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The UBS FundsUBS Total Return Bond FundProspectusMarch 1, 2016

Class: A: UTBAX, C: UTBCX, P: UTBPX

Not FDIC Insured. May lose value. No bank guarantee.

The UBS Funds Prospectus

This prospectus offers Class A, Class C and Class P shares in the UBS Total Return Bond Fund (the “Fund”), a seriesof The UBS Funds (the “Trust”).

As with all mutual funds, the U.S. Securities and Exchange Commission (“SEC”) has not approved or disapprovedthe Fund’s shares or determined whether this prospectus is complete or accurate. To state otherwise is a crime.

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UBS Asset Management

The UBS Funds

ContentsThe UBS FundsWhat every investor should know about the fund

Fund summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3

More information about the fundInvestment objective, strategies, securities selection and risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8

Your investmentInformation for managing your fund accountManaging your fund account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13—Flexible pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13—Buying shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 17—Selling shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0—Exchanging shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 21—Pricing and valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 22

Additional informationAdditional important information about the fundManagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 25Disclosure of portfolio holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 26Dividends and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 26Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 29Where to learn more about the fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Back cover

Please find the UBS family of funds privacy notice on page 30 of this prospectus.

Please find the UBS Asset Management business continuity planning overview on page 31 of this prospectus.

The fund is not a complete or balanced investment program.

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UBS Total Return Bond FundFund summary

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Investment objectiveThe Fund seeks to maximize total return, consisting ofcapital appreciation and current income.

Fees and expensesThese tables describe the fees and expenses that youmay pay if you buy and hold shares of the Fund. Youmay qualify for a sales charge waiver or discount if youand your family invest, or agree to invest in the future,at least $100,000 in the Fund. More information aboutthese and other discounts and waivers, as well as eligi-bility requirements for each share class, is available fromyour financial advisor and in “Managing your fund ac-count” on page 13 of the Fund’s prospectus and in“Reduced sales charges, additional purchase, exchangeand redemption information and other services” onpage 78 of the Fund’s statement of additional informa-tion (“SAI”).

Shareholder fees (fees paid directly from your investment)

Class A Class C Class P

Maximum front-end sales charge(load) imposed on purchases(as a % of offering price) 3.75% None None

Maximum contingent deferredsales charge (load) (CDSC)(as a % of purchase or salesprice, whichever is less) None1 0.75% None

Redemption fee (as a % of amountredeemed within 90 days from the datethe Fund commenced investmentoperations) None None 2.00%*

* The Board of Trustees of the Trust has approved a temporary redemption fee forthe Fund for the first 90 days of the Fund’s operation following the reorganiza-tion of Fort Dearborn Income Securities, Inc., a closed-end fund, with the Fund.

Annual fund operating expenses (expenses that you pay

each year as a percentage of the value of your investment)

Class A Class C Class P

Management fees 0.50% 0.50% 0.50%

Distribution and/or service(12b-1) fees 0.25 0.75 None

Other expenses2 0.31 0.31 0.31

Total annual fund operatingexpenses 1.06 1.56 0.81

Less management fee waiver/expensereimbursements 0.31 0.31 0.31

Total annual fund operatingexpenses after management feewaiver/expense reimbursements3 0.75 1.25 0.501 Purchases of $1 million or more that were not subject to a front-end sales

charge are subject to a 1% CDSC if sold within one year of the purchase date.2 “Other expenses” are based on estimates for the current fiscal year.3 The Trust, with respect to the Fund, and UBS Asset Management (Americas) Inc.

(formerly, UBS Global Asset Management (Americas) Inc.), the Fund’s invest-ment advisor (“UBS AM (Americas)” or the “Advisor”), have entered into awritten agreement pursuant to which the Advisor has agreed to waive a portionof its management fees and/or to reimburse expenses (excluding expenses in-curred through investment in other investment companies, interest, taxes, bro-kerage commissions and extraordinary expenses) to the extent necessary sothat the Fund’s ordinary operating expenses (excluding expenses incurredthrough investment in other investment companies, interest, taxes, brokeragecommissions and extraordinary expenses), through the period ending Octo-ber 27, 2017, do not exceed 0.75% for Class A shares, 1.25% for Class Cshares and 0.50% for Class P shares. Pursuant to the written agreement, theAdvisor is entitled to be reimbursed for any fees it waives and expenses it reim-burses for a period of three years following such fee waivers and expense reim-bursements to the extent that such reimbursement of the Advisor by the Fundwill not cause the Fund to exceed any applicable expense limit that is in placefor the Fund. The fee waiver/expense reimbursement agreement may be termi-nated by the Fund’s Board of Trustees at any time and also will terminate auto-matically upon the expiration or termination of the Fund’s advisory contractwith the Advisor. Upon termination of the fee waiver/expense reimbursementagreement, however, the UBS AM (Americas)’s three year recoupment rightswill survive.


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ExampleThis example is intended to help you compare the costof investing in the Fund with the cost of investing inother mutual funds. The example assumes that you in-vest $10,000 in the Fund for the time periods indicatedand then sell all of your shares at the end of those peri-ods unless otherwise stated. The example also assumesthat your investment has a 5% return each year andthat the Fund’s operating expenses remain the same.The costs described in the example reflect the expensesof the Fund that would result from the contractual feewaiver and expense reimbursement agreement with theAdvisor for the first year only. Although your actualcosts may be higher or lower, based on these assump-tions, your costs would be:

1 year 3 years

Class A $449 $670

Class C (assuming sale of all shares at end of period) 202 462

Class C (assuming no saleof shares) 127 462

Class P 51 228

Portfolio turnoverThe Fund pays transaction costs, such as commissions,when it buys and sells securities (or “turns over” itsportfolio). A higher portfolio turnover rate may indicatehigher transaction costs and may result in higher taxeswhen Fund shares are held in a taxable account. Thesecosts, which are not reflected in annual fund operatingexpenses or in the example, affect the Fund’s perform-ance. Because the Fund has not yet commenced opera-tions as of the date of this prospectus, the Fund’sportfolio turnover is not available.

Principal strategiesPrincipal investmentsUnder normal circumstances, the Fund invests at least80% of its net assets (plus borrowings for investmentpurposes, if any) in bonds and/or instruments that pro-vide exposure to bond markets.

For purposes of the Fund’s 80% policy above, theFund’s investments in bonds include a variety of fixedincome securities, which may include, but are not lim-ited to, securities of the US government, its agenciesand government-sponsored enterprises, securities guar-anteed by the US government, corporate debt securitiesof US and non-US issuers, including convertible securi-ties, obligations of non-US governments or their subdi-visions, agencies and government-sponsoredenterprises, obligations of international agencies orsupranational entities, mortgage-backed (includingcommercial and residential mortgage-backed securities)and asset-backed securities, and other securitized andstructured securities.

Under normal circumstances, the Fund will invest atleast 75% of its net assets in securities that, at the timeof purchase, are rated investment grade by an inde-pendent rating agency (or, if unrated, are deemed to beof comparable quality by the Advisor), but may investup to 25% in securities rated below investment grade(also known as “junk bonds”).

The Fund’s investments in fixed income securities mayhave all types of interest rate payment and reset terms,including fixed rate, adjustable rate, zero coupon, pay-in-kind and auction rate features. In addition, the fixedincome securities purchased by the Fund may be de-nominated in any currency, have coupons payable inany currency and may be of any maturity or duration.

The Fund invests in the United States and abroad, in-cluding emerging markets, and may purchase securitiesissued by domestic and foreign issuers. However, theFund expects to limit foreign currency exposure to 25%of its net assets. Furthermore, no more than 25% of theFund’s net assets may be invested in emerging marketssecurities. Depending on its assessment of market con-ditions, the Advisor may choose to allocate the Fund’sassets in any combination among these types of invest-ments or may choose not to invest in these types of in-vestments.

The Fund may, but is not required to, use exchange-traded or over-the-counter (“OTC”) derivative instru-ments for risk management purposes or as part of theFund’s investment strategies. Generally, derivatives arefinancial contracts whose value depends upon, or is de-rived from, the value of an underlying asset, referencerate, or index, and may relate to stocks, bonds, interestrates, currencies or currency exchange rates, and relatedindexes. The derivatives in which the Fund may investinclude options (including, but not limited to, optionson futures, forwards and swap agreements), futures,forward agreements, swap agreements (specifically, in-terest rate, total return, currency, credit default and in-flation swaps), credit-linked securities and structuredinvestments. All of these derivatives may be used forrisk management purposes, such as hedging against aspecific security or currency, or to manage or adjust therisk profile of the Fund. In addition, all of the derivativeinstruments listed above may be used for investment(non-hedging) purposes to earn income; to enhance re-turns; to replace more traditional direct investments; toobtain exposure to certain markets; or to establish netshort positions for individual sectors, markets, curren-cies or securities. The Fund may use options, futures,swap agreements, credit-linked securities and structuredinvestments to adjust the Fund’s portfolio duration.




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The Fund may engage in active and frequent trading ofportfolio securities to achieve its principal investmentstrategies.

Management processThe Advisor’s investment strategy is based on identify-ing compelling and attractive opportunities where theAdvisor believes that the return profile sufficiently com-pensates for the risk of owning a position. The Advisorfocuses on identifying relative value opportunities anddiscrepancies between observable market prices and theAdvisor’s own estimates of fundamental value acrossvarious maturities, sectors and issuers.

The investment process combines both a top-down andbottom-up dynamic approach to exploit diversifiedsources of alpha. The Advisor makes active decisions re-lated to top-down factors, including duration, yieldcurve, and sector positioning. After defining these pa-rameters, portfolio managers and credit research ana-lysts work in close collaboration to develop investmentthemes for industry overweights and underweights aswell as to determine the portions of the credit curvethat are most attractive. The team then works to selectsecurities to build optimal portfolios using bottom-upresearch and analysis.

Main risksAll investments carry a certain amount of risk and theFund cannot guarantee that it will achieve its invest-ment objective. You may lose money by investing in theFund. An investment in the Fund is not a deposit of thebank and is not insured or guaranteed by the FederalDeposit Insurance Corporation or any other governmentagency. Below are some of the specific risks of investingin the Fund.

Interest rate risk: An increase in prevailing interestrates typically causes the value of fixed income securi-ties to fall. Changes in interest rates will likely affect thevalue of longer-duration fixed income securities morethan shorter-duration securities and higher quality secu-rities more than lower quality securities. When interestrates are falling, some fixed income securities providethat the issuer may repay them earlier than the maturitydate, and if this occurs the Fund may have to reinvestthese repayments at lower interest rates. The risks asso-ciated with rising interest rates may be more pro-nounced in the near future due to the current period ofhistorically low rates.

Credit risk: The risk that the Fund could lose money ifthe issuer or guarantor of a fixed income security, or thecounterparty to or guarantor of a derivative contract, isunable or unwilling to meet its financial obligations.This risk is likely greater for lower quality investmentsthan for investments that are higher quality.

US Government securities risk: There are differenttypes of US government securities with different levelsof credit risk, including the risk of default, dependingon the nature of the particular government support forthat security. For example, a US government-sponsoredentity, although chartered or sponsored by an Act ofCongress, may issue securities that are neither insurednor guaranteed by the US Treasury and are thereforeriskier than those that are.

Illiquidity risk: The risk that investments cannot bereadily sold at the desired time or price, and the Fundmay have to accept a lower price or may not be able tosell the security at all. An inability to sell securities canadversely affect the Fund’s value or prevent the Fundfrom taking advantage of other investment opportuni-ties. Liquid portfolio investments may become illiquid orless liquid after purchase by the Fund due to low trad-ing volume, adverse investor perceptions and/or othermarket developments. Illiquidity risk includes the riskthat the Fund will experience significant net redemp-tions at a time when it cannot find willing buyers for itsportfolio securities or can only sell its portfolio securitiesat a material loss. Illiquidity risk can be more pro-nounced in periods of market turmoil.

