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Ubs Funds

Filed: 9 Mar 20, 4:18pm

 

 

 

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

 

 

 

The UBS Funds

 

(Exact name of registrant as specified in charter)

 

One North Wacker Drive, Chicago, IL 60606-2807

 

(Address of principal executive offices) (Zip code)

 

Keith A. Weller, Esq.

UBS Asset Management

One North Wacker Drive

Chicago, IL 60606

(Name and address of agent for service)

 

Copy to:

Bruce Leto, Esq.

Stradley Ronon Stevens & Young, LLP

2600 One Commerce Square

Philadelphia, PA 19103-7098

 

Registrant’s telephone number, including area code: 312-525 7100

 

Date of fiscal year end: June 30

 

Date of reporting period: December 31, 2019

 

 

 

 

 

 

Item 1. Reports to Stockholders.

 

 

 

 

The UBS Funds

Semiannual Report | December 31, 2019



Table of contents

 

Page

 

President's letter

  

1

  

Market commentary

  

3

  

UBS Dynamic Alpha Fund

  

5

  

UBS Global Allocation Fund

  

20

  

UBS Emerging Markets Equity Opportunity Fund

  

32

  

UBS Engage For Impact Fund

  

38

  

UBS International Sustainable Equity Fund

  

45

  

UBS U.S. Small Cap Growth Fund

  

53

  

UBS U.S. Sustainable Equity Fund

  

61

  

UBS Municipal Bond Fund

  

68

  

UBS Sustainable Development Bank Bond Fund

  

75

  

UBS Total Return Bond Fund

  

81

  

Explanation of expense disclosure

  

95

  

Statement of assets and liabilities

  

98

  

Statement of operations

  

106

  

Statement of changes in net assets

  

110

  

Financial highlights

  

114

  

Notes to financial statements

  

124

  

General information

  

154

  


President's letter

February 14, 2020

Despite generally strong performance across most markets in 2019, the year was notable for persistent volatility given uncertainty regarding many geopolitical issues, trade tensions and other event risks.

The first quarter of 2019 was a historically strong quarter for most markets—bouncing back from the sharp December 2018 sell-off as the US Federal Reserve (Fed) pivoted toward a dovish stance, and the US and China outlined positive trade developments. However, the second and third quarters were more volatile as markets were whipsawed, for instance, when trade talk deterioration was swiftly followed by dovish action from the Fed to shore up confidence. What a difference a year made in the US: rate hikes, followed by rate cuts, finally settling into a cautious holding pattern.

While investors worried about slowing economic data (especially in manufacturing) and corporate earnings that continued to be relatively sluggish compared to prior years of the economic expansion, the Fed's commitment to accommodative policy and a US-China trade deal pieced together throughout the end of the year provided a strong finish.

A combination of factors, such as rising interest rates, US-China trade tension, economic slowdown, and turmoil surrounding Brexit—that had roiled markets at the end of 2018 all seemed to come to at least partial resolution in the final months of 2019, making investors more comfortable and leading markets to close out a year of record performance. In December, the US and China hammered out a 'Phase One' trade deal, the Federal Reserve committed to keeping rates low, and the Conservative party had a strong victory in the UK to allow for a path toward an organized Brexit. Investor sentiment has proven to be broadly positive as we head into the new year.

The ongoing volatility in global markets continues to underscore the importance of diversification for investors and the portfolios. Asset classes frequently have differing shorter-term trajectories as events can present a variety of challenges and opportunities across asset classes, regions, industries and risk spectrums. While emerging markets currently present an attractive risk/return opportunity due, in part, to valuations, they are generally more sensitive to an array of global factors. On the other hand, developed markets, for instance, US equities in particular, may be less fickle, but may have more full valuations. Small cap equities in the US may present opportunities, as they are generally somewhat insulated from global events, and while China assets face slowing growth, they are increasingly driven by internal economic developments and demand. We have expanded our fund range in recent years to offer our clients more investment choice to allocate their capital across funds that invest in large and small capitalization US, developed international and emerging equity markets.

Sustainability continues to be a growing and driving force for investors and markets, and remains at the heart of UBS's DNA. We have incorporated sustainable considerations across all of our investment platforms and continued to show our commitment to an issue that is at the forefront of many of our clients' goals, as was front and center at the World Economic Forum in Davos where we presented our views on the challenges presented by the 'Climate Finance Gap.' We are continuing to develop sustainable solutions for our clients in our robust lineup of UBS funds.


1



President's letter

Sincerely

Igor Lasun
President
The UBS Funds
Executive Director
UBS Asset Management (Americas) Inc.


2



The markets in review

A resilient global economy

Despite concerns that trade conflicts, Brexit uncertainties and other issues could lead to an economic contraction, the global economy continued to expand during the reporting period, albeit at a modest pace. Looking back, the US Commerce Department reported that gross domestic product ("GDP") grew at a 3.1% seasonally adjusted annualized rate during the first quarter of 2019. GDP growth was then 2.0% and 2.1% during the second and third quarters of 2019, respectively. Finally, the US Commerce Department's initial estimate for fourth quarter GDP growth in the US, released after the reporting period ended, was 2.1%.

The US Federal Reserve Board (the "Fed") proactively addressed moderating growth with a "dovish pivot" in January 2019. In particular, after raising interest rates four times in 2018, the Fed indicated it would pause from additional rate hikes. After analyzing incoming economic data for several months, the Fed pulled the trigger and lowered the federal funds rate at its meetings in July, September and October 2019. In its final meeting of the year in December 2019, the Fed indicated a pause from further actions for the time being, saying, "...participants regarded the current stance of monetary policy as likely to remain appropriate for a time as long as incoming information about the economy remained broadly consistent with the economic outlook".

From a global perspective, in its October 2019 World Economic Outlook Update, the International Monetary Fund ("IMF") said, "...the pace of global economic activity remains weak. Momentum in manufacturing activity, in particular, has weakened substantially, to levels not seen since the global financial crisis. Rising trade and geopolitical tensions have increased uncertainty about the future of the global trading system and international cooperation more generally, taking a toll on business confidence, investment decisions, and global trade. A notable shift toward increased monetary policy accommodation—through both action and communication—has cushioned the impact of these tensions on financial market sentiment and activity, while a generally resilient service sector has supported employment growth. That said, the outlook remains precarious." The IMF projects 2019 GDP growth in the eurozone, U.K. and Japan will be 1.2%, 1.2% and 0.9%, respectively. In contrast, GDP growth in these countries was 1.9%, 1.4% and 0.8%, respectively, in 2018.

Global equities rally

The global equity market posted strong returns during the reporting period. Despite times of elevated volatility, these proved to be only temporary setbacks. All told, the US equity market moved higher during five of the six months of the reporting period. Supporting the market were accommodative monetary policy, corporate profits that often exceeded expectations and, late in the year, a "Phase 1" trade agreement between the US and China. Collectively, this buoyed investor sentiment and led to generally robust risk appetite. During the six months ended December 31, 2019, the S&P 500 Index1 gained 10.92% and ended the year near an all-time high. Returns were also strong outside the US. International developed equities, as measured by the MSCI EAFE Index (net),2 returned 7.01% during the reporting period, while emerging markets equities, as measured by the MSCI Emerging Markets Index (net),3 gained 7.09% in 2019.

1  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.

2  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.

3  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 fixed income market also moves higher

The global fixed income market also rose during the reporting period. In the US, both short- and long-term Treasury yields declined (bond yields and prices move in the opposite direction). For the six months ended December 31, 2019, the yield on the US 10-year Treasury fell from 2.00% to 1.92%. Government bond yields outside the US also generally moved lower amid moderating economic growth and accommodative monetary policies by a number of developed and emerging market central banks. The overall US bond market, as measured by the Bloomberg Barclays US Aggregate Index,4 returned 2.45% during the reporting period. Riskier fixed income securities also rallied. High yield bonds, as measured by the ICE BofA US High Yield Cash Pay Constrained Index,5 returned 14.40% during the reporting period. Elsewhere, emerging markets debt, as measured by the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global),6 gained 3.45%.

4  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.

5  The ICE BofA 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.

6  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, 2019, Class A shares of UBS Dynamic Alpha Fund (the "Fund") returned 3.16% (Class A shares returned -2.51% after the deduction of the maximum sales charge), while Class P shares returned 3.23%. For purposes of comparison, the BofA US Treasury 1-5 Year Index retuned 1.10% during the same time period, the MSCI World Index (net) returned 9.14%, and the FTSE One-Month US Treasury Bill Index returned 0.97%. (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. Market allocation decisions generally contributed to performance. However, active currency allocation decisions modestly detracted from performance over the period.

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, in aggregate, detracted from the Fund's 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, contributed to performance during the reporting period.

Portfolio performance summary1

What worked:

•  Overall, market allocation decisions were positive for returns.

  – Within equities, performance was positively impacted by a few equity relative value trades during the reporting period. These included a long Japanese versus French equities position, which benefited from the relative outperformance of Japanese equities over French equities. The Fund also had a long FTSE 250 versus FTSE 100 position (closed in October 2019) which benefited from lowered probabilities of a hard Brexit in the second half of 2019 given that FTSE 250 stocks are more domestically focused. Elsewhere, the Fund had a preference for Chinese equities over broader emerging market equities (closed in November 2019) which was supported by the improvement in trade relations between the US and China.

  – Within fixed income, a long exposure to local currency emerging market (EM) debt was beneficial. Spreads on local currency EM debt relative to US Treasuries widened substantially in 2018 in the face of higher geopolitical risks, a strengthening US dollar and higher US dollar funding rates. However, in 2019 local currency EM debt rallied along with US Treasuries, delivering strong results. Additionally, a US two-year—ten-year steepener trade initiated in October 2019 was additive for performance.

•  Certain active currency positions added to results during the period.

  – A long Mexican peso versus US dollar position contributed to results, supported by tailwinds such as valuation and carry.

  – Long positions in the Chilean peso and Colombian peso versus the US dollar also contributed to returns over the period. Both the Colombian peso and the Chilean peso were undervalued versus the dollar, presenting attractive opportunities.

1  For a detailed commentary on the market environment in general during the reporting period, see page 3.


5



UBS Dynamic Alpha Fund

What didn't work:

•  Certain market allocation decisions detracted from results.

  – Within equities, performance was negatively impacted by a long China H shares versus Taiwanese equities relative value trade which we closed in September 2019. Taiwanese equities outperformed over the period as the country's technology sector attracted capital in the wake of the US-China trade war.

•  Overall, active currency positions modestly detracted from returns:

  – Long positions versus the US dollar in certain European currencies, such as the Swedish krona and euro, as well as the Japanese yen weighed on performance, as the US dollar appreciated against them over the period.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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 12/31/19 (unaudited)

 

6 months

 

1 year

 

5 years

 

10 years

 

Before deducting maximum sales charge

 

Class A1

  

3.16

%

  

7.91

%

  

(0.74

)%

  

1.85

%

 

Class P2

  

3.23

   

8.20

   

(0.51

)

  

2.12

  

After deducting maximum sales charge

 

Class A1

  

(2.51

)%

  

2.04

%

  

(1.84

)%

  

1.27

%

 

ICE BofA US Treasury 1-5 Year Index3

  

1.10

   

4.20

   

1.68

   

1.73

  

MSCI World Index (net)4

  

9.14

   

27.67

   

8.74

   

9.47

  

FTSE One-Month US Treasury Bill Index5

  

0.97

   

2.20

   

1.01

   

0.53

  

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class A—2.05% and 1.38%; Class P—1.73% and 1.13%. 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 and administrator ("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 28, 2020, do not exceed 1.35% for Class A 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement or (ii) at the time of the recoupment. 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  Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.

2  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.

3  The ICE BofA 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.

4  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.

5  The FTSE 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.

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, 2019 (unaudited)1

Top ten holdings

  Percentage of
net assets
 
U.S. Treasury Bills,
1.553% due 06/18/20
  

34.9

%

 
U.S. Treasury Bills,
1.903% due 03/12/20
  

7.3

  
Cooperatieve Rabobank UA,
5.500% due 06/29/20
  

0.7

  
Mirvac Group Finance Ltd., EMTN,
3.625% due 03/18/27
  

0.6

  
JPMorgan Chase & Co.,
3.200% due 01/25/23
  

0.6

  
Telefonica Emisiones SA,
5.520% due 03/01/49
  

0.6

  
Tesco Property Finance 4 PLC,
5.801% due 10/13/40
  

0.5

  
Mylan N.V.,
3.125% due 11/22/28
  

0.5

  
AA Bond Co. Ltd., EMTN,
2.875% due 01/31/22
  

0.5

  
Bank of America Corp., MTN,
3.875% due 08/01/25
  

0.5

  

Total

  

46.7

%

 

Top five issuer breakdown by country or territory of origin

  Percentage of
net assets
 

United States

  

71.4

%

 

United Kingdom

  

5.8

  

France

  

3.4

  

Netherlands

  

3.2

  

Australia

  

1.5

  

Total

  

85.3

%

 

1  The Fund's Portfolio is actively managed and its composition will vary over time.


8



UBS Dynamic Alpha Fund

Industry diversification—December 31, 2019 (unaudited)1,2

Corporate bonds

 Percentage of
net assets
 

Advertising

  

0.1

%

 

Aerospace & defense

  

0.2

  

Agriculture

  

0.8

  

Airlines

  

0.2

  

Auto manufacturers

  

1.5

  

Banks

  

10.7

  

Beverages

  

0.3

  

Biotechnology

  

0.2

  

Building materials

  

0.3

  

Chemicals

  

0.9

  

Commercial services

  

0.6

  

Computers

  

0.5

  

Diversified financial services

  

0.7

  

Electric

  

3.1

  

Engineering & construction

  

0.5

  

Food

  

0.6

  

Gas

  

0.8

  

Healthcare-products

  

0.1

  

Healthcare-services

  

0.2

  

Insurance

  

3.4

  

Internet

  

0.3

  

Machinery-construction & mining

  

0.1

  

Media

  

1.5

  

Mining

  

0.2

  

Miscellaneous manufacturers

  

0.3

  

Oil & gas

  

1.6

  

Pharmaceuticals

  

2.4

  

Pipelines

  

1.4

  

Real estate

  

2.0

  

Real estate investment trusts

  

0.7

  

Retail

  

0.2

  

Savings & loans

  

0.3

  

Semiconductors

  

0.2

  

Software

  

0.3

  

Telecommunications

  

1.8

  

Transportation

  

0.5

  

Water

  

1.1

  

Total corporate bonds

  

40.6

%

 
  Percentage of
net assets
 

Mortgage-backed securities

  

0.0

%

 

Non-U.S. government agency obligations

  

0.1

  

U.S. treasury obligations

  

42.2

  

Exchange traded funds

  

6.6

  

Short-term investments

  

5.1

  

Investment of cash collateral from securities loaned

  

0.8

  

Total investments

  

95.4

%

 

Other assets in excess of liabilities

  

4.6

  

Net assets

  

100.0

%

 

  Amount represents less than 0.05%

1  Figures represent the breakdown of direct investments of UBS Dynamic Alpha Fund. Figures would be different if a breakdown of the underlying investment companies and exchange traded funds was included.

2  The Fund's portfolio is actively managed and its composition will vary over time.


9



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount1
 

Value

 

Corporate bonds: 40.6%

 

Australia: 1.5%

 
APT Pipelines Ltd.
4.200%, due 03/23/252
  

15,000

  

$

15,939

  
Aurizon Network Pty Ltd., MTN
4.000%, due 06/21/242
 

AUD

30,000

   

22,349

  
Ausgrid Finance Pty Ltd., MTN
3.750%, due 10/30/242
 

AUD

30,000

   

22,652

  
Commonwealth Bank of Australia, EMTN
(fixed, converts to FRN on 10/03/24),
1.936%, due 10/03/292
 

EUR

100,000

   

116,547

  
Mirvac Group Finance Ltd., EMTN
3.625%, due 03/18/272
  

270,000

   

276,005

  
Origin Energy Finance Ltd.
5.450%, due 10/14/212
  

45,000

   

47,315

  
Scentre Group Trust 1/Scentre Group Trust 2
2.375%, due 04/28/212
  

45,000

   

45,069

  
Telstra Corp. Ltd.
4.800%, due 10/12/212
  

25,000

   

26,179

  
Westpac Banking Corp.
2.800%, due 01/11/22
  

15,000

   

15,241

  
(fixed, converts to FRN on 09/21/27),
5.000%, due 09/21/273
  

80,000

   

80,469

  
     

667,765

  

Belgium: 0.8%

 
AG Insurance SA
(fixed, converts to FRN on 06/30/27),
3.500%, due 06/30/472
 

EUR

100,000

   

127,313

  
Anheuser-Busch Cos. LLC/Anheuser-Busch
InBev Worldwide, Inc.
3.650%, due 02/01/26
  

35,000

   

37,283

  
Anheuser-Busch InBev Worldwide, Inc.
4.150%, due 01/23/25
  

25,000

   

27,199

  

4.750%, due 01/23/29

  

35,000

   

40,518

  
RESA SA
1.000%, due 07/22/262
 

EUR

100,000

   

114,269

  
     

346,582

  

Bermuda: 0.1%

 
XLIT Ltd.
5.250%, due 12/15/43
  

30,000

   

38,810

  

Canada: 0.7%

 
Bell Canada, Inc., MTN
4.750%, due 09/29/44
 

CAD

10,000

   

8,836

  
Canadian Natural Resources Ltd.
2.950%, due 01/15/23
  

35,000

   

35,705

  

3.850%, due 06/01/274

  

35,000

   

37,298

  
Cenovus Energy, Inc.
4.250%, due 04/15/27
  

35,000

   

37,041

  
Royal Bank of Canada
1.650%, due 07/15/21
 

CAD

85,000

   

65,034

  
  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

Canada—(Concluded)

 
Suncor Energy, Inc.
6.500%, due 06/15/38
  

45,000

  

$

62,502

  
TELUS Corp.
3.750%, due 01/17/25
 

CAD

15,000

   

12,108

  
Toronto Dominion Bank/The
2.045%, due 03/08/21
 

CAD

60,000

   

46,203

  
     

304,727

  

China: 0.1%

 
Nexen, Inc.
6.400%, due 05/15/37
  

35,000

   

48,092

  

Czech Republic: 0.3%

 
NET4GAS sro, EMTN
2.500%, due 07/28/212
 

EUR

100,000

   

116,031

  

Denmark: 0.5%

 
Ap Moller Maersk A/S, EMTN
1.750%, due 03/16/262
 

EUR

100,000

   

116,279

  
Danske Bank A/S, EMTN
1.375%, due 05/24/222
 

EUR

100,000

   

115,018

  
     

231,297

  

France: 3.4%

 
AXA SA, EMTN
(fixed, converts to FRN on 05/28/29),
3.250%, due 05/28/492
 

EUR

100,000

   

127,736

  
Banque Federative du Credit Mutuel SA, EMTN
3.000%, due 09/11/252
 

EUR

100,000

   

126,246

  
BNP Paribas SA, EMTN
1.000%, due 04/17/242
 

EUR

100,000

   

115,557

  

1.250%, due 03/19/252

 

EUR

100,000

   

116,923

  
BPCE SA, EMTN
1.375%, due 03/23/262
 

EUR

100,000

   

117,881

  
Credit Agricole SA, EMTN
1.375%, due 03/13/252
 

EUR

100,000

   

117,782

  
Credit Logement SA
3 mo. Euribor + 1.150%,
0.755%, due 03/16/202,3,5
 

EUR

100,000

   

91,073

  
Electricite de France SA
(fixed, converts to FRN on 01/22/24),
5.625%, due 01/22/242,3
  

100,000

   

106,000

  
SCOR SE
(fixed, converts to FRN on 03/13/29),
5.250%, due 03/13/292,3
  

200,000

   

200,627

  
TDF Infrastructure SAS
2.875%, due 10/19/222
 

EUR

100,000

   

118,787

  
Terega SA
2.200%, due 08/05/252
 

EUR

100,000

   

122,246

  
Unibail-Rodamco-Westfield SE
(fixed, converts to FRN on 01/25/26),
2.875%, due 01/25/262,3
 

EUR

100,000

   

118,856

  
     

1,479,714

  


10



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

Germany: 0.6%

 
Volkswagen International Finance N.V.
1.125%, due 10/02/232
 

EUR

100,000

  

$

114,977

  
Series NC6,
(fixed, converts to FRN on 06/27/24),
3.375%, due 06/27/242,3
 

EUR

100,000

   

119,708

  
Volkswagen Leasing GmbH, EMTN
1.625%, due 08/15/252
 

EUR

40,000

   

46,851

  
     

281,536

  

Guernsey: 0.3%

 
Globalworth Real Estate Investments Ltd., EMTN
3.000%, due 03/29/252
 

EUR

100,000

   

120,399

  

Israel: 0.3%

 
Teva Pharmaceutical Finance IV BV
3.650%, due 11/10/21
  

20,000

   

19,694

  
Teva Pharmaceutical Finance Netherlands II BV
1.125%, due 10/15/242
 

EUR

100,000

   

97,588

  
Teva Pharmaceutical Finance Netherlands III BV
2.800%, due 07/21/23
  

40,000

   

37,012

  
     

154,294

  

Italy: 0.3%

 
Buzzi Unicem SpA
2.125%, due 04/28/232
 

EUR

100,000

   

118,319

  

Japan: 0.1%

 
Mitsubishi UFJ Financial Group, Inc.
2.665%, due 07/25/22
  

25,000

   

25,370

  

Jersey: 0.6%

 
AA Bond Co. Ltd., EMTN
2.875%, due 01/31/222
 

GBP

174,000

   

228,683

  
HSBC Bank Capital Funding Sterling 2 LP
(fixed, converts to FRN on 04/07/20),
5.862%, due 04/07/203
 

GBP

20,000

   

26,791

  
     

255,474

  

Luxembourg: 0.5%

 
ADO Properties SA
1.500%, due 07/26/242
 

EUR

100,000

   

110,783

  
Allergan Funding SCS
2.125%, due 06/01/29
 

EUR

100,000

   

123,690

  
     

234,473

  

Mexico: 1.3%

 
Mexico City Airport Trust
5.500%, due 07/31/472
  

200,000

   

206,688

  
Orbia Advance Corp. SAB de CV
5.500%, due 01/15/486
  

200,000

   

204,500

  
Petroleos Mexicanos
5.500%, due 02/24/252
 

EUR

20,000

   

25,666

  
Petroleos Mexicanos, EMTN
3.750%, due 02/21/242
 

EUR

100,000

   

119,564

  
     

556,418

  
  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

Netherlands: 3.2%

 
Argentum Netherlands BV for Swiss Life AG
(fixed, converts to FRN on 06/16/25),
4.375%, due 06/16/252,3
 

EUR

100,000

  

$

129,977

  
ATF Netherlands BV
(fixed, converts to FRN on 01/20/23),
3.750%, due 01/20/232,3
 

EUR

100,000

   

119,742

  
Cooperatieve Rabobank UA
(fixed, converts to FRN on 06/29/20),
5.500%, due 06/29/202,3
 

EUR

250,000

   

286,735

  
Iberdrola International BV, EMTN
(fixed, converts to FRN on 03/26/24),
2.625%, due 03/26/242,3
 

