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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Joseph J. Allessie, Esq. UBS Global Asset Management (Americas) Inc. 1285 Avenue of the Americas New York, NY 10019 | ||||||||
(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, 2011 |
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Item 1. Reports to Stockholders.
UBS Fixed
Income Funds
December 31, 2011
The UBS FundsFixed Income
Semiannual Report
Table of contents | |||||||
President's letter | 1 | ||||||
Market commentary | 2 | ||||||
Fixed Income | |||||||
UBS Core Plus Bond Fund | 3 | ||||||
UBS Fixed Income Opportunities Fund | 16 | ||||||
UBS Global Bond Fund | 34 | ||||||
UBS High Yield Fund | 46 | ||||||
Explanation of expense disclosure | 60 | ||||||
Statement of assets and liabilities | 64 | ||||||
Statement of operations | 68 | ||||||
Statement of changes in net assets | 70 | ||||||
Financial highlights | 72 | ||||||
Notes to financial statements | 80 | ||||||
General information | 100 | ||||||
This page intentionally left blank.
President's letter
February 15, 2012
Dear Shareholder,
If I were asked to characterize the market environment of the past six months, I could probably crystallize it to one word: challenging. Adverse macroeconomic newsincluding events relating to Greece and the Eurozone, ratings downgrades and inflation concernsweighed heavily on investor sentiment, in turn causing markets to demonstrate unusually high levels of volatility.
In this environment of uncertainty, company fundamentals were largely ignored in favor of short-term news, making it difficult for active managers to add value through security selection. We were no different, and so stock selection was the primary detractor from performance across many of our equity and asset allocation funds during the period. Our fixed income portfolios, though generally experiencing performance more in line with their benchmarks, also faced certain headwinds, including a volatile credit and interest rate environment as investor sentiment frequently shifted between risk aversion and risk-taking.
In the time since I have been writing these letters to you, I have stressed the importance of maintaining a long-term perspective. This advice, though valuable under any circumstance, is never more important to follow than during periods of extreme market volatility, when fear plays a too large role in investor decision-making.
At UBS Global Asset Management, we have always kept an eye on the long term. This perspective has required us to evolve over our 30 years of investing, to meet the demands of a more complex investment landscapefor example, by combining our valuation work with market behavioral analysis in our asset allocation portfolios to better position them to navigate market volatility. However, we have never compromised on our core belief that strict adherence to our disciplined investment process through up and down marketsalthough it may, on occasion, result in short-term underperformanceis the most important way, over time, that we can add value in our clients' portfolios.
As I write this, the road ahead, though never certain, seems less unsure. Signs of a solution appear to be emerging in Europe, while US economic indicators seem to be improving. Year-to-date, the S&P 500 Indexthe standard-bearer of equity market performanceis in positive territory, and stock correlations and volatility appear to be moving lower. The market, once again, seems to be paying attention to fundamentals. Against this backdrop, we firmly believe that our portfolios will ultimately be rewarded for the positions we've taken, and that active managers will once again be well-positioned to add value in 2012.
As always, we remain firmly dedicated to your investment success. Thank you for your continued support.
Sincerely,
Mark E. Carver
President
The UBS Funds
Managing Director
UBS Global Asset Management (Americas) Inc.
1
The markets in review
Moderating growth in many countries
Although the overall US economy expanded during the reporting period, gross domestic product ("GDP") growth rates in general could best be characterized as tepid. At its August meeting, the Federal Reserve Board (the "Fed"), acknowledging that economic growth had been considerably slower than it expected, declared that it would keep the federal funds rate on hold until at least through mid-2013. In January 2012 (after the reporting period had ended), the Fed extended this period, noting that economic conditions warranted maintaining exceptionally low federal funds rate levels at least through late 2014.
Additionally, the Fed also announced its plan to purchase $400 billion of longer-term Treasury securities, and to sell an equal amount of shorter-term Treasury securities by June 2012. Dubbed "Operation Twist," the Fed noted that its intention with this program was to "put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative."
In contrast to the US, many international economies took a step backward as the reporting period progressed. Growth in the Eurozone was negatively impacted by its ongoing sovereign debt crisis, as well as weak consumer and business confidence. In contrast, Japan's economy gained some traction, emerging from its recession in the first half of the review period. Elsewhere, while growth rates in many developing countries such as China and India surpassed their developed country counterparts, they also tended to progressively move lower during the course of the reporting period.
Riskier fixed income securities produced mixed results
The US taxable spread sectors (non-US Treasury fixed income securities) were a study in contrasts during the reporting period. Over the first half of the period, investor risk aversion was often elevated due to concerns about the European sovereign debt crisis, signs of decelerating global growth and the downgrade of US sovereign debt. Against this backdrop, US Treasury yields fell sharply. Risk appetite then increased at times during the second half of the period, given signs that the US economy was gaining some traction. All told, during the six months ended December 31, 2011, spread sectors typically underperformed Treasuries, and the overall US bond market, as measured by the Barclays Capital US Aggregate Index,1 returned 4.98%.
Looking more closely at lower-rated fixed-income securities, the BofA Merrill Lynch US High Yield Cash Pay Constrained Index2 declined 0.39% during the reporting period. In contrast, emerging markets debt, as measured by the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global),3 rose 3.21%.The emerging markets debt asset class was supported by continued solid growth in developing countries and generally solid demand from investors seeking to generate incremental yield in the low interest rate environment.
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 Core Plus Bond Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS Core Plus Bond Fund (the "Fund") returned 4.77% (Class A shares returned 0.06% after the deduction of the maximum sales charge), while Class Y shares returned 4.91%. The Fund's benchmark, the Barclays Capital US Aggregate Index (the "Index"), returned 4.98% 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 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, but slightly underperformed the Index during the reporting period, largely due to sector allocation and issue selection.
The Fund used derivatives during the reporting period. Certain interest rate derivatives were utilized to facilitate specific duration and yield curve strategies. Credit default swaps were used to implement specific credit-related investment strategies as part of the Fund's sector allocation and security selection. Later in the period, the Fund engaged in foreign exchange forwards to help implement its active currency positions. Derivatives play a role in the overall portfolio construction process but are just one of the tools we utilize to manage the Fund's overall risk exposure and to implement the aforementioned strategies. With that in mind, overall, the Fund's yield curve positioning and currency management were positive contributors to performance, while sector allocation and security selection in certain spread sectors detracted from performance.
Portfolio performance summary1
What worked
• Yield curve positioning was a positive for performance. We had a yield curve flattening bias for the portfolio from July 2011 through the end of September, as we expected longer-term rates to decline and the difference between short- and long-term rates to narrow. This was a positive for results when the yield curve flattened during that period.
• The Fund's active currency decisions in several developed markets contributed to results. The largest benefit came from our short position in the euro, which weakened during the reporting period given concerns relating to the European sovereign debt crisis.
What didn't work
• The Fund's positioning in several spread sectors (non-US Treasuries) detracted from performance during the reporting period.
Our allocation to commercial mortgage-backed securities (CMBS) modestly detracted from results, both from an allocation and security selection standpoint. While the Fund's CMBS exposure fluctuated from month to month, we generally maintained an overweight position for the period. Within the sector, we held a mix of securities across the capital structure. During the third quarter, securities lower in the capital structure were very volatile and underperformed.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
3
UBS Core Plus Bond Fund
An out-of-index exposure to high yield bondsin particular securities rated BB and belowwas detrimental for performance. While they performed well during the second half of the period, this was not enough to offset their weak results in July and August, when investor risk aversion rose sharply.
• Security selection of investment grade industrial bonds hurt the Fund's results. Within the industrials sector, we emphasized more liquid, higher beta (higher risk) telecommunications companies. The spreads of these bonds widened due to economic concern and periods of risk aversion that were triggered by several macro factors, including the European sovereign debt crisis. (Spread measures the difference between the yields paid on a security versus those paid on US Treasuries.)
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 Core Plus Bond Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | 4.77 | % | 7.34 | % | 2.21 | % | 3.33 | % | |||||||||||
Class B2 | 4.38 | 6.54 | 1.44 | 2.875 | |||||||||||||||
Class C3 | 4.41 | 6.83 | 1.67 | 2.80 | |||||||||||||||
Class Y4 | 4.91 | 7.74 | 2.45 | 3.59 | |||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | 0.06 | % | 2.46 | % | 1.28 | % | 2.86 | % | |||||||||||
Class B2 | (0.62 | ) | 1.54 | 1.11 | 2.875 | ||||||||||||||
Class C3 | 3.66 | 6.08 | 1.67 | 2.80 | |||||||||||||||
Barclays Capital US Aggregate Index6 | 4.98 | % | 7.84 | % | 6.50 | % | 5.78 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.46% and 0.65%; Class B2.29% and 1.40%; Class C1.93% and 1.15%; Class Y1.13% and 0.40%. 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 period ending October 27, 2012, 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 Maximum sales charge for Class A shares is 4.5%. Class A shares bear ongoing 12b-1 service fees.
2 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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. 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.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
6 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://globalam-us.ubs.com/corpweb/performance.do.
5
UBS Core Plus Bond Fund
Top ten long-term fixed income holdings (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
US Treasury Notes, 0.250%, due 10/31/13 |
7.8 | % | |||||
US Treasury Bonds, 3.750%, due 08/15/41 |
5.6 | ||||||
US Treasury Notes, 0.875%, due 11/30/16 |
4.9 | ||||||
Federal National Mortgage Association, 1.625%, due 10/26/15 |
2.6 | ||||||
US Treasury Notes, 2.000%, due 11/15/21 |
2.3 | ||||||
Government National Mortgage Association Pools, 4.500%, TBA |
1.9 | ||||||
Federal National Mortgage Association, 0.875%, due 08/28/14 |
1.9 | ||||||
Federal Home Loan Mortgage Corp. Gold Pools, 5.000%, TBA |
1.9 | ||||||
Federal Home Loan Mortgage Corp. Gold Pools, #A95090, 4.500%, due 11/01/40 |
1.9 | ||||||
Federal Home Loan Mortgage Corp. Gold Pools, 5.500%, TBA |
1.8 | ||||||
Total | 32.6 | % |
1 Figures represent the direct investments of UBS Core Plus Bond Fund. Figures would be different if a breakdown of the underlying investment company was included.
6
UBS Core Plus Bond Fund
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2011
Bonds | |||||||
Corporate bonds | |||||||
Aerospace & defense | 0.16 | % | |||||
Beverages | 0.05 | ||||||
Biotechnology | 0.22 | ||||||
Building products | 0.28 | ||||||
Capital markets | 1.42 | ||||||
Chemicals | 0.28 | ||||||
Commercial banks | 2.15 | ||||||
Commercial services & supplies | 0.39 | ||||||
Computers & peripherals | 0.14 | ||||||
Consumer finance | 1.09 | ||||||
Diversified financial services | 3.09 | ||||||
Diversified telecommunication services | 0.58 | ||||||
Electric utilities | 0.99 | ||||||
Energy equipment & services | 0.33 | ||||||
Food & staples retailing | 0.13 | ||||||
Food products | 0.59 | ||||||
Gas utilities | 0.45 | ||||||
Health care providers & services | 0.32 | ||||||
Household durables | 0.12 | ||||||
Independent power producers & energy traders | 0.28 | ||||||
Insurance | 0.93 | ||||||
Leisure equipment & products | 0.13 | ||||||
Machinery | 0.15 | ||||||
Media | 1.51 | ||||||
Metals & mining | 1.15 | ||||||
Multi-utilities | 0.11 | ||||||
Oil, gas & consumable fuels | 1.76 | ||||||
Paper & forest products | 0.18 | % | |||||
Pharmaceuticals | 0.40 | ||||||
Real estate investment trust (REIT) | 0.64 | ||||||
Road & rail | 0.46 | ||||||
Semiconductors & semiconductor equipment | 0.10 | ||||||
Tobacco | 0.66 | ||||||
Wireless telecommunication services | 0.68 | ||||||
Total corporate bonds | 21.92 | % | |||||
Asset-backed securities | 0.93 | ||||||
Commercial mortgage-backed securities | 6.26 | ||||||
Mortgage & agency debt securities | 39.54 | ||||||
Municipal bonds | 1.39 | ||||||
US government obligations | 25.27 | ||||||
Non-US government obligations | 0.36 | ||||||
Supranational bond | 0.25 | ||||||
Total bonds | 95.92 | % | |||||
Investment company | |||||||
UBS High Yield Relationship Fund | 0.48 | ||||||
Short-term investment | 11.93 | ||||||
Options purchased | 0.15 | ||||||
Investment of cash collateral from securities loaned | 0.13 | ||||||
Total investments | 108.61 | % | |||||
Liabilities, in excess of cash and other assets | (8.61 | ) | |||||
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 company's industry diversification and derivatives exposure was included.
7
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 95.92% | |||||||||||
Corporate bonds: 21.92% | |||||||||||
Australia: 0.30% | |||||||||||
National Australia Bank Ltd., 3.000%, due 07/27/161 |
$ | 100,000 | $ | 99,627 | |||||||
Rio Tinto Finance USA Ltd., 4.125%, due 05/20/21 |
30,000 | 32,249 | |||||||||
Total Australia corporate bonds | 131,876 | ||||||||||
Austria: 0.18% | |||||||||||
PE Paper Escrow GmbH, 12.000%, due 08/01/141 |
75,000 | 79,875 | |||||||||
Canada: 0.66% | |||||||||||
Cenovus Energy, Inc., 4.500%, due 09/15/14 |
95,000 | 102,342 | |||||||||
Teck Resources Ltd., 6.250%, due 07/15/41 |
125,000 | 144,402 | |||||||||
Xstrata Canada Financial Corp., 4.950%, due 11/15/211 |
45,000 | 45,973 | |||||||||
Total Canada corporate bonds | 292,717 | ||||||||||
Cayman Islands: 0.82% | |||||||||||
Transocean, Inc., 6.800%, due 03/15/38 |
145,000 | 146,151 | |||||||||
Vale Overseas Ltd., 4.625%, due 09/15/20 |
155,000 | 160,286 | |||||||||
6.875%, due 11/21/36 | 50,000 | 56,928 | |||||||||
Total Cayman Islands corporate bonds | 363,365 | ||||||||||
France: 0.11% | |||||||||||
RCI Banque SA, 4.600%, due 04/12/161 |
50,000 | 47,594 | |||||||||
Ireland: 0.51% | |||||||||||
The Governor & Co. of the Bank of Ireland, 2.750%, due 03/02/121 |
225,000 | 223,045 | |||||||||
Luxembourg: 0.17% | |||||||||||
Telecom Italia Capital SA, 4.950%, due 09/30/14 |
80,000 | 74,256 | |||||||||
Mexico: 0.25% | |||||||||||
America Movil SAB de CV, 5.000%, due 03/30/20 |
100,000 | 110,477 | |||||||||
Netherlands: 0.14% | |||||||||||
Siemens Financieringsmaatschappij NV, 6.125%, due 08/17/261 |
50,000 | 60,696 |
Face amount |
Value | ||||||||||
Netherlands Antilles: 0.40% | |||||||||||
Teva Pharmaceutical Finance Co. BV, 2.400%, due 11/10/16 |
$ | 100,000 | $ | 101,709 | |||||||
Teva Pharmaceutical Finance IV BV, 3.650%, due 11/10/21 |
75,000 | 76,285 | |||||||||
Total Netherlands Antilles corporate bonds |
177,994 | ||||||||||
Norway: 0.18% | |||||||||||
Eksportfinans ASA, 5.000%, due 02/14/12 |
80,000 | 79,645 | |||||||||
South Africa: 0.16% | |||||||||||
AngloGold Ashanti Holdings PLC, 5.375%, due 04/15/20 |
70,000 | 69,542 | |||||||||
United Kingdom: 1.15% | |||||||||||
BP Capital Markets PLC, 3.875%, due 03/10/15 |
120,000 | 128,137 | |||||||||
HSBC Holdings PLC, 4.875%, due 01/14/22 |
325,000 | 343,490 | |||||||||
PPL WEM Holdings PLC, 3.900%, due 05/01/161 |
35,000 | 35,084 | |||||||||
Total United Kingdom corporate bonds | 506,711 | ||||||||||
United States: 16.89% | |||||||||||
Allied Waste North America, Inc., 6.875%, due 06/01/17 |
85,000 | 89,887 | |||||||||
Altria Group, Inc., 9.950%, due 11/10/38 |
55,000 | 83,654 | |||||||||
American International Group, Inc., 4.250%, due 09/15/14 |
50,000 | 48,556 | |||||||||
Amgen, Inc., 3.450%, due 10/01/20 |
100,000 | 97,683 | |||||||||
Anadarko Petroleum Corp., 5.950%, due 09/15/16 |
75,000 | 85,016 | |||||||||
Appalachian Power Co., 4.600%, due 03/30/21 |
70,000 | 76,766 | |||||||||
Aristotle Holding, Inc., 4.750%, due 11/15/211 |
50,000 | 51,739 | |||||||||
Bank of America Corp., 3.750%, due 07/12/16 |
30,000 | 27,778 | |||||||||
6.500%, due 08/01/16 | 130,000 | 130,919 | |||||||||
Bunge Ltd. Finance Corp., 5.100%, due 07/15/15 |
80,000 | 83,733 | |||||||||
Burlington Northern Santa Fe LLC, 6.150%, due 05/01/37 |
100,000 | 126,304 | |||||||||
Caterpillar Financial Services Corp., 1.125%, due 12/15/14 |
45,000 | 45,056 | |||||||||
Caterpillar, Inc., 3.900%, due 05/27/21 |
60,000 | 65,871 |
8
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Cellco Partnership, 8.500%, due 11/15/18 |
$ | 85,000 | $ | 114,724 | |||||||
CenterPoint Energy Resources Corp., 6.000%, due 05/15/18 |
115,000 | 133,596 | |||||||||
CIT Group, Inc., 7.000%, due 05/02/161 |
135,000 | 134,831 | |||||||||
Citigroup, Inc., 3.953%, due 06/15/16 |
65,000 | 64,776 | |||||||||
6.125%, due 05/15/18 | 160,000 | 170,297 | |||||||||
8.125%, due 07/15/39 | 60,000 | 73,460 | |||||||||
Comcast Corp., 6.300%, due 11/15/17 |
160,000 | 189,248 | |||||||||
ConocoPhillips, 6.500%, due 02/01/39 |
75,000 | 103,745 | |||||||||
Dell, Inc., 5.400%, due 09/10/40 |
55,000 | 61,833 | |||||||||
DirecTV Holdings LLC, 6.000%, due 08/15/40 |
70,000 | 76,361 | |||||||||
7.625%, due 05/15/16 | 105,000 | 111,431 | |||||||||
Dolphin Subsidiary II, Inc., 7.250%, due 10/15/211 |
85,000 | 91,800 | |||||||||
Dow Chemical Co., 4.125%, due 11/15/21 |
50,000 | 51,286 | |||||||||
4.250%, due 11/15/20 | 70,000 | 72,761 | |||||||||
Duke Energy Carolinas LLC, 5.100%, due 04/15/18 |
55,000 | 64,051 | |||||||||
Energy Transfer Partners LP, 6.050%, due 06/01/41 |
40,000 | 39,222 | |||||||||
ERP Operating LP, 4.750%, due 07/15/20 |
35,000 | 36,310 | |||||||||
5.375%, due 08/01/16 | 225,000 | 244,789 | |||||||||
FGI Operating Co., Inc., 10.250%, due 08/01/15 |
67,000 | 71,020 | |||||||||
Ford Motor Credit Co. LLC, 5.000%, due 05/15/18 |
65,000 | 65,169 | |||||||||
5.875%, due 08/02/21 | 145,000 | 151,120 | |||||||||
7.800%, due 06/01/12 | 215,000 | 219,579 | |||||||||
Fortune Brands, Inc., 6.375%, due 06/15/14 |
19,000 | 20,775 | |||||||||
General Electric Capital Corp., 3.350%, due 10/17/16 |
100,000 | 104,140 | |||||||||
4.650%, due 10/17/21 | 100,000 | 104,367 | |||||||||
Goldman Sachs Group, Inc., 3.625%, due 02/07/16 |
160,000 | 154,596 | |||||||||
Hasbro, Inc., 6.350%, due 03/15/40 |
55,000 | 59,459 | |||||||||
Intel Corp., 3.300%, due 10/01/21 |
40,000 | 42,137 |
Face amount |
Value | ||||||||||
International Lease Finance Corp., 7.125%, due 09/01/181 |
$ | 80,000 | $ | 82,800 | |||||||
Jersey Central Power & Light Co., 7.350%, due 02/01/19 |
60,000 | 75,336 | |||||||||
JPMorgan Chase & Co., 3.150%, due 07/05/16 |
165,000 | 165,772 | |||||||||
4.400%, due 07/22/20 | 145,000 | 148,076 | |||||||||
5.400%, due 01/06/42 | 45,000 | 46,962 | |||||||||
Kinder Morgan Energy Partners LP, 5.800%, due 03/15/35 |
45,000 | 46,370 | |||||||||
6.500%, due 09/01/39 | 50,000 | 55,575 | |||||||||
Kraft Foods, Inc., 6.500%, due 02/09/40 |
135,000 | 175,627 | |||||||||
Massachusetts Mutual Life Insurance Co., 8.875%, due 06/01/391 |
50,000 | 73,138 | |||||||||
MBNA Corp., 6.125%, due 03/01/13 |
135,000 | 135,545 | |||||||||
Merrill Lynch & Co., Inc., 5.450%, due 02/05/13 |
80,000 | 80,582 | |||||||||
Morgan Stanley, 5.500%, due 07/28/21 |
75,000 | 69,348 | |||||||||
Series F, 5.625%, due 09/23/19 |
110,000 | 101,869 | |||||||||
6.000%, due 04/28/15 | 75,000 | 75,130 | |||||||||
6.625%, due 04/01/18 | 150,000 | 148,116 | |||||||||
Mutual of Omaha Insurance Co., 6.800%, due 06/15/361 |
80,000 | 85,326 | |||||||||
News America, Inc., 6.200%, due 12/15/34 |
35,000 | 37,627 | |||||||||
7.750%, due 12/01/45 | 60,000 | 73,462 | |||||||||
Norfolk Southern Corp., 3.250%, due 12/01/21 |
75,000 | 76,101 | |||||||||
NuStar Logistics LP, 7.650%, due 04/15/18 |
100,000 | 118,724 | |||||||||
Oncor Electric Delivery Co. LLC, 6.800%, due 09/01/18 |
50,000 | 60,805 | |||||||||
ONEOK, Inc., 6.000%, due 06/15/35 |
60,000 | 64,221 | |||||||||
Owens Corning, 6.500%, due 12/01/16 |
115,000 | 125,509 | |||||||||
Pacific Gas & Electric Co., 6.050%, due 03/01/34 |
30,000 | 37,135 | |||||||||
Pacific Life Insurance Co., 9.250%, due 06/15/391 |
35,000 | 46,608 | |||||||||
Philip Morris International, Inc., 2.900%, due 11/15/21 |
125,000 | 127,444 | |||||||||
PPL Energy Supply LLC, 4.600%, due 12/15/21 |
70,000 | 70,987 | |||||||||
Principal Financial Group, Inc., 8.875%, due 05/15/19 |
105,000 | 130,730 | |||||||||
Prudential Financial, Inc., 6.625%, due 12/01/37 |
20,000 | 21,900 |
9
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
PSEG Power LLC, 8.625%, due 04/15/31 |
$ | 35,000 | $ | 51,630 | |||||||
Qwest Corp., 7.625%, due 06/15/15 |
125,000 | 138,514 | |||||||||
Reynolds American, Inc., 7.625%, due 06/01/16 |
65,000 | 77,508 | |||||||||
Sempra Energy, 9.800%, due 02/15/19 |
35,000 | 47,269 | |||||||||
Time Warner, Inc., 6.100%, due 07/15/40 |
35,000 | 41,032 | |||||||||
Tupperware Brands Corp., 4.750%, due 06/01/211,2 |
55,000 | 55,110 | |||||||||
UnitedHealth Group, Inc., 5.800%, due 03/15/36 |
75,000 | 89,728 | |||||||||
Valero Energy Corp., 6.625%, due 06/15/37 |
90,000 | 96,501 | |||||||||
Verizon Communications, Inc., 6.100%, due 04/15/18 |
100,000 | 120,136 | |||||||||
Wal-Mart Stores, Inc., 5.000%, due 10/25/40 |
50,000 | 58,847 | |||||||||
Wells Fargo & Co., 3.676%, due 06/15/16 |
135,000 | 141,075 | |||||||||
WMG Acquisition Corp., 9.500%, due 06/15/16 |
125,000 | 135,625 | |||||||||
Total United States corporate bonds | 7,449,645 | ||||||||||
Total corporate bonds (cost $9,298,689) |
9,667,438 | ||||||||||
Asset-backed securities: 0.93% | |||||||||||
United States: 0.93% | |||||||||||
Delta Air Lines Pass Through Trust, Series 2007-1, Class A, 6.821%, due 08/10/22 |
37,817 | 39,470 | |||||||||
MBNA Credit Card Master Note Trust, Series 2004-C2, Class C2, 1.178%, due 11/15/163 |
350,000 | 346,605 | |||||||||
Renaissance Home Equity Loan Trust, Series 2006-4, Class AF1, 5.545%, due 01/25/37 |
41,708 | 23,303 | |||||||||
Total asset-backed securities (cost $410,766) |
409,378 | ||||||||||
Commercial mortgage-backed securities: 6.26% | |||||||||||
United States: 6.26% | |||||||||||
Banc of America Commercial Mortgage, Inc., Series 2007-2, Class AM, 5.642%, due 04/10/493 |
150,000 | 140,007 |
Face amount |
Value | ||||||||||
Series 2007-4, Class AM, 5.791%, due 02/10/513 |
$ | 300,000 | $ | 283,839 | |||||||
Commercial Mortgage Loan Trust, Series 2008-LS1, Class AM, 6.007%, due 12/10/493 |
300,000 | 278,216 | |||||||||
FDIC Structured Sale Guaranteed Notes, Series 2010-C1, Class A, 2.980%, due 12/06/201 |
268,221 | 278,700 | |||||||||
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class AM, 5.606%, due 12/10/493 |
150,000 | 123,109 | |||||||||
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class A4, 5.444%, due 03/10/39 |
400,000 | 432,954 | |||||||||
Series 2007-GG9, Class AM, 5.475%, due 03/10/39 |
445,000 | 417,964 | |||||||||
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2006-CB17, Class AM, 5.464%, due 12/12/43 |
170,000 | 166,733 | |||||||||
Series 2006-LDP8, Class AJ, 5.480%, due 05/15/453 |
200,000 | 167,531 | |||||||||
Series 2006-LDP7, Class AJ, 5.875%, due 04/15/453 |
225,000 | 174,453 | |||||||||
Morgan Stanley Dean Witter Capital I, Series 2002-IQ3, Class B, 5.240%, due 09/15/37 |
75,000 | 74,515 | |||||||||
Morgan Stanley Re-REMIC Trust, Series 2009-GG10, Class A4B, 5.790%, due 08/12/451,3 |
225,000 | 221,031 | |||||||||
Total commercial mortgage-backed securities (cost $2,838,759) |
2,759,052 | ||||||||||
Mortgage & agency debt securities: 39.54% | |||||||||||
United Kingdom: 1.24% | |||||||||||
Fosse Master Issuer PLC, Series 2011-1A, Class A2, 1.805%, due 10/18/541,3 |
300,000 | 298,857 | |||||||||
Holmes Master Issuer PLC, Series 2011-1A, Class A2, 1.753%, due 10/15/541,3 |
250,000 | 248,897 | |||||||||
Total United Kingdom mortgage & agency debt securities |
547,754 | ||||||||||
United States: 38.30% | |||||||||||
Federal Home Loan Mortgage Corp. Gold Pools,4 3.500%, TBA |
350,000 | 359,352 | |||||||||
4.000%, TBA | 150,000 | 157,313 | |||||||||
4.500%, TBA | 250,000 | 264,883 |
10
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Mortgage & agency debt securities(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
5.000%, TBA | $ | 775,000 | $ | 832,762 | |||||||
5.500%, TBA | 750,000 | 813,750 | |||||||||
#G13223, 4.000%, due 05/01/23 | 303,415 | 318,909 | |||||||||
#A96140, 4.000%, due 01/01/41 | 144,217 | 151,477 | |||||||||
#G08431, 4.000%, due 01/01/41 | 373,230 | 392,018 | |||||||||
#A95090, 4.500%, due 11/01/40 | 771,580 | 818,065 | |||||||||
#Q01348, 4.500%, due 06/01/41 | 219,204 | 232,359 | |||||||||
#G05249, 5.000%, due 01/01/39 | 321,670 | 346,007 | |||||||||
#G05267, 5.500%, due 12/01/38 | 16,103 | 17,496 | |||||||||
#G06381, 5.500%, due 08/01/40 | 180,717 | 197,072 | |||||||||
#C63008, 6.000%, due 01/01/32 | 187,005 | 208,313 | |||||||||
#G06019, 6.000%, due 10/01/36 | 191,999 | 213,035 | |||||||||
#G01717, 6.500%, due 11/01/29 | 98,780 | 113,184 | |||||||||
Federal National Mortgage Association,4 0.875%, due 08/28/142 |
830,000 | 834,050 | |||||||||
1.625%, due 10/26/15 | 1,120,000 | 1,147,785 | |||||||||
Federal National Mortgage Association Pools,4 #AE0113, 4.000%, due 07/01/40 |
274,402 | 288,670 | |||||||||
#932848, 4.000%, due 12/01/40 | 164,236 | 172,683 | |||||||||
#AH3347, 4.000%, due 01/01/41 | 424,226 | 446,044 | |||||||||
#AB2331, 4.000%, due 02/01/41 | 193,086 | 203,077 | |||||||||
#AE9202, 4.000%, due 09/01/41 | 646,927 | 680,402 | |||||||||
#AI0337, 4.000%, due 10/01/41 | 86,383 | 90,853 | |||||||||
#AE0106, 4.500%, due 06/01/40 | 2,775 | 2,953 | |||||||||
#AI2472, 4.500%, due 05/01/41 | 382,308 | 407,150 | |||||||||
#AI6578, 4.500%, due 07/01/41 | 578,856 | 616,470 | |||||||||
#AJ1415, 4.500%, due 09/01/41 | 344,157 | 366,520 | |||||||||
#890209, 5.000%, due 05/01/40 | 416,801 | 450,485 | |||||||||
#AD9114, 5.000%, due 07/01/40 | 484,639 | 526,907 | |||||||||
5.000%, TBA | 275,000 | 297,086 | |||||||||
#AJ1422, 5.000%, due 09/01/41 | 371,759 | 402,617 | |||||||||
#688066, 5.500%, due 03/01/33 | 230,415 | 254,976 | |||||||||
#688314, 5.500%, due 03/01/33 | 272,243 | 301,263 | |||||||||
#802481, 5.500%, due 11/01/34 | 399,185 | 438,369 | |||||||||
#995018, 5.500%, due 06/01/38 | 35,700 | 38,948 | |||||||||
#408267, 6.000%, due 03/01/28 | 23,237 | 26,027 | |||||||||
#323715, 6.000%, due 05/01/29 | 20,277 | 22,602 | |||||||||
#522564, 6.000%, due 07/01/29 | 62,825 | 70,021 | |||||||||
#676733, 6.000%, due 01/01/33 | 170,723 | 190,683 | |||||||||
#708631, 6.000%, due 06/01/33 | 40,483 | 45,342 | |||||||||
#AE0405, 6.000%, due 08/01/37 | 291,550 | 324,306 | |||||||||
#831730, 6.500%, due 09/01/36 | 240,806 | 270,464 | |||||||||
#253824, 7.000%, due 03/01/31 | 8,540 | 9,857 |
Face amount |
Value | ||||||||||
Federal National Mortgage Association Pools Re-REMIC,4 Series 2005-29, Class KA, 4.500%, due 02/25/35 |
$ | 192,379 | $ | 204,628 | |||||||
First Horizon Asset Securities, Inc., Series 2004-FL1, Class 1A1, 0.564%, due 02/25/353 |
48,905 | 37,737 | |||||||||
Government National Mortgage Association Pools, #738970, 3.500%, due 11/15/26 |
199,010 | 212,465 | |||||||||
#G2 5256, 3.500%, due 12/20/26 | 350,000 | 374,320 | |||||||||
#G2 5107, 4.000%, due 07/20/26 | 478,010 | 513,399 | |||||||||
4.000%, TBA | 175,000 | 187,715 | |||||||||
4.500%, TBA | 775,000 | 844,023 | |||||||||
#G2 2687, 6.000%, due 12/20/28 | 32,215 | 36,637 | |||||||||
#G2 2794, 6.000%, due 08/20/29 | 101,228 | 115,121 | |||||||||
Total United States mortgage & agency debt securities |
16,888,650 | ||||||||||
Total mortgage & agency debt securities (cost $17,008,650) |
17,436,404 | ||||||||||
Municipal bonds: 1.39% | |||||||||||
Chicago Transit Authority, Series 2008-A, 6.899%, due 12/01/40 |
60,000 | 70,853 | |||||||||
Illinois State Taxable Pension, Series 2003, 5.100%, due 06/01/33 |
115,000 | 104,958 | |||||||||
Los Angeles Unified School District, Series 2010, 6.758%, due 07/01/34 |
110,000 | 137,629 | |||||||||
New Jersey State Turnpike Authority Revenue Bonds, Class F, 7.414%, due 01/01/40 |
30,000 | 42,788 | |||||||||
New York State Urban Development Corp. Revenue Bonds, 5.770%, due 03/15/39 |
55,000 | 65,620 | |||||||||
State of California, GO, 6.650%, due 03/01/22 |
30,000 | 34,921 | |||||||||
7.300%, due 10/01/39 | 130,000 | 154,889 | |||||||||
Total municipal bonds (cost $530,570) |
611,658 | ||||||||||
US government obligations: 25.27% | |||||||||||
US Treasury Bonds, 3.750%, due 08/15/412 |
2,115,000 | 2,487,438 | |||||||||
4.375%, due 05/15/412 | 520,000 | 677,544 |
11
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
US government obligations(Concluded) | |||||||||||
US Treasury Notes, 0.250%, due 10/31/13 |
$ | 3,420,000 | $ | 3,420,533 | |||||||
0.250%, due 11/30/132 | 795,000 | 795,093 | |||||||||
0.875%, due 11/30/16 | 2,140,000 | 2,146,521 | |||||||||
1.000%, due 10/31/16 | 610,000 | 615,910 | |||||||||
2.000%, due 11/15/21 | 990,000 | 1,001,292 | |||||||||
Total US government obligations (cost $11,041,310) |
11,144,331 | ||||||||||
Non-US government obligations: 0.36% | |||||||||||
Chile: 0.24% | |||||||||||
Republic of Chile, 3.250%, due 09/14/21 |
100,000 | 103,350 | |||||||||
Colombia: 0.12% | |||||||||||
Republic of Colombia, 4.375%, due 07/12/21 |
50,000 | 53,500 | |||||||||
Total Non-US government obligations (cost $148,930) |
156,850 | ||||||||||
Supranational bond: 0.25% | |||||||||||
European Investment Bank, 1.250%, due 09/17/13 (cost $109,624) |
110,000 | 110,183 | |||||||||
Total bonds (cost $41,387,298) |
42,295,294 | ||||||||||
Shares | |||||||||||
Investment company: 0.48% | |||||||||||
UBS High Yield Relationship Fund*5 (cost $210,000) |
7,858 | 213,419 | |||||||||
Short-term investment: 11.93% | |||||||||||
Investment company: 11.93% | |||||||||||
UBS Cash Management Prime Relationship Fund5 (cost $5,260,470) |
5,260,470 | 5,260,470 |
Number of contracts |
Value | ||||||||||
Options purchased*: 0.15% | |||||||||||
Call Options: 0.12% | |||||||||||
10 Year US Treasury Notes, strike @ USD 132.00, expires February 2012 |
19 | $ | 15,141 | ||||||||
5 Year US Treasury Notes, strike @ USD 122.75, expires January 2012 |
57 | 36,961 | |||||||||
52,102 | |||||||||||
Put Options: 0.03% | |||||||||||
10 Year US Treasury Notes, strike @ USD 128.00, expires February 2012 |
19 | 5,937 | |||||||||
5 Year US Treasury Notes, strike @ USD 122.75, expires January 2012 |
57 | 8,016 | |||||||||
13,953 | |||||||||||
Total options purchased (cost $63,850) |
66,055 | ||||||||||
Shares | |||||||||||
Investment of cash collateral from securities loaned: 0.13% | |||||||||||
UBS Private Money Market Fund LLC5 (cost $56,375) |
56,375 | 56,375 | |||||||||
Total investments: 108.61% (cost $46,977,993) |
47,891,613 | ||||||||||
Liabilities, in excess of cash and other assets: (8.61)% |
(3,795,225 | ) | |||||||||
Net assets: 100.00% | $ | 44,096,388 |
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 | $ | 1,159,042 | |||||
Gross unrealized depreciation | (245,422 | ) | |||||
Net unrealized appreciation of investments | $ | 913,620 |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 59.
* Non-income producing security.
12
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
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, 2011, the value of these securities amounted to $2,260,731 or 5.13% of net assets.
2 Security, or portion thereof, was on loan at December 31, 2011.
3 Variable or floating rate securityThe interest rate shown is the current rate as of December 31, 2011 and changes periodically.
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.
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 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Net realized gain during the six months ended 12/31/11 |
Change in net unrealized appreciation/ (depreciation) during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 2,543,100 | $ | 15,990,804 | $ | 13,273,434 | $ | | $ | | $ | 5,260,470 | $ | 3,119 | |||||||||||||||||
UBS Private Money Market Fund LLCa |
223,105 | 2,574,149 | 2,740,879 | | | 56,375 | 18 | ||||||||||||||||||||||||
UBS High Yield Relationship Fund |
1,439,092 | 210,000 | 1,419,474 | 6,953 | (23,152 | ) | 213,419 | | |||||||||||||||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
493,162 | | 496,720 | 106,746 | (103,188 | ) | | | |||||||||||||||||||||||
$ | 4,698,459 | $ | 18,774,953 | $ | 17,930,507 | $ | 113,699 | $ | (126,340 | ) | $ | 5,530,264 | $ | 3,137 |
a 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.
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Goldman Sachs International | EUR | 835,000 | USD | 1,079,822 | 03/09/12 | $ | (1,475 | ) | |||||||||||
Goldman Sachs International | USD | 1,758,254 | EUR | 1,340,000 | 03/09/12 | (22,999 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 1,340,000 | USD | 1,807,955 | 03/09/12 | 72,699 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 48,225 |
Futures contracts
Expiration date |
Proceeds | Value |
Unrealized depreciation |
||||||||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
US Ultra Bond Futures, 6 contracts (USD) | March 2012 | $ | (949,897 | ) | $ | (961,125 | ) | $ | (11,228 | ) | |||||||||
5 Year US Treasury Notes, 24 contracts (USD) | March 2012 | (2,954,057 | ) | (2,958,188 | ) | (4,131 | ) | ||||||||||||
10 Year US Treasury Notes, 4 contracts (USD) | March 2012 | (523,289 | ) | (524,500 | ) | (1,211 | ) | ||||||||||||
Net unrealized depreciation on futures contracts | $ | (16,570 | ) |
13
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (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 received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Deutsche Bank AG | USD | 225,000 | 03/20/14 | 1.000 | % | 3 | $ | 1,958 | $ | (2,757 | ) | $ | (799 | ) | |||||||||||||||||
Deutsche Bank AG | USD | 250,000 | 12/20/15 | 1.000 | 4 | 5,969 | (3,310 | ) | 2,659 | ||||||||||||||||||||||
$ | 7,927 | $ | (6,067 | ) | $ | 1,860 |
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 Motorola Solutions, Inc. 6.500% bond, due 09/01/25.
4 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.
Credit default swaps on corporate 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 |
|||||||||||||||||||||||||||
Deutsche Bank AG | USD | 250,000 | 12/20/15 | 4 | 1.000 | % | $ | (5,716 | ) | $ | 2,795 | $ | (2,921 | ) | 0.720 | % | |||||||||||||||||||
Deutsche Bank AG | USD | 150,000 | 03/20/16 | 5 | 1.000 | 2,683 | 1,286 | 3,969 | 0.799 | ||||||||||||||||||||||||||
$ | (3,033 | ) | $ | 4,081 | $ | 1,048 |
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 Pfizer, Inc. 4.650% bond, due 03/01/18.
5 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Motorola Solutions, Inc. 6.500% bond, due 09/01/25.
14
UBS Core Plus Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | | $ | 9,667,438 | | $ | 9,667,438 | ||||||||||||
Asset-backed securities | | 409,378 | | 409,378 | |||||||||||||||
Commercial mortgage-backed securities | | 2,759,052 | | 2,759,052 | |||||||||||||||
Mortgage & agency debt securities | | 17,436,404 | | 17,436,404 | |||||||||||||||
Municipal bonds | | 611,658 | | 611,658 | |||||||||||||||
US government obligations | | 11,144,331 | | 11,144,331 | |||||||||||||||
Non-US government obligations | | 156,850 | | 156,850 | |||||||||||||||
Supranational bond | | 110,183 | | 110,183 | |||||||||||||||
Investment company | | 213,419 | | 213,419 | |||||||||||||||
Short-term investment | | 5,260,470 | | 5,260,470 | |||||||||||||||
Options purchased | 66,055 | | | 66,055 | |||||||||||||||
Investment of cash collateral from securities loaned | | 56,375 | | 56,375 | |||||||||||||||
Forward foreign currency contracts | | 48,225 | | 48,225 | |||||||||||||||
Futures contracts | (16,570 | ) | | | (16,570 | ) | |||||||||||||
Swap agreements | | (1,986 | ) | | (1,986 | ) | |||||||||||||
Total | $ | 49,485 | $ | 47,871,797 | | $ | 47,921,282 |
See accompanying notes to financial statements.
15
UBS Fixed Income Opportunities Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS Fixed Income Opportunities Fund (the "Fund") declined 0.33% (Class A shares declined 4.83% after the deduction of the maximum sales charge), while Class Y shares declined 0.19%. For comparison purposes, the BofA Merrill Lynch US Dollar 3-Month LIBOR Constant Maturity Index (the "Index"), returned 0.12% 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 18; 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 slightly negative return during the reporting period.
The Fund extensively utilizes derivatives as part of its investment strategy across global interest rate, credit and currency markets. To facilitate specific duration and yield curve strategies, the Fund utilized different interest rate derivatives, including but not limited to futures, options, swaps and swaptions. Credit default swaps and credit default swaptions were used to help implement credit-related investment strategies as part of the Fund's sector allocation and security selection. Lastly, the Fund utilized currency forwards and swaps as part of its currency management strategy. Derivatives play a role in the overall portfolio construction process but are just one of the tools we utilize to manage the Fund's overall risk exposure and to implement the aforementioned strategies. With that in mind, overall, the Fund's duration and yield curve positioning, as well as currency allocations, were positive contributors to performance, while sector allocation and security selection in certain spread sectors detracted from performance.
Portfolio performance summary1
What worked
• The Fund's yield curve and duration positioning contributed to performance.
We had a yield curve flattening bias in the portfolio for much of the reporting period, as we expected longer-term rates to decline and the difference between short- and long-term rates to narrow. This was a positive for results when the yield curve flattened during the period.
We tactically adjusted the Fund's duration, at times moving to short and long positions. In aggregate, duration positioning was additive for performance. (Duration measures the price sensitivity of a portfolio to interest rate changes.)
• Overall, currency positioning was beneficial for performance. The Fund's active currency decisions in several developed markets, including short positions in the euro and Australian dollar, contributed to results.
What didn't work
• Security selection of investment grade bonds issued by banks detracted from results. We emphasized more liquid, higher beta (higher risk) US banks. The spreads of these bonds widened due to fears of contagion from the European sovereign debt crisis, uncertainties regarding new financial regulations and ongoing weakness
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
16
UBS Fixed Income Opportunities Fund
in the housing market. (Spread measures the difference between the yields paid on non-government securities versus those paid on government securities of comparable duration.)
• The Fund's overweight to several spread sectors (non-US Treasuries) was negative for results during the reporting period.
An overweight to investment grade financials was detrimental for results, as they were among the weakest performing sectors during the reporting period.
An allocation to high yield bondsin particular securities rated BB and belowhurt performance. While they performed well during the second half of the period, this performance was not enough to offset the weak results they posted in July and August, when investor risk aversion rose sharply.
Exposure to emerging markets debt was a drag on results.
A small allocation to commercial mortgage-backed securities (CMBS) that were lower in the capital structure was not rewarded. Their spreads widened at times, given several investor flights-to-quality.
This letter is intended to assist shareholders in understanding how the Fund performed for the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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.
17
UBS Fixed Income Opportunities Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | Inception1 | |||||||||||||
Before deducting maximum sales charge | |||||||||||||||
Class A2 | (0.33 | )% | (1.75 | )% | 0.40 | % | |||||||||
Class C3 | (0.58 | ) | (2.21 | ) | (0.14 | ) | |||||||||
Class Y4 | (0.19 | ) | (1.53 | ) | 0.71 | ||||||||||
After deducting maximum sales charge | |||||||||||||||
Class A2 | (4.83 | )% | (6.17 | )% | (3.76 | )% | |||||||||
Class C3 | (1.30 | ) | (2.91 | ) | (0.14 | ) | |||||||||
BofA Merrill Lynch US Dollar 3-Month LIBOR Constant Maturity Index5 | 0.12 | % | 0.27 | % | 0.27 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.47% and 1.03%; Class C2.02% and 1.53%; Class Y1.37% and 0.78%. 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 dividend expense and security loan fees for securities sold short) to the extent necessary so that the Fund's ordinary operating expenses (excluding expense incurred through investment in other investment companies, interest, taxes, brokerage commissions, extraordinary expenses and dividend expense and security loan fees for securities sold short), through the 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://globalam-us.ubs.com/corpweb/performance.do.
18
UBS Fixed Income Opportunities Fund
Top ten long-term fixed income holdings (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
US Treasury Bonds, PO, 4.845%, due 05/15/40 |
3.0 | % | |||||
Merrill Lynch & Co., Inc., 6.400%, due 08/28/17 |
2.5 | ||||||
JP Morgan Chase Capital XXVII, 7.000%, due 11/01/39 |
2.1 | ||||||
Citigroup, Inc., 3.625%, due 11/30/17 |
1.8 | ||||||
Santander US Debt SA Unipersonal, 3.724%, due 01/20/15 |
1.5 | ||||||
Morgan Stanley Re-REMIC Trust, Series 2009-GG10, Class A4B, 5.790%, due 08/12/45 |
1.4 | ||||||
US Treasury Bonds, 3.500%, due 02/15/39 |
1.4 | ||||||
Ford Motor Credit Co. LLC, 8.700%, due 10/01/14 |
1.3 | ||||||
Intelsat Jackson Holdings SA, 11.250%, due 06/15/16 |
1.2 | ||||||
Petrobras International Finance Co., 5.375%, due 01/27/21 |
1.2 | ||||||
Total | 17.4 | % |
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2011
Bonds | |||||||
Corporate bonds | |||||||
Building materials | 1.82 | % | |||||
Capital markets | 1.55 | ||||||
Chemicals | 2.35 | ||||||
Commercial banks | 8.56 | ||||||
Commercial services & supplies | 1.22 | ||||||
Consumer finance | 1.90 | ||||||
Containers & packaging | 0.38 | ||||||
Diversified financial services | 12.96 | ||||||
Diversified telecommunication services | 2.18 | ||||||
Electric utilities | 1.55 | ||||||
Health care providers & services | 0.62 | ||||||
Hotels, restaurants & leisure | 3.02 | ||||||
Independent power producers & energy traders | 0.55 | ||||||
Insurance | 1.63 | ||||||
Leisure equipment & products | 0.25 | ||||||
Machinery | 0.63 | ||||||
Media | 1.84 | ||||||
Metals & mining | 2.18 | ||||||
Oil, gas & consumable fuels | 6.72 | ||||||
Paper & forest products | 0.51 | ||||||
Road & rail | 0.03 | ||||||
Specialty retail | 0.34 | ||||||
Telecommunications | 0.25 | ||||||
Textiles, apparel & luxury goods | 0.22 | ||||||
Transportation infrastructure | 0.53 | ||||||
Wireless telecommunication services | 1.01 | ||||||
Total corporate bonds | 54.80 | % | |||||
Asset-backed securities | 3.53 | ||||||
Collateralized debt obligations | 2.34 | ||||||
Commercial mortgage-backed securities | 8.17 | ||||||
Mortgage & agency debt securities | 1.50 | ||||||
Municipal bonds | 3.82 | ||||||
US government obligations | 4.37 | ||||||
Total bonds | 78.53 | % | |||||
Investment company | |||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
18.94 | ||||||
Short-term investment | 2.37 | ||||||
Options purchased | 4.00 | ||||||
Total investments | 103.84 | % | |||||
Liabilities, in excess of cash and other assets | (3.84 | ) | |||||
Net assets | 100.00 | % |
Country exposure by issuer, top five (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
United States | 53.2 | % | |||||
United Kingdom | 6.7 | ||||||
Netherlands | 2.4 | ||||||
Luxembourg | 2.2 | ||||||
Ireland | 2.2 | ||||||
Total | 66.7 | % |
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 and derivatives exposure was included.
19
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 78.53% | |||||||||||
Corporate bonds: 54.80% | |||||||||||
Australia: 1.27% | |||||||||||
Leighton Finance Ltd., 9.500%, due 07/28/14 |
AUD | 500,000 | $ | 535,212 | |||||||
Sydney Airport Finance Co. Pty Ltd., 8.000%, due 07/06/15 |
500,000 | 532,848 | |||||||||
Total Australia corporate bonds | 1,068,060 | ||||||||||
Austria: 0.51% | |||||||||||
PE Paper Escrow GmbH, 12.000%, due 08/01/141 |
$ | 400,000 | 426,000 | ||||||||
Brazil: 1.25% | |||||||||||
Petrobras International Finance Co., 5.375%, due 01/27/21 |
1,000,000 | 1,047,690 | |||||||||
Canada: 2.06% | |||||||||||
Nova Chemicals Corp., 8.625%, due 11/01/19 |
800,000 | 882,000 | |||||||||
Rogers Communications, Inc., 5.340%, due 03/22/21 |
CAD | 800,000 | 846,646 | ||||||||
Total Canada corporate bonds | 1,728,646 | ||||||||||
France: 0.35% | |||||||||||
Credit Agricole SA, 6.637%, due 05/31/171,2,3 |
$ | 500,000 | 290,000 | ||||||||
Germany: 1.56% | |||||||||||
HeidelbergCement Finance BV, 8.500%, due 10/31/19 |
EUR | 500,000 | 643,889 | ||||||||
Unitymedia GmbH, 9.625%, due 12/01/194 |
500,000 | 668,157 | |||||||||
Total Germany corporate bonds | 1,312,046 | ||||||||||
Ireland: 2.15% | |||||||||||
Allied Irish Banks PLC, 1.641%, due 04/11/122 |
200,000 | 244,613 | |||||||||
4.500%, due 10/01/12 | 200,000 | 235,554 | |||||||||
Ardagh Packaging Finance PLC, 7.375%, due 10/15/174 |
250,000 | 317,091 | |||||||||
The Governor & Co. of the Bank of Ireland, 2.750%, due 03/02/121 |
$ | 500,000 | 495,656 | ||||||||
4.000%, due 01/28/15 | EUR | 250,000 | 249,033 | ||||||||
Irish Life & Permanent PLC, 3.600%, due 01/14/131 |
$ | 300,000 | 262,373 | ||||||||
Total Ireland corporate bonds | 1,804,320 | ||||||||||
Italy: 0.25% | |||||||||||
Wind Acquisition Finance SA, 11.750%, due 07/15/174 |
EUR | 200,000 | 212,904 |
Face amount |
Value | ||||||||||
Luxembourg: 2.24% | |||||||||||
ArcelorMittal, 5.500%, due 03/01/21 |
$ | 900,000 | $ | 826,118 | |||||||
Intelsat Jackson Holdings SA, 11.250%, due 06/15/16 |
1,000,000 | 1,050,625 | |||||||||
Total Luxembourg corporate bonds | 1,876,743 | ||||||||||
Mexico: 1.05% | |||||||||||
Cemex Finance LLC, 9.500%, due 12/14/161 |
1,000,000 | 877,500 | |||||||||
Netherlands: 2.37% | |||||||||||
Case New Holland, Inc., 7.750%, due 09/01/13 |
500,000 | 531,250 | |||||||||
EDP Finance BV, 4.750%, due 09/26/16 |
EUR | 750,000 | 805,671 | ||||||||
Ziggo Bond Co. BV, 8.000%, due 05/15/184 |
500,000 | 653,596 | |||||||||
Total Netherlands corporate bonds | 1,990,517 | ||||||||||
Norway: 0.94% | |||||||||||
Eksportfinans ASA, 5.000%, due 02/14/12 |
$ | 232,000 | 230,969 | ||||||||
5.500%, due 05/25/16 | 600,000 | 553,238 | |||||||||
Total Norway corporate bonds | 784,207 | ||||||||||
South Africa: 0.93% | |||||||||||
AngloGold Ashanti Holdings PLC, 5.375%, due 04/15/20 |
500,000 | 496,727 | |||||||||
Edcon Proprietary Ltd., 4.676%, due 06/15/142,4 |
EUR | 300,000 | 286,353 | ||||||||
Total South Africa corporate bonds | 783,080 | ||||||||||
Spain: 1.77% | |||||||||||
Cirsa Funding Luxembourg SA, 8.750%, due 05/15/184 |
200,000 | 212,257 | |||||||||
Santander US Debt SA Unipersonal, 3.724%, due 01/20/151 |
$ | 1,400,000 | 1,271,221 | ||||||||
Total Spain corporate bonds | 1,483,478 | ||||||||||
United Kingdom: 5.64% | |||||||||||
Barclays Bank PLC, 5.140%, due 10/14/20 |
1,000,000 | 846,487 | |||||||||
CEVA Group PLC, 8.500%, due 12/01/144 |
EUR | 500,000 | 440,045 | ||||||||
FCE Bank PLC, 7.125%, due 01/15/13 |
500,000 | 661,685 | |||||||||
Imperial Tobacco Finance PLC, 4.500%, due 07/05/18 |
400,000 | 531,942 | |||||||||
Ineos Group Holdings PLC, 7.875%, due 02/15/164 |
500,000 | 478,872 |
20
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United Kingdom(Concluded) | |||||||||||
Lloyds TSB Bank PLC, 6.375%, due 01/21/21 |
$ | 250,000 | $ | 250,534 | |||||||
6.500%, due 03/24/20 | EUR | 1,000,000 | 1,015,404 | ||||||||
PPL WEM Holdings PLC, 3.900%, due 05/01/161 |
$ | 500,000 | 501,204 | ||||||||
Total United Kingdom corporate bonds | 4,726,173 | ||||||||||
United States: 30.46% | |||||||||||
Ally Financial, Inc., 3.612%, due 12/01/125 |
600,000 | 564,000 | |||||||||
American International Group, Inc., 4.250%, due 09/15/14 |
750,000 | 728,346 | |||||||||
Anadarko Petroleum Corp., 8.700%, due 03/15/19 |
500,000 | 638,350 | |||||||||
Caesars Entertainment Operating Co., Inc., 11.250%, due 06/01/17 |
750,000 | 795,938 | |||||||||
Chesapeake Energy Corp., 6.500%, due 08/15/17 |
750,000 | 798,750 | |||||||||
CIT Group, Inc., 7.000%, due 05/01/15 |
500,000 | 501,000 | |||||||||
Citigroup, Inc., 3.625%, due 11/30/172 |
EUR | 1,500,000 | 1,546,129 | ||||||||
5.000%, due 09/15/14 | $ | 750,000 | 742,281 | ||||||||
Discover Bank, 8.700%, due 11/18/19 |
500,000 | 570,092 | |||||||||
Discover Financial Services, 10.250%, due 07/15/19 |
300,000 | 365,687 | |||||||||
DISH DBS Corp., 6.625%, due 10/01/14 |
450,000 | 480,375 | |||||||||
Dow Chemical Co., 7.375%, due 03/01/23 |
500,000 | 614,870 | |||||||||
El Paso Corp., 7.250%, due 06/01/18 |
300,000 | 328,469 | |||||||||
Energy Transfer Partners LP, 6.050%, due 06/01/41 |
680,000 | 666,773 | |||||||||
Exelon Generation Co. LLC, 6.200%, due 10/01/17 |
400,000 | 459,342 | |||||||||
FireKeepers Development Authority, 13.875%, due 05/01/151 |
750,000 | 851,250 | |||||||||
Ford Motor Credit Co. LLC, 8.700%, due 10/01/14 |
1,000,000 | 1,116,604 | |||||||||
Forest Oil Corp., 8.500%, due 02/15/14 |
500,000 | 545,000 | |||||||||
Frontier Communications Corp., 8.250%, due 05/01/14 |
750,000 | 781,875 | |||||||||
GenOn Americas Generation LLC, 8.500%, due 10/01/21 |
850,000 | 792,625 | |||||||||
Goldman Sachs Group, Inc., 4.100%, due 11/03/15 |
CAD | 330,000 | 308,695 | ||||||||
5.000%, due 05/03/18 | 500,000 | 460,049 |
Face amount |
Value | ||||||||||
HCA Holdings, Inc., 6.750%, due 07/15/13 |
$ | 500,000 | $ | 516,250 | |||||||
Hertz Corp., 8.875%, due 01/01/14 |
22,000 | 22,110 | |||||||||
HSBC USA, Inc., 5.000%, due 09/27/20 |
750,000 | 708,755 | |||||||||
International Lease Finance Corp., 8.625%, due 09/15/15 |
1,000,000 | 1,025,000 | |||||||||
JP Morgan Chase Capital XXVII, 7.000%, due 11/01/39 |
1,750,000 | 1,760,938 | |||||||||
Kinder Morgan Finance Co. ULC, 5.700%, due 01/05/16 |
750,000 | 766,875 | |||||||||
Merrill Lynch & Co., Inc., 6.400%, due 08/28/17 |
2,200,000 | 2,130,269 | |||||||||
MGM Resorts International, 13.000%, due 11/15/13 |
750,000 | 890,625 | |||||||||
Nationwide Mutual Insurance Co., 9.375%, due 08/15/391 |
250,000 | 302,114 | |||||||||
Pacific Life Insurance Co., 9.250%, due 06/15/391 |
250,000 | 332,917 | |||||||||
Petrohawk Energy Corp., 7.250%, due 08/15/18 |
750,000 | 843,750 | |||||||||
Quiksilver, Inc., 6.875%, due 04/15/15 |
200,000 | 185,750 | |||||||||
Regions Financial Corp., 5.750%, due 06/15/15 |
250,000 | 238,750 | |||||||||
Ryerson, Inc., 12.000%, due 11/01/15 |
500,000 | 505,000 | |||||||||
Univision Communications, Inc., 7.875%, due 11/01/201 |
400,000 | 406,000 | |||||||||
Wachovia Capital Trust III, 5.570%, due 02/09/122,3 |
300,000 | 251,250 | |||||||||
Total United States corporate bonds | 25,542,853 | ||||||||||
Total corporate bonds (cost $48,890,618) |
45,954,217 | ||||||||||
Asset-backed securities: 3.53% | |||||||||||
United States: 3.53% | |||||||||||
Accredited Mortgage Loan Trust, Series 2006-1, Class A3, 0.474%, due 04/25/362 |
359,774 | 292,873 | |||||||||
Citigroup Mortgage Loan Trust, Inc., Series 2006-WFH2, Class A2A, 0.444%, due 08/25/362 |
718,808 | 486,035 | |||||||||
Delta Air Lines Pass Through Trust, Series 2007-1, Class A, 6.821%, due 08/10/22 |
378,170 | 394,696 | |||||||||
First Franklin Mortgage Loan Asset Backed Certificates, Series 2005-FF10, Class A4, 0.614%, due 11/25/352 |
1,120,647 | 864,759 |
21
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Asset-backed securities(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Saxon Asset Securities Trust, Series 2006-2, Class A3C, 0.444%, due 09/25/362 |
$ | 1,195,710 | $ | 918,267 | |||||||
Total asset-backed securities (cost $3,144,621) |
2,956,630 | ||||||||||
Collateralized debt obligations: 2.34% | |||||||||||
United Kingdom: 0.68% | |||||||||||
Jubilee CDO BV, Series III X, Class A2, 2.679%, due 04/20/17†2 |
EUR | 500,000 | 571,824 | ||||||||
United States: 1.66% | |||||||||||
GSC Partners CDO Fund Ltd., Series 2003-4A, Class B, 2.343%, due 12/16/15†1,2,6 |
$ | 500,000 | 477,500 | ||||||||
Race Point CLO, Series 2X, Class B1, 1.957%, due 05/15/15†2,4 |
1,000,000 | 909,517 | |||||||||
Total United States collateralized debt obligations |
1,387,017 | ||||||||||
Total collateralized debt obligations (cost $2,085,742) |
1,958,841 | ||||||||||
Commercial mortgage-backed securities: 8.17% | |||||||||||
United States: 8.17% | |||||||||||
Banc of America Commercial Mortgage, Inc., Series 2007-2, Class AM, 5.642%, due 04/10/492 |
500,000 | 466,689 | |||||||||
Commercial Mortgage Loan Trust, Series 2008-LS1, Class AM, 6.007%, due 12/10/492 |
500,000 | 463,694 | |||||||||
Commercial Mortgage Pass Through Certificates, Series 2006-C8, Class AM, 5.347%, due 12/10/46 |
150,000 | 146,281 | |||||||||
CW Capital Cobalt Ltd., Series 2007-C3, Class AJ, 5.816%, due 05/15/462 |
575,000 | 275,641 | |||||||||
Series 2007-C3, Class AM, 5.816%, due 05/15/462 |
400,000 | 320,490 | |||||||||
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class AM, 5.606%, due 12/10/492 |
1,000,000 | 820,727 |
Face amount |
Value | ||||||||||
Greenwich Capital Commercial Funding Corp., Series 2007-GG9, Class AM, 5.475%, due 03/10/39 |
$ | 750,000 | $ | 704,433 | |||||||
Series 2007-GG11, Class AM, 5.867%, due 12/10/492 |
500,000 | 443,505 | |||||||||
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2007-LD12, Class AM, 6.058%, due 02/15/512 |
1,000,000 | 930,519 | |||||||||
Morgan Stanley Capital I, Series 2006-HQ8, Class A3, 5.470%, due 03/12/442 |
240,244 | 241,946 | |||||||||
Morgan Stanley Re-REMIC Trust, Series 2009-GG10, Class A4B, 5.790%, due 08/12/451,2 |
1,225,000 | 1,203,391 | |||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2007-C33, Class AM, 5.899%, due 02/15/512 |
1,000,000 | 837,060 | |||||||||
Total commercial mortgage-backed securities (cost $7,650,110) |
6,854,376 | ||||||||||
Mortgage & agency debt securities: 1.50% | |||||||||||
United Kingdom: 0.36% | |||||||||||
Holmes Master Issuer PLC, Series 2011-1A, Class A2, 1.753%, due 10/15/541,2 |
300,000 | 298,677 | |||||||||
United States: 1.14% | |||||||||||
Federal National Mortgage Association,7 3.110%, due 10/09/195,8 |
1,250,000 | 961,081 | |||||||||
Total mortgage & agency debt securities (cost $1,182,735) |
1,259,758 | ||||||||||
Municipal bonds: 3.82% | |||||||||||
Los Angeles Unified School District, Series 2010, 6.758%, due 07/01/34 |
500,000 | 625,585 | |||||||||
State of California, GO Bonds, 7.300%, due 10/01/39 |
800,000 | 953,160 | |||||||||
State of Illinois, GO bonds, Series 2010, 4.421%, due 01/01/15 |
225,000 | 234,049 | |||||||||
5.365%, due 03/01/17 | 800,000 | 858,216 | |||||||||
5.665%, due 03/01/18 | 500,000 | 535,515 | |||||||||
Total municipal bonds (cost $2,883,520) |
3,206,525 |
22
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
US government obligations: 4.37% | |||||||||||
US Treasury Bonds, 3.500%, due 02/15/398 |
$ | 1,000,000 | $ | 1,124,844 | |||||||
US Treasury Bonds, PO 4.845%, due 05/15/405,8 |
6,000,000 | 2,536,506 | |||||||||
Total US government obligations (cost $2,509,263) |
3,661,350 | ||||||||||
Total bonds (cost $68,346,609) |
65,851,697 | ||||||||||
Shares | |||||||||||
Investment company: 18.94% | |||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund*9 (cost $15,000,000) |
903,948 | 15,878,211 | |||||||||
Short-term investment: 2.37% | |||||||||||
Investment company: 2.37% | |||||||||||
UBS Cash Management Prime Relationship Fund9 (cost $1,988,888) |
1,988,888 | 1,988,888 | |||||||||
Number of contracts |
|||||||||||
Options purchased*: 4.00% | |||||||||||
Call Options: 0.38% | |||||||||||
10 Year US Treasury Notes, strike @ USD 132.00, expires February 2012 |
150 | 119,531 | |||||||||
5 Year US Treasury Notes, strike @ USD 122.75, expires January 2012 |
214 | 138,766 | |||||||||
5 Year US Treasury Notes, strike @ USD 123.75, expires February 2012 |
242 | 58,609 | |||||||||
316,906 | |||||||||||
Put Options: 0.48% | |||||||||||
10 Year US Treasury Notes, strike @ USD 131.00, expires January 2012 |
105 | 77,109 | |||||||||
10 Year US Treasury Notes, strike @ USD 128.00, expires February 2012 |
150 | 46,875 | |||||||||
30 Year US Treasury Bond, strike @ USD 145.00, expires January 2012 |
60 | 125,625 |
Number of contracts |
Value | ||||||||||
5 Year US Treasury Notes, strike @ USD 122.75, expires January 2012 |
214 | $ | 30,094 | ||||||||
90 Day Euro-Dollar Time Deposit, strike @ USD 99.13, expires January 2012 |
126 | 787 | |||||||||
90 Day Euro-Dollar Time Deposit, strike @ USD 99.38, expires January 2012 |
495 | 46,406 | |||||||||
90 Day Euro-Dollar Time Deposit, strike @ USD 98.63, expires March 2012 |
253 | 11,069 | |||||||||
90 Day Euro-Dollar Time Deposit, strike @ USD 99.50, expires March 2012 |
105 | 43,969 | |||||||||
90 Day Euro-Dollar Time Deposit, strike @ USD 98.00, expires December 2012 |
130 | 18,688 | |||||||||
400,622 | |||||||||||
Notional Amount |
|||||||||||
Options Purchased on Credit Default Swap on Credit Index†: 0.92% |
|||||||||||
Expiring 03/21/12. If exercised the 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 17 Index and the Fund pays fixed rate of 5.000%. Underlying credit default swap terminating 12/20/16. European style. Counterparty: Morgan Stanley, |
$ | 23,000,000 | 773,829 | ||||||||
Options Purchased on Interest Rate Swaps†: 2.22% | |||||||||||
Expiring 02/11/15. If exercised the Fund pays semi annually 6.000% and receives quarterly floating 3 month LIBOR terminating 04/11/25. European style. Counterparty: Deutsche Bank AG |
3,050,000 | 32,991 |
23
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Notional Amount |
Value | ||||||||||
Options purchased(Concluded) | |||||||||||
Expiring 06/14/13. If exercised the Fund pays quarterly floating 3 month LIBOR and receives semi annually 3.410% terminating 06/18/18. European style. Counterparty: Deutsche Bank AG |
$ | 8,240,000 | $ | 667,339 | |||||||
Expiring 06/14/13. If exercised the Fund pays semi annually 3.410% and receives quarterly floating 3 month LIBOR terminating 06/18/18. European style. Counterparty: Deutsche Bank AG |
8,240,000 | 21,844 | |||||||||
Expiring 06/14/21. If exercised the Fund pays quarterly floating 3 month LIBOR and receives semi annually 5.080% terminating 06/16/26. European style. Counterparty: Deutsche Bank AG |
4,050,000 | 378,571 | |||||||||
Expiring 06/14/21. If exercised the Fund pays semi annually 5.080% and receives quarterly floating 3 month LIBOR terminating 06/16/26. European style. Counterparty: Deutsche Bank AG |
4,050,000 | 95,203 |
Notional Amount |
Value | ||||||||||
Expiring 08/12/14. If exercised the Fund pays quarterly floating 3 month EURIBOR and receives semi annually 2.325% terminating 10/12/15. European style. Counterparty: Barclays Bank PLC |
EUR | 32,000,000 | $ | 337,841 | |||||||
Expiring 12/24/13. If exercised the Fund pays semi annually 2.140% and receives semi annually floating 6 month LIBOR terminating 12/30/33. European style. Counterparty: JP Morgan Chase Bank |
JPY | 670,000,000 | 331,816 | ||||||||
1,865,605 | |||||||||||
Total options purchased (cost $3,423,336) |
3,356,962 | ||||||||||
Total investments: 103.84% (cost $88,758,833) |
87,075,758 | ||||||||||
Liabilities, in excess of cash and other assets: (3.84%) |
(3,219,326 | ) | |||||||||
Net assets: 100.00% | $ | 83,856,432 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 3,628,662 | |||||
Gross unrealized depreciation | (5,311,737 | ) | |||||
Net unrealized depreciation of investments | $ | (1,683,075 | ) |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 59.
* Non-income producing security.
† Holding is illiquid. At December 31, 2011, the value of these securities and other derivative instruments amounted to $7,406,473 or 8.83% of net assets.
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, 2011, the value of these securities amounted to $7,995,803 or 9.54% of net assets.
2 Variable or floating rate securityThe interest rate shown is the current rate as of December 31, 2011 and changes periodically.
3 Perpetual bond security. The maturity date reflects the next call date.
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, 2011, the value of these securities amounted to $4,178,792 or 4.98% of net assets.
5 Rate shown reflects annualized yield at December 31, 2011 on zero coupon bond.
24
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
6 This security, which represents 0.57% of net assets as of December 31, 2011, 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 12/31/11 |
Value as a percentage of net assets |
||||||||||||||||||
GSC Partners CDO Fund Ltd., Series 2003-4A, Class B, 2.343%, due 12/16/15 |
12/14/10 | $ | 455,500 | 0.54 | % | $ | 477,500 | 0.57 | % |
7 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.
8 All or a portion of these securities have been designated as collateral for open swap positions.
9 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 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Net realized gain during the six months ended 12/31/11 |
Change in net unrealized appreciation/ (depreciation) during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 4,839,734 | $ | 29,931,348 | $ | 32,782,194 | | $ | | $ | 1,988,888 | $ | 2,174 | ||||||||||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
15,623,479 | | | | 254,732 | 15,878,211 | | ||||||||||||||||||||||||
$ | 20,463,213 | $ | 29,931,348 | $ | 32,782,194 | | $ | 254,732 | $ | 17,867,099 | $ | 2,174 |
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
JPMorgan Chase Bank | AUD | 3,735,000 | USD | 3,708,967 | 03/01/12 | $ | (86,135 | ) | |||||||||||
JPMorgan Chase Bank | CAD | 1,665,000 | USD | 1,617,052 | 03/01/12 | (15,173 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 470,000 | USD | 618,134 | 03/01/12 | 9,553 | |||||||||||||
JPMorgan Chase Bank | GBP | 320,000 | USD | 499,786 | 03/01/12 | 3,097 | |||||||||||||
JPMorgan Chase Bank | JPY | 65,300,000 | USD | 841,706 | 03/01/12 | (7,503 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 1,475,044 | EUR | 1,120,000 | 03/01/12 | (24,809 | ) | ||||||||||||
Morgan Stanley & Co., Inc. | EUR | 13,440,000 | USD | 18,049,920 | 03/01/12 | 647,103 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 526,133 |
25
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Futures contracts
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Ultra Bond Futures, 99 contracts (USD) | March 2012 | $ | 15,523,752 | $ | 15,858,563 | $ | 334,811 | ||||||||||||
10 Year US Treasury Notes, 22 contracts (USD) | March 2012 | 2,873,098 | 2,884,750 | 11,652 | |||||||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
US Long Bond, 6 contracts (USD) | March 2012 | (846,178 | ) | (868,875 | ) | (22,697 | ) | ||||||||||||
2 Year US Treasury Notes, 58 contracts (USD) | March 2012 | (12,788,636 | ) | (12,791,719 | ) | (3,083 | ) | ||||||||||||
5 Year US Treasury Notes, 140 contracts (USD) | March 2012 | (17,236,600 | ) | (17,256,094 | ) | (19,494 | ) | ||||||||||||
10 Year US Treasury Notes, 88 contracts (USD) | March 2012 | (11,507,170 | ) | (11,539,000 | ) | (31,830 | ) | ||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
90 Day Euro-Dollar Futures, 78 contracts (USD) | September 2013 | 19,345,374 | 19,345,950 | 576 | |||||||||||||||
90 Day Euro-Dollar Futures, 78 contracts (USD) | March 2014 | 19,292,478 | 19,318,650 | 26,172 | |||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
90 Day Euro-Dollar Futures, 156 contracts (USD) | December 2013 | (38,625,343 | ) | (38,670,450 | ) | (45,107 | ) | ||||||||||||
Euro-Bobl, 16 contracts (EUR) | March 2012 | (2,531,631 | ) | (2,590,778 | ) | (59,147 | ) | ||||||||||||
Euro-Bund, 14 contracts (EUR) | March 2012 | (2,424,971 | ) | (2,519,335 | ) | (94,364 | ) | ||||||||||||
Net unrealized appreciation on futures contracts | $ | 97,489 |
Currency swap agreements
Counterparty |
Pay currency |
Pay contracts |
Receive currency |
Receive contracts |
Termination date |
Pay rate |
Receive rate |
Upfront payments (made)/ received |
Value† |
Unrealized appreciation/ (depreciation) |
|||||||||||||||||||||||||||||||||
Deutsche |
|||||||||||||||||||||||||||||||||||||||||||
Bank AG | USD | 2,700,000 | EUR | 1,964,350 | 03/16/40 | 0.555 | %1 | 1.423 | %2 | $ | (17,080 | ) | $ | (20,406 | ) | $ | (37,486 | ) | |||||||||||||||||||||||||
Deutsche Bank AG |
USD | 3,675,250 | EUR | 2,701,397 | 01/13/41 | 0.3981 | 1.5702 | 544,275 | 18,030 | 562,305 | |||||||||||||||||||||||||||||||||
Deutsche Bank AG |
EUR | 1,964,350 | USD | 2,700,000 | 03/16/20 | 1.4232 | 0.5551 | 1,574 | 69,953 | 71,527 | |||||||||||||||||||||||||||||||||
Deutsche Bank AG |
EUR | 2,701,397 | USD | 3,675,250 | 01/13/21 | 1.5702 | 0.3981 | (544,275 | ) | 60,815 | (483,460 | ) | |||||||||||||||||||||||||||||||
Merrill Lynch International |
USD | 6,417,932 | CAD | 6,678,500 | 03/16/20 | 0.5551 | 1.2793 | 106,250 | 150,219 | 256,469 | |||||||||||||||||||||||||||||||||
Merrill Lynch International |
CAD | 6,678,500 | USD | 6,417,932 | 03/16/40 | 1.2793 | 0.5551 | (141,380 | ) | (155,916 | ) | (297,296 | ) | ||||||||||||||||||||||||||||||
$ | (50,636 | ) | $ | 122,695 | $ | 72,059 |
1 Rate based on 3 month USD LIBOR.
2 Rate based on 3 month EURIBOR.
3 Rate based on 3 month Canadian Bankers Acceptance Rate.
26
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Interest rate swap agreements
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund1 |
Payments received by the Fund1 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Barclays Bank PLC | USD | 102,000,000 | 06/20/21 | 0.285 | %2 | 0.563 | %3 | $ | | $ | 320,702 | $ | 320,702 | ||||||||||||||||||
Barclays Bank PLC | USD | 1,470,000 | 06/16/26 | 3.624 | 4 | | (21,627 | ) | (21,627 | ) | |||||||||||||||||||||
Citibank, N.A. | USD | 1,860,000 | 02/15/36 | 4.668 | 0.4533 | 555,373 | (762,304 | ) | (206,931 | ) | |||||||||||||||||||||
Credit Suisse International | EUR | 740,000 | 04/27/22 | 5 | 3.865 | (88,207 | ) | 120,137 | 31,930 | ||||||||||||||||||||||
Credit Suisse International | USD | 2,650,000 | 12/08/16 | 0.4493 | 1.194 | | 17,333 | 17,333 | |||||||||||||||||||||||
Deutsche Bank AG | AUD | 2,840,000 | 11/02/21 | 6 | 6.585 | | 180,604 | 180,604 | |||||||||||||||||||||||
Deutsche Bank AG | CAD | 11,600,000 | 03/10/13 | 1.2797 | 1.875 | 41,249 | 160,029 | 201,278 | |||||||||||||||||||||||
Deutsche Bank AG | CAD | 10,350,000 | 03/10/16 | 2.485 | 1.2797 | (134,496 | ) | (526,193 | ) | (660,689 | ) | ||||||||||||||||||||
Deutsche Bank AG | CAD | 2,850,000 | 03/10/21 | 1.2797 | 3.260 | 76,335 | 277,892 | 354,227 | |||||||||||||||||||||||
Deutsche Bank AG | KRW | 2,585,000,000 | 01/26/21 | 4.810 | 8 | | (92,050 | ) | (92,050 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 3,000,000 | 12/15/15 | 1.521 | 0.5463 | (41,000 | ) | (62,690 | ) | (103,690 | ) | ||||||||||||||||||||
Deutsche Bank AG | USD | 1,250,000 | 09/23/20 | 2.690 | 0.5713 | (23,000 | ) | (92,707 | ) | (115,707 | ) | ||||||||||||||||||||
Deutsche Bank AG | USD | 1,450,000 | 02/15/36 | 3.630 | 0.4533 | (50,000 | ) | (310,664 | ) | (360,664 | ) | ||||||||||||||||||||
Deutsche Bank AG | USD | 4,550,000 | 05/15/38 | 4.413 | 0.4533 | 124,000 | (1,675,338 | ) | (1,551,338 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 875,000 | 05/15/40 | 3.470 | 0.4533 | (157,000 | ) | (255,977 | ) | (412,977 | ) | ||||||||||||||||||||
Deutsche Bank AG | USD | 695,000 | 05/15/40 | 4.560 | 0.4533 | | (510,663 | ) | (510,663 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 1,250,000 | 09/17/40 | 3.473 | 0.5593 | (83,000 | ) | (243,405 | ) | (326,405 | ) | ||||||||||||||||||||
JPMorgan Chase Bank | AUD | 2,585,000 | 01/27/21 | 6 | 6.465 | | 153,004 | 153,004 | |||||||||||||||||||||||
JPMorgan Chase Bank | CAD | 6,125,000 | 11/02/14 | 9 | 2.775 | | 192,743 | 192,743 | |||||||||||||||||||||||
JPMorgan Chase Bank | CAD | 5,490,000 | 11/02/17 | 3.500 | 9 | | (524,899 | ) | (524,899 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | CAD | 1,550,000 | 11/02/22 | 9 | 4.145 | | 260,999 | 260,999 | |||||||||||||||||||||||
JPMorgan Chase Bank | EUR | 6,100,000 | 04/27/22 | 5 | 3.865 | | 990,321 | 990,321 | |||||||||||||||||||||||
JPMorgan Chase Bank | EUR | 2,910,000 | 04/27/42 | 3.919 | 5 | | (1,034,043 | ) | (1,034,043 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | USD | 4,500,000 | 02/18/16 | 2.532 | 0.4713 | | (312,765 | ) | (312,765 | ) | |||||||||||||||||||||
Merrill Lynch International | AUD | 175,000 | 02/15/21 | 6 | 6.635 | | 11,454 | 11,454 | |||||||||||||||||||||||
Merrill Lynch International | CAD | 2,400,000 | 04/02/21 | 3.725 | 1.2817 | | (342,101 | ) | (342,101 | ) | |||||||||||||||||||||
Merrill Lynch International | CAD | 3,000,000 | 04/02/31 | 1.2817 | 4.310 | 5,192 | 729,305 | 734,497 | |||||||||||||||||||||||
Merrill Lynch International | CAD | 1,200,000 | 04/02/41 | 4.208 | 1.2817 | | (389,565 | ) | (389,565 | ) | |||||||||||||||||||||
Merrill Lynch International | JPY | 841,000,000 | 04/26/13 | 0.33410 | 0.451 | | 10,439 | 10,439 | |||||||||||||||||||||||
Merrill Lynch International | JPY | 676,000,000 | 04/26/16 | 0.706 | 0.33410 | | (102,204 | ) | (102,204 | ) | |||||||||||||||||||||
Merrill Lynch International | JPY | 176,000,000 | 04/26/21 | 0.33410 | 1.334 | | 91,366 | 91,366 | |||||||||||||||||||||||
Merrill Lynch International | KRW | 3,015,000,000 | 11/02/21 | 4.840 | 8 | | (109,958 | ) | (109,958 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 42,000,000 | 06/20/12 | 0.5633 | 0.2852 | | 1,565 | 1,565 | |||||||||||||||||||||||
Merrill Lynch International | USD | 15,650,000 | 03/21/18 | 2.763 | 0.5673 | | (1,333,902 | ) | (1,333,902 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 4,020,000 | 06/18/18 | 2.090 | 4 | | (62,228 | ) | (62,228 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 8,200,000 | 06/20/18 | 3.403 | 0.5673 | | (968,048 | ) | (968,048 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 3,630,000 | 06/16/21 | 4 | 3.171 | | 60,141 | 60,141 | |||||||||||||||||||||||
Merrill Lynch International | USD | 3,670,000 | 02/17/41 | 4.423 | 0.4663 | | (1,470,435 | ) | (1,470,435 | ) | |||||||||||||||||||||
Morgan Stanley | CAD | 8,870,000 | 08/04/17 | 3.600 | 9 | | (870,965 | ) | (870,965 | ) | |||||||||||||||||||||
Morgan Stanley | CAD | 4,750,000 | 08/04/22 | 9 | 4.230 | | 816,390 | 816,390 |
27
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund1 |
Payments received by the Fund1 |
Upfront payments (made)/ received |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Morgan Stanley | USD | 60,000,000 | 06/20/12 | 0.563 | %3 | 0.291 | %2 | $ | | $ | 954 | $ | 954 | ||||||||||||||||||
Morgan Stanley | USD | 3,500,000 | 09/23/20 | 2.690 | 0.5713 | (60,500 | ) | (259,580 | ) | (320,080 | ) | ||||||||||||||||||||
$ | 164,946 | $ | (7,938,933 | ) | $ | (7,773,987 | ) |
1 Payments made or received are based on the notional amount.
2 Rate based on 1 month LIBOR (USD BBA).
3 Rate based on 3 month LIBOR (USD BBA).
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, 2011.
5 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, 2011.
6 Rate based on 6 month BBSW. This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2011.
7 Rate based on 3 month Canadian Bankers Acceptance Rate.
8 Rate based on 3 month CD KSDA. This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2011.
9 Rate based on 3 month Canadian Bankers Acceptance Rate. This is a forward starting trade, and as such, a floating rate has not yet been assigned as of December 31, 2011.
10 Rate based on 6 month LIBOR (USD BBA).
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) |
||||||||||||||||||||||||
Barclays Bank PLC | USD | 1,500,000 | 06/20/16 | 5.000 | % | 3 | $ | (81,354 | ) | $ | 64,641 | $ | (16,713 | ) | |||||||||||||||||
Credit Suisse International | USD | 3,000,000 | 06/20/16 | 2.500 | 4 | (194,918 | ) | 104,948 | (89,970 | ) | |||||||||||||||||||||
Credit Suisse International | USD | 4,000,000 | 02/17/51 | 0.350 | 5 | (421,023 | ) | 407,344 | (13,679 | ) | |||||||||||||||||||||
Deutsche Bank | EUR | 3,250,000 | 12/20/15 | 1.000 | 6 | 6,046 | 116,462 | 122,508 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 2,500,000 | 12/20/15 | 1.000 | 7 | (84,611 | ) | 74,446 | (10,165 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | USD | 1,000,000 | 06/20/16 | 5.000 | 8 | 145,611 | (85,048 | ) | 60,563 | ||||||||||||||||||||||
Merrill Lynch International | EUR | 900,000 | 12/20/15 | 1.000 | 6 | 3,437 | 32,251 | 35,688 | |||||||||||||||||||||||
Merrill Lynch International | EUR | 10,000,000 | 06/20/16 | 1.000 | 9 | 27,897 | 386,489 | 414,386 | |||||||||||||||||||||||
Merrill Lynch International | EUR | 4,000,000 | 12/20/16 | 5.000 | 10 | (584,492 | ) | 465,890 | (118,602 | ) | |||||||||||||||||||||
Merrill Lynch International | USD | 13,000,000 | 06/20/16 | 5.000 | 8 | 1,421,250 | (1,105,624 | ) | 315,626 | ||||||||||||||||||||||
Morgan Stanley | EUR | 6,450,000 | 06/20/16 | 1.000 | 9 | (54,064 | ) | 249,285 | 195,221 | ||||||||||||||||||||||
$ | 183,779 | $ | 711,084 | $ | 894,863 |
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 bankruptcy and/or restructuring event with respect to the CDX.NA.HY.Series 16 Index.
4 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the LCDX.NA.Series 16 Index
28
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
5 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the CMBX.NA.AAA Series 4 Index.
6 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to iTraxx Europe Series 14 Index.
7 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to MCDX.NA.Series 15 Index.
8 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to CDX.EM.Series 15 Index.
9 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to iTraxx Europe Series 15 Index.
10 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to iTraxx Europe Crossover Series 16 Index.
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) |
||||||||||||||||||||||||
Barclays Bank PLC | EUR | 3,000,000 | 09/20/16 | 1.000 | % | 3 | $ | (70,834 | ) | $ | 73,062 | $ | 2,228 | ||||||||||||||||||
Barclays Bank PLC | USD | 1,500,000 | 09/20/16 | 1.000 | 4 | (24,598 | ) | 57,590 | 32,992 | ||||||||||||||||||||||
Barclays Bank PLC | USD | 2,750,000 | 12/20/16 | 1.000 | 5 | 45,988 | (51,960 | ) | (5,972 | ) | |||||||||||||||||||||
Deutsche Bank AG | EUR | 1,500,000 | 03/20/14 | 5.000 | 6 | 236,056 | (128,485 | ) | 107,571 | ||||||||||||||||||||||
Deutsche Bank AG | EUR | 2,500,000 | 06/20/16 | 1.000 | 7 | (9,883 | ) | 147,508 | 137,625 | ||||||||||||||||||||||
Deutsche Bank AG | USD | 1,515,000 | 03/20/14 | 1.000 | 8 | 13,182 | (18,567 | ) | (5,385 | ) | |||||||||||||||||||||
Deutsche Bank AG | USD | 2,250,000 | 03/20/14 | 1.000 | 9 | 16,250 | 143,847 | 160,097 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 3,025,000 | 09/20/16 | 0.250 | 10 | (97,127 | ) | 247,831 | 150,704 | ||||||||||||||||||||||
JPMorgan Chase Bank | USD | 1,500,000 | 09/20/16 | 1.000 | 11 | 1,958 | 11,524 | 13,482 | |||||||||||||||||||||||
JPMorgan Chase Bank | USD | 2,000,000 | 09/20/16 | 1.000 | 12 | (223,918 | ) | 181,131 | (42,787 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | USD | 750,000 | 12/20/16 | 1.000 | 13 | (41,049 | ) | 54,771 | 13,722 | ||||||||||||||||||||||
Merrill Lynch International | EUR | 2,750,000 | 06/20/16 | 1.000 | 14 | (88,491 | ) | 226,950 | 138,459 | ||||||||||||||||||||||
Merrill Lynch International | USD | 3,500,000 | 06/20/16 | 1.000 | 15 | 110,916 | (83,845 | ) | 27,071 | ||||||||||||||||||||||
Merrill Lynch International | USD | 3,000,000 | 09/20/16 | 1.000 | 11 | (21,643 | ) | 23,048 | 1,405 | ||||||||||||||||||||||
Merrill Lynch International | USD | 1,000,000 | 09/20/16 | 1.000 | 13 | (63,218 | ) | 68,347 | 5,129 | ||||||||||||||||||||||
Morgan Stanley | EUR | 2,500,000 | 06/20/16 | 1.000 | 16 | (10,692 | ) | 197,908 | 187,216 | ||||||||||||||||||||||
Morgan Stanley | USD | 750,000 | 12/20/16 | 1.000 | 17 | (28,200 | ) | 28,032 | (168 | ) | |||||||||||||||||||||
Morgan Stanley | USD | 1,750,000 | 12/20/16 | 1.000 | 18 | 35,224 | (42,798 | ) | (7,574 | ) | |||||||||||||||||||||
Morgan Stanley | USD | 2,750,000 | 12/20/16 | 1.000 | 19 | 35,355 | (62,024 | ) | (26,669 | ) | |||||||||||||||||||||
$ | (184,724 | ) | $ | 1,073,870 | $ | 889,146 |
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 Credit Suisse Group Finance Guernsey Ltd. 5.000% bond, due 07/29/19.
4 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Kimco Realty Corp. 5.980% bond, due 07/30/12.
29
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
5 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Verizon Communications, 4.900% bond, due 09/15/15.
6 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the ITV PLC 5.375% bond, due 10/19/15.
7 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the ING Bank NV 5.250% bond, due 06/07/19.
8 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.
9 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Computer Sciences Corp. 6.500% bond, due 03/15/18.
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 04/25/19.
11 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Simon Property Group LP 5.250% bond, due 12/01/16.
12 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Hartford Financial Services Group, Inc. 4.000% bond, due 03/30/15.
13 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Prudential Financial, Inc. 4.500% bond, due 07/15/13.
14 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Credit Agricole SA 5.065% bond, due 08/10/22.
15 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the United Parcel Service of America, Inc. 8.375% bond, due 04/01/30.
16 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the BNP Paribas 4.250% bond, due 01/16/14.
17 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Olin Corp., 8.875% bond, due 08/15/19.
18 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Target Corp., 5.375% bond, due 05/01/17.
19 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the VF Corp., 5.950% bond, due 11/01/17.
