UBS
Ultra Short Income Fund
Prospectus | August
28, 2023
Includes:
This
prospectus offers Class I shares of UBS Ultra Short Income Fund.
Class I shares are available only to certain types of investors.
As
with all mutual funds, the Securities and Exchange Commission has not approved
or disapproved the fund’s shares or determined whether this prospectus is
complete or accurate. To state otherwise is a crime.
This
fund is not a money market fund and should not be considered to be a money
market fund or the equivalent of a money market fund. UBS Asset Management (US)
Inc. (“UBS AM (US)”) offers money market funds that are advised by UBS Asset
Management (Americas) Inc. Please contact UBS AM (US) if you are interested in
investing in money market funds.
Not
FDIC Insured. May lose value. No bank guarantee.
Contents
The fund is not a complete or balanced investment
program.
2
UBS
Ultra Short Income Fund
Summary
Investment
objective
To
provide current income while seeking to maintain low volatility of
principal.
Fees
and expenses
These
tables describe the fees and expenses that you may pay if you buy, hold and sell
shares of the fund. You may pay other fees, such as brokerage commissions and
other fees to financial intermediaries, which are not reflected in the table or
example below.
Shareholder fees (fees paid directly from your investment)
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| Class I |
Maximum
front‑end sales charge (load) imposed on purchases (as a % of the offering
price) |
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| None |
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Maximum
deferred sales charge (load) (as a % of the lesser of the offering or the
redemption price) |
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| None |
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Exchange
fee |
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| None |
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Annual fund operating expenses (expenses that you pay each year as a percentage of
the value of your investment)
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| Class I |
Management
fees |
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| 0.20 |
% |
Distribution
and/or service (12b‑1) fees |
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| None |
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Other
expenses (includes administration fee of 0.10%) |
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| 0.14 |
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Total
annual fund operating expenses |
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| 0.34 |
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Management
fee waiver/expense reimbursements1 |
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| 0.11 |
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Total
annual fund operating expenses after fee waiver and/or expense
reimbursements1 |
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| 0.23 |
|
1 |
The
fund and UBS Asset Management (Americas) Inc. (“UBS AM”) have entered into
a written fee waiver/expense reimbursement agreement pursuant to which UBS
AM is contractually obligated to waive its management fee and/or reimburse
expenses so that the fund’s ordinary total operating expenses through
August 31,
2024 (excluding dividend expense, borrowing costs, and
interest expense relating to short sales, and expenses attributable to
investment in other investment companies, interest, taxes, brokerage
commissions, expenses related to shareholders’ meetings and extraordinary
expenses) would not exceed 0.23% for Class I. The fund has agreed to
repay UBS AM for any waived fees/reimbursed expenses to the extent that it
can do so over the following three fiscal years without causing the class
expenses in any of those three years to exceed this expense cap and that
UBS AM has not waived the right to do so. The fee waiver/expense
reimbursement agreement may be terminated by the fund’s board at any time
and also will terminate automatically upon the expiration or termination
of the fund’s advisory contract with UBS AM. Upon termination of the
agreement, however, UBS AM’s three year recoupment rights will
survive. |
3
Example
This
example is intended to help you compare the cost of investing in the fund with
the cost of investing in other mutual funds. The example assumes that you invest
$10,000 in the fund for the time periods indicated and then redeem all of your
shares at the end of those periods unless otherwise stated. The example also
assumes that your investment has a 5% return each year and that the fund’s
operating expenses remain the same.*
Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
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| 1 year |
| 3 years |
| 5 years |
| 10 years |
Class I |
| $ |
24 |
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| $ |
98 |
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| $ |
180 |
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| $ |
420 |
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* |
Except
that the expenses reflect the effects of the fund’s fee waiver/expense
reimbursement agreement for the first year
only. |
Portfolio
turnover
The
fund pays transaction costs, such as commissions or dealer spreads, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when fund shares are held in a taxable account. These costs, which are not
reflected in annual fund operating expenses or in the example, affect the fund’s
performance. During the fiscal year ended April 30, 2023, the fund’s portfolio
turnover rate was 72% of the average value
of its portfolio.
Principal
strategies
Principal
investments
Under
normal circumstances, the fund invests in fixed income securities and money
market instruments. The fund’s investments in securities may include, but are
not limited to, government obligations including agencies, debt issued by
government-sponsored and supranational entities, as well as municipal
securities, corporate debt, mortgage-backed, asset-backed, and inflation-linked
securities. Investments in money market instruments may include, but are not
limited to, commercial paper (including asset-backed commercial paper),
certificates of deposit, notes, time deposits, repurchase agreements and other
money market securities. The fund may invest in money market funds, including
those advised by UBS Asset Management (Americas) Inc. (“UBS AM”), the fund’s
investment advisor.
The
fund may invest in securities of any maturity, but will generally limit its
weighted average portfolio duration to one year or
less.
The
fund normally invests in investment grade securities. Investment grade
securities possess a minimum rating of Baa3 by Moody’s Investors Service, Inc.
(“Moody’s”) or BBB‑ by Standard & Poor’s Financial Services LLC
(“S&P”) or Fitch Ratings, Inc. (“Fitch”) for long-term ratings and/or
equivalent short-term ratings, comparably rated by another nationally recognized
statistical rating organization, or, if unrated, are determined by UBS AM to be
of comparable quality. The fund may at times hold securities rated
below-investment-grade if the rating for a security held by the fund is
subsequently reduced to below-investment-grade (commonly referred to as “junk
bonds,” which are considered speculative in nature).
4
The
fund’s investments may have all types of interest rate payment and reset terms,
including floating or variable rate, zero coupon and other features. In
addition, the fixed income securities purchased by the fund may be of US and
non‑US issuers. The fund’s investments are typically denominated in US dollars
or hedged to US dollars.
The
fund will, under normal circumstances, invest more than 25% of its total assets
in the financial services group of
industries.
The
fund may engage in derivatives transactions; however, it is not a principal
strategy of the fund. Derivatives instruments such as futures, forwards,
options, and/or swaps may be used for risk management purposes or as part of the
fund’s investment strategies.
The
fund is not a money market fund and does not seek to maintain a stable net asset
value (“NAV”). The fund should not be considered to be a money market fund or
the equivalent of a money market fund.
Management
process
UBS
AM acts as the investment advisor to the fund, and makes the fund’s investment
decisions. UBS AM selects investments for the fund based on a rigorous valuation
and research framework, combining top‑down macroeconomic and quantitative
research with issuer level credit analysis. This dynamic approach allows UBS AM
to exploit diversified sources of return, which UBS AM believes is key to
delivering consistent performance over
time.
The
top‑down process involves formulation of broad investment views and views
regarding macroeconomic trends. UBS AM’s views on the direction of interest
rates, yield curve shape, sectors, and volatility help formulate final portfolio
positioning.
After
UBS AM establishes the top‑down strategy, the portfolio management team, working
closely with UBS AM’s research analysts, builds portfolios that combines
top‑down allocation targets with bottom‑up security specific strategies.
Research is a fundamental component of UBS AM’s globally integrated investment
platform and consists of top‑down macroeconomic analysis as well as bottom‑up
sector and issuer level research. UBS AM uses rigorous credit/structure analysis
and relative pricing to choose securities that it believes have superior
risk/return characteristics. The ultimate goal of any purchase decision is to be
compensated for a given level of risk. Prudent diversification seeks to ensure
an appropriate risk/return relationship. Security selection represents the final
level of decision-making in our investment process. UBS AM selects individual
securities that it believes will give the portfolio the desired exposures with
optimal relative value. UBS AM integrates risk management throughout the
investment process.
UBS
AM considers safety of principal and liquidity in selecting securities for the
fund and thus may not buy securities that pay the highest yield. The fund may
sell investments that UBS AM believes are no longer favorable with regard to
these factors or for other reasons.
5
The
fund is classified by UBS AM as an “ESG-integrated” fund. The fund’s investment
process integrates material sustainability and/or environmental, social and
governance (“ESG”) considerations into the research process for all portfolio
investments and portfolio holdings, except repurchase agreements with certain
counterparties and except asset-backed and mortgage-backed securities. ESG
integration is driven by taking into account material sustainability and/or ESG
risks which could impact investment returns, rather than being driven by
specific ethical principles or norms. The analysis of material sustainability
and/or ESG considerations can include many different aspects, including, for
example, the carbon footprint, employee health and well-being, supply chain
management, fair customer treatment and governance processes of a company. The
fund’s portfolio managers may still invest in securities without respect to
sustainability and/or ESG considerations or in securities which present
sustainability and/or ESG risks, including where the portfolio managers believe
the potential compensation outweighs the risks
identified.
Principal
risks
All
investments carry a certain amount of risk, and the fund cannot guarantee that
it will achieve its investment objective. The prices for the fund’s shares will
fluctuate, and you may lose money by investing in the fund.
An investment in the fund is not a bank
deposit and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The principal risks
presented by an investment in the fund are:
Credit risk: The risk that the fund could lose
money if the issuer or guarantor of a fixed income security or financial
institutions that have entered into repurchase agreements with the fund are
unable or unwilling to meet their financial obligations or complete
transactions. This risk is likely greater for lower quality investments than for
investments that are higher quality.
Financial services sector risk: Investments of
the fund in the financial services group of industries or sectors may be
particularly affected by economic cycles, business developments, interest rate
changes and regulatory changes.
Concentration risk: The fund will invest a
significant portion of its assets in securities issued by companies in the
financial services group of industries or sectors, including US banking, non‑US
banking, brokerdealers, insurance companies, finance companies (e.g., automobile finance) and related
asset-backed securities. Accordingly, the fund will be more susceptible to
developments that affect those industries than other funds that do not
concentrate their investments.
Interest rate risk: An increase in prevailing
interest rates typically causes the value of fixed income securities to fall.
Changes in interest rates will likely affect the value of longer-duration fixed
income securities more than shorter-duration securities and higher quality
securities more than lower quality securities. When interest rates are falling,
some fixed income securities provide that the issuer may repay them earlier than
the maturity date, and if this occurs the fund may have to reinvest these
repayments at lower interest rates. The fund may face a heightened level of
interest rate risk due to certain changes in general economic conditions,
inflation and monetary policy, such as certain types of interest rate changes by
the Federal Reserve.
