China and Asia fixed income: all you need to know3 0 bn 1,500 bn 3,000 bn 4,500 bn 6,000 bn 7,500 bn 9,000 bn 10,500 bn 12,000 bn 13,500 bn 15,000 bn Jan-09 Jan-11 Jan-13 Jan-15 Jan-17

Confidential

UBS Asset Management

China and Asia fixed income:all you need to know

March 2020

Hayden Briscoe

China onshore bond marketOverview and macroeconomic backdrop

Section 1

US-I

2

Why invest in the UBS China Fixed Income?

Underrepresented market We are Late Cycle Need for diversification

Global index inclusion IG Rating: A1Low correlationAttractive yield

Strong global demand fuels liquidity in China bonds

Safe haven asset with strong fundamentals

China bonds as attractive portfolio diversifier

UBS CHINA FIXED INCOME

Challenging Market Conditions

1 2 3

Source: UBS Asset Management. As of end January 2020

3

0 bn

1,500 bn

3,000 bn

4,500 bn

6,000 bn

7,500 bn

9,000 bn

10,500 bn

12,000 bn

13,500 bn

15,000 bn

Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19

Billion USD

China Government Bonds Policy Bank Bonds Local Government BondsGovernment Agency Bonds Corporate Bonds Money Market InstrumentsAsset-Backed Securities Private Placement Notes Others

China makes up only 3.1% of a major global indicesForeign investors are still underinvested

A market too big to ignoreWe see strong inflow from global investors in China bonds

1

Source: UBS, WIND, World Bank. Policy banks are China Development Bank, Agricultural Development Bank of China, and Export-Import Bank of China. Corporate bonds include non-policy bank financial bonds, enterprise bonds, company bonds, and medium-term notes. As of October 2019

Foreign investors hold ~300 billion USD which is only 2.1% of market

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

China United States Europe Japan

% share global GDP Global bond index representation

4

Increase in monthly trading volume indicates rising liquidityLower volatility compared to developed markets

China bonds as new safe haven asset class2

China bonds attractive to match global uncertainty

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Oct

10

Apr

11

Oct

11

Apr

12

Oct

12

Apr

13

Oct

13

Apr

14

Oct

14

Apr

15

Oct

15

Apr

16

Oct

16

Apr

17

Oct

17

Apr

18

Oct

18

Apr

19

Oct

19

An

nu

alise

dV

ola

tility

(3y r

ollin

g)

China (A+) US (AAA) Europe (A+) UK (AA)

Source: Bloomberg, WIND. As of end January 2020

--

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jan

16

Apr

16

Jul 16

Oct

16

Jan

17

Apr

17

Jul 17

Oct

17

Jan

18

Apr

18

Jul 18

Oct

18

Jan

19

Apr

19

Jul 19

Oct

19

USD

bn

5

Low correlation to other global marketsAttractive nominal yield

Portfolio diversifier with attractive yield pick-up

-1%

0%

1%

2%

3%

4%

5%

Dec-09 Dec-11 Dec-13 Dec-15 Dec-17 Dec-19

Yie

ld(%

)

China USA Germany Japan UK

Source: Bloomberg. As of end January 2020

Attractive yield and spread pick up in Asia vs. global credit markets

3

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

US (

AA

A)

Euro

pe (A

+)

Fran

ce (

AA

A)

Germ

any

(AA

A)

Sw

itze

rlan

d (A

AA

)

Aust

ralia

(A

AA

)

Jap

an

(A

)

UK

(A

A)

S&

P 5

00

Euro

pe E

qu

itie

s

Chin

a E

quitie

s

World

Eq

uitie

s

UK

Eq

uitie

s

US IG

US H

Y

CEM

BI

MA

GG

IE

EM

BI

JAC

I

Major Bond Markets Equities Credit

Co

rrela

tio

n t

o C

hin

a B

on

ds

6

Looking back to 2019: fast maturing market

Quarterly turnover ratio of bonds

Source: Bloomberg, JP Morgan, as of end January 2020

Liquidity in trading

Market liberalization

Foreign investor ownership now exceeds USD 300bn

Foreign investors piling in

China now second largest bond marketImproving ease of access for offshore investors

42.0

13.7 12.4

5.9 4.6 3.5 3.2 3.2 2.1 2.0

Un

ited

Sta

tes

Ch

ina

Japan

UK

France

Germ

an

y

Can

ad

a

Italy

Neth

erlands

Spain

Bond market size in USD trillion

0

50

100

150

200

250

300

350

No

v 14

Feb 1

5

May 1

5

Au

g 1

5

No

v 15

Feb 1

6

May 1

6

Au

g 1

6

No

v 16

Feb 1

7

May 1

7

Au

g 1

7

No

v 17

Feb 1

8

May 1

8

Au

g 1

8

No

v 18

Feb 1

9

May 1

9

Au

g 1

9

No

v 19

Fo

reig

n H

old

ing

s o

f O

nsh

ore

C

NY

Bo

nd

s (U

SD

billio

n)

Govt Local Govt Quasi/Agency Credit Credit (CD) Credit (ABS)

New measures in 2019:

• CNY hedging open to offshore investorsImpact: Investors no longer have to rely on offshore Renminbi

• QFII and RFQII quota restrictions abolishedImpact: Improve ease of access for foreign investors

