497 1 a2110582z497.txt 497 [UBS GLOBAL ASSET MANAGEMENT LOGO] The UBS Funds UBS U.S. Bond Fund UBS High Yield Fund UBS U.S. Balanced Fund UBS U.S. Equity Fund UBS U.S. Value Equity Fund UBS U.S. Large Cap Growth Fund UBS U.S. Small Cap Equity Fund UBS U.S. Small Cap Growth Fund UBS U.S. Real Estate Equity Fund UBS Global Allocation Fund UBS Global Equity Fund UBS Global Bond Fund UBS International Equity Fund Prospectus September 30, 2002 (as revised May 7, 2003) This prospectus offers Class A, Class B, Class C and Class Y shares in the thirteen Funds listed above. Each class has different sales charges and ongoing expenses. You can choose the class that is best for you based on how much you plan to invest and how long you plan to hold your Fund shares. Class Y shares are available only to certain types of investors. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved any Fund's shares or determined whether this prospectus is complete or accurate. To state otherwise is a crime. NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. The UBS Funds -------------------------------------------------------------------------- Contents THE UBS FUNDS WHAT EVERY INVESTOR SHOULD KNOW ABOUT THE FUNDS PAGE UBS U.S. Bond Fund Investment Objective, Strategies, Securities Selection and Risks......... 4 Performance............................ 6 Expenses and Fee Tables................ 8 UBS High Yield Fund Investment Objective, Strategies, Securities Selection and Risks......... 9 Performance............................ 11 Expenses and Fee Tables................ 13 UBS U.S. Balanced Fund Investment Objective, Strategies, Securities Selection and Risks......... 15 Performance............................ 17 Expenses and Fee Tables................ 19 UBS U.S. Equity Fund Investment Objective, Strategies, Securities Selection and Risks......... 21 Performance............................ 22 Expenses and Fee Tables................ 24 UBS U.S. Value Equity Fund Investment Objective, Strategies, Securities Selection and Risks......... 26 Performance............................ 27 Expenses and Fee Tables................ 28 UBS U.S. Large Cap Growth Fund Investment Objective, Strategies, Securities Selection and Risks......... 30 Performance............................ 31 Expenses and Fee Tables................ 33 UBS U.S. Small Cap Equity Fund Investment Objective, Strategies, Securities Selection and Risks......... 35 Performance............................ 36 Expenses and Fee Tables................ 37 UBS U.S. Small Cap Growth Fund Investment Objective, Strategies, Securities Selection and Risks......... 39 Performance............................ 40 Expenses and Fee Tables................ 42
-------------------------------------------------------------------------------- 2 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- PAGE UBS U.S. Real Estate Equity Fund Investment Objective, Strategies, Securities Selection and Risks......... 44 Performance............................ 46 Expenses and Fee Tables................ 47 UBS Global Allocation Fund Investment Objective, Strategies, Securities Selection and Risks......... 49 Performance............................ 51 Expenses and Fee Tables................ 53 UBS Global Equity Fund Investment Objective, Strategies, Securities Selection and Risks......... 55 Performance............................ 56 Expenses and Fee Tables................ 58 UBS Global Bond Fund Investment Objective, Strategies, Securities Selection and Risks......... 60 Performance............................ 62 Expenses and Fee Tables................ 64 UBS International Equity Fund Investment Objective, Strategies, Securities Selection and Risks......... 66 Performance............................ 67 Expenses and Fee Tables................ 69 YOUR INVESTMENT INFORMATION FOR MANAGING YOUR FUND ACCOUNT Managing Your Fund Account................... 71 --Flexible Pricing --Buying Shares --Selling Shares --Exchanging Shares --Pricing and Valuation ADDITIONAL INFORMATION ADDITIONAL IMPORTANT INFORMATION ABOUT THE FUNDS Management................................... 80 Dividends and Taxes.......................... 82 Supplemental Investment Advisor Performance Information.................................. 83 Financial Highlights......................... 107 Where to learn more about the Funds.......... Back Cover
THE FUNDS ARE NOT A COMPLETE OR BALANCED INVESTMENT PROGRAM. -------------------------------------------------------------------------- UBS Global Asset Management 3 UBS U.S. Bond Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in U.S. fixed income securities. The Fund may invest in fixed income securities of any maturity, but generally invests in securities having an initial maturity of more than one year. Investments in fixed income securities may include debt securities of the U.S. government, its agencies and instrumentalities, debt securities of U.S. corporations, mortgage-backed securities and asset-backed securities. The Fund may (but is not required to) use options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. The Fund generally invests in investment-grade fixed income securities. Investment-grade fixed income securities possess a minimum rating of BBB by Standard & Poor's Ratings Group ("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's") or, if unrated, are determined to be of comparable quality by UBS Global Asset Management (Americas) Inc., the Fund's investment advisor (the "Advisor"). SECURITIES SELECTION In selecting securities, the Advisor uses an internally developed valuation model that quantifies return expectations for all major domestic bond markets. The model employs a qualitative and quantitative credit review process that assesses the ways in which macroeconomic forces (such as inflation, risk premiums and interest rates) may affect industry trends. Against the output of this model, the Advisor considers the viability of specific debt securities compared to certain qualitative factors, such as management strength, market position, competitive environment and financial flexibility, as well as certain quantitative factors, such as historical operating results, calculation of credit ratios, and expected future outlook. The Advisor's fixed income strategy combines judgments about the absolute value of the fixed income universe and the relative value of issuer sectors, maturity intervals, duration of securities, quality and coupon segments and specific circumstances facing the issuers of fixed income securities. Duration management involves adjusting the sensitivity to interest rates of the holdings. The Advisor manages duration by choosing a maturity mix that provides opportunity for appreciation while also limiting interest rate risk. Depending on market conditions, undervalued securities may be found in different sectors and with different durations. Therefore, all investment decisions are interrelated and made using ongoing sector, security and duration research. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. -------------------------------------------------------------------------------- 4 UBS Global Asset Management UBS U.S. Bond Fund -------------------------------------------------------------------------- PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - INTEREST RATE RISK--The risk that changing interest rates may adversely affect the value of an investment. An increase in prevailing interest rates typically causes the value of fixed income securities to fall, while a decline in prevailing interest rates may cause the market value of fixed income securities to rise. Changes in interest rates will affect the value of longer-term fixed income securities more than shorter-term securities and higher quality securities more than lower quality securities. - PREPAYMENT OR CALL RISK--The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the Fund to re-invest in obligations with lower interest rates than the original obligations. - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- UBS Global Asset Management 5 UBS U.S. Bond Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1996 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1996 3.53% 1997 9.64% 1998 8.37% 1999 -1.04% 2000 10.82% 2001 8.42%
Total Return January 1 to June 30, 2002: 3.57% Best quarter during calendar years shown: 3rd Quarter 2001: 5.02% Worst quarter during calendar years shown: 1st Quarter 1996: -2.23% -------------------------------------------------------------------------------- 6 UBS Global Asset Management UBS U.S. Bond Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 8/31/95) 1 YEAR 5 YEAR LIFE OF CLASS ----------------------------------- ------ ------ ------------- Return Before Taxes................ 8.42% 7.15% 7.08% Return After Taxes on Distributions.................... 6.47% 4.65% 4.58% Return After Taxes on Distributions and Sale of Fund Shares.......... 5.13% 4.52% 4.46% Lehman U.S. Aggregate Index*(1)(2)..................... 8.44% 7.42% 7.28% Salomon BIG Index*................. 8.52% 7.43% 7.29%
CLASS A SHARES** (INCEPTION DATE: 6/30/97) ----------------------------------- Return Before Taxes................ 3.32% N/A 5.96% Lehman U.S. Aggregate Index*(1)(2)..................... 8.44% N/A 7.55% Salomon BIG Index*................. 8.52% N/A 7.57%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 4.50%. (1) The Lehman U.S. Aggregate Index is an unmanaged index of investment grade fixed-rate debt issues, including corporate, government, mortgage-backed and asset-backed securities with maturities of at least one year. (2) As of April 1, 2002, the Fund's benchmark index was changed to the Lehman U.S. Aggregate Index from the Salomon Smith Barney Broad Investment Grade (BIG) Bond Index because the Lehman U.S. Aggregate Index better reflects the portfolio composition of the Fund. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- UBS Global Asset Management 7 UBS U.S. Bond Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y ------- ------- ------- ------- Maximum Sales Charge (Load) (as a % of offering price)...... 4.50% 5.00% 1.75% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 4.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 0.75% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ------- ------- ------- ------- Management Fees............................................. 0.50% 0.50% 0.50% 0.50% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 0.75% None Other Expenses**............................................ 0.54% 0.54% 0.44% 0.38% ------ ------ ------ ------ Total Annual Fund Operating Expenses........................ 1.29% 2.04% 1.69% 0.88% ====== ====== ====== ====== Management Fee Waiver/Expense Reimbursements................ 0.44% 0.44% 0.34% 0.28% ------ ------ ------ ------ Net Expenses***............................................. 0.85% 1.60% 1.35% 0.60% ====== ====== ====== ======
* The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. Amounts do not include interest expense. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global Asset Management (US) Inc. ("UBS Global AM"). *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $533 $799 $1,085 $1,900 Class B (assuming sale of all shares at end of period)...... 663 897 1,258 1,963 Class B (assuming no sale of shares)........................ 163 597 1,058 1,963 Class C (assuming sale of all shares at end of period)...... 311 595 977 2,050 Class C (assuming no sale of shares)........................ 236 595 977 2,050 Class Y..................................................... 61 253 460 1,059
-------------------------------------------------------------------------------- 8 UBS Global Asset Management UBS High Yield Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to provide high current income, as well as capital growth when consistent with high current income. PRINCIPAL INVESTMENT STRATEGIES The Fund invests in a portfolio of higher yielding, lower rated debt securities issued by foreign and domestic companies. Under normal conditions, at least 80% of the Fund's net assets (plus borrowings for investment purposes, if any) are invested in fixed income securities that provide higher yields and are lower-rated. The Fund may invest in fixed income securities of any maturity, but generally invests in securities having an initial maturity of more than one year. Up to 25% of the Fund's total assets may be invested in foreign securities, which may include securities of issuers in emerging markets. The Fund may (but is not required to) use forward currency contracts, options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. Lower-rated bonds are bonds rated in the lower rating categories of Moody's and S&P, including securities rated Ba or lower by Moody's or BB or lower by S&P. Securities rated in these categories are considered to be of poorer quality and predominantly speculative. Bonds in these categories may also be called "high yield bonds" or "junk bonds." SECURITIES SELECTION The Fund will invest in securities that UBS Global Asset Management (New York) Inc., the Fund's sub-advisor (the "Sub-Advisor"), expects will appreciate in value as a result of declines in long-term interest rates or favorable developments affecting the business or prospects of the issuer which may improve the issuer's financial condition and credit rating. In selecting securities, the Sub-Advisor uses a quantitative and qualitative credit review process that assesses the ways in which macroeconomic forces (such as inflation, risk premiums and interest rates), as well as certain quantitative factors, such as historical operating results, calculation of credit ratios, and expected future outlook, may affect industry trends. Against the output of this model, the Sub-Advisor considers the viability of specific debt securities, assessing management strength, market position, competitive environment and financial flexibility. The Sub-Advisor's fixed income strategies combine judgements about the absolute value of the fixed income universe and the relative value of issuer sectors, maturity intervals, quality and coupon segments and specific circumstances facing the issuers of fixed income securities. The Sub-Advisor also determines optimal sector, security and rating weightings based on its assessment of macro and microeconomic factors. Depending on market conditions, undervalued securities may be found in different sectors. Therefore, all investment decisions are interrelated and made using ongoing sector, security and rating evaluation. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. -------------------------------------------------------------------------------- UBS Global Asset Management 9 UBS High Yield Fund -------------------------------------------------------------------------- PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - INTEREST RATE RISK--The risk that changing interest rates may adversely affect the value of an investment. An increase in prevailing interest rates typically causes the value of fixed income securities to fall, while a decline in prevailing interest rates may cause the market value of fixed income securities to rise. Changes in interest rates will affect the value of longer-term fixed income securities more than shorter-term securities and higher quality securities more than lower quality securities. - CREDIT RISK--The risk that the issuer of bonds with ratings of BB (S&P) or Ba (Moody's) or below will default or otherwise be unable to honor a financial obligation. These securities are considered to be predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. Lower-rated bonds are more likely to be subject to an issuer's default or downgrade than investment grade (higher rated) bonds. - PREPAYMENT OR CALL RISK--The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the Fund to re-invest in obligations with lower interest rates than the original obligations. - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - FOREIGN INVESTING AND EMERGING MARKETS RISK--The risk that prices of the Fund's investments in foreign securities may go down because of unfavorable foreign government actions, political instability or the absence of accurate information about foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S. Dollar will reduce the value of securities denominated in those currencies. Also, foreign securities are sometimes less liquid and harder to sell and to value than securities of U.S. issuers. Each of these risks is more severe for securities of issuers in emerging market countries. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- 10 UBS Global Asset Management UBS High Yield Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1998 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1998 7.76% 1999 4.85% 2000 -5.18% 2001 4.15%
Total Return January 1 to June 30, 2002: -5.32% Best quarter during calendar years shown: 4th Quarter 2001: 7.36% Worst quarter during calendar years shown: 3rd Quarter 2001: -4.56% -------------------------------------------------------------------------------- UBS Global Asset Management 11 UBS High Yield Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 9/30/97) 1 YEAR LIFE OF CLASS ---------------------------------------- ------------- ------------- Return Before Taxes..................... 4.15% 3.17% Return After Taxes on Distributions..... -2.35% -1.16% Return After Taxes on Distributions and Sale of Fund Shares................... 2.40% 0.43% Merrill Lynch High Yield Cash Pay Index* (1)................................... 6.20% 2.35% CLASS A SHARES** (INCEPTION DATE: 12/31/98) ---------------------------------------- Return Before Taxes..................... -0.82% -0.65% Merrill Lynch High Yield Cash Pay Index* (1)................................... 6.20% 1.25%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 4.50%. (1) The Merrill Lynch High Yield Cash Pay Index is an index of publicly placed non-convertible, coupon-bearing U.S. domestic debt with a term to maturity of at least one year. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- 12 UBS Global Asset Management UBS High Yield Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)...... 4.50% 5.00% 1.75% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 4.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 0.75% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.60% 0.60% 0.60% 0.60% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 0.75% None Other Expenses**............................................ 0.49% 0.53% 0.52% 0.50% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.34% 2.13% 1.87% 1.10% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.39% 0.43% 0.42% 0.40% -------- -------- -------- -------- Net Expenses***............................................. 0.95% 1.70% 1.45% 0.70% ======== ======== ======== ========
* The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. Amounts do not include interest expense. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- UBS Global Asset Management 13 UBS High Yield Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $543 $819 $1,115 $1,958 Class B (assuming sale of all shares at end of period)...... 673 926 1,305 2,041 Class B (assuming no sale of shares)........................ 173 626 1,105 2,041 Class C (assuming sale of all shares at end of period)...... 321 642 1,062 2,235 Class C (assuming no sale of shares)........................ 246 642 1,062 2,235 Class Y..................................................... 72 310 567 1,304
-------------------------------------------------------------------------------- 14 UBS Global Asset Management UBS U.S. Balanced Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in U.S. securities. The Fund will also invest, under normal circumstances, at least 25% of its net assets in fixed income securities and 25% of its net assets in equity securities. Investments in fixed income securities may include debt securities of the U.S. government, its agencies and instrumentalities, debt securities of U.S. corporations, mortgage-backed securities and asset-backed securities. Investments in equity securities may include dividend-paying securities, common stock and preferred stock. The Fund may (but is not required to) use options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. SECURITIES SELECTION The Fund is a multi-asset fund and allocates its assets among the major domestic asset classes (U.S. fixed income and U.S. equities) based upon the Advisor's assessment of prevailing market conditions in the U.S. and abroad. Within the equity portion of the Fund, the Advisor selects securities whose fundamental values it believes are greater than their market prices. In this context, the fundamental value of a given security is the Advisor's assessment of what a security is worth. The Advisor bases its estimates of value upon economic, industry and company analysis, as well as upon a company's management team, competitive advantage and core competencies. The Advisor then compares its assessment of a security's value against the prevailing market prices with the aim of constructing a portfolio of stocks with attractive relative price/value characteristics. In selecting fixed income securities, the Advisor uses an internally developed valuation model that quantifies return expectations for all major domestic bond markets. The model employs a qualitative credit review process that assesses the ways in which macroeconomic forces (such as inflation, risk premiums and interest rates) may affect industry trends. Against the output of this model, the Advisor considers the viability of specific debt securities compared to certain qualitative factors, such as management strength, market position, competitive environment and financial flexibility, as well as certain quantitative factors, such as historical operating results, calculation of credit ratios, and expected future outlook. These securities will have an initial maturity of more than one year, and will generally be of investment-grade quality and possess a minimum rating of BBB by S&P or Baa by Moody's or, if unrated, determined to be of comparable quality by the Advisor. The Advisor's fixed income strategy combines judgments about the absolute value of the fixed income universe and the relative value of issuer sectors, maturity intervals, duration of securities, quality and coupon segments and specific circumstances facing the issuers of fixed income securities. Duration management involves adjusting the sensitivity to interest rates of the holdings. The Advisor manages duration by choosing a maturity mix that provides opportunity for appreciation while also limiting interest rate risk. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect its ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. -------------------------------------------------------------------------------- UBS Global Asset Management 15 UBS U.S. Balanced Fund -------------------------------------------------------------------------- PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - INTEREST RATE RISK--The risk that changing interest rates may adversely affect the value of an investment. An increase in prevailing interest rates typically causes the value of fixed income securities to fall, while a decline in prevailing interest rates may cause the market value of fixed income securities to rise. Changes in interest rates will affect the value of longer-term fixed income securities more than shorter-term securities and higher quality securities more than lower quality securities. - PREPAYMENT OR CALL RISK--The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the Fund to re-invest in obligations with lower interest rates than the original obligations. - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - MID CAP RISK--The risk that investments in medium size companies may be more volatile than investments in larger companies, as medium size companies generally experience higher growth and failure rates. The trading volume of these securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for these securities generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - ASSET ALLOCATION RISK--The risk that the Fund may allocate assets to an asset category that underperforms other asset categories. For example, the Fund may be overweighted in equity securities when the stock market is falling and the fixed income market is rising. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- 16 UBS Global Asset Management UBS U.S. Balanced Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1995 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1995 25.48% 1996 11.32% 1997 13.22% 1998 9.92% 1999 -6.95% 2000 12.49% 2001 7.72%
Total Return January 1 to June 30, 2002: -3.30% Best quarter during calendar years shown: 4th Quarter 2001: 8.45% Worst quarter during calendar years shown: 3rd Quarter 1999: -5.12% -------------------------------------------------------------------------------- UBS Global Asset Management 17 UBS U.S. Balanced Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 12/31/94) 1 YEAR 5 YEAR LIFE OF CLASS ----------------------------------- -------------- ------ ------------- Return Before Taxes................ 7.72% 7.01% 10.07% Return After Taxes on Distributions.................... 6.30% 3.77% 6.75% Return After Taxes on Distributions and Sale of Fund Shares.......... 4.69% 4.51% 6.95% Wilshire 5000 Equity Index *(1).... -10.97% 9.70% 14.80% Lehman U.S. Aggregate Index *(2)(3).......................... 8.44% 7.42% 8.38% U.S. Balanced Mutual Fund Index *(4)............................. -4.02% 9.34% 12.80% Salomon Smith Barney Broad Investment Grade (BIG) Index..... 8.52% 7.43% 8.40% CLASS A SHARES** (INCEPTION DATE: 6/30/97) ----------------------------------- Return Before Taxes................ 1.53% N/A 4.59% Wilshire 5000 Equity Index *(1).... -10.97% N/A 6.90% Lehman U.S. Aggregate Index *(2)(3).......................... 8.44% N/A 7.55% U.S. Balanced Mutual Fund Index *(4)............................. -4.02% N/A 7.59% Salomon Smith Barney Broad Investment Grade (BIG) Index..... 8.52% N/A 7.57%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 5.50%. (1) The Wilshire 5000 Equity Index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. (2) The Lehman U.S. Aggregate Index is an unmanaged index of investment grade fixed-rate debt issues, including corporate, government, mortgage-backed and asset-backed securities with maturities of at least one year. (3) As of April 1, 2002, the fixed income component of U.S. Balanced Mutual Fund Index was changed to the Lehman U.S. Aggregate Index from the Salomon Smith Barney Broad Investment Grade (BIG) Index because the Lehman U.S. Aggregate Index better reflects the portfolio composition of the fixed income component of the Fund. Assuming the fixed income component of the U.S. Balanced Mutual Fund Index reflected the returns for the Salomon BIG Index for the periods indicated, the returns for the U.S. Balanced Mutual Fund Index were -4.02% for the one year period, 9.34% for the five year period, and 12.80% and 10.81% for the Class Y and Class A life of class periods, respectively. (4) The U.S. Balanced Mutual Fund Index is an unmanaged index compiled by the Advisor and represents a fixed composite of 65% Wilshire 5000 Equity Index and 35% Lehman U.S. Aggregate Index. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- 18 UBS Global Asset Management UBS U.S. Balanced Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)...... 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.70% 0.70% 0.70% 0.70% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses**............................................ 0.70% 0.79% 0.75% 0.62% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.65% 2.49% 2.45% 1.32% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.60% 0.69% 0.65% 0.52% -------- -------- -------- -------- Net Expenses***............................................. 1.05% 1.80% 1.80% 0.80% ======== ======== ======== ========
* The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. Amounts do not include interest expense. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- UBS Global Asset Management 19 UBS U.S. Balanced Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $651 $ 986 $1,344 $2,350 Class B (assuming sale of all shares at end of period)...... 683 1,010 1,463 2,375 Class B (assuming no sale of shares)........................ 183 710 1,263 2,375 Class C (assuming sale of all shares at end of period)...... 381 795 1,335 2,810 Class C (assuming no sale of shares)........................ 281 795 1,335 2,810 Class Y..................................................... 82 367 674 1,545
-------------------------------------------------------------------------------- 20 UBS Global Asset Management UBS U.S. Equity Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in U.S. equity securities. Investments in equity securities may include dividend-paying securities, common stock and preferred stock. In general, the Fund emphasizes large capitalization stocks, but also may hold small and intermediate capitalization stocks. The Fund may (but is not required to) use options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. SECURITIES SELECTION In selecting securities, the Advisor focuses on, among other things, identifying discrepancies between a security's fundamental value and its market price. In this context, the fundamental value of a given security is the Advisor's assessment of what a security is worth. The Advisor will select a security whose fundamental value it estimates to be greater than its market value at any given time. For each stock under analysis, the Advisor bases its estimates of value upon economic, industry and company analysis, as well as upon a company's management team, competitive advantage and core competencies. The Advisor then compares its assessment of a security's value against the prevailing market prices, with the aim of constructing a portfolio of stocks with attractive relative price/value characteristics. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - SMALL AND MEDIUM COMPANY RISK--The risk that investments in small and medium size companies may be more volatile than investments in larger companies, as small and medium size companies generally experience higher growth and failure rates. The trading volume of these securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for these securities generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- UBS Global Asset Management 21 UBS U.S. Equity Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1995 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1995 40.58% 1996 25.65% 1997 24.76% 1998 18.57% 1999 -4.05% 2000 3.23% 2001 1.87%
Total Return January 1 to June 30, 2002: -7.50% Best quarter during calendar years shown: 4th Quarter 1998: 16.35% Worst quarter during calendar years shown: 3rd Quarter 1999: -14.25% -------------------------------------------------------------------------------- 22 UBS Global Asset Management UBS U.S. Equity Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 2/28/94) 1 YEAR 5 YEAR LIFE OF CLASS ----------------------------------- -------------- ------ ------------- Return Before Taxes................ 1.87% 8.34% 12.87% Return After Taxes on Distributions.................... 0.82% 6.50% 10.99% Return After Taxes on Distributions and Sale of Fund Shares.......... 1.96% 6.59% 10.38% Wilshire 5000 Equity Index* (1).... -10.97% 9.70% 12.99%
CLASS A SHARES** (INCEPTION DATE: 6/30/97) ----------------------------------- Return Before Taxes................ -4.02% N/A 3.97% Wilshire 5000 Equity Index* (1).... -10.97% N/A 6.90%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 5.50%. (1) The Wilshire 5000 Equity Index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- UBS Global Asset Management 23 UBS U.S. Equity Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)...... 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.70% 0.70% 0.70% 0.70% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses**............................................ 0.32% 0.37% 0.35% 0.31% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.27% 2.07% 2.05% 1.01% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.22% 0.27% 0.25% 0.21% -------- -------- -------- -------- Net Expenses***............................................. 1.05% 1.80% 1.80% 0.80% ======== ======== ======== ========
* The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- 24 UBS Global Asset Management UBS U.S. Equity Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $651 $910 $1,189 $1,981 Class B (assuming sale of all shares at end of period)...... 683 923 1,289 1,984 Class B (assuming no sale of shares)........................ 183 623 1,089 1,984 Class C (assuming sale of all shares at end of period)...... 381 712 1,170 2,436 Class C (assuming no sale of shares)........................ 281 712 1,170 2,436 Class Y..................................................... 82 301 537 1,217