6
Liquidity risk: Certain of the fund’s
investments may present liquidity risk. Although the fund invests in a
diversified portfolio of high quality instruments, the fund’s investments may
become less liquid as a result of market developments or adverse investor
perception. If this happens, the fund’s ability to redeem its shares for cash
may be affected.
Management risk: The risk that the investment
strategies, techniques and risk analyses employed by the advisor may not produce
the desired results.
Market risk: The risk that the market value of
the fund’s investments may fluctuate, sometimes rapidly or unpredictably, as the
stock and bond markets fluctuate. Market risk may affect a single issuer,
industry, or sector of the economy, or it may affect the market as a whole.
Moreover, changing market, economic, political and social conditions in one
country or geographic region could adversely impact market, economic, political
and social conditions in other countries or
regions.
Mortgage- and asset-backed securities risk: The
fund may invest in mortgage- and asset-backed securities that are subject to
prepayment or call risk, which is the risk that the borrower’s payments may be
received earlier or later than expected due to changes in prepayment rates on
underlying loans. Faster prepayments often happen when interest rates are
falling. As a result, the fund may reinvest these early payments at lower
interest rates, thereby reducing the fund’s income. Conversely, when interest
rates rise, prepayments may happen more slowly, causing the security to lengthen
in duration. Longer duration securities tend to be more volatile. Securities may
be prepaid at a price less than the original purchase value. An unexpectedly
high rate of defaults on the mortgages held by a mortgage pool may adversely
affect the value of mortgage-backed securities and could result in losses to the
fund.
Floating or variable rate securities risk:
Floating or variable rate securities bear interest at rates that are not
fixed but that vary with changes in specified market rates or indices. The
market value of floating rate and variable rate securities generally fluctuates
less than the market value of fixed rate obligations. Accordingly, as interest
rates decrease or increase, the potential for capital appreciation or capital
depreciation is less than for fixed rate
obligations.
NAV risk: The fund is not a money market fund,
does not attempt to maintain a stable NAV, and is not subject to the rules that
govern the quality, maturity, liquidity and other features of securities that
money market funds may purchase. Under normal conditions, the fund’s investments
are likely to be more susceptible than a money market fund’s investments to
interest rate risk, valuation risk, credit risk, and other risks relevant to the
fund’s investments. The fund’s NAV per share will fluctuate. Because the fund is
not a money market fund, it does not qualify for the special money market fund
tax treatment or tax accounting methods under US Treasury
regulations.
Prepayment risk: Payments on bonds and other
fixed income securities that are backed by mortgage loans or similar assets may
be prepaid more rapidly than expected, especially when interest rates are
falling, and the fund may have to reinvest those prepayments at lower interest
rates. When interest rates are rising, slower prepayments may extend the
duration of the securities and may reduce their value.
7
Valuation risk: During periods of reduced
market liquidity or in the absence of readily available market quotations for
investments, the ability of the fund to value the fund’s investments becomes
more difficult and the judgment of the fund’s investment advisor may play a
greater role in the valuation of the investments due to reduced availability of
reliable objective pricing data.
Variable rate demand obligations risk: Variable
rate demand obligations are floating rate securities that combine an interest in
a long-term bond, such as municipal debt, with a right to demand payment before
maturity from a bank or other financial institution. If the bank or financial
institution is unable to pay, the fund may lose money. The absence of an active
secondary market for certain variable and floating rate obligations could make
it difficult to dispose of these instruments, which could result in a
loss.
Municipal securities risk: Municipal securities
are subject to interest rate and credit risks. The ability of a municipal issuer
to make payments and the value of municipal securities can be affected by
uncertainties in the municipal securities market. Such uncertainties could cause
increased volatility in the municipal securities market and could negatively
impact the fund’s NAV and/or the distributions paid by the fund. Municipalities
continue to experience difficulties in the current economic and political
environment.
Zero coupon securities risk: Zero coupon
securities are securities on which no periodic interest payments are made but
instead are sold at a deep discount from their face value. Zero coupon
securities are generally more sensitive to changes in interest rates than debt
obligations of comparable maturities that make current interest payments. This
means that when interest rates fall, the value of zero coupon securities
generally rises more rapidly than securities paying interest on a current basis.
However, when interest rates rise, their value generally falls more
dramatically.
US government securities risk: There are
different types of US government securities with different levels of credit
risk, including the risk of default, depending on the nature of the particular
government support for that security. For example, a US government-sponsored
entity, such as Federal National Mortgage Association (“Fannie Mae”) or Federal
Home Loan Mortgage Corporation (“Freddie Mac”), although chartered or sponsored
by an Act of Congress, may issue securities that are neither insured nor
guaranteed by the US Treasury and are therefore riskier than those that
are.
Repurchase agreements risk: Repurchase
agreements carry certain risks not associated with direct investments in
securities, including a possible decline in the market value of the underlying
obligations. Repurchase agreements involving obligations other than US
government securities (such as commercial paper, corporate bonds, mortgage loans
and equities) may be subject to special risks and may not have the benefit of
certain protections in the event of the counterparty’s insolvency. If the seller
or guarantor becomes insolvent, the fund may suffer delays, costs and possible
losses in connection with the disposition of
collateral.
Investments in money market funds risk: Certain
money market funds may seek to maintain a stable $1 NAV per share (“stable NAV
money market funds”) or have a share price that fluctuates (“variable NAV money
market funds”). Although a stable NAV money market fund seeks to maintain a
stable $1 NAV, it
8
is
possible to lose money by investing in such a money market fund. Because the NAV
of a variable NAV money market fund will fluctuate, when the fund sells the
shares it owns they may be worth more or less than what the fund originally paid
for them. In addition, neither type of money market fund is designed to offer
capital appreciation. Certain money market funds may impose a fee upon the sale
of shares or, until October 2, 2023, may temporarily suspend the ability to
sell shares if such fund’s liquidity falls below required
minimums.
Sovereign debt risk: Sovereign debt includes
bonds that are issued by foreign governments or their agencies,
instrumentalities or political subdivisions or by foreign central banks.
Sovereign debt also may be issued by quasi-governmental entities that are owned
by foreign governments but are not backed by their full faith and credit or
general taxing powers. Investment in sovereign debt involves special risks. The
issuer of the debt or the governmental authorities that control the repayment of
the debt may be unable or unwilling to repay principal and/or interest when due
in accordance with the terms of such debt, and the fund may have limited legal
recourse in the event of a default.
Foreign investing risk: The value of the fund’s
investments in foreign securities may fall due to adverse political, social and
economic developments abroad. However, because, under normal circumstances, the
fund’s foreign investments are typically denominated in US dollars or hedged to
US dollars, it generally is not subject to the risk of changes in currency
valuations.
Derivatives risk: The value of derivatives—so
called because their value derives from the value of an underlying asset,
reference rate or index—may rise or fall more rapidly than other investments. It
is possible for the fund to lose more than the amount it invested in the
derivative. When using derivatives for hedging purposes, the fund’s overall
returns may be reduced if the hedged investment experiences a favorable price
movement. In addition, if the fund has insufficient cash to meet daily variation
margin or payment requirements, it may have to sell securities from its
portfolio at a time when it may be disadvantageous to do so. The risks of
investing in derivative instruments also include market and management risks.
Derivatives relating to fixed income markets are especially susceptible to
interest rate risk and credit risk. In addition, many types of swaps and other
derivatives may be subject to liquidity risk, counterparty risk, credit risk and
mispricing or valuation complexity. Derivatives also involve the risk that
changes in the value of a derivative may not correlate as anticipated with the
underlying asset, rate, index or overall securities markets, thereby reducing
their effectiveness. These derivatives risks are different from, and may be
greater than, the risks associated with investing directly in securities and
other instruments. Regulation relating to a mutual fund’s use of derivatives and
related instruments, including Rule 18f-4 under the Investment Company Act of
1940, as amended (the “1940 Act”), (“Rule 18f-4”), could potentially limit or
impact the fund’s ability to invest in derivatives, limit the fund’s ability to
employ certain strategies that use derivatives and/or adversely affect the value
of derivatives and the fund’s performance.
9
Performance
Risk/return
bar chart and table
The
performance information that follows shows the fund’s performance information in
a bar chart and an average annual total returns table. The information
provides some indication of the risks of investing in the fund by showing how
the fund’s average annual total returns compare with those of a broad measure of
market performance. The fund’s past performance
(before and after taxes) is not necessarily an indication of how the fund will
perform in the future. Updated performance for the fund is
available at www.ubs.com/us‑mutualfundperformance.
After‑tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after‑tax returns
depend on an investor’s tax situation and may differ from those shown. In
addition, the after‑tax returns shown are not relevant to investors who hold
fund shares through tax‑advantaged arrangements, such as 401(k) plans or
individual retirement accounts. After‑tax returns for other
classes will vary from the Class I shares’ after‑tax returns
shown.
UBS
Ultra Short Income Fund
Annual
Total Returns of Class I Shares
Total return January 1 to
June 30, 2023:
2.59%
Best quarter during years
shown—2Q
2020: 1.74%
Worst quarter during years
shown—1Q
2020: (1.14)%
Average annual total returns (for the periods ended December 31,
2022)
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Class |
| 1 year |
| Life of the fund |
Class I |
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Return
before taxes |
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| (0.18 |
)% |
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| 0.99 |
% |
Return
after taxes on distributions |
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| (0.89 |
) |
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| 0.37 |
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Return
after taxes on distributions and sale of fund shares |
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| (0.11 |
) |
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| 0.50 |
|
ICE
BofAML US 3‑Month Treasury Bill Index
(Index
reflects no deduction for fees, expenses or taxes.) |
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| 1.47 |
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| 1.24 |
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10
Investment
advisor
UBS
AM serves as the investment advisor to the fund.
Portfolio
managers
Robert
Sabatino, Vice President of UBS Series Funds, David Walczak, Vice President of
UBS Series Funds, David Rothweiler and Scott Dolan are jointly and primarily
responsible for the day-to-day management of the fund. Messrs. Sabatino, Walczak
and Rothweiler have been portfolio managers of the fund since 2018. Mr. Dolan
has been a portfolio manager of the fund since 2020.
Purchase &
sale of fund shares
Shares
can be purchased and redeemed on any business day on which the New York Stock
Exchange is open. You may purchase or redeem shares of the fund directly from
the fund or through a financial intermediary. In general, the minimum initial
investment is $10,000,000 for Class I shares ($2,500,000 for foundations,
endowments and religious and other charitable organizations described in
Section 501(c) of the Internal Revenue Code).
