# UBS ASSET MANAGEMENT (US) INC. X-17A-5 (2020-03-02) — Broker-dealer annual report

- Company: UBS ASSET MANAGEMENT (US) INC.
- Form: X-17A-5
- Filed: 2020-03-02
- Period: 2019-12-31
- Accession: 0000067037-20-000001
- CIK: 67037
- File #: 8-21901
- Material weakness: No
- Auditor: Ernst & Young
- Auditor location: Chicago, IL
- Contact: Karen Hu
- Phone: 3125256103
- Website: ubs.com
- Signed by: Kathleen Horang (FINOP Officer)

Original filing: https://www.sec.gov/Archives/edgar/data/67037/000006703720000001/usinc2019secfiling2.pdf

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fl~ANCIAL STATEMENTS AND SUl'l'L l:'. Ml::NTARY 1:-JFORMATIOt,;

UBS Asset Management (US) Inc. (A Subsidiary of UBS Americas Inc.) Year Ended December 31, 2019 With Report of Independent Registered Public Accounting Finn

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UNITEDSTATES SECURITIF.SANDF.XCHANGECOMI'tUSSION **Washington,** D.C. 10549

0MB APPROVAL **0MB Number:** 3235-0123 Expires: August 31, 2020 Estimated **average** burden hours ...... 12.00

# **ANNUAL** AUDITED **REPORT FORM X-17A-5 PART** Ill

SEC FILE NUMBER ~21901

**FACING PAGE Information** Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder

|                                                                                                                                                |                                                          | AND ENDING 12/31/19 |                                |  |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------|---------------------|--------------------------------|--|--|--|
|                                                                                                                                                | REPORT FOR THE PERIOD BEGINNING 01/01/19<br>MM/DD/YY     |                     | -----------<br>MM/DD/YY        |  |  |  |
|                                                                                                                                                | A. REGISTRANT IDENTlF1CATION                             |                     |                                |  |  |  |
| NAME OF BROKER·DEALER: UBS Asset Management (US) Inc.                                                                                          |                                                          |                     | OFACIAL USE ONLY               |  |  |  |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)                                                                              |                                                          |                     | FIRM I.D. NO.                  |  |  |  |
| 1285 Avenue of the Americas                                                                                                                    |                                                          |                     |                                |  |  |  |
|                                                                                                                                                | (No. and Street)                                         |                     |                                |  |  |  |
| New York                                                                                                                                       | NY                                                       | 10019               |                                |  |  |  |
| (City}                                                                                                                                         | (Smu)                                                    | (Zip Code)          |                                |  |  |  |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONT ACT IN REGARD TO THIS REPORT                                                                       |                                                          |                     | 201-352~0                      |  |  |  |
|                                                                                                                                                |                                                          |                     | (Arca Code - Telephone Number) |  |  |  |
|                                                                                                                                                | B. ACCOUNT ANT IDENTIFICATION                            |                     |                                |  |  |  |
| INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report•<br>EY, Ernst & Young LLP                                             | (Name - if iltdivid11al. stale /rut. first. middle iwme) |                     |                                |  |  |  |
| 155 North Wacker Drive                                                                                                                         | Chicago                                                  | IL                  | 60606-1787                     |  |  |  |
| (Address)                                                                                                                                      | (City)                                                   |                     | (Zip Code)                     |  |  |  |
| CHECK ONE:<br>I<br>✓<br>certified Public Accountant<br>Pu lic Accountant<br>ccountant not resident in United States or any of its possessions. |                                                          |                     |                                |  |  |  |
|                                                                                                                                                | FOR OFFICIAL USE ONLY                                    |                     |                                |  |  |  |
|                                                                                                                                                |                                                          |                     |                                |  |  |  |
|                                                                                                                                                |                                                          |                     |                                |  |  |  |
|                                                                                                                                                |                                                          |                     |                                |  |  |  |

*must be supported by a statemenl of /acts and circumstances relied on as the basis for the exemption. See Section 240.17 ~j(e}(2)* 

Potential persons who are to respond to the collection of infbrmation contained in this form are not required to respond unlessthefonndieplayeacurrentlyvalidOMBcontrolnumber.

SEC 1410 (11--05)

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#### **OATH OR AFFIRMATION**

