UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number |
811-06637 | |||||||
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The UBS Funds | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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One North Wacker Drive, Chicago, IL |
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60606-2807 | ||||||
(Address of principal executive offices) |
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(Zip code) | ||||||
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Mark F. Kemper, Esq. UBS Global Asset Management One North Wacker Drive Chicago, IL 60606-2807 | ||||||||
(Name and address of agent for service) | ||||||||
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Copy to: | ||||||||
Bruce Leto, Esq. Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103-7098 | ||||||||
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Registrants telephone number, including area code: |
212-821 3000 |
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Date of fiscal year end: |
June 30 |
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Date of reporting period: |
December 31, 2010 |
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Item 1. Reports to Stockholders.
The UBS FundsFixed Income
Semiannual Report
December 31, 2010
Table of contents | |||||||
President's letter | 1 | ||||||
Market commentary | 2 | ||||||
Fixed Income | |||||||
UBS Absolute Return Bond Fund | 3 | ||||||
UBS Core Plus Bond Fund (formerly, UBS U.S. Bond Fund) | 18 | ||||||
UBS Fixed Income Opportunities Fund | 31 | ||||||
UBS Global Bond Fund | 45 | ||||||
UBS High Yield Fund | 57 | ||||||
Explanation of expense disclosure | 72 | ||||||
Statement of assets and liabilities | 76 | ||||||
Statement of operations | 80 | ||||||
Statement of changes in net assets | 82 | ||||||
Financial highlights | 84 | ||||||
Notes to financial statements | 94 | ||||||
General information | 116 | ||||||
This page has been left blank intentionally.
President's letter
Dear Shareholder,
In the time since I last wrote to you, we have seen a shift in the investor mindset. Asset flows into equities seem to be turning in a positive direction, as investors appear to be showing interest, once again, in riskier assets. Nonetheless, considering the upward trend in the equity markets and encouraging signs that the economy is on the road to recovery, a surprising number of investors remain sidelined by fear, avoiding "risky" assets in favor of fixed income.
The truth is, market pundits will tell you that, in today's low yield environment, fixed income investing is fraught with its own uncertainties. If rates stay low, so will returns; if bond yields rise, the value of fixed income investments will fall. In short, fixed income may not be the safe harbor that many investors believe it to be.
Feararguably, now more than ever, it's one of the biggest obstacles to investor success. That's not to say that when it comes to investing, no fear is a good thing. In fact, fear helps inform an investor's own understanding of the level of risk he or she is willing to assume when it comes to building an investment plan. However, the fear that is so prevalent in the market today has little to do with rational thinking, and everything to do with basic human emotion. In fact, a good portion of investors today are making investment decisions based on their desire to avoid losing moneywhich turns the whole idea of a long-term investment plan on its head, really.
Irrational fear more often than not has the unfortunate result of leading investors to make the wrong decisions, for the wrong reasons, at the wrong timesoften at the expense of their long-term investment success. What can you do to fight it? A key strategy that makes sense in any environment is a diversified portfolio that blends both stocks and bonds. A diversified portfolio can't guarantee against a loss, but it does have the potential to provide you with more consistent returnsmaking it easier for you to maintain the discipline you need to stay the course to achieve your financial goals.
In 2011, we will continue to build upon our 30-year foundationgrowing and evolving to meet not only the challenges of a new market landscape, but also the ever-increasing diversification needs of our clients. At the same time, we will remain resolute in adhering to our disciplined investment approach, so we can seek to avoid the types of traps that can confound fear-driven investors. In doing so, we believe we will be better positioned to provide you, our clients, with the types of investment solutions that will help carry you forward over the next five, 10 or 30 years.
As always, we remain firmly dedicated to your investment success. Thank you for your continued support.
Mark E. Carver
President
The UBS Funds
Managing Director
UBS Global Asset Management (Americas) Inc.
1
The markets in review
Continued Economic Growth
The overall US economy expanded during the six-months ended December 31, 2010. The US economy has now grown for six consecutive quarters, spurred, in part, due to government stimulus programs, as well as the Federal Reserve Board's (the "Fed's") accommodative monetary policy. However, there continued to be several areas of weakness, most notably unemployment that remained above 9%, which held back a more robust expansion. Looking back, gross domestic product ("GDP") growth was 3.7% during the first quarter of 2010. GDP growth was then 1.7% and 2.6%, respectively, during the second and third quarters of the year. The Commerce Department's initial estimate for GDP growth in the fourth quarter is 3.2%.
Economic growth outside the US was largely positive as well during the reporting period. However, there was a significant disparity between the growth rates in the international developed and emerging market countries. The European sovereign debt crisis, which began in Greece and later impacted Ireland, served to temper growth in a number of developed countries in the Eurozone. In contrast, developing countries, including China and India, continued to see their economies expand at a rapid pace.
Risk is rewarded in the fixed income markets
While there were periods of volatility, the spread sectors (non-Treasuries) in general produced positive results during the reporting period. This was driven by signs that the economy appeared to be gaining enough momentum to avoid a double-dip recession. In addition, investor demand for the spread sectors was generally robust as investors looked to generate incremental yield in the low interest rate environment. Also supporting the spread sectors were overall strong corporate profits and indications from the Fed that it was prepared to take further actions to bolster the economy. After declining during the first four months of the reporting period, long-term Treasury yields then moved sharply higher in November and December. This was triggered by optimism for a strengthening economy in 2011 and expectations for higher inflation in the future. During the six months ended December 31, 2010, the overall US bond market (as measured by the Barclays Capital US Aggregate Index1) returned 1.15%.
Despite giving back a portion of their gains in November, riskier fixed income asset classes generated strong returns, as the BofA Merrill Lynch US High Yield Cash Pay Constrained Index2 gained 9.83%, and the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global)3 rose 6.33%.
1 The Barclays Capital US Aggregate Index is an unmanaged broad-based index designed to measure the US dollar-denominated, investment-grade, fixed rate taxable bond market. The index includes bonds from the Treasury, government-related, corporate, mortgage-backed, asset-backed and commercial mortgage-backed sectors. US agency hybrid adjustable rate mortgage (ARM) securities were added to the index on April 1, 2007. Investors should note that indices do not reflect the deduction of fees and expenses.
2 The BofA Merrill Lynch US High Yield Cash Pay Constrained Index is an unmanaged index of publicly placed non-convertible, coupon-bearing US dollar-denominated below investment grade corporate debt with a term to maturity of at least one year. The index is market weighted, so that larger bond issuers have a greater effect on the index's return. However, the representation of any single bond issue is restricted to a maximum of 2% of the total index. Investors should note that indices do not reflect the deduction of fees and expenses.
3 The J.P. Morgan Emerging Markets Bond Index Global (EMBI Global) is an unmanaged index which is designed to track total returns for US-dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds. Investors should note that indices do not reflect the deduction of fees and expenses.
2
UBS Absolute Return Bond Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Absolute Return Bond Fund (the "Fund") returned 2.20% (Class A shares declined 0.33% after the deduction of the maximum sales charge), while Class Y shares returned 2.30%. For purposes of comparison, the BofA Merrill Lynch US Treasury 1-3 Year Index returned 0.47%, and the US LIBOR 3-Month Index (the "Index") returned 0.18% over the same period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 5; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund generated a positive absolute return during the reporting period. Notably, spread management, sector selection and currency management enhanced the Fund's results.
Derivative instruments are used both for hedging purposes as well as for facilitating positions in currency, duration/yield curve or credit strategies. Instruments used during the period included currency forwards, interest rate futures and swaps, and credit default swaps (both single name and indices). The results of derivatives use during the period were within our expectations.
Portfolio performance summary1
What worked
• Sector allocation was rewarded during the period. The Fund had an overweight to non-government bonds, which saw a narrowing of their spread over the six-month period. As a result, corporate bonds and other non-government sectors as a whole outperformed government securities during the reporting period. In particular, overweight positions in financials and securitized assets were supportive for performance.
• Active currency management was beneficial. Throughout the six-month period, we implemented a number of tactical currency trades to take advantage of opportunities in the foreign exchange markets. We also maintained a well-diversified currency strategy. As a whole, this contributed to the Fund's performance.
What didn't work
• The Fund's active duration positioning was not rewarded. (Duration is a measure of a portfolio's sensitivity to changes in interest rates.) When the six-month period began, the Fund had a short duration position, which we gradually shifted to be marginally long at the end of the period. On average, duration positioning neither helped nor hurt performance.
However, yield curve positioning (positioning along the different maturity points) detracted from performance. During the review period, the Fund's portfolio was long the longer maturity part of the curve, and short the short
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
3
UBS Absolute Return Bond Fund
maturity part of the curve, in an environment in which the short end did not move, while the long end increased the most. (In other words, the yield curve moved upwards, but was anchored at the short end.)
• Security selection detracted from performance over the period, due to positioning in fairly conservative names, in an environment of overall recovering spread tightening.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
4
UBS Absolute Return Bond Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | Inception1 | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A2 | 2.20 | % | 1.06 | % | (3.92 | )% | (3.17 | )% | |||||||||||
Class C3 | 2.00 | 0.68 | (4.24 | ) | (3.51 | ) | |||||||||||||
Class Y4 | 2.30 | 1.42 | (3.71 | ) | (2.97 | ) | |||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A2 | (0.33 | )% | (1.53 | )% | (4.39 | )% | (3.61 | )% | |||||||||||
Class C3 | 1.50 | 0.20 | (4.24 | ) | (3.51 | ) | |||||||||||||
BofA Merrill Lynch US Treasury 1-3 Year Index5 | 0.47 | % | 2.35 | % | 4.17 | % | 3.92 | % | |||||||||||
US LIBOR 3-Month Index6 | 0.18 | 0.35 | 3.01 | 3.12 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.14% and 1.00%; Class C1.42% and 1.35%; Class Y0.80% and 0.80%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short), through the 12-month period ending October 27, 2011, do not exceed 1.00% for Class A shares, 1.35% for Class C shares and 0.85% for Class Y shares. 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.
1 Inception date of all shares of UBS Absolute Return Bond Fund is April 27, 2005. Inception date of the indices, for the purpose of this illustration, is April 30, 2005.
2 Maximum sales charge for Class A shares is 2.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class C shares is 0.5% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees.
4 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
5 The BofA Merrill Lynch US Treasury 1-3 Year Index is an unmanaged index designed to track short-term US Treasury securities with maturities between 1 and 3 years. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The US LIBOR 3-Month Index is based on LIBOR, the London Interbank Offered Rate, a short-term interest rate that banks quote to each other and deemed generally representative of current cash rates available. The US LIBOR 3-Month Index is designed to track the interest rate earned on three month inter-bank US dollar denominated deposits. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
5
UBS Absolute Return Bond Fund
Top ten long-term fixed income holdings (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
Compagnie de Financement Foncier, 3.625%, due 01/16/12 |
4.0 | % | |||||
U.S. Treasury Note, 1.375%, due 03/15/12 |
3.7 | ||||||
Federal Home Loan Bank, 5.250%, due 06/18/14 |
3.1 | ||||||
Federal Home Loan Mortgage Corp., 5.000%, due 02/16/17 |
2.9 | ||||||
Hypothekenbank in Essen AG, 5.250%, due 01/17/11 |
2.7 | ||||||
Federal National Mortgage Association, 5.000%, due 10/15/11 |
2.7 | ||||||
Kreditanstalt fuer Wiederaufbau, 3.375%, due 01/16/12 |
2.6 | ||||||
Federal National Mortgage Association, 4.125%, due 04/15/14 |
2.2 | ||||||
Kreditanstalt fuer Wiederaufbau, 5.550%, due 06/07/21 |
2.1 | ||||||
Federal National Mortgage Association Pools, #933765, 4.500%, due 04/01/38 |
2.1 | ||||||
Total | 28.1 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2010
Bonds | |||||||
Corporate bonds | |||||||
Aerospace & defense | 0.39 | % | |||||
Building materials | 0.25 | ||||||
Commercial banks | 9.16 | ||||||
Communications equipment | 0.23 | ||||||
Computers & peripherals | 0.30 | ||||||
Construction & engineering | 1.04 | ||||||
Diversified financial services | 9.50 | ||||||
Diversified telecommunication services | 2.43 | ||||||
Electric utilities | 0.75 | ||||||
Energy | 0.07 | ||||||
Food & staples retailing | 0.53 | ||||||
Health care providers & services | 0.43 | ||||||
Industrial conglomerates | 0.29 | ||||||
Insurance | 1.30 | ||||||
Media | 1.19 | ||||||
Metals & mining | 1.02 | ||||||
Oil, gas & consumable fuels | 2.47 | ||||||
Personal products | 0.60 | ||||||
Pharmaceuticals | 0.23 | ||||||
Road & rail | 0.45 | ||||||
Sovereign | 1.20 | ||||||
Thrifts & mortgage finance | 6.67 | ||||||
Tobacco | 2.56 | ||||||
Wireless telecommunication services | 2.37 | ||||||
Total corporate bonds | 45.43 | % | |||||
Asset-backed securities | 2.24 | ||||||
Collateralized debt obligations | 1.17 | ||||||
Commercial mortgage-backed security | 0.21 | ||||||
Mortgage & agency debt securities | 17.12 | ||||||
US government obligation | 3.73 | ||||||
Non-US government obligations | 17.75 | ||||||
Supranational bonds | 4.40 | ||||||
Total bonds | 92.05 | % | |||||
Short-term investment | 6.13 | ||||||
Total investments | 98.18 | % | |||||
Cash and other assets, less liabilities | 1.82 | ||||||
Net assets | 100.00 | % |
Country exposure, top five (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
United States | 41.0 | % | |||||
Germany | 12.5 | ||||||
United Kingdom | 8.9 | ||||||
France | 5.3 | ||||||
Netherlands | 3.9 | ||||||
Total | 71.6 | % |
6
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 92.05% | |||||||||||
Corporate bonds: 45.43% | |||||||||||
Australia: 0.63% | |||||||||||
Rio Tinto Finance USA Ltd., 3.500%, due 11/02/20 |
$ | 600,000 | $ | 569,561 | |||||||
Westpac Banking Corp., 4.200%, due 02/27/15 |
350,000 | 367,344 | |||||||||
Total Australia corporate bonds | 936,905 | ||||||||||
Denmark: 0.24% | |||||||||||
Dong Energy A/S, 4.875%, due 05/07/14 |
EUR | 250,000 | 357,690 | ||||||||
France: 5.30% | |||||||||||
Casino Guichard Perrachon SA, 5.500%, due 01/30/15 |
550,000 | 796,628 | |||||||||
Compagnie de Financement Foncier, 3.625%, due 01/16/12 |
4,350,000 | 5,944,817 | |||||||||
Credit Agricole SA, 0.502%, due 03/13/161 |
$ | 800,000 | 783,103 | ||||||||
Natixis, 0.539%, due 01/15/191 |
450,000 | 384,235 | |||||||||
Total France corporate bonds | 7,908,783 | ||||||||||
Germany: 2.69% | |||||||||||
Hypothekenbank in Essen AG, 5.250%, due 01/17/112 |
EUR | 3,000,000 | 4,015,762 | ||||||||
Greece: 0.49% | |||||||||||
OTE PLC, 5.375%, due 02/14/11 |
550,000 | 736,440 | |||||||||
Ireland: 0.66% | |||||||||||
Allied Irish Banks PLC, 4.500%, due 10/01/12 |
300,000 | 306,681 | |||||||||
GE Capital UK Funding, 6.000%, due 04/11/13 |
GBP | 400,000 | 670,529 | ||||||||
Total Ireland corporate bonds | 977,210 | ||||||||||
Italy: 1.56% | |||||||||||
Intesa Sanpaolo SpA, 6.625%, due 05/08/18 |
EUR | 500,000 | 658,900 | ||||||||
Telecom Italia SpA, 4.750%, due 05/19/14 |
1,200,000 | 1,671,312 | |||||||||
Total Italy corporate bonds | 2,330,212 | ||||||||||
Luxembourg: 0.56% | |||||||||||
ArcelorMittal, 9.000%, due 02/15/15 |
$ | 350,000 | 416,573 |
Face amount |
Value | ||||||||||
GAZ Capital SA for Gazprom, 6.580%, due 10/31/13 |
GBP | 250,000 | $ | 414,136 | |||||||
Total Luxembourg corporate bonds |
830,709 | ||||||||||
Mexico: 0.48% | |||||||||||
America Movil SAB de CV, 3.625%, due 03/30/15 |
$ | 700,000 | 719,761 | ||||||||
Netherlands: 3.61% | |||||||||||
Allianz Finance II BV, 4.750%, due 07/22/19 |
EUR | 850,000 | 1,185,696 | ||||||||
CRH Finance BV, 7.375%, due 05/28/14 |
250,000 | 368,752 | |||||||||
MDC B.V., 5.750%, due 05/06/143 |
$ | 1,650,000 | 1,788,600 | ||||||||
PACCAR Financial Europe BV, 5.125%, due 05/19/11 |
EUR | 350,000 | 472,032 | ||||||||
Rabobank Nederland NV, 4.000%, due 09/10/15 |
GBP | 230,000 | 371,796 | ||||||||
Repsol International Finance BV, 4.750%, due 02/16/17 |
EUR | 300,000 | 410,403 | ||||||||
Scotland International Finance BV, 4.250%, due 05/23/133 |
$ | 800,000 | 792,026 | ||||||||
Total Netherlands corporate bonds |
5,389,305 | ||||||||||
Portugal: 0.51% | |||||||||||
EDP Finance BV, 5.375%, due 11/02/123 |
750,000 | 759,776 | |||||||||
Qatar: 0.29% | |||||||||||
Qtel International Finance Ltd., 6.500%, due 06/10/143 |
400,000 | 438,448 | |||||||||
South Korea: 0.36% | |||||||||||
Hyundai Capital Services, Inc., 6.000%, due 05/05/153 |
500,000 | 541,233 | |||||||||
Spain: 0.48% | |||||||||||
Telefonica Emisiones SAU, 5.431%, due 02/03/14 |
EUR | 500,000 | 710,477 | ||||||||
Sweden: 0.24% | |||||||||||
Vattenfall Treasury AB, 4.250%, due 05/19/14 |
250,000 | 353,361 | |||||||||
Switzerland: 0.84% | |||||||||||
Credit Suisse/London, 6.125%, due 05/16/14 |
850,000 | 1,255,098 |
7
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United Kingdom: 8.04% | |||||||||||
Anglo American Capital PLC, 9.375%, due 04/08/143 |
$ | 450,000 | $ | 541,788 | |||||||
BAA Funding Ltd., 3.975%, due 02/15/141,3 |
EUR | 1,150,000 | 1,560,380 | ||||||||
Barclays Bank PLC, 1.175%, due 04/20/161 |
600,000 | 770,387 | |||||||||
2.500%, due 01/23/13 | $ | 950,000 | 965,423 | ||||||||
BP Capital Markets PLC, 1.550%, due 08/11/11 |
100,000 | 100,452 | |||||||||
HSBC Holdings PLC, 4.500%, due 04/30/14 |
EUR | 250,000 | 352,476 | ||||||||
Imperial Tobacco Finance PLC, 8.375%, due 02/17/16 |
1,200,000 | 1,953,999 | |||||||||
Nationwide Building Society, 4.650%, due 02/25/153 |
$ | 550,000 | 554,481 | ||||||||
Reed Elsevier Investments PLC, 5.625%, due 10/20/16 |
GBP | 450,000 | 754,706 | ||||||||
Royal Bank of Scotland Group PLC, 5.250%, due 05/15/13 |
EUR | 1,000,000 | 1,388,127 | ||||||||
Smiths Group PLC, 6.050%, due 05/15/143 |
$ | 400,000 | 431,651 | ||||||||
Standard Chartered Bank PLC, 3.850%, due 04/27/153 |
1,400,000 | 1,441,392 | |||||||||
Vodafone Group PLC, 5.750%, due 03/15/16 |
650,000 | 727,687 | |||||||||
WPP PLC, 6.625%, due 05/12/16 |
EUR | 300,000 | 451,723 | ||||||||
Total United Kingdom corporate bonds |
11,994,672 | ||||||||||
United States: 18.45% | |||||||||||
Altria Group, Inc., 9.250%, due 08/06/19 |
$ | 300,000 | 391,512 | ||||||||
American Honda Finance Corp., 3.875%, due 09/16/14 |
EUR | 200,000 | 280,150 | ||||||||
American International Group, Inc., 3.650%, due 01/15/14 |
$ | 750,000 | 762,807 | ||||||||
Anadarko Petroleum Corp., 5.750%, due 06/15/14 |
1,000,000 | 1,070,436 | |||||||||
AT&T, Inc., 4.850%, due 02/15/14 |
750,000 | 811,055 | |||||||||
Avon Products, Inc., 5.625%, due 03/01/14 |
810,000 | 897,535 | |||||||||
BAE Systems Holdings, Inc., 4.950%, due 06/01/143 |
550,000 | 589,651 | |||||||||
Bank of America Corp., 4.900%, due 05/01/13 |
710,000 | 740,253 | |||||||||
5.650%, due 05/01/18 | 650,000 | 664,152 |
Face amount |
Value | ||||||||||
Cellco Partnership, 7.625%, due 12/19/11 |
EUR | 500,000 | $ | 706,368 | |||||||
8.500%, due 11/15/18 | $ | 500,000 | 654,275 | ||||||||
Cisco Systems, Inc., 4.950%, due 02/15/19 |
310,000 | 337,827 | |||||||||
Citibank Credit Card Issuance Trust, 5.375%, due 04/11/11 |
EUR | 240,000 | 323,072 | ||||||||
Citigroup, Inc., 4.750%, due 05/31/171 |
400,000 | 486,593 | |||||||||
5.625%, due 08/27/12 | $ | 540,000 | 566,651 | ||||||||
Comcast Corp., 6.300%, due 11/15/17 |
620,000 | 709,868 | |||||||||
CSX Corp., 5.750%, due 03/15/13 |
610,000 | 665,104 | |||||||||
DirecTV Financing Co., Inc., 7.625%, due 05/15/16 |
550,000 | 609,812 | |||||||||
Enterprise Products Operating LLC, 3.700%, due 06/01/15 |
380,000 | 391,996 | |||||||||
Series I, 5.000%, due 03/01/15 | 330,000 | 355,845 | |||||||||
ERAC USA Finance Co., 2.750%, due 07/01/133 |
400,000 | 407,143 | |||||||||
General Electric Capital Corp., 0.424%, due 12/20/131 |
240,000 | 233,532 | |||||||||
Series A, 3.750%, due 11/14/14 |
610,000 | 630,569 | |||||||||
6.750%, due 03/15/32 | 2,250,000 | 2,547,266 | |||||||||
Goldman Sachs Group, Inc., 7.500%, due 02/15/19 |
1,300,000 | 1,515,788 | |||||||||
Hewlett-Packard Co., 6.125%, due 03/01/14 |
400,000 | 452,969 | |||||||||
JPMorgan Chase & Co., 3.400%, due 06/24/15 |
1,350,000 | 1,376,669 | |||||||||
6.300%, due 04/23/19 | 1,200,000 | 1,365,906 | |||||||||
Morgan Stanley, 5.950%, due 12/28/17 |
1,300,000 | 1,375,452 | |||||||||
ONEOK Partners LP, 8.625%, due 03/01/19 |
550,000 | 686,196 | |||||||||
Pfizer, Inc., 3.625%, due 06/03/13 |
EUR | 250,000 | 346,450 | ||||||||
Roche Holdings, Inc., 4.625%, due 03/04/13 |
450,000 | 635,019 | |||||||||
SLM Corp., 1.300%, due 11/15/111 |
250,000 | 320,503 | |||||||||
UST, Inc., 6.625%, due 07/15/12 |
$ | 1,375,000 | 1,475,161 | ||||||||
Wells Fargo & Co., 5.250%, due 10/23/12 |
2,000,000 | 2,144,156 | |||||||||
Total United States corporate bonds |
27,527,741 | ||||||||||
Total corporate bonds (cost $65,770,033) |
67,783,583 |
8
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Asset-backed securities: 2.24% | |||||||||||
Cayman Islands: 0.17% | |||||||||||
MBNA America European Structured Offerings, Series 7, 5.450%, due 04/19/11 |
EUR | 190,000 | $ | 256,231 | |||||||
United Kingdom: 0.87% | |||||||||||
Chester Asset Receivables Dealings, Series 2004-1, Class A, 0.928%, due 04/15/161 |
GBP | 150,000 | 225,624 | ||||||||
Chester Asset Receivables Dealings 2003-B PLC, Series A, 4.650%, due 07/15/13 |
240,000 | 388,079 | |||||||||
Chester Asset Receivables Dealings No. 12 PLC, Series A, 6.000%, due 01/18/11 |
120,000 | 187,301 | |||||||||
Permanent Financing PLC, Series 6, Class 5A2, 0.905%, due 06/10/421,2,5,6 |
GBP | 320,000 | 493,022 | ||||||||
Total United Kingdom asset-backed securities |
1,294,026 | ||||||||||
United States: 1.20% | |||||||||||
Bank of America Corp., Series 2008-A5, Class A5, 1.460%, due 12/16/131 |
$ | 300,000 | 301,598 | ||||||||
Series 2004-A1, 4.500%, due 01/17/14 |
EUR | 270,000 | 374,078 | ||||||||
Chase Issuance Trust, Series 2007-A16, Class A16, 0.602%, due 06/16/141 |
$ | 300,000 | 300,218 | ||||||||
Series 2009-A3, Class A3, 2.400%, due 06/17/13 |
390,000 | 393,235 | |||||||||
MBNA Credit Card Master Note Trust, Series 2002-A2, Class A, 5.600%, due 07/17/14 |
EUR | 300,000 | 415,031 | ||||||||
Total United States asset-backed securities |
1,784,160 | ||||||||||
Total asset-backed securities (cost $2,828,278) |
3,334,417 | ||||||||||
Collateralized debt obligations: 1.17% | |||||||||||
Cayman Islands: 0.58% | |||||||||||
Denali Capital CLO VII Ltd., Series 2007-1A, Class B2L, 4.538%, due 01/22/221,3,4,5 |
$ | 290,000 | 150,858 |
Face amount |
Value | ||||||||||
FM Leveraged Capital Fund, Series 2006-2A, Class E, 4.034%, due 11/15/201,4 |
$ | 400,000 | $ | 228,000 | |||||||
Galena CDO Ltd., Series II-AIRL, 1.162%, due 04/07/171,3,4,5 |
1,000,000 | 366,800 | |||||||||
Gresham Street CDO Funding, Series 2003-1X, Class D, 3.536%, due 11/07/331,2,4,5 |
100,069 | 10,007 | |||||||||
Trimaran CLO Ltd., Series 2007-1A, Class B2L, 3.702%, due 06/15/211,3,4,5 |
200,000 | 116,000 | |||||||||
Total Cayman Islands collateralized debt obligations |
871,665 | ||||||||||
Netherlands: 0.30% | |||||||||||
Harbourmaster CLO Ltd., Series 7A, Class C, 12.000%, due 09/22/223,4,5 |
300,000 | 128,285 | |||||||||
Highlander Euro CDO, Series 2006-2CA, Class E, due 12/14/223,4,5,7 |
250,000 | 143,652 | |||||||||
Queen Street CLO, Series 2007-1A, Class F, 6.980%, due 08/15/243,4,5 |
EUR | 350,000 | 168,374 | ||||||||
Total Netherlands collateralized debt obligations |
440,311 | ||||||||||
United States: 0.29% | |||||||||||
Ajax Ltd., Series 2A, Class C, 2.765%, due 09/08/321,3,4,5 |
$ | 500,000 | 225,000 | ||||||||
Axius Europe CLO SA, Series 2007-1A, Class D, 4.275%, due 11/15/231,3,4,5 |
EUR | 350,000 | 210,467 | ||||||||
Total United States collateralized debt obligations |
435,467 | ||||||||||
Total collateralized debt obligations (cost $4,589,573) |
1,747,443 | ||||||||||
Commercial mortgage-backed security: 0.21% | |||||||||||
United States: 0.21% | |||||||||||
GS Mortgage Securities Corp. II, Series 2007-GG10, Class A4, 5.807%, due 08/10/451 (cost $225,866) |
300,000 | 313,623 |
9
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Mortgage & agency debt securities: 17.12% | |||||||||||
United States: 17.12% | |||||||||||
Federal Home Loan Bank, 5.250%, due 06/18/14 |
$ | 4,100,000 | $ | 4,653,734 | |||||||
Federal Home Loan Mortgage Corp.,8 4.750%, due 03/05/12 |
1,300,000 | 1,365,125 | |||||||||
5.000%, due 02/16/17 | 3,900,000 | 4,391,041 | |||||||||
Federal Home Loan Mortgage Corp. Gold Pools,8 #G04668, 5.000%, due 03/01/38 |
746,502 | 783,624 | |||||||||
#G08307, 5.000%, due 11/01/38 |
1,100,631 | 1,155,129 | |||||||||
Federal National Mortgage Association8 4.125%, due 04/15/14 |
2,950,000 | 3,217,338 | |||||||||
5.000%, due 10/15/11 | 3,820,000 | 3,957,872 | |||||||||
Federal National Mortgage Association Pools,8 #992260, 4.000%, due 01/01/39 |
2,846,942 | 2,834,975 | |||||||||
#933765, 4.500%, due 04/01/38 |
3,104,663 | 3,189,743 | |||||||||
Total mortgage & agency debt securities (cost $24,453,267) |
25,548,581 | ||||||||||
US government obligation: 3.73% | |||||||||||
U.S. Treasury Note, 1.375%, due 03/15/12 (cost $5,540,881) |
5,500,000 | 5,568,321 | |||||||||
Non-US government obligations: 17.75% | |||||||||||
Canada: 1.26% | |||||||||||
Quebec Province, 6.125%, due 01/22/11 |
1,880,000 | 1,886,041 | |||||||||
Denmark: 0.85% | |||||||||||
Government of Denmark, 1.875%, due 03/16/12 |
1,250,000 | 1,270,719 | |||||||||
Germany: 9.78% | |||||||||||
Bundesobligation, 4.000%, due 04/13/12 |
EUR | 1,420,000 | 1,978,837 |
Face amount |
Value | ||||||||||
Bundesrepublik Deutschland, Series 00, 5.250%, due 01/04/11 |
EUR | 1,050,000 | $ | 1,403,812 | |||||||
Series 01, 5.000%, due 07/04/11 |
2,200,000 | 3,004,919 | |||||||||
Series 04 4.250%, due 07/04/14 |
800,000 | 1,171,229 | |||||||||
Kreditanstalt fuer Wiederaufbau, 3.375%, due 01/16/12 |
2,800,000 | 3,831,720 | |||||||||
5.550%, due 06/07/21 | GBP | 1,800,000 | 3,207,412 | ||||||||
14,597,929 | |||||||||||
Italy: 2.15% | |||||||||||
Republic of Italy, 4.500%, due 01/21/15 |
$ | 1,565,000 | 1,607,992 | ||||||||
4.750%, due 01/25/16 | 1,565,000 | 1,594,453 | |||||||||
3,202,445 | |||||||||||
Japan: 2.29% | |||||||||||
Government of Japan, Series 27 2.500%, due 09/20/37 |
JPY | 134,000,000 | 1,833,631 | ||||||||
Japan Bank for International Cooperation, 5.250%, due 03/23/16 |
$ | 1,400,000 | 1,585,429 | ||||||||
3,419,060 | |||||||||||
Spain: 1.42% | |||||||||||
Instituto de Credito Oficial, 3.000%, due 03/15/11 |
250,000 | 250,489 | |||||||||
5.375%, due 07/02/12 | 1,800,000 | 1,874,394 | |||||||||
2,124,883 | |||||||||||
Total non-US government obligations (cost $26,114,691) |
26,501,077 | ||||||||||
Supranational bonds: 4.40% | |||||||||||
European Investment Bank, 2.500%, due 04/15/12 |
EUR | 1,225,000 | 1,669,334 | ||||||||
6.250%, due 04/15/14 | GBP | 1,270,000 | 2,236,548 | ||||||||
Inter-American Development Bank, 3.250%, due 11/15/11 |
$ | 2,600,000 | 2,661,667 | ||||||||
Total supranational bonds (cost $6,475,234) |
6,567,549 | ||||||||||
Total bonds (cost $135,997,823) |
137,364,594 |
10
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Short-term investment: 6.13% | |||||||||||
Investment company: 6.13% | |||||||||||
UBS Cash Management Prime Relationship Fund9 (cost $9,144,727) |
9,144,727 | $ | 9,144,727 | ||||||||
Total investments: 98.18% (cost $145,142,550) |
146,509,321 | ||||||||||
Cash and other assets, less liabilities: 1.82% |
2,709,854 | ||||||||||
Net assets: 100.00% | $ | 149,219,175 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 5,493,630 | |||||
Gross unrealized depreciation | (4,126,859 | ) | |||||
Net unrealized appreciation of investments | $ | 1,366,771 |
1 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2010 and changes periodically.
2 Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. At December 31, 2010, the value of these securities amounted to $4,518,791 or 3.03% of net assets.
3 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $11,356,005 or 7.61% of net assets.
4 Security is illiquid. At December 31, 2010, the value of these securities amounted to $1,747,443 or 1.17% of net assets.
11
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
5 These securities, which represent 1.35% of net assets as of December 31, 2010, are considered restricted. (See restricted securities table below for more information.)
Restricted securities |
Acquisition date |
Acquisition cost |
Acquisition cost as a percentage of net assets |
Value 12/31/10 |
12/31/10 Value as a percentage of net assets |
||||||||||||||||||
Ajax Ltd., Series 2A, Class C, 2.765%, due 09/08/32 |
11/08/05 | $ | 487,550 | 0.33 | % | $ | 225,000 | 0.15 | % | ||||||||||||||
Axius Europe CLO SA, Series 2007-1A, Class D, 4.275%, due 11/15/23 |
09/28/07 - 11/01/09 |
466,689 | 0.31 | 210,467 | 0.14 | ||||||||||||||||||
Denali Capital CLO VII Ltd., Series 2007-1A, Class B2L, 4.538%, due 01/22/22 |
04/27/07 | 285,865 | 0.19 | 150,858 | 0.10 | ||||||||||||||||||
Galena CDO Ltd., Series II-AIRL, 1.162%, due 04/07/17 |
03/08/07 | 1,000,000 | 0.67 | 366,800 | 0.25 | ||||||||||||||||||
Gresham Street CDO Funding, Series 2003-1X, Class D, 3.536%, due 11/07/33 |
06/10/05 - 02/07/10 |
105,894 | 0.07 | 10,007 | 0.01 | ||||||||||||||||||
Harbourmaster CLO Ltd., Series 7A, Class C, 12.000%, due 09/22/22 |
10/31/06 | 363,746 | 0.25 | 128,285 | 0.09 | ||||||||||||||||||
Highlander Euro CDO, Series 2006-2CA, Class E, due 12/14/22 |
11/28/06 | 329,608 | 0.22 | 143,652 | 0.09 | ||||||||||||||||||
Permanent Financing PLC, Series 6, Class 5A2, 0.905%, due 06/10/42 |
11/19/10 | 315,456 | 0.21 | 493,022 | 0.33 | ||||||||||||||||||
Queen Street CLO, Series 2007-1A, Class F, 6.980%, due 08/15/24 |
05/18/07 | 463,444 | 0.31 | 168,374 | 0.11 | ||||||||||||||||||
Trimaran CLO Ltd., Series 2007-1A, Class B2L, 3.702%, due 06/15/21 |
03/09/07 | 198,806 | 0.13 | 116,000 | 0.08 | ||||||||||||||||||
$ | 4,017,058 | 2.69 | % | $ | 2,012,465 | 1.35 | % |
6 Step bondCoupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2010. Maturity date disclosed is the ultimate maturity date.
7 This security is the equity tranche of a collateralized debt obligation. The Fund receives periodic payments, which may vary, from the issuer of this security.
8 On September 7, 2008, the Federal Housing Finance Agency placed the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association into conservatorship, and the US Treasury guaranteed the debt issued by those organizations.
12
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
9 The table below details the Fund's investments in a fund that is advised by the same advisor as the Fund. The advisor does not earn a management fee from UBS Cash Management Prime Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 5,509,864 | $ | 25,314,744 | $ | 21,679,881 | $ | 9,144,727 | $ | 7,336 |
CDO Collateralized debt obligations
CLO Collateralized loan obligations
GE General Electric
GS Goldman Sachs
Currency type abbreviations:
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
Forward foreign currency contracts
UBS Absolute Return Bond Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
HSBC Bank, PLC London | USD | 7,120,424 | SEK | 48,800,000 | 01/24/11 | $ | 130,494 | ||||||||||||
JPMorgan Chase Bank | AUD | 5,420,000 | USD | 5,323,660 | 01/24/11 | (205,102 | ) | ||||||||||||
JPMorgan Chase Bank | CHF | 5,120,000 | USD | 5,293,752 | 01/24/11 | (183,356 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 32,770,000 | USD | 43,242,571 | 01/24/11 | (547,980 | ) | ||||||||||||
JPMorgan Chase Bank | JPY | 124,900,000 | USD | 1,481,891 | 01/24/11 | (56,838 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 5,380,003 | CAD | 5,415,000 | 01/24/11 | 64,214 | |||||||||||||
JPMorgan Chase Bank | USD | 7,200,004 | NOK | 43,050,000 | 01/24/11 | 170,418 | |||||||||||||
Morgan Stanley & Co. Inc. | GBP | 14,770,000 | USD | 23,019,148 | 01/24/11 | (5,805 | ) | ||||||||||||
State Street Bank & Trust | CAD | 5,462,926 | AUD | 5,420,000 | 01/24/11 | 36,359 | |||||||||||||
Net unrealized depreciation on forward foreign currency contracts | $ | (597,596 | ) |
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
NOK Norwegian Krone
SEK Swedish Krona
USD United States Dollar
13
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Futures contracts
UBS Absolute Return Bond Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Long Bond, 37 contracts (USD) | March 2011 | $ | 4,650,496 | $ | 4,518,625 | $ | (131,871 | ) | |||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
2 Year US Treasury Notes, 135 contracts (USD) | March 2011 | (29,560,575 | ) | (29,552,344 | ) | 8,231 | |||||||||||||
5 Year US Treasury Notes, 358 contracts (USD) | March 2011 | (42,760,677 | ) | (42,143,313 | ) | 617,364 | |||||||||||||
10 Year US Treasury Notes, 141 contracts (USD) | March 2011 | (17,415,476 | ) | (16,981,687 | ) | 433,789 | |||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
Euro-Buxl, 16 contracts (EUR) | March 2011 | 2,339,236 | 2,306,988 | (32,248 | ) | ||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
Euro-Bobl, 132 contracts (EUR) | March 2011 | (21,031,209 | ) | (20,951,794 | ) | 79,415 | |||||||||||||
Euro-Bund, 27 contracts (EUR) | March 2011 | (4,548,003 | ) | (4,521,197 | ) | 26,806 | |||||||||||||
Euro-Schatz, 41 contracts (EUR) | March 2011 | (5,977,802 | ) | (5,972,199 | ) | 5,603 | |||||||||||||
Long Gilt, 8 contracts (GBP) | March 2011 | (1,491,259 | ) | (1,490,375 | ) | 884 | |||||||||||||
10 Year Japanese Government Bond, 32 contracts (JPY) | March 2011 | (5,541,025 | ) | (5,541,963 | ) | (938 | ) | ||||||||||||
Net unrealized appreciation on futures contracts | $ | 1,007,035 |
Currency type abbreviations:
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
USD United States Dollar
Swap agreements
Credit default swaps on credit indicesbuy protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund |
Upfront payments (made)/ received |
Value |
Unrealized depreciation |
||||||||||||||||||||||||
Goldman Sachs International | EUR | 2,400,000 | 12/20/13 | 2.2000 | %2 | 3 | | $ | (111,901 | ) | $ | (111,901 | ) |
1 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments made are based on the notional amount.
3 Payment from the counterparty will be received upon the occurrence of a succession event with respect to the iTraxx Europe HiVol Series 10 Index.
14
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Credit default swaps on corporate issuesbuy protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund2 |
Payments received by the Fund |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Barclays Bank PLC | EUR | 600,000 | 12/20/15 | 1.0000 | % | 3 | $ | (14,903 | ) | $ | 30,810 | $ | 15,907 | ||||||||||||||||||
Barclays Bank PLC | USD | 450,000 | 12/20/15 | 1.0000 | 4 | 11,942 | (12,229 | ) | (287 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 250,000 | 12/20/15 | 1.0000 | 4 | 7,310 | (6,794 | ) | 516 | ||||||||||||||||||||||
Goldman Sachs International | EUR | 1,200,000 | 12/20/15 | 1.0000 | 5 | (30,229 | ) | 5,485 | (24,744 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | USD | 1,500,000 | 12/20/15 | 1.0000 | 6 | 45,168 | (48,696 | ) | (3,528 | ) | |||||||||||||||||||||
Merrill Lynch International | EUR | 500,000 | 12/20/15 | 1.0000 | 3 | (13,077 | ) | 25,675 | 12,598 | ||||||||||||||||||||||
Merrill Lynch International | EUR | 500,000 | 12/20/15 | 1.0000 | 7 | (2,922 | ) | 12,497 | 9,575 | ||||||||||||||||||||||
$ | 3,289 | $ | 6,748 | $ | 10,037 |
1 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments made are based on the notional amount.
3 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Deutsche Bank AG 5.125% bond, due 01/31/13.
4 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Duke Energy 6.100% bond, due 06/01/37.
5 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Saint Gobain Neder NV 5.000% bond, due 04/25/14.
6 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Lockheed Martin Corp. 7.650% bond, due 01/05/16.
7 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Commerzbank AG 5.500% bond, due 10/25/11.
Credit default swaps on credit indicessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund |
Upfront payments received |
Value |
Unrealized appreciation |
Credit spread2 |
|||||||||||||||||||||||||||
JPMorgan Chase Bank | USD | 750,000 | 12/20/15 | 3 | 1.0000 | %4 | $ | 2,624 | $ | 5,530 | $ | 8,154 | 0.8507 | % |
1 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.
2 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity.
3 Payment to the counterparty will be made upon the occurrence of a succession event with respect to the CDX.NA.IG. Series 15 Index.
4 Payments received are based on the notional amount.
15
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Credit default swaps on corporate and sovereign issuessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
Credit spread3 |
|||||||||||||||||||||||||||
Barclays Bank PLC | EUR | 600,000 | 12/20/15 | 4 | 1.0000 | % | $ | 25,854 | $ | (53,613 | ) | $ | (27,759 | ) | 2.5286 | % | |||||||||||||||||||
Barclays Bank PLC | USD | 450,000 | 12/20/15 | 5 | 1.0000 | 7,022 | (2,220 | ) | 4,802 | 1.1458 | |||||||||||||||||||||||||
Deutsche Bank AG | USD | 250,000 | 12/20/15 | 5 | 1.0000 | 3,288 | (1,233 | ) | 2,055 | 1.1458 | |||||||||||||||||||||||||
Goldman Sachs International | EUR | 1,200,000 | 12/20/15 | 6 | 1.0000 | 61,934 | (21,834 | ) | 40,100 | 1.1163 | |||||||||||||||||||||||||
Goldman Sachs International | USD | 800,000 | 06/20/18 | 7 | 0.5140 | | (135,610 | ) | (135,610 | ) | 3.4756 | ||||||||||||||||||||||||
Goldman Sachs International | USD | 1,600,000 | 12/20/18 | 8 | 1.1425 | | (45,862 | ) | (45,862 | ) | 1.5318 | ||||||||||||||||||||||||
Goldman Sachs International | USD | 3,000,000 | 09/20/19 | 9 | 1.0000 | (19,160 | ) | (18,606 | ) | (37,766 | ) | 1.1075 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 1,500,000 | 03/20/20 | 10 | 1.0000 | (2,579 | ) | (148,602 | ) | (151,181 | ) | 2.4119 | |||||||||||||||||||||||
Merrill Lynch International | EUR | 500,000 | 12/20/15 | 4 | 1.0000 | 22,191 | (44,678 | ) | (22,487 | ) | 2.5286 | ||||||||||||||||||||||||
Merrill Lynch International | EUR | 500,000 | 12/20/15 | 11 | 1.0000 | 10,602 | (14,975 | ) | (4,373 | ) | 1.5298 | ||||||||||||||||||||||||
$ | 109,152 | $ | (487,233 | ) | $ | (378,081 | ) |
1 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments received are based on the notional amount.
3 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity.
4 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the ING Bank NV 5.250% bond, due 01/04/13.
5 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Southern California Edison 6.650% bond, due 04/01/29.
6 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Holcim Finance Luxembourg SA 4.375% bond, due 12/09/14.
7 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Kingdom of Spain 5.500% bond, due 07/30/17.
8 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Republic of Poland 5.250% bond, due 01/15/14.
9 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Republic of Austria 5.250% bond, due 01/04/11.
10 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Republic of Italy 6.875% bond, due 09/27/23.
11 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Intesa Sanpaolo SpA 4.750% bond, due 06/15/17.
Currency type abbreviations:
EUR Euro
USD United States Dollar
16
UBS Absolute Return Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Corporate bonds | $ | | $ | 67,783,583 | $ | | $ | 67,783,583 | |||||||||||
Asset-backed securities | | 3,334,417 | | 3,334,417 | |||||||||||||||
Collateralized debt obligations | | | 1,747,443 | 1,747,443 | |||||||||||||||
Commercial mortgage-backed security | | 313,623 | | 313,623 | |||||||||||||||
Mortgage & agency debt securities | | 25,548,581 | | 25,548,581 | |||||||||||||||
US government obligation | | 5,568,321 | | 5,568,321 | |||||||||||||||
Non-US government obligations | | 26,501,077 | | 26,501,077 | |||||||||||||||
Supranational bonds | | 6,567,549 | | 6,567,549 | |||||||||||||||
Short-term investment | | 9,144,727 | | 9,144,727 | |||||||||||||||
Other financial instruments1 | 1,007,035 | (1,184,452 | ) | | (177,417 | ) | |||||||||||||
Total | $ | 1,007,035 | $ | 143,577,426 | $ | 1,747,443 | $ | 146,331,904 |
1 Other financial instruments include futures contracts, swap agreements and forward foreign currency contracts.
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Measurements using unobservable inputs (Level 3) | |||||||||||
Collateralized debt obligations |
Total | ||||||||||
Assets | |||||||||||
Beginning balance | $ | 1,269,921 | $ | 1,269,921 | |||||||
Total gains or losses (realized/unrealized), and premiums/discounts included in earnings | 1,575,020 | 1,575,020 | |||||||||
Purchases, sales, issuances, and settlements (net) | (1,097,498 | ) | (1,097,498 | ) | |||||||
Transfers in and/or out of Level 3 | | | |||||||||
Ending balance | 1,747,443 | 1,747,443 | |||||||||
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to investments still held at 12/31/10. |
1,578,920 | 1,578,920 |
See accompanying notes to financial statements.
17
UBS Core Plus Bond Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Core Plus Bond Fund (the "Fund") (formerly UBS U.S. Bond Fund) returned 2.48% (Class A shares declined 2.13% after the deduction of the maximum sales charge), while Class Y shares returned 2.49%. The Fund's benchmark, the Barclays Capital US Aggregate Index (the "Index"), returned 1.15% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 20; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund posted a positive return and outperformed the Index during the reporting period, largely due to sector allocation and security selection.
During the period, certain derivative instruments, namely bond and interest rate futures, were used to facilitate specific duration and yield curve strategies. Credit default swaps were used to implement specific credit-related investment strategies. The results of derivatives use during the period were within our expectations.
Portfolio performance summary1
What worked
• The Fund's overweight to the spread sectors (non-US Treasuries) was beneficial during the reporting period.
The largest contributor to performance was the Fund's exposure to commercial mortgage-backed securities (CMBS). While CMBS spreads had narrowed significantly during the first six months of 2010, we continued to feel that they were attractively valued given signs that the overall US economy was gaining some momentum and would avoid a double-dip recession. Our CMBS overweight during the period was rewarded as their spreads continued to narrow, in part due to overall robust demand from investors seeking to generate incremental yield in the low interest rate environment. (Spread measures the difference between the yields paid on a security versus those paid on US Treasuries of comparable duration.)
An overweight to certain asset-backed securities added value during the reporting period. As was the case with CMBS, we continued to find value in the asset-backed sector and believed that spreads on these securities would narrow further during the reporting period.
The Fund's overweight to investment grade corporate bonds enhanced results. We maintained a meaningful exposure in the sector given our expectations for continued economic growth, rising corporate profits, declining default rates and solid investor demand.
Out-of-index exposures to high yield bonds and emerging markets debt boosted the Fund's returns. Overall, these riskier asset classes generated strong returns during the period as their spreads narrowed.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
18
UBS Core Plus Bond Fund
• Security selection was a positive for performance.
Notably, the Fund's selection of CMBS was rewarded. Within the sector, we emphasized AAA-rated securities at the top of the capital structure (that is, senior debt).2 This portion of the CMBS sector generated the strongest relative results and was least impacted by the potential increase in delinquencies within commercial real estate.
Asset-backed security selection added value as well. In particular, the Fund's BBB-rated credit card receivables generated solid results during the review period.3
Within the corporate bond sector, the Fund's industrial holdings contributed to results. The spreads of issuers in this sector narrowed as the economy continued to expand, corporate profits generally exceeded expectations and investor demand was typically robust.
• The Fund's duration positioning modestly contributed to performance. We tactically adjusted the Fund's duration during the reporting period. In particular, we moved from a neutral position versus the Index to a short position, given our belief that yields were unsustainably low. This proved to be the case, as Treasury yields moved sharply higher in November and December 2010. (Duration measures the price sensitivity of a portfolio to interest rate changes.)
What didn't work
• Certain mortgage-backed securities held by the Fund detracted from performance. During the reporting period, security selection in the mortgage-backed securities sector was a modest drag on the Fund's results.
2 AAA rating is the highest rating assigned by Standard & Poor's Ratings Group to a debt obligation and indicates an extremely strong capacity to pay principal and interest.
3 Bonds rated BBB are regarded as having an adequate capacity to pay principal and interest.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
19
UBS Core Plus Bond Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 2.48 | % | 7.86 | % | 1.58 | % | 3.42 | % | 4.27 | % | |||||||||||||
Class B3 | 2.08 | 7.02 | 0.81 | N/A | 2.10 6 | ||||||||||||||||||
Class C4 | 2.23 | 7.35 | 1.04 | N/A | 2.07 | ||||||||||||||||||
Class Y5 | 2.49 | 8.01 | 1.79 | 3.66 | 4.75 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | (2.13 | )% | 2.96 | % | 0.66 | % | 2.94 | % | 3.91 | % | |||||||||||||
Class B3 | (2.87 | ) | 2.02 | 0.49 | N/A | 2.10 6 | |||||||||||||||||
Class C4 | 1.49 | 6.60 | 1.04 | N/A | 2.07 | ||||||||||||||||||
Barclays Capital US Aggregate Index7 | 1.15 | % | 6.54 | % | 5.80 | % | 5.84 | % | 6.26 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.41% and 0.66%; Class B2.24% and 1.41%; Class C1.88% and 1.16%; Class Y1.11% and 0.41%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the 12-month period ending October 27, 2011, do not exceed 0.64% for Class A shares, 1.39% for Class B shares, 1.14% for Class C shares and 0.39% for Class Y shares. 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.
1 Inception date of UBS Core Plus Bond Fund (formerly, UBS U.S. Bond Fund) Class A shares is June 30, 1997. Inception dates of Class B and Class C shares are November 6, 2001 and November 8, 2001, respectively. Inception date of Class Y shares and the index is August 31,1995.
2 Maximum sales charge for Class A shares is 4.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 0.75% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The Barclays Capital US Aggregate Index is an unmanaged broad based index designed to measure the US dollar-denominated, investment-grade, fixed rate taxable bond market. The index includes bonds from the Treasury, government-related, corporate, mortgage-backed, asset-backed and commercial-mortgage backed sectors. US agency hybrid adjustable rate mortgage (ARM) securities were added to the index on April 1, 2007. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
20
UBS Core Plus Bond Fund
Top ten fixed income holdings (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
US Treasury Notes, 0.500%, due 11/30/12 |
7.4 | % | |||||
Federal National Mortgage Association Pools, 5.000%, TBA |
6.4 | ||||||
US Treasury Notes, 0.375%, due 10/31/12 |
4.1 | ||||||
Federal National Mortgage Association Pools, 4.000%, TBA |
3.4 | ||||||
Federal National Mortgage Association Pools, 4.500%, TBA |
2.9 | ||||||
Federal Home Loan Mortgage Corp., 0.625%, due 12/28/12 |
2.9 | ||||||
Federal National Mortgage Association, 1.750%, due 05/07/13 |
2.5 | ||||||
Federal National Mortgage Association, 1.625%, due 10/26/15 |
2.4 | ||||||
Federal Home Loan Mortgage Corp. Gold Pools, #A90675, 4.500%, due 01/01/40 |
1.8 | ||||||
US Treasury Notes, 0.875%, due 01/31/12 |
1.6 | ||||||
Total | 35.4 | % |
1 Figures represent the direct investments of UBS Core Plus Bond Fund. Figures would be different if a breakdown of the underlying investment companies was included.
21
UBS Core Plus Bond Fund
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2010
Bonds | |||||||
Corporate bonds | |||||||
Aerospace & defense | 0.18 | % | |||||
Beverages | 0.23 | ||||||
Biotechnology | 0.32 | ||||||
Building products | 0.27 | ||||||
Capital markets | 1.53 | ||||||
Chemicals | 0.30 | ||||||
Commercial banks | 1.74 | ||||||
Commercial services & supplies | 0.51 | ||||||
Communications equipment | 0.15 | ||||||
Consumer finance | 0.65 | ||||||
Diversified financial services | 3.27 | ||||||
Diversified media | 0.30 | ||||||
Diversified telecommunication services | 0.31 | ||||||
Electric utilities | 1.54 | ||||||
Energy equipment & services | 0.33 | ||||||
Food & staples retailing | 1.03 | ||||||
Food products | 0.59 | ||||||
Health care providers & services | 0.20 | ||||||
Insurance | 1.89 | ||||||
Leisure equipment & products | 0.12 | ||||||
Media | 1.75 | ||||||
Metals & mining | 0.53 | ||||||
Multi-utilities | 0.10 | ||||||
Oil, gas & consumable fuels | 2.88 | ||||||
Paper & forest products | 0.18 | ||||||
Pharmaceuticals | 0.74 | ||||||
Real estate investment trust (REIT) | 0.17 | ||||||
Road & rail | 0.25 | ||||||
Software | 0.14 | ||||||
Tobacco | 0.61 | ||||||
Wireless telecommunication services | 1.39 | ||||||
Total corporate bonds | 24.20 | % | |||||
Asset-backed securities | 2.32 | ||||||
Commercial mortgage-backed securities | 8.67 | ||||||
Mortgage & agency debt securities | 42.78 | ||||||
Municipal bonds | 1.14 | ||||||
US government obligations | 15.35 | ||||||
Supranational bond | 0.25 | ||||||
Total bonds | 94.71 | % | |||||
Investment companies | |||||||
UBS High Yield Relationship Fund | 2.96 | % | |||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
1.05 | ||||||
Total investment companies | 4.01 | % | |||||
Short-term investment | 18.32 | ||||||
Investment of cash collateral from securities loaned | 0.76 | ||||||
Total investments | 117.80 | % | |||||
Liabilities, in excess of cash and other assets | (17.80 | ) | |||||
Net assets | 100.00 | % |
2 Figures represent the industry breakdown of direct investments of UBS Core Plus Bond Fund. Figures would be different if a breakdown of the underlying investment companies' industry diversification was included.
22
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 94.71% | |||||||||||
Corporate bonds: 24.20% | |||||||||||
Australia: 0.15% | |||||||||||
Rio Tinto Finance USA Ltd., 9.000%, due 05/01/19 |
$ | 50,000 | $ | 67,152 | |||||||
Canada: 0.46% | |||||||||||
Canadian Natural Resources Ltd., 5.850%, due 02/01/35 |
65,000 | 67,561 | |||||||||
Cenovus Energy, Inc., 4.500%, due 09/15/14 |
95,000 | 101,797 | |||||||||
EnCana Corp., 6.500%, due 05/15/191 |
30,000 | 35,558 | |||||||||
Total Canada corporate bonds | 204,916 | ||||||||||
Cayman Islands: 0.55% | |||||||||||
Transocean, Inc., 6.800%, due 03/15/38 |
145,000 | 148,605 | |||||||||
Vale Overseas Ltd., 4.625%, due 09/15/201 |
100,000 | 99,008 | |||||||||
Total Cayman Islands corporate bonds | 247,613 | ||||||||||
France: 0.36% | |||||||||||
EDF SA, 4.600%, due 01/27/202 |
50,000 | 51,672 | |||||||||
France Telecom SA, 2.125%, due 09/16/15 |
115,000 | 111,946 | |||||||||
Total France corporate bonds | 163,618 | ||||||||||
Isle of Man: 0.16% | |||||||||||
AngloGold Ashanti Holdings PLC, 5.375%, due 04/15/20 |
70,000 | 72,800 | |||||||||
Luxembourg: 0.61% | |||||||||||
Covidien International Finance SA, 4.200%, due 06/15/20 |
90,000 | 89,977 | |||||||||
Telecom Italia Capital SA, 4.950%, due 09/30/14 |
180,000 | 184,418 | |||||||||
Total Luxembourg corporate bonds | 274,395 | ||||||||||
Mexico: 0.23% | |||||||||||
America Movil SAB de CV, 5.000%, due 03/30/20 |
100,000 | 103,945 | |||||||||
Netherlands: 0.26% | |||||||||||
Shell International Finance BV, 3.100%, due 06/28/15 |
115,000 | 118,099 | |||||||||
Netherlands Antilles: 0.22% | |||||||||||
Teva Pharmaceutical Finance II BV, 3.000%, due 06/15/15 |
95,000 | 96,660 |
Face amount |
Value | ||||||||||
United Kingdom: 0.54% | |||||||||||
AstraZeneca PLC, 6.450%, due 09/15/37 |
$ | 40,000 | $ | 47,488 | |||||||
BP Capital Markets PLC, 3.875%, due 03/10/15 |
120,000 | 123,779 | |||||||||
Royal Bank of Scotland PLC, 5.625%, due 08/24/20 |
70,000 | 69,594 | |||||||||
Total United Kingdom corporate bonds | 240,861 | ||||||||||
United States: 20.66% | |||||||||||
Allied Waste North America, Inc., 6.875%, due 06/01/17 |
85,000 | 93,500 | |||||||||
Altria Group, Inc., 9.950%, due 11/10/38 |
55,000 | 77,502 | |||||||||
American International Group, Inc., 6.400%, due 12/15/20 |
60,000 | 62,953 | |||||||||
Amgen, Inc., 3.450%, due 10/01/20 |
100,000 | 95,284 | |||||||||
Anadarko Petroleum Corp., 5.950%, due 09/15/16 |
75,000 | 80,572 | |||||||||
Anheuser-Busch InBev Worldwide, Inc., 4.125%, due 01/15/15 |
100,000 | 105,322 | |||||||||
Apache Corp., 5.250%, due 02/01/42 |
115,000 | 114,280 | |||||||||
AvalonBay Communities, Inc., 3.950%, due 01/15/21 |
80,000 | 76,319 | |||||||||
Bank of America Corp., 5.625%, due 07/01/20 |
150,000 | 152,924 | |||||||||
5.875%, due 01/05/21 | 45,000 | 46,557 | |||||||||
6.500%, due 08/01/16 | 130,000 | 141,062 | |||||||||
Bristol-Myers Squibb Co., 5.875%, due 11/15/36 |
40,000 | 44,484 | |||||||||
Browning-Ferris Industries, Inc., 7.400%, due 09/15/35 |
35,000 | 41,413 | |||||||||
Burlington Northern Santa Fe LLC, 5.050%, due 03/01/41 |
45,000 | 41,845 | |||||||||
6.150%, due 05/01/37 | 65,000 | 69,886 | |||||||||
Capital One Financial Corp., 7.375%, due 05/23/14 |
55,000 | 62,586 | |||||||||
Cellco Partnership, 8.500%, due 11/15/18 |
85,000 | 111,227 | |||||||||
CenterPoint Energy Resources Corp., 6.000%, due 05/15/18 |
115,000 | 126,813 | |||||||||
Cisco Systems, Inc., 5.900%, due 02/15/39 |
60,000 | 66,450 | |||||||||
Citigroup, Inc., 5.375%, due 08/09/20 |
10,000 | 10,390 | |||||||||
6.125%, due 05/15/18 | 285,000 | 312,225 | |||||||||
8.125%, due 07/15/39 | 60,000 | 76,328 | |||||||||
Comcast Corp., 6.300%, due 11/15/17 |
160,000 | 183,192 |
23
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
ConocoPhillips, 6.500%, due 02/01/39 |
$ | 35,000 | $ | 41,619 | |||||||
CVS Caremark Corp., 6.125%, due 09/15/39 |
160,000 | 170,953 | |||||||||
CVS Pass-Through Trust, 6.036%, due 12/10/28 |
67,564 | 69,293 | |||||||||
DirecTV Financing Co., Inc., 6.000%, due 08/15/40 |
70,000 | 70,275 | |||||||||
7.625%, due 05/15/16 | 105,000 | 116,419 | |||||||||
Dominion Resources, Inc., 5.200%, due 08/15/19 |
85,000 | 92,024 | |||||||||
Dow Chemical Co., 4.250%, due 11/15/20 |
70,000 | 67,053 | |||||||||
Duke Energy Carolinas LLC, 5.100%, due 04/15/18 |
55,000 | 60,411 | |||||||||
ERAC USA Finance Co., 2.750%, due 07/01/132 |
25,000 | 25,447 | |||||||||
7.000%, due 10/15/372 | 85,000 | 91,530 | |||||||||
Express Scripts, Inc., 6.250%, due 06/15/14 |
65,000 | 72,668 | |||||||||
FGI Operating Co., Inc., 10.250%, due 08/01/15 |
75,000 | 78,750 | |||||||||
FirstEnergy Solutions Corp., 4.800%, due 02/15/15 |
165,000 | 173,264 | |||||||||
Ford Motor Credit Co. LLC, 7.800%, due 06/01/12 |
215,000 | 228,572 | |||||||||
General Electric Capital Corp., 2.250%, due 11/09/15 |
40,000 | 38,454 | |||||||||
6.000%, due 06/15/12 | 40,000 | 42,760 | |||||||||
Series A, 6.000%, due 08/07/19 | 230,000 | 255,896 | |||||||||
6.750%, due 03/15/32 | 260,000 | 294,351 | |||||||||
Georgia-Pacific LLC, 5.400%, due 11/01/202 |
80,000 | 79,094 | |||||||||
GlaxoSmithKline Capital, Inc., 5.650%, due 05/15/18 |
60,000 | 68,606 | |||||||||
Goldman Sachs Group, Inc., 6.150%, due 04/01/18 |
260,000 | 286,310 | |||||||||
7.500%, due 02/15/19 | 20,000 | 23,320 | |||||||||
Hasbro, Inc., 6.350%, due 03/15/40 |
55,000 | 55,654 | |||||||||
International Lease Finance Corp., 7.125%, due 09/01/182 |
80,000 | 85,000 | |||||||||
Jersey Central Power & Light Co., 7.350%, due 02/01/19 |
60,000 | 71,005 | |||||||||
JP Morgan Chase Capital XXII, Series V, 6.450%, due 02/02/37 |
225,000 | 224,122 | |||||||||
JPMorgan Chase & Co., 4.250%, due 10/15/20 |
185,000 | 180,680 | |||||||||
4.400%, due 07/22/20 | 145,000 | 142,716 |
Face amount |
Value | ||||||||||
Kinder Morgan Energy Partners LP, 5.800%, due 03/15/35 |
$ | 45,000 | $ | 42,863 | |||||||
Kraft Foods, Inc., 6.500%, due 02/09/40 |
135,000 | 151,285 | |||||||||
Life Technologies Corp., 6.000%, due 03/01/20 |
45,000 | 48,201 | |||||||||
Massachusetts Mutual Life Insurance Co., 8.875%, due 06/01/392 |
50,000 | 66,921 | |||||||||
Merrill Lynch & Co., Inc., 6.875%, due 04/25/18 |
75,000 | 82,077 | |||||||||
MetLife, Inc., 6.400%, due 12/15/36 |
150,000 | 141,000 | |||||||||
MidAmerican Energy Holding Co., 5.950%, due 05/15/37 |
40,000 | 42,193 | |||||||||
Morgan Stanley, 5.500%, due 01/26/20 |
40,000 | 40,321 | |||||||||
Series F, 5.625%, due 09/23/19 | 100,000 | 101,968 | |||||||||
6.625%, due 04/01/18 | 200,000 | 216,954 | |||||||||
Mosaic Co., 7.375%, due 12/01/142 |
65,000 | 67,283 | |||||||||
Motiva Enterprises LLC, 5.750%, due 01/15/202 |
45,000 | 50,477 | |||||||||
Nationwide Mutual Insurance Co., 9.375%, due 08/15/392 |
95,000 | 110,183 | |||||||||
NBC Universal, Inc., 5.950%, due 04/01/412 |
85,000 | 84,991 | |||||||||
News America, Inc., 6.200%, due 12/15/34 |
35,000 | 36,749 | |||||||||
7.750%, due 12/01/45 | 60,000 | 71,309 | |||||||||
NuStar Logistics LP, 7.650%, due 04/15/18 |
100,000 | 114,597 | |||||||||
Oncor Electric Delivery Co. LLC, 6.800%, due 09/01/18 |
50,000 | 58,529 | |||||||||
ONEOK, Inc., 6.000%, due 06/15/35 |
60,000 | 58,123 | |||||||||
Oracle Corp., 6.125%, due 07/08/39 |
55,000 | 61,721 | |||||||||
Owens Corning, 6.500%, due 12/01/16 |
115,000 | 121,799 | |||||||||
Pacific Gas & Electric Co., 6.050%, due 03/01/34 |
30,000 | 32,847 | |||||||||
Pacific Life Insurance Co., 9.250%, due 06/15/392 |
100,000 | 129,953 | |||||||||
Philip Morris International, Inc., 5.650%, due 05/16/18 |
60,000 | 67,645 | |||||||||
6.375%, due 05/16/38 | 45,000 | 52,231 | |||||||||
Principal Financial Group, Inc., 8.875%, due 05/15/19 |
105,000 | 132,099 | |||||||||
Prudential Financial, Inc., 4.500%, due 11/15/20 |
110,000 | 107,574 | |||||||||
Series C, 5.400%, due 06/13/35 |
105,000 | 99,808 |
24
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
PSEG Power LLC, 8.625%, due 04/15/31 |
$ | 35,000 | $ | 44,951 | |||||||
Qwest Corp., 7.625%, due 06/15/15 |
125,000 | 140,938 | |||||||||
Reynolds American, Inc., 7.625%, due 06/01/16 |
65,000 | 75,545 | |||||||||
Sempra Energy, 9.800%, due 02/15/19 |
35,000 | 47,053 | |||||||||
South Carolina Electric & Gas Co., 6.050%, due 01/15/38 |
35,000 | 37,790 | |||||||||
Southern Natural Gas Co., 8.000%, due 03/01/32 |
130,000 | 148,933 | |||||||||
Time Warner Cable, Inc., 6.550%, due 05/01/37 |
65,000 | 69,595 | |||||||||
6.750%, due 07/01/18 | 100,000 | 116,568 | |||||||||
Time Warner, Inc., 6.100%, due 07/15/40 |
35,000 | 36,725 | |||||||||
Verizon Communications, Inc., 6.100%, due 04/15/18 |
100,000 | 113,592 | |||||||||
Virginia Electric & Power Co., 6.350%, due 11/30/37 |
30,000 | 34,340 | |||||||||
Wal-Mart Stores, Inc., 3.625%, due 07/08/20 |
230,000 | 223,832 | |||||||||
Waste Management, Inc., 4.750%, due 06/30/20 |
90,000 | 92,280 | |||||||||
Williams Partners LP, 4.125%, due 11/15/20 |
20,000 | 18,944 | |||||||||
6.300%, due 04/15/40 | 50,000 | 52,044 | |||||||||
WM Wrigley Jr. Co., 3.700%, due 06/30/142 |
110,000 | 113,306 | |||||||||
WMG Acquisition Corp., 9.500%, due 06/15/16 |
125,000 | 134,063 | |||||||||
Total United States corporate bonds |
9,291,560 | ||||||||||
Total corporate bonds (cost $10,429,001) |
10,881,619 | ||||||||||
Asset-backed securities: 2.32% | |||||||||||
United States: 2.32% | |||||||||||
Ameriquest Mortgage Securities, Inc., Series 2005-R6, Class A2, 0.461%, due 08/25/353 |
70,998 | 68,684 | |||||||||
Citibank Credit Card Issuance Trust, Series 2005-C2, Class C2, 0.731%, due 03/24/173 |
350,000 | 328,500 | |||||||||
Series 2003-C4, Class C4, 5.000%, due 06/10/15 |
250,000 | 262,852 |
Face amount |
Value | ||||||||||
MBNA Credit Card Master Note Trust, Series 2004-C2, Class C2, 1.160%, due 11/15/163 |
$ | 350,000 | $ | 338,811 | |||||||
Renaissance Home Equity Loan Trust, Series 2006-4, Class AF1, 5.545%, due 01/25/37 |
43,629 | 42,979 | |||||||||
Total asset-backed securities (cost $1,008,353) |
1,041,826 | ||||||||||
Commercial mortgage-backed securities: 8.67% | |||||||||||
United States: 8.67% | |||||||||||
Banc of America Commercial Mortgage, Inc., Series 2007-2, Class AM, 5.699%, due 04/10/493 |
150,000 | 143,904 | |||||||||
Series 2007-4, Class A4, 5.742%, due 02/10/513 |
300,000 | 319,555 | |||||||||
Citigroup Commercial Mortgage Trust, Series 2007-C6, Class AM, 5.698%, due 12/10/493 |
370,000 | 367,080 | |||||||||
Commercial Mortgage Pass-Through Certificates, Series 2006-C8, Class A4, 5.306%, due 12/10/46 |
200,000 | 208,597 | |||||||||
FDIC Structured Sale Guaranteed Notes, Series 2010-C1, Class A, 2.980%, due 12/06/202,4 |
400,000 | 401,108 | |||||||||
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class A4, 5.543%, due 12/10/49 |
250,000 | 257,401 | |||||||||
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class AM, 5.475%, due 03/10/39 |
275,000 | 274,743 | |||||||||
Series 2007-GG11, Class A4, 5.736%, due 12/10/49 |
275,000 | 290,579 | |||||||||
GS Mortgage Securities Corp. II, Series 2007-GG10, Class A4, 5.807%, due 08/10/451,3 |
250,000 | 261,353 | |||||||||
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CB17, Class AM, 5.464%, due 12/12/43 |
150,000 | 147,387 | |||||||||
Series 2006-LDP7, Class AM, 5.872%, due 04/15/45 |
250,000 | 259,251 | |||||||||
Series 2007-LD12, Class A4, 5.882%, due 02/15/513 |
325,000 | 344,095 | |||||||||
Morgan Stanley Re-REMIC Trust, Series 2009-GG10, Class A4B, 5.807%, due 08/12/452,3 |
375,000 | 372,634 |
25
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Commercial mortgage-backed securities(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
TrizecHahn Office Properties, Series 2001-TZHA, Class B4, 6.718%, due 05/15/162 |
$ | 250,000 | $ | 253,404 | |||||||
Total commercial mortgage-backed securities (cost $3,595,824) |
3,901,091 | ||||||||||
Mortgage & agency debt securities: 42.78% | |||||||||||
United States: 42.78% | |||||||||||
Federal Home Loan Mortgage Corp.5 0.625%, due 12/28/12 |
1,280,000 | 1,277,669 | |||||||||
Federal Home Loan Mortgage Corp. Gold Pools5 4.000%, TBA |
550,000 | 545,961 | |||||||||
#A90660, 4.500%, due 01/01/40 |
112,840 | 115,738 | |||||||||
#A90675, 4.500%, due 01/01/40 |
775,208 | 795,120 | |||||||||
#G05249, 5.000%, due 01/01/39 |
454,335 | 476,832 | |||||||||
#G04567, 5.500%, due 07/01/38 |
214,651 | 228,948 | |||||||||
#G05267, 5.500%, due 12/01/38 |
239,453 | 255,401 | |||||||||
#C63008, 6.000%, due 01/01/32 |
259,798 | 285,515 | |||||||||
#G06019, 6.000%, due 10/01/36 |
283,390 | 310,115 | |||||||||
#G01717, 6.500%, due 11/01/29 |
152,944 | 171,973 | |||||||||
Federal National Mortgage Association,5 1.625%, due 10/26/15 |
1,120,000 | 1,091,640 | |||||||||
1.750%, due 05/07/13 | 1,115,000 | 1,138,800 | |||||||||
Federal National Mortgage Association Pools,5 3.500%, TBA |
450,000 | 453,094 | |||||||||
4.000%, TBA | 1,550,000 | 1,541,766 | |||||||||
4.500%, TBA | 1,275,000 | 1,308,668 | |||||||||
5.000%, TBA | 2,725,000 | 2,864,656 | |||||||||
5.500%, TBA | 150,000 | 160,477 | |||||||||
#935520, 4.500%, due 08/01/39 |
607,170 | 623,904 | |||||||||
#890209, 5.000%, due 05/01/40 |
491,975 | 517,570 | |||||||||
#AD9114, 5.000%, due 07/01/40 |
537,565 | 566,877 | |||||||||
#576764, 5.500%, due 09/01/24 |
133,250 | 143,043 |
Face amount |
Value | ||||||||||
#688066, 5.500%, due 03/01/33 |
$ | 271,632 | $ | 294,398 | |||||||
#688314, 5.500%, due 03/01/33 |
318,881 | 345,604 | |||||||||
#802481, 5.500%, due 11/01/34 |
488,193 | 526,070 | |||||||||
#962129, 5.500%, due 03/01/38 |
382,565 | 409,557 | |||||||||
#995018, 5.500%, due 06/01/38 |
380,052 | 407,519 | |||||||||
#408267, 6.000%, due 03/01/28 |
28,251 | 31,627 | |||||||||
#323715, 6.000%, due 05/01/29 |
27,655 | 30,966 | |||||||||
#522564, 6.000%, due 07/01/29 |
96,026 | 105,783 | |||||||||
#676733, 6.000%, due 01/01/33 |
205,870 | 228,977 | |||||||||
#708631, 6.000%, due 06/01/33 |
49,989 | 55,942 | |||||||||
#AE0405, 6.000%, due 08/01/37 |
377,508 | 414,825 | |||||||||
#831730, 6.500%, due 09/01/36 |
312,524 | 348,477 | |||||||||
#894630, 6.500%, due 11/01/36 |
239,672 | 267,243 | |||||||||
#253824, 7.000%, due 03/01/31 |
10,201 | 11,566 | |||||||||
First Horizon Asset Securities, Inc., Series 2004-FL1, Class 1A1, 0.531%, due 02/25/353 |
49,321 | 39,345 | |||||||||
Government National Mortgage Association Pools, #701813, 4.500%, due 04/15/39 |
630,138 | 655,077 | |||||||||
#G2 2687, 6.000%, due 12/20/28 |
38,016 | 41,895 | |||||||||
#G2 2794, 6.000%, due 08/20/29 |
119,356 | 131,594 | |||||||||
WaMu Mortgage Pass-Through Certificates, Series 2007-HY1, Class 3B2, 5.752%, due 02/25/373 |
1,097,598 | 17,880 | |||||||||
Total mortgage & agency debt securities (cost $19,150,580) |
19,238,112 | ||||||||||
Municipal bonds: 1.14% | |||||||||||
Chicago Transit Authority, Series 2008-A, 6.899%, due 12/01/40 |
60,000 | 60,055 |
26
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Municipal bonds(Concluded) | |||||||||||
Illinois State Taxable Pension, Series 2003, 5.100%, due 06/01/33 |
$ | 115,000 | $ | 86,537 | |||||||
Los Angeles Unified School District, Series 2010, 6.758%, due 07/01/34 |
110,000 | 115,027 | |||||||||
New Jersey State Turnpike Authority Revenue Bonds, Class F, 7.414%, due 01/01/40 |
30,000 | 33,095 | |||||||||
New York State Urban Development Corp. Revenue Bonds, 5.770%, due 03/15/39 |
55,000 | 54,751 | |||||||||
State of California, GO, 6.650%, due 03/01/22 |
30,000 | 31,517 | |||||||||
7.300%, due 10/01/39 | 130,000 | 131,866 | |||||||||
Total municipal bonds (cost $530,527) |
512,848 | ||||||||||
US government obligations: 15.35% | |||||||||||
US Treasury Notes, 0.375%, due 10/31/12 |
1,855,000 | 1,849,348 | |||||||||
0.500%, due 11/30/121 | 3,335,000 | 3,330,701 | |||||||||
0.875%, due 01/31/121 | 700,000 | 703,910 | |||||||||
1.250%, due 09/30/15 | 185,000 | 179,493 | |||||||||
1.375%, due 11/30/151 | 250,000 | 242,949 | |||||||||
2.625%, due 11/15/201 | 635,000 | 598,984 | |||||||||
Total US government obligations (cost $6,916,083) |
6,905,385 |
Face amount |
Value | ||||||||||
Supranational bond: 0.25% | |||||||||||
European Investment Bank, 1.250%, due 09/17/13 (cost $109,624) |
$ | 110,000 | $ | 110,102 | |||||||
Total bonds (cost $41,739,992) |
42,590,983 | ||||||||||
Investment companies: 4.01% | |||||||||||
UBS High Yield Relationship Fund*6 | 50,205 | 1,331,369 | |||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund*6 |
28,534 | 473,873 | |||||||||
Total investment companies (cost $1,642,561) |
1,805,242 | ||||||||||
Short-term investment: 18.32% | |||||||||||
Investment company: 18.32% | |||||||||||
UBS Cash Management Prime Relationship Fund6 (cost $8,239,065) |
8,239,065 | 8,239,065 | |||||||||
Investment of cash collateral from securities loaned: 0.76% | |||||||||||
UBS Private Money Market Fund LLC6 (cost $343,069) |
343,069 | 343,069 | |||||||||
Total investments: 117.80% (cost $51,964,687) |
52,978,359 | ||||||||||
Liabilities, in excess of cash and other assets: (17.80)% |
(8,004,129 | ) | |||||||||
Net assets: 100.00% | $ | 44,974,230 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 1,338,569 | |||||
Gross unrealized depreciation | (324,897 | ) | |||||
Net unrealized appreciation of investments | $ | 1,013,672 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
2 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $1,983,003 or 4.41% of net assets.
3 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2010 and changes periodically.
4 Security is being fair valued by a valuation committee under the direction of the Board of Trustees. At December 31, 2010, the value of this security amounted to $401,108 or 0.89% of net assets.
5 On September 7, 2008, the Federal Housing Finance Agency placed the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association into conservatorship, and the US Treasury guaranteed the debt issued by those organizations.
27
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
6 The table below details the Fund's investments in funds that are advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Funds.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Net realized gain during the six months ended 12/31/10 |
Change in net unrealized appreciation/ (depreciation) during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 2,632,182 | $ | 19,822,200 | $ | 14,215,317 | $ | | $ | | $ | 8,239,065 | $ | 7,106 | |||||||||||||||||
UBS Private Money Market Fund LLC1 |
197,250 | 3,276,888 | 3,131,069 | | | 343,069 | 412 | ||||||||||||||||||||||||
UBS High Yield Relationship Fund |
988,798 | 450,000 | 200,000 | 2,588 | 89,983 | 1,331,369 | | ||||||||||||||||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
417,560 | | | | 56,313 | 473,873 | | ||||||||||||||||||||||||
$ | 4,235,790 | $ | 23,549,088 | $ | 17,546,386 | $ | 2,588 | $ | 146,296 | $ | 10,387,376 | $ | 7,518 |
1 The advisor does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements for further information.
GE General Electric
GO General Obligation
GS Goldman Sachs
Re-REMIC Combined Real Estate Mortgage Investment Conduits
TBA (To be announced) Security is purchased on a forward commitment basis with an approximate principal amount (generally +/-1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement, when the specific mortgage pools are assigned.
Futures contracts
UBS Core Plus Bond Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized depreciation |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Ultra Bond Futures, 10 contracts (USD) | March 2011 | $ | 1,310,094 | $ | 1,270,937 | $ | (39,157 | ) | |||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
US Ultra Bond Futures, 6 contracts (USD) | March 2011 | (752,054 | ) | (762,563 | ) | (10,509 | ) | ||||||||||||
Net unrealized depreciation on futures contracts | $ | (49,666 | ) |
Currency type abbreviations:
USD United States Dollar
28
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Swap agreements
UBS Core Plus Bond Fund had outstanding interest rate swap agreements with the following terms as of December 31, 2010:
Interest Rate Swaps
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund1 |
Payments received by the Fund1 |
Upfront payments (made)/ received |
Value |
Unrealized depreciation |
||||||||||||||||||||||||
Deutsche Bank AG | USD | 1,310,000 | 02/15/36 | 4.5450 | % | 0.2856 | %2 | | $ | (123,917 | ) | $ | (123,917 | ) |
1 Payments made or received are based on the notional amount.
2 Rate based on 3 month LIBOR (USD BBA).
BBA British Banker's Association
LIBOR London Interbank Offered Rate
Credit default swaps on corporate issuesbuy protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund |
Upfront payments received |
Value |
Unrealized depreciation |
||||||||||||||||||||||||
Deutsche Bank AG | USD | 250,000 | 12/20/15 | 1.0000 | %2 | 3 | $ | 5,969 | $ | (6,731 | ) | $ | (762 | ) |
1 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments made are based on the notional amount.
3 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Amgen Inc. 4.850% bond, due 11/18/14.
Currency type abbreviation:
USD United States Dollar
Credit default swaps on corporate issuessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund |
Upfront payments made |
Value |
Unrealized appreciation |
Credit spread2 |
|||||||||||||||||||||||||||
Deutsche Bank AG | USD | 250,000 | 12/20/15 | 3 | 1.0000 | %4 | $ | (5,716 | ) | $ | 5,983 | $ | 267 | 0.5213 | % |
1 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater
29
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity.
3 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Pfizer Inc. 4.650% bond, due 03/01/18.
4 Payments received are based on the notional amount.
Currency type abbreviation:
USD United States Dollar
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Corporate bonds | $ | | $ | 10,881,619 | | $ | 10,881,619 | ||||||||||||
Asset-backed securities | | 1,041,826 | | 1,041,826 | |||||||||||||||
Commercial mortgage-backed securities | | 3,901,091 | | 3,901,091 | |||||||||||||||
Mortgage & agency debt securities | | 19,238,112 | | 19,238,112 | |||||||||||||||
Municipal bonds | | 512,848 | | 512,848 | |||||||||||||||
US government obligations | | 6,905,385 | | 6,905,385 | |||||||||||||||
Supranational bond | | 110,102 | | 110,102 | |||||||||||||||
Investment companies | | 1,805,242 | | 1,805,242 | |||||||||||||||
Short-term investment | | 8,239,065 | | 8,239,065 | |||||||||||||||
Investment of cash collateral from securities loaned | | 343,069 | | 343,069 | |||||||||||||||
Other financial instruments1 | (49,666 | ) | (124,665 | ) | | (174,331 | ) | ||||||||||||
Total | $ | (49,666 | ) | $ | 52,853,694 | | $ | 52,804,028 |
1 Other financial instruments include open futures contracts and swap agreements.
See accompanying notes to financial statements.
30
UBS Fixed Income Opportunities Fund
Portfolio performance
From its inception on November 29, 2010 through December 31, 2010, Class A shares of UBS Fixed Income Opportunities Fund (the "Fund") returned 2.22% (Class A shares declined 2.36% after the deduction of the maximum sales charge), while Class Y shares returned 2.34%. The Fund's benchmark, the BofA Merrill Lynch US Dollar 3-Month LIBOR Constant Maturity Index (the "Index"), returned 0.03% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 33; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund generated a positive return during the reporting period and outperformed the Index, largely due to duration positioning and sector allocation.
Certain derivative instruments, namely bond and interest rate futures, were used to facilitate specific duration and yield curve strategies. Credit default swaps were used to implement specific credit-related investment strategies. The results of derivatives use during the period were within our expectations.
Portfolio performance summary1
What worked
• The Fund's duration was the largest contributor to performance. The Fund's duration was generally positioned net short in anticipation that interest rates would move higher. This proved to be the case, as Treasury yields moved sharply higher in December 2010. (Duration measures the price sensitivity of a portfolio to interest rate changes.)
• The Fund's overweight to certain spread sectors (non-US Treasuries) was beneficial during the reporting period.
The Fund's exposure to investment grade credit, particularly in the financials sector, was rewarded as their spreads narrowed in December given another round of quantitative easing by the Federal Reserve Board, and amid expectations for a strengthening economy in 2011. (Spread measures the difference between the yields paid on a security versus those paid on US Treasuries of comparable duration.)
An exposure to high yield bondsin particular securities rated BB and belowwas beneficial as investor risk appetite was robust during the reporting period.2
Security selection of emerging markets debt boosted the Fund's return as spreads narrowed.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
2 Bonds rated BB and below are considered below investment grade. They are commonly referred to as high yield or "junk" bonds.
31
UBS Fixed Income Opportunities Fund
What didn't work
• Hedging our credit exposure was a slight drag on performance. We hedged the Fund's investment grade credit positions to manage the Fund's overall risk exposure. While this served its purpose in terms of managing risk, the hedge was a modest negative for performance given the strong results in the credit markets.
This letter is intended to assist shareholders in understanding how the Fund performed from its inception on November 29, 2010 through December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
32
UBS Fixed Income Opportunities Fund
Total returns for period ended 12/31/10 (unaudited)
Inception1 | |||||||
Before deducting maximum sales charge | |||||||
Class A2 | 2.22 | % | |||||
Class C3 | 2.11 | ||||||
Class Y4 | 2.34 | ||||||
After deducting maximum sales charge | |||||||
Class A2 | (2.36 | )% | |||||
Class C3 | 1.36 | ||||||
BofA Merrill Lynch US Dollar 3-Month LIBOR Constant Maturity Index5 | 0.03 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the November 24, 2010 prospectuses were as follows: Class A1.60% and 0.95%; Class C2.10% and 1.45%; Class Y1.35% and 0.70%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short), through the 24-month period ending October 27, 2012, do not exceed 0.95% for Class A shares, 1.45% for Class C shares and 0.70% for Class Y shares. 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.
1 Inception date of all shares of UBS Fixed Income Opportunities Fund and the index is November 29, 2010.
2 Maximum sales charge for Class A shares is 4.50%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class C shares is 0.75% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees.
4 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
5 The BofA Merrill Lynch US Dollar 3-Month LIBOR Constant Maturity Index is designed to track the performance of a synthetic asset paying Libor to a stated maturity. The index is based on the assumed purchase at par of a synthetic instrument having exactly its stated maturity and with a coupon equal to that day's fixing rate. That issue is assumed to be sold the following business day (priced at a yield equal to the current day fixing rate) and rolled into a new instrument. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for period of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
33
UBS Fixed Income Opportunities Fund
Top ten long-term fixed income holdings (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
Federal National Mortgage Association Pools, 4.000%, TBA |
4.3 | % | |||||
US Treasury Bonds, PO, 1.212%, due 05/15/40 |
2.8 | ||||||
Chester Asset Receivables Dealings No. 12 PLC, Series C, 2.190%, due 01/18/11 |
2.2 | ||||||
Lloyds TSB Bank PLC, 6.500%, due 03/24/20 |
2.2 | ||||||
Citigroup, Inc., 4.750%, due 05/31/17 |
2.2 | ||||||
Gazprom OAO Via Morgan Stanley Bank AG, 9.625%, due 03/01/13 |
2.0 | ||||||
Reynolds American, Inc., 6.750%, due 06/15/17 |
2.0 | ||||||
Federal Home Loan Bank of Chicago, 5.625%, due 06/13/16 |
1.9 | ||||||
Morgan Stanley, 6.250%, due 08/28/17 |
1.9 | ||||||
Anadarko Petroleum Corp., 5.950%, due 09/15/16 |
1.9 | ||||||
Total | 23.4 | % |
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2010
Bonds | |||||||
Corporate bonds | |||||||
Broadcasting | 0.98 | % | |||||
Building materials | 0.93 | ||||||
Capital markets | 2.55 | ||||||
Commercial banks | 8.71 | ||||||
Consumer finance | 4.57 | ||||||
Containers & packaging | 1.21 | ||||||
Diversified financial services | 12.83 | ||||||
Electric utilities | 2.43 | ||||||
Healthcare | 0.98 | ||||||
Insurance | 3.29 | ||||||
Media | 1.89 | ||||||
Oil, gas & consumable fuels | 6.80 | ||||||
Paper | 0.71 | ||||||
Road & rail | 0.92 | ||||||
Tobacco | 2.01 | ||||||
Wireless telecommunication services | 1.20 | ||||||
Total corporate bonds | 52.01 | % | |||||
Asset-backed securities | 5.39 | ||||||
Collateralized debt obligation | 1.64 | ||||||
Commercial mortgage-backed securities | 7.03 | ||||||
Mortgage & agency debt securities | 7.95 | ||||||
Municipal bonds | 6.95 | ||||||
US government obligations | 2.80 | ||||||
Non-US government obligation | 2.89 | ||||||
Total bonds | 86.66 | % | |||||
Investment company | |||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
11.01 | ||||||
Short-term investment | 2.06 | ||||||
Options purchased | 1.35 | ||||||
Total investments | 101.08 | % | |||||
Liabilities, in excess of cash and other assets | (1.08 | ) | |||||
Net assets | 100.00 | % |
Country exposure, top five (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
United States | 62.4 | % | |||||
United Kingdom | 8.8 | ||||||
Russia | 3.8 | ||||||
Australia | 3.7 | ||||||
Ireland | 2.7 | ||||||
Total | 81.4 | % |
1 Figures represent the direct investments of UBS Fixed Income Opportunities Fund. Figures would be different if a breakdown of the underlying investment company was included.
2 Figures represent the industry breakdown of direct investments of UBS Fixed Income Opportunities Fund. Figures would be different if a breakdown of the underlying investment company's industry diversification was included.
34
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 86.66% | |||||||||||
Corporate bonds: 52.01% | |||||||||||
Australia: 3.70% | |||||||||||
Leighton Finance Ltd., 9.500%, due 07/28/14 |
AUD | 500,000 | $ | 519,580 | |||||||
Sydney Airport Finance Co. Pty Ltd., 8.000%, due 07/06/15 |
500,000 | 511,942 | |||||||||
Total Australia corporate bonds | 1,031,522 | ||||||||||
Canada: 0.51% | |||||||||||
ING Bank of Canada, 4.300%, due 12/05/16 |
CAD | 150,000 | 142,563 | ||||||||
Greece: 1.20% | |||||||||||
OTE PLC, 5.375%, due 02/14/11 |
EUR | 250,000 | 334,745 | ||||||||
Ireland: 2.72% | |||||||||||
Allied Irish Banks PLC, 1.040%, due 04/11/121 |
200,000 | 208,463 | |||||||||
Anglo Irish Bank Corp. Ltd., 0.411%, due 11/02/111 |
$ | 125,000 | 88,125 | ||||||||
1.143%, due 01/31/111 | EUR | 100,000 | 125,612 | ||||||||
Ardagh Packaging Finance PLC, 7.375%, due 10/15/172 |
250,000 | 336,580 | |||||||||
Total Ireland corporate bonds | 758,780 | ||||||||||
Portugal: 1.53% | |||||||||||
EDP Finance BV, 4.900%, due 10/01/193 |
500,000 | 426,218 | |||||||||
Russia: 2.04% | |||||||||||
Gazprom OAO Via Morgan Stanley Bank AG, 9.625%, due 03/01/132 |
$ | 500,000 | 566,875 | ||||||||
Spain: 0.85% | |||||||||||
Santander US Debt SA Unipersonal, 3.724%, due 01/20/153 |
EUR | 250,000 | 236,865 | ||||||||
United Kingdom: 5.22% | |||||||||||
Barclays Bank PLC, 5.140%, due 10/14/20 |
$ | 250,000 | 224,937 | ||||||||
FCE Bank PLC, 7.125%, due 01/15/13 |
EUR | 250,000 | 349,109 | ||||||||
Lloyds TSB Bank PLC, 6.500%, due 03/24/20 |
500,000 | 613,760 | |||||||||
Virgin Media Finance PLC, 9.125%, due 08/15/16 |
$ | 250,000 | 266,250 | ||||||||
Total United Kingdom corporate bonds |
1,454,056 |
Face amount |
Value | ||||||||||
United States: 34.24% | |||||||||||
Ally Financial, Inc., 6.625%, due 05/15/12 |
$ | 250,000 | $ | 257,717 | |||||||
American General Finance Corp., Series H, 4.000%, due 03/15/11 |
500,000 | 496,250 | |||||||||
Anadarko Petroleum Corp., 5.950%, due 09/15/16 |
500,000 | 537,145 | |||||||||
Apria Healthcare Group, Inc., 11.250%, due 11/01/14 |
250,000 | 273,125 | |||||||||
Cemex Finance LLC, 9.500%, due 12/14/163 |
250,000 | 257,812 | |||||||||
Chesapeake Energy Corp., 9.500%, due 02/15/15 |
250,000 | 281,875 | |||||||||
CIT Group, Inc., 7.000%, due 05/01/13 |
250,000 | 255,000 | |||||||||
Citigroup, Inc., 4.750%, due 05/31/171 |
EUR | 500,000 | 608,242 | ||||||||
DISH DBS Corp., 6.625%, due 10/01/14 |
$ | 250,000 | 259,375 | ||||||||
Ford Motor Credit Co. LLC, 12.000%, due 05/15/15 |
250,000 | 314,485 | |||||||||
Georgia-Pacific LLC, 5.400%, due 11/01/203 |
200,000 | 197,736 | |||||||||
Goldman Sachs Group, Inc., 4.100%, due 11/03/15 |
CAD | 80,000 | 79,531 | ||||||||
Hertz Corp., 8.875%, due 01/01/14 |
$ | 250,000 | 255,625 | ||||||||
International Lease Finance Corp., 5.000%, due 09/15/12 |
100,000 | 100,625 | |||||||||
JP Morgan Chase Capital XXVII, 7.000%, due 11/01/39 |
500,000 | 523,514 | |||||||||
Kinder Morgan Finance Co. ULC, 5.700%, due 01/05/16 |
500,000 | 506,250 | |||||||||
Merrill Lynch & Co., Inc., 6.050%, due 05/16/16 |
250,000 | 257,578 | |||||||||
6.400%, due 08/28/17 | 500,000 | 528,635 | |||||||||
Mirant Americas Generation LLC, 8.500%, due 10/01/21 |
250,000 | 250,000 | |||||||||
Morgan Stanley, 6.250%, due 08/28/17 |
500,000 | 538,583 | |||||||||
Nationwide Mutual Insurance Co., 9.375%, due 08/15/393 |
250,000 | 289,955 | |||||||||
Pacific Life Insurance Co., 9.250%, due 06/15/393 |
250,000 | 324,883 | |||||||||
Prudential Financial, Inc., 6.200%, due 11/15/40 |
285,000 | 301,488 | |||||||||
Reynolds American, Inc., 6.750%, due 06/15/17 |
500,000 | 558,858 | |||||||||
SLM Corp., 1.300%, due 11/15/111 |
EUR | 100,000 | 128,201 | ||||||||
5.400%, due 10/25/11 | $ | 500,000 | 508,823 |
35
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Tennessee Valley Authority., 4.625%, due 09/15/60 |
$ | 400,000 | $ | 374,141 | |||||||
Univision Communications, Inc., 12.000%, due 07/01/143 |
250,000 | 273,750 | |||||||||
Total United States corporate bonds | 9,539,202 | ||||||||||
Total corporate bonds (cost $14,463,332) |
14,490,826 | ||||||||||
Asset-backed securities: 5.39% | |||||||||||
United Kingdom: 3.62% | |||||||||||
Chester Asset Receivables Dealings No. 12 PLC, Series C, 2.190%, due 01/18/111 |
GBP | 400,000 | 623,435 | ||||||||
Permanent Financing PLC, Series 6, Class 5A2, 0.905%, due 06/10/421,2,5,6 |
250,000 | 385,174 | |||||||||
1,008,609 | |||||||||||
United States: 1.77% | |||||||||||
Capital One Multi-Asset Execution Trust, Series 2006-C1, Class C, 0.550%, due 03/17/141 |
$ | 250,000 | 248,650 | ||||||||
Citibank Credit Card Issuance Trust, Series 2005-C3, Class C3, 0.670%, due 07/15/141 |
250,000 | 245,020 | |||||||||
Total United States asset-backed securities |
493,670 | ||||||||||
Total asset-backed securities (cost $1,499,365) |
1,502,279 | ||||||||||
Collateralized debt obligation: 1.64% | |||||||||||
United States: 1.64% | |||||||||||
GSC Partners CDO Fund Ltd., Series 2003-4A, Class B, 2.223%, due 12/16/151,3,4,7 (cost $455,826) |
500,000 | 455,500 | |||||||||
Commercial mortgage-backed securities: 7.03% | |||||||||||
United States: 7.03% | |||||||||||
Banc of America Commercial Mortgage, Inc., Series 2007-4, Class A4, 5.742%, due 02/10/511 |
250,000 | 266,296 | |||||||||
Commercial Mortgage Pass Through Certificates, Series 2006-C8, Class AM, 5.347%, due 12/10/46 |
150,000 | 144,169 |
Face amount |
Value | ||||||||||
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class A4, 5.543%, due 12/10/49 |
$ | 350,000 | $ | 360,361 | |||||||
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class AM, 5.475%, due 03/10/39 |
250,000 | 249,767 | |||||||||
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2007-LD12, Class A4, 5.882%, due 02/15/511 |
225,000 | 238,220 | |||||||||
Morgan Stanley Re-REMIC Trust, Series 2009-GG10, Class A4B, 5.807%, due 08/12/451,3 |
450,000 | 447,161 | |||||||||
TrizecHahn Office Properties, Series 2001-TZHA, Class B4, 6.718%, due 05/15/163 |
250,000 | 253,404 | |||||||||
Total commercial mortgage-backed securities (cost $1,939,948) |
1,959,378 | ||||||||||
Mortgage & agency debt securities: 7.95% | |||||||||||
United States: 7.95% | |||||||||||
Federal Home Loan Bank of Chicago, 5.625%, due 06/13/16 |
500,000 | 541,419 | |||||||||
Federal National Mortgage Association, 5.825%, due 10/09/198,9 |
750,000 | 473,567 | |||||||||
Federal National Mortgage Association Pools, 4.000%, TBA8 |
1,210,000 | 1,200,169 | |||||||||
Total mortgage & agency debt securities (cost $2,247,903) |
2,215,155 | ||||||||||
Municipal bonds: 6.95% | |||||||||||
American Municipal Power-Ohio, Inc., Revenue Bonds, Series 2010, Class B, 7.834%, due 02/15/41 |
250,000 | 270,773 | |||||||||
Illinois State Taxable Pension, Series 2003, 5.100%, due 06/01/33 |
250,000 | 188,125 | |||||||||
New York City Transitional Finance Authority, Series 2010, 5.267%, due 05/01/27 |
250,000 | 239,767 |
36
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Municipal bonds(Concluded) | |||||||||||
Port Authority of New York & New Jersey, Series 2009, 6.040%, due 12/01/29 |
$ | 250,000 | $ | 261,228 | |||||||
State of California, GO bonds, 7.300%, due 10/01/39 |
500,000 | 507,175 | |||||||||
State of Illinois, GO bonds, Series 2010, 4.421%, due 01/01/15 |
225,000 | 226,978 | |||||||||
State of Washington, GO bonds, Series 2010, Class F, 5.140%, due 08/01/40 |
250,000 | 241,872 | |||||||||
Total municipal bonds (cost $1,945,724) |
1,935,918 | ||||||||||
US government obligations: 2.80% | |||||||||||
US Treasury Bonds, PO, 1.212%, due 05/15/409 (cost $804,234) |
3,000,000 | 778,233 | |||||||||
Non-US government obligation: 2.89% | |||||||||||
Greece: 1.09% | |||||||||||
Hellenic Republic Government Bond, 4.300%, due 03/20/12 |
EUR | 250,000 | 304,576 | ||||||||
Russia: 1.80% | |||||||||||
Federation of Russia, 3.625%, due 04/29/152 |
$ | 500,000 | 500,000 | ||||||||
Total non US-government obligations (cost $801,890) |
804,576 | ||||||||||
Total bonds (cost $24,158,222) |
24,141,865 | ||||||||||
Shares | |||||||||||
Investment company: 11.01% | |||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund*10 (cost $3,000,000) |
184,736 | 3,068,026 | |||||||||
Short-term investment: 2.06% | |||||||||||
Investment company: 2.06% | |||||||||||
UBS Cash Management Prime Relationship Fund10 (cost $574,769) |
574,769 | 574,769 |
Number of contracts |
Value | ||||||||||
Options purchased: 1.35% | |||||||||||
Put options: 0.92% | |||||||||||
10 Year US Treasury Notes, strike @ USD 119.50, expires January 2011* |
56 | $ | 34,125 | ||||||||
2 Year US Treasury Notes, strike @ USD 109.00, expires January 2011* |
72 | 5,625 | |||||||||
5 Year US Treasury Notes, strike @ USD 117.50, expires January 2011* |
200 | 103,125 | |||||||||
90 Day Euro-Dollar Time Deposit, strike @ USD 99.25, expires September 2012* |
50 | 108,437 | |||||||||
Japan 10 Year, strike @ JPY 140.00, expires February 2011* |
1 | 4,927 | |||||||||
Notional amount |
|||||||||||
Options purchased on interest rate swaps: 0.43% | |||||||||||
Expiring 11/02/15. If exercised the Fund pays semi annually 6.000% and receives quarterly floating 3 month LIBOR terminating 11/04/25. European style. Counterparty: Deutsche Bank AG* |
$ | 3,050,000 | 120,513 | ||||||||
Total options purchased (cost $409,752) |
376,752 | ||||||||||
Total investments: 101.08% (cost $28,142,743) |
28,161,412 | ||||||||||
Liabilities, in excess of cash and other assets: (1.08)% |
(305,093 | ) | |||||||||
Net assets: 100.00% | $ | 27,856,319 |
37
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 314,955 | |||||
Gross unrealized depreciation | (296,286 | ) | |||||
Net unrealized appreciation of investments | $ | 18,669 |
* Non-income producing security.
1 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2010 and changes periodically.
2 Securities exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. At December 31, 2010, the value of these securities amounted to $1,788,629 or 6.42% of net assets.
3 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $3,163,284 or 11.36% of net assets.
4 Security is illiquid. At December 31, 2010, the value of these securities amounted to $455,500 or 1.64% of net assets.
5 This security, which represents 1.38% of net assets as of December 31, 2010, is considered restricted. (See restricted security table below for more information.)
Restricted Security |
Acquisition date |
Acquisition cost |
Acquisition cost as a percentage of net assets |
Value 12/31/10 |
12/31/10 Value as a percentage of net assets |
||||||||||||||||||
Permanent Financing PLC, Series 6, Class 5A2, 0.905%, due 06/10/42 |
11/30/10 | $ | 246,822 | 0.89 | % | $ | 385,174 | 1.38 | % |
6 Step bondCoupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2010. Maturity date disclosed is the ultimate maturity date.
7 Security is being fair valued by a valuation committee under the direction of the Board of Trustees. At December 31, 2010, the value of this security amounted to $455,500 or 1.64% of net assets.
8 On September 7, 2008, the Federal Housing Finance Agency placed the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association into conservatorship, and the US Treasury guaranteed the debt issued by those organizations.
9 Rate shown reflects annualized yield at December 31, 2010 on zero coupon bond.
10 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the period ended 12/31/10 |
Sales during the period ended 12/31/10 |
Change in net unrealized appreciation/ (depreciation) during the period ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the period ended 12/31/10 |
|||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | | $ | 5,302,612 | $ | 4,727,843 | $ | | $ | 574,769 | $ | 197 | |||||||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
| 3,000,000 | | 68,026 | 3,068,026 | | |||||||||||||||||||||
$ | | $ | 8,302,612 | $ | 4,727,843 | $ | 68,026 | $ | 3,642,795 | $ | 197 |
CDO Collateralized debt obligations
GE General Electric
GO General Obligation
38
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
PO Principal only securityThis security entitles the holder to receive principal payments from an underlying pool of assets. High prepayments return principal faster than expected and cause the yield to increase. Low prepayments return principal slower than expected and cause the yield to decrease.
Re-REMIC Combined Real Estate Mortgage Investment Conduits
TBA (To be announced) Security is purchased on a forward commitment basis with an approximate principal amount (generally +/ 1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement, when the specific mortgage pools are assigned.
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
USD United States Dollar
Forward foreign currency contracts
UBS Fixed Income Opportunities Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized depreciation |
|||||||||||||||
Goldman Sachs International | AUD | 1,045,000 | USD | 989,688 | 03/01/11 | $ | (71,593 | ) | |||||||||||
Goldman Sachs International | EUR | 2,920,000 | USD | 3,819,827 | 03/01/11 | (81,662 | ) | ||||||||||||
Goldman Sachs International | GBP | 630,000 | USD | 977,798 | 03/01/11 | (4,028 | ) | ||||||||||||
Goldman Sachs International | JPY | 21,000,000 | USD | 249,155 | 03/01/11 | (9,651 | ) | ||||||||||||
Net unrealized depreciation on forward foreign currency contracts | $ | (166,934 | ) |
Currency type abbreviations:
AUD Australian Dollar
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
USD United States Dollar
Futures contracts
UBS Fixed Income Opportunities Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Ultra Bond Futures, 27 contracts (USD) | March 2011 | $ | 3,324,229 | $ | 3,431,531 | $ | 107,302 | ||||||||||||
5 Year US Treasury Notes, 54 contracts (USD) | March 2011 | 6,331,657 | 6,356,813 | 25,156 | |||||||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
US Long Bond, 13 contracts (USD) | March 2011 | (1,575,417 | ) | (1,587,625 | ) | (12,208 | ) | ||||||||||||
US Ultra Bond Futures, 8 contracts (USD) | March 2011 | (993,362 | ) | (1,016,750 | ) | (23,388 | ) | ||||||||||||
2 Year US Treasury Notes, 17 contracts (USD) | March 2011 | (3,725,656 | ) | (3,721,406 | ) | 4,250 | |||||||||||||
5 Year US Treasury Notes, 26 contracts (USD) | March 2011 | (3,113,654 | ) | (3,060,688 | ) | 52,966 | |||||||||||||
10 Year US Treasury Notes, 10 contracts (USD) | March 2011 | (1,202,640 | ) | (1,204,375 | ) | (1,735 | ) | ||||||||||||
Net unrealized appreciation on futures contracts | $ | 152,343 |
Currency type abbreviations:
USD United States Dollar
39
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Options written
UBS Fixed Income Opportunities Fund had the following open options written as of December 31, 2010:
Expiration date |
Premiums received |
Value | |||||||||||||
Call options | |||||||||||||||
5 Year US Treasury Notes, 200 contracts, strike @ USD 118.50 | January 2011 | $ | 41,744 | $ | (54,688 | ) | |||||||||
Put options | |||||||||||||||
10 Year US Treasury Notes, 56 contracts, strike @ USD 118.00 | January 2011 | 26,568 | (14,000 | ) | |||||||||||
5 Year US Treasury Notes, 200 contracts, strike @ USD 116.50 | January 2011 | 68,324 | (45,312 | ) | |||||||||||
90 Day Euro-Dollar Time Deposit, 50 contracts, strike @ USD 97.25 | September 2012 | 19,825 | (30,000 | ) | |||||||||||
Options written on interest rate swaps | |||||||||||||||
If option exercised the Fund pays semi-annually 7.250% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 11/04/25. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 3,050,000 |
November 2015 | 63,135 | (72,362 | ) | |||||||||||
If option exercised the Fund pays semi-annually 8.760% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 11/04/25. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 3,050,000 |
November 2015 | 38,735 | (37,145 | ) | |||||||||||
Receiver option written on credit default swap on credit indices | |||||||||||||||
If option exercised payment from the counterparty will be received upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the CDX.NA.HY Series 15 Index and Fund pays fixed rate of 5.000%. Underlying credit default swap terminating 12/20/15. European style. Counterparty: Morgan Stanley, Notional Amount USD 2,000,000 |
March 2011 | 28,200 | (4,462 | ) | |||||||||||
Payor option written on credit default swap on credit indices | |||||||||||||||
If option exercised payment from the counterparty will be made upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the CDX.NA.IG Series 15 Index and Fund receives fixed rate of 1.000%. Underlying credit default swap terminating 12/20/15. European style. Counterparty: Morgan Stanley, Notional Amount USD 2,500,000 |
March 2011 | 4,625 | (5,129 | ) | |||||||||||
Total options written | $ | 291,156 | $ | (263,098 | ) |
Currency type abbreviations:
USD United States Dollar
Written option activity for the period ended December 31, 2010 for UBS Fixed Income Opportunities Fund was as follows:
Number of contracts |
Amount of premiums received |
||||||||||
Options outstanding at June 30, 2010 | | $ | | ||||||||
Options written | 823 | 213,765 | |||||||||
Options terminated in closing purchase transactions | (317 | ) | (57,304 | ) | |||||||
Options expired prior to exercise | | | |||||||||
Options outstanding at December 31, 2010 | 506 | $ | 156,461 |
Swaption activity for the period ended December 31, 2010 for UBS Fixed Income Opportunities Fund was as follows:
Amount of premiums received |
|||||||
Swaptions outstanding at June 30, 2010 | $ | | |||||
Swaptions written | 134,695 | ||||||
Swaptions terminated in closing purchase transactions | | ||||||
Swaptions expired prior to exercise | | ||||||
Swaptions outstanding at December 31, 2010 | $ | 134,695 |
40
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Swap agreements
UBS Fixed Income Opportunities Fund had outstanding currency swap agreements with the following terms as of December 31, 2010:
Counterparty |
Pay currency |
Pay contracts |
Receive currency |
Receive contracts |
Termination date |
Pay rate |
Receive rate |
Upfront payments received |
Value |
Unrealized appreciation/ (depreciation) |
|||||||||||||||||||||||||||||||||
Morgan Stanley | AUD2,059,944 | USD2,000,000 | 10/06/40 | 4.9600%1 | 0.3028%2 | $13,738 | $(132,176) | $(118,438) | |||||||||||||||||||||||||||||||||||
Morgan Stanley | USD2,000,000 | AUD2,059,944 | 10/06/20 | 0.30282 | 4.96001 | 9,738 | 112,771 | 122,509 | |||||||||||||||||||||||||||||||||||
$ | 23,476 | $ | (19,405 | ) | $ | 4,071 |
1 Rate based on 3 month BBSW.
2 Rate based on 3 month USD LIBOR.
BBSW Bank Bill Swap Reference Rate (Australian Financial Market)
LIBOR London Interbank Offered Rate
UBS Fixed Income Opportunities Fund had outstanding interest rate swap agreements with the following terms as of December 31, 2010:
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund1 |
Payments received by the Fund1 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Credit Suisse International | USD | 6,100,000 | 05/31/15 | 1.6288 | % | | %2 | $ | | $ | 93,295 | $ | 93,295 | ||||||||||||||||||
Deutsche Bank AG | CAD | 5,750,000 | 10/03/13 | 3 | 1.8750 | 34,361 | (40,495 | ) | (6,134 | ) | |||||||||||||||||||||
Deutsche Bank AG | CAD | 5,150,000 | 10/03/16 | 2.4850 | 3 | (93,265 | ) | 111,217 | 17,952 | ||||||||||||||||||||||
Deutsche Bank AG | CAD | 1,400,000 | 10/03/21 | 3 | 3.2600 | 39,269 | (47,467 | ) | (8,198 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 6,250,000 | 10/05/13 | 1.1250 | 2 | (12,500 | ) | 37,198 | 24,698 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 3,000,000 | 12/15/15 | 1.5210 | 0.30164 | (41,000 | ) | 85,407 | 44,407 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 4,950,000 | 10/05/16 | 2 | 2.1200 | 54,000 | (148,600 | ) | (94,600 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 1,250,000 | 09/23/20 | 2.6900 | 0.30284 | (23,000 | ) | 58,211 | 35,211 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 1,350,000 | 10/05/21 | 2.9750 | 2 | (45,000 | ) | 85,992 | 40,992 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 1,450,000 | 02/15/36 | 3.6300 | 0.30284 | (50,000 | ) | 101,788 | 51,788 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 875,000 | 05/15/40 | 3.4700 | 0.28564 | (157,000 | ) | 194,265 | 37,265 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 1,250,000 | 09/17/40 | 3.4730 | 0.30194 | (83,000 | ) | 126,461 | 43,461 | ||||||||||||||||||||||
JPMorgan Chase Bank | EUR | 1,180,000 | 12/17/15 | 1.25405 | 2.6375 | | 12,963 | 12,963 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 1,370,000 | 12/08/15 | 1.8050 | 0.30344 | | 19,354 | 19,354 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 1,490,000 | 12/08/20 | 0.30344 | 3.1250 | | (26,543 | ) | (26,543 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | USD | 370,000 | 12/08/40 | 3.9975 | 0.30344 | | 6,242 | 6,242 | |||||||||||||||||||||||
Merrill Lynch International | CAD | 1,340,000 | 12/15/15 | 2.6770 | 1.29576 | | (6,494 | ) | (6,494 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 1,410,000 | 12/16/15 | 2.2500 | 0.30194 | | (9,112 | ) | (9,112 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 1,550,000 | 12/16/20 | 0.30194 | 3.5500 | | 28,687 | 28,687 | |||||||||||||||||||||||
Merrill Lynch International | USD | 390,000 | 12/16/40 | 4.2688 | 0.30194 | | (11,828 | ) | (11,828 | ) | |||||||||||||||||||||
Morgan Stanley | EUR | 550,000 | 10/10/21 | 7 | 2.8010 | 34,251 | (46,261 | ) | (12,010 | ) | |||||||||||||||||||||
Morgan Stanley | EUR | 250,000 | 10/10/41 | 2.8550 | 7 | (29,658 | ) | 43,142 | 13,484 | ||||||||||||||||||||||
Morgan Stanley | USD | 3,500,000 | 09/23/20 | 2.6900 | 0.30284 | (60,500 | ) | 162,992 | 102,492 | ||||||||||||||||||||||
$ | (433,042 | ) | $ | 830,414 | $ | 397,372 |
1 Payments made or received are based on the notional amount.
41
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
2 Rate based on 3 month LIBOR (USD BBA). This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2010.
3 Rate based on 3 month Canadian Bankers Acceptance. This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2010.
4 Rate based on 3 month LIBOR (USD BBA).
5 Rate based on 6 month EURIBOR.
6 Rate based on 3 month Canadian Bankers Acceptance.
7 Rate based on 6 month EURIBOR. This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2010.
BBA British Banking Association
EURIBOR Euro Interbank Offered Rate
LIBOR London Interbank Offered Rate
UBS Fixed Income Opportunities Fund had outstanding credit default swap agreements with the following terms as of December 31, 2010:
Credit default swaps on credit indicesbuy protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund2 |
Payments received by the Fund |
Upfront payments (made) |
Value |
Unrealized depreciation |
||||||||||||||||||||||||
Morgan Stanley | EUR | 5,000,000 | 12/20/15 | 1.0000 | % | 3 | $ | (24,437 | ) | $ | 14,354 | $ | (10,083 | ) |
1 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.
2 Payments made are based on the notional amount.
3 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to Itraxx Europe Main Series 14 Index.
Credit default swaps on corporate issuesbuy protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund2 |
Payments received by the Fund |
Upfront payments (made) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Morgan Stanley | EUR | 500,000 | 12/20/15 | 1.0000 | % | 3 | $ | (6,369 | ) | $ | 2,285 | $ | (4,084 | ) | |||||||||||||||||
Morgan Stanley | EUR | 500,000 | 12/20/15 | 1.0000 | 4 | (7,868 | ) | 12,497 | 4,629 | ||||||||||||||||||||||
$ | (14,237 | ) | $ | 14,782 | $ | 545 |
1 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments made are based on the notional amount.
3 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Saint Gobain Neder NV 5.000% bond, due 04/25/14.
4 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Commerzbank AG 5.500% bond, due 10/25/11.
42
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Credit default swaps on corporate issuessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments received |
Value |
Unrealized appreciation |
Credit spread3 |
|||||||||||||||||||||||||||
Deutsche Bank AG | EUR | 500,000 | 12/20/15 | 4 | 1.0000 | % | $ | 15,782 | $ | (14,975 | ) | $ | 807 | 1.5298 | % | ||||||||||||||||||||
Deutsche Bank AG | USD | 500,000 | 12/20/15 | 5 | 1.0000 | 9,062 | (8,853 | ) | 209 | 1.4160 | |||||||||||||||||||||||||
Deutsche Bank AG | USD | 500,000 | 12/20/15 | 6 | 1.0000 | 24,022 | (13,582 | ) | 10,440 | 1.6389 | |||||||||||||||||||||||||
Morgan Stanley | EUR | 500,000 | 12/20/15 | 7 | 1.0000 | 15,197 | (9,098 | ) | 6,099 | 1.3523 | |||||||||||||||||||||||||
Morgan Stanley | USD | 500,000 | 12/20/15 | 6 | 1.0000 | 24,022 | (13,582 | ) | 10,440 | 1.6389 | |||||||||||||||||||||||||
$ | 88,085 | $ | (60,090 | ) | $ | 27,995 |
1 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments received are based on the notional amount.
3 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity.
4 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Intesa Sanpaolo SPA 4.750% bond, due 06/15/17.
5 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the QBE Insurance Group Ltd. 9.750% bond, due 03/14/14.
6 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the MetLife Inc. 5.000% bond, due 06/15/15.
7 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Holcim Finance Luxembourg SA 4.375% bond, due 12/09/14.
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
EUR Euro
USD United States Dollar
43
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Corporate bonds | $ | | $ | 14,490,826 | $ | | $ | 14,490,826 | |||||||||||
Asset-backed securities | | 1,502,279 | | 1,502,279 | |||||||||||||||
Collateralized debt obligation | | | 455,500 | 455,500 | |||||||||||||||
Commercial mortgage-backed securities | | 1,959,378 | | 1,959,378 | |||||||||||||||
Mortgage & agency debt securities | | 2,215,155 | | 2,215,155 | |||||||||||||||
Municipal bonds | | 1,935,918 | | 1,935,918 | |||||||||||||||
US government obligations | | 778,233 | | 778,233 | |||||||||||||||
Non-US government obligation | | 804,576 | | 804,576 | |||||||||||||||
Investment company | | 3,068,026 | | 3,068,026 | |||||||||||||||
Short-term investment | | 574,769 | | 574,769 | |||||||||||||||
Options purchased | 256,239 | 120,513 | | 376,752 | |||||||||||||||
Other financial instruments1 | 8,343 | 494,023 | | 502,366 | |||||||||||||||
Total | $ | 264,582 | $ | 27,943,696 | $ | 455,500 | $ | 28,663,778 |
1 Other financial instruments include futures contracts, swap agreements, options written and forward foreign currency contracts.
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Measurements using unobservable inputs (Level 3) | |||||||||||
Collateralized debt obligation |
Total | ||||||||||
Assets | |||||||||||
Beginning balance | $ | | $ | | |||||||
Total gains or losses (realized/unrealized), and premiums/discounts included in earnings | | | |||||||||
Purchases, sales, issuances, and settlements (net) | 455,500 | 455,500 | |||||||||
Transfers in and/or out of Level 3 | | | |||||||||
Ending balance | $ | 455,500 | $ | 455,500 | |||||||
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to investments still held at 12/31/10. |
$ | (326 | ) | $ | (326 | ) |
See accompanying notes to financial statements.
44
UBS Global Bond Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Global Bond Fund (the "Fund") returned 6.31% (Class A shares returned 1.46% after the deduction of the maximum sales charge), while Class Y shares returned 6.35%. The Fund's benchmark, the Barclays Capital Global Aggregate Index (the "Index"), returned 5.87% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 47; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund's outperformance was due to a variety of factors, including positioning in the corporate bond sector and, to a lesser extent, currency management.
Portfolio performance summary1
What worked
• An overweight to the corporate bond sector was the largest contributor to performance. In particular, our overweight to financials, namely US banks, was rewarded. In addition an overweight to industrials was also beneficial. Spreads in these sectors narrowed given improving corporate profits and generally strong investor demand. (Spread measures the difference between the yields paid on a security versus those paid on US Treasuries of comparable duration.) In addition, uncertainties regarding increased regulations in the US financial sector dissipated during the reporting period.
• Active currency management generated solid results.
Having an underweight in the poor-performing euro during the first half of the reporting period was a positive for results. The euro declined over that timeframe given the negative impact from the European sovereign debt crisis. We later moved to a neutral position versus the Index as the euro, in our view, became more attractively valued.
Likewise, an overweight to the Swedish krona and to the Norwegian krone contributed to results, as their economies performed better than a number of other European countries.
What didn't work
• Overall, our duration positioning detracted from results.
In particular, the Fund's duration in the US was shorter than the Index, as we felt US yields would move higher as the US economy continued to expand. This positioning was not rewarded, as yields in the US declined during much of the reporting period. (Duration is a measure of a portfolio's sensitivity to changes in interest rates.)
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
45
UBS Global Bond Fund
Having a long duration in the UK toward the end of the year was a negative for performance, as yields in the country moved higher given rising inflation expectations. We had moved to a long duration in the UK as we felt inflation expectations were overblown given continued high unemployment in the country. Given this, it was our belief that the Bank of England would keep interest rates on hold and yields would subsequently decline.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
46
UBS Global Bond Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 6.31 | % | 4.52 | % | 2.02 | % | N/A | 4.48 | % | ||||||||||||||
Class B3 | 5.88 | 3.71 | 1.24 | N/A | 4.316 | ||||||||||||||||||
Class C4 | 5.91 | 3.87 | 1.52 | N/A | 3.46 | ||||||||||||||||||
Class Y5 | 6.35 | 4.77 | 2.28 | 4.58 | % | 4.71 | |||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 1.46 | % | (0.24 | )% | 1.09 | % | N/A | 3.96 | % | ||||||||||||||
Class B3 | 1.00 | (1.02 | ) | 0.95 | N/A | 4.316 | |||||||||||||||||
Class C4 | 5.18 | 3.16 | 1.52 | N/A | 3.46 | ||||||||||||||||||
Barclays Capital Global Aggregate Index7 | 5.87 | % | 5.54 | % | 6.66 | % | 6.73 | % | 6.28 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A2.05% and 1.15%; Class B2.85% and 1.90%; Class C2.52% and 1.65%; Class Y1.73% and 0.90%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the 12-month period ending October 27, 2011, do not exceed 1.15% for Class A shares, 1.90% for Class B shares, 1.65% for Class C shares and 0.90% for Class Y shares. 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.
1 Inception date of UBS Global Bond Fund Class A shares is November 5, 2001. Inception dates of Class B and Class C shares are November 26, 2001 and July 2, 2002, respectively. Inception date of Class Y shares and the Index is July 31, 1993.