EUR

100,000

   

119,730

  
ING Groep N.V., EMTN
1.125%, due 02/14/252
 

EUR

100,000

   

116,330

  
Mylan N.V.
3.125%, due 11/22/282
 

EUR

180,000

   

229,079

  
Redexis Gas Finance BV, EMTN
1.875%, due 04/27/272
 

EUR

100,000

   

115,325

  
Shell International Finance BV
4.375%, due 05/11/45
  

35,000

   

41,797

  
Volkswagen International Finance N.V.
4.125%, due 11/16/382
 

EUR

100,000

   

144,403

  
Vonovia Finance BV
(fixed, converts to FRN on 12/17/21),
4.000%, due 12/17/212,3
 

EUR

100,000

   

120,014

  
     

1,423,132

  

Poland: 0.3%

 
Tauron Polska Energia SA
2.375%, due 07/05/272
 

EUR

100,000

   

117,119

  

Portugal: 0.3%

 
Galp Gas Natural Distribuicao SA, EMTN
1.375%, due 09/19/232
 

EUR

100,000

   

116,103

  

Singapore: 0.4%

 
DBS Group Holdings Ltd., GMTN
(fixed, converts to FRN on 09/07/21),
3.600%, due 09/07/212,3
  

200,000

   

201,250

  

Spain: 1.5%

 
Banco Santander SA, EMTN
3.250%, due 04/04/262
 

EUR

100,000

   

127,598

  

4.000%, due 01/19/232

 

AUD

200,000

   

146,394

  
Canal de Isabel II Gestion SA, EMTN
1.680%, due 02/26/252
 

EUR

100,000

   

118,197

  
Telefonica Emisiones SA
5.520%, due 03/01/49
  

200,000

   

250,167

  
     

642,356

  

Switzerland: 0.2%

 
ABB Finance USA, Inc.
2.875%, due 05/08/22
  

40,000

   

40,830

  
Glencore Funding LLC
4.875%, due 03/12/296
  

40,000

   

43,406

  
     

84,236

  


11



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

United Kingdom: 5.8%

 
Anglian Water Services Financing PLC, EMTN
4.500%, due 02/22/262
 

GBP

100,000

  

$

146,758

  
Barclays Bank PLC
9.500%, due 08/07/212
 

GBP

40,000

   

59,464

  
Barclays PLC, EMTN
(fixed, converts to FRN on 10/06/22),
2.375%, due 10/06/232
 

GBP

100,000

   

134,810

  
(fixed, converts to FRN on 11/11/20),
2.625%, due 11/11/252
 

EUR

100,000

   

114,196

  
BAT Capital Corp.
3.557%, due 08/15/27
  

35,000

   

35,693

  
BAT International Finance PLC, EMTN
0.875%, due 10/13/232
 

EUR

100,000

   

114,229

  
BUPA Finance PLC
(fixed, converts to FRN on 09/16/20),
6.125%, due 09/16/203
 

GBP

20,000

   

27,287

  
Diageo Capital PLC
3.875%, due 04/29/43
  

25,000

   

27,536

  
HSBC Holdings PLC
5.100%, due 04/05/21
  

60,000

   

62,214

  
Lloyds Banking Group PLC, EMTN
2.250%, due 10/16/242
 

GBP

100,000

   

136,271

  
M&G PLC, EMTN
(fixed, converts to FRN on 07/20/35),
5.000%, due 07/20/552
 

GBP

100,000

   

147,310

  
Nationwide Building Society, EMTN
(fixed, converts to FRN on 07/25/24),
2.000%, due 07/25/292
 

EUR

100,000

   

116,531

  
Phoenix Group Holdings PLC, EMTN
4.125%, due 07/20/222
 

GBP

150,000

   

207,944

  
Prudential PLC
5.625%, due 10/20/512
 

GBP

100,000

   

151,422

  
Reynolds American, Inc.
4.450%, due 06/12/25
  

25,000

   

26,896

  

5.700%, due 08/15/35

  

10,000

   

11,602

  
Royal Bank of Scotland Group PLC
6.100%, due 06/10/23
  

40,000

   

44,014

  
(fixed, converts to FRN on 06/25/23),
4.519%, due 06/25/24
  

200,000

   

212,332

  
SSE PLC
(fixed, converts to FRN on 09/10/20),
3.875%, due 09/10/202,3
 

GBP

100,000

   

133,453

  
Tesco Property Finance 4 PLC
5.801%, due 10/13/402
 

GBP

136,445

   

236,461

  
Thames Water Utilities Finance PLC, EMTN
5.125%, due 09/28/372
 

GBP

50,000

   

88,627

  
Virgin Money UK PLC, GMTN
(fixed, converts to FRN on 04/24/25),
3.375%, due 04/24/262
 

GBP

100,000

   

134,336

  
Vodafone Group PLC
4.375%, due 02/19/43
  

15,000

   

16,123

  
WPP Finance 2010
3.750%, due 09/19/24
  

25,000

  ��

26,360

  
  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

United Kingdom—(Concluded)

 
Yorkshire Water Finance PLC, EMTN
(fixed, converts to FRN on 03/22/23),
3.750%, due 03/22/462
 

GBP

100,000

  

$

137,705

  
     

2,549,574

  

United States: 17.5%

 
Abbott Laboratories
4.900%, due 11/30/46
  

50,000

   

65,602

  
AbbVie, Inc.
4.250%, due 11/14/284
  

35,000

   

38,663

  

4.400%, due 11/06/42

  

25,000

   

26,979

  

4.875%, due 11/14/48

  

35,000

   

40,080

  
Albemarle Corp.
5.450%, due 12/01/44
  

50,000

   

57,187

  
Allergan Funding SCS
3.450%, due 03/15/22
  

25,000

   

25,564

  

4.750%, due 03/15/45

  

15,000

   

16,291

  
Alphabet, Inc.
1.998%, due 08/15/26
  

60,000

   

59,636

  
Altria Group, Inc.
4.250%, due 08/09/42
  

80,000

   

79,837

  

4.400%, due 02/14/26

  

25,000

   

27,140

  

5.950%, due 02/14/49

  

35,000

   

42,317

  
Amazon.com, Inc.
2.800%, due 08/22/24
  

70,000

   

72,417

  
American Airlines Pass-Through Trust,
Series 2014-1, Class B,
4.375%, due 10/01/22
  

50,191

   

51,639

  
American Express Co.
3.400%, due 02/27/23
  

110,000

   

114,150

  
Amgen, Inc.
4.400%, due 05/01/45
  

25,000

   

28,064

  
Apache Corp.
4.250%, due 01/15/44
  

60,000

   

55,196

  
Apple, Inc.
3.850%, due 08/04/46
  

50,000

   

56,427

  
AT&T, Inc.
3.000%, due 02/15/22
  

45,000

   

45,883

  

4.350%, due 03/01/294

  

70,000

   

77,772

  

4.750%, due 05/15/46

  

70,000

   

78,991

  

5.550%, due 08/15/41

  

50,000

   

61,031

  
Baltimore Gas & Electric Co.
3.500%, due 08/15/46
  

35,000

   

35,541

  
Bank of America Corp.
(fixed, converts to FRN on 12/20/22),
3.004%, due 12/20/23
  

90,000

   

92,169

  
Bank of America Corp., MTN
3.875%, due 08/01/25
  

210,000

   

225,509

  
Bristol-Myers Squibb Co.
3.875%, due 08/15/256
  

70,000

   

75,671

  
Broadcom Corp./Broadcom Cayman Finance Ltd.
3.625%, due 01/15/24
  

70,000

   

72,495

  
Burlington Northern Santa Fe LLC
5.400%, due 06/01/41
  

25,000

   

32,262

  


12



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

United States—(Continued)

 
CF Industries, Inc.
5.150%, due 03/15/34
  

30,000

  

$

33,525

  
Charter Communications Operating LLC/Charter
Communications Operating Capital
4.500%, due 02/01/24
  

50,000

   

53,770

  

5.375%, due 05/01/47

  

15,000

   

16,782

  
Chevron Phillips Chemical Co. LLC/Chevron
Phillips Chemical Co. LP
3.300%, due 05/01/236
  

120,000

   

123,511

  
Cigna Corp.
3.400%, due 09/17/21
  

25,000

   

25,585

  

4.375%, due 10/15/28

  

45,000

   

49,791

  

4.900%, due 12/15/48

  

25,000

   

29,770

  
Citigroup, Inc.
3.875%, due 10/25/23
  

130,000

   

138,049

  

4.600%, due 03/09/26

  

30,000

   

32,998

  

4.650%, due 07/23/48

  

70,000

   

87,276

  
Comcast Corp.
3.950%, due 10/15/25
  

45,000

   

49,076

  

4.150%, due 10/15/28

  

15,000

   

16,873

  

4.700%, due 10/15/48

  

15,000

   

18,463

  

4.750%, due 03/01/444

  

15,000

   

18,222

  

4.950%, due 10/15/58

  

15,000

   

19,476

  
Conagra Brands, Inc.
3.800%, due 10/22/21
  

15,000

   

15,475

  

4.600%, due 11/01/25

  

25,000

   

27,592

  

5.400%, due 11/01/48

  

35,000

   

42,623

  
Consumers Energy Co.
3.250%, due 08/15/46
  

10,000

   

10,022

  
CVS Health Corp.
2.625%, due 08/15/24
  

45,000

   

45,347

  

3.350%, due 03/09/21

  

17,000

   

17,279

  

4.300%, due 03/25/28

  

35,000

   

38,193

  

5.050%, due 03/25/484

  

35,000

   

41,352

  

5.125%, due 07/20/45

  

35,000

   

41,404

  
Dell International LLC/EMC Corp.
5.300%, due 10/01/294,6
  

60,000

   

67,564

  

8.350%, due 07/15/466

  

80,000

   

109,973

  
Diamondback Energy, Inc.
3.250%, due 12/01/26
  

50,000

   

50,553

  
Discovery Communications LLC
5.300%, due 05/15/49
  

45,000

   

53,186

  
Dominion Energy, Inc.,
Series D,
2.850%, due 08/15/26
  

25,000

   

25,237

  
Duke Energy Carolinas LLC
4.000%, due 09/30/42
  

35,000

   

38,956

  
Eaton Corp.
4.150%, due 11/02/42
  

30,000

   

33,475

  
Enable Midstream Partners LP
3.900%, due 05/15/247
  

25,000

   

25,592

  
Energy Transfer Operating LP
4.500%, due 04/15/24
  

35,000

   

37,233

  

6.000%, due 06/15/48

  

45,000

   

52,364

  

6.050%, due 06/01/41

  

45,000

   

50,695

  
  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

United States—(Continued)

 
EnLink Midstream Partners LP
4.400%, due 04/01/24
  

40,000

  

$

38,804

  
Enterprise Products Operating LLC
4.850%, due 03/15/44
  

25,000

   

28,997

  
ERAC USA Finance LLC
5.625%, due 03/15/426
  

35,000

   

44,304

  
Exelon Corp.
3.400%, due 04/15/26
  

15,000

   

15,658

  
FedEx Corp.
4.550%, due 04/01/46
  

15,000

   

15,385

  
Ford Motor Credit Co. LLC, EMTN
3.021%, due 03/06/24
 

EUR

100,000

   

118,570

  
Freeport-McMoRan, Inc.
3.875%, due 03/15/23
  

70,000

   

71,276

  
GE Capital International Funding Co.
Unlimited Co.
4.418%, due 11/15/35
  

200,000

   

212,955

  
General Electric Co.
4.125%, due 10/09/42
  

3,000

   

3,082

  
General Electric Co., GMTN
3.150%, due 09/07/22
  

30,000

   

30,655

  
General Electric Co., MTN
4.375%, due 09/16/20
  

30,000

   

30,464

  
General Motors Financial Co., Inc.
4.350%, due 04/09/25
  

90,000

   

96,380

  
Gilead Sciences, Inc.
4.750%, due 03/01/46
  

25,000

   

29,976

  

4.800%, due 04/01/44

  

15,000

   

17,977

  
Goldman Sachs Group, Inc./The
5.150%, due 05/22/45
  

40,000

   

49,033

  
Goldman Sachs Group, Inc./The, EMTN
1.625%, due 07/27/262
 

EUR

50,000

   

59,760

  

2.000%, due 07/27/232

 

EUR

120,000

   

142,950

  

2.000%, due 11/01/282

 

EUR

35,000

   

43,161

  
Hartford Financial Services Group, Inc./The
4.300%, due 04/15/43
  

35,000

   

38,748

  

4.400%, due 03/15/48

  

35,000

   

40,216

  
Healthpeak Properties, Inc.
3.875%, due 08/15/24
  

35,000

   

37,206

  
Home Depot, Inc./The
4.875%, due 02/15/44
  

30,000

   

38,071

  
Humana, Inc.
3.125%, due 08/15/29
  

50,000

   

50,932

  
Illinois Tool Works, Inc.
2.650%, due 11/15/26
  

45,000

   

46,164

  
JPMorgan Chase & Co.
3.200%, due 01/25/23
  

260,000

   

268,199

  

3.625%, due 12/01/27

  

60,000

   

63,323

  
(fixed, converts to FRN on 10/15/29),
2.739%, due 10/15/30
  

100,000

   

99,857

  
Kinder Morgan, Inc.
3.150%, due 01/15/23
  

35,000

   

35,824

  

5.625%, due 11/15/236

  

35,000

   

38,709

  


13



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

United States—(Continued)

 
Kraft Heinz Foods Co.
4.875%, due 02/15/256
  

35,000

  

$

35,961

  

5.000%, due 06/04/42

  

45,000

   

47,965

  
Kroger Co./The
3.700%, due 08/01/27
  

50,000

   

53,483

  

3.875%, due 10/15/46

  

15,000

   

14,651

  

4.650%, due 01/15/48

  

15,000

   

16,385

  
Liberty Mutual Group, Inc.
4.569%, due 02/01/296
  

25,000

   

27,901

  
Lincoln National Corp.
3.800%, due 03/01/28
  

70,000

   

74,531

  
Lowe's Cos., Inc.
4.250%, due 09/15/44
  

40,000

   

43,019

  
Marathon Oil Corp.
3.850%, due 06/01/25
  

35,000

   

37,031

  
Merck & Co., Inc.
3.700%, due 02/10/45
  

15,000

   

16,544

  
Microsoft Corp.
2.400%, due 08/08/26
  

25,000

   

25,304

  

3.500%, due 11/15/42

  

20,000

   

21,640

  

3.700%, due 08/08/46

  

50,000

   

56,376

  
Monongahela Power Co.
5.400%, due 12/15/436
  

25,000

   

32,257

  
Morgan Stanley
6.375%, due 07/24/42
  

15,000

   

22,057

  
Morgan Stanley, GMTN
2.500%, due 04/21/21
  

115,000

   

115,871

  

4.000%, due 07/23/25

  

85,000

   

91,908

  

4.350%, due 09/08/26

  

50,000

   

54,641

  
Motiva Enterprises LLC
6.850%, due 01/15/406
  

30,000

   

36,200

  
MPLX LP
4.250%, due 12/01/276
  

30,000

   

31,551

  

5.200%, due 03/01/47

  

35,000

   

37,739

  
National Rural Utilities Cooperative
Finance Corp.
3.700%, due 03/15/29
  

15,000

   

16,390

  
NBCUniversal Media LLC
4.375%, due 04/01/21
  

60,000

   

61,870

  
Noble Energy, Inc.
3.850%, due 01/15/28
  

20,000

   

21,109

  
Oncor Electric Delivery Co. LLC
3.700%, due 11/15/28
  

35,000

   

38,263

  
PacifiCorp
6.000%, due 01/15/39
  

35,000

   

47,886

  
Philip Morris International, Inc.
4.250%, due 11/10/44
  

25,000

   

27,561

  
Phillips 66
4.650%, due 11/15/34
  

25,000

   

29,327

  
Phillips 66 Partners LP
4.680%, due 02/15/45
  

10,000

   

10,826

  
PPL Capital Funding, Inc.
4.700%, due 06/01/43
  

60,000

   

66,916

  
  Face
amount1
 

Value

 

Corporate bonds—(Continued)

 

United States—(Continued)

 
QUALCOMM, Inc.
4.300%, due 05/20/47
  

30,000

  

$

34,311

  
Sempra Energy
6.000%, due 10/15/39
  

35,000

   

45,302

  
Southern California Edison Co.
2.850%, due 08/01/294
  

45,000

   

44,892

  

4.000%, due 04/01/47

  

45,000

   

47,230

  
Southern Co./The
3.250%, due 07/01/26
  

35,000

   

36,425

  

4.400%, due 07/01/46

  

15,000

   

16,586

  
Southwestern Electric Power Co.
6.200%, due 03/15/40
  

50,000

   

65,732

  
Swiss Re Treasury U.S. Corp.
4.250%, due 12/06/426
  

30,000

   

34,568

  
Teachers Insurance & Annuity Association of
America
4.900%, due 09/15/446
  

30,000

   

36,791

  
Time Warner Cable LLC
4.500%, due 09/15/42
  

25,000

   

25,492

  

5.000%, due 02/01/20

  

45,000

   

45,084

  
Truist Financial Corp.
2.700%, due 01/27/22
  

45,000

   

45,601

  
TWDC Enterprises 18 Corp., MTN
1.850%, due 07/30/26
  

10,000

   

9,817

  
Union Pacific Corp.
4.050%, due 11/15/45
  

20,000

   

21,707

  
United Airlines Pass-Through Trust
3.650%, due 01/07/26
  

43,576

   

44,246

  
United Technologies Corp.
3.350%, due 08/16/21
  

30,000

   

30,712

  

3.950%, due 08/16/25

  

25,000

   

27,251

  

4.625%, due 11/16/48

  

15,000

   

18,737

  
Valero Energy Corp.
4.900%, due 03/15/45
  

50,000

   

57,575

  
Verizon Communications, Inc.,
3.376%, due 02/15/25
  

25,000

   

26,455

  

3.875%, due 02/08/29

  

15,000

   

16,541

  

5.250%, due 03/16/37

  

15,000

   

18,796

  
Series 20Y,
2.875%, due 01/15/38
 

EUR

100,000

   

135,859

  
Virginia Electric & Power Co.,
Series C,
4.000%, due 11/15/46
  

25,000

   

27,505

  
VMware, Inc.
3.900%, due 08/21/27
  

40,000

   

41,825

  
Walt Disney Co./The
6.200%, due 12/15/34
  

100,000

   

140,162

  
Wells Fargo & Co.
2.100%, due 07/26/21
  

50,000

   

50,071

  

3.069%, due 01/24/23

  

60,000

   

61,232

  
Wells Fargo & Co., MTN
2.625%, due 07/22/22
  

70,000

   

71,011

  
Williams Cos., Inc./The
4.300%, due 03/04/24
  

35,000

   

37,325

  


14



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount1
 

Value

 

Corporate bonds—(Concluded)

 

United States—(Concluded)

 

4.550%, due 06/24/24

  

25,000

  

$

26,970

  

4.900%, due 01/15/45

  

15,000

   

16,152

  
Xcel Energy, Inc.
4.800%, due 09/15/41
  

80,000

   

90,267

  
     

7,659,824

  
Total corporate bonds
(cost $16,999,081)
    

17,772,895

  

Mortgage-backed securities: 0.0%

 

Cayman Islands: 0.0%

 
LNR CDO IV Ltd.,
Series 2006-1A, Class FFX,
7.592%, due 05/28/436,8,9
  

8,000,000

   

0

  
     

0

  

United States: 0.0%

 
Structured Adjustable Rate Mortgage Loan Trust,
Series 2005-7, Class B11,
4.286%, due 04/25/3510
  

42,639

   

544

  
     

544

  
Total mortgage-backed securities
(cost $8,099,973)
    

544

  

Non-U.S. government agency obligations: 0.1%

 

Italy: 0.1%

 
Italy Buoni Poliennali Del Tesoro
1.350%, due 04/15/22
(cost $67,240)
 

EUR

60,000

   

69,226

  

U.S. treasury obligations: 42.2%

 

United States: 42.2%

 
U.S. Treasury Bills
1.553%, due 06/18/2011
  

15,400,000

   

15,289,709

  

1.903%, due 03/12/2011

  

3,200,000

   

3,188,261

  
Total U.S. treasury obligations
(cost $18,477,970)
    

18,477,970

  
  Number of
shares
 

Value

 

Exchange traded funds: 6.6%

 

United States: 6.6%

 

iShares JP Morgan EM Local Currency Bond ETF

  

45,239

  

$

1,985,540

  
VanEck Vectors J.P. Morgan EM Local Currency
Bond ETF
  

26,800

   

911,468

  
Total exchange traded funds
(cost $2,880,595)
    

2,897,008

  

Short-term investments: 5.1%

 

Investment companies: 5.1%

 
State Street Institutional U.S. Government
Money Market Fund
(cost $2,217,295)
  

2,217,295

   

2,217,295

  

Investment of cash collateral from securities loaned: 0.8%

 

Money market funds: 0.8%

 
State Street Navigator Securities Lending
Government Money Market Portfolio
(cost $336,925)
  

336,925

   

336,925

  
Total investments: 95.4%
(cost $49,079,079)
    

41,771,863

  

Other assets in excess of liabilities: 4.6%

    

2,026,759

  

Net assets: 100.0%

   

$

43,798,622

  

For a listing of defined portfolio acronyms, counterparty acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.