| I, Kathleen Horan                                                                                                                                     | , swear (or affinn) that, to the best of                                                                                                                         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| UBS Asset Management (US) Inc .                                                                                                                       | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of<br>-------------------------------------------'~ |
| of February 28                                                                                                                                        | are true and correct. I further swear (or affinn) that                                                                                                           |
| classified solely as that of a customer, except as follows:                                                                                           | neither the company nor any parlner, proprietor, principal officer or director has any proprietary interest in aoy account                                       |
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|                                                                                                                                                       | FINOP Officer                                                                                                                                                    |
|                                                                                                                                                       | Title                                                                                                                                                            |
|                                                                                                                                                       | IERNADEnE C. ,EHIIION                                                                                                                                            |
|                                                                                                                                                       | NOTARYPUmJCOl fEW .8SEY                                                                                                                                          |
| This report •• contains (check all applicable boxes):                                                                                                 | M1Ca11d1IID11Elqllr'll2tl1W                                                                                                                                      |
| 0 (a) Pacing Page.                                                                                                                                    |                                                                                                                                                                  |
| 0 (b) Statement of Financial Condition.                                                                                                               |                                                                                                                                                                  |
|                                                                                                                                                       | 0 (c) Statement oflncome (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement                                               |
| of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).                                                                                  |                                                                                                                                                                  |
|                                                                                                                                                       |                                                                                                                                                                  |
| § (d) Statement of Changes in Financial Condition .<br>./ (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. |                                                                                                                                                                  |
| (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.                                                                          |                                                                                                                                                                  |
| ~ (g) Computation of Net Capital.<br>(b) Computation for Determination of Reserve Requirements Pursuant to Ruic 15c3-3.                               |                                                                                                                                                                  |
| (i) Infunnation Relating to the Possession or Control Requirements Under Rule 15c3-3.                                                                 |                                                                                                                                                                  |
| 0                                                                                                                                                     | G) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule l 5c3-l and the                                              |
|                                                                                                                                                       | Computation for Det.ennination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.                                                                       |
| 0                                                                                                                                                     | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of                                              |
| consolidation.                                                                                                                                        |                                                                                                                                                                  |
| ~ (I) An Oath or Affinnation.                                                                                                                         |                                                                                                                                                                  |
| 0 (m) A copy of the SIPC Supplemental Report.                                                                                                         |                                                                                                                                                                  |
| D (n) A report describing any material inadequacies found to exist o                                                                                  | r found to have existed since the date of the previous audit.                                                                                                    |
| ••For conditions of confidential treatment of certain portions of this filing. see section 240.17 a-5 (e)(3).                                         |                                                                                                                                                                  |

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## Financial Statements and Supplementary Information

Year Ended December 3 1, 2019

### **Contents**

| Repon of Independent Registered Public Accounting Fi1m  I                                                                                         |  |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--|
| Financial Statements                                                                                                                              |  |
| Statement of Financial Condition  2                                                                                                               |  |
| Statement ofOperations  3                                                                                                                         |  |
| Statement of Changes in Stockholder's Equity  4                                                                                                   |  |
| Statement of Cash Flows  5                                                                                                                        |  |
| Notes to Financial Statements  6                                                                                                                  |  |
| Supplementary Information                                                                                                                         |  |
| Schedule I - Computation of Net Capital for Brokers and Dealers Pursuant to Rule<br>I 5c3-l Under the Securities Exchange Act of 1934  14         |  |
| Detail of Non-Allowable Assets  15<br>Schedule II -                                                                                               |  |
| Schedule III - Computation for Determination of PAB Account and Reserve<br>Requirements for Brokers and Dealers Pursuant to Rule 1Sc3-3 Under the |  |
| n Relating to Possession or Control<br>Securities Exchange Act of 1934 and Informatio                                                             |  |
| Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 Under the                                                                            |  |
| Secuiities Exchange Act of 1934  16                                                                                                               |  |

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#### **Report of Independent Registered Public Accounting Firm**

To the Stockholder and the Board of Directors of UBS Asset Management (US) Inc.

#### **Opinion on the Financial Statements**

We have audited the accompanying statement of financial condition of UBS Asset Management {US) Inc. (the Company) as of December 31 , 2019, 1he related statements of operations, changes in stockholder's equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, 1he financial statements present fair1y, in all material respects, the financial position of the Company at December 31. 2019, and the results of its operations and its cash f'lo-..vs for the year then ended in conformity with U.S. generally accepted accounting principles.

#### **Basis** for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with 1he Public Company Accounting Ove~ight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material missta!ement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erTor or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the frmmcial statements. We believe that our audit provides a reasonable basis for our opinion.

### **Supplemental** lnfonnation

The accompanying information contained in Schedules I, II and Ill has been subjected to audit ptocedures performed in coniunction with the audit of the Company's financial statements. Such informaHon is the responsibility of the Company's management. Our audit procedures included determining whether the information reconciles to the financial statements or the under1ying accounting and other records, **as**  applicable, and performing proced1.1res to test the completeness and accuracy of the information. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with Rule 17a-5 under the Securities Exchange Act of 1934. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements **as a** whole.

We have served as the Company's auditor since at least 2001, but were unable to detennine the specit'ic year.