0

0.2

0.4

0.6

0.8

1

1.2

Jan

16

Mar

16

May

16

Jul 16

Sep 1

6

No

v 16

Jan

17

Mar

17

May

17

Jul 17

Sep 1

7

No

v 17

Jan

18

Mar

18

May

18

Jul 18

Sep 1

8

No

v 18

Jan

19

Mar

19

May

19

Jul 19

Sep 1

9

No

v 19

Rates Bonds Credit Bond Government Bonds + Policy Bank Bonds

7

Outlook for 2020

US accounts for about 20% of China's gross exports

Trade in 2020

Slowing growth outlook

Infrastructure spending leading investments

Fiscal spending increasing

Gradual deleveragingCredit impulse stabilizing

-0.10%

-0.08%

-0.06%

-0.04%

-0.02%

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

Jan 1

0

Jun 1

0

No

v 10

Ap

r 11

Sep 1

1

Feb 1

2

Jul 12

Dec

12

May

13

Oct

13

Mar

14

Au

g 1

4

Jan 1

5

Jun 1

5

No

v 15

Ap

r 16

Sep 1

6

Feb 1

7

Jul 17

Dec

17

May

18

Oct

18

Mar

19

Au

g 1

9

Jan 2

0

Credit Impulse 12-month Change

LGFV reducing as % of net financing

100%

58% 56% 61%

95%80% 83%

22% 20%11% 16%

28%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

LGFV LGB

18% 17% 17% 17% 17% 18% 18% 19% 19% 17%

20% 19% 16% 15% 16% 16% 16% 16% 16% 17%

8% 8%7% 7% 6% 6% 6% 6% 6% 6%

9% 9% 10% 11% 12% 12% 12% 12% 13% 14%

14% 14% 16% 17% 16% 15% 14% 12% 12% 11%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Others

Korea

HK + TW

South East Asia

Japan

EU

US

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Dec

09

May

10

Oct

10

Mar

11

Au

g 1

1

Jan 1

2

Jun 1

2

No

v 12

Ap

r 13

Sep 1

3

Feb 1

4

Jul 14

Dec

14

May

15

Oct

15

Mar

16

Au

g 1

6

Jan 1

7

Jun 1

7

No

v 17

Ap

r 18

Sep 1

8

Feb 1

9

Jul 19

Tax Revenue (YTD YoY) Personal Income Tax (YTD YoY)

Corporate Tax (YTD YoY) Value-added Tax (YTD YoY)

Source: Bloomberg, JP Morgan, as of end January 2020

UBS China Fixed Income (RMB)

Section 2

9

Why invest in UBS China Fixed Income?

• Easy and direct accessto China's fast-growing and very large onshore fixed income market

• Attractive yield of 3.00%from investment grade portfolio

• Active, diversified portfoliomanaged by a team with years of experience in onshore China securities

• High-quality assetsto build diversified investment grade portfolio

• Focus on liquidityto preserve room for flexibility

• Sector allocationFocus on China government and policy bank bonds

CNY returns net

Longstanding investment expertise in China

Portfolio composition Attractive market opportunity

YTD 3 months 1 year

UBS Bond China Fixed Income

0.76 2.17 3.46

AVG peer performance 0.13 1.55 2.68

China Bond Aggregate 0.73 2.32 4.57

• Attractive yield pick-upwith strong risk-adjusted returns compared to major developed markets

• Strong technical demandby inclusion in global indices

• Ideal safe haven assetwith low realized volatility and low correlation to other markets

Source: UBS Asset Management, Bloomberg, Morningstar Direct. As of end January 2020

1.87%

51.08%

1.85%

18.26%

0.31%

25.39%

1.24%Commercial BankBondsChina GovernmentBondsGovernment AgencyBondsCorporate Bonds

Non-Bank FinInstitution Bonds

Sector allocation

AAA0.28%

A172.98%

A22.53%

A31.54%

Baa20.31%

Baa32.14%

NR20.22%

Credit quality allocation

10

Fund Index

Yield to Maturity (gross) 3.07% 3.13%

OAD (years) 5.26 5.03

Average rating of holdings A2 A2

No. of issuers 30 555

Key statistics

UBS China Fixed Income: Positioning

Sector Allocation vs Index

US-I

Source: UBS Asset Management as at 31 January 2020Note: Please note that information is representative of a specific Asian high yield portfolio and may vary. All figures above are gross of fees.

China Fixed Income Fund

Credit quality allocation (MV%)

China Aggregate Index CNY

As of 31 January 2020

AAA0.28% A1

72.98%

A22.53%

A31.54%

Baa20.31%

Baa32.14%

NR20.22%

A163.23%

A31.35%

Baa22.89%

NR30.31%

21.51%

13.70%

0.00% -0.56% -2.11%-6.75% -7.89%

-19.50%

1.60%

-30%

-20%

-10%

0%

10%

20%

30%

GovernmentBond

Corporate Bonds Project Rev DebtInstrument


Govt SupportingAgency Bonds

CommercialBank Bonds

Policy BankBonds

LocalGovernment

Bonds

Cash

11

UBS-AM China Fixed Income performance

Annualized1

1 month 3 months Year-to-date 1 Year Since inception

UBS Bond China Fixed Income 0.83 2.44 0.83 4.63 6.92

Bloomberg Barclays China Aggregate Index CNY 0.73 2.32 0.73 4.57 6.97

Value added2 0.10 0.13 0.10 0.05 -0.05

Tracking error3 - - - 0.42 0.52

Total returns (USD, Gross)

Total return (%) in CNY for periods ending 31 January 2020

Source: UBS Asset ManagementNote: The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results. Performance figures are gross of fees. Please see attached disclosure information. Inception date as of 31 March 2018

1 Periods greater than 1 year are annualized.2 Value added is the arithmetic difference between the composite return and the benchmark return.3 Tracking error is the standard deviation of the difference between the monthly composite and benchmark returns, based on logarithmic returns

Tracking error is annualized for periods greater than 1 year

Investment philosophy and process

Section 3

13

Alpha from different sources…

• Long or short relative to benchmark

• Curve positioning

• Local Asian bond market opportunities

• High yield expertise

• Market beta

• Sector-rotation, issuer and issue selection

• Opportunistic allocations to investment grade

• Active long or short positions in Asian currencies

• Options

• Carry strategies

Credit

For illustrative purposes only

… and a holistic investment process in the evolving Asia high yield market.