15



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

Futures contracts

Number of
contracts
   Expiration
date
 Current
notional
amount
 

Value

 Unrealized
appreciation
(depreciation)
 

Index futures buy contracts:

   
 

3

  

ASX SPI 200 Index Futures

 

March 2020

 

$

357,948

  

$

347,524

  

$

(10,424

)

 
 

2

  

S&P TSX 60 Index Futures

 

March 2020

  

312,359

   

311,856

   

(503

)

 
 

1

  

DAX Index Futures

 

March 2020

  

376,024

   

371,465

   

(4,559

)

 
 

37

  

EURO STOXX 50 Index Futures

 

March 2020

  

1,552,353

   

1,547,643

   

(4,710

)

 
 

5

  

FTSE MIB Index Futures

 

March 2020

  

657,184

   

656,475

   

(709

)

 
 

10

  

FTSE 100 Index Futures

 

March 2020

  

992,334

   

993,317

   

983

  
 

21

  

TOPIX Index Futures

 

March 2020

  

3,324,351

   

3,326,216

   

1,865

  
 

23

  

Mini MSCI Emerging Markets (EM) Index Futures

 

March 2020

  

1,263,869

   

1,288,230

   

24,361

  
 

21

  

S&P 500 E-Mini Index Futures

 

March 2020

  

3,341,854

   

3,392,655

   

50,801

  

Interest rate futures buy contracts:

   
 

3

  

Canada Government Bond 10 Year Futures

 

March 2020

 

$

323,510

  

$

317,616

  

$

(5,894

)

 

U.S. treasury futures buy contracts:

   
 

21

  

U.S. Treasury Note 2 Year Futures

 

March 2020

 

$

4,528,319

  

$

4,525,500

  

$

(2,819

)

 
 

22

  

U.S. Treasury Note 5 Year Futures

 

March 2020

  

2,618,204

   

2,609,406

   

(8,798

)

 

Total

         

$

19,648,309

  

$

19,687,903

  

$

39,594

  

Index futures sell contracts:

   
 

22

  

CAC 40 Index Futures

 

January 2020

 

$

(1,478,026

)

 

$

(1,473,241

)

 

$

4,785

  

Interest rate futures sell contracts:

   
 

23

  

German Euro Bund Futures

 

March 2020

 

$

(4,441,001

)

 

$

(4,398,488

)

 

$

42,513

  
 

9

  

United Kingdom Long Gilt Bond Futures

 

March 2020

  

(1,585,625

)

  

(1,566,233

)

  

19,392

  

U.S. treasury futures sell contracts:

   
 

4

  

U.S. Treasury Note 10 Year Futures

 

March 2020

 

$

(518,271

)

 

$

(513,687

)

 

$

4,584

  
 

10

  

U.S. Ultra Long Treasury Bond Futures

 

March 2020

  

(1,877,056

)

  

(1,816,563

)

  

60,493

  

Total

         

$

(9,899,979

)

 

$

(9,768,212

)

 

$

131,767

  

Net unrealized appreciation (depreciation)

         

$

171,361

  

Centrally cleared credit default swap agreements on credit indices—buy protection13

Referenced
obligations
 Notional
amount
(000)
 Maturity
date
 Payment
frequency
 Payments
made
by the
Portfolio12
 Upfront
payments
received
(made)
 Value Unrealized
appreciation
(depreciation)
 

CDX North American Investment Grade 33 Index

 

USD

9,850

  

12/20/24

 

Quarterly

  

1.000

%

 

$

182,506

  

$

(258,717

)

 

$

(76,211

)

 

iTraxx Europe Series 32 Index

 

EUR

4,800

  

12/20/24

 

Quarterly

  

1.000

   

118,363

   

(151,316

)

  

(32,953

)

 

Total

         

$

300,869

  

$

(410,033

)

 

$

(109,164

)

 


16



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

Centrally cleared credit default swap agreements on credit indices—sell protection14

Referenced
obligations
 Notional
amount
(000)
 Maturity
date
 Payment
frequency
 Payments
made
by the
Portfolio12
 Upfront
payments
received
(made)
 Value Unrealized
appreciation
(depreciation)
 

CDX North American High Yield 33 Index

 

USD

1,148

  

12/20/24

 

Quarterly

  

5.000

%

 

$

(72,734

)

 

$

112,577

  

$

39,843

  

iTraxx Europe Crossover Series 32 Index

 

EUR

400

  

12/20/24

 

Quarterly

  

5.000

   

(56,739

)

  

61,872

   

5,133

  

Total

         

$

(129,473

)

 

$

174,449

  

$

44,976

  

OTC credit default swap agreements on corporate issues—sell protection14

Counterparty

 Referenced
obligations
 Notional
amount
(000)
 Maturity
date
 Payment
frequency
 Payments
received by
the Portfolio12
 Upfront
payments
received
(made)
 Value Unrealized
appreciation
(depreciation)
 

JPMCB

 Teck Resources Ltd., bond,
3.150%, due 03/20/20
 

USD

90

  

03/20/20

 

Quarterly

  

1.000

%

 

$

315

  

$

208

  

$

523

  

Forward foreign currency contracts

Counterparty

 

Sell

 

Purchase

 Settlement
date
 Unrealized
appreciation
(depreciation)
 

BB

 

NZD

1,052,615

  

USD

675,000

  

02/20/20

 

$

(34,083

)

 

CIBC

 

SEK

12,630,208

  

NOK

12,050,000

  

01/24/20

  

22,824

  

CITI

 

USD

1,360,921

  

BRL

5,650,000

  

01/24/20

  

42,721

  

GSI

 

MYR

979,000

  

USD

235,139

  

01/24/20

  

(4,034

)

 

GSI

 

USD

1,340,000

  

CLP

1,067,385,040

  

02/20/20

  

80,276

  

GSI

 

USD

894,812

  

MYR

3,760,000

  

01/24/20

  

23,768

  

HSBC

 

HUF

412,650,000

  

USD

1,402,786

  

01/24/20

  

2,808

  

HSBC

 

THB

89,660,000

  

USD

2,964,016

  

01/24/20

  

(30,807

)

 

JPMCB

 

USD

2,673,102

  

COP

9,309,477,000

  

01/24/20

  

156,705

  

MSCI

 

GBP

1,061,984

  

EUR

1,230,000

  

01/24/20

  

(26,064

)

 

SSC

 

AUD

2,670,000

  

USD

1,837,852

  

01/24/20

  

(36,821

)

 

SSC

 

CAD

5,920,000

  

USD

4,525,659

  

01/24/20

  

(33,813

)

 

SSC

 

CHF

2,740,000

  

USD

2,794,539

  

01/24/20

  

(40,248

)

 

SSC

 

EUR

4,570,000

  

USD

5,126,858

  

01/24/20

  

(5,999

)

 

SSC

 

GBP

710,000

  

USD

922,593

  

01/24/20

  

(18,442

)

 

SSC

 

HKD

4,315,000

  

USD

550,436

  

01/24/20

  

(3,180

)

 

SSC

 

JPY

30,000,000

  

USD

277,325

  

01/24/20

  

959

  

SSC

 

NOK

2,440,000

  

USD

275,595

  

01/24/20

  

(2,359

)

 

SSC

 

NZD

4,330,000

  

USD

2,788,762

  

01/24/20

  

(126,929

)

 

SSC

 

USD

230,032

  

AUD

335,000

  

01/24/20

  

5,179

  

SSC

 

USD

236,814

  

CAD

315,000

  

01/24/20

  

5,793

  

SSC

 

USD

620,922

  

EUR

560,000

  

01/24/20

  

8,049

  

SSC

 

USD

310,657

  

HKD

2,435,000

  

01/24/20

  

1,754

  

SSC

 

USD

194,441

  

HKD

1,515,000

  

01/24/20

  

(66

)

 

SSC

 

USD

3,458,884

  

JPY

373,400,000

  

01/24/20

  

(19,057

)

 


17



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

Forward foreign currency contracts—(Concluded)

Counterparty

 

Sell

 

Purchase

 Settlement
date
 Unrealized
appreciation
(depreciation)
 

SSC

 

USD

550,568

  

JPY

60,100,000

  

01/24/20

 

$

3,084

  

SSC

 

USD

2,705,506

  

MXN

52,460,000

  

01/24/20

  

60,542

  

SSC

 

USD

2,844,991

  

NOK

25,940,000

  

01/24/20

  

109,981

  

SSC

 

USD

272,518

  

NZD

405,000

  

01/24/20

  

196

  

SSC

 

USD

2,763,240

  

SEK

26,480,000

  

01/24/20

  

66,824

  

SSC

 

USD

234,199

  

THB

7,060,000

  

01/24/20

  

1,619

  

Net unrealized appreciation (depreciation)

 

$

211,180

  

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event a Fund holds investments (other than a money market fund) 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

 

$

  

$

17,772,895

  

$

  

$

17,772,895

  

Mortgage-backed securities

  

   

544

   

0

   

544

  

Non-U.S. government agency obligations

  

   

69,226

   

   

69,226

  

U.S. treasury obligations

  

   

18,477,970

   

   

18,477,970

  

Exchange traded funds

  

2,897,008

   

   

   

2,897,008

  

Short-term investments

  

   

2,217,295

   

   

2,217,295

  

Investment of cash collateral from securities loaned

  

   

336,925

   

   

336,925

  

Futures contracts

  

209,777

   

   

   

209,777

  

Swap agreements

  

   

174,657

   

   

174,657

  

Forward foreign currency contracts

  

   

593,082

   

   

593,082

  

Total

 

$

3,106,785

  

$

39,642,594

  

$

0

  

$

42,749,379

  

Liabilities

 

Futures contracts

 

$

(38,416

)

 

$

  

$

  

$

(38,416

)

 

Swap agreements

  

   

(410,033

)

  

   

(410,033

)

 

Forward foreign currency contracts

  

   

(381,902

)

  

   

(381,902

)

 

Total

 

$

(38,416

)

 

$

(791,935

)

 

$

  

$

(830,351

)

 

At December 31, 2019, there were no transfers in or out of Level 3.


18



UBS Dynamic Alpha Fund

Portfolio of investments

December 31, 2019 (unaudited)

Portfolio footnotes

  Amount represents less than 0.05%.

1  In U.S. dollars unless otherwise indicated.

2  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.

3  Perpetual investment. Date shown reflects the next call date.

4  Security, or portion thereof, was on loan at the period end.

5  Variable or floating rate security. The interest rate shown is the rate in effect as of period end and changes periodically.

6  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. Securities exempt from registration pursuant to Rule 144A, in the amount of $942,867, represented 2.2% of the Fund's net assets at period end.

7  Step bond—coupon rate increases in increments to maturity. The rate disclosed is the rate at the period end; the maturity date disclosed is the ultimate maturity date.

8  Security fair valued by the Valuation Committee under the direction of the Board of Trustees.

9  Significant unobservable inputs were used in the valuation of this security; i.e. Level 3.

10  Variable or floating rate security for which the interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate shown is the rate in effect as of period end.

11  Rate shown is the discount rate at the date of purchase unless otherwise noted.

12  Payments made or received are based on the notional amount.

13  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.

14  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.

See accompanying notes to financial statements.
19



UBS Global Allocation Fund

Portfolio performance

For the six months ended December 31, 2019, Class A shares of UBS Global Allocation Fund (the "Fund") returned 6.16% (Class A shares returned 0.33% after the deduction of the maximum sales charge), while Class P shares returned 6.27%. In contrast, the Fund's benchmark, the 60% MSCI All Country World Index (net)/40% Citigroup World Government Bond Index (Hedged in USD), returned 6.02% during the same time period. For comparison purposes, the MSCI All Country World Index (net) returned 8.92% and the FTSE World Government Bond Index (Hedged in USD) returned 1.59%. (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 22; 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. Market allocation and security selection were both modestly additive for results, whereas the Fund's currency strategy had a neutral impact on relative performance.

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 neutral impact on 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, were additive to performance during the reporting period.

Portfolio performance summary

What worked:

•  Bottom-up security selection contributed to performance overall.

  – Both developed market ex-US and emerging market equities were areas of strong security selection which was additive for performance.

•  Overall, market allocations were positive for returns.

  – An overall underweight to fixed income contributed to relative performance, as fixed income lagged equities over the reporting period despite rates falling throughout markets. Underweights to nominal government bonds (especially US government bonds) were particularly additive relative to the benchmark. Outside of the US, the Fund's short German bund positioning also helped performance.

  – The Fund's overweight to equities outside of the US (both developed and emerging) bolstered performance as they outperformed global bonds. The relative value trade for Japanese equities over French equities within the ex-US equity exposure was also helpful.

•  Certain active currency positions were positive for portfolio results.

  – A long Mexican peso versus US dollar position was additive as the currency provided a strong return from carry and the peso's valuation was attractive as well.


20



UBS Global Allocation Fund

What didn't work:

•  Bottom-up security selection within US equities detracted.

  – Security selection within the US large-cap core and US large-cap growth active strategies was weak and, therefore, was a drag on performance.

•  Certain market allocations detracted from results.

  – The Fund's underweight to US equities, and resulting preference for non-US equities, detracted over the reporting period. The US economy remained resilient and US equities continued to outperform other developed and emerging market equities. This preference was expressed in broad Fund allocations in addition to a relative value trade which favored Europe, Australia and Far East (EAFE) over US equities.

  – One other relative value trade which hurt performance was a preference for Canadian bonds over US bonds While both countries saw rates fall, US bonds appreciated quickly amid three Federal Reserve Board rate cuts in the second half of 2019.

•  Certain active currency positions hurt performance over this reporting period.

  – One relative value trade which favored the euro over the Swiss franc was a detractor as Brexit uncertainty loomed throughout the reporting period, while the franc maintained its strength as a safe haven currency.

  – A preference for Japanese yen over the US dollar detracted as well. The US dollar maintained relative strength amid lacking clarity on global trade disputes.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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.


21



UBS Global Allocation Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

 

6 months

 

1 year

 

5 years

 

10 years

 

Before deducting maximum sales charge

 

Class A1

  

6.16

%

  

18.73

%

  

4.91

%

  

5.61

%

 

Class P2

  

6.27

   

19.03

   

5.16

   

5.89

  

After deducting maximum sales charge

 

Class A1

  

0.33

%

  

12.24

%

  

3.72

%

  

5.02

%

 

MSCI All Country World Index (net)3

  

8.92

   

26.60

   

8.41

   

8.79

  

FTSE World Government Bond Index (Hedged in USD)4

  

1.59

   

7.59

   

3.45

   

3.90

  
60% MSCI All Country World Index (net)/40% FTSE World
Government Bond Index (Hedged in USD)5
  

6.02

   

18.94

   

6.61

   

7.07

  

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class A—1.47% and 1.27%; Class P—1.20% and 1.02%. 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 and administrator ("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 28, 2020, do not exceed 1.20% for Class A 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement or (ii) at the time of the recoupment. 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  Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.

2  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.

3  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.

4  The FTSE 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.

5  The 60% MSCI All Country World Index (net)/40% FTSE 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 August 3, 2015, a 1% redemption fee was imposed on sales or exchanges of any class of shares of the Fund made during the specified holding period.

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.


22



UBS Global Allocation Fund

Portfolio statistics—December 31, 2019 (unaudited)1

Top ten equity holdings

  Percentage of
net assets
 

Microsoft Corp.

  

2.0

%

 

Amazon.com, Inc.

  

1.5

  

Visa, Inc., Class A

  

1.3

  

UnitedHealth Group, Inc.

  

1.1

  

Johnson & Johnson

  

1.1

  

Mondelez International, Inc., Class A

  

1.0

  

Facebook, Inc., Class A

  

0.9

  

salesforce.com, Inc.

  

0.8

  

Simon Property Group, Inc.

  

0.8

  

Progressive Corp./The

  

0.7

  

Total

  

11.2

%

 

Top ten fixed income holdings

  Percentage of
net assets
 
U.S. Treasury Bills,
1.320% due 06/18/20
  

6.0

%

 
U.S. Treasury Bills,
1.193% due 06/18/20
  

3.0

  
New Zealand Government Inflation Linked Bond,
2.000% due 09/20/25
  

1.2

  
U.S. Treasury Notes,
1.500% due 08/15/20
  

0.9

  
U.S. Treasury Notes,
1.875% due 07/31/22
  

0.7

  
Canadian Government Bond,
1.500% due 09/01/24
  

0.6

  
U.S. Treasury Notes,
2.500% due 05/15/24
  

0.6

  
U.S. Treasury Notes,
1.375% due 09/30/23
  

0.6

  
Japan Government Twenty Year Bond,
0.400% due 03/20/36
  

0.5

  
U.S. Treasury Notes,
2.000% due 11/30/22
  

0.5

  

Total

  

14.6

%

 

Top five issuer breakdown by country or territory of origin2

  Percentage of
net assets
 

United States

  

60.7

%

 

Japan

  

6.5

  

United Kingdom

  

4.2

  

Canada

  

1.7

  

Germany

  

1.7

  

Total

  

74.8

%

 

1  The 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: 64.8%, Japan: 6.6%, United Kingdom: 4.4%, Canada: 1.8% and Germany 1.7%.


23



UBS Global Allocation Fund

Industry diversification—December 31, 2019 (unaudited)1,2

Common stocks

 Percentage of
net assets
 

Aerospace & defense

  

0.2

%

 

Airlines

  

0.8

  

Auto components

  

0.4

  

Automobiles

  

0.3

  

Banks

  

2.4

  

Beverages

  

0.1

  

Biotechnology

  

0.9

  

Capital markets

  

0.7

  

Chemicals

  

1.3

  

Commercial services & supplies

  

0.7

  

Communications equipment

  

0.2

  

Consumer finance

  

0.6

  

Diversified financial services

  

0.9

  

Diversified telecommunication services

  

0.8

  

Electronic equipment, instruments & components

  

0.5

  

Energy equipment & services

  

0.2

  

Entertainment

  

1.4

  

Equity real estate investment trusts

  

1.5

  

Food & staples retailing

  

0.4

  

Food products

  

1.6

  

Health care equipment & supplies

  

1.2

  

Health care providers & services

  

1.6

  

Hotels, restaurants & leisure

  

0.6

  

Household durables

  

0.7

  

Insurance

  

3.2

  

Interactive media & services

  

1.8

  

Internet & direct marketing retail

  

1.6

  

IT services

  

1.6

  

Life sciences tools & services

  

0.1

  

Machinery

  

1.3

  

Metals & mining

  

0.4

  

Multiline retail

  

1.1

  

Oil, gas & consumable fuels

  

1.5

  

Paper & forest products

  

0.3

  

Personal products

  

0.6

  

Pharmaceuticals

  

3.2

  

Professional services

  

0.3

  

Road & rail

  

0.5

  

Semiconductors & semiconductor equipment

  

2.3

  

Software

  

4.2

  

Specialty retail

  

0.6

  

Technology hardware, storage & peripherals

  

1.0

  

Textiles, apparel & luxury goods

  

0.7

  

Common stocks—(Concluded)

 Percentage of
net assets
 

Tobacco

  

0.7

%

 

Trading companies & distributors

  

0.9

  

Wireless telecommunication services

  

0.2

  

Total common stocks

  

48.1

%

 

Preferred stocks

  

0.3

  

Exchange traded funds

  

9.4

  

Investment companies

  

8.7

  

Non-U.S. government obligations

  

5.4

  

U.S. treasury obligations

  

15.8

  

Short-term investments

  

8.5

  

Investment of cash collateral from securities loaned

  

6.4

  

Total investments

  

102.6

%

 

Liabilities in excess of other assets

  

(2.6

)

 

Net assets

  

100.0

%

 

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 traded funds was included.

2  The Fund's portfolio is actively managed and its composition will vary over time.


24



UBS Global Allocation Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks: 48.1%

 

Austria: 0.4%

 

Erste Group Bank AG*

  

28,285

  

$

1,064,768

  

Belgium: 0.9%

 

Euronav N.V.

  

27,217

   

335,212

  

Galapagos N.V.*

  

2,745

   

574,246

  

KBC Group N.V.

  

18,483

   

1,390,313

  
     

2,299,771

  

Canada: 1.0%

 

Canadian Natural Resources Ltd.1

  

19,661

   

635,911

  

Dollarama, Inc.

  

15,820

   

543,719

  

Husky Energy, Inc.

  

65,428

   

525,016

  

Nutrien Ltd.1

  

5,188

   

248,557

  

Toronto-Dominion Bank/The

  

11,575

   

649,191

  
     

2,602,394

  

China: 0.1%

 

Alibaba Group Holding Ltd., ADR*

  

1,048

   

222,281

  

Denmark: 0.6%

 

Genmab A/S*

  

3,623

   

805,703

  

H Lundbeck A/S

  

17,746

   

677,677

  
     

1,483,380

  

Finland: 0.4%

 

Sampo Oyj, Class A

  

25,742

   

1,123,518

  

France: 0.5%

 

Thales SA

  

5,985

   

621,121

  

Ubisoft Entertainment SA*

  

11,073

   

764,860

  
     

1,385,981

  

Germany: 1.4%

 

Continental AG

  

4,277

   

552,961

  

Daimler AG (Registered)

  

12,675

   

701,920

  

Infineon Technologies AG

  

25,842

   

588,726

  

LANXESS AG

  

10,280

   

689,789

  

SAP SE

  

8,311

   

1,121,677

  
     

3,655,073

  

Ghana: 0.2%

 

Kosmos Energy Ltd.

  

114,161

   

650,718

  

Hong Kong: 0.9%

 

AIA Group Ltd.

  

173,517

   

1,821,502

  

WH Group Ltd.2

  

542,500

   

560,441

  
     

2,381,943

  

Ireland: 0.2%

 

Ryanair Holdings PLC, ADR*

  

6,592

   

577,525

  

Italy: 0.9%

 

Banca Mediolanum SpA

  

107,813

   

1,070,869

  

Infrastrutture Wireless Italiane SpA2

  

91,778

   

898,731

  

Prada SpA

  

75,700

   

312,814

  
     

2,282,414

  
  Number of
shares
 

Value

 

Common stocks—(Continued)

 

Japan: 5.8%

 

Inpex Corp.

  

56,600

  

$

592,020

  

ITOCHU Corp.

  

45,600

   

1,063,671

  

Kao Corp.

  

8,500

   

706,019

  

Keyence Corp.

  

1,200

   

425,089

  

Kissei Pharmaceutical Co. Ltd.1

  

15,700

   

450,821

  

MINEBEA MITSUMI, Inc.1

  

44,300

   

928,361

  

Nabtesco Corp.

  

24,200

   

727,192

  

Nintendo Co. Ltd.

  

2,600

   

1,052,156

  

Nippon Telegraph & Telephone Corp.

  

47,200

   

1,197,648

  

ORIX Corp.

  

74,600

   

1,243,391

  

Shin-Etsu Chemical Co. Ltd.

  

10,700

   

1,187,631

  

SoftBank Group Corp.

  

13,700

   

599,670

  

Sony Corp.1

  

25,800

   

1,757,359

  

Sumitomo Electric Industries Ltd.

  

37,500

   

570,153

  

Takeda Pharmaceutical Co. Ltd.

  

26,800

   

1,068,497

  

TechnoPro Holdings, Inc.

  

6,700

   

471,722

  

Tokyo Electron Ltd.

  

2,600

   

572,500

  

West Japan Railway Co.

  

8,200

   

712,495

  
     

15,326,395

  

Luxembourg: 0.2%

 

Tenaris SA

  

44,666

   

503,524

  

Netherlands: 1.2%

 

ASR Nederland N.V.

  

22,645

   

847,374

  

Koninklijke Ahold Delhaize N.V.

  

43,677

   

1,092,287

  

NXP Semiconductors N.V.

  

9,633

   

1,225,896

  
     

3,165,557

  

Norway: 0.4%

 

Equinor ASA

  

42,654

   

852,662

  

Mowi ASA

  

11,263

   

292,759

  
     

1,145,421

  

South Africa: 0.4%

 

Anglo American PLC

  

33,320

   

959,068

  

Spain: 0.7%

 

Banco Bilbao Vizcaya Argentaria SA

  

206,861

   

1,156,235

  

Grifols SA, ADR

  

27,000

   

628,830

  
     

1,785,065

  

Sweden: 0.2%

 

Swedish Match AB

  

7,934

   

408,968

  

Switzerland: 1.4%

 

Alcon, Inc.*

  

14,498

   

820,924

  

Cie Financiere Richemont SA (Registered)

  

11,351

   

892,082

  

Nestle SA (Registered)

  

7,875

   

852,596

  

Zurich Insurance Group AG

  

2,789

   

1,144,361

  
     

3,709,963

  

United Kingdom: 3.6%

 

Ashtead Group PLC

  

31,720

   

1,014,274

  

Babcock International Group PLC

  

86,724

   

723,021

  

Barclays PLC

  

218,217

��  

519,250

  


25



UBS Global Allocation Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks—(Continued)

 

United Kingdom—(Concluded)

 

British American Tobacco PLC

  

32,342

  

$

1,384,381

  

GlaxoSmithKline PLC

  

64,050

   

1,509,314

  

GlaxoSmithKline PLC, ADR

  

9,000

   

422,910

  

Mondi PLC

  

32,938

   

773,336

  

Sage Group PLC/The

  

129,612

   

1,285,913

  

Spectris PLC

  

22,582

   

869,246

  

Unilever N.V.