-------------------------------------------------------------------------------- UBS Global Asset Management 25 UBS U.S. Value Equity Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in U.S. equity securities. Investments in equity securities may include dividend-paying securities, common stock and preferred stock. The Fund may (but is not required to) use options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. SECURITIES SELECTION In selecting securities, the Advisor focuses on, among other things, identifying discrepancies between a security's fundamental value and its market price. In this context, the fundamental value of a given security is the Advisor's assessment of what a security is worth. The Fund will select a security whose fundamental value it estimates to be greater than its market value at any given time. For each stock under analysis, the Advisor bases its estimates of value upon economic, industry and company analysis, as well as upon a company's management team, competitive advantage and core competencies. The Advisor then compares its assessment of a security's value against the prevailing market prices with the aim of constructing a portfolio of stocks with attractive relative price/value characteristics. The Fund will generally only invest in stocks that at the time of purchase are contained in its benchmark. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- 26 UBS Global Asset Management UBS U.S. Value Equity Fund -------------------------------------------------------------------------- Performance There is no performance information quoted for the Fund as the Fund did not commence investment operations until June 29, 2001 and therefore, does not have a full calendar year of performance information. -------------------------------------------------------------------------------- UBS Global Asset Management 27 UBS U.S. Value Equity Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y ------- ------- ------- ------- Maximum Sales Charge (Load) (as a % of offering price)...... 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Management Fees............................................. 0.70% 0.70% 0.70% 0.70% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses**............................................ 2.95% 3.04% 2.96% 2.53% ----- ----- ----- ----- Total Annual Fund Operating Expenses........................ 3.90% 4.74% 4.66% 3.23% ===== ===== ===== ===== Management Fee Waiver/Expense Reimbursements................ 2.80% 2.89% 2.81% 2.38% ----- ----- ----- ----- Net Expenses***............................................. 1.10% 1.85% 1.85% 0.85% ===== ===== ===== =====
* The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for its fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to expense caps for its classes of shares at identical rates for the one-year period from September 1, 2001 through September 1, 2002. -------------------------------------------------------------------------------- 28 UBS Global Asset Management UBS U.S. Value Equity Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $656 $1,430 $2,222 $4,278 Class B (assuming sale of all shares at end of period)...... 688 1,468 2,354 4,315 Class B (assuming no sale of shares)........................ 188 1,168 2,154 4,315 Class C (assuming sale of all shares at end of period)...... 386 1,241 2,203 4,635 Class C (assuming no sale of shares)........................ 286 1,241 2,203 4,635 Class Y..................................................... 87 772 1,481 3,367
-------------------------------------------------------------------------------- UBS Global Asset Management 29 UBS U.S. Large Cap Growth Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to provide long-term capital appreciation. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in equity securities of U.S. large capitalization companies. Large capitalization companies are those with a market capitalization of $6 billion or greater at the time of purchase. Up to 20% of the Fund's net assets may be invested in foreign securities. Investments in equity securities may include common stock and preferred stock. The Fund may (but is not required to) use forward currency contracts, options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. The Fund is a non-diversified fund. SECURITIES SELECTION In selecting securities, the Sub-Advisor seeks to invest in companies that possess dominant market positions or franchises, a major technical edge, or a unique competitive advantage. To this end, the Sub-Advisor considers earnings revision trends, expected earnings growth rates, sales acceleration, price earnings multiples and positive stock price momentum, when selecting securities. The Sub-Advisor expects that these companies can sustain an above average return on invested capital at a higher level and over a longer period of time than is reflected in the current market prices. The Fund will invest in companies within its capitalization range as described above. However, the Fund may invest a portion of its assets in securities outside of this range. Further, if movement in the market price causes a security to change from one capitalization range to another, the Fund is not required to dispose of the security. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - FOREIGN INVESTING RISK--The risk that prices of the Fund's investments in foreign securities may go down because of unfavorable foreign government actions, political instability or the absence of accurate information about foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S. Dollar will reduce the value of securities denominated in those currencies. Also, foreign securities are sometimes less liquid and harder to sell and to value than securities of U.S. issuers. - NON-DIVERSIFICATION RISK--The risk that the Fund will be more volatile than a diversified fund because the Fund invests its assets in a smaller number of issuers. The gains or losses on a single security may, therefore, have a greater impact on the Fund's net asset value. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- 30 UBS Global Asset Management UBS U.S. Large Cap Growth Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1998 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1998 24.90% 1999 32.73% 2000 -16.10% 2001 -22.75%
Total Return January 1 to June 30, 2002: -20.22% Best quarter during calendar years shown: 4th Quarter 1998: 26.41% Worst quarter during calendar years shown: 3rd Quarter 2001: -20.02% -------------------------------------------------------------------------------- UBS Global Asset Management 31 UBS U.S. Large Cap Growth Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 10/14/97) 1 YEAR LIFE OF CLASS ---------------------------------------- -------------- ------------- Return Before Taxes..................... -22.75% 1.58% Return After Taxes on Distributions..... -22.84% -0.12% Return After Taxes on Distributions and Sale of Fund Shares................... -13.77% 1.15% Russell 1000 Growth Index* (1).......... -20.42% 4.51% CLASS A SHARES** (INCEPTION DATE: 12/31/98) ---------------------------------------- Return Before Taxes..................... -27.35% -7.01% Russell 1000 Growth Index* (1).......... -20.42% -6.32%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 5.50%. (1) The Russell 1000 Growth Index measures the performance of the 1,000 largest companies in the Russell 3000 Growth Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- 32 UBS Global Asset Management UBS U.S. Large Cap Growth Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.70% 0.70% 0.70% 0.70% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses**............................................ 1.64% 1.44% 1.60% 1.52% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 2.59% 3.14% 3.30% 2.22% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 1.54% 1.34% 1.50% 1.42% -------- -------- -------- -------- Net Expenses***............................................. 1.05% 1.80% 1.80% 0.80% ======== ======== ======== ========
* The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- UBS Global Asset Management 33 UBS U.S. Large Cap Growth Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $651 $1,172 $1,719 $3,205 Class B (assuming sale of all shares at end of period)...... 683 1,143 1,728 3,110 Class B (assuming no sale of shares)........................ 183 843 1,528 3,110 Class C (assuming sale of all shares at end of period)...... 381 967 1,676 3,558 Class C (assuming no sale of shares)........................ 281 967 1,676 3,558 Class Y..................................................... 82 557 1,060 2,443
-------------------------------------------------------------------------------- 34 UBS Global Asset Management UBS U.S. Small Cap Equity Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in equity securities of U.S. small capitalization companies. Small capitalization companies are those companies with market capitalizations of $2.5 billion or less at the time of purchase. Investments in equity securities may include dividend-paying securities, common stock and preferred stock. The Fund may (but is not required to) use options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. The Fund is a non-diversified fund. SECURITIES SELECTION The Advisor looks for companies with strong and innovative management, good financial controls, increasing market share, diversified product/service offerings, and low market-to-sales ratios relative to similar companies. In selecting securities, the Advisor focuses on, among other things, identifying discrepancies between a security's fundamental value and its market price. In this context, the fundamental value of a given security is the Advisor's assessment of what a security is worth. The Fund will select a security whose fundamental value it estimates to be greater than its market value at any given time. For each stock under analysis, the Advisor bases its estimates of value upon economic, industry and company analysis, as well as upon a company's management team, competitive advantage and core competencies. The Advisor then compares its assessment of a security's value against the prevailing market prices with the aim of constructing a portfolio of stocks with attractive relative price/value characteristics. The Fund will invest in companies within its capitalization range as described above. However, the Fund may invest a portion of its assets in securities outside of this range. Further, if movement in the market price causes a security to change from one capitalization range to another, the Fund is not required to dispose of the security. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - SMALL COMPANY RISK--The risk that investments in smaller companies may be more volatile than investments in larger companies, as smaller companies generally experience higher growth and failure rates. The trading volume of smaller company securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for the securities of smaller companies generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - NON-DIVERSIFICATION RISK--The risk that the fund will be more volatile than a diversified Fund because the Fund invests its assets in a smaller number of issuers. The gains or losses on a single security may, therefore, have a greater impact on the Fund's net asset value. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- UBS Global Asset Management 35 UBS U.S. Small Cap Equity Fund -------------------------------------------------------------------------- Performance There is no performance information quoted for the Fund as the Fund had not commenced investment operations as of the date of this prospectus. -------------------------------------------------------------------------------- 36 UBS Global Asset Management UBS U.S. Small Cap Equity Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 1.00% 1.00% 1.00% 1.00% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses**............................................ 0.52% 0.54% 0.54% 0.49% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.77% 2.54% 2.54% 1.49% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.37% 0.39% 0.39% 0.34% -------- -------- -------- -------- Net Expenses***............................................. 1.40% 2.15% 2.15% 1.15% ======== ======== ======== ========
* The fees and expenses are based on estimates. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for its fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to expense caps for its classes of shares at identical rates for the one-year period from September 1, 2001 through September 1, 2002. -------------------------------------------------------------------------------- UBS Global Asset Management 37 UBS U.S. Small Cap Equity Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS ------ ------- Class A..................................................... $685 $1,043 Class B (assuming sale of all shares at end of period)...... 718 1,053 Class B (assuming no sale of shares)........................ 218 753 Class C (assuming sale of all shares at end of period)...... 416 846 Class C (assuming no sale of shares)........................ 316 846 Class Y..................................................... 117 438
* The Fund has not projected expenses beyond the 3 year period shown because the Fund had not commenced investment operations as of the date of this prospectus. -------------------------------------------------------------------------------- 38 UBS Global Asset Management UBS U.S. Small Cap Growth Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to provide long-term capital appreciation. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in equity securities of U.S. small capitalization companies. Small capitalization companies are those companies with market capitalizations of $2.5 billion or less at the time of purchase. Investments in equity securities may include common stock and preferred stock. The Fund may invest up to 20% of its net assets in foreign securities. The Fund may (but is not required to) use forward currency contracts, options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. SECURITIES SELECTION In selecting securities, the Sub-Advisor seeks to invest in companies that possess dominant market positions or franchises, a major technical edge, or a unique competitive advantage. To this end, the Sub-Advisor considers earnings revision trends, positive stock price momentum and sales acceleration when selecting securities. The Fund may invest in emerging growth companies, which are companies that the Sub-Advisor expects to experience above-average earnings or cash flow growth or meaningful changes in underlying asset values. The Fund will invest in companies within its capitalization range as described above. However, the Fund may invest a portion of its assets in securities outside of this range. Further, if movement in the market price causes a security to change from one capitalization range to another, the Fund is not required to dispose of the security. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - SMALL COMPANY RISK--The risk that investments in smaller companies may be more volatile than investments in larger companies, as smaller companies generally experience higher growth and failure rates. The trading volume of smaller company securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for the securities of smaller companies generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - FOREIGN INVESTING RISK--The risk that prices of the Fund's investments in foreign securities may go down because of unfavorable foreign government actions, political instability or the absence of accurate information about foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S. Dollar will reduce the value of securities denominated in those currencies. Also, foreign securities are sometimes less liquid and harder to sell and to value than securities of U.S. issuers. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- UBS Global Asset Management 39 UBS U.S. Small Cap Growth Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1998 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1998 -6.70% 1999 41.70% 2000 22.44% 2001 -10.23%
Total Return January 1 to June 30, 2002: -7.72% Best quarter during calendar years shown: 4th Quarter 1999: 32.94% Worst quarter during calendar years shown: 3rd Quarter 1998: -23.86% -------------------------------------------------------------------------------- 40 UBS Global Asset Management UBS U.S. Small Cap Growth Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 9/30/97) 1 YEAR LIFE OF CLASS ---------------------------------------- -------------- -------------- Return Before Taxes..................... -10.23% 7.70% Return After Taxes on Distributions..... -11.12% 5.71% Return After Taxes on Distributions and Sale of Fund Shares................... -5.74% 5.52% Russell 2000 Growth Index* (1).......... -9.23% -1.54% CLASS A SHARES** (INCEPTION DATE: 12/31/98) ---------------------------------------- Return Before Taxes..................... -15.54% 13.36% Russell 2000 Growth Index* (1).......... -9.23% 0.25%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 5.50%. (1) The Russell 2000 Growth Index is an unmanaged index composed of those companies in the Russell 2000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an index composed of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- UBS Global Asset Management 41 UBS U.S. Small Cap Growth Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 1.00% 1.00% 1.00% 1.00% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses**............................................ 0.52% 0.54% 0.54% 0.49% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.77% 2.54% 2.54% 1.49% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.37% 0.39% 0.39% 0.34% -------- -------- -------- -------- Net Expenses***............................................. 1.40% 2.15% 2.15% 1.15% ======== ======== ======== ========
* The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- 42 UBS Global Asset Management UBS U.S. Small Cap Growth Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $685 $1,043 $1,424 $2,490 Class B (assuming sale of all shares at end of period)...... 718 1,053 1,516 2,484 Class B (assuming no sale of shares)........................ 218 753 1,316 2,484 Class C (assuming sale of all shares at end of period)...... 416 846 1,402 2,918 Class C (assuming no sale of shares)........................ 316 846 1,402 2,918 Class Y..................................................... 117 438 781 1,750
-------------------------------------------------------------------------------- UBS Global Asset Management 43 UBS U.S. Real Estate Equity Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in real estate equity securities of U.S. issuers. These may include real estate investment trusts ("REITs") that own properties or make construction or mortgage loans, real estate developers and companies with substantial real estate holdings and other companies whose products and services are related to the real estate industry, such as building supply manufacturers, mortgage lenders, or mortgage service companies. REITs and other real estate securities may be of any market capitalization, including small capitalization (below $2.5 billion). Investments in equity securities may include common stock and preferred stock. The Fund may (but is not required to) use options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. The Fund is a non-diversified fund. SECURITIES SELECTION The Fund is a sector fund, a category of funds created in response to changing market conditions and for the varied and dynamic needs of shareholders. The Fund focuses on the real estate sector, generally a narrower market segment than many other funds, and may be considered a complement to a diversified investment program. In selecting securities, the Advisor focuses on, among other things, identifying discrepancies between a security's fundamental value and its market price. In this context, the fundamental value of a given security is the Advisor's assessment of what a security is worth. For each security under analysis, the Advisor bases its estimates of value upon economic, industry and company analysis, as well as upon a company's management team, competitive advantage and core competencies. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - INDUSTRY CONCENTRATION RISK--The risk that changes in economic, political or other conditions may have a particularly negative effect on issuers in an industry or sector in which the Fund's investments are concentrated. The Fund invests principally in the real estate sector by purchasing securities issued by REITs. There is, therefore, a risk that changes in real estate values or interest rates, along with economic downturns, can have a substantial impact on the Fund's investments. The Fund's portfolio may be more volatile than a Fund with a broader range of investments. - PREPAYMENT OR CALL RISK--The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the Fund to re-invest in obligations with lower interest rates than the original obligations. - SMALL COMPANY RISK--The risk that investments in smaller companies may be more volatile than -------------------------------------------------------------------------------- 44 UBS Global Asset Management UBS U.S. Real Estate Equity Fund -------------------------------------------------------------------------- investments in larger companies, as smaller companies generally experience higher growth and failure rates. The trading volume of smaller company securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for the securities of smaller companies generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - NON-DIVERSIFICATION RISK--The risk that the Fund will be more volatile than a diversified fund because the Fund invests its assets in a smaller number of issuers. The gains or losses on a single security may, therefore, have a greater impact on the Fund's net asset value. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- UBS Global Asset Management 45 UBS U.S. Real Estate Equity Fund -------------------------------------------------------------------------- Performance There is no performance information quoted for the Fund as the Fund had not commenced investment operations as of the date of this prospectus. -------------------------------------------------------------------------------- 46 UBS Global Asset Management UBS U.S. Real Estate Equity Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.90% 0.90% 0.90% 0.90% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses**............................................ 0.31% 0.31% 0.31% 0.31% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.46% 2.21% 2.21% 1.21% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.16% 0.16% 0.16% 0.16% -------- -------- -------- -------- Net Expenses***............................................. 1.30% 2.05% 2.05% 1.05% ======== ======== ======== ========
* The fees and expenses are based on estimates. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for its fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to expense caps for its classes of shares at identical rates for the one-year period from September 1, 2001 through September 1, 2002. -------------------------------------------------------------------------------- UBS Global Asset Management 47 UBS U.S. Real Estate Equity Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS ------ ------- Class A..................................................... $675 $971 Class B (assuming sale of all shares at end of period)...... 708 976 Class B (assuming no sale of shares)........................ 208 676 Class C (assuming sale of all shares at end of period)...... 406 769 Class C (assuming no sale of shares)........................ 306 769 Class Y..................................................... 107 368
* The Fund has not projected expenses beyond the 3 year period shown because the Fund had not commenced investment operations as of the date of this prospectus. -------------------------------------------------------------------------------- 48 UBS Global Asset Management UBS Global Allocation Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund (formerly known as UBS Global Balanced Fund) seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES The Fund invests in equity and fixed income securities of issuers located within and outside the U.S. Under normal circumstances, the Fund will allocate its assets between fixed income securities and equity securities. Investments in fixed income securities may include debt securities of governments throughout the world (including the U.S.), their agencies and instrumentalities, debt securities of corporations, mortgage-backed securities and asset-backed securities. Investments in equity securities may include common stock and preferred stock. The Fund may invest in emerging market issuers by investing in other open-end investment companies advised by the Advisor. The Fund does not pay fees in connection with its investment in the investment companies advised by the Advisor, but may pay expenses associated with such investments. In addition, the Fund attempts to generate positive returns through sophisticated currency management techniques. These decisions are integrated with analysis of global market and economic conditions. The Fund may (but is not required to) use forward currency contracts, options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. SECURITIES SELECTION The Fund is a multi-asset fund, and invests in each of the major asset classes: U.S. fixed income, U.S. equities, international fixed income, and international equities, based upon the Advisor's assessment of prevailing market conditions in the U.S. and abroad. Within the equity portion of the Fund's portfolio, the Advisor selects securities whose fundamental values it believes are greater than their market prices. In this context, the fundamental value of a given security is the Advisor's assessment of what a security is worth. The Advisor bases its estimates of value upon economic, industry and company analysis, as well as upon a company's management team, competitive advantage and core competencies. The Advisor then compares its assessment of a security's value against the prevailing market prices, with the aim of constructing a portfolio of stocks with attractive relative price/value characteristics. For each security under analysis, the fundamental value estimate is compared to the company's current market price to ascertain whether a valuation anomaly exists. A stock with a market price below the estimated intrinsic or fundamental value would be considered a candidate for inclusion in the Fund's portfolio. This comparison between price and intrinsic or fundamental value allows comparisons across industries and countries. In selecting fixed income securities, the Advisor uses an internally developed valuation model that quantifies return expectations for all major bond markets, domestic and foreign. The model employs a qualitative credit review process that assesses the ways in which macroeconomic forces (such as inflation, risk premiums and interest rates) may affect industry trends. Against the output of this model, the Advisor considers the viability of specific debt securities compared to certain qualitative factors, such as management strength, market position, competitive environment and financial flexibility, as well as certain quantitative factors, such as historical operating results, calculation of credit ratios, and expected future outlook. These securities will have an initial maturity of more than one year and will generally be of investment-grade quality and possess a minimum rating of BBB by S&P or Baa by Moody's, or, if unrated, determined to be of comparable quality by the Advisor. The Advisor's fixed income strategy combines judgments about the absolute value of the fixed income -------------------------------------------------------------------------------- UBS Global Asset Management 49 UBS Global Allocation Fund -------------------------------------------------------------------------- universe and the relative value of issuer sectors, maturity intervals, duration of securities, quality and coupon segments and specific circumstances facing the issuers of fixed income securities. Duration management involves adjusting the sensitivity to interest rates of the holdings within a country. The Advisor manages duration by choosing a maturity mix that provides opportunity for appreciation while also limiting interest rate risks. The Fund's risk is carefully monitored with consideration given to the risk generated by individual positions, sector, country and currency views. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - INTEREST RATE RISK--The risk that changing interest rates may adversely affect the value of an investment. An increase in prevailing interest rates typically causes the value of fixed income securities to fall, while a decline in prevailing interest rates may cause the market value of fixed income securities to rise. Changes in interest rates will affect the value of longer-term fixed income securities more than shorter-term securities and higher quality securities more than lower quality securities. - PREPAYMENT OR CALL RISK--The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the Fund to re-invest in obligations with lower interest rates than the original obligations. - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - SMALL AND MEDIUM COMPANY RISK--The risk that investments in small and medium size companies may be more volatile than investments in larger companies, as small and medium size companies generally experience higher growth and failure rates. The trading volume of these securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for these securities generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - FOREIGN INVESTING AND EMERGING MARKET RISK--The risk that prices of the Fund's investments in foreign securities may go down because of unfavorable foreign government actions, political instability or the absence of accurate information about foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S. Dollar will reduce the value of securities denominated in those currencies. Also, foreign securities are sometimes less liquid and harder to sell and to value than securities of U.S. issuers. Each of these risks is more severe for securities of issuers in emerging market countries. - ASSET ALLOCATION RISK--The risk that the Fund may allocate assets to an asset category that underperforms other asset categories. For example, the Fund may be overweighted in equity securities when the stock market is falling and the fixed income market is rising. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- 50 UBS Global Asset Management UBS Global Allocation Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1993 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1993 11.15% 1994 -1.89% 1995 24.14% 1996 14.10% 1997 11.00% 1998 8.32% 1999 1.49% 2000 6.52% 2001 2.20%
Total Return January 1 to June 30, 2002: 2.10% Best quarter during calendar years shown: 4th Quarter 2001: 8.58% Worst quarter during calendar years shown: 3rd Quarter 2001: -5.37% -------------------------------------------------------------------------------- UBS Global Asset Management 51 UBS Global Allocation Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 8/31/92) 1 YEAR 5 YEAR LIFE OF CLASS ----------------------------------- -------------- ------ ------------- Return Before Taxes................ 2.20% 5.85% 8.37% Return After Taxes on Distributions.................... -0.19% 3.51% 5.85% Return After Taxes on Distributions and Sale of Fund Shares.......... 2.45% 4.04% 5.97% Wilshire 5000 Equity Index* (1).... MSCI World Equity (Free) Index* (2).............................. -16.63% 5.55% 9.45% Salomon Smith Barney World Government Bond Index* (3)....... -0.99% 2.16% 4.79% GSMI Mutual Fund Index* (4)........ -7.50% 6.20% 9.24%
CLASS A SHARES** (INCEPTION DATE: 6/30/97) ----------------------------------- Return Before Taxes................ -3.68% N/A 2.91% Wilshire 5000 Equity Index* (1).... MSCI World Equity (Free) Index* (2).............................. -16.63% N/A 2.83% Salomon Smith Barney World Government Bond Index* (3)....... -0.99% N/A 2.69% GSMI Mutual Fund Index* (4)........ -7.50% N/A 4.53%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 5.50%. (1) The Wilshire 5000 Equity Index, a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. (2) The MSCI World Equity (Free) Index is a broad-based securities index that represents the U.S. and developed international equity markets in terms of capitalization and performance. It is designed to provide a representative total return for all major stock exchanges located inside and outside the United States. (3) The Salomon Smith Barney World Government Bond Index represents the broad global fixed income markets and includes debt issues of U.S. and most developed international governments, governmental entities and supranationals. (4) The Global Securities Markets Index (GSMI) is an unmanaged index compiled by the Advisor. It is currently constructed as follows: 40% Wilshire 5000 Equity Index, 22% MSCI World Ex USA (Free) Index, 21% Salomon Smith Barney Broad Investment Grade (BIG) Bond Index, 9% Salomon Smith Barney WGBI Non- U.S. Index, 3% Merrill Lynch High Yield Cash Pay Index, 3% MSCI Emerging Markets Free Index and 2% JP Morgan EMBI Global. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- 52 UBS Global Asset Management UBS Global Allocation Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None Redemption Fee (as a percentage of amount redeemed within 90 days of purchase, if applicable)*......................... 1.00% None None 1.00%
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)**
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.80% 0.80% 0.80% 0.80% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses***........................................... 0.38% 0.38% 0.38% 0.38% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.43% 2.18% 2.18% 1.18% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.08% 0.08% 0.08% 0.08% -------- -------- -------- -------- Net Expenses****............................................ 1.35% 2.10% 2.10% 1.10% ======== ======== ======== ========
* Please see the section entitled "Selling Shares" for additional information concerning the applicability of the redemption fee. ** The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. *** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. **** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- UBS Global Asset Management 53 UBS Global Allocation Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $680 $970 $1,281 $2,162 Class B (assuming sale of all shares at end of period)...... 713 974 1,362 2,143 Class B (assuming no sale of shares)........................ 213 674 1,162 2,143 Class C (assuming sale of all shares at end of period)...... 411 768 1,251 2,582 Class C (assuming no sale of shares)........................ 311 768 1,251 2,582 Class Y..................................................... 112 367 641 1,425