14

Collaboration – Portfolio management & credit analysts

Alpha generation Risk management

▪ Credit selectionBottom-up research

▪ Valuationsrelative and absolute

▪ Macroeconomic pictureTechnical trends

▪ Idiosyncratic riskUnderstand business modelAssess financial conditionMonitor event risk

▪ Industry riskAssess business cycles

Portfolio Management

Credit Analysts

Global macroeconomic

assessment

Focus on regional drivers

Risk adjusted outcomes for

credit, rates & FX

Portfolio construction

Timing, execution& liquidity

management

Fundamental credit analysis

On the ground company research

Country and sector expertise

Preservation of capital

High conviction relative value

opinions

Consistent performance is derived by leveraging global portfolio management insights and regional interaction with analysts


15

Portfolio construction

Develop Risk Budget1 Implementation2 Risk Monitoring3

UBS Asian High Yield Bond Strategy

Our objective is to take compensated risks seeking to generate favorable risk-adjusted returns for our clients over a market cycle.

Rate

sC

red

itFX

Overall duration exposure

IG credit

HY credit

- Index +

Min 75%

Non-US currencies Max 20%

Max 25%

Max 10%Single issuer

Non Asia Max 25%

Max 8% Tracking Error

For illustrative purposes only.

Our process combines a top-down and bottom-up approach under ongoing risk management

Duration Country Currency Sector

Top-Down Macro Strategies

Bottom-Up Security Selection Strategies

Government Quasi-Sov Corporate Non-Asia

16

Issuer selection

Single security analysis

– credit view(management, event risks, etc.)

– technicals(liquidity, supply, etc.)

– valuation(absolute and relative credit spreads)

Key considerations

− underlying fundamental risks associated with a borrower

− appropriate level of credit spread to compensate an investor for assuming those risks

Fundamental credit analysis

− qualitative assessment of management strength, market position, competitive environment and financial flexibility

− qualitative assessment of historical operating results, credit ratios and most importantly, an expected future outlook

Portfolio manager views

– beta positioning– industry allocation– quality distribution– liquidity needs– performance targets– risk budgets

Credit analyst views

− fundamental overview− industry investment thesis− industry relative weighting− issue relative weights

Credit research

− industry overview− financial projections− capital structure− cash flow and liquidity− covenant review− management review− ownership structure

PO

RT

FO

LIO

HO

LD

ING

A disciplined and thorough research-based approach


17

Asia Fixed Income – execution and trading

Execution factors

– Price/Cost

– Speed of execution

– Size

– Market Coverage

– Others (settlement, delivery, etc. )

Fixed Income portfolio management tool

– Analysis of portfolio, benchmark and risk parameters

– Trade simulation

Price discovery

– Tradeweb

– Bloomberg

– Market Axess

– Brokers

UBS Asset Management’s Compliance team regularly monitors the quality of the executions, and continuously enhances internal best execution and trading policies to reflect latest market practices.

Investment guideline check & risk management

– Sentinel Global Risk System

– Prima / RIskMetriicsBarclays Point

Order management systems

– Longview

– Sophis (OTC Derivatives)

– FXCM (FX Cash Management)

Portfolio holding

– Ongoing management with internal portfolio management system (YODA)

Combining PM's knowledge with industry leading technology to deliver best execution


18

Formal investment meetings

Meeting Frequency Purpose

Fixed Income Investment Forum (FIIF) Monthly Identify key investment themes and risks

Macro Forum Discussion QuarterlySurvey GDP, inflation trends versus consensus and cash paths across major economies

Sector Survey Discussion QuarterlySurvey 300+ market factors, assign conviction and assess returns to identify trade ideas

FIIF Sub-committees (Rates / FX, IG credit, HY credit, EM Debt)

Bi-Weekly,

as requiredReview market development, valuations and trade ideas

Meeting Frequency Purpose

Asia Macro Discussion Quarterly Review of macro and policy direction across all Asia countries

APAC Research Forum Monthly Discuss China cross asset class themes in Fixed Income, equities and asset allocation

APAC Risk Control Meeting Monthly PM and risk team discuss market risks and portfolio risk utilization

APAC Credit Committee B-Weekly Formal review of credit research recommendations

Asia Portfolio Strategy Team WeeklyReview global and Asia market developments, FIIF views, portfolio risk positioning, trade ideas and investment performance

Asia PMs & Credit Analysts WeeklyDiscussion of single name credit news/views, upcoming primary issuance and portfolio positioning

Asia Morning Meeting Daily Discuss overnight market color, news, and updates

Enable portfolio managers to effectively draw on the global resources of our portfolio management and credit research teams, as well as the broader Fixed Income investment group, as they assess the relative attractiveness of sectors/industries and formulate macro views (e.g. credit beta and duration positioning) and set portfolio strategy:

19

Why invest in UBS China Fixed Income?