Chicago, Illinois February 28, 2020

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### Statement of Financial Condition

(In *Thousands of Dollars, Except Share and Per Share* Amoullls)

December 31, 20 19

| Assets                                                       |               |
|--------------------------------------------------------------|---------------|
| Cash and cash equivalents                                    | \$ 20.793     |
| Receivable from third panies                                 | 3,178         |
| Receivable from affiliates                                   | 3.776         |
| Receivable for income tax overpayment                        | 156           |
| Prepaid expenses                                             | 227           |
| Total assets                                                 | \$ 28. 130    |
| Liabilities and stockholder's equity                         |               |
| Liabilities:                                                 |               |
| Payable to affiliates                                        | 6,242<br>\$   |
| Accrued liabilities and accounts payable                     | 913           |
| Advanced payments from third parties                         | 279           |
| Total liabilitjes                                            | 7.434         |
| Stockholder's equity:                                        |               |
| Common srock, \$1 par value, 1,000 shares authorized, issued |               |
| and outstanding                                              | I             |
| Additional paid-in-capital                                   | 17.563        |
| Retained earnings                                            | 3.132         |
| Total stockholder's equity                                   | 20.696        |
| Total liabilities and stockholder's equity                   | 130<br>\$ 28, |
|                                                              |               |

*See accompanying notes.* 

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## Statement of Operations *(In Thousands of Do/furs)*

Year Ended December 31. 2019

| Revenues                             |              |
|--------------------------------------|--------------|
| Distribution fees from affiliates    | 43,599<br>\$ |
| Interest income                      | 342          |
| Distribution fees from third parties | 111          |
| Commissions                          | 14           |
| Total revenues                       | 44,066       |
| Expenses                             |              |
| Distribution costs to affiliates     | 28.881       |
| Allocated costs from affiliate       | 6.805        |
| Distribution costs to third parties  | 3.219        |
| Professional fees                    | 447          |
| Other expenses                       | 450          |
| Total expenses                       | 39,802       |
| Income before income tax expense     | 4.264        |
| Income tax expense                   | 1.132        |
| Net income                           | 3,132<br>\$  |

*See* accompa11yi11~ *notes.* 

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## Statement of Changes in Stockholder's Equity *(In Thousands of Du/furs)*

Year Ended December 31 , 20 I 9

|                                  | Common<br>Stock | Additional<br>Paid-in<br>Capital |   | Retained<br>Earnings | Total<br>Stockholder's<br>Equity |
|----------------------------------|-----------------|----------------------------------|---|----------------------|----------------------------------|
| Balance at January I<br>, 2019   | \$              | \$<br>17.563                     | s | 1.938                | 19,502                           |
| Net income                       |                 |                                  |   | 3,132                | 3,132                            |
| Dividend paid to Parent          |                 |                                  |   | p,938}               | {1,938}                          |
| Balance at December 31<br>, 2019 | \$              | \$<br>17,563                     | s | 3 132                | \$<br>20696                      |

*See m·companying notes.* 

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## Statement of Cash Flows *(In Thousands of Du/furs)*

Year Ended December *3* I, 2019

| Operating activities                                                                 |              |
|--------------------------------------------------------------------------------------|--------------|
| Net income                                                                           | \$<br>3,132  |
| Adjustments to reconcile net income to net cash provided by<br>operating activities: |              |
| Changes in assets and liabilities:                                                   |              |
| Receivable from third parties                                                        | 2,969        |
| Receivable from affiliates                                                           | (813)        |
| Receivable for income tax overpayment                                                | 17           |
| Prepaid expenses                                                                     | I I          |
| Payable to affiliates                                                                | 787          |
| Accrued liabilities and accounts payable                                             | 19           |
| Advanced payments from third parties                                                 | 16           |
| Net cash provided by operating activitiL-s                                           | 6.138        |
| Financing activities                                                                 |              |
| Dividend paid to Parent                                                              | (1,938}      |
| Cash used in financing activities                                                    | (1,938)      |
| Net change in cash and cash equivalents                                              | 4,200        |
| Cash and cash equivalents at beginning of year                                       | 16.593       |
| Cash and cash equivalents at end of year                                             | \$<br>20.793 |

No income tax payments were made by the Company in 2019. These items werl! charged through intercompany accounts. Income tax payments charg~ through the intercompany accounts in 2019 were \$1,115.

*See ac:companyin~ notes.* 

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### Notes to Financial Statements *(In Thousands c?f' Dollars)*

Year Ended December 31, 2019

#### 1. **Organization and Nature or the Business**

UBS Asset Management {US) Inc. (the Company) is organized as a Delaware corporation and is primarily engaged in the business of distributing mutual funds and other investment vehicles. The Company is a broker-dealer registered under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority Inc. **(FINRA).** The Company is a wholly owned subsidiary of UBS Americas Inc. (UBS Americas or the Parent). a wholly owned subsidiary of UBS /\G (UBS). The Company has material transactions with subsidiaries and affilialt:s uf UBS Amt:rkas.

### **2. Summary or Significant Accounting Policies**

#### **Use or Estimates**

The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (US GAAP). The preparation of these financial statements requires management to make estimates and assumptions that afTecl the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates.

#### **Cash and Cash Equivalents**

The Company considers all highly liquid instruments, purchased with a maturity of three months or less, to be cash equivalents. As of Dec.ember J 1, 2019, cash equivalents include U.S. Treasury Bills with a face value of SI 6,8 14 maturing in January 2020. The U.S. Treasury Bills approximate fair value, and a re considered Level I assets under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, *Fair Value Meusurement.*  Cash and cash equivalents are held at an affiliated bank.