High yield bond risk: The risk that the issuer of mu-nicipal bonds with ratings of BB (Standard & Poor’s Fi-nancial Services LLC (“S&P”) or Fitch Ratings, Inc.(“Fitch”)) or Ba (Moody’s Investors Service, Inc.(“Moody’s”)) or below, or deemed of equivalent quality,will default or otherwise be unable to honor a financialobligation (also known as lower-rated or “junk bonds”).These securities are considered to be predominatelyspeculative with respect to an issuer’s capacity to pay in-terest and repay principal in accordance with the termsof the obligations. Lower-rated municipal bonds aremore likely to be subject to an issuer’s default or down-grade than investment grade (higher quality) municipalbonds.

Mortgage- and Asset-Backed Securities Risk: TheFund may invest in mortgage- and asset-backed securi-ties that are subject to prepayment or call risk, which isthe risk that the borrower’s payments may be receivedearlier or later than expected due to changes in prepay-ment rates on underlying loans. Faster prepayments of-ten happen when interest rates are falling. As a result,the Fund may reinvest these early payments at lower in-terest rates, thereby reducing the Fund’s income. Con-versely, when interest rates rise, prepayments mayhappen more slowly, causing the security to lengthen induration. Longer duration securities tend to be morevolatile. Securities may be prepaid at may adversely af-fect the value of mortgage-backed securities and couldresult in losses to the Fund.




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Market risk: The risk that the market value of theFund’s investments may fluctuate, sometimes rapidly orunpredictably, as the stock and bond markets fluctuate.Market risk may affect a single issuer, industry, or sectorof the economy, or it may affect the market as a whole.

Foreign investing risk: The value of the Fund’s invest-ments in foreign securities may fall due to adverse polit-ical, social and economic developments abroad and dueto decreases in foreign currency values relative to the USdollar. Investments in foreign government bonds involvespecial risks because the Fund may have limited legal re-course in the event of default. Also, foreign securitiesare sometimes less liquid and more difficult to sell andto value than securities of US issuers. These risks aregreater for investments in emerging market issuers.

Emerging market risk: There are additional risks in-herent in investing in less developed countries that areapplicable to the Fund. Compared to the United Statesand other developed countries, investments in emerg-ing market issuers may decline in value because of un-favorable foreign government actions, greater risks ofpolitical instability or the absence of accurate informa-tion about emerging market issuers. Further, emergingcountries may have economies based on only a few in-dustries and securities markets that trade only a smallnumber of securities and employ settlement proceduresdifferent from those used in the United States. Prices onthese exchanges tend to be volatile and, in the past, se-curities in these countries have offered greater potentialfor gain (as well as loss) than securities of companies lo-cated in developed countries. Further, investments byforeign investors are subject to a variety of restrictionsin many emerging countries. Countries such as those inwhich the Fund may invest may experience, high ratesof inflation, high interest rates, exchange rate fluctua-tions or currency depreciation, large amounts of exter-nal debt, balance of payments and trade difficulties andextreme poverty and unemployment.

Derivatives risk: The value of “derivatives”—so calledbecause their value “derives” from the value of an un-derlying asset, reference rate or index—may rise or fallmore rapidly than other investments. It is possible forthe Fund to lose more than the amount it invested inthe derivative. The risks of investing in derivative instru-ments also include market risk, management risk andcounterparty risk (which is the risk that a counterpartyto a derivative contract is unable or unwilling to meetits financial obligations). Derivatives relating to fixed in-come markets are especially susceptible to interest raterisk and credit risk. In addition, many types of swapsand other non-exchange traded derivatives may be sub-ject to liquidity risk, credit risk and mispricing or valua-tion complexity. These derivatives risks are differentfrom, and may be greater than, the risks associated

with investing directly in securities and other instru-ments.

Leverage risk associated with financial instru-ments: The use of financial instruments to increase po-tential returns, including derivatives used for investment(non-hedging) purposes, may cause the Fund to bemore volatile than if it had not been leveraged. The useof leverage may also accelerate the velocity of lossesand can result in losses to the Fund that exceed theamount originally invested.

Management risk: The risk that the investment strate-gies, techniques and risk analyses employed by the Ad-visor may not produce the desired results.

Portfolio turnover risk: High portfolio turnover fromfrequent trading will increase the Fund’s transactioncosts and may increase the portion of the Fund’s capitalgains that are realized for tax purposes in any givenyear. The Fund does not restrict the frequency of tradingin order to limit expenses or the tax effect that its distri-butions may have on shareholders.

PerformanceThere is no performance information quoted for theFund as the Fund had not commenced investment oper-ations as of the date of this prospectus.

Investment advisorUBS Asset Management (Americas) Inc. (formerly, UBSGlobal Asset Management (Americas) Inc.) serves as theinvestment advisor to the Fund.

Portfolio managers• Scott E. Dolan, portfolio manager of the Fund since its

inception.• John Dugenske, portfolio manager of the Fund since

its inception.• Craig G. Ellinger, portfolio manager of the Fund since

its inception.• Brian Fehrenbach, portfolio manager of the Fund

since its inception.

Purchase & sale of Fund sharesYou may purchase, redeem or exchange shares of theFund on any business day, which is any day the NewYork Stock Exchange (“NYSE”) is open for business. Youmay purchase, redeem or exchange shares of the Fundeither through a financial advisor or directly from theFund. In general, the minimum initial investment is$1,000 and the minimum subsequent investment is$100.

Tax informationThe dividends and distributions you receive from theFund are taxable and generally will be taxed as ordinary




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income, capital gains, or some combination of both,unless you are investing through a tax deferred arrange-ment, such as a 401(k) plan or an individual retirementaccount, in which case your distributions generally willbe taxed when withdrawn from the tax-deferred ac-count.

Payments to broker/dealers and other financialintermediariesIf you purchase the Fund through a broker-dealer orother financial intermediary (such as a bank), the Fundand its related companies may pay the intermediary forthe sale of Fund shares and related services. These pay-ments may create a conflict of interest by influencingthe broker-dealer or other intermediary and your finan-cial advisor to recommend the Fund over another in-vestment. Ask your financial advisor or visit yourfinancial intermediary’s Web site for more information.




The UBS Funds

More information about the fund—UBS Total Return Bond Fund

Fund objectiveThe Fund seeks to maximize total return, consisting ofcapital appreciation and current income.

Principal investment strategiesUnder normal circumstances, the Fund invests at least80% of its net assets (plus borrowings for investmentpurposes, if any) in bonds and/or instruments that pro-vide exposure to bond markets.

For purposes of the Fund’s 80% policy above, theFund’s investments in bonds include a variety of fixedincome securities, which may include, but are not lim-ited to, securities of the US government, its agenciesand government-sponsored enterprises, securities guar-anteed by the US government, corporate debt securitiesof US and non-US issuers, including convertible securi-ties, obligations of non-US governments or their subdi-visions, agencies and government-sponsoredenterprises, obligations of international agencies orsupranational entities, mortgage-backed (includingcommercial and residential mortgage-backed securities)and asset-backed securities, and other securitized andstructured securities.

Under normal circumstances, the Fund will invest atleast 75% of its net assets in securities that, at the timeof purchase, are rated investment grade by an inde-pendent rating agency, but may invest up to 25% in se-curities rated below investment grade (also known as“junk bonds”). Investment grade fixed income securi-ties possess a minimum rating of BBB- by Standard &Poor’s Financial Services LLC (“S&P”) or Fitch Ratings,Inc. (“Fitch”), or Baa3 by Moody’s Investors Service, Inc.(“Moody’s”) or, if unrated, are determined to be ofcomparable quality by the Advisor.

The Fund’s investments in fixed income securities mayhave all types of interest rate payment and reset terms,including fixed rate, adjustable rate, zero coupon, pay-in-kind and auction rate features. In addition, the fixedincome securities purchased by the Fund may be de-nominated in any currency, have coupons payable inany currency and may be of any maturity or duration.

The Fund invests in the United States and abroad, in-cluding emerging markets, and may purchase securities

issued by domestic and foreign issuers. However, theFund expects to limit foreign currency exposure to 25%of its net assets. Furthermore, no more than 25% ofthe Fund’s net assets may be invested in emerging mar-kets securities. Depending on its assessment of marketconditions, the Advisor may choose to allocate theFund’s assets in any combination among these types ofinvestments or may choose not to invest in these typesof investments.

The Fund may, but is not required to, use derivative in-struments for risk management purposes or as part ofthe Fund’s investment strategies. Generally, derivativesare financial contracts whose value depends upon, or isderived from, the value of an underlying asset, refer-ence rate, or index, and may relate to stocks, bonds, in-terest rates, currencies or currency exchange rates, andrelated indexes. Examples of derivatives include options(including, but not limited to, options on futures, for-wards and swap agreements), futures, forward agree-ments, swap agreements (including, but not limited to,interest rate, total return, currency, credit default andinflation swaps), credit-linked securities and structuredinvestments. The Fund may use all of the derivativeslisted above to hedge against a specific security or cur-rency; to manage or adjust the risk profile of the Fund;to earn income and enhance returns; to replace moretraditional direct investments; to obtain exposure to cer-tain markets; or to establish net short positions for indi-vidual sectors, markets, currencies or securities. TheFund may use options, futures, swap agreements,credit-linked securities and structured investments toadjust the Fund’s portfolio duration.

The Fund may engage in active and frequent trading ofportfolio securities to achieve its principal investmentstrategies.

The Fund will notify shareholders at least 60 days priorto any change in its policy of investing at least 80% ofits net assets (plus borrowings for investment purposes,if any) in bonds and/or instruments that provide expo-sure to bond markets.

Securities selectionThe Advisor’s investment strategy is based on identify-ing compelling and attractive opportunities where the

Investment objective, strategies, securities selection and risks

UBS Asset Management8

Merrill Corp - UBS Funds Total Return Bond Fund Prospectus [Funds] 03-01-2016 ED [AUX] | bjasper | 14-Mar-16 12:44 | 16-5662-3.ca | Sequence: 1CHKSUM Content: 15633 Layout: 42606 Graphics: No Graphics CLEAN


9UBS Asset Management

The UBS Funds

Advisor believes that the return profile sufficiently com-pensates for the risk of owning a position. The Advisorfocuses on identifying relative value opportunities anddiscrepancies between observable market prices andthe Advisor’s own estimates of fundamental valueacross various maturities, sectors and issuers.

The investment process combines both a top-down andbottom-up dynamic approach to exploit diversifiedsources of alpha. The Advisor makes active decisions re-lated to top-down factors, including duration, yieldcurve, and sector positioning. “Duration” is a measureof price sensitivity of a fixed income investment or port-folio (expressed as % change in price) to a 1 percent-age point (i.e., 100 basis points) change in interestrates, accounting for optionality in bonds such as pre-payment risk and call/put features. A longer durationmeans an increased likelihood of interest rate sensitivity.For example, when the level of interest rates increasesby 0.10%, the price of a fixed income security or aportfolio of fixed income securities having a duration offive years generally will decrease by approximately0.50%. Conversely, when the level of interest rates de-creases by 0.10%, the price of a fixed income securityor a portfolio of fixed income securities having a dura-tion of five years generally will increase by approxi-mately 0.50%. After defining these parameters,portfolio managers and credit research analysts work inclose collaboration to develop investment themes forindustry overweights and underweights as well as todetermine the portions of the credit curve that are mostattractive. The team then works to select securities tobuild optimal portfolios using bottom-up research andanalysis.

The Fund may invest in cash or cash equivalent instru-ments, including shares of an affiliated investment com-pany. When market conditions warrant, the Fund maymake substantial temporary defensive investments incash equivalents, which may affect the Fund’s ability topursue its investment objective. The Advisor activelymanages the Fund. As such, the Fund may have highportfolio turnover, which may result in higher costs fortransactions and taxable gains. The trading costs andtax effects associated with portfolio turnover may ad-versely affect the Fund’s performance.

The Fund may lend its portfolio securities to generateadditional income. The Fund may invest in other open-

end investment companies advised by the Advisor togain exposure to certain markets. The Fund does notpay fees in connection with its investment in the invest-ment companies advised by the Advisor, but may payexpenses associated with such investments.