  

14,525

   

834,675

  
     

9,336,320

  

United States: 26.7%

 

10X Genomics, Inc., Class A*,1

  

2,236

   

170,495

  

Abbott Laboratories

  

4,621

   

401,380

  

AGCO Corp.

  

19,319

   

1,492,393

  

Alexion Pharmaceuticals, Inc.*

  

4,049

   

437,899

  

Align Technology, Inc.*

  

1,463

   

408,236

  

Alphabet, Inc., Class A*

  

1,273

   

1,705,043

  

Amazon.com, Inc.*

  

2,170

   

4,009,813

  

American Express Co.

  

2,336

   

290,809

  

Ameriprise Financial, Inc.

  

10,458

   

1,742,094

  

Analog Devices, Inc.

  

2,165

   

257,289

  

Apache Corp.

  

18,721

   

479,070

  

Apple, Inc.

  

5,528

   

1,623,297

  

Arista Networks, Inc.*

  

2,632

   

535,349

  

Autodesk, Inc.*

  

3,114

   

571,294

  

Burlington Stores, Inc.*

  

1,801

   

410,682

  

Carnival Corp.

  

20,005

   

1,016,854

  

Carvana Co.*,1

  

1,418

   

130,527

  

Caterpillar, Inc.

  

1,702

   

251,351

  

Cooper Cos., Inc./The

  

1,362

   

437,597

  

Cree, Inc.*

  

14,415

   

665,252

  

Crown Castle International Corp.

  

2,100

   

298,515

  

Delta Air Lines, Inc.

  

24,397

   

1,426,737

  

Digital Realty Trust, Inc.1

  

12,943

   

1,549,795

  

Dollar General Corp.

  

3,664

   

571,511

  

Dollar Tree, Inc.*

  

18,543

   

1,743,969

  

Domino's Pizza, Inc.

  

1,163

   

341,666

  

Elanco Animal Health, Inc.*

  

53,068

   

1,562,853

  

Facebook, Inc., Class A*

  

11,998

   

2,462,589

  

Fidelity National Information Services, Inc.

  

3,661

   

509,208

  

FMC Corp.

  

3,545

   

353,862

  

GoDaddy, Inc., Class A*

  

6,640

   

450,989

  

HubSpot, Inc.*

  

1,728

   

273,888

  

IAC/InterActiveCorp*

  

1,836

   

457,366

  

Johnson & Johnson

  

19,397

   

2,829,440

  

Laboratory Corp. of America Holdings*

  

7,248

   

1,226,144

  

Lam Research Corp.

  

935

   

273,394

  

LivaNova PLC*

  

7,700

   

580,811

  

Lowe's Cos., Inc.

  

4,631

   

554,609

  

Marvell Technology Group Ltd.1

  

13,161

   

349,556

  

MetLife, Inc.

  

31,335

   

1,597,145

  

Micron Technology, Inc.*

  

21,525

   

1,157,614

  
  Number of
shares
 

Value

 

Common stocks—(Concluded)

 

United States—(Concluded)

 

Microsoft Corp.

  

33,275

  

$

5,247,467

  

Mondelez International, Inc., Class A

  

46,558

   

2,564,415

  

Netflix, Inc.*

  

656

   

212,262

  

NIKE, Inc., Class B

  

6,775

   

686,375

  

ON Semiconductor Corp.*

  

30,033

   

732,205

  

PepsiCo, Inc.

  

2,485

   

339,625

  

Progressive Corp./The

  

25,628

   

1,855,211

  

salesforce.com, Inc.*

  

13,553

   

2,204,260

  

ServiceNow, Inc.*

  

1,584

   

447,195

  

Simon Property Group, Inc.

  

14,015

   

2,087,674

  

SmileDirectClub, Inc.*

  

9,871

   

86,273

  

Starbucks Corp.

  

1,975

   

173,642

  

Stericycle, Inc.*,1

  

14,940

   

953,321

  

Synchrony Financial

  

33,184

   

1,194,956

  

Take-Two Interactive Software, Inc.*

  

9,883

   

1,209,976

  

TransUnion

  

3,103

   

265,648

  

Ulta Salon, Cosmetics & Fragrance, Inc.*

  

1,724

   

436,413

  

Union Pacific Corp.

  

3,243

   

586,302

  

United Rentals, Inc.*

  

1,282

   

213,799

  

UnitedHealth Group, Inc.

  

10,047

   

2,953,617

  

Universal Display Corp.

  

1,583

   

326,209

  

Visa, Inc., Class A

  

17,568

   

3,301,027

  

Walt Disney Co./The

  

3,214

   

464,841

  

Waste Connections, Inc.

  

2,516

   

228,428

  

Wells Fargo & Co.

  

27,699

   

1,490,206

  

Western Digital Corp.

  

14,329

   

909,462

  

Westlake Chemical Corp.

  

13,795

   

967,719

  

Zimmer Biomet Holdings, Inc.

  

3,136

   

469,396

  
     

70,216,309

  
Total common stocks
(cost $107,720,281)
    

126,286,356

  

Preferred stocks: 0.3%

 

Germany: 0.3%

 
Henkel AG & Co. KGaA
(cost $717,961)
  

7,001

   

724,048

  

Exchange traded funds: 9.4%

 

United States: 9.4%

 
iShares JPMorgan USD Emerging
Markets Bond ETF1
  

106,396

   

12,188,726

  
iShares iBoxx $ Investment Grade
Corporate Bond ETF1
  

98,054

   

12,546,990

  
Total exchange traded funds
(cost $24,136,551)
    

24,735,716

  

Investment companies: 8.7%

 
UBS Emerging Markets Equity Opportunity Fund3
(cost $22,973,089)
  

2,297,929

   

22,933,334

  


26



UBS Global Allocation Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount
 

Value

 

Non-U.S. government agency obligations: 5.4%

 

Australia: 0.2%

 
Australia Government Bond,
Series 126,
4.500%, due 04/15/204
 

AUD

486,000

  

$

344,491

  
Series 138,
3.250%, due 04/21/294
 

AUD

380,000

   

310,343

  
     

654,834

  

Austria: 0.1%

 
Republic of Austria Government Bond
1.200%, due 10/20/252,4
 

EUR

37,000

   

45,037

  

3.150%, due 06/20/442,4

 

EUR

67,000

   

120,188

  
     

165,225

  

Belgium: 0.1%

 
Kingdom of Belgium Government Bond,
Series 71,
3.750%, due 06/22/454
 

EUR

125,000

   

236,034

  

Canada: 0.7%

 
Canadian Government Bond
1.500%, due 09/01/24
 

CAD

2,000,000

   

1,527,088

  

2.250%, due 06/01/25

 

CAD

221,000

   

175,093

  

2.750%, due 12/01/64

 

CAD

82,000

   

82,821

  
     

1,785,002

  

France: 0.7%

 
French Republic Government Bond OAT,
Series OATE,
1.800%, due 07/25/402,4
 

EUR

210,348

   

364,515

  
French Republic Government Bond OAT
0.500%, due 05/25/264
 

EUR

741,000

   

868,508

  

2.500%, due 05/25/304

 

EUR

262,000

   

365,595

  

3.250%, due 05/25/454

 

EUR

172,000

   

302,381

  
     

1,900,999

  

Ireland: 0.1%

 
Ireland Government Bond
1.500%, due 05/15/504
 

EUR

200,000

   

256,211

  

2.000%, due 02/18/454

 

EUR

48,000

   

68,727

  
     

324,938

  

Italy: 0.5%

 
Italy Buoni Poliennali Del Tesoro
1.650%, due 03/01/322,4
 

EUR

60,000

   

68,008

  

3.000%, due 08/01/294

 

EUR

300,000

   

387,559

  

3.250%, due 09/01/462,4

 

EUR

45,000

   

59,594

  

4.000%, due 02/01/372,4

 

EUR

129,000

   

186,011

  

4.750%, due 09/01/442,4

 

EUR

25,000

   

40,569

  
Series CPI,
2.550%, due 09/15/412,4
 

EUR

376,299

   

538,187

  
     

1,279,928

  
  Face
amount
 

Value

 

Non-U.S. government agency obligations—(Concluded)

 

Japan: 0.7%

 
Japan Government Forty Year Bond,
Series 12,
0.500%, due 03/20/59
 

JPY

20,000,000

  

$

187,850

  
Japan Government Thirty Year Bond,
Series 51,
0.300%, due 06/20/46
 

JPY

32,000,000

   

288,944

  
Japan Government Twenty Year Bond,
Series 156,
0.400%, due 03/20/36
 

JPY

137,350,000

   

1,307,160

  
     

1,783,954

  

New Zealand: 1.2%

 
New Zealand Government Inflation
Linked Bond,
Series 0925,
2.000%, due 09/20/254,5
 

NZD

4,073,611

   

3,272,588

  

Spain: 0.5%

 
Spain Government Bond
1.450%, due 10/31/272,4
 

EUR

250,000

   

305,910

  

3.450%, due 07/30/662,4

 

EUR

10,000

   

17,794

  

4.200%, due 01/31/372,4

 

EUR

44,000

   

75,251

  

4.800%, due 01/31/242,4

 

EUR

451,000

   

607,691

  

5.150%, due 10/31/442,4

 

EUR

110,000

   

228,057

  
     

1,234,703

  

United Kingdom: 0.6%

 
United Kingdom Gilt
1.000%, due 04/22/244
 

GBP

140,000

   

188,539

  

1.500%, due 07/22/474

 

GBP

263,000

   

361,117

  

1.625%, due 10/22/284

 

GBP

580,000

   

825,858

  

3.500%, due 01/22/454

 

GBP

120,000

   

231,777

  
     

1,607,291

  
Total non-U.S. government agency obligations
(cost $13,175,060)
    

14,245,496

  

U.S. treasury obligations: 15.8%

 

United States: 15.8%

 
U.S. Treasury Bills
1.193%, due 06/18/206
  

8,000,000

   

7,943,667

  

1.320%, due 06/18/206

  

16,000,000

   

15,883,953

  
U.S. Treasury Bonds
2.250%, due 08/15/46
  

490,000

   

475,590

  

2.500%, due 02/15/46

  

461,000

   

470,083

  

2.750%, due 11/15/42

  

423,000

   

450,873

  

2.750%, due 08/15/47

  

333,000

   

356,678

  

2.875%, due 05/15/43

  

817,000

   

888,979

  

2.875%, due 08/15/45

  

37,000

   

40,397

  

3.000%, due 11/15/45

  

97,000

   

108,384

  
U.S. Treasury Inflation Index Notes (TIPS)
0.125%, due 01/15/23
  

189,521

   

189,494

  
U.S. Treasury Inflation Indexed Bonds (TIPS)
0.750%, due 02/15/45
  

688,445

   

713,749

  
U.S. Treasury Notes
1.250%, due 03/31/21
  

497,000

   

494,663

  


27



UBS Global Allocation Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount
 

Value

 

U.S. treasury obligations—(Concluded)

 

United States—(Concluded)

 

1.375%, due 09/30/23

  

1,483,000

  

$

1,467,076

  

1.500%, due 08/15/20

  

2,339,000

   

2,337,140

  

1.500%, due 02/28/23

  

346,000

   

344,578

  

1.625%, due 08/15/22

  

1,160,000

   

1,160,528

  

1.625%, due 11/30/26

  

1,150,000

   

1,134,063

  

1.625%, due 08/15/29

  

300,000

   

292,026

  

1.750%, due 05/15/23

  

530,000

   

531,689

  

1.875%, due 07/31/22

  

1,794,000

   

1,805,848

  

1.875%, due 10/31/22

  

1,037,000

   

1,044,179

  

2.000%, due 11/30/22

  

1,228,000

   

1,241,174

  

2.500%, due 05/15/24

  

1,437,000

   

1,485,616

  

2.750%, due 07/31/23

  

702,000

   

728,477

  
Total U.S. treasury obligations
(cost $41,057,431)
    

41,588,904

  
  Number of
shares
 

Value

 

Short-term investments: 8.5%

 

Investment companies: 8.5%

 
State Street Institutional U.S. Government
Money Market Fund
(cost $22,243,400)
  

22,243,400

  

$

22,243,400

  

Investment of cash collateral from securities loaned: 6.4%

 

Money market funds: 6.4%

 
State Street Navigator Securities Lending
Government Money Market Portfolio
(cost $16,658,350)
  

16,658,350

   

16,658,350

  
Total investments: 102.6%
(cost $248,682,123)
    

269,415,604

  

Liabilities in excess of other assets: (2.6)%

    

(6,813,579

)

 

Net assets: 100.0%

   

$

262,602,025

  

For a listing of defined portfolio acronyms, counterparty acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.

Futures contracts

Number of
contracts
 

Currency

   Expiration
date
 Current
notional
amount
 

Value

 Unrealized
appreciation
(depreciation)
 

Index futures buy contracts:

   
 

316

  

EUR

   

EURO STOXX 50 Index Futures

 

March 2020

 

$

13,318,439

  

$

13,217,709

  

$

(100,730

)

 
 

77

  

JPY

   

TOPIX Index Futures

 

March 2020

  

12,189,286

   

12,196,125

   

6,839

  
 

221

  

USD

   

E-Mini Russell 1000 Value Index Futures

 

March 2020

  

14,658,798

   

14,881,035

   

222,237

  
 

50

  

USD

   

Mini MSCI Emerging Markets (EM) Index Futures

 

March 2020

  

2,742,845

   

2,800,500

   

57,655

  

Interest rate futures buy contracts:

   
 

84

  

AUD

   

Australian Bond 10 Year Futures

 

March 2020

  

8,570,753

   

8,426,953

   

(143,800

)

 
 

252

  

CAD

   

Canada Government Bond 10 Year Futures

 

March 2020

  

27,165,078

   

26,679,727

   

(485,351

)

 
 

33

  

GBP

   

United Kingdom Long Gilt Bond Futures

 

March 2020

  

5,806,238

   

5,742,856

   

(63,382

)

 

U.S. treasury futures buy contracts:

   
 

60

  

USD

   

U.S. Ultra Bond Futures

 

March 2020

  

11,274,806

   

10,899,375

   

(375,431

)

 

Total

       

$

95,726,243

  

$

94,844,280

  

$

(881,963

)

 

Index futures sell contracts:

   
 

36

  

CAD

   

S&P TSX 60 Index Futures

 

March 2020

 

$

(5,611,339

)

 

$

(5,613,400

)

 

$

(2,061

)

 
 

93

  

EUR

   

CAC 40 Index Futures

 

January 2020

  

(6,248,018

)

  

(6,227,790

)

  

20,228

  
 

526

  

SEK

   

OMX 30 Index Futures

 

January 2020

  

(10,037,150

)

  

(9,930,224

)

  

106,926

  
 

69

  

USD

   

MSCI Taiwan Index Futures

 

January 2020

  

(3,182,851

)

  

(3,171,240

)

  

11,611

  
 

72

  

USD

   

S&P 500 E-Mini Index Futures

 

March 2020

  

(11,433,814

)

  

(11,631,960

)

  

(198,146

)

 

Interest rate futures sell contracts:

   
 

90

  

EUR

   

German Euro Bund Futures

 

March 2020

  

(17,350,791

)

  

(17,211,476

)

  

139,315

  
 

21

  

JPY

   

JGB MINI 10 Year Futures

 

March 2020

  

(2,942,381

)

  

(2,936,386

)

  

5,995

  


28



UBS Global Allocation Fund

Portfolio of investments

December 31, 2019 (unaudited)

Futures contracts—(Concluded)

Number of
contracts
 

Currency

   Expiration
date
 Current
notional
amount
 

Value

 Unrealized
appreciation
(depreciation)
 

U.S. treasury futures sell contracts:

 
 

101

  

USD

   

U.S. Treasury Note 10 Year Futures

 

March 2020

 

$

(12,973,621

)

 

$

(12,970,609

)

 

$

3,012

  
 

170

  

USD

   

U.S. Treasury Note 2 Year Futures

 

March 2020

  

(36,657,794

)

  

(36,635,000

)

  

22,794

  

Total

       

$

(106,437,759

)

 

$

(106,328,085

)

 

$

109,674

  

Net unrealized appreciation (depreciation)

           

$

(772,289

)

 

Centrally cleared credit default swap agreements on credit indices—sell protection8

Referenced
obligations
 Notional
amount
(000)
 Maturity
date
 Payment
frequency
 Payments
made
by the
Portfolio7
 Upfront
payments
received
(made)
 

Value

 Unrealized
appreciation
(depreciation)
 

CDX Emerging Markets Series 32 Index

 

USD

8,200

  

12/20/24

 

Quarterly

  

1.000

%

 

$

395,427

  

$

(272,850

)

 

$

122,577

  

CDX North America High Yield Series 33 Index

 

USD

17,919

  

12/20/24

 

Quarterly

  

5.000

   

(1,294,140

)

  

1,756,582

   

462,442

  

CDX North America Investment Grade 33 Index

 

USD

10,100

  

12/20/24

 

Quarterly

  

1.000

   

(192,550

)

  

265,283

   

72,733

  

iTraxx Europe Series 32 Index

 

EUR

15,900

  

12/20/24

 

Quarterly

  

1.000

   

(389,360

)

  

501,233

   

111,873

  

Total

         

$

(1,480,623

)

 

$

2,250,248

  

$

769,625

  

Forward foreign currency contracts

Counterparty

 

Sell

 

Purchase

 Settlement
date
 Unrealized
appreciation
(depreciation)
 

BB

 

JPY

156,300,000

  

USD

1,442,519

  

01/24/20

 

$

2,656

  

CIBC

 

SEK

37,377,029

  

NOK

35,660,000

  

01/24/20

  

67,543

  

GSI

 

CNY

8,400,000

  

USD

1,185,520

  

01/23/20

  

(19,529

)

 

HSBC

 

GBP

1,170,000

  

USD

1,528,781

  

01/24/20

  

(21,938

)

 

HSBC

 

CHF

7,675,000

  

USD

7,830,929

  

01/24/20

  

(109,578

)

 

HSBC

 

EUR

6,840,000

  

USD

7,673,924

  

01/24/20

  

(8,514

)

 

HSBC

 

NZD

12,305,000

  

USD

7,925,374

  

01/24/20

  

(360,442

)

 

HSBC

 

CAD

15,140,000

  

USD

11,578,691

  

01/24/20

  

(81,850

)

 

JPMCB

 

USD

5,097,037

  

COP

17,751,195,000

  

01/24/20

  

298,802

  

SSC

 

USD

1,697,732

  

SGD

2,310,000

  

01/24/20

  

20,059

  

SSC

 

USD

5,810,316

  

SEK

55,680,000

  

01/24/20

  

140,512

  

SSC

 

USD

5,309,406

  

NOK

48,410,000

  

01/24/20

  

205,250

  

SSC

 

USD

9,953,302

  

MXN

192,680,000

  

01/24/20

  

206,098

  

SSC

 

EUR

665,000

  

USD

741,497

  

01/24/20

  

(5,407

)

 

SSC

 

CAD

2,870,000

  

USD

2,195,225

  

01/24/20

  

(15,195

)

 

SSC

 

AUD

7,550,000

  

USD

5,196,923

  

01/24/20

  

(104,120

)

 

SSC

 

GBP

2,095,000

  

USD

2,722,298

  

01/24/20

  

(54,416

)

 

Net unrealized appreciation (depreciation)

 

$

159,931

  


29



UBS Global Allocation Fund

Portfolio of investments

December 31, 2019 (unaudited)

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event a Fund holds investments (other than a money market fund) 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

 

$

125,712,110

  

$

574,246

  

$

  

$

126,286,356

  

Preferred stocks

  

724,048

   

   

   

724,048

  

Exchange traded funds

  

24,735,716

   

   

   

24,735,716

  

Investment companies

  

22,933,334

   

   

   

22,933,334

  

Non-U.S. government agency obligations

  

   

14,245,496

   

   

14,245,496

  

U.S. treasury obligations

  

   

41,588,904

   

   

41,588,904

  

Short-term investments

  

   

22,243,400

   

   

22,243,400

  

Investment of cash collateral from securities loaned

  

   

16,658,350

   

   

16,658,350

  

Futures contracts

  

596,612

   

   

   

596,612

  

Swap agreements

  

   

2,523,098

   

   

2,523,098

  

Forward foreign currency contracts

  

   

940,920

   

   

940,920

  

Total

 

$

174,701,820

  

$

98,774,414

  

$

  

$

273,476,234

  

Liabilities

 

Futures contracts

 

$

(1,368,901

)

 

$

  

$

  

$

(1,368,901

)

 

Swap agreements

  

   

(272,850

)

  

   

(272,850

)

 

Forward foreign currency contracts

  

   

(780,989

)

  

   

(780,989

)

 

Total

 

$

(1,368,901

)

 

$

(1,053,839

)

 

$

  

$

(2,422,740

)

 

At December 31, 2019, there were no transfers in or out of Level 3.

Portfolio footnotes

*  Non-income producing security.

1  Security, or portion thereof, was on loan at the period end.

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. Securities exempt from registration pursuant to Rule 144A, in the amount of $4,115,984, represented 1.6% of the Fund's net assets at period end.

3  The table below details the Fund's investment in a fund advised by the same Advisor as the Fund. The Advisor does not earn a management fee on the assets invested into the affiliated UBS Relationship Funds.


30



UBS Global Allocation Fund

Portfolio of investments

December 31, 2019 (unaudited)

Security description

 Value
6/30/2019
 Purchases
during the
period
ended
12/31/2019
 Sales
during the
period
ended
12/31/2019
 Net
realized loss
during the
period
ended
12/31/2019
 Change in
net unrealized
appreciation
(depreciation)
during the
period
ended
12/31/2019
 Value
12/31/2019
 Net income
earned from
affiliate for the
period
ended
12/31/2019
 Shares
12/31/2019
 
UBS Emerging Markets
Equity Opportunity Fund
 

$

20,816,127

  

$

614,199

  

$

  

$

  

$

1,503,008

  

$

22,933,334

  

$

614,199

   

2,297,929

  

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  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.

6  Rate shown is the discount rate at the date of purchase unless otherwise noted.

7  Payments made or received are based on the notional amount.

8  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.

See accompanying notes to financial statements.
31



UBS Emerging Markets Equity Opportunity Fund

Portfolio performance

For the six months ended December 31, 2019, Class P2 shares of UBS Emerging Markets Equity Opportunity Fund (the "Fund") returned 10.17%, while Class P shares returned 9.68%. The Fund's benchmark, the MSCI Emerging Markets Index (net) (the "Index"), returned 7.09%. 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 return and outperformed its benchmark during the reporting period.

