynamic Alpha Fund | UBS Global Allocation Fund | UBS International Sustainable Equity Fund | |||||||||||||
Assets: | |||||||||||||||
Investments, at cost: | |||||||||||||||
Unaffiliated issuers | $ | 186,950,206 | $ | 270,421,445 | $ | 24,664,512 | |||||||||
Affiliated issuers | — | 60,728,387 | — | ||||||||||||
Investment of cash collateral received from securities loaned1 | 587,063 | 15,810,979 | — | ||||||||||||
Foreign currency | 3,869,575 | 6,053,959 | 134,268 | ||||||||||||
$ | 191,406,844 | $ | 353,014,770 | $ | 24,798,780 | ||||||||||
Investments, at value: | |||||||||||||||
Unaffiliated issuers | $ | 174,224,585 | $ | 277,448,989 | $ | 24,078,318 | |||||||||
Affiliated issuers | — | 63,019,367 | — | ||||||||||||
Investment of cash collateral received from securities loaned1 | 587,063 | 15,810,979 | — | ||||||||||||
Foreign currency | 3,856,591 | 6,042,097 | 131,980 | ||||||||||||
Cash | — | 15,144 | — | ||||||||||||
Receivables: | |||||||||||||||
Investment securities sold | — | 140,209 | — | ||||||||||||
Interest | 1,012,762 | 227,122 | 9 | ||||||||||||
Fund shares sold | 51,689 | 18,195 | 4,850 | ||||||||||||
Foreign tax reclaims | 127 | 130,930 | 14,620 | ||||||||||||
Due from Advisor | — | — | 16,082 | ||||||||||||
Dividends | 3,974 | 89,176 | 25,141 | ||||||||||||
Variation margin on centrally cleared swap agreements | 492,381 | 1,032,770 | — | ||||||||||||
Due from broker | 4,632,874 | 366,713 | — | ||||||||||||
Cash collateral for securities lending | — | 1,138,775 | — | ||||||||||||
Cash collateral for futures contracts | 4,212,649 | 3,781,084 | — | ||||||||||||
Cash collateral for swap agreements | 1,118,821 | 1,354,178 | — | ||||||||||||
Outstanding swap agreements, at value2 | 13,532 | — | — | ||||||||||||
Unrealized appreciation on forward foreign currency contracts | 1,750,405 | 1,465,685 | — | ||||||||||||
Other assets | 49,484 | 49,357 | 25,420 | ||||||||||||
Total assets | 192,006,937 | 372,130,770 | 24,296,420 | ||||||||||||
Liabilities: | |||||||||||||||
Payables: | |||||||||||||||
Cash collateral from securities loaned | 587,063 | 16,949,754 | — | ||||||||||||
Investment securities purchased | — | 184,856 | — | ||||||||||||
Investment advisory and administration fee | 122,470 | 162,155 | — | ||||||||||||
Custody and fund accounting fees | 30,054 | 40,317 | 12,981 | ||||||||||||
Fund shares redeemed | 1,185,394 | 1,034,182 | 55,185 | ||||||||||||
Distribution and service fees | 28,804 | 119,182 | 2,987 | ||||||||||||
Trustees' fees | 16,770 | 24,729 | 6,717 | ||||||||||||
Due to custodian | 997 | — | — | ||||||||||||
Variation margin on futures contracts | 281,558 | 143,271 | — | ||||||||||||
Accrued expenses | 160,828 | 294,545 | 58,256 | ||||||||||||
Options written, at value3 | — | 169,850 | — | ||||||||||||
Outstanding swap agreements, at value2 | 61,835 | — | — | ||||||||||||
Unrealized depreciation on forward foreign currency contracts | 573,395 | 362,119 | — | ||||||||||||
Total liabilities | 3,049,168 | 19,484,960 | 136,126 | ||||||||||||
Net assets | $ | 188,957,769 | $ | 352,645,810 | $ | 24,160,294 |
1 The market value of securities loaned by UBS Dynamic Alpha Fund, UBS Global Allocation Fund, UBS U.S. Large Cap Equity Fund and UBS U.S. Small Cap Growth Fund as of December 31, 2016 was $574,801, $16,590,730, $223,413 and $8,744,537, respectively.
2 Net upfront payments received by UBS Dynamic Alpha Fund were $104,101.
3 Premiums received by UBS Global Allocation Fund were $126,005.
82
The UBS Funds
UBS U.S. Large Cap Equity Fund | UBS U.S. Small Cap Growth Fund | ||||||||||
Assets: | |||||||||||
Investments, at cost: | |||||||||||
Unaffiliated issuers | $ | 25,047,532 | $ | 146,789,872 | |||||||
Affiliated issuers | — | — | |||||||||
Investment of cash collateral received from securities loaned1 | 230,632 | 8,969,598 | |||||||||
Foreign currency | — | — | |||||||||
$ | 25,278,164 | $ | 155,759,470 | ||||||||
Investments, at value: | |||||||||||
Unaffiliated issuers | $ | 27,359,212 | $ | 172,210,707 | |||||||
Affiliated issuers | — | — | |||||||||
Investment of cash collateral received from securities loaned1 | 230,632 | 8,969,598 | |||||||||
Foreign currency | — | — | |||||||||
Cash | 295 | — | |||||||||
Receivables: | |||||||||||
Investment securities sold | 421,210 | — | |||||||||
Interest | 74 | 2,847 | |||||||||
Fund shares sold | — | 199,464 | |||||||||
Foreign tax reclaims | — | — | |||||||||
Due from Advisor | 30,331 | — | |||||||||
Dividends | 38,766 | 33,849 | |||||||||
Variation margin on centrally cleared swap agreements | — | — | |||||||||
Due from broker | — | — | |||||||||
Cash collateral for securities lending | — | — | |||||||||
Cash collateral for futures contracts | — | — | |||||||||
Cash collateral for swap agreements | — | — | |||||||||
Outstanding swap agreements, at value2 | — | — | |||||||||
Unrealized appreciation on forward foreign currency contracts | — | — | |||||||||
Other assets | 28,324 | 43,910 | |||||||||
Total assets | 28,108,844 | 181,460,375 | |||||||||
Liabilities: | |||||||||||
Payables: | |||||||||||
Cash collateral from securities loaned | 230,632 | 8,969,598 | |||||||||
Investment securities purchased | 217,419 | — | |||||||||
Investment advisory and administration fee | — | 92,938 | |||||||||
Custody and fund accounting fees | 10,440 | 16,101 | |||||||||
Fund shares redeemed | 20,989 | 1,770,193 | |||||||||
Distribution and service fees | 3,818 | 9,941 | |||||||||
Trustees' fees | 6,944 | 13,220 | |||||||||
Due to custodian | — | 8,416 | |||||||||
Variation margin on futures contracts | — | — | |||||||||
Accrued expenses | 44,476 | 71,490 | |||||||||
Options written, at value3 | — | — | |||||||||
Outstanding swap agreements, at value2 | — | — | |||||||||
Unrealized depreciation on forward foreign currency contracts | — | — | |||||||||
Total liabilities | 534,718 | 10,951,897 | |||||||||
Net assets | $ | 27,574,126 | $ | 170,508,478 |
See accompanying notes to financial statements.
83
The UBS Funds
Financial Statements
Statement of assets and liabilities—December 31, 2016 (unaudited) (continued)
UBS Total Return Bond Fund | |||||||
Assets: | |||||||
Investments, at cost: | |||||||
Unaffiliated issuers | $ | 65,958,891 | |||||
Foreign currency | 150,946 | ||||||
$ | 66,109,837 | ||||||
Investments, at value: | |||||||
Unaffiliated issuers | $ | 65,741,919 | |||||
Foreign currency | 152,650 | ||||||
Receivables: | |||||||
Investment securities sold | 18,244,071 | ||||||
Interest | 327,797 | ||||||
Fund shares sold | — | ||||||
Due from Advisor | 29,716 | ||||||
Dividends | 3,846 | ||||||
Due from broker | 75,573 | ||||||
Deferred offering cost | 52,117 | ||||||
Cash collateral for futures contracts | 92,676 | ||||||
Outstanding swap agreements, at value1 | 8,292 | ||||||
Unrealized appreciation on forward foreign currency contracts | 5,336 | ||||||
Other assets | — | ||||||
Total assets | 84,733,993 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Investment securities purchased | 28,770,803 | ||||||
Custody and fund accounting fees | 17,162 | ||||||
Fund shares redeemed | 63,246 | ||||||
Distribution and service fees | 58 | ||||||
Trustees' fees | 11,428 | ||||||
Due to custodian | 5,476 | ||||||
Variation margin on futures contracts | 46,144 | ||||||
Accrued expenses | 106,118 | ||||||
Options written, at value2 | 68,056 | ||||||
Unrealized depreciation on forward foreign currency contracts | 10,118 | ||||||
Total liabilities | 29,098,609 | ||||||
Net assets | $ | 55,635,384 |
1 Net upfront payments received by UBS Total Return Bond Fund were $809.
2 Premiums received by UBS Total Return Bond Fund were $70,548.
84
The UBS Funds
UBS Municipal Bond Fund | |||||||
Assets: | |||||||
Investments, at cost: | |||||||
Unaffiliated issuers | $ | 121,893,688 | |||||
Foreign currency | — | ||||||
$ | 121,893,688 | ||||||
Investments, at value: | |||||||
Unaffiliated issuers | $ | 119,458,956 | |||||
Foreign currency | — | ||||||
Receivables: | |||||||
Investment securities sold | — | ||||||
Interest | 1,440,432 | ||||||
Fund shares sold | 1,664,518 | ||||||
Due from Advisor | 311 | ||||||
Dividends | 29 | ||||||
Due from broker | — | ||||||
Deferred offering cost | — | ||||||
Cash collateral for futures contracts | — | ||||||
Outstanding swap agreements, at value1 | — | ||||||
Unrealized appreciation on forward foreign currency contracts | — | ||||||
Other assets | 43,829 | ||||||
Total assets | 122,608,075 | ||||||
Liabilities: | |||||||
Payables: | |||||||
Investment securities purchased | 2,409,420 | ||||||
Custody and fund accounting fees | 13,330 | ||||||
Fund shares redeemed | 561,173 | ||||||
Distribution and service fees | 8,585 | ||||||
Trustees' fees | 10,093 | ||||||
Due to custodian | — | ||||||
Variation margin on futures contracts | — | ||||||
Accrued expenses | 40,206 | ||||||
Options written, at value2 | — | ||||||
Unrealized depreciation on forward foreign currency contracts | — | ||||||
Total liabilities | 3,042,807 | ||||||
Net assets | $ | 119,565,268 |
See accompanying notes to financial statements.
85
The UBS Funds
Financial Statements
Statement of assets and liabilities—December 31, 2016 (unaudited) (continued)
UBS Dynamic Alpha Fund | UBS Global Allocation Fund | UBS International Sustainable Equity Fund | |||||||||||||
Net assets consist of: | |||||||||||||||
Beneficial interest | $ | 600,071,483 | $ | 1,309,927,292 | $ | 33,791,246 | |||||||||
Accumulated undistributed (distributions in excess of) net investment income (loss) | (8,011,576 | ) | (2,545,058 | ) | (28,752 | ) | |||||||||
Accumulated net realized loss | (391,604,660 | ) | (965,937,437 | ) | (9,012,935 | ) | |||||||||
Net unrealized appreciation (depreciation) | (11,497,478 | ) | 11,201,013 | (589,265 | ) | ||||||||||
Net assets | $ | 188,957,769 | $ | 352,645,810 | $ | 24,160,294 | |||||||||
Class A: | |||||||||||||||
Net assets | $ | 51,209,738 | $ | 173,765,735 | $ | 5,398,718 | |||||||||
Shares outstanding | 8,149,439 | 16,430,503 | 652,036 | ||||||||||||
Net asset value and redemption proceeds per share | $ | 6.28 | $ | 10.58 | $ | 8.28 | |||||||||
Offering price per share (NAV per share plus maximum sales charge) | $ | 6.65 | $ | 11.20 | $ | 8.76 | |||||||||
Class C: | |||||||||||||||
Net assets | $ | 20,146,652 | $ | 97,536,725 | $ | 2,235,248 | |||||||||
Shares outstanding | 3,433,713 | 9,449,287 | 275,622 | ||||||||||||
Net asset value and offering price per share | $ | 5.87 | $ | 10.32 | $ | 8.11 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge) | $ | 5.81 | $ | 10.22 | $ | 8.03 | |||||||||
Class P: | |||||||||||||||
Net assets | $ | 117,601,379 | $ | 81,343,350 | $ | 16,526,328 | |||||||||
Shares outstanding | 18,344,409 | 7,536,795 | 1,991,690 | ||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share | $ | 6.41 | $ | 10.79 | $ | 8.30 |
86
The UBS Funds
UBS U.S. Large Cap Equity Fund | UBS U.S. Small Cap Growth Fund | ||||||||||
Net assets consist of: | |||||||||||
Beneficial interest | $ | 106,487,121 | $ | 146,986,357 | |||||||
Accumulated undistributed (distributions in excess of) net investment income (loss) | 94,618 | (493,772 | ) | ||||||||
Accumulated net realized loss | (81,319,293 | ) | (1,404,942 | ) | |||||||
Net unrealized appreciation (depreciation) | 2,311,680 | 25,420,835 | |||||||||
Net assets | $ | 27,574,126 | $ | 170,508,478 | |||||||
Class A: | |||||||||||
Net assets | $ | 9,696,204 | $ | 28,934,826 | |||||||
Shares outstanding | 347,655 | 1,481,355 | |||||||||
Net asset value and redemption proceeds per share | $ | 27.89 | $ | 19.53 | |||||||
Offering price per share (NAV per share plus maximum sales charge) | $ | 29.51 | $ | 20.67 | |||||||
Class C: | |||||||||||
Net assets | $ | 2,125,104 | $ | 4,101,463 | |||||||
Shares outstanding | 79,334 | 248,230 | |||||||||
Net asset value and offering price per share | $ | 26.79 | $ | 16.52 | |||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge) | $ | 26.52 | $ | 16.35 | |||||||
Class P: | |||||||||||
Net assets | $ | 15,752,818 | $ | 137,472,189 | |||||||
Shares outstanding | 563,150 | 6,535,676 | |||||||||
Net asset value per share, offering price per share, and redemption proceeds per share | $ | 27.97 | $ | 21.03 |
See accompanying notes to financial statements.
87
The UBS Funds
Financial Statements
Statement of assets and liabilities—December 31, 2016 (unaudited) (continued)
UBS Total Return Bond Fund | |||||||
Net assets consist of: | |||||||
Beneficial interest | $ | 59,416,173 | |||||
Distributions in excess of net investment income | (19,625 | ) | |||||
Accumulated net realized loss | (3,506,384 | ) | |||||
Net unrealized depreciation | (254,780 | ) | |||||
Net assets | $ | 55,635,384 | |||||
Class A: | |||||||
Net assets | $ | 5,328 | |||||
Shares outstanding | 363 | ||||||
Net asset value and redemption proceeds per share | $ | 14.69 | |||||
Offering price per share (NAV per share plus maximum sales charge) | $ | 15.26 | |||||
Class C: | |||||||
Net assets | $ | 87,611 | |||||
Shares outstanding | 5,964 | ||||||
Net asset value and offering price per share | $ | 14.69 | |||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge) | $ | 14.58 | |||||
Class P: | |||||||
Net assets | $ | 55,542,445 | |||||
Shares outstanding | 3,778,833 | ||||||
Net asset value per share, offering price per share, and redemption proceeds per share | $ | 14.70 |
88
The UBS Funds
UBS Municipal Bond Fund | |||||||
Net assets consist of: | |||||||
Beneficial interest | $ | 122,404,174 | |||||
Distributions in excess of net investment income | (42,618 | ) | |||||
Accumulated net realized loss | (361,556 | ) | |||||
Net unrealized depreciation | (2,434,732 | ) | |||||
Net assets | $ | 119,565,268 | |||||
Class A: | |||||||
Net assets | $ | 21,740,870 | |||||
Shares outstanding | 2,171,111 | ||||||
Net asset value and redemption proceeds per share | $ | 10.01 | |||||
Offering price per share (NAV per share plus maximum sales charge) | $ | 10.24 | |||||
Class C: | |||||||
Net assets | $ | 6,447,060 | |||||
Shares outstanding | 644,160 | ||||||
Net asset value and offering price per share | $ | 10.01 | |||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge) | $ | 9.93 | |||||
Class P: | |||||||
Net assets | $ | 91,377,338 | |||||
Shares outstanding | 9,129,164 | ||||||
Net asset value per share, offering price per share, and redemption proceeds per share | $ | 10.01 |
See accompanying notes to financial statements.
89
The UBS Funds
Financial Statements
Statement of operations—For the six months ended December 31, 2016 (unaudited)
UBS Dynamic Alpha Fund | UBS Global Allocation Fund | UBS International Sustainable Equity Fund | |||||||||||||
Investment income: | |||||||||||||||
Dividends | $ | 181,426 | $ | 2,248,229 | $ | 206,225 | |||||||||
Interest | 1,731,098 | 234,896 | — | ||||||||||||
Securities lending | 11,499 | 30,996 | 1,536 | ||||||||||||
Foreign tax withheld | — | (72,911 | ) | (18,290 | ) | ||||||||||
Total income | 1,924,023 | 2,441,210 | 189,471 | ||||||||||||
Expenses: | |||||||||||||||
Advisory and administration | 989,733 | 1,680,000 | 107,077 | ||||||||||||
Distribution and service: | |||||||||||||||
Class A | 77,488 | 232,851 | 6,756 | ||||||||||||
Class C | 121,291 | 551,297 | 11,979 | ||||||||||||
Transfer agency and related service fees: | |||||||||||||||
Class A | 16,981 | 62,965 | 1,943 | ||||||||||||
Class C | 12,662 | 56,770 | 1,201 | ||||||||||||
Class P | 53,601 | 21,591 | 5,145 | ||||||||||||
Custodian and fund accounting | 62,057 | 82,320 | 27,404 | ||||||||||||
Federal and state registration | 22,712 | 21,957 | 21,720 | ||||||||||||
Professional services | 66,329 | 80,178 | 59,295 | ||||||||||||
Shareholder reports | 30,911 | 62,630 | 4,094 | ||||||||||||
Trustees | 32,884 | 49,513 | 14,446 | ||||||||||||
Other | 33,458 | 41,234 | 16,871 | ||||||||||||
Total expenses | 1,520,107 | 2,943,306 | 277,931 | ||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (140,224 | ) | (137,136 | ) | (136,415 | ) | |||||||||
Net expenses | 1,379,883 | 2,806,170 | 141,516 | ||||||||||||
Net investment income (loss) | 544,140 | (364,960 | ) | 47,955 | |||||||||||
Net realized gain (loss) on: | |||||||||||||||
Investments in unaffiliated issuers | (1,453,256 | ) | 1,982,009 | 132,729 | |||||||||||
Investments in affiliated issuers | — | 325,040 | — | ||||||||||||
Futures contracts | 3,589,755 | (3,208,151 | ) | — | |||||||||||
Options written | 50,250 | 171,748 | — | ||||||||||||
Swap agreements | 703,567 | 1,773,802 | — | ||||||||||||
Forward foreign currency contracts | 4,188,926 | 806,547 | — | ||||||||||||
Foreign currency transactions | (896,826 | ) | 277,212 | (8,794 | ) | ||||||||||
Net realized gain | 6,182,416 | 2,128,207 | 123,935 | ||||||||||||
Change in net unrealized appreciation (depreciation) on: | |||||||||||||||
Investments | (2,883,319 | ) | 9,880,932 | 993,696 | |||||||||||
Futures contracts | 752,773 | 194,659 | — | ||||||||||||
Options written | — | (190,873 | ) | — | |||||||||||
Swap agreements | 282,006 | (387,252 | ) | — | |||||||||||
Forward foreign currency contracts | (754,665 | ) | 1,105,273 | — | |||||||||||
Translation of other assets and liabilities denominated in foreign currency | 28,003 | 306,593 | (2,316 | ) | |||||||||||
Change in net unrealized appreciation (depreciation) | (2,575,202 | ) | 10,909,332 | 991,380 | |||||||||||
Net realized and unrealized gain | 3,607,214 | 13,037,539 | 1,115,315 | ||||||||||||
Net increase in net assets resulting from operations | $ | 4,151,354 | $ | 12,672,579 | $ | 1,163,270 |
90
The UBS Funds
UBS U.S. Large Cap Equity Fund | UBS U.S. Small Cap Growth Fund | ||||||||||
Investment income: | |||||||||||
Dividends | $ | 209,100 | $ | 752,792 | |||||||
Interest | — | — | |||||||||
Securities lending | 1,970 | 50,048 | |||||||||
Foreign tax withheld | — | — | |||||||||
Total income | 211,070 | 802,840 | |||||||||
Expenses: | |||||||||||
Advisory and administration | 106,273 | 791,078 | |||||||||
Distribution and service: | |||||||||||
Class A | 11,788 | 36,616 | |||||||||
Class C | 10,886 | 22,105 | |||||||||
Transfer agency and related service fees: | |||||||||||
Class A | 3,176 | 27,943 | |||||||||
Class C | 988 | 3,422 | |||||||||
Class P | 4,753 | 45,525 | |||||||||
Custodian and fund accounting | 21,173 | 34,050 | |||||||||
Federal and state registration | 20,432 | 22,750 | |||||||||
Professional services | 50,434 | 47,975 | |||||||||
Shareholder reports | 4,648 | 9,971 | |||||||||
Trustees | 14,734 | 28,154 | |||||||||
Other | 15,482 | 17,766 | |||||||||
Total expenses | 264,767 | 1,087,355 | |||||||||
Fee waivers and/or expense reimbursements by Advisor | (145,722 | ) | (179,016 | ) | |||||||
Net expenses | 119,045 | 908,339 | |||||||||
Net investment income (loss) | 92,025 | (105,499 | ) | ||||||||
Net realized gain (loss) on: | |||||||||||
Investments in unaffiliated issuers | 767,884 | 6,394,712 | |||||||||
Investments in affiliated issuers | — | — | |||||||||
Futures contracts | — | — | |||||||||
Options written | — | — | |||||||||
Swap agreements | — | — | |||||||||
Forward foreign currency contracts | — | — | |||||||||
Foreign currency transactions | — | — | |||||||||
Net realized gain | 767,884 | 6,394,712 | |||||||||
Change in net unrealized appreciation (depreciation) on: | |||||||||||
Investments | 1,863,212 | 15,444,881 | |||||||||
Futures contracts | — | — | |||||||||
Options written | — | — | |||||||||
Swap agreements | — | — | |||||||||
Forward foreign currency contracts | — | — | |||||||||
Translation of other assets and liabilities denominated in foreign currency | — | — | |||||||||
Change in net unrealized appreciation (depreciation) | 1,863,212 | 15,444,881 | |||||||||
Net realized and unrealized gain | 2,631,096 | 21,839,593 | |||||||||
Net increase in net assets resulting from operations | $ | 2,723,121 | $ | 21,734,094 |
See accompanying notes to financial statements.