Credit default swaps on corporate 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 |
|||||||||||||||||||||||||||
Deutsche Bank AG | EUR | 1,000,000 | 03/20/16 | 4 | 5.000 | % | $ | (190,725 | ) | $ | 105,344 | $ | (85,381 | ) | 2.960 | % | |||||||||||||||||||
Deutsche Bank AG | USD | 1,000,000 | 03/20/16 | 5 | 1.000 | 17,886 | 8,571 | 26,457 | 0.799 | ||||||||||||||||||||||||||
Deutsche Bank AG | USD | 1,500,000 | 03/20/16 | 6 | 1.000 | 33,597 | (204,936 | ) | (171,339 | ) | 4.774 | ||||||||||||||||||||||||
Deutsche Bank AG | USD | 1,000,000 | 09/20/16 | 7 | 1.000 | 89,097 | (122,711 | ) | (33,614 | ) | 4.090 | ||||||||||||||||||||||||
JPMorgan Chase Bank | USD | 2,000,000 | 09/20/16 | 8 | 1.000 | 230,988 | (195,746 | ) | 35,242 | 3.340 | |||||||||||||||||||||||||
JPMorgan Chase Bank | USD | 750,000 | 12/20/16 | 9 | 1.000 | 64,202 | (72,951 | ) | (8,749 | ) | 3.224 | ||||||||||||||||||||||||
Merrill Lynch International | EUR | 900,000 | 03/20/16 | 10 | 1.000 | 36,430 | (61,980 | ) | (25,550 | ) | 2.359 | ||||||||||||||||||||||||
Merrill Lynch International | USD | 1,000,000 | 09/20/16 | 9 | 1.000 | 78,782 | (91,787 | ) | (13,005 | ) | 3.190 | ||||||||||||||||||||||||
Morgan Stanley | USD | 1,300,000 | 06/20/16 | 9 | 1.000 | 23,959 | (111,957 | ) | (87,998 | ) | 3.151 | ||||||||||||||||||||||||
Morgan Stanley | USD | 750,000 | 12/20/16 | 11 | 1.000 | 34,908 | (34,877 | ) | 31 | 2.011 | |||||||||||||||||||||||||
Morgan Stanley | USD | 1,750,000 | 12/20/16 | 12 | 1.000 | (35,224 | ) | 40,083 | 4,859 | 0.534 | |||||||||||||||||||||||||
$ | 383,900 | $ | (742,947 | ) | $ | (359,047 | ) |
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.
30
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
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 ITV PLC 5.375% bond, due 10/19/15.
5 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Motorola Solutions, Inc. 6.500% bond, due 09/01/25.
6 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Computer Sciences Corp. 6.500% bond, due 03/15/18.
7 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Bank of America Corp. 6.250% bond, due 04/15/12.
8 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Lincoln National Corp. 6.200% bond, due 12/15/11.
9 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.
10 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Aegon NV 4.125% bond, due 12/08/14.
11 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Dow Chemical Co., 7.375% bond, due 11/01/29.
12 Payment to the counterparty will be made upon the occurrence of bankruptcy and/or restructuring event with respect to the Wal-Mart Stores, Inc., 5.875% bond, due 04/05/27.
Options written
Expiration date |
Premiums received |
Value | |||||||||||||
Call options | |||||||||||||||
Euro-Bobl, 167 contracts, strike @ EUR 126.50 | February 2012 | $ | 63,819 | $ | (63,761 | ) | |||||||||
Put options | |||||||||||||||
90 Day Euro-Dollar Time Deposit, 242 contracts, strike @ USD 99.38 | March 2012 | 102,278 | (57,475 | ) | |||||||||||
90 Day Euro-Dollar Time Deposit, 506 contracts, strike @ USD 99.00 | March 2012 | 144,579 | (41,113 | ) | |||||||||||
90 Day Euro-Dollar Time Deposit, 84 contracts, strike @ USD 99.13 | March 2012 | 23,856 | (8,925 | ) | |||||||||||
90 Day Euro-Dollar Time Deposit, 130 contracts, strike @ USD 96.00 | December 2012 | 58,045 | (3,250 | ) | |||||||||||
Options written on interest rate swaps† | |||||||||||||||
If option exercised the Fund pays quarterly floating 3 month EURIBOR and receives semi annually 1.83%. Underlying interest rate swap terminating 10/12/15. European style. Counterparty: Barclays Bank PLC, Notional Amount EUR 32,000,000 |
December 2014 | 180,157 | (221,234 | ) | |||||||||||
If option exercised the Fund pays quarterly floating 3 month LIBOR and receives semi annually 4.70%. Underlying interest rate swap terminating 06/16/21. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 10,200,000 |
June 2016 | 402,115 | (1,012,767 | ) | |||||||||||
If option exercised the Fund pays semi annually 3.33% and receives quarterly floating 3 month EURIBOR. Underlying interest rate swap terminating 10/12/15. European style. Counterparty: Barclays Bank PLC, Notional Amount EUR 32,000,000 |
December 2014 | 155,492 | (102,617 | ) | |||||||||||
If option exercised the Fund pays semi annually 4.70% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 06/16/21. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 10,200,000 |
June 2016 | 402,115 | (152,957 | ) | |||||||||||
If option exercised the Fund pays semi annually 7.25% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 04/11/25. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 3,050,000 |
February 2015 | 63,135 | (16,602 | ) |
31
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Expiration date |
Premiums received |
Value | |||||||||||||
If option exercised the Fund pays semi annually 8.76% and receives quarterly floating 3 month LIBOR. Underlying interest rate swap terminating 04/11/25. European style. Counterparty: Deutsche Bank AG, Notional Amount USD 3,050,000 |
February 2015 | $ | 38,735 | $ | (7,795 | ) | |||||||||
If option exercised the Fund pays semi annually floating 6 month LIBOR and receives semi annually 1.60%. Underlying interest rate swap terminating 12/30/33. European style. Counterparty: Morgan Stanley, Notional Amount JPY 670,000,000 |
December 2013 | 248,816 | (274,185 | ) | |||||||||||
Receiver options written on credit default swaps 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.IG Series 17 Index and Fund pays fixed rate of 1.000%. Underlying credit default swap terminating 12/20/2016. European style. Counterparty: Morgan Stanley, Notional Amount USD 4,250,000 |
March 2012 | 46,325 | (16,559 | ) | |||||||||||
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 17 Index and Fund receives fixed rate of 1.000%. Underlying credit default swap terminating 12/20/2016. European style. Counterparty: Morgan Stanley, Notional Amount USD 4,250,000 |
March 2012 | 56,525 | (60,620 | ) | |||||||||||
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 17 Index and Fund pays fixed rate of 5.000%. Underlying credit default swap terminating 12/20/2016. European style. Counterparty: Morgan Stanley, Notional Amount USD 10,000,000 |
March 2012 | 207,900 | (94,479 | ) | |||||||||||
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.HY Series 17 Index and Fund receives fixed rate of 5.000%. Underlying credit default swap terminating 12/20/2016. European style. Counterparty: Morgan Stanley, Notional Amount USD 23,000,000 |
March 2012 | 182,160 | (115,055 | ) | |||||||||||
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 17 Index and Fund pays fixed rate of 5.000%. Underlying credit default swap terminating 12/20/2016. European style. Counterparty: Morgan Stanley, Notional Amount USD 23,000,000 |
March 2012 | 387,090 | (257,989 | ) | |||||||||||
Total options written | $ | 2,763,142 | $ | (2,507,383 | ) |
Written option activity for the period ended December 31, 2011 was as follows:
Number of contracts |
Premiums received |
||||||||||
Options outstanding at June 30, 2011 | 1,408 | $ | 235,521 | ||||||||
Options written | 5,533 | 2,113,024 | |||||||||
Options terminated in closing purchase transactions | (5,812 | ) | (1,955,968 | ) | |||||||
Options expired prior to exercise | | | |||||||||
Options outstanding at December 31, 2011 | 1,129 | $ | 392,577 |
Swaption activity for the period ended December 31, 2011 was as follows:
Swaptions outstanding at June 30, 2011 | $ | 1,546,001 | |||||
Swaptions written | 4,182,464 | ||||||
Swaptions terminated in closing purchase transactions | (3,357,900 | ) | |||||
Swaptions expired prior to exercise | | ||||||
Swaptions outstanding at December 31, 2011 | $ | 2,370,565 |
32
UBS Fixed Income Opportunities Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | | $ | 45,954,217 | $ | | $ | 45,954,217 | |||||||||||
Asset-backed securities | | 2,956,630 | | 2,956,630 | |||||||||||||||
Collateralized debt obligations | | 1,481,341 | 477,500 | 1,958,841 | |||||||||||||||
Commercial mortgage-backed securities | | 6,854,376 | | 6,854,376 | |||||||||||||||
Mortgage & agency debt securities | | 1,259,758 | | 1,259,758 | |||||||||||||||
Municipal bonds | | 3,206,525 | | 3,206,525 | |||||||||||||||
US government obligations | | 3,661,350 | | 3,661,350 | |||||||||||||||
Investment company | | 15,878,211 | | 15,878,211 | |||||||||||||||
Short-term investment | | 1,988,888 | | 1,988,888 | |||||||||||||||
Options purchased | 717,528 | 2,639,434 | | 3,356,962 | |||||||||||||||
Forward foreign currency contracts | | 526,133 | | 526,133 | |||||||||||||||
Futures contracts | 97,489 | | | 97,489 | |||||||||||||||
Swap agreements | | (6,774,231 | ) | | (6,774,231 | ) | |||||||||||||
Options written | (174,524 | ) | (2,332,859 | ) | | (2,507,383 | ) | ||||||||||||
Total | $ | 640,493 | $ | 77,299,773 | $ | 477,500 | $ | 78,417,766 |
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Collateralized debt obligation |
Total | ||||||||||
Assets | |||||||||||
Beginning balance | $ | 475,000 | $ | 475,000 | |||||||
Purchases | | | |||||||||
Issuances | | | |||||||||
Sales | | | |||||||||
Settlements | | | |||||||||
Accrued discounts (premiums) | 4,137 | 4,137 | |||||||||
Total realized gain (loss) | | | |||||||||
Change in net unrealized appreciation/depreciation | (1,637 | ) | (1,637 | ) | |||||||
Transfers into Level 3 | | | |||||||||
Transfers out of Level 3 | | | |||||||||
Ending balance | $ | 477,500 | $ | 477,500 |
The change in net unrealized appreciation/depreciation relating to the Level 3 investments held at December 31, 2011 was $(1,637).
See accompanying notes to financial statements.
33
UBS Global Bond Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS Global Bond Fund (the "Fund") declined 0.01% (Class A shares declined 4.52% after the deduction of the maximum sales charge), while Class Y shares returned 0.10%. The Fund's benchmark, the Barclays Capital Global Aggregate Bond Index (the "Index"), returned 1.21% 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 36; 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 underperformance was due to a variety of factors, including security selection and sector positioning.
The Fund used derivatives during the reporting period. These included certain interest rate instruments, to manage the Fund's duration and yield curve exposure; credit default swaps to implement specific credit-related investment strategies as part of the Fund's sector allocation and security selection; and foreign exchange forwards to manage the Fund's currency exposures. Derivatives play a role in the overall portfolio construction process but are just one of the tools we utilize to manage the Fund's overall risk exposure and to implement the aforementioned strategies. With that in mind, overall, the Fund's duration and yield curve positioning, as well as currency allocations, were positive contributors to performance, while sector allocation and security selection in certain spread sectors detracted from performance.
Portfolio performance summary1
What worked
• Duration positioning contributed to results. We tactically adjusted the Fund's duration in both the US and the UK. At the beginning of the period, the Fund's duration in the US was shorter than the Index, as we felt US yields would move higher as the US economic expansion continued. However, as US economic growth hit a soft patch in the summer, we moved to a long duration versus the Index. This was rewarded, as US Treasury yields moved sharply lower in the third quarter of 2011. In the UK, we moved from a neutral to a long duration versus the Index. This was also beneficial, as rates in the UK declined given slowing economic growth and fears of recession. (Duration is a measure of a portfolio's sensitivity to changes in interest rates.)
• Overall, the Fund's yield curve positioning strategies were rewarded. During the second half of the review period, we generally had a yield curve flattening bias in the US, as we expected longer-term US rates to decline and the difference between short- and long-term rates to narrow. This was a positive for results when the yield curve flattened during that period.
• The Fund's currency exposures, overall, modestly contributed to performance.
What didn't work
• Security selection of investment grade bonds detracted from results. Security selection in European industrials hurt performance, as did the Fund's holdings in the financial sector. With respect to the latter, we emphasized senior secured securities issued by US and European banks. The spreads of these bonds widened due to the European sovereign debt crisis, moderating global growth and uncertainties regarding new financial regulations. (Spread measures the difference between the yields paid on non-government securities versus those paid on government securities of comparable duration.)
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
34
UBS Global Bond Fund
• Sector positioning, overall, was a negative for performance.
An overweight to investment grade financials was detrimental for results, as it was the weakest performing sector within the Index during the review period. During the period, we pared our exposure to European financials in favor of US financials, as we felt the latter had relatively better fundamentals and return prospects.
Having on overweight to European mortgage-backed securities was a negative for results, as they underperformed during the period.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 Bond Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | (0.01 | )% | 4.92 | % | 1.95 | % | 4.98 | % | 4.52 | % | |||||||||||||
Class B3 | (0.37 | ) | 4.27 | 1.20 | 4.54 | 4.376 | |||||||||||||||||
Class C4 | (0.26 | ) | 4.42 | 1.43 | N/A | 3.56 | |||||||||||||||||
Class Y5 | 0.10 | 5.21 | 2.21 | 5.25 | 4.74 | ||||||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | (4.52 | )% | 0.16 | % | 1.03 | % | 4.50 | % | 4.05 | % | |||||||||||||
Class B3 | (5.07 | ) | (0.61 | ) | 0.93 | 4.54 | 4.376 | ||||||||||||||||
Class C4 | (0.96 | ) | 3.69 | 1.43 | N/A | 3.56 |
Barclays Capital Global Aggregate Index7 1.21% 5.64% 6.46% 7.16% 6.24%
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A2.43% and 1.15%; Class B3.20% and 1.90%; Class C2.89% and 1.65%; Class Y2.13% 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 period ending October 27, 2012, 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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 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://globalam-us.ubs.com/corpweb/performance.do.
36
UBS Global Bond Fund
Top ten long-term fixed income holdings (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
Government of Japan, 1.800%, due 06/20/17 |
6.7 | % | |||||
Government of Japan, 0.600%, due 03/20/16 |
5.5 | ||||||
Bundesrepublik Deutschland, 4.000%, due 01/04/37 |
3.4 | ||||||
Government of Japan, 1.900%, due 06/20/25 |
3.3 | ||||||
US Treasury Notes, 1.750%, due 05/31/16 |
2.9 | ||||||
US Treasury Notes, 2.625%, due 08/15/20 |
2.9 | ||||||
Instituto de Credito Oficial, 5.375%, due 07/02/12 |
2.8 | ||||||
Canadian Government Bond, 3.500%, due 06/01/20 |
2.6 | ||||||
Bundesrepublik Deutschland, 6.250%, due 01/04/24 |
2.6 | ||||||
UK Gilts, 2.000%, due 01/22/16 |
2.3 | ||||||
Total | 35.0 | % |
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2011
Bonds | |||||||
Corporate bonds | |||||||
Building materials | 0.27 | % | |||||
Capital markets | 1.68 | ||||||
Chemicals | 0.55 | ||||||
Commercial banks | 9.48 | ||||||
Commercial services & supplies | 0.35 | ||||||
Construction & engineering | 0.46 | ||||||
Consumer finance | 0.34 | ||||||
Diversified financial services | 4.74 | ||||||
Diversified telecommunication services | 2.26 | ||||||
Electric utilities | 0.53 | ||||||
Gas utilities | 0.46 | ||||||
Health care equipment & supplies | 0.39 | ||||||
Insurance | 0.65 | ||||||
Leisure equipment & products | 0.38 | ||||||
Media | 2.04 | ||||||
Metals & mining | 0.99 | ||||||
Multi-utilities | 0.18 | ||||||
Oil, gas & consumable fuels | 2.15 | ||||||
Pharmaceuticals | 0.36 | ||||||
Semiconductors & semiconductor equipment | 0.15 | ||||||
Specialty retail | 0.14 | ||||||
Telecommunications | 0.37 | ||||||
Tobacco | 1.87 | ||||||
Wireless telecommunication services | 0.73 | ||||||
Total corporate bonds | 31.52 | % | |||||
Asset-backed securities | 1.81 | ||||||
Collateralized debt obligation | 1.22 | ||||||
Mortgage & agency debt securities | 7.66 | ||||||
US government obligations | 10.06 | ||||||
Non-US government obligations | 39.96 | ||||||
Supranational bonds | 2.16 | ||||||
Total bonds | 94.39 | % | |||||
Short-term investment | 3.36 | ||||||
Total investments | 97.75 | % | |||||
Cash and other assets, less liabilities | 2.25 | ||||||
Net assets | 100.00 | % |
Country exposure by issuer, top five (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
United States | 32.3 | % | |||||
Japan | 16.8 | ||||||
United Kingdom | 10.8 | ||||||
Germany | 8.1 | ||||||
Italy | 5.1 | ||||||
Total | 73.1 | % |
1 Figures represent the industry breakdown of direct investments of UBS Global Bond Fund. Figures would be different if a breakdown of derivatives exposure was included.
37
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 94.39% | |||||||||||
Corporate bonds: 31.52% | |||||||||||
Australia: 1.69% | |||||||||||
Rio Tinto Finance USA Ltd., 3.750%, due 09/20/21 |
$ | 35,000 | $ | 36,675 | |||||||
Westpac Banking Corp., 4.125%, due 05/25/18 |
EUR | 100,000 | 132,458 | ||||||||
4.200%, due 02/27/15 | $ | 70,000 | 72,957 | ||||||||
Total Australia corporate bonds | 242,090 | ||||||||||
Canada: 0.30% | |||||||||||
Nova Chemicals Corp., 8.625%, due 11/01/19 |
25,000 | 27,562 | |||||||||
Teck Resources Ltd., 3.150%, due 01/15/17 |
15,000 | 15,324 | |||||||||
Total Canada corporate bonds | 42,886 | ||||||||||
Cayman Islands: 0.62% | |||||||||||
Vale Overseas Ltd., 5.625%, due 09/15/19 |
50,000 | 55,080 | |||||||||
6.875%, due 11/21/36 | 30,000 | 34,157 | |||||||||
Total Cayman Islands corporate bonds |
89,237 | ||||||||||
France: 2.92% | |||||||||||
AXA SA, 6.667%, due 07/06/161,2 |
GBP | 50,000 | 55,908 | ||||||||
BNP Paribas Home Loan SFH, 3.875%, due 07/12/21 |
EUR | 100,000 | 130,830 | ||||||||
CM-CIC Covered Bonds, 4.375%, due 03/17/213 |
100,000 | 136,149 | |||||||||
Societe Generale SA, 2.200%, due 09/14/134 |
$ | 100,000 | 93,958 | ||||||||
Total France corporate bonds | 416,845 | ||||||||||
Germany: 2.14% | |||||||||||
HeidelbergCement Finance BV, 8.500%, due 10/31/19 |
EUR | 30,000 | 38,633 | ||||||||
Kreditanstalt fuer Wiederaufbau, 5.500%, due 12/07/15 |
GBP | 150,000 | 267,151 | ||||||||
Total Germany corporate bonds | 305,784 | ||||||||||
Italy: 0.73% | |||||||||||
Telecom Italia SpA, 2.260%, due 06/07/161 |
EUR | 50,000 | 51,875 | ||||||||
Wind Acquisition Finance SA, 11.750%, due 07/15/173 |
50,000 | 53,226 | |||||||||
Total Italy corporate bonds | 105,101 | ||||||||||
Luxembourg: 0.18% | |||||||||||
Intelsat Jackson Holdings SA, 7.250%, due 10/15/20 |
$ | 25,000 | 25,375 |
Face amount |
Value | ||||||||||
Mexico: 0.73% | |||||||||||
America Movil SAB de CV, 3.625%, due 03/30/15 |
$ | 100,000 | $ | 104,787 | |||||||
Netherlands: 0.75% | |||||||||||
Rabobank Nederland NV, 4.000%, due 09/10/15 |
GBP | 50,000 | 81,216 | ||||||||
RWE Finance BV, 5.625%, due 12/06/23 |
15,000 | 26,675 | |||||||||
Total Netherlands corporate bonds | 107,891 | ||||||||||
Netherlands Antilles: 0.36% | |||||||||||
Teva Pharmaceutical Finance Co. BV, 3.650%, due 11/10/21 |
$ | 25,000 | 25,428 | ||||||||
Teva Pharmaceutical Finance IV BV, 3.650%, due 11/10/21 |
25,000 | 25,429 | |||||||||
Total Netherlands Antilles corporate bonds |
50,857 | ||||||||||
Norway: 1.11% | |||||||||||
DnB NOR Boligkreditt, 3.875%, due 06/16/21 |
EUR | 110,000 | 152,951 | ||||||||
Statoil ASA, 3.150%, due 01/23/22 |
$ | 5,000 | 5,142 | ||||||||
Total Norway corporate bonds | 158,093 | ||||||||||
Qatar: 0.76% | |||||||||||
Qtel International Finance Ltd., 6.500%, due 06/10/144 |
100,000 | 108,850 | |||||||||
Spain: 1.04% | |||||||||||
Bankia SA, 4.125%, due 03/24/36 |
EUR | 100,000 | 82,810 | ||||||||
Gas Natural Capital Markets SA, 5.250%, due 07/09/14 |
50,000 | 66,141 | |||||||||
Total Spain corporate bonds | 148,951 | ||||||||||
United Kingdom: 5.79% | |||||||||||
Aviva PLC, 4.729%, due 11/28/141,2 |
40,000 | 36,757 | |||||||||
BAA Funding Ltd., 3.975%, due 02/15/124 |
50,000 | 64,809 | |||||||||
Barclays Bank PLC, 4.750%, due 03/15/201,2 |
40,000 | 24,332 | |||||||||
4.875%, due 12/15/141,2 | 60,000 | 44,263 | |||||||||
British Telecommunications PLC, 8.625%, due 03/26/20 |
GBP | 40,000 | 80,408 | ||||||||
HSBC Holdings PLC, 4.500%, due 04/30/14 |
EUR | 50,000 | 67,656 | ||||||||
Imperial Tobacco Finance PLC, 4.500%, due 07/05/18 |
100,000 | 132,985 |
38
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United Kingdom(Concluded) | |||||||||||
Lloyds TSB Bank PLC, 4.500%, due 09/15/143 |
EUR | 100,000 | $ | 127,488 | |||||||
Royal Bank of Scotland PLC, 3.400%, due 08/23/13 |
$ | 60,000 | 58,372 | ||||||||
Scottish & Southern Energy PLC, 5.453%, due 10/01/151,2 |
GBP | 50,000 | 75,631 | ||||||||
WPP PLC, 6.625%, due 05/12/16 |
EUR | 80,000 | 114,800 | ||||||||
Total United Kingdom corporate bonds |
827,501 | ||||||||||
United States: 12.40% | |||||||||||
Alltel Corp., 7.875%, due 07/01/32 |
$ | 40,000 | 57,169 | ||||||||
Ally Financial, Inc., 4.500%, due 02/11/14 |
15,000 | 14,475 | |||||||||
Altria Group, Inc., 9.250%, due 08/06/19 |
100,000 | 134,276 | |||||||||
Anadarko Petroleum Corp., 5.750%, due 06/15/14 |
100,000 | 107,618 | |||||||||
Bank of America Corp., 7.375%, due 05/15/14 |
125,000 | 129,607 | |||||||||
Bear Stearns Cos. LLC, 5.700%, due 11/15/14 |
150,000 | 163,130 | |||||||||
Boston Scientific Corp., 6.000%, due 01/15/20 |
50,000 | 55,817 | |||||||||
Celanese US Holdings LLC, 6.625%, due 10/15/18 |
25,000 | 26,562 | |||||||||
CF Industries, Inc., 7.125%, due 05/01/20 |
20,000 | 23,650 | |||||||||
Citigroup, Inc., 4.750%, due 05/31/171 |
EUR | 50,000 | 52,870 | ||||||||
5.625%, due 08/27/12 | $ | 70,000 | 71,057 | ||||||||
Comcast Corp., 6.300%, due 11/15/17 |
150,000 | 177,420 | |||||||||
Energy Transfer Partners LP, 6.050%, due 06/01/41 |
25,000 | 24,514 | |||||||||
7.500%, due 07/01/38 | 10,000 | 11,417 | |||||||||
Enterprise Products Operating LLC, 3.700%, due 06/01/15 |
30,000 | 31,451 | |||||||||
Series I, 5.000%, due 03/01/15 | 20,000 | 21,783 | |||||||||
Freescale Semiconductor, Inc., 9.250%, due 04/15/184 |
20,000 | 21,375 | |||||||||
General Electric Capital Corp., Series A, 6.750%, due 03/15/32 |
110,000 | 128,804 | |||||||||
Hasbro, Inc., 6.350%, due 03/15/40 |
50,000 | 54,054 | |||||||||
Kinder Morgan Energy Partners LP, 5.800%, due 03/15/35 |
75,000 | 77,283 |
Face amount |
Value | ||||||||||
Morgan Stanley, 5.450%, due 01/09/17 |
$ | 250,000 | $ | 240,691 | |||||||
Quicksilver Resources, Inc., 11.750%, due 01/01/16 |
20,000 | 22,700 | |||||||||
Range Resources Corp., 5.750%, due 06/01/21 |
5,000 | 5,413 | |||||||||
SLM Corp., 6.250%, due 01/25/16 |
50,000 | 48,624 | |||||||||
Toys R Us Property Co. II LLC, 8.500%, due 12/01/17 |
20,000 | 20,700 | |||||||||
Waste Management, Inc., 7.375%, due 03/11/19 |
40,000 | 50,370 | |||||||||
Total United States corporate bonds |
1,772,830 | ||||||||||
Total corporate bonds (cost $4,661,062) |
4,507,078 | ||||||||||
Asset-backed securities: 1.81% | |||||||||||
United Kingdom: 0.85% | |||||||||||
Chester Asset Receivables Dealings, Series 2004-1, Class A, 1.198%, due 04/15/161 |
GBP | 20,000 | 30,135 | ||||||||
Series 2003-B PLC, Class A, 4.650%, due 07/15/13 |
30,000 | 47,839 | |||||||||
Whinstone Capital Management Ltd., Series 1A, Class B2, 3.385%, due 10/25/441,4 |
EUR | 77,108 | 44,410 | ||||||||
Total United Kingdom asset-backed securities |
122,384 | ||||||||||
United States: 0.96% | |||||||||||
Bank of America Corp., Series 2004-A1, 4.500%, due 01/17/14 |
40,000 | 53,822 | |||||||||
MBNA Credit Card Master Note Trust, Series 2002-A2, Class A, 5.600%, due 07/17/14 |
50,000 | 65,118 | |||||||||
Merrill Lynch Mortgage Investors, Inc., Series 2006-SL1, Class A, 0.474%, due 09/25/361 |
$ | 29,495 | 17,741 | ||||||||
Total United States asset-backed securities |
136,681 | ||||||||||
Total asset-backed securities (cost $324,032) |
259,065 |
39
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Collateralized debt obligation: 1.22% | |||||||||||
United States: 1.22% | |||||||||||
Hewett's Island CDO Ltd., Series 2007-6A, Class D, 2.790%, due 06/09/19 (cost $247,508)†1,4,5 |
$ | 250,000 | $ | 174,598 | |||||||
Mortgage & agency debt securities: 7.66% | |||||||||||
United States: 7.66% | |||||||||||
Federal Home Loan Mortgage Corp. Gold Pools,6 #G04461, 5.000%, due 07/01/38 |
122,301 | 131,555 | |||||||||
Federal National Mortgage Association Pools,6 #AA5244, 4.000%, due 05/01/39 |
62,808 | 66,038 | |||||||||
#909356, 5.000%, due 02/01/37 |
146,778 | 158,663 | |||||||||
#914467, 5.000%, due 04/01/37 |
106,235 | 114,837 | |||||||||
#928197, 5.500%, due 03/01/37 |
108,444 | 118,173 | |||||||||
#AC1466, 5.500%, due 08/01/39 |
143,380 | 158,760 | |||||||||
#900568, 6.000%, due 09/01/36 |
60,234 | 66,448 | |||||||||
#940642, 6.000%, due 08/01/37 |
117,266 | 130,096 | |||||||||
#889579, 6.000%, due 05/01/38 |
90,183 | 99,741 | |||||||||
Government National Mortgage Association Pools, #781276, 6.500%, due 04/15/31 |
43,569 | 50,410 | |||||||||
Total mortgage & agency debt securities (cost $1,002,061) |
1,094,721 | ||||||||||
US government obligations: 10.06% | |||||||||||
US Treasury Bonds, 3.500%, due 02/15/39 |
275,000 | 309,332 | |||||||||
US Treasury Notes, 1.750%, due 05/31/16 |
400,000 | 418,281 | |||||||||
2.625%, due 08/15/20 | 385,000 | 415,229 | |||||||||
3.625%, due 02/15/20 | 255,000 | 295,740 | |||||||||
Total US government obligations (cost $1,329,974) |
1,438,582 |
Face amount |
Value | ||||||||||
Non-US government obligations: 39.96% | |||||||||||
Canada: 2.63% | |||||||||||
Canadian Government Bond, 3.500%, due 06/01/20 |
CAD | 340,000 | $ | 376,682 | |||||||
Denmark: 0.71% | |||||||||||
Government of Denmark, 4.000%, due 11/15/17 |
DKK | 500,000 | 102,168 | ||||||||
Finland: 1.02% | |||||||||||
Government of Finland, 1.750%, due 04/15/16 |
EUR | 110,000 | 146,041 | ||||||||
Germany: 5.98% | |||||||||||
Bundesrepublik Deutschland, 4.000%, due 01/04/37 |
290,000 | 482,396 | |||||||||
6.250%, due 01/04/24 | 200,000 | 372,873 | |||||||||
855,269 | |||||||||||
Italy: 4.36% | |||||||||||
Buoni Ordinari del Tesoro, 8.777%, due 04/30/127 |
110,000 | 140,858 | |||||||||
Buoni Poliennali Del Tesoro, 3.000%, due 11/01/15 |
180,000 | 211,744 | |||||||||
Republic of Italy, 4.750%, due 01/25/16 |
$ | 290,000 | 270,070 | ||||||||
622,672 | |||||||||||
Japan: 16.77% | |||||||||||
Government of Japan, 0.100%, due 11/15/12 |
JPY | 10,000,000 | 129,903 | ||||||||
0.600%, due 03/20/16 | 60,000,000 | 789,200 | |||||||||
1.800%, due 06/20/17 | 68,000,000 | 950,887 | |||||||||
1.900%, due 06/20/25 | 33,800,000 | 468,820 | |||||||||
2.500%, due 09/20/35 | 4,000,000 | 58,804 | |||||||||
2,397,614 | |||||||||||
Netherlands: 1.03% | |||||||||||
Government of the Netherlands, 4.000%, due 07/15/18 |
EUR | 100,000 | 146,711 | ||||||||
Spain: 3.29% | |||||||||||
Instituto de Credito Oficial, 5.375%, due 07/02/12 |
$ | 400,000 | 399,210 | ||||||||
Kingdom of Spain, 4.200%, due 07/30/13 |
EUR | 55,000 | 71,825 | ||||||||
471,035 |
40
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Non-US government obligations(Concluded) | |||||||||||
United Kingdom: 4.17% | |||||||||||
UK Gilts, 2.000%, due 01/22/16 |
GBP | 200,000 | $ | 326,087 | |||||||
4.000%, due 01/22/60 | 140,000 | 269,579 | |||||||||
595,666 | |||||||||||
Total Non-US government obligations (cost $5,370,582) |
5,713,858 | ||||||||||
Supranational bonds: 2.16% | |||||||||||
European Investment Bank, 6.125%, due 01/23/17 |
AUD | 150,000 | 154,006 | ||||||||
6.250%, due 04/15/14 | GBP | 90,000 | 153,747 | ||||||||
Total supranational bonds (cost $317,881) |
307,753 | ||||||||||
Total bonds (cost $13,253,100) |
13,495,655 |
Shares | Value | ||||||||||
Short-term investment: 3.36% | |||||||||||
Investment company: 3.36% | |||||||||||
UBS Cash Management Prime Relationship Fund8 (cost $479,734) |
479,734 | $ | 479,734 | ||||||||
Total investments: 97.75% (cost $13,732,834) |
13,975,389 | ||||||||||
Cash and other assets, less liabilities: 2.25% |
322,075 | ||||||||||
Net assets: 100.00% | $ | 14,297,464 |
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 | $ | 773,669 | |||||
Gross unrealized depreciation | (531,114 | ) | |||||
Net unrealized appreciation of investments | $ | 242,555 |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 59.
† Holding is illiquid. At December 31, 2011, the value of this security amounted to $174,598 or 1.22% of net assets.
1 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2011 and changes periodically.
2 Perpetual bond security. The maturity date reflects the next call date.
3 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, 2011, the value of these securities amounted to $316,863 or 2.22% of net assets.
4 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, 2011, the value of these securities amounted to $508,000 or 3.55% of net assets.
41
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
5 This security, which represents 1.22% of net assets as of December 31, 2011, 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 12/31/11 |
Value as a percentage of net assets |
||||||||||||||||||
Hewett's Island CDO Ltd., Series 2007-6A, Class D, 2.790%, due 06/09/19 |
05/09/07-09/25/09 | $ | 247,508 | 1.73 | % | $ | 174,598 | 1.22 | % |
6 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.
7 Rate shown reflects annualized yield at December 31, 2011 on zero coupon bond.
8 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 Relationship Fund.
Security description |
Value 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 377,148 | $ | 3,385,734 | $ | 3,283,148 | $ | 479,734 | $ | 250 |
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Barclays Bank PLC | AUD | 120,000 | USD | 121,133 | 03/05/12 | $ | (747 | ) | |||||||||||
Barclays Bank PLC | EUR | 50,000 | GBP | 42,387 | 03/05/12 | 1,043 | |||||||||||||
Barclays Bank PLC | USD | 39,607 | AUD | 40,000 | 03/05/12 | 1,020 | |||||||||||||
Barclays Bank PLC | USD | 168,686 | EUR | 125,000 | 03/05/12 | (6,823 | ) | ||||||||||||
Credit Suisse First Boston | USD | 132,353 | AUD | 130,000 | 03/05/12 | (317 | ) | ||||||||||||
Credit Suisse First Boston | USD | 288,165 | EUR | 215,000 | 03/05/12 | (9,760 | ) | ||||||||||||
Goldman Sachs International | USD | 39,556 | AUD | 40,000 | 03/05/12 | 1,071 | |||||||||||||
JPMorgan Chase Bank | AUD | 130,000 | USD | 127,628 | 03/05/12 | (4,408 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 85,000 | JPY | 8,839,152 | 03/05/12 | 4,893 | |||||||||||||
JPMorgan Chase Bank | EUR | 617,500 | USD | 818,908 | 03/05/12 | 19,304 | |||||||||||||
JPMorgan Chase Bank | GBP | 50,000 | USD | 77,594 | 03/05/12 | (11 | ) | ||||||||||||
JPMorgan Chase Bank | GBP | 805,000 | USD | 1,253,472 | 03/05/12 | 4,037 | |||||||||||||
JPMorgan Chase Bank | USD | 119,973 | CHF | 110,000 | 03/05/12 | (2,720 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 228,131 | EUR | 175,000 | 03/05/12 | (1,523 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 464,576 | GBP | 300,000 | 03/05/12 | 1,052 | |||||||||||||
JPMorgan Chase Bank | USD | 554,826 | JPY | 43,000,000 | 03/05/12 | 4,422 | |||||||||||||
JPMorgan Chase Bank | USD | 144,021 | KRW | 167,000,000 | 03/05/12 | 334 | |||||||||||||
JPMorgan Chase Bank | USD | 57,813 | NOK | 340,000 | 03/05/12 | (1,093 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 97,844 | SEK | 680,000 | 03/05/12 | 668 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 10,442 |
42
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Futures contracts
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
10 Year US Treasury Notes, 3 contracts (USD) | March 2012 | $ | 389,114 | $ | 393,375 | $ | 4,261 | ||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
10 Year Mini Japanese Government Bond, 4 contracts (JPY) | March 2012 | 738,970 | 740,600 | 1,630 | |||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
Euro-Bobl, 2 contracts (EUR) | March 2012 | (319,407 | ) | (323,847 | ) | (4,440 | ) | ||||||||||||
Euro-Bund, 1 contracts (EUR) | March 2012 | (173,920 | ) | (179,952 | ) | (6,032 | ) | ||||||||||||
Net unrealized depreciation on futures contracts | $ | (4,581 | ) |
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 |
||||||||||||||||||||||||
Barclays Bank PLC | EUR | 135,000 | 12/20/16 | 5.000 | % | 3 | $ | (3,081 | ) | $ | 402 | $ | (2,679 | ) | |||||||||||||||||
Deutsche Bank AG | EUR | 135,000 | 12/20/16 | 5.000 | 3 | (2,715 | ) | 402 | (2,313 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | EUR | 175,000 | 12/20/16 | 5.000 | 3 | (2,149 | ) | 520 | (1,629 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | EUR | 200,000 | 12/20/16 | 5.000 | 4 | (34,797 | ) | 23,294 | (11,503 | ) | |||||||||||||||||||||
$ | (42,742 | ) | $ | 24,618 | $ | (18,124 | ) |
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 iTraxx Europe Sub Financials Series 16 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 iTraxx Europe Crossover Series 16 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) |
||||||||||||||||||||||||
Barclays Bank PLC | EUR | 25,000 | 03/20/17 | 1.000 | % | 3 | $ | (2,393 | ) | $ | 2,347 | $ | (46 | ) | |||||||||||||||||
JPMorgan Chase Bank | EUR | 50,000 | 09/20/16 | 1.000 | 4 | (3,636 | ) | 5,143 | 1,507 | ||||||||||||||||||||||
JPMorgan Chase Bank | EUR | 100,000 | 09/20/16 | 1.000 | 5 | (5,893 | ) | 6,035 | 142 | ||||||||||||||||||||||
JPMorgan Chase Bank | EUR | 50,000 | 12/20/16 | 1.000 | 6 | (4,780 | ) | 4,628 | (152 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | EUR | 50,000 | 03/20/17 | 1.000 | 7 | (3,119 | ) | 3,554 | 435 | ||||||||||||||||||||||
$ | (19,821 | ) | $ | 21,707 | $ | 1,886 |
43
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
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 Marks & Spencer PLC 5.625% bond, due 03/24/14.
4 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Valeo SA 3.750% bond, due 06/24/13.
5 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Michelin Luxembourg SCS 8.625% bond, due 04/24/14.
6 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Volvo Treasury AB 5.000% bond, due 05/31/17.
7 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Metro AG 7.625% bond, due 03/05/15.
Credit default swaps on credit indicessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments received |
Value |
Unrealized appreciation |
Credit spread3 |
|||||||||||||||||||||||||||
Barclays Bank PLC | EUR | 150,000 | 12/20/16 | 4 | 1.000 | % | $ | 17,423 | $ | (14,700 | ) | $ | 2,723 | 2.752 | % | ||||||||||||||||||||
Deutsche Bank AG | EUR | 150,000 | 12/20/16 | 4 | 1.000 | 16,910 | (14,700 | ) | 2,210 | 2.752 | |||||||||||||||||||||||||
$ | 34,333 | $ | (29,400 | ) | $ | 4,933 |
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 (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, 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 iTraxx Europe Senior Financials Series 16 Index.
Credit default swap on corporate issuessell protection1
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund |
Payments received by the Fund2 |
Upfront payments received |
Value |
Unrealized depreciation |
Credit spread3 |
|||||||||||||||||||||||||||
Goldman Sachs International | EUR | 30,000 | 09/20/16 | 4 | 1.000 | % | $ | 1,625 | $ | (2,121 | ) | $ | (496 | ) | 2.248 | % |
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.
44
UBS Global Bond Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
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 Carrefour SA 4.375% bond, due 11/02/16.
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | | $ | 4,507,078 | $ | | $ | 4,507,078 | |||||||||||
Asset-backed securities | | 259,065 | | 259,065 | |||||||||||||||
Collateralized debt obligation | | | 174,598 | 174,598 | |||||||||||||||
Mortgage & agency debt securities | | 1,094,721 | | 1,094,721 | |||||||||||||||
US government obligations | | 1,438,582 | | 1,438,582 | |||||||||||||||
Non-US government obligations | | 5,713,858 | | 5,713,858 | |||||||||||||||
Supranational bonds | | 307,753 | | 307,753 | |||||||||||||||
Short-term investment | | 479,734 | | 479,734 | |||||||||||||||
Forward foreign currency contracts | | 10,442 | | 10,442 | |||||||||||||||
Futures contracts | (4,581 | ) | | | (4,581 | ) | |||||||||||||
Swap agreements | | 14,804 | | 14,804 | |||||||||||||||
Total | $ | (4,581 | ) | $ | 13,826,037 | $ | 174,598 | $ | 13,996,054 |
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Collateralized debt obligations |
Total | ||||||||||
Assets | |||||||||||
Beginning balance | $ | 287,009 | $ | 287,009 | |||||||
Purchases | | | |||||||||
Issuances | | | |||||||||
Sales | (46,331 | ) | (46,331 | ) | |||||||
Settlements | | | |||||||||
Accrued discounts (premiums) | | | |||||||||
Total realized gain (loss) | (86,081 | ) | (86,081 | ) | |||||||
Change in net unrealized appreciation/depreciation | 20,001 | 20,001 | |||||||||
Transfers into Level 3 | | | |||||||||
Transfers out of Level 3 | | | |||||||||
Ending balance | $ | 174,598 | $ | 174,598 |
The change in net unrealized appreciation/depreciation relating to the Level 3 investments held at December 31, 2011 was $(25,403).
See accompanying notes to financial statements.
45
UBS High Yield Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS High Yield Fund (the "Fund") declined 1.71% (Class A shares declined 6.09% after the deduction of the maximum sales charge), while Class Y shares declined 1.58%. The Fund's benchmark, the BofA Merrill Lynch US High Yield Cash Pay Constrained Index (the "Index"), declined 0.39% 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 48; 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 and underperformed the Index. Certain sector allocations and security selection detracted from results.
Over the period, the Fund used foreign exchange forwards to hedge its non-US dollar exposure, which was helpful in reducing the Fund's currency risk.
Portfolio performance summary1
What worked
• The Fund's positioning in several areas of the industrials sector contributed positively to relative performance during the reporting period. Specifically, issue selection within the chemicals subsector was beneficial for results, while security selection in the media subsectorespecially the Fund's holdings of debt issued by cable companiesenhanced Fund performance.
What didn't work
• The Fund's allocation to the financial sector was a negative for results.
The insurance subsector, despite good performance early in the year (prior to the beginning of the reporting period), was dragged down during the third quarter as risk appetite was replaced by periods of extreme risk aversion.
The Fund's exposure to the bank subsector detracted from performance. This area of the market performed poorly, as it was negatively impacted by fears of contagion from the European sovereign debt crisis, weakening global growth and uncertainty regarding new financial regulations.
• The Fund's positioning in the industrial sector was not rewarded.
An overweight to the gaming subsector was a drag on results, as the subsector underperformed during the reporting period.
Issue selection in the transportation subsector hurt the Fund's performance, particularly our positioning within shipping services, which underperformed given signs of moderating global growth.
During the review period, the Fund generally had an underweight to telecommunications that was beneficial to performance. However, this positive performance was not enough to offset the negative impact from positioning within the subsector.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
46
UBS High Yield Fund
Generally having an overweight to the metals and mining subsector was a modest detractor, given that negative sentiment regarding the more cyclical areas of the market grew as the review period progressed.
• The Fund's positioning from a quality perspective detracted from results. Although we moved to increase the portfolio's overall credit quality early in the period, the Fund's quality biases still generated negative results as risk aversion and market volatility increased as the period progressed.
The Fund's overweight to securities rated CCC and lower detracted from performance, largely during the third quarter of 2011.2
Having an underweight to securities rated BB was not rewarded, as they outperformed their lower rated B and CCC counterparts during the reporting period.3,4
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.
3 Debt rated BB has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments.
4 Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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.
47
UBS High Yield Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | (1.71 | )% | 2.42 | % | 5.31 | % | 6.98 | % | |||||||||||
Class B2 | (2.09 | ) | 1.47 | 4.48 | 6.495 | ||||||||||||||
Class C3 | (1.96 | ) | 1.90 | 4.81 | 6.46 | ||||||||||||||
Class Y4 | (1.58 | ) | 2.48 | 5.57 | 7.26 | ||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (6.09 | )% | (2.16 | )% | 4.35 | % | 6.50 | % | |||||||||||
Class B2 | (6.83 | ) | (3.27 | ) | 4.20 | 6.495 | |||||||||||||
Class C3 | (2.67 | ) | 1.19 | 4.81 | 6.46 | ||||||||||||||
BofA Merrill Lynch US High Yield Cash Pay Constrained Index6 | (0.39 | )% | 4.49 | % | 7.43 | % | 8.66 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.37% and 1.20%; Class B2.17% and 1.95%; Class C1.86% and 1.70%; Class Y1.03% 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 dividend expense and security loan fees 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 dividend expense and security loan fees for securities sold short), through the period ending October 27, 2012, 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 Maximum sales charge for Class A shares is 4.5%. Class A shares bear ongoing 12b-1 service fees.
2 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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. 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.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
6 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 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://globalam-us.ubs.com/corpweb/performance.do.
48
UBS High Yield Fund
Top ten long-term fixed income holdings (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
Nova Chemicals Corp., 8.625%, due 11/01/19 |
1.2 | % | |||||
CF Industries, Inc., 7.125%, due 05/01/20 |
1.1 | ||||||
Ally Financial, Inc., 8.300%, due 02/12/15 |
1.1 | ||||||
El Paso Corp., 7.750%, due 01/15/32 |
1.0 | ||||||
Frontier Communications Corp., 8.250%, due 04/15/17 |
0.9 | ||||||
OGX Petroleo e Gas Participacoes SA, 8.500%, due 06/01/18 |
0.9 | ||||||
Ford Motor Credit Co. LLC, 12.000%, due 05/15/15 |
0.9 | ||||||
CIT Group, Inc., 7.000%, due 05/01/16 |
0.9 | ||||||
Ford Motor Co., 7.450%, due 07/16/31 |
0.9 | ||||||
Seagate HDD Cayman, 7.750%, due 12/15/18 |
0.9 | ||||||
Total | 9.8 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2011
Bonds | |||||||
Corporate bonds | |||||||
Aerospace | 0.77 | % | |||||
Air transportation | 0.20 | ||||||
Automotive & auto parts distributors | 4.82 | ||||||
Banks & thrifts | 2.09 | ||||||
Broadcasting | 1.03 | ||||||
Building materials | 0.88 | ||||||
Cable TV | 2.12 | ||||||
Capital goods | 0.85 | ||||||
Chemicals | 4.86 | ||||||
Consumer products | 0.41 | ||||||
Containers | 2.62 | ||||||
Diversified financial services | 4.26 | ||||||
Diversified media | 1.29 | ||||||
Electric utilities | 4.40 | ||||||
Energy | 14.45 | ||||||
Entertainment/film | 0.41 | ||||||
Environmental | 0.16 | ||||||
Food & drug retail | 1.23 | ||||||
Food/beverage/tobacco | 1.85 | ||||||
Gaming | 5.82 | ||||||
Healthcare | 4.96 | ||||||
Homebuilders/real estate | 1.55 | ||||||
Hotel | 0.87 | ||||||
Insurance | 2.58 | ||||||
Leisure | 1.00 | ||||||
Machinery | 0.73 | ||||||
Metals/mining | 3.25 | ||||||
Paper | 1.65 | ||||||
Publishing/printing | 0.87 | ||||||
Restaurants | 0.42 | ||||||
Services | 2.66 | ||||||
Steels | 2.21 | ||||||
Super retail index | 4.79 | ||||||
Technology | 4.63 | ||||||
Telecommunications | 7.89 | ||||||
Textile/apparel | 0.14 | ||||||
Transportation excluding air/rail | 0.97 | ||||||
Total corporate bonds | 95.69 | % | |||||
Commercial mortgage-backed securities | 0.69 | ||||||
Total bonds | 96.38 | % | |||||
Common stocks | 0.07 | ||||||
Warrants | 0.001 | ||||||
Short-term investment | 1.34 | ||||||
Total investments | 97.79 | % | |||||
Cash and other assets, less liabilities | 2.21 | ||||||
Net assets | 100.00 | % |
1 Amount represents less than 0.005%.
49
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds: 96.38% | |||||||||||
Corporate bonds: 95.69% | |||||||||||
Australia: 0.83% | |||||||||||
FMG Resources August 2006 Pty Ltd., 7.000%, due 11/01/151 |
$ | 300,000 | $ | 303,000 | |||||||
Mirabela Nickel Ltd., 8.750%, due 04/15/181 |
425,000 | 381,438 | |||||||||
Total Australia corporate bonds | 684,438 | ||||||||||
Austria: 0.31% | |||||||||||
PE Paper Escrow GmbH, 12.000%, due 08/01/141 |
235,000 | 250,275 | |||||||||
Brazil: 0.93% | |||||||||||
OGX Petroleo e Gas Participacoes SA, 8.500%, due 06/01/181 |
775,000 | 759,500 | |||||||||
Canada: 2.85% | |||||||||||
Bombardier, Inc., 7.500%, due 03/15/181 |
110,000 | 117,700 | |||||||||
7.750%, due 03/15/201 | 150,000 | 163,500 | |||||||||
CHC Helicopter SA, 9.250%, due 10/15/201 |
250,000 | 225,000 | |||||||||
Connacher Oil and Gas Ltd., 8.500%, due 08/01/191 |
285,000 | 257,925 | |||||||||
Nova Chemicals Corp., 8.625%, due 11/01/19 |
930,000 | 1,025,325 | |||||||||
Novelis, Inc., 8.375%, due 12/15/17 |
225,000 | 239,062 | |||||||||
Reliance Intermediate Holdings LP, 9.500%, due 12/15/191 |
200,000 | 212,000 | |||||||||
Trinidad Drilling Ltd., 7.875%, due 01/15/191 |
95,000 | 97,850 | |||||||||
Total Canada corporate bonds | 2,338,362 | ||||||||||
Cayman Islands: 1.13% | |||||||||||
Fibria Overseas Finance Ltd., 7.500%, due 05/04/201 |
100,000 | 97,750 | |||||||||
Sable International Finance Ltd., 7.750%, due 02/15/171 |
125,000 | 125,000 | |||||||||
Seagate HDD Cayman, 7.750%, due 12/15/181 |
665,000 | 707,394 | |||||||||
Total Cayman Islands corporate bonds | 930,144 | ||||||||||
France: 0.44% | |||||||||||
Cie Generale de Geophysique-Veritas, 7.750%, due 05/15/17 |
150,000 | 151,875 | |||||||||
CMA CGM SA, 8.500%, due 04/15/171 |
475,000 | 210,187 | |||||||||
Total France corporate bonds | 362,062 |
Face amount |
Value | ||||||||||
Germany: 0.36% | |||||||||||
Kinove German Bondco GmbH, 9.625%, due 06/15/181 |
$ | 315,000 | $ | 299,250 | |||||||
Ireland: 0.54% | |||||||||||
Ardagh Packaging Finance PLC, 7.375%, due 10/15/171 |
200,000 | 202,000 | |||||||||
Vimpel Communications Via VIP Finance Ireland Ltd. OJSC, 9.125%, due 04/30/181 |
250,000 | 244,688 | |||||||||
Total Ireland corporate bonds | 446,688 | ||||||||||
Italy: 0.46% | |||||||||||
Wind Acquisition Finance SA, 7.250%, due 02/15/181 |
150,000 | 136,500 | |||||||||
11.750%, due 07/15/171 | 270,000 | 241,650 | |||||||||
Total Italy corporate bonds | 378,150 | ||||||||||
Luxembourg: 2.01% | |||||||||||
APERAM, 7.750%, due 04/01/181 |
150,000 | 124,500 | |||||||||
ConvaTec Healthcare E SA, 10.500%, due 12/15/181 |
400,000 | 357,000 | |||||||||
Expro Finance Luxembourg SCA, 8.500%, due 12/15/161 |
580,000 | 510,400 | |||||||||
Intelsat Jackson Holdings SA, 7.250%, due 10/15/20 |
100,000 | 101,500 | |||||||||
Intelsat Luxembourg SA, 11.250%, due 02/04/17 |
575,000 | 556,313 | |||||||||
Total Luxembourg corporate bonds | 1,649,713 | ||||||||||
Mexico: 0.21% | |||||||||||
Cemex Finance LLC, 9.500%, due 12/14/161 |
200,000 | 175,500 | |||||||||
Netherlands: 0.39% | |||||||||||
LyondellBasell Industries NV, 6.000%, due 11/15/211 |
135,000 | 140,062 | |||||||||
VimpelCom Holdings BV, 6.255%, due 03/01/171 |
200,000 | 180,000 | |||||||||
Total Netherlands corporate bonds | 320,062 | ||||||||||
Russia: 0.25% | |||||||||||
Evraz Group SA, 9.500%, due 04/24/181 |
200,000 | 203,750 | |||||||||
South Africa: 0.29% | |||||||||||
Edcon Proprietary Ltd., 4.676%, due 06/15/142,3 |
EUR | 250,000 | 238,627 |
50
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United Kingdom: 1.82% | |||||||||||
Hanson Ltd., 6.125%, due 08/15/16 |
$ | 200,000 | $ | 203,000 | |||||||
HBOS Capital Funding LP, 6.071%, due 06/30/141,3,4 |
300,000 | 186,000 | |||||||||
Ineos Finance PLC, 9.000%, due 05/15/151 |
100,000 | 101,500 | |||||||||
Ineos Group Holdings PLC, 8.500%, due 02/15/161 |
155,000 | 123,225 | |||||||||
Vedanta Resources PLC, 8.250%, due 06/07/211 |
200,000 | 155,000 | |||||||||
9.500%, due 07/18/181 | 400,000 | 344,000 | |||||||||
Virgin Media Finance PLC, 8.375%, due 10/15/19 |
100,000 | 109,750 | |||||||||
9.500%, due 08/15/16 | 100,000 | 112,250 | |||||||||
Virgin Media Secured Finance PLC, 6.500%, due 01/15/18 |
150,000 | 159,375 | |||||||||
Total United Kingdom corporate bonds | 1,494,100 | ||||||||||
United States: 82.87% | |||||||||||
ACCO Brands Corp., 10.625%, due 03/15/15 |
75,000 | 83,438 | |||||||||
AES Corp., 8.000%, due 10/15/17 |
60,000 | 66,000 | |||||||||
8.000%, due 06/01/20 | 550,000 | 605,000 | |||||||||
AK Steel Corp., 7.625%, due 05/15/20 |
200,000 | 188,000 | |||||||||
Ally Financial, Inc., 6.750%, due 12/01/14 |
100,000 | 100,500 | |||||||||
8.000%, due 03/15/20 | 225,000 | 230,625 | |||||||||
8.300%, due 02/12/15 | 830,000 | 875,650 | |||||||||
Alta Mesa Holdings, 9.625%, due 10/15/18 |
215,000 | 208,550 | |||||||||
AMC Entertainment, Inc., 8.750%, due 06/01/19 |
275,000 | 284,625 | |||||||||
American General Institutional Capital, Series A, 7.570%, due 12/01/451 |
600,000 | 540,367 | |||||||||
American International Group, Inc., 6.250%, due 03/15/37 |
175,000 | 126,656 | |||||||||
8.175%, due 05/15/583 | 130,000 | 115,700 | |||||||||
AMGH Merger Sub, Inc., 9.250%, due 11/01/181 |
135,000 | 139,050 | |||||||||
ARAMARK Corp., 8.500%, due 02/01/15 |
460,000 | 471,500 | |||||||||
Ashland, Inc., 9.125%, due 06/01/17 |
165,000 | 183,975 | |||||||||
Atlas Pipeline Partners LP, 8.750%, due 06/15/181 |
125,000 | 130,625 | |||||||||
ATP Oil & Gas Corp., 11.875%, due 05/01/15 |
50,000 | 32,875 |
Face amount |
Value | ||||||||||
Avis Budget Car Rental LLC, 7.750%, due 05/15/16 |
$ | 125,000 | $ | 125,938 | |||||||
9.625%, due 03/15/18 | 100,000 | 103,500 | |||||||||
BankAmerica Capital II, 8.000%, due 12/15/26 |
90,000 | 81,000 | |||||||||
BE Aerospace, Inc., 6.875%, due 10/01/20 |
175,000 | 190,750 | |||||||||
Belden, Inc., 9.250%, due 06/15/19 |
100,000 | 106,750 | |||||||||
Berry Petroleum Co., 6.750%, due 11/01/20 |
200,000 | 202,000 | |||||||||
Berry Plastics Corp., 8.250%, due 11/15/15 |
125,000 | 133,125 | |||||||||
9.500%, due 05/15/18 | 140,000 | 140,700 | |||||||||
Boise Paper Holdings LLC, 9.000%, due 11/01/17 |
70,000 | 75,250 | |||||||||
Boyd Gaming Corp., 9.125%, due 12/01/18 |
495,000 | 470,250 | |||||||||
Brocade Communications Systems, Inc., 6.875%, due 01/15/20 |
50,000 | 53,250 | |||||||||
Brunswick Corp., 11.250%, due 11/01/161 |
80,000 | 92,200 | |||||||||
Burlington Coat Factory Warehouse Corp., 10.000%, due 02/15/19 |
500,000 | 488,750 | |||||||||
Caesars Entertainment Operating Co., Inc., 5.625%, due 06/01/15 |
500,000 | 271,250 | |||||||||
10.000%, due 12/15/15 | 225,000 | 173,250 | |||||||||
10.000%, due 12/15/18 | 780,000 | 534,300 | |||||||||
11.250%, due 06/01/17 | 250,000 | 265,312 | |||||||||
Calpine Construction Finance Co. LP, 8.000%, due 06/01/161 |
270,000 | 291,600 | |||||||||
Calpine Corp., 7.500%, due 02/15/211 |
285,000 | 304,950 | |||||||||
7.875%, due 07/31/201 | 645,000 | 694,987 | |||||||||
Capella Healthcare, Inc., 9.250%, due 07/01/17 |
55,000 | 55,825 | |||||||||
Carriage Services, Inc., 7.875%, due 01/15/15 |
135,000 | 136,012 | |||||||||
Case New Holland, Inc., 7.875%, due 12/01/17 |
225,000 | 254,250 | |||||||||
Casella Waste Systems, Inc., 11.000%, due 07/15/14 |
125,000 | 135,625 | |||||||||
CB Richard Ellis Services, Inc., 11.625%, due 06/15/17 |
100,000 | 115,250 | |||||||||
CDW Finance Corp., 12.535%, due 10/12/17 |
375,000 | 376,875 | |||||||||
Celanese US Holdings LLC, 5.875%, due 06/15/21 |
320,000 | 330,400 | |||||||||
6.625%, due 10/15/18 | 95,000 | 100,937 | |||||||||
Cengage Learning Acquisitions, Inc., 10.500%, due 01/15/151 |
180,000 | 129,150 |
51
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Ceridian Corp., 11.250%, due 11/15/15 |
$ | 390,000 | $ | 304,200 | |||||||
CF Industries, Inc., 6.875%, due 05/01/18 |
130,000 | 148,850 | |||||||||
7.125%, due 05/01/20 | 785,000 | 928,262 | |||||||||
Chesapeake Energy Corp., 6.625%, due 08/15/20 |
196,000 | 210,210 | |||||||||
9.500%, due 02/15/15 | 475,000 | 543,875 | |||||||||
Chrysler Group LLC, 8.000%, due 06/15/191 |
480,000 | 439,200 | |||||||||
CIT Group, Inc., 7.000%, due 05/01/16 |
755,000 | 755,000 | |||||||||
7.000%, due 05/01/17 | 497,000 | 497,000 | |||||||||
Clear Channel Communications, Inc., 5.500%, due 09/15/14 |
130,000 | 97,500 | |||||||||
10.750%, due 08/01/16 | 430,000 | 288,100 | |||||||||
Clearwater Paper Corp., 7.125%, due 11/01/18 |
125,000 | 130,000 | |||||||||
Clearwire Communications LLC, 12.000%, due 12/01/151 |
155,000 | 148,412 | |||||||||
Community Health Systems, Inc., 8.000%, due 11/15/191 |
125,000 | 126,250 | |||||||||
8.875%, due 07/15/15 | 151,000 | 155,907 | |||||||||
Comstock Resources, Inc., 8.375%, due 10/15/17 |
35,000 | 33,862 | |||||||||
Consol Energy, Inc., 8.000%, due 04/01/17 |
200,000 | 219,000 | |||||||||
Constellation Brands, Inc., 8.375%, due 12/15/14 |
350,000 | 392,875 | |||||||||
Cricket Communications, Inc., 7.750%, due 05/15/16 |
200,000 | 206,500 | |||||||||
Crosstex Energy LP, 8.875%, due 02/15/18 |
280,000 | 305,900 | |||||||||
CSC Holdings LLC, 8.625%, due 02/15/19 |
125,000 | 144,062 | |||||||||
DDR Corp., REIT, 9.625%, due 03/15/16 |
310,000 | 360,605 | |||||||||
Delta Air Lines, Inc., 12.250%, due 03/15/151 |
160,000 | 167,200 | |||||||||
Denbury Resources, Inc., 8.250%, due 02/15/20 |
125,000 | 139,687 | |||||||||
9.750%, due 03/01/16 | 335,000 | 369,337 | |||||||||
Diamond Resorts Corp., 12.000%, due 08/15/18 |
645,000 | 635,325 | |||||||||
DISH DBS Corp., 6.625%, due 10/01/14 |
400,000 | 427,000 | |||||||||
7.750%, due 05/31/15 | 100,000 | 110,000 | |||||||||
7.875%, due 09/01/19 | 600,000 | 678,000 | |||||||||
Dolphin Subsidiary II, Inc., 7.250%, due 10/15/211 |
385,000 | 415,800 |
Face amount |
Value | ||||||||||
Domtar Corp., 10.750%, due 06/01/17 |
$ | 85,000 | $ | 107,100 | |||||||
DuPont Fabros Technology LP, REIT, 8.500%, due 12/15/17 |
450,000 | 481,500 | |||||||||
E*Trade Financial Corp., 12.500%, due 11/30/17 |
324,000 | 366,120 | |||||||||
Eagle Parent, Inc., 8.625%, due 05/01/191 |
50,000 | 47,750 | |||||||||
EH Holding Corp., 6.500%, due 06/15/191 |
55,000 | 57,337 | |||||||||
7.625%, due 06/15/211 | 55,000 | 57,750 | |||||||||
El Paso Corp., 7.750%, due 01/15/32 |
720,000 | 831,600 | |||||||||
Encore Acquisition Co., 9.500%, due 05/01/16 |
140,000 | 154,350 | |||||||||
Energy Transfer Partners LP, 6.050%, due 06/01/41 |
240,000 | 235,332 | |||||||||
7.500%, due 07/01/38 | 200,000 | 228,345 | |||||||||
Entravision Communications Corp., 8.750%, due 08/01/17 |
225,000 | 220,500 | |||||||||
Equinix, Inc., 7.000%, due 07/15/21 |
150,000 | 158,250 | |||||||||
8.125%, due 03/01/18 | 400,000 | 436,000 | |||||||||
ExamWorks Group, Inc., 9.000%, due 07/15/191 |
425,000 | 384,625 | |||||||||
Felcor Lodging LP, 6.750%, due 06/01/19 |
165,000 | 158,400 | |||||||||
Ferrellgas Partners-LP, 9.125%, due 10/01/17 |
435,000 | 454,575 | |||||||||
FireKeepers Development Authority, 13.875%, due 05/01/151 |
540,000 | 612,900 | |||||||||
First Data Corp., 9.875%, due 09/24/15 |
410,000 | 385,400 | |||||||||
11.250%, due 03/31/16 | 195,000 | 161,850 | |||||||||
Ford Motor Co., 7.450%, due 07/16/31 |
615,000 | 738,000 | |||||||||
Ford Motor Credit Co. LLC, 5.750%, due 02/01/21 |
450,000 | 468,959 | |||||||||
6.625%, due 08/15/17 | 275,000 | 299,354 | |||||||||
8.125%, due 01/15/20 | 160,000 | 188,331 | |||||||||
8.700%, due 10/01/14 | 250,000 | 279,151 | |||||||||
12.000%, due 05/15/15 | 620,000 | 759,494 | |||||||||
Forest Oil Corp., 7.250%, due 06/15/19 |
310,000 | 316,200 | |||||||||
8.500%, due 02/15/14 | 140,000 | 152,600 | |||||||||
Freescale Semiconductor, Inc., 9.250%, due 04/15/181 |
115,000 | 122,906 | |||||||||
10.125%, due 03/15/181 | 110,000 | 119,900 | |||||||||
10.750%, due 08/01/20 | 101,000 | 105,293 | |||||||||
Frontier Communications Corp., 8.250%, due 04/15/17 |
755,000 | 771,988 | |||||||||
8.500%, due 04/15/20 | 60,000 | 61,425 | |||||||||
9.000%, due 08/15/31 | 380,000 | 346,750 |
52
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
FTI Consulting, Inc., 6.750%, due 10/01/20 |
$ | 100,000 | $ | 103,250 | |||||||
Gannett Co., Inc., 9.375%, due 11/15/17 |
150,000 | 162,750 | |||||||||
GenOn Energy, Inc., 9.500%, due 10/15/18 |
340,000 | 344,250 | |||||||||
9.875%, due 10/15/20 | 200,000 | 203,000 | |||||||||
Geo Group, Inc., 7.750%, due 10/15/17 |
125,000 | 132,812 | |||||||||
Georgia Gulf Corp., 9.000%, due 01/15/171 |
235,000 | 248,512 | |||||||||
Georgia-Pacific LLC, 8.250%, due 05/01/161 |
375,000 | 416,610 | |||||||||
Glen Meadow Pass-Through Trust, 6.505%, due 02/12/671,3 |
300,000 | 211,500 | |||||||||
Goodyear Tire & Rubber Co., 10.500%, due 05/15/16 |
240,000 | 264,600 | |||||||||
Graphic Packaging International, Inc., 7.875%, due 10/01/18 |
120,000 | 127,800 | |||||||||
9.500%, due 06/15/17 | 55,000 | 60,225 | |||||||||
Grifols, Inc., 8.250%, due 02/01/18 |
165,000 | 173,250 | |||||||||
Gulfmark Offshore, Inc., 7.750%, due 07/15/14 |
215,000 | 215,000 | |||||||||
Harland Clarke Holdings Corp., 9.500%, due 05/15/15 |
290,000 | 211,700 | |||||||||
HCA, Inc., 7.500%, due 02/15/22 |
375,000 | 383,437 | |||||||||
8.500%, due 04/15/19 | 275,000 | 301,125 | |||||||||
Helix Energy Solutions Group, Inc., 9.500%, due 01/15/161 |
470,000 | 488,800 | |||||||||
Hexion US Finance Corp., 8.875%, due 02/01/18 |
145,000 | 135,937 | |||||||||
Hilcorp Finance Co., 7.625%, due 04/15/211 |
125,000 | 130,937 | |||||||||
8.000%, due 02/15/201 | 85,000 | 90,950 | |||||||||
Hilton Worldwide, Inc., 4.957%, due 11/15/131,3 |
250,000 | 247,757 | |||||||||
Host Hotels & Resorts LP, REIT, 9.000%, due 05/15/17 |
285,000 | 309,937 | |||||||||
Huntington Ingalls Industries, Inc., 6.875%, due 03/15/181 |
95,000 | 93,100 | |||||||||
7.125%, due 03/15/211 | 75,000 | 73,500 | |||||||||
Icahn Enterprises LP, 8.000%, due 01/15/18 |
125,000 | 130,000 | |||||||||
ILFC E-Capital Trust I, 4.340%, due 12/21/651,3 |
195,000 | 115,046 | |||||||||
Inergy LP, 6.875%, due 08/01/21 |
129,000 | 129,645 | |||||||||
7.000%, due 10/01/18 | 80,000 | 81,200 |
Face amount |
Value | ||||||||||
Ingles Markets, Inc., 8.875%, due 05/15/17 |
$ | 205,000 | $ | 221,912 | |||||||
Interactive Data Corp., 10.250%, due 08/01/18 |
25,000 | 27,125 | |||||||||
International Lease Finance Corp., 7.125%, due 09/01/181 |
575,000 | 595,125 | |||||||||
8.625%, due 09/15/15 | 370,000 | 379,250 | |||||||||
8.750%, due 03/15/17 | 220,000 | 226,600 | |||||||||
Iron Mountain, Inc., 8.000%, due 06/15/20 |
125,000 | 130,156 | |||||||||
8.375%, due 08/15/21 | 300,000 | 319,500 | |||||||||
Jabil Circuit, Inc., 8.250%, due 03/15/18 |
150,000 | 172,875 | |||||||||
Jacobs Entertainment, Inc., 9.750%, due 06/15/14 |
120,000 | 111,000 | |||||||||
JC Penney Corp., Inc., 7.125%, due 11/15/23 |
325,000 | 325,000 | |||||||||
JMC Steel Group, 8.250%, due 03/15/181 |
130,000 | 126,750 | |||||||||
KEMET Corp., 10.500%, due 05/01/18 |
100,000 | 105,750 | |||||||||
Key Energy Services, Inc., 6.750%, due 03/01/21 |
200,000 | 200,000 | |||||||||
Landry's Restaurants, Inc., 11.625%, due 12/01/15 |
325,000 | 342,062 | |||||||||
Level 3 Financing, Inc., 9.250%, due 11/01/14 |
241,000 | 246,422 | |||||||||
10.000%, due 02/01/18 | 320,000 | 339,200 | |||||||||
Libbey Glass, Inc., 10.000%, due 02/15/15 |
68,000 | 72,760 | |||||||||
Liberty Mutual Group, Inc., 7.800%, due 03/15/371 |
125,000 | 111,250 | |||||||||
10.750%, due 06/15/581,3 | 235,000 | 294,925 | |||||||||
Limited Brands, Inc., 7.600%, due 07/15/37 |
100,000 | 99,500 | |||||||||
8.500%, due 06/15/19 | 155,000 | 180,575 | |||||||||
Lincoln National Corp., 7.000%, due 05/17/663 |
520,000 | 469,300 | |||||||||
Linn Energy LLC, 6.500%, due 05/15/191 |
200,000 | 198,500 | |||||||||
7.750%, due 02/01/21 | 240,000 | 249,600 | |||||||||
8.625%, due 04/15/20 | 160,000 | 173,600 | |||||||||
Lyondell Chemical Co., 11.000%, due 05/01/18 |
219,604 | 239,917 | |||||||||
Macy's Retail Holdings, Inc., 6.375%, due 03/15/37 |
225,000 | 261,383 | |||||||||
Manitowoc Co., Inc., 8.500%, due 11/01/20 |
325,000 | 342,469 | |||||||||
Marina District Finance Co., Inc., 9.500%, due 10/15/15 |
605,000 | 565,675 | |||||||||
MarkWest Energy Partners LP, 6.750%, due 11/01/20 |
100,000 | 104,750 |
53
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Marquette Transportation Finance Corp., 10.875%, due 01/15/17 |
$ | 100,000 | $ | 100,750 | |||||||
Masco Corp., 7.125%, due 03/15/20 |
150,000 | 151,384 | |||||||||
McClatchy Co., 11.500%, due 02/15/17 |
210,000 | 203,175 | |||||||||
McJunkin Red Man Corp., 9.500%, due 12/15/16 |
355,000 | 360,325 | |||||||||
MedAssets, Inc., 8.000%, due 11/15/18 |
300,000 | 294,000 | |||||||||
Mercer International, Inc., 9.500%, due 12/01/17 |
205,000 | 209,613 | |||||||||
Meritage Homes Corp., 6.250%, due 03/15/15 |
100,000 | 98,500 | |||||||||
Meritor, Inc., 10.625%, due 03/15/18 |
150,000 | 141,000 | |||||||||
MGM Resorts International, 10.000%, due 11/01/16 |
555,000 | 582,750 | |||||||||
11.125%, due 11/15/17 | 200,000 | 228,000 | |||||||||
Michael Foods, Inc., 9.750%, due 07/15/18 |
220,000 | 231,550 | |||||||||
Michaels Stores, Inc., 7.750%, due 11/01/18 |
160,000 | 161,600 | |||||||||
11.375%, due 11/01/16 | 215,000 | 227,879 | |||||||||
Mirant Americas Generation LLC, 9.125%, due 05/01/31 |
240,000 | 217,200 | |||||||||
Multiplan, Inc., 9.875%, due 09/01/181 |
485,000 | 504,400 | |||||||||
Murray Energy Corp., 10.250%, due 10/15/151 |
685,000 | 679,863 | |||||||||
Mylan, Inc., 7.625%, due 07/15/171 |
275,000 | 300,094 | |||||||||
Navios Maritime Acquisition Corp., 8.625%, due 11/01/17 |
450,000 | 326,250 | |||||||||
Navios Maritime Holdings, Inc., 8.875%, due 11/01/17 |
160,000 | 152,400 | |||||||||
Navistar International Corp., 8.250%, due 11/01/21 |
113,000 | 120,204 | |||||||||
NB Capital Trust II, 7.830%, due 12/15/26 |
115,000 | 102,350 | |||||||||
Nexstar Broadcasting, Inc., 8.875%, due 04/15/17 |
125,000 | 128,125 | |||||||||
Nextel Communications, Inc., Series D, 7.375%, due 08/01/15 |
370,000 | 338,550 | |||||||||
Nielsen Finance LLC, 7.750%, due 10/15/18 |
35,000 | 37,800 | |||||||||
11.625%, due 02/01/14 | 91,000 | 104,536 | |||||||||
Niska Gas Storage US LLC, 8.875%, due 03/15/18 |
640,000 | 625,600 |
Face amount |
Value | ||||||||||
NRG Energy, Inc., 7.625%, due 05/15/191 |
$ | 105,000 | $ | 102,900 | |||||||
8.500%, due 06/15/19 | 200,000 | 203,000 | |||||||||
Omnicare, Inc., 7.750%, due 06/01/20 |
42,000 | 45,098 | |||||||||
Owens-Brockway Glass Container, Inc., 7.375%, due 05/15/16 |
435,000 | 476,325 | |||||||||
PAETEC Holding Corp., 9.875%, due 12/01/18 |
400,000 | 440,000 | |||||||||
Patriot Coal Corp., 8.250%, due 04/30/18 |
125,000 | 120,000 | |||||||||
Peabody Energy Corp., 7.375%, due 11/01/16 |
200,000 | 220,000 | |||||||||
Petco Animal Supplies, Inc., 9.250%, due 12/01/181 |
345,000 | 370,013 | |||||||||
Pinnacle Foods Finance LLC, 10.625%, due 04/01/17 |
230,000 | 241,500 | |||||||||
Plains Exploration & Production Co., 7.625%, due 06/01/18 |
127,000 | 134,620 | |||||||||
Production Resource Group, Inc., 8.875%, due 05/01/191 |
50,000 | 45,750 | |||||||||
Prospect Medical Holdings, Inc., 12.750%, due 07/15/14 |
200,000 | 218,000 | |||||||||
QEP Resources, Inc., 6.875%, due 03/01/21 |
105,000 | 113,138 | |||||||||
Quicksilver Resources, Inc., 7.125%, due 04/01/16 |
350,000 | 348,250 | |||||||||
9.125%, due 08/15/19 | 75,000 | 79,500 | |||||||||
11.750%, due 01/01/16 | 140,000 | 158,900 | |||||||||
Quiksilver, Inc., 6.875%, due 04/15/15 |
125,000 | 116,094 | |||||||||
QVC, Inc., 7.125%, due 04/15/171 |
70,000 | 74,200 | |||||||||
7.500%, due 10/01/191 | 515,000 | 552,338 | |||||||||
Radiation Therapy Services, Inc., 9.875%, due 04/15/17 |
100,000 | 74,750 | |||||||||
Range Resources Corp., 5.750%, due 06/01/21 |
140,000 | 151,550 | |||||||||
7.250%, due 05/01/18 | 175,000 | 187,250 | |||||||||
RBS Global, Inc., 8.500%, due 05/01/18 |
140,000 | 148,400 | |||||||||
Residential Capital LLC, 9.625%, due 05/15/15 |
125,000 | 87,500 | |||||||||
Reynolds Group Issuer, Inc., 7.875%, due 08/15/191 |
100,000 | 104,500 | |||||||||
8.750%, due 10/15/161 | 200,000 | 210,500 | |||||||||
9.875%, due 08/15/191 | 450,000 | 436,500 | |||||||||
Rite Aid Corp., 8.625%, due 03/01/15 |
230,000 | 221,950 | |||||||||
10.375%, due 07/15/16 | 300,000 | 318,750 | |||||||||
Roofing Supply Group LLC, 8.625%, due 12/01/171 |
162,000 | 165,240 |
54
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Royal Caribbean Cruises Ltd., 7.500%, due 10/15/27 |
$ | 190,000 | $ | 186,200 | |||||||
Ryerson, Inc., 12.000%, due 11/01/15 |
580,000 | 585,800 | |||||||||
SandRidge Energy, Inc., 8.750%, due 01/15/20 |
210,000 | 216,825 | |||||||||
9.875%, due 05/15/161 | 190,000 | 203,300 | |||||||||
Sanmina-SCI Corp., 7.000%, due 05/15/191 |
325,000 | 316,875 | |||||||||
Sealed Air Corp., 8.375%, due 09/15/211 |
240,000 | 265,200 | |||||||||
Sealy Mattress Co., 10.875%, due 04/15/161 |
84,000 | 91,770 | |||||||||
SESI LLC, 7.125%, due 12/15/211 |
115,000 | 120,750 | |||||||||
Severstal Columbus LLC, 10.250%, due 02/15/18 |
200,000 | 209,500 | |||||||||
Shingle Springs Tribal Gaming Authority, 9.375%, due 06/15/151 |
365,000 | 206,225 | |||||||||
Smithfield Foods, Inc., 10.000%, due 07/15/14 |
102,000 | 118,575 | |||||||||
Sprint Capital Corp., 6.875%, due 11/15/28 |
175,000 | 124,906 | |||||||||
8.750%, due 03/15/32 | 430,000 | 347,763 | |||||||||
Sprint Nextel Corp., 6.000%, due 12/01/16 |
335,000 | 278,050 | |||||||||
8.375%, due 08/15/17 | 415,000 | 371,944 | |||||||||
9.000%, due 11/15/181 | 135,000 | 141,750 | |||||||||
11.500%, due 11/15/211 | 45,000 | 44,550 | |||||||||
SPX Corp., 7.625%, due 12/15/14 |
400,000 | 440,000 | |||||||||
SquareTwo Financial Corp., 11.625%, due 04/01/17 |
355,000 | 342,575 | |||||||||
Standard Pacific Corp., 10.750%, due 09/15/16 |
115,000 | 120,750 | |||||||||
SunGard Data Systems, Inc., 10.625%, due 05/15/15 |
327,000 | 348,255 | |||||||||
SUPERVALU, Inc., 8.000%, due 05/01/16 |
235,000 | 242,638 | |||||||||
Susser Holdings LLC, 8.500%, due 05/15/16 |
50,000 | 53,938 | |||||||||
Swift Energy Co., 7.875%, due 03/01/221 |
75,000 | 74,063 | |||||||||
Tenet Healthcare Corp., 6.875%, due 11/15/31 |
150,000 | 123,000 | |||||||||
8.000%, due 08/01/20 | 160,000 | 160,200 | |||||||||
Tesoro Corp., 9.750%, due 06/01/19 |
205,000 | 230,113 |
Face amount |
Value | ||||||||||
Texas Competitive Electric Holdings Co. LLC, Series A, 10.250%, due 11/01/15 |
$ | 445,000 | $ | 157,975 | |||||||
Toll Brothers Finance Corp., 8.910%, due 10/15/17 |
80,000 | 92,196 | |||||||||
Tomkins LLC, 9.000%, due 10/01/18 |
243,000 | 269,426 | |||||||||
Toys R Us Property Co. II LLC, 8.500%, due 12/01/17 |
505,000 | 522,675 | |||||||||
Tube City IMS Corp., 9.750%, due 02/01/15 |
240,000 | 242,400 | |||||||||
Tunica-Biloxi Gaming Authority, 9.000%, due 11/15/151 |
250,000 | 240,625 | |||||||||
Tyson Foods, Inc., 10.500%, due 03/01/14 |
175,000 | 202,125 | |||||||||
U.S. Foodservice, 8.500%, due 06/30/191 |
140,000 | 135,450 | |||||||||
Unisys Corp., 12.750%, due 10/15/141 |
154,000 | 174,983 | |||||||||
United States Steel Corp., 7.375%, due 04/01/20 |
150,000 | 146,250 | |||||||||
Univision Communications, Inc., 7.875%, due 11/01/201 |
35,000 | 35,525 | |||||||||
8.500%, due 05/15/211 | 185,000 | 168,350 | |||||||||
USG Corp., 8.375%, due 10/15/181 |
35,000 | 32,200 | |||||||||
Vanguard Health Holding Co. II LLC, 8.000%, due 02/01/18 |
225,000 | 223,313 | |||||||||
Verso Paper Holdings LLC, Series B, 11.375%, due 08/01/16 |
140,000 | 57,400 | |||||||||
Viskase Cos., Inc., 9.875%, due 01/15/181 |
200,000 | 202,500 | |||||||||
Warner Chilcott Co. LLC, 7.750%, due 09/15/18 |
200,000 | 204,250 | |||||||||
West Corp., 7.875%, due 01/15/19 |
250,000 | 248,125 | |||||||||
11.000%, due 10/15/16 | 300,000 | 315,750 | |||||||||
Whiting Petroleum Corp., 6.500%, due 10/01/18 |
250,000 | 261,250 | |||||||||
WMG Acquisition Corp., 9.500%, due 06/15/16 |
635,000 | 688,975 | |||||||||
XL Group PLC, Series E, 6.500%, due 04/15/173,4 |
315,000 | 246,488 | |||||||||
XM Satellite Radio, Inc., 13.000%, due 08/01/131 |
115,000 | 130,525 | |||||||||
YCC Holdings LLC, 10.250%, due 02/15/165 |
425,000 | 371,875 | |||||||||
Yonkers Racing Corp., 11.375%, due 07/15/161 |
500,000 | 515,000 |
55
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
Zions Bancorp., 5.500%, due 11/16/15 |
$ | 140,000 | $ | 141,548 | |||||||
Total United States corporate bonds | 68,071,195 | ||||||||||
Total corporate bonds (cost $78,441,509) |
78,601,816 | ||||||||||
Commercial mortgage-backed securities: 0.69% | |||||||||||
United States: 0.69% | |||||||||||
CW Capital Cobalt Ltd., Series 2007-C3, Class AJ, 5.816%, due 05/15/463 |
250,000 | 119,844 | |||||||||
GE Capital Commercial Mortgage Corp., Series 2007-C1, Class AJ, 5.677%, due 12/10/493 |
225,000 | 108,000 | |||||||||
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2007-LD11, Class AM, 5.817%, due 06/15/493 |
305,000 | 259,875 | |||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2007-C33, Class AM, 5.899%, due 02/15/513 |
100,000 | 83,706 | |||||||||
Total commercial mortgage-backed securities (cost $644,136) |
571,425 | ||||||||||
Total bonds (cost $79,085,645) |
79,173,241 |
Shares | Value | ||||||||||
Common stocks: 0.07% | |||||||||||
United States: 0.07% | |||||||||||
American Restaurant Group, Inc.*†6 | 972 | $ | 0 | ||||||||
Knology, Inc.* | 3,926 | 55,749 | |||||||||
Pliant Corp.*†6,7 | 1 | 0 | |||||||||
Total common stocks (cost $0) |
55,749 | ||||||||||
Number of Warrants |
|||||||||||
Warrants: 0.00%8 | |||||||||||
CMP Susquehanna Radio Holdings Corp., strike @ $0.01, expires 03/26/19*†6 |
13,325 | 133 | |||||||||
Sabreliner Corp., strike @ $0.01, expires 06/08/18*†6 |
8,400 | 0 | |||||||||
Total warrants (cost $153,135) |
133 | ||||||||||
Short-term investment: 1.34% | |||||||||||
Investment company: 1.34% | |||||||||||
UBS Cash Management Prime Relationship Fund9 (cost $1,103,016) |
1,103,016 | 1,103,016 | |||||||||
Total investments: 97.79% (cost $80,341,796) |
80,332,139 | ||||||||||
Cash and other assets, less liabilities: 2.21% |
1,812,833 | ||||||||||
Net assets: 100.00% | $ | 82,144,972 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 3,389,703 | |||||
Gross unrealized depreciation | (3,399,360 | ) | |||||
Net unrealized depreciation of investments | $ | (9,657 | ) |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 59.
* Non-income producing security.
† Holding is illiquid. At December 31, 2011, the value of this security amounted to $133 or 0.00% of net assets.
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, 2011, the value of these securities amounted to $22,745,704 or 27.69% of net assets.
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, 2011, the value of this security amounted to $238,627 or 0.29% of net assets.
3 Variable or floating rate security: The interest rate shown is the current rate as of December 31, 2011 and changes periodically.
4 Perpetual bond security. The maturity date reflects the next call date.
5 PIK: Payment-in kind security. Income may be paid in cash or additional notes, at the discretion of the issuer.
56
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (unaudited)
6 Security is being fair valued by a valuation committee under the direction of the Board of Trustees. At December 31, 2011, the value of these securities amounted to $133 or 0.00% of net assets.
7 This security, which represent 0.00% of net assets as of December 31, 2011, 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 12/31/11 |
Value as a percentage of net assets |
||||||||||||||||||
Pliant Corp. | 10/20/00 | $ | 0 | 0.00 | % | $ | 0 | 0.00 | % |
8 Amount represents less than 0.005%.
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 the affiliated UBS Relationship Fund.
Security description |
Value 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 3,024,386 | $ | 18,294,896 | $ | 20,216,266 | $ | 1,103,016 | $ | 945 |
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation |
|||||||||||||||
JPMorgan Chase Bank | EUR | 455,000 | USD | 593,464 | 01/30/12 | $ | 4,476 |
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | | $ | 78,601,816 | $ | | $ | 78,601,816 | |||||||||||
Commercial mortgage-backed securities | | 571,425 | | 571,425 | |||||||||||||||
Common stocks | 55,749 | | 0 | 55,749 | |||||||||||||||
Warrants | | | 133 | 133 | |||||||||||||||
Short-term investment | | 1,103,016 | | 1,103,016 | |||||||||||||||
Forward foreign currency contract | | 4,476 | | 4,476 | |||||||||||||||
Total | $ | 55,749 | $ | 80,280,733 | $ | 133 | $ | 80,336,615 |
57
UBS High Yield Fund
Portfolio of investments
December 31, 2011 (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:
Common stocks |
Preferred stock |
Warrants | Total | ||||||||||||||||
Assets | |||||||||||||||||||
Beginning balance | $ | 0 | $ | 117 | $ | 133 | $ | 250 | |||||||||||
Purchases | | | | | |||||||||||||||
Issuances | | | | | |||||||||||||||
Sales | | (116,610 | ) | | (116,610 | ) | |||||||||||||
Settlements | | | | | |||||||||||||||
Accrued discounts (premiums) | | | | | |||||||||||||||
Total realized gain (loss) | | 116,475 | | 116,475 | |||||||||||||||
Change in net unrealized appreciation/depreciation | | 18 | | 18 | |||||||||||||||
Transfers into Level 3 | | | | | |||||||||||||||
Transfers out of Level 3 | | | | | |||||||||||||||
Ending balance | $ | 0 | $ | | $ | 133 | $ | 133 |
The change in net unrealized appreciation/depreciation relating to the Level 3 investments held at December 31, 2011 was $(0).
See accompanying notes to financial statements
58
The UBS Funds
Portfolio acronymns
BBA British Banking Association
BBSW Bank Bill Swap Reference Rate (Australian Financial Market)
CD KSDA Korean Securities Dealer Association 91 day Certificate of Deposit Rate
CDO Collateralized debt obligations
CLO Collateralized loan obligations
EURIBOR Euro Interbank Offered Rate
GE General Electric
GO General Obligation
LIBOR London Interbank Offered Rate
OJSC Open joint stock company
PO Principal only securityThis security entitles the holder to receive principal payments from an underlying pool of assets or on the security itself. In the case of asset-backed securities, 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.
REIT Real estate investment trust
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.
Currency 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
NOK Norwegian Krone
SEK Swedish Krona
USD United States Dollar
See accompanying notes to financial statements
59
The UBS Funds
December 31, 2011 (unaudited)
Explanation of expense disclosure
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, 2011 to December 31, 2011.
Actual expenses
The first line for 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, 2011 to December 31, 2011.
60
The UBS Funds
December 31, 2011 (unaudited)
Beginning account value July 1, 2011 |
Ending account value December 31, 2011 |
Expenses paid during period* 07/01/11 12/31/11 |
Expense ratio during period |
||||||||||||||||||||
UBS Core Plus Bond Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,047.70 | $ | 3.29 | 0.64 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,021.92 | 3.25 | 0.64 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,043.80 | 7.14 | 1.39 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.15 | 7.05 | 1.39 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,044.10 | 5.86 | 1.14 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.41 | 5.79 | 1.14 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,049.10 | 2.01 | 0.39 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,023.18 | 1.98 | 0.39 | |||||||||||||||||||
UBS Fixed Income Opportunities Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 996.70 | 4.77 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.36 | 4.82 | 0.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 994.20 | 7.27 | 1.45 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,017.85 | 7.35 | 1.45 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 998.10 | 3.52 | 0.70 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,021.62 | 3.56 | 0.70 | |||||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 999.90 | 5.78 | 1.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.36 | 5.84 | 1.15 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 996.30 | 9.53 | 1.90 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.58 | 9.63 | 1.90 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 997.40 | 8.28 | 1.65 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,016.84 | 8.36 | 1.65 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,001.00 | 4.53 | 0.90 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.61 | 4.57 | 0.90 |
* 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 366 (to reflect the one-half year period).