2 Maximum sales charge for Class A shares is 4.50%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 0.75% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The Barclays Capital Global Aggregate Index is an unmanaged broad-based, market capitalization weighted index which is designed to measure the broad global markets for US and non US corporate, government, governmental agency, supranational, mortgage-backed and asset-backed fixed income securities. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
47
UBS Global Bond Fund
Top ten long-term fixed income holdings (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
Government of Japan, 1.800%, due 06/20/17 |
7.0 | % | |||||
Government of Japan, 1.900%, due 06/20/25 |
5.4 | ||||||
European Investment Bank, 6.250%, due 04/15/14 |
3.1 | ||||||
Instituto de Credito Oficial, 5.375%, due 07/02/12 |
2.5 | ||||||
Canadian Government Bond, 3.500%, due 06/01/20 |
2.5 | ||||||
US Treasury Bonds, 4.375%, due 05/15/40 |
2.3 | ||||||
JPMorgan Chase Commercial Alternative Mortgage Product, Series 2006-CB17, Class A4, 5.429%, due 12/12/43 |
2.2 | ||||||
Kreditanstalt fuer Wiederaufbau, 5.500%, due 12/07/15 |
2.1 | ||||||
UK Gilts, 4.750%, due 03/07/20 |
2.1 | ||||||
Bear Stearns Cos. LLC, 5.700%, due 11/15/14 |
2.0 | ||||||
Total | 31.2 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2010
Bonds | |||||||
Corporate bonds | |||||||
Commercial banks | 10.45 | % | |||||
Commercial services & supplies | 0.29 | ||||||
Construction & engineering | 0.41 | ||||||
Diversified financial services | 7.88 | ||||||
Diversified telecommunication services | 1.68 | ||||||
Electric utilities | 0.47 | ||||||
Food & staples retailing | 0.51 | ||||||
Gas utilities | 0.41 | ||||||
Insurance | 0.65 | ||||||
Leisure equipment & products | 0.31 | ||||||
Media | 1.64 | ||||||
Metals & mining | 0.89 | ||||||
Oil, gas & consumable fuels | 2.07 | ||||||
Personal products | 0.47 | ||||||
Thrifts & mortgage finance | 3.45 | ||||||
Tobacco | 1.78 | ||||||
Wireless telecommunication services | 1.53 | ||||||
Total corporate bonds | 34.89 | % | |||||
Asset-backed securities | 2.29 | ||||||
Collateralized debt obligations | 1.20 | ||||||
Commercial mortgage-backed security | 2.24 | ||||||
Mortgage & agency debt securities | 8.62 | ||||||
US government obligations | 5.64 | ||||||
Non-US government obligations | 34.41 | ||||||
Supranational bonds | 4.61 | ||||||
Total bonds | 93.90 | % | |||||
Short-term investment | 3.77 | ||||||
Total investments | 97.67 | % | |||||
Cash and other assets, less liabilities | 2.33 | ||||||
Net assets | 100.00 | % |
Country exposure, top five (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
United States | 31.3 | % | |||||
Japan | 14.4 | ||||||
United Kingdom | 11.5 | ||||||
Germany | 8.8 | ||||||
Italy | 6.0 | ||||||
Total | 72.0 | % |
48
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 93.90% | |||||||||||
Corporate bonds: 34.89% | |||||||||||
Australia: 1.02% | |||||||||||
Rio Tinto Finance USA Ltd., 3.500%, due 11/02/20 |
$ | 100,000 | $ | 94,927 | |||||||
Westpac Banking Corp., 4.200%, due 02/27/15 |
70,000 | 73,469 | |||||||||
Total Australia corporate bonds | 168,396 | ||||||||||
Cayman Islands: 0.32% | |||||||||||
Vale Overseas Ltd., 5.625%, due 09/15/19 |
50,000 | 53,255 | |||||||||
France: 1.95% | |||||||||||
AXA SA, 6.772%, due 10/16/191,2 |
GBP | 50,000 | 65,093 | ||||||||
Compagnie de Financement Foncier, 4.000%, due 07/21/11 |
EUR | 150,000 | 203,431 | ||||||||
France Telecom SA, 8.500%, due 03/01/31 |
$ | 40,000 | 54,377 | ||||||||
Total France corporate bonds | 322,901 | ||||||||||
Germany: 6.07% | |||||||||||
Bayerische Landesbank, 3.750%, due 05/23/11 |
EUR | 240,000 | 323,953 | ||||||||
Hypothekenbank in Essen AG, 4.000%, due 11/21/11 |
240,000 | 328,104 | |||||||||
Kreditanstalt fuer Wiederaufbau, 5.500%, due 12/07/15 |
GBP | 200,000 | 350,974 | ||||||||
Total Germany corporate bonds | 1,003,031 | ||||||||||
Greece: 0.41% | |||||||||||
OTE PLC, 5.375%, due 02/14/11 |
EUR | 50,000 | 66,949 | ||||||||
Ireland: 0.51% | |||||||||||
GE Capital UK Funding, 6.000%, due 04/11/13 |
GBP | 50,000 | 83,816 | ||||||||
Italy: 0.89% | |||||||||||
Telecom Italia SpA, 1.817%, due 06/07/161 |
EUR | 50,000 | 62,148 | ||||||||
7.375%, due 12/15/17 | GBP | 50,000 | 84,786 | ||||||||
Total Italy corporate bonds | 146,934 | ||||||||||
Jersey (Channel Islands): 0.97% | |||||||||||
Travelers Insurance Company Institutional Funding Ltd., 5.750%, due 12/06/11 |
100,000 | 160,658 |
Face amount |
Value | ||||||||||
Luxembourg: 0.47% | |||||||||||
Enel Finance International SA, 5.625%, due 08/14/24 |
GBP | 50,000 | $ | 77,412 | |||||||
Mexico: 0.62% | |||||||||||
America Movil SAB de CV, 3.625%, due 03/30/15 |
$ | 100,000 | 102,823 | ||||||||
Netherlands: 0.49% | |||||||||||
Rabobank Nederland NV, 4.000%, due 09/10/15 |
GBP | 50,000 | 80,825 | ||||||||
Norway: 0.67% | |||||||||||
StatoilHydro ASA, 5.250%, due 04/15/19 |
$ | 100,000 | 111,389 | ||||||||
Qatar: 0.66% | |||||||||||
Qtel International Finance Ltd., 6.500%, due 06/10/143 |
100,000 | 109,612 | |||||||||
South Korea: 0.66% | |||||||||||
Hyundai Capital Services, Inc., 6.000%, due 05/05/153 |
100,000 | 108,247 | |||||||||
Spain: 1.24% | |||||||||||
Caja de Ahorros y Monte de Piedad de Madrid, 4.125%, due 03/24/36 |
EUR | 150,000 | 136,904 | ||||||||
Gas Natural Capital Markets SA, 5.250%, due 07/09/14 |
50,000 | 67,986 | |||||||||
Total Spain corporate bonds | 204,890 | ||||||||||
United Kingdom: 4.94% | |||||||||||
Aviva PLC, 4.729%, due 11/28/141,2 |
40,000 | 42,227 | |||||||||
BAA Funding Ltd., 3.975%, due 02/15/141,3 |
50,000 | 67,843 | |||||||||
Barclays Bank PLC, 4.750%, due 03/15/201,2 |
40,000 | 35,011 | |||||||||
4.875%, due 12/15/141,2 | 60,000 | 62,539 | |||||||||
Imperial Tobacco Finance PLC, 8.375%, due 02/17/16 |
100,000 | 162,833 | |||||||||
Nationwide Building Society, 1.242%, due 12/22/161 |
200,000 | 241,203 | |||||||||
Tesco PLC, 6.125%, due 02/24/22 |
GBP | 50,000 | 85,086 | ||||||||
WPP PLC, 6.625%, due 05/12/16 |
EUR | 80,000 | 120,459 | ||||||||
Total United Kingdom corporate bonds |
817,201 |
49
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States: 13.00% | |||||||||||
Alltel Corp., 7.875%, due 07/01/32 |
$ | 40,000 | $ | 51,107 | |||||||
Altria Group, Inc., 9.250%, due 08/06/19 |
100,000 | 130,504 | |||||||||
American Honda Finance Corp., 3.875%, due 09/16/14 |
EUR | 50,000 | 70,037 | ||||||||
Anadarko Petroleum Corp., 5.750%, due 06/15/14 |
$ | 100,000 | 107,044 | ||||||||
Avon Products, Inc., 5.625%, due 03/01/14 |
70,000 | 77,565 | |||||||||
Bank of America Corp., 7.375%, due 05/15/14 |
125,000 | 138,948 | |||||||||
Bear Stearns Cos. LLC, 5.700%, due 11/15/14 |
300,000 | 329,625 | |||||||||
Citibank Credit Card Issuance Trust, 5.375%, due 04/11/11 |
EUR | 40,000 | 53,845 | ||||||||
Citigroup, Inc., 4.750%, due 05/31/171 |
50,000 | 60,824 | |||||||||
5.625%, due 08/27/12 | $ | 70,000 | 73,455 | ||||||||
Comcast Cable Communications LLC, 6.750%, due 01/30/11 |
150,000 | 150,705 | |||||||||
Enterprise Products Operating LLC, 3.700%, due 06/01/15 |
30,000 | 30,947 | |||||||||
5.000%, due 03/01/15 | 20,000 | 21,566 | |||||||||
General Electric Capital Corp., Series A, 6.750%, due 03/15/32 |
110,000 | 124,533 | |||||||||
Goldman Sachs Group, Inc., 7.500%, due 02/15/19 |
200,000 | 233,198 | |||||||||
Hasbro, Inc., 6.350%, due 03/15/40 |
50,000 | 50,594 | |||||||||
Kinder Morgan Energy Partners LP, 5.800%, due 03/15/35 |
75,000 | 71,438 | |||||||||
Morgan Stanley, 5.450%, due 01/09/17 |
250,000 | 259,254 | |||||||||
SLM Corp., 1.300%, due 11/15/111 |
EUR | 50,000 | 64,101 | ||||||||
Waste Management, Inc., 7.375%, due 03/11/19 |
$ | 40,000 | 48,404 | ||||||||
Total United States corporate bonds |
2,147,694 | ||||||||||
Total corporate bonds (cost $5,813,239) |
5,766,033 |
Face amount |
Value | ||||||||||
Asset-backed securities: 2.29% | |||||||||||
Cayman Islands: 0.16% | |||||||||||
MBNA America European Structured Offerings, Series 7, 5.450%, due 04/19/11 |
EUR | 20,000 | $ | 26,971 | |||||||
United Kingdom: 1.29% | |||||||||||
Chester Asset Receivables Dealings, Series 2004-1, Class A, 0.928%, due 04/15/161 |
GBP | 20,000 | 30,083 | ||||||||
Chester Asset Receivables Dealings 2003-B PLC, Series A, 4.650%, due 07/15/13 |
30,000 | 48,510 | |||||||||
Chester Asset Receivables Dealings No. 12 PLC, Series A, 6.000%, due 01/18/11 |
20,000 | 31,217 | |||||||||
Permanent Financing PLC, Series 6, Class 5A2, 0.905%, due 06/10/421,4,6,8 |
40,000 | 61,628 | |||||||||
Whinstone Capital Management Ltd., Series 1A, Class B2, 2.825%, due 10/25/441 |
EUR | 77,108 | 41,731 | ||||||||
Total United Kingdom asset-backed securities |
213,169 | ||||||||||
United States: 0.84% | |||||||||||
Bank of America Corp., Series 2004-A1, 4.500%, due 01/17/14 |
40,000 | 55,419 | |||||||||
MBNA Credit Card Master Note Trust, Series 2002-A2, Class A, 5.600%, due 07/17/14 |
50,000 | 69,172 | |||||||||
Merrill Lynch Mortgage Investors, Inc., Series 2006-SL1, Class A, 0.441%, due 09/25/361 |
$ | 36,028 | 13,604 | ||||||||
Total United States asset-backed securities |
138,195 | ||||||||||
Total asset-backed securities (cost $453,805) |
378,335 | ||||||||||
Collateralized debt obligations: 1.20% | |||||||||||
Netherlands: 0.29% | |||||||||||
Queen Street CLO, Series 2007-1A, Class F, due 08/15/243,5,6,7 |
100,000 | 48,107 |
50
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Collateralized debt obligations(Concluded) | |||||||||||
United States: 0.91% | |||||||||||
Hewett's Island CDO Ltd., Series 2007-6A, Class D, 2.552%, due 06/09/191,3,5,6 |
$ | 250,000 | $ | 150,000 | |||||||
Total collateralized debt obligations (cost $379,920) |
198,107 | ||||||||||
Commercial mortgage-backed security: 2.24% | |||||||||||
United States: 2.24% | |||||||||||
JPMorgan Chase Commercial Alternative Mortgage Product, Series 2006-CB17, Class A4, 5.429%, due 12/12/43 (cost $329,365) |
350,000 | 371,020 | |||||||||
Mortgage & agency debt securities: 8.62% | |||||||||||
United States: 8.62% | |||||||||||
Federal Home Loan Mortgage Corp. Gold Pools,9 #G04461, 5.000%, due 07/01/38 |
170,399 | 178,836 | |||||||||
Federal National Mortgage Association Pools,9 #AA5244, 4.000%, due 05/01/39 |
72,407 | 72,102 | |||||||||
#909356, 5.000%, due 02/01/37 |
180,251 | 189,741 | |||||||||
#914467, 5.000%, due 04/01/37 |
142,364 | 149,816 | |||||||||
#928197, 5.500%, due 03/01/37 |
151,675 | 162,400 | |||||||||
#AC1466, 5.500%, due 08/01/39 |
186,561 | 200,853 | |||||||||
#900568, 6.000%, due 09/01/36 |
93,014 | 101,389 | |||||||||
#940642, 6.000%, due 08/01/37 |
159,592 | 174,959 | |||||||||
#889579, 6.000%, due 05/01/38 |
125,402 | 136,458 | |||||||||
Government National Mortgage Association Pools, #781276, 6.500%, due 04/15/31 |
51,049 | 57,958 | |||||||||
Total mortgage & agency debt securities (cost $1,333,996) |
1,424,512 |
Face amount |
Value | ||||||||||
US government obligations: 5.64% | |||||||||||
US Treasury Bonds, 4.375%, due 05/15/40 |
$ | 375,000 | $ | 376,815 | |||||||
US Treasury Notes, 1.375%, due 02/15/12 |
120,000 | 121,350 | |||||||||
2.625%, due 08/15/20 | 250,000 | 237,012 | |||||||||
3.625%, due 02/15/20 | 190,000 | 197,184 | |||||||||
932,361 | |||||||||||
Total US government obligations (cost $988,810) |
932,361 | ||||||||||
Non-US government obligations: 34.41% | |||||||||||
Canada: 2.51% | |||||||||||
Canadian Government Bond, 3.500%, due 06/01/20 |
CAD | 400,000 | 414,684 | ||||||||
Denmark: 0.59% | |||||||||||
Government of Denmark, 4.000%, due 11/15/17 |
DKK | 500,000 | 97,513 | ||||||||
Germany: 2.71% | |||||||||||
Bundesrepublik Deutschland, 2.250%, due 09/04/20 |
EUR | 75,000 | 94,730 | ||||||||
4.000%, due 01/04/37 | 80,000 | 115,628 | |||||||||
6.250%, due 01/04/24 | 135,000 | 237,382 | |||||||||
447,740 | |||||||||||
Italy: 5.10% | |||||||||||
Buoni Poliennali Del Tesoro, 4.000%, due 09/01/20 |
200,000 | 253,095 | |||||||||
5.000%, due 08/01/39 | 235,000 | 295,481 | |||||||||
Republic of Italy, 4.750%, due 01/25/16 |
290,000 | 295,458 | |||||||||
844,034 | |||||||||||
Japan: 14.37% | |||||||||||
Government of Japan, 0.800%, due 03/20/13 |
JPY | 25,950,000 | 323,919 | ||||||||
1.800%, due 06/20/17 | 88,000,000 | 1,164,904 | |||||||||
1.900%, due 06/20/25 | 68,800,000 | 886,162 | |||||||||
2,374,985 | |||||||||||
Netherlands: 0.87% | |||||||||||
Government of the Netherlands, 4.000%, due 01/15/37 |
EUR | 100,000 | 143,654 | ||||||||
Spain: 2.97% | |||||||||||
Government of Spain, 4.200%, due 07/30/13 |
55,000 | 74,151 | |||||||||
Instituto de Credito Oficial, 5.375%, due 07/02/12 |
400,000 | 416,532 | |||||||||
490,683 |
51
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Non-US government obligations(Concluded) | |||||||||||
United Kingdom: 5.29% | |||||||||||
UK Gilts, 2.000%, due 01/22/16 |
GBP | 200,000 | $ | 305,746 | |||||||
4.250%, due 03/07/36 | 85,000 | 133,451 | |||||||||
4.750%, due 03/07/20 | 200,000 | 344,779 | |||||||||
5.000%, due 03/07/12 | 55,000 | 90,039 | |||||||||
874,015 | |||||||||||
Total non-US government obligations (cost $5,369,211) |
5,687,308 | ||||||||||
Supranational bonds: 4.61% | |||||||||||
European Investment Bank, 6.125%, due 01/23/17 |
AUD | 250,000 | 250,899 | ||||||||
6.250%, due 04/15/14 | GBP | 290,000 | 510,708 | ||||||||
Total supranational bonds (cost $811,091) |
761,607 | ||||||||||
Total bonds (cost $15,479,437) |
15,519,283 |
Shares | Value | ||||||||||
Short-term investment: 3.77% | |||||||||||
Investment company: 3.77% | |||||||||||
UBS Cash Management Prime Relationship Fund10 (cost $623,491) |
623,491 | $ | 623,491 | ||||||||
Total investments: 97.67% (cost $16,102,928) |
16,142,774 | ||||||||||
Cash and other assets, less liabilities: 2.33% |
384,483 | ||||||||||
Net assets: 100.00% | $ | 16,527,257 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 783,025 | |||||
Gross unrealized depreciation | (743,179 | ) | |||||
Net unrealized appreciation of investments | $ | 39,846 |
1 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2010 and changes periodically.
2 Perpetual bond security. The maturity date reflects the next call date.
3 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $483,809 or 2.93% of net assets.
4 Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. At December 31, 2010, the value of this security amounted to $61,628 or 0.37% of net assets.
5 Security is illiquid. At December 31, 2010, the value of these securities amounted to $198,107 or 1.20% of net assets.
52
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
6 These securities, which represent 1.57% of net assets as of December 31, 2010, are considered restricted. (See restricted security table below for more information.)
Restricted securities |
Acquisition date |
Acquisition cost |
Acquisition cost as a percentage of net assets |
Value 12/31/10 |
12/31/10 Value as a percentage of net assets |
||||||||||||||||||
Hewett's Island CDO Ltd., Series 2007-6A, Class D, 2.552%, due 06/09/19 |
05/09/07 - 09/25/09 | $ | 247,508 | 1.50 | % | $ | 150,000 | 0.91 | % | ||||||||||||||
Permanent Financing PLC, Series 6, Class 5A2, 0.905%, due 06/10/42 |
11/19/10 | 39,432 | 0.24 | 61,628 | 0.37 | ||||||||||||||||||
Queen Street CLO, Series 2007-1A, Class F, due 08/15/24 |
05/18/07 | 132,413 | 0.80 | 48,107 | 0.29 | ||||||||||||||||||
$ | 419,353 | 2.54 | % | $ | 259,735 | 1.57 | % |
7 This security is the equity tranche of a collateralized debt obligation. The Fund receives periodic payments, which may vary, from the issuer of this security.
8 Step bondCoupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2010. Maturity date disclosed is the ultimate maturity date.
9 On September 7, 2008, the Federal Housing Finance Agency placed the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association into conservatorship, and the US Treasury guaranteed the debt issued by those organizations.
10 The table below details the Fund's investments in a fund that is advised by the same advisor as the Fund. The advisor does not earn a management fee from UBS Cash Management Prime Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 570,589 | $ | 3,614,741 | $ | 3,561,840 | $ | 623,491 | $ | 792 |
CDO Collateralized debt obligations
CLO Collateralized loan obligations
GE General Electric
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
DKK Danish Krone
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
53
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Forward foreign currency contracts
UBS Global Bond Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity dates |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
JPMorgan Chase Bank | CAD | 425,000 | USD | 416,375 | 03/03/11 | $ | (10,566 | ) | |||||||||||
JPMorgan Chase Bank | EUR | 200,000 | USD | 263,762 | 03/03/11 | (3,461 | ) | ||||||||||||
JPMorgan Chase Bank | GBP | 1,480,000 | USD | 2,318,774 | 03/03/11 | 12,302 | |||||||||||||
JPMorgan Chase Bank | USD | 508,314 | CAD | 520,000 | 03/03/11 | 14,061 | |||||||||||||
JPMorgan Chase Bank | USD | 179,838 | CHF | 180,000 | 03/03/11 | 12,795 | |||||||||||||
JPMorgan Chase Bank | USD | 733,988 | EUR | 555,000 | 03/03/11 | 7,555 | |||||||||||||
JPMorgan Chase Bank | USD | 778,609 | JPY | 65,300,000 | 03/03/11 | 26,167 | |||||||||||||
JPMorgan Chase Bank | USD | 214,933 | KRW | 249,000,000 | 03/03/11 | 3,814 | |||||||||||||
JPMorgan Chase Bank | USD | 200,389 | NOK | 1,240,000 | 03/03/11 | 11,515 | |||||||||||||
JPMorgan Chase Bank | USD | 452,791 | SEK | 3,190,000 | 03/03/11 | 20,561 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 94,743 |
Currency type abbreviations:
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
KRW Korean Won
NOK Norwegian Krone
SEK Swedish Krona
USD United States Dollar
Futures contracts
UBS Global Bond Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Long Bond, 3 contracts (USD) | March 2011 | $ | 377,067 | $ | 366,375 | $ | (10,692 | ) | |||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
5 Year US Treasury Notes, 8 contracts (USD) | March 2011 | (955,612 | ) | (941,750 | ) | 13,862 | |||||||||||||
Net unrealized appreciation on futures contracts | $ | 3,170 |
Currency type abbreviation:
USD United States Dollar
Swap agreements
UBS Global Bond Fund had outstanding credit default swap agreements with the following terms as of December 31, 2010:
54
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Credit default swaps on sovereign issuessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund |
Upfront payments (made)/ received |
Value |
Unrealized depreciation |
Credit spread4 |
|||||||||||||||||||||||||||
Goldman Sachs International | EUR | 280,000 | 12/20/18 | 2 | 1.2600 | %3 | | $ | (14,338 | ) | $ | (14,338 | ) | 1.8488 | % |
1 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Republic of Italy 6.875% bond, due 09/27/23.
3 Payments received are based on the notional amount.
4 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity.
Currency type abbreviation:
EUR Euro
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Corporate bonds | $ | | $ | 5,766,033 | $ | | $ | 5,766,033 | |||||||||||
Asset-backed securities | | 378,335 | | 378,335 | |||||||||||||||
Collateralized debt obligations | | | 198,107 | 198,107 | |||||||||||||||
Commercial mortgage-backed security | | 371,020 | | 371,020 | |||||||||||||||
Mortgage & agency debt securities | | 1,424,512 | | 1,424,512 | |||||||||||||||
US government obligations | | 932,361 | | 932,361 | |||||||||||||||
Non-US government obligations | | 5,687,308 | | 5,687,308 | |||||||||||||||
Supranational bonds | | 761,607 | | 761,607 | |||||||||||||||
Short-term investment | | 623,491 | | 623,491 | |||||||||||||||
Other financial instruments1 | 3,170 | 80,405 | | 83,575 | |||||||||||||||
Total | $ | 3,170 | $ | 16,025,072 | $ | 198,107 | $ | 16,226,349 |
1 Other financial instruments include futures contracts, swap agreements, and forward foreign currency contracts.
55
UBS Global Bond Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Measurements using unobservable inputs (Level 3) | |||||||||||
Collateralized debt obligations |
Total | ||||||||||
Assets | |||||||||||
Beginning balance | $ | 269,435 | $ | 269,435 | |||||||
Total gains or losses (realized/unrealized), and premiums/discounts included in earnings | 30,212 | 30,212 | |||||||||
Purchases, sales, issuances, and settlements (net) | (101,540 | ) | (101,540 | ) | |||||||
Transfers in and/or out of Level 3 | | | |||||||||
Ending balance | $ | 198,107 | $ | 198,107 | |||||||
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to investments still held at 12/31/10. |
$ | 11,421 | $ | 11,421 |
See accompanying notes to financial statements.
56
UBS High Yield Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS High Yield Fund (the "Fund") returned 9.70% (Class A shares gained 4.72% after the deduction of the maximum sales charge), while Class Y shares returned 9.92%. The Fund's benchmark, the BofA Merrill Lynch US High Yield Cash Pay Constrained Index (the "Index"), returned 9.83% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 59; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund generated a strong absolute return during the reporting period and performed largely in line with the Index. Overall sector allocation was positive for results, while issue selection marginally detracted from performance.
Portfolio performance summary1
What worked
• The Fund's positioning in a number of sectors contributed to performance during the reporting period.
Our overweight exposure to the industrial sectors was a positive for results. In particular, overweights in gaming and technology were rewarded as their spreads narrowed given improving profits and generally strong investor demand. (Spread measures the difference between the yields paid on a security versus those paid on US Treasuries of comparable duration.)
Within the financial sector, an overweight to the insurance subsector aided the Fund's results. During the period, spreads in this space continued to narrow from their elevated levels during the credit crisis.
• Issue selection contributed positively within the building materials/construction and chemical industries, where we broadly sought to own more defensive names that we expected to be more resilient. Although fundamentals remained weak, strengthening global demand benefited these industries.
• Overall, the Fund's positioning from a quality perspective enhanced its results. The Fund's modest overweight to securities rated CCC and lower was beneficial for performance, as investor risk appetite was generally robust during the review period.2
What didn't work
• Issue selection was the largest detractor from the Fund's relative performance. While the Fund's overweight to the industrials sector was a positive for results, this was somewhat offset by security selectionparticularly in the gaming subsector.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
2 Debt rated CCC has a current identifiable vulnerability to default, and is dependent upon favorable business, financial and economic conditions to meet timely payments of interest and repayment of principal.
57
UBS High Yield Fund
• An underweight in banking was not rewarded, as the sector performed very well during the reporting period. We increased the Fund's exposure to banking as the reporting period progressed, but remained modestly underweight.
• The Fund's overweight exposure to B-rated bonds negatively contributed to results.3 This segment of the high yield market lagged the index during the reporting period, while lower rated securities outperformed.
3 A bond credit rating assesses the credit worthiness of a debt issue. A B-rated bond is considered to be low grade.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
58
UBS High Yield Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 9.70 | % | 13.87 | % | 6.80 | % | 7.13 | % | 5.81 | % | |||||||||||||
Class B3 | 9.27 | 13.19 | 6.03 | N/A | 7.23 6 | ||||||||||||||||||
Class C4 | 9.41 | 13.47 | 6.30 | N/A | 7.25 | ||||||||||||||||||
Class Y5 | 9.92 | 14.41 | 7.12 | 7.43 | 6.30 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 4.72 | % | 8.73 | % | 5.81 | % | 6.64 | % | 5.40 | % | |||||||||||||
Class B3 | 4.27 | 8.19 | 5.74 | N/A | 7.23 6 | ||||||||||||||||||
Class C4 | 8.66 | 12.72 | 6.30 | N/A | 7.25 | ||||||||||||||||||
BofA Merrill Lynch US High Yield Cash Pay Constrained Index7 | 9.83 | % | 15.10 | % | 8.66 | % | 8.84 | % | 6.89 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.38% and 1.20%; Class B2.20% and 1.95%; Class C1.88% and 1.70%; Class Y1.05% and 0.95%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short), through the 12-month period ending October 27, 2011, do not exceed 1.20% for Class A shares, 1.95% for Class B shares, 1.70% for Class C shares and 0.95% for Class Y shares. 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.
1 Inception date of UBS High Yield Fund Class A shares is December 31, 1998. Inception date of Class B and Class C shares is November 7, 2001. Inception date of Class Y shares and the index is September 30, 1997.
2 Maximum sales charge for Class A shares is 4.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 0.75% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The BofA Merrill Lynch US High Yield Cash Pay Constrained Index is an unmanaged index of publicly placed non-convertible, coupon-bearing US dollar denominated below investment grade corporate debt with a term to maturity of at least one year. The index is market weighted, so that larger bond issuers have a greater effect on the index's return. However, the representation of any single bond issue is restricted to a maximum of 2% of the total index. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
59
UBS High Yield Fund
Top ten long-term fixed income holdings (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
CIT Group, Inc., 7.000%, due 05/01/17 |
1.3 | % | |||||
FireKeepers Development Authority, 13.875%, due 05/01/15 |
1.2 | ||||||
Caesars Entertainment Operating Co., Inc., 11.250%, due 06/01/17 |
1.1 | ||||||
Chesapeake Energy Corp., 7.250%, due 12/15/18 |
1.0 | ||||||
SunGard Data Systems, Inc., 10.250%, due 08/15/15 |
1.0 | ||||||
Clearwire Communications LLC, 12.000%, due 12/01/15 |
1.0 | ||||||
Frontier Communications Corp., 9.000%, due 08/15/31 |
0.9 | ||||||
Apria Healthcare Group, Inc., 11.250%, due 11/01/14 |
0.9 | ||||||
Intelsat Jackson Holdings SA, 11.250%, due 06/15/16 |
0.9 | ||||||
CIT Group, Inc., 7.000%, due 05/01/16 |
0.9 | ||||||
Total | 10.2 | % |
60
UBS High Yield Fund
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2010
Bonds | |||||||
Corporate bonds | |||||||
Aerospace | 0.95 | % | |||||
Air transportation | 0.66 | ||||||
Automotive & auto parts distributors | 3.20 | ||||||
Banks & thrifts | 3.34 | ||||||
Broadcasting | 1.97 | ||||||
Building materials | 1.68 | ||||||
Cable TV | 2.11 | ||||||
Capital goods | 0.89 | ||||||
Chemicals | 2.39 | ||||||
Commercial banks | 0.38 | ||||||
Consumer products | 0.40 | ||||||
Containers | 2.52 | ||||||
Diversified financial services | 5.18 | ||||||
Diversified media | 1.46 | ||||||
Electric utilities | 4.41 | ||||||
Energy | 11.84 | ||||||
Entertainment/film | 0.40 | ||||||
Environmental | 0.21 | ||||||
Food & drug retail | 1.04 | ||||||
Food/beverage/tobacco | 2.03 | ||||||
Gaming | 6.87 | ||||||
Healthcare | 4.87 | ||||||
Homebuilders/real estate | 3.04 | ||||||
Hotel | 0.36 | ||||||
Insurance | 3.83 | ||||||
Leisure | 0.85 | ||||||
Machinery | 0.96 | ||||||
Metals/mining | 1.35 | ||||||
Paper | 2.90 | ||||||
Publishing/printing | 1.13 | ||||||
Restaurants | 0.14 | ||||||
Services | 2.62 | ||||||
Steels | 1.74 | ||||||
Super retail index | 3.78 | ||||||
Technology | 5.31 | ||||||
Telecommunications | 8.13 | ||||||
Textile/apparel | 0.37 | ||||||
Transportation excluding air/rail | 0.96 | ||||||
Total corporate bonds | 96.27 | % | |||||
Commercial mortgage-backed securities | 0.34 | ||||||
Total bonds | 96.61 | % | |||||
Common stocks | 0.07 | % | |||||
Preferred stock | 0.001 | ||||||
Warrants | 0.001 | ||||||
Short-term investment | 1.81 | ||||||
Total investments | 98.49 | % | |||||
Cash and other assets, less liabilities | 1.51 | ||||||
Net assets | 100.00 | % |
1 Amount represents less than 0.005%.
61
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 96.61% | |||||||||||
Corporate bonds: 96.27% | |||||||||||
Austria: 0.30% | |||||||||||
PE Paper Escrow GmbH, 12.000%, due 08/01/141 |
$ | 235,000 | $ | 271,884 | |||||||
Bermuda: 0.58% | |||||||||||
Intelsat Bermuda Ltd., 11.250%, due 02/04/17 |
300,000 | 327,000 | |||||||||
Ship Finance International Ltd., 8.500%, due 12/15/13 |
190,000 | 193,325 | |||||||||
Total Bermuda corporate bonds | 520,325 | ||||||||||
Canada: 1.20% | |||||||||||
Bombardier, Inc., 7.500%, due 03/15/181 |
110,000 | 117,975 | |||||||||
7.750%, due 03/15/201 | 150,000 | 161,625 | |||||||||
Nova Chemicals Corp., 8.625%, due 11/01/19 |
150,000 | 163,875 | |||||||||
OPTI Canada, Inc., 8.250%, due 12/15/14 |
230,000 | 163,875 | |||||||||
9.000%, due 12/15/121 | 150,000 | 150,375 | |||||||||
Reliance Intermediate Holdings LP, 9.500%, due 12/15/191 |
200,000 | 210,250 | |||||||||
Trinidad Drilling Ltd., 7.875%, due 01/15/191 |
95,000 | 95,950 | |||||||||
Total Canada corporate bonds | 1,063,925 | ||||||||||
Cayman Islands: 0.35% | |||||||||||
Sable International Finance Ltd., 7.750%, due 02/15/171 |
125,000 | 132,188 | |||||||||
Seagate HDD Cayman, 7.750%, due 12/15/181 |
175,000 | 177,187 | |||||||||
Total Cayman Islands corporate bonds | 309,375 | ||||||||||
China: 0.10% | |||||||||||
Sino-Forest Corp., 6.250%, due 10/21/171 |
90,000 | 90,788 | |||||||||
France: 0.15% | |||||||||||
Cie Generale de Geophysique-Veritas, 7.750%, due 05/15/17 |
135,000 | 138,375 | |||||||||
Germany: 0.09% | |||||||||||
Unitymedia Hessen, 8.125%, due 12/01/171 |
75,000 | 78,375 | |||||||||
Ireland: 0.61% | |||||||||||
Anglo Irish Bank Corp. Ltd., 0.411%, due 11/02/112 |
475,000 | 334,875 |
Face amount |
Value | ||||||||||
Ardagh Packaging Finance PLC, 7.375%, due 10/15/171 |
$ | 200,000 | $ | 206,250 | |||||||
Total Ireland corporate bonds | 541,125 | ||||||||||
Luxembourg: 2.05% | |||||||||||
ConvaTec Healthcare E SA, 10.500%, due 12/15/181 |
200,000 | 202,750 | |||||||||
Expro Finance Luxembourg SCA, 8.500%, due 12/15/161 |
455,000 | 434,525 | |||||||||
Intelsat Jackson Holdings SA, 7.250%, due 10/15/201 |
100,000 | 101,000 | |||||||||
11.250%, due 06/15/16 | 727,000 | 783,342 | |||||||||
Wind Acquisition Finance SA, 11.750%, due 07/15/171 |
270,000 | 304,425 | |||||||||
Total Luxembourg corporate bonds | 1,826,042 | ||||||||||
Netherlands: 0.80% | |||||||||||
ING Groep NV, 5.775%, due 12/08/152,3 |
245,000 | 210,700 | |||||||||
NXP BV, 7.875%, due 10/15/14 |
230,000 | 239,200 | |||||||||
9.500%, due 10/15/15 | 245,000 | 262,150 | |||||||||
Total Netherlands corporate bonds | 712,050 | ||||||||||
Russia: 0.25% | |||||||||||
Evraz Group SA, 9.500%, due 04/24/181 |
200,000 | 220,760 | |||||||||
Spain: 0.28% | |||||||||||
Cemex Espana Luxembourg, 9.250%, due 05/12/201 |
252,000 | 247,590 | |||||||||
United Kingdom: 1.83% | |||||||||||
Global Crossing UK Finance PLC, 10.750%, due 12/15/14 |
300,000 | 310,500 | |||||||||
Hanson Ltd., 6.125%, due 08/15/16 |
200,000 | 204,000 | |||||||||
HBOS Capital Funding LP, 6.071%, due 06/30/141,2,3 |
300,000 | 244,500 | |||||||||
Ineos Finance PLC, 9.000%, due 05/15/151 |
100,000 | 106,375 | |||||||||
Ineos Group Holdings PLC, 8.500%, due 02/15/161 |
230,000 | 219,075 | |||||||||
Vedanta Resources PLC, 9.500%, due 07/18/181 |
100,000 | 109,375 | |||||||||
Virgin Media Finance PLC, 9.125%, due 08/15/16 |
150,000 | 159,750 | |||||||||
9.500%, due 08/15/16 | 100,000 | 113,000 | |||||||||
Virgin Media Secured Finance PLC, 6.500%, due 01/15/18 |
150,000 | 157,875 | |||||||||
Total United Kingdom corporate bonds | 1,624,450 |
62
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States: 87.68% | |||||||||||
Accellent, Inc., 8.375%, due 02/01/17 |
$ | 275,000 | $ | 281,875 | |||||||
ACCO Brands Corp., 10.625%, due 03/15/15 |
75,000 | 84,375 | |||||||||
Advanced Micro Devices, Inc., 8.125%, due 12/15/17 |
135,000 | 143,100 | |||||||||
AES Corp., 8.000%, due 06/01/20 |
550,000 | 583,000 | |||||||||
AGFC Capital Trust I, 6.000%, due 01/15/671,2 |
125,000 | 57,500 | |||||||||
AK Steel Corp., 7.625%, due 05/15/20 |
200,000 | 200,500 | |||||||||
Allison Transmission, Inc., 11.000%, due 11/01/151 |
190,000 | 207,100 | |||||||||
Ally Financial, Inc., 7.500%, due 09/15/201 |
150,000 | 157,313 | |||||||||
8.000%, due 03/15/20 | 425,000 | 464,313 | |||||||||
8.000%, due 11/01/31 | 150,000 | 161,625 | |||||||||
8.300%, due 02/12/15 | 500,000 | 550,000 | |||||||||
AMC Entertainment, Inc., 8.750%, due 06/01/19 |
275,000 | 293,563 | |||||||||
American Axle & Manufacturing Holdings, Inc., 9.250%, due 01/15/171 |
85,000 | 94,988 | |||||||||
American General Finance Corp., 5.625%, due 08/17/11 |
175,000 | 172,156 | |||||||||
American General Institutional Capital A, 7.570%, due 12/01/451 |
600,000 | 601,500 | |||||||||
American International Group, Inc., 6.250%, due 03/15/37 |
175,000 | 154,761 | |||||||||
8.175%, due 05/15/582 | 130,000 | 138,425 | |||||||||
Ameristar Casinos, Inc., 9.250%, due 06/01/14 |
225,000 | 240,750 | |||||||||
AMGH Merger Sub, Inc., 9.250%, due 11/01/181 |
135,000 | 141,750 | |||||||||
Amsted Industries, Inc., 8.125%, due 03/15/181 |
60,000 | 63,675 | |||||||||
Apria Healthcare Group, Inc., 11.250%, due 11/01/14 |
750,000 | 819,375 | |||||||||
Aquilex Holdings LLC, 11.125%, due 12/15/16 |
70,000 | 70,875 | |||||||||
ARAMARK Corp., 8.500%, due 02/01/15 |
460,000 | 480,700 | |||||||||
ArvinMeritor, Inc., 10.625%, due 03/15/18 |
150,000 | 168,750 | |||||||||
Ashland, Inc., 9.125%, due 06/01/17 |
165,000 | 190,163 |
Face amount |
Value | ||||||||||
Aspect Software, Inc., 10.625%, due 05/15/171 |
$ | 60,000 | $ | 61,575 | |||||||
Atlas Pipeline Partners LP, 8.125%, due 12/15/15 |
275,000 | 283,250 | |||||||||
ATP Oil & Gas Corp., 11.875%, due 05/01/151 |
50,000 | 47,250 | |||||||||
Avis Budget Car Rental LLC, 9.625%, due 03/15/18 |
100,000 | 107,750 | |||||||||
Baldor Electric Co., 8.625%, due 02/15/17 |
110,000 | 123,200 | |||||||||
Ball Corp., 6.750%, due 09/15/20 |
35,000 | 36,750 | |||||||||
Bank of America Corp., 8.000%, due 01/30/182,3 |
75,000 | 75,585 | |||||||||
BankAmerica Capital II, 8.000%, due 12/15/26 |
380,000 | 382,375 | |||||||||
BE Aerospace, Inc., 6.875%, due 10/01/20 |
175,000 | 180,688 | |||||||||
Beazer Homes USA, Inc., 6.875%, due 07/15/15 |
15,000 | 14,513 | |||||||||
8.125%, due 06/15/16 | 150,000 | 147,375 | |||||||||
Belden, Inc., 9.250%, due 06/15/19 |
100,000 | 109,625 | |||||||||
Berry Petroleum Co., 6.750%, due 11/01/20 |
100,000 | 100,500 | |||||||||
Berry Plastics Corp., 8.250%, due 11/15/15 |
125,000 | 132,500 | |||||||||
9.500%, due 05/15/18 | 150,000 | 150,375 | |||||||||
Biomet, Inc., 10.375%, due 10/15/174 |
435,000 | 475,238 | |||||||||
Boise Paper Holdings LLC, 9.000%, due 11/01/17 |
70,000 | 76,475 | |||||||||
Bon-Ton Department Stores, Inc., 10.250%, due 03/15/14 |
575,000 | 586,500 | |||||||||
Boyd Gaming Corp., 9.125%, due 12/01/181 |
160,000 | 158,000 | |||||||||
Brocade Communications Systems, Inc., 6.875%, due 01/15/20 |
50,000 | 53,250 | |||||||||
Brunswick Corp., 11.250%, due 11/01/161 |
80,000 | 95,200 | |||||||||
Cablevision Systems Corp., 8.625%, due 09/15/17 |
425,000 | 462,719 | |||||||||
Caesars Entertainment Operating Co., Inc., 10.000%, due 12/15/18 |
305,000 | 278,313 | |||||||||
11.250%, due 06/01/17 | 880,000 | 990,000 | |||||||||
Calpine Construction Finance Co. LP, 8.000%, due 06/01/161 |
200,000 | 212,500 | |||||||||
Calpine Corp., 7.500%, due 02/15/211 |
285,000 | 280,725 | |||||||||
7.875%, due 07/31/201 | 470,000 | 475,875 |
63
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Capella Healthcare, Inc., 9.250%, due 07/01/171 |
$ | 55,000 | $ | 58,300 | |||||||
Carriage Services, Inc., 7.875%, due 01/15/15 |
250,000 | 251,562 | |||||||||
Case New Holland, Inc., 7.875%, due 12/01/171 |
225,000 | 245,812 | |||||||||
Casella Waste Systems, Inc., 11.000%, due 07/15/14 |
125,000 | 138,281 | |||||||||
CB Richard Ellis Services, Inc., 11.625%, due 06/15/17 |
100,000 | 115,875 | |||||||||
Celanese US Holdings LLC, 6.625%, due 10/15/181 |
95,000 | 98,087 | |||||||||
Cemex Finance LLC, 9.500%, due 12/14/161 |
200,000 | 206,250 | |||||||||
Cengage Learning Acquisitions, Inc., 10.500%, due 01/15/151 |
180,000 | 185,850 | |||||||||
Chesapeake Energy Corp., 6.625%, due 08/15/20 |
130,000 | 128,050 | |||||||||
7.250%, due 12/15/18 | 850,000 | 879,750 | |||||||||
CIT Group, Inc., 7.000%, due 05/01/13 |
200,000 | 204,000 | |||||||||
7.000%, due 05/01/16 | 755,000 | 757,831 | |||||||||
7.000%, due 05/01/17 | 1,175,000 | 1,177,937 | |||||||||
Citigroup Capital XXI, 8.300%, due 12/21/572 |
655,000 | 681,200 | |||||||||
Clear Channel Communications, Inc., 5.500%, due 09/15/14 |
130,000 | 107,900 | |||||||||
6.250%, due 03/15/11 | 55,000 | 54,862 | |||||||||
7.250%, due 10/15/27 | 135,000 | 75,600 | |||||||||
10.750%, due 08/01/16 | 200,000 | 179,000 | |||||||||
Clear Channel Worldwide Holdings, Inc., 9.250%, due 12/15/17 |
25,000 | 27,187 | |||||||||
Series B, 9.250%, due 12/15/17 |
105,000 | 114,975 | |||||||||
Clearwater Paper Corp., 7.125%, due 11/01/181 |
125,000 | 129,062 | |||||||||
Clearwire Communications LLC, 12.000%, due 12/01/151 |
780,000 | 841,400 | |||||||||
CMP Susquehanna Corp., 16.611%, due 05/15/145,6 |
50,000 | 17,750 | |||||||||
Community Health Systems, Inc., 8.875%, due 07/15/15 |
190,000 | 199,500 | |||||||||
Comstock Resources, Inc., 8.375%, due 10/15/17 |
100,000 | 100,250 | |||||||||
Consol Energy, Inc., 8.000%, due 04/01/171 |
200,000 | 213,000 | |||||||||
Constellation Brands, Inc., 8.375%, due 12/15/14 |
350,000 | 382,375 |
Face amount |
Value | ||||||||||
CPM Holdings, Inc., 10.625%, due 09/01/141 |
$ | 150,000 | $ | 160,500 | |||||||
Cricket Communications, Inc., 10.000%, due 07/15/15 |
125,000 | 133,906 | |||||||||
Crosstex Energy LP, 8.875%, due 02/15/18 |
280,000 | 299,950 | |||||||||
CSC Holdings LLC, 8.625%, due 02/15/19 |
125,000 | 141,250 | |||||||||
DAE Aviation Holdings, Inc., 11.250%, due 08/01/151 |
180,000 | 186,300 | |||||||||
Darling International, Inc., 8.500%, due 12/15/181 |
40,000 | 41,700 | |||||||||
Delta Air Lines, Inc., 12.250%, due 03/15/151 |
325,000 | 366,437 | |||||||||
Denbury Resources, Inc., 8.250%, due 02/15/20 |
125,000 | 135,625 | |||||||||
9.750%, due 03/01/16 | 335,000 | 373,525 | |||||||||
Developers Diversified Realty Corp., REIT, 9.625%, due 03/15/16 |
310,000 | 367,884 | |||||||||
Diamond Resorts Corp., 12.000%, due 08/15/181 |
570,000 | 570,000 | |||||||||
DISH DBS Corp., 6.625%, due 10/01/14 |
400,000 | 415,000 | |||||||||
7.875%, due 09/01/19 | 200,000 | 209,000 | |||||||||
Domtar Corp., 10.750%, due 06/01/17 |
85,000 | 107,100 | |||||||||
DuPont Fabros Technology LP, REIT, 8.500%, due 12/15/17 |
400,000 | 428,000 | |||||||||
Dycom Investments, Inc., 8.125%, due 10/15/15 |
175,000 | 179,812 | |||||||||
Dynegy Holdings, Inc., 8.375%, due 05/01/16 |
160,000 | 119,600 | |||||||||
E*Trade Financial Corp., 12.500%, due 11/30/174 |
324,000 | 380,700 | |||||||||
Edgen Murray Corp., 12.250%, due 01/15/15 |
140,000 | 121,800 | |||||||||
Edison Mission Energy, 7.000%, due 05/15/17 |
555,000 | 439,837 | |||||||||
El Paso Corp., 7.800%, due 08/01/31 |
640,000 | 636,636 | |||||||||
Encore Acquisition Co., 9.500%, due 05/01/16 |
175,000 | 194,250 | |||||||||
Energy Future Intermediate Holding Co. LLC, 10.000%, due 12/01/20 |
431,000 | 444,479 | |||||||||
Energy Transfer Equity LP, 7.500%, due 10/15/20 |
50,000 | 51,500 | |||||||||
Entravision Communications Corp., 8.750%, due 08/01/171 |
175,000 | 184,625 | |||||||||
Equinix, Inc., 8.125%, due 03/01/18 |
250,000 | 261,250 |
64
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Exopack Holding Corp., 11.250%, due 02/01/14 |
$ | 195,000 | $ | 202,312 | |||||||
Ferrellgas Partners-LP, 9.125%, due 10/01/17 |
435,000 | 478,500 | |||||||||
FireKeepers Development Authority, 13.875%, due 05/01/151 |
930,000 | 1,099,725 | |||||||||
First Data Corp., 9.875%, due 09/24/15 |
205,000 | 195,262 | |||||||||
11.250%, due 03/31/16 | 195,000 | 170,625 | |||||||||
Ford Motor Co., 7.450%, due 07/16/31 |
415,000 | 444,569 | |||||||||
Ford Motor Credit Co. LLC, 8.700%, due 10/01/14 |
250,000 | 281,539 | |||||||||
12.000%, due 05/15/15 | 520,000 | 654,128 | |||||||||
Forest Oil Corp., 8.500%, due 02/15/14 |
140,000 | 152,950 | |||||||||
Freeport-McMoRan Copper & Gold, Inc., 8.375%, due 04/01/17 |
210,000 | 232,313 | |||||||||
Freescale Semiconductor, Inc., 9.125%, due 12/15/144 |
135,000 | 141,075 | |||||||||
9.250%, due 04/15/181 | 115,000 | 126,500 | |||||||||
10.125%, due 12/15/16 | 275,000 | 289,438 | |||||||||
10.125%, due 03/15/181 | 125,000 | 140,625 | |||||||||
10.750%, due 08/01/201 | 150,000 | 163,500 | |||||||||
Frontier Communications Corp., 8.250%, due 04/15/17 |
60,000 | 65,850 | |||||||||
8.500%, due 04/15/20 | 60,000 | 65,550 | |||||||||
9.000%, due 08/15/31 | 805,000 | 827,137 | |||||||||
FTI Consulting, Inc., 6.750%, due 10/01/201 |
100,000 | 99,250 | |||||||||
Gannett Co., Inc., 9.375%, due 11/15/17 |
150,000 | 167,250 | |||||||||
GenOn Energy, Inc., 9.500%, due 10/15/181 |
140,000 | 139,125 | |||||||||
GenOn Escrow Corp., 9.875%, due 10/15/201 |
200,000 | 198,500 | |||||||||
Gentiva Health Services, Inc., 11.500%, due 09/01/18 |
55,000 | 59,950 | |||||||||
Georgia Gulf Corp., 9.000%, due 01/15/171 |
35,000 | 37,975 | |||||||||
Georgia-Pacific LLC, 5.400%, due 11/01/201 |
200,000 | 197,736 | |||||||||
8.250%, due 05/01/161 | 375,000 | 423,281 | |||||||||
8.875%, due 05/15/31 | 215,000 | 264,450 | |||||||||
Glen Meadow Pass-Through Trust, 6.505%, due 02/12/671,2 |
200,000 | 166,000 | |||||||||
Global Aviation Holdings, Inc., 14.000%, due 08/15/13 |
205,000 | 221,400 |
Face amount |
Value | ||||||||||
Goodyear Tire & Rubber Co., 10.500%, due 05/15/16 |
$ | 360,000 | $ | 410,400 | |||||||
Graham Packaging Co. LP, 8.250%, due 10/01/18 |
45,000 | 47,250 | |||||||||
9.875%, due 10/15/14 | 545,000 | 564,075 | |||||||||
Graphic Packaging International, Inc., 7.875%, due 10/01/18 |
120,000 | 125,700 | |||||||||
9.500%, due 06/15/17 | 55,000 | 60,019 | |||||||||
Gulfmark Offshore, Inc., 7.750%, due 07/15/14 |
215,000 | 218,225 | |||||||||
GXS Worldwide, Inc., 9.750%, due 06/15/15 |
175,000 | 172,813 | |||||||||
Harland Clarke Holdings Corp., 9.500%, due 05/15/15 |
430,000 | 408,500 | |||||||||
Hartford Financial Services Group, Inc., 8.125%, due 06/15/382 |
460,000 | 488,750 | |||||||||
HCA Holdings, Inc., 7.750%, due 05/15/211 |
280,000 | 280,000 | |||||||||
Helix Energy Solutions Group, Inc., 9.500%, due 01/15/161 |
450,000 | 462,375 | |||||||||
Hertz Corp., 7.375%, due 01/15/211 |
240,000 | 242,400 | |||||||||
Hexion US Finance Corp., 8.875%, due 02/01/18 |
145,000 | 154,969 | |||||||||
Hilcorp Finance Co., 7.625%, due 04/15/211 |
90,000 | 92,925 | |||||||||
8.000%, due 02/15/201 | 85,000 | 89,994 | |||||||||
Host Hotels & Resorts LP, REIT, 9.000%, due 05/15/17 |
285,000 | 316,350 | |||||||||
Huntsman International LLC, 5.500%, due 06/30/16 |
150,000 | 145,125 | |||||||||
Icahn Enterprises LP, 8.000%, due 01/15/18 |
125,000 | 125,000 | |||||||||
ILFC E-Capital Trust I, 5.990%, due 12/21/651,2 |
320,000 | 242,259 | |||||||||
Inergy LP, 7.000%, due 10/01/181 |
80,000 | 80,600 | |||||||||
8.250%, due 03/01/16 | 325,000 | 338,812 | |||||||||
8.750%, due 03/01/15 | 290,000 | 308,850 | |||||||||
ING Capital Funding Trust III, 3.903%, due 03/31/112,3 |
215,000 | 198,337 | |||||||||
Ingles Markets, Inc., 8.875%, due 05/15/17 |
430,000 | 460,100 | |||||||||
Insight Communications Co., Inc., 9.375%, due 07/15/181 |
50,000 | 53,250 | |||||||||
Interactive Data Corp., 10.250%, due 08/01/181 |
25,000 | 27,125 | |||||||||
International Lease Finance Corp., 7.125%, due 09/01/181 |
425,000 | 451,563 | |||||||||
8.625%, due 09/15/151 | 405,000 | 435,375 | |||||||||
8.750%, due 03/15/171 | 130,000 | 139,425 |
65
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Invista, 9.250%, due 05/01/121 |
$ | 77,000 | $ | 78,348 | |||||||
Iron Mountain, Inc., 8.375%, due 08/15/21 |
425,000 | 455,812 | |||||||||
Jabil Circuit, Inc., 8.250%, due 03/15/18 |
150,000 | 169,875 | |||||||||
Jacobs Entertainment, Inc., 9.750%, due 06/15/14 |
275,000 | 267,438 | |||||||||
JC Penney Corp., Inc., 7.125%, due 11/15/23 |
325,000 | 335,563 | |||||||||
K Hovnanian Enterprises, Inc., 10.625%, due 10/15/16 |
180,000 | 184,500 | |||||||||
KB Home, 5.750%, due 02/01/14 |
75,000 | 75,000 | |||||||||
5.875%, due 01/15/15 | 150,000 | 146,250 | |||||||||
6.250%, due 06/15/15 | 150,000 | 148,500 | |||||||||
KEMET Corp., 10.500%, due 05/01/181 |
100,000 | 107,500 | |||||||||
Key Energy Services, Inc., 8.375%, due 12/01/14 |
365,000 | 385,075 | |||||||||
Land O'Lakes Capital Trust I, 7.450%, due 03/15/281 |
340,000 | 304,300 | |||||||||
Landry's Restaurants, Inc., 11.625%, due 12/01/15 |
120,000 | 128,100 | |||||||||
Level 3 Financing, Inc., 9.250%, due 11/01/14 |
110,000 | 109,175 | |||||||||
10.000%, due 02/01/18 | 150,000 | 144,000 | |||||||||
Levi Strauss & Co., 7.625%, due 05/15/20 |
200,000 | 206,500 | |||||||||
Libbey Glass, Inc., 10.000%, due 02/15/151 |
75,000 | 80,625 | |||||||||
Liberty Mutual Group, Inc., 7.800%, due 03/15/371 |
100,000 | 98,500 | |||||||||
10.750%, due 06/15/581,2 | 335,000 | 405,350 | |||||||||
Limited Brands, Inc., 7.600%, due 07/15/37 |
100,000 | 98,000 | |||||||||
8.500%, due 06/15/19 | 155,000 | 177,087 | |||||||||
Lincoln National Corp., 7.000%, due 05/17/662 |
550,000 | 536,250 | |||||||||
Linn Energy LLC, 7.750%, due 02/01/211 |
240,000 | 246,000 | |||||||||
11.750%, due 05/15/17 | 160,000 | 183,200 | |||||||||
Lyondell Chemical Co., 8.000%, due 11/01/171 |
270,000 | 298,687 | |||||||||
11.000%, due 05/01/18 | 250,000 | 283,125 | |||||||||
Macy's Retail Holdings, Inc., 6.375%, due 03/15/37 |
225,000 | 220,500 | |||||||||
Manitowoc Co., Inc., 8.500%, due 11/01/20 |
300,000 | 318,750 |
Face amount |
Value | ||||||||||
Mantech International Corp., 7.250%, due 04/15/18 |
$ | 35,000 | $ | 36,575 | |||||||
Marquette Transportation Finance Corp., 10.875%, due 01/15/171 |
100,000 | 102,000 | |||||||||
Massey Energy Co., 6.875%, due 12/15/13 |
250,000 | 253,125 | |||||||||
McClatchy Co., 11.500%, due 02/15/17 |
210,000 | 235,987 | |||||||||
McJunkin Red Man Corp., 9.500%, due 12/15/161 |
500,000 | 472,500 | |||||||||
MedAssets, Inc., 8.000%, due 11/15/181 |
225,000 | 226,125 | |||||||||
Media General, Inc., 11.750%, due 02/15/17 |
150,000 | 157,687 | |||||||||
Mediacom LLC, 9.125%, due 08/15/19 |
75,000 | 76,500 | |||||||||
Mercer International, Inc., 9.500%, due 12/01/171 |
140,000 | 143,850 | |||||||||
Meritage Homes Corp., 6.250%, due 03/15/15 |
100,000 | 100,500 | |||||||||
MGM Resorts International, 9.000%, due 03/15/201 |
125,000 | 137,500 | |||||||||
10.000%, due 11/01/161 | 210,000 | 215,775 | |||||||||
10.375%, due 05/15/14 | 125,000 | 140,312 | |||||||||
11.125%, due 11/15/17 | 410,000 | 471,500 | |||||||||
13.000%, due 11/15/13 | 260,000 | 307,450 | |||||||||
Michael Foods, Inc., 9.750%, due 07/15/181 |
220,000 | 240,350 | |||||||||
Michaels Stores, Inc., 11.375%, due 11/01/16 |
215,000 | 234,350 | |||||||||
Midwest Gaming Borrower LLC, 11.625%, due 04/15/161 |
120,000 | 124,200 | |||||||||
Mirant Americas Generation LLC, 9.125%, due 05/01/31 |
240,000 | 236,400 | |||||||||
Momentive Performance Materials, Inc., 12.500%, due 06/15/14 |
80,000 | 89,300 | |||||||||
Multiplan, Inc., 9.875%, due 09/01/181 |
485,000 | 515,312 | |||||||||
Murray Energy Corp., 10.250%, due 10/15/151 |
210,000 | 220,500 | |||||||||
Mylan, Inc., 7.625%, due 07/15/171 |
250,000 | 265,938 | |||||||||
Nalco Co., 6.625%, due 01/15/191 |
250,000 | 255,625 | |||||||||
Navios Maritime Acquisition Corp., 8.625%, due 11/01/171 |
390,000 | 398,775 | |||||||||
Navios Maritime Holdings, Inc., 8.875%, due 11/01/17 |
160,000 | 173,200 | |||||||||
Navistar International Corp., 8.250%, due 11/01/21 |
125,000 | 134,375 |
66
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
NB Capital Trust II, 7.830%, due 12/15/26 |
$ | 115,000 | $ | 115,000 | |||||||
Neiman Marcus Group, Inc., 9.000%, due 10/15/154 |
66,456 | 69,613 | |||||||||
10.375%, due 10/15/15 | 115,000 | 121,469 | |||||||||
Nexstar Broadcasting, Inc., 8.875%, due 04/15/171 |
125,000 | 132,813 | |||||||||
Nextel Communications, Inc., Series D, 7.375%, due 08/01/15 |
250,000 | 250,313 | |||||||||
Nielsen Finance LLC, 7.750%, due 10/15/181 |
35,000 | 36,225 | |||||||||
11.625%, due 02/01/14 | 140,000 | 162,050 | |||||||||
12.500%, due 08/01/167 | 145,000 | 152,250 | |||||||||
Niska Gas Storage US LLC, 8.875%, due 03/15/181 |
185,000 | 197,950 | |||||||||
North American Energy Alliance LLC, 10.875%, due 06/01/161 |
200,000 | 222,000 | |||||||||
NRG Energy, Inc., 7.250%, due 02/01/14 |
350,000 | 357,000 | |||||||||
7.375%, due 02/01/16 | 100,000 | 102,500 | |||||||||
8.500%, due 06/15/19 | 100,000 | 103,250 | |||||||||
Omnicare, Inc., 7.750%, due 06/01/20 |
42,000 | 43,260 | |||||||||
Owens-Brockway Glass Container, Inc., 7.375%, due 05/15/16 |
120,000 | 127,500 | |||||||||
PAETEC Holding Corp., 9.875%, due 12/01/181 |
300,000 | 308,250 | |||||||||
Patriot Coal Corp., 8.250%, due 04/30/18 |
125,000 | 127,188 | |||||||||
Peabody Energy Corp., 6.500%, due 09/15/20 |
50,000 | 53,375 | |||||||||
Peninsula Gaming LLC, 8.375%, due 08/15/15 |
100,000 | 105,125 | |||||||||
Petco Animal Supplies, Inc., 9.250%, due 12/01/181 |
215,000 | 226,556 | |||||||||
Petrohawk Energy Corp., 7.875%, due 06/01/15 |
200,000 | 208,250 | |||||||||
10.500%, due 08/01/14 | 445,000 | 507,300 | |||||||||
Pinafore LLC, 9.000%, due 10/01/181 |
200,000 | 216,000 | |||||||||
Pinnacle Foods Finance LLC, 10.625%, due 04/01/17 |
230,000 | 246,100 | |||||||||
Plains Exploration & Production Co., 7.625%, due 06/01/18 |
127,000 | 133,668 | |||||||||
10.000%, due 03/01/16 | 305,000 | 340,838 | |||||||||
PLY Gem Industries, Inc., 11.750%, due 06/15/13 |
470,000 | 502,900 | |||||||||
Pokagon Gaming Authority, 10.375%, due 06/15/141 |
398,000 | 414,915 |
Face amount |
Value | ||||||||||
Pride International, Inc., 6.875%, due 08/15/20 |
$ | 35,000 | $ | 36,312 | |||||||
Prospect Medical Holdings, Inc., 12.750%, due 07/15/14 |
200,000 | 220,000 | |||||||||
QEP Resources, Inc., 6.875%, due 03/01/21 |
105,000 | 110,250 | |||||||||
Quicksilver Resources, Inc., 11.750%, due 01/01/16 |
140,000 | 163,100 | |||||||||
Quiksilver, Inc., 6.875%, due 04/15/15 |
125,000 | 122,187 | |||||||||
QVC, Inc., 7.125%, due 04/15/171 |
70,000 | 73,325 | |||||||||
7.500%, due 10/01/191 | 130,000 | 136,825 | |||||||||
Qwest Communications International, Inc., 7.125%, due 04/01/181 |
450,000 | 465,750 | |||||||||
Radiation Therapy Services, Inc., 9.875%, due 04/15/171 |
100,000 | 99,750 | |||||||||
RBS Global, Inc., 8.500%, due 05/01/18 |
140,000 | 148,750 | |||||||||
Realogy Corp., 10.500%, due 04/15/14 |
315,000 | 309,487 | |||||||||
Regal Entertainment Group, 9.125%, due 08/15/18 |
55,000 | 58,575 | |||||||||
Residential Capital LLC, 9.625%, due 05/15/15 |
125,000 | 126,250 | |||||||||
Reynolds Group Issuer, Inc., 7.750%, due 10/15/161 |
200,000 | 211,500 | |||||||||
8.500%, due 05/15/181 | 200,000 | 201,000 | |||||||||
Rite Aid Corp., 9.500%, due 06/15/17 |
180,000 | 153,000 | |||||||||
10.375%, due 07/15/16 | 300,000 | 312,000 | |||||||||
Roofing Supply Group LLC, 8.625%, due 12/01/171 |
180,000 | 185,400 | |||||||||
Royal Caribbean Cruises Ltd., 7.500%, due 10/15/27 |
190,000 | 186,437 | |||||||||
Ryerson, Inc., 12.000%, due 11/01/15 |
480,000 | 502,800 | |||||||||
Ryland Group, Inc., 6.625%, due 05/01/20 |
275,000 | 270,875 | |||||||||
Salem Communications Corp., 9.625%, due 12/15/16 |
53,000 | 56,180 | |||||||||
Sally Holdings LLC, 10.500%, due 11/15/16 |
125,000 | 137,812 | |||||||||
SandRidge Energy, Inc., 8.750%, due 01/15/20 |
210,000 | 215,775 | |||||||||
9.875%, due 05/15/161 | 190,000 | 200,925 | |||||||||
Sanmina-SCI Corp., 8.125%, due 03/01/16 |
485,000 | 489,850 | |||||||||
SBA Telecommunications, Inc., 8.250%, due 08/15/19 |
180,000 | 196,650 |
67
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Scientific Games Corp., 8.125%, due 09/15/181 |
$ | 55,000 | $ | 55,412 | |||||||
Sealy Mattress Co., 10.875%, due 04/15/161 |
90,000 | 101,700 | |||||||||
Severstal Columbus LLC, 10.250%, due 02/15/181 |
200,000 | 211,000 | |||||||||
Shingle Springs Tribal Gaming Authority, 9.375%, due 06/15/151 |
365,000 | 251,850 | |||||||||
Sinclair Television Group, Inc., 9.250%, due 11/01/171 |
225,000 | 243,562 | |||||||||
Sitel LLC, 11.500%, due 04/01/181 |
150,000 | 123,750 | |||||||||
Smithfield Foods, Inc., 10.000%, due 07/15/141 |
190,000 | 218,975 | |||||||||
Solo Cup Co., 8.500%, due 02/15/14 |
200,000 | 180,000 | |||||||||
Spirit Aerosystems, Inc., 7.500%, due 10/01/17 |
115,000 | 119,600 | |||||||||
Sprint Capital Corp., 8.750%, due 03/15/32 |
730,000 | 737,300 | |||||||||
Sprint Nextel Corp., 8.375%, due 08/15/17 |
300,000 | 321,750 | |||||||||
SPX Corp., 7.625%, due 12/15/14 |
400,000 | 435,000 | |||||||||
SquareTwo Financial Corp., 11.625%, due 04/01/171 |
355,000 | 349,675 | |||||||||
Standard Pacific Corp., 10.750%, due 09/15/16 |
115,000 | 132,537 | |||||||||
SunGard Data Systems, Inc., 10.250%, due 08/15/15 |
815,000 | 856,769 | |||||||||
Susser Holdings LLC, 8.500%, due 05/15/16 |
50,000 | 53,625 | |||||||||
Swift Energy Co., 8.875%, due 01/15/20 |
125,000 | 135,312 | |||||||||
Tenet Healthcare Corp., 8.000%, due 08/01/201 |
55,000 | 55,825 | |||||||||
Tenneco, Inc., 7.750%, due 08/15/181 |
55,000 | 58,300 | |||||||||
Terremark Worldwide, Inc., 12.000%, due 06/15/17 |
170,000 | 194,650 | |||||||||
Tesoro Corp., 9.750%, due 06/01/19 |
205,000 | 227,038 | |||||||||
Toll Brothers Finance Corp., 8.910%, due 10/15/17 |
225,000 | 265,468 | |||||||||
Toys R Us Property Co. II LLC, 8.500%, due 12/01/17 |
505,000 | 542,875 | |||||||||
Trimas Corp., 9.750%, due 12/15/17 |
30,000 | 32,850 |
Face amount |
Value | ||||||||||
Triumph Group, Inc., 8.000%, due 11/15/17 |
$ | 55,000 | $ | 57,200 | |||||||
TRW Automotive, Inc., 7.000%, due 03/15/141 |
155,000 | 165,850 | |||||||||
Tube City IMS Corp., 9.750%, due 02/01/15 |
240,000 | 248,400 | |||||||||
Tunica-Biloxi Gaming Authority, 9.000%, due 11/15/151 |
600,000 | 565,500 | |||||||||
Tyson Foods, Inc., 10.500%, due 03/01/14 |
175,000 | 206,938 | |||||||||
Umbrella Acquisition, Inc., 9.750%, due 03/15/154 |
285,369 | 308,199 | |||||||||
Unisys Corp., 12.750%, due 10/15/141 |
300,000 | 354,750 | |||||||||
United States Steel Corp., 7.375%, due 04/01/20 |
150,000 | 153,750 | |||||||||
Universal Hospital Services, Inc., 8.500%, due 06/01/154 |
130,000 | 133,575 | |||||||||
Univision Communications, Inc., 7.875%, due 11/01/201 |
35,000 | 36,750 | |||||||||
8.500%, due 05/15/211 | 185,000 | 187,313 | |||||||||
12.000%, due 07/01/141 | 200,000 | 219,000 | |||||||||
USG Corp., 8.375%, due 10/15/181 |
35,000 | 34,300 | |||||||||
9.750%, due 08/01/141 | 100,000 | 105,500 | |||||||||
Vanguard Health Holding Co. II LLC, 8.000%, due 02/01/18 |
225,000 | 230,625 | |||||||||
Verso Paper Holdings LLC, 11.500%, due 07/01/14 |
260,000 | 285,350 | |||||||||
Series B, 11.375%, due 08/01/16 |
420,000 | 421,050 | |||||||||
Viskase Cos., Inc., 9.875%, due 01/15/181 |
200,000 | 208,500 | |||||||||
West Corp., 7.875%, due 01/15/191 |
250,000 | 254,375 | |||||||||
11.000%, due 10/15/16 | 300,000 | 325,500 | |||||||||
Weyerhaeuser Co., 7.375%, due 03/15/32 |
170,000 | 171,851 | |||||||||
Whiting Petroleum Corp., 6.500%, due 10/01/18 |
150,000 | 151,500 | |||||||||
Windstream Corp., 8.625%, due 08/01/16 |
375,000 | 394,688 | |||||||||
WMG Acquisition Corp., 9.500%, due 06/15/16 |
435,000 | 466,538 | |||||||||
XL Group PLC, Series E, 6.500%, due 04/15/172,3 |
465,000 | 399,900 | |||||||||
XM Satellite Radio, Inc., 13.000%, due 08/01/131 |
115,000 | 136,850 | |||||||||
Yankee Acquisition Corp., Series B, 8.500%, due 02/15/15 |
90,000 | 93,600 | |||||||||
9.750%, due 02/15/17 | 245,000 | 255,413 |
68
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Yonkers Racing Corp., 11.375%, due 07/15/161 |
$ | 260,000 | $ | 286,325 | |||||||
Zions Bancorp., 5.500%, due 11/16/15 |
140,000 | 136,093 | |||||||||
Total United States corporate bonds | 78,021,781 | ||||||||||
Total corporate bonds (cost $78,400,478) |
85,666,845 | ||||||||||
Commercial mortgage-backed securities: 0.34% | |||||||||||
United States: 0.34% | |||||||||||
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class AJ, 5.677%, due 12/10/492 |
225,000 | 130,418 | |||||||||
GS Mortgage Securities Corp. II, Series 2007-GG10, Class C, 5.807%, due 08/10/452 |
425,000 | 74,026 | |||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2007-C33, Class AM, 5.902%, due 02/15/512 |
100,000 | 97,655 | |||||||||
Total commercial mortgage-backed securities (cost $256,876) |
302,099 | ||||||||||
Total bonds (cost $78,657,354) |
85,968,944 | ||||||||||
Shares | |||||||||||
Common stocks: 0.07% | |||||||||||
United States: 0.07% | |||||||||||
American Restaurant Group, Inc.*5,6 | 972 | 0 | |||||||||
Knology, Inc.* | 3,926 | 61,363 | |||||||||
Pliant Corp.*5,6,9 | 1 | 0 | |||||||||
Vertis Holdings, Inc.*5,6 | 8,952 | 0 | |||||||||
Total common stocks (cost $0) |
61,363 | ||||||||||
Preferred stock: 0.00%8 | |||||||||||
United States: 0.00%8 | |||||||||||
CMP Susquehanna Radio Holdings Corp., Series A1,5,6,9 (cost $135) |
11,661 | 117 |
Number of warrants |
Value | ||||||||||
Warrants: 0.00%8 | |||||||||||
United States: 0.00%8 | |||||||||||
CMP Susquehanna Radio Holdings Corp., strike @ $0.01, expires 03/26/19*5,6 |
13,325 | $ | 133 | ||||||||
Sabreliner Corp., strike @ $0.01, expires 06/08/18*5,6 |
8,400 | 0 | |||||||||
Total warrants (cost $153,135) |
133 | ||||||||||
Shares | |||||||||||
Short-term investment: 1.81% | |||||||||||
Investment company: 1.81% | |||||||||||
UBS Cash Management Prime Relationship Fund10 (cost $1,607,581) |
1,607,581 | 1,607,581 | |||||||||
Total investments: 98.49% (cost $80,418,205) |
87,638,138 | ||||||||||
Cash and other assets, less liabilities: 1.51% |
1,345,144 | ||||||||||
Net assets: 100.00% | $ | 88,983,282 |
69
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 8,117,141 | |||||
Gross unrealized depreciation | (897,208 | ) | |||||
Net unrealized appreciation of investments | $ | 7,219,933 |
* Non-income producing security.
1 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $27,907,127 or 31.36% of net assets.
2 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2010 and changes periodically.
3 Perpetual bond security. The maturity date reflects the next call date.
4 PIKPayment-in kind security. Income may be paid in cash or additional notes, at the discretion of the issuer.
5 Security is illiquid. At December 31, 2010, the value of these securities amounted to $18,000 or 0.02% of net assets.
6 Security is being fair valued by a valuation committee under the direction of the Board of Trustees. At December 31, 2010, the value of these securities amounted to $18,000 or 0.02% of net assets.
7 Step bondCoupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2010. Maturity date disclosed is the ultimate maturity date.
8 Amount represents less than 0.005%.
9 These securities, which represent 0.005% of net assets as of December 31, 2010, are considered restricted. (See restricted security table below for more information.)
Restricted security |
Acquisition date |
Acquisition cost |
Acquisition cost as a percentage of net assets |
Value 12/31/10 |
12/31/10 Value as a percentage of net assets |
||||||||||||||||||
CMP Susquehanna Radio Holdings Corp., Series A, |
03/30/09 | $ | 135 | 0.00 | %1 | $ | 117 | 0.00 | %1 | ||||||||||||||
Pliant Corp., | 10/02/00 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||
$ | 135 | 0.00 | %1 | $ | 117 | 0.00 | %1 |
1 Amount represents less than 0.005%.
10 The table below details the Fund's investments in a fund that is advised by the same advisor as the Fund. The advisor does not earn a management fee from UBS Cash Management Prime Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 1,804,675 | $ | 16,862,554 | $ | 17,059,648 | $ | 1,607,581 | $ | 1,826 |
GE General Electric
GS Goldman Sachs
REIT Real estate investment trust
70
UBS High Yield Fund
Portfolio of investments
December 31, 2010 (unaudited)
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Corporate bonds | $ | | $ | 85,649,095 | $ | 17,750 | $ | 85,666,845 | |||||||||||
Commercial mortgage-backed securities | | 302,099 | | 302,099 | |||||||||||||||
Common stocks | 61,363 | | 0 | 61,363 | |||||||||||||||
Preferred stock | | | 117 | 117 | |||||||||||||||
Warrants | | | 133 | 133 | |||||||||||||||
Short-term investment | | 1,607,581 | | 1,607,581 | |||||||||||||||
Total | $ | 61,363 | $ | 87,558,775 | $ | 18,000 | $ | 87,638,138 |
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Measurements using unobservable inputs (Level 3) |
Corporate bonds |
Common Stocks |
Preferred stocks |
Warrants | Total | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Beginning balance | $ | 17,750 | $ | 0 | $ | 117 | $ | 133 | $ | 18,000 | |||||||||||||
Total gains or losses (realized/unrealized), and premiums/discounts included in earnings |
| | | | | ||||||||||||||||||
Purchases, sales, issuances, and settlements (net) | | | | | | ||||||||||||||||||
Transfers in and/or out of Level 3 | | | | | | ||||||||||||||||||
Ending balance | $ | 17,750 | $ | 0 | $ | 117 | $ | 133 | $ | 18,000 | |||||||||||||
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to investments still held at 12/31/10. |
$ | | $ | | $ | | $ | | $ | |
See accompanying notes to financial statements.
71
The UBS Funds
December 31, 2010 (unaudited)
Explanation of expense disclosure (unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transactional costs (as applicable); including sales charges (loads); and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees (if applicable); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example below is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, July 1, 2010 to December 31, 2010.
Actual expenses
The first line of each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over a period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on that Fund's actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not that Fund's actual return for each class of shares. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs (as applicable), such as sales charges (loads). Therefore, the second line in the table for each class of shares is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
This projection assumes that annualized expense ratios were in effect during the period July 1, 2010 to December 31, 2010.
72
The UBS Funds
December 31, 2010 (unaudited)
Beginning account value July 1, 2010 |
Ending account value December 31, 2010 |
Expenses paid during period* 07/01/10 12/31/10 |
Expense ratio during period |
||||||||||||||||||||
UBS Absolute Return Bond Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,022.00 | $ | 5.10 | 1.00 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.16 | 5.09 | 1.00 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,020.00 | 6.87 | 1.35 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.40 | 6.87 | 1.35 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,023.00 | 4.13 | 0.81 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,021.12 | 4.13 | 0.81 | |||||||||||||||||||
UBS Core Plus Bond Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,024.80 | 3.27 | 0.64 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,021.98 | 3.26 | 0.64 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,020.80 | 7.08 | 1.39 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.20 | 7.07 | 1.39 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,022.30 | 5.81 | 1.14 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.46 | 5.80 | 1.14 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,024.90 | 1.99 | 0.39 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,023.24 | 1.99 | 0.39 | |||||||||||||||||||
UBS Fixed Income Opportunities Fund1 | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,022.20 | 0.87 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.42 | 4.84 | 0.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,021.10 | 1.32 | 1.45 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,017.90 | 7.37 | 1.45 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,023.40 | 0.64 | 0.70 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,021.68 | 3.57 | 0.70 |
* Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
1 UBS Fixed Income Opportunities Fund commenced operations on November 29, 2010. Actual expense is equal to the Fund's annualized net expense ratios from the commencement of investment operations date, multiplied by the average account value over the period, multiplied by 33 divided by 365 (to reflect the actual days in the period). For comparability purposes, hypothetical expense assumes that the Fund was in operation for the entire six-month period ended December 31, 2010. Thus, the hypothetical expense is equal to the Fund's annualized net expense ratio, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
73
The UBS Funds
December 31, 2010 (unaudited)
Beginning account value July 1, 2010 |
Ending account value December 31, 2010 |
Expenses paid during period* 07/01/10 12/31/10 |
Expense ratio during period |
||||||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,063.10 | $ | 5.98 | 1.15 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.41 | 5.85 | 1.15 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,058.80 | 9.86 | 1.90 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.63 | 9.65 | 1.90 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,059.10 | 8.56 | 1.65 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,016.89 | 8.39 | 1.65 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,063.50 | 4.68 | 0.90 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.67 | 4.58 | 0.90 | |||||||||||||||||||
UBS High Yield Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,097.00 | 6.34 | 1.20 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.16 | 6.11 | 1.20 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,092.70 | 10.29 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.38 | 9.91 | 1.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,094.10 | 8.97 | 1.70 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,016.64 | 8.64 | 1.70 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,099.20 | 5.03 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.42 | 4.84 | 0.95 |
* Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
74
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75
The UBS Funds
Financial statements
Statement of assets and liabilities
December 31, 2010 (unaudited)
UBS Absolute Return Bond Fund |
UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund |
|||||||||||||
Assets: | |||||||||||||||
Investments, at cost: | |||||||||||||||
Unaffiliated issuers | $ | 135,997,823 | $ | 41,739,992 | $ | 24,567,974 | |||||||||
Affiliated issuers | 9,144,727 | 9,881,626 | 3,574,769 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | | 343,069 | | ||||||||||||
Foreign currency, at cost | 693,364 | | 21,207 | ||||||||||||
$ | 145,835,914 | $ | 51,964,687 | $ | 28,163,950 | ||||||||||
Investments, at value: | |||||||||||||||
Unaffiliated issuers | $ | 137,364,594 | $ | 42,590,983 | $ | 24,518,617 | |||||||||
Affiliated issuers | 9,144,727 | 10,044,307 | 3,642,795 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | | 343,069 | | ||||||||||||
Foreign currency, at value | 706,496 | | 21,544 | ||||||||||||
Receivables: | |||||||||||||||
Interest | 2,585,797 | 229,112 | 381,744 | ||||||||||||
Foreign tax reclaims | 36,805 | | | ||||||||||||
Fund shares sold | 4,828 | 40,037 | 142,482 | ||||||||||||
Investment securities sold | | 491,031 | 49,500 | ||||||||||||
Due from advisor | | 5,900 | 8,926 | ||||||||||||
Deferred organizational costs | | | 49,401 | ||||||||||||
Variation margin | | 27,400 | 20,375 | ||||||||||||
Cash collateral for futures contracts | 853,072 | | | ||||||||||||
Outstanding swap agreements, at value2 | 79,997 | 5,983 | 1,309,121 | ||||||||||||
Unrealized appreciation on forward foreign currency contracts | 401,485 | | | ||||||||||||
Other assets | 21,618 | 34,971 | 1,298 | ||||||||||||
Total assets | 151,199,419 | 53,812,793 | 30,145,803 | ||||||||||||
Liabilities: | |||||||||||||||
Payables: | |||||||||||||||
Cash collateral from securities loaned | | 343,069 | | ||||||||||||
Investment securities purchased | | 7,387,488 | 1,198,798 | ||||||||||||
Investment advisory and administration fees | 76,746 | | | ||||||||||||
Fund shares redeemed | 17,060 | 907,032 | | ||||||||||||
Custody and fund accounting fees | 12,988 | 8,601 | 3,433 | ||||||||||||
Distribution and service fees | 2,376 | 3,648 | 405 | ||||||||||||
Trustees' fees | 7,314 | 5,455 | 2,253 | ||||||||||||
Organizational costs | | | 54,000 | ||||||||||||
Due to broker | | 5,648 | 9,646 | ||||||||||||
Due to custodian | | 1,523 | 47,500 | ||||||||||||
Variation margin | 134,601 | | | ||||||||||||
Accrued expenses | 63,225 | 45,451 | 14,351 | ||||||||||||
Options written, at value3 | | | 263,098 | ||||||||||||
Outstanding swap agreements, at value2 | 666,853 | 130,648 | 529,066 | ||||||||||||
Unrealized depreciation on forward foreign currency contracts | 999,081 | | 166,934 | ||||||||||||
Total liabilities | 1,980,244 | 8,838,563 | 2,289,484 | ||||||||||||
Net assets | $ | 149,219,175 | $ | 44,974,230 | $ | 27,856,319 |
1 The market value of securities loaned by UBS Core Plus Bond Fund, as of December 31, 2010 was $746,083.
2 Net upfront payments (made) received by UBS Absolute Return Bond Fund, UBS Core Plus Bond Fund and UBS Fixed Income Opportunities Fund were $115,065, $253 and $(360,155), respectively.
3 Premiums received by UBS Fixed Income Opportunities Fund were $291,156.
76
The UBS Funds
Financial statements
UBS Global Bond Fund |
UBS High Yield Fund |
||||||||||
Assets: | |||||||||||
Investments, at cost: | |||||||||||
Unaffiliated issuers | $ | 15,479,437 | $ | 78,810,624 | |||||||
Affiliated issuers | 623,491 | 1,607,581 | |||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | | | |||||||||
Foreign currency, at cost | 204,251 | | |||||||||
$ | 16,307,179 | $ | 80,418,205 | ||||||||
Investments, at value: | |||||||||||
Unaffiliated issuers | $ | 15,519,283 | $ | 86,030,557 | |||||||
Affiliated issuers | 623,491 | 1,607,581 | |||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | | | |||||||||
Foreign currency, at value | 207,671 | | |||||||||
Receivables: | |||||||||||
Interest | 216,664 | 1,653,634 | |||||||||
Foreign tax reclaims | | | |||||||||
Fund shares sold | 5,818 | 10,472 | |||||||||
Investment securities sold | | | |||||||||
Due from advisor | 7,026 | | |||||||||
Deferred organizational costs | | | |||||||||
Variation margin | 875 | | |||||||||
Cash collateral for futures contracts | 3,022 | | |||||||||
Outstanding swap agreements, at value2 | | | |||||||||
Unrealized appreciation on forward foreign currency contracts | 108,770 | | |||||||||
Other assets | 28,996 | 38,275 | |||||||||
Total assets | 16,721,616 | 89,340,519 | |||||||||
Liabilities: | |||||||||||
Payables: | |||||||||||
Cash collateral from securities loaned | | | |||||||||
Investment securities purchased | | 172,813 | |||||||||
Investment advisory and administration fees | | 43,466 | |||||||||
Fund shares redeemed | 104,035 | 50,694 | |||||||||
Custody and fund accounting fees | 8,850 | 6,843 | |||||||||
Distribution and service fees | 3,028 | 14,465 | |||||||||
Trustees' fees | 4,974 | 6,129 | |||||||||
Organizational costs | | | |||||||||
Due to broker | | | |||||||||
Due to custodian | 90 | | |||||||||
Variation margin | | | |||||||||
Accrued expenses | 45,017 | 62,827 | |||||||||
Options written, at value3 | | | |||||||||
Outstanding swap agreements, at value2 | 14,338 | | |||||||||
Unrealized depreciation on forward foreign currency contracts | 14,027 | | |||||||||
Total liabilities | 194,359 | 357,237 | |||||||||
Net assets | $ | 16,527,257 | $ | 88,983,282 |
See accompanying notes to financial statements.
77
The UBS Funds
Financial statements
Statement of assets and liabilities (cont'd)
December 31, 2010 (unaudited)
UBS Absolute Return Bond Fund1 |
UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund1 |
|||||||||||||
Net assets consist of: | |||||||||||||||
Beneficial interest | $ | 279,378,732 | $ | 80,595,855 | $ | 27,319,047 | |||||||||
Accumulated undistributed (distributions in excess of) net investment income | (599,755 | ) | 186,653 | 35,224 | |||||||||||
Accumulated net realized gain (loss) | (130,895,944 | ) | (36,647,872 | ) | 45,626 | ||||||||||
Net unrealized appreciation | 1,336,142 | 839,594 | 456,422 | ||||||||||||
Net assets | $ | 149,219,175 | $ | 44,974,230 | $ | 27,856,319 | |||||||||
Class A: | |||||||||||||||
Net assets | $ | 9,632,230 | $ | 9,385,250 | $ | 1,138,272 | |||||||||
Shares outstanding | 1,522,718 | 1,090,675 | 111,621 | ||||||||||||
Net asset value and redemption proceeds per share | $ | 6.33 | $ | 8.60 | $ | 10.20 | |||||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 6.49 | $ | 9.01 | $ | 10.68 | |||||||||
Class B: | |||||||||||||||
Net assets | N/A | $ | 52,957 | N/A | |||||||||||
Shares outstanding | N/A | 6,146 | N/A | ||||||||||||
Net asset value and offering price per share | N/A | $ | 8.62 | N/A | |||||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | N/A | $ | 8.19 | N/A | |||||||||||
Class C: | |||||||||||||||
Net assets | $ | 2,562,719 | $ | 2,344,007 | $ | 847,055 | |||||||||
Shares outstanding | 405,093 | 273,265 | 83,113 | ||||||||||||
Net asset value and offering price per share | $ | 6.33 | $ | 8.58 | $ | 10.19 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 6.30 | $ | 8.52 | $ | 10.11 | |||||||||
Class Y: | |||||||||||||||
Net assets | $ | 137,024,226 | $ | 33,192,016 | $ | 25,870,992 | |||||||||
Shares outstanding | 21,674,322 | 3,861,922 | 2,534,624 | ||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 6.32 | $ | 8.59 | $ | 10.21 |
1 UBS Absolute Return Bond Fund and UBS Fixed Income Opportunities Fund do not offer Class B shares.
2 For Class A, the maximum sales charge is 4.50% for UBS Global Bond Fund, UBS Core Plus Bond Fund, UBS Fixed Income Opportunities Fund and UBS High Yield Fund and 2.50% for UBS Absolute Return Bond Fund. Classes B, C and Y have no front-end sales charges. For Class A shares of each Fund except UBS Absolute Return Bond Fund, the maximum contingent deferred sales charge of 1.00% of the shares' offering price or the net asset value at the time of sales by the shareholder, whichever is less, is charged on sales of shares on original purchases of $1,000,000 or more that were not subject to a front-end sales charge made within one year of the purchase date. For Class A shares of UBS Absolute Return Bond Fund, the maximum contingent deferred sales charge of 0.50% of the shares' offering price or the net asset value at the time of sales by the shareholder, whichever is less, is charged on sales of shares on original purchases of $250,000 or more that were not subject to a front end sales charge made within one year of the purchase date. For Class B, the maximum contingent deferred sales charge is 5.00%. For Class C, the maximum contingent deferred sales charge is 0.75% for UBS Global Bond Fund, UBS Core Plus Bond Fund, UBS Fixed Income Opportunities Fund and UBS High Yield Fund, and 0.50% for UBS Absolute Return Bond Fund. Class Y has no contingent deferred sales charge.
78
The UBS Funds
Financial statements
UBS Global Bond Fund |
UBS High Yield Fund |
||||||||||
Net assets consist of: | |||||||||||
Beneficial interest | $ | 32,555,736 | $ | 203,366,319 | |||||||
Accumulated undistributed (distributions in excess of) net investment income | 74,400 | 579,479 | |||||||||
Accumulated net realized gain (loss) | (16,230,760 | ) | (122,182,449 | ) | |||||||
Net unrealized appreciation | 127,881 | 7,219,933 | |||||||||
Net assets | $ | 16,527,257 | $ | 88,983,282 | |||||||
Class A: | |||||||||||
Net assets | $ | 6,794,678 | $ | 37,050,358 | |||||||
Shares outstanding | 950,933 | 5,971,106 | |||||||||
Net asset value and redemption proceeds per share | $ | 7.15 | $ | 6.20 | |||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 7.49 | $ | 6.49 | |||||||
Class B: | |||||||||||
Net assets | $ | 113,550 | $ | 751,435 | |||||||
Shares outstanding | 15,838 | 121,033 | |||||||||
Net asset value and offering price per share | $ | 7.17 | $ | 6.21 | |||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 6.81 | $ | 5.90 | |||||||
Class C: | |||||||||||
Net assets | $ | 2,402,821 | $ | 9,398,588 | |||||||
Shares outstanding | 337,463 | 1,513,524 | |||||||||
Net asset value and offering price per share | $ | 7.12 | $ | 6.21 | |||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 7.07 | $ | 6.16 | |||||||
Class Y: | |||||||||||
Net assets | $ | 7,216,208 | $ | 41,782,901 | |||||||
Shares outstanding | 873,913 | 6,678,096 | |||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 8.26 | $ | 6.26 |
See accompanying notes to financial statements.
79
The UBS Funds
Financial statements
Statement of operations
For the six months ended December 31, 2010 (unaudited)
UBS Absolute Return Bond Fund |
UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund1 |
|||||||||||||
Investment income: | |||||||||||||||
Interest and other | $ | 2,756,284 | $ | 791,834 | $ | 116,089 | |||||||||
Affiliated interest | 7,336 | 7,106 | 197 | ||||||||||||
Securities lending-net | | 412 | | ||||||||||||
Total income | 2,763,620 | 799,352 | 116,286 | ||||||||||||
Expenses: | |||||||||||||||
Advisory and administration | 470,749 | 134,625 | 16,838 | ||||||||||||
Service and distribution: | |||||||||||||||
Class A | 7,905 | 12,282 | 147 | ||||||||||||
Class B | | 214 | | ||||||||||||
Class C | 7,387 | 9,460 | 257 | ||||||||||||
Transfer agency and related service fees: | |||||||||||||||
Class A | 11,025 | 5,681 | 15 | ||||||||||||
Class B | | 70 | | ||||||||||||
Class C | 1,936 | 1,096 | 16 | ||||||||||||
Class Y | 116 | 12,017 | 15 | ||||||||||||
Custodian and fund accounting | 38,783 | 25,358 | 3,433 | ||||||||||||
Federal and state registration | 17,764 | 25,319 | | ||||||||||||
Professional services | 49,741 | 42,161 | 10,967 | ||||||||||||
Shareholder reports | 8,813 | 3,659 | 2,253 | ||||||||||||
Trustees | 14,547 | 10,854 | 2,253 | ||||||||||||
Amortization of organizational costs | | | 4,599 | ||||||||||||
Other | 10,852 | 6,429 | 1,173 | ||||||||||||
Total expenses | 639,618 | 289,225 | 41,966 | ||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (10,369 | ) | (175,965 | ) | (25,294 | ) | |||||||||
Net expenses | 629,249 | 113,260 | 16,672 | ||||||||||||
Net investment income | 2,134,371 | 686,092 | 99,614 | ||||||||||||
Net realized gain (loss) on: | |||||||||||||||
Investments in unaffiliated issuers | (289,371 | ) | 349,910 | (11,249 | ) | ||||||||||
Investments in affiliated issuers | | 2,588 | | ||||||||||||
Futures contracts | (3,076,197 | ) | (20,338 | ) | 39,086 | ||||||||||
Options written | | (32,458 | ) | 28,847 | |||||||||||
Swap agreements | (30,903 | ) | 6,146 | (10,324 | ) | ||||||||||
Forward foreign currency contracts | (2,670,191 | ) | 14,370 | | |||||||||||
Foreign currency transactions | 382,369 | | (734 | ) | |||||||||||
Net realized gain (loss) | (5,684,293 | ) | 320,218 | 45,626 | |||||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||||||
Investments | 5,176,691 | 194,008 | 18,669 | ||||||||||||
Futures contracts | 2,358,693 | (86,422 | ) | 152,343 | |||||||||||
Options written | | | 28,058 | ||||||||||||
Swap agreements | (79,293 | ) | 71,694 | 419,900 | |||||||||||
Forward foreign currency contracts | (475,288 | ) | (14,370 | ) | (166,934 | ) | |||||||||
Translation of other assets and liabilities denominated in foreign currency | 105,610 | | 4,386 | ||||||||||||
Change in net unrealized appreciation/depreciation | 7,086,413 | 164,910 | 456,422 | ||||||||||||
Net realized and unrealized gain | 1,402,120 | 485,128 | 502,048 | ||||||||||||
Net increase in net assets resulting from operations | $ | 3,536,491 | $ | 1,171,220 | $ | 601,662 |
1 For the period November 29, 2010 (commencement of operations) through December 31, 2010.
80
The UBS Funds
Financial statements
UBS Global Bond Fund |
UBS High Yield Fund |
||||||||||
Investment income: | |||||||||||
Interest and other | $ | 340,077 | $ | 4,008,184 | |||||||
Affiliated interest | 792 | 1,826 | |||||||||
Securities lending-net | | | |||||||||
Total income | 340,869 | 4,010,010 | |||||||||
Expenses: | |||||||||||
Advisory and administration | 64,391 | 296,970 | |||||||||
Service and distribution: | |||||||||||
Class A | 9,104 | 47,214 | |||||||||
Class B | 628 | 4,240 | |||||||||
Class C | 8,864 | 35,014 | |||||||||
Transfer agency and related service fees: | |||||||||||
Class A | 4,478 | 25,375 | |||||||||
Class B | 122 | 1,028 | |||||||||
Class C | 937 | 5,959 | |||||||||
Class Y | 7,649 | 14,314 | |||||||||
Custodian and fund accounting | 25,690 | 20,268 | |||||||||
Federal and state registration | 21,883 | 21,856 | |||||||||
Professional services | 43,289 | 44,617 | |||||||||
Shareholder reports | 4,134 | 20,422 | |||||||||
Trustees | 9,854 | 12,216 | |||||||||
Amortization of organizational costs | | | |||||||||
Other | 4,935 | 8,162 | |||||||||
Total expenses | 205,958 | 557,655 | |||||||||
Fee waivers and/or expense reimbursements by Advisor | (107,431 | ) | (53,092 | ) | |||||||
Net expenses | 98,527 | 504,563 | |||||||||
Net investment income | 242,342 | 3,505,447 | |||||||||
Net realized gain (loss) on: | |||||||||||
Investments in unaffiliated issuers | 95,470 | 1,851,524 | |||||||||
Investments in affiliated issuers | | | |||||||||
Futures contracts | (26,913 | ) | | ||||||||
Options written | | | |||||||||
Swap agreements | 1,604 | | |||||||||
Forward foreign currency contracts | (92,009 | ) | | ||||||||
Foreign currency transactions | 283,034 | | |||||||||
Net realized gain (loss) | 261,186 | 1,851,524 | |||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||
Investments | 460,132 | 2,655,732 | |||||||||
Futures contracts | 4,189 | | |||||||||
Options written | | | |||||||||
Swap agreements | 1,358 | | |||||||||
Forward foreign currency contracts | 125,705 | | |||||||||
Translation of other assets and liabilities denominated in foreign currency | 2,913 | | |||||||||
Change in net unrealized appreciation/depreciation | 594,297 | 2,655,732 | |||||||||
Net realized and unrealized gain | 855,483 | 4,507,256 | |||||||||
Net increase in net assets resulting from operations | $ | 1,097,825 | $ | 8,012,703 |
See accompanying notes to financial statements.
81
The UBS Funds
Financial statements
Statement of changes in net assets
UBS Absolute Return Bond Fund | UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund |
|||||||||||||||||||||
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Period ended December 31, 20101 (unaudited) |
|||||||||||||||||||
Operations: | |||||||||||||||||||||||
Net investment income | $ | 2,134,371 | $ | 3,885,147 | $ | 686,092 | $ | 1,906,138 | $ | 99,614 | |||||||||||||
Net realized gain (loss) | (5,684,293 | ) | (4,186,552 | ) | 320,218 | 2,124,339 | 45,626 | ||||||||||||||||
Change in net unrealized appreciation/depreciation | 7,086,413 | 3,698,343 | 164,910 | 2,918,815 | 456,422 | ||||||||||||||||||
Net increase in net assets from operations | 3,536,491 | 3,396,938 | 1,171,220 | 6,949,292 | 601,662 | ||||||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||||||
Class A: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | (185,649 | ) | (337,877 | ) | (335,573 | ) | (518,764 | ) | (1,760 | ) | |||||||||||||
Return of capital | | (50,071 | ) | | | | |||||||||||||||||
Total Class A dividends and distributions | (185,649 | ) | (387,948 | ) | (335,573 | ) | (518,764 | ) | (1,760 | ) | |||||||||||||
Class B: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | | | (1,069 | ) | (4,783 | ) | | ||||||||||||||||
Class C: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | (45,072 | ) | (84,610 | ) | (75,000 | ) | (138,464 | ) | (1,690 | ) | |||||||||||||
Return of capital | | (12,539 | ) | | | | |||||||||||||||||
Total Class C dividends and distributions | (45,072 | ) | (97,149 | ) | (75,000 | ) | (138,464 | ) | (1,690 | ) | |||||||||||||
Class Y: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | (2,660,565 | ) | (3,446,259 | ) | (1,172,600 | ) | (2,592,086 | ) | (60,940 | ) | |||||||||||||
Return of capital | | (510,709 | ) | | | | |||||||||||||||||
Total Class Y dividends and distributions | (2,660,565 | ) | (3,956,968 | ) | (1,172,600 | ) | (2,592,086 | ) | (60,940 | ) | |||||||||||||
Decrease in net assets from dividends and distributions | (2,891,286 | ) | (4,442,065 | ) | (1,584,242 | ) | (3,254,097 | ) | (64,390 | ) | |||||||||||||
Beneficial interest transactions: | |||||||||||||||||||||||
Proceeds from shares sold | 330,743 | 1,856,827 | 3,486,438 | 13,516,769 | 27,270,956 | ||||||||||||||||||
Shares issued on reinvestment of dividends and distributions | 2,864,430 | 4,394,016 | 1,510,457 | 3,123,358 | 64,390 | ||||||||||||||||||
Cost of shares redeemed | (2,982,601 | ) | (10,775,409 | ) | (5,912,497 | ) | (41,004,427 | ) | (16,299 | ) | |||||||||||||
Redemption fees | 505 | 493 | 3,654 | 8,940 | | ||||||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions |
213,077 | (4,524,073 | ) | (911,948 | ) | (24,355,360 | ) | 27,319,047 | |||||||||||||||
Increase (decrease) in net assets | 858,282 | (5,569,200 | ) | (1,324,970 | ) | (20,660,165 | ) | 27,856,319 | |||||||||||||||
Net assets, beginning of period | 148,360,893 | 153,930,093 | 46,299,200 | 66,959,365 | | ||||||||||||||||||
Net assets, end of period | $ | 149,219,175 | $ | 148,360,893 | $ | 44,974,230 | $ | 46,299,200 | $ | 27,856,319 | |||||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income |
$ | (599,755 | ) | $ | 157,160 | $ | 186,653 | $ | 1,084,803 | $ | 35,224 |
1 For the period November 29, 2010 (commencement of operations) through December 31, 2010.
82
The UBS Funds
Financial statements
UBS Global Bond Fund | UBS High Yield Fund | ||||||||||||||||||
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income | $ | 242,342 | $ | 643,076 | $ | 3,505,447 | $ | 8,757,347 | |||||||||||
Net realized gain (loss) | 261,186 | 1,281,408 | 1,851,524 | 3,810,693 | |||||||||||||||
Change in net unrealized appreciation/depreciation | 594,297 | 369,576 | 2,655,732 | 7,962,022 | |||||||||||||||
Net increase in net assets from operations | 1,097,825 | 2,294,060 | 8,012,703 | 20,530,062 | |||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | (576,613 | ) | (231,955 | ) | (1,542,947 | ) | (3,411,268 | ) | |||||||||||
Return of capital | | | | | |||||||||||||||
Total Class A dividends and distributions | (576,613 | ) | (231,955 | ) | (1,542,947 | ) | (3,411,268 | ) | |||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | (9,053 | ) | (3,025 | ) | (31,520 | ) | (81,622 | ) | |||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | (187,308 | ) | (51,974 | ) | (358,365 | ) | (754,944 | ) | |||||||||||
Return of capital | | | | | |||||||||||||||
Total Class C dividends and distributions | (187,308 | ) | (51,974 | ) | (358,365 | ) | (754,944 | ) | |||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (536,205 | ) | (427,927 | ) | (1,664,613 | ) | (4,118,309 | ) | |||||||||||
Return of capital | | | | | |||||||||||||||
Total Class Y dividends and distributions | (536,205 | ) | (427,927 | ) | (1,664,613 | ) | (4,118,309 | ) | |||||||||||
Decrease in net assets from dividends and distributions | (1,309,179 | ) | (714,881 | ) | (3,597,445 | ) | (8,366,143 | ) | |||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 752,548 | 8,359,734 | 6,800,224 | 12,200,138 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 1,164,875 | 673,245 | 2,809,158 | 6,616,743 | |||||||||||||||
Cost of shares redeemed | (3,187,025 | ) | (26,950,230 | ) | (8,350,554 | ) | (56,934,196 | ) | |||||||||||
Redemption fees | 518 | 540 | 1,043 | 9,441 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions |
(1,269,084 | ) | (17,916,711 | ) | 1,259,871 | (38,107,874 | ) | ||||||||||||
Increase (decrease) in net assets | (1,480,438 | ) | (16,337,532 | ) | 5,675,129 | (25,943,955 | ) | ||||||||||||
Net assets, beginning of period | 18,007,695 | 34,345,227 | 83,308,153 | 109,252,108 | |||||||||||||||
Net assets, end of period | $ | 16,527,257 | $ | 18,007,695 | $ | 88,983,282 | $ | 83,308,153 | |||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income |
$ | 74,400 | $ | 1,141,237 | $ | 579,479 | $ | 671,477 |
See accompanying notes to financial statements.
83
UBS Absolute Return Bond Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.30 | $ | 6.35 | $ | 7.81 | $ | 10.05 | $ | 10.14 | $ | 9.98 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.09 | 0.15 | 0.13 | 0.34 | 0.35 | 0.28 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.06 | (0.02 | ) | (0.88 | ) | (2.13 | ) | (0.06 | ) | 0.18 | |||||||||||||||||
Total income (loss) from investment operations | 0.15 | 0.13 | (0.75 | ) | (1.79 | ) | 0.29 | 0.46 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.12 | ) | (0.16 | ) | (0.71 | ) | (0.45 | ) | (0.30 | ) | (0.29 | ) | |||||||||||||||
From return of capital | | (0.02 | ) | | | | | ||||||||||||||||||||
From net realized gains | | | | | (0.08 | ) | (0.01 | ) | |||||||||||||||||||
Total dividends and distributions | (0.12 | ) | (0.18 | ) | (0.71 | ) | (0.45 | ) | (0.38 | ) | (0.30 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.33 | $ | 6.30 | $ | 6.35 | $ | 7.81 | $ | 10.05 | $ | 10.14 | |||||||||||||||
Total investment return2 | 2.20 | % | 1.99 | % | (9.48 | )% | (18.07 | )% | 2.87 | % | 4.65 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 9,632 | $ | 11,333 | $ | 17,850 | $ | 50,761 | $ | 257,180 | $ | 212,983 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 1.17 | %3 | 1.14 | % | 1.12 | % | 0.99 | % | 0.95 | % | 0.96 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 1.00 | %3 | 1.00 | % | 1.00 | % | 0.99 | % | 0.95 | % | 0.99 | %4 | |||||||||||||||
Ratio of net investment income to average net assets | 2.67 | %3 | 2.36 | % | 1.85 | % | 3.68 | % | 3.43 | % | 2.78 | % | |||||||||||||||
Portfolio turnover rate | 11 | % | 37 | % | 99 | % | 33 | % | 56 | % | 96 | % | |||||||||||||||
Class Y |
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.30 | $ | 6.34 | $ | 7.81 | $ | 10.05 | $ | 10.15 | $ | 9.98 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.09 | 0.16 | 0.13 | 0.36 | 0.37 | 0.30 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.05 | (0.01 | ) | (0.88 | ) | (2.12 | ) | (0.07 | ) | 0.19 | |||||||||||||||||
Total income (loss) from investment operations | 0.14 | 0.15 | (0.75 | ) | (1.76 | ) | 0.30 | 0.49 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.12 | ) | (0.17 | ) | (0.72 | ) | (0.48 | ) | (0.32 | ) | (0.31 | ) | |||||||||||||||
From return of capital | | (0.02 | ) | | | | | ||||||||||||||||||||
From net realized gains | | | | | (0.08 | ) | (0.01 | ) | |||||||||||||||||||
Total dividends and distributions | (0.12 | ) | (0.19 | ) | (0.72 | ) | (0.48 | ) | (0.40 | ) | (0.32 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.32 | $ | 6.30 | $ | 6.34 | $ | 7.81 | $ | 10.05 | $ | 10.15 | |||||||||||||||
Total investment return2 | 2.30 | % | 2.34 | % | (9.32 | )% | (17.92 | )% | 2.96 | % | 4.94 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 137,024 | $ | 133,822 | $ | 130,933 | $ | 187,445 | $ | 259,089 | $ | 232,208 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 0.81 | %3 | 0.80 | % | 0.83 | % | 0.76 | % | 0.75 | % | 0.77 | % | |||||||||||||||
Net of expense reimbursement | 0.81 | %3 | 0.80 | % | 0.83 | % | 0.76 | % | 0.75 | % | 0.77 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.86 | %3 | 2.56 | % | 1.94 | % | 3.92 | % | 3.63 | % | 3.00 | % | |||||||||||||||
Portfolio turnover rate | 11 | % | 37 | % | 99 | % | 33 | % | 56 | % | 96 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less
84
UBS Absolute Return Bond Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.30 | $ | 6.35 | $ | 7.81 | $ | 10.04 | $ | 10.14 | $ | 9.98 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.07 | 0.13 | 0.10 | 0.31 | 0.31 | 0.24 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.07 | (0.03 | ) | (0.87 | ) | (2.12 | ) | (0.06 | ) | 0.18 | |||||||||||||||||
Total income (loss) from investment operations | 0.14 | 0.10 | (0.77 | ) | (1.81 | ) | 0.25 | 0.42 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.11 | ) | (0.13 | ) | (0.69 | ) | (0.42 | ) | (0.27 | ) | (0.25 | ) | |||||||||||||||
From return of capital | | (0.02 | ) | | | | | ||||||||||||||||||||
From net realized gains | | | | | (0.08 | ) | (0.01 | ) | |||||||||||||||||||
Total dividends and distributions | (0.11 | ) | (0.15 | ) | (0.69 | ) | (0.42 | ) | (0.35 | ) | (0.26 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.33 | $ | 6.30 | $ | 6.35 | $ | 7.81 | $ | 10.04 | $ | 10.14 | |||||||||||||||
Total investment return2 | 2.00 | % | 1.61 | % | (9.81 | )% | (18.27 | )% | 2.42 | % | 4.30 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,563 | $ | 3,206 | $ | 5,147 | $ | 9,971 | $ | 37,548 | $ | 30,618 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 1.44 | %3 | 1.42 | % | 1.42 | % | 1.32 | % | 1.29 | % | 1.32 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 1.35 | %3 | 1.35 | % | 1.35 | % | 1.32 | % | 1.30 | %4 | 1.35 | %4 | |||||||||||||||
Ratio of net investment income to average net assets | 2.32 | %3 | 2.01 | % | 1.46 | % | 3.35 | % | 3.07 | % | 2.42 | % | |||||||||||||||
Portfolio turnover rate | 11 | % | 37 | % | 99 | % | 33 | % | 56 | % | 96 | % | |||||||||||||||
than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Annualized.
4 The investment manager recouped expenses previously reimbursed by the investment manager on behalf of the Fund, not to exceed the expense cap.
See accompanying notes to financial statements.
85
UBS Core Plus Bond Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.69 | $ | 8.17 | $ | 9.13 | $ | 10.46 | $ | 10.27 | $ | 10.73 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.12 | 0.28 | 0.23 | 0.25 | 0.32 | 0.40 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.08 | 0.73 | (0.56 | ) | (1.06 | ) | 0.24 | (0.42 | ) | ||||||||||||||||||
Net increase from payment by Advisor | | | | | 0.003 | | |||||||||||||||||||||
Total income (loss) from investment operations | 0.20 | 1.01 | (0.33 | ) | (0.81 | ) | 0.56 | (0.02 | ) | ||||||||||||||||||
Redemption fees | 0.003 | 0.003 | 0.01 | 0.01 | | | |||||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.29 | ) | (0.49 | ) | (0.64 | ) | (0.53 | ) | (0.37 | ) | (0.44 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.60 | $ | 8.69 | $ | 8.17 | $ | 9.13 | $ | 10.46 | $ | 10.27 | |||||||||||||||
Total investment return2 | 2.48 | % | 12.72 | % | (3.29 | )% | (8.03 | )% | 5.39 | % | (0.07 | )% | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 9,385 | $ | 8,956 | $ | 9,128 | $ | 9,330 | $ | 29,356 | $ | 31,285 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.43 | %4 | 1.39 | % | 1.27 | % | 1.02 | % | 1.07 | % | 1.07 | % | |||||||||||||||
Net of expense reimbursement | 0.64 | %4 | 0.64 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.77 | %4 | 3.30 | % | 2.71 | % | 2.05 | % | 3.08 | % | 3.79 | % | |||||||||||||||
Portfolio turnover rate | 211 | % | 283 | % | 247 | % | 192 | % | 209 | % | 229 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.70 | $ | 8.18 | $ | 9.14 | $ | 10.47 | $ | 10.28 | $ | 10.74 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.09 | 0.21 | 0.16 | 0.18 | 0.25 | 0.32 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.09 | 0.74 | (0.54 | ) | (1.07 | ) | 0.23 | (0.42 | ) | ||||||||||||||||||
Net increase from payment by Advisor | | | | | 0.003 | | |||||||||||||||||||||
Total income (loss) from investment operations | 0.18 | 0.95 | (0.38 | ) | (0.89 | ) | 0.48 | (0.10 | ) | ||||||||||||||||||
Redemption fees | | | 0.003 | 0.01 | | | |||||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.26 | ) | (0.43 | ) | (0.58 | ) | (0.45 | ) | (0.29 | ) | (0.36 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.62 | $ | 8.70 | $ | 8.18 | $ | 9.14 | $ | 10.47 | $ | 10.28 | |||||||||||||||
Total investment return2 | 2.08 | % | 11.85 | % | (4.01 | )% | (8.72 | )% | 4.70 | % | (0.93 | )% | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 53 | $ | 56 | $ | 109 | $ | 250 | $ | 442 | $ | 808 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.39 | %4 | 2.22 | % | 2.10 | % | 1.91 | % | 1.84 | % | 1.83 | % | |||||||||||||||
Net of expense reimbursement | 1.39 | %4 | 1.39 | % | 1.60 | % | 1.60 | % | 1.60 | % | 1.60 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.05 | %4 | 2.52 | % | 1.89 | % | 1.77 | % | 2.39 | % | 3.04 | % | |||||||||||||||
Portfolio turnover rate | 211 | % | 283 | % | 247 | % | 192 | % | 209 | % | 229 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less
86
UBS Core Plus Bond Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.66 | $ | 8.15 | $ | 9.12 | $ | 10.45 | $ | 10.26 | $ | 10.72 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.10 | 0.24 | 0.19 | 0.20 | 0.27 | 0.34 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.09 | 0.72 | (0.57 | ) | (1.05 | ) | 0.24 | (0.41 | ) | ||||||||||||||||||
Net increase from payment by Advisor | | | | | 0.003 | | |||||||||||||||||||||
Total income (loss) from investment operations | 0.19 | 0.96 | (0.38 | ) | (0.85 | ) | 0.51 | (0.07 | ) | ||||||||||||||||||
Redemption fees | 0.003 | 0.003 | 0.01 | | | | |||||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.27 | ) | (0.45 | ) | (0.60 | ) | (0.48 | ) | (0.32 | ) | (0.39 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.58 | $ | 8.66 | $ | 8.15 | $ | 9.12 | $ | 10.45 | $ | 10.26 | |||||||||||||||
Total investment return2 | 2.23 | % | 12.06 | % | (3.76 | )% | (8.58 | )% | 4.98 | % | (0.67 | )% | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,344 | $ | 2,628 | $ | 2,574 | $ | 1,117 | $ | 1,525 | $ | 1,530 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.90 | %4 | 1.86 | % | 1.76 | % | 1.58 | % | 1.55 | % | 1.56 | % | |||||||||||||||
Net of expense reimbursement | 1.14 | %4 | 1.14 | % | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.28 | %4 | 2.80 | % | 2.35 | % | 2.01 | % | 2.56 | % | 3.29 | % | |||||||||||||||
Portfolio turnover rate | 211 | % | 283 | % | 247 | % | 192 | % | 209 | % | 229 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.68 | $ | 8.16 | $ | 9.13 | $ | 10.46 | $ | 10.27 | $ | 10.72 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.13 | 0.30 | 0.24 | 0.28 | 0.34 | 0.42 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.09 | 0.74 | (0.55 | ) | (1.06 | ) | 0.25 | (0.41 | ) | ||||||||||||||||||
Net increase from payment by Advisor | | | | | 0.003 | | |||||||||||||||||||||
Total income (loss) from investment operations | 0.22 | 1.04 | (0.31 | ) | (0.78 | ) | 0.59 | 0.01 | |||||||||||||||||||
Redemption fees | 0.003 | 0.003 | | | | | |||||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.31 | ) | (0.52 | ) | (0.66 | ) | (0.55 | ) | (0.40 | ) | (0.46 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.59 | $ | 8.68 | $ | 8.16 | $ | 9.13 | $ | 10.46 | $ | 10.27 | |||||||||||||||
Total investment return2 | 2.49 | % | 13.02 | % | (3.15 | )% | (7.78 | )% | 5.76 | % | 0.14 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 33,192 | $ | 34,659 | $ | 55,149 | $ | 102,473 | $ | 163,172 | $ | 105,526 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.13 | %4 | 1.09 | % | 0.96 | % | 0.78 | % | 0.76 | % | 0.82 | % | |||||||||||||||
Net of expense reimbursement | 0.39 | %4 | 0.39 | % | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | |||||||||||||||
Ratio of net investment income to average net assets | 3.03 | %4 | 3.53 | % | 2.88 | % | 2.77 | % | 3.27 | % | 4.04 | % | |||||||||||||||
Portfolio turnover rate | 211 | % | 283 | % | 247 | % | 192 | % | 209 | % | 229 | % |
than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Amount represents less than $0.005 per share.
4 Annualized.
See accompanying notes to financial statements.
87
UBS Fixed Income Opportunities Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | Class C | Class Y | |||||||||||||
For the period ended December 31, 20103 (unaudited) |
For the period ended December 31, 20103 (unaudited) |
For the period ended December 31, 20103 (unaudited) |
|||||||||||||
Net asset value, beginning of period | $ | 10.00 | $ | 10.00 | $ | 10.00 | |||||||||
Income from investment operations: | |||||||||||||||
Net investment income1 | 0.05 | 0.05 | 0.04 | ||||||||||||
Net realized and unrealized gain from investment activities | 0.17 | 0.16 | 0.19 | ||||||||||||
Total income from investment operations | 0.22 | 0.21 | 0.23 | ||||||||||||
Less dividends and distributions: | |||||||||||||||
From net investment income | (0.02 | ) | (0.02 | ) | (0.02 | ) | |||||||||
Net asset value, end of period | $ | 10.20 | $ | 10.19 | $ | 10.21 | |||||||||
Total investment return2 | 2.22 | % | 2.11 | % | 2.34 | % | |||||||||
Ratios/Supplemental data: | |||||||||||||||
Net assets, end of period (000's) | $ | 1,138 | $ | 847 | $ | 25,871 | |||||||||
Ratios of expenses to average net assets: | |||||||||||||||
Before expense reimbursement | 2.06 | %4 | 2.55 | %4 | 1.79 | %4 | |||||||||
Net of expense reimbursement | 0.95 | %4 | 1.45 | %4 | 0.70 | %4 | |||||||||
Ratio of net investment income to average net assets | 5.61 | %4 | 5.03 | %4 | 4.24 | %4 | |||||||||
Portfolio turnover rate | 1 | % | 1 | % | 1 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 For the period November 29, 2010 (commencement of operations) through December 31, 2010.
4 Annualized.
See accompanying notes to financial statements.
88
This page has been left blank intentionally.
89
UBS Global Bond Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 7.33 | $ | 7.12 | $ | 9.17 | $ | 9.41 | $ | 9.50 | $ | 9.83 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.10 | 0.18 | 0.22 | 0.27 | 0.26 | 0.19 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.35 | 0.25 | (0.92 | ) | (0.08 | ) | (0.10 | ) | (0.15 | ) | |||||||||||||||||
Total income (loss) from investment operations | 0.45 | 0.43 | (0.70 | ) | 0.19 | 0.16 | 0.04 | ||||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.63 | ) | (0.22 | ) | (1.35 | ) | (0.43 | ) | (0.25 | ) | (0.37 | ) | |||||||||||||||
Net asset value, end of period | $ | 7.15 | $ | 7.33 | $ | 7.12 | $ | 9.17 | $ | 9.41 | $ | 9.50 | |||||||||||||||
Total investment return2 | 6.31 | % | 5.94 | % | (7.66 | )% | 1.94 | % | 1.67 | % | 0.51 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 6,795 | $ | 7,240 | $ | 7,930 | $ | 12,123 | $ | 14,093 | $ | 15,546 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.33 | %3 | 2.05 | % | 1.68 | % | 1.31 | % | 1.40 | % | 1.48 | % | |||||||||||||||
Net of expense reimbursement | 1.15 | %3 | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.69 | %3 | 2.34 | % | 2.90 | % | 2.81 | % | 2.67 | % | 1.97 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 116 | % | 137 | % | 74 | % | 114 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 7.35 | $ | 7.14 | $ | 9.20 | $ | 9.43 | $ | 9.52 | $ | 9.85 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.07 | 0.12 | 0.17 | 0.20 | 0.18 | 0.12 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.35 | 0.25 | (0.93 | ) | (0.08 | ) | (0.09 | ) | (0.15 | ) | |||||||||||||||||
Total income (loss) from investment operations | 0.42 | 0.37 | (0.76 | ) | 0.12 | 0.09 | (0.03 | ) | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.60 | ) | (0.16 | ) | (1.30 | ) | (0.35 | ) | (0.18 | ) | (0.30 | ) | |||||||||||||||
Net asset value, end of period | $ | 7.17 | $ | 7.35 | $ | 7.14 | $ | 9.20 | $ | 9.43 | $ | 9.52 | |||||||||||||||
Total investment return2 | 5.88 | % | 5.14 | % | (8.45 | )% | 1.27 | % | 0.90 | % | (0.26 | )% | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 114 | $ | 146 | $ | 122 | $ | 131 | $ | 215 | $ | 420 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 3.15 | %3 | 2.85 | % | 2.55 | % | 2.20 | % | 2.17 | % | 2.25 | % | |||||||||||||||
Net of expense reimbursement | 1.90 | %3 | 1.90 | % | 1.90 | % | 1.90 | % | 1.90 | % | 1.90 | % | |||||||||||||||
Ratio of net investment income to average net assets | 1.93 | %3 | 1.59 | % | 2.15 | % | 2.06 | % | 1.92 | % | 1.22 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 116 | % | 137 | % | 74 | % | 114 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Annualized.
90
UBS Global Bond Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 7.31 | $ | 7.09 | $ | 9.15 | $ | 9.38 | $ | 9.47 | $ | 9.81 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.08 | 0.14 | 0.18 | 0.22 | 0.21 | 0.14 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.34 | 0.26 | (0.92 | ) | (0.07 | ) | (0.10 | ) | (0.15 | ) | |||||||||||||||||
Total income (loss) from investment operations | 0.42 | 0.40 | (0.74 | ) | 0.15 | 0.11 | (0.01 | ) | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.61 | ) | (0.18 | ) | (1.32 | ) | (0.38 | ) | (0.20 | ) | (0.33 | ) | |||||||||||||||
Net asset value, end of period | $ | 7.12 | $ | 7.31 | $ | 7.09 | $ | 9.15 | $ | 9.38 | $ | 9.47 | |||||||||||||||
Total investment return2 | 5.91 | % | 5.58 | % | (8.27 | )% | 1.56 | % | 1.17 | % | (0.09 | )% | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,403 | $ | 2,242 | $ | 1,856 | $ | 1,716 | $ | 1,491 | $ | 2,426 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.79 | %3 | 2.52 | % | 2.17 | % | 1.79 | % | 1.77 | % | 1.88 | % | |||||||||||||||
Net of expense reimbursement | 1.65 | %3 | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.19 | %3 | 1.84 | % | 2.37 | % | 2.31 | % | 2.17 | % | 1.47 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 116 | % | 137 | % | 74 | % | 114 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.37 | $ | 8.10 | $ | 10.24 | $ | 10.45 | $ | 10.51 | $ | 10.84 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.13 | 0.22 | 0.28 | 0.32 | 0.31 | 0.23 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.40 | 0.28 | (1.05 | ) | (0.08 | ) | (0.10 | ) | (0.17 | ) | |||||||||||||||||
Total income (loss) from investment operations | 0.53 | 0.50 | (0.77 | ) | 0.24 | 0.21 | 0.06 | ||||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.64 | ) | (0.23 | ) | (1.37 | ) | (0.45 | ) | (0.27 | ) | (0.39 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.26 | $ | 8.37 | $ | 8.10 | $ | 10.24 | $ | 10.45 | $ | 10.51 | |||||||||||||||
Total investment return2 | 6.35 | % | 6.33 | % | (7.54 | )% | 2.28 | % | 2.03 | % | 0.65 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 7,216 | $ | 8,379 | $ | 24,437 | $ | 52,620 | $ | 107,465 | $ | 80,536 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.15 | %3 | 1.73 | % | 1.44 | % | 1.04 | % | 1.03 | % | 1.16 | % | |||||||||||||||
Net of expense reimbursement | 0.90 | %3 | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | |||||||||||||||
Ratio of net investment income to average net assets | 2.94 | %3 | 2.60 | % | 3.15 | % | 3.06 | % | 2.93 | % | 2.22 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 116 | % | 137 | % | 74 | % | 114 | % |
See accompanying notes to financial statements.
91
UBS High Yield Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.89 | $ | 5.16 | $ | 6.19 | $ | 6.92 | $ | 6.89 | $ | 7.14 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.24 | 0.57 | 0.50 | 0.51 | 0.50 | 0.55 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.32 | 0.71 | (1.00 | ) | (0.75 | ) | 0.08 | (0.24 | ) | ||||||||||||||||||
Total income (loss) from investment operations | 0.56 | 1.28 | (0.50 | ) | (0.24 | ) | 0.58 | 0.31 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.25 | ) | (0.55 | ) | (0.53 | ) | (0.49 | ) | (0.55 | ) | (0.56 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.20 | $ | 5.89 | $ | 5.16 | $ | 6.19 | $ | 6.92 | $ | 6.89 | |||||||||||||||
Total investment return2 | 9.70 | % | 25.49 | % | (7.12 | )% | (3.55 | )% | 8.60 | % | 4.48 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 37,050 | $ | 36,334 | $ | 39,859 | $ | 40,582 | $ | 45,031 | $ | 51,121 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.35 | %3 | 1.38 | % | 1.33 | % | 1.29 | % | 1.28 | % | 1.37 | % | |||||||||||||||
Net of expense reimbursement | 1.20 | %3 | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | |||||||||||||||
Ratio of net investment income to average net assets | 7.91 | %3 | 9.80 | % | 9.96 | % | 7.81 | % | 7.16 | % | 7.86 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 92 | % | 39 | % | 46 | % | 64 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.90 | $ | 5.16 | $ | 6.20 | $ | 6.93 | $ | 6.89 | $ | 7.14 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.22 | 0.52 | 0.46 | 0.46 | 0.45 | 0.50 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.32 | 0.73 | (1.01 | ) | (0.75 | ) | 0.09 | (0.25 | ) | ||||||||||||||||||
Total income (loss) from investment operations | 0.54 | 1.25 | (0.55 | ) | (0.29 | ) | 0.54 | 0.25 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.23 | ) | (0.51 | ) | (0.49 | ) | (0.44 | ) | (0.50 | ) | (0.50 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.21 | $ | 5.90 | $ | 5.16 | $ | 6.20 | $ | 6.93 | $ | 6.89 | |||||||||||||||
Total investment return2 | 9.27 | % | 24.76 | % | (7.98 | )% | (4.27 | )% | 7.93 | % | 3.69 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 751 | $ | 921 | $ | 900 | $ | 1,480 | $ | 2,386 | $ | 2,497 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.21 | %3 | 2.20 | % | 2.15 | % | 2.07 | % | 2.04 | % | 2.09 | % | |||||||||||||||
Net of expense reimbursement | 1.95 | %3 | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | |||||||||||||||
Ratio of net investment income to average net assets | 7.17 | %3 | 9.05 | % | 9.01 | % | 7.02 | % | 6.42 | % | 7.11 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 92 | % | 39 | % | 46 | % | 64 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Annualized.