Tax
information
The
dividends and distributions you receive from the fund are taxable and will
generally be taxed as ordinary income, capital gains or some combination of
both, unless you hold shares through a tax‑exempt account or plan, such as an
individual retirement account or 401(k) plan, in which case dividends and
distributions on your shares generally will be taxed when withdrawn from the
tax‑exempt account or plan.
Payments
to financial intermediaries
If
you purchase the fund through a financial intermediary (such as a bank), UBS AM
and/or its affiliates may pay the intermediary for the sale of fund shares and
related services, or other shareholder services. These payments may create a
conflict of interest by influencing the intermediary to recommend the fund over
another investment. Visit your financial intermediary’s website for more
information.
11
UBS Ultra Short Income Fund
More
information about the fund
Investment
objective
The
fund’s investment objective is to provide current income while seeking to
maintain low volatility of principal.
The
fund’s investment objective is “non‑fundamental.” This means that it may be
changed by the fund’s board of trustees without shareholder approval.
Principal
investment strategies
The
fund seeks to achieve its investment objective by investing in a diversified
portfolio of short duration, high quality money market instruments and other
fixed income securities of governmental, municipal and private issuers, which
may include short-term obligations of the US government and its
instrumentalities; repurchase agreements; obligations of issuers in the
financial services group of industries; commercial paper, other corporate
obligations, and asset-backed securities; and municipal money market
instruments. The fund may invest in the securities of money market funds,
including those advised by UBS Asset Management (Americas) Inc. (“UBS
AM”).
The
fund may invest in securities of any maturity, but will generally limit its
weighted average portfolio duration to one year or less. Duration is a measure
used to determine the sensitivity of a security’s price to changes in interest
rates. Duration incorporates a bond’s yield, coupon interest payments, final
maturity, call and put features and prepayment exposure into one measure, with a
higher duration indicating greater sensitivity to interest rate changes. For
example, if a portfolio has a duration of two years, and interest rates increase
(fall) by 1%, the portfolio should decline (increase) in value by approximately
2%. However, duration may not accurately reflect the true interest rate
sensitivity of
instruments
held by the fund and, therefore the fund’s exposure to changes in interest
rates.
Although
the use of derivatives is not a principal strategy of the fund, it may use
derivative instruments such as futures, forwards, options, and/or swaps for risk
management purposes or as part of the fund’s investment strategies.
The
fund may engage in securities lending to the extent permitted by law.
The
fund is not a money market fund and does not seek to maintain a stable NAV. As a
result, the value of your investment in the fund may change.
Securities
selection
UBS
AM serves as the fund’s investment advisor. UBS AM’s investment process employs
a rigorous valuation and research framework, combining top‑down macroeconomic
and quantitative research with issuer level credit analysis. This dynamic
approach allows UBS AM to exploit diversified sources of return, which UBS AM
believes is key to delivering consistent performance over time.
The
top‑down process involves formulation of broad investment views and views
regarding macroeconomic trends. UBS AM’s views on the direction of interest
rates, yield curve shape, sectors, and volatility help formulate final portfolio
positioning.
After
establishing the top‑down strategy, the portfolio management team, working
closely with UBS AM’s research analysts, uses rigorous credit/structure analysis
and relative pricing to choose securities that it believes have superior
risk/return characteristics. UBS AM integrates risk management throughout its
investment process.
12
UBS Ultra Short Income Fund
UBS
AM considers safety of principal and liquidity in selecting securities for the
fund and thus may not buy securities that pay the highest yield.
The
fund is classified by UBS AM as an “ESG-integrated” fund. The fund’s investment
process integrates material sustainability and/or environmental, social and
governance (“ESG”) considerations into the research process for all portfolio
investments and portfolio holdings, except repurchase agreements with certain
counterparties and except asset-backed and mortgage-backed securities. ESG
integration is driven by taking into account material sustainability and/or ESG
risks which could impact investment returns, rather than being driven by
specific ethical principles or norms. The analysis of material sustainability
and/or ESG considerations can include many different aspects, including, for
example, the carbon footprint, employee health and well-being, supply chain
management, fair customer treatment and governance processes of a company. The
fund’s portfolio managers may still invest in securities without respect to
sustainability and/or ESG considerations or in securities which present
sustainability and/or ESG risks, including where the portfolio managers believe
the potential compensation outweighs the risks identified.
Principal
risks
All
investments carry a certain amount of risk, and the fund cannot guarantee that
it will achieve its investment objective. You may lose money by investing in the
fund. An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The principal risks presented by an investment in the fund are described
below. Other risks of investing in the fund, along with further details about
some of the risks described below, are discussed in the fund’s
SAI.
Information on how you can obtain the SAI is on the back cover of this
prospectus.
Credit risk. Credit risk is the risk that the
issuer or guarantor of a fixed income security, or the counterparty to or
guarantor of a derivative contract or transaction, is unable or unwilling to
meet its financial obligations. Even if an issuer or counterparty does not
default on a payment, an investment’s value may decline if the market believes
that the issuer or counterparty has become less able, or less willing, to make
payments on time. Moreover, in a rising interest rate environment, the risk that
such issuer or guarantor may default on its obligations is heightened. Even high
quality investments are subject to some credit risk. However, credit risk is
greater for lower quality investments than for investments that are higher
quality. Fixed income securities that are not investment grade, which are
commonly known as “junk bonds,” involve high credit risk and are considered
speculative. Some of these low quality securities may go into default. Low
quality fixed income securities may fluctuate in value more than higher quality
bonds and, during periods of market volatility, may be more difficult to sell at
the time and price the fund desires.
Financial services sector risk. Investments of
the fund in the financial services group of industries or sectors may be
particularly affected by economic cycles, business developments, interest rate
changes and regulatory changes. For example, declining economic and business
conditions can disproportionately impact companies in the financial services
sector due to increased defaults on payments by borrowers. Interest rate
increases can also adversely affect the financial services sector by increasing
the cost of capital available for financial services companies. In addition,
financial services companies are heavily regulated by governmental entities and,
as a result, political and regulatory
13
UBS Ultra Short Income Fund
changes
can affect the operations and financial results of such companies, potentially
imposing additional costs and possibly restricting the businesses in which those
companies may engage.
Concentration risk. The fund will invest a
significant portion of its assets in securities issued by companies in the
financial services group of industries or sectors, including US banking, non‑US
banking, broker-dealers, insurance companies, finance companies (e.g., automobile finance) and related
asset-backed securities. As a result, the fund’s performance will be
significantly impacted, both positively and negatively, by developments in the
financial services sector, and the fund will be more susceptible to such
developments than other funds that do not concentrate their investments.
Interest rate risk. The value of bonds and
other fixed income securities generally can be expected to fall when short-term
interest rates rise and to rise when short-term interest rates fall. Interest
rate risk is the risk that interest rates will rise, so that the value of the
fund’s investments in bonds and other fixed income securities will fall.
Duration is a measure of the fund’s exposure to interest rate risk. A longer
duration means that the changes in market interest rates will generally have a
larger effect on the fund’s market value.
Interest
rate risk is the primary source of risk for US government securities and usually
for other very high quality bonds. The impact of changes in the general level of
interest rates on lower quality bonds may be greater or less than the impact on
higher quality bonds.
The
fund may face a heightened level of interest rate risk due to certain changes in
monetary policy, such as certain types of interest rate changes by the Federal
Reserve. The risks associated with changing interest
rates
may have unpredictable effects on the markets and the fund’s investments. A
sudden or unpredictable increase in interest rates may cause volatility in the
market and may decrease liquidity in the money market securities markets, making
it harder for the fund to sell its money market investments at an advantageous
time. Decreased market liquidity also may make it more difficult to value some
or all of the fund’s money market securities holdings.
Some
corporate and municipal bonds, particularly those issued at relatively high
interest rates, provide that the issuer may repay them earlier than the maturity
date. The issuers of these bonds are most likely to exercise these “call”
provisions if prevailing interest rates are lower than they were when the bonds
were issued. The fund then may have to reinvest the repayments at lower interest
rates. Bonds subject to call provisions also may not benefit fully from the rise
in value that generally occurs for bonds when interest rates fall.
Liquidity risk. The risk that investments
cannot be readily sold at the desired time or price, and the fund may have to
accept a lower price or may not be able to sell the security at all. An
inability to sell securities can adversely affect the fund’s value or prevent
the fund from taking advantage of other investment opportunities. Liquid
portfolio investments may become illiquid or less liquid after purchase by the
fund due to low trading volume, adverse investor perceptions and/or other market
developments. In recent years, the number and capacity of dealers that make
markets in fixed income securities has decreased. Consequently, the decline in
dealers engaging in market making trading activities may increase liquidity
risk, which can be more pronounced in periods of market turmoil or when prices
of securities are negatively impacted by rapid or unexpected changes in interest
rates. Liquidity risk may be magnified in a rising interest rate environment or
when investor redemptions
14
UBS Ultra Short Income Fund
from
fixed income funds may be higher than normal, causing increased supply in the
market due to selling activity. Liquidity risk includes the risk that the fund
will experience significant net redemptions at a time when it cannot find
willing buyers for its portfolio securities or can only sell its portfolio
securities at a material loss, making it more difficult for the fund to meet
redemption requests.
Management risk. There is the risk that the
investment strategies, techniques and risk analyses employed by the advisor may
not produce the desired results. The investment advisor may be incorrect in its
assessment of a particular security or other investment or assessment of market,
interest rate or other trends, which can result in losses to the fund.
Market risk. The risk that the market value of
the fund’s investments will fluctuate as the stock and fixed-income markets
fluctuate. Market risk may affect a single issuer, industry or sector of the
economy, or it may affect the market as a whole. In addition, turbulence in
financial markets and reduced liquidity in equity and/or fixed-income markets
may negatively affect the fund. Global economies and financial markets are
becoming increasingly interconnected, and conditions and events in one country,
region or financial market may adversely impact issuers in a different country,
region or financial market. Events such as war, acts of terrorism, natural
disasters, recessions, rapid inflation, the imposition of international
sanctions, pandemics or other public health threats could also significantly
impact the fund and its investments. These risks may be magnified if certain
events or developments adversely interrupt the global supply chain, and could
affect companies worldwide.