61
The UBS Funds
December 31, 2011 (unaudited)
Beginning account value July 1, 2011 |
Ending account value December 31, 2011 |
Expenses paid during period* 07/01/11 12/31/11 |
Expense ratio during period |
||||||||||||||||||||
UBS High Yield Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 982.90 | $ | 5.98 | 1.20 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.10 | 6.09 | 1.20 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 979.10 | 9.70 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.33 | 9.88 | 1.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 980.40 | 8.46 | 1.70 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,016.59 | 8.62 | 1.70 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 984.20 | 4.74 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.36 | 4.82 | 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 366 (to reflect the one-half year period).
62
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63
The UBS Funds
Financial statements
Statement of assets and liabilities
December 31, 2011 (unaudited)
UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund |
||||||||||
Assets: | |||||||||||
Investments, at cost: | |||||||||||
Unaffiliated issuers | $ | 41,451,148 | $ | 71,769,945 | |||||||
Affiliated issuers | 5,470,470 | 16,988,888 | |||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | 56,375 | | |||||||||
Foreign currency, at cost | | 1,442,206 | |||||||||
$ | 46,977,993 | $ | 90,201,039 | ||||||||
Investments, at value: | |||||||||||
Unaffiliated issuers | $ | 42,361,349 | $ | 69,208,659 | |||||||
Affiliated issuers | 5,473,889 | 17,867,099 | |||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | 56,375 | | |||||||||
Foreign currency, at value | | 652,511 | |||||||||
Cash | | | |||||||||
Receivables: | |||||||||||
Investment securities sold | 1,677,305 | 1,906,721 | |||||||||
Interest | 231,003 | 977,835 | |||||||||
Fund shares sold | 106,491 | 26,919 | |||||||||
Due from advisor | 5,569 | | |||||||||
Due from broker | 397,195 | 273,463 | |||||||||
Cash collateral for futures contracts | 31,361 | 597,064 | |||||||||
Cash collateral for swap agreements | | 2,588,000 | |||||||||
Outstanding swap agreements, at value2 | 4,081 | 8,211,698 | |||||||||
Unrealized appreciation on forward foreign currency contracts | 72,699 | 659,753 | |||||||||
Other assets | 36,758 | 37,907 | |||||||||
Total assets | 50,454,075 | 103,007,629 | |||||||||
Liabilities: | |||||||||||
Payables: | |||||||||||
Cash collateral from securities loaned | 56,375 | | |||||||||
Investment securities purchased | 6,150,663 | 954,787 | |||||||||
Investment advisory and administration fee | | 20,319 | |||||||||
Fund shares redeemed | 38,610 | 435,972 | |||||||||
Custody and fund accounting fees | 8,697 | 10,495 | |||||||||
Distribution and service fees | 3,211 | 16,022 | |||||||||
Trustees' fees | 4,327 | 5,325 | |||||||||
Due to custodian | | | |||||||||
Accrued expenses | 65,263 | 81,345 | |||||||||
Options written, at value3 | | 2,507,383 | |||||||||
Outstanding swap agreements, at value2 | 6,067 | 14,985,929 | |||||||||
Unrealized depreciation on forward foreign currency contracts | 24,474 | 133,620 | |||||||||
Total liabilities | 6,357,687 | 19,151,197 | |||||||||
Net assets | $ | 44,096,388 | $ | 83,856,432 |
1 The market value of securities loaned by UBS Core Plus Bond Fund as of December 31, 2011 was $343,964.
2 Net upfront payments received by UBS Core Plus Bond Fund and UBS Fixed Income Opportunities Fund were $4,894 and $497,265, respectively, and net upfront payments made by UBS Global Bond Fund were $26,605.
3 Premiums received by UBS Fixed Income Opportunities Fund were $2,763,142.
64
The UBS Funds
Financial statements
UBS Global Bond Fund |
UBS High Yield Fund |
||||||||||
Assets: | |||||||||||
Investments, at cost: | |||||||||||
Unaffiliated issuers | $ | 13,253,100 | $ | 79,238,780 | |||||||
Affiliated issuers | 479,734 | 1,103,016 | |||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | | | |||||||||
Foreign currency, at cost | 229,493 | 356,705 | |||||||||
$ | 13,962,327 | $ | 80,698,501 | ||||||||
Investments, at value: | |||||||||||
Unaffiliated issuers | $ | 13,495,655 | $ | 79,229,123 | |||||||
Affiliated issuers | 479,734 | 1,103,016 | |||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | | | |||||||||
Foreign currency, at value | 228,874 | 356,788 | |||||||||
Cash | | | |||||||||
Receivables: | |||||||||||
Investment securities sold | | | |||||||||
Interest | 183,536 | 1,615,177 | |||||||||
Fund shares sold | 491 | 260 | |||||||||
Due from advisor | 9,088 | | |||||||||
Due from broker | 519 | | |||||||||
Cash collateral for futures contracts | 20,304 | | |||||||||
Cash collateral for swap agreements | | | |||||||||
Outstanding swap agreements, at value2 | 46,325 | | |||||||||
Unrealized appreciation on forward foreign currency contracts | 37,844 | 4,476 | |||||||||
Other assets | 29,780 | 39,475 | |||||||||
Total assets | 14,532,150 | 82,348,315 | |||||||||
Liabilities: | |||||||||||
Payables: | |||||||||||
Cash collateral from securities loaned | | | |||||||||
Investment securities purchased | | | |||||||||
Investment advisory and administration fee | | 40,033 | |||||||||
Fund shares redeemed | 99,843 | 44,926 | |||||||||
Custody and fund accounting fees | 8,611 | 7,069 | |||||||||
Distribution and service fees | 3,025 | 13,487 | |||||||||
Trustees' fees | 3,905 | 5,191 | |||||||||
Due to custodian | 422 | 127 | |||||||||
Accrued expenses | 59,957 | 92,510 | |||||||||
Options written, at value3 | | | |||||||||
Outstanding swap agreements, at value2 | 31,521 | | |||||||||
Unrealized depreciation on forward foreign currency contracts | 27,402 | | |||||||||
Total liabilities | 234,686 | 203,343 | |||||||||
Net assets | $ | 14,297,464 | $ | 82,144,972 |
See accompanying notes to financial statements.
65
The UBS Funds
Financial statements
Statement of assets and liabilities (continued)
December 31, 2011 (unaudited)
UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund1 |
||||||||||
Net assets consist of: | |||||||||||
Beneficial interest | $ | 77,919,499 | $ | 90,364,081 | |||||||
Accumulated undistributed (distributions in excess of) net investment income | 291,429 | 101,722 | |||||||||
Accumulated net realized gain (loss) | (35,062,723 | ) | 471,776 | ||||||||
Net unrealized appreciation (depreciation) | 948,183 | (7,081,147 | ) | ||||||||
Net assets | $ | 44,096,388 | $ | 83,856,432 | |||||||
Class A: | |||||||||||
Net assets | $ | 8,384,726 | $ | 51,156,079 | |||||||
Shares outstanding | 932,591 | 5,399,715 | |||||||||
Net asset value and redemption proceeds per share | $ | 8.99 | $ | 9.47 | |||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 9.41 | $ | 9.92 | |||||||
Class B: | |||||||||||
Net assets | $ | 48,748 | N/A | ||||||||
Shares outstanding | 5,414 | N/A | |||||||||
Net asset value and offering price per share | $ | 9.00 | N/A | ||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 8.55 | N/A | ||||||||
Class C: | |||||||||||
Net assets | $ | 2,250,786 | $ | 7,120,428 | |||||||
Shares outstanding | 251,164 | 752,426 | |||||||||
Net asset value and offering price per share | $ | 8.96 | $ | 9.46 | |||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 8.89 | $ | 9.39 | |||||||
Class Y: | |||||||||||
Net assets | $ | 33,412,128 | $ | 25,579,925 | |||||||
Shares outstanding | 3,721,018 | 2,697,165 | |||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 8.98 | $ | 9.48 |
1 UBS Fixed Income Opportunities Fund does not offer Class B shares.
2 For Class A, the maximum sales charge is 4.50% for each Fund, Classes B, C and Y have no front-end sales charges. For Class A shares of each 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 B, the maximum contingent deferred sales charge is 5.00%. For Class C, the maximum contingent deferred sales charge is 0.75% for each Fund. Class Y has no contingent deferred sales charge.
66
The UBS Funds
Financial statements
UBS Global Bond Fund |
UBS High Yield Fund |
||||||||||
Net assets consist of: | |||||||||||
Beneficial interest | $ | 30,535,506 | $ | 167,503,305 | |||||||
Accumulated undistributed (distributions in excess of) net investment income | (176,019 | ) | 565,767 | ||||||||
Accumulated net realized gain (loss) | (16,291,249 | ) | (85,918,996 | ) | |||||||
Net unrealized appreciation (depreciation) | 229,226 | (5,104 | ) | ||||||||
Net assets | $ | 14,297,464 | $ | 82,144,972 | |||||||
Class A: | |||||||||||
Net assets | $ | 5,774,965 | $ | 38,633,164 | |||||||
Shares outstanding | 828,673 | 6,559,527 | |||||||||
Net asset value and redemption proceeds per share | $ | 6.97 | $ | 5.89 | |||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 7.30 | $ | 6.17 | |||||||
Class B: | |||||||||||
Net assets | $ | 43,738 | $ | 450,350 | |||||||
Shares outstanding | 6,251 | 76,398 | |||||||||
Net asset value and offering price per share | $ | 7.00 | $ | 5.89 | |||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 6.65 | $ | 5.60 | |||||||
Class C: | |||||||||||
Net assets | $ | 2,776,972 | $ | 7,850,350 | |||||||
Shares outstanding | 399,976 | 1,331,441 | |||||||||
Net asset value and offering price per share | $ | 6.94 | $ | 5.90 | |||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 6.89 | $ | 5.86 | |||||||
Class Y: | |||||||||||
Net assets | $ | 5,701,789 | $ | 35,211,108 | |||||||
Shares outstanding | 700,514 | 5,924,456 | |||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 8.14 | $ | 5.94 |
See accompanying notes to financial statements.
67
The UBS Funds
Financial statements
Statement of operations
For the six months ended December 31, 2011 (unaudited)
UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund |
||||||||||
Investment income: | |||||||||||
Interest and other | $ | 625,466 | $ | 2,148,993 | |||||||
Affiliated interest | 3,119 | 2,174 | |||||||||
Securities lending1 | 809 | | |||||||||
Foreign tax withheld | | | |||||||||
Total income | 629,394 | 2,151,167 | |||||||||
Expenses: | |||||||||||
Advisory and administration | $ | 122,103 | $ | 335,741 | |||||||
Service and distribution: | |||||||||||
Class A | 9,833 | 73,999 | |||||||||
Class B | 249 | | |||||||||
Class C | 8,242 | 29,084 | |||||||||
Transfer agency and related service fees: | |||||||||||
Class A | 5,950 | 5,611 | |||||||||
Class B | 60 | | |||||||||
Class C | 812 | 1,447 | |||||||||
Class Y | 4,392 | 29 | |||||||||
Custodian and fund accounting | 25,433 | 44,204 | |||||||||
Federal and state registration | 25,144 | 11,120 | |||||||||
Professional services | 48,859 | 51,092 | |||||||||
Shareholder reports | 2,653 | 5,395 | |||||||||
Trustees | 8,712 | 10,623 | |||||||||
Amortization of offering costs | | 74,287 | |||||||||
Other | 9,526 | 4,724 | |||||||||
Total expenses | 271,968 | 647,356 | |||||||||
Fee waivers and/or expense reimbursements by Advisor | (171,076 | ) | (221,321 | ) | |||||||
Net expenses | 100,892 | 426,035 | |||||||||
Net investment income | 528,502 | 1,725,132 | |||||||||
Net realized gain (loss) on: | |||||||||||
Investments in unaffiliated issuers | 1,342,765 | (5,475,287 | ) | ||||||||
Investments in affiliated issuers | 113,699 | | |||||||||
Futures contracts | (83,325 | ) | 4,648,079 | ||||||||
Options written | | 2,480,164 | |||||||||
Swap agreements | (287,981 | ) | 872,596 | ||||||||
Forward foreign currency contracts | 15,883 | 724,498 | |||||||||
Foreign currency transactions | | (134,250 | ) | ||||||||
Net realized gain | 1,101,041 | 3,115,800 | |||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||
Investments | 123,321 | (1,385,267 | ) | ||||||||
Futures contracts | 572 | 165,217 | |||||||||
Options written | | 59,193 | |||||||||
Swap agreements | 140,958 | (5,259,053 | ) | ||||||||
Forward foreign currency contracts | 48,225 | 1,200,265 | |||||||||
Translation of other assets and liabilities denominated in foreign currency | | (4,785 | ) | ||||||||
Change in net unrealized appreciation/depreciation | 313,076 | (5,224,430 | ) | ||||||||
Net realized and unrealized gain (loss) | 1,414,117 | (2,108,630 | ) | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | 1,942,619 | $ | (383,498 | ) |
1 Includes affiliated income from UBS Private Money Market Fund LLC of $18 for UBS Core Plus Bond Fund.
68
The UBS Funds
Financial statements
UBS Global Bond Fund |
UBS High Yield Fund |
||||||||||
Investment income: | |||||||||||
Interest and other | $ | 278,320 | $ | 3,693,462 | |||||||
Affiliated interest | 250 | 945 | |||||||||
Securities lending1 | | | |||||||||
Foreign tax withheld | | (2,048 | ) | ||||||||
Total income | 278,570 | 3,692,359 | |||||||||
Expenses: | |||||||||||
Advisory and administration | $ | 56,017 | $ | 292,241 | |||||||
Service and distribution: | |||||||||||
Class A | 8,007 | 49,123 | |||||||||
Class B | 240 | 2,615 | |||||||||
Class C | 10,260 | 29,737 | |||||||||
Transfer agency and related service fees: | |||||||||||
Class A | 3,284 | 19,254 | |||||||||
Class B | 87 | 554 | |||||||||
Class C | 811 | 4,625 | |||||||||
Class Y | 2,974 | 6,312 | |||||||||
Custodian and fund accounting | 25,661 | 20,963 | |||||||||
Federal and state registration | 23,369 | 23,792 | |||||||||
Professional services | 50,226 | 51,594 | |||||||||
Shareholder reports | 3,534 | 16,690 | |||||||||
Trustees | 7,791 | 10,392 | |||||||||
Amortization of offering costs | | | |||||||||
Other | 4,648 | 8,610 | |||||||||
Total expenses | 196,909 | 536,502 | |||||||||
Fee waivers and/or expense reimbursements by Advisor | (109,119 | ) | (44,100 | ) | |||||||
Net expenses | 87,790 | 492,402 | |||||||||
Net investment income | 190,780 | 3,199,957 | |||||||||
Net realized gain (loss) on: | |||||||||||
Investments in unaffiliated issuers | 11,695 | 605,887 | |||||||||
Investments in affiliated issuers | | | |||||||||
Futures contracts | 37,562 | | |||||||||
Options written | | | |||||||||
Swap agreements | (33,073 | ) | | ||||||||
Forward foreign currency contracts | 28,317 | 64,066 | |||||||||
Foreign currency transactions | 62,763 | (43,373 | ) | ||||||||
Net realized gain | 107,264 | 626,580 | |||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||
Investments | (248,393 | ) | (5,572,041 | ) | |||||||
Futures contracts | (7,198 | ) | | ||||||||
Options written | | | |||||||||
Swap agreements | 3,995 | | |||||||||
Forward foreign currency contracts | (12,197 | ) | 17,000 | ||||||||
Translation of other assets and liabilities denominated in foreign currency | (11,620 | ) | (453 | ) | |||||||
Change in net unrealized appreciation/depreciation | (275,413 | ) | (5,555,494 | ) | |||||||
Net realized and unrealized gain (loss) | (168,149 | ) | (4,928,914 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | $ | 22,631 | $ | (1,728,957 | ) |
See accompanying notes to financial statements.
69
The UBS Funds
Financial statements
Statement of changes in net assets
UBS Core Plus Bond Fund |
UBS Fixed Income Opportunities Fund |
||||||||||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
Six months ended December 31, 2011 (unaudited) |
Period ended June 30, 20111 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income | $ | 528,502 | $ | 1,301,553 | $ | 1,725,132 | $ | 1,485,703 | |||||||||||
Net realized gain (loss) | 1,101,041 | 1,007,314 | 3,115,800 | (1,599,593 | ) | ||||||||||||||
Change in net unrealized appreciation/depreciation | 313,076 | (39,577 | ) | (5,224,430 | ) | (1,856,717 | ) | ||||||||||||
Net increase (decrease) in net assets from operations | 1,942,619 | 2,269,290 | (383,498 | ) | (1,970,607 | ) | |||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | (105,568 | ) | (440,852 | ) | (1,005,459 | ) | (374,094 | ) | |||||||||||
Net realized gain | | | (1,313,363 | ) | | ||||||||||||||
Return of capital | | | | (368,635 | ) | ||||||||||||||
Total Class A dividends and distributions | (105,568 | ) | (440,852 | ) | (2,318,822 | ) | (742,729 | ) | |||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | (507 | ) | (1,595 | ) | | | |||||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | (24,763 | ) | (100,168 | ) | (118,506 | ) | (26,993 | ) | |||||||||||
Net realized gain | | | (182,288 | ) | | ||||||||||||||
Return of capital | | | | (49,759 | ) | ||||||||||||||
Total Class C dividends and distributions | (24,763 | ) | (100,168 | ) | (300,794 | ) | (76,752 | ) | |||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (486,001 | ) | (1,660,450 | ) | (504,248 | ) | (155,605 | ) | |||||||||||
Net realized gain | | | (639,174 | ) | | ||||||||||||||
Return of capital | | | | (246,080 | ) | ||||||||||||||
Total Class Y dividends and distributions | (486,001 | ) | (1,660,450 | ) | (1,143,422 | ) | (401,685 | ) | |||||||||||
Decrease in net assets from dividends and distributions | (616,839 | ) | (2,203,065 | ) | (3,763,038 | ) | (1,221,166 | ) | |||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 6,237,670 | 5,635,622 | 4,658,359 | 116,091,420 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 566,544 | 2,100,969 | 2,624,330 | 911,111 | |||||||||||||||
Cost of shares redeemed | (3,308,367 | ) | (14,834,259 | ) | (20,233,437 | ) | (12,945,222 | ) | |||||||||||
Redemption fees | 1,330 | 5,674 | 123 | 88,057 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | 3,497,177 | (7,091,994 | ) | (12,950,625 | ) | 104,145,366 | |||||||||||||
Increase (decrease) in net assets | 4,822,957 | (7,025,769 | ) | (17,097,161 | ) | 100,953,593 | |||||||||||||
Net assets, beginning of period | 39,273,431 | 46,299,200 | 100,953,593 | | |||||||||||||||
Net assets, end of period | $ | 44,096,388 | $ | 39,273,431 | $ | 83,856,432 | $ | 100,953,593 | |||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income | $ | 291,429 | $ | 379,766 | $ | 101,722 | $ | 4,803 |
1 For the period November 29, 2010 (commencement of operations) through June 30, 2011.
70
The UBS Funds
Financial statements
UBS Global Bond Fund | UBS High Yield Fund | ||||||||||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income | $ | 190,780 | $ | 434,237 | $ | 3,199,957 | $ | 6,957,309 | |||||||||||
Net realized gain (loss) | 107,264 | 474,516 | 626,580 | 3,652,534 | |||||||||||||||
Change in net unrealized appreciation/depreciation | (275,413 | ) | 971,055 | (5,555,494 | ) | 986,189 | |||||||||||||
Net increase (decrease) in net assets from operations | 22,631 | 1,879,808 | (1,728,957 | ) | 11,596,032 | ||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | (356,021 | ) | (659,803 | ) | (1,444,398 | ) | (3,000,404 | ) | |||||||||||
Net realized gain | | | | | |||||||||||||||
Return of capital | | | | | |||||||||||||||
Total Class A dividends and distributions | (356,021 | ) | (659,803 | ) | (1,444,398 | ) | (3,000,404 | ) | |||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | (2,489 | ) | (9,797 | ) | (17,157 | ) | (53,266 | ) | |||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | (156,413 | ) | (212,238 | ) | (269,651 | ) | (687,533 | ) | |||||||||||
Net realized gain | | | | | |||||||||||||||
Return of capital | | | | | |||||||||||||||
Total Class C dividends and distributions | (156,413 | ) | (212,238 | ) | (269,651 | ) | (687,533 | ) | |||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (308,738 | ) | (617,857 | ) | (1,459,817 | ) | (3,330,657 | ) | |||||||||||
Net realized gain | | | | | |||||||||||||||
Return of capital | | | | | |||||||||||||||
Total Class Y dividends and distributions | (308,738 | ) | (617,857 | ) | (1,459,817 | ) | (3,330,657 | ) | |||||||||||
Decrease in net assets from dividends and distributions | (823,661 | ) | (1,499,695 | ) | (3,191,023 | ) | (7,071,860 | ) | |||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 1,053,623 | 1,967,712 | 3,935,110 | 20,020,501 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 696,434 | 1,330,191 | 2,266,129 | 5,403,254 | |||||||||||||||
Cost of shares redeemed | (2,414,831 | ) | (5,923,183 | ) | (14,636,424 | ) | (17,758,604 | ) | |||||||||||
Redemption fees | 160 | 580 | 628 | 2,033 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | (664,614 | ) | (2,624,700 | ) | (8,434,557 | ) | 7,667,184 | ||||||||||||
Increase (decrease) in net assets | (1,465,644 | ) | (2,244,587 | ) | (13,354,537 | ) | 12,191,356 | ||||||||||||
Net assets, beginning of period | 15,763,108 | 18,007,695 | 95,499,509 | 83,308,153 | |||||||||||||||
Net assets, end of period | $ | 14,297,464 | $ | 15,763,108 | $ | 82,144,972 | $ | 95,499,509 | |||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income | $ | (176,019 | ) | $ | 456,862 | $ | 565,767 | $ | 556,833 |
See accompanying notes to financial statements.
71
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, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.70 | $ | 8.69 | $ | 8.17 | $ | 9.13 | $ | 10.46 | $ | 10.27 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.10 | 0.24 | 0.28 | 0.23 | 0.25 | 0.32 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.31 | 0.18 | 0.73 | (0.56 | ) | (1.06 | ) | 0.24 | |||||||||||||||||||
Net increase from payment by Advisor | | | | | | 0.003 | |||||||||||||||||||||
Total income (loss) from investment operations | 0.41 | 0.42 | 1.01 | (0.33 | ) | (0.81 | ) | 0.56 | |||||||||||||||||||
Redemption fees | 0.003 | 0.003 | 0.003 | 0.01 | 0.01 | | |||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.12 | ) | (0.41 | ) | (0.49 | ) | (0.64 | ) | (0.53 | ) | (0.37 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.99 | $ | 8.70 | $ | 8.69 | $ | 8.17 | $ | 9.13 | $ | 10.46 | |||||||||||||||
Total investment return2 | 4.77 | % | 5.00 | % | 12.72 | % | (3.29 | )% | (8.03 | )% | 5.39 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.62 | %4 | 1.45 | % | 1.39 | % | 1.27 | % | 1.02 | % | 1.07 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.64 | %4 | 0.64 | % | 0.64 | % | 0.85 | % | 0.85 | % | 0.85 | % | |||||||||||||||
Net investment income | 2.31 | %4 | 2.76 | % | 3.30 | % | 2.71 | % | 2.05 | % | 3.08 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 8,385 | $ | 5,996 | $ | 8,956 | $ | 9,128 | $ | 9,330 | $ | 29,356 | |||||||||||||||
Portfolio turnover rate | 240 | % | 400 | % | 283 | % | 247 | % | 192 | % | 209 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.71 | $ | 8.70 | $ | 8.18 | $ | 9.14 | $ | 10.47 | $ | 10.28 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.07 | 0.18 | 0.21 | 0.16 | 0.18 | 0.25 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.31 | 0.18 | 0.74 | (0.54 | ) | (1.07 | ) | 0.23 | |||||||||||||||||||
Net increase from payment by Advisor | | | | | | 0.003 | |||||||||||||||||||||
Total income (loss) from investment operations | 0.38 | 0.36 | 0.95 | (0.38 | ) | (0.89 | ) | 0.48 | |||||||||||||||||||
Redemption fees | | | | 0.003 | 0.01 | | |||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.09 | ) | (0.35 | ) | (0.43 | ) | (0.58 | ) | (0.45 | ) | (0.29 | ) | |||||||||||||||
Net asset value, end of period | $ | 9.00 | $ | 8.71 | $ | 8.70 | $ | 8.18 | $ | 9.14 | $ | 10.47 | |||||||||||||||
Total investment return2 | 4.38 | % | 4.20 | % | 11.85 | % | (4.01 | )% | (8.72 | )% | 4.70 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.38 | %4 | 2.28 | % | 2.22 | % | 2.10 | % | 1.91 | % | 1.84 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.39 | %4 | 1.39 | % | 1.39 | % | 1.60 | % | 1.60 | % | 1.60 | % | |||||||||||||||
Net investment income | 1.59 | %4 | 2.02 | % | 2.52 | % | 1.89 | % | 1.77 | % | 2.39 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 49 | $ | 55 | $ | 56 | $ | 109 | $ | 250 | $ | 442 | |||||||||||||||
Portfolio turnover rate | 240 | % | 400 | % | 283 | % | 247 | % | 192 | % | 209 | % |
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.
72
UBS Core Plus Bond Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.68 | $ | 8.66 | $ | 8.15 | $ | 9.12 | $ | 10.45 | $ | 10.26 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.08 | 0.20 | 0.24 | 0.19 | 0.20 | 0.27 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.30 | 0.19 | 0.72 | (0.57 | ) | (1.05 | ) | 0.24 | |||||||||||||||||||
Net increase from payment by Advisor | | | | | | 0.003 | |||||||||||||||||||||
Total income (loss) from investment operations | 0.38 | 0.39 | 0.96 | (0.38 | ) | (0.85 | ) | 0.51 | |||||||||||||||||||
Redemption fees | 0.003 | 0.003 | 0.003 | 0.01 | | | |||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.10 | ) | (0.37 | ) | (0.45 | ) | (0.60 | ) | (0.48 | ) | (0.32 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.96 | $ | 8.68 | $ | 8.66 | $ | 8.15 | $ | 9.12 | $ | 10.45 | |||||||||||||||
Total investment return2 | 4.41 | % | 4.60 | % | 12.06 | % | (3.76 | )% | (8.58 | )% | 4.98 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.95 | %4 | 1.92 | % | 1.86 | % | 1.76 | % | 1.58 | % | 1.55 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.14 | %4 | 1.14 | % | 1.14 | % | 1.35 | % | 1.35 | % | 1.35 | % | |||||||||||||||
Net investment income | 1.84 | %4 | 2.27 | % | 2.80 | % | 2.35 | % | 2.01 | % | 2.56 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,251 | $ | 2,175 | $ | 2,628 | $ | 2,574 | $ | 1,117 | $ | 1,525 | |||||||||||||||
Portfolio turnover rate | 240 | % | 400 | % | 283 | % | 247 | % | 192 | % | 209 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.69 | $ | 8.68 | $ | 8.16 | $ | 9.13 | $ | 10.46 | $ | 10.27 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.12 | 0.26 | 0.30 | 0.24 | 0.28 | 0.34 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.30 | 0.19 | 0.74 | (0.55 | ) | (1.06 | ) | 0.25 | |||||||||||||||||||
Net increase from payment by Advisor | | | | | | 0.003 | |||||||||||||||||||||
Total income (loss) from investment operations | 0.42 | 0.45 | 1.04 | (0.31 | ) | (0.78 | ) | 0.59 | |||||||||||||||||||
Redemption fees | | 0.003 | 0.003 | | | | |||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.13 | ) | (0.44 | ) | (0.52 | ) | (0.66 | ) | (0.55 | ) | (0.40 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.98 | $ | 8.69 | $ | 8.68 | $ | 8.16 | $ | 9.13 | $ | 10.46 | |||||||||||||||
Total investment return2 | 4.91 | % | 5.26 | % | 13.02 | % | (3.15 | )% | (7.78 | )% | 5.76 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.16 | %4 | 1.12 | % | 1.09 | % | 0.96 | % | 0.78 | % | 0.76 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.39 | %4 | 0.39 | % | 0.39 | % | 0.60 | % | 0.60 | % | 0.60 | % | |||||||||||||||
Net investment income | 2.59 | %4 | 3.02 | % | 3.53 | % | 2.88 | % | 2.77 | % | 3.27 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 33,412 | $ | 31,047 | $ | 34,659 | $ | 55,149 | $ | 102,473 | $ | 163,172 | |||||||||||||||
Portfolio turnover rate | 240 | % | 400 | % | 283 | % | 247 | % | 192 | % | 209 | % |
See accompanying notes to financial statements.
73
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 | ||||||||||||||||||
Six months ended December 31, 2011 (unaudited) |
For the period ended June 30, 20113 |
Six months ended December 31, 2011 (unaudited) |
For the period ended June 30, 20113 |
||||||||||||||||
Net asset value, beginning of period | $ | 9.93 | $ | 10.00 | $ | 9.92 | $ | 10.00 | |||||||||||
Income (loss) from investment operations: | |||||||||||||||||||
Net investment income1 | 0.18 | 0.21 | 0.16 | 0.18 | |||||||||||||||
Net realized and unrealized loss from investment activities | (0.21 | ) | (0.15 | ) | (0.21 | ) | (0.14 | ) | |||||||||||
Total income (loss) from investment operations | (0.03 | ) | 0.06 | (0.05 | ) | 0.04 | |||||||||||||
Redemption fees | 0.004 | 0.02 | | 0.004 | |||||||||||||||
Less dividends/distributions: | |||||||||||||||||||
From net investment income | (0.18 | ) | (0.05 | ) | (0.16 | ) | (0.02 | ) | |||||||||||
From net realized gains | (0.25 | ) | | (0.25 | ) | | |||||||||||||
From return of capital | | (0.10 | ) | | (0.10 | ) | |||||||||||||
Total dividends/distributions | (0.43 | ) | (0.15 | ) | (0.41 | ) | (0.12 | ) | |||||||||||
Net asset value, end of period | $ | 9.47 | $ | 9.93 | $ | 9.46 | $ | 9.92 | |||||||||||
Total investment return2 | (0.33 | )% | 0.76 | % | (0.58 | )% | 0.43 | % | |||||||||||
Ratios to average net assets: | |||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.43 | %5 | 1.39 | %5 | 1.96 | %5 | 1.94 | %5 | |||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.95 | %5 | 0.95 | %5 | 1.45 | %5 | 1.45 | %5 | |||||||||||
Net investment income | 3.71 | %5 | 3.53 | %5 | 3.20 | %5 | 3.06 | %5 | |||||||||||
Supplemental data: | |||||||||||||||||||
Net assets, end of period (000's) | $ | 51,156 | $ | 67,314 | $ | 7,120 | $ | 8,116 | |||||||||||
Portfolio turnover rate | 22 | % | 48 | % | 22 | % | 48 | % |
Class Y | |||||||||||
Six months ended December 31, 2011 (unaudited) |
For the period ended June 30, 20113 |
||||||||||
Net asset value, beginning of period | $ | 9.94 | $ | 10.00 | |||||||
Income (loss) from investment operations: | |||||||||||
Net investment income1 | 0.20 | 0.23 | |||||||||
Net realized and unrealized loss from investment activities | (0.22 | ) | (0.13 | ) | |||||||
Total income (loss) from investment operations | (0.02 | ) | 0.10 | ||||||||
Less dividends/distributions: | |||||||||||
From net investment income | (0.19 | ) | (0.06 | ) | |||||||
From net realized gains | (0.25 | ) | | ||||||||
From return of capital | | (0.10 | ) | ||||||||
Total dividends/distributions | (0.44 | ) | (0.16 | ) | |||||||
Net asset value, end of period | $ | 9.48 | $ | 9.94 | |||||||
Total investment return2 | (0.19 | )% | 0.97 | % | |||||||
Ratios to average net assets: | |||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.17 | %5 | 1.29 | %5 | |||||||
Expenses after fee waivers and/or expense reimbursement | 0.70 | %5 | 0.70 | %5 | |||||||
Net investment income | 3.95 | %5 | 3.91 | %5 | |||||||
Supplemental data: | |||||||||||
Net assets, end of period (000's) | $ | 25,580 | $ | 25,523 | |||||||
Portfolio turnover rate | 22 | % | 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.
3 For the period November 29, 2010 (commencement of operations) through June 30, 2011.
4 Amount represents less than $0.005 per share.
5 Annualized.
See accompanying notes to financial statements.
74
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75
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, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 7.41 | $ | 7.33 | $ | 7.12 | $ | 9.17 | $ | 9.41 | $ | 9.50 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.09 | 0.19 | 0.18 | 0.22 | 0.27 | 0.26 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.09 | ) | 0.61 | 0.25 | (0.92 | ) | (0.08 | ) | (0.10 | ) | |||||||||||||||||
Total income (loss) from investment operations | 0.00 | 0.80 | 0.43 | (0.70 | ) | 0.19 | 0.16 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.44 | ) | (0.72 | ) | (0.22 | ) | (1.35 | ) | (0.43 | ) | (0.25 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.97 | $ | 7.41 | $ | 7.33 | $ | 7.12 | $ | 9.17 | $ | 9.41 | |||||||||||||||
Total investment return2 | (0.01 | )% | 11.55 | % | 5.94 | % | (7.66 | )% | 1.94 | % | 1.67 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.58 | %3 | 2.43 | % | 2.05 | % | 1.68 | % | 1.31 | % | 1.40 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.15 | %3 | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | % | |||||||||||||||
Net investment income | 2.47 | %3 | 2.53 | % | 2.34 | % | 2.90 | % | 2.81 | % | 2.67 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 5,775 | $ | 6,768 | $ | 7,240 | $ | 7,930 | $ | 12,123 | $ | 14,093 | |||||||||||||||
Portfolio turnover rate | 29 | % | 63 | % | 61 | % | 116 | % | 137 | % | 74 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 7.43 | $ | 7.35 | $ | 7.14 | $ | 9.20 | $ | 9.43 | $ | 9.52 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.07 | 0.13 | 0.12 | 0.17 | 0.20 | 0.18 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.09 | ) | 0.62 | 0.25 | (0.93 | ) | (0.08 | ) | (0.09 | ) | |||||||||||||||||
Total income (loss) from investment operations | (0.02 | ) | 0.75 | 0.37 | (0.76 | ) | 0.12 | 0.09 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.41 | ) | (0.67 | ) | (0.16 | ) | (1.30 | ) | (0.35 | ) | (0.18 | ) | |||||||||||||||
Net asset value, end of period | $ | 7.00 | $ | 7.43 | $ | 7.35 | $ | 7.14 | $ | 9.20 | $ | 9.43 | |||||||||||||||
Total investment return2 | (0.37 | )% | 10.81 | % | 5.14 | % | (8.45 | )% | 1.27 | % | 0.90 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 3.58 | %3 | 3.20 | % | 2.85 | % | 2.55 | % | 2.20 | % | 2.17 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.90 | %3 | 1.90 | % | 1.90 | % | 1.90 | % | 1.90 | % | 1.90 | % | |||||||||||||||
Net investment income | 1.75 | %3 | 1.79 | % | 1.59 | % | 2.15 | % | 2.06 | % | 1.92 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 44 | $ | 45 | $ | 146 | $ | 122 | $ | 131 | $ | 215 | |||||||||||||||
Portfolio turnover rate | 29 | % | 63 | % | 61 | % | 116 | % | 137 | % | 74 | % |
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.
76
UBS Global Bond Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 7.38 | $ | 7.31 | $ | 7.09 | $ | 9.15 | $ | 9.38 | $ | 9.47 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.07 | 0.15 | 0.14 | 0.18 | 0.22 | 0.21 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.09 | ) | 0.61 | 0.26 | (0.92 | ) | (0.07 | ) | (0.10 | ) | |||||||||||||||||
Total income (loss) from investment operations | (0.02 | ) | 0.76 | 0.40 | (0.74 | ) | 0.15 | 0.11 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.42 | ) | (0.69 | ) | (0.18 | ) | (1.32 | ) | (0.38 | ) | (0.20 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.94 | $ | 7.38 | $ | 7.31 | $ | 7.09 | $ | 9.15 | $ | 9.38 | |||||||||||||||
Total investment return2 | (0.26 | )% | 10.88 | % | 5.58 | % | (8.27 | )% | 1.56 | % | 1.17 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 3.04 | %3 | 2.89 | % | 2.52 | % | 2.17 | % | 1.79 | % | 1.77 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.65 | %3 | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | 1.65 | % | |||||||||||||||
Net investment income | 1.96 | %3 | 2.01 | % | 1.84 | % | 2.37 | % | 2.31 | % | 2.17 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,777 | $ | 2,700 | $ | 2,242 | $ | 1,856 | $ | 1,716 | $ | 1,491 | |||||||||||||||
Portfolio turnover rate | 29 | % | 63 | % | 61 | % | 116 | % | 137 | % | 74 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.57 | $ | 8.37 | $ | 8.10 | $ | 10.24 | $ | 10.45 | $ | 10.51 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.12 | 0.24 | 0.22 | 0.28 | 0.32 | 0.31 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.10 | ) | 0.70 | 0.28 | (1.05 | ) | (0.08 | ) | (0.10 | ) | |||||||||||||||||
Total income (loss) from investment operations | 0.02 | 0.94 | 0.50 | (0.77 | ) | 0.24 | 0.21 | ||||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.45 | ) | (0.74 | ) | (0.23 | ) | (1.37 | ) | (0.45 | ) | (0.27 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.14 | $ | 8.57 | $ | 8.37 | $ | 8.10 | $ | 10.24 | $ | 10.45 | |||||||||||||||
Total investment return2 | 0.10 | % | 11.77 | % | 6.33 | % | (7.54 | )% | 2.28 | % | 2.03 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.32 | %3 | 2.13 | % | 1.73 | % | 1.44 | % | 1.04 | % | 1.03 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.90 | %3 | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | |||||||||||||||
Net investment income | 2.72 | %3 | 2.78 | % | 2.60 | % | 3.15 | % | 3.06 | % | 2.93 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 5,702 | $ | 6,250 | $ | 8,379 | $ | 24,437 | $ | 52,620 | $ | 107,465 | |||||||||||||||
Portfolio turnover rate | 29 | % | 63 | % | 61 | % | 116 | % | 137 | % | 74 | % |
See accompanying notes to financial statements.
77
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, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.22 | $ | 5.89 | $ | 5.16 | $ | 6.19 | $ | 6.92 | $ | 6.89 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.22 | 0.48 | 0.57 | 0.50 | 0.51 | 0.50 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.33 | ) | 0.34 | 0.71 | (1.00 | ) | (0.75 | ) | 0.08 | ||||||||||||||||||
Total income (loss) from investment operations | (0.11 | ) | 0.82 | 1.28 | (0.50 | ) | (0.24 | ) | 0.58 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.22 | ) | (0.49 | ) | (0.55 | ) | (0.53 | ) | (0.49 | ) | (0.55 | ) | |||||||||||||||
Net asset value, end of period | $ | 5.89 | $ | 6.22 | $ | 5.89 | $ | 5.16 | $ | 6.19 | $ | 6.92 | |||||||||||||||
Total investment return2 | (1.71 | )% | 14.30 | % | 25.49 | % | (7.12 | )% | (3.55 | )% | 8.60 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.33 | %3 | 1.37 | % | 1.38 | % | 1.33 | % | 1.29 | % | 1.28 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.20 | %3 | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | |||||||||||||||
Net investment income | 7.34 | %3 | 7.73 | % | 9.80 | % | 9.96 | % | 7.81 | % | 7.16 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 38,633 | $ | 40,987 | $ | 36,334 | $ | 39,859 | $ | 40,582 | $ | 45,031 | |||||||||||||||
Portfolio turnover rate | 26 | % | 55 | % | 61 | % | 92 | % | 39 | % | 46 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.22 | $ | 5.90 | $ | 5.16 | $ | 6.20 | $ | 6.93 | $ | 6.89 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.20 | 0.44 | 0.52 | 0.46 | 0.46 | 0.45 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.33 | ) | 0.33 | 0.73 | (1.01 | ) | (0.75 | ) | 0.09 | ||||||||||||||||||
Total income (loss) from investment operations | (0.13 | ) | 0.77 | 1.25 | (0.55 | ) | (0.29 | ) | 0.54 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.20 | ) | (0.45 | ) | (0.51 | ) | (0.49 | ) | (0.44 | ) | (0.50 | ) | |||||||||||||||
Net asset value, end of period | $ | 5.89 | $ | 6.22 | $ | 5.90 | $ | 5.16 | $ | 6.20 | $ | 6.93 | |||||||||||||||
Total investment return2 | (2.09 | )% | 13.24 | % | 24.76 | % | (7.98 | )% | (4.27 | )% | 7.93 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.19 | %3 | 2.17 | % | 2.20 | % | 2.15 | % | 2.07 | % | 2.04 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.95 | %3 | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | |||||||||||||||
Net investment income | 6.59 | %3 | 7.02 | % | 9.05 | % | 9.01 | % | 7.02 | % | 6.42 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 450 | $ | 598 | $ | 921 | $ | 900 | $ | 1,480 | $ | 2,386 | |||||||||||||||
Portfolio turnover rate | 26 | % | 55 | % | 61 | % | 92 | % | 39 | % | 46 | % |
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.
78
UBS High Yield Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.23 | $ | 5.90 | $ | 5.16 | $ | 6.19 | $ | 6.93 | $ | 6.89 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.20 | 0.45 | 0.54 | 0.48 | 0.48 | 0.47 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.33 | ) | 0.34 | 0.72 | (1.01 | ) | (0.76 | ) | 0.08 | ||||||||||||||||||
Total income (loss) from investment operations | (0.13 | ) | 0.79 | 1.26 | (0.53 | ) | (0.28 | ) | 0.55 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.20 | ) | (0.46 | ) | (0.52 | ) | (0.50 | ) | (0.46 | ) | (0.51 | ) | |||||||||||||||
Net asset value, end of period | $ | 5.90 | $ | 6.23 | $ | 5.90 | $ | 5.16 | $ | 6.19 | $ | 6.93 | |||||||||||||||
Total investment return2 | (1.96 | )% | 13.72 | % | 25.07 | % | (7.60 | )% | (4.03 | )% | 8.05 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.85 | %3 | 1.86 | % | 1.88 | % | 1.86 | % | 1.79 | % | 1.78 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.70 | %3 | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % | |||||||||||||||
Net investment income | 6.83 | %3 | 7.24 | % | 9.27 | % | 9.41 | % | 7.31 | % | 6.66 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 7,850 | $ | 9,165 | $ | 8,902 | $ | 7,072 | $ | 8,453 | $ | 11,330 | |||||||||||||||
Portfolio turnover rate | 26 | % | 55 | % | 61 | % | 92 | % | 39 | % | 46 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.27 | $ | 5.94 | $ | 5.20 | $ | 6.23 | $ | 6.96 | $ | 6.92 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.23 | 0.50 | 0.59 | 0.52 | 0.53 | 0.52 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.33 | ) | 0.34 | 0.71 | (1.01 | ) | (0.75 | ) | 0.09 | ||||||||||||||||||
Total income (loss) from investment operations | (0.10 | ) | 0.84 | 1.30 | (0.49 | ) | (0.22 | ) | 0.61 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.23 | ) | (0.51 | ) | (0.56 | ) | (0.54 | ) | (0.51 | ) | (0.57 | ) | |||||||||||||||
Net asset value, end of period | $ | 5.94 | $ | 6.27 | $ | 5.94 | $ | 5.20 | $ | 6.23 | $ | 6.96 | |||||||||||||||
Total investment return2 | (1.58 | )% | 14.47 | % | 25.80 | % | (6.83 | )% | (3.28 | )% | 8.98 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.01 | %3 | 1.03 | % | 1.05 | % | 1.06 | % | 0.99 | % | 0.98 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.95 | %3 | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | |||||||||||||||
Net investment income | 7.58 | %3 | 7.97 | % | 10.08 | % | 10.07 | % | 8.13 | % | 7.43 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 35,211 | $ | 44,750 | $ | 37,152 | $ | 61,421 | $ | 99,538 | $ | 47,768 | |||||||||||||||
Portfolio turnover rate | 26 | % | 55 | % | 61 | % | 92 | % | 39 | % | 46 | % |
See accompanying notes to financial statements.
79
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 14 Funds available for investment, each having its own investment objectives and policies. The following four funds are covered in this report: UBS Core Plus 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 Global Bond Fund which is classified as "non-diversified" for purposes of the 1940 Act. The Fund currently offers Class A, Class C and Class Y shares. For each Fund except 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 Advisor Trust and other funds for which UBS Global Asset Management (US) Inc. ("UBS Global AM (US)") serves as principal underwriter. UBS Fixed Income Opportunities 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. Effective on or about March 1, 2012, all outstanding Class B shares will be converted to Class A shares of the same Fund. 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 "evaluation" systems that derive values based on comparable securities or instruments. An evaluation system incorporates
80
The UBS Funds
Notes to financial statements (unaudited)
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 may result in securities being transferred between Level 1 and Level 2 of the fair valuation hierarchy at the end of the reporting period.
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' 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.
81
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 Funds' 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 2010-06"). ASU 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. The disclosures surrounding purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements have been implemented for annual and interim periods beginning after December 15, 2010.
In April 2011, FASB issued Accounting Standards Update No. 2011-03 "Transfers and Servicing (Topic 860) Reconsideration of Effective Control for Repurchase Agreements" ("ASU 2011-03") which relates to the accounting for repurchase agreements and similar agreements, including mortgage dollar rolls, that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU 2011-03 modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. ASU 2011-03 is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011. Management is currently evaluating the implications of this change and its impact on the financial statements.
In May 2011, FASB issued Accounting Standards Update No. 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS")" ("ASU 2011-04"). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU 2011-04 and its impact on the financial statements.
82
The UBS Funds
Notes to financial statements (unaudited)
In December 2011, FASB issued Accounting Standards Update No. 2011-11 "Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company's financial position. They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition, ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact 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. Certain derivative contracts entered into by the Funds may contain credit-risk related contingent features that could be triggered subject to certain circumstances. Such circumstances include agreed upon net asset value thresholds. If triggered, the derivative counterparty could request additional cash margin and/or terminate the derivative contract. The aggregate fair value of the derivative contracts that are in a net liability position that contain these triggers can be found in the Portfolio of investments. The aggregate fair value of assets that are already posted as collateral as of December 31, 2011 is reflected in the Statement of assets and liabilities. If the applicable credit-risk related contingent features were triggered as of December 31, 2011, the Fund would be required to post additional collateral or may be required to terminate the contract and settle any amounts outstanding. The volume of derivatives as disclosed in each Fund's Portfolio of investments is representative of the volume of derivatives outstanding during the period ended December 31, 2011. 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).
Disclosure of derivatives by underlying risk for each Fund as of and for the period ended December 31, 2011 is as follows:
Asset derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Core Plus Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | 72,699 | $ | 72,699 | |||||||||||
Options purchased1 | 66,055 | | | 66,055 | |||||||||||||||
Swap agreements1 | | 4,081 | | 4,081 | |||||||||||||||
Total value | $ | 66,055 | $ | 4,081 | $ | 72,699 | $ | 142,835 |
1 Statement of assets and liabilities location: Options purchased are shown within investments in securities of unaffiliated issuers, at value, unrealized appreciation on forward foreign currency contracts and outstanding swap agreements, at value.
83
The UBS Funds
Notes to financial statements (unaudited)
Liability derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Core Plus Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | (24,474 | ) | $ | (24,474 | ) | |||||||||
Futures contracts2 | (16,570 | ) | | | (16,570 | ) | |||||||||||||
Swap agreements1 | | (6,067 | ) | | (6,067 | ) | |||||||||||||
Total value | $ | (16,570 | ) | $ | (6,067 | ) | $ | (24,474 | ) | $ | (47,111 | ) |
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 within Due to broker.
Activities in derivative instruments during the period ended December 31, 2011, were as follows:
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Core Plus Bond Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 15,883 | $ | 15,883 | |||||||||||
Futures contracts | (83,325 | ) | | | (83,325 | ) | |||||||||||||
Swap agreements | (287,600 | ) | (381 | ) | | (287,981 | ) | ||||||||||||
Total net realized gain (loss) | $ | (370,925 | ) | $ | (381 | ) | $ | 15,883 | $ | (355,423 | ) | ||||||||
Change in net unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 48,225 | $ | 48,225 | |||||||||||
Futures contracts | 572 | | | 572 | |||||||||||||||
Options purchased3 | 2,205 | | | 2,205 | |||||||||||||||
Swap agreements | 138,075 | 2,883 | | 140,958 | |||||||||||||||
Total change in net unrealized appreciation/depreciation | $ | 140,852 | $ | 2,883 | $ | 48,225 | $ | 191,960 |
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.
3 Unrealized gain (loss) is included in net change in unrealized appreciation/depreciation on investments.
Asset derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Fixed Income Opportunities Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | 659,753 | $ | 659,753 | |||||||||||
Futures contracts2 | 373,211 | | | 373,211 | |||||||||||||||
Options purchased1 | 2,583,133 | 773,829 | | 3,356,962 | |||||||||||||||
Swap agreements1 | 4,395,378 | 3,517,303 | 299,017 | 8,211,698 | |||||||||||||||
Total value | $ | 7,351,722 | $ | 4,291,132 | $ | 958,770 | $ | 12,601,624 |
1 Statement of assets and liabilities location: Options purchased are shown within 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 within Due from broker.
84
The UBS Funds
Notes to financial statements (unaudited)
Liability derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Fixed Income Opportunities Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | (133,620 | ) | $ | (133,620 | ) | |||||||||
Futures contracts2 | (275,722 | ) | | | (275,722 | ) | |||||||||||||
Options written1 | (1,962,681 | ) | (544,702 | ) | | (2,507,383 | ) | ||||||||||||
Swap agreements1 | (12,334,311 | ) | (2,475,296 | ) | (176,322 | ) | (14,985,929 | ) | |||||||||||
Total value | $ | (14,572,714 | ) | $ | (3,019,998 | ) | $ | (309,942 | ) | $ | (17,902,654 | ) |
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 within Due to broker.
Activities in derivative instruments during the period ended December 31, 2011, were as follows:
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Fixed Income Opportunities Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 724,498 | $ | 724,498 | |||||||||||
Futures contracts | 4,648,079 | | | 4,648,079 | |||||||||||||||
Options purchased3 | (4,290,558 | ) | (1,055,000 | ) | | (5,345,558 | ) | ||||||||||||
Options written | 55,639 | 2,424,525 | | 2,480,164 | |||||||||||||||
Swap agreements | 73,653 | 781,489 | 17,454 | 872,596 | |||||||||||||||
Total net realized gain (loss) | $ | 486,813 | $ | 2,151,014 | $ | 741,952 | $ | 3,379,779 | |||||||||||
Change in net unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 1,200,265 | $ | 1,200,265 | |||||||||||
Futures contracts | 165,217 | | | 165,217 | |||||||||||||||
Options purchased3 | 1,084,274 | (136,971 | ) | | 947,303 | ||||||||||||||
Options written | (113,304 | ) | 172,497 | | 59,193 | ||||||||||||||
Swap agreements | (6,417,280 | ) | 1,124,233 | 33,994 | (5,259,053 | ) | |||||||||||||
Total change in net unrealized appreciation/depreciation |
$ | (5,281,093 | ) | $ | 1,159,759 | $ | 1,234,259 | $ | (2,887,075 | ) |
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) on investments and net change in unrealized appreciation/depreciation on investments.
85
The UBS Funds
Notes to financial statements (unaudited)
Asset derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | 37,844 | $ | 37,844 | |||||||||||
Futures contracts2 | 5,891 | | | 5,891 | |||||||||||||||
Swap agreements1 | | 46,325 | | 46,325 | |||||||||||||||
Total value | $ | 5,891 | $ | 46,325 | $ | 37,844 | $ | 90,060 |
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 within Due from broker.
Liability derivatives
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | (27,402 | ) | $ | (27,402 | ) | |||||||||
Futures contracts2 | (10,472 | ) | | | (10,472 | ) | |||||||||||||
Swap agreements1 | | (31,521 | ) | | (31,521 | ) | |||||||||||||
Total value | $ | (10,472 | ) | $ | (31,521 | ) | $ | (27,402 | ) | $ | (69,395 | ) |
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 within Due to broker.
Activities in derivative instruments during the period ended December 31, 2011, were as follows:
Interest rate risk |
Credit risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Bond Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 28,317 | $ | 28,317 | |||||||||||
Futures contracts | 37,562 | | | 37,562 | |||||||||||||||
Swap agreements | (44,236 | ) | 11,163 | | (33,073 | ) | |||||||||||||
Total net realized gain (loss) | $ | (6,674 | ) | $ | 11,163 | $ | 28,317 | $ | 32,806 | ||||||||||
Change in net unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | (12,197 | ) | $ | (12,197 | ) | |||||||||
Futures contracts | (7,198 | ) | | | (7,198 | ) | |||||||||||||
Swap agreements | 16,307 | (12,312 | ) | | 3,995 | ||||||||||||||
Total change in net unrealized appreciation/depreciation | $ | 9,109 | $ | (12,312 | ) | $ | (12,197 | ) | $ | (15,400 | ) |
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
86
The UBS Funds
Notes to financial statements (unaudited)
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. Dividend income and expenses are recorded on the ex-dividend date ("ex-date") except in the case of certain dividends from foreign securities which are recorded as soon after the ex-date as the respective Fund, using reasonable diligence, becomes aware of such dividends. 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 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 non-cash settled 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 equal to the contract's full notional value. However, currency contracts with respect to identical currencies may be netted against each other and, in such cases, a Fund's custodian or sub-custodian will place assets in a segregated account of the Fund, in an amount equal to the net amount owed (the unrealized loss) by a Fund. 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.
87
The UBS Funds
Notes to financial statements (unaudited)
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 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 as part of Due to or Due from broker 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 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 to receive or pay amounts based on changes in currency exchange rates in order 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.
88
The UBS Funds
Notes to financial statements (unaudited)
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, 2011 for which a Fund is the seller of protection are disclosed under the section "Credit default swaps on credit indicessell protection" and "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.
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
89
The UBS Funds
Notes to financial statements (unaudited)
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.
K. Short sales: Occasionally, UBS High Yield 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 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 or interest payable on securities while those securities are in a short position. These dividends or interest 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.
For the period ended December 31, 2011, there were no short positions held by UBS High Yield Fund.
90
The UBS Funds
Notes to financial statements (unaudited)
L. Dividends and distributions: It is the Funds' policy to distribute their respective net investment income monthly except UBS Fixed Income Opportunities Fund which will distribute its 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.
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 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 following table. For 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 dividend expense and securities loan fees 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 dividend expense and security loan fees for securities sold short) do not exceed the expense limit of the Fund as
91
The UBS Funds
Notes to financial statements (unaudited)
indicated in the following table. Investment advisory fees, including the dollar amount waived or reimbursed, for the period ended December 31, 2011, 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 Core Plus Bond Fund | 0.64 | % | 1.39 | % | 1.14 | % | 0.39 | % | $ | 106,187 | $ | 171,076 | |||||||||||||||
UBS Fixed Income Opportunities Fund | 0.95 | N/A* | 1.45 | 0.70 | 301,046 | 221,321 | |||||||||||||||||||||
UBS Global Bond Fund | 1.15 | 1.90 | 1.65 | 0.90 | 50,229 | 109,119 | |||||||||||||||||||||
UBS High Yield Fund | 1.20 | 1.95 | 1.70 | 0.95 | 259,816 | 44,100 |
* UBS Fixed Income Opportunities Fund does not offer Class B shares.
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, 2011 are subject to repayment through June 30, 2015. At December 31, 2011, 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, 2012 |
Expires June 30, 2013 |
Expires June 30, 2014 |
Expires June 30, 2015 |
||||||||||||||||||
UBS Core Plus Bond FundClass A | $ | 212,291 | $ | 34,710 | $ | 68,455 | $ | 70,796 | $ | 38,330 | |||||||||||||
UBS Core Plus Bond FundClass B | 2,130 | 738 | 728 | 419 | 245 | ||||||||||||||||||
UBS Core Plus Bond FundClass C | 52,769 | 6,551 | 18,828 | 18,459 | 8,931 | ||||||||||||||||||
UBS Core Plus Bond FundClass Y | 943,898 | 275,353 | 301,741 | 243,234 | 123,570 | ||||||||||||||||||
UBS Fixed Income Opportunities FundClass A | 241,773 | | | 99,909 | 141,864 | ||||||||||||||||||
UBS Fixed Income Opportunities FundClass C | 34,594 | | | 15,057 | 19,537 | ||||||||||||||||||
UBS Fixed Income Opportunities FundClass Y | 149,464 | | | 89,544 | 59,920 | ||||||||||||||||||
UBS Global Bond FundClass A | 258,195 | 50,263 | 73,286 | 89,130 | 45,516 | ||||||||||||||||||
UBS Global Bond FundClass B | 3,902 | 761 | 1,350 | 1,388 | 403 | ||||||||||||||||||
UBS Global Bond FundClass C | 76,411 | 8,446 | 18,996 | 30,060 | 18,909 | ||||||||||||||||||
UBS Global Bond FundClass Y | 484,366 | 217,046 | 131,754 | 91,275 | 44,291 | ||||||||||||||||||
UBS High Yield FundClass A | 199,034 | 46,068 | 63,865 | 63,735 | 25,366 | ||||||||||||||||||
UBS High Yield FundClass B | 6,666 | 2,019 | 2,384 | 1,628 | 635 | ||||||||||||||||||
UBS High Yield FundClass C | 46,463 | 10,727 | 14,851 | 15,019 | 5,866 | ||||||||||||||||||
UBS High Yield FundClass Y | 166,135 | 75,272 | 44,862 | 33,768 | 12,233 |
Each Fund pays UBS Global AM 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, 2011, the Funds owed and incurred administrative fees as follows:
Fund |
Administrative fees owed |
Administrative fees incurred |
|||||||||
UBS Core Plus Bond Fund | $ | 2,787 | $ | 15,916 | |||||||
UBS Fixed Income Opportunities Fund | 5,476 | 34,695 | |||||||||
UBS Global Bond Fund | 923 | 5,788 | |||||||||
UBS High Yield Fund | 5,245 | 32,425 |
92
The UBS Funds
Notes to financial statements (unaudited)
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, 2011 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, 2011 and for the period then ended have been included near the end of each Fund's Portfolio of investments.
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 income in the Statement of operations. Amounts relating to those investments at December 31, 2011 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 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 Fixed Income Opportunities 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, 2011, certain Funds owed UBS Global AM (US) service and distribution fees, and for the
93
The UBS Funds
Notes to financial statements (unaudited)
period ended December 31, 2011, 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 Core Plus Bond FundClass A | $ | 1,769 | $ | 691 | |||||||
UBS Core Plus Bond FundClass B | 35 | | |||||||||
UBS Core Plus Bond FundClass C | 1,407 | 125 | |||||||||
UBS Fixed Income Opportunities FundClass A | 11,342 | 7,822 | |||||||||
UBS Fixed Income Opportunities FundClass C | 4,680 | 4,790 | |||||||||
UBS Global Bond FundClass A | 1,256 | 663 | |||||||||
UBS Global Bond FundClass B | 36 | | |||||||||
UBS Global Bond FundClass C | 1,733 | 12 | |||||||||
UBS High Yield FundClass A | 8,177 | 5,018 | |||||||||
UBS High Yield FundClass B | 382 | 172 | |||||||||
UBS High Yield FundClass C | 4,928 | 729 |
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"), as each Fund's transfer agent, and is compensated for these services by BNY Mellon, not the Funds.
For the period ended December 31, 2011, UBS Financial Services Inc. received from BNY Mellon, not the Funds, total service fees as follows:
Fund | Amount paid | ||||||
UBS Core Plus Bond Fund | $ | 1,225 | |||||
UBS Fixed Income Opportunities Fund | 5,529 | ||||||
UBS Global Bond Fund | 2,009 | ||||||
UBS High Yield Fund | 9,424 |
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 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 Fund's Portfolio of investments. In addition, UBS Core Plus Bond Fund received US Government Agency securities
94
The UBS Funds
Notes to financial statements (unaudited)
as collateral amounting to $294,335. The market value of loaned securities and related collateral outstanding at December 31, 2011, 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 | $ | 343,964 | $ | 350,710 | $ | 56,375 |
6. Purchases and sales of securities
For the period ended December 31, 2011, 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 Core Plus Bond Fund | $ | 45,322,317 | $ | 45,702,669 | |||||||
UBS Fixed Income Opportunities Fund | 18,941,269 | 32,016,096 | |||||||||
UBS Global Bond Fund | 3,273,304 | 4,534,758 | |||||||||
UBS High Yield Fund | 20,092,805 | 26,157,327 |
For the period ended December 31, 2011, aggregate purchases and sales of US Government and agency securities, excluding short-term investments, were as follows:
Fund | Purchases | Sales proceeds | |||||||||
UBS Core Plus Bond Fund | $ | 54,435,571 | $ | 50,993,867 | |||||||
UBS Fixed Income Opportunities Fund | 892,348 | 1,079,850 | |||||||||
UBS Global Bond Fund | 880,857 | 920,323 | |||||||||
UBS High Yield Fund | 1,678,402 | 1,690,441 |
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, 2011 were as follows:
2011 | |||||||||||||||
Fund |
Distributions paid from ordinary income |
Return of capital |
Total distributions paid |
||||||||||||
UBS Core Plus Bond Fund | $ | 2,203,065 | $ | | $ | 2,203,065 | |||||||||
UBS Fixed Income Opportunities Fund1 | 556,692 | 664,474 | 1,221,166 | ||||||||||||
UBS Global Bond Fund | 1,499,695 | | 1,499,695 | ||||||||||||
UBS High Yield Fund | 7,071,860 | | 7,071,860 |
1 UBS Fixed Income Opportunities Fund commenced operations on November 29, 2010.
95
The UBS Funds
Notes to financial statements (unaudited)
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, 2012.
At June 30, 2011, the following Funds had net capital loss carryforwards for federal income tax purposes available to offset future capital gains through the indicated expiration dates:
Fund |
June 30, 2012 |
June 30, 2013 |
June 30, 2014 |
June 30, 2015 |
June 30, 2016 |
June 30, 2017 |
June 30, 2018 |
June 30, 2019 |
|||||||||||||||||||||||||||
UBS Core Plus Bond Fund | $ | | $ | | $ | | $ | 1,013,774 | $ | | $ | 3,069,977 | $ | 32,070,048 | $ | | |||||||||||||||||||
UBS Fixed Income Opportunities Fund |
| | | | | | | 1,787,007 | |||||||||||||||||||||||||||
UBS Global Bond Fund | | | | 262,929 | 577,591 | 3,369,482 | 12,176,817 | | |||||||||||||||||||||||||||
UBS High Yield Fund | 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 $33,835,770 that expired as of June 30, 2011.
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, 2011, the following Funds incurred, and elected to defer, losses of the following:
Fund |
Net currency losses |
||||||
UBS High Yield Fund | $ | 93 |
As of and during the period ended December 31, 2011, 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.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Act") was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an indefinite period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
Each of the tax years in the four year period ended June 30, 2011, 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.
8. Line of credit
The Trust has entered into an agreement with JPMorgan Chase Bank to provide a $50 million committed line of credit to the Funds ("Committed Credit Facility") to be utilized for temporary financing until the settlement of sales 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
96
The UBS Funds
Notes to financial statements (unaudited)
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, 2011.
9. Shares of beneficial interest
For the period ended December 31, 2011, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Core Plus Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 368,764 | $ | 3,276,345 | 2,318 | $ | 20,747 | |||||||||||||
Shares repurchased | (135,231 | ) | (1,202,689 | ) | (6 | ) | (54 | ) | |||||||||||
Shares converted from Class B to Class A | 3,286 | 29,442 | (3,282 | ) | (29,442 | ) | |||||||||||||
Dividends reinvested | 6,805 | 60,461 | 49 | 437 | |||||||||||||||
Redemption fees | | 227 | | | |||||||||||||||
Net increase (decrease) | 243,624 | $ | 2,163,786 | (921 | ) | $ | (8,312 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 22,730 | $ | 201,917 | 303,996 | $ | 2,709,219 | |||||||||||||
Shares repurchased | (24,874 | ) | (220,126 | ) | (209,011 | ) | (1,856,056 | ) | |||||||||||
Dividends reinvested | 2,599 | 23,021 | 54,363 | 482,625 | |||||||||||||||
Redemption fees | | 174 | | 929 | |||||||||||||||
Net increase | 455 | $ | 4,986 | 149,348 | $ | 1,336,717 |
UBS Fixed Income Opportunities Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 433,312 | $ | 4,285,271 | 28,902 | $ | 282,172 | 9,126 | $ | 90,916 | ||||||||||||||||||
Shares repurchased | (1,945,068 | ) | (19,059,436 | ) | (120,450 | ) | (1,171,474 | ) | (258 | ) | (2,527 | ) | |||||||||||||||
Dividends reinvested | 129,862 | 1,238,919 | 25,422 | 241,989 | 119,737 | 1,143,422 | |||||||||||||||||||||
Redemption fees | | 104 | | | | 19 | |||||||||||||||||||||
Net increase (decrease) | (1,381,894 | ) | $ | (13,535,142 | ) | (66,126 | ) | $ | (647,313 | ) | 128,605 | $ | 1,231,830 |
UBS Global Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 16,120 | $ | 118,114 | 2,906 | $ | 21,431 | |||||||||||||
Shares repurchased | (143,271 | ) | (1,060,728 | ) | | | |||||||||||||
Shares converted from Class B to Class A | 3,090 | 22,895 | (3,077 | ) | (22,895 | ) | |||||||||||||
Dividends reinvested | 38,789 | 272,198 | 349 | 2,456 | |||||||||||||||
Redemption fees | | 26 | | | |||||||||||||||
Net increase (decrease) | (85,272 | ) | $ | (647,495 | ) | 178 | $ | 992 |
97
The UBS Funds
Notes to financial statements (unaudited)
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 41,374 | $ | 298,138 | 69,003 | $ | 593,045 | |||||||||||||
Shares repurchased | (27,175 | ) | (197,932 | ) | (131,977 | ) | (1,133,276 | ) | |||||||||||
Dividends reinvested | 19,908 | 138,659 | 34,579 | 283,121 | |||||||||||||||
Redemption fees | | | | 134 | |||||||||||||||
Net increase (decrease) | 34,107 | $ | 238,865 | (28,395 | ) | $ | (256,976 | ) |
UBS High Yield Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 196,733 | $ | 1,186,613 | | $ | | |||||||||||||
Shares repurchased | (363,195 | ) | (2,147,910 | ) | (2,722 | ) | (15,923 | ) | |||||||||||
Shares converted from Class B to Class A | 17,998 | 104,038 | (17,993 | ) | (104,038 | ) | |||||||||||||
Dividends reinvested | 118,102 | 693,480 | 1,039 | 6,109 | |||||||||||||||
Redemption fees | | 67 | | | |||||||||||||||
Net decrease | (30,362 | ) | $ | (163,712 | ) | (19,676 | ) | $ | (113,852 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 90,891 | $ | 530,154 | 356,934 | $ | 2,114,305 | |||||||||||||
Shares repurchased | (257,460 | ) | (1,556,808 | ) | (1,803,998 | ) | (10,811,745 | ) | |||||||||||
Dividends reinvested | 25,891 | 152,291 | 238,560 | 1,414,249 | |||||||||||||||
Redemption fees | | 80 | | 481 | |||||||||||||||
Net decrease | (140,678 | ) | $ | (874,283 | ) | (1,208,504 | ) | $ | (7,282,710 | ) |
For the year ended June 30, 2011, transactions in shares of beneficial interest for each of the Funds were as follows:
UBS Core Plus Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 309,990 | $ | 2,712,353 | 3,048 | $ | 26,309 | |||||||||||||
Shares repurchased | (697,246 | ) | (6,048,838 | ) | (616 | ) | (5,439 | ) | |||||||||||
Shares converted from Class B to Class A | 2,710 | 23,647 | (2,707 | ) | (23,647 | ) | |||||||||||||
Dividends reinvested | 42,676 | 369,281 | 175 | 1,518 | |||||||||||||||
Redemption fees | | 1,982 | | | |||||||||||||||
Net decrease | (341,870 | ) | $ | (2,941,575 | ) | (100 | ) | $ | (1,259 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 15,999 | $ | 137,474 | 314,144 | $ | 2,735,839 | |||||||||||||
Shares repurchased | (79,141 | ) | (688,107 | ) | (926,110 | ) | (8,068,228 | ) | |||||||||||
Dividends reinvested | 10,456 | 90,180 | 189,546 | 1,639,990 | |||||||||||||||
Redemption fees | | 315 | | 3,377 | |||||||||||||||
Net decrease | (52,686 | ) | $ | (460,138 | ) | (422,420 | ) | $ | (3,689,022 | ) |
98
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 | 8,001,031 | $ | 82,263,982 | 830,015 | $ | 8,517,271 | 2,528,626 | $ | 25,310,167 | ||||||||||||||||||
Shares repurchased | (1,263,856 | ) | (12,764,240 | ) | (17,869 | ) | (180,982 | ) | | | |||||||||||||||||
Dividends reinvested | 44,434 | 445,259 | 6,406 | 64,167 | 39,934 | 401,685 | |||||||||||||||||||||
Redemption fees | | 87,471 | | 586 | | | |||||||||||||||||||||
Net increase | 6,781,609 | $ | 70,032,472 | 818,552 | $ | 8,401,042 | 2,568,560 | $ | 25,711,852 |
UBS Global Bond Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 42,530 | $ | 316,402 | | $ | | |||||||||||||
Shares repurchased | (207,548 | ) | (1,557,130 | ) | (3,112 | ) | (22,784 | ) | |||||||||||
Shares converted from Class B to Class A | 11,930 | 89,985 | (11,892 | ) | (89,985 | ) | |||||||||||||
Dividends reinvested | 79,262 | 565,787 | 1,231 | 8,796 | |||||||||||||||
Redemption fees | | 35 | | | |||||||||||||||
Net decrease | (73,826 | ) | $ | (584,921 | ) | (13,773 | ) | $ | (103,973 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 102,740 | $ | 744,499 | 94,578 | $ | 816,826 | |||||||||||||
Shares repurchased | (68,774 | ) | (497,604 | ) | (436,167 | ) | (3,755,680 | ) | |||||||||||
Dividends reinvested | 25,051 | 177,950 | 69,958 | 577,658 | |||||||||||||||
Redemption fees | | 12 | | 533 | |||||||||||||||
Net increase (decrease) | 59,017 | $ | 424,857 | (271,631 | ) | $ | (2,360,663 | ) |
UBS High Yield Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 1,280,817 | $ | 8,106,143 | | $ | | |||||||||||||
Shares repurchased | (1,151,730 | ) | (7,189,565 | ) | (49,329 | ) | (305,228 | ) | |||||||||||
Shares converted from Class B to Class A | 14,288 | 89,305 | (14,280 | ) | (89,305 | ) | |||||||||||||
Dividends reinvested | 280,657 | 1,738,044 | 3,434 | 21,203 | |||||||||||||||
Redemption fees | | 1,633 | | | |||||||||||||||
Net increase (decrease) | 424,032 | $ | 2,745,560 | (60,175 | ) | $ | (373,330 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 133,030 | $ | 829,023 | 1,748,491 | $ | 10,996,030 | |||||||||||||
Shares repurchased | (231,863 | ) | (1,451,699 | ) | (1,391,821 | ) | (8,722,807 | ) | |||||||||||
Dividends reinvested | 61,456 | 381,252 | 521,701 | 3,262,755 | |||||||||||||||
Redemption fees | | 244 | | 156 | |||||||||||||||
Net increase (decrease) | (37,377 | ) | $ | (241,180 | ) | 878,371 | $ | 5,536,134 |
99
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).
100
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UBS Global Asset Management (Americas) Inc.
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S1173
UBS Equity
Funds
December 31, 2011
The UBS FundsEquities
Semiannual Report
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 | 38 | ||||||
UBS U.S. Equity Opportunity Fund (formerly, UBS U.S. Large Cap Value Equity Fund) | 49 | ||||||
UBS U.S. Large Cap Equity Fund | 56 | ||||||
UBS U.S. Small Cap Growth Fund | 64 | ||||||
Explanation of expense disclosure | 72 | ||||||
Statement of assets and liabilities | 76 | ||||||
Statement of operations | 80 | ||||||
Statement of changes in net assets | 82 | ||||||
Statement of cash flows | 86 | ||||||
Financial highlights | 88 | ||||||
Notes to financial statements | 102 | ||||||
General information | 121 | ||||||
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President's letter
February 15, 2012
Dear Shareholder,
If I were asked to characterize the market environment of the past six months, I could probably crystallize it to one word: challenging. Adverse macroeconomic newsincluding events relating to Greece and the Eurozone, ratings downgrades and inflation concernsweighed heavily on investor sentiment, in turn causing markets to demonstrate unusually high levels of volatility.
In this environment of uncertainty, company fundamentals were largely ignored in favor of short-term news, making it difficult for active managers to add value through security selection. We were no different, and so stock selection was the primary detractor from performance across many of our equity and asset allocation funds during the period. Our fixed income portfolios, though generally experiencing performance more in line with their benchmarks, also faced certain headwinds, including a volatile credit and interest rate environment as investor sentiment frequently shifted between risk aversion and risk-taking.
In the time since I have been writing these letters to you, I have stressed the importance of maintaining a long-term perspective. This advice, though valuable under any circumstance, is never more important to follow than during periods of extreme market volatility, when fear plays a too large role in investor decision-making.
At UBS Global Asset Management, we have always kept an eye on the long term. This perspective has required us to evolve over our 30 years of investing, to meet the demands of a more complex investment landscapefor example, by combining our valuation work with market behavioral analysis in our asset allocation portfolios to better position them to navigate market volatility. However, we have never compromised on our core belief that strict adherence to our disciplined investment process through up and down marketsalthough it may, on occasion, result in short-term underperformanceis the most important way, over time, that we can add value in our clients' portfolios.
As I write this, the road ahead, though never certain, seems less unsure. Signs of a solution appear to be emerging in Europe, while US economic indicators seem to be improving. Year-to-date, the S&P 500 Indexthe standard-bearer of equity market performanceis in positive territory, and stock correlations and volatility appear to be moving lower. The market, once again, seems to be paying attention to fundamentals. Against this backdrop, we firmly believe that our portfolios will ultimately be rewarded for the positions we've taken, and that active managers will once again be well-positioned to add value in 2012.
As always, we remain firmly dedicated to your investment success. Thank you for your continued support.
Sincerely,
Mark E. Carver
President
The UBS Funds
Managing Director
UBS Global Asset Management (Americas) Inc.
1
The markets in review
Moderating growth in many countries
Although the overall US economy expanded during the reporting period, gross domestic product ("GDP") growth rates in general could best be characterized as tepid. At its August meeting, the Federal Reserve Board (the "Fed"), acknowledging that economic growth had been considerably slower than it expected, declared that it would keep the federal funds rate on hold until at least through mid-2013. In January 2012 (after the reporting period had ended), the Fed extended this period, noting that economic conditions warranted maintaining exceptionally low federal funds rate levels at least through late 2014.
Additionally, the Fed also announced its plan to purchase $400 billion of longer-term Treasury securities, and to sell an equal amount of shorter-term Treasury securities by June 2012. Dubbed "Operation Twist," the Fed noted that its intention with this program was to "put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative."
In contrast to the US, many international economies took a step backward as the reporting period progressed. Growth in the Eurozone was negatively impacted by its ongoing sovereign debt crisis, as well as weak consumer and business confidence. In contrast, Japan's economy gained some traction, emerging from its recession in the first half of the review period. Elsewhere, while growth rates in many developing countries such as China and India surpassed their developed country counterparts, they also tended to progressively move lower during the course of the reporting period.
Global equities declined
The global equity markets experienced periods of extreme volatility during the reporting period, as a number of macro factors impacted investor sentiment. After being highly resilient and rising earlier in 2011, the US stock market fell sharply in the first half of the review period, as investor risk appetite was replaced by risk aversion. Triggering this change in sentiment were concerns about the European sovereign debt crisis, signs of decelerating global growth and the downgrade of US long-term debt. US equities then rallied sharply in the second half of the year, given signs that the economy was gaining some traction. All told, the US stock market, as measured by the S&P 500 Index,1 declined 3.69% during the six-months ended December 31, 2011.
International developed equities (as measured by the MSCI EAFE Index (net)2) also moved higher during the first half of 2011. However, fears of contagion from the European sovereign debt crisis and increasing signs that Europe was headed for a double-dip recession led to a very sharp decline in the first half of the period. Unlike the US, however, international equities only experienced a modest gain in the second half of the period. Overall, for the six-month period ended December 31, 2011, the MSCI EAFE Index (net) declined 16.31%. Emerging markets equities (as measured by the MSCI Emerging Markets Index (net)3) generated even weaker results, falling 19.13% over the period. Concerns about a hard landing for China's economy and declining growth in the developed world drove emerging market equity prices lower.
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 (net) 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. 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. 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, 2011, Class A shares of UBS Global Equity Fund (the "Fund") declined 12.85% (Class A shares declined 17.66% after the deduction of the maximum sales charge), while Class Y shares declined 12.78%. The Fund's benchmark, the MSCI World Free Index (net) (the "Index"), declined 10.29% 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.)
Both the Fund and its benchmark posted negative returns during the review period; however, the Fund slightly underperformed its index, primarily due to stock selection decisions.
Portfolio performance summary1
What worked
• Several individual stocks were positive for performance during the period.
Global tobacco products manufacturer Imperial Tobacco was the Fund's top-performing stock. Despite the downward trend for international equities in general, its shares moved sharply higher during the reporting period. (For additional details, see "Portfolio Highlights.")
Samsung Electronics Co. is a high-quality growth-oriented companya segment of the market that performed relatively well in the uncertain global economic environment. The company also benefited from increased demand for smartphones and consumer electronic devices, such as flat screen televisions.
Google Inc. and Apple Inc. are both market leaders in their respective industries. Internet search engine company Google experienced strong revenue growth, driven by increased traffic and rising advertising revenue. Apple continued to generate exceptional results given the success of its new products, as well as very strong demand for enhanced models of the iPhone and iPad.
Colgate-Palmolive Co. is a leading consumer products company. Its shares moved higher as investors rewarded more defensive companies that experienced solid growth and generated strong free cash flow.
• Sector allocation decisions positively contributed to relative performance in a number of areas. The Fund's sector allocations are a by-product of our bottom-up stock selection process. During the reporting period, having an overweight to information technology, and underweights to materials and industrials, were beneficial to the Fund's relative performance.
What didn't work
• Overall, individual stock selection had a negative impact on performance.
Citigroup Inc. is a US-based multinational financial services company. It performed poorly given fears of contagion from the European sovereign debt crisis and uncertainties regarding new financial regulations. Nonetheless, the company has a very attractive valuation and a significantly improved balance sheet, as well as a valuable franchise in developing economies. We believe that the company has substantial future earnings power despite the near-term uncertainty.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
3
UBS Global Equity Fund
Lloyds Banking Group, a major British financial institution, detracted from performance as it faced a number of issues and posted weak earnings results. We eliminated this position after period-end, as it was no longer meeting our investment expectations. (For additional details, see "Portfolio highlights.")
Sberbank of Russia is a Russian bank that experienced solid operating growth and loan growth. Despite these positives, its shares were hurt after management lowered its earnings projections. However, we believe that an improving economic picture, as well as continuing operating progress, will lead to improving earnings in the future.
Carrefour is a French retailer that also has extensive real estate holdings in the country. Carrefour's shares declined as it produced disappointing operating results. (For additional details, see "Portfolio Highlights.")
• Sector allocations in several areas detracted from results. During the reporting period, having an overweight to financials and underweights to energy and consumer staples were negatives for the Fund's relative performance.
Portfolio highlights
• Imperial Tobacco is a well-managed, global tobacco products manufacturer. This defensive company's shares performed well, as it continued to generate strong free cash flow and offered an attractive dividend. Imperial Tobacco has leading market share positions in a number of highly profitable markets, including the UK, Germany, Spain and Russia. While it competes primarily in the value and mid-price ranges, the company has been successfully growing Davidoff as a global premium brand.
• Norway-based Telenor is primarily an international wireless carrier. Its shares rose during the period, as it generated a strong cash flow. We believe the company has significant upside potential from its emerging markets operations in Asia and Eastern Europe. Additionally, Telenor is more than 50% owned by the Norwegian government and, as such, it has a high-quality credit rating.
• Shares of UK-based Lloyds Banking Group fell sharply due to continued fears about its exposure to Europe's sovereign debt crisis and uncertainty about anticipated industry regulatory changes, and to problems resulting from its exposure to Ireland's collapsing real estate market. Furthermore, conditions in the UK commercial property market, where the company has substantial exposure to relatively poor-quality properties, has worsened significantly given the increasing risk of recession in Europe.
• Carrefour is a leading retailer in France; with additional operations elsewhere in Europe, Latin America and Asia, it is one of the largest retailers in the world. The market is skeptical about Carrefour's ability to turn around its hypermarket (a store combining a supermarket and a department store) business in France. As a result, its shares are trading at an extremely low valuation. We believe that management has a sound strategy to make necessary operating improvements, such as reducing promotional intensity in its stores, improving inventory and expanding its private label sales. We also believe that the company's focus on return-enhancing capital allocation will help unlock the considerable value within its French and overseas operations that, in our view, are currently being overlooked by the market.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | (12.85 | )% | (12.09 | )% | (3.02 | )% | 2.92 | % | |||||||||||
Class B2 | (13.17 | ) | (12.67 | ) | (3.71 | ) | 2.455 | ||||||||||||
Class C3 | (13.17 | ) | (12.74 | ) | (3.76 | ) | 2.15 | ||||||||||||
Class Y4 | (12.78 | ) | (11.84 | ) | (2.70 | ) | 3.24 | ||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (17.66 | )% | (16.92 | )% | (4.12 | )% | 2.34 | % | |||||||||||
Class B2 | (17.51 | ) | (17.04 | ) | (4.07 | ) | 2.455 | ||||||||||||
Class C3 | (14.04 | ) | (13.61 | ) | (3.76 | ) | 2.15 | ||||||||||||
MSCI World Free Index (net)6 | (10.29 | )% | (5.54 | )% | (2.37 | )% | 3.62 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.53% and 1.50%; Class B2.20% and 2.23%; Class C2.32% and 2.25%; Class Y1.15% and 1.15%. Net expenses reflect fee waivers and/or expense reimbursements/recoupments, 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 period ending October 27, 2012, 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 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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. 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.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
6 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 2011, 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://globalam-us.ubs.com/corpweb/performance.do.
5
UBS Global Equity Fund
Top ten equity holdings (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
Apple, Inc. | 2.6 | % | |||||
Microsoft Corp. | 2.3 | ||||||
BP PLC | 2.3 | ||||||
Colgate-Palmolive Co. | 2.3 | ||||||
Vodafone Group PLC | 2.2 | ||||||
Carrefour SA | 2.2 | ||||||
Wells Fargo & Co. | 2.1 | ||||||
Nestle SA | 2.0 | ||||||
Citigroup, Inc. | 2.0 | ||||||
HON HAI Precision Industry Co., Ltd. | 1.9 | ||||||
Total | 21.9 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 1.12 | % | |||||
Beverages | 1.81 | ||||||
Biotechnology | 1.86 | ||||||
Building products | 1.16 | ||||||
Capital markets | 2.96 | ||||||
Chemicals | 2.14 | ||||||
Commercial banks | 10.86 | ||||||
Commercial services & supplies | 1.07 | ||||||
Communications equipment | 1.51 | ||||||
Computers & peripherals | 2.62 | ||||||
Construction & engineering | 2.36 | ||||||
Diversified consumer services | 1.32 | ||||||
Diversified financial services | 2.00 | ||||||
Diversified telecommunication services | 2.16 | ||||||
Electric utilities | 1.11 | ||||||
Electronic equipment, instruments & components | 2.72 | ||||||
Energy equipment & services | 0.84 | ||||||
Food & staples retailing | 2.15 | ||||||
Food products | 2.02 | ||||||
Gas utilities | 0.85 | ||||||
Health care equipment & supplies | 0.95 | ||||||
Health care providers & services | 5.48 | ||||||
Household products | 2.29 | ||||||
Insurance | 3.00 | ||||||
Internet software & services | 1.65 | ||||||
Leisure equipment & products | 1.13 | ||||||
Machinery | 3.95 | ||||||
Media | 2.98 | ||||||
Metals & mining | 1.67 | ||||||
Multi-utilities | 1.17 | ||||||
Oil, gas & consumable fuels | 7.91 | ||||||
Personal products | 1.14 | ||||||
Pharmaceuticals | 3.78 | ||||||
Semiconductors & semiconductor equipment | 4.08 | ||||||
Software | 3.99 | ||||||
Specialty retail | 1.31 | ||||||
Tobacco | 1.87 | ||||||
Trading companies & distributors | 1.47 | ||||||
Wireless telecommunication services | 2.20 | ||||||
Total common stocks | 96.66 | % | |||||
Preferred stock | 0.97 | ||||||
Short-term investment | 0.79 | ||||||
Investment of cash collateral from securities loaned | 2.82 | ||||||
Total investments | 101.24 | % | |||||
Liabilities, in excess of cash and other assets | (1.24 | ) | |||||
Net assets | 100.00 | % |
Country exposure by issuer, top five (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
United States | 35.3 | % | |||||
United Kingdom | 11.5 | ||||||
Japan | 8.3 | ||||||
Germany | 5.7 | ||||||
Netherlands | 5.5 | ||||||
Total | 66.3 | % |
6
UBS Global Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 96.66% | |||||||||||
Canada: 4.02% | |||||||||||
Canadian Oil Sands Ltd.1 | 36,000 | $ | 821,595 | ||||||||
Petrobank Energy & Resources Ltd.* | 69,000 | 716,584 | |||||||||
Petrominerales Ltd.1 | 50,500 | 820,888 | |||||||||
Shamaran Petroleum Corp.*1 | 1,297,500 | 452,135 | |||||||||
Suncor Energy, Inc.1 | 27,700 | 798,848 | |||||||||
Total Canada common stocks | 3,610,050 | ||||||||||
China: 3.68% | |||||||||||
AIA Group Ltd. | 397,455 | 1,240,991 | |||||||||
China Construction Bank Corp., H Shares |
1,911,450 | 1,333,925 | |||||||||
Hollysys Automation Technologies Ltd.* | 88,600 | 737,152 | |||||||||
Total China common stocks | 3,312,068 | ||||||||||
Denmark: 1.13% | |||||||||||
FLSmidth & Co. A/S | 17,230 | 1,012,506 | |||||||||
France: 2.15% | |||||||||||
Carrefour SA | 84,817 | 1,933,676 | |||||||||
Germany: 4.69% | |||||||||||
Beiersdorf AG NPV | 18,159 | 1,029,870 | |||||||||
E.ON AG | 46,172 | 996,168 | |||||||||
Fresenius Medical Care AG & Co. KGaA | 10,773 | 732,005 | |||||||||
Infineon Technologies AG | 77,781 | 585,486 | |||||||||
SAP AG | 16,598 | 877,538 | |||||||||
Total Germany common stocks | 4,221,067 | ||||||||||
Greece: 0.53% | |||||||||||
Hellenic Telecommunications Organization SA |
126,621 | 471,972 | |||||||||
Indonesia: 1.17% | |||||||||||
Bank Rakyat Indonesia Persero Tbk PT | 1,411,000 | 1,050,372 | |||||||||
Ireland: 1.79% | |||||||||||
Covidien PLC | 19,004 | 855,370 | |||||||||
Ingersoll-Rand PLC | 24,800 | 755,656 | |||||||||
Total Ireland common stocks | 1,611,026 | ||||||||||
Italy: 2.42% | |||||||||||
Azimut Holding SpA | 124,616 | 999,156 | |||||||||
Fiat Industrial SpA* | 136,697 | 1,172,096 | |||||||||
Total Italy common stocks | 2,171,252 | ||||||||||
Japan: 8.29% | |||||||||||
Benesse Holdings, Inc. | 24,500 | 1,185,689 | |||||||||
ITOCHU Corp. | 129,900 | 1,319,758 | |||||||||
Mitsubishi UFJ Financial Group, Inc. | 316,900 | 1,346,321 | |||||||||
Sankyo Co., Ltd. | 20,100 | 1,017,143 |
Shares | Value | ||||||||||
Shin-Etsu Chemical Co., Ltd. | 15,800 | $ | 777,991 | ||||||||
THK Co., Ltd. | 52,900 | 1,042,605 | |||||||||
Tokyo Gas Co., Ltd. | 167,000 | 768,066 | |||||||||
Total Japan common stocks | 7,457,573 | ||||||||||
Netherlands: 5.45% | |||||||||||
ASML Holding NV | 16,509 | 693,886 | |||||||||
Heineken NV | 35,206 | 1,629,873 | |||||||||
LyondellBasell Industries NV, Class A | 35,525 | 1,154,207 | |||||||||
Wolters Kluwer NV | 82,466 | 1,425,401 | |||||||||
Total Netherlands common stocks | 4,903,367 | ||||||||||
Norway: 1.63% | |||||||||||
Telenor ASA | 89,316 | 1,464,992 | |||||||||
Russia: 1.49% | |||||||||||
Gazprom OAO ADR | 54,869 | 584,904 | |||||||||
Sberbank of Russia | 333,824 | 751,104 | |||||||||
Total Russia common stocks | 1,336,008 | ||||||||||
South Africa: 1.39% | |||||||||||
Naspers Ltd., Class N | 28,619 | 1,252,138 | |||||||||
South Korea: 1.21% | |||||||||||
Samsung Electronics Co., Ltd. | 1,181 | 1,086,886 | |||||||||
Spain: 1.23% | |||||||||||
Obrascon Huarte Lain SA | 44,224 | 1,109,251 | |||||||||
Switzerland: 3.90% | |||||||||||
Nestle SA | 31,585 | 1,815,809 | |||||||||
Novartis AG | 29,546 | 1,689,152 | |||||||||
Total Switzerland common stocks | 3,504,961 | ||||||||||
Taiwan: 2.65% | |||||||||||
HON HAI Precision Industry Co., Ltd. | 624,024 | 1,708,497 | |||||||||
HTC Corp. | 41,000 | 672,975 | |||||||||
Total Taiwan common stocks | 2,381,472 | ||||||||||
Thailand: 1.09% | |||||||||||
Kasikornbank PCL | 247,500 | 976,664 | |||||||||
United Kingdom: 11.48% | |||||||||||
Aberdeen Asset Management PLC | 278,821 | 917,979 | |||||||||
Admiral Group PLC | 47,365 | 626,713 | |||||||||
Barclays PLC | 299,672 | 819,320 | |||||||||
BP PLC | 294,137 | 2,103,540 | |||||||||
Imperial Tobacco Group PLC | 44,495 | 1,682,603 | |||||||||
Lloyds Banking Group PLC* | 1,714,054 | 689,572 | |||||||||
Vodafone Group PLC | 711,690 | 1,977,300 | |||||||||
Xstrata PLC | 99,248 | 1,507,412 | |||||||||
Total United Kingdom common stocks | 10,324,439 |
7
UBS Global Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
United States: 35.27% | |||||||||||
Abbott Laboratories | 30,300 | $ | 1,703,769 | ||||||||
Apple, Inc.* | 5,820 | 2,357,100 | |||||||||
Autodesk, Inc.* | 19,600 | 594,468 | |||||||||
Bank of New York Mellon Corp. | 37,600 | 748,616 | |||||||||
Citigroup, Inc. | 68,358 | 1,798,499 | |||||||||
Colgate-Palmolive Co. | 22,300 | 2,060,297 | |||||||||
F5 Networks, Inc.* | 6,400 | 679,168 | |||||||||
Gilead Sciences, Inc.* | 40,900 | 1,674,037 | |||||||||
Google, Inc., Class A* | 2,300 | 1,485,570 | |||||||||
Helmerich & Payne, Inc. | 12,900 | 752,844 | |||||||||
Herman Miller, Inc. | 52,100 | 961,245 | |||||||||
Lowe's Cos., Inc. | 46,500 | 1,180,170 | |||||||||
MDU Resources Group, Inc. | 49,000 | 1,051,540 | |||||||||
MetLife, Inc. | 26,500 | 826,270 | |||||||||
Microsoft Corp. | 81,300 | 2,110,548 | |||||||||
Moog, Inc., Class A* | 23,000 | 1,010,390 | |||||||||
Occidental Petroleum Corp. | 8,600 | 805,820 | |||||||||
Owens Corning* | 36,400 | 1,045,408 | |||||||||
PNC Financial Services Group, Inc. | 16,000 | 922,720 | |||||||||
Texas Instruments, Inc. | 44,700 | 1,301,217 | |||||||||
Timken Co. | 14,900 | 576,779 | |||||||||
UnitedHealth Group, Inc. | 32,000 | 1,621,760 | |||||||||
Universal Health Services, Inc., Class B | 32,200 | 1,251,292 | |||||||||
WellPoint, Inc. | 20,100 | 1,331,625 | |||||||||
Wells Fargo & Co. | 67,600 | 1,863,056 | |||||||||
Total United States common stocks | 31,714,208 | ||||||||||
Total common stocks (cost $91,709,872) |
86,905,948 |
Shares | Value | ||||||||||
Preferred stock: 0.97% | |||||||||||
Germany: 0.97% | |||||||||||
Volkswagen AG, Preference shares (cost $1,117,553) |
5,828 | $ | 873,089 | ||||||||
Short-term investment: 0.79% | |||||||||||
Investment company: 0.79% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $708,376) |
708,376 | 708,376 | |||||||||
Investment of cash collateral from securities loaned: 2.82% | |||||||||||
UBS Private Money Market Fund LLC2 (cost $2,536,840) |
2,536,840 | 2,536,840 | |||||||||
Total investments: 101.24% (cost $96,072,641) |
91,024,253 | ||||||||||
Liabilities, in excess of cash and other assets: (1.24)% |
(1,114,780 | ) | |||||||||
Net assets: 100.00% | $ | 89,909,473 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 4,917,034 | |||||
Gross unrealized depreciation | (9,965,422 | ) | |||||
Net unrealized depreciation of investments | $ | (5,048,388 | ) |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 71.