91
The UBS Funds
Financial Statements
Statement of operations—For the six months ended December 31, 2016 (unaudited) (continued)
UBS Total Return Bond Fund | |||||||
Investment income: | |||||||
Dividends | $ | 30,918 | |||||
Interest | 1,213,533 | ||||||
Total income | 1,244,451 | ||||||
Expenses: | |||||||
Advisory and administration | 244,729 | ||||||
Distribution and service: | |||||||
Class A | 2 | ||||||
Class C | 97 | ||||||
Transfer agency and related service fees: | |||||||
Class A | 21 | ||||||
Class C | 20 | ||||||
Class P | 5,284 | ||||||
Custodian and fund accounting | 27,029 | ||||||
Federal and state registration | 3,659 | ||||||
Professional services | 16,896 | ||||||
Shareholder reports | 12,572 | ||||||
Trustees | 21,697 | ||||||
Amortization of offering costs | 54,885 | ||||||
Other | 18,968 | ||||||
Total expenses | 405,859 | ||||||
Fee waivers and/or expense reimbursements by Advisor | (192,388 | ) | |||||
Net expenses | 213,471 | ||||||
Net investment income | 1,030,980 | ||||||
Net realized gain (loss) on: | |||||||
Investments in unaffiliated issuers | 1,085,307 | ||||||
Futures contracts | (345,408 | ) | |||||
Options written | 265,515 | ||||||
Swap agreements | 15,655 | ||||||
Forward foreign currency contracts | 63,261 | ||||||
Foreign currency transactions | (14,789 | ) | |||||
Net realized gain (loss) | 1,069,541 | ||||||
Change in net unrealized appreciation (depreciation) on: | |||||||
Investments | (2,403,885 | ) | |||||
Futures contracts | 53,713 | ||||||
Options written | 5,491 | ||||||
Swap agreements | 14,293 | ||||||
Forward foreign currency contracts | (31,929 | ) | |||||
Translation of other assets and liabilities denominated in foreign currency | 5,407 | ||||||
Change in net unrealized appreciation (depreciation) | (2,356,910 | ) | |||||
Net realized and unrealized loss | (1,287,369 | ) | |||||
Net decrease in net assets resulting from operations | $ | (256,389 | ) |
92
The UBS Funds
UBS Municipal Bond Fund | |||||||
Investment income: | |||||||
Dividends | $ | 612 | |||||
Interest | 1,199,852 | ||||||
Total income | 1,200,464 | ||||||
Expenses: | |||||||
Advisory and administration | 297,238 | ||||||
Distribution and service: | |||||||
Class A | 28,559 | ||||||
Class C | 24,127 | ||||||
Transfer agency and related service fees: | |||||||
Class A | 1,018 | ||||||
Class C | 810 | ||||||
Class P | 9,555 | ||||||
Custodian and fund accounting | 26,235 | ||||||
Federal and state registration | 25,574 | ||||||
Professional services | 49,434 | ||||||
Shareholder reports | 8,911 | ||||||
Trustees | 23,911 | ||||||
Amortization of offering costs | — | ||||||
Other | 10,359 | ||||||
Total expenses | 505,731 | ||||||
Fee waivers and/or expense reimbursements by Advisor | (201,996 | ) | |||||
Net expenses | 303,735 | ||||||
Net investment income | 896,729 | ||||||
Net realized gain (loss) on: | |||||||
Investments in unaffiliated issuers | (205,377 | ) | |||||
Futures contracts | — | ||||||
Options written | — | ||||||
Swap agreements | — | ||||||
Forward foreign currency contracts | — | ||||||
Foreign currency transactions | — | ||||||
Net realized gain (loss) | (205,377 | ) | |||||
Change in net unrealized appreciation (depreciation) on: | |||||||
Investments | (5,923,209 | ) | |||||
Futures contracts | — | ||||||
Options written | — | ||||||
Swap agreements | — | ||||||
Forward foreign currency contracts | — | ||||||
Translation of other assets and liabilities denominated in foreign currency | — | ||||||
Change in net unrealized appreciation (depreciation) | (5,923,209 | ) | |||||
Net realized and unrealized loss | (6,128,586 | ) | |||||
Net decrease in net assets resulting from operations | $ | (5,231,857 | ) |
See accompanying notes to financial statements.
93
The UBS Funds
Financial Statements
Statement of changes in net assets
UBS Dynamic Alpha Fund | UBS Global Allocation Fund | ||||||||||||||||||
Six months ended December 31, 2016 (unaudited) | Year ended June 30, 2016 | Six months ended December 31, 2016 (unaudited) | Year ended June 30, 2016 | ||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 544,140 | $ | 2,396,025 | $ | (364,960 | ) | $ | (282,902 | ) | |||||||||
Net realized gain (loss) | 6,182,416 | (44,796,086 | ) | 2,128,207 | (15,818,275 | ) | |||||||||||||
Change in net unrealized appreciation (depreciation) | (2,575,202 | ) | 10,008,305 | 10,909,332 | (8,564,917 | ) | |||||||||||||
Contributions from Advisor | — | 214,280 | — | 316,557 | |||||||||||||||
Net increase (decrease) in net assets from operations | 4,151,354 | (32,177,476 | ) | 12,672,579 | (24,349,537 | ) | |||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income | — | (2,647,814 | ) | (3,709,639 | ) | (5,354,437 | ) | ||||||||||||
Return of capital | — | (30,207 | ) | — | — | ||||||||||||||
Total Class A dividends and distributions | — | (2,678,021 | ) | (3,709,639 | ) | (5,354,437 | ) | ||||||||||||
Class C: | |||||||||||||||||||
Net investment income | — | (936,550 | ) | (1,163,177 | ) | (2,183,113 | ) | ||||||||||||
Return of capital | — | (10,683 | ) | — | — | ||||||||||||||
Total Class C dividends and distributions | — | (947,233 | ) | (1,163,177 | ) | (2,183,113 | ) | ||||||||||||
Class P: | |||||||||||||||||||
Net investment income | — | (5,913,042 | ) | (1,947,479 | ) | (3,013,026 | ) | ||||||||||||
Return of capital | — | (67,458 | ) | — | — | ||||||||||||||
Total Class P dividends and distributions | — | (5,980,500 | ) | (1,947,479 | ) | (3,013,026 | ) | ||||||||||||
Decrease in net assets from dividends and distributions | — | (9,605,754 | ) | (6,820,295 | ) | (10,550,576 | ) | ||||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 4,299,157 | 29,677,803 | 9,591,106 | 9,553,990 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | — | 9,059,509 | 6,231,895 | 9,531,202 | |||||||||||||||
Cost of shares redeemed | (45,229,865 | ) | (99,285,584 | ) | (66,903,567 | ) | (90,668,225 | ) | |||||||||||
Redemption fees | — | — | — | 378 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | (40,930,708 | ) | (60,548,272 | ) | (51,080,566 | ) | (71,582,655 | ) | |||||||||||
Increase (decrease) in net asset | (36,779,354 | ) | (102,331,502 | ) | (45,228,282 | ) | (106,482,768 | ) | |||||||||||
Net assets, beginning of period | 225,737,123 | 328,068,625 | 397,874,092 | 504,356,860 | |||||||||||||||
Net assets, end of period | $ | 188,957,769 | $ | 225,737,123 | $ | 352,645,810 | $ | 397,874,092 | |||||||||||
Accumulated undistributed (distributions in excess) net investment income (loss) | $ | (8,011,576 | ) | $ | (8,555,716 | ) | $ | (2,545,058 | ) | $ | 4,640,197 |
94
The UBS Funds
UBS International Sustainable Equity Fund | UBS U.S. Large Cap Equity Fund | ||||||||||||||||||
Six months ended December 31, 2016 (unaudited) | Year ended June 30, 2016 | Six months ended December 31, 2016 (unaudited) | Year ended June 30, 2016 | ||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 47,955 | $ | 439,021 | $ | 92,025 | $ | 307,584 | |||||||||||
Net realized gain (loss) | 123,935 | (520,410 | ) | 767,884 | (473,205 | ) | |||||||||||||
Change in net unrealized appreciation (depreciation) | 991,380 | (3,713,231 | ) | 1,863,212 | (3,137,879 | ) | |||||||||||||
Contributions from Advisor | — | 39,797 | — | — | |||||||||||||||
Net increase (decrease) in net assets from operations | 1,163,270 | (3,754,823 | ) | 2,723,121 | (3,303,500 | ) | |||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income | (107,890 | ) | (69,810 | ) | (96,685 | ) | (132,023 | ) | |||||||||||
Return of capital | — | — | — | — | |||||||||||||||
Total Class A dividends and distributions | (107,890 | ) | (69,810 | ) | (96,685 | ) | (132,023 | ) | |||||||||||
Class C: | |||||||||||||||||||
Net investment income | (26,845 | ) | (15,558 | ) | (5,319 | ) | (12,163 | ) | |||||||||||
Return of capital | — | — | — | — | |||||||||||||||
Total Class C dividends and distributions | (26,845 | ) | (15,558 | ) | (5,319 | ) | (12,163 | ) | |||||||||||
Class P: | |||||||||||||||||||
Net investment income | (369,867 | ) | (218,890 | ) | (197,574 | ) | (454,262 | ) | |||||||||||
Return of capital | — | — | — | — | |||||||||||||||
Total Class P dividends and distributions | (369,867 | ) | (218,890 | ) | (197,574 | ) | (454,262 | ) | |||||||||||
Decrease in net assets from dividends and distributions | (504,602 | ) | (304,258 | ) | (299,578 | ) | (598,448 | ) | |||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 1,194,316 | 7,565,514 | 1,938,018 | 6,381,043 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 468,472 | 274,911 | 286,088 | 577,488 | |||||||||||||||
Cost of shares redeemed | (1,993,522 | ) | (6,095,200 | ) | (4,124,618 | ) | (16,777,291 | ) | |||||||||||
Redemption fees | — | — | — | 188 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | (330,734 | ) | 1,745,225 | (1,900,512 | ) | (9,818,572 | ) | ||||||||||||
Increase (decrease) in net asset | 327,934 | (2,313,856 | ) | 523,031 | (13,720,520 | ) | |||||||||||||
Net assets, beginning of period | 23,832,360 | 26,146,216 | 27,051,095 | 40,771,615 | |||||||||||||||
Net assets, end of period | $ | 24,160,294 | $ | 23,832,360 | $ | 27,574,126 | $ | 27,051,095 | |||||||||||
Accumulated undistributed (distributions in excess) net investment income (loss) | $ | (28,752 | ) | $ | 427,895 | $ | 94,618 | $ | 302,171 |
See accompanying notes to financial statements.
95
The UBS Funds
Financial Statements
Statement of changes in net assets (continued)
UBS U.S. Small Cap Growth Fund | UBS Total Return Bond Fund | ||||||||||||||||||||||
Six months ended December 31, 2016 (unaudited) | Year ended June 30, 2016 | Six months ended December 31, 2016 (unaudited) | Nine Months ended June 30, 2016 | Year ended September 30, 2016 | |||||||||||||||||||
Operations: | |||||||||||||||||||||||
Net investment income (loss) | $ | (105,499 | ) | $ | (919,714 | ) | $ | 1,030,980 | $ | 3,128,455 | $ | 5,587,745 | |||||||||||
Net realized gain (loss) | 6,394,712 | (975,802 | ) | 1,069,541 | (4,059,029 | ) | (265,409 | ) | |||||||||||||||
Change in net unrealized appreciation (depreciation) | 15,444,881 | (41,105,966 | ) | (2,356,910 | ) | 5,043,486 | (8,068,933 | ) | |||||||||||||||
Net increase (decrease) in net assets from operations | 21,734,094 | (43,001,482 | ) | (256,389 | ) | 4,112,912 | (2,746,597 | ) | |||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||||||
Class A: | |||||||||||||||||||||||
Net investment income | — | — | (21 | ) | — | — | |||||||||||||||||
Net realized gain | (1,010,739 | ) | (3,580,313 | ) | — | — | — | ||||||||||||||||
Total Class A dividends and distributions | (1,010,739 | ) | (3,580,313 | ) | (21 | ) | — | — | |||||||||||||||
Class C: | |||||||||||||||||||||||
Net investment income | — | — | (224 | ) | — | — | |||||||||||||||||
Net realized gain | (164,852 | ) | (515,022 | ) | — | — | — | ||||||||||||||||
Total Class C dividends and distributions | (164,852 | ) | (515,022 | ) | (224 | ) | — | — | |||||||||||||||
Class P: | |||||||||||||||||||||||
Net investment income | — | — | (1,125,457 | ) | (2,868,246 | ) | (5,638,365 | ) | |||||||||||||||
Net realized gain | (4,314,463 | ) | (10,977,397 | ) | — | — | (480,029 | ) | |||||||||||||||
Total Class P dividends and distributions | (4,314,463 | ) | (10,977,397 | ) | (1,125,457 | ) | (2,868,246 | ) | (6,118,394 | ) | |||||||||||||
Decrease in net assets from dividends and distributions | (5,490,054 | ) | (15,072,732 | ) | (1,125,702 | ) | (2,868,246 | ) | (6,118,394 | ) | |||||||||||||
Beneficial interest transactions: | |||||||||||||||||||||||
Proceeds from shares sold | 11,236,534 | 96,909,755 | 270,603 | 303,562 | — | ||||||||||||||||||
Shares issued on reinvestment of dividends and distributions | 5,212,883 | 13,779,443 | 855,936 | 249,928 | — | ||||||||||||||||||
Cost of shares redeemed | (24,844,579 | ) | (120,663,054 | ) | (71,074,145 | ) | (6,441,226 | ) | — | ||||||||||||||
Redemption fees | — | 1,617 | 42,949 | 92,483 | — | ||||||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | (8,395,162 | ) | (9,972,239 | ) | (69,904,657 | ) | (5,795,253 | ) | — | ||||||||||||||
Increase (decrease) in net asset | 7,848,878 | (68,046,453 | ) | (71,286,748 | ) | (4,550,587 | ) | (8,864,991 | ) | ||||||||||||||
Net assets, beginning of period | 162,659,600 | 230,706,053 | 126,922,132 | 131,472,719 | 140,337,710 | ||||||||||||||||||
Net assets, end of period | $ | 170,508,478 | $ | 162,659,600 | $ | 55,635,384 | $ | 126,922,132 | $ | 131,472,719 | |||||||||||||
Accumulated undistributed (distributions in excess) net investment income (loss) | $ | (493,755 | ) | $ | (388,273 | ) | $ | (19,625 | ) | $ | 75,097 | $ | 144,266 |
96
The UBS Funds
UBS Municipal Bond Fund | |||||||||||
Six months ended December 31, 2016 (unaudited) | Year ended June 30, 2016 | ||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | 896,729 | $ | 1,312,103 | |||||||
Net realized gain (loss) | (205,377 | ) | 273,244 | ||||||||
Change in net unrealized appreciation (depreciation) | (5,923,209 | ) | 4,066,059 | ||||||||
Net increase (decrease) in net assets from operations | (5,231,857 | ) | 5,651,406 | ||||||||
Dividends and distributions to shareholders by class: | |||||||||||
Class A: | |||||||||||
Net investment income | (146,324 | ) | (232,100 | ) | |||||||
Net realized gain | (54,279 | ) | — | ||||||||
Total Class A dividends and distributions | (200,603 | ) | (232,100 | ) | |||||||
Class C: | |||||||||||
Net investment income | (24,649 | ) | (57,551 | ) | |||||||
Net realized gain | (15,735 | ) | — | ||||||||
Total Class C dividends and distributions | (40,384 | ) | (57,551 | ) | |||||||
Class P: | |||||||||||
Net investment income | (724,523 | ) | (1,118,533 | ) | |||||||
Net realized gain | (223,923 | ) | — | ||||||||
Total Class P dividends and distributions | (948,446 | ) | (1,118,533 | ) | |||||||
Decrease in net assets from dividends and distributions | (1,189,433 | ) | (1,408,184 | ) | |||||||
Beneficial interest transactions: | |||||||||||
Proceeds from shares sold | 47,218,974 | 85,280,837 | |||||||||
Shares issued on reinvestment of dividends and distributions | 973,102 | 1,172,802 | |||||||||
Cost of shares redeemed | (36,186,866 | ) | (37,585,911 | ) | |||||||
Redemption fees | — | — | |||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | 12,005,210 | 48,867,728 | |||||||||
Increase (decrease) in net asset | 5,583,920 | 53,110,950 | |||||||||
Net assets, beginning of period | 113,981,348 | 60,870,398 | |||||||||
Net assets, end of period | $ | 119,565,268 | $ | 113,981,348 | |||||||
Accumulated undistributed (distributions in excess) net investment income (loss) | $ | (42,618 | ) | $ | (43,851 | ) |
See accompanying notes to financial statements.
97
UBS Dynamic Alpha Fund
Financial highlights
The table below sets forth data for one share of beneficial interest outstanding throughout each period presented.