Mortgage- and asset-backed securities risk. The
fund may invest in mortgage- and asset-backed securities that are subject to
prepayment or call risk,
which
is the risk that the borrower’s payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. Faster
prepayments often happen when interest rates are falling. As a result, the fund
may reinvest these early payments at lower interest rates, thereby reducing the
fund’s income. Conversely, when interest rates rise, prepayments may happen more
slowly, causing the security to lengthen in duration. Longer duration securities
tend to be more volatile. Securities may be prepaid at a price less than the
original purchase value. An unexpectedly high rate of defaults on the mortgages
held by a mortgage pool may adversely affect the value of mortgage-backed
securities and could result in losses to the fund.
Floating or variable rate securities risk.
Floating or variable rate
securities bear interest at rates that are not fixed but that vary with changes
in specified market rates or indices. The market value of floating rate and
variable rate securities generally fluctuates less than the market value of
fixed rate obligations. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation or capital depreciation is less than for
fixed rate obligations. Although floating or variable rate securities are
generally less sensitive to interest rate risk than fixed rate securities, they
are subject to credit, liquidity and market risk.
NAV risk. The fund is not a money market fund,
does not attempt to maintain a stable NAV, and is not subject to the rules that
govern the quality, maturity, liquidity and other features of securities that
money market funds may purchase. Under normal conditions, the fund’s investments
would be more susceptible than a money market fund’s investments to interest
rate risk, valuation risk, credit risk, and other risks relevant to the fund’s
investments. The fund’s NAV per share will fluctuate. Because the fund is not a
money market fund, it does not qualify for the special money market fund tax
treatment or tax accounting methods under US Treasury regulations.
15
UBS Ultra Short Income Fund
Prepayment risk. Payments on bonds and other
fixed income securities that are backed by mortgage loans or similar assets may
be received earlier or later than expected due to changes in the rate at which
the underlying loans are prepaid. Faster prepayments often happen when market
interest rates are falling. As a result, the fund may need to reinvest these
early payments at those lower interest rates, thus reducing its income.
Conversely, when interest rates rise, prepayments may happen more slowly,
causing the underlying loans to be outstanding for a longer time than
anticipated. This can cause the market value of the security to fall because the
market may view its interest rate as too low for a longer term investment.
Valuation risk. During periods of reduced
market liquidity or in the absence of readily available market quotations for
securities or instruments in the fund’s portfolio, the ability of the fund to
value the fund’s investments becomes more difficult and the judgment of the
fund’s investment advisor may play a greater role in the valuation of the fund’s
investments due to reduced availability of reliable objective pricing data.
Consequently, while such determinations may be made in good faith, it may
nevertheless be more difficult for the fund to accurately assign a daily value
to such investments.
Variable rate demand obligations risk. Variable
rate demand obligations are floating rate securities that combine an interest in
a long-term bond, such as municipal debt, with a right to demand payment before
maturity from a bank or other financial institution. If the bank or financial
institution is unable to pay, the fund may lose money. The absence of an active
secondary market for certain variable and floating rate obligations could make
it difficult to dispose of these instruments, which could result in a
loss.
Municipal securities risk. Municipal securities
are subject to interest rate, credit, illiquidity, market and
political
risks. The ability of a municipal issuer to make payments and the value of
municipal securities can be affected by uncertainties in the municipal
securities market, including litigation, the strength of the local or national
economy, the issuer’s ability to raise revenues through tax or other means, the
bankruptcy of the issuer affecting the rights of municipal securities holders
and budgetary constraints of local, state and federal governments upon which the
issuer may be relying for funding. Municipal securities and issuers of municipal
securities may be more susceptible to downgrade, default and bankruptcy during
periods of economic stress. In addition, the municipal securities market can be
significantly affected by political changes, including legislation or proposals
at either the state or the federal level to eliminate or limit the tax‑exempt
status of municipal security interest. Similarly, reductions in tax rates may
make municipal securities less attractive in comparison to taxable securities.
Legislatures also may be unable or unwilling to appropriate funds needed to pay
municipal security obligations. These events can cause the value of the
municipal securities held by the fund to fall. In addition, third-party credit
quality or liquidity enhancements are frequently a characteristic of the
structure of certain types of municipal securities. Problems encountered by such
third-parties (such as issues negatively impacting a municipal security insurer
or bank issuing a liquidity enhancement facility) may negatively impact a
municipal security even though the related municipal issuer is not experiencing
problems. Municipal bonds secured by revenues from public housing authorities
may be subject to additional uncertainties relating to the possibility that
proceeds may exceed supply of available mortgages to be purchased by public
housing authorities, resulting in early retirement of bonds, or that homeowner
repayments will create an irregular cash flow.
Zero coupon securities risk. Zero coupon
securities are securities on which no periodic interest payments
16
UBS Ultra Short Income Fund
are
made but instead are sold at a deep discount from their face value. Zero coupon
securities are generally more sensitive to changes in interest rates than debt
obligations of comparable maturities that make current interest payments. This
means that when interest rates fall, the value of zero coupon securities
generally rises more rapidly than securities paying interest on a current basis.
However, when interest rates rise, their value generally falls more
dramatically.
US government securities risk. Credit risk is
the risk that the issuer will not make principal or interest payments when they
are due. There are different types of US government securities with different
relative levels of credit risk depending on the nature of the particular
government support for that security. US government securities may be supported
by (1) the full faith and credit of the US; (2) the ability of the
issuer to borrow from the US Treasury; (3) the credit of the issuing
agency, instrumentality or government-sponsored entity; (4) pools of assets
(e.g., mortgage-backed securities); or
(5) the US in some other way. In some cases, there is even the risk of
default. For example, for mortgage-backed securities there is the risk those
assets will decrease in value below the face value of the security. Similarly,
for certain agency-issued securities there is no guarantee the US government
will support the agency if it is unable to meet its obligations. Further, the US
government and its agencies and instrumentalities do not guarantee the market
value of their securities; consequently, the value of such securities will
fluctuate. This may be the case especially when there is any controversy or
ongoing uncertainty regarding the status of negotiations in the US Congress to
increase the statutory debt ceiling. If the US Congress is unable to negotiate
an adjustment to the statutory debt ceiling, there is also the risk that the US
government may default on payments on certain US government securities,
including those held by the fund, which could have a material negative impact on
the fund.
Repurchase agreements risk. Repurchase
agreements carry certain risks not associated with direct investments in
securities, including a possible decline in the market value of the underlying
obligations. If their value becomes less than the repurchase price, plus any
agreed-upon additional amount, the counterparty must provide additional
collateral so that at all times the collateral is at least equal to the
repurchase price plus any agreed-upon additional amount. Repurchase agreements
involving obligations other than US government securities (such as commercial
paper, corporate bonds, mortgage loans and equities) may be subject to special
risks and may not have the benefit of certain protections in the event of the
counterparty’s insolvency. If the seller or guarantor becomes insolvent, the
fund may suffer delays, costs and possible losses in connection with the
disposition of collateral.
Investments in money market funds risk. The
fund may invest in money market funds that either seek to maintain a stable $1
NAV per share (“stable NAV money market funds”) or that have a share price that
fluctuates (“variable NAV money market funds”). Although a stable NAV money
market fund seeks to maintain a stable $1 NAV, it is possible for the fund to
lose money by investing in such a money market fund. Because the share price of
a variable NAV money market fund will fluctuate, when the fund sells the shares
it owns those shares may be worth more or less than the price the fund
originally paid for them. In addition, neither type of money market fund is
designed to offer capital appreciation. In exchange for their emphasis on
stability and liquidity, money market funds may offer lower long-term
performance than bond investments. Certain money market funds may impose a fee
upon the sale of shares or, until October 2, 2023, may temporarily suspend
the ability to sell shares if such fund’s liquidity falls below required
minimums. The fund also is subject to the management fees and/or expenses of
underlying
17
UBS Ultra Short Income Fund
money
market funds. At the same time, the fund would continue to pay its own
management fees and expenses with respect to all of its direct
investments.
Sovereign debt risk: Sovereign debt includes
bonds that are issued by foreign governments or their agencies,
instrumentalities or political subdivisions or by foreign central banks.
Sovereign debt also may be issued by quasi-governmental entities that are owned
by foreign governments but are not backed by their full faith and credit or
general taxing powers. Investment in sovereign debt involves special risks. The
issuer of the debt or the governmental authorities that control the repayment of
the debt may be unable or unwilling to repay principal and/or interest when due
in accordance with the terms of such debt, and the fund may have limited legal
recourse in the event of a default. In addition, the issuer of sovereign debt
may be unable or unwilling to repay due to the imposition of international
sanctions and other similar measures.
Foreign investing risk. The fund may invest in
foreign instruments that are denominated in US dollars or hedged to US dollars.
Foreign investing may involve risks relating to political, social and economic
developments abroad, such as the imposition of international sanctions and other
similar measures, to a greater extent than investing in the securities of US
issuers. Foreign investments may also be subject to risk of loss because of more
or less foreign government regulation, less public information and less
stringent investor protections and disclosure standards. In addition, there are
differences between US and foreign regulatory requirements and market
practices.
Derivatives risk. In addition to the risks
associated with the underlying assets, reference rates or indices on which
derivatives are based, derivatives are subject to risks different from, and
possibly greater than, those of direct investments in securities and
other
instruments.