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2011.
8
UBS Global Equity Fund
Portfolio of investments
December 31, 2011 (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 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 71,213 | $ | 19,299,236 | $ | 18,662,073 | $ | 708,376 | $ | 423 | |||||||||||||
UBS Private Money Market Fund LLCa | 3,462,365 | 22,176,368 | 23,101,893 | 2,536,840 | 208 | ||||||||||||||||||
$ | 3,533,578 | $ | 41,475,604 | $ | 41,763,966 | $ | 3,245,216 | $ | 631 |
a 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.
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Barclays Bank PLC | AUD | 870,000 | EUR | 659,676 | 03/05/12 | $ | (29,411 | ) | |||||||||||
Barclays Bank PLC | EUR | 6,355,000 | USD | 8,508,837 | 03/05/12 | 279,713 | |||||||||||||
JPMorgan Chase Bank | CHF | 1,070,000 | USD | 1,147,270 | 03/05/12 | 6,721 | |||||||||||||
JPMorgan Chase Bank | DKK | 5,080,000 | USD | 915,053 | 03/05/12 | 30,004 | |||||||||||||
JPMorgan Chase Bank | GBP | 635,000 | USD | 993,574 | 03/05/12 | 7,995 | |||||||||||||
JPMorgan Chase Bank | HKD | 5,405,000 | USD | 695,675 | 03/05/12 | (414 | ) | ||||||||||||
JPMorgan Chase Bank | JPY | 119,600,000 | USD | 1,541,533 | 03/05/12 | (13,957 | ) | ||||||||||||
JPMorgan Chase Bank | KRW | 1,475,000,000 | USD | 1,272,045 | 03/05/12 | (2,954 | ) | ||||||||||||
JPMorgan Chase Bank | NOK | 5,270,000 | USD | 896,107 | 03/05/12 | 16,943 | |||||||||||||
JPMorgan Chase Bank | THB | 27,930,000 | USD | 883,331 | 03/05/12 | 1,747 | |||||||||||||
JPMorgan Chase Bank | TWD | 63,000,000 | USD | 2,076,467 | 03/05/12 | (6,605 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 854,128 | AUD | 870,000 | 03/05/12 | 29,501 | |||||||||||||
JPMorgan Chase Bank | USD | 1,349,371 | CAD | 1,400,000 | 03/05/12 | 22,948 | |||||||||||||
JPMorgan Chase Bank | USD | 588,959 | CHF | 540,000 | 03/05/12 | (13,355 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 339,035 | DKK | 1,930,000 | 03/05/12 | (2,787 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 879,678 | EUR | 675,000 | 03/05/12 | (5,616 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 404,848 | GBP | 260,000 | 03/05/12 | (1,304 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 696,050 | HKD | 5,405,000 | 03/05/12 | 40 | |||||||||||||
JPMorgan Chase Bank | USD | 2,025,759 | JPY | 157,000,000 | 03/05/12 | 16,147 | |||||||||||||
JPMorgan Chase Bank | USD | 279,029 | KRW | 322,000,000 | 03/05/12 | (691 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 2,485,799 | MXN | 35,110,000 | 03/05/12 | 17,434 | |||||||||||||
JPMorgan Chase Bank | USD | 2,076,303 | SEK | 14,430,000 | 03/05/12 | 14,165 | |||||||||||||
JPMorgan Chase Bank | USD | 1,863,934 | SGD | 2,420,000 | 03/05/12 | 1,635 | |||||||||||||
JPMorgan Chase Bank | ZAR | 9,440,000 | USD | 1,126,016 | 03/05/12 | (32,108 | ) | ||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 335,791 |
9
UBS Global Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 86,905,948 | $ | | $ | | $ | 86,905,948 | |||||||||||
Preferred stock | 873,089 | | | 873,089 | |||||||||||||||
Short-term investment | | 708,376 | | 708,376 | |||||||||||||||
Investment of cash collateral from securities loaned | | 2,536,840 | | 2,536,840 | |||||||||||||||
Forward foreign currency contracts | | 335,791 | | 335,791 | |||||||||||||||
Total | $ | 87,779,037 | $ | 3,581,007 | $ | | $ | 91,360,044 |
See accompanying notes to financial statements.
10
UBS International Equity Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS International Equity Fund (the "Fund") declined 19.11% (Class A shares declined 23.57% after the deduction of the maximum sales charge), while Class Y shares declined 18.98%. The Fund's benchmark, the MSCI World Free ex USA Index (net) (the "Index"), declined 16.16% 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 posted a negative absolute return and underperformed its benchmark Index (which also posted a negative absolute return) during the reporting period, primarily due to stock selection.
Portfolio performance summary1
What worked
• Several individual stocks contributed to performance during the period.
Samsung Electronics Co. is a high-quality, growth-oriented companya segment of the market that performed relatively well in the uncertain global economic environment. The company also benefited from increased demand for smartphones and consumer electronic devices, such as flat screen televisions.
Global tobacco products manufacturer Imperial Tobacco was among the Fund's top performing stocks. Despite the downward trend for international equities in general, its shares moved sharply higher during the reporting period. (For additional details, see "Portfolio Highlights.")
ASML Holding is a Dutch company and the world's largest supplier of photolithography systems for the semiconductor industry. Its shares benefited from improved capital spending for photolithography systems. In particular, ASML Holding experienced rising demand from end users involved in the manufacturing of smartphones and other consumer electronics.
Astra International is an Indonesian tobacco company. As was the case with Imperial Tobacco (see above), this stock performed well because it was viewed as being defensive in the uncertain macro environment. In addition, Astra is experiencing growing sales in emerging market countries.
• Sector allocation decisions positively contributed to relative performance in a number of areas. The Fund's overall sector allocations are a byproduct of our bottom-up stock selection process. During the reporting period, having underweights to financials, materials and utilities were beneficial to the Fund's relative performance.
What didn't work
• Overall, individual stock selection had a negative impact on performance.
BNP Paribas is a French bank with a significant exposure to sovereign debt risk in Europe. Uncertainties regarding the recapitalization of European banks and concerns about a downgrade to France's credit rating negatively impacted its performance during the reporting period. (For additional details, see "Portfolio Highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
11
UBS International Equity Fund
DeNA Co. is an operator of social media, community, auction and shopping and mobile gaming for Internet sites in Japan. Its shares fell sharply after the company reported results that fell short of the company's prior projections. Its shares were further hurt following the announcement of a lawsuit being brought against the company by rival Gree, Inc. In particular, it was alleged that DeNA pressured or forced social game developers not to trade with its competitors. (For additional details, see "Portfolio Highlights.")
Petrominerales Ltd. is a Latin America-based oil exploration, development and production company. Its shares were hurt after reporting disappointing results in several of its wells. We kept this stock because we believe its valuation is extremely attractive and that its production profiles will be successful.
• Sector allocations in several areas detracted from results. During the reporting period, having underweights to health care and consumer staples, and an overweight to industrials were negative for the Fund's relative performance.
Portfolio highlights
• Imperial Tobacco is a well-managed, global tobacco products manufacturer. This defensive company's shares performed well, as it continued to generate strong free cash flow and it offered an attractive dividend. Imperial Tobacco has leading market share positions in a number of highly profitable markets, including the UK, Germany, Spain and Russia. While it competes primarily in the value and mid-price ranges, the company has been successfully growing Davidoff as a global premium brand.
• Norway-based Telenor is primarily an international wireless carrier. Its shares rose during the period as it generated strong cash flow. We believe the company has significant upside potential from its emerging market operations in Asia and Eastern Europe. Additionally, Telenor is more than 50% owned by the Norwegian government and, as such, it has a high quality credit rating.
• Fears over the Eurozone sovereign debt crisis weighed heavily on BNP Paribas shares during the reporting period. We reduced the size of the Fund's position in the stock given uncertainties in the Eurozone and given concerns over higher funding costs and the impact of forced deleveraging on the company's future growth prospects. We continue to hold this position because we believe the company has an extremely low valuation discounting the near-term fear, and considerable upside potential when the European economy improves.
• We continue to view the DeNA Co. favorably. It is a leading developer of social games for mobile devices. The mobile social games market in Japan reached Y150bn in 2010, and is estimated to grow 14% per year through 2014. The company's game platform Mobage-town continues to attract customers, and has the ability to raise existing revenue per user by increasing hit titles and increasing billable activities in established games. We believe the company is well-positioned for overseas growth through its subsidiary ngcomo, Inc. and Gameview Studios, and recently announced a partnership with Samsung Electronics.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | Inception1 | |||||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | (19.11 | )% | (18.01 | )% | (5.03 | )% | 3.25 | % | 1.81 | % | |||||||||||||
Class B3 | (19.40 | ) | (18.63 | ) | (5.72 | ) | N/A | 3.196 | |||||||||||||||
Class C4 | (19.36 | ) | (18.65 | ) | (5.75 | ) | N/A | 2.85 | |||||||||||||||
Class Y5 | (18.98 | ) | (17.79 | ) | (4.80 | ) | 3.48 | 3.69 | |||||||||||||||
After deducting maximum sales charge | |||||||||||||||||||||||
Class A2 | (23.57 | )% | (22.50 | )% | (6.09 | )% | 2.66 | % | 1.42 | % | |||||||||||||
Class B3 | (23.43 | ) | (22.70 | ) | (6.02 | ) | N/A | 3.196 | |||||||||||||||
Class C4 | (20.16 | ) | (19.45 | ) | (5.75 | ) | N/A | 2.85 | |||||||||||||||
MSCI World Free ex USA Index (net)7 | (16.16 | )% | (12.21 | )% | (4.09 | )% | 5.14 | % | 4.41 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A2.04% and 1.25%; Class B2.87% and 2.00%; Class C2.82% and 2.00%; Class Y1.78% 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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 2011, 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://globalam-us.ubs.com/corpweb/performance.do.
13
UBS International Equity Fund
Top 10 equity holdings (unaudited)
As of December 31, 2011
% of net assets |
|||||||
Novartis AG | 2.4 | % | |||||
Nestle SA | 2.2 | ||||||
Vodafone Group PLC | 2.0 | ||||||
BP PLC | 1.8 | ||||||
Imperial Tobacco Group PLC | 1.6 | ||||||
Samsung Electronics Co., Ltd. | 1.6 | ||||||
Xstrata PLC | 1.4 | ||||||
Telenor ASA | 1.3 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 1.3 | ||||||
ITOCHU Corp. | 1.2 | ||||||
Total | 16.8 | % |
Country exposure by issuer, top five (unaudited)
As of December 31, 2011
% of net assets |
|||||||
United Kingdom | 18.7 | % | |||||
Japan | 14.7 | ||||||
Germany | 8.6 | ||||||
Switzerland | 6.5 | ||||||
China | 5.4 | ||||||
Total | 53.9 | % |
14
UBS International Equity Fund
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 0.63 | % | |||||
Airlines | 0.47 | ||||||
Auto components | 1.21 | ||||||
Automobiles | 2.45 | ||||||
Beverages | 1.19 | ||||||
Building products | 0.77 | ||||||
Capital markets | 0.66 | ||||||
Chemicals | 3.77 | ||||||
Commercial banks | 12.54 | ||||||
Commercial services & supplies | 1.14 | ||||||
Communications equipment | 0.48 | ||||||
Computers & peripherals | 0.42 | ||||||
Construction & engineering | 0.91 | ||||||
Construction materials | 0.88 | ||||||
Diversified financial services | 1.39 | ||||||
Diversified telecommunication services | 1.36 | ||||||
Electric utilities | 1.35 | ||||||
Electrical equipment | 0.41 | ||||||
Electronic equipment, instruments & components | 1.19 | ||||||
Energy equipment & services | 2.46 | ||||||
Food & staples retailing | 1.70 | ||||||
Food products | 2.84 | ||||||
Gas utilities | 0.56 | ||||||
Health care equipment & supplies | 0.90 | ||||||
Health care providers & services | 1.27 | ||||||
Hotels, restaurants & leisure | 0.59 | ||||||
Household durables | 0.36 | ||||||
Household products | 0.38 | ||||||
Industrial conglomerates | 0.42 | ||||||
Insurance | 3.77 | ||||||
Internet & catalog retail | 0.44 | ||||||
Internet software & services | 1.07 | ||||||
Leisure equipment & products | 0.86 | ||||||
Machinery | 5.30 | ||||||
Media | 2.20 | ||||||
Metals & mining | 5.40 | ||||||
Multiline retail | 0.17 | ||||||
Office electronics | 0.32 | ||||||
Oil, gas & consumable fuels | 8.64 | ||||||
Personal products | 0.69 | ||||||
Pharmaceuticals | 4.55 | ||||||
Professional services | 0.65 | ||||||
Real estate management & development | 0.74 | ||||||
Semiconductors & semiconductor equipment | 3.57 | ||||||
Software | 1.72 | ||||||
Specialty retail | 1.42 | ||||||
Textiles, apparel & luxury goods | 1.05 | ||||||
Tobacco | 2.09 | ||||||
Trading companies & distributors | 2.02 | ||||||
Wireless telecommunication services | 4.13 | ||||||
Total common stocks | 95.50 | % | |||||
Preferred stock | 1.05 | % | |||||
Short-term investment | 1.91 | ||||||
Investment of cash collateral from securities loaned | 3.14 | ||||||
Total investments | 101.60 | % | |||||
Liabilities, in excess of cash and other assets | (1.60 | ) | |||||
Net assets | 100.00 | % |
15
UBS International Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 95.50% | |||||||||||
Australia: 2.17% | |||||||||||
BHP Billiton Ltd. | 1,733 | $ | 61,010 | ||||||||
Incitec Pivot Ltd. | 24,929 | 79,297 | |||||||||
National Australia Bank Ltd. | 3,575 | 85,416 | |||||||||
Orica Ltd. | 8,831 | 218,944 | |||||||||
Total Australia common stocks | 444,667 | ||||||||||
Belgium: 0.23% | |||||||||||
Anheuser-Busch InBev NV | 775 | 47,449 | |||||||||
Brazil: 0.93% | |||||||||||
Cia Hering | 2,700 | 46,987 | |||||||||
Vale SA ADR | 6,700 | 143,715 | |||||||||
Total Brazil common stocks | 190,702 | ||||||||||
Canada: 5.24% | |||||||||||
Bombardier, Inc., Class B | 32,500 | 129,521 | |||||||||
Canadian Oil Sands Ltd.1 | 5,800 | 132,368 | |||||||||
Major Drilling Group International | 2,600 | 39,660 | |||||||||
Pan American Silver Corp. | 1,921 | 41,897 | |||||||||
Petrobank Energy & Resources Ltd.* | 9,200 | 95,545 | |||||||||
Petrominerales Ltd.1 | 6,700 | 108,910 | |||||||||
Royal Bank of Canada | 3,800 | 193,889 | |||||||||
Suncor Energy, Inc.1 | 6,000 | 173,036 | |||||||||
Teck Resources Ltd., Class B | 1,000 | 35,249 | |||||||||
Trican Well Service Ltd.1 | 7,200 | 124,034 | |||||||||
Total Canada common stocks | 1,074,109 | ||||||||||
China: 5.37% | |||||||||||
Agile Property Holdings Ltd.1 | 66,000 | 59,146 | |||||||||
AIA Group Ltd. | 48,038 | 149,991 | |||||||||
Baidu, Inc. ADR* | 800 | 93,176 | |||||||||
BBMG Corp., H Shares | 55,500 | 36,873 | |||||||||
Brilliance China Automotive Holdings Ltd.* | 26,000 | 28,053 | |||||||||
China Construction Bank Corp., H Shares | 327,280 | 228,396 | |||||||||
China Merchants Bank Co., Ltd., H Shares | 75,259 | 152,134 | |||||||||
Dongfang Electric Corp. Ltd., H Shares | 28,600 | 84,696 | |||||||||
Haier Electronics Group Co., Ltd.* | 37,000 | 33,110 | |||||||||
Intime Department Store Group Co., Ltd.1 | 33,000 | 33,779 | |||||||||
Melco Crown Entertainment Ltd. ADR* | 7,300 | 70,226 | |||||||||
New World Development Co., Ltd. | 114,000 | 91,886 | |||||||||
Xinyi Glass Holdings Ltd. | 70,000 | 40,198 | |||||||||
Total China common stocks | 1,101,664 | ||||||||||
Denmark: 1.84% | |||||||||||
FLSmidth & Co. A/S | 3,181 | 186,929 | |||||||||
Novo Nordisk A/S, Class B | 1,660 | 190,761 | |||||||||
Total Denmark common stocks | 377,690 | ||||||||||
Finland: 0.93% | |||||||||||
Sampo Oyj, Class A | 7,677 | 190,472 |
Shares | Value | ||||||||||
France: 2.70% | |||||||||||
BNP Paribas SA | 4,758 | $ | 186,897 | ||||||||
Carrefour SA | 11,240 | 256,252 | |||||||||
Technip SA | 472 | 44,362 | |||||||||
Valeo SA | 1,646 | 65,423 | |||||||||
Total France common stocks | 552,934 | ||||||||||
Germany: 7.53% | |||||||||||
Allianz SE2 | 288 | 27,549 | |||||||||
Beiersdorf AG NPV | 2,495 | 141,501 | |||||||||
Deutsche Bank AG2 | 626 | 23,848 | |||||||||
Dialog Semiconductor PLC* | 4,150 | 67,569 | |||||||||
E.ON AG | 6,497 | 140,174 | |||||||||
Fresenius Medical Care AG & Co. KGaA | 3,158 | 214,580 | |||||||||
Fresenius SE & Co KGaA | 484 | 44,776 | |||||||||
GEA Group AG | 3,492 | 98,752 | |||||||||
HeidelbergCement AG | 3,379 | 143,400 | |||||||||
Infineon Technologies AG | 18,302 | 137,766 | |||||||||
Kabel Deutschland Holding AG* | 2,159 | 109,578 | |||||||||
Lanxess AG | 1,224 | 63,366 | |||||||||
MAN SE | 1,311 | 116,568 | |||||||||
Metro AG | 2,539 | 92,668 | |||||||||
SAP AG | 2,326 | 122,976 | |||||||||
Total Germany common stocks | 1,545,071 | ||||||||||
Hong Kong: 1.02% | |||||||||||
Emperor Watch & Jewellery Ltd.1 | 560,000 | 69,940 | |||||||||
Hong Kong Exchanges & Clearing Ltd. | 5,500 | 87,883 | |||||||||
Shangri-La Asia Ltd. | 30,000 | 51,760 | |||||||||
Total Hong Kong common stocks | 209,583 | ||||||||||
Indonesia: 2.14% | |||||||||||
Astra International Tbk PT | 29,000 | 236,669 | |||||||||
Bank Rakyat Indonesia PT | 271,000 | 201,737 | |||||||||
Total Indonesia common stocks | 438,406 | ||||||||||
Ireland: 0.47% | |||||||||||
Ryanair Holdings PLC ADR* | 3,500 | 97,510 | |||||||||
Israel: 0.81% | |||||||||||
Mellanox Technologies Ltd.* | 2,000 | 64,980 | |||||||||
Teva Pharmaceutical Industries Ltd. | 2,473 | 100,710 | |||||||||
Total Israel common stocks | 165,690 | ||||||||||
Italy: 2.06% | |||||||||||
Fiat Industrial SpA* | 23,133 | 198,352 | |||||||||
Saipem SpA | 3,721 | 158,203 | |||||||||
Tod's SpA | 799 | 65,200 | |||||||||
Total Italy common stocks | 421,755 |
16
UBS International Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Japan: 14.66% | |||||||||||
Asahi Glass Co., Ltd. | 14,000 | $ | 117,500 | ||||||||
Canon, Inc.1 | 1,500 | 66,454 | |||||||||
DeNA Co., Ltd. | 2,100 | 62,997 | |||||||||
Denki Kagaku Kogyo KK | 18,000 | 66,649 | |||||||||
FANUC Corp. | 1,400 | 214,265 | |||||||||
Isuzu Motors Ltd. | 26,000 | 120,255 | |||||||||
ITOCHU Corp. | 25,400 | 258,059 | |||||||||
Japan Petroleum Exploration Co. | 3,000 | 117,318 | |||||||||
KDDI Corp. | 20 | 128,622 | |||||||||
Komatsu Ltd. | 3,200 | 74,793 | |||||||||
Makino Milling Machine Co., Ltd. | 5,000 | 30,791 | |||||||||
Mitsubishi Corp. | 7,700 | 155,561 | |||||||||
Mitsubishi UFJ Financial Group, Inc. | 64,000 | 271,898 | |||||||||
Nippon Sheet Glass Co., Ltd. | 22,000 | 41,159 | |||||||||
Nissan Motor Co., Ltd. | 12,800 | 115,079 | |||||||||
NTT DoCoMo, Inc. | 13 | 23,899 | |||||||||
ORIX Corp. | 1,660 | 137,165 | |||||||||
OSAKA Titanium Technologies Co. | 1,400 | 61,933 | |||||||||
Rakuten, Inc. | 83 | 89,287 | |||||||||
Sankyo Co., Ltd. | 3,500 | 177,115 | |||||||||
Shin-Etsu Chemical Co., Ltd. | 3,600 | 177,264 | |||||||||
Square Enix Holdings Co., Ltd. | 4,000 | 78,524 | |||||||||
THK Co., Ltd. | 6,200 | 122,196 | |||||||||
Tokio Marine Holdings, Inc. | 8,300 | 183,857 | |||||||||
Tokyo Gas Co., Ltd. | 25,000 | 114,980 | |||||||||
Total Japan common stocks | 3,007,620 | ||||||||||
Luxembourg: 0.80% | |||||||||||
ArcelorMittal | 8,935 | 163,401 | |||||||||
Malaysia: 0.51% | |||||||||||
Petronas Chemicals Group Bhd | 53,700 | 105,028 | |||||||||
Netherlands: 3.79% | |||||||||||
ASML Holding NV | 3,126 | 131,388 | |||||||||
Gemalto NV | 1,760 | 85,603 | |||||||||
Heineken NV | 4,252 | 196,848 | |||||||||
ING Groep NV CVA* | 8,277 | 59,561 | |||||||||
Royal Dutch Shell PLC, Class A | 3,712 | 136,682 | |||||||||
Wolters Kluwer NV | 9,669 | 167,126 | |||||||||
Total Netherlands common stocks | 777,208 | ||||||||||
Norway: 2.14% | |||||||||||
Storebrand ASA | 14,298 | 74,348 | |||||||||
Subsea 7 SA* | 4,631 | 85,948 | |||||||||
Telenor ASA | 16,960 | 278,184 | |||||||||
Total Norway common stocks | 438,480 | ||||||||||
Russia: 3.03% | |||||||||||
Gazprom OAO ADR | 12,629 | 134,625 | |||||||||
Mobile Telesystems OJSC ADR | 9,550 | 140,194 |
Shares | Value | ||||||||||
NovaTek OAO GDR | 1,325 | $ | 165,890 | ||||||||
Sberbank of Russia Federation | 63,525 | 142,931 | |||||||||
VTB Bank OJSC GDR | 10,553 | 38,097 | |||||||||
Total Russia common stocks | 621,737 | ||||||||||
Singapore: 1.37% | |||||||||||
Biosensors International Group Ltd.* | 91,000 | 100,328 | |||||||||
Golden Agri-Resources Ltd. | 171,000 | 94,264 | |||||||||
Keppel Corp. Ltd. | 12,200 | 87,475 | |||||||||
Total Singapore common stocks | 282,067 | ||||||||||
South Africa: 1.72% | |||||||||||
MTN Group Ltd. | 7,628 | 135,815 | |||||||||
Naspers Ltd., Class N | 4,053 | 177,327 | |||||||||
Steinhoff International Holdings Ltd.* | 14,017 | 39,902 | |||||||||
Total South Africa common stocks | 353,044 | ||||||||||
South Korea: 2.30% | |||||||||||
Hyundai Mobis* | 555 | 141,412 | |||||||||
Samsung Electronics Co., Ltd. | 360 | 331,311 | |||||||||
Total South Korea common stocks | 472,723 | ||||||||||
Spain: 1.78% | |||||||||||
Banco Bilbao Vizcaya Argentaria SA | 2,012 | 17,395 | |||||||||
Banco Santander SA | 24,823 | 188,587 | |||||||||
Inditex SA | 1,382 | 113,186 | |||||||||
Viscofan SA | 1,236 | 45,847 | |||||||||
Total Spain common stocks | 365,015 | ||||||||||
Sweden: 1.69% | |||||||||||
Elekta AB, Class B | 1,946 | 84,405 | |||||||||
Skandinaviska Enskilda Banken AB, Class A | 12,023 | 70,038 | |||||||||
Swedish Match AB | 2,525 | 89,633 | |||||||||
Trelleborg AB, Class B | 7,037 | 61,095 | |||||||||
Volvo AB, Class B | 3,754 | 41,074 | |||||||||
Total Sweden common stocks | 346,245 | ||||||||||
Switzerland: 6.45% | |||||||||||
Cie Financiere Richemont SA, Class A | 1,714 | 86,694 | |||||||||
Credit Suisse Group AG*2 | 1,656 | 38,910 | |||||||||
GAM Holding AG* | 6,687 | 72,615 | |||||||||
Nestle SA | 7,706 | 443,015 | |||||||||
Novartis AG | 8,509 | 486,462 | |||||||||
SGS SA2 | 80 | 132,439 | |||||||||
Swatch Group AG | 943 | 62,847 | |||||||||
Total Switzerland common stocks | 1,322,982 | ||||||||||
Taiwan: 1.67% | |||||||||||
HON HAI Precision Industry Co., Ltd. | 89,386 | 244,727 | |||||||||
HTC Corp. | 6,000 | 98,484 | |||||||||
Total Taiwan common stocks | 343,211 |
17
UBS International Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Thailand: 1.45% | |||||||||||
Home Product Center PCL | 175,300 | $ | 61,119 | ||||||||
Kasikornbank PCL | 59,800 | 235,978 | |||||||||
Total Thailand common stocks | 297,097 | ||||||||||
United Kingdom: 18.70% | |||||||||||
Afren PLC* | 26,270 | 34,963 | |||||||||
Aggreko PLC | 7,438 | 232,988 | |||||||||
Anglo American PLC | 1,639 | 60,554 | |||||||||
Barclays PLC | 72,417 | 197,992 | |||||||||
BG Group PLC | 6,736 | 143,996 | |||||||||
BP PLC | 52,283 | 373,905 | |||||||||
Croda International PLC | 2,259 | 63,288 | |||||||||
HSBC Holdings PLC | 15,643 | 119,294 | |||||||||
Imperial Tobacco Group PLC | 8,928 | 337,617 | |||||||||
John Wood Group PLC | 8,970 | 89,294 | |||||||||
Lloyds Banking Group PLC* | 265,790 | 106,929 | |||||||||
Prudential PLC | 14,983 | 148,570 | |||||||||
Reckitt Benckiser Group PLC | 1,573 | 77,683 | |||||||||
Rio Tinto PLC | 4,535 | 220,089 | |||||||||
Sage Group PLC | 33,316 | 152,218 | |||||||||
Shire PLC | 4,487 | 156,299 | |||||||||
SSE PLC | 6,871 | 137,758 | |||||||||
Standard Chartered PLC | 6,158 | 134,748 | |||||||||
Telecity Group PLC* | 6,364 | 63,945 | |||||||||
Tullow Oil PLC | 7,105 | 154,698 | |||||||||
Vodafone Group PLC | 150,437 | 417,962 |
Shares | Value | ||||||||||
Weir Group PLC | 4,124 | $ | 130,141 | ||||||||
Xstrata PLC | 18,554 | 281,805 | |||||||||
Total United Kingdom common stocks | 3,836,736 | ||||||||||
Total common stocks (cost $20,037,227) |
19,590,296 | ||||||||||
Preferred stock: 1.05% | |||||||||||
Germany: 1.05% | |||||||||||
Volkswagen AG, Preference shares (cost $185,134) |
1,441 | 215,876 | |||||||||
Short-term investment: 1.91% | |||||||||||
Investment company: 1.91% | |||||||||||
UBS Cash Management Prime Relationship Fund3 (cost $391,107) |
391,107 | 391,107 | |||||||||
Investment of cash collateral from securities loaned: 3.14% | |||||||||||
UBS Private Money Market Fund LLC3 (cost $644,154) |
644,154 | 644,154 | |||||||||
Total investments: 101.60% (cost $21,257,622) |
20,841,433 | ||||||||||
Liabilities, in excess of cash and other assets: (1.60)% |
(327,838 | ) | |||||||||
Net assets: 100.00% | $ | 20,513,595 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes, which was substantially the same as for book purposes, and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 2,259,247 | |||||
Gross unrealized depreciation | (2,675,436 | ) | |||||
Net unrealized depreciation of investments | $ | (416,189 | ) |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 71.
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2011.
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, 2011, the value of these securities amounted to $222,746 or 1.09% of net assets.
18
UBS International Equity Fund
Portfolio of investments
December 31, 2011 (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 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 379,602 | $ | 4,182,745 | $ | 4,171,240 | $ | 391,107 | $ | 310 | |||||||||||||
UBS Private Money Market Fund LLCa | 1,597,843 | 5,736,957 | 6,690,646 | 644,154 | 59 | ||||||||||||||||||
$ | 1,977,445 | $ | 9,919,702 | $ | 10,861,886 | $ | 1,035,261 | $ | 369 |
a 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.
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Barclays Bank plc | AUD | 55,000 | EUR | 41,704 | 03/05/12 | $ | (1,859 | ) | |||||||||||
JPMorgan Chase Bank | AUD | 180,000 | USD | 176,716 | 03/05/12 | (6,104 | ) | ||||||||||||
JPMorgan Chase Bank | BRL | 360,000 | USD | 190,668 | 03/05/12 | 276 | |||||||||||||
JPMorgan Chase Bank | DKK | 720,000 | USD | 129,693 | 03/05/12 | 4,253 | |||||||||||||
JPMorgan Chase Bank | EUR | 1,070,000 | USD | 1,432,805 | 03/05/12 | 47,256 | |||||||||||||
JPMorgan Chase Bank | GBP | 85,000 | USD | 132,827 | 03/05/12 | 899 | |||||||||||||
JPMorgan Chase Bank | HKD | 1,370,000 | USD | 175,851 | 03/05/12 | (586 | ) | ||||||||||||
JPMorgan Chase Bank | JPY | 3,900,000 | USD | 50,246 | 03/05/12 | (477 | ) | ||||||||||||
JPMorgan Chase Bank | KRW | 298,000,000 | USD | 256,996 | 03/05/12 | (597 | ) | ||||||||||||
JPMorgan Chase Bank | MYR | 458,000 | USD | 143,255 | 03/05/12 | (707 | ) | ||||||||||||
JPMorgan Chase Bank | NOK | 1,310,000 | USD | 222,752 | 03/05/12 | 4,212 | |||||||||||||
JPMorgan Chase Bank | SEK | 570,000 | USD | 81,570 | 03/05/12 | (1,006 | ) | ||||||||||||
JPMorgan Chase Bank | SEK | 1,260,000 | USD | 186,154 | 03/05/12 | 3,618 | |||||||||||||
JPMorgan Chase Bank | THB | 7,880,000 | USD | 249,131 | 03/05/12 | 406 | |||||||||||||
JPMorgan Chase Bank | TWD | 11,600,000 | USD | 382,334 | 03/05/12 | (1,216 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 642,250 | CAD | 665,000 | 03/05/12 | 9,601 | |||||||||||||
JPMorgan Chase Bank | USD | 65,440 | CHF | 60,000 | 03/05/12 | (1,484 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 501,976 | EUR | 380,000 | 03/05/12 | (9,912 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 653,985 | GBP | 420,000 | 03/05/12 | (2,106 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 877,399 | JPY | 68,000,000 | 03/05/12 | 6,994 | |||||||||||||
JPMorgan Chase Bank | USD | 504,098 | MXN | 7,120,000 | 03/05/12 | 3,536 | |||||||||||||
JPMorgan Chase Bank | USD | 151,101 | PLN | 515,000 | 03/05/12 | (2,736 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 525,191 | SEK | 3,650,000 | 03/05/12 | 3,583 | |||||||||||||
JPMorgan Chase Bank | USD | 338,897 | SGD | 440,000 | 03/05/12 | 297 | |||||||||||||
JPMorgan Chase Bank | ZAR | 2,400,000 | USD | 283,099 | 03/05/12 | (11,339 | ) | ||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 44,802 |
19
UBS International Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 19,590,296 | $ | | $ | | $ | 19,590,296 | |||||||||||
Preferred stock | 215,876 | | | 215,876 | |||||||||||||||
Short-term investment | | 391,107 | | 391,107 | |||||||||||||||
Investment of cash collateral from securities loaned | | 644,154 | | 644,154 | |||||||||||||||
Forward foreign currency contracts | | 44,802 | | 44,802 | |||||||||||||||
Total | $ | 19,806,172 | $ | 1,080,063 | $ | | $ | 20,886,235 |
See accompanying notes to financial statements.
20
UBS Market Neutral Multi-Strategy Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS Market Neutral Multi-Strategy Fund (the "Fund") declined 1.08% (Class A shares declined 6.48% after the deduction of the maximum sales charge), while Class Y shares declined 0.97%. The Fund's benchmark, the Citigroup Three-Month US Treasury Bill Index (the "Index"), returned 0.02% 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's underperformance versus its benchmark was driven by the negative returns generated by the event-driven and the European fundamental sleeves.
During the reporting period, the various sleeves in which the Fund invests used derivative instruments for efficient portfolio and risk management purposes. The use of these derivatives during the period was successful in helping to manage risk in the Fund.
Portfolio performance summary1
What worked
• The global quantitative sleeve was the largest positive contributor to performance during the reporting period. This 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. In particular, the sleeve's overweight to the information technology sector and underweight to the financials sector added the most value. From a country perspective, the sleeve's overweight to Japan and underweights to Canada and Germany were the most positive for performance.
• The US fundamental sleeve added value during the reporting period, primarily due to stock selection in the health care sector. Early in 2011, our research identified a compelling set of uncorrelated opportunities within the health care sector. One such opportunity was a biotech company that was developing a promising Hepatitis C treatment that our proprietary analysis suggested was grossly undervalued. At the end of the review period, our view was rewarded when a bid was made for the company at a premium of 89%, supporting our original investment thesis. The information technology sector also contributed positively, building on a successful track record from the previous three years.
What didn't work
• The event-driven sleeve detracted the most from results during the reporting period. The event-driven sleeve seeks to identify and capitalize on specific events, such as reconstitutions in major global equity indexes. After a positive start into 2011, the sleeve experienced difficulties in June and October. In June, the sleeve's negative performance was mainly attributed to Russell Investments' annual reconstitution of its indexes, while in October, the sleeve was hurt by its trades related to the third quarter initial public offering (IPO) additions to the Russell indexes. The strategy's positive performance at the end of the reporting period helped to offset some of its prior weakness.
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
• The European fundamental sleeve also detracted from results during the reporting period. The ongoing European sovereign debt crisis and increased expectations for recession in Europe negatively impacted the sleeve during the first half of the period. Solid performance in the second half of the review period was not enough to offset its earlier weakness.
• Overall, our strategic allocation among the various sleeves was not rewarded. In particular, we reduced the Fund's weighting in the global quantitative sleeve from 40% to 20% just prior to the start of the review period. This sleeve then performed strongly during the period, and the Fund did not fully benefit from its outperformance. As of December 31, 2011, the sleeve weightings were: US fundamental 27%, European fundamental 27%, event-driven 26%, global quantitative 20%.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | Inception1 | |||||||||||||
Before deducting maximum sales charge | |||||||||||||||
Class A2 | (1.08 | )% | (2.58 | )% | (2.71 | )% | |||||||||
Class C3 | (1.50 | ) | (3.30 | ) | (3.38 | ) | |||||||||
Class Y4 | (0.97 | ) | (2.38 | ) | (2.44 | ) | |||||||||
After deducting maximum sales charge | |||||||||||||||
Class A2 | (6.48 | )% | (7.91 | )% | (6.29 | )% | |||||||||
Class C3 | (2.48 | ) | (4.27 | ) | (3.38 | ) | |||||||||
Citigroup Three-Month US Treasury Bill Index5 | 0.02 | % | 0.08 | % | 0.10 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A5.30% and 4.17%; Class C5.98% and 4.98%; Class Y4.87% and 3.86%. 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 dividend expense and security loan fees 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 dividend expense and security loan fees for securities sold short), through the period ending October 27, 2012, 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://globalam-us.ubs.com/corpweb/performance.do.
23
UBS Market Neutral Multi-Strategy Fund
Top ten equity holdings (unaudited)1,2
As of December 31, 2011
Percentage of net assets |
|||||||
Imperial Tobacco Group PLC | 1.5 | % | |||||
Telenor ASA | 1.4 | ||||||
Enagas SA | 1.1 | ||||||
Fresenius Medical Care AG & Co. KGaA | 1.1 | ||||||
BAE Systems PLC | 1.0 | ||||||
Linde AG | 1.0 | ||||||
Sampo Oyj, Class A | 0.9 | ||||||
Vinci SA | 0.9 | ||||||
Illinois Tool Works, Inc. | 0.9 | ||||||
FedEx Corp. | 0.9 | ||||||
Total | 10.7 | % |
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 company was included.
24
UBS Market Neutral Multi-Strategy Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 2.09 | % | |||||
Air freight & logistics | 1.15 | ||||||
Airlines | 0.21 | ||||||
Auto components | 0.36 | ||||||
Automobiles | 0.26 | ||||||
Beverages | 2.03 | ||||||
Biotechnology | 2.76 | ||||||
Building products | 0.23 | ||||||
Capital markets | 1.88 | ||||||
Chemicals | 2.73 | ||||||
Commercial banks | 1.39 | ||||||
Communications equipment | 0.49 | ||||||
Computers & peripherals | 1.26 | ||||||
Construction & engineering | 1.52 | ||||||
Construction materials | 0.24 | ||||||
Consumer finance | 0.16 | ||||||
Containers & packaging | 0.09 | ||||||
Distributors | 0.21 | ||||||
Diversified consumer services | 0.58 | ||||||
Diversified financial services | 0.31 | ||||||
Diversified telecommunication services | 3.94 | ||||||
Electric utilities | 3.92 | ||||||
Electrical equipment | 0.05 | ||||||
Electronic equipment, instruments & components | 0.34 | ||||||
Energy equipment & services | 1.40 | ||||||
Food & staples retailing | 1.45 | ||||||
Food products | 1.57 | ||||||
Gas utilities | 1.20 | ||||||
Health care equipment & supplies | 1.11 | ||||||
Health care providers & services | 1.77 | ||||||
Hotels, restaurants & leisure | 0.65 | ||||||
Household durables | 0.09 | ||||||
Household products | 0.61 | ||||||
Independent power producers & energy traders | 0.29 | ||||||
Industrial conglomerates | 0.20 | ||||||
Insurance | 1.82 | ||||||
Internet & catalog retail | 0.60 | ||||||
Internet software & services | 0.53 | ||||||
IT services | 1.50 | ||||||
Leisure equipment & products | 0.18 | ||||||
Life sciences tools & services | 0.74 | ||||||
Machinery | 2.37 | ||||||
Marine | 0.07 | ||||||
Media | 2.25 | ||||||
Metals & mining | 3.25 | ||||||
Multiline retail | 0.36 | ||||||
Oil, gas & consumable fuels | 3.73 | ||||||
Pharmaceuticals | 2.57 | ||||||
Professional services | 0.34 | ||||||
Real estate investment trust (REIT) | 1.63 | ||||||
Real estate management & development | 0.30 | ||||||
Road & rail | 0.80 | ||||||
Semiconductors & semiconductor equipment | 2.95 | ||||||
Software | 3.25 | % | |||||
Specialty retail | 1.87 | ||||||
Textiles, apparel & luxury goods | 0.76 | ||||||
Thrifts & mortgage finance | 0.14 | ||||||
Tobacco | 1.57 | ||||||
Trading companies & distributors | 0.10 | ||||||
Transportation infrastructure | 0.18 | ||||||
Wireless telecommunication services | 0.11 | ||||||
Total common stocks | 72.51 | % | |||||
Preferred stock | 0.21 | ||||||
Investment company | |||||||
iShares II PLC | 1.27 | ||||||
Rights | 0.002 | ||||||
Short-term investment | 45.19 | ||||||
Total investments before investments sold short | 119.18 | % | |||||
Investments sold short | |||||||
Common stocks | |||||||
Aerospace & defense | (0.08 | ) | |||||
Air freight & logistics | (0.66 | ) | |||||
Airlines | (0.17 | ) | |||||
Auto components | (0.52 | ) | |||||
Automobiles | (0.29 | ) | |||||
Beverages | (1.59 | ) | |||||
Biotechnology | (0.31 | ) | |||||
Building products | (1.28 | ) | |||||
Capital markets | (1.05 | ) | |||||
Chemicals | (2.60 | ) | |||||
Commercial banks | (1.89 | ) | |||||
Commercial services & supplies | (0.24 | ) | |||||
Communications equipment | (0.72 | ) | |||||
Computers & peripherals | (1.04 | ) | |||||
Construction & engineering | (0.29 | ) | |||||
Construction materials | (0.21 | ) | |||||
Consumer finance | (0.28 | ) | |||||
Containers & packaging | (0.09 | ) | |||||
Distributors | (0.29 | ) | |||||
Diversified consumer services | (0.12 | ) | |||||
Diversified financial services | (0.24 | ) | |||||
Diversified telecommunication services | (2.98 | ) | |||||
Electric utilities | (1.99 | ) | |||||
Electrical equipment | (1.91 | ) | |||||
Electronic equipment, instruments & components | (0.14 | ) | |||||
Energy equipment & services | (0.91 | ) | |||||
Food & staples retailing | (1.86 | ) | |||||
Food products | (4.81 | ) | |||||
Gas utilities | (1.20 | ) | |||||
Health care equipment & supplies | (1.58 | ) | |||||
Health care providers & services | (1.59 | ) | |||||
Hotels, restaurants & leisure | (1.38 | ) | |||||
Household durables | (0.34 | ) | |||||
Household products | (0.62 | ) |
25
UBS Market Neutral Multi-Strategy Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2011
Investments sold short(Concluded) | |||||||
Common stocks(Concluded) | |||||||
Independent power producers & energy traders | (0.71 | )% | |||||
Industrial conglomerates | (0.99 | ) | |||||
Insurance | (2.44 | ) | |||||
Internet & catalog retail | (0.57 | ) | |||||
Internet software & services | (0.48 | ) | |||||
IT services | (1.89 | ) | |||||
Leisure equipment & products | (0.09 | ) | |||||
Life sciences tools & services | (0.87 | ) | |||||
Machinery | (3.18 | ) | |||||
Marine | (0.23 | ) | |||||
Media | (1.57 | ) | |||||
Metals & mining | (3.57 | ) | |||||
Multiline retail | (1.12 | ) | |||||
Multi-utilities | (2.26 | ) | |||||
Oil, gas & consumable fuels | (4.10 | ) | |||||
Paper & forest products | (0.20 | ) | |||||
Pharmaceuticals | (4.55 | ) | |||||
Professional services | (0.21 | ) | |||||
Real estate investment trust (REIT) | (1.05 | ) | |||||
Real estate management & development | (0.32 | ) | |||||
Road & rail | (0.71 | ) | |||||
Semiconductors & semiconductor equipment | (1.61 | ) | |||||
Software | (2.32 | ) | |||||
Specialty retail | (1.23 | ) | |||||
Textiles, apparel & luxury goods | (0.45 | ) | |||||
Thrifts & mortgage finance | (0.06 | ) | |||||
Trading companies & distributors | (1.36 | ) | |||||
Transportation infrastructure | (0.10 | ) | |||||
Water utilities | (0.66 | ) | |||||
Wireless telecommunication services | (0.10 | ) | |||||
Total common stocks | (74.27 | )% | |||||
Preferred stock | (0.07 | ) | |||||
Total investments sold short | (74.34 | )% | |||||
Total investments, net of investments sold short | 44.84 | ||||||
Cash and other assets, less liabilities | 55.16 | ||||||
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 company's industry diversification was included.
2 Amount represents less than 0.005%.
26
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 72.51% | |||||||||||
Australia: 0.54% | |||||||||||
Charter Hall Office REIT | 4,970 | $ | 17,842 | ||||||||
CSL Ltd. | 532 | 17,412 | |||||||||
Echo Entertainment Group Ltd.* | 1,187 | 4,359 | |||||||||
Fairfax Media Ltd. | 17,510 | 12,895 | |||||||||
OneSteel Ltd. | 9,333 | 6,682 | |||||||||
Suncorp Group Ltd. | 2,089 | 17,905 | |||||||||
Telstra Corp. Ltd. | 5,784 | 19,700 | |||||||||
Total Australia common stocks | 96,795 | ||||||||||
Austria: 0.53% | |||||||||||
Telekom Austria AG1 | 8,030 | 96,246 | |||||||||
Belgium: 1.71% | |||||||||||
Anheuser-Busch InBev NV | 552 | 33,796 | |||||||||
Delhaize Group SA | 241 | 13,539 | |||||||||
KBC Groep NV | 470 | 5,919 | |||||||||
Nyrstar NV* | 13,744 | 108,508 | |||||||||
UCB SA NPV | 3,494 | 147,014 | |||||||||
Total Belgium common stocks | 308,776 | ||||||||||
Canada: 0.31% | |||||||||||
Ensign Energy Services, Inc. | 900 | 14,356 | |||||||||
Precision Drilling Corp.* | 1,300 | 13,399 | |||||||||
Teck Resources Ltd., Class B | 400 | 14,100 | |||||||||
Trican Well Service Ltd. | 800 | 13,781 | |||||||||
Total Canada common stocks | 55,636 | ||||||||||
China: 0.24% | |||||||||||
Changsha Zoomlion Heavy Industry Science & Technology Development Co., Ltd., H Shares |
2,820 | 3,035 | |||||||||
New World Development Co., Ltd. | 12,000 | 9,672 | |||||||||
NWS Holdings Ltd. | 14,000 | 20,622 | |||||||||
Yangzijiang Shipbuilding Holdings Ltd. | 15,000 | 10,524 | |||||||||
Total China common stocks | 43,853 | ||||||||||
Denmark: 0.99% | |||||||||||
Carlsberg A/S, Class B1 | 1,752 | 123,545 | |||||||||
FLSmidth & Co. A/S | 429 | 25,210 | |||||||||
H Lundbeck A/S | 715 | 13,445 | |||||||||
TDC A/S | 2,008 | 16,104 | |||||||||
Total Denmark common stocks | 178,304 | ||||||||||
Finland: 1.11% | |||||||||||
Orion Oyj, Class B | 730 | 14,219 | |||||||||
Sampo Oyj, Class A1 | 6,891 | 170,971 | |||||||||
Wartsila Oyj | 562 | 16,235 | |||||||||
Total Finland common stocks | 201,425 |
Shares | Value | ||||||||||
France: 2.86% | |||||||||||
BNP Paribas SA1 | 139 | $ | 5,460 | ||||||||
Cap Gemini SA | 701 | 21,906 | |||||||||
EDF SA1 | 2,861 | 69,614 | |||||||||
Eiffage SA | 2,188 | 52,969 | |||||||||
France Telecom SA1 | 6,981 | 109,642 | |||||||||
LVMH Moet Hennessy Louis Vuitton SA1 | 405 | 57,344 | |||||||||
Total SA | 320 | 16,359 | |||||||||
Vinci SA1 | 3,888 | 169,882 | |||||||||
Vivendi SA | 659 | 14,431 | |||||||||
Total France common stocks | 517,607 | ||||||||||
Germany: 3.71% | |||||||||||
Allianz SE1 | 841 | 80,448 | |||||||||
Fresenius Medical Care AG & Co. KGaA1 | 2,893 | 196,574 | |||||||||
Hamburger Hafen und Logistik AG | 419 | 12,378 | |||||||||
HeidelbergCement AG | 370 | 15,702 | |||||||||
Kabel Deutschland Holding AG* | 288 | 14,617 | |||||||||
Linde AG1 | 1,245 | 185,224 | |||||||||
Salzgitter AG1 | 789 | 39,447 | |||||||||
SAP AG1 | 2,089 | 110,446 | |||||||||
Suedzucker AG | 517 | 16,494 | |||||||||
Total Germany common stocks | 671,330 | ||||||||||
Greece: 0.37% | |||||||||||
Hellenic Telecommunications Organization SA1 |
14,994 | 55,889 | |||||||||
OPAP SA | 1,190 | 10,520 | |||||||||
Total Greece common stocks | 66,409 | ||||||||||
Hong Kong: 0.19% | |||||||||||
Hopewell Holdings Ltd. | 6,000 | 15,343 | |||||||||
Shangri-La Asia Ltd. | 666 | 1,149 | |||||||||
Swire Pacific Ltd., Class A | 1,500 | 18,106 | |||||||||
Total Hong Kong common stocks | 34,598 | ||||||||||
Ireland: 0.46% | |||||||||||
Accenture PLC, Class A1 | 300 | 15,969 | |||||||||
Experian PLC | 1,448 | 19,688 | |||||||||
Kerry Group PLC, Class A1 | 1,275 | 46,675 | |||||||||
Total Ireland common stocks | 82,332 | ||||||||||
Israel: 0.15% | |||||||||||
Israel Corp., Ltd. | 17 | 10,673 | |||||||||
NICE Systems Ltd.* | 496 | 16,944 | |||||||||
Total Israel common stocks | 27,617 | ||||||||||
Italy: 1.11% | |||||||||||
Atlantia SpA | 1,273 | 20,381 | |||||||||
Azimut Holding SpA1 | 10,444 | 83,739 | |||||||||
Enel SpA | 6,249 | 25,428 | |||||||||
Fiat SpA | 1,663 | 7,641 |
27
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Italy(Concluded) | |||||||||||
Finmeccanica SpA1 | 8,727 | $ | 32,281 | ||||||||
Intesa Sanpaolo SpA | 7,355 | 12,318 | |||||||||
Mediaset SpA | 3,978 | 11,007 | |||||||||
UniCredit SpA | 860 | 7,147 | |||||||||
Total Italy common stocks | 199,942 | ||||||||||
Japan: 3.20% | |||||||||||
AOKI Holdings, Inc. | 2,500 | 40,795 | |||||||||
Aozora Bank Ltd. | 8,000 | 22,035 | |||||||||
Asahi Glass Co., Ltd. | 2,000 | 16,786 | |||||||||
Asahi Group Holdings Ltd. | 900 | 19,761 | |||||||||
Bridgestone Corp. | 800 | 18,137 | |||||||||
Central Glass Co., Ltd. | 4,000 | 19,332 | |||||||||
Central Japan Railway Co. | 3 | 25,335 | |||||||||
Dainippon Sumitomo Pharma Co., Ltd. | 2,000 | 22,788 | |||||||||
Eisai Co., Ltd. | 400 | 16,552 | |||||||||
Fujitsu Ltd. | 3,000 | 15,591 | |||||||||
Gunma Bank Ltd. | 3,000 | 16,487 | |||||||||
Hachijuni Bank Ltd. | 3,000 | 17,111 | |||||||||
Hokuhoku Financial Group, Inc. | 9,000 | 17,539 | |||||||||
JTEKT Corp. | 1,200 | 11,802 | |||||||||
KDDI Corp. | 3 | 19,293 | |||||||||
Makino Milling Machine Co., Ltd. | 2,000 | 12,316 | |||||||||
Marubeni Corp. | 3,000 | 18,280 | |||||||||
Mitsubishi UFJ Financial Group, Inc. | 3,800 | 16,144 | |||||||||
Mizuho Financial Group, Inc. | 11,820 | 15,971 | |||||||||
Mori Seiki Co., Ltd. | 1,300 | 11,586 | |||||||||
Nippon Meat Packers, Inc. | 1,000 | 12,420 | |||||||||
Nishi-Nippon City Bank Ltd. | 6,000 | 17,228 | |||||||||
NTT Data Corp. | 5 | 15,967 | |||||||||
Oriental Land Co., Ltd. | 200 | 21,125 | |||||||||
Sapporo Holdings Ltd. | 4,000 | 15,123 | |||||||||
Sekisui Chemical Co., Ltd. | 2,000 | 16,500 | |||||||||
Sumitomo Rubber Industries Ltd. | 1,500 | 18,007 | |||||||||
Toho Co., Ltd. | 1,000 | 17,825 | |||||||||
Toyota Industries Corp. | 500 | 13,609 | |||||||||
Tsumura & Co. | 500 | 14,746 | |||||||||
Yamada Denki Co., Ltd. | 230 | 15,658 | |||||||||
Yamazaki Baking Co., Ltd. | 2,000 | 26,270 | |||||||||
Total Japan common stocks | 578,119 | ||||||||||
Luxembourg: 0.34% | |||||||||||
ArcelorMittal | 2,761 | 50,492 | |||||||||
Ternium SA ADR | 600 | 11,034 | |||||||||
Total Luxembourg common stocks | 61,526 | ||||||||||
Macau: 0.11% | |||||||||||
Sands China Ltd.* | 6,800 | 19,218 |
Shares | Value | ||||||||||
Mexico: 0.10% | |||||||||||
Fresnillo PLC | 793 | $ | 18,805 | ||||||||
Netherlands: 1.03% | |||||||||||
ASML Holding NV | 491 | 20,637 | |||||||||
Koninklijke Ahold NV | 1,780 | 23,971 | |||||||||
Koninklijke DSM NV1 | 345 | 16,008 | |||||||||
Koninklijke KPN NV | 1,250 | 14,957 | |||||||||
Koninklijke Philips Electronics NV | 728 | 15,339 | |||||||||
LyondellBasell Industries NV, Class A1 | 400 | 12,996 | |||||||||
Wolters Kluwer NV1 | 4,775 | 82,534 | |||||||||
Total Netherlands common stocks | 186,442 | ||||||||||
Norway: 2.16% | |||||||||||
Petroleum Geo-Services ASA* | 2,601 | 28,463 | |||||||||
Renewable Energy Corp. ASA* | 165,000 | 91,592 | |||||||||
Statoil ASA | 734 | 18,838 | |||||||||
Telenor ASA1 | 15,123 | 248,053 | |||||||||
Yara International ASA | 114 | 4,575 | |||||||||
Total Norway common stocks | 391,521 | ||||||||||
Portugal: 0.50% | |||||||||||
Portugal Telecom SGPS SA1 | 15,597 | 89,830 | |||||||||
Singapore: 0.45% | |||||||||||
Golden Agri-Resources Ltd. | 33,000 | 18,191 | |||||||||
Jardine Cycle & Carriage Ltd. | 1,000 | 37,100 | |||||||||
Olam International Ltd. | 8,000 | 13,137 | |||||||||
UOL Group Ltd. | 4,000 | 12,336 | |||||||||
Total Singapore common stocks | 80,764 | ||||||||||
Spain: 1.83% | |||||||||||
Acciona SA1 | 609 | 52,597 | |||||||||
EDP Renovaveis SA*1 | 3,319 | 20,310 | |||||||||
Enagas SA1 | 10,793 | 199,615 | |||||||||
Fomento de Construcciones y Contratas SA |
634 | 16,444 | |||||||||
Gamesa Corp.Tecnologica SA | 2,313 | 9,609 | |||||||||
Gas Natural SDG SA | 893 | 15,331 | |||||||||
Repsol YPF SA | 551 | 16,926 | |||||||||
Total Spain common stocks | 330,832 | ||||||||||
Sweden: 0.71% | |||||||||||
Getinge AB, Class B | 694 | 17,587 | |||||||||
Hennes & Mauritz AB, Class B | 964 | 30,999 | |||||||||
Lundin Petroleum AB* | 1,426 | 35,059 | |||||||||
Scania AB, Class B | 1,753 | 25,982 | |||||||||
Swedish Match AB | 543 | 19,275 | |||||||||
Total Sweden common stocks | 128,902 |
28
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Switzerland: 1.84% | |||||||||||
Actelion Ltd.* | 374 | $ | 12,841 | ||||||||
Aryzta AG | 1,987 | 96,039 | |||||||||
Ferrexpo PLC | 2,369 | 9,889 | |||||||||
Kuehne & Nagel International AG | 120 | 13,478 | |||||||||
Meyer Burger Technology AG* | 407 | 6,370 | |||||||||
Nestle SA | 285 | 16,385 | |||||||||
Novartis AG1 | 1,910 | 109,195 | |||||||||
Roche Holding AG (Non-voting) | 253 | 42,880 | |||||||||
Straumann Holding AG1 | 153 | 26,404 | |||||||||
Total Switzerland common stocks | 333,481 | ||||||||||
United Kingdom: 8.44% | |||||||||||
Aberdeen Asset Management PLC1 | 31,990 | 105,323 | |||||||||
BAE Systems PLC1 | 42,620 | 188,704 | |||||||||
BG Group PLC1 | 1,688 | 36,084 | |||||||||
BP PLC | 1,412 | 10,098 | |||||||||
British Land Co., PLC | 32 | 230 | |||||||||
Croda International PLC | 596 | 16,698 | |||||||||
Drax Group PLC | 2,259 | 19,120 | |||||||||
Ensco PLC ADR1 | 1,400 | 65,688 | |||||||||
Home Retail Group PLC | 6,699 | 8,677 | |||||||||
Imperial Tobacco Group PLC1 | 6,990 | 264,331 | |||||||||
Inmarsat PLC | 7,468 | 46,936 | |||||||||
Investec PLC | 8,920 | 46,961 | |||||||||
Lonmin PLC | 3,166 | 48,185 | |||||||||
Premier Oil PLC* | 2,570 | 14,488 | |||||||||
Reed Elsevier PLC1 | 4,702 | 37,898 | |||||||||
Sage Group PLC1 | 19,374 | 88,518 | |||||||||
Smith & Nephew PLC | 1,734 | 16,844 | |||||||||
SSE PLC1 | 7,283 | 146,019 | |||||||||
Tesco PLC1 | 16,848 | 105,562 | |||||||||
Tullow Oil PLC1 | 600 | 13,064 | |||||||||
Vedanta Resources PLC1 | 5,787 | 91,220 | |||||||||
Xstrata PLC1 | 10,264 | 155,893 | |||||||||
Total United Kingdom common stocks | 1,526,541 | ||||||||||
United States: 37.52% | |||||||||||
Acorda Therapeutics, Inc.*1 | 2,300 | 54,832 | |||||||||
Adobe Systems, Inc.*1 | 4,300 | 121,561 | |||||||||
Aeropostale, Inc.*1 | 1,000 | 15,250 | |||||||||
Aflac, Inc.1 | 800 | 34,608 | |||||||||
Agilent Technologies, Inc.*1 | 400 | 13,972 | |||||||||
Alaska Air Group, Inc.*1 | 300 | 22,527 | |||||||||
Alexion Pharmaceuticals, Inc.*1 | 1,800 | 128,700 | |||||||||
Allergan, Inc.1 | 400 | 35,096 | |||||||||
Alliant Techsystems, Inc.1 | 300 | 17,148 | |||||||||
Amazon.com, Inc.*1 | 575 | 99,533 | |||||||||
American Campus Communities, Inc. | 700 | 29,372 | |||||||||
Amgen, Inc.1 | 300 | 19,263 | |||||||||
Amylin Pharmaceuticals, Inc.*1 | 3,400 | 38,692 |
Shares | Value | ||||||||||
Analog Devices, Inc.1 | 400 | $ | 14,312 | ||||||||
Angie's List, Inc.* | 2,200 | 35,420 | |||||||||
ANN, Inc.*1 | 600 | 14,868 | |||||||||
Annaly Capital Management, Inc.1 | 1,100 | 17,556 | |||||||||
Apollo Group, Inc., Class A*1 | 1,300 | 70,031 | |||||||||
Apple, Inc.*1 | 230 | 93,150 | |||||||||
Arch Coal, Inc.1 | 1,000 | 14,510 | |||||||||
Ashland, Inc.1 | 300 | 17,148 | |||||||||
Atlas Air Worldwide Holdings, Inc.*1 | 300 | 11,529 | |||||||||
Autodesk, Inc.*1 | 1,400 | 42,462 | |||||||||
Baxter International, Inc.1 | 700 | 34,636 | |||||||||
Biogen Idec, Inc.*1 | 150 | 16,508 | |||||||||
Bio-Rad Laboratories, Inc., Class A*1 | 1,100 | 105,644 | |||||||||
Boise, Inc.1 | 2,300 | 16,376 | |||||||||
Brinker International, Inc.1 | 700 | 18,732 | |||||||||
Broadcom Corp., Class A*1 | 2,500 | 73,400 | |||||||||
C.H. Robinson Worldwide, Inc.1 | 300 | 20,934 | |||||||||
CA, Inc.1 | 800 | 16,172 | |||||||||
Capital One Financial Corp.1 | 300 | 12,687 | |||||||||
Career Education Corp.*1 | 900 | 7,173 | |||||||||
Carnival Corp.1 | 1,300 | 42,432 | |||||||||
CBL & Associates Properties, Inc.1 | 1,000 | 15,700 | |||||||||
Celanese Corp., Series A1 | 2,300 | 101,821 | |||||||||
CF Industries Holdings, Inc.1 | 138 | 20,007 | |||||||||
Citigroup, Inc.1 | 640 | 16,838 | |||||||||
Cliffs Natural Resources, Inc.1 | 260 | 16,211 | |||||||||
CME Group, Inc. | 100 | 24,367 | |||||||||
Coach, Inc.1 | 1,300 | 79,352 | |||||||||
Colgate-Palmolive Co.1 | 1,200 | 110,868 | |||||||||
Comcast Corp., Class A1 | 1,400 | 33,194 | |||||||||
Comerica, Inc.1 | 500 | 12,900 | |||||||||
Commercial Metals Co.1 | 1,200 | 16,596 | |||||||||
Complete Production Services, Inc.*1 | 500 | 16,780 | |||||||||
Compuware Corp.* | 7,163 | 59,596 | |||||||||
Cousins Properties, Inc. | 14,120 | 90,509 | |||||||||
Cubist Pharmaceuticals, Inc.*1 | 500 | 19,810 | |||||||||
Dell, Inc.*1 | 1,000 | 14,630 | |||||||||
Delta Air Lines, Inc.*1 | 1,900 | 15,371 | |||||||||
Diamond Offshore Drilling, Inc.1 | 300 | 16,578 | |||||||||
Digital Domain Media Group, Inc.* | 7,160 | 43,533 | |||||||||
Discover Financial Services1 | 700 | 16,800 | |||||||||
Dover Corp.1 | 1,900 | 110,295 | |||||||||
Dow Chemical Co.1 | 2,800 | 80,528 | |||||||||
Dun & Bradstreet Corp.1 | 300 | 22,449 | |||||||||
Eastman Chemical Co.1 | 400 | 15,624 | |||||||||
Eastman Kodak Co.*1 | 4,900 | 3,183 | |||||||||
EchoStar Corp., Class A*1 | 500 | 10,470 | |||||||||
Edison International1 | 3,500 | 144,900 | |||||||||
EOG Resources, Inc.1 | 1,230 | 121,167 | |||||||||
EQT Corp. | 1,300 | 71,227 | |||||||||
Equifax, Inc.1 | 500 | 19,370 | |||||||||
Expeditors International Washington, Inc.1 |
400 | 16,384 |
29
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
United States(Continued) | |||||||||||
Federal Realty Investment Trust1 | 200 | $ | 18,150 | ||||||||
FedEx Corp.1 | 1,900 | 158,669 | |||||||||
Fidelity National Information Services, Inc.1 |
2,700 | 71,793 | |||||||||
FirstEnergy Corp.1 | 2,800 | 124,040 | |||||||||
Flextronics International Ltd.*1 | 2,800 | 15,848 | |||||||||
GameStop Corp., Class A*1 | 4,100 | 98,933 | |||||||||
General Dynamics Corp.1 | 1,900 | 126,179 | |||||||||
General Motors Co.*1 | 2,000 | 40,540 | |||||||||
Georgia Gulf Corp.*1 | 700 | 13,643 | |||||||||
Gilead Sciences, Inc.* | 1,500 | 61,395 | |||||||||
Hasbro, Inc.1 | 400 | 12,756 | |||||||||
HCA Holdings, Inc.*1 | 2,100 | 46,263 | |||||||||
Helix Energy Solutions Group, Inc.*1 | 1,000 | 15,800 | |||||||||
Hertz Global Holdings, Inc.*1 | 7,100 | 83,212 | |||||||||
Hess Corp.1 | 1,100 | 62,480 | |||||||||
Hewlett-Packard Co.1 | 3,400 | 87,584 | |||||||||
HollyFrontier Corp.1 | 976 | 22,838 | |||||||||
Hudson City Bancorp, Inc.1 | 2,200 | 13,750 | |||||||||
Illinois Tool Works, Inc.1 | 3,600 | 168,156 | |||||||||
Imperva, Inc.* | 1,400 | 48,734 | |||||||||
International Business Machines Corp.1 | 135 | 24,824 | |||||||||
Interpublic Group of Cos., Inc.1 | 2,400 | 23,352 | |||||||||
Intersil Corp., Class A1 | 9,200 | 96,048 | |||||||||
Intuit, Inc.1 | 400 | 21,036 | |||||||||
InvenSense, Inc.* | 3,630 | 36,155 | |||||||||
Invesco Ltd. | 900 | 18,081 | |||||||||
ITT Educational Services, Inc.*1 | 300 | 17,067 | |||||||||
JPMorgan Chase & Co.1 | 500 | 16,625 | |||||||||
KBR, Inc.1 | 400 | 11,148 | |||||||||
Kimco Realty Corp.1 | 1,000 | 16,240 | |||||||||
Kinder Morgan, Inc.1 | 600 | 19,302 | |||||||||
KKR & Co. LP1 | 1,100 | 14,113 | |||||||||
KLA-Tencor Corp.1 | 500 | 24,125 | |||||||||
Kohl's Corp.1 | 900 | 44,415 | |||||||||
Kraft Foods, Inc., Class A1 | 800 | 29,888 | |||||||||
Kroger Co.1 | 4,400 | 106,568 | |||||||||
Landstar System, Inc.1 | 300 | 14,376 | |||||||||
Lear Corp.1 | 400 | 15,920 | |||||||||
Lender Processing Services, Inc.1 | 900 | 13,563 | |||||||||
Liberty Property Trust1 | 500 | 15,440 | |||||||||
Lowe's Cos., Inc.1 | 2,600 | 65,988 | |||||||||
Mack-Cali Realty Corp.1 | 500 | 13,345 | |||||||||
Macy's, Inc.1 | 600 | 19,308 | |||||||||
Magellan Health Services, Inc.*1 | 300 | 14,841 | |||||||||
Manning & Napier, Inc.* | 2,880 | 35,971 | |||||||||
Marathon Oil Corp.1 | 400 | 11,708 | |||||||||
Marathon Petroleum Corp.1 | 200 | 6,658 | |||||||||
Marvell Technology Group Ltd.*1 | 3,200 | 44,320 | |||||||||
Masco Corp.1 | 500 | 5,240 |
Shares | Value | ||||||||||
Mattress Firm Holding Corp.* | 1,680 | $ | 38,959 | ||||||||
Maxim Integrated Products, Inc.1 | 700 | 18,228 | |||||||||
Medtronic, Inc.1 | 1,400 | 53,550 | |||||||||
MEMC Electronic Materials, Inc.* | 15,800 | 62,252 | |||||||||
Merck & Co., Inc.1 | 1,300 | 49,010 | |||||||||
MetLife, Inc. | 400 | 12,472 | |||||||||
Microsoft Corp.1 | 700 | 18,172 | |||||||||
Molson Coors Brewing Co., Class B1 | 900 | 39,186 | |||||||||
Monster Worldwide, Inc.* | 7,600 | 60,268 | |||||||||
Morgan Stanley1 | 1,300 | 19,669 | |||||||||
Motorola Solutions, Inc.1 | 300 | 13,887 | |||||||||
NewLink Genetics Corp.* | 5,650 | 39,776 | |||||||||
NextEra Energy, Inc.1 | 2,400 | 146,112 | |||||||||
Noble Corp.*1 | 2,300 | 69,506 | |||||||||
Norfolk Southern Corp.1 | 300 | 21,858 | |||||||||
Novellus Systems, Inc.*1 | 500 | 20,645 | |||||||||
NRG Energy, Inc.*1 | 700 | 12,684 | |||||||||
PACCAR, Inc.1 | 1,400 | 52,458 | |||||||||
PepsiCo, Inc.1 | 2,050 | 136,018 | |||||||||
Pharmasset, Inc.*1 | 700 | 89,740 | |||||||||
Polaris Industries, Inc.1 | 300 | 16,794 | |||||||||
Power-One, Inc.*1 | 2,200 | 8,602 | |||||||||
Principal Financial Group, Inc.1 | 600 | 14,760 | |||||||||
QLogic Corp.*1 | 1,100 | 16,500 | |||||||||
Radian Group, Inc.1 | 4,500 | 10,530 | |||||||||
RadioShack Corp.1 | 1,400 | 13,594 | |||||||||
Rayonier, Inc.1 | 350 | 15,620 | |||||||||
SEI Investments Co.1 | 800 | 13,880 | |||||||||
ServiceSource International, Inc.*1 | 3,500 | 54,915 | |||||||||
Skyworks Solutions, Inc.* | 2,700 | 43,794 | |||||||||
SL Green Realty Corp.1 | 200 | 13,328 | |||||||||
Smithfield Foods, Inc.*1 | 800 | 19,424 | |||||||||
Sotheby's1 | 400 | 11,412 | |||||||||
Stone Energy Corp.*1 | 600 | 15,828 | |||||||||
Symantec Corp.*1 | 2,900 | 45,385 | |||||||||
Tellabs, Inc. | 15,600 | 63,024 | |||||||||
Teradyne, Inc.*1 | 1,200 | 16,356 | |||||||||
Tesoro Corp.*1 | 800 | 18,688 | |||||||||
Textron, Inc.1 | 800 | 14,792 | |||||||||
Time Warner, Inc.1 | 1,600 | 57,824 | |||||||||
Ultra Petroleum Corp.*1 | 4,100 | 121,483 | |||||||||
UnitedHealth Group, Inc.1 | 900 | 45,612 | |||||||||
US Bancorp1 | 1,200 | 32,460 | |||||||||
Valero Energy Corp.1 | 700 | 14,735 | |||||||||
Veeco Instruments, Inc.*1 | 400 | 8,320 | |||||||||
Ventas, Inc.1 | 300 | 16,539 | |||||||||
Viacom, Inc., Class B1 | 1,600 | 72,656 | |||||||||
Visa, Inc., Class A1 | 500 | 50,765 | |||||||||
Vulcan Materials Co.1 | 700 | 27,545 | |||||||||
W&T Offshore, Inc.1 | 700 | 14,847 | |||||||||
Waters Corp.*1 | 200 | 14,810 | |||||||||
Weingarten Realty Investors1 | 700 | 15,274 |
30
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
WellCare Health Plans, Inc.*1 | 300 | $ | 15,750 | ||||||||
Wells Fargo & Co.1 | 2,000 | 55,120 | |||||||||
Zeltiq Aesthetics, Inc.* | 3,000 | 34,080 | |||||||||
Zimmer Holdings, Inc.*1 | 300 | 16,026 | |||||||||
Total United States common stocks | 6,785,242 | ||||||||||
Total common stocks (cost $14,137,482) |
13,112,093 | ||||||||||
Preferred stock: 0.21% | |||||||||||
Germany: 0.21% | |||||||||||
Volkswagen AG, Preference shares1 (cost $44,510) |
252 | 37,752 | |||||||||
Investment company: 1.27% | |||||||||||
iShares II PLC (cost $233,195) |
11,381 | 229,197 | |||||||||
Number of rights |
|||||||||||
Rights: 0.00%2 | |||||||||||
France: 0.00%2 | |||||||||||
Sanofi-Aventis SA, expires 12/31/20*1 (cost $1,177) |
500 | 600 | |||||||||
Shares | |||||||||||
Short-term investment: 45.19% | |||||||||||
Investment company: 45.19% | |||||||||||
UBS Cash Management Prime Relationship Fund3 (cost $8,171,641) |
8,171,641 | 8,171,641 | |||||||||
Total investments before investments sold short: 119.18% (cost $22,588,005) |
21,551,283 | ||||||||||
Investments sold short: (74.34)% | |||||||||||
Common stocks: (74.27)% | |||||||||||
Australia: (0.97)% | |||||||||||
ASX Ltd. | (551 | ) | (17,234 | ) | |||||||
BlueScope Steel Ltd. | (56,473 | ) | (23,393 | ) | |||||||
Caltex Australia Ltd. | (556 | ) | (6,693 | ) | |||||||
CSR Ltd. | (6,240 | ) | (12,509 | ) | |||||||
Dexus Property Group | (18,627 | ) | (15,813 | ) | |||||||
DUET Group | (4,403 | ) | (7,904 | ) | |||||||
Lynas Corp. Ltd. | (9,103 | ) | (9,730 | ) | |||||||
Newcrest Mining Ltd. | (485 | ) | (14,683 | ) | |||||||
Origin Energy Ltd. | (1,106 | ) | (15,090 | ) | |||||||
Paladin Energy Ltd. | (7,259 | ) | (10,172 | ) | |||||||
Ramsay Health Care Ltd. | (935 | ) | (18,438 | ) |
Shares | Value | ||||||||||
Tatts Group Ltd. | (2,420 | ) | $ | (6,039 | ) | ||||||
Transurban Group | (3,195 | ) | (18,365 | ) | |||||||
Total Australia common stocks | (176,063 | ) | |||||||||
Austria: (0.58)% | |||||||||||
Erste Group Bank AG | (935 | ) | (16,472 | ) | |||||||
Verbund - Oesterreichische Elektrizitaetswirtschafts AG, Class A |
(3,300 | ) | (88,687 | ) | |||||||
Total Austria common stocks | (105,159 | ) | |||||||||
Belgium: (0.32)% | |||||||||||
Colruyt SA | (1,519 | ) | (57,504 | ) | |||||||
Bermuda: (0.13)% | |||||||||||
Frontline Ltd. | (1,301 | ) | (5,542 | ) | |||||||
Seadrill Ltd. | (513 | ) | (17,155 | ) | |||||||
Total Bermuda common stocks | (22,697 | ) | |||||||||
Canada: (0.94)% | |||||||||||
BCE, Inc. | (400 | ) | (16,675 | ) | |||||||
Crescent Point Energy Corp. | (400 | ) | (17,630 | ) | |||||||
Fairfax Financial Holdings Ltd. | (50 | ) | (21,448 | ) | |||||||
Fortis, Inc. | (500 | ) | (16,378 | ) | |||||||
George Weston Ltd. | (100 | ) | (6,684 | ) | |||||||
Ivanhoe Mines Ltd. | (700 | ) | (12,430 | ) | |||||||
Onex Corp. | (400 | ) | (13,028 | ) | |||||||
Potash Corp. of Saskatchewan, Inc. | (340 | ) | (14,054 | ) | |||||||
Provident Energy Ltd. | (2,100 | ) | (20,304 | ) | |||||||
Ritchie Bros Auctioneers, Inc. | (700 | ) | (15,391 | ) | |||||||
Uranium One, Inc. | (7,100 | ) | (15,054 | ) | |||||||
Total Canada common stocks | (169,076 | ) | |||||||||
China: 0.00%2 | |||||||||||
China CITIC Bank, H Shares | (1,200 | ) | (675 | ) | |||||||
Denmark: (0.93)% | |||||||||||
H Lundbeck A/S | (3,293 | ) | (61,923 | ) | |||||||
Novo Nordisk A/S, Class B | (453 | ) | (52,057 | ) | |||||||
William Demant Holding A/S | (659 | ) | (54,801 | ) | |||||||
Total Denmark common stocks | (168,781 | ) | |||||||||
Finland: (1.17)% | |||||||||||
Fortum Oyj | (1,807 | ) | (38,565 | ) | |||||||
Metso Oyj | (2,949 | ) | (109,350 | ) | |||||||
Nokia Oyj | (10,126 | ) | (49,434 | ) | |||||||
Sampo Oyj, Class A | (606 | ) | (15,036 | ) | |||||||
Total Finland common stocks | (212,385 | ) | |||||||||
France: (5.00)% | |||||||||||
Air France-KLM | (1,184 | ) | (6,088 | ) | |||||||
Air Liquide SA | (77 | ) | (9,526 | ) | |||||||
Alcatel-Lucent | (11,590 | ) | (18,105 | ) |
31
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
France(Concluded) | |||||||||||
Alstom SA | (315 | ) | $ | (9,552 | ) | ||||||
Atos | (171 | ) | (7,505 | ) | |||||||
Carrefour SA | (476 | ) | (10,852 | ) | |||||||
Cie de Saint-Gobain | (1,535 | ) | (58,935 | ) | |||||||
Cie Generale des Etablissements Michelin, Class B |
(117 | ) | (6,916 | ) | |||||||
Cie Generale d'Optique Essilor International SA |
(333 | ) | (23,510 | ) | |||||||
Danone | (2,533 | ) | (159,229 | ) | |||||||
Dassault Systemes SA | (1,597 | ) | (128,004 | ) | |||||||
Edenred | (606 | ) | (14,918 | ) | |||||||
Iliad SA | (199 | ) | (24,558 | ) | |||||||
Legrand SA | (3,070 | ) | (98,738 | ) | |||||||
Pernod-Ricard SA | (2,001 | ) | (185,585 | ) | |||||||
Publicis Groupe SA | (1,742 | ) | (80,139 | ) | |||||||
Renault SA | (823 | ) | (28,546 | ) | |||||||
Unibail-Rodamco SE | (129 | ) | (23,191 | ) | |||||||
Vallourec SA | (165 | ) | (10,712 | ) | |||||||
Total France common stocks | (904,609 | ) | |||||||||
Germany: (3.08)% | |||||||||||
Axel Springer AG | (370 | ) | (15,901 | ) | |||||||
Commerzbank AG | (4,484 | ) | (7,562 | ) | |||||||
Deutsche Bank AG | (926 | ) | (35,277 | ) | |||||||
Deutsche Lufthansa AG | (879 | ) | (10,449 | ) | |||||||
GEA Group AG | (3,910 | ) | (110,572 | ) | |||||||
Hochtief AG | (238 | ) | (13,768 | ) | |||||||
K&S AG NPV | (780 | ) | (35,252 | ) | |||||||
Merck KGaA | (1,973 | ) | (196,701 | ) | |||||||
RWE AG | (1,716 | ) | (60,298 | ) | |||||||
Siemens AG | (262 | ) | (25,073 | ) | |||||||
ThyssenKrupp AG | (1,055 | ) | (24,202 | ) | |||||||
United Internet AG | (1,177 | ) | (21,022 | ) | |||||||
Total Germany common stocks | (556,077 | ) | |||||||||
Hong Kong: (0.07)% | |||||||||||
Orient Overseas International Ltd. | (2,000 | ) | (11,678 | ) | |||||||
Shangri-La Asia Ltd. | (666 | ) | (1,149 | ) | |||||||
Total Hong Kong common stocks | (12,827 | ) | |||||||||
Ireland: (0.34)% | |||||||||||
James Hardie Industries SE CDI | (3,004 | ) | (20,954 | ) | |||||||
Seagate Technology PLC | (1,821 | ) | (29,865 | ) | |||||||
Warner Chilcott PLC, Class A | (700 | ) | (10,591 | ) | |||||||
Total Ireland common stocks | (61,410 | ) | |||||||||
Italy: (2.48)% | |||||||||||
Assicurazioni Generali SpA | (5,908 | ) | (88,928 | ) | |||||||
Banco Popolare SC | (31,434 | ) | (40,684 | ) |
Shares | Value | ||||||||||
Luxottica Group SpA | (1,638 | ) | $ | (46,004 | ) | ||||||
Pirelli & Co. SpA NPV | (1,690 | ) | (14,228 | ) | |||||||
Snam Rete Gas SpA | (23,488 | ) | (103,540 | ) | |||||||
Terna-Rete Elettrica Nazionale SpA | (41,926 | ) | (141,300 | ) | |||||||
Unione di Banche Italiane SCPA | (3,432 | ) | (14,063 | ) | |||||||
Total Italy common stocks | (448,747 | ) | |||||||||
Japan: (2.77)% | |||||||||||
Acom Co., Ltd. | (1,070 | ) | (19,156 | ) | |||||||
All Nippon Airways Co., Ltd. | (5,000 | ) | (13,966 | ) | |||||||
Benesse Holdings, Inc. | (300 | ) | (14,519 | ) | |||||||
Chiyoda Corp. | (2,000 | ) | (20,346 | ) | |||||||
Chugoku Electric Power Co., Inc. | (1,000 | ) | (17,526 | ) | |||||||
Cosmo Oil Co., Ltd. | (6,000 | ) | (16,760 | ) | |||||||
Daito Trust Construction Co., Ltd. | (200 | ) | (17,150 | ) | |||||||
Denki Kagaku Kogyo KK | (3,000 | ) | (11,108 | ) | |||||||
Denso Corp. | (400 | ) | (11,048 | ) | |||||||
Electric Power Development Co., Ltd. | (700 | ) | (18,616 | ) | |||||||
Hitachi Chemical Co., Ltd. | (900 | ) | (15,856 | ) | |||||||
JSR Corp. | (1,000 | ) | (18,449 | ) | |||||||
Kaneka Corp. | (3,000 | ) | (15,980 | ) | |||||||
Kawasaki Kisen Kaisha Ltd. | (5,000 | ) | (9,030 | ) | |||||||
Mazda Motor Corp. | (2,000 | ) | (3,534 | ) | |||||||
McDonald's Holdings Co. Japan Ltd. | (700 | ) | (18,889 | ) | |||||||
Mitsubishi Gas Chemical Co., Inc. | (3,000 | ) | (16,643 | ) | |||||||
NEC Corp. | (7,000 | ) | (14,187 | ) | |||||||
Nippon Yusen KK | (4,000 | ) | (10,238 | ) | |||||||
Nissin Foods Holdings Co., Ltd. | (500 | ) | (19,586 | ) | |||||||
Nitto Denko Corp. | (300 | ) | (10,734 | ) | |||||||
Odakyu Electric Railway Co., Ltd. | (3,000 | ) | (28,998 | ) | |||||||
Olympus Corp. | (900 | ) | (11,833 | ) | |||||||
Senshu Ikeda Holdings, Inc. | (11,800 | ) | (17,324 | ) | |||||||
Square Enix Holdings Co., Ltd. | (1,000 | ) | (19,631 | ) | |||||||
Sumitomo Realty & Development Co., Ltd. |
(1,000 | ) | (17,513 | ) | |||||||
Tobu Railway Co., Ltd. | (4,000 | ) | (20,424 | ) | |||||||
Unicharm Corp. | (400 | ) | (19,722 | ) | |||||||
Yakult Honsha Co., Ltd. | (600 | ) | (18,903 | ) | |||||||
Yamaha Corp. | (1,700 | ) | (15,593 | ) | |||||||
Yamato Holdings Co., Ltd. | (1,100 | ) | (18,536 | ) | |||||||
Total Japan common stocks | (501,798 | ) | |||||||||
Jersey (Channel Islands): (0.09)% | |||||||||||
Heritage Oil PLC | (5,354 | ) | (16,006 | ) | |||||||
Netherlands: (1.50)% | |||||||||||
Koninklijke KPN NV | (8,864 | ) | (106,061 | ) | |||||||
PostNL NV | (2,256 | ) | (7,183 | ) | |||||||
Unilever NV CVA | (4,586 | ) | (157,704 | ) | |||||||
Total Netherlands common stocks | (270,948 | ) |
32
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
Norway: (1.53)% | |||||||||||
Renewable Energy Corp. ASA | (11,462 | ) | $ | (6,363 | ) | ||||||
Subsea 7 SA | (4,708 | ) | (87,377 | ) | |||||||
Telenor ASA | (1,107 | ) | (18,157 | ) | |||||||
Yara International ASA | (4,113 | ) | (165,047 | ) | |||||||
Total Norway common stocks | (276,944 | ) | |||||||||
Portugal: (0.09)% | |||||||||||
Jeronimo Martins, SGPS, SA | (965 | ) | (15,974 | ) | |||||||
Singapore: (0.51)% | |||||||||||
Ascendas Real Estate Investment Trust | (10,000 | ) | (14,109 | ) | |||||||
CapitaMall Trust | (11,000 | ) | (14,417 | ) | |||||||
DBS Group Holdings Ltd. | (2,000 | ) | (17,763 | ) | |||||||
Global Logistic Properties Ltd. | (10,000 | ) | (13,531 | ) | |||||||
Keppel Land Ltd. | (6,000 | ) | (10,269 | ) | |||||||
Singapore Technologies Engineering Ltd. | (3,000 | ) | (6,222 | ) | |||||||
Wilmar International Ltd. | (4,000 | ) | (15,420 | ) | |||||||
Total Singapore common stocks | (91,731 | ) | |||||||||
Spain: (1.10)% | |||||||||||
Acerinox SA | (3,992 | ) | (51,201 | ) | |||||||
Distribuidora Internacional de Alimentacion SA |
(546 | ) | (2,470 | ) | |||||||
EDP Renovaveis SA | (2,882 | ) | (17,635 | ) | |||||||
Iberdrola SA | (1,332 | ) | (8,342 | ) | |||||||
Indra Sistemas SA | (3,339 | ) | (42,511 | ) | |||||||
Telefonica SA | (4,462 | ) | (77,298 | ) | |||||||
Total Spain common stocks | (199,457 | ) | |||||||||
Sweden: (0.82)% | |||||||||||
Atlas Copco AB, Class A | (1,038 | ) | (22,322 | ) | |||||||
Boliden AB | (929 | ) | (13,566 | ) | |||||||
Hennes & Mauritz AB, Class B | (518 | ) | (16,657 | ) | |||||||
Holmen AB, Class B | (574 | ) | (16,489 | ) | |||||||
Modern Times Group AB, Class B | (304 | ) | (14,524 | ) | |||||||
Skandinaviska Enskilda Banken AB, Class A |
(1,829 | ) | (10,655 | ) | |||||||
Skanska AB, Class B | (1,051 | ) | (17,410 | ) | |||||||
Svenska Handelsbanken AB, Class A | (596 | ) | (15,675 | ) | |||||||
Volvo AB, Class B | (1,845 | ) | (20,187 | ) | |||||||
Total Sweden common stocks | (147,485 | ) | |||||||||
Switzerland: (3.41)% | |||||||||||
Barry Callebaut AG | (116 | ) | (114,296 | ) | |||||||
Credit Suisse Group AG | (487 | ) | (11,443 | ) | |||||||
EFG International AG | (1,671 | ) | (12,649 | ) | |||||||
Geberit AG | (689 | ) | (132,768 | ) | |||||||
Kuehne & Nagel International AG | (92 | ) | (10,333 | ) | |||||||
Nestle SA | (978 | ) | (56,225 | ) |
Shares | Value | ||||||||||
OC Oerlikon Corp. AG | (2,477 | ) | $ | (13,264 | ) | ||||||
Roche Holding AG (Non-voting) | (105 | ) | (17,796 | ) | |||||||
Swiss Life Holding AG | (933 | ) | (85,821 | ) | |||||||
Swiss Re Ltd. | (319 | ) | (16,257 | ) | |||||||
Swisscom AG | (16 | ) | (6,062 | ) | |||||||
Tyco International Ltd. | (3,000 | ) | (140,130 | ) | |||||||
Total Switzerland common stocks | (617,044 | ) | |||||||||
United Kingdom: (9.19)% | |||||||||||
3i Group PLC | (4,312 | ) | (12,121 | ) | |||||||
AMEC PLC | (847 | ) | (11,937 | ) | |||||||
Antofagasta PLC | (8,021 | ) | (151,348 | ) | |||||||
ARM Holdings PLC | (5,692 | ) | (52,331 | ) | |||||||
AstraZeneca PLC | (1,880 | ) | (86,859 | ) | |||||||
BHP Billiton PLC | (4,069 | ) | (118,642 | ) | |||||||
Booker Group PLC | (40,881 | ) | (46,981 | ) | |||||||
British Land Co., PLC | (2,006 | ) | (14,408 | ) | |||||||
British Sky Broadcasting Group PLC | (1,366 | ) | (15,539 | ) | |||||||
BT Group PLC, Class A | (67,861 | ) | (201,186 | ) | |||||||
Bumi PLC | (3,252 | ) | (44,443 | ) | |||||||
Burberry Group PLC | (1,233 | ) | (22,691 | ) | |||||||
Cable & Wireless Worldwide PLC | (360,392 | ) | (90,949 | ) | |||||||
Capital Shopping Centres Group PLC | (2,970 | ) | (14,405 | ) | |||||||
Drax Group PLC | (6,744 | ) | (57,080 | ) | |||||||
Evraz PLC | (8,221 | ) | (47,839 | ) | |||||||
Invensys PLC | (3,811 | ) | (12,488 | ) | |||||||
ITV PLC | (39,996 | ) | (42,330 | ) | |||||||
Kazakhmys | (3,741 | ) | (53,857 | ) | |||||||
Lloyds Banking Group PLC | (26,579 | ) | (10,693 | ) | |||||||
Lonmin PLC | (3,632 | ) | (55,277 | ) | |||||||
National Grid PLC | (1,047 | ) | (10,162 | ) | |||||||
Polymetal International PLC | (2,965 | ) | (50,375 | ) | |||||||
Rolls-Royce Holdings PLC, Class C | (486,519 | ) | (756 | ) | |||||||
RSA Insurance Group PLC | (24,064 | ) | (39,315 | ) | |||||||
Shire PLC | (567 | ) | (19,751 | ) | |||||||
Smith & Nephew PLC | (4,685 | ) | (45,510 | ) | |||||||
Standard Life PLC | (37,941 | ) | (121,557 | ) | |||||||
Tate & Lyle PLC | (9,700 | ) | (106,127 | ) | |||||||
TUI Travel PLC | (5,142 | ) | (13,240 | ) | |||||||
WM Morrison Supermarkets PLC | (18,020 | ) | (91,287 | ) | |||||||
Total United Kingdom common stocks | (1,661,484 | ) | |||||||||
United States: (37.25)% | |||||||||||
Abbott Laboratories | (900 | ) | (50,607 | ) | |||||||
Abercrombie & Fitch Co., Class A | (800 | ) | (39,072 | ) | |||||||
Acme Packet, Inc. | (300 | ) | (9,273 | ) | |||||||
Actuant Corp., Class A | (700 | ) | (15,883 | ) | |||||||
AGCO Corp. | (700 | ) | (30,079 | ) | |||||||
AGL Resources, Inc. | (1,570 | ) | (66,348 | ) | |||||||
AK Steel Holding Corp. | (1,300 | ) | (10,738 | ) | |||||||
Alliant Energy Corp. | (2,000 | ) | (88,220 | ) | |||||||
Amazon.com, Inc. | (100 | ) | (17,310 | ) |
33
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
United States(Continued) | |||||||||||
American Express Co. | (400 | ) | $ | (18,868 | ) | ||||||
American Water Works Co., Inc. | (2,200 | ) | (70,092 | ) | |||||||
Amylin Pharmaceuticals, Inc. | (1,500 | ) | (17,070 | ) | |||||||
AO Smith Corp. | (400 | ) | (16,048 | ) | |||||||
Aqua America, Inc. | (2,200 | ) | (48,510 | ) | |||||||
Associated Banc-Corp. | (2,100 | ) | (23,457 | ) | |||||||
AvalonBay Communities, Inc. | (100 | ) | (13,060 | ) | |||||||
BB&T Corp. | (900 | ) | (22,653 | ) | |||||||
Berkshire Hathaway, Inc., Class B | (300 | ) | (22,890 | ) | |||||||
BioMarin Pharmaceutical, Inc. | (700 | ) | (24,066 | ) | |||||||
Bio-Reference Labs, Inc. | (1,800 | ) | (29,286 | ) | |||||||
BMC Software, Inc. | (2,400 | ) | (78,672 | ) | |||||||
Booz Allen Hamilton Holding Corp. | (220 | ) | (3,795 | ) | |||||||
BorgWarner, Inc. | (960 | ) | (61,190 | ) | |||||||
Bristol-Myers Squibb Co. | (1,400 | ) | (49,336 | ) | |||||||
Brown-Forman Corp., Class B | (1,000 | ) | (80,510 | ) | |||||||
Bruker Corp. | (900 | ) | (11,178 | ) | |||||||
Cadence Design Systems, Inc. | (4,000 | ) | (41,600 | ) | |||||||
Calpine Corp. | (2,200 | ) | (35,926 | ) | |||||||
Cardinal Health, Inc. | (1,100 | ) | (44,671 | ) | |||||||
CarMax, Inc. | (800 | ) | (24,384 | ) | |||||||
Caterpillar, Inc. | (1,000 | ) | (90,600 | ) | |||||||
Charles Schwab Corp. | (3,000 | ) | (33,780 | ) | |||||||
Chesapeake Energy Corp. | (2,500 | ) | (55,725 | ) | |||||||
Chevron Corp. | (300 | ) | (31,920 | ) | |||||||
Choice Hotels International, Inc. | (600 | ) | (22,830 | ) | |||||||
Church & Dwight Co., Inc. | (2,000 | ) | (91,520 | ) | |||||||
Ciena Corp. | (1,000 | ) | (12,100 | ) | |||||||
CIT Group, Inc. | (400 | ) | (13,948 | ) | |||||||
CLARCOR, Inc. | (1,750 | ) | (87,483 | ) | |||||||
Clean Energy Fuels Corp. | (600 | ) | (7,476 | ) | |||||||
Cobalt International Energy, Inc. | (1,300 | ) | (20,176 | ) | |||||||
Cognizant Technology Solutions Corp., Class A |
(1,800 | ) | (115,758 | ) | |||||||
Compuware Corp. | (7,500 | ) | (62,400 | ) | |||||||
ConocoPhillips | (2,000 | ) | (145,740 | ) | |||||||
CONSOL Energy, Inc. | (700 | ) | (25,690 | ) | |||||||
Consolidated Edison, Inc. | (2,100 | ) | (130,263 | ) | |||||||
CoreLogic, Inc. | (1,000 | ) | (12,930 | ) | |||||||
Cree, Inc. | (500 | ) | (11,020 | ) | |||||||
CSX Corp. | (3,200 | ) | (67,392 | ) | |||||||
CVR Energy, Inc. | (600 | ) | (11,238 | ) | |||||||
Dell, Inc. | (6,800 | ) | (99,484 | ) | |||||||
DISH Network Corp., Class A | (600 | ) | (17,088 | ) | |||||||
Dollar General Corp. | (1,500 | ) | (61,710 | ) | |||||||
Dollar Tree, Inc. | (740 | ) | (61,502 | ) | |||||||
Douglas Emmett, Inc. | (900 | ) | (16,416 | ) | |||||||
DreamWorks Animation SKG, Inc., Class A |
(900 | ) | (14,936 | ) | |||||||
DuPont Fabros Technology, Inc. | (700 | ) | (16,954 | ) |
Shares | Value | ||||||||||
eBay, Inc. | (900 | ) | $ | (27,297 | ) | ||||||
Edison International | (400 | ) | (16,560 | ) | |||||||
EI Du Pont de Nemours & Co. | (1,500 | ) | (68,670 | ) | |||||||
El Paso Corp. | (900 | ) | (23,913 | ) | |||||||
Eli Lilly & Co. | (4,000 | ) | (166,240 | ) | |||||||
EnerSys | (4,720 | ) | (122,578 | ) | |||||||
Equinix, Inc. | (200 | ) | (20,280 | ) | |||||||
Equity Residential | (300 | ) | (17,109 | ) | |||||||
Expeditors International Washington, Inc. | (2,300 | ) | (94,208 | ) | |||||||
Fastenal Co. | (1,800 | ) | (78,498 | ) | |||||||
First American Financial Corp. | (1,100 | ) | (13,937 | ) | |||||||
First Niagara Financial Group, Inc. | (1,400 | ) | (12,082 | ) | |||||||
Fiserv, Inc. | (800 | ) | (46,992 | ) | |||||||
Flowers Foods, Inc. | (4,100 | ) | (77,818 | ) | |||||||
Forest Laboratories, Inc. | (400 | ) | (12,104 | ) | |||||||
Gap, Inc. | (1,400 | ) | (25,970 | ) | |||||||
General Growth Properties, Inc. | (1,062 | ) | (15,951 | ) | |||||||
Genuine Parts Co. | (700 | ) | (42,840 | ) | |||||||
GeoEye, Inc. | (400 | ) | (8,888 | ) | |||||||
GrafTech International Ltd. | (900 | ) | (12,285 | ) | |||||||
Grand Canyon Education, Inc. | (467 | ) | (7,453 | ) | |||||||
Green Mountain Coffee Roasters, Inc. | (200 | ) | (8,970 | ) | |||||||
Greenhill & Co., Inc. | (273 | ) | (9,929 | ) | |||||||
Hertz Global Holdings, Inc. | (1,100 | ) | (12,892 | ) | |||||||
Higher One Holdings, Inc. | (6,200 | ) | (114,328 | ) | |||||||
HMS Holdings Corp. | (2,760 | ) | (88,265 | ) | |||||||
Hormel Foods Corp. | (1,400 | ) | (41,006 | ) | |||||||
Hospira, Inc. | (100 | ) | (3,037 | ) | |||||||
HSN, Inc. | (2,340 | ) | (84,848 | ) | |||||||
Human Genome Sciences, Inc. | (800 | ) | (5,912 | ) | |||||||
Humana, Inc. | (400 | ) | (35,044 | ) | |||||||
Hyatt Hotels Corp., Class A | (800 | ) | (30,112 | ) | |||||||
IDEXX Laboratories, Inc. | (550 | ) | (42,328 | ) | |||||||
Illumina, Inc. | (300 | ) | (9,144 | ) | |||||||
Integrys Energy Group, Inc. | (2,000 | ) | (108,360 | ) | |||||||
Intel Corp. | (3,300 | ) | (80,025 | ) | |||||||
Intrepid Potash, Inc. | (500 | ) | (11,315 | ) | |||||||
Intuitive Surgical, Inc. | (200 | ) | (92,602 | ) | |||||||
Invesco Ltd. | (800 | ) | (16,072 | ) | |||||||
Jabil Circuit, Inc. | (1,300 | ) | (25,558 | ) | |||||||
JC Penney Co., Inc. | (1,400 | ) | (49,210 | ) | |||||||
KB Home | (1,600 | ) | (10,752 | ) | |||||||
KLA-Tencor Corp. | (600 | ) | (28,950 | ) | |||||||
Kraft Foods, Inc., Class A | (500 | ) | (18,680 | ) | |||||||
Laboratory Corp. of America Holdings | (600 | ) | (51,582 | ) | |||||||
Lamar Advertising Co., Class A | (2,500 | ) | (68,750 | ) | |||||||
Lennar Corp., Class A | (1,000 | ) | (19,650 | ) | |||||||
Lennox International, Inc. | (400 | ) | (13,500 | ) | |||||||
LKQ Corp. | (300 | ) | (9,024 | ) | |||||||
LSI Corp. | (13,000 | ) | (77,350 | ) | |||||||
M&T Bank Corp. | (400 | ) | (30,536 | ) | |||||||
Manitowoc Co., Inc. | (1,060 | ) | (9,741 | ) | |||||||
McDonald's Corp. | (800 | ) | (80,264 | ) |
34
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Concluded) | |||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
McMoRan Exploration Co. | (1,000 | ) | $ | (14,550 | ) | ||||||
Mead Johnson Nutrition Co. | (300 | ) | (20,619 | ) | |||||||
MEMC Electronic Materials, Inc. | (2,200 | ) | (8,668 | ) | |||||||
MetroPCS Communications, Inc. | (1,000 | ) | (8,680 | ) | |||||||
Mettler-Toledo International, Inc. | (200 | ) | (29,542 | ) | |||||||
MGIC Investment Corp. | (3,100 | ) | (11,563 | ) | |||||||
MGM Resorts International | (500 | ) | (5,215 | ) | |||||||
Microchip Technology, Inc. | (700 | ) | (25,641 | ) | |||||||
Molycorp, Inc. | (300 | ) | (7,194 | ) | |||||||
Morgan Stanley | (639 | ) | (9,668 | ) | |||||||
MSCI, Inc., Class A | (400 | ) | (13,172 | ) | |||||||
Navistar International Corp. | (900 | ) | (34,092 | ) | |||||||
Nektar Therapeutics | (2,500 | ) | (13,988 | ) | |||||||
Newell Rubbermaid, Inc. | (1,100 | ) | (17,765 | ) | |||||||
Nielsen Holdings NV | (600 | ) | (17,814 | ) | |||||||
NII Holdings, Inc. | (400 | ) | (8,520 | ) | |||||||
Nordstrom, Inc. | (600 | ) | (29,826 | ) | |||||||
Northern Trust Corp. | (600 | ) | (23,796 | ) | |||||||
Nuance Communications, Inc. | (900 | ) | (22,644 | ) | |||||||
Occidental Petroleum Corp. | (600 | ) | (56,220 | ) | |||||||
Office Depot, Inc. | (4,100 | ) | (8,815 | ) | |||||||
Old Republic International Corp. | (1,600 | ) | (14,832 | ) | |||||||
Olin Corp. | (800 | ) | (15,720 | ) | |||||||
Omnicare, Inc. | (600 | ) | (20,670 | ) | |||||||
Owens Corning | (400 | ) | (11,488 | ) | |||||||
Parexel International Corp. | (800 | ) | (16,592 | ) | |||||||
PepsiCo, Inc. | (300 | ) | (19,905 | ) | |||||||
PerkinElmer, Inc. | (1,900 | ) | (38,000 | ) | |||||||
Perrigo Co. | (820 | ) | (79,786 | ) | |||||||
PG&E Corp. | (100 | ) | (4,122 | ) | |||||||
Pioneer Natural Resources Co. | (700 | ) | (62,636 | ) | |||||||
PNC Financial Services Group, Inc. | (700 | ) | (40,369 | ) | |||||||
Polypore International, Inc. | (300 | ) | (13,197 | ) | |||||||
Praxair, Inc. | (600 | ) | (64,140 | ) | |||||||
PulteGroup, Inc. | (2,100 | ) | (13,251 | ) | |||||||
Questar Corp. | (2,400 | ) | (47,664 | ) | |||||||
Range Resources Corp. | (300 | ) | (18,582 | ) | |||||||
Red Hat, Inc. | (1,200 | ) | (49,548 | ) | |||||||
Rockwell Automation, Inc. | (1,200 | ) | (88,044 | ) | |||||||
Salesforce.com, Inc. | (150 | ) | (15,219 | ) | |||||||
Sanderson Farms, Inc. | (300 | ) | (15,039 | ) | |||||||
SanDisk Corp. | (900 | ) | (44,289 | ) | |||||||
SandRidge Energy, Inc. | (1,600 | ) | (13,056 | ) | |||||||
Sara Lee Corp. | (2,200 | ) | (41,624 | ) | |||||||
Schlumberger Ltd. | (700 | ) | (47,817 | ) | |||||||
Schweitzer-Mauduit International, Inc. | (300 | ) | (19,938 | ) | |||||||
Sirius XM Radio, Inc. | (8,600 | ) | (15,652 | ) | |||||||
Skechers U.S.A., Inc., Class A | (1,200 | ) | (14,544 | ) | |||||||
SLM Corp. | (1,000 | ) | (13,400 | ) |
Shares | Value | ||||||||||
Southern Co. | (700 | ) | $ | (32,403 | ) | ||||||
Starwood Hotels & Resorts Worldwide, Inc. |
(1,500 | ) | (71,955 | ) | |||||||
T. Rowe Price Group, Inc. | (400 | ) | (22,780 | ) | |||||||
TCF Financial Corp. | (2,100 | ) | (21,672 | ) | |||||||
Tellabs, Inc. | (5,900 | ) | (23,836 | ) | |||||||
Temple-Inland, Inc. | (500 | ) | (15,855 | ) | |||||||
Terex Corp. | (600 | ) | (8,106 | ) | |||||||
Thermo Fisher Scientific, Inc. | (1,200 | ) | (53,964 | ) | |||||||
TJX Cos., Inc. | (1,000 | ) | (64,550 | ) | |||||||
Toyota Motor Corp. ADR | (300 | ) | (19,839 | ) | |||||||
VeriSign, Inc. | (500 | ) | (17,860 | ) | |||||||
Verisk Analytics, Inc., Class A | (500 | ) | (20,065 | ) | |||||||
Vertex Pharmaceuticals, Inc. | (300 | ) | (9,963 | ) | |||||||
Viasat, Inc. | (400 | ) | (18,448 | ) | |||||||
Vulcan Materials Co. | (400 | ) | (15,740 | ) | |||||||
Waste Management, Inc. | (400 | ) | (13,084 | ) | |||||||
Weyerhaeuser Co. | (800 | ) | (14,936 | ) | |||||||
Whole Foods Market, Inc. | (1,500 | ) | (104,370 | ) | |||||||
Williams-Sonoma, Inc. | (1,100 | ) | (42,350 | ) | |||||||
World Fuel Services Corp. | (2,050 | ) | (86,059 | ) | |||||||
WW Grainger, Inc. | (900 | ) | (168,471 | ) | |||||||
Zions Bancorporation | (1,300 | ) | (21,164 | ) | |||||||
Zoll Medical Corp. | (300 | ) | (18,954 | ) | |||||||
Total United States common stocks | (6,735,820 | ) | |||||||||
Total common stocks (proceeds $14,487,231) |
(13,430,701 | ) | |||||||||
Preferred stock: (0.07)% | |||||||||||
Germany: (0.07)% | |||||||||||
Porsche Automobil Holding SE, Preference shares (proceeds $19,241). |
(243 | ) | (13,005 | ) | |||||||
Total investments sold short (proceeds $14,506,472) |
(13,443,706 | ) | |||||||||
Total investments, net of investments sold short: 44.84% |
8,107,577 | ||||||||||
Cash and other assets, less liabilities: 55.16% |
9,975,403 | ||||||||||
Net assets: 100.00% | $ | 18,082,980 |
35
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (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 depreciation consisted of:
Gross unrealized appreciation | $ | 753,198 | |||||
Gross unrealized depreciation | (1,789,920 | ) | |||||
Net unrealized depreciation of investments | $ | (1,036,722 | ) |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 71.