• Easy and direct accessto China's fast-growing and very large onshore fixed income market

• Attractive yield of 3.00%from investment grade portfolio

• Active, diversified portfoliomanaged by a team with years of experience in onshore China securities

• High-quality assetsto build diversified investment grade portfolio

• Focus on liquidityto preserve room for flexibility

• Sector allocationFocus on China government and policy bank bonds

CNY returns net

Longstanding investment expertise in China

Portfolio composition Attractive market opportunity

YTD 3 months 1 year

UBS Bond China Fixed Income

0.76 2.17 3.46

AVG peer performance 0.13 1.55 2.68

China Bond Aggregate 0.73 2.32 4.57

• Attractive yield pick-upwith strong risk-adjusted returns compared to major developed markets

• Strong technical demandby inclusion in global indices

• Ideal safe haven assetwith low realized volatility and low correlation to other markets

Source: UBS Asset Management, Bloomberg, Morningstar Direct. As of end January 2020

1.87%

51.08%

1.85%

18.26%

0.31%

25.39%

1.24%Commercial BankBondsChina GovernmentBondsGovernment AgencyBondsCorporate Bonds


Sector allocation

AAA0.28%

A172.98%

A22.53%

A31.54%

Baa20.31%

Baa32.14%

NR20.22%

Credit quality allocation

US-I

Appendix

UBS Asset Management

Fixed Income Overview

Appendix A

US-I

22

US

Global

European and UK

Emerging Markets

Swiss

Australian and Asia Pacific

Global presence

Chicago

New York

London

Zurich

Singapore

Hong Kong

Shanghai

Tokyo

Sydney

Total AUM USD 253 billion, by strategyBonds USD 151 billion

Money Market USD 102 billion

Leading manager with USD 253 billion in assets under management

UBS-AM Global Fixed Income at a glance

• Deep expertise with 100+ fixed income investment professionals, averaging 18 years investment experience

• Globally integrated platform offering local insights and diverse perspectives

• Disciplined investment approach drawing on deep resources to employ diverse alpha sources

• Commitment to proprietary research across the full investment spectrum

Key strengths of Global Fixed income

US Taxable

Emerging Markets

European

US Municipal

Australian

Swiss

Source: UBS Asset Management: worldwide fixed income invested assets. As of December 31, 20191 Excludes fixed income assets in multi asset mandates and other strategies managed by Multi Asset and Solutions

23

Experienced Asia fixed income investment team

Source: UBS Asset Management. As of January 2020

Hayden BriscoeHead Fixed Income, Asia Pacific

A highly experienced and stable team with average industry experience of 17 years

Asia PM

Trading and Investment Analysts Asia

Investment Specialists

Credit Research APAC

Yunxi LiuAnalyst APAC

Ross DilkesPM APAC

Evan GreenburgPM APAC

Jiayi YewPM China

Brian LouPM China

Sophie LeiAnalyst China

Smit RastogiAnalyst North East Asian Property and Financials

Ben SquireHead Credit Research APAC

Ethan WangAnalyst Chinese Corporates

Brian HuangAnalyst China Industrials and Property

David ChengHead Investment Specialist APAC

Patrick JungInvestment Specialist Australia

Keiko SugawaHead Japan Fixed Income & Investment Specialist Japan

Eiji YamamotoInvestment Specialist Japan

Michael FleischInvestment Specialist Asia

Pantheon ChungFixed Income Taiwan

Jimmy YangTrading China

Feifei YuTrading China

Steven ChuangTrading Taiwan

Earl San JuanAnalyst Australia, Asia

Emerging Markets Team

Thiago CarlosEmerging market analyst

Federico KauneHead EM PM

Igor ArseninPM EM

Jose BernalEmerging market analyst

Will RivaEmerging market analyst

Singapore Hong Kong Shanghai

Sydney Tokyo Taiwan

Global

Gianandrea HeyerEmerging market analyst

David MichaelPM EM

Daphne ChiuFixed Income Taiwan

24

Portfolio managers directly involved with Asia FI strategies

Source: UBS Asset Management. As of January 2020

Name Years in Industry Years with Firm Years with Strategy/Fund

Hayden Briscoe, Head FI APAC 28 3 3

Ross Dilkes (lead PM) 14 14 7

Evan Greenburg (deputy PM) 14 5 5

Brian Lou (onshore China) 9 2 n/a

Jiayi Jew (onshore China) 9 <1 n/a

Fixed Maturity Funds, $1,990

China Fixed Income, $890

Asian USD Credit, $616

Asian USD IG, $1,221

Asian USD HY, $950

Onshore China private funds,

$50

Team manages USD 5.7 billion in assets across 21 portfolios

25

Asia fixed income strategiesDiversified offering

Source: UBS Asset Management as at 31 January 2020

UBS (Lux) Bond Fund – Full Cycle

Asian Bond

UBS (Lux) Bond SICAV – Asian

Investment Grade Bonds

UBS (Lux) Bond SICAV – Asian High

Yield

UBS (HK) Fund Series – China High

Yield Bond

UBS (Lux) Bond SICAV – China Fixed Income

Universe / Style USD Asian creditUSD Asian

investment grade credit

USD Asian non-investment grade

credit

USD China non-investment grade

creditChina fixed income

BenchmarkJ.P. Morgan Asia

Credit Index

J.P. Morgan Asia Credit Index

Investment Grade

J.P. Morgan Asia Credit Index Non Investment Grade

Bloomberg Barclays China Aggregate

Index in CNY

Option Adjusted Duration 4.2 4.3 2.6 2.2 5.3

Average Rating BBB A- B+ B+ AAA (onshore)