More about risksAn investment in the Fund is not guaranteed; you maylose money by investing in the Fund. The other principalrisks presented by an investment in the Fund are:

• Interest rate risk—The risk that changing interestrates may adversely affect the value of an invest-ment. An increase in prevailing interest rates typicallycauses the value of fixed income securities to fall,while a decline in prevailing interest rates may causethe market value of fixed income securities to rise.Changes in interest rates will affect the value oflonger-term fixed income securities more thanshorter-term securities and higher quality securitiesmore than lower quality securities. Interest ratechanges can be sudden and unpredictable, and areinfluenced by a number of factors including govern-ment policy, inflation expectations and supply anddemand. A substantial increase in interest rates mayhave an adverse impact on the liquidity and valuationof a security, especially those with longer maturities.Changes in government monetary policy, includingchanges in tax policy or changes in a central bank’simplementation of specific policy goals, may have asubstantial impact on interest rates. There can be noguarantee that any particular government or centralbank policy will be continued, discontinued orchanged nor that any such policy will have the de-sired effect on interest rates. The risks associatedwith rising interest rates may be more pronounced inthe near future due to the current period of histori-cally low rates.

• Credit and high yield bond risk—The risk that a mu-nicipal bond issuer may default or otherwise be un-able to honor a financial obligation, or may becomeless willing or less able to do so. Municipal bondswith ratings of BB (S&P or Fitch) or Ba (Moody’s) orbelow may have increased risks of default (alsoknown as lower-rated or “junk bonds”). These secu-rities are considered to be predominately speculativewith respect to an issuer’s capacity to pay interestand repay principal in accordance with the terms of



10 UBS Asset Management

The UBS Funds

the obligations. Lower-rated bonds are more likely tobe subject to an issuer’s default or downgrade thaninvestment grade (higher-rated) bonds.

• US Government securities risk—Credit risk is the riskthat the issuer will not make principal or interest pay-ments when they are due. There are different typesof US government securities with different relativelevels of credit risk depending on the nature of theparticular government support for that security. USgovernment securities may be supported by (i) thefull faith and credit of the United States; (ii) the abil-ity of the issuer to borrow from the US Treasury;(iii) the credit of the issuing agency, instrumentality orgovernment-sponsored entity; (iv) pools of assets(e.g., mortgage-backed securities); or (v) the UnitedStates in some other way. In some cases, there iseven the risk of default. For example, for assetbacked securities there is the risk those assets will de-crease in value below the face value of the security.Similarly, for certain agency-issued securities there isno guarantee the US government will support theagency if it is unable to meet its obligations. Further,the US government and its agencies and instrumen-talities do not guarantee the market value of their se-curities; consequently, the value of such securitieswill fluctuate.

• Illiquidity risk—The risk that the Fund may have diffi-culty or may not be able to sell its investments. Illiq-uidity may result from political, economic or issuerspecific events; changes in a specific market’s size orstructure, including the number of participants; oroverall market disruptions. When there is no willingbuyer and investments cannot be readily sold at thedesired time or price, the Fund may have to accept alower price or may not be able to sell the security atall. An inability to sell securities can adversely affectthe Fund’s value or prevent the Fund from being ableto take advantage of other investment opportunities.Liquid portfolio investments may become illiquid orless liquid after purchase by the Fund due to lowtrading volume, adverse investor perceptions and/orother market developments. Illiquidity risk includesthe risk that the Fund will experience significant netredemptions at a time when it cannot find willingbuyers for its portfolio securities or can only sell itsportfolio securities at a material loss. Illiquidity risk

can be more pronounced in periods of market tur-moil.

• Mortgage- and Asset-Backed Securities Risk—TheFund may invest in mortgage- and asset-backed se-curities that are subject to prepayment or call risk,which is the risk that the borrower’s payments maybe received earlier or later than expected due tochanges in prepayment rates on underlying loans.Faster prepayments often happen when interest ratesare falling. As a result, the Fund may reinvest theseearly payments at lower interest rates, thereby reduc-ing the Fund’s income. Conversely, when interestrates rise, prepayments may happen more slowly,causing the security to lengthen in duration. Longerduration securities tend to be more volatile. Securi-ties may be prepaid at may adversely affect the valueof mortgage-backed securities and could result inlosses to the Fund.

• Market risk—The risk that the market value of theFund’s investments will fluctuate as the stock andbond markets fluctuate. Market risk may affect a sin-gle issuer, industry or section of the economy, or itmay affect the market as a whole.

• Foreign investing risk—The risk that prices of theFund’s investments in foreign securities may go downbecause of unfavorable foreign government actions,political instability or the absence of accurate infor-mation about foreign issuers. In addition, political,diplomatic, or regional conflicts, terrorism or war, so-cial and economic instability, and internal or externalpolicies or economic sanctions limiting or restrictingforeign investment, the movement of assets or othereconomic activity may affect the value and liquidityof foreign securities. Also, a decline in the value offoreign currencies relative to the US dollar will reducethe value of securities denominated in those curren-cies. Also, foreign securities are sometimes less liquidand harder to sell and to value than securities of USissuers. Each of these risks is more severe for securi-ties of issuers in emerging market countries.

• Emerging market risk—The risk that investments inemerging market issuers may decline in value be-cause of unfavorable foreign government actions,greater risks of political instability or the absence ofaccurate information about emerging market issuers.




The UBS Funds

Further, emerging countries may have economiesbased on only a few industries and securities marketsthat trade only a small number of securities and em-ploy settlement procedures different from those usedin the United States. Prices on these exchanges tendto be volatile and, in the past, securities in thesecountries have offered greater potential for gain (aswell as loss) than securities of companies located indeveloped countries. Further, investments by foreigninvestors are subject to a variety of restrictions inmany emerging countries. Countries such as those inwhich the Fund may invest may experience high ratesof inflation, high interest rates, exchange rate fluctu-ations or currency depreciation, large amounts of ex-ternal debt, balance of payments and tradedifficulties and extreme poverty and unemployment.

• Derivatives risk—Derivatives involve risks differentfrom, and possibly greater than, the risks associatedwith investing directly in securities and other instru-ments. Derivatives require investment techniques andrisk analyses different from those of other invest-ments. If the Advisor incorrectly forecasts the valueof securities, currencies, interest rates, or other eco-nomic factors in using derivatives, the Fund mighthave been in a better position if the Fund had notentered into the derivatives. While some strategiesinvolving derivatives can protect against the risk ofloss, the use of derivatives can also reduce the oppor-tunity for gain or even result in losses by offsettingfavorable price movements in other Fund invest-ments. Derivatives also involve the risk of mispricingor improper valuation, the risk that changes in thevalue of a derivative may not correlate perfectly withthe underlying asset, rate, index, or overall securitiesmarkets, and counterparty and credit risk (the riskthat the other party to a swap agreement or otherderivative will not fulfill its contractual obligations,whether because of bankruptcy or other default).With respect to futures and certain swaps, there is arisk of loss by the Fund of the initial and variationmargin deposits in the event of bankruptcy of a fu-tures commission merchant (“FCM”) with which theFund has an open position in a futures or swaps con-tract. The assets of the Fund may not be fully pro-tected in the event of the bankruptcy of the FCM orcentral counterparty. The Fund is also subject to therisk that the FCM could use the Fund’s assets to sat-isfy its own financial obligations or the payment obli-

gations of another customer to the central counter-party. Gains or losses involving some options, futures,and other derivatives may be substantial (for exam-ple, for some derivatives, it is possible for the Fund tolose more than the amount the Fund invested in thederivatives). Some derivatives tend to be morevolatile than other investments, resulting in largergains or losses in response to market changes.

Derivatives are subject to a number of other risks, in-cluding liquidity risk (the possible lack of a secondarymarket for derivatives and the resulting inability ofthe Fund to sell or otherwise close out the deriva-tives) and interest rate risk (some derivatives are moresensitive to interest rate changes and market pricefluctuations). The Fund’s use of derivatives may causethe Fund to realize higher amounts of short-termcapital gains (generally taxed at ordinary income taxrates) than if the Fund had not used such instru-ments. Finally, the regulation of swaps and other de-rivatives is a rapidly changing area of law and it is notpossible to predict fully the effects of current or fu-ture regulation. It is possible that developments ingovernment regulation of various types of derivativescould affect the character, timing and amount of theFund’s taxable income or gains; may limit or preventthe Fund from using or limit the Fund’s use of theseinstruments effectively as a part of its investmentstrategy; and could adversely affect the Fund’s abilityto achieve its investment objective. The Fund’s use ofderivatives may be limited by the requirements fortaxation of the Fund as a regulated investment com-pany. New requirements, even if not directly applica-ble to the Fund, may increase the cost of the Fund’sinvestments and cost of doing business.

• Leverage risk associated with financial instru-ments—Certain derivatives that the Fund may usemay create leverage. Derivatives that involve leveragecan result in losses to the Fund that exceed theamount originally invested in the derivatives.

• Management risk—The risk that the investmentstrategies, techniques and risk analyses employed bythe Advisor may not produce the desired results. TheAdvisor may be incorrect in its assessment of thevalue of securities or assessment of market or inter-est rate trends, which can result in losses to theFund.




The UBS Funds

• Securities lending risk—Securities lending involvesthe lending of portfolio securities owned by the Fundto qualified broker-dealers and financial institutionswho provide collateral to the Fund in connectionwith these loans. Securities lending involves the riskthat the borrower may fail to return the securities ina timely manner or at all. As a result, the Fund maylose money and there may be a delay in recoveringthe loaned securities. The Fund also could losemoney if it does not recover the securities and/or thevalue of the collateral falls, including the value of in-vestments made with cash collateral.

• Portfolio turnover risk—High portfolio turnover fromfrequent trading will increase the Fund’s transactioncosts and may increase the portion of the Fund’s cap-ital gains that are realized for tax purposes in anygiven year. This, in turn, may increase the Fund’s tax-able distributions in that year. Frequent trading alsomay increase the portion of the Fund’s realized capi-tal gains that is considered “short-term” for tax pur-poses. Shareholders will pay higher taxes ondistributions that represent short-term capital gainsthan they would pay on distributions that representlong-term capital gains. The Fund does not restrictthe frequency of trading in order to limit expenses orthe tax effect that its distributions may have onshareholders.

Other informationExclusion of Advisor from commodity pool opera-tor definition—With respect to the Fund, the Advisorhas claimed an exclusion from the definition of “com-modity pool operator” (“CPO”) under the CommodityExchange Act (“CEA”) and the rules of the U.S. Com-modity Futures Trading Commission (“CFTC”) and,therefore, is not subject to CFTC registration or regula-tion as a CPO. In addition, the Advisor is relying upon arelated exclusion from the definition of “commoditytrading advisor” under the CEA and the rules of theCFTC.

The terms of the CPO exclusion require the Fund,among other things, to adhere to certain limits on itsinvestments in “commodity interests.” Commodity in-terests include commodity futures, commodity optionsand swaps, which in turn include non-deliverable for-ward currency agreements, as further described in theFund’s statement of additional information (“SAI”). Be-cause the Advisor and the Fund intend to comply withthe terms of the CPO exclusion at this time, the Fundwill limit its investments in these types of instruments.The Fund is not intended as a vehicle for trading in thecommodity futures, commodity options or swaps mar-kets. The CFTC has neither reviewed nor approved theAdvisor’s reliance on these exclusions, or the Fund, itsinvestment strategies or this prospectus.




The UBS Funds

Managing your fund accountFlexible pricingThe Fund offers three classes of shares—Class A,Class C and Class P. Each class has different salescharges and ongoing expenses. You can choose theclass that is best for you, based on how much you planto invest and how long you plan to hold your shares ofthe Fund. Class P shares are only available to certaintypes of investors.

The Fund has adopted separate plans pertaining to theClass A and Class C shares of the Fund underRule 12b-1 that allow the Fund to pay service and (forClass C shares) distribution fees for the sale of theFund’s shares and services provided to shareholders. Be-cause the 12b-1 distribution fees for Class C shares arepaid out of the Fund’s assets on an ongoing basis, overtime they will increase the cost of your investment andmay cost you more than if you paid other types of salescharges, such as the front-end sales charge for Class Ashares.