Class A
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.17 | $ | 7.13 | $ | 7.24 | $ | 6.82 | $ | 6.36 | $ | 5.98 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.01 | 0.05 | 0.04 | 0.05 | 0.07 | 0.08 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.10 | (0.79 | ) | 0.11 | 0.38 | 0.50 | 0.30 | ||||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | 0.003 | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.11 | (0.73 | ) | 0.15 | 0.43 | 0.57 | 0.38 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | — | (0.23 | ) | (0.26 | ) | (0.01 | ) | (0.11 | ) | — | |||||||||||||||||
Return of capital | — | (0.00 | )3 | — | — | — | — | ||||||||||||||||||||
Total dividends/distributions | — | (0.23 | ) | (0.26 | ) | (0.01 | ) | (0.11 | ) | — | |||||||||||||||||
Net asset value, end of period | $ | 6.28 | $ | 6.17 | $ | 7.13 | $ | 7.24 | $ | 6.82 | $ | 6.36 | |||||||||||||||
Total investment return2 | 1.95 | % | (10.48 | )%4 | 2.03 | %5 | 6.31 | % | 9.05 | % | 6.18 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short | 1.46 | %6 | 1.45 | % | 1.43 | % | 1.42 | % | 1.43 | % | 1.60 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short | 1.35 | %6 | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | % | 1.54 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short | 1.35 | %6 | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | % | |||||||||||||||
Net investment income | 0.43 | %6 | 0.82 | % | 0.58 | % | 0.66 | % | 0.98 | % | 1.33 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 51,210 | $ | 65,741 | $ | 89,421 | $ | 194,185 | $ | 208,369 | $ | 160,773 | |||||||||||||||
Portfolio turnover rate | 27 | % | 50 | % | 54 | % | 45 | % | 74 | % | 164 | % |
Class P
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.28 | $ | 7.27 | $ | 7.38 | $ | 6.96 | $ | 6.48 | $ | 6.09 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.02 | 0.07 | 0.06 | 0.06 | 0.09 | 0.10 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.11 | (0.82 | ) | 0.12 | 0.39 | 0.52 | 0.29 | ||||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | 0.003 | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.13 | (0.74 | ) | 0.18 | 0.45 | 0.61 | 0.39 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | — | (0.25 | ) | (0.29 | ) | (0.03 | ) | (0.13 | ) | — | |||||||||||||||||
Return of capital | — | (0.00 | )3 | — | — | — | — | ||||||||||||||||||||
Total dividends/distributions | — | (0.25 | ) | (0.29 | ) | (0.03 | ) | (0.13 | ) | — | |||||||||||||||||
Net asset value, end of period | $ | 6.41 | $ | 6.28 | $ | 7.27 | $ | 7.38 | $ | 6.96 | $ | 6.48 | |||||||||||||||
Total investment return2 | 2.07 | % | (10.17 | )%4 | 2.29 | %5 | 6.45 | % | 9.29 | % | 6.57 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short | 1.24 | %6 | 1.22 | % | 1.20 | % | 1.15 | % | 1.12 | % | 1.28 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short | 1.10 | %6 | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.28 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short | 1.10 | %6 | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | |||||||||||||||
Net investment income | 0.70 | %6 | 1.07 | % | 0.84 | % | 0.87 | % | 1.25 | % | 1.56 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 117,601 | $ | 132,725 | $ | 192,777 | $ | 81,168 | $ | 48,113 | $ | 51,807 | |||||||||||||||
Portfolio turnover rate | 27 | % | 50 | % | 54 | % | 45 | % | 74 | % | 164 | % |
98
UBS Dynamic Alpha Fund
Financial highlights
Class C
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.78 | $ | 6.68 | $ | 6.81 | $ | 6.46 | $ | 6.02 | $ | 5.71 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | 0.003 | (0.01 | ) | (0.01 | ) | 0.02 | 0.03 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.10 | (0.73 | ) | 0.09 | 0.36 | 0.48 | 0.28 | ||||||||||||||||||||
Net increase from payment by Advisor | — | 0.003 | 0.003 | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.09 | (0.73 | ) | 0.08 | 0.35 | 0.50 | 0.31 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | — | (0.17 | ) | (0.21 | ) | — | (0.06 | ) | — | ||||||||||||||||||
Return of capital | — | (0.00 | )3 | — | — | — | — | ||||||||||||||||||||
Total dividends/distributions | — | (0.17 | ) | (0.21 | ) | — | (0.06 | ) | — | ||||||||||||||||||
Net asset value, end of period | $ | 5.87 | $ | 5.78 | $ | 6.68 | $ | 6.81 | $ | 6.46 | $ | 6.02 | |||||||||||||||
Total investment return2 | 1.56 | % | (11.00 | )%4 | 1.21 | %5 | 5.42 | % | 8.22 | % | 5.60 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short | 2.26 | %6 | 2.23 | % | 2.19 | % | 2.18 | % | 2.19 | % | 2.36 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short | 2.10 | %6 | 2.10 | % | 2.10 | % | 2.10 | % | 2.10 | % | 2.29 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short | 2.10 | %6 | 2.10 | % | 2.10 | % | 2.10 | % | 2.10 | % | 2.10 | % | |||||||||||||||
Net investment income (loss) | (0.31 | )%6 | 0.07 | % | (0.17 | )% | (0.09 | )% | 0.24 | % | 0.58 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 20,147 | $ | 27,271 | $ | 45,871 | $ | 51,119 | $ | 53,405 | $ | 49,155 | |||||||||||||||
Portfolio turnover rate | 27 | % | 50 | % | 54 | % | 45 | % | 74 | % | 164 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
3 Amount represents less than $0.005 per share.
4 During the year ended June 30, 2016, the Advisor reimbursed the Fund $128,212, which was determined to be the value of the ineligible services paid for from the Fund's dealing commissions, and $86,068 for a trading error, both reimbursements had no impact on the Fund's total return.
5 During the year ended June 30, 2015 the Advisor reimbursed the Fund for a trading error in the amount of $2,068, which had no impact on the Fund's total return.
6 Annualized.
See accompanying notes to financial statements.
99
UBS Global Allocation Fund
Financial highlights
The table below sets forth data for one share of beneficial interest outstanding throughout each period presented.
Class A
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.46 | $ | 11.27 | $ | 11.04 | $ | 9.79 | $ | 9.12 | $ | 10.27 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.00 | )3 | 0.01 | (0.00 | )3 | 0.02 | 0.01 | (0.00 | )3 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.35 | (0.56 | ) | 0.23 | 1.36 | 0.88 | (0.72 | ) | |||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | — | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.35 | (0.54 | ) | 0.23 | 1.38 | 0.89 | (0.72 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.23 | ) | (0.27 | ) | — | (0.13 | ) | (0.22 | ) | (0.43 | ) | ||||||||||||||||
Net asset value, end of period | $ | 10.58 | $ | 10.46 | $ | 11.27 | $ | 11.04 | $ | 9.79 | $ | 9.12 | |||||||||||||||
Total investment return2 | 3.33 | % | (4.81 | )%4 | 2.08 | % | 14.20 | % | 9.86 | % | (6.83 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.37 | %5 | 1.36 | % | 1.32 | % | 1.30 | % | 1.28 | % | 1.25 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.30 | %5 | 1.35 | % | 1.32 | % | 1.30 | % | 1.28 | % | 1.25 | % | |||||||||||||||
Net investment income (loss) | (0.03 | )%5 | 0.09 | % | (0.01 | )% | 0.17 | % | 0.12 | % | (0.03 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 173,766 | $ | 190,813 | $ | 234,665 | $ | 309,296 | $ | 377,781 | $ | 494,604 | |||||||||||||||
Portfolio turnover rate | 21 | % | 60 | % | 62 | % | 49 | % | 54 | % | 93 | % |
Class P
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.69 | $ | 11.51 | $ | 11.25 | $ | 9.98 | $ | 9.30 | $ | 10.48 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.01 | 0.04 | 0.03 | 0.05 | 0.04 | 0.03 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.35 | (0.56 | ) | 0.23 | 1.39 | 0.90 | (0.75 | ) | |||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | — | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.36 | (0.51 | ) | 0.26 | 1.44 | 0.94 | (0.72 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.26 | ) | (0.31 | ) | — | (0.17 | ) | (0.26 | ) | (0.46 | ) | ||||||||||||||||
Net asset value, end of period | $ | 10.79 | $ | 10.69 | $ | 11.51 | $ | 11.25 | $ | 9.98 | $ | 9.30 | |||||||||||||||
Total investment return2 | 3.37 | % | (4.50 | )%4 | 2.31 | % | 14.56 | % | 10.22 | % | (6.59 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.10 | %5 | 1.09 | % | 1.04 | % | 1.00 | % | 0.98 | % | 0.95 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.05 | %5 | 1.09 | % | 1.04 | % | 1.00 | % | 0.98 | % | 0.95 | % | |||||||||||||||
Net investment income | 0.22 | %5 | 0.34 | % | 0.26 | % | 0.51 | % | 0.44 | % | 0.27 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 81,343 | $ | 91,004 | $ | 124,415 | $ | 129,417 | $ | 127,751 | $ | 132,941 | |||||||||||||||
Portfolio turnover rate | 21 | % | 60 | % | 62 | % | 49 | % | 54 | % | 93 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
3 Amount represents less than $0.005 per share.
100
UBS Global Allocation Fund
Financial highlights
Class C
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.15 | $ | 10.92 | $ | 10.79 | $ | 9.55 | $ | 8.89 | $ | 10.00 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment (loss)1 | (0.04 | ) | (0.07 | ) | (0.09 | ) | (0.06 | ) | (0.06 | ) | (0.07 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | 0.33 | (0.54 | ) | 0.22 | 1.34 | 0.86 | (0.71 | ) | |||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | — | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.29 | (0.60 | ) | 0.13 | 1.28 | 0.80 | (0.78 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.12 | ) | (0.17 | ) | — | (0.04 | ) | (0.14 | ) | (0.33 | ) | ||||||||||||||||
Net asset value, end of period | $ | 10.32 | $ | 10.15 | $ | 10.92 | $ | 10.79 | $ | 9.55 | $ | 8.89 | |||||||||||||||
Total investment return2 | 2.89 | % | (5.49 | )%4 | 1.20 | % | 13.31 | % | 9.11 | % | (7.66 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.15 | %5 | 2.15 | % | 2.10 | % | 2.08 | % | 2.06 | % | 2.02 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.05 | %5 | 2.10 | % | 2.10 | % | 2.08 | % | 2.06 | % | 2.02 | % | |||||||||||||||
Net investment loss | (0.78 | )%5 | (0.66 | )% | (0.79 | )% | (0.59 | )% | (0.65 | )% | (0.80 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 97,537 | $ | 116,057 | $ | 145,277 | $ | 174,078 | $ | 195,427 | $ | 238,054 | |||||||||||||||
Portfolio turnover rate | 21 | % | 60 | % | 62 | % | 49 | % | 54 | % | 93 | % |
4 During the year ended June 30, 2016, the Advisor reimbursed the Fund $316,557 which was determined to be the value of the ineligible services paid for from the Fund's dealing commissions. If payment from Advisor was not made, the estimated total return would have been -4.90% for A shares, -5.59% for C shares, and -4.59% for P shares.
5 Annualized.
See accompanying notes to financial statements.
101
UBS International Sustainable Equity Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.05 | $ | 9.47 | $ | 8.95 | $ | 7.55 | $ | 6.75 | $ | 8.21 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.01 | 0.13 | 0.10 | 0.08 | 0.11 | 0.08 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.39 | (1.47 | ) | 0.53 | 1.51 | 0.93 | (1.40 | ) | |||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | — | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.40 | (1.33 | ) | 0.63 | 1.59 | 1.04 | (1.32 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.17 | ) | (0.09 | ) | (0.11 | ) | (0.19 | ) | (0.24 | ) | (0.14 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.28 | $ | 8.05 | $ | 9.47 | $ | 8.95 | $ | 7.55 | $ | 6.75 | |||||||||||||||
Total investment return2 | 4.95 | % | (14.07 | )%3 | 7.14 | % | 21.32 | % | 15.49 | % | (15.99 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.37 | %4 | 2.37 | % | 2.47 | % | 2.74 | % | 2.65 | % | 2.28 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.25 | %4 | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | |||||||||||||||
Net investment income | 0.29 | %4 | 1.59 | % | 1.09 | % | 0.91 | % | 1.49 | % | 1.20 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 5,399 | $ | 5,204 | $ | 6,371 | $ | 7,541 | $ | 5,433 | $ | 5,576 | |||||||||||||||
Portfolio turnover rate | 15 | % | 114 | % | 42 | % | 137 | % | 41 | % | 49 | % |
Class P
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.08 | $ | 9.50 | $ | 8.99 | $ | 7.58 | $ | 6.77 | $ | 8.25 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.02 | 0.16 | 0.13 | 0.09 | 0.13 | 0.11 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.39 | (1.48 | ) | 0.51 | 1.53 | 0.94 | (1.43 | ) | |||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | — | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.41 | (1.31 | ) | 0.64 | 1.62 | 1.07 | (1.32 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.19 | ) | (0.11 | ) | (0.13 | ) | (0.21 | ) | (0.26 | ) | (0.16 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.30 | $ | 8.08 | $ | 9.50 | $ | 8.99 | $ | 7.58 | $ | 6.77 | |||||||||||||||
Total investment return2 | 5.09 | % | (13.83 | )%3 | 7.32 | % | 21.65 | % | 15.95 | % | (15.88 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.11 | %4 | 2.12 | % | 2.21 | % | 2.45 | % | 2.40 | % | 2.06 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.00 | %4 | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | |||||||||||||||
Net investment income | 0.54 | %4 | 1.92 | % | 1.40 | % | 1.10 | % | 1.69 | % | 1.52 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 16,526 | $ | 16,277 | $ | 17,103 | $ | 12,462 | $ | 11,740 | $ | 12,966 | |||||||||||||||
Portfolio turnover rate | 15 | % | 114 | % | 42 | % | 137 | % | 41 | % | 49 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund Shares.
102
UBS International Sustainable Equity Fund
Financial highlights
Class C
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 7.85 | $ | 9.26 | $ | 8.80 | $ | 7.43 | $ | 6.63 | $ | 8.02 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.02 | ) | 0.07 | 0.04 | 0.03 | 0.05 | 0.03 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.38 | (1.44 | ) | 0.51 | 1.47 | 0.92 | (1.36 | ) | |||||||||||||||||||
Net increase from payment by Advisor | — | 0.01 | — | — | — | — | |||||||||||||||||||||
Total income (loss) from investment operations | 0.36 | (1.36 | ) | 0.55 | 1.50 | 0.97 | (1.33 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.10 | ) | (0.05 | ) | (0.09 | ) | (0.13 | ) | (0.17 | ) | (0.06 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.11 | $ | 7.85 | $ | 9.26 | $ | 8.80 | $ | 7.43 | $ | 6.63 | |||||||||||||||
Total investment return2 | 4.57 | % | (14.72 | )%3 | 6.36 | % | 20.32 | % | 14.72 | % | (16.59 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 3.14 | %4 | 3.15 | % | 3.23 | % | 3.54 | % | 3.40 | % | 3.06 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.00 | %4 | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | |||||||||||||||
Net investment income (loss) | (0.45 | )%4 | 0.86 | % | 0.46 | % | 0.37 | % | 0.65 | % | 0.45 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,235 | $ | 2,351 | $ | 2,672 | $ | 1,579 | $ | 605 | $ | 703 | |||||||||||||||
Portfolio turnover rate | 15 | % | 114 | % | 42 | % | 137 | % | 41 | % | 49 | % |
3 During the year ended June 30, 2016, the Advisor reimbursed the Fund $34,326, which was determined to be the value of the ineligible services paid for from the Fund's dealing commissions, and $5,471 for a trading error. lf payment from Advisor was not made, the estimated total return would have been -14.18% for A shares, -14.83% for C shares, and -13.94% for P shares.
4 Annualized
See accompanying notes to financial statements.
103
UBS U.S. Large Cap Equity Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.51 | $ | 27.55 | $ | 25.03 | $ | 19.85 | $ | 15.96 | $ | 16.46 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.08 | 0.21 | 0.14 | 0.11 | 0.11 | 0.10 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 2.58 | (1.88 | ) | 2.50 | 5.23 | 3.86 | (0.51 | ) | |||||||||||||||||||
Total income (loss) from investment operations | 2.66 | (1.67 | ) | 2.64 | 5.34 | 3.97 | (0.41 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.28 | ) | (0.37 | ) | (0.12 | ) | (0.16 | ) | (0.08 | ) | (0.09 | ) | |||||||||||||||
Net asset value, end of period | $ | 27.89 | $ | 25.51 | $ | 27.55 | $ | 25.03 | $ | 19.85 | $ | 15.96 | |||||||||||||||
Total investment return2 | 10.46 | % | (6.13 | )% | 10.61 | % | 27.05 | % | 24.99 | % | (2.47 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.01 | %3 | 1.93 | % | 1.56 | % | 1.29 | % | 1.28 | % | 1.24 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.95 | %3 | 1.13 | % | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | |||||||||||||||
Net investment income | 0.59 | %3 | 0.81 | % | 0.53 | % | 0.47 | % | 0.63 | % | 0.64 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 9,696 | $ | 9,774 | $ | 9,784 | $ | 9,478 | $ | 8,534 | $ | 14,113 | |||||||||||||||
Portfolio turnover rate | 41 | % | 57 | % | 59 | % | 55 | % | 58 | % | 65 | % |
Class P
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.61 | $ | 27.67 | $ | 25.14 | $ | 19.94 | $ | 16.07 | $ | 16.60 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.11 | 0.26 | 0.20 | 0.16 | 0.15 | 0.14 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 2.60 | (1.89 | ) | 2.52 | 5.27 | 3.88 | (0.52 | ) | |||||||||||||||||||
Total income (loss) from investment operations | 2.71 | (1.63 | ) | 2.72 | 5.43 | 4.03 | (0.38 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.35 | ) | (0.43 | ) | (0.19 | ) | (0.23 | ) | (0.16 | ) | (0.15 | ) | |||||||||||||||
Net asset value, end of period | $ | 27.97 | $ | 25.61 | $ | 27.67 | $ | 25.14 | $ | 19.94 | $ | 16.07 | |||||||||||||||
Total investment return2 | 10.55 | % | (5.91 | )% | 10.90 | % | 27.38 | % | 25.28 | % | (2.23 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.76 | %3 | 1.64 | % | 1.07 | % | 0.99 | % | 0.98 | % | 0.97 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.70 | %3 | 0.90 | % | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | |||||||||||||||
Net investment income | 0.83 | %3 | 1.00 | % | 0.77 | % | 0.71 | % | 0.87 | % | 0.90 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 15,753 | $ | 15,147 | $ | 28,345 | $ | 126,735 | $ | 146,145 | $ | 185,910 | |||||||||||||||
Portfolio turnover rate | 41 | % | 57 | % | 59 | % | 55 | % | 58 | % | 65 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
3 Annualized.
104
UBS U.S. Large Cap Equity Fund
Financial highlights
Class C
For the Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 24.41 | $ | 26.34 | $ | 23.99 | $ | 19.06 | $ | 15.36 | $ | 15.88 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.02 | ) | 0.01 | (0.05 | ) | (0.06 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||||
Net realized and unrealized gain (loss) | 2.47 | (1.80 | ) | 2.40 | 5.03 | 3.72 | (0.50 | ) | |||||||||||||||||||
Total income (loss) from investment operations | 2.45 | (1.79 | ) | 2.35 | 4.97 | 3.70 | (0.52 | ) | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.07 | ) | (0.14 | ) | — | (0.04 | ) | — | — | ||||||||||||||||||
Net asset value, end of period | $ | 26.79 | $ | 24.41 | $ | 26.34 | $ | 23.99 | $ | 19.06 | $ | 15.36 | |||||||||||||||
Total investment return2 | 10.02 | % | (6.82 | )% | 9.80 | % | 26.09 | % | 24.09 | % | (3.28 | )% | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.78 | %3 | 2.68 | % | 2.31 | % | 2.08 | % | 2.04 | % | 2.02 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.70 | %3 | 1.88 | % | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | |||||||||||||||
Net investment income (loss) | (0.17 | )%3 | 0.03 | % | (0.22 | )% | (0.27 | )% | (0.11 | )% | (0.11 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,125 | $ | 2,130 | $ | 2,643 | $ | 3,299 | $ | 2,617 | $ | 2,873 | |||||||||||||||
Portfolio turnover rate | 41 | % | 57 | % | 59 | % | 55 | % | 58 | % | 65 | % |
See accompanying notes to financial statements.