* Non-income producing security.
1 All or a portion of these securities have been designated as collateral for open short positions.
2 Amount represents less than 0.005%.
3 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 Relationship Fund.
Security description |
Value 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 9,830,068 | $ | 13,542,979 | $ | 15,201,406 | $ | 8,171,641 | $ | 5,151 |
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
JPMorgan Chase Bank | CAD | 295,000 | USD | 289,112 | 03/05/12 | $ | (55 | ) | |||||||||||
JPMorgan Chase Bank | EUR | 520,000 | USD | 692,471 | 03/05/12 | 19,120 | |||||||||||||
JPMorgan Chase Bank | GBP | 450,000 | USD | 701,399 | 03/05/12 | 2,957 | |||||||||||||
JPMorgan Chase Bank | USD | 411,557 | CAD | 420,000 | 03/05/12 | 139 | |||||||||||||
JPMorgan Chase Bank | USD | 435,172 | EUR | 325,000 | 03/05/12 | (14,328 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 209,308 | GBP | 135,000 | 03/05/12 | 224 | |||||||||||||
JPMorgan Chase Bank | USD | 493,789 | GBP | 315,000 | 03/05/12 | (4,879 | ) | ||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 3,178 |
Futures contracts
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
Index futures buy contracts: | |||||||||||||||||||
E-mini S&P MidCap 400, 3 contracts (USD) | March 2012 | $ | 255,488 | $ | 263,190 | $ | 7,702 | ||||||||||||
E-mini S&P SmallCap 600, 6 contracts (USD) | March 2012 | 239,244 | 248,460 | 9,216 | |||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
Mini Tokyo Price Index, 4 contracts (JPY) | March 2012 | (38,599 | ) | (37,833 | ) | 766 | |||||||||||||
Russell 2000 Mini Index, 4 contracts (USD) | March 2012 | (286,961 | ) | (295,520 | ) | (8,559 | ) | ||||||||||||
Net unrealized appreciation on futures contracts | $ | 9,125 |
36
UBS Market Neutral Multi-Strategy Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 13,112,093 | $ | | $ | | $ | 13,112,093 | |||||||||||
Common stocks sold short | (13,429,945 | ) | | (756 | ) | (13,430,701 | ) | ||||||||||||
Preferred stock | 37,752 | | | 37,752 | |||||||||||||||
Preferred stock sold short | (13,005 | ) | | | (13,005 | ) | |||||||||||||
Investment company | 229,197 | | | 229,197 | |||||||||||||||
Rights | 600 | | | 600 | |||||||||||||||
Short-term investment | | 8,171,641 | | 8,171,641 | |||||||||||||||
Forward foreign currency contracts | | 3,178 | | 3,178 | |||||||||||||||
Futures contracts | 9,125 | | | 9,125 | |||||||||||||||
Total | $ | (54,183 | ) | $ | 8,174,819 | $ | (756 | ) | $ | 8,119,880 |
Level 3 Rollforward Disclosure
The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period:
Common stocks sold short |
Total | ||||||||||
Assets | |||||||||||
Beginning balance | $ | (6,105 | ) | $ | (6,105 | ) | |||||
Purchases | 2,204 | 2,204 | |||||||||
Issuances | (756 | ) | (756 | ) | |||||||
Sales | | | |||||||||
Settlements | | | |||||||||
Accrued discounts (premiums) | | | |||||||||
Total realized gain (loss) | 24,420 | 24,420 | |||||||||
Change in net unrealized appreciation/depreciation | (20,519 | ) | (20,519 | ) | |||||||
Transfers into Level 3 | | | |||||||||
Transfers out of Level 3 | | | |||||||||
Ending balance | $ | (756 | ) | $ | (756 | ) |
The change in net unrealized appreciation/depreciation relating to the Level 3 investments held at December 31, 2011 was $0.
See accompanying notes to financial statements.
37
UBS U.S. Equity Alpha Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS U.S. Equity Alpha Fund (the "Fund") declined 7.28% (Class A shares declined 12.37% after the deduction of the maximum sales charge), while Class Y shares declined 7.19%. The Fund's benchmark, the Russell 1000 Index (the "Index"), declined 4.58% 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 41; 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.)
Stock selection was the main detractor from the Fund's performance during the review period. Additionally, the Fund's exposure to economically sensitive sectors and stocks hurt performance when defensive sectors such as utilities and consumer staples generated the best returns during the period.
Portfolio performance summary1
What worked
• Stock selection among health care names made the largest positive contribution to Fund performance.
Pharmasset, a biotechnology company, was by far the largest contributor to performance during the period. (For details, see "Portfolio highlights.")
Alexion Pharmaceuticals, a biotech company, was a strong performer for the period primarily due to strong sales growth for its hematology treatment Soliris. We believe that Alexion will continue to surprise the market with better-than-expected earnings growth and new indications for Soliris.
• Some of the Fund's financial stocks were positive for relative performance.
Visa outperformed for the year as investors grew more confident that the company's business model and market share will remain largely unaffected by the new Durbin regulations (a part of Dodd-Frank). (For details, see "Portfolio highlights.")
The Fund benefited from our decision to avoid Bank of America, a stock that has a significant weight in the Index. Bank of America declined during the six-month period due to problems with the ongoing integration of its Merrill Lynch acquisition and to headwinds from the bank's mortgage portfolio.
• Apple was a top contributor to active performance. Shares of Apple rallied during the six-month period, following solid quarterly results that easily beat estimates, and were driven by strong iPhone and iPad sales. Analysts have continued to upgrade their earnings estimates for Apple, and the company is attractively valued with a strong balance sheet.
• Several consumer staples stocks contributed to performance during the six-month period. As equity markets struggled during the period, investors bid up the share prices of staples.
Colgate-Palmolive was a significant contributor to performance. The company maintains a strong foothold in the oral hygiene market. Colgate, which makes more than 80% of its sales outside of North America, reported that it expects price increases in emerging markets. We are encouraged by Colgate's recent quarterly report that showed cost-cutting and operating leverage. This allowed the company to report better-than-expected earnings per share. (For details, see "Portfolio highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
38
UBS U.S. Equity Alpha Fund
Kraft Foods, a consumer staples name, also performed well for the period. Kraft announced at the beginning of August 2011 that it will split into two companies, a North American grocery company and a global snack company. (For details, see "Portfolio highlights.")
• Several short positions made a positive contribution to returns when the prices of the stocks declined. Notably, the Fund had a short position in BMC Software, given our belief that the company was reinvesting in lower-margin business units. Additionally, a short position in Halliburton contributed to performance as concerns over oilfield services profits increased during the period based on an unfavorable US regulatory environment. At the beginning of the fourth quarter, there were rumors in the market that Halliburton would have to pay out a settlement regarding the Macondo oil spill, which resulted in a sharp drop in the stock. We believed this drop was overdone, and decided to exit our short position.
What didn't work
• The financial stocks held in the Fund made a negative contribution during the six-month period. Notably, the Fund's positions in Citigroup, Morgan Stanley and MetLife were large detractors from performance. Although the underlying fundamentals of the banking industry improved throughout the period, the stock prices of many financial names fell. The market focused on macro fears about increased financial regulation and its potential impact on future earnings. Concerns about the European debt crisis also put downward pressure on the prices of globally diversified financial firms. We continued to hold all three positions in the Fund at period end, as we believed they remained attractively valued.
• Stock selection in the energy sector was negative for performance as fears of a global recession dominated the equity markets and caused energy stock prices to decline. Ultra Petroleum, Noble Corp. and Peabody Energy were hurt by natural gas prices, which fell below $3 during the period. Coal and crude oil prices also declined. We believe that prices will recover as the economy continues to improve, and that the Fund's energy holdings will benefit. (For additional details on Noble Corp., see "Portfolio highlights.")
• Several stock positions detracted from relative performance during the six months. The Fund held companies that have executed their strategy well and have good fundamentals. During this period of market volatility, however, many of these names were punished. For example, General Motors, an economically sensitive stock, declined during the period. GM has faced competitive headwinds and macroeconomic uncertainty in North America and in Europe. Recently, it has been negatively impacted by the news of fires in its Volt electric vehicles. We believe the company is attractively valued, and expect GM to successfully complete its turnaround.
• The Fund was hindered by its underweight positions in defensive sectors such as utilities and telecommunications. Several companies within these sectors benefited from a pronounced flight-to-quality during the market volatility that characterized the period. The Fund's reduced exposure to these names was a hindrance.
• A short position to Church & Dwight detracted from returns when the company stock price rallied. This consumer staples company benefited from investors' flight to stability. We believe that the company's shares are unattractively priced at current levels, and therefore closed the position prior to period end.
Portfolio highlights
• Pharmasset is a biotechnology company focused on the development of nucleotide hepatitis C virus inhibitors (nucs) taken orally rather than via the traditional injection method. Pharmasset's positive drug trials increased conviction for this product. Shares were up strongly after Gilead, the largest maker of HIV medicines, agreed to buy Pharmasset at a premium. Gilead's purchase shows that the company is intent on becoming the leader in hepatitis medicines.
39
UBS U.S. Equity Alpha Fund
• Visa remains the dominant provider of debit processing to US card issuers, and now has clarity on final debit rules. We believe pricing pressures will be modest, with Visa continuing to enjoy a significant market share, while also benefiting from the long-term transition from cash and check payments to plastic and electronic payment forms. We continue to believe Visa is attractively valued, and remain overweight.
• We believe Colgate-Palmolive is a well-run company with a strong track record of organic growth. The company has a leading market position in favorable categories with a clear focus, such as oral care, and a high-margin, high-growth business with strong brand loyalty. Colgate also benefits from high exposure to the emerging markets, as well as strong capability in innovation and branding. Colgate has an attractive valuation and is a top overweight in the portfolio.
• Kraft Foods is undergoing a turnaround and improvement effort that we believe is not yet fully appreciated by the market. We see a renewed and increased focus on long-term growth by company management since Kraft separated from Altria. The recent acquisition of Cadbury should further improve the company's growth profile, cost structure and economies of scale, especially in Europe and the emerging markets.
• Noble Corp. offers an attractive way to participate in offshore development activity, which is gaining share in oil production relative to onshore, while also mitigating downside risk given its current backlog. Offshore drillers as a group have lagged diversified oil service stocks on concerns over a weak supply/demand balance. However, we believe the deepwater supply/demand balance looks more favorable over the next three to five years. We see incremental demand absorbing new supply, driven by Brazil, West Africa, a return to the Gulf of Mexico and emerging areas that are off most investors' radar screens, such as East Africa, the Black Sea and Asia. Noble should particularly benefit from the resumption of drilling activity in Mexico, where the company currently has a number of idle rigs.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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.
40
UBS U.S. Equity Alpha Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | Inception1 | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A2 | (7.28 | )% | (2.93 | )% | (3.73 | )% | (2.02 | )% | |||||||||||
Class C3 | (7.75 | ) | (3.80 | ) | (4.46 | ) | (2.76 | ) | |||||||||||
Class Y4 | (7.19 | ) | (2.72 | ) | (3.47 | ) | (1.78 | ) | |||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A2 | (12.37 | )% | (8.30 | )% | (4.81 | )% | (3.06 | )% | |||||||||||
Class C3 | (8.67 | ) | (4.76 | ) | (4.46 | ) | (2.76 | ) | |||||||||||
Russell 1000 Index5 | (4.58 | )% | 1.50 | % | (0.02 | )% | 1.25 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A2.55% and 2.04%; Class C3.37% and 2.79%; Class Y2.27% and 1.79%. 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 dividend expense and security loan fees 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 dividend expense and security loan fees for securities sold short), through the period ending October 27, 2012, 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 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the US market. 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://globalam-us.ubs.com/corpweb/performance.do.
41
UBS U.S. Equity Alpha Fund
Top ten equity holdings (unaudited)1,2
As of December 31, 2011
Percentage of net assets |
|||||||
Apple, Inc. | 4.7 | % | |||||
Edison International | 3.3 | ||||||
Adobe Systems, Inc. | 3.1 | ||||||
Wells Fargo & Co. | 3.1 | ||||||
PepsiCo, Inc. | 3.0 | ||||||
Kraft Foods, Inc., Class A | 3.0 | ||||||
NextEra Energy, Inc. | 2.9 | ||||||
Amazon.com, Inc. | 2.9 | ||||||
Visa, Inc., Class A | 2.8 | ||||||
Time Warner, Inc. | 2.7 | ||||||
Total | 31.5 | % |
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.
42
UBS U.S. Equity Alpha Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 4.84 | % | |||||
Air freight & logistics | 2.06 | ||||||
Automobiles | 1.38 | ||||||
Beverages | 3.02 | ||||||
Biotechnology | 4.90 | ||||||
Capital markets | 2.86 | ||||||
Chemicals | 2.62 | ||||||
Commercial banks | 4.72 | ||||||
Commercial services & supplies | 0.56 | ||||||
Communications equipment | 2.51 | ||||||
Computers & peripherals | 6.00 | ||||||
Construction materials | 1.30 | ||||||
Diversified consumer services | 1.04 | ||||||
Diversified financial services | 5.57 | ||||||
Electric utilities | 6.16 | ||||||
Energy equipment & services | 4.30 | ||||||
Food & staples retailing | 3.90 | ||||||
Food products | 2.96 | ||||||
Health care equipment & supplies | 2.79 | ||||||
Health care providers & services | 1.94 | ||||||
Hotels, restaurants & leisure | 3.37 | ||||||
Household products | 2.61 | ||||||
Insurance | 2.70 | ||||||
Internet & catalog retail | 2.90 | ||||||
IT services | 4.20 | ||||||
Life sciences tools & services | 1.06 | ||||||
Machinery | 3.12 | ||||||
Media | 6.86 | ||||||
Metals & mining | 0.52 | ||||||
Oil, gas & consumable fuels | 9.39 | ||||||
Pharmaceuticals | 6.63 | ||||||
Real estate investment trust (REIT) | 1.91 | ||||||
Road & rail | 2.85 | ||||||
Semiconductors & semiconductor equipment | 4.50 | ||||||
Software | 5.08 | ||||||
Specialty retail | 1.23 | ||||||
Textiles, apparel & luxury goods | 1.02 | ||||||
Total common stocks | 125.38 | % | |||||
Investment company | |||||||
SPDR S&P 500 ETF Trust | 2.63 | % | |||||
Short-term investment | 1.04 | ||||||
Total investments before investments sold short | 129.05 | % | |||||
Investments sold short | |||||||
Common stocks | |||||||
Capital markets | (1.12 | ) | |||||
Chemicals | (0.55 | ) | |||||
Commercial banks | (2.42 | ) | |||||
Consumer finance | (0.27 | ) | |||||
Electronic equipment, instruments & components | (0.33 | ) | |||||
Gas utilities | (0.49 | ) | |||||
Health care equipment & supplies | (1.28 | ) | |||||
Health care providers & services | (1.28 | ) | |||||
Hotels, restaurants & leisure | (2.10 | ) | |||||
Household products | (0.82 | ) | |||||
Industrial conglomerates | (1.00 | ) | |||||
IT services | (0.47 | ) | |||||
Life sciences tools & services | (0.39 | ) | |||||
Machinery | (0.70 | ) | |||||
Media | (1.40 | ) | |||||
Multiline retail | (2.06 | ) | |||||
Multi-utilities | (1.65 | ) | |||||
Oil, gas & consumable fuels | (1.66 | ) | |||||
Pharmaceuticals | (2.07 | ) | |||||
Real estate investment trust (REIT) | (0.57 | ) | |||||
Semiconductors & semiconductor equipment | (1.63 | ) | |||||
Software | (1.93 | ) | |||||
Specialty retail | (1.12 | ) | |||||
Trading companies & distributors | (0.46 | ) | |||||
Water utilities | (1.39 | ) | |||||
Total investments sold short | (29.16 | )% | |||||
Total investments, net of investments sold short | 99.89 | ||||||
Cash and other assets, less liabilities | 0.11 | ||||||
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 company's industry diversification was included.
43
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 125.38% | |||||||||||
Aerospace & defense: 4.84% | |||||||||||
Boeing Co.1 | 5,800 | $ | 425,430 | ||||||||
General Dynamics Corp.1 | 7,500 | 498,075 | |||||||||
923,505 | |||||||||||
Air freight & logistics: 2.06% | |||||||||||
FedEx Corp.1 | 4,700 | 392,497 | |||||||||
Automobiles: 1.38% | |||||||||||
General Motors Co.*1 | 13,000 | 263,510 | |||||||||
Beverages: 3.02% | |||||||||||
PepsiCo, Inc.1 | 8,700 | 577,245 | |||||||||
Biotechnology: 4.90% | |||||||||||
Acorda Therapeutics, Inc.*1 | 5,200 | 123,968 | |||||||||
Alexion Pharmaceuticals, Inc.*1 | 3,500 | 250,250 | |||||||||
Amylin Pharmaceuticals, Inc.*1 | 11,200 | 127,456 | |||||||||
Gilead Sciences, Inc.* | 5,900 | 241,487 | |||||||||
Pharmasset, Inc.*1 | 1,500 | 192,300 | |||||||||
935,461 | |||||||||||
Capital markets: 2.86% | |||||||||||
Invesco Ltd. | 13,100 | 263,179 | |||||||||
Morgan Stanley1 | 18,700 | 282,931 | |||||||||
546,110 | |||||||||||
Chemicals: 2.62% | |||||||||||
Celanese Corp., Series A1 | 7,000 | 309,890 | |||||||||
Dow Chemical Co. | 6,600 | 189,816 | |||||||||
499,706 | |||||||||||
Commercial banks: 4.72% | |||||||||||
US Bancorp1 | 11,400 | 308,370 | |||||||||
Wells Fargo & Co.1 | 21,500 | 592,540 | |||||||||
900,910 | |||||||||||
Commercial services & supplies: 0.56% | |||||||||||
Republic Services, Inc. | 3,900 | 107,445 | |||||||||
Communications equipment: 2.51% | |||||||||||
Cisco Systems, Inc.1 | 19,500 | 352,560 | |||||||||
QUALCOMM, Inc.1 | 2,300 | 125,810 | |||||||||
478,370 | |||||||||||
Computers & peripherals: 6.00% | |||||||||||
Apple, Inc.*1 | 2,200 | 891,000 | |||||||||
Hewlett-Packard Co.1 | 9,900 | 255,024 | |||||||||
1,146,024 |
Shares | Value | ||||||||||
Construction materials: 1.30% | |||||||||||
Vulcan Materials Co.1 | 6,300 | $ | 247,905 | ||||||||
Diversified consumer services: 1.04% | |||||||||||
Apollo Group, Inc., Class A*1 | 3,700 | 199,319 | |||||||||
Diversified financial services: 5.57% | |||||||||||
Citigroup, Inc.1 | 16,119 | 424,091 | |||||||||
CME Group, Inc. | 600 | 146,202 | |||||||||
JPMorgan Chase & Co.1 | 14,800 | 492,100 | |||||||||
1,062,393 | |||||||||||
Electric utilities: 6.16% | |||||||||||
Edison International1 | 15,000 | 621,000 | |||||||||
NextEra Energy, Inc.1 | 9,100 | 554,008 | |||||||||
1,175,008 | |||||||||||
Energy equipment & services: 4.30% | |||||||||||
Baker Hughes, Inc. | 2,000 | 97,280 | |||||||||
Ensco PLC ADR | 6,400 | 300,288 | |||||||||
McDermott International, Inc.* | 6,600 | 75,966 | |||||||||
Noble Corp.*1 | 11,500 | 347,530 | |||||||||
821,064 | |||||||||||
Food & staples retailing: 3.90% | |||||||||||
Kroger Co.1 | 19,100 | 462,602 | |||||||||
Wal-Mart Stores, Inc.1 | 4,700 | 280,872 | |||||||||
743,474 | |||||||||||
Food products: 2.96% | |||||||||||
Kraft Foods, Inc., Class A1 | 15,100 | 564,136 | |||||||||
Health care equipment & supplies: 2.79% | |||||||||||
Baxter International, Inc.1 | 4,900 | 242,452 | |||||||||
Medtronic, Inc.1 | 7,600 | 290,700 | |||||||||
533,152 | |||||||||||
Health care providers & services: 1.94% | |||||||||||
HCA Holdings, Inc.*1 | 7,400 | 163,022 | |||||||||
UnitedHealth Group, Inc.1 | 4,100 | 207,788 | |||||||||
370,810 | |||||||||||
Hotels, restaurants & leisure: 3.37% | |||||||||||
Carnival Corp.1 | 10,000 | 326,400 | |||||||||
International Game Technology1 | 18,400 | 316,480 | |||||||||
642,880 | |||||||||||
Household products: 2.61% | |||||||||||
Colgate-Palmolive Co.1 | 5,400 | 498,906 |
44
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Insurance: 2.70% | |||||||||||
Aflac, Inc.1 | 5,300 | $ | 229,278 | ||||||||
MetLife, Inc.1 | 9,200 | 286,856 | |||||||||
516,134 | |||||||||||
Internet & catalog retail: 2.90% | |||||||||||
Amazon.com, Inc.*1 | 3,200 | 553,920 | |||||||||
IT services: 4.20% | |||||||||||
ServiceSource International, Inc.* | 17,500 | 274,575 | |||||||||
Visa, Inc., Class A1 | 5,200 | 527,956 | |||||||||
802,531 | |||||||||||
Life sciences tools & services: 1.06% | |||||||||||
Bio-Rad Laboratories, Inc., Class A*1 | 2,100 | 201,684 | |||||||||
Machinery: 3.12% | |||||||||||
Illinois Tool Works, Inc.1 | 8,400 | 392,364 | |||||||||
PACCAR, Inc.1 | 5,400 | 202,338 | |||||||||
594,702 | |||||||||||
Media: 6.86% | |||||||||||
Comcast Corp., Class A1 | 17,000 | 403,070 | |||||||||
Time Warner, Inc.1 | 14,500 | 524,030 | |||||||||
Viacom, Inc., Class B1 | 8,400 | 381,444 | |||||||||
1,308,544 | |||||||||||
Metals & mining: 0.52% | |||||||||||
Steel Dynamics, Inc.1 | 7,600 | 99,940 | |||||||||
Oil, gas & consumable fuels: 9.39% | |||||||||||
EOG Resources, Inc.1 | 2,800 | 275,828 | |||||||||
EQT Corp. | 6,000 | 328,740 | |||||||||
Exxon Mobil Corp. | 5,600 | 474,656 | |||||||||
Hess Corp.1 | 6,000 | 340,800 | |||||||||
Peabody Energy Corp. | 3,800 | 125,818 | |||||||||
Ultra Petroleum Corp.*1 | 8,300 | 245,929 | |||||||||
1,791,771 | |||||||||||
Pharmaceuticals: 6.63% | |||||||||||
Allergan, Inc.1 | 1,800 | 157,932 | |||||||||
Hospira, Inc.* | 3,100 | 94,147 | |||||||||
Johnson & Johnson1 | 5,400 | 354,132 | |||||||||
Merck & Co., Inc.1 | 12,900 | 486,330 | |||||||||
Teva Pharmaceutical Industries Ltd. ADR | 4,300 | 173,548 | |||||||||
1,266,089 | |||||||||||
Real estate investment trust (REIT): 1.91% | |||||||||||
American Campus Communities, Inc. | 3,700 | 155,252 | |||||||||
Annaly Capital Management, Inc.1 | 13,100 | 209,076 | |||||||||
364,328 |
Shares | Value | ||||||||||
Road & rail: 2.85% | |||||||||||
Hertz Global Holdings, Inc.*1 | 24,600 | $ | 288,312 | ||||||||
Norfolk Southern Corp.1 | 3,500 | 255,010 | |||||||||
543,322 | |||||||||||
Semiconductors & semiconductor equipment: 4.50% | |||||||||||
Broadcom Corp., Class A*1 | 9,700 | 284,792 | |||||||||
Intersil Corp., Class A1 | 35,400 | 369,576 | |||||||||
Skyworks Solutions, Inc.* | 12,600 | 204,372 | |||||||||
858,740 | |||||||||||
Software: 5.08% | |||||||||||
Adobe Systems, Inc.*1 | 21,200 | 599,324 | |||||||||
Symantec Corp.*1 | 23,600 | 369,340 | |||||||||
968,664 | |||||||||||
Specialty retail: 1.23% | |||||||||||
GameStop Corp., Class A*1 | 9,700 | 234,061 | |||||||||
Textiles, apparel & luxury goods: 1.02% | |||||||||||
Coach, Inc. | 3,200 | 195,328 | |||||||||
Total common stocks (cost $23,196,229) |
23,929,588 | ||||||||||
Investment company: 2.63% | |||||||||||
SPDR S&P 500 ETF Trust (cost $495,788) |
4,000 | 502,000 | |||||||||
Short-term investment: 1.04% | |||||||||||
Investment company: 1.04% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $198,205) |
198,205 | 198,205 | |||||||||
Total investments before investments sold short: 129.05% (cost $23,890,222) |
24,629,793 | ||||||||||
Investments sold short: (29.16)% | |||||||||||
Common stocks: (29.16)% | |||||||||||
Capital markets: (1.12)% | |||||||||||
Charles Schwab Corp. | (8,700 | ) | (97,962 | ) | |||||||
Northern Trust Corp. | (1,500 | ) | (59,490 | ) | |||||||
T. Rowe Price Group, Inc. | (1,000 | ) | (56,950 | ) | |||||||
(214,402 | ) | ||||||||||
Chemicals: (0.55)% | |||||||||||
EI Du Pont de Nemours & Co. | (900 | ) | (41,202 | ) | |||||||
Praxair, Inc. | (600 | ) | (64,140 | ) | |||||||
(105,342 | ) |
45
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Continued) | |||||||||||
Common stocks(Continued) | |||||||||||
Commercial banks: (2.42)% | |||||||||||
Associated Banc-Corp. | (5,100 | ) | $ | (56,967 | ) | ||||||
BB&T Corp. | (3,100 | ) | (78,027 | ) | |||||||
M&T Bank Corp. | (900 | ) | (68,706 | ) | |||||||
PNC Financial Services Group, Inc. | (2,600 | ) | (149,942 | ) | |||||||
TCF Financial Corp. | (5,200 | ) | (53,664 | ) | |||||||
Zions Bancorporation | (3,400 | ) | (55,352 | ) | |||||||
(462,658 | ) | ||||||||||
Consumer finance: (0.27)% | |||||||||||
American Express Co. | (1,100 | ) | (51,887 | ) | |||||||
Electronic equipment, instruments & components: (0.33)% | |||||||||||
Jabil Circuit, Inc. | (3,200 | ) | (62,912 | ) | |||||||
Gas utilities: (0.49)% | |||||||||||
Questar Corp. | (4,700 | ) | (93,342 | ) | |||||||
Health care equipment & supplies: (1.28)% | |||||||||||
IDEXX Laboratories, Inc. | (900 | ) | (69,264 | ) | |||||||
Intuitive Surgical, Inc. | (200 | ) | (92,602 | ) | |||||||
Zoll Medical Corp. | (1,300 | ) | (82,134 | ) | |||||||
(244,000 | ) | ||||||||||
Health care providers & services: (1.28)% | |||||||||||
Bio-Reference Labs, Inc. | (4,300 | ) | (69,961 | ) | |||||||
Humana, Inc. | (1,200 | ) | (105,132 | ) | |||||||
Laboratory Corp. of America Holdings | (800 | ) | (68,776 | ) | |||||||
(243,869 | ) | ||||||||||
Hotels, restaurants & leisure: (2.10)% | |||||||||||
Choice Hotels International, Inc. | (2,700 | ) | (102,735 | ) | |||||||
Hyatt Hotels Corp., Class A | (3,200 | ) | (120,448 | ) | |||||||
Starwood Hotels & Resorts Worldwide, Inc. | (3,700 | ) | (177,489 | ) | |||||||
(400,672 | ) | ||||||||||
Household products: (0.82)% | |||||||||||
Church & Dwight Co., Inc. | (3,400 | ) | (155,584 | ) | |||||||
Industrial conglomerates: (1.00)% | |||||||||||
Tyco International Ltd. | (4,100 | ) | (191,511 | ) | |||||||
IT services: (0.47)% | |||||||||||
Cognizant Technology Solutions Corp., Class A |
(1,400 | ) | (90,034 | ) | |||||||
Life sciences tools & services: (0.39)% | |||||||||||
Mettler-Toledo International, Inc. | (500 | ) | (73,855 | ) |
Shares | Value | ||||||||||
Machinery: (0.70)% | |||||||||||
AGCO Corp. | (3,100 | ) | $ | (133,207 | ) | ||||||
Media: (1.40)% | |||||||||||
Discovery Communications, Inc., Class A | (2,500 | ) | (102,425 | ) | |||||||
Lamar Advertising Co., Class A | (6,000 | ) | (165,000 | ) | |||||||
(267,425 | ) | ||||||||||
Multiline retail: (2.06)% | |||||||||||
Dollar General Corp. | (4,700 | ) | (193,358 | ) | |||||||
JC Penney Co., Inc. | (3,300 | ) | (115,995 | ) | |||||||
Nordstrom, Inc. | (1,700 | ) | (84,507 | ) | |||||||
(393,860 | ) | ||||||||||
Multi-utilities: (1.65)% | |||||||||||
Consolidated Edison, Inc. | (2,900 | ) | (179,887 | ) | |||||||
Integrys Energy Group, Inc. | (2,500 | ) | (135,450 | ) | |||||||
(315,337 | ) | ||||||||||
Oil, gas & consumable fuels: (1.66)% | |||||||||||
ConocoPhillips | (700 | ) | (51,009 | ) | |||||||
Pioneer Natural Resources Co. | (2,000 | ) | (178,960 | ) | |||||||
Spectra Energy Corp. | (2,800 | ) | (86,100 | ) | |||||||
(316,069 | ) | ||||||||||
Pharmaceuticals: (2.07)% | |||||||||||
Eli Lilly & Co. | (6,000 | ) | (249,360 | ) | |||||||
Perrigo Co. | (1,500 | ) | (145,950 | ) | |||||||
(395,310 | ) | ||||||||||
Real estate investment trust (REIT): (0.57)% | |||||||||||
AvalonBay Communities, Inc. | (400 | ) | (52,240 | ) | |||||||
Equity Residential | (1,000 | ) | (57,030 | ) | |||||||
(109,270 | ) | ||||||||||
Semiconductors & semiconductor equipment: (1.63)% | |||||||||||
Intel Corp. | (1,900 | ) | (46,075 | ) | |||||||
KLA-Tencor Corp. | (1,600 | ) | (77,200 | ) | |||||||
LSI Corp. | (19,800 | ) | (117,810 | ) | |||||||
Microchip Technology, Inc. | (1,900 | ) | (69,597 | ) | |||||||
(310,682 | ) | ||||||||||
Software: (1.93)% | |||||||||||
BMC Software, Inc. | (3,500 | ) | (114,730 | ) | |||||||
Cadence Design Systems, Inc. | (7,100 | ) | (73,840 | ) | |||||||
Compuware Corp. | (8,800 | ) | (73,216 | ) | |||||||
Red Hat, Inc. | (1,000 | ) | (41,290 | ) | |||||||
Synopsys, Inc. | (2,400 | ) | (65,280 | ) | |||||||
(368,356 | ) |
46
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Investments sold short(Concluded) | |||||||||||
Common stocks(Concluded) | |||||||||||
Specialty retail: (1.12)% | |||||||||||
Abercrombie & Fitch Co., Class A | (1,400 | ) | $ | (68,376 | ) | ||||||
CarMax, Inc. | (2,500 | ) | (76,200 | ) | |||||||
Williams-Sonoma, Inc. | (1,800 | ) | (69,300 | ) | |||||||
(213,876 | ) | ||||||||||
Trading companies & distributors: (0.46)% | |||||||||||
Fastenal Co. | (2,000 | ) | (87,220 | ) | |||||||
Water utilities: (1.39)% | |||||||||||
American Water Works Co., Inc. | (4,700 | ) | (149,742 | ) | |||||||
Aqua America, Inc. | (5,200 | ) | (114,660 | ) | |||||||
(264,402 | ) | ||||||||||
Total investments sold short (proceeds $5,025,201) |
(5,565,082 | ) | |||||||||
Total investments, net of investments sold short: 99.89% |
19,064,711 | ||||||||||
Cash and other assets, less liabilities: 0.11% |
21,574 | ||||||||||
Net assets: 100.00% | $ | 19,086,285 |
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 | $ | 2,419,916 | |||||
Gross unrealized depreciation | (1,680,345 | ) | |||||
Net unrealized appreciation of investments | $ | 739,571 |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 71.
* 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 Relationship Fund.
Security description |
Value 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 221,096 | $ | 6,712,608 | $ | 6,735,499 | $ | 198,205 | $ | 148 |
47
UBS U.S. Equity Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 23,929,588 | $ | | $ | | $ | 23,929,588 | |||||||||||
Common stocks sold short | (5,565,082 | ) | | | (5,565,082 | ) | |||||||||||||
Investment company | 502,000 | | | 502,000 | |||||||||||||||
Short-term investment | | 198,205 | | 198,205 | |||||||||||||||
Total | $ | 18,866,506 | $ | 198,205 | $ | | $ | 19,064,711 |
See accompanying notes to financial statements.
48
UBS U.S. Equity Opportunity Fund
Portfolio performance
Effective December 30, 2011, UBS U.S. Large Cap Value Equity Fund was renamed UBS U.S. Equity Opportunity Fund, and its benchmark was changed from the Russell 1000 Value Index to the Russell 1000 Index. For the purpose of this historical performance analysis, the U.S. Large Cap Value strategy and the Russell 1000 Value Index are used.
For the six months ended December 31, 2011, Class A shares of UBS U.S. Equity Opportunity Fund (the "Fund") declined 10.43% (Class A shares declined 15.33% after the deduction of the maximum sales charge), while Class Y shares declined 10.37%. The Fund's benchmark, the Russell 1000 Value Index (the "Index"), declined 5.22% 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 52; 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.)
Stock selection was the main detractor from the Fund's performance during the review period. Additionally, the Fund's exposure to economically sensitive sectors and stocks hurt performance when defensive sectors such as utilities and consumer staples generated the best returns during the period.
Important Notice About Your Fund
As noted above, as of December 30, 2011, the name and investment policy of UBS U.S. Large Cap Value Equity Fund changed. The purpose of these changes is to broaden and diversify the Fund's opportunity set, and provide greater potential for better risk-adjusted returns for the Fund as a whole. The Fund is now known as UBS U.S. Equity Opportunity Fund, and its benchmark has changed from the Russell 1000 Value Index to the Russell 1000 Index. For comparison purposes, over the six-month reporting period ended December 31, 2011, the Russell 1000 Index declined 4.58%. The investment universe has been expanded to provide the Fund with a greater opportunity to invest in foreign securities and securities with smaller market capitalizations when market conditions warrant such investments. Please see the Fund's prospectus for additional details.
Portfolio performance summary1
What worked
• Several consumer staples stocks were successful during the six-month period. As equity markets struggled, investors bid up the share prices of defensively positioned stocks. The Fund benefited from being overweight to this sector.
Colgate-Palmolive was a significant contributor to performance. The company maintains a strong foothold in the oral hygiene market. Colgate, which makes more than 80% of its sales outside of North America, reported that it expects price increases in emerging markets. Colgate's recent quarterly report, which showed cost-cutting and operating leverage, allowed the company to report better-than-expected earnings per share. (For details, see "Portfolio highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
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UBS U.S. Equity Opportunity Fund
Kraft Foods, another "safe haven" name, also performed well for the period. Kraft announced at the beginning of August 2011 that it will split into two companies, a North American grocery company and a global snack company. (For details, see "Portfolio highlights.")
• Stock selection among health care names, and an overweight to the sector, made a positive contribution to Fund performance. Notably, UnitedHealth Group had strong performance during the period as it continued to do an excellent job of executing in the managed care space and as investors began to realize that the company still had a viable position in the post-healthcare reform world. We sold out of this position prior to period end as it approached our estimate of fair value.
• An underweight to financial stocks was positive for relative performance.
The Fund's positions in Invesco and US Bancorp performed strongly relative to other financial companies that had greater exposure to investment banking and Europe. Both companies have strong, stable franchises without as much regulatory overhang as some of the larger diversified financials. We sold out of Invesco prior to period end as it approached our estimate of fair value.
The Fund benefited from our decision to avoid Bank of America, a stock that has a significant weight in the benchmark index. Bank of America declined during the six-month period due to problems with the ongoing integration of its Merrill Lynch acquisition and to headwinds from the bank's mortgage portfolio.
What didn't work
• A number of financial stocks held in the Fund made a negative contribution during the six-month period. Notably, the Fund's positions in Citigroup, Morgan Stanley and MetLife were large detractors from performance. Although the underlying fundamentals of the banking industry improved throughout the period, the stock prices of many financial names fell. The market focused on macro fears about increased financial regulation and its potential impact on future earnings. Concerns about the European debt crisis also put downward pressure on the prices of globally diversified financial firms. We continue to hold Citigroup and Morgan Stanley, as we believe they continue to present compelling opportunties. However, we sold out of MetLife before period end.
• Stock selection in the energy sector was negative for performance. Shares of Peabody Energy, a coal producer, fell as coal and crude oil prices suffered. Fears of a global recession have dominated the equity markets and caused energy stock prices to decline. Ultra Petroleum was hurt by natural gas prices, which fell below $3 during the period. We believe that prices will recover as the economy continues to improve, and that Ultra will benefit. (For details, see "Portfolio highlights.")
• Several stock positions detracted from relative performance during the six months. We held companies that executed their strategies well, and that have good fundamentals. During this period of market volatility, however, many of these names were punished. For example, General Motors, an economically sensitive stock, declined during the period. GM has faced competitive headwinds and macroeconomic uncertainty in North America and in Europe. Recently, it has been negatively impacted by the news of fires in its Volt electric vehicles. We believe the company is attractively valued, and expect GM to successfully complete its turnaround.
Portfolio highlights
• We believe Colgate-Palmolive is a well-run company with a strong track record of organic growth. The company has a leading market position in favorable categories with a clear focus, such as oral care, and a high-margin, high-growth business with strong brand loyalty. Colgate also benefits from high exposure to the emerging
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UBS U.S. Equity Opportunity Fund
markets, as well as strong capability in innovation and branding. We sold out of this position prior to period end as it approached our estimate of fair value.
• Kraft Foods underwent a turnaround and improvement effort that we believed was not fully appreciated by the market. We saw a renewed and increased focus on long-term growth by company management since Kraft separated from Altria. We sold out of this position prior to period end as it approached our estimate of fair value.
• Ultra Petroleum suffered when the market experienced a flight-to-safety. Energy stocks were punished because investors perceived them as higher-risk and more susceptible to an economic slowdown. Weak natural gas prices have challenged Ultra, even though the company is still earning more than its cost of capital returns. We believe the stock should recover as industry gas volumes begin to come down later in 2012. This should be accelerated by reduced rig counts in key producing regions like the Haynesville shale.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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.
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UBS U.S. Equity Opportunity Fund8
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | (10.43 | )% | (6.12 | )% | (5.29 | )% | 2.16 | % | |||||||||||
Class B2 | (10.88 | ) | (6.85 | ) | (6.01 | ) | 1.695 | ||||||||||||
Class C3 | (10.78 | ) | (6.68 | ) | (5.98 | ) | 1.41 | ||||||||||||
Class Y4 | (10.37 | ) | (5.94 | ) | (5.03 | ) | 2.43 | ||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (15.33 | )% | (11.22 | )% | (6.35 | )% | 1.58 | % | |||||||||||
Class B2 | (15.34 | ) | (11.51 | ) | (6.29 | ) | 1.695 | ||||||||||||
Class C3 | (11.67 | ) | (7.61 | ) | (5.98 | ) | 1.41 | ||||||||||||
Russell 1000 Index6,8 | (4.58 | )% | 1.50 | % | (0.02 | )% | 3.35 | % | |||||||||||
Russell 1000 Value Index7,8 | (5.22 | ) | 0.39 | (2.64 | ) | 3.90 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the December 30, 2011 prospectuses were as follows: Class A1.62% and 1.21%; Class B2.49% and 1.96%; Class C2.41% and 1.96%; Class Y1.49% 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 period ending October 27, 2013, 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 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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. 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.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
6 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 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the US market. 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.
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 Index 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.
8 Effective December 30, 2011, the Fund's official name and benchmark had been changed from UBS U.S. Large Cap Value Equity Fund to UBS U.S. Equity Opportunity Fund; and from the Russell 1000 Value Index to the Russell 1000 Index respectively, which better reflects the Fund's revised investment policies.
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://globalam-us.ubs.com/corpweb/performance.do.
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UBS U.S. Equity Opportunity Fund
Top ten equity holdings (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
Apple, Inc. | 7.6 | % | |||||
Tullow Oil PLC | 4.2 | ||||||
Adobe Systems, Inc. | 3.4 | ||||||
Time Warner, Inc. | 3.4 | ||||||
Dow Chemical Co. | 3.2 | ||||||
Spectrum Brands Holdings, Inc. | 3.1 | ||||||
Telenor ASA | 3.1 | ||||||
Comcast Corp., Class A | 3.1 | ||||||
US Bancorp | 3.0 | ||||||
Pharmasset, Inc. | 3.0 | ||||||
Total | 37.1 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 5.45 | % | |||||
Biotechnology | 9.57 | ||||||
Capital markets | 2.34 | ||||||
Chemicals | 5.53 | ||||||
Commercial banks | 8.32 | ||||||
Computers & peripherals | 7.63 | ||||||
Diversified financial services | 5.04 | ||||||
Diversified telecommunication services | 4.36 | ||||||
Energy equipment & services | 3.35 | ||||||
Health care equipment & supplies | 4.84 | ||||||
Hotels, restaurants & leisure | 2.64 | ||||||
Household products | 3.15 | ||||||
Internet & catalog retail | 2.15 | ||||||
Life sciences tools & services | 1.37 | ||||||
Media | 6.44 | ||||||
Oil, gas & consumable fuels | 9.15 | ||||||
Real estate investment trust (REIT) | 1.42 | ||||||
Semiconductors & semiconductor equipment | 6.50 | ||||||
Software | 3.41 | ||||||
Specialty retail | 2.78 | ||||||
Textiles, apparel & luxury goods | 1.99 | ||||||
Total common stocks | 97.43 | % | |||||
Short-term investment | 1.12 | ||||||
Investment of cash collateral from securities loaned | 2.12 | ||||||
Total investments | 100.67 | % | |||||
Liabilities, in excess of cash and other assets | (0.67 | ) | |||||
Net assets | 100.00 | % |
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UBS U.S. Equity Opportunity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 97.43% | |||||||||||
Aerospace & defense: 5.45% | |||||||||||
General Dynamics Corp. | 16,200 | $ | 1,075,842 | ||||||||
Textron, Inc. | 65,500 | 1,211,095 | |||||||||
2,286,937 | |||||||||||
Biotechnology: 9.57% | |||||||||||
Acorda Therapeutics, Inc.* | 46,800 | 1,115,712 | |||||||||
Alexion Pharmaceuticals, Inc.* | 15,400 | 1,101,100 | |||||||||
Amylin Pharmaceuticals, Inc.* | 47,500 | 540,550 | |||||||||
Pharmasset, Inc.* | 9,800 | 1,256,360 | |||||||||
4,013,722 | |||||||||||
Capital markets: 2.34% | |||||||||||
Morgan Stanley | 65,000 | 983,450 | |||||||||
Chemicals: 5.53% | |||||||||||
Celanese Corp., Series A | 21,600 | 956,232 | |||||||||
Dow Chemical Co. | 47,400 | 1,363,224 | |||||||||
2,319,456 | |||||||||||
Commercial banks: 8.32% | |||||||||||
East West Bancorp, Inc. | 57,000 | 1,125,750 | |||||||||
US Bancorp | 46,600 | 1,260,530 | |||||||||
Wells Fargo & Co. | 40,100 | 1,105,156 | |||||||||
3,491,436 | |||||||||||
Computers & peripherals: 7.63% | |||||||||||
Apple, Inc.* | 7,900 | 3,199,500 | |||||||||
Diversified financial services: 5.04% | |||||||||||
Citigroup, Inc. | 41,954 | 1,103,810 | |||||||||
JPMorgan Chase & Co. | 30,370 | 1,009,802 | |||||||||
2,113,612 | |||||||||||
Diversified telecommunication services: 4.36% | |||||||||||
Hellenic Telecommunications Organization SA |
145,188 | 541,180 | |||||||||
Telenor ASA | 78,529 | 1,288,060 | |||||||||
1,829,240 | |||||||||||
Energy equipment & services: 3.35% | |||||||||||
Baker Hughes, Inc. | 15,200 | 739,328 | |||||||||
McDermott International, Inc.* | 58,000 | 667,580 | |||||||||
1,406,908 | |||||||||||
Health care equipment & supplies: 4.84% | |||||||||||
Baxter International, Inc. | 16,300 | 806,524 | |||||||||
Medtronic, Inc. | 32,000 | 1,224,000 | |||||||||
2,030,524 |
Shares | Value | ||||||||||
Hotels, restaurants & leisure: 2.64% | |||||||||||
Carnival Corp. | 34,000 | $ | 1,109,760 | ||||||||
Household products: 3.15% | |||||||||||
Spectrum Brands Holdings, Inc.* | 48,200 | 1,320,680 | |||||||||
Internet & catalog retail: 2.15% | |||||||||||
Amazon.com, Inc.* | 5,200 | 900,120 | |||||||||
Life sciences tools & services: 1.37% | |||||||||||
Bio-Rad Laboratories, Inc., Class A* | 6,000 | 576,240 | |||||||||
Media: 6.44% | |||||||||||
Comcast Corp., Class A | 54,300 | 1,287,453 | |||||||||
Time Warner, Inc. | 39,200 | 1,416,688 | |||||||||
2,704,141 | |||||||||||
Oil, gas & consumable fuels: 9.15% | |||||||||||
Hess Corp. | 14,000 | 795,200 | |||||||||
Peabody Energy Corp. | 14,600 | 483,406 | |||||||||
Tullow Oil PLC | 80,095 | 1,743,913 | |||||||||
Ultra Petroleum Corp.* | 27,500 | 814,825 | |||||||||
3,837,344 | |||||||||||
Real estate investment trust (REIT): 1.42% | |||||||||||
Annaly Capital Management, Inc. | 37,400 | 596,904 | |||||||||
Semiconductors & semiconductor equipment: 6.50% | |||||||||||
Broadcom Corp., Class A* | 36,200 | 1,062,832 | |||||||||
Intersil Corp., Class A | 72,900 | 761,076 | |||||||||
Skyworks Solutions, Inc.* | 55,800 | 905,076 | |||||||||
2,728,984 | |||||||||||
Software: 3.41% | |||||||||||
Adobe Systems, Inc.* | 50,600 | 1,430,462 | |||||||||
Specialty retail: 2.78% | |||||||||||
GameStop Corp., Class A*1 | 48,400 | 1,167,892 | |||||||||
Textiles, apparel & luxury goods: 1.99% | |||||||||||
Coach, Inc. | 13,700 | 836,248 | |||||||||
Total common stocks (cost $42,160,047) |
40,883,560 | ||||||||||
Short-term investment: 1.12% | |||||||||||
Investment company: 1.12% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $471,927) |
471,927 | 471,927 |
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UBS U.S. Equity Opportunity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
Shares | Value | ||||||||||
Investment of cash collateral from securities loaned: 2.12% | |||||||||||
UBS Private Money Market Fund LLC2 (cost $887,661) |
887,661 | $ | 887,661 | ||||||||
Total investments: 100.67% (cost $43,519,635) |
42,243,148 | ||||||||||
Liabilities, in excess of cash and other assets: (0.67)% |
(281,018 | ) | |||||||||
Net assets100.00% | $ | 41,962,130 |
Notes to portfolio of investments
Aggregate cost for federal income tax purposes was substantially the same as for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | $ | 937,774 | |||||
Gross unrealized depreciation | (2,214,261 | ) | |||||
Net unrealized depreciation of investments | $ | (1,276,487 | ) |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 71.
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2011.
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 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 406,762 | $ | 5,702,475 | $ | 5,637,310 | $ | 471,927 | $ | 322 | |||||||||||||
UBS Private Money Market Fund LLCa | 2,040,331 | 9,682,332 | 10,835,002 | 887,661 | 70 | ||||||||||||||||||
$ | 2,447,093 | $ | 15,384,807 | $ | 16,472,312 | $ | 1,359,588 | $ | 392 |
a 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.
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 40,883,560 | $ | | $ | | $ | 40,883,560 | |||||||||||
Short-term investment | | 471,927 | | 471,927 | |||||||||||||||
Investment of cash collateral from securities loaned | | 887,661 | | 887,661 | |||||||||||||||
Total | $ | 40,883,560 | $ | 1,359,588 | $ | | $ | 42,243,148 |
See accompanying notes to financial statements.
55
UBS U.S. Large Cap Equity Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS U.S. Large Cap Equity Fund (the "Fund") declined 7.60% (Class A shares declined 12.70% after the deduction of the maximum sales charge), while Class Y shares declined 7.46%. The Fund's benchmark, the Russell 1000 Index (the "Index"), declined 4.58% 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 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.)
Stock selection was the main detractor from the Fund's performance during the review period. Additionally, the Fund's exposure to economically sensitive sectors and stocks hurt performance when defensive sectors such as utilities and consumer staples generated the best returns during the period.
Portfolio performance summary1
What worked
• Stock selection among health care names made the largest positive contribution to Fund performance.
Pharmasset, a biotechnology company, was by far the largest contributor to performance during the period. (For details, see "Portfolio highlights.")
Alexion Pharmaceuticals, a biotech company, was a strong performer for the period primarily due to strong sales growth for its hematology treatment Soliris. We believe that Alexion will continue to surprise the market with better-than-expected earnings growth and new indications for Soliris.
• Some of the Fund's financial stocks were positive for relative performance.
Visa outperformed for the year as investors grew more confident that the company's business model and market share will remain largely unaffected by the new Durbin regulations (a part of Dodd-Frank). (For details, see "Portfolio highlights.")
The Fund did not hold Bank of America, a stock that had a significant weight in the benchmark index. Bank of America declined during the six months under review, due to problems relating to the ongoing integration of its Merrill Lynch acquisition and due to headwinds from the bank's mortgage portfolio.
• Several consumer staples stocks were successful during the six months. As equity markets struggled during the period, investors bid up the share prices of staples.
Colgate-Palmolive was a significant contributor to performance. The company maintains a strong foothold in the oral hygiene market. Colgate, which makes more than 80% of its sales outside of North America, reported that it expects price increases in emerging markets. We are encouraged by Colgate's recent quarterly report that showed cost-cutting and operating leverage. This allowed the company to report better-than-expected earnings per share. (For details, see "Portfolio highlights.")
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
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UBS U.S. Large Cap Equity Fund
Kraft Foods, a consumer staples name, also performed well for the period. Kraft announced at the beginning of August 2011 that it will split into two companies, a North American grocery company and a global snack company. (For details, see "Portfolio highlights.")
• Apple was a top contributor to active performance. Shares of Apple rallied during the six months, following solid quarterly results that easily beat estimates and were driven by strong iPhone and iPad sales. Analysts have continued to upgrade their earnings estimates for Apple, and the company is attractively valued with a strong balance sheet.
What didn't work
• The Fund was hindered by its underweight positions in defensive sectors such as consumer staples and telecommunications. Several companies within these sectors benefited from a pronounced flight to quality during the market volatility that characterized the period. The Fund's reduced exposure to these names was a hindrance.
• The financial stocks held in the Fund made a negative contribution during the six-month period. Notably, the Fund's positions in Citigroup, Morgan Stanley and MetLife were large detractors from performance. Although the underlying fundamentals of the banking industry improved throughout the period, the stock prices of many financial names fell. The market focused on macro fears about increased financial regulation and its potential impact on future earnings. Concerns about the European debt crisis also put downward pressure on the prices of globally diversified financial firms.
• Stock selection in the energy sector was negative for performance. Ultra Petroleum was hurt by natural gas prices, which fell below $3 during the period. We believe that prices will recover as the economy continues to improve, and that Ultra will benefit. (For details, see "Portfolio highlights.") Shares of Peabody Energy, a coal producer, fell as coal and crude oil prices suffered. Fears of a global recession have dominated the equity markets and caused energy stock prices to decline.
• Several stock positions detracted from relative performance during the six months.
General Motors, an economically sensitive stock, declined during the period. GM has faced competitive headwinds and macroeconomic uncertainty in North America and in Europe. Recently, it has been negatively impacted by the news of fires in its Volt electric vehicles. We believe the company is attractively valued, and expect GM to successfully complete its turnaround.
Shares of Hewlett-Packard declined due to continued management instability. After CEO Mark Hurd resigned amid allegations of misconduct, his successor announced that the company would exit the computer business. The board overruled that business plan and brought in Meg Whitman, the third CEO in less than a year. We believe H-P's underlying business is strong, and that the stock will recover as the management situation stabilizes.
Portfolio highlights
• Pharmasset is a biotechnology company focused on the development of nucleotide hepatitis C virus inhibitors (nucs) taken orally rather than via the traditional injection method. Pharmasset's positive drug trials increased conviction for this product. Shares were up strongly after Gilead, the largest maker of HIV medicines, agreed to buy Pharmasset at a premium. Gilead's purchase shows that the company is intent on becoming the leader in hepatitis medicines.
• Visa remains the dominant provider of debit processing to US card issuers, and now has clarity on final debit rules. We believe pricing pressures will be modest, with Visa continuing to enjoy a significant market share, while
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UBS U.S. Large Cap Equity Fund
also benefiting from the long-term transition from cash and check payments to plastic and electronic payment forms. We continue to believe Visa is attractively valued, and remain overweight.
• We believe Colgate-Palmolive is a well-run company with a strong track record of organic growth. The company has a leading market position in favorable categories with a clear focus, such as oral care, and a high-margin, high-growth business with strong brand loyalty. Colgate also benefits from high exposure to the emerging markets, as well as strong capability in innovation and branding. Colgate has an attractive valuation and is a top overweight in the portfolio.
• Kraft Foods is undergoing a turnaround and improvement effort that we believe is not yet fully appreciated by the market. We see a renewed and increased focus on long-term growth by company management since Kraft separated from Altria. The recent acquisition of Cadbury should further improve the company's growth profile, cost structure and economies of scale, especially in Europe and the emerging markets.
• Ultra Petroleum suffered when the market experienced a flight to safety. Energy stocks were punished as investors perceived them as higher-risk and more susceptible to an economic slowdown. Weak natural gas prices have challenged Ultra, even though the company is still earning more than its cost of capital returns. We believe the stock should recover as industry gas volumes begin to come down later in 2012. This should be accelerated by reduced rig counts in key producing regions like the Haynesville shale.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 U.S. Large Cap Equity Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | (7.60 | )% | (3.13 | )% | (2.84 | )% | 2.75 | % | |||||||||||
Class B2 | (7.98 | ) | (3.84 | ) | (3.57 | ) | 2.285 | ||||||||||||
Class C3 | (8.00 | ) | (3.88 | ) | (3.56 | ) | 2.00 | ||||||||||||
Class Y4 | (7.46 | ) | (2.83 | ) | (2.57 | ) | 3.05 | ||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (12.70 | )% | (8.44 | )% | (3.93 | )% | 2.17 | % | |||||||||||
Class B2 | (12.58 | ) | (8.65 | ) | (3.93 | ) | 2.285 | ||||||||||||
Class C3 | (8.92 | ) | (4.84 | ) | (3.56 | ) | 2.00 | ||||||||||||
Russell 1000 Index6 | (4.58 | )% | 1.50 | % | (0.02 | )% | 3.35 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.19% and 1.20%; Class B2.06% and 1.95%; Class C2.00% and 1.95%; Class Y0.94% and 0.95%. Net expenses reflect fee waivers and/or expense reimbursements/recoupments, 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 period ending October 27, 2012, 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 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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. 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.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
6 The Russell 1000 Index is designed to measures 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 US market. 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://globalam-us.ubs.com/corpweb/performance.do.
59
UBS U.S. Large Cap Equity Fund
Top ten equity holdings (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
Apple, Inc. | 4.1 | % | |||||
Wells Fargo & Co. | 2.8 | ||||||
Kraft Foods, Inc., Class A | 2.5 | ||||||
Comcast Corp., Class A | 2.2 | ||||||
General Dynamics Corp. | 2.2 | ||||||
Time Warner, Inc. | 2.2 | ||||||
Exxon Mobil Corp. | 2.1 | ||||||
JPMorgan Chase & Co. | 2.1 | ||||||
Adobe Systems, Inc. | 2.1 | ||||||
Citigroup, Inc. | 2.0 | ||||||
Total | 24.3 | % |
Industry diversification (unaudited)
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 5.47 | % | |||||
Air freight & logistics | 1.79 | ||||||
Automobiles | 1.22 | ||||||
Biotechnology | 3.67 | ||||||
Capital markets | 2.46 | ||||||
Chemicals | 3.19 | ||||||
Commercial banks | 4.31 | ||||||
Communications equipment | 1.99 | ||||||
Computers & peripherals | 5.22 | ||||||
Construction materials | 0.70 | ||||||
Diversified consumer services | 0.93 | ||||||
Diversified financial services | 5.16 | ||||||
Electric utilities | 2.66 | ||||||
Energy equipment & services | 4.90 | ||||||
Food & staples retailing | 1.58 | ||||||
Food products | 2.49 | ||||||
Health care equipment & supplies | 3.01 | ||||||
Health care providers & services | 2.30 | ||||||
Hotels, restaurants & leisure | 2.53 | ||||||
Household products | 2.01 | ||||||
Insurance | 2.43 | ||||||
Internet & catalog retail | 1.40 | ||||||
IT services | 2.16 | ||||||
Life sciences tools & services | 0.51 | ||||||
Machinery | 1.93 | ||||||
Media | 5.64 | ||||||
Multiline retail | 1.42 | ||||||
Oil, gas & consumable fuels | 7.12 | ||||||
Pharmaceuticals | 4.98 | ||||||
Real estate investment trust (REIT) | 0.89 | ||||||
Road & rail | 1.47 | ||||||
Semiconductors & semiconductor equipment | 3.16 | ||||||
Software | 3.75 | ||||||
Specialty retail | 0.99 | ||||||
Textiles, apparel & luxury goods | 1.67 | ||||||
Total common stocks | 97.11 | % | |||||
Short-term investment | 3.12 | ||||||
Investment of cash collateral from securities loaned | 0.64 | ||||||
Total investments | 100.87 | % | |||||
Liabilities, in excess of cash and other assets | (0.87 | ) | |||||
Net assets | 100.00 | % |
60
UBS U.S. Large Cap Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 97.11% | |||||||||||
Aerospace & defense: 5.47% | |||||||||||
Boeing Co. | 54,600 | $ | 4,004,910 | ||||||||
General Dynamics Corp. | 66,700 | 4,429,547 | |||||||||
Textron, Inc. | 142,400 | 2,632,976 | |||||||||
11,067,433 | |||||||||||
Air freight & logistics: 1.79% | |||||||||||
FedEx Corp. | 43,400 | 3,624,334 | |||||||||
Automobiles: 1.22% | |||||||||||
General Motors Co.* | 121,400 | 2,460,778 | |||||||||
Biotechnology: 3.67% | |||||||||||
Acorda Therapeutics, Inc.* | 56,100 | 1,337,424 | |||||||||
Alexion Pharmaceuticals, Inc.* | 37,700 | 2,695,550 | |||||||||
Amylin Pharmaceuticals, Inc.* | 100,000 | 1,138,000 | |||||||||
Gilead Sciences, Inc.* | 55,300 | 2,263,429 | |||||||||
7,434,403 | |||||||||||
Capital markets: 2.46% | |||||||||||
Invesco Ltd. | 116,100 | 2,332,449 | |||||||||
Morgan Stanley | 174,600 | 2,641,698 | |||||||||
4,974,147 | |||||||||||
Chemicals: 3.19% | |||||||||||
Celanese Corp., Series A | 76,900 | 3,404,363 | |||||||||
Dow Chemical Co. | 105,700 | 3,039,932 | |||||||||
6,444,295 | |||||||||||
Commercial banks: 4.31% | |||||||||||
US Bancorp | 115,500 | 3,124,275 | |||||||||
Wells Fargo & Co. | 203,200 | 5,600,192 | |||||||||
8,724,467 | |||||||||||
Communications equipment: 1.99% | |||||||||||
Cisco Systems, Inc. | 202,400 | 3,659,392 | |||||||||
QUALCOMM, Inc. | 6,600 | 361,020 | |||||||||
4,020,412 | |||||||||||
Computers & peripherals: 5.22% | |||||||||||
Apple, Inc.* | 20,400 | 8,262,000 | |||||||||
Hewlett-Packard Co. | 89,300 | 2,300,368 | |||||||||
10,562,368 | |||||||||||
Construction materials: 0.70% | |||||||||||
Martin Marietta Materials, Inc.1 | 18,900 | 1,425,249 | |||||||||
Diversified consumer services: 0.93% | |||||||||||
Apollo Group, Inc., Class A* | 35,100 | 1,890,837 |
Shares | Value | ||||||||||
Diversified financial services: 5.16% | |||||||||||
Citigroup, Inc. | 155,530 | $ | 4,091,994 | ||||||||
CME Group, Inc. | 8,700 | 2,119,929 | |||||||||
JPMorgan Chase & Co. | 127,200 | 4,229,400 | |||||||||
10,441,323 | |||||||||||
Electric utilities: 2.66% | |||||||||||
Edison International | 62,500 | 2,587,500 | |||||||||
NextEra Energy, Inc. | 46,000 | 2,800,480 | |||||||||
5,387,980 | |||||||||||
Energy equipment & services: 4.90% | |||||||||||
Baker Hughes, Inc. | 45,000 | 2,188,800 | |||||||||
Ensco PLC ADR | 55,700 | 2,613,444 | |||||||||
McDermott International, Inc.* | 222,700 | 2,563,277 | |||||||||
Noble Corp.* | 84,600 | 2,556,612 | |||||||||
9,922,133 | |||||||||||
Food & staples retailing: 1.58% | |||||||||||
Kroger Co. | 131,600 | 3,187,352 | |||||||||
Food products: 2.49% | |||||||||||
Kraft Foods, Inc., Class A | 135,100 | 5,047,336 | |||||||||
Health care equipment & supplies: 3.01% | |||||||||||
Baxter International, Inc. | 52,500 | 2,597,700 | |||||||||
Medtronic, Inc. | 91,200 | 3,488,400 | |||||||||
6,086,100 | |||||||||||
Health care providers & services: 2.30% | |||||||||||
HCA Holdings, Inc.* | 82,800 | 1,824,084 | |||||||||
UnitedHealth Group, Inc. | 55,800 | 2,827,944 | |||||||||
4,652,028 | |||||||||||
Hotels, restaurants & leisure: 2.53% | |||||||||||
Carnival Corp. | 87,900 | 2,869,056 | |||||||||
International Game Technology | 131,200 | 2,256,640 | |||||||||
5,125,696 | |||||||||||
Household products: 2.01% | |||||||||||
Colgate-Palmolive Co. | 44,100 | 4,074,399 | |||||||||
Insurance: 2.43% | |||||||||||
Aflac, Inc. | 55,000 | 2,379,300 | |||||||||
MetLife, Inc. | 81,400 | 2,538,052 | |||||||||
4,917,352 | |||||||||||
Internet & catalog retail: 1.40% | |||||||||||
Amazon.com, Inc.* | 16,400 | 2,838,840 |
61
UBS U.S. Large Cap Equity Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
IT services: 2.16% | |||||||||||
ServiceSource International, Inc.* | 71,500 | $ | 1,121,835 | ||||||||
Visa, Inc., Class A | 32,000 | 3,248,960 | |||||||||
4,370,795 | |||||||||||
Life sciences tools & services: 0.51% | |||||||||||
Bio-Rad Laboratories, Inc., Class A* | 10,700 | 1,027,628 | |||||||||
Machinery: 1.93% | |||||||||||
Illinois Tool Works, Inc. | 83,600 | 3,904,956 | |||||||||
Media: 5.64% | |||||||||||
Comcast Corp., Class A | 187,300 | 4,440,883 | |||||||||
Time Warner, Inc. | 120,800 | 4,365,712 | |||||||||
Viacom, Inc., Class B | 57,400 | 2,606,534 | |||||||||
11,413,129 | |||||||||||
Multiline retail: 1.42% | |||||||||||
Kohl's Corp. | 58,100 | 2,867,235 | |||||||||
Oil, gas & consumable fuels: 7.12% | |||||||||||
EOG Resources, Inc. | 31,500 | 3,103,065 | |||||||||
Exxon Mobil Corp. | 50,600 | 4,288,856 | |||||||||
Hess Corp. | 56,800 | 3,226,240 | |||||||||
Peabody Energy Corp. | 52,000 | 1,721,720 | |||||||||
Ultra Petroleum Corp.* | 69,477 | 2,058,603 | |||||||||
14,398,484 | |||||||||||
Pharmaceuticals: 4.98% | |||||||||||
Allergan, Inc. | 21,900 | 1,921,506 | |||||||||
Hospira, Inc.* | 71,900 | 2,183,603 | |||||||||
Merck & Co., Inc. | 106,200 | 4,003,740 | |||||||||
Teva Pharmaceutical Industries Ltd. ADR | 48,700 | 1,965,532 | |||||||||
10,074,381 | |||||||||||
Real estate investment trust (REIT): 0.89% | |||||||||||
Annaly Capital Management, Inc. | 112,800 | 1,800,288 |
Shares | Value | ||||||||||
Road & rail: 1.47% | |||||||||||
Hertz Global Holdings, Inc.* | 253,800 | $ | 2,974,536 | ||||||||
Semiconductors & semiconductor equipment: 3.16% | |||||||||||
Atmel Corp.* | 123,200 | 997,920 | |||||||||
Broadcom Corp., Class A* | 63,000 | 1,849,680 | |||||||||
Intersil Corp., Class A | 171,100 | 1,786,284 | |||||||||
Skyworks Solutions, Inc.* | 108,000 | 1,751,760 | |||||||||
6,385,644 | |||||||||||
Software: 3.75% | |||||||||||
Adobe Systems, Inc.* | 147,800 | 4,178,306 | |||||||||
Symantec Corp.* | 218,100 | 3,413,265 | |||||||||
7,591,571 | |||||||||||
Specialty retail: 0.99% | |||||||||||
GameStop Corp., Class A* | 82,800 | 1,997,964 | |||||||||
Textiles, apparel & luxury goods: 1.67% | |||||||||||
Coach, Inc. | 55,400 | 3,381,616 | |||||||||
Total common stocks (cost $188,620,966) |
196,497,489 | ||||||||||
Short-term investment: 3.12% | |||||||||||
Investment company: 3.12% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $6,305,582) |
6,305,582 | 6,305,582 | |||||||||
Investment of cash collateral from securities loaned: 0.64% | |||||||||||
UBS Private Money Market Fund LLC2 (cost $1,291,012) |
1,291,012 | 1,291,012 | |||||||||
Total investments: 100.87% (cost $196,217,560) |
204,094,083 | ||||||||||
Liabilities, in excess of cash and other assets: (0.87)% |
(1,767,627 | ) | |||||||||
Net assets: 100.00% | $ | 202,326,456 |
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 | $ | 22,701,492 | |||||
Gross unrealized depreciation | (14,824,969 | ) | |||||
Net unrealized appreciation of investments | $ | 7,876,523 |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 71.
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2011.
62
UBS U.S. Large Cap Equity Fund
Portfolio of investments
December 31, 2011 (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 Funds.
Security description |
Value 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 3,069,181 | $ | 29,889,415 | $ | 26,653,014 | $ | 6,305,582 | $ | 1,789 | |||||||||||||
UBS Private Money Market Fund LLCa | 10,614,564 | 33,959,901 | 43,283,453 | 1,291,012 | 275 | ||||||||||||||||||
$ | 13,683,745 | $ | 63,849,316 | $ | 69,936,467 | $ | 7,596,594 | $ | 2,064 |
a 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.
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 196,497,489 | $ | | $ | | $ | 196,497,489 | |||||||||||
Short-term investment | | 6,305,582 | | 6,305,582 | |||||||||||||||
Investment of cash collateral from securities loaned | | 1,291,012 | | 1,291,012 | |||||||||||||||
Total | $ | 196,497,489 | $ | 7,596,594 | $ | | $ | 204,094,083 |
See accompanying notes to financial statements.
63
UBS U.S. Small Cap Growth Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS U.S. Small Cap Growth Fund (the "Fund") declined 9.63% (Class A shares declined 14.59% after the deduction of the maximum sales charge), while Class Y shares declined 9.50%. The Fund's benchmark, the Russell 2000 Growth Index (the "Index"), declined 10.59% 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 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.)
Both the Fund and its benchmark posted negative returns during the review period; however, the Fund did outperform its benchmark, primarily due to stock selection decisions.
Portfolio performance summary1
What worked
• Stock selection in health care was the main driver of relative returns. Though the sector as a whole declined, the Fund's health care names showed gains during the period.
Shares of Pharmasset, a biotechnology company, rose during the six-month period and was a large contributor to performance. (For details, see "Portfolio highlights.")
Questcor Pharmaceuticals was up sharply after the company reported strong third quarter results that exceeded consensus estimates. Earnings were driven by sales growth of Acthar, a drug developed for the treatment of multiple sclerosis and nephrotic syndrome.
ViroPharma, a biotechnology company, saw its shares rise after announcing a supplementary NDA (New Drug Application) approval for its Vancocin product. The new label should qualify Vancocin for an additional three years of market exclusivity.
• The Fund's small cash position contributed positively to performance as the equity market declined during the summer.
• An underweight to energy stocks was beneficial for results during the six months. The Fund's sector allocations are a by-product of our bottom-up stock selection process. As many energy stocks underperformed, the Fund benefited from its reduced exposure to these names.
• Stock selection decisions within the information technology sector were positive for performance. OSI Systems (for details, see "Portfolio highlights") generated solid performance, as did Taleo Corp. The latter, a provider of on-demand talent management solutions, gained after its competitor, SuccessFactors Inc., agreed to be acquired by SAP for $3.4 billion.
What didn't work
• Stock selection in the consumer staples sector detracted from relative returns. Notably, Diamond Foods, a branded nut and snack products company, saw its shares fall amid questions about how Diamond compensates its walnut growers. Investors grew concerned that the walnut issue would lead to a delay or cancellation of the previously announced acquisition of Pringles, as well as a lower stock price. We sold out of the position towards the end of the reporting period.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
64
UBS U.S. Small Cap Growth Fund
• Several of the Fund's information technology holdings underperformed during the period.
Polycom Inc., a supplier of video and voice conferencing solutions, saw its shares fall after the company announced increased operating expenses in 2012.
Shares of Rovi Corp., a provider of solutions to search, manage and protect digital media, declined after management provided a cautious 2012 outlook.
Acme Packet, a provider of networking equipment, underperformed as investors worried that the company's service provider customers remain cautious on capital expenditures.
• Certain consumer discretionary holdings generated poor results during the six months. Notably, the stock price of Imax Corp. was under pressure due to weaker-than-expected box office results. We added to our position during the dip. (For details, see "Portfolio highlights.")