Yield to Maturity 4.6% 2.8% 7.1% 9.1% 3.1%

Derivatives Low Low Low Low None

Alpha Target 100-200bps 100-200bps 100-200bps N/A 75 bps

Tracking Error Target 200-400bps 200-400bps 200-400bps N/A 150 bps

Volatility – 5 years 3.0 N/A 4.6 N/A N/A

Inception Jan 2010 May 2016 Aug 2011 Mar 2017 Apr 2018

AuM Fund USD 257 52 823 100 483

AuM Strategy USD 616 106 950 950 890

26

Asia fixed income composite return summary

Source: UBS Asset Management

Note: The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results. Performance figures are gross of fees. Please see attached disclosure information. Inception Dates: Full Cycle: 31 January 2010, Asian High Yield:31 August 2011 Benchmark change after 30 September 2014. Before: J.P. Morgan Asia Credit Index Non-Investment Grade in ADXY; after: J.P. Morgan Asia Credit Index Non-Investment Grade in USD. China Fixed Income: 30 April 2018, China High Yield: 31 March 2017

1 Periods greater than 1 year are annualized2 Value added is the arithmetic difference between the composite return and the benchmark return

Total returns (%) in USD for periods ending 31 January 2020

Annualized

Year-to-date 1 Year 2 Years 3 Years 4 Years 5 Years

Since Inception

UBS Bond Full Cycle Asia 1.17 11.58 7.42 6.19 6.30 5.82 6.43

J.P. Morgan Asia Credit Index 1.36 10.66 6.10 5.50 5.54 4.88 6.00

Value added2 -0.19 0.92 1.32 0.70 0.76 0.94 0.43

UBS Investment Grade Bond 1.49 11.46 7.20 5.91 - - 5.14

J.P. Morgan Asia Credit Index IG 1.54 10.91 6.53 5.64 - - 4.85

Value added2 -0.05 0.55 0.67 0.27 - - 0.29

UBS Bond Asian High Yield 0.62 11.89 6.80 6.41 8.40 7.50 7.21

J.P. Morgan Asia Credit Index Non-IG 0.78 9.89 4.75 5.08 7.08 6.51 6.54

Value added2 -0.16 2.00 2.05 1.33 1.32 0.98 0.67

UBS Bond China Fixed Income 0.83 4.63 - - - - 6.92

Bloomberg Barclays China Aggregate Index CNY 0.73 4.57 - - - - 6.97

Value Added2 0.10 0.05 - - - - -0.05

UBS China High Yield Bond Fund 0.49 10.89 5.02 - - - 4.42

27

Over 20 year history of UBS-AM in AsiaLong-term commitment, experience and track record in managing Asian bonds

Source: UBS Asset Management. Past performance is not an indicator of future return. As of June 2019

• Best Fund Manager for Bonds – Asia Pacific Hard Currency by Citywire in the Hong Kong Awards (2016 and 2017)

• UBS (Lux) Bond Fund – Full Cycle Asian Bond (USD) P-acc: awarded Best Asia Bond Fund in the Morningstar Hong Kong Fund Awards for 2017

• UBS (Lux) Bond Fund – Full Cycle Asian Bond (USD) P-acc: 4-star Morningstar rating in the EAA Fund Asia Bond category

• UBS (Lux) Bond SICAV – Asian High Yield (USD) P-acc: 3-star Morningstar rating in the EAA Fund Asia High Yield Bond category

2006

• Asian local currency bond mandate

• Asian USD HY credit funds

• Asian local currency bond fund

• CNH bond fund

• Asian local currency bond segregated mandate

• Onshore China fixed income fund

• Asian USD IG credit buy & hold mandate

• Asian USD credit fixed maturity fund

• Asian USD IG credit fund

• China high yield fund

2010 2011 2012 2014 201620152013

• Onshore China short term fund

• Asian USD IG credit segregated portfolio

• CNH bond portfolio

• Asian USD credit fund

2017 2018

• Onshore China CNY bond fund

• WFOE onshore China Flexible Bond Fund and customized fundsIndustry recognition

2019

• China Treasury segregated portfolio

Asian credit markets

Supportive credit environment

Appendix B

US-I

29

2.9

1.9

1.0

3.6

6.4 6.6

5.2

2.6

1.3

0.6

1.0

6.2 6.2

5.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

US Euro Area LATAM EmergingEurope

Emerging Asia China ASEAN-5

GD

P G

row

th %

2018 2019F

Asia remains a bright spot for growth

Strong Asia growth

Asia remains a global growth driver

Stable fundamentals

Rising profitability combined with low default rates

China opening up

Maturing Chinese bond market offers new opportunities

… driving the world economy amid a global growth slowdown

Asia growth continues to outperform overall global growth

Source: IMF World Economic Outlook (WEO) Update July 2019. As of January 2020

Emerging MarketsDeveloped Markets

30

30 bn

35 bn

40 bn

45 bn

50 bn

55 bn

60 bn

Jan

-12

Apr-

12

Jul-1

2

Oct

-12

Jan

-13

Apr-

13

Jul-1

3

Oct

-13

Jan

-14

Apr-

14

Jul-1

4

Oct

-14

Jan

-15

Apr-

15

Jul-1

5

Oct

-15

Jan

-16

Apr-

16

Jul-1

6

Oct

-16

Jan

-17

Apr-

17

Jul-1

7

Oct

-17

Jan

-18

Apr-

18

Jul-1

8

Oct

-18

Jan

-19

Apr-

19

Jul-1

9

Oct

-19

Jan

-20

Positive Yielding Debt Negative Yielding Debt

Asian high yield bonds provide strong income proposition

USD 14tn negative yielding debt

Source: Bloomberg, Bloomberg Barclays Global Aggregate Index MV USD. As of end January 2020