105
UBS U.S. Small Cap Growth Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A
Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 17.75 | $ | 23.60 | $ | 24.76 | $ | 20.10 | $ | 16.19 | $ | 16.00 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment (loss)1 | (0.03 | ) | (0.13 | ) | (0.16 | ) | (0.21 | ) | (0.11 | ) | (0.14 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | 2.49 | (3.89 | ) | 3.38 | 5.40 | 4.02 | 0.33 | ||||||||||||||||||||
Total income (loss) from investment operations | 2.46 | (4.02 | ) | 3.22 | 5.19 | 3.91 | 0.19 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.00 | )3 | — | — | — | — | — | ||||||||||||||||||||
From net realized gains | (0.68 | ) | (1.83 | ) | (4.38 | ) | (0.53 | ) | — | — | |||||||||||||||||
Total dividends/distributions | (0.68 | ) | (1.83 | ) | (4.38 | ) | (0.53 | ) | — | — | |||||||||||||||||
Net asset value, end of period | $ | 19.53 | $ | 17.75 | $ | 23.60 | $ | 24.76 | $ | 20.10 | $ | 16.19 | |||||||||||||||
Total investment return2 | 13.68 | % | (17.58 | )% | 15.61 | % | 26.42 | % | 23.78 | % | 1.19 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.55 | %4 | 1.53 | % | 1.51 | % | 1.45 | % | 1.55 | % | 1.57 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.24 | %4 | 1.24 | % | 1.35 | % | 1.40 | % | 1.40 | % | 1.40 | % | |||||||||||||||
Net investment loss | (0.31 | )%4 | (0.65 | )% | (0.69 | )% | (0.92 | )% | (0.64 | )% | (0.93 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 28,935 | $ | 28,048 | $ | 46,813 | $ | 42,552 | $ | 32,848 | $ | 31,015 | |||||||||||||||
Portfolio turnover rate | 25 | % | 109 | % | 64 | % | 57 | % | 42 | % | 48 | % |
Class P
Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 19.05 | $ | 25.11 | $ | 26.00 | $ | 21.01 | $ | 16.88 | $ | 16.64 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment (loss)1 | (0.01 | ) | (0.08 | ) | (0.11 | ) | (0.15 | ) | (0.08 | ) | (0.11 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | 2.67 | (4.15 | ) | 3.60 | 5.67 | 4.21 | 0.35 | ||||||||||||||||||||
Total income (loss) from investment operations | 2.66 | (4.23 | ) | 3.49 | 5.52 | 4.13 | 0.24 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.00 | )3 | — | — | — | — | — | ||||||||||||||||||||
From net realized gains | (0.68 | ) | (1.83 | ) | (4.38 | ) | (0.53 | ) | — | — | |||||||||||||||||
Total dividends/distributions | (0.68 | ) | (1.83 | ) | (4.38 | ) | (0.53 | ) | — | — | |||||||||||||||||
Net asset value, end of period | $ | 21.03 | $ | 19.05 | $ | 25.11 | $ | 26.00 | $ | 21.01 | $ | 16.88 | |||||||||||||||
Total investment return2 | 13.85 | % | (17.39 | )% | 15.93 | % | 26.79 | % | 24.17 | % | 1.44 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 1.18 | %4 | 1.17 | % | 1.10 | % | 1.09 | % | 1.13 | % | 1.15 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 0.99 | %4 | 0.99 | % | 1.07 | % | 1.09 | % | 1.15 | %5 | 1.15 | %5 | |||||||||||||||
Net investment loss | (0.05 | )%4 | (0.40 | )% | (0.43 | )% | (0.61 | )% | (0.41 | )% | (0.68 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 137,472 | $ | 130,227 | $ | 178,495 | $ | 226,376 | $ | 172,436 | $ | 107,447 | |||||||||||||||
Portfolio turnover rate | 25 | % | 109 | % | 64 | % | 57 | % | 42 | % | 48 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year have not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
106
UBS U.S. Small Cap Growth Fund
Financial highlights
Class C
Six months ended December 31, 2016 | Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.16 | $ | 20.60 | $ | 22.32 | $ | 18.29 | $ | 14.85 | $ | 14.78 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment (loss)1 | (0.09 | ) | (0.23 | ) | (0.29 | ) | (0.35 | ) | (0.22 | ) | (0.23 | ) | |||||||||||||||
Net realized and unrealized gain (loss) | 2.13 | (3.38 | ) | 2.95 | 4.91 | 3.66 | 0.30 | ||||||||||||||||||||
Total income (loss) from investment operations | 2.04 | (3.61 | ) | 2.66 | 4.56 | 3.44 | 0.07 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net realized gains | (0.68 | ) | (1.83 | ) | (4.38 | ) | (0.53 | ) | — | — | |||||||||||||||||
Total dividends/distributions | (0.68 | ) | (1.83 | ) | (4.38 | ) | (0.53 | ) | — | — | |||||||||||||||||
Net asset value, end of period | $ | 16.52 | $ | 15.16 | $ | 20.60 | $ | 22.32 | $ | 18.29 | $ | 14.85 | |||||||||||||||
Total investment return2 | 13.25 | % | (18.18 | )% | 14.71 | % | 25.51 | % | 22.83 | % | 0.47 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.26 | %4 | 2.28 | % | 2.24 | % | 2.24 | % | 2.32 | % | 2.35 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.99 | %4 | 1.99 | % | 2.10 | % | 2.15 | % | 2.15 | % | 2.15 | % | |||||||||||||||
Net investment loss | (1.06 | )%4 | (1.39 | )% | (1.44 | )% | (1.67 | )% | (1.39 | )% | (1.68 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 4,101 | $ | 4,385 | $ | 5,398 | $ | 3,687 | $ | 2,937 | $ | 2,442 | |||||||||||||||
Portfolio turnover rate | 25 | % | 109 | % | 64 | % | 57 | % | 42 | % | 48 | % |
3 Amount represents less than $0.005 per share
4 Annualized
5 The investment manager recouped expenses previously reimbursed by the investment manager on behalf of the Fund, not to exceed the expense cap.
See accompanying notes to financial statements.
107
UBS Total Return Bond Fund
Financial highlights
The table below sets forth data for one share of beneficial interest outstanding throughout each period presented.
Class A | Class C | ||||||||||
For the Period ended December 31, 20163 | For the Period ended December 31, 20163 | ||||||||||
Net asset value, beginning of period | $ | 15.24 | $ | 15.24 | |||||||
Income (loss) from investment operations: | |||||||||||
Net investment income1 | 0.08 | 0.06 | |||||||||
Net realized and unrealized loss | (0.55 | ) | (0.55 | ) | |||||||
Total loss from investment operations | (0.47 | ) | (0.49 | ) | |||||||
Less dividends/distributions: | |||||||||||
From net investment income | (0.08 | ) | (0.06 | ) | |||||||
Total dividends/distributions | (0.08 | ) | (0.06 | ) | |||||||
Net asset value, end of period | $ | 14.69 | $ | 14.69 | |||||||
Total investment return2 | (3.08 | )% | (3.19 | )% | |||||||
Ratios to average net assets: | |||||||||||
Expenses before fee waivers and/or expense reimbursement | 4.02 | %4 | 2.07 | %4 | |||||||
Expenses after fee waivers and/or expense reimbursement | 0.75 | %4 | 1.25 | %4 | |||||||
Net investment income | 2.11 | %4 | 1.64 | %4 | |||||||
Supplemental data: | |||||||||||
Net assets, end of period (000's) | $ | 5 | $ | 88 | |||||||
Portfolio turnover rate | 395 | % | 395 | % |
Class P
For the Six months ended December 31, 2016 | For the Nine months ended June 30, | Year ended September 30, | |||||||||||||||||||||||||
(unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.14 | $ | 14.98 | $ | 15.99 | $ | 15.89 | $ | 17.87 | $ | 17.29 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.18 | 0.36 | 0.64 | 0.60 | 0.60 | 0.67 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | (0.41 | ) | 0.13 | (0.96 | ) | 0.44 | (1.06 | ) | 1.34 | ||||||||||||||||||
Total income (loss) from investment operations | (0.23 | ) | 0.49 | (0.32 | ) | 1.04 | (0.46 | ) | 2.01 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.21 | ) | (0.33 | ) | (0.64 | ) | (0.62 | ) | (0.70 | ) | (0.71 | ) | |||||||||||||||
From net realized gains | — | — | (0.05 | ) | (0.32 | ) | (0.82 | ) | (0.72 | ) | |||||||||||||||||
Total dividends/distributions | (0.21 | ) | (0.33 | ) | (0.69 | ) | (0.94 | ) | (1.52 | ) | (1.43 | ) | |||||||||||||||
Net asset value, end of period | $ | 14.70 | $ | 15.14 | $ | 14.98 | $ | 15.99 | $ | 15.89 | $ | 17.87 | |||||||||||||||
Total investment return2 | (1.55 | )% | 3.33 | % | (2.05 | )% | 6.77 | % | (2.82 | )% | 12.23 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 0.95 | %4 | 1.21 | %4 | 0.75 | % | 0.83 | % | 0.71 | % | 0.67 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.50 | %4 | 1.16 | %4 | 0.75 | % | 0.83 | % | 0.71 | % | 0.67 | % | |||||||||||||||
Net investment income | 2.42 | %4 | 3.22 | %4 | 4.04 | % | 3.76 | % | 3.56 | % | 3.89 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 55,542 | $ | 126,922 | $ | 131,473 | $ | 140,338 | $ | 139,416 | $ | 156,791 | |||||||||||||||
Portfolio turnover rate | 395 | % | 251 | % | 26 | % | 44 | % | 133 | % | 175 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends/distributions or the redemption of Fund shares.
3 For the period September 30, 2016 (commencement of operations) through December 31, 2016.
4 Annualized.
See accompanying notes to financial statements.
108
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109
UBS Municipal Bond Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A
For the Six months ended December 31,2016 (unaudited) | For the Year ended June 30, 2016 | For the Period ended June 30, 20153 | |||||||||||||
Net asset value, beginning of period | $ | 10.52 | $ | 9.94 | $ | 10.00 | |||||||||
Income (loss) from investment operations: | |||||||||||||||
Net investment income1 | 0.07 | 0.17 | 0.09 | ||||||||||||
Net realized and unrealized gain (loss) | (0.49 | ) | 0.59 | (0.06 | ) | ||||||||||
Total income (loss) from investment operations | (0.42 | ) | 0.76 | 0.03 | |||||||||||
Less dividends/distributions: | |||||||||||||||
From net investment income | (0.07 | ) | (0.18 | ) | (0.09 | ) | |||||||||
From net realized gains | (0.02 | ) | — | — | |||||||||||
Total dividends/distributions | (0.09 | ) | (0.18 | ) | (0.09 | ) | |||||||||
Net asset value, end of period | $ | 10.01 | $ | 10.52 | $ | 9.94 | |||||||||
Total investment return2 | (4.00 | )% | 7.74 | % | 0.30 | % | |||||||||
Ratios to average net assets: | |||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 0.96 | %5 | 1.15 | % | 1.46 | %5 | |||||||||
Expenses after fee waivers and/or expense reimbursement | 0.65 | %5 | 0.65 | % | 0.65 | %5 | |||||||||
Net investment income | 1.26 | %5 | 1.66 | % | 1.43 | %5 | |||||||||
Supplemental data: | |||||||||||||||
Net assets, end of period (000's) | $ | 21,741 | $ | 17,671 | $ | 10,929 | |||||||||
Portfolio turnover rate | 72 | % | 100 | % | 72 | % |
Class P
For the Six months ended December 31,2016 (unaudited) | For the Year ended June 30, 2016 | For the Period ended June 30, 20153 | |||||||||||||
Net asset value, beginning of period | $ | 10.52 | $ | 9.94 | $ | 10.00 | |||||||||
Income (loss) from investment operations: | |||||||||||||||
Net investment income1 | 0.08 | 0.19 | 0.10 | ||||||||||||
Net realized and unrealized gain (loss) | (0.49 | ) | 0.60 | (0.05 | ) | ||||||||||
Total income (loss) from investment operations | (0.41 | ) | 0.79 | 0.05 | |||||||||||
Less dividends/distributions: | |||||||||||||||
From net investment income | (0.08 | ) | (0.21 | ) | (0.11 | ) | |||||||||
From net realized gains | (0.02 | ) | — | — | |||||||||||
Total dividends/distributions | (0.10 | ) | (0.21 | ) | (0.11 | ) | |||||||||
Net asset value, end of period | $ | 10.01 | $ | 10.52 | $ | 9.94 | |||||||||
Total investment return2 | (3.88 | )% | 8.01 | % | 0.45 | % | |||||||||
Ratios to average net assets: | |||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 0.72 | %5 | 0.89 | % | 1.23 | %5 | |||||||||
Expenses after fee waivers and/or expense reimbursement | 0.40 | %5 | 0.40 | % | 0.40 | %5 | |||||||||
Net investment income | 1.51 | %5 | 1.89 | % | 1.63 | %5 | |||||||||
Supplemental data: | |||||||||||||||
Net assets, end of period (000's) | $ | 91,377 | $ | 90,146 | $ | 46,993 | |||||||||
Portfolio turnover rate | 72 | % | 100 | % | 72 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund distributions or the redemption of Fund shares.
110
UBS Municipal Bond Fund
Financial highlights
Class C
For the Six months ended December 31,2016 (unaudited) | For the Year ended June 30, 2016 | For the Period ended June 30, 20153 | |||||||||||||
Net asset value, beginning of period | $ | 10.52 | $ | 9.94 | $ | 10.00 | |||||||||
Income (loss) from investment operations: | |||||||||||||||
Net investment income1 | 0.04 | 0.12 | 0.06 | ||||||||||||
Net realized and unrealized gain (loss) | (0.49 | ) | 0.59 | (0.06 | ) | ||||||||||
Total income (loss) from investment operations | (0.45 | ) | 0.71 | 0.004 | |||||||||||
Less dividends/distributions: | |||||||||||||||
From net investment income | (0.04 | ) | (0.13 | ) | (0.06 | ) | |||||||||
From net realized gains | (0.02 | ) | — | — | |||||||||||
Total dividends/distributions | (0.06 | ) | (0.13 | ) | (0.06 | ) | |||||||||
Net asset value, end of period | $ | 10.01 | $ | 10.52 | $ | 9.94 | |||||||||
Total investment return2 | (4.24 | )% | 7.21 | % | 0.03 | % | |||||||||
Ratios to average net assets: | |||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.48 | %5 | 1.65 | % | 1.98 | %5 | |||||||||
Expenses after fee waivers and/or expense reimbursement | 1.15 | %5 | 1.15 | % | 1.14 | %5 | |||||||||
Net investment income | 0.77 | %5 | 1.15 | % | 0.94 | %5 | |||||||||
Supplemental data: | |||||||||||||||
Net assets, end of period (000's) | $ | 6,447 | $ | 6,164 | $ | 2,948 | |||||||||
Portfolio turnover rate | 72 | % | 100 | % | 72 | % |
3 For the period November 10, 2014 (commencement of operations) through June 30, 2015.
4 Amount represents less than $0.005 per share.
5 Annualized
See accompanying notes to financial statements.
111
The UBS Funds
Notes to financial statements (unaudited)
Organization and significant accounting policies
The UBS Funds (the "Trust") is an open-end management investment company registered with the US Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the "1940 Act"), as amended, currently offering multiple series representing separate investment portfolios. The Trust is a Delaware statutory trust organized on August 13, 1993. The trustees of the Trust have authority to issue an unlimited number of shares of beneficial interest at par value of $0.001 per share.
The Trust has seven Funds available for investment, each having its own investment objectives and policies: UBS Dynamic Alpha Fund, UBS Global Allocation Fund, UBS International Sustainable Equity Fund, UBS U.S. Large Cap Equity Fund, UBS U.S. Small Cap Growth Fund, UBS Total Return Bond Fund and UBS Municipal Bond Fund, (each a "Fund", and collectively, the "Funds"). Each of the Funds is classified as a diversified investment company with the exception of UBS Dynamic Alpha Fund and UBS Municipal Bond Fund, which are classified as non-diversified for purposes of the 1940 Act.
UBS Asset Management (Americas) Inc. ("UBS AM" or the "Advisor") serves as the investment advisor and administrator for the Funds. UBS Asset Management (US) Inc. ("UBS AM (US)") serves as principal underwriter for the Funds. UBS AM and UBS AM (US) are indirect wholly owned subsidiaries of UBS Group AG. UBS Group AG is an internationally diversified organization with headquarters in Zurich, Switzerland. UBS Group AG operates in many areas of the financial services industry.
The Funds currently offer Class A, Class C and Class P shares. Each class represents interests in the same assets of the applicable Fund and the classes are identical except for differences in their sales charge structures, ongoing service and distribution charges and certain transfer agency and related services expenses. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plan, if any. Class P shares have no service or distribution plan.
The Class P shares of the UBS Total Return Bond Fund acquired the assets and liabilities of Fort Dearborn Income Securities, Inc., a closed-end management investment company organized as a Illinois corporation (the "Predecessor Fund"), prior to the opening of business on May 23, 2016 (the "Reorganization"). The UBS Total Return Bond Fund's investment advisor, UBS AM, was the advisor for the Predecessor Fund, and the day-to-day management of, and investment decisions for, the UBS Total Return Bond Fund and the Predecessor Fund are made by the same portfolio managers. The Funds have generally similar investment objectives and strategies. As such, the Predecessor Fund was designed as accounting survivor of the Reorganization. The UBS Total Return Bond Fund's Class P shares have adopted the historical performance of the Predecessor Fund. In connection with the Reorganization, the fiscal year end for UBS Total Return Bond Fund has changed from September 30th to June 30th. As such, the fiscal year ended June 30, 2016 for UBS Total Return Bond Fund reflects the nine month period from October 1, 2015 through June 30, 2016.
The Trust accounts separately for the assets, liabilities and operations of each Fund. Expenses directly attributable to each Fund are charged to that Fund's operations; expenses which are applicable to all Funds are allocated among them on a pro rata basis.
In the normal course of business, the Funds may enter into contracts that contain a variety of representations that provide indemnification for certain liabilities. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had any prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
Under certain circumstances, shareholders of the Funds may receive payment for redemptions in securities rather than in cash.
112
The UBS Funds
Notes to financial statements (unaudited)
The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the exclusive reference of authoritative US generally accepted accounting principles ("US GAAP") recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative US GAAP for SEC registrants. The Funds' financial statements are prepared in accordance with US GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
In August 2014, the FASB issued Accounting Standard Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern" ("ASU 2014-15"). The update provides guidance about management's responsibility to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual reporting periods ending after December 15, 2016, and for annual and interim periods thereafter. Management is currently evaluating the impact of the guidance on the disclosures in the financial statements.
The following is a summary of significant accounting policies:
Investment transactions, investment income and expenses: Investment transactions are recorded on the trade date. Realized gains and losses from investment transactions and foreign exchange transactions are calculated using the identified cost method. Dividend income and expense are recorded on the ex-dividend date ("ex-date") except in the case of certain dividends from foreign securities which are recorded as soon after the ex-date as the respective Fund, using reasonable diligence, becomes aware of such dividends. Interest income is recorded on an accrual basis. Discounts are accreted and premiums are amortized as adjustments to interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares (or the value of dividend eligible shares, as appropriate) of each class at the beginning of the day after adjusting for current capital share activity of the respective classes. Class specific expenses are charged directly to the applicable class of shares.
Dividends and distributions: Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends from net investment income and distributions from net realized capital gains and/or return of capital are determined in accordance with US federal income tax regulations, which may differ from US GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification.
Foreign currency translation: The books and records of the Funds are maintained in US dollars. Foreign currency amounts are translated into US dollars as follows: (1) the foreign currency market value of investment securities and other assets and liabilities stated in foreign currencies are translated into US dollars based on the current exchange rates each business day; and (2) purchases and sales of investment securities and income and expenses are translated at the rate of exchange prevailing on the respective dates of such transactions. The resulting exchange gains and losses are included in the Statement of operations.
The Funds do not generally isolate the effect of fluctuations in foreign exchange rates from the effect of the changes in market prices of securities. However, the Funds do isolate the effect of fluctuations in foreign exchange rates when determining the realized gain or loss upon the sale or maturity of foreign currency-denominated securities pursuant to US federal income tax regulations. Net realized foreign currency transaction gain (loss) is treated as ordinary income (loss) for income tax reporting purposes.
113
The UBS Funds
Notes to financial statements (unaudited)
Concentration of risk: Investing in securities of foreign issuers and currency transactions may involve certain considerations and risks not typically associated with investments in the United States. These risks include revaluation of currencies, adverse fluctuations in foreign currency values and possible adverse political, social and economic developments, including those particular to a specific industry, country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable US companies and US government securities. These risks are greater with respect to securities of issuers located in emerging market countries in which some Funds in the Trust invest.