You may qualify for a waiver of certain sales charges onClass A and Class C shares. See “Sales charge waiversfor Class A and Class C shares” later in this prospectus.You may also qualify for a reduced sales charge onClass A shares. See “Sales charge reductions for Class Ashares” later in this prospectus.

Class A sharesClass A shares have a front-end sales charge that is in-cluded in the offering price of the Class A shares. Thissales charge is paid at the time of purchase and is notinvested in the Fund. The Fund’s Class A shares pay anannual service (12b-1) fee of 0.25% of average net as-sets on an ongoing basis. Class A shares pay no distri-bution fees. The ongoing expenses for Class A sharesare lower than for Class C shares.

The Class A sales charges for the Fund are described inthe following tables:

Class A sales charges Reallowance to Sales charge as a percentage of: selected dealers asAmount of investment Offering price Net amount invested percentage of offering price

Less than $100,000 3.75% 3.90% 3.25%$100,000 to $249,999 3.25 3.36 2.75$250,000 to $499,999 2.25 2.30 2.00$500,000 to $999,999 1.75 1.78 1.50$1,000,000 and over1 None None May pay up to 1.002

1 A contingent deferred sales charge of 1% of the shares’ offering price or the net asset value at the time of sale by the shareholder, whicheveris less, is charged on sales of shares made within one year of the purchase date. Class A shares representing reinvestment of dividends are notsubject to this 1% charge. Withdrawals in the first year after purchase of up to 12% of the value of the fund account under the Fund’s Auto-matic Cash Withdrawal Plan are not subject to this charge.

2 For sales of $1 million or more, UBS Asset Management (US) Inc. (formerly, UBS Global Asset Management (US) Inc.) (“UBS AM (US)”) pays tothe dealer an amount based upon the following schedule: 1.00% on the first $3 million and 0.75% on the next $2 million.




The UBS Funds

If you intend to purchase more than $5 million ofClass A shares, you should instead purchase Class Pshares, which have lower on-going expenses.

Class C sharesClass C shares pay an annual 12b-1 distribution fee of0.50% of average net assets. Class C shares of theFund also pay an annual 12b-1 service fee of 0.25% ofaverage net assets. Class C shares do not convert to an-other class of shares. This means that you will pay the12b-1 fees for as long as you own your shares.

Class C shares also have a contingent deferred salescharge of 0.75%, applicable if you sell your shareswithin one year of the date you purchased them. Wecalculate the deferred sales charge on sales of Class Cshares by multiplying 0.75% by the lesser of the net as-set value of the Class C shares at the time of purchaseor the net asset value at the time of sale.

Sales charge waivers for Class A and Class C sharesClass A front-end sales charge waivers—Front-end salescharges will be waived if you buy Class A shares withproceeds from the following sources:

1. Redemptions from any registered mutual fund forwhich UBS AM (US) or any of its affiliates serves asprincipal underwriter if you:

• Originally paid a front-end sales charge on theshares; and

• Reinvest the money within 60 days of the re-demption date.

The Fund’s front-end sales charges will also not apply toClass A purchases by or through:

1. Employees of UBS Group AG (“UBS”) and its sub-sidiaries and members of the employees’ immediatefamilies; and members of the Board ofDirectors/Trustees (and former Board members whoretire from such Boards after December 1, 2005) ofany investment company for which UBS AM (US) orany of its affiliates serve as principal underwriter.

2. Trust companies and bank trust departments invest-ing on behalf of their clients if clients pay the bankor trust company an asset-based fee for trust or as-set management services.

3. Retirement plans and deferred compensation plansthat have assets of at least $1 million or at least 25eligible employees.

4. Broker-dealers and other financial institutions (in-cluding registered investment advisors and financialplanners) that have entered into a selling agreementwith UBS AM (US) (or otherwise have an arrange-ment with a broker-dealer or other financial institu-tion with respect to sales of Fund shares), on behalfof clients participating in a fund supermarket, wrapprogram, or other program in which clients pay afee for advisory services, executing transactions inFund shares, or for otherwise participating in theprogram.

5. Employees of broker-dealers and other financial in-stitutions (including registered investment advisorsand financial planners) that have entered into a sell-ing agreement with UBS AM (US) (or otherwise hav-ing an arrangement with a broker-dealer or otherfinancial institution with respect to sales of Fundshares), and their immediate family members, as al-lowed by the internal policies of their employer.

6. Insurance company separate accounts.

7. Shareholders of the Class N shares of any UBS Fundwho held such shares at the time they were redesig-nated as Class A shares.

8. Reinvestment of capital gains distributions and divi-dends.

9. College savings plans organized under Section 529of the Internal Revenue Code (the “IRC”).

10. Broker-dealers or other financial institutions thathave entered into an agreement with UBS AM (US)to offer Class A shares through a no-load networkor platform or self-directed investment brokerageaccounts, in which clients may or may not pay atransaction fee to the broker-dealer or financial in-stitution.

Class A and Class C shares contingent deferred salescharge waivers—The contingent deferred sales chargewill be waived for:

• Redemptions of Class A shares by former holders ofClass N shares;




The UBS Funds

• Exchanges between funds for which UBS AM (US) orone of its affiliates serves as principal underwriter, ifpurchasing the same class of shares;

• Redemptions following the death or disability of theshareholder or beneficial owner;

• Tax-free returns of excess contributions from em-ployee benefit plans;

• Distributions from employee benefit plans, includingthose due to plan termination or plan transfer;

• Redemptions made in connection with the Auto-matic Cash Withdrawal Plan, provided that such re-demptions:

—are limited annually to no more than 12% of theoriginal account value;

—are made in equal monthly amounts, not to ex-ceed 1% per month; and

—the minimum account value at the time the Auto-matic Cash Withdrawal Plan was initiated was noless than $5,000;

• Redemptions of shares purchased through certain re-tirement plans;

• Broker-dealers or other financial institutions thathave entered into an agreement with UBS AM (US)to offer Class A shares through a no-load network orplatform or self-directed investment brokerage ac-counts, in which clients may or may not pay a trans-action fee to the broker-dealer or financialinstitution.

Sales charge reductions for Class A shares right ofaccumulation. A purchaser of Class A shares mayqualify for a reduction of the front-end sales charge onpurchases of Class A shares by combining a current pur-chase with certain other Class A, Class C and/or Class Pshares of Family Funds (“Family Funds” include otherUBS Funds, PACE Select funds and other funds forwhich UBS AM (US) serves as principal underwriter)1

already owned. To determine if you qualify for a reduc-tion of the front-end sales charge, the amount of yourcurrent purchase is added to the current net asset valueof your other Class A, Class C and/or Class P shares, aswell as those Class A, Class C and/or Class P shares ofyour spouse and children under the age of 21 and whoreside in the same household. If you are the sole ownerof a company, you may also add any company ac-counts, including retirement plan accounts invested inClass A, Class C and/or Class P shares of the FamilyFunds. Companies with one or more retirement plansmay add together the total plan assets invested inClass A, Class C and/or Class P shares of the FamilyFunds to determine the front-end sales charge that ap-plies. To qualify for the discount on a purchase througha financial institution, when each purchase is made, theinvestor or institution must provide UBS AM (US) withsufficient information to verify that the purchase quali-fies for the privilege or discount. The right of accumula-tion may be amended or terminated by UBS AM (US) atany time as to purchases occurring thereafter.

Shares purchased through a broker/dealer may be sub-ject to different procedures concerning Rights of Accu-mulation. Please contact your investment professionalfor more information.

Letter of IntentInvestors may also obtain reduced sales charges forClass A shares for investments of a particular amountby means of a written Letter of Intent, which expressesthe investor’s intention to invest that amount within aperiod of 13 months in shares of one or more FamilyFunds.1 Each purchase of Class A shares under a Letterof Intent will be made at the public offering price appli-cable at the time of such purchase to a single transac-tion of the total dollar amount indicated in the Letter ofIntent. A Letter of Intent may include purchases ofClass A, Class C and/or Class P shares made not morethan three months prior to the date that the investorsigns a Letter of Intent and during the 13-month periodin which the Letter of Intent is in effect; however, the13-month period during which the Letter of Intent is ineffect will begin on the date on which the Letter of In-tent is signed.

1 Please note that any Family Fund that is a money market fund will not count for purposes of the right of accumulation discount or for pur-poses of satisfying the forms of a Letter of Intent.




The UBS Funds

Investors do not receive credit for shares purchased bythe reinvestment of distributions. Investors qualifyingfor a right of accumulation discount (described above)may purchase shares under a single Letter of Intent.

The Letter of Intent is not a binding obligation upon theinvestor to purchase the full amount indicated. Theminimum initial investment under a Letter of Intent is5% of such amount, which must be invested immedi-ately. Class A shares purchased with the first 5% ofsuch amount may be held in escrow to secure paymentof the higher sales charge applicable to the shares actu-ally purchased if the full amount indicated is not pur-chased. When the full amount indicated has beenpurchased, the escrow will be released. If an investordesires to redeem escrowed shares before the fullamount has been purchased, the shares will be releasedonly if the investor pays the sales charge that, withoutregard to the Letter of Intent, would apply to the totalinvestment made to date.

Letter of Intent forms may be obtained from UBS AM(US) or from investment professionals. Investors shouldread the Letter of Intent carefully.

Shares purchased through a broker/dealer may be sub-ject to different procedures concerning Letters of In-tent. Please contact your investment professional formore information.

Note on sales charge reductions and waivers forClass A and Class C sharesAdditional information concerning sales charge reduc-tions and waivers is available in the Fund’s SAI. If youthink you qualify for any of the sales charge waivers orreductions described previously, you may need to notifyand/or provide documentation to UBS AM (US). Youwill also need to notify UBS AM (US) of the existence ofother accounts in which there are holdings eligible tobe aggregated to meet certain sales load breakpoints.Information you may need to provide to UBS AM (US)may include:

• Information or records regarding shares of the Fundor other funds held in all accounts at any financial in-termediary;

• Information or records regarding shares of the Fundor other funds held in any account at any financial

intermediary by related parties of the shareholder,such as members of the same family; and/or

• Any information that may be necessary for UBS AM(US) to determine your eligibility for a reduction orwaiver of a sales charge.

For more information, you should contact your invest-ment professional or call 1-800-647 1568. If you wantinformation on the Automatic Cash Withdrawal Plan, seethe SAI or contact your investment professional. Also, in-formation regarding the Fund’s distribution arrangementsand the applicable sales charge reductions and waivers isavailable on the Fund’s Web Site, free of charge, athttp://www.ubs.com/us/en/asset_management/individual_investors/mutual_fund.html.

Class P sharesShareholders pay no front-end or deferred sales chargeson Class P shares. UBS AM (US), the principal under-writer of the Fund, may make payments out of its ownresources to certain affiliated dealers (e.g., UBS Finan-cial Services Inc.) and, from time to time, unaffiliateddealers in UBS AM (US)’s sole discretion. Only specifictypes of investors can purchase Class P shares.

The following are eligible to purchase Class P shares:

• Shareholders of the Class I shares of any UBS Fundwho held such shares as of the date the shares wereredesignated Class Y shares (now designated Class Pshares);

• Retirement plans with 5,000 or more eligible employ-ees or $100 million or more in plan assets;

• Retirement plan platforms/programs that includeFund shares if the platform/program covers plan as-sets of at least $100 million;

• Trust companies and bank trust departments pur-chasing shares on behalf of their clients in a fiduciarycapacity;

• Banks, registered investment advisors and other fi-nancial institutions purchasing Fund shares for theirclients as part of an advisory program;




The UBS Funds

• College savings plans organized under Section 529of the IRC, if shareholder servicing fees are paid ex-clusively outside of the participating funds;

• Other investors as approved by the Fund’s Board ofTrustees;

• Shareholders who invest a minimum initial amountof $5 million in the Fund. An institutional investormay aggregate its holdings with holdings of certainrelated institutional investors to meet the foregoingminimums;

• Foundations, Endowments and Religious and othercharitable organizations described inSection 501(c)(3) of the IRC that invest a minimuminitial amount of $2,500,000;

• Employees of UBS AM (Americas) and UBS AM (US),as long as the employee establishes an account in hisor her name directly at the Fund’s transfer agent andpurchases a minimum initial amount of $50,000;

• Members of the Board of Directors/Trustees (and for-mer Board members who retire from such Boards af-ter December 1, 2005) of any investment companyfor which UBS AM (US) or any of its affiliates servesas principal underwriter, subject to a minimum initialpurchase amount of $50,000 in an account estab-lished by the member in his or her name directly atthe Fund’s transfer agent; and

• Investors who are clients of a wrap fee advisory pro-gram, including those programs sponsored by UBSAM (Americas) or its affiliates, and who invest a mini-mum initial amount of $1,000 (with a minimum sub-sequent investment of $100), unless waived byagreement or otherwise with UBS AM (US).