-------------------------------------------------------------------------------- 54 UBS Global Asset Management UBS Global Equity Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in equity securities. Investments in equity securities may include dividend-paying securities, common stock and preferred stock of U.S. and foreign issuers. The Fund may invest in companies of any size. The Fund may (but is not required to) use forward currency contracts, options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. SECURITIES SELECTION In the global universe, the Advisor uses a disciplined intrinsic or fundamental value approach that seeks to take advantage of anomalies in markets often created by human over-reactions to both good and bad news. The Advisor, on behalf of the Fund, intends to diversify broadly among countries, but reserves the right to invest a substantial portion of the Fund's assets in one or more countries if economic and business conditions warrant such investments. For each security under analysis, a fundamental value is estimated based upon detailed country, industry and company analysis, including visits to the company, its competitors and suppliers. This fundamental value estimate is a function of the present value of the estimated future cash flows. The resulting fundamental value estimate is then compared to the company's current market price to ascertain whether a valuation anomaly exists. A stock with a price below the estimated intrinsic or fundamental value would be considered a candidate for inclusion in the Fund's portfolio. This comparison between price and intrinsic or fundamental value allows comparisons across industries and countries. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - SMALL AND MEDIUM COMPANY RISK--The risk that investments in small and medium size companies may be more volatile than investments in larger companies, as small and medium size companies generally experience higher growth and failure rates. The trading volume of these securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for these securities generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - FOREIGN INVESTING AND EMERGING MARKET RISK--The risk that prices of the Fund's investments in foreign securities may go down because of unfavorable foreign government actions, political instability or the absence of accurate information about foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S. Dollar will reduce the value of securities denominated in those currencies. Also, foreign securities are sometimes less liquid and harder to sell and to value than securities of U.S. issuers. Each of these risks is more severe for securities of issuers in emerging market countries. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- UBS Global Asset Management 55 UBS Global Equity Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. Performance information for Class B and Class C shares is not included because Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1995 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1995 21.93% 1996 17.26% 1997 10.72% 1998 14.03% 1999 12.87% 2000 -0.08% 2001 -9.03%
Total Return January 1 to June 30, 2002: -5.11% Best quarter during calendar years shown: 4th Quarter 1998: 14.25% Worst quarter during calendar years shown: 3rd Quarter 2001: -11.14% -------------------------------------------------------------------------------- 56 UBS Global Asset Management UBS Global Equity Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 1/31/94) 1 YEAR 5 YEAR LIFE OF CLASS ----------------------------------- -------------- ------ ------------- Return Before Taxes................ -9.03% 5.31% 7.48% Return After Taxes on Distributions.................... -10.49% 3.25% 5.38% Return After Taxes on Distributions and Sale of Fund Shares.......... -5.51% 3.83% 5.50% MSCI World Equity (Free) Index* (1).............................. -16.63% 5.55% 7.64%
CLASS A SHARES** (INCEPTION DATE: 6/30/97) ----------------------------------- Return Before Taxes................ -14.50% N/A 1.51% MSCI World Equity (Free) Index* (1).............................. -16.63% N/A 2.83%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 5.50%. (1) The MSCI World Equity (Free) Index is a broad-based index that represents the U.S. and developed non-U.S. equity markets in terms of capitalization and performance. It is designed to provide a representative total return for all major stock exchanges located inside and outside the United States. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- UBS Global Asset Management 57 UBS Global Equity Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None Redemption Fee (as a percentage of amount redeemed within 90 days of purchase, if applicable)*......................... 1.00% None None 1.00%
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)**
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.80% 0.80% 0.80% 0.80% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses***........................................... 0.50% 0.53% 0.51% 0.47% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.55% 2.33% 2.31% 1.27% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.30% 0.33% 0.31% 0.27% Net Expenses****............................................ 1.25% 2.00% 2.00% 1.00% ======== ======== ======== ========
* Please see the section entitled "Selling Shares" for additional information concerning the applicability of the redemption fee. ** The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. *** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. **** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- 58 UBS Global Asset Management UBS Global Equity Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $670 $985 $1,321 $2,270 Class B (assuming sale of all shares at end of period)...... 703 996 1,415 2,266 Class B (assuming no sale of shares)........................ 203 696 1,215 2,266 Class C (assuming sale of all shares at end of period)...... 401 785 1,295 2,696 Class C (assuming no sale of shares)........................ 301 785 1,295 2,696 Class Y..................................................... 102 376 671 1,510
-------------------------------------------------------------------------------- UBS Global Asset Management 59 UBS Global Bond Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income. PRINCIPAL INVESTMENT STRATEGIES The Fund invests in a portfolio of investment grade global debt securities that may also provide the potential for capital appreciation. Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in fixed income securities. While the Fund may invest in debt securities of all types, it expects to emphasize debt securities of government issuers. Investments in fixed income securities may include debt securities of governments throughout the world (including the U.S.), their agencies and instrumentalities, debt securities of corporations, mortgage-backed securities and asset-backed securities. The Fund may invest in fixed income securities of any maturity, but generally invests in fixed income securities having an initial maturity of more than one year. The Fund may (but is not required to) use forward currency contracts, options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. The Fund is a non-diversified fund. SECURITIES SELECTION In selecting fixed income securities, the Advisor uses an internally developed valuation model that quantifies return expectations for all major bond markets, domestic and foreign. The Advisor determines optimal country and currency weightings based on its assessments of global macroeconomic and political landscapes. The model employs a qualitative credit review process that assesses the ways in which macroeconomic forces (such as inflation, risk premiums and interest rates) may affect industry trends. Against the output of this model, the Advisor considers the viability of specific debt securities compared to certain qualitative factors, such as management strength, market position, competitive environment and financial flexibility, as well as certain quantitative factors, such as historical operating results, calculation of credit ratios, and expected future outlook. These securities will generally be of investment-grade quality and possess a minimum rating of BBB by S&P or Baa by Moody's, or, if unrated, determined to be of comparable quality by the Advisor. The Advisor's fixed income strategy combines judgments about the absolute value of the fixed income universe and the relative value of issuer sectors, maturity intervals, duration of securities, quality and coupon segments and specific circumstances facing the issuers of fixed income securities. Duration management involves adjusting the sensitivity to interest rates of the holdings within a country. The Advisor manages duration by choosing a maturity mix that provides opportunity for appreciation while also limiting interest rate risks. Depending on market conditions, undervalued securities may be found in different countries, sectors and with different durations. Therefore, all investment decisions are interrelated and made using ongoing sector, security, duration and country/currency research. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. -------------------------------------------------------------------------------- 60 UBS Global Asset Management UBS Global Bond Fund -------------------------------------------------------------------------- PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - INTEREST RATE RISK--The risk that changing interest rates may adversely affect the value of an investment. An increase in prevailing interest rates typically causes the value of fixed income securities to fall, while a decline in prevailing interest rates may cause the market value of fixed income securities to rise. Changes in interest rates will affect the value of longer-term fixed income securities more than shorter-term securities and higher quality securities more than lower quality securities. - FOREIGN INVESTING--The risk that prices of the Fund's investments in foreign securities may go down because of unfavorable foreign government actions, political instability or the absence of accurate information about foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S. Dollar will reduce the value of securities denominated in those currencies. Also, foreign securities are sometimes less liquid and harder to sell and to value than securities of U.S. issuers. - CREDIT RISK--The risk that the issuer of a security, or the counterparty to a contract, will default or otherwise be unable to honor a financial obligation. Lower-rated bonds are more likely to be subject to an issuer's default or downgrade than investment grade (higher-rated) bonds. - PREPAYMENT OR CALL RISK--The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the Fund to re-invest in obligations with lower interest rates than the original obligations. - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - NON-DIVERSIFICATION RISK--The risk that the Fund will be more volatile than a diversified Fund because the Fund invests its assets in a smaller number of issuers. The gains or losses on a single security may, therefore, have a greater impact on the Fund's net asset value. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- UBS Global Asset Management 61 UBS Global Bond Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart and table reflect performance information for the Class Y shares of the Fund. Performance information for Class A, Class B and Class C shares is not included because Class A, Class B and Class C shares have not completed one full year of operations. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1994 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1994 -3.49% 1995 20.32% 1996 9.30% 1997 1.63% 1998 11.98% 1999 -6.27% 2000 1.36% 2001 -1.33%
Total Return January 1 to June 30, 2002: 11.39% Best quarter during calendar years shown: 3rd Quarter 2001: 7.23% Worst quarter during calendar years shown: 3rd Quarter 2000: -3.77% -------------------------------------------------------------------------------- 62 UBS Global Asset Management UBS Global Bond Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 7/31/93) 1 YEAR 5 YEAR LIFE OF CLASS ----------------------------------- ------------- ------ ------------- Return Before Taxes................ -1.33% 1.30% 4.13% Return After Taxes on Distributions.................... -1.54% 0.29% 2.04% Return After Taxes on Distributions and Sale of Fund Shares.......... -0.81% 0.57% 2.31% Salomon Smith Barney World Government Bond Index* (1)....... -0.99% 2.16% 4.63%
* Does not reflect the deduction of fees, expenses or taxes. (1) The Salomon Smith Barney World Government Bond Index represents the broad global fixed income markets and includes debt issues of U.S. and most developed non-U.S. governments, governmental entities and supranationals. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- UBS Global Asset Management 63 UBS Global Bond Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 4.50% 5.00% 1.75% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 4.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 0.75% None Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)*
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.75% 0.75% 0.75% 0.75% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 0.75% None Other Expenses**............................................ 0.57% 0.58% 0.42% 0.42% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.57% 2.33% 1.92% 1.17% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.42% 0.43% 0.27% 0.27% -------- -------- -------- -------- Net Expenses***............................................. 1.15% 1.90% 1.65% 0.90% ======== ======== ======== ========
* The operating expenses shown for each class (except Class C) are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class C operating expenses are based on estimates. Amounts do not include interest expense. ** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. *** The Trust, with respect to the Fund, and the Advisor have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its fees and/or to reimburse expenses to the extent that the Fund's expenses, for the fiscal year ending June 30, 2003, otherwise would exceed the "Net Expenses" rates shown in the table above for each of the Class A, Class B, Class C and Class Y shares, as applicable. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed any applicable expense limit that is in place for the Fund. Prior to July 1, 2002, the Fund was subject to permanent expense caps for its classes of shares at identical rates. -------------------------------------------------------------------------------- 64 UBS Global Asset Management UBS Global Bond Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $562 $884 $1,229 $2,199 Class B (assuming sale of all shares at end of period)...... 693 986 1,406 2,268 Class B (assuming no sale of shares)........................ 193 686 1,206 2,268 Class C (assuming sale of all shares at end of period)...... 366 671 1,102 2,299 Class C (assuming no sale of shares)........................ 266 671 1,102 2,299 Class Y..................................................... 92 345 616 1,396
-------------------------------------------------------------------------------- UBS Global Asset Management 65 UBS International Equity Fund -------------------------------------------------------------------------- Investment Objective, Strategies, Securities Selection and Risks FUND OBJECTIVE The Fund seeks to maximize total return, consisting of capital appreciation and current income by investing primarily in the equity securities of non-U.S. issuers. PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes, if any) in equity securities. Investments in equity securities may include dividend-paying securities, common stock and preferred stock of issuers located throughout the world. The Fund may invest in stocks of companies of any size. The Fund may (but is not required to) use forward currency contracts, options, futures and other derivatives as part of its investment strategy or to help manage portfolio risks. SECURITIES SELECTION The Advisor uses a disciplined intrinsic or fundamental value approach that seeks to take advantage of anomalies in markets often created by human over- reactions to both good and bad news. The Advisor, on behalf of the Fund, intends to diversify broadly among countries, but reserves the right to invest a substantial portion of the Fund's assets in one or more countries if economic and business conditions warrant such investments. For each security under analysis, a fundamental value is estimated, based upon detailed country, industry and company analysis, including visits to the company, its competitors and suppliers. This fundamental value estimate is a function of the present value of the estimated future cash flows. The resulting fundamental value estimate is then compared to the company's current market price to ascertain whether a valuation anomaly exists. A stock with a market price below the estimated intrinsic or fundamental value would be considered a candidate for inclusion in the Fund's portfolio. This comparison between price and intrinsic or fundamental value allows comparisons across industries and countries. The Fund may invest in cash or cash equivalent instruments, including shares of an affiliated investment company. When market conditions warrant, the Fund may make substantial temporary defensive investments in cash equivalents, which may affect the Fund's ability to pursue its investment objective. The Advisor actively manages the Fund. As such, increased portfolio turnover may result in higher costs for brokerage commissions, transaction costs and taxable gains. PRINCIPAL RISKS An investment in the Fund is not guaranteed; you may lose money by investing in the Fund. The other principal risks presented by an investment in the Fund are: - MARKET RISK--The risk that the market value of the Fund's investments will fluctuate as the stock and bond markets fluctuate. Market risk may affect a single issuer, industry or section of the economy, or it may affect the market as a whole. - SMALL AND MEDIUM COMPANY RISK--The risk that investments in small and medium size companies may be more volatile than investments in larger companies, as small and medium size companies generally experience higher growth and failure rates. The trading volume of these securities is normally lower than that of larger companies. Such securities may be less liquid than others and could make it difficult to sell a security at a time or price desired. Changes in the demand for these securities of generally have a disproportionate effect on their market price, tending to make prices rise more in response to buying demand and fall more in response to selling pressure. - FOREIGN INVESTING RISK--The risk that prices of the Fund's investments in foreign securities may go down because of unfavorable foreign government actions, political instability or the absence of accurate information about foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S. Dollar will reduce the value of securities denominated in those currencies. Also, foreign securities are sometimes less liquid and harder to sell and to value than securities of U.S. issuers. - DERIVATIVES RISK--The Fund's investments in derivatives may rise or fall more rapidly than other investments. -------------------------------------------------------------------------------- 66 UBS Global Asset Management UBS International Equity Fund -------------------------------------------------------------------------- Performance RISK/RETURN BAR CHART AND TABLE The following bar chart reflects performance information for the Class Y shares of the Fund, and the table reflects performance information for the Class Y and Class A shares of the Fund. The bar chart and table give an indication of the Fund's risks and performance. The bar chart shows you how the Fund's performance has varied from year to year. The table illustrates how the performance of the Class Y shares and Class A shares, before taxes and for specified time periods, compares to that of a broad measure of market performance. In addition, the table presents the performance of the Class Y shares reflecting the impact of taxes. WHEN YOU CONSIDER THIS INFORMATION, PLEASE REMEMBER THAT THE FUND'S PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NOT NECESSARILY AN INDICATION OF HOW IT WILL PERFORM IN THE FUTURE. TOTAL RETURN OF CLASS Y SHARES (1994 IS THE FUND'S FIRST FULL CALENDAR YEAR OF OPERATION) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALENDAR YEAR TOTAL RETURN 1994 0.94% 1995 15.55% 1996 12.75% 1997 5.74% 1998 14.39% 1999 19.16% 2000 -9.09% 2001 -16.99%
Total Return January 1 to June 30, 2002: 0.62% Best quarter during calendar years shown: 4th Quarter 1998: 17.15% Worst quarter during calendar years shown: 3rd Quarter 1998: -13.66% -------------------------------------------------------------------------------- UBS Global Asset Management 67 UBS International Equity Fund -------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS as of December 31, 2001
CLASS Y SHARES (INCEPTION DATE: 8/31/93) 1 YEAR 5 YEAR LIFE OF CLASS ----------------------------------- -------------- ------------- ------------- Return Before Taxes................ -16.99% 1.70% 3.95% Return After Taxes on Distributions.................... -20.69% -0.18% 2.25% Return After Taxes on Distributions and Sale of Fund Shares.......... -7.82% 1.06% 2.79% MSCI World Ex USA (Free) Index* (1).............................. -21.36% 1.04% 3.57%
CLASS A SHARES** (INCEPTION DATE: 6/30/97) ----------------------------------- Return Before Taxes................ -21.66% N/A -2.53% MSCI World Ex USA (Free) Index* (1).............................. -21.36% N/A -1.20%
* Does not reflect the deduction of fees, expenses or taxes. ** The average annual total returns for the Class A shares have been calculated to reflect the Class A shares' current maximum front-end sales charge of 5.50%. (1) The MSCI World Ex USA (Free) Index is an unmanaged, market driven broad-based securities index which includes non-U.S. equity markets in terms of capitalization and performance. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. In addition, the after-tax returns shown are not relevant to investors who hold Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns for other classes will vary from the Class Y shares' after-tax returns shown. -------------------------------------------------------------------------------- 68 UBS Global Asset Management UBS International Equity Fund -------------------------------------------------------------------------- Expenses and Fee Tables FEES AND EXPENSES These tables describe the fees and expenses that you may pay if you buy, sell and hold shares of the Fund. SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
CLASS A CLASS B CLASS C CLASS Y -------- -------- -------- -------- Maximum Sales Charge (Load) (as a % of offering price)................................ 5.50% 5.00% 2.00% None Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a % of offering price)................................ 5.50% None 1.00% None Maximum Contingent Deferred Sales Charge (Load) (CDSC) (as a % of offering price)................................ None 5.00% 1.00% None Exchange Fee................................................ None None None None Redemption Fee (as a percentage of amount redeemed within 90 days of purchase, if applicable)*......................... 1.00% None None 1.00%
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)**
CLASS A CLASS B CLASS C CLASS Y ---------- ---------- ---------- ---------- Management Fees............................................. 0.80% 0.80% 0.80% 0.80% Distribution and/or Service (12b-1) Fees.................... 0.25% 1.00% 1.00% None Other Expenses***........................................... 0.44% 0.33% 0.47% 0.41% -------- -------- -------- -------- Total Annual Fund Operating Expenses........................ 1.49% 2.13% 2.27% 1.21% ======== ======== ======== ======== Management Fee Waiver/Expense Reimbursements................ 0.24% 0.13% 0.27% 0.21% -------- -------- -------- -------- Net Expenses****............................................ 1.25% 2.00% 2.00% 1.00% ======== ======== ======== ========
* Please see the section entitled "Selling Shares" for additional information concerning the applicability of the redemption fee. ** The operating expenses shown are based on expenses incurred during the Fund's most recent fiscal year ending June 30, 2002. Class B and Class C expense ratios are annualized. Amounts do not include interest expense. *** Includes an administrative fee of 0.075% paid by the Fund to UBS Global AM. **** The Advisor has agreed irrevocably to waive its fees and reimburse certain expenses so that total operating expenses of the Fund, exclusive of 12b-1 fees, do not exceed 1.00% for each of the Class A, Class B, Class C and Class Y shares, respectively. -------------------------------------------------------------------------------- UBS Global Asset Management 69 UBS International Equity Fund -------------------------------------------------------------------------- EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods unless otherwise stated. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Class A..................................................... $670 $971 $1,293 $2,203 Class B (assuming sale of all shares at end of period)...... 703 954 1,332 2,135 Class B (assuming no sale of shares)........................ 203 654 1,132 2,135 Class C (assuming sale of all shares at end of period)...... 401 777 1,279 2,659 Class C (assuming no sale of shares)........................ 301 777 1,279 2,659 Class Y..................................................... 102 363 645 1,447
-------------------------------------------------------------------------------- 70 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Managing Your Fund Account FLEXIBLE PRICING The UBS Funds offer four classes of shares--Class A, Class B, Class C and Class Y. Each class has different sales charges and ongoing expenses. You can choose the class that is best for you, based on how much you plan to invest and how long you plan to hold your shares of the Fund(s). Class Y shares are only available to certain types of investors. The UBS Funds have adopted separate plans pertaining to the Class A, Class B and Class C shares of the Funds under rule 12b-1 that allow the Funds to pay service and (for Class B and Class C shares) distribution fees for the sale of the Funds' shares and services provided to shareholders. Because the 12b-1 fees for Class B and Class C shares are paid out of a Fund's assets on an ongoing basis, over time they will increase the cost of your investment and may cost you more than if you paid the front-end sales charge for Class A shares. You may qualify for a waiver of certain sales charges on Class A, Class B and Class C shares. See "Sales Charge Waivers for Class A, Class B and Class C Shares" below. You may also qualify for a reduced sales charge on Class A shares. See "Sales Charge Reductions for Class A Shares" below. CLASS A SHARES Class A shares have a front-end sales charge that is included in the offering price of the Class A shares. This sales charge is paid at the time of purchase and is not invested in a Fund. Class A shares pay an annual service fee of 0.25% of average net assets, but they pay no distribution fees. The ongoing expenses for Class A shares are lower than for Class B and Class C shares. The Class A sales charges for each Fund are described in the following tables: CLASS A SALES CHARGES-UBS U.S. Bond Fund, UBS High Yield Fund and UBS Global Bond Fund:
REALLOWANCE TO SALES CHARGE AS A PERCENTAGE OF: SELECTED DEALERS AS AMOUNT OF INVESTMENT OFFERING PRICE NET AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE -------------------- -------------- ------------------- ---------------------------- Less than $100,000................. 4.50% 4.71% 4.00% $100,000 to $249,999............... 3.50 3.63 3.00 $250,000 to $499,999............... 2.50 2.56 2.00 $500,000 to $999,999............... 2.00 2.04 1.75 $1,000,000 and over (1)............ None None Up to 1.00(2)
-------------------------------------------------------------------------------- UBS Global Asset Management 71 The UBS Funds -------------------------------------------------------------------------- CLASS A SALES CHARGES-UBS U.S. Balanced Fund, UBS U.S. Equity Fund, UBS U.S. Value Equity Fund, UBS U.S. Large Cap Growth Fund, UBS U.S. Small Cap Equity Fund, UBS U.S. Small Cap Growth Fund, UBS U.S. Real Estate Equity Fund, UBS Global Allocation Fund, UBS Global Equity Fund and UBS International Equity Fund:
REALLOWANCE TO SALES CHARGE AS A PERCENTAGE OF: SELECTED DEALERS AS AMOUNT OF INVESTMENT OFFERING PRICE NET AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE -------------------- -------------- ------------------- ------------------------------------ Less than $50,000.................. 5.50% 5.82% 5.00% $50,000 to $99,999................. 4.50 4.71 4.00 $100,000 to $249,999............... 3.50 3.63 3.00 $250,000 to $499,999............... 2.50 2.56 2.00 $500,000 to $999,999............... 2.00 2.04 1.75 $1,000,000 and over (1)............ None None Up to 1.00(2)
(1) A contingent deferred sales charge of 1% of the shares' offering price or the net asset value at the time of sale by the shareholder, whichever is less, is charged on sales of shares made within one year of the purchase date. Class A shares representing reinvestment of dividends are not subject to this 1% charge. Withdrawals in the first year after purchase of up to 12% of the value of the fund account under a Fund's Automatic Cash Withdrawal Plan are not subject to this charge. (2) UBS Global AM pays 1.00% to the dealer for sales of greater than $1 million but less than $3 million, 0.75% for sales of at least $3 million but less than $5 million, 0.50% for sales of at least $5 million but less than $50 million, and 0.25% for sales of $50 million or more. CLASS B SHARES Class B shares have a contingent deferred sales charge. When you purchase Class B shares, we invest 100% of your purchase price in Fund shares. However, you may have to pay the deferred sales charge when you sell your Fund shares, depending on how long you own the shares. Class B shares pay an annual 12b-1 distribution fee of 0.75% of average net assets, as well as an annual 12b-1 service fee of 0.25% of average net assets. If you hold your Class B shares for the period specified below, they will automatically convert to Class A shares, which have lower ongoing expenses. If you sell Class B shares before the end of the specified period, you will pay a deferred sales charge. We calculate the deferred sales charge by multiplying the lesser of the net asset value of the Class B shares at the time of purchase or the net asset value at the time of sale by the percentage shown below:
PERCENTAGE (BASED ON AMOUNT OF INVESTMENT) BY WHICH THE SHARES' NET ASSET VALUE IS MULTIPLIED: -------------------------------------- LESS $100,000 $250,000 $500,000 IF YOU SELL THAN TO TO TO SHARES WITHIN: $100,000 $249,999 $499,999 $999,999 -------------- -------- -------- -------- -------- 1st year since purchase....... 5% 3% 3% 2% 2nd year since purchase....... 4% 2% 2% 1% 3rd year since purchase....... 3% 2% 1% None 4th year since purchase....... 2% 1% None None 5th year since purchase....... 2% None None None 6th year since purchase....... 1% None None None 7th year since purchase....... None None None None
IF YOU ARE ELIGIBLE FOR A COMPLETE WAIVER OF THE SALES CHARGE ON CLASS A SHARES BECAUSE YOU ARE INVESTING $1 MILLION OR MORE, YOU SHOULD PURCHASE CLASS A SHARES, WHICH HAVE LOWER ONGOING EXPENSES. Class B shares automatically convert to Class A shares after the end of the sixth year if you purchase less than $100,000, after the end of the fourth year if you purchase at least $100,000 but less than -------------------------------------------------------------------------------- 72 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- $250,000, after the end of the third year if you purchase at least $250,000 but less than $500,000 and after the end of the second year if you purchase $500,000 or more but less than $1 million. TO QUALIFY FOR THE LOWER DEFERRED SALES CHARGE AND SHORTER CONVERSION SCHEDULE, YOU MUST MAKE THE INDICATED INVESTMENT AS A SINGLE PURCHASE. Regardless of the amount of the investment, Class B shares of Family Funds ("Family Funds" include other UBS Funds, UBS PACE Select funds and other funds for which UBS Global AM serves as principal underwriter) purchased or acquired prior to November 5, 2001 and exchanged (including exchanges as part of a reorganization) for shares of the Funds after November 5, 2001 (collectively, "Prior Class B Shares") are subject to a deferred sales charge at the time of redemption at the following percentages: (i) 5%, if shares are sold within the first year since purchase; (ii) 4%, if shares are sold within the second year since purchase; (iii) 3%, if shares are sold within the third year since purchase; (iv) 2%, if shares are sold within the fourth or fifth year since purchase; and (v) 1%, if shares are sold within the sixth year of purchase. Prior Class B Shares held longer than six years are not subject to a deferred sales charge and automatically convert to Class A shares, which have lower ongoing expenses. We will not impose the deferred sales charge on Class B shares purchased by reinvesting dividends or on withdrawals in any year of up to 12% of the value of your Class B shares under the Automatic Cash Withdrawal Plan. To minimize your deferred sales charge, we will assume that you are selling: - First, Class B shares representing reinvested dividends, and - Second, Class B shares that you have owned the longest. CLASS C SHARES Class C shares have a front-end sales charge that is included in the offering price of the Class C shares, as described in the following table. This sales charge is paid at the time of the purchase and is not invested in a Fund.