If the investment advisor incorrectly forecasts the value of securities,
currencies, interest rates, or other economic factors in using derivatives, the
fund might have been in a better position had it not entered into the
derivatives. While some strategies involving derivatives are designed to protect
against the risk of loss, this use of derivatives may also reduce the
opportunity for gain or even result in losses by offsetting favorable price
movements in other fund investments. Gains or losses may be substantial, and in
some cases losses may exceed the amount of the fund’s initial investment. In
addition, if the fund has insufficient cash to meet daily variation margin
requirements, it may have to sell securities from its portfolio at a time when
it may be disadvantageous to do so. Some derivatives tend to be more volatile
than other investments, resulting in larger gains or losses in response to
market changes. In October 2020, the SEC adopted Rule 18f-4 related to the use
of derivatives, reverse repurchase agreements and certain other transactions by
registered investment companies and rescinded and withdrew certain guidance of
the SEC and its staff regarding asset segregation and cover transactions. Under
Rule 18f-4, the fund has adopted a derivatives risk management program and
appointed a derivatives risk manager that manages the program and communicates
to the board of the fund. Compliance with Rule 18f-4 may increase the cost of
the fund’s investments and cost of doing business, which could adversely affect
investors. Derivatives also involve the risk of mispricing or other improper
valuation; the risk that changes in the value of a derivative may not correlate
as anticipated with the underlying asset, rate, index or overall securities
markets, thereby reducing their effectiveness; credit risk; counterparty risk
(the risk that the other party to a swap agreement or other derivative will not
fulfill its contractual obligations, whether because of bankruptcy or other
default); liquidity risk (the possible lack of a secondary market for
derivatives and the resulting inability
18
UBS Ultra Short Income Fund
of
the fund to sell or otherwise close out the derivatives at a favorable price, if
at all); and interest rate risk (some derivatives are more sensitive to interest
rate changes and market price fluctuations). Finally, the fund’s use of
derivatives may cause the fund to realize higher amounts of short-term capital
gains (generally taxed at ordinary income tax rates) than if the fund had not
used such instruments.
Additional
(non-principal) risks
LIBOR replacement risk. Certain variable- and
floating- rate debt securities that the fund may invest in are subject to rates
that are or were previously tied to the London Interbank Offered Rate (“LIBOR”).
LIBOR was a leading floating rate benchmark used in loans, notes, derivatives
and other instruments or investments. As a result of benchmark reforms,
publication of most LIBOR settings has ceased. Some LIBOR settings continue to
be published, but only on a temporary, synthetic and non-representative basis.
Regulated entities have generally ceased entering into new LIBOR contracts in
connection with regulatory guidance or prohibitions. Replacement rates that have
been identified include the Secured Overnight Financing Rate (“SOFR”), which is
intended to replace US dollar LIBOR and measures the cost of overnight
borrowings through repurchase agreement transactions collateralized with US
Treasury securities, and the Sterling Overnight Index Average Rate (“SONIA”),
which is intended to replace GBP LIBOR and measures the overnight interest rate
paid by banks for unsecured transactions in the sterling market, although other
replacement rates could be adopted by market participants. The unavailability or
replacement of LIBOR may affect the value, liquidity or return on, and may cause
increased volatility in markets for, certain fund investments and may result in
costs incurred in connection with closing out positions and entering into new
trades. Accordingly, the potential effect of the transition away from LIBOR on
the fund or the debt securities or other instruments based on LIBOR in which the
fund invests cannot yet
be
determined. Any pricing adjustments to the fund’s investments resulting from a
substitute reference rate may also adversely affect the fund’s performance
and/or net asset value. At this time, it is not possible to predict the effect
of the establishment of SOFR, SONIA or any other replacement rates.
High yield securities (“junk bonds”) risk.
National rating agencies typically rate bonds and other fixed income
securities. These ratings generally assess the ability of the issuer to pay
principal and interest. Issuers of securities that are rated below investment
grade (i.e., lower than Baa3/BBB‑ and
their unrated equivalents) are typically in poorer financial health, and
lower-rated securities and their unrated equivalents may be (1) subject to
a greater risk of loss of principal and non‑payment of interest (including
default by the issuer); (2) subject to greater price volatility; and
(3) less liquid than investment grade securities. High yield securities are
particularly sensitive to interest rates, and the prices of such securities may
be more vulnerable to bad economic news, or even the expectation of bad news,
than higher rated or investment grade bonds and other fixed income securities.
In addition, high yield securities are often thinly traded and may be more
difficult to sell and value accurately than higher rated fixed income securities
of a similar maturity.
Securities lending risk. Securities lending
involves the lending of portfolio securities owned by the fund to qualified
broker-dealers and financial institutions. When lending portfolio securities,
the fund initially will require the borrower to provide the fund with
collateral, most commonly cash, which the fund will invest. Although the fund
invests this collateral in a conservative manner, it is possible that it could
lose money from such an investment or fail to earn sufficient income from its
investment to cover the fee or rebate that it has agreed to pay the borrower.
Loans of securities also involve a risk that the borrower may fail to return the
securities
19
UBS Ultra Short Income Fund
or
deliver the proper amount of collateral, which may result in a loss to the fund.
In addition, in the event of bankruptcy of the borrower, the fund could
experience losses or delays in recovering the loaned securities. In some cases,
these risks may be mitigated by an indemnification provided by the fund’s
lending agent.
Cybersecurity risk. The fund, like other
business organizations, is susceptible to operational, information security and
related risks through breaches in cybersecurity. In general, cybersecurity
failures or breaches of the fund or its service providers or the issuers of
securities in which the fund invests may result from deliberate attacks or
unintentional events and may arise from external or internal sources.
Cybersecurity breaches may involve unauthorized access to the fund’s digital
information systems (e.g., through “hacking” or malicious software coding), but
may also result from outside attacks such as denial-of-service attacks (i.e.,
efforts to make network services unavailable to intended users). Cybersecurity
failures or breaches affecting the fund’s investment advisor or any other
service providers (including, but not limited to, fund accountants, custodians,
transfer agents and financial intermediaries) have the ability to cause
disruptions and impact business operations, potentially resulting in financial
losses, interference with the fund’s ability to calculate its net asset value,
impediments to trading, the inability of fund shareholders to transact business,
destruction to equipment and systems, violations of applicable privacy and other
laws, regulatory fines, penalties, reputational damage, reimbursement or other
compensation costs and/or additional compliance costs. In addition, substantial
costs may be incurred in order to prevent any cybersecurity breaches in the
future.
20
UBS Ultra Short Income Fund
Managing
your fund account
Flexible
pricing
The
fund offers one class of shares in this prospectus—Class I. (Class A and P
shares of the fund are offered in a separate prospectus.) Class I shares
are available only to certain types of investors. Investments must be
denominated in US dollars.
Class I
shares
Shareholders
pay no front‑end or deferred sales charges on Class I shares. Only specific
types of investors can purchase Class I shares.
The
following investors are eligible to purchase Class I shares:
• |
| Shareholders
who invest a minimum initial amount of $10 million in the
fund; |
• |
| Foundations,
endowments and religious and other charitable organizations described in
Section 501(c) of the Internal Revenue Code that invest a minimum
initial amount of $2,500,000 in the fund; and |
• |
| Employees
of UBS AM or UBS AM (US) (or certain other affiliated entities) as long as
the employee establishes an account in his or her name directly at the
fund’s transfer agent and purchases a minimum initial amount of
$10,000. |
UBS
AM (US) may waive the investment minimum in its discretion. The fund may change
its minimum investment requirements at any time.
If
your fund account balance has fallen below $10 million, or
$2.5 million with respect to foundations, endowments and religious and
other charitable organizations described in Section 501(c) of the Internal
Revenue Code, UBS AM reserves the right
to
reject your purchase order to add to the account unless the account balance will
be at least $10 million, or $2.5 million, respectively, after that
purchase.
Class I
shares do not pay ongoing 12b‑1 distribution or service fees.
Buying
shares
You
can buy fund shares through a financial intermediary with which UBS AM (US) has
a dealer agreement or through the fund’s transfer agent as described
below.
The
fund and UBS AM (US) reserve the right to reject a purchase order or suspend the
offering of shares.
Additional
compensation to financial institution(s)
UBS
AM (US) or UBS AM may pay compensation, out of UBS AM’s profits and not as an
additional charge to the fund, to certain financial institutions (which may
include banks, securities dealers and other industry professionals) for the sale
and/or distribution of fund shares or the retention and/or servicing of fund
investors and fund shares. These payments are often referred to as “revenue
sharing.” Revenue sharing payments are paid in addition to any record keeping or
sub‑transfer agency fees payable by the fund, or other fees described in the fee
tables or elsewhere in the prospectus or SAI. Revenue sharing payments are paid
from UBS AM’s own resources and not as an additional charge to the fund.
The
level of revenue sharing payments made to financial institutions may be a fixed
fee or based upon one or more of the following factors: gross sales, current
assets and/or number of accounts of
UBS Ultra Short Income Fund
the
fund attributable to the financial institution, or other factors as agreed to by
UBS AM and the financial institution or any combination thereof. The amount of
the revenue share may be different for different financial institutions. For
specific information about revenue sharing arrangements for a particular
financial institution please also see the SAI.
In
some circumstances, revenue sharing payments may create an incentive for a
financial institution, its employees or associated persons to recommend or sell
shares of the fund to you. You should consult with a representative from the
intermediary and review carefully any disclosure by the financial institution as
to compensation received.
Minimum
investments:
Class I
Shares:
|
|
|
| |
To open an account |
| $ |
10,000,000 |
|
To add to an account |
| $ |
0 |
|
The
fund may waive or reduce/change these amounts for (or as otherwise noted in the
prospectus):
• |
| Employees
of UBS AM or its affiliates; or |
• |
| Participants
in certain unaffiliated investment programs. |
UBS
AM (US) may waive the investment minimum in its discretion. The fund may change
its minimum investment requirements at any time.
Selling
shares
You
can sell your fund shares at any time. If you own more than one class of shares,
you should specify which class you want to sell. If you do not, the fund will
assume that you want to sell shares in the following order: Class A
(offered in a separate
prospectus
with Class P shares), then Class P (offered in a separate prospectus
with Class A shares) and last, Class I. If you want to sell shares
that you purchased recently, the fund may delay payment until it verifies that
it has received good payment. Also, if conditions exist that make cash payments
undesirable, the fund reserves the right to honor any request for redemption by
making payment in whole or in part in securities, to the extent permitted under
applicable law. Additional information is available in the SAI.
If
you hold your shares through a financial intermediary, you can sell shares by
contacting your intermediary. The fund typically expects to pay sale proceeds to
redeeming shareholders within 1-2 business days following receipt of a
shareholder redemption order for those payments made to your account held with a
financial institution; however, the fund may take up to 7 business days to pay
sale proceeds. For sale proceeds that are paid directly to a shareholder by the
fund, the fund typically expects to pay sales proceeds by wire, ACH, or mailing
a check to redeeming shareholders within 1 business day following receipt
of the shareholder redemption order; however, the fund may take up to 7 days to
pay sale proceeds.