Market size bn

Total negative yielding debt - USD 14 trillion

31

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

US HY EUR HY Asia HY

Attractive valuation supported by 3 positive factorsAttractive yield and spread pick up in Asia vs. global credit markets

5.5% – 11.7% 12mth forecasted return range

UBS expects 8-9% 12m return

1.Supportive monetary policy - central banks look to underpin growth

2.Loosening financial conditions in China

3.Default rate to remain low, fundamentals to remain stable

Asian USD Credit Market: Yields


Ø Asia HY YTM: 6.35%

2020 Forecast

5.5%Bull Case

2020F

Bear case7.5%

32

Easing monetary policy

%

1%

2%

3%

4%

5%

6%

7%

Jan 18 Jul 18 Jan 19 Jul 19 Jan 20

USA China 3m SHIBOR IndiaIndonesia South Korea PhilippinesMalaysia

USA

China

Indonesia

South Korea

Philippines

India

Central bank policy rates

Central banks loosen policy to support growth


Various rate cuts across Asia

Malaysia5x

3x

2x

4x

2x

1x

6.50%

2.50%

1.75%

6.00%

3.25%

4.75%

5.15%

1.75%

1.25%

5.00%

2.75%

4.50%

Interest rate movements

# of rate cuts

33

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

Credit impulse (12M)

Targeted credit growth supports the economy in China

Source: Bloomberg. As of end December 2019

Bloomberg China Credit Impulse

(yoy % change)

China's credit impulse has been increasing since November 2018

China's credit impulse – measures change in new credit issued as percentage of GDP

Credit impulse

China's credit impulse signals economic and investment activity inflection points

Flow of credit and improved sentiment will be supportive for risk assets

34

Default rates are low and trend expected to continue…

Asian companies have healthier corporate balance sheets Annual default rates by region since 2010

Stable and increasing interest rate coverage ratio Low historical default rates in China credit markets

Source: J.P. Morgan. For illustration purposes only. Data available as of January 2020

… backed by solid interest rate coverage ratios and fundamentals

Source: J.P. Morgan. For illustration purposes only. Data available as of December 2019

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F

China HY Asia

EM Europe LATAM

CEMBI Broad HY Composite

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

2014 2015 2016 2017 2018 1H 2019

Interest rate coverage ratio

HY HY industrial HY property

35

%

2%

4%

6%

8%

0 1 2 3 4 5 6 7 8 9

Yie

ld (

%)

Duration (years)

Asian high yield – attractive risk/return

Yield(%) Duration

Yield/Duration

Spread (bps)

USD High Yield 5.5 3.1 0.7 390

EUR High Yield 3.4 4.2 0.4 337

Asia USD High Yield 6.7 3.2 0.8 524

Asia HY

Asia IG

Europe HY

US HY

US IG

Europe IG

Yield/duration ratio for high yield (HY) and investment grade (IG) bonds

Asian high yield provides higher yield but with lower duration

Source: Bloomberg, J.P. Morgan. As represented by Bloomberg Barclays US Aggregate Corporate Index, Bloomberg Barclays Euro Aggregate Corporate index, JACI Investment Grade Index, Bloomberg Barclays US Corporate High Yield Index, Bloomberg Barclays Pan-European High Yield Index, and JACI Non-Investment Grade Index. As of end January 2020

UBS (Lux) Bond Fund – Asian High Yield (USD)