REALLOWANCE TO SELECTED DEALERS SALES CHARGE AS A PERCENTAGE OF: AS PERCENTAGE OF OFFERING PRICE NET AMOUNT INVESTED OFFERING PRICE -------------- ------------------- ---------------- 1.00% 1.01% 1.00%
Class C shares pay an annual 12b-1 distribution fee of 0.50% of average net assets for fixed income funds, and 0.75% of average net assets for equity funds, as well as an annual 12b-1 service fee of 0.25% of average net assets. Class C shares do not convert to another class of shares. This means that you will pay the 12b-1 fees for as long as you own your shares. Class C shares also have a contingent deferred sales charge of 1.00% for equity funds and 0.75% for fixed income funds, applicable if you sell your shares within one year of the date you purchased them. We calculate the deferred sales charge on sales of Class C shares by multiplying 1.00% for equity funds and 0.75% for fixed income funds by the lesser of the net asset value of the Class C shares at the time of purchase or the net asset value at the time of sale. SALES CHARGE WAIVERS FOR CLASS A, CLASS B AND CLASS C SHARES CLASS A FRONT-END SALES CHARGE WAIVERS. Front-end sales charges will be waived if you buy Class A shares with proceeds from the following sources: 1. Redemptions from any registered mutual fund for which UBS Global AM or any of its affiliates serves as principal underwriter if you: - Originally paid a front-end sales charge on the shares; and - Reinvest the money within 60 days of the redemption date. The Funds' front-end sales charges will also not apply to Class A purchases by or through: 2. Employees of UBS AG and its subsidiaries and members of the employees' immediate families; and members of the Board of Directors/Trustees of any investment company for which UBS Global -------------------------------------------------------------------------------- UBS Global Asset Management 73 The UBS Funds -------------------------------------------------------------------------- AM or any of its affiliates serves as principal underwriter. 3. Trust companies and bank trust departments investing on behalf of their clients if clients pay the bank or trust company an asset-based fee for trust or asset management services. 4. Retirement plans and deferred compensation plans that have assets of at least $1 million or at least 25 eligible employees. 5. Broker-dealers and other financial institutions (including registered investment advisers and financial planners) that have entered into a selling agreement with UBS Global AM (or otherwise have an arrangement with a broker-dealer or other financial institution with respect to sales of fund shares), on behalf of clients participating in a fund supermarket, wrap program, or other program in which clients pay a fee for advisory services, executing transactions in Fund shares, or for otherwise participating in the program. 6. Employees of broker-dealers and other financial institutions (including registered investment advisers and financial planners) that have entered into a selling agreement with UBS Global AM (or otherwise having an arrangement with a broker-dealer or other financial institution with respect to sales of fund shares), and their immediate family members, as allowed by the internal policies of their employer. 7. Insurance company separate accounts. 8. Shareholders of the Class N shares of any UBS Fund who held such shares at the time they were redesignated as Class A shares. 9. Reinvestment of capital gains distributions and dividends. 10. College savings plans organized under Section 529 of the Internal Revenue Code (the "IRC"). 11. A UBS PaineWebber Financial Advisor who was formerly employed as an investment executive with a competing brokerage firm, and - you were the Financial Advisor's client at the competing brokerage firm; - within 90 days of buying shares in the Fund, you sell shares of one or more mutual funds that were principally underwritten by the competing brokerage firm or its affiliates, and you either paid a sales charge to buy those shares, pay a contingent deferred sales charge when selling them or held those shares until the contingent deferred sales charge was waived; and - you purchase an amount that does not exceed the total amount of money you received from the sale of the other mutual fund. CLASS C FRONT-END SALES CHARGE WAIVERS. Front-end sales charges will be waived if you buy Class C shares through a UBS PaineWebber Financial Advisor who was formerly employed as an investment executive with a competing brokerage firm, and - you were the Financial Advisor's client at the competing brokerage firm; - within 90 days of buying shares in the Fund, you sell shares of one or more mutual funds that were principally underwritten by the competing brokerage firm or its affiliates, and you either paid a sales charge to buy those shares, pay a contingent deferred sales charge when selling them or held those shares until the contingent deferred sales charge was waived; and - you purchase an amount that does not exceed the total amount of money you received from the sale of the other mutual fund. -------------------------------------------------------------------------------- 74 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- CLASS A, CLASS B AND CLASS C SHARES CONTINGENT DEFERRED SALES CHARGE WAIVERS. The contingent deferred sales charge will be waived for: - Redemptions of Class A shares by former holders of Class N shares; - Exchanges between funds for which UBS Global AM or one of its affiliates serves as principal underwriter, if purchasing the same class of shares; - Redemptions following the death or disability of the shareholder or beneficial owner; - Tax-free returns of excess contributions from employee benefit plans; - Distributions from employee benefit plans, including those due to plan termination or plan transfer; - Redemptions made in connection with the Automatic Cash Withdrawal Plan, provided that such redemptions: -- are limited annually to no more than 12% of the original account value; -- are made in equal monthly amounts, not to exceed 1% per month; and -- the minimum account value at the time the Automatic Cash Withdrawal Plan was initiated was no less than $5,000; and - Redemptions of shares purchased through retirement plans. SALES CHARGE REDUCTIONS FOR CLASS A SHARES (RIGHT OF ACCUMULATION/CUMULATIVE QUANTITY DISCOUNT) A purchaser of Class A shares may qualify for a cumulative quantity discount by combining a current purchase with certain other Class A shares of Family Funds already owned. To determine if you qualify for a reduced front-end sales charge, the amount of your current purchase is added to the cost or current value, whichever is higher, of your other Class A shares as well as those Class A shares of your spouse and children under the age of 21. If you are the sole owner of a company, you may also add any company accounts, including retirement plan accounts invested in Class A shares of the Family Funds. Companies with one or more retirement plans may add together the total plan assets invested in Class A shares of the Family Funds to determine the front-end sales charge that applies. To qualify for the cumulative quantity discount on a purchase through a financial institution, when each purchase is made the investor or institution must provide UBS Global AM with sufficient information to verify that the purchase qualifies for the privilege or discount. NOTE ON SALES CHARGE WAIVERS FOR CLASS A, CLASS B AND CLASS C SHARES If you think you qualify for any of the sales charge waivers described above, you will need to provide documentation to UBS Global AM or the Funds. For more information, you should contact your investment professional or call 1-800-647-1568. If you want information on the Automatic Cash Withdrawal Plan, see the SAI or contact your investment professional. CLASS Y SHARES Class Y shares have no sales charge. Only specific types of investors can purchase Class Y shares. The following are eligible to purchase Class Y shares: - Shareholders of the Class I shares of any UBS Fund who held such shares as of the date the shares were redesignated Class Y shares; - Retirement plans with 5,000 or more eligible employees or $100 million or more in plan assets; - Retirement plan platforms/programs that include Fund shares if the platform/program covers plan assets of at least $100 million; - Trust companies and bank trust departments purchasing shares on behalf of their clients in a fiduciary capacity; - Banks, registered investment advisors and other financial institutions purchasing fund shares for their clients as part of a discretionary asset allocation model portfolio; -------------------------------------------------------------------------------- UBS Global Asset Management 75 The UBS Funds -------------------------------------------------------------------------- - Shareholders who owned Class Y shares of the Fund through the PACE Multi-Advisor Program as of November 15, 2001, will be eligible to continue to purchase Class Y shares of that Fund through the program; - College savings plans organized under Section 529 of the IRC, if shareholder servicing fees are paid exclusively outside of the participating funds; - Other investors as approved by the Funds' Board of Trustees; - Shareholders who invest a minimum initial amount of $10 million in a Fund ($5 million for UBS U.S. Small Cap Growth Fund, UBS U.S. Small Cap Equity Fund, UBS U.S. Real Estate Equity Fund, and UBS High Yield Fund); and - Foundations, Endowments and Religious and other charitable organizations described in Section 501(c)(3) of the IRC. Class Y shares do not pay ongoing 12b-1 distribution or service fees. The ongoing expenses for Class Y shares are the lowest of all the classes. BUYING SHARES You can buy Fund shares through your investment professional at a broker-dealer or other financial institution with which UBS Global AM has a dealer agreement. If you wish to invest in other Family Funds, you can do so by: - Contacting your investment professional (if you have an account at a financial institution that has entered into a dealer agreement with UBS Global AM); - Buying shares through the transfer agent as described below; or - Opening an account by exchanging shares from another Family Fund. The Funds and UBS Global AM reserve the right to reject a purchase order or suspend the offering of shares. THROUGH FINANCIAL INSTITUTIONS/PROFESSIONALS As mentioned above, the Funds have entered into one or more sales agreements with brokers, dealers or other financial intermediaries ("Service Providers"), as well as with financial institutions (banks and bank trust departments) (each an "Authorized Dealer"). The Authorized Dealer, or intermediaries designated by the Authorized Dealer (a "Sub-designee"), may in some cases be authorized to accept purchase and redemption orders that are in "good form" on behalf of the Funds. A Fund will be deemed to have received a purchase or redemption order when the Authorized Dealer or Sub-designee receives the order in good form. Such orders will be priced at the Fund's net asset value next computed after such order is received in good form by the Authorized Dealer or Sub-designee. These Authorized Dealers may charge the investor a transaction fee or other fee for their services at the time of purchase. These fees would not be otherwise charged if you purchased shares directly from the Funds. It is the responsibility of such Authorized Dealers or Sub-designees to promptly forward purchase orders with payments to the Funds. The Advisor, or its affiliates, may, from their own resources, compensate Service Providers for services performed with respect to a Fund's Class Y shares. These services may include marketing, shareholder servicing, recordkeeping and/or other services. When these service arrangements are in effect, they are generally made available to all qualified Service Providers. MINIMUM INVESTMENTS: Class A, Class B and Class C shares: To open an account................................ $ 1,000 To add to an account.............................. $ 100
The Funds may waive or reduce these amounts for: - Employees of UBS Global AM or its affiliates; or - Participants in certain pension plans, retirement accounts, unaffiliated investment programs or the Funds' automatic investment plan. -------------------------------------------------------------------------------- 76 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- In addition, the Funds will waive the minimum investment amounts for Class Y shares for: - Shareholders who owned Class I shares of the Funds prior to their redesignation as Class Y shares; - Retirement plans with 5,000 or more eligible employees in the plan or $100 million in plan assets; or - Retirement plans offered through a common platform that have an aggregate $100 million in plan assets. MARKET TIMERS. The interests of the Funds' long-term shareholders and their ability to manage their investments may be adversely affected when their shares are repeatedly bought and sold in response to short-term market fluctuations--also known as "market timing." When large dollar amounts are involved, a Fund may have difficulty implementing long-term investment strategies, because it cannot predict how much cash it will have to invest. Market timing also may force a Fund to sell portfolio securities at disadvantageous times to raise the cash needed to buy a market timer's Fund shares. These factors may hurt a Fund's performance and its shareholders. When UBS Global AM believes frequent trading would have a disruptive effect on a Fund's ability to manage its investments, UBS Global AM and the Fund may reject purchase orders and exchanges into the Fund by any person, group or account that UBS Global AM believes to be a market timer. SELLING SHARES You can sell your Fund shares at any time. If you own more than one class of shares, you should specify which class you want to sell. If you do not, a Fund will assume that you want to sell shares in the following order: Class A, then Class C, then Class B and last, Class Y. If you want to sell shares that you purchased recently, a Fund may delay payment until it verifies that it has received good payment. If you hold your shares through a financial institution, you can sell shares by contacting your investment professional, or an Authorized Dealer or Sub-designee, for more information. Important note: Each institution or professional may have its own procedures and requirements for selling shares and may charge fees. If you purchased shares through the Funds' transfer agent, you may sell them as explained below. If you sell Class A shares and then repurchase Class A shares of the same Fund within 365 days of the sale, you can reinstate your account without paying a sales charge. The Funds reserve the right to pay redemptions "in kind" (i.e., payment in securities rather than cash) if the investment you are redeeming is large enough to affect a Fund's operations (for example, if it represents more than $250,000 or 1% of the Fund's assets). In these cases, you might incur brokerage costs converting the securities to cash. It costs the Funds money to maintain shareholder accounts. Therefore, the Funds reserve the right to repurchase all shares in any account that has a net asset value of less than $500. If a Fund elects to do this with your account, it will notify you that you can increase the amount invested to $500 or more within 60 days. A Fund will not repurchase shares in accounts that fall below $500 solely because of a decrease in the Fund's net asset value. REDEMPTION FEE (UBS GLOBAL ALLOCATION FUND, UBS GLOBAL EQUITY FUND AND UBS INTERNATIONAL EQUITY FUND ) If you sell or exchange Class A shares or sell Class Y shares of UBS Global Allocation Fund, UBS Global Equity Fund or UBS International Equity Fund less than 90 days after you purchased them, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted below. This amount will be paid to the applicable Fund, not to the Advisor or UBS Global AM. The redemption fee is designed to offset the costs associated with fluctuations in Fund asset levels and cash flow caused by short-term shareholder trading. Shares held the longest will be redeemed first for purposes of calculating the redemption fee. The redemption fee -------------------------------------------------------------------------------- UBS Global Asset Management 77 The UBS Funds -------------------------------------------------------------------------- will not apply to Class A or Class Y shares of the above-referenced Funds that: - are held through certain omnibus accounts, including retirement plans qualified under Section 401(k) of the IRC or plans administered as college savings programs under Section 529 of the IRC; - are sold or exchanged under automatic withdrawal plans; - are held through certain managed account programs with automatic asset allocation rebalancing features; or - are sold due to death or disability of the shareholder. EXCHANGING SHARES You may exchange Class A, Class B or Class C shares of a fund for shares of the same class of most other Family Funds. You may not exchange Class Y shares. You will not pay either a front-end sales charge or a deferred sales charge when you exchange shares but shareholders of UBS Global Allocation Fund, UBS Global Equity Fund, and UBS International Equity Fund may be subject to the redemption fee as noted above. Also, you may have to pay a deferred sales charge if you later sell the shares you acquired in the exchange. A Fund will use the date of your original share purchase to determine whether you must pay a deferred sales charge when you sell the shares of the Fund acquired in the exchange. Other Family Funds may have different minimum investment amounts. You may not be able to exchange your shares if the value of shares you exchange is not as large as the minimum investment amount in that other Fund. You may exchange shares of one Fund for shares of another Fund only after the first purchase has settled and the first Fund has received your payment. If you hold your Fund shares through a financial institution, you may exchange your shares by placing an order with that institution. If you hold Fund shares through the Funds' transfer agent, you may exchange your shares as explained below. The Funds may modify or terminate the exchange privilege at any time. TRANSFER AGENT If you wish to invest in this or any other of the Family Funds through the Funds' transfer agent, PFPC Inc., you can obtain an application by calling 1-800-647-1568. You must complete and sign the application and mail it, along with a check to the transfer agent. You may also sell or exchange your shares by writing to the Funds' transfer agent. Your letter must include: - Your name and address; - Your account number; - The name of the Fund whose shares you are selling, and if exchanging shares, the name of the Fund whose shares you want to buy; - The dollar amount or number of shares you want to sell and/or exchange; and - A guarantee of each registered owner's signature. A signature guarantee may be obtained from a financial institution, broker, dealer or clearing agency that is a participant in one of the medallion programs recognized by the Securities Transfer Agents Association. These are: Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature Program (MSP). The Funds will not accept signature guarantees that are not part of these programs. Applications to purchase shares (along with a check), and letters requesting redemptions of shares or exchanges of shares through the transfer agent should be mailed to: PFPC Inc. Attention: UBS Mutual Funds P. O. Box 8950 Wilmington, DE 19899 -------------------------------------------------------------------------------- 78 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- You do not have to complete an application when you make additional investments in the same Fund. PRICING AND VALUATION The price at which you may buy, sell or exchange Fund shares is based on the net asset value per share. Each Fund calculates net asset value on days that the New York Stock Exchange ("NYSE") is open. Each Fund calculates net asset value separately for each class as of the close of regular trading on the NYSE (generally, 4:00 p.m., Eastern time). The NYSE normally is not open, and a Fund does not price its shares, on most national holidays and on Good Friday. Your price for buying, selling or exchanging shares of a Fund will be based on the net asset value (adjusted for any applicable sales charges) that is next calculated after the Fund receives your order in good form. If you place your order through a financial institution, your investment professional is responsible for making sure that your order is promptly sent to the Fund. Each Fund calculates its net asset value based on the current market value of its portfolio securities. Each Fund normally obtains market values for its securities from independent pricing services that use reported last sales prices, current market quotations or valuations from computerized "matrix" systems that derive values based on comparable securities. If a market value is not available from an independent pricing source for a particular security, that security is valued at a fair value determined by or under the direction of the Funds' Board of Trustees. Each Fund normally uses the amortized cost method to value bonds that will mature in 60 days or less. Judgment plays a greater role in valuing thinly traded securities, including many lower-rated bonds, because there is less reliable, objective data available. Each Fund calculates the U.S. dollar value of investments that are denominated in foreign currencies daily, based on current exchange rates. A Fund may own securities including some securities that trade primarily in foreign markets that trade on weekends or other days on which the Fund does not calculate net asset value. As a result, a Fund's net asset value may change on days when you will not be able to buy and sell your Fund shares. If a Fund concludes that a material change in the value of a foreign security has occurred after the close of trading in its principal foreign market but before the close of regular trading on the NYSE, the Fund may use fair value methods to reflect those changes. This policy is intended to assure that each Fund's net asset value fairly reflects security values as of the time of pricing. -------------------------------------------------------------------------------- UBS Global Asset Management 79 The UBS Funds -------------------------------------------------------------------------- Management INVESTMENT ADVISOR AND SUB-ADVISOR UBS Global Asset Management (Americas) Inc. (the "Advisor"), a Delaware corporation located at One North Wacker Drive, Chicago, IL 60606, is an investment advisor registered with the U.S. Securities and Exchange Commission. As of June 30, 2002, the Advisor had approximately $37 billion in assets under management. The Advisor is an indirect, wholly owned subsidiary of UBS AG ("UBS") and a member of the UBS Global Asset Management Division, which had approximately $411 billion in assets under management as of June 30, 2002. UBS is an internationally diversified organization headquartered in Zurich, Switzerland, with operations in many areas of the financial services industry. The Advisor employs its affiliate, UBS Global Asset Management (New York) Inc. (the "Sub-Advisor"), to serve as sub-advisor to the UBS U.S. Large Cap Growth Fund, UBS U.S. Small Cap Growth Fund, UBS U.S. Real Estate Equity Fund and UBS High Yield Fund. The Sub-Advisor is also a subsidiary of UBS. As of June 30, 2002, the Sub-Advisor had approximately $14 billion in assets under management. The Sub-Advisor is located at 51 West 52nd Street, New York, NY 10019-6114. Subject to the Advisor's control and supervision, the Sub-Advisor is responsible for managing the investment and reinvestment of a Fund's portfolio, including placing orders for the purchase and sale of portfolio securities. The Sub-Advisor also furnishes the Advisor with investment recommendations, asset allocation advice, research and other investment services, subject to the direction of the Trust's Board of Trustees and officers. PORTFOLIO MANAGEMENT Investment decisions for the Funds are made by investment management teams at the Advisor and the Sub-Advisor. No member of any investment management team is primarily responsible for making recommendations for portfolio purchases. ADVISORY FEES The investment advisory fees (expressed as a percentage of average net assets) payable to the Advisor, before fee waivers and/or expense reimbursements, if applicable, by each Fund are presented in the tables below. The Advisor has contractually agreed to waive its fees and/or reimburse certain expenses so that the total operating expenses (excluding 12b-1 fees) of the Funds do not exceed the amounts listed in the table below under "Total Expense Limit." The contractual fee waiver and/or expense reimbursement agreement will remain in place for the Funds' fiscal year ending June 30, 2003. Thereafter, the expense limit for each of the applicable Funds will be reviewed each year, at which time the continuation of the expense limit will be discussed by the Advisor and the Board of Trustees. The contractual fee waiver agreement also provides that the Advisor is entitled to reimbursement of fees it waived and/or expenses it reimbursed for a period of three years following such fee waivers and expense reimbursements, provided that the reimbursement by a Fund of the Advisor will not cause the total operating expense ratio to exceed the contractual limit as then may be in effect for that Fund.