Portfolio performance summary1

What worked:

• The Fund's holding in Taiwan Semiconductor Manufacturing Company (Taiwan, information technology) was the top contributor to results over the reporting period. The company posted better than expected results on the back of the continued recovery in its mobile and high-performing computing businesses. Taiwan Semiconductor Manufacturing Company is also seen as a big beneficiary of trends such as 5G and high performance computing (artificial intelligent, internet of things, edge computing, etc.).

• The Fund's position in SK Hynix (South Korea, information technology) was also additive for returns. The market may be turning more positive on the memory market. NAND prices bottomed out, while near term movement of DRAM, despite being still on a downtrend, would suggest a trough in the coming months.

What didn't work:

• The Fund's position in Bangkok Bank (Thailand, financials) was a headwind for returns. Bangkok Bank underperformed as it announced in December 2019 that it would buy an 89% stake in Bank Permata in Indonesia. Investors perceived this negatively in terms of the price paid and potential value add to Bangkok Bank's business. We are reconsidering our thesis on the company and continue to hold the stock.

• The Fund's position in Banco Bradesco (Brazil, financials) was a headwind for results, alongside broader weakness in the Brazilian market in August 2019, amid weakening sentiment over slower economic growth. The stock rallied in the fourth quarter, but it did not offset the losses from the prior quarter. We continue to hold the stock.

• The Fund did not invest in derivatives during the reporting period.

This letter is intended to assist shareholders in understanding how the Fund performed during the period from the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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 page 3.


32



UBS Emerging Markets Equity Opportunity Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

  

6 months

 

1 year

 

Inception1

 

Before deducting maximum sales charge

 

Class P22

  

10.17

%

  

26.47

%

  

3.19

%

 

Class P4

  

9.68

%

  

N/A

   

14.10

%

 

MSCI Emerging Markets Index (net)3

  

7.09

%

  

18.44

%

  

1.50

%

 

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class P2—1.44% and 0.42%; Class P—1.24% and 1.02%. 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 and administrator ("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 28, 2020, do not exceed 1.25% for Class A shares and 1.00% for Class P shares and 0.40% for Class P2 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement or (ii) at the time of the recoupment. 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 recounpment rights will survive.

1  Inception date of Class P2 of UBS Emerging Markets Equity Opportunity Fund is June 4, 2018.

2  Class P2 shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P2 shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.

3  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 nonresident 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  Inception date of Class P of UBS Emerging Markets Equity Opportunity Fund is January 31, 2019.

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.


33



UBS Emerging Markets Equity Opportunity Fund

Portfolio statistics—December 31, 2019 (unaudited)1

Top ten holdings

  Percentage of
net assets
 

Alibaba Group Holding Ltd., ADR

  

8.1

%

 

Taiwan Semiconductor Manufacturing Co. Ltd.

  

7.8

  

Samsung Electronics Co. Ltd.

  

6.8

  

Tencent Holdings Ltd.

  

4.8

  

SK Hynix, Inc.

  

4.1

  

Naspers Ltd., N Shares

  

4.0

  

TAL Education Group, ADR

  

3.9

  

Ping An Insurance Group Co. of China Ltd., H Shares

  

3.9

  

Banco Bradesco SA

  

3.7

  

LUKOIL PJSC, ADR

  

3.7

  

Total

  

50.8

%

 

Top five issuer breakdown by country or territory of origin

  Percentage of
net assets
 

China

  

32.8

%

 

South Korea

  

13.1

  

India

  

9.0

  

Brazil

  

8.5

  

Taiwan

  

7.8

  

Total

  

71.2

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


34



UBS Emerging Markets Equity Opportunity Fund

Industry diversification—December 31, 2019 (unaudited)1

Common stocks

 Percentage of
net assets
 

Automobiles

  

2.3

%

 

Banks

  

18.4

  

Beverages

  

4.9

  

Diversified consumer services

  

4.9

  

Electric utilities

  

0.8

  

Household durables

  

1.5

  

Insurance

  

3.9

  

Interactive media & services

  

4.8

  

Internet & direct marketing retail

  

12.1

  

IT services

  

1.6

  

Metals & mining

  

2.0

  

Oil, gas & consumable fuels

  

8.0

  

Personal products

  

1.7

  

Pharmaceuticals

  

3.0

  

Real estate management & development

  

2.5

  

Semiconductors & semiconductor equipment

  

11.9

  

Technology hardware, storage & peripherals

  

6.8

  

Thrifts & mortgage finance

  

3.3

  

Total common stocks

  

94.4

%

 

Preferred stocks

  

3.7

  

Short-term investments

  

1.5

  

Total investments

  

99.6

%

 

Other assets in excess of liabilities

  

0.4

  

Net assets

  

100.0

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


35



UBS Emerging Markets Equity Opportunity Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks: 94.4%

 

Brazil: 4.8%

 

Petroleo Brasileiro SA, ADR

  

307,700

  

$

4,590,884

  

Petroleo Brasileiro SA, ADR

  

290,800

   

4,635,352

  

Vale SA

  

509,386

   

6,749,266

  
     

15,975,502

  

China: 32.8%

 

Alibaba Group Holding Ltd., ADR*

  

128,795

   

27,317,420

  

China Jinmao Holdings Group Ltd.

  

10,706,000

   

8,339,697

  

CNOOC Ltd.

  

1,969,000

   

3,274,802

  

Gree Electric Appliances, Inc. of Zhuhai, Class A

  

521,689

   

4,911,547

  

Jiangsu Hengrui Medicine Co. Ltd., Class A

  

818,961

   

10,289,772

  

Kweichow Moutai Co. Ltd., Class A

  

62,237

   

10,569,845

  
New Oriental Education & Technology Group,
Inc., ADR*
  

28,193

   

3,418,401

  

Ping An Insurance Group Co. of China Ltd., H Shares

  

1,108,000

   

13,095,851

  

TAL Education Group, ADR*

  

274,900

   

13,250,180

  

Tencent Holdings Ltd.

  

332,800

   

16,041,436

  
     

110,508,951

  

Hungary: 1.2%

 

OTP Bank Nyrt PLC

  

80,146

   

4,191,238

  

India: 9.0%

 

HDFC Bank Ltd.

  

450,000

   

8,019,891

  

HDFC Bank Ltd., ADR

  

44,930

   

2,847,214

  

Housing Development Finance Corp. Ltd.

  

331,820

   

11,215,370

  

Power Grid Corp. of India Ltd.

  

975,574

   

2,600,277

  

Tata Consultancy Services Ltd.

  

183,417

   

5,554,817

  
     

30,237,569

  

Indonesia: 5.6%

 

Astra International Tbk. PT

  

15,292,800

   

7,628,499

  

Bank Mandiri Persero Tbk. PT

  

20,167,300

   

11,149,579

  
     

18,778,078

  

Malaysia: 2.4%

 

CIMB Group Holdings Bhd

  

6,347,731

   

7,991,887

  

Mexico: 4.2%

 

Fomento Economico Mexicano SAB de CV

  

619,500

   

5,854,083

  

Grupo Financiero Banorte SAB de CV, Class O

  

1,507,200

   

8,421,826

  
     

14,275,909

  
  Number of
shares
 

Value

 

Common stocks—(Concluded)

 

Russia: 7.4%

 

LUKOIL PJSC, ADR

  

125,851

  

$

12,422,752

  

LUKOIL PJSC, ADR

  

1,854

   

183,880

  

Sberbank of Russia PJSC

  

3,021,060

   

12,399,895

  
     

25,006,527

  

South Africa: 4.0%

 

Naspers Ltd., N Shares

  

81,500

   

13,329,958

  

South Korea: 13.1%

 

LG Household & Health Care Ltd.*

  

5,257

   

5,732,264

  

Samsung Electronics Co. Ltd.

  

476,432

   

22,988,374

  

SK Hynix, Inc.*

  

166,872

   

13,578,326

  

SK Innovation Co. Ltd.

  

13,278

   

1,722,254

  
     

44,021,218

  

Taiwan: 7.8%

 

Taiwan Semiconductor Manufacturing Co. Ltd.

  

2,386,000

   

26,345,732

  

Thailand: 2.1%

 

Bangkok Bank PCL NVDR

  

1,322,600

   

7,064,758

  
Total common stocks
(cost $284,081,021)
    

317,727,327

  

Preferred stocks: 3.7%

 

Brazil: 3.7%

 
Banco Bradesco SA
(cost $11,844,586)
  

1,399,300

   

12,581,769

  

Short-term investments: 1.5%

 

Investment companies: 1.5%

 
State Street Institutional U.S. Government
Money Market Fund
(cost $5,027,668)
  

5,027,668

   

5,027,668

  
Total investments: 99.6%
(cost $300,953,275)
    

335,336,764

  

Other assets in excess of liabilities: 0.4%

    

1,210,304

  

Net assets: 100.0%

   

$

336,547,068

  

For a listing of defined portfolio acronyms that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.


36



UBS Emerging Markets Equity Opportunity Fund

Portfolio of investments

December 31, 2019 (unaudited)

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event a Fund holds investments (other than a money market fund) 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

 

$

317,727,327

  

$

  

$

  

$

317,727,327

  

Preferred stocks

  

12,581,769

   

   

   

12,581,769

  

Short-term investments

  

   

5,027,668

   

   

5,027,668

  

Total

 

$

330,309,096

  

$

5,027,668

  

$

  

$

335,336,764

  

At December 31, 2019, there were no transfers in or out of Level 3.

Portfolio footnotes

*  Non-income producing security.

See accompanying notes to financial statements.
37



UBS Engage For Impact Fund

Portfolio performance

For the six months ended December 31, 2019, Class P shares of UBS Engage for Impact Fund (the "Fund") returned 6.39%. The Fund's benchmark, the MSCI All Country World Index (net) (the "Index"), returned 8.92% over the same time period. (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 posted positive absolute returns and underperformed its benchmark during the reporting period. This was driven by weak sector allocation. Stock selection was slightly negative.

Portfolio performance summary1

What worked:

•  Stock selection within the industrials and consumer discretionary sectors contributed positively to Fund performance during the reporting period. The Fund's relative overweight to the health care sector contributed positively, as well.

•  Several individual stock positions were positive for relative performance.

•  New Oriental Education continued on its positive trajectory, as demand for a higher level of literacy and private tutoring is on the rise in China. The tutoring market is highly related to China's urbanization progress, and is still in a huge up-cycle for development.

•  Prysmian posted solid results for the second quarter of the year, including adjusted earnings before interest, tax, depreciation and amortization (EBITDA) that was about 5% ahead of consensus. In November, Prysmian announced the final commissioning of a major project, a significant positive, which helped cash flow and allowed the group to shift resources to other projects. Prysmian is strongly cash generative, due to low capital expenditure requirements and prepayments on large turnkey contracts. The company's Draka deal provided significant opportunities for synergy, and helped with further expansion of profit margins. We believe the acquisition of General Cable should offer similar opportunities, as Prysmian's management has a good track record of adding value through industry consolidation.

•  LKQ's share price increased beginning in September, after management updated investors on its European restructuring plans, which call for a significant expansion of profit margins. We believe the plan is achievable because it will be managed by the new CEO of Europe. LKQ is also being engaged by an increasingly active set of shareholders, who are pushing for operational improvements as well as possible divestitures of non-core businesses. We believe these developments have the potential to unlock value for the company.

1  For a detailed commentary on the market environment in general during the reporting period, see page 3.


38



UBS Engage For Impact Fund

What didn't work:

•  Stock selection in financials and health care detracted from Fund performance during the six-month period. The Fund's relative underweight to the information technology sector also detracted from relative performance.

•  Certain stock selection decisions made a negative contribution to relative performance.

•  The Fund suffered from not owning Apple, the largest stock in the benchmark. Apple's shares were lifted by expectations of strong holiday sales, as well as October results which were boosted by Services, Wearables and iPad sales. We do not believe Apple qualifies for this Fund, as the technology giant does not derive revenues from impactful product and services.

•  The share price of KasikornBank decreased over the six months ended December 31, 2019, following the release of second quarter 2019 earnings, which showed loan growth and non-interest income growth below guidance. We continue to hold this security.

•  Centrica was a top detractor to performance over the period. Our initial thesis on the company was based around our expectation that Centrica could maintain market share leadership while significantly reducing costs. While Centrica was rated in the top decile on environmental, social & governance (ESG) scoring, our view was that there needed to be improvements in management of the business, and we had been extensively engaging with the board to encourage change at the beginning of 2019. Hence, the departure of the CEO in June was both expected to us and a desired outcome. The company's additional restructuring costs, however, were not expected, and had a detrimental impact on our initial thesis. Although the stock was trading well below our previous fair value estimate, we sold out of it late in the summer due to our lack of confidence in the ability of management to execute on the restructuring plan.

•  The Fund did not invest in derivatives during the reporting period.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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.


39



UBS Engage For Impact Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

  

6 months

 

1 year

 

Inception1

 

Class P2

  

6.39

%

  

23.64

%

  

12.66

%

 

MSCI All Country World Index (net)3

  

8.92

%

  

26.60

%

  

21.24

%

 

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class P—3.87% and 0.85%. 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 and administrator ("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 28, 2020, do not exceed 1.10% for Class A shares and 0.85% 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement or (ii) at the time of the recoupment. 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 Class P of UBS Engage For Impact Fund is October 24, 2018.

2  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.

3  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.

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.


40



UBS Engage For Impact Fund

Portfolio statistics—December 31, 2019 (unaudited)1

Top ten holdings

  Percentage of
net assets
 

Conagra Brands, Inc.

  

3.6

%

 

Takeda Pharmaceutical Co. Ltd.

  

3.6

  

LKQ Corp.

  

3.3

  

West Japan Railway Co.

  

3.1

  

MSA Safety, Inc.

  

3.0

  

China Mobile Ltd.

  

3.0

  

Linde PLC

  

2.9

  

Erste Group Bank AG

  

2.8

  

Stericycle, Inc.

  

2.8

  

Sumitomo Mitsui Financial Group, Inc.

  

2.8

  

Total

  

30.9

%

 

Top five issuer breakdown by country or territory of origin

  Percentage of
net assets
 

United States

  

45.8

%

 

Japan

  

9.5

  

Germany

  

9.0

  

China

  

8.1

  

United Kingdom

  

4.9

  

Total

  

77.3

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


41



UBS Engage For Impact Fund

Industry diversification—December 31, 2019 (unaudited)1

Common stocks

 Percentage of
net assets
 

Auto components

  

3.8

%

 

Banks

  

12.7

  

Biotechnology

  

8.0

  

Building products

  

1.9

  

Chemicals

  

7.2

  

Commercial services & supplies

  

5.9

  

Distributors

  

3.3

  

Diversified consumer services

  

2.0

  

Electrical equipment

  

2.6

  

Electronic equipment, instruments & components

  

4.4

  

Food & staples retailing

  

1.8

  

Food products

  

5.0

  

Health care equipment & supplies

  

5.9

  

Health care providers & services

  

1.6

  

Machinery

  

4.6

  

Metals & mining

  

2.1

  

Oil, gas & consumable fuels

  

4.3

  

Personal products

  

2.0

  

Pharmaceuticals

  

5.1

  

Real estate management & development

  

0.8

  

Road & rail

  

3.1

  

Semiconductors & semiconductor equipment

  

5.5

  

Wireless telecommunication services

  

3.0

  

Total common stocks

  

96.6

%

 

Short-term investments

  

3.5

  

Investment of cash collateral from securities loaned

  

2.2

  

Total investments

  

102.3

%

 

Liabilities in excess of other assets

  

(2.3

)

 

Net assets

  

100.0

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


42



UBS Engage For Impact Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks: 96.6%

 

Austria: 2.8%

 

Erste Group Bank AG*

  

16,607

  

$

625,158

  

China: 8.1%

 

China Mengniu Dairy Co. Ltd.*

  

77,000

   

311,269

  

China Mobile Ltd.

  

79,500

   

668,256

  

China Suntien Green Energy Corp., Class H

  

1,325,000

   

382,589

  
New Oriental Education & Technology
Group, Inc., ADR*
  

3,545

   

429,831

  
     

1,791,945

  

Denmark: 1.7%

 

Genmab A/S*

  

1,676

   

372,718

  

Germany: 9.0%

 

Continental AG

  

3,059

   

395,489

  

Infineon Technologies AG

  

25,064

   

571,001

  

KION Group AG

  

7,587

   

523,897

  

LANXESS AG

  

7,481

   

501,976

  
     

1,992,363

  

Hong Kong: 0.8%

 

Sun Hung Kai Properties Ltd.

  

12,000

   

183,720

  

Indonesia: 2.3%

 

Bank Mandiri Persero Tbk. PT

  

914,000

   

505,309

  

Ireland: 1.9%

 

Kingspan Group PLC

  

6,917

   

422,467

  

Italy: 2.6%

 

Prysmian SpA

  

24,029

   

579,227

  

Japan: 9.5%

 

Sumitomo Mitsui Financial Group, Inc.

  

16,500

   

613,198

  

Takeda Pharmaceutical Co. Ltd.

  

19,653

   

783,551

  

West Japan Railway Co.

  

7,900

   

686,429

  
     

2,083,178

  

Mexico: 2.6%

 

Grupo Financiero Banorte SAB de CV, Class O

  

103,050

   

575,816

  

Netherlands: 1.8%

 

Koninklijke Ahold Delhaize N.V.

  

15,839

   

396,106

  

Norway: 2.6%

 

Equinor ASA

  

28,538

   

570,480

  

Spain: 1.5%

 

Grifols SA, ADR

  

14,300

   

333,047

  

Thailand: 2.2%

 

Kasikornbank PCL

  

94,100

   

472,797

  
  Number of
shares
 

Value

 

Common stocks—(Concluded)

 

United Kingdom: 4.9%

 

Linde PLC

  

2,944

  

$

626,777

  

Unilever N.V.

  

7,809

   

448,742

  
     

1,075,519

  

United States: 42.3%

 

Abbott Laboratories

  

5,218

   

453,236

  

AGCO Corp.

  

6,220

   

480,495

  

Aptiv PLC

  

4,714

   

447,689

  

Conagra Brands, Inc.

  

23,023

   

788,307

  

Danaher Corp.

  

3,417

   

524,441

  

Ecolab, Inc.

  

2,365

   

456,421

  

Elanco Animal Health, Inc.*

  

11,916

   

350,926

  

Incyte Corp.*

  

5,969

   

521,213

  

IPG Photonics Corp.*

  

3,023

   

438,093

  

Ironwood Pharmaceuticals, Inc.*,1

  

40,638

   

540,892

  

Laboratory Corp. of America Holdings*

  

2,041

   

345,276

  

LivaNova PLC*

  

4,235

   

319,446

  

LKQ Corp.*

  

20,160

   

719,712

  

Micron Technology, Inc.*

  

7,282

   

391,626

  

MSA Safety, Inc.

  

5,305

   

670,340

  

Sims Metal Management Ltd.

  

62,992

   

471,664

  

Stericycle, Inc.*,1

  

9,703

   

619,148

  

Trimble, Inc.*

  

12,984

   

541,303

  

Universal Display Corp.

  

1,206

   

248,520

  
     

9,328,748

  
Total common stocks
(cost $19,178,698)
    

21,308,598

  

Short-term investments: 3.5%

 

Investment companies: 3.5%

 
State Street Institutional U.S. Government
Money Market Fund
(cost $758,419)
  

758,419

   

758,419

  

Investment of cash collateral from securities loaned: 2.2%

 

Money market funds: 2.2%

 
State Street Navigator Securities Lending
Government Money Market Portfolio
(cost $488,524)
  

488,524

   

488,524

  
Total investments: 102.3%
(cost $20,425,641)
    

22,555,541

  

Liabilities in excess of other assets: (2.3)%

    

(501,144

)

 

Net assets: 100.0%

   

$

22,054,397

  

For a listing of defined portfolio acronyms, counterparty acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.


43



UBS Engage For Impact Fund

Portfolio of investments

December 31, 2019 (unaudited)

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event a Fund holds investments (other than a money market fund) 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

 

$

21,308,598

  

$

  

$

  

$

21,308,598

  

Short-term investments

  

   

758,419

   

   

758,419

  

Investment of cash collateral from securities loaned

  

   

488,524

   

   

488,524

  

Total

 

$

21,308,598

  

$

1,246,943

  

$

  

$

22,555,541

  

At December 31, 2019, there were no transfers in or out of Level 3.

Portfolio footnotes

*  Non-income producing security.

1  Security, or portion thereof, was on loan at the period end.

See accompanying notes to financial statements.
44



UBS International Sustainable Equity Fund

Portfolio performance

For the six months ended December 31, 2019, Class A shares of UBS International Sustainable Equity Fund (the "Fund") returned 6.98% (Class A shares returned 1.12% after the deduction of the maximum sales charge), while Class P shares returned 7.10%. The Fund's new benchmark, the MSCI ACWI ex-US Index (the "Index"), returned 6.96%. For comparison purposes, the Fund's previous benchmark, the MSCI World ex USA Index (net), returned 6.85%.1 (Class P shares have lower expenses than the other share class in the series. Returns for all share classes over various time periods are shown on page 47; 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's performance was primarily due to stock selection and sector allocation decisions.

Portfolio performance summary2

What worked:

• Stock selection in the financials, energy and materials sectors contributed the most to performance.

Entertainment One's share price rallied as Hasbro announced it was acquiring the company for $4 billion. We sold out of our position before the reporting period ended.

• Shares of Banca Mediolanum were supported by the company's strong third quarter 2019 results, which showed more than 50% increase in its operating margins, driven by cost controls and improving quality of recurring revenues. In addition, net commissions and net interest income both increased over 25% compared to the previous year.

Galapagos posted strong third quarter 2019 results and, most importantly, strengthened its balance sheet thanks to a $3.95 billion payment and a $1.1 billion equity investment from partner Gilead.

• From a sector allocation perspective, an average underweight to the energy sector contributed to performance.

What didn't work:

• Stock selection in the communication services, consumer discretionary and utilities sectors detracted from performance during the reporting period.

• The largest stock detractor was Centrica, which announced the much-anticipated restructuring in July 2019, costing approximately £1.3 billion. This was not expected and detrimental to our thesis. As such, we eliminated our position.

Publicis Groupe guided down for 2019, with sales expected to decline 2.5% for the full year. New parts if its business (Sapient and Epsilon) haven't delivered the expected growth and margin improvement contributions. It appeared that our original thesis for Publicis Groupe to execute its strategy of transforming itself into an advertising and marketing service company fit for the world of digital will take longer than expected. We therefore sold out the position.

Axis Bank's share price fell during the reporting period on fears over the Indian banking sector's stability. Although Axis Bank missed the market's estimates for the first quarter of the year, its net profit rose 95%.

1  Effective October 28, 2019, the MSCI ACWI ex-US Index replaced MSCI World ex USA Index (net) as the Fund's primary benchmark because it more closely aligns with the Fund's investment strategy.

For a detailed commentary on the market environment in general during the reporting period, see page 3.


45



UBS International Sustainable Equity Fund

• In terms of sector allocation, an average underweight to consumer discretionary and an average overweight to communication services slightly detracted from relative performance.