92
UBS High Yield Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.90 | $ | 5.16 | $ | 6.19 | $ | 6.93 | $ | 6.89 | $ | 7.14 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.23 | 0.54 | 0.48 | 0.48 | 0.47 | 0.52 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.32 | 0.72 | (1.01 | ) | (0.76 | ) | 0.08 | (0.25 | ) | ||||||||||||||||||
Total income (loss) from investment operations | 0.55 | 1.26 | (0.53 | ) | (0.28 | ) | 0.55 | 0.27 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.24 | ) | (0.52 | ) | (0.50 | ) | (0.46 | ) | (0.51 | ) | (0.52 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.21 | $ | 5.90 | $ | 5.16 | $ | 6.19 | $ | 6.93 | $ | 6.89 | |||||||||||||||
Total investment return2 | 9.41 | % | 25.07 | % | (7.60 | )% | (4.03 | )% | 8.05 | % | 3.95 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 9,399 | $ | 8,902 | $ | 7,072 | $ | 8,453 | $ | 11,330 | $ | 12,177 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.84 | %3 | 1.88 | % | 1.86 | % | 1.79 | % | 1.78 | % | 1.86 | % | |||||||||||||||
Net of expense reimbursement | 1.70 | %3 | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | |||||||||||||||
Ratio of net investment income to average net assets | 7.41 | %3 | 9.27 | % | 9.41 | % | 7.31 | % | 6.66 | % | 7.36 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 92 | % | 39 | % | 46 | % | 64 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.94 | $ | 5.20 | $ | 6.23 | $ | 6.96 | $ | 6.92 | $ | 7.17 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.25 | 0.59 | 0.52 | 0.53 | 0.52 | 0.57 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.33 | 0.71 | (1.01 | ) | (0.75 | ) | 0.09 | (0.24 | ) | ||||||||||||||||||
Total income (loss) from investment operations | 0.58 | 1.30 | (0.49 | ) | (0.22 | ) | 0.61 | 0.33 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.26 | ) | (0.56 | ) | (0.54 | ) | (0.51 | ) | (0.57 | ) | (0.58 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.26 | $ | 5.94 | $ | 5.20 | $ | 6.23 | $ | 6.96 | $ | 6.92 | |||||||||||||||
Total investment return2 | 9.92 | % | 25.80 | % | (6.83 | )% | (3.28 | )% | 8.98 | % | 4.72 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 41,783 | $ | 37,152 | $ | 61,421 | $ | 99,538 | $ | 47,768 | $ | 33,015 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.04 | %3 | 1.05 | % | 1.06 | % | 0.99 | % | 0.98 | % | 1.06 | % | |||||||||||||||
Net of expense reimbursement | 0.95 | %3 | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | |||||||||||||||
Ratio of net investment income to average net assets | 8.16 | %3 | 10.08 | % | 10.07 | % | 8.13 | % | 7.43 | % | 8.11 | % | |||||||||||||||
Portfolio turnover rate | 30 | % | 61 | % | 92 | % | 39 | % | 46 | % | 64 | % |
See accompanying notes to financial statements.
93
The UBS Funds
Notes to financial statements (unaudited)
1. Organization and significant accounting policies
The UBS Funds (the "Trust") is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end management investment company currently offering multiple series representing separate investment portfolios. The Trust is a Delaware statutory trust organized on August 13, 1993. The trustees of the Trust have the authority to issue an unlimited number of shares of beneficial interest at a par value of $0.001 per share.
The Trust has 15 Funds available for investment, each having its own investment objectives and policies: The following five funds are covered in this report: UBS Absolute Return Bond Fund, UBS Core Plus Bond Fund (formerly UBS U.S. Bond Fund), UBS Fixed Income Opportunities Fund, UBS Global Bond Fund and UBS High Yield Fund (each a "Fund", and collectively, the "Funds").
Each of the Funds is classified as a "diversified" investment company with the exception of UBS Absolute Return Bond Fund and UBS Global Bond Fund which are classified as "non-diversified" for purposes of the 1940 Act. Each Fund currently offers Class A, Class C and Class Y shares. For each Fund except UBS Absolute Return Bond Fund and UBS Fixed Income Opportunities Fund, Class B shares are offered only to existing Class B shareholders with respect to the reinvestment of dividends and distributions and exchanges of Class B shares of the Funds for Class B shares of other series of the UBS Family of Funds. "UBS Family of Funds" include other UBS Funds, PACE Select funds and other funds for which UBS Global Asset Management (US) Inc. ("UBS Global AM (US)") serves as principal underwriter. UBS Absolute Return Bond Fund and UBS Fixed Income Opportunities Fund do not offer Class B shares. Each class represents interests in the same assets of the applicable Fund and the classes are identical except for differences in their sales charge structures, ongoing service and distribution charges and certain transfer agency and related services expenses. In addition, Class B shares and all corresponding reinvested dividend shares automatically convert to Class A shares within a certain number of years after issuance which varies depending upon the amount invested. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plan, if any. Class Y shares have no service or distribution plan.
In the normal course of business, the Funds may enter into contracts that contain a variety of representations that provide general indemnification for certain liabilities. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had any prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
The Trust accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the exclusive reference of authoritative US generally accepted accounting principles ("GAAP") recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The Funds' financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The following is a summary of significant accounting policies:
A. Valuation of investments: Each Fund calculates its net asset value based on the current market value, where available, for its portfolio securities. The Funds normally obtain market values for their securities and other instruments from independent pricing sources and broker-dealers. Independent pricing sources may use reported last sale prices, official market closing prices, current market quotations or valuations from computerized "matrix"
94
The UBS Funds
Notes to financial statements (unaudited)
systems that derive values based on comparable securities or instruments. A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities or instruments. Securities and other instruments also may be valued based on appraisals derived from information concerning the security or instrument or similar securities or instruments received from recognized dealers in those holdings. Securities and instruments traded in the over-the- counter ("OTC") market and listed on The NASDAQ Stock Market, Inc. ("NASDAQ") normally are valued at the NASDAQ Official Closing Price. Other OTC securities are valued at the last bid price on the valuation date available prior to valuation. Securities and instruments which are listed on US and foreign stock exchanges normally are valued at the market closing price, the last sale price on the day the securities are valued or, lacking any sales on such day, at the last available bid price. In cases where securities or instruments are traded on more than one exchange, the securities or instruments are valued on the exchange designated as the primary market by UBS Global Asset Management (Americas) Inc. ("UBS Global AM" or the "Advisor"), the investment advisor of the Funds. UBS Global AM is an indirect wholly owned asset management subsidiary of UBS AG, an internationally diversified organization with headquarters in Zurich and Basel, Switzerland and operations in many areas of the financial services industry. If a market value is not readily available from an independent pricing source for a particular security or instrument, that security or instrument is valued at fair value as determined in good faith by or under the direction of the Trust's Board of Trustees (the "Board"). Various factors may be reviewed in order to make a good faith determination of a security's or instrument's fair value. These factors include, but are not limited to, fundamental analytical data relating to the investment; the nature and duration of restrictions on disposition of the securities or instruments; and the evaluation of forces which influence the market in which the securities or instruments are purchased and sold. Foreign currency exchange rates are generally determined as of the close of the New York Stock Exchange ("NYSE").
Certain securities or instruments in which the Funds invest are traded in markets that close before 4:00 p.m. Eastern Time. Normally, developments that occur between the close of the foreign markets and 4:00 p.m. Eastern Time will not be reflected in the Fund's net asset value. However, if any of the Funds determine that such developments are so significant that they will materially affect the value of the Fund's securities or instruments, the Fund may adjust the previous closing prices to reflect what the Board believes to be the fair value of these securities or instruments as of 4:00 p.m. Eastern Time.
Certain Funds may use a systematic fair valuation model provided by an independent third party to value securities or instruments principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. The systematic fair valuation model may use calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures contracts. If a security or instrument is valued at a "fair value," that value is likely to be different from the last quoted market price for the security or instrument. The use of the fair valuation model result in securities being transferred between Level 1 and Level 2 at reporting periods.
The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with 60 days or less remaining to maturity, unless the Board determines that this does not represent fair value. Investments in open-end investment companies are valued at the daily closing net asset value of the respective investment company. Pursuant to the Funds' adoption of the use of the practical expedient within ASC Topic 820, investments in non-registered investment companies are also valued at the daily net asset value. All investments quoted in foreign currencies will be valued daily in US dollars on the basis of the foreign currency exchange rates prevailing at the time such valuation is determined by the Funds' custodian.
Futures contracts are generally valued at the settlement price established each day on the exchange on which they are traded. Forward foreign currency contracts are valued daily using forward exchange rates quoted by independent pricing services.
95
The UBS Funds
Notes to financial statements (unaudited)
Swaps are marked-to-market daily based upon values from third party vendors or quotations from market makers to the extent available and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of assets and liabilities. In the event that market quotations are not readily available or deemed unreliable, the swap is valued at fair value as determined in good faith by or under the direction of the Board.
GAAP requires disclosure regarding the various inputs that are used in determining the value of the Funds' investments. These inputs are summarized into the three broad levels listed below:
Level 1Unadjusted quoted prices in active markets for identical investments.
Level 2Other significant observable inputs, including but not limited to, quoted prices for similar investments, interest rates, prepayment speeds and credit risk.
Level 3Unobservable inputs inclusive of the Fund's own assumptions in determining the fair value of investments.
A fair value hierarchy has been included near the end of each Fund's Portfolio of investments.
In January 2010, FASB issued Accounting Standards Update No. 2010-06 "Improving Disclosures about Fair Value Measurements" (ASU No. 2010-06"). ASU No. 2010-06 requires reporting entities to make new disclosures about amounts and reasons for significant transfer in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, including information on purchases, sales, issuances and settlements on a gross basis in the reconciliation of activity in Level 3 fair value measurements. The new and revised disclosures have been implemented for annual and interim periods beginning after December 15, 2009 except for the disclosures surrounding purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements, which are effective for annual and interim periods beginning after December 15, 2010. Management is currently evaluating the impact the adoption of the remaining portion of ASU No. 2010-06 may have on the Funds' financial statement disclosures.
The provisions of ASC Topic 815 "Derivatives and Hedging" ("ASC Topic 815") require qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit risk related contingent features in derivative agreements. Since investment companies value their derivatives at fair value and recognize changes in fair value through the statement of operations, they do not qualify for hedge accounting under ASC Topic 815. Accordingly, even though a fund's investments in derivatives may represent economic hedges, they are considered to be non-hedge transactions for purposes of disclosure under ASC Topic 815. ASC Topic 815 requires that (1) objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation, (2) the fair values of derivative instruments and their gains and losses be disclosed in a tabular format, and (3) information be disclosed about credit-risk contingent features of derivatives contracts. Details of this disclosure can be found below as well as in the Portfolio of investments. The volume of derivatives that is presented in the Portfolio of investments of each Fund is consistent with the derivative activity during the period ended December 31, 2010. The Funds may be sellers of protection through credit default swap agreements which are by nature credit-risk contingent (the terms of these agreements can be found within the Portfolio of investments, with further discussion in the Notes to financial statements); however, the Funds are not aware of any additional credit-risk contingent features on other derivative contracts held by the Funds.
96
The UBS Funds
Notes to financial statements (unaudited)
Disclosure of derivatives by underlying risk for each Fund as of and for the period ended December 31, 2010 is as follows:
Asset derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Absolute Return Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | 401,485 | $ | 401,485 | |||||||||||
Futures contracts2 | 1,172,092 | | | 1,172,092 | |||||||||||||||
Swap agreements1 | | 79,997 | | 79,997 | |||||||||||||||
Total value | $ | 1,172,092 | $ | 79,997 | $ | 401,485 | $ | 1,653,574 |
1 Statement of assets and liabilities location: Unrealized appreciation on forward foreign currency contracts and outstanding swap agreements, at value.
2 Includes cumulative appreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Liability derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Absolute Return Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | (999,081 | ) | $ | (999,081 | ) | |||||||||
Futures contracts2 | (165,057 | ) | | | (165,057 | ) | |||||||||||||
Swap agreements1 | | (666,853 | ) | | (666,853 | ) | |||||||||||||
Total value | $ | (165,057 | ) | $ | (666,853 | ) | $ | (999,081 | ) | $ | (1,830,991 | ) |
1 Statement of assets and liabilities location: Unrealized depreciation on forward foreign currency contracts and outstanding swap agreements, at value.
2 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Absolute Return Bond Fund | |||||||||||||||||||
Net realized loss1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | (2,670,191 | ) | $ | (2,670,191 | ) | |||||||||
Futures contracts | (3,076,197 | ) | | | (3,076,197 | ) | |||||||||||||
Swap agreements | | (30,903 | ) | | (30,903 | ) | |||||||||||||
Total net realized loss | $ | (3,076,197 | ) | $ | (30,903 | ) | $ | (2,670,191 | ) | $ | (5,777,291 | ) | |||||||
Net change in unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | (475,288 | ) | $ | (475,288 | ) | |||||||||
Futures contracts | 2,358,693 | | | 2,358,693 | |||||||||||||||
Swap agreements | | (79,293 | ) | | (79,293 | ) | |||||||||||||
Total net change in unrealized appreciation/depreciation | $ | 2,358,693 | $ | (79,293 | ) | $ | (475,288 | ) | $ | 1,804,112 |
1 Statement of operations location: Net realized gain (loss) on futures contracts, swap agreements and forward foreign currency contracts.
2 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts, swap agreements and forward foreign currency contracts.
97
The UBS Funds
Notes to financial statements (unaudited)
Asset derivatives
Credit risk | Total | ||||||||||
UBS Core Plus Bond Fund | |||||||||||
Swap agreements1 | $ | 5,983 | $ | 5,983 |
1 Statement of assets and liabilities location: Outstanding swap agreements, at value.
Liability derivatives
Interest rate risk |
Credit risk | Total | |||||||||||||
UBS Core Plus Bond Fund | |||||||||||||||
Futures contracts1 | $ | (49,666 | ) | $ | | $ | (49,666 | ) | |||||||
Swap agreements2 | (123,917 | ) | (6,731 | ) | (130,648 | ) | |||||||||
Total value | $ | (173,583 | ) | $ | (6,731 | ) | $ | (180,314 | ) |
1 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
2 Statement of assets and liabilities location: Outstanding swap agreements, at value.
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Core Plus Bond Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 14,370 | $ | 14,370 | |||||||||||
Futures contracts | (20,338 | ) | | | (20,338 | ) | |||||||||||||
Options purchased2 | 15,239 | | | 15,239 | |||||||||||||||
Options written | (32,458 | ) | | | (32,458 | ) | |||||||||||||
Swap agreements | 6,146 | | | 6,146 | |||||||||||||||
Total net realized gain (loss) | $ | (31,411 | ) | $ | | $ | 14,370 | $ | (17,041 | ) | |||||||||
Net change in unrealized appreciation/depreciation3 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | (14,370 | ) | $ | (14,370 | ) | |||||||||
Futures contracts | (86,422 | ) | | | (86,422 | ) | |||||||||||||
Swap agreements | 72,189 | (495 | ) | | 71,694 | ||||||||||||||
Total net change in unrealized appreciation/depreciation | $ | (14,233 | ) | $ | (495 | ) | $ | (14,370 | ) | $ | (29,098 | ) |
1 Statement of operations location: Net realized gain (loss) on futures contracts, options written, swap agreements and forward foreign currency contracts.
2 Realized and unrealized gain (loss) is included in net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.
3 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts, forward foreign currency contracts and swap agreements.
98
The UBS Funds
Notes to financial statements (unaudited)
Asset derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Fixed Income Opportunities Fund | |||||||||||||||||||
Futures contracts2 | $ | 189,674 | $ | | $ | | $ | 189,674 | |||||||||||
Options purchased1 | 376,752 | | | 376,752 | |||||||||||||||
Swap agreements1 | 1,167,214 | 29,136 | 112,771 | 1,309,121 | |||||||||||||||
Total value | $ | 1,733,640 | $ | 29,136 | $ | 112,771 | $ | 1,875,547 |
1 Statement of assets and liabilities location: Investments in securities of unaffiliated issuers, at value and outstanding swap agreements, at value.
2 Includes cumulative appreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Liability derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Fixed Income Opportunities Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | (166,934 | ) | $ | (166,934 | ) | |||||||||
Futures contracts2 | (37,331 | ) | | | (37,331 | ) | |||||||||||||
Options written1 | (253,507 | ) | (9,591 | ) | | (263,098 | ) | ||||||||||||
Swap agreements1 | (336,801 | ) | (60,090 | ) | (132,175 | ) | (529,066 | ) | |||||||||||
Total value | $ | (627,639 | ) | $ | (69,681 | ) | $ | (299,109 | ) | $ | (996,429 | ) |
1 Statement of assets and liabilities location: Unrealized depreciation on forward foreign currency contracts, outstanding swap agreements, at value and options written, at value.
2 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
99
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Interest rate risk |
Equity risk | Credit risk |
Foreign exchange risk |
Total | |||||||||||||||||||
UBS Fixed Income Opportunities Fund | |||||||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||||||
Futures contracts | $ | 39,741 | $ | (655 | ) | $ | | $ | | $ | 39,086 | ||||||||||||
Options purchased2 | (13,249 | ) | | | | (13,249 | ) | ||||||||||||||||
Options written | 28,847 | | | | 28,847 | ||||||||||||||||||
Swap agreements | 2,400 | | (12,665 | ) | (59 | ) | (10,324 | ) | |||||||||||||||
Total net realized gain (loss) | $ | 57,739 | $ | (655 | ) | $ | (12,665 | ) | $ | (59 | ) | $ | 44,360 | ||||||||||
Net change in unrealized appreciation/depreciation3 | |||||||||||||||||||||||
Forward contracts | $ | | $ | | $ | | $ | (166,934 | ) | $ | (166,934 | ) | |||||||||||
Futures contracts | 152,343 | | | | 152,343 | ||||||||||||||||||
Options purchased2 | (33,000 | ) | | | (33,000 | ) | |||||||||||||||||
Oprtions written | 4,824 | | 23,234 | | 28,058 | ||||||||||||||||||
Swap agreements | 397,372 | | 18,457 | 4,071 | 419,900 | ||||||||||||||||||
Total net change in unrealized appreciation/depreciation | $ | 521,539 | $ | | $ | 41,691 | $ | (162,863 | ) | $ | 400,367 |
1 Statement of operations location: Net realized gain (loss) on futures contracts, options written and swap agreements.
2 Realized and unrealized gain (loss) is included in net realized gain (loss) from investments and net change in unrealized appreciation/depreciation from investments.
3 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts, options written, swap agreements and forward foreign currency contracts.
Asset derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | 108,770 | $ | 108,770 | |||||||||||
Futures contracts2 | 13,862 | | | 13,862 | |||||||||||||||
Total value | $ | 13,862 | $ | | $ | 108,770 | $ | 122,632 |
1 Statement of assets and liabilities location: Unrealized appreciation on forward foreign currency contracts.
2 Includes cumulative appreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Liability derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | (14,027 | ) | $ | (14,027 | ) | |||||||||
Futures contracts2 | (10,692 | ) | | | (10,692 | ) | |||||||||||||
Swap agreements1 | | (14,338 | ) | | (14,338 | ) | |||||||||||||
Total value | $ | (10,692 | ) | $ | (14,338 | ) | $ | (14,027 | ) | $ | (39,057 | ) |
1 Statement of assets and liabilities location: Unrealized depreciation on forward foreign currency contracts and outstanding swap agreements, at value.
2 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
100
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | (92,009 | ) | $ | (92,009 | ) | |||||||||
Futures contracts | (26,913 | ) | | | (26,913 | ) | |||||||||||||
Swap agreements | | 1,604 | | 1,604 | |||||||||||||||
Total net realized gain (loss) | $ | (26,913 | ) | $ | 1,604 | $ | (92,009 | ) | $ | (117,318 | ) | ||||||||
Net change in unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 125,705 | $ | 125,705 | |||||||||||
Futures contracts | 4,189 | | | 4,189 | |||||||||||||||
Swap agreements | | 1,358 | | 1,358 | |||||||||||||||
Total net change in unrealized appreciation/depreciation | $ | 4,189 | $ | 1,358 | $ | 125,705 | $ | 131,252 |
1 Statement of operations location: Net realized gain (loss) on futures contracts, swap agreements and forward foreign currency contracts.
2 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts, swap agreements and forward foreign currency contracts.
B. Restricted securities: The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included in each Fund's Notes to portfolio of investments.
C. Investment transactions, investment income and expenses: Investment transactions are recorded on the trade date. Realized gains and losses from investment and foreign exchange transactions are calculated using the identified cost method. Interest income is recorded on an accrual basis. Discounts are accreted and premiums are amortized as adjustments to interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares (or the value of dividend-eligible shares, as appropriate) of each class at the beginning of the day after adjusting for current capital share activity of the respective classes. Class specific expenses are charged directly to the applicable class of shares.
D. Foreign currency translation: The Funds use the foreign currency exchange rates determined as of the close of regular trading on the NYSE. For purposes of calculating the US dollar equivalent value of a non US dollar denominated obligation, foreign currency amounts are translated into US dollars on the following basis: (1) market value of investment securities and other assets and liabilitiesat the exchange rates prevailing at the end of each Fund's fiscal period; and (2) purchases and sales of investment securities and income and expensesat the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets and the market value of each Fund's portfolio are presented at the foreign exchange rates at the end of each Fund's fiscal period, the Funds do not generally isolate the effect of fluctuations in foreign exchange rates from the effect of the changes in market prices of securities. However, the Funds do isolate the effect of fluctuations in foreign exchange rates when determining the gain or loss upon the sale or maturity of foreign currency-denominated securities pursuant to US federal income tax regulations. Certain foreign exchange gains and losses included in realized and unrealized gains and losses are included in or are a reduction of ordinary income in accordance with US federal income tax regulations.
101
The UBS Funds
Notes to financial statements (unaudited)
E. Forward foreign currency contracts: A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Risks associated with such contracts include movement in the value of the foreign currency relative to the US dollar and the potential inability of the counterparty to meet the terms of the contract. The Funds may purchase or sell currencies and/or engage in forward foreign currency transactions in order to expedite settlement of portfolio transactions, manage currency risk or to gain exposure to a currency without purchasing securities denominated in that currency. Forward foreign currency contracts involve, to varying degrees, elements of market risk (specifically foreign currency risk).
A Fund will only enter into forward contracts to sell, for a fixed amount of US dollars or other appropriate currency, an amount of foreign currency, to the extent that the value of the short forward contract is covered by the underlying value of securities denominated in the currency being sold. Alternatively, when a Fund enters into a forward contract to sell an amount of foreign currency, the Fund's custodian or sub custodian will place assets in a segregated account of the Fund in an amount not less than the value of the Fund's total assets committed to the utilization of such forward contracts. If the assets placed in the account decline in value, additional cash or securities will be placed in the account on a daily basis so that the value of the account will equal the amount of the Fund's commitments with respect to such contracts.
The unrealized gain, if any, represents the credit risk to each Fund on a forward foreign currency contract. Fluctuations in the value of the open forward foreign currency contracts are recorded daily for book purposes as unrealized gains or losses on foreign forward currency contracts by the Funds. Realized gains and losses include net gains and losses recognized by each Fund on contracts which have been sold or matured.
F. Futures contracts: Each Fund may purchase or sell financial futures contracts. The Funds may purchase or sell futures contracts to increase or reduce their exposure to an asset class without purchasing or selling the underlying securities, either as a hedge or to enhance the Fund's overall total return, income or realize gains. Using financial futures contracts involves various market risks, including interest rate and equity risk. Risks of entering into futures contracts include the possibility that there may be an illiquid market or that a change in the value of the contract may not correlate with changes in the value of the underlying securities. To the extent that market prices move in an unexpected direction, there is a risk that a Fund will not achieve the anticipated benefits of the futures contract or may realize a loss.
Upon entering into a futures contract, the Fund is required to deliver to a broker an amount of cash and/or securities equal to a certain percentage of the contract amount. This amount is known as the "initial margin". Subsequent payments, known as "variation margin", are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying futures contracts. Such variation margin is recorded for financial statement purposes on a daily basis as an unrealized gain or loss on futures until the futures contract is closed or expires, at which time the net gain or loss is reclassified to realized gain or loss on futures.
G. Securities traded on to-be-announced basis: Certain Funds may from time to time purchase, or sell short, securities on a to-be-announced ("TBA") basis. In a TBA transaction, the Fund commits to purchasing or selling securities for which all specific information is not yet known at the time of the trade, particularly the face amount and maturity date of the underlying security transactions. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, normally 15 to 45 days later. Beginning on the date the Fund enters into a TBA transaction, cash, US government securities or other liquid high grade debt obligations are segregated in the Funds' records in an amount equal in value to the purchase price of the TBA security. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other securities.
H. Swap agreements: Certain Funds may engage in swap agreements, including but not limited to interest rate, currency, total return, and credit default swap agreements. The Funds expect to enter into these transactions to
102
The UBS Funds
Notes to financial statements (unaudited)
preserve a return or spread on a particular investment or to hedge a portion of the portfolio's duration, to protect against any increase in the price of securities a Fund anticipates purchasing at a later date, to gain exposure to certain markets in the most economical way possible or in an attempt to enhance income or gains.
Certain Funds may enter into interest rate swap agreements with another party to receive or pay interest (e.g., an exchange of fixed rate payments for floating rate payments) to protect itself from interest rate fluctuations. This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to a specified interest rate(s) for a specified amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Interest rate swap agreements are subject to general market risk, liquidity risk, counterparty risk and interest rate risk.
Certain Funds may enter into currency swap agreements with another party in order to receive or pay amounts based on changes in currency exchange rates to protect itself from or take advantage of exchange rate fluctuations. The Fund utilizes currency swaps to earn income and enhance returns as well as to manage the risk profile of the Fund. This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to a specified currency exchange rate(s) for a specified amount. Currency swap agreements are subject to general market risk, liquidity risk, counterparty risk, foreign exchange risk and interest rate risk.
Credit default swap agreements involve commitments to make or receive payments in the event of a default or other credit event of a referenced security. As a buyer, a Fund would make periodic payments to the counterparty, and a Fund would receive payments only upon the occurrence of a credit event. If no credit event occurs, a Fund will lose its periodic stream of payments over the term of the contract. However, if a credit event does occur, a Fund typically would receive full notional value for a reference obligation that may have little or no value. As a seller, a Fund would receive periodic payments from the counterparty, and a Fund would make payments only upon the occurrence of a credit event. If no credit event occurs, a Fund will gain the periodic stream of payments it received over the term of the contract. However, if a credit event occurs, a Fund will pay full notional value for a reference obligation that may have little or no value. Credit default swaps may involve greater risks than if a Fund had invested in the reference obligation directly and are subject to general market risk, liquidity risk, counterparty risk and credit risk.
Credit default swap agreements on corporate issues or sovereign issues of an emerging market country involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default or other credit event. If a credit event occurs and cash settlement is not elected, a variety of other obligations may be delivered in lieu of the specific referenced obligation. The ability to deliver other obligations may result in delivery of a security with a value other than had been anticipated (such as a party's right to choose the deliverable obligation with the lowest value following a credit event). A Fund may use credit default swaps on corporate issues or sovereign issues of an emerging market country to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where a Fund owns or has exposure to the referenced obligation) or to take an active long or short position with respect to the likelihood of a particular issuer's default.
The maximum potential amount of future payments (undiscounted) that a Fund as a seller of protection could be required to make under a credit default swap agreement would be an amount equal to the notional amount of the agreement. Notional amounts of all credit default swap agreements outstanding as of December 31, 2010 for which a Fund is the seller of protection are disclosed under the section "Credit default swaps on corporate and sovereign issuessell protection" in the Notes to Portfolio of investments. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into, if any, by a Fund for the same referenced entity or entities.
103
The UBS Funds
Notes to financial statements (unaudited)
The use of swap agreements involves investment techniques and risks different from those associated with ordinary portfolio security transactions. If UBS Global AM is incorrect in its forecast of market values, interest rates and other applicable factors, the investment performance of a Fund will be less favorable than it would have been if this investment technique was never used. Swap agreements do not involve the delivery of securities and are subject to counterparty risk. If the other party to a swap agreement defaults and fails to consummate the transaction, a Fund's risk of loss will consist of the net amount of interest or other payments that the Fund is contractually entitled to receive. Therefore, a Fund would consider the creditworthiness of the counterparty to a swap agreement in evaluating potential credit risk.
A Fund accrues for interim payments on swap agreements on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap agreements on the Statement of assets and liabilities. Once interim payments are settled in cash, the net amount is recorded as realized gain/loss on swap agreements, in addition to realized gain/loss recorded upon the termination of swap agreements on the Statement of operations. Fluctuations in the value of swap agreements are recorded for financial statement purposes as unrealized appreciation or depreciation of swap agreements.
I. Option writing: Certain Funds may write (sell) put and call options on foreign or US securities, indices, foreign currencies and interest rate swaps (commonly referred to as swaptions), in order to gain exposure to or protect against changes in the markets or in an attempt to enhance income or gains. When a Fund writes a call or a put option, an amount equal to the premium received by the Fund is included in the Fund's Statement of assets and liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. If an option which the Fund has written either expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security or derivative instrument, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund recognizes a realized gain or loss (long-term or short-term, depending on the holding period of the underlying security) from the sale of the underlying security or derivative instrument and the proceeds from the sale are increased by the premium originally received. If a put option which a Fund has written is exercised, the amount of the premium originally received reduces the cost of the security or derivative instrument which the Fund purchases upon exercise of the option.
In writing an option, the Fund bears the market risk of an unfavorable change in the price of the derivative instrument, security, index or currency underlying the written option. Exercise of an option written by the Fund could result in the Fund selling or buying a derivative instrument, security or currency at a price different from current market value.
J. Purchased options: Certain Funds may purchase put and call options on foreign or US securities, indices, foreign currencies and interest rate swaps (commonly referred to as swaptions), as well as exchange listed call options on particular market segment indices to achieve temporary exposure to a specific security, currency, industry or geographic region. Purchasing call options tends to increase exposure to the underlying instrument. Purchasing put options tends to decrease exposure to the underlying instrument. The Fund pays a premium which is included in the Statement of assets and liabilities as an investment and subsequently marked-to-market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying futures, security or currency transaction to determine the realized gain or loss.
104
The UBS Funds
Notes to financial statements (unaudited)
K. Short sales: Occasionally, UBS Absolute Return Bond Fund and UBS High Yield Fund may enter into short sales whereby they sell a security they generally do not own, in anticipation of a decline in the security's price. The initial amount of a short sale is recorded as a liability which is marked to market daily. Fluctuations in the value of this liability are recorded as unrealized gains or losses on the Statement of operations. If a Fund shorts a security while also holding a long position in the security (a "short against the box"), as the security price declines, the short position increases in value, offsetting the long position's decrease in value. The opposite effect occurs if the security price rises. A Fund will realize a gain or loss upon closing of the short sale (returning the security to the counterparty by way of purchase or delivery of a long position owned). The Fund is liable to the lender for any dividends payable on securities while those securities are in a short position. These dividends are booked as an expense of the Funds. The Fund designates collateral consisting of cash, US government securities or other liquid assets sufficient to collateralize the market value of short positions. The Fund is charged a securities loan fee in connection with short sale transactions.
For the period ended December 31, 2010, there were no short positions held by either of these Funds.
L. Dividends and distributions: It is the Funds' policy to distribute their respective net investment income monthly except UBS Absolute Return Bond Fund and UBS Fixed Income Opportunities Fund which will distribute their net investment income, if any, quarterly. Net realized capital gains, if any, are paid annually. Dividends and distributions to shareholders are recorded on the ex-distribution date. The amount of dividends from net investment income and distributions from net realized capital gains and/or return of capital is determined in accordance with US federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification.
M. Concentration of risk: Investing in securities of foreign issuers and currency transactions may involve certain considerations and risks not typically associated with investments in the United States. These risks include revaluation of currencies, adverse fluctuations in foreign currency values and possible adverse political, social and economic developments, including those particular to a specific industry, country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable US companies and US government securities. These risks are greater with respect to securities of issuers located in emerging market countries in which the Funds invest. The ability of the issuers of debt securities held by a Fund to meet their obligations may be affected by economic and political developments particular to a specific industry, country, state or region.
N. Redemption fees: Each class of each series of the UBS Funds will impose a 1% redemption fee on shares sold or exchanged within 90 days of their purchase date, subject to limited exceptions. This amount is paid to the applicable Fund, not the Advisor or UBS Global AM (US). The redemption fees retained by the Funds are disclosed in the Statement of changes in net assets. For the period ended December 31, 2010, redemption fees represent less than $0.005 per share.
105
The UBS Funds
Notes to financial statements (unaudited)
2. Investment advisory fees and other transactions with affiliates
The Advisor, a registered investment advisor, provides the Funds with investment management services. As compensation for these services, each Fund pays the Advisor a monthly fee, accrued daily and paid monthly, based on each Fund's respective average daily net assets in accordance with the following per annum schedule:
Fund |
$0 to $500 mm |
$500 mm to $1.0 billion |
$1.0 billion to $1.5 billion |
$1.5 billion to $2.0 billion |
$2.0 billion and over |
||||||||||||||||||
UBS Absolute Return Bond Fund | 0.550 | % | 0.500 | % | 0.475 | % | 0.450 | % | 0.425 | % | |||||||||||||
UBS Core Plus Bond Fund | 0.500 | 0.475 | 0.450 | 0.425 | 0.400 | ||||||||||||||||||
UBS Fixed Income Opportunities Fund | 0.650 | 0.650 | 0.650 | 0.650 | 0.650 | ||||||||||||||||||
UBS Global Bond Fund | 0.650 | 0.650 | 0.650 | 0.600 | 0.550 | ||||||||||||||||||
UBS High Yield Fund | 0.600 | 0.550 | 0.525 | 0.525 | 0.525 |
For UBS Core Plus Bond Fund, UBS Fixed Income Opportunities Fund and UBS Global Bond Fund, the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) do not exceed the expense limit of each Fund as indicated in the table. For UBS Absolute Return Bond Fund and UBS High Yield Fund, the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expense for securities sold short) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expense for securities sold short) do not exceed the expense limit of each Fund as indicated in the table. Investment advisory fees, including the dollar amount waived or reimbursed, for the period ended December 31, 2010, were as follows:
Fund |
Class A expense cap |
Class B expense cap |
Class C expense cap |
Class Y expense cap |
Advisory fees |
Fees waived/ expenses reimbursed |
|||||||||||||||||||||
UBS Absolute Return Bond Fund | 1.00 | % | N/A* | 1.35 | % | 0.85 | % | $ | 414,259 | $ | 10,369 | ||||||||||||||||
UBS Core Plus Bond Fund | 0.64 | 1.39 | % | 1.14 | 0.39 | 117,065 | 175,965 | ||||||||||||||||||||
UBS Fixed Income Opportunities Fund | 0.95 | N/A* | 1.45 | 0.70 | 15,096 | 25,294 | |||||||||||||||||||||
UBS Global Bond Fund | 1.15 | 1.90 | 1.65 | 0.90 | 57,735 | 107,431 | |||||||||||||||||||||
UBS High Yield Fund | 1.20 | 1.95 | 1.70 | 0.95 | 263,973 | 53,092 |
* UBS Absolute Return Bond Fund and UBS Fixed Income Opportunities Fund do not offer Class B shares.
106
The UBS Funds
Notes to financial statements (unaudited)
Each Fund will reimburse the Advisor for expenses it reimburses for a period of three years following such 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 the Fund. The expenses waived for the period ended December 31, 2010 are subject to repayment through June 30, 2014. At December 31, 2010, the following Funds had remaining fee waivers and expense reimbursements subject to repayment to the Advisor and respective dates of expiration as follows:
Fund |
Fee waivers/ expense reimbursements subject to repayment |
Expires June 30, 2011 |
Expires June 30, 2012 |
Expires June 30, 2013 |
Expires June 30, 2014 |
||||||||||||||||||
UBS Absolute Return Bond FundClass A | $ | 65,798 | $ | | $ | 35,057 | $ | 21,740 | $ | 9,001 | |||||||||||||
UBS Absolute Return Bond FundClass C | 9,191 | | 4,733 | 3,090 | 1,368 | ||||||||||||||||||
UBS Core Plus Bond FundClass A | 169,231 | 27,421 | 34,710 | 68,455 | 38,645 | ||||||||||||||||||
UBS Core Plus Bond FundClass B | 2,806 | 1,126 | 738 | 728 | 214 | ||||||||||||||||||
UBS Core Plus Bond FundClass C | 37,948 | 3,008 | 6,551 | 18,828 | 9,561 | ||||||||||||||||||
UBS Core Plus Bond FundClass Y | 983,252 | 278,613 | 275,353 | 301,741 | 127,545 | ||||||||||||||||||
UBS Fixed Income Opportunities FundClass A | 651 | | | | 651 | ||||||||||||||||||
UBS Fixed Income Opportunities FundClass C | 378 | | | | 378 | ||||||||||||||||||
UBS Fixed Income Opportunities FundClass Y | 24,265 | | | | 24,265 | ||||||||||||||||||
UBS Global Bond FundClass A | 187,444 | 20,765 | 50,263 | 73,286 | 43,130 | ||||||||||||||||||
UBS Global Bond FundClass B | 3,359 | 460 | 761 | 1,350 | 788 | ||||||||||||||||||
UBS Global Bond FundClass C | 43,178 | 2,242 | 8,446 | 18,996 | 13,494 | ||||||||||||||||||
UBS Global Bond FundClass Y | 534,429 | 135,610 | 217,046 | 131,754 | 50,019 | ||||||||||||||||||
UBS High Yield FundClass A | 173,312 | 35,260 | 46,068 | 63,865 | 28,119 | ||||||||||||||||||
UBS High Yield FundClass B | 7,696 | 2,204 | 2,019 | 2,384 | 1,089 | ||||||||||||||||||
UBS High Yield FundClass C | 40,722 | 8,511 | 10,727 | 14,851 | 6,633 | ||||||||||||||||||
UBS High Yield FundClass Y | 164,253 | 26,868 | 75,272 | 44,862 | 17,251 |
Each Fund pays UBS Global AM (US), an affiliate of the Advisor, a monthly administration fee that is accrued daily and paid monthly at an annual rate of 0.075% of the average daily net assets of such Fund. For the period ended December 31, 2010, the Funds owed and incurred administrative fees as follows:
Fund |
Administrative fees owed |
Administrative fees incurred |
|||||||||
UBS Absolute Return Bond Fund | $ | 9,505 | $ | 56,490 | |||||||
UBS Core Plus Bond Fund | 2,906 | 17,560 | |||||||||
UBS Fixed Income Opportunities Fund | 1,691 | 1,742 | |||||||||
UBS Global Bond Fund | 1,053 | 6,656 | |||||||||
UBS High Yield Fund | 5,671 | 32,997 |
The Funds may invest in certain affiliated investment companies also advised or managed by the Advisor. Investments in affiliated investment companies for the period ended December 31, 2010 have been included near the end of each Fund's Portfolio of investments.
The Funds may invest in UBS Cash Management Prime Relationship Fund ("Cash Prime"). Cash Prime is offered as a cash management option only to mutual funds and certain other accounts. Distributions received from Cash Prime are reflected as affiliated interest income in the Statement of operations. Amounts relating to those investments at December 31, 2010 and for the period ended have been included near the end of each Fund's Portfolio of investments.
107
The UBS Funds
Notes to financial statements (unaudited)
Under normal conditions, the Funds invest cash collateral from securities lending activities into an affiliated private money market fund, UBS Private Money Market Fund LLC ("Private Money Market"), which operates in compliance with most of the substantive provisions of Rule 2a-7 of the 1940 Act. Private Money Market is managed by the Advisor and is offered as a cash management option only to mutual funds and certain other accounts managed by the Advisor. UBS Global AM acts as managing member and receives a management fee from Private Money Market payable monthly in arrears at the annual rate of 0.10% of Private Money Market's average daily members' equity, minus the aggregate operating expenses of, and incurred by, Private Money Market during each such related month, not including investment expenses (including brokerage commissions, taxes, interest charges and other costs with respect to transactions in securities) and extraordinary expenses including litigation expenses, if any. The Advisor may, in its sole discretion, waive all or any portion of the management fee to which it may be entitled from time to time in order to maintain operating expenses at a certain level. Distributions received from Private Money Market, net of fee rebates paid to borrowers, are reflected as securities lending-net in the Statement of operations. Amounts relating to those investments at December 31, 2010 and for the period then ended have been included near the end of each Fund's Portfolio of investments.
3. Service and distribution plans
UBS Global AM (US) is the principal underwriter of each Fund's shares. The Trust has adopted service and/or distribution plans (the "Plans") pursuant to Rule 12b-1 under the 1940 Act for Class A, Class B and Class C. The Plans govern payments made for the expenses incurred in the service and/or distribution of Class A, Class B and Class C. Annual fees under the Plans as a percentage of the average daily net assets of each representative class of each of the Funds are as follows:
Fund | Class A | Class B | Class C | ||||||||||||
UBS Absolute Return Bond Fund | 0.15 | % | N/A* | 0.50 | % | ||||||||||
UBS Core Plus Bond Fund | 0.25 | 1.00 | % | 0.75 | |||||||||||
UBS Fixed Income Opportunities Fund | 0.25 | N/A* | 0.75 | ||||||||||||
UBS Global Bond Fund | 0.25 | 1.00 | 0.75 | ||||||||||||
UBS High Yield Fund | 0.25 | 1.00 | 0.75 |
* UBS Absolute Return Bond Fund and UBS Fixed Income Opportunities Fund do not offer Class B shares.
108
The UBS Funds
Notes to financial statements (unaudited)
UBS Global AM (US) also receives the proceeds of the initial sales charges paid upon purchases of Class A shares and the contingent deferred sales charges paid by shareholders upon certain redemptions of Class A, Class B, and Class C. At December 31, 2010, certain Funds owed UBS Global AM (US) service and distribution fees, and for the period ended December 31, 2010, certain Funds were informed by UBS Global AM (US) that it had earned sales charges as follows:
Fund |
Service and distribution fees owed |
Sales charges earned |
|||||||||
UBS Absolute Return Bond FundClass A | $ | 1,244 | $ | 118 | |||||||
UBS Absolute Return Bond FundClass C | 1,132 | | |||||||||
UBS Core Plus Bond FundClass A | 2,120 | 593 | |||||||||
UBS Core Plus Bond FundClass B | 30 | 167 | |||||||||
UBS Core Plus Bond FundClass C | 1,498 | 97 | |||||||||
UBS Fixed Income Opportunities FundClass A | 147 | | |||||||||
UBS Fixed Income Opportunities FundClass C | 258 | | |||||||||
UBS Global Bond FundClass A | 1,452 | 136 | |||||||||
UBS Global Bond FundClass B | 96 | | |||||||||
UBS Global Bond FundClass C | 1,480 | 4 | |||||||||
UBS High Yield FundClass A | 7,842 | 8,111 | |||||||||
UBS High Yield FundClass B | 639 | 2,548 | |||||||||
UBS High Yield FundClass C | 5,984 | 130 |
4. Transfer agency and related services fees
UBS Financial Services Inc. provides certain services pursuant to a delegation of authority from BNY Mellon Investment Servicing ("BNY Mellon"), each Fund's transfer agent, and is compensated for these services by BNY Mellon, not the Funds.
For the period ended December 31, 2010, UBS Financial Services Inc. received from BNY Mellon, not the Funds, total services fees as follows:
Fund | Amount paid | ||||||
UBS Absolute Return Bond Fund | $ | 5,717 | |||||
UBS Core Plus Bond Fund | 1,588 | ||||||
UBS Fixed Income Opportunities Fund | 19 | ||||||
UBS Global Bond Fund | 2,555 | ||||||
UBS High Yield Fund | 11,437 |
5. Securities lending
Each Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, cash equivalents or US government securities in an amount at least equal to 102% of the market value of the securities loaned with respect to domestic securities and 105% of the market value of the securities loaned with respect to foreign securities, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly.
Each Fund will regain ownership of loaned securities to exercise certain beneficial rights; however, the Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. The Fund receives compensation for lending its securities from interest or dividends earned on the cash, cash
109
The UBS Funds
Notes to financial statements (unaudited)
equivalents or US government securities held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees.
UBS Core Plus Bond Fund loaned securities to certain qualified broker-dealers, with the Funds' custodian acting as the Funds' lending agent. Cash collateral received is invested in Private Money Market, which is included in the Portfolio(s) of investments. In addition, UBS Core Plus Bond Fund received US Government Agency securities as collateral amounting to $419,894. The market value of loaned securities and related collateral outstanding at December 31, 2010, were as follows:
Fund |
Market value of securities loaned |
Market value of collateral received from securities loaned |
Market value of investments of cash collateral received |
||||||||||||
UBS Core Plus Bond Fund | $ | 746,083 | $ | 762,963 | $ | 343,069 |
6. Purchases and sales of securities
For the period ended December 31, 2010, aggregate purchases and sales of portfolio securities, excluding short-term investments and US Government and agency securities, were as follows:
Fund | Purchases | Sales proceeds | |||||||||
UBS Absolute Return Bond Fund | $ | 12,455,875 | $ | 18,283,072 | |||||||
UBS Core Plus Bond Fund | 56,650,856 | 53,083,170 | |||||||||
UBS Fixed Income Opportunities Fund | 26,393,953 | 49,500 | |||||||||
UBS Global Bond Fund | 4,076,419 | 6,940,298 | |||||||||
UBS High Yield Fund | 26,189,249 | 25,023,327 |
For the period ended December 31, 2010, aggregate purchases and sales of US Government and agency securities, excluding short-term investments, were as follows:
Fund | Purchases | Sales proceeds | |||||||||
UBS Absolute Return Bond Fund | $ | 3,040,078 | $ | 2,538,859 | |||||||
UBS Core Plus Bond Fund | 37,773,143 | 41,885,154 | |||||||||
UBS Fixed Income Opportunities Fund | 801,054 | | |||||||||
UBS Global Bond Fund | 973,554 | 551,775 |
7. Federal income taxes
It is each Fund's policy to comply with all requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, each Fund intends not to be subject to a federal excise tax. Accordingly, no federal income tax provision was required.
110
The UBS Funds
Notes to financial statements (unaudited)
The tax character of distributions paid during the fiscal year ended June 30, 2010 were as follows:
2010 | |||||||||||||||
Fund |
Distributions paid from ordinary income |
Return of capital |
Total distributions paid |
||||||||||||
UBS Absolute Return Bond Fund | $ | 3,868,746 | $ | 573,319 | $ | 4,442,065 | |||||||||
UBS Core Plus Bond Fund | 3,254,097 | | 3,254,097 | ||||||||||||
UBS Global Bond Fund | 714,881 | | 714,881 | ||||||||||||
UBS High Yield Fund | 8,366,143 | | 8,366,143 |
The tax character of distributions paid and components of accumulated earnings/(deficit) on a tax basis for the current fiscal year will be determined after the Trust's fiscal year ending June 30, 2011.
At June 30, 2010, the following Funds had net capital loss carryforwards for federal income tax purposes available to offset future capital gains through the indicated expiration dates:
Expiration dates | |||||||||||||||||||||||||||||||||||
Fund |
June 30, 2011 |
June 30, 2012 |
June 30, 2013 |
June 30, 2014 |
June 30, 2015 |
June 30, 2016 |
June 30, 2017 |
June 30, 2018 |
|||||||||||||||||||||||||||
UBS Absolute Return Bond Fund |
$ | | $ | | $ | | $ | | $ | 564,587 | $ | 8,900,102 | $ | 70,926,250 | $ | 38,038,802 | |||||||||||||||||||
UBS Core Plus Bond Fund |
| | | 353,828 | 1,283,441 | | 3,069,977 | 32,070,048 | |||||||||||||||||||||||||||
UBS Global Bond Fund | | | | | 359,497 | 577,591 | 3,369,482 | 12,176,817 | |||||||||||||||||||||||||||
UBS High Yield Fund | 37,425,637 | 15,791,570 | 11,067,780 | 22,213,870 | 5,885,761 | 1,000,707 | 4,782,241 | 25,725,339 |
UBS High Yield Fund had capital loss carryforwards in the amount of $6,612,767 that expired as of June 30, 2010.
Post-October losses are deemed to arise on the first business day of a Fund's next taxable year. For the year ended June 30, 2010, the following Funds incurred, and elected to defer, losses of the following:
Fund |
Net capital losses |
||||||
UBS Absolute Return Bond Fund | $ | 6,910,577 |
As of and during the period ended December 31, 2010, the Funds did not have any liabilities for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of operations. During the period, the Funds did not incur any interest or penalties.
Each of the tax years in the four year period ended June 30, 2010, or since inception in the case of UBS Fixed Income Opportunities Fund, remains subject to examination by the Internal Revenue Service and state taxing authorities.
111
The UBS Funds
Notes to financial statements (unaudited)
8. Line of credit
The Trust has entered into an agreement with JPMorgan Chase Bank to provide a $75 million committed line of credit to the Funds ("Committed Credit Facility") to be utilized for temporary financing until the settlement of shares or purchases of portfolio securities, the repurchase or redemption of shares of each Fund at the request of shareholders and other temporary or emergency purposes. Interest on amounts borrowed is calculated based on the prevailing rates in effect at the time of borrowing. Under the Committed Credit Facility arrangement, each Fund has agreed to pay commitment fees, pro rata, based on the relative asset size of the Funds in the Committed Credit Facility. There were no borrowings from the Committed Credit Facility during the period ended December 31, 2010.
9. Shares of beneficial interest
For the period ended December 31, 2010, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Absolute Return Bond Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 44,447 | $ | 283,067 | 7,293 | $ | 46,331 | 139 | $ | 1,345 | ||||||||||||||||||
Shares repurchased | (346,759 | ) | (2,209,719 | ) | (117,668 | ) | (749,837 | ) | (3,625 | ) | (23,045 | ) | |||||||||||||||
Dividends reinvested | 25,797 | 163,408 | 6,387 | 40,457 | 420,361 | 2,660,565 | |||||||||||||||||||||
Redemption fees | | 179 | | 326 | | | |||||||||||||||||||||
Net increase (decrease) | (276,515 | ) | $ | (1,763,065 | ) | (103,988 | ) | $ | (662,723 | ) | 416,875 | $ | 2,638,865 |
UBS Core Plus Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 237,359 | $ | 2,081,252 | 2,327 | $ | 19,968 | |||||||||||||
Shares repurchased | (212,009 | ) | (1,848,719 | ) | (1,090 | ) | (9,592 | ) | |||||||||||
Shares converted from Class B to Class A | 1,644 | 14,372 | (1,642 | ) | (14,372 | ) | |||||||||||||
Dividends reinvested | 32,845 | 284,165 | 116 | 1,005 | |||||||||||||||
Redemption fees | | 407 | | | |||||||||||||||
Net increase (decrease) | 59,839 | $ | 531,477 | (289 | ) | $ | (2,991 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 189 | $ | 1,534 | 156,328 | $ | 1,369,312 | |||||||||||||
Shares repurchased | (38,095 | ) | (334,301 | ) | (422,412 | ) | (3,705,513 | ) | |||||||||||
Dividends reinvested | 7,776 | 67,013 | 133,916 | 1,158,274 | |||||||||||||||
Redemption fees | | 315 | | 2,932 | |||||||||||||||
Net decrease | (30,130 | ) | $ | (265,439 | ) | (132,168 | ) | $ | (1,174,995 | ) |
112
The UBS Funds
Notes to financial statements (unaudited)
UBS Fixed Income Opportunities Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 113,051 | $ | 1,139,212 | 82,947 | $ | 844,310 | 2,528,626 | $ | 25,287,434 | ||||||||||||||||||
Shares repurchased | (1,603 | ) | (16,299 | ) | | | | | |||||||||||||||||||
Dividends reinvested | 173 | 1,760 | 166 | 1,690 | 5,998 | 60,940 | |||||||||||||||||||||
Redemption fees | | | | | | | |||||||||||||||||||||
Net increase | 111,621 | $ | 1,124,673 | 83,113 | $ | 846,000 | 2,534,624 | $ | 25,348,374 |
UBS Global Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 20,394 | $ | 153,868 | | $ | | |||||||||||||
Shares repurchased | (132,490 | ) | (1,011,721 | ) | | | |||||||||||||
Shares converted from Class B to Class A | 5,163 | 39,322 | (5,144 | ) | (39,322 | ) | |||||||||||||
Dividends reinvested | 70,095 | 499,076 | 1,136 | 8,105 | |||||||||||||||
Redemption fees | | | | 4 | |||||||||||||||
Net decrease | (36,838 | ) | $ | (319,455 | ) | (4,008 | ) | $ | (31,213 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 21,612 | $ | 157,943 | 45,338 | $ | 401,415 | |||||||||||||
Shares repurchased | (13,062 | ) | (99,278 | ) | (232,868 | ) | (2,036,704 | ) | |||||||||||
Dividends reinvested | 22,061 | 156,246 | 60,903 | 501,448 | |||||||||||||||
Redemption fees | | | | 514 | |||||||||||||||
Net increase (decrease) | 30,611 | $ | 214,911 | (126,627 | ) | $ | (1,133,327 | ) |
UBS High Yield Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 182,139 | $ | 1,118,455 | | $ | | |||||||||||||
Shares repurchased | (543,448 | ) | (3,351,291 | ) | (28,609 | ) | (174,447 | ) | |||||||||||
Shares converted from Class B to Class A | 8,900 | 55,227 | (8,894 | ) | (55,227 | ) | |||||||||||||
Dividends reinvested | 157,658 | 964,565 | 2,287 | 13,985 | |||||||||||||||
Redemption fees | | 815 | | | |||||||||||||||
Net decrease | (194,751 | ) | $ | (1,212,229 | ) | (35,216 | ) | $ | (215,689 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 63,369 | $ | 389,819 | 839,549 | $ | 5,236,723 | |||||||||||||
Shares repurchased | (91,910 | ) | (565,863 | ) | (680,370 | ) | (4,203,726 | ) | |||||||||||
Dividends reinvested | 32,569 | 199,500 | 264,328 | 1,631,108 | |||||||||||||||
Redemption fees | | 228 | | | |||||||||||||||
Net increase | 4,028 | $ | 23,684 | 423,507 | $ | 2,664,105 |
113
The UBS Funds
Notes to financial statements (unaudited)
For the year ended June 30, 2010, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Absolute Return Bond Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 217,038 | $ | 1,401,201 | 70,592 | $ | 455,064 | 20 | $ | 562 | ||||||||||||||||||
Shares repurchased | (1,285,276 | ) | (8,274,781 | ) | (385,497 | ) | (2,484,236 | ) | (2,543 | ) | (16,392 | ) | |||||||||||||||
Dividends reinvested | 55,176 | 353,982 | 12,969 | 83,173 | 617,551 | 3,956,861 | |||||||||||||||||||||
Redemption fees | | 493 | | | | | |||||||||||||||||||||
Net increase (decrease) | (1,013,062 | ) | $ | (6,519,105 | ) | (301,936 | ) | $ | (1,945,999 | ) | 615,028 | $ | 3,941,031 |
UBS Core Plus Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 262,271 | $ | 2,233,905 | | $ | | |||||||||||||
Shares repurchased | (404,919 | ) | (3,461,690 | ) | (1,035 | ) | (8,898 | ) | |||||||||||
Shares converted from Class B to Class A | 6,393 | 54,084 | (6,386 | ) | (54,084 | ) | |||||||||||||
Dividends reinvested | 50,240 | 425,583 | 519 | 4,384 | |||||||||||||||
Redemption fees | | 2,823 | | | |||||||||||||||
Net decrease | (86,015 | ) | $ | (745,295 | ) | (6,902 | ) | $ | (58,598 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 59,234 | $ | 502,420 | 1,273,659 | $ | 10,726,360 | |||||||||||||
Shares repurchased | (86,427 | ) | (734,856 | ) | (4,338,818 | ) | (36,744,899 | ) | |||||||||||
Dividends reinvested | 14,810 | 125,041 | 303,875 | 2,568,350 | |||||||||||||||
Redemption fees | | 201 | | 5,916 | |||||||||||||||
Net decrease | (12,383 | ) | $ | (107,194 | ) | (2,761,284 | ) | $ | (23,444,273 | ) |
UBS Global Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 251,384 | $ | 1,895,900 | 3,919 | $ | 30,661 | |||||||||||||
Shares repurchased | (406,539 | ) | (3,054,815 | ) | (733 | ) | (5,816 | ) | |||||||||||
Shares converted from Class B to Class A | 841 | 6,421 | (838 | ) | (6,421 | ) | |||||||||||||
Dividends reinvested | 28,230 | 211,673 | 369 | 2,775 | |||||||||||||||
Redemption fees | | 12 | | | |||||||||||||||
Net increase (decrease) | (126,084 | ) | $ | (940,809 | ) | 2,717 | $ | 21,199 |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 84,908 | $ | 637,045 | 680,645 | $ | 5,789,707 | |||||||||||||
Shares repurchased | (45,365 | ) | (342,107 | ) | (2,744,310 | ) | (23,541,071 | ) | |||||||||||
Dividends reinvested | 5,755 | 43,010 | 48,617 | 415,787 | |||||||||||||||
Redemption fees | | 4 | | 524 | |||||||||||||||
Net increase (decrease) | 45,298 | $ | 337,952 | (2,015,048 | ) | $ | (17,335,053 | ) |
114
The UBS Funds
Notes to financial statements (unaudited)
UBS High Yield Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 932,338 | $ | 5,419,062 | 4,005 | $ | 22,493 | |||||||||||||
Shares repurchased | (2,860,458 | ) | (15,823,923 | ) | (22,957 | ) | (127,320 | ) | |||||||||||
Shares converted from Class B to Class A | 6,102 | 35,866 | (6,102 | ) | (35,866 | ) | |||||||||||||
Dividends reinvested | 360,925 | 2,087,179 | 6,853 | 39,638 | |||||||||||||||
Redemption fees | | 2,539 | | | |||||||||||||||
Net decrease | (1,561,093 | ) | $ | (8,279,277 | ) | (18,201 | ) | $ | (101,055 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 279,977 | $ | 1,626,635 | 872,636 | $ | 5,096,082 | |||||||||||||
Shares repurchased | (217,274 | ) | (1,264,177 | ) | (7,136,983 | ) | (39,682,910 | ) | |||||||||||
Dividends reinvested | 76,798 | 444,474 | 697,236 | 4,045,452 | |||||||||||||||
Redemption fees | | 83 | | 6,819 | |||||||||||||||
Net increase (decrease) | 139,501 | $ | 807,015 | (5,567,111 | ) | $ | (30,534,557 | ) |
115
The UBS Funds
General information (unaudited)
Quarterly Form N-Q portfolio schedule
The Funds will file their complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC 0330. Additionally, you may obtain copies of Forms N-Q from the Funds upon request by calling 1-800-647 1568.
Proxy voting policies, procedures and record
You may obtain a description of the Funds' (1) proxy voting policies, (2) proxy voting procedures and (3) information regarding how the Funds voted any proxies related to portfolio securities during the most recent 12-month period ended June 30 for which an SEC filing has been made, without charge, upon request by contacting the Funds directly at 1-800-647 1568, online on UBS's Web site: www.ubs.com/ubsglobalam-proxy, or on the EDGAR Database on the SEC's Web site (http://www.sec.gov).
116
The UBS Funds
Funds' privacy notice
This notice describes the privacy policy of the UBS Family of Funds, the PACE Funds and all closed-end funds managed by UBS Global Asset Management (collectively, the "Funds"). The Funds are committed to protecting the personal information that they collect about individuals who are prospective, current or former investors.
The Funds collect personal information in order to process requests and transactions and to provide customer service. Personal information, which is obtained from applications, may include name(s), address, social security number or tax identification number, bank account information, other Fund holdings and any affiliation the person has with UBS Financial Services Inc. or its subsidiaries ("Personal Information"). The Funds limit access to Personal Information to those individuals who need to know that information in order to process transactions and service accounts. These individuals are required to maintain and protect the confidentiality of Personal Information. The Funds maintain physical, electronic and procedural safeguards to protect Personal Information. The Funds may share Personal Information described above with their affiliates for marketing and other business purposes, such as to facilitate the servicing of accounts. The Funds may share Personal Information described above with a non-affiliated third party if the entity is under contract to perform transaction processing or to service and maintain shareholder accounts on behalf of the Funds and otherwise as permitted by law. Any such contract will include provisions designed to ensure that the third party will uphold and maintain privacy standards when handling Personal Information. The Funds may also disclose Personal Information to regulatory authorities as required by applicable law. Except as described in this privacy notice, the Funds will not use Personal Information for any other purpose unless the Funds describe how such Personal Information will be used and clients are given an opportunity to decline approval of such use of Personal Information relating to them. The Funds endeavor to keep their customer files complete and accurate. The Funds should be notified if any Personal Information needs to be corrected or updated. Please call 1-800-647 1568 with any questions or concerns regarding your Personal Information or this privacy notice.
Privacy Notice
This privacy notice is not a part of the shareholder report.
117
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The UBS FundsEquities
Semiannual Report
December 31, 2010
Table of contents | |||||||
President's letter | 1 | ||||||
Market commentary | 2 | ||||||
Equities | |||||||
UBS Global Equity Fund | 3 | ||||||
UBS International Equity Fund | 11 | ||||||
UBS Market Neutral Multi-Strategy Fund | 21 | ||||||
UBS U.S. Equity Alpha Fund | 44 | ||||||
UBS U.S. Large Cap Equity Fund | 54 | ||||||
UBS U.S. Large Cap Value Equity Fund | 63 | ||||||
UBS U.S. Small Cap Growth Fund | 71 | ||||||
Explanation of expense disclosure | 79 | ||||||
Statement of assets and liabilities | 84 | ||||||
Statement of operations | 88 | ||||||
Statement of changes in net assets | 90 | ||||||
Financial highlights | 94 | ||||||
Notes to financial statements | 108 | ||||||
General information | 127 | ||||||
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President's letter
Dear Shareholder,
In the time since I last wrote to you, we have seen a shift in the investor mindset. Asset flows into equities seem to be turning in a positive direction, as investors appear to be showing interest, once again, in riskier assets. Nonetheless, considering the upward trend in the equity markets and encouraging signs that the economy is on the road to recovery, a surprising number of investors remain sidelined by fear, avoiding "risky" assets in favor of fixed income.
The truth is, market pundits will tell you that, in today's low yield environment, fixed income investing is fraught with its own uncertainties. If rates stay low, so will returns; if bond yields rise, the value of fixed income investments will fall. In short, fixed income may not be the safe harbor that many investors believe it to be.
Feararguably, now more than ever, it's one of the biggest obstacles to investor success. That's not to say that when it comes to investing, no fear is a good thing. In fact, fear helps inform an investor's own understanding of the level of risk he or she is willing to assume when it comes to building an investment plan. However, the fear that is so prevalent in the market today has little to do with rational thinking, and everything to do with basic human emotion. In fact, a good portion of investors today are making investment decisions based on their desire to avoid losing moneywhich turns the whole idea of a long-term investment plan on its head, really.
Irrational fear more often than not has the unfortunate result of leading investors to make the wrong decisions, for the wrong reasons, at the wrong timesoften at the expense of their long-term investment success. What can you do to fight it? A key strategy that makes sense in any environment is a diversified portfolio that blends both stocks and bonds. A diversified portfolio can't guarantee against a loss, but it does have the potential to provide you with more consistent returnsmaking it easier for you to maintain the discipline you need to stay the course to achieve your financial goals.
In 2011, we will continue to build upon our 30-year foundationgrowing and evolving to meet not only the challenges of a new market landscape, but also the ever-increasing diversification needs of our clients. At the same time, we will remain resolute in adhering to our disciplined investment approach, so we can seek to avoid the types of traps that can confound fear-driven investors. In doing so, we believe we will be better positioned to provide you, our clients, with the types of investment solutions that will help carry you forward over the next five, 10 or 30 years.
As always, we remain firmly dedicated to your investment success. Thank you for your continued support.
Mark E. Carver
President
The UBS Funds
Managing Director
UBS Global Asset Management (Americas) Inc.
1
The markets in review
Continued Economic Growth
The overall US economy expanded during the six-months ended December 31, 2010. The US economy has now grown for six consecutive quarters, spurred, in part, due to government stimulus programs, as well as the Federal Reserve Board's (the "Fed's") accommodative monetary policy. However, there continued to be several areas of weakness, most notably unemployment that remained above 9%, which held back a more robust expansion. Looking back, gross domestic product ("GDP") growth was 3.7% during the first quarter of 2010. GDP growth was then 1.7% and 2.6%, respectively, during the second and third quarters of the year. The Commerce Department's initial estimate for GDP growth in the fourth quarter is 3.2%.
Economic growth outside the US was largely positive as well during the reporting period. However, there was a significant disparity between the growth rates in the international developed and emerging market countries. The European sovereign debt crisis, which began in Greece and later impacted Ireland, served to temper growth in a number of developed countries in the Eurozone. In contrast, developing countries, including China and India, continued to see their economies expand at a rapid pace.
The global equity markets end the period with a sharp rally
After a weak first half of 2010, the global stock market generated outstanding results during the reporting period. This was largely due to a strong rally in the fourth quarter. In the US, the S&P 500 Index1 (the "Index") declined nearly 7% during the first half of the year. However, the market then rebounded and the Index posted positive returns in five of the six months covered by this report. All told, the Index gained 23.27% during the six-months ended December 31, 2010. The market's turnaround was due to several factors, including better than expected corporate profits, a second round of quantitative easing by the Fed and an extension of the Bush-era tax cuts.
International developed equities, as measured by the MSCI EAFE Index (net),2 also posted strong returns during the reporting period, gaining 24.18%. While international developed equities lost ground in August and November given concerns regarding the European debt crisis, this was more than offset by their gains during the other four months covered by this report. Emerging market equities (as measured by the MSCI Emerging Markets Index3) performed even better, as they gained 26.86% over the same period. Robust economic growth, overall strong demand and rising commodity prices supported emerging market equity prices.
1 The S&P 500 Index is an unmanaged, weighted index composed of 500 widely held common stocks varying in composition, and is not available for direct investment. Investors should note that indices do not reflect the deduction of fees and expenses.
2 The MSCI EAFE Index (net) is an index of stocks from 22 countries designed to measure the investment returns of developed economies outside of North America. Dividends are reinvested after the deduction of withholding tax, using tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. The Index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
3 The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 21 emerging market countries in Europe, Latin America and the Pacific Basin. The Index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
2
UBS Global Equity Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Global Equity Fund (the "Fund") returned 24.43% (Class A shares returned 17.62% after the deduction of the maximum sales charge), while Class Y shares returned 24.63%. The Fund's benchmark, the MSCI World Free Index (net) (the "Index"), returned 23.96% over the same time period. (Class Y Shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 5; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund outperformed its benchmark Index during the reporting period, primarily due to stock selection decisions.
Portfolio performance summary1
What worked
• Overall, individual stock selection had a positive impact on performance.
Naspers, an attractively valued South African Internet and traditional publishing company produced strong results during the reporting period. (For details, see "Portfolio highlights.")
Our holding of multinational mining company Rio Tinto, headquartered in Australia, was a positive for performance. The company benefited as commodity prices moved higher given continued strong demand from emerging market countries such as China. (For details, see "Portfolio highlights.")
We held a position in Australian airline Qantas Airways.2 The company's shares rallied from depressed levels as the airline industry appeared to recover during the reporting period.
Owning US company Autodesk, a global leader in 3D design and engineering software, was rewarded given strong demand for its products amid an upturn in corporate capital spending. We are optimistic on the company's future operating leverage given its excellent cost management, coupled with a pending recovery in their end markets from a very low base.
• Stock selection decisions positively contributed to relative performance in a number of sectors. The Fund's sector allocations are a byproduct of our bottom-up stock selection process. Overall, during the reporting period we positioned the Fund in anticipation of a continued economic recovery. In particular, stock selection was beneficial in the consumer discretionary, financial and information technology sectors.
What didn't work
• Several individual stocks were negative for performance during the period.
China Mengniu Dairy, a manufacturing and distribution company of dairy products in China, detracted from performance. Its shares declined, along with the overall Chinese stock market during the period, given concerns over whether the government could orchestrate a soft landing for its economy. (For details, see "Portfolio highlights.")
CRH, an Ireland-based building materials company, generated poor results as management did not effectively manage its business plan. We subsequently sold the Fund's position. (For details, see "Portfolio highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
2 As of December 31, 2010, this position was no longer held by the Fund.
3
UBS Global Equity Fund
The Fund's holding in US financial company Bank of America was a detractor from performance. We sold the position given the ongoing issues in the company's mortgage portfolio. (For details, see "Portfolio highlights.")
Owning shares of Hewlett-Packard was not beneficial for results. This US information technology company suffered due to the negative publicity surrounding the firing of its Chief Executive Officer. (For details, see "Portfolio highlights.")
• Stock selection in the materials, consumer staples and energy sectors negatively contributed to the Fund's results. A number of individual Fund holdings led to overall negative performance in these sectors.
Portfolio highlights
• Naspers is a South Africa-based multinational media company. We believe it offers an attractive exposure to the media industry in the underdeveloped and growing African continent and the BRIC countries (Brazil, Russia, India and China). A large portion of the company's current profits come from pay television, which is being used to help finance the expansion of its Internet business.
• Rio Tinto, an Australian mining company, in our opinion has one of the best growth profiles in its industry, and is highly leveraged to rising iron ore prices. We believe its projects are of high quality and long life expectancy, and it has a solid balance sheet, strong pipeline and refocused management. In addition, Rio Tinto has reduced its debt, which should enable the company to reinitiate stalled growth projects.
• China Mengniu Dairy is a quality dairy brand in China that provides a broad range of milk, dairy and ice cream products. The company is growing along with Chinese food consumption. In addition, we believe the company could benefit from efforts to upgrade Chinese diets.
• CRH is a global building materials company. We eliminated the Fund's position because its growth in the highly competitive paving business was counter to our expectations, and we lost faith in management's ability to make value-added acquisitions.
• Bank of America is a very broad-based US bank that is rationalizing its business portfolio. We sold the shares to pursue what we felt were better opportunities within the sector, and which do not have the same level of mortgage-related risks.
• Hewlett-Packard is a US-based global computer, printer and services company. The company benefits from its strong industry position, and we believe it is well-positioned to capitalize on the expected recovery in information technology capital spending.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
4
UBS Global Equity Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 24.43 | % | 10.08 | % | 2.77 | % | 3.21 | % | 4.09 | % | |||||||||||||
Class B3 | 23.88 | 9.25 | 2.00 | N/A | 4.32 6 | ||||||||||||||||||
Class C4 | 23.87 | 9.26 | 1.98 | N/A | 4.03 | ||||||||||||||||||
Class Y5 | 24.63 | 10.61 | 3.10 | 3.57 | 6.19 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 17.62 | % | 4.04 | % | 1.61 | % | 2.64 | % | 3.65 | % | |||||||||||||
Class B3 | 18.88 | 4.25 | 1.63 | N/A | 4.32 6 | ||||||||||||||||||
Class C4 | 22.87 | 8.26 | 1.98 | N/A | 4.03 | ||||||||||||||||||
MSCI World Free Index (net)7 | 23.96 | % | 11.76 | % | 2.43 | % | 2.31 | % | 5.92 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.55% and 1.50%; Class B2.27% and 2.25%; Class C2.34% and 2.25%; Class Y1.15% and 1.15%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the 12-month period ending October 27, 2011, do not exceed 1.50% for Class A shares, 2.25% for Class B shares, 2.25% for Class C shares and 1.25% for Class Y shares. 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.
1 Inception date of UBS Global Equity Fund Class A shares is June 30, 1997. Inception dates of Class B and Class C shares are December 11, 2001 and November 27, 2001, respectively. Inception date of Class Y shares is January 28, 1994. The inception return of the index is calculated as of January 31, 1994, which is the closest month-end to the inception date of the oldest share class (Class Y).
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The MSCI World Free Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. As of May 2010, the index consisted of 24 developed market country indices. Dividends are reinvested after deduction of withholding tax, using tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. Had US tax rates been applied, the performance of the index would be different. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
5
UBS Global Equity Fund
Top ten equity holdings (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
Microsoft Corp. | 2.8 | % | |||||
Citigroup, Inc. | 2.1 | ||||||
BP PLC | 2.0 | ||||||
Novartis AG | 1.8 | ||||||
Apple, Inc. | 1.7 | ||||||
Lowe's Cos., Inc. | 1.7 | ||||||
Petrominerales Ltd. | 1.7 | ||||||
Rio Tinto Ltd. | 1.7 | ||||||
HeidelbergCement AG | 1.6 | ||||||
HON HAI Precision Industry Co., Ltd. | 1.6 | ||||||
Total | 18.7 | % |
Country exposure, top five (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
United States | 38.5 | % | |||||
Japan | 9.7 | ||||||
United Kingdom | 8.4 | ||||||
Canada | 5.3 | ||||||
China | 5.0 | ||||||
Total | 66.9 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Airlines | 0.75 | % | |||||
Automobiles | 2.37 | ||||||
Biotechnology | 1.24 | ||||||
Building products | 1.34 | ||||||
Capital markets | 4.33 | ||||||
Chemicals | 3.44 | ||||||
Commercial banks | 7.96 | ||||||
Commercial services & supplies | 1.28 | ||||||
Communications equipment | 0.96 | ||||||
Computers & peripherals | 3.09 | ||||||
Construction & engineering | 1.49 | ||||||
Construction materials | 2.46 | ||||||
Diversified financial services | 2.93 | ||||||
Diversified telecommunication services | 1.26 | ||||||
Electric utilities | 0.76 | ||||||
Electronic equipment, instruments & components | 2.50 | ||||||
Energy equipment & services | 1.69 | ||||||
Food & staples retailing | 2.18 | ||||||
Food products | 1.88 | ||||||
Health care equipment & supplies | 1.24 | ||||||
Health care providers & services | 4.07 | ||||||
Hotels, restaurants & leisure | 1.35 | ||||||
Household durables | 1.20 | ||||||
Industrial conglomerates | 1.40 | ||||||
Insurance | 4.38 | ||||||
Internet software & services | 1.38 | ||||||
IT services | 1.21 | ||||||
Leisure equipment & products | 0.67 | ||||||
Media | 4.06 | ||||||
Metals & mining | 2.87 | ||||||
Multi-utilities | 1.28 | ||||||
Office electronics | 1.16 | ||||||
Oil, gas & consumable fuels | 9.36 | ||||||
Pharmaceuticals | 2.99 | ||||||
Professional services | 1.07 | ||||||
Real estate management & development | 1.92 | ||||||
Semiconductors & semiconductor equipment | 1.14 | ||||||
Software | 4.02 | ||||||
Specialty retail | 1.68 | ||||||
Tobacco | 1.36 | ||||||
Trading companies & distributors | 2.68 | ||||||
Wireless telecommunication services | 1.85 | ||||||
Total common stocks | 98.25 | % | |||||
Participation note | 0.53 | ||||||
Short-term investment | 0.80 | ||||||
Investment of cash collateral from securities loaned | 1.23 | ||||||
Total investments | 100.81 | % | |||||
Liabilities, in excess of cash and other assets | (0.81 | ) | |||||
Net assets | 100.00 | % |
6
UBS Global Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 98.25% | |||||||||||
Australia: 2.69% | |||||||||||
Orica Ltd. | 50,873 | $ | 1,295,619 | ||||||||
Rio Tinto Ltd. | 23,650 | 2,067,453 | |||||||||
Total Australia common stocks | 3,363,072 | ||||||||||
Brazil: 1.22% | |||||||||||
Vale SA ADR | 44,100 | 1,524,537 | |||||||||
Canada: 5.24% | |||||||||||
Cenovus Energy, Inc. | 44,100 | 1,476,062 | |||||||||
Petrominerales Ltd.1 | 62,500 | 2,084,381 | |||||||||
Research In Motion Ltd.* | 20,400 | 1,191,419 | |||||||||
Suncor Energy, Inc. | 46,800 | 1,801,774 | |||||||||
Total Canada common stocks | 6,553,636 | ||||||||||
China: 4.98% | |||||||||||
AIA Group Ltd.* | 527,255 | 1,482,159 | |||||||||
China Construction Bank Corp., H Shares |
1,553,450 | 1,393,005 | |||||||||
China Mengniu Dairy Co., Ltd. | 356,000 | 943,495 | |||||||||
New World Development Ltd. | 900,000 | 1,690,510 | |||||||||
Sino-Ocean Land Holdings Ltd. | 1,096,500 | 718,040 | |||||||||
Total China common stocks | 6,227,209 | ||||||||||
Denmark: 1.49% | |||||||||||
FLSmidth & Co. A/S | 19,549 | 1,864,463 | |||||||||
Finland: 0.74% | |||||||||||
Sampo Oyj, Class A | 34,432 | 922,530 | |||||||||
France: 1.10% | |||||||||||
Carrefour SA | 33,288 | 1,372,293 | |||||||||
Germany: 3.73% | |||||||||||
Fresenius Medical Care AG & Co. KGaA | 21,949 | 1,267,955 | |||||||||
HeidelbergCement AG | 32,483 | 2,035,790 | |||||||||
Metro AG | 18,764 | 1,351,005 | |||||||||
Total Germany common stocks | 4,654,750 | ||||||||||
India: 1.21% | |||||||||||
Infosys Technology Ltd. ADR | 19,800 | 1,506,384 | |||||||||
Indonesia: 1.10% | |||||||||||
Bank Rakyat Indonesia PT | 1,181,500 | 1,376,887 | |||||||||
Ireland: 2.07% | |||||||||||
Covidien PLC | 33,904 | 1,548,057 | |||||||||
James Hardie Industries SE CDI* | 150,076 | 1,040,714 | |||||||||
Total Ireland common stocks | 2,588,771 |
Shares | Value | ||||||||||
Japan: 9.70% | |||||||||||
ITOCHU Corp. | 141,400 | $ | 1,431,590 | ||||||||
KDDI Corp. | 191 | 1,103,325 | |||||||||
Mitsubishi Corp. | 70,400 | 1,905,890 | |||||||||
Nissan Motor Co., Ltd.* | 151,400 | 1,441,461 | |||||||||
ORIX Corp. | 10,820 | 1,064,808 | |||||||||
Ricoh Co., Ltd. | 99,000 | 1,451,041 | |||||||||
Sankyo Co., Ltd. | 14,800 | 835,793 | |||||||||
Shin-Etsu Chemical Co., Ltd. | 22,800 | 1,235,620 | |||||||||
Sumitomo Mitsui Financial Group, Inc. | 46,400 | 1,652,775 | |||||||||
Total Japan common stocks | 12,122,303 | ||||||||||
Malaysia: 0.62% | |||||||||||
Petronas Chemicals Group Bhd* | 434,400 | 777,651 | |||||||||
Netherlands: 2.93% | |||||||||||
ASML Holding NV | 36,848 | 1,423,036 | |||||||||
LyondellBasell Industries NV, Class A* | 28,625 | 984,700 | |||||||||
Wolters Kluwer NV | 57,144 | 1,252,329 | |||||||||
Total Netherlands common stocks | 3,660,065 | ||||||||||
Norway: 2.13% | |||||||||||
Petroleum Geo-Services ASA* | 69,754 | 1,086,049 | |||||||||
Telenor ASA | 97,019 | 1,576,234 | |||||||||
Total Norway common stocks | 2,662,283 | ||||||||||
Russia: 2.02% | |||||||||||
Mobile Telesystems OJSC ADR | 57,900 | 1,208,373 | |||||||||
Sberbank of Russia* | 387,258 | 1,319,388 | |||||||||
Total Russia common stocks | 2,527,761 | ||||||||||
South Africa: 1.55% | |||||||||||
Naspers Ltd., Class N | 32,943 | 1,940,074 | |||||||||
Switzerland: 2.91% | |||||||||||
Novartis AG | 39,066 | 2,295,911 | |||||||||
SGS SA | 801 | 1,344,138 | |||||||||
Total Switzerland common stocks | 3,640,049 | ||||||||||
Taiwan: 2.51% | |||||||||||
AU Optronics Corp.* | 1,099,000 | 1,142,102 | |||||||||
HON HAI Precision Industry Co., Ltd. | 492,840 | 1,986,134 | |||||||||
Total Taiwan common stocks | 3,128,236 | ||||||||||
Thailand: 1.48% | |||||||||||
Bank of Ayudhya PCL | 2,187,900 | 1,850,770 | |||||||||
United Kingdom: 8.38% | |||||||||||
Barclays PLC | 276,619 | 1,128,435 | |||||||||
BP PLC | 338,059 | 2,453,764 | |||||||||
GlaxoSmithKline PLC | 74,411 | 1,438,576 |
7
UBS Global Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
United Kingdom(Concluded) | |||||||||||
Lloyds Banking Group PLC* | 1,223,076 | $ | 1,252,832 | ||||||||
Man Group PLC | 343,303 | 1,584,321 | |||||||||
Prudential PLC | 129,546 | 1,349,194 | |||||||||
Tullow Oil PLC | 64,502 | 1,268,126 | |||||||||
Total United Kingdom common stocks | 10,475,248 | ||||||||||
United States: 38.45% | |||||||||||
Aflac, Inc. | 30,300 | 1,709,829 | |||||||||
Altria Group, Inc. | 69,100 | 1,701,242 | |||||||||
American Electric Power Co., Inc. | 26,400 | 949,872 | |||||||||
AmerisourceBergen Corp. | 35,100 | 1,197,612 | |||||||||
Apple, Inc.* | 6,700 | 2,161,152 | |||||||||
Autodesk, Inc.* | 38,700 | 1,478,340 | |||||||||
Bank of New York Mellon Corp. | 65,000 | 1,963,000 | |||||||||
Carnival Corp. | 36,700 | 1,692,237 | |||||||||
Citigroup, Inc.* | 548,800 | 2,595,824 | |||||||||
Comcast Corp., Class A | 85,800 | 1,885,026 | |||||||||
EOG Resources, Inc. | 16,800 | 1,535,688 | |||||||||
Fortune Brands, Inc. | 24,800 | 1,494,200 | |||||||||
General Motors Co.* | 41,348 | 1,524,087 | |||||||||
Gilead Sciences, Inc.* | 42,800 | 1,551,072 | |||||||||
Goldman Sachs Group, Inc. | 11,100 | 1,866,576 | |||||||||
Google, Inc., Class A* | 2,900 | 1,722,513 | |||||||||
Helmerich & Payne, Inc. | 21,100 | 1,022,928 | |||||||||
Hess Corp. | 14,100 | 1,079,214 | |||||||||
Hewlett-Packard Co. | 40,300 | 1,696,630 | |||||||||
Kraft Foods, Inc., Class A | 44,300 | 1,395,893 | |||||||||
Lowe's Cos., Inc. | 83,600 | 2,096,688 | |||||||||
MDU Resources Group, Inc. | 79,000 | 1,601,330 | |||||||||
Microsoft Corp. | 127,200 | 3,551,424 | |||||||||
Owens Corning* | 53,900 | 1,678,985 |
Shares | Value | ||||||||||
Republic Services, Inc. | 53,400 | $ | 1,594,524 | ||||||||
Southwest Airlines Co. | 72,200 | 937,156 | |||||||||
Textron, Inc. | 74,100 | 1,751,724 | |||||||||
UnitedHealth Group, Inc. | 35,300 | 1,274,683 | |||||||||
Universal Health Services, Inc., Class B | 30,800 | 1,337,336 | |||||||||
Total United States common stocks | 48,046,785 | ||||||||||
Total common stocks (cost $100,515,872) |
122,785,757 | ||||||||||
Participation note: 0.53% | |||||||||||
India: 0.53% | |||||||||||
Housing Development & Infrastructure Limited, expires 08/10/12* (cost $959,885) |
151,614 | 661,012 | |||||||||
Short-term investment: 0.80% | |||||||||||
Investment company: 0.80% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $993,097) |
993,097 | 993,097 | |||||||||
Investment of cash collateral from securities loaned: 1.23% |
|||||||||||
UBS Private Money Market Fund LLC2 (cost $1,539,915) |
1,539,915 | 1,539,915 | |||||||||
Total investments: 100.81% (cost $104,008,769) |
125,979,781 | ||||||||||
Liabilities, in excess of cash and other assets: (0.81)% |
(1,010,942 | ) | |||||||||
Net assets: 100.00% | $ | 124,968,839 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 23,248,298 | |||||
Gross unrealized depreciation | (1,277,286 | ) | |||||
Net unrealized appreciation of investments | $ | 21,971,012 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
8
UBS Global Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
2 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Funds.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 760,855 | $ | 19,744,230 | $ | 19,511,988 | $ | 993,097 | $ | 939 | |||||||||||||
UBS Private Money Market Fund LLC1 | 2,220,517 | 20,372,428 | 21,053,030 | 1,539,915 | 8,151 | ||||||||||||||||||
$ | 2,981,372 | $ | 40,116,658 | $ | 40,565,018 | $ | 2,533,012 | $ | 9,090 |
1 The advisor does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements for further information.
ADR American depositary receipt
CDI Chess depositary interest
OJSC Open joint stock company
Forward foreign currency contracts
UBS Global Equity Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
JPMorgan Chase Bank | AUD | 3,210,000 | USD | 3,059,355 | 03/03/11 | $ | (199,887 | ) | |||||||||||
JPMorgan Chase Bank | BRL | 2,190,000 | USD | 1,244,318 | 03/03/11 | (58,155 | ) | ||||||||||||
JPMorgan Chase Bank | CAD | 2,400,000 | USD | 2,346,064 | 03/03/11 | (64,898 | ) | ||||||||||||
JPMorgan Chase Bank | DKK | 8,070,000 | USD | 1,431,632 | 03/03/11 | (14,885 | ) | ||||||||||||
JPMorgan Chase Bank | GBP | 735,000 | USD | 1,155,443 | 03/03/11 | 10,000 | |||||||||||||
JPMorgan Chase Bank | HKD | 21,615,000 | USD | 2,785,948 | 03/03/11 | 3,739 | |||||||||||||
JPMorgan Chase Bank | HKD | 6,905,000 | USD | 888,190 | 03/03/11 | (598 | ) | ||||||||||||
JPMorgan Chase Bank | MYR | 1,952,000 | USD | 618,995 | 03/03/11 | (11,686 | ) | ||||||||||||
JPMorgan Chase Bank | NOK | 13,020,000 | USD | 2,115,987 | 03/03/11 | (109,012 | ) | ||||||||||||
JPMorgan Chase Bank | THB | 49,900,000 | USD | 1,650,132 | 03/03/11 | (3,429 | ) | ||||||||||||
JPMorgan Chase Bank | TWD | 51,700,000 | USD | 1,710,222 | 03/03/11 | (65,323 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 3,226,609 | EUR | 2,435,000 | 03/03/11 | 26,827 | |||||||||||||
JPMorgan Chase Bank | USD | 652,083 | GBP | 415,000 | 03/03/11 | (5,336 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 1,824,344 | GBP | 1,175,000 | 03/03/11 | 6,808 | |||||||||||||
JPMorgan Chase Bank | USD | 1,025,283 | HKD | 7,960,000 | 03/03/11 | (699 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 1,558,743 | JPY | 130,300,000 | 03/03/11 | 47,112 | |||||||||||||
JPMorgan Chase Bank | USD | 1,249,029 | KRW | 1,447,000,000 | 03/03/11 | 22,162 | |||||||||||||
JPMorgan Chase Bank | USD | 2,494,824 | MXN | 31,450,000 | 03/03/11 | 41,042 | |||||||||||||
JPMorgan Chase Bank | USD | 3,927,497 | SEK | 27,670,000 | 03/03/11 | 178,350 | |||||||||||||
JPMorgan Chase Bank | USD | 3,495,153 | SGD | 4,615,000 | 03/03/11 | 100,904 | |||||||||||||
JPMorgan Chase Bank | ZAR | 11,080,000 | USD | 1,527,619 | 03/03/11 | (140,466 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | EUR | 1,270,000 | USD | 1,679,001 | 03/03/11 | (17,863 | ) | ||||||||||||
Net unrealized depreciation on forward foreign currency contracts | $ | (255,293 | ) |
9
UBS Global Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
Currency type abbreviations:
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
DKK Danish Krone
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
JPY Japanese Yen
KRW Korean Won
MXN Mexican Peso
MYR Malaysian Ringgit
NOK Norwegian Krone
SEK Swedish Krona
SGD Singapore Dollar
THB Thai Baht
TWD New Taiwan Dollar
USD United States Dollar
ZAR South African Rand
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 120,934,987 | $ | 1,850,770 | $ | | $ | 122,785,757 | |||||||||||
Participation note | | 661,012 | | 661,012 | |||||||||||||||
Short-term investment | | 993,097 | | 993,097 | |||||||||||||||
Investment of cash collateral from securities loaned | | 1,539,915 | | 1,539,915 | |||||||||||||||
Other financial instruments1 | | (255,293 | ) | | (255,293 | ) | |||||||||||||
Total | $ | 120,934,987 | $ | 4,789,501 | $ | | $ | 125,724,488 |
1 Other financial instruments include forward foreign currency contracts.
See accompanying notes to financial statements.
10
UBS International Equity Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS International Equity Fund (the "Fund") returned 26.42% (Class A shares returned 19.39% after the deduction of the maximum sales charge), while Class Y shares returned 26.59%. The Fund's benchmark, the MSCI World Free ex USA Index (net) (the "Index"), returned 24.46% over the same time period. (Class Y Shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 13; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund outperformed its benchmark Index during the reporting period, primarily due to stock selection.
Portfolio performance summary1
What worked
• Overall, individual stock selection had a positive impact on performance.
Naspers, an attractively valued South African Internet and traditional publishing company produced strong results during the reporting period. (For details, see "Portfolio highlights.")
Our holding of Denmark mining and machinery company FLSmidth & Co. was a positive for performance. It benefited as demand for its products remained strong from emerging market countries such as China. (For details, see "Portfolio highlights.")
We held a position in Norway-based Petroleum Geo-Services, which helps energy companies find oil and gas reserves offshore. The company benefited given an increase in global oil exploration. (For details, see "Portfolio highlights.")
Owning Volkswagen was rewarded given strong demand for its automobiles in China, Germany and a number of other European countries. The company also benefited from productivity enhancements and plans to increase its presence in the US. (For details, see "Portfolio highlights.")
• Stock selection decisions positively contributed to relative performance in a number of sectors. The Fund's sector allocations are a byproduct of our bottom-up stock selection process. Overall, during the reporting period we positioned the Fund in anticipation of a continued economic recovery. In particular, stock selection was beneficial in the consumer discretionary, materials and telecommunication services sectors. A lack of utilities holdings in the Fund led to an underweight position in the sector. This was a positive for results as utilities lagged the benchmark during the reporting period.
What didn't work
• Several individual stocks were negative for performance during the period.
China Mengniu Dairy, a manufacturing and distribution company of dairy products in China, detracted from performance. Its shares declined, along with the overall Chinese stock market during the period, given concerns whether the government could orchestrate a soft landing for its economy. (For details, see "Portfolio highlights.")
Lloyds Banking Group, the UK-based financial services organization, generated poor results as it missed earnings expectations. We believe this was partially due to the negative repercussions from the European sovereign debt crisis.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
11
UBS International Equity Fund
The Fund's position in Japanese financial company Nomura Holdings2 was a detractor from performance. The company made a number of significant acquisitions during the reporting period, and increased spending to grow its presence in the US. Neither of these initiatives have yet to boost the company's earnings. (For details, see "Portfolio highlights.")
Owning shares of Mitsui O.S.K. Lines2 was not beneficial for results. Mitsui is the world's largest operator of iron-ore vessels. It has a substantial business presence in China, which is the world's biggest steelmaker and buyer of iron ore. The company saw its shares decline when concerns rose that China's economy could decelerate.
• Stock selection in the financial and information technology sectors negatively contributed to the Fund's results. A number of individual Fund holdings led to overall negative performance in both sectors.
Portfolio highlights
Naspers is a South Africa-based multinational media company. We believe it offers an attractive exposure to the media industry in the underdeveloped and growing African continent and the BRIC countries (Brazil, Russia, India and China). A large portion of the company's current profits come from pay television, which is being used to help finance the expansion of its Internet business.
FLSmidth & Co. is a leading supplier of equipment and services to the global cement and minerals industry. FLSmidth's history is in the global cement industry, where it holds 38% global (ex-China) market share. Largely through acquisition over the last decade, FLSmidth has been building a strong franchise in mining capital equipment. We believe the company is well-positioned to benefit from a return of capital spending in the industry.
Petroleum Geo-Services is a global oilfield services, seismic and exploration service company. We believe the company's technical expertise and staff puts it in a good position to benefit as major oil companies seek to expand and replace their reserves.
Volkswagen is a global automobile company with a broad mix of mass market and luxury brands. We believe the company is well positioned to benefit from a rebound in demand in developed markets and continued growth in China.
China Mengniu Dairy is a quality dairy brand in China that provides a broad range of milk, dairy and ice cream products. The company is growing along with Chinese food consumption. In addition, we believe the company could benefit from efforts to upgrade Chinese diets.
Nomura Holdings is a brokerage and investment banking firm in Japan. The stock underperformed along with the Japanese equity market. While we believe it is attractively valued, the company's leverage to market exposure has hurt the stock.
2 As of December 31, 2010, this position was no longer held by the Fund.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
12
UBS International Equity Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 26.42 | % | 12.03 | % | 3.10 | % | 3.36 | % | 3.46 | % | |||||||||||||
Class B3 | 26.06 | 11.38 | 2.34 | N/A | 5.90 6 | ||||||||||||||||||
Class C4 | 26.03 | 11.25 | 2.33 | N/A | 5.58 | ||||||||||||||||||
Class Y5 | 26.59 | 12.39 | 3.32 | 3.58 | 5.09 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 19.39 | % | 5.94 | % | 1.95 | % | 2.78 | % | 3.03 | % | |||||||||||||
Class B3 | 21.06 | 6.38 | 2.04 | N/A | 5.90 6 | ||||||||||||||||||
Class C4 | 25.03 | 10.25 | 2.33 | N/A | 5.58 | ||||||||||||||||||
MSCI World Free ex USA Index (net)7 | 24.46 | % | 8.95 | % | 3.05 | % | 3.98 | % | 5.46 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.76% and 1.25%; Class B2.56% and 2.00%; Class C2.56% and 2.00%; Class Y1.55% and 1.00%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), has agreed irrevocably to waive its fees and reimburse certain expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) do not exceed 1.25% for Class A shares, 2.00% for Class B shares, 2.00% for Class C shares and 1.00% for Class Y shares.
1 Inception date of UBS International Equity Fund Class A shares is June 30, 1997. Inception dates of Class B and Class C shares are February 12, 2002 and January 25, 2002, respectively. Inception date of Class Y shares and the index is August 31, 1993.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The MSCI World Free ex USA Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets excluding the United States. As of May 2010, the index consisted of 23 developed market country indices. Dividends are reinvested after deduction of withholding tax, using tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. Had US tax rates been applied, the performance of the index would be different. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
13
UBS International Equity Fund
Top ten equity holdings (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
Mitsubishi Corp. | 1.8 | % | |||||
Vodafone Group PLC | 1.8 | ||||||
Novartis AG | 1.7 | ||||||
Rio Tinto PLC | 1.5 | ||||||
FLSmidth & Co. A/S | 1.4 | ||||||
BP PLC | 1.4 | ||||||
THK Co., Ltd. | 1.4 | ||||||
Lloyds Banking Group PLC | 1.3 | ||||||
BNP Paribas | 1.2 | ||||||
Nissan Motor Co., Ltd. | 1.1 | ||||||
Total | 14.6 | % |
Country exposure, top five (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
United Kingdom | 17.6 | % | |||||
Japan | 16.1 | ||||||
China | 7.7 | ||||||
Germany | 6.6 | ||||||
Switzerland | 6.3 | ||||||
Total | 54.3 | % |
14
UBS International Equity Fund
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 0.32 | % | |||||
Airlines | 1.22 | ||||||
Auto components | 0.89 | ||||||
Automobiles | 2.59 | ||||||
Beverages | 0.50 | ||||||
Building products | 1.35 | ||||||
Capital markets | 1.33 | ||||||
Chemicals | 4.00 | ||||||
Commercial banks | 13.95 | ||||||
Communications equipment | 0.58 | ||||||
Computers & peripherals | 0.52 | ||||||
Construction & engineering | 1.61 | ||||||
Construction materials | 1.65 | ||||||
Diversified financial services | 2.09 | ||||||
Diversified telecommunication services | 1.53 | ||||||
Electric utilities | 1.46 | ||||||
Electronic equipment, instruments & components | 1.72 | ||||||
Energy equipment & services | 2.20 | ||||||
Food & staples retailing | 2.06 | ||||||
Food products | 2.70 | ||||||
Health care equipment & supplies | 0.31 | ||||||
Health care providers & services | 0.64 | ||||||
Hotels, restaurants & leisure | 1.12 | ||||||
Household products | 0.51 | ||||||
Industrial conglomerates | 0.17 | ||||||
Insurance | 3.00 | ||||||
Internet software & services | 0.40 | ||||||
IT services | 1.04 | ||||||
Leisure equipment & products | 0.48 | ||||||
Machinery | 5.37 | ||||||
Marine | 0.73 | ||||||
Media | 1.88 | ||||||
Metals & mining | 8.26 | ||||||
Office electronics | 1.50 | ||||||
Oil, gas & consumable fuels | 7.61 | ||||||
Pharmaceuticals | 4.70 | ||||||
Professional services | 0.77 | ||||||
Real estate management & development | 1.29 | ||||||
Semiconductors & semiconductor equipment | 2.02 | ||||||
Software | 0.90 | ||||||
Specialty retail | 0.43 | ||||||
Textiles, apparel & luxury goods | 1.70 | ||||||
Tobacco | 0.80 | ||||||
Trading companies & distributors | 2.45 | ||||||
Wireless telecommunication services | 3.83 | ||||||
Total common stocks | 96.18 | % | |||||
Preferred stock | 0.85 | % | |||||
Participation note | 0.33 | ||||||
Short-term investment | 2.22 | ||||||
Investment of cash collateral from securities loaned | 2.87 | ||||||
Total investments | 102.45 | % | |||||
Liabilities, in excess of cash and other assets | (2.45 | ) | |||||
Net assets | 100.00 | % |
15
UBS International Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 96.18% | |||||||||||
Australia: 4.19% | |||||||||||
Alumina Ltd. | 32,098 | $ | 81,418 | ||||||||
BHP Billiton Ltd. | 1,969 | 91,129 | |||||||||
Incitec Pivot Ltd. | 52,336 | 211,976 | |||||||||
Mount Gibson Iron Ltd.* | 53,934 | 116,947 | |||||||||
National Australia Bank Ltd. | 10,634 | 257,772 | |||||||||
Orica Ltd. | 10,303 | 262,394 | |||||||||
Qantas Airways Ltd.* | 76,366 | 198,392 | |||||||||
Total Australia common stocks | 1,220,028 | ||||||||||
Austria: 0.27% | |||||||||||
Raiffeisen Bank International AG | 1,409 | 77,197 | |||||||||
Belgium: 0.50% | |||||||||||
Anheuser-Busch InBev NV | 2,568 | 146,873 | |||||||||
Brazil: 1.10% | |||||||||||
Vale SA ADR | 9,300 | 321,501 | |||||||||
Canada: 6.30% | |||||||||||
Canadian Oil Sands Ltd. | 5,300 | 140,989 | |||||||||
EnCana Corp.1 | 4,200 | 122,879 | |||||||||
Lundin Mining Corp.* | 14,500 | 105,874 | |||||||||
Petrominerales Ltd. | 9,500 | 316,826 | |||||||||
Research In Motion Ltd.* | 2,900 | 169,368 | |||||||||
Suncor Energy, Inc. | 8,400 | 323,395 | |||||||||
Teck Resources Ltd., Class B1 | 4,800 | 298,292 | |||||||||
Toronto-Dominion Bank | 2,700 | 201,624 | |||||||||
TransCanada Corp.1 | 4,100 | 156,652 | |||||||||
Total Canada common stocks | 1,835,899 | ||||||||||
China: 7.67% | |||||||||||
AIA Group Ltd.* | 73,038 | 205,316 | |||||||||
Baidu, Inc. ADR* | 1,200 | 115,836 | |||||||||
China Construction Bank Corp., H Shares |
325,280 | 291,684 | |||||||||
China Everbright Ltd. | 54,000 | 121,995 | |||||||||
China Mengniu Dairy Co., Ltd. | 57,000 | 151,065 | |||||||||
China Merchants Bank Co., Ltd., H Shares | 86,759 | 218,996 | |||||||||
China National Building Material Co., Ltd., H Shares |
44,000 | 100,875 | |||||||||
Dongfeng Motor Group Co., Ltd., H Shares |
42,000 | 72,406 | |||||||||
Focus Media Holding Ltd. ADR* | 2,600 | 57,018 | |||||||||
Fushan International Energy Group Ltd. | 110,000 | 75,430 | |||||||||
Hong Kong Exchanges & Clearing Ltd. | 10,900 | 247,230 | |||||||||
New World Development Ltd. | 98,000 | 184,078 | |||||||||
Pacific Basin Shipping Ltd. | 157,000 | 104,427 | |||||||||
Shangri-La Asia Ltd. | 36,000 | 97,725 | |||||||||
Sino-Ocean Land Holdings Ltd. | 189,500 | 124,094 | |||||||||
Sun Hung Kai Properties Ltd. | 4,000 | 66,437 | |||||||||
Total China common stocks | 2,234,612 |
Shares | Value | ||||||||||
Denmark: 2.28% | |||||||||||
Danisco A/S | 879 | $ | 80,367 | ||||||||
FLSmidth & Co. A/S | 4,414 | 420,980 | |||||||||
Novo Nordisk A/S, Class B | 1,437 | 162,041 | |||||||||
Total Denmark common stocks | 663,388 | ||||||||||
Finland: 0.76% | |||||||||||
Sampo Oyj, Class A | 8,309 | 222,622 | |||||||||
France: 2.01% | |||||||||||
BNP Paribas | 5,356 | 340,755 | |||||||||
Carrefour SA | 4,565 | 188,192 | |||||||||
Valeo SA* | 1,018 | 57,767 | |||||||||
Total France common stocks | 586,714 | ||||||||||
Germany: 5.77% | |||||||||||
Bayer AG | 2,838 | 209,721 | |||||||||
Bayerische Motoren Werke AG | 1,028 | 80,843 | |||||||||
Dialog Semiconductor PLC* | 2,950 | 67,134 | |||||||||
E.ON AG | 7,520 | 230,473 | |||||||||
Fresenius Medical Care AG & Co. KGaA | 3,234 | 186,823 | |||||||||
GEA Group AG | 3,995 | 115,472 | |||||||||
HeidelbergCement AG | 3,906 | 244,799 | |||||||||
MAN SE | 1,086 | 129,144 | |||||||||
Metro AG | 4,110 | 295,919 | |||||||||
ThyssenKrupp AG | 2,926 | 121,152 | |||||||||
Total Germany common stocks | 1,681,480 | ||||||||||
India: 2.12% | |||||||||||
ICICI Bank Ltd. ADR | 3,600 | 182,304 | |||||||||
Infosys Technology Ltd. ADR | 4,000 | 304,320 | |||||||||
Tata Motors Ltd. ADR1 | 4,500 | 132,030 | |||||||||
Total India common stocks | 618,654 | ||||||||||
Indonesia: 1.29% | |||||||||||
Astra International Tbk PT | 21,500 | 130,169 | |||||||||
Bank Rakyat Indonesia PT | 210,000 | 244,728 | |||||||||
Total Indonesia common stocks | 374,897 | ||||||||||
Ireland: 1.00% | |||||||||||
James Hardie Industries SE CDI* | 19,260 | 133,560 | |||||||||
Ryanair Holdings PLC ADR | 5,100 | 156,876 | |||||||||
Total Ireland common stocks | 290,436 | ||||||||||
Israel: 0.81% | |||||||||||
Teva Pharmaceutical Industries Ltd. ADR | 1,800 | 93,834 | |||||||||
Teva Pharmaceutical Industries Ltd. | 2,737 | 143,464 | |||||||||
Total Israel common stocks | 237,298 | ||||||||||
Italy: 0.68% | |||||||||||
Saipem SpA | 4,031 | 198,443 |
16
UBS International Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Japan: 16.06% | |||||||||||
Asahi Glass Co., Ltd. | 28,000 | $ | 327,282 | ||||||||
Canon, Inc.1 | 3,900 | 202,229 | |||||||||
Disco Corp. | 2,000 | 121,443 | |||||||||
Fanuc Corp. | 1,000 | 153,590 | |||||||||
Ibiden Co., Ltd. | 2,900 | 91,511 | |||||||||
Isuzu Motors Ltd. | 30,000 | 136,347 | |||||||||
ITOCHU Corp. | 19,500 | 197,426 | |||||||||
KDDI Corp. | 33 | 190,627 | |||||||||
Komatsu Ltd. | 5,400 | 163,417 | |||||||||
Makino Milling Machine Co., Ltd.* | 15,000 | 123,599 | |||||||||
Mitsubishi Corp. | 19,000 | 514,374 | |||||||||
Mitsubishi UFJ Financial Group, Inc. | 24,200 | 130,851 | |||||||||
Nippon Sheet Glass Co., Ltd. | 25,000 | 67,434 | |||||||||
Nippon Yusen KK | 24,000 | 106,417 | |||||||||
Nissan Motor Co., Ltd. | 35,000 | 333,231 | |||||||||
NTT DoCoMo, Inc. | 43 | 75,100 | |||||||||
ORIX Corp. | 2,430 | 239,139 | |||||||||
Ricoh Co., Ltd. | 16,000 | 234,512 | |||||||||
Sankyo Co., Ltd. | 2,500 | 141,181 | |||||||||
Shin-Etsu Chemical Co., Ltd. | 3,500 | 189,679 | |||||||||
Sony Financial Holdings, Inc. | 50 | 202,303 | |||||||||
Sumitomo Mitsui Financial Group, Inc. | 6,800 | 242,217 | |||||||||
THK Co., Ltd. | 17,400 | 400,121 | |||||||||
Toshiba Corp. | 18,000 | 97,992 | |||||||||
Total Japan common stocks | 4,682,022 | ||||||||||
Luxembourg: 0.99% | |||||||||||
ArcelorMittal | 7,568 | 287,010 | |||||||||
Malaysia: 0.44% | |||||||||||
Malayan Banking Bhd | 7,400 | 20,399 | |||||||||
Petronas Chemicals Group Bhd* | 60,700 | 108,664 | |||||||||
Total Malaysia common stocks | 129,063 | ||||||||||
Netherlands: 3.78% | |||||||||||
ASML Holding NV | 7,361 | 284,275 | |||||||||
Fugro NV CVA | 1,117 | 91,798 | |||||||||
Gemalto NV | 1,234 | 52,512 | |||||||||
Koninklijke Philips Electronics NV NY Shares | 1,600 | 49,120 | |||||||||
LyondellBasell Industries NV, Class A* | 3,900 | 134,160 | |||||||||
Royal Dutch Shell PLC, Class A | 6,224 | 207,517 | |||||||||
Unilever NV CVA | 3,203 | 99,728 | |||||||||
Wolters Kluwer NV | 8,291 | 181,700 | |||||||||
Total Netherlands common stocks | 1,100,810 | ||||||||||
Norway: 2.23% | |||||||||||
Petroleum Geo-Services ASA* | 14,257 | 221,977 | |||||||||
Telenor ASA | 17,959 | 291,773 | |||||||||
Yara International ASA | 2,373 | 137,255 | |||||||||
Total Norway common stocks | 651,005 |
Shares | Value | ||||||||||
Russia: 2.24% | |||||||||||
Mechel OAO ADR | 4,000 | $ | 116,920 | ||||||||
Mobile Telesystems OJSC ADR | 6,550 | 136,698 | |||||||||
NovaTek OAO GDR | 1,022 | 122,129 | |||||||||
Sberbank of Russian Federation* | 51,162 | 174,309 | |||||||||
VTB Bank OJSC GDR | 15,566 | 102,580 | |||||||||
Total Russia common stocks | 652,636 | ||||||||||
Singapore: 1.79% | |||||||||||
Biosensors International Group Ltd.* | 103,000 | 90,692 | |||||||||
DBS Group Holdings Ltd. | 14,159 | 157,990 | |||||||||
Golden Agri-Resources Ltd. | 248,000 | 154,596 | |||||||||
Olam International Ltd. | 48,000 | 117,443 | |||||||||
Total Singapore common stocks | 520,721 | ||||||||||
South Africa: 1.76% | |||||||||||
MTN Group Ltd. | 9,912 | 202,257 | |||||||||
Naspers Ltd., Class N | 5,292 | 311,656 | |||||||||
Total South Africa common stocks | 513,913 | ||||||||||
South Korea: 0.78% | |||||||||||
Hyundai Heavy Industries Co., Ltd.* | 294 | 114,761 | |||||||||
Hyundai Mobis* | 449 | 112,556 | |||||||||
Total South Korea common stocks | 227,317 | ||||||||||
Spain: 0.96% | |||||||||||
Inditex SA | 1,665 | 124,664 | |||||||||
Telefonica SA | 6,824 | 154,702 | |||||||||
Total Spain common stocks | 279,366 | ||||||||||
Sweden: 1.50% | |||||||||||
Autoliv, Inc. | 1,100 | 86,834 | |||||||||
Skandinaviska Enskilda Banken AB, Class A |
13,661 | 113,949 | |||||||||
Volvo AB, Class B* | 13,484 | 237,576 | |||||||||
Total Sweden common stocks | 438,359 | ||||||||||
Switzerland: 6.31% | |||||||||||
Cie Financiere Richemont SA, Class A | 4,584 | 269,647 | |||||||||
Clariant AG* | 5,984 | 121,216 | |||||||||
GAM Holding AG* | 7,571 | 125,104 | |||||||||
Nestle SA | 5,139 | 300,920 | |||||||||
Novartis AG | 8,601 | 505,481 | |||||||||
SGS SA | 133 | 223,184 | |||||||||
Swatch Group AG | 2,771 | 223,458 | |||||||||
Temenos Group AG* | 1,706 | 70,977 | |||||||||
Total Switzerland common stocks | 1,839,987 | ||||||||||
Taiwan: 1.80% | |||||||||||
AU Optronics Corp.* | 115,000 | 119,510 | |||||||||
HON HAI Precision Industry Co., Ltd. | 72,624 | 292,673 |
17
UBS International Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Taiwan(Concluded) | |||||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. ADR |
9,000 | $ | 112,860 | ||||||||
Total Taiwan common stocks | 525,043 | ||||||||||
Thailand: 1.20% | |||||||||||
Italian-Thai Development PCL* | 318,200 | 48,978 | |||||||||
Kasikornbank PCL | 69,200 | 299,572 | |||||||||
Total Thailand common stocks | 348,550 | ||||||||||
United Kingdom: 17.59% | |||||||||||
Acergy SA | 5,277 | 129,324 | |||||||||
Anglo American PLC* | 1,867 | 97,091 | |||||||||
Barclays PLC | 51,692 | 210,872 | |||||||||
BG Group PLC | 7,662 | 154,818 | |||||||||
BP PLC | 56,411 | 409,453 | |||||||||
Carnival PLC | 4,929 | 229,161 | |||||||||
Cobham PLC | 29,759 | 94,418 | |||||||||
GlaxoSmithKline PLC | 13,269 | 256,527 | |||||||||
HSBC Holdings PLC | 17,772 | 180,409 | |||||||||
Imperial Tobacco Group PLC | 7,596 | 233,069 | |||||||||
Lloyds Banking Group PLC* | 364,847 | 373,723 | |||||||||
Man Group PLC | 56,607 | 261,238 | |||||||||
Prudential PLC | 23,818 | 248,059 | |||||||||
Reckitt Benckiser Group PLC | 2,689 | 147,783 | |||||||||
Rio Tinto PLC | 6,185 | 432,635 | |||||||||
Sage Group PLC | 45,130 | 192,370 | |||||||||
Scottish & Southern Energy PLC | 10,161 | 194,065 | |||||||||
Standard Chartered PLC | 8,965 | 241,179 | |||||||||
Tullow Oil PLC | 13,291 | 261,304 |
Shares | Value | ||||||||||
Vodafone Group PLC | 198,084 | $ | 512,045 | ||||||||
Xstrata PLC | 11,357 | 266,574 | |||||||||
Total United Kingdom common stocks | 5,126,117 | ||||||||||
Total common stocks (cost $20,223,126) |
28,031,961 | ||||||||||
Preferred stock: 0.85% | |||||||||||
Germany: 0.85% | |||||||||||
Volkswagen AG, Preference Shares (cost $141,249) |
1,530 | 248,207 | |||||||||
Participation note: 0.33% | |||||||||||
India: 0.33% | |||||||||||
Housing Development & Infrastructure Limited, expires 08/10/12* (cost $139,284) |
22,000 | 95,916 | |||||||||
Short-term investment: 2.22% | |||||||||||
Investment company: 2.22% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $646,228) |
646,228 | 646,228 | |||||||||
Investment of cash collateral from securities loaned: 2.87% | |||||||||||
UBS Private Money Market Fund LLC2 (cost $835,957) |
835,957 | 835,957 | |||||||||
Total investments: 102.45% (cost $21,985,844) |
29,858,269 | ||||||||||
Liabilities, in excess of cash and other assets: (2.45)% |
(713,513 | ) | |||||||||
Net assets: 100.00% | $ | 29,144,756 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 8,153,588 | |||||
Gross unrealized depreciation | (281,163 | ) | |||||
Net unrealized appreciation of investments | $ | 7,872,425 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
18
UBS International Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
2 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 722,032 | $ | 7,059,111 | $ | 7,134,915 | $ | 646,228 | $ | 714 | |||||||||||||
UBS Private Money Market Fund LLC1 |
471,729 | 4,807,286 | 4,443,058 | 835,957 | 5,079 | ||||||||||||||||||
$ | 1,193,761 | $ | 11,866,397 | $ | 11,577,973 | $ | 1,482,185 | $ | 5,793 |
1 The advisor does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements for further information.
ADR American depositary receipt
CDI Chess depositary interest
CVA Dutch certificationdepository certificate
GDR Global depositary receipt
OJSC Open joint stock company
Preference shares A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.
Forward foreign currency contracts
UBS International Equity Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
JPMorgan Chase Bank | AUD | 360,000 | USD | 348,726 | 03/03/11 | $ | (16,796 | ) | |||||||||||
JPMorgan Chase Bank | BRL | 340,000 | USD | 193,182 | 03/03/11 | (9,029 | ) | ||||||||||||
JPMorgan Chase Bank | CAD | 145,000 | USD | 141,741 | 03/03/11 | (3,921 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 565,000 | USD | 741,360 | 03/03/11 | (13,544 | ) | ||||||||||||
JPMorgan Chase Bank | GBP | 155,000 | USD | 242,845 | 03/03/11 | 1,288 | |||||||||||||
JPMorgan Chase Bank | HKD | 1,360,000 | USD | 175,290 | 03/03/11 | 235 | |||||||||||||
JPMorgan Chase Bank | JPY | 33,900,000 | USD | 407,311 | 03/03/11 | (10,483 | ) | ||||||||||||
JPMorgan Chase Bank | NOK | 2,270,000 | USD | 366,842 | 03/03/11 | (21,080 | ) | ||||||||||||
JPMorgan Chase Bank | THB | 7,880,000 | USD | 260,582 | 03/03/11 | (542 | ) | ||||||||||||
JPMorgan Chase Bank | TWD | 11,600,000 | USD | 383,725 | 03/03/11 | (14,656 | ) | ||||||||||||
JPMorgan Chase Bank | ZAR | 3,230,000 | USD | 445,326 | 03/03/11 | (40,948 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 214,269 | AUD | 215,000 | 03/03/11 | 4,029 | |||||||||||||
JPMorgan Chase Bank | USD | 601,888 | CHF | 600,000 | 03/03/11 | 40,222 | |||||||||||||
JPMorgan Chase Bank | USD | 1,359,648 | EUR | 1,030,000 | 03/03/11 | 16,549 | |||||||||||||
JPMorgan Chase Bank | USD | 240,621 | GBP | 155,000 | 03/03/11 | 936 | |||||||||||||
JPMorgan Chase Bank | USD | 174,964 | HKD | 1,360,000 | 03/03/11 | 91 | |||||||||||||
JPMorgan Chase Bank | USD | 1,478,931 | JPY | 123,200,000 | 03/03/11 | 39,421 | |||||||||||||
JPMorgan Chase Bank | USD | 181,269 | KRW | 210,000,000 | 03/03/11 | 3,216 | |||||||||||||
JPMorgan Chase Bank | USD | 168,966 | MXN | 2,130,000 | 03/03/11 | 2,780 | |||||||||||||
JPMorgan Chase Bank | USD | 167,938 | PLN | 515,000 | 03/03/11 | 5,390 | |||||||||||||
JPMorgan Chase Bank | USD | 411,628 | SEK | 2,900,000 | 03/03/11 | 18,692 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 1,850 |
19
UBS International Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
Currency type abbreviations:
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
JPY Japanese Yen
KRW Korean Won
MXN Mexican Peso
NOK Norwegian Krone
PLN Polish Zloty
SEK Swedish Krona
THB Thai Baht
TWD New Taiwan Dollar
USD United States Dollar
ZAR South African Rand
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 27,683,411 | $ | 348,550 | $ | | $ | 28,031,961 | |||||||||||
Preferred stock | 248,207 | | | 248,207 | |||||||||||||||
Participation note | | 95,916 | | 95,916 | |||||||||||||||
Short-term investment | | 646,228 | | 646,228 | |||||||||||||||
Investment of cash collateral from securities loaned | | 835,957 | | 835,957 | |||||||||||||||
Other financial instruments1 | | 1,850 | | 1,850 | |||||||||||||||
Total | $ | 27,931,618 | $ | 1,928,501 | $ | | $ | 29,860,119 |
1 Other financial instruments include forward foreign currency contracts.
See accompanying notes to financial statements.
20
UBS Market Neutral Multi-Strategy Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Market Neutral Multi-Strategy Fund (the "Fund") declined 1.50% (Class A shares declined 6.90% after the deduction of the maximum sales charge), while Class Y shares declined 1.30%. The Fund's benchmark, the Citigroup Three-Month US Treasury Bill Index (the "Index"), returned 0.08% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 23; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund generated a negative return during the reporting period and lagged the Index. The Fund's portfolio is allocated among four unique components, or "sleeves," consisting of US fundamental, European fundamental, global quantitative and event-driven disciplines. The Fund's underperformance was driven by the negative returns generated by the European fundamental sleeve.
During the reporting period Japanese futures were used to hedge stock-specific exposure. Currency forwards were used to reduce an unwanted currency exposure. The results of derivatives use during the period were within our expectations.
Portfolio performance summary1
What worked
• The global quantitative sleeve was the largest contributor to performance during the reporting period. The global quantitative sleeve is based on our proprietary multi-factor model that captures key fundamental-driven investment themes: valuation, capital use, quality, growth and market behavior. Each factor is designed to have zero correlation to all other factors.
Overall, the sleeve performed well during the reporting period, although returns from the various factors were widely dispersed, with capital use and quality being the most positive contributors to performance. On an industry level, materials and industrials were the largest positive contributors. Materials was primarily driven by strategic positions in companies exposed to base metals. Industrials benefited from positions in Swedish, German and UK companies exposed to construction in emerging markets. On a country level, China (short position) and Hong Kong (long position) contributed most positively. The strategy positioning remains with relatively small sector bets, heavily weighted towards value factors, and short China and selected European financials.
• Overall, the event-driven sleeve added value over the six months ended December 31, 2010. The event-driven sleeve seeks to identify and capitalize on specific events, such as changes in major global equity indices.
Most of the indices covered by the strategy positively contributed to performance during the reporting period. Morgan Stanley Capital International (MSCI) semi-annual review, with index changes effective on December 1, 2010, was the dominating contributor to performance. In addition, the strategy benefited from positions triggered by changes to the Russell and Standard & Poor (S&P) indices. In contrast, changes to the STOXX and FTSE UK indices were a slight drag on performance during the reporting period.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
21
UBS Market Neutral Multi-Strategy Fund
• Certain components of the US fundamental sleeve added value. Taking long positions in stocks that were identified as offering the most potential, and taking short positions in stocks that offered the least potential, was sometimes rewarded. However, this was largely offset by macro-driven factors and a high correlation among US stocks during the reporting period.
• Our strategic allocation among the various sleeves was beneficial. In particular, allocating a larger portion of the Fund's portfolio to the global quantitative sleeve, and a smaller portion to the European fundamental sleeve, was a positive for performance.
What didn't work
• The European fundamental sleeve produced poor results and detracted from results. Within this sleeve, having an overweight to higher quality companies and an underweight to more cyclical companies was a negative for performance. As the reporting period progressed, investor risk aversion abated, which resulted in the outperformance of lower quality companies. In addition, robust growth in emerging market countries led to strong results for cyclical European companies.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
22
UBS Market Neutral Multi-Strategy Fund
Total returns for periods ended 12/31/10 (unaudited)
6 months | Inception1 | ||||||||||
Before deducting maximum sales charge | |||||||||||
Class A2 | (1.50 | )% | (1.50 | )% | |||||||
Class C3 | (1.80 | ) | (1.80 | ) | |||||||
Class Y4 | (1.30 | ) | (1.30 | ) | |||||||
After deducting maximum sales charge | |||||||||||
Class A2 | (6.90 | )% | (6.90 | )% | |||||||
Class C3 | (2.78 | ) | (2.78 | ) | |||||||
Citigroup Three-Month US Treasury Bill Index5 | 0.08 | % | 0.08 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A4.13% and 3.55%; Class C4.88% and 4.30%; Class Y3.88% and 3.30%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses, and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses, and securities loan fees and dividend expenses for securities sold short), through the 12-month period ending October 27, 2011, do not exceed 1.75% for Class A shares, 2.50% for Class C shares and 1.50% for Class Y shares. 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.
1 Inception date of all shares of UBS Market Neutral Multi-Strategy Fund and the index is June 30, 2010.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees.
4 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
5 The Citigroup Three-Month US Treasury Bill Index is an unmanaged index reflecting monthly return equivalents of yield averages that are not marked to the market and an average of the last three 3-month T-bill month-end rates. 3-month T-bills are the short-term debt obligations of the US government. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
23
UBS Market Neutral Multi-Strategy Fund
Top ten equity holdings (unaudited)1,2
As of December 31, 2010
Percentage of net assets |
|||||||
Apple, Inc. | 0.9 | % | |||||
Illinois Tool Works, Inc. | 0.9 | ||||||
Ultra Petroleum Corp. | 0.8 | ||||||
FedEx Corp. | 0.8 | ||||||
Danaher Corp. | 0.6 | ||||||
Broadcom Corp., Class A | 0.6 | ||||||
Avon Products, Inc. | 0.6 | ||||||
Kloeckner & Co. SE | 0.6 | ||||||
Fortune Brands, Inc. | 0.6 | ||||||
General Dynamics Corp. | 0.6 | ||||||
Total | 7.0 | % |
1 Only long positions are considered for top ten holdings.
2 Figures represent the direct investments of UBS Market Neutral Multi-Strategy Fund. Figures would be different if a breakdown of the underlying investment companies was included.