TOTAL EXPENSE ADVISORY LIMIT FEE -------- --------- UBS U.S. Value Equity Fund.............. 0.85% 0.70% UBS U.S. Small Cap Equity Fund.......... 1.15 1.00 UBS U.S. Real Estate Equity Fund........ 1.05 0.90 UBS Global Allocation Fund.............. 1.10 0.80 UBS Global Equity Fund.................. 1.00 0.80 UBS Global Bond Fund.................... 0.90 0.75 UBS U.S. Balanced Fund.................. 0.80 0.70 UBS U.S. Equity Fund.................... 0.80 0.70 UBS U.S. Large Cap Growth Fund.......... 0.80 0.70 UBS U.S. Small Cap Growth Fund.......... 1.15 1.00 UBS U.S. Bond Fund...................... 0.60 0.50 UBS High Yield Fund..................... 0.70 0.60
-------------------------------------------------------------------------------- 80 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Prior to July 1, 2002, each of the Funds (except UBS U.S. Value Equity Fund, UBS U.S. Small Cap Equity Fund and UBS U.S Real Estate Equity Fund) was subject to an irrevocable fee waiver and expense reimbursement agreement. At a meeting held on June 28, 2002, the shareholders of each of these Funds approved the proposal to eliminate the irrevocable fee waiver and expense reimbursement arrangement that had been in place for the Funds. In accordance with such proposal, the irrevocable fee waiver and expense reimbursement arrangement for each Fund has been replaced by the one-year contractual fee waiver and/ or expense reimbursement agreement described above. With regard to UBS International Equity Fund, the Advisor has agreed irrevocably to waive its fees and reimburse certain expenses so that the total operating expenses (excluding 12b-1 fees) of the Fund do not exceed the amount listed in the table below under "Total Expense Limit":
TOTAL EXPENSE ADVISORY LIMIT FEE -------- --------- UBS International Equity Fund........... 1.00% 0.80%
The Advisor pays the Sub-Advisor a portion of the fee the Advisor receives under its investment advisory agreement with each Fund sub-advised by the Sub- Advisor. See the SAI for further information. ADMINISTRATOR UBS Global Asset Management (US) Inc. ("UBS Global AM"), located at 51 West 52nd Street, New York, NY 10019-6114, is the administrator of the Funds. UBS Global AM is an indirect wholly owned asset management subsidiary of UBS. Each Fund pays UBS Global AM at the annual contract rate of 0.075% of its average daily net assets for administrative services. -------------------------------------------------------------------------------- UBS Global Asset Management 81 The UBS Funds -------------------------------------------------------------------------- Dividends and Taxes DIVIDENDS AND DISTRIBUTIONS Income dividends are normally declared, and paid, by each fixed income fund monthly, and by each equity fund and multi-asset fund annually. Capital gains, if any, are distributed in December. The amount of any distributions will vary, and there is no guarantee a Fund will pay either income dividends or capital gain distributions. Classes with higher expenses are expected to have lower income dividends. For example, Class B and Class C shares are expected to have the lowest dividends of a Fund's shares, while Class Y shares are expected to have the highest. You will receive income dividends and capital gain distributions in additional shares of the same class of a Fund unless you notify your investment professional or the Fund in writing that you elect to receive them in cash. Distribution options may be changed at any time by requesting a change in writing. Dividends and distributions are reinvested on the reinvestment date at the net asset value determined at the close of business on that date. If you invest in a Fund shortly before it makes a distribution, you may receive some of your investment back in the form of a taxable distribution. TAXES In general, if you are a taxable investor, Fund distributions are taxable to you as either ordinary income or capital gains. This is true whether you reinvest your distributions in additional Fund shares or receive them in cash. For federal income tax purposes, Fund distributions of short-term capital gains are taxable to you as ordinary income. Fund distributions of long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your shares. Every January, you will receive a statement that shows the tax status of distributions you received for the previous year. By law, a Fund must withhold a portion of your taxable distributions and redemption proceeds unless you: - provide your correct social security or taxpayer identification number, - certify that this number is correct, - certify that you are not subject to backup withholding, and - certify that you are a U.S. person (including a U.S. resident alien). A Fund also must withhold if the IRS instructs it to do so. When you sell your shares in a Fund, you may realize a capital gain or loss. For tax purposes, an exchange of your Fund shares for shares of a different Family Fund is the same as a sale. Fund distributions and gains from the sale of your Fund shares generally are subject to state and local taxes. Any foreign taxes a Fund pays on its investments may be passed through to you as a foreign tax credit. Non-U.S. investors may be subject to U.S. withholding or estate tax, and are subject to special U.S. tax certification requirements. You should consult your tax advisor about the federal, state, local or foreign tax consequences of your investment in a Fund. -------------------------------------------------------------------------------- 82 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Investment Advisor Performance Information Because the Advisor has managed other advisory accounts for many years in a substantially similar manner to the way in which the Advisor manages certain Funds, the following supplemental performance information is being provided to assist prospective investors in making an informed investment decision. The tables below provide performance information for composites of other advisory accounts ("Account Composite Performance") managed by the Advisor in a substantially similar manner to the way in which the Advisor manages certain Funds' assets. The Account Composite Performance was obtained from the records maintained by the Advisor, and is adjusted to reflect each applicable Fund's Class A current net expenses, which include the effect of fee waivers and/ or expense reimbursements, as applicable. The following presentation also shows the Account Composite Performance adjusted to reflect each applicable Fund's Class A current net expenses, which include the effect of fee waivers and/or expense reimbursements, as applicable, and also reflects the Class A front-end sales charge of 5.50% or 4.50%, as applicable. The performance of one or more appropriate unmanaged benchmark indexes, not adjusted for any fees or expenses, is provided as well for each composite. Please note that the Account Composite Performance is not the Funds' own historical performance. The Account Composite Performance should not be considered a substitute for the Funds' performance, and the Account Composite Performance is not necessarily an indication of the Funds' future performance. The accounts included in the Account Composite Performance were not necessarily subject to certain investment limitations, diversification requirements and other restrictions imposed on mutual funds by the Investment Company Act of 1940 and the IRC, which, if applicable, may have adversely affected the performance of these accounts. -------------------------------------------------------------------------------- UBS Global Asset Management 83 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Bond Fund COMPOSITE PERFORMANCE: U.S. BOND COMPOSITE JANUARY 1, 1982 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) 1982 29.00% 35.08% 36.20% 32.62% 1983 1.99% 6.79% 7.70% 8.37% 1984 9.56% 14.72% 15.69% 15.15% 1985 15.78% 21.24% 22.25% 22.11% 1986 9.80% 14.98% 15.94% 15.25% 1987 -0.97% 3.70% 4.58% 2.76% 1988 3.11% 7.97% 8.88% 7.88% 1989 7.67% 12.74% 13.69% 14.53% 1990 3.56% 8.44% 9.35% 8.95% 1991 12.04% 17.31% 18.30% 16.00% 1992 2.40% 7.22% 8.13% 7.40% 1993 4.68% 9.61% 10.54% 9.75% 1994 -7.49% -3.13% -2.30% -2.92% 1995 12.33% 17.62% 18.61% 18.48% 1996 -1.14% 3.51% 4.39% 3.63% 1997 4.32% 9.24% 10.16% 9.65% 1998 2.49% 7.32% 8.22% 8.67% 1999 -5.43% -0.97% -0.13% -0.83% 2000 5.59% 10.56% 11.50% 11.62% 2001 3.08% 7.93% 8.84% 8.44% 2002 -0.59% 4.09% 4.61% 5.04%
COMPOSITE PERFORMANCE: U.S. BOND COMPOSITE FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ 1.10% 5.86% 6.76% 7.53% 5 years....................... 5.37% 6.34% 7.24% 7.25% 10 years...................... 6.15% 6.64% 7.54% 7.25% Since inception............... 9.97% 10.22% 11.15% 10.56%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Lehman U.S. Aggregate Index. The Lehman U.S. Aggregate Index is an unmanaged index of investment grade fixed-rate debt issues, including corporate, government, mortgage-backed and asset-backed securities with maturities of at least one year. -------------------------------------------------------------------------------- 84 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Bond Fund COMPOSITE PERFORMANCE: U.S. BOND COMPOSITE JANUARY 1, 1982 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1982.......................... 29.00% 35.08% 36.20% 32.62% 1983.......................... 1.99% 6.79% 7.70% 8.37% 1984.......................... 9.56% 14.72% 15.69% 15.15% 1985.......................... 15.78% 21.24% 22.25% 22.11% 1986.......................... 9.80% 14.98% 15.94% 15.25% 1987.......................... -0.97% 3.70% 4.58% 2.76% 1988.......................... 3.11% 7.97% 8.88% 7.88% 1989.......................... 7.67% 12.74% 13.69% 14.53% 1990.......................... 3.56% 8.44% 9.35% 8.95% 1991.......................... 12.04% 17.31% 18.30% 16.00% 1992.......................... 2.40% 7.22% 8.13% 7.40% 1993.......................... 4.68% 9.61% 10.54% 9.75% 1994.......................... -7.49% -3.13% -2.30% -2.92% 1995.......................... 12.33% 17.62% 18.61% 18.48% 1996.......................... -1.14% 3.51% 4.39% 3.63% 1997.......................... 4.32% 9.24% 10.16% 9.65% 1998.......................... 2.49% 7.32% 8.22% 8.67% 1999.......................... -5.43% -0.97% -0.13% -0.83% 2000.......................... 5.59% 10.56% 11.50% 11.62% 2001.......................... 3.08% 7.93% 8.84% 8.44%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Lehman U.S. Aggregate Index. The Lehman U.S. Aggregate Index is an unmanaged index of investment grade fixed-rate debt issues, including corporate, government, mortgage-backed and asset-backed securities with maturities of at least one year. -------------------------------------------------------------------------------- UBS Global Asset Management 85 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS Global Allocation Fund COMPOSITE PERFORMANCE: GLOBAL SECURITIES COMPOSITE+ JANUARY 1, 1985 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK BENCHMARK BENCHMARK BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) RETURN (%)(4) RETURN (%)(5) RETURN (%)(6) 1985 17.60% 24.45% 26.10% 32.56% 42.02% 32.29% 32.91% 1986 11.59% 18.09% 19.66% 16.09% 42.65% 26.47% 24.78% 1987 6.37% 12.55% 14.06% 2.27% 16.68% 18.39% 9.92% 1988 8.01% 14.29% 15.82% 17.95% 24.11% 4.37% 15.96% 1989 11.16% 17.63% 19.20% 29.17% 16.97% 4.34% 19.36% 1990 -2.17% 3.53% 4.92% -6.18% -16.54% 11.97% -3.56% 1991 14.78% 21.46% 23.07% 34.20% 19.03% 15.82% 23.97% 1992 1.69% 7.61% 9.05% 8.98% -4.64% 5.53% 4.47% 1993 4.48% 10.56% 12.04% 11.28% 22.90% 13.28% 14.46% 1994 -7.47% -2.09% -0.76% -0.06% 5.48% 2.33% 1.42% 1995 17.54% 24.38% 26.03% 36.45% 21.29% 19.04% 24.70% 1996 7.48% 13.74% 15.25% 21.21% 13.92% 3.63% 12.53% 1997 4.28% 10.35% 11.83% 31.29% 15.92% 0.24% 14.30% 1998 2.36% 8.33% 9.78% 23.43% 24.62% 15.29% 16.45% 1999 -4.25% 1.32% 2.69% 23.56% 25.12% -4.26% 16.85% 2000 -0.58% 5.20% 6.62% -10.89% -13.08% 1.59% -6.11% 2001 -3.62% 2.00% 3.37% -10.97% -16.63% -0.99% -7.50% 2002 -9.04% -3.75% -2.99% -5.90% -8.75% 10.93% -16.38%
COMPOSITE PERFORMANCE: GLOBAL SECURITIES COMPOSITE+ FOR PERIODS ENDED JULY 31, 2002
NET NET GROSS BENCHMARK BENCHMARK BENCHMARK BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) RETURN (%)(4) RETURN (%)(5) RETURN (%)(6) ---- ------------- ------------- ------------- ------------- ------------- ------------- ------------- 1 year................... -6.91% -1.49% -0.16% -22.07% -21.12% 12.25% -10.52% 5 years.................. 1.06% 2.21% 3.59% 0.34% 1.95% 4.73% 1.38% 10 years................. 6.47% 7.07% 8.51% 9.68% 7.13% 5.85% 7.60% Since inception.......... 10.12% 10.47% 11.95% 12.39% 5.62% 9.84% 11.06%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The Wilshire 5000 Equity Index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. (4) MSCI World Equity (Free) Index is a broad-based securities index that represents the U.S. and developed international equity markets in terms of capitalization and performance. It is designed to provide a repre- sentative total return for all major stock exchanges located inside and outside the United States. (5) The Salomon Smith Barney World Government Bond Index represents the broad global fixed income markets and includes debt issues of U.S. and most developed international governments, governmental entities and supranationals. (6) The Global Securities Market Index is produced internally from generally available indices and is a blended index incorporating percentages of various indices across certain capital markets. As of June 30, 2002, the Global Securities Market Index was constructed as follows: 40% Wilshire 5000 Equity Index, 22% MSCI World Ex USA (Free) Index, 21% Salomon Smith Barney Broad Investment Grade Bond Index, 9% Salomon Smith Barney Non-U.S. World Government Bond Index, 3% Merrill Lynch High Yield Cash Pay Index, 3% MSCI Emerging Markets Free Index and 2% JP Morgan EMBI Global. The percentages may be periodically re-weighted to reflect changing capital market expectations. + Although the Advisor has managed this asset class since 1982, performance information for the period prior to March 31, 1984 is not shown because such information relates only to sub-sectors or carveouts of other accounts managed by the Advisor. -------------------------------------------------------------------------------- 86 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS Global Allocation Fund COMPOSITE PERFORMANCE: GLOBAL SECURITIES COMPOSITE+ JANUARY 1, 1985 THROUGH DECEMBER 31, 2001
NET NET GROSS BENCHMARK BENCHMARK BENCHMARK BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) RETURN (%)(4) RETURN (%)(5) RETURN (%)(6) ---- ------------- ------------- ------------ ------------- ------------- ------------- ------------- 1985..................... 17.60% 24.45% 26.10% 32.56% 42.02% 32.29% 32.91% 1986..................... 11.59% 18.09% 19.66% 16.09% 42.65% 26.47% 24.78% 1987..................... 6.37% 12.55% 14.06% 2.27% 16.68% 18.39% 9.92% 1988..................... 8.01% 14.29% 15.82% 17.95% 24.11% 4.37% 15.96% 1989..................... 11.16% 17.63% 19.20% 29.17% 16.97% 4.34% 19.36% 1990..................... -2.17% 3.53% 4.92% -6.18% -16.54% 11.97% -3.56% 1991..................... 14.78% 21.46% 23.07% 34.20% 19.03% 15.82% 23.97% 1992..................... 1.69% 7.61% 9.05% 8.98% -4.64% 5.53% 4.47% 1993..................... 4.48% 10.56% 12.04% 11.28% 22.90% 13.28% 14.46% 1994..................... -7.47% -2.09% -0.76% -0.06% 5.48% 2.33% 1.42% 1995..................... 17.54% 24.38% 26.03% 36.45% 21.29% 19.04% 24.70% 1996..................... 7.48% 13.74% 15.25% 21.21% 13.92% 3.63% 12.53% 1997..................... 4.28% 10.35% 11.83% 31.29% 15.92% 0.24% 14.30% 1998..................... 2.36% 8.33% 9.78% 23.43% 24.62% 15.29% 16.45% 1999..................... -4.25% 1.32% 2.69% 23.56% 25.12% -4.26% 16.85% 2000..................... -0.58% 5.20% 6.62% -10.89% -13.08% 1.59% -6.11% 2001..................... -3.62% 2.00% 3.37% -10.97% -16.63% -0.99% -7.50%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The Wilshire 5000 Equity Index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. (4) MSCI World Equity (Free) Index is a broad-based securities index that represents the U.S. and developed international equity markets in terms of capitalization and performance. It is designed to provide a repre- sentative total return for all major stock exchanges located inside and outside the United States. (5) The Salomon Smith Barney World Government Bond Index represents the broad global fixed income markets and includes debt issues of U.S. and most developed international governments, governmental entities and supranationals. (6) The Global Securities Market Index is produced internally from generally available indices and is a blended index incorporating percentages of various indices across certain capital markets. As of June 30, 2002, the Global Securities Market Index was constructed as follows: 40% Wilshire 5000 Equity Index, 22% MSCI World Ex USA (Free) Index, 21% Salomon Smith Barney Broad Investment Grade Bond Index, 9% Salomon Smith Barney Non-U.S. World Government Bond Index, 3% Merrill Lynch High Yield Cash Pay Index, 3% MSCI Emerging Markets Free Index and 2% JP Morgan EMBI Global. The percentages may be periodically re-weighted to reflect changing capital market expectations. + Although the Advisor has managed this asset class since 1982, performance information for the period prior to March 31, 1984 is not shown because such information relates only to sub-sectors or carveouts of other accounts managed by the Advisor. -------------------------------------------------------------------------------- UBS Global Asset Management 87 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Balanced Fund COMPOSITE PERFORMANCE: U.S. BALANCED NORMAL EQUITY ALLOCATION 65% COMPOSITE JANUARY 1, 1982 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK BENCHMARK BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) RETURN (%)(4) RETURN (%)(5) 1982 18.50% 25.40% 26.69% 18.71% 32.62% 23.37% 1983 9.63% 16.01% 17.21% 23.46% 8.37% 18.03% 1984 3.59% 9.62% 10.76% 3.05% 15.15% 7.29% 1985 13.04% 19.62% 20.86% 32.56% 22.11% 29.05% 1986 7.02% 13.25% 14.43% 16.09% 15.25% 16.15% 1987 1.93% 7.86% 8.99% 2.27% 2.76% 3.77% 1988 8.01% 14.30% 15.49% 17.95% 7.88% 14.42% 1989 13.05% 19.63% 20.87% 29.17% 14.53% 24.00% 1990 -2.35% 3.33% 4.41% -6.18% 8.95% -0.82% 1991 14.32% 20.98% 22.23% 34.20% 16.00% 27.80% 1992 2.54% 8.51% 9.64% 8.98% 7.40% 8.56% 1993 4.42% 10.50% 11.65% 11.28% 9.75% 10.85% 1994 -7.24% -1.84% -0.81% -0.06% -2.92% -0.99% 1995 19.58% 26.54% 27.84% 36.45% 18.48% 29.98% 1996 4.88% 10.98% 12.14% 21.21% 3.63% 14.90% 1997 7.18% 13.43% 14.60% 31.29% 9.65% 23.50% 1998 5.40% 11.54% 12.69% 23.43% 8.67% 18.85% 1999 -6.99% -1.57% -0.54% 23.56% -0.83% 14.66% 2000 3.11% 9.11% 10.25% -10.89% 11.62% -3.26% 2001 0.06% 5.88% 6.99% -10.97% 8.44% 4.02% 2002 -11.62% -6.48% -5.90% -5.90% 5.04% -10.95%
COMPOSITE PERFORMANCE: U.S. BALANCED NORMAL EQUITY ALLOCATION 65% COMPOSITE FOR PERIODS ENDED JULY 31, 2002
BENCHMARK BENCHMARK BENCHMARK YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) RETURN (%)(3) RETURN (%)(4) RETURN (%)(5) ---- ----------------- ----------------- ---------------- ------------- ------------- ------------- 1 year................... -10.36% -5.14% -4.14% -22.07% 7.53% -12.27% 5 years.................. 2.67% 3.84% 4.92% 0.34% 7.25% 3.16% 10 years................. 7.21% 7.82% 8.94% 9.68% 7.25% 9.13% Since inception.......... 10.87% 11.18% 12.34% 9.38% 10.56% 12.27%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The Wilshire 5000 Equity index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. (4) The Lehman U.S. Aggregate Index is an unmanaged index of investment grade fixed-rate debt issues, including corporate, government, mortgage-backed and asset-backed securities with maturities of at least one year. (5) The U.S. Balanced Mutual Fund Index is an unmanaged index compiled by the Advisor and represents a fixed composite of 65% Wilshire 5000 Equity Index and 35% Lehman U.S. Aggregate Index. -------------------------------------------------------------------------------- 88 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Balanced Fund COMPOSITE PERFORMANCE: U.S. BALANCED NORMAL EQUITY ALLOCATION 65% COMPOSITE JANUARY 1, 1982 THROUGH DECEMBER 31, 2001
BENCHMARK BENCHMARK BENCHMARK YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) RETURN (%)(3) RETURN (%)(4) RETURN (%)(5) ---- ----------------- ----------------- ---------------- ------------- ------------- ------------- 1982..................... 18.50% 25.40% 26.69% 18.71% 32.62% 23.37% 1983..................... 9.63% 16.01% 17.21% 23.46% 8.37% 18.03% 1984..................... 3.59% 9.62% 10.76% 3.05% 15.15% 7.29% 1985..................... 13.04% 19.62% 20.86% 32.56% 22.11% 29.05% 1986..................... 7.02% 13.25% 14.43% 16.09% 15.25% 16.15% 1987..................... 1.93% 7.86% 8.99% 2.27% 2.76% 3.77% 1988..................... 8.01% 14.30% 15.49% 17.95% 7.88% 14.42% 1989..................... 13.05% 19.63% 20.87% 29.17% 14.53% 24.00% 1990..................... -2.35% 3.33% 4.41% -6.18% 8.95% -0.82% 1991..................... 14.32% 20.98% 22.23% 34.20% 16.00% 27.80% 1992..................... 2.54% 8.51% 9.64% 8.98% 7.40% 8.56% 1993..................... 4.42% 10.50% 11.65% 11.28% 9.75% 10.85% 1994..................... -7.24% -1.84% -0.81% -0.06% -2.92% -0.99% 1995..................... 19.58% 26.54% 27.84% 36.45% 18.48% 29.98% 1996..................... 4.88% 10.98% 12.14% 21.21% 3.63% 14.90% 1997..................... 7.18% 13.43% 14.60% 31.29% 9.65% 23.50% 1998..................... 5.40% 11.54% 12.69% 23.43% 8.67% 18.85% 1999..................... -6.99% -1.57% -0.54% 23.56% -0.83% 14.66% 2000..................... 3.11% 9.11% 10.25% -10.89% 11.62% -3.26% 2001..................... 0.06% 5.88% 6.99% -10.97% 8.44% -4.02%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The Wilshire 5000 Equity index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. (4) The Lehman U.S. Aggregate Index is an unmanaged index of investment grade fixed-rate debt issues, including corporate, government, mortgage-backed and asset-backed securities with maturities of at least one year. (5) The U.S. Balanced Mutual Fund Index is an unmanaged index compiled by the Advisor and represents a fixed composite of 65% Wilshire 5000 Equity Index and 35% Lehman U.S. Aggregate Index. -------------------------------------------------------------------------------- UBS Global Asset Management 89 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Equity Fund COMPOSITE PERFORMANCE: U.S. EQUITY COMPOSITE+ JULY 1, 1992 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1992 8.51% 14.83% 16.02% 8.98% 1993 9.70% 16.08% 17.28% 11.28% 1994 -5.52% -0.01% 1.04% -0.06% 1995 33.09% 40.85% 42.28% 36.45% 1996 18.77% 25.68% 26.98% 21.21% 1997 18.57% 25.48% 26.77% 31.29% 1998 10.04% 16.46% 17.66% 23.43% 1999 -10.06% -4.82% -3.82% 23.56% 2000 -1.93% 3.77% 4.86% -10.89% 2001 -3.07% 2.57% 3.65% -10.97% 2002 -18.41% -13.66% -13.17% -18.89%
COMPOSITE PERFORMANCE: U.S. EQUITY COMPOSITE+ FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ -18.76% -14.03% -13.12% -22.07% 5 years....................... -0.84% 0.29% 1.35% 0.34% 10 years...................... 10.30% 10.93% 12.09% 9.68% Since inception............... 10.40% 10.99% 12.15% 9.38%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Wilshire 5000 Equity Index. The Wilshire 5000 Equity Index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. + Although the Advisor has managed this asset class since 1982, performance information for the period prior to November 30, 1991 is not shown because such information relates only to subsectors or carveouts of other accounts managed by the Advisor. -------------------------------------------------------------------------------- 90 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Equity Fund COMPOSITE PERFORMANCE: U.S. EQUITY COMPOSITE+ JANUARY 1, 1992 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1992.......................... 8.51% 14.83% 16.02% 8.98% 1993.......................... 9.70% 16.08% 17.28% 11.28% 1994.......................... -5.52% -0.01% 1.04% -0.06% 1995.......................... 33.09% 40.85% 42.28% 36.45% 1996.......................... 18.77% 25.68% 26.98% 21.21% 1997.......................... 18.57% 25.48% 26.77% 31.29% 1998.......................... 10.04% 16.46% 17.66% 23.43% 1999.......................... -10.06% -4.82% -3.82% 23.56% 2000.......................... -1.93% 3.77% 4.86% -10.89% 2001.......................... -3.07% 2.57% 3.65% -10.97%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Wilshire 5000 Equity Index. The Wilshire 5000 Equity Index is a broad-based, market capitalization weighted index that includes all U.S. common stocks. It is designed to provide a representative indication of the capitalization and return for the U.S. equity market. + Although the Advisor has managed this asset class since 1982, performance information for the period prior to November 30, 1991 is not shown because such information relates only to sub-sectors or carveouts of other accounts managed by the Advisor. -------------------------------------------------------------------------------- UBS Global Asset Management 91 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Value Equity Fund COMPOSITE PERFORMANCE: U.S. VALUE EQUITY COMPOSITE JULY 1, 1998 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1998+ -2.76% 2.90% 3.46% 3.10% 1999 -6.76% -1.33% -0.24% 7.33% 2000 10.04% 16.44% 17.71% 7.01% 2001 -3.21% 2.43% 3.55% -5.59% 2002 -18.05% -13.28% -12.72% -13.63%