Shareholders of Fort Dearborn Income Securities, Inc.received Class P shares in connection with the reorgani-zation with the Fund. In order to purchase additionalshares of Class P, former Fort Dearborn Income Securi-ties, Inc. shareholders must meet the eligibility require-ments listed above.

Class P shares do not pay ongoing 12b-1 distribution orservice fees. The ongoing expenses for Class P sharesare the lowest of all the classes.

Buying sharesYou can buy Fund shares through your investment pro-fessional at a broker-dealer or other financial institutionwith which UBS AM (US) has a dealer agreement.

If you wish to invest in other Family Funds, you can doso by:

• Contacting your investment professional (if you havean account at a financial institution that has enteredinto a dealer agreement with UBS AM (US));

• Buying shares through the transfer agent as de-scribed later in this prospectus; or

• Opening an account by exchanging shares from an-other Family Fund.

Selected securities dealers or other financial institutions,including UBS Financial Services Inc., may charge a pro-cessing fee to confirm a purchase. UBS Financial Serv-ices Inc. currently charges a fee of $5.25.

The Fund and UBS AM (US) reserve the right to reject apurchase order or suspend the offering of shares.

Through financial institutions/professionalsAs mentioned above, the Fund has entered into one ormore sales agreements with brokers, dealers or other fi-nancial intermediaries (“Service Providers”), as well aswith financial institutions (banks and bank trust depart-ments) (each an “Authorized Dealer”). The AuthorizedDealer, or intermediaries designated by the AuthorizedDealer (a “Sub-designee”), may in some cases be au-thorized to accept purchase and redemption orders thatare in “good form” on behalf of the Fund. The Fundwill be deemed to have received a purchase or redemp-tion order when the Authorized Dealer or Sub-designeereceives the order in good form. Such orders will bepriced at the Fund’s net asset value next computed af-ter such order is received in good form by the Author-ized Dealer or Sub-designee. These Authorized Dealersmay charge the investor a transaction fee or other feefor their services at the time of purchase. These feeswould not be otherwise charged if you purchasedshares directly from the Fund. It is the responsibility ofsuch Authorized Dealers or Sub-designees to promptlyforward purchase orders with payments to the Fund.




The UBS Funds

Additional compensation to affiliated dealer UBS AM (US) pays its affiliate, UBS Financial ServicesInc., the following additional compensation in connec-tion with the sale of Fund shares in consideration of dis-tribution, marketing support and other services:

• Fees on Program Assets: 0.05% (5 basis points) perannum of the value of the average monthly assetsthat are invested in each Fund sold through certainwrap fee advisory programs, to be computed andpaid on a quarterly basis; and

• Fees on Retail (i.e., Non-Program) Assets: a quarterlyfee at the annual rate of 0.05% (5 basis points) ofthe net asset value of all Fund shares, other than ex-cluded shares, in the UBS Financial Services Inc. ac-counts as of the end of such quarter, valued as of theclose of business on the last business day of thequarter.

UBS Financial Services Inc. charges a minimum of$75,000 per calendar year for distribution, marketingsupport and other services.

The foregoing payments are made by UBS AM (US) outof its own resources. These payments are often referredto as “revenue sharing.”

Additional compensation to financial institution(s)UBS AM (US) or the Advisor may pay compensation,out of the Advisor’s profits and not as an additionalcharge to the Fund, to certain financial institutions(which may include banks, securities dealers and otherindustry professionals) for the sale and/or distribution ofFund shares or the retention and/or servicing of Fundinvestors and Fund shares. These payments are oftenreferred to as “revenue sharing.” Revenue sharing pay-ments are paid in addition to any distribution or servic-ing fees payable under a 12b-1 or service plan of theFund, any record keeping or sub-transfer agency feespayable by the Fund, or other fees described in the feetables or elsewhere in the prospectus or SAI. Revenuesharing payments are paid from the Advisor’s own re-sources and not as an additional charge to the Fund.

The level of revenue sharing payments made to finan-cial institutions may be a fixed fee or based upon oneor more of the following factors: gross sales, current as-sets and/or number of accounts of the Fund attributa-

ble to the financial institution, or other factors asagreed to by the Advisor and the financial institution orany combination thereof. The amount of the revenueshare may be different for different financial institu-tions. For specific information about revenue sharingarrangements for a particular financial institution pleasesee the SAI.

In some circumstances, revenue sharing payments maycreate an incentive for a financial institution, its employ-ees or associated persons to recommend or sell sharesof the Fund to you. You should consult with your finan-cial advisor and review carefully any disclosure by the fi-nancial institution as to compensation received.

Minimum investments:Class A and Class C shares (except retirement ac-counts):

To open an account . . . . . . . . . . . . $ 1,000To add to an account . . . . . . . . . . . $ 100

Class A and Class C shares (retirement accounts):

To open an account . . . . . . . . . . . . $ 250To add to an account . . . . . . . . . . . $ 25

Class P shares:

To open an account . . . . . . . . . . . . $5,000,000To add to an account . . . . . . . . . . . $ 0

The Fund may waive or reduce these amounts for (or asotherwise noted in the prospectus):

• Employees of UBS AM (US) or its affiliates; or

• Participants in certain pension plans, retirement ac-counts, unaffiliated investment programs or theFund’s automatic investment plan.

Market timers. The interests of the Fund’s long-termshareholders and their ability to manage their invest-ments may be adversely affected when their shares arerepeatedly bought and sold in response to short-termmarket fluctuations—also known as “market timing.”Market timing may cause the Fund to have difficulty im-plementing long-term investment strategies, because itcannot predict how much cash it will have to invest.




The UBS Funds

Market timing also may force the Fund to sell portfoliosecurities at disadvantageous times to raise the cashneeded to buy a market timer’s Fund shares. Markettiming also may materially increase the Fund’s transac-tion costs, administrative costs or taxes. These factorsmay hurt the Fund’s performance and its shareholders.

In addition, the nature of the Fund’s portfolio holdingsmay allow a shareholder to engage in a short-termtrading strategy to take advantage of possible delaysbetween the change in the Fund’s portfolio holdingsand the reflection of that change in the Fund’s net assetvalue (often called “arbitrage market timing”). Such adelay may occur if the Fund has significant investmentsin non-US securities, where due to time zone differ-ences, the value of those securities is established sometime before the Fund calculates its net asset value. Insuch circumstances, the available market prices for suchnon-US securities may not accurately reflect the latestindications of value at the time the Fund calculates itsnet asset value. There is a possibility that arbitrage mar-ket timing may dilute the value of Fund shares if re-deeming shareholders receive proceeds (and buyingshareholders receive shares) based upon a net assetvalue that does not reflect appropriate fair value prices.One of the objectives of the Fund’s fair value pricingprocedures is to minimize the possibilities of this type ofarbitrage market timing.

The Board of Trustees of the Trust has adopted the fol-lowing policies as a means to discourage, detect andprevent market timing. The Fund will reject purchase or-ders and exchanges into the Fund by any person, groupor account that UBS AM (Americas), as the Fund’s Advi-sor and Administrator, determines to be a market timer.UBS AM (Americas) maintains market timing preventionprocedures under which it reviews daily reports fromthe Fund’s transfer agent of all accounts that engagedin transactions in Fund shares that exceed a specifiedmonetary threshold and effected such transactionswithin a certain period of time to evaluate whether anysuch account had engaged in market timing activity. Inevaluating the account transactions, UBS AM (Ameri-cas) will consider the potential harm of the trading orexchange activity to the Fund or its shareholders. If UBSAM (Americas) determines, in its sole discretion, that ashareholder has engaged in market timing, the share-holder will be permanently barred from making futurepurchases or exchanges into the Fund. Additionally, in

making a determination as to whether a shareholderhas engaged in market timing, the shareholder’s ac-count may be temporarily barred from making addi-tional investments into the Fund pending a definitivedetermination. In addition, if a Financial Advisor is iden-tified as the Financial Advisor of two or more accountsthat have engaged in market timing, UBS AM (Ameri-cas) may prohibit the Financial Advisor from making ad-ditional purchases of the Fund on behalf of its clients.

Shares of the Fund may be held through omnibus ac-count arrangements, whereby a broker-dealer, invest-ment advisor, retirement plan sponsor or other financialintermediary (each a “Financial Intermediary”) main-tains an omnibus account with the Fund for trading onbehalf of its customers or participants. Omnibus ac-counts are accounts that aggregate the transactions ofunderlying shareholders, thus making it difficult toidentify individual underlying account holder activity.UBS AM (Americas) reviews purchase and redemptionactivity in omnibus accounts on a daily basis to seek toidentify an unusual pattern of trading activity within ashort period of time. If UBS AM (Americas) detects anunusual pattern of trading activity, UBS AM (Americas)will notify the Financial Intermediary of the omnibus ac-count and will request that the Financial Intermediaryprovide underlying account detail. If UBS AM (Americas)identifies market timing activity, it will instruct the Fi-nancial Intermediary to block the customer or partici-pant from further purchases of Fund shares. In theevent that the Financial Intermediary cannot identifyand block the customer or participant, UBS AM (Ameri-cas) will require the Financial Intermediary to block theparticular plan from further purchases of Fund shares.UBS AM (Americas) also will periodically request under-lying account detail for omnibus accounts for reviewand analysis.

While the Fund will seek to take actions (directly andwith the assistance of Financial Intermediaries) that willdetect market timing, the Fund’s efforts may not becompletely successful in minimizing or eliminating suchtrading activity.

When it is determined that a Financial Intermediary’sfrequent trading policies and procedures sufficientlyprotect Fund shareholders, the Fund and UBS AM(Americas) may rely on the Financial Intermediary’s frequent trading policies and procedures with respect to




The UBS Funds

transactions by shareholders investing through the Fi-nancial Intermediary rather than applying the Fund’smarket timing prevention procedures. The determina-tion to rely on a Financial Intermediary’s frequent trad-ing policies and procedures will be made after a reviewof the policies and procedures by the Legal and Compli-ance Departments of UBS AM (Americas). The ChiefCompliance Officer of UBS AM (Americas) will deter-mine whether the policies and procedures sufficientlyprotect Fund shareholders. The types of Financial Inter-mediaries that may have frequent trading policies andprocedures on which the Fund and UBS AM (Americas)may rely may include broker-dealers, advisors, clearingfirms, bank trust departments, retirement plan adminis-trators, other record keepers and certain Financial Inter-mediary through which a shareholder may own Fundshares may impose frequent trading restrictions that dif-fer from those of the Fund. If you have purchasedshares through a Financial Intermediary as describedabove, you should contact your Financial Intermediaryto determine the frequent trading restrictions that applyto your account.

Certain types of transactions will also be exempt fromthe market timing prevention procedures. These ex-empt transactions are purchases and redemptionsthrough the Automatic Cash Withdrawal Plan, pur-chases through an automatic investment plan, redemp-tions by wrap fee accounts that have an automaticrebalancing feature and that have been identified tothe Fund’s principal underwriter and transfer agent, cer-tain non-participant directed transactions in retirementplans, and purchases and redemptions by UBS funds offunds.

Selling sharesYou can sell your Fund shares at any time. If you ownmore than one class of shares, you should specify whichClass you want to sell. If you do not, the Fund will as-sume that you want to sell shares in the following or-der: Class A, then Class C and last, Class P.