24
UBS Market Neutral Multi-Strategy Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 1.55 | % | |||||
Air freight & logistics | 1.79 | ||||||
Airlines | 0.77 | ||||||
Auto components | 1.08 | ||||||
Automobiles | 0.67 | ||||||
Beverages | 1.21 | ||||||
Biotechnology | 1.54 | ||||||
Building products | 0.47 | ||||||
Capital markets | 1.13 | ||||||
Chemicals | 3.20 | ||||||
Commercial banks | 2.42 | ||||||
Commercial services & supplies | 0.22 | ||||||
Communications equipment | 0.86 | ||||||
Computers & peripherals | 1.53 | ||||||
Construction & engineering | 0.55 | ||||||
Construction materials | 0.19 | ||||||
Consumer finance | 0.19 | ||||||
Containers & packaging | 0.37 | ||||||
Distributors | 0.02 | ||||||
Diversified consumer services | 0.15 | ||||||
Diversified financial services | 1.08 | ||||||
Diversified telecommunication services | 0.58 | ||||||
Electric utilities | 2.75 | ||||||
Electrical equipment | 0.86 | ||||||
Electronic equipment, instruments & components | 1.56 | ||||||
Energy equipment & services | 1.85 | ||||||
Food & staples retailing | 1.34 | ||||||
Food products | 2.77 | ||||||
Gas utilities | 0.38 | ||||||
Health care equipment & supplies | 1.73 | ||||||
Health care providers & services | 1.24 | ||||||
Hotels, restaurants & leisure | 2.17 | ||||||
Household durables | 0.94 | ||||||
Household products | 0.83 | ||||||
Independent power producers & energy traders | 0.29 | ||||||
Industrial conglomerates | 0.29 | ||||||
Insurance | 2.67 | ||||||
Internet & catalog retail | 0.63 | ||||||
Internet software & services | 0.41 | ||||||
IT services | 0.93 | ||||||
Leisure equipment & products | 0.43 | ||||||
Life sciences tools & services | 0.68 | ||||||
Machinery | 5.76 | ||||||
Marine | 0.14 | ||||||
Media | 2.61 | ||||||
Metals & mining | 2.86 | ||||||
Multiline retail | 0.37 | ||||||
Multi-utilities | 0.95 | ||||||
Office electronics | 0.08 | ||||||
Oil, gas & consumable fuels | 5.40 | ||||||
Paper & forest products | 0.35 | ||||||
Personal products | 0.77 | ||||||
Pharmaceuticals | 2.01 | ||||||
Professional services | 0.29 | % | |||||
Real estate investment trust (REIT) | 1.13 | ||||||
Real estate management & development | 1.12 | ||||||
Road & rail | 1.93 | ||||||
Semiconductors & semiconductor equipment | 2.71 | ||||||
Software | 3.10 | ||||||
Specialty retail | 1.79 | ||||||
Textiles, apparel & luxury goods | 1.20 | ||||||
Thrifts & mortgage finance | 0.11 | ||||||
Tobacco | 0.32 | ||||||
Trading companies & distributors | 1.19 | ||||||
Transportation infrastructure | 0.28 | ||||||
Water utilities | 0.08 | ||||||
Wireless telecommunication services | 1.02 | ||||||
Total common stocks | 83.89 | % | |||||
Preferred stocks | 0.55 | ||||||
Investment companies | |||||||
SPDR S&P 500 ETF Trust | 0.63 | ||||||
SPDR S&P MidCap 400 ETF Trust | 0.10 | ||||||
Total investment companies | 0.73 | % | |||||
Short-term investment | 34.10 | ||||||
Total investments before investments sold short | 119.27 | % | |||||
Investments sold short | |||||||
Common stocks | |||||||
Aerospace & defense | (1.36 | ) | |||||
Air freight & logistics | (1.47 | ) | |||||
Airlines | (0.55 | ) | |||||
Auto components | (0.56 | ) | |||||
Automobiles | (0.90 | ) | |||||
Beverages | (1.70 | ) | |||||
Biotechnology | (0.65 | ) | |||||
Building products | (0.45 | ) | |||||
Capital markets | (0.97 | ) | |||||
Chemicals | (3.18 | ) | |||||
Commercial banks | (2.74 | ) | |||||
Commercial services & supplies | (0.56 | ) | |||||
Communications equipment | (0.79 | ) | |||||
Computers & peripherals | (1.66 | ) | |||||
Construction & engineering | (0.89 | ) | |||||
Construction materials | (0.33 | ) | |||||
Containers & packaging | (0.25 | ) | |||||
Distributors | (0.28 | ) | |||||
Diversified consumer services | (0.09 | ) | |||||
Diversified financial services | (0.69 | ) | |||||
Diversified telecommunication services | (1.09 | ) | |||||
Electric utilities | (1.83 | ) | |||||
Electrical equipment | (1.77 | ) | |||||
Electronic equipment, instruments & components | (1.00 | ) | |||||
Energy equipment & services | (1.18 | ) |
25
UBS Market Neutral Multi-Strategy Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2010
Investments sold short(Concluded) | |||||||
Common stocks(Concluded) | |||||||
Food & staples retailing | (1.38 | )% | |||||
Food products | (2.84 | ) | |||||
Gas utilities | (0.25 | ) | |||||
Health care equipment & supplies | (1.08 | ) | |||||
Health care providers & services | (1.33 | ) | |||||
Health care technology | (0.17 | ) | |||||
Hotels, restaurants & leisure | (2.10 | ) | |||||
Household durables | (0.71 | ) | |||||
Household products | (0.52 | ) | |||||
Independent power producers & energy traders | (0.72 | ) | |||||
Industrial conglomerates | (0.23 | ) | |||||
Insurance | (2.58 | ) | |||||
Internet & catalog retail | (0.38 | ) | |||||
Internet software & services | (0.62 | ) | |||||
IT services | (1.06 | ) | |||||
Leisure equipment & products | (0.38 | ) | |||||
Life sciences tools & services | (1.16 | ) | |||||
Machinery | (5.45 | ) | |||||
Marine | (0.88 | ) | |||||
Media | (2.45 | ) | |||||
Metals & mining | (3.26 | ) | |||||
Multiline retail | (0.96 | ) | |||||
Multi-utilities | (1.77 | ) | |||||
Oil, gas & consumable fuels | (5.66 | ) | |||||
Paper & forest products | (0.31 | ) | |||||
Personal products | (0.26 | ) | |||||
Pharmaceuticals | (2.23 | ) | |||||
Professional services | (0.36 | ) | |||||
Real estate investment trust (REIT) | (1.79 | ) | |||||
Real estate management & development | (0.67 | ) | |||||
Road & rail | (1.41 | ) | |||||
Semiconductors & semiconductor equipment | (2.81 | ) | |||||
Software | (2.36 | ) | |||||
Specialty retail | (2.26 | ) | |||||
Textiles, apparel & luxury goods | (0.87 | ) | |||||
Thrifts & mortgage finance | (0.32 | ) | |||||
Trading companies & distributors | (0.93 | ) | |||||
Transportation infrastructure | (0.51 | ) | |||||
Water utilities | (0.41 | ) | |||||
Wireless telecommunication services | (0.38 | ) | |||||
Total common stocks | (82.76 | )% | |||||
Rights | (0.00 | )2 | |||||
Total investments sold short | (82.76 | )% | |||||
Total investments, net of investments sold short | 36.51 | ||||||
Cash and other assets, less liabilities | 63.49 | ||||||
Net assets | 100.00 | % |
1 Figures represent the industry breakdown of direct investments of UBS Market Neutral Multi-Strategy Fund. Figures would be different if a breakdown of the underlying investment companies' industry diversification was included.
2 Amount represents less than 0.005%.
26
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 83.89% | |||||||||||
Australia: 0.62% | |||||||||||
ASX Ltd. NPV | 602 | $ | 23,201 | ||||||||
BHP Billiton Ltd. | 498 | 23,048 | |||||||||
Caltex Australia Ltd. | 1,487 | 21,855 | |||||||||
Challenger Ltd. | 6,170 | 29,660 | |||||||||
Energy Resources of Australia Ltd. | 1,585 | 18,043 | |||||||||
Equinox Minerals Ltd.* | 3,634 | 22,264 | |||||||||
Fortescue Metals Group Ltd.* | 3,163 | 21,158 | |||||||||
Total Australia common stocks | 159,229 | ||||||||||
Austria: 0.74% | |||||||||||
Bwin Interactive Entertainment AG | 558 | 21,989 | |||||||||
Erste Group Bank AG | 485 | 22,774 | |||||||||
IMMOFINANZ AG NPV* | 5,881 | 25,062 | |||||||||
OMV AG NPV | 522 | 21,694 | |||||||||
Strabag SE | 784 | 21,477 | |||||||||
Voestalpine AG NPV | 1,156 | 55,071 | |||||||||
Wiener Staedtische Versicherung AG | 448 | 23,285 | |||||||||
Total Austria common stocks | 191,352 | ||||||||||
Belgium: 0.20% | |||||||||||
Delhaize Group SA | 326 | 24,078 | |||||||||
Mobistar SA | 403 | 26,124 | |||||||||
Total Belgium common stocks | 50,202 | ||||||||||
Bermuda: 0.15% | |||||||||||
Aspen Insurance Holdings Ltd.1 | 700 | 20,034 | |||||||||
Endurance Specialty Holdings Ltd.1 | 400 | 18,428 | |||||||||
Total Bermuda common stocks | 38,462 | ||||||||||
Brazil: 0.19% | |||||||||||
Banco Bradesco SA ADR1 | 1,110 | 22,522 | |||||||||
Cia Energetica de Minas Gerais ADR1 | 1,600 | 26,544 | |||||||||
Total Brazil common stocks | 49,066 | ||||||||||
Canada: 2.70% | |||||||||||
Agrium, Inc. | 300 | 27,607 | |||||||||
Brookfield Properties Corp. | 2,000 | 35,321 | |||||||||
Canadian Tire Corp. Ltd., Class A | 300 | 20,574 | |||||||||
Centerra Gold, Inc. | 1,100 | 21,949 | |||||||||
CGI Group, Inc., Class A* | 1,700 | 29,408 | |||||||||
CI Financial Corp.* | 1,000 | 22,629 | |||||||||
Domtar Corp.1 | 300 | 22,776 | |||||||||
Eldorado Gold Corp. | 1,100 | 20,467 | |||||||||
Empire Co., Ltd., Class A | 400 | 22,456 | |||||||||
Genworth MI Canada, Inc. | 1,000 | 27,748 | |||||||||
Goldcorp, Inc. | 400 | 18,457 | |||||||||
Gran Tierra Energy, Inc.* | 2,700 | 21,968 | |||||||||
Groupe Aeroplan, Inc. | 1,600 | 21,997 | |||||||||
Industrial Alliance Insurance & Financial Services, Inc. |
700 | 25,915 |
Shares | Value | ||||||||||
Lululemon Athletica, Inc.*1 | 300 | $ | 20,526 | ||||||||
Manulife Financial Corp. | 2,100 | 36,221 | |||||||||
Open Text Corp.* | 500 | 22,996 | |||||||||
Petrominerales Ltd. | 1,300 | 43,355 | |||||||||
Potash Corp of Saskatchewan, Inc. | 160 | 24,854 | |||||||||
Precision Drilling Corp.* | 2,900 | 28,000 | |||||||||
Research In Motion Ltd.* | 300 | 17,521 | |||||||||
Saputo, Inc. | 700 | 27,865 | |||||||||
Teck Resources Ltd., Class B | 1,000 | 62,144 | |||||||||
TMX Group, Inc.1 | 700 | 26,020 | |||||||||
Valeant Pharmaceuticals International, Inc.1 |
712 | 20,142 | |||||||||
Yamana Gold, Inc. | 2,000 | 25,686 | |||||||||
Total Canada common stocks | 694,602 | ||||||||||
Cayman Islands: 0.16% | |||||||||||
Fufeng Group Ltd. | 24,000 | 21,027 | |||||||||
Kingboard Laminates Holdings Ltd. | 20,500 | 20,836 | |||||||||
Total Cayman Islands common stocks | 41,863 | ||||||||||
China: 3.25% | |||||||||||
Agile Property Holdings Ltd. | 14,000 | 20,605 | |||||||||
Cathay Pacific Airways Ltd. | 12,000 | 33,115 | |||||||||
Cheung Kong Infrastructure Holdings Ltd. |
11,000 | 50,381 | |||||||||
China Everbright Ltd. | 10,000 | 22,592 | |||||||||
China Merchants Bank Co., Ltd., H Shares |
7,500 | 18,931 | |||||||||
China Oilfield Services Ltd., H Shares | 14,000 | 30,331 | |||||||||
China Petroleum & Chemical Corp. ADR1 |
200 | 19,138 | |||||||||
China Resources Cement Holdings Ltd.* | 32,000 | 24,290 | |||||||||
China Unicom Hong Kong Ltd. | 18,000 | 25,751 | |||||||||
China Wireless Technologies Ltd. | 28,000 | 17,471 | |||||||||
China Yurun Food Group Ltd. | 7,000 | 23,010 | |||||||||
CNOOC Ltd. | 10,000 | 23,724 | |||||||||
CNOOC Ltd. ADR1 | 100 | 23,837 | |||||||||
CSR Corp. Ltd., H Shares | 17,000 | 22,352 | |||||||||
Fantasia Holdings Group Co., Ltd. | 143,000 | 24,469 | |||||||||
Hong Kong Exchanges & Clearing Ltd. | 1,000 | 22,682 | |||||||||
Hongkong Electric Holdings Ltd. | 4,000 | 25,216 | |||||||||
Jiangsu Expressway Co., Ltd., H Shares | 22,000 | 25,190 | |||||||||
Link | 13,000 | 40,391 | |||||||||
Longfor Properties Co., Ltd. | 21,000 | 29,233 | |||||||||
Noble Group Ltd. | 13,000 | 21,982 | |||||||||
NWS Holdings Ltd. | 21,000 | 31,880 | |||||||||
PICC Property & Casualty Co., Ltd., H Shares* |
14,000 | 20,281 | |||||||||
SA SA International Holdings Ltd. | 26,000 | 16,223 | |||||||||
Shangri-La Asia Ltd. | 10,000 | 27,146 | |||||||||
Sino-Forest Corp.* | 1,000 | 23,424 |
27
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
China(Concluded) | |||||||||||
Sinopec Yizheng Chemical Fibre Co., Ltd., H Shares* |
40,000 | $ | 20,379 | ||||||||
Sun Hung Kai Properties Ltd. | 1,000 | 16,609 | |||||||||
Swire Pacific Ltd., Class A | 1,000 | 16,442 | |||||||||
Tencent Holdings Ltd. | 1,200 | 26,076 | |||||||||
United Laboratories International Holdings Ltd. |
10,000 | 20,533 | |||||||||
Weichai Power Co., Ltd., H Shares | 2,000 | 12,312 | |||||||||
Wheelock & Co., Ltd.. | 4,000 | 16,185 | |||||||||
Wynn Macau Ltd. | 9,600 | 21,490 | |||||||||
Zhaojin Mining Industry Co., Ltd. | 6,000 | 24,547 | |||||||||
Total China common stocks | 838,218 | ||||||||||
Denmark: 0.97% | |||||||||||
A.P. Moeller - Maersk A/S, Class B | 2 | 18,110 | |||||||||
Carlsberg A/S, Class B | 151 | 15,119 | |||||||||
Coloplast A/S, Class B | 297 | 40,359 | |||||||||
FLSmidth & Co. A/S | 248 | 23,653 | |||||||||
H Lundbeck A/S | 1,262 | 23,982 | |||||||||
Jyske Bank A/S* | 1,328 | 61,662 | |||||||||
Novo Nordisk A/S, Class B | 405 | 45,669 | |||||||||
Topdanmark A/S* | 169 | 22,344 | |||||||||
Total Denmark common stocks | 250,898 | ||||||||||
Finland: 0.35% | |||||||||||
Metso Oyj | 402 | 22,454 | |||||||||
Orion Oyj, Class B | 980 | 21,438 | |||||||||
UPM-Kymmene Oyj | 1,278 | 22,577 | |||||||||
Wartsila Oyj | 320 | 24,417 | |||||||||
Total Finland common stocks | 90,886 | ||||||||||
France: 1.69% | |||||||||||
BNP Paribas | 290 | 18,450 | |||||||||
Bureau Veritas SA | 277 | 20,995 | |||||||||
Casino Guichard Perrachon SA | 217 | 21,154 | |||||||||
CNP Assurances | 1,158 | 20,898 | |||||||||
Eurazeo | 296 | 21,949 | |||||||||
France Telecom SA | 1,108 | 23,090 | |||||||||
Hermes International NPV | 574 | 120,233 | |||||||||
Metropole Television SA | 807 | 19,519 | |||||||||
Publicis Groupe SA | 520 | 27,100 | |||||||||
Schneider Electric SA | 656 | 98,181 | |||||||||
Societe Generale | 383 | 20,585 | |||||||||
Valeo SA* | 413 | 23,436 | |||||||||
Total France common stocks | 435,590 | ||||||||||
Germany: 2.98% | |||||||||||
Adidas AG | 396 | 25,871 | |||||||||
Allianz SE1 | 211 | 25,075 | |||||||||
Axel Springer AG NPV | 138 | 22,498 |
Shares | Value | ||||||||||
Bayerische Motoren Werke AG | 300 | $ | 23,592 | ||||||||
Celesio AG | 301 | 7,481 | |||||||||
Deutsche Lufthansa AG* | 963 | 21,047 | |||||||||
Deutsche Post AG | 3,195 | 54,222 | |||||||||
Deutsche Telekom AG | 1,563 | 20,166 | |||||||||
Hannover Rueckversicherung AG | 393 | 21,078 | |||||||||
HeidelbergCement AG | 427 | 26,761 | |||||||||
Henkel AG & Co KGaA | 2,282 | 117,754 | |||||||||
Kloeckner & Co. SE* | 5,367 | 150,646 | |||||||||
Lanxess AG | 301 | 23,772 | |||||||||
Linde AG | 155 | 23,519 | |||||||||
Muenchener Rueckversicherungs-Gesellschaft AG |
178 | 26,985 | |||||||||
SAP AG | 228 | 11,608 | |||||||||
Symrise AG | 1,011 | 27,729 | |||||||||
ThyssenKrupp AG | 508 | 21,034 | |||||||||
Vossloh AG NPV | 909 | 116,004 | |||||||||
Total Germany common stocks | 766,842 | ||||||||||
India: 0.07% | |||||||||||
Tata Motors Ltd. ADR1 | 600 | 17,604 | |||||||||
Ireland: 0.74% | |||||||||||
Covidien PLC1 | 2,200 | 100,452 | |||||||||
Icon PLC ADR*1 | 1,000 | 21,900 | |||||||||
Seagate Technology PLC*1 | 4,600 | 69,138 | |||||||||
Total Ireland common stocks | 191,490 | ||||||||||
Isle of Man: 0.23% | |||||||||||
Playtech Ltd. | 9,114 | 60,249 | |||||||||
Israel: 0.20% | |||||||||||
Check Point Software Technologies Ltd.*1 |
1,100 | 50,886 | |||||||||
Italy: 0.44% | |||||||||||
Enel SpA | 5,746 | 28,717 | |||||||||
Finmeccanica SpA | 2,046 | 23,253 | |||||||||
Intesa Sanpaolo SpA | 8,208 | 22,266 | |||||||||
Parmalat SpA | 7,918 | 21,691 | |||||||||
Tod's SpA | 179 | 17,677 | |||||||||
Total Italy common stocks | 113,604 | ||||||||||
Japan: 8.18% | |||||||||||
77 Bank Ltd. | 4,000 | 21,234 | |||||||||
Aeon Co. Ltd. | 2,300 | 28,782 | |||||||||
Aeon Credit Service Co., Ltd. | 1,600 | 22,624 | |||||||||
Aisin Seiki Co., Ltd. | 700 | 24,770 | |||||||||
Ajinomoto Co., Inc. | 2,000 | 20,840 | |||||||||
Alps Electric Co., Ltd. | 1,900 | 22,045 | |||||||||
Aozora Bank Ltd. | 11,000 | 22,761 | |||||||||
Asahi Glass Co., Ltd. | 2,000 | 23,377 |
28
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Japan(Concluded) | |||||||||||
Asahi Kasei Corp. | 3,000 | $ | 19,584 | ||||||||
Canon, Inc. | 400 | 20,742 | |||||||||
Central Japan Railway Co. | 3 | 25,126 | |||||||||
Chubu Electric Power Co., Inc. | 700 | 17,209 | |||||||||
Cosmo Oil Co. Ltd. | 10,000 | 32,763 | |||||||||
Dai Nippon Printing Co., Ltd. | 1,000 | 13,622 | |||||||||
Daicel Chemical Industries Ltd. | 3,000 | 21,912 | |||||||||
Daihatsu Motor Co., Ltd. | 2,000 | 30,693 | |||||||||
Dainippon Sumitomo Pharma Co., Ltd. | 2,000 | 18,180 | |||||||||
Daito Trust Construction Co., Ltd. | 300 | 20,544 | |||||||||
Daiwa Securities Group, Inc. | 4,000 | 20,594 | |||||||||
Dentsu, Inc. | 800 | 24,841 | |||||||||
DIC Corp. | 11,000 | 24,658 | |||||||||
Fuji Electric Holdings Co., Ltd. | 7,000 | 21,813 | |||||||||
Fuji Heavy Industries Ltd. | 3,000 | 23,279 | |||||||||
Fukuyama Transporting Co., Ltd. | 4,000 | 21,283 | |||||||||
Funai Consulting Co., Ltd. | 4,800 | 30,565 | |||||||||
Hitachi Ltd. | 5,000 | 26,666 | |||||||||
Honda Motor Co., Ltd. | 600 | 23,759 | |||||||||
Idemitsu Kosan Co., Ltd. | 300 | 31,851 | |||||||||
Isuzu Motors Ltd. | 5,000 | 22,725 | |||||||||
ITOCHU Corp. | 3,000 | 30,373 | |||||||||
Kamigumi Co., Ltd. | 3,000 | 25,200 | |||||||||
Kao Corp. | 800 | 21,559 | |||||||||
Kawasaki Heavy Industries Ltd. | 7,000 | 23,537 | |||||||||
KDDI Corp. | 3 | 17,330 | |||||||||
Kinden Corp. | 3,000 | 27,713 | |||||||||
Komatsu Ltd. | 1,000 | 30,262 | |||||||||
Kuraray Co., Ltd. | 1,500 | 21,505 | |||||||||
Kyocera Corp. | 200 | 20,421 | |||||||||
Makino Milling Machine Co., Ltd.* | 3,000 | 24,720 | |||||||||
Marubeni Corp. | 4,000 | 28,132 | |||||||||
Maruichi Steel Tube Ltd. | 1,000 | 21,247 | |||||||||
MEIJI Holdings Co., Ltd. | 500 | 22,601 | |||||||||
Minebea Co., Ltd. | 4,000 | 25,225 | |||||||||
Mitsubishi Electric Corp. | 3,000 | 31,482 | |||||||||
Mitsubishi Materials Corp.* | 7,000 | 22,330 | |||||||||
Mitsubishi UFJ Financial Group, Inc. | 4,400 | 23,791 | |||||||||
Mitsubishi UFJ Lease & Finance Co., Ltd. | 570 | 22,606 | |||||||||
Mitsui & Co., Ltd. | 1,200 | 19,820 | |||||||||
Mitsui Chemicals, Inc. | 7,000 | 25,089 | |||||||||
Mitsui Mining & Smelting Co., Ltd. | 7,000 | 23,106 | |||||||||
Murata Manufacturing Co., Ltd. | 400 | 28,033 | |||||||||
NHK Spring Co., Ltd. | 2,000 | 21,751 | |||||||||
Nidec Corp. | 200 | 20,224 | |||||||||
Nippon Building Fund, Inc. | 3 | 30,780 | |||||||||
Nippon Meat Packers, Inc. | 2,000 | 26,136 | |||||||||
Nippon Shokubai Co., Ltd. | 2,000 | 20,692 | |||||||||
Nippon Telegraph & Telephone Corp. | 1,300 | 58,844 | |||||||||
Nippon Yusen KK | 4,000 | 17,736 | |||||||||
Nishi-Nippon City Bank Ltd. | 9,000 | 27,380 |
Shares | Value | ||||||||||
Nissan Chemical Industries Ltd. | 2,000 | $ | 25,939 | ||||||||
Nissan Motor Co., Ltd. | 2,400 | 22,850 | |||||||||
Nisshin Steel Co., Ltd. | 10,000 | 22,293 | |||||||||
Nitto Denko Corp. | 600 | 28,267 | |||||||||
NOK Corp. | 1,100 | 22,924 | |||||||||
NSK Ltd. | 3,000 | 27,122 | |||||||||
NTN Corp. | 4,000 | 21,234 | |||||||||
NTT Data Corp. | 6 | 20,774 | |||||||||
Ohashi Technica, Inc.* | 700 | 5,130 | |||||||||
Oriental Land Co., Ltd. | 200 | 18,524 | |||||||||
Osaka Gas Co., Ltd. | 6,000 | 23,279 | |||||||||
S.T. Corporation NPV* | 2,900 | 33,468 | |||||||||
Sapporo Hokuyo Holdings, Inc. | 4,200 | 19,658 | |||||||||
Sega Sammy Holdings, Inc. | 2,300 | 43,768 | |||||||||
Seino Holdings Corp. | 3,000 | 20,618 | |||||||||
SMC Corp. | 100 | 17,133 | |||||||||
Softbank Corp. | 600 | 20,774 | |||||||||
Sony Corp. | 600 | 21,631 | |||||||||
Sumitomo Corp. | 1,700 | 24,058 | |||||||||
Sumitomo Electric Industries Ltd. | 1,700 | 23,619 | |||||||||
Sumitomo Heavy Industries Ltd. | 3,000 | 19,288 | |||||||||
Sumitomo Mitsui Financial Group, Inc. | 600 | 21,372 | |||||||||
Sumitomo Trust & Banking Co., Ltd. | 4,000 | 25,225 | |||||||||
Taisei Corp. | 10,000 | 23,402 | |||||||||
TDK Corp. | 300 | 20,877 | |||||||||
Tosoh Corp. | 7,000 | 22,761 | |||||||||
Ube Industries Ltd. | 8,000 | 24,042 | |||||||||
Yamada Denki Co., Ltd. | 400 | 27,294 | |||||||||
Yamaguchi Financial Group, Inc. | 2,000 | 20,249 | |||||||||
Total Japan common stocks | 2,106,040 | ||||||||||
Luxembourg: 0.18% | |||||||||||
ArcelorMittal | 658 | 24,954 | |||||||||
Tenaris SA | 903 | 22,143 | |||||||||
Total Luxembourg common stocks | 47,097 | ||||||||||
Mexico: 0.21% | |||||||||||
Fomento Economico Mexicano SAB de CV ADR1 |
300 | 16,776 | |||||||||
Fresnillo PLC | 1,466 | 38,124 | |||||||||
Total Mexico common stocks | 54,900 | ||||||||||
Netherlands: 2.11% | |||||||||||
Aegon NV* | 3,470 | 21,219 | |||||||||
ASML Holding NV | 665 | 25,682 | |||||||||
Core Laboratories NV1 | 200 | 17,810 | |||||||||
Heineken NV | 1,270 | 62,266 | |||||||||
LyondellBasell Industries NV, Class A*1 | 700 | 24,080 | |||||||||
Randstad Holding NV* | 421 | 22,222 | |||||||||
Reed Elsevier NV | 6,907 | 85,440 | |||||||||
Royal Dutch Shell PLC, Class B | 645 | 21,269 | |||||||||
TNT NV | 4,530 | 119,556 |
29
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Netherlands(Concluded) | |||||||||||
Unilever NV CVA | 4,593 | $ | 143,007 | ||||||||
Total Netherlands common stocks | 542,551 | ||||||||||
Norway: 0.36% | |||||||||||
Cermaq ASA* | 1,495 | 23,059 | |||||||||
DnB NOR ASA | 1,273 | 17,868 | |||||||||
Petroleum Geo-Services ASA* | 1,624 | 25,285 | |||||||||
Yara International ASA | 450 | 26,028 | |||||||||
Total Norway common stocks | 92,240 | ||||||||||
Russia: 0.23% | |||||||||||
Gazprom OAO ADR | 836 | 21,109 | |||||||||
United Co. RUSAL PLC* | 24,000 | 36,805 | |||||||||
Total Russia common stocks | 57,914 | ||||||||||
Singapore: 0.52% | |||||||||||
Avago Technologies Ltd.1 | 800 | 22,776 | |||||||||
Golden Agri-Resources Ltd. | 39,000 | 24,311 | |||||||||
SembCorp Marine Ltd. | 8,000 | 33,475 | |||||||||
UOL Group Ltd. | 7,000 | 25,909 | |||||||||
Yangzijiang Shipbuilding Holdings Ltd. | 19,000 | 28,278 | |||||||||
Total Singapore common stocks | 134,749 | ||||||||||
Spain: 0.48% | |||||||||||
Abertis Infraestructuras SA | 1,132 | 20,353 | |||||||||
Criteria Caixacorp SA | 3,128 | 16,645 | |||||||||
Fomento de Construcciones y Contratas SA |
711 | 18,679 | |||||||||
Mapfre SA | 6,570 | 18,244 | |||||||||
Red Electrica Corp. SA | 400 | 18,815 | |||||||||
Repsol YPF SA | 1,080 | 30,091 | |||||||||
Total Spain common stocks | 122,827 | ||||||||||
Sweden: 1.96% | |||||||||||
Alfa Laval AB | 1,280 | 26,968 | |||||||||
Assa Abloy AB, Class B | 3,515 | 99,038 | |||||||||
Atlas Copco AB, Class B | 1,952 | 44,144 | |||||||||
Autoliv, Inc. | 300 | 23,682 | |||||||||
Boliden AB | 1,301 | 26,443 | |||||||||
Electrolux AB | 778 | 22,094 | |||||||||
Investor AB, Class B | 1,052 | 22,508 | |||||||||
Kinnevik Investment AB, Class B | 1,023 | 20,838 | |||||||||
Millicom International Cellular SA SDR | 274 | 26,318 | |||||||||
Ratos AB, Class B | 604 | 22,361 | |||||||||
Scania AB, Class B | 1,119 | 25,739 | |||||||||
Securitas AB, Class B | 1,888 | 22,078 | |||||||||
Skandinaviska Enskilda Banken AB, Class A |
2,746 | 22,905 | |||||||||
SKF AB, Class B | 809 | 23,047 | |||||||||
Svenska Cellulosa AB, Class B | 1,375 | 21,712 |
Shares | Value | ||||||||||
Tele2 AB, Class B | 1,032 | $ | 21,420 | ||||||||
Volvo AB, Class B* | 1,852 | 32,631 | |||||||||
Total Sweden common stocks | 503,926 | ||||||||||
Switzerland: 1.37% | |||||||||||
Cie Financiere Richemont SA, Class A | 379 | 22,294 | |||||||||
Ferrexpo PLC | 4,228 | 27,416 | |||||||||
GAM Holding AG* | 1,005 | 16,607 | |||||||||
Givaudan SA | 58 | 62,590 | |||||||||
Nestle SA | 2,532 | 148,264 | |||||||||
STMicroelectronics NV | 3,113 | 32,193 | |||||||||
Sulzer AG | 147 | 22,404 | |||||||||
Transocean Ltd.*1 | 300 | 20,853 | |||||||||
Total Switzerland common stocks | 352,621 | ||||||||||
United Kingdom: 5.81% | |||||||||||
3i Group PLC | 4,178 | 21,398 | |||||||||
Acergy SA ADR1 | 900 | 21,906 | |||||||||
AstraZeneca PLC | 518 | 23,599 | |||||||||
Balfour Beatty PLC | 5,555 | 27,100 | |||||||||
BG Group PLC | 1,033 | 20,873 | |||||||||
British Airways PLC* | 5,003 | 21,256 | |||||||||
British Land Co., PLC | 32 | 262 | |||||||||
Ensco International PLC ADR1 | 700 | 37,366 | |||||||||
Firstgroup PLC | 4,573 | 28,398 | |||||||||
Halma PLC | 21,551 | 120,625 | |||||||||
Home Retail Group PLC | 22,471 | 66,040 | |||||||||
ICAP PLC | 2,749 | 22,930 | |||||||||
Intercontinental Hotels Group PLC | 1,062 | 20,581 | |||||||||
International Power PLC | 7,153 | 48,802 | |||||||||
Jardine Lloyd Thompson Group PLC | 12,769 | 125,222 | |||||||||
Kazakhmys | 867 | 21,817 | |||||||||
Kingfisher PLC | 4,951 | 20,332 | |||||||||
Legal & General Group | 14,191 | 21,406 | |||||||||
Marks & Spencer Group PLC | 4,517 | 25,987 | |||||||||
Pearson PLC | 1,678 | 26,371 | |||||||||
Premier Oil PLC* | 806 | 24,504 | |||||||||
Reckitt Benckiser Group PLC | 782 | 42,977 | |||||||||
Rio Tinto PLC | 345 | 24,133 | |||||||||
Rolls-Royce Group PLC* | 2,147 | 20,854 | |||||||||
Sage Group PLC | 27,517 | 117,293 | |||||||||
Scottish & Southern Energy PLC | 1,176 | 22,460 | |||||||||
Soco International PLC* | 6,600 | 38,032 | |||||||||
Stagecoach Group PLC | 32,885 | 108,797 | |||||||||
Tesco PLC | 13,528 | 89,639 | |||||||||
TUI Travel PLC | 12,428 | 47,705 | |||||||||
Vodafone Group PLC | 40,803 | 105,475 | |||||||||
Weir Group PLC | 813 | 22,562 | |||||||||
William Hill PLC | 23,562 | 62,708 | |||||||||
Willis Group Holdings PLC1 | 600 | 20,778 | |||||||||
WPP PLC | 2,239 | 27,560 | |||||||||
Total United Kingdom common stocks | 1,497,748 |
30
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
United States: 46.80% | |||||||||||
ACE Ltd.1 | 400 | $ | 24,900 | ||||||||
Activision Blizzard, Inc.1 | 1,800 | 22,392 | |||||||||
Adobe Systems, Inc.* | 3,000 | 92,340 | |||||||||
Advance Auto Parts, Inc.1 | 400 | 26,460 | |||||||||
Aegerion Pharmaceuticals, Inc.* | 2,400 | 34,008 | |||||||||
Aflac, Inc.1 | 1,200 | 67,716 | |||||||||
Agilent Technologies, Inc.*1 | 500 | 20,715 | |||||||||
Alexandria Real Estate Equities, Inc.1 | 300 | 21,978 | |||||||||
Alexion Pharmaceuticals, Inc.*1 | 1,400 | 112,770 | |||||||||
Allergan, Inc.1 | 2,000 | 137,340 | |||||||||
Amazon.com, Inc.*1 | 300 | 54,000 | |||||||||
Ameren Corp.1 | 900 | 25,371 | |||||||||
American Capital Ltd.*1 | 2,900 | 21,924 | |||||||||
American Electric Power Co., Inc.1 | 3,900 | 140,322 | |||||||||
American International Group, Inc.*1 | 400 | 23,048 | |||||||||
American Water Works Co., Inc. | 800 | 20,232 | |||||||||
Ameriprise Financial, Inc.1 | 400 | 23,020 | |||||||||
Amgen, Inc.*1 | 400 | 21,960 | |||||||||
Amylin Pharmaceuticals, Inc.* | 2,600 | 38,246 | |||||||||
Amyris, Inc.* | 1,300 | 34,684 | |||||||||
Anacor Pharmaceuticals, Inc.* | 5,700 | 30,609 | |||||||||
Annaly Capital Management, Inc.1 | 1,000 | 17,920 | |||||||||
AnnTaylor Stores Corp.*1 | 1,000 | 27,390 | |||||||||
Apache Corp.1 | 200 | 23,846 | |||||||||
Apartment Investment & Management Co., Class A1 |
900 | 23,256 | |||||||||
Apollo Group, Inc., Class A*1 | 1,000 | 39,490 | |||||||||
Apple, Inc.*1 | 720 | 232,243 | |||||||||
Arch Coal, Inc.1 | 2,200 | 77,132 | |||||||||
Assured Guaranty Ltd.1 | 1,200 | 21,240 | |||||||||
Autodesk, Inc.*1 | 3,800 | 145,160 | |||||||||
Avon Products, Inc. | 5,300 | 154,018 | |||||||||
Baker Hughes, Inc.1 | 1,400 | 80,038 | |||||||||
Bank of New York Mellon Corp.1 | 1,400 | 42,280 | |||||||||
Baxter International, Inc.1 | 700 | 35,434 | |||||||||
Becton Dickinson & Co.1 | 700 | 59,164 | |||||||||
Berry Petroleum Co., Class A1 | 600 | 26,220 | |||||||||
Bill Barrett Corp.*1 | 700 | 28,791 | |||||||||
Biogen Idec, Inc.*1 | 300 | 20,115 | |||||||||
Body Central Corp.* | 2,000 | 28,540 | |||||||||
Boeing Co.1 | 300 | 19,578 | |||||||||
Boise, Inc.1 | 5,700 | 45,201 | |||||||||
Boston Scientific Corp.* | 2,500 | 18,925 | |||||||||
Bravo Brio Restaurant Group, Inc.* | 1,500 | 28,755 | |||||||||
Broadcom Corp., Class A1 | 3,600 | 156,780 | |||||||||
Bruker Corp.*1 | 1,500 | 24,900 | |||||||||
C.H. Robinson Worldwide, Inc. | 300 | 24,057 | |||||||||
C.R. Bard, Inc.1 | 200 | 18,354 | |||||||||
Cablevision Systems Corp., Class A1 | 600 | 20,304 | |||||||||
Calpine Corp.* | 2,000 | 26,680 |
Shares | Value | ||||||||||
Campus Crest Communities, Inc. | 2,200 | $ | 30,844 | ||||||||
Cardinal Health, Inc. | 700 | 26,817 | |||||||||
CareFusion Corp.*1 | 500 | 12,850 | |||||||||
Carnival Corp.1 | 1,300 | 59,943 | |||||||||
Caterpillar, Inc. | 200 | 18,732 | |||||||||
CBL & Associates Properties, Inc.1 | 1,600 | 28,000 | |||||||||
CBS Corp., Class B1 | 2,200 | 41,910 | |||||||||
Celanese Corp., Series A | 2,500 | 102,925 | |||||||||
Celgene Corp.* | 400 | 23,656 | |||||||||
Cephalon, Inc.* | 400 | 24,688 | |||||||||
CF Industries Holdings, Inc.1 | 200 | 27,030 | |||||||||
Cie Generale de Geophysique-Veritas ADR*1 |
900 | 27,531 | |||||||||
Cimarex Energy Co.1 | 500 | 44,265 | |||||||||
Cisco Systems, Inc.*1 | 3,400 | 68,782 | |||||||||
Citigroup, Inc.*1 | 4,900 | 23,177 | |||||||||
Citrix Systems, Inc.*1 | 400 | 27,364 | |||||||||
City National Corp.1 | 400 | 24,544 | |||||||||
Cliffs Natural Resources, Inc.1 | 300 | 23,403 | |||||||||
CMS Energy Corp1 | 1,200 | 22,320 | |||||||||
Coach, Inc.1 | 1,000 | 55,310 | |||||||||
Coca-Cola Co.1 | 300 | 19,731 | |||||||||
Coca-Cola Enterprises, Inc.1 | 894 | 22,377 | |||||||||
Comcast Corp., Class A | 2,500 | 54,925 | |||||||||
Complete Genomics, Inc.* | 4,200 | 31,374 | |||||||||
Complete Production Services, Inc.*1 | 800 | 23,640 | |||||||||
Computer Sciences Corp.1 | 600 | 29,760 | |||||||||
Concho Resources, Inc.*1 | 300 | 26,301 | |||||||||
ConocoPhillips | 400 | 27,240 | |||||||||
Cooper Tire & Rubber Co.1 | 1,000 | 23,580 | |||||||||
Coresite Realty Corp. | 2,200 | 30,008 | |||||||||
Corn Products International, Inc.1 | 500 | 23,000 | |||||||||
Corning, Inc. | 1,200 | 23,184 | |||||||||
Crown Castle International Corp.* | 1,000 | 43,830 | |||||||||
Crown Holdings, Inc.*1 | 700 | 23,366 | |||||||||
CSX Corp. | 300 | 19,383 | |||||||||
Cubist Pharmaceuticals, Inc.*1 | 1,000 | 21,400 | |||||||||
Cummins, Inc.1 | 200 | 22,002 | |||||||||
Cypress Semiconductor Corp.*1 | 1,300 | 24,154 | |||||||||
Cytec Industries, Inc.1 | 400 | 21,224 | |||||||||
Danaher Corp. | 3,500 | 165,095 | |||||||||
Darden Restaurants, Inc.1 | 500 | 23,220 | |||||||||
Deckers Outdoor Corp.*1 | 300 | 23,922 | |||||||||
Deere & Co. | 300 | 24,915 | |||||||||
Dillard's, Inc., Class A1 | 600 | 22,764 | |||||||||
Dolby Laboratories, Inc., Class A*1 | 1,000 | 66,700 | |||||||||
Dover Corp. | 2,100 | 122,745 | |||||||||
Dresser-Rand Group, Inc.*1 | 600 | 25,554 | |||||||||
DTE Energy Co.1 | 400 | 18,128 | |||||||||
Eastman Chemical Co.1 | 200 | 16,816 | |||||||||
Eastman Kodak Co.* | 3,900 | 20,904 | |||||||||
eBay, Inc.*1 | 900 | 25,047 |
31
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
United States(Continued) | |||||||||||
Edison International1 | 3,200 | $ | 123,520 | ||||||||
Edwards Lifesciences Corp.*1 | 300 | 24,252 | |||||||||
El Paso Corp.1 | 1,700 | 23,392 | |||||||||
Endo Pharmaceuticals Holdings, Inc.*1 | 500 | 17,855 | |||||||||
Energen Corp.1 | 500 | 24,130 | |||||||||
Energy XXI Bermuda Ltd.*1 | 800 | 22,136 | |||||||||
Entergy Corp.1 | 300 | 21,249 | |||||||||
EOG Resources, Inc. | 530 | 48,447 | |||||||||
Equity Residential1 | 500 | 25,975 | |||||||||
Estee Lauder Cos., Inc., Class A1 | 300 | 24,210 | |||||||||
ExamWorks Group, Inc.* | 1,500 | 27,720 | |||||||||
Exelon Corp.1 | 2,800 | 116,592 | |||||||||
Expeditors International Washington, Inc. |
500 | 27,300 | |||||||||
F5 Networks, Inc.*1 | 300 | 39,048 | |||||||||
FedEx Corp. | 2,300 | 213,923 | |||||||||
Fidelity National Information Services, Inc.1 |
2,900 | 79,431 | |||||||||
Fifth Third Bancorp1 | 1,200 | 17,616 | |||||||||
FirstEnergy Corp.1 | 3,200 | 118,464 | |||||||||
Flextronics International Ltd.* | 3,500 | 27,475 | |||||||||
FMC Corp.1 | 200 | 15,978 | |||||||||
Ford Motor Co.* | 1,500 | 25,185 | |||||||||
Forest Laboratories, Inc.* | 700 | 22,386 | |||||||||
Forest Oil Corp.*1 | 600 | 22,782 | |||||||||
Fortinet, Inc.*1 | 700 | 22,645 | |||||||||
Fortune Brands, Inc. | 2,500 | 150,625 | |||||||||
Freeport-McMoRan Copper & Gold, Inc. | 200 | 24,018 | |||||||||
Fresh Market, Inc.* | 700 | 28,840 | |||||||||
GameStop Corp., Class A*1 | 1,800 | 41,184 | |||||||||
Gardner Denver, Inc.1 | 300 | 20,646 | |||||||||
General Dynamics Corp.1 | 2,100 | 149,016 | |||||||||
General Electric Co.1 | 1,200 | 21,948 | |||||||||
Genzyme Corp.*1 | 500 | 35,600 | |||||||||
Gilead Sciences, Inc.*1 | 300 | 10,872 | |||||||||
Goldman Sachs Group, Inc.1 | 360 | 60,538 | |||||||||
Goodrich Corp. | 200 | 17,614 | |||||||||
Google, Inc., Class A*1 | 50 | 29,699 | |||||||||
Halliburton Co.1 | 600 | 24,498 | |||||||||
Hartford Financial Services Group, Inc.1 | 700 | 18,543 | |||||||||
Health Management Associates, Inc., Class A*1 |
3,100 | 29,574 | |||||||||
Hershey Co. | 400 | 18,860 | |||||||||
Hess Corp.1 | 700 | 53,578 | |||||||||
Hewlett-Packard Co. | 1,500 | 63,150 | |||||||||
Hologic, Inc.*1 | 1,100 | 20,702 | |||||||||
Home Depot, Inc.1 | 3,400 | 119,204 | |||||||||
Hormell Foods Corp. | 400 | 20,504 | |||||||||
Humana, Inc.* | 400 | 21,896 | |||||||||
Huntington Bancshares, Inc. | 3,600 | 24,732 | |||||||||
Hyatt Hotels Corp., Class A*1 | 500 | 22,880 |
Shares | Value | ||||||||||
Illinois Tool Works, Inc. | 4,200 | $ | 224,280 | ||||||||
Illumina, Inc.*1 | 300 | 19,002 | |||||||||
Inphi Corp.* | 1,600 | 32,144 | |||||||||
Integrys Energy Group, Inc. | 300 | 14,553 | |||||||||
International Business Machines Corp. | 540 | 79,250 | |||||||||
International Game Technology | 700 | 12,383 | |||||||||
Interpublic Group of Cos., Inc.*1 | 9,500 | 100,890 | |||||||||
Intersil Corp., Class A1 | 6,700 | 102,309 | |||||||||
Intuit, Inc.* | 400 | 19,720 | |||||||||
JB Hunt Transport Services, Inc.1 | 1,100 | 44,891 | |||||||||
JM Smucker Co.1 | 300 | 19,695 | |||||||||
Johnson & Johnson1 | 700 | 43,295 | |||||||||
Johnson Controls, Inc.1 | 2,300 | 87,860 | |||||||||
JPMorgan Chase & Co.1 | 500 | 21,210 | |||||||||
Kellogg Co. | 400 | 20,432 | |||||||||
Kennametal, Inc.1 | 600 | 23,676 | |||||||||
KeyCorp1 | 3,000 | 26,550 | |||||||||
Keyw Holding Corp.* | 2,100 | 30,807 | |||||||||
Kinetic Concepts, Inc.*1 | 600 | 25,128 | |||||||||
Kraft Foods, Inc., Class A | 1,700 | 53,567 | |||||||||
Kroger Co.1 | 4,700 | 105,092 | |||||||||
Lam Research Corp.*1 | 500 | 25,890 | |||||||||
Las Vegas Sands Corp.*1 | 2,400 | 110,280 | |||||||||
Legg Mason, Inc.1 | 600 | 21,762 | |||||||||
Liberty Global, Inc., Class A*1 | 700 | 24,766 | |||||||||
Liberty Media Corp.*1 | 1,400 | 22,078 | |||||||||
Life Technologies Corp.*1 | 500 | 27,750 | |||||||||
Lowe's Cos., Inc.1 | 2,600 | 65,208 | |||||||||
LSI Corp.*1 | 3,900 | 23,361 | |||||||||
Lubrizol Corp.1 | 200 | 21,376 | |||||||||
Macy's, Inc.1 | 1,000 | 25,300 | |||||||||
Marvell Technology Group Ltd.*1 | 4,600 | 85,330 | |||||||||
Mattel, Inc.1 | 900 | 22,887 | |||||||||
McGraw-Hill Cos., Inc.1 | 600 | 21,846 | |||||||||
McKesson Corp.1 | 1,000 | 70,380 | |||||||||
MDU Resources Group, Inc. | 3,800 | 77,026 | |||||||||
Mead Johnson Nutrition Co.1 | 400 | 24,900 | |||||||||
Medco Health Solutions, Inc., Class A*1 | 800 | 49,016 | |||||||||
Medtronic, Inc.1 | 900 | 33,381 | |||||||||
Merck & Co., Inc.1 | 1,300 | 46,852 | |||||||||
Microsoft Corp.1 | 4,000 | 111,680 | |||||||||
Molson Coors Brewing Co., Class B1 | 900 | 45,171 | |||||||||
Murphy Oil Corp.1 | 300 | 22,365 | |||||||||
Nalco Holding Co.1 | 700 | 22,358 | |||||||||
National Oilwell Varco, Inc.1 | 300 | 20,175 | |||||||||
National Semiconductor Corp.1 | 3,600 | 49,536 | |||||||||
Netflix, Inc.* | 100 | 17,570 | |||||||||
Netspend Holdings, Inc.* | 2,000 | 25,640 | |||||||||
Newfield Exploration Co.*1 | 300 | 21,633 | |||||||||
Newmont Mining Corp.1 | 300 | 18,429 | |||||||||
News Corp., Class B1 | 1,400 | 22,988 | |||||||||
NII Holdings, Inc.*1 | 500 | 22,330 | |||||||||
Noble Corp.1 | 700 | 25,039 |
32
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Norfolk Southern Corp.1 | 600 | $ | 37,692 | ||||||||
Northrop Grumman Corp.1 | 2,100 | 136,038 | |||||||||
Oceaneering International, Inc.*1 | 300 | 22,089 | |||||||||
Oil States International, Inc.*1 | 400 | 25,636 | |||||||||
Omnicom Group, Inc.1 | 800 | 36,640 | |||||||||
Oracle Corp.1 | 800 | 25,040 | |||||||||
PACCAR, Inc. | 1,400 | 80,388 | |||||||||
Pacific Biosciences of California, Inc.* | 2,000 | 31,820 | |||||||||
Pall Corp.1 | 1,200 | 59,496 | |||||||||
Panera Bread Co., Class A*1 | 200 | 20,242 | |||||||||
Parker Hannifin Corp. | 300 | 25,890 | |||||||||
Peabody Energy Corp.1 | 1,200 | 76,776 | |||||||||
PepsiCo, Inc. | 1,450 | 94,728 | |||||||||
PetroChina Co. Ltd. ADR1 | 200 | 26,298 | |||||||||
Pfizer, Inc. | 2,500 | 43,775 | |||||||||
Philip Morris International, Inc.1 | 1,400 | 81,942 | |||||||||
PMC - Sierra, Inc.*1 | 2,600 | 22,334 | |||||||||
PNC Financial Services Group, Inc. | 300 | 18,216 | |||||||||
Polaris Industries, Inc.1 | 300 | 23,406 | |||||||||
Primo Water Corp.* | 2,300 | 32,683 | |||||||||
Procter & Gamble Co.1 | 800 | 51,464 | |||||||||
Protective Life Corp.1 | 800 | 21,312 | |||||||||
Prudential Financial, Inc.1 | 400 | 23,484 | |||||||||
Public Storage1 | 200 | 20,284 | |||||||||
QUALCOMM, Inc.1 | 1,000 | 49,490 | |||||||||
Rayonier, Inc.1 | 700 | 36,764 | |||||||||
ResMed, Inc.*1 | 700 | 24,248 | |||||||||
Riverbed Technology, Inc.*1 | 800 | 28,136 | |||||||||
Rockwell Automation, Inc. | 400 | 28,684 | |||||||||
Rockwood Holdings, Inc.*1 | 600 | 23,472 | |||||||||
Ross Stores, Inc.1 | 300 | 18,975 | |||||||||
RR Donnelley & Sons Co.1 | 1,200 | 20,964 | |||||||||
Ryder System, Inc.1 | 2,300 | 121,072 | |||||||||
SanDisk Corp.*1 | 600 | 29,916 | |||||||||
SeaCube Container Leasing Ltd. | 2,100 | 29,526 | |||||||||
Sempra Energy | 1,600 | 83,968 | |||||||||
Signature Bank*1 | 400 | 20,000 | |||||||||
Silgan Holdings, Inc.1 | 700 | 25,067 | |||||||||
SL Green Realty Corp.1 | 300 | 20,253 | |||||||||
SM Energy Co.1 | 400 | 23,572 | |||||||||
Smithfield Foods, Inc.* | 1,000 | 20,630 | |||||||||
Southwest Airlines Co.1 | 8,000 | 103,840 | |||||||||
Southwest Gas Corp.1 | 800 | 29,336 | |||||||||
Starbucks Corp.1 | 900 | 28,917 | |||||||||
Stone Energy Corp.*1 | 1,000 | 22,290 | |||||||||
Sunoco, Inc.1 | 1,100 | 44,341 | |||||||||
Symantec Corp.*1 | 2,100 | 35,154 | |||||||||
Teleflex, Inc.1 | 300 | 16,143 | |||||||||
Teradyne, Inc.*1 | 1,800 | 25,272 | |||||||||
Texas Instruments, Inc.1 | 1,600 | 52,000 | |||||||||
Textron, Inc.1 | 1,000 | 23,640 |
Shares | Value | ||||||||||
TIBCO Software, Inc.*1 | 2,600 | $ | 51,246 | ||||||||
Tiffany & Co.1 | 400 | 24,908 | |||||||||
Time Warner, Inc.1 | 1,000 | 32,170 | |||||||||
Timken Co.1 | 600 | 28,638 | |||||||||
TJX Cos., Inc. | 400 | 17,756 | |||||||||
Tower International, Inc.* | 1,700 | 30,073 | |||||||||
Travelers Cos., Inc. | 400 | 22,284 | |||||||||
TRW Automotive Holdings Corp.*1 | 400 | 21,080 | |||||||||
Tupperware Brands Corp.1 | 500 | 23,835 | |||||||||
Tyco Electronics Ltd.1 | 700 | 24,780 | |||||||||
Tyson Foods, Inc., Class A | 1,600 | 27,552 | |||||||||
UGI Corp.1 | 700 | 22,106 | |||||||||
Ultra Petroleum Corp.*1 | 4,500 | 214,965 | |||||||||
Union Pacific Corp.1 | 500 | 46,330 | |||||||||
United Continental Holdings, Inc.*1 | 829 | 19,747 | |||||||||
United Parcel Service, Inc., Class B1 | 300 | 21,774 | |||||||||
United States Steel Corp. | 500 | 29,210 | |||||||||
United Therapeutics Corp.*1 | 400 | 25,288 | |||||||||
UnitedHealth Group, Inc.1 | 1,400 | 50,554 | |||||||||
Universal Health Services, Inc., Class B1 | 500 | 21,710 | |||||||||
US Bancorp | 600 | 16,182 | |||||||||
Valero Energy Corp.1 | 1,200 | 27,744 | |||||||||
Varian Medical Systems, Inc.*1 | 300 | 20,784 | |||||||||
Veeco Instruments, Inc.*1 | 500 | 21,480 | |||||||||
Vera Bradley, Inc.* | 700 | 23,100 | |||||||||
Viacom, Inc., Class B1 | 1,600 | 63,376 | |||||||||
W&T Offshore, Inc.1 | 1,300 | 23,231 | |||||||||
Walgreen Co.1 | 600 | 23,376 | |||||||||
Walter Energy, Inc.1 | 300 | 38,352 | |||||||||
WellPoint, Inc.*1 | 300 | 17,058 | |||||||||
Wells Fargo & Co.1 | 2,000 | 61,980 | |||||||||
Werner Enterprises, Inc.1 | 1,000 | 22,600 | |||||||||
Westlake Chemical Corp.1 | 600 | 26,082 | |||||||||
Weyerhaeuser Co.1 | 1,200 | 22,716 | |||||||||
Whirlpool Corp.1 | 300 | 26,649 | |||||||||
Whiting Petroleum Corp.*1 | 200 | 23,438 | |||||||||
Williams-Sonoma, Inc.1 | 800 | 28,552 | |||||||||
Wynn Resorts Ltd.1 | 300 | 31,152 | |||||||||
Zogenix, Inc.* | 4,900 | 27,783 | |||||||||
Total United States common stocks | 12,056,679 | ||||||||||
Total common stocks (cost $18,938,642) |
21,610,335 | ||||||||||
Preferred stocks: 0.55% | |||||||||||
Germany: 0.47% | |||||||||||
Fresenius SE, Preference shares | 587 | 50,257 | |||||||||
Henkel AG & Co KGaA, Preference shares |
336 | 20,894 | |||||||||
ProSiebenSat.1 Media AG, Preference shares |
710 | 21,348 | |||||||||
Volkswagen AG, Preference Shares | 173 | 28,065 | |||||||||
Total Germany preferred stocks | 120,564 |
33
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Preferred stocks(Concluded) | |||||||||||
Italy: 0.08% | |||||||||||
Telecom Italia SpA | 19,723 | $ | 21,401 | ||||||||
Total preferred stocks (cost $127,920) |
141,965 | ||||||||||
Investment companies: 0.73% | |||||||||||
SPDR S&P 500 ETF Trust | 1,300 | 163,514 | |||||||||
SPDR S&P MidCap 400 ETF Trust | 150 | 24,702 | |||||||||
Total investment companies (cost $188,268) |
188,216 | ||||||||||
Short-term investment: 34.10% | |||||||||||
Investment company: 34.10% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $8,784,814) |
8,784,814 | 8,784,814 | |||||||||
Total investments before investments sold short: 119.27% (cost $28,039,644) |
30,725,330 | ||||||||||
Investments sold short: (82.76)% | |||||||||||
Common stocks: (82.76)% | |||||||||||
Austria: (0.09)% | |||||||||||
Verbund - Oesterreichische Elektrizitaetswirtschafts AG, Class A |
(656 | ) | (24,440 | ) | |||||||
Belgium: (0.38)% | |||||||||||
Belgacom SA | (569 | ) | (19,104 | ) | |||||||
Cie Nationale a Portefeuille | (408 | ) | (19,955 | ) | |||||||
Colruyt SA | (738 | ) | (37,524 | ) | |||||||
Solvay SA | (205 | ) | (21,847 | ) | |||||||
Total Belgium common stocks | (98,430 | ) | |||||||||
Bermuda: (0.67)% | |||||||||||
Central European Media Enterprises Ltd., Class A |
(1,200 | ) | (24,420 | ) | |||||||
Everest Re Group Ltd. | (300 | ) | (25,446 | ) | |||||||
Frontline Ltd. | (830 | ) | (21,408 | ) | |||||||
Genpact Ltd. | (1,800 | ) | (27,360 | ) | |||||||
Li & Fung Ltd. | (4,000 | ) | (23,209 | ) | |||||||
Orient-Express Hotels Ltd., Class A | (1,900 | ) | (24,681 | ) | |||||||
White Mountains Insurance Group Ltd. | (75 | ) | (25,170 | ) | |||||||
Total Bermuda common stocks | (171,694 | ) | |||||||||
Brazil: (0.12)% | |||||||||||
Petroleo Brasileiro SA ADR | (800 | ) | (30,272 | ) | |||||||
Canada: (3.18)% | |||||||||||
Barrick Gold Corp. | (400 | ) | (21,370 | ) | |||||||
Bombardier, Inc., Class B | (4,600 | ) | (23,178 | ) | |||||||
Canadian Imperial Bank of Commerce | (300 | ) | (23,634 | ) |
Shares | Value | ||||||||||
Canadian Pacific Railway Ltd. | (300 | ) | $ | (19,497 | ) | ||||||
Cenovus Energy, Inc. | (900 | ) | (30,124 | ) | |||||||
Crescent Point Energy Corp. | (500 | ) | (22,222 | ) | |||||||
Crew Energy, Inc. | (1,100 | ) | (21,130 | ) | |||||||
Enbridge, Inc. | (400 | ) | (22,637 | ) | |||||||
EnCana Corp. | (800 | ) | (23,405 | ) | |||||||
Ensign Energy Services, Inc. | (1,800 | ) | (27,209 | ) | |||||||
Gildan Activewear, Inc. | (700 | ) | (19,959 | ) | |||||||
Great-West Lifeco, Inc. | (800 | ) | (21,241 | ) | |||||||
Husky Energy, Inc. | (800 | ) | (21,362 | ) | |||||||
IAMGOLD Corp. | (1,500 | ) | (26,778 | ) | |||||||
Imperial Oil Ltd. | (1,100 | ) | (44,894 | ) | |||||||
Intact Financial Corp. | (400 | ) | (20,461 | ) | |||||||
InterOil Corp. | (300 | ) | (21,621 | ) | |||||||
Ivanhoe Mines Ltd. | (900 | ) | (20,819 | ) | |||||||
Magna International, Inc. | (400 | ) | (20,883 | ) | |||||||
Manitoba Telecom Services, Inc. | (900 | ) | (25,797 | ) | |||||||
Niko Resources Ltd. | (300 | ) | (31,131 | ) | |||||||
Onex Corp. | (700 | ) | (21,282 | ) | |||||||
Osisko Mining Corp. | (1,400 | ) | (20,444 | ) | |||||||
Power Financial Corp. | (700 | ) | (21,634 | ) | |||||||
Progress Energy Resources Corp. | (2,100 | ) | (26,823 | ) | |||||||
RioCan Real Estate Investment Trust | (1,000 | ) | (22,126 | ) | |||||||
Ritchie Bros Auctioneers, Inc. | (1,300 | ) | (29,967 | ) | |||||||
Sherritt International Corp. | (3,100 | ) | (26,407 | ) | |||||||
Shoppers Drug Mart Corp. | (700 | ) | (27,830 | ) | |||||||
Silver Wheaton Corp. | (600 | ) | (23,522 | ) | |||||||
SNC-Lavalin Group, Inc. | (400 | ) | (24,045 | ) | |||||||
TransAlta Corp. | (1,100 | ) | (23,398 | ) | |||||||
TransCanada Corp. | (500 | ) | (19,104 | ) | |||||||
Viterra, Inc. | (2,400 | ) | (22,400 | ) | |||||||
Total Canada common stocks | (818,334 | ) | |||||||||
China: (4.01)% | |||||||||||
Alibaba.com Ltd. | (14,500 | ) | (26,005 | ) | |||||||
Aluminum Corp of China Ltd., H Shares | (26,000 | ) | (23,716 | ) | |||||||
Angang Steel Co., Ltd., H Shares | (16,000 | ) | (24,496 | ) | |||||||
Anta Sports Products Ltd. | (13,000 | ) | (20,639 | ) | |||||||
China Agri-Industries Holdings Ltd. | (15,000 | ) | (17,021 | ) | |||||||
China Coal Energy Co., H Shares | (15,000 | ) | (23,428 | ) | |||||||
China COSCO Holdings Co., Ltd., H Shares |
(22,000 | ) | (23,322 | ) | |||||||
China Dongxiang Group Co. | (56,000 | ) | (24,207 | ) | |||||||
China Foods Ltd. | (36,000 | ) | (22,972 | ) | |||||||
China High Speed Transmission Equipment Group Co., Ltd. |
(12,000 | ) | (18,588 | ) | |||||||
China Life Insurance Co., Ltd., H Shares | (5,000 | ) | (20,424 | ) | |||||||
China Longyuan Power Group Corp., H Shares |
(22,000 | ) | (20,124 | ) | |||||||
China Molybdenum Co., Ltd., H Shares | (26,000 | ) | (23,917 | ) | |||||||
China National Materials Co., Ltd. | (18,000 | ) | (14,520 | ) | |||||||
China Resources Land Ltd. | (12,000 | ) | (21,923 | ) |
34
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
China(Concluded) | |||||||||||
China Resources Power Holdings Co., Ltd. |
(12,000 | ) | $ | (21,737 | ) | ||||||
China Shipping Development Co., Ltd., H Shares |
(18,000 | ) | (23,991 | ) | |||||||
Citic Resources Holdings Ltd. | (82,000 | ) | (18,462 | ) | |||||||
Datang International Power Generation Co., Ltd., H Shares |
(74,000 | ) | (25,991 | ) | |||||||
Dongfeng Motor Group Co., Ltd., H Shares |
(4,000 | ) | (6,896 | ) | |||||||
Foxconn International Holdings Ltd. | (36,000 | ) | (25,149 | ) | |||||||
Fushan International Energy Group Ltd. | (30,000 | ) | (20,572 | ) | |||||||
Giant Interactive Group, Inc. ADR | (3,200 | ) | (22,784 | ) | |||||||
GOME Electrical Appliances Holdings Ltd. |
(47,000 | ) | (16,931 | ) | |||||||
Guangzhou Automobile Group Co., Ltd., H Shares |
(20,000 | ) | (27,583 | ) | |||||||
Guangzhou R&F Properties Co., Ltd., H Shares |
(15,200 | ) | (21,745 | ) | |||||||
Hidili Industry International Development Ltd. |
(24,000 | ) | (20,286 | ) | |||||||
Hong Kong & China Gas Co., Ltd. | (19,000 | ) | (44,782 | ) | |||||||
Industrial & Commercial Bank of China, H Shares |
(31,000 | ) | (23,092 | ) | |||||||
Jiangxi Copper Co. Ltd., H Shares | (7,000 | ) | (23,010 | ) | |||||||
Melco Crown Entertainment Ltd. ADR | (4,100 | ) | (26,076 | ) | |||||||
Mindray Medical International Ltd. ADR | (800 | ) | (21,120 | ) | |||||||
Nine Dragons Paper Holdings Ltd. | (19,000 | ) | (26,840 | ) | |||||||
Parkson Retail Group Ltd. | (15,500 | ) | (23,890 | ) | |||||||
Ping An Insurance Group Co. of China Ltd., H Shares |
(2,000 | ) | (22,360 | ) | |||||||
Renhe Commercial Holdings Co., Ltd. | (114,000 | ) | (19,946 | ) | |||||||
Ruinian International Ltd. | (34,000 | ) | (23,577 | ) | |||||||
Shandong Weigao Group Medical Polymer Co., Ltd., H Shares |
(8,000 | ) | (22,694 | ) | |||||||
Sinofert Holdings Ltd. | (46,000 | ) | (23,791 | ) | |||||||
Stella International Holdings Ltd. | (8,500 | ) | (16,950 | ) | |||||||
Tsingtao Brewery Co., Ltd., H Shares | (4,000 | ) | (20,945 | ) | |||||||
Wumart Stores, Inc., H Shares | (9,000 | ) | (22,185 | ) | |||||||
Yingde Gases | (24,500 | ) | (21,780 | ) | |||||||
Yue Yuen Industrial Holdings Ltd. | (6,500 | ) | (23,373 | ) | |||||||
Zhuzhou CSR Times Electric Co. Ltd., H Shares |
(7,000 | ) | (27,513 | ) | |||||||
Zijin Mining Group Co. Ltd., H Shares | (22,000 | ) | (20,407 | ) | |||||||
Total China common stocks | (1,031,760 | ) | |||||||||
Denmark: (0.77)% | |||||||||||
DSV A/S | (5,996 | ) | (132,539 | ) | |||||||
Tryg A/S | (441 | ) | (20,358 | ) | |||||||
Vestas Wind Systems A/S | (1,417 | ) | (44,735 | ) | |||||||
Total Denmark common stocks | (197,632 | ) |
Shares | Value | ||||||||||
Finland: (1.75)% | |||||||||||
Kesko Oyj, Class B | (2,002 | ) | $ | (93,447 | ) | ||||||
Kone OYJ, Class B | (395 | ) | (21,958 | ) | |||||||
Nokia Oyj | (2,127 | ) | (21,999 | ) | |||||||
Outokumpu Oyj | (7,049 | ) | (130,744 | ) | |||||||
Rautaruukki Oyj NPV | (1,463 | ) | (34,232 | ) | |||||||
Sampo Oyj, Class A | (771 | ) | (20,657 | ) | |||||||
Wartsila Oyj | (1,691 | ) | (129,028 | ) | |||||||
Total Finland common stocks | (452,065 | ) | |||||||||
France: (2.87)% | |||||||||||
Alcatel-Lucent | (8,636 | ) | (25,158 | ) | |||||||
BioMerieux | (222 | ) | (21,899 | ) | |||||||
Carrefour SA | (636 | ) | (26,219 | ) | |||||||
Cie de Saint-Gobain | (1,501 | ) | (77,223 | ) | |||||||
Edenred | (998 | ) | (23,625 | ) | |||||||
EDF SA | (3,741 | ) | (153,447 | ) | |||||||
Eramet | (80 | ) | (27,421 | ) | |||||||
Iliad SA | (196 | ) | (21,320 | ) | |||||||
JCDecaux SA | (4,416 | ) | (135,873 | ) | |||||||
Lafarge SA | (459 | ) | (28,779 | ) | |||||||
Lagardere SCA | (515 | ) | (21,217 | ) | |||||||
Pernod-Ricard SA | (1,181 | ) | (111,040 | ) | |||||||
Peugeot SA | (574 | ) | (21,792 | ) | |||||||
Thales SA | (542 | ) | (18,965 | ) | |||||||
Vallourec SA | (253 | ) | (26,573 | ) | |||||||
Total France common stocks | (740,551 | ) | |||||||||
Germany: (1.91)% | |||||||||||
BASF SE | (111 | ) | (8,855 | ) | |||||||
Beiersdorf AG NPV | (388 | ) | (21,530 | ) | |||||||
Commerzbank AG | (3,064 | ) | (22,740 | ) | |||||||
Daimler AG | (319 | ) | (21,625 | ) | |||||||
Fraport AG Frankfurt Airport Services Worldwide |
(501 | ) | (31,573 | ) | |||||||
GEA Group AG | (952 | ) | (27,517 | ) | |||||||
Hamburger Hafen und Logistik AG | (507 | ) | (23,408 | ) | |||||||
K&S AG NPV | (244 | ) | (18,377 | ) | |||||||
Linde AG | (418 | ) | (63,426 | ) | |||||||
MAN SE | (223 | ) | (26,519 | ) | |||||||
Puma AG Rudolf Dassler Sport | (69 | ) | (22,867 | ) | |||||||
SGL Carbon SE NPV | (660 | ) | (23,826 | ) | |||||||
Suedzucker AG | (1,333 | ) | (35,492 | ) | |||||||
Wacker Chemie AG | (826 | ) | (144,154 | ) | |||||||
Total Germany common stocks | (491,909 | ) | |||||||||
Ireland: (0.33)% | |||||||||||
Elan Corp. PLC | (4,031 | ) | (22,355 | ) | |||||||
Ingersoll-Rand PLC | (800 | ) | (37,672 | ) | |||||||
Ryanair Holdings PLC | (5,102 | ) | (25,703 | ) | |||||||
Total Ireland common stocks | (85,730 | ) |
35
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
Israel: (0.08)% | |||||||||||
Teva Pharmaceutical Industries Ltd. ADR | (400 | ) | $ | (20,852 | ) | ||||||
Italy: (1.01)% | |||||||||||
Assicurazioni Generali SpA | (1,245 | ) | (23,641 | ) | |||||||
Autogrill SpA | (1,668 | ) | (23,560 | ) | |||||||
Banca Monte dei Paschi di Siena SpA | (18,789 | ) | (21,367 | ) | |||||||
Banca Popolare di Milano Scarl | (5,999 | ) | (21,003 | ) | |||||||
Banco Popolare SC | (3,941 | ) | (17,853 | ) | |||||||
Bulgari SpA | (1,913 | ) | (20,668 | ) | |||||||
Flat SpA | (985 | ) | (20,310 | ) | |||||||
Luxottica Group SpA | (818 | ) | (24,923 | ) | |||||||
Mediolanum SpA | (5,323 | ) | (21,997 | ) | |||||||
Pirelli & Co SpA NPV | (634 | ) | (5,126 | ) | |||||||
Saras Raffinerie Sarde SpA | (10,102 | ) | (21,261 | ) | |||||||
Terna-Rete Elettrica Nazionale SpA | (4,348 | ) | (18,360 | ) | |||||||
Unione di Banche Italiane SCPA | (2,366 | ) | (20,709 | ) | |||||||
Total Italy common stocks | (260,778 | ) | |||||||||
Japan: (7.90)% | |||||||||||
Advantest Corp. | (1,100 | ) | (24,889 | ) | |||||||
Air Water, Inc. | (1,000 | ) | (12,773 | ) | |||||||
Alfresa Holdings Corp. | (500 | ) | (22,201 | ) | |||||||
All Nippon Airways Co. Ltd. | (8,000 | ) | (29,856 | ) | |||||||
Benesse Holdings, Inc. | (500 | ) | (23,032 | ) | |||||||
Canon Marketing Japan, Inc. | (1,600 | ) | (22,781 | ) | |||||||
Chugai Pharmaceutical Co., Ltd. | (1,200 | ) | (22,022 | ) | |||||||
Chugoku Electric Power Co., Inc. | (1,200 | ) | (24,387 | ) | |||||||
Dai-ichi Life Insurance Co., Ltd. | (18 | ) | (29,243 | ) | |||||||
Dowa Holdings Co., Ltd. | (4,000 | ) | (26,259 | ) | |||||||
Fast Retailing Co., Ltd. | (200 | ) | (31,851 | ) | |||||||
Furukawa Electric Co., Ltd. | (5,000 | ) | (22,478 | ) | |||||||
GS Yuasa Corp. | (4,000 | ) | (27,688 | ) | |||||||
Hakuhodo DY Holdings, Inc. | (330 | ) | (18,921 | ) | |||||||
Hitachi Chemical Co., Ltd. | (1,200 | ) | (24,845 | ) | |||||||
Hokkaido Electric Power Co., Inc. | (1,200 | ) | (24,535 | ) | |||||||
Inpex Corp. | (4 | ) | (23,427 | ) | |||||||
Japan Prime Realty Investment Corp. | (9 | ) | (27,713 | ) | |||||||
Juroku Bank Ltd. | (9,000 | ) | (28,821 | ) | |||||||
Kajima Corp. | (9,000 | ) | (23,944 | ) | |||||||
Kansai Paint Co., Ltd. | (2,000 | ) | (19,362 | ) | |||||||
Kawasaki Kisen Kaisha Ltd. | (5,000 | ) | (21,986 | ) | |||||||
Keihin Electric Express Railway Co., Ltd. | (3,000 | ) | (26,493 | ) | |||||||
Keio Corp. | (3,000 | ) | (20,471 | ) | |||||||
Keyence Corp. | (100 | ) | (28,969 | ) | |||||||
Kikkoman Corp. | (2,000 | ) | (22,417 | ) | |||||||
Kintetsu Corp. | (7,000 | ) | (21,899 | ) | |||||||
Koito Manufacturing Co., Ltd. | (2,000 | ) | (31,285 | ) | |||||||
Kurita Water Industries Ltd. | (800 | ) | (25,205 | ) | |||||||
Lawson, Inc. | (500 | ) | (24,726 | ) |
Shares | Value | ||||||||||
Matsui Securities Co., Ltd. | (2,800 | ) | $ | (19,934 | ) | ||||||
MISUMI Group, Inc. | (900 | ) | (22,425 | ) | |||||||
Mitsubishi Estate Co., Ltd. | (2,000 | ) | (37,098 | ) | |||||||
Mitsubishi Heavy Industries Ltd. | (8,000 | ) | (30,053 | ) | |||||||
Mitsubishi Motors Corp. | (19,000 | ) | (27,614 | ) | |||||||
Mitsui Engineering & Shipbuilding Co., Ltd. |
(8,000 | ) | (21,185 | ) | |||||||
Mitsui Sumitomo Insurance Group Holdings, Inc. |
(900 | ) | (22,558 | ) | |||||||
Mizuho Trust & Banking Co., Ltd. | (23,000 | ) | (23,796 | ) | |||||||
Mori Seiki Co., Ltd. | (1,900 | ) | (22,536 | ) | |||||||
Namco Bandai Holdings, Inc. | (2,300 | ) | (24,703 | ) | |||||||
NGK Insulators Ltd. | (2,000 | ) | (32,640 | ) | |||||||
Nikon Corp. | (1,100 | ) | (22,314 | ) | |||||||
Nintendo Co., Ltd. | (100 | ) | (29,351 | ) | |||||||
Nippon Sheet Glass Co., Ltd. | (4,000 | ) | (10,790 | ) | |||||||
Nippon Steel Corp. | (6,000 | ) | (21,579 | ) | |||||||
Nissha Printing Co., Ltd. | (900 | ) | (23,888 | ) | |||||||
Nomura Research Institute Ltd. | (900 | ) | (20,042 | ) | |||||||
Obayashi Corp. | (6,000 | ) | (27,639 | ) | |||||||
Olympus Corp. | (700 | ) | (21,192 | ) | |||||||
Ono Pharmaceutical Co., Ltd. | (400 | ) | (18,672 | ) | |||||||
Oracle Corp. Japan | (500 | ) | (24,572 | ) | |||||||
OSAKA Titanium Technologies Co., Ltd. | (500 | ) | (23,618 | ) | |||||||
Otsuka Corp. | (400 | ) | (27,294 | ) | |||||||
Panasonic Corp. | (1,000 | ) | (14,201 | ) | |||||||
Santen Pharmaceutical Co., Ltd. | (700 | ) | (24,313 | ) | |||||||
Secom Co., Ltd. | (400 | ) | (18,943 | ) | |||||||
Sekisui House Ltd. | (2,000 | ) | (20,224 | ) | |||||||
Senshu Ikeda Holdings, Inc. | (16,700 | ) | (23,860 | ) | |||||||
Shin-Etsu Chemical Co., Ltd. | (500 | ) | (27,097 | ) | |||||||
Shinko Electric Industries Co., Ltd. | (1,800 | ) | (20,175 | ) | |||||||
Shinsei Bank Ltd. | (23,000 | ) | (30,028 | ) | |||||||
Showa Shell Sekiyu KK | (3,000 | ) | (27,491 | ) | |||||||
Square Enix Holdings Co., Ltd. | (1,400 | ) | (24,831 | ) | |||||||
Sumco Corp. | (1,800 | ) | (25,718 | ) | |||||||
Sumitomo Chemical Co., Ltd. | (6,000 | ) | (29,560 | ) | |||||||
Sumitomo Metal Industries Ltd. | (11,000 | ) | (27,097 | ) | |||||||
Suruga Bank Ltd. | (2,000 | ) | (18,623 | ) | |||||||
Suzuki Motor Corp. | (900 | ) | (22,170 | ) | |||||||
Taiheiyo Cement Corp. | (17,000 | ) | (21,776 | ) | |||||||
Taiyo Nippon Sanso Corp. | (3,000 | ) | (26,493 | ) | |||||||
Tobu Railway Co., Ltd. | (4,000 | ) | (22,466 | ) | |||||||
Tokio Marine Holdings, Inc. | (700 | ) | (20,925 | ) | |||||||
Tokuyama Corp. | (5,000 | ) | (25,865 | ) | |||||||
Tokyo Steel Manufacturing Co., Ltd. | (2,000 | ) | (21,825 | ) | |||||||
TonenGeneral Sekiyu KK | (3,000 | ) | (32,812 | ) | |||||||
Toray Industries, Inc. | (8,000 | ) | (47,789 | ) | |||||||
Toshiba Corp. | (4,000 | ) | (21,776 | ) | |||||||
Toyo Seikan Kaisha Ltd. | (1,300 | ) | (24,738 | ) | |||||||
Toyoda Gosei Co., Ltd. | (900 | ) | (21,139 | ) | |||||||
Toyota Industries Corp. | (800 | ) | (24,841 | ) |
36
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
Japan(Concluded) | |||||||||||
Trend Micro, Inc. | (800 | ) | $ | (26,417 | ) | ||||||
Yakult Honsha Co., Ltd. | (800 | ) | (23,047 | ) | |||||||
Yaskawa Electric Corp. | (3,000 | ) | (28,378 | ) | |||||||
Total Japan common stocks | (2,034,590 | ) | |||||||||
Jersey (Channel Islands): (0.11)% | |||||||||||
Heritage Oil PLC | (4,200 | ) | (29,382 | ) | |||||||
Luxembourg: (0.22)% | |||||||||||
AZ Electronic Materials SA | (6,416 | ) | (31,010 | ) | |||||||
L'Occitane International SA | (9,750 | ) | (26,969 | ) | |||||||
Total Luxembourg common stocks | (57,979 | ) | |||||||||
Netherlands: (1.16)% | |||||||||||
Akzo Nobel NV | (456 | ) | (28,326 | ) | |||||||
Eurocommercial Properties NV | (845 | ) | (38,894 | ) | |||||||
European Aeronautic Defence & Space Co. NV |
(856 | ) | (19,949 | ) | |||||||
ING Groep NV CVA | (2,518 | ) | (24,496 | ) | |||||||
Koninklijke KPN NV | (1,320 | ) | (19,262 | ) | |||||||
Koninklijke Vopak NV | (456 | ) | (21,541 | ) | |||||||
QIAGEN NV | (1,193 | ) | (23,323 | ) | |||||||
Reed Elsevier NV | (1,627 | ) | (20,126 | ) | |||||||
SNS REAAL NV | (4,980 | ) | (21,229 | ) | |||||||
TNT NV | (1,004 | ) | (26,497 | ) | |||||||
Unilever NV CVA | (701 | ) | (21,826 | ) | |||||||
VistaPrint NV | (700 | ) | (32,200 | ) | |||||||
Total Netherlands common stocks | (297,669 | ) | |||||||||
New Zealand: (0.10)% | |||||||||||
Auckland International Airport Ltd. | (297 | ) | (504 | ) | |||||||
Contact Energy Ltd. | (5,284 | ) | (25,651 | ) | |||||||
Total New Zealand common stocks | (26,155 | ) | |||||||||
Norway: (0.10)% | |||||||||||
Renewable Energy Corp. ASA | (8,335 | ) | (25,412 | ) | |||||||
Portugal: (0.29)% | |||||||||||
Brisa Auto-Estradas de Portugal SA | (7,931 | ) | (55,312 | ) | |||||||
Portugal Telecom, SGPS, SA | (1,625 | ) | (18,197 | ) | |||||||
Total Portugal common stocks | (73,509 | ) | |||||||||
Singapore: (1.13)% | |||||||||||
Ascendas Real Estate Investment Trust | (18,000 | ) | (29,033 | ) | |||||||
CapitaLand Ltd. | (9,000 | ) | (26,018 | ) | |||||||
CapitaMall Trust | (16,000 | ) | (24,311 | ) | |||||||
CapitaMalls Asia Ltd. | (15,000 | ) | (22,675 | ) | |||||||
Global Logistic Properties Ltd. | (13,000 | ) | (21,880 | ) | |||||||
Indofood Agri Resources Ltd. | (10,000 | ) | (21,818 | ) |
Shares | Value | ||||||||||
Neptune Orient Lines Ltd. | (13,000 | ) | $ | (22,083 | ) | ||||||
Olam International Ltd. | (9,000 | ) | (22,020 | ) | |||||||
Singapore Exchange Ltd. | (4,000 | ) | (26,244 | ) | |||||||
Singapore Telecommunications Ltd. | (11,000 | ) | (26,143 | ) | |||||||
StarHub Ltd. | (11,000 | ) | (22,543 | ) | |||||||
Wilmar International Ltd. | (6,000 | ) | (26,322 | ) | |||||||
Total Singapore common stocks | (291,090 | ) | |||||||||
Spain: (0.95)% | |||||||||||
Acerinox SA | (1,824 | ) | (31,991 | ) | |||||||
ACS Actividades de Construccion y Servicios SA |
(405 | ) | (18,983 | ) | |||||||
Banco de Valencia SA | (6,322 | ) | (27,710 | ) | |||||||
Bankinter SA | (4,845 | ) | (26,907 | ) | |||||||
EDP Renovaveis SA | (2,904 | ) | (16,830 | ) | |||||||
Gestevision Telecinco SA | (2,882 | ) | (31,696 | ) | |||||||
Grifols SA | (1,566 | ) | (21,345 | ) | |||||||
Iberdrola Renovables SA | (5,965 | ) | (21,171 | ) | |||||||
Telefonica SA | (970 | ) | (21,990 | ) | |||||||
Zardoya Otis SA | (1,852 | ) | (26,085 | ) | |||||||
Total Spain common stocks | (244,708 | ) | |||||||||
Sweden: (2.64)% | |||||||||||
Alfa Laval AB | (6,536 | ) | (137,704 | ) | |||||||
Atlas Copco AB, Class A | (4,364 | ) | (110,112 | ) | |||||||
CDON Group AB | (268 | ) | (1,239 | ) | |||||||
Getinge AB, Class B | (990 | ) | (20,740 | ) | |||||||
Hennes & Mauritz AB, Class B | (3,567 | ) | (118,800 | ) | |||||||
Holmen AB, Class B | (848 | ) | (27,915 | ) | |||||||
Modern Times Group AB, Class B | (268 | ) | (17,732 | ) | |||||||
Sandvik AB | (1,283 | ) | (25,009 | ) | |||||||
Skanska AB, Class B | (5,167 | ) | (102,408 | ) | |||||||
SKF AB, Class B | (4,184 | ) | (119,194 | ) | |||||||
Total Sweden common stocks | (680,853 | ) | |||||||||
Switzerland: (2.07)% | |||||||||||
ABB Ltd. | (4,474 | ) | (99,672 | ) | |||||||
Adecco SA | (327 | ) | (21,421 | ) | |||||||
Credit Suisse Group AG | (506 | ) | (20,386 | ) | |||||||
Givaudan SA | (26 | ) | (28,058 | ) | |||||||
Kuehne & Nagel International AG | (960 | ) | (133,476 | ) | |||||||
Lindt & Spruengli AG | (1 | ) | (32,192 | ) | |||||||
Lonza Group AG | (254 | ) | (20,361 | ) | |||||||
Nobel Biocare Holding AG | (1,368 | ) | (25,794 | ) | |||||||
Novartis AG | (480 | ) | (28,210 | ) | |||||||
Roche Holding AG (Non-voting) | (181 | ) | (26,521 | ) | |||||||
SGS SA | (15 | ) | (25,171 | ) | |||||||
Sika AG | (10 | ) | (21,936 | ) | |||||||
Sonova Holding AG | (157 | ) | (20,267 | ) | |||||||
Weatherford International Ltd. | (1,300 | ) | (29,640 | ) | |||||||
Total Switzerland common stocks | (533,105 | ) |
37
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
Taiwan: (0.09)% | |||||||||||
Uni-President China Holdings Ltd. | (41,000 | ) | $ | (21,943 | ) | ||||||
United Kingdom: (2.26)% | |||||||||||
Autonomy Corp. PLC | (1,157 | ) | (27,149 | ) | |||||||
BP PLC | (3,131 | ) | (22,726 | ) | |||||||
British Land Co., PLC | (2,805 | ) | (22,938 | ) | |||||||
Capital Shopping Centres Group PLC | (3,908 | ) | (25,444 | ) | |||||||
IMI PLC | (2,089 | ) | (30,778 | ) | |||||||
Invensys PLC | (3,848 | ) | (21,250 | ) | |||||||
London & Stamford Property PLC | (14,856 | ) | (30,342 | ) | |||||||
Prudential PLC | (2,180 | ) | (22,704 | ) | |||||||
SABMiller PLC | (4,217 | ) | (148,359 | ) | |||||||
Standard Chartered PLC | (787 | ) | (21,172 | ) | |||||||
Standard Life PLC | (8,097 | ) | (27,268 | ) | |||||||
Tullow Oil PLC | (1,102 | ) | (21,666 | ) | |||||||
WH Smith PLC | (6,169 | ) | (46,840 | ) | |||||||
Whitbread PLC | (4,091 | ) | (114,171 | ) | |||||||
Total United Kingdom common stocks | (582,807 | ) | |||||||||
United States: (46.57)% | |||||||||||
3M Co. | (700 | ) | (60,410 | ) | |||||||
Acuity Brands, Inc. | (100 | ) | (5,767 | ) | |||||||
Adobe Systems, Inc. | (700 | ) | (21,546 | ) | |||||||
Advanced Micro Devices, Inc. | (7,100 | ) | (58,078 | ) | |||||||
Air Products & Chemicals, Inc. | (300 | ) | (27,285 | ) | |||||||
AK Steel Holding Corp. | (1,600 | ) | (26,192 | ) | |||||||
Akamai Technologies, Inc. | (1,100 | ) | (51,755 | ) | |||||||
Alcoa, Inc. | (1,400 | ) | (21,546 | ) | |||||||
Alliant Energy Corp. | (2,700 | ) | (99,279 | ) | |||||||
Alliant Techsystems, Inc. | (300 | ) | (22,329 | ) | |||||||
Alpha Natural Resources, Inc. | (400 | ) | (24,012 | ) | |||||||
Altera Corp. | (2,800 | ) | (99,624 | ) | |||||||
AMB Property Corp. | (800 | ) | (25,368 | ) | |||||||
Amedisys, Inc. | (800 | ) | (26,800 | ) | |||||||
American Superconductor Corp. | (1,100 | ) | (31,449 | ) | |||||||
American Water Works Co., Inc. | (2,200 | ) | (55,638 | ) | |||||||
Amphenol Corp., Class A | (600 | ) | (31,668 | ) | |||||||
AMR Corp. | (3,400 | ) | (26,486 | ) | |||||||
Amylin Pharmaceuticals, Inc. | (1,600 | ) | (23,536 | ) | |||||||
Anadarko Petroleum Corp. | (300 | ) | (22,848 | ) | |||||||
AON Corp. | (500 | ) | (23,005 | ) | |||||||
Aqua America, Inc. | (2,200 | ) | (49,456 | ) | |||||||
Archer-Daniels-Midland Co. NPV | (1,100 | ) | (33,088 | ) | |||||||
AT&T, Inc. | (800 | ) | (23,504 | ) | |||||||
Auxilium Pharmaceuticals, Inc. | (1,000 | ) | (21,100 | ) | |||||||
Avon Products, Inc. | (800 | ) | (23,248 | ) | |||||||
Bally Technologies, Inc. | (600 | ) | (25,314 | ) | |||||||
BancorpSouth, Inc. | (1,500 | ) | (23,925 | ) | |||||||
Bank of Hawaii Corp. | (400 | ) | (18,884 | ) | |||||||
BB&T Corp. | (800 | ) | (21,032 | ) |
Shares | Value | ||||||||||
Beckman Coulter, Inc. | (300 | ) | $ | (22,569 | ) | ||||||
Berkshire Hathaway, Inc., Class B | (400 | ) | (32,044 | ) | |||||||
Best Buy Co., Inc. | (1,900 | ) | (65,151 | ) | |||||||
Bio-Reference Labs, Inc. | (1,800 | ) | (39,924 | ) | |||||||
BlackRock, Inc. | (200 | ) | (38,116 | ) | |||||||
Blackstone Group LP | (1,900 | ) | (26,885 | ) | |||||||
BMC Software, Inc. | (4,000 | ) | (188,560 | ) | |||||||
Booz Allen Hamilton Holding Corp. | (1,100 | ) | (21,373 | ) | |||||||
BorgWarner, Inc. | (300 | ) | (21,708 | ) | |||||||
Boston Properties, Inc. | (200 | ) | (17,220 | ) | |||||||
Boston Scientific Corp. | (3,400 | ) | (25,738 | ) | |||||||
BRE Properties, Inc. | (500 | ) | (21,750 | ) | |||||||
Bristol-Myers Squibb Co. | (2,200 | ) | (58,256 | ) | |||||||
Brookdale Senior Living, Inc. | (1,000 | ) | (21,410 | ) | |||||||
Brown-Forman Corp., Class B | (1,900 | ) | (132,278 | ) | |||||||
Brunswick Corp. | (1,100 | ) | (20,614 | ) | |||||||
C.H. Robinson Worldwide, Inc. | (2,200 | ) | (176,418 | ) | |||||||
Cabot Oil & Gas Corp. | (600 | ) | (22,710 | ) | |||||||
Cadence Design Systems, Inc. | (3,700 | ) | (30,562 | ) | |||||||
Calpine Corp. | (2,200 | ) | (29,348 | ) | |||||||
Campbell Soup Co. | (800 | ) | (27,800 | ) | |||||||
Cardinal Health, Inc. | (1,100 | ) | (42,141 | ) | |||||||
Caterpillar, Inc. | (1,100 | ) | (103,026 | ) | |||||||
Celgene Corp. | (700 | ) | (41,398 | ) | |||||||
CenturyLink, Inc. | (800 | ) | (36,936 | ) | |||||||
Cephalon, Inc. | (600 | ) | (37,032 | ) | |||||||
Charles River Laboratories International, Inc. |
(3,200 | ) | (113,728 | ) | |||||||
Charles Schwab Corp. | (1,700 | ) | (29,087 | ) | |||||||
Chesapeake Energy Corp. | (2,500 | ) | (64,775 | ) | |||||||
Chevron Corp. | (600 | ) | (54,750 | ) | |||||||
Chipotle Mexican Grill, Inc. | (100 | ) | (21,266 | ) | |||||||
Choice Hotels International, Inc. | (600 | ) | (22,962 | ) | |||||||
Church & Dwight Co., Inc. | (300 | ) | (20,706 | ) | |||||||
Cia de Minas Buenaventura SA ADR | (400 | ) | (19,584 | ) | |||||||
Cincinnati Bell, Inc. | (11,100 | ) | (31,080 | ) | |||||||
Clean Energy Fuels Corp. | (1,600 | ) | (22,144 | ) | |||||||
Clear Channel Outdoor Holdings, Inc., Class A |
(1,700 | ) | (23,868 | ) | |||||||
Clorox Co. | (1,400 | ) | (88,592 | ) | |||||||
Cobalt International Energy, Inc. | (2,300 | ) | (28,083 | ) | |||||||
Cognizant Technology Solutions Corp., Class A |
(200 | ) | (14,658 | ) | |||||||
Comcast Corp., Class A | (1,000 | ) | (21,970 | ) | |||||||
Commercial Metals Co. | (1,500 | ) | (24,885 | ) | |||||||
Compuware Corp. | (3,900 | ) | (45,513 | ) | |||||||
Comstock Resources, Inc. | (900 | ) | (22,104 | ) | |||||||
ConocoPhillips | (700 | ) | (47,670 | ) | |||||||
CONSOL Energy, Inc. | (700 | ) | (34,118 | ) | |||||||
Consolidated Edison, Inc. | (2,300 | ) | (114,011 | ) | |||||||
Constellation Energy Group, Inc. | (900 | ) | (27,567 | ) | |||||||
Con-way, Inc. | (700 | ) | (25,599 | ) | |||||||
CoreLogic, Inc. | (1,400 | ) | (25,928 | ) |
38
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
United States(Continued) | |||||||||||
Corning, Inc. | (2,600 | ) | $ | (50,232 | ) | ||||||
Covance, Inc. | (600 | ) | (30,846 | ) | |||||||
Crane Co. | (500 | ) | (20,535 | ) | |||||||
Crown Castle International Corp. | (500 | ) | (21,915 | ) | |||||||
CSX Corp. | (700 | ) | (45,227 | ) | |||||||
Danaher Corp. | (400 | ) | (18,868 | ) | |||||||
DaVita, Inc. | (300 | ) | (20,847 | ) | |||||||
Deere & Co. | (500 | ) | (41,525 | ) | |||||||
Dell, Inc. | (10,200 | ) | (138,210 | ) | |||||||
Delta Air Lines, Inc. | (4,700 | ) | (59,220 | ) | |||||||
DENTSPLY International, Inc. | (700 | ) | (23,919 | ) | |||||||
Diebold, Inc. | (1,500 | ) | (48,075 | ) | |||||||
Discovery Communications, Inc., Class A |
(500 | ) | (20,850 | ) | |||||||
DISH Network Corp., Class A | (1,500 | ) | (29,490 | ) | |||||||
Dollar General Corp. | (1,600 | ) | (49,072 | ) | |||||||
Dominion Resources, Inc. | (600 | ) | (25,632 | ) | |||||||
Dover Corp. | (400 | ) | (23,380 | ) | |||||||
DR Horton, Inc. | (1,700 | ) | (20,281 | ) | |||||||
DreamWorks Animation SKG, Inc., Class A |
(700 | ) | (20,629 | ) | |||||||
Duke Energy Corp. | (2,600 | ) | (46,306 | ) | |||||||
Duke Realty Corp. | (1,900 | ) | (23,674 | ) | |||||||
Dun & Bradstreet Corp. | (300 | ) | (24,627 | ) | |||||||
Ecolab, Inc. | (500 | ) | (25,210 | ) | |||||||
EI Du Pont de Nemours & Co. | (1,100 | ) | (54,868 | ) | |||||||
Electronic Arts, Inc. | (3,200 | ) | (52,416 | ) | |||||||
Eli Lilly & Co. | (4,400 | ) | (154,176 | ) | |||||||
EMC Corp. | (5,100 | ) | (116,790 | ) | |||||||
Emerson Electric Co. | (1,100 | ) | (62,887 | ) | |||||||
Emulex Corp. | (2,200 | ) | (25,652 | ) | |||||||
EOG Resources, Inc. | (300 | ) | (27,423 | ) | |||||||
EQT Corp. | (1,200 | ) | (53,808 | ) | |||||||
Equinix, Inc. | (300 | ) | (24,378 | ) | |||||||
Expedia, Inc. | (1,100 | ) | (27,599 | ) | |||||||
Expeditors International Washington, Inc. |
(2,900 | ) | (158,340 | ) | |||||||
Express Scripts, Inc. | (400 | ) | (21,620 | ) | |||||||
Exterran Holdings, Inc. | (1,000 | ) | (23,950 | ) | |||||||
Exxon Mobil Corp. | (400 | ) | (29,248 | ) | |||||||
Fastenal Co. | (300 | ) | (17,973 | ) | |||||||
Federated Investors, Inc., Class B | (900 | ) | (23,553 | ) | |||||||
FedEx Corp. | (200 | ) | (18,602 | ) | |||||||
First Horizon National Corp. | (4,000 | ) | (47,120 | ) | |||||||
First Solar, Inc. | (200 | ) | (26,028 | ) | |||||||
FirstMerit Corp. | (1,200 | ) | (23,748 | ) | |||||||
Fiserv, Inc. | (800 | ) | (46,848 | ) | |||||||
Flextronics International Ltd. | (5,200 | ) | (40,820 | ) | |||||||
Flowers Foods, Inc. | (2,000 | ) | (53,820 | ) | |||||||
Ford Motor Co. | (4,900 | ) | (82,271 | ) |
Shares | Value | ||||||||||
Forest Laboratories, Inc. | (2,400 | ) | $ | (76,752 | ) | ||||||
Fortune Brands, Inc. | (300 | ) | (18,075 | ) | |||||||
Freeport-McMoRan Copper & Gold, Inc. | (400 | ) | (48,036 | ) | |||||||
Frontier Oil Corp. | (1,300 | ) | (23,413 | ) | |||||||
Gap, Inc. | (2,800 | ) | (61,992 | ) | |||||||
Genworth Financial, Inc., Class A | (1,800 | ) | (23,652 | ) | |||||||
Goodrich Corp. | (1,600 | ) | (140,912 | ) | |||||||
Goodyear Tire & Rubber Co. | (1,800 | ) | (21,330 | ) | |||||||
Great Plains Energy, Inc. | (1,600 | ) | (31,024 | ) | |||||||
Green Mountain Coffee Roasters, Inc. | (800 | ) | (26,288 | ) | |||||||
GSI Commerce, Inc. | (1,100 | ) | (25,520 | ) | |||||||
Hasbro, Inc. | (600 | ) | (28,308 | ) | |||||||
HCP, Inc. | (1,200 | ) | (44,148 | ) | |||||||
Health Care REIT, Inc. | (400 | ) | (19,056 | ) | |||||||
Helix Energy Solutions Group, Inc. | (2,100 | ) | (25,494 | ) | |||||||
Hershey Co. | (1,900 | ) | (89,585 | ) | |||||||
Hewlett-Packard Co. | (1,000 | ) | (42,100 | ) | |||||||
Honeywell International, Inc. | (1,000 | ) | (53,160 | ) | |||||||
Hormell Foods Corp. | (700 | ) | (35,882 | ) | |||||||
Hospira, Inc. | (1,400 | ) | (77,966 | ) | |||||||
Hudson City Bancorp, Inc. | (2,300 | ) | (29,302 | ) | |||||||
Human Genome Sciences, Inc. | (900 | ) | (21,501 | ) | |||||||
Humana, Inc. | (600 | ) | (32,844 | ) | |||||||
Huntington Bancshares, Inc. | (6,700 | ) | (46,029 | ) | |||||||
IDEX Corp. | (600 | ) | (23,472 | ) | |||||||
Illinois Tool Works, Inc. | (500 | ) | (26,700 | ) | |||||||
Integrys Energy Group, Inc. | (400 | ) | (19,404 | ) | |||||||
Intel Corp. | (5,700 | ) | (119,871 | ) | |||||||
International Business Machines Corp. | (300 | ) | (44,028 | ) | |||||||
International Game Technology | (3,200 | ) | (56,608 | ) | |||||||
Intrepid Potash, Inc. | (700 | ) | (26,103 | ) | |||||||
Intuitive Surgical, Inc. | (200 | ) | (51,550 | ) | |||||||
Invesco Ltd. | (1,000 | ) | (24,060 | ) | |||||||
ITT Corp. | (800 | ) | (41,688 | ) | |||||||
Jabil Circuit, Inc. | (1,400 | ) | (28,126 | ) | |||||||
Jarden Corp. | (700 | ) | (21,609 | ) | |||||||
JC Penney Co., Inc. | (1,300 | ) | (42,003 | ) | |||||||
Jefferies Group, Inc. | (800 | ) | (21,304 | ) | |||||||
Joy Global, Inc. | (600 | ) | (52,050 | ) | |||||||
Kellogg Co. | (500 | ) | (25,540 | ) | |||||||
Kimberly-Clark Corp. | (400 | ) | (25,216 | ) | |||||||
Kinder Morgan Management LLC | (307 | ) | (20,532 | ) | |||||||
Knight Transportation, Inc. | (1,100 | ) | (20,900 | ) | |||||||
Kraft Foods, Inc., Class A | (800 | ) | (25,208 | ) | |||||||
Laboratory Corp. of America Holdings | (200 | ) | (17,584 | ) | |||||||
Lamar Advertising Co., Class A | (2,900 | ) | (115,536 | ) | |||||||
Landstar System, Inc. | (600 | ) | (24,564 | ) | |||||||
Leucadia National Corp. | (700 | ) | (20,426 | ) | |||||||
Linear Technology Corp. | (800 | ) | (27,672 | ) | |||||||
LKQ Corp. | (1,100 | ) | (24,992 | ) | |||||||
Loews Corp. | (800 | ) | (31,128 | ) | |||||||
Longtop Financial Technologies Ltd. ADR | (800 | ) | (28,944 | ) | |||||||
Louisiana-Pacific Corp. | (2,800 | ) | (26,488 | ) |
39
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
United States(Continued) | |||||||||||
Manitowoc Co., Inc. | (1,900 | ) | $ | (24,909 | ) | ||||||
Marsh & McLennan Cos., Inc. | (1,000 | ) | (27,340 | ) | |||||||
Martin Marietta Materials, Inc. | (200 | ) | (18,448 | ) | |||||||
Masco Corp. | (2,300 | ) | (29,118 | ) | |||||||
McDonald's Corp. | (900 | ) | (69,084 | ) | |||||||
MDU Resources Group, Inc. | (1,000 | ) | (20,270 | ) | |||||||
MedAssets, Inc. | (1,100 | ) | (22,209 | ) | |||||||
MEMC Electronic Materials, Inc. | (2,000 | ) | (22,520 | ) | |||||||
Meredith Corp. | (700 | ) | (24,255 | ) | |||||||
MetLife, Inc. | (600 | ) | (26,664 | ) | |||||||
MetroPCS Communications, Inc. | (1,800 | ) | (22,734 | ) | |||||||
Mettler-Toledo International, Inc. | (100 | ) | (15,121 | ) | |||||||
MGM Resorts International | (3,100 | ) | (46,035 | ) | |||||||
Micron Technology, Inc. | (3,000 | ) | (24,060 | ) | |||||||
Mohawk Industries, Inc. | (400 | ) | (22,704 | ) | |||||||
Molex, Inc. | (1,000 | ) | (22,720 | ) | |||||||
Molycorp, Inc. | (200 | ) | (9,980 | ) | |||||||
Monsanto Co. | (400 | ) | (27,856 | ) | |||||||
Motorola, Inc. | (7,800 | ) | (70,746 | ) | |||||||
MSCI, Inc., Class A | (600 | ) | (23,376 | ) | |||||||
National Fuel Gas Co. | (300 | ) | (19,686 | ) | |||||||
Navistar International Corp. | (900 | ) | (52,119 | ) | |||||||
NCR Corp. | (1,900 | ) | (29,203 | ) | |||||||
NetApp, Inc. | (600 | ) | (32,976 | ) | |||||||
NetFlix, Inc. | (400 | ) | (70,280 | ) | |||||||
New York Times Co., Class A | (2,300 | ) | (22,540 | ) | |||||||
Nordstrom, Inc. | (1,100 | ) | (46,618 | ) | |||||||
Northern Trust Corp. | (400 | ) | (22,164 | ) | |||||||
Novellus Systems, Inc. | (2,400 | ) | (77,568 | ) | |||||||
NSTAR | (2,500 | ) | (105,475 | ) | |||||||
Nuance Communications, Inc. | (1,500 | ) | (27,270 | ) | |||||||
Nucor Corp. | (700 | ) | (30,674 | ) | |||||||
Nvidia Corp. | (900 | ) | (13,860 | ) | |||||||
NYSE Euronext | (700 | ) | (20,986 | ) | |||||||
Occidental Petroleum Corp. | (1,700 | ) | (166,770 | ) | |||||||
Office Depot, Inc. | (4,800 | ) | (25,920 | ) | |||||||
Old Republic International Corp. | (2,000 | ) | (27,260 | ) | |||||||
Olin Corp. | (1,600 | ) | (32,832 | ) | |||||||
Omnicare, Inc. | (900 | ) | (22,851 | ) | |||||||
O'Reilly Automotive, Inc. | (1,450 | ) | (87,609 | ) | |||||||
Owens-Illinois, Inc. | (700 | ) | (21,490 | ) | |||||||
PACCAR, Inc. | (400 | ) | (22,968 | ) | |||||||
Parexel International Corp. | (1,300 | ) | (27,599 | ) | |||||||
Parker Hannifin Corp. | (500 | ) | (43,150 | ) | |||||||
Patriot Coal Corp. | (1,300 | ) | (25,181 | ) | |||||||
Patterson Cos., Inc. | (800 | ) | (24,504 | ) | |||||||
Paychex, Inc. | (700 | ) | (21,637 | ) | |||||||
Penford Corp. | (5,250 | ) | (32,078 | ) | |||||||
Penske Automotive Group, Inc. | (1,200 | ) | (20,904 | ) | |||||||
Pentair, Inc. | (600 | ) | (21,906 | ) |
Shares | Value | ||||||||||
People's United Financial, Inc. | (1,700 | ) | $ | (23,817 | ) | ||||||
PepsiCo, Inc. | (400 | ) | (26,132 | ) | |||||||
Petrohawk Energy Corp. | (1,400 | ) | (25,550 | ) | |||||||
Pfizer, Inc. | (1,300 | ) | (22,763 | ) | |||||||
Phillips-Van Heusen Corp. | (400 | ) | (25,204 | ) | |||||||
Pioneer Natural Resources Co. | (700 | ) | (60,774 | ) | |||||||
Plum Creek Timber Co., Inc. | (700 | ) | (26,215 | ) | |||||||
PNC Financial Services Group, Inc. | (1,000 | ) | (60,720 | ) | |||||||
Potlatch Corp. | (600 | ) | (19,530 | ) | |||||||
Pride International, Inc. | (700 | ) | (23,100 | ) | |||||||
Progress Energy, Inc. | (400 | ) | (17,392 | ) | |||||||
Progressive Corp. | (900 | ) | (17,883 | ) | |||||||
Pulte Homes, Inc. | (3,100 | ) | (23,312 | ) | |||||||
Quality Systems, Inc. | (300 | ) | (20,946 | ) | |||||||
Quanta Services, Inc. | (1,700 | ) | (33,864 | ) | |||||||
Quicksilver Resources, Inc. | (2,400 | ) | (35,376 | ) | |||||||
Rambus, Inc. | (2,700 | ) | (55,296 | ) | |||||||
Range Resources Corp. | (700 | ) | (31,486 | ) | |||||||
Red Hat, Inc. | (800 | ) | (36,520 | ) | |||||||
Regal Entertainment Group, Class A | (1,600 | ) | (18,784 | ) | |||||||
Regency Centers Corp. | (500 | ) | (21,120 | ) | |||||||
Regions Financial Corp. | (10,200 | ) | (71,400 | ) | |||||||
Republic Services, Inc. | (900 | ) | (26,874 | ) | |||||||
Robert Half International, Inc. | (700 | ) | (21,420 | ) | |||||||
Rockwell Automation, Inc. | (1,300 | ) | (93,223 | ) | |||||||
Sara Lee Corp. | (1,400 | ) | (24,514 | ) | |||||||
SBA Communications Corp., Class A | (700 | ) | (28,658 | ) | |||||||
SCANA Corp. | (500 | ) | (20,300 | ) | |||||||
Schlumberger Ltd. | (1,100 | ) | (91,850 | ) | |||||||
Scripps Networks Interactive, Inc., Class A |
(400 | ) | (20,700 | ) | |||||||
Sears Holdings Corp. | (1,200 | ) | (88,500 | ) | |||||||
Sempra Energy | (400 | ) | (20,992 | ) | |||||||
Skechers U.S.A., Inc., Class A | (1,100 | ) | (22,000 | ) | |||||||
Smithfield Foods, Inc. | (3,100 | ) | (63,953 | ) | |||||||
Southern Co. | (2,700 | ) | (103,221 | ) | |||||||
Southwestern Energy Co. | (600 | ) | (22,458 | ) | |||||||
Spectra Energy Corp. | (2,000 | ) | (49,980 | ) | |||||||
Spirit Aerosystems Holdings, Inc., Class A |
(1,400 | ) | (29,134 | ) | |||||||
SPX Corp. | (300 | ) | (21,447 | ) | |||||||
Stanley Black & Decker, Inc. | (300 | ) | (20,061 | ) | |||||||
Staples, Inc. | (900 | ) | (20,493 | ) | |||||||
Starwood Hotels & Resorts Worldwide, Inc. |
(1,000 | ) | (60,780 | ) | |||||||
Steel Dynamics, Inc. | (1,200 | ) | (21,960 | ) | |||||||
Stericycle, Inc. | (300 | ) | (24,276 | ) | |||||||
SunPower Corp., Class A | (1,600 | ) | (20,528 | ) | |||||||
Superior Energy Services, Inc. | (700 | ) | (24,493 | ) | |||||||
Sysco Corp. | (800 | ) | (23,520 | ) | |||||||
Talbots, Inc. | (2,100 | ) | (17,892 | ) | |||||||
TCF Financial Corp. | (1,500 | ) | (22,215 | ) | |||||||
TD Ameritrade Holding Corp. | (1,400 | ) | (26,586 | ) |
40
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Concluded) | |||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Tellabs, Inc. | (4,300 | ) | $ | (29,154 | ) | ||||||
Temple-Inland, Inc. | (900 | ) | (19,116 | ) | |||||||
Terex Corp. | (800 | ) | (24,832 | ) | |||||||
TFS Financial Corp. | (3,362 | ) | (30,325 | ) | |||||||
Thermo Fisher Scientific, Inc. | (1,200 | ) | (66,432 | ) | |||||||
Thomson Reuters Corp. | (600 | ) | (22,362 | ) | |||||||
Tidewater, Inc. | (600 | ) | (32,304 | ) | |||||||
TiVo, Inc. | (2,600 | ) | (22,438 | ) | |||||||
TJX Cos., Inc. | (500 | ) | (22,195 | ) | |||||||
Toll Brothers, Inc. | (1,200 | ) | (22,800 | ) | |||||||
Transatlantic Holdings, Inc. | (400 | ) | (20,648 | ) | |||||||
Travelers Cos., Inc. | (1,200 | ) | (66,852 | ) | |||||||
Tyson Foods, Inc., Class A | (3,200 | ) | (55,104 | ) | |||||||
UDR, Inc. | (1,000 | ) | (23,520 | ) | |||||||
Unit Corp. | (500 | ) | (23,240 | ) | |||||||
Urban Outfitters, Inc. | (600 | ) | (21,486 | ) | |||||||
US Bancorp | (800 | ) | (21,576 | ) | |||||||
Varian Semiconductor Equipment Associates, Inc. |
(700 | ) | (25,879 | ) | |||||||
VCA Antech, Inc. | (1,100 | ) | (25,619 | ) | |||||||
Verizon Communications, Inc. | (1,100 | ) | (39,358 | ) | |||||||
Vertex Pharmaceuticals, Inc. | (700 | ) | (24,521 | ) | |||||||
Viasat, Inc. | (700 | ) | (31,087 | ) | |||||||
Vulcan Materials Co. | (400 | ) | (17,744 | ) | |||||||
Walt Disney Co. | (600 | ) | (22,506 | ) | |||||||
WellCare Health Plans, Inc. | (800 | ) | (24,176 | ) | |||||||
Wendy's/Arby's Group, Inc., Class A | (5,200 | ) | (24,024 | ) | |||||||
Western Union Co. | (1,200 | ) | (22,284 | ) | |||||||
Whole Foods Market, Inc. | (1,500 | ) | (75,885 | ) | |||||||
WW Grainger, Inc. | (1,300 | ) | (179,543 | ) | |||||||
Xcel Energy, Inc. | (1,200 | ) | (28,260 | ) | |||||||
Xilinx, Inc. | (800 | ) | (23,184 | ) | |||||||
Yum! Brands, Inc. | (500 | ) | (24,525 | ) | |||||||
Total United States common stocks | (11,996,388 | ) | |||||||||
Total common stocks (proceeds $18,861,131) |
(21,320,037 | ) |
Number of rights |
Value | ||||||||||
Rights: (0.00)%3 | |||||||||||
Canada: (0.00)%3 | |||||||||||
Ivanhoe Mines Ltd., expires 01/26/11* (proceeds $0) |
(900 | ) | $ | (1,213 | ) | ||||||
Total investments sold short (proceeds $18,861,131) |
(21,321,250 | ) | |||||||||
Total investments, net of investments sold short: 36.51% |
9,404,080 | ||||||||||
Cash and other assets, less liabilities: 63.49% |
16,356,603 | ||||||||||
Net assets: 100.00% | $ | 25,760,683 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes, before investments sold short, was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 2,785,434 | |||||
Gross unrealized depreciation | (99,748 | ) | |||||
Net unrealized appreciation of investments | $ | 2,685,686 |
* Non-income producing security.
1 All or a portion of these securities have been designated as collateral for open short positions.
41
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
2 The table below details the Fund's investment in a fund that is advised by the same advisor as the Fund. The advisor does not earn a management fee from UBS Cash Management Prime Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | | $ | 47,923,930 | $ | 39,139,116 | $ | 8,784,814 | $ | 7,827 |
3 Amount represents less than 0.005%.
ADR American depositary receipt
CVA Dutch certificationdepository certificate
ETF Exchange Traded Fund
NPV No Par Value
Preference shares A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.
REIT Real estate investment trust
SDR Swedish depository receipts
SPDR Standard & Poor's Depository Receipts
Forward foreign currency contracts
UBS Market Neutral Multi-Strategy Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Credit Suisse First Boston | USD | 198,359 | JPY | 16,200,000 | 01/05/11 | $ | 1,175 | ||||||||||||
JPMorgan Chase Bank | GBP | 900,000 | USD | 1,443,614 | 03/03/11 | 41,030 | |||||||||||||
JPMorgan Chase Bank | JPY | 30,300,000 | USD | 364,535 | 03/03/11 | (8,892 | ) | ||||||||||||
JPMorgan Chase Bank | SEK | 900,000 | USD | 129,826 | 03/03/11 | (3,721 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 284,909 | CHF | 280,000 | 03/03/11 | 14,742 | |||||||||||||
JPMorgan Chase Bank | USD | 538,869 | GBP | 340,000 | 03/03/11 | (9,004 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 46,529 | JPY | 3,800,000 | 01/05/11 | 276 | |||||||||||||
JPMorgan Chase Bank | USD | 364,424 | JPY | 30,300,000 | 03/03/11 | 9,002 | |||||||||||||
JPMorgan Chase Bank | USD | 599,317 | SEK | 4,130,000 | 03/03/11 | 13,518 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 58,126 |
Currency type abbreviations:
CHF Swiss Franc
GBP Great Britain Pound
JPY Japanese Yen
SEK Swedish Krona
USD United States Dollar
42
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
Futures contracts
UBS Market Neutral Multi-Strategy Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
Index futures buy contracts: | |||||||||||||||||||
FTSE 100 Index, 1 contract (GBP) | March 2011 | $ | 90,997 | $ | 91,878 | $ | 881 | ||||||||||||
Mini TPX Index, 3 contracts (JPY) | March 2011 | 33,405 | 33,107 | (298 | ) | ||||||||||||||
S&P SmallCap 600 E-MINI, 1 contract (USD) | March 2011 | 41,943 | 41,500 | (443 | ) | ||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
Russell 2000 Mini Index, 7 contracts (USD) | March 2011 | (544,639 | ) | (547,610 | ) | (2,971 | ) | ||||||||||||
TOPIX Index, 1 contract (JPY) | March 2011 | (111,512 | ) | (110,358 | ) | 1,154 | |||||||||||||
Net unrealized depreciation on futures contracts | $ | (1,677 | ) |
Currency type abbreviations:
GBP Great Britain Pound
JPY Japanese Yen
USD United States Dollar
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for (Level 1) |
Other significant identical investments (Level 2) |
Unobservable observable inputs (Level 3) |
inputs Total |
|||||||||||||||
Common stocks | $ | 21,610,335 | $ | | $ | | $ | 21,610,335 | |||||||||||
Common stocks sold short | (21,320,037 | ) | | | (21,320,037 | ) | |||||||||||||
Rights sold short | | (1,213 | ) | | (1,213 | ) | |||||||||||||
Preferred stocks | 141,965 | | | 141,965 | |||||||||||||||
Investment companies | 188,216 | | | 188,216 | |||||||||||||||
Short-term investment | | 8,784,814 | | 8,784,814 | |||||||||||||||
Other financial instruments1 | (1,677 | ) | 58,126 | | 56,449 | ||||||||||||||
Total | $ | 618,802 | $ | 8,841,727 | $ | | $ | 9,460,529 |
1 Other financial instruments include futures contracts and forward foreign currency contracts.
See accompanying notes to financial statements.
43
UBS U.S. Equity Alpha Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS U.S. Equity Alpha Fund (the "Fund") returned 21.83% (Class A shares returned 15.09% after the deduction of the maximum sales charge), while Class Y shares returned 22.05%. The Fund's benchmark, the Russell 1000 Index (the "Index"), returned 24.03% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 47; please note that the Fund's returns do not reflect the deduction of taxes that an investor would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund's underperformance versus the benchmark Index was due to stock selection and industry allocation.
Portfolio performance summary1
What worked
• Industry allocation and stock selection within financials was successful during the period. Industry allocation within consumer discretionary was also successful. The Fund took several strong positions relative to the benchmark, and these were rewarded.
The Fund was underweight to financials, a weighting that contributed to active performance when that sector lagged the market during the period. The decision not to hold Berkshire Hathaway in the Fund also made a positive contribution. The Fund's insurance holdings, particularly Principal Financial Group and AFLAC, also contributed.
The Fund had an overweight position to the consumer discretionary sector, which outperformed as investors began to feel more confident about the economic recovery. The second round of quantitative easing by the Federal Reserve, the extension of unemployment benefits and the continuation of the Bush-era tax cuts all helped the market move higher during the six months.
• Several stock holdings contributed positively to returns. The period was marked by unusually high correlations between stocks and market sectors. In a few cases, however, value events occurred that helped some stocks distinguish themselves.
The Fund's position in Fortune Brands made a significant contribution to returns. (For details, see "Portfolio highlights.")
Carnival Corp.'s news regarding the fire on one of its ships was a one-time incident that caused some volatility in share price performance during the period. But when the company reported strong earnings results, the stock moved higher. As the economy has continued to recover, Carnival has benefitted from an increasing demand for cruises, improving pricing power and low supply growth. (For additional details, see "Portfolio highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
44
UBS U.S. Equity Alpha Fund
• Within technology, several positions were positive for performance.
Autodesk performed strongly as a way to profit from cyclical growth, and we trimmed the position in December. The demand for Autodesk's design software increased, which helped to move the company's earnings higher. The stock also benefited from improving industry trends, specifically hiring and spending, as the economic recovery continued.
Intuit was another successful holding during the review period. The company is the biggest provider of tax and personal finance software. Intuit reported higher forecasts that topped estimates during the third quarter, and announced plans for a $2 billion stock buyback. We sold out of our position after the stock performed well.
• A short position in Amedisys contributed positively to relative returns. The Fund shorted Amedisys, a decision that was positive for performance when the company's shares experienced their sharpest decline in four years. The home health-care provider preannounced earnings that were worse than expected due to a large decline in recertification trends. In addition, Amedisys suspended their annual guidance, and the SEC is investigating the company. Our investment thesis for Amedisys was proven correct, and we sold out of the position before period-end.
What didn't work
• Short positions in Netflix and Ford were the largest detractors from Fund performance during the six months.
Although Netflix was the largest detractor over the review period, our investment thesis started to work in December. After a US regulator endorsed higher fees for heavy web users, the stock traded lower on the news. (For details, see "Portfolio highlights.")
A short position in Ford Motor also detracted from the Fund's performance. The stock rose when Ford announced that its US sales had increased 46% in September, from a year earlier. We believe, however, that the current stock price reflects a long-term outcome that is unlikely to justify its valuation. (For details, see "Portfolio highlights.")
• Hewlett-Packard was a negative contributor to relative returns. Shares of Hewlett-Packard tumbled after CEO Mark Hurd stepped down amid allegations of misconduct. We believe that this dramatic news may catch headlines in the short term, but that in the long term, strong execution and earnings visibility will be more important.
• The Fund's position in Bank of America detracted from performance. Like many financial stocks, Bank of America has struggled for some time. We believe the company faces earnings headwinds in the near term, and we therefore sold the stock in order to pursue other opportunities in the sector.
• Industry group weightings that hindered the Fund's performance included underweights to economically sensitive sectors. Over the review period, materials was the best-performing sector in the Index. The Fund was underweight to materials stocks, however, which detracted from results.
45
UBS U.S. Equity Alpha Fund
Portfolio highlights
• Rumors of a breakup plan pushed shares of Fortune Brands higher in November. Later in the quarter, the company announced plans to split the company into as many as three separate businesses. The company intends to spin off its home and security unit to shareholders, and either sell or spin off its golf division. This would allow Fortune to focus on its successful wine and spirits division. We believe that the company's current earnings power and valuation are being negatively impacted by the housing market downturn and soft economy. We have confidence in management's ability to weather the current housing market challenge, given its good track record in past downturns.
• We believe Carnival can benefit from increased consumer demand, and that sentiment on demand is too negative. We believe consumer demand has room to riseeven in a slow growth scenariogiven the relative importance of vacations in consumer spending priorities, the value proposition of cruising and the relatively low penetration rates of cruising, particularly in Europe. Our research indicates that supply growth will slow significantly after 2011, even with a couple of new ship orders by smaller competitors. In any case, we believe Carnival's management has levers to pull that can offset margin pressures from higher fuel prices as the global economy recovers.
• The Fund is short Netflix, reflecting our belief that the company faces serious headwinds in the intermediate term. These obstacles include the "net neutrality" proposal by the Federal Communications Commission, which calls for allowing network providers to manage traffic through pricing. We believe this would benefit broadband providers such as Comcast, while harming Netflix. In addition, the company's business offers low barriers to entry, and Netflix has a deficient library of content.
• Ford, a short position in the portfolio, has been able to take advantage of the current environment to regain some of the market share it had given up over the last few years. The company was able to avert bankruptcy this past year, and has a solid lineup of new vehicles coming out in showrooms during the next few years. In addition, CEO Alan Mulally's turnaround efforts have exceeded expectations to date. We believe, however, that the stock price reflects these developments and more. While we expect to see tremendous operating and financial leverage as the economic recovery plays out, we do not expect the market to pay very much for Ford's earnings, nor do we expect those earnings to be sustainable.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
46
UBS U.S. Equity Alpha Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | Inception1 | |||||||||||||
Before deducting maximum sales charge | |||||||||||||||
Class A2 | 21.83 | % | 7.83 | % | (1.80 | )% | |||||||||
Class C3 | 21.50 | 7.12 | (2.51 | ) | |||||||||||
Class Y4 | 22.05 | 8.02 | (1.56 | ) | |||||||||||
After deducting maximum sales charge | |||||||||||||||
Class A2 | 15.09 | % | 1.91 | % | (3.09 | )% | |||||||||
Class C3 | 20.50 | 6.12 | (2.51 | ) | |||||||||||
Russell 1000 Index5 | 24.03 | % | 16.10 | % | 1.20 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A2.47% and 2.27%; Class C3.30% and 3.01%; Class Y2.19% and 2.03%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short), through the 12-month period ending October 27, 2011, otherwise do not exceed 1.50% for Class A shares, 2.25% for Class C shares and 1.25% for Class Y shares. 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.
1 Inception date of all shares of UBS U.S. Equity Alpha Fund and the index is September 26, 2006.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees.
4 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
5 The Russell 1000 Index is designed to measure the performance of the large-cap segment of the US equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the Russell 3000 Index. The Russell 1000 Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
47
UBS U.S. Equity Alpha Fund
Top ten equity holdings (unaudited)1,2
As of December 31, 2010
Percentage of net assets |
|||||||
Exxon Mobil Corp. | 5.0 | % | |||||
Procter & Gamble Co. | 3.2 | ||||||
Apple, Inc. | 3.2 | ||||||
Wells Fargo & Co. | 2.9 | ||||||
PepsiCo, Inc. | 2.6 | ||||||
AT&T, Inc. | 2.4 | ||||||
JPMorgan Chase & Co. | 2.3 | ||||||
Kroger Co. | 2.2 | ||||||
General Dynamics Corp. | 2.1 | ||||||
Adobe Systems, Inc. | 2.1 | ||||||
Total | 28.0 | % |
1 Only long positions are considered for top ten holdings.
2 Figures represent the direct investments of UBS U.S. Equity Alpha Fund. Figures would be different if a breakdown of the underlying investment company was included.
48
UBS U.S. Equity Alpha Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 3.27 | % | |||||
Air freight & logistics | 1.79 | ||||||
Airlines | 0.91 | ||||||
Auto components | 1.49 | ||||||
Automobiles | 1.46 | ||||||
Beverages | 2.61 | ||||||
Biotechnology | 1.66 | ||||||
Capital markets | 3.96 | ||||||
Chemicals | 3.03 | ||||||
Commercial banks | 4.48 | ||||||
Communications equipment | 3.71 | ||||||
Computers & peripherals | 6.07 | ||||||
Diversified consumer services | 0.75 | ||||||
Diversified financial services | 3.24 | ||||||
Diversified telecommunication services | 2.43 | ||||||
Electric utilities | 4.08 | ||||||
Energy equipment & services | 3.79 | ||||||
Food & staples retailing | 2.19 | ||||||
Food products | 1.24 | ||||||
Health care equipment & supplies | 6.21 | ||||||
Health care providers & services | 1.75 | ||||||
Hotels, restaurants & leisure | 2.76 | ||||||
Household durables | 1.43 | ||||||
Household products | 3.23 | ||||||
Insurance | 5.06 | ||||||
Internet & catalog retail | 0.52 | ||||||
IT services | 1.17 | ||||||
Machinery | 5.33 | ||||||
Media | 5.50 | ||||||
Metals & mining | 1.20 | ||||||
Multi-utilities | 0.76 | ||||||
Oil, gas & consumable fuels | 8.82 | ||||||
Personal products | 1.28 | ||||||
Pharmaceuticals | 4.75 | ||||||
Road & rail | 1.62 | ||||||
Semiconductors & semiconductor equipment | 4.24 | ||||||
Software | 6.82 | ||||||
Specialty retail | 3.42 | ||||||
Total common stocks | 118.03 | % | |||||
Investment company | |||||||
SPDR S&P 500 ETF Trust | 1.98 | % | |||||
Short-term investment | 1.45 | ||||||
Total investments before investments sold short | 121.46 | % | |||||
Investments sold short | |||||||
Common stocks | |||||||
Aerospace & defense | (0.90 | ) | |||||
Automobiles | (0.89 | ) | |||||
Beverages | (0.53 | ) | |||||
Commercial banks | (0.53 | ) | |||||
Computers & peripherals | (0.92 | ) | |||||
Diversified telecommunication services | (0.95 | ) | |||||
Energy equipment & services | (0.71 | ) | |||||
Hotels, restaurants & leisure | (0.72 | ) | |||||
Household products | (0.60 | ) | |||||
Insurance | (0.67 | ) | |||||
Internet & catalog retail | (0.83 | ) | |||||
IT services | (0.54 | ) | |||||
Media | (1.21 | ) | |||||
Multiline retail | (1.25 | ) | |||||
Multi-utilities | (1.78 | ) | |||||
Oil, gas & consumable fuels | (1.62 | ) | |||||
Pharmaceuticals | (1.28 | ) | |||||
Semiconductors & semiconductor equipment | (0.71 | ) | |||||
Software | (1.37 | ) | |||||
Specialty retail | (1.27 | ) | |||||
Trading companies & distributors | (0.73 | ) | |||||
Water utilities | (1.21 | ) | |||||
Total investments sold short | (21.22 | )% | |||||
Total investments, net of investments sold short | 100.24 | ||||||
Liabilities, in excess of cash and other assets | (0.24 | ) | |||||
Net assets | 100.00 | % |
1 Figures represent the industry breakdown of direct investments of UBS U.S. Equity Alpha Fund. Figures would be different if a breakdown of the underlying investment companies' industry diversification was included.