Portfolio highlights

Sony is a conglomerate engaged in the production of various kinds of electronic equipment and production and licensing of music and films. Sony has significantly transformed its business portfolio over the past several years. We believe Sony will be able to grow its earnings in a sustainable way at least for the next three- to five-years. Keys to achieving this are its game and network services segment and the successful launch of PlayStation 5. The restructuring of its Mobile Communication and Pictures business is also very important. Sony is rated top decile based on our sustainability model, lifted by its environmental efficiency.

Takeda Pharmaceutical is one of the top 10 global pharmaceuticial companies, with a balanced product portfolio. Investor frustration around the surprise $60 billion Shire acquisition resulted in a depressed valuation. At current levels, we believe concerns around the ability to grow its plasma business in-line with the market and to improve historically weak research and development (R&D) productivity are more than priced in to its share price, and we see the potential for upside surprises on both fronts. In addition, we believe its diversified business is better prepared to weather the upcoming loss of exclusivity of Velcade (2020+) and Vyvanse (2022-23) than either legacy Takeda or Shire alone. Although the company's financial leverage remains elevated, we see a clear path to delevraging within the next three years, even without additional divestitures of non-core assets. Takeda Pharmaceutical has formulated "Vision 2025" as its vision for sustainable growth, formulated around its strategic roadmap, with clear performance targets.

Bank Central Asia is a diversified Indonesian bank, offering traditional commercial banking services, as well as insurance and investment products. The company generates one of the highest returns in the Indonesian and regional banking sector. This is driven by a positive domestic structure, macro momentum and better leverage of its deposit franchise. Bank Central Asia also has a strong balance sheet, coming from low loan-to-deposit ratio, strong ratio of deposits in current and saving accounts, and a solid transactional banking franchise.

• During the reporting period, we initiated several new positions, including Alibaba, Daimler, Grifols, HCL Technologies, Henkel, Mahindra & Mahindra and Softbank. We sold the Fund's positions in A.P. Moller Maersk, Publicis Groupe, KDDI, Novartis and Sumitomo Mitsui Financials.

•  The Fund did not invest in derivatives during the reporting period.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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.


46



UBS International Sustainable Equity Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

  

6 months

 

1 year

 

5 years

 

10 years

 

Before deducting maximum sales charge

 

Class A1

  

6.98

%

  

22.38

%

  

5.37

%

  

5.56

%

 

Class P2

  

7.10

%

  

22.61

%

  

5.62

%

  

5.83

%

 

After deducting maximum sales charge

 

Class A1

  

1.12

%

  

15.64

%

  

4.18

%

  

4.97

%

 

MSCI World ex USA Index (net)3

  

6.85

%

  

22.49

%

  

5.42

%

  

5.32

%

 

MSCI ACWI ex-US Index4

  

6.96

%

  

21.51

%

  

5.51

%

  

4.97

%

 

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class A—1.53% and 1.25%; Class P—1.26% 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 and administrator ("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 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  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.

3  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.

4  Effective October 28, 2019, the MSCI ACWI ex-US Index replaced MSCI World ex USA Index (net) as the Fund's primary benchmark because it more closely aligns with the Fund's investment strategy

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.


47



UBS International Sustainable Equity Fund

Portfolio statistics—December 31, 2019 (unaudited)1

Top ten holdings

  Percentage of
net assets
 

Sony Corp.

  

3.2

%

 

Takeda Pharmaceutical Co. Ltd.

  

2.6

  

GlaxoSmithKline PLC

  

2.5

  

Ping An Insurance Group Co. of China Ltd., H Shares

  

2.2

  

Bank Central Asia Tbk. PT

  

2.1

  

SAP SE

  

2.0

  

Banca Mediolanum SpA

  

2.0

  

Aon PLC

  

1.9

  

Kao Corp.

  

1.9

  

Unilever N.V.

  

1.9

  

Total

  

22.3

%

 

Top five issuer breakdown by country or territory of origin

  Percentage of
net assets
 

Japan

  

22.5

%

 

United Kingdom

  

13.8

  

Germany

  

8.5

  

China

  

6.3

  

Switzerland

  

5.6

  

Total

  

56.7

%

 

1  The Fund's Portfolio is actively managed and its composition will vary over time.


48



UBS International Sustainable Equity Fund

Industry diversification—December 31, 2019 (unaudited)1

Common stocks

 Percentage of
net assets
 

Auto components

  

1.2

%

 

Automobiles

  

1.8

  

Banks

  

9.1

  

Biotechnology

  

3.1

  

Chemicals

  

3.5

  

Commercial services & supplies

  

1.3

  

Construction & engineering

  

1.0

  

Diversified financial services

  

3.5

  

Diversified telecommunication services

  

2.0

  

Electronic equipment, instruments & components

  

1.6

  

Entertainment

  

2.9

  

Equity real estate investment trusts

  

1.8

  

Food & staples retailing

  

1.7

  

Food products

  

2.1

  

Health care equipment & supplies

  

2.1

  

Household durables

  

3.2

  

Insurance

  

7.9

  

Internet & direct marketing retail

  

3.8

  

IT services

  

0.6

  

Machinery

  

5.8

  

Oil, gas & consumable fuels

  

4.6

  

Paper & forest products

  

1.1

  

Personal products

  

4.6

  

Pharmaceuticals

  

7.1

  

Real estate management & development

  

1.2

  

Road & rail

  

0.7

  

Semiconductors & semiconductor equipment

  

4.7

  

Software

  

3.8

  

Textiles, apparel & luxury goods

  

1.6

  

Trading companies & distributors

  

2.5

  

Wireless telecommunication services

  

2.7

  

Total common stocks

  

94.6

%

 

Preferred stocks

  

1.5

  

Short-term investments

  

0.5

  

Investment of cash collateral from securities loaned

  

0.8

  

Total investments

  

97.4

%

 

Other assets in excess of liabilities

  

2.6

  

Net assets

  

100.0

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


49



UBS International Sustainable Equity Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks: 94.6%

 

Australia: 4.7%

 

Brambles Ltd.

  

340,670

  

$

2,801,843

  

Mirvac Group

  

1,724,721

   

3,848,827

  

Santos Ltd.

  

580,660

   

3,333,171

  
     

9,983,841

  

Austria: 1.5%

 

Erste Group Bank AG*

  

82,860

   

3,119,203

  

Belgium: 2.1%

 

Galapagos N.V.*

  

785

   

164,220

  

Galapagos N.V.*,1

  

8,386

   

1,754,326

  

KBC Group N.V.

  

34,020

   

2,559,025

  
     

4,477,571

  

China: 6.3%

 

Alibaba Group Holding Ltd., ADR*

  

16,399

   

3,478,228

  

China Mobile Ltd.

  

386,500

   

3,248,816

  
Ping An Insurance Group Co. of
China Ltd., H Shares
  

399,500

   

4,721,834

  

Prosus N.V.*

  

24,407

   

1,821,414

  
     

13,270,292

  

Denmark: 2.5%

 

Genmab A/S*

  

12,428

   

2,763,809

  

H Lundbeck A/S

  

66,120

   

2,524,964

  
     

5,288,773

  

Finland: 1.0%

 

Neste Oyj

  

59,423

   

2,067,631

  

France: 1.2%

 

Ubisoft Entertainment SA*

  

35,577

   

2,457,456

  

Germany: 7.0%

 

Continental AG

  

19,466

   

2,516,703

  

Daimler AG (Registered)

  

36,876

   

2,042,131

  

Infineon Technologies AG

  

104,867

   

2,389,051

  

KION Group AG

  

20,324

   

1,403,410

  

LANXESS AG

  

32,877

   

2,206,050

  

SAP SE

  

32,137

   

4,337,304

  
     

14,894,649

  

Hong Kong: 1.2%

 

Sun Hung Kai Properties Ltd.

  

170,500

   

2,610,353

  

India: 3.1%

 

Axis Bank Ltd., GDR

  

64,080

   

3,402,648

  

Infosys Ltd., ADR

  

124,499

   

1,284,830

  

Mahindra & Mahindra Ltd., GDR

  

246,611

   

1,864,379

  
     

6,551,857

  
  Number of
shares
 

Value

 

Common stocks—(Continued)

 

Indonesia: 3.5%

 

Bank Central Asia Tbk. PT

  

1,853,300

  

$

4,462,205

  

Bank Mandiri Persero Tbk. PT

  

5,219,900

   

2,885,844

  
     

7,348,049

  

Italy: 3.1%

 

Banca Mediolanum SpA

  

413,224

   

4,104,410

  

Infrastrutture Wireless Italiane SpA2

  

243,902

   

2,388,396

  
     

6,492,806

  

Japan: 22.5%

 

Inpex Corp.

  

196,700

   

2,057,425

  

ITOCHU Corp.

  

101,100

   

2,358,271

  

Kao Corp.

  

49,000

   

4,069,992

  

Kissei Pharmaceutical Co. Ltd.

  

64,082

   

1,840,098

  

Kubota Corp.1

  

167,500

   

2,660,761

  

MINEBEA MITSUMI, Inc.

  

185,900

   

3,895,765

  

Nabtesco Corp.

  

88,300

   

2,653,348

  

Nintendo Co. Ltd.

  

9,200

   

3,723,013

  

Nippon Telegraph & Telephone Corp.

  

76,600

   

1,943,640

  

ORIX Corp.

  

196,200

   

3,270,150

  

Shin-Etsu Chemical Co. Ltd.

  

28,400

   

3,152,216

  

SoftBank Group Corp.

  

56,500

   

2,473,094

  

Sony Corp.

  

98,500

   

6,709,296

  

Takeda Pharmaceutical Co. Ltd.

  

136,161

   

5,428,645

  

West Japan Railway Co.

  

17,400

   

1,511,881

  
     

47,747,595

  

Netherlands: 4.4%

 

ASML Holding N.V.

  

12,476

   

3,690,305

  

Koninklijke Ahold Delhaize N.V.

  

141,835

   

3,547,052

  

NXP Semiconductors N.V.

  

16,205

   

2,062,248

  
     

9,299,605

  

Norway: 2.0%

 

Equinor ASA

  

119,044

   

2,379,714

  

Mowi ASA

  

74,851

   

1,945,599

  
     

4,325,313

  

South Africa: 1.3%

 

Naspers Ltd., N Shares

  

17,082

   

2,793,894

  

South Korea: 2.6%

 

LG Household & Health Care Ltd.

  

1,561

   

1,702,124

  

Samsung Engineering Co. Ltd.*

  

122,706

   

2,037,230

  

SK Hynix, Inc.*

  

21,811

   

1,774,755

  
     

5,514,109

  

Spain: 2.2%

 

Banco Bilbao Vizcaya Argentaria SA

  

491,695

   

2,748,295

  

Grifols SA, ADR

  

81,600

   

1,900,464

  
     

4,648,759

  


50



UBS International Sustainable Equity Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks—(Concluded)

 

Switzerland: 5.6%

 

Alcon, Inc.*

  

37,931

  

$

2,147,777

  

Cie Financiere Richemont SA (Registered)

  

42,233

   

3,319,118

  

Nestle SA (Registered)

  

22,893

   

2,478,537

  

Zurich Insurance Group AG

  

9,449

   

3,877,039

  
     

11,822,471

  

United Kingdom: 13.8%

 

Ashtead Group PLC

  

91,620

   

2,929,626

  

Croda International PLC

  

29,092

   

1,973,005

  

GlaxoSmithKline PLC

  

225,145

   

5,305,459

  

Mondi PLC

  

94,697

   

2,223,347

  

Prudential PLC

  

207,328

   

3,979,340

  

Sage Group PLC/The

  

369,374

   

3,664,653

  

Spectris PLC

  

85,070

   

3,274,588

  

Unilever N.V.

  

70,153

   

4,031,320

  

Weir Group PLC/The

  

88,294

   

1,765,424

  
     

29,146,762

  

United States: 3.0%

 

Aon PLC

  

19,600

   

4,082,484

  

LivaNova PLC*

  

29,900

   

2,255,357

  
     

6,337,841

  
Total common stocks
(cost $181,857,464)
    

200,198,830

  
  Number of
shares
 

Value

 

Preferred stocks: 1.5%

 

Germany: 1.5%

 

Henkel AG & Co. KGaA

  

23,371

  

$

2,417,046

  

Jungheinrich AG

  

34,478

   

831,490

  
Total preferred stocks
(cost $3,436,468)
    

3,248,536

  

Short-term investments: 0.5%

 

Investment companies: 0.5%

 
State Street Institutional U.S. Government
Money Market Fund
(cost $1,063,998)
  

1,063,998

   

1,063,998

  

Investment of cash collateral from securities loaned: 0.8%

 

Money market funds: 0.8%

 
State Street Navigator Securities Lending
Government Money Market Portfolio
(cost $1,673,164)
  

1,673,164

   

1,673,164

  
Total investments: 97.4%
(cost $188,031,094)
    

206,184,528

  

Other assets in excess of liabilities: 2.6%

    

5,561,547

  

Net assets: 100.0%

   

$

211,746,075

  

For a listing of defined portfolio acronyms that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event a Fund holds investments (other than a money market fund) 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

 

$

200,034,610

  

$

164,220

  

$

  

$

200,198,830

  

Preferred stocks

  

3,248,536

   

   

   

3,248,536

  

Short-term investments

  

   

1,063,998

   

   

1,063,998

  

Investment of cash collateral from securities loaned

  

   

1,673,164

   

   

1,673,164

  

Total

 

$

203,283,146

  

$

2,901,382

  

$

  

$

206,184,528

  


51



UBS International Sustainable Equity Fund

Portfolio of investments

December 31, 2019 (unaudited)

At December 31, 2019, there were no transfers in or out of Level 3.

Portfolio footnotes

*  Non-income producing security.

1  Security, or portion thereof, was on loan at the period end.

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. Securities exempt from registration pursuant to Rule 144A, in the amount of $2,388,396, represented 1.1% of the Fund's net assets at period end.

See accompanying notes to financial statements.
52



UBS U.S. Small Cap Growth Fund

Portfolio performance

For the six months ended December 31, 2019, Class A shares of UBS U.S. Small Cap Growth Fund (the "Fund") returned 1.13% (Class A shares returned -4.41% after the deduction of the maximum sales charge), while Class P shares returned 1.24%. The Fund's benchmark, the Russell 2000 Growth Index (the "Index"), returned 6.75% 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 55; 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's underperformance was driven primarily by stock selection decisions.

Portfolio performance summary1

What worked:

• Roku was the top contributor to Fund performance during the six months ended December 31, 2019.

•  Roku offers wireless-enabled devices that stream audio and video content from the internet to home entertainment systems. The stock rallied during the period on the news that Apple TV and Apple TV+ would be available over Roku-enabled devices. The announcement supported the company's position as a leading enabler of over-the-top content deliver to homes. We sold the stock during the reporting period.

• Several other stock selection decisions benefited performance during the six-month period.

•  Generac Holdings is a manufacturer of residential standby and portable generators. The company's shares rose as investors anticipated both a near-term and long-term benefit to generator sales after PG&E announced that it would proactively implement its first widespread Public Safety Power Shutoffs in response to elevated wildfire risks in California.

•  Ra Pharmaceuticals is a clinical-stage biopharmaceutical company that uses a proprietary peptide chemistry platform to develop novel therapeutics for the treatment of serious diseases. The stock outperformed after the company announced that it was being acquired by UCB SA. The stock was subsequently sold after the reporting period ended.

•  Novocure, a developer of Tumor Treating Fields (TTF) technology for the treatment of solid tumor cancers, rallied following the release of positive quarterly results. The company has been buoyed by the continued adoption of and improving reimbursement for Optune, its TTF treatment for Glioblastoma Multiforme (GBM).

•  Shares of Dick's Sporting Goods, a sporting goods retailer, rose on investor optimism regarding the potential for positive same store sales and improved operating margins.

•  The Fund did not invest in derivatives during the reporting period.

What didn't work:

Certain stock selection decisions made a negative contribution to Fund returns during the reporting period.

•  Vonage Holdings, a provider of telecommunications services delivered over the internet, saw its shares decline during the six-month period after reporting earnings results and guidance below expectations. We continue to hold this stock.

1  For a detailed commentary on the market environment in general during the reporting period, see page 3.


53



UBS U.S. Small Cap Growth Fund

•  Exact Sciences is a molecular diagnostics company whose products include Cologuard, a stool-based, non-invasive test for the early detection of colorectal cancer. The company's shares traded lower on concerns related to both potential competition and the challenges associated with integrating the recent acquisition of Genomic Health. We continue to hold this stock. (For details, see "Portfolio highlights.")

•  CrowdStrike Holdings is a provider of cloud-based security software. The share price declined despite the company reporting sales and earnings ahead of consensus expectations. Investors remained cautious given the current valuation, but we continued to have confidence in the stock, and remained invested.

•  Ollie's Bargain Outlet, an operator of a chain of retail stores, underperformed due to a decline in same store sales and the unexpected passing of the company's CEO. We sold the stock after the reporting period.

•  Wix.com, a cloud-based website creation platform, underperformed after the company reported quarterly results that included lower than expected gross margins. We continue to hold this stock. (For details, see "Portfolio highlights.")

Portfolio highlights

•  Universal Display is a leader in the research, development and commercialization of organic light-emitting diode (OLED) technologies and materials. We remain positive regarding expected OLED industry shipments in the coming years as manufacturing capacity continues to grow and adoption across mobile, TV, auto and other form factors continues to broaden.

•  Planet Fitness has a large network of gyms across the US, which we expect to expand significantly over time. Growth should come from both company-owned and franchisee gyms, with the latter being the faster-growing and more strongly profitable segment. The company's unique model has enabled it to deliver strong unit economics despite offering a positive value proposition to individuals, and helping to convert sporadic gym-goers into members.

•  Alteryx designs and develops software solutions for data storage, retrieval, management, reporting and analysis. We believe the large and growing addressable market for business intelligence and advanced analytics will lead to better than expected sales and earnings growth for Alteryx.

•  Wix.com is a web platform that enables businesses, organizations, professionals and individuals to develop customized websites and applications. The company's rapid growth is being driven by the continued move online by small and medium-sized businesses (SMB). Wix.com provides SMBs with an easy to use web design solution that incorporates full e-commerce capabilities.

•  Exact Sciences focuses on the early detection and prevention of colorectal cancer. The company has exclusive intellectual property protecting its non-invasive molecular screening technology. We believe the market adoption of its Cologuard test continues to be robust, and we remain overweight to the stock.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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.


54



UBS U.S. Small Cap Growth Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

 

6 months

 

1 year

 

5 years

 

10 years

 

Before deducting maximum sales charge

 

Class A1

  

1.13

%

  

29.63

%

  

8.84

%

  

14.40

%

 

Class P2

  

1.24

   

29.95

   

9.11

   

14.70

  

After deducting maximum sales charge

 

Class A1

  

(4.41

)%

  

22.53

%

  

7.61

%

  

13.76

%

 

Russell 2000 Growth Index3

  

6.75

   

28.48

   

9.34

   

13.01

  

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class A—1.58% and 1.25%; Class P—1.31% 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 and administrator ("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 28, 2020, do not exceed 1.24% for Class A 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement or (ii) at the time of the recoupment. 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  Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.

2  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.

3  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.

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.


55



UBS U.S. Small Cap Growth Fund

Portfolio statistics—December 31, 2019 (unaudited)1

Top ten holdings

  Percentage of
net assets
 

Universal Display Corp.

  

2.6

%

 

Planet Fitness, Inc., Class A

  

2.1

  

Teladoc Health, Inc.

  

2.0

  

Performance Food Group Co.

  

2.0

  

Alteryx, Inc., Class A

  

1.9

  

Wix.com Ltd.

  

1.7

  

Chegg, Inc.

  

1.7

  

Generac Holdings, Inc.

  

1.7

  

LivePerson, Inc.

  

1.6

  

QTS Realty Trust, Inc., Class A

  

1.6

  

Total

  

18.9

%

 

Top five issuer breakdown by country or territory of origin

  Percentage of
net assets
 

United States

  

96.3

%

 

Israel

  

1.7

  

Canada

  

0.8

  

Netherlands

  

0.8

  

Switzerland

  

0.6

  

Total

  

100.2

%

 

1  The Fund's Portfolio is actively managed and its composition will vary over time.


56



UBS U.S. Small Cap Growth Fund

Industry diversification—December 31, 2019 (unaudited)1

Common stocks

 Percentage of
net assets
 

Aerospace & defense

  

1.6

%

 

Airlines

  

1.3

  

Auto components

  

1.1

  

Banks

  

3.8

  

Biotechnology

  

13.0

  

Chemicals

  

1.3

  

Commercial services & supplies

  

0.9

  

Construction & engineering

  

2.7

  

Diversified consumer services

  

1.7

  

Diversified telecommunication services

  

0.8

  

Electrical equipment

  

3.0

  

Entertainment

  

0.7

  

Equity real estate investment trusts

  

2.9

  

Food & staples retailing

  

3.3

  

Health care equipment & supplies

  

5.7

  

Health care providers & services

  

1.5

  

Health care technology

  

3.7

  

Hotels, restaurants & leisure

  

4.7

  

Household durables

  

0.9

  

IT services

  

1.7

  

Life sciences tools & services

  

2.4

  

Machinery

  

6.4

  

Multiline retail

  

1.1

  

Oil, gas & consumable fuels

  

0.6

  

Paper & forest products

  

1.2

  

Pharmaceuticals

  

1.1

  

Professional services

  

1.4

  

Road & rail

  

1.0

  

Semiconductors & semiconductor equipment

  

4.9

  

Software

  

14.7

  

Specialty retail

  

2.8

  

Textiles, apparel & luxury goods

  

1.3

  

Thrifts & mortgage finance

  

1.2

  

Total common stocks

  

96.4

%

 

Exchange traded funds

  

1.3

  

Short-term investments

  

2.6

  

Investment of cash collateral from securities loaned

  

9.6

  

Total investments

  

109.9

%

 

Liabilities in excess of other assets

  

(9.9

)

 

Net assets

  

100.0

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


57



UBS U.S. Small Cap Growth Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks: 96.4%

 

Aerospace & defense: 1.6%

 

Mercury Systems, Inc.*

  

28,436

  

$

1,965,212

  

Airlines: 1.3%

 

SkyWest, Inc.

  

25,235

   

1,630,938

  

Auto components: 1.1%

 

Visteon Corp.*

  

16,189

   

1,401,805

  

Banks: 3.8%

 

Columbia Banking System, Inc.

  

28,997

   

1,179,743

  

FB Financial Corp.

  

9,752

   

386,082

  

National Bank Holdings Corp., Class A

  

38,209

   

1,345,721

  

Webster Financial Corp.