#### **Revenue Recognition**

Distribution recs are accrued during the period in whic h they are earned. Commissions earned on redemption of mutual fund shares are recorded on a trade-date basis.

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### Notes to Financial Statements ( continued) *(In Thousands c?f' Dollars)*

#### **2. Summary or Signilicant Accounting Policies (continued)**

The following table presents revenue from contracts with customers by major source.

| Distribution fees from affiliates           | S 4),599 |
|---------------------------------------------|----------|
| Commissions                                 |          |
| Distribution fees from third parties        | 111      |
| Commissions                                 | 14       |
| Total Commissions                           | 125      |
| Total revenue rrom contracts with customers | \$43,724 |

#### **Dererred Distribution Costs**

The Company is responsible for the distribution of shares of certain mutual funds and investment vehicles. In connection with the distribution of certain classes of shares, the Company pays UBS Financial Services. Inc. (UBS FSI). an affiliated broker-dealer. and other third-party brokers a fee based on the value of the fund shares sold by UBS FSI and other third-party brokers. The fees paid to UBS FSI and other third-pany brokers are deferred and amortized over the period during which the Company receives I 2b- I fee revenue from the mutual funds for its role in the distribution of the shares. The deferred distribution costs are amortized over a period of one to six years based on the contractual period in which the I 2b- I fee revenue is received. Contingent deferred sales chan~es received from early withdrawal char~es reduce the deferred distribution costs balance.

The Company periodically reviews the carrying value of deferred distribution costs to determine whether a significant decline in the equity or bond markets or other events or circumstances indicate that an impairment in value may have occurred. If indicators of potential impairment exi:st. the Cumpany cump,ne:s the carrying value uf the a:s:set tu the e:stimaleu future net undiscounted cash f1ows related to the asset. Ir such adjustments indicate that estimated future net undiscounted cash nows will not be suffic ient to recover the recorded carrying value, the asset is adjusted to its estimated fair value. The Company did not record impainnent for the year ended December 31. 20 I 9.

#### **Income Taxes**

The Company is included in the consolidated federal income tax return and certain combined state and local tax returns of UBS Americas. In addition. the Company files stand-alone returns in other state and local jurisdictions. Federal, state. and local taxes are provided for on a separate return basis.

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### Notes to Financial Statements ( continued) *(In Thou.winds c?f' Dollars)*

#### **2. Summary or Significant Accounting Policies (continued)**

In accordance with the provisions of FASB ASC Topic 740, *lncume Taxes* (ASC Topic 740), deferred tax assets and liabilities are recognized for the future tax effect of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect during the year in which the basis differences reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period that includes the enactment date. In the event it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is recorded.

ASC Topic 740 also sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions. This interpretation uses a two-step approach wherein a tax benefit is recognized if a position is more likely than not to be sustained. The amount of the benefit is then measured to be the highest tax benefit that is greater than *50%*  likely to be realized.

#### **Accounting Developments**

#### **Adopted in 2019**

In February 2016. the F ASB issued Accounting Standards Update (ASU) 2016-02, *Leu.\'<.'.\'.* The standard substantially changes how lessees must account for operating lease commitments, requiring a lease liability with a corresponding right-of-use asset to be recognized on the balance sheet, compared with the current off-balance sheet treatment of such leases. The Company adopted ASU 20 I 6-02 as of January I, 2019. Upon adoption, the assets and liabilities of the Company were not impacted as the Company is not a lessee to any leases.

#### **Pending Adoption**

In June 2016. the FASB issued ASU 2016-13. *Fimmdul lnstrnments* - *Credit Losses (Topic: 326) Measurement of Credit Losses on Financial Instruments.* The amendment replaces existing incurred loss impainnent guidance and introduces a new credit loss model; the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit losses. The CECL model requires the measurement of all expected credit losses for financial assets carried at amortized cost based on historical experience, current conditions and reasonable and supportable forecasts over the full remaining expected life of the financial assets. The Company will adopt the amendment on January I. 2020. Upon adoption. the Company will not be impacted as it does not hold any financial instruments.

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### Notes to Financial Statements ( continued) *(In Thousands c?f' Dollars)*

#### **2. Summary or Signilicant Accounting Policies (continued)**

In December 2019, the FAS B issued ASU 2019- 12, providing guidance that simplifies the accounting for income taxes by eliminating certain exceptions to ASC 740 related to, among other things. the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences, and other codification improvements. In addition. ASU 2019-12 specifies that an entity is not required to allocate the consolidated amount of c urrent and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements. However. an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax. and disregarded by the taxing authority. ASU 2019-12 is effective for fisca l years, and interim periods within those ti seal years, beginning after December 15, 2020. Early adoption of the amendments is permitted. The Company is presently evaluating the effect of ASU 20 I 9- 12. and expects no material impact to its financial statements.