49
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 118.03% | |||||||||||
Aerospace & defense: 3.27% | |||||||||||
General Dynamics Corp.1 | 11,200 | $ | 794,752 | ||||||||
Raytheon Co.1 | 9,700 | 449,498 | |||||||||
1,244,250 | |||||||||||
Air freight & logistics: 1.79% | |||||||||||
FedEx Corp.1 | 7,300 | 678,973 | |||||||||
Airlines: 0.91% | |||||||||||
Southwest Airlines Co.1 | 26,600 | 345,268 | |||||||||
Auto components: 1.49% | |||||||||||
Johnson Controls, Inc.1 | 14,800 | 565,360 | |||||||||
Automobiles: 1.46% | |||||||||||
General Motors Co.*1 | 15,100 | 556,586 | |||||||||
Beverages: 2.61% | |||||||||||
PepsiCo, Inc.1 | 15,200 | 993,016 | |||||||||
Biotechnology: 1.66% | |||||||||||
Alexion Pharmaceuticals, Inc.*1 | 2,600 | 209,430 | |||||||||
Amgen, Inc.*1 | 6,000 | 329,400 | |||||||||
Amylin Pharmaceuticals, Inc.*1 | 6,400 | 94,144 | |||||||||
632,974 | |||||||||||
Capital markets: 3.96% | |||||||||||
Bank of New York Mellon Corp.1 | 17,906 | 540,761 | |||||||||
Goldman Sachs Group, Inc.1 | 3,600 | 605,376 | |||||||||
Morgan Stanley1 | 13,200 | 359,172 | |||||||||
1,505,309 | |||||||||||
Chemicals: 3.03% | |||||||||||
Air Products & Chemicals, Inc.1 | 2,100 | 190,995 | |||||||||
Celanese Corp., Series A1 | 4,800 | 197,616 | |||||||||
Dow Chemical Co.1 | 11,100 | 378,954 | |||||||||
Monsanto Co.1 | 5,500 | 383,020 | |||||||||
1,150,585 | |||||||||||
Commercial banks: 4.48% | |||||||||||
US Bancorp1 | 22,200 | 598,734 | |||||||||
Wells Fargo & Co.1 | 35,700 | 1,106,343 | |||||||||
1,705,077 | |||||||||||
Communications equipment: 3.71% | |||||||||||
Cisco Systems, Inc.*1 | 30,800 | 623,084 | |||||||||
QUALCOMM, Inc.1 | 15,900 | 786,891 | |||||||||
1,409,975 |
Shares | Value | ||||||||||
Computers & peripherals: 6.07% | |||||||||||
Apple, Inc.*1 | 3,800 | $ | 1,225,728 | ||||||||
Hewlett-Packard Co.1 | 16,700 | 703,070 | |||||||||
Seagate Technology PLC*1 | 25,300 | 380,259 | |||||||||
2,309,057 | |||||||||||
Diversified consumer services: 0.75% | |||||||||||
Apollo Group, Inc., Class A*1 | 7,200 | 284,328 | |||||||||
Diversified financial services: 3.24% | |||||||||||
Citigroup, Inc.*1 | 79,100 | 374,143 | |||||||||
JPMorgan Chase & Co.1 | 20,200 | 856,884 | |||||||||
1,231,027 | |||||||||||
Diversified telecommunication services: 2.43% | |||||||||||
AT&T, Inc.1 | 31,400 | 922,532 | |||||||||
Electric utilities: 4.08% | |||||||||||
American Electric Power Co., Inc.1 | 19,300 | 694,414 | |||||||||
Edison International1 | 9,600 | 370,560 | |||||||||
FirstEnergy Corp.1 | 13,100 | 484,962 | |||||||||
1,549,936 | |||||||||||
Energy equipment & services: 3.79% | |||||||||||
Baker Hughes, Inc.1 | 12,800 | 731,776 | |||||||||
Noble Corp.1 | 19,800 | 708,246 | |||||||||
1,440,022 | |||||||||||
Food & staples retailing: 2.19% | |||||||||||
Kroger Co.1 | 37,200 | 831,792 | |||||||||
Food products: 1.24% | |||||||||||
Kellogg Co.1 | 9,200 | 469,936 | |||||||||
Health care equipment & supplies: 6.21% | |||||||||||
Baxter International, Inc.1 | 7,500 | 379,650 | |||||||||
Boston Scientific Corp.*1 | 35,300 | 267,221 | |||||||||
Covidien PLC1 | 15,200 | 694,032 | |||||||||
Medtronic, Inc.1 | 19,100 | 708,419 | |||||||||
Zimmer Holdings, Inc.*1 | 5,800 | 311,344 | |||||||||
2,360,666 | |||||||||||
Health care providers & services: 1.75% | |||||||||||
UnitedHealth Group, Inc.1 | 18,400 | 664,424 | |||||||||
Hotels, restaurants & leisure: 2.76% | |||||||||||
Carnival Corp.1 | 16,200 | 746,982 | |||||||||
International Game Technology1 | 17,200 | 304,268 | |||||||||
1,051,250 | |||||||||||
Household durables: 1.43% | |||||||||||
Fortune Brands, Inc.1 | 9,000 | 542,250 |
50
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Household products: 3.23% | |||||||||||
Procter & Gamble Co.1 | 19,100 | $ | 1,228,703 | ||||||||
Insurance: 5.06% | |||||||||||
Aflac, Inc.1 | 12,300 | 694,089 | |||||||||
MetLife, Inc.1 | 16,200 | 719,928 | |||||||||
Principal Financial Group, Inc.1 | 15,600 | 507,936 | |||||||||
1,921,953 | |||||||||||
Internet & catalog retail: 0.52% | |||||||||||
Amazon.com, Inc.*1 | 1,100 | 198,000 | |||||||||
IT services: 1.17% | |||||||||||
Visa, Inc., Class A1 | 6,300 | 443,394 | |||||||||
Machinery: 5.33% | |||||||||||
Dover Corp.1 | 9,500 | 555,275 | |||||||||
Illinois Tool Works, Inc.1 | 14,300 | 763,620 | |||||||||
PACCAR, Inc.1 | 6,600 | 378,972 | |||||||||
Pall Corp.1 | 6,600 | 327,228 | |||||||||
2,025,095 | |||||||||||
Media: 5.50% | |||||||||||
Comcast Corp., Class A1 | 34,400 | 755,768 | |||||||||
Interpublic Group of Cos., Inc.* | 16,545 | 175,708 | |||||||||
Time Warner, Inc.1 | 18,700 | 601,579 | |||||||||
Viacom, Inc., Class B1 | 14,100 | 558,501 | |||||||||
2,091,556 | |||||||||||
Metals & mining: 1.20% | |||||||||||
Steel Dynamics, Inc.1 | 25,000 | 457,500 | |||||||||
Multi-utilities: 0.76% | |||||||||||
MDU Resources Group, Inc.1 | 14,300 | 289,861 | |||||||||
Oil, gas & consumable fuels: 8.82% | |||||||||||
Exxon Mobil Corp.1 | 26,000 | 1,901,120 | |||||||||
Hess Corp.1 | 5,300 | 405,662 | |||||||||
Marathon Oil Corp.1 | 10,700 | 396,221 | |||||||||
Ultra Petroleum Corp.*1 | 13,600 | 649,672 | |||||||||
3,352,675 | |||||||||||
Personal products: 1.28% | |||||||||||
Avon Products, Inc.1 | 16,700 | 485,302 | |||||||||
Pharmaceuticals: 4.75% | |||||||||||
Allergan, Inc.1 | 7,100 | 487,557 | |||||||||
Johnson & Johnson1 | 10,600 | 655,610 | |||||||||
Merck & Co., Inc.1 | 18,400 | 663,136 | |||||||||
1,806,303 |
Shares | Value | ||||||||||
Road & rail: 1.62% | |||||||||||
Ryder System, Inc.1 | 11,700 | $ | 615,888 | ||||||||
Semiconductors & semiconductor equipment: 4.24% | |||||||||||
Applied Materials, Inc.1 | 26,700 | 375,135 | |||||||||
Broadcom Corp., Class A1 | 7,400 | 322,270 | |||||||||
Intersil Corp., Class A1 | 22,100 | 337,467 | |||||||||
Marvell Technology Group Ltd.*1 | 11,800 | 218,890 | |||||||||
National Semiconductor Corp.1 | 26,100 | 359,136 | |||||||||
1,612,898 | |||||||||||
Software: 6.82% | |||||||||||
Adobe Systems, Inc.*1 | 25,700 | 791,046 | |||||||||
Autodesk, Inc.*1 | 17,000 | 649,400 | |||||||||
Microsoft Corp.1 | 21,600 | 603,072 | |||||||||
Symantec Corp.*1 | 32,900 | 550,746 | |||||||||
2,594,264 | |||||||||||
Specialty retail: 3.42% | |||||||||||
GameStop Corp., Class A*1 | 18,900 | 432,432 | |||||||||
Home Depot, Inc.1 | 8,200 | 287,492 | |||||||||
Lowe's Cos., Inc.1 | 23,100 | 579,348 | |||||||||
1,299,272 | |||||||||||
Total common stocks (cost $37,672,847) |
44,867,257 | ||||||||||
Investment company: 1.98% | |||||||||||
SPDR S&P 500 ETF Trust (cost $754,108) |
6,000 | 754,680 | |||||||||
Short-term investment: 1.45% | |||||||||||
Investment company: 1.45% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $549,430) |
549,430 | 549,430 | |||||||||
Total investments before investments sold short: 121.46% (cost $38,976,385) |
46,171,367 | ||||||||||
Investments sold short: (21.22)% | |||||||||||
Common stocks: (21.22)% | |||||||||||
Aerospace & defense: (0.90)% | |||||||||||
Goodrich Corp. | (3,900 | ) | (343,473 | ) | |||||||
Automobiles: (0.89)% | |||||||||||
Ford Motor Co. | (20,100 | ) | (337,479 | ) | |||||||
Beverages: (0.53)% | |||||||||||
Constellation Brands, Inc., Class A | (9,100 | ) | (201,565 | ) | |||||||
Commercial banks: (0.53)% | |||||||||||
BB&T Corp. | (7,600 | ) | (199,804 | ) |
51
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Concluded) | |||||||||||
Common stocks(Concluded) | |||||||||||
Computers & peripherals: (0.92)% | |||||||||||
EMC Corp. | (6,800 | ) | $ | (155,720 | ) | ||||||
NetApp, Inc. | (3,500 | ) | (192,360 | ) | |||||||
(348,080 | ) | ||||||||||
Diversified telecommunication services: (0.95)% | |||||||||||
Qwest Communications International, Inc. | (47,600 | ) | (362,236 | ) | |||||||
Energy equipment & services: (0.71)% | |||||||||||
Halliburton Co. | (6,600 | ) | (269,478 | ) | |||||||
Hotels, restaurants & leisure: (0.72)% | |||||||||||
Starwood Hotels & Resorts Worldwide, Inc. | (4,500 | ) | (273,510 | ) | |||||||
Household products: (0.60)% | |||||||||||
Church & Dwight Co., Inc. | (3,300 | ) | (227,766 | ) | |||||||
Insurance: (0.67)% | |||||||||||
Travelers Cos., Inc. | (4,600 | ) | (256,266 | ) | |||||||
Internet & catalog retail: (0.83)% | |||||||||||
NetFlix, Inc. | (1,800 | ) | (316,260 | ) | |||||||
IT services: (0.54)% | |||||||||||
Cognizant Technology Solutions Corp., Class A |
(2,800 | ) | (205,212 | ) | |||||||
Media: (1.21)% | |||||||||||
Discovery Communications, Inc., Class A | (4,900 | ) | (204,330 | ) | |||||||
Lamar Advertising Co., Class A | (6,400 | ) | (254,976 | ) | |||||||
(459,306 | ) | ||||||||||
Multiline retail: (1.25)% | |||||||||||
Dollar General Corp. | (9,300 | ) | (285,231 | ) | |||||||
Sears Holdings Corp. | (2,600 | ) | (191,750 | ) | |||||||
(476,981 | ) | ||||||||||
Multi-utilities: (1.78)% | |||||||||||
Consolidated Edison, Inc. | (5,700 | ) | (282,549 | ) | |||||||
Integrys Energy Group, Inc. | (4,800 | ) | (232,848 | ) | |||||||
NSTAR | (3,800 | ) | (160,322 | ) | |||||||
(675,719 | ) | ||||||||||
Oil, gas & consumable fuels: (1.62)% | |||||||||||
Occidental Petroleum Corp. | (2,900 | ) | (284,490 | ) | |||||||
Pioneer Natural Resources Co. | (3,800 | ) | (329,916 | ) | |||||||
(614,406 | ) |
Shares | Value | ||||||||||
Pharmaceuticals: (1.28)% | |||||||||||
Eli Lilly & Co. | (7,700 | ) | $ | (269,808 | ) | ||||||
Hospira, Inc. | (3,900 | ) | (217,191 | ) | |||||||
(486,999 | ) | ||||||||||
Semiconductors & semiconductor equipment: (0.71)% | |||||||||||
Novellus Systems, Inc. | (8,400 | ) | (271,488 | ) | |||||||
Software: (1.37)% | |||||||||||
BMC Software, Inc. | (6,800 | ) | (320,552 | ) | |||||||
Compuware Corp. | (17,100 | ) | (199,557 | ) | |||||||
(520,109 | ) | ||||||||||
Specialty retail: (1.27)% | |||||||||||
O'Reilly Automotive, Inc. | (4,600 | ) | (277,932 | ) | |||||||
TJX Cos., Inc. | (4,600 | ) | (204,194 | ) | |||||||
(482,126 | ) | ||||||||||
Trading companies & distributors: (0.73)% | |||||||||||
WW Grainger, Inc. | (2,000 | ) | (276,220 | ) | |||||||
Water utilities: (1.21)% | |||||||||||
American Water Works Co., Inc. | (9,100 | ) | (230,139 | ) | |||||||
Aqua America, Inc. | (10,200 | ) | (229,296 | ) | |||||||
(459,435 | ) | ||||||||||
Total investments sold short (proceeds $6,142,247) |
(8,063,918 | ) | |||||||||
Total investments, net of investments sold short: 100.24% |
38,107,449 | ||||||||||
Liabilities, in excess of cash and other assets: (0.24)% |
(93,036 | ) | |||||||||
Net assets: 100.00% | $ | 38,014,413 |
52
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
Notes to portfolio of investments
Aggregate cost for federal income tax purposes, before investments sold short, was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 7,799,896 | |||||
Gross unrealized depreciation | (604,914 | ) | |||||
Net unrealized appreciation of investments | $ | 7,194,982 |
* Non-income producing security.
1 All or a portion of these securities have been designated as collateral for open short positions.
2 The table below details the Fund's investments in a fund that is advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Cash Management Prime Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 443,436 | $ | 10,423,803 | $ | 10,317,809 | $ | 549,430 | $ | 550 |
ETF Exchange Traded Fund
SPDR Standard & Poor's Depository Receipts
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 44,867,257 | $ | | | $ | 44,867,257 | ||||||||||||
Common stocks sold short | (8,063,918 | ) | | | (8,063,918 | ) | |||||||||||||
Investment company | 754,680 | | | 754,680 | |||||||||||||||
Short-term investment | | 549,430 | | 549,430 | |||||||||||||||
Total | $ | 37,558,019 | $ | 549,430 | | $ | 38,107,449 |
See accompanying notes to financial statements.
53
UBS U.S. Large Cap Equity Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS U.S. Large Cap Equity Fund (the "Fund") returned 23.31% (Class A shares returned 16.57% after the deduction of the maximum sales charge), while Class Y shares returned 23.40%. The Fund's benchmark, the Russell 1000 Index (the "Index"), returned 24.03% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 57; please note that the Fund's returns do not reflect the deduction of taxes that an investor would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund's underperformance versus the Index was mostly due to industry allocation. Stock selection was positive for the six months.
Portfolio performance summary1
What worked
• Industry allocation and stock selection within consumer discretionary and financials were successful during the period. The Fund took several strong positions relative to the benchmark, and these were rewarded.
The Fund was underweight to financials, a weighting that contributed to active performance when that sector lagged the market during the period. The decision not to hold Berkshire Hathaway in the Fund also made a positive contribution. The Fund's insurance holdings, particularly Principal Financial Group and AFLAC, also contributed positively.
The Fund had an overweight position to the consumer discretionary sector, which outperformed as investors began to feel more confident about the economic recovery. The second round of quantitative easing by the Federal Reserve, the extension of unemployment benefits and the continuation of the Bush-era tax cuts all helped the market move higher during the six months.
• Several stock holdings contributed positively to returns. The period was marked by unusually high correlations between stocks and market sectors. In a few cases, however, value events occurred that helped some stocks distinguish themselves.
The Fund's position in Fortune Brands made a significant contribution to returns. (For details, see "Portfolio highlights.")
Carnival Corp.'s news regarding the fire on one of its ships was a one-time incident that caused some volatility in share price performance during the period. But when the company reported strong earnings results, the stock moved higher. As the economy has continued to recover, Carnival has benefitted from an increasing demand for cruises, improving pricing power and low supply growth. (For additional details, see "Portfolio highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
54
UBS U.S. Large Cap Equity Fund
• Within technology, several positions were positive for performance.
Autodesk performed strongly, and we trimmed the position in December. The demand for Autodesk's design software increased, which helped to move the company's earnings higher. The stock also benefited from improving industry trends, specifically hiring and spending, as the economic recovery continued.
Intuit was another successful holding during the review period. The company is the biggest provider of tax and personal finance software. Intuit reported higher forecasts that topped estimates during the third quarter, and announced plans for a $2 billion stock buyback. We sold out of our position after the stock performed well.
What didn't work
• The largest detractor from Fund performance during the six months was Bank of America. Like many financial stocks, Bank of America has struggled for some time. We believe the company faces earnings headwinds in the near term, and we therefore sold the stock in order to pursue other opportunities in the sector.
• Hewlett-Packard was a negative contributor to relative returns. Shares of Hewlett-Packard tumbled after CEO Mark Hurd stepped down amid allegations of misconduct. We believe that this dramatic news may catch headlines in the short term, but that in the long term, strong execution and earnings visibility will be more important.
• Apollo Group detracted from Fund performance during the six months. Apollo specializes in providing higher education programs for working adults. The for-profit education sector came under intense regulatory scrutiny during the fourth quarter, and the company's share price underperformed. (For details, see "Portfolio highlights.")
• Industry group weightings that hindered the Fund included underweights to economically sensitive sectors. Over the review period, materials was the best-performing sector in the Index. The Fund was underweight to materials stocks, however, which detracted from results.
Portfolio highlights
• Rumors of a breakup plan pushed shares of Fortune Brands higher in November. Later in the quarter, the company announced plans to split the company into as many as three separate businesses. The company intends to spin off its home and security unit to shareholders, and either sell or spin off its golf division. This would allow Fortune to focus on its successful wine and spirits division. We believe that the company's current earnings power and valuation are being negatively impacted by the housing market downturn and soft economy. We have confidence in management's ability to weather the current housing market challenge, given its good track record in past downturns.
• We believe Carnival can benefit from increased consumer demand, and that sentiment on demand is too negative. We believe consumer demand has room to riseeven in a slow growth scenariogiven the relative importance of vacations in consumer spending priorities, the value proposition of cruising and the relatively low penetration rates of cruising, particularly in Europe. Our research indicates that supply growth will slow significantly after 2011, even with a couple of new ship orders by smaller competitors. In any case, we believe Carnival's management has levers to pull that can offset margin pressures from higher fuel prices as the global economy recovers.
55
UBS U.S. Large Cap Equity Fund
• Apollo Group suffered a sharp decline in enrollment in 2010 versus the prior year, after it altered its enrollment practices. Concerns about student loan defaults and possible government regulation put pressure on the stock for much of the year. Over the past few years, we believe Apollo has worked hard to put the long-term success of the student at the heart of the company's own long-term success, and has been implementing investments to back that up.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
56
UBS U.S. Large Cap Equity Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 23.31 | % | 13.14 | % | 0.37 | % | 3.24 | % | 4.05 | % | |||||||||||||
Class B3 | 22.80 | 12.29 | (0.39 | ) | N/A | 3.63 6 | |||||||||||||||||
Class C4 | 22.88 | 12.34 | (0.36 | ) | N/A | 3.09 | |||||||||||||||||
Class Y5 | 23.40 | 13.39 | 0.64 | 3.54 | 7.90 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 16.57 | % | 6.93 | % | (0.76 | )% | 2.66 | % | 3.61 | % | |||||||||||||
Class B3 | 17.80 | 7.29 | (0.75 | ) | N/A | 3.63 6 | |||||||||||||||||
Class C4 | 21.88 | 11.34 | (0.36 | ) | N/A | 3.09 | |||||||||||||||||
Russell 1000 Index7 | 24.03 | % | 16.10 | % | 2.59 | % | 1.83 | % | 8.21 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.33% and 1.20%; Class B2.10% and 1.95%; Class C2.01% and 1.95%; Class Y0.99% and 0.95%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the 12-month period ending October 27, 2011, do not exceed 1.20% for Class A shares, 1.95% for Class B shares, 1.95% for Class C shares and 0.95% for Class Y shares. 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.
1 Inception date of UBS U.S. Large Cap Equity Fund Class A shares is June 30, 1997. Inception dates of Class B and Class C shares are November 5, 2001 and November 13, 2001, respectively. Inception date of Class Y shares and the index is February 22, 1994.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The Russell 1000 Index is designed to measure the performance of the large-cap segment of the US equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the Russell 3000 Index. The Russell 1000 Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
57
UBS U.S. Large Cap Equity Fund
Top ten equity holdings (unaudited)
As of December 31, 2010
Percentage of net assets |
|||||||
Exxon Mobil Corp. | 4.2 | % | |||||
Apple, Inc. | 3.2 | ||||||
Wells Fargo & Co. | 2.4 | ||||||
JPMorgan Chase & Co. | 2.3 | ||||||
AT&T, Inc. | 2.1 | ||||||
Carnival Corp. | 2.0 | ||||||
Comcast Corp., Class A | 2.0 | ||||||
Johnson & Johnson | 2.0 | ||||||
General Dynamics Corp. | 1.9 | ||||||
Aflac, Inc. | 1.9 | ||||||
Total | 24.0 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 2.72 | % | |||||
Air freight & logistics | 1.39 | ||||||
Airlines | 0.88 | ||||||
Auto components | 1.44 | ||||||
Automobiles | 1.13 | ||||||
Beverages | 1.87 | ||||||
Biotechnology | 2.37 | ||||||
Capital markets | 3.17 | ||||||
Chemicals | 2.15 | ||||||
Commercial banks | 3.92 | ||||||
Communications equipment | 3.29 | ||||||
Computers & peripherals | 5.60 | ||||||
Diversified consumer services | 0.67 | ||||||
Diversified financial services | 3.25 | ||||||
Diversified telecommunication services | 2.07 | ||||||
Electric utilities | 2.59 | ||||||
Energy equipment & services | 2.78 | ||||||
Food & staples retailing | 1.42 | ||||||
Food products | 1.05 | ||||||
Health care equipment & supplies | 4.34 | ||||||
Health care providers & services | 1.63 | ||||||
Hotels, restaurants & leisure | 2.79 | ||||||
Household durables | 1.76 | ||||||
Household products | 1.78 | ||||||
Insurance | 4.19 | ||||||
IT services | 0.91 | ||||||
Machinery | 4.83 | ||||||
Media | 4.93 | ||||||
Oil, gas & consumable fuels | 8.30 | ||||||
Personal products | 1.33 | ||||||
Pharmaceuticals | 4.88 | ||||||
Road & rail | 0.96 | ||||||
Semiconductors & semiconductor equipment | 4.04 | ||||||
Software | 5.58 | ||||||
Specialty retail | 2.22 | ||||||
Total common stocks | 98.23 | % | |||||
Short-term investment | 1.95 | ||||||
Investment of cash collateral from securities loaned | 0.18 | ||||||
Total investments | 100.36 | % | |||||
Liabilities, in excess of cash and other assets | (0.36 | ) | |||||
Net assets | 100.00 | % |
58
UBS U.S. Large Cap Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 98.23% | |||||||||||
Aerospace & defense: 2.72% | |||||||||||
General Dynamics Corp. | 65,700 | $ | 4,662,072 | ||||||||
Raytheon Co. | 39,800 | 1,844,332 | |||||||||
6,506,404 | |||||||||||
Air freight & logistics: 1.39% | |||||||||||
FedEx Corp. | 35,900 | 3,339,059 | |||||||||
Airlines: 0.88% | |||||||||||
Southwest Airlines Co. | 162,100 | 2,104,058 | |||||||||
Auto components: 1.44% | |||||||||||
Johnson Controls, Inc. | 90,100 | 3,441,820 | |||||||||
Automobiles: 1.13% | |||||||||||
General Motors Co.* | 73,500 | 2,709,210 | |||||||||
Beverages: 1.87% | |||||||||||
PepsiCo, Inc. | 68,700 | 4,488,171 | |||||||||
Biotechnology: 2.37% | |||||||||||
Alexion Pharmaceuticals, Inc.* | 16,300 | 1,312,965 | |||||||||
Amgen, Inc.* | 37,300 | 2,047,770 | |||||||||
Amylin Pharmaceuticals, Inc.*1 | 41,100 | 604,581 | |||||||||
Genzyme Corp.* | 24,000 | 1,708,800 | |||||||||
5,674,116 | |||||||||||
Capital markets: 3.17% | |||||||||||
Bank of New York Mellon Corp. | 91,383 | 2,759,766 | |||||||||
Goldman Sachs Group, Inc. | 18,300 | 3,077,328 | |||||||||
Morgan Stanley | 63,908 | 1,738,937 | |||||||||
7,576,031 | |||||||||||
Chemicals: 2.15% | |||||||||||
Celanese Corp., Series A | 28,700 | 1,181,579 | |||||||||
Dow Chemical Co. | 60,600 | 2,068,884 | |||||||||
Monsanto Co. | 27,300 | 1,901,172 | |||||||||
5,151,635 | |||||||||||
Commercial banks: 3.92% | |||||||||||
US Bancorp | 133,000 | 3,587,010 | |||||||||
Wells Fargo & Co. | 187,400 | 5,807,526 | |||||||||
9,394,536 | |||||||||||
Communications equipment: 3.29% | |||||||||||
Cisco Systems, Inc.* | 199,500 | 4,035,885 | |||||||||
QUALCOMM, Inc. | 77,800 | 3,850,322 | |||||||||
7,886,207 |
Shares | Value | ||||||||||
Computers & peripherals: 5.60% | |||||||||||
Apple, Inc.* | 23,500 | $ | 7,580,160 | ||||||||
Hewlett-Packard Co. | 86,800 | 3,654,280 | |||||||||
Seagate Technology | 143,700 | 2,159,811 | |||||||||
13,394,251 | |||||||||||
Diversified consumer services: 0.67% | |||||||||||
Apollo Group, Inc., Class A* | 40,400 | 1,595,396 | |||||||||
Diversified financial services: 3.25% | |||||||||||
Citigroup, Inc.* | 503,200 | 2,380,136 | |||||||||
JPMorgan Chase & Co. | 127,300 | 5,400,066 | |||||||||
7,780,202 | |||||||||||
Diversified telecommunication services: 2.07% | |||||||||||
AT&T, Inc. | 168,800 | 4,959,344 | |||||||||
Electric utilities: 2.59% | |||||||||||
American Electric Power Co., Inc. | 110,800 | 3,986,584 | |||||||||
FirstEnergy Corp. | 59,700 | 2,210,094 | |||||||||
6,196,678 | |||||||||||
Energy equipment & services: 2.78% | |||||||||||
Baker Hughes, Inc. | 55,300 | 3,161,501 | |||||||||
Noble Corp. | 97,400 | 3,483,998 | |||||||||
6,645,499 | |||||||||||
Food & staples retailing: 1.42% | |||||||||||
Kroger Co. | 151,500 | 3,387,540 | |||||||||
Food products: 1.05% | |||||||||||
Kellogg Co. | 49,200 | 2,513,136 | |||||||||
Health care equipment & supplies: 4.34% | |||||||||||
Baxter International, Inc. | 43,500 | 2,201,970 | |||||||||
Boston Scientific Corp.* | 159,800 | 1,209,686 | |||||||||
Covidien PLC | 83,500 | 3,812,610 | |||||||||
Medtronic, Inc. | 85,000 | 3,152,650 | |||||||||
10,376,916 | |||||||||||
Health care providers & services: 1.63% | |||||||||||
UnitedHealth Group, Inc. | 107,800 | 3,892,658 | |||||||||
Hotels, restaurants & leisure: 2.79% | |||||||||||
Carnival Corp. | 104,100 | 4,800,051 | |||||||||
International Game Technology | 106,800 | 1,889,292 | |||||||||
6,689,343 | |||||||||||
Household durables: 1.76% | |||||||||||
Fortune Brands, Inc. | 69,800 | 4,205,450 |
59
UBS U.S. Large Cap Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Household products: 1.78% | |||||||||||
Procter & Gamble Co. | 66,100 | $ | 4,252,213 | ||||||||
Insurance: 4.19% | |||||||||||
Aflac, Inc. | 80,000 | 4,514,400 | |||||||||
MetLife, Inc. | 76,700 | 3,408,548 | |||||||||
Principal Financial Group, Inc. | 64,400 | 2,096,864 | |||||||||
10,019,812 | |||||||||||
IT services: 0.91% | |||||||||||
Visa, Inc., Class A | 30,900 | 2,174,742 | |||||||||
Machinery: 4.83% | |||||||||||
Dover Corp. | 62,300 | 3,641,435 | |||||||||
Illinois Tool Works, Inc. | 83,200 | 4,442,880 | |||||||||
PACCAR, Inc. | 20,850 | 1,197,207 | |||||||||
Pall Corp. | 46,200 | 2,290,596 | |||||||||
11,572,118 | |||||||||||
Media: 4.93% | |||||||||||
Comcast Corp., Class A | 218,000 | 4,789,460 | |||||||||
Interpublic Group of Cos., Inc.* | 63,800 | 677,556 | |||||||||
Time Warner, Inc. | 115,400 | 3,712,418 | |||||||||
Viacom, Inc., Class B | 66,000 | 2,614,260 | |||||||||
11,793,694 | |||||||||||
Oil, gas & consumable fuels: 8.30% | |||||||||||
Exxon Mobil Corp. | 136,800 | 10,002,816 | |||||||||
Hess Corp. | 42,900 | 3,283,566 | |||||||||
Marathon Oil Corp. | 74,700 | 2,766,141 | |||||||||
Ultra Petroleum Corp.*1 | 79,977 | 3,820,502 | |||||||||
19,873,025 | |||||||||||
Personal products: 1.33% | |||||||||||
Avon Products, Inc. | 109,800 | 3,190,788 | |||||||||
Pharmaceuticals: 4.88% | |||||||||||
Allergan, Inc. | 53,300 | 3,660,111 | |||||||||
Johnson & Johnson | 77,300 | 4,781,005 | |||||||||
Merck & Co., Inc. | 89,600 | 3,229,184 | |||||||||
11,670,300 | |||||||||||
Road & rail: 0.96% | |||||||||||
Ryder System, Inc. | 43,800 | 2,305,632 |
Shares | Value | ||||||||||
Semiconductors & semiconductor equipment: 4.04% | |||||||||||
Applied Materials, Inc. | 104,100 | $ | 1,462,605 | ||||||||
Broadcom Corp., Class A | 59,300 | 2,582,515 | |||||||||
Intersil Corp., Class A | 124,400 | 1,899,588 | |||||||||
Marvell Technology Group Ltd.* | 97,300 | 1,804,915 | |||||||||
National Semiconductor Corp. | 139,400 | 1,918,144 | |||||||||
9,667,767 | |||||||||||
Software: 5.58% | |||||||||||
Adobe Systems, Inc.* | 144,100 | 4,435,398 | |||||||||
Autodesk, Inc.* | 69,300 | 2,647,260 | |||||||||
Microsoft Corp. | 137,800 | 3,847,376 | |||||||||
Symantec Corp.* | 145,500 | 2,435,670 | |||||||||
13,365,704 | |||||||||||
Specialty retail: 2.22% | |||||||||||
GameStop Corp., Class A* | 95,300 | 2,180,464 | |||||||||
Lowe's Cos., Inc. | 124,900 | 3,132,492 | |||||||||
5,312,956 | |||||||||||
Total common stocks (cost $193,814,101) |
235,106,411 | ||||||||||
Short-term investment: 1.95% | |||||||||||
Investment company: 1.95% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $4,665,034) |
4,665,034 | 4,665,034 | |||||||||
Investment of cash collateral from securities loaned: 0.18% | |||||||||||
UBS Private Money Market Fund LLC2 (cost $441,875) |
441,875 | 441,875 | |||||||||
Total investments: 100.36% (cost $198,921,010) |
240,213,320 | ||||||||||
Liabilities, in excess of cash and other assets: (0.36)% |
(852,159 | ) | |||||||||
Net assets: 100.00% | $ | 239,361,161 |
60
UBS U.S. Large Cap Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 44,594,474 | |||||
Gross unrealized depreciation | (3,302,164 | ) | |||||
Net unrealized appreciation of investments | $ | 41,292,310 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
2 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 5,489,875 | $ | 21,554,746 | $ | 22,379,587 | $ | 4,665,034 | $ | 4,836 | |||||||||||||
UBS Private Money Market Fund LLC1 | | 27,334,813 | 26,892,938 | 441,875 | 446 | ||||||||||||||||||
$ | 5,489,875 | $ | 48,889,559 | $ | 49,272,525 | $ | 5,106,909 | $ | 5,282 |
1 The advisor does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements in the most recent shareholder report for further information.
Futures contracts
UBS U.S. Large Cap Equity Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost | Value |
Unrealized appreciation |
||||||||||||||||
Index futures buy contracts: | |||||||||||||||||||
S&P 500 Index, 5 contracts (USD) | March 2011 | $ | 1,563,767 | $ | 1,566,250 | $ | 2,483 |
Currency type abbreviation:
USD United States Dollar
61
UBS U.S. Large Cap Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 235,106,411 | $ | | $ | | $ | 235,106,411 | |||||||||||
Short-term investment | | 4,665,034 | | 4,665,034 | |||||||||||||||
Investment of cash collateral from securities loaned | | 441,875 | | 441,875 | |||||||||||||||
Other financial instruments1 | 2,483 | | | 2,483 | |||||||||||||||
Total | $ | 235,108,894 | $ | 5,106,909 | $ | | $ | 240,215,803 |
1 Other financial instruments include futures contracts.
See accompanying notes to financial statements.
62
UBS U.S. Large Cap Value Equity Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS U.S. Large Cap Value Equity Fund (the "Fund") returned 21.71% (Class A shares returned 15.02% after the deduction of the maximum sales charge), while Class Y shares returned 22.09%. The Fund's benchmark, the Russell 1000 Value Index (the "Index"), returned 21.74% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 66; please note that the Fund's returns do not reflect the deduction of taxes that an investor would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund performed in line with the Index. Performance was driven primarily by industry allocation, while stock selection generated positive results as well.
Portfolio performance summary1
What worked
• Industry allocation and stock selection within consumer discretionary and financials were successful during the period. The Fund took several strong positions relative to the benchmark, and these were rewarded.
The Fund was underweight to financials, a weighting that contributed to active performance when that sector lagged the market during the period. The decision not to hold Berkshire Hathaway in the Fund also made a positive contribution. The Fund's insurance holdings, particularly Principal Financial Group and AFLAC, also contributed.
The Fund had an overweight position to the consumer discretionary sector, which outperformed as investors began to feel more confident about the economic recovery. The second round of quantitative easing by the Federal Reserve, the extension of unemployment benefits and the continuation of the Bush-era tax cuts all helped the market move higher during the six months.
• Several stock holdings contributed positively to returns. The period was marked by unusually high correlations between stocks and market sectors. In a few cases, however, value events occurred that helped some stocks distinguish themselves.
Carnival Corp. was the largest contributor to Fund returns during the six months. News regarding the fire on one of Carnival's ships was a one-time incident that caused some volatility in share price performance during the period. But when the company reported strong earnings results, the stock moved higher. As the economy has continued to recover, Carnival has benefitted from an increasing demand for cruises, improving pricing power and low supply growth. (For additional details, see "Portfolio highlights.")
The Fund's position in Fortune Brands made a significant contribution to returns. (For details, see "Portfolio highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
63
UBS U.S. Large Cap Value Equity Fund
• Several energy stocks benefited Fund returns. Cyclical sectors such as energy and materials were some of the best performing sectors during the period.
The Fund's position in Baker Hughes made a positive contribution for the period when rising oil prices and the increasing number of US oil rigs helped to move the company's share price higher.
We bought shares of Anadarko Petroleum2 when its price declined during the oil spill in the Gulf of Mexico. Because the company was a drilling partner of BP, investors feared it would face steep financial penalties. We believed the company bore limited exposure to the spill, and initiated a new position. When the crisis passed, the stock recovered strongly, and our position was rewarded.
• Within technology, several positions were positive for performance. Notably, Autodesk2 performed strongly, and we trimmed the position in December. The demand for Autodesk's design software increased, which helped to move the company's earnings higher. The stock also benefited from improving industry trends, specifically hiring and spending, as the economic recovery continued.
What didn't work
• The largest detractor from Fund performance during the six months was Bank of America. Like many financial stocks, Bank of America has struggled for some time. We believe the company faces earnings headwinds in the near term, and we therefore sold the stock in order to pursue other opportunities in the sector.
• Hewlett-Packard was a negative contributor to relative returns. Shares of Hewlett-Packard tumbled after CEO Mark Hurd stepped down amid allegations of misconduct. We believe that this dramatic news may catch headlines in the short term, but that in the long term, strong execution and earnings visibility will be more important.
• Stock selection within the utilities sector made a negative contribution to performance. Defensive sectors lagged the market meaningfully as the economy began to recover.
Names such as FirstEnergy detracted from relative returns. We recently completed a major review of the power generation industry, including numerous covered utility companies with exposure to wholesale power generation prices. The study provides a framework for forecasting normal power prices by region. It incorporates our normal gas price outlook, which was recently revised downward, and our coal price forecasts. The lower normal power prices that resulted from our study have generally decreased the investment opportunity for many of the Fund's utility holdings.
• Covidien had a negative impact on Fund returns, as well. After a disappointing third quarter, Covidien performed significantly better in the fourth quarter due to an improved operating environment and signs of price stability. (For details, see "Portfolio highlights.")
• Industry group weightings that hindered the Fund included underweights to economically sensitive sectors.
Over the review period, materials was the best-performing sector in the Index. The Fund was underweight to materials stocks, which detracted from results.
An underweight to telecommunications services companies such as Verizon Communications (not held in the portfolio) also detracted from relative returns.
2 As of December 31, 2010, this position was no longer held by the fund.
64
UBS U.S. Large Cap Value Equity Fund
Portfolio highlights
• We believe Carnival can benefit from increased consumer demand, and that sentiment on demand is too negative. We believe consumer demand has room to riseeven in a slow growth scenariogiven the relative importance of vacations in consumer spending priorities, the value proposition of cruising and the relatively low penetration rates of cruising, particularly in Europe. Our research indicates that supply growth will slow significantly after 2011, even with a couple of new ship orders by smaller competitors. In any case, we believe Carnival's management has levers to pull that can offset margin pressures from higher fuel prices as the global economy recovers.
• Rumors of a breakup plan pushed shares of Fortune Brands higher in November. Later in the quarter, the company announced plans to split the company into as many as three separate businesses. The company intends to spin off its home and security unit to shareholders, and either sell or spin off its golf division. This would allow Fortune to focus on its successful wine and spirits division. We believe that the company's current earnings power and valuation are being negatively impacted by the housing market downturn and soft economy. We have confidence in management's ability to weather the current housing market challenge, given its good track record in past downturns.
• Although Covidien is experiencing volume issues, we expect them to be transient, as patients can only delay surgical procedures for so long. Covidien's pharmaceuticals business faces increased pricing pressure with its generic narcotics. We believe that three new products which are in the early days of being rolled out, as well as additional new drugs expected next year, should offset these pricing issues. Pharmaceuticals represents less than 20% of Covidien's sales and profits. We own the stock for what we believe is its solid franchise in devices, rather than for its pharmaceuticals business.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
65
UBS U.S. Large Cap Value Equity Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 month | 1 year | 5 years | Inception1 | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A2 | 21.71 | % | 10.51 | % | (0.84 | )% | 3.11 | % | |||||||||||
Class B3 | 21.36 | 9.74 | (1.55 | ) | 2.96 6 | ||||||||||||||
Class C4 | 21.29 | 9.49 | (1.58 | ) | 2.61 | ||||||||||||||
Class Y5 | 22.09 | 10.92 | (0.53 | ) | 3.19 | ||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A2 | 15.02 | % | 4.46 | % | (1.96 | )% | 2.47 | % | |||||||||||
Class B3 | 16.36 | 4.74 | (1.83 | ) | 2.96 6 | ||||||||||||||
Class C4 | 20.29 | 8.49 | (1.58 | ) | 2.61 | ||||||||||||||
Russell 1000 Value Index7 | 21.74 | % | 15.51 | % | 1.28 | % | 3.57 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.62% and 1.21%; Class B2.63% and 1.96%; Class C2.42% and 1.96%; Class Y1.51% and 0.96%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the 12-month period ending October 27, 2011, do not exceed 1.20% for Class A shares, 1.95% for Class B shares, 1.95% for Class C shares and 0.95% for Class Y shares. 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.
1 Inception dates of UBS U.S. Large Cap Value Equity Fund Class A shares is December 7, 2001. Inception dates of Class B and Class C shares are November 8, 2001 and December 12, 2001, respectively. Inception date of Class Y shares and the index is June 29, 2001.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The Russell 1000 Value Index is designed to measure the performance of the large-cap value segment of the US equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
66
UBS U.S. Large Cap Value Equity Fund
Top ten equity holdings (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
Exxon Mobil Corp. | 4.4 | % | |||||
Wells Fargo & Co. | 3.8 | ||||||
Procter & Gamble Co. | 3.7 | ||||||
JPMorgan Chase & Co. | 3.6 | ||||||
AT&T, Inc. | 3.4 | ||||||
Johnson & Johnson | 3.1 | ||||||
Carnival Corp. | 2.5 | ||||||
Comcast Corp., Class A | 2.4 | ||||||
US Bancorp | 2.4 | ||||||
Time Warner, Inc. | 2.3 | ||||||
Total | 31.6 | % |
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 3.05 | % | |||||
Air freight & logistics | 1.50 | ||||||
Airlines | 0.69 | ||||||
Auto components | 1.55 | ||||||
Automobiles | 1.34 | ||||||
Beverages | 1.64 | ||||||
Biotechnology | 1.05 | ||||||
Capital markets | 4.07 | ||||||
Chemicals | 1.87 | ||||||
Commercial banks | 6.18 | ||||||
Computers & peripherals | 1.87 | ||||||
Diversified consumer services | 0.55 | ||||||
Diversified financial services | 5.10 | ||||||
Diversified telecommunication services | 3.36 | ||||||
Electric utilities | 4.78 | ||||||
Energy equipment & services | 3.37 | ||||||
Food & staples retailing | 1.96 | ||||||
Food products | 0.96 | ||||||
Health care equipment & supplies | 5.09 | ||||||
Health care providers & services | 2.05 | ||||||
Hotels, restaurants & leisure | 2.46 | ||||||
Household durables | 1.60 | ||||||
Household products | 3.70 | ||||||
Insurance | 5.54 | ||||||
Machinery | 3.71 | ||||||
Media | 6.94 | ||||||
Metals & mining | 1.27 | ||||||
Oil, gas & consumable fuels | 7.32 | ||||||
Personal products | 0.97 | ||||||
Pharmaceuticals | 5.30 | ||||||
Road & rail | 1.07 | ||||||
Semiconductors & semiconductor equipment | 1.86 | ||||||
Software | 2.33 | ||||||
Specialty retail | 2.87 | ||||||
Total common stocks | 98.97 | % | |||||
Investment company | |||||||
SPDR S&P 500 ETF Trust | 0.83 | ||||||
Short-term investment | 1.07 | ||||||
Total investments | 100.87 | % | |||||
Liabilities, in excess of cash and other assets | (0.87 | ) | |||||
Net assets | 100.00 | % |
1 Figures represent the direct investments of UBS U.S. Large Cap Value Equity Fund. Figures would be different if a breakdown of the underlying investment company was included
2 Figures represent the industry breakdown of direct investments of UBS U.S. Large Cap Value Equity Fund. Figures would be different if a breakdown of the underlying investment company's industry diversification was included.
67
UBS U.S. Large Cap Value Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 98.97% | |||||||||||
Aerospace & defense: 3.05% | |||||||||||
General Dynamics Corp. | 15,400 | $ | 1,092,784 | ||||||||
Raytheon Co. | 11,200 | 519,008 | |||||||||
1,611,792 | |||||||||||
Air freight & logistics: 1.50% | |||||||||||
FedEx Corp. | 8,500 | 790,585 | |||||||||
Airlines: 0.69% | |||||||||||
Southwest Airlines Co. | 28,300 | 367,334 | |||||||||
Auto components: 1.55% | |||||||||||
Johnson Controls, Inc. | 21,500 | 821,300 | |||||||||
Automobiles: 1.34% | |||||||||||
General Motors Co.* | 19,200 | 707,712 | |||||||||
Beverages: 1.64% | |||||||||||
PepsiCo, Inc. | 13,300 | 868,889 | |||||||||
Biotechnology: 1.05% | |||||||||||
Amgen, Inc.* | 10,100 | 554,490 | |||||||||
Capital markets: 4.07% | |||||||||||
Bank of New York Mellon Corp. | 26,200 | 791,240 | |||||||||
Goldman Sachs Group, Inc. | 5,800 | 975,328 | |||||||||
Morgan Stanley | 14,200 | 386,382 | |||||||||
2,152,950 | |||||||||||
Chemicals: 1.87% | |||||||||||
Celanese Corp., Series A, | 6,500 | 267,605 | |||||||||
Dow Chemical Co. | 21,100 | 720,354 | |||||||||
987,959 | |||||||||||
Commercial banks: 6.18% | |||||||||||
US Bancorp | 46,600 | 1,256,802 | |||||||||
Wells Fargo & Co. | 64,800 | 2,008,152 | |||||||||
3,264,954 | |||||||||||
Computers & peripherals: 1.87% | |||||||||||
Hewlett-Packard Co. | 14,500 | 610,450 | |||||||||
Seagate Technology PLC* | 25,000 | 375,750 | |||||||||
986,200 | |||||||||||
Diversified consumer services: 0.55% | |||||||||||
Apollo Group, Inc., Class A* | 7,400 | 292,226 | |||||||||
Diversified financial services: 5.10% | |||||||||||
Citigroup, Inc.* | 167,800 | 793,694 | |||||||||
JPMorgan Chase & Co. | 44,870 | 1,903,386 | |||||||||
2,697,080 |
Shares | Value | ||||||||||
Diversified telecommunication services: 3.36% | |||||||||||
AT&T, Inc. | 60,350 | $ | 1,773,083 | ||||||||
Electric utilities: 4.78% | |||||||||||
American Electric Power Co., Inc. | 28,100 | 1,011,038 | |||||||||
Edison International | 13,200 | 509,520 | |||||||||
FirstEnergy Corp. | 27,100 | 1,003,242 | |||||||||
2,523,800 | |||||||||||
Energy equipment & services: 3.37% | |||||||||||
Baker Hughes, Inc. | 14,400 | 823,248 | |||||||||
Noble Corp. | 26,700 | 955,059 | |||||||||
1,778,307 | |||||||||||
Food & staples retailing: 1.96% | |||||||||||
Kroger Co. | 46,200 | 1,033,032 | |||||||||
Food products: 0.96% | |||||||||||
Kellogg Co. | 9,900 | 505,692 | |||||||||
Health care equipment & supplies: 5.09% | |||||||||||
Baxter International, Inc. | 10,300 | 521,386 | |||||||||
Boston Scientific Corp.* | 66,500 | 503,405 | |||||||||
Covidien PLC | 22,600 | 1,031,916 | |||||||||
Medtronic, Inc. | 17,100 | 634,239 | |||||||||
2,690,946 | |||||||||||
Health care providers & services: 2.05% | |||||||||||
UnitedHealth Group, Inc. | 30,000 | 1,083,300 | |||||||||
Hotels, restaurants & leisure: 2.46% | |||||||||||
Carnival Corp. | 28,200 | 1,300,302 | |||||||||
Household durables: 1.60% | |||||||||||
Fortune Brands, Inc. | 14,000 | 843,500 | |||||||||
Household products: 3.70% | |||||||||||
Procter & Gamble Co. | 30,400 | 1,955,632 | |||||||||
Insurance: 5.54% | |||||||||||
Aflac, Inc. | 19,500 | 1,100,385 | |||||||||
MetLife, Inc. | 22,000 | 977,680 | |||||||||
Principal Financial Group, Inc. | 26,000 | 846,560 | |||||||||
2,924,625 | |||||||||||
Machinery: 3.71% | |||||||||||
Dover Corp. | 15,500 | 905,975 | |||||||||
Illinois Tool Works, Inc. | 19,700 | 1,051,980 | |||||||||
1,957,955 | |||||||||||
Media: 6.94% | |||||||||||
Comcast Corp., Class A | 58,700 | 1,289,639 | |||||||||
Interpublic Group of Cos., Inc.* | 16,200 | 172,044 |
68
UBS U.S. Large Cap Value Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Media(Concluded) | |||||||||||
Time Warner, Inc. | 38,100 | $ | 1,225,677 | ||||||||
Viacom, Inc., Class B | 24,700 | 978,367 | |||||||||
3,665,727 | |||||||||||
Metals & mining: 1.27% | |||||||||||
Steel Dynamics, Inc. | 36,800 | 673,440 | |||||||||
Oil, gas & consumable fuels: 7.32% | |||||||||||
Exxon Mobil Corp. | 31,850 | 2,328,872 | |||||||||
Hess Corp. | 8,000 | 612,320 | |||||||||
Ultra Petroleum Corp.* | 19,400 | 926,738 | |||||||||
3,867,930 | |||||||||||
Personal products: 0.97% | |||||||||||
Avon Products, Inc. | 17,600 | 511,456 | |||||||||
Pharmaceuticals: 5.30% | |||||||||||
Johnson & Johnson | 26,800 | 1,657,580 | |||||||||
Merck & Co., Inc. | 31,700 | 1,142,468 | |||||||||
2,800,048 | |||||||||||
Road & rail: 1.07% | |||||||||||
Ryder System, Inc. | 10,700 | 563,248 | |||||||||
Semiconductors & semiconductor equipment: 1.86% | |||||||||||
Applied Materials, Inc. | 24,900 | 349,845 | |||||||||
Marvell Technology Group Ltd.* | 16,400 | 304,220 | |||||||||
National Semiconductor Corp. | 24,000 | 330,240 | |||||||||
984,305 |
Shares | Value | ||||||||||
Software: 2.33% | |||||||||||
Adobe Systems, Inc.* | 26,600 | $ | 818,748 | ||||||||
Symantec Corp.* | 24,600 | 411,804 | |||||||||
1,230,552 | |||||||||||
Specialty retail: 2.87% | |||||||||||
GameStop Corp., Class A* | 23,100 | 528,528 | |||||||||
Lowe's Cos., Inc. | 39,300 | 985,644 | |||||||||
1,514,172 | |||||||||||
Total common stocks (cost $46,131,173) |
52,284,523 | ||||||||||
Investment company: 0.83% | |||||||||||
SPDR S&P 500 ETF Trust (cost $439,247) |
3,500 | 440,230 | |||||||||
Short-term investment: 1.07% | |||||||||||
Investment company: 1.07% | |||||||||||
UBS Cash Management Prime Relationship Fund1 (cost $565,627) |
565,627 | 565,627 | |||||||||
Total investments: 100.87% (cost $47,136,047) |
53,290,380 | ||||||||||
Liabilities, in excess of cash and other assets: (0.87)% |
(459,380 | ) | |||||||||
Net assets: 100.00% | $ | 52,831,000 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 6,481,829 | |||||
Gross unrealized depreciation | (327,496 | ) | |||||
Net unrealized appreciation of investments | $ | 6,154,333 |
* Non-income producing security.
69
UBS U.S. Large Cap Value Equity Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
1 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 2,293,816 | $ | 6,765,737 | $ | 8,493,926 | $ | 565,627 | $ | 692 | |||||||||||||
UBS Private Money Market LLC1 | | 9,577,023 | 9,577,023 | | 123 | ||||||||||||||||||
$ | 2,293,816 | $ | 16,342,760 | $ | 18,070,949 | $ | 565,627 | $ | 815 |
1 The advisor does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements for further information.
ETF Exchange Traded Fund
SPDR Standard & Poor's Depository Receipts
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 52,284,523 | $ | | | $ | 52,284,523 | ||||||||||||
Investment company | 440,230 | | | 440,230 | |||||||||||||||
Short-term investment | | 565,627 | | 565,627 | |||||||||||||||
Total | $ | 52,724,753 | $ | 565,627 | | $ | 53,290,380 |
See accompanying notes to financial statements.
70
UBS U.S. Small Cap Growth Fund
Portfolio performance
For the six months ended December 31, 2010, Class A Shares of UBS U.S. Small Cap Growth Fund (the "Fund") returned 37.17% (Class A shares returned 29.59% after the deduction of the maximum sales charge), while Class Y shares returned 37.36%. The Fund's benchmark, the Russell 2000 Growth Index (the "Index"), returned 32.14% over the same time period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 73; please note that the Fund's returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund outperformed its benchmark largely due to stock selection.
Portfolio performance summary1
What worked
• The information technology sector was the Fund's largest source of relative outperformance during the period. An overweight to the sector relative to the benchmark, as well as positive stock selection, made strong contributions to Fund returns.
Successful names included F5 Networks,2 an internet solutions provider. The company's shares outperformed after F5 reported better-than-expected results in June and raised earnings guidance for the next two quarters. (For details, see "Portfolio highlights.")
ArcSight2 was another positive contributor during the six months. The company, which provides security and compliance management solutions, rose during the period on news that it would be acquired.
• Stock selection in the health care sector was positive for performance, as well. The Fund maintained an underweight to health care relative to the benchmark, and avoided several stocks that suffered sharp declines during the period.
Among the Fund's successful positions was Questcor Pharmaceuticals, which produces drugs for central nervous system disorders. (For details, see "Portfolio highlights.")
• The Fund's underweight to consumer staples stocks contributed to relative returns.
We seek out companies with attractive business models, sustainable competitive advantages and the ability to take market share. Our sector allocation is a by-product of our bottom up company research.
The consumer staples sector lagged the broad market during a strong period for equity returns. The Fund benefited from its reduced exposure to these stocks relative to the benchmark.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
2 As of December 31, 2010, this position was no longer held by the Fund.
71
UBS U.S. Small Cap Growth Fund
What didn't work
• Stock selection within the industrials sector detracted from relative returns. The Fund held Landstar System and Knight Transportation, two short-haul truck carriers. Shares of both companies were up during the period, but not enough to keep pace with the more cyclically-geared transportation names, which rallied strongly as economic recovery improved.
• The Fund's consumer discretionary stocks underperformed the market during the six months.
Our bottom-up research has identified names within the sector whose earnings growth, we believe, is misunderstood in this challenging time for consumers.
Two apparel retailers, Talbots and Men's Wearhouse, disappointed Wall Street by posting earnings that were lower-than-expected. (For details, see "Portfolio highlights.")
• The Fund's small cash position was a hindrance during the period. In a market that rallies more than 30% in six months, any cash position can hold back returns. The Fund must maintain some cash holdings to fund purchases and redemptions, but this negatively affected relative performance during the review period.
Portfolio highlights
• The Fund benefited from holding F5 Networks, a provider of integrated internet traffic management solutions. The company's software-based solutions manage, control and optimize internet traffic and content for its customers, while at the same time offering a layer of security protection. During the period, the company strengthened its security and WAN (Wide Area Network) optimization capabilities through a series of acquisitions. We sold the position when it became too big from a market capitalization standpoint, in accordance with portfolio guidelines.
• Questcor Pharmaceuticals is a specialty pharmaceutical company focused on providing prescription drugs for central nervous system disorders. The company's Acthar product recently received FDA approval for the treatment of infantile spasms. Shares rose as investors focused on the growth prospects for the drug.
• Talbots, a specialty retailer of women's apparel and accessories, saw its shares fall during the period after reporting disappointing sales and earnings. Investors were also concerned with the company's higher inventory levels.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
72
UBS U.S. Small Cap Growth Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 37.17 | % | 38.21 | % | 3.05 | % | 3.70 | % | 7.87 | % | |||||||||||||
Class B3 | 36.70 | 37.26 | 2.32 | N/A | 5.79 6 | ||||||||||||||||||
Class C4 | 36.58 | 37.27 | 2.30 | N/A | 5.31 | ||||||||||||||||||
Class Y5 | 37.36 | 38.62 | 3.33 | 3.98 | 6.34 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 29.59 | % | 30.64 | % | 1.89 | % | 3.12 | % | 7.36 | % | |||||||||||||
Class B3 | 31.70 | 32.26 | 1.96 | N/A | 5.79 6 | ||||||||||||||||||
Class C4 | 35.58 | 36.27 | 2.30 | N/A | 5.31 | ||||||||||||||||||
Russell 2000 Growth Index7 | 32.14 | % | 29.09 | % | 5.30 | % | 3.78 | % | 3.08 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.61% and 1.41%; Class B2.92% and 2.16%; Class C2.51% and 2.16%; Class Y1.22% and 1.16%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions , extraordinary expenses and securities loan fees and dividend expenses for securities sold short), through the 12-month period ending October 27, 2011, do not exceed 1.40% for Class A shares, 2.15% for Class B shares, 2.15% for Class C shares and 1.15% for Class Y shares. 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.
1 Inception date of UBS U.S. Small Cap Growth Fund Class A shares is December 31, 1998. Inception dates of Class B and Class C shares are November 7, 2001 and November 19, 2001, respectively. Inception date of Class Y shares and the index is September 30, 1997.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The Russell 2000 Growth Index is designed to measure the performance of the small-cap growth segment of the US equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the small-cap growth segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth characteristics. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
The Fund invests in IPOs which may have a magnified impact on performance.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
73
UBS U.S. Small Cap Growth Fund
Top ten equity holdings (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
Finisar Corp. | 2.1 | % | |||||
Tenneco, Inc. | 2.0 | ||||||
Riverbed Technology, Inc. | 1.9 | ||||||
Imax Corp. | 1.9 | ||||||
Solutia, Inc. | 1.8 | ||||||
SM Energy Co. | 1.8 | ||||||
Whiting Petroleum Corp. | 1.7 | ||||||
Acme Packet, Inc. | 1.6 | ||||||
Rovi Corp. | 1.6 | ||||||
Cavium Networks, Inc. | 1.6 | ||||||
Total | 18.0 | % |
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 0.96 | % | |||||
Air freight & logistics | 1.38 | ||||||
Auto components | 3.22 | ||||||
Biotechnology | 6.22 | ||||||
Chemicals | 1.79 | ||||||
Commercial banks | 0.30 | ||||||
Commercial services & supplies | 1.22 | ||||||
Communications equipment | 7.76 | ||||||
Construction & engineering | 1.88 | ||||||
Consumer finance | 0.70 | ||||||
Containers & packaging | 1.46 | ||||||
Distributors | 1.00 | ||||||
Electrical equipment | 4.19 | ||||||
Electronic equipment, instruments & components | 1.15 | ||||||
Energy equipment & services | 2.74 | ||||||
Food & staples retailing | 2.49 | ||||||
Food products | 2.87 | ||||||
Health care equipment & supplies | 4.51 | ||||||
Health care providers & services | 2.72 | ||||||
Health care technology | 1.28 | ||||||
Hotels, restaurants & leisure | 6.15 | ||||||
Household durables | 0.60 | ||||||
Internet & catalog retail | 0.84 | ||||||
Internet software & services | 0.82 | ||||||
Media | 2.94 | ||||||
Metals & mining | 0.60 | ||||||
Oil, gas & consumable fuels | 5.99 | ||||||
Pharmaceuticals | 5.04 | ||||||
Real estate investment trust (REIT) | 1.63 | ||||||
Road & rail | 2.26 | ||||||
Semiconductors & semiconductor equipment | 8.03 | ||||||
Software | 8.17 | ||||||
Specialty retail | 4.36 | ||||||
Textiles, apparel & luxury goods | 1.38 | ||||||
Total common stocks | 98.65 | % | |||||
Investment company | |||||||
iShares Russell 2000 Growth Index Fund | 0.34 | ||||||
Short-term investment | 1.67 | ||||||
Investment of cash collateral from securities loaned | 6.17 | ||||||
Total investments | 106.83 | % | |||||
Liabilities, in excess of cash and other assets | (6.83 | ) | |||||
Net assets | 100.00 | % |
1 Figures represent the direct investments of UBS U.S. Small Cap Growth Fund. Figures would be different if a breakdown of the underlying investment company was included.
2 Figures represent the industry breakdown of direct investments of UBS U.S. Small Cap Growth Fund. Figures would be different if a breakdown of the underlying investment company's industry diversification was included.
74
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 98.65% | |||||||||||
Aerospace & defense: 0.96% | |||||||||||
DigitalGlobe, Inc.* | 46,500 | $ | 1,474,515 | ||||||||
Air freight & logistics: 1.38% | |||||||||||
Hub Group, Inc., Class A* | 60,600 | 2,129,484 | |||||||||
Auto components: 3.22% | |||||||||||
Cooper Tire & Rubber Co. | 77,400 | 1,825,092 | |||||||||
Tenneco, Inc.* | 75,900 | 3,124,044 | |||||||||
4,949,136 | |||||||||||
Biotechnology: 6.22% | |||||||||||
Cepheid, Inc.* | 76,500 | 1,740,375 | |||||||||
Emergent Biosolutions, Inc.* | 47,900 | 1,123,734 | |||||||||
Enzon Pharmaceuticals, Inc.*1 | 54,900 | 668,133 | |||||||||
Incyte Corp. Ltd.* | 54,700 | 905,832 | |||||||||
Micromet, Inc.*1 | 92,300 | 749,476 | |||||||||
Pharmasset, Inc.* | 29,100 | 1,263,231 | |||||||||
Regeneron Pharmaceuticals, Inc.* | 36,200 | 1,188,446 | |||||||||
Seattle Genetics, Inc.*1 | 64,100 | 958,295 | |||||||||
Theravance, Inc.* | 38,800 | 972,716 | |||||||||
9,570,238 | |||||||||||
Chemicals: 1.79% | |||||||||||
Solutia, Inc.* | 119,600 | 2,760,368 | |||||||||
Commercial banks: 0.30% | |||||||||||
Columbia Banking System, Inc. | 22,300 | 469,638 | |||||||||
Commercial services & supplies: 1.22% | |||||||||||
Clean Harbors, Inc.* | 13,000 | 1,093,040 | |||||||||
Tetra Tech, Inc.* | 31,400 | 786,884 | |||||||||
1,879,924 | |||||||||||
Communications equipment: 7.76% | |||||||||||
Acme Packet, Inc.* | 46,600 | 2,477,256 | |||||||||
Blue Coat Systems, Inc.* | 34,000 | 1,015,580 | |||||||||
Finisar Corp.* | 109,521 | 3,251,678 | |||||||||
Polycom, Inc.* | 56,900 | 2,217,962 | |||||||||
Riverbed Technology, Inc.* | 84,600 | 2,975,382 | |||||||||
11,937,858 | |||||||||||
Construction & engineering: 1.88% | |||||||||||
EMCOR Group, Inc.* | 74,300 | 2,153,214 | |||||||||
Orion Marine Group, Inc.* | 63,300 | 734,280 | |||||||||
2,887,494 | |||||||||||
Consumer finance: 0.70% | |||||||||||
Netspend Holdings, Inc.*1 | 84,500 | 1,083,290 |
Shares | Value | ||||||||||
Containers & packaging: 1.46% | |||||||||||
Rock-Tenn Co., Class A | 41,656 | $ | 2,247,341 | ||||||||
Distributors: 1.00% | |||||||||||
LKQ Corp.* | 67,900 | 1,542,688 | |||||||||
Electrical equipment: 4.19% | |||||||||||
EnerSys* | 64,300 | 2,065,316 | |||||||||
Regal-Beloit Corp. | 36,200 | 2,416,712 | |||||||||
Woodward Governor Co. | 52,300 | 1,964,388 | |||||||||
6,446,416 | |||||||||||
Electronic equipment, instruments & components: 1.15% | |||||||||||
Tech Data Corp.* | 40,100 | 1,765,202 | |||||||||
Energy equipment & services: 2.74% | |||||||||||
Dril-Quip, Inc.* | 27,000 | 2,098,440 | |||||||||
Key Energy Services, Inc.* | 163,700 | 2,124,826 | |||||||||
4,223,266 | |||||||||||
Food & staples retailing: 2.49% | |||||||||||
Fresh Market, Inc.* | 47,600 | 1,961,120 | |||||||||
United Natural Foods, Inc.* | 51,100 | 1,874,348 | |||||||||
3,835,468 | |||||||||||
Food products: 2.87% | |||||||||||
Diamond Foods, Inc.1 | 46,000 | 2,446,280 | |||||||||
TreeHouse Foods, Inc.* | 38,500 | 1,966,965 | |||||||||
4,413,245 | |||||||||||
Health care equipment & supplies: 4.51% | |||||||||||
DexCom, Inc.* | 113,500 | 1,549,275 | |||||||||
HeartWare International, Inc.* | 12,100 | 1,059,597 | |||||||||
ResMed, Inc.*1 | 44,900 | 1,555,336 | |||||||||
Thoratec Corp.* | 41,800 | 1,183,776 | |||||||||
Zoll Medical Corp.* | 43,000 | 1,600,890 | |||||||||
6,948,874 | |||||||||||
Health care providers & services: 2.72% | |||||||||||
Emergency Medical Services Corp., Class A* |
23,100 | 1,492,491 | |||||||||
HMS Holdings Corp.* | 26,645 | 1,725,797 | |||||||||
Mednax, Inc.* | 14,400 | 968,976 | |||||||||
4,187,264 | |||||||||||
Health care technology: 1.28% | |||||||||||
MedAssets, Inc.* | 41,900 | 845,961 | |||||||||
SXC Health Solutions Corp.* | 26,332 | 1,128,590 | |||||||||
1,974,551 |
75
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Hotels, restaurants & leisure: 6.15% | |||||||||||
BJ's Restaurants, Inc.* | 42,000 | $ | 1,488,060 | ||||||||
Buffalo Wild Wings, Inc.* | 26,400 | 1,157,640 | |||||||||
Panera Bread Co., Class A* | 9,700 | 981,737 | |||||||||
Texas Roadhouse, Inc.* | 103,836 | 1,782,864 | |||||||||
The Cheesecake Factory, Inc.* | 61,700 | 1,891,722 | |||||||||
WMS Industries, Inc.* | 47,900 | 2,166,996 | |||||||||
9,469,019 | |||||||||||
Household durables: 0.60% | |||||||||||
Ryland Group, Inc. | 53,800 | 916,214 | |||||||||
Internet & catalog retail: 0.84% | |||||||||||
E-Commerce China Dangdang, Inc. ADR*1 |
48,000 | 1,299,360 | |||||||||
Internet software & services: 0.82% | |||||||||||
VistaPrint NV* | 27,500 | 1,265,000 | |||||||||
Media: 2.94% | |||||||||||
Imax Corp.* | 105,700 | 2,964,885 | |||||||||
National CineMedia, Inc. | 78,400 | 1,560,944 | |||||||||
4,525,829 | |||||||||||
Metals & mining: 0.60% | |||||||||||
Steel Dynamics, Inc. | 50,800 | 929,640 | |||||||||
Oil, gas & consumable fuels: 5.99% | |||||||||||
Approach Resources, Inc.* | 71,400 | 1,649,340 | |||||||||
Resolute Energy Corp.*1 | 148,100 | 2,185,956 | |||||||||
SM Energy Co. | 46,100 | 2,716,673 | |||||||||
Whiting Petroleum Corp.* | 22,700 | 2,660,213 | |||||||||
9,212,182 | |||||||||||
Pharmaceuticals: 5.04% | |||||||||||
Inspire Pharmaceuticals, Inc.* | 108,000 | 907,200 | |||||||||
MAP Pharmaceuticals, Inc.* | 56,870 | 952,004 | |||||||||
Nektar Therapeutics* | 78,400 | 1,007,440 | |||||||||
Questcor Pharmaceuticals, Inc.* | 150,400 | 2,215,392 | |||||||||
Salix Pharmaceuticals Ltd.* | 25,300 | 1,188,088 | |||||||||
Viropharma, Inc.* | 85,600 | 1,482,592 | |||||||||
7,752,716 | |||||||||||
Real estate investment trust (REIT): 1.63% | |||||||||||
BioMed Realty Trust, Inc. | 37,900 | 706,835 | |||||||||
DuPont Fabros Technology, Inc.1 | 39,100 | 831,657 | |||||||||
Franklin Street Properties Corp. | 67,600 | 963,300 | |||||||||
2,501,792 |
Shares | Value | ||||||||||
Road & rail: 2.26% | |||||||||||
Knight Transportation, Inc. | 82,300 | $ | 1,563,700 | ||||||||
Landstar System, Inc. | 46,700 | 1,911,898 | |||||||||
3,475,598 | |||||||||||
Semiconductors & semiconductor equipment: 8.03% | |||||||||||
Atheros Communications, Inc.* | 21,200 | 761,504 | |||||||||
Cavium Networks, Inc.* | 65,200 | 2,456,736 | |||||||||
Cirrus Logic, Inc.*1 | 98,600 | 1,575,628 | |||||||||
Cymer, Inc.* | 31,700 | 1,428,719 | |||||||||
Mellanox Technologies Ltd.* | 55,692 | 1,457,460 | |||||||||
SemiLEDs Corp.* | 23,100 | 671,055 | |||||||||
Skyworks Solutions, Inc.* | 77,000 | 2,204,510 | |||||||||
Veeco Instruments, Inc.*1 | 41,800 | 1,795,728 | |||||||||
12,351,340 | |||||||||||
Software: 8.17% | |||||||||||
Factset Research Systems, Inc. | 22,300 | 2,090,848 | |||||||||
NICE Systems Ltd. ADR* | 56,600 | 1,975,340 | |||||||||
Radiant Systems, Inc.* | 109,200 | 2,137,044 | |||||||||
Rovi Corp.* | 39,900 | 2,474,199 | |||||||||
Synchronoss Technologies, Inc.* | 64,400 | 1,720,124 | |||||||||
Ultimate Software Group, Inc.* | 44,704 | 2,173,955 | |||||||||
12,571,510 | |||||||||||
Specialty retail: 4.36% | |||||||||||
Chico's FAS, Inc. | 119,500 | 1,437,585 | |||||||||
Children's Place Retail Stores, Inc.* | 20,500 | 1,017,620 | |||||||||
Talbots, Inc.* | 128,100 | 1,091,412 | |||||||||
The Men's Wearhouse, Inc. | 84,100 | 2,100,818 | |||||||||
Wet Seal, Inc., Class A* | 288,500 | 1,067,450 | |||||||||
6,714,885 | |||||||||||
Textiles, apparel & luxury goods: 1.38% | |||||||||||
Phillips-Van Heusen Corp. | 33,600 | 2,117,136 | |||||||||
Total common stocks (cost $106,208,192) |
151,828,481 | ||||||||||
Investment company: 0.34% | |||||||||||
iShares Russell 2000 Growth Index Fund1 (cost $529,049) |
6,000 | 524,520 | |||||||||
Short-term investment: 1.67% | |||||||||||
Investment company: 1.67% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $2,564,785) |
2,564,785 | 2,564,785 |
76
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investment of cash collateral from securities loaned: 6.17% | |||||||||||
UBS Private Money Market Fund LLC2 (cost $9,490,655) |
9,490,655 | $ | 9,490,655 | ||||||||
Total investments: 106.83% (cost $118,792,681) |
164,408,441 | ||||||||||
Liabilities, in excess of cash and other assets: (6.83)% |
(10,510,911 | ) | |||||||||
Net assets: 100.00% | $ | 153,897,530 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 48,564,748 | |||||
Gross unrealized depreciation | (2,948,988 | ) | |||||
Net unrealized appreciation of investments | $ | 45,615,760 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
77
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
2 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Fund.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 2,089,534 | $ | 27,832,476 | $ | 27,357,225 | $ | 2,564,785 | $ | 2,612 | |||||||||||||
UBS Private Money Market Fund LLC1 | 6,773,043 | 61,831,659 | 59,114,047 | 9,490,655 | 104,146 | ||||||||||||||||||
$ | 8,862,577 | $ | 89,664,135 | $ | 86,471,272 | $ | 12,055,440 | $ | 106,758 |
1 The advisor does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements for further information.
ADR American depositary receipt
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 151,828,481 | $ | | $ | | $ | 151,828,481 | |||||||||||
Investment company | 524,520 | | | 524,520 | |||||||||||||||
Short-term investment | | 2,564,785 | | 2,564,785 | |||||||||||||||
Investment of cash collateral from securities loaned | | 9,490,655 | | 9,490,655 | |||||||||||||||
Total | $ | 152,353,001 | $ | 12,055,440 | $ | | $ | 164,408,441 |
See accompanying notes to financial statements.
78
The UBS Funds
December 31, 2010 (unaudited)
Explanation of expense disclosure (unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transactional costs (as applicable); including sales charges (loads); and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees (if applicable); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example below is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, July 1, 2010 to December 31, 2010.
Actual expenses
The first line of each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over a period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on that Fund's actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not that Fund's actual return for each class of shares. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs (as applicable), such as sales charges (loads). Therefore, the second line in the table for each class of shares is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
This projection assumes that annualized expense ratios were in effect during the period July 1, 2010 to December 31, 2010.
79
The UBS Funds
December 31, 2010 (unaudited)
Beginning account value July 1, 2010 |
Ending account value December 31, 2010 |
Expenses paid during period* 07/01/10 12/31/10 |
Expense ratio during period |
||||||||||||||||||||
UBS Global Equity Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,244.30 | $ | 8.49 | 1.50 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,017.64 | 7.63 | 1.50 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,238.80 | 12.70 | 2.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,013.86 | 11.42 | 2.25 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,238.70 | 12.70 | 2.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,013.86 | 11.42 | 2.25 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,246.30 | 6.57 | 1.16 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.36 | 5.90 | 1.16 | |||||||||||||||||||
UBS International Equity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,264.20 | 7.13 | 1.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.90 | 6.36 | 1.25 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,260.60 | 11.40 | 2.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.12 | 10.16 | 2.00 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,260.30 | 11.39 | 2.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.02 | 10.16 | 2.00 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,265.90 | 5.71 | 1.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.16 | 5.09 | 1.00 | |||||||||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 985.00 | 18.86 | 3.77 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,006.20 | 19.06 | 3.77 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 982.00 | 22.63 | 4.53 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,002.37 | 22.86 | 4.53 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 987.00 | 17.18 | 3.43 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,007.91 | 17.36 | 3.43 |
* Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
80
The UBS Funds
December 31, 2010 (unaudited)
Beginning account value July 1, 2010 |
Ending account value December 31, 2010 |
Expenses paid during period* 07/01/10 12/31/10 |
Expense ratio during period |
||||||||||||||||||||
UBS U.S. Equity Alpha Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,218.30 | $ | 11.41 | 2.04 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.92 | 10.36 | 2.04 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,215.00 | 15.58 | 2.79 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,011.14 | 14.14 | 2.79 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,220.50 | 10.02 | 1.79 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,016.18 | 9.10 | 1.79 | |||||||||||||||||||
UBS U.S. Large Cap Equity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,233.10 | 6.75 | 1.20 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.16 | 6.11 | 1.20 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,228.00 | 10.95 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.38 | 9.91 | 1.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,228.80 | 10.95 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.38 | 9.91 | 1.95 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,234.00 | 5.35 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.42 | 4.84 | 0.95 | |||||||||||||||||||
UBS U.S. Large Cap Value Equity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,217.10 | 6.71 | 1.20 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.16 | 6.11 | 1.20 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,213.60 | 10.88 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.38 | 9.91 | 1.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,212.90 | 10.88 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.38 | 9.91 | 1.95 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,220.90 | 5.32 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.42 | 4.84 | 0.95 |
* Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
81
The UBS Funds
December 31, 2010 (unaudited)
Beginning account value July 1, 2010 |
Ending account value December 31, 2010 |
Expenses paid during period* 07/01/10 12/31/10 |
Expense ratio during period |
||||||||||||||||||||
UBS U.S. Small Cap Growth Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,371.70 | $ | 8.37 | 1.40 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.15 | 7.12 | 1.40 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,367.00 | 12.83 | 2.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.37 | 10.92 | 2.15 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,365.80 | 12.82 | 2.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.37 | 10.92 | 2.15 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,373.60 | 6.88 | 1.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.41 | 5.85 | 1.15 |
* Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
82
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83
The UBS Funds
Financial statements
Statement of assets and liabilities
December 31, 2010 (unaudited)
UBS Global Equity Fund |
UBS International Equity Fund |
UBS Market Neutral Multi-Strategy Fund |
UBS U.S. Equity Alpha Fund |
||||||||||||||||
Assets: | |||||||||||||||||||
Investments, at cost: | |||||||||||||||||||
Unaffiliated issuers | $ | 101,475,757 | $ | 20,503,659 | $ | 19,254,830 | $ | 38,426,955 | |||||||||||
Affiliated issuers | 993,097 | 646,228 | 8,784,814 | 549,430 | |||||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | 1,539,915 | 835,957 | | | |||||||||||||||
Foreign currency, at cost | 817,632 | 144,366 | 63,147 | | |||||||||||||||
$ | 104,826,401 | $ | 22,130,210 | $ | 28,102,791 | $ | 38,976,385 | ||||||||||||
Investments, at value: | |||||||||||||||||||
Unaffiliated issuers | $ | 123,446,769 | $ | 28,376,084 | $ | 21,940,516 | $ | 45,621,937 | |||||||||||
Affiliated issuers | 993,097 | 646,228 | 8,784,814 | 549,430 | |||||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | 1,539,915 | 835,957 | | | |||||||||||||||
Foreign currency, at value | 832,163 | 148,494 | 65,263 | | |||||||||||||||
Cash | | | 1,335 | | |||||||||||||||
Receivables: | |||||||||||||||||||
Foreign tax reclaims | 357,857 | 109,998 | 841 | | |||||||||||||||
Dividends | 160,686 | 27,788 | 21,074 | 42,125 | |||||||||||||||
Interest | 5,632 | 118 | 1,498 | 60 | |||||||||||||||
Fund shares sold | 1,470 | 5,012 | 22,403 | 1,000 | |||||||||||||||
Investment securities sold | | | 734,784 | 24,461 | |||||||||||||||
Prepaid organizational costs | | | 38,562 | | |||||||||||||||
Variation margin | | | 70,461 | | |||||||||||||||
Cash collateral for futures contracts | | | 57,083 | | |||||||||||||||
Cash collateral for securities sold short | | | 16,610,660 | 293,860 | |||||||||||||||
Unrealized appreciation on forward foreign currency contracts | 436,944 | 132,849 | 79,743 | | |||||||||||||||
Other assets | 34,148 | 30,970 | 2,890 | 26,661 | |||||||||||||||
Total assets | 127,808,681 | 30,313,498 | 48,431,927 | 46,559,534 | |||||||||||||||
Liabilities: | |||||||||||||||||||
Payables: | |||||||||||||||||||
Cash collateral from securities loaned | 1,539,915 | 835,957 | | | |||||||||||||||
Investment securities purchased | | | 1,235,139 | 87,417 | |||||||||||||||
Investment advisory and administration fee | 88,981 | 1,454 | 12,166 | 18,955 | |||||||||||||||
Fund shares redeemed | 357,040 | 100,574 | | 288,766 | |||||||||||||||
Custody and fund accounting fees | 10,933 | 8,587 | 18,425 | 11,118 | |||||||||||||||
Distribution and service fees | 35,556 | 2,714 | 1,881 | 9,673 | |||||||||||||||
Trustees' fees | 6,717 | 5,132 | 5,107 | 5,578 | |||||||||||||||
Dividends payable for securities sold short | | | 16,595 | 1,178 | |||||||||||||||
Accrued expenses | 108,463 | 83,325 | 39,064 | 58,518 | |||||||||||||||
Securities sold short, at value2 | | | 21,321,250 | 8,063,918 | |||||||||||||||
Unrealized depreciation on forward foreign currency contracts | 692,237 | 130,999 | 21,617 | | |||||||||||||||
Total liabilities | 2,839,842 | 1,168,742 | 22,671,244 | 8,545,121 | |||||||||||||||
Net assets | $ | 124,968,839 | $ | 29,144,756 | $ | 25,760,683 | $ | 38,014,413 |
1 The market value of securities loaned by UBS Global Equity Fund, UBS International Equity Fund, UBS U.S. Large Cap Equity Fund and UBS U.S. Small Cap Growth Fund as of December 31, 2010 was $1,490,749, $805,141, $431,825 and $9,176,900, respectively.
2 Proceeds from securities sold short by UBS Market Neutral Multi-Strategy Fund and UBS U.S. Equity Alpha Fund were $18,861,131 and $6,142,247, respectively.
84
The UBS Funds
Financial statements
UBS U.S. Large Cap Equity Fund |
UBS U.S. Large Cap Value Equity Fund |
UBS U.S. Small Cap Growth Fund |
|||||||||||||
Assets: | |||||||||||||||
Investments, at cost: | |||||||||||||||
Unaffiliated issuers | $ | 193,814,101 | $ | 46,570,420 | $ | 106,737,241 | |||||||||
Affiliated issuers | 4,665,034 | 565,627 | 2,564,785 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | 441,875 | | 9,490,655 | ||||||||||||
Foreign currency, at cost | | | | ||||||||||||
$ | 198,921,010 | $ | 47,136,047 | $ | 118,792,681 | ||||||||||
Investments, at value: | |||||||||||||||
Unaffiliated issuers | $ | 235,106,411 | $ | 52,724,753 | $ | 152,353,001 | |||||||||
Affiliated issuers | 4,665,034 | 565,627 | 2,564,785 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | 441,875 | | 9,490,655 | ||||||||||||
Foreign currency, at value | | | | ||||||||||||
Cash | | | | ||||||||||||
Receivables: | |||||||||||||||
Foreign tax reclaims | | | | ||||||||||||
Dividends | 166,572 | 48,079 | 21,154 | ||||||||||||
Interest | 516 | 93 | 12,004 | ||||||||||||
Fund shares sold | 193,791 | 5,016 | 441,705 | ||||||||||||
Investment securities sold | 152,014 | 48,956 | 3,233,189 | ||||||||||||
Prepaid organizational costs | | | | ||||||||||||
Variation margin | 110,625 | | | ||||||||||||
Cash collateral for futures contracts | 35 | | | ||||||||||||
Cash collateral for securities sold short | | | | ||||||||||||
Unrealized appreciation on forward foreign currency contracts | | | | ||||||||||||
Other assets | 44,143 | 29,021 | 42,757 | ||||||||||||
Total assets | 240,881,016 | 53,421,545 | 168,159,250 | ||||||||||||
Liabilities: | |||||||||||||||
Payables: | |||||||||||||||
Cash collateral from securities loaned | 441,875 | | 9,490,655 | ||||||||||||
Investment securities purchased | 461,643 | 103,808 | 3,751,207 | ||||||||||||
Investment advisory and administration fee | 157,770 | 17,969 | 115,146 | ||||||||||||
Fund shares redeemed | 296,665 | 381,603 | 756,138 | ||||||||||||
Custody and fund accounting fees | 15,557 | 6,832 | 9,408 | ||||||||||||
Distribution and service fees | 8,603 | 14,317 | 10,030 | ||||||||||||
Trustees' fees | 8,667 | 5,522 | 6,947 | ||||||||||||
Dividends payable for securities sold short | | | | ||||||||||||
Accrued expenses | 129,075 | 60,494 | 122,189 | ||||||||||||
Securities sold short, at value2 | | | | ||||||||||||
Unrealized depreciation on forward foreign currency contracts | | | | ||||||||||||
Total liabilities | 1,519,855 | 590,545 | 14,261,720 | ||||||||||||
Net assets | $ | 239,361,161 | $ | 52,831,000 | $ | 153,897,530 |
See accompanying notes to financial statements.
85
The UBS Funds
Financial statements
Statement of assets and liabilities (continued)
December 31, 2010 (unaudited)
UBS Global Equity Fund |
UBS International Equity Fund |
UBS Market Neutral Multi-Strategy Fund |
UBS U.S. Equity Alpha Fund |
||||||||||||||||
Net assets consist of: | |||||||||||||||||||
Beneficial interest | $ | 145,337,871 | $ | 37,477,774 | $ | 26,105,636 | $ | 59,726,302 | |||||||||||
Accumulated undistributed (distributions in excess of) net investment income | (248,216 | ) | (19,177 | ) | (239,406 | ) | 10,013 | ||||||||||||
Accumulated net realized loss | (41,902,931 | ) | (16,222,425 | ) | (388,118 | ) | (26,995,213 | ) | |||||||||||
Net unrealized appreciation | 21,782,115 | 7,908,584 | 282,571 | 5,273,311 | |||||||||||||||
Net assets | $ | 124,968,839 | $ | 29,144,756 | $ | 25,760,683 | $ | 38,014,413 | |||||||||||
Class A: | |||||||||||||||||||
Net assets | $ | 72,431,920 | $ | 8,821,605 | $ | 4,981,087 | $ | 19,873,480 | |||||||||||
Shares outstanding | 5,768,524 | 1,088,942 | 505,577 | 2,326,631 | |||||||||||||||
Net asset value and redemption proceeds per share | $ | 12.56 | $ | 8.10 | $ | 9.85 | $ | 8.54 | |||||||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 13.29 | $ | 8.57 | $ | 10.42 | $ | 9.04 | |||||||||||
Class B: | |||||||||||||||||||
Net assets | $ | 699,942 | $ | 48,027 | N/A | N/A | |||||||||||||
Shares outstanding | 56,857 | 5,772 | N/A | N/A | |||||||||||||||
Net asset value and offering price per share | $ | 12.31 | $ | 8.32 | N/A | N/A | |||||||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 11.69 | $ | 7.90 | N/A | N/A | |||||||||||||
Class C: | |||||||||||||||||||
Net assets | $ | 23,190,317 | $ | 1,032,752 | $ | 920,368 | $ | 6,258,235 | |||||||||||
Shares outstanding | 1,918,441 | 129,952 | 93,696 | 743,612 | |||||||||||||||
Net asset value and offering price per share | $ | 12.09 | $ | 7.95 | $ | 9.82 | $ | 8.42 | |||||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 11.97 | $ | 7.87 | $ | 9.72 | $ | 8.34 | |||||||||||
Class Y: | |||||||||||||||||||
Net assets | $ | 28,646,660 | $ | 19,242,372 | $ | 19,859,228 | $ | 11,882,698 | |||||||||||
Shares outstanding | 2,221,344 | 2,366,283 | 2,012,541 | 1,392,660 | |||||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 12.90 | $ | 8.13 | $ | 9.87 | $ | 8.53 |
1 UBS Market Neutral Multi-Strategy Fund and UBS U.S. Equity Alpha Fund do not offer Class B shares.
2 For Class A, the maximum sales charge is 5.50%. Classes B, C and Y have no front-end sales charges. For Class A, the maximum contingent deferred sales charge of 1.00% of the share's offering price or the net asset value at the time of sales by the shareholder, whichever is less, is charged on sales of shares on original purchases of $1,000,000 or more that were not subject to a front-end sales charge made within one year of the purchase date. For Class B, the maximum contingent deferred sales charge is 5.00%. Class C maximum contingent deferred sales charge is 1.00%. Class Y has no contingent deferred sales charge.
86
The UBS Funds
Financial statements
UBS U.S. Large Cap Equity Fund |
UBS U.S. Large Cap Value Equity Fund |
UBS U.S. Small Cap Growth Fund |
|||||||||||||
Net assets consist of: | |||||||||||||||
Beneficial interest | $ | 409,848,739 | $ | 71,117,242 | $ | 163,990,915 | |||||||||
Accumulated undistributed (distributions in excess of) net investment income | 917,174 | 199,265 | (423,920 | ) | |||||||||||
Accumulated net realized loss | (212,699,545 | ) | (24,639,840 | ) | (55,285,225 | ) | |||||||||
Net unrealized appreciation | 41,294,793 | 6,154,333 | 45,615,760 | ||||||||||||
Net assets | $ | 239,361,161 | $ | 52,831,000 | $ | 153,897,530 | |||||||||
Class A: | |||||||||||||||
Net assets | $ | 24,399,124 | $ | 45,495,976 | $ | 35,491,050 | |||||||||
Shares outstanding | 1,554,136 | 7,075,513 | 2,440,456 | ||||||||||||
Net asset value and redemption proceeds per share | $ | 15.70 | $ | 6.43 | $ | 14.54 | |||||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 16.61 | $ | 6.80 | $ | 15.39 | |||||||||
Class B: | |||||||||||||||
Net assets | $ | 159,353 | $ | 92,881 | $ | 61,702 | |||||||||
Shares outstanding | 10,380 | 14,471 | 4,565 | ||||||||||||
Net asset value and offering price per share | $ | 15.35 | $ | 6.42 | $ | 13.52 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 14.58 | $ | 6.10 | $ | 12.84 | |||||||||
Class C: | |||||||||||||||
Net assets | $ | 3,748,418 | $ | 5,516,285 | $ | 2,872,880 | |||||||||
Shares outstanding | 246,684 | 874,974 | 213,054 | ||||||||||||
Net asset value and offering price per share | $ | 15.20 | $ | 6.30 | $ | 13.48 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 15.05 | $ | 6.24 | $ | 13.35 | |||||||||
Class Y: | |||||||||||||||
Net assets | $ | 211,054,266 | $ | 1,725,858 | $ | 115,471,898 | |||||||||
Shares outstanding | 13,347,482 | 266,876 | 7,643,704 | ||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 15.81 | $ | 6.47 | $ | 15.11 |
See accompanying notes to financial statements.
87
The UBS Funds
Financial statements
Statement of operations
For the six months ended December 31, 2010 (unaudited)
UBS Global Equity Fund |
UBS International Equity Fund |
UBS Market Neutral Multi-Strategy Fund |
UBS U.S. Equity Alpha Fund |
||||||||||||||||
Investment income: | |||||||||||||||||||
Dividends | $ | 930,251 | $ | 228,985 | $ | 190,694 | $ | 477,182 | |||||||||||
Interest and other | 244 | 30 | 21 | | |||||||||||||||
Affiliated interest | 939 | 714 | 7,827 | 550 | |||||||||||||||
Securities lending-net | 8,151 | 5,079 | | | |||||||||||||||
Foreign tax withheld | (21,229 | ) | (9,043 | ) | (5,443 | ) | | ||||||||||||
Total income | 918,356 | 225,765 | 193,099 | 477,732 | |||||||||||||||
Expenses: | |||||||||||||||||||
Advisory and administration | 505,301 | 124,861 | 163,155 | 222,410 | |||||||||||||||
Service and distribution: | |||||||||||||||||||
Class A | 89,463 | 9,996 | 4,873 | 28,259 | |||||||||||||||
Class B | 3,627 | 794 | | | |||||||||||||||
Class C | 113,042 | 4,794 | 3,208 | 33,401 | |||||||||||||||
Transfer agency and related service fees: | |||||||||||||||||||
Class A | 66,739 | 3,147 | 2,369 | 9,186 | |||||||||||||||
Class B | 502 | 139 | | | |||||||||||||||
Class C | 25,248 | 638 | 653 | 5,415 | |||||||||||||||
Class Y | 10,640 | 28,817 | 1,485 | 11,408 | |||||||||||||||
Custodian and fund accounting | 31,564 | 25,721 | 37,681 | 32,790 | |||||||||||||||
Federal and state registration | 22,185 | 21,682 | 439 | 16,348 | |||||||||||||||
Professional services | 49,103 | 47,642 | 42,563 | 41,945 | |||||||||||||||
Shareholder reports | 23,362 | 2,286 | 1,945 | 4,843 | |||||||||||||||
Trustees | 13,293 | 10,177 | 10,096 | 10,845 | |||||||||||||||
Interest expense | | 141 | | | |||||||||||||||
Dividend expense and security loan fees for securities sold short | | | 239,735 | 111,753 | |||||||||||||||
Amortization of organizational costs | | | 39,200 | | |||||||||||||||
Other | 17,074 | 12,168 | 10,435 | 7,776 | |||||||||||||||
Total expenses | 971,143 | 293,003 | 557,837 | 536,379 | |||||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (11,486 | ) | (134,421 | ) | (125,332 | ) | (104,007 | ) | |||||||||||
Net expenses | 959,657 | 158,582 | 432,505 | 432,372 | |||||||||||||||
Net investment income (loss) | (41,301 | ) | 67,183 | (239,406 | ) | 45,360 | |||||||||||||
Net realized gain (loss) on: | |||||||||||||||||||
Investments in unaffiliated issuers | 9,736,463 | 2,957,630 | 2,448,685 | 3,709,581 | |||||||||||||||
Futures contracts | | | 14,394 | | |||||||||||||||
Securities sold short | | | (2,830,464 | ) | (1,248,864 | ) | |||||||||||||
Forward foreign currency contracts | (188,151 | ) | 102,365 | 1,944 | | ||||||||||||||
Foreign currency transactions | 34,761 | (24,187 | ) | (22,677 | ) | | |||||||||||||
Net realized gain (loss) | 9,583,073 | 3,035,808 | (388,118 | ) | 2,460,717 | ||||||||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||||||||||
Investments | 16,913,523 | 3,466,953 | 2,685,686 | 6,456,313 | |||||||||||||||
Futures contracts | | | (1,677 | ) | | ||||||||||||||
Securities sold short | | | (2,460,119 | ) | (818,951 | ) | |||||||||||||
Forward foreign currency contracts | (362,024 | ) | (64,343 | ) | 58,126 | | |||||||||||||
Translation of other assets and liabilities denominated in foreign currency | 46,470 | 13,224 | 555 | | |||||||||||||||
Change in net unrealized appreciation | 16,597,969 | 3,415,834 | 282,571 | 5,637,362 | |||||||||||||||
Net realized and unrealized gain (loss) | 26,181,042 | 6,451,642 | (105,547 | ) | 8,098,079 | ||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 26,139,741 | $ | 6,518,825 | $ | (344,953 | ) | $ | 8,143,439 |
88
The UBS Funds
Financial statements
UBS U.S. Large Cap Equity Fund |
UBS U.S. Large Cap Value Equity Fund |
UBS U.S. Small Cap Growth Fund |
|||||||||||||
Investment income: | |||||||||||||||
Dividends | $ | 2,069,628 | $ | 523,950 | $ | 248,784 | |||||||||
Interest and other | | | | ||||||||||||
Affiliated interest | 4,836 | 692 | 2,612 | ||||||||||||
Securities lending-net | 446 | 123 | 104,146 | ||||||||||||
Foreign tax withheld | | | | ||||||||||||
Total income | 2,074,910 | 524,765 | 355,542 | ||||||||||||
Expenses: | |||||||||||||||
Advisory and administration | 902,236 | 198,000 | 625,848 | ||||||||||||
Service and distribution: | |||||||||||||||
Class A | 30,575 | 55,085 | 39,706 | ||||||||||||
Class B | 804 | 483 | 325 | ||||||||||||
Class C | 18,302 | 26,398 | 12,930 | ||||||||||||
Transfer agency and related service fees: | |||||||||||||||
Class A | 14,907 | 28,972 | 45,793 | ||||||||||||
Class B | 169 | 200 | 214 | ||||||||||||
Class C | 2,449 | 4,854 | 4,678 | ||||||||||||
Class Y | 67,708 | 2,646 | 53,162 | ||||||||||||
Custodian and fund accounting | 43,601 | 20,165 | 26,905 | ||||||||||||
Federal and state registration | 25,012 | 20,655 | 22,524 | ||||||||||||
Professional services | 43,205 | 45,877 | 41,945 | ||||||||||||
Shareholder reports | 6,356 | 9,356 | 6,521 | ||||||||||||
Trustees | 17,098 | 10,919 | 13,703 | ||||||||||||
Interest expense | 300 | | | ||||||||||||
Dividend expense and security loan fees for securities sold short | | | | ||||||||||||
Amortization of organizational costs | | | | ||||||||||||
Other | 16,003 | 6,480 | 13,282 | ||||||||||||
Total expenses | 1,188,725 | 430,090 | 907,536 | ||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (31,510 | ) | (105,083 | ) | (75,080 | ) | |||||||||
Net expenses | 1,157,215 | 325,007 | 832,456 | ||||||||||||
Net investment income (loss) | 917,695 | 199,758 | (476,914 | ) | |||||||||||
Net realized gain (loss) on: | |||||||||||||||
Investments in unaffiliated issuers | 14,863,449 | (703,540 | ) | 16,881,829 | |||||||||||
Futures contracts | 255,154 | | | ||||||||||||
Securities sold short | | | | ||||||||||||
Forward foreign currency contracts | | | | ||||||||||||
Foreign currency transactions | | | | ||||||||||||
Net realized gain (loss) | 15,118,603 | (703,540 | ) | 16,881,829 | |||||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||||||
Investments | 32,150,322 | 10,463,446 | 26,009,824 | ||||||||||||
Futures contracts | 177,125 | | | ||||||||||||
Securities sold short | | | | ||||||||||||
Forward foreign currency contracts | | | | ||||||||||||
Translation of other assets and liabilities denominated in foreign currency | | | | ||||||||||||
Change in net unrealized appreciation | 32,327,447 | 10,463,446 | 26,009,824 | ||||||||||||
Net realized and unrealized gain (loss) | 47,446,050 | 9,759,906 | 42,891,653 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 48,363,745 | $ | 9,959,664 | $ | 42,414,739 |
See accompanying notes to financial statements.
89
The UBS Funds
Financial statements
Statement of changes in net assets
UBS Global Equity Fund | UBS International Equity Fund |
UBS Market Neutral Multi-Strategy Fund |
|||||||||||||||||||||
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Six months ended December 31, 2010 (unaudited) |
|||||||||||||||||||
Operations: | |||||||||||||||||||||||
Net investment income (loss) | $ | (41,301 | ) | $ | 602,937 | $ | 67,183 | $ | 442,387 | $ | (239,406 | ) | |||||||||||
Net realized gain (loss) | 9,583,073 | 27,141,705 | 3,035,808 | 19,806,830 | (388,118 | ) | |||||||||||||||||
Change in net unrealized appreciation/depreciation | 16,597,969 | (3,256,800 | ) | 3,415,834 | (9,002,969 | ) | 282,571 | ||||||||||||||||
Net increase (decrease) in net assets from operations | 26,139,741 | 24,487,842 | 6,518,825 | 11,246,248 | (344,953 | ) | |||||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||||||
Class A: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | (1,879,257 | ) | (1,823,227 | ) | (283,789 | ) | (502,754 | ) | | ||||||||||||||
Class B: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | (9,881 | ) | (16,105 | ) | | (14,771 | ) | | |||||||||||||||
Class C: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | (440,427 | ) | (531,429 | ) | (24,784 | ) | (58,439 | ) | | ||||||||||||||
Class Y: | |||||||||||||||||||||||
Net investment income and net foreign currency gains | (789,580 | ) | (1,055,564 | ) | (650,195 | ) | (2,971,270 | ) | | ||||||||||||||
Decrease in net assets from dividends and distributions | (3,119,145 | ) | (3,426,325 | ) | (958,768 | ) | (3,547,234 | ) | | ||||||||||||||
Beneficial interest transactions: | |||||||||||||||||||||||
Proceeds from shares sold | 1,073,124 | 5,126,587 | 1,616,831 | 5,021,294 | 27,484,400 | ||||||||||||||||||
Shares issued on reinvestment of dividends and distributions | 2,899,995 | 3,259,302 | 929,545 | 3,488,259 | | ||||||||||||||||||
Cost of shares redeemed | (13,464,463 | ) | (80,709,652 | ) | (5,634,595 | ) | (65,141,997 | ) | (1,384,071 | ) | |||||||||||||
Redemption fees | 587 | 2,824 | 545 | 42 | 5,307 | ||||||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions |
(9,490,757 | ) | (72,320,939 | ) | (3,087,674 | ) | (56,632,402 | ) | 26,105,636 | ||||||||||||||
Increase (decrease) in net assets | 13,529,839 | (51,259,422 | ) | 2,472,383 | (48,933,388 | ) | 25,760,683 | ||||||||||||||||
Net assets, beginning of period | 111,439,000 | 162,698,422 | 26,672,373 | 75,605,761 | | ||||||||||||||||||
Net assets, end of period | $ | 124,968,839 | $ | 111,439,000 | $ | 29,144,756 | $ | 26,672,373 | $ | 25,760,683 | |||||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income |
$ | (248,216 | ) | $ | 2,912,230 | $ | (19,177 | ) | $ | 872,408 | $ | (239,406 | ) |
90
The UBS Funds
Financial statements
UBS U.S. Equity Alpha Fund | UBS U.S. Large Cap Equity Fund | ||||||||||||||||||
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 45,360 | $ | (50,043 | ) | $ | 917,695 | $ | 1,698,358 | ||||||||||
Net realized gain (loss) | 2,460,717 | 30,810,569 | 15,118,603 | 23,744,545 | |||||||||||||||
Change in net unrealized appreciation/depreciation | 5,637,362 | (6,659,609 | ) | 32,327,447 | 13,507,829 | ||||||||||||||
Net increase (decrease) in net assets from operations | 8,143,439 | 24,100,917 | 48,363,745 | 38,950,732 | |||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | | | (114,184 | ) | (615,929 | ) | |||||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | | | | (1,397 | ) | ||||||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | | | | (72,171 | ) | ||||||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (35,347 | ) | | (1,583,968 | ) | (5,270,317 | ) | ||||||||||||
Decrease in net assets from dividends and distributions | (35,347 | ) | | (1,698,152 | ) | (5,959,814 | ) | ||||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 990,385 | 7,197,109 | 24,153,461 | 27,903,444 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 35,347 | | 1,683,135 | 5,904,189 | |||||||||||||||
Cost of shares redeemed | (13,000,732 | ) | (127,363,698 | ) | (48,656,445 | ) | (108,531,808 | ) | |||||||||||
Redemption fees | 988 | 1,582 | 6,182 | 31,717 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions |
(11,974,012 | ) | (120,165,007 | ) | (22,813,667 | ) | (74,692,458 | ) | |||||||||||
Increase (decrease) in net assets | (3,865,920 | ) | (96,064,090 | ) | 23,851,926 | (41,701,540 | ) | ||||||||||||
Net assets, beginning of period | 41,880,333 | 137,944,423 | 215,509,235 | 257,210,775 | |||||||||||||||
Net assets, end of period | $ | 38,014,413 | $ | 41,880,333 | $ | 239,361,161 | $ | 215,509,235 | |||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income |
$ | 10,013 | $ | | $ | 917,174 | $ | 1,697,631 |
See accompanying notes to financial statements.
91
The UBS Funds
Financial statements
Statement of changes in net assets (continued)
UBS U.S. Large Cap Value Equity Fund |
UBS U.S. Small Cap Growth Fund |
||||||||||||||||||
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 199,758 | $ | 425,248 | $ | (476,914 | ) | $ | (1,373,343 | ) | |||||||||
Net realized gain (loss) | (703,540 | ) | (1,295,466 | ) | 16,881,829 | 15,023,871 | |||||||||||||
Change in net unrealized appreciation/depreciation | 10,463,446 | 6,741,046 | 26,009,824 | 24,224,475 | |||||||||||||||
Net increase in net assets from operations | 9,959,664 | 5,870,828 | 42,414,739 | 37,875,003 | |||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | (399,917 | ) | (1,002,633 | ) | | | |||||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | | (896 | ) | | | ||||||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | (5,988 | ) | (78,334 | ) | | | |||||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (19,421 | ) | (54,618 | ) | | | |||||||||||||
Decrease in net assets from dividends and distributions | (425,326 | ) | (1,136,481 | ) | | | |||||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 172,643 | 749,584 | 15,116,669 | 29,302,395 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 373,491 | 1,014,890 | | | |||||||||||||||
Cost of shares redeemed | (4,760,077 | ) | (10,789,645 | ) | (29,360,325 | ) | (119,644,217 | ) | |||||||||||
Redemption fees | 165 | 364 | 5,727 | 19,963 | |||||||||||||||
Net decrease in net assets resulting from beneficial interest transactions |
(4,213,778 | ) | (9,024,807 | ) | (14,237,929 | ) | (90,321,859 | ) | |||||||||||
Increase (decrease) in net assets | 5,320,560 | (4,290,460 | ) | 28,176,810 | (52,446,856 | ) | |||||||||||||
Net assets, beginning of year | 47,510,440 | 51,800,900 | 125,720,720 | 178,167,576 | |||||||||||||||
Net assets, end of period | $ | 52,831,000 | $ | 47,510,440 | $ | 153,897,530 | $ | 125,720,720 | |||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income |
$ | 199,265 | $ | 424,833 | $ | (423,920 | ) | $ | 52,994 |
92
(This page has been left blank intentionally)
93
UBS Global Equity Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.36 | $ | 9.46 | $ | 13.54 | $ | 15.47 | $ | 12.99 | $ | 11.63 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.00 | )3 | 0.05 | 0.10 | 0.15 | 0.13 | 0.11 | ||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.53 | 1.12 | (3.57 | ) | (2.08 | ) | 2.47 | 1.32 | |||||||||||||||||||
Total income (loss) from investment operations | 2.53 | 1.17 | (3.47 | ) | (1.93 | ) | 2.60 | 1.43 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.33 | ) | (0.27 | ) | (0.61 | ) | | (0.12 | ) | (0.07 | ) | ||||||||||||||||
Net asset value, end of period | $ | 12.56 | $ | 10.36 | $ | 9.46 | $ | 13.54 | $ | 15.47 | $ | 12.99 | |||||||||||||||
Total investment return2 | 24.43 | % | 12.05 | % | (24.86 | )% | (12.48 | )% | 20.11 | % | 12.35 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 72,432 | $ | 64,979 | $ | 72,280 | $ | 117,601 | $ | 168,208 | $ | 173,052 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.52 | %4 | 1.55 | % | 1.48 | % | 1.31 | % | 1.35 | % | 1.37 | % | |||||||||||||||
Net of expense reimbursement | 1.50 | %4 | 1.50 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.00 | )%4,5 | 0.47 | % | 1.10 | % | 0.98 | % | 0.91 | % | 0.88 | % | |||||||||||||||
Portfolio turnover rate | 35 | % | 83 | % | 76 | % | 66 | % | 32 | % | 48 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.08 | $ | 9.22 | $ | 13.13 | $ | 15.11 | $ | 12.69 | $ | 11.39 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.04 | ) | (0.04 | ) | 0.02 | 0.02 | 0.01 | 0.02 | |||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.45 | 1.09 | (3.43 | ) | (2.00 | ) | 2.43 | 1.28 | |||||||||||||||||||
Total income (loss) from investment operations | 2.41 | 1.05 | (3.41 | ) | (1.98 | ) | 2.44 | 1.30 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.18 | ) | (0.19 | ) | (0.50 | ) | | (0.02 | ) | | |||||||||||||||||
Net asset value, end of period | $ | 12.31 | $ | 10.08 | $ | 9.22 | $ | 13.13 | $ | 15.11 | $ | 12.69 | |||||||||||||||
Total investment return2 | 23.88 | % | 11.27 | % | (25.39 | )% | (13.10 | )% | 19.25 | % | 11.41 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 700 | $ | 733 | $ | 1,254 | $ | 3,814 | $ | 7,439 | $ | 13,672 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 2.22 | %4 | 2.27 | % | 2.25 | % | 2.05 | % | 2.17 | % | 2.35 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 2.25 | %4,6 | 2.25 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.75 | )%4 | (0.34 | )% | 0.26 | % | 0.17 | % | 0.10 | % | 0.13 | % | |||||||||||||||
Portfolio turnover rate | 35 | % | 83 | % | 76 | % | 66 | % | 32 | % | 48 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
94
UBS Global Equity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.94 | $ | 9.13 | $ | 13.05 | $ | 15.02 | $ | 12.65 | $ | 11.35 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.04 | ) | (0.03 | ) | 0.03 | 0.03 | 0.02 | 0.02 | |||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.42 | 1.07 | (3.44 | ) | (2.00 | ) | 2.42 | 1.28 | |||||||||||||||||||
Total income (loss) from investment operations | 2.38 | 1.04 | (3.41 | ) | (1.97 | ) | 2.44 | 1.30 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.23 | ) | (0.23 | ) | (0.51 | ) | | (0.07 | ) | | |||||||||||||||||
Net asset value, end of period | $ | 12.09 | $ | 9.94 | $ | 9.13 | $ | 13.05 | $ | 15.02 | $ | 12.65 | |||||||||||||||
Total investment return2 | 23.87 | % | 11.29 | % | (25.46 | )% | (13.12 | )% | 19.28 | % | 11.45 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 23,190 | $ | 20,499 | $ | 22,519 | $ | 35,900 | $ | 52,378 | $ | 56,836 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.30 | %4 | 2.34 | % | 2.30 | % | 2.11 | % | 2.14 | % | 2.20 | % | |||||||||||||||
Net of expense reimbursement | 2.25 | %4 | 2.25 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.75 | )%4 | (0.28 | )% | 0.34 | % | 0.23 | % | 0.16 | % | 0.13 | % | |||||||||||||||
Portfolio turnover rate | 35 | % | 83 | % | 76 | % | 66 | % | 32 | % | 48 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.65 | $ | 9.69 | $ | 13.84 | $ | 15.78 | $ | 13.23 | $ | 11.83 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.02 | 0.08 | 0.13 | 0.19 | 0.17 | 0.15 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.60 | 1.16 | (3.63 | ) | (2.13 | ) | 2.52 | 1.34 | |||||||||||||||||||
Total income (loss) from investment operations | 2.62 | 1.24 | (3.50 | ) | (1.94 | ) | 2.69 | 1.49 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.37 | ) | (0.28 | ) | (0.65 | ) | | (0.14 | ) | (0.09 | ) | ||||||||||||||||
Net asset value, end of period | $ | 12.90 | $ | 10.65 | $ | 9.69 | $ | 13.84 | $ | 15.78 | $ | 13.23 | |||||||||||||||
Total investment return2 | 24.63 | % | 12.51 | % | (24.52 | )% | (12.29 | )% | 20.44 | % | 12.67 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 28,647 | $ | 25,227 | $ | 66,646 | $ | 164,307 | $ | 180,027 | $ | 180,990 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 1.16 | %4 | 1.15 | % | 1.08 | % | 0.96 | % | 0.99 | % | 0.99 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 1.16 | %4 | 1.15 | % | 1.00 | % | 1.00 | %6 | 0.99 | % | 0.99 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.34 | %4 | 0.67 | % | 1.27 | % | 1.29 | % | 1.16 | % | 1.14 | % | |||||||||||||||
Portfolio turnover rate | 35 | % | 83 | % | 76 | % | 66 | % | 32 | % | 48 | % |
3 Amount represents less than $0.005 per share.
4 Annualized.
5 Amount represents less than 0.005%.
6 The investment manager recouped expenses previously reimbursed by the manager on behalf of the Fund, not to exceed the expense cap in effect at the time of reimbursement.
See accompanying notes to financial statements.
95
UBS International Equity Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.62 | $ | 6.48 | $ | 9.97 | $ | 12.99 | $ | 10.98 | $ | 9.48 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.06 | 0.10 | 0.17 | 0.17 | 0.16 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.73 | 0.54 | (2.89 | ) | (1.83 | ) | 2.47 | 1.81 | |||||||||||||||||||
Total income (loss) from investment operations | 1.74 | 0.60 | (2.79 | ) | (1.66 | ) | 2.64 | 1.97 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.26 | ) | (0.46 | ) | (0.16 | ) | (0.20 | ) | (0.11 | ) | (0.10 | ) | |||||||||||||||
From net realized gains | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | (0.37 | ) | |||||||||||||||||
Total dividends and distributions | (0.26 | ) | (0.46 | ) | (0.70 | ) | (1.36 | ) | (0.63 | ) | (0.47 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.10 | $ | 6.62 | $ | 6.48 | $ | 9.97 | $ | 12.99 | $ | 10.98 | |||||||||||||||
Total investment return2 | 26.42 | % | 8.65 | % | (26.75 | )% | (13.93 | )% | (24.84 | )% | 20.93 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 8,822 | $ | 6,875 | $ | 7,809 | $ | 17,023 | $ | 26,564 | $ | 23,539 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.04 | %3 | 1.76 | % | 1.57 | % | 1.32 | % | 1.38 | %4 | 1.48 | % | |||||||||||||||
Net of expense reimbursement | 1.25 | %3 | 1.25 | % | 1.25 | % | 1.25 | % | 1.26 | %4 | 1.25 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.32 | %3 | 0.83 | % | 1.50 | % | 1.43 | % | 1.42 | % | 1.52 | % | |||||||||||||||
Portfolio turnover rate | 37 | % | 71 | % | 124 | % | 55 | % | 72 | % | 69 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.60 | $ | 6.49 | $ | 9.79 | $ | 12.81 | $ | 10.82 | $ | 9.34 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | 0.01 | 0.06 | 0.08 | 0.06 | 0.08 | ||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.73 | 0.54 | (2.82 | ) | (1.79 | ) | 2.46 | 1.77 | |||||||||||||||||||
Total income (loss) from investment operations | 1.72 | 0.55 | (2.76 | ) | (1.71 | ) | 2.52 | 1.85 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.44 | ) | | (0.15 | ) | (0.01 | ) | | ||||||||||||||||||
From net realized gains | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | (0.37 | ) | |||||||||||||||||
Total dividends and distributions | | (0.44 | ) | (0.54 | ) | (1.31 | ) | (0.53 | ) | (0.37 | ) | ||||||||||||||||
Net asset value, end of period | $ | 8.32 | $ | 6.60 | $ | 6.49 | $ | 9.79 | $ | 12.81 | $ | 10.82 | |||||||||||||||
Total investment return2 | 26.06 | % | 7.85 | % | (27.30 | )% | (14.55 | )% | 23.97 | % | 19.86 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 48 | $ | 208 | $ | 218 | $ | 324 | $ | 555 | $ | 732 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.89 | %3 | 2.56 | % | 2.52 | % | 2.25 | % | 2.25 | %4 | 2.22 | % | |||||||||||||||
Net of expense reimbursement | 2.00 | %3 | 2.00 | % | 2.00 | % | 2.00 | % | 2.01 | %4 | 2.00 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.33 | )%3 | 0.08 | % | 0.93 | % | 0.67 | % | 0.51 | % | 0.77 | % | |||||||||||||||
Portfolio turnover rate | 37 | % | 71 | % | 124 | % | 55 | % | 72 | % | 69 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less
96
UBS International Equity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.47 | $ | 6.34 | $ | 9.69 | $ | 12.71 | $ | 10.76 | $ | 9.30 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.02 | ) | 0.01 | 0.05 | 0.09 | 0.08 | 0.08 | ||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.70 | 0.53 | (2.80 | ) | (1.79 | ) | 2.42 | 1.77 | |||||||||||||||||||
Total income (loss) from investment operations | 1.68 | 0.54 | (2.75 | ) | (1.70 | ) | 2.50 | 1.85 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.20 | ) | (0.41 | ) | (0.06 | ) | (0.16 | ) | (0.03 | ) | (0.02 | ) | |||||||||||||||
From net realized gains | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | (0.37 | ) | |||||||||||||||||
Total dividends and distributions | (0.20 | ) | (0.41 | ) | (0.60 | ) | (1.32 | ) | (0.55 | ) | (0.39 | ) | |||||||||||||||
Net asset value, end of period | $ | 7.95 | $ | 6.47 | $ | 6.34 | $ | 9.69 | $ | 12.71 | $ | 10.76 | |||||||||||||||
Total investment return2 | 26.03 | % | 7.86 | % | (27.33 | )% | (14.51 | )% | 23.85 | % | 19.93 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 1,033 | $ | 866 | $ | 914 | $ | 1,949 | $ | 2,576 | $ | 2,412 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.84 | %3 | 2.56 | % | 2.38 | % | 2.13 | % | 2.16 | %4 | 2.17 | % | |||||||||||||||
Net of expense reimbursement | 2.00 | %3 | 2.00 | % | 2.00 | % | 2.00 | % | 2.01 | %4 | 2.01 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.42 | )%3 | 0.10 | % | 0.75 | % | 0.75 | % | 0.66 | % | 0.77 | % | |||||||||||||||
Portfolio turnover rate | 37 | % | 71 | % | 124 | % | 55 | % | 72 | % | 69 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.65 | $ | 6.51 | $ | 10.05 | $ | 13.07 | $ | 11.04 | $ | 9.55 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.02 | 0.06 | 0.12 | 0.21 | 0.20 | 0.19 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.74 | 0.57 | (2.91 | ) | (1.85 | ) | 2.49 | 1.79 | |||||||||||||||||||
Total income (loss) from investment operations | 1.76 | 0.63 | (2.79 | ) | (1.64 | ) | 2.69 | 1.98 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.28 | ) | (0.49 | ) | (0.21 | ) | (0.22 | ) | (0.14 | ) | (0.12 | ) | |||||||||||||||
From net realized gains | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | (0.37 | ) | |||||||||||||||||
Total dividends and distributions | (0.28 | ) | (0.49 | ) | (0.75 | ) | (1.38 | ) | (0.66 | ) | (0.49 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.13 | $ | 6.65 | $ | 6.51 | $ | 10.05 | $ | 13.07 | $ | 11.04 | |||||||||||||||
Total investment return2 | 26.59 | % | 8.94 | % | (26.62 | )% | (13.63 | )% | 24.83 | % | 21.22 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 19,242 | $ | 18,724 | $ | 66,665 | $ | 129,573 | $ | 172,150 | $ | 147,397 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.01 | %3 | 1.55 | % | 1.42 | % | 1.13 | % | 1.16 | %4 | 1.19 | % | |||||||||||||||
Net of expense reimbursement | 1.00 | %3 | 1.00 | % | 1.00 | % | 1.00 | % | 1.01 | %4 | 1.00 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.58 | %3 | 0.84 | % | 1.81 | % | 1.79 | % | 1.63 | % | 1.77 | % | |||||||||||||||
Portfolio turnover rate | 37 | % | 71 | % | 124 | % | 55 | % | 72 | % | 69 | % |
than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Annualized.
4 Includes interest expense of 0.01%.
See accompanying notes to financial statements.
97
UBS Market Neutral Multi-Strategy Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | Class C | Class Y | |||||||||||||
Six months ended December 31, 2010 (unaudited) |
Six months ended December 31, 2010 (unaudited) |
Six months ended December 31, 2010 (unaudited) |
|||||||||||||
Net asset value, beginning of period | $ | 10.00 | $ | 10.00 | $ | 10.00 | |||||||||
Income (loss) from investment operations: | |||||||||||||||
Net investment loss1 | (0.11 | ) | (0.15 | ) | (0.09 | ) | |||||||||
Net realized and unrealized gain (loss) from investment activities | (0.05 | ) | (0.03 | ) | (0.04 | ) | |||||||||
Total loss from investment operations | (0.16 | ) | (0.18 | ) | (0.13 | ) | |||||||||
Redemption fees | 0.01 | | | ||||||||||||
Net asset value, end of period | $ | 9.85 | $ | 9.82 | $ | 9.87 | |||||||||
Total investment return2 | (1.50 | )% | (1.80 | )% | (1.30 | )% | |||||||||
Ratios/Supplemental data: | |||||||||||||||
Net assets, end of period (000's) | $ | 4,981 | $ | 920 | $ | 19,859 | |||||||||
Ratios of expenses to average net assets: | |||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short | 4.85 | %3 | 5.67 | %3 | 4.43 | %3 | |||||||||
Net of expense reimbursement and after dividend expense and security loan fees for securities sold short | 3.77 | %3 | 4.53 | %3 | 3.43 | %3 | |||||||||
Net of expense reimbursement and before dividend expense and security loan fees for securities sold short | 1.75 | %3 | 2.50 | %3 | 1.50 | %3 | |||||||||
Ratio of net investment loss to average net assets | (2.16 | )%3 | (2.99 | )%3 | (1.87 | )%3 | |||||||||
Portfolio turnover rate | 262 | % | 262 | % | 262 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Annualized.
See accompanying notes to financial statements.
98
This page has been left blank intentionally.
99
UBS U.S. Equity Alpha Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | June 30, 20073 | |||||||||||||||||||
Net asset value, beginning of period | $ | 7.01 | $ | 6.31 | $ | 8.82 | $ | 11.55 | $ | 10.00 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | (0.01 | ) | 0.04 | 0.05 | 0.02 | |||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.52 | 0.71 | (2.48 | ) | (2.10 | ) | 1.55 | ||||||||||||||||
Total income (loss) from investment operations | 1.53 | 0.70 | (2.44 | ) | (2.05 | ) | 1.57 | ||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||
From net investment income | | | (0.07 | ) | (0.03 | ) | (0.01 | ) | |||||||||||||||
From net realized gains | | | | (0.65 | ) | (0.01 | ) | ||||||||||||||||
Total dividends and distributions | | | (0.07 | ) | (0.68 | ) | (0.02 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.54 | $ | 7.01 | $ | 6.31 | $ | 8.82 | $ | 11.55 | |||||||||||||
Total investment return2 | 21.83 | % | 11.09 | % | (27.52 | )% | (18.49 | )% | 15.73 | % | |||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 19,873 | $ | 22,938 | $ | 33,137 | $ | 93,344 | $ | 187,444 | |||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.50 | %4 | 2.44 | % | 2.47 | % | 1.93 | % | 1.93 | %4 | |||||||||||||
Net of expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.04 | %4 | 2.24 | % | 2.24 | % | 1.93 | % | 1.88 | %4 | |||||||||||||
Net of expense reimbursement and before dividend expense and security loan fees for securities sold short |
1.50 | %4 | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | %4 | |||||||||||||
Ratio of net investment income (loss) to average net assets | 0.27 | %4 | (0.10 | )% | 0.63 | % | 0.47 | % | 0.30 | %4 | |||||||||||||
Portfolio turnover rate | 41 | % | 130 | % | 154 | % | 72 | % | 81 | % |
Class Y | |||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | June 30, 20073 | |||||||||||||||||||
Net asset value, beginning of period | $ | 7.01 | $ | 6.30 | $ | 8.82 | $ | 11.55 | $ | 10.00 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income1 | 0.02 | 0.01 | 0.005 | 0.08 | 0.04 | ||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.53 | 0.70 | (2.41 | ) | (2.10 | ) | 1.54 | ||||||||||||||||
Total income (loss) from investment operations | 1.55 | 0.71 | (2.41 | ) | (2.02 | ) | 1.58 | ||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||
From net investment income | (0.03 | ) | | (0.11 | ) | (0.06 | ) | (0.02 | ) | ||||||||||||||
From net realized gains | | | | (0.65 | ) | (0.01 | ) | ||||||||||||||||
Total dividends and distributions | (0.03 | ) | | (0.11 | ) | (0.71 | ) | (0.03 | ) | ||||||||||||||
Net asset value, end of period | $ | 8.53 | $ | 7.01 | $ | 6.30 | $ | 8.82 | $ | 11.55 | |||||||||||||
Total investment return2 | 22.05 | % | 11.27 | % | (27.22 | )% | (18.34 | )% | 15.88 | % | |||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 11,883 | $ | 12,132 | $ | 95,804 | $ | 9,121 | $ | 5,405 | |||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.35 | %4 | 2.16 | % | 2.33 | % | 1.70 | % | 1.67 | %4 | |||||||||||||
Net of expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.79 | %4 | 2.00 | % | 2.25 | % | 1.70 | % | 1.67 | %4 | |||||||||||||
Net of expense reimbursement and before dividend expense and security loan fees for securities sold short |
1.25 | %4 | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | %4 | |||||||||||||
Ratio of net investment income to average net assets | 0.51 | %4 | 0.12 | % | 0.07 | % | 0.74 | % | 0.43 | %4 | |||||||||||||
Portfolio turnover rate | 41 | % | 130 | % | 154 | % | 72 | % | 81 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
100
UBS U.S. Equity Alpha Fund
Financial highlights
Class C | |||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | June 30, 20073 | |||||||||||||||||||
Net asset value, beginning of period | $ | 6.93 | $ | 6.29 | $ | 8.74 | $ | 11.50 | $ | 10.00 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment income (loss)1 | (0.02 | ) | (0.06 | ) | (0.01 | ) | (0.03 | ) | (0.04 | ) | |||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.51 | 0.70 | (2.44 | ) | (2.08 | ) | 1.55 | ||||||||||||||||
Total income (loss) from investment operations | 1.49 | 0.64 | (2.45 | ) | (2.11 | ) | 1.51 | ||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||
From net investment income | | | | | | ||||||||||||||||||
From net realized gains | | | | (0.65 | ) | (0.01 | ) | ||||||||||||||||
Total dividends and distributions | | | | (0.65 | ) | (0.01 | ) | ||||||||||||||||
Net asset value, end of period | $ | 8.42 | $ | 6.93 | $ | 6.29 | $ | 8.74 | $ | 11.50 | |||||||||||||
Total investment return2 | 21.50 | % | 10.18 | % | (28.03 | )% | (19.11 | )% | 15.12 | % | |||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 6,258 | $ | 6,810 | $ | 9,003 | $ | 22,823 | $ | 42,750 | |||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short |
3.33 | %4 | 3.27 | % | 3.30 | % | 2.74 | % | 2.72 | %4 | |||||||||||||
Net of expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.79 | %4 | 2.98 | % | 2.99 | % | 2.68 | % | 2.64 | %4 | |||||||||||||
Net of expense reimbursement and before dividend expense and security loan fees for securities sold short |
2.25 | %4 | 2.25 | % | 2.25 | % | 2.25 | % | 2.25 | %4 | |||||||||||||
Ratio of net investment income (loss) to average net assets | (0.49 | )%4 | (0.85 | )% | (0.12 | )% | (0.28 | )% | (0.44 | )%4 | |||||||||||||
Portfolio turnover rate | 41 | % | 130 | % | 154 | % | 72 | % | 81 | % |
3 For the period September 26, 2006 (commencement of operations) through June 30, 2007.
4 Annualized.
5 Amount represents less than $0.005 per share.
See accompanying notes to financial statements.