  

33,454

   

1,785,105

  
     

4,696,651

  

Biotechnology: 13.0%

 

Allogene Therapeutics, Inc.*,1

  

23,670

   

614,947

  

Argenx SE, ADR*,1

  

5,912

   

948,994

  

Avrobio, Inc.*,1

  

17,943

   

361,193

  

Blueprint Medicines Corp.*

  

12,394

   

992,883

  

Bridgebio Pharma, Inc.*

  

9,800

   

343,490

  

CRISPR Therapeutics AG*

  

11,300

   

688,226

  

Exact Sciences Corp.*,1

  

21,061

   

1,947,721

  

G1 Therapeutics, Inc.*,1

  

30,030

   

793,693

  

Gritstone Oncology, Inc.*,1

  

46,939

   

421,043

  

Immunomedics, Inc.*,1

  

59,584

   

1,260,797

  

Ligand Pharmaceuticals, Inc.*,1

  

6,409

   

668,395

  

MeiraGTx Holdings PLC*

  

51,749

   

1,036,015

  

Moderna, Inc.*,1

  

56,931

   

1,113,570

  

Momenta Pharmaceuticals, Inc.*

  

48,764

   

962,114

  

NuCana PLC, ADR*,1

  

22,000

   

134,200

  

Ra Pharmaceuticals, Inc.*

  

21,806

   

1,023,356

  

REGENXBIO, Inc.*,1

  

11,996

   

491,476

  

Voyager Therapeutics, Inc.*,1

  

35,398

   

493,802

  

Xencor, Inc.*,1

  

24,723

   

850,224

  

Zymeworks, Inc.*

  

21,187

   

963,161

  
     

16,109,300

  

Chemicals: 1.3%

 

Ingevity Corp.*

  

17,762

   

1,552,044

  

Commercial services & supplies: 0.9%

 

U.S. Ecology, Inc.

  

18,539

   

1,073,593

  

Construction & engineering: 2.7%

 

EMCOR Group, Inc.

  

20,221

   

1,745,072

  

MasTec, Inc.*,1

  

25,530

   

1,638,005

  
     

3,383,077

  

Diversified consumer services: 1.7%

 

Chegg, Inc.*,1

  

56,468

   

2,140,702

  

Diversified telecommunication services: 0.8%

 

Vonage Holdings Corp.*

  

136,703

   

1,012,969

  
  Number of
shares
 

Value

 

Common stocks—(Continued)

 

Electrical equipment: 3.0%

 

Generac Holdings, Inc.*

  

20,827

  

$

2,094,988

  

Regal Beloit Corp.

  

18,470

   

1,581,217

  
     

3,676,205

  

Entertainment: 0.7%

 

Glu Mobile, Inc.*

  

144,299

   

873,009

  

Equity real estate investment trusts: 2.9%

 

QTS Realty Trust, Inc., Class A

  

36,338

   

1,972,063

  

Ryman Hospitality Properties, Inc.

  

18,373

   

1,592,204

  
     

3,564,267

  

Food & staples retailing: 3.3%

 

Grocery Outlet Holding Corp.*,1

  

51,168

   

1,660,402

  

Performance Food Group Co.*

  

48,179

   

2,480,255

  
     

4,140,657

  

Health care equipment & supplies: 5.7%

 

Haemonetics Corp.*

  

6,561

   

753,859

  

Novocure Ltd.*

  

21,408

   

1,804,052

  

Sientra, Inc.*

  

133,026

   

1,189,252

  

Staar Surgical Co.*,1

  

44,112

   

1,551,419

  

Tandem Diabetes Care, Inc.*

  

22,659

   

1,350,703

  

ViewRay, Inc.*,1

  

86,444

   

364,794

  
     

7,014,079

  

Health care providers & services: 1.5%

 

LHC Group, Inc.*

  

13,330

   

1,836,341

  

Health care technology: 3.7%

 

Livongo Health, Inc.*

  

28,693

   

719,047

  

Tabula Rasa HealthCare, Inc.*,1

  

28,675

   

1,395,899

  

Teladoc Health, Inc.*,1

  

29,657

   

2,482,884

  
     

4,597,830

  

Hotels, restaurants & leisure: 4.7%

 

Planet Fitness, Inc., Class A*

  

34,864

   

2,603,643

  

Shake Shack, Inc., Class A*,1

  

23,952

   

1,426,821

  

Wendy's Co./The

  

80,087

   

1,778,732

  
     

5,809,196

  

Household durables: 0.9%

 

Sonos, Inc.*

  

72,963

   

1,139,682

  

IT services: 1.7%

 

Wix.com Ltd.*

  

17,602

   

2,154,133

  

Life sciences tools & services: 2.4%

 

10X Genomics, Inc., Class A*,1

  

3,633

   

277,016

  

Adaptive Biotechnologies Corp.*

  

6,600

   

197,472

  

Charles River Laboratories International, Inc.*

  

4,961

   

757,843

  

NanoString Technologies, Inc.*

  

63,037

   

1,753,689

  
     

2,986,020

  


58



UBS U.S. Small Cap Growth Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks—(Continued)

 

Machinery: 6.4%

 

Altra Industrial Motion Corp.

  

49,180

  

$

1,780,808

  

Chart Industries, Inc.*

  

26,191

   

1,767,630

  

Kadant, Inc.

  

13,948

   

1,469,282

  

Kennametal, Inc.

  

29,467

   

1,087,038

  

Woodward, Inc.

  

15,900

   

1,883,196

  
     

7,987,954

  

Multiline retail: 1.1%

 

Ollie's Bargain Outlet Holdings, Inc.*,1

  

21,331

   

1,393,128

  

Oil, gas & consumable fuels: 0.6%

 

Matador Resources Co.*,1

  

41,090

   

738,387

  

Paper & forest products: 1.2%

 

Boise Cascade Co.

  

41,337

   

1,510,041

  

Pharmaceuticals: 1.1%

 

Amphastar Pharmaceuticals, Inc.*

  

32,864

   

633,947

  

Collegium Pharmaceutical, Inc.*

  

36,585

   

752,919

  
     

1,386,866

  

Professional services: 1.4%

 

ASGN, Inc.*

  

24,214

   

1,718,468

  

Road & rail: 1.0%

 

Werner Enterprises, Inc.

  

35,444

   

1,289,807

  

Semiconductors & semiconductor equipment: 4.9%

 

MaxLinear, Inc.*

  

49,567

   

1,051,812

  

Monolithic Power Systems, Inc.

  

7,121

   

1,267,680

  

PDF Solutions, Inc.*

  

30,291

   

511,615

  

Universal Display Corp.

  

15,684

   

3,232,002

  
     

6,063,109

  

Software: 14.7%

 

8x8, Inc.*,1

  

80,430

   

1,471,869

  

Alteryx, Inc., Class A*,1

  

23,093

   

2,310,917

  

Bill.Com Holdings, Inc.*

  

6,990

   

265,970

  

Cloudflare, Inc., Class A*

  

89,000

   

1,518,340

  

Crowdstrike Holdings, Inc., Class A*

  

23,626

   

1,178,229

  

j2 Global, Inc.

  

16,507

   

1,546,871

  

LivePerson, Inc.*,1

  

54,868

   

2,030,116

  

Proofpoint, Inc.*

  

13,576

   

1,558,253

  
  Number of
shares
 

Value

 

Common stocks—(Concluded)

 

Software—(Concluded)

 

PROS Holdings, Inc.*

  

27,647

  

$

1,656,608

  

Sprout Social, Inc.*

  

40,627

   

652,063

  

Tenable Holdings, Inc.*

  

58,925

   

1,411,843

  

Upland Software, Inc.*

  

24,775

   

884,715

  

Varonis Systems, Inc.*

  

22,521

   

1,750,107

  
     

18,235,901

  

Specialty retail: 2.8%

 

American Eagle Outfitters, Inc.

  

66,040

   

970,788

  

Children's Place, Inc./The1

  

11,981

   

749,052

  

Dick's Sporting Goods, Inc.

  

34,878

   

1,726,112

  
     

3,445,952

  

Textiles, apparel & luxury goods: 1.3%

 

Steven Madden Ltd.

  

36,393

   

1,565,263

  

Thrifts & mortgage finance: 1.2%

 

Essent Group Ltd.

  

28,157

   

1,463,882

  
Total common stocks
(cost $96,038,055)
    

119,556,468

  

Exchange traded funds: 1.3%

 
iShares Russell 2000 Growth ETF1
(cost $1,527,325)
  

7,439

   

1,593,583

  

Short-term investments: 2.6%

 

Investment companies: 2.6%

 
State Street Institutional U.S. Government
Money Market Fund
(cost $3,252,912)
  

3,252,912

   

3,252,912

  

Investment of cash collateral from securities loaned: 9.6%

 

Money market funds: 9.6%

 
State Street Navigator Securities Lending
Government Money Market Portfolio
(cost $11,941,276)
  

11,941,276

   

11,941,276

  
Total investments: 109.9%
(cost $112,759,568)
    

136,344,239

  

Liabilities in excess of other assets: (9.9)%

    

(12,252,920

)

 

Net assets: 100.0%

   

$

124,091,319

  

For a listing of defined portfolio acronyms that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.


59



UBS U.S. Small Cap Growth Fund

Portfolio of investments

December 31, 2019 (unaudited)

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event the Fund holds investments (other than a money market fund) 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

 

$

119,556,468

  

$

  

$

  

$

119,556,468

  

Exchange traded funds

  

1,593,583

   

   

   

1,593,583

  

Short-term investments

  

   

3,252,912

   

   

3,252,912

  

Investment of cash collateral from securities loaned

  

   

11,941,276

   

   

11,941,276

  

Total

 

$

121,150,051

  

$

15,194,188

  

$

  

$

136,344,239

  

At December 31, 2019, there were no transfers in or out of Level 3.

Portfolio footnotes

*  Non-income producing security.

1  Security, or portion thereof, was on loan at the period end.

See accompanying notes to financial statements.
60



UBS U.S. Sustainable Equity Fund

Portfolio performance

For the six months ended December 31, 2019, Class A shares of UBS U.S. Sustainable Equity Fund (the "Fund") returned 11.51% (Class A shares returned 5.38% after the deduction of the maximum sales charge), while Class P shares returned 11.67%. The Fund's benchmark, the S&P 500 Index (the "Index"), returned 10.92% over the same time period. (Class P shares have lower expenses than the other share class in the Fund. Returns for all share classes over various time periods are shown on page 64; 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's performance was primarily due to stock selection decisions.

Portfolio performance summary1

What worked:

•  Several stock selection decisions contributed positively to Fund performance during the six months ended December 31, 2019.

  • Stericycle was the largest positive contributor to relative returns for the six-month period. The company continued to make progress toward simplifying its business by divesting non-core businesses. The market responded by bidding up Stericycle's share price.

  • Best Buy's shares rose based on expectations that the company will benefit from the Phase 1 trade agreement between the U.S. and China. The deal should lead to a reduction in some tariffs and, therefore, lower prices for Best Buy's customers.

  • Micron Technology's outperformance was driven by good results and expectations that memory pricing in both NAND and DRAM would be improving over the next several quarters. We sold out of the stock as it reached our estimate of intrinsic value.

  • Shares of UnitedHealth Group traded higher during the period. Investor concerns about the potential for significant health care reform began to recede as the field for the Democratic presidential nomination grew more competitive. In addition, UnitedHealth announced that it expected to reach the higher end of its $15 earnings per share (EPS) guidance for 2019, and introduced guidance for 2020 that included revenues of $260 to $262 billion. (For details, see "Portfolio highlights.")

  • Ameriprise Financial rallied alongside other higher-beta, equity market-sensitive financial companies during the six-month period. We believe the company's fundamentals remain intact and return on equity (ROE) is high. We increased our holdings in the financial planning and retirement solutions provider. (For details, see "Portfolio highlights.")

What didn't work:

•  Several stock selection decisions in the financials and health care sectors detracted from relative performance for the six months ended December 31, 2019.

1  For a detailed commentary on the market environment in general during the reporting period, see page 3.


61



UBS U.S. Sustainable Equity Fund

  • Ironwood Pharmaceuticals was the second largest negative contributor during the reporting period. Ironwood's shares underperformed following the spin-out of R&D-Co on concerns around the growth prospects for the company's flagship product, Linzess. These concerns further intensified when AbbVie announced plans to acquire Ironwood's partner, Allergan, raising concerns that the Linzess franchise could be impacted by merger related reorganizations and reprioritizations. We sold out of the stock to pursue more attractive opportunities within the health care sector.

  • Incyte's share price dropped after the company announced that its Itacitinib product failed in a Phase 3 trial for acute graft-versus-host disease. We sold out of the stock to pursue more attractive opportunities within the health care sector.

  • Prudential's share price fell after company reported quarterly results and reduced guidance. Our positive thesis on Prudential is predicated on our belief that the company can continue to generate solid returns for the forseeable future that are not properly being recognized by the market. We continue to hold this stock. (For details, see "Portfolio highlights.")

•  Certain other stock positions made a negative contribution to performance for the six-month period.

  • The Fund suffered from not owning Apple, the largest detractor during the six-month period. The Fund's underweight to Apple was negative for relative performance, as the stock continued to benefit from better than expected demand for the iPhone 11 and strong growth in the company's wearables business (AirPods and Apple Watch). We remain cautious on Apple given concerns about the company's ability to drive material long-term growth in its core iPhone business.

  • Mohawk Industries' share price fell after company announced quarterly results weakened by poor third quarter guidance across all markets. Management pointed to a more challenging environment, notably in the ceramic segment, as well as the US residential carpet business. We continue to hold this stock.

Portfolio highlights

•  Ameriprise Financial provides financial planning, asset management and insurance services. The company has achieved double-digit margins in its flagship advice and wealth management business, benefitting from its strategy to carefully manage the success and happiness of its most productive advisors. Ameriprise has shifted its earnings focus away from more capital-intensive insurance and annuity products, and is relying more heavily on the balance sheet-light asset accumulation and management businesses. This has resulted in strong return on equity (ROE) improvement that we believe should remain fairly stable. Management has expressed confidence that its long-term care (LTC) reserves are sufficient, and says it intends to increase reserve transparency and LTC block characteristics within its public filings.

•  UnitedHealth provides health care coverage, software and consultancy services. We believe the company is uniquely positioned to benefit from the increased consumerization of health care, as it holds industry-leading positions across five key growth markets. Investors have come to appreciate the value of Optum, the company's health services platform, particularly the Insight and Rx businesses. However, we believe the importance of Optum Care, which offers alternative site care delivery, remains underappreciated, both as a longer-term driver of revenues and profits, and as a way of bending the cost curve.

•  Elanco Animal Health engages in innovation, development and manufacture of products for animals. We believe that Elanco provides a great opportunity to participate in the animal health market, which we view favorably due to its consistently recession-resistant nature, global opportunity and innovation developments. There are significant opportunities in this stable (4% to 6% annual growth), visible ($33 billion) market, driven by global


62



UBS U.S. Sustainable Equity Fund

demands for safe protein, and an uptick in new companion animal drugs. We see favorable structural trends that we believe are likely to continue to drive demand, and consequently top-line growth, across the industry.

•  Prudential Financial is a provider of financial services and products. The company is growing earnings at a high compound annual growth rate. Prudential has a unique franchise in Asia where it benefits from the secular trend of an emerging middle class and an increased need for insurance. In the US, the company manages to sustain a high growth profile thanks to disciplined pricing and innovative products such as Elite access.

•  The Fund did not invest in derivatives during the reporting period.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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.


63



UBS U.S. Sustainable Equity Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

 

6 months

 

1 year

 

5 years

 

10 years

 

Before deducting maximum sales charge

 

Class A1

  

11.51

%

  

37.18

%

  

10.15

%

  

12.03

%

 

Class P2

  

11.67

   

37.51

   

10.42

   

12.31

  

After deducting maximum sales charge

 

Class A1

  

5.38

%

  

29.66

%

  

8.91

%

  

11.40

%

 

S&P 500 Index3

  

10.92

   

31.49

   

11.70

   

13.56

  

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses, supplemented from time to time, were as follows: Class A—2.14% and 0.95%; Class P—1.85% 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. The Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc., the Fund's investment advisor and administrator ("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 28, 2020, do not exceed 0.95% for Class A shares and 0.70% 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement or (ii) at the time of the recoupment. 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  Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.

2  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.

3  The S&P 500 Index is an unmanaged, weighted index comprising 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.

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.


64



UBS U.S. Sustainable Equity Fund

Portfolio statistics and industry diversification—December 31, 2019 (unaudited)1

Top ten holdings

  Percentage of
net assets
 

UnitedHealth Group, Inc.

  

5.4

%

 

Ameriprise Financial, Inc.

  

4.7

  

Visa, Inc., Class A

  

4.6

  

Prudential Financial, Inc.

  

4.5

  

U.S. Bancorp

  

4.3

  

Elanco Animal Health, Inc.

  

4.2

  

Comerica, Inc.

  

4.1

  

Simon Property Group, Inc.

  

4.1

  

Electronic Arts, Inc.

  

4.0

  

AGCO Corp.

  

4.0

  

Total

  

43.9

%

 

Issuer breakdown by country or territory of origin

  Percentage of
net assets
 

United States

  

97.9

%

 

Bahamas

  

3.7

  

Netherlands

  

2.0

  

Total

  

103.6

%

 
Common stocks Percentage of
net assets
 

Auto components

  

3.4

%

 

Banks

  

8.4

  

Building products

  

2.1

  

Capital markets

  

4.7

  

Commercial services & supplies

  

2.4

  

Distributors

  

2.9

  

Diversified consumer services

  

3.7

  

Electronic equipment, instruments & components

  

1.5

  

Entertainment

  

7.5

  

Equity real estate investment trusts

  

4.1

  

Health care providers & services

  

8.4

  

Household durables

  

3.2

  

Insurance

  

6.0

  

IT services

  

7.5

  

Life sciences tools & services

  

2.7

  

Machinery

  

4.0

  

Pharmaceuticals

  

4.2

  

Road & rail

  

1.9

  

Semiconductors & semiconductor equipment

  

7.1

  

Software

  

9.1

  

Specialty retail

  

2.6

  

Technology hardware, storage & peripherals

  

2.1

  

Total common stocks

  

99.5

%

 

Short-term investments

  

0.3

  

Investment of cash collateral from securities loaned

  

3.8

  

Total investments

  

103.6

%

 

Liabilities in excess of other assets

  

(3.6

)

 

Net assets

  

100.0

%

 

1  The Portfolio is actively managed and its composition will vary over time.


65



UBS U.S. Sustainable Equity Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Number of
shares
 

Value

 

Common stocks: 99.5%

 

Auto components: 3.4%

 

Aptiv PLC

  

12,060

  

$

1,145,338

  

Banks: 8.4%

 

Comerica, Inc.

  

19,176

   

1,375,878

  

U.S. Bancorp

  

24,237

   

1,437,012

  
     

2,812,890

  

Building products: 2.1%

 

Masco Corp.

  

14,389

   

690,528

  

Capital markets: 4.7%

 

Ameriprise Financial, Inc.

  

9,412

   

1,567,851

  

Commercial services & supplies: 2.4%

 

Stericycle, Inc.*,1

  

12,716

   

811,408

  

Distributors: 2.9%

 

LKQ Corp.*

  

26,810

   

957,117

  

Diversified consumer services: 3.7%

 

OneSpaWorld Holdings Ltd.*,1

  

72,790

   

1,225,784

  

Electronic equipment, instruments & components: 1.5%

 

Trimble, Inc.*

  

12,212

   

509,118

  

Entertainment: 7.5%

 

Electronic Arts, Inc.*

  

12,581

   

1,352,583

  

Take-Two Interactive Software, Inc.*

  

5,572

   

682,180

  

Walt Disney Co./The

  

3,274

   

473,519

  
     

2,508,282

  

Equity real estate investment trusts: 4.1%

 

Simon Property Group, Inc.

  

9,211

   

1,372,071

  

Health care providers & services: 8.4%

 

Laboratory Corp. of America Holdings*

  

6,006

   

1,016,035

  

UnitedHealth Group, Inc.

  

6,119

   

1,798,864

  
     

2,814,899

  

Household durables: 3.2%

 

Mohawk Industries, Inc.*

  

7,837

   

1,068,810

  

Insurance: 6.0%

 

Marsh & McLennan Cos., Inc.

  

4,489

   

500,119

  

Prudential Financial, Inc.

  

16,058

   

1,505,277

  
     

2,005,396

  

IT services: 7.5%

 

LiveRamp Holdings, Inc.*

  

20,481

   

984,522

  

Visa, Inc., Class A

  

8,109

   

1,523,681

  
     

2,508,203

  
  Number of
shares
 

Value

 

Common stocks—(Concluded)

 

Life sciences tools & services: 2.7%

 

Bio-Rad Laboratories, Inc., Class A*

  

2,432

  

$

899,913

  

Machinery: 4.0%

 

AGCO Corp.

  

17,358

   

1,340,905

  

Pharmaceuticals: 4.2%

 

Elanco Animal Health, Inc.*

  

48,077

   

1,415,868

  

Road & rail: 1.9%

 

Lyft, Inc., Class A*

  

14,742

   

634,201

  

Semiconductors & semiconductor equipment: 7.1%

 

KLA Corp.

  

3,990

   

710,898

  

NXP Semiconductors N.V.

  

5,214

   

663,534

  

ON Semiconductor Corp.*

  

41,179

   

1,003,944

  
     

2,378,376

  

Software: 9.1%

 

Adobe, Inc.*

  

3,704

   

1,221,616

  

PTC, Inc.*

  

9,051

   

677,830

  

salesforce.com, Inc.*

  

2,930

   

476,535

  

VMware, Inc., Class A*

  

4,461

   

677,135

  
     

3,053,116

  

Specialty retail: 2.6%

 

Best Buy Co., Inc.

  

9,884

   

867,815

  

Technology hardware, storage & peripherals: 2.1%

 

Western Digital Corp.

  

11,205

   

711,181

  
Total common stocks
(cost $30,385,554)
    

33,299,070

  

Short-term investments: 0.3%

 

Investment companies: 0.3%

 
State Street Institutional
U.S. Government Money
Market Fund
(cost $109,531)
  

109,531

   

109,531

  

Investment of cash collateral from securities loaned: 3.8%

 

Money market funds: 3.8%

 
State Street Navigator Securities
Lending Government Money
Market Portfolio
(cost $1,255,630)
  

1,255,630

   

1,255,630

  
Total investments: 103.6%
(cost $31,750,715)
    

34,664,231

  

Liabilities in excess of other assets: (3.6)%

    

(1,194,334

)

 

Net assets: 100.0%

   

$

33,469,897

  

For a listing of defined portfolio acronyms that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.


66



UBS U.S. Sustainable Equity Fund

Portfolio of investments

December 31, 2019 (unaudited)

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event a Fund holds investments (other than a money market fund) 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

 

$

33,299,070

  

$

  

$

  

$

33,299,070

  

Short-term investments

  

   

109,531

   

   

109,531

  

Investment of cash collateral from securities loaned

  

   

1,255,630

   

   

1,255,630

  

Total

 

$

33,299,070

  

$

1,365,161

  

$

  

$

34,664,231

  

At December 31, 2019, there were no transfers in or out of Level 3.

Portfolio footnotes

*  Non-income producing security.

1  Security, or portion thereof, was on loan at the period end.

See accompanying notes to financial statements.
67



UBS Municipal Bond Fund

Portfolio performance

For the six months ended December 31, 2019, Class A shares of UBS Municipal Bond Fund (the "Fund") returned 1.92% (Class A shares returned -0.34% after the deduction of the maximum sales charge), while Class P shares returned 1.95%. For comparison purposes, the Fund's benchmark, the Bloomberg Barclays Municipal Bond Index (the "Index"), returned 2.32%, and the Bloomberg Barclays Municipal Managed Money Intermediate (1-17) Index returned 2.08% over the same time period. (Class P shares have lower expenses than the other share class of the Fund. Returns for all share classes over various time periods are shown on page 69; 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 positive return during the reporting period, but underperformed its benchmark. This was primarily due to security selection and its positioning in a number of sectors.