Small capitalization ("small cap") companies may be more vulnerable than larger capitalization ("large cap") companies to adverse business or economic developments. Small cap companies may also have limited product lines, markets or financial resources, and may be dependent on a relatively small management group. Securities of such companies may be less liquid and more volatile than securities of large cap companies or the market averages in general and therefore may involve greater risk than investing in large cap companies. In addition, small cap companies may not be well-known to the investing public, may not have institutional ownership and may have only cyclical, static or moderate growth prospects.
The ability of the issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments particular to a specific industry, country, state or region.
Investments in bonds with ratings of BB (Standard & Poor's Financial Services LLC or Fitch Ratings, Inc.) or Ba (Moody's Investors Service, Inc.) or below (commonly referred to as "high yield" bonds), or deemed of equivalent quality, have an increased risk of defaulting or otherwise being unable to honor a financial obligation. These securities are considered to be predominately speculative with respect to an issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. Lower-quality bonds are more likely to be subject to an issuer's default or downgrade than investment grade (higher-quality) bonds.
Valuation of investments
Each Fund generally calculates its net asset value on days that the New York Stock Exchange ("NYSE") is open. A Fund calculates net asset value separately for each class as of the close of regular trading on the NYSE (generally, 4:00 p.m., Eastern time). The NYSE normally is not open, and the Funds do not price their shares, on most national holidays and Good Friday. To the extent that a Fund's assets are traded in other markets on days when the NYSE is not open, the value of a Fund's assets may be affected on those days. If trading on the NYSE is halted for the day before 4:00 p.m., Eastern time, a Fund's net asset value per share generally will still be calculated as of the close of regular trading on the NYSE. The time at which a Fund calculates its net asset value and until which purchase, sale or exchange orders are accepted may be changed as permitted by the SEC.
Each Fund calculates its net asset value based on the current market value, where available, for its portfolio investments. The Funds normally obtain market values for their investments from independent pricing sources and broker-dealers. Independent pricing sources may use reported last sale prices, official market closing prices, current market quotations or valuations from computerized "evaluation" systems that derive values based on comparable investments. An evaluation system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio investments. Investments also may be valued based on appraisals derived from information concerning the investment or similar investments received from recognized dealers in those holdings. Investments traded in the over-the-counter ("OTC") market and listed on The NASDAQ Stock Market, Inc. ("NASDAQ") normally are valued at the NASDAQ Official Closing Price. Other OTC securities are valued at the last bid price on the valuation date available prior to valuation. Investments which are listed on US and foreign stock exchanges normally are valued at the market closing price, the last sale price on the day the securities are valued or, lacking any sales on such day, at the last available bid price. Investments listed on foreign stock exchanges may be
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The UBS Funds
Notes to financial statements (unaudited)
fair valued based on significant events that have occurred subsequent to the close of the foreign markets. In cases where investments are traded on more than one exchange, the investments are valued on the exchange designated as the primary market by UBS AM. If a market value is not readily available from an independent pricing source for a particular investment, that investment is valued at fair value as determined in good faith by or under the direction of the Trust's Board of Trustees (the "Board"). Foreign currency exchange rates are generally determined as of the close of the NYSE.
Certain investments in which the Funds invest are traded in markets that close before 4:00 p.m., Eastern time. Normally, developments that occur between the close of the foreign markets and 4:00 p.m., Eastern time, will not be reflected in a Fund's net asset value. However, if any of the Funds determine that such developments are so significant that they will materially affect the value of the Fund's investments, the Fund may adjust the previous closing prices to reflect what is believed to be the fair value of these investments as of 4:00 p.m., Eastern time.
Certain Funds may use a systematic fair valuation model provided by an independent third party to value investments principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. The systematic fair valuation model may use calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures contracts. If an investment is valued at a "fair value," that value is likely to be different from the last quoted market price for the investment. The use of the fair valuation model may result in securities being transferred between Level 1 and Level 2 of the fair valuation hierarchy at the end of the reporting period. Transfers between Level 1 and Level 2, if any, are disclosed near the end of each Fund's Portfolio of investments.
The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with 60 days or less remaining to maturity, unless the Board determines that this does not represent fair value.
Investments in open-end investment companies are valued at the daily closing net asset value of the respective investment company. Pursuant to the Funds' use of the practical expedient within ASC Topic 820, Fair Value Measurement, investments in investment companies without publicly published prices are also valued at the daily net asset value.
All investments quoted in foreign currencies are valued daily in US dollars on the basis of the foreign currency exchange rates prevailing at the time such valuation is determined by the Funds' custodian.
Futures contracts are generally valued at the settlement price established each day on the exchange on which they are traded. Forward foreign currency contracts are valued daily using forward exchange rates quoted by independent pricing services.
Swaps are marked-to-market daily based upon values from third party vendors or quotations from market makers to the extent available. In the event that market quotations are not readily available or deemed unreliable, the swap is valued at fair value as determined in good faith by or under the direction of the Board.
The Board has delegated to the Equities, Fixed Income, and Multi-Asset Valuation Committee ("VC") (formerly UBS AM Global Valuation Committee or GVC) the responsibility for making fair value determinations with respect to the Funds' portfolio holdings. The VC is comprised of representatives of management. The VC provides reports to the Board at each quarterly meeting regarding any investments that have been fair valued, valued pursuant to standing instructions approved by the VC, or where non-vendor pricing sources had been used to make fair value determinations when sufficient information exists during the prior quarter. Fair valuation determinations are subject to review at least monthly by the VC during scheduled meetings. Pricing decisions, processes, and controls over fair value
115
The UBS Funds
Notes to financial statements (unaudited)
determinations are subject to internal and external reviews, including annual internal compliance reviews and periodic internal audit reviews.
The types of investments for which such fair value pricing may be necessary include, but are not limited to: foreign investments under some circumstances; securities of an issuer that has entered into a restructuring; investments whose trading has been halted or suspended; fixed income securities that are in default and for which there is no current market value quotation; and investments that are restricted as to transfer or resale. The need to fair value a Fund's portfolio investments may also result from low trading volume in foreign markets or thinly traded domestic investments, and when a security that is subject to a trading limit or collar on the exchange or market on which it is primarily traded reaches the "limit up" or "limit down" price and no trading has taken place at that price. Various factors may be reviewed in order to make a good faith determination of an investment's fair value. These factors include, but are not limited to, fundamental analytical data relating to the investment; the nature and duration of restrictions on disposition of the investment; and the evaluation of forces which influence the market in which the investment is purchased and sold. Valuing investments at fair value involves greater reliance on judgment than valuing investments that have readily available market quotations. Fair value determinations can also involve reliance on quantitative models employed by a fair value pricing service.
US GAAP requires disclosure regarding the various inputs that are used in determining the value of each Fund's investments. These inputs are summarized into the three broad levels listed below:
Level 1—Unadjusted quoted prices in active markets for identical investments.
Level 2—Other significant observable inputs, including but not limited to, quoted prices for similar investments, interest rates, prepayment speeds and credit risk.
Level 3—Unobservable inputs inclusive of the Funds' own assumptions in determining the fair value of investments.
A fair value hierarchy table has been included near the end of each Fund's Portfolio of investments.
Investments
Securities traded on to-be-announced basis: Certain Funds may from time to time purchase, or short sell, securities on a to-be-announced ("TBA") basis. In a TBA transaction, the Fund commits to purchasing or selling securities for which all specific information is not yet known at the time of the trade, particularly the face amount and maturity date of the underlying securities. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, normally 15 to 45 days later. Beginning on the date the Fund enters into a TBA transaction, cash, US government securities or other liquid securities are segregated in an amount equal in value to the purchase price of the TBA security. These transactions are subject to market fluctuations, and their current value is determined in the same manner as for other securities.
Mortgage-backed securities: Certain Funds may invest in mortgage-backed securities ("MBS"), representing direct or indirect interests in pools of underlying mortgage loans that are secured by real property. These securities provide investors with payments consisting of both principal and interest as the mortgages in the underlying mortgage pools are paid.
The timely payment of principal and interest (but not the market value) on MBS issued or guaranteed by Ginnie Mae (formally known as the Government National Mortgage Association or GNMA) is backed by Ginnie Mae and the full faith and credit of the US government. Obligations issued by Fannie Mae (formally known as the Federal National Mortgage Association or FNMA) and Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation or FHLMC) are historically supported only by the credit of the issuer, but currently are guaranteed by the US government in connection with such agencies being placed temporarily into conservatorship by the US government.
116
The UBS Funds
Notes to financial statements (unaudited)
Some MBS are sponsored or issued by private entities. Payments of principal and interest (but not the market value) of such private MBS may be supported by pools of mortgage loans or other MBS that are guaranteed, directly or indirectly, by the US government or one of its agencies or instrumentalities, or they may be issued without any government guarantee of the underlying mortgage assets but with some form of non-government credit enhancement.
Collateralized mortgage obligations ("CMO") are a type of MBS. A CMO is a debt security that may be collateralized by whole mortgage loans or mortgage pass-through securities. The mortgage loans or mortgage pass-through securities are divided into classes or tranches with each class having its own characteristics. Investors typically receive payments out of the interest and principal on the underlying mortgages. The portions of these payments that investors receive, as well as the priority of their rights to receive payments, are determined by the specific terms of the CMO class.
The yield characteristics of MBS differ from those of traditional debt securities. Among the major differences are that interest and principal payments are made more frequently, usually monthly, and that principal may be prepaid at any time because the underlying mortgage loans or other obligations generally may be prepaid at any time. Prepayments on a pool of mortgage loans are influenced by a variety of economic, geographic, social and other factors. Generally, prepayments on fixed-rate mortgage loans will increase during a period of falling interest rates and decrease during a period of rising interest rates. Certain classes of CMOs and other MBS are structured in a manner that makes them extremely sensitive to changes in prepayment rates. Such classes include interest-only ("IO") and principal-only ("PO") classes. IOs are entitled to receive all or a portion of the interest, but none (or only a nominal amount) of the principal payments, from the underlying mortgage assets. If the mortgage assets underlying an IO experience greater than anticipated principal prepayments, then the total amount of interest payments allocable to the IO class, and therefore the yield to investors, generally will be reduced. Conversely, PO classes are entitled to receive all or a portion of the principal payments, but none of the interest, from the underlying mortgage assets. PO classes are purchased at substantial discounts from par, and the yield to investors will be reduced if principal payments are slower than expected.
Asset-backed securities: Certain Funds may invest in asset-backed securities ("ABS"), representing interests in pools of certain types of underlying installment loans, home equity loans, leases of various types of real and personal property and receivables from revolving lines of credit (credit cards). Such assets are securitized through the use of trusts or special purpose corporations. The yield characteristics of ABS differ from those of traditional debt securities. One such major difference is that principal may be prepaid at any time because the underlying obligations generally may be prepaid at any time. ABS may decrease in value as a result of increases in interest rates and may benefit less than other fixed-income securities from declining interest rates because of the risk of prepayment.
Short sales: UBS Dynamic Alpha Fund, UBS U.S. Small Cap Growth Fund and UBS Total Return Bond Fund may engage in short sale transactions in which the Fund sells a security it does not own (or does not have the right to acquire at no added cost), in anticipation of a decline in the security's price.
The Fund must borrow the security to make delivery to the buyer. The initial amount of a short sale is recorded as a liability which is marked to market daily. Fluctuations in the value of this liability are recorded as unrealized appreciation or depreciation on the Statement of operations. The Fund will realize a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security, and the Fund will realize a gain if the security declines in price between those same dates. Each Fund segregates collateral, consisting of cash or liquid assets, sufficient to collateralize the market value of the investments sold short. Each Fund incurs transaction costs, including dividend expense, borrowing costs and interest expenses in connection with opening, maintaining and closing short sales. These dividends and interest are booked as an expense or liability to the Fund.
117
The UBS Funds
Notes to financial statements (unaudited)
Because a Fund's loss on a short sale arises from increases in the value of the investment sold short, such loss, like the potential increase in price of the security sold short, is theoretically unlimited. The Fund's investments held long could also decline in value at the same time the value of the investment sold short increases, thereby increasing the Fund's potential for loss. There is also the risk that the counterparty to a short sale transaction may fail to honor its contract terms, causing a loss to the Fund.
For the period ended December 31, 2016, UBS Dynamic Alpha Fund, UBS U.S. Small Cap Growth Fund and UBS Total Return Bond Fund did not engage in short sale transactions.
Restricted securities: The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included in each Fund's portfolio footnotes.
Derivative instruments
Purchased options: Certain Funds may purchase put and call options, including, but not limited to, options on foreign or US securities, indices, foreign currencies and options on swap agreements (commonly referred to as swaptions), in order to gain exposure to or protect against changes in the markets or in an attempt to enhance income or gains. Purchasing call options tends to increase exposure to the underlying instrument. Purchasing put options tends to decrease exposure to the underlying instrument.
The Fund pays a premium which is included in the Statement of assets and liabilities as an investment and subsequently marked-to-market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. Purchased options are shown as portfolio holdings within the Portfolio of investments and are included in the Statement of assets and liabilities in investments of unaffiliated issuers, at value.
The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying future, security or currency transaction to determine the realized gain or loss.
Option writing: Certain Funds may write (sell) put and call options, including, but not limited to, options on foreign or US securities, indices, foreign currencies and options on swap agreements (commonly referred to as swaptions), in order to gain exposure to or protect against changes in the markets or in an attempt to enhance income or gains.
When a Fund writes a call or a put option, an amount equal to the premium received by the Fund is included in the Fund's Statement of assets and liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. If an option which a Fund has written either expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security or derivative instrument, and the liability related to such option is extinguished. If a call option, which a Fund has written, is exercised, the Fund recognizes a realized gain or loss (long-term or short-term, depending on the holding period of the underlying security) from the sale of the underlying security or derivative instrument and the proceeds from the sale are increased by the premium originally received. If a put option, which a Fund has written, is exercised, the amount of the premium originally received reduces the cost of the security or derivative instrument which the Fund purchases upon exercise of the option.
118
The UBS Funds
Notes to financial statements (unaudited)
In writing an option, a Fund bears the market risk of an unfavorable change in the price of the derivative instrument, security, or currency underlying the written option. Exercise of an option written by a Fund could result in the Fund selling or buying a derivative instrument, security or currency at a price different from current market value.
In the normal course of trading activities, the Funds trade and hold certain fair valued derivative contracts that constitute guarantees. Such contracts include written put options, where the Funds would be obligated to purchase securities at specified prices (i.e. the options are exercised by the counterparties). The maximum payout for these contracts is limited to the number of put option contracts written and the related strike prices, respectively. Maximum payout amounts could be offset by the subsequent sale, if any, of assets obtained via the execution of a payout event. At December 31, 2016, UBS Global Allocation Fund and UBS Total Return Bond Fund had maximum payout amounts of approximately $31,205,000 and $5,360,580, respectively, relating to written put option contracts.
Futures contracts: Certain Funds may purchase or sell futures contracts to increase or reduce their exposure to an asset class without purchasing or selling the underlying securities, either as a hedge or to enhance income or realized gains. Generally, a futures contract is a standard binding agreement to buy or sell a specified quantity of an underlying reference asset, such as a specific security or currency, at a specified price at a specified later date.
Upon entering into a futures contract, a Fund is required to deliver to a broker an amount of cash and/or U.S. government securities equal to a certain percentage of the contract amount. This amount is known as the "initial margin". Subsequent payments, known as "variation margin", generally are made or received by a Fund, depending on the daily fluctuations in the value of the underlying futures contracts. Such variation margin is recorded for financial statement purposes on a daily basis as an unrealized appreciation or depreciation on futures until the futures contract is closed or expires, at which time the net gain or loss is reclassified to realized gain or loss on futures.
Using futures contracts involves various market risks, including interest rate and equity risk. Risks of entering into futures contracts include the possibility that there may be an illiquid market or that a change in the value of the contract may not correlate with changes in the value of the underlying securities. To the extent that market prices move in an unexpected direction, there is a risk that a Fund will not achieve the anticipated benefits of the futures contract or may realize a loss.
Forward foreign currency contracts: Certain Funds may enter into forward foreign currency contracts in order to expedite settlement of portfolio transactions, manage currency risk or to gain exposure to a currency without purchasing securities denominated in that currency. Generally, a forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Non-deliverable forward foreign currency contracts are settled with the counterparty in US dollars, or another fully convertible currency, without the physical delivery of foreign currency.
Fluctuations in the value of open forward foreign currency contracts are recorded daily for book purposes as unrealized appreciation or depreciation on forward foreign currency contracts by the Funds. Realized gains and losses on forward foreign currency contracts include net gains or losses recognized by the Funds on contracts which have been sold or matured.
Risks may arise upon entering into forward foreign currency contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of foreign currencies relative to the US dollar or each other.
Swap agreements: Certain Funds may engage in swap agreements, including, but not limited to, interest rate, credit default and total return swap agreements. A Fund expects to enter into these transactions to preserve a
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The UBS Funds
Notes to financial statements (unaudited)
return or spread on a particular investment or to hedge a portion of the portfolio's duration, to protect against any increase in the price of securities the Fund anticipates purchasing at a later date, to gain exposure to certain markets in the most economical way possible or in an attempt to enhance income or gains.
The Funds accrue for interim payments on swap agreements on a daily basis, with the net amount recorded within unrealized appreciation or depreciation of swap agreements. Once interim payments are settled in cash, the net amount is recorded as realized gain/loss on swap agreements, in addition to realized gain/loss recorded upon the termination of swap agreements on the Statement of operations. Fluctuations in the value of swap agreements are recorded for financial statement purposes as unrealized appreciation or depreciation on swap agreements.
Certain Funds may enter into interest rate swap agreements with another party to receive or pay interest (e.g., an exchange of fixed rate payments for floating rate payments) to protect themselves from interest rate fluctuations. This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to a specified interest rate(s) for a specified amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Interest rate swap agreements are subject to general market risk, liquidity risk, counterparty risk and interest rate risk.
Credit default swap agreements involve commitments to make or receive payments in the event of a default of a security or other credit event of the referenced obligation. As a buyer, the Fund would make periodic payments to the counterparty, and the Fund would receive payments only upon the occurrence of a default or credit event. If no default or credit event occurs, the Fund will lose its periodic stream of payments over the term of the contract. However, if a default or a credit event does occur, the Fund typically would receive full notional value for the referenced obligation that may have little or no value. As a seller, the Fund would receive periodic payments from the counterparty, and the Fund would make payments only upon the occurrence of a default or a credit event. If no default or credit event occurs, the Fund will gain the periodic stream of payments it received over the term of the contract and the counterparty will lose its periodic stream of payments over the term of the contract. However, if a default or credit event occurs, the Fund typically would pay full notional value for the referenced obligation that may have little or no value. Credit default swap agreements may involve greater risks than if the Fund had invested in the referenced obligation directly and are subject to general market risk, liquidity risk and credit risk.
Credit default swap agreements on credit indices involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the referenced entities comprising the credit index. A credit index is a list of a basket of credit instruments or exposures designed to be representative of some part of the credit market as a whole. These indices are made up of referenced credits that are judged by a poll of dealers to be the most liquid entities in the credit default swap market based on the sector of the index. Components of the indices may include, but are not limited to, investment grade securities, high yield securities, asset backed securities, emerging markets, and/or various credit ratings within each sector. Credit indices are traded using credit default swaps with standardized terms including a fixed spread and standard maturity dates. An index credit default swap references all the names in the index, and if there is a default, the credit event is settled based on that name's weight in the index. The composition of the indices changes periodically, usually every six months, and for most indices, each name has an equal weight in the index. A Fund may use credit default swap agreements on credit indices to hedge a portfolio of credit default swaps or bonds with a credit default swap on indices which is less expensive than it would be to buy many credit default swaps to achieve a similar effect. Credit default swap agreements on credit indices are benchmarks for protecting investors owning bonds against default, and traders use them to speculate on changes in credit quality.
Credit default swap agreements on corporate issues or sovereign issues of an emerging market country involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the
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The UBS Funds
Notes to financial statements (unaudited)
event of a default or other credit event. If a credit event occurs and cash settlement is not elected, a variety of other obligations may be delivered in lieu of the specific referenced obligation. The ability to deliver other obligations may result in a cheapest-to-deliver option (the buyer of protection's right to choose the deliverable obligation with the lowest value following a credit event). A Fund may use credit default swap agreements on corporate issues or sovereign issues of an emerging market country to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where the Fund owns or has exposure to the referenced obligation) or to take an active long or short position with respect to the likelihood of a particular issuer's default.