Portfolio highlights
• Pharmasset's positive drug trials increased conviction for its hepatitis C virus inhibitor. Shares were up strongly after Gilead, the largest maker of HIV medicines, agreed to buy Pharmasset at a significant premium in the fourth quarter. Gilead's purchase shows that the company is intent on becoming the leader in hepatitis medicines. We sold out of this position prior to period end, as we felt that Pharmasset's upside potential was capped when it was purchased by Gilead.
• OSI Systems Inc. is a manufacturer of security inspection systems and medical monitoring systems. Its shares rose after the company reported strong quarterly results with strong bookings and backlog growth. The company recently announced a major deal with the port of Puerto Rico, in which OSI will provide equipment, as well as turnkey cargo screening services at the port. The company is also in the process of launching a new CT scanner for airport baggage screening, which can operate at three times the speed of current scanners with similar accuracy rates.
• IMAX designs and manufactures projection and sound systems for large-format motion picture presentation and production in both 2D and 3D formats. IMAX stands to benefit from the recent trend toward premium movie-going experiences. Several developments should lead to greater adoption of the IMAX platform by studios and operators. These include a lower cost to convert films and theatre screens to IMAX, as well as greater consumer acceptance. The company's business model now includes a percentage of the box office revenues, which, in our view, should allow IMAX to grow profitability.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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. Small Cap Growth Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | (9.63 | )% | (0.55 | )% | 1.32 | % | 4.81 | % | |||||||||||
Class B2 | (9.93 | ) | (1.33 | ) | 0.58 | 4.355 | |||||||||||||
Class C3 | (9.95 | ) | (1.26 | ) | 0.57 | 4.03 | |||||||||||||
Class Y4 | (9.50 | ) | (0.33 | ) | 1.58 | 5.07 | |||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (14.59 | )% | (6.04 | )% | 0.17 | % | 4.22 | % | |||||||||||
Class B2 | (14.43 | ) | (6.27 | ) | 0.21 | 4.355 | |||||||||||||
Class C3 | (10.85 | ) | (2.25 | ) | 0.57 | 4.03 | |||||||||||||
Russell 2000 Growth Index6 | (10.59 | )% | (2.91 | )% | 2.09 | % | 4.48 | % |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.55% and 1.41%; Class B2.26% and 2.16%; Class C2.38% and 2.16%; Class Y1.14% and 1.16%. Net expenses reflect fee waivers and/or expense reimbursements/recoupments, 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 dividend expense and security loan fees 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 dividend expense and security loan fees for securities sold short), through the period ending October 27, 2012, 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 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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. 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.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
6 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 Index companies with higher price-to-value 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://globalam-us.ubs.com/corpweb/performance.do.
66
UBS U.S. Small Cap Growth Fund
Top ten equity holdings (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
OSI Systems, Inc. | 2.5 | % | |||||
SM Energy Co. | 2.2 | ||||||
Ultimate Software Group, Inc. | 1.9 | ||||||
Taleo Corp., Class A | 1.8 | ||||||
The Men's Wearhouse, Inc. | 1.8 | ||||||
Zoll Medical Corp. | 1.7 | ||||||
Tenneco, Inc. | 1.7 | ||||||
Cepheid, Inc. | 1.7 | ||||||
HMS Holdings Corp. | 1.6 | ||||||
Chart Industries, Inc. | 1.6 | ||||||
Total | 18.5 | % |
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Air freight & logistics | 1.26 | % | |||||
Auto components | 1.72 | ||||||
Biotechnology | 6.52 | ||||||
Chemicals | 2.38 | ||||||
Commercial banks | 1.05 | ||||||
Commercial services & supplies | 1.06 | ||||||
Communications equipment | 5.03 | ||||||
Computers & peripherals | 1.45 | ||||||
Construction & engineering | 1.28 | ||||||
Containers & packaging | 1.54 | ||||||
Distributors | 1.38 | ||||||
Electrical equipment | 2.25 | ||||||
Electronic equipment, instruments & components | 4.63 | ||||||
Energy equipment & services | 2.66 | ||||||
Food & staples retailing | 2.01 | ||||||
Food products | 1.62 | ||||||
Health care equipment & supplies | 4.95 | ||||||
Health care providers & services | 6.18 | ||||||
Health care technology | 0.95 | ||||||
Hotels, restaurants & leisure | 4.51 | ||||||
Household durables | 0.54 | ||||||
Internet & catalog retail | 0.55 | ||||||
Internet software & services | 0.54 | ||||||
Machinery | 5.24 | ||||||
Media | 1.51 | ||||||
Metals & mining | 0.47 | ||||||
Oil, gas & consumable fuels | 6.45 | ||||||
Pharmaceuticals | 3.99 | ||||||
Real estate investment trust (REIT) | 1.47 | ||||||
Road & rail | 2.26 | ||||||
Semiconductors & semiconductor equipment | 5.04 | ||||||
Software | 10.85 | ||||||
Specialty retail | 3.65 | ||||||
Textiles, apparel & luxury goods | 1.18 | ||||||
Total common stocks | 98.17 | % | |||||
Investment company | |||||||
iShares Russell 2000 Growth Index Fund | 1.22 | ||||||
Short-term investment | 1.05 | ||||||
Investment of cash collateral from securities loaned | 5.85 | ||||||
Total investments | 106.29 | % | |||||
Liabilities, in excess of cash and other assets | (6.29 | ) | |||||
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.
67
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 98.17% | |||||||||||
Air freight & logistics: 1.26% | |||||||||||
Hub Group, Inc., Class A* | 51,300 | $ | 1,663,659 | ||||||||
Auto components: 1.72% | |||||||||||
Tenneco, Inc.* | 76,100 | 2,266,258 | |||||||||
Biotechnology: 6.52% | |||||||||||
Amarin Corp. PLC ADR* | 62,200 | 465,878 | |||||||||
Ariad Pharmaceuticals, Inc.* | 48,300 | 591,675 | |||||||||
Cepheid, Inc.* | 64,800 | 2,229,768 | |||||||||
Emergent Biosolutions, Inc.* | 36,100 | 607,924 | |||||||||
Exact Sciences Corp.* | 122,800 | 997,136 | |||||||||
Halozyme Therapeutics, Inc.* | 55,700 | 529,707 | |||||||||
Incyte Corp. Ltd.*1 | 46,500 | 697,965 | |||||||||
Ironwood Pharmaceuticals, Inc.* | 64,000 | 766,080 | |||||||||
Medivation, Inc.* | 17,300 | 797,703 | |||||||||
Seattle Genetics, Inc.*1 | 54,000 | 902,610 | |||||||||
8,586,446 | |||||||||||
Chemicals: 2.38% | |||||||||||
LSB Industries, Inc.* | 49,900 | 1,398,697 | |||||||||
Solutia, Inc.* | 100,900 | 1,743,552 | |||||||||
3,142,249 | |||||||||||
Commercial banks: 1.05% | |||||||||||
Columbia Banking System, Inc. | 18,500 | 356,495 | |||||||||
Webster Financial Corp. | 50,100 | 1,021,539 | |||||||||
1,378,034 | |||||||||||
Commercial services & supplies: 1.06% | |||||||||||
Clean Harbors, Inc.* | 22,000 | 1,402,060 | |||||||||
Communications equipment: 5.03% | |||||||||||
Acme Packet, Inc.* | 27,800 | 859,298 | |||||||||
Aruba Networks, Inc.* | 87,300 | 1,616,796 | |||||||||
Finisar Corp.* | 92,421 | 1,547,590 | |||||||||
Polycom, Inc.* | 96,000 | 1,564,800 | |||||||||
Riverbed Technology, Inc.* | 44,000 | 1,034,000 | |||||||||
6,622,484 | |||||||||||
Computers & peripherals: 1.45% | |||||||||||
Fusion-io, Inc.*1 | 34,100 | 825,220 | |||||||||
OCZ Technology Group, Inc.*1 | 164,800 | 1,089,328 | |||||||||
1,914,548 | |||||||||||
Construction & engineering: 1.28% | |||||||||||
EMCOR Group, Inc. | 62,700 | 1,680,987 | |||||||||
Containers & packaging: 1.54% | |||||||||||
Rock-Tenn Co., Class A | 35,156 | 2,028,501 |
Shares | Value | ||||||||||
Distributors: 1.38% | |||||||||||
LKQ Corp.* | 60,300 | $ | 1,813,824 | ||||||||
Electrical equipment: 2.25% | |||||||||||
EnerSys* | 54,400 | 1,412,768 | |||||||||
Regal-Beloit Corp. | 30,500 | 1,554,585 | |||||||||
2,967,353 | |||||||||||
Electronic equipment, instruments & components: 4.63% | |||||||||||
InvenSense, Inc.* | 116,600 | 1,161,336 | |||||||||
OSI Systems, Inc.* | 66,900 | 3,263,382 | |||||||||
Tech Data Corp.* | 33,900 | 1,674,999 | |||||||||
6,099,717 | |||||||||||
Energy equipment & services: 2.66% | |||||||||||
Key Energy Services, Inc.* | 138,600 | 2,144,142 | |||||||||
Pioneer Drilling Co.* | 140,900 | 1,363,912 | |||||||||
3,508,054 | |||||||||||
Food & staples retailing: 2.01% | |||||||||||
Susser Holdings Corp.* | 40,800 | 922,896 | |||||||||
United Natural Foods, Inc.* | 43,200 | 1,728,432 | |||||||||
2,651,328 | |||||||||||
Food products: 1.62% | |||||||||||
TreeHouse Foods, Inc.* | 32,600 | 2,131,388 | |||||||||
Health care equipment & supplies: 4.95% | |||||||||||
HeartWare International, Inc.*1 | 10,100 | 696,900 | |||||||||
Insulet Corp.* | 71,200 | 1,340,696 | |||||||||
ResMed, Inc.* | 39,400 | 1,000,760 | |||||||||
Thoratec Corp.* | 35,300 | 1,184,668 | |||||||||
Zoll Medical Corp.* | 36,400 | 2,299,752 | |||||||||
6,522,776 | |||||||||||
Health care providers & services: 6.18% | |||||||||||
Air Methods Corp.* | 19,900 | 1,680,555 | |||||||||
HMS Holdings Corp.* | 67,735 | 2,166,165 | |||||||||
IPC The Hospitalist Co., Inc.* | 37,100 | 1,696,212 | |||||||||
Mednax, Inc.* | 13,200 | 950,532 | |||||||||
PSS World Medical, Inc.* | 68,100 | 1,647,339 | |||||||||
8,140,803 | |||||||||||
Health care technology: 0.95% | |||||||||||
SXC Health Solutions Corp.* | 22,132 | 1,250,015 | |||||||||
Hotels, restaurants & leisure: 4.51% | |||||||||||
BJ's Restaurants, Inc.* | 35,500 | 1,608,860 | |||||||||
Buffalo Wild Wings, Inc.* | 22,300 | 1,505,473 | |||||||||
Panera Bread Co., Class A* | 8,800 | 1,244,760 | |||||||||
Texas Roadhouse, Inc. | 2,900 | 43,210 | |||||||||
The Cheesecake Factory, Inc.* | 52,300 | 1,535,005 | |||||||||
5,937,308 |
68
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
Household durables: 0.54% | |||||||||||
Ryland Group, Inc. | 45,200 | $ | 712,352 | ||||||||
Internet & catalog retail: 0.55% | |||||||||||
Shutterfly, Inc.*1 | 32,100 | 730,596 | |||||||||
Internet software & services: 0.54% | |||||||||||
VistaPrint NV*1 | 23,100 | 706,860 | |||||||||
Machinery: 5.24% | |||||||||||
Chart Industries, Inc.* | 40,000 | 2,162,800 | |||||||||
Robbins & Myers, Inc. | 44,400 | 2,155,620 | |||||||||
Wabash National Corp.* | 99,800 | 782,432 | |||||||||
Woodward, Inc. | 44,200 | 1,809,106 | |||||||||
6,909,958 | |||||||||||
Media: 1.51% | |||||||||||
Imax Corp.*1 | 108,700 | 1,992,471 | |||||||||
Metals & mining: 0.47% | |||||||||||
Steel Dynamics, Inc. | 46,700 | 614,105 | |||||||||
Oil, gas & consumable fuels: 6.45% | |||||||||||
Approach Resources, Inc.* | 60,400 | 1,776,364 | |||||||||
Bonanza Creek Energy, Inc.* | 95,000 | 1,187,500 | |||||||||
Gulfport Energy Corp.* | 53,700 | 1,581,465 | |||||||||
SM Energy Co. | 39,000 | 2,850,900 | |||||||||
Whiting Petroleum Corp.* | 23,600 | 1,101,884 | |||||||||
8,498,113 | |||||||||||
Pharmaceuticals: 3.99% | |||||||||||
Auxilium Pharmaceuticals, Inc.* | 41,400 | 825,102 | |||||||||
Nektar Therapeutics*1 | 65,200 | 364,794 | |||||||||
Questcor Pharmaceuticals, Inc.* | 50,100 | 2,083,158 | |||||||||
ViroPharma, Inc.* | 72,300 | 1,980,297 | |||||||||
5,253,351 | |||||||||||
Real estate investment trust (REIT): 1.47% | |||||||||||
BioMed Realty Trust, Inc. | 31,700 | 573,136 | |||||||||
DuPont Fabros Technology, Inc. | 32,900 | 796,838 | |||||||||
Franklin Street Properties Corp. | 56,600 | 563,170 | |||||||||
1,933,144 | |||||||||||
Road & rail: 2.26% | |||||||||||
Knight Transportation, Inc. | 69,400 | 1,085,416 | |||||||||
Landstar System, Inc. | 39,500 | 1,892,840 | |||||||||
2,978,256 |
Shares | Value | ||||||||||
Semiconductors & semiconductor equipment: 5.04% | |||||||||||
Cavium, Inc.* | 55,200 | $ | 1,569,336 | ||||||||
Cirrus Logic, Inc.* | 73,500 | 1,164,975 | |||||||||
Cymer, Inc.* | 26,800 | 1,333,568 | |||||||||
Mellanox Technologies Ltd.* | 47,092 | 1,530,019 | |||||||||
Skyworks Solutions, Inc.* | 46,800 | 759,096 | |||||||||
Veeco Instruments, Inc.*1 | 13,900 | 289,120 | |||||||||
6,646,114 | |||||||||||
Software: 10.85% | |||||||||||
Factset Research Systems, Inc. | 19,600 | 1,710,688 | |||||||||
Imperva, Inc.* | 22,000 | 765,820 | |||||||||
Jive Software, Inc.* | 101,800 | 1,628,800 | |||||||||
NICE Systems Ltd. ADR* | 47,800 | 1,646,710 | |||||||||
QLIK Technologies, Inc.* | 71,600 | 1,732,720 | |||||||||
Rovi Corp.* | 11,900 | 292,502 | |||||||||
Synchronoss Technologies, Inc.* | 54,400 | 1,643,424 | |||||||||
Taleo Corp., Class A* | 62,600 | 2,421,994 | |||||||||
Ultimate Software Group, Inc.* | 37,704 | 2,455,285 | |||||||||
14,297,943 | |||||||||||
Specialty retail: 3.65% | |||||||||||
Children's Place Retail Stores, Inc.* | 17,300 | 918,976 | |||||||||
Francesca's Holdings Corp.*1 | 46,117 | 797,824 | |||||||||
The Men's Wearhouse, Inc. | 71,200 | 2,307,592 | |||||||||
Wet Seal, Inc., Class A* | 242,500 | 790,550 | |||||||||
4,814,942 | |||||||||||
Textiles, apparel & luxury goods: 1.18% | |||||||||||
PVH Corp. | 22,100 | 1,557,829 | |||||||||
Total common stocks (cost $101,795,892) |
129,353,826 | ||||||||||
Investment company: 1.22% | |||||||||||
iShares Russell 2000 Growth Index Fund1 (cost $1,568,410) |
19,000 | 1,600,370 | |||||||||
Short-term investment: 1.05% | |||||||||||
Investment company: 1.05% | |||||||||||
UBS Cash Management Prime Relationship Fund2 (cost $1,386,887) |
1,386,887 | 1,386,887 |
69
UBS U.S. Small Cap Growth Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
Shares | Value | ||||||||||
Investment of cash collateral from securities loaned: 5.85% | |||||||||||
UBS Private Money Market Fund LLC2 (cost $7,707,904) |
7,707,904 | $ | 7,707,904 | ||||||||
Total investments: 106.29% (cost $112,459,093) |
140,048,987 | ||||||||||
Liabilities, in excess of cash and other assets: (6.29)% |
(8,282,770 | ) | |||||||||
Net assets: 100.00% | $ | 131,766,217 |
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 | $ | 33,290,037 | |||||
Gross unrealized depreciation | (5,700,143 | ) | |||||
Net unrealized appreciation of investments | $ | 27,589,894 |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 71.
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2011.
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 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||
UBS Cash Management Prime Relationship Fund | $ | 1,436,127 | $ | 25,215,261 | $ | 25,264,501 | $ | 1,386,887 | $ | 1,510 | |||||||||||||
UBS Private Money Market Fund LLCa | 17,143,760 | 60,816,247 | 70,252,103 | 7,707,904 | 1,017 | ||||||||||||||||||
$ | 18,579,887 | $ | 86,031,508 | $ | 95,516,604 | $ | 9,094,791 | $ | 2,527 |
a 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.
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 129,353,826 | $ | | $ | | $ | 129,353,826 | |||||||||||
Investment company | 1,600,370 | | | 1,600,370 | |||||||||||||||
Short-term investment | | 1,386,887 | | 1,386,887 | |||||||||||||||
Investment of cash collateral from securities loaned | | 7,707,904 | | 7,707,904 | |||||||||||||||
Total | $ | 130,954,196 | $ | 9,094,791 | $ | | $ | 140,048,987 |
See accompanying notes to financial statements.
70
The UBS Funds
Portfolio acronyms
ADR American depositary receipt
CDI Chess depository interest
CVA Dutch certificationdepository certificate
ETF Exchange Traded Fund
GDR Global depositary receipt
NPV No Par Value
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. | ||||||
REIT | Real estate investment trust | ||||||
SPDR | Standard & Poor's Depository Receipts | ||||||
Currency abbreviations
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
CHF Swiss Franc
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
PLN Polish Zloty
SEK Swedish Krona
SGD Singapore Dollar
THB Thai Baht
TWD Taiwan Dollar
USD United States Dollar
ZAR South African Rand
See accompanying notes to financial statements
71
The UBS Funds
December 31, 2011 (unaudited)
Explanation of expense disclosure
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, 2011 to December 31, 2011.
Actual expenses
The first line for 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, 2011 to December 31, 2011.
72
The UBS Funds
December 31, 2011 (unaudited)
Beginning account value July 1, 2011 |
Ending account value December 31, 2011 |
Expenses paid during period* 07/01/11 12/31/11 |
Expense ratio during period |
||||||||||||||||||||
UBS Global Equity Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 871.50 | $ | 7.06 | 1.50 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,017.60 | 7.61 | 1.50 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 868.30 | 10.57 | 2.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,013.83 | 11.39 | 2.25 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 868.30 | 10.57 | 2.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,013.83 | 11.39 | 2.25 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 872.20 | 5.69 | 1.21 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.05 | 6.14 | 1.21 | |||||||||||||||||||
UBS International Equity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 808.90 | 5.68 | 1.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.85 | 6.34 | 1.25 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 806.00 | 9.08 | 2.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.08 | 10.13 | 2.00 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 806.40 | 9.08 | 2.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.08 | 10.13 | 2.00 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 810.20 | 4.55 | 1.00 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.11 | 5.08 | 1.00 | |||||||||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 989.20 | 19.30 | 3.86 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,005.73 | 19.46 | 3.86 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 985.00 | 22.95 | 4.60 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,002.01 | 23.15 | 4.60 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 990.30 | 18.01 | 3.60 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,007.04 | 18.16 | 3.60 |
* 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 366 (to reflect the one-half year period).
73
The UBS Funds
December 31, 2011 (unaudited)
Beginning account value July 1, 2011 |
Ending account value December 31, 2011 |
Expenses paid during period* 07/01/11 12/31/11 |
Expense ratio during period |
||||||||||||||||||||
UBS U.S. Equity Alpha Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 927.20 | $ | 10.17 | 2.10 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.58 | 10.63 | 2.10 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 922.50 | 13.82 | 2.86 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,010.76 | 14.46 | 2.86 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 928.10 | 9.01 | 1.86 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.79 | 9.42 | 1.86 | |||||||||||||||||||
UBS U.S. Equity Opportunity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 895.70 | 5.72 | 1.20 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.10 | 6.09 | 1.20 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 891.20 | 9.27 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.33 | 9.88 | 1.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 892.20 | 9.27 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.33 | 9.88 | 1.95 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 896.30 | 4.53 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.36 | 4.82 | 0.95 | |||||||||||||||||||
UBS U.S. Large Cap Equity Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 924.00 | 5.80 | 1.20 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.10 | 6.09 | 1.20 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 920.20 | 9.41 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.33 | 9.88 | 1.95 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 920.00 | 9.41 | 1.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,015.33 | 9.88 | 1.95 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 925.40 | 4.60 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.36 | 4.82 | 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 366 (to reflect the one-half year period).
74
The UBS Funds
December 31, 2011 (unaudited)
Beginning account value July 1, 2011 |
Ending account value December 31, 2011 |
Expenses paid during period* 07/01/11 12/31/11 |
Expense ratio during period |
||||||||||||||||||||
UBS U.S. Small Cap Growth Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 903.70 | $ | 6.70 | 1.40 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.10 | 7.10 | 1.40 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 900.70 | 10.27 | 2.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.33 | 10.89 | 2.15 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 900.50 | 10.27 | 2.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.33 | 10.89 | 2.15 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 905.00 | 5.51 | 1.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.36 | 5.84 | 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 366 (to reflect the one-half year period).
75
The UBS Funds
Financial statements
Statement of assets and liabilities
December 31, 2011 (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 | $ | 92,827,425 | $ | 20,222,361 | $ | 14,416,364 | $ | 23,692,017 | |||||||||||
Affiliated issuers | 708,376 | 391,107 | 8,171,641 | 198,205 | |||||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | 2,536,840 | 644,154 | | | |||||||||||||||
Foreign currency, at cost | 702,282 | 145,781 | 430,003 | | |||||||||||||||
$ | 96,774,923 | $ | 21,403,403 | $ | 23,018,008 | $ | 23,890,222 | ||||||||||||
Investments, at value: | |||||||||||||||||||
Unaffiliated issuers | $ | 87,779,037 | $ | 19,806,172 | $ | 13,379,642 | $ | 24,431,588 | |||||||||||
Affiliated issuers | 708,376 | 391,107 | 8,171,641 | 198,205 | |||||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | 2,536,840 | 644,154 | | | |||||||||||||||
Foreign currency, at value | 699,008 | 146,641 | 430,005 | | |||||||||||||||
Cash | | 123 | 40,739 | | |||||||||||||||
Receivables: | |||||||||||||||||||
Investment securities sold | 521,608 | 233,264 | 295,184 | 1,018,161 | |||||||||||||||
Foreign tax reclaims | 309,517 | 108,485 | 4,790 | | |||||||||||||||
Dividends | 124,022 | 25,438 | 23,283 | 61,157 | |||||||||||||||
Interest | 4,096 | 406 | 832 | 15 | |||||||||||||||
Fund shares sold | 1,946 | 30,501 | 39 | 2,514 | |||||||||||||||
Due from advisor | | 4,872 | 100 | | |||||||||||||||
Cash collateral for futures contracts | | | 63,892 | | |||||||||||||||
Cash collateral for securities sold short | | | 9,727,514 | 37,291 | |||||||||||||||
Unrealized appreciation on forward foreign currency contracts | 444,993 | 84,931 | 22,440 | | |||||||||||||||
Other assets | 35,294 | 30,170 | 21,355 | 25,584 | |||||||||||||||
Total assets | 93,164,737 | 21,506,264 | 32,181,456 | 25,774,515 | |||||||||||||||
Liabilities: | |||||||||||||||||||
Payables: | |||||||||||||||||||
Cash collateral from securities loaned | 2,536,840 | 644,154 | | | |||||||||||||||
Investment securities purchased | 284,663 | 211,920 | 379,825 | 236,749 | |||||||||||||||
Investment advisory and administration fee | 57,376 | | | 3,326 | |||||||||||||||
Fund shares redeemed | 97,619 | 8,720 | 24,114 | 795,480 | |||||||||||||||
Custody and fund accounting fees | 8,611 | 8,262 | 14,585 | 11,031 | |||||||||||||||
Distribution and service fees | 26,427 | 2,020 | 1,248 | 5,755 | |||||||||||||||
Trustees' fees | 5,538 | 4,092 | 4,026 | 4,161 | |||||||||||||||
Dividends payable for securities sold short | | | 9,954 | 2,530 | |||||||||||||||
Due to custodian | | | | 86 | |||||||||||||||
Due to broker | | | 150,152 | | |||||||||||||||
Accrued expenses | 128,988 | 73,372 | 51,604 | 64,030 | |||||||||||||||
Securities sold short, at value2 | | | 13,443,706 | 5,565,082 | |||||||||||||||
Unrealized depreciation on forward foreign currency contracts | 109,202 | 40,129 | 19,262 | | |||||||||||||||
Total liabilities | 3,255,264 | 992,669 | 14,098,476 | 6,688,230 | |||||||||||||||
Net assets | $ | 89,909,473 | $ | 20,513,595 | $ | 18,082,980 | $ | 19,086,285 |
1 The market value of securities loaned by UBS Global Equity Fund, UBS International Equity Fund, UBS U.S. Equity Opportunity Fund, UBS U.S. Large Cap Equity Fund and UBS U.S. Small Cap Growth Fund, as of December 31, 2011 was $2,460,742, $616,076, $423,482, $1,268,472 and $7,497,705, respectively.
2 Proceeds from securities sold short by UBS Market Neutral Multi-Strategy Fund and UBS U.S. Equity Alpha Fund were $14,506,472 and $5,025,201, respectively.
76
The UBS Funds
Financial statements
UBS U.S. Equity Opportunity Fund |
UBS U.S. Large Cap Equity Fund |
UBS U.S. Small Cap Growth Fund |
|||||||||||||
Assets: | |||||||||||||||
Investments, at cost: | |||||||||||||||
Unaffiliated issuers | $ | 42,160,047 | $ | 188,620,966 | $ | 103,364,302 | |||||||||
Affiliated issuers | 471,927 | 6,305,582 | 1,386,887 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | 887,661 | 1,291,012 | 7,707,904 | ||||||||||||
Foreign currency, at cost | | | | ||||||||||||
$ | 43,519,635 | $ | 196,217,560 | $ | 112,459,093 | ||||||||||
Investments, at value: | |||||||||||||||
Unaffiliated issuers | $ | 40,883,560 | $ | 196,497,489 | $ | 130,954,196 | |||||||||
Affiliated issuers | 471,927 | 6,305,582 | 1,386,887 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | 887,661 | 1,291,012 | 7,707,904 | ||||||||||||
Foreign currency, at value | | | | ||||||||||||
Cash | | 38 | | ||||||||||||
Receivables: | |||||||||||||||
Investment securities sold | 24,651,641 | 776,815 | 438,957 | ||||||||||||
Foreign tax reclaims | | | | ||||||||||||
Dividends | 86,319 | 328,742 | 20,448 | ||||||||||||
Interest | 278 | 1,382 | 30,529 | ||||||||||||
Fund shares sold | 904 | 67,341 | 285,314 | ||||||||||||
Due from advisor | | | | ||||||||||||
Cash collateral for futures contracts | | | | ||||||||||||
Cash collateral for securities sold short | | | | ||||||||||||
Unrealized appreciation on forward foreign currency contracts | | | | ||||||||||||
Other assets | 30,824 | 46,259 | 43,512 | ||||||||||||
Total assets | 67,013,114 | 205,314,660 | 140,867,747 | ||||||||||||
Liabilities: | |||||||||||||||
Payables: | |||||||||||||||
Cash collateral from securities loaned | 887,661 | 1,291,012 | 7,707,904 | ||||||||||||
Investment securities purchased | 24,002,179 | 1,353,345 | 583,937 | ||||||||||||
Investment advisory and administration fee | 10,128 | 129,057 | 96,437 | ||||||||||||
Fund shares redeemed | 60,930 | 102,763 | 613,616 | ||||||||||||
Custody and fund accounting fees | 6,778 | 14,293 | 8,688 | ||||||||||||
Distribution and service fees | 11,361 | 5,945 | 8,422 | ||||||||||||
Trustees' fees | 4,467 | 7,621 | 6,152 | ||||||||||||
Dividends payable for securities sold short | | | | ||||||||||||
Due to custodian | | | | ||||||||||||
Due to broker | | | | ||||||||||||
Accrued expenses | 67,480 | 84,168 | 76,374 | ||||||||||||
Securities sold short, at value2 | | | | ||||||||||||
Unrealized depreciation on forward foreign currency contracts | | | | ||||||||||||
Total liabilities | 25,050,984 | 2,988,204 | 9,101,530 | ||||||||||||
Net assets | $ | 41,962,130 | $ | 202,326,456 | $ | 131,766,217 |
See accompanying notes to financial statements.
77
The UBS Funds
Financial statements
Statement of assets and liabilities (continued)
December 31, 2011 (unaudited)
UBS Global Equity Fund |
UBS International Equity Fund |
UBS Market Neutral Multi-Strategy Fund1 |
UBS U.S. Equity Alpha Fund1 |
||||||||||||||||
Net assets consist of: | |||||||||||||||||||
Beneficial interest | $ | 123,534,913 | $ | 34,327,732 | $ | 18,974,859 | $ | 41,680,555 | |||||||||||
Accumulated undistributed net investment income (loss) | 373,977 | 97,418 | (272,303 | ) | 25,196 | ||||||||||||||
Accumulated net realized loss | (29,323,381 | ) | (13,568,198 | ) | (657,864 | ) | (22,819,156 | ) | |||||||||||
Net unrealized appreciation (depreciation) | (4,676,036 | ) | (343,357 | ) | 38,288 | 199,690 | |||||||||||||
Net assets | $ | 89,909,473 | $ | 20,513,595 | $ | 18,082,980 | $ | 19,086,285 | |||||||||||
Class A: | |||||||||||||||||||
Net assets | $ | 53,618,799 | $ | 6,353,684 | $ | 2,987,514 | $ | 11,072,639 | |||||||||||
Shares outstanding | 4,861,234 | 977,730 | 311,692 | 1,337,803 | |||||||||||||||
Net asset value and redemption proceeds per share | $ | 11.03 | $ | 6.50 | $ | 9.58 | $ | 8.28 | |||||||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 11.67 | $ | 6.88 | $ | 10.14 | $ | 8.76 | |||||||||||
Class B: | |||||||||||||||||||
Net assets | $ | 469,322 | $ | 20,690 | N/A | N/A | |||||||||||||
Shares outstanding | 43,671 | 3,057 | N/A | N/A | |||||||||||||||
Net asset value and offering price per share | $ | 10.75 | $ | 6.77 | N/A | N/A | |||||||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 10.21 | $ | 6.43 | N/A | N/A | |||||||||||||
Class C: | |||||||||||||||||||
Net assets | $ | 16,889,225 | $ | 737,888 | $ | 660,106 | $ | 3,723,030 | |||||||||||
Shares outstanding | 1,600,840 | 115,142 | 69,590 | 459,468 | |||||||||||||||
Net asset value and offering price per share | $ | 10.55 | $ | 6.41 | $ | 9.49 | $ | 8.10 | |||||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 10.44 | $ | 6.35 | $ | 9.40 | $ | 8.02 | |||||||||||
Class Y: | |||||||||||||||||||
Net assets | $ | 18,932,127 | $ | 13,401,333 | $ | 14,435,360 | $ | 4,290,616 | |||||||||||
Shares outstanding | 1,673,383 | 2,056,157 | 1,499,728 | 519,739 | |||||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 11.31 | $ | 6.52 | $ | 9.63 | $ | 8.26 |
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 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 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.
78
The UBS Funds
Financial statements
UBS U.S. Equity Opportunity Fund |
UBS U.S. Large Cap Equity Fund |
UBS U.S. Small Cap Growth Fund |
|||||||||||||
Net assets consist of: | |||||||||||||||
Beneficial interest | $ | 63,408,649 | $ | 381,041,224 | $ | 140,156,595 | |||||||||
Accumulated undistributed net investment income (loss) | 214,847 | 891,780 | (408,507 | ) | |||||||||||
Accumulated net realized loss | (20,379,310 | ) | (187,483,071 | ) | (35,571,765 | ) | |||||||||
Net unrealized appreciation (depreciation) | (1,282,056 | ) | 7,876,523 | 27,589,894 | |||||||||||
Net assets | $ | 41,962,130 | $ | 202,326,456 | $ | 131,766,217 | |||||||||
Class A: | |||||||||||||||
Net assets | $ | 36,104,802 | $ | 14,920,003 | $ | 29,635,364 | |||||||||
Shares outstanding | 6,048,401 | 986,679 | 2,049,355 | ||||||||||||
Net asset value and redemption proceeds per share | $ | 5.97 | $ | 15.12 | $ | 14.46 | |||||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 6.32 | $ | 16.00 | $ | 15.30 | |||||||||
Class B: | |||||||||||||||
Net assets | $ | 21,021 | $ | 81,536 | $ | 19,989 | |||||||||
Shares outstanding | 3,514 | 5,524 | 1,498 | ||||||||||||
Net asset value and offering price per share | $ | 5.98 | $ | 14.76 | $ | 13.34 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 5.68 | $ | 14.02 | $ | 12.67 | |||||||||
Class C: | |||||||||||||||
Net assets | $ | 4,206,841 | $ | 3,171,316 | $ | 2,260,939 | |||||||||
Shares outstanding | 717,351 | 217,031 | 169,882 | ||||||||||||
Net asset value and offering price per share | $ | 5.86 | $ | 14.61 | $ | 13.31 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 5.80 | $ | 14.46 | $ | 13.18 | |||||||||
Class Y: | |||||||||||||||
Net assets | $ | 1,629,466 | $ | 184,153,601 | $ | 99,849,925 | |||||||||
Shares outstanding | 271,605 | 12,110,255 | 6,630,118 | ||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 6.00 | $ | 15.21 | $ | 15.06 |
See accompanying notes to financial statements.
79
The UBS Funds
Financial statements
Statement of operations
For the six months ended December 31, 2011 (unaudited)
UBS Global Equity Fund |
UBS International Equity Fund |
UBS Market Neutral Multi-Strategy Fund |
UBS U.S. Equity Alpha Fund |
||||||||||||||||
Investment income: | |||||||||||||||||||
Dividends | $ | 963,281 | $ | 199,087 | $ | 147,918 | $ | 323,932 | |||||||||||
Interest | 93 | 85 | | | |||||||||||||||
Affiliated interest | 423 | 310 | 5,151 | 148 | |||||||||||||||
Securities lending1 | 84,202 | 6,882 | | | |||||||||||||||
Foreign tax withheld | (93,343 | ) | (15,209 | ) | (8,441 | ) | | ||||||||||||
Total income | 954,656 | 191,155 | 144,628 | 324,080 | |||||||||||||||
Expenses: | |||||||||||||||||||
Advisory and administration | $ | 397,252 | $ | 101,740 | $ | 127,221 | $ | 142,304 | |||||||||||
Service and distribution: | |||||||||||||||||||
Class A | 72,162 | 9,234 | 4,885 | 16,762 | |||||||||||||||
Class B | 2,492 | 126 | | | |||||||||||||||
Class C | 89,379 | 4,832 | 3,613 | 20,776 | |||||||||||||||
Transfer agency and related service fees: | |||||||||||||||||||
Class A | 48,175 | 2,846 | 3,245 | 5,935 | |||||||||||||||
Class B | 196 | 75 | | | |||||||||||||||
Class C | 20,102 | 646 | 69 | 3,892 | |||||||||||||||
Class Y | 4,531 | 7,756 | 424 | 1,863 | |||||||||||||||
Custodian and fund accounting | 31,586 | 27,813 | 43,355 | 32,734 | |||||||||||||||
Federal and state registration | 24,712 | 23,637 | 15,754 | 18,486 | |||||||||||||||
Professional services | 56,157 | 54,610 | 42,351 | 48,859 | |||||||||||||||
Shareholder reports | 23,412 | 1,967 | 7,656 | 3,509 | |||||||||||||||
Trustees | 10,971 | 8,138 | 7,970 | 8,257 | |||||||||||||||
Dividend expense and security loan fees for securities sold short | | | 201,363 | 79,729 | |||||||||||||||
Interest expense | 524 | | | | |||||||||||||||
Other | 14,222 | 9,916 | 10,237 | 5,758 | |||||||||||||||
Total expenses | 795,873 | 253,336 | 468,143 | 388,864 | |||||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (36,609 | ) | (123,373 | ) | (114,670 | ) | (106,761 | ) | |||||||||||
Net expenses | 759,264 | 129,963 | 353,473 | 282,103 | |||||||||||||||
Net investment income (loss) | 195,392 | 61,192 | (208,845 | ) | 41,977 | ||||||||||||||
Net realized gain (loss) on: | |||||||||||||||||||
Investments in unaffiliated issuers | (1,981,218 | ) | (423,212 | ) | 256,476 | 984,326 | |||||||||||||
Futures contracts | | | (220,551 | ) | | ||||||||||||||
Securities sold short | | | (309,445 | ) | (715,859 | ) | |||||||||||||
Forward foreign currency contracts | 995,058 | 252,116 | (8,142 | ) | | ||||||||||||||
Foreign currency transactions | (39,251 | ) | 9,389 | 4,456 | | ||||||||||||||
Net realized gain (loss) | (1,025,411 | ) | (161,707 | ) | (277,206 | ) | 268,467 | ||||||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||||||||||
Investments | (14,036,551 | ) | (5,374,620 | ) | (1,836,665 | ) | (3,838,022 | ) | |||||||||||
Futures contracts | | | (9,950 | ) | | ||||||||||||||
Securities sold short | | | 2,141,289 | 940,106 | |||||||||||||||
Forward foreign currency contracts | 509,386 | 80,857 | (3,253 | ) | | ||||||||||||||
Translation of other assets and liabilities denominated in foreign currency | (31,909 | ) | (12,774 | ) | (2,134 | ) | | ||||||||||||
Change in net unrealized appreciation/depreciation | (13,559,074 | ) | (5,306,537 | ) | 289,287 | (2,897,916 | ) | ||||||||||||
Net realized and unrealized gain (loss) | (14,584,485 | ) | (5,468,244 | ) | 12,081 | (2,629,449 | ) | ||||||||||||
Net decrease in net assets resulting from operations | $ | (14,389,093 | ) | $ | (5,407,052 | ) | $ | (196,764 | ) | $ | (2,587,472 | ) |
1 Includes affiliated income from UBS Private Money Market Fund LLC of $208, $59, $70, $275 and $1,017, for UBS Global Equity Fund, UBS International Equity Fund, UBS U.S. Equity Opportunity Fund, UBS U.S. Large Cap Equity Fund and UBS U.S. Small Cap Growth Fund, respectively.
80
The UBS Funds
Financial statements
UBS U.S. Equity Opportunity Fund |
UBS U.S. Large Cap Equity Fund |
UBS U.S. Small Cap Growth Fund |
|||||||||||||
Investment income: | |||||||||||||||
Dividends | $ | 489,952 | $ | 1,905,956 | $ | 190,237 | |||||||||
Interest | | | | ||||||||||||
Affiliated interest | 322 | 1,789 | 1,510 | ||||||||||||
Securities lending1 | 909 | 4,089 | 157,011 | ||||||||||||
Foreign tax withheld | | | | ||||||||||||
Total income | 491,183 | 1,911,834 | 348,758 | ||||||||||||
Expenses: | |||||||||||||||
Advisory and administration | $ | 169,242 | $ | 803,796 | $ | 627,911 | |||||||||
Service and distribution: | |||||||||||||||
Class A | 47,208 | 20,709 | 40,080 | ||||||||||||
Class B | 111 | 569 | 112 | ||||||||||||
Class C | 21,825 | 15,519 | 12,819 | ||||||||||||
Transfer agency and related service fees: | |||||||||||||||
Class A | 21,603 | 7,787 | 40,222 | ||||||||||||
Class B | 67 | 136 | 90 | ||||||||||||
Class C | 3,602 | 1,606 | 3,600 | ||||||||||||
Class Y | 1,706 | 57,330 | 14,960 | ||||||||||||
Custodian and fund accounting | 20,110 | 40,510 | 28,236 | ||||||||||||
Federal and state registration | 23,134 | 25,740 | 24,539 | ||||||||||||
Professional services | 52,851 | 50,116 | 48,859 | ||||||||||||
Shareholder reports | 9,202 | 5,179 | 5,990 | ||||||||||||
Trustees | 8,872 | 15,139 | 12,261 | ||||||||||||
Dividend expense and security loan fees for securities sold short | | | | ||||||||||||
Interest expense | | | | ||||||||||||
Other | 6,749 | 15,670 | 12,718 | ||||||||||||
Total expenses | 386,282 | 1,059,806 | 872,397 | ||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (110,578 | ) | (40,838 | ) | (41,332 | ) | |||||||||
Net expenses | 275,704 | 1,018,968 | 831,065 | ||||||||||||
Net investment income (loss) | 215,479 | 892,866 | (482,307 | ) | |||||||||||
Net realized gain (loss) on: | |||||||||||||||
Investments in unaffiliated issuers | 476,685 | 4,174,726 | 6,654,594 | ||||||||||||
Futures contracts | | | | ||||||||||||
Securities sold short | | | | ||||||||||||
Forward foreign currency contracts | | | | ||||||||||||
Foreign currency transactions | | | | ||||||||||||
Net realized gain (loss) | 476,685 | 4,174,726 | 6,654,594 | ||||||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||||||
Investments | (5,948,929 | ) | (22,783,659 | ) | (20,833,960 | ) | |||||||||
Futures contracts | | | | ||||||||||||
Securities sold short | | | | ||||||||||||
Forward foreign currency contracts | | | | ||||||||||||
Translation of other assets and liabilities denominated in foreign currency | (5,569 | ) | | | |||||||||||
Change in net unrealized appreciation/depreciation | (5,954,498 | ) | (22,783,659 | ) | (20,833,960 | ) | |||||||||
Net realized and unrealized gain (loss) | (5,477,813 | ) | (18,608,933 | ) | (14,179,366 | ) | |||||||||
Net decrease in net assets resulting from operations | $ | (5,262,334 | ) | $ | (17,716,067 | ) | $ | (14,661,673 | ) |
See accompanying notes to financial statements.
81
The UBS Funds
Financial statements
Statement of changes in net assets
UBS Global Equity Fund | UBS International Equity Fund | ||||||||||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 195,392 | $ | 241,094 | $ | 61,192 | $ | 296,211 | |||||||||||
Net realized gain (loss) | (1,025,411 | ) | 23,488,783 | (161,707 | ) | 6,141,236 | |||||||||||||
Change in net unrealized appreciation/depreciation | (13,559,074 | ) | 3,698,892 | (5,306,537 | ) | 470,430 | |||||||||||||
Net increase (decrease) in net assets from operations | (14,389,093 | ) | 27,428,769 | (5,407,052 | ) | 6,907,877 | |||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | (53,767 | ) | (1,879,257 | ) | (133,700 | ) | (283,789 | ) | |||||||||||
Net realized gain | | | | | |||||||||||||||
Total Class A dividends and distributions | (53,767 | ) | (1,879,257 | ) | (133,700 | ) | (283,789 | ) | |||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | | (9,881 | ) | | | ||||||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | | (440,427 | ) | (6,054 | ) | (24,784 | ) | ||||||||||||
Net realized gain | | | | | |||||||||||||||
Total Class C dividends and distributions | | (440,427 | ) | (6,054 | ) | (24,784 | ) | ||||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (102,576 | ) | (789,580 | ) | (323,365 | ) | (650,195 | ) | |||||||||||
Net realized gain | | | | | |||||||||||||||
Total Class Y dividends and distributions | (102,576 | ) | (789,580 | ) | (323,365 | ) | (650,195 | ) | |||||||||||
Decrease in net assets from dividends and distributions | (156,343 | ) | (3,119,145 | ) | (463,119 | ) | (958,768 | ) | |||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 1,295,309 | 3,549,078 | 1,345,599 | 3,572,353 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 149,853 | 2,899,995 | 450,533 | 929,537 | |||||||||||||||
Cost of shares redeemed | (8,857,536 | ) | (30,334,527 | ) | (3,897,048 | ) | (8,643,523 | ) | |||||||||||
Redemption fees | 3,392 | 721 | 2,586 | 2,247 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | (7,408,982 | ) | (23,884,733 | ) | (2,098,330 | ) | (4,139,386 | ) | |||||||||||
Increase (decrease) in net assets | (21,954,418 | ) | 424,891 | (7,968,501 | ) | 1,809,723 | |||||||||||||
Net assets, beginning of period | 111,863,891 | 111,439,000 | 28,482,096 | 26,672,373 | |||||||||||||||
Net assets, end of period | $ | 89,909,473 | $ | 111,863,891 | $ | 20,513,595 | $ | 28,482,096 | |||||||||||
Net assets include accumulated undistributed net investment income (loss) | $ | 373,977 | $ | 334,928 | $ | 97,418 | $ | 499,345 |
82
The UBS Funds
Financial statements
UBS Market Neutral Multi-Strategy Fund |
UBS U.S. Equity Alpha Fund | ||||||||||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | (208,845 | ) | $ | (468,231 | ) | $ | 41,977 | $ | 72,847 | |||||||||
Net realized gain (loss) | (277,206 | ) | 4,637 | 268,467 | 6,366,117 | ||||||||||||||
Change in net unrealized appreciation/depreciation | 289,287 | (250,999 | ) | (2,897,916 | ) | 3,461,657 | |||||||||||||
Net increase (decrease) in net assets from operations | (196,764 | ) | (714,593 | ) | (2,587,472 | ) | 9,900,621 | ||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | | | (13,232 | ) | | ||||||||||||||
Net realized gain | (1,900 | ) | | | | ||||||||||||||
Total Class A dividends and distributions | (1,900 | ) | | (13,232 | ) | | |||||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | | | | | |||||||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | | | | | |||||||||||||||
Net realized gain | (383 | ) | | | | ||||||||||||||
Total Class C dividends and distributions | (383 | ) | | | | ||||||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | | | (38,859 | ) | (35,347 | ) | |||||||||||||
Net realized gain | (8,249 | ) | | | | ||||||||||||||
Total Class Y dividends and distributions | (8,249 | ) | | (38,859 | ) | (35,347 | ) | ||||||||||||
Decrease in net assets from dividends and distributions | (10,532 | ) | | (52,091 | ) | (35,347 | ) | ||||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 395,691 | 28,856,571 | 393,252 | 1,854,588 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 2,071 | | 50,929 | 35,347 | |||||||||||||||
Cost of shares redeemed | (2,060,752 | ) | (8,196,091 | ) | (11,239,060 | ) | (21,118,475 | ) | |||||||||||
Redemption fees | 283 | 7,096 | 1,488 | 2,172 | |||||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions | (1,662,707 | ) | 20,667,576 | (10,793,391 | ) | (19,226,368 | ) | ||||||||||||
Increase (decrease) in net assets | (1,870,003 | ) | 19,952,983 | (13,432,954 | ) | (9,361,094 | ) | ||||||||||||
Net assets, beginning of period | 19,952,983 | | 32,519,239 | 41,880,333 | |||||||||||||||
Net assets, end of period | $ | 18,082,980 | $ | 19,952,983 | $ | 19,086,285 | $ | 32,519,239 | |||||||||||
Net assets include accumulated undistributed net investment income (loss) | $ | (272,303 | ) | $ | (63,458 | ) | $ | 25,196 | $ | 35,310 |
See accompanying notes to financial statements.
83
The UBS Funds
Financial statements
Statement of changes in net assets (continued)
UBS U.S. Equity Opportunity Fund | UBS U.S. Large Cap Equity Fund | ||||||||||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 215,479 | $ | 420,082 | $ | 892,866 | $ | 1,865,151 | |||||||||||
Net realized gain | 476,685 | 3,079,528 | 4,174,726 | 36,146,774 | |||||||||||||||
Change in net unrealized appreciation/depreciation | (5,954,498 | ) | 8,981,555 | (22,783,659 | ) | 21,692,836 | |||||||||||||
Net increase (decrease) in net assets from operations | (5,262,334 | ) | 12,481,165 | (17,716,067 | ) | 59,704,761 | |||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | (390,688 | ) | (399,917 | ) | (85,957 | ) | (114,184 | ) | |||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | (6,536 | ) | (5,988 | ) | | | |||||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | (22,220 | ) | (19,421 | ) | (1,766,182 | ) | (1,583,968 | ) | |||||||||||
Decrease in net assets from dividends and distributions | (419,444 | ) | (425,326 | ) | (1,852,139 | ) | (1,698,152 | ) | |||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 350,342 | 471,989 | 11,908,180 | 40,477,462 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | 371,455 | 373,492 | 1,839,436 | 1,683,123 | |||||||||||||||
Cost of shares redeemed | (3,447,265 | ) | (10,043,500 | ) | (21,862,050 | ) | (85,698,301 | ) | |||||||||||
Redemption fees | 189 | 927 | 11,651 | 19,317 | |||||||||||||||
Net decrease in net assets resulting from beneficial interest transactions | (2,725,279 | ) | (9,197,092 | ) | (8,102,783 | ) | (43,518,399 | ) | |||||||||||
Increase (decrease) in net assets | (8,407,057 | ) | 2,858,747 | (27,670,989 | ) | 14,488,210 | |||||||||||||
Net assets, beginning of period | 50,369,187 | 47,510,440 | 229,997,445 | 215,509,235 | |||||||||||||||
Net assets, end of period | $ | 41,962,130 | $ | 50,369,187 | $ | 202,326,456 | $ | 229,997,445 | |||||||||||
Net assets include accumulated undistributed net investment income (loss) | $ | 214,847 | $ | 418,812 | $ | 891,780 | $ | 1,851,053 |
84
The UBS Funds
Financial statements
UBS U.S. Small Cap Growth Fund | |||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | (482,307 | ) | $ | (1,140,998 | ) | |||||
Net realized gain | 6,654,594 | 29,906,662 | |||||||||
Change in net unrealized appreciation/depreciation | (20,833,960 | ) | 28,817,918 | ||||||||
Net increase (decrease) in net assets from operations | (14,661,673 | ) | 57,583,582 | ||||||||
Dividends and distributions to shareholders by class: | |||||||||||
Class A: | |||||||||||
Net investment income and net foreign currency gains | | | |||||||||
Class C: | |||||||||||
Net investment income and net foreign currency gains | | | |||||||||
Class Y: | |||||||||||
Net investment income and net foreign currency gains | | | |||||||||
Decrease in net assets from dividends and distributions | | | |||||||||
Beneficial interest transactions: | |||||||||||
Proceeds from shares sold | 12,129,892 | 35,363,698 | |||||||||
Shares issued on reinvestment of dividends and distributions | | | |||||||||
Cost of shares redeemed | (19,213,050 | ) | (65,190,814 | ) | |||||||
Redemption fees | 13,556 | 20,306 | |||||||||
Net decrease in net assets resulting from beneficial interest transactions | (7,069,602 | ) | (29,806,810 | ) | |||||||
Increase (decrease) in net assets | (21,731,275 | ) | 27,776,772 | ||||||||
Net assets, beginning of period | 153,497,492 | 125,720,720 | |||||||||
Net assets, end of period | $ | 131,766,217 | $ | 153,497,492 | |||||||
Net assets include accumulated undistributed net investment income (loss) | $ | (408,507 | ) | $ | 73,800 |
See accompanying notes to financial statements.
85
The UBS Funds
Financial statements
Statement of cash flows
For the six months ended December 31, 2011 (unaudited)
UBS Market Neutral Multi-Strategy Fund |
|||||||
Cash flows provided by operating activities: | |||||||
Net decrease in net assets from operations | $ | (196,764 | ) | ||||
Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating activities: |
|||||||
Purchase of investment securities | (28,680,206 | ) | |||||
Proceeds from disposition of investment securities | 29,422,208 | ||||||
Covers of investment securities sold short | (21,778,584 | ) | |||||
Proceeds from investment securities sold short | 20,816,616 | ||||||
Proceeds of short-term investments, net | 1,658,426 | ||||||
Change in net unrealized (appreciation)/depreciation on investments | 1,836,665 | ||||||
Change in net unrealized (appreciation)/depreciation on investment securities sold short | (2,141,289 | ) | |||||
Change in net unrealized (appreciation)/depreciation on forward foreign currency contracts | 3,253 | ||||||
Net realized (gain)/loss on investments | (256,476 | ) | |||||
Net realized (gain)/loss on investment securities sold short | 309,445 | ||||||
Increase in cash collateral for futures contracts | (38,820 | ) | |||||
Decrease in cash collateral for securities sold short | 837,315 | ||||||
Increase in foreign cash at value | (348,188 | ) | |||||
Increase in receivable due from advisor | (100 | ) | |||||
Decrease in payable for investment advisory and administration fee | (23,206 | ) | |||||
Increase in dividends receivable | (3,199 | ) | |||||
Decrease in interest receivable | 285 | ||||||
Decrease in foreign tax reclaims receivable | 1,345 | ||||||
Decrease in other assets | 1,878 | ||||||
Increase in due to broker | 254,289 | ||||||
Decrease in dividends payable for securities sold short | (3,299 | ) | |||||
Decrease in accrued expenses and other liabilities | (26,592 | ) | |||||
Net cash provided by operating activities | 1,645,002 | ||||||
Cash flows used in financing activities: | |||||||
Proceeds from shares issued | 399,371 | ||||||
Payment on shares redeemed | (2,037,788 | ) | |||||
Redemption fees retained | 283 | ||||||
Cash distributions paid to shareholders | (8,461 | ) | |||||
Net cash used in financing activities | (1,646,595 | ) | |||||
Net decrease in cash | (1,593 | ) | |||||
Cash: | |||||||
Beginning of period | 42,332 | ||||||
End of period | $ | 40,739 |
86
The UBS Funds
Financial statements
Statement of cash flows
For the six months ended December 31, 2011 (unaudited)
UBS U.S. Equity Alpha Fund |
|||||||
Cash flows provided by operating activities: | |||||||
Net decrease in net assets from operations | $ | (2,587,472 | ) | ||||
Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating activities: |
|||||||
Purchase of investment securities | (11,850,185 | ) | |||||
Proceeds from disposition of investment securities | 22,728,480 | ||||||
Covers of investment securities sold short | (6,677,230 | ) | |||||
Proceeds from investment securities sold short | 5,679,738 | ||||||
Proceeds of short-term investments, net | 22,891 | ||||||
Change in net unrealized (appreciation)/depreciation on investments | 3,838,022 | ||||||
Change in net unrealized (appreciation)/depreciation on investment securities sold short | (940,106 | ) | |||||
Net realized (gain)/loss on investments | (984,326 | ) | |||||
Net realized (gain)/loss on investment securities sold short | 715,859 | ||||||
Decrease in cash collateral for securities sold short | 216,680 | ||||||
Increase in dividends receivable | (141 | ) | |||||
Decrease in interest receivable | 5 | ||||||
Decrease in dividends payable for securities sold short | (181 | ) | |||||
Increase in prepaid expenses and other assets | (12,354 | ) | |||||
Decrease in accrued expenses and other liabilities | (60,676 | ) | |||||
Net cash provided by operating activities | 10,089,004 | ||||||
Cash flows used in financing activities: | |||||||
Proceeds from shares issued | 458,916 | ||||||
Payment on shares redeemed | (10,554,610 | ) | |||||
Redemption fees retained | 1,488 | ||||||
Cash distributions paid to shareholders | (1,162 | ) | |||||
Net cash used in financing activities | (10,095,368 | ) | |||||
Net decrease in cash | (6,364 | ) | |||||
Cash: | |||||||
Beginning of period | 6,278 | ||||||
End of period | $ | (86 | ) |
See accompanying notes to financial statements.
87
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 December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.67 | $ | 10.36 | $ | 9.46 | $ | 13.54 | $ | 15.47 | $ | 12.99 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.03 | 0.03 | 0.05 | 0.10 | 0.15 | 0.13 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.66 | ) | 2.61 | 1.12 | (3.57 | ) | (2.08 | ) | 2.47 | ||||||||||||||||||
Total income (loss) from investment operations | (1.63 | ) | 2.64 | 1.17 | (3.47 | ) | (1.93 | ) | 2.60 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.01 | ) | (0.33 | ) | (0.27 | ) | (0.61 | ) | | (0.12 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.03 | $ | 12.67 | $ | 10.36 | $ | 9.46 | $ | 13.54 | $ | 15.47 | |||||||||||||||
Total investment return2 | (12.85 | )% | 25.52 | % | 12.05 | % | (24.86 | )% | (12.48 | )% | 20.11 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.58 | %3 | 1.53 | % | 1.55 | % | 1.48 | % | 1.31 | % | 1.35 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.50 | %3 | 1.50 | % | 1.50 | % | 1.25 | % | 1.25 | % | 1.25 | % | |||||||||||||||
Net investment income (loss) | 0.49 | %3 | 0.26 | % | 0.47 | % | 1.10 | % | 0.98 | % | 0.91 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 53,619 | $ | 67,172 | $ | 64,979 | $ | 72,280 | $ | 117,601 | $ | 168,208 | |||||||||||||||
Portfolio turnover rate | 45 | % | 83 | % | 83 | % | 76 | % | 66 | % | 32 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.38 | $ | 10.08 | $ | 9.22 | $ | 13.13 | $ | 15.11 | $ | 12.69 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.06 | ) | (0.04 | ) | 0.02 | 0.02 | 0.01 | ||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.62 | ) | 2.54 | 1.09 | (3.43 | ) | (2.00 | ) | 2.43 | ||||||||||||||||||
Total income (loss) from investment operations | (1.63 | ) | 2.48 | 1.05 | (3.41 | ) | (1.98 | ) | 2.44 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.18 | ) | (0.19 | ) | (0.50 | ) | | (0.02 | ) | |||||||||||||||||
Net asset value, end of period | $ | 10.75 | $ | 12.38 | $ | 10.08 | $ | 9.22 | $ | 13.13 | $ | 15.11 | |||||||||||||||
Total investment return2 | (13.17 | )% | 24.59 | % | 11.27 | % | (25.39 | )% | (13.10 | )% | 19.25 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 2.25 | %3 | 2.20 | % | 2.27 | % | 2.25 | % | 2.05 | % | 2.17 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 2.25 | %3 | 2.23 | %4 | 2.25 | % | 2.00 | % | 2.00 | % | 2.00 | % | |||||||||||||||
Net investment income (loss) | (0.26 | )%3 | (0.49 | )% | (0.34 | )% | 0.26 | % | 0.17 | % | 0.10 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 469 | $ | 598 | $ | 733 | $ | 1,254 | $ | 3,814 | $ | 7,439 | |||||||||||||||
Portfolio turnover rate | 45 | % | 83 | % | 83 | % | 76 | % | 66 | % | 32 | % |
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.
88
UBS Global Equity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 12.15 | $ | 9.94 | $ | 9.13 | $ | 13.05 | $ | 15.02 | $ | 12.65 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.06 | ) | (0.03 | ) | 0.03 | 0.03 | 0.02 | ||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.59 | ) | 2.50 | 1.07 | (3.44 | ) | (2.00 | ) | 2.42 | ||||||||||||||||||
Total income (loss) from investment operations | (1.60 | ) | 2.44 | 1.04 | (3.41 | ) | (1.97 | ) | 2.44 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.23 | ) | (0.23 | ) | (0.51 | ) | | (0.07 | ) | |||||||||||||||||
Net asset value, end of period | $ | 10.55 | $ | 12.15 | $ | 9.94 | $ | 9.13 | $ | 13.05 | $ | 15.02 | |||||||||||||||
Total investment return2 | (13.17 | )% | 24.48 | % | 11.29 | % | (25.46 | )% | (13.12 | )% | 19.28 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.39 | %3 | 2.32 | % | 2.34 | % | 2.30 | % | 2.11 | % | 2.14 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.25 | %3 | 2.25 | % | 2.25 | % | 2.00 | % | 2.00 | % | 2.00 | % | |||||||||||||||
Net investment income (loss) | (0.26 | )%3 | (0.49 | )% | (0.28 | )% | 0.34 | % | 0.23 | % | 0.16 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 16,889 | $ | 20,863 | $ | 20,499 | $ | 22,519 | $ | 35,900 | $ | 52,378 | |||||||||||||||
Portfolio turnover rate | 45 | % | 83 | % | 83 | % | 76 | % | 66 | % | 32 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 13.04 | $ | 10.65 | $ | 9.69 | $ | 13.84 | $ | 15.78 | $ | 13.23 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.05 | 0.08 | 0.08 | 0.13 | 0.19 | 0.17 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.72 | ) | 2.68 | 1.16 | (3.63 | ) | (2.13 | ) | 2.52 | ||||||||||||||||||
Total income (loss) from investment operations | (1.67 | ) | 2.76 | 1.24 | (3.50 | ) | (1.94 | ) | 2.69 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.06 | ) | (0.37 | ) | (0.28 | ) | (0.65 | ) | | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $ | 11.31 | $ | 13.04 | $ | 10.65 | $ | 9.69 | $ | 13.84 | $ | 15.78 | |||||||||||||||
Total investment return2 | (12.78 | )% | 25.98 | % | 12.51 | % | (24.52 | )% | (12.29 | )% | 20.44 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 1.21 | %3 | 1.15 | % | 1.15 | % | 1.08 | % | 0.96 | % | 0.99 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 1.21 | %3 | 1.15 | % | 1.15 | % | 1.00 | % | 1.00 | %4 | 0.99 | % | |||||||||||||||
Net investment income (loss) | 0.78 | %3 | 0.62 | % | 0.67 | % | 1.27 | % | 1.29 | % | 1.16 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 18,932 | $ | 23,230 | $ | 25,227 | $ | 66,646 | $ | 164,307 | $ | 180,027 | |||||||||||||||
Portfolio turnover rate | 45 | % | 83 | % | 83 | % | 76 | % | 66 | % | 32 | % |
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.
89
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 December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.21 | $ | 6.62 | $ | 6.48 | $ | 9.97 | $ | 12.99 | $ | 10.98 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.07 | 0.06 | 0.10 | 0.17 | 0.17 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.58 | ) | 1.78 | 0.54 | (2.89 | ) | (1.83 | ) | 2.47 | ||||||||||||||||||
Total income (loss) from investment operations | (1.57 | ) | 1.85 | 0.60 | (2.79 | ) | (1.66 | ) | 2.64 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.14 | ) | (0.26 | ) | (0.46 | ) | (0.16 | ) | (0.20 | ) | (0.11 | ) | |||||||||||||||
From net realized gains | | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | ||||||||||||||||||
Total dividends/distributions | (0.14 | ) | (0.26 | ) | (0.46 | ) | (0.70 | ) | (1.36 | ) | (0.63 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.50 | $ | 8.21 | $ | 6.62 | $ | 6.48 | $ | 9.97 | $ | 12.99 | |||||||||||||||
Total investment return2 | (19.11 | )% | 28.14 | % | 8.65 | % | (26.75 | )% | (13.93 | )% | 24.84 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.29 | %3 | 2.04 | % | 1.76 | % | 1.57 | % | 1.32 | % | 1.38 | %4 | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.25 | %3 | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.26 | %4 | |||||||||||||||
Net investment income (loss) | 0.40 | %3 | 0.93 | % | 0.83 | % | 1.50 | % | 1.43 | % | 1.42 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 6,354 | $ | 9,207 | $ | 6,875 | $ | 7,809 | $ | 17,023 | $ | 26,564 | |||||||||||||||
Portfolio turnover rate | 23 | % | 76 | % | 71 | % | 124 | % | 55 | % | 72 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.40 | $ | 6.60 | $ | 6.49 | $ | 9.79 | $ | 12.81 | $ | 10.82 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.01 | ) | 0.01 | 0.06 | 0.08 | 0.06 | |||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.62 | ) | 1.81 | 0.54 | (2.82 | ) | (1.79 | ) | 2.46 | ||||||||||||||||||
Total income (loss) from investment operations | (1.63 | ) | 1.80 | 0.55 | (2.76 | ) | (1.71 | ) | 2.52 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | | (0.44 | ) | | (0.15 | ) | (0.01 | ) | ||||||||||||||||||
From net realized gains | | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | ||||||||||||||||||
Total dividends/distributions | | | (0.44 | ) | (0.54 | ) | (1.31 | ) | (0.53 | ) | |||||||||||||||||
Net asset value, end of period | $ | 6.77 | $ | 8.40 | $ | 6.60 | $ | 6.49 | $ | 9.79 | $ | 12.81 | |||||||||||||||
Total investment return2 | (19.40 | )% | 27.27 | % | 7.85 | % | (27.30 | )% | (14.55 | )% | 23.97 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 3.55 | %3 | 2.87 | % | 2.56 | % | 2.52 | % | 2.25 | % | 2.25 | %4 | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.00 | %3 | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.01 | %4 | |||||||||||||||
Net investment income (loss) | (0.31 | )%3 | (0.09 | )% | 0.08 | % | 0.93 | % | 0.67 | % | 0.51 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 21 | $ | 40 | $ | 208 | $ | 218 | $ | 324 | $ | 555 | |||||||||||||||
Portfolio turnover rate | 23 | % | 76 | % | 71 | % | 124 | % | 55 | % | 72 | % |
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.
90
UBS International Equity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.02 | $ | 6.47 | $ | 6.34 | $ | 9.69 | $ | 12.71 | $ | 10.76 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | 0.03 | 0.01 | 0.05 | 0.09 | 0.08 | ||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.54 | ) | 1.72 | 0.53 | (2.80 | ) | (1.79 | ) | 2.42 | ||||||||||||||||||
Total income (loss) from investment operations | (1.55 | ) | 1.75 | 0.54 | (2.75 | ) | (1.70 | ) | 2.50 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.06 | ) | (0.20 | ) | (0.41 | ) | (0.06 | ) | (0.16 | ) | (0.03 | ) | |||||||||||||||
From net realized gains | | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | ||||||||||||||||||
Total dividends/distributions | (0.06 | ) | (0.20 | ) | (0.41 | ) | (0.60 | ) | (1.32 | ) | (0.55 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.41 | $ | 8.02 | $ | 6.47 | $ | 6.34 | $ | 9.69 | $ | 12.71 | |||||||||||||||
Total investment return2 | (19.36 | )% | 27.14 | % | 7.86 | % | (27.33 | )% | (14.51 | )% | 23.85 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 3.08 | %3 | 2.82 | % | 2.56 | % | 2.38 | % | 2.13 | % | 2.16 | %4 | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.00 | %3 | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.01 | %4 | |||||||||||||||
Net investment income (loss) | (0.32 | )%3 | 0.32 | % | 0.10 | % | 0.75 | % | 0.75 | % | 0.66 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 738 | $ | 1,405 | $ | 866 | $ | 914 | $ | 1,949 | $ | 2,576 | |||||||||||||||
Portfolio turnover rate | 23 | % | 76 | % | 71 | % | 124 | % | 55 | % | 72 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.25 | $ | 6.65 | $ | 6.51 | $ | 10.05 | $ | 13.07 | $ | 11.04 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.02 | 0.09 | 0.06 | 0.12 | 0.21 | 0.20 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.59 | ) | 1.79 | 0.57 | (2.91 | ) | (1.85 | ) | 2.49 | ||||||||||||||||||
Total income (loss) from investment operations | (1.57 | ) | 1.88 | 0.63 | (2.79 | ) | (1.64 | ) | 2.69 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.16 | ) | (0.28 | ) | (0.49 | ) | (0.21 | ) | (0.22 | ) | (0.14 | ) | |||||||||||||||
From net realized gains | | | | (0.54 | ) | (1.16 | ) | (0.52 | ) | ||||||||||||||||||
Total dividends/distributions | (0.16 | ) | (0.28 | ) | (0.49 | ) | (0.75 | ) | (1.38 | ) | (0.66 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.52 | $ | 8.25 | $ | 6.65 | $ | 6.51 | $ | 10.05 | $ | 13.07 | |||||||||||||||
Total investment return2 | (18.98 | )% | 28.46 | % | 8.94 | % | (26.62 | )% | (13.63 | )% | 24.83 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.07 | %3 | 1.78 | % | 1.55 | % | 1.42 | % | 1.13 | % | 1.16 | %4 | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.00 | %3 | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.01 | %4 | |||||||||||||||
Net investment income (loss) | 0.65 | %3 | 1.13 | % | 0.84 | % | 1.81 | % | 1.79 | % | 1.63 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 13,401 | $ | 17,829 | $ | 18,724 | $ | 66,665 | $ | 129,573 | $ | 172,150 | |||||||||||||||
Portfolio turnover rate | 23 | % | 76 | % | 71 | % | 124 | % | 55 | % | 72 | % |
3 Annualized.
4 Includes interest expense of 0.01%.
See accompanying notes to financial statements.
91
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 | ||||||||||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
||||||||||||||||
Net asset value, beginning of period | $ | 9.70 | $ | 10.00 | $ | 9.63 | $ | 10.00 | |||||||||||
Income (loss) from investment operations: | |||||||||||||||||||
Net investment loss1 | (0.11 | ) | (0.20 | ) | (0.15 | ) | (0.28 | ) | |||||||||||
Net realized and unrealized gain (loss) from investment activities | 0.003 | (0.12 | ) | 0.02 | (0.09 | ) | |||||||||||||
Total loss from investment operations | (0.11 | ) | (0.32 | ) | (0.13 | ) | (0.37 | ) | |||||||||||
Redemption fees | 0.003 | 0.02 | 0.003 | 0.003 | |||||||||||||||
Less dividends/distributions: | |||||||||||||||||||
From net realized gains | (0.01 | ) | | (0.01 | ) | | |||||||||||||
Net asset value, end of period | $ | 9.58 | $ | 9.70 | $ | 9.49 | $ | 9.63 | |||||||||||
Total investment return2 | (1.08 | )% | (3.00 | )% | (1.50 | )% | (3.60 | )% | |||||||||||
Ratios to average net assets: | |||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
5.18 | %4 | 5.26 | % | 5.77 | %4 | 5.94 | % | |||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
3.86 | %4 | 4.13 | % | 4.60 | %4 | 4.94 | % | |||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short |
1.75 | %4 | 1.75 | % | 2.50 | %4 | 2.50 | % | |||||||||||
Net investment loss | (2.35 | )%4 | (2.07 | )% | (3.11 | )%4 | (2.84 | )% | |||||||||||
Supplemental data: | |||||||||||||||||||
Net assets, end of period (000's) | $ | 2,988 | $ | 4,466 | $ | 660 | $ | 904 | |||||||||||
Portfolio turnover rate | 144 | % | 460 | % | 144 | % | 460 | % |
Class Y | |||||||||||
Six months ended December 31, 2011 (unaudited) |
Year ended June 30, 2011 |
||||||||||
Net asset value, beginning of period | $ | 9.72 | $ | 10.00 | |||||||
Income (loss) from investment operations: | |||||||||||
Net investment loss1 | (0.10 | ) | (0.18 | ) | |||||||
Net realized and unrealized gain (loss) from investment activities | 0.02 | (0.10 | ) | ||||||||
Total loss from investment operations | (0.08 | ) | (0.28 | ) | |||||||
Less dividends/distributions: | |||||||||||
From net realized gains | (0.01 | ) | | ||||||||
Net asset value, end of period | $ | 9.63 | $ | 9.72 | |||||||
Total investment return2 | (0.97 | )% | (2.70 | )% | |||||||
Ratios to average net assets: | |||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
4.77 | %4 | 4.83 | % | |||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
3.60 | %4 | 3.82 | % | |||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short |
1.50 | %4 | 1.50 | % | |||||||
Net investment loss | (2.09 | )%4 | (1.81 | )% | |||||||
Supplemental data: | |||||||||||
Net assets, end of period (000's) | $ | 14,435 | $ | 14,583 | |||||||
Portfolio turnover rate | 144 | % | 460 | % |
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.
See accompanying notes to financial statements.
92
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93
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, 2011 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | June 30, 20073 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.94 | $ | 7.01 | $ | 6.31 | $ | 8.82 | $ | 11.55 | $ | 10.00 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.02 | (0.01 | ) | 0.04 | 0.05 | 0.02 | ||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.66 | ) | 1.91 | 0.71 | (2.48 | ) | (2.10 | ) | 1.55 | ||||||||||||||||||
Total income (loss) from investment operations | (0.65 | ) | 1.93 | 0.70 | (2.44 | ) | (2.05 | ) | 1.57 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.01 | ) | | | (0.07 | ) | (0.03 | ) | (0.01 | ) | |||||||||||||||||
From net realized gains | | | | | (0.65 | ) | (0.01 | ) | |||||||||||||||||||
Total dividends/distributions | (0.01 | ) | | | (0.07 | ) | (0.68 | ) | (0.02 | ) | |||||||||||||||||
Net asset value, end of period | $ | 8.28 | $ | 8.94 | $ | 7.01 | $ | 6.31 | $ | 8.82 | $ | 11.55 | |||||||||||||||
Total investment return2 | (7.28 | )% | 27.53 | % | 11.09 | % | (27.52 | )% | (18.49 | )% | 15.73 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.91 | %4 | 2.54 | % | 2.44 | % | 2.47 | % | 1.93 | % | 1.93 | %4 | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.10 | %4 | 2.03 | % | 2.24 | % | 2.24 | % | 1.93 | % | 1.88 | %4 | |||||||||||||||
Expenses after fee waivers and/or 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 | % | 1.50 | %4 | |||||||||||||||
Net investment income (loss) | 0.36 | %4 | 0.24 | % | (0.10 | )% | 0.63 | % | 0.47 | % | 0.30 | %4 | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 11,073 | $ | 16,726 | $ | 22,938 | $ | 33,137 | $ | 93,344 | $ | 187,444 | |||||||||||||||
Portfolio turnover rate | 48 | % | 85 | % | 130 | % | 154 | % | 72 | % | 81 | % | |||||||||||||||
Class Y |
Six months ended December 31, 2011 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | June 30, 20073 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.94 | $ | 7.01 | $ | 6.30 | $ | 8.82 | $ | 11.55 | $ | 10.00 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.02 | 0.04 | 0.01 | 0.005 | 0.08 | 0.04 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.66 | ) | 1.92 | 0.70 | (2.41 | ) | (2.10 | ) | 1.54 | ||||||||||||||||||
Total income (loss) from investment operations | (0.64 | ) | 1.96 | 0.71 | (2.41 | ) | (2.02 | ) | 1.58 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.04 | ) | (0.03 | ) | | (0.11 | ) | (0.06 | ) | (0.02 | ) | ||||||||||||||||
From net realized gains | | | | | (0.65 | ) | (0.01 | ) | |||||||||||||||||||
Total dividends/distributions | (0.04 | ) | (0.03 | ) | | (0.11 | ) | (0.71 | ) | (0.03 | ) | ||||||||||||||||
Net asset value, end of period | $ | 8.26 | $ | 8.94 | $ | 7.01 | $ | 6.30 | $ | 8.82 | $ | 11.55 | |||||||||||||||
Total investment return2 | (7.19 | )% | 27.91 | % | 11.27 | % | (27.22 | )% | (18.34 | )% | 15.88 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.61 | %4 | 2.26 | % | 2.16 | % | 2.33 | % | 1.70 | % | 1.67 | %4 | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.86 | %4 | 1.78 | % | 2.00 | % | 2.25 | % | 1.70 | % | 1.67 | %4 | |||||||||||||||
Expenses after fee waivers and/or 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 | % | 1.25 | %4 | |||||||||||||||
Net investment income | 0.57 | %4 | 0.48 | % | 0.12 | % | 0.07 | % | 0.74 | % | 0.43 | %4 | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 4,291 | $ | 10,764 | $ | 12,132 | $ | 95,804 | $ | 9,121 | $ | 5,405 | |||||||||||||||
Portfolio turnover rate | 48 | % | 85 | % | 130 | % | 154 | % | 72 | % | 81 | % |
1 Calculated using the average shares method.
94
UBS U.S. Equity Alpha Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | June 30, 20073 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 8.78 | $ | 6.93 | $ | 6.29 | $ | 8.74 | $ | 11.50 | $ | 10.00 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.02 | ) | (0.04 | ) | (0.06 | ) | (0.01 | ) | (0.03 | ) | (0.04 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.66 | ) | 1.89 | 0.70 | (2.44 | ) | (2.08 | ) | 1.55 | ||||||||||||||||||
Total income (loss) from investment operations | (0.68 | ) | 1.85 | 0.64 | (2.45 | ) | (2.11 | ) | 1.51 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | | | | | | |||||||||||||||||||||
From net realized gains | | | | | (0.65 | ) | (0.01 | ) | |||||||||||||||||||
Total dividends/distributions | | | | | (0.65 | ) | (0.01 | ) | |||||||||||||||||||
Net asset value, end of period | $ | 8.10 | $ | 8.78 | $ | 6.93 | $ | 6.29 | $ | 8.74 | $ | 11.50 | |||||||||||||||
Total investment return2 | (7.75 | )% | 26.70 | % | 10.18 | % | (28.03 | )% | (19.11 | )% | 15.12 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
3.77 | %4 | 3.36 | % | 3.27 | % | 3.30 | % | 2.74 | % | 2.72 | %4 | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.86 | %4 | 2.78 | % | 2.98 | % | 2.99 | % | 2.68 | % | 2.64 | %4 | |||||||||||||||
Expenses after fee waivers and/or 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 | % | 2.25 | %4 | |||||||||||||||
Net investment income (loss) | (0.38 | )%4 | (0.52 | )% | (0.85 | )% | (0.12 | )% | (0.28 | )% | (0.44 | )%4 | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 3,723 | $ | 5,029 | $ | 6,810 | $ | 9,003 | $ | 22,823 | $ | 42,750 | |||||||||||||||
Portfolio turnover rate | 48 | % | 85 | % | 130 | % | 154 | % | 72 | % | 81 | % | |||||||||||||||
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 September 26, 2006 (commencement of operations) through June 30, 2007.
4 Annualized.
5 Amount represents less that $0.005 per share.
See accompanying notes to financial statements.
95
UBS U.S. Equity Opportunity 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, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.74 | $ | 5.33 | $ | 4.94 | $ | 8.42 | $ | 11.66 | $ | 10.54 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.03 | 0.06 | 0.05 | 0.11 | 0.14 | 0.13 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.74 | ) | 1.41 | 0.46 | (2.66 | ) | (2.25 | ) | 2.03 | ||||||||||||||||||
Total income (loss) from investment operations | (0.71 | ) | 1.47 | 0.51 | (2.55 | ) | (2.11 | ) | 2.16 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.06 | ) | (0.06 | ) | (0.12 | ) | (0.06 | ) | (0.14 | ) | (0.11 | ) | |||||||||||||||
From net realized gains | | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | ||||||||||||||||||
Total dividends/distributions | (0.06 | ) | (0.06 | ) | (0.12 | ) | (0.93 | ) | (1.13 | ) | (1.04 | ) | |||||||||||||||
Net asset value, end of period | $ | 5.97 | $ | 6.74 | $ | 5.33 | $ | 4.94 | $ | 8.42 | $ | 11.66 | |||||||||||||||
Total investment return2 | (10.43 | )% | 27.57 | % | 10.16 | % | (29.74 | )% | (19.38 | )% | 21.20 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.70 | %4 | 1.61 | % | 1.61 | % | 1.52 | % | 1.32 | % | 1.29 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.20 | %4 | 1.20 | % | 1.20 | % | 1.10 | % | 1.10 | % | 1.10 | % | |||||||||||||||
Net investment income | 1.06 | %4 | 0.88 | % | 0.83 | % | 1.89 | % | 1.35 | % | 1.12 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 36,105 | $ | 43,766 | $ | 41,012 | $ | 43,951 | $ | 78,989 | $ | 113,213 | |||||||||||||||
Portfolio turnover rate | 84 | % | 85 | % | 70 | % | 67 | % | 52 | % | 27 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.71 | $ | 5.29 | $ | 4.87 | $ | 8.33 | $ | 11.50 | $ | 10.39 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.01 | 0.003 | 0.003 | 0.06 | 0.06 | 0.04 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.74 | ) | 1.42 | 0.45 | (2.62 | ) | (2.21 | ) | 2.00 | ||||||||||||||||||
Total income (loss) from investment operations | (0.73 | ) | 1.42 | 0.45 | (2.56 | ) | (2.15 | ) | 2.04 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | | (0.03 | ) | (0.03 | ) | (0.03 | ) | | ||||||||||||||||||
From net realized gains | | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | ||||||||||||||||||
Total dividends/distributions | | | (0.03 | ) | (0.90 | ) | (1.02 | ) | (0.93 | ) | |||||||||||||||||
Net asset value, end of period | $ | 5.98 | $ | 6.71 | $ | 5.29 | $ | 4.87 | $ | 8.33 | $ | 11.50 | |||||||||||||||
Total investment return2 | (10.88 | )% | 26.84 | % | 9.18 | % | (30.23 | )% | (19.92 | )% | 20.21 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.94 | %4 | 2.48 | % | 2.62 | % | 2.48 | % | 2.17 | % | 2.19 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.95 | %4 | 1.95 | % | 1.95 | % | 1.85 | % | 1.85 | % | 1.85 | % | |||||||||||||||
Net investment income | 0.28 | %4 | 0.08 | % | 0.09 | % | 1.14 | % | 0.59 | % | 0.39 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 21 | $ | 35 | $ | 94 | $ | 247 | $ | 471 | $ | 1,061 | |||||||||||||||
Portfolio turnover rate | 84 | % | 85 | % | 70 | % | 67 | % | 52 | % | 27 | % |
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.
96
UBS U.S. Equity Opportunity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.59 | $ | 5.20 | $ | 4.83 | $ | 8.26 | $ | 11.42 | $ | 10.34 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.01 | 0.01 | 0.003 | 0.06 | 0.06 | 0.04 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.73 | ) | 1.39 | 0.45 | (2.60 | ) | (2.18 | ) | 1.99 | ||||||||||||||||||
Total income (loss) from investment operations | (0.72 | ) | 1.40 | 0.45 | (2.54 | ) | (2.12 | ) | 2.03 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.01 | ) | (0.01 | ) | (0.08 | ) | (0.02 | ) | (0.05 | ) | (0.02 | ) | |||||||||||||||
From net realized gains | | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | ||||||||||||||||||
Total dividends/distributions | (0.01 | ) | (0.01 | ) | (0.08 | ) | (0.89 | ) | (1.04 | ) | (0.95 | ) | |||||||||||||||
Net asset value, end of period | $ | 5.86 | $ | 6.59 | $ | 5.20 | $ | 4.83 | $ | 8.26 | $ | 11.42 | |||||||||||||||
Total investment return2 | (10.78 | )% | 26.87 | % | 9.08 | % | (30.25 | )% | (19.83 | )% | 20.24 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.50 | %4 | 2.40 | % | 2.41 | % | 2.33 | % | 2.10 | % | 2.06 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.95 | %4 | 1.95 | % | 1.95 | % | 1.85 | % | 1.85 | % | 1.85 | % | |||||||||||||||
Net investment income | 0.31 | %4 | 0.13 | % | 0.08 | % | 1.13 | % | 0.60 | % | 0.37 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 4,207 | $ | 4,992 | $ | 4,889 | $ | 5,429 | $ | 9,795 | $ | 15,919 | |||||||||||||||
Portfolio turnover rate | 84 | % | 85 | % | 70 | % | 67 | % | 52 | % | 27 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.79 | $ | 5.36 | $ | 4.97 | $ | 8.46 | $ | 11.71 | $ | 10.58 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income1 | 0.04 | 0.07 | 0.06 | 0.12 | 0.16 | 0.15 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (0.75 | ) | 1.43 | 0.47 | (2.67 | ) | (2.25 | ) | 2.05 | ||||||||||||||||||
Total income (loss) from investment operations | (0.71 | ) | 1.50 | 0.53 | (2.55 | ) | (2.09 | ) | 2.20 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.08 | ) | (0.07 | ) | (0.14 | ) | (0.07 | ) | (0.17 | ) | (0.14 | ) | |||||||||||||||
From net realized gains | | | | (0.87 | ) | (0.99 | ) | (0.93 | ) | ||||||||||||||||||
Total dividends/distributions | (0.08 | ) | (0.07 | ) | (0.14 | ) | (0.94 | ) | (1.16 | ) | (1.07 | ) | |||||||||||||||
Net asset value, end of period | $ | 6.00 | $ | 6.79 | $ | 5.36 | $ | 4.97 | $ | 8.46 | $ | 11.71 | |||||||||||||||
Total investment return2 | (10.37 | )% | 28.13 | % | 10.39 | % | (29.53 | )% | (19.15 | )% | 21.52 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.56 | %4 | 1.48 | % | 1.50 | % | 1.45 | % | 1.13 | % | 1.06 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.95 | %4 | 0.95 | % | 0.95 | % | 0.85 | % | 0.85 | % | 0.85 | % | |||||||||||||||
Net investment income | 1.33 | %4 | 1.13 | % | 1.07 | % | 2.08 | % | 1.60 | % | 1.36 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 1,629 | $ | 1,576 | $ | 1,515 | $ | 2,174 | $ | 5,694 | $ | 9,074 | |||||||||||||||
Portfolio turnover rate | 84 | % | 85 | % | 70 | % | 67 | % | 52 | % | 27 | % |
3 Amount represents less that $0.005 per share.
4 Annualized.
See accompanying notes to financial statements.
97
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 December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.46 | $ | 12.79 | $ | 11.48 | $ | 16.63 | $ | 21.19 | $ | 18.24 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.05 | 0.09 | 0.06 | 0.13 | 0.16 | 0.15 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.30 | ) | 3.65 | 1.54 | (4.84 | ) | (3.68 | ) | 3.52 | ||||||||||||||||||
Total income (loss) from investment operations | (1.25 | ) | 3.74 | 1.60 | (4.71 | ) | (3.52 | ) | 3.67 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.09 | ) | (0.07 | ) | (0.29 | ) | (0.07 | ) | (0.16 | ) | (0.10 | ) | |||||||||||||||
From net realized gains | | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | ||||||||||||||||||
Total dividends/distributions | (0.09 | ) | (0.07 | ) | (0.29 | ) | (0.44 | ) | (1.04 | ) | (0.72 | ) | |||||||||||||||
Net asset value, end of period | $ | 15.12 | $ | 16.46 | $ | 12.79 | $ | 11.48 | $ | 16.63 | $ | 21.19 | |||||||||||||||
Total investment return2 | (7.60 | )% | 29.28 | % | 13.75 | % | (28.04 | )% | (17.17 | )% | 20.39 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 1.27 | %4 | 1.19 | % | 1.33 | % | 1.28 | % | 1.16 | % | 1.18 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 1.20 | %4 | 1.20 | %5 | 1.20 | % | 1.28 | % | 1.16 | % | 1.18 | % | |||||||||||||||
Net investment income (loss) | 0.64 | %4 | 0.57 | % | 0.47 | % | 1.05 | % | 0.83 | % | 0.75 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 14,920 | $ | 19,832 | $ | 23,164 | $ | 34,406 | $ | 90,558 | $ | 158,138 | |||||||||||||||
Portfolio turnover rate | 29 | % | 60 | % | 50 | % | 62 | % | 47 | % | 34 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.04 | $ | 12.50 | $ | 11.14 | $ | 16.20 | $ | 20.66 | $ | 17.84 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.02 | ) | (0.04 | ) | 0.04 | 0.01 | 0.003 | ||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.27 | ) | 3.56 | 1.49 | (4.71 | ) | (3.58 | ) | 3.44 | ||||||||||||||||||
Total income (loss) from investment operations | (1.28 | ) | 3.54 | 1.45 | (4.67 | ) | (3.57 | ) | 3.44 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | | (0.09 | ) | (0.02 | ) | (0.01 | ) | | ||||||||||||||||||
From net realized gains | | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | ||||||||||||||||||
Total dividends/distributions | | | (0.09 | ) | (0.39 | ) | (0.89 | ) | (0.62 | ) | |||||||||||||||||
Net asset value, end of period | $ | 14.76 | $ | 16.04 | $ | 12.50 | $ | 11.14 | $ | 16.20 | $ | 20.66 | |||||||||||||||
Total investment return2 | (7.98 | )% | 28.32 | % | 12.96 | % | (28.61 | )% | (17.79 | )% | 19.50 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 2.17 | %4 | 2.06 | % | 2.10 | % | 2.02 | % | 1.93 | % | 1.95 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 1.95 | %4 | 1.95 | % | 1.95 | % | 2.02 | % | 1.93 | % | 1.95 | % | |||||||||||||||
Net investment income (loss) | (0.11 | )%4 | (0.17 | )% | (0.28 | )% | 0.33 | % | 0.07 | % | (0.01 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 82 | $ | 144 | $ | 170 | $ | 265 | $ | 635 | $ | 870 | |||||||||||||||
Portfolio turnover rate | 29 | % | 60 | % | 50 | % | 62 | % | 47 | % | 34 | % |
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.