Portfolio performance summary1

What worked:

•  Certain positions on the yield curve contributed to performance. In particular, an underweight to the three year portion of the curve, along with overweights to the five and 10 to 20-year portions of the curve, were beneficial for relative performance. (The yield curve plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates.)

•  The Fund's ratings biases, overall, were modestly positive for performance. In particular, a large overweight to municipal securities rated A was additive for returns.

•  An overweight to the special tax sector, along with an overweight to local general obligation bonds, contributed to returns.

What didn't work:

•  Having an underweight allocation to the long end of the municipal yield curve (22+ years) detracted from relative performance as they outperformed the benchmark. In addition, an overweight to the seven year portion of the curve was negative for returns.

•  An underweight to municipal securities rated BBB detracted from relative results.

•  Positioning in a number of sectors detracted from performance. In particular, underweights to the industrial development, pollution control revenue, transportation and hospital sectors were drags on relative results.

•  The Fund did not invest in derivatives during the reporting period.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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 Web site at www.ubs.com.

1  For a detailed commentary on the market environment in general during the reporting period, see page 3.


68



UBS Municipal Bond Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

 

6 months

 

1 year

 

5 years

 

Inception1

 

Before deducting maximum sales charge

 

Class A2

  

1.92

%

  

7.42

%

  

2.97

%

  

3.06

%

 

Class P3

  

1.95

%

  

7.70

%

  

3.21

%

  

3.30

%

 

After deducting maximum sales charge

 

Class A2

  

(0.34

)%

  

5.04

%

  

2.50

%

  

2.60

%

 

Bloomberg Barclays Municipal Bond Index4

  

2.32

%

  

7.54

%

  

3.53

%

  

3.62

%

 
Bloomberg Barclays Municipal Managed Money
Intermediate (1-17) Index5
  

2.08

%

  

7.10

%

  

3.23

%

  

3.30

%

 

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class A—1.07% and 0.65%; Class P—0.82% 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 28, 2020, do not exceed 0.65% for Class A 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement, or (ii) at the time of the recoupment. 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 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  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 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.

5  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.

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.


69



UBS Municipal Bond Fund

Portfolio statistics—December 31, 2019 (unaudited)1

Summary of municipal securities by state

  Percentage of
net assets
 

Municipal bonds

 

California

  

1.1

%

 

Connecticut

  

9.1

  

Florida

  

10.1

  

Georgia

  

1.8

  

Illinois

  

11.8

  

Maryland

  

2.5

  

Massachusetts

  

2.9

  

Michigan

  

3.2

  

Minnesota

  

1.2

  

Mississippi

  

1.0

  

Missouri

  

0.2

  

Nevada

  

2.1

  

New Jersey

  

3.6

  

New York

  

25.4

  

Ohio

  

1.4

  

Pennsylvania

  

7.7

  

Rhode Island

  

1.0

  

South Carolina

  

2.4

  

Texas

  

9.0

  

Washington

  

1.2

  

Wisconsin

  

0.3

  

Total municipal bonds

  

99.0

%

 

Short-term investments

  

0.1

  

Total investments

  

99.1

%

 

Other assets in excess of liabilities

  

0.9

  

Net assets

  

100.0

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


70



UBS Municipal Bond Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount
 

Value

 

Municipal bonds: 99.0%

 

California: 1.1%

 
California State Kindergarten, GO Bonds,
Series A-1,
1.370%, due 05/01/341
 

$

1,000,000

  

$

1,000,000

  
Series A5,
1.360%, due 05/01/341
  

200,000

   

200,000

  
     

1,200,000

  

Connecticut: 9.1%

 
State of Connecticut Special Tax Revenue,
Transportation Infrastructure Revenue Bonds,
Series A,
5.000%, due 01/01/30
  

1,665,000

   

2,058,323

  
State of Connecticut, GO Bonds,
Series A,
5.000%, due 04/15/25
  

1,250,000

   

1,478,275

  
Series B,
5.000%, due 04/15/25
  

2,000,000

   

2,365,240

  
Series C,
5.000%, due 06/15/23
  

1,000,000

   

1,126,070

  
Series F,
5.000%, due 09/15/25
  

2,140,000

   

2,557,214

  
     

9,585,122

  

Florida: 10.1%

 
Central Florida Expressway Authority, Senior Lien
Revenue Bonds,
Series B,
5.000%, due 07/01/34
  

1,000,000

   

1,195,390

  
Miami-Dade County Revenue Bonds
5.000%, due 10/01/26
  

1,000,000

   

1,223,250

  
School Board of St. Lucie County, Sales Tax
Revenue Bonds, AGM
5.000%, due 10/01/26
  

1,020,000

   

1,213,372

  
School Board of Volusia County, Master Lease
Program, COP,
Series B,
5.000%, due 08/01/31
  

1,000,000

   

1,143,820

  
South Florida Water Management District, COP
5.000%, due 10/01/34
  

1,000,000

   

1,178,640

  
The School Board of Broward County, COP,
Series B,
5.000%, due 07/01/30
  

2,000,000

   

2,352,900

  
The School Board of Miami-Dade County, COP,
Series A,
5.000%, due 05/01/31
  

1,000,000

   

1,156,920

  
The School Board of Palm Beach County, COP,
Series B,
5.000%, due 08/01/31
  

1,000,000

   

1,174,930

  
     

10,639,222

  

Georgia: 1.8%

 
Brookhaven Development Authority, Childrens
Healthcare of Atlanta Revenue Bonds,
Series A,
5.000%, due 07/01/29
  

1,500,000

   

1,943,535

  
  Face
amount
 

Value

 

Municipal bonds—(Continued)

 

Illinois: 11.8%

 
City of Chicago O'Hare International Airport
Revenue Bonds,
Series B,
5.000%, due 01/01/30
 

$

1,000,000

  

$

1,163,500

  
Series B,
5.000%, due 01/01/31
  

1,050,000

   

1,218,157

  
County of Cook, GO Bonds,
Series A,
5.000%, due 11/15/20
  

1,830,000

   

1,885,101

  
Series A,
5.000%, due 11/15/26
  

1,500,000

   

1,801,845

  
Illinois Finance Authority Revenue Bonds
5.000%, due 07/01/37
  

1,000,000

   

1,250,190

  
Illinois State Toll Highway Authority Revenue Bonds,
Series B,
5.000%, due 01/01/27
  

1,000,000

   

1,210,060

  
Railsplitter Tobacco Settlement Authority
Revenue Bonds
5.000%, due 06/01/25
  

1,235,000

   

1,457,510

  
State of Illinois, Sales Tax Revenue Bonds
5.000%, due 06/15/20
  

1,190,000

   

1,207,136

  

5.000%, due 06/15/22

  

1,105,000

   

1,178,759

  
     

12,372,258

  

Maryland: 2.5%

 
County of Prince George's MD, GO Bonds,
Series A,
5.000%, due 07/15/30
  

1,000,000

   

1,303,370

  
State of Maryland, GO Bonds,
Series A,
5.000%, due 08/01/30
  

1,000,000

   

1,304,340

  
     

2,607,710

  

Massachusetts: 2.9%

 
The Commonwealth of Massachusetts, GO Bonds,
Series A,
5.000%, due 01/01/40
  

1,500,000

   

1,821,135

  
Series B,
5.000%, due 07/01/36
  

1,000,000

   

1,249,060

  
     

3,070,195

  

Michigan: 3.2%

 
Michigan Finance Authority, Trinity Health Credit
Group, Hospital Revenue Bonds,
Series A,
5.000%, due 12/01/35
  

1,000,000

   

1,213,330

  
Michigan State Building Authority Revenue Bonds,
Series I,
5.000%, due 10/15/29
  

1,800,000

   

2,185,776

  
     

3,399,106

  


71



UBS Municipal Bond Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount
 

Value

 

Municipal bonds—(Continued)

 

Minnesota: 1.2%

 
State of Minnesota, GO Bonds,
Series A,
5.000%, due 08/01/36
 

$

1,000,000

  

$

1,278,480

  

Mississippi: 1.0%

 
Mississippi Business Finance Corp., (Chevron USA, Inc.
Project) Revenue Bonds,
Series A,
1.600%, due 11/01/351
  

100,000

   

100,000

  
Series B,
1.600%, due 12/01/301
  

200,000

   

200,000

  
Series G,
1.600%, due 12/01/301
  

400,000

   

400,000

  
Series I,
1.600%, due 11/01/351
  

200,000

   

200,000

  
Series L,
1.600%, due 11/01/351
  

100,000

   

100,000

  
     

1,000,000

  

Missouri: 0.2%

 
Missouri State Health & Educational Facilities
Authority Educational Facilities Revenue
(Washington University) Revenue Bonds,
Series B,
1.670%, due 03/01/401
  

200,000

   

200,000

  

Nevada: 2.1%

 
County of Clark Department of Aviation, Las
Vegas-McCarran International Airport Revenue Bonds,
Series C,
5.000%, due 07/01/27
  

1,815,000

   

2,258,332

  

New Jersey: 3.6%

 
New Jersey Transportation Trust Fund Authority
Revenue Bonds,
Series AA,
5.000%, due 06/15/27
  

1,500,000

   

1,655,925

  
New Jersey Turnpike Authority Revenue Bonds,
Series A,
5.000%, due 01/01/27
  

1,000,000

   

1,162,360

  
Series E,
5.000%, due 01/01/34
  

860,000

   

997,067

  
     

3,815,352

  

New York: 25.4%

 
City of New York, GO Bonds,
Series B-1,
5.000%, due 10/01/42
  

1,200,000

   

1,487,292

  
Series F-1,
5.000%, due 04/01/34
  

1,100,000

   

1,359,996

  
Series F-1,
5.000%, due 04/01/40
  

1,000,000

   

1,214,400

  
Metropolitan Transportation Authority Revenue Bonds,
Series B-2A,
5.000%, due 05/15/21
  

1,060,000

   

1,112,343

  
  Face
amount
 

Value

 

Municipal bonds—(Continued)

 

New York—(Concluded)

 
New York City Municipal Water Finance Authority,
Water & Sewer System Revenue Bonds,
Series EE,
5.000%, due 06/15/40
 

$

1,000,000

  

$

1,218,220

  
New York City Municipal Water Finance Authority,
Water & Sewer System, Second General Resolution
Fiscal 2017 Revenue Bonds,
Series EE,
5.000%, due 06/15/33
  

1,000,000

   

1,224,110

  
New York City Municipal Water Finance Authority,
Water & Sewer System, Second General Resolution
Revenue Bonds,
Series A,
1.650%, due 06/15/321
  

900,000

   

900,000

  
Series DD-2,
1.670%, due 06/15/431
  

700,000

   

700,000

  
Series EE-2,
5.000%, due 06/15/40
  

1,200,000

   

1,496,244

  
Series FF,
5.000%, due 06/15/39
  

2,000,000

   

2,455,480

  
New York City Transitional Finance Authority Future
Tax Secured Revenue Bonds,
Series A-2,
5.000%, due 08/01/38
  

1,000,000

   

1,210,720

  
Series C-2,
5.000%, due 05/01/35
  

3,000,000

   

3,697,650

  
New York State Dormitory Authority, State Sales
Tax Revenue Bonds,
Series A,
5.000%, due 03/15/43
  

1,500,000

   

1,809,450

  
New York State Urban Development Corp., Sales
Tax Revenue Bonds,
Series A,
5.000%, due 03/15/41
  

4,060,000

   

5,035,334

  
New York State Urban Development Corp., State
Personal Income Tax Revenue Bonds,
Series A,
5.000%, due 03/15/36
  

1,500,000

   

1,861,125

  
     

26,782,364

  

Ohio: 1.4%

 
State of Ohio, GO Bonds,
Series A,
5.000%, due 06/15/30
  

1,110,000

   

1,469,773

  

Pennsylvania: 7.7%

 
City of Philadelphia, GO Bonds
5.000%, due 08/01/20
  

1,590,000

   

1,625,234

  
Commonwealth Financing Authority, Tobacco
Master Settlement Payment Revenue Bonds
5.000%, due 06/01/24
  

1,625,000

   

1,865,386

  
Pennsylvania Turnpike Commission Revenue Bonds
5.000%, due 12/01/30
  

1,750,000

   

2,136,593

  


72



UBS Municipal Bond Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount
 

Value

 

Municipal bonds—(Continued)

 

Pennsylvania—(Concluded)

 
Series 2017-3,
5.000%, due 12/01/28
 

$

1,000,000

  

$

1,233,760

  
Series A-2,
5.000%, due 12/01/28
  

1,000,000

   

1,248,790

  
     

8,109,763

  

Rhode Island: 1.0%

 
Tobacco Settlement Financing Corp., Asset-Backed
Revenue Bonds,
Series A,
5.000%, due 06/01/21
  

1,000,000

   

1,047,240

  

South Carolina: 2.4%

 
South Carolina Public Service Authority (Escrowed
to Maturity) Revenue Bonds,
Series B,
5.000%, due 12/01/202
  

555,000

   

574,303

  
South Carolina Public Service Authority Revenue Bonds,
Series A,
5.000%, due 12/01/26
  

1,010,000

   

1,187,437

  
South Carolina Public Service Authority-Unrefunded
Balance Revenue Bonds,
Series B,
5.000%, due 12/01/20
  

690,000

   

712,977

  
     

2,474,717

  

Texas: 9.0%

 
Harris County Cultural Education Facilities Finance
Corp., (Methodist Hospital) Revenue Bonds,
Series C-1,
1.680%, due 12/01/241
  

370,000

   

370,000

  
Lower Colorado River Authority Refunding LCRA
Transmission Services Revenue Bonds
5.000%, due 05/15/31
  

1,000,000

   

1,260,810

  
Lower Neches Valley Texas Authority Industrial
Development Corp., (ExxonMobil Project)
Revenue Bonds
1.590%, due 11/01/381
  

100,000

   

100,000

  
North Texas Tollway Authority Revenue Bonds,
Series A,
5.000%, due 01/01/27
  

3,030,000

   

3,458,199

  
  Face
amount
 

Value

 

Municipal bonds—(Concluded)

 

Texas—(Concluded)

 
Series B,
5.000%, due 01/01/29
 

$

1,140,000

  

$

1,451,414

  
State of Texas, Revenue Anticipation Notes
4.000%, due 08/27/20
  

1,500,000

   

1,528,005

  
University of Texas Revenue Bonds,
Series A,
5.000%, due 08/15/38
  

1,000,000

   

1,260,080

  
     

9,428,508

  

Washington: 1.2%

 
Washington State, GO Bonds,
Series C,
5.000%, due 02/01/37
  

1,000,000

   

1,249,880

  

Wisconsin: 0.3%

 
Uinta County Pollution Control Revenue
Refunding-Chevron USA, Inc., Project
Revenue Bonds
1.600%, due 08/15/201
  

300,000

   

300,000

  
Total municipal bonds
(cost $100,296,094)
    

104,231,557

  
  Number of
shares
   

Short-term investments: 0.1%

 

Investment companies: 0.1%

 
State Street Institutional U.S. Government Money
Market Fund
(cost $96,683)
  

96,683

   

96,683

  
Total investments: 99.1%
(cost $100,392,777)
    

104,328,240

  

Other assets in excess of liabilities: 0.9%

    

973,245

  

Net assets: 100.0%

   

$

105,301,485

  

For a listing of defined portfolio acronyms that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 94.


73



UBS Municipal Bond Fund

Portfolio of investments

December 31, 2019 (unaudited)

Fair valuation summary

The following is a summary of the fair valuations according to the inputs used as of December 31, 2019 in valuing the Fund's investments. In the event a Fund holds investments (other than a money market fund) 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

 

Municipal bonds

 

$

  

$

104,231,557

  

$

  

$

104,231,557

  

Short-term investments

  

   

96,683

   

   

96,683

  

Total

 

$

  

$

104,328,240

  

$

  

$

104,328,240

  

At December 31, 2019, there were no transfers in or out of Level 3.

Portfolio footnotes

1  Variable or floating rate security. The interest rate shown is the rate in effect as of 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.

See accompanying notes to financial statements.
74



UBS Sustainable Development Bank Bond Fund

Portfolio performance

For the six months ended December 31, 2019 (the "reporting period"), Class P shares of UBS Sustainable Development Bank Bond Fund (the "Fund") returned 1.23%. For comparison purposes, the Bloomberg Barclays U.S. Treasury Index (the "Index") returned 1.59%. The Fund's secondary benchmark, the Solactive Global Multilateral Development Bank Bond USD 40% 1-5 Year 60% 5-10 Year Total Return Index, retuned 1.44% during the reporting period. 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.

Fund overview

The Fund seeks current income. Under normal circumstances, the Fund invests at least 80% of its net assets in bonds and/or instruments that provide exposure to bonds issued by development banks. Development banks are financial organizations formed by government entities to promote economic and social development.

The development bank bond market typically follows high-quality US government bonds. As each of the global Multilateral Development Banks ("MDB") are supranational entities backed by multiple member governments, MDBs historically have a similar credit profile to major sovereign issuers, such as the US government. Consequently, MDB bonds have generally delivered comparable returns to US Treasuries.

Market review

Global economic activity stabilized in the second half of 2019. Some of the major global themes that drove the slowdown, such as the trade war between the US and China, as well as the risk of a "No-Deal Brexit," were tackled, and at least temporary solutions were found. At the same time, central banks kept their cautions stance, with some of the major ones even cutting rates and restarting quantitative easing ("QE"). This helped to brighten both economic- and market-sentiment.

The US economy mirrored the global trend. Economic activity stabilized on a still healthy level. After cutting its benchmark rate three times in 2019, the Federal Reserve Board ("Fed") kept its policy unchanged in December, with a positive view on the labor market and household spending.

Meanwhile, volatility in the US rates market picked up during the reporting period. The 10-year US Treasury yield traded in a range of more than 50 basis points (i.e., 0.50%). After falling to a new record low, Treasury yields stabilized and closed the year at 1.92% versus 2.00% at the start of the reporting period.

Led by the direction of US Treasury yields, yields of sustainable development banks (SDB) closed the reporting period also slightly lower. The robust demand for high quality bonds, coupled with a lack of supply, continued and helped spreads of SDB bonds tighten somewhat.


75



UBS Sustainable Development Bank Bond Fund

Portfolio performance summary

The Fund seeks to minimize tracking error relative to its secondary benchmark (before fees and expenses), which is constructed from a blend of two market indexes designed to measure the performance of the US dollar-denominated multilateral development bank bond market. The Fund is passively managed but does not seek to directly replicate the secondary benchmark. During the reporting period, the Fund's underperformance relative to its secondary benchmark was largely driven by transaction costs, along with fees and expenses. Additionally, the performance deviation between the Fund and the primary index is explained by the longer duration of the Index. No derivatives were used in managing the Fund during the reporting period.

This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2019. The views and opinions in the letter were current as of February 14, 2020. 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.


76



UBS Sustainable Development Bank Bond Fund

Average annual total returns for periods ended 12/31/19 (unaudited)

  

6 months

 

1 year

 

Inception1

 

Class P2

  

1.23

%

  

6.80

%

  

7.59

%

 

Bloomberg Barclays U.S. Treasury Index3

  

1.59

%

  

6.86

%

  

9.92

%

 
Solactive UBS Global Multilateral Development Bank Bond
USD 40% 1-5 Year 60% 5-10 Year Total Return Index.4
  

1.44

%

  

6.74

%

  

9.59

%

 

The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2019 prospectuses were as follows: Class P—2.19% and 0.25%. 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 and administrator ("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 28, 2020, do not exceed 0.35% for Class A shares and 0.25% 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 fiscal years following the date on 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 the lesser of any applicable expense limit that is in place for the Fund (i) at the time of the waiver or reimbursement or (ii) at the time of the recoupment. 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 Class P of UBS Sustainable Development Bank Bond Fund is October 24, 2018.

2  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.

3  The Bloomberg Barclays US Treasury Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury. Investors should note that indices do not reflect the deduction of fees and expenses.

4  The Solactive UBS Global Multilateral Development Bank Bond USD 40% 1-5 Year 60% 5-10 Year Total Return Index is a composite index, constructed from a blend of two market indexes designed to measure the performance of the US dollar denominated multilateral development bank bond market. Investors should note that indices do not reflect the deduction of fees and expenses.

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.


77



UBS Sustainable Development Bank Bond Fund

Portfolio statistics—December 31, 2019 (unaudited)1

Top ten holdings

  Percentage of
net assets
 
Inter-American Development Bank,
2.250%, due 06/18/29
  

7.3

%

 
International Bank for Reconstruction & Development,
2.500%, due 11/22/27
  

5.4

  
Inter-American Development Bank,
3.125%, due 09/18/28
  

5.1

  
Asian Infrastructure Investment Bank/The,
2.250%, due 05/16/24
  

4.4

  
International Development Association,
2.750%, due 04/24/23
  

4.1

  
International Bank for Reconstruction & Development,
2.500%, due 07/29/25
  

3.9

  
International Bank for Reconstruction & Development,
1.875%, due 10/27/26
  

3.8

  
Inter-American Development Bank,
2.000%, due 07/23/26
  

3.3

  
International Bank for Reconstruction & Development,
1.750%, due 10/23/29
  

3.3

  
Inter-American Development Bank,
2.375%, due 07/07/27
  

3.2

  

Total

  

43.8

%

 

Sector allocation

  Percentage of
net assets
 

Non-U.S. Government agency obligations

  

97.8

%

 

Short-term investments

  

1.7

  

Investment of cash collateral from securities loaned

  

2.5

  

Total investments

  

102.0

%

 

Liabilities in excess of other assets

  

(2.0

)

 

Total

  

100.0

%

 

1  The Fund's portfolio is actively managed and its composition will vary over time.


78



UBS Sustainable Development Bank Bond Fund

Portfolio of investments

December 31, 2019 (unaudited)

  Face
amount
 

Value

 

Non-U.S. government agency obligations: 97.8%

 

Supranationals: 97.8%

 
African Development Bank,
Series GDIF,
1.250%, due 07/26/21
 

$

450,000

  

$

446,914

  

2.125%, due 11/16/22

  

200,000

   

202,291

  

2.625%, due 03/22/21

  

200,000

   

202,229

  

3.000%, due 09/20/231

  

700,000

   

732,287

  
Agence Francaise de Developpement, EMTN
2.750%, due 03/22/212
  

1,000,000

   

1,011,170

  

2.750%, due 01/22/222

  

400,000

   

407,576

  
Asian Development Bank
2.625%, due 01/30/24
  

100,000

   

103,424

  
Asian Development Bank, GMTN
1.750%, due 09/19/29
  

400,000

   

390,688

  

2.000%, due 01/22/25

  

75,000

   

75,599

  

2.500%, due 11/02/27

  

100,000

   

103,911

  

2.625%, due 01/12/27

  

100,000

   

104,615

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