If
you purchased shares through the fund’s transfer agent, you may sell them as
explained below. The fund typically expects to pay sale proceeds by wire, ACH,
or mailing a check, to redeeming shareholders within 1 business day following
receipt of a shareholder redemption order; however, the fund may take up to 7
days to pay sale proceeds.
It
costs the fund money to maintain shareholder accounts. Therefore, the fund
reserves the right to repurchase all shares in any account that has a net asset
value of less than $500. If the fund elects to do this with your account, it
will notify you that you can increase the amount invested to $500 or
more
22
UBS Ultra Short Income Fund
within
60 days. The fund will not repurchase shares in accounts that fall below $500
solely because of a decrease in the fund’s net asset value.
Typically,
redemptions of fund shares will be made by the fund wiring cash payments or
deposits into your account. The fund typically expects to meet redemption
requests by using holdings of cash or cash equivalents and/or proceeds from the
sale of portfolio holdings. On a less regular basis, the fund may also draw on a
bank line of credit to meet redemption requests. Although not routinely used by
the fund, the fund reserves the right to pay proceeds “in kind” (i.e., payment in securities rather than cash)
if the investment you are redeeming is large enough to affect the fund’s
operations or in particularly stressed market conditions. In these cases, you
might incur transaction costs converting the securities to cash. The securities
included in a redemption in kind may include illiquid securities that may not be
immediately saleable.
Transfer
agent
If
you wish to invest in the fund or another one of the Family Funds (“Family
Funds” include PACE®
Select funds, series of The UBS Funds and other funds for which UBS AM (US)
serves as principal underwriter) through the fund’s transfer agent, BNY Mellon
Investment Servicing (US) Inc. (“BNY Mellon”), you can obtain an application by
calling 1‑800‑647 1568. You must complete and sign the application and mail it,
along with a check, to the transfer agent.
You
may also sell your shares by writing to the fund’s transfer agent. Your letter
must include:
• |
| The
name of the fund whose shares you are selling; |
• |
| The
dollar amount or number of shares you want to sell;
and |
• |
| A
guarantee of each registered owner’s signature. A signature guarantee may
be obtained from a financial institution, broker, dealer or clearing
agency that is a participant in one of the medallion programs recognized
by the Securities Transfer Agents Association. These are: Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion
Program (SEMP) and the New York Stock Exchange Medallion Signature Program
(MSP). The fund will not accept signature guarantees that are not part of
these programs. |
Applications
to purchase shares (along with a check), and letters requesting redemptions of
shares through the transfer agent, should be mailed to:
BNY
Mellon Investment Servicing (US) Inc.
UBS
Asset Management
P.O.
Box 9786
Providence,
RI 02940
You
do not have to complete an application when you make additional investments in
the same fund.
Different
procedures may apply to investments through the transfer agent by UBS AM (US)
and UBS AM employees or members of (and nominees to) the board of
directors/trustees (and former board members who retired from such boards after
December 1, 2005) of any investment company for which UBS AM (US) or any of
its affiliates serves as principal underwriter.
Unless
you specifically elect otherwise, you will receive telephone privileges when you
open your account, allowing you to obtain your account information, and conduct
a number of transactions by phone, including: buy, sell, or exchange shares of
the fund; use electronic funds transfer or wire to buy or sell shares of the
fund; change your address; and add or change account services by calling
1‑800‑647 1568.
23
UBS Ultra Short Income Fund
As
long as we follow reasonable security procedures and act on instructions we
reasonably believe are genuine, we will not be responsible for any losses that
may occur from unauthorized requests. We will request account information and
also may record calls to help safeguard your account, keep your account
information confidential and verify the accuracy of your confirmation statements
immediately after you receive them.
Contact
us immediately if you believe someone has obtained unauthorized access to your
account. Certain methods of contacting us (such as by phone) may be unavailable
or delayed during periods of unusual market activity. If you have telephone
privileges on your account and want to discontinue them, please contact us for
instructions. You may reinstate these privileges at any time in writing.
Note
that telephone privileges may not be available to all Family Funds. The fund may
modify, suspend or terminate telephone privileges at any time. For more
information, you should contact your investment professional or call 1‑800‑647
1568.
Transfer
of accounts limitations
If
you hold your shares with a securities firm, please note that if you change
securities firms, you may not be able to transfer your fund shares to an account
at the new securities firm. Fund shares may only be transferred to an account
held with a securities dealer or financial intermediary that has entered into an
agreement with the fund’s principal underwriter. If you cannot transfer your
shares to another firm, you may choose to hold the shares directly in your own
name with the fund’s transfer agent, BNY Mellon. Please contact your financial
intermediary, for information on how to transfer your shares to the fund’s
transfer agent. If you transfer your shares to the fund’s transfer agent, the
fund’s principal underwriter may be named as
the
dealer of record, and you will receive ongoing account statements from BNY
Mellon.
Should
you have any questions regarding the portability of your fund shares, please
contact your financial intermediary.
Additional
information about your account
To
help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. If you
do not provide the information requested, the fund may not be able to maintain
your account. If the fund is unable to verify your identity (or that of another
person(s) authorized to act on your behalf) within a reasonable time, the fund
and UBS AM (US) reserve the right to close your account and/or take such other
action they deem reasonable or required by law. If we decide to close your
account for this reason, your fund shares will be redeemed at the net asset
value per share next calculated after the account is closed, less any applicable
fees. You may recognize a gain or loss on the redemption of your fund shares and
you may incur a tax liability.
The
fund may suspend redemption privileges or postpone the date of payment beyond
the same or next business day (1) for any period (a) during which the
New York Stock Exchange (“NYSE”) is closed other than customary weekend and
holiday closings or (b) during which trading on the NYSE is restricted;
(2) for any period during which an emergency exists as a result of which
(a) disposal by the fund of securities owned by it is not reasonably
practicable or (b) it is not reasonably practicable for the fund fairly to
determine the value of its net assets; (3) for such other periods as the
SEC may by order permit for the protection of security holders
24
UBS Ultra Short Income Fund
of
the fund; or (4) to the extent otherwise permitted by applicable laws and
regulations.
Market
timing
Frequent
purchases and redemptions of fund shares could increase the fund’s transaction
costs, such as market spreads and custodial fees, and may interfere with the
efficient management of the fund’s portfolio, which could impact the fund’s
performance. However, it is anticipated that the fund may generally be used by
investors for short-term investments. These investors value the ability to add
and withdraw their funds quickly, without restriction. UBS AM (US) anticipates
that shareholders may purchase and sell fund shares frequently, but also
believes that the fund is unlikely to be a target of abusive trading practices.
For these reasons, the fund’s board has not adopted policies and procedures, or
imposed redemption fees or other restrictions such as minimum holding periods,
to discourage excessive or short-term trading of fund shares. However, because
frequent trading by shareholders can disrupt management of the fund and raise
its expenses, UBS AM reserves the right to reject any request for a purchase or
exchange if deemed to be used as a tool for market-timing, and may bar a
shareholder who trades excessively from making further purchases for an
indefinite period.
Other
longer-term funds that are managed by UBS AM have approved policies and
procedures designed to discourage and prevent abusive trading practices. For
more information about market timing policies and procedures for these funds,
please see the funds’ prospectuses.
Pricing
and valuation
The
price at which you may buy or sell fund shares is based on net asset value per
share. The fund generally calculates its net asset value on days that the NYSE
is open. The fund calculates its net asset value separately for each class as of
the close of regular
trading
on the NYSE (generally, 4:00 p.m., Eastern time). The NYSE normally is not open,
and the fund does not price its shares, on most national holidays and on Good
Friday. To the extent that the fund’s assets are traded in other markets on days
when the NYSE is not open, the value of the fund’s assets may be affected on
those days. If trading on the NYSE is halted for the day before 4:00 p.m.,
Eastern time, the fund’s net asset value per share generally will still be
calculated as of the close of regular trading on the NYSE. The time at which the
fund calculates its net asset value and until which purchase, sale or exchange
orders are accepted may be changed as permitted by the SEC.
Your
price for buying or selling shares will be based on the net asset value that is
next calculated after the fund receives your order in good form. If you place
your order on a day the NYSE is not open, your price for buying, selling, or
exchanging shares will be based on the net asset value that is calculated on the
next day that the NYSE is open. If you place your order through a financial
intermediary, your financial intermediary is responsible for making sure that
your order is promptly sent to the fund.
The
fund calculates its net asset value based on the current market value, where
available, for its portfolio securities. The fund normally obtains market values
for its securities and other instruments from independent pricing sources and
broker-dealers.
Independent
pricing sources may use reported last sale prices, official market closing
prices, current market quotations or valuations from computerized evaluation
systems that derive values based on comparable securities or instruments. An
evaluation system incorporates parameters such as security quality, maturity and
coupon, and/or research and evaluations by its staff, including review of
broker-dealer market price quotations, if available, in
25
UBS Ultra Short Income Fund
determining
the valuation of the portfolio securities or instruments. If a market value is
not readily available from an independent pricing source for a particular
security or instrument, that security or instrument is valued at fair value as
determined in good faith by or under the direction of the board.
The
amortized cost method of valuation, which approximates market value, generally
is used to value short-term debt instruments with 60 days or less remaining to
maturity, unless the board determines that this does not represent fair value.
Investments in open‑end investment companies are valued at the daily closing net
asset value of the respective investment company. All investments quoted in
foreign currencies will be valued daily in US dollars on the basis of the
foreign currency exchange rates prevailing at the time such valuation is
determined by the fund’s custodian and accounting agent. Foreign currency
exchange rates are generally determined as of the close of the NYSE.
Securities
and instruments traded in the over-the-counter (“OTC”) market and listed on The
NASDAQ Stock Market, Inc. (“NASDAQ”) normally are valued at the NASDAQ Official
Closing Price. Other OTC securities are normally valued at the last bid price on
the valuation date available prior to valuation. Securities and instruments that
are listed on US and foreign stock exchanges normally are valued at the market
closing price, the last sale price on the day the securities are valued or,
lacking any sales on such day, at the last available bid price.
The
board has designated UBS AM as the valuation designee pursuant to Rule 2a-5
under the 1940 Act, as amended, and delegated to UBS AM the responsibility for
making fair value determinations with respect to the fund’s portfolio holdings.