101
UBS U.S. Large Cap Equity Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.79 | $ | 11.48 | $ | 16.63 | $ | 21.19 | $ | 18.24 | $ | 17.27 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.04 | 0.06 | 0.13 | 0.16 | 0.15 | 0.10 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.94 | 1.54 | (4.84 | ) | (3.68 | ) | 3.52 | 1.39 | |||||||||||||||||||
Total income (loss) from investment operations | 2.98 | 1.60 | (4.71 | ) | (3.52 | ) | 3.67 | 1.49 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.07 | ) | (0.29 | ) | (0.07 | ) | (0.16 | ) | (0.10 | ) | (0.11 | ) | |||||||||||||||
From net realized gains | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | (0.41 | ) | |||||||||||||||||
Total dividends and distributions | (0.07 | ) | (0.29 | ) | (0.44 | ) | (1.04 | ) | (0.72 | ) | (0.52 | ) | |||||||||||||||
Net asset value, end of period | $ | 15.70 | $ | 12.79 | $ | 11.48 | $ | 16.63 | $ | 21.19 | $ | 18.24 | |||||||||||||||
Total investment return2 | 23.31 | % | 13.75 | % | (28.04 | )% | (17.17 | )% | 20.39 | % | 8.62 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 24,399 | $ | 23,164 | $ | 34,406 | $ | 90,558 | $ | 158,138 | $ | 88,968 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 1.28 | %4 | 1.33 | % | 1.28 | % | 1.16 | % | 1.18 | % | 1.20 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 1.20 | %4 | 1.20 | % | 1.28 | % | 1.16 | % | 1.18 | % | 1.24 | %5 | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.59 | %4 | 0.47 | % | 1.05 | % | 0.83 | % | 0.75 | % | 0.54 | % | |||||||||||||||
Portfolio turnover rate | 23 | % | 50 | % | 62 | % | 47 | % | 34 | % | 50 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.50 | $ | 11.14 | $ | 16.20 | $ | 20.66 | $ | 17.84 | $ | 16.94 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment Income (loss)1 | (0.01 | ) | (0.04 | ) | 0.04 | 0.01 | 0.003 | (0.04 | ) | ||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.86 | 1.49 | (4.71 | ) | (3.58 | ) | 3.44 | 1.35 | |||||||||||||||||||
Total income (loss) from investment operations | 2.85 | 1.45 | (4.67 | ) | (3.57 | ) | 3.44 | 1.31 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.09 | ) | (0.02 | ) | (0.01 | ) | | | ||||||||||||||||||
From net realized gains | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | (0.41 | ) | |||||||||||||||||
Total dividends and distributions | | (0.09 | ) | (0.39 | ) | (0.89 | ) | (0.62 | ) | (0.41 | ) | ||||||||||||||||
Net asset value, end of period | $ | 15.35 | $ | 12.50 | $ | 11.14 | $ | 16.20 | $ | 20.66 | $ | 17.84 | |||||||||||||||
Total investment return2 | 22.80 | % | 12.96 | % | (28.61 | )% | (17.79 | )% | 19.50 | % | 7.73 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 159 | $ | 170 | $ | 265 | $ | 635 | $ | 870 | $ | 989 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 2.11 | %4 | 2.10 | % | 2.02 | % | 1.93 | % | 1.95 | % | 1.92 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 1.95 | %4 | 1.95 | % | 2.02 | % | 1.93 | % | 1.95 | % | 2.01 | %5 | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.15 | )%4 | (0.28 | )% | 0.33 | % | 0.07 | % | (0.01 | )% | (0.23 | )% | |||||||||||||||
Portfolio turnover rate | 23 | % | 50 | % | 62 | % | 47 | % | 34 | % | 50 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
102
UBS U.S. Large Cap Equity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.37 | $ | 11.14 | $ | 16.21 | $ | 20.66 | $ | 17.83 | $ | 16.93 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.04 | ) | 0.04 | 0.02 | 0.003 | (0.04 | ) | ||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.84 | 1.50 | (4.71 | ) | (3.59 | ) | 3.45 | 1.36 | |||||||||||||||||||
Total income (loss) from investment operations | 2.83 | 1.46 | (4.67 | ) | (3.57 | ) | 3.45 | 1.32 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.23 | ) | (0.03 | ) | | | (0.01 | ) | ||||||||||||||||||
From net realized gains | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | (0.41 | ) | |||||||||||||||||
Total dividends and distributions | | (0.23 | ) | (0.40 | ) | (0.88 | ) | (0.62 | ) | (0.42 | ) | ||||||||||||||||
Net asset value, end of period | $ | 15.20 | $ | 12.37 | $ | 11.14 | $ | 16.21 | $ | 20.66 | $ | 17.83 | |||||||||||||||
Total investment return2 | 22.88 | % | 12.92 | % | (28.57 | )% | (17.76 | )% | 19.56 | % | 7.79 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 3,748 | $ | 3,539 | $ | 4,719 | $ | 6,382 | $ | 10,591 | $ | 5,977 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 2.04 | %4 | 2.01 | % | 1.96 | % | 1.91 | % | 1.92 | % | 1.96 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 1.95 | %4 | 1.95 | % | 1.96 | % | 1.91 | % | 1.92 | % | 1.98 | %5 | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.17 | )%4 | (0.28 | )% | 0.35 | % | 0.09 | % | 0.01 | % | (0.20 | )% | |||||||||||||||
Portfolio turnover rate | 23 | % | 50 | % | 62 | % | 47 | % | 34 | % | 50 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.91 | $ | 11.62 | $ | 16.85 | $ | 21.44 | $ | 18.43 | $ | 17.42 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment Income (loss)1 | 0.06 | 0.10 | 0.17 | 0.22 | 0.21 | 0.15 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 2.96 | 1.56 | (4.91 | ) | (3.72 | ) | 3.56 | 1.40 | |||||||||||||||||||
Total income (loss) from investment operations | 3.02 | 1.66 | (4.74 | ) | (3.50 | ) | 3.77 | 1.55 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.12 | ) | (0.37 | ) | (0.12 | ) | (0.21 | ) | (0.14 | ) | (0.13 | ) | |||||||||||||||
From net realized gains | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | (0.41 | ) | |||||||||||||||||
Total dividends and distributions | (0.12 | ) | (0.37 | ) | (0.49 | ) | (1.09 | ) | (0.76 | ) | (0.54 | ) | |||||||||||||||
Net asset value, end of period | $ | 15.81 | $ | 12.91 | $ | 11.62 | $ | 16.85 | $ | 21.44 | $ | 18.43 | |||||||||||||||
Total investment return2 | 23.40 | % | 14.04 | % | (27.85 | )% | (16.87 | )% | 20.73 | % | 8.91 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 211,054 | $ | 188,636 | $ | 217,821 | $ | 645,803 | $ | 833,023 | $ | 543,099 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement/recoupment | 0.97 | %4 | 0.99 | % | 0.96 | % | 0.87 | % | 0.89 | % | 0.92 | % | |||||||||||||||
Net of expense reimbursement/recoupment | 0.95 | %4 | 0.95 | % | 0.96 | % | 0.87 | % | 0.89 | % | 0.97 | %5 | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.83 | %4 | 0.72 | % | 1.39 | % | 1.13 | % | 1.04 | % | 0.81 | % | |||||||||||||||
Portfolio turnover rate | 23 | % | 50 | % | 62 | % | 47 | % | 34 | % | 50 | % |
3 Amount represents less than $0.005 per share.
4 Annualized.
5 The investment manager recouped expenses previously reimbursed by the investment manager on behalf of the Fund, not to exceed the expense cap in effect at the time of reimbursement.
See accompanying notes to financial statements.
103
UBS U.S. Large Cap Value Equity Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.33 | $ | 4.94 | $ | 8.42 | $ | 11.66 | $ | 10.54 | $ | 10.48 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.03 | 0.05 | 0.11 | 0.14 | 0.13 | 0.11 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.13 | 0.46 | (2.66 | ) | (2.25 | ) | 2.03 | 1.12 | |||||||||||||||||||
Total income (loss) from investment operations | 1.16 | 0.51 | (2.55 | ) | (2.11 | ) | 2.16 | 1.23 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.06 | ) | (0.12 | ) | (0.06 | ) | (0.14 | ) | (0.11 | ) | (0.12 | ) | |||||||||||||||
From net realized gains | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | (1.05 | ) | |||||||||||||||||
Total dividends and distributions | (0.06 | ) | (0.12 | ) | (0.93 | ) | (1.13 | ) | (1.04 | ) | (1.17 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.43 | $ | 5.33 | $ | 4.94 | $ | 8.42 | $ | 11.66 | $ | 10.54 | |||||||||||||||
Total investment return2 | 21.71 | % | 10.16 | % | (29.74 | )% | (19.38 | )% | 21.20 | % | 12.13 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 45,496 | $ | 41,012 | $ | 43,951 | $ | 78,989 | $ | 113,213 | $ | 105,709 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.60 | %4 | 1.61 | % | 1.52 | % | 1.32 | % | 1.29 | % | 1.31 | % | |||||||||||||||
Net of expense reimbursement | 1.20 | %4 | 1.20 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | |||||||||||||||
Ratio of net investment income to average net assets | 0.85 | %4 | 0.83 | % | 1.89 | % | 1.35 | % | 1.12 | % | 1.07 | % | |||||||||||||||
Portfolio turnover rate | 40 | % | 70 | % | 67 | % | 52 | % | 27 | % | 41 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.29 | $ | 4.87 | $ | 8.33 | $ | 11.50 | $ | 10.39 | $ | 10.31 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.003 | 0.003 | 0.06 | 0.06 | 0.04 | 0.03 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.13 | 0.45 | (2.62 | ) | (2.21 | ) | 2.00 | 1.10 | |||||||||||||||||||
Total income (loss) from investment operations | 1.13 | 0.45 | (2.56 | ) | (2.15 | ) | 2.04 | 1.13 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.03 | ) | (0.03 | ) | (0.03 | ) | | | ||||||||||||||||||
From net realized gains | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | (1.05 | ) | |||||||||||||||||
Total dividends and distributions | | (0.03 | ) | (0.90 | ) | (1.02 | ) | (0.93 | ) | (1.05 | ) | ||||||||||||||||
Net asset value, end of period | $ | 6.42 | $ | 5.29 | $ | 4.87 | $ | 8.33 | $ | 11.50 | $ | 10.39 | |||||||||||||||
Total investment return2 | 21.36 | % | 9.18 | % | (30.23 | )% | (19.92 | )% | 20.21 | % | 11.25 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 93 | $ | 94 | $ | 247 | $ | 471 | $ | 1,061 | $ | 1,978 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.63 | %4 | 2.62 | % | 2.48 | % | 2.17 | % | 2.19 | % | 2.15 | % | |||||||||||||||
Net of expense reimbursement | 1.95 | %4 | 1.95 | % | 1.85 | % | 1.85 | % | 1.85 | % | 1.85 | % | |||||||||||||||
Ratio of net investment income to average net assets | 0.09 | %4 | 0.09 | % | 1.14 | % | 0.59 | % | 0.39 | % | 0.32 | % | |||||||||||||||
Portfolio turnover rate | 40 | % | 70 | % | 67 | % | 52 | % | 27 | % | 41 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less
104
UBS U.S. Large Cap Value Equity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.20 | $ | 4.83 | $ | 8.26 | $ | 11.42 | $ | 10.34 | $ | 10.30 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.003 | 0.003 | 0.06 | 0.06 | 0.04 | 0.03 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.11 | 0.45 | (2.60 | ) | (2.18 | ) | 1.99 | 1.10 | |||||||||||||||||||
Total income (loss) from investment operations | 1.11 | 0.45 | (2.54 | ) | (2.12 | ) | 2.03 | 1.13 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.01 | ) | (0.08 | ) | (0.02 | ) | (0.05 | ) | (0.02 | ) | (0.04 | ) | |||||||||||||||
From net realized gains | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | (1.05 | ) | |||||||||||||||||
Total dividends and distributions | (0.01 | ) | (0.08 | ) | (0.89 | ) | (1.04 | ) | (0.95 | ) | (1.09 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.30 | $ | 5.20 | $ | 4.83 | $ | 8.26 | $ | 11.42 | $ | 10.34 | |||||||||||||||
Total investment return2 | 21.29 | % | 9.08 | % | (30.25 | )% | (19.83 | )% | 20.24 | % | 11.26 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 5,516 | $ | 4,889 | $ | 5,429 | $ | 9,795 | $ | 15,919 | $ | 15,683 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.40 | %4 | 2.41 | % | 2.33 | % | 2.10 | % | 2.06 | % | 2.08 | % | |||||||||||||||
Net of expense reimbursement | 1.95 | %4 | 1.95 | % | 1.85 | % | 1.85 | % | 1.85 | % | 1.85 | % | |||||||||||||||
Ratio of net investment income to average net assets | 0.10 | %4 | 0.08 | % | 1.13 | % | 0.60 | % | 0.37 | % | 0.32 | % | |||||||||||||||
Portfolio turnover rate | 40 | % | 70 | % | 67 | % | 52 | % | 27 | % | 41 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.36 | $ | 4.97 | $ | 8.46 | $ | 11.71 | $ | 10.58 | $ | 10.52 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.03 | 0.06 | 0.12 | 0.16 | 0.15 | 0.14 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 1.15 | 0.47 | (2.67 | ) | (2.25 | ) | 2.05 | 1.12 | |||||||||||||||||||
Total income (loss) from investment operations | 1.18 | 0.53 | (2.55 | ) | (2.09 | ) | 2.20 | 1.26 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net investment income | (0.07 | ) | (0.14 | ) | (0.07 | ) | (0.17 | ) | (0.14 | ) | (0.15 | ) | |||||||||||||||
From net realized gains | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | (1.05 | ) | |||||||||||||||||
Total dividends and distributions | (0.07 | ) | (0.14 | ) | (0.94 | ) | (1.16 | ) | (1.07 | ) | (1.20 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.47 | $ | 5.36 | $ | 4.97 | $ | 8.46 | $ | 11.71 | $ | 10.58 | |||||||||||||||
Total investment return2 | 22.09 | % | 10.39 | % | (29.53 | )% | (19.15 | )% | 21.52 | % | 12.37 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 1,726 | $ | 1,515 | $ | 2,174 | $ | 5,694 | $ | 9,074 | $ | 7,172 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.54 | %4 | 1.50 | % | 1.45 | % | 1.13 | % | 1.06 | % | 1.06 | % | |||||||||||||||
Net of expense reimbursement | 0.95 | %4 | 0.95 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | |||||||||||||||
Ratio of net investment income to average net assets | 1.10 | %4 | 1.07 | % | 2.08 | % | 1.60 | % | 1.36 | % | 1.32 | % | |||||||||||||||
Portfolio turnover rate | 40 | % | 70 | % | 67 | % | 52 | % | 27 | % | 41 | % |
than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Amount represents less than $0.005 per share.
4 Annualized.
See accompanying notes to financial statements.
105
UBS U.S. Small Cap Growth Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.60 | $ | 8.56 | $ | 13.31 | $ | 15.94 | $ | 14.41 | $ | 13.65 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.05 | ) | (0.10 | ) | (0.06 | ) | (0.12 | ) | (0.14 | ) | (0.12 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 3.99 | 2.14 | (4.69 | ) | (1.47 | ) | 2.14 | 1.45 | |||||||||||||||||||
Total income (loss) from investment operations | 3.94 | 2.04 | (4.75 | ) | (1.59 | ) | 2.00 | 1.33 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net realized gains | | | 0.003 | (1.04 | ) | (0.47 | ) | (0.57 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 14.54 | $ | 10.60 | $ | 8.56 | $ | 13.31 | $ | 15.94 | $ | 14.41 | |||||||||||||||
Total investment return2 | 37.17 | % | 23.83 | % | (35.68 | )% | (10.25 | )% | 14.18 | % | 9.88 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 35,491 | $ | 28,586 | $ | 41,141 | $ | 92,759 | $ | 149,362 | $ | 151,731 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.65 | %4 | 1.60 | % | 1.67 | % | 1.47 | % | 1.65 | % | 1.50 | % | |||||||||||||||
Net of expense reimbursement | 1.40 | %4 | 1.40 | % | 1.28 | % | 1.28 | % | 1.28 | % | 1.28 | % | |||||||||||||||
Ratio of net investment loss to average net assets | (0.88 | )%4 | (1.00 | )% | (0.60 | )% | (0.81 | )% | (0.93 | )% | (0.82 | )% | |||||||||||||||
Portfolio turnover rate | 31 | % | 72 | % | 73 | % | 51 | % | 34 | % | 49 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.89 | $ | 8.05 | $ | 12.59 | $ | 15.25 | $ | 13.91 | $ | 13.29 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.09 | ) | (0.17 | ) | (0.12 | ) | (0.22 | ) | (0.24 | ) | (0.22 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 3.72 | 2.01 | (4.42 | ) | (1.40 | ) | 2.05 | 1.41 | |||||||||||||||||||
Total income (loss) from investment operations | 3.63 | 1.84 | (4.54 | ) | (1.62 | ) | 1.81 | 1.19 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net realized gains | | | 0.003 | (1.04 | ) | (0.47 | ) | (0.57 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 13.52 | $ | 9.89 | $ | 8.05 | $ | 12.59 | $ | 15.25 | $ | 13.91 | |||||||||||||||
Total investment return2 | 36.70 | % | 22.86 | % | (36.06 | )% | (10.94 | )% | 13.32 | % | 9.09 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 62 | $ | 74 | $ | 177 | $ | 661 | $ | 1,798 | $ | 5,598 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.76 | %4 | 2.91 | % | 2.55 | % | 2.20 | % | 2.29 | % | 2.39 | % | |||||||||||||||
Net of expense reimbursement | 2.15 | %4 | 2.15 | % | 2.03 | % | 2.03 | % | 2.03 | % | 2.03 | % | |||||||||||||||
Ratio of net investment loss to average net assets | (1.63 | )%4 | (1.75 | )% | (1.38 | )% | (1.58 | )% | (1.69 | )% | (1.57 | )% | |||||||||||||||
Portfolio turnover rate | 31 | % | 72 | % | 73 | % | 51 | % | 34 | % | 49 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Amount represents less than $0.005 per share.
4 Annualized.
106
UBS U.S. Small Cap Growth Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.87 | $ | 8.03 | $ | 12.57 | $ | 15.23 | $ | 13.89 | $ | 13.28 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.09 | ) | (0.17 | ) | (0.12 | ) | (0.21 | ) | (0.24 | ) | (0.22 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 3.70 | 2.01 | (4.42 | ) | (1.41 | ) | 2.05 | 1.40 | |||||||||||||||||||
Total income (loss) from investment operations | 3.61 | 1.84 | (4.54 | ) | (1.62 | ) | 1.81 | 1.18 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net realized gains | | | 0.003 | (1.04 | ) | (0.47 | ) | (0.57 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 13.48 | $ | 9.87 | $ | 8.03 | $ | 12.57 | $ | 15.23 | $ | 13.89 | |||||||||||||||
Total investment return2 | 36.58 | % | 22.91 | % | (36.11 | )% | (10.95 | )% | 13.33 | % | 9.02 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,873 | $ | 2,336 | $ | 2,471 | $ | 6,042 | $ | 7,877 | $ | 8,329 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.47 | %4 | 2.50 | % | 2.45 | % | 2.25 | % | 2.28 | % | 2.31 | % | |||||||||||||||
Net of expense reimbursement | 2.15 | %4 | 2.15 | % | 2.03 | % | 2.03 | % | 2.03 | % | 2.03 | % | |||||||||||||||
Ratio of net investment loss to average net assets | (1.63 | )%4 | (1.75 | )% | (1.38 | )% | (1.55 | )% | (1.68 | )% | (1.57 | )% | |||||||||||||||
Portfolio turnover rate | 31 | % | 72 | % | 73 | % | 51 | % | 34 | % | 49 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended | Year ended June 30, | ||||||||||||||||||||||||||
December 31, 2010 | |||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 11.00 | $ | 8.86 | $ | 13.74 | $ | 16.38 | $ | 14.75 | $ | 13.93 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.04 | ) | (0.08 | ) | (0.03 | ) | (0.08 | ) | (0.10 | ) | (0.08 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 4.15 | 2.22 | (4.85 | ) | (1.52 | ) | 2.20 | 1.47 | |||||||||||||||||||
Total income (loss) from investment operations | 4.11 | 2.14 | (4.88 | ) | (1.60 | ) | 2.10 | 1.39 | |||||||||||||||||||
Less dividends and distributions: | |||||||||||||||||||||||||||
From net realized gains | | | 0.003 | (1.04 | ) | (0.47 | ) | (0.57 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 15.11 | $ | 11.00 | $ | 8.86 | $ | 13.74 | $ | 16.38 | $ | 14.75 | |||||||||||||||
Total investment return2 | 37.36 | % | 24.15 | % | (35.51 | )% | (10.03 | )% | 14.54 | % | 10.12 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 115,472 | $ | 94,725 | $ | 134,378 | $ | 272,666 | $ | 303,029 | $ | 269,696 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 1.21 | %4 | 1.21 | % | 1.25 | % | 1.12 | % | 1.18 | % | 1.13 | % | |||||||||||||||
Net of expense reimbursement | 1.15 | %4 | 1.15 | % | 1.03 | % | 1.03 | % | 1.03 | % | 1.03 | % | |||||||||||||||
Ratio of net investment loss to average net assets | (0.63 | )%4 | (0.74 | )% | (0.36 | )% | (0.55 | )% | (0.68 | )% | (0.57 | )% | |||||||||||||||
Portfolio turnover rate | 31 | % | 72 | % | 73 | % | 51 | % | 34 | % | 49 | % |
See accompanying notes to financial statements.
107
The UBS Funds
Notes to financial statements (unaudited)
1. Organization and significant accounting policies
The UBS Funds (the "Trust") is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end management investment company currently offering multiple series representing separate investment portfolios. The Trust is a Delaware statutory trust organized on August 13, 1993. The trustees of the Trust have the authority to issue an unlimited number of shares of beneficial interest at a par value of $0.001 per share.
The Trust has 15 Funds available for investment, each having its own investment objectives and policies. The following seven funds are covered in this report: UBS Global Equity Fund, UBS International Equity Fund, UBS Market Neutral Multi-Strategy Fund, UBS U.S. Equity Alpha Fund, UBS U.S. Large Cap Equity Fund, UBS U.S. Large Cap Value Equity Fund, and UBS U.S. Small Cap Growth Fund (each a "Fund", and collectively, the "Funds").
Each of the Funds is classified as a "diversified" investment company for purposes of the 1940 Act. Each Fund currently offers Class A, Class C and Class Y shares. For each Fund, except UBS U.S. Equity Alpha Fund and UBS Market Neutral Multi-Strategy Fund, Class B shares are offered only to existing Class B shareholders with respect to the reinvestment of dividends and distributions and exchanges of Class B shares of the Funds for Class B shares of other series of the UBS Family of Funds. "UBS Family of Funds" include other UBS Funds, PACE Select funds and other funds for which UBS Global Asset Management (US) Inc. ("UBS Global AM (US)") serves as principal underwriter. UBS U.S. Equity Alpha Fund and UBS Market Neutral Multi-Strategy Fund do not offer Class B shares. Each class represents interests in the same assets of the applicable Fund and the classes are identical except for differences in their sales charge structures, ongoing service and distribution charges and certain transfer agency and related services expenses. In addition, Class B shares and all corresponding reinvested dividend shares automatically convert to Class A shares within a certain number of years after issuance which varies depending upon the amount invested. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plan, if any. Class Y shares have no service or distribution plan.
In the normal course of business, the Funds may enter into contracts that contain a variety of representations that provide general indemnification for certain liabilities. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had any prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
The Trust accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the exclusive reference of authoritative US generally accepted accounting principles ("GAAP") recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The Funds' financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The following is a summary of significant accounting policies:
A. Valuation of investments: Each Fund calculates its net asset value based on the current market value, where available, for its portfolio securities. The Funds normally obtain market values for their securities and other instruments from independent pricing sources and broker-dealers. Independent pricing sources may use reported last sale prices, official market closing prices, current market quotations or valuations from computerized "matrix" systems that derive values based on comparable securities or instruments. A matrix system incorporates parameters
108
The UBS Funds
Notes to financial statements (unaudited)
such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities or instruments. Securities and other instruments also may be valued based on appraisals derived from information concerning the security or instrument or similar securities or instruments received from recognized dealers in those holdings. Securities and instruments traded in the over-the-counter ("OTC") market and listed on The NASDAQ Stock Market, Inc. ("NASDAQ") normally are valued at the NASDAQ Official Closing Price. Other OTC securities are valued at the last bid price on the valuation date available prior to valuation. Securities and instruments which are listed on US and foreign stock exchanges normally are valued at the market closing price, the last sale price on the day the securities are valued or, lacking any sales on such day, at the last available bid price. In cases where securities or instruments are traded on more than one exchange, the securities or instruments are valued on the exchange designated as the primary market by UBS Global Asset Management (Americas) Inc. ("UBS Global AM" or the "Advisor"), the investment advisor of the Funds. UBS Global AM is an indirect wholly owned asset management subsidiary of UBS AG, an internationally diversified organization with headquarters in Zurich and Basel, Switzerland and operations in many areas of the financial services industry. If a market value is not readily available from an independent pricing source for a particular security or instrument, that security or instrument is valued at fair value as determined in good faith by or under the direction of the Trust's Board of Trustees (the "Board"). Various factors may be reviewed in order to make a good faith determination of a security's or instrument's fair value. These factors include, but are not limited to, fundamental analytical data relating to the investment; the nature and duration of restrictions on disposition of the securities or instruments; and the evaluation of forces which influence the market in which the securities or instruments are purchased and sold. Foreign currency exchange rates are generally determined as of the close of the New York Stock Exchange ("NYSE").
Certain securities or instruments in which the Funds invest are traded in markets that close before 4:00 p.m. Eastern Time. Normally, developments that occur between the close of the foreign markets and 4:00 p.m. Eastern Time will not be reflected in the Fund's net asset value. However, if any of the Funds determine that such developments are so significant that they will materially affect the value of the Fund's securities or instruments, the Fund may adjust the previous closing prices to reflect what the Board believes to be the fair value of these securities or instruments as of 4:00 p.m. Eastern Time.
Certain Funds may use a systematic fair valuation model provided by an independent third party to value securities or instruments principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. The systematic fair valuation model may use calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures contracts. If a security or instrument is valued at a "fair value," that value is likely to be different from the last quoted market price for the security or instrument. The use of the fair valuation model may result in securities being transferred between Level 1 and Level 2 at reporting periods.
The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with 60 days or less remaining to maturity, unless the Board determines that this does not represent fair value. Investments in open-end investment companies are valued at the daily closing net asset value of the respective investment company. Pursuant to the Funds' adoption of the use of the practical expedient within ASC Topic 820, investments in non-registered investment companies are also valued at the daily net asset value. All investments quoted in foreign currencies will be valued daily in US dollars on the basis of the foreign currency exchange rates prevailing at the time such valuation is determined by the Funds' custodian.
Futures contracts are generally valued at the settlement price established each day on the exchange on which they are traded. Forward foreign currency contracts are valued daily using forward exchange rates quoted by independent pricing services.
109
The UBS Funds
Notes to financial statements (unaudited)
GAAP requires disclosure regarding the various inputs that are used in determining the value of the Funds' investments. These inputs are summarized into the three broad levels listed below:
Level 1Unadjusted quoted prices in active markets for identical investments.
Level 2Other significant observable inputs, including but not limited to, quoted prices for similar investments, interest rates, prepayment speeds and credit risk.
Level 3Unobservable inputs inclusive of the Fund's own assumptions in determining the fair value of investments.
A fair value hierarchy has been included near the end of each Fund's Portfolio of investments.
In January 2010, FASB issued Accounting Standards Update No. 2010-06 "Improving Disclosures about Fair Value Measurements" ("ASU No. 2010-06"). ASU No. 2010-06 requires reporting entities to make new disclosures about amounts and reasons for significant transfer in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, including information on purchases, sales, issuances and settlements on a gross basis in the reconciliation of activity in Level 3 fair value measurements. The new and revised disclosures have been implemented for annual and interim periods beginning after December 15, 2009 except for the disclosures surrounding purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements, which are effective for annual and interim periods beginning after December 15, 2010. Management is currently evaluating the impact the adoption of the remaining portions of ASU No. 2010-06 may have on the Funds' financial statement disclosures.
The provisions of ASC Topic 815 "Derivatives and Hedging" ("ASC Topic 815") require qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk related contingent features in derivative agreements. Since investment companies value their derivatives at fair value and recognize changes in fair value through the statement of operations, they do not qualify for hedge accounting under ASC Topic 815. Accordingly, even though a fund's investments in derivatives may represent economic hedges, they are considered to be non-hedge transactions for purposes of disclosure under ASC Topic 815. ASC Topic 815 requires that (1) objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation, (2) the fair values of derivative instruments and their gains and losses be disclosed in a tabular format, and (3) information be disclosed about credit-risk contingent features of derivatives contracts. Details of this disclosure can be found below as well as in the Portfolio of investments. The volume of derivatives that is presented in the Portfolio of investments of each Fund is consistent with the derivative activity during the year ended December 31, 2010.
110
The UBS Funds
Notes to financial statements (unaudited)
Disclosure of derivatives by underlying risk for each Fund as of and for the period ended December 31, 2010 is as follows:
Asset derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||
Forward contracts1 | $ | | $ | 79,743 | $ | 79,743 | |||||||||
Futures contracts2 | 2,035 | | 2,035 | ||||||||||||
Total value | $ | 2,035 | $ | 79,743 | $ | 81,778 |
1 Statement of assets and liabilities location: Unrealized appreciation on forward foreign currency contracts.
2 Includes cumulative appreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Liability derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||
Forward contracts1 | $ | | $ | (21,617 | ) | $ | (21,617 | ) | |||||||
Futures contracts2 | (3,712 | ) | | (3,712 | ) | ||||||||||
Total value | $ | (3,712 | ) | $ | (21,617 | ) | $ | (25,329 | ) |
1 Statement of assets and liabilities location: Unrealized depreciation on forward foreign currency contracts.
2 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||
Net realized gain1 | |||||||||||||||
Forward contracts | $ | | $ | 1,944 | $ | 1,944 | |||||||||
Futures contracts | 14,394 | | 14,394 | ||||||||||||
Total net realized gain | $ | 14,394 | $ | 1,944 | $ | 16,338 | |||||||||
Net change in unrealized appreciation/depreciation2 | |||||||||||||||
Forward contracts | $ | | $ | 58,126 | $ | 58,126 | |||||||||
Futures contracts | (1,677 | ) | | (1,677 | ) | ||||||||||
Total net change in unrealized appreciation/depreciation | $ | (1,677 | ) | $ | 58,126 | $ | 56,449 |
1 Statement of operations location: Net realized gain (loss) on futures contracts and forward foreign currency contracts.
2 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts and forward foreign currency contracts.
B. Restricted securities: The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included in each Fund's Notes to portfolio of investments.
111
The UBS Funds
Notes to financial statements (unaudited)
C. Investment transactions, investment income and expenses: Investment transactions are recorded on the trade date. Realized gains and losses from investment and foreign exchange transactions are calculated using the identified cost method. Interest income is recorded on an accrual basis. Discounts are accreted and premiums are amortized as adjustments to interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares (or the value of dividend-eligible shares, as appropriate) of each class at the beginning of the day after adjusting for current capital share activity of the respective classes. Class specific expenses are charged directly to the applicable class of shares.
D. Foreign currency translation: The Funds use the foreign currency exchange rates determined as of the close of regular trading on the NYSE. For purposes of calculating the US dollar equivalent value of a non US dollar denominated obligation, foreign currency amounts are translated into US dollars on the following basis: (1) market value of investment securities and other assets and liabilitiesat the exchange rates prevailing at the end of each Fund's fiscal period; and (2) purchases and sales of investment securities and income and expensesat the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets and the market value of each Fund's portfolio are presented at the foreign exchange rates at the end of each Fund's fiscal period, the Funds do not generally isolate the effect of fluctuations in foreign exchange rates from the effect of the changes in market prices of securities. However, the Funds do isolate the effect of fluctuations in foreign exchange rates when determining the gain or loss upon the sale or maturity of foreign currency-denominated securities pursuant to US federal income tax regulations. Certain foreign exchange gains and losses included in realized and unrealized gains and losses are included in or are a reduction of ordinary income in accordance with US federal income tax regulations.
E. Forward foreign currency contracts: A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Risks associated with such contracts include movement in the value of the foreign currency relative to the US dollar and the potential inability of the counterparty to meet the terms of the contract. The Funds may purchase or sell currencies and/or engage in forward foreign currency transactions in order to expedite settlement of portfolio transactions, manage currency risk or to gain exposure to a currency without purchasing securities denominated in that currency. Forward foreign currency contracts involve, to varying degrees, elements of market risk (specifically foreign currency risk).
A Fund will only enter into forward contracts to sell, for a fixed amount of US dollars or other appropriate currency, an amount of foreign currency, to the extent that the value of the short forward contract is covered by the underlying value of securities denominated in the currency being sold. Alternatively, when a Fund enters into a forward contract to sell an amount of foreign currency, the Fund's custodian or sub custodian will place assets in a segregated account of the Fund in an amount not less than the value of the Fund's total assets committed to the utilization of such forward contracts. If the assets placed in the account decline in value, additional cash or securities will be placed in the account on a daily basis so that the value of the account will equal the amount of the Fund's commitments with respect to such contracts.
The unrealized gain, if any, represents the credit risk to each Fund on a forward foreign currency contract. Fluctuations in the value of the open forward foreign currency contracts are recorded daily for book purposes as unrealized gains or losses on foreign forward currency contracts by the Funds. Realized gains and losses include net gains and losses recognized by each Fund on contracts which have been sold or matured.
F. Futures contracts: Each Fund may purchase or sell financial futures contracts. The Funds may purchase or sell futures contracts to increase or reduce their exposure to an asset class without purchasing or selling the underlying
112
The UBS Funds
Notes to financial statements (unaudited)
securities, either as a hedge or to enhance income or realize gains. Using financial futures contracts involves various market risks, including interest rate and equity risk. Risks of entering into futures contracts include the possibility that there may be an illiquid market or that a change in the value of the contract may not correlate with changes in the value of the underlying securities. To the extent that market prices move in an unexpected direction, there is a risk that a Fund will not achieve the anticipated benefits of the futures contract or may realize a loss.
Upon entering into a futures contract, the Fund is required to deliver to a broker an amount of cash and/or securities equal to a certain percentage of the contract amount. This amount is known as the "initial margin". Subsequent payments, known as "variation margin", are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying futures contracts. Such variation margin is recorded for financial statement purposes on a daily basis as an unrealized gain or loss on futures until the futures contract is closed or expires, at which time the net gain or loss is reclassified to realized gain or loss on futures.
G. Short sales: UBS U.S. Equity Alpha Fund, UBS U.S. Small Cap Growth Fund and UBS Market Neutral Multi-Strategy Fund may each enter into short sales whereby it sells a security it generally does not own, in anticipation of a decline in the security's price. The initial amount of a short sale is recorded as a liability which is marked to market daily. Fluctuations in the value of this liability are recorded as unrealized gains or losses on the Statement of operations. If a Fund shorts a security while holding a long position in the security (a "short against the box"), as the security price declines, the short position increases in value, offsetting the long position's decrease in value. The opposite effect occurs if the security price rises. A Fund will realize a gain or loss upon closing of the short sale (returning the security to the lender by way of purchase or delivery of a long position owned). A Fund is liable to the lender for any dividends payable or other corporate actions on securities while those securities are in a short position. These dividends are booked as an expense or liability of the Fund. Each Fund segregates collateral consisting of cash, US government securities or other liquid assets sufficient to collateralize the market value of short positions. Each Fund is charged a securities loan fee in connection with short sale transactions. Due to the independence of portfolio management teams that manage the various Fund components, it is likely that UBS Market Neutral Multi-Strategy Fund will, at times, hold the same security both long and short (which may technically result in a "short against the box").
H. Dividends and distributions: It is the Funds' policy to distribute their respective net investment income and net capital gains, if any, annually. Dividends and distributions to shareholders are recorded on the ex-distribution date. The amount of dividends from net investment income and distributions from net realized capital gains and/or return of capital is determined in accordance with US federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification.
I. Concentration of risk: Investing in securities of foreign issuers and currency transactions may involve certain considerations and risks not typically associated with investments in the United States. These risks include revaluation of currencies, adverse fluctuations in foreign currency values and possible adverse political, social and economic developments, including those particular to a specific industry, country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable US companies and US government securities. These risks are greater with respect to securities of issuers located in emerging market countries in which the Funds invest.
Small capitalization ("small cap") companies may be more vulnerable than larger capitalization ("large cap") companies to adverse business or economic developments. Small cap companies may also have limited product lines, markets or financial resources, and may be dependent on a relatively small management group. Securities of such companies may be less liquid and more volatile than securities of large cap companies. In addition, small cap
113
The UBS Funds
Notes to financial statements (unaudited)
companies may not be well-known to the investing public, may not have institutional ownership and may have only cyclical, static or moderated growth prospects.
The ability of the issuers of debt securities held by a Fund to meet their obligations may be affected by economic and political developments particular to a specific industry, country, state or region.
J. Commission recapture program: The Funds participate in a brokerage commission recapture program, whereby the Funds have established commission recapture arrangements with certain participating brokers or dealers. If a Fund's investment manager chooses to execute a transaction through a participating broker subject to best price and execution, the broker will rebate a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. For the period ended December 31, 2010, the following Funds recorded recaptured commissions which are reflected on the Statement of operations within the net realized gains (losses) on investment activities:
Fund | Amount | ||||||
UBS Global Equity Fund | $ | 6,032 | |||||
UBS U.S. Equity Alpha Fund | 4,592 | ||||||
UBS U.S. Large Cap Equity Fund | 15,253 | ||||||
UBS U.S. Large Cap Value Equity Fund | 5,132 |
K. Redemption fees: Each class of each series of The UBS Funds will impose a 1% redemption fee on shares sold or exchanged within 90 days of their purchase date, subject to limited exceptions. This amount is paid to the applicable Fund, not the Advisor or UBS Global AM (US). The redemption fees retained by the Funds are disclosed in the Statement of changes in net assets.
2. Investment advisory fees and other transactions with affiliates
The Advisor, a registered investment advisor, provides the Funds with investment management services. As compensation for these services, each Fund pays the Advisor a monthly fee, accrued daily and paid monthly, based on each Fund's respective average daily net assets in accordance with the following per annum schedule:
Fund |
$0 to $500 mm |
$500 mm to $1.0 billion |
$1.0 billion to $1.5 billion |
$1.5 billion to $2.0 billion |
$2.0 billion and over |
||||||||||||||||||
UBS International Equity Fund | 0.800 | % | 0.750 | % | 0.700 | % | 0.675 | % | 0.650 | % | |||||||||||||
UBS U.S. Equity Alpha Fund | 1.000 | 0.900 | 0.850 | 0.850 | 0.850 | ||||||||||||||||||
UBS U.S. Large Cap Equity Fund | 0.700 | 0.650 | 0.600 | 0.575 | 0.550 | ||||||||||||||||||
UBS U.S. Large Cap Value Equity Fund | 0.700 | 0.650 | 0.600 | 0.575 | 0.550 | ||||||||||||||||||
UBS U.S. Small Cap Growth Fund | 0.850 | 0.850 | 0.825 | 0.825 | 0.825 |
$0 to $250 mm |
$250 mm to $500 mm |
$500 mm to $1.0 billion |
$1.0 billion and over |
||||||||||||||||
UBS Global Equity Fund | 0.750 | % | 0.700 | % | 0.680 | % | 0.650 | % | |||||||||||
UBS Market Neutral Multi-Strategy Fund | 1.250 | 1.250 | 1.250 | 1.250 |
114
The UBS Funds
Notes to financial statements (unaudited)
For UBS Global Equity Fund, UBS International Equity Fund, UBS U.S. Large Cap Equity Fund and UBS U.S. Large Cap Value Equity Fund, the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) do not exceed the expense limit of each Fund as indicated in the table. For UBS Market Neutral Multi-Strategy Fund, UBS U.S. Equity Alpha Fund and UBS U.S. Small Cap Growth Fund, the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expense for securities sold short) do not exceed the expense limit of each Fund as indicated in the table. Investment advisory fees, including the dollar amount waived or reimbursed, for the period ended December 31, 2010, were as follows:
Fund |
Class A expense cap |
Class B expense cap |
Class C expense cap |
Class Y expense cap |
Advisory fees |
Fees waived/ expenses reimbursed |
|||||||||||||||||||||
UBS Global Equity Fund | 1.50 | % | 2.25 | % | 2.25 | % | 1.25 | % | $ | 459,3431 | $ | 11,486 | |||||||||||||||
UBS International Equity Fund | 1.25 | 2.00 | 2.00 | 1.00 | 114,152 | 134,421 | |||||||||||||||||||||
UBS Market Neutral Multi-Strategy Fund | 1.75 | N/A* | 2.50 | 1.50 | 153,920 | 125,332 | |||||||||||||||||||||
UBS U.S. Equity Alpha Fund | 1.50 | N/A* | 2.25 | 1.25 | 206,893 | 104,007 | |||||||||||||||||||||
UBS U.S. Large Cap Equity Fund | 1.20 | 1.95 | 1.95 | 0.95 | 814,923 | 31,510 | |||||||||||||||||||||
UBS U.S. Large Cap Value Equity Fund | 1.20 | 1.95 | 1.95 | 0.95 | 178,839 | 105,083 | |||||||||||||||||||||
UBS U.S. Small Cap Growth Fund | 1.40 | 2.15 | 2.15 | 1.15 | 575,067 | 75,080 |
* UBS Market Neutral Multi-Strategy Fund and UBS U.S. Equity Alpha Fund do not offer Class B shares.
1 Includes recoupment of $119.
115
The UBS Funds
Notes to financial statements (unaudited)
Each Fund, except for UBS International Equity Fund, will reimburse the Advisor for expenses it reimburses for a period of three years following such 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 the Fund. The expenses waived for the period ended December 31, 2010 are subject to repayment through June 30, 2014. At December 31, 2010, the following Funds had remaining fee waivers and expense reimbursements subject to repayment to the Advisor and respective dates of expiration as follows:
Fund |
Fee waivers/ expense reimbursements subject to repayment |
Expires June 30, 2011 |
Expires June 30, 2012 |
Expires June 30, 2013 |
Expires June 30, 2014 |
||||||||||||||||||
UBS Global Equity FundClass A | $ | 315,433 | $ | 91,547 | $ | 183,038 | $ | 35,216 | $ | 5,632 | |||||||||||||
UBS Global Equity FundClass B | 8,418 | 2,660 | 5,646 | 112 | | ||||||||||||||||||
UBS Global Equity FundClass C | 145,474 | 46,114 | 71,037 | 22,469 | 5,854 | ||||||||||||||||||
UBS Global Equity FundClass Y | 76,072 | | 76,072 | | | ||||||||||||||||||
UBS Market Neutral Multi-Strategy FundClass A | 21,089 | | | | 21,089 | ||||||||||||||||||
UBS Market Neutral Multi-Strategy FundClass C | 3,666 | | | | 3,666 | ||||||||||||||||||
UBS Market Neutral Multi-Strategy FundClass Y | 100,577 | | | | 100,577 | ||||||||||||||||||
UBS U.S. Equity Alpha FundClass A | 239,087 | 5,169 | 117,100 | 65,040 | 51,778 | ||||||||||||||||||
UBS U.S. Equity Alpha FundClass C | 105,688 | 21,407 | 40,859 | 25,435 | 17,987 | ||||||||||||||||||
UBS U.S. Equity Alpha FundClass Y | 134,830 | 292 | 23,783 | 76,513 | 34,242 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass A | 49,119 | | | 39,880 | 9,239 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass B | 449 | | | 318 | 131 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass C | 4,245 | | | 2,660 | 1,585 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass Y | 105,361 | | | 84,806 | 20,555 | ||||||||||||||||||
UBS U.S. Large Cap Value Equity FundClass A | 727,111 | 217,979 | 224,763 | 196,379 | 87,990 | ||||||||||||||||||
UBS U.S. Large Cap Value Equity FundClass B | 6,047 | 2,454 | 2,049 | 1,215 | 329 | ||||||||||||||||||
UBS U.S. Large Cap Value Equity FundClass C | 101,737 | 32,231 | 30,998 | 26,605 | 11,903 | ||||||||||||||||||
UBS U.S. Large Cap Value Equity FundClass Y | 54,395 | 21,042 | 16,498 | 11,994 | 4,861 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass A | 545,459 | 213,353 | 218,473 | 74,652 | 38,981 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass B | 4,622 | 1,801 | 1,681 | 940 | 200 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass C | 42,919 | 15,477 | 14,437 | 8,898 | 4,107 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass Y | 737,867 | 270,369 | 356,380 | 79,326 | 31,792 |
Each Fund pays UBS Global AM (US), an affiliate of the Advisor, a monthly administration fee that is accrued daily and paid monthly at an annual rate of 0.075% of the average daily net assets of such Fund. For the period ended December 31, 2010, the Funds owed and incurred administrative fees as follows:
Fund |
Administrative fees owed |
Administrative fees incurred |
|||||||||
UBS Global Equity Fund | $ | 7,968 | $ | 45,958 | |||||||
UBS International Equity Fund | 1,833 | 10,709 | |||||||||
UBS Market Neutral Multi-Strategy Fund | 1,655 | 9,235 | |||||||||
UBS U.S Equity Alpha Fund | 2,458 | 15,517 | |||||||||
UBS U.S. Large Cap Equity Fund | 15,058 | 87,313 | |||||||||
UBS U.S. Large Cap Value Equity Fund | 3,354 | 19,161 | |||||||||
UBS U.S. Small Cap Growth Fund | 9,700 | 50,781 |
The Funds may invest in certain affiliated investment companies also advised or managed by the Advisor. Investments in affiliated investment companies for the period ended December 31, 2010 have been included near the end of each Fund's Portfolio of investments.
116
The UBS Funds
Notes to financial statements (unaudited)
The Funds may invest in UBS Cash Management Prime Relationship Fund ("Cash Prime"). Cash Prime is offered as a cash management option only to mutual funds and certain other accounts. Distributions received from Cash Prime are reflected as affiliated interest income in the Statement of operations.
Under normal conditions, the Funds invest cash collateral from securities lending activities into an affiliated private money market fund, UBS Private Money Market Fund LLC ("Private Money Market"), which operates in compliance with most of the substantive provisions of Rule 2a-7 of the 1940 Act. Private Money Market is managed by the Advisor and is offered as a cash management option only to mutual funds and certain other accounts managed by the Advisor. UBS Global AM acts as managing member and receives a management fee from Private Money Market payable monthly in arrears at the annual rate of 0.10% of Private Money Market's average daily members' equity, minus the aggregate operating expenses of, and incurred by, Private Money Market during each such related month, not including investment expenses (including brokerage commissions, taxes, interest charges and other costs with respect to transactions in securities) and extraordinary expenses including litigation expenses, if any. The Advisor may, in its sole discretion, waive all or any portion of the management fee to which it may be entitled from time to time in order to maintain operating expenses at a certain level. Distributions received from Private Money Market, net of fee rebates paid to borrowers, are reflected as securities lending-net in the Statement of operations.
The following Funds have incurred brokerage commissions with UBS AG, an affiliated broker-dealer. Amounts relating to those transactions for the period ended December 31, 2010, were as follows:
Fund | UBS AG | ||||||
UBS International Equity Fund | $ | 434 | |||||
UBS Market Neutral Multi-Strategy Fund | 8,914 | ||||||
UBS U.S. Equity Alpha Fund | 75 | ||||||
UBS U.S. Large Cap Equity Fund | 445 | ||||||
UBS U.S. Large Cap Value Equity Fund | 153 | ||||||
UBS U.S. Small Cap Growth Fund | 326 |
3. Service and distribution plans
UBS Global AM (US) is the principal underwriter of each Fund's shares. The Trust has adopted service and/or distribution plans (the "Plans") pursuant to Rule 12b-1 under the 1940 Act for Class A, Class B and Class C. The Plans govern payments made for the expenses incurred in the service and/or distribution of Class A, Class B and Class C. Annual fees under the Plans as a percentage of the average daily net assets of each representative class of each of the Funds are as follows:
Fund | Class A | Class B | Class C | ||||||||||||
UBS Global Equity Fund | 0.25 | % | 1.00 | % | 1.00 | % | |||||||||
UBS International Equity Fund | 0.25 | 1.00 | 1.00 | ||||||||||||
UBS Market Neutral Multi-Strategy Fund | 0.25 | N/A* | 1.00 | ||||||||||||
UBS U.S. Equity Alpha Fund | 0.25 | N/A* | 1.00 | ||||||||||||
UBS U.S. Large Cap Equity Fund | 0.25 | 1.00 | 1.00 | ||||||||||||
UBS U.S. Large Cap Value Equity Fund | 0.25 | 1.00 | 1.00 | ||||||||||||
UBS U.S. Small Cap Growth Fund | 0.25 | 1.00 | 1.00 |
* UBS Market Neutral Multi-Strategy Fund and UBS U.S. Equity Alpha Fund do not offer Class B shares.
117
The UBS Funds
Notes to financial statements (unaudited)
UBS Global AM (US) also receives the proceeds of the initial sales charges paid upon purchases of Class A shares and the contingent deferred sales charges paid by shareholders upon certain redemptions of Class A, Class B and Class C. At December 31, 2010, certain Funds owed UBS Global AM (US) service and distribution fees, and for the period ended December 31, 2010, certain Funds were informed by UBS Global AM (US) that it had earned sales charges as follows:
Fund |
Service and distribution fees owed |
Sales charges earned |
|||||||||
UBS Global Equity FundClass A | $ | 15,443 | $ | 1,098 | |||||||
UBS Global Equity FundClass B | 586 | 160 | |||||||||
UBS Global Equity FundClass C | 19,527 | 23 | |||||||||
UBS International Equity FundClass A | 1,836 | 1,004 | |||||||||
UBS International Equity FundClass B | 40 | 1,474 | |||||||||
UBS International Equity FundClass C | 838 | 18 | |||||||||
UBS Market Neutral Multi-Strategy FundClass A | 1,097 | 17,257 | |||||||||
UBS Market Neutral Multi-Strategy FundClass C | 784 | | |||||||||
UBS U.S. Equity Alpha FundClass A | 4,326 | 1,636 | |||||||||
UBS U.S. Equity Alpha FundClass C | 5,347 | 26 | |||||||||
UBS U.S. Large Cap Equity FundClass A | 5,340 | 366 | |||||||||
UBS U.S. Large Cap Equity FundClass B | 133 | 561 | |||||||||
UBS U.S. Large Cap Equity FundClass C | 3,130 | 51 | |||||||||
UBS U.S. Large Cap Value Equity FundClass A | 9,618 | 466 | |||||||||
UBS U.S. Large Cap Value Equity FundClass B | 78 | 30 | |||||||||
UBS U.S. Large Cap Value Equity FundClass C | 4,621 | | |||||||||
UBS U.S. Small Cap Growth FundClass A | 7,543 | 1,421 | |||||||||
UBS U.S. Small Cap Growth FundClass B | 52 | 69 | |||||||||
UBS U.S. Small Cap Growth FundClass C | 2,435 | |
4. Transfer agency and related services fees
UBS Financial Services Inc. provides certain services pursuant to a delegation of authority from BNY Mellon Investment Servicing ("BNY Mellon"), each Fund's transfer agent, and is compensated for these services by BNY Mellon, not the Funds.
For the period ended December 31, 2010, UBS Financial Services Inc. received from BNY Mellon, not the Funds, total services fees as follows:
Fund | Amount paid | ||||||
UBS Global Equity Fund | $ | 36,516 | |||||
UBS International Equity Fund | 2,081 | ||||||
UBS Market Neutral Multi-Strategy Fund | 780 | ||||||
UBS U.S. Equity Alpha Fund | 6,536 | ||||||
UBS U.S. Large Cap Equity Fund | 2,862 | ||||||
UBS U.S. Large Cap Value Equity Fund | 10,837 | ||||||
UBS U.S. Small Cap Growth Fund | 7,120 |
5. Securities lending
Each Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, cash equivalents or US government securities in an amount at least equal to 102% of the market value of the securities loaned with respect to domestic securities and 105% of the
118
The UBS Funds
Notes to financial statements (unaudited)
market value of the securities loaned with respect to foreign securities, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly.
Each Fund will regain ownership of loaned securities to exercise certain beneficial rights; however, the Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. The Fund receives compensation for lending its securities from interest or dividends earned on the cash, cash equivalents or US government securities held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees.
UBS Global Equity Fund, UBS International Equity Fund, UBS U.S. Large Cap Equity Fund, UBS U.S. Large Cap Value Equity Fund and UBS U.S. Small Cap Growth Fund loaned securities to certain qualified broker dealers, with the Funds' custodian acting as the Funds' lending agent. Cash collateral received is invested in Private Money Market, which is included in the Portfolio(s) of investments. The value of loaned securities and related collateral outstanding at December 31, 2010, were as follows:
Fund |
Market value of securities loaned |
Market value of collateral received from securities loaned |
Market value of investments of cash collateral received |
||||||||||||
UBS Global Equity Fund | $ | 1,490,749 | $ | 1,539,915 | $ | 1,539,915 | |||||||||
UBS International Equity Fund | 805,141 | 835,957 | 835,957 | ||||||||||||
UBS U.S. Large Cap Equity Fund | 431,825 | 441,875 | 441,875 | ||||||||||||
UBS U.S. Small Cap Growth Fund | 9,176,900 | 9,490,655 | 9,490,655 |
6. Purchases and sales of securities
For the period ended December 31, 2010, aggregate purchases and sales of portfolio securities, excluding short-term investments and US Government and agency securities, were as follows:
Fund | Purchases | Sales proceeds | |||||||||
UBS Global Equity Fund | $ | 41,205,951 | $ | 54,735,169 | |||||||
UBS International Equity Fund | 9,906,358 | 13,554,809 | |||||||||
UBS Market Neutral Multi-Strategy Fund | 95,756,047 | 94,980,569 | |||||||||
UBS U.S. Equity Alpha Fund | 23,818,142 | 36,318,204 | |||||||||
UBS U.S. Large Cap Equity Fund | 51,642,888 | 74,378,361 | |||||||||
UBS U.S. Large Cap Value Equity Fund | 19,406,654 | 23,185,220 | |||||||||
UBS U.S. Small Cap Growth Fund | 41,596,474 | 56,516,544 |
7. Federal income taxes
It is each Fund's policy to comply with all requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, each Fund intends not to be subject to a federal excise tax. Accordingly, no federal income tax provision was required.
119
The UBS Funds
Notes to financial statements (unaudited)
The tax character of distributions paid during the fiscal year ended June 30, 2010 were as follows:
2010 | |||||||
Fund |
Distributions paid from ordinary income |
||||||
UBS Global Equity Fund | $ | 3,426,325 | |||||
UBS International Equity Fund | 3,547,234 | ||||||
UBS U.S. Large Cap Equity Fund | 5,959,814 | ||||||
UBS U.S. Large Cap Value Equity Fund | 1,136,481 |
The tax character of distributions paid and components of accumulated earnings/(deficit) on a tax basis for the current fiscal year will be determined after the Trust's fiscal year ending June 30, 2011.
At June 30, 2010, the following Funds had net capital loss carryforwards for federal income tax purposes available to offset future capital gains through the indicated expiration dates:
Expiration dates | |||||||||||||||||||||||||||||||||||
Fund |
June 30, 2011 |
June 30, 2012 |
June 30, 2013 |
June 30, 2014 |
June 30, 2015 |
June 30, 2016 |
June 30, 2017 |
June 30, 2018 |
|||||||||||||||||||||||||||
UBS Global Equity Fund | $ | (4,283,846 | )1 | | | | | | $ | (14,741,673 | ) | $ | (29,963,354 | ) | |||||||||||||||||||||
UBS International Equity Fund | | | | | | | (5,638,290 | ) | (12,259,376 | ) | |||||||||||||||||||||||||
UBS U.S. Equity Alpha Fund | | | | | | | (15,530,495 | ) | (12,503,688 | ) | |||||||||||||||||||||||||
UBS U.S. Large Cap Equity Fund | | | | | | | (52,072,835 | ) | (167,517,489 | ) | |||||||||||||||||||||||||
UBS U.S. Large Cap Value Equity Fund | | | | | | | (2,034,727 | ) | (20,216,588 | ) | |||||||||||||||||||||||||
UBS U.S. Small Cap Growth Fund | | | | | | | (10,194,467 | ) | (61,451,890 | ) |
1 Due to a merger with UBS Strategy Fund, utilization of capital loss carryforwards in subsequent years may be limited.
Post-October losses are deemed to arise on the first business day of a Fund's next taxable year. For the year ended June 30, 2010, the following Funds incurred, and elected to defer, losses of the following:
Fund |
Net capital losses |
||||||
UBS U.S. Large Cap Value Equity Fund | $ | 904,956 |
As of and during the period ended December 31, 2010, the Funds did not have any liabilities for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of operations. During the period, the Funds did not incur any interest or penalties.
Each of the tax years in the four year period ended June 30, 2010, or since inception for UBS Market Neutral Multi-Strategy Fund, remains subject to examination by the Internal Revenue Service and state taxing authorities.
120
The UBS Funds
Notes to financial statements (unaudited)
8. Line of credit
The Trust has entered into an agreement with JPMorgan Chase Bank to provide a $75 million committed line of credit to the Funds ("Committed Credit Facility") to be utilized for temporary financing until the settlement of shares or purchases of portfolio securities, the repurchase or redemption of shares of each Fund at the request of shareholders and other temporary or emergency purposes. Interest on amounts borrowed is calculated based on the prevailing rates in effect at the time of borrowing. Under the Committed Credit Facility arrangement, each Fund has agreed to pay commitment fees, pro rata, based on the relative asset size of the Funds in the Committed Credit Facility. The average daily borrowings under the agreement for the period ended December 31, 2010, were as follows:
Fund |
Average daily borrowings |
Number of days Outstanding |
Interest expense |
Weighted average annualized interest rate |
|||||||||||||||
UBS International Equity Fund | $ | 1,013,000 | 5 | $ | 141 | 1.00 | % | ||||||||||||
UBS U.S. Large Cap Equity Fund | 10,813,369 | 1 | 300 | 1.00 |
There were no borrowings from the Committed Credit Facility outstanding as of December 31, 2010.
9. Shares of beneficial interest
For the period ended December 31, 2010, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Global Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 18,821 | $ | 222,522 | 325 | $ | 3,954 | |||||||||||||
Shares repurchased | (669,496 | ) | (8,010,237 | ) | (6,179 | ) | (70,751 | ) | |||||||||||
Shares converted from Class B to Class A | 9,972 | 113,537 | (10,264 | ) | (113,537 | ) | |||||||||||||
Dividends reinvested | 137,883 | 1,709,749 | 234 | 2,843 | |||||||||||||||
Redemption fees | | 505 | | | |||||||||||||||
Net decrease | (502,820 | ) | $ | (5,963,924 | ) | (15,884 | ) | $ | (177,491 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 6,547 | $ | 74,776 | 52,237 | $ | 658,335 | |||||||||||||
Shares repurchased | (183,092 | ) | (2,094,066 | ) | (261,358 | ) | (3,175,872 | ) | |||||||||||
Dividends reinvested | 33,701 | 402,393 | 61,666 | 785,010 | |||||||||||||||
Redemption fees | | | | 82 | |||||||||||||||
Net decrease | (142,844 | ) | $ | (1,616,897 | ) | (147,455 | ) | $ | (1,732,445 | ) |
121
The UBS Funds
Notes to financial statements (unaudited)
UBS International Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 131,033 | $ | 1,028,589 | | $ | | |||||||||||||
Shares repurchased | (116,830 | ) | (883,737 | ) | (23,366 | ) | (185,992 | ) | |||||||||||
Shares converted from Class B to Class A | 2,283 | 15,333 | (2,291 | ) | (15,333 | ) | |||||||||||||
Dividends reinvested | 34,276 | 272,493 | | | |||||||||||||||
Redemption fees | | 2 | | | |||||||||||||||
Net increase (decrease) | 50,762 | $ | 432,680 | (25,657 | ) | $ | (201,325 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 14,770 | $ | 110,306 | 59,911 | $ | 462,603 | |||||||||||||
Shares repurchased | (21,735 | ) | (159,919 | ) | (587,355 | ) | (4,389,614 | ) | |||||||||||
Dividends reinvested | 3,173 | 24,751 | 79,236 | 632,301 | |||||||||||||||
Redemption fees | | | | 543 | |||||||||||||||
Net decrease | (3,792 | ) | $ | (24,862 | ) | (448,208 | ) | $ | (3,294,167 | ) |
UBS Market Neutral Multi-Strategy Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 645,633 | $ | 6,424,119 | 93,696 | $ | 930,360 | 2,012,541 | $ | 20,129,921 | ||||||||||||||||||
Shares repurchased | (140,056 | ) | (1,384,071 | ) | | | | | |||||||||||||||||||
Redemption fees | | 5,307 | | | | | |||||||||||||||||||||
Net increase | 505,577 | $ | 5,045,355 | 93,696 | $ | 930,360 | 2,012,541 | $ | 20,129,921 |
UBS U.S. Equity Alpha Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 99,454 | $ | 788,481 | 1,598 | $ | 11,854 | 24,667 | $ | 190,050 | ||||||||||||||||||
Shares repurchased | (1,046,438 | ) | (8,308,250 | ) | (240,703 | ) | (1,861,892 | ) | (366,434 | ) | (2,830,590 | ) | |||||||||||||||
Dividends reinvested | | | | | 4,203 | 35,347 | |||||||||||||||||||||
Redemption fees | | 5 | | 70 | | 913 | |||||||||||||||||||||
Net decrease | (946,984 | ) | $ | (7,519,764 | ) | (239,105 | ) | $ | (1,849,968 | ) | (337,564 | ) | $ | (2,604,280 | ) |
122
The UBS Funds
Notes to financial statements (unaudited)
UBS U.S. Large Cap Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 159,140 | $ | 2,360,146 | | $ | | |||||||||||||
Shares repurchased | (422,664 | ) | (6,192,410 | ) | (2,927 | ) | (37,544 | ) | |||||||||||
Shares converted from Class B to Class A | 282 | 3,945 | (289 | ) | (3,945 | ) | |||||||||||||
Dividends reinvested | 6,676 | 103,343 | | | |||||||||||||||
Redemption fees | | 1,029 | | | |||||||||||||||
Net decrease | (256,566 | ) | $ | (3,723,947 | ) | (3,216 | ) | $ | (41,489 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 6,893 | $ | 96,760 | 1,530,200 | $ | 21,692,610 | |||||||||||||
Shares repurchased | (46,214 | ) | (640,185 | ) | (2,897,206 | ) | (41,782,361 | ) | |||||||||||
Dividends reinvested | | | 101,334 | 1,579,792 | |||||||||||||||
Redemption fees | | | | 5,153 | |||||||||||||||
Net decrease | (39,321 | ) | $ | (543,425 | ) | (1,265,672 | ) | $ | (18,504,806 | ) |
UBS U.S. Large Cap Value Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 12,810 | $ | 77,354 | | $ | | |||||||||||||
Shares repurchased | (694,130 | ) | (4,158,881 | ) | (1,408 | ) | (8,321 | ) | |||||||||||
Shares converted from Class B to Class A | 1,903 | 11,441 | (1,919 | ) | (11,441 | ) | |||||||||||||
Dividends reinvested | 55,116 | 348,885 | | | |||||||||||||||
Redemption fees | | 6 | | | |||||||||||||||
Net decrease | (624,301 | ) | $ | (3,721,195 | ) | (3,327 | ) | $ | (19,762 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 12,267 | $ | 72,921 | 1,864 | $ | 10,927 | |||||||||||||
Shares repurchased | (78,028 | ) | (457,190 | ) | (20,445 | ) | (124,244 | ) | |||||||||||
Dividends reinvested | 878 | 5,453 | 3,007 | 19,153 | |||||||||||||||
Redemption fees | | 159 | | | |||||||||||||||
Net decrease | (64,883 | ) | $ | (378,657 | ) | (15,574 | ) | $ | (94,164 | ) |
123
The UBS Funds
Notes to financial statements (unaudited)
UBS U.S. Small Cap Growth Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 275,657 | $ | 3,492,737 | | $ | | |||||||||||||
Shares repurchased | (533,262 | ) | (6,656,709 | ) | (975 | ) | (9,947 | ) | |||||||||||
Shares converted from Class B to Class A | 1,772 | 21,316 | (1,903 | ) | (21,316 | ) | |||||||||||||
Redemption fees | | 32 | | | |||||||||||||||
Net decrease | (255,833 | ) | $ | (3,142,624 | ) | (2,878 | ) | $ | (31,263 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 5,115 | $ | 65,458 | 866,608 | $ | 11,537,158 | |||||||||||||
Shares repurchased | (28,798 | ) | (337,891 | ) | (1,834,616 | ) | (22,334,462 | ) | |||||||||||
Redemption fees | | | | 5,695 | |||||||||||||||
Net decrease | (23,683 | ) | $ | (272,433 | ) | (968,008 | ) | $ | (10,791,609 | ) |
For the year ended June 30, 2010, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Global Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 145,285 | $ | 1,671,360 | 370 | $ | 3,963 | |||||||||||||
Shares repurchased | (1,710,774 | ) | (19,257,996 | ) | (12,210 | ) | (130,804 | ) | |||||||||||
Shares converted from Class B to Class A | 50,653 | 548,079 | (52,051 | ) | (548,079 | ) | |||||||||||||
Dividends reinvested | 148,169 | 1,703,949 | 610 | 6,849 | |||||||||||||||
Redemption fees | | 2,645 | | | |||||||||||||||
Net decrease | (1,366,667 | ) | $ | (15,331,963 | ) | (63,281 | ) | $ | (668,071 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 51,808 | $ | 561,877 | 198,746 | $ | 2,341,308 | |||||||||||||
Shares repurchased | (500,865 | ) | (5,481,257 | ) | (4,795,448 | ) | (55,291,516 | ) | |||||||||||
Dividends reinvested | 44,968 | 498,254 | 89,155 | 1,050,250 | |||||||||||||||
Redemption fees | | 179 | | | |||||||||||||||
Net decrease | (404,089 | ) | $ | (4,420,947 | ) | (4,507,547 | ) | $ | (51,899,958 | ) |
124
The UBS Funds
Notes to financial statements (unaudited)
UBS International Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 69,558 | $ | 517,761 | | $ | | |||||||||||||
Shares repurchased | (302,849 | ) | (2,206,513 | ) | (3,341 | ) | (24,442 | ) | |||||||||||
Shares converted from Class B to Class A | 872 | 6,532 | (873 | ) | (6,532 | ) | |||||||||||||
Dividends reinvested | 65,443 | 477,730 | 2,021 | 14,771 | |||||||||||||||
Redemption fees | | 18 | | | |||||||||||||||
Net decrease | (166,976 | ) | $ | (1,204,472 | ) | (2,193 | ) | $ | (16,203 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 27,365 | $ | 195,421 | 574,341 | $ | 4,301,580 | |||||||||||||
Shares repurchased | (45,826 | ) | (325,595 | ) | (8,401,530 | ) | (62,578,915 | ) | |||||||||||
Dividends reinvested | 8,153 | 58,374 | 401,282 | 2,937,384 | |||||||||||||||
Redemption fees | | 24 | | ||||||||||||||||
Net decrease | (10,308 | ) | $ | (71,776 | ) | (7,425,907 | ) | $ | (55,339,951 | ) |
UBS U.S. Equity Alpha Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 425,830 | $ | 3,263,919 | 32,228 | $ | 247,136 | 582,815 | $ | 3,686,054 | ||||||||||||||||||
Shares repurchased | (2,400,367 | ) | (18,257,508 | ) | (480,716 | ) | (3,582,496 | ) | (14,052,092 | ) | (105,523,694 | ) | |||||||||||||||
Redemption fees | | 1,576 | | 6 | | | |||||||||||||||||||||
Net decrease | (1,974,537 | ) | $ | (14,992,013 | ) | (448,488 | ) | $ | (3,335,354 | ) | (13,469,277 | ) | $ | (101,837,640 | ) |
UBS U.S. Large Cap Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 211,919 | $ | 2,862,468 | | $ | | |||||||||||||
Shares repurchased | (1,441,915 | ) | (19,457,342 | ) | (8,841 | ) | (110,351 | ) | |||||||||||
Shares converted from Class B to Class A | 1,396 | 18,466 | (1,434 | ) | (18,466 | ) | |||||||||||||
Dividends reinvested | 42,141 | 581,128 | 86 | 1,161 | |||||||||||||||
Redemption fees | | 1,524 | | | |||||||||||||||
Net decrease | (1,186,459 | ) | $ | (15,993,756 | ) | (10,189 | ) | $ | (127,656 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 29,251 | $ | 383,526 | 1,787,956 | $ | 24,638,984 | |||||||||||||
Shares repurchased | (171,958 | ) | (2,193,369 | ) | (6,301,552 | ) | (86,752,280 | ) | |||||||||||
Dividends reinvested | 5,224 | 69,956 | 377,838 | 5,251,944 | |||||||||||||||
Redemption fees | | 334 | | 29,859 | |||||||||||||||
Net decrease | (137,483 | ) | $ | (1,739,553 | ) | (4,135,758 | ) | $ | (56,831,493 | ) |
125
The UBS Funds
Notes to financial statements (unaudited)
UBS U.S. Large Cap Value Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 50,208 | $ | 292,843 | | $ | | |||||||||||||
Shares repurchased | (1,420,888 | ) | (8,212,013 | ) | (6,448 | ) | (36,185 | ) | |||||||||||
Shares converted from Class B to Class A | 26,216 | 152,591 | (26,548 | ) | (152,591 | ) | |||||||||||||
Dividends reinvested | 151,731 | 886,108 | 122 | 713 | |||||||||||||||
Redemption fees | | 208 | | | |||||||||||||||
Net decrease | (1,192,733 | ) | $ | (6,880,263 | ) | (32,874 | ) | $ | (188,063 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 21,177 | $ | 122,270 | 31,414 | $ | 181,880 | |||||||||||||
Shares repurchased | (219,077 | ) | (1,252,208 | ) | (195,293 | ) | (1,136,648 | ) | |||||||||||
Dividends reinvested | 12,907 | 73,960 | 9,218 | 54,109 | |||||||||||||||
Redemption fees | | 53 | | 103 | |||||||||||||||
Net decrease | (184,993 | ) | $ | (1,055,925 | ) | (154,661 | ) | $ | (900,556 | ) |
UBS U.S. Small Cap Growth Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 606,902 | $ | 6,271,903 | | $ | | |||||||||||||
Shares repurchased | (2,724,947 | ) | (27,696,331 | ) | (3,736 | ) | (35,773 | ) | |||||||||||
Shares converted from Class B to Class A | 10,168 | 100,987 | (10,847 | ) | (100,987 | ) | |||||||||||||
Redemption fees | | 1,782 | | | |||||||||||||||
Net decrease | (2,107,877 | ) | $ | (21,321,659 | ) | (14,583 | ) | $ | (136,760 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 8,354 | $ | 82,926 | 2,133,702 | $ | 22,846,579 | |||||||||||||
Shares repurchased | (79,320 | ) | (756,398 | ) | (8,682,682 | ) | (91,054,728 | ) | |||||||||||
Redemption fees | | 9 | | 18,172 | |||||||||||||||
Net decrease | (70,966 | ) | $ | (673,463 | ) | (6,548,980 | ) | $ | (68,189,977 | ) |
126
The UBS Funds
General information (unaudited)
Quarterly Form N-Q portfolio schedule
The Funds will file their complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC 0330. Additionally, you may obtain copies of Forms N-Q from the Funds upon request by calling 1-800-647 1568.
Proxy voting policies, procedures and record
You may obtain a description of the Funds' (1) proxy voting policies, (2) proxy voting procedures and (3) information regarding how the Funds voted any proxies related to portfolio securities during the most recent 12-month period ended June 30 for which an SEC filing has been made, without charge, upon request by contacting the Funds directly at 1-800-647 1568, online on UBS's Web site: www.ubs.com/ubsglobalam-proxy, or on the EDGAR Database on the SEC's Web site (http://www.sec.gov).
127
The UBS Funds
Funds' privacy notice
This notice describes the privacy policy of the UBS Family of Funds, the PACE Funds and all closed-end funds managed by UBS Global Asset Management (collectively, the "Funds"). The Funds are committed to protecting the personal information that they collect about individuals who are prospective, current or former investors.
The Funds collect personal information in order to process requests and transactions and to provide customer service. Personal information, which is obtained from applications, may include name(s), address, social security number or tax identification number, bank account information, other Fund holdings and any affiliation the person has with UBS Financial Services Inc. or its subsidiaries ("Personal Information"). The Funds limit access to Personal Information to those individuals who need to know that information in order to process transactions and service accounts. These individuals are required to maintain and protect the confidentiality of Personal Information. The Funds maintain physical, electronic and procedural safeguards to protect Personal Information. The Funds may share Personal Information described above with their affiliates for marketing and other business purposes, such as to facilitate the servicing of accounts. The Funds may share Personal Information described above with a non-affiliated third party if the entity is under contract to perform transaction processing or to service and maintain shareholder accounts on behalf of the Funds and otherwise as permitted by law. Any such contract will include provisions designed to ensure that the third party will uphold and maintain privacy standards when handling Personal Information. The Funds may also disclose Personal Information to regulatory authorities as required by applicable law. Except as described in this privacy notice, the Funds will not use Personal Information for any other purpose unless the Funds describe how such Personal Information will be used and clients are given an opportunity to decline approval of such use of Personal Information relating to them. The Funds endeavor to keep their customer files complete and accurate. The Funds should be notified if any Personal Information needs to be corrected or updated. Please call 1-800-647 1568 with any questions or concerns regarding your Personal Information or this privacy notice.
Privacy Notice
This privacy notice is not a part of the shareholder report.
128
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The UBS FundsAsset Allocation
Semiannual Report
December 31, 2010
Table of contents | |||||||
President's letter | 1 | ||||||
Market commentary | 2 | ||||||
Asset Allocations | |||||||
UBS Dynamic Alpha Fund | 4 | ||||||
UBS Global Allocation Fund | 34 | ||||||
UBS Global Frontier Fund | 50 | ||||||
Explanation of expense disclosure | 59 | ||||||
Statement of assets and liabilities | 61 | ||||||
Statement of operations | 63 | ||||||
Statement of changes in net assets | 64 | ||||||
Financial highlights | 66 | ||||||
Notes to financial statements | 72 | ||||||
General information | 91 | ||||||
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President's letter
Dear Shareholder,
In the time since I last wrote to you, we have seen a shift in the investor mindset. Asset flows into equities seem to be turning in a positive direction, as investors appear to be showing interest, once again, in riskier assets. Nonetheless, considering the upward trend in the equity markets and encouraging signs that the economy is on the road to recovery, a surprising number of investors remain sidelined by fear, avoiding "risky" assets in favor of fixed income.
The truth is, market pundits will tell you that, in today's low yield environment, fixed income investing is fraught with its own uncertainties. If rates stay low, so will returns; if bond yields rise, the value of fixed income investments will fall. In short, fixed income may not be the safe harbor that many investors believe it to be.
Feararguably, now more than ever, it's one of the biggest obstacles to investor success. That's not to say that when it comes to investing, no fear is a good thing. In fact, fear helps inform an investor's own understanding of the level of risk he or she is willing to assume when it comes to building an investment plan. However, the fear that is so prevalent in the market today has little to do with rational thinking, and everything to do with basic human emotion. In fact, a good portion of investors today are making investment decisions based on their desire to avoid losing moneywhich turns the whole idea of a long-term investment plan on its head, really.
Irrational fear more often than not has the unfortunate result of leading investors to make the wrong decisions, for the wrong reasons, at the wrong timesoften at the expense of their long-term investment success. What can you do to fight it? A key strategy that makes sense in any environment is a diversified portfolio that blends both stocks and bonds. A diversified portfolio can't guarantee against a loss, but it does have the potential to provide you with more consistent returnsmaking it easier for you to maintain the discipline you need to stay the course to achieve your financial goals.
In 2011, we will continue to build upon our 30-year foundationgrowing and evolving to meet not only the challenges of a new market landscape, but also the ever-increasing diversification needs of our clients. At the same time, we will remain resolute in adhering to our disciplined investment approach, so we can seek to avoid the types of traps that can confound fear-driven investors. In doing so, we believe we will be better positioned to provide you, our clients, with the types of investment solutions that will help carry you forward over the next five, 10 or 30 years.
As always, we remain firmly dedicated to your investment success. Thank you for your continued support.
Mark E. Carver
President
The UBS Funds
Managing Director
UBS Global Asset Management (Americas) Inc.
1
The markets in review
Continued economic growth
The overall US economy expanded during the six-months ended December 31, 2010. The US economy has now grown for six consecutive quarters, spurred, in part, due to government stimulus programs, as well as the Federal Reserve Board's (the "Fed's") accommodative monetary policy. However, there continued to be several areas of weakness, most notably unemployment that remained above 9%, which held back a more robust expansion. Looking back, gross domestic product ("GDP") growth was 3.7% during the first quarter of 2010. GDP growth was then 1.7% and 2.6%, respectively, during the second and third quarters of the year. The Commerce Department's initial estimate for GDP growth in the fourth quarter is 3.2%.
Economic growth outside the US was largely positive as well during the reporting period. However, there was a significant disparity between the growth rates in the international developed and emerging market countries. The European sovereign debt crisis, which began in Greece and later impacted Ireland, served to temper growth in a number of developed countries in the Eurozone. In contrast, developing countries, including China and India, continued to see their economies expand at a rapid pace.
The global equity markets end the period with a sharp rally
After a weak first half of 2010, the global stock market generated outstanding results during the reporting period. This was largely due to a strong rally in the fourth quarter. In the US, the S&P 500 Index1 (the "Index") declined nearly 7% during the first half of the year. However, the market then rebounded and the Index posted positive returns in five of the six months covered by this report. All told, the Index gained 23.27% during the six-months ended December 31, 2010. The market's turnaround was due to several factors, including better than expected corporate profits, a second round of quantitative easing by the Fed and an extension of the Bush-era tax cuts.
International developed equities, as measured by the MSCI EAFE Index (net),2 also posted strong returns during the reporting period, gaining 24.18%. While international developed equities lost ground in August and November given concerns regarding the European debt crisis, this was more than offset by their gains during the other four months covered by this report. Emerging market equities (as measured by the MSCI Emerging Markets Index3) performed even better, gaining 26.86% over the same period. Robust economic growth, overall strong demand and rising commodity prices supported emerging market equity prices.
1 The S&P 500 Index is an unmanaged, weighted index composed of 500 widely held common stocks varying in composition, and is not available for direct investment. Investors should note that indices do not reflect the deduction of fees and expenses.
2 The MSCI EAFE Index (net) is an index of stocks from 22 countries designed to measure the investment returns of developed economies outside of North America. Dividends are reinvested after the deduction of withholding tax, using tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. The index is constructed and managed with a view of being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
3 The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 21 emerging market countries in Europe, Latin America and the Pacific Basin. The index is constructed and managed with a view of being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
2
The markets in review
Risk is rewarded in the fixed income markets
While there were periods of volatility, the spread sectors (non-Treasuries) in general produced positive results during the reporting period. This was driven by signs that the economy appeared to be gaining enough momentum to avoid a double-dip recession. In addition, investor demand for the spread sectors was generally robust as investors looked to generate incremental yield in the low interest rate environment. Also supporting the spread sectors were overall strong corporate profits and indications from the Fed that it was prepared to take further actions to bolster the economy. After declining during the first four months of the reporting period, long-term Treasury yields then moved sharply higher in November and December. This was triggered by optimism for a strengthening economy in 2011 and expectations for higher inflation in the future. During the six months ended December 31, 2010, the overall US bond market (as measured by the Barclays Capital US Aggregate Index4) returned 1.15%.
Despite giving back a portion of their gains in November, riskier fixed income asset classes generated strong returns, as the BofA Merrill Lynch US High Yield Cash Pay Constrained Index5 gained 9.83%, and the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global)6 rose 6.33%.
4 The Barclays Capital US Aggregate Index is an unmanaged broad-based index designed to measure the US dollar-denominated, investment-grade, fixed rate taxable bond market. The index includes bonds from the Treasury, government-related, corporate, mortgage-backed, asset-backed and commercial mortgage-backed sectors. US agency hybrid adjustable rate mortgage (ARM) securities were added to the index on April 1, 2007. Investors should note that indices do not reflect the deduction of fees and expenses.
5 The BofA Merrill Lynch US High Yield Cash Pay Constrained Index is an unmanaged index of publicly placed non-convertible, coupon-bearing US dollar-denominated below investment grade corporate debt with a term to maturity of at least one year. The index is market weighted, so that larger bond issuers have a greater effect on the index's return. However, the representation of any single bond issue is restricted to a maximum of 2% of the total index. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The J.P. Morgan Emerging Markets Bond Index Global (EMBI Global) is an unmanaged index which is designed to track total returns for US-dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans and Eurobonds. Investors should note that indices do not reflect the deduction of fees and expenses.
3
UBS Dynamic Alpha Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Dynamic Alpha Fund (the "Fund") returned 6.17% (Class A shares returned 0.26% after the deduction of the maximum sales charge), while Class Y shares returned 6.28%. For purposes of comparison, the BofA Merrill Lynch US Treasury 1-5 Year Index returned 0.64% over the same time period, the MSCI World Free Index (net) returned 23.96% and the US Consumer Price Index (CPI) rose 0.56%. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 6; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund's solid absolute performance was primarily due to market allocation decisions.
Portfolio performance summary1
What worked
• The Fund's overweight to risk assets made a significant contribution to performance during the six months.
The Fund was overweight to equities throughout the period, finishing the six months at a 44% long equity allocation. This position was rewarded as the global economic landscape improved considerably following the recent "Great Recession."
Within equities, the Fund was overweight to US versus European stocks. The six-month period saw a large divergence between strong returns in the US, with much lower growth in Europe.
• A relative value trade in European equities contributed positively to performance.
The Fund took a long position in the equities of core European countries such as Germany, while selling short the equities of peripheral European economies like Spain. This strategy was successful as sovereign debt concerns flared anew toward the end of the reporting period, when Ireland received bailout assistance.
• Security selection made a positive contribution to relative performance during the six months.
A major driver of outperformance was the Fixed Income Best Ideas portion of the Fund. This sleevea duration-neutral portfolio that invests in global bondsperformed strongly during the period.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
4
UBS Dynamic Alpha Fund
What didn't work
• The Fund's currency strategy detracted slightly from performance.
The Fund sold short several higher-yielding commodity currencies, including the Australian dollar and the New Zealand dollar, because our research indicated that they were mispriced. However, these currencies tend to be highly correlated with risk assets, which outperformed at the end of the review period. As these commodity currencies rose, the Fund's short positions were negatively impacted.
• Derivatives use across currencies had a negative impact on performance. During the review period, the Fund used derivatives for risk management purposes and as part of the Fund's investment strategies to enhance return across markets and currencies. Performance across market allocation was positively impacted by the use of derivatives, while currency was negatively impacted.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
5
UBS Dynamic Alpha Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | Inception1 | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A2 | 6.17 | % | 1.88 | % | 0.89 | % | 2.21 | % | |||||||||||
Class B3 | 5.93 | 1.27 | 0.10 | 1.42 | |||||||||||||||
Class C4 | 5.88 | 1.22 | 0.12 | 1.42 | |||||||||||||||
Class Y5 | 6.28 | 2.22 | 1.19 | 2.51 | |||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A2 | 0.26 | % | (3.73 | )% | (0.25 | )% | 1.24 | % | |||||||||||
Class B3 | 0.93 | (3.71 | ) | (0.12 | ) | 1.32 | |||||||||||||
Class C4 | 4.88 | 0.23 | 0.12 | 1.42 | |||||||||||||||
BofA Merrill Lynch US Treasury 1-5 Year Index6 | 0.64 | % | 3.61 | % | 4.86 | % | 4.34 | % | |||||||||||
MSCI World Free Index (net)7 | 23.96 | 11.76 | 2.43 | 4.03 | |||||||||||||||
US Consumer Price Index (CPI)8 | 0.56 | 1.50 | 2.18 | 2.38 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.98% and 1.96%; Class B2.82% and 2.71%; Class C2.74% and 2.71%; Class Y1.66% and 1.66%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short), through the 12-month period ending October 27, 2011, do not exceed 1.35% for Class A shares, 2.10% for Class B shares, 2.10% for Class C shares and 1.10% for Class Y shares. 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.
1 Inception date of all share classes of UBS Dynamic Alpha Fund is January 27, 2005. Inception date of the indices, for the purpose of this illustration, is January 31, 2005.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 The BofA Merrill Lynch US Treasury 1-5 Year Index is an unmanaged index designed to track US Treasury securities with maturities between 1 and 5 years. Investors should note that indices do not reflect the deduction of fees and expenses.
7 The MSCI World Free Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. As of May 2010, the index consisted of 24 developed market country indices. Dividends are reinvested after deduction of withholding tax, using tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. Had US tax rates been applied, the performance of the index would be different. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
8 The US Consumer Price Index (CPI) produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. The Index is calculated by the Bureau of Labor Statistics. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
6
UBS Dynamic Alpha Fund
Top ten equity holdings (unaudited)1,2
As of December 31, 2010
Percentage of net assets |
|||||||
Apple, Inc. | 1.4 | % | |||||
Sage Group PLC | 1.0 | ||||||
Nestle SA | 0.9 | ||||||
Illinois Tool Works, Inc. | 0.9 | ||||||
Novartis AG | 0.8 | ||||||
Amazon.com, Inc. | 0.7 | ||||||
Allergan, Inc. | 0.7 | ||||||
Vodafone Group PLC | 0.7 | ||||||
Danaher Corp. | 0.7 | ||||||
Google, Inc., Class A | 0.7 | ||||||
Total | 8.5 | % |
Country exposure, top five (unaudited)2,3
As of December 31, 2010
Percentage of net assets |
|||||||
United States | 20.2 | % | |||||
United Kingdom | 10.4 | ||||||
Switzerland | 4.9 | ||||||
Netherlands | 3.2 | ||||||
Germany | 3.1 | ||||||
Total | 41.8 | % |
Top ten long-term fixed income holdings (unaudited)2
As of December 31, 2010
Percentage of net assets |
|||||||
Federal National Mortgage Association Pool, 4.000%, TBA |
0.5 | % | |||||
US Treasury Bonds, PO, 3.861%, due 08/15/29 |
0.3 | ||||||
State of California, GO, 7.300%, due 10/01/39 |
0.3 | ||||||
Federal Home Loan Bank of Chicago, 5.625%, due 06/13/16 |
0.3 | ||||||
Shasta CLO Ltd., due 04/20/13 |
0.3 | ||||||
Harbourmaster CLO Ltd., Series 7A, Class C, 12.000%, due 09/22/22 |
0.3 | ||||||
Highlander Euro CDO, Series 2006-2CA, Class F1, due 12/14/22 |
0.3 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class AM, 5.475%, due 03/10/39 |
0.2 | ||||||
Citigroup, Inc., 4.750%, due 05/31/17 |
0.2 | ||||||
Federal National Mortgage Association, 5.976%, due 10/19/19 |
0.2 | ||||||
Total | 2.9 | % |
1 Only long positions are considered for top ten holdings.
2 Figures represent the direct investments of UBS Dynamic Alpha Fund. Figures would be different if a breakdown of the underlying investment companies was included.
3 This table includes long and short positions.
7
UBS Dynamic Alpha Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 1.74 | % | |||||
Air freight & logistics | 1.41 | ||||||
Airlines | 0.29 | ||||||
Auto components | 0.43 | ||||||
Automobiles | 0.32 | ||||||
Beverages | 1.47 | ||||||
Biotechnology | 0.54 | ||||||
Building products | 0.74 | ||||||
Capital markets | 0.80 | ||||||
Chemicals | 1.88 | ||||||
Commercial banks | 3.85 | ||||||
Communications equipment | 1.26 | ||||||
Computers & peripherals | 2.53 | ||||||
Construction & engineering | 0.31 | ||||||
Construction materials | 0.48 | ||||||
Diversified consumer services | 0.04 | ||||||
Diversified financial services | 0.90 | ||||||
Diversified telecommunication services | 1.08 | ||||||
Electric utilities | 1.77 | ||||||
Electrical equipment | 0.57 | ||||||
Electronic equipment, instruments & components | 0.42 | ||||||
Energy equipment & services | 1.26 | ||||||
Food & staples retailing | 1.11 | ||||||
Food products | 2.33 | ||||||
Gas utilities | 0.16 | ||||||
Health care equipment & supplies | 1.09 | ||||||
Health care providers & services | 0.58 | ||||||
Hotels, restaurants & leisure | 1.46 | ||||||
Household durables | 0.65 | ||||||
Household products | 0.57 | ||||||
Industrial conglomerates | 0.04 | ||||||
Insurance | 1.60 | ||||||
Internet & catalog retail | 1.06 | ||||||
Internet software & services | 1.15 | ||||||
IT services | 0.55 | ||||||
Life sciences tools & services | 0.22 | ||||||
Machinery | 3.49 | ||||||
Marine | 0.09 | ||||||
Media | 2.00 | ||||||
Metals & mining | 2.07 | ||||||
Multi-utilities | 0.46 | ||||||
Office electronics | 0.16 | ||||||
Oil, gas & consumable fuels | 4.08 | ||||||
Personal products | 0.44 | ||||||
Pharmaceuticals | 3.61 | ||||||
Professional services | 0.07 | ||||||
Real estate management & development | 0.05 | ||||||
Road & rail | 1.21 | ||||||
Semiconductors & semiconductor equipment | 1.63 | ||||||
Software | 2.70 | ||||||
Specialty retail | 0.88 | % | |||||
Textiles, apparel & luxury goods | 0.74 | ||||||
Tobacco | 0.59 | ||||||
Trading companies & distributors | 0.42 | ||||||
Wireless telecommunication services | 1.36 | ||||||
Total common stocks | 62.71 | % | |||||
Preferred stock | 0.68 | ||||||
Bonds | |||||||
Corporate bonds | |||||||
Broadcasting | 0.14 | ||||||
Building materials | 0.03 | ||||||
Building products | 0.07 | ||||||
Capital markets | 0.16 | ||||||
Chemicals | 0.06 | ||||||
Commercial banks | 1.00 | ||||||
Construction materials | 0.11 | ||||||
Consumer finance | 0.43 | ||||||
Containers & packaging | 0.25 | ||||||
Diversified financial services | 0.79 | ||||||
Diversified telecommunication services | 0.08 | ||||||
Electric utilities | 0.17 | ||||||
Energyexploration & production | 0.13 | ||||||
Health care providers & services | 0.06 | ||||||
Healthcare | 0.15 | ||||||
Hotels, restaurants & leisure | 0.13 | ||||||
Household durables | 0.06 | ||||||
Insurance | 0.16 | ||||||
Media | 0.11 | ||||||
Metals & mining | 0.11 | ||||||
Oil, gas & consumable fuels | 0.67 | ||||||
Paper & forest products | 0.14 | ||||||
Pharmaceuticals | 0.13 | ||||||
Road & rail | 0.11 | ||||||
Specialty retail | 0.06 | ||||||
Tobacco | 0.07 | ||||||
Wireless telecommunication services | 0.10 | ||||||
Total corporate bonds | 5.48 | % | |||||
Asset-backed securities | 0.82 | ||||||
Collateralized debt obligations | 2.11 | ||||||
Commercial mortgage-backed securities | 1.26 | ||||||
Mortgage & agency debt securities | 1.19 | ||||||
Municipal bonds | 0.33 | ||||||
US government obligation | 0.31 | ||||||
Non-US government obligation | 0.04 | ||||||
Total bonds | 11.54 | % |
8
UBS Dynamic Alpha Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2010
Investment companies | |||||||
UBS Global Corporate Bond Relationship Fund | 10.19 | % | |||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
2.65 | ||||||
UBS U.S. Equity Alpha Relationship Fund | 12.65 | ||||||
Total investment companies | 25.49 | % | |||||
Short-term investment | 5.58 | ||||||
Options purchased | 0.67 | ||||||
Investment of cash collateral from securities loaned | 0.61 | ||||||
Total investments before investments sold short | 107.28 | % | |||||
Investments sold short | |||||||
Common stocks | |||||||
Aerospace & defense | (0.66 | ) | |||||
Air freight & logistics | (0.95 | ) | |||||
Airlines | (0.17 | ) | |||||
Automobiles | (0.23 | ) | |||||
Beverages | (0.33 | ) | |||||
Biotechnology | (0.22 | ) | |||||
Chemicals | (0.17 | ) | |||||
Commercial banks | (0.31 | ) | |||||
Communications equipment | (0.21 | ) | |||||
Computers & peripherals | (0.84 | ) | |||||
Diversified telecommunication services | (0.21 | ) | |||||
Electric utilities | (0.36 | ) | |||||
Electrical equipment | (0.44 | ) | |||||
Electronic equipment, instruments & components | (0.26 | ) | |||||
Energy equipment & services | (0.18 | ) | |||||
Food & staples retailing | (0.21 | ) | |||||
Food products | (0.93 | ) | |||||
Health care equipment & supplies | (0.17 | ) | |||||
Health care providers & services | (0.50 | ) | |||||
Hotels, restaurants & leisure | (0.36 | ) | |||||
Household products | (0.30 | )% | |||||
Independent power producers & energy traders | (0.08 | ) | |||||
Industrial conglomerates | (0.12 | ) | |||||
Insurance | (0.19 | ) | |||||
Internet & catalog retail | (0.20 | ) | |||||
Internet software & services | (0.15 | ) | |||||
IT services | (0.31 | ) | |||||
Leisure equipment & products | (0.07 | ) | |||||
Life sciences tools & services | (0.54 | ) | |||||
Machinery | (0.93 | ) | |||||
Media | (0.44 | ) | |||||
Metals & mining | (0.12 | ) | |||||
Multiline retail | (0.41 | ) | |||||
Multi-utilities | (0.97 | ) | |||||
Oil, gas & consumable fuels | (1.55 | ) | |||||
Pharmaceuticals | (0.95 | ) | |||||
Road & rail | (0.12 | ) | |||||
Semiconductors & semiconductor equipment | (1.19 | ) | |||||
Software | (0.69 | ) | |||||
Specialty retail | (0.66 | ) | |||||
Thrifts & mortgage finance | (0.09 | ) | |||||
Trading companies & distributors | (0.52 | ) | |||||
Water utilities | (0.30 | ) | |||||
Wireless telecommunication services | (0.06 | ) | |||||
Total investments sold short | (18.67 | )% | |||||
Total investments, net of investments sold short | 88.61 | ||||||
Cash and other assets, less liabilities | 11.39 | ||||||
Net assets | 100.00 | % |
1 Figures represent the industry breakdown of direct investments of UBS Dynamic Alpha Fund. Figures would be different if a breakdown of the underlying investment companies' industry diversification was included.
9
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 62.71% | |||||||||||
Australia: 0.47% | |||||||||||
Alumina Ltd. | 120,116 | $ | 304,679 | ||||||||
BHP Billiton Ltd. | 7,532 | 348,594 | |||||||||
Incitec Pivot Ltd.1 | 200,222 | 810,957 | |||||||||
Mount Gibson Iron Ltd.* | 202,175 | 438,383 | |||||||||
National Australia Bank Ltd. | 15,389 | 373,035 | |||||||||
Total Australia common stocks | 2,275,648 | ||||||||||
Austria: 0.43% | |||||||||||
bwin Interactive Entertainment AG |
7,202 | 283,813 | |||||||||
Erste Group Bank AG1 | 11,405 | 535,551 | |||||||||
Raiffeisen Bank International AG | 5,329 | 291,967 | |||||||||
Wiener Staedtische Versicherung AG |
18,524 | 962,792 | |||||||||
Total Austria common stocks | 2,074,123 | ||||||||||
Belgium: 0.12% | |||||||||||
Anheuser-Busch InBev NV | 9,808 | 560,955 | |||||||||
Canada: 0.48% | |||||||||||
Lundin Mining Corp.* | 51,300 | 374,573 | |||||||||
Potash Corp. of Saskatchewan, Inc. | 5,400 | 836,082 | |||||||||
Teck Resources Ltd., Class B1 | 17,900 | 1,112,382 | |||||||||
Total Canada common stocks | 2,323,037 | ||||||||||
China: 1.25% | |||||||||||
Baidu, Inc. ADR* | 15,700 | 1,515,521 | |||||||||
China Everbright Ltd. | 204,000 | 460,869 | |||||||||
China National Building Material Co., Ltd., H Shares |
156,000 | 357,647 | |||||||||
Dongfeng Motor Group Co., Ltd., H Shares |
154,000 | 265,490 | |||||||||
Focus Media Holding Ltd. ADR* | 39,900 | 875,007 | |||||||||
Fushan International Energy Group Ltd. |
414,000 | 283,890 | |||||||||
Hong Kong Exchanges & Clearing Ltd. |
40,400 | 916,339 | |||||||||
Shangri-La Asia Ltd. | 134,000 | 363,755 | |||||||||
Sina Corp.* | 10,700 | 736,374 | |||||||||
Sun Hung Kai Properties Ltd. | 14,000 | 232,529 | |||||||||
Total China common stocks | 6,007,421 | ||||||||||
Denmark: 0.53% | |||||||||||
Danisco A/S | 3,180 | 290,747 | |||||||||
FLSmidth & Co. A/S | 6,307 | 601,523 | |||||||||
Jyske Bank A/S* | 22,741 | 1,055,910 | |||||||||
Novo Nordisk A/S, Class B | 5,480 | 617,943 | |||||||||
Total Denmark common stocks | 2,566,123 | ||||||||||
Finland: 0.39% | |||||||||||
Sampo Oyj, Class A | 71,075 | 1,904,299 |
Shares | Value | ||||||||||
France: 0.90% | |||||||||||
BNP Paribas | 3,358 | $ | 213,640 | ||||||||
Bouygues SA | 16,391 | 706,491 | |||||||||
Carrefour SA | 18,112 | 746,665 | |||||||||
LVMH Moet Hennessy Louis Vuitton SA |
3,194 | 525,408 | |||||||||
Remy Cointreau SA | 3,569 | 252,532 | |||||||||
Sanofi-Aventis SA | 12,134 | 775,872 | |||||||||
Schneider Electric SA | 4,209 | 629,942 | |||||||||
Societe Generale | 5,206 | 279,802 | |||||||||
Valeo SA* | 3,697 | 209,790 | |||||||||
Total France common stocks | 4,340,142 | ||||||||||
Germany: 2.32% | |||||||||||
Allianz SE | 4,795 | 569,824 | |||||||||
Bayer AG | 14,856 | 1,097,820 | |||||||||
Bayerische Motoren Werke AG | 3,846 | 302,454 | |||||||||
Deutsche Post AG | 102,658 | 1,742,210 | |||||||||
Dialog Semiconductor PLC* | 11,200 | 254,880 | |||||||||
E.ON AG | 53,608 | 1,642,980 | |||||||||
GEA Group AG | 15,153 | 437,985 | |||||||||
HeidelbergCement AG | 16,112 | 1,009,779 | |||||||||
Linde AG | 4,011 | 608,617 | |||||||||
MAN SE | 4,192 | 498,501 | |||||||||
Muenchener Rueckversicherungs- Gesellschaft AG |
4,089 | 619,906 | |||||||||
SAP AG | 33,335 | 1,697,186 | |||||||||
Sky Deutschland AG* | 95,626 | 216,468 | |||||||||
ThyssenKrupp AG | 11,100 | 459,598 | |||||||||
Total Germany common stocks | 11,158,208 | ||||||||||
Greece: 0.22% | |||||||||||
Hellenic Telecommunications Organization SA |
127,790 | 1,046,794 | |||||||||
Guernsey: 0.01% | |||||||||||
Resolution Ltd. | 17,509 | 63,905 | |||||||||
India: 0.24% | |||||||||||
ICICI Bank Ltd. ADR | 13,400 | 678,576 | |||||||||
Tata Motors Ltd. ADR1 | 17,000 | 498,780 | |||||||||
Total India common stocks | 1,177,356 | ||||||||||
Ireland: 0.75% | |||||||||||
Covidien PLC2 | 30,000 | 1,369,800 | |||||||||
CRH PLC | 45,808 | 948,805 | |||||||||
Experian PLC | 29,215 | 363,482 | |||||||||
Seagate Technology PLC*2 | 62,800 | 943,884 | |||||||||
Total Ireland common stocks | 3,625,971 |
10
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Israel: 0.08% | |||||||||||
Teva Pharmaceutical Industries Ltd. ADR |
7,000 | $ | 364,910 | ||||||||
Italy: 1.03% | |||||||||||
ENI SpA | 95,040 | 2,075,212 | |||||||||
Finmeccanica SpA | 90,912 | 1,033,236 | |||||||||
Saipem SpA | 15,104 | 743,559 | |||||||||
UniCredit SpA | 533,204 | 1,102,982 | |||||||||
Total Italy common stocks | 4,954,989 | ||||||||||
Japan: 1.61% | |||||||||||
Asahi Glass Co., Ltd. | 38,000 | 444,168 | |||||||||
Canon, Inc.1 | 14,800 | 767,435 | |||||||||
Disco Corp. | 7,800 | 473,630 | |||||||||
FANUC Corp. | 3,600 | 552,925 | |||||||||
Ibiden Co., Ltd. | 10,800 | 340,801 | |||||||||
Isuzu Motors Ltd. | 113,000 | 513,573 | |||||||||
Komatsu Ltd. | 20,500 | 620,378 | |||||||||
Makino Milling Machine Co., Ltd.*1 |
55,000 | 453,196 | |||||||||
Mitsubishi Corp. | 23,400 | 633,492 | |||||||||
Mitsubishi UFJ Financial Group, Inc. |
90,600 | 489,881 | |||||||||
Nippon Sheet Glass Co., Ltd. | 96,000 | 258,948 | |||||||||
Nippon Yusen KK | 93,000 | 412,366 | |||||||||
Nissan Motor Co., Ltd. | 43,200 | 411,302 | |||||||||
NTT DoCoMo, Inc. | 162 | 282,936 | |||||||||
THK Co., Ltd. | 32,200 | 740,453 | |||||||||
Toshiba Corp. | 68,000 | 370,193 | |||||||||
Total Japan common stocks | 7,765,677 | ||||||||||
Luxembourg: 0.28% | |||||||||||
ArcelorMittal | 35,478 | 1,345,475 | |||||||||
Malaysia: 0.02% | |||||||||||
Malayan Banking Bhd | 28,100 | 77,461 | |||||||||
Netherlands: 2.19% | |||||||||||
ASML Holding NV | 28,889 | 1,115,666 | |||||||||
Fugro NV, CVA | 4,188 | 344,180 | |||||||||
Gemalto NV | 4,374 | 186,133 | |||||||||
Heineken NV | 30,016 | 1,471,650 | |||||||||
Hunter Douglas NV | 8,330 | 440,469 | |||||||||
ING Groep NV CVA* | 123,628 | 1,202,686 | |||||||||
Koninklijke Philips Electronics NV NY Shares |
5,800 | 178,060 | |||||||||
Ordina NV* | 43,032 | 211,498 | |||||||||
Reed Elsevier NV | 102,269 | 1,265,081 | |||||||||
Royal Dutch Shell PLC, Class A | 75,935 | 2,531,776 | |||||||||
TNT NV | 46,060 | 1,215,612 | |||||||||
Unilever NV CVA | 12,152 | 378,362 | |||||||||
Total Netherlands common stocks | 10,541,173 |
Shares | Value | ||||||||||
Norway: 0.78% | |||||||||||
Petroleum Geo-Services ASA* | 66,818 | $ | 1,040,336 | ||||||||
Telenor ASA | 135,260 | 2,197,522 | |||||||||
Yara International ASA | 8,656 | 500,664 | |||||||||
Total Norway common stocks | 3,738,522 | ||||||||||
Portugal: 0.28% | |||||||||||
Portugal Telecom, SGPS, SA | 121,647 | 1,362,227 | |||||||||
Russia: 0.26% | |||||||||||
Mechel OAO ADR | 14,800 | 432,604 | |||||||||
NovaTek OAO GDR | 3,825 | 457,088 | |||||||||
VTB Bank OJSC GDR | 55,151 | 363,445 | |||||||||
Total Russia common stocks | 1,253,137 | ||||||||||
Singapore: 0.18% | |||||||||||
Biosensors International Group Ltd.* |
371,000 | 326,669 | |||||||||
Golden Agri-Resources Ltd. | 853,000 | 531,733 | |||||||||
Total Singapore common stocks | 858,402 | ||||||||||
South Korea: 0.18% | |||||||||||
Hyundai Heavy Industries Co., Ltd.* |
1,099 | 428,987 | |||||||||
Hyundai Mobis* | 1,670 | 418,640 | |||||||||
Total South Korea common stocks | 847,627 | ||||||||||
Spain: 0.89% | |||||||||||
Acciona SA | 7,886 | 558,517 | |||||||||
Banco Santander SA | 182,560 | 1,934,075 | |||||||||
Enagas SA | 38,329 | 763,932 | |||||||||
Inditex SA | 6,229 | 466,383 | |||||||||
Telefonica SA | 25,566 | 579,590 | |||||||||
Total Spain common stocks | 4,302,497 | ||||||||||
Sweden: 1.29% | |||||||||||
Assa Abloy AB, Class B | 102,263 | 2,881,333 | |||||||||
Autoliv, Inc. | 4,200 | 331,548 | |||||||||
Nordea Bank AB | 86,951 | 945,703 | |||||||||
Skandinaviska Enskilda Banken AB, Class A |
49,014 | 408,835 | |||||||||
Swedish Match AB | 24,942 | 722,043 | |||||||||
Volvo AB, Class B* | 51,593 | 909,023 | |||||||||
Total Sweden common stocks | 6,198,485 | ||||||||||
Switzerland: 4.91% | |||||||||||
ABB Ltd.* | 58,957 | 1,313,449 | |||||||||
Cie Financiere Richemont SA, Class A |
16,924 | 995,529 | |||||||||
Clariant AG* | 22,431 | 454,378 | |||||||||
Credit Suisse Group AG | 30,932 | 1,246,212 | |||||||||
GAM Holding AG* | 27,868 | 460,493 |
11
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Switzerland(Concluded) | |||||||||||
Givaudan SA | 2,376 | $ | 2,564,047 | ||||||||
Nestle SA | 75,736 | 4,434,809 | |||||||||
Nobel Biocare Holding AG | 94,198 | 1,776,161 | |||||||||
Novartis AG | 68,869 | 4,047,435 | |||||||||
Roche Holding AG | 6,547 | 999,905 | |||||||||
Roche Holding AG (Non-voting) | 14,342 | 2,101,448 | |||||||||
Swatch Group AG | 10,597 | 854,560 | |||||||||
Temenos Group AG* | 6,044 | 251,456 | |||||||||
Xstrata PLC | 91,629 | 2,150,739 | |||||||||
Total Switzerland common stocks | 23,650,621 | ||||||||||
Taiwan: 0.09% | |||||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. ADR |
33,700 | 422,598 | |||||||||
Thailand: 0.04% | |||||||||||
Italian-Thai Development PCL* | 1,200,300 | 184,753 | |||||||||
United Kingdom: 9.83% | |||||||||||
Acergy SA | 19,182 | 470,095 | |||||||||
Amlin PLC | 27,372 | 174,501 | |||||||||
Anglo American PLC | 17,492 | 909,650 | |||||||||
BAE Systems PLC | 236,060 | 1,214,536 | |||||||||
Barclays PLC | 605,459 | 2,469,900 | |||||||||
BG Group PLC | 29,224 | 590,498 | |||||||||
BP PLC | 306,288 | 2,223,158 | |||||||||
Cattles PLC*3,4 | 404,007 | 0 | |||||||||
Diageo PLC | 135,432 | 2,502,152 | |||||||||
Ensco International PLC ADR2 | 9,300 | 496,434 | |||||||||
Firstgroup PLC | 140,349 | 871,553 | |||||||||
GlaxoSmithKline PLC | 55,792 | 1,078,618 | |||||||||
Halma PLC | 141,747 | 793,382 | |||||||||
Hiscox Ltd. | 52,789 | 313,905 | |||||||||
HSBC Holdings PLC | 239,126 | 2,427,440 | |||||||||
Imperial Tobacco Group PLC | 44,119 | 1,353,707 | |||||||||
Jardine Lloyd Thompson Group PLC |
61,465 | 602,771 | |||||||||
Kingfisher PLC | 158,442 | 650,669 | |||||||||
Lloyds Banking Group PLC* | 1,850,460 | 1,895,479 | |||||||||
Pearson PLC | 76,814 | 1,207,188 | |||||||||
Prudential PLC | 145,757 | 1,518,028 | |||||||||
Reckitt Benckiser Group PLC | 38,661 | 2,124,742 | |||||||||
Reed Elsevier PLC | 156,067 | 1,317,600 | |||||||||
Rio Tinto PLC | 8,211 | 574,351 | |||||||||
Sage Group PLC | 1,077,902 | 4,594,643 | |||||||||
Sportingbet PLC | 459,730 | 442,244 | |||||||||
Stagecoach Group PLC | 424,279 | 1,403,689 | |||||||||
Standard Chartered PLC | 73,012 | 1,964,189 | |||||||||
Tesco PLC | 301,325 | 1,996,632 | |||||||||
Tullow Oil PLC | 43,404 | 853,334 | |||||||||
Unilever PLC | 95,059 | 2,909,293 | |||||||||
Vodafone Group PLC | 1,337,673 | 3,457,868 |
Shares | Value | ||||||||||
William Hill PLC | 232,093 | $ | 617,688 | ||||||||
Wolseley PLC* | 42,996 | 1,371,537 | |||||||||
Total United Kingdom common stocks |
47,391,474 | ||||||||||
United States: 30.66% | |||||||||||
Adobe Systems, Inc.*2 | 41,100 | 1,265,058 | |||||||||
Aflac, Inc.2 | 15,900 | 897,237 | |||||||||
Agilent Technologies, Inc.* | 25,100 | 1,039,893 | |||||||||
Alexion Pharmaceuticals, Inc.*2 | 18,800 | 1,514,340 | |||||||||
Allergan, Inc.2 | 50,700 | 3,481,569 | |||||||||
Amazon.com, Inc.*2 | 19,900 | 3,582,000 | |||||||||
American Electric Power Co., Inc.2 | 52,800 | 1,899,744 | |||||||||
American Tower Corp., Class A* | 11,200 | 578,368 | |||||||||
Amylin Pharmaceuticals, Inc.*2 | 37,000 | 544,270 | |||||||||
Anadarko Petroleum Corp. | 13,700 | 1,043,392 | |||||||||
Apollo Group, Inc., Class A*2 | 5,000 | 197,450 | |||||||||
Apple, Inc.*2 | 20,400 | 6,580,224 | |||||||||
Arch Coal, Inc.2 | 20,300 | 711,718 | |||||||||
Autodesk, Inc.*2 | 43,700 | 1,669,340 | |||||||||
Avon Products, Inc.2 | 72,500 | 2,106,850 | |||||||||
Baker Hughes, Inc.2 | 19,000 | 1,086,230 | |||||||||
Bank of New York Mellon Corp.2 | 18,600 | 561,720 | |||||||||
Baxter International, Inc.2 | 9,100 | 460,642 | |||||||||
Becton Dickinson & Co.2 | 5,300 | 447,956 | |||||||||
BlackRock, Inc. | 3,500 | 667,030 | |||||||||
Boston Scientific Corp.*2 | 33,100 | 250,567 | |||||||||
Broadcom Corp., Class A2 | 43,500 | 1,894,425 | |||||||||
C.H. Robinson Worldwide, Inc. | 12,800 | 1,026,432 | |||||||||
CareFusion Corp.*2 | 6,900 | 177,330 | |||||||||
Carnival Corp.2 | 17,600 | 811,536 | |||||||||
Celanese Corp., Series A | 34,000 | 1,399,780 | |||||||||
Cisco Systems, Inc.*2 | 46,200 | 934,626 | |||||||||
CME Group, Inc. | 2,800 | 900,900 | |||||||||
Coca-Cola Co.2 | 4,400 | 289,388 | |||||||||
Comcast Corp., Class A2 | 33,900 | 744,783 | |||||||||
Concho Resources, Inc.* | 11,300 | 990,671 | |||||||||
CONSOL Energy, Inc. | 19,900 | 969,926 | |||||||||
Crown Castle International Corp.*2 |
50,500 | 2,213,415 | |||||||||
CVS Caremark Corp. | 33,100 | 1,150,887 | |||||||||
Danaher Corp.2 | 71,900 | 3,391,523 | |||||||||
Discovery Communications, Inc., Class A* |
27,400 | 1,142,580 | |||||||||
Dolby Laboratories, Inc., Class A*2 |
13,500 | 900,450 | |||||||||
Dover Corp.2 | 27,800 | 1,624,910 | |||||||||
Edison International2 | 42,500 | 1,640,500 | |||||||||
EMC Corp.* | 99,500 | 2,278,550 | |||||||||
EOG Resources, Inc.2 | 7,800 | 712,998 | |||||||||
Exelon Corp.2 | 30,600 | 1,274,184 | |||||||||
Express Scripts, Inc.* | 14,300 | 772,915 |
12
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
F5 Networks, Inc.* | 4,800 | $ | 624,768 | ||||||||
FedEx Corp.2 | 30,700 | 2,855,407 | |||||||||
Fidelity National Information Services, Inc.2 |
39,400 | 1,079,166 | |||||||||
FirstEnergy Corp.2 | 43,300 | 1,602,966 | |||||||||
Fortune Brands, Inc.2 | 33,600 | 2,024,400 | |||||||||
Freeport-McMoRan Copper & Gold, Inc. |
10,000 | 1,200,900 | |||||||||
GameStop Corp., Class A*2 | 25,000 | 572,000 | |||||||||
General Dynamics Corp.2 | 28,100 | 1,993,976 | |||||||||
Genzyme Corp.*2 | 6,100 | 434,320 | |||||||||
Gilead Sciences, Inc.*2 | 4,300 | 155,832 | |||||||||
Goldman Sachs Group, Inc. | 5,500 | 924,880 | |||||||||
Google, Inc., Class A*2 | 5,600 | 3,326,232 | |||||||||
Hess Corp.2 | 5,100 | 390,354 | |||||||||
Hewlett-Packard Co.2 | 20,100 | 846,210 | |||||||||
Home Depot, Inc.2 | 46,200 | 1,619,772 | |||||||||
Illinois Tool Works, Inc.2 | 77,200 | 4,122,480 | |||||||||
IntercontinentalExchange, Inc.* | 5,000 | 595,750 | |||||||||
International Game Technology2 | 70,000 | 1,238,300 | |||||||||
Interpublic Group of Cos., Inc.* | 129,000 | 1,369,980 | |||||||||
Intersil Corp., Class A2 | 91,900 | 1,403,313 | |||||||||
JB Hunt Transport Services, Inc.2 | 14,800 | 603,988 | |||||||||
Johnson & Johnson2 | 10,100 | 624,685 | |||||||||
Johnson Controls, Inc.2 | 29,500 | 1,126,900 | |||||||||
JPMorgan Chase & Co.2 | 5,900 | 250,278 | |||||||||
Juniper Networks, Inc.* | 30,700 | 1,133,444 | |||||||||
Kellogg Co.2 | 32,400 | 1,654,992 | |||||||||
Kraft Foods, Inc., Class A2 | 23,500 | 740,485 | |||||||||
Kroger Co.2 | 64,400 | 1,439,984 | |||||||||
Las Vegas Sands Corp.* | 23,400 | 1,075,230 | |||||||||
Lowe's Cos., Inc.2 | 34,800 | 872,784 | |||||||||
Marvell Technology Group Ltd.*2 | 48,900 | 907,095 | |||||||||
MasterCard, Inc., Class A2 | 3,100 | 694,741 | |||||||||
McDonald's Corp. | 28,200 | 2,164,632 | |||||||||
McKesson Corp.2 | 8,900 | 626,382 | |||||||||
MDU Resources Group, Inc.2 | 52,400 | 1,062,148 | |||||||||
Mead Johnson Nutrition Co.2 | 5,100 | 317,475 | |||||||||
Medco Health Solutions, Inc., Class A*2 |
6,900 | 422,763 | |||||||||
Medtronic, Inc.2 | 11,900 | 441,371 | |||||||||
Merck & Co., Inc.2 | 18,000 | 648,720 | |||||||||
Microsoft Corp.2 | 43,100 | 1,203,352 | |||||||||
Molson Coors Brewing Co., Class B2 |
13,000 | 652,470 | |||||||||
National Semiconductor Corp.2 | 48,900 | 672,864 | |||||||||
NIKE, Inc., Class B | 13,700 | 1,170,254 | |||||||||
Noble Corp.2 | 8,900 | 318,353 | |||||||||
Norfolk Southern Corp.2 | 8,500 | 533,970 | |||||||||
Northrop Grumman Corp.2 | 23,700 | 1,535,286 |
Shares | Value | ||||||||||
Occidental Petroleum Corp. | 20,800 | $ | 2,040,480 | ||||||||
Omnicom Group, Inc.2 | 11,100 | 508,380 | |||||||||
Oracle Corp. | 43,100 | 1,349,030 | |||||||||
PACCAR, Inc.2 | 18,700 | 1,073,754 | |||||||||
Pall Corp.2 | 16,400 | 813,112 | |||||||||
Parker Hannifin Corp. | 8,200 | 707,660 | |||||||||
Peabody Energy Corp.2 | 9,300 | 595,014 | |||||||||
PepsiCo, Inc.2 | 19,900 | 1,300,067 | |||||||||
Pfizer, Inc.2 | 34,400 | 602,344 | |||||||||
Philip Morris International, Inc.2 | 13,300 | 778,449 | |||||||||
Praxair, Inc. | 6,800 | 649,196 | |||||||||
Precision Castparts Corp. | 8,000 | 1,113,680 | |||||||||
Priceline.com, Inc.*2 | 3,900 | 1,558,245 | |||||||||
Procter & Gamble Co.2 | 9,600 | 617,568 | |||||||||
QUALCOMM, Inc.2 | 54,100 | 2,677,409 | |||||||||
Red Hat, Inc.* | 11,400 | 520,410 | |||||||||
Riverbed Technology, Inc.* | 18,800 | 661,196 | |||||||||
Roper Industries, Inc. | 10,900 | 833,087 | |||||||||
Ryder System, Inc.2 | 31,700 | 1,668,688 | |||||||||
SanDisk Corp.* | 18,200 | 907,452 | |||||||||
Schlumberger Ltd. | 18,400 | 1,536,400 | |||||||||
Sempra Energy2 | 21,600 | 1,133,568 | |||||||||
Sherwin-Williams Co. | 15,300 | 1,281,375 | |||||||||
Southwest Airlines Co.2 | 108,700 | 1,410,926 | |||||||||
Sunoco, Inc.2 | 14,400 | 580,464 | |||||||||
Symantec Corp.*2 | 29,300 | 490,482 | |||||||||
Teradata Corp.* | 17,100 | 703,836 | |||||||||
Texas Instruments, Inc.2 | 22,300 | 724,750 | |||||||||
Time Warner Cable, Inc. | 2 | 132 | |||||||||
Time Warner, Inc.2 | 4,800 | 154,416 | |||||||||
Tupperware Brands Corp.2 | 6,400 | 305,088 | |||||||||
Ultra Petroleum Corp.*2 | 60,700 | 2,899,639 | |||||||||
Union Pacific Corp. | 7,800 | 722,748 | |||||||||
United Technologies Corp.2 | 19,200 | 1,511,424 | |||||||||
UnitedHealth Group, Inc.2 | 19,100 | 689,701 | |||||||||
US Bancorp2 | 8,000 | 215,760 | |||||||||
Viacom, Inc., Class B2 | 21,400 | 847,654 | |||||||||
Watson Pharmaceuticals, Inc.* | 17,500 | 903,875 | |||||||||
WellPoint, Inc.*2 | 4,800 | 272,928 | |||||||||
Wells Fargo & Co.2 | 27,100 | 839,829 | |||||||||
Whirlpool Corp.2 | 4,400 | 390,852 | |||||||||
Total United States common stocks |
147,695,027 | ||||||||||
Total common stocks (cost $251,584,506) |
302,079,037 |
13
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Preferred stock: 0.68% | |||||||||||
Germany: 0.68% | |||||||||||
Henkel AG & Co KGaA, Preference shares (cost $1,790,962) |
52,303 | $ | 3,252,447 | ||||||||
Face amount |
|||||||||||
Bonds: 11.54% | |||||||||||
Corporate bonds: 5.48% | |||||||||||
Australia: 0.11% | |||||||||||
Leighton Finance Ltd., 9.500%, due 07/28/14 |
AUD | 250,000 | 259,790 | ||||||||
Wesfarmers Ltd., 8.250%, due 09/11/14 |
250,000 | 264,375 | |||||||||
Total Australia corporate bonds | 524,165 | ||||||||||
Bermuda: 0.03% | |||||||||||
Validus Holdings Ltd., 8.875%, due 01/26/40 |
$ | 150,000 | 159,901 | ||||||||
Canada: 0.04% | |||||||||||
ING Bank of Canada, 4.300%, due 12/05/16 |
CAD | 200,000 | 190,084 | ||||||||
France: 0.06% | |||||||||||
Credit Agricole SA, 6.637%, due 05/31/175,6,7 |
$ | 300,000 | 257,250 | ||||||||
Germany: 0.11% | |||||||||||
HeidelbergCement AG, 8.000%, due 01/31/17 |
EUR | 350,000 | 499,275 | ||||||||
Greece: 0.03% | |||||||||||
OTE PLC, 5.375%, due 02/14/11 |
125,000 | 167,373 | |||||||||
Ireland: 0.25% | |||||||||||
Allied Irish Banks PLC, 1.040%, due 04/11/126 |
500,000 | 521,157 | |||||||||
Anglo Irish Bank Corp. Ltd., 0.411%, due 11/02/116 |
$ | 250,000 | 176,250 | ||||||||
1.143%, due 01/31/116 | EUR | 250,000 | 314,031 | ||||||||
Ardagh Packaging Finance PLC, 7.375%, due 10/15/17 |
150,000 | 201,948 | |||||||||
Total Ireland corporate bonds | 1,213,386 | ||||||||||
Luxembourg: 0.10% | |||||||||||
GAZ Capital SA for Gazprom, 6.580%, due 10/31/13 |
GBP | 300,000 | 496,963 |
Face amount |
Value | ||||||||||
Portugal: 0.11% | |||||||||||
EDP Finance BV, 4.900%, due 10/01/195 |
$ | 600,000 | $ | 511,462 | |||||||
United Kingdom: 0.41% | |||||||||||
Barclays Bank PLC, 5.140%, due 10/14/20 |
275,000 | 247,430 | |||||||||
FCE Bank PLC, 7.125%, due 01/16/12 |
EUR | 350,000 | 479,398 | ||||||||
7.125%, due 01/15/13 | 250,000 | 349,108 | |||||||||
Lloyds TSB Bank PLC, 5.800%, due 01/13/205 |
$ | 600,000 | 592,419 | ||||||||
Virgin Media Finance PLC, 9.125%, due 08/15/16 |
275,000 | 292,875 | |||||||||
Total United Kingdom corporate bonds |
1,961,230 | ||||||||||
United States: 4.23% | |||||||||||
Ally Financial, Inc., 6.625%, due 05/15/12 |
150,000 | 154,630 | |||||||||
American General Finance Corp., 4.000%, due 03/15/111 |
600,000 | 595,500 | |||||||||
5.625%, due 08/17/11 | 300,000 | 295,125 | |||||||||
Anadarko Petroleum Corp., 5.950%, due 09/15/16 |
300,000 | 322,287 | |||||||||
Apria Healthcare Group, Inc., 11.250%, due 11/01/14 |
650,000 | 710,125 | |||||||||
Axcan Intermediate Holdings, Inc., 12.750%, due 03/01/16 |
600,000 | 616,500 | |||||||||
Biomet, Inc., 10.375%, due 10/15/178 |
250,000 | 273,125 | |||||||||
Boise Cascade LLC, 7.125%, due 10/15/14 |
700,000 | 684,250 | |||||||||
Cemex Finance LLC, 9.500%, due 12/14/165 |
150,000 | 154,687 | |||||||||
Chesapeake Energy Corp., 9.500%, due 02/15/15 |
250,000 | 281,875 | |||||||||
Citigroup, Inc., 4.750%, due 05/31/176 |
EUR | 900,000 | 1,094,835 | ||||||||
Crown Americas LLC, 7.625%, due 05/15/17 |
$ | 650,000 | 698,750 | ||||||||
Discover Financial Services, 10.250%, due 07/15/19 |
300,000 | 372,364 | |||||||||
DISH DBS Corp., 6.625%, due 10/01/14 |
250,000 | 259,375 | |||||||||
FireKeepers Development Authority, 13.875%, due 05/01/155 |
300,000 | 354,750 | |||||||||
FirstEnergy Solutions Corp., 6.800%, due 08/15/39 |
280,000 | 271,377 |
14
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Ford Motor Credit Co. LLC, 12.000%, due 05/15/15 |
$ | 650,000 | $ | 817,660 | |||||||
Frontier Communications Corp., 8.250%, due 05/01/14 |
250,000 | 276,875 | |||||||||
Goldman Sachs Group, Inc., 4.100%, due 11/03/15 |
CAD | 200,000 | 198,827 | ||||||||
Hertz Corp., 8.875%, due 01/01/14 |
$ | 500,000 | 511,250 | ||||||||
International Lease Finance Corp., 5.000%, due 09/15/12 |
250,000 | 251,562 | |||||||||
8.625%, due 09/15/155 | 675,000 | 725,625 | |||||||||
JP Morgan Chase Capital XXVII, 7.000%, due 11/01/39 |
400,000 | 418,811 | |||||||||
Kinder Morgan Energy Partners LP, 7.300%, due 08/15/33 |
700,000 | 779,172 | |||||||||
Kinder Morgan Finance Co. ULC, 5.700%, due 01/05/16 |
587,500 | 594,844 | |||||||||
Merrill Lynch & Co., Inc., 6.400%, due 08/28/17 |
700,000 | 740,090 | |||||||||
Momentive Performance Materials, Inc., 11.500%, due 12/01/16 |
250,000 | 271,250 | |||||||||
Morgan Stanley, 7.300%, due 05/13/19 |
600,000 | 675,383 | |||||||||
Owens Corning, 6.500%, due 12/01/16 |
300,000 | 317,736 | |||||||||
Owens-Brockway Glass Container, Inc., 7.375%, due 05/15/16 |
300,000 | 318,750 | |||||||||
Pacific Bell Telephone Co., 7.125%, due 03/15/26 |
350,000 | 404,052 | |||||||||
Pacific Life Insurance Co., 9.250%, due 06/15/395 |
500,000 | 649,767 | |||||||||
Petrohawk Energy Corp., 10.500%, due 08/01/14 |
550,000 | 627,000 | |||||||||
Plains Exploration & Production Co., 7.750%, due 06/15/15 |
450,000 | 469,125 | |||||||||
Reynolds American, Inc., 6.750%, due 06/15/17 |
300,000 | 335,315 | |||||||||
Ryerson, Inc., 12.000%, due 11/01/15 |
500,000 | 523,750 | |||||||||
SLM Corp., 1.300%, due 11/15/116 |
EUR | 250,000 | 320,503 | ||||||||
SunTrust Bank, 7.250%, due 03/15/18 |
$ | 300,000 | 332,637 |
Face amount |
Value | ||||||||||
Tennessee Valley Authority., 4.625%, due 09/15/60 |
$ | 600,000 | $ | 561,212 | |||||||
Univision Communications, Inc., 12.000%, due 07/01/145 |
600,000 | 657,000 | |||||||||
Wachovia Capital Trust III, 5.800%, due 03/15/116,7 |
300,000 | 260,250 | |||||||||
Wells Fargo Capital XIII, 7.700%, due 03/26/136,7 |
300,000 | 310,125 | |||||||||
Williams Cos., Inc., 8.750%, due 03/15/32 |
241,000 | 294,849 | |||||||||
Yankee Acquisition Corp., 8.500%, due 02/15/15 |
300,000 | 312,000 | |||||||||
Yonkers Racing Corp., 11.375%, due 07/15/165 |
270,000 | 297,338 | |||||||||
Total United States corporate bonds |
20,392,313 | ||||||||||
Total corporate bonds (cost $25,755,687) |
26,373,402 | ||||||||||
Asset-backed securities: 0.82% | |||||||||||
Cayman Islands: 0.16% | |||||||||||
Commercial Industrial Finance Corp., Series 2007-1A, Class A1LB, 0.626%, due 05/10/213,5,6,9 |
1,000,000 | 783,900 | |||||||||
United Kingdom: 0.16% | |||||||||||
Chester Asset Receivables Dealings, Series 2004-1, Class C, 1.638%, due 04/15/166 |
GBP | 170,000 | 244,183 | ||||||||
Chester Asset Receivables Dealings No. 12 PLC, Series C, 2.190%, due 01/18/116 |
320,000 | 498,748 | |||||||||
Total United Kingdom asset-backed securities |
742,931 | ||||||||||
United States: 0.50% | |||||||||||
Ameriquest Mortgage Securities, Inc., Series 2005-R6, Class A2, 0.461%, due 08/25/356 |
$ | 83,527 | 80,805 | ||||||||
Citibank Credit Card Issuance Trust, Series 2008-C6, Class C6, 6.300%, due 06/20/14 |
200,000 | 211,565 | |||||||||
First Franklin Mortgage Loan Asset Backed Certificates, Series 2006-FF15, Class A3, 0.311%, due 11/25/366 |
47,577 | 47,174 |
15
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Asset-backed securities(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Home Equity Asset Trust, Series 2006-3, Class 2A3, 0.441%, due 07/25/366 |
$ | 317,624 | $ | 306,009 | |||||||
Home Equity Mortgage Trust, Series 2006-6, Class 2A1, 0.361%, due 03/25/376 |
2,528,942 | 171,336 | |||||||||
MBNA Credit Card Master Note Trust, Series 2003-C7, Class C7, 1.610%, due 03/15/166 |
375,000 | 370,576 | |||||||||
Nomura Asset Acceptance Corp., Series 2006-S4, Class A1, 0.431%, due 08/25/363,6 |
1,041,890 | 329,102 | |||||||||
Popular ABS Mortgage Pass-Through Trust, Series 2006-E, Class A1, 0.351%, due 01/25/376 |
13,553 | 13,506 | |||||||||
Renaissance Home Equity Loan Trust, Series 2006-4, Class AV1, 0.331%, due 01/25/376 |
31,402 | 31,175 | |||||||||
Series 2005-3, Class AF3, 4.814%, due 11/25/3510 |
51,746 | 50,090 | |||||||||
Residential Asset Securities Corp., Series 2006-KS2, Class A3, 0.451%, due 03/25/366 |
326,019 | 311,072 | |||||||||
Series 2005-KS11, Class AI3, 0.461%, due 12/25/356 |
34,054 | 33,451 | |||||||||
SACO I Trust, Series 2006-3, Class A1, 0.621%, due 04/25/366 |
1,601,104 | 461,934 | |||||||||
Soundview Home Equity Loan Trust, Series 2006-OPT3, Class 2A2, 0.371%, due 06/25/366 |
4,583 | 4,560 | |||||||||
Total United States asset-backed securities |
2,422,355 | ||||||||||
Total asset-backed securities (cost $6,837,768) |
3,949,186 | ||||||||||
Collateralized debt obligations: 2.11% | |||||||||||
Cayman Islands: 0.66% | |||||||||||
Avenue CLO Fund Ltd., Series 2007-5I, Class SUB, due 04/25/193,11 |
2,200,000 | 880,000 | |||||||||
FM Leveraged Capital Fund II, due 11/20/203,5,6,9,11 |
5,300,000 | 378,950 |
Face amount |
Value | ||||||||||
Harbourview CLO VI Ltd., Series 6A, Class SUB, due 12/27/193,5,9,11 |
$ | 1,200,000 | $ | 612,000 | |||||||
LNR CDO Ltd., Series 2006-1A, Class FFX, 7.592%, due 05/28/433,5,9 |
8,000,000 | 0 | |||||||||
Shasta CLO Ltd., due 04/20/133,5,6,9,11 |
2,000,000 | 1,300,000 | |||||||||
Total Cayman Islands collateralized debt obligations |
3,170,950 | ||||||||||
Ireland: 0.20% | |||||||||||
Eurocredit CDO BV, Series VI-X, Class SUB, due 01/16/223,6,11 |
2,500,000 | 968,818 | |||||||||
Luxembourg: 0.03% | |||||||||||
Ashwell Rated SA, 6.625%, due 12/22/773,4,5,6,9 |
GBP | 1,950,000 | 30 | ||||||||
GSC European CDO SA, Series I-RA, Class SUB, due 12/15/223,5,6,9,11 |
EUR | 2,400,000 | 160,356 | ||||||||
Total Luxembourg collateralized debt obligations |
160,386 | ||||||||||
Netherlands: 1.01% | |||||||||||
Ares Euro CLO BV, Series 2007-1A, Class G1, 13.138%, due 05/15/243,5,6,9 |
1,400,000 | 598,662 | |||||||||
Harbourmaster CLO Ltd., Series 7A, Class C, 12.000%, due 09/22/223,5,9 |
3,000,000 | 1,282,848 | |||||||||
Highlander Euro CDO, Series 2006-2CA, Class F1, due 12/14/223,5,9,11,12 |
3,000,000 | 1,242,759 | |||||||||
Prospero CLO I BV, Series I-A, Class A2, 0.829%, due 03/20/173,5,6,9 |
$ | 1,000,000 | 817,500 | ||||||||
Regent's Park CDO BV, Series 1A, Class F, 6.465%, due 01/26/233,5,6,9 |
EUR | 2,000,000 | 935,410 | ||||||||
Total Netherlands collateralized debt obligations |
4,877,179 | ||||||||||
United States: 0.21% | |||||||||||
Cent CDO Ltd., Series 2006-12A, Class INC, 0.540%, due 11/18/203,11 |
$ | 2,000,000 | 1,000,000 | ||||||||
Total collateralized debt obligations (cost $43,408,117) |
10,177,333 |
16
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Commercial mortgage-backed securities: 1.26% | |||||||||||
United States: 1.26% | |||||||||||
Banc of America Commercial Mortgage, Inc., Series 2007-2, Class AM, 5.699%, due 04/10/496 |
$ | 450,000 | $ | 431,713 | |||||||
Series 2007-4, Class A4, 5.742%, due 02/10/516 |
400,000 | 426,073 | |||||||||
Citigroup Commercial Mortgage Trust, Series 2007-C6, Class AM, 5.698%, due 12/10/496 |
650,000 | 644,870 | |||||||||
Commercial Mortgage Pass Through Certificates, Series 2006-C8, Class AM, 5.347%, due 12/10/46 |
300,000 | 288,339 | |||||||||
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class A4, 5.543%, due 12/10/49 |
400,000 | 411,841 | |||||||||
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class AM, 5.475%, due 03/10/39 |
1,200,000 | 1,198,881 | |||||||||
Series 2006-GG7, Class A4, 5.883%, due 07/10/386 |
900,000 | 981,899 | |||||||||
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CB17, Class AM, 5.464%, due 12/12/43 |
300,000 | 294,775 | |||||||||
Series 2007-LD12, Class A4, 5.882%, due 02/15/516 |
825,000 | 873,472 | |||||||||
Morgan Stanley Re-REMIC Trust, Series 2009-GG10, Class A4B, 5.807%, due 08/12/455,6 |
500,000 | 496,845 | |||||||||
Total commercial mortgage-backed securities (cost $4,909,423) |
6,048,708 | ||||||||||
Mortgage & agency debt securities: 1.19% | |||||||||||
United States: 1.19% | |||||||||||
American Home Mortgage Investment Trust, Series 2006-3, Class 4A, 0.451%, due 11/25/356 |
2,607,823 | 624,782 | |||||||||
Countrywide Alternative Loan Trust, Series 2006-45T1, Class M1, 6.000%, due 02/25/37 |
42,493 | 4 |
Face amount |
Value | ||||||||||
Credit Suisse Mortgage Capital Certificates, Series 2006-4, Class CB1, 5.603%, due 05/25/366 |
$ | 624,152 | $ | 3,745 | |||||||
Series 2006-7, Class B1, 5.848%, due 08/25/366 |
179,360 | 2,353 | |||||||||
Federal Home Loan Bank of Chicago, 5.625%, due 06/13/16 |
1,300,000 | 1,407,690 | |||||||||
Federal National Mortgage Association, 5.976%, due 10/09/1912,13 |
1,700,000 | 1,073,419 | |||||||||
Federal National Mortgage Association Pool, 4.000%, TBA13 |
2,325,000 | 2,306,109 | |||||||||
GSR Mortgage Loan Trust, Series 2006-5F, Class B1, 6.056%, due 06/25/366 |
954,956 | 29,978 | |||||||||
Harborview Mortgage Loan Trust, Series 2005-3, Class 2A1A, 0.501%, due 06/19/356 |
252,692 | 171,217 | |||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-7, Class B11, 3.162%, due 04/25/356 |
1,678,671 | 58,101 | |||||||||
WaMu Mortgage Pass-Through Certificates, Series 2006-AR16, Class 3B1, 5.581%, due 12/25/366 |
1,296,576 | 27,215 | |||||||||
Wells Fargo Mortgage Backed Securities Trust, Series 2006-AR12, Class 2B1, 5.928%, due 09/25/366 |
249,711 | 2,497 | |||||||||
Series 2006-18, Class B1, 6.000%, due 12/26/36 |
1,169,655 | 9,026 | |||||||||
Total mortgage & agency debt securities (cost $8,021,498) |
5,716,136 | ||||||||||
Municipal bonds: 0.33% | |||||||||||
State of California, GO, 7.300%, due 10/01/39 |
1,425,000 | 1,445,449 | |||||||||
State of Illinois, GO, Series 2010, 4.421%, due 01/01/15 |
165,000 | 166,450 | |||||||||
Total municipal bonds (cost $1,601,585) |
1,611,899 |
17
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
US government obligation: 0.31% | |||||||||||
US Treasury Bonds, PO, 3.861%, due 08/15/2912 (cost $1,692,446) |
$ | 3,500,000 | $ | 1,499,855 | |||||||
Non-US government obligation: 0.04% | |||||||||||
Greece: 0.04% | |||||||||||
Hellenic Republic Government Bond, 4.300%, due 03/20/12 (cost $208,379) |
EUR | 160,000 | 194,929 | ||||||||
Total bonds (cost $92,434,903) |
55,571,448 | ||||||||||
Shares | |||||||||||
Investment companies: 25.49% | |||||||||||
UBS Global Corporate Bond Relationship Fund*14 |
4,518,395 | 49,072,477 | |||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund*14 |
769,619 | 12,781,528 | |||||||||
UBS U.S. Equity Alpha Relationship Fund*14 |
5,383,420 | 60,908,010 | |||||||||
Total investment companies (cost $99,777,283) |
122,762,015 | ||||||||||
Short-term investment: 5.58% | |||||||||||
Investment company: 5.58% | |||||||||||
UBS Cash Management Prime Relationship Fund14 (cost $26,894,610) |
26,894,610 | 26,894,610 | |||||||||
Number of contracts |
|||||||||||
Options purchased: 0.67% | |||||||||||
Call option: 0.42% | |||||||||||
S&P 500 Index, strike @ USD 1,175.00, expires March 2011* |
213 | 2,040,540 | |||||||||
Put options: 0.14% | |||||||||||
10 Year US Treasury Notes, strike @ USD 119.50, expires January 2011* |
120 | 73,125 | |||||||||
2 Year US Treasury Notes, strike @ USD 109.00, expires January 2011* |
138 | 10,781 |
Number of contracts |
Value | ||||||||||
5 Year US Treasury Notes, strike @ USD 117.50, expires January 2011* |
120 | $ | 61,875 | ||||||||
90 Day Euro-Dollar Futures, strike @ USD 96.00, expires March 2011* |
161 | 1,006 | |||||||||
90 Day Euro-Dollar Futures, strike @ USD 95.00, expires June 2011* |
144 | 900 | |||||||||
90 Day Euro-Dollar Futures, strike @ USD 96.00, expires September 2011* |
528 | 6,600 | |||||||||
90 Day Euro-Dollar Time Deposit, strike @ USD 99.25, expires September 2012* |
232 | 503,150 | |||||||||
Japan 10 Year, strike @ JPY 140.00, expires January 2011* |
2 | 9,854 | |||||||||
Face amount covered by contracts |
|
||||||||||
Foreign Exchange Option, Buy AUD/USD, strike @ AUD 0.94, expires January 2011* |
$ | 10,451,000 | 8,199 | ||||||||
Foreign Exchange Option, Buy AUD/USD, strike @ AUD 0.91, expires January 2011* |
10,544,000 | 6,589 | |||||||||
Notional amount |
|||||||||||
Options purchased on interest rate swaps: 0.11% | |||||||||||
Expiring 04/15/11. If option exercised the Fund pays monthly floating 28 day MEXIBOR and receives monthly 4.860%. Underlying interest rate swap terminating 04/15/13. European style. Counterparty: Deutsche Bank AG* |
MXN | 1,472,000,000 | 16,746 | ||||||||
Expiring 04/18/11. If option exercised the Fund pays monthly floating 28 day MEXIBOR and receives monthly 4.870%. Underlying interest rate swap terminating 04/16/13. European style. Counterparty: Deutsche Bank AG* |
1,472,000,000 | 19,189 |
18
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Notional amount |
Value | ||||||||||
Options purchased(Concluded) | |||||||||||
Options purchased on interest rate swaps(Concluded) | |||||||||||
Expiring 04/27/11. If option exercised the Fund pays 4.035% and receives semi-annually floating 6 month LIBOR. Underlying interest rate swap terminating 04/27/18. European style. Counterparty: Deutsche Bank AG* |
GBP | 6,500,000 | $ | 18,656 | |||||||
Expiring 04/29/11. If option exercised the Fund pays monthly floating 28 day MEXIBOR and receives monthly 4.920%. Underlying interest rate swap terminating 04/29/13. European style. Counterparty: Citi Bank Bank NA* |
MXN | 1,570,400,000 | 60,955 | ||||||||
Expiring 05/05/11. If option exercised the Fund pays monthly floating 28 day MEXIBOR and receives monthly 5.160%. Underlying interest rate swap terminating 05/03/13. European style. Counterparty: Deutsche Bank AG* |
1,470,500,000 | 99,416 | |||||||||
Expiring 06/08/11. If option exercised the Fund pays 1.990% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 06/30/13. European style. Counterparty: Deutsche Bank AG* |
$ | 32,500,000 | 33,603 | ||||||||
Expiring 04/18/11. If option exercised the Fund pays fixed 6.000% and receives quarterly 3 month LIBOR. Underlying interest rate swap terminating 02/15/11. European style. Counterparty: Deutsche Bank AG* |
7,050,000 | 278,566 | |||||||||
Total options purchased (cost $4,368,888) |
3,249,750 |
Shares | Value | ||||||||||
Investment of cash collateral from securities loaned: 0.61% | |||||||||||
UBS Private Money Market Fund LLC,14 (cost $2,930,382) |
$ | 2,930,382 | $ | 2,930,382 | |||||||
Total investments before investments sold short: 107.28% (cost $479,781,534) |
516,739,689 | ||||||||||
Investments sold short: (18.67)% | |||||||||||
Common stocks: (18.67)% | |||||||||||
Ireland: (0.11)% | |||||||||||
Ingersoll-Rand PLC | (11,000 | ) | (517,990 | ) | |||||||
Switzerland: (0.05)% | |||||||||||
Mettler-Toledo International, Inc. | (1,700 | ) | (257,057 | ) | |||||||
United States: (18.51)% | |||||||||||
3M Co. | (6,700 | ) | (578,210 | ) | |||||||
Advanced Micro Devices, Inc. | (95,500 | ) | (781,190 | ) | |||||||
Akamai Technologies, Inc. | (15,000 | ) | (705,750 | ) | |||||||
Alliant Energy Corp. | (29,900 | ) | (1,099,423 | ) | |||||||
Altera Corp. | (38,100 | ) | (1,355,598 | ) | |||||||
Amedisys, Inc. | (9,400 | ) | (314,900 | ) | |||||||
American Water Works Co., Inc. | (30,100 | ) | (761,229 | ) | |||||||
Aqua America, Inc. | (29,200 | ) | (656,416 | ) | |||||||
Archer-Daniels-Midland Co. NPV | (5,200 | ) | (156,416 | ) | |||||||
Best Buy Co., Inc. | (25,100 | ) | (860,679 | ) | |||||||
Bio-Reference Labs, Inc. | (24,200 | ) | (536,756 | ) | |||||||
BMC Software, Inc. | (53,700 | ) | (2,531,418 | ) | |||||||
Bristol-Myers Squibb Co. | (28,600 | ) | (757,328 | ) | |||||||
Brown-Forman Corp., Class B | (22,900 | ) | (1,594,298 | ) | |||||||
C.H. Robinson Worldwide, Inc. | (30,100 | ) | (2,413,719 | ) | |||||||
Calpine Corp. | (29,200 | ) | (389,528 | ) | |||||||
Cardinal Health, Inc. | (14,000 | ) | (536,340 | ) | |||||||
Caterpillar, Inc. | (15,200 | ) | (1,423,632 | ) | |||||||
Celgene Corp. | (9,900 | ) | (585,486 | ) | |||||||
CenturyLink, Inc. | (10,500 | ) | (484,785 | ) | |||||||
Cephalon, Inc. | (7,900 | ) | (487,588 | ) | |||||||
Charles River Laboratories International, Inc. |
(31,300 | ) | (1,112,402 | ) | |||||||
Chesapeake Energy Corp. | (33,500 | ) | (867,985 | ) | |||||||
Chevron Corp. | (8,500 | ) | (775,625 | ) | |||||||
Church & Dwight Co., Inc. | (4,300 | ) | (296,786 | ) | |||||||
Clorox Co. | (18,500 | ) | (1,170,680 | ) | |||||||
Cognizant Technology Solutions Corp., Class A |
(3,400 | ) | (249,186 | ) | |||||||
Compuware Corp. | (24,300 | ) | (283,581 | ) | |||||||
ConocoPhillips | (9,300 | ) | (633,330 | ) | |||||||
CONSOL Energy, Inc. | (9,700 | ) | (472,778 | ) | |||||||
Consolidated Edison, Inc. | (31,600 | ) | (1,566,412 | ) | |||||||
Corning, Inc. | (35,200 | ) | (680,064 | ) | |||||||
Covance, Inc. | (7,700 | ) | (395,857 | ) | |||||||
CSX Corp. | (9,100 | ) | (587,951 | ) |
19
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Concluded) | |||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Deere & Co. | (6,300 | ) | $ | (523,215 | ) | ||||||
Dell, Inc. | (98,400 | ) | (1,333,320 | ) | |||||||
Delta Air Lines, Inc. | (63,800 | ) | (803,880 | ) | |||||||
Diebold, Inc. | (19,900 | ) | (637,795 | ) | |||||||
Discovery Communications, Inc., Class A |
(6,600 | ) | (275,220 | ) | |||||||
Dollar General Corp. | (11,800 | ) | (361,906 | ) | |||||||
Duke Energy Corp. | (19,500 | ) | (347,295 | ) | |||||||
EI Du Pont de Nemours & Co. | (16,000 | ) | (798,080 | ) | |||||||
Eli Lilly & Co. | (59,200 | ) | (2,074,368 | ) | |||||||
EMC Corp. | (69,000 | ) | (1,580,100 | ) | |||||||
Emerson Electric Co. | (14,100 | ) | (806,097 | ) | |||||||
EQT Corp. | (9,500 | ) | (425,980 | ) | |||||||
Expeditors International Washington, Inc. |
(40,100 | ) | (2,189,460 | ) | |||||||
Express Scripts, Inc. | (5,000 | ) | (270,250 | ) | |||||||
Fiserv, Inc. | (10,600 | ) | (620,736 | ) | |||||||
Flextronics International Ltd. | (70,900 | ) | (556,565 | ) | |||||||
Flowers Foods, Inc. | (27,000 | ) | (726,570 | ) | |||||||
Ford Motor Co. | (66,300 | ) | (1,113,177 | ) | |||||||
Forest Laboratories, Inc. | (31,600 | ) | (1,010,568 | ) | |||||||
Freeport-McMoRan Copper & Gold, Inc. |
(4,900 | ) | (588,441 | ) | |||||||
Gap, Inc. | (38,400 | ) | (850,176 | ) | |||||||
Goodrich Corp. | (21,100 | ) | (1,858,277 | ) | |||||||
Hasbro, Inc. | (7,500 | ) | (353,850 | ) | |||||||
Hershey Co. | (25,700 | ) | (1,211,755 | ) | |||||||
Honeywell International, Inc. | (13,700 | ) | (728,292 | ) | |||||||
Hormell Foods Corp. | (9,500 | ) | (486,970 | ) | |||||||
Hospira, Inc. | (13,100 | ) | (729,539 | ) | |||||||
Hudson City Bancorp, Inc. | (32,700 | ) | (416,598 | ) | |||||||
Humana, Inc. | (8,500 | ) | (465,290 | ) | |||||||
Integrys Energy Group, Inc. | (4,500 | ) | (218,295 | ) | |||||||
Intel Corp. | (77,900 | ) | (1,638,237 | ) | |||||||
International Business Machines Corp. |
(4,300 | ) | (631,068 | ) | |||||||
Intuitive Surgical, Inc. | (3,100 | ) | (799,025 | ) | |||||||
ITT Corp. | (11,000 | ) | (573,210 | ) | |||||||
JC Penney Co., Inc. | (8,100 | ) | (261,711 | ) | |||||||
Joy Global, Inc. | (8,100 | ) | (702,675 | ) | |||||||
Laboratory Corp. of America Holdings |
(3,100 | ) | (272,552 | ) | |||||||
Lamar Advertising Co., Class A | (39,300 | ) | (1,565,712 | ) | |||||||
Linear Technology Corp. | (10,600 | ) | (366,654 | ) | |||||||
McDonald's Corp. | (11,700 | ) | (898,092 | ) | |||||||
MetroPCS Communications, Inc. | (23,600 | ) | (298,068 | ) | |||||||
Micron Technology, Inc. | (41,000 | ) | (328,820 | ) | |||||||
Motorola, Inc. | (71,700 | ) | (650,319 | ) | |||||||
Navistar International Corp. | (12,100 | ) | (700,711 | ) |
Shares | Value | ||||||||||
NetApp, Inc. | (8,500 | ) | $ | (467,160 | ) | ||||||
NetFlix, Inc. | (5,600 | ) | (983,920 | ) | |||||||
Nordstrom, Inc. | (7,600 | ) | (322,088 | ) | |||||||
Novellus Systems, Inc. | (32,600 | ) | (1,053,632 | ) | |||||||
NSTAR | (34,300 | ) | (1,447,117 | ) | |||||||
Nvidia Corp. | (11,500 | ) | (177,100 | ) | |||||||
Occidental Petroleum Corp. | (23,200 | ) | (2,275,920 | ) | |||||||
O'Reilly Automotive, Inc. | (19,000 | ) | (1,147,980 | ) | |||||||
Parker Hannifin Corp. | (6,600 | ) | (569,580 | ) | |||||||
Pioneer Natural Resources Co. | (10,000 | ) | (868,200 | ) | |||||||
PNC Financial Services Group, Inc. |
(14,100 | ) | (856,152 | ) | |||||||
Quicksilver Resources, Inc. | (32,800 | ) | (483,472 | ) | |||||||
Red Hat, Inc. | (10,800 | ) | (493,020 | ) | |||||||
Regions Financial Corp. | (91,500 | ) | (640,500 | ) | |||||||
Rockwell Automation, Inc. | (18,000 | ) | (1,290,780 | ) | |||||||
Sara Lee Corp. | (19,500 | ) | (341,445 | ) | |||||||
Schlumberger Ltd. | (10,300 | ) | (860,050 | ) | |||||||
Sears Holdings Corp. | (14,400 | ) | (1,062,000 | ) | |||||||
Smithfield Foods, Inc. | (41,500 | ) | (856,145 | ) | |||||||
Southern Co. | (36,600 | ) | (1,399,218 | ) | |||||||
Spectra Energy Corp. | (26,600 | ) | (664,734 | ) | |||||||
Starwood Hotels & Resorts Worldwide, Inc. |
(13,200 | ) | (802,296 | ) | |||||||
Tellabs, Inc. | (58,000 | ) | (393,240 | ) | |||||||
Thermo Fisher Scientific, Inc. | (15,800 | ) | (874,688 | ) | |||||||
TJX Cos., Inc. | (6,300 | ) | (279,657 | ) | |||||||
Travelers Cos., Inc. | (16,400 | ) | (913,644 | ) | |||||||
Tyson Foods, Inc., Class A | (43,100 | ) | (742,182 | ) | |||||||
Verizon Communications, Inc. | (15,100 | ) | (540,278 | ) | |||||||
Walt Disney Co. | (7,500 | ) | (281,325 | ) | |||||||
Whole Foods Market, Inc. | (20,200 | ) | (1,021,918 | ) | |||||||
WW Grainger, Inc. | (18,300 | ) | (2,527,413 | ) | |||||||
Xcel Energy, Inc. | (15,700 | ) | (369,735 | ) | |||||||
Total United States common stocks |
(89,158,834 | ) | |||||||||
Total common stocks and investments sold short (proceeds $(65,367,865)) |
(89,933,881 | ) | |||||||||
Total investments, net of investments sold short: 88.61% |
426,805,808 | ||||||||||
Cash and other assets, less liabilities: 11.39% |
54,876,079 | ||||||||||
Net assets: 100.00% | $ | 481,681,887 |
20
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Notes to portfolio of investments
Aggregate cost for federal income tax purposes, before investments sold short, was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 84,437,205 | |||||
Gross unrealized depreciation | (47,479,050 | ) | |||||
Net unrealized appreciation of investments | $ | 36,958,155 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