98
UBS U.S. Large Cap Equity Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.88 | $ | 12.37 | $ | 11.14 | $ | 16.21 | $ | 20.66 | $ | 17.83 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | (0.03 | ) | (0.04 | ) | 0.04 | 0.02 | 0.003 | ||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.26 | ) | 3.54 | 1.50 | (4.71 | ) | (3.59 | ) | 3.45 | ||||||||||||||||||
Total income (loss) from investment operations | (1.27 | ) | 3.51 | 1.46 | (4.67 | ) | (3.57 | ) | 3.45 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | | (0.23 | ) | (0.03 | ) | | | |||||||||||||||||||
From net realized gains | | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | ||||||||||||||||||
Total dividends/distributions | | | (0.23 | ) | (0.40 | ) | (0.88 | ) | (0.62 | ) | |||||||||||||||||
Net asset value, end of period | $ | 14.61 | $ | 15.88 | $ | 12.37 | $ | 11.14 | $ | 16.21 | $ | 20.66 | |||||||||||||||
Total investment return2 | (8.00 | )% | 28.38 | % | 12.92 | % | (28.57 | )% | (17.76 | )% | 19.56 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 2.03 | %4 | 2.00 | % | 2.01 | % | 1.96 | % | 1.91 | % | 1.92 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 1.95 | %4 | 1.95 | % | 1.95 | % | 1.96 | % | 1.91 | % | 1.92 | % | |||||||||||||||
Net investment income (loss) | (0.10 | )%4 | (0.18 | )% | (0.28 | )% | 0.35 | % | 0.09 | % | 0.01 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 3,171 | $ | 3,467 | $ | 3,539 | $ | 4,719 | $ | 6,382 | $ | 10,591 | |||||||||||||||
Portfolio turnover rate | 29 | % | 60 | % | 50 | % | 62 | % | 47 | % | 34 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.60 | $ | 12.91 | $ | 11.62 | $ | 16.85 | $ | 21.44 | $ | 18.43 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.07 | 0.13 | 0.10 | 0.17 | 0.22 | 0.21 | |||||||||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.31 | ) | 3.68 | 1.56 | (4.91 | ) | (3.72 | ) | 3.56 | ||||||||||||||||||
Total income (loss) from investment operations | (1.24 | ) | 3.81 | 1.66 | (4.74 | ) | (3.50 | ) | 3.77 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.15 | ) | (0.12 | ) | (0.37 | ) | (0.12 | ) | (0.21 | ) | (0.14 | ) | |||||||||||||||
From net realized gains | | | | (0.37 | ) | (0.88 | ) | (0.62 | ) | ||||||||||||||||||
Total dividends/distributions | (0.15 | ) | (0.12 | ) | (0.37 | ) | (0.49 | ) | (1.09 | ) | (0.76 | ) | |||||||||||||||
Net asset value, end of period | $ | 15.21 | $ | 16.60 | $ | 12.91 | $ | 11.62 | $ | 16.85 | $ | 21.44 | |||||||||||||||
Total investment return2 | (7.46 | )% | 29.57 | % | 14.04 | % | (27.85 | )% | (16.87 | )% | 20.73 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 0.99 | %4 | 0.94 | % | 0.99 | % | 0.96 | % | 0.87 | % | 0.89 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 0.95 | %4 | 0.95 | %5 | 0.95 | % | 0.96 | % | 0.87 | % | 0.89 | % | |||||||||||||||
Net investment income (loss) | 0.90 | %4 | 0.82 | % | 0.72 | % | 1.39 | % | 1.13 | % | 1.04 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 184,154 | $ | 206,555 | $ | 188,636 | $ | 217,821 | $ | 645,803 | $ | 833,023 | |||||||||||||||
Portfolio turnover rate | 29 | % | 60 | % | 50 | % | 62 | % | 47 | % | 34 | % |
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.
See accompanying notes to financial statements.
99
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 December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.00 | $ | 10.60 | $ | 8.56 | $ | 13.31 | $ | 15.94 | $ | 14.41 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.06 | ) | (0.13 | ) | (0.10 | ) | (0.06 | ) | (0.12 | ) | (0.14 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.48 | ) | 5.53 | 2.14 | (4.69 | ) | (1.47 | ) | 2.14 | ||||||||||||||||||
Total income (loss) from investment operations | (1.54 | ) | 5.40 | 2.04 | (4.75 | ) | (1.59 | ) | 2.00 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net realized gains | | | | (0.00 | )3 | (1.04 | ) | (0.47 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 14.46 | $ | 16.00 | $ | 10.60 | $ | 8.56 | $ | 13.31 | $ | 15.94 | |||||||||||||||
Total investment return2 | (9.63 | )% | 50.94 | % | 23.83 | % | (35.68 | )% | (10.25 | )% | 14.18 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.63 | %4 | 1.54 | % | 1.60 | % | 1.67 | % | 1.47 | % | 1.65 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.40 | %4 | 1.40 | % | 1.40 | % | 1.28 | % | 1.28 | % | 1.28 | % | |||||||||||||||
Net investment loss | (0.89 | )%4 | (0.95 | )% | (1.00 | )% | (0.60 | )% | (0.81 | )% | (0.93 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 29,635 | $ | 38,319 | $ | 28,586 | $ | 41,141 | $ | 92,759 | $ | 149,362 | |||||||||||||||
Portfolio turnover rate | 25 | % | 55 | % | 72 | % | 73 | % | 51 | % | 34 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.81 | $ | 9.89 | $ | 8.05 | $ | 12.59 | $ | 15.25 | $ | 13.91 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.11 | ) | (0.21 | ) | (0.17 | ) | (0.12 | ) | (0.22 | ) | (0.24 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.36 | ) | 5.13 | 2.01 | (4.42 | ) | (1.40 | ) | 2.05 | ||||||||||||||||||
Total income (loss) from investment operations | (1.47 | ) | 4.92 | 1.84 | (4.54 | ) | (1.62 | ) | 1.81 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net realized gains | | | | (0.00 | )3 | (1.04 | ) | (0.47 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 13.34 | $ | 14.81 | $ | 9.89 | $ | 8.05 | $ | 12.59 | $ | 15.25 | |||||||||||||||
Total investment return2 | (9.93 | )% | 49.75 | % | 22.86 | % | (36.06 | )% | (10.94 | )% | 13.32 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 2.92 | %4 | 2.25 | % | 2.91 | % | 2.55 | % | 2.20 | % | 2.29 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 2.15 | %4 | 2.15 | % | 2.15 | % | 2.03 | % | 2.03 | % | 2.03 | % | |||||||||||||||
Net investment loss | (1.64 | )%4 | (1.68 | )% | (1.75 | )% | (1.38 | )% | (1.58 | )% | (1.69 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 20 | $ | 31 | $ | 74 | $ | 177 | $ | 661 | $ | 1,798 | |||||||||||||||
Portfolio turnover rate | 25 | % | 55 | % | 72 | % | 73 | % | 51 | % | 34 | % |
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.
100
UBS U.S. Small Cap Growth Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.78 | $ | 9.87 | $ | 8.03 | $ | 12.57 | $ | 15.23 | $ | 13.89 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.11 | ) | (0.22 | ) | (0.17 | ) | (0.12 | ) | (0.21 | ) | (0.24 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.36 | ) | 5.13 | 2.01 | (4.42 | ) | (1.41 | ) | 2.05 | ||||||||||||||||||
Total income (loss) from investment operations | (1.47 | ) | 4.91 | 1.84 | (4.54 | ) | (1.62 | ) | 1.81 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net realized gains | | | | (0.00 | )3 | (1.04 | ) | (0.47 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 13.31 | $ | 14.78 | $ | 9.87 | $ | 8.03 | $ | 12.57 | $ | 15.23 | |||||||||||||||
Total investment return2 | (9.95 | )% | 49.75 | % | 22.91 | % | (36.11 | )% | (10.95 | )% | 13.33 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.41 | %4 | 2.37 | % | 2.50 | % | 2.45 | % | 2.25 | % | 2.28 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.15 | %4 | 2.15 | % | 2.15 | % | 2.03 | % | 2.03 | % | 2.03 | % | |||||||||||||||
Net investment loss | (1.64 | )%4 | (1.70 | )% | (1.75 | )% | (1.38 | )% | (1.55 | )% | (1.68 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 2,261 | $ | 2,961 | $ | 2,336 | $ | 2,471 | $ | 6,042 | $ | 7,877 | |||||||||||||||
Portfolio turnover rate | 25 | % | 55 | % | 72 | % | 73 | % | 51 | % | 34 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.64 | $ | 11.00 | $ | 8.86 | $ | 13.74 | $ | 16.38 | $ | 14.75 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment loss1 | (0.05 | ) | (0.10 | ) | (0.08 | ) | (0.03 | ) | (0.08 | ) | (0.10 | ) | |||||||||||||||
Net realized and unrealized gain (loss) from investment activities | (1.53 | ) | 5.74 | 2.22 | (4.85 | ) | (1.52 | ) | 2.20 | ||||||||||||||||||
Total income (loss) from investment operations | (1.58 | ) | 5.64 | 2.14 | (4.88 | ) | (1.60 | ) | 2.10 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net realized gains | | | | (0.00 | )3 | (1.04 | ) | (0.47 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 15.06 | $ | 16.64 | $ | 11.00 | $ | 8.86 | $ | 13.74 | $ | 16.38 | |||||||||||||||
Total investment return2 | (9.50 | )% | 51.27 | % | 24.15 | % | (35.51 | )% | (10.03 | )% | 14.54 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement/recoupment | 1.15 | %4 | 1.13 | % | 1.21 | % | 1.25 | % | 1.12 | % | 1.18 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement/recoupment | 1.15 | %4 | 1.15 | %5 | 1.15 | % | 1.03 | % | 1.03 | % | 1.03 | % | |||||||||||||||
Net investment loss | (0.63 | )%4 | (0.70 | )% | (0.74 | )% | (0.36 | )% | (0.55 | )% | (0.68 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 99,850 | $ | 112,186 | $ | 94,725 | $ | 134,378 | $ | 272,666 | $ | 303,029 | |||||||||||||||
Portfolio turnover rate | 25 | % | 55 | % | 72 | % | 73 | % | 51 | % | 34 | % |
5 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.
101
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 14 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. Equity Opportunity Fund (formerly known as UBS U.S. Large Cap Value Equity Fund), UBS U.S. Large Cap 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 Advisor Trust 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. Effective on or about March 1, 2012, all outstanding Class B shares will be converted to Class A shares of the same Fund. 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 "evaluation" systems
102
The UBS Funds
Notes to financial statements (unaudited)
that derive values based on comparable securities or instruments. An evaluation 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 may result in securities being transferred between Level 1 and Level 2 of the fair valuation hierarchy at the end of the reporting period.
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 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.
103
The UBS Funds
Notes to financial statements (unaudited)
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.
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 Funds' 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 2010-06"). ASU 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. The disclosures surrounding purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements have been implemented for annual and interim periods beginning after December 15, 2010.
In May 2011, FASB issued Accounting Standards Update No. 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS")" ("ASU 2011-04"). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU 2011-04 and its impact on the financial statements.
In December 2011, FASB issued Accounting Standards Update No. 2011-11 "Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company's financial position. They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition, ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after
104
The UBS Funds
Notes to financial statements (unaudited)
January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact 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 in the Portfolio of investments. Certain derivative contracts entered into by the Funds may contain credit-risk related contingent features that could be triggered subject to certain circumstances. Such circumstances include agreed upon net asset value thresholds. If triggered, the derivative counterparty could request additional cash margin and/or terminate the derivative contract. The aggregate fair value of the derivative contracts that are in a net liability position that contain these triggers can be found in the Portfolio of investments. The aggregate fair value of assets that are already posted as collateral as of December 31, 2011 is reflected in the Statement of assets and liabilities. If the applicable credit-risk related contingent features were triggered as of December 31, 2011, the Fund would be required to post additional collateral or may be required to terminate the contract and settle any amounts outstanding. The volume of derivatives as disclosed in each Fund's Portfolio of investments is representative of the volume of derivatives outstanding during the period ended December 31, 2011, except for forward foreign currency contracts for UBS Global Equity Fund, UBS International Equity Fund and UBS Market Neutral Multi-Strategy Fund, for which the average volume during the period was greater than at period end.
Disclosure of derivatives by underlying risk for the Fund as of and for the period ended December 31, 2011 is as follows:
Asset derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||
Forward contracts1 | $ | | $ | 22,440 | $ | 22,440 | |||||||||
Futures contracts2 | 17,684 | | 17,684 | ||||||||||||
Total value | $ | 17,684 | $ | 22,440 | $ | 40,124 |
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 within Due from broker.
Liability derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||
Forward contracts1 | $ | | $ | (19,262 | ) | $ | (19,262 | ) | |||||||
Futures contracts2 | (8,559 | ) | | (8,559 | ) | ||||||||||
Total value | $ | (8,559 | ) | $ | (19,262 | ) | $ | (27,821 | ) |
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 within Due to broker.
105
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2011, were as follows:
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Market Neutral Multi-Strategy Fund | |||||||||||||||
Net realized gain (loss)1 | |||||||||||||||
Forward contracts | $ | | $ | (8,142 | ) | $ | (8,142 | ) | |||||||
Futures contracts | (220,551 | ) | | (220,551 | ) | ||||||||||
Total net realized gain (loss) | $ | (220,551 | ) | $ | (8,142 | ) | $ | (228,693 | ) | ||||||
Change in net unrealized appreciation/depreciation2 | |||||||||||||||
Forward contracts | $ | | $ | (3,253 | ) | $ | (3,253 | ) | |||||||
Futures contracts | (9,950 | ) | | (9,950 | ) | ||||||||||
Total change in net unrealized appreciation/depreciation | $ | (9,950 | ) | $ | (3,253 | ) | $ | (13,203 | ) |
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. Dividend income and expense are recorded on the ex-dividend date ("ex-date") except in the case of certain dividends from foreign securities which are recorded as soon after the ex-date as the respective Fund, using reasonable diligence, becomes aware of such dividends. 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.
106
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 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 non-cash settled 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 equal to the contract's full notional value. However, currency contracts with respect to identical currencies may be netted against each other and, in such cases, a Fund's custodian or sub-custodian will place assets in a segregated account of the Fund, in an amount equal to the net amount owed (the unrealized loss) by a Fund. 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 gains. Using financial futures contracts involves various market risks, including 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 as part of Due to or Due from broker 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 on securities while those securities are in a short position. These dividends are
107
The UBS Funds
Notes to financial statements (unaudited)
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 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, 2011, the following Funds recorded recaptured commissions which are reflected on the Statement of operations within the net realized gains (losses) on investments in unaffiliated issuers:
Fund | Amount | ||||||
UBS Global Equity Fund | $ | 1,181 | |||||
UBS U.S. Equity Alpha Fund | 2,194 | ||||||
UBS U.S. Equity Opportunity Fund | 4,698 | ||||||
UBS U.S. Large Cap Equity Fund | 16,639 |
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.
108
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 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. Equity Opportunity Fund | 0.700 | 0.650 | 0.600 | 0.575 | 0.550 | ||||||||||||||||||
UBS U.S. Large Cap 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 |
Fund |
$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 |
For UBS Global Equity Fund, UBS International Equity Fund, UBS U.S. Equity Opportunity Fund and UBS U.S. Large Cap 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 following 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 dividend expense and securities loan fees 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 dividend expense and securities loan fees for securities sold short) do not exceed the expense limit of each Fund as indicated in the following table. Investment advisory fees, including the dollar amount waived or reimbursed, for the period ended December 31, 2011, 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 | % | $ | 361,226 | $ | 36,609 | |||||||||||||||
UBS International Equity Fund | 1.25 | 2.00 | 2.00 | 1.00 | 93,046 | 123,373 | |||||||||||||||||||||
UBS Market Neutral Multi-Strategy Fund | 1.75 | N/A* | 2.50 | 1.50 | 120,030 | 114,670 | |||||||||||||||||||||
UBS U.S. Equity Alpha Fund | 1.50 | N/A* | 2.25 | 1.25 | 132,401 | 106,761 | |||||||||||||||||||||
UBS U.S. Equity Opportunity Fund | 1.20 | 1.95 | 1.95 | 0.95 | 152,904 | 110,578 | |||||||||||||||||||||
UBS U.S. Large Cap Equity Fund | 1.20 | 1.95 | 1.95 | 0.95 | 726,152 | 40,838 | |||||||||||||||||||||
UBS U.S. Small Cap Growth Fund | 1.40 | 2.15 | 2.15 | 1.15 | 577,103 | 41,332 |
* UBS Market Neutral Multi-Strategy Fund and UBS U.S. Equity Alpha Fund do not offer Class B shares.
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, 2011 are subject to repayment through
109
The UBS Funds
Notes to financial statements (unaudited)
June 30, 2015. At December 31, 2011, 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, 2012 |
Expires June 30, 2013 |
Expires June 30, 2014 |
Expires June 30, 2015 |
||||||||||||||||||
UBS Global Equity FundClass A | $ | 262,962 | $ | 183,038 | $ | 35,216 | $ | 20,895 | $ | 23,813 | |||||||||||||
UBS Global Equity FundClass B | 5,661 | 5,646 | 15 | | | ||||||||||||||||||
UBS Global Equity FundClass C | 121,158 | 71,037 | 22,469 | 14,856 | 12,796 | ||||||||||||||||||
UBS Global Equity FundClass Y | 76,072 | 76,072 | | | | ||||||||||||||||||
UBS Market Neutral Multi-Strategy FundClass A | 74,095 | | | 48,384 | 25,711 | ||||||||||||||||||
UBS Market Neutral Multi-Strategy FundClass C | 11,920 | | | 7,708 | 4,212 | ||||||||||||||||||
UBS Market Neutral Multi-Strategy FundClass Y | 283,925 | | | 199,178 | 84,747 | ||||||||||||||||||
UBS U.S. Equity Alpha FundClass A | 341,286 | 117,100 | 65,041 | 104,994 | 54,151 | ||||||||||||||||||
UBS U.S. Equity Alpha FundClass C | 120,854 | 40,859 | 25,435 | 35,648 | 18,912 | ||||||||||||||||||
UBS U.S. Equity Alpha FundClass Y | 191,113 | 23,783 | 76,513 | 57,119 | 33,698 | ||||||||||||||||||
UBS U.S. Equity Opportunity FundClass A | 698,409 | 224,763 | 196,379 | 183,453 | 93,814 | ||||||||||||||||||
UBS U.S. Equity Opportunity FundClass B | 3,786 | 2,049 | 1,215 | 412 | 110 | ||||||||||||||||||
UBS U.S. Equity Opportunity FundClass C | 93,303 | 30,998 | 26,604 | 23,692 | 12,009 | ||||||||||||||||||
UBS U.S. Equity Opportunity FundClass Y | 42,113 | 16,498 | 11,994 | 8,976 | 4,645 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass A | 44,617 | | 38,849 | | 5,768 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass B | 610 | | 318 | 169 | 123 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass C | 5,856 | | 2,660 | 1,932 | 1,264 | ||||||||||||||||||
UBS U.S. Large Cap Equity FundClass Y | 102,918 | | 69,235 | | 33,683 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass A | 376,815 | 218,473 | 74,652 | 47,545 | 36,145 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass B | 2,759 | 1,681 | 940 | 51 | 87 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass C | 32,913 | 14,437 | 8,898 | 6,270 | 3,308 | ||||||||||||||||||
UBS U.S. Small Cap Growth FundClass Y | 420,740 | 356,380 | 62,568 | | 1,792 |
Each Fund pays UBS Global AM 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, 2011, the Funds owed and incurred administrative fees as follows:
Fund |
Administrative fees owed |
Administrative fees incurred |
|||||||||
UBS Global Equity Fund | $ | 5,747 | $ | 36,026 | |||||||
UBS International Equity Fund | 1,317 | 8,694 | |||||||||
UBS Market Neutral Multi-Strategy Fund | 1,175 | 7,191 | |||||||||
UBS U.S. Equity Alpha Fund | 1,455 | 9,903 | |||||||||
UBS U.S. Equity Opportunity Fund | 2,676 | 16,338 | |||||||||
UBS U.S. Large Cap Equity Fund | 12,814 | 77,644 | |||||||||
UBS U.S. Small Cap Growth Fund | 8,444 | 50,808 |
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, 2011 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.
110
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 income 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, 2011, were as follows:
Fund | UBS AG | ||||||
UBS International Equity Fund | $ | 243 | |||||
UBS Market Neutral Multi-Strategy Fund | 6,204 | ||||||
UBS U.S. Equity Alpha Fund | 165 | ||||||
UBS U.S. Equity Opportunity Fund | 89 | ||||||
UBS U.S. Small Cap Growth Fund | 183 |
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. Equity Opportunity Fund | 0.25 | 1.00 | 1.00 | ||||||||||||
UBS U.S. Large Cap 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.
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, 2011, certain Funds owed UBS Global AM (US) service and distribution fees, and for the
111
The UBS Funds
Notes to financial statements (unaudited)
period ended December 31, 2011, 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 | $ | 11,550 | $ | 1,467 | |||||||
UBS Global Equity FundClass B | 401 | 17 | |||||||||
UBS Global Equity FundClass C | 14,476 | | |||||||||
UBS International Equity FundClass A | 1,382 | 57 | |||||||||
UBS International Equity FundClass B | 18 | 138 | |||||||||
UBS International Equity FundClass C | 620 | | |||||||||
UBS Market Neutral Multi-Strategy FundClass A | 712 | 123 | |||||||||
UBS Market Neutral Multi-Strategy FundClass C | 536 | 628 | |||||||||
UBS U.S. Equity Alpha FundClass A | 2,550 | 50 | |||||||||
UBS U.S. Equity Alpha FundClass C | 3,205 | 13 | |||||||||
UBS U.S. Equity Opportunity FundClass A | 7,745 | 226 | |||||||||
UBS U.S. Equity Opportunity FundClass B | 18 | 120 | |||||||||
UBS U.S. Equity Opportunity FundClass C | 3,598 | | |||||||||
UBS U.S. Large Cap Equity FundClass A | 3,224 | 2,343 | |||||||||
UBS U.S. Large Cap Equity FundClass B | 71 | | |||||||||
UBS U.S. Large Cap Equity FundClass C | 2,650 | | |||||||||
UBS U.S. Small Cap Growth FundClass A | 6,434 | 110 | |||||||||
UBS U.S. Small Cap Growth FundClass B | 17 | | |||||||||
UBS U.S. Small Cap Growth FundClass C | 1,971 | 1,117 |
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"), as each Fund's transfer agent, and is compensated for these services by BNY Mellon, not the Funds.
For the period ended December 31, 2011, UBS Financial Services Inc. received from BNY Mellon, not the Funds, total service fees as follows:
Fund | Amount paid | ||||||
UBS Global Equity Fund | $ | 30,033 | |||||
UBS International Equity Fund | 1,484 | ||||||
UBS Market Neutral Multi-Strategy Fund | 1,551 | ||||||
UBS U.S. Equity Alpha Fund | 4,194 | ||||||
UBS U.S. Equity Opportunity Fund | 8,935 | ||||||
UBS U.S. Large Cap Equity Fund | 2,061 | ||||||
UBS U.S. Small Cap Growth Fund | 5,648 |
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.
112
The UBS Funds
Notes to financial statements (unaudited)
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. Equity Opportunity Fund, UBS U.S. Large Cap 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 Fund's Portfolio of investments. The value of loaned securities and related collateral outstanding at December 31, 2011, 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 | $ | 2,460,742 | $ | 2,536,840 | $ | 2,536,840 | |||||||||
UBS International Equity Fund | 616,076 | 644,154 | 644,154 | ||||||||||||
UBS U.S. Equity Opportunity Fund | 423,482 | 887,661 | 887,661 | ||||||||||||
UBS U.S. Large Cap Equity Fund | 1,268,472 | 1,291,012 | 1,291,012 | ||||||||||||
UBS U.S. Small Cap Growth Fund | 7,497,705 | 7,707,904 | 7,707,904 |
6. Purchases and sales of securities
For the period ended December 31, 2011, 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 | $ | 42,937,418 | $ | 53,261,176 | |||||||
UBS International Equity Fund | 5,178,005 | 7,348,539 | |||||||||
UBS Market Neutral Multi-Strategy Fund | 42,738,762 | 42,688,584 | |||||||||
UBS U.S. Equity Alpha Fund | 18,621,572 | 29,298,263 | |||||||||
UBS U.S. Equity Opportunity Fund | 36,860,316 | 40,445,856 | |||||||||
UBS U.S. Large Cap Equity Fund | 59,632,556 | 72,122,559 | |||||||||
UBS U.S. Small Cap Growth Fund | 34,212,782 | 40,384,533 |
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.
113
The UBS Funds
Notes to financial statements (unaudited)
The tax character of distributions paid during the fiscal year ended June 30, 2011 were as follows:
2011 | |||||||
Fund |
Distributions paid from ordinary income |
||||||
UBS Global Equity Fund | $ | 3,119,145 | |||||
UBS International Equity Fund | 958,768 | ||||||
UBS U.S. Equity Alpha Fund | 35,347 | ||||||
UBS U.S. Equity Opportunity Fund | 425,326 | ||||||
UBS U.S. Large Cap Equity Fund | 1,698,152 |
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, 2012.
At June 30, 2011, 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, 2017 |
June 30, 2018 |
|||||||||
UBS Global Equity Fund | $ | | $ | (28,073,690 | ) | ||||||
UBS International Equity Fund | (407,480 | ) | (12,259,376 | ) | |||||||
UBS U.S. Equity Alpha Fund | (10,000,522 | ) | (12,503,688 | ) | |||||||
UBS U.S. Equity Opportunity Fund | (246,302 | ) | (20,216,588 | ) | |||||||
UBS U.S. Large Cap Equity Fund | (21,228,626 | ) | (167,517,489 | ) | |||||||
UBS U.S. Small Cap Growth Fund | | (41,811,793 | ) |
As of and during the period ended December 31, 2011, 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.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Act") was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an indefinite period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
Each of the tax years in the four year period ended June 30, 2011, remains subject to examination by the Internal Revenue Service and state taxing authorities.
114
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 $50 million committed line of credit to the Funds ("Committed Credit Facility") to be utilized for temporary financing until the settlement of sales 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, 2011, were as follows:
Fund |
Average daily borrowings |
Number of days outstanding |
Interest expense |
Weighted average annualized interest rate |
|||||||||||||||
UBS Global Equity Fund | $ | 4,327,758 | 5 | $ | 524 | 0.87 | % |
There were no borrowings from the Committed Credit Facility outstanding as of December 31, 2011.
9. Shares of beneficial interest
For the period ended December 31, 2011, 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 | 46,230 | $ | 500,333 | | $ | | |||||||||||||
Shares repurchased | (492,084 | ) | (5,494,181 | ) | (3,140 | ) | (37,250 | ) | |||||||||||
Shares converted from Class B to Class A | 1,487 | 17,714 | (1,523 | ) | (17,714 | ) | |||||||||||||
Dividends reinvested | 4,482 | 47,824 | | | |||||||||||||||
Redemption fees | | 3,246 | | | |||||||||||||||
Net decrease | (439,885 | ) | $ | (4,925,064 | ) | (4,663 | ) | $ | (54,964 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 23,979 | $ | 253,506 | 41,042 | $ | 523,756 | |||||||||||||
Shares repurchased | (139,861 | ) | (1,491,978 | ) | (158,263 | ) | (1,816,413 | ) | |||||||||||
Dividends reinvested | | | 9,318 | 102,029 | |||||||||||||||
Redemption fees | | 146 | | | |||||||||||||||
Net decrease | (115,882 | ) | $ | (1,238,326 | ) | (107,903 | ) | $ | (1,190,628 | ) |
115
The UBS Funds
Notes to financial statements (unaudited)
UBS International Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 98,551 | $ | 748,272 | | $ | | |||||||||||||
Shares repurchased | (263,648 | ) | (1,824,538 | ) | (1,559 | ) | (11,410 | ) | |||||||||||
Shares converted from Class B to Class A | 147 | 1,224 | (144 | ) | (1,224 | ) | |||||||||||||
Dividends reinvested | 20,534 | 129,572 | | | |||||||||||||||
Redemption fees | | 1,746 | | | |||||||||||||||
Net decrease | (144,416 | ) | $ | (943,724 | ) | (1,703 | ) | $ | (12,634 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 9,176 | $ | 61,893 | 75,943 | $ | 534,210 | |||||||||||||
Shares repurchased | (70,256 | ) | (462,371 | ) | (231,577 | ) | (1,597,505 | ) | |||||||||||
Dividends reinvested | 972 | 6,045 | 49,750 | 314,916 | |||||||||||||||
Redemption fees | | | | 840 | |||||||||||||||
Net decrease | (60,108 | ) | $ | (394,433 | ) | (105,884 | ) | $ | (747,539 | ) |
UBS Market Neutral Multi-Strategy Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 31,836 | $ | 306,645 | 9,372 | $ | 89,046 | | $ | | ||||||||||||||||||
Shares repurchased | (180,908 | ) | (1,739,138 | ) | (33,709 | ) | (321,614 | ) | | | |||||||||||||||||
Dividends reinvested | 179 | 1,717 | 30 | 285 | 7 | 69 | |||||||||||||||||||||
Redemption fees | | 283 | | | | | |||||||||||||||||||||
Net increase (decrease) | (148,893 | ) | $ | (1,430,493 | ) | (24,307 | ) | $ | (232,283 | ) | 7 | $ | 69 |
UBS U.S. Equity Alpha Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 9,114 | $ | 73,649 | 10,270 | $ | 75,742 | 30,814 | $ | 243,861 | ||||||||||||||||||
Shares repurchased | (543,346 | ) | (4,422,109 | ) | (123,826 | ) | (979,400 | ) | (719,503 | ) | (5,837,551 | ) | |||||||||||||||
Dividends reinvested | 1,501 | 12,070 | | | 4,845 | 38,859 | |||||||||||||||||||||
Redemption fees | | 921 | | 4 | | 563 | |||||||||||||||||||||
Net decrease | (532,731 | ) | $ | (4,335,469 | ) | (113,556 | ) | $ | (903,654 | ) | (683,844 | ) | $ | (5,554,268 | ) |
UBS U.S. Equity Opportunity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 5,168 | $ | 30,070 | | $ | | |||||||||||||
Shares repurchased | (505,332 | ) | (3,065,581 | ) | (1,692 | ) | (10,997 | ) | |||||||||||
Dividends reinvested | 59,439 | 343,560 | | | |||||||||||||||
Redemption fees | | 189 | | | |||||||||||||||
Net decrease | (440,725 | ) | $ | (2,691,762 | ) | (1,692 | ) | $ | (10,997 | ) |
116
The UBS Funds
Notes to financial statements (unaudited)
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 8,306 | $ | 48,773 | 47,950 | $ | 271,499 | |||||||||||||
Shares repurchased | (49,722 | ) | (295,935 | ) | (12,224 | ) | (74,752 | ) | |||||||||||
Dividends reinvested | 1,046 | 5,940 | 3,779 | 21,955 | |||||||||||||||
Net increase (decrease) | (40,370 | ) | $ | (241,222 | ) | 39,505 | $ | 218,702 |
UBS U.S. Large Cap Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 43,606 | $ | 647,628 | | $ | | |||||||||||||
Shares repurchased | (269,894 | ) | (4,047,907 | ) | (562 | ) | (9,133 | ) | |||||||||||
Shares converted from Class B to Class A | 2,808 | 41,096 | (2,890 | ) | (41,096 | ) | |||||||||||||
Dividends reinvested | 5,482 | 80,315 | | | |||||||||||||||
Redemption fees | | 597 | | | |||||||||||||||
Net decrease | (217,998 | ) | $ | (3,278,271 | ) | (3,452 | ) | $ | (50,229 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 25,845 | $ | 369,504 | 706,516 | $ | 10,849,952 | |||||||||||||
Shares repurchased | (27,190 | ) | (395,821 | ) | (1,157,070 | ) | (17,368,093 | ) | |||||||||||
Dividends reinvested | | | 119,424 | 1,759,121 | |||||||||||||||
Redemption fees | | | | 11,054 | |||||||||||||||
Net decrease | (1,345 | ) | $ | (26,317 | ) | (331,130 | ) | $ | (4,747,966 | ) |
UBS U.S. Small Cap Growth Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 169,172 | $ | 2,454,829 | | $ | | |||||||||||||
Shares repurchased | (515,632 | ) | (7,510,291 | ) | | | |||||||||||||
Shares converted from Class B to Class A | 534 | 7,827 | (578 | ) | (7,827 | ) | |||||||||||||
Redemption fees | | 1,266 | | | |||||||||||||||
Net decrease | (345,926 | ) | $ | (5,046,369 | ) | (578 | ) | $ | (7,827 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 5,836 | $ | 83,783 | 638,011 | $ | 9,583,453 | |||||||||||||
Shares repurchased | (36,317 | ) | (467,723 | ) | (749,776 | ) | (11,227,209 | ) | |||||||||||
Redemption fees | | 419 | | 11,871 | |||||||||||||||
Net decrease | (30,481 | ) | $ | (383,521 | ) | (111,765 | ) | $ | (1,631,885 | ) |
117
The UBS Funds
Notes to financial statements (unaudited)
For the year ended June 30, 2011, 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 | 149,340 | $ | 1,920,017 | 325 | $ | 3,955 | |||||||||||||
Shares repurchased | (1,272,205 | ) | (15,817,784 | ) | (9,813 | ) | (116,256 | ) | |||||||||||
Shares converted from Class B to Class A | 14,757 | 175,773 | (15,153 | ) | (175,773 | ) | |||||||||||||
Dividends reinvested | 137,883 | 1,709,749 | 234 | 2,843 | |||||||||||||||
Redemption fees | | 611 | | | |||||||||||||||
Net decrease | (970,225 | ) | $ | (12,011,634 | ) | (24,407 | ) | $ | (285,231 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 16,431 | $ | 197,648 | 96,980 | $ | 1,251,685 | |||||||||||||
Shares repurchased | (394,695 | ) | (4,714,816 | ) | (746,159 | ) | (9,509,898 | ) | |||||||||||
Dividends reinvested | 33,701 | 402,393 | 61,666 | 785,010 | |||||||||||||||
Redemption fees | | 26 | | 84 | |||||||||||||||
Net decrease | (344,563 | ) | $ | (4,114,749 | ) | (587,513 | ) | $ | (7,473,119 | ) |
UBS International Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 249,435 | $ | 2,003,310 | | $ | | |||||||||||||
Shares repurchased | (202,651 | ) | (1,587,735 | ) | (23,771 | ) | (189,375 | ) | |||||||||||
Shares converted from Class B to Class A | 2,906 | 20,748 | (2,898 | ) | (20,748 | ) | |||||||||||||
Dividends reinvested | 34,276 | 272,493 | | | |||||||||||||||
Redemption fees | | 1,407 | | | |||||||||||||||
Net increase (decrease) | 83,966 | $ | 710,223 | (26,669 | ) | $ | (210,123 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 69,592 | $ | 553,419 | 124,651 | $ | 994,876 | |||||||||||||
Shares repurchased | (31,259 | ) | (237,769 | ) | (856,335 | ) | (6,607,896 | ) | |||||||||||
Dividends reinvested | 3,173 | 24,751 | 79,234 | 632,293 | |||||||||||||||
Redemption fees | | 173 | | 667 | |||||||||||||||
Net increase (decrease) | 41,506 | $ | 340,574 | (652,450 | ) | $ | (4,980,060 | ) |
UBS Market Neutral Multi-Strategy Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 777,025 | $ | 7,714,287 | 101,962 | $ | 1,010,977 | 2,012,541 | $ | 20,131,307 | ||||||||||||||||||
Shares repurchased | (316,440 | ) | (3,117,135 | ) | (8,065 | ) | (78,956 | ) | (512,820 | ) | (5,000,000 | ) | |||||||||||||||
Redemption fees | | 6,897 | | 199 | | | |||||||||||||||||||||
Net increase | 460,585 | $ | 4,604,049 | 93,897 | $ | 932,220 | 1,499,721 | $ | 15,131,307 |
118
The UBS Funds
Notes to financial statements (unaudited)
UBS U.S. Equity Alpha Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 179,920 | $ | 1,500,075 | 2,316 | $ | 18,343 | 40,956 | $ | 336,170 | ||||||||||||||||||
Shares repurchased | (1,583,001 | ) | (13,094,969 | ) | (412,009 | ) | (3,366,542 | ) | (571,800 | ) | (4,656,964 | ) | |||||||||||||||
Dividends reinvested | | | | | 4,203 | 35,347 | |||||||||||||||||||||
Redemption fees | | 1,189 | | 70 | | 913 | |||||||||||||||||||||
Net decrease | (1,403,081 | ) | $ | (11,593,705 | ) | (409,693 | ) | $ | (3,348,129 | ) | (526,641 | ) | $ | (4,284,534 | ) |
UBS U.S. Equity Opportunity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 34,230 | $ | 218,247 | | $ | | |||||||||||||
Shares repurchased | (1,310,446 | ) | (8,274,037 | ) | (2,132 | ) | (13,071 | ) | |||||||||||
Shares converted from Class B to Class A | 10,412 | 69,198 | (10,460 | ) | (69,198 | ) | |||||||||||||
Dividends reinvested | 55,116 | 348,885 | | | |||||||||||||||
Redemption fees | | 756 | | | |||||||||||||||
Net decrease | (1,210,688 | ) | $ | (7,636,951 | ) | (12,592 | ) | $ | (82,269 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 24,844 | $ | 155,122 | 4,632 | $ | 29,422 | |||||||||||||
Shares repurchased | (207,858 | ) | (1,310,763 | ) | (57,989 | ) | (376,431 | ) | |||||||||||
Dividends reinvested | 878 | 5,453 | 3,007 | 19,154 | |||||||||||||||
Redemption fees | | 160 | | 11 | |||||||||||||||
Net decrease | (182,136 | ) | $ | (1,150,028 | ) | (50,350 | ) | $ | (327,844 | ) |
UBS U.S. Large Cap Equity Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 213,632 | $ | 3,246,905 | | $ | | |||||||||||||
Shares repurchased | (827,199 | ) | (12,817,491 | ) | (3,733 | ) | (50,295 | ) | |||||||||||
Shares converted from Class B to Class A | 866 | 13,311 | (887 | ) | (13,311 | ) | |||||||||||||
Dividends reinvested | 6,676 | 103,343 | | | |||||||||||||||
Redemption fees | | 2,579 | | | |||||||||||||||
Net decrease | (606,025 | ) | $ | (9,451,353 | ) | (4,620 | ) | $ | (63,606 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 11,660 | $ | 172,260 | 2,464,964 | $ | 37,044,986 | |||||||||||||
Shares repurchased | (79,289 | ) | (1,160,430 | ) | (4,738,066 | ) | (71,656,774 | ) | |||||||||||
Dividends reinvested | | | | 1,579,780 | |||||||||||||||
Redemption fees | | 90 | 101,333 | 16,648 | |||||||||||||||
Net decrease | (67,629 | ) | $ | (988,080 | ) | (2,171,769 | ) | $ | (33,015,360 | ) |
119
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 | 571,513 | $ | 8,030,544 | | $ | | |||||||||||||
Shares repurchased | (876,247 | ) | (11,899,215 | ) | (1,360 | ) | (15,253 | ) | |||||||||||
Shares converted from Class B to Class A | 3,726 | 50,744 | (4,007 | ) | (50,744 | ) | |||||||||||||
Redemption fees | | 3,633 | | | |||||||||||||||
Net decrease | (301,008 | ) | $ | (3,814,294 | ) | (5,367 | ) | $ | (65,997 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 20,977 | $ | 283,069 | 1,835,735 | $ | 26,999,341 | |||||||||||||
Shares repurchased | (57,351 | ) | (744,060 | ) | (3,705,564 | ) | (52,481,542 | ) | |||||||||||
Redemption fees | | 9 | | 16,664 | |||||||||||||||
Net decrease | (36,374 | ) | $ | (460,982 | ) | (1,869,829 | ) | $ | (25,465,537 | ) |
120
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).
121
PRESORTED
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PAID
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UBS Global Asset Management (Americas) Inc.
1285 Avenue of the Americas
New York, NY 10019
S1174
UBS Asset
Allocation Funds
December 31, 2011
The UBS FundsAsset Allocation
Semiannual Report
Table of contents | |||||||
President's letter | 1 | ||||||
Market commentary | 2 | ||||||
Asset Allocation | |||||||
UBS Dynamic Alpha Fund | 4 | ||||||
UBS Global Allocation Fund | 21 | ||||||
UBS Global Frontier Fund | 34 | ||||||
Explanation of expense disclosure | 45 | ||||||
Statement of assets and liabilities | 47 | ||||||
Statement of operations | 49 | ||||||
Statement of changes in net assets | 50 | ||||||
Financial highlights | 52 | ||||||
Notes to financial statements | 58 | ||||||
General information | 78 | ||||||
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President's letter
February 15, 2012
Dear Shareholder,
If I were asked to characterize the market environment of the past six months, I could probably crystallize it to one word: challenging. Adverse macroeconomic newsincluding events relating to Greece and the Eurozone, ratings downgrades and inflation concernsweighed heavily on investor sentiment, in turn causing markets to demonstrate unusually high levels of volatility.
In this environment of uncertainty, company fundamentals were largely ignored in favor of short-term news, making it difficult for active managers to add value through security selection. We were no different, and so stock selection was the primary detractor from performance across many of our equity and asset allocation funds during the period. Our fixed income portfolios, though generally experiencing performance more in line with their benchmarks, also faced certain headwinds, including a volatile credit and interest rate environment as investor sentiment frequently shifted between risk aversion and risk-taking.
In the time since I have been writing these letters to you, I have stressed the importance of maintaining a long-term perspective. This advice, though valuable under any circumstance, is never more important to follow than during periods of extreme market volatility, when fear plays a too large role in investor decision-making.
At UBS Global Asset Management, we have always kept an eye on the long term. This perspective has required us to evolve over our 30 years of investing, to meet the demands of a more complex investment landscapefor example, by combining our valuation work with market behavioral analysis in our asset allocation portfolios to better position them to navigate market volatility. However, we have never compromised on our core belief that strict adherence to our disciplined investment process through up and down marketsalthough it may, on occasion, result in short-term underperformanceis the most important way, over time, that we can add value in our clients' portfolios.
As I write this, the road ahead, though never certain, seems less unsure. Signs of a solution appear to be emerging in Europe, while US economic indicators seem to be improving. Year-to-date, the S&P 500 Indexthe standard-bearer of equity market performanceis in positive territory, and stock correlations and volatility appear to be moving lower. The market, once again, seems to be paying attention to fundamentals. Against this backdrop, we firmly believe that our portfolios will ultimately be rewarded for the positions we've taken, and that active managers will once again be well-positioned to add value in 2012.
As always, we remain firmly dedicated to your investment success. Thank you for your continued support.
Sincerely,
Mark E. Carver
President
The UBS Funds
Managing Director
UBS Global Asset Management (Americas) Inc.
1
The markets in review
Moderating growth in many countries
Although the overall US economy expanded during the reporting period, gross domestic product ("GDP") growth rates in general could best be characterized as tepid. At its August meeting, the Federal Reserve Board (the "Fed"), acknowledging that economic growth had been considerably slower than it expected, declared that it would keep the federal funds rate on hold until at least through mid-2013. In January 2012 (after the reporting period had ended), the Fed extended this period, noting that economic conditions warranted maintaining exceptionally low federal funds rate levels at least through late 2014.
Additionally, the Fed also announced its plan to purchase $400 billion of longer-term Treasury securities, and to sell an equal amount of shorter-term Treasury securities by June 2012. Dubbed "Operation Twist," the Fed noted that its intention with this program was to "put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative."
In contrast to the US, many international economies took a step backward as the reporting period progressed. Growth in the Eurozone was negatively impacted by its ongoing sovereign debt crisis, as well as weak consumer and business confidence. In contrast, Japan's economy gained some traction, emerging from its recession in the first half of the review period. Elsewhere, while growth rates in many developing countries such as China and India surpassed their developed country counterparts, they also tended to progressively move lower during the course of the reporting period.
Global equities declined
The global equity markets experienced periods of extreme volatility during the reporting period, as a number of macro factors impacted investor sentiment. After being highly resilient and rising earlier in 2011, the US stock market fell sharply in the first half of the review period, as investor risk appetite was replaced by risk aversion. Triggering this change in sentiment were concerns about the European sovereign debt crisis, signs of decelerating global growth and the downgrade of US long-term debt. US equities then rallied sharply in the second half of the year, given signs that the economy was gaining some traction. All told, the US stock market, as measured by the S&P 500 Index,1 declined 3.69% during the six-months ended December 31, 2011.
International developed equities (as measured by the MSCI EAFE Index (net)2) also moved higher during the first half of 2011. However, fears of contagion from the European sovereign debt crisis and increasing signs that Europe was headed for a double-dip recession led to a very sharp decline in the first half of the period. Unlike the US, however, international equities only experienced a modest gain in the second half of the period. Overall, for the six-month period ended December 31, 2011, the MSCI EAFE Index (net) declined 16.31%. Emerging markets equities (as measured by the MSCI Emerging Markets Index (net)3) generated even weaker results, falling 19.13% over the period. Concerns about a hard landing for China's economy and declining growth in the developed world drove emerging market equity prices lower.
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 (net) 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. 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. Investors should note that indices do not reflect the deduction of fees and expenses.
2
The markets in review
Riskier fixed income securities produced mixed results
The US taxable spread sectors (non-US Treasury fixed income securities) were a study in contrasts during the reporting period. Over the first half of the period, investor risk aversion was often elevated due to concerns about the European sovereign debt crisis, signs of decelerating global growth and the downgrade of US long-term debt. Against this backdrop, US Treasury yields fell sharply. Risk appetite then increased at times during the second half of the period, given signs that the US economy was gaining some traction. All told, during the six months ended December 31, 2011, spread sectors typically underperformed Treasuries, and the overall US bond market, as measured by the Barclays Capital US Aggregate Index,4 returned 4.98%.
Looking more closely at lower-rated fixed-income securities, the BofA Merrill Lynch US High Yield Cash Pay Constrained Index5 declined 0.39% during the reporting period. In contrast, emerging markets debt, as measured by the J.P. Morgan Emerging Markets Bond Index Global (EMBI Global),6 rose 3.21%. The emerging markets debt asset class was supported by continued solid growth in developing countries and generally solid demand from investors seeking to generate incremental yield in the low interest rate environment.
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, 2011, Class A shares of UBS Dynamic Alpha Fund (the "Fund") returned 0.83% (Class A shares declined 4.73% after the deduction of the maximum sales charge), while Class Y shares returned 0.99%. For purposes of comparison, the BofA Merrill Lynch US Treasury 1-5 Year Index returned 1.82% over the same time period, the MSCI World Free Index (net) declined 10.29% and the US Consumer Price Index (CPI) declined 0.02%. (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 produced a modest gain during the reporting period, primarily due to currency positioning and security selection.
During the review period, we used derivatives for risk management purposes and as a tool to help enhance returns across various strategies. With respect to our currency strategy, derivatives had a direct positive impact on Fund performance. At the market level, derivatives were just one tool among others that we used to implement our market allocation strategy. Having said that, overall, our market allocation strategy detracted from Fund performance during the period.
Portfolio performance summary1
What worked
• Currency strategies, overall, were positive for performance.
The Fund's long position in the Swiss franc was beneficial. The currency appreciated as its economic fundamentals were relatively solid during the reporting period.
Underweighting the euro was a modest contributor to performance, especially during the fourth quarter when the European sovereign debt crisis escalated and the euro depreciated.
• Relative value strategies, overall, were positive for performance.
The Fund's long position in investment grade credit relative to treasuries was beneficial as investor appetite for yield caused bond prices to rise, and narrowed credit spreads.
An overweight to US large caps vs. US small caps contributed to the Fund's performance. In general, we believed, and continue to believe, that expectations for higher growth globally favors large caps with a global business, while, in our view, small caps face more difficulty as stimulus is withdrawn.
• Security selection in several sleeves made a positive contribution to performance during the period. Security selection within the US Equity Market Neutral sleeve and US Core Bond sleeve modestly contributed to results.
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 positioning among risk assets detracted from results.
When the reporting period began, the Fund had a 30% equity market exposure. However, given a host of macro issues, including the European sovereign debt crisis and slowing global growth, we took a more conservative approach for the portfolio and moved to a net short allocation to equities in early August and September. While this was positive for performance when equities sold off sharply mid-period, it later detracted from performance when equities rebounded in the second half of the review period.
Within equities, a preference for international stocks was not rewarded, as they significantly lagged their US counterparts.
• Overall, currency strategies contributed to the Fund's performance, yet we did have some detractors during the period.
The Fund's long position in the Mexican peso was not rewarded, as it performed poorly.
Having an overweight to the Polish zloty had a negative impact on the Fund's performance.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 12/31/11 (unaudited)
6 months | 1 year | 5 years | Inception1 | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A2 | 0.83 | % | (1.63 | )% | (0.87 | )% | 1.64 | % | |||||||||||
Class B3 | 0.53 | (2.38 | ) | (1.63 | ) | 0.986 | |||||||||||||
Class C4 | 0.53 | (2.38 | ) | (1.63 | ) | 0.87 | |||||||||||||
Class Y5 | 0.99 | (1.28 | ) | (0.56 | ) | 1.95 | |||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A2 | (4.73 | )% | (7.08 | )% | (1.98 | )% | 0.82 | % | |||||||||||
Class B3 | (4.47 | ) | (7.26 | ) | (1.84 | ) | 0.986 | ||||||||||||
Class C4 | (0.47 | ) | (3.36 | ) | (1.63 | ) | 0.87 | ||||||||||||
BofA Merrill Lynch US Treasury 1-5 Year Index7 | 1.82 | % | 3.36 | % | 4.77 | % | 4.20 | % | |||||||||||
MSCI World Free Index (net)8 | (10.29 | ) | (5.54 | ) | (2.37 | ) | 2.58 | ||||||||||||
US Consumer Price Index (CPI)9 | (0.02 | ) | 2.96 | 2.26 | 2.46 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.84% and 1.81%; Class B2.68% and 2.55%; Class C2.60% and 2.56%; Class Y1.54% and 1.54%. 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 dividend expense and security loan fees 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 dividend expense and security loan fees for securities sold short), through the period ending October 27, 2012, 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
7 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.
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 2011, 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 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://globalam-us.ubs.com/corpweb/performance.do.
6
UBS Dynamic Alpha Fund
Top ten long-term fixed income holdings (unaudited)
As of December 31, 2011
Percentage of net assets |
|||||||
JPMorgan Chase & Co., 4.950%, due 03/25/20 |
2.1 | % | |||||
Citigroup, Inc., 6.000%, due 08/15/17 |
2.1 | ||||||
UK Gilts, 1.750%, due 01/22/17 |
1.6 | ||||||
Morgan Stanley, 5.950%, due 12/28/17 |
1.5 | ||||||
AT&T, Inc., 5.550%, due 08/15/41 |
1.5 | ||||||
Bank of America Corp., 5.650%, due 05/01/18 |
1.4 | ||||||
Anheuser-Busch InBev Worldwide, Inc., 5.000%, due 04/15/20 |
1.3 | ||||||
General Electric Capital Corp., Series A, 3.750%, due 11/14/14 |
1.3 | ||||||
Comcast Corp., 6.300%, due 11/15/17 |
1.3 | ||||||
Kraft Foods, Inc., 5.375%, due 02/10/20 |
1.2 | ||||||
Total | 15.3 | % |
Country exposure by issuer, top five (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
United States | 43.1 | % | |||||
United Kingdom | 15.3 | ||||||
Netherlands | 4.0 | ||||||
Canada | 3.6 | ||||||
France | 2.8 | ||||||
Total | 68.8 | % |
1 This table includes long and short positions.
7
UBS Dynamic Alpha Fund
Industry diversification (unaudited)2
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Household products | 0.00 | %3 | |||||
Bonds | |||||||
Corporate bonds | |||||||
Automobiles | 0.41 | ||||||
Beverages | 2.09 | ||||||
Building materials | 0.25 | ||||||
Capital markets | 4.26 | ||||||
Chemicals | 0.18 | ||||||
Commercial banks | 14.11 | ||||||
Commercial services & supplies | 1.78 | ||||||
Communications equipment | 0.22 | ||||||
Computers & peripherals | 0.63 | ||||||
Consumer finance | 0.83 | ||||||
Diversified financial services | 11.00 | ||||||
Diversified operations | 0.64 | ||||||
Diversified telecommunication services | 5.90 | ||||||
Electric utilities | 4.40 | ||||||
Energy equipment & services | 0.68 | ||||||
Engineering & construction | 0.74 | ||||||
Food & staples retailing | 0.95 | ||||||
Food products | 1.53 | ||||||
Gas utilities | 0.98 | ||||||
Health care equipment & supplies | 0.38 | ||||||
Health care providers & services | 0.04 | ||||||
Independent power producers & energy traders | 0.33 | ||||||
Insurance | 4.67 | ||||||
Leisure equipment & products | 0.27 | ||||||
Media | 4.36 | ||||||
Metals & mining | 3.61 | ||||||
Multi-utilities | 1.32 | ||||||
Oil, gas & consumable fuels | 6.92 | ||||||
Pharmaceuticals | 1.61 | % | |||||
Real estate investment trust (REIT) | 0.12 | ||||||
Real estate management & development | 0.25 | ||||||
Road & rail | 0.78 | ||||||
Specialty retail | 0.28 | ||||||
Tobacco | 2.54 | ||||||
Transportation | 0.24 | ||||||
Water utilities | 0.35 | ||||||
Wireless telecommunication services | 1.32 | ||||||
Total corporate bonds | 80.97 | % | |||||
Collateralized debt obligation | 0.003 | ||||||
Mortgage & agency debt securities | 0.01 | ||||||
US government obligation | 0.13 | ||||||
Non-US government obligations | 3.10 | ||||||
Total bonds | 84.21 | % | |||||
Short-term investment | 6.31 | ||||||
Investment of cash collateral from securities loaned | 0.53 | ||||||
Total investments before investments sold short | 91.05 | % | |||||
Investments sold short | |||||||
Common stocks | |||||||
Household products | (0.00 | )3 | |||||
Oil, gas & consumable fuels | (0.00 | )3 | |||||
Total investments sold short | (0.00 | )%3 | |||||
Total investments, net of investments sold short | 91.05 | ||||||
Cash and other assets, less liabilities | 8.95 | ||||||
Net assets | 100.00 | % |
2 Figures represent the industry breakdown of direct investments of UBS Dynamic Alpha Fund. Figures would be different if a breakdown of derivatives exposure was included.
3 Amount represents less than 0.005%.
8
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 0.00%1 | |||||||||||
United States0.00%1 | |||||||||||
Procter & Gamble Co (cost $6,279) |
100 | $ | 6,672 | ||||||||
Face amount |
|||||||||||
Bonds: 84.21% | |||||||||||
Corporate bonds: 80.97% | |||||||||||
Australia: 2.54% | |||||||||||
Commonwealth Bank of Australia, 3.500%, due 03/19/152 |
$ | 1,200,000 | 1,225,272 | ||||||||
National Australia Bank Ltd., 4.000%, due 07/13/20 |
EUR | 1,200,000 | 1,566,777 | ||||||||
Rio Tinto Finance USA Ltd., 4.125%, due 05/20/21 |
$ | 2,600,000 | 2,794,966 | ||||||||
Telstra Corp. Ltd., 4.800%, due 10/12/212 |
300,000 | 318,166 | |||||||||
Westpac Banking Corp., 4.125%, due 05/25/18 |
EUR | 900,000 | 1,192,121 | ||||||||
Total Australia corporate bonds | 7,097,302 | ||||||||||
Brazil: 0.07% | |||||||||||
Petrobras International Finance Co., 5.375%, due 01/27/21 |
$ | 200,000 | 209,538 | ||||||||
Canada: 3.63% | |||||||||||
Bank of Montreal, 6.020%, due 05/02/18 |
CAD | 750,000 | 870,081 | ||||||||
Bank of Nova Scotia, 4.100%, due 06/08/17 |
1,100,000 | 1,159,613 | |||||||||
Barrick Gold Corp., 2.900%, due 05/30/16 |
$ | 700,000 | 718,440 | ||||||||
Canadian Imperial Bank of Commerce, 3.400%, due 01/14/16 |
CAD | 750,000 | 766,093 | ||||||||
Canadian Natural Resources Ltd., 3.450%, due 11/15/213 |
$ | 500,000 | 521,119 | ||||||||
Greater Toronto Airports Authority, 6.980%, due 10/15/32 |
CAD | 500,000 | 676,363 | ||||||||
Hydro One, Inc., 5.360%, due 05/20/36 |
700,000 | 826,663 | |||||||||
Rogers Communications, Inc., 5.340%, due 03/22/21 |
200,000 | 211,661 | |||||||||
Royal Bank of Canada, 3.360%, due 01/11/16 |
250,000 | 254,991 | |||||||||
3.660%, due 01/25/17 | 1,000,000 | 1,033,257 | |||||||||
Suncor Energy, Inc., 6.500%, due 06/15/38 |
$ | 1,250,000 | 1,574,320 | ||||||||
Teck Resources Ltd., 3.150%, due 01/15/17 |
600,000 | 612,958 |
Face amount |
Value | ||||||||||
Toronto-Dominion Bank, 3.367%, due 11/02/204 |
CAD | 900,000 | $ | 897,456 | |||||||
Total Canada corporate bonds | 10,123,015 | ||||||||||
Cayman Islands: 2.43% | |||||||||||
Hutchison Whampoa International Ltd., 7.625%, due 04/09/192 |
$ | 1,450,000 | 1,786,307 | ||||||||
New York Life Funding, 5.125%, due 02/03/15 |
GBP | 500,000 | 840,882 | ||||||||
Principal Financial Global Funding II LLC, 4.500%, due 01/26/17 |
EUR | 550,000 | 718,028 | ||||||||
Transocean, Inc., 6.000%, due 03/15/18 |
$ | 1,150,000 | 1,175,324 | ||||||||
Vale Overseas Ltd., 5.625%, due 09/15/19 |
2,050,000 | 2,258,282 | |||||||||
Total Cayman Islands corporate bonds | 6,778,823 | ||||||||||
China: 0.14% | |||||||||||
Standard Chartered Bank Hong Kong Ltd., 0.648%, due 04/13/174 |
400,000 | 389,171 | |||||||||
France: 2.80% | |||||||||||
Autoroutes du Sud de la France SA, 5.625%, due 07/04/22 |
EUR | 750,000 | 1,036,620 | ||||||||
AXA SA, 5.250%, due 04/16/404 |
1,400,000 | 1,322,279 | |||||||||
Banque PSA Finance SA, 3.875%, due 01/18/13 |
1,000,000 | 1,286,239 | |||||||||
BNP Paribas SA, 3.500%, due 12/07/16 |
GBP | 350,000 | 518,886 | ||||||||
Casino Guichard Perrachon SA, 5.500%, due 01/30/15 |
EUR | 900,000 | 1,216,893 | ||||||||
EDF SA, 6.950%, due 01/26/392 |
$ | 350,000 | 411,919 | ||||||||
France Telecom SA, 7.250%, due 01/28/13 |
EUR | 350,000 | 478,403 | ||||||||
Societe Generale SA, 2.200%, due 09/14/132 |
$ | 1,180,000 | 1,108,702 | ||||||||
5.400%, due 01/30/18 | GBP | 350,000 | 424,720 | ||||||||
Total France corporate bonds | 7,804,661 | ||||||||||
Germany: 0.24% | |||||||||||
Muenchener Rueckversicherungs AG, 6.000%, due 05/26/414 |
EUR | 200,000 | 240,138 | ||||||||
RWE AG, 4.625%, due 09/28/154,5 |
350,000 | 419,013 | |||||||||
Total Germany corporate bonds | 659,151 |
9
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
Ireland: 0.80% | |||||||||||
CRH Finance Ltd., 7.375%, due 05/28/14 |
EUR | 500,000 | $ | 706,615 | |||||||
GE Capital European Funding, 6.025%, due 03/01/38 |
1,100,000 | 1,535,576 | |||||||||
Total Ireland corporate bonds | 2,242,191 | ||||||||||
Italy: 0.40% | |||||||||||
Banco Popolare SC, 4.125%, due 10/22/14 |
300,000 | 345,869 | |||||||||
Telecom Italia SpA, 7.000%, due 01/20/17 |
350,000 | 451,108 | |||||||||
7.375%, due 12/15/17 | GBP | 200,000 | 309,482 | ||||||||
Total Italy corporate bonds | 1,106,459 | ||||||||||
Luxembourg: 1.08% | |||||||||||
ArcelorMittal, 9.000%, due 02/15/15 |
$ | 1,300,000 | 1,437,262 | ||||||||
Enel Finance International SA, 6.000%, due 10/07/392 |
450,000 | 362,181 | |||||||||
GAZ Capital SA for Gazprom, 6.580%, due 10/31/13 |
GBP | 750,000 | 1,208,428 | ||||||||
Total Luxembourg corporate bonds | 3,007,871 | ||||||||||
Mexico: 0.57% | |||||||||||
America Movil SAB de CV, 3.625%, due 03/30/15 |
$ | 1,150,000 | 1,205,052 | ||||||||
5.000%, due 03/30/20 | 350,000 | 386,670 | |||||||||
Total Mexico corporate bonds | 1,591,722 | ||||||||||
Netherlands: 3.99% | |||||||||||
Alliander NV, 5.500%, due 04/20/16 |
EUR | 240,000 | 353,939 | ||||||||
Allianz Finance II BV, 5.750%, due 07/08/414 |
1,300,000 | 1,431,553 | |||||||||
Daimler International Finance BV, 7.875%, due 01/16/14 |
800,000 | 1,153,645 | |||||||||
Deutsche Telekom International Finance BV, 6.500%, due 04/08/22 |
GBP | 350,000 | 637,926 | ||||||||
E.ON International Finance BV, 6.000%, due 10/30/19 |
500,000 | 913,459 | |||||||||
HIT Finance BV, 5.750%, due 03/09/18 |
EUR | 200,000 | 254,837 | ||||||||
ING Bank NV, 6.125%, due 05/29/234 |
90,000 | 100,150 | |||||||||
Koninklijke KPN NV, 3.750%, due 09/21/20 |
1,500,000 | 1,940,777 | |||||||||
Linde Finance BV, 7.375%, due 07/14/664 |
350,000 | 486,957 |
Face amount |
Value | ||||||||||
Rabobank Nederland NV, 5.875%, due 05/20/19 |
EUR | 550,000 | $ | 739,363 | |||||||
Repsol International Finance BV, 4.250%, due 02/12/16 |
500,000 | 652,809 | |||||||||
4.750%, due 02/16/17 | 350,000 | 465,839 | |||||||||
RWE Finance BV, 5.625%, due 12/06/23 |
GBP | 400,000 | 711,330 | ||||||||
Scotland International Finance BV, 4.250%, due 05/23/132 |
$ | 800,000 | 712,000 | ||||||||
TenneT Holding BV, 6.655%, due 06/01/174,5 |
EUR | 450,000 | 580,997 | ||||||||
Total Netherlands corporate bonds | 11,135,581 | ||||||||||
Netherlands Antilles: 0.35% | |||||||||||
Teva Pharmaceutical Finance Co. BV, 3.650%, due 11/10/21 |
$ | 300,000 | 305,140 | ||||||||
Teva Pharmaceutical Finance IV BV, 3.650%, due 11/10/21 |
650,000 | 661,138 | |||||||||
Total Netherlands Antilles corporate bonds | 966,278 | ||||||||||
Portugal: 0.33% | |||||||||||
EDP Finance BV, 4.900%, due 10/01/192 |
600,000 | 457,680 | |||||||||
5.375%, due 11/02/122 | 457,000 | 451,351 | |||||||||
Total Portugal corporate bonds | 909,031 | ||||||||||
Qatar: 0.41% | |||||||||||
Qtel International Finance Ltd., 6.500%, due 06/10/142 |
1,050,000 | 1,142,925 | |||||||||
South Korea: 0.27% | |||||||||||
GS Caltex Corp., 5.500%, due 10/15/156 |
700,000 | 750,400 | |||||||||
Spain: 2.26% | |||||||||||
Banco Santander SA, 4.375%, due 03/16/15 |
EUR | 900,000 | 1,164,289 | ||||||||
BBVA US Senior SAU, 3.250%, due 05/16/14 |
$ | 850,000 | 805,141 | ||||||||
Gas Natural Capital Markets SA, 5.250%, due 07/09/14 |
EUR | 900,000 | 1,190,533 | ||||||||
Santander International Debt SAU, 3.381%, due 12/01/15 |
700,000 | 845,416 | |||||||||
Telefonica Emisiones SAU, 4.693%, due 11/11/19 |
500,000 | 607,702 | |||||||||
5.375%, due 02/02/18 | GBP | 1,100,000 | 1,687,288 | ||||||||
Total Spain corporate bonds | 6,300,369 | ||||||||||
Sweden: 1.08% | |||||||||||
Nordea Bank AB, 4.000%, due 06/29/20 |
EUR | 850,000 | 1,105,008 | ||||||||
6.250%, due 09/10/184 | 450,000 | 598,135 |
10
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
Sweden(Concluded) | |||||||||||
Svenska Handelsbanken AB, 5.125%, due 03/30/202 |
$ | 1,200,000 | $ | 1,300,637 | |||||||
Total Sweden corporate bonds | 3,003,780 | ||||||||||
Switzerland: 0.89% | |||||||||||
Credit Suisse AG, 5.400%, due 01/14/20 |
1,100,000 | 1,037,482 | |||||||||
Credit Suisse/London, 5.125%, due 09/18/17 |
EUR | 1,050,000 | 1,451,358 | ||||||||
Total Switzerland corporate bonds | 2,488,840 | ||||||||||
United Kingdom: 13.74% | |||||||||||
Abbey National Treasury Services PLC, 3.875%, due 11/10/142 |
$ | 650,000 | 610,030 | ||||||||
Aviva PLC, 5.250%, due 10/02/234 |
EUR | 1,400,000 | 1,721,352 | ||||||||
B.A.T. International Finance PLC, 9.500%, due 11/15/182 |
$ | 750,000 | 1,018,410 | ||||||||
BAA Funding Ltd., 6.750%, due 12/03/26 |
GBP | 1,150,000 | 2,078,049 | ||||||||
Barclays Bank PLC, 0.740%, due 09/11/174 |
$ | 900,000 | 783,063 | ||||||||
5.750%, due 08/17/21 | GBP | 450,000 | 701,274 | ||||||||
BP Capital Markets PLC, 3.561%, due 11/01/21 |
$ | 280,000 | 291,503 | ||||||||
3.875%, due 03/10/15 | 700,000 | 747,465 | |||||||||
Brambles Finance PLC, 4.625%, due 04/20/18 |
EUR | 400,000 | 546,712 | ||||||||
British Sky Broadcasting Group PLC, 9.500%, due 11/15/182 |
$ | 600,000 | 776,522 | ||||||||
British Telecommunications PLC, 8.500%, due 12/07/16 |
GBP | 925,000 | 1,755,540 | ||||||||
Friends Life Group PLC, 8.250%, due 04/21/22 |
800,000 | 1,096,438 | |||||||||
HSBC Capital Funding LP, 5.369%, due 03/24/144,5 |
EUR | 400,000 | 445,222 | ||||||||
HSBC Holdings PLC, 5.100%, due 04/05/21 |
$ | 850,000 | 903,204 | ||||||||
6.250%, due 03/19/18 | EUR | 900,000 | 1,197,479 | ||||||||
6.500%, due 09/15/37 | $ | 2,450,000 | 2,418,373 | ||||||||
Imperial Tobacco Finance PLC, 4.500%, due 07/05/18 |
EUR | 1,200,000 | 1,595,826 | ||||||||
9.000%, due 02/17/22 | GBP | 650,000 | 1,358,457 | ||||||||
Lloyds Banking Group PLC, 5.875%, due 07/08/14 |
EUR | 1,300,000 | 1,584,086 | ||||||||
Lloyds TSB Bank PLC, 6.500%, due 03/24/20 |
750,000 | 761,553 | |||||||||
National Express Group PLC, 6.250%, due 01/13/17 |
GBP | 350,000 | 584,030 |
Face amount |
Value | ||||||||||
Old Mutual PLC, 4.500%, due 01/18/174 |
EUR | 200,000 | $ | 259,038 | |||||||
Royal Bank of Scotland PLC, 3.400%, due 08/23/13 |
$ | 1,550,000 | 1,507,936 | ||||||||
4.875%, due 03/16/15 | 750,000 | 717,137 | |||||||||
4.875%, due 01/20/17 | EUR | 550,000 | 672,437 | ||||||||
SABMiller PLC, 4.500%, due 01/20/15 |
600,000 | 824,368 | |||||||||
Scottish & Southern Energy PLC, 5.453%, due 10/01/154,5 |
GBP | 550,000 | 831,942 | ||||||||
Standard Chartered PLC, 3.850%, due 04/27/152 |
$ | 1,650,000 | 1,660,664 | ||||||||
Tesco PLC, 6.125%, due 02/24/22 |
GBP | 450,000 | 824,992 | ||||||||
Tesco Property Finance 4 PLC, 5.801%, due 10/13/406 |
348,306 | 588,621 | |||||||||
Thames Water Utilities Finance Ltd., 5.125%, due 09/28/37 |
600,000 | 980,186 | |||||||||
Vodafone Group PLC, 5.625%, due 02/27/17 |
$ | 1,600,000 | 1,857,814 | ||||||||
Wales & West Utilities Finance PLC, 5.125%, due 12/02/16 |
GBP | 900,000 | 1,541,481 | ||||||||
Western Power Distribution East Midlands PLC, 5.250%, due 01/17/23 |
450,000 | 765,526 | |||||||||
Western Power Distribution West Midlands PLC, 5.750%, due 04/16/32 |
400,000 | 690,608 | |||||||||
WPP PLC, 6.000%, due 04/04/17 |
350,000 | 601,922 | |||||||||
6.625%, due 05/12/16 | EUR | 700,000 | 1,004,500 | ||||||||
Total United Kingdom corporate bonds | 38,303,760 | ||||||||||
United States: 42.95% | |||||||||||
Abbott Laboratories, 6.000%, due 04/01/39 |
$ | 550,000 | 698,746 | ||||||||
Alcoa, Inc., 6.150%, due 08/15/20 |
2,150,000 | 2,233,798 | |||||||||
Allegheny Energy Supply Co. LLC, 5.750%, due 10/15/192 |
850,000 | 909,075 | |||||||||
Alltel Corp., 7.875%, due 07/01/32 |
550,000 | 786,070 | |||||||||
Altria Group, Inc., 4.750%, due 05/05/21 |
2,800,000 | 3,082,906 | |||||||||
American Honda Finance Corp., 3.875%, due 09/16/14 |
EUR | 450,000 | 615,494 | ||||||||
American International Group, Inc., 5.850%, due 01/16/18 |
$ | 1,850,000 | 1,809,328 | ||||||||
Anadarko Petroleum Corp., 6.375%, due 09/15/17 |
2,150,000 | 2,492,138 | |||||||||
7.625%, due 03/15/14 | 100,000 | 111,086 |
11
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Continued) | |||||||||||
United States(Continued) | |||||||||||
Anheuser-Busch InBev Worldwide, Inc., 5.000%, due 04/15/20 |
$ | 3,100,000 | $ | 3,553,189 | |||||||
AT&T, Inc., 3.875%, due 08/15/21 |
1,225,000 | 1,295,745 | |||||||||
5.550%, due 08/15/41 | 3,450,000 | 4,062,089 | |||||||||
Bank of America Corp., 5.250%, due 11/09/16 |
GBP | 400,000 | 546,134 | ||||||||
5.650%, due 05/01/18 | $ | 4,000,000 | 3,811,012 | ||||||||
7.375%, due 05/15/14 | 2,250,000 | 2,332,933 | |||||||||
Boston Scientific Corp., 6.000%, due 01/15/20 |
950,000 | 1,060,522 | |||||||||
Burlington Northern Santa Fe LLC, 3.450%, due 09/15/21 |
1,550,000 | 1,597,568 | |||||||||
Cameron International Corp., 6.375%, due 07/15/18 |
600,000 | 710,567 | |||||||||
Cargill, Inc., 3.250%, due 11/15/212 |
200,000 | 201,289 | |||||||||
CBS Corp., 8.875%, due 05/15/19 |
400,000 | 513,757 | |||||||||
Citigroup, Inc., 6.000%, due 08/15/177 |
5,500,000 | 5,763,791 | |||||||||
Comcast Corp., 6.300%, due 11/15/17 |
2,950,000 | 3,489,254 | |||||||||
ConocoPhillips, 4.600%, due 01/15/15 |
300,000 | 331,798 | |||||||||
Dell, Inc., 5.400%, due 09/10/40 |
650,000 | 730,757 | |||||||||
DirecTV Holdings LLC, 5.000%, due 03/01/21 |
2,400,000 | 2,568,526 | |||||||||
Dow Chemical Co., 5.900%, due 02/15/15 |
450,000 | 500,724 | |||||||||
Duke Energy Corp., 2.150%, due 11/15/16 |
500,000 | 501,421 | |||||||||
5.050%, due 09/15/19 | 250,000 | 283,639 | |||||||||
Energy Transfer Partners LP, 6.050%, due 06/01/41 |
350,000 | 343,192 | |||||||||
9.700%, due 03/15/19 | 1,250,000 | 1,531,438 | |||||||||
Enterprise Products Operating LLC, 3.200%, due 02/01/16 |
1,520,000 | 1,573,626 | |||||||||
ERAC USA Finance LLC, 5.250%, due 10/01/202 |
350,000 | 377,351 | |||||||||
ERP Operating LP, REIT, 5.750%, due 06/15/17 |
300,000 | 332,621 | |||||||||
FirstEnergy Solutions Corp., 6.050%, due 08/15/21 |
700,000 | 776,787 | |||||||||
General Electric Capital Corp., Series A, 3.750%, due 11/14/14 |
3,350,000 | 3,531,128 | |||||||||
6.000%, due 08/07/19 | 800,000 | 918,903 | |||||||||
Series A, 6.750%, due 03/15/327 | 2,300,000 | 2,693,164 |
Face amount |
Value | ||||||||||
Georgia Power Co., 5.400%, due 06/01/40 |
$ | 600,000 | $ | 722,840 | |||||||
GlaxoSmithKline Capital, Inc., 6.375%, due 05/15/38 |
1,100,000 | 1,471,857 | |||||||||
Goldman Sachs Group, Inc., 4.375%, due 03/16/17 |
EUR | 2,250,000 | 2,726,815 | ||||||||
6.150%, due 04/01/18 | $ | 1,700,000 | 1,754,551 | ||||||||
Hasbro, Inc., 6.350%, due 03/15/40 |
700,000 | 756,755 | |||||||||
Hewlett-Packard Co., 2.625%, due 12/09/14 |
1,010,000 | 1,018,899 | |||||||||
Home Depot, Inc., 4.400%, due 04/01/21 |
700,000 | 789,219 | |||||||||
Indiana Michigan Power Co., 7.000%, due 03/15/19 |
350,000 | 430,498 | |||||||||
JPMorgan Chase & Co., 4.950%, due 03/25/20 |
5,500,000 | 5,845,780 | |||||||||
Kellogg Co., 1.875%, due 11/17/16 |
600,000 | 602,419 | |||||||||
Kinder Morgan Energy Partners LP, 4.150%, due 03/01/223 |
1,700,000 | 1,729,131 | |||||||||
Kraft Foods, Inc., 5.375%, due 02/10/20 |
3,000,000 | 3,461,553 | |||||||||
Merck & Co., Inc., 6.550%, due 09/15/37 |
950,000 | 1,324,386 | |||||||||
MetLife, Inc., 7.717%, due 02/15/19 |
1,500,000 | 1,880,919 | |||||||||
Morgan Stanley, 5.450%, due 01/09/17 |
1,000,000 | 962,764 | |||||||||
5.950%, due 12/28/17 | 4,400,000 | 4,192,038 | |||||||||
Motorola Solutions, Inc., 6.000%, due 11/15/17 |
550,000 | 616,476 | |||||||||
NBCUniversal Media LLC, 4.375%, due 04/01/21 |
250,000 | 263,837 | |||||||||
News America, Inc., 6.900%, due 03/01/19 |
450,000 | 528,883 | |||||||||
NuStar Logistics LP, 4.800%, due 09/01/20 |
1,150,000 | 1,197,642 | |||||||||
Oncor Electric Delivery Co. LLC, 7.000%, due 05/01/32 |
150,000 | 198,053 | |||||||||
ONEOK Partners LP, 8.625%, due 03/01/19 |
200,000 | 256,738 | |||||||||
Pacific Gas & Electric Co., 6.050%, due 03/01/34 |
650,000 | 804,595 | |||||||||
PacifiCorp, 6.000%, due 01/15/39 |
1,200,000 | 1,532,357 | |||||||||
Pemex Project Funding Master Trust, 5.500%, due 02/24/256 |
EUR | 950,000 | 1,141,011 | ||||||||
PepsiCo, Inc., 3.125%, due 11/01/20 |
$ | 1,400,000 | 1,455,014 | ||||||||
Philip Morris International, Inc., 2.900%, due 11/15/21 |
300,000 | 305,865 |
12
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Continued) | |||||||||||
Corporate bonds(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
PNC Funding Corp., 5.125%, due 02/08/20 |
$ | 200,000 | $ | 225,994 | |||||||
Principal Financial Group, Inc., 8.875%, due 05/15/19 |
600,000 | 747,026 | |||||||||
Progress Energy, Inc., 4.400%, due 01/15/21 |
400,000 | 440,914 | |||||||||
Prudential Financial, Inc., 4.500%, due 11/15/20 |
1,800,000 | 1,809,985 | |||||||||
Republic Services, Inc., 5.250%, due 11/15/21 |
1,750,000 | 1,984,304 | |||||||||
Reynolds American, Inc., 6.750%, due 06/15/17 |
1,150,000 | 1,307,122 | |||||||||
Sempra Energy, 6.000%, due 10/15/39 |
750,000 | 925,394 | |||||||||
SLM Corp., 6.250%, due 01/25/16 |
1,750,000 | 1,701,838 | |||||||||
Southwestern Electric Power Co., 6.200%, due 03/15/40 |
250,000 | 305,356 | |||||||||
Time Warner Cable, Inc., 6.750%, due 06/15/39 |
300,000 | 354,515 | |||||||||
8.250%, due 04/01/19 | 1,650,000 | 2,072,420 | |||||||||
Valero Energy Corp., 6.625%, due 06/15/37 |
1,400,000 | 1,501,132 | |||||||||
10.500%, due 03/15/39 | 500,000 | 737,606 | |||||||||
Verizon Communications, Inc., 6.350%, due 04/01/19 |
1,350,000 | 1,644,984 | |||||||||
Virginia Electric and Power Co., 8.875%, due 11/15/38 |
250,000 | 413,056 | |||||||||
Wachovia Corp., 5.750%, due 02/01/18 |
2,000,000 | 2,272,044 | |||||||||
Waste Management, Inc., 7.375%, due 03/11/19 |
900,000 | 1,133,330 | |||||||||
WEA Finance LLC, 5.750%, due 09/02/152 |
650,000 | 690,893 | |||||||||
WellPoint, Inc., 4.350%, due 08/15/20 |
100,000 | 108,024 | |||||||||
Wells Fargo & Co., 2.625%, due 12/15/16 |
1,450,000 | 1,449,116 | |||||||||
Xcel Energy, Inc., 4.700%, due 05/15/20 |
1,150,000 | 1,296,075 | |||||||||
Total United States corporate bonds |
119,763,589 | ||||||||||
Total corporate bonds (cost $228,566,209) |
225,774,457 |
Face amount |
Value | ||||||||||
Collateralized debt obligation: 0.00% | |||||||||||
Cayman Islands: 0.00% | |||||||||||
LNR CDO Ltd., Series 2006-1A, Class FFX, 7.592%, due 05/28/43†2,8,9 (cost $8,118,607) |
$ | 8,000,000 | $ | 0 | |||||||
Mortgage & agency debt securities: 0.01% | |||||||||||
United States: 0.01% | |||||||||||
Credit Suisse Mortgage Capital Certificates, Series 2006-4, Class CB1, 4.748%, due 05/25/364 |
181,088 | 2 | |||||||||
GSR Mortgage Loan Trust, Series 2006-5F, Class B1, 5.933%, due 06/25/364 |
172,152 | 1 | |||||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2005-7, Class B11, 2.915%, due 04/25/354 |
1,405,785 | 35,821 | |||||||||
WaMu Mortgage Pass-Through Certificates, Series 2006-AR16, Class 3B1, 1.820%, due 12/25/364 |
178,718 | 36 | |||||||||
Wells Fargo Mortgage Backed Securities Trust, Series 2006-AR12, Class 2B1, 5.843%, due 09/25/364 |
36,842 | 46 | |||||||||
Series 2006-18, Class B1, 6.000%, due 12/26/36 |
393,338 | 197 | |||||||||
Total mortgage & agency debt securities (cost $440,978) |
36,103 | ||||||||||
US government obligation: 0.13% | |||||||||||
US Treasury Notes, 0.875%, due 11/30/16 (cost $350,313) |
350,000 | 351,066 | |||||||||
Non-US government obligations: 3.10% | |||||||||||
Germany: 1.51% | |||||||||||
Bundesrepublik Deutschland, 4.000%, due 07/04/16 |
EUR | 1,600,000 | 2,373,095 | ||||||||
Kreditanstalt fuer Wiederaufbau, 2.050%, due 02/16/26 |
JPY | 132,000,000 | 1,835,152 | ||||||||
4,208,247 |
13
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Non-US government obligations(Concluded) | |||||||||||
United Kingdom: 1.59% | |||||||||||
UK Gilts, 1.750%, due 01/22/17 |
GBP | 2,750,000 | $ | 4,419,030 | |||||||
Total Non-US government obligations (cost $8,711,321) |
8,627,277 | ||||||||||
Total bonds (cost $246,187,428) |
234,788,903 | ||||||||||
Shares | |||||||||||
Short-term investment: 6.31% | |||||||||||
Investment company: 6.31% | |||||||||||
UBS Cash Management Prime Relationship Fund10 (cost $17,594,250) |
17,594,250 | 17,594,250 | |||||||||
Investment of cash collateral from securities loaned: 0.53% | |||||||||||
UBS Private Money Market Fund LLC10 (cost $1,487,143) |
1,487,143 | 1,487,143 | |||||||||
Total investments before investments sold short: 91.05% (cost $265,275,100) |
253,876,968 |
Shares | Value | ||||||||||
Investments sold short: 0.00%1 | |||||||||||
Common stocks: 0.00%1 | |||||||||||
United Kingdom: 0.00%1 | |||||||||||
BP PLC | (23 | ) | $ | (163 | ) | ||||||
United States0.00%1 | |||||||||||
Procter & Gamble Co. | (100 | ) | (6,672 | ) | |||||||
Total common stocks and investments sold short (proceeds $6,238) |
(6,835 | ) | |||||||||
Total investments, net of investments sold short: 91.05% |
253,870,133 | ||||||||||
Cash and other assets, less liabilities: 8.95% |
24,964,037 | ||||||||||
Net assets: 100.00% | $ | 278,834,170 |
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 depreciation consisted of:
Gross unrealized appreciation | $ | 1,548,989 | |||||
Gross unrealized depreciation | (12,947,121 | ) | |||||
Net unrealized depreciation of investments | $ | (11,398,132 | ) |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 44.
† Holding is illiquid. At December 31, 2011, the value of this security amounted to $0 or 0.00% of net assets.
1 Amount represents less than 0.005%.
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, 2011, the value of these securities amounted to $15,521,374 or 5.57% of net assets.
3 Security, or portion thereof, was on loan at December 31, 2011.
4 Variable or floating rate security. The interest rate shown is the current rate as of December 31, 2011 and changes periodically.
5 Perpetual bond security. The maturity date reflects the next call date.
6 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, 2011, the value of these securities amounted to $2,480,032 or 0.89% of net assets.
7 All or a portion of these securities have been designated as collateral for open short positions.
8 Security is in default.
14
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
9 This security, which represents 0.00% of net assets as of December 31, 2011, 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 12/31/11 |
Value as a percentage of net assets |
||||||||||||||||||
LNR CDO Ltd., Series 2006-1A, Class FFX, 7.592%, due 05/28/43 |
11/03/06 | $ | 8,138,056 | 2.92 | % | $ | 0 | 0.00 | % |
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 Funds.
Security description |
Value 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Net realized gain during the six months ended 12/31/11 |
Change in net unrealized appreciation/ (depreciation) during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 45,918,039 | $ | 263,451,925 | $ | 291,775,714 | $ | | $ | | $ | 17,594,250 | $ | 35,475 | |||||||||||||||||
UBS Private Money Market Fund LLCa |
8,124,287 | 15,918,562 | 22,555,706 | | | 1,487,143 | 196 | ||||||||||||||||||||||||
UBS Global Corporate Bond Relationship Fund |
| 47,664,000 | 47,147,023 | (516,977 | ) | | | | |||||||||||||||||||||||
UBS Opportunistic Emerging Markets Debt Relationship Fund |
7,694,043 | | 7,792,467 | 2,841,883 | (2,743,459 | ) | | | |||||||||||||||||||||||
UBS U.S. Equity Alpha Relationship Fund |
38,923,054 | | 38,614,590 | 11,130,209 | (11,438,673 | ) | | | |||||||||||||||||||||||
$ | 100,659,423 | $ | 327,034,487 | $ | 407,885,500 | $ | 13,455,115 | $ | (14,182,132 | ) | $ | 19,081,393 | $ | 35,671 |
a 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.
15
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Barclays Bank PLC | USD | 23,307,104 | MXN | 319,890,000 | 03/07/12 | $ | (503,059 | ) | |||||||||||
Credit Suisse First Boston | AUD | 21,000,000 | USD | 20,727,000 | 03/07/12 | (597,575 | ) | ||||||||||||
Credit Suisse First Boston | CAD | 7,255,000 | USD | 7,012,033 | 03/07/12 | (99,231 | ) | ||||||||||||
Credit Suisse First Boston | GBP | 17,000,000 | USD | 26,422,080 | 03/07/12 | 37,053 | |||||||||||||
Credit Suisse First Boston | NZD | 31,325,000 | USD | 23,632,833 | 03/07/12 | (646,559 | ) | ||||||||||||
Goldman Sachs International | AUD | 5,565,318 | EUR | 4,205,000 | 03/07/12 | (206,129 | ) | ||||||||||||
JPMorgan Chase Bank | CNY | 14,300,000 | USD | 2,239,273 | 03/07/12 | (30,310 | ) | ||||||||||||
JPMorgan Chase Bank | HUF | 1,301,950,000 | USD | 5,518,042 | 03/07/12 | 206,376 | |||||||||||||
JPMorgan Chase Bank | JPY | 111,900,000 | USD | 1,437,136 | 03/07/12 | (18,277 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 5,940,000 | CNY | 37,867,500 | 04/19/12 | 67,256 | |||||||||||||
JPMorgan Chase Bank | USD | 6,191,510 | KRW | 7,132,000,000 | 03/07/12 | (27,265 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 6,690,357 | MYR | 21,369,000 | 03/07/12 | 26,128 | |||||||||||||
JPMorgan Chase Bank | USD | 2,869,586 | NOK | 16,790,000 | 03/07/12 | (68,796 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 5,439,331 | PLN | 18,635,000 | 03/07/12 | (71,777 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 2,846,734 | SEK | 19,650,000 | 03/07/12 | (237 | ) | ||||||||||||
State Street Bank & Trust | EUR | 59,390,000 | USD | 79,190,626 | 03/07/12 | 2,284,379 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 351,977 |
Futures contracts
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Long Bond, 60 contracts (USD) | March 2012 | $ | 8,591,813 | $ | 8,688,750 | $ | 96,937 | ||||||||||||
5 Year US Treasury Notes, 162 contracts (USD) | March 2012 | 19,874,367 | 19,967,765 | 93,398 | |||||||||||||||
US Treasury futures sell contracts: | |||||||||||||||||||
10 Year US Treasury Notes, 290 contracts (USD) | March 2012 | (37,665,429 | ) | (38,026,250 | ) | (360,821 | ) | ||||||||||||
Index futures buy contracts: | |||||||||||||||||||
Dow Jones EURO STOXX 50 Index, 1,418 contracts (EUR) | March 2012 | 41,557,262 | 42,357,489 | 800,227 | |||||||||||||||
NIKKEI 225 Index, 255 contracts (JPY) | March 2012 | 27,613,824 | 27,994,673 | 380,849 | |||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
MSCI Taiwan Index, 1,139 contracts (USD) | January 2012 | (28,512,542 | ) | (28,873,650 | ) | (361,108 | ) | ||||||||||||
Russell 2000 Mini Index, 566 contracts (USD) | March 2012 | (42,034,845 | ) | (41,816,080 | ) | 218,765 | |||||||||||||
Interest rate futures buy contracts: | |||||||||||||||||||
Euro-Bund, 14 contracts (EUR) | March 2012 | 2,478,143 | 2,519,335 | 41,192 | |||||||||||||||
Japanese 10 Year Bond, 2 contracts (JPY) | March 2012 | 3,698,585 | 3,700,403 | 1,818 | |||||||||||||||
Interest rate futures sell contracts: | |||||||||||||||||||
Euro-Buxl, 10 contracts (EUR) | March 2012 | (1,545,791 | ) | (1,655,863 | ) | (110,072 | ) | ||||||||||||
Long Gilt, 24 contracts (GBP) | March 2012 | (4,297,542 | ) | (4,358,960 | ) | (61,418 | ) | ||||||||||||
Net unrealized appreciation on futures contracts | $ | 739,767 |
16
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Interest rate swap agreements
Counterparty |
Notional amount |
Termination date |
Payments made by the Fund1 |
Payments received by the Fund1 |
Upfront payments made |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||||||||||
Deutsche Bank AG | EUR | 32,600,000 | 11/01/21 | 2.698 | % | 1.793 | %2 | $ | | $ | (1,197,499 | ) | $ | (1,197,499 | ) | ||||||||||||||||
Goldman Sachs International | EUR | 31,200,000 | 06/21/21 | 1.6682 | 3.325 | | 4,046,638 | 4,046,638 | |||||||||||||||||||||||
$ | | $ | 2,849,139 | $ | 2,849,139 |
1 Payments made or received are based on the notional amount.
2 Rate based on 6 month EURIBOR.
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) |
||||||||||||||||||||||||
Barclays Bank PLC | EUR | 4,675,000 | 12/20/16 | 5.000 | % | 3 | $ | (106,704 | ) | $ | 13,907 | $ | (92,797 | ) | |||||||||||||||||
Deutsche Bank AG | EUR | 4,675,000 | 12/20/16 | 5.000 | 3 | (94,037 | ) | 13,907 | (80,130 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | USD | 29,400,000 | 12/20/16 | 5.000 | 4 | 3,163,080 | (2,566,899 | ) | 596,181 | ||||||||||||||||||||||
Morgan Stanley & Co., Inc. | EUR | 3,780,000 | 12/20/16 | 1.000 | 5 | (439,546 | ) | 370,452 | (69,094 | ) | |||||||||||||||||||||
$ | 2,522,793 | $ | (2,168,633 | ) | $ | 354,160 |
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 iTraxx Europe Sub Financials Series 16 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 CDX.EM Series 16 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 iTraxx Europe Senior Financials Series 16 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) |
||||||||||||||||||||||||
Barclays Bank PLC | EUR | 465,000 | 03/20/17 | 1.000 | % | 3 | $ | (44,512 | ) | $ | 43,655 | $ | (857 | ) | |||||||||||||||||
JPMorgan Chase Bank | EUR | 800,000 | 12/20/16 | 3.000 | 4 | (37,690 | ) | 22,875 | (14,815 | ) | |||||||||||||||||||||
JPMorgan Chase Bank | EUR | 1,850,000 | 03/20/17 | 1.000 | 5 | (115,421 | ) | 131,492 | 16,071 | ||||||||||||||||||||||
$ | (197,623 | ) | $ | 198,022 | $ | 399 |
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.