UBS AM, as the valuation designee, is responsible for periodically assessing any
material risks associated
with
the determination of the fair value of a fund’s investments; establishing and
applying fair value methodologies; testing the appropriateness of fair value
methodologies; and overseeing and evaluating third-party pricing services. UBS
AM has a valuation committee to assist with its designated responsibilities as
valuation designee. The types of securities and other instruments for which such
fair value pricing may be necessary include, but are not limited to: foreign
securities and instruments under some circumstances, as discussed below;
securities of an issuer that has entered into a restructuring; securities or
instruments whose trading has been halted or suspended; fixed income securities
that are in default and for which there is no current market value quotation;
Section 4(a)(2) commercial paper; securities or instruments that are
restricted as to transfer or resale; illiquid instruments; and instruments for
which the prices or values available do not, in the judgment of UBS AM,
represent current market value. The need to fair value the fund’s portfolio
securities and other instruments may also result from low trading volume in
foreign markets or thinly traded domestic securities or instruments, and when a
security subject to a trading limit or collar on the exchange or market on which
it is primarily traded reaches the “limit up” or “limit down” price and no
trading has taken place at that price.
Various
factors may be reviewed in order to make a good faith determination of a
security’s or instrument’s fair value. These factors include, but are not
limited to, fundamental analytical data relating to the investment; the nature
and duration of restrictions on disposition of the securities or instruments;
and the evaluation of forces which influence the market in which the securities
or instruments are purchased and sold.
26
UBS Ultra Short Income Fund
The
fund expects to price certain of its portfolio holdings based on current market
value, as discussed previously. Securities and assets for which market
quotations are not readily available may be valued based upon appraisals
received from a pricing service using a computerized evaluation system or
formula method that takes into consideration market indices, matrices, yield
curves and other specific adjustments. This may result in the securities or
other instruments being valued at a price different from the price that would
have been determined had the evaluation or formula method not been used.
Securities and other instruments also may be valued based on appraisals derived
from information concerning the security or instrument or similar securities or
instruments received from recognized dealers in those holdings. If the fund
concludes that a market quotation is not readily available for a portfolio
security or instrument for any number of reasons, including the occurrence of a
“significant event” (e.g., natural
disaster or governmental action), after the close of trading in its principal
domestic or foreign market but before the close of regular trading on the NYSE,
the fund will use fair value methods to reflect those events. This policy is
intended to assure that the fund’s net asset value fairly reflects the value of
its portfolio holdings as of the time of pricing. The fund may use a systematic
fair valuation model provided by an independent third party to value securities
or instruments principally traded in foreign markets in order to adjust for
possible stale pricing that may occur between the close of the foreign exchanges
and the time for valuation. The systematic fair valuation model may use
calculations based on indices of domestic securities and other appropriate
indicators, such as prices of relevant American Depositary Receipts and futures
contracts. If a security or instrument is valued at a “fair value,” that value
is likely to be different from the last quoted market price for the security or
instrument. In cases where securities or instruments
are
traded on more than one exchange, the securities or instruments are valued on
the exchange designated as the primary market by UBS AM, the investment advisor
of the fund.
Valuing
securities and other instruments at fair value involves greater reliance on
judgment than valuing securities and other instruments that have readily
available market quotations. Fair value determinations can also involve reliance
on quantitative models employed by a fair value pricing service. There can be no
assurance that the fund could obtain the fair value assigned to a security or
instrument if it were to sell the security or instrument at approximately the
time at which the fund determines its net asset value per share. As a result,
the fund’s sale or redemption of its shares at net asset value, at a time when a
holding or holdings are valued at fair value, may have the effect of diluting or
increasing the economic interest of existing shareholders.
The
fund may invest in securities or instruments that trade primarily in foreign
markets that trade on weekends or other days on which the fund does not
calculate its net asset value. As a result, the fund’s net asset value may
change on days when you will not be able to buy and sell your fund shares.
Certain securities or instruments in which the fund may invest are traded in
markets that close before 4:00 p.m., Eastern time. Normally, developments that
occur between the close of the foreign markets and 4:00 p.m., Eastern time, will
not be reflected in the fund’s net asset value. However, if the fund determines
that such developments are so significant that they will materially affect the
value of the fund’s securities or instruments, the fund may adjust the previous
closing prices to reflect what the board believes to be the fair value of these
securities or instruments as of 4:00 p.m., Eastern time.
27
UBS Ultra Short Income Fund
Futures
contracts are generally valued at the settlement price established each day on
the exchange on which they are traded. Forward foreign currency contracts are
valued daily using forward exchange rates quoted by independent pricing
services. Swaps and other OTC derivatives are marked to market daily based upon
values from third party vendors or quotations from market makers to the extent
available. In the event that market quotations are not readily available or
deemed unreliable, the swap is valued at fair value as determined in good faith
by or under the direction of the board.
The
fund’s portfolio holdings may also consist of shares of other investment
companies in which the fund invests. The value of each such open‑end investment
company will generally be its net asset value at the time the fund’s shares are
priced. The value of closed‑end investment company securities and shares of ETFs
will generally be market price. Pursuant to the fund’s use of the practical
expedient within ASC Topic 820, investments in non‑registered investment
companies are also valued at the daily net asset value. Each investment company
generally values securities and other instruments in a manner as described in
that investment company’s prospectus or similar document.
Management
Investment
advisor
UBS
Asset Management (Americas) Inc. (“UBS AM”) is the fund’s investment advisor and
administrator. UBS AM is a Delaware corporation with its principal business
offices located at One North Wacker Drive, Chicago, IL 60606 and at 787 Seventh
Avenue, New York, NY 10019. UBS AM is an investment adviser registered with the
SEC. UBS AM is an indirect asset management subsidiary of UBS Group AG
(“UBS”). As of June 30, 2023, UBS AM had approximately
$336.0
billion in assets under management. UBS AM is a member of the UBS Asset
Management Division, which had approximately $1.2 trillion in assets under
management worldwide as of June 30, 2023. UBS is an internationally diversified
organization headquartered in Zurich, Switzerland with operations in many areas
of the financial services group of industries.
Portfolio
managers
UBS
AM’s investment professionals are organized into investment management teams,
with a particular team dedicated to a specific asset class.
Robert
Sabatino, David Walczak, David Rothweiler and Scott Dolan are the portfolio
managers for the fund. As portfolio managers, Messrs. Sabatino, Walczak,
Rothweiler and Dolan have primary responsibility for managing the fund’s
day‑to‑day investment operations and reviewing the overall composition of the
portfolio in an effort to ensure its compliance with its stated investment
objective.
Mr. Sabatino
is a Vice President of UBS Series Funds (since 2001) and a managing director
(since 2010) (prior to which he was an executive director (from 2007 to 2010)),
head of global liquidity portfolio management (since 2015), head of US taxable
money markets (from 2009 to 2015), and portfolio manager of UBS AM—Liquidity
Management team (since 2001).
Mr. Walczak
is a Vice President of UBS Series Funds and an executive director (since 2016),
head of US money markets (since 2015) and portfolio manager of UBS AM—Liquidity
Management team (since 2007).
Mr. Rothweiler
is an executive director (since 2018) and senior portfolio manager of US ultra
short, short duration, and intermediate portfolios (since 2004) for UBS
AM.
UBS Ultra Short Income Fund
Mr. Dolan
is head of US multi-sector fixed income and a managing director at UBS AM. Prior
to joining UBS AM in 2008, Mr. Dolan was a managing director and head of
securitized assets for Citigroup Alternative Investments. Prior to joining
Citigroup, Mr. Dolan was a managing director and head of mortgages and
structured assets for Bear Stearns Asset Management and a senior mortgage trader
at the Clinton Group. Mr. Dolan also worked at Deutsche Asset Management as
a managing director and co‑head of the Rates Group responsible for strategy,
security selection and trading for MBS, ABS, agencies and treasuries.
Mr. Dolan started his career at Scudder, Stevens and Clark, where he
managed total return fixed income mutual funds and institutional
portfolios.
The
SAI provides additional information about the compensation of, and any other
accounts managed by, and any fund shares held by, Messrs. Sabatino, Walczak,
Rothweiler and Dolan.
Advisory
and administration fees
The
fund pays UBS AM a contractual advisory fee of 0.20% of the fund’s average daily
net assets. The fund also pays UBS AM an administration fee of 0.10% of the
fund’s average daily net assets. UBS AM received an effective fee of 0.19%
of the average daily net assets of the fund for its services in the fund’s last
year ended April 30, 2023. The effective fee for the fund reflects the
contractual fee waiver arrangements that capped the fund’s ordinary operating
expenses at 0.23% for Class I shares through August 31, 2024. A discussion
regarding the basis for the board’s approval of the fund’s Investment Advisory
and Administration Contract with UBS AM is available in the fund’s semiannual
report to shareholders for the fiscal period ended October 31,
2022.
Other
information
To
the extent authorized by law, the fund reserves the right to discontinue
offering shares at any time, merge, reorganize itself or its classes of shares
or cease operations and liquidate. The fund also reserves the right, without
shareholder approval, to convert to a master-feeder structure in which the fund
as a “feeder fund” invests all of its assets in a “master fund,” which would
have the same investment objective.
UBS
AM is the fund’s manager and primary provider of investment advisory services.
Although the fund has no intention of engaging subadvisors at this time, the
fund may operate under an exemptive order from the SEC to permit UBS AM, subject
to the review and approval of the board of UBS Series Funds, to select
subadvisors and recommend their hiring, termination and replacement and to enter
into and materially amend subadvisory contracts between UBS AM and the
subadvisors without obtaining shareholder approval. Shareholders would be
notified of the engagement of any subadvisors. In accordance with a separate
exemptive order that the fund and UBS AM have obtained from the SEC, the board
of UBS Series Funds may enter into a new subadvisory contract or materially
amend an existing subadvisory contract with a subadvisor at a meeting that is
not in person, subject to certain conditions, including that the board members
are able to participate in the meeting using a means of communication that
allows them to hear each other simultaneously during the meeting.
Dividends
and taxes
Dividends
The
fund declares dividends daily and pays them monthly. Dividends accrued during a
given month
29
UBS Ultra Short Income Fund
are
paid on the first business day of the next month or upon the sale of all the
fund shares in a shareholder’s account. The fund may distribute all or a portion
of its capital gains (if any) to the extent required to ensure that the fund
maintains its federal tax law status as a regulated investment company.