Appendix C

37

Fund Index


OAD (years) 2.96 2.81

Average rating of holdings B1 B1


Key statistics

UBS Asian High Yield Bond Fund: Positioning

Sector Allocation vs Index

US-I


Asian HY Fund

Quality allocation

JACI HY


AAA0.00%

BBB1.68%

BB32.45%

B51.97%

CCC1.44%

NR8.36%

Cash4.11%

BB38.12%

B38.21%

CCC0.85%

NR22.79%

3.0% 2.7% 2.1% 2.0%0.9%

-0.1% -0.5% -0.9% -1.0% -1.2% -1.5% -1.5% -1.8%

-6.2%

4.1%

Utilit

ies

Real Est

ate

Consu

mer

Oil

& G

as

Indu

strial

Pulp

& P

aper

Tra

nsp

ort

Sove

reig

n

Tm

t

Meta

ls &

Min

ing

Div

ers

ifie

d

Financi

al

Infr

ast

ruct

ure

Qu

asi

-Sov

Cash

& F

x

38

UBS Asian High Yield: Position Breakdown

Market Exposure vs. Index

Top 10 Issuer Underweights

Top 10 Issuer Overweights


4.1%

3.2%

2.8%

2.2%

1.2%

0.7%

-0.1%

-0.1%

-0.3%

-0.6%

-0.8%

-0.9%

-0.9%

-1.1%

-1.7%

-5.3%

-6.5%

4.1%

India

Indonesia

Macau

Philippines

Sri Lanka

Australia

Cambodia

Maldives

Thailand

Pakistan

Vietnam

Singapore

Mongolia

South Korea

Malaysia

Hong Kong

China

Cash & FX


2.0%

1.8%

1.5%

1.5%

1.4%

1.4%

1.4%

1.3%

1.3%

1.2%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

Aev International Pte

Bank Of East Asia Ltd

Yanlord Land Hk Co Ltd

Adani Green Energy Up

Cifi Holdings Group

Modernland Overseas Pte

Central Chn Real Estate

Chn Aoyuan Property Grp

Smc Global Power Hldgs

Tower Bersama Infrastruc

-1.2%

-1.2%

-1.2%

-1.2%

-0.8%

-0.8%

-0.8%

-0.8%

-0.7%

-0.7%

-2.3% -1.8% -1.3% -0.8% -0.3% 0.2%

Proven Honour Capital

Cfld Cayman Investment

Greenland Glb Invst

1Mdb Global Investments

Fwd Group Ltd

Third Pkstan Intl Sukuk

Logan Property Holdings

Nwd Mtn Ltd

Zhenro Properties Group

Woori Bank

39

UBS-AM Asian High Yield performance

Annualized1

Year-to-date 1 Year 2 Years 3 Years 5 YearsSince

inception

UBS Bond Asian High Yield 0.62 11.89 6.80 6.41 7.50 7.21

J.P. Morgan Asia Credit Index Non-Investment Grade

0.78 9.89 4.75 5.08 6.51 6.54

Value added2 -0.16 2.00 2.05 1.33 0.98 0.67

Tracking error3 1.07 1.03 0.91 1.19 1.34

Morningstar quartile ranking4 3 1 1 1 2 -

Total returns (USD, Gross)

quartile fund over1, 2 and 3 years

UBS Asian High Yield Bond Fund Composite

Source: UBS Asset Management, as at 31 January 2020

Note: The returns shown above are based on currently available information and are subject to revisionPast performance is no guarantee of future results. Performance figures are net of fees. Please see attached disclosure information. Inception date as of 31 August 2011Benchmark change after 30 September 2014. Before: J.P. Morgan Asia Credit Index Non-Investment Grade in ADXY; after: J.P. Morgan Asia Credit Index Non-Investment Grade in USD1 Data for periods greater than 1 year is annualized

For periods greater than 1 year, annualized returns are used to calculate the value added and the tracking errorFor periods greater than 1 year, the annualized standard deviation is based on monthly logarithmic returns

2 Value added is the arithmetic difference between the composite return and the benchmark return3 Tracking error is the standard deviation of the difference between the monthly composite and benchmark returns, based on logarithmic returns

Tracking error is annualized for periods greater than 1 year4 Retrieved from Morningstar direct

UBS (Lux) Bond SICAV – Full Cycle Asian Bond

Appendix D

41

Fund Index


OAD (years) 4.48 4.39

Average rating of holdings Baa2 Baa2


UBS Full Cycle Asian Bond: Positioning

Asian Full Cycle Fund


Sector allocation vs index

Quality allocationKey statistics

JACI


Note: Please note that information is representative of a specific Asian credit portfolio and may vary. All figures above are gross of fees.

AAA, 0.64%

AA, 5.13%

A, 25.05%

BBB, 35.00%

BB, 12.67%

B, 15.78%

CCC, 1.32%

NR, 4.37%

Cash, 0.05%

AA, 5.86%

A, 30.34%

BBB, 39.11%

BB, 8.84%

B, 9.05%

NR, 6.14%

10.0%

1.8% 1.7% 1.0% 0.9% 0.7% 0.5% 0.0%

0.0% -0.1% -0.3% -0.6% -1.2%-6.1%

-8.4%

0.1%

Real Est

ate

Financi

al

Indu

strial

Oil

& G

as

Utilit

ies

Tm

t

Oth

er

Consu

mer

Pulp

& P

aper

Div

ers

ifie

d

Tra

nsp

ort

Meta

ls &

Min

ing

Infr

ast

ruct

ure

Qu

asi

-Sov

Sove

reig

n

Cash

& F

X

42

UBS Full Cycle Asian Bond: Position Breakdown

Market Exposure vs. Index

Top 10 Issuer Underweights

Top 10 Issuer Overweights




12.0%

3.0%

2.5%

2.3%

1.8%

1.8%

1.6%

1.6%

1.5%

1.3%

0.0% 2.0% 4.0% 6.0% 8.0%10.0%12.0%14.0%

Us Treasury N/B

Huarong Finance 2019

Boc Aviation Ltd

Siam Commercial Bank Cay

Bharti Airtel Ltd

Adani Green Energy Up

Hkt Capital No 5 Ltd

Powerlong Real Estate

China Govt Intl Bond

United Overseas Bank Ltd

-3.6%

-2.9%

-2.3%

-1.5%

-1.4%

-1.3%

-1.2%

-1.0%

-0.9%

-0.9%

-4.0%-3.5%-3.0%-2.5%-2.0%-1.5%-1.0%-0.5%0.0%

Republic Of Indonesia

Republic Of Philippines

Sinopec Grp Oversea 2012

Cnooc Finance 2015 Us

Export-Import Bank Korea

Republic Of Sri Lanka

Alibaba Group Holding

Korea Development Bank

Perusahaan Listrik Negar

China Cinda Finance 7.13%

5.53%

1.17%

0.85%

0.70%

0.48%

0.28%

0.16%

0.02%

-0.02%

-0.03%

-0.20%

-0.29%

-0.37%

-0.37%

-0.53%

-1.21%

-2.28%

-5.35%

-5.70%

0.05%

India

Singapore

Hong Kong

Thailand

Japan

Other

Sri Lanka

United States

Macau

Maldives

Cambodia

Vietnam

Taiwan

South Korea

Mongolia

Pakistan

Philippines

Malaysia

China

Indonesia

Cash & FX

43

UBS-AM Asian Full Cycle performance

Annualized

Year-to-date

1 Year 2 Years 3 Years 4 Years 5 Years Since Inception

UBS Full Cycle Asian Bond 1.17 11.58 7.42 6.19 6.30 5.82 6.43

J.P. Morgan Asia Credit Index 1.36 10.66 6.10 5.50 5.54 4.88 6.00

Value added2 -0.19 0.92 1.32 0.70 0.76 0.94 0.43

Tracking error3 0.92 0.82 0.76 0.71 0.80 1.63

Information ratio4 1.00 1.61 0.92 1.06 1.18 0.26


Note: The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results. Performance figures are gross of fees. Please see attached disclosure information. Inception date as of 31 January 20101 Data for periods greater than 1 year is annualized