If you want to sell shares that you purchased recently,the Fund may delay payment until it verifies that it hasreceived good payment. If you hold your sharesthrough a financial institution, you can sell shares bycontacting your investment professional, or an Author-ized Dealer or Sub-designee, for more information. Im-portant note: Each institution or professional may have

its own procedures and requirements for selling sharesand may charge fees. If you purchased shares throughthe Fund’s transfer agent, you may sell them as ex-plained later in this prospectus.

If you sell Class A shares and then repurchase Class Ashares of the same Fund within 365 days of the sale,you can reinstate your account without paying a salescharge.

Securities dealers or other financial institutions, includ-ing UBS Financial Services Inc., may charge a fee toprocess a redemption of shares. UBS Financial ServicesInc. currently charges a fee of $5.25.

The Fund reserves the right to pay redemptions “inkind” (i.e., payment in securities rather than cash) if theinvestment you are redeeming is large enough to affectthe Fund’s operations (for example, if it represents morethan $250,000 or 1% of the Fund’s assets). In thesecases, you might incur brokerage costs converting thesecurities to cash. The securities included in a redemp-tion in kind may include illiquid securities that may notbe immediately saleable.

It costs the Fund money to maintain shareholder ac-counts. Therefore, the Fund reserves the right to repur-chase all shares in any account that has a net assetvalue of less than $500. Any applicable deferred salescharge may be assessed on such redemptions. If theFund elects to do this with your account, it will notifyyou that you can increase the amount invested to $500or more within 60 days. The Fund will not repurchaseshares in accounts that fall below $500 solely becauseof a decrease in the Fund’s net asset value.

To help the government fight the funding of terrorismand money laundering activities, federal law requires allfinancial institutions to obtain, verify and record infor-mation that identifies each person who opens an ac-count. If you do not provide the information requested,the Fund may not be able to maintain your account. Ifthe Fund is unable to verify your identity or that of an-other person(s) authorized to act on your behalf, theFund and UBS AM (Americas) reserve the right to closeyour account and/or take such other action they deemreasonable or required by law. Fund shares will be re-deemed and valued in accordance with the net asset




The UBS Funds

value next calculated after the determination has beenmade to close the account.

Temporary redemption feeIf you sell or exchange Class P shares of the Fund lessthan 90 days after you received Class P shares of theFund in connection with the reorganization of FortDearborn Income Securities, Inc. into and with theFund, a redemption fee of 2.00% of the amount soldor exchanged will be deducted at the time of the trans-action. Other purchases and subsequent sale or ex-change of Class P shares within the 90 day periodfollowing commencement of Fund operations in con-nection with the reorganization of Fort Dearborn In-come Securities, Inc. into and with the Fund will also besubject to the 2.00% redemption fee. This amount willbe paid to the Fund, not to the Advisor or UBS AM(US). The redemption fee is designed to offset the costsassociated with trading portfolio securities to facilitateanticipated shareholder redemptions upon the reorgan-ization of Fort Dearborn Income Securities, Inc., aclosed-end fund, into and with the Fund. Furthermore,Advisor believes imposing a temporary redemption feewill aid in protecting interests of long term shareholdersof the Fund.

Exchanging sharesYou may exchange Class A or Class C shares of theFund for shares of the same class of most other FamilyFunds. You also may exchange Class P shares for sharesof the same class of most other Family Funds if youmeet the eligibility requirements for Class P shares ofthat Family Fund, although you may not be able to ex-change your shares for Class P shares of the series ofPACE Select Advisors Trust until certain operational pro-cedures are implemented by UBS Financial Services, Inc.Please contact your investment professional for furtherinformation.

You will not pay either a front-end sales charge or a de-ferred sales charge when you exchange shares, butshareholders may be subject to a redemption fee asnoted above. Also, you may have to pay a deferredsales charge if you later sell the shares you acquired inthe exchange. The Fund will use the date of your origi-nal share purchase to determine whether you must paya deferred sales charge when you sell the shares of thefund acquired in the exchange.

Other Family Funds may have different minimum invest-ment amounts. You may not be able to exchange yourshares if the value of shares you exchange is not aslarge as the minimum investment amount in that otherfund. Further, other Family Funds may have different eli-gibility requirements for purchase. You may not be ableto exchange your shares if you are not eligible to pur-chase shares of the other Family Fund.

You may exchange shares of one fund for shares of an-other Family Fund only after the first purchase has set-tled and the first fund has received your payment.

If you hold your Fund shares through a financial institu-tion, you may exchange your shares by placing an orderwith that institution. If you hold Fund shares throughthe Fund’s transfer agent, you may exchange yourshares as explained below.

The Fund may modify or terminate the exchange privi-lege at any time.

Transfer agentIf you wish to invest in the Fund or any other of theFamily Funds through the Fund’s transfer agent, BNYMellon Investment Servicing (US) Inc., you can obtainan application by calling 1-800-647 1568. You mustcomplete and sign the application and mail it, alongwith a check to the transfer agent.

You may also sell or exchange your shares by writing tothe Fund’s transfer agent. Your letter must include:

• Your name and address;

• Your account number;

• The name of the fund whose shares you are selling,and if exchanging shares, the name of the fundwhose shares you want to buy;

• The dollar amount or number of shares you want tosell and/or exchange; and

• A guarantee of each registered owner’s signature. Asignature guarantee may be obtained from a finan-cial institution, broker, dealer or clearing agency thatis a participant in one of the medallion programs rec-ognized by the Securities Transfer Agents Associa-




The UBS Funds

tion. These are: Securities Transfer Agents MedallionProgram (STAMP), Stock Exchanges Medallion Pro-gram (SEMP) and the New York Stock ExchangeMedallion Signature Program (MSP). The Fund willnot accept signature guarantees that are not part ofthese programs.

Applications to purchase shares (along with a check),and letters requesting redemptions of shares or ex-changes of shares through the transfer agent should bemailed to:

BNY Mellon Investment Serving (US) Inc.UBS Asset ManagementP.O. Box 9786Providence, RI 02940

You do not have to complete an application when youmake additional investments in the same Fund.

Unless you specifically elect otherwise, you will receivetelephone privileges when you open your account, al-lowing you to obtain your account information, andconduct a number of transactions by phone, including:buy, sell, or exchange shares of the Fund; use electronicfunds transfer or wire to buy or sell shares of the Fund;change your address; and add or change account serv-ices by calling 1-800-647 1568.

As long as we follow reasonable security proceduresand act on instructions we reasonably believe are gen-uine, we will not be responsible for any losses that mayoccur from unauthorized requests. We will request ac-count information and also may record calls. To helpsafeguard your account, keep your account informationconfidential and verify the accuracy of your confirma-tion statements immediately after you receive them.Contact us immediately if you believe someone has ob-tained unauthorized access to your account. Certainmethods of contacting us (such as by phone) may beunavailable or delayed during periods of unusual mar-ket activity. If you have telephone privileges on your ac-count and want to discontinue them, please contact usfor instructions. You may reinstate these privileges atany time in writing.

Note that telephone privileges may not be available toall Family Funds. The Fund may modify, suspend or ter-minate telephone privileges at any time. For more infor-

mation, you should contact your investment profes-sional or call 1-800-647 1568.

Transfer of account limitationsIf you hold your shares with UBS Financial Services, Inc.or another securities firm, please note that if youchange securities firms, you may not be able to transferyour Fund shares to an account at the new securitiesfirm. Fund shares may only be transferred to an accountheld with a securities dealer or financial intermediarythat has entered into an agreement with the Fund’sprincipal underwriter. If you cannot transfer your sharesto another firm, you may choose to hold the shares di-rectly in your own name with the Fund’s transfer agent,BNY Mellon Investment Serving (US) Inc. Please contactyour broker or financial advisor, for information on howto transfer your shares to the Fund’s transfer agent. Ifyou transfer your shares to the Fund’s transfer agent,the Fund’s principal underwriter may be named as thedealer of record and you will receive ongoing accountstatements from BNY Mellon Investment Serving (US)Inc.

Should you decide to sell your shares of the Fund in lieuof transfer, you will pay a redemption fee or a CDSC ifthose fees are applicable. Should you have any ques-tions regarding the portability of your Fund shares,please contact your broker or financial advisor.

Pricing and valuationThe price at which you may buy, sell or exchange Fundshares is based on net asset value per share. The Fundgenerally calculates its net asset value on days that theNYSE is open. The Fund calculates net asset value sepa-rately for each class as of the close of regular trading onthe NYSE (generally, 4:00 p.m., Eastern time). The NYSEnormally is not open, and the Fund does not price itsshares, on most national holidays and on Good Friday.To the extent that the Fund’s assets are traded in othermarkets on days when the NYSE is not open, the valueof the Fund’s assets may be affected on those days. Iftrading on the NYSE is halted for the day before4:00 p.m., Eastern time, the Fund’s net asset value pershare generally will still be calculated as of the close ofregular trading on the NYSE. The time at which theFund calculates its net asset value and until which pur-chase, sale or exchange orders are accepted may bechanged as permitted by the SEC.




The UBS Funds

Your price for buying, selling or exchanging shares willbe based on the net asset value (adjusted for any appli-cable sales charges) that is next calculated after theFund receives your order in good form. If you placeyour order on a day the NYSE is not open, your pricefor buying, selling or exchanging shares will be basedon the net asset value (adjusted for any applicable salescharges) that is calculated on the next day that theNYSE is open. If you place your order through a finan-cial institution, your financial advisor is responsible formaking sure that your order is promptly sent to theFund.

The Fund calculates its net asset value based on the cur-rent market value, where available, for its portfolio se-curities. The Fund normally obtains market values fortheir investments from independent pricing sources andbroker-dealers. Independent pricing sources may use re-ported last sale prices, official market closing prices,current market quotations or valuations from computer-ized “evaluation” systems that derive values based oncomparable investments. An evaluation system incorpo-rates parameters such as security quality, maturity andcoupon, and/or research and evaluations by its staff, in-cluding review of broker-dealer market price quota-tions, if available, in determining the valuation of theportfolio securities or instruments. If a market value isnot readily available from an independent pricingsource for a particular investments, that investment isvalued at fair value as determined in good faith by orunder the direction of the Trust’s Board of Trustees.

The amortized cost method of valuation, which approx-imates market value, generally is used to value short-term debt instruments with 60 days or less remaining tomaturity, unless the Board (or a committee designatedby it) determines that this does not represent fair value.Investments in open-end investment companies are val-ued at the daily closing net asset value of the respectiveinvestment company. Investments in non-registered in-vestment companies are also valued at the daily net as-set value. All investments quoted in foreign currenciesare valued daily in US dollars on the basis of the foreigncurrency exchange rates prevailing at the time such val-uation is determined by the Fund’s custodian. Foreigncurrency exchange rates are generally determined as ofthe close of the NYSE.

Investments traded in the OTC market and listed onThe NASDAQ Stock Market, Inc. (“NASDAQ”) normallyare valued at the NASDAQ Official Closing Price. OtherOTC securities are normally valued at the last bid priceon the valuation date available prior to valuation. In-vestments that are listed on US and foreign stock ex-changes normally are valued at the last bid price on thevaluation date available prior to valuation. Investmentsthat are listed on US and foreign stock exchanges nor-mally are valued at the market closing price, the lastsale price on the day the securities are valued or, lack-ing any sales on such day, at the last available bid price.

The Trust’s Board of Trustees has delegated to the UBSAM (Americas)’ Global Valuation Committee the re-sponsibility for making fair value determinations withrespect to the Fund’s portfolio holdings. The types of in-vestments for which such fair value pricing may be nec-essary include, but are not limited to: foreigninvestments under some circumstances, as discussedbelow; investments of an issuer that has entered into arestructuring; investments whose trading has beenhalted or suspended; fixed-income securities that are indefault and for which there is no current market valuequotation; and investments that are restricted as totransfer or resale. The need to fair value the Fund’sportfolio investments may also result from low tradingvolume in foreign markets or thinly traded domestic in-vestments, and when a security subject to a tradinglimit or collar on the exchange or market on which it isprimarily traded reaches the “limit up” or “limit down”price and no trading has taken place at that price. Vari-ous factors may be reviewed in order to make a goodfaith determination of a instrument’s fair value. Thesefactors include, but are not limited to, fundamental an-alytical data relating to the investment; the nature andduration of restrictions on disposition of the invest-ments; and the evaluation of forces that influence themarket in which the investments are purchased andsold.