#### **3. Related Party Transactions**

Under a service level agreement. UBS Asset Management (Americas) Inc. **(AM** Americas) compensates the Company for the distribution of certain investment products for which **AM**  Americas is the registered investment adviser. These amounts are included in d istribution fees from affiliates on the statement of operations, and totaled \$43,223 for the year ended December 31. 2019. This amount is calculated based on three components: I) sales of certain investment products, 2) the average net assets of specified funds distiibuted by the Company and 3) costs incurred by the Company as pan of its distribution activities.

Under a marketing and sales support se rvices agreement with UBS Realty Investors LLC (UBS Realty), the Company provides certai n marketing and sales support services to UBS Realty on a non-exclusive basis in connection with the sale of fund interests issued by certain privatelyofTered, pooled investment funds managed by UBS Realty. The Company earned \$350 in accordance with the agreement for the year ended December 31. 2019, which is included in distribution fees from affiliates on the statement of operations. The Company may share a portion o f the fees earned under this agreement with UBS FSI for introductions to such investors. For the year ended December 3 1, 20 I 9, the Company did not share any fees with UBS FSI.

Under a marketing and sales support services agreement with UBS Farmland Investors LLC (UBS Fannland Investors). the Company provides certain marketing and sales support services to UBS Farmland Investors on a non-exclusive basis in connection with the sale of fund interests issued by certain privately-offered, pooled investment funds managed by UBS Farmland Investors. The Company earned \$26 in accordance with the agreement for the year ended December 3 1, 2019, which is included in distribution fees from affiliates on the statement of operations.

{13}------------------------------------------------

### Notes to Financial Statements ( continued) *(In Thou.winds c?f' Dollars)*

#### 3. **Related Party Transactions (continued)**

The Company has entered into a distribution support services agreement with UBS FSI for distribution, marketing support, and other services related to certain mutual funds. Under the agreement, the Company pays a fee of *5* basis points of all sales of fund shares. excluding certain programs that have been agreed to by the panies. In addition, the Company pays a fee of *5* basis points of the net asset value of all equity shares and 5 basis points of the net asset value of all fixed income shares in dealer accounts. The net asset values exclude cenain grandfathered assets prior to July I. 1997. and qualified plan assets held away from UBS FSI. In accordance with the agreement, the Company incurred \$4,831 in distribution support service costs from UBS FSI for the year ended December 31. 2019, which is included in distribution costs to affiliates on the statement of operations.

The Company has also entered into selected dealer agreements with UBS FSI and UBS Securities LLC ( UBS Sec LLC) related to the sale of shares of certain money market funds. Under these agreements, the Company pays UBS FSI and UBS Sec LLC sales charges and commissions based on average daily net assets of each Fund. For the year ended December 31. 2019, foes related to these agreements totaled \$23.744 and \$306 respectively. and are included in distribution costs to affiliates on the statement of operations.

Under a portal referral fee agreement with UBS Sec LLC. the Company pays a l'eferral foe when prospective shareholders invest in proprietary funds. For the year ended December 31, 2019, there was no payment of referral fees to UBS Sec LLC.

The Company is allocated the ponion of the expenses incurred by AM Americas that relates to the distribution activities conducted by the Company. Employees of AM Americas associated with distribution activities and otlicers of AM Americas have dual-employee status with both the Company and AM Americas, All compensation and benefit costs associated with the dualemployees are borne by AM Americas and allocated to the Company based on a service-level agreement. These amounts arc included in allocated costs from affiliate on the statement of operations and totaled S6,805 for the year ended December 31, 2019.

As of December 31. 2019. \$3.776 of distribution fees from affili~tes and \$6,242 of distribution costs to atliliates are included in the receivable from affiliates and payable to affiliates respectively on the statement of financial condition.

{14}------------------------------------------------

### Notes to Financial Statements ( continued) *(In Thou.winds c?f' Dollars)*

#### **4. Regulatory Requirements**

The Company is subject to the Securities and Exchange Commission's (SEC) Unifonn Net Capital Rule. Rule I 5c3-1. Under the alternative method of computing capital requirements, the Company's net capital shall not be less than S250. As of December 31, 2019. the Company"s net capital, as defined, was S 13,359 which exceeded the minimum net capital required by \$13, I 09.

Dividend payments, equity withdrawals, and advances are subject to certain notification and other provisions of the net capital rules of the SEC and other regulatory bodies.

#### 5. **Income Taxes**

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31.2019, the Company had no net deferred tax balances.

The components of the income tax expense for the year ended December 31 . 2019 were as follows:

| Current                          |          |
|----------------------------------|----------|
| Federal                          | \$ 833   |
| State and local                  | 299      |
| Total current                    | 1,132    |
| Deferred                         |          |
| Federal                          | 0        |
| State and local                  | 0        |
| Total deferred                   | 0        |
| Total provision for income taxes | \$ 1.132 |

The Company's effective tax rate differs from the statutory federal rate of 21 % primarily due to state and local taxes.