The maximum potential amount of future payments (undiscounted) that a Fund as a seller of protection could be required to make under a credit default swap agreement would be an amount equal to the notional amount of the agreement, which may exceed the amount of the value reflected on the Statement of assets and liabilities. Notional amounts of all credit default swap agreements outstanding as of the period end for which a Fund is the seller of protection are disclosed under the section "Credit default swap agreements on corporate issues—sell protection" in the Portfolio of investments. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into, if any, by a Fund for the same referenced entity or entities.
Total return swap agreements involve commitments to pay or receive interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty, respectively. Total return swap agreements are marked-to-market daily, and the change, if any, is recorded as unrealized appreciation or depreciation. Total return swap agreements are subject to general market risk, liquidity risk, counterparty risk, interest rate risk, credit risk and the risk that there may be unfavorable changes in the underlying investments or instruments.
The use of swap agreements involves investment techniques and risks different from those associated with ordinary portfolio security transactions. If UBS AM is incorrect in its forecast of market values, interest rates and other applicable factors, the investment performance of the Fund will be less favorable than it would have been if this investment technique was never used. OTC swap agreements do not involve the delivery of securities and are subject to counterparty risk. If the other party to a swap agreement defaults and fails to consummate the transaction, a Fund's risk of loss will consist of the net amount of interest or other payments that the Fund is contractually entitled to receive. Therefore, the Fund would consider the creditworthiness of the counterparty to a swap agreement in evaluating potential credit risk.
Certain clearinghouses offer clearing for limited types of derivatives transactions, such as interest rate and credit default swap agreements. Centrally cleared swap agreements must be transacted through a futures commission merchant ("FCM") and cleared through a clearinghouse that serves as a central counterparty. The performance of a centrally cleared swap transaction is effectively guaranteed by a central clearinghouse, thereby reducing the Fund's exposure to the credit risk of its original counterparty. The Fund will be required to post specified levels of margin with the clearinghouse or at the instruction of the clearinghouse; the margin required by a clearinghouse may be greater than the margin the Fund would be required to post in an uncleared transaction. Centrally cleared swap agreements, if any, are reported on the Statement of assets and liabilities based on variation margin receivable or payable, if any.
Derivatives by underlying risk: Investment companies value their derivatives at fair value and recognize changes in fair value through the Statement of operations. Under US GAAP, investment companies do not qualify for hedge accounting. Accordingly, even though a Fund's investments in derivatives may represent economic hedges, they are considered to be non-hedge transactions for purposes of disclosure under US GAAP.
121
The UBS Funds
Notes to financial statements (unaudited)
The volume of derivatives as disclosed in each Fund's Portfolio of investments is representative of the volume of derivatives outstanding during the period ended December 31, 2016.
Swap agreements, forward foreign currency contracts, swaptions and options written entered into by the Funds may contain credit-risk related contingent features that could be triggered subject to certain circumstances. Such circumstances include agreed upon net asset value thresholds. If triggered, the derivative counterparty could request additional cash margin and/or terminate the derivative contract. The aggregate fair value of the derivative contracts that are in a net liability position that contain these triggers can be found in the Portfolio of investments. The aggregate fair value of assets that are already posted as collateral as of December 31, 2016 is reflected in the Statement of assets and liabilities.
At December 31, 2016, the Fund had the following derivatives categorized by underlying risk:
Asset derivatives1
Interest rate risk | Foreign exchange risk | Credit risk | Equity risk | Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | 1,750,405 | $ | — | $ | — | $ | 1,750,405 | |||||||||||||
Futures contracts | 349,208 | — | — | 362,343 | 711,551 | ||||||||||||||||||
Swap agreements | — | — | 929,281 | — | 929,281 | ||||||||||||||||||
Total value | $ | 349,208 | $ | 1,750,405 | $ | 929,281 | $ | 362,343 | $ | 3,391,237 |
Liability derivatives2
Interest rate risk | Foreign exchange risk | Credit risk | Equity risk | Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | (573,395 | ) | $ | — | $ | — | $ | (573,395 | ) | |||||||||||
Futures contracts | (734,520 | ) | — | — | (261,649 | ) | (996,169 | ) | |||||||||||||||
Swap agreements | — | — | (128,690 | ) | — | (128,690 | ) | ||||||||||||||||
Total value | $ | (734,520 | ) | $ | (573,395 | ) | $ | (128,690 | ) | $ | (261,649 | ) | $ | (1,698,254 | ) |
Table footnotes begin on page 125.
122
The UBS Funds
Notes to financial statements (unaudited)
During the period ended December 31, 2016, net realized gains (losses) and change in net unrealized appreciation (depreciation) from derivatives were as follows:
Interest rate risk | Foreign exchange risk | Credit risk | Equity risk | Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Net realized gain (loss)3 | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | 4,188,926 | $ | — | $ | — | $ | 4,188,926 | |||||||||||||
Futures contracts | 342,048 | — | — | 3,247,707 | 3,589,755 | ||||||||||||||||||
Options purchased | — | — | (14,400 | ) | (1,626,905 | ) | (1,641,305 | ) | |||||||||||||||
Options written | — | — | — | 50,250 | 50,250 | ||||||||||||||||||
Swap agreements | (176,755 | ) | — | 880,322 | — | 703,567 | |||||||||||||||||
Total net realized gain | $ | 165,293 | $ | 4,188,926 | $ | 865,922 | $ | 1,671,052 | $ | 6,891,193 | |||||||||||||
Change in net unrealized appreciation (depreciation)4 | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | (754,665 | ) | $ | — | $ | — | $ | (754,665 | ) | |||||||||||
Futures contracts | 1,062,167 | — | — | (309,394 | ) | 752,773 | |||||||||||||||||
Options purchased | — | — | — | 895,044 | 895,044 | ||||||||||||||||||
Swap agreements | 67,080 | — | 214,926 | — | 282,006 | ||||||||||||||||||
Total change in net unrealized appreciation (depreciation) | $ | 1,129,247 | $ | (754,665 | ) | $ | 214,926 | $ | 585,650 | $ | 1,175,158 |
At December 31, 2016, the Fund had the following derivatives categorized by underlying risk:
Asset derivatives1
Interest rate risk | Foreign exchange risk | Credit risk | Equity risk | Total | |||||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | 1,465,685 | $ | — | $ | — | $ | 1,465,685 | |||||||||||||
Futures contracts | 185,249 | — | — | 527,244 | 712,493 | ||||||||||||||||||
Options purchased | — | — | — | 663,600 | 663,600 | ||||||||||||||||||
Swap agreements | — | — | 1,600,900 | — | 1,600,900 | ||||||||||||||||||
Total value | $ | 185,249 | $ | 1,465,685 | $ | 1,600,900 | $ | 1,190,844 | $ | 4,442,678 |
Liability derivatives2
Interest rate risk | Foreign exchange risk | Equity risk | Total | ||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | (362,119 | ) | $ | — | $ | (362,119 | ) | |||||||||
Futures contracts | (644,369 | ) | — | (218,586 | ) | (862,955 | ) | ||||||||||||
Options written | — | — | (169,850 | ) | (169,850 | ) | |||||||||||||
Total value | $ | (644,369 | ) | $ | (362,119 | ) | $ | (388,436 | ) | $ | (1,394,924 | ) |
Table footnotes begin on page 125.
123
The UBS Funds
Notes to financial statements (unaudited)
During the period ended December 31, 2016, net realized gains (losses) and change in net unrealized appreciation (depreciation) from derivatives were as follows:
Interest rate risk | Foreign exchange risk | Credit risk | Equity risk | Total | |||||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||||||
Net realized gain (loss)3 | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | 806,547 | $ | — | $ | — | $ | 806,547 | |||||||||||||
Futures contracts | (888,600 | ) | — | — | (2,319,551 | ) | (3,208,151 | ) | |||||||||||||||
Options purchased | — | — | — | (872,984 | ) | (872,984 | ) | ||||||||||||||||
Options written | — | — | — | 171,748 | 171,748 | ||||||||||||||||||
Swap agreements | — | — | 1,773,802 | — | 1,773,802 | ||||||||||||||||||
Total net realized gain (loss) | $ | (888,600 | ) | $ | 806,547 | $ | 1,773,802 | $ | (3,020,787 | ) | $ | (1,329,038 | ) | ||||||||||
Change in net unrealized appreciation (depreciation)4 | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | 1,105,273 | $ | — | $ | — | $ | 1,105,273 | |||||||||||||
Futures contracts | (1,536,366 | ) | — | — | 1,731,025 | 194,659 | |||||||||||||||||
Options purchased | — | — | — | 696,716 | 696,716 | ||||||||||||||||||
Options written | — | — | — | (190,873 | ) | (190,873 | ) | ||||||||||||||||
Swap agreements | — | — | (387,252 | ) | — | (387,252 | ) | ||||||||||||||||
Total change in net unrealized appreciation (depreciation) | $ | (1,536,366 | ) | $ | 1,105,273 | $ | (387,252 | ) | $ | 2,236,868 | $ | 1,418,523 |
At December 31, 2016, the Fund had the following derivatives categorized by underlying risk:
Asset derivatives1
Interest rate risk | Foreign exchange risk | Equity risk | Total | ||||||||||||||||
UBS Total Return Bond Fund | |||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | 5,336 | $ | — | $ | 5,336 | |||||||||||
Futures contracts | 20,274 | — | — | 20,274 | |||||||||||||||
Swap agreements | — | — | 8,292 | 8,292 | |||||||||||||||
Total value | $ | 20,274 | $ | 5,336 | $ | 8,292 | $ | 33,902 |
Liability derivatives2
Interest rate risk | Foreign exchange risk | Total | |||||||||||||
UBS Total Return Bond Fund | |||||||||||||||
Forward foreign currency contracts | $ | — | $ | (10,118 | ) | $ | (10,118 | ) | |||||||
Futures contracts | (66,265 | ) | — | (66,265 | ) | ||||||||||
Options written | — | (68,056 | ) | (68,056 | ) | ||||||||||
Total value | $ | (66,265 | ) | $ | (78,174 | ) | $ | (144,439 | ) |
Table footnotes begin on page 125.
124
The UBS Funds
Notes to financial statements (unaudited)
During the period ended December 31, 2016, net realized gains (losses) and change in net unrealized appreciation (depreciation) from derivatives were as follows:
Interest rate risk | Foreign exchange risk | Credit risk | Equity risk | Total | |||||||||||||||||||
UBS Total Return Bond Fund | |||||||||||||||||||||||
Net realized gain (loss)3 | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | 63,261 | $ | — | $ | — | $ | 63,261 | |||||||||||||
Futures contracts | (345,408 | ) | — | — | — | (345,408 | ) | ||||||||||||||||
Options purchased | (35,672 | ) | (33,105 | ) | (154,871 | ) | — | (223,648 | ) | ||||||||||||||
Options written | 3,965 | 168,088 | 93,462 | — | 265,515 | ||||||||||||||||||
Swap agreements | — | — | — | 15,655 | 15,655 | ||||||||||||||||||
Total net realized gain (loss) | $ | (377,115 | ) | $ | 198,244 | $ | (61,409 | ) | $ | 15,655 | $ | (224,625 | ) | ||||||||||
Change in net unrealized appreciation (depreciation)4 | |||||||||||||||||||||||
Forward foreign currency contracts | $ | — | $ | (31,929 | ) | $ | — | $ | — | $ | (31,929 | ) | |||||||||||
Futures contracts | 53,713 | — | — | — | 53,713 | ||||||||||||||||||
Options purchased | (30,261 | ) | 5,357 | 1,227 | — | (23,677 | ) | ||||||||||||||||
Options written | 26,455 | (14,952 | ) | (6,012 | ) | — | 5,491 | ||||||||||||||||
Swap agreements | — | — | — | 14,293 | 14,293 | ||||||||||||||||||
Total change in net unrealized appreciation (depreciation) | $ | 49,907 | $ | (41,524 | ) | $ | (4,785 | ) | $ | 14,293 | $ | 17,891 |
1 In the Statement of assets and liabilities, options purchased are shown within investments of unaffiliated issuers, at value, swap agreements (except centrally cleared swap agreements) are shown within outstanding swap agreements, at value, while forward foreign currency contracts are shown within unrealized appreciation on forward foreign currency contracts. Futures contracts are reported in the table above using cumulative appreciation of futures contracts and centrally cleared swap agreements are reported at value, as reported in the futures contracts and centrally cleared swap agreements tables at the end of the Portfolio of investments, respectively, but only the variation margin to be received, if any, is reported within the Statement of assets and liabilities.
2 In the Statement of assets and liabilities, options written are shown within options written, at value, swap agreements (except centrally cleared swap agreements) are shown within outstanding swap agreements, at value, while forward foreign currency contracts are shown within unrealized depreciation on forward foreign currency contracts. Futures contracts are reported in the table above using cumulative depreciation of futures contracts and centrally cleared swap agreements are reported at value, as reported in the futures contracts and centrally cleared swap agreements tables at the end of the Portfolio of investments, respectively, but only the variation margin to be paid, if any, is reported within the Statement of assets and liabilities.
3 The net realized gain (loss) is shown in the Statement of operations in net realized gain (loss) on futures contracts, options written, swap agreements and forward foreign currency contracts, unless otherwise noted. The net realized gain (loss) of options purchased is shown in the Statement of operations in net realized gain (loss) on investments in unaffiliated issuers.
4 The change in net unrealized appreciation (depreciation) is shown in the Statement of operations in change in net unrealized appreciation (depreciation) on futures contracts, options written, swap agreements and forward foreign currency contracts, unless otherwise noted. The change in net unrealized appreciation (depreciation) of options purchased is shown in the Statement of operations on change in net unrealized appreciation (depreciation) on investments.
Offsetting of certain derivatives: The Funds typically enter into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Funds typically may offset with the counterparty certain derivative financial instrument's payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination. The Statement of assets and liabilities is presented gross of any netting.
125
The UBS Funds
Notes to financial statements (unaudited)
At December 31, 2016, derivative assets and liabilities (by type) on a gross basis and derivatives subject to an enforceable master netting arrangement ("MNA") or similar agreement were as follows:
UBS Dynamic Alpha Fund
Derivative Financial Instruments: | Assets | Liabilities | |||||||||
Forward foreign currency contracts | $ | 1,750,405 | $ | (573,395 | ) | ||||||
Futures contracts1 | 711,551 | (996,169 | ) | ||||||||
Swap agreements1 | 929,281 | (128,690 | ) | ||||||||
Total gross amount of derivative assets and liabilities in the Statement of assets and liabilities | $ | 3,391,237 | $ | (1,698,254 | ) | ||||||
Derivatives not subject to MNA or similar agreements | (1,627,300 | ) | 1,063,024 | ||||||||
Total gross amount of assets and liabilities subject to MNA or similar agreements | $ | 1,763,937 | $ | (635,230 | ) |
The following tables present the Fund's derivative assets and liabilities by counterparty net of amounts available for offset under a MNA and net of the related collateral received/pledged by the Fund as of the period end.
Counterparty | Gross amount of assets | Financial instruments and derivatives available for offset | Collateral received2 | Net amount of asset | |||||||||||||||
CITI | $ | 2,188 | $ | (2,188 | ) | $ | — | $ | — | ||||||||||
GSI | 84,689 | (72,319 | ) | — | 12,370 | ||||||||||||||
HSBC | 11,830 | — | — | 11,830 | |||||||||||||||
JPMCB | 49,426 | (46,204 | ) | — | 3,222 | ||||||||||||||
MSC | 821,068 | (277,913 | ) | — | 543,155 | ||||||||||||||
SSB | 413,518 | — | — | 413,518 | |||||||||||||||
WBC | 381,218 | (231,484 | ) | — | 149,734 | ||||||||||||||
Total | $ | 1,763,937 | $ | (630,108 | ) | $ | — | $ | 1,133,829 | ||||||||||
Counterparty | Gross amount of liabilities | Financial instruments and derivatives available for offset | Collateral pledged2 | Net amount of liabilities | |||||||||||||||
BB | $ | (1,584 | ) | $ | — | $ | — | $ | (1,584 | ) | |||||||||
CITI | (5,726 | ) | 2,188 | 3,538 | — | ||||||||||||||
GSI | (72,319 | ) | 72,319 | — | — | ||||||||||||||
JPMCB | (46,204 | ) | 46,204 | — | — | ||||||||||||||
MSC | (277,913 | ) | 277,913 | — | — | ||||||||||||||
WBC | (231,484 | ) | 231,484 | — | — | ||||||||||||||
Total | $ | (635,230 | ) | $ | 630,108 | $ | 3,538 | $ | (1,584 | ) |
Table footnotes begin on page 128.
126
The UBS Funds
Notes to financial statements (unaudited)
At December 31, 2016, derivative assets and liabilities (by type) on a gross basis and derivatives subject to an enforceable master netting arrangement ("MNA") or similar agreement were as follows:
UBS Global Allocation Fund
Derivative Financial Instruments: | Assets | Liabilities | |||||||||
Forward foreign currency contracts | $ | 1,465,685 | $ | (362,119 | ) | ||||||
Futures contracts1 | 712,493 | (862,955 | ) | ||||||||
Options purchased | 663,600 | — | |||||||||
Options written | — | (169,850 | ) | ||||||||
Swap agreements1 | 1,600,900 | — | |||||||||
Total gross amount of derivative assets and liabilities in the Statement of assets and liabilities | $ | 4,442,678 | $ | (1,394,924 | ) | ||||||
Derivatives not subject to MNA or similar agreements | (2,976,993 | ) | 1,032,805 | ||||||||
Total gross amount of assets and liabilities subject to MNA or similar agreements | $ | 1,465,685 | $ | (362,119 | ) |
Table footnotes begin on page 128.
The following tables present the Fund's derivative assets and liabilities by counterparty net of amounts available for offset under a MNA and net of the related collateral received/pledged by the Fund as of the period end.
Counterparty | Gross amount of assets | Financial instruments and derivatives available for offset | Collateral received | Net amount of assets | |||||||||||||||
CITI | $ | 17,731 | $ | — | $ | — | $ | 17,731 | |||||||||||
GSI | 117,924 | (73,593 | ) | — | 44,331 | ||||||||||||||
HSBC | 120,131 | — | — | 120,131 | |||||||||||||||
JPMCB | 222,735 | (32,866 | ) | — | 189,869 | ||||||||||||||
MSC | 718,045 | (255,660 | ) | — | 462,385 | ||||||||||||||
SSC | 64,275 | — | — | 64,275 | |||||||||||||||
WBC | 204,844 | — | — | 204,844 | |||||||||||||||
Total | $ | 1,465,685 | $ | (362,119 | ) | $ | — | $ | 1,103,566 | ||||||||||
Counterparty | Gross amount of liabilities | Financial instruments and derivatives available for offset | Collateral pledged | Net amount of liabilities | |||||||||||||||
GSI | $ | (73,593 | ) | $ | 73,593 | $ | — | $ | — | ||||||||||
JPMCB | (32,866 | ) | 32,866 | — | — | ||||||||||||||
MSC | (255,660 | ) | 255,660 | — | — | ||||||||||||||
Total | $ | (362,119 | ) | $ | 362,119 | $ | — | $ | — |
127
The UBS Funds
Notes to financial statements (unaudited)
At December 31, 2016, derivative assets and liabilities (by type) on a gross basis and derivatives subject to an enforceable master netting arrangement ("MNA") or similar agreement were as follows:
UBS Total Return Bond Fund
Derivative Financial Instruments: | Assets | Liabilities | |||||||||
Forward foreign currency contracts | $ | 5,336 | $ | (10,118 | ) | ||||||
Futures contracts1 | 20,274 | (66,265 | ) | ||||||||
Options written | — | (68,056 | ) | ||||||||
Swap agreements | 8,292 | — | |||||||||
Total gross amount of derivative assets and liabilities in the Statement of assets and liabilities | $ | 33,902 | $ | (144,439 | ) | ||||||
Derivatives not subject to MNA or similar agreements | (20,274 | ) | 66,265 | ||||||||
Total gross amount of assets and liabilities subject to MNA or similar agreements | $ | 13,628 | $ | (78,174 | ) |
The following tables present the Fund's derivative assets and liabilities by counterparty net of amounts available for offset under a MNA and net of the related collateral received/pledged by the Fund as of the period end.