COMPOSITE PERFORMANCE: U.S. VALUE EQUITY COMPOSITE FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ -19.16% -14.45% -13.50% -17.24% Since inception............... -0.19% 1.20% 2.32% -0.85%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 1000 Value Index. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. + Performance is presented for July 1, 1998 through December 31, 1998. -------------------------------------------------------------------------------- 92 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Value Equity Fund COMPOSITE PEFORMANCE: U.S. VALUE EQUITY COMPOSITE JULY 1, 1998 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1998+......................... -2.76% 2.90% 3.46% 3.10% 1999.......................... -6.76% -1.33% -0.24% 7.33% 2000.......................... 10.04% 16.44% 17.71% 7.01% 2001.......................... -3.21% 2.43% 3.55% -5.59%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 1000 Value Index. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. + Performance is presented for July 1, 1998 through December 31, 1998. -------------------------------------------------------------------------------- UBS Global Asset Management 93 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Large Cap Growth Fund COMPOSITE PERFORMANCE: U.S. LARGE CAPITALIZATION GROWTH COMPOSITE OCTOBER 1, 1998 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1998+ 17.93% 24.79% 25.09% 26.74% 1999 25.91% 33.24% 34.61% 33.16% 2000 -21.06% -16.47% -15.57% -22.42% 2001 -27.67% -23.46% -22.64% -20.42% 2002 -26.67% -25.73% -25.25% -25.13%
COMPOSITE PERFORMANCE: U.S. LARGE CAPITALIZATION GROWTH COMPOSITE FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ -34.79% -31.00% -30.25% -28.75% Since inception............... -7.36% -5.98% -4.98% -6.28%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 1000 Growth Index. The Russell 1000 Growth Index measures the performance of the 1,000 largest companies in the Russell 3000 Growth Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. + Performance is presented for October 1, 1998 through December 31, 1998. -------------------------------------------------------------------------------- 94 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Large Cap Growth Fund COMPOSITE PERFORMANCE: U.S. LARGE CAPITALIZATION GROWTH COMPOSITE OCTOBER 1, 1998 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1998+......................... 17.93% 24.79% 25.09% 26.74% 1999.......................... 25.91% 33.24% 34.61% 33.16% 2000.......................... -21.06% -16.47% -15.57% -22.42% 2001.......................... -27.67% -23.46% -22.64% -20.42%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 1000 Growth Index. The Russell 1000 Growth Index measures the performance of the 1,000 largest companies in the Russell 3000 Growth Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. + Performance is presented for October 1, 1998 through December 31, 1998. -------------------------------------------------------------------------------- UBS Global Asset Management 95 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Small Cap Growth Fund COMPOSITE PERFORMANCE: U.S. SMALL CAPITALIZATION GROWTH COMPOSITE+ AUGUST 1, 1994 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1994++ 1.05% 6.91% 7.53% 3.24% 1995 16.20% 22.96% 24.65% 28.44% 1996 11.58% 18.08% 19.71% 16.50% 1997 15.71% 22.45% 24.14% 22.36% 1998 -16.06% -11.17% -9.91% -2.55% 1999 36.89% 44.86% 46.83% 21.26% 2000 16.95% 23.76% 25.47% -20.54% 2001 -16.07% -11.18% -9.92% -9.23% 2002 -21.08% -16.48% -15.79% -30.05%
COMPOSITE PERFORMANCE: U.S. SMALL CAPITALIZATION GROWTH COMPOSITE+ FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ -22.14% -17.61% -16.44% -30.61% 5 years....................... 3.08% 4.25% 5.71% -8.75% Since inception............... 9.86% 10.64% 12.18% 1.51%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 2000 Growth Index. Prior to May 1, 2000, the benchmark was the Russell 2000 Index. The Russell 2000 Growth Index is an unmanaged index composed of those companies in the Russell 2000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an index composed of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. + Certain investments in this strategy are initial public offerings and may have caused the performance of the composite to be higher than could have been achieved without such investments, which are of limited availability. ++ Performance is presented for August 1, 1994 through December 31, 1994. -------------------------------------------------------------------------------- 96 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Small Cap Growth Fund COMPOSITE PERFORMANCE: U.S. SMALL CAPITALIZATION GROWTH COMPOSITE+ AUGUST 1, 1994 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1994++........................ 1.03% 6.91% 7.53% 3.24% 1995.......................... 16.20% 22.96% 24.65% 28.44% 1996.......................... 11.58% 18.08% 19.71% 16.50% 1997.......................... 15.71% 22.45% 24.14% 22.36% 1998.......................... -16.06% -11.17% -9.91% -2.55% 1999.......................... 36.89% 44.86% 46.83% 21.26% 2000.......................... 16.95% 23.76% 25.47% -20.54% 2001.......................... -16.07% -11.18% -9.92% -9.23%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 2000 Growth Index. Prior to May 1, 2000 the benchmark was the Russell 2000 Index. The Russell 2000 Growth Index is an unmanaged index composed of those companies in the Russell 2000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an index composed of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. + Certain investments in this strategy are initial public offerings and may have caused the performance of the composite to be higher than could have been achieved without such investments, which are of limited availability. ++ Performance is presented for August 1, 1994 through December 31, 1994. -------------------------------------------------------------------------------- UBS Global Asset Management 97 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Small Cap Equity Fund COMPOSITE PERFORMANCE: U.S. SMALL CAPITALIZATION EQUITY COMPOSITE+ JANUARY 1, 1987 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1987 -4.08% 1.51% 2.94% -12.61% 1988 35.26% 43.13% 45.07% 22.61% 1989 16.69% 23.48% 25.18% 11.64% 1990 -8.05% -2.70% -1.33% -25.08% 1991 36.87% 44.84% 46.80% 44.79% 1992 15.50% 22.22% 23.91% 19.36% 1993 4.85% 10.95% 12.49% 17.43% 1994 -6.27% -0.81% 0.58% -3.18% 1995 23.03% 30.20% 31.98% 30.56% 1996 18.44% 25.34% 27.06% 18.46% 1997 22.58% 29.71% 31.49% 22.82% 1998 -11.95% -6.83% -5.51% -3.99% 1999 -4.14% 1.44% 2.86% 26.94% 2000 2.30% 8.25% 9.76% -3.18% 2001 8.79% 15.13% 16.72% 2.49% 2002 -11.05% -5.87% -5.09% -19.09%
COMPOSITE PERFORMANCE: U.S. SMALL CAPITALIZATION EQUITY COMPOSITE FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ -9.16% -3.87% -2.52% -17.96% 5 years....................... 2.69% 3.86% 5.31% 0.74% 10 years...................... 11.25% 11.88% 13.43% 9.25% Since inception............... 13.85% 14.26% 15.84% 7.91%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 2000 Index. The Russell 2000 Index is an index composed of the 2,000 smallest companies in The Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. Prior to July 1, 2000, the benchmark was the Wilshire Small Stock Index. + Certain investments in this strategy are initial public offerings and may have caused the performance of the composite to be higher than could have been achieved without such investments, which are of limited availability. -------------------------------------------------------------------------------- 98 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS U.S. Small Cap Equity Fund COMPOSITE PERFORMANCE: U.S. SMALL CAPITALIZATION EQUITY COMPOSITE+ JANUARY 1, 1987 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1987.......................... -4.08% 1.51% 2.94% -12.61% 1988.......................... 35.26% 43.13% 45.07% 22.61% 1989.......................... 16.69% 23.48% 25.18% 11.64% 1990.......................... -8.05% -2.70% -1.33% -25.08% 1991.......................... 36.87% 44.84% 46.80% 44.79% 1992.......................... 15.50% 22.22% 23.91% 19.36% 1993.......................... 4.85% 10.95% 12.49% 17.43% 1994.......................... -6.27% -0.81% 0.58% -3.18% 1995.......................... 23.03% 30.20% 31.98% 30.56% 1996.......................... 18.44% 25.34% 27.06% 18.46% 1997.......................... 22.58% 29.71% 31.49% 22.82% 1998.......................... -11.95% -6.83% -5.51% -3.99% 1999.......................... -4.14% 1.44% 2.86% 26.94% 2000.......................... 2.30% 8.25% 9.76% -3.18% 2001.......................... 8.79% 15.13% 16.72% 2.49%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Russell 2000 Index. The Russell 2000 Index is an index composed of the 2,000 smallest companies in The Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. Prior to July 1, 2000, the benchmark was the Wilshire Small Stock Index. + Certain investments in this strategy are initial public offerings and may have caused the performance of the composite to be higher than could have been achieved without such investments, which are of limited availability. -------------------------------------------------------------------------------- UBS Global Asset Management 99 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS Global Bond Fund COMPOSITE PERFORMANCE: GLOBAL BOND COMPOSITE JANUARY 1, 1982 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1982 16.68% 22.18% 23.56% 20.25% 1983 5.75% 10.73% 12.00% 5.73% 1984 0.15% 4.87% 6.07% 5.68% 1985 27.86% 33.88% 35.38% 32.29% 1986 18.15% 23.72% 25.12% 26.47% 1987 10.64% 15.85% 17.17% 18.39% 1988 0.81% 5.56% 6.77% 4.37% 1989 2.90% 7.75% 8.98% 4.34% 1990 4.59% 9.52% 10.77% 11.97% 1991 13.43% 18.77% 20.12% 15.82% 1992 2.80% 7.64% 8.87% 5.53% 1993 6.07% 11.07% 12.34% 13.28% 1994 -8.74% -4.44% -3.33% 2.33% 1995 14.45% 19.84% 21.20% 19.04% 1996 3.57% 8.45% 9.69% 3.63% 1997 -3.16% 1.40% 2.57% 0.24% 1998 7.51% 12.58% 13.86% 15.29% 1999 -10.73% -6.52% -5.44% -4.26% 2000 -3.32% 1.23% 2.30% 1.59% 2001 -6.65% -2.25% -1.13% -0.99% 2002 6.05% 11.05% 11.79% 10.93%
COMPOSITE PERFORMANCE: GLOBAL BOND COMPOSITE FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ 7.11% 12.15% 13.43% 12.25% 5 years....................... 2.28% 3.23% 4.41% 4.73% 10 years...................... 4.86% 5.34% 6.55% 5.85% Since inception............... 9.68% 9.93% 11.18% 9.92%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Salomon Smith Barney World Government Bond Index. The Salomon Smith Barney World Government Bond Index represents the broad global fixed income markets and includes debt issues of U.S. and most developed non-U.S. governments, governmental entities and supranationals. -------------------------------------------------------------------------------- 100 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS Global Bond Fund COMPOSITE PERFORMANCE: GLOBAL BOND COMPOSITE JANUARY 1, 1982 THROUGH DECEMBER 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1982.......................... 16.68% 22.18% 23.56% 20.25% 1983.......................... 5.75% 10.73% 12.00% 5.73% 1984.......................... 0.15% 4.87% 6.07% 5.68% 1985.......................... 27.86% 33.88% 35.38% 32.29% 1986.......................... 18.15% 23.72% 25.12% 26.47% 1987.......................... 10.64% 15.85% 17.17% 18.39% 1988.......................... 0.81% 5.56% 6.77% 4.37% 1989.......................... 2.90% 7.75% 8.98% 4.34% 1990.......................... 4.59% 9.52% 10.77% 11.97% 1991.......................... 13.43% 18.77% 20.12% 15.82% 1992.......................... 2.80% 7.64% 8.87% 5.53% 1993.......................... 6.07% 11.07% 12.34% 13.28% 1994.......................... -8.74% -4.44% -3.33% 2.33% 1995.......................... 14.45% 19.84% 21.20% 19.04% 1996.......................... 3.57% 8.45% 9.69% 3.63% 1997.......................... -3.16% 1.40% 2.57% 0.24% 1998.......................... 7.51% 12.58% 13.86% 15.29% 1999.......................... -10.73% -6.52% -5.44% -4.26% 2000.......................... -3.32% 1.23% 2.39% 1.59% 2001.......................... -6.65% -2.25% -1.13% -0.99%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Salomon Smith Barney World Government Bond Index. The Salomon Smith Barney World Government Bond Index represents the broad global fixed income markets and includes debt issues of U.S. and most developed non-U.S. governments, governmental entities and supranationals. -------------------------------------------------------------------------------- UBS Global Asset Management 101 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS High Yield Fund COMPOSITE PERFORMANCE: U.S. HIGH YIELD BOND COMPOSITE MAY 1, 1995 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1995+ 6.33% 11.34% 12.04% 10.50% 1996 6.92% 11.96% 13.01% 11.06% 1997 7.96% 13.04% 14.11% 12.83% 1998 2.66% 7.50% 8.52% 3.66% 1999 -0.99% 3.68% 4.66% 1.57% 2000 -8.50% -4.19% -3.28% -3.79% 2001 -1.38% 3.27% 4.25% 6.20% 2002 -10.92% -6.86% -6.34% -8.11%
COMPOSITE PERFORMANCE: U.S. HIGH YIELD BOND COMPOSITE FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ -10.97% -6.77% -5.88% -8.36% 5 years....................... 0.50% 1.43% 2.39% 0.58% Since inception............... 4.59% 5.25% 6.25% 4.43%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Merrill Lynch High Yield Cash Pay Index. The Merrill Lynch High Yield Cash Pay Index is an index of publicly placed non-convertible, coupon-bearing U.S. domestic debt with a term to maturity of at least one year. + Performance presented for May 1, 1995 through December 31, 1995. -------------------------------------------------------------------------------- 102 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS High Yield Fund COMPOSITE PEFORMANCE: U.S. HIGH YIELD BOND COMPOSITE MAY 1, 1995 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1995+......................... 6.33% 11.34% 12.04% 10.50% 1996.......................... 6.92% 11.96% 13.01% 11.06% 1997.......................... 7.96% 13.04% 14.11% 12.83% 1998.......................... 2.66% 7.50% 8.52% 3.66% 1999.......................... -0.99% 3.68% 4.66% 1.57% 2000.......................... -8.50% -4.19% -3.28% -3.79% 2001.......................... -1.38% 3.27% 4.25% 6.20%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the Merrill Lynch High Yield Cash Pay Index. The Merrill Lynch High Yield Cash Pay Index is an index of publicly placed non-convertible, coupon-bearing U.S. domestic debt with a term to maturity of at least one year. + Performance presented for May 1, 1995 through December 31, 1995. -------------------------------------------------------------------------------- UBS Global Asset Management 103 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS Real Estate Equity Fund COMPOSITE PERFORMANCE: U.S. REAL ESTATE INVESTMENT TRUSTS COMPOSITE OCTOBER 1, 1996 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) RETURN (%)(4) 1996+ 13.35% 19.94% 20.31% 8.34% 19.97% 1997 21.47% 28.54% 30.17% 33.36% 18.58% 1998 -26.75% -22.49% -21.46% 28.58% -16.90% 1999 -8.22% -2.88% -1.61% 21.04% -4.55% 2000 19.90% 26.88% 28.50% -9.10% 26.81% 2001 4.19% 10.26% 11.68% -11.88% 12.83% 2002 0.75% 6.61% 7.41% -13.40% 7.18%
COMPOSITE PERFORMANCE: U.S. REAL ESTATE INVESTMENT TRUSTS COMPOSITE FOR PERIODS ENDED JULY 31, 2002
BENCHMARK YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) RETURN (%)(4) ---- ----------------- ----------------- ---------------- ----------------------- ------------- 1 year................... 4.91% 11.02% 12.45% -23.63% 11.97% 5 years.................. 3.67% 4.85% 6.21% 0.44% 5.95% Since inception.......... 8.80% 9.86% 11.28% 6.48% 9.86%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) This benchmark is the S&P 500 Index. The S&P 500 Index is a broad based capitalization weighted index which primarily includes common stocks. (4) This benchmark is the Morgan Stanley REIT Index. The Morgan Stanley REIT Index is a total-return index comprised of the most actively traded real estate investment trusts and is designed to be a measure of real estate equity performance. + Performance presented for October 1, 1996 through December 31, 1996. -------------------------------------------------------------------------------- 104 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS Real Estate Equity Fund COMPOSITE PERFORMANCE: U.S. REAL ESTATE INVESTMENT TRUSTS COMPOSITE OCTOBER 1, 1996 THROUGH DECEMBER 31, 2001
BENCHMARK BENCHMARK YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) RETURN (%)(3) RETURN (%)(4) ---- ----------------- ----------------- ---------------- -------------- -------------- 1996+.................... 13.35% 19.94% 20.31% 8.34% 19.97% 1997..................... 21.47% 28.54% 30.17% 33.36% 18.58% 1998..................... -26.75% -22.49% -21.46% 28.58% -16.90% 1999..................... -8.22% -2.88% -1.61% 21.04% -4.55% 2000..................... 19.90% 26.88% 28.50% -9.10% 26.81% 2001..................... 4.19% 10.26% 11.68% -11.88% 12.83%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) This benchmark is the S&P 500 Index. The S&P 500 Index is a broad based capitalization weighted index which primarily includes common stocks. (4) This benchmark is the Morgan Stanley REIT Index. The Morgan Stanley REIT Index is a total-return index comprised of the most actively traded real estate investment trusts and is designed to be a measure of real estate equity performance. + Performance presented for October 1, 1996 through December 31, 1996. -------------------------------------------------------------------------------- UBS Global Asset Management 105 The UBS Funds -------------------------------------------------------------------------- Supplemental Performance Information for the Advisor of UBS Global Equity Fund COMPOSITE PERFORMANCE: GLOBAL EQUITY COMPOSITE+ JANUARY 1, 1999 THROUGH JULY 31, 2002 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NET NET GROSS BENCHMARK YEAR RETURN (%)(1) RETURN (%)(2) RETURN (%) RETURN (%)(3) 1999 6.40% 12.59% 13.99% 25.12% 2000 -5.81% 0.33% -0.33% -13.08% 2001 -10.62% -5.42% -5.42% -16.63% 2002 -19.32% -14.62% -13.98% -16.38%
COMPOSITE PERFORMANCE: GLOBAL EQUITY COMPOSITE+ FOR PERIODS ENDED JULY 31, 2002
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1 year........................ -19.56% -14.88% -13.80% -21.12% Since inception............... -4.24% -2.71% -1.49% -7.43%
COMPOSITE PERFORMANCE: GLOBAL EQUITY COMPOSITE JANUARY 1, 1999 THROUGH DECEMBER 31, 2001
YEAR NET RETURN (%)(1) NET RETURN (%)(2) GROSS RETURN (%) BENCHMARK RETURN (%)(3) ---- ----------------- ----------------- ---------------- ----------------------- 1999.......................... 6.40% 12.59% 13.99% 25.12% 2000.......................... -5.81% -0.33% 0.92% -13.08% 2001.......................... -10.62% -5.42% -4.23% -16.63%
(1) Adjusted to reflect Class A Shares' current net expenses and the maximum front-end sales charge. (2) Adjusted to reflect Class A Shares' current net expenses but not adjusted to reflect the maximum front-end sales charge. (3) The benchmark is the MSCI World Equity (Free) Index. MSCI World Equity (Free) Index is a broad-based securities index that represents the U.S. and developed international equity markets in terms of capitalization and performance. It is designed to provide a representative total return for all major stock exchanges located inside and outside the United States. + Although the Advisor has managed this asset class since 1982, performance information is not shown for the period prior to December 31, 1998 because such information relates only to sub-sectors or carveouts of other accounts managed by the Advisor. -------------------------------------------------------------------------------- 106 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- Financial Highlights The financial highlights table is intended to help you understand a Fund's financial performance for the past five years (or, if shorter, the period of the Fund's operations). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in each Fund (assuming reinvestment of all dividends and distributions). UBS GLOBAL ALLOCATION FUND, UBS GLOBAL EQUITY FUND, UBS GLOBAL BOND FUND, UBS U.S. BALANCED FUND, UBS U.S. EQUITY FUND, UBS U.S. VALUE EQUITY FUND, UBS U.S. BOND FUND AND UBS INTERNATIONAL EQUITY FUND The selected financial information in the following tables has been audited by the Funds' independent auditors, Ernst & Young, whose unqualified report thereon (the "Report") appears in the Funds' Annual Report to Shareholders dated June 30, 2002 (the "Annual Report"). Additional performance and financial data and related notes are contained in the Annual Report, which is available without charge upon request. The Funds' financial statements for the fiscal year ended June 30, 2002 and the Report are incorporated by reference into the SAI. UBS U.S. LARGE CAP GROWTH FUND, UBS U.S. SMALL CAP GROWTH FUND AND UBS HIGH YIELD FUND The UBS U.S. Large Cap Growth Fund, the UBS U.S. Small Cap Growth Fund and the UBS High Yield Fund (collectively, the "Successor Funds") are successors to the UBS Large Cap Growth Fund, the UBS Small Cap Fund and the UBS High Yield Bond Fund, respectively (collectively, the "Predecessor Funds"). Each Predecessor Fund, prior to its merger into a Successor Fund, operated as a separate portfolio of UBS Private Investor Funds, Inc., another investment company that was advised by another entity. The Predecessor Funds had fiscal years ending on December 31. On December 18, 1998, following the approval of the shareholders of each Predecessor Fund of an agreement and plan of reorganization, the UBS Large Cap Growth Fund, the UBS Small Cap Fund and the UBS High Yield Bond Fund series of UBS Private Investor Funds, Inc. were reorganized and merged into the UBS U.S. Large Cap Growth Fund, the UBS U.S. Small Cap Growth Fund and the UBS High Yield Fund series of the Trust, respectively. (These transactions are collectively referred to as the "Reorganizations".) The Successor Funds had no operations prior to the Reorganizations. The Successor Funds have fiscal years ending on June 30. The selected financial information in the following table, for the year ended June 30, 2002, has been audited by the Funds' independent auditors, Ernst & Young LLP, whose unqualified report thereon (the "Report") appears in the Fund's Annual Report to Shareholders dated June 30, 2002 (the "Annual Report"). Additional performance and financial data and related notes are contained in the Annual Report which are available without charge upon request. The Successor Funds' financial statements for the fiscal year ended June 30, 2002 and Report are incorporated by reference into the SAI. UBS U.S. SMALL CAP EQUITY FUND AND UBS U. S. REAL ESTATE EQUITY FUND No financial information is presented for these Funds as they were not publicly offered prior to the date of this prospectus. -------------------------------------------------------------------------------- UBS Global Asset Management 107 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Bond Fund -- Financial Highlights FINANCIAL HIGHLIGHTS--FISCAL YEARS ENDED JUNE 30 The following financial highlights tables are intended to help you understand each Fund's financial performance for the periods shown. In the tables, "total investment return" represents the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and distributions). This information has been derived from the Funds' and the Predecessor Funds' financial statements.