2 All or a portion of these securities have been designated as collateral for open short positions.
3 Security is illiquid. At December 31, 2010, the value of these securities amounted to $11,290,335 or 2.34% of net assets.
4 Security is being fair valued by a valuation committee under the direction of the Board of Trustees. At December 31, 2010, the value of these securities amounted to $30 or 0.00% of net assets.
5 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $12,809,558 or 2.66% of net assets.
6 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2010 and changes periodically.
7 Perpetual bond security. The maturity date reflects the next call date.
8 PIKPayment-in kind security. Income may be paid in cash or additional notes, at the discretion of the issuer.
9 These securities, which represent 1.68% of net assets as of December 31, 2010, are considered restricted. (See restricted securities table below for more information.)
Restricted securities |
Acquisition date |
Acquisition cost |
Acquisition cost as a percentage of net assets |
Value 12/31/10 |
12/31/10 Value as a percentage of net assets |
||||||||||||||||||
Ares Euro CLO BV, Series 2007-1A, Class G1, 13.138%, due 05/15/24 |
03/26/07 | $ | 1,863,680 | 0.39 | % | $ | 598,662 | 0.12 | % | ||||||||||||||
Ashwell Rated SA, 6.625%, due 12/22/77 |
01/29/07 | 3,660,332 | 0.76 | 30 | 0.001 | ||||||||||||||||||
Commercial Industrial Finance Corp., Series 2007-1A, Class A1LB, 0.626%, due 05/10/21 |
09/30/09 | 692,500 | 0.14 | 783,900 | 0.16 | ||||||||||||||||||
FM Leveraged Capital Fund II, due 11/20/20 |
10/31/06 | 5,300,000 | 1.10 | 378,950 | 0.08 | ||||||||||||||||||
GSC European CDO SA, Series I-RA, Class SUB, due 12/15/22 |
12/01/06 | 3,200,760 | 0.66 | 160,356 | 0.03 | ||||||||||||||||||
Harbourmaster CLO Ltd., Series 7A, Class C, 12.000%, due 09/22/22 |
10/31/06 | 3,637,455 | 0.76 | 1,282,848 | 0.27 | ||||||||||||||||||
Harbourview CLO VI Ltd., Series 6A, Class SUB, due 12/27/19 |
10/20/06 | 1,128,000 | 0.23 | 612,000 | 0.13 | ||||||||||||||||||
Highlander Euro CDO, Series 2006-2CA, Class F1, due 12/14/22 |
11/28/06 | 3,840,472 | 0.80 | 1,242,759 | 0.26 | ||||||||||||||||||
LNR CDO Ltd., Series 2006-1A, Class FFX, 7.592%, due 05/28/43 |
11/03/06 | 8,138,056 | 1.69 | 0 | 0.00 | ||||||||||||||||||
Prospero CLO I BV, Series I-A, Class A2, 0.829%, due 03/20/17 |
10/29/09 | 760,000 | 0.16 | 817,500 | 0.17 | ||||||||||||||||||
Regent's Park CDO BV, Series 1A, Class F, 6.465%, due 01/26/23 |
09/25/06 | 2,551,500 | 0.53 | 935,410 | 0.19 | ||||||||||||||||||
Shasta CLO Ltd., due 04/20/13 |
12/20/06 | 1,900,000 | 0.39 | 1,300,000 | 0.27 | ||||||||||||||||||
$ | 36,672,755 | 7.61 | % | $ | 8,112,415 | 1.68 | % |
1 Amount represents less than 0.005%.
21
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
10 Step bondCoupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2010. Maturity date disclosed is the ultimate maturity date.
11 This security is the equity tranche of a collateralized debt obligation. The Fund receives periodic payments, which may vary, from the issuer of this security.
12 Rate shown reflects annualized yield at December 31, 2010 on zero coupon bond.
13 On September 7, 2008, the Federal Housing Finance Agency placed the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association into conservatorship, and the US Treasury guaranteed the debt issued by those organizations.
14 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Funds.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Net realized gain during the six months ended 12/31/10 |
Change in net unrealized appreciation/ depreciation during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 30,452,523 | $ | 182,631,389 | $ | 186,189,302 | $ | | $ | | $ | 26,894,610 | $ | 34,557 | |||||||||||||||||
UBS Private Money Market Fund LLC1 |
4,355,230 | 31,662,039 | 33,086,887 | | | 2,930,382 | 27,323 | ||||||||||||||||||||||||
UBS Global Corporate Bond Relationship Fund |
53,202,142 | | 6,250,000 | 552,020 | 1,568,315 | 49,072,477 | | ||||||||||||||||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
17,369,977 | | 6,500,000 | 1,858,834 | 52,717 | 12,781,528 | | ||||||||||||||||||||||||
UBS U.S. Equity Alpha Relationship Fund |
62,547,042 | | 15,000,000 | 3,203,557 | 10,157,411 | 60,908,010 | | ||||||||||||||||||||||||
$ | 167,926,914 | $ | 214,293,428 | $ | 247,026,189 | $ | 5,614,411 | $ | 11,778,443 | $ | 152,587,007 | $ | 61,880 |
1 The adviser does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements for further information.
ABS Asset-backed securities
ADR American depositary receipt
CDO Collateralized debt obligations
CLO Collateralized loan obligations
CVA Dutch certificationdepository certificate
GDR Global depositary receipt
GE General Electric
GO General Obligation
GSR Goldman Sachs Residential
LIBOR London Interbank Offered Rate
MEXIBOR Mexican Interbank Offered Rate
NPV No Par Value
OJSC Open joint stock company
PO Principal only securityThis security entitles the holder to receive principal payments from an underlying pool of assets. High prepayments return principal faster than expected and cause the yield to increase. Low prepayments return principal slower than expected and cause the yield to decrease.
Preference
shares A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.
Re-REMIC Combined Real Estate Mortgage Investment Conduit
TBA (To be announced) Security is purchased on a forward commitment basis with an approximate principal amount (generally +/-1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement, when the specific mortgage pools are assigned.
22
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
USD United States Dollar
Forward foreign currency contracts
UBS Dynamic Alpha Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Goldman Sachs International | AUD | 48,840,000 | USD | 46,593,360 | 03/03/11 | $ | (2,995,845 | ) | |||||||||||
Goldman Sachs International | TRY | 11,524,509 | USD | 7,360,000 | 03/03/11 | (52,569 | ) | ||||||||||||
JPMorgan Chase Bank | AUD | 480,000 | USD | 465,162 | 03/02/11 | (22,259 | ) | ||||||||||||
JPMorgan Chase Bank | CAD | 410,000 | USD | 405,108 | 03/02/11 | (6,774 | ) | ||||||||||||
JPMorgan Chase Bank | CHF | 2,500,000 | USD | 2,497,088 | 03/03/11 | (178,368 | ) | ||||||||||||
JPMorgan Chase Bank | DKK | 15,470,000 | USD | 2,746,429 | 03/03/11 | (26,511 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 480,000 | USD | 642,360 | 03/02/11 | 1,023 | |||||||||||||
JPMorgan Chase Bank | GBP | 695,000 | USD | 1,095,198 | 03/02/11 | 12,083 | |||||||||||||
JPMorgan Chase Bank | NOK | 12,360,000 | USD | 1,997,430 | 03/03/11 | (114,780 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 231,926 | CAD | 235,000 | 03/02/11 | 4,153 | |||||||||||||
JPMorgan Chase Bank | USD | 1,661,808 | EUR | 1,260,000 | 03/02/11 | 21,702 | |||||||||||||
JPMorgan Chase Bank | USD | 8,318,321 | EUR | 6,300,000 | 03/03/11 | 99,193 | |||||||||||||
JPMorgan Chase Bank | USD | 2,417,795 | GBP | 1,550,000 | 03/03/11 | (2,234 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 44,762,192 | KRW | 51,857,000,000 | 03/03/11 | 794,234 | |||||||||||||
JPMorgan Chase Bank | USD | 47,185,444 | MXN | 595,150,000 | 03/03/11 | 802,491 | |||||||||||||
JPMorgan Chase Bank | USD | 15,983,560 | MYR | 50,556,000 | 03/03/11 | 350,824 | |||||||||||||
JPMorgan Chase Bank | USD | 32,206,417 | TWD | 973,600,000 | 03/03/11 | 1,230,137 | |||||||||||||
Morgan Stanley & Co. Inc. | CAD | 34,620,000 | USD | 33,762,434 | 03/03/11 | (1,015,691 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | CHF | 17,460,000 | USD | 17,414,548 | 03/03/11 | (1,270,840 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | EUR | 108,505,000 | USD | 143,209,462 | 03/03/11 | (1,765,516 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | GBP | 37,575,000 | USD | 58,902,758 | 03/03/11 | 344,876 | |||||||||||||
Morgan Stanley & Co. Inc. | NZD | 83,815,000 | USD | 62,518,866 | 03/03/11 | (2,489,725 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | TRY | 32,445,000 | USD | 21,475,377 | 03/03/11 | 606,740 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 8,095,119 | JPY | 677,100,000 | 03/03/11 | 249,658 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 20,879,103 | PLN | 64,245,000 | 03/03/11 | 743,187 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 23,505,406 | SEK | 165,880,000 | 03/03/11 | 1,108,903 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 30,228,610 | SGD | 39,880,000 | 03/03/11 | 846,312 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 42,912,444 | TRY | 64,890,000 | 03/03/11 | (1,175,170 | ) | ||||||||||||
Royal Bank of Scotland | EUR | 7,975,000 | USD | 10,613,585 | 03/02/11 | (41,972 | ) | ||||||||||||
Royal Bank of Scotland | USD | 4,955,442 | GBP | 3,190,000 | 03/03/11 | 15,939 | |||||||||||||
Net unrealized depreciation on forward foreign currency contracts | $ | (3,926,799 | ) |
23
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
DKK Danish Krone
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
KRW Korean Won
MXN Mexican Peso
MYR Malaysian Ringgit
NOK Norwegian Krone
NZD New Zealand Dollar
PLN Polish Zloty
SEK Swedish Krona
SGD Singapore Dollar
TRY Turkish Lira
TWD New Taiwan Dollar
USD United States Dollar
Futures contracts
UBS Dynamic Alpha Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Ultra Bond Futures, 124 contracts (USD) | March 2011 | $ | 15,941,379 | $ | 15,759,625 | $ | (181,754 | ) | |||||||||||
5 Year US Treasury Notes, 343 contracts (USD) | March 2011 | 40,269,985 | 40,377,531 | 107,546 | |||||||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
US Long Bond, 5 contracts (USD) | March 2011 | (605,930 | ) | (610,625 | ) | (4,695 | ) | ||||||||||||
10 Year US Treasury Notes, 116 contracts (USD) | March 2011 | (13,852,254 | ) | (13,970,750 | ) | (118,496 | ) | ||||||||||||
Index futures buy contracts: | |||||||||||||||||||
Amsterdam Exchange Index, 85 contracts (EUR) | January 2011 | 8,003,639 | 8,060,027 | 56,388 | |||||||||||||||
CAC 40 Euro Index, 153 contracts (EUR) | January 2011 | 7,942,040 | 7,788,671 | (153,369 | ) | ||||||||||||||
DAX Index, 330 contracts (EUR) | March 2011 | 77,101,116 | 76,366,539 | (734,577 | ) | ||||||||||||||
MSCI Singapore Index, 31 contracts (SGD) | January 2011 | 1,789,724 | 1,828,090 | 38,366 | |||||||||||||||
NIKKEI 225 Index, 119 contracts (JPY) | March 2011 | 14,870,666 | 14,964,774 | 94,108 | |||||||||||||||
SPI 200 Index, 61 contracts (AUD) | March 2011 | 7,437,075 | 7,377,712 | (59,363 | ) | ||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
Dow Jones EURO STOXX 50 Index, 662 contracts (EUR) | March 2011 | (25,195,733 | ) | (24,716,579 | ) | 479,154 | |||||||||||||
FTSE 100 Index, 198 contracts (GBP) | March 2011 | (17,993,115 | ) | (18,191,797 | ) | (198,682 | ) | ||||||||||||
FTSE/MIB Index, 78 contracts (EUR) | March 2011 | (10,805,924 | ) | (10,529,977 | ) | 275,947 | |||||||||||||
Hang Seng Stock Index, 33 contracts (HKD) | January 2011 | (4,859,839 | ) | (4,886,656 | ) | (26,817 | ) | ||||||||||||
IBEX 35 Index, 578 contracts (EUR) | January 2011 | (76,232,846 | ) | (75,623,863 | ) | 608,983 | |||||||||||||
OMXS 30 Index, 93 contracts (SEK) | January 2011 | (1,593,658 | ) | (1,599,860 | ) | (6,202 | ) | ||||||||||||
S&P 500 Index, 100 contracts (USD) | March 2011 | (30,897,150 | ) | (31,325,000 | ) | (427,850 | ) | ||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
Euro-Bund, 140 contracts (EUR) | March 2011 | 23,521,203 | 23,443,246 | (77,957 | ) | ||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
Japanese 10 Year Bond, 4 contracts (JPY) | March 2011 | (6,906,320 | ) | (6,927,454 | ) | (21,134 | ) | ||||||||||||
Net unrealized depreciation on futures contracts | $ | (350,404 | ) |
Currency type abbreviations:
AUD Australian Dollar
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
JPY Japanese Yen
SEK Swedish Krona
SGD Singapore Dollar
USD United States Dollar
24
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Options written
UBS Dynamic Alpha Fund had the following open options written as of December 31, 2010:
Expiration date |
Premiums received |
Value | |||||||||||||
Call options | |||||||||||||||
5 Year US Treasury Notes, 120 contracts, strike @ USD 118.50 | January 2011 | $ | 24,110 | $ | (32,813 | ) | |||||||||
Foreign Exchange Option, Sell AUD/USD, $10,451,000 face amount covered by contracts, strike @ AUD 1.02 |
January 2011 | 131,088 | (94,098 | ) | |||||||||||
Foreign Exchange Option, Sell AUD/USD, $10,544,000 face amount covered by contracts, strike @ AUD 1.01 |
January 2011 | 129,105 | (183,637 | ) | |||||||||||
Put options | |||||||||||||||
10 Year US Treasury Notes, 120 contracts, strike @ USD 118.00 | January 2011 | 56,930 | (30,000 | ) | |||||||||||
5 Year US Treasury Notes, 120 contracts, strike @ USD 116.50 | January 2011 | 37,238 | (27,187 | ) | |||||||||||
90 Day Euro-Dollar Futures, 528 contracts, strike @ USD 95.00 | September 2011 | 394,152 | (3,300 | ) | |||||||||||
90 Day Euro-Dollar Time Deposit, 232 contracts, strike @ USD 97.25 | September 2012 | 45,588 | (139,200 | ) | |||||||||||
Options written on interest rate swaps | |||||||||||||||
If option exercised the Fund pays semi-annually 3.150% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 03/23/21. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 69,075,000 |
March 2011 | 1,039,579 | (2,359,560 | ) | |||||||||||
If option exercised the Fund pays monthly 5.360% and receives monthly floating 28 day MEXIBOR. Underlying interest rate swap terminating 04/15/13. European style. Counterparty: Deutsche Bank AG, Notional Amount MXN 1,472,000,000 |
April 2011 | 286,103 | (979,629 | ) | |||||||||||
If option exercised the Fund pays monthly 5.370% and receives monthly floating 28 day MEXIBOR. Underlying interest rate swap terminating 04/16/13. European style. Counterparty: Deutsche Bank AG, Notional Amount MXN 1,472,000,000 |
April 2011 | 321,944 | (975,805 | ) | |||||||||||
If option exercised the Fund pays monthly 5.420% and receives monthly floating 28 day MEXIBOR. Underlying interest rate swap terminating 04/29/13. European style. Counterparty: Deutsche Bank AG, Notional Amount MXN 1,570,400,000 |
April 2011 | 298,598 | (1,052,455 | ) | |||||||||||
If option exercised the Fund pays semi-annually 5.660% and receives monthly floating 28 day MEXIBOR. Underlying interest rate swap terminating 05/03/13. European style. Counterparty: Deutsche Bank AG, Notional Amount MXN 1,470,500,000 |
May 2011 | 358,558 | (716,696 | ) | |||||||||||
If option exercised the Fund pays semi-annually 1.550% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 06/10/12. European style. Counterparty: Merrill Lynch International, Notional Amount USD 64,025,000 |
June 2011 | 266,504 | (25,187 | ) | |||||||||||
If option exercised the Fund pays semi-annually 7.250% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 11/04/25. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 7,050,000 |
November 2015 | 129,720 | (167,266 | ) | |||||||||||
If option exercised the Fund pays semi-annually 8.760% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 11/04/25. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 7,050,000 |
November 2015 | 83,895 | (85,861 | ) | |||||||||||
Receiver options written on credit default swaps on credit indices | |||||||||||||||
If option exercised payment to the counterparty will be received upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the CDX.NA.HY Series 15 Index and Fund pays fixed rate of 5.000%. Underlying credit default swap terminating 12/20/15. European style. Counterparty: Credit Suisse International, Notional Amount USD 6,500,000 |
March 2011 | 69,225 | (14,503 | ) | |||||||||||
Payor options written on credit default swaps on credit indices | |||||||||||||||
If option exercised payment to the counterparty will be made upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the CDX.NA.IG Series 15 Index and Fund receives fixed rate of 1.000%. Underlying credit default swap terminating 12/20/15. European style. Counterparty: Barclays UK, Notional Amount USD 6,500,000 |
March 2011 | 13,650 | (13,334 | ) | |||||||||||
Total options written | $ | 3,685,987 | $ | (6,900,531 | ) |
25
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
LIBOR London Interbank Offered Rate
MEXIBOR Mexican Interbank Offered Rate
Currency type abbreviations:
AUD Australian Dollar
MXN Mexican Peso
USD United States Dollar
Written option activity for the period ended December 31, 2010 for UBS Dynamic Alpha Fund was as follows:
Number of contracts |
Amount of premiums received |
||||||||||
Options outstanding at June 30, 2010 | 2,678 | $ | 1,073,661 | ||||||||
Options written | 10,853 | 2,235,715 | |||||||||
Options terminated in closing purchase transactions | (12,411 | ) | (2,751,358 | ) | |||||||
Options expired prior to exercise | | | |||||||||
Options outstanding at December 31, 2010 | 1,120 | $ | 558,018 |
Swaption and Foreign exchange option activity for the period ended December 31, 2010 for UBS Dynamic Alpha Fund was as follows:
Amount of premiums received |
|||||||
Swaptions and Foreign exchange options outstanding at June 30, 2010 | $ | 779,716 | |||||
Swaptions and Foreign exchange options written | 3,264,608 | ||||||
Swaptions and Foreign exchange options terminated in closing purchase transactions | (758,819 | ) | |||||
Swaptions and Foreign exchange options expired prior to exercise | (157,536 | ) | |||||
Swaptions and Foreign exchange options outstanding at December 31, 2010 | $ | 3,127,969 |
Swap agreements
UBS Dynamic Alpha Fund had outstanding currency swap agreements with the following terms as of December 31, 2010:
Counterparty |
Pay currency |
Pay contracts |
Receive currency |
Receive contracts |
Termination date |
Pay rate |
Receive rate |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
|||||||||||||||||||||||||||||||||
Citigroup Global |
|||||||||||||||||||||||||||||||||||||||||||
Markets Ltd. | AUD | 5,581,635 | USD | 5,019,743 | 02/25/40 | 4.9767 | %1 | 0.2844 | %2 | $ | (966,150 | ) | $ | (313,074 | ) | $ | (1,279,224 | ) | |||||||||||||||||||||||||
Deutsche Bank AG |
EUR | 5,238,268 | USD | 7,200,000 | 03/16/20 | 0.88353 | 0.30192 | | 153,632 | 153,632 | |||||||||||||||||||||||||||||||||
Deutsche Bank AG |
USD | 7,200,000 | EUR | 5,238,268 | 03/16/40 | 0.30192 | 1.05853 | | (180,282) | (180,282) | |||||||||||||||||||||||||||||||||
Merrill Lynch International |
USD | 5,019,743 | AUD | 5,581,635 | 02/25/20 | 0.28442 | 5.46921 | 966,150 | 261,826 | 1,227,976 | |||||||||||||||||||||||||||||||||
Merrill Lynch International |
USD | 7,292,501 | CAD | 7,416,473 | 03/16/20 | 0.30192 | 1.41574 | 129,128 | 55,168 | 184,296 | |||||||||||||||||||||||||||||||||
Merrill Lynch International |
CAD | 7,416,473 | USD | 7,292,501 | 03/16/40 | 1.21074 | 0.30192 | (129,128) | (63,374) | (192,502) | |||||||||||||||||||||||||||||||||
$ | | $ | (86,104 | ) | $ | (86,104 | ) |
1 Based on 3 month BBSW.
2 Based on 3 month USD LIBOR.
3 Based on 3 month EURIBOR.
4 Based on the 3 month Canadian Bankers Acceptance.
26
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
BBSW Bank Bill Swap Reference Rate (Australian Financial Market)
EURIBOR Euro Interbank Offered Rate
LIBOR London Interbank Offered Rate
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
EUR Euro
USD United States Dollar
UBS Dynamic Alpha Fund had outstanding interest rate swap agreements with the following terms as of December 31, 2010:
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund1 |
Payments received by the Fund1 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Citigroup Global Markets Ltd. |
USD | 27,444,000 | 08/31/14 | 2.6325 | % | 0.2944 | %2 | $ | | $ | (1,281,017 | ) | $ | (1,281,017 | ) | ||||||||||||||||
Citigroup Global Markets Ltd. |
USD | 20,960,000 | 11/15/16 | 4.0000 | 0.28562 | | (1,882,678 | ) | (1,882,678 | ) | |||||||||||||||||||||
Citigroup Global Markets Ltd. |
USD | 7,029,000 | 02/15/36 | 4.6680 | 0.28562 | | (808,165 | ) | (808,165 | ) | |||||||||||||||||||||
Credit Suisse International | EUR | 10,670,000 | 04/13/15 | 1.20403 | 2.4430 | (340,303 | ) | 302,080 | (38,223 | ) | |||||||||||||||||||||
Credit Suisse International | EUR | 5,140,000 | 04/13/20 | 3.3300 | 1.20403 | 247,389 | (210,855 | ) | 36,534 | ||||||||||||||||||||||
Credit Suisse International | USD | 25,400,000 | 05/31/15 | 1.6288 | 4 | | 388,474 | 388,474 | |||||||||||||||||||||||
Deutsche Bank AG | AUD | 11,800,000 | 09/21/19 | 5.08175 | 5.9700 | | (23,936 | ) | (23,936 | ) | |||||||||||||||||||||
Deutsche Bank AG | AUD | 6,310,000 | 09/21/39 | 5.6200 | 5.08175 | (3,103 | ) | 172,005 | 168,902 | ||||||||||||||||||||||
Deutsche Bank AG | CAD | 12,950,000 | 10/03/13 | 6 | 1.8750 | | (91,202 | ) | (91,202 | ) | |||||||||||||||||||||
Deutsche Bank AG | CAD | 11,550,000 | 10/03/16 | 2.4850 | 6 | | 249,428 | 249,428 | |||||||||||||||||||||||
Deutsche Bank AG | CAD | 3,200,000 | 10/03/21 | 6 | 3.2600 | | (108,496 | ) | (108,496 | ) | |||||||||||||||||||||
Deutsche Bank AG | GBP | 8,750,000 | 04/13/15 | 2.9375 | 1.02757 | | (342,134 | ) | (342,134 | ) | |||||||||||||||||||||
Deutsche Bank AG | GBP | 4,250,000 | 04/13/20 | 1.02757 | 3.8660 | | 257,945 | 257,945 | |||||||||||||||||||||||
Deutsche Bank AG | USD | 52,156,800 | 12/21/15 | 2.1750 | 0.30382 | | (122,410 | ) | (122,410 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 20,268,000 | 02/15/17 | 0.28562 | 3.4175 | | 1,263,021 | 1,263,021 | |||||||||||||||||||||||
Deutsche Bank AG | USD | 11,000,000 | 10/01/18 | 4.5460 | 0.29002 | | (1,345,092 | ) | (1,345,092 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 57,294,400 | 12/21/20 | 0.30382 | 3.4350 | | 448,349 | 448,349 | |||||||||||||||||||||||
Deutsche Bank AG | USD | 8,051,000 | 02/15/36 | 4.5450 | 0.28562 | | (761,570 | ) | (761,570 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 360,000 | 04/01/39 | 4.5690 | 4 | | (25,736 | ) | (25,736 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 524,000 | 09/15/39 | 4.3500 | 0.30162 | | (29,761 | ) | (29,761 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 990,000 | 10/01/39 | 4.0580 | 0.30282 | | (2,858 | ) | (2,858 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 14,242,900 | 12/21/40 | 4.1444 | 0.30382 | | (110,562 | ) | (110,562 | ) | |||||||||||||||||||||
Goldman Sachs International |
CHF | 50,000,000 | 09/15/20 | 1.9525 | 0.24678 | | 400,028 | 400,028 | |||||||||||||||||||||||
Goldman Sachs International |
EUR | 4,650,000 | 10/10/21 | 9 | 2.7950 | | (394,244 | ) | (394,244 | ) | |||||||||||||||||||||
Goldman Sachs International |
EUR | 2,050,000 | 10/10/41 | 2.8550 | 9 | | 353,762 | 353,762 |
27
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund1 |
Payments received by the Fund1 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
JPMorgan Chase Bank | EUR | 4,680,000 | 12/17/15 | 1.2540 | %3 | 2.6375 | % | $ | | $ | 51,411 | $ | 51,411 | ||||||||||||||||||
JPMorgan Chase Bank | USD | 5,870,000 | 12/08/15 | 1.8050 | 0.30342 | | 82,926 | 82,926 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 119,500,000 | 11/24/18 | 0.270610 | 0.28442 | | 351,878 | 351,878 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 6,380,000 | 12/08/20 | 0.30342 | 3.1250 | | (113,655 | ) | (113,655 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | USD | 1,570,000 | 12/08/40 | 3.9975 | 0.30342 | | 26,486 | 26,486 | |||||||||||||||||||||||
Merrill Lynch International | CAD | 13,150,000 | 12/03/12 | 6 | 1.5950 | | (51,693 | ) | (51,693 | ) | |||||||||||||||||||||
Merrill Lynch International | CAD | 11,700,000 | 12/03/15 | 2.3150 | 1.297911 | | 135,508 | 135,508 | |||||||||||||||||||||||
Merrill Lynch International | CAD | 5,290,000 | 12/15/15 | 2.6770 | 1.295711 | | (25,635 | ) | (25,635 | ) | |||||||||||||||||||||
Merrill Lynch International | CAD | 14,650,000 | 03/09/19 | 3.3960 | 1.295711 | (7,060 | ) | (363,555 | ) | (370,615 | ) | ||||||||||||||||||||
Merrill Lynch International | CAD | 3,250,000 | 12/03/20 | 6 | 3.1850 | | (50,724 | ) | (50,724 | ) | |||||||||||||||||||||
Merrill Lynch International | CAD | 7,700,000 | 03/09/29 | 1.295711 | 4.1880 | 35,443 | 309,733 | 345,176 | |||||||||||||||||||||||
Merrill Lynch International | JPY | 2,051,000,000 | 06/18/12 | 12 | 0.4738 | | 37,297 | 37,297 | |||||||||||||||||||||||
Merrill Lynch International | JPY | 1,380,000,000 | 06/18/15 | 0.6600 | 0.347513 | | (106,187 | ) | (106,187 | ) | |||||||||||||||||||||
Merrill Lynch International | JPY | 338,000,000 | 06/18/20 | 12 | 1.3013 | | 76,992 | 76,992 | |||||||||||||||||||||||
Merrill Lynch International | USD | 119,500,000 | 11/24/11 | 0.28442 | 0.413410 | | 128,839 | 128,839 | |||||||||||||||||||||||
Merrill Lynch International | USD | 14,100,000 | 10/05/13 | 1.1300 | 4 | | 82,529 | 82,529 | |||||||||||||||||||||||
Merrill Lynch International | USD | 5,600,000 | 12/16/15 | 2.2500 | 0.30192 | | (36,191 | ) | (36,191 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 11,150,000 | 10/05/16 | 4 | 2.1300 | | (329,480 | ) | (329,480 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 6,150,000 | 12/16/20 | 0.30192 | 3.5500 | | 113,823 | 113,823 | |||||||||||||||||||||||
Merrill Lynch International | USD | 3,100,000 | 10/05/21 | 2.9863 | 4 | | 194,493 | 194,493 | |||||||||||||||||||||||
Merrill Lynch International | USD | 2,970,000 | 08/15/29 | 4.2625 | 0.28562 | | (174,867 | ) | (174,867 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 3,250,000 | 02/15/36 | 4 | 3.9750 | | (61,397 | ) | (61,397 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 4,080,000 | 06/15/39 | 3.6250 | 0.30162 | | 323,226 | 323,226 | |||||||||||||||||||||||
Merrill Lynch International | USD | 1,550,000 | 12/16/40 | 4.2688 | 0.30192 | | (47,009 | ) | (47,009 | ) | |||||||||||||||||||||
$ | (67,634 | ) | $ | (3,150,876 | ) | $ | (3,218,510 | ) |
1 Payments made or received are based on the notional amount.
2 Rate based on 3 month LIBOR (USD BBA).
3 Rate based on 6 month EURIBOR.
4 Rate based on 3 month LIBOR (USD BBA). This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2010.
5 Rate based on 6 month BBSW.
6 Rate based on 3 month Canadian Bankers Acceptance. This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2010.
7 Rate based on 6 month LIBOR (GBP BBA).
8 Rate based on 6 month LIBOR (CHF BBA).
9 Rate based on 6 month EURIBOR. This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2010.
10 Rate based on 1 month LIBOR (USD BBA).
11 Rate based on 3 month Canadian Bankers Acceptance.
12 Rate based on 6 month LIBOR (JPY BBA). This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2010.
13 Rate based on 6 month LIBOR (JPY BBA).
28
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
BBA British Banking Association
BBSW Bank Bill Swap Reference Rate (Australian Financial Market)
EURIBOR Euro Interbank Offered Rate
LIBOR London Interbank Offered Rate
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP Great Britain Pound
JPY Japanese Yen
USD United States Dollar
Credit default swaps on credit indicesbuy protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund2 |
Payments received by the Fund |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Citigroup Global Markets Ltd. | USD | 3,750,000 | 06/20/15 | 5.0000 | % | 3 | $ | (117,188 | ) | $ | (171,511 | ) | $ | (288,699 | ) | ||||||||||||||||
Deutsche Bank AG | USD | 9,680,000 | 12/20/12 | 0.6000 | 4 | | 24,835 | 24,835 | |||||||||||||||||||||||
Deutsche Bank AG | USD | 5,500,000 | 06/20/15 | 5.0000 | 3 | (173,021 | ) | (251,549 | ) | (424,570 | ) | ||||||||||||||||||||
Goldman Sachs International | USD | 4,960,000 | 12/20/13 | 1.5000 | 5 | (120,094 | ) | (106,034 | ) | (226,128 | ) | ||||||||||||||||||||
Goldman Sachs International | USD | 8,460,000 | 06/20/14 | 5.0000 | 6 | (1,322,463 | ) | (546,835 | ) | (1,869,298 | ) | ||||||||||||||||||||
Goldman Sachs International | USD | 12,500,000 | 12/20/15 | 5.0000 | 7 | 1,799,306 | (1,710,769 | ) | 88,537 | ||||||||||||||||||||||
Merrill Lynch International | EUR | 3,750,000 | 06/20/15 | 1.0000 | 8 | 12,904 | (3,629 | ) | 9,275 | ||||||||||||||||||||||
Merrill Lynch International | EUR | 13,000,000 | 12/20/15 | 1.0000 | 9 | (69,853 | ) | 37,321 | (32,532 | ) | |||||||||||||||||||||
$ | 9,591 | $ | (2,728,171 | ) | $ | (2,718,580 | ) |
1 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.
2 Payments made are based on the notional amount.
3 Payment from the counterparty will be received upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.NA.HY Series 14 Index.
4 Payment from the counterparty will be received upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.NA.IG Series 9 Index.
5 Payment from the counterparty will be received upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.NA.IG Series 11 Index.
6 Payment from the counterparty will be received upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.NA.HY Series 12 Index.
7 Payment from the counterparty will be received upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.EM Series 14 Index.
8 Payment from the counterparty will be received upon the occurrence of a succession event with respect to the iTraxx Europe Series 13 Index.
9 Payment from the counterparty will be received upon the occurrence of a succession event with respect to the iTraxx Europe Series 14 Index.
29
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Credit default swaps on corporate and sovereign issuesbuy protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund2 |
Payments received by the Fund |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Citigroup Global Markets Ltd. | EUR | 1,000,000 | 12/20/15 | 1.0000 | % | 3 | $ | (18,770 | ) | $ | 4,571 | $ | (14,199 | ) | |||||||||||||||||
Citigroup Global Markets Ltd. | USD | 600,000 | 09/20/14 | 5.0000 | 4 | (53,000 | ) | (90,591 | ) | (143,591 | ) | ||||||||||||||||||||
Citigroup Global Markets Ltd. | USD | 2,600,000 | 12/20/14 | 1.0000 | 5 | 29,397 | (13,984 | ) | 15,413 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 3,000,000 | 12/20/14 | 1.0000 | 6 | 47,207 | (39,907 | ) | 7,300 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 750,000 | 09/20/15 | 1.0000 | 7 | 5,012 | 10,726 | 15,738 | |||||||||||||||||||||||
Merrill Lynch International | USD | 1,265,000 | 12/20/13 | 3.0500 | 8 | | (96,215 | ) | (96,215 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 2,740,000 | 06/20/15 | 1.0000 | 9 | 53,128 | 127,799 | 180,927 | |||||||||||||||||||||||
Merrill Lynch International | USD | 2,740,000 | 06/20/15 | 0.2500 | 10 | (37,017 | ) | 86,570 | 49,553 | ||||||||||||||||||||||
Morgan Stanley | EUR | 1,000,000 | 12/20/15 | 1.0000 | 11 | (7,090 | ) | 24,993 | 17,903 | ||||||||||||||||||||||
$ | 18,867 | $ | 13,962 | $ | 32,829 |
1 If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments made are based on the notional amount.
3 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Saint Gobain Nederland BV 5.000% bond, due 04/25/14.
4 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Textron Financial Corp. 5.125% bond, due 08/15/14.
5 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Wells Fargo & Company 0.702% bond, due 10/28/15.
6 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the JPMorgan Chase & Co. 4.750% bond, due 03/01/15.
7 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Motorola Solutions Inc. 6.500% bond, due 09/01/25.
8 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the American Express Co. 4.875% bond, due 07/15/13.
9 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Belgium Kingdom 4.250% bond, due 9/28/14.
10 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Government of France 4.250% bond, due 4/25/19.
11 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Commerzbank AG 5.500% bond, due 10/25/11.
Credit default swaps on credit indicessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
Credit spread3 |
|||||||||||||||||||||||||||
Citigroup Global Markets Ltd. |
USD | 9,250,000 | 06/20/15 | 4 | 5.0000 | % | $ | 154,965 | $ | 423,060 | $ | 578,025 | 3.8934 | % | |||||||||||||||||||||
Deutsche Bank AG | EUR | 24,200,000 | 06/20/14 | 5 | 1.8500 | (1,003,906 | ) | 1,080,139 | 76,233 | 0.8687 | |||||||||||||||||||||||||
Deutsche Bank AG | USD | 12,896,000 | 06/20/14 | 6 | 1.0000 | 170,743 | 160,635 | 331,378 | 3.8934 | ||||||||||||||||||||||||||
Deutsche Bank AG | USD | 37,550,000 | 06/20/15 | 4 | 5.0000 | 659,733 | 1,717,395 | 2,377,128 | 3.8934 |
30
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
Credit spread3 |
|||||||||||||||||||||||||||
Deutsche Bank AG | USD | 13,550,000 | 06/20/15 | 4 | 5.0000 | % | $ | 159,965 | $ | 619,726 | $ | 779,691 | 3.8934 | % | |||||||||||||||||||||
Deutsche Bank AG | USD | 9,500,000 | 07/25/45 | 7 | 0.5400 | | (5,460,658 | ) | (5,460,658 | ) | | ||||||||||||||||||||||||
Goldman Sachs International |
USD | 6,500,000 | 06/20/15 | 8 | 1.0000 | 14,442 | 61,832 | 76,274 | 0.7861 | ||||||||||||||||||||||||||
Merrill Lynch International |
EUR | 15,000,000 | 06/20/15 | 9 | 1.0000 | (72,316 | ) | 14,516 | (57,800 | ) | 0.9905 | ||||||||||||||||||||||||
Merrill Lynch International |
USD | 3,100,000 | 07/25/45 | 7 | 0.5400 | | (1,781,899 | ) | (1,781,899 | ) | | ||||||||||||||||||||||||
$ | 83,626 | $ | (3,165,254 | ) | $ | (3,081,628 | ) |
1 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.
2 Payments received are based on the notional amount.
3 Credit spreads, where available, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity.
4 Payment to the counterparty will be made upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.NA.HY Series 14 Index.
5 Payment to the counterparty will be made upon the occurrence of a succession event with respect to the iTraxx Europe Series 11 Index.
6 Payment to the counterparty will be made upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.NA.IG Series 12 Index.
7 Payment to the counterparty will be made upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones ABX-HE-A Series 6 Index.
8 Payment to the counterparty will be made upon the occurrence of a failure to pay, obligation acceleration, repudiation or restructuring of the referenced obligation specified in the Dow Jones CDX.NA.IG Series 14 Index.
9 Payment to the counterparty will be made upon the occurrence of a succession event with respect to the iTraxx Europe Series 13 Index.
Credit default swaps on corporate and sovereign issuessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
Credit spread3 |
|||||||||||||||||||||||||||
Citigroup Global Markets Ltd. |
EUR | 1,000,000 | 12/20/15 | 4 | 1.0000 | % | $ | 47,182 | $ | (18,195 | ) | $ | 28,987 | 1.3523 | % | ||||||||||||||||||||
Citigroup Global Markets Ltd. |
USD | 1,000,000 | 03/20/15 | 5 | 1.0000 | 38,346 | (16,904 | ) | 21,442 | 1.4305 | |||||||||||||||||||||||||
Credit Suisse International |
EUR | 4,700,000 | 12/20/15 | 6 | 0.2500 | 54,276 | (45,359 | ) | 8,917 | 0.4204 | |||||||||||||||||||||||||
Deutsche Bank AG | EUR | 1,000,000 | 12/20/15 | 7 | 1.0000 | 23,681 | (29,951 | ) | (6,270 | ) | 1.5298 | ||||||||||||||||||||||||
Deutsche Bank AG | USD | 600,000 | 09/20/11 | 8 | 5.0000 | 5,929 | 22,162 | 28,091 | 0.1579 | ||||||||||||||||||||||||||
Deutsche Bank AG | USD | 1,265,000 | 12/20/13 | 9 | 5.3500 | | 158,583 | 158,583 | 1.1310 | ||||||||||||||||||||||||||
Deutsche Bank AG | USD | 1,400,000 | 12/20/13 | 10 | 4.0800 | | 116,117 | 116,117 | 1.2952 | ||||||||||||||||||||||||||
Deutsche Bank AG | USD | 6,500,000 | 03/20/15 | 11 | 1.0000 | (70,881 | ) | 111,244 | 40,363 | 0.5915 | |||||||||||||||||||||||||
Deutsche Bank AG | USD | 675,000 | 06/20/15 | 12 | 1.0000 | 87,610 | (192,661 | ) | (105,051 | ) | 10.5277 |
31
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
Credit spread3 |
|||||||||||||||||||||||||||
Deutsche Bank AG | USD | 1,500,000 | 09/20/15 | 13 | 1.0000 | % | $ | 37,947 | $ | (23,435 | ) | $ | 14,512 | 1.4160 | % | ||||||||||||||||||||
Merrill Lynch International |
USD | 600,000 | 09/20/14 | 14 | 5.0000 | 13,250 | 72,790 | 86,040 | 1.8147 | ||||||||||||||||||||||||||
Morgan Stanley | USD | 500,000 | 12/20/15 | 5 | 1.0000 | 20,389 | (13,582 | ) | 6,807 | 1.6389 | |||||||||||||||||||||||||
$ | 257,729 | $ | 140,809 | $ | 398,538 |
1 If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation.
2 Payments received are based on the notional amount.
3 Credit spreads, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default or other credit event occurring for the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as "Defaulted" indicates a credit event has occurred for the referenced entity.
4 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Holcim Finance Luxembourg SA 4.375% bond, due 12/09/14.
5 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the MetLife, Inc. 5.000% bond, due 06/15/15.
6 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the United States Treasury Notes 4.875% bond, due 08/15/16.
7 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Intesa Sanpaolo SPA 4.750% bond, due 06/15/17.
8 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the BP Capital Markets America, Inc. 4.200% bond, due 06/15/18.
9 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the General Electric Capital Corp. 6.000% bond, due 06/15/12.
10 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Morgan Stanley 6.600% bond, due 04/01/12.
11 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Government of Japan 2.000% bond, due 03/21/22.
12 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Helenic Republic 5.900% bond,due 10/22/22.
13 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the QBE Insurance Group Ltd. 9.750% bond,due 03/14/14.
14 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Bombardier, Inc. 6.750% bond, due 05/01/12.
Currency type abbreviations:
EUR Euro
USD United States Dollar
32
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 301,894,284 | $ | 184,753 | $ | 0 | $ | 302,079,037 | |||||||||||
Common stocks sold short | (89,933,881 | ) | | | (89,933,881 | ) | |||||||||||||
Preferred stock | 3,252,447 | | | 3,252,447 | |||||||||||||||
Corporate bonds | | 26,373,402 | | 26,373,402 | |||||||||||||||
Asset-backed securities | | 3,165,286 | 783,900 | 3,949,186 | |||||||||||||||
Collateralized debt obligations | | | 10,177,333 | 10,177,333 | |||||||||||||||
Commercial mortgage-backed securities | | 6,048,708 | | 6,048,708 | |||||||||||||||
Mortgage & agency debt securities | | 5,716,136 | | 5,716,136 | |||||||||||||||
Municipal bonds | | 1,611,899 | | 1,611,899 | |||||||||||||||
US government obligation | | 1,499,855 | | 1,499,855 | |||||||||||||||
Non-US government obligation | | 194,929 | | 194,929 | |||||||||||||||
Investment companies | | 122,762,015 | | 122,762,015 | |||||||||||||||
Short-term investment | | 26,894,610 | | 26,894,610 | |||||||||||||||
Options purchased | 2,707,831 | 541,919 | | 3,249,750 | |||||||||||||||
Investment of cash collateral from securities loaned | | 2,930,382 | | 2,930,382 | |||||||||||||||
Other financial instruments1 | (582,904 | ) | (19,570,464 | ) | | (20,153,368 | ) | ||||||||||||
Total | $ | 217,337,777 | $ | 178,353,430 | $ | 10,961,233 | $ | 406,652,440 |
1 Other financial instruments include open futures contracts, swap agreements, options written and forward foreign currency contracts.
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Measurements using unobservable inputs (Level 3) | |||||||||||||||||||
Common stock |
Asset-backed securities |
Collateralized debt obligations |
Total | ||||||||||||||||
Assets | |||||||||||||||||||
Beginning balance | $ | 0 | $ | 766,614 | $ | 9,334,600 | $ | 10,101,214 | |||||||||||
Total gains or losses (realized/unrealized), and premiums/discounts included in earnings |
| 17,286 | 6,453,915 | 6,471,201 | |||||||||||||||
Purchases, sales, issuances, and settlements (net) | | | (5,611,182 | ) | (5,611,182 | ) | |||||||||||||
Transfers in and/or out of Level 3 | | | | | |||||||||||||||
Ending balance | $ | 0 | $ | 783,900 | $ | 10,177,333 | $ | 10,961,233 | |||||||||||
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to investments still held at 12/31/10. |
$ | 0 | $ | 7,439 | $ | 8,024,961 | $ | 8,032,400 |
See accompanying notes to financial statements.
33
UBS Global Allocation Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Global Allocation Fund (the "Fund") returned 20.37% (Class A shares returned 13.80% after the deduction of the maximum sales charge), while Class Y shares returned 20.48%. The Fund's benchmark, the GSMI Mutual Fund Index (the "Index"), returned 17.40% over the same time period.
For comparison purposes, the Russell 3000 Index returned 24.46%, the MSCI World Free Index (net) returned 23.96%, and the Citigroup World Government Bond Index returned 6.28% over the same period. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 36; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund's outperformance versus the Index was due primarily to market allocation decisions and currency strategy.
Portfolio performance summary1
What worked
• The Fund's overweight to risk assets made a significant contribution to relative performance during the six months.
The Fund was overweight to equities throughout the period, finishing the six months at a 70% equity allocation, versus the Index weight of 65%. This position was rewarded as the global economic landscape improved considerably following the recent "Great Recession."
Within equities, the Fund was overweight to US versus European stocks. The six-month period saw a large divergence between strong returns in the US, with lower growth in Europe.
The Fund's European equity positions emphasized core European countries such as Germany, while underweighting lower-growth economies like Spain. This weighting was successful as sovereign debt concerns continued into the second half of the reporting period.
• The Fund had significant exposure to investment grade corporate bonds, which was positive for performance.
We find US and European investment grade corporate credit to be attractive. We believe that healthier balance sheets, coupled with strong corporate profits, should benefit credit.
We de-emphasized Treasuries in favor of corporate bonds, and benefited when corporate bonds posted higher returns during the six months.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
34
UBS Global Allocation Fund
• The Fund's currency strategy was positive for performance.
We underweighted the euro in the Fund, versus other European currencies. This position was rewarded as sovereign debt concerns in Europe caused the euro to decline, and other European currencies to strenghten.
The Fund was also overweight to other European currencies, as well. In particular, we believed the Swedish krona and the Swiss franc were undervalued relative to the euro. We believed they had the potential to appreciate further, and this proved to be the case during the review period.
• Derivatives use contributed to Fund performance. During the review period, the Fund used derivatives for risk management purposes and as part of the Fund's investment strategies to enhance return across markets and currencies. Our use of derivatives had a positive impact on performance across both market allocation and currencies.
What didn't work
• Security selection and sector allocation in US equities made negative contributions to performance during the period.
Defensive sectors lagged the market meaningfully as the economy began to recover. As a result, an overweight to the utilities sector made a negative contribution to performance.
The Fund was underweight materials and telecommunications stocks, which rallied in the second half of the review period. We believe that, while the economy is improving, these areas appear to be already pricing in a strong global economic environment.
In the growth sleeve of the Fund, individual holdings in the financials and consumer staples sectors detracted from performance. Additionally, the Fund's health care holdings, as well as an overweight to the healthcare sector, were also headwinds for performance.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
35
UBS Global Allocation Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 20.37 | % | 11.85 | % | 2.84 | % | 5.80 | % | 5.56 | % | |||||||||||||
Class B3 | 19.75 | 10.82 | 1.99 | N/A | 5.796 | ||||||||||||||||||
Class C4 | 19.70 | 10.89 | 2.03 | N/A | 5.62 | ||||||||||||||||||
Class Y5 | 20.48 | 12.11 | 3.12 | 6.06 | 7.45 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | 13.80 | % | 5.73 | % | 1.69 | % | 5.20 | % | 5.12 | % | |||||||||||||
Class B3 | 14.75 | 5.82 | 1.71 | N/A | 5.796 | ||||||||||||||||||
Class C4 | 18.70 | 9.89 | 2.03 | N/A | 5.62 | ||||||||||||||||||
Russell 3000 Index7 | 24.46 | % | 16.93 | % | 2.74 | % | 2.16 | % | 8.61 | % | |||||||||||||
MSCI World Free Index (net)8 | 23.96 | 11.76 | 2.43 | 2.31 | 6.93 | ||||||||||||||||||
Citigroup World Government Bond Index9 | 6.28 | 5.17 | 7.09 | 7.00 | 6.32 | ||||||||||||||||||
GSMI Mutual Fund Index10 | 17.40 | 11.02 | 4.86 | 5.03 | 7.89 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.27% and 1.27%; Class B2.15% and 2.15%; Class C2.06% and 2.06%; Class Y0.99% and 0.99%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses), through the 12-month period ending October 27, 2011, do not exceed 1.35% for Class A shares, 2.10% for Class B shares, 2.10% for Class C shares and 1.10% for Class Y shares. 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.
1 Inception date of UBS Global Allocation Fund Class A shares is June 30, 1997. Inception dates of Class B and Class C shares are December 13, 2001 and November 22, 2001, respectively. Inception date of Class Y shares and, for purposes of this illustration, the indices, is August 31,1992.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees.
4 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. Prior to September 30, 2003, Class C shares were subject to a maximum front-end sales charge of 1.00%; this front-end sales charge is not reflected in the average annual total returns presented for the Class C shares shown above.
5 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
6 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 The Russell 3000 Index is designed to measure the performance of the largest 3,000 US companies representing approximately 98% of the investable US equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected. Investors should note that indices do not reflect the deduction of fees and expenses.
8 The MSCI World Free Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. As of May 2010, the index consisted of 24 developed market country indices. Dividends are reinvested after deduction of withholding tax, using tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. Had US tax rates been applied, the performance of the index would be different. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
9 The Citigroup World Government Bond Index is an unmanaged broad-based market capitalization-weighted index composed of straight (i.e., not floating rate or index-linked) government bonds with a one-year minimum maturity. The index is designed to track the government bond markets of 22 developed countries. Investors should note that indices do not reflect the deduction of fees and expenses.
10 The GSMI Mutual Fund Index is an unmanaged index compiled by the Advisor, constructed as follows: 65% MSCI All Country World Index, 15% Citigroup World Government Bond ex US Index, 15% Citigroup US Government Bond Index, 2% J.P. Morgan Emerging Markets Bond Index Global (EMBI Global),and 3% BofA Merrill Lynch US High Yield Cash Pay Constrained Index. On December 1, 2003, the 40% Russell 3000 Index replaced the 40% Wilshire 5000 Index, and on June 1, 2005, the 3% BofA Merrill Lynch US High Yield Cash Pay Constrained Index replaced the 3% BofA Merrill Lynch US High Yield Cash Pay Index. On April 30, 2009, the 65% MSCI All Country World Index replaced the 40% Russell 3000 Index, 22% MSCI World ex USA Index and 3% MSCI Emerging Markets Index (net); the 15% Citigroup World Government Bond ex US Index and 15% Citigroup US Government Bond Index replaced the 9% Citigroup World Government Bond ex US Index and the 21% Citigroup Broad Investment Grade Index. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
36
UBS Global Allocation Fund
Top ten equity holdings (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
Apple, Inc. | 1.2 | % | |||||
Exxon Mobil Corp. | 0.9 | ||||||
Wells Fargo & Co. | 0.6 | ||||||
JPMorgan Chase & Co. | 0.6 | ||||||
Illinois Tool Works, Inc. | 0.6 | ||||||
AT&T, Inc. | 0.5 | ||||||
QUALCOMM, Inc. | 0.5 | ||||||
Procter & Gamble Co. | 0.5 | ||||||
Johnson & Johnson | 0.5 | ||||||
Allergan, Inc. | 0.5 | ||||||
Total | 6.4 | % |
Country exposure, top five (unaudited)2
As of December 31, 2010
Percentage of net assets |
|||||||
United States | 37.7 | % | |||||
United Kingdom | 3.9 | ||||||
Japan | 2.8 | ||||||
Germany | 2.5 | ||||||
China | 2.0 | ||||||
Total | 48.9 | % |
Top ten long-term fixed income holdings (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
US Treasury Notes, 0.500%, due 11/30/12 |
1.9 | % | |||||
US Treasury Notes, 2.625%, due 04/30/16 |
1.0 | ||||||
US Treasury Notes, 0.375%, due 10/31/12 |
0.7 | ||||||
US Treasury Bonds, 8.000%, due 11/15/21 |
0.7 | ||||||
US Treasury Notes, 2.750%, due 10/31/13 |
0.7 | ||||||
US Treasury Notes, 3.125%, due 04/30/17 |
0.6 | ||||||
US Treasury Notes, 2.500%, due 04/30/15 |
0.5 | ||||||
US Treasury Notes, 2.625%, due 11/15/20 |
0.3 | ||||||
US Treasury Bonds, 6.250%, due 08/15/23 |
0.3 | ||||||
US Treasury Bonds, 3.875%, due 08/15/40 |
0.3 | ||||||
Total | 7.0 | % |
1 Figures represent the direct investments of UBS Global Allocation Fund. Figures would be different if a breakdown of the underlying investment companies was included.
2 Figures represent the direct investments of UBS Global Allocation Fund. If a breakdown of the underlying investment companies was included, the country exposure percentages would be as follows: United States 48.3%, United Kingdom 7.4%, Japan 5.5%, China 3.8%, Germany 3.1%.
37
UBS Global Allocation Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2010
Common stocks | |||||||
Aerospace & defense | 1.09 | % | |||||
Air freight & logistics | 0.53 | ||||||
Airlines | 0.50 | ||||||
Auto components | 0.32 | ||||||
Automobiles | 0.77 | ||||||
Beverages | 0.66 | ||||||
Biotechnology | 0.43 | ||||||
Building products | 0.29 | ||||||
Capital markets | 1.54 | ||||||
Chemicals | 1.50 | ||||||
Commercial banks | 3.09 | ||||||
Communications equipment | 1.34 | ||||||
Computers & peripherals | 2.14 | ||||||
Construction & engineering | 0.28 | ||||||
Construction materials | 0.39 | ||||||
Distributors | 0.06 | ||||||
Diversified consumer services | 0.14 | ||||||
Diversified financial services | 1.44 | ||||||
Diversified telecommunication services | 0.81 | ||||||
Electric utilities | 1.24 | ||||||
Electrical equipment | 0.12 | ||||||
Electronic equipment, instruments & components | 0.12 | ||||||
Energy equipment & services | 1.19 | ||||||
Food & staples retailing | 1.22 | ||||||
Food products | 0.58 | ||||||
Health care equipment & supplies | 1.00 | ||||||
Health care providers & services | 0.69 | ||||||
Hotels, restaurants & leisure | 1.52 | ||||||
Household durables | 0.37 | ||||||
Household products | 0.53 | ||||||
Industrial conglomerates | 0.22 | ||||||
Insurance | 1.90 | ||||||
Internet & catalog retail | 0.71 | ||||||
Internet software & services | 0.91 | ||||||
IT services | 0.41 | ||||||
Leisure equipment & products | 0.11 | ||||||
Life sciences tools & services | 0.15 | ||||||
Machinery | 2.06 | ||||||
Media | 1.73 | ||||||
Metals & mining | 1.67 | ||||||
Office electronics | 0.42 | ||||||
Oil, gas & consumable fuels | 4.23 | ||||||
Personal products | 0.42 | ||||||
Pharmaceuticals | 2.44 | ||||||
Professional services | 0.19 | ||||||
Real estate management & development | 0.26 | ||||||
Road & rail | 0.39 | ||||||
Semiconductors & semiconductor equipment | 0.97 | ||||||
Software | 1.44 | % | |||||
Specialty retail | 0.61 | ||||||
Textiles, apparel & luxury goods | 0.19 | ||||||
Tobacco | 0.20 | ||||||
Trading companies & distributors | 0.53 | ||||||
Wireless telecommunication services | 0.92 | ||||||
Total common stocks | 48.98 | % | |||||
Preferred stock | 0.21 | ||||||
Bonds | |||||||
Corporate bonds | |||||||
Commercial banks | 0.14 | ||||||
Diversified financial services | 0.11 | ||||||
Wireless telecommunication services | 0.03 | ||||||
Total corporate bonds | 0.28 | % | |||||
Mortgage & agency debt securities | 0.11 | ||||||
US government obligations | 7.61 | ||||||
Non-US government obligations | 2.62 | ||||||
Supranational bond | 0.04 | ||||||
Total bonds | 10.66 | % | |||||
Investment companies | |||||||
UBS Credit Bond Relationship Fund | 4.10 | ||||||
UBS Emerging Markets Equity Relationship Fund | 5.24 | ||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund | 14.95 | ||||||
UBS Global Corporate Bond Relationship Fund | 4.08 | ||||||
UBS High Yield Relationship Fund | 4.05 | ||||||
UBS Small-Cap Equity Relationship Fund | 2.03 | ||||||
Total investment companies | 34.45 | % | |||||
Rights | 0.002 | ||||||
Warrants | 0.19 | ||||||
Short-term investment | 3.86 | ||||||
Investment of cash collateral from securities loaned | 1.16 | ||||||
Total investments | 99.51 | % | |||||
Cash and other assets, less liabilities | 0.49 | ||||||
Net assets | 100.00 | % |
1 Figures represent the industry breakdown of direct investments of UBS Global Allocation Fund. Figures would be different if a breakdown of the underlying investment companies' industry diversification was included.
2 Amount represents less than 0.005%.
38
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks: 48.98% | |||||||||||
Australia: 0.60% | |||||||||||
National Australia Bank Ltd. | 90,462 | $ | 2,192,831 | ||||||||
Orica Ltd. | 112,870 | 2,874,542 | |||||||||
Qantas Airways Ltd.* | 836,423 | 2,172,953 | |||||||||
QBE Insurance Group Ltd. | 71,021 | 1,318,421 | |||||||||
Total Australia common stocks | 8,558,747 | ||||||||||
Belgium: 0.19% | |||||||||||
Anheuser-Busch InBev NV | 47,766 | 2,731,912 | |||||||||
Brazil: 0.61% | |||||||||||
Banco Bradesco SA ADR1 | 30,564 | 620,143 | |||||||||
BM&F Bovespa SA | 72,000 | 569,494 | |||||||||
Cia de Bebidas das Americas ADR |
36,500 | 1,132,595 | |||||||||
Cosan Ltd., Class A | 48,400 | 659,208 | |||||||||
Diagnosticos da America SA | 40,000 | 542,169 | |||||||||
Itau Unibanco Holding SA ADR | 30,580 | 734,226 | |||||||||
MMX Mineracao e Metalicos SA* |
75,159 | 508,455 | |||||||||
Petroleo Brasileiro SA ADR | 51,300 | 1,941,192 | |||||||||
Tam SA ADR | 25,800 | 627,714 | |||||||||
Vale SA ADR | 39,000 | 1,348,230 | |||||||||
Total Brazil common stocks | 8,683,426 | ||||||||||
Canada: 1.68% | |||||||||||
Canadian Oil Sands Trust | 62,800 | 1,670,582 | |||||||||
EnCana Corp.1 | 48,200 | 1,410,176 | |||||||||
Petrobank Energy & Resources Ltd.* |
53,100 | 1,348,461 | |||||||||
Petrominerales Ltd. | 32,603 | 1,087,326 | |||||||||
Potash Corp. of Saskatchewan, Inc. |
11,400 | 1,765,062 | |||||||||
Research In Motion Ltd.* | 46,900 | 2,739,096 | |||||||||
Suncor Energy, Inc. | 94,100 | 3,622,798 | |||||||||
Teck Resources Ltd., Class B1 | 70,800 | 4,399,811 | |||||||||
Toronto-Dominion Bank | 45,300 | 3,382,807 | |||||||||
TransCanada Corp.1 | 65,600 | 2,506,431 | |||||||||
Total Canada common stocks | 23,932,550 | ||||||||||
China: 2.03% | |||||||||||
Agile Property Holdings Ltd. | 414,000 | 609,325 | |||||||||
AIA Group Ltd.* | 913,317 | 2,567,412 | |||||||||
Angang Steel Co., Ltd., H Shares | 530,000 | 811,419 | |||||||||
Baidu, Inc. ADR* | 37,000 | 3,571,610 | |||||||||
BBMG Corp., H Shares | 628,000 | 851,575 | |||||||||
China Coal Energy Co., H Shares |
347,000 | 541,964 | |||||||||
China Liansu Group Holdings Ltd.* |
1,854,000 | 1,493,161 |
Shares | Value | ||||||||||
China Oilfield Services Ltd., H Shares |
588,000 | $ | 1,273,919 | ||||||||
Chongqing Machinery & Electric Co., Ltd., H Shares |
2,138,000 | 797,679 | |||||||||
CNOOC Ltd. | 566,000 | 1,342,765 | |||||||||
CSR Corp. Ltd., H Shares | 607,000 | 798,109 | |||||||||
Focus Media Holding Ltd. ADR* | 63,000 | 1,381,590 | |||||||||
Guangzhou Automobile Group Co., Ltd., H Shares |
416,000 | 573,734 | |||||||||
Industrial & Commercial Bank of China, H Shares |
354,000 | 263,696 | |||||||||
International Mining Machinery Holdings Ltd.* |
878,500 | 710,910 | |||||||||
Jardine Matheson Holdings Ltd. | 52,000 | 2,288,000 | |||||||||
Melco Crown Entertainment Ltd. ADR*1 |
221,000 | 1,405,560 | |||||||||
New World Development Ltd. | 1,292,000 | 2,426,822 | |||||||||
Shougang Concord International Enterprises Co., Ltd.* |
1,550,000 | 225,337 | |||||||||
Sina Corp.*1 | 22,900 | 1,575,978 | |||||||||
Tencent Holdings Ltd. | 40,200 | 873,531 | |||||||||
Xingda International Holdings Ltd. |
1,312,000 | 1,417,867 | |||||||||
Yanzhou Coal Mining Co., Ltd., H Shares |
224,000 | 684,438 | |||||||||
Zhongsheng Group Holdings Ltd.* |
185,500 | 403,323 | |||||||||
Total China common stocks | 28,889,724 | ||||||||||
Cyprus: 0.06% | |||||||||||
Globaltrans Investment PLC GDR2 |
49,899 | 848,283 | |||||||||
Denmark: 0.21% | |||||||||||
FLSmidth & Co. A/S | 31,679 | 3,021,348 | |||||||||
Finland: 0.21% | |||||||||||
Sampo Oyj, Class A | 109,723 | 2,939,788 | |||||||||
France: 0.46% | |||||||||||
BNP Paribas | 59,956 | 3,814,475 | |||||||||
Carrefour SA | 67,662 | 2,789,356 | |||||||||
Total France common stocks | 6,603,831 | ||||||||||
Germany: 1.17% | |||||||||||
Bayer AG | 35,136 | 2,596,459 | |||||||||
E.ON AG | 103,838 | 3,182,431 | |||||||||
Fresenius Medical Care AG & Co. KGaA |
35,475 | 2,049,329 | |||||||||
HeidelbergCement AG | 47,169 | 2,956,198 |
39
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Germany(Concluded) | |||||||||||
MAN SE | 16,957 | $ | 2,016,481 | ||||||||
Metro AG | 53,720 | 3,867,831 | |||||||||
Total Germany common stocks | 16,668,729 | ||||||||||
India: 0.24% | |||||||||||
HDFC Bank Ltd. ADR1 | 3,900 | 651,729 | |||||||||
ICICI Bank Ltd. ADR | 12,700 | 643,128 | |||||||||
Infosys Technology Ltd. ADR1 | 12,900 | 981,432 | |||||||||
Reliance Industries Ltd. GDR3 | 10,314 | 490,121 | |||||||||
Tata Motors Ltd. ADR1 | 23,400 | 686,556 | |||||||||
Total India common stocks | 3,452,966 | ||||||||||
Indonesia: 0.11% | |||||||||||
Astra International Tbk PT | 249,500 | 1,510,569 | |||||||||
Ireland: 0.80% | |||||||||||
Covidien PLC | 115,900 | 5,291,994 | |||||||||
James Hardie Industries SE CDI* | 237,180 | 1,644,745 | |||||||||
Ryanair Holdings PLC ADR | 58,300 | 1,793,308 | |||||||||
Seagate Technology PLC* | 173,400 | 2,606,202 | |||||||||
Total Ireland common stocks | 11,336,249 | ||||||||||
Japan: 2.78% | |||||||||||
Asahi Glass Co., Ltd. | 233,000 | 2,723,451 | |||||||||
Canon, Inc.1 | 63,600 | 3,297,894 | |||||||||
ITOCHU Corp. | 232,700 | 2,355,948 | |||||||||
Kao Corp. | 80,000 | 2,155,931 | |||||||||
KDDI Corp. | 375 | 2,166,215 | |||||||||
Mitsubishi Corp. | 160,600 | 4,347,811 | |||||||||
Nissan Motor Co., Ltd. | 378,000 | 3,598,891 | |||||||||
ORIX Corp. | 33,740 | 3,320,392 | |||||||||
Ricoh Co., Ltd. | 189,000 | 2,770,169 | |||||||||
Sankyo Co., Ltd. | 28,000 | 1,581,229 | |||||||||
Shin-Etsu Chemical Co., Ltd. | 43,800 | 2,373,691 | |||||||||
Sony Financial Holdings, Inc. | 677 | 2,739,186 | |||||||||
Sumitomo Mitsui Financial Group, Inc. |
99,300 | 3,537,081 | |||||||||
THK Co., Ltd. | 115,600 | 2,658,273 | |||||||||
Total Japan common stocks | 39,626,162 | ||||||||||
Kazakhstan: 0.04% | |||||||||||
Eurasian Natural Resources Corp. |
38,422 | 627,791 | |||||||||
Luxembourg: 0.19% | |||||||||||
ArcelorMittal | 70,670 | 2,680,103 | |||||||||
Malaysia: 0.25% | |||||||||||
Axiata Group Bhd* | 539,100 | 830,461 |
Shares | Value | ||||||||||
Bumiputra-Commerce Holdings Bhd |
258,100 | $ | 711,480 | ||||||||
Gamuda Bhd | 232,100 | 286,785 | |||||||||
KNM Group Bhd* | 838,000 | 771,824 | |||||||||
Malayan Banking Bhd | 359,100 | 989,898 | |||||||||
Total Malaysia common stocks | 3,590,448 | ||||||||||
Netherlands: 0.51% | |||||||||||
ASML Holding NV | 71,677 | 2,768,099 | |||||||||
LyondellBasell Industries NV, Class A* |
44,700 | 1,537,680 | |||||||||
New World Resources NV, Class A |
58,545 | 877,177 | |||||||||
Wolters Kluwer NV | 91,361 | 2,002,206 | |||||||||
Total Netherlands common stocks |
7,185,162 | ||||||||||
Norway: 0.45% | |||||||||||
Petroleum Geo-Services ASA* | 160,039 | 2,491,760 | |||||||||
Telenor ASA | 239,350 | 3,888,635 | |||||||||
Total Norway common stocks | 6,380,395 | ||||||||||
Peru: 0.03% | |||||||||||
Credicorp Ltd. | 3,300 | 392,403 | |||||||||
Philippines: 0.21% | |||||||||||
Alliance Global Group, Inc. | 3,418,000 | 975,234 | |||||||||
Megaworld Corp. | 13,979,000 | 791,324 | |||||||||
Metropolitan Bank & Trust | 484,150 | 795,681 | |||||||||
Universal Robina Corp. | 503,200 | 401,435 | |||||||||
Total Philippines common stocks | 2,963,674 | ||||||||||
Russia: 0.21% | |||||||||||
Mechel OAO ADR | 56,900 | 1,663,187 | |||||||||
Mobile Telesystems OJSC ADR | 23,600 | 492,532 | |||||||||
Uralkali GDR2 | 24,276 | 891,415 | |||||||||
Total Russia common stocks | 3,047,134 | ||||||||||
Singapore: 0.25% | |||||||||||
DBS Group Holdings Ltd. | 188,280 | 2,100,884 | |||||||||
Olam International Ltd.1 | 594,000 | 1,453,353 | |||||||||
Total Singapore common stocks | 3,554,237 | ||||||||||
South Africa: 0.30% | |||||||||||
African Bank Investments Ltd. | 135,134 | 794,906 | |||||||||
Barloworld Ltd. | 73,724 | 749,830 | |||||||||
Impala Platinum Holdings Ltd. | 9,021 | 319,018 | |||||||||
Imperial Holdings Ltd. | 43,071 | 833,502 | |||||||||
JD Group Ltd. | 64,730 | 569,919 | |||||||||
Shoprite Holdings Ltd. | 63,306 | 957,638 | |||||||||
Total South Africa common stocks |
4,224,813 |
40
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
South Korea: 0.59% | |||||||||||
Basic House Co., Ltd.* | 8,577 | $ | 138,302 | ||||||||
Doosan Infracore Co. Ltd.* | 29,930 | 738,426 | |||||||||
Glovis Co., Ltd.* | 7,081 | 929,658 | |||||||||
Hyundai Engineering & Construction Co., Ltd.* |
11,269 | 717,904 | |||||||||
Hyundai Heavy Industries Co., Ltd.* |
4,165 | 1,625,778 | |||||||||
Hyundai Motor Co.* | 10,597 | 1,620,037 | |||||||||
KB Financial Group, Inc.* | 9,832 | 519,799 | |||||||||
KIWOOM Securities Co., Ltd. | 16,393 | 839,222 | |||||||||
LG Chem Ltd.* | 1,923 | 662,519 | |||||||||
Samsung Electro-Mechanics Co. Ltd.* |
5,674 | 619,945 | |||||||||
Total South Korea common stocks |
8,411,590 | ||||||||||
Spain: 0.13% | |||||||||||
Acciona SA | 25,312 | 1,792,695 | |||||||||
Switzerland: 0.94% | |||||||||||
Credit Suisse Group AG | 78,123 | 3,147,479 | |||||||||
Novartis AG | 81,002 | 4,760,492 | |||||||||
Roche Holding AG | 19,255 | 2,821,321 | |||||||||
SGS SA | 1,602 | 2,688,276 | |||||||||
Total Switzerland common stocks |
13,417,568 | ||||||||||
Taiwan: 0.27% | |||||||||||
Formosa Chemicals & Fibre Corp. |
201,000 | 676,974 | |||||||||
HON HAI Precision Industry Co., Ltd. |
67,640 | 272,588 | |||||||||
Largan Precision Co., Ltd. | 34,000 | 845,437 | |||||||||
Powertech Technology, Inc. | 166,000 | 552,261 | |||||||||
Uni-President Enterprises Corp. | 662,600 | 982,884 | |||||||||
Yuanta Financial Holding Co., Ltd. |
635,000 | 474,783 | |||||||||
Total Taiwan common stocks | 3,804,927 | ||||||||||
Thailand: 0.15% | |||||||||||
Bangkok Bank PCL | 120,700 | 603,966 | |||||||||
Home Product Center PCL | 950,494 | 277,470 | |||||||||
Thanachart Capital PCL | 458,100 | 547,076 | |||||||||
Tisco Financial Group PCL NVDR | 558,600 | 755,115 | |||||||||
Total Thailand common stocks | 2,183,627 | ||||||||||
Turkey: 0.03% | |||||||||||
Turkiye Garanti Bankasi AS | 91,485 | 463,350 |
Shares | Value | ||||||||||
United Kingdom: 3.31% | |||||||||||
Barclays PLC | 625,986 | $ | 2,553,638 | ||||||||
BP PLC | 838,103 | 6,083,278 | |||||||||
British Sky Broadcasting Group PLC |
155,272 | 1,781,742 | |||||||||
Carnival PLC | 58,811 | 2,734,262 | |||||||||
Cobham PLC | 356,158 | 1,130,007 | |||||||||
GlaxoSmithKline PLC | 159,016 | 3,074,231 | |||||||||
Imperial Tobacco Group PLC | 91,235 | 2,799,372 | |||||||||
Lloyds Banking Group PLC* | 3,537,837 | 3,623,908 | |||||||||
Man Group PLC | 697,589 | 3,219,329 | |||||||||
Prudential PLC | 294,473 | 3,066,874 | |||||||||
Rio Tinto PLC | 72,989 | 5,105,509 | |||||||||
Sage Group PLC | 603,786 | 2,573,686 | |||||||||
Scottish & Southern Energy PLC | 127,602 | 2,437,067 | |||||||||
Tullow Oil PLC | 103,631 | 2,037,411 | |||||||||
Vodafone Group PLC | 1,893,820 | 4,895,502 | |||||||||
Total United Kingdom common stocks |
47,115,816 | ||||||||||
United States: 29.97% | |||||||||||
Adobe Systems, Inc.* | 177,600 | 5,466,528 | |||||||||
Aflac, Inc. | 107,300 | 6,054,939 | |||||||||
Agilent Technologies, Inc.* | 53,200 | 2,204,076 | |||||||||
Alexion Pharmaceuticals, Inc.* | 14,300 | 1,151,865 | |||||||||
Allergan, Inc. | 104,300 | 7,162,281 | |||||||||
Amazon.com, Inc.* | 37,900 | 6,822,000 | |||||||||
American Electric Power Co., Inc. | 150,700 | 5,422,186 | |||||||||
American Tower Corp., Class A* | 24,000 | 1,239,360 | |||||||||
Amgen, Inc.* | 52,200 | 2,865,780 | |||||||||
Amylin Pharmaceuticals, Inc.* | 35,300 | 519,263 | |||||||||
Anadarko Petroleum Corp. | 29,200 | 2,223,872 | |||||||||
Apollo Group, Inc., Class A* | 49,400 | 1,950,806 | |||||||||
Apple, Inc.* | 51,800 | 16,708,608 | |||||||||
Applied Materials, Inc. | 138,700 | 1,948,735 | |||||||||
AT&T, Inc. | 262,600 | 7,715,188 | |||||||||
Autodesk, Inc.* | 60,200 | 2,299,640 | |||||||||
Avon Products, Inc. | 130,200 | 3,783,612 | |||||||||
Baker Hughes, Inc. | 75,500 | 4,316,335 | |||||||||
Bank of New York Mellon Corp. | 130,002 | 3,926,061 | |||||||||
Baxter International, Inc. | 58,000 | 2,935,960 | |||||||||
BlackRock, Inc. | 7,400 | 1,410,292 | |||||||||
Boston Scientific Corp.* | 264,000 | 1,998,480 | |||||||||
Broadcom Corp., Class A | 51,900 | 2,260,245 | |||||||||
C.H. Robinson Worldwide, Inc. | 27,300 | 2,189,187 | |||||||||
Carnival Corp. | 145,400 | 6,704,394 | |||||||||
Celanese Corp, Series A | 37,500 | 1,543,875 | |||||||||
Cisco Systems, Inc.* | 174,600 | 3,532,158 | |||||||||
Citigroup, Inc.* | 770,100 | 3,642,573 | |||||||||
CME Group, Inc. | 5,900 | 1,898,325 | |||||||||
Comcast Corp., Class A | 301,100 | 6,615,167 |
41
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Concho Resources, Inc.* | 24,100 | $ | 2,112,847 | ||||||||
CONSOL Energy, Inc. | 42,300 | 2,061,702 | |||||||||
Crown Castle International Corp.* |
80,400 | 3,523,932 | |||||||||
CVS Caremark Corp. | 70,600 | 2,454,762 | |||||||||
Danaher Corp. | 52,500 | 2,476,425 | |||||||||
Discovery Communications, Inc., Class A* |
58,500 | 2,439,450 | |||||||||
Dover Corp. | 84,300 | 4,927,335 | |||||||||
Dow Chemical Co. | 92,900 | 3,171,606 | |||||||||
Edison International | 25,500 | 984,300 | |||||||||
EMC Corp.* | 211,700 | 4,847,930 | |||||||||
Express Scripts, Inc.* | 30,500 | 1,648,525 | |||||||||
Exxon Mobil Corp. | 180,900 | 13,227,408 | |||||||||
F5 Networks, Inc.* | 10,200 | 1,327,632 | |||||||||
FedEx Corp. | 47,500 | 4,417,975 | |||||||||
FirstEnergy Corp.1 | 104,400 | 3,864,888 | |||||||||
Fortune Brands, Inc. | 87,500 | 5,271,875 | |||||||||
Freeport-McMoRan Copper & Gold, Inc. |
21,300 | 2,557,917 | |||||||||
GameStop Corp., Class A* | 127,400 | 2,914,912 | |||||||||
General Dynamics Corp. | 86,800 | 6,159,328 | |||||||||
General Motors Co.* | 101,300 | 3,733,918 | |||||||||
Genzyme Corp.* | 21,000 | 1,495,200 | |||||||||
Goldman Sachs Group, Inc. | 38,800 | 6,524,608 | |||||||||
Google, Inc., Class A* | 11,800 | 7,008,846 | |||||||||
Hess Corp. | 52,700 | 4,033,658 | |||||||||
Hewlett-Packard Co. | 103,700 | 4,365,770 | |||||||||
Illinois Tool Works, Inc. | 152,000 | 8,116,800 | |||||||||
IntercontinentalExchange, Inc.* | 10,700 | 1,274,905 | |||||||||
International Game Technology | 222,400 | 3,934,256 | |||||||||
Interpublic Group of Cos., Inc.* | 86,300 | 916,506 | |||||||||
Intersil Corp., Class A | 109,000 | 1,664,430 | |||||||||
Johnson & Johnson | 119,300 | 7,378,705 | |||||||||
Johnson Controls, Inc. | 120,800 | 4,614,560 | |||||||||
JPMorgan Chase & Co. | 196,700 | 8,344,014 | |||||||||
Juniper Networks, Inc.* | 65,600 | 2,421,952 | |||||||||
Kellogg Co. | 120,500 | 6,155,140 | |||||||||
Kroger Co. | 220,800 | 4,937,088 | |||||||||
Las Vegas Sands Corp.* | 50,000 | 2,297,500 | |||||||||
Lowe's Cos., Inc. | 184,300 | 4,622,244 | |||||||||
Marathon Oil Corp. | 65,300 | 2,418,059 | |||||||||
Marvell Technology Group Ltd.* | 116,500 | 2,161,075 | |||||||||
MasterCard, Inc., Class A | 6,520 | 1,461,197 | |||||||||
McDonald's Corp. | 60,100 | 4,613,276 | |||||||||
Medtronic, Inc. | 107,400 | 3,983,466 | |||||||||
Merck & Co., Inc. | 138,900 | 5,005,956 | |||||||||
MetLife, Inc. | 109,400 | 4,861,736 | |||||||||
Microsoft Corp. | 120,600 | 3,367,152 |
Shares | Value | ||||||||||
Monsanto Co. | 23,900 | $ | 1,664,396 | ||||||||
Morgan Stanley | 82,800 | 2,252,988 | |||||||||
National Semiconductor Corp. | 168,300 | 2,315,808 | |||||||||
NIKE, Inc., Class B | 29,300 | 2,502,806 | |||||||||
Noble Corp. | 136,300 | 4,875,451 | |||||||||
Occidental Petroleum Corp. | 44,000 | 4,316,400 | |||||||||
Oracle Corp. | 91,900 | 2,876,470 | |||||||||
PACCAR, Inc. | 17,850 | 1,024,947 | |||||||||
Pall Corp. | 40,400 | 2,003,032 | |||||||||
Parker Hannifin Corp. | 17,400 | 1,501,620 | |||||||||
PepsiCo, Inc. | 85,600 | 5,592,248 | |||||||||
Praxair, Inc. | 14,400 | 1,374,768 | |||||||||
Precision Castparts Corp. | 17,000 | 2,366,570 | |||||||||
Priceline.com, Inc.* | 8,200 | 3,276,310 | |||||||||
Principal Financial Group, Inc. | 105,700 | 3,441,592 | |||||||||
Procter & Gamble Co. | 116,300 | 7,481,579 | |||||||||
QUALCOMM, Inc. | 154,100 | 7,626,409 | |||||||||
Raytheon Co. | 56,200 | 2,604,308 | |||||||||
Red Hat, Inc.* | 24,400 | 1,113,860 | |||||||||
Riverbed Technology, Inc.* | 40,000 | 1,406,800 | |||||||||
Roper Industries, Inc. | 23,200 | 1,773,176 | |||||||||
Ryder System, Inc. | 58,700 | 3,089,968 | |||||||||
SanDisk Corp.* | 38,600 | 1,924,596 | |||||||||
Schlumberger Ltd. | 39,100 | 3,264,850 | |||||||||
Sherwin-Williams Co. | 32,700 | 2,738,625 | |||||||||
Southwest Airlines Co. | 195,100 | 2,532,398 | |||||||||
Steel Dynamics, Inc. | 70,600 | 1,291,980 | |||||||||
Symantec Corp.* | 173,600 | 2,906,064 | |||||||||
Teradata Corp.* | 36,500 | 1,502,340 | |||||||||
Time Warner, Inc. | 174,200 | 5,604,014 | |||||||||
Ultra Petroleum Corp.* | 106,900 | 5,106,613 | |||||||||
Union Pacific Corp. | 16,700 | 1,547,422 | |||||||||
United Technologies Corp. | 40,900 | 3,219,648 | |||||||||
UnitedHealth Group, Inc. | 151,700 | 5,477,887 | |||||||||
US Bancorp | 205,900 | 5,553,123 | |||||||||
Viacom, Inc., Class B | 105,200 | 4,166,972 | |||||||||
Visa, Inc., Class A | 27,000 | 1,900,260 | |||||||||
Watson Pharmaceuticals, Inc.* | 37,300 | 1,926,545 | |||||||||
Wells Fargo & Co. | 287,700 | 8,915,823 | |||||||||
Total United States common stocks |
426,675,223 | ||||||||||
Total common stocks (cost $569,930,587) |
697,315,240 | ||||||||||
Preferred stock: 0.21% | |||||||||||
Germany: 0.21% | |||||||||||
Volkswagen AG, Preference shares |
|||||||||||
(cost $1,695,778) | 18,176 | 2,948,635 |
42
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 10.66% | |||||||||||
Corporate bonds: 0.28% | |||||||||||
France: 0.01% | |||||||||||
Societe Generale, 3.750%, due 08/21/14 |
EUR | 100,000 | $ | 136,694 | |||||||
Ireland: 0.01% | |||||||||||
GE Capital European Funding, 4.875%, due 03/06/13 |
100,000 | 140,517 | |||||||||
Netherlands: 0.01% | |||||||||||
Rabobank Nederland NV, 4.125%, due 01/14/20 |
100,000 | 134,431 | |||||||||
Norway: 0.01% | |||||||||||
DnB NOR Bank ASA, 4.500%, due 05/29/14 |
130,000 | 184,598 | |||||||||
Sweden: 0.01% | |||||||||||
Nordea Bank AB, 4.500%, due 05/12/14 |
130,000 | 184,251 | |||||||||
Switzerland: 0.01% | |||||||||||
Credit Suisse/London, 4.750%, due 08/05/19 |
100,000 | 136,850 | |||||||||
United Kingdom: 0.18% | |||||||||||
Barclays Bank PLC, 4.875%, due 08/13/19 |
120,000 | 163,276 | |||||||||
Lloyds TSB Bank PLC, 6.750%, due 10/24/18 |
GBP | 100,000 | 162,582 | ||||||||
Network Rail Infrastructure Finance PLC, 4.875%, due 03/07/12 |
600,000 | 973,443 | |||||||||
Royal Bank of Scotland PLC, 4.125%, due 11/14/11 |
230,000 | 368,047 | |||||||||
5.375%, due 09/30/19 | EUR | 150,000 | 191,025 | ||||||||
Vodafone Group PLC, 3.625%, due 11/29/12 |
280,000 | 386,624 | |||||||||
Wellcome Trust Finance, 4.750%, due 05/28/21 |
GBP | 215,000 | 350,141 | ||||||||
Total United Kingdom corporate bonds |
2,595,138 | ||||||||||
United States: 0.04% | |||||||||||
Citigroup, Inc., 5.500%, due 11/18/15 |
100,000 | 161,215 | |||||||||
Goldman Sachs Group, Inc., 5.125%, due 10/23/19 |
EUR | 150,000 | 195,709 | ||||||||
Morgan Stanley, 5.500%, due 10/02/17 |
125,000 | 169,024 | |||||||||
Total United States corporate bonds |
525,948 | ||||||||||
Total corporate bonds (cost $4,152,389) |
4,038,427 |
Face amount |
Value | ||||||||||
Mortgage & agency debt securities: 0.11% | |||||||||||
United States: 0.11% | |||||||||||
Federal Home Loan Mortgage Corp. Gold Pools, #G00194, 7.500%, due 02/01/244 |
$ | 64,834 | $ | 73,826 | |||||||
Government National Mortgage Association, Series 2001-35, Class AZ, 6.500%, due 08/20/31 |
1,350,571 | 1,439,475 | |||||||||
Total mortgage & agency debt securities (cost $1,480,265) |
1,513,301 | ||||||||||
US government obligations: 7.61% | |||||||||||
US Treasury Bonds, 3.875%, due 08/15/401 |
4,465,000 | 4,112,685 | |||||||||
5.375%, due 02/15/31 | 1,500,000 | 1,751,016 | |||||||||
6.125%, due 11/15/27 | 3,000,000 | 3,768,750 | |||||||||
6.250%, due 08/15/23 | 3,500,000 | 4,399,062 | |||||||||
8.000%, due 11/15/21 | 7,360,000 | 10,409,800 | |||||||||
US Treasury Notes, 0.375%, due 10/31/121 |
10,570,000 | 10,537,793 | |||||||||
0.500%, due 11/30/121 | 27,765,000 | 27,729,211 | |||||||||
1.250%, due 09/30/15 | 870,000 | 844,104 | |||||||||
1.375%, due 11/30/151 | 1,810,000 | 1,758,953 | |||||||||
2.500%, due 04/30/151 | 6,225,000 | 6,435,579 | |||||||||
2.625%, due 04/30/16 | 14,000,000 | 14,331,408 | |||||||||
2.625%, due 11/15/201 | 4,795,000 | 4,523,032 | |||||||||
2.750%, due 10/31/13 | 9,000,000 | 9,460,548 | |||||||||
3.125%, due 04/30/17 | 8,000,000 | 8,289,376 | |||||||||
Total US government obligations (cost $108,653,300) |
108,351,317 | ||||||||||
Non-US government obligations: 2.62% | |||||||||||
Australia: 0.02% | |||||||||||
Government of Australia, 4.500%, due 10/21/14 |
AUD | 225,000 | 223,613 | ||||||||
Austria: 0.14% | |||||||||||
Government of Austria, 4.000%, due 09/15/163 |
EUR | 610,000 | 873,523 | ||||||||
4.150%, due 03/15/373 | 785,000 | 1,095,928 | |||||||||
1,969,451 | |||||||||||
Belgium: 0.07% | |||||||||||
Government of Belgium, 3.500%, due 03/28/15 |
790,000 | 1,073,317 | |||||||||
Canada: 0.08% | |||||||||||
Government of Canada, 3.750%, due 06/01/19 |
CAD | 170,000 | 180,181 | ||||||||
5.250%, due 06/01/12 | 935,000 | 988,723 | |||||||||
1,168,904 |
43
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Non-US government obligations(Concluded) | |||||||||||
Denmark: 0.04% | |||||||||||
Government of Denmark, 4.000%, due 11/15/17 |
DKK | 2,700,000 | $ | 526,573 | |||||||
Finland: 0.07% | |||||||||||
Government of Finland, 4.375%, due 07/04/19 |
EUR | 667,000 | 979,695 | ||||||||
France: 0.13% | |||||||||||
Government of France, 4.000%, due 04/25/14 |
680,000 | 979,043 | |||||||||
4.000%, due 04/25/55 | 630,000 | 855,423 | |||||||||
1,834,466 | |||||||||||
Germany: 1.12% | |||||||||||
Bundesobligation, 2.250%, due 04/10/15 |
2,385,000 | 3,260,251 | |||||||||
4.000%, due 04/13/12 | 1,755,000 | 2,445,675 | |||||||||
4.000%, due 10/11/13 | 315,000 | 454,513 | |||||||||
Bundesrepublik Deutschland, 3.500%, due 01/04/16 |
2,635,000 | 3,776,117 | |||||||||
3.750%, due 01/04/19 | 970,000 | 1,387,918 | |||||||||
4.000%, due 01/04/37 | 1,720,000 | 2,486,011 | |||||||||
5.000%, due 07/04/12 | 210,000 | 298,482 | |||||||||
Kreditanstalt fuer Wiederaufbau, 3.875%, due 07/04/13 |
970,000 | 1,376,370 | |||||||||
5.500%, due 06/05/14 | AUD | 420,000 | 424,588 | ||||||||
15,909,925 | |||||||||||
Ireland: 0.02% | |||||||||||
Government of Ireland, 3.900%, due 03/05/12 |
EUR | 170,000 | 220,483 | ||||||||
Italy: 0.27% | |||||||||||
Buoni Poliennali Del Tesoro, 3.750%, due 08/01/21 |
540,000 | 665,404 | |||||||||
4.000%, due 02/01/17 | 1,330,000 | 1,767,877 | |||||||||
5.000%, due 08/01/34 | 1,105,000 | 1,408,097 | |||||||||
3,841,378 | |||||||||||
Mexico: 0.05% | |||||||||||
Mexican Bonos, Series M, 8.000%, due 06/11/20 |
MXN | 8,500,000 | 737,156 | ||||||||
Netherlands: 0.06% | |||||||||||
Government of Netherlands, 4.250%, due 07/15/13 |
EUR | 645,000 | 930,272 |
Face amount |
Value | ||||||||||
Spain: 0.13% | |||||||||||
Government of Spain, 3.900%, due 10/31/12 |
EUR | 1,220,000 | $ | 1,640,084 | |||||||
4.200%, due 01/31/37 | 220,000 | 225,864 | |||||||||
1,865,948 | |||||||||||
Sweden: 0.03% | |||||||||||
Government of Sweden, 6.750%, due 05/05/14 |
SEK | 2,320,000 | 391,871 | ||||||||
United Kingdom: 0.39% | |||||||||||
UK Gilts, 2.000%, due 01/22/16 |
GBP | 1,355,000 | 2,071,428 | ||||||||
2.750%, due 01/22/15 | 765,000 | 1,225,690 | |||||||||
4.250%, due 12/07/49 | 450,000 | 715,276 | |||||||||
4.750%, due 12/07/38 | 935,000 | 1,593,184 | |||||||||
5,605,578 | |||||||||||
Total non-US government obligations (cost $37,232,812) |
37,278,630 | ||||||||||
Supranational bond: 0.04% | |||||||||||
European Investment Bank, 5.375%, due 10/15/12 (cost $542,883) |
390,000 | 559,074 | |||||||||
Total bonds (cost $152,061,649) |
151,740,749 | ||||||||||
Shares | |||||||||||
Investment companies: 34.45% | |||||||||||
UBS Credit Bond Relationship Fund*5 |
4,122,673 | 58,421,570 | |||||||||
UBS Emerging Markets Equity Relationship Fund*5 |
1,870,546 | 74,630,126 | |||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund*5 |
14,761,707 | 212,797,385 | |||||||||
UBS Global Corporate Bond Relationship Fund*5 |
5,351,787 | 58,123,613 | |||||||||
UBS High Yield Relationship Fund*5 |
2,171,223 | 57,578,224 | |||||||||
UBS Small-Cap Equity Relationship Fund*5 |
514,661 | 28,919,298 | |||||||||
Total investment companies (cost $352,342,036) |
490,470,216 |
44
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Number of rights |
Value | ||||||||||
Rights: 0.00%6 | |||||||||||
Philippines: 0.00%6 | |||||||||||
Metropolitan Bank & Trust, expires 01/14/11*7,8 (cost $0) |
$ | 55,362 | $ | 27,801 | |||||||
Number of warrants |
|||||||||||
Warrants: 0.19% | |||||||||||
India: 0.03% | |||||||||||
India Infoline Ltd., strike @ USD 0.000001, expires 09/21/20* |
224,772 | 412,949 | |||||||||
Russia: 0.16% | |||||||||||
AeroflotRussian Airlines OJSC, strike @ USD 0.00001, expires 04/08/13* |
313,645 | 815,477 | |||||||||
Sberbank of Russia, strike @ USD 0.00001, expires 11/05/12* |
418,953 | 1,427,373 | |||||||||
Total Russia warrants | 2,242,850 | ||||||||||
Total warrants (cost $2,511,691) |
2,655,799 |
Shares | Value | ||||||||||
Short-term investment: 3.86% | |||||||||||
Investment company: 3.86% | |||||||||||
UBS Cash Management Prime Relationship Fund5 (cost $54,890,749) |
54,890,749 | $ | 54,890,749 | ||||||||
Investment of cash collateral from securities loaned: 1.16% | |||||||||||
UBS Private Money Market Fund LLC5 (cost $16,533,673) |
16,533,673 | 16,533,673 | |||||||||
Total investments: 99.51% (cost $1,149,966,163) |
1,416,582,862 | ||||||||||
Cash and other assets, less liabilities: 0.49% |
6,912,374 | ||||||||||
Net assets: 100.00% | $ | 1,423,495,236 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 274,458,076 | |||||
Gross unrealized depreciation | (7,841,377 | ) | |||||
Net unrealized appreciation of investments | $ | 266,616,699 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
2 Security exempt from registration pursuant to Regulation S under the Securities Act of 1933. Regulation S applies to securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. At December 31, 2010, the value of these securities amounted to $1,739,698 or 0.12% of net assets.
3 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $2,459,572 or 0.17% of net assets.
4 On September 7, 2008, the Federal Housing Finance Agency placed the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association into conservatorship, and the US Treasury guaranteed the debt issued by those organizations.
45
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
5 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Funds.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Net realized gain during the six months ended 12/31/10 |
Change in net unrealized appreciation/ depreciation during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 17,046,965 | $ | 248,509,688 | $ | 210,665,904 | $ | | $ | | $ | 54,890,749 | $ | 43,142 | |||||||||||||||||
UBS Private Money Market Fund LLC1 |
10,789,467 | 81,709,084 | 75,964,878 | | | 16,533,673 | 80,187 | ||||||||||||||||||||||||
UBS Credit Bond Relationship Fund |
74,925,815 | | 19,500,000 | 4,140,119 | (1,144,364 | ) | 58,421,570 | | |||||||||||||||||||||||
UBS Emerging Markets Equity Relationship Fund |
62,461,477 | | 4,000,000 | 1,664,125 | 14,504,524 | 74,630,126 | | ||||||||||||||||||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund |
193,561,579 | | 33,000,000 | 8,251,306 | 43,984,500 | 212,797,385 | | ||||||||||||||||||||||||
UBS Global Corporate Bond Relationship Fund |
116,724,130 | | 62,900,000 | 4,784,230 | (484,747 | ) | 58,123,613 | | |||||||||||||||||||||||
UBS High Yield Relationship Fund |
37,881,974 | 20,000,000 | 5,000,000 | 1,719,872 | 2,976,378 | 57,578,224 | | ||||||||||||||||||||||||
UBS Small-Cap Equity Relationship Fund |
31,361,478 | | 10,000,000 | 2,794,596 | 4,763,224 | 28,919,298 | | ||||||||||||||||||||||||
$ | 544,752,885 | $ | 350,218,772 | $ | 421,030,782 | $ | 23,354,248 | $ | 64,599,515 | $ | 561,894,638 | $ | 123,329 |
1 The adviser does earn a management fee from this affiliated fund, and any income earned is net of expenses. Please see the Notes to financial statements for further information.
6 Amount represents less than 0.005%.
7 Security is illiquid. At December 31, 2010, the value of this security amounted to $27,801 or 0.00% of net assets.
8 Security is being fair valued by a valuation committee under the direction of the Board of Trustees. At December 31, 2010, the value of this security amounted to $27,801 or 0.00% of net assets.
ADR American depositary receipt
CDI Chess depositary interest
GDR Global depositary receipt
GE General Electric
NVDR Non voting depository receipt
OJSC Open joint stock company
Preference
shares A special type of equity investment that shares in the earnings of the company, has limited voting rights, and may have a dividend preference. Preference shares may also have liquidation preference.