Classes
with higher expenses are expected to have lower dividends. For example,
Class A shares (offered in a separate prospectus with Class P shares)
are expected to have the lowest dividends of the fund’s shares, while
Class I shares are expected to have the highest.
You
will receive dividends in additional shares of the same class unless you elect
to receive them in cash. If you prefer to receive dividends in cash, contact
your financial intermediary (or the fund’s transfer agent if you invested in the
fund through its transfer agent). Distributions declared in October, November or
December, but not paid until January of the following year, are taxed as though
they were paid on December 31 of the year in which they were
declared.
Taxes
The
dividends that you receive from the fund generally are subject to federal income
tax regardless of whether you receive them in additional fund shares or in cash.
If you hold fund shares through a tax‑exempt account or plan, such as an IRA or
401(k) plan, dividends on your shares generally will not be subject to tax
before you receive distributions from the account or plan.
When
you sell fund shares, you generally will be subject to federal income tax on any
gain you realize. The gain will be taxed at the long-term capital gains rate
(discussed below) if you hold your shares for more than one year. Otherwise the
gain is short-term capital gain which is generally taxed as ordinary
income.
Fund
dividends derived from investment income (other than qualifying dividends,
discussed below) are generally taxable to you as ordinary income. Fund
distributions of gains are treated as long-term capital gains to the extent the
fund derives long-term capital gains and are treated as ordinary income to the
extent the fund derives short-term capital gains. The fund will send you a tax
report annually summarizing the amount of and the tax aspects of your
distributions.
The
maximum individual rate applicable to qualifying dividends on certain corporate
stock and long-term capital gains is generally either 15% or 20%, depending on
whether the individual’s income exceeds certain threshold amounts. These rate
reductions do not apply to corporate taxpayers or to non‑US shareholders. A
shareholder will also have to satisfy a more than 60-day holding period with
respect to any distributions of qualifying dividends in order to obtain the
benefit of the lower tax rate. Distributions of earnings from non‑qualifying
dividends, interest income, other types of ordinary income and short-term
capital gains will be taxed at the ordinary income tax rate applicable to the
taxpayer.
An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from the
fund and net gains from redemptions or other taxable dispositions of fund
shares) of US individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
The
fund is required to report to you and the IRS annually on Form 1099‑B not only
the gross proceeds of fund shares you sell or redeem but also their cost basis
for such shares. Cost basis will be calculated using the fund’s default method
of average
30
UBS Ultra Short Income Fund
cost,
unless you instruct the fund to use a different available calculation method. If
you hold your shares through a financial intermediary you should contact such
financial intermediary with respect to reporting of cost basis and available
elections for your account.
If
you have not provided complete and correct taxpayer identification to us or if
you are subject to “backup withholding,” by law we must withhold 24% of your
distributions and redemption proceeds to pay US federal income taxes.
Taxable
distributions to non-US shareholders are generally expected to be subject to a
30% withholding tax. Distributions to non-US shareholders of short-term capital
gains and interest income are expected to be subject to withholding tax because
certain detailed information necessary for a possible exemption is not expected
to be available.
The
above is a general and abbreviated discussion of certain tax considerations, and
each investor is advised to consult with his or her own tax advisor. There is
additional information on taxes in the fund’s SAI.
Disclosure
of portfolio holdings
The
fund will generally post on UBS AM’s website at www.ubs.com/usshortduration, its
full portfolio holdings and the percentage that each of these
holdings
represents of the fund’s total assets, as of the most recent calendar-month end,
on or about 10 days after the end of the calendar month.
The
fund’s complete schedule of portfolio holdings for the first and third quarters
of its fiscal year will be publicly available on the SEC’s website as part of
periodic filings on Form N-PORT for such periods. The fund’s complete schedule
of portfolio holdings for the second and fourth quarters of each fiscal year is
included in its semiannual and annual reports to shareholders and is filed with
the SEC on Form N‑CSR. The fund’s Forms N-PORT for the last month of the
applicable fiscal quarter and Forms N‑CSR are available on the SEC’s website at
http://www.sec.gov. Additionally, you may obtain copies of Forms N-PORT and
annual and semiannual reports to shareholders from the fund upon request by
calling 1‑800‑647 1568. The annual and semiannual reports for the fund will also
be posted on the fund’s website at www.ubs.com/usshortduration. Please consult
the fund’s SAI for a description of the policies and procedures that govern
disclosure of the fund’s portfolio holdings.
31
UBS Ultra Short Income Fund
Financial
highlights
The
following financial highlights table is intended to help you understand the
fund’s financial performance for the fiscal periods indicated. Certain
information reflects financial results for a single fund share. In the table,
“total investment return” represents the rate that an investor would have earned
(or lost) on an investment in the fund (assuming reinvestment of all dividends
and distributions).
The
information in the financial highlights has been derived from the financial
statements audited by Ernst & Young LLP, an independent registered public
accounting firm, whose report, along with the fund’s financial statements, is
included in the fund’s annual report to shareholders. The annual report may be
obtained without charge by calling 1‑800‑647 1568.
32
UBS Ultra Short Income Fund
Financial
highlights (concluded)
Selected
data for a share of beneficial interest outstanding throughout each period is
presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Class I |
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| Years ended April 30 |
| For the period from May 29,
20181
to April 30,
2019 |
|
| 2023 |
|
| 2022 |
| 2021 |
| 2020 |
|
Net asset value, beginning of period |
| |
$9.88 |
|
| |
$9.97 |
|
| |
$9.94 |
|
| |
$9.99 |
|
| |
$10.00 |
|
Net
investment income (loss)2 |
|
| 0.08 |
3 |
|
| 0.02 |
|
|
| 0.03 |
|
|
| 0.22 |
|
|
| 0.22 |
|
Net
realized and unrealized gain (loss) |
|
| 0.12 |
3 |
|
| (0.08 |
) |
|
| 0.05 |
|
|
| (0.05 |
) |
|
| (0.00 |
)4,5 |
Net
increase (decrease) from operations |
|
| 0.20 |
|
|
| (0.06 |
) |
|
| 0.08 |
|
|
| 0.17 |
|
|
| 0.22 |
|
Dividends
from net investment income |
|
| (0.29 |
) |
|
| (0.03 |
) |
|
| (0.05 |
) |
|
| (0.22 |
) |
|
| (0.23 |
) |
Distributions
from net realized gain |
|
| (0.01 |
) |
|
| (0.00 |
)4 |
|
| (0.00 |
)5 |
|
| — |
|
|
| — |
|
Total
dividends and distributions |
|
| (0.30 |
) |
|
| (0.03 |
) |
|
| (0.05 |
) |
|
| (0.22 |
) |
|
| (0.23 |
) |
Net asset value, end of period |
| |
$9.78 |
|
| |
$9.88 |
|
| |
$9.97 |
|
| |
$9.94 |
|
| |
$9.99 |
|
Total investment return6 |
| |
2.05 |
% |
| |
(0.63 |
)% |
| |
0.84 |
% |
| |
1.68 |
% |
| |
2.26 |
% |
Ratios to average net assets: |
|
Expenses
before fee waivers and/or expense reimbursements |
|
| 0.34 |
% |
|
| 0.33 |
%7 |
|
| 0.33 |
%7 |
|
| 0.35 |
%7 |
|
| 0.38 |
%7,8 |
Expenses
after fee waivers and/or expense reimbursements |
|
| 0.23 |
% |
|
| 0.23 |
%7 |
|
| 0.23 |
%7 |
|
| 0.23 |
%7 |
|
| 0.16 |
%7,8 |
Net
investment income (loss) |
|
| 0.79 |
% |
|
| 0.23 |
% |
|
| 0.31 |
% |
|
| 2.25 |
% |
|
| 2.42 |
%8 |
Supplemental data: |
|
Net
assets, end of period (000’s) |
|
| $
78 |
|
|
| $49,811 |
|
|
| $495,530 |
|
|
| $
421 |
|
|
| $675 |
|
Portfolio
turnover |
|
| 72 |
% |
|
| 56 |
% |
|
| 64 |
% |
|
| 53 |
% |
|
| 12 |
% |
1 |
Commencement
of operations. |
2 |
Calculated
using the average shares method. |
3 |
Due
to substantial redemptions of Class I shares of the fund during the year
and fluctuating market values, these numbers would differ if presented
utilizing another acceptable financial reporting method other than the
average shares method that was used to calculate per share amounts. If
such other acceptable method had been used, “Net investment income” would
have been $0.27 per share and “Net realized and unrealized loss” would
have been $(0.07) per share. |
4 |
The
amount of net realized and unrealized loss per share does not correspond
with the net realized and unrealized gain reported within the Statement of
Changes in its shareholder report due to the timing of purchases and
redemptions of fund shares and fluctuating market
values. |
5 |
Amount
represents less than $0.005 or $(0.005) per
share. |
6 |
Total
investment return is calculated assuming a $10,000 investment on the first
day of the period reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the ex‑dividend dates, and a
sale at net asset value on the last day of the period reported. Total
investment return for the period of less than one year has not been
annualized. Returns do not reflect the deduction of taxes that a
shareholder would pay on fund distributions. |
7 |
Includes
interest expense representing less than 0.005%. |
33
If
you want more information about the fund, the following documents are available
free of charge upon request:
Annual/semiannual
reports
Additional
information about the fund’s investments is available in the fund’s annual and
semiannual reports to shareholders.
Statement
of additional information (SAI)
The
SAI provides more detailed information about the fund and is incorporated by
reference into this prospectus (i.e., it
is legally a part of this prospectus).
You
may discuss your questions about the fund by contacting your Financial Advisor.
You may obtain free copies of the fund’s annual and semiannual reports and the
SAI by contacting the fund directly at 1‑800‑647 1568. The fund’s annual and
semiannual reports and its SAI will also be posted on the UBS website at the
following internet address: https://www.ubs.com/usshortduration
You
may also request other information about the fund and make shareholder inquiries
via this number above.
You
can get copies of reports and other information about the fund:
• |
|
Free,
from the EDGAR database on the SEC’s Internet website at:
http://www.sec.gov. |
© UBS 2023. All rights
reserved.
UBS
Series Funds—UBS Ultra Short Income Fund
Investment
Company Act File No. 811‑08767
UBS
Asset Management (Americas) Inc.
is
a subsidiary of UBS AG
S1688
UBS
Ultra Short Income Fund
Prospectus | August
28, 2023