For periods greater than 1 year, annualized returns are used to calculate the value added and the tracking errorFor periods greater than 1 year, the annualized standard deviation is based on monthly logarithmic returns

2 Value added is the arithmetic difference between the composite return and the benchmark return3 Tracking error is the standard deviation of the difference between the monthly composite and benchmark returns, based on logarithmic returns

Tracking error is annualized for periods greater than 1 year4 Information ratio is the arithmetic value added divided by the tracking error

UBS Full Cycle Asian Bond Composite

Composite total returns (USD, Gross)

UBS (Lux) Bond SICAV – Asian Investment Grade

Appendix E

45

Fund Index


OAD (years) 4.89 4.94

Average rating of holdings A3 Baa1


UBS Asian Investment Grade: Positioning

AAA6.6%

AA10.1%

A32.7%

BBB39.2%

NR10.8%

Cash0.7%

2.8%2.0% 2.0% 1.8%

1.3%0.2% 0.0%

-0.2% -0.5% -0.9% -1.2% -1.3% -1.3%

0.5%

Oil

& G

as

Real Est

ate

Div

ers

ifie

d

Financi

al

Indu

strial

Qu

asi

-Sov

Pulp

& P

aper

Tra

nsp

ort

Meta

ls &

Min

ing

Infr

ast

ruct

ure

Utilit

ies

Consu

mer

Tm

t

Sove

reig

n

Cash

& F

x

AAA, 0.6% AA,

8.1%

A, 39.9%

BBB, 51.3%

Asian Full Cycle Fund


Sector allocation vs index

Quality allocationKey statistics

JACI



46

UBS Asian Investment Grade composite return summary


Note: The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results. Performance figures are gross of fees. Please see attached disclosure information. Inception date as of 31 May 2016

1 Periods greater than 1 year are annualized2 Value added is the arithmetic difference between the composite return and the benchmark return3 For periods greater than 1 year, the annualized standard deviation is based on monthly logarithmic returns4 Tracking error is the standard deviation of the difference between the monthly composite and benchmark returns, based on logarithmic returns. Tracking error is annualized for periods greater than one year5 Information ratio is the arithmetic value added divided by the tracking error. For periods greater than one year, annualized returns are used to calculate the value added and the tracking error

Annualized

Year-to-date 1 Year 2 Years 3 Years Since Inception

UBS Asian Investment Grade Bond 1.49 11.46 7.20 5.91 5.14

J.P. Morgan Asia Credit Index Investment Grade 1.54 10.91 6.53 5.64 4.85

Value added2 -0.05 0.55 0.67 0.27 0.29

Tracking error3 0.52 0.46 0.46 0.45

Information ratio4 1.05 1.46 0.58 0.64

UBS Asian Investment Grade Bond Composite

Composite total returns (USD, Gross)

47

Disclaimer

UBS Asset Management (UK) Ltd is a subsidiary of UBS AG. Registered in England.UBS Asset Management (UK) Ltd and UBS Asset Management Funds Ltd are authorised and regulated by the Financial Conduct Authority. UBS Asset Management Life Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Telephone calls may be recorded.© UBS 2020. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.This document is for Professional Clients only. It is not to be distributed to or relied upon by Retail Clients under any circumstances.This material supports the presentation(s) given. It is not intended to be read in isolation and may not provide a full explanation of all the topics that were presented and discussed. Care has been taken to ensure the accuracy of the content, but no responsibility is accepted for any errors or omissions. Please note that past performance is not a guide to the future. The value of investments and the income from them may go down as well as up, and investors may not get back the original amount invested.This document is a marketing communication. Any market or investment views expressed are not intended to be investment research. The document has not been prepared in line with the FCA requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.Source for all data and charts (unless otherwise stated): UBS Asset ManagementThe information contained in this document should not be considered a recommendation to purchase or sell any particular security and the opinions expressed are those of UBS Asset Management and are subject to change without notice. Furthermore, there can be no assurance that any trends described in this document will continue or that forecasts will occur because economic and market conditions change frequently. This document does not create any legal or contractual obligation with UBS Asset Management. The recipient agrees that this information shall remain strictly confidential where it relates to the Investment Manager's business. The prior consent of UBS Asset Management (UK) Ltd should be obtained prior to the disclosure of commercially sensitive information to a third party (excluding the professional advisors of the recipient). Information reasonably deemed to be commercially sensitive and obtained from UBS Asset Management (UK) Ltd should not be disclosed. This information is supplied with a reasonable expectation that it will not be made public. If you receive a request under the Freedom of Information Act 2000 for information obtained from UBS Asset Management (UK) Ltd we ask that you consult with us. We also request that any information obtained from UBS Asset Management (UK) Ltd in your possession is destroyed as soon as it is no longer required.The Luxembourg and Irish domiciled funds are recognised schemes under section 264 of the Financial and Services Markets Act 2000. The protections offered by the UK's regulatory systemand the compensation under the Financial Services Compensation Scheme, will not be available.

Documents

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