As of December 31. 20 I 9. the Company detennined that it has no uncertain tax pos1ttons. interest, or penalties as defined within ASC Topic 740 and, accordingly, no additional disclosures are required.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income taxes.

{15}------------------------------------------------

## Notes to Financial Statements ( continued) *(In Thou.winds c?f' Dollars)*

### **5. Income Taxes (continued)**

The Company is included in the consolidated federal income tax return and certain combined state and local income tax returns of UBS Americas. The Company also files stand-alone tax returns in various state and local jurisdictions.

As of December 31, 2019, the consolidated group is under examination by the Internal Revenue Service for tax years 2015 and 2016. The 2017 and 2018 tax years are open for examination. There are various state and local jurisdictions currently under audit for tax years 2002 through 2017 and the 20 18 tax year is open for examination.

111 lite next twt:lvt: mouths, lht: Cornpa11y bt:lievt:s lhal tht:rt: will bt: 110 111alt:rial (;hanges lo unrecognized tax benefits.

#### **6. Contingencies**

**At** various times. the Company has been named as a detendant in legal actions arising in the ordinary course of business. While the outcome of such matters cannot be predicted with certainty, in the opinion of management of the Company. any such actions will be resolved with no material adverse effect on the Company's financial statements talcen as a whole.

#### 7. **Subsequent Events**

The Company is required by accounting literature (ASC 855, S11l>seq11ellf El'<!nts) to evaluate whether events occurring after the statement of financial condition date but before the date the statement of financial condition is issued require accounting as of the balance sheet date or disc losure in the financ ial statements. The Company has evaluated all subsequent events through the date of issuance of the financial statements and determined that no such events have occurred.

{16}------------------------------------------------

Supplementary Information

{17}------------------------------------------------

## Schedule I

## Computation of Net Capital for Brokers and Dealers Pursuant to Rule l 5c3-l Under the Securities Exchange Act of 1934 *(/11 Thousund,;)*

#### December 3 I . 2019

| Stockholder's equity                                               | \$20,696 |
|--------------------------------------------------------------------|----------|
| Less non-allowable assets (sec schedule on following page)         | (7.337)  |
| Net capital                                                        | 13.359   |
| Net capital requirement (greater of \$250 or 2% of aggregate dehit |          |
| items as shown in Formula for Reserve Requirements pursuant to     |          |
| Rul<.! l 5c3-3 (2% of \$0))                                        | 250      |
| Excess net capital                                                 | \$13,109 |

There are no material differences between the above computation of net capital pursuant to Rule l 5c3-J and the corresponding computation included in the Company's December 31. 2019. unaudited amended Part IIA FOCUS Report, on February 27. 2020.

{18}------------------------------------------------

### Schedule II

### Detail of Non-Allowable Assets *(In Thousands)*

December 3 I . 2019

| Non-allowable assets:                 |          |
|---------------------------------------|----------|
| Receivable from third parties         | \$3,178  |
| Receivable from affiliates            | 3,776    |
| Receivable for income tax overpayment | 156      |
| Prepaid expenses                      | 227      |
| Total                                 | \$ 7.337 |

{19}------------------------------------------------

### Schedule Ill

Computation for Determination of P AB Account and Reserve Requirements for Brokers and Dealers Pursuant to Rule l 5c3-3 Under the Securities Exchange Act of 1934 and Information Relating to Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 Under the Securities Exchange Act of1934

December 31, 2019

The Company is exempt from Rule 15c3-3 and the Possession or Control Rule of the Securities and Exchange Commission under the paragraph (k)(I) limited business (mutual funds and/or variable annuities only) exemption.

{20}------------------------------------------------

![](_page_20_Picture_0.jpeg)

**UBS**  One North W;,cker Drive Chirago IL 60606 Tel. -+-1·312-525 5247 www.ubs.com

### UBS Asset Management (US) Inc.

### Exemption Report

### December 31, 2019

UBS Asset Management (US) Inc. (the "Company") is a **registered** broker-dealer subject to Rule **l** 7a-5 promulgated by the Securities and Exchange Commission (17 C.F.R.. §240.l?a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d)(l) and (4). To the best of its knowledge and belief, the Company states the following:

(1) The Company claimed an exemption from 17 C.F.R. § 240.1Sc3-3 under the provisions of 17 C.F.R. § 240.15c3-3 (k)(l) limited business (mutual funds and/or variable annuities only) exemption.

(2) The Company met the identified exemption provisions in 17 C.F.R § 240.15c3- 3(k) for the period from January I, 2019 through December 31, 2019 except as described below:

- a Accidental receipt \$1,069.59 received *4/9119.* returned 1/29/20
- b. Accidental receipt \$8,420.09- received 4/24/19, returned 8/26/19
- c. Accidental receipt \$1,305.51 -received 5/10/19, returned 1/22/20
- d. Accidental receipt \$7,000.00 received 8/21/19, returned 8/26/19
- e. Accidental receipt \$368.70 received 9/4/19, returned 9/12/19

UBS Asset Management (US) Inc.

I, Kathleen Horan, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct.