CLASS A (FORMERLY CLASS N) YEAR ENDED JUNE 30, --------------------------------------------------- 2002 2001 2000 1999 1998 ------- ------ ------ ------ ------ Net asset value, beginning of period.... $ 10.33 $ 9.99 $10.30 $10.58 $10.24 ------- ------ ------ ------ ------ Income from investment operations: Net investment income............... 0.53* 0.62* 0.58* 0.57* 0.61 Net realized and unrealized gain (loss)............... 0.32 0.41 (0.25) (0.26) 0.42 ------- ------ ------ ------ ------ Total income from investment operations......... 0.85 1.03 0.33 0.31 1.03 ------- ------ ------ ------ ------ Less distributions: Distributions from net investment income.... (0.67) (0.69) (0.64) (0.44) (0.55) Distributions from net realized gains....... -- -- -- (0.15) (0.14) ------- ------ ------ ------ ------ Total distributions...... (0.67) (0.69) (0.64) (0.59) (0.69) ------- ------ ------ ------ ------ Net asset value, end of period................. $ 10.51 $10.33 $ 9.99 $10.30 $10.58 ======= ====== ====== ====== ====== Total return+............ 8.41% 10.56% 3.29% 2.88% 10.30% ======= ====== ====== ====== ====== Ratios/Supplemental data: Net assets, end of period (in 000s).............. $18,558 $ 123 $ 1 $ 1 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.21% 0.98% 0.92% 0.86% 1.09% After expense reimbursement and earnings credits..... 0.86%++ 0.85% 0.85% 0.85% 0.85% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 4.68% 5.86% 5.87% 5.17% 5.36% After expense reimbursement and earnings credits..... 5.03% 5.99% 5.94% 5.18% 5.60% Portfolio turnover rate................... 452% 314% 170% 260% 198%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + The returns do not include sales charges. ++ The ratio of net operating expenses to average net assets for Class A was 0.85%. -------------------------------------------------------------------------------- 108 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Bond Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $10.76 ------ Income from investment operations: Net investment income........................... 0.29** Net realized and unrealized loss................ (0.22) ------ Total income from investment operations....... 0.07 ------ Less distributions: Distributions from net investment income........ (0.33) ------ Net asset value, end of period.................... $10.50 ====== Total return...................................... 0.70%@ ====== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $1,405 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 1.96%*** After expense reimbursement and earnings credits....................................... 1.60%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 3.93%*** After expense reimbursement and earnings credits....................................... 4.29%*** Portfolio turnover rate........................... 452%
* For the period November 6, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- UBS Global Asset Management 109 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Bond Fund -- Financial Highlights
CLASS C ----------------- FOR THE PERIOD ENDED JUNE 30, 2002* ----------------- Net asset value, beginning of period.............. $10.77 ------ Income from investment operations: Net investment income........................... 0.31** Net realized and unrealized loss................ (0.24) ------ Total income from investment operations....... 0.07 ------ Less distributions: Distributions from net investment income........ (0.34) ------ Net asset value, end of period.................... $10.50 ====== Total return...................................... 0.72%@ ====== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $1,143 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 1.61%*** After expense reimbursement and earnings credits....................................... 1.35%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 4.32%*** After expense reimbursement and earnings credits....................................... 4.58%*** Portfolio turnover rate........................... 452%
* For the period November 8, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 110 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Bond Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) YEAR ENDED JUNE 30, ------------------------------------------------------- 2002 2001 2000 1999 1998 ------- ------- ------- ------- ------- Net asset value, beginning of period.... $ 10.35 $ 10.00 $ 10.28 $ 10.58 $ 10.24 ------- ------- ------- ------- ------- Income from investment operations: Net investment income............... 0.56* 0.64* 0.62* 0.58* 0.53 Net realized and unrealized gain (loss)............... 0.31 0.42 (0.25) (0.26) 0.53 ------- ------- ------- ------- ------- Total income from investment operations......... 0.87 1.06 0.37 0.32 1.06 ------- ------- ------- ------- ------- Less distributions: Distributions from net investment income.... (0.69) (0.71) (0.65) (0.47) (0.58) Distributions from net realized gains....... -- -- -- (0.15) (0.14) ------- ------- ------- ------- ------- Total distributions...... (0.69) (0.71) (0.65) (0.62) (0.72) ------- ------- ------- ------- ------- Net asset value, end of period................. $ 10.53 $ 10.35 $ 10.00 $ 10.28 $ 10.58 ======= ======= ======= ======= ======= Total return+............ 8.59% 10.86% 3.74% 2.97% 10.60% ======= ======= ======= ======= ======= Ratios/Supplemental data: Net assets, end of period (in 000s).............. $59,740 $62,514 $58,121 $92,030 $38,874 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 0.80% 0.73% 0.67% 0.61% 0.84% After expense reimbursement and earnings credits..... 0.64%++ 0.60% 0.60% 0.60% 0.60% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 5.10% 6.11% 6.12% 5.42% 5.61% After expense reimbursement and earnings credits..... 5.26% 6.24% 6.19% 5.43% 5.85% Portfolio turnover rate................... 452% 314% 170% 260% 198%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + Class Y does not have sales charges. ++ The ratio of net operating expenses to average net assets for Class Y was 0.60%. -------------------------------------------------------------------------------- UBS Global Asset Management 111 The UBS Funds -------------------------------------------------------------------------- UBS High Yield Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) ----------------------------------------------------------- YEAR ENDED JUNE 30, FOR THE ------------------------------------- PERIOD ENDED 2002 2001 2000 JUNE 30, 1999(A) --------- --------- --------- ----------------- Net asset value, beginning of period.... $ 7.87 $ 9.18 $ 9.95 $ 9.98 -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................. 0.76* 0.85* 0.90* 0.42* Net realized and unrealized loss...... (0.96) (1.08) (0.90) (0.15) -------- -------- -------- -------- Total income (loss) from investment operations........................ (0.20) (0.23) -- 0.27 -------- -------- -------- -------- Less distributions: Distributions from net investment income.............................. (1.31) (1.08) (0.70) (0.30) Distributions from net realized gains............................... -- -- (0.07) -- -------- -------- -------- -------- Total distributions................. (1.31) (1.08) (0.77) (0.30) -------- -------- -------- -------- Net asset value, end of period.......... $ 6.36 $ 7.87 $ 9.18 $ 9.95 ======== ======== ======== ======== Total return+........................... (3.01)% (2.28)% (0.13)% 2.71%# ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 65,832 $ 1 $ 1 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.26% 1.14% 1.11% 1.08%** After expense reimbursement and earnings credits.................... 0.95% 0.97%++ 0.95% 0.95%** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 10.71% 9.65% 9.06% 8.29%** After expense reimbursement and earnings credits.................... 11.02% 9.82% 9.22% 8.42%** Portfolio turnover rate................. 120% 87% 73% 77%
(a) For the period December 31, 1998 (commencement of investment operations) through June 30, 1999. * The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized. # The return is non-annualized. + The returns do not include sales charges. ++ The ratio of net operating expenses to average net assets for Class A was 0.95%. -------------------------------------------------------------------------------- 112 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS High Yield Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 7.02 -------- Income (loss) from investment operations: Net investment income........................... 0.45** Net realized and unrealized loss................ (0.61) -------- Total loss from investment operations......... (0.16) -------- Less distributions: Distributions from net investment income........ (0.51) -------- Net asset value, end of period.................... $ 6.35 ======== Total return...................................... (2.70)%@ ======== Ratios/Supplemental Data: Net assets, end of period (in 000s)............... $ 15,692 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.05%*** After expense reimbursement and earnings credits....................................... 1.70%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 9.88%*** After expense reimbursement and earnings credits....................................... 10.23%*** Portfolio turnover rate........................... 120%
* For the period November 7, 2001 (commencement of issuance) June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 113 The UBS Funds -------------------------------------------------------------------------- UBS High Yield Fund -- Financial Highlights
CLASS C --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 7.02 -------- Income (loss) from investment operations: Net investment income........................... 0.46** Net realized and unrealized loss................ (0.61) -------- Total loss from investment operations......... (0.15) -------- Less distributions: Distributions from net investment income........ (0.52) -------- Net asset value, end of period.................... $ 6.35 ======== Total return...................................... (2.54)%@ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 17,947 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 1.79%*** After expense reimbursement and earnings credits....................................... 1.45%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 10.15%*** After expense reimbursement and earnings credits....................................... 10.49%*** Portfolio turnover rate........................... 120%
* For the period November 7, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 114 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS High Yield Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) --------------------------------------------------------------------- SIX MONTHS YEAR ENDED JUNE 30, ENDED YEAR ENDED ------------------------------------- JUNE 30, DECEMBER 31, 2002 2001 2000 1999(A) 1998(B) --------- --------- --------- ---------- ------------ Net asset value, beginning of period.... $ 7.90 $ 9.19 $ 9.96 $ 9.98 $ 10.05 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................. 0.81* 0.88* 0.91* 0.44* 7.30 Net realized and unrealized gain (loss).............................. (1.01) (1.08) (0.90) (0.15) 0.02 -------- -------- -------- -------- -------- Total income (loss) from investment operations........................ (0.20) (0.20) 0.01 0.29 7.32 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.............................. (1.32) (1.09) (0.71) (0.31) (7.33) Distributions from net realized gains............................... -- -- (0.07) -- (0.06) -------- -------- -------- -------- -------- Total distributions................. (1.32) (1.09) (0.78) (0.31) (7.39) -------- -------- -------- -------- -------- Net asset value, end of period.......... $ 6.38 $ 7.90 $ 9.19 $ 9.96 $ 9.98 ======== ======== ======== ======== ======== Total return+........................... (2.98)% (1.83)% 0.02% 2.91%# 7.75% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 40,120 $ 54,560 $ 50,845 $ 60,044 $ 34,900 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.02% 0.89% 0.86% 0.83%*** 1.59% After expense reimbursement and earnings credits.................... 0.70% 0.72%++ 0.70% 0.70%*** 0.89% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 10.77% 9.90% 9.31% 8.54%*** 7.38% After expense reimbursement and earnings credits.................... 11.09% 10.07% 9.47% 8.67%*** 8.08% Portfolio turnover rate................. 120% 87% 73% 77% N/A
* The net investment income per share data was determined by using average shares outstanding throughout the period. # The total return is non-annualized. + Class Y does not have sales charges. ++ The ratio of net operating expenses to average net assets for Class Y was 0.70%. (a) Reflects the Fund's change in fiscal year end from December 31 to June 30. (b) Reflects 10 for 1 share split effective December 9, 1998. N/A = Information is not available for periods prior to reorganization. -------------------------------------------------------------------------- UBS Global Asset Management 115 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Balanced Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) YEAR ENDED JUNE 30, ------------------------------------------------------ 2002 2001 2000 1999 1998 ------- ------- ------- ------ ------- Net asset value, beginning of period.... $ 9.38 $ 8.57 $ 9.38 $12.27 $ 12.53 ------- ------- ------- ------ ------- Income (loss) from investment operations: Net investment income................. 0.20* 0.28 0.23* 0.29* 0.47* Net realized and unrealized gain (loss).............................. (0.25) 0.89 (0.74) 0.18 0.94 ------- ------- ------- ------ ------- Total income (loss) from investment operations........................ (0.05) 1.17 (0.51) 0.47 1.41 ------- ------- ------- ------ ------- Less distributions: Distributions from net investment income.............................. (0.29) (0.36) (0.24) (0.71) (0.73) Distributions from net realized gains............................... -- -- (0.06) (2.65) (0.94) ------- ------- ------- ------ ------- Total distributions................. (0.29) (0.36) (0.30) (3.36) (1.67) ------- ------- ------- ------ ------- Net asset value, end of period.......... $ 9.04 $ 9.38 $ 8.57 $ 9.38 $ 12.27 ======= ======= ======= ====== ======= Total return+........................... (0.60)% 13.89% (5.39)% 4.17% 12.15% ======= ======= ======= ====== ======= Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 2,583 $ 1 $ 1 $ 1 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.57% 1.39% 1.26% 1.21% 1.06% After expense reimbursement and earnings credits.................... 1.05% 1.05% 1.06%++ 1.05% 1.05% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 1.63% 2.81% 2.55% 2.75% 3.63% After expense reimbursement and earnings credits.................... 2.15% 3.15% 2.75% 2.91% 3.64% Portfolio turnover rate................. 147% 159% 96% 113% 194%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + The returns do not include sales charges. ++ The ratio of net operating expenses to average net assets for Class A was 1.05%. -------------------------------------------------------------------------------- 116 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Balanced Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.... $ 9.39 -------- Income (loss) from investment operations: Net investment income................. 0.08** -------- Net realized and unrealized loss...... (0.19) -------- Total loss from investment operations......................... (0.11) -------- Less distributions: Distributions from net investment income.............................. (0.28) -------- Net asset value, end of period........ $ 9.00 ======== Total return............................ (1.18)%@ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 913 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 2.41%*** After expense reimbursement and earnings credits.................... 1.80%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 0.69%*** After expense reimbursement and earnings credits.................... 1.30%*** Portfolio turnover rate................. 147%
* For the period November 7, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 117 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Balanced Fund -- Financial Highlights
CLASS C ----------------- FOR THE PERIOD ENDED JUNE 30, 2002* ----------------- Net asset value, beginning of period.... $ 9.36 ------- Income (loss) from investment operations: Net investment income................. 0.08** ------- Net realized and unrealized loss...... (0.15) ------- Total loss from investment operations......................... (0.07) ------- Less distributions: Distributions from net investment income.............................. (0.28) ------- Net asset value, end of period........ $ 9.01 ======= Total return............................ (0.76)%@ ======= Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 402 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 2.37%*** After expense reimbursement and earnings credits.................... 1.80%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 0.75%*** After expense reimbursement and earnings credits.................... 1.32%*** Portfolio turnover rate................. 147%
* For the period November 6, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 118 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Balanced Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) YEAR ENDED JUNE 30, ------------------------------------------------------- 2002 2001 2000 1999 1998 ------- ------- ------- ------- ------- Net asset value, beginning of period.... $ 9.41 $ 8.59 $ 9.38 $ 12.24 $ 12.53 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income................. 0.24* 0.31 0.26* 0.34* 0.49* Net realized and unrealized gain (loss).............................. (0.27) 0.89 (0.74) 0.18 0.93 ------- ------- ------- ------- ------- Total income (loss) from investment operations........................ (0.03) 1.20 (0.48) 0.52 1.42 ------- ------- ------- ------- ------- Less distributions: Distributions from net investment income.............................. (0.29) (0.38) (0.25) (0.73) (0.77) Distributions from net realized gains............................... -- -- (0.06) (2.65) (0.94) ------- ------- ------- ------- ------- Total distributions................. (0.29) (0.38) (0.31) (3.38) (1.71) ------- ------- ------- ------- ------- Net asset value, end of period.......... $ 9.09 $ 9.41 $ 8.59 $ 9.38 $ 12.24 ======= ======= ======= ======= ======= Total return+........................... (0.36)% 14.18% (5.07)% 4.74% 12.19% ======= ======= ======= ======= ======= Ratios/Supplemental data: Net assets, end of period (in 000s)..... $21,771 $25,719 $11,136 $37,603 $80,556 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.24% 1.14% 1.01% 0.96% 0.81% After expense reimbursement and earnings credits.................... 0.80% 0.80% 0.81%++ 0.80% 0.80% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 2.17% 3.06% 2.80% 3.00% 3.88% After expense reimbursement and earnings credits.................... 2.61% 3.40% 3.00% 3.16% 3.89% Portfolio turnover rate................. 147% 159% 96% 113% 194%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + Class Y does not have sales charges. ++ The ratio of net operating expenses to average net assets for Class Y was 0.80%. -------------------------------------------------------------------------- UBS Global Asset Management 119 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Equity Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) YEAR ENDED JUNE 30, ----------------------------------------------------- 2002 2001 2000 1999 1998 ------- ------ -------- ------ ------ Net asset value, beginning of period.... $ 15.97 $15.97 $ 21.39 $19.88 $17.64 ------- ------ -------- ------ ------ Income (loss) from investment operations: Net investment income............... 0.08* 0.08* 0.13* 0.08* 0.15 Net realized and unrealized gain (loss)............... (1.38) 1.56 (3.75) 2.67 3.37 ------- ------ -------- ------ ------ Total income (loss) from investment operations......... (1.30) 1.64 (3.62) 2.75 3.52 ------- ------ -------- ------ ------ Less distributions: Distributions from net investment income.... (0.04) (0.29) (0.03) (0.12) (0.15) Distributions from net realized gains....... (0.69) (1.35) (1.77) (1.12) (1.13) ------- ------ -------- ------ ------ Total distributions...... (0.73) (1.64) (1.80) (1.24) (1.28) ------- ------ -------- ------ ------ Net asset value, end of period................. $ 13.94 $15.97 $ 15.97 $21.39 $19.88 ======= ====== ======== ====== ====== Total return+............ (8.41)% 10.63% (17.24)% 14.75% 21.10% ======= ====== ======== ====== ====== Ratios/Supplemental data: Net assets, end of period (in 000s).............. $13,698 $7,067 $ 7,191 $7,563 $ 268 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.19% 1.17% 1.09% 1.05% 1.05% After expense reimbursement and earnings credits..... 1.05% 1.05% 1.05% 1.05% 1.05% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 0.40% 0.37% 0.64% 0.57% 0.87% After expense reimbursement and earnings credits..... 0.54% 0.49% 0.68% 0.57% 0.87% Portfolio turnover rate................... 60% 54% 55% 48% 42%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + The returns do not include sales charges. -------------------------------------------------------------------------------- 120 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Equity Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 14.76 -------- Income (loss) from investment operations: Net investment income........................... 0.06** Net realized and unrealized loss................ (0.22) -------- Total loss from investment operations......... (0.16) -------- Less distributions: Distributions from net investment income........ (0.04) Distributions from net realized gains........... (0.69) -------- Total distributions........................... (0.73) -------- Net asset value, end of period.................... $ 13.87 ======== Total return...................................... (1.39)%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 223 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 1.99%*** After expense reimbursement and earnings credits....................................... 1.80%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 0.46%*** After expense reimbursement and earnings credits....................................... 0.65%*** Portfolio turnover rate........................... 60%
* For the period November 5, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 121 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Equity Fund -- Financial Highlights
CLASS C --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 15.20 ------- Income (loss) from investment operations: Net investment income........................... 0.07** Net realized and unrealized loss................ (0.66) ------- Total loss from investment operations......... (0.59) ------- Less distributions: Distributions from net investment income........ (0.04) Distributions from net realized gains........... (0.69) ------- Total distributions........................... (0.73) ------- Net asset value, end of period.................... $ 13.88 ======= Total return...................................... (4.18)%++ ======= Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 70 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 1.97%*** After expense reimbursement and earnings credits....................................... 1.80%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 0.56%*** After expense reimbursement and earnings credits....................................... 0.73%*** Portfolio turnover rate........................... 60%
* For the period November 13, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 122 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Equity Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 16.07 $ 16.07 $ 21.48 $ 19.91 $ 17.64 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income............... 0.12* 0.12* 0.16* 0.17* 0.19 Net realized and unrealized gain (loss)............... (1.39) 1.57 (3.75) 2.67 3.39 -------- -------- -------- -------- -------- Total income (loss) from investment operations......... (1.27) 1.69 (3.59) 2.84 3.58 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.... (0.04) (0.34) (0.05) (0.15) (0.18) Distributions from net realized gains....... (0.69) (1.35) (1.77) (1.12) (1.13) -------- -------- -------- -------- -------- Total distributions...... (0.73) (1.69) (1.82) (1.27) (1.31) -------- -------- -------- -------- -------- Net asset value, end of period................. $ 14.07 $ 16.07 $ 16.07 $ 21.48 $ 19.91 ======== ======== ======== ======== ======== Total return+............ (8.17)% 10.88% (17.00)% 15.22% 21.48% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s).............. $ 87,710 $125,997 $167,870 $713,321 $605,768 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 0.93% 0.92% 0.84% 0.80% 0.80% After expense reimbursement and earnings credits..... 0.80% 0.80% 0.80% 0.80% 0.80% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 0.66% 0.62% 0.89% 0.82% 1.12% After expense reimbursement and earnings credits..... 0.79% 0.74% 0.93% 0.82% 1.12% Portfolio turnover rate................... 60% 54% 55% 48% 42%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + Class Y does not have sales charges. -------------------------------------------------------------------------- UBS Global Asset Management 123 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Value Equity Fund -- Financial Highlights
CLASS A -------------- FOR THE PERIOD ENDED JUNE 30, 2002* -------------- Net asset value, beginning of period.............. $ 9.96 ----------- Income (loss) from investment operations: Net investment income........................... 0.05** Net realized and unrealized loss................ (0.64) ----------- Total loss from investment operations......... (0.59) ----------- Net asset value, end of period.................... $ 9.37 =========== Total return...................................... (5.92)%++ =========== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 751 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 3.82%*** After expense reimbursement and earnings credits....................................... 1.10%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (1.85)%*** After expense reimbursement and earnings credits....................................... 0.87%*** Portfolio turnover rate........................... 39%
* For the period December 9, 2001 (commencement of issuance and investment operations) for Class A through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The returns do not include sales charges and are non-annualized. -------------------------------------------------------------------------------- 124 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Value Equity Fund -- Financial Highlights
CLASS B -------------- FOR THE PERIOD ENDED JUNE 30, 2002* -------------- Net asset value, beginning of period.............. $ 9.62 ----------- Income (loss) from investment operations: Net investment income........................... 0.01** Net realized and unrealized loss................ (0.31) ----------- Total loss from investment operations......... (0.30) ----------- Net asset value, end of period.................... $ 9.32 =========== Total return...................................... (3.12)%++ =========== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 301 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 4.66%*** After expense reimbursement and earnings credits....................................... 1.85%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (2.72)%*** After expense reimbursement and earnings credits....................................... 0.09%*** Portfolio turnover rate........................... 39%
* For the period November 8, 2001 (commencement of issuance and investment operations) for Class B through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The returns do not include sales charges and are non-annualized. -------------------------------------------------------------------------------- UBS Global Asset Management 125 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Value Equity Fund -- Financial Highlights
CLASS C -------------- FOR THE PERIOD ENDED JUNE 30, 2002* -------------- Net asset value, beginning of period.............. $ 9.73 ----------- Income (loss) from investment operations: Net investment income........................... --** Net realized and unrealized loss................ (0.40) ----------- Total loss from investment operations......... (0.40) ----------- Net asset value, end of period.................... $ 9.33 =========== Total return...................................... (4.11)%++ =========== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 234 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 4.58%*** After expense reimbursement and earnings credits....................................... 1.85%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (2.68)%*** After expense reimbursement and earnings credits....................................... 0.05%*** Portfolio turnover rate........................... 39%
* For the period December 12, 2001 (commencement of issuance and investment operations) for Class C through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 126 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Value Equity Fund -- Financial Highlights (continued)
CLASS Y ----------------- FOR THE PERIOD ENDED JUNE 30, 2002* ----------------- Net asset value, beginning of period.............. $ 10.00 ------------ Income (loss) from investment operations: Net investment income........................... 0.11** Net realized and unrealized loss................ (0.73) ------------ Total loss from investment operations......... (0.62) ------------ Net asset value, end of period.................... $ 9.38 ============ Total return+..................................... (6.20)% ============ Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 2,819 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 3.15%*** After expense reimbursement and earnings credits....................................... 0.85%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (1.17)%*** After expense reimbursement and earnings credits....................................... 1.13%*** Portfolio turnover rate........................... 39%
* For the period June 29, 2001 (commencement of issuance and investment operations) for Class Y through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. + Class Y does not have sales charges. -------------------------------------------------------------------------------- UBS Global Asset Management 127 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Large Cap Growth Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) ----------------------------------------------------------- YEAR ENDED JUNE 30, FOR THE ------------------------------------- PERIOD ENDED 2002 2001 2000 JUNE 30, 1999(A) --------- --------- --------- ----------------- Net asset value, beginning of period.... $ 8.90 $ 15.20 $ 13.88 $ 11.84 -------- -------- -------- -------- Income (loss) from investment operations: Net investment loss................... (0.02)* (0.07) (0.02)* (0.01) Net realized and unrealized gain (loss).............................. (2.45) (4.32) 2.29 2.05 -------- -------- -------- -------- Total income (loss) from investment operations........................ (2.47) (4.39) 2.27 2.04 -------- -------- -------- -------- Less distributions: Distributions from net realized gains............................... (0.05) (1.91) (0.95) -- -------- -------- -------- -------- Net asset value, end of period.......... $ 6.38 $ 8.90 $ 15.20 $ 13.88 ======== ======== ======== ======== Total return+........................... (27.89)% (31.59)% 17.18% 17.23%# ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 1,155 $ 1 $ 1 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 2.51% 1.59% 2.11% 2.63%** After expense reimbursement and earnings credits.................... 1.05% 1.05% 1.05% 1.05%** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits.................... (1.71)% (0.91)% (1.22)% (1.51)%** After expense reimbursement and earnings credits.................... (0.25)% (0.37)% (0.16)% 0.07%** Portfolio turnover rate................. 93% 56% 86% 51%
(a) For the period December 31, 1998 (commencement of operations) through June 30, 1999. * The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized. # The return is non-annualized. + The returns do not include sales charges. -------------------------------------------------------------------------------- 128 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Large Cap Growth Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 7.86 -------- Income (loss) from investment operations: Net investment loss............................. (0.05)** Net realized and unrealized loss................ (1.40) -------- Total loss from investment operations......... (1.45) -------- Less distributions: Distributions from net realized gains........... (0.05) -------- Net asset value, end of period.................... $ 6.36 ======== Total return...................................... (18.61)%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 115 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 3.06%*** After expense reimbursement and earnings credits....................................... 1.80%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (2.28)%*** After expense reimbursement and earnings credits....................................... (1.02)%*** Portfolio turnover rate........................... 93%
* For the period November 7, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 129 The UBS Funds -------------------------------------------------------------------------- UBS. U.S. Large Cap Growth Fund -- Financial Highlights
CLASS C --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 8.18 -------- Income (loss) from investment operations: Net investment loss............................. (0.05)** Net realized and unrealized loss................ (1.73) -------- Total loss from investment operations......... (1.78) -------- Less distributions: Distributions from net realized gains........... (0.05) -------- Net asset value, end of period.................... $ 6.35 ======== Total return...................................... (21.91)%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 572 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 3.22%*** After expense reimbursement and earnings credits....................................... 1.80%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (2.44)%*** After expense reimbursement and earnings credits....................................... (1.02)%*** Portfolio turnover rate........................... 93%