The Fund expects to price most of its portfolio holdingsbased on current market value, as discussed previously.Securities and assets for which market quotations arenot readily available may be valued based upon ap-praisals received from a pricing service using a comput-erized evaluation system or formula method that takesinto consideration market indices, matrices, yield curvesand other specific adjustments. This may result in the




The UBS Funds

investments being valued at a price different from theprice that would have been determined had the evalua-tion or formula method not been used. Investmentsalso may be valued based on appraisals derived from in-formation concerning the investments or similar invest-ments received from recognized dealers in thoseholdings. If the Fund concludes that a market quotationis not readily available for a portfolio investment for anynumber of reasons, including the occurrence of a “sig-nificant event” (e.g., natural disaster or governmentalaction), after the close of trading in its principal domes-tic or foreign market but before the close of regulartrading on the NYSE, the Fund will use fair value meth-ods to reflect those events. This policy is intended to as-sure that the Fund’s net asset value fairly reflects thevalue of its portfolio holdings as of the time of pricing.The Fund may use a systematic fair valuation modelprovided by an independent third party to value invest-ments principally traded in foreign markets in order toadjust for possible stale pricing that may occur betweenthe close of the foreign exchanges and the time for val-uation. The systematic fair valuation model may use cal-culations based on indices of domestic securities andother appropriate indicators, such as prices of relevantAmerican depositary receipts and futures contracts. Ifan investment is valued at a “fair value,” that value islikely to be different from the last quoted market pricefor the investment. In cases where investments aretraded on more than one exchange, the investmentsare valued on the exchange designated as the primarymarket by UBS AM (Americas), the investment advisorof the Fund.

Valuing investments at fair value involves greater re-liance on judgment than valuing investments that havereadily available market quotations. Fair value determi-nations can also involve reliance on quantitative modelsemployed by a fair value pricing service. There can beno assurance that the Fund could obtain the fair valueassigned to an investment if it were to sell the invest-ment at approximately the time at which the Fund de-termines its net asset value per share. As a result, theFund’s sale or redemption of its shares at net assetvalue, at a time when a holding or holdings are valuedat fair value, may have the effect of diluting or increas-ing the economic interest of existing shareholders.

The Fund may invest in investments that trade primarilyin foreign markets that trade on weekends or otherdays on which the Fund does not calculate its net assetvalue. As a result, the Fund’s net asset value maychange on days when you will not be able to buy andsell your Fund shares. Certain investments in which theFund invests are traded in markets that close before4:00 p.m., Eastern time. Normally, developments thatoccur between the close of the foreign markets and4:00 p.m., Eastern time, will not be reflected in theFund’s net asset value. However, if the Fund determinesthat such developments are so significant that they willmaterially affect the value of the Fund’s investments,the Fund may adjust the previous closing prices to re-flect what the Board believes to be the fair value ofthese investments as of 4:00 p.m., Eastern time.

Futures contracts are generally valued at the settlementprice established each day on the exchange on whichthey are traded. Forward foreign currency contracts arevalued daily using forward exchange rates quoted by in-dependent pricing services. Swaps are marked-to-mar-ket daily based upon values from third party vendors orquotations from market makers to the extent availableand the change in value, if any, is recorded as an unre-alized gain or loss on the Statement of assets and liabil-ities. In the event that market quotations are not readilyavailable or deemed unreliable, the swap is valued atfair value as determined in good faith by or under thedirection of the Board (or a committee designated byit).

The Fund’s portfolio holdings may also consist of sharesof other investment companies in which the Fund in-vests. The value of each such investment company willbe its net asset value at the time the Fund’s shares arepriced. Each investment company calculates its net as-set value based on the current market value for its port-folio holdings. Each investment company valuessecurities and other instruments in a manner as de-scribed in that investment company’s prospectus.

Additional information about the Fund’s current net assetvalue per share is available to investors on the Fund’s WebSite at http://www.ubs.com/us/en/asset_management/individual_investors/mutual_fund.html.




The UBS Funds

ManagementInvestment advisorUBS Asset Management (Americas) Inc. (formerly, UBSGlobal Asset Management (Americas) Inc.), a Delawarecorporation located at 1285 Avenue of the Americas,New York, NY 10019, is an investment advisor regis-tered with the SEC. UBS AM (Americas) serves as the in-vestment advisor to the Fund by managing theinvestment of assets of the Fund. As of December 31,2015, the Advisor had approximately $147 billion in as-sets under management. The Advisor is an indirect as-set management subsidiary of UBS Group AG and amember of the UBS Asset Management Division (for-merly, UBS Global Asset Management Division), whichhad approximately $649 billion in assets under manage-ment as of December 31, 2015. UBS is an internation-ally diversified organization headquartered in Zurich,Switzerland, with operations in many areas of the fi-nancial services group of industries.

Portfolio managementThe Advisor’s investment professionals are organizedinto investment management teams, with a particularteam dedicated to a specific asset class. Information isprovided below for those portfolio managers withineach investment management team that are primarilyresponsible for coordinating the day-to-day manage-ment of the Fund.

Scott E. Dolan, John Dugenske, Craig G. Ellinger andBrian Fehrenbach are the members of the investmentmanagement team and are jointly and primarily respon-sible for the day-to-day management of the Fund’sportfolio. Messrs. Dolan, Dugenske, Ellinger andFehrenbach have access to a globally integrated teamof credit analysts and other members of the Fixed In-come investment management team who may con-tribute to research, security selection and portfolioconstruction. Messrs. Dolan, Dugenske, Ellinger andFehrenbach are responsible for the overall portfolio andfor reviewing the overall composition of the portfolio toensure its compliance with the Fund’s stated investmentobjectives and strategies. Information aboutMessrs. Dolan, Dugenske, Ellinger and Fehrenbach isprovided below.

Scott E. Dolan is Co-Head of US Multi-Sector Fixed In-come Multi-Sector Strategies and a Managing Director

at UBS AM (Americas). Prior to joining UBS Asset Man-agement in 2008, Mr. Dolan was a managing directorand head of securitized assets for Citigroup AlternativeInvestments. Prior to joining Citigroup, Mr. Dolan was amanaging director and head of mortgages and struc-tured assets for Bear Stearns Asset Management and asenior mortgage trader at the Clinton Group. Mr. Dolanalso worked at Deutsche Asset Management as a man-aging director and co-head of the Rates Group respon-sible for strategy, security selection and trading forMBS, ABS, agencies and treasuries. Mr. Dolan startedhis career at Scudder, Stevens and Clark, where hemanaged total return fixed income mutual funds andinstitutional portfolios. Mr. Dolan has been a portfoliomanager of the Fund since its inception.

John Dugenske is Global Head of Fixed Income and aGroup Managing Director at UBS AM (Americas). Priorto joining UBS Asset Management in 2009,Mr. Dugenske spent over four years at the former assetmanagement business of Lehman Brothers, which en-compassed Lehman Brothers Asset Management andNeuberger Berman, where he most recently held theposition of Head of European and Middle East Fixed In-come, based in London. Mr. Dugenske has been a port-folio manager of the Fund since its inception.

Craig G. Ellinger is Head of US Investment Grade andGlobal High Yield Fixed Income and a Managing Direc-tor at UBS Asset Management. Mr. Ellinger has been aninvestment professional with UBS Asset Managementsince 2000 and a portfolio manager of the Fund sinceits inception.

Brian Fehrenbach is the Co-Head of US Multi-SectorFixed Income and a Managing Director at UBS AM(Americas). Prior to joining UBS Asset Management in2006, Mr. Fehrenbach was a managing director in aglobal strategic trading unit at Bank of America inChicago, where he primarily managed a US rate deriva-tives portfolio. Additionally, Mr. Fehrenbach was theglobal head of rate derivative and currency trading atFleet Boston prior to the merger with Bank of Americain 2004. Mr. Fehrenbach has been a portfolio managerof the Fund since its inception.

The Fund’s SAI provides information about the Fund’sportfolio managers’ compensation, other accounts




The UBS Funds

managed by the portfolio managers and the portfoliomanagers’ ownership of Fund shares.

Advisory feesThe investment advisory fee (expressed as a monthly feeat an annual rate multiplied by the average daily net as-sets of the Fund) payable to the Advisor, before feewaivers and/or expense reimbursements, by the Fund, ispresented in the following table.

The Advisor has contractually agreed to waive its feesand/or reimburse certain expenses so that the ordinaryoperating expenses of the Fund (excluding expenses in-curred through investment in other investment compa-nies, interest, taxes, brokerage commissions andextraordinary expenses) do not exceed the amountslisted in the footnote to the Expense Table. The contrac-tual fee waiver and/or expense reimbursement agree-ment will remain in place for the period endingOctober 27, 2017. Thereafter, the expense limit foreach of the Fund will be reviewed each year, at whichtime the continuation of the expense limit will be dis-cussed by the Advisor and the Board of Trustees. Thecontractual fee waiver agreement also provides that theAdvisor is entitled to reimbursement of fees it waivedand/or expenses it reimbursed for a period of threeyears following such fee waivers and expense reim-bursements, provided that the reimbursement by theFund of the Advisor will not cause the total operatingexpense ratio to exceed the contractual limit as thenmay be in effect for the Fund.

The Fund has not yet commenced operations as of thedate of this prospectus. A discussion regarding the basisfor the Board of Trustees’ approval of the investmentadvisory agreement between the Trust and Advisor onbehalf of the Fund will be available in the Fund’s semi-annual report to shareholders for the period ending De-cember 31.

AdvisoryFund fee

UBS Total Return Bond Fund 0.50%

AdministratorUBS AM (Americas) is also the administrator of theFund. The Fund pays UBS AM (Americas) an annualcontract rate of 0.075% of its average daily net assetsfor administrative services.

Disclosure of portfolio holdingsThe Fund will file its complete schedule of portfolioholdings with the SEC for the first and third quarters ofeach fiscal year on Form N-Q. The Fund’s Forms N-Q areavailable on the SEC’s Web Site at www.sec.gov. TheFund’s Forms N-Q may be reviewed and copied at theSEC’s Public Reference Room in Washington, D.C.

Information on the operation of the SEC’s Public Refer-ence Room may be obtained by calling 202-551 8090.Additionally, you may obtain copies of Forms N-Q fromthe Fund upon request by calling 1-800-647 1568. TheFund’s complete schedule of portfolio holdings for thesecond and fourth quarters of each fiscal year is filedwith the SEC on Form N-CSR and appears in the semi-annual and annual reports, respectively, sent to share-holders. The semiannual and annual reports for theFund will be posted on the Fund’s Web Site athttp://www.ubs.com/us/en/asset_management/individ-ual_investors/mutual_fund.html.

In addition, due to the recent launch of the Fund, theFund will provide an initial public disclosure of portfolioholdings. During the last week of June 2016, the Fundwill post a complete schedule of portfolio holdings asof May 31, 2016 on the Fund’s Web Site athttps://www.ubs.com/us/en/asset_management/individ-ual_investors/mutual_fund.html.

Please consult the Fund’s SAI for a description of thepolicies and procedures that govern disclosure of theFund’s portfolio holdings.

Dividends and taxesDividends and distributionsThe Fund intends to elect and qualify each year as aregulated investment company under the IRC. As a reg-ulated investment company, the Fund generally pays no




The UBS Funds

federal income tax on the income and gains it distrib-utes to you. The Fund expects to declare and distributeall of its net investment income, if any, to shareholdersas dividends monthly. The Fund will distribute net real-ized capital gains, if any, at least annually, usually in De-cember. The Fund may distribute such income dividendsand capital gains more frequently, if necessary, in orderto reduce or eliminate federal excise or income taxes onthe Fund. The amount of any distribution will vary, andthere is no guarantee the Fund will pay either an in-come dividend or a capital gains distribution.