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
DKK Danish Krone
EUR Euro
GBP Great Britain Pound
MXN Mexican Peso
SEK Swedish Krona
46
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Forward foreign currency contracts
UBS Global Allocation Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Barclays Bank PLC | EUR | 7,390,000 | USD | 9,688,187 | 03/03/11 | $ | (185,691 | ) | |||||||||||
Barclays Bank PLC | HKD | 91,375,000 | USD | 11,777,178 | 03/03/11 | 15,700 | |||||||||||||
Goldman Sachs International | JPY | 585,000,000 | USD | 7,180,954 | 03/03/11 | (28,755 | ) | ||||||||||||
JPMorgan Chase Bank | CHF | 5,690,000 | USD | 5,684,884 | 03/03/11 | (404,455 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 10,630,000 | USD | 14,035,841 | 03/03/11 | (167,043 | ) | ||||||||||||
JPMorgan Chase Bank | GBP | 2,581,420 | USD | 3,999,035 | 03/03/11 | (23,919 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 13,719,465 | KRW | 15,894,000,000 | 03/03/11 | 243,430 | |||||||||||||
JPMorgan Chase Bank | USD | 15,510,981 | MXN | 195,640,000 | 03/03/11 | 263,798 | |||||||||||||
JPMorgan Chase Bank | USD | 18,061,528 | TWD | 546,000,000 | 03/03/11 | 689,867 | |||||||||||||
Morgan Stanley & Co. Inc. | CAD | 8,580,000 | USD | 8,367,466 | 03/03/11 | (251,723 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | NOK | 54,550,000 | USD | 8,801,652 | 03/03/11 | (520,442 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | USD | 12,022,360 | EUR | 9,105,000 | 03/03/11 | 142,952 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 9,405,630 | GBP | 6,000,000 | 03/03/11 | (55,070 | ) | ||||||||||||
Morgan Stanley & Co. Inc. | USD | 116,147,197 | JPY | 9,714,900,000 | 03/03/11 | 3,582,038 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 13,643,159 | PLN | 41,980,000 | 03/03/11 | 485,625 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 35,415,397 | SEK | 249,930,000 | 03/03/11 | 1,670,775 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 29,584,319 | SGD | 39,030,000 | 03/03/11 | 828,273 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 6,285,360 |
Currency type abbreviations:
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
JPY Japanese Yen
KRW Korean Won
MXN Mexican Peso
NOK Norwegian Krone
PLN Polish Zloty
SEK Swedish Krona
SGD Singapore Dollar
TWD New Taiwan Dollar
USD United States Dollar
47
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Futures contracts
UBS Global Allocation Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
10 Year US Treasury Notes, 55 contracts (USD) | March 2011 | $ | (6,831,513 | ) | $ | (6,624,063 | ) | $ | 207,450 | ||||||||||
Index futures buy contracts: | |||||||||||||||||||
Amsterdam Exchange Index, 154 contracts (EUR) | January 2011 | 14,500,712 | 14,602,873 | 102,161 | |||||||||||||||
DAX Index, 186 contracts (EUR) | March 2011 | 43,456,992 | 43,042,958 | (414,034 | ) | ||||||||||||||
Dow Jones EURO STOXX 50 Index, 759 contracts (EUR) | March 2011 | 28,886,267 | 28,338,193 | (548,074 | ) | ||||||||||||||
FTSE 100 Index, 233 contracts (GBP) | March 2011 | 21,203,561 | 21,407,519 | 203,958 | |||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
FTSE/MIB Index, 158 contracts (EUR) | March 2011 | (21,888,963 | ) | (21,329,954 | ) | 559,009 | |||||||||||||
IBEX 35 Index, 266 contracts (EUR) | January 2011 | (35,082,937 | ) | (34,802,678 | ) | 280,259 | |||||||||||||
Russell 2000 Mini Index, 370 contracts (USD) | March 2011 | (28,280,388 | ) | (28,945,100 | ) | (664,712 | ) | ||||||||||||
S&P 500 Index, 135 contracts (USD) | March 2011 | (8,462,407 | ) | (8,457,750 | ) | 4,657 | |||||||||||||
S&P Toronto Stock Exchange 60 Index, 192 contracts (CAD) | March 2011 | (29,144,118 | ) | (29,625,505 | ) | (481,387 | ) | ||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
Euro-Bund, 137 contracts (EUR) | March 2011 | 23,082,837 | 22,940,890 | (141,947 | ) | ||||||||||||||
Long Gilt, 30 contracts (GBP) | March 2011 | 5,592,296 | 5,588,906 | (3,390 | ) | ||||||||||||||
Net unrealized depreciation on futures contracts | $ | (896,050 | ) |
Currency type abbreviations:
CAD Canadian Dollar
EUR Euro
GBP Great Britain Pound
USD United States Dollar
48
UBS Global Allocation Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stocks | $ | 694,503,899 | $ | 2,811,341 | | $ | 697,315,240 | ||||||||||||
Preferred stock | 2,948,635 | | | 2,948,635 | |||||||||||||||
Corporate bonds | | 4,038,427 | | 4,038,427 | |||||||||||||||
Mortgage & agency debt securities | | 1,513,301 | | 1,513,301 | |||||||||||||||
US government obligations | | 108,351,317 | | 108,351,317 | |||||||||||||||
Non-US government obligations | | 37,278,630 | | 37,278,630 | |||||||||||||||
Supranational bond | | 559,074 | | 559,074 | |||||||||||||||
Investment companies | | 490,470,216 | | 490,470,216 | |||||||||||||||
Rights | | 27,801 | | 27,801 | |||||||||||||||
Warrants | | 2,655,799 | | 2,655,799 | |||||||||||||||
Short-term investment | | 54,890,749 | | 54,890,749 | |||||||||||||||
Investment of cash collateral from securities loaned | | 16,533,673 | | 16,533,673 | |||||||||||||||
Other financial instruments1 | (896,050 | ) | 6,285,360 | | 5,389,310 | ||||||||||||||
Total | $ | 696,556,484 | $ | 725,415,688 | | $ | 1,421,972,172 |
1 Other financial instruments include open futures contracts and forward foreign currency contracts.
See accompanying notes to financial statements.
49
UBS Global Frontier Fund
Portfolio performance
For the six months ended December 31, 2010, Class A shares of UBS Global Frontier Fund (the "Fund") returned 29.34% (Class A shares returned 22.19% after the deduction of the maximum sales charge), while Class Y shares returned 29.47%. The Fund's benchmark, the GSMI Mutual Fund Index (the "Index"), returned 17.40% over the same time period. For comparison purposes, the MSCI World Free Index (net) returned 23.96%. (Class Y shares have lower expenses than other share classes of the Fund. Returns for all share classes over various time periods are shown on page 52; please note that these returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares, while the Index returns do not reflect the deduction of fees and expenses.)
The Fund's outperformance was due primarily to market allocation decisions and leverage positioning.
Portfolio performance summary1
What worked
• The Fund's overweight to risk assets made a significant contribution to relative performance during the six months.
The Fund was overweight to equities throughout the period, finishing the six months at a 70% equity allocation, versus the Index weight of 65%. This position was rewarded as the global economic landscape improved considerably following the recent "Great Recession."
Within equities, the Fund was overweight to US versus European stocks. The six-month period saw a large divergence between strong returns in the US, with much lower growth in Europe.
The Fund's European equity positions emphasized core European countries such as Germany, while underweighting lower-growth economies like Spain. This weighting was successful as sovereign debt concerns continued into the second half of the reporting period.
• The Fund had significant exposure to investment grade corporate bonds, which was positive for performance.
We find US and European investment grade corporate credit to be attractive. We believe that healthier balance sheets, coupled with strong corporate profits, should benefit credit.
We de-emphasized Treasuries in favor of corporate bonds, and benefited when corporate bonds posted higher returns during the six months.
• The Fund's currency strategy was positive for performance.
We underweighted the euro in the Fund, versus other European currencies. This position was rewarded as sovereign debt concerns in Europe caused the euro to decline, and other European currencies to strengthen.
The Fund was also overweight to other European currencies, as well. In particular, we believed the Swedish krona and the Swiss franc were undervalued relative to the euro. We believed they had the potential to appreciate further, and this proved to be the case during the review period.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
50
UBS Global Frontier Fund
• The Fund's leverage strategy magnified positive performance during the period.
We held the amount of leverage in the Fund at its maximum level of 50% to the asset mix for the six-month period. This allowed us to take further advantage of the runup in the prices of global equities, and magnified the impact of our underweight to fixed income. We remain convinced that riskier assets like equities and investment grade corporate bonds offer attractive absolute and risk-adjusted potential returns.
• Derivatives use contributed to Fund performance. During the review period, the Fund used derivatives for risk management purposes and as part of the Fund's investment strategies to enhance return across markets and currencies. Our use of derivatives had a positive impact on performance across both market allocation and currencies.
What didn't work
• Security selection and sector allocation in US equities made negative contributions to performance during the period.
Defensive sectors lagged the market meaningfully as the economy began to recover. As a result, an overweight to the utilities sector made a negative contribution to performance.
The Fund was underweight materials and telecommunications stocks, which rallied in the second half of the year. We believe that, while the economy is improving, these areas appear to be already pricing in a strong global economic environment.
In the growth sleeve of the Fund, individual holdings in the financials and consumer staples sectors detracted from performance. Additionally, the Fund's health care holdings, as well as an overweight to the healthcare sector, were also headwinds for performance.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2010. The views and opinions in the letter were current as of February 15, 2011. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com.
51
UBS Global Frontier Fund
Average annual total returns for periods ended 12/31/10 (unaudited)
6 months | 1 year | Inception1 | |||||||||||||
Before deducting maximum sales charge | |||||||||||||||
Class A2 | 29.34 | % | 15.62 | % | (3.47 | )% | |||||||||
Class C3 | 28.90 | % | 14.72 | % | (4.17 | )% | |||||||||
Class Y4 | 29.47 | % | 15.92 | % | (3.21 | )% | |||||||||
After deducting maximum sales charge | |||||||||||||||
Class A2 | 22.19 | % | 9.28 | % | (5.04 | )% | |||||||||
Class C3 | 27.90 | % | 13.72 | % | (4.17 | )% | |||||||||
MSCI World Free Index (net)5 | 23.96 | % | 11.76 | % | (3.68 | )% | |||||||||
GSMI Mutual Fund Index6 | 17.40 | % | 11.02 | % | 1.51 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2010 prospectuses were as follows: Class A1.75% and 1.53%; Class C2.54% and 2.28%; Class Y1.48% and 1.28%. Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses.The Trust, with respect to the Fund, and UBS Global Asset Management (Americas) Inc., the Fund's investment advisor ("UBS Global AM (Americas)" or the "Advisor"), have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short), through the 12-month period ending October 27, 2011, do not exceed 1.40% for Class A shares, 2.15% for Class C shares and 1.15% for Class Y shares. 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.
1 Inception date of UBS Global Frontier Fund Class A, Class C and Class Y shares is July 26, 2007. Inception date of the indices, for the purpose of this illustration, is July 31, 2007.
2 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
3 Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees.
4 The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees.
5 The MSCI World Free Index (net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. As of May 2010, the index consisted of 24 developed market country indices. Dividends are reinvested after deduction of withholding tax, using tax rates applicable to Luxembourg holding companies, as Luxembourg applies the highest rates. Had US tax rates been applied, the performance of the index would be different. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The GSMI Mutual Fund Index is an unmanaged index compiled by the Advisor, constructed as follows: 65% MSCI All Country World Index, 15% Citigroup World Government Bond ex US Index, 15% Citigroup US Government Bond Index, 2% J.P. Morgan Emerging Markets Bond Index Global (EMBI Global),and 3% BofA Merrill Lynch US High Yield Cash Pay Constrained Index. On December 1, 2003, the 40% Russell 3000 Index replaced the 40% Wilshire 5000 Index, and on June 1, 2005, the 3% BofA Merrill Lynch US High Yield Cash Pay Constrained Index replaced the 3% BofA Merrill Lynch US High Yield Cash Pay Index. On April 30, 2009, the 65% MSCI All Country World Index replaced the 40% Russell 3000 Index, 22% MSCI World ex USA Index and 3% MSCI Emerging Markets Index (net); the 15% Citigroup World Government Bond ex US Index and 15% Citigroup US Government Bond Index replaced the 9% Citigroup World Government Bond ex US Index and the 21% Citigroup Broad Investment Grade Index. Investors should note that indices do not reflect the deduction of fees and expenses.
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
52
UBS Global Frontier Fund
Top ten fixed income holdings (unaudited)1
As of December 31, 2010
Percentage of net assets |
|||||||
US Treasury Notes, 0.500%, due 11/30/12 |
0.6 | % | |||||
Bundesrepublik Deutschland, 3.750%, due 01/04/19 |
0.4 | ||||||
Bundesrepublik Deutschland, 6.250%, due 01/04/24 |
0.4 | ||||||
Government of France, 4.250%, due 10/25/17 |
0.4 | ||||||
Bundesrepublik Deutschland, 3.250%, due 07/04/15 |
0.4 | ||||||
Government of the Netherlands, 5.000%, due 07/15/12 |
0.4 | ||||||
Government of Spain, 5.000%, due 07/30/12 |
0.3 | ||||||
Kreditanstalt fuer Wiederaufbau, 3.875%, due 07/04/13 |
0.3 | ||||||
Buoni Poliennali Del Tesoro, 4.250%, due 08/01/13 |
0.3 | ||||||
Bundesrepublik Deutschland, 4.750%, due 07/04/34 |
0.3 | ||||||
Total | 3.8 | % |
Industry diversification (unaudited)3
As a percentage of net assets as of December 31, 2010
Bonds | |||||||
Corporate bond | |||||||
Diversified financial services | 0.16 | % | |||||
Total corporate bond | 0.16 | % | |||||
US government obligations | 1.82 | ||||||
Non-US government obligations | 6.46 | ||||||
Total bonds | 8.44 | % | |||||
Investment companies | |||||||
UBS Credit Bond Relationship Fund | 6.08 | ||||||
UBS Emerging Markets Equity Relationship Fund | 13.55 | ||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund | 10.58 | ||||||
UBS Global Corporate Bond Relationship Fund | 6.09 | ||||||
UBS High Yield Relationship Fund | 6.35 | ||||||
UBS International Equity Relationship Fund | 11.00 | ||||||
UBS U.S. Large Cap Equity Relationship Fund | 16.65 | ||||||
UBS U.S. Large Cap Growth Equity Relationship Fund | 8.52 | ||||||
Total investment companies | 78.82 | % | |||||
Short-term investment | 8.28 | ||||||
Total investments | 95.54 | % | |||||
Cash and other assets, less liabilities | 4.46 | ||||||
Net assets | 100.00 | % |
Country exposure, top five (unaudited)2
As of December 31, 2010
Percentage of net assets |
|||||||
Germany | 2.2 | % | |||||
United States | 1.8 | ||||||
United Kingdom | 1.2 | ||||||
Italy | 0.7 | ||||||
France | 0.5 | ||||||
Total | 6.4 | % |
1 Figures represent the direct investments of UBS Global Frontier Fund. Figures would be different if a breakdown of the underlying investment companies was included.
2 Figures represent the direct investments of UBS Global Frontier Fund. If a breakdown of the underlying investment companies was included, the country exposure percentages would be as follows: United States 48.3%, United Kingdom 7.4%, Japan 5.5%, China 3.8%, Germany 3.1%.
3 Figures represent the industry breakdown of direct investments of UBS Global Frontier Fund. Figures would be different if a breakdown of the underlying investment companies' industry diversification was included.
53
UBS Global Frontier Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 8.44% | |||||||||||
Corporate bond: 0.16% | |||||||||||
United Kingdom: 0.16% | |||||||||||
Network Rail Infrastructure Finance PLC, 4.875%, due 03/07/12 (cost $113,778) |
GBP | 70,000 | $ | 113,568 | |||||||
US government obligations: 1.82% | |||||||||||
US Treasury Bonds, 3.875%, due 08/15/40 |
$ | 100,000 | 92,109 | ||||||||
6.250%, due 08/15/23 | 70,000 | 87,981 | |||||||||
6.625%, due 02/15/27 | 105,000 | 138,108 | |||||||||
US Treasury Notes, 0.375%, due 10/31/121 |
105,000 | 104,680 | |||||||||
0.500%, due 11/30/121 | 395,000 | 394,491 | |||||||||
0.875%, due 01/31/121 | 30,000 | 30,168 | |||||||||
1.250%, due 09/30/15 | 45,000 | 43,660 | |||||||||
1.375%, due 11/30/15 | 95,000 | 92,321 | |||||||||
2.500%, due 04/30/151 | 170,000 | 175,751 | |||||||||
4.625%, due 07/31/12 | 120,000 | 127,884 | |||||||||
Total US government obligations (cost $1,268,042) |
1,287,153 | ||||||||||
Non-US government obligations: 6.46% | |||||||||||
Austria: 0.31% | |||||||||||
Republic of Austria, 4.350%, due 03/15/192 |
EUR | 150,000 | 216,370 | ||||||||
Belgium: 0.17% | |||||||||||
Kingdom of Belgium, Series 56, 3.500%, due 03/28/15 |
90,000 | 122,277 | |||||||||
Canada: 0.18% | |||||||||||
Government of Canada, 4.000%, due 06/01/16 |
CAD | 40,000 | 43,199 | ||||||||
5.250%, due 06/01/12 | 80,000 | 84,597 | |||||||||
127,796 | |||||||||||
Denmark: 0.10% | |||||||||||
Government of Denmark, 4.000%, due 11/15/17 |
DKK | 370,000 | 72,160 | ||||||||
Finland: 0.20% | |||||||||||
Government of Finland, 3.875%, due 09/15/17 |
EUR | 100,000 | 144,075 | ||||||||
France: 0.48% | |||||||||||
Government of France, 4.250%, due 10/25/17 |
190,000 | 276,545 | |||||||||
4.750%, due 04/25/35 | 40,000 | 60,567 | |||||||||
337,112 |
Face amount |
Value | ||||||||||
Germany: 2.22% | |||||||||||
Bundesrepublik Deutschland, 3.250%, due 07/04/15 |
EUR | 185,000 | $ | 262,716 | |||||||
3.750%, due 01/04/17 | 75,000 | 108,465 | |||||||||
3.750%, due 01/04/19 | 210,000 | 300,477 | |||||||||
4.750%, due 07/04/34 | 140,000 | 223,075 | |||||||||
5.000%, due 07/04/12 | 10,000 | 14,213 | |||||||||
6.250%, due 01/04/24 | 170,000 | 298,925 | |||||||||
Kreditanstalt fuer Wiederaufbau, 3.875%, due 07/04/13 |
160,000 | 227,030 | |||||||||
4.625%, due 10/12/12 | 30,000 | 42,501 | |||||||||
5.500%, due 06/05/14 | AUD | 95,000 | 96,038 | ||||||||
1,573,440 | |||||||||||
Ireland: 0.05% | |||||||||||
Republic of Ireland, 3.900%, due 03/05/12 |
EUR | 25,000 | 32,424 | ||||||||
Italy: 0.74% | |||||||||||
Buoni Poliennali Del Tesoro, 4.000%, due 02/01/37 |
185,000 | 202,457 | |||||||||
4.250%, due 08/01/13 | 165,000 | 226,562 | |||||||||
4.500%, due 08/01/18 | 70,000 | 93,906 | |||||||||
522,925 | |||||||||||
Mexico: 0.09% | |||||||||||
Mexican Bonos, Series M, 8.000%, due 06/11/20 |
MXN | 700,000 | 60,707 | ||||||||
Netherlands: 0.42% | |||||||||||
Government of the Netherlands, 4.000%, due 07/15/18 |
EUR | 40,000 | 57,681 | ||||||||
5.000%, due 07/15/12 | 170,000 | 241,748 | |||||||||
299,429 | |||||||||||
Spain: 0.37% | |||||||||||
Government of Spain, 4.200%, due 01/31/37 |
25,000 | 25,666 | |||||||||
5.000%, due 07/30/12 | 175,000 | 239,393 | |||||||||
265,059 | |||||||||||
Sweden: 0.06% | |||||||||||
Government of Sweden, 6.750%, due 05/05/14 |
SEK | 240,000 | 40,538 | ||||||||
United Kingdom: 1.07% | |||||||||||
UK Gilts, 2.000%, due 01/22/16 |
GBP | 110,000 | 168,160 | ||||||||
2.250%, due 03/07/14 | 130,000 | 206,919 | |||||||||
3.750%, due 09/07/19 | 35,000 | 56,295 | |||||||||
4.000%, due 03/07/22 | 30,000 | 48,087 | |||||||||
4.250%, due 12/07/49 | 45,000 | 71,528 |
54
UBS Global Frontier Fund
Portfolio of investments
December 31, 2010 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Non-US government obligations(Concluded) | |||||||||||
United Kingdom(Concluded) | |||||||||||
4.750%, due 12/07/38 | GBP | 100,000 | $ | 170,394 | |||||||
5.250%, due 06/07/12 | 20,000 | 33,150 | |||||||||
754,533 | |||||||||||
Total non-US government obligations (cost $4,616,658) |
4,568,845 | ||||||||||
Total bonds (cost $5,998,478) |
5,969,566 | ||||||||||
Shares | |||||||||||
Investment companies: 78.82% | |||||||||||
UBS Credit Bond Relationship Fund*3 | 303,412 | 4,299,584 | |||||||||
UBS Emerging Markets Equity Relationship Fund*3 |
240,192 | 9,583,062 | |||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund*3 |
518,825 | 7,479,118 | |||||||||
UBS Global Corporate Bond Relationship Fund*3 |
396,242 | 4,303,430 | |||||||||
UBS High Yield Relationship Fund*3 | 169,412 | 4,492,604 |
Shares | Value | ||||||||||
UBS International Equity Relationship Fund*3 |
425,216 | $ | 7,777,584 | ||||||||
UBS U.S. Large Cap Equity Relationship Fund*3 |
603,807 | 11,776,166 | |||||||||
UBS U.S. Large Cap Growth Equity Relationship Fund*3 |
448,986 | 6,023,643 | |||||||||
Total investment companies (cost $38,988,048) |
55,735,191 | ||||||||||
Short-term investment: 8.28% | |||||||||||
Investment company: 8.28% | |||||||||||
UBS Cash Management Prime Relationship Fund3 (cost $5,855,053) |
5,855,053 | 5,855,053 | |||||||||
Total investments: 95.54% (cost $50,841,579) |
67,559,810 | ||||||||||
Cash and other assets, less liabilities: 4.46% |
3,152,160 | ||||||||||
Net assets: 100.00% | $ | 70,711,970 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized appreciation consisted of:
Gross unrealized appreciation | $ | 16,851,747 | |||||
Gross unrealized depreciation | (133,516 | ) | |||||
Net unrealized appreciation of investments | $ | 16,718,231 |
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2010.
2 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities are considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2010, the value of these securities amounted to $216,370 or 0.31% of net assets.
55
UBS Global Frontier Fund
Portfolio of investments
December 31, 2010 (unaudited)
3 The table below details the Fund's investments in funds advised by the same advisor as the Fund. The advisor does not earn a management fee from the affiliated UBS Relationship Funds.
Security description |
Value 06/30/10 |
Purchases during the six months ended 12/31/10 |
Sales during the six months ended 12/31/10 |
Net realized gain during the six months ended 12/31/10 |
Change in net unrealized appreciation/ depreciation during the six months ended 12/31/10 |
Value 12/31/10 |
Income earned from affiliate for the six months ended 12/31/10 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 625,102 | $ | 19,978,040 | $ | 14,748,089 | $ | | $ | | $ | 5,855,053 | $ | 3,813 | |||||||||||||||||
UBS Credit Bond Relationship Fund |
4,005,338 | 1,500,000 | 1,350,000 | 292,173 | (147,927 | ) | 4,299,584 | | |||||||||||||||||||||||
UBS Emerging Markets Equity Relationship Fund |
8,982,575 | | 1,600,000 | 804,934 | 1,395,553 | 9,583,062 | | ||||||||||||||||||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund |
6,080,116 | 600,000 | 1,000,000 | 215,271 | 1,583,731 | 7,479,118 | | ||||||||||||||||||||||||
UBS Global Corporate Bond Relationship Fund |
7,355,743 | 900,000 | 4,300,000 | 372,708 | (25,021 | ) | 4,303,430 | | |||||||||||||||||||||||
UBS High Yield Relationship Fund |
2,560,339 | 1,600,000 | | | 332,265 | 4,492,604 | | ||||||||||||||||||||||||
UBS International Equity Relationship Fund |
6,453,919 | 500,000 | 900,000 | 283,640 | 1,440,025 | 7,777,584 | | ||||||||||||||||||||||||
UBS U.S. Large Cap Equity Relationship Fund |
11,425,002 | | 2,000,000 | 465,440 | 1,885,724 | 11,776,166 | | ||||||||||||||||||||||||
UBS U.S. Large Cap Growth Equity Relationship Fund |
5,368,075 | | 800,000 | 313,583 | 1,141,985 | 6,023,643 | | ||||||||||||||||||||||||
$ | 52,856,209 | $ | 25,078,040 | $ | 26,698,089 | $ | 2,747,749 | $ | 7,606,335 | $ | 61,590,244 | $ | 3,813 |
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
DKK Danish Krone
EUR Euro
GBP Great Britain Pound
MXN Mexican Peso
SEK Swedish Krona
56
UBS Global Frontier Fund
Portfolio of investments
December 31, 2010 (unaudited)
Forward foreign currency contracts
UBS Global Frontier Fund had the following open forward foreign currency contracts as of December 31, 2010:
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
JPMorgan Chase Bank | EUR | 570,000 | USD | 752,303 | 03/03/11 | $ | (9,281 | ) | |||||||||||
JPMorgan Chase Bank | GBP | 285,000 | USD | 440,627 | 03/03/11 | (3,524 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 724,333 | AUD | 760,000 | 03/03/11 | 47,325 | |||||||||||||
JPMorgan Chase Bank | USD | 454,550 | CAD | 465,000 | 03/03/11 | 12,574 | |||||||||||||
JPMorgan Chase Bank | USD | 639,425 | CHF | 640,000 | 03/03/11 | 45,492 | |||||||||||||
JPMorgan Chase Bank | USD | 1,934,766 | EUR | 1,465,000 | 03/03/11 | 22,640 | |||||||||||||
JPMorgan Chase Bank | USD | 3,846,344 | GBP | 2,455,000 | 03/03/11 | (20,408 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 324,157 | HKD | 2,515,000 | 03/03/11 | (435 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 1,135,088 | KRW | 1,315,000,000 | 03/03/11 | 20,140 | |||||||||||||
JPMorgan Chase Bank | USD | 868,627 | MXN | 10,950,000 | 03/03/11 | 14,290 | |||||||||||||
JPMorgan Chase Bank | USD | 356,623 | MYR | 1,128,000 | 03/03/11 | 7,828 | |||||||||||||
JPMorgan Chase Bank | USD | 1,129,916 | PLN | 3,465,000 | 03/03/11 | 36,264 | |||||||||||||
JPMorgan Chase Bank | USD | 2,367,569 | SEK | 16,680,000 | 03/03/11 | 107,514 | |||||||||||||
JPMorgan Chase Bank | USD | 2,128,143 | SGD | 2,810,000 | 03/03/11 | 61,439 | |||||||||||||
JPMorgan Chase Bank | USD | 1,184,254 | TWD | 35,800,000 | 03/03/11 | 45,233 | |||||||||||||
Morgan Stanley & Co. Inc. | USD | 10,815,011 | JPY | 904,600,000 | 03/03/11 | 333,540 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 720,631 |
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
JPY Japanese Yen
KRW Korean Won
MXN Mexican Peso
MYR Malaysian Ringgit
PLN Polish Zloty
SEK Swedish Krona
SGD Singapore Dollar
TWD New Taiwan Dollar
USD United States Dollar
57
UBS Global Frontier Fund
Portfolio of investments
December 31, 2010 (unaudited)
Concluded
Futures contracts
UBS Global Frontier Fund had the following open futures contracts as of December 31, 2010:
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
Index futures buy contracts: | |||||||||||||||||||
Amsterdam Exchange Index, 4 contracts (EUR) | January 2011 | $ | 376,642 | $ | 379,296 | $ | 2,654 | ||||||||||||
DAX Index, 9 contracts (EUR) | March 2011 | 2,102,758 | 2,082,724 | (20,034 | ) | ||||||||||||||
Dow Jones EURO STOXX 50 Index, 193 contracts (EUR) | March 2011 | 7,345,256 | 7,205,891 | (139,365 | ) | ||||||||||||||
FTSE 100 Index, 27 contracts (GBP) | March 2011 | 2,457,065 | 2,480,700 | 23,635 | |||||||||||||||
Hang Seng Stock Index, 3 contracts (HKD) | January 2011 | 441,865 | 444,241 | 2,376 | |||||||||||||||
OMX Stockholm 30 Index, 77 contracts (SEK) | January 2011 | 1,319,695 | 1,324,615 | 4,920 | |||||||||||||||
S&P 500 Index, 239 contracts (USD) | March 2011 | 14,674,122 | 14,973,350 | 299,228 | |||||||||||||||
S&P Toronto Stock Exchange 60 Index, 4 contracts (CAD) | March 2011 | 607,203 | 617,198 | 9,995 | |||||||||||||||
SPI 200 Index, 9 contracts (AUD) | March 2011 | 1,097,273 | 1,088,515 | (8,758 | ) | ||||||||||||||
TOPIX Index, 27 contracts (JPY) | March 2011 | 2,922,074 | 2,979,677 | 57,603 | |||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
FTSE/MIB Index, 5 contracts (EUR) | March 2011 | (692,686 | ) | (674,999 | ) | 17,687 | |||||||||||||
IBEX 35 Index, 11 contracts (EUR) | January 2011 | (1,450,798 | ) | (1,439,208 | ) | 11,590 | |||||||||||||
Net unrealized appreciation on futures contracts | $ | 261,531 |
Currency type abbreviations:
AUD Australian Dollar
CAD Canadian Dollar
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
JPY Japanese Yen
SEK Swedish Krona
USD United States Dollar
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments:
Measurements at 12/31/10 | |||||||||||||||||||
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Corporate bond | $ | | $ | 113,568 | | $ | 113,568 | ||||||||||||
US government obligations | | 1,287,153 | | 1,287,153 | |||||||||||||||
Non-US government obligations | | 4,568,845 | | 4,568,845 | |||||||||||||||
Investment companies | | 55,735,191 | | 55,735,191 | |||||||||||||||
Short-term investment | | 5,855,053 | | 5,855,053 | |||||||||||||||
Other financial instruments1 | 261,531 | 720,631 | | 982,162 | |||||||||||||||
Total | $ | 261,531 | $ | 68,280,441 | | $ | 68,541,972 |
1 Other financial instruments include open futures contracts and forward foreign currency contracts.
See accompanying notes to financial statements.
58
The UBS Funds
December 31, 2010 (unaudited)
Explanation of expense disclosure (unaudited)
As a shareholder of the Funds, you incur two types of costs: (1) transactional costs (as applicable); including sales charges (loads); and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees (if applicable); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example below is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, July 1, 2010 to December 31, 2010.
Actual expenses
The first line of each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over a period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on that Fund's actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not that Fund's actual return for each class of shares. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs (as applicable), such as sales charges (loads). Therefore, the second line in the table for each class of shares is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
This projection assumes that annualized expense ratios were in effect during the period July 1, 2010 to December 31, 2010.
59
The UBS Funds
December 31, 2010 (unaudited)
Beginning account value July 1, 2010 |
Ending account value December 31, 2010 |
Expenses paid during period* 07/01/10 12/31/10 |
Expense ratio during period |
||||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,061.70 | $ | 8.89 | 1.71 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,016.59 | 8.69 | 1.71 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,059.30 | 12.77 | 2.46 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,012.80 | 12.48 | 2.46 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,058.80 | 12.77 | 2.46 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,012.80 | 12.48 | 2.46 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,062.80 | 7.38 | 1.42 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.05 | 7.22 | 1.42 | |||||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,203.70 | 6.78 | 1.22 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.06 | 6.21 | 1.22 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,197.50 | 11.63 | 2.10 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.62 | 10.66 | 2.10 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,197.00 | 11.08 | 2.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.12 | 10.16 | 2.00 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,204.80 | 5.17 | 0.93 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.52 | 4.74 | 0.93 | |||||||||||||||||||
UBS Global Frontier Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 1,293.40 | 8.09 | 1.40 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.15 | 7.12 | 1.40 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,289.00 | 12.40 | 2.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.37 | 10.92 | 2.15 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,294.70 | 6.65 | 1.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.41 | 5.85 | 1.15 |
* Expenses are equal to the Fund's annualized net expense ratios, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
60
The UBS Funds
Financial statements
Statement of assets and liabilities
December 31, 2010 (unaudited)
UBS Dynamic Alpha Fund |
UBS Global Allocation Fund |
UBS Global Frontier Fund |
|||||||||||||
Assets: | |||||||||||||||
Investments, at cost: | |||||||||||||||
Unaffiliated issuers | $ | 350,179,259 | $ | 726,199,705 | $ | 5,998,478 | |||||||||
Affiliated issuers | 126,671,893 | 407,232,785 | 44,843,101 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | 2,930,382 | 16,533,673 | | ||||||||||||
Foreign currency, at cost | 1,724,888 | 2,886,610 | 27,496 | ||||||||||||
$ | 481,506,422 | $ | 1,152,852,773 | $ | 50,869,075 | ||||||||||
Investments, at value: | |||||||||||||||
Unaffiliated issuers | $ | 364,152,682 | $ | 854,688,224 | $ | 5,969,566 | |||||||||
Affiliated issuers | 149,656,625 | 545,360,965 | 61,590,244 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | 2,930,382 | 16,533,673 | | ||||||||||||
Foreign currency, at value | 1,826,925 | 2,971,824 | 29,759 | ||||||||||||
Cash | | 5,274 | | ||||||||||||
Receivables: | |||||||||||||||
Investment securities sold | 4,418,057 | 1,779,946 | | ||||||||||||
Interest | 783,263 | 1,345,730 | 102,057 | ||||||||||||
Dividends | 296,682 | 593,299 | | ||||||||||||
Foreign tax reclaims | 241,857 | 154,223 | | ||||||||||||
Fund shares sold | 126,377 | 455,645 | 85,516 | ||||||||||||
Cash collateral for futures contracts | 23,808,433 | 18,611,063 | 2,471,475 | ||||||||||||
Cash collateral for securities sold short | 38,735,380 | | | ||||||||||||
Cash collateral for swap agreements | 16,720,000 | | | ||||||||||||
Outstanding swap agreements, at value2 | 11,095,873 | | | ||||||||||||
Unrealized appreciation on forward foreign currency contracts | 7,231,455 | 7,922,458 | 754,279 | ||||||||||||
Other assets | 66,741 | 105,850 | 24,489 | ||||||||||||
Total assets | 622,090,732 | 1,450,528,174 | 71,027,385 | ||||||||||||
Liabilities: | |||||||||||||||
Payables: | |||||||||||||||
Cash collateral from securities loaned | 2,930,382 | 16,533,673 | | ||||||||||||
Investment securities purchased | 5,589,471 | 2,082,205 | | ||||||||||||
Investment advisory and administration fee | 374,789 | 997,243 | 46,840 | ||||||||||||
Fund shares redeemed | 2,540,373 | 4,681,846 | 114,292 | ||||||||||||
Custody and fund accounting fees | 37,338 | 85,173 | 8,556 | ||||||||||||
Distribution and service fees | 143,418 | 515,116 | 24,240 | ||||||||||||
Trustees' fees | 14,429 | 30,031 | 5,553 | ||||||||||||
Dividends payable for securities sold short | 41,550 | | | ||||||||||||
Due to custodian | 138,358 | | 9 | ||||||||||||
Variation margin | 358,378 | 72,930 | 50,186 | ||||||||||||
Accrued expenses | 176,186 | 397,623 | 32,091 | ||||||||||||
Options written, at value3 | 6,900,531 | | | ||||||||||||
Securities sold short, at value4 | 89,933,881 | | | ||||||||||||
Outstanding swap agreements, at value2 | 20,071,507 | | | ||||||||||||
Unrealized depreciation on forward foreign currency contracts | 11,158,254 | 1,637,098 | 33,648 | ||||||||||||
Total liabilities | 140,408,845 | 27,032,938 | 315,415 | ||||||||||||
Net assets | $ | 481,681,887 | $ | 1,423,495,236 | $ | 70,711,970 |
1 The market value of securities loaned by UBS Dynamic Alpha Fund, UBS Global Allocation Fund and UBS Global Frontier Fund as of December 31, 2010 was $2,831,824, $21,497,835 and $695,102, respectively.
2 Net upfront payments made by UBS Dynamic Alpha Fund were $302,179.
3 Premiums received by UBS Dynamic Alpha Fund were $3,685,987.
4 Proceeds from securities sold short by UBS Dynamic Alpha Fund were $65,367,865.
See accompanying notes to financial statements.
61
The UBS Funds
Financial statements
Statement of assets and liabilities (continued)
December 31, 2010 (unaudited)
UBS Dynamic Alpha Fund |
UBS Global Allocation Fund |
UBS Global Frontier Fund1 |
|||||||||||||
Net assets consist of: | |||||||||||||||
Beneficial interest | $ | 887,207,532 | $ | 2,381,878,649 | $ | 85,643,780 | |||||||||
Distributions in excess of net investment income | (8,581,945 | ) | (4,956,834 | ) | (1,967,492 | ) | |||||||||
Accumulated net realized loss | (393,558,443 | ) | (1,225,542,374 | ) | (30,669,027 | ) | |||||||||
Net unrealized appreciation (depreciation) | (3,385,257 | ) | 272,115,795 | 17,704,709 | |||||||||||
Net assets | $ | 481,681,887 | $ | 1,423,495,236 | $ | 70,711,970 | |||||||||
Class A: | |||||||||||||||
Net assets | $ | 295,468,248 | $ | 838,590,045 | $ | 54,349,142 | |||||||||
Shares outstanding | 48,082,089 | 84,141,644 | 6,867,848 | ||||||||||||
Net asset value and redemption proceeds per share | $ | 6.15 | $ | 9.97 | $ | 7.91 | |||||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 6.51 | $ | 10.55 | $ | 8.37 | |||||||||
Class B: | |||||||||||||||
Net assets | $ | 4,150,910 | $ | 11,975,988 | N/A | ||||||||||
Shares outstanding | 705,510 | 1,196,332 | N/A | ||||||||||||
Net asset value and offering price per share | $ | 5.88 | $ | 10.01 | N/A | ||||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 5.59 | $ | 9.51 | N/A | ||||||||||
Class C: | |||||||||||||||
Net assets | $ | 87,714,998 | $ | 388,079,730 | $ | 15,479,881 | |||||||||
Shares outstanding | 14,905,327 | 39,867,552 | 1,952,239 | ||||||||||||
Net asset value and offering price per share | $ | 5.88 | $ | 9.73 | $ | 7.93 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 5.82 | $ | 9.63 | $ | 7.85 | |||||||||
Class Y: | |||||||||||||||
Net assets | $ | 94,347,731 | $ | 184,849,473 | $ | 882,947 | |||||||||
Shares outstanding | 15,118,331 | 18,201,230 | 111,672 | ||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 6.24 | $ | 10.16 | $ | 7.91 |
1 UBS Global Frontier Fund does not offer Class B shares.
2 For Class A, the maximum sales charge is 5.50%. Classes B, C and Y have no front-end sales charges. For Class A, the maximum contingent deferred sales charge of 1.00% 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 on original purchases of $1 million or more that were not subject to a front-end sales charge made within one year of the purchase date. For Class B, the maximum contingent deferred sales charge is 5.00%. Class C maximum contingent deferred sales charge is 1.00%. Class Y has no contingent deferred sales charge.
62
The UBS Funds
Financial statements
Statement of operations
For the six months ended December 31, 2010 (unaudited)
UBS Dynamic Alpha Fund |
UBS Global Allocation Fund |
UBS Global Frontier Fund |
|||||||||||||
Investment income: | |||||||||||||||
Dividends | $ | 2,442,960 | $ | 6,935,245 | $ | | |||||||||
Interest and other | 3,269,460 | 1,427,350 | 70,056 | ||||||||||||
Affiliated interest | 34,557 | 43,142 | 3,813 | ||||||||||||
Securities lending-net | 27,323 | 80,187 | 156 | ||||||||||||
Foreign tax withheld | (84,381 | ) | (107,629 | ) | | ||||||||||
Total income | 5,689,919 | 8,378,295 | 74,025 | ||||||||||||
Expenses: | |||||||||||||||
Advisory and administration | $ | 2,391,352 | $ | 5,967,120 | $ | 354,340 | |||||||||
Service and distribution: | |||||||||||||||
Class A | 404,539 | 1,067,809 | 67,012 | ||||||||||||
Class B | 22,216 | 68,688 | | ||||||||||||
Class C | 489,171 | 1,977,646 | 74,852 | ||||||||||||
Transfer agency and related service fees: | |||||||||||||||
Class A | 131,758 | 296,395 | 11,653 | ||||||||||||
Class B | 4,205 | 16,036 | | ||||||||||||
Class C | 50,669 | 201,700 | 6,104 | ||||||||||||
Class Y | 8,267 | 27,445 | 118 | ||||||||||||
Custodian and fund accounting | 113,402 | 242,714 | 25,223 | ||||||||||||
Federal and state registration | 25,973 | 27,178 | 18,594 | ||||||||||||
Professional services | 60,206 | 59,890 | 37,896 | ||||||||||||
Shareholder reports | 27,933 | 59,161 | 5,499 | ||||||||||||
Trustees | 28,280 | 59,181 | 11,269 | ||||||||||||
Dividend expense and security loan fees for securities sold short | 930,928 | | | ||||||||||||
Other | 44,324 | 92,456 | 7,528 | ||||||||||||
Total expenses | 4,733,223 | 10,163,419 | 620,088 | ||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (56,697 | ) | (2,343 | ) | (80,046 | ) | |||||||||
Net expenses | 4,676,526 | 10,161,076 | 540,042 | ||||||||||||
Net investment income (loss) | 1,013,393 | (1,782,781 | ) | (466,017 | ) | ||||||||||
Net realized gain (loss) on: | |||||||||||||||
Investments in unaffiliated issuers | 19,210,563 | 40,373,375 | 33,641 | ||||||||||||
Investments in affiliated issuers | 5,614,411 | 23,354,248 | 2,747,749 | ||||||||||||
Futures contracts | (16,878,961 | ) | (5,521,058 | ) | 3,230,353 | ||||||||||
Options written | 2,011,542 | | | ||||||||||||
Securities sold short | (4,516,614 | ) | | | |||||||||||
Swap agreements | (2,987,109 | ) | | | |||||||||||
Forward foreign currency contracts | (21,608,254 | ) | 15,816,539 | 2,044,157 | |||||||||||
Foreign currency transactions | 224,039 | 88,217 | (19,207 | ) | |||||||||||
Net realized gain (loss) | (18,930,383 | ) | 74,111,321 | 8,036,693 | |||||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||||||
Investments | 67,260,506 | 183,135,713 | 7,754,320 | ||||||||||||
Futures contracts | (4,657,273 | ) | 2,140,920 | 1,805,617 | |||||||||||
Options written | (3,219,730 | ) | | | |||||||||||
Securities sold short | (14,147,926 | ) | | | |||||||||||
Swap agreements | 4,530,024 | | | ||||||||||||
Forward foreign currency contracts | (705,293 | ) | 3,569,742 | 239,143 | |||||||||||
Translation of other assets and liabilities denominated in foreign currency | 207,469 | 108,649 | 8,156 | ||||||||||||
Change in net unrealized appreciation/depreciation | 49,267,777 | 188,955,024 | 9,807,236 | ||||||||||||
Net realized and unrealized gain | 30,337,394 | 263,066,345 | 17,843,929 | ||||||||||||
Net increase in net assets resulting from operations | $ | 31,350,787 | $ | 261,283,564 | $ | 17,377,912 |
See accompanying notes to financial statements.
63
The UBS Funds
Financial statements
Statement of changes in net assets
UBS Dynamic Alpha Fund | UBS Global Allocation Fund | ||||||||||||||||||
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 1,013,393 | $ | 1,223,597 | $ | (1,782,781 | ) | $ | (3,123,265 | ) | |||||||||
Net realized gain (loss) | (18,930,383 | ) | 10,196,316 | 74,111,321 | 194,245,926 | ||||||||||||||
Change in net unrealized appreciation/depreciation | 49,267,777 | 77,091,341 | 188,955,024 | 50,734,378 | |||||||||||||||
Net increase in net assets from operations | 31,350,787 | 88,511,254 | 261,283,564 | 241,857,039 | |||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | (7,507,567 | ) | (18,036,063 | ) | (35,643,712 | ) | (64,679,381 | ) | |||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | (74,697 | ) | (256,998 | ) | (271,858 | ) | (1,173,478 | ) | |||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | (1,529,009 | ) | (5,224,436 | ) | (13,451,079 | ) | (27,111,813 | ) | |||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (2,642,703 | ) | (5,942,088 | ) | (8,188,472 | ) | (14,623,794 | ) | |||||||||||
Decrease in net assets from dividends and distributions | (11,753,976 | ) | (29,459,585 | ) | (57,555,121 | ) | (107,588,466 | ) | |||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 28,432,870 | 114,313,977 | 37,843,021 | 115,466,913 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 11,063,778 | 28,144,238 | 53,431,280 | 100,642,981 | |||||||||||||||
Cost of shares redeemed | (103,852,540 | ) | (289,139,327 | ) | (253,120,046 | ) | (679,409,293 | ) | |||||||||||
Redemption fees | 6,132 | 10,795 | 9,925 | 30,280 | |||||||||||||||
Net decrease in net assets resulting from beneficial interest transactions | (64,349,760 | ) | (146,670,317 | ) | (161,835,820 | ) | (463,269,119 | ) | |||||||||||
Increase (decrease) in net assets | (44,752,949 | ) | (87,618,648 | ) | 41,892,623 | (329,000,546 | ) | ||||||||||||
Net assets, beginning of period | 526,434,836 | 614,053,484 | 1,381,602,613 | 1,710,603,159 | |||||||||||||||
Net assets, end of period | $ | 481,681,887 | $ | 526,434,836 | $ | 1,423,495,236 | $ | 1,381,602,613 | |||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income | $ | (8,581,945 | ) | $ | 2,158,638 | $ | (4,956,834 | ) | $ | 54,381,068 |
64
The UBS Funds
Financial statements
UBS Global Frontier Fund | |||||||||||
Six months ended December 31, 2010 (unaudited) |
Year ended June 30, 2010 |
||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | (466,017 | ) | $ | (848,300 | ) | |||||
Net realized gain (loss) | 8,036,693 | 10,120,585 | |||||||||
Change in net unrealized appreciation/depreciation | 9,807,236 | 3,573,824 | |||||||||
Net increase in net assets from operations | 17,377,912 | 12,846,109 | |||||||||
Dividends and distributions to shareholders by class: | |||||||||||
Class A: | |||||||||||
Net investment income and net foreign currency gains | (1,678,450 | ) | (2,525,878 | ) | |||||||
Class B: | |||||||||||
Net investment income and net foreign currency gains | | | |||||||||
Class C: | |||||||||||
Net investment income and net foreign currency gains | (361,050 | ) | (614,766 | ) | |||||||
Class Y: | |||||||||||
Net investment income and net foreign currency gains | (28,269 | ) | (530 | ) | |||||||
Decrease in net assets from dividends and distributions | (2,067,769 | ) | (3,141,174 | ) | |||||||
Beneficial interest transactions: | |||||||||||
Proceeds from shares sold | 5,529,015 | 14,056,564 | |||||||||
Shares issued on reinvestment of dividends and distributions | 1,915,760 | 3,011,650 | |||||||||
Cost of shares redeemed | (14,504,491 | ) | (28,974,906 | ) | |||||||
Redemption fees | 5,085 | 6,130 | |||||||||
Net decrease in net assets resulting from beneficial interest transactions | (7,054,631 | ) | (11,900,562 | ) | |||||||
Increase (decrease) in net assets | 8,255,512 | (2,195,627 | ) | ||||||||
Net assets, beginning of period | 62,456,458 | 64,652,085 | |||||||||
Net assets, end of period | $ | 70,711,970 | $ | 62,456,458 | |||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income | $ | (1,967,492 | ) | $ | 566,294 |
See accompanying notes to financial statements.
65
UBS Dynamic Alpha Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.92 | $ | 5.45 | $ | 9.89 | $ | 11.42 | $ | 11.04 | $ | 10.22 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.02 | 0.14 | 0.04 | 0.01 | (0.09 | ) | ||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.38 | 0.75 | (1.84 | ) | (0.56 | ) | 0.37 | 1.01 | |||||||||||||||||||
Net increase from payment by Advisor | | | 0.003 | | | 0.003 | |||||||||||||||||||||
Total income (loss) | 0.39 | 0.77 | (1.70 | ) | (0.52 | ) | 0.38 | 0.92 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.16 | ) | (0.30 | ) | | (0.01 | ) | 0.003 | (0.10 | ) | |||||||||||||||||
From net realized gains | | | (2.74 | ) | (1.00 | ) | | | |||||||||||||||||||
Total dividends/distributions | (0.16 | ) | (0.30 | ) | (2.74 | ) | (1.01 | ) | 0.003 | (0.10 | ) | ||||||||||||||||
Net asset value, end of period | $ | 6.15 | $ | 5.92 | $ | 5.45 | $ | 9.89 | $ | 11.42 | $ | 11.04 | |||||||||||||||
Total investment return2 | 6.17 | % | 14.19 | % | (14.31 | )%4 | (4.95 | )% | 3.44 | % | 9.02 | %5 | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 295,468 | $ | 334,131 | $ | 398,321 | $ | 1,178,342 | $ | 2,168,596 | $ | 1,777,329 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.73 | %6 | 1.74 | % | 1.54 | % | 1.20 | % | 1.17 | % | 1.20 | % | |||||||||||||||
Net of expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.71 | %6 | 1.72 | % | 1.54 | % | 1.20 | % | 1.17 | % | 1.20 | % | |||||||||||||||
Net of expense reimbursement and before dividend expense and security loan fees for securities sold short |
1.35 | %6 | 1.35 | % | 1.30 | % | 1.20 | % | 1.17 | % | 1.20 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.48 | %6 | 0.31 | % | 1.99 | % | 0.35 | % | 0.06 | % | (0.80 | )% | |||||||||||||||
Portfolio turnover rate | 34 | % | 58 | % | 139 | % | 39 | % | 28 | % | 38 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.65 | $ | 5.20 | $ | 9.68 | $ | 11.26 | $ | 10.98 | $ | 10.19 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.03 | ) | 0.08 | (0.04 | ) | (0.09 | ) | (0.17 | ) | ||||||||||||||||
Net realized and unrealized gain (loss) | 0.35 | 0.73 | (1.82 | ) | (0.54 | ) | 0.37 | 1.00 | |||||||||||||||||||
Net increase from payment by Advisor | | | 0.003 | | | 0.003 | |||||||||||||||||||||
Total income (loss) | 0.34 | 0.70 | (1.74 | ) | (0.58 | ) | 0.28 | 0.83 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.11 | ) | (0.25 | ) | | | | (0.04 | ) | ||||||||||||||||||
From net realized gains | | | (2.74 | ) | (1.00 | ) | | | |||||||||||||||||||
Total dividends/distributions | (0.11 | ) | (0.25 | ) | (2.74 | ) | (1.00 | ) | | (0.04 | ) | ||||||||||||||||
Net asset value, end of period | $ | 5.88 | $ | 5.65 | $ | 5.20 | $ | 9.68 | $ | 11.26 | $ | 10.98 | |||||||||||||||
Total investment return2 | 5.93 | % | 13.11 | % | (14.98 | )%4 | (5.62 | )% | 2.64 | % | 8.09 | %5 | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 4,151 | $ | 4,597 | $ | 6,733 | $ | 14,905 | $ | 25,790 | $ | 30,051 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.59 | %6 | 2.58 | % | 2.39 | % | 1.99 | % | 1.95 | % | 1.98 | % | |||||||||||||||
Net of expense reimbursement/recoupment and after dividend expense and security loan fees for securities sold short |
2.46 | %6 | 2.47 | % | 2.36 | % | 1.99 | % | 1.95 | % | 1.99 | %7 | |||||||||||||||
Net of expense reimbursement/recoupment and before dividend expense and security loan fees for securities sold short |
2.10 | %6 | 2.10 | % | 2.10 | % | 1.99 | % | 1.95 | % | 1.99 | %7 | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.27 | )%6 | (0.44 | )% | 1.23 | % | (0.42 | )% | (0.78 | )% | (1.59 | )% | |||||||||||||||
Portfolio turnover rate | 34 | % | 58 | % | 139 | % | 39 | % | 28 | % | 38 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
3 Amount represents less than $0.005 per share.
66
UBS Dynamic Alpha Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.65 | $ | 5.21 | $ | 9.68 | $ | 11.26 | $ | 10.97 | $ | 10.19 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.03 | ) | 0.08 | (0.04 | ) | (0.08 | ) | (0.17 | ) | ||||||||||||||||
Net realized and unrealized gain (loss) | 0.34 | 0.72 | (1.81 | ) | (0.54 | ) | 0.37 | 1.00 | |||||||||||||||||||
Net increase from payment by Advisor | | | 0.003 | | | 0.003 | |||||||||||||||||||||
Total income (loss) | 0.33 | 0.69 | (1.73 | ) | (0.58 | ) | 0.29 | 0.83 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.10 | ) | (0.25 | ) | | | | (0.05 | ) | ||||||||||||||||||
From net realized gains | | | (2.74 | ) | (1.00 | ) | | | |||||||||||||||||||
Total dividends/distributions | (0.10 | ) | (0.25 | ) | (2.74 | ) | (1.00 | ) | | (0.05 | ) | ||||||||||||||||
Net asset value, end of period | $ | 5.88 | $ | 5.65 | $ | 5.21 | $ | 9.68 | $ | 11.26 | $ | 10.97 | |||||||||||||||
Total investment return2 | 5.88 | % | 13.15 | % | (14.98 | )%4 | (5.62 | )% | 2.64 | % | 8.15 | %5 | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 87,715 | $ | 104,146 | $ | 131,745 | $ | 317,450 | $ | 579,916 | $ | 520,754 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.50 | %6 | 2.50 | % | 2.32 | % | 1.97 | % | 1.93 | % | 1.97 | % | |||||||||||||||
Net of expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.46 | %6 | 2.47 | % | 2.32 | % | 1.97 | % | 1.93 | % | 1.97 | % | |||||||||||||||
Net of expense reimbursement and before dividend expense and security loan fees for securities sold short |
2.10 | %6 | 2.10 | % | 2.07 | % | 1.97 | % | 1.93 | % | 1.97 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.26 | )%6 | (0.44 | )% | 1.24 | % | (0.41 | )% | (0.72 | )% | (1.57 | )% | |||||||||||||||
Portfolio turnover rate | 34 | % | 58 | % | 139 | % | 39 | % | 28 | % | 38 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.03 | $ | 5.54 | $ | 9.96 | $ | 11.48 | $ | 11.07 | $ | 10.23 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.02 | 0.03 | 0.17 | 0.08 | 0.05 | (0.06 | ) | ||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.37 | 0.78 | (1.85 | ) | (0.56 | ) | 0.36 | 1.02 | |||||||||||||||||||
Net increase from payment by Advisor | | | 0.003 | | | 0.003 | |||||||||||||||||||||
Total income (loss) | 0.39 | 0.81 | (1.68 | ) | (0.48 | ) | 0.41 | 0.96 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.18 | ) | (0.32 | ) | | (0.04 | ) | 0.003 | (0.12 | ) | |||||||||||||||||
From net realized gains | | | (2.74 | ) | (1.00 | ) | | | |||||||||||||||||||
Total dividends/distributions | (0.18 | ) | (0.32 | ) | (2.74 | ) | (1.04 | ) | 0.003 | (0.12 | ) | ||||||||||||||||
Net asset value, end of period | $ | 6.24 | $ | 6.03 | $ | 5.54 | $ | 9.96 | $ | 11.48 | $ | 11.07 | |||||||||||||||
Total investment return2 | 6.28 | % | 14.49 | % | (13.99 | )%4 | (4.64 | )% | 3.80 | % | 9.28 | %5 | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 94,348 | $ | 83,561 | $ | 77,254 | $ | 320,839 | $ | 478,785 | $ | 293,004 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.42 | %6 | 1.42 | % | 1.22 | % | 0.91 | % | 0.89 | % | 0.92 | % | |||||||||||||||
Net of expense reimbursement/recoupment and after dividend expense and security loan fees for securities sold short |
1.42 | %6 | 1.42 | % | 1.22 | % | 0.91 | % | 0.89 | % | 0.92 | % | |||||||||||||||
Net of expense reimbursement/recoupment and before dividend expense and security loan fees for securities sold short |
1.06 | %6 | 1.04 | % | 1.00 | % | 0.91 | % | 0.89 | % | 0.92 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.79 | %6 | 0.56 | % | 2.23 | % | 0.69 | % | 0.40 | % | (0.52 | )% | |||||||||||||||
Portfolio turnover rate | 34 | % | 58 | % | 139 | % | 39 | % | 28 | % | 38 | % |
4 During the fiscal year ended June 30, 2009, the Fund's total investment return included a reimbursement by the Investment Advisor for amounts related to a trading error that had an impact on the total return of less than 0.005%.
5 During the fiscal year ended June 30, 2006, the Fund's total investment return included a reimbursement by the Investment Advisor for amounts related to a trading error that had an impact on the total return of less than 0.005%.
6 Annualized.
7 The Investment Manager recouped expenses previously reimbursed by the Investment Manager on behalf of the Fund, not to exceed the expense cap.
See accompanying notes to financial statements.
67
UBS Global Allocation Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.66 | $ | 8.18 | $ | 12.59 | $ | 14.81 | $ | 13.86 | $ | 13.33 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.00 | )3 | 0.003 | 0.08 | 0.17 | 0.19 | 0.19 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | 1.75 | 1.11 | (3.08 | ) | (1.34 | ) | 1.83 | 1.08 | |||||||||||||||||||
Total income (loss) | 1.75 | 1.11 | (3.00 | ) | (1.17 | ) | 2.02 | 1.27 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.44 | ) | (0.63 | ) | (0.46 | ) | (0.23 | ) | (0.27 | ) | (0.14 | ) | |||||||||||||||
From net realized gains | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | (0.60 | ) | |||||||||||||||||
Total dividends/distributions | (0.44 | ) | (0.63 | ) | (1.41 | ) | (1.05 | ) | (1.07 | ) | (0.74 | ) | |||||||||||||||
Net asset value, end of period | $ | 9.97 | $ | 8.66 | $ | 8.18 | $ | 12.59 | $ | 14.81 | $ | 13.86 | |||||||||||||||
Total investment return2 | 20.37 | % | 13.11 | % | (22.36 | )% | (8.43 | )% | 14.93 | % | 9.72 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 838,590 | $ | 814,760 | $ | 996,059 | $ | 2,396,937 | $ | 3,094,036 | $ | 2,246,289 | |||||||||||||||
Ratio of expenses to average net assets | 1.22 | %4 | 1.21 | % | 1.19 | % | 1.09 | % | 1.13 | % | 1.14 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.06 | )%4 | 0.01 | % | 0.84 | % | 1.19 | % | 1.28 | % | 1.41 | % | |||||||||||||||
Portfolio turnover rate | 33 | % | 90 | % | 122 | % | 83 | % | 74 | % | 83 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.56 | $ | 8.00 | $ | 12.35 | $ | 14.52 | $ | 13.60 | $ | 13.08 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.04 | ) | (0.08 | ) | 0.003 | 0.05 | 0.07 | 0.08 | |||||||||||||||||||
Net realized and unrealized gain (loss) | 1.72 | 1.08 | (3.01 | ) | (1.31 | ) | 1.79 | 1.06 | |||||||||||||||||||
Total income (loss) | 1.68 | 1.00 | (3.01 | ) | (1.26 | ) | 1.86 | 1.14 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.23 | ) | (0.44 | ) | (0.39 | ) | (0.09 | ) | (0.14 | ) | (0.02 | ) | |||||||||||||||
From net realized gains | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | (0.60 | ) | |||||||||||||||||
Total dividends/distributions | (0.23 | ) | (0.44 | ) | (1.34 | ) | (0.91 | ) | (0.94 | ) | (0.62 | ) | |||||||||||||||
Net asset value, end of period | $ | 10.01 | $ | 8.56 | $ | 8.00 | $ | 12.35 | $ | 14.52 | $ | 13.60 | |||||||||||||||
Total investment return2 | 19.75 | % | 12.14 | % | (22.98 | )% | (9.14 | )% | 13.96 | % | 8.81 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 11,976 | $ | 15,190 | $ | 33,685 | $ | 90,258 | $ | 139,061 | $ | 161,704 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 2.13 | %4 | 2.09 | % | 2.02 | % | 1.91 | % | 1.93 | % | 1.95 | % | |||||||||||||||
Net of expense reimbursement | 2.10 | %4 | 2.09 | % | 2.02 | % | 1.91 | % | 1.93 | % | 1.95 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.93 | )%4 | (0.90 | )% | 0.01 | % | 0.36 | % | 0.48 | % | 0.60 | % | |||||||||||||||
Portfolio turnover rate | 33 | % | 90 | % | 122 | % | 83 | % | 74 | % | 83 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
68
UBS Global Allocation Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.42 | $ | 7.96 | $ | 12.29 | $ | 14.48 | $ | 13.58 | $ | 13.09 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.04 | ) | (0.07 | ) | 0.003 | 0.05 | 0.07 | 0.09 | |||||||||||||||||||
Net realized and unrealized gain (loss) | 1.69 | 1.07 | (2.99 | ) | (1.30 | ) | 1.79 | 1.05 | |||||||||||||||||||
Total income (loss) | 1.65 | 1.00 | (2.99 | ) | (1.25 | ) | 1.86 | 1.14 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.34 | ) | (0.54 | ) | (0.39 | ) | (0.12 | ) | (0.16 | ) | (0.05 | ) | |||||||||||||||
From net realized gains | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | (0.60 | ) | |||||||||||||||||
Total dividends/distributions | (0.34 | ) | (0.54 | ) | (1.34 | ) | (0.94 | ) | (0.96 | ) | (0.65 | ) | |||||||||||||||
Net asset value, end of period | $ | 9.73 | $ | 8.42 | $ | 7.96 | $ | 12.29 | $ | 14.48 | $ | 13.58 | |||||||||||||||
Total investment return2 | 19.70 | % | 12.29 | % | (22.93 | )% | (9.15 | )% | 14.02 | % | 8.82 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 388,080 | $ | 381,137 | $ | 456,577 | $ | 985,156 | $ | 1,274,539 | $ | 1,044,517 | |||||||||||||||
Ratio of expenses to average net assets | 2.00 | %4 | 2.00 | % | 1.97 | % | 1.89 | % | 1.90 | % | 1.91 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | (0.84 | )%4 | (0.78 | )% | 0.06 | % | 0.40 | % | 0.51 | % | 0.64 | % | |||||||||||||||
Portfolio turnover rate | 33 | % | 90 | % | 122 | % | 83 | % | 74 | % | 83 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.84 | $ | 8.34 | $ | 12.80 | $ | 15.04 | $ | 14.06 | $ | 13.51 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.03 | 0.10 | 0.21 | 0.23 | 0.23 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 1.78 | 1.14 | (3.13 | ) | (1.37 | ) | 1.85 | 1.09 | |||||||||||||||||||
Total income (loss) | 1.79 | 1.17 | (3.03 | ) | (1.16 | ) | 2.08 | 1.32 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.47 | ) | (0.67 | ) | (0.48 | ) | (0.26 | ) | (0.30 | ) | (0.17 | ) | |||||||||||||||
From net realized gains | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | (0.60 | ) | |||||||||||||||||
Total dividends/distributions | (0.47 | ) | (0.67 | ) | (1.43 | ) | (1.08 | ) | (1.10 | ) | (0.77 | ) | |||||||||||||||
Net asset value, end of period | $ | 10.16 | $ | 8.84 | $ | 8.34 | $ | 12.80 | $ | 15.04 | $ | 14.06 | |||||||||||||||
Total investment return2 | 20.48 | % | 13.54 | % | (22.12 | )% | (8.20 | )% | 15.18 | % | 9.98 | % | |||||||||||||||
Ratios/Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 184,849 | $ | 170,517 | $ | 224,281 | $ | 477,603 | $ | 648,479 | $ | 463,122 | |||||||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||||||||||
Before expense reimbursement | 0.93 | %4 | 0.93 | % | 0.90 | % | 0.82 | % | 0.88 | % | 0.88 | % | |||||||||||||||
Net of expense reimbursement | 0.93 | %4 | 0.93 | % | 0.90 | % | 0.82 | % | 0.88 | % | 0.88 | % | |||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.23 | %4 | 0.29 | % | 1.14 | % | 1.46 | % | 1.53 | % | 1.67 | % | |||||||||||||||
Portfolio turnover rate | 33 | % | 90 | % | 122 | % | 83 | % | 74 | % | 83 | % |
3 Amount represents less than $0.005 per share.
4 Annualized.
See accompanying notes to financial statements.
69
UBS Global Frontier Fund
Financial highlights
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, |
For the period ended |
|||||||||||||||||
(unaudited) | 2010 | 2009 | June 30, 20083 | ||||||||||||||||
Net asset value, beginning of period | $ | 6.32 | $ | 5.59 | $ | 8.75 | $ | 10.00 | |||||||||||
Income (loss) from investment operations: | |||||||||||||||||||
Net investment loss1 | (0.04 | ) | (0.07 | ) | (0.06 | ) | (0.05 | ) | |||||||||||
Net realized and unrealized gain (loss) | 1.88 | 1.12 | (2.98 | ) | (1.10 | ) | |||||||||||||
Total income (loss) | 1.84 | 1.05 | (3.04 | ) | (1.15 | ) | |||||||||||||
Less dividends/distributions: | |||||||||||||||||||
From net investment income | (0.25 | ) | (0.32 | ) | (0.12 | ) | (0.03 | ) | |||||||||||
From net realized gains | | | | (0.07 | ) | ||||||||||||||
Total dividends/distributions | (0.25 | ) | (0.32 | ) | (0.12 | ) | (0.10 | ) | |||||||||||
Net asset value, end of period | $ | 7.91 | $ | 6.32 | $ | 5.59 | $ | 8.75 | |||||||||||
Total investment return2 | 29.34 | % | 18.30 | % | (34.51 | )% | (11.60 | )% | |||||||||||
Ratios/Supplemental data: | |||||||||||||||||||
Net assets, end of period (000's) | $ | 54,349 | $ | 48,479 | $ | 48,395 | $ | 79,572 | |||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||
Before expense reimbursement | 1.62 | %5 | 1.62 | % | 1.66 | % | 1.59 | %5 | |||||||||||
Net of expense reimbursement | 1.40 | %5 | 1.40 | % | 1.40 | % | 1.40 | %5 | |||||||||||
Ratio of net investment loss to average net assets | (1.19 | )%5 | (1.01 | )% | (1.01 | )% | (0.52 | )%5 | |||||||||||
Portfolio turnover rate | 17 | % | 54 | % | 148 | % | 84 | % |
Class Y | |||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, |
For the period ended |
|||||||||||||||||
(unaudited) | 2010 | 2009 | June 30, 20083 | ||||||||||||||||
Net asset value, beginning of period | $ | 6.32 | $ | 5.60 | $ | 8.77 | $ | 10.00 | |||||||||||
Income (loss) from investment operations: | |||||||||||||||||||
Net investment loss1 | (0.04 | ) | (0.05 | ) | (0.04 | ) | (0.02 | ) | |||||||||||
Net realized and unrealized gain (loss) | 1.90 | 1.11 | (2.99 | ) | (1.10 | ) | |||||||||||||
Total income (loss) | 1.86 | 1.06 | (3.03 | ) | (1.12 | ) | |||||||||||||
Less dividends/distributions: | |||||||||||||||||||
From net investment income | (0.27 | ) | (0.34 | ) | (0.14 | ) | (0.04 | ) | |||||||||||
From net realized gains | | | | (0.07 | ) | ||||||||||||||
Total dividends/distributions | (0.27 | ) | (0.34 | ) | (0.14 | ) | (0.11 | ) | |||||||||||
Net asset value, end of period | $ | 7.91 | $ | 6.32 | $ | 5.60 | $ | 8.77 | |||||||||||
Total investment return2 | 29.47 | % | 18.54 | % | (34.30 | )% | (11.33 | )% | |||||||||||
Ratios/Supplemental data: | |||||||||||||||||||
Net assets, end of period (000's) | $ | 883 | $ | 185 | $ | 1,699 | $ | 7,395 | |||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||
Before expense reimbursement | 1.37 | %5 | 1.35 | % | 1.35 | % | 1.31 | %5 | |||||||||||
Net of expense reimbursement | 1.15 | %5 | 1.15 | % | 1.15 | % | 1.15 | %5 | |||||||||||
Ratio of net investment loss to average net assets | (0.93 | )%5 | (0.72 | )% | (0.73 | )% | (0.26 | )%5 | |||||||||||
Portfolio turnover rate | 17 | % | 54 | % | 148 | % | 84 | % |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges; results would be lower if they were included. Total investment return for periods of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on dividends/distributions or the redemption of Fund shares.
70
UBS Global Frontier Fund
Financial highlights
Class C | |||||||||||||||||||
Six months ended December 31, 2010 |
Year ended June 30, |
For the period ended |
|||||||||||||||||
(unaudited) | 2010 | 2009 | June 30, 20083 | ||||||||||||||||
Net asset value, beginning of period | $ | 6.31 | $ | 5.58 | $ | 8.71 | $ | 10.00 | |||||||||||
Income (loss) from investment operations: | |||||||||||||||||||
Net investment loss1 | (0.07 | ) | (0.12 | ) | (0.10 | ) | (0.12 | ) | |||||||||||
Net realized and unrealized gain (loss) | 1.88 | 1.12 | (2.96 | ) | (1.10 | ) | |||||||||||||
Total income (loss) | 1.81 | 1.00 | (3.06 | ) | (1.22 | ) | |||||||||||||
Less dividends/distributions: | |||||||||||||||||||
From net investment income | (0.19 | ) | (0.27 | ) | (0.07 | ) | (0.00 | )4 | |||||||||||
From net realized gains | | | | (0.07 | ) | ||||||||||||||
Total dividends/distributions | (0.19 | ) | (0.27 | ) | (0.07 | ) | (0.07 | ) | |||||||||||
Net asset value, end of period | $ | 7.93 | $ | 6.31 | $ | 5.58 | $ | 8.71 | |||||||||||
Total investment return2 | 28.90 | % | 17.50 | % | (35.03 | )% | (12.22 | )% | |||||||||||
Ratios/Supplemental data: | |||||||||||||||||||
Net assets, end of period (000's) | $ | 15,480 | $ | 13,792 | $ | 14,559 | $ | 22,882 | |||||||||||
Ratios of expenses to average net assets: | |||||||||||||||||||
Before expense reimbursement | 2.41 | %5 | 2.41 | % | 2.48 | % | 2.40 | %5 | |||||||||||
Net of expense reimbursement | 2.15 | %5 | 2.15 | % | 2.15 | % | 2.15 | %5 | |||||||||||
Ratio of net investment loss to average net assets | (1.94 | )%5 | (1.76 | )% | (1.76 | )% | (1.27 | )%5 | |||||||||||
Portfolio turnover rate | 17 | % | 54 | % | 148 | % | 84 | % |
3 For the period July 26, 2007 (commencement of operations) through June 30, 2008.
4 Amount represents less than $0.005 per share.
5 Annualized.
See accompanying notes to financial statements.
71
The UBS Funds
Notes to financial statements (unaudited)
1. Organization and significant accounting policies
The UBS Funds (the "Trust") is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end management investment company currently offering multiple series representing separate investment portfolios. The Trust is a Delaware statutory trust organized on August 13, 1993. The trustees of the Trust have the authority to issue an unlimited number of shares of beneficial interest at a par value of $0.001 per share.
The Trust has 15 Funds available for investment, each having its own investment objectives and policies. The following three funds are covered in this report: UBS Dynamic Alpha Fund, UBS Global Allocation Fund, and UBS Global Frontier Fund (each a "Fund", and collectively, the "Funds").
Each of the Funds is classified as a "diversified" investment company with the exception of UBS Dynamic Alpha Fund, which is classified as "non-diversified" for purposes of the 1940 Act. Each Fund currently offers Class A, Class C and Class Y shares. For each Fund except UBS Global Frontier Fund, Class B shares are offered only to existing Class B shareholders with respect to the reinvestment of dividends and distributions and exchanges of Class B shares of the Funds for Class B shares of other series of the UBS Family of Funds. "UBS Family of Funds" include other UBS Funds, PACE Select funds and other funds for which UBS Global Asset Management (US) Inc. ("UBS Global AM (US)") serves as principal underwriter. UBS Global Frontier Fund does not offer Class B shares. Each class represents interests in the same assets of the applicable Fund and the classes are identical except for differences in their sales charge structures, ongoing service and distribution charges and certain transfer agency and related services expenses. In addition, Class B shares and all corresponding reinvested dividend shares automatically convert to Class A shares within a certain number of years after issuance which varies depending upon the amount invested. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plan, if any. Class Y shares have no service or distribution plan.
In the normal course of business, the Funds may enter into contracts that contain a variety of representations that provide general indemnification for certain liabilities. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had any prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
The Trust accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the exclusive reference of authoritative US generally accepted accounting principles ("GAAP") recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The Funds' financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The following is a summary of significant accounting policies:
A. Valuation of investments: Each Fund calculates its net asset value based on the current market value, where available, for its portfolio securities. The Funds normally obtain market values for their securities and other instruments from independent pricing sources and broker-dealers. Independent pricing sources may use reported last sale prices, official market closing prices, current market quotations or valuations from computerized "matrix" systems that derive values based on comparable securities or instruments. A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of
72
The UBS Funds
Notes to financial statements (unaudited)
broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities or instruments. Securities and other instruments also may be valued based on appraisals derived from information concerning the security or instrument or similar securities or instruments received from recognized dealers in those holdings. Securities and instruments traded in the over-the-counter ("OTC") market and listed on The NASDAQ Stock Market, Inc. ("NASDAQ") normally are valued at the NASDAQ Official Closing Price. Other OTC securities are valued at the last bid price on the valuation date available prior to valuation. Securities and instruments which are listed on US and foreign stock exchanges normally are valued at the market closing price, the last sale price on the day the securities are valued or, lacking any sales on such day, at the last available bid price. In cases where securities or instruments are traded on more than one exchange, the securities or instruments are valued on the exchange designated as the primary market by UBS Global Asset Management (Americas) Inc. ("UBS Global AM" or the "Advisor"), the investment advisor of the Funds. UBS Global AM is an indirect wholly owned asset management subsidiary of UBS AG, an internationally diversified organization with headquarters in Zurich and Basel, Switzerland and operations in many areas of the financial services industry. If a market value is not readily available from an independent pricing source for a particular security or instrument, that security or instrument is valued at fair value as determined in good faith by or under the direction of the Trust's Board of Trustees (the "Board"). Various factors may be reviewed in order to make a good faith determination of a security's or instrument's fair value. These factors include, but are not limited to, fundamental analytical data relating to the investment; the nature and duration of restrictions on disposition of the securities or instruments; and the evaluation of forces which influence the market in which the securities or instruments are purchased and sold. Foreign currency exchange rates are generally determined as of the close of the New York Stock Exchange ("NYSE").
Certain securities or instruments in which the Funds invest are traded in markets that close before 4:00 p.m. Eastern Time. Normally, developments that occur between the close of the foreign markets and 4:00 p.m. Eastern Time will not be reflected in the Fund's net asset value. However, if any of the Funds determine that such developments are so significant that they will materially affect the value of the Fund's securities or instruments, the Fund may adjust the previous closing prices to reflect what the Board believes to be the fair value of these securities or instruments as of 4:00 p.m. Eastern Time.
Certain Funds may use a systematic fair valuation model provided by an independent third party to value securities or instruments principally traded in foreign markets in order to adjust for possible stale pricing that may occur between the close of the foreign exchanges and the time for valuation. The systematic fair valuation model may use calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant ADRs and futures contracts. If a security or instrument is valued at a "fair value," that value is likely to be different from the last quoted market price for the security or instrument. The use of the fair valuation model may result in securities being transferred between Level 1 and Level 2 at reporting periods.
The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with 60 days or less remaining to maturity, unless the Board determines that this does not represent fair value. Investments in open-end investment companies are valued at the daily closing net asset value of the respective investment company. Pursuant to the Funds' adoption of the use of the practical expedient within ASC Topic 820, investments in non-registered investment companies are also valued at the daily net asset value. All investments quoted in foreign currencies will be valued daily in US dollars on the basis of the foreign currency exchange rates prevailing at the time such valuation is determined by the Funds' custodian.
Futures contracts are generally valued at the settlement price established each day on the exchange on which they are traded. Forward foreign currency contracts are valued daily using forward exchange rates quoted by independent pricing services.
Swaps are marked-to-market daily based upon values from third party vendors or quotations from market makers to the extent available and the change in value, if any, is recorded as an unrealized gain or loss on the Statement of
73
The UBS Funds
Notes to financial statements (unaudited)
assets and liabilities. In the event that market quotations are not readily available or deemed unreliable, the swap is valued at fair value as determined in good faith by or under the direction of the Board.
GAAP requires disclosure regarding the various inputs that are used in determining the value of the Funds' investments. These inputs are summarized into the three broad levels listed below:
Level 1Unadjusted quoted prices in active markets for identical investments.
Level 2Other significant observable inputs, including but not limited to, quoted prices for similar investments, interest rates, prepayment speeds and credit risk.
Level 3Unobservable inputs inclusive of the Fund's own assumptions in determining the fair value of investments.
A fair value hierarchy has been included near the end of each Fund's Portfolio of investments.
In January 2010, FASB issued Accounting Standards Update No. 2010-06 "Improving Disclosures about Fair Value Measurements" ("ASU No. 2010-06"). ASU No. 2010-06 requires reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, including information on purchases, sales, issuances and settlements on a gross basis in the reconciliation of activity in Level 3 fair value measurements. The new and revised disclosures have been implemented for annual and interim periods beginning after December 15, 2009 except for the disclosures surrounding purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements, which are effective for annual and interim periods beginning after December 15, 2010. Management is currently evaluating the impact the adoption of the remaining portion of ASU No. 2010-06 may have on the Funds' financial statement disclosures.
The provisions of ASC Topic 815 "Derivatives and Hedging" ("ASC Topic 815") require qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk related contingent features in derivative agreements. Since investment companies value their derivatives at fair value and recognize changes in fair value through the statement of operations, they do not qualify for hedge accounting under ASC Topic 815. Accordingly, even though a fund's investments in derivatives may represent economic hedges, they are considered to be non-hedge transactions for purposes of disclosure under ASC Topic 815. ASC Topic 815 requires that (1) objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation, (2) the fair values of derivative instruments and their gains and losses be disclosed in a tabular format, and (3) information be disclosed about credit-risk contingent features of derivatives contracts. Details of this disclosure can be found below as well as in the Portfolio of investments. The volume of derivatives that is presented in the Portfolio of investments of each Fund is consistent with the derivative activity during the period ended December 31, 2010. The Funds may be sellers of protection through credit default swap agreements which are by nature credit-risk contingent (the terms of these agreements can be found within the Portfolio of investments, with further discussion in the Notes to financial statements); however, the Funds are not aware of any additional credit-risk contingent features on other derivative contracts held by the Funds.
74
The UBS Funds
Notes to financial statements (unaudited)
Disclosure of derivatives by underlying risk for each Fund as of and for the period ended December 31, 2010 is as follows:
Asset derivatives
Interest rate risk |
Equity risk | Credit risk |
Foreign exchange risk |
Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | | $ | 7,231,455 | $ | 7,231,455 | |||||||||||||
Futures contracts2 | 107,546 | 1,552,946 | | | 1,660,492 | ||||||||||||||||||
Options purchased1 | 1,194,422 | 2,040,540 | | 14,788 | 3,249,750 | ||||||||||||||||||
Swap agreements1 | 5,750,233 | | 4,875,014 | 470,626 | 11,095,873 | ||||||||||||||||||
Total value | $ | 7,052,201 | $ | 3,593,486 | $ | 4,875,014 | $ | 7,716,869 | $ | 23,237,570 |
1 Statement of assets and liabilities location: Investments in securities of unaffiliated issuers, at value, Unrealized appreciation on forward foreign currency contracts and Outstanding swap agreements, at value.
2 Includes cumulative appreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Liability derivatives
Interest rate risk |
Equity risk | Credit risk |
Foreign exchange risk |
Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | | $ | (11,158,254 | ) | $ | (11,158,254 | ) | |||||||||||
Futures contracts2 | (404,036 | ) | (1,606,860 | ) | | | (2,010,896 | ) | |||||||||||||||
Options written1 | (6,594,959 | ) | | (27,837 | ) | (277,735 | ) | (6,900,531 | ) | ||||||||||||||
Swap agreements1 | (8,901,109 | ) | | (10,613,668 | ) | (556,730 | ) | (20,071,507 | ) | ||||||||||||||
Total value | $ | (15,900,104 | ) | $ | (1,606,860 | ) | $ | (10,641,505 | ) | $ | (11,992,719 | ) | $ | (40,141,188 | ) |
1 Statement of assets and liabilities location: Unrealized depreciation on forward foreign currency contracts, Outstanding swap agreements, at value and Options written, at value.
2 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
75
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Interest rate risk |
Equity risk | Credit risk |
Foreign exchange risk |
Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||||||
Forward contracts | $ | | $ | | $ | | $ | (21,608,254 | ) | $ | (21,608,254 | ) | |||||||||||
Futures contracts | 184,218 | (17,063,179 | ) | | | (16,878,961 | ) | ||||||||||||||||
Options purchased3 | (3,229,650 | ) | (719,445 | ) | | | (3,949,095 | ) | |||||||||||||||
Options written | 1,890,642 | | 120,900 | | 2,011,542 | ||||||||||||||||||
Swap agreements | (5,312,896 | ) | (59,458 | ) | 2,358,951 | 26,294 | (2,987,109 | ) | |||||||||||||||
Total net realized gain (loss) | $ | (6,467,686 | ) | $ | (17,842,082 | ) | $ | 2,479,851 | $ | (21,581,960 | ) | $ | (43,411,877 | ) | |||||||||
Net change in unrealized appreciation/depreciation2 | |||||||||||||||||||||||
Forward contracts | $ | | $ | | $ | | $ | (705,293 | ) | $ | (705,293 | ) | |||||||||||
Futures contracts | 41,201 | (4,698,474 | ) | | | (4,657,273 | ) | ||||||||||||||||
Options purchased3 | (1,114,252 | ) | 1,657,146 | | (245,404 | ) | 297,490 | ||||||||||||||||
Options written | (3,257,763 | ) | | 55,576 | (17,543 | ) | (3,219,730 | ) | |||||||||||||||
Swap agreements | 4,749,029 | (1,889,451 | ) | 1,826,600 | (156,154 | ) | 4,530,024 | ||||||||||||||||
Total net change in unrealized appreciation/depreciation | $ | 418,215 | $ | (4,930,779 | ) | $ | 1,882,176 | $ | (1,124,394 | ) | $ | (3,754,782 | ) |
1 Statement of operations location: Net realized gain (loss) on futures contracts, options written, swap agreements and forward foreign currency contracts.
2 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts, options written, swap agreements and forward foreign currency contracts.
3 Realized and unrealized gain (loss) is included in net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.
Asset derivatives
Interest rate risk |
Equity risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | 7,922,458 | $ | 7,922,458 | |||||||||||
Futures contracts2 | 207,450 | 1,150,044 | | 1,357,494 | |||||||||||||||
Total value | $ | 207,450 | $ | 1,150,044 | $ | 7,922,458 | $ | 9,279,952 |
1 Statement of assets and liabilities location: Unrealized appreciation on forward foreign currency contracts
2 Includes cumulative appreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Liability derivatives
Interest rate risk |
Equity risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | (1,637,098 | ) | $ | (1,637,098 | ) | |||||||||
Futures contracts2 | (145,337 | ) | (2,108,207 | ) | | (2,253,544 | ) | ||||||||||||
Total value | $ | (145,337 | ) | $ | (2,108,207 | ) | $ | (1,637,098 | ) | $ | (3,890,642 | ) |
1 Statement of assets and liabilities location: Unrealized depreciation on forward foreign currency contracts
2 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
76
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Interest rate risk |
Equity risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 15,816,539 | $ | 15,816,539 | |||||||||||
Futures contracts | (2,073,462 | ) | (3,447,596 | ) | | (5,521,058 | ) | ||||||||||||
Total net realized gain (loss) | $ | (2,073,462 | ) | $ | (3,447,596 | ) | $ | 15,816,539 | $ | 10,295,481 | |||||||||
Net change in unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 3,569,742 | $ | 3,569,742 | |||||||||||
Futures contracts | 1,558,271 | 582,649 | | 2,140,920 | |||||||||||||||
Total net change in unrealized appreciation/depreciation | $ | 1,558,271 | $ | 582,649 | $ | 3,569,742 | $ | 5,710,662 |
1 Statement of operations location: Net realized gain (loss) on futures contracts and forward foreign currency contracts.
2 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts and forward foreign currency contracts.
Asset derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Global Frontier Fund | |||||||||||||||
Forward contracts1 | $ | | $ | 754,279 | $ | 754,279 | |||||||||
Futures contracts2 | 429,688 | | 429,688 | ||||||||||||
Total value | $ | 429,688 | $ | 754,279 | $ | 1,183,967 |
1 Statement of assets and liabilities location: Unrealized appreciation on forward foreign currency contracts.
2 Includes cumulative appreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
Liability derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Global Frontier Fund | |||||||||||||||
Forward contracts1 | $ | | $ | (33,648 | ) | $ | (33,648 | ) | |||||||
Futures contracts2 | (168,157 | ) | | (168,157 | ) | ||||||||||
Total value | $ | (168,157 | ) | $ | (33,648 | ) | $ | (201,805 | ) |
1 Statement of assets and liabilities location: Unrealized depreciation on forward foreign currency contracts.
2 Includes cumulative depreciation of futures contracts as reported in the futures contracts table in the Portfolio of investments, but only the unpaid variation margin is reported within the Statement of assets and liabilities.
77
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2010, were as follows:
Interest rate risk |
Equity risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Frontier Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 2,044,157 | $ | 2,044,157 | |||||||||||
Futures contracts | (28,101 | ) | 3,258,454 | | 3,230,353 | ||||||||||||||
Total net realized gain (loss) | $ | (28,101 | ) | $ | 3,258,454 | $ | 2,044,157 | $ | 5,274,510 | ||||||||||
Net change in unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 239,143 | $ | 239,143 | |||||||||||
Futures contracts | 27,549 | 1,778,068 | | 1,805,617 | |||||||||||||||
Total net change in unrealized appreciation/depreciation | $ | 27,549 | $ | 1,778,068 | $ | 239,143 | $ | 2,044,760 |
1 Statement of operations location: Net realized gain (loss) on futures contracts and forward foreign currency contracts.
2 Statement of operations location: Change in net unrealized appreciation/depreciation on futures contracts and forward foreign currency contracts.
B. Restricted securities: The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included in each Fund's Notes to portfolio of investments.
C. Investment transactions, investment income and expenses: Investment transactions are recorded on the trade date. Realized gains and losses from investment and foreign exchange transactions are calculated using the identified cost method. Interest income is recorded on an accrual basis. Discounts are accreted and premiums are amortized as adjustments to interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares (or the value of dividend-eligible shares, as appropriate) of each class at the beginning of the day after adjusting for current capital share activity of the respective classes. Class specific expenses are charged directly to the applicable class of shares.
D. Foreign currency translation: The Funds use the foreign currency exchange rates determined as of the close of regular trading on the NYSE. For purposes of calculating the US dollar equivalent value of a non US dollar denominated obligation, foreign currency amounts are translated into US dollars on the following basis: (1) market value of investment securities and other assets and liabilitiesat the exchange rates prevailing at the end of each Fund's fiscal period; and (2) purchases and sales of investment securities and income and expensesat the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets and the market value of each Fund's portfolio are presented at the foreign exchange rates at the end of each Fund's fiscal period, the Funds do not generally isolate the effect of fluctuations in foreign exchange rates from the effect of the changes in market prices of securities. However, the Funds do isolate the effect of fluctuations in foreign exchange rates when determining the gain or loss upon the sale or maturity of foreign currency-denominated securities pursuant to US federal income tax regulations. Certain foreign exchange gains and losses included in realized and unrealized gains and losses are included in or are a reduction of ordinary income in accordance with US federal income tax regulations.
78
The UBS Funds
Notes to financial statements (unaudited)
E. Forward foreign currency contracts: A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Risks associated with such contracts include movement in the value of the foreign currency relative to the US dollar and the potential inability of the counterparty to meet the terms of the contract. The Funds may purchase or sell currencies and/or engage in forward foreign currency transactions in order to expedite settlement of portfolio transactions, manage currency risk or to gain exposure to a currency without purchasing securities denominated in that currency. Forward foreign currency contracts involve, to varying degrees, elements of market risk (specifically foreign currency risk).
A Fund will only enter into forward contracts to sell, for a fixed amount of US dollars or other appropriate currency, an amount of foreign currency, to the extent that the value of the short forward contract is covered by the underlying value of securities denominated in the currency being sold. Alternatively, when a Fund enters into a forward contract to sell an amount of foreign currency, the Fund's custodian or sub custodian will place assets in a segregated account of the Fund in an amount not less than the value of the Fund's total assets committed to the utilization of such forward contracts. If the assets placed in the account decline in value, additional cash or securities will be placed in the account on a daily basis so that the value of the account will equal the amount of the Fund's commitments with respect to such contracts.
The unrealized gain, if any, represents the credit risk to each Fund on a forward foreign currency contract. Fluctuations in the value of the open forward foreign currency contracts are recorded daily for book purposes as unrealized gains or losses on foreign forward currency contracts by the Funds. Realized gains and losses include net gains and losses recognized by each Fund on contracts which have been sold or matured.
F. Futures contracts: Each Fund may purchase or sell financial futures contracts. The Funds may purchase or sell futures contracts to increase or reduce their exposure to an asset class without purchasing or selling the underlying securities, either as a hedge or to enhance income or realize gains. Using financial futures contracts involves various market risks, including interest rate and equity risk. Risks of entering into futures contracts include the possibility that there may be an illiquid market or that a change in the value of the contract may not correlate with changes in the value of the underlying securities. To the extent that market prices move in an unexpected direction, there is a risk that a Fund will not achieve the anticipated benefits of the futures contract or may realize a loss.
Upon entering into a futures contract, the Fund is required to deliver to a broker an amount of cash and/or securities equal to a certain percentage of the contract amount. This amount is known as the "initial margin". Subsequent payments, known as "variation margin", are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying futures contracts. Such variation margin is recorded for financial statement purposes on a daily basis as an unrealized gain or loss on futures until the futures contract is closed or expires, at which time the net gain or loss is reclassified to realized gain or loss on futures.
G. Securities traded on to-be-announced basis: Certain Funds may from time to time purchase, or sell short, securities on a to-be-announced ("TBA") basis. In a TBA transaction, the Fund commits to purchasing or selling securities for which all specific information is not yet known at the time of the trade, particularly the face amount and maturity date of the underlying security transactions. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, normally 15 to 45 days later. Beginning on the date the Fund enters into a TBA transaction, cash, US government securities or other liquid high grade debt obligations are segregated in the Funds' records in an amount equal in value to the purchase price of the TBA security. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other securities.
H. Swap agreements: Certain Funds may engage in swap agreements, including but not limited to interest rate, currency, total return, and credit default swap agreements. The Funds expect to enter into these transactions to preserve a return or spread on a particular investment or to hedge a portion of the portfolio's duration, to protect
79
The UBS Funds
Notes to financial statements (unaudited)
against any increase in the price of securities a Fund anticipates purchasing at a later date, to gain exposure to certain markets in the most economical way possible or in an attempt to enhance income or gains.
Certain Funds may enter into interest rate swap agreements with another party to receive or pay interest (e.g., an exchange of fixed rate payments for floating rate payments) to protect itself from interest rate fluctuations. This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to a specified interest rate(s) for a specified amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Interest rate swap agreements are subject to general market risk, liquidity risk, counterparty risk and interest rate risk.
Certain Funds may enter into currency swap agreements with another party in order to receive or pay amounts based on changes in currency exchange rates to protect itself from or take advantage of exchange rate fluctuations. The Fund utilizes currency swaps to earn income and enhance returns as well as to manage the risk profile of the Fund. This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to a specified currency exchange rate(s) for a specified amount. Currency swap agreements are subject to general market risk, liquidity risk, counterparty risk, foreign exchange risk and interest rate risk.
Credit default swap agreements involve commitments to make or receive payments in the event of a default or other credit event of a referenced security. As a buyer, a Fund would make periodic payments to the counterparty, and a Fund would receive payments only upon the occurrence of a credit event. If no credit event occurs, a Fund will lose its periodic stream of payments over the term of the contract. However, if a credit event does occur, a Fund typically would receive full notional value for a reference obligation that may have little or no value. As a seller, a Fund would receive periodic payments from the counterparty, and a Fund would make payments only upon the occurrence of a credit event. If no credit event occurs, a Fund will gain the periodic stream of payments it received over the term of the contract. However, if a credit event occurs, a Fund will pay full notional value for a reference obligation that may have little or no value. Credit default swaps may involve greater risks than if a Fund had invested in the reference obligation directly and are subject to general market risk, liquidity risk, counterparty risk and credit risk.
Credit default swap agreements on corporate issues or sovereign issues of an emerging market country involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default or other credit event. If a credit event occurs and cash settlement is not elected, a variety of other obligations may be delivered in lieu of the specific referenced obligation. The ability to deliver other obligations may result in delivery of a security with a value other than had been anticipated (such as a party's right to choose the deliverable obligation with the lowest value following a credit event). A Fund may use credit default swaps on corporate issues or sovereign issues of an emerging market country to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where a Fund owns or has exposure to the referenced obligation) or to take an active long or short position with respect to the likelihood of a particular issuer's default.
The maximum potential amount of future payments (undiscounted) that a Fund as a seller of protection could be required to make under a credit default swap agreement would be an amount equal to the notional amount of the agreement. Notional amounts of all credit default swap agreements outstanding as of December 31, 2010 for which a Fund is the seller of protection are disclosed under the section "Credit default swaps on corporate and sovereign issuessell protection" in the Notes to Portfolio of investments. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into, if any, by a Fund for the same referenced entity or entities.
80
The UBS Funds
Notes to financial statements (unaudited)
Total return swap agreements involve commitments to pay or receive interest in exchange for a market linked return based on a notional amount. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, a Fund will receive a payment from or make a payment to the counterparty, respectively. Total return swaps are marked-to-market daily, and the change, if any, is recorded as unrealized appreciation or depreciation.
The use of swap agreements involves investment techniques and risks different from those associated with ordinary portfolio security transactions. If UBS Global AM is incorrect in its forecast of market values, interest rates and other applicable factors, the investment performance of a Fund will be less favorable than it would have been if this investment technique was never used. Swap agreements do not involve the delivery of securities and are subject to counterparty risk. If the other party to a swap agreement defaults and fails to consummate the transaction, a Fund's risk of loss will consist of the net amount of interest or other payments that the Fund is contractually entitled to receive. Therefore, a Fund would consider the creditworthiness of the counterparty to a swap agreement in evaluating potential credit risk.
A Fund accrues for interim payments on swap agreements on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap agreements on the Statement of assets and liabilities. Once interim payments are settled in cash, the net amount is recorded as realized gain/loss on swap agreements, in addition to realized gain/loss recorded upon the termination of swap agreements on the Statement of operations. Fluctuations in the value of swap agreements are recorded for financial statement purposes as unrealized appreciation or depreciation of swap agreements.
I. Option writing: Certain Funds may write (sell) put and call options on foreign or US securities, indices, foreign currencies and interest rate swaps (commonly referred to as swaptions), in order to gain exposure to or protect against changes in the markets or in an attempt to enhance income or gains. When a Fund writes a call or a put option, an amount equal to the premium received by the Fund is included in the Fund's Statement of assets and liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. If an option which the Fund has written either expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security or derivative instrument, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund recognizes a realized gain or loss (long-term or short-term, depending on the holding period of the underlying security) from the sale of the underlying security or derivative instrument and the proceeds from the sale are increased by the premium originally received. If a put option which a Fund has written is exercised, the amount of the premium originally received reduces the cost of the security or derivative instrument which the Fund purchases upon exercise of the option.
In writing an option, the Fund bears the market risk of an unfavorable change in the price of the derivative instrument, security, index or currency underlying the written option. Exercise of an option written by the Fund could result in the Fund selling or buying a derivative instrument, security or currency at a price different from current market value.
J. Purchased options: Certain Funds may purchase put and call options on foreign or US securities, indices, foreign currencies and interest rate swaps (commonly referred to as swaptions), as well as exchange listed call options on particular market segment indices to achieve temporary exposure to a specific security, currency, industry or geographic region. Purchasing call options tends to increase exposure to the underlying instrument. Purchasing put options tends to decrease exposure to the underlying instrument. The Fund pays a premium which is included in the Statement of assets and liabilities as an investment and subsequently marked-to-market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk
81
The UBS Funds
Notes to financial statements (unaudited)
associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying futures, security or currency transaction to determine the realized gain or loss.
K. Short sales: UBS Dynamic Alpha Fund may enter into short sales whereby it sells a security it generally does not own, in anticipation of a decline in the security's price. The initial amount of a short sale is recorded as a liability which is marked to market daily. Fluctuations in the value of this liability are recorded as unrealized gains or losses on the Statement of operations. If the Fund shorts a security while holding a long position in the security (a "short against the box"), as the security price declines, the short position increases in value, offsetting the long position's decrease in value. The opposite effect occurs if the security price rises. The Fund will realize a gain or loss upon closing of the short sale (returning the security to the lender by way of purchase or delivery of a long position owned). The Fund is liable to the lender for any dividends payable or other corporate actions on securities while those securities are in a short position. These dividends are booked as an expense or liability of the Fund. The Fund segregates collateral consisting of cash, US government securities or other liquid assets sufficient to collateralize the market value of short positions. The Fund is charged a securities loan fee in connection with short sale transactions.
L. Dividends and distributions: It is the Funds' policy to distribute their respective net investment income and net capital gains, if any, annually. Dividends and distributions to shareholders are recorded on the ex-distribution date. The amount of dividends from net investment income and distributions from net realized capital gains and/or return of capital is determined in accordance with US federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification.
M. Concentration of risk: Investing in securities of foreign issuers and currency transactions may involve certain considerations and risks not typically associated with investments in the United States. These risks include revaluation of currencies, adverse fluctuations in foreign currency values and possible adverse political, social and economic developments, including those particular to a specific industry, country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable US companies and US government securities. These risks are greater with respect to securities of issuers located in emerging market countries in which the Funds invest. The ability of the issuers of debt securities held by a Fund to meet their obligations may be affected by economic and political developments particular to a specific industry, country, state or region.
N. Commission recapture program: The Funds participate in a brokerage commission recapture program. The Funds have established commission recapture arrangements with certain participating brokers or dealers. If a Fund's investment manager chooses to execute a transaction through a participating broker subject to best price and execution, the broker will rebate a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. For the period ended December 31, 2010 the UBS Global Allocation Fund recorded $15,268 recaptured commissions which are reflected on the Statement of operations within the net realized gains (losses) on investment activities.
O. Redemption fees: Each class of each series of The UBS Funds will impose a 1% redemption fee on shares sold or exchanged within 90 days of their purchase date, subject to limited exceptions. This amount is paid to the applicable Fund, not the Advisor or UBS Global AM (US). The redemption fees retained by the Funds are disclosed in the Statement of changes in net assets.
82
The UBS Funds
Notes to financial statements (unaudited)
2. Investment advisory fees and other transactions with affiliates
The Advisor, a registered investment advisor, provides the Funds with investment management services. As compensation for these services, each Fund pays the Advisor a monthly fee, accrued daily and paid monthly, based on each Fund's respective average daily net assets in accordance with the following per annum schedule:
Fund |
$0 to $500 mm |
$500 mm to $1.0 billion |
$1.0 billion to $1.5 billion |
$1.5 billion to $2.0 billion |
$2.0 billion to $3.0 billion |
$3.0 billion to $6.0 billion |
$6.0 billion and over |
||||||||||||||||||||||||
UBS Global Allocation Fund | 0.800 | % | 0.750 | % | 0.700 | % | 0.675 | % | 0.650 | % | 0.630 | % | 0.610 | % | |||||||||||||||||
UBS Global Frontier Fund | 0.950 | 0.950 | 0.950 | 0.950 | 0.950 | 0.950 | 0.950 |
$0 to $500 mm |
$500 mm to $1.0 billion |
$1.0 billion to $1.5 billion |
$1.5 billion to $2.0 billion |
$2.0 billion to $4.0 billion |
$4.0 billion and over |
||||||||||||||||||||||
UBS Dynamic Alpha Fund | 0.850 | % | 0.800 | % | 0.750 | % | 0.725 | % | 0.700 | % | 0.680 | % |
For UBS Global Allocation Fund, the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) do not exceed the expense limit of each class of shares as indicated in the table. For UBS Dynamic Alpha Fund and UBS Global Frontier Fund, the Advisor has agreed to waive its fees and/or reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) to the extent necessary so that each Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and securities loan fees and dividend expenses for securities sold short) do not exceed the expense limit of each class of shares as indicated in the table. Investment advisory fees, including the dollar amount waived or reimbursed for the period ended December 31, 2010, were as follows:
Fund |
Class A expense cap |
Class B expense cap |
Class C expense cap |
Class Y expense cap |
Advisory fees |
Fees waived/ expenses reimbursed |
|||||||||||||||||||||
UBS Dynamic Alpha Fund | 1.35 | % | 2.10 | % | 2.10 | % | 1.10 | % | $ | 2,197,138 | $ | 56,697 | |||||||||||||||
UBS Global Allocation Fund | 1.35 | 2.10 | 2.10 | 1.10 | 5,425,903 | 2,343 | |||||||||||||||||||||
UBS Global Frontier Fund | 1.40 | N/A1 | 2.15 | 1.15 | 328,395 | 80,046 |
1 UBS Global Frontier Fund does not offer Class B shares.
83
The UBS Funds
Notes to financial statements (unaudited)
Each Fund will reimburse the Advisor for expenses it reimburses for a period of three years following such 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 the Fund. The expenses waived for the period ended December 31, 2010 are subject to repayment through June 30, 2014. At December 31, 2010, the following Funds had remaining fee waivers and expense reimbursements subject to repayment to the Advisor and respective dates of expiration as follows:
Fund |
Fee waivers/ expense reimbursements subject to repayment |
Expires June 30, 2011 |
Expires June 30, 2012 |
Expires June 30, 2013 |
Expires June 30, 2014 |
||||||||||||||||||
UBS Dynamic Alpha FundClass A | $ | 84,260 | $ | | $ | | $ | 51,127 | $ | 33,133 | |||||||||||||
UBS Dynamic Alpha FundClass B | 11,836 | | 2,654 | 6,334 | 2,848 | ||||||||||||||||||
UBS Dynamic Alpha FundClass C | 56,199 | | | 35,483 | 20,716 | ||||||||||||||||||
UBS Global Allocation FundClass B | 2,343 | | | | 2,343 | ||||||||||||||||||
UBS Global Frontier FundClass A | 468,711 | 152,817 | 137,120 | 118,866 | 59,908 | ||||||||||||||||||
UBS Global Frontier FundClass C | 165,041 | 52,934 | 50,614 | 41,974 | 19,519 | ||||||||||||||||||
UBS Global Frontier FundClass Y | 20,259 | 12,442 | 5,653 | 1,545 | 619 |
Each Fund pays UBS Global AM (US), an affiliate of the Advisor, a monthly administration fee that is accrued daily and paid monthly at an annual rate of 0.075% of the average daily net assets of such Fund. For the period ended December 31, 2010, the Funds owed and incurred administrative fees as follows:
Fund |
Adminstrative fees owed |
Adminstrative fees incurred |
|||||||||
UBS Dynamic Alpha Fund | $ | 31,185 | $ | 194,214 | |||||||
UBS Global Allocation Fund | 90,427 | 541,217 | |||||||||
UBS Global Frontier Fund | 4,447 | 25,945 |
The Funds may invest in certain affiliated investment companies also advised or managed by the Advisor. Investments in affiliated investment companies for the period ended December 31, 2010 have been included near the end of each Fund's Portfolio of investments.
The Funds may invest in UBS Cash Management Prime Relationship Fund ("Cash Prime"). Cash Prime is offered as a cash management option only to mutual funds and certain other accounts. Distributions received from Cash Prime are reflected as affiliated interest income in the Statement of operations.
Under normal conditions, the Funds invest cash collateral from securities lending activities into an affiliated private money market fund, UBS Private Money Market Fund LLC ("Private Money Market"), which operates in compliance with most of the substantive provisions of Rule 2a-7 of the 1940 Act. Private Money Market is managed by the Advisor and is offered as a cash management option only to mutual funds and certain other accounts managed by the Advisor. UBS Global AM acts as managing member and receives a management fee from Private Money Market payable monthly in arrears at the annual rate of 0.10% of Private Money Market's average daily members' equity, minus the aggregate operating expenses of, and incurred by, Private Money Market during each such related month, not including investment expenses (including brokerage commissions, taxes, interest charges and other costs with respect to transactions in securities) and extraordinary expenses including litigation expenses, if any. The Advisor may, in its sole discretion, waive all or any portion of the management fee to which it may be entitled from time to time in order to maintain operating expenses at a certain level. Distributions received from Private Money Market, net of fee rebates paid to borrowers, are reflected as securities lending-net in the Statement of operations.
84
The UBS Funds
Notes to financial statements (unaudited)
The following Funds have incurred brokerage commissions with UBS AG, an affiliated broker-dealer. Amounts relating to those transactions for the period ended December 31, 2010, were as follows:
Fund | UBS AG | ||||||
UBS Dynamic Alpha Fund | $ | 14,084 | |||||
UBS Global Allocation Fund | 6,797 |
3. Service and distribution plans
UBS Global AM (US) is the principal underwriter of each Fund's shares. The Trust has adopted service and/or distribution plans (the "Plans") pursuant to Rule 12b-1 under the 1940 Act for Class A, Class B and Class C. The Plans govern payments made for the expenses incurred in the service and/or distribution of Class A, Class B and Class C. Annual fees under the Plans as a percentage of the average daily net assets of each representative class of each of the Funds are as follows:
Fund | Class A | Class B | Class C | ||||||||||||
UBS Dynamic Alpha Fund | 0.25 | % | 1.00 | % | 1.00 | % | |||||||||
UBS Global Allocation Fund | 0.25 | 1.00 | 1.00 | ||||||||||||
UBS Global Frontier Fund | 0.25 | N/A* | 1.00 |
* UBS Global Frontier Fund does not offer Class B shares.
UBS Global AM (US) also receives the proceeds of the initial sales charges paid upon purchases of Class A shares and the contingent deferred sales charges paid by shareholders upon certain redemptions of Class A, Class B and Class C. At December 31, 2010, certain Funds owed UBS Global AM (US) service and distribution fees, and for the period ended December 31, 2010, certain Funds were informed by UBS Global AM (US) that it had earned sales charges as follows:
Fund |
Service and distribution fees owed |
Sales charges earned |
|||||||||
UBS Dynamic Alpha FundClass A | $ | 64,148 | $ | 58,870 | |||||||
UBS Dynamic Alpha FundClass B | 3,593 | 3,466 | |||||||||
UBS Dynamic Alpha FundClass C | 75,677 | 6,488 | |||||||||
UBS Global Allocation FundClass A | 177,282 | 87,353 | |||||||||
UBS Global Allocation FundClass B | 10,221 | 13,698 | |||||||||
UBS Global Allocation FundClass C | 327,613 | 3,297 | |||||||||
UBS Global Frontier FundClass A | 11,330 | 17,792 | |||||||||
UBS Global Frontier FundClass C | 12,910 | 316 |
4. Transfer agency and related services fees
UBS Financial Services Inc. provides certain services pursuant to a delegation of authority from BNY Mellon Investment Servicing ("BNY Mellon") each Fund's transfer agent, and is compensated for these services by BNY Mellon, not the Funds.
85
The UBS Funds
Notes to financial statements (unaudited)
For the period ended December 31, 2010, UBS Financial Services Inc. received from BNY Mellon, not the Funds, total services fees as follows:
Fund | Amount paid | ||||||
UBS Dynamic Alpha Fund | $ | 89,445 | |||||
UBS Global Allocation Fund | 204,127 | ||||||
UBS Global Frontier Fund | 8,119 |
5. Securities lending
Each Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, cash equivalents or US government securities in an amount at least equal to 102% of the market value of the securities loaned with respect to domestic securities and 105% of the market value of the securities loaned with respect to foreign securities, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly.
Each Fund will regain ownership of loaned securities to exercise certain beneficial rights; however, the Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. The Fund receives compensation for lending its securities from interest or dividends earned on the cash, cash equivalents or US government securities held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees.
UBS Dynamic Alpha Fund, UBS Global Allocation Fund and UBS Global Frontier Fund loaned securities to certain qualified broker-dealers, with the Funds' custodian acting as the Funds' lending agent. Cash collateral received is invested in Private Money Market, which is included in the Portfolio(s) of investments. In addition, UBS Global Allocation Fund and UBS Global Frontier Fund received US Government Agency securities as collateral amounting to $5,657,643 and $709,206, respectively, which cannot be resold. The value of loaned securities and related collateral outstanding at December 31, 2010, were as follows:
Fund |
Market value of securities loaned |
Market value of collateral received from securities loaned |
Market value of investments of cash collateral received |
||||||||||||
UBS Dynamic Alpha Fund | $ | 2,831,824 | $ | 2,930,382 | $ | 2,930,382 | |||||||||
UBS Global Allocation Fund | 21,497,835 | 22,191,316 | 16,533,673 | ||||||||||||
UBS Global Frontier Fund | 695,102 | 709,206 | |
6. Purchases and sales of securities
For the period ended December 31, 2010, aggregate purchases and sales of portfolio securities, excluding short-term investments and US Government and agency securities, were as follows:
Fund | Purchases | Sales proceeds | |||||||||
UBS Dynamic Alpha Fund | $ | 193,746,713 | $ | 295,290,998 | |||||||
UBS Global Allocation Fund | 257,337,489 | 472,407,902 | |||||||||
UBS Global Frontier Fund | 7,404,793 | 13,158,065 |
86
The UBS Funds
Notes to financial statements (unaudited)
For the period ended December 31, 2010, aggregate purchases and sales of US Government and agency securities, excluding short-term investments, were as follows:
Fund | Purchases | Sales proceeds | |||||||||
UBS Dynamic Alpha Fund | $ | 2,291,464 | $ | 3,272,544 | |||||||
UBS Global Allocation Fund | 189,246,222 | 212,193,357 | |||||||||
UBS Global Frontier Fund | 3,131,628 | 4,195,539 |
7. Federal income taxes
It is each Fund's policy to comply with all requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, each Fund intends not to be subject to a federal excise tax. Accordingly, no federal income tax provision was required.
The tax character of distributions paid during the fiscal year ended June 30, 2010 were as follows:
2010 | |||||||
Fund |
Distributions paid from ordinary income |
||||||
UBS Dynamic Alpha Fund | $ | 29,459,585 | |||||
UBS Global Allocation Fund | 107,588,466 | ||||||
UBS Global Frontier Fund | 3,141,174 |
The tax character of distributions paid and components of accumulated earnings/(deficit) on a tax basis for the current fiscal year will be determined after the Trust's fiscal year ending June 30, 2011.
At June 30, 2010, the following Funds had net capital loss carryforwards for federal income tax purposes available to offset future capital gains through the indicated expiration dates:
Expiration dates | |||||||||||||||||||||||||||||||||||
Fund |
June 30, 2011 |
June 30, 2012 |
June 30, 2013 |
June 30, 2014 |
June 30, 2015 |
June 30, 2016 |
June 30, 2017 |
June 30, 2018 |
|||||||||||||||||||||||||||
UBS Dynamic Alpha Fund | | | | | | | $ | 145,211,340 | $ | 202,927,795 | |||||||||||||||||||||||||
UBS Global Allocation Fund | | | | | | | 288,404,627 | 862,762,158 | |||||||||||||||||||||||||||
UBS Global Frontier Fund | | | | | | | 12,841,328 | 9,543,610 |
Post-October losses are deemed to arise on the first business day of a Fund's next taxable year. For the year ended June 30, 2010, the following Funds incurred, and elected to defer, losses of the following:
Fund |
Net capital losses |
Net currency losses |
|||||||||
UBS Dynamic Alpha Fund | $ | 4,123,842 | $ | 3,519,823 | |||||||
UBS Global Allocation Fund | 101,365,098 | | |||||||||
UBS Global Frontier Fund | 7,180,823 | |
87
The UBS Funds
Notes to financial statements (unaudited)
As of and during the period ended December 31, 2010, the Funds did not have any liabilities for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of operations. During the period, the Funds did not incur any interest or penalties.
Each of the tax years in the four year period ended June 30, 2010, remains subject to examination by the Internal Revenue Service and state taxing authorities.
8. Line of credit
The Trust has entered into an agreement with JPMorgan Chase Bank to provide a $75 million committed line of credit to the Funds ("Committed Credit Facility") to be utilized for temporary financing until the settlement of shares or purchases of portfolio securities, the repurchase or redemption of shares of each Fund at the request of shareholders and other temporary or emergency purposes. Interest on amounts borrowed is calculated based on the prevailing rates in effect at the time of borrowing. Under the Committed Credit Facility arrangement, each Fund has agreed to pay commitment fees, pro rata, based on the relative asset size of the Funds in the Committed Credit Facility. There were no borrowings from the Committed Credit Facility during the period ended December 31, 2010.
9. Shares of beneficial interest
For the period ended December 31, 2010, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Dynamic Alpha Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 2,646,459 | $ | 16,115,097 | | $ | | |||||||||||||
Shares repurchased | (12,097,112 | ) | (74,018,239 | ) | (113,332 | ) | (659,623 | ) | |||||||||||
Shares converted from Class B to Class A | 6,405 | 38,104 | (6,716 | ) | (38,104 | ) | |||||||||||||
Dividends reinvested | 1,128,687 | 6,941,424 | 12,288 | 72,375 | |||||||||||||||
Redemption fees | | 5,590 | | | |||||||||||||||
Net decrease | (8,315,561 | ) | $ | (50,918,024 | ) | (107,760 | ) | $ | (625,352 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 134,744 | $ | 781,731 | 1,873,568 | $ | 11,497,938 | |||||||||||||
Shares repurchased | (3,904,483 | ) | (22,721,372 | ) | (1,036,769 | ) | (6,415,202 | ) | |||||||||||
Dividends reinvested | 244,384 | 1,439,424 | 418,358 | 2,610,555 | |||||||||||||||
Redemption fees | | 356 | | 186 | |||||||||||||||
Net increase (decrease) | (3,525,355 | ) | $ | (20,499,861 | ) | 1,255,157 | $ | 7,693,477 |
88
The UBS Funds
Notes to financial statements (unaudited)
UBS Global Allocation Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 2,858,395 | $ | 27,442,811 | 6,121 | $ | 60,474 | |||||||||||||
Shares repurchased | (16,488,199 | ) | (159,809,483 | ) | (239,284 | ) | (2,245,044 | ) | |||||||||||
Shares converted from Class B to Class A | 365,917 | 3,500,122 | (371,137 | ) | (3,500,122 | ) | |||||||||||||
Dividends reinvested | 3,337,040 | 32,702,995 | 25,649 | 252,385 | |||||||||||||||
Redemption fees | | 9,046 | | | |||||||||||||||
Net decrease | (9,926,847 | ) | $ | (96,154,509 | ) | (578,651 | ) | $ | (5,432,307 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 337,339 | $ | 3,174,949 | 367,324 | $ | 3,664,665 | |||||||||||||
Shares repurchased | (7,016,504 | ) | (65,787,024 | ) | (2,268,269 | ) | (21,778,373 | ) | |||||||||||
Dividends reinvested | 1,301,168 | 12,452,180 | 803,980 | 8,023,720 | |||||||||||||||
Redemption fees | | 732 | | 147 | |||||||||||||||
Net decrease | (5,377,997 | ) | $ | (50,159,163 | ) | (1,096,965 | ) | $ | (10,089,841 | ) |
UBS Global Frontier Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 584,196 | $ | 4,447,643 | 63,693 | $ | 491,785 | 79,923 | $ | 589,587 | ||||||||||||||||||
Shares repurchased | (1,588,096 | ) | (11,975,570 | ) | (343,114 | ) | (2,520,128 | ) | (1,168 | ) | (8,793 | ) | |||||||||||||||
Dividends reinvested | 199,143 | 1,539,376 | 44,976 | 348,115 | 3,662 | 28,269 | |||||||||||||||||||||
Redemption fees | | 5,061 | | 24 | | | |||||||||||||||||||||
Net increase (decrease) | (804,757 | ) | $ | (5,983,490 | ) | (234,445 | ) | $ | (1,680,204 | ) | 82,417 | $ | 609,063 |
For the year ended June 30, 2010, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Dynamic Alpha Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 8,327,793 | $ | 51,653,337 | 1,338 | $ | 7,948 | |||||||||||||
Shares repurchased | (27,919,319 | ) | (169,870,197 | ) | (440,378 | ) | (2,587,427 | ) | |||||||||||
Shares converted from Class B to Class A | 80,825 | 498,728 | (84,617 | ) | (498,728 | ) | |||||||||||||
Dividends reinvested | 2,795,905 | 16,999,103 | 43,098 | 250,834 | |||||||||||||||
Redemption fees | | 10,795 | | | |||||||||||||||
Net decrease | (16,714,796 | ) | $ | (100,708,234 | ) | (480,559 | ) | $ | (2,827,373 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 1,384,171 | $ | 8,180,981 | 9,079,410 | $ | 53,972,983 | |||||||||||||
Shares repurchased | (9,114,936 | ) | (53,034,892 | ) | (10,125,401 | ) | (63,148,083 | ) | |||||||||||
Dividends reinvested | 852,122 | 4,959,348 | 961,905 | 5,934,953 | |||||||||||||||
Net decrease | (6,878,643 | ) | $ | (39,894,563 | ) | (84,086 | ) | $ | (3,240,147 | ) |
89
The UBS Funds
Notes to financial statements (unaudited)
UBS Global Allocation Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 6,352,517 | $ | 59,062,787 | 10,783 | $ | 100,247 | |||||||||||||
Shares repurchased | (41,995,018 | ) | (391,321,186 | ) | (1,081,458 | ) | (9,800,513 | ) | |||||||||||
Shares converted from Class B to Class A | 1,460,114 | 13,447,161 | (1,486,878 | ) | (13,447,161 | ) | |||||||||||||
Dividends reinvested | 6,494,949 | 59,948,378 | 121,003 | 1,108,390 | |||||||||||||||
Redemption fees | | 21,796 | | | |||||||||||||||
Net decrease | (27,687,438 | ) | $ | (258,841,064 | ) | (2,436,550 | ) | $ | (22,039,037 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 1,764,048 | $ | 16,132,184 | 2,805,782 | $ | 26,724,534 | |||||||||||||
Shares repurchased | (16,688,832 | ) | (151,047,516 | ) | (11,923,497 | ) | (113,792,917 | ) | |||||||||||
Dividends reinvested | 2,798,058 | 25,210,500 | 1,529,331 | 14,375,713 | |||||||||||||||
Redemption fees | | 7,984 | | 500 | |||||||||||||||
Net decrease | (12,126,726 | ) | $ | (109,696,848 | ) | (7,588,384 | ) | $ | (72,692,170 | ) |
UBS Global Frontier Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 1,866,397 | $ | 12,428,452 | 208,061 | $ | 1,436,877 | 27,487 | $ | 191,235 | ||||||||||||||||||
Shares repurchased | (3,195,448 | ) | (21,825,684 | ) | (714,884 | ) | (4,951,609 | ) | (301,785 | ) | (2,197,613 | ) | |||||||||||||||
Dividends reinvested | 347,095 | 2,408,840 | 86,529 | 602,239 | 82 | 571 | |||||||||||||||||||||
Redemption fees | | 5,142 | | 988 | | | |||||||||||||||||||||
Net decrease | (981,956 | ) | $ | (6,983,250 | ) | (420,294 | ) | $ | (2,911,505 | ) | (274,216 | ) | $ | (2,005,807 | ) |
90
The UBS Funds
General information (unaudited)
Quarterly Form N-Q portfolio schedule
The Funds will file their complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC 0330. Additionally, you may obtain copies of Forms N-Q from the Funds upon request by calling 1-800-647 1568.
Proxy voting policies, procedures and record
You may obtain a description of the Funds' (1) proxy voting policies, (2) proxy voting procedures and (3) information regarding how the Funds voted any proxies related to portfolio securities during the most recent 12-month period ended June 30 for which an SEC filing has been made, without charge, upon request by contacting the Funds directly at 1-800-647 1568, online on UBS's Web site: www.ubs.com/ubsglobalam-proxy, or on the EDGAR Database on the SEC's Web site (http://www.sec.gov).
91
The UBS Funds
Funds' privacy notice
This notice describes the privacy policy of the UBS Family of Funds, the PACE Funds and all closed-end funds managed by UBS Global Asset Management (collectively, the "Funds"). The Funds are committed to protecting the personal information that they collect about individuals who are prospective, current or former investors.
The Funds collect personal information in order to process requests and transactions and to provide customer service. Personal information, which is obtained from applications, may include name(s), address, social security number or tax identification number, bank account information, other Fund holdings and any affiliation the person has with UBS Financial Services Inc. or its subsidiaries ("Personal Information"). The Funds limit access to Personal Information to those individuals who need to know that information in order to process transactions and service accounts. These individuals are required to maintain and protect the confidentiality of Personal Information. The Funds maintain physical, electronic and procedural safeguards to protect Personal Information. The Funds may share Personal Information described above with their affiliates for marketing and other business purposes, such as to facilitate the servicing of accounts. The Funds may share Personal Information described above with a non-affiliated third party if the entity is under contract to perform transaction processing or to service and maintain shareholder accounts on behalf of the Funds and otherwise as permitted by law. Any such contract will include provisions designed to ensure that the third party will uphold and maintain privacy standards when handling Personal Information. The Funds may also disclose Personal Information to regulatory authorities as required by applicable law. Except as described in this privacy notice, the Funds will not use Personal Information for any other purpose unless the Funds describe how such Personal Information will be used and clients are given an opportunity to decline approval of such use of Personal Information relating to them. The Funds endeavor to keep their customer files complete and accurate. The Funds should be notified if any Personal Information needs to be corrected or updated. Please call 1-800-647 1568 with any questions or concerns regarding your Personal Information or this privacy notice.
Privacy Notice
This privacy notice is not a part of the shareholder report.
92
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Item 2. Code of Ethics.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 3. Audit Committee Financial Expert.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 4. Principal Accountant Fees and Services.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 5. Audit Committee of Listed Registrants.
Not applicable to the registrant.
Item 6. Schedule of Investments.
(a) Included as part of the report to shareholders filed under Item 1 of this form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
The Nominating Committee will consider nominees recommended by Qualifying Fund Shareholders if an Independent Trustee vacancy on the Board occurs. A Qualifying Fund Shareholder is a shareholder that: (i) owns of record, or beneficially through a financial intermediary, 1/2 of 1% or more of the Trusts outstanding shares and (ii) has been a shareholder of at least 1/2 of 1% of the Trusts total outstanding shares for 12 months or more prior to submitting the recommendation to the Nominating Committee. In order to recommend a nominee, a Qualifying Fund Shareholder should send a letter to the chairperson of the Nominating Committee, care of the Secretary of the UBS Funds at UBS Global Asset Management, One North Wacker Drive, Chicago, Illinois 60606, and indicate on the envelope Nominating Committee. The Qualifying Fund Shareholders letter should include: (i) the name and address of the Qualifying Fund Shareholder making the recommendation; (ii) the number of shares of each class and series of shares of the Trust which are owned of record and beneficially by such Qualifying Fund Shareholder and the length of time that such shares have been so owned by the Qualifying Fund Shareholder; (iii) a description of all arrangements and understandings between such Qualifying Fund Shareholder and any other person or persons (naming such person or persons) pursuant to which the recommendation is being made; (iv) the name and address of the nominee; and (v) the nominees resume or curriculum vitae. The Qualifying Fund Shareholders letter must be accompanied by a written consent of the individual to stand for election if nominated for the Board and to serve if elected by shareholders.
Item 11. Controls and Procedures.
(a) The registrants principal executive officer and principal financial officer have concluded that the registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) The registrants principal executive officer and principal financial officer are aware of no changes in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
(a) (2) Certifications of principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.CERT.
(a) (3) Written solicitation to purchase securities under Rule 23c-1 under the Investment Company Act of 1940 sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons not applicable to the registrant.
(b) Certifications of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The UBS Funds
By: |
/s/ Mark E. Carver |
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Mark E. Carver |
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President |
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Date: |
March 11, 2011 |
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: |
/s/ Mark E. Carver |
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Mark E. Carver |
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President |
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Date: |
March 11, 2011 |
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By: |
/s/ Thomas Disbrow |
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Thomas Disbrow |
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Vice President and Treasurer |
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Date: |
March 11, 2011 |
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Exhibit EX-99.CERT
Certifications
I, Mark E. Carver, President of The UBS Funds, certify that:
1. I have reviewed this report on Form N-CSR of The UBS Funds;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements, for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
By: |
/s/ Mark E. Carver |
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Mark E. Carver |
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President |
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Date: |
March 11, 2011 |
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I, Thomas Disbrow, Vice President and Treasurer of The UBS Funds, certify that:
1. I have reviewed this report on Form N-CSR of The UBS Funds;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements, for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
By: |
/s/ Thomas Disbrow |
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Thomas Disbrow |
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Vice President and Treasurer |
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Date: |
March 11, 2011 |
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Exhibit EX-99.906CERT
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
In connection with the attached report of The UBS Funds (the Registrant) on Form N-CSR (the Report), each of the undersigned officers of the Registrant does hereby certify that, to the best of such officers knowledge:
1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended;
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant as of, and for, the periods presented in the Report.
Dated: |
March 11, 2011 |
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By: |
/s/ Mark E. Carver |
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Mark E. Carver |
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President |
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Dated: |
March 11, 2011 |
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By: |
/s/ Thomas Disbrow |
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Thomas Disbrow |
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Vice President and Treasurer |
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This certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
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