Counterparty | Gross amount of assets | Financial instruments and derivatives available for offset | Collateral received | Net amount of assets | |||||||||||||||
CITI | $ | 8,292 | $ | (8,292 | ) | $ | — | $ | — | ||||||||||
JPMCB | 5,336 | (5,336 | ) | — | — | ||||||||||||||
Total | $ | 13,628 | $ | (13,628 | ) | $ | — | $ | — | ||||||||||
Counterparty | Gross amount of liabilities | Financial instruments and derivatives available for offset | Collateral pledged | Net amount of liabilities | |||||||||||||||
CITI | $ | (68,056 | ) | $ | 8,292 | $ | — | $ | (59,764 | ) | |||||||||
JPMCB | (10,118 | ) | 5,336 | — | (4,782 | ) | |||||||||||||
Total | $ | (78,174 | ) | $ | 13,628 | $ | — | $ | (64,546 | ) |
1 Includes cumulative appreciation (depreciation) of futures contracts and centrally cleared swaps, at value as reported in the futures contracts and centrally cleared swap tables in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities within variation margin on futures contracts and centrally cleared swap agreements, respectively.
2 In some instances, the actual collateral received and/or pledged may be more than the amount shown and may be comprised of cash collateral, non-cash collateral or a combination of both.
Investment advisory fees and other transactions with affiliates
The Advisor, a registered investment advisor, provides the Funds with investment management services. As compensation for these services, each Fund pays the Advisor a monthly fee, accrued daily and paid monthly, based on each Fund's respective average daily net assets in accordance with the following per annum schedule:
$0 to $500 mm | $500 mm to $1.0 billion | $1.0 billion to $1.5 billion | $1.5 billion to $2.0 billion | $2.0 billion to $4.0 billion | $4.0 billion and over | ||||||||||||||||||||||
UBS Dynamic Alpha Fund | 0.850 | % | 0.800 | % | 0.750 | % | 0.725 | % | 0.700 | % | 0.680 | % |
128
The UBS Funds
Notes to financial statements (unaudited)
Fund | $0 to $500 mm | $500 mm to $1.0 billion | $1.0 billion to $1.5 billion | $1.5 billion to $2.0 billion | $2.0 billion to $3.0 billion | $3.0 billion to $6.0 billion | $6.0 billion and over | ||||||||||||||||||||||||
UBS Global Allocation Fund | 0.800 | % | 0.750 | % | 0.700 | % | 0.675 | % | 0.650 | % | 0.630 | % | 0.610 | % |
Fund | $0 to $500 mm | $500 mm to $1.0 billion | $1.0 billion to $1.5 billion | $1.5 billion to $2.0 billion | $2.0 billion and over | ||||||||||||||||||
UBS International Sustainable Equity Fund | 0.800 | % | 0.750 | % | 0.700 | % | 0.675 | % | 0.650 | % | |||||||||||||
UBS U.S. Large Cap Equity Fund | 0.700 | 0.650 | 0.600 | 0.575 | 0.550 | ||||||||||||||||||
UBS U.S. Small Cap Growth Fund | 0.850 | 0.850 | 0.825 | 0.825 | 0.825 |
Fund | All assets | ||||||
UBS Total Return Bond Fund | 0.500 | % | |||||
UBS Municipal Bond Fund | 0.400 |
For UBS Global Allocation Fund, UBS International Sustainable Equity Fund, UBS U.S. Large Cap Equity Fund, UBS Total Return Bond Fund and UBS Municipal Bond Fund, the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Funds' operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) do not exceed the expense limit of each class of shares as indicated in the following table. For UBS Dynamic Alpha Fund and UBS U.S. Small Cap Growth Fund the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and dividend expense and security loan fees for securities sold short) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and dividend expense and security loan fees for securities sold short) do not exceed the expense limit of each class of shares as indicated in the following table. The contractual fee waiver and/or expense reimbursement agreement for each Fund, except UBS International Sustainable Equity Fund, will remain in place through the period ending October 27, 2017. The fee waiver and/or expense reimbursement for UBS International Sustainable Equity Fund is irrevocable. Investment advisory fees, including the dollar amount waived or reimbursed, for the period ended December 31, 2016 were as follows:
Fund | Class A expense cap | Class C expense cap | Class P expense cap | Amount due to or (due from) Advisor | Advisory fees incurred | Fees waived/ expenses reimbursed | Recoupments | ||||||||||||||||||||||||
UBS Dynamic Alpha Fund | 1.35 | % | 2.10 | % | 1.10 | % | $ | 110,202 | $ | 909,484 | $ | 140,224 | $ | — | |||||||||||||||||
UBS Global Allocation Fund1 | 1.20 | 1.95 | 0.95 | 139,727 | 1,535,999 | 137,136 | — | ||||||||||||||||||||||||
UBS International Sustainable Equity Fund | 1.25 | 2.00 | 1.00 | (17,592 | ) | 97,899 | 136,415 | — | |||||||||||||||||||||||
UBS U.S. Large Cap Equity Fund | 0.95 | 1.70 | 0.70 | (32,085 | ) | 95,988 | 145,722 | — | |||||||||||||||||||||||
UBS U.S. Small Cap Growth Fund | 1.24 | 1.99 | 0.99 | 81,929 | 726,936 | 179,016 | — | ||||||||||||||||||||||||
UBS Total Return Bond Fund | 0.75 | 1.25 | 0.50 | (33,185 | ) | 212,807 | 192,388 | — | |||||||||||||||||||||||
UBS Municipal Bond Fund | 0.65 | 1.15 | 0.40 | (7,970 | ) | 250,305 | 201,996 | — |
1 Effective October 28, 2016, UBS Global Allocation Fund's expense caps were reduced from 1.35%, 2.10% and 1.10% for Class A, C & P, respectively.
Each Fund, except for UBS International Sustainable Equity Fund, will reimburse the Advisor for expenses it waives or reimburses for a period of three years following such expense waivers or reimbursements, provided that the reimbursement by a Fund of the Advisor will not cause the total operating expense ratio to exceed the contractual
129
The UBS Funds
Notes to financial statements (unaudited)
limit as then may be in effect for the Fund. The expenses waived or reimbursed for the period ended December 31, 2016 are subject to repayment through June 30, 2020.
At December 31, 2016, the following Funds had remaining fee waivers and expense reimbursements subject to repayment to the Advisor and respective dates of expiration as follows:
Fund | Fee waivers/ expense reimbursements subject to repayment | Expires June 30, 2017 | Expires June 30, 2018 | Expires June 30, 2019 | Expires June 30, 2020 | ||||||||||||||||||
UBS Dynamic Alpha Fund—Class A | $ | 334,222 | $ | 148,450 | $ | 78,494 | $ | 73,863 | $ | 33,415 | |||||||||||||
UBS Dynamic Alpha Fund—Class C | 147,667 | 40,482 | 43,534 | 44,827 | 18,824 | ||||||||||||||||||
UBS Dynamic Alpha Fund—Class P | 475,971 | 28,343 | 165,473 | 194,170 | 87,985 | ||||||||||||||||||
UBS Global Allocation Fund—Class A | 87,582 | — | — | 26,083 | 61,499 | ||||||||||||||||||
UBS Global Allocation Fund—Class C | 113,738 | — | — | 60,816 | 52,922 | ||||||||||||||||||
UBS Global Allocation Fund—Class P | 22,715 | — | — | — | 22,715 | ||||||||||||||||||
UBS U.S. Large Cap Equity Fund—Class A | 166,121 | 7,993 | 33,158 | 75,018 | 49,952 | ||||||||||||||||||
UBS U.S. Large Cap Equity Fund—Class C | 42,747 | 3,730 | 9,467 | 17,727 | 11,823 | ||||||||||||||||||
UBS U.S. Large Cap Equity Fund—Class P | 406,372 | 55,550 | 94,815 | 172,060 | 83,947 | ||||||||||||||||||
UBS U.S. Small Cap Growth Fund—Class A | 234,695 | 20,513 | 59,130 | 109,706 | 45,346 | ||||||||||||||||||
UBS U.S. Small Cap Growth Fund—Class C | 27,998 | 2,856 | 5,493 | 13,652 | 5,997 | ||||||||||||||||||
UBS U.S. Small Cap Growth Fund—Class P | 461,577 | — | 59,114 | 274,790 | 127,673 | ||||||||||||||||||
UBS Total Return Bond Fund—Class A1 | 25 | — | — | — | 25 | ||||||||||||||||||
UBS Total Return Bond Fund—Class C1 | 106 | — | — | — | 106 | ||||||||||||||||||
UBS Total Return Bond Fund—Class P | 234,852 | — | — | 42,595 | 192,257 | ||||||||||||||||||
UBS Municipal Bond Fund—Class A | 136,391 | — | 35,220 | 65,430 | 35,741 | ||||||||||||||||||
UBS Municipal Bond Fund—Class C | 43,523 | — | 10,331 | 22,631 | 10,561 | ||||||||||||||||||
UBS Municipal Bond Fund—Class P | 647,892 | — | 220,354 | 271,844 | 155,694 |
1 For the period from September 30, 2016 (commencement of operations) through December 31, 2016.
Each Fund pays UBS AM a monthly administration fee that is accrued daily and paid monthly at an annual rate of 0.075% of the average daily net assets of such Fund. For the period ended December 31, 2016, the Funds owed and incurred administrative fees as follows:
Fund | Administrative fees owed | Administrative fees incurred | |||||||||
UBS Dynamic Alpha Fund | $ | 12,268 | $ | 80,249 | |||||||
UBS Global Allocation Fund | 22,428 | 144,001 | |||||||||
UBS International Sustainable Equity Fund | 1,510 | 9,178 | |||||||||
UBS U.S. Large Cap Equity Fund | 1,754 | 10,285 | |||||||||
UBS U.S. Small Cap Growth Fund | 11,009 | 64,142 | |||||||||
UBS Total Return Bond Fund | 3,469 | 31,922 | |||||||||
UBS Municipal Bond Fund | 7,659 | 46,933 |
The Funds may invest in shares of certain affiliated investment companies also advised or managed by the Advisor. Investments in affiliated investment companies for the period ended December 31, 2016 have been included near the end of each Fund's Portfolio of investments.
130
The UBS Funds
Notes to financial statements (unaudited)
The following Funds have incurred brokerage commissions with UBS Group AG, an affiliated broker-dealer. Amounts relating to those transactions for the period ended December 31, 2016, were as follows:
Fund | UBS AG | ||||||
UBS Global Allocation Fund | $ | 493 | |||||
UBS International Sustainable Equity Fund | 47 | ||||||
UBS U.S. Large Cap Equity Fund | 43 |
Service and distribution plans
UBS AM (US) is the principal underwriter of each Fund's shares. The Trust has adopted distribution and/or service plans (the "Plans") pursuant to Rule 12b-1 under the 1940 Act for Class A and Class C shares. The Plans govern payments made for the expenses incurred in the service and/or distribution of Class A and Class C shares. Annual fees under the Plans as a percentage of the average daily net assets of each representative class of each of the Funds are as follows:
Fund | Class A | Class C | |||||||||
UBS Dynamic Alpha Fund | 0.25 | % | 1.00 | % | |||||||
UBS Global Allocation Fund | 0.25 | 1.00 | |||||||||
UBS International Sustainable Equity Fund | 0.25 | 1.00 | |||||||||
UBS U.S. Large Cap Equity Fund | 0.25 | 1.00 | |||||||||
UBS U.S. Small Cap Growth Fund | 0.25 | 1.00 | |||||||||
UBS Total Return Bond Fund | 0.25 | 0.75 | |||||||||
UBS Municipal Bond Fund | 0.25 | 0.75 |
UBS AM (US) also receives the proceeds of the initial sales charges paid upon purchases of Class A shares and the contingent deferred sales charges paid by shareholders upon certain redemptions of Class A and Class C shares. At December 31, 2016, certain Funds owed UBS AM (US) service and distribution fees, and for the period ended December 31, 2016, certain Funds were informed by UBS AM (US) that it had earned sales charges as follows:
Fund | Service and distribution fees owed | Sales charges earned by distributor | |||||||||
UBS Dynamic Alpha Fund—Class A | $ | 11,541 | $ | 496 | |||||||
UBS Dynamic Alpha Fund—Class C | 17,263 | — | |||||||||
UBS Global Allocation Fund—Class A | 36,939 | 8,853 | |||||||||
UBS Global Allocation Fund—Class C | 82,243 | 202 | |||||||||
UBS International Sustainable Equity Fund—Class A | 1,127 | 4,405 | |||||||||
UBS International Sustainable Equity Fund—Class C | 1,860 | — | |||||||||
UBS U.S. Large Cap Equity Fund—Class A | 2,030 | 2,432 | |||||||||
UBS U.S. Large Cap Equity Fund—Class C | 1,788 | — | |||||||||
UBS U.S. Small Cap Growth Fund—Class A | 6,372 | 2,418 | |||||||||
UBS U.S. Small Cap Growth Fund—Class C | 3,569 | — | |||||||||
UBS Total Return Bond Fund—Class A1 | — | 37 | |||||||||
UBS Total Return Bond Fund—Class C1 | 58 | — | |||||||||
UBS Municipal Bond Fund—Class A | 4,600 | 28,654 | |||||||||
UBS Municipal Bond Fund—Class C | 3,985 | 1,444 |
1 For the period from September 30, 2016 (commencement of operations) through December 31, 2016.
131
The UBS Funds
Notes to financial statements (unaudited)
Transfer agency and related services fees
UBS Financial Services Inc. provides certain services to the Funds pursuant to a delegation of authority from BNY Mellon Investment Servicing (US) Inc. ("BNY Mellon"), the Funds' transfer agent, and is compensated for these services by BNY Mellon, not the Funds.
For the period ended December 31, 2016, UBS Financial Services Inc. received from BNY Mellon, not the Funds, total delegated service fees as follows:
Fund | Delegated services fees earned | ||||||
UBS Dynamic Alpha Fund | $ | 25,020 | |||||
UBS Global Allocation Fund | 56,333 | ||||||
UBS International Sustainable Equity Fund | 1,870 | ||||||
UBS U.S. Large Cap Equity Fund | 1,263 | ||||||
UBS U.S. Small Cap Growth Fund | 3,607 | ||||||
UBS Total Return Bond Fund | 775 | ||||||
UBS Municipal Bond Fund | 7,021 |
Securities lending
Each Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, US government or government agency securities or, under certain conditions, bank letters of credit in an amount at least equal to 102% of the market value of the securities loaned with respect to domestic securities and 105% of the market value of the securities loaned with respect to foreign securities, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly.
Each Fund will regain ownership of loaned securities to exercise certain beneficial rights; however, the Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. Each Fund receives compensation for lending its securities from interest or dividends earned on the cash, US government or government agency securities or, under certain conditions, bank letters of credit held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees. Cash collateral received is invested in JPMorgan U.S. Government Money Market Fund, which is included in each Fund's Portfolio of investments. JPMorgan Chase Bank serves as the Funds' lending agent.
At December 31, 2016, the following Funds had securities on loan at value, cash collateral and non-cash collateral as follows:
Fund | Market value of securities loaned | Total market value of collateral received for securities loaned | Market value of cash collateral received | Market value of non-cash collateral received | Security type held as non-cash collateral | ||||||||||||||||||
UBS Dynamic Alpha Fund | $ | 574,801 | $ | 587,063 | $ | 587,063 | $ | — | $ | — | |||||||||||||
UBS Global Allocation Fund | 16,590,730 | 16,949,754 | 16,949,754 | — | — | ||||||||||||||||||
UBS U.S. Large Cap Equity Fund | 223,413 | 230,632 | 230,632 | — | — | ||||||||||||||||||
UBS U.S. Small Cap Growth Fund | 8,744,537 | 8,969,598 | 8,969,598 | — | — |
The table below represents the disaggregation at December 31, 2016 of the gross amount of recognized liabilities for securities lending transactions. As the securities loaned are subject to termination by the Funds or the borrower at any time, the remaining contractual maturities of the transactions presented below are considered to be overnight and continuous.
132
The UBS Funds
Notes to financial statements (unaudited)
Type of securities loaned | Total gross amount of recognized | ||||||||||||||||||
Fund | Equity securities | Investment companies | Corporate notes | liabilities for securities lending transactions | |||||||||||||||
UBS Dynamic Alpha Fund | $ | — | $ | — | $ | 587,063 | $ | 587,063 | |||||||||||
UBS Global Allocation Fund | 544,629 | 16,405,125 | — | 16,949,754 | |||||||||||||||
UBS U.S. Large Cap Equity Fund | 230,632 | — | — | 230,632 | |||||||||||||||
UBS U.S. Small Cap Growth Fund | 6,784,760 | 2,184,838 | — | 8,969,598 |
Bank line of credit
The Funds participate with other funds managed by UBS AM in a $50 million committed credit facility (the "Committed Credit Facility") with JPMorgan Chase Bank. The Committed Credit Facility is to be utilized for temporary financing until the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of a participating Fund at the request of shareholders and other temporary or emergency purposes.
Interest on amounts borrowed is calculated based on the prevailing rates in effect at the time of borrowing. Each Fund covered by the Committed Credit Facility has agreed to pay commitment fees on the average daily balance of the Committed Credit Facility not utilized. Commitment fees have been allocated among the Funds in the Committed Credit Facility as follows: 50% of the allocation is based on the relative asset size of Funds and the other 50% of the allocation is based on utilization. For the period ended December 31, 2016, the Funds had no borrowings under the Committed Credit Facility.