Classes with higher expenses are expected to havelower income dividends.

You will receive income dividends and capital gain dis-tributions in additional shares of the same class of theFund unless you notify your investment professional orthe Fund in writing that you elect to receive them incash. Clients who own Fund shares through certainwrap fee programs may not have the option of electingto receive dividends in cash. Distribution options maybe changed at any time by requesting a change in writ-ing. Dividends and distributions are reinvested on thereinvestment date at the net asset value determined atthe close of business on that date.

Annual statements—Each year, the Fund will send youan annual statement (Form 1099) of your account activ-ity to assist you in completing your federal, state andlocal tax returns. Distributions declared in December toshareholders of record in such month, but paid in Janu-ary, are taxable as if they were paid in December. Priorto issuing your statement, the Fund makes every effortto reduce the number of corrected forms mailed to you.However, if the Fund finds it necessary to reclassify itsdistributions or adjust the cost basis of any shares soldor exchanged after you receive your tax statement, theFund will send you a corrected Form 1099.

Avoid “buying a dividend”—At the time you purchaseyour Fund shares, the Fund’s net asset value may reflectundistributed income, undistributed capital gains, ornet unrealized appreciation in value of portfolio securi-ties held by the Fund. For taxable investors, a subse-quent distribution to you of such amounts, althoughconstituting a return of your investment, would be tax-able. Buying shares in the Fund just before it declares

an income dividend or capital gains distribution issometimes known as “buying a dividend.”

TaxesFund distributions—The Fund expects, based on its in-vestment objective and strategies, that its distributions,if any, will be taxable as ordinary income, capital gains,or some combination of both. This is true whether youreinvest your distributions in additional Fund shares orreceive them in cash. For federal income tax purposes,Fund distributions of short-term capital gains are tax-able to you as ordinary income. Fund distributions oflong-term capital gains are taxable to you as long-termcapital gains no matter how long you have owned yourshares. Because the income of the Fund primarily is de-rived from investments earning interest rather than divi-dend income, generally none or only a small portion ofthe income dividends paid to you by the Fund is antici-pated to be qualified dividend income eligible for taxa-tion by individuals at long-term capital gain tax rates,provided certain holding period requirements are met.

If the Fund qualifies to pass through to you the tax ben-efits from foreign taxes it pays on its investments, andelects to do so, then any foreign taxes it pays on theseinvestments may be passed through to you as a foreigntax credit.

Sale or redemption of Fund shares—If you are a taxableinvestor, when you sell or redeem your shares in theFund, you may realize a capital gain or loss. For tax pur-poses, an exchange of your Fund shares for shares of adifferent Family Fund is the same as a sale. Any loss in-curred on the sale or exchange of Fund shares held forsix months or less will be treated as a long-term capitalloss to the extent of capital gain distributions receivedwith respect to such shares. The Fund is required to re-port to you and the Internal Revenue Service (“IRS”) an-nually on Form 1099-B not only the gross proceeds ofFund shares you sell or redeem but also the cost basisof Fund shares you sell or redeem. Cost basis will becalculated using the Fund’s default method of averagecost, unless you instruct the Fund to use a different cal-culation method. Shareholders should carefully reviewthe cost basis information provided by the Fund andmake any additional basis, holding period or other ad-justments that are required when reporting theseamounts on their federal income tax returns. If your ac-count is held by your investment representative (finan-




The UBS Funds

cial advisor or other broker), please contact that repre-sentative with respect to reporting of cost basis andavailable elections for your account. Their defaultmethod for cost basis reporting may be different thanthe Fund’s default method. Tax-advantaged retirementaccounts will not be affected.

Medicare tax—An additional 3.8% Medicare tax is im-posed on certain net investment income (including ordi-nary dividends and capital gain distributions receivedfrom a Fund and net gains from redemptions or othertaxable 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 in-dividual) or “adjusted gross income” (in the case of anestate or trust) exceeds a threshold amount. ThisMedicare tax, if applicable, is reported by you on, andpaid with, your federal income tax return.

Backup withholding—By law, if you do not provide theFund with your proper taxpayer identification numberand certain required certifications, you may be subjectto backup withholding on any distributions of income,capital gains, or proceeds from the sale of your shares.The Fund also must withhold if the IRS instructs it to doso. When withholding is required, the amount will be28% of any distributions or proceeds paid.

State and local taxes—Fund distributions and gainsfrom the sale or exchange of your Fund shares generallyare subject to state and local taxes.

Non-US investors—Non-US investors may be subject toUS withholding tax at a 30% or lower treaty rate andUS estate tax and are subject to special US tax certifica-tion requirements to avoid backup withholding andclaim any treaty benefits. Exemptions from US with-

holding tax are provided for capital gain dividends paidby the Fund from net long-term capital gains, if any, in-terest-related dividends and short-term capital gain divi-dends, if such amounts are reported by the Fund.However, any such dividends and distributions of in-come and capital gains will be subject to backup with-holding at a rate of 28% if you fail to properly certifythat you are not a US person.

Other reporting and withholding requirements—Underthe Foreign Account Tax Compliance Act (“FATCA”), aFund will be required to withhold a 30% tax on the fol-lowing payments or distributions made by the Fund tocertain foreign entities, referred to as foreign financialinstitutions or non-financial foreign entities, that fail tocomply (or be deemed compliant) with extensive report-ing and withholding requirements designed to informthe US Department of the Treasury of US-owned for-eign investment accounts: (a) income dividends and(b) after December 31, 2018, certain capital gain distri-butions, return of capital distributions and the proceedsarising from the sale of Fund shares. A Fund may dis-close the information that it receives from its sharehold-ers to the IRS, non-US taxing authorities or other partiesas necessary to comply with FATCA or similar laws.Withholding also may be required if a foreign entitythat is a shareholder of a Fund fails to provide the Fundwith appropriate certifications or other documentationconcerning its status under FATCA.

This discussion of “Dividends and Taxes” is not in-tended or written to be used as tax advice. Be-cause everyone’s tax situation is unique, youshould consult your tax professional about fed-eral, state, local, or foreign tax consequences be-fore making an investment in the Fund.



29

The UBS Funds


Financial highlightsNo financial information is presented for the Fund as itwas not publicly offered prior to the date of thisprospectus.

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Funds’ privacy noticeThis notice describes the privacy policy of the UBS Family of Funds, the PACE Funds and all closed-endfunds managed by UBS Asset Management (collectively, the “Funds”). The Funds are committed to pro-tecting the personal information that they collect about individuals who are prospective, current or for-mer investors.

The Funds collect personal information in order to process requests and transactions and to providecustomer service. Personal information, which is obtained from applications and other forms or corre-spondence submitted to the Funds, may include name(s), address, e-mail address, telephone number,date of birth, social security number or other tax identification number, bank account information,information about your transactions and experiences with the Funds, and any affiliation a client haswith UBS Financial Services Inc. or its affiliates (“Personal Information”).

The Funds limit access to Personal Information to those individuals who need to know that informationin order to process transactions and service accounts. These individuals are required to maintain andprotect the confidentiality of Personal Information and to follow established procedures. The Fundsmaintain physical, electronic and procedural safeguards to protect Personal Information and to complywith applicable laws and regulations.

The Funds may share Personal Information with their affiliates to facilitate the servicing of accountsand for other business purposes, or as otherwise required or permitted by applicable law. The Fundsmay also share Personal Information with non-affiliated third parties that perform services for theFunds, such as vendors that provide data or transaction processing, computer software maintenanceand development, and other administrative services. When the Funds share Personal Information witha non-affiliated third party, they will do so pursuant to a contract that includes provisions designed toensure that the third party will uphold and maintain privacy standards when handling PersonalInformation. In addition to sharing information with non-affiliated third parties to facilitate the servic-ing of accounts and for other business purposes, the Funds may disclose Personal Information to nonaf-filiated third parties as otherwise required or permitted by applicable law. For example, the Funds maydisclose Personal Information to credit bureaus or regulatory authorities to facilitate or comply withinvestigations; to protect against or prevent actual or potential fraud, unauthorized transactions,claims or other liabilities; or to respond to judicial or legal process, such as subpoena requests.

Except as described in this privacy notice, the Funds will not use Personal Information for any otherpurpose unless the Funds describe how such Personal Information will be used and clients are given anopportunity to decline approval of such use of Personal Information relating to them (or affirmativelyapprove the use of Personal Information, if required by applicable law). The Funds endeavor to keeptheir customer files complete and accurate. The Funds should be notified if any Personal Informationneeds to be corrected or updated. Please call 1-800-647 1568 with any questions or concerns regardingyour Personal Information or this privacy notice.


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UBS Asset Management, Americas Region

Business continuity planning overview

UBS Asset Management affiliates UBS Asset Management (US) and UBS Asset Management (Americas) protectinformation assets, processes, and customer data from unpredictable events through preparation and testing of acomprehensive business continuity capability. This capability seeks recovery of the technology infrastructure andinformation, and prevention of the loss of company or customer information and transactions. In the event of acrisis scenario, we will recover those functions deemed to be critical to our business and our clients, and strive toresume processing within predefined time frames following a disaster declaration (typically 4-6 hours). Businesscontinuity processes provide us the ability to continue critical business functions regardless of the type, scope, orduration of a localized event. However, these processes are dependent upon various external resources beyond ourcontrol, such as regional telecommunications, transportation networks, and other public utilities.

Essential elements of the business continuity plan include:

• Crisis communication procedures — Action plans for coordinating essential communications for crisismanagement leaders, employees, and key business partners

• Information technology backup and recovery procedures — Comprehensive technology and datamanagement plans designed to protect the integrity and speed the recovery of essential technologyinfrastructure and data

• Disaster recovery site — Alternative workspace, technology infrastructure, and systems support that isdesigned to be fully operational within 24-36 hours of a disaster declaration

• Testing regimen — The business continuity plan is reviewed on a quarterly basis and tested on an annual basis,including full activation of the disaster recovery facility. In addition, all IT application recovery plans are updatedand tested annually.

The UBS Funds


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©UBS 2016. All rights reserved.

The UBS Funds

Investment Company Act File No. 811-6637

UBS Asset Management (Americas) Inc.

is a subsidiary of UBS Group AG.

S1614

If you want more information about the Fund, the fol-lowing documents are available free upon request:

Annual/semiannual reportsAdditional information about the Fund’s investmentswill be available in the Fund’s annual and semiannualreports to shareholders. In the Fund’s annual reports,you will find a discussion of the market conditions andinvestment strategies that significantly affected theFund’s performance during the last fiscal year. As of thedate of the prospectus, the annual and semiannual re-ports are not yet available for the Fund because theFund has not yet commenced operations.

Statement of additional information (SAI)The SAI provides more detailed information about theFund and is incorporated by reference into this prospec-tus (i.e., it is legally considered a part of this prospec-tus).

When available, you may obtain free copies of theFund’s annual and semiannual reports and the SAI, anddiscuss your questions about the Fund, by contactingthe Fund directly at 1-800-647 1568, or by contactingyour investment professional. The annual and semian-nual reports and the SAI may also be obtained, free of

charge, by accessing the documents on the Fund’s WebSite at http://www.ubs.com/us/en/asset_management/individual_investors/mutual_fund.html.

You may review and copy information about the Fund,including shareholder reports and the SAI, at the PublicReference Room of the U.S. Securities and ExchangeCommission (SEC) in Washington, D.C. You may obtaininformation about the operations of the SEC’s PublicReference Room by calling the SEC at 202-551 8090.You may get copies of reports and other informationabout the Funds:

• For a fee, by electronic request at [email protected] by writing the SEC’s Public Reference Section,Washington, D.C. 20549-1520; or

• Free from the EDGAR Database on the SEC’s InternetWeb Site at: http://www.sec.gov.

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JOB: 16-5662-3 CYCLE#;BL#: 3; 0 TRIM: 8.25" x 10.75" COMPOSITECOLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: UBS_logo_semibold_K.eps V1.5

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