By: h&k\~ Title: FINOP

February 28, 2020

{21}------------------------------------------------

### **Report of Independent Registered Public Accounting Firm**

The Board of Directors and Management of UBS Asset Management (US) Inc.

We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) UBS Asset Management {US) Inc. (the Company) identified the following provisions of 17 C.F.R. § 15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. § 240.1 5c3-3 (k)(1) (the "exemption provisions'') and (2) the Company stated that it met the identified exemption provisions in 17 C .F.R. § 240.15c3-3 (k) throughout the most recent fiscal year ended December 31, 2019 except as described in its exemption report. Management is responsible for compliance with the exemption provisions and its statements.

Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exempt.ion provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should ·be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k.1) of Rufe 15c3-3 under the Securities Exchange Act of 1934.

This report is intended solely for the infom,ation and use of the Board of Directors. management, the SEC, FINRA, other regulatory agencies that rely on Rule 17a-5 under the Securities Exchange Act of 1934 in their regulation of registered brokers and dealers, and other recipients specified by Rule 17a-5{d)(6) and is not intended to be and should not be used by anyone other than these specified parties.

Chicago, Illinois February 28, 2020

{22}------------------------------------------------

### **Report of Independent Registered Public Accounting** Firm **on Applying Agreed-Upon Procedures**

To the Board of Directors and Management of UBS Asset Management (US) Inc.:

We have performed the procedures enumerated below, which were agreed to by the Board of Directors, management of UBS Asset Management (US) Inc. (the Company), and the Securities Investor Protection Corporation (SIPC), as set forth in the Series 600 Rules of SIPC, solely to assist the specified parties in evaluating the Company's schedule of assessments and payments is in accordance with the applicable instructions of the General Assessment Reconciliation (Form SJPC-7) for the fiscal year ended December 31 ,2019. The Company's management is responsible for the Company's compliance with those requirements. The sufficiency or these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures enumerated below either for the purpose for which this report has been requested or for any other purpose.

The procedures we performed and our findings **are as** follows:

1. Compared the assessment payments made in accordance with the General Assessment Payment Form (Form SIPC-6} and applied to the General Assessment calculation on Form SIPC-7 with respective cash disbursement record entries.

No findings were found as a result of applying the procedure.

2. Compared the amounts reported in the audited financial \$tatement\$ requited by SEC Rule 17a-5 with the amounts reported in Form SIPC-7 for the fiscal year ended December 31 , 2019.

No findings were found as a result of applying the procedure.

3. Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers supporting the adjustments.

No findings were round **as a** result of applying the procedure.

4. Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the schedules and working papers supporting the adjustments.

No findings were found **as a** result of applying the procedure.

{23}------------------------------------------------

This agreed-upon procedures engagement was conducted in accordance with the interim attestation standards of the Public Company Accounting Oversight Board (United States) and the attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or a review, the objective of which would be the expression of an opinion or conclusion, respectively, on whether UBS Asset Management {US) lnc.'s

schedule of assessments and payments is in accordance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the fiscal year ended December 31, 2019. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the information and use of the specified parties listed above and is not intended to be and should not be used by anyone other than these specified parties.