Commission recapture program
Certain Funds participate in a brokerage commission recapture program. These Funds have established commission recapture arrangements with certain participating brokers or dealers. If a Fund's investment manager chooses to execute a transaction through a participating broker subject to best price and execution, the broker will rebate a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. For the period ended December 31, 2016, the following Funds recorded recaptured commissions which are reflected in the Statement of operations within the net realized gains (losses) on investments in unaffiliated issuers:
Fund | Amount | ||||||
UBS Global Allocation Fund | $ | 1,896 | |||||
UBS U.S. Large Cap Equity Fund | 462 | ||||||
UBS U.S. Small Cap Growth Fund | 2,653 |
Purchases and sales of securities
For the period ended December 31, 2016, aggregate purchases and sales of portfolio securities, excluding short-term securities, were as follows:
Fund | Purchases | Sales proceeds | |||||||||
UBS Dynamic Alpha Fund | $ | 34,490,790 | $ | 37,702,511 | |||||||
UBS Global Allocation Fund | 67,799,035 | 100,647,719 | |||||||||
UBS International Sustainable Equity Fund | 3,531,967 | 4,200,078 | |||||||||
UBS U.S. Large Cap Equity Fund | 10,975,242 | 13,329,455 | |||||||||
UBS U.S. Small Cap Growth Fund | 41,230,723 | 54,512,501 | |||||||||
UBS Total Return Bond Fund | 329,381,769 | 401,147,486 | |||||||||
UBS Municipal Bond Fund | 96,749,444 | 91,094,605 |
133
The UBS Funds
Notes to financial statements (unaudited)
Shares of beneficial interest
There is an unlimited number of $0.001 par value shares of beneficial interest authorized. Transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Dynamic Alpha Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 252,616 | $ | 1,588,712 | 15,127 | $ | 88,743 | 412,112 | $ | 2,621,702 | ||||||||||||||||||
Shares repurchased | (2,766,410 | ) | (17,284,708 | ) | (1,301,097 | ) | (7,608,828 | ) | (3,196,087 | ) | (20,336,329 | ) | |||||||||||||||
Dividends reinvested | — | — | — | — | — | — | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net decrease | (2,513,794 | ) | $ | (15,695,996 | ) | (1,285,970 | ) | $ | (7,520,085 | ) | (2,783,975 | ) | $ | (17,714,627 | ) |
UBS Global Allocation Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 724,611 | $ | 7,886,573 | 17,033 | $ | 177,985 | 138,369 | $ | 1,526,548 | ||||||||||||||||||
Shares repurchased | (2,853,973 | ) | (30,793,674 | ) | (2,103,825 | ) | (22,025,530 | ) | (1,281,198 | ) | (14,084,363 | ) | |||||||||||||||
Dividends reinvested | 318,584 | 3,373,805 | 103,791 | 1,073,201 | 165,115 | 1,784,889 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net decrease | (1,810,778 | ) | $ | (19,533,296 | ) | (1,983,001 | ) | $ | (20,774,344 | ) | (977,714 | ) | $ | (10,772,926 | ) |
UBS International Sustainable Equity Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 19,931 | $ | 167,652 | 6,665 | $ | 55,516 | 115,497 | $ | 971,148 | ||||||||||||||||||
Shares repurchased | (26,260 | ) | (221,256 | ) | (33,523 | ) | (271,945 | ) | (179,972 | ) | (1,500,321 | ) | |||||||||||||||
Dividends reinvested | 12,031 | 99,137 | 3,112 | 25,111 | 41,674 | 344,224 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net increase (decrease) | 5,702 | $ | 45,533 | (23,746 | ) | $ | (191,318 | ) | (22,801 | ) | $ | (184,949 | ) |
UBS U.S. Large Cap Equity Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 64,104 | $ | 1,778,674 | 3,204 | $ | 83,976 | 2,740 | $ | 75,368 | ||||||||||||||||||
Shares repurchased | (102,870 | ) | (2,800,377 | ) | (11,303 | ) | (292,058 | ) | (37,666 | ) | (1,032,183 | ) | |||||||||||||||
Dividends reinvested | 3,244 | 92,024 | 167 | 4,560 | 6,661 | 189,504 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net decrease | (35,522 | ) | $ | (929,679 | ) | (7,932 | ) | $ | (203,522 | ) | (28,265 | ) | $ | (767,311 | ) |
134
The UBS Funds
Notes to financial statements (unaudited)
UBS U.S. Small Cap Growth Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 238,620 | $ | 4,714,718 | 6,903 | $ | 116,081 | 306,596 | $ | 6,405,735 | ||||||||||||||||||
Shares repurchased | (379,333 | ) | (7,312,717 | ) | (55,248 | ) | (913,241 | ) | (804,738 | ) | (16,618,621 | ) | |||||||||||||||
Dividends reinvested | 42,131 | 843,036 | 7,412 | 125,480 | 196,954 | 4,244,367 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net decrease | (98,582 | ) | $ | (1,754,963 | ) | (40,933 | ) | $ | (671,680 | ) | (301,188 | ) | $ | (5,968,519 | ) |
UBS Total Return Bond Fund
Class A1 | Class C1 | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 362 | $ | 5,370 | 5,949 | $ | 89,229 | 11,838 | $ | 176,004 | ||||||||||||||||||
Shares repurchased | — | — | — | — | (4,673,217 | ) | (71,074,145 | ) | |||||||||||||||||||
Dividends reinvested | 1 | 16 | 15 | 220 | 56,725 | 855,700 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | 42,949 | |||||||||||||||||||||
Net increase (decrease) | 363 | $ | 5,386 | 5,964 | $ | 89,449 | (4,604,654 | ) | $ | (69,999,492 | ) |
1 For the period from September 30, 2016 (commencement of operations) through December 31, 2016.
UBS Municipal Bond Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 887,125 | $ | 9,230,536 | 96,921 | $ | 1,003,593 | 3,599,088 | $ | 36,984,845 | ||||||||||||||||||
Shares repurchased | (409,365 | ) | (4,107,234 | ) | (42,220 | ) | (433,152 | ) | (3,117,811 | ) | (31,646,480 | ) | |||||||||||||||
Dividends reinvested | 14,076 | 143,425 | 3,440 | 34,926 | 77,939 | 794,751 | |||||||||||||||||||||
Redemption fees | �� | — | — | — | — | — | |||||||||||||||||||||
Net increase | 491,836 | $ | 5,266,727 | 58,141 | $ | 605,367 | 559,216 | $ | 6,133,116 |
For the year ended June 30, 2016, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Dynamic Alpha Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 218,328 | $ | 1,421,937 | 103,426 | $ | 617,783 | 4,014,934 | $ | 27,638,083 | ||||||||||||||||||
Shares repurchased | (2,467,134 | ) | (16,053,447 | ) | (2,385,743 | ) | (14,684,601 | ) | (10,309,029 | ) | (68,547,536 | ) | |||||||||||||||
Dividends reinvested | 373,973 | 2,404,649 | 139,684 | 845,085 | 888,345 | 5,809,775 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net decrease | (1,874,833 | ) | $ | (12,226,861 | ) | (2,142,633 | ) | $ | (13,221,733 | ) | (5,405,750 | ) | $ | (35,099,678 | ) |
UBS Global Allocation Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 254,146 | $ | 2,707,293 | 81,385 | $ | 830,853 | 549,495 | $ | 6,015,844 | ||||||||||||||||||
Shares repurchased | (3,292,895 | ) | (35,058,994 | ) | (2,142,869 | ) | (22,145,568 | ) | (3,083,713 | ) | (33,463,663 | ) | |||||||||||||||
Dividends reinvested | 453,882 | 4,861,081 | 193,128 | 2,016,252 | 242,806 | 2,653,869 | |||||||||||||||||||||
Redemption fees | — | 172 | — | 107 | — | 99 | |||||||||||||||||||||
Net decrease | (2,584,867 | ) | $ | (27,490,448 | ) | (1,868,356 | ) | $ | (19,298,356 | ) | (2,291,412 | ) | $ | (24,793,851 | ) |
135
The UBS Funds
Notes to financial statements (unaudited)
UBS International Sustainable Equity Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 178,748 | $ | 1,556,047 | 66,720 | $ | 566,384 | 662,247 | $ | 5,443,083 | ||||||||||||||||||
Shares repurchased | (212,720 | ) | (1,713,569 | ) | (57,757 | ) | (450,574 | ) | (471,757 | ) | (3,931,057 | ) | |||||||||||||||
Dividends reinvested | 7,241 | 61,695 | 1,731 | 14,435 | 23,276 | 198,781 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net increase (decrease) | (26,731 | ) | $ | (95,827 | ) | 10,694 | $ | 130,245 | 213,766 | $ | 1,710,807 |
UBS U.S. Large Cap Equity Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 73,334 | $ | 1,777,229 | 6,633 | $ | 162,598 | 171,857 | $ | 4,441,216 | ||||||||||||||||||
Shares repurchased | (49,958 | ) | (1,264,299 | ) | (20,150 | ) | (497,984 | ) | (621,766 | ) | (15,015,008 | ) | |||||||||||||||
Dividends reinvested | 4,705 | 122,708 | 430 | 10,793 | 16,972 | 443,987 | |||||||||||||||||||||
Redemption fees | — | 60 | — | 14 | — | 114 | |||||||||||||||||||||
Net increase (decrease) | 28,081 | $ | 635,698 | (13,087 | ) | $ | (324,579 | ) | (432,937 | ) | $ | (10,129,691 | ) |
UBS U.S. Small Cap Growth Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 722,812 | $ | 14,513,102 | 91,782 | $ | 1,545,730 | 3,815,467 | $ | 80,850,923 | ||||||||||||||||||
Shares repurchased | (1,286,169 | ) | (24,263,478 | ) | (89,821 | ) | (1,435,475 | ) | (4,588,148 | ) | (94,964,101 | ) | |||||||||||||||
Dividends reinvested | 159,734 | 3,063,699 | 25,184 | 414,279 | 501,288 | 10,301,465 | |||||||||||||||||||||
Redemption fees | — | 16 | — | 1,555 | — | 46 | |||||||||||||||||||||
Net increase (decrease) | (403,623 | ) | $ | (6,686,661 | ) | 27,145 | $ | 526,089 | (271,393 | ) | $ | (3,811,667 | ) |
UBS Total Return Bond Fund
Class P | |||||||||||
Shares | Amount | ||||||||||
Shares sold | 19,939 | $ | 303,562 | ||||||||
Shares repurchased | (428,779 | ) | (6,441,226 | ) | |||||||
Dividends reinvested | 16,662 | 249,928 | |||||||||
Redemption fees | — | 92,483 | |||||||||
Net decrease | (392,178 | ) | $ | (5,795,253 | ) |
UBS Municipal Bond Fund
Class A | Class C | Class P | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 1,127,581 | $ | 11,536,432 | 362,028 | $ | 3,709,114 | 6,811,943 | $ | 70,035,291 | ||||||||||||||||||
Shares repurchased | (563,957 | ) | (5,741,505 | ) | (77,714 | ) | (804,441 | ) | (3,063,665 | ) | (31,039,965 | ) | |||||||||||||||
Dividends reinvested | 16,474 | 168,229 | 5,066 | 51,751 | 93,107 | 952,822 | |||||||||||||||||||||
Redemption fees | — | — | — | — | — | — | |||||||||||||||||||||
Net increase | 580,098 | $ | 5,963,156 | 289,380 | $ | 2,956,424 | 3,841,385 | $ | 39,948,148 |
136
The UBS Funds
Notes to financial statements (unaudited)
Redemption fees
Effective August 3, 2015, the redemption fee of 1.00% imposed by each class of each series of The UBS Funds, with the exception of UBS Total Return Bond Fund, was eliminated. Prior to August 3, 2015 for purchases of shares on or after February 17, 2015, the redemption fee was calculated as a percentage of the amount redeemed within 30 days of purchase, if applicable.
The Board of Trustees approved a temporary redemption fee of 2.00% following the reorganization of Fort Dearborn Income Securities, Inc. with UBS Total Return Bond Fund. The temporary redemption fee was paid to the UBS Total Return Bond Fund and was in effect until August 22, 2016.
The redemption fees retained by the Funds are disclosed in the Statement of changes in net assets. For the period ended December 31, 2016, redemption fee represented less than $0.005 per share.
Federal tax status
It is each Fund's policy to comply with all requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, each Fund intends not to be subject to a federal excise tax. Accordingly, no federal income tax provision was required.
The tax character of distributions paid during the fiscal year ended June 30, 2016 were as follows:
2016 | |||||||||||||||||||||||
Fund | Distributions paid from tax-exempt income | Distributions paid from ordinary income | Distributions paid from net long-term gains | Return of capital | Total distributions paid | ||||||||||||||||||
UBS Dynamic Alpha Fund | $ | — | $ | 9,497,406 | $ | — | $ | 108,348 | $ | 9,605,754 | |||||||||||||
UBS Global Allocation Fund | — | 10,550,576 | — | — | 10,550,576 | ||||||||||||||||||
UBS International Sustainable Equity Fund | — | 304,258 | — | — | 304,258 | ||||||||||||||||||
UBS U.S. Large Cap Equity Fund | — | 598,448 | — | — | 598,448 | ||||||||||||||||||
UBS U.S. Small Cap Growth Fund | — | 5,972,567 | 9,100,165 | — | 15,072,732 | ||||||||||||||||||
UBS Total Return Bond Fund1 | — | 2,868,246 | — | — | 2,868,246 | ||||||||||||||||||
UBS Municipal Bond Fund | 1,363,303 | 15,711 | 29,170 | — | 1,408,184 |
1 For the period from October 1, 2015 through June 30, 2016.
The tax character of distributions paid and components of accumulated earnings (deficit) on a tax basis current fiscal year will be determined after the Trust's fiscal year ending June 30, 2017.
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"), net capital losses recognized by the Funds after December 22, 2010, may be carried forward indefinitely, and retain their character as short-term and/or long-term losses. These carryforwards are available as a reduction, to the extent provided in regulations, of future realized capital gains. To the extent that such losses are used to offset future net realized capital gains, it is probable these gains will not be distributed. The Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
137
The UBS Funds
Notes to financial statements (unaudited)
At June 30, 2016, the following Funds had post-enactment net capital losses that will be carried forward indefinitely, as follows:
Fund | Short-term losses | Long-term losses | Net capital losses | ||||||||||||
UBS Dynamic Alpha Fund | $ | 23,566,803 | $ | 13,738,856 | $ | 37,305,659 | |||||||||
UBS Total Return Bond Fund | 2,514,598 | 1,911,270 | 4,425,868 |
At June 30, 2016, the following Funds had pre-enactment capital loss carryforwards for federal income tax purposes available to offset future capital gains through the indicated expiration dates:
Expiration Dates | |||||||||||||||
Fund | June 30, 2017 | June 30, 2018 | June 30, 2019 | ||||||||||||
UBS Dynamic Alpha Fund | $ | 103,495,364 | $ | 202,927,795 | $ | 46,428,719 | |||||||||
UBS Global Allocation Fund | 89,719,530 | 862,762,158 | — | ||||||||||||
UBS International Sustainable Equity Fund | — | 8,184,323 | — | ||||||||||||
UBS U.S. Large Cap Equity Fund | — | 80,804,303 | — |
Qualified late year losses are deemed to arise on the first business day of a Fund's next taxable year. For the year ended June 30, 2016, the following Funds incurred and elected to defer qualified late year losses of the following:
Post October Capital Loss | |||||||||||||||
Fund | Late year ordinary loss | Short-term losses | Long-term losses | ||||||||||||
UBS Dynamic Alpha Fund | $ | 9,214,809 | $ | — | $ | — | |||||||||
UBS Global Allocation Fund | — | 8,567,747 | 7,232,469 | ||||||||||||
UBS International Sustainable Equity Fund | — | 431,083 | 345,316 | ||||||||||||
UBS U.S. Large Cap Equity Fund | — | 204,359 | 476,922 | ||||||||||||
UBS U.S. Small Cap Growth Fund | 367,707 | 890,391 | — |
ASC 740-10 "Income Taxes—Overall" sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken. The Funds have conducted an analysis and concluded, as of June 30, 2016, that there are no significant uncertain tax positions taken or expected to be taken that would require recognition in the financial statements. It is each Fund's policy to record any significant foreign tax exposures in the financial statements. The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of operations. During the period ended December 31, 2016, the Funds did not incur any interest or penalties.
Under the applicable foreign tax laws, gains on certain securities held in certain foreign countries may be subject to taxes that will be paid by the Funds.
Each of the tax years in the four year fiscal period ended June 30, 2016, or since inception in the case of UBS Municipal Bond Fund, remains subject to examination by the Internal Revenue Service and state taxing authorities.
Contribution from Advisor
During the fiscal year ended June 30, 2016, the Advisor reimbursed UBS Dynamic Alpha Fund and UBS International Sustainable Equity Fund for trading and operational errors in the amounts of $86,068 and $5,471, respectively.
During a review, the Financial Conduct Authority, a United Kingdom regulator, and the Advisor agreed that the Advisor paid for ineligible services, namely index data and certain market data services, out of equity dealing commissions for trades effected on behalf of the UBS Dynamic Alpha Fund, UBS Global Allocation Fund and UBS
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The UBS Funds
Notes to financial statements (unaudited)
International Sustainable Equity Fund in the United Kingdom. As a result, during the fiscal year ended June 30, 2016, the Advisor reimbursed UBS Dynamic Alpha Fund, UBS Global Allocation Fund and UBS International Sustainable Equity Fund $128,212, $316,557 and $34,326, respectively, which was determined to be the value of the ineligible services paid for from the Funds' dealing commissions.
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The UBS Funds
General information (unaudited)
Quarterly Form N-Q portfolio schedule
The Funds will file their complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-202-551 8090. Additionally, you may obtain copies of Forms N-Q from the Funds upon request by calling 1-800-647 1568.
Proxy voting policies and procedures record
You may obtain a description of the Funds' (1) proxy voting policies, (2) proxy voting procedures and (3) information regarding how the Funds voted any proxies related to portfolio securities during the most recent 12-month period ended June 30 for which an SEC filing has been made, without charge, upon request by contacting the Funds directly at 1-800-647 1568, on the EDGAR Database on the SEC's Web site (http://www.sec.gov).
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The UBS Funds
Funds' privacy notice
This notice describes the privacy policy of the UBS Family of Funds, the PACE Funds and all closed-end funds managed by UBS AM (collectively, the "Funds"). The Funds are committed to protecting the personal information that they collect about individuals who are prospective, current or former investors.
The Funds collect personal information in order to process requests and transactions and to provide customer service. Personal information, which is obtained from applications and other forms or correspondence submitted to the Funds, may include name(s), address, e-mail address, telephone number, date of birth, social security number or other tax identification number, bank account information, information about your transactions and experiences with the Funds, and any affiliation a client has with UBS Financial Services Inc. or its affiliates ("Personal Information").
The Funds limit access to Personal Information to those individuals who need to know that information in order to process transactions and service accounts. These individuals are required to maintain and protect the confidentiality of Personal Information and to follow established procedures. The Funds maintain physical, electronic and procedural safeguards to protect Personal Information and to comply with applicable laws and regulations. The Funds may share Personal Information with their affiliates to facilitate the servicing of accounts and for other business purposes, or as otherwise required or permitted by applicable law. The Funds may also share Personal Information with non-affiliated third parties that perform services for the Funds, such as vendors that provide data or transaction processing, computer software maintenance and development, and other administrative services. When the Funds share Personal Information with a non-affiliated third party, they will do so pursuant to a contract that includes provisions designed to ensure that the third party will uphold and maintain privacy standards when handling Personal Information. In addition to sharing information with non-affiliated third parties to facilitate the servicing of accounts and for other business purposes, the Funds may disclose Personal Information to non-affiliated third parties as otherwise required or permitted by applicable law. For example, the Funds may disclose Personal Information to credit bureaus or regulatory authorities to facilitate or comply with investigations; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liabilities; or to respond to judicial or legal process, such as subpoena requests.
Except as described in this privacy notice, the Funds will not use Personal Information for any other purpose unless the Funds describe how such Personal Information will be used and clients are given an opportunity to decline approval of such use of Personal Information relating to them (or affirmatively approve the use of Personal Information, if required by applicable law). The Funds endeavor to keep their customer files complete and accurate. The Funds should be notified if any Personal Information needs to be corrected or updated. Please call 1-800-647 1568 with any questions or concerns regarding your Personal Information or this privacy notice.
Privacy Notice
This privacy notice is not a part of the shareholder report.
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PRESORTED
STANDARD
U.S. POSTAGE
PAID
COMPUTERSHARE
UBS Asset Management (Americas) Inc.
1285 Avenue of the Americas
New York, NY 10019-6028
S1627
Item 2. Code of Ethics.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 3. Audit Committee Financial Expert.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 4. Principal Accountant Fees and Services.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 5. Audit Committee of Listed Registrants.
Not applicable to the registrant.
Item 6. Schedule of Investments.
(a) Included as part of the report to shareholders filed under Item 1 of this form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
The Nominating Committee will consider nominees recommended by Qualifying Fund Shareholders if an Independent Trustee vacancy on the Board occurs. A Qualifying Fund Shareholder is a shareholder that: (i) owns of record, or beneficially through a financial intermediary, 1/2 of 1% or more of the Trust’s outstanding shares and (ii) has been a shareholder of at least 1/2 of 1% of the Trust’s total outstanding
shares for 12 months or more prior to submitting the recommendation to the Nominating Committee. In order to recommend a nominee, a Qualifying Fund Shareholder should send a letter to the chairperson of the Nominating Committee, Ms. Adela Cepeda, care of Mark Kemper, Secretary of The UBS Funds, at UBS Asset Management, One North Wacker Drive, Chicago, Illinois 60606, and indicate on the envelope “Nominating Committee.” The Qualifying Fund Shareholder’s letter should include: (i) the name and address of the Qualifying Fund Shareholder making the recommendation; (ii) the number of shares of each class and series of shares of the Trust which are owned of record and beneficially by such Qualifying Fund Shareholder and the length of time that such shares have been so owned by the Qualifying Fund Shareholder; (iii) a description of all arrangements and understandings between such Qualifying Fund Shareholder and any other person or persons (naming such person or persons) pursuant to which the recommendation is being made; (iv) the name and address of the nominee; and (v) the nominee’s resume or curriculum vitae. The Qualifying Fund Shareholder’s letter must be accompanied by a written consent of the individual to stand for election if nominated for the Board and to serve if elected by shareholders.
Item 11. Controls and Procedures.
(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) The registrant’s principal executive officer and principal financial officer are aware of no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a) �� (1) Code of Ethics — Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
(a) (2) Certifications of principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.CERT.
(a) (3) Written solicitation to purchase securities under Rule 23c-1 under the Investment Company Act of 1940 sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons — not applicable to the registrant.
(b) Certifications of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The UBS Funds |
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By: | /s/ Mark E. Carver |
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| Mark E. Carver |
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| President |
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Date: | March 13, 2017 |
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
The UBS Funds |
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By: | /s/ Mark E. Carver |
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| Mark E. Carver |
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| President |
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Date: | March 13, 2017 |
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By: | /s/ Thomas Disbrow |
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| Thomas Disbrow |
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| Vice President, Treasurer and Principal Accounting Officer |
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Date: | March 13, 2017 |
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