* For the period November 19, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 130 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Large Cap Growth Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) ----------------------------------------------------------------------- SIX MONTHS YEAR ENDED JUNE 30, ENDED YEAR ENDED ------------------------------------- JUNE 30, DECEMBER 31, 2002 2001 2000 1999(A) 1998(B) --------- --------- --------- ---------- ------------- Net asset value, beginning of period.... $ 8.99 $ 15.28 $ 13.91 $ 11.84 $ 9.92 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income (loss)............... --* (0.01) 0.03* 0.02 0.06 Net realized and unrealized gain (loss)............... (2.47) (4.37) 2.29 2.05 2.38 -------- -------- -------- -------- -------- Total income (loss) from investment operations......... (2.47) (4.38) 2.32 2.07 2.44 ======== ======== ======== ======== ======== Less distributions: Distributions from net investment income.... (0.05) -- -- -- (0.06) Distributions from net realized gains....... -- (1.91) (0.95) -- (0.46) -------- -------- -------- -------- -------- Total distributions...... (0.05) (1.91) (0.95) -- (0.52) -------- -------- -------- -------- -------- Net asset value, end of period................. $ 6.47 $ 8.99 $ 15.28 $ 13.91 $ 11.84 ======== ======== ======== ======== ======== Total return+............ (27.61)% (31.33)% 17.52% 17.48%# 24.90% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s).............. $ 2,291 $ 3,299 $ 5,885 $ 2,947 $ 4,147 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 2.14% 1.34% 1.86% 2.38%** 2.76% After expense reimbursement and earnings credits..... 0.80% 0.80% 0.80% 0.80%** 0.99% Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits..... (1.39)% (0.66)% (0.97)% (1.26)%** (1.40)% After expense reimbursement and earnings credits..... (0.05)% (0.12)% 0.09% 0.32%** 0.37% Portfolio turnover rate................... 93% 56% 86% 51% N/A
* The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized. # The return is non-annualized. + Class Y does not have sales charges. (a) Reflects the Fund's change in fiscal year end from December 31 to June 30. (b) Reflects 10 for 1 share split effective December 9, 1998. N/A = Information is not available for periods prior to reorganization. -------------------------------------------------------------------------- UBS Global Asset Management 131 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Small Cap Growth Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) ----------------------------------------------------------- YEAR ENDED JUNE 30, FOR THE ------------------------------------- PERIOD ENDED 2002 2001 2000 JUNE 30, 1999(A) --------- --------- --------- ----------------- Net asset value, beginning of period.... $ 11.76 $ 16.20 $ 9.16 $ 8.80 -------- -------- -------- -------- Income (loss) from investment operations: Net investment loss................... (0.11)* (0.09) (0.08)* (0.04) Net realized and unrealized gain (loss).............................. (1.42) (1.52) 7.12 0.40 -------- -------- -------- -------- Total income (loss) from investment operations........................ (1.53) (1.61) 7.04 0.36 -------- -------- -------- -------- Less distributions: Distributions from net realized gains............................... (0.44) (2.83) -- -- -------- -------- -------- -------- Net asset value, end of period.......... $ 9.79 $ 11.76 $ 16.20 $ 9.16 ======== ======== ======== ======== Total return+........................... (13.18)% (11.00)% 76.86% 4.09%# ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 1,789 $ 2 $ 2 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.69% 1.48% 1.56% 1.57%** After expense reimbursement and earnings credits.................... 1.40% 1.40% 1.40% 1.40%** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits.................... (1.35)% (0.87)% (1.01)% (0.87)%** After expense reimbursement and earnings credits.................... (1.06)% (0.79)% (0.85)% (0.70)%** Portfolio turnover rate................. 71% 93% 104% 71%
(a) For the period December 31, 1998 (commencement of investment operations) through June 30, 1999. * The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized. # The return is non-annualized. + The returns do not include sales charges. -------------------------------------------------------------------------------- 132 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Small Cap Growth Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 10.18 -------- Income (loss) from investment operations: Net investment loss............................. (0.11)** Net realized and unrealized gain................ 0.12 -------- Total income from investment operations....... 0.01 -------- Less distributions: Distributions from net realized gains........... (0.44) -------- Net asset value, end of period.................... $ 9.75 ======== Total return...................................... (0.11)%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 656 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.46%*** After expense reimbursement and earnings credits....................................... 2.15%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (1.93)%*** After expense reimbursement and earnings credits....................................... (1.62)%*** Portfolio turnover rate........................... 71%
* For the period November 7, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 133 The UBS Funds -------------------------------------------------------------------------- UBS U.S. Small Cap Growth Fund -- Financial Highlights
CLASS C --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 10.37 -------- Income (loss) from investment operations: Net investment loss............................. (0.10)** Net realized and unrealized loss................ (0.09) -------- Total loss from investment operations......... (0.19) -------- Less distributions: Distributions from net realized gains........... (0.44) -------- Net asset value, end of period.................... $ 9.74 ======== Total return...................................... (2.04)%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 410 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.46%*** After expense reimbursement and earnings credits....................................... 2.15%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits....................................... (1.90)%*** After expense reimbursement and earnings credits....................................... (1.59)%*** Portfolio turnover rate........................... 71%
* For the period November 19, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 134 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS U.S. Small Cap Growth Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) --------------------------------------------------------------------- SIX MONTHS YEAR ENDED JUNE 30, ENDED YEAR ENDED ------------------------------------- JUNE 30, DECEMBER 31, 2002 2001 2000 1999(A) 1998(B) --------- --------- --------- ---------- ------------ Net asset value, beginning of period.... $ 11.86 $ 16.27 $ 9.18 $ 8.80 $ 9.44 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment loss................... (0.09)* (0.07) (0.03)* (0.02) (0.02) Net realized and unrealized gain (loss).............................. (1.41) (1.51) 7.12 0.40 (0.57) -------- -------- -------- -------- -------- Total income (loss) from investment operations........................ (1.50) (1.58) 7.09 0.38 (0.59) -------- -------- -------- -------- -------- Less distributions: Distributions from net realized gains............................... (0.44) (2.83) -- -- (0.05) -------- -------- -------- -------- -------- Net asset value, end of period.......... $ 9.92 $ 11.86 $ 16.27 $ 9.18 $ 8.80 ======== ======== ======== ======== ======== Total return+........................... (12.90)% (10.74)% 77.23% 4.32%# (6.70)% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 36,318 $ 44,057 $ 50,975 $ 35,211 $ 22,607 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.41% 1.23% 1.31% 1.32%** 1.69% After expense reimbursement and earnings credits.................... 1.15% 1.15% 1.15% 1.15%** 1.20% Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits.................... (1.07)% (0.62)% (0.76)% (0.62)%** (0.76)% After expense reimbursement and earnings credits.................... (0.81)% (0.54)% (0.60)% (0.45)%** (0.27)% Portfolio turnover rate................. 71% 93% 104% 71% N/A
* The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized. # The return is non-annualized. + Class Y does not have sales charges. (a) Reflects the Fund's change in fiscal year end from December 31 to June 30. (b) Reflects 10 for 1 share split effective December 9, 1998. N/A = Information is not available for periods prior to reorganization. -------------------------------------------------------------------------- UBS Global Asset Management 135 The UBS Funds -------------------------------------------------------------------------- UBS Global Allocation Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 11.10 $ 11.20 $ 11.99 $ 12.75 $ 13.13 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................. 0.10* 0.22 0.19* 0.27 0.63 Net realized and unrealized gain (loss).............................. 0.40 0.31 (0.30) 0.25 0.32 -------- -------- -------- -------- -------- Total income (loss) from investment operations........................ 0.50 0.53 (0.11) 0.52 0.95 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.............................. (0.19) -- (0.16) (0.44) (0.63) Distributions from net realized gains............................... (0.81) (0.63) (0.52) (0.84) (0.70) -------- -------- -------- -------- -------- Total distributions................. (1.00) (0.63) (0.68) (1.28) (1.33) -------- -------- -------- -------- -------- Net asset value, end of period.......... $ 10.60 $ 11.10 $ 11.20 $ 11.99 $ 12.75 ======== ======== ======== ======== ======== Total return+........................... 4.84% 4.95% (0.80)% 4.47% 7.90% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 6,914 $ 237 $ 202 $ 1,576 $ 1,163 Ratio of expenses to average net assets................................ 1.35% 1.30% 1.24% 1.21% 1.19% Ratio of net investment income to average net assets.................... 0.98% 1.52% 1.74% 1.98% 2.45% Portfolio turnover rate................. 116% 115% 98% 105% 88%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + The returns do not include sales charges. -------------------------------------------------------------------------------- 136 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS Global Allocation Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 11.21 -------- Income from investment operations: Net investment income........................... 0.12** Net realized and unrealized gain................ 0.19 -------- Total income from investment operations....... 0.31 -------- Less distributions: Distributions from net investment income........ (0.19) Distributions from net realized gains........... (0.81) -------- Total distributions........................... (1.00) -------- Net asset value, end of period.................... $ 10.52 ======== Total return...................................... 3.00%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 1,570 Ratio of gross expenses to average net assets..... 2.10%*** Ratio of net investment income to average net assets.......................................... 2.17%*** Portfolio turnover rate........................... 116%
* For the period December 13, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 137 The UBS Funds -------------------------------------------------------------------------- UBS Global Allocation Fund -- Financial Highlights
CLASS C --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 11.10 -------- Income from investment operations: Net investment income........................... 0.11** Net realized and unrealized gain................ 0.33 -------- Total income from investment operations....... 0.44 -------- Less distributions: Distributions from net investment income........ (0.19) Distributions from net realized gains........... (0.81) -------- Total distributions........................... (1.00) -------- Net asset value, end of period.................... $ 10.54 ======== Total return...................................... 4.23%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 1,525 Ratio of gross expenses to average net assets..... 2.10%*** Ratio of net investment income to average net assets.......................................... 1.77%*** Portfolio turnover rate........................... 116%
* For the period November 22, 2001 (commencement of issuance) through December 31, 2001. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 138 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS Global Allocation Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 11.18 $ 11.25 $ 12.02 $ 12.77 $ 13.13 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................. 0.13* 0.25 0.23* 0.30 0.37 Net realized and unrealized gain (loss).............................. 0.38 0.31 (0.30) 0.25 0.62 -------- -------- -------- -------- -------- Total income (loss) from investment operations........................ 0.51 0.56 (0.07) 0.55 0.99 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.............................. (0.19) -- (0.18) (0.46) (0.65) Distributions from net realized gains............................... (0.81) (0.63) (0.52) (0.84) (0.70) -------- -------- -------- -------- -------- Total distributions................. (1.00) (0.63) (0.70) (1.30) (1.35) -------- -------- -------- -------- -------- Net asset value, end of period.......... $ 10.69 $ 11.18 $ 11.25 $ 12.02 $ 12.77 ======== ======== ======== ======== ======== Total return+........................... 4.91% 5.20% (0.48)% 4.76% 8.28% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $165,630 $156,130 $284,229 $469,080 $667,745 Ratio of gross expenses to average net assets................................ 1.10% 1.05% 0.99% 0.96% 0.94% Ratio of net investment income to average net assets.................... 1.24% 1.77% 1.99% 2.23% 2.70% Portfolio turnover rate................. 116% 115% 98% 105% 88%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + Class Y does not have sales charges. -------------------------------------------------------------------------- UBS Global Asset Management 139 The UBS Funds -------------------------------------------------------------------------- UBS Global Equity Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) YEAR ENDED JUNE 30, ---------------------------------------------------- 2002 2001 2000 1999 1998 ------- ------- ------ ------ ------ Net asset value, beginning of period.... $ 10.61 $ 12.44 $13.40 $12.53 $12.76 ------- ------- ------ ------ ------ Income (loss) from investment operations: Net investment income............... 0.04* 0.07 0.04* 0.10* 0.13 Net realized and unrealized gain (loss)............... (0.88) (0.56) 0.27 1.09 0.82 ------- ------- ------ ------ ------ Total income (loss) from investment operations......... (0.84) (0.49) 0.31 1.19 0.95 ------- ------- ------ ------ ------ Less distributions: Distributions from net investment income.... (0.06) (0.02) (0.06) (0.14) (0.13) Distributions from net realized gains....... (0.34) (1.32) (1.21) (0.18) (1.05) ------- ------- ------ ------ ------ Total distributions...... (0.40) (1.34) (1.27) (0.32) (1.18) ------- ------- ------ ------ ------ Net asset value, end of period................. $ 9.37 $ 10.61 $12.44 $13.40 $12.53 ======= ======= ====== ====== ====== Total return+............ (8.05)% (4.45)% 2.49% 9.80% 8.60% ======= ======= ====== ====== ====== Ratios/Supplemental data: Net assets, end of period (in 000s).............. $15,173 $ 302 $ 224 $ 220 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.47% 1.37% 1.33% 1.30% 1.27% After expense reimbursement and earnings credits..... 1.25% 1.25% 1.25% 1.25% 1.25% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 0.17% 0.65% 0.23% 0.80% 1.04% After expense reimbursement and earnings credits..... 0.39% 0.77% 0.31% 0.85% 1.06% Portfolio turnover rate................... 117% 81% 111% 86% 46%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + The returns do not include sales charges. -------------------------------------------------------------------------------- 140 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS Global Equity Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 10.17 -------- Income (loss) from investment operations: Net investment income........................... 0.05** Net realized and unrealized loss................ (0.48) -------- Total loss from investment operations......... (0.43) -------- Less distributions: Distributions from net investment income........ (0.06) Distributions from net realized gains........... (0.34) -------- Total distributions........................... (0.40) -------- Net asset value, end of period.................... $ 9.34 ======== Total return...................................... (4.38)%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 418 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.25%*** After expense reimbursement and earnings credits....................................... 2.00%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 0.72%*** After expense reimbursement and earnings credits....................................... 0.97%*** Portfolio turnover rate........................... 117%
* For the period December 11, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 141 The UBS Funds -------------------------------------------------------------------------- UBS Global Equity Fund -- Financial Highlights
CLASS C --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 10.18 -------- Income (loss) from investment operations: Net investment income........................... 0.04** Net realized and unrealized loss................ (0.49) -------- Total loss from investment operations......... (0.45) -------- Less distributions: Distributions from net investment income........ (0.06) Distributions from net realized gains........... (0.34) -------- Total distributions........................... (0.40) -------- Net asset value, end of period.................... $ 9.33 ======== Total return...................................... (4.57)%++ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 351 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.23%*** After expense reimbursement and earnings credits....................................... 2.00%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 0.55%*** After expense reimbursement and earnings credits....................................... 0.78%*** Portfolio turnover rate........................... 117%
* For the period November 27, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. ++ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 142 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS Global Equity Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 10.68 $ 12.47 $ 13.42 $ 12.54 $ 12.76 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income............... 0.06* 0.09 0.07* 0.14* 0.22 Net realized and unrealized gain (loss)............... (0.87) (0.54) 0.27 1.09 0.78 -------- -------- -------- -------- -------- Total income (loss) from investment operations......... (0.81) (0.45) 0.34 1.23 1.00 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.... (0.06) (0.02) (0.08) (0.17) (0.17) Distributions from net realized gains....... (0.34) (1.32) (1.21) (0.18) (1.05) -------- -------- -------- -------- -------- Total distributions...... (0.40) (1.34) (1.29) (0.35) (1.22) -------- -------- -------- -------- -------- Net asset value, end of period................. $ 9.47 $ 10.68 $ 12.47 $ 13.42 $ 12.54 ======== ======== ======== ======== ======== Total return+............ (7.71)% (4.07)% 2.69% 10.14% 8.99% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s).............. $ 40,714 $ 49,306 $ 40,538 $ 42,106 $ 22,724 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.19% 1.12% 1.08% 1.05% 1.02% After expense reimbursement and earnings credits..... 1.00% 1.00% 1.00% 1.00% 1.00% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 0.45% 0.90% 0.48% 1.05% 1.29% After expense reimbursement and earnings credits..... 0.64% 1.02% 0.56% 1.10% 1.31% Portfolio turnover rate................... 117% 81% 111% 86% 46%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + Class Y does not have sales charges. -------------------------------------------------------------------------- UBS Global Asset Management 143 The UBS Funds -------------------------------------------------------------------------- UBS Global Bond Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002* 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 8.58 $ 9.09 $ 9.16 $ 9.40 $ 9.64 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................. 0.17** 0.33** 0.37** 0.37** 0.42** Net realized and unrealized gain (loss).............................. 0.43 (0.72) (0.43) (0.07) (0.20) -------- -------- -------- -------- -------- Total income (loss) from investment operations........................ 0.60 (0.39) (0.06) 0.30 0.22 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.............................. -- (0.06) -- (0.46) (0.29) Distributions from net realized gains............................... -- -- (0.01) (0.08) (0.17) Distributions from return of capital............................. (0.17) -- -- -- -- -------- -------- -------- -------- -------- Total distributions................. (0.17) (0.06) (0.01) (0.54) (0.46) -------- -------- -------- -------- -------- Net asset value, end of period.......... $ 9.01 $ 8.64 $ 9.09 $ 9.16 $ 9.40 ======== ======== ======== ======== ======== Total return+........................... 7.18%# (4.27)% (0.66)% 2.89% 2.37% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 1,925 $ 3 $ 1 $ 1,085 $ 9 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.49%*** 1.37% 1.30% 1.15% 1.21% After expense reimbursement and earnings credits.................... 1.15%*** 1.15% 1.19%++ 1.15% 1.15% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 2.72%*** 3.60% 4.09% 3.80% 4.22% After expense reimbursement and earnings credits.................... 3.06%*** 3.82% 4.20% 3.80% 4.28% Portfolio turnover rate................. 157% 165% 87% 138% 151%
* On July 2, 2001 Class A (formerly Class N) was fully liquidated. Information shown is for the period November 5, 2001 (commencement of reissuance) for Class A through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. + The returns do not include sales charges. ++ The ratio of net operating expenses to average net assets for Class A was 1.15%. # The return is non-annualized. -------------------------------------------------------------------------------- 144 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS Global Bond Fund -- Financial Highlights
CLASS B --------------- FOR THE PERIOD ENDED JUNE 30, 2002* --------------- Net asset value, beginning of period.............. $ 8.35 -------- Income from investment operations: Net investment income........................... 0.11** Net realized and unrealized gain................ 0.69 -------- Total income from investment operations....... 0.80 -------- Less distributions: Distributions from return of capital............ (0.14) -------- Net asset value, end of period.................... $ 9.01 ======== Total return...................................... 9.67%@ ======== Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 392 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.25%*** After expense reimbursement and earnings credits....................................... 1.90%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 1.94%*** After expense reimbursement and earnings credits....................................... 2.29%*** Portfolio turnover rate........................... 157%
* Information shown is for the period November 26, 2001 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 145 The UBS Funds -------------------------------------------------------------------------- UBS Global Bond Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 8.57 $ 9.01 $ 9.18 $ 9.41 $ 9.64 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................. 0.31* 0.36* 0.40* 0.39* 0.43* Net realized and unrealized gain (loss).............................. 1.09 (0.72) (0.43) (0.07) (0.18) -------- -------- -------- -------- -------- Total income (loss) from investment operations........................ 1.40 (0.36) (0.03) 0.32 0.25 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.............................. -- (0.08) (0.13) (0.47) (0.31) Distributions from net realized gains............................... -- -- (0.01) (0.08) (0.17) Distributions from return of capital............................. (0.18) -- -- -- -- -------- -------- -------- -------- -------- Total distributions................. (0.18) (0.08) (0.14) (0.55) (0.48) -------- -------- -------- -------- -------- Net asset value, end of period.......... $ 9.79 $ 8.57 $ 9.01 $ 9.18 $ 9.41 ======== ======== ======== ======== ======== Total return+........................... 16.57% (4.02)% (0.34)% 3.13% 2.69% ======== ======== ======== ======== ======== Ratios/Supplemental data: Net assets, end of period (in 000s)..... $ 34,421 $ 37,822 $ 43,467 $ 92,832 $ 91,274 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.17% 1.12% 1.05% 0.90% 0.96% After expense reimbursement and earnings credits.................... 0.90% 0.90% 0.94%++ 0.90% 0.90% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 3.14% 3.85% 4.34% 4.05% 4.47% After expense reimbursement and earnings credits.................... 3.41% 4.07% 4.45% 4.05% 4.53% Portfolio turnover rate................. 157% 165% 87% 138% 151%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + Class Y does not have sales charges. ++ The ratio of net operating expenses to average net assets for Class Y was 0.90%. -------------------------------------------------------------------------------- 146 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS International Equity Fund -- Financial Highlights
CLASS A (FORMERLY CLASS N) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 10.61 $ 13.57 $ 12.30 $ 12.14 $ 12.59 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income............... 0.13* --* 0.08* 0.12 0.16 Net realized and unrealized gain (loss)............... (0.79) (2.15) 1.33 0.27 0.29 -------- -------- -------- -------- -------- Total income (loss) from investment operations......... (0.66) (2.15) 1.41 0.39 0.45 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.... (0.27) (0.04) -- (0.11) (0.16) Distributions from net realized gains....... (1.60) (0.77) (0.14) (0.12) (0.74) -------- -------- -------- -------- -------- Total distributions...... (1.87) (0.81) (0.14) (0.23) (0.90) -------- -------- -------- -------- -------- Net asset value, end of period................. $ 8.08 $ 10.61 $ 13.57 $ 12.30 $ 12.14 ======== ======== ======== ======== ======== Total return+............ (5.91)% (16.37)% 11.51% 3.30% 4.51% ======== ======== ======== ======== ======== Ratios/Supplemental Data: Net assets, end of period (in 000s).............. $ 2,599 $ 301 $ 1 $ 15 $ 11 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.41% 1.31% 1.25% 1.24% 1.25% After expense reimbursement and earnings credits..... 1.25% 1.28%++ 1.25%+++ 1.24% 1.25% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 1.38% 0.77% 0.64% 1.10% 1.27% After expense reimbursement and earnings credits..... 1.54% 0.80% 0.64% 1.10% 1.27% Portfolio turnover rate................... 82% 62% 59% 74% 49%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + The returns do not include sales charges. ++ The ratio of net operating expenses to average net assets for Class A was 1.25%. +++ The ratio of net operating expenses to average net assets for Class A was 1.24%. -------------------------------------------------------------------------- UBS Global Asset Management 147 The UBS Funds -------------------------------------------------------------------------- UBS International Equity Fund -- Financial Highlights
CLASS B ----------------- FOR THE PERIOD ENDED JUNE 30, 2002* ----------------- Net asset value, beginning of period.............. $ 7.75 ----------- Income from investment operations: Net investment income........................... 0.05** Net realized and unrealized gain................ 0.25 ----------- Total income from investment operations....... 0.30 ----------- Net asset value, end of period.................... $ 8.05 =========== Total return...................................... 3.87%@ =========== Ratios/Supplemental Data: Net assets, end of period (in 000s)............... $ 120 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.05%*** After expense reimbursement and earnings credits....................................... 2.00%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 1.45%*** After expense reimbursement and earnings credits....................................... 1.50%*** Portfolio turnover rate........................... 82%
* For the period February 12, 2002 (commencement of issuance) through June 30, 2002. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------------- 148 UBS Global Asset Management The UBS Funds -------------------------------------------------------------------------- UBS International Equity Fund -- Financial Highlights
CLASS C ----------------- FOR THE PERIOD ENDED JUNE 30, 2002* ----------------- Net asset value, beginning of period.............. $ 7.75 ----------- Income from investment operations: Net investment income........................... 0.04** Net realized and unrealized gain................ 0.26 ----------- Total income from investment operations....... 0.30 ----------- Net asset value, end of period.................... $ 8.05 =========== Total return...................................... 3.87%@ =========== Ratios/Supplemental Data: Net assets, end of period (in 000s)............... $ 183 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................................... 2.19%*** After expense reimbursement and earnings credits....................................... 2.00%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................................... 0.91%*** After expense reimbursement and earnings credits....................................... 1.10%*** Portfolio turnover rate........................... 82%
* For the period January 27, 2002 (commencement of issuance) through June 30, 2002. For the fiscal year ended, Class C dividend distributions were $0.27 and $1.60 per share from net investment income and net realized gains, respectively. ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized. @ The return does not include sales charges and is non-annualized. -------------------------------------------------------------------------- UBS Global Asset Management 149 The UBS Funds -------------------------------------------------------------------------- UBS International Equity Fund -- Financial Highlights
CLASS Y (FORMERLY CLASS I) YEAR ENDED JUNE 30, ----------------------------------------------------------------- 2002 2001 2000 1999 1998 --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 10.64 $ 13.57 $ 12.34 $ 12.15 $ 12.59 -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income............... 0.09* 0.13* 0.11* 0.16 0.18 Net realized and unrealized gain (loss)............... (0.74) (2.25) 1.33 0.27 0.30 -------- -------- -------- -------- -------- Total income (loss) from investment operations......... (0.65) (2.12) 1.44 0.43 0.48 -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income.... (0.27) (0.04) (0.07) (0.12) (0.18) Distributions from net realized gains....... (1.60) (0.77) (0.14) (0.12) (0.74) -------- -------- -------- -------- -------- Total distributions...... (1.87) (0.81) (0.21) (0.24) (0.92) -------- -------- -------- -------- -------- Net asset value, end of period................. $ 8.12 $ 10.64 $ 13.57 $ 12.34 $ 12.15 ======== ======== ======== ======== ======== Total return+............ (5.78)% (16.15)% 11.76% 3.65% 4.78% ======== ======== ======== ======== ======== Ratios/Supplemental Data: Net assets, end of period (in 000s).............. $ 97,851 $192,408 $411,985 $490,322 $439,329 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.13% 1.06% 1.00% 0.99% 1.00% After expense reimbursement and earnings credits..... 1.00% 1.03%++ 1.00%+++ 0.99% 1.00% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... 0.92% 1.02% 0.89% 1.35% 1.52% After expense reimbursement and earnings credits..... 1.05% 1.05% 0.89% 1.35% 1.52% Portfolio turnover rate................... 82% 62% 59% 74% 49%
* The net investment income per share data was determined by using average shares outstanding throughout the period. + Class Y does not have sales charges. ++ The ratio of net operating expenses to average net assets for Class Y was 1.00%. +++ The ratio of net operating expenses to average net assets for Class Y was 0.99%. -------------------------------------------------------------------------------- 150 UBS Global Asset Management If you want more information about the Funds, the following documents are available free upon request: ANNUAL/SEMI-ANNUAL REPORTS Additional information about the Funds' investments is available in the Funds' annual and semi-annual reports to shareholders. In the Funds' annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year. STATEMENT OF ADDITIONAL INFORMATION (SAI) The SAI provides more detailed information about the Funds and is incorporated by reference into this prospectus. You may discuss your questions about the Funds by contacting your investment professional. You may obtain free copies of the Funds' annual and semi-annual reports and the SAI by contacting the Funds directly at 1-800-647-1568. You may review and copy information about the Funds, including shareholder reports and the SAI, at the Public Reference Room of the Securities and Exchange Commission in Washington, D.C. You may obtain information about the operations of the SEC's Public Reference Room by calling the SEC at 1-202-942-8090. You may get copies of reports and other information about the Funds: - For a fee, by electronic request at publicinfo@sec.gov or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102; or - Free from the EDGAR Database on the SEC's Internet website at: http://www.sec.gov. [UBS GLOBAL ASSET MANAGEMENT LOGO] The UBS Funds UBS U.S. Bond Fund UBS High Yield Fund UBS U.S. Balanced Fund UBS U.S. Equity Fund UBS U.S. Value Equity Fund UBS U.S. Large Cap Growth Fund UBS U.S. Small Cap Equity Fund UBS U.S. Small Cap Growth Fund UBS U.S. Real Estate Equity Fund UBS Global Allocation Fund UBS Global Equity Fund UBS Global Bond Fund UBS International Equity Fund Prospectus The UBS Funds Investment Company Act File No. 811-6637 September 30, 2002 (as revised May 7, 2003)