Chicago, Illinois February 28, 2020

{24}------------------------------------------------

|            | SIPC-7           |                                                                                                                                                                                                                                                                    | SECURITIES INVESTOR PROTECTION CORPORATION<br>P.O. Box 92185 Washington, D.C. 20090-2185<br>202-371-8300                |          |                                                                                                                                                                                                                                |        | SIPC-7                                           |
|------------|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|
|            | (36-REV 12/18)   |                                                                                                                                                                                                                                                                    | General Assessment Reconciliation<br>(36-REV 12/18)                                                                     |          |                                                                                                                                                                                                                                |        |                                                  |
|            |                  |                                                                                                                                                                                                                                                                    | For the fiscal year ended 20_1_9<br>(Read carefully the instructions in your Working Copy before complel ing this Form) | ___<br>_ |                                                                                                                                                                                                                                |        |                                                  |
|            |                  |                                                                                                                                                                                                                                                                    | TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS                                                                |          |                                                                                                                                                                                                                                |        |                                                  |
|            |                  | 1. Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fiscal year ends for<br>purposes of the audit requirement of SEC Rule 17a-5;                                                                              |                                                                                                                         |          |                                                                                                                                                                                                                                |        |                                                  |
|            | 12th Floor<br>L  | [ UBS Asset Management (US) Inc.<br>1285 Avenue of the Americas<br>New Yor1<, NY 10019                                                                                                                                                                             |                                                                                                                         | 7<br>_j  | Note: If any of the information shown on the<br>any corrections to form@sipc.org and so<br>indicate on the form filed.<br>Name a1Jd telephone riumber of person to<br>contact respecting this form.<br>Karen Hu (312) 525-6103 |        | mailing label requires correction, please e-mail |
| 2. A.      |                  | General Assessment (item 2e from page 2)                                                                                                                                                                                                                           |                                                                                                                         |          |                                                                                                                                                                                                                                | \$ 564 |                                                  |
| B.         |                  | Less payment made with SIPC-6 filed (exclude interest)                                                                                                                                                                                                             |                                                                                                                         |          |                                                                                                                                                                                                                                | ( 283  |                                                  |
| C.<br>D.   |                  | Date Paid<br>Less prior overpayment applied<br>Assessment balance due or (overpayment)<br>E. Interest computed on late payment (see instruction E) for ____ days at 20% per annum<br>F. Total assessment balance and interest due (or overpayment carried forward) |                                                                                                                         |          | (<br>\$                                                                                                                                                                                                                        | 281    | __________<br>_                                  |
|            | G. PA YU ENT:    | ✓ the box<br>Check mailed to P.O. 801D funds Wired D<br>Total {must be aame as F above)                                                                                                                                                                            | ACH0<br>\$                                                                                                              |          | __________<br>_                                                                                                                                                                                                                |        |                                                  |
|            |                  | H. Overpayment carried forward                                                                                                                                                                                                                                     | \$(                                                                                                                     |          | ________<br>_                                                                                                                                                                                                                  |        |                                                  |
|            |                  | J. Subsidiaries (S) and predecessors (P} included in this 1orm (give name and 1934 Act registration number):                                                                                                                                                       |                                                                                                                         |          |                                                                                                                                                                                                                                |        |                                                  |
|            | and complete.    | The SIPC member submitting this form and the<br>person by whom it Is executed represent thereby<br>that all Information contained herein is true, correct                                                                                                          |                                                                                                                         |          |                                                                                                                                                                                                                                |        |                                                  |
| Datao the~ |                  | day ot February                                                                                                                                                                                                                                                    |                                                                                                                         |          |                                                                                                                                                                                                                                |        |                                                  |
|            |                  | Thi9 form and the a99essment payment is due 60 days after the end of the fi9cal year. Retain the Working Copy of this form<br>for a period of not less than 6 years, the latest 2 years In an easily accessible place.                                             |                                                                                                                         |          |                                                                                                                                                                                                                                |        |                                                  |
| 3<br>UJ    | ffi Dates:       | Postmarked<br>Received                                                                                                                                                                                                                                             | Reviewed                                                                                                                |          |                                                                                                                                                                                                                                |        |                                                  |
| u.,<br>a:  | ;;: Calculations | ---                                                                                                                                                                                                                                                                | __<br>Documentation<br>_                                                                                                |          |                                                                                                                                                                                                                                |        | ___<br>Forward Copy<br>_                         |

> **a.. 0 c.:, c:.c :z:**  -:-= ICC **c:, 3:** 

| a |  |                               |
|---|--|-------------------------------|
|   |  | ui Disposition of exceptions: |

**a:** 

~ Exceptions:

{25}------------------------------------------------

**DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT**  Amounls for the fiscal period

Item **No.**  2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030) 2b. Additions: (1) Total revenues from the securities business ot subsidiaries (except foreign subsidiaries} and predecessors not included above. (2) Net loss from principal transactions in securities in trading accounts. (3) Net loss from principal transactions in commodities in trading accounts. **{4)** Interest and dividend expense deducted in determining item 211. (5) Net loss from management of or parlicipation in the underwriting or distribution of securities. (6) Expenses other than advertising, printing, registration fees and legal lees deducted in determining net profit from management of or participation in underwriting or distribution of securities. (7) Net loss from securities in investment accounts. Total additions 2c. Deductions: (1) Revenues from the distribution of shares of a 1egistered open end investment company or unit investment trust, from the sale of variable annuities, from the business of insurance, from investment advisory services rendered to registered investment companies or insurance company separate accounts, and from transaclions in secu,ity futures products. (2) Revenues from commodity transactions. (3) Commissions, lloor brokerage and clearance paid to other SIPC **members** in connection **with**  securities transactions. (4) Reimbursements for postage in connection **with** proxy solicitation. (5) Nel gain from securities in investment accounts. (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and (iii Treasury bills, bankers acceptances or commercial paper that mature nine months or less from issuance date. (7) Direct expenses of printing advertising and legal tees incurred in connection with other revenue related to the securities business (revenue defined by Section 16(9l(l) ol the Act). (8) Other revenue not related either directly or indirectly to the securities business. (See Instruction C): (Deductions in excess of \$100,000 require documentation) (9) (ii Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13, Code 4075 plus line 2b(4) above) bul not in excess of total interest and dividend income. \$ \_\_\_\_\_\_\_\_\_\_ \_ (ii) 40% ot margin interest earned on customers securities accounts (40% of FOCUS fine 5. Code 39601. \$ \_\_\_\_\_\_\_\_\_ \_ Enter the greater of line (i) or (ii) Total deductions 2d. SIPC Net Operating Revenues 2e. General Assessment @ .001 5 beginning 01/01/2019 and ending 12131/2019 **Eliminate** cents \$ 44,065,710 43,689,832 43,689,832 \$ 375,878 \$564 (to page 1, line 2.A.)


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