17
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
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 Marks & Spencer PLC 5.625% bond, due 03/24/14.
4 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Santander International Debt SAU 0.000% bond, due 08/09/13.
5 Payment from the counterparty will be received upon the occurrence of bankruptcy and/or restructuring event with respect to the Metro AG 7.625% bond, due 03/05/15.
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 |
|||||||||||||||||||||||||||
Barclays Bank PLC | EUR | 5,180,000 | 12/20/16 | 4 | 1.000 | % | $ | 601,678 | $ | (507,656 | ) | $ | 94,022 | 2.752 | % | ||||||||||||||||||||
Deutsche Bank AG | EUR | 5,180,000 | 12/20/16 | 4 | 1.000 | 583,983 | (507,656 | ) | 76,327 | 2.752 | |||||||||||||||||||||||||
Goldman Sachs International |
USD | 43,600,000 | 06/20/16 | 5 | 1.000 | (107,789 | ) | (312,394 | ) | (420,183 | ) | 1.176 | |||||||||||||||||||||||
Goldman Sachs International |
USD | 32,300,000 | 06/20/16 | 6 | 5.000 | (856,847 | ) | (1,391,937 | ) | (2,248,784 | ) | 6.243 | |||||||||||||||||||||||
$ | 221,025 | $ | (2,719,643 | ) | $ | (2,498,618 | ) |
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 (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, 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 iTraxx Europe Senior Financials Series 16 Index.
5 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 16 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.HY Series 16 Index.
Options written
Call option |
Expiration date |
Premiums received |
Value | ||||||||||||
S&P 500 Index, 567 contracts, strike @ USD 1,250.00 | June 2012 | $ | 5,226,039 | $ | (4,479,300 | ) |
18
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (unaudited)
Written option activity for the period ended December 31, 2011 was as follows:
Number of contracts |
Premiums received |
||||||||||
Options outstanding at June 30, 2011 | 5,807 | $ | 2,186,107 | ||||||||
Options written | 3,353 | 8,002,494 | |||||||||
Options terminated in closing purchase transactions | (8,593 | ) | (4,962,562 | ) | |||||||
Options expired prior to exercise | | | |||||||||
Options outstanding at December 31, 2011 | 567 | $ | 5,226,039 |
Swaption & Foreign exchange option activity for the period ended December 31, 2011 was as follows:
Swaptions & Foreign exchange options outstanding at June 30, 2011 | $ | 968,439 | |||||
Swaptions & Foreign exchange options written | 32,799 | ||||||
Swaptions & Foreign exchange options terminated in closing purchase transactions | (933,023 | ) | |||||
Swaptions & Foreign exchange options expired prior to exercise | (68,215 | ) | |||||
Swaptions & Foreign exchange options outstanding at December 31, 2011 | $ | |
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
Description |
Unadjusted quoted prices in active markets for identical investments (Level 1) |
Other significant observable inputs (Level 2) |
Unobservable inputs (Level 3) |
Total | |||||||||||||||
Common stock | $ | 6,672 | $ | | $ | | $ | 6,672 | |||||||||||
Common stocks sold short | (6,835 | ) | | | (6,835 | ) | |||||||||||||
Corporate bonds | | 225,774,457 | | 225,774,457 | |||||||||||||||
Collateralized debt obligation | | | 0 | 0 | |||||||||||||||
Mortgage & agency debt securities | | 36,103 | | 36,103 | |||||||||||||||
US government obligation | | 351,066 | | 351,066 | |||||||||||||||
Non-US government obligations | | 8,627,277 | | 8,627,277 | |||||||||||||||
Short-term investment | | 17,594,250 | | 17,594,250 | |||||||||||||||
Investment of cash collateral from securities loaned | | 1,487,143 | | 1,487,143 | |||||||||||||||
Forward foreign currency contracts | | 351,977 | | 351,977 | |||||||||||||||
Futures contracts | 739,767 | | | 739,767 | |||||||||||||||
Options written | (4,479,300 | ) | | | (4,479,300 | ) | |||||||||||||
Swap agreements | | (1,841,115 | ) | | (1,841,115 | ) | |||||||||||||
Total | $ | (3,739,696 | ) | $ | 252,381,158 | $ | 0 | $ | 248,641,462 |
19
UBS Dynamic Alpha Fund
Portfolio of investments
December 31, 2011 (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:
Common stocks sold short |
Asset-backed securities |
Collateralized debt obligations |
Total | ||||||||||||||||
Assets | |||||||||||||||||||
Beginning balance | $ | (3,975 | ) | $ | 806,900 | $ | 3,229,737 | $ | 4,032,662 | ||||||||||
Purchases | 246 | | | 246 | |||||||||||||||
Issuances | | | | | |||||||||||||||
Sales | | (795,000 | ) | (3,056,398 | ) | (3,851,398 | ) | ||||||||||||
Settlements | | | | | |||||||||||||||
Accrued discounts (premiums) | | 2,418 | (1,903 | ) | 515 | ||||||||||||||
Total realized gain (loss) | 19,369 | 62,831 | (8,583,792 | ) | (8,501,592 | ) | |||||||||||||
Change in net unrealized appreciation/depreciation | (15,640 | ) | (77,149 | ) | 8,412,356 | 8,319,567 | |||||||||||||
Transfers into Level 3 | | | | | |||||||||||||||
Transfers out of Level 3 | | | | | |||||||||||||||
Ending balance | $ | | $ | | $ | 0 | $ | 0 |
The change in net unrealized appreciation/depreciation relating to the Level 3 investments held at December 31, 2011 was $1,590.
See accompanying notes to financial statements.
20
UBS Global Allocation Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS Global Allocation Fund (the "Fund") declined 10.30% (Class A shares declined 15.26% after the deduction of the maximum sales charge), while Class Y shares declined 10.11%. The Fund's benchmark, the GSMI Mutual Fund Index (the "Index"), declined 6.22% over the same time period. For comparison purposes, the Russell 3000 Index declined 5.01%, the MSCI World Free Index (net) declined 10.29%, and the Citigroup World Government Bond Index returned 2.26% 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 23; 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 negative performance was due primarily to security selection and market allocation decisions.
During the review period, we used derivatives for risk management purposes and as a tool to help enhance returns across various strategies. With respect to our currency strategy, derivatives had a direct positive impact on Fund performance. At the market level, derivatives were just one tool among others that we used to implement our market allocation strategy. Having said that, overall, our market allocation strategy detracted from Fund performance during the period.
Portfolio performance summary1
What worked
• Currency strategies, overall, were positive for performance.
The Fund's overweight to the Swiss franc was beneficial. The currency appreciated as its economic fundamentals were relatively solid during the reporting period.
An overweight to the US dollar contributed to results. It generally performed well during periods of extreme risk aversion, given its "safe haven" status.
A short to the euro benefited performance, especially during the fourth quarter when the European sovereign debt crisis escalated and the euro depreciated.
• The Fund's corporate credit overweight enhanced results during the reporting period.
An overweight to investment-grade corporate bonds was beneficial as they generated strong results given generally strong investor demand from investors looking to generate incremental yield in the low interest rate environment.
An overweight to high yield bonds was also rewarded, as they outperformed the Index during the reporting period.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
21
UBS Global Allocation Fund
What didn't work
• Security selection was the major driver of the Fund's poor performance during the reporting period. Notably, holdings in the international all-cap growth component of the portfolio and security selection in the large-cap core/value international equity space detracted from results.
• The Fund's positioning among risk assets detracted from results.
When the reporting period began, the Fund had a 68% equity market exposure, versus the Index weight of 65%. However, given a host of macro issues, including the European sovereign debt crisis and slowing global growth, we took a more conservative approach for the portfolio and reduced our equity exposure in early August and September. While this generated positive results as the equity markets sold off mid-period, it later detracted from performance when equities rallied in the last three months of the reporting period. At the end of the period, 44% of the portfolio was allocated to equities.
Within equities, a preference for international stocks was not rewarded, as they significantly lagged their US counterparts.
• Duration positioning was a negative for results. At the beginning of the period, the Fund's fixed income duration component was shorter than the Index, as we felt US yields would move higher as the US economic expansion continued. With economic growth in the US hitting a soft patch, however, we then moved to a neutral duration in August. Overall, duration positioning detracted from results as US Treasury yields moved lower during the reporting period.
• Currency positioning was negative for the period. In particular, the Fund's overweight to the Mexican peso was not rewarded, as it performed poorly.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 Global Allocation Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | 5 years | 10 years | ||||||||||||||||
Before deducting maximum sales charge | |||||||||||||||||||
Class A1 | (10.30 | )% | (7.70 | )% | (1.33 | )% | 4.76 | % | |||||||||||
Class B2 | (10.68 | ) | (8.36 | ) | (2.15 | ) | 4.245 | ||||||||||||
Class C3 | (10.67 | ) | (8.29 | ) | (2.09 | ) | 3.94 | ||||||||||||
Class Y4 | (10.11 | ) | (7.37 | ) | (1.05 | ) | 5.02 | ||||||||||||
After deducting maximum sales charge | |||||||||||||||||||
Class A1 | (15.26 | )% | (12.77 | )% | (2.44 | )% | 4.17 | % | |||||||||||
Class B2 | (15.07 | ) | (12.86 | ) | (2.43 | ) | 4.245 | ||||||||||||
Class C3 | (11.53 | ) | (9.17 | ) | (2.09 | ) | 3.94 | ||||||||||||
Russell 3000 Index6 | (5.01 | )% | 1.03 | % | (0.01 | )% | 3.52 | % | |||||||||||
MSCI World Free Index (net)7 | (10.29 | ) | (5.54 | ) | (2.37 | ) | 3.62 | ||||||||||||
Citigroup World Government Bond Index8 | 2.26 | 6.35 | 7.13 | 7.77 | |||||||||||||||
GSMI Mutual Fund Index9 | (6.22 | ) | (2.14 | ) | 1.56 | 5.62 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.27% and 1.27%; Class B2.13% and 2.13%; Class C2.05% and 2.05%; Class Y0.98% and 0.98%. 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 period ending October 27, 2012, 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 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 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. On or about March 1, 2012, the Class B shares of the Fund will be converted into Class A shares of the same Fund and Class B shares will be terminated effective immediately after such conversion.
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. 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.
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 Assumes the conversion of Class B to Class A shares at the end of the sixth year.
6 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.
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 2011, 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 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 23 developed countries. Investors should note that indices do not reflect the deduction of fees and expenses.
9 The GSMI Mutual Fund Index is an unmanaged index compiled by the Advisor, constructed as follows: 65% MSCI All Country World Index (net), 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 (net) 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 US 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://globalam-us.ubs.com/corpweb/performance.do.
23
UBS Global Allocation Fund
Top ten equity holdings (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
Apple, Inc. | 1.4 | % | |||||
Visa, Inc., Class A | 0.7 | ||||||
BP PLC | 0.6 | ||||||
Amazon.com, Inc. | 0.6 | ||||||
Novartis AG | 0.6 | ||||||
Nestle SA | 0.5 | ||||||
Google, Inc., Class A | 0.5 | ||||||
Imperial Tobacco Group PLC | 0.5 | ||||||
Vodafone Group PLC | 0.5 | ||||||
Telenor ASA | 0.4 | ||||||
Total | 6.3 | % |
Country exposure by issuer, top five (unaudited)2
As of December 31, 2011
Percentage of net assets |
|||||||
United States | 29.5 | % | |||||
Germany | 6.7 | ||||||
United Kingdom | 5.6 | ||||||
Japan | 2.7 | ||||||
Spain | 1.9 | ||||||
Total | 46.4 | % |
Top ten long-term fixed income holdings (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
US Treasury Notes, 0.250%, due 10/31/13 |
1.6 | % | |||||
Kingdom of Spain, 4.200%, due 01/31/37 |
1.5 | ||||||
Buoni Poliennali Del Tesoro, 4.000%, due 02/01/37 |
1.4 | ||||||
Bundesobligation, 4.000%, due 10/11/13 |
1.4 | ||||||
UK Gilts, 3.750%, due 09/07/21 |
1.0 | ||||||
US Treasury Notes, 0.250%, due 11/30/13 |
1.0 | ||||||
US Treasury Notes, 3.125%, due 04/30/17 |
0.9 | ||||||
Bundesrepublik Deutschland, 3.250%, due 07/04/21 |
0.8 | ||||||
Bundesschatzanweisungen, 0.500%, due 06/15/12 |
0.7 | ||||||
US Treasury Bonds, 3.750%, due 08/15/41 |
0.6 | ||||||
Total | 10.9 | % |
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 46.9%, United Kingdom 8.7%, Germany 7.2%, Japan 4.1%, China 2.3%.
24
UBS Global Allocation Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 0.71 | % | |||||
Air freight & logistics | 0.48 | ||||||
Airlines | 0.14 | ||||||
Auto components | 0.03 | ||||||
Automobiles | 0.45 | ||||||
Beverages | 0.63 | ||||||
Biotechnology | 0.41 | ||||||
Building products | 0.22 | ||||||
Capital markets | 0.47 | ||||||
Chemicals | 1.49 | ||||||
Commercial banks | 2.60 | ||||||
Communications equipment | 0.83 | ||||||
Computers & peripherals | 2.02 | ||||||
Construction & engineering | 0.27 | ||||||
Construction materials | 0.30 | ||||||
Distributors | 0.01 | ||||||
Diversified consumer services | 0.15 | ||||||
Diversified financial services | 1.02 | ||||||
Diversified telecommunication services | 0.74 | ||||||
Electric utilities | 0.93 | ||||||
Electrical equipment | 0.17 | ||||||
Electronic equipment, instruments & components | 0.01 | ||||||
Energy equipment & services | 1.18 | ||||||
Food & staples retailing | 1.14 | ||||||
Food products | 1.19 | ||||||
Gas utilities | 0.16 | ||||||
Health care equipment & supplies | 0.34 | ||||||
Health care providers & services | 1.02 | ||||||
Hotels, restaurants & leisure | 1.14 | ||||||
Household durables | 0.02 | ||||||
Household products | 0.28 | ||||||
Independent power producers & energy traders | 0.01 | ||||||
Industrial conglomerates | 0.53 | ||||||
Insurance | 1.34 | ||||||
Internet & catalog retail | 1.00 | ||||||
Internet software & services | 1.10 | ||||||
IT services | 1.05 | ||||||
Leisure equipment & products | 0.23 | ||||||
Life sciences tools & services | 0.36 | ||||||
Machinery | 0.90 | ||||||
Media | 1.17 | ||||||
Metals & mining | 0.97 | ||||||
Multiline retail | 0.34 | ||||||
Oil, gas & consumable fuels | 3.24 | % | |||||
Personal products | 0.64 | ||||||
Pharmaceuticals | 1.65 | ||||||
Professional services | 0.23 | ||||||
Real estate investment trust (REIT) | 0.09 | ||||||
Real estate management & development | 0.21 | ||||||
Road & rail | 0.31 | ||||||
Semiconductors & semiconductor equipment | 0.88 | ||||||
Software | 1.37 | ||||||
Specialty retail | 0.19 | ||||||
Textiles, apparel & luxury goods | 0.66 | ||||||
Tobacco | 0.84 | ||||||
Trading companies & distributors | 0.53 | ||||||
Transportation infrastructure | 0.01 | ||||||
Wireless telecommunication services | 1.13 | ||||||
Total common stocks | 41.53 | % | |||||
Preferred stock | 0.30 | ||||||
Bonds | |||||||
Corporate bond | |||||||
Diversified financial services | 0.09 | ||||||
Mortgage & agency debt securities | 0.13 | ||||||
US government obligations | 5.88 | ||||||
Non-US government obligations | 10.70 | ||||||
Total bonds | 16.80 | % | |||||
Investment companies | |||||||
UBS Credit Bond Relationship Fund | 10.17 | ||||||
UBS Emerging Markets Equity Relationship Fund | 3.36 | ||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund | 7.96 | ||||||
UBS Global Corporate Bond Relationship Fund | 6.54 | ||||||
UBS High Yield Relationship Fund | 5.14 | ||||||
UBS Small-Cap Equity Relationship Fund | 2.13 | ||||||
Total investment companies | 35.30 | % | |||||
Warrants | 0.02 | ||||||
Short-term investment | 5.05 | ||||||
Investment of cash collateral from securities loaned | 1.49 | ||||||
Total investments | 100.49 | % | |||||
Liabilities, in excess of cash and other assets | (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.
25
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 41.53% | |||||||||||
Argentina: 0.15% | |||||||||||
MercadoLibre, Inc. | 18,800 | $ | 1,495,352 | ||||||||
Australia: 0.55% | |||||||||||
National Australia Bank Ltd. | 110,003 | 2,628,258 | |||||||||
Orica Ltd. | 108,448 | 2,688,716 | |||||||||
Total Australia common stocks | 5,316,974 | ||||||||||
Belgium: 0.29% | |||||||||||
Anheuser-Busch InBev NV | 46,409 | 2,841,368 | |||||||||
Brazil: 0.15% | |||||||||||
AES Tiete SA, Preference shares | 9,800 | 141,227 | |||||||||
Banco Bradesco SA ADR | 2,264 | 37,764 | |||||||||
CCR SA NPV | 12,000 | 78,617 | |||||||||
Cia de Bebidas das Americas ADR | 10,400 | 375,336 | |||||||||
Cia Hering | 4,000 | 69,610 | |||||||||
Cosan Ltd., Class A | 8,300 | 90,968 | |||||||||
Odontoprev SA | 5,000 | 71,304 | |||||||||
Petroleo Brasileiro SA ADR | 14,400 | 357,840 | |||||||||
QGEP Participacoes SA | 7,000 | 61,922 | |||||||||
Redecard SA | 4,200 | 65,727 | |||||||||
Vale SA ADR | 4,000 | 85,800 | |||||||||
Total Brazil common stocks | 1,436,115 | ||||||||||
Canada: 1.34% | |||||||||||
Canadian Oil Sands Ltd. | 89,700 | 2,047,141 | |||||||||
Petrobank Energy & Resources Ltd.* | 140,400 | 1,458,093 | |||||||||
Petrominerales Ltd.1 | 88,658 | 1,441,155 | |||||||||
Royal Bank of Canada | 67,100 | 3,423,664 | |||||||||
Suncor Energy, Inc.1 | 85,500 | 2,465,757 | |||||||||
Teck Resources Ltd., Class B | 60,100 | 2,118,470 | |||||||||
Total Canada common stocks | 12,954,280 | ||||||||||
Chile: 0.02% | |||||||||||
ENTEL Chile SA | 11,005 | 204,424 | |||||||||
China: 1.28% | |||||||||||
Agile Property Holdings Ltd.1 | 166,000 | 148,760 | |||||||||
AIA Group Ltd. | 728,317 | 2,274,056 | |||||||||
Baidu, Inc. ADR* | 24,100 | 2,806,927 | |||||||||
BBMG Corp., H Shares | 170,000 | 112,945 | |||||||||
Brilliance China Automotive Holdings Ltd.* |
128,000 | 138,109 | |||||||||
China Liansu Group Holdings Ltd. | 375,000 | 162,716 | |||||||||
China Lumena New Materials Corp.1 | 664,000 | 123,112 | |||||||||
Chongqing Machinery & Electric Co., Ltd., H Shares |
90,000 | 14,833 | |||||||||
CNOOC Ltd. | 69,000 | 120,647 | |||||||||
Dongfeng Motor Group Co., Ltd., H Shares |
82,000 | 140,633 |
Shares | Value | ||||||||||
Haier Electronics Group Co., Ltd.* | 104,000 | $ | 93,065 | ||||||||
Industrial & Commercial Bank of China, H Shares |
246,000 | 146,017 | |||||||||
International Mining Machinery Holdings Ltd. |
112,000 | 123,297 | |||||||||
Jardine Matheson Holdings Ltd. | 50,800 | 2,390,140 | |||||||||
Melco Crown Entertainment Ltd. ADR*1 |
35,400 | 340,548 | |||||||||
MIE Holdings Corp. | 223,567 | 56,708 | |||||||||
New World Development Co., Ltd. | 1,848,000 | 1,489,517 | |||||||||
PetroChina Co., Ltd., H Shares | 116,000 | 144,429 | |||||||||
Sina Corp.* | 19,600 | 1,019,200 | |||||||||
Skyworth Digital Holdings Ltd.1 | 260,000 | 91,057 | |||||||||
Tencent Holdings Ltd. | 11,900 | 239,177 | |||||||||
Xingda International Holdings Ltd. | 346,000 | 155,924 | |||||||||
Xinyi Glass Holdings Ltd. | 90,000 | 51,683 | |||||||||
Total China common stocks | 12,383,500 | ||||||||||
Cyprus: 0.01% | |||||||||||
Globaltrans Investment PLC GDR2 | 4,331 | 59,551 | |||||||||
Denmark: 0.27% | |||||||||||
FLSmidth & Co. A/S | 45,345 | 2,664,659 | |||||||||
Finland: 0.29% | |||||||||||
Sampo Oyj, Class A | 112,413 | 2,789,053 | |||||||||
France: 0.53% | |||||||||||
BNP Paribas SA | 43,052 | 1,691,103 | |||||||||
Carrefour SA | 152,861 | 3,484,958 | |||||||||
Total France common stocks | 5,176,061 | ||||||||||
Germany: 1.79% | |||||||||||
Beiersdorf AG | 40,376 | 2,289,886 | |||||||||
E.ON AG | 103,882 | 2,241,269 | |||||||||
Fresenius Medical Care AG & Co. KGaA |
48,553 | 3,299,085 | |||||||||
HeidelbergCement AG | 40,573 | 1,721,856 | |||||||||
Infineon Technologies AG | 260,243 | 1,958,942 | |||||||||
MAN SE | 20,342 | 1,808,708 | |||||||||
Metro AG | 43,018 | 1,570,065 | |||||||||
SAP AG | 46,889 | 2,479,027 | |||||||||
Total Germany common stocks | 17,368,838 | ||||||||||
India: 0.02% | |||||||||||
ICICI Bank Ltd. ADR1 | 3,500 | 92,505 | |||||||||
Tata Motors Ltd. ADR1 | 7,400 | 125,060 | |||||||||
Total India common stocks | 217,565 | ||||||||||
Indonesia: 0.08% | |||||||||||
Alam Sutera Realty Tbk PT | 3,569,500 | 181,083 | |||||||||
Astra International Tbk PT | 21,000 | 171,382 |
26
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Indonesia(Concluded) | |||||||||||
Bank Bukopin Tbk PT | 1,017,000 | $ | 65,052 | ||||||||
Bank Rakyat Indonesia Persero Tbk PT | 264,000 | 196,526 | |||||||||
Harum Energy Tbk PT | 147,500 | 111,428 | |||||||||
Total Indonesia common stocks | 725,471 | ||||||||||
Ireland: 0.14% | |||||||||||
Ryanair Holdings PLC ADR* | 50,000 | 1,393,000 | |||||||||
Israel: 0.11% | |||||||||||
Teva Pharmaceutical Industries Ltd. ADR |
25,200 | 1,017,072 | |||||||||
Italy: 0.29% | |||||||||||
Fiat Industrial SpA* | 332,281 | 2,849,112 | |||||||||
Japan: 2.72% | |||||||||||
Asahi Glass Co., Ltd.1 | 227,000 | 1,905,184 | |||||||||
ITOCHU Corp. | 327,400 | 3,326,319 | |||||||||
KDDI Corp. | 272 | 1,749,253 | |||||||||
Mitsubishi Corp. | 89,400 | 1,806,119 | |||||||||
Mitsubishi UFJ Financial Group, Inc. | 873,900 | 3,712,684 | |||||||||
Nissan Motor Co., Ltd. | 197,800 | 1,778,324 | |||||||||
ORIX Corp. | 17,970 | 1,484,854 | |||||||||
Sankyo Co., Ltd. | 42,900 | 2,170,917 | |||||||||
Shin-Etsu Chemical Co., Ltd. | 49,200 | 2,422,606 | |||||||||
THK Co., Ltd. | 87,200 | 1,718,623 | |||||||||
Tokio Marine Holdings, Inc. | 122,200 | 2,706,912 | |||||||||
Tokyo Gas Co., Ltd. | 339,000 | 1,559,127 | |||||||||
Total Japan common stocks | 26,340,922 | ||||||||||
Luxembourg: 0.16% | |||||||||||
ArcelorMittal | 85,718 | 1,567,590 | |||||||||
Malaysia: 0.05% | |||||||||||
Axiata Group Bhd | 159,100 | 257,973 | |||||||||
Malayan Banking Bhd | 90,700 | 245,491 | |||||||||
Total Malaysia common stocks | 503,464 | ||||||||||
Mexico: 0.06% | |||||||||||
America Movil SAB de CV ADR | 5,500 | 124,300 | |||||||||
Fomento Economico Mexicano SAB de CV ADR |
4,500 | 313,695 | |||||||||
Wal-Mart de Mexico SAB de CV | 64,000 | 175,333 | |||||||||
Total Mexico common stocks | 613,328 | ||||||||||
Netherlands: 0.86% | |||||||||||
ASML Holding NV | 67,704 | 2,845,651 | |||||||||
Heineken NV | 56,833 | 2,631,102 | |||||||||
Wolters Kluwer NV | 164,465 | 2,842,730 | |||||||||
Total Netherlands common stocks | 8,319,483 |
Shares | Value | ||||||||||
Norway: 0.70% | |||||||||||
Statoil ASA | 101,215 | $ | 2,597,708 | ||||||||
Telenor ASA | 253,444 | 4,157,077 | |||||||||
Total Norway common stocks | 6,754,785 | ||||||||||
Philippines: 0.06% | |||||||||||
Alliance Global Group, Inc. | 1,006,000 | 238,807 | |||||||||
Megaworld Corp. | 3,517,000 | 136,861 | |||||||||
Metropolitan Bank & Trust | 134,362 | 209,220 | |||||||||
Total Philippines common stocks | 584,888 | ||||||||||
Russia: 0.02% | |||||||||||
Gazprom OAO ADR | 6,006 | 64,024 | |||||||||
Lukoil OAO ADR | 2,275 | 121,030 | |||||||||
Total Russia common stocks | 185,054 | ||||||||||
Singapore: 0.17% | |||||||||||
DBS Group Holdings Ltd. | 186,089 | 1,652,785 | |||||||||
South Africa: 0.12% | |||||||||||
Imperial Holdings Ltd. | 4,837 | 74,000 | |||||||||
Life Healthcare Group Holdings Ltd. | 44,986 | 115,021 | |||||||||
Mr. Price Group Ltd. | 16,542 | 163,524 | |||||||||
MTN Group Ltd. | 15,609 | 277,915 | |||||||||
Sasol Ltd. | 4,176 | 199,422 | |||||||||
Shoprite Holdings Ltd. | 17,850 | 301,165 | |||||||||
Total South Africa common stocks | 1,131,047 | ||||||||||
South Korea: 0.18% | |||||||||||
Amorepacific Corp. | 147 | 134,311 | |||||||||
Cheil Industries, Inc. | 1,815 | 160,031 | |||||||||
Hyundai Department Store Co., Ltd.* | 969 | 137,645 | |||||||||
Hyundai Mobis* | 521 | 132,749 | |||||||||
Hyundai Motor Co. | 2,624 | 487,666 | |||||||||
KB Financial Group, Inc.* | 3,965 | 125,854 | |||||||||
KIWOOM Securities Co., Ltd. | 3,786 | 180,562 | |||||||||
LG Chem Ltd. | 434 | 120,521 | |||||||||
Samsung Electronics Co., Ltd. | 282 | 259,527 | |||||||||
Total South Korea common stocks | 1,738,866 | ||||||||||
Spain: 0.40% | |||||||||||
Acciona SA | 19,411 | 1,676,437 | |||||||||
Banco Santander SA | 290,119 | 2,204,106 | |||||||||
Total Spain common stocks | 3,880,543 | ||||||||||
Switzerland: 1.62% | |||||||||||
ACE Ltd. | 11,200 | 785,344 | |||||||||
Credit Suisse Group AG* | 66,986 | 1,573,918 | |||||||||
Nestle SA | 90,062 | 5,177,630 | |||||||||
Novartis AG | 103,016 | 5,889,449 | |||||||||
SGS SA | 1,354 | 2,241,531 | |||||||||
Total Switzerland common stocks | 15,667,872 |
27
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Continued) | |||||||||||
Taiwan: 0.11% | |||||||||||
Catcher Technology Co., Ltd. | 17,000 | $ | 78,883 | ||||||||
Chinatrust Financial Holding Co., Ltd. | 144,804 | 90,386 | |||||||||
Chunghwa Telecom Co., Ltd. | 74,000 | 244,394 | |||||||||
Largan Precision Co., Ltd. | 7,000 | 130,850 | |||||||||
Taishin Financial Holding Co., Ltd. | 278,900 | 96,716 | |||||||||
Taiwan Semiconductor Manufacturing Co., Ltd. ADR |
5,100 | 65,841 | |||||||||
Uni-President Enterprises Corp. | 255,176 | 372,916 | |||||||||
Total Taiwan common stocks | 1,079,986 | ||||||||||
Thailand: 0.10% | |||||||||||
Bangkok Bank PCL | 56,900 | 293,575 | |||||||||
CP ALL PCL | 81,800 | 134,173 | |||||||||
Italian-Thai Development PCL | 292,800 | 33,595 | |||||||||
LPN Development PCL NVDR | 83,000 | 33,674 | |||||||||
Sri Trang Agro-Industry PCL | 220,300 | 122,893 | |||||||||
Thanachart Capital PCL | 153,800 | 130,401 | |||||||||
Tisco Financial Group PCL | 171,900 | 207,043 | |||||||||
Total Thailand common stocks | 955,354 | ||||||||||
Turkey: 0.00%3 | |||||||||||
Turkiye Halk Bankasi AS | 8,698 | 45,471 | |||||||||
United Kingdom: 3.37% | |||||||||||
Barclays PLC | 1,060,460 | 2,899,358 | |||||||||
BP PLC | 869,716 | 6,219,830 | |||||||||
Ensco PLC ADR | 29,300 | 1,374,756 | |||||||||
Imperial Tobacco Group PLC | 123,925 | 4,686,292 | |||||||||
Lloyds Banking Group PLC* | 3,652,930 | 1,469,591 | |||||||||
Prudential PLC | 219,499 | 2,176,531 | |||||||||
Rio Tinto PLC | 41,915 | 2,034,187 | |||||||||
Sage Group PLC | 586,675 | 2,680,475 | |||||||||
SSE PLC | 99,331 | 1,991,510 | |||||||||
Vodafone Group PLC | 1,626,040 | 4,517,654 | |||||||||
Xstrata PLC | 173,354 | 2,632,959 | |||||||||
Total United Kingdom common stocks |
32,683,143 | ||||||||||
United States: 23.52% | |||||||||||
Acorda Therapeutics, Inc.* | 37,400 | 891,616 | |||||||||
Adobe Systems, Inc.* | 89,900 | 2,541,473 | |||||||||
Aflac, Inc. | 28,700 | 1,241,562 | |||||||||
Agilent Technologies, Inc.* | 77,800 | 2,717,554 | |||||||||
Alcoa, Inc. | 94,500 | 817,425 | |||||||||
Alexion Pharmaceuticals, Inc.* | 16,600 | 1,186,900 | |||||||||
Allergan, Inc. | 45,400 | 3,983,396 | |||||||||
Amazon.com, Inc.* | 35,100 | 6,075,810 | |||||||||
Amylin Pharmaceuticals, Inc.* | 59,300 | 674,834 | |||||||||
Annaly Capital Management, Inc. | 51,500 | 821,940 | |||||||||
Apollo Group, Inc., Class A* | 26,700 | 1,438,329 |
Shares | Value | ||||||||||
Apple, Inc.* | 33,300 | $ | 13,486,500 | ||||||||
AT&T, Inc. | 91,800 | 2,776,032 | |||||||||
Atmel Corp.* | 64,300 | 520,830 | |||||||||
Baker Hughes, Inc. | 50,600 | 2,461,184 | |||||||||
Baxter International, Inc. | 16,300 | 806,524 | |||||||||
Bio-Rad Laboratories, Inc., Class A* | 7,600 | 729,904 | |||||||||
Boeing Co. | 30,400 | 2,229,840 | |||||||||
Broadcom Corp., Class A* | 32,400 | 951,264 | |||||||||
Bunge Ltd. | 15,000 | 858,000 | |||||||||
C.H. Robinson Worldwide, Inc. | 32,500 | 2,267,850 | |||||||||
Cabot Oil & Gas Corp. | 10,900 | 827,310 | |||||||||
Carnival Corp. | 38,200 | 1,246,848 | |||||||||
Celanese Corp., Series A | 26,300 | 1,164,301 | |||||||||
Chipotle Mexican Grill, Inc.* | 4,500 | 1,519,830 | |||||||||
Cisco Systems, Inc. | 113,300 | 2,048,464 | |||||||||
Citigroup, Inc. | 105,020 | 2,763,076 | |||||||||
CME Group, Inc. | 13,600 | 3,313,912 | |||||||||
Coach, Inc. | 27,200 | 1,660,288 | |||||||||
Colgate-Palmolive Co. | 29,600 | 2,734,744 | |||||||||
Comcast Corp., Class A | 116,100 | 2,752,731 | |||||||||
Concho Resources, Inc.* | 28,300 | 2,653,125 | |||||||||
CONSOL Energy, Inc. | 31,900 | 1,170,730 | |||||||||
Crown Castle International Corp.* | 84,900 | 3,803,520 | |||||||||
CVS Caremark Corp. | 91,900 | 3,747,682 | |||||||||
Danaher Corp. | 51,700 | 2,431,968 | |||||||||
Discovery Communications, Inc., Class A* |
40,600 | 1,663,382 | |||||||||
Dollar General Corp.* | 35,200 | 1,448,128 | |||||||||
Dow Chemical Co. | 63,700 | 1,832,012 | |||||||||
Ecolab, Inc. | 22,000 | 1,271,820 | |||||||||
Edison International | 41,900 | 1,734,660 | |||||||||
Edwards Lifesciences Corp.* | 22,500 | 1,590,750 | |||||||||
EMC Corp.* | 120,400 | 2,593,416 | |||||||||
EOG Resources, Inc. | 34,100 | 3,359,191 | |||||||||
EQT Corp. | 34,400 | 1,884,776 | |||||||||
Estee Lauder Cos., Inc., Class A | 33,800 | 3,796,416 | |||||||||
Express Scripts, Inc.* | 81,500 | 3,642,235 | |||||||||
FedEx Corp. | 29,100 | 2,430,141 | |||||||||
Fidelity National Information Services, Inc. |
41,600 | 1,106,144 | |||||||||
FMC Corp. | 15,400 | 1,325,016 | |||||||||
FMC Technologies, Inc.* | 49,000 | 2,559,270 | |||||||||
GameStop Corp., Class A* | 65,600 | 1,582,928 | |||||||||
General Dynamics Corp. | 37,200 | 2,470,452 | |||||||||
General Motors Co.* | 82,200 | 1,666,194 | |||||||||
Gilead Sciences, Inc.* | 29,900 | 1,223,807 | |||||||||
Google, Inc., Class A* | 7,900 | 5,102,610 | |||||||||
HCA Holdings, Inc.* | 40,900 | 901,027 | |||||||||
Hertz Global Holdings, Inc.* | 122,200 | 1,432,184 | |||||||||
Hess Corp. | 35,800 | 2,033,440 | |||||||||
Hewlett-Packard Co. | 61,700 | 1,589,392 | |||||||||
Hospira, Inc.* | 30,900 | 938,433 | |||||||||
Illinois Tool Works, Inc. | 48,700 | 2,274,777 |
28
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks(Concluded) | |||||||||||
United States(Concluded) | |||||||||||
International Game Technology | 45,200 | $ | 777,440 | ||||||||
Intersil Corp., Class A | 82,700 | 863,388 | |||||||||
Invesco Ltd. | 49,300 | 990,437 | |||||||||
JPMorgan Chase & Co. | 70,500 | 2,344,125 | |||||||||
Kellogg Co. | 45,200 | 2,285,764 | |||||||||
Kohl's Corp. | 33,400 | 1,648,290 | |||||||||
Kraft Foods, Inc., Class A | 70,600 | 2,637,616 | |||||||||
Kroger Co. | 64,500 | 1,562,190 | |||||||||
Las Vegas Sands Corp.* | 84,500 | 3,610,685 | |||||||||
Lenovo Group Ltd. | 48,000 | 32,014 | |||||||||
Martin Marietta Materials, Inc.1 | 13,700 | 1,033,117 | |||||||||
McDermott International, Inc.* | 185,000 | 2,129,350 | |||||||||
McDonald's Corp. | 35,100 | 3,521,583 | |||||||||
Medtronic, Inc. | 26,200 | 1,002,150 | |||||||||
Merck & Co., Inc. | 50,900 | 1,918,930 | |||||||||
MetLife, Inc. | 33,500 | 1,044,530 | |||||||||
Monsanto Co. | 13,000 | 910,910 | |||||||||
Morgan Stanley | 123,000 | 1,860,990 | |||||||||
NetApp, Inc.* | 51,600 | 1,871,532 | |||||||||
NextEra Energy, Inc. | 22,100 | 1,345,448 | |||||||||
NIKE, Inc., Class B | 23,100 | 2,226,147 | |||||||||
Noble Corp.* | 41,900 | 1,266,218 | |||||||||
Oracle Corp. | 46,100 | 1,182,465 | |||||||||
Peabody Energy Corp. | 29,500 | 976,745 | |||||||||
Philip Morris International, Inc. | 44,400 | 3,484,512 | |||||||||
Priceline.com, Inc.* | 7,600 | 3,554,596 | |||||||||
QUALCOMM, Inc. | 67,200 | 3,675,840 | |||||||||
Ralph Lauren Corp. | 18,400 | 2,540,672 | |||||||||
Riverbed Technology, Inc.* | 98,000 | 2,303,000 | |||||||||
Roper Industries, Inc. | 18,900 | 1,641,843 | |||||||||
Salesforce.com, Inc.* | 23,400 | 2,374,164 | |||||||||
Schlumberger Ltd. | 25,600 | 1,748,736 | |||||||||
ServiceSource International, Inc.*1 | 80,500 | 1,263,045 | |||||||||
Sherwin-Williams Co. | 26,600 | 2,374,582 | |||||||||
Skyworks Solutions, Inc.* | 58,900 | 955,358 | |||||||||
Symantec Corp.* | 131,900 | 2,064,235 | |||||||||
Teradata Corp.* | 17,100 | 829,521 | |||||||||
Textron, Inc. | 115,000 | 2,126,350 | |||||||||
Time Warner, Inc. | 81,000 | 2,927,340 | |||||||||
Ultra Petroleum Corp.* | 35,400 | 1,048,902 | |||||||||
Union Pacific Corp. | 13,600 | 1,440,784 | |||||||||
UnitedHealth Group, Inc. | 35,900 | 1,819,412 | |||||||||
US Bancorp | 50,000 | 1,352,500 | |||||||||
Viacom, Inc., Class B | 28,100 | 1,276,021 | |||||||||
Visa, Inc., Class A | 68,000 | 6,904,040 | |||||||||
Watson Pharmaceuticals, Inc.* | 35,600 | 2,148,104 | |||||||||
Wells Fargo & Co. | 85,200 | 2,348,112 | |||||||||
Total United States common stocks | 228,013,630 | ||||||||||
Total common stocks (cost $407,907,250) |
402,610,606 |
Shares | Value | ||||||||||
Preferred stock: 0.30% | |||||||||||
Germany: 0.30% | |||||||||||
Volkswagen AG, Preference shares (cost $2,686,918) |
19,428 | $ | 2,910,497 | ||||||||
Face amount |
|||||||||||
Bonds: 16.80% | |||||||||||
Corporate bond: 0.09% | |||||||||||
Austria: 0.09% | |||||||||||
Oesterreichische Kontrollbank AG, 3.500%, due 04/28/14 (cost $859,913) |
EUR | 635,000 | 853,490 | ||||||||
Mortgage & agency debt securities: 0.13% | |||||||||||
United States: 0.13% | |||||||||||
Federal Home Loan Mortgage Corp. Gold Pools, #G00194, 7.500%, due 02/01/244 |
$ | 54,453 | 63,479 | ||||||||
Government National Mortgage Association, Series 2001-35, Class AZ, 6.500%, due 08/20/31 |
1,125,725 | 1,194,349 | |||||||||
Total mortgage & agency debt securities (cost $1,232,797) |
1,257,828 | ||||||||||
US government obligations: 5.88% | |||||||||||
US Treasury Bonds, 3.750%, due 08/15/411 |
5,195,000 | 6,109,808 | |||||||||
4.375%, due 05/15/41 | 1,265,000 | 1,648,256 | |||||||||
5.375%, due 02/15/311 | 2,000,000 | 2,850,624 | |||||||||
6.250%, due 08/15/23 | 1,500,000 | 2,146,875 | |||||||||
8.000%, due 11/15/21 | 1,960,000 | 3,063,419 | |||||||||
US Treasury Notes, 0.250%, due 10/31/13 |
15,375,000 | 15,377,399 | |||||||||
0.250%, due 11/30/131 | 10,060,000 | 10,061,177 | |||||||||
0.875%, due 11/30/161 | 745,000 | 747,270 | |||||||||
1.000%, due 10/31/161 | 745,000 | 752,218 | |||||||||
2.000%, due 11/15/211 | 855,000 | 864,752 | |||||||||
2.500%, due 04/30/15 | 4,225,000 | 4,508,869 | |||||||||
3.125%, due 04/30/17 | 8,000,000 | 8,910,000 | |||||||||
Total US government obligations (cost $54,813,295) |
57,040,667 | ||||||||||
Non-US government obligations: 10.70% | |||||||||||
Austria: 0.15% | |||||||||||
Government of Austria, 4.150%, due 03/15/375 |
EUR | 1,020,000 | 1,488,452 |
29
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
Non-US government obligations(Concluded) | |||||||||||
Finland: 0.45% | |||||||||||
Government of Finland, 4.375%, due 07/04/19 |
EUR | 2,892,000 | $ | 4,299,551 | |||||||
Germany: 4.59% | |||||||||||
Bundesobligation, 2.250%, due 04/11/14 |
3,910,000 | 5,306,205 | |||||||||
2.250%, due 04/10/15 | 830,000 | 1,137,070 | |||||||||
4.000%, due 10/11/13 | 9,895,000 | 13,681,295 | |||||||||
Bundesrepublik Deutschland, 3.250%, due 07/04/21 |
5,310,000 | 7,764,514 | |||||||||
4.000%, due 07/04/16 | 1,595,000 | 2,365,680 | |||||||||
4.000%, due 01/04/37 | 3,230,000 | 5,372,894 | |||||||||
Bundesschatzanweisungen, 0.500%, due 06/15/12 |
5,230,000 | 6,784,496 | |||||||||
Kreditanstalt fuer Wiederaufbau, 3.875%, due 07/04/13 |
970,000 | 1,311,369 | |||||||||
Landwirtschaftliche Rentenbank, 3.250%, due 03/12/14 |
600,000 | 811,808 | |||||||||
44,535,331 | |||||||||||
Italy: 1.42% | |||||||||||
Buoni Poliennali Del Tesoro, 4.000%, due 02/01/37 |
15,210,000 | 13,750,351 | |||||||||
Netherlands: 0.45% | |||||||||||
Government of the Netherlands, 3.250%, due 07/15/21 |
3,090,000 | 4,351,445 | |||||||||
Spain: 1.45% | |||||||||||
Kingdom of Spain, 4.200%, due 01/31/37 |
13,910,000 | 14,083,256 | |||||||||
United Kingdom: 2.19% | |||||||||||
UK Gilts, 3.750%, due 09/07/21 |
GBP | 5,640,000 | 10,130,304 | ||||||||
4.000%, due 09/07/16 | 3,115,000 | 5,531,790 | |||||||||
4.250%, due 12/07/49 | 1,405,000 | 2,765,902 | |||||||||
4.750%, due 12/07/38 | 1,345,000 | 2,789,364 | |||||||||
21,217,360 | |||||||||||
Total Non-US government obligations (cost $107,694,955) |
103,725,746 | ||||||||||
Total bonds (cost $164,600,960) |
162,877,731 |
Shares | Value | ||||||||||
Investment companies: 35.30% | |||||||||||
UBS Credit Bond Relationship Fund*6 | 6,468,762 | $ | 98,633,743 | ||||||||
UBS Emerging Markets Equity Relationship Fund*6 |
982,088 | 32,575,453 | |||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund*6 |
6,723,681 | 77,179,119 | |||||||||
UBS Global Corporate Bond Relationship Fund*6 |
5,644,913 | 63,389,554 | |||||||||
UBS High Yield Relationship Fund*6 | 1,834,134 | 49,815,800 | |||||||||
UBS Small-Cap Equity Relationship Fund*6 |
394,633 | 20,663,869 | |||||||||
Total investment companies (cost $287,064,029) |
342,257,538 | ||||||||||
Number of Warrants |
|||||||||||
Warrants: 0.02% | |||||||||||
Russia: 0.02% | |||||||||||
Sberbank of Russia, strike @ USD $0.00001, expires 11/05/12* (cost $361,519) |
106,889 | 240,499 | |||||||||
Shares | |||||||||||
Short-term investment: 5.05% | |||||||||||
Investment company: 5.05% | |||||||||||
UBS Cash Management Prime Relationship Fund6 (cost $48,986,551) |
48,986,551 | 48,986,551 | |||||||||
Investment of cash collateral from securities loaned: 1.49% | |||||||||||
UBS Private Money Market Fund LLC6 (cost $14,458,925) |
14,458,925 | 14,458,925 | |||||||||
Total investments: 100.49% (cost $926,066,152) |
974,342,347 | ||||||||||
Liabilities, in excess of cash and other assets: (0.49)% |
(4,703,436 | ) | |||||||||
Net assets: 100.00% | $ | 969,638,911 |
30
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (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 | $ | 91,018,539 | |||||
Gross unrealized depreciation | (42,742,344 | ) | |||||
Net unrealized appreciation of investments | $ | 48,276,195 |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 44.
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2011.
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, 2011, the value of these securities amounted to $59,551 or 0.01% of net assets.
3 Amount represents less than 0.005%.
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.
5 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security is considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2011, the value of this security amounted to $1,488,452 or 0.15% of net assets.
6 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 06/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Net realized gain during the six months ended 12/31/11 |
Change in net unrealized appreciation/ (depreciation) during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 37,647,079 | $ | 344,921,186 | $ | 333,581,714 | $ | | $ | | $ | 48,986,551 | $ | 29,824 | |||||||||||||||||
UBS Private Money Market Fund LLCa |
23,289,247 | 98,609,671 | 107,439,993 | | | 14,458,925 | 949 | ||||||||||||||||||||||||
UBS Credit Bond Relationship Fund |
51,413,192 | 51,000,000 | 7,000,000 | 1,886,325 | 1,334,226 | 98,633,743 | | ||||||||||||||||||||||||
UBS Emerging Markets Equity Relationship Fund |
51,853,695 | | 9,500,000 | 4,158,556 | (13,936,798 | ) | 32,575,453 | | |||||||||||||||||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund |
191,160,516 | | 74,000,000 | 6,373,387 | (46,354,784 | ) | 77,179,119 | | |||||||||||||||||||||||
UBS Global Corporate Bond Relationship Fund |
59,740,923 | 13,000,000 | 10,000,000 | 1,119,636 | (471,005 | ) | 63,389,554 | | |||||||||||||||||||||||
UBS High Yield Relationship Fund |
52,179,801 | 3,500,000 | 5,000,000 | 1,801,324 | (2,665,325 | ) | 49,815,800 | | |||||||||||||||||||||||
UBS Small-Cap Equity Relationship Fund |
30,331,888 | | 6,000,000 | 2,164,873 | (5,832,892 | ) | 20,663,869 | | |||||||||||||||||||||||
$ | 497,616,341 | $ | 511,030,857 | $ | 552,521,707 | $ | 17,504,101 | $ | (67,926,578 | ) | $ | 405,703,014 | $ | 30,773 |
a 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.
31
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (unaudited)
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Barclays Bank PLC | AUD | 9,455,000 | EUR | 7,169,233 | 03/05/12 | $ | (319,637 | ) | |||||||||||
Barclays Bank PLC | EUR | 48,510,000 | USD | 64,951,009 | 03/05/12 | 2,135,153 | |||||||||||||
Barclays Bank PLC | USD | 11,346,593 | GBP | 7,290,000 | 03/05/12 | (31,832 | ) | ||||||||||||
Barclays Bank PLC | USD | 81,782,311 | JPY | 6,342,300,000 | 03/05/12 | 704,203 | |||||||||||||
Barclays Bank PLC | USD | 11,197,100 | SEK | 77,840,000 | 03/05/12 | 79,548 | |||||||||||||
Goldman Sachs International | NZD | 52,855,000 | USD | 39,752,246 | 03/05/12 | (1,220,422 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 6,670,000 | USD | 8,933,178 | 03/05/12 | 296,159 | |||||||||||||
JPMorgan Chase Bank | HKD | 43,660,000 | USD | 5,604,142 | 03/05/12 | (18,661 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 5,190,403 | BRL | 9,800,000 | 03/05/12 | (7,520 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 10,870,000 | CNY | 69,296,250 | 04/19/12 | 123,077 | |||||||||||||
JPMorgan Chase Bank | USD | 9,876,130 | EUR | 7,475,000 | 03/05/12 | (196,713 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 17,147,169 | KRW | 19,883,000,000 | 03/05/12 | 39,815 | |||||||||||||
JPMorgan Chase Bank | USD | 13,456,883 | MYR | 43,023,000 | 03/05/12 | 66,445 | |||||||||||||
JPMorgan Chase Bank | USD | 4,447,021 | ZAR | 37,700,000 | 03/05/12 | 178,117 | |||||||||||||
Morgan Stanley & Co., Inc. | AUD | 21,545,000 | USD | 21,196,510 | 03/05/12 | (685,999 | ) | ||||||||||||
Morgan Stanley & Co., Inc. | HUF | 2,326,150,000 | USD | 9,980,050 | 03/05/12 | 487,906 | |||||||||||||
Morgan Stanley & Co., Inc. | USD | 16,127,006 | CAD | 16,685,000 | 03/05/12 | 228,099 | |||||||||||||
Morgan Stanley & Co., Inc. | USD | 44,711,089 | MXN | 631,410,000 | 03/05/12 | 306,477 | |||||||||||||
Morgan Stanley & Co., Inc. | USD | 12,338,712 | PLN | 41,980,000 | 03/05/12 | (244,780 | ) | ||||||||||||
Royal Bank of Scotland | GBP | 3,453,192 | USD | 5,411,383 | 03/05/12 | 51,707 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 1,971,142 |
Futures contracts
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
Index futures buy contracts: | |||||||||||||||||||
Dow Jones EURO STOXX 50 Index, 412 contracts (EUR) | March 2012 | $ | 12,298,155 | $ | 12,306,971 | $ | 8,816 | ||||||||||||
TOPIX Index, 159 contracts (JPY) | March 2012 | 15,349,791 | 15,038,586 | (311,205 | ) | ||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
FTSE 100 Index, 133 contracts (GBP) | March 2012 | (11,228,978 | ) | (11,434,552 | ) | (205,574 | ) | ||||||||||||
Russell 2000 Mini Index, 796 contracts (USD) | March 2012 | (59,116,142 | ) | (58,808,480 | ) | 307,662 | |||||||||||||
E-mini S&P 500 Index, 868 contracts (USD) | March 2012 | (54,373,907 | ) | (54,362,840 | ) | 11,067 | |||||||||||||
Net unrealized depreciation on futures contracts | $ | (189,234 | ) |
32
UBS Global Allocation Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 402,610,606 | $ | | $ | | $ | 402,610,606 | |||||||||||
Preferred stock | 2,910,497 | | | 2,910,497 | |||||||||||||||
Corporate bond | | 853,490 | | 853,490 | |||||||||||||||
Mortgage & agency debt securities | | 1,257,828 | | 1,257,828 | |||||||||||||||
US government obligations | | 57,040,667 | | 57,040,667 | |||||||||||||||
Non-US government obligations | | 103,725,746 | | 103,725,746 | |||||||||||||||
Investment companies | | 342,257,538 | | 342,257,538 | |||||||||||||||
Warrants | | 240,499 | | 240,499 | |||||||||||||||
Short-term investment | | 48,986,551 | | 48,986,551 | |||||||||||||||
Investment of cash collateral from securities loaned | | 14,458,925 | | 14,458,925 | |||||||||||||||
Forward foreign currency contracts | | 1,971,142 | | 1,971,142 | |||||||||||||||
Futures contracts | (189,234 | ) | | | (189,234 | ) | |||||||||||||
Total | $ | 405,331,869 | $ | 570,792,386 | $ | | $ | 976,124,255 |
See accompanying notes to financial statements.
33
UBS Global Frontier Fund
Portfolio performance
For the six months ended December 31, 2011, Class A shares of UBS Global Frontier Fund (the "Fund") declined 15.06% (Class A shares declined 19.76% after the deduction of the maximum sales charge), while Class Y shares declined 14.89%. The Fund's benchmark, the GSMI Mutual Fund Index (the "Index"), declined 6.22% over the same time period. For comparison purposes, the MSCI World Free Index (net) declined 10.29%. (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 negative performance was due primarily to security selection and market allocation decisions.
During the review period, we used derivatives for risk management purposes and as a tool to help enhance returns across various strategies. With respect to our currency strategy, derivatives had a direct positive impact on Fund performance. At the market level, derivatives were just one tool among others that we used to implement our market allocation strategy. Having said that, overall, our market allocation strategy detracted from Fund performance during the period.
Portfolio performance summary1
What worked
• Currency strategies, overall, were positive for performance.
The Fund's overweight to the Swiss franc was beneficial. The currency appreciated as its economic fundamentals were relatively solid during the reporting period.
An overweight to the US dollar contributed to results. It generally performed well during periods of extreme risk aversion, given its "safe haven" status.
A short to the euro benefited performance, especially during the fourth quarter when the European sovereign debt crisis escalated and the euro depreciated.
• The Fund's corporate credit overweight enhanced results during the reporting period.
An overweight to investment-grade corporate bonds was beneficial as they generated positive results given generally strong demand from investors looking to generate incremental yield in the low interest rate environment.
An overweight to high yield bonds was also rewarded, as they outperformed the Index during the reporting period.
What didn't work
• Security selection was the major driver of the Fund's poor performance during the reporting period. Notably, holdings in the international all-cap growth component of the portfolio and security selection in the large-cap core/value international equity space detracted from results.
1 For a detailed commentary on the market environment in general during the reporting period, see page 2.
34
UBS Global Frontier Fund
• The Fund's positioning among risk assets detracted from results. When the reporting period began, the Fund's underlying portfolio, including a leverage factor of 50%, was overweight equity market exposure versus its benchmark index. However, given a host of macro issues, including the European sovereign debt crisis and slowing global growth, we took a slightly more conservative approach in the portfolio and reduced our equity exposure in early August and September. While this generated positive results as the equity markets sold off mid-period, it later detracted from performance when equities rallied in the last three months of the reporting period. At period end, the Fund's underlying portfolio, while applying a leverage factor of 50%, still remained overweight to equities based on our forward looking assumptions, with an estimated 66% exposure.
• Duration positioning was a negative for results. At the beginning of the period, the Fund's fixed income duration component in the US was shorter than the Index, as we felt US yields would move higher as the US economic expansion continued. With economic growth in the US hitting a soft patch, however, we then moved to a neutral duration in August. Overall, duration positioning detracted from results as US Treasury yields moved lower during the reporting period.
• Primary currency strategies were detrimental for performance. In particular, the Fund's overweight to the Mexican peso was not rewarded, as it performed poorly.
• Leverage detracted from performance during the period as market allocation generated negative results in the Fund's underlying portfolio. The Fund maintained a leverage factor of approximately 50% throughout the reporting period. Given that leverage magnifies returns on the upside and the downside, the negative impact from market exposure was, therefore, amplified.
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended December 31, 2011. The views and opinions in the letter were current as of February 15, 2012. 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 Frontier Fund
Average annual total returns for periods ended 12/31/11 (unaudited)
6 months | 1 year | Inception1 | |||||||||||||
Before deducting maximum sales charge | |||||||||||||||
Class A2 | (15.06 | )% | (10.34 | )% | (5.07 | )% | |||||||||
Class C3 | (15.29 | ) | (11.02 | ) | (5.76 | ) | |||||||||
Class Y4 | (14.89 | ) | (10.17 | ) | (4.82 | ) | |||||||||
After deducting maximum sales charge | |||||||||||||||
Class A2 | (19.76 | )% | (15.26 | )% | (6.27 | )% | |||||||||
Class C3 | (16.09 | ) | (11.87 | ) | (5.76 | ) | |||||||||
MSCI World Free Index (net)5 | (10.29 | )% | (5.54 | )% | (4.10 | )% | |||||||||
GSMI Mutual Fund Index6 | (6.22 | ) | (2.14 | ) | 0.67 |
The annualized gross and net expense ratios, respectively, for each class of shares as in the October 28, 2011 prospectuses were as follows: Class A1.78% and 1.54%; Class C2.55% and 2.29%; Class Y1.57% and 1.29%. 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 dividend expense and security loan fees 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 dividend expense and security loan fees for securities sold short), through the period ending October 27, 2012, 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 2011, 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 (net), 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 US 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://globalam-us.ubs.com/corpweb/performance.do.
36
UBS Global Frontier Fund
Top ten equity holdings (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
Apple, Inc. | 0.5 | % | |||||
Philip Morris International, Inc. | 0.3 | ||||||
Time Warner, Inc. | 0.3 | ||||||
Citigroup, Inc. | 0.2 | ||||||
AT&T, Inc. | 0.2 | ||||||
Comcast Corp., Class A | 0.2 | ||||||
Colgate-Palmolive Co. | 0.2 | ||||||
Kraft Foods, Inc., Class A | 0.2 | ||||||
General Dynamics Corp. | 0.2 | ||||||
Adobe Systems, Inc. | 0.2 | ||||||
Total | 2.5 | % |
Country exposure by issuer, top five (unaudited)2
As of December 31, 2011
Percentage of net assets |
|||||||
United States | 12.6 | % | |||||
Germany | 6.2 | ||||||
United Kingdom | 3.3 | ||||||
Italy | 2.1 | ||||||
Spain | 2.0 | ||||||
Total | 26.2 | % |
Top ten long-term fixed income holdings (unaudited)1
As of December 31, 2011
Percentage of net assets |
|||||||
Buoni Poliennali Del Tesoro, 4.000%, due 02/01/37 |
2.1 | % | |||||
Kingdom of Spain, 4.200%, due 01/31/37 |
2.0 | ||||||
UK Gilts, 3.750%, due 09/07/21 |
1.6 | ||||||
Bundesschatzanweisungen, 0.500%, due 06/15/12 |
1.5 | ||||||
Bundesrepublik Deutschland, 3.250%, due 07/04/21 |
1.1 | ||||||
Bundesobligation, 2.250%, due 04/11/14 |
1.0 | ||||||
Bundesrepublik Deutschland, 6.250%, due 01/04/24 |
0.8 | ||||||
US Treasury Notes, 0.250%, due 10/31/13 |
0.8 | ||||||
UK Gilts, 4.000%, due 09/07/16 |
0.8 | ||||||
Bundesrepublik Deutschland, 4.000%, due 01/04/37 |
0.7 | ||||||
Total | 12.4 | % |
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 44.8%, United Kingdom 8.9%, Germany 7.8%, Japan 3.0%, Italy 2.8%.
37
UBS Global Frontier Fund
Industry diversification (unaudited)1
As a percentage of net assets as of December 31, 2011
Common stocks | |||||||
Aerospace & defense | 0.60 | % | |||||
Air freight & logistics | 0.21 | ||||||
Automobiles | 0.14 | ||||||
Biotechnology | 0.35 | ||||||
Capital markets | 0.24 | ||||||
Chemicals | 0.26 | ||||||
Commercial banks | 0.33 | ||||||
Communications equipment | 0.18 | ||||||
Computers & peripherals | 0.65 | ||||||
Construction materials | 0.09 | ||||||
Diversified consumer services | 0.12 | ||||||
Diversified financial services | 0.54 | ||||||
Diversified telecommunication services | 0.24 | ||||||
Electric utilities | 0.26 | ||||||
Energy equipment & services | 0.62 | ||||||
Food & staples retailing | 0.14 | ||||||
Food products | 0.30 | ||||||
Health care equipment & supplies | 0.16 | ||||||
Health care providers & services | 0.24 | ||||||
Hotels, restaurants & leisure | 0.18 | ||||||
Household products | 0.23 | ||||||
Insurance | 0.27 | ||||||
Internet & catalog retail | 0.14 | ||||||
IT services | 0.39 | ||||||
Life sciences tools & services | 0.06 | ||||||
Machinery | 0.19 | ||||||
Media | 0.61 | ||||||
Metals & mining | 0.07 | ||||||
Multiline retail | 0.14 | ||||||
Oil, gas & consumable fuels | 0.63 | ||||||
Pharmaceuticals | 0.40 | ||||||
Real estate investment trust (REIT) | 0.07 | ||||||
Road & rail | 0.12 | ||||||
Semiconductors & semiconductor equipment | 0.30 | % | |||||
Software | 0.40 | ||||||
Specialty retail | 0.14 | ||||||
Textiles, apparel & luxury goods | 0.14 | ||||||
Tobacco | 0.29 | ||||||
Wireless telecommunication services | 0.07 | ||||||
Total common stocks | 10.51 | % | |||||
Bonds | |||||||
Corporate bond | |||||||
Diversified financial services | 0.36 | ||||||
US government obligations | 2.32 | ||||||
Non-US government obligations | 14.84 | ||||||
Total bonds | 17.52 | % | |||||
Investment companies | |||||||
UBS Credit Bond Relationship Fund | 15.15 | ||||||
UBS Emerging Markets Equity Relationship Fund | 6.35 | ||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund | 10.18 | ||||||
UBS Global Corporate Bond Relationship Fund | 9.53 | ||||||
UBS High Yield Relationship Fund | 7.68 | ||||||
UBS International Equity Relationship Fund | 7.31 | ||||||
UBS U.S. Large Cap Growth Equity Relationship Fund | 10.02 | ||||||
Total investment companies | 66.22 | % | |||||
Short-term investment | 2.25 | ||||||
Investment of cash collateral from securities loaned | 0.09 | ||||||
Total investments | 96.59 | % | |||||
Cash and other assets, less liabilities | 3.41 | ||||||
Net assets | 100.00 | % |
1 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.
38
UBS Global Frontier Fund
Portfolio of investments
December 31, 2011 (unaudited)
Shares | Value | ||||||||||
Common stocks: 10.51% | |||||||||||
Israel: 0.08% | |||||||||||
Teva Pharmaceutical Industries Ltd. ADR |
1,000 | $ | 40,360 | ||||||||
Switzerland: 0.07% | |||||||||||
ACE Ltd. | 500 | 35,060 | |||||||||
United Kingdom: 0.12% | |||||||||||
Ensco PLC ADR | 1,200 | 56,304 | |||||||||
United States: 10.24% | |||||||||||
Acorda Therapeutics, Inc.* | 1,600 | 38,144 | |||||||||
Adobe Systems, Inc.* | 3,700 | 104,599 | |||||||||
Aflac, Inc. | 1,200 | 51,912 | |||||||||
Alcoa, Inc. | 3,900 | 33,735 | |||||||||
Alexion Pharmaceuticals, Inc.* | 700 | 50,050 | |||||||||
Allergan, Inc. | 400 | 35,096 | |||||||||
Amazon.com, Inc.* | 400 | 69,240 | |||||||||
Amylin Pharmaceuticals, Inc.* | 2,400 | 27,312 | |||||||||
Annaly Capital Management, Inc. | 2,100 | 33,516 | |||||||||
Apollo Group, Inc., Class A* | 1,100 | 59,257 | |||||||||
Apple, Inc.* | 600 | 243,000 | |||||||||
AT&T, Inc. | 3,800 | 114,912 | |||||||||
Atmel Corp.* | 2,700 | 21,870 | |||||||||
Baker Hughes, Inc. | 2,100 | 102,144 | |||||||||
Baxter International, Inc. | 700 | 34,636 | |||||||||
Bio-Rad Laboratories, Inc., Class A* | 300 | 28,812 | |||||||||
Boeing Co. | 1,300 | 95,355 | |||||||||
Broadcom Corp., Class A* | 1,300 | 38,168 | |||||||||
Bunge Ltd. | 600 | 34,320 | |||||||||
Carnival Corp. | 1,600 | 52,224 | |||||||||
Celanese Corp., Series A | 1,100 | 48,697 | |||||||||
Cisco Systems, Inc. | 4,700 | 84,976 | |||||||||
Citigroup, Inc. | 4,400 | 115,764 | |||||||||
CME Group, Inc. | 200 | 48,734 | |||||||||
Coach, Inc. | 1,100 | 67,144 | |||||||||
Colgate-Palmolive Co. | 1,200 | 110,868 | |||||||||
Comcast Corp., Class A | 4,800 | 113,808 | |||||||||
Crown Castle International Corp.* | 800 | 35,840 | |||||||||
Dow Chemical Co. | 2,600 | 74,776 | |||||||||
Edison International | 1,700 | 70,380 | |||||||||
EOG Resources, Inc. | 600 | 59,106 | |||||||||
EQT Corp. | 1,400 | 76,706 | |||||||||
FedEx Corp. | 1,200 | 100,212 | |||||||||
Fidelity National Information Services, Inc. |
1,700 | 45,203 | |||||||||
GameStop Corp., Class A* | 2,700 | 65,151 | |||||||||
General Dynamics Corp. | 1,600 | 106,256 | |||||||||
General Motors Co.* | 3,400 | 68,918 | |||||||||
Gilead Sciences, Inc.* | 1,300 | 53,209 | |||||||||
HCA Holdings, Inc.* | 1,700 | 37,451 | |||||||||
Hertz Global Holdings, Inc.* | 5,100 | 59,772 |
Shares | Value | ||||||||||
Hess Corp. | 1,500 | $ | 85,200 | ||||||||
Hewlett-Packard Co. | 2,600 | 66,976 | |||||||||
Hospira, Inc.* | 1,300 | 39,481 | |||||||||
Illinois Tool Works, Inc. | 2,000 | 93,420 | |||||||||
International Game Technology | 1,900 | 32,680 | |||||||||
Intersil Corp., Class A | 3,400 | 35,496 | |||||||||
Invesco Ltd. | 2,000 | 40,180 | |||||||||
JPMorgan Chase & Co. | 2,900 | 96,425 | |||||||||
Kohl's Corp. | 1,400 | 69,090 | |||||||||
Kraft Foods, Inc., Class A | 2,900 | 108,344 | |||||||||
Kroger Co. | 2,700 | 65,394 | |||||||||
Martin Marietta Materials, Inc.1 | 600 | 45,246 | |||||||||
McDermott International, Inc.* | 7,700 | 88,627 | |||||||||
Medtronic, Inc. | 1,100 | 42,075 | |||||||||
Merck & Co., Inc. | 2,100 | 79,170 | |||||||||
MetLife, Inc. | 1,400 | 43,652 | |||||||||
Morgan Stanley | 5,100 | 77,163 | |||||||||
NextEra Energy, Inc. | 900 | 54,792 | |||||||||
Noble Corp.* | 1,700 | 51,374 | |||||||||
Peabody Energy Corp. | 1,200 | 39,732 | |||||||||
Philip Morris International, Inc. | 1,800 | 141,264 | |||||||||
ServiceSource International, Inc.* | 3,300 | 51,777 | |||||||||
Skyworks Solutions, Inc.* | 3,100 | 50,282 | |||||||||
Symantec Corp.* | 5,500 | 86,075 | |||||||||
Textron, Inc. | 4,800 | 88,752 | |||||||||
Time Warner, Inc. | 3,400 | 122,876 | |||||||||
Ultra Petroleum Corp.* | 1,500 | 44,445 | |||||||||
UnitedHealth Group, Inc. | 1,500 | 76,020 | |||||||||
US Bancorp | 2,100 | 56,805 | |||||||||
Viacom, Inc., Class B | 1,200 | 54,492 | |||||||||
Visa, Inc., Class A | 900 | 91,377 | |||||||||
Wells Fargo & Co. | 3,600 | 99,216 | |||||||||
Total United States common stocks | 4,929,171 | ||||||||||
Total common stocks (cost $5,237,121) |
5,060,895 | ||||||||||
Face amount |
|||||||||||
Bonds: 17.52% | |||||||||||
Corporate bond: 0.36% | |||||||||||
Austria: 0.36% | |||||||||||
Oesterreichische Kontrollbank AG, 3.500%, due 04/28/14 (cost $176,045) |
EUR | 130,000 | 174,730 | ||||||||
US government obligations: 2.32% | |||||||||||
US Treasury Bonds, 3.750%, due 08/15/41 |
$ | 80,000 | 94,087 | ||||||||
4.375%, due 05/15/41 | 15,000 | 19,545 | |||||||||
6.250%, due 08/15/23 | 70,000 | 100,187 | |||||||||
6.625%, due 02/15/27 | 105,000 | 161,569 |
39
UBS Global Frontier Fund
Portfolio of investments
December 31, 2011 (unaudited)
Face amount |
Value | ||||||||||
Bonds(Concluded) | |||||||||||
US government obligations(Concluded) | |||||||||||
US Treasury Notes, 0.250%, due 10/31/13 |
$ | 390,000 | $ | 390,061 | |||||||
0.250%, due 11/30/13 | 130,000 | 130,015 | |||||||||
0.875%, due 11/30/161 | 35,000 | 35,107 | |||||||||
1.000%, due 10/31/161 | 5,000 | 5,048 | |||||||||
2.500%, due 04/30/15 | 170,000 | 181,422 | |||||||||
Total US government obligations (cost $1,054,074) |
1,117,041 | ||||||||||
Non-US government obligations: 14.84% | |||||||||||
Austria: 0.09% | |||||||||||
Republic of Austria, 4.350%, due 03/15/192 |
EUR | 30,000 | 42,846 | ||||||||
Finland: 0.62% | |||||||||||
Government of Finland, 4.375%, due 07/04/19 |
200,000 | 297,341 | |||||||||
Germany: 6.20% | |||||||||||
Bundesobligation, 2.250%, due 04/11/14 |
350,000 | 474,980 | |||||||||
Bundesrepublik Deutschland, 3.250%, due 07/04/21 |
370,000 | 541,030 | |||||||||
4.000%, due 07/04/16 | 145,000 | 215,062 | |||||||||
4.000%, due 01/04/37 | 190,000 | 316,053 | |||||||||
6.250%, due 01/04/24 | 215,000 | 400,839 | |||||||||
Bundesschatzanweisungen, 0.500%, due 06/15/12 |
560,000 | 726,447 | |||||||||
Kreditanstalt fuer Wiederaufbau, 3.875%, due 07/04/13 |
160,000 | 216,308 | |||||||||
Landwirtschaftliche Rentenbank, 3.250%, due 03/12/14 |
70,000 | 94,711 | |||||||||
2,985,430 | |||||||||||
Italy: 2.13% | |||||||||||
Buoni Poliennali Del Tesoro, 4.000%, due 02/01/37 |
1,135,000 | 1,026,078 | |||||||||
Netherlands: 0.62% | |||||||||||
Government of the Netherlands, 3.250%, due 07/15/21 |
170,000 | 239,400 | |||||||||
4.000%, due 07/15/18 | 40,000 | 58,684 | |||||||||
298,084 | |||||||||||
Spain: 1.97% | |||||||||||
Kingdom of Spain, 4.200%, due 01/31/37 |
935,000 | 946,646 |
Face amount |
Value | ||||||||||
United Kingdom: 3.21% | |||||||||||
UK Gilts, 3.750%, due 09/07/21 |
GBP | 430,000 | $ | 772,346 | |||||||
4.000%, due 09/07/16 | 215,000 | 381,809 | |||||||||
4.250%, due 12/07/49 | 100,000 | 196,862 | |||||||||
4.750%, due 12/07/38 | 95,000 | 197,018 | |||||||||
1,548,035 | |||||||||||
Total non-US government obligations (cost $7,412,068) |
7,144,460 | ||||||||||
Total bonds (cost $8,642,187) |
8,436,231 | ||||||||||
Shares | |||||||||||
Investment companies: 66.22% | |||||||||||
UBS Credit Bond Relationship Fund*3 |
478,394 | 7,294,403 | |||||||||
UBS Emerging Markets Equity Relationship Fund*3 |
92,101 | 3,054,963 | |||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund*3 |
426,674 | 4,897,663 | |||||||||
UBS Global Corporate Bond Relationship Fund*3 |
408,581 | 4,588,165 | |||||||||
UBS High Yield Relationship Fund*3 | 136,104 | 3,696,636 | |||||||||
UBS International Equity Relationship Fund*3 |
225,542 | 3,518,682 | |||||||||
UBS U.S. Large Cap Growth Equity Relationship Fund*3 |
352,581 | 4,824,608 | |||||||||
Total investment companies (cost $29,082,412) |
31,875,120 | ||||||||||
Short-term investment: 2.25% | |||||||||||
Investment company: 2.25% | |||||||||||
UBS Cash Management Prime Relationship Fund3 (cost $1,082,747) |
1,082,747 | 1,082,747 | |||||||||
Investment of cash collateral from securities loaned: 0.09% | |||||||||||
UBS Private Money Market Fund LLC3 (cost $41,445) |
41,445 | 41,445 | |||||||||
Total investments: 96.59% (cost $44,085,912) |
46,496,438 | ||||||||||
Cash and other assets, less liabilities: 3.41% |
1,639,524 | ||||||||||
Net assets: 100.00% | $ | 48,135,962 |
40
UBS Global Frontier Fund
Portfolio of investments
December 31, 2011 (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 | $ | 3,151,367 | |||||
Gross unrealized depreciation | (740,841 | ) | |||||
Net unrealized appreciation of investments | $ | 2,410,526 |
For a listing of defined portfolio acronyms and currency abbreviations that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 44.
* Non-income producing security.
1 Security, or portion thereof, was on loan at December 31, 2011.
2 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security is considered liquid, unless noted otherwise, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2011, the value of this security amounted to $42,846 or 0.09% of net assets.
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 6/30/11 |
Purchases during the six months ended 12/31/11 |
Sales during the six months ended 12/31/11 |
Net realized gain during the six months ended 12/31/11 |
Change in net unrealized appreciation/ (depreciation) during the six months ended 12/31/11 |
Value 12/31/11 |
Income earned from affiliate for the six months ended 12/31/11 |
||||||||||||||||||||||||
UBS Cash Management Prime Relationship Fund |
$ | 1,679,454 | $ | 17,106,939 | $ | 17,703,646 | $ | | $ | | $ | 1,082,747 | $ | 985 | |||||||||||||||||
UBS Private Money Market Fund LLCa |
| 1,003,216 | 961,771 | | | 41,445 | 6 | ||||||||||||||||||||||||
UBS Credit Bond Relationship Fund |
4,042,507 | 4,400,000 | 1,400,000 | 370,979 | (119,083 | ) | 7,294,403 | | |||||||||||||||||||||||
UBS Emerging Markets Equity Relationship Fund |
8,195,772 | | 3,500,000 | 1,178,200 | (2,819,009 | ) | 3,054,963 | | |||||||||||||||||||||||
UBS Global (ex-U.S.) All Cap Growth Relationship Fund |
7,463,632 | | 1,100,000 | 214,543 | (1,680,512 | ) | 4,897,663 | | |||||||||||||||||||||||
UBS Global Corporate Bond Relationship Fund |
4,423,175 | 1,100,000 | 1,000,000 | 94,585 | (29,595 | ) | 4,588,165 | | |||||||||||||||||||||||
UBS High Yield Relationship Fund |
3,953,787 | 500,000 | 700,000 | 280,193 | (337,344 | ) | 3,696,636 | | |||||||||||||||||||||||
UBS International Equity Relationship Fund |
7,328,307 | | 2,500,000 | 487,672 | (1,797,297 | ) | 3,518,682 | | |||||||||||||||||||||||
UBS U.S. Large Cap Equity Relationship Fund |
11,621,189 | | 11,350,330 | 4,283,854 | (4,554,713 | ) | | | |||||||||||||||||||||||
UBS U.S. Large Cap Growth Equity Relationship Fund |
5,536,738 | 3,100,000 | 3,250,000 | 1,298,772 | (1,860,902 | ) | 4,824,608 | | |||||||||||||||||||||||
$ | 54,244,561 | $ | 27,210,155 | $ | 43,465,747 | $ | 8,208,798 | $ | (13,198,455 | ) | $ | 32,999,312 | $ | 991 |
a 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.
41
UBS Global Frontier Fund
Portfolio of investments
December 31, 2011 (unaudited)
Forward foreign currency contracts
Counterparty |
Contracts to deliver |
In exchange for |
Maturity date |
Unrealized appreciation/ (depreciation) |
|||||||||||||||
Barclays Bank PLC | AUD | 765,000 | EUR | 580,060 | 03/05/12 | $ | (25,862 | ) | |||||||||||
JPMorgan Chase Bank | AUD | 1,875,000 | USD | 1,840,793 | 03/05/12 | (63,580 | ) | ||||||||||||
JPMorgan Chase Bank | CNY | 2,340,000 | USD | 366,656 | 04/19/12 | (4,559 | ) | ||||||||||||
JPMorgan Chase Bank | EUR | 3,750,000 | USD | 5,021,400 | 03/05/12 | 165,505 | |||||||||||||
JPMorgan Chase Bank | HUF | 173,650,000 | USD | 743,946 | 03/05/12 | 35,346 | |||||||||||||
JPMorgan Chase Bank | NZD | 3,945,000 | USD | 2,958,154 | 03/05/12 | (99,970 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 1,216,895 | CAD | 1,260,000 | 03/05/12 | 18,192 | |||||||||||||
JPMorgan Chase Bank | USD | 463,533 | CHF | 425,000 | 03/05/12 | (10,511 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 965,000 | CNY | 6,171,175 | 04/19/12 | 13,988 | |||||||||||||
JPMorgan Chase Bank | USD | 646,200 | GBP | 415,000 | 03/05/12 | (2,081 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 4,465,703 | JPY | 346,100,000 | 03/05/12 | 35,595 | |||||||||||||
JPMorgan Chase Bank | USD | 1,092,665 | KRW | 1,267,000,000 | 03/05/12 | 2,537 | |||||||||||||
JPMorgan Chase Bank | USD | 3,210,795 | MXN | 45,350,000 | 03/05/12 | 22,519 | |||||||||||||
JPMorgan Chase Bank | USD | 934,910 | MYR | 2,989,000 | 03/05/12 | 4,616 | |||||||||||||
JPMorgan Chase Bank | USD | 384,289 | NOK | 2,260,000 | 03/05/12 | (7,266 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 1,016,633 | PLN | 3,465,000 | 03/05/12 | (18,408 | ) | ||||||||||||
JPMorgan Chase Bank | USD | 601,451 | SEK | 4,180,000 | 03/05/12 | 4,104 | |||||||||||||
JPMorgan Chase Bank | USD | 343,258 | ZAR | 2,910,000 | 03/05/12 | 13,749 | |||||||||||||
Net unrealized appreciation on forward foreign currency contracts | $ | 83,914 |
Futures contracts
Expiration date |
Cost/ (proceeds) |
Value |
Unrealized appreciation/ (depreciation) |
||||||||||||||||
US Treasury futures buy contracts: | |||||||||||||||||||
US Ultra Bond Futures, 3 contracts (USD) | March 2012 | $ | 473,724 | $ | 480,563 | $ | 6,839 | ||||||||||||
10 Year US Treasury Notes, 28 contracts (USD) | March 2012 | 3,627,357 | 3,671,500 | 44,143 | |||||||||||||||
Index futures buy contracts: | |||||||||||||||||||
Amsterdam Exchange Index, 2 contracts (EUR) | January 2012 | 155,518 | 162,170 | 6,652 | |||||||||||||||
DAX Index, 3 contracts (EUR) | March 2012 | 556,932 | 572,705 | 15,773 | |||||||||||||||
Dow Jones Euro STOXX 50 Index, 71 contracts (EUR) | March 2012 | 2,119,342 | 2,120,861 | 1,519 | |||||||||||||||
E-mini S&P 500 Index, 51 contracts (USD) | March 2012 | 3,195,010 | 3,194,130 | (880 | ) | ||||||||||||||
FTSE 100 Index, 12 contracts (GBP) | March 2012 | 1,012,497 | 1,031,689 | 19,192 | |||||||||||||||
Hang Seng Stock Index, 3 contracts (HKD) | January 2012 | 359,372 | 356,449 | (2,923 | ) | ||||||||||||||
IBEX 35 Index, 2 contracts (EUR) | January 2012 | 211,805 | 219,401 | 7,596 | |||||||||||||||
OMX Stockholm 30 Index, 50 contracts (SEK) | January 2012 | 690,403 | 718,536 | 28,133 | |||||||||||||||
S&P Toronto Stock Exchange 60 Index, 8 contracts (CAD) | March 2012 | 1,061,086 | 1,066,248 | 5,162 | |||||||||||||||
SPI 200 Index, 9 contracts (AUD) | March 2012 | 978,650 | 924,892 | (53,758 | ) | ||||||||||||||
TOPIX Index, 29 contracts (JPY) | March 2012 | 2,799,648 | 2,742,887 | (56,761 | ) | ||||||||||||||
Index futures sell contracts: | |||||||||||||||||||
Russell 2000 Mini Index, 38 contracts (USD) | March 2012 | (2,822,127 | ) | (2,807,440 | ) | 14,687 | |||||||||||||
Net unrealized appreciation on futures contracts | $ | 35,374 |
42
UBS Global Frontier Fund
Portfolio of investments
December 31, 2011 (unaudited)
Concluded
The following is a summary of the inputs used as of December 31, 2011 in valuing the Fund's investments:
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 | $ | 5,060,895 | $ | | $ | | $ | 5,060,895 | |||||||||||
Corporate bond | | 174,730 | | 174,730 | |||||||||||||||
US government obligations | | 1,117,041 | | 1,117,041 | |||||||||||||||
Non-US government obligations | | 7,144,460 | | 7,144,460 | |||||||||||||||
Investment companies | | 31,875,120 | | 31,875,120 | |||||||||||||||
Short-term investment | | 1,082,747 | | 1,082,747 | |||||||||||||||
Investment of cash collateral from securities loaned | | 41,445 | | 41,445 | |||||||||||||||
Forward foreign currency contracts | | 83,914 | | 83,914 | |||||||||||||||
Futures contracts | 35,374 | | | 35,374 | |||||||||||||||
Total | $ | 5,096,269 | $ | 41,519,457 | $ | | $ | 46,615,726 |
See accompanying notes to financial statements.
43
The UBS Funds
Portfolio acronyms
ADR American depositary receipt
CDO Collateralized debt obligations
EURIBOR Euro Interbank Offered Rate
GDR Global depositary receipt
GE General Electric
GSR Goldman Sachs Residential
NVDR Non-voting depositary receipt
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
Currency abbreviations
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
CHF Swiss Franc
CNY Chinese Yuan
EUR Euro
GBP Great Britain Pound
HKD Hong Kong Dollar
HUF Hungarian Forint
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
USD United States Dollar
ZAR South African Rand
See accompanying notes to financial statements.
44
The UBS Funds
December 31, 2011 (unaudited)
Explanation of expense disclosure
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, 2011 to December 31, 2011.
Actual expenses
The first line for 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, 2011 to December 31, 2011.
45
The UBS Funds
December 31, 2011 (unaudited)
Beginning account value July 1, 2011 |
Ending account value December 31, 2011 |
Expenses paid during period* 07/01/11 12/31/11 |
Expense ratio during period |
||||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,008.30 | $ | 8.53 | 1.69 | % | ||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,016.64 | 8.57 | 1.69 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 1,005.30 | 12.35 | 2.45 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,012.82 | 12.40 | 2.45 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 1,005.30 | 12.30 | 2.44 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,012.87 | 12.35 | 2.44 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 1,009.90 | 7.28 | 1.44 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,017.90 | 7.30 | 1.44 | |||||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 897.00 | 5.96 | 1.25 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.85 | 6.34 | 1.25 | |||||||||||||||||||
Class B | Actual | 1,000.00 | 893.20 | 9.99 | 2.10 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.58 | 10.63 | 2.10 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 893.30 | 9.66 | 2.03 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.93 | 10.28 | 2.03 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 898.90 | 4.53 | 0.95 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,020.36 | 4.82 | 0.95 | |||||||||||||||||||
UBS Global Frontier Fund | |||||||||||||||||||||||
Class A | Actual | 1,000.00 | 849.40 | 6.51 | 1.40 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,018.10 | 7.10 | 1.40 | |||||||||||||||||||
Class C | Actual | 1,000.00 | 847.10 | 9.98 | 2.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,014.33 | 10.89 | 2.15 | |||||||||||||||||||
Class Y | Actual | 1,000.00 | 851.10 | 5.35 | 1.15 | ||||||||||||||||||
Hypothetical (5% annual return before expenses) |
1,000.00 | 1,019.36 | 5.84 | 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 366 (to reflect the one-half year period).
46
The UBS Funds
Financial statements
Statement of assets and liabilities
December 31, 2011 (unaudited)
UBS Dynamic Alpha Fund |
UBS Global Allocation Fund |
UBS Global Frontier Fund |
|||||||||||||
Assets: | |||||||||||||||
Investments, at cost: | |||||||||||||||
Unaffiliated issuers | $ | 246,193,707 | $ | 575,556,647 | $ | 13,879,308 | |||||||||
Affiliated issuers | 17,594,250 | 336,050,580 | 30,165,159 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at cost1 | 1,487,143 | 14,458,925 | 41,445 | ||||||||||||
Foreign currency, at cost | 11,934,216 | 1,830,887 | 271,884 | ||||||||||||
$ | 277,209,316 | $ | 927,897,039 | $ | 44,357,796 | ||||||||||
Investments, at value: | |||||||||||||||
Unaffiliated issuers | $ | 234,795,575 | $ | 568,639,333 | $ | 13,497,126 | |||||||||
Affiliated issuers | 17,594,250 | 391,244,089 | 32,957,867 | ||||||||||||
Investments of cash collateral in affiliated issuers received from securities loaned, at value1 | 1,487,143 | 14,458,925 | 41,445 | ||||||||||||
Foreign currency, at value | 11,817,096 | 1,838,144 | 263,101 | ||||||||||||
Cash | | 182 | | ||||||||||||
Receivables: | |||||||||||||||
Interest | 4,048,316 | 2,308,293 | 162,988 | ||||||||||||
Foreign tax reclaims | 178,788 | 229,767 | | ||||||||||||
Fund shares sold | 136,285 | 175,604 | 11,594 | ||||||||||||
Dividends | 3,654 | 499,920 | 8,883 | ||||||||||||
Investment securities sold | | 562,687 | 32,799 | ||||||||||||
Due from broker | 3,420,957 | 957,034 | 332,017 | ||||||||||||
Cash collateral for futures contracts | 10,770,068 | 11,183,425 | 1,167,786 | ||||||||||||
Cash collateral for swap agreements | 3,640,000 | | | ||||||||||||
Outstanding swap agreements, at value2 | 4,642,926 | | | ||||||||||||
Unrealized appreciation on forward foreign currency contracts | 2,621,192 | 4,696,706 | 316,151 | ||||||||||||
Other assets | 55,186 | 95,958 | 25,515 | ||||||||||||
Total assets | 295,211,436 | 996,890,067 | 48,817,272 | ||||||||||||
Liabilities: | |||||||||||||||
Payables: | |||||||||||||||
Cash collateral from securities loaned | 1,487,143 | 14,458,925 | 41,445 | ||||||||||||
Investment securities purchased | | 1,467,448 | 35,826 | ||||||||||||
Investment advisory and administration fee | 210,557 | 724,516 | 27,703 | ||||||||||||
Fund shares redeemed | 1,112,192 | 7,107,745 | 258,019 | ||||||||||||
Custody and fund accounting fees | 24,604 | 64,674 | 8,488 | ||||||||||||
Distribution and service fees | 87,202 | 358,349 | 17,337 | ||||||||||||
Trustees' fees | 9,806 | 25,027 | 4,722 | ||||||||||||
Due to custodian | 4,732 | | | ||||||||||||
Accrued expenses | 201,639 | 318,908 | 55,533 | ||||||||||||
Options written, at value3 | 4,479,300 | | | ||||||||||||
Securities sold short, at value4 | 6,835 | | | ||||||||||||
Outstanding swap agreements, at value2 | 6,484,041 | | | ||||||||||||
Unrealized depreciation on forward foreign currency contracts | 2,269,215 | 2,725,564 | 232,237 | ||||||||||||
Total liabilities | 16,377,266 | 27,251,156 | 681,310 | ||||||||||||
Net assets | $ | 278,834,170 | $ | 969,638,911 | $ | 48,135,962 |
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, 2011 was $1,460,425, $21,031,454 and $80,910, respectively.
2 Net upfront payments received by UBS Dynamic Alpha Fund were $2,546,195.
3 Premiums received by UBS Dynamic Alpha Fund were $5,226,039.
4 Proceeds from securities sold short by UBS Dynamic Alpha Fund were $6,238.
See accompanying notes to financial statements.
47
The UBS Funds
Financial statements
Statement of assets and liabilities (continued)
December 31, 2011 (unaudited)
UBS Dynamic Alpha Fund |
UBS Global Allocation Fund |
UBS Global Frontier Fund1 |
|||||||||||||
Net assets consist of: | |||||||||||||||
Beneficial interest | $ | 687,211,766 | $ | 2,041,175,210 | $ | 74,548,342 | |||||||||
Accumulated undistributed (distributions in excess of) net investment income | 2,565,894 | (3,450,847 | ) | (441,034 | ) | ||||||||||
Accumulated net realized loss | (402,152,167 | ) | (1,118,045,394 | ) | (28,480,342 | ) | |||||||||
Net unrealized appreciation (depreciation) | (8,791,323 | ) | 49,959,942 | 2,508,996 | |||||||||||
Net assets | $ | 278,834,170 | $ | 969,638,911 | $ | 48,135,962 | |||||||||
Class A: | |||||||||||||||
Net assets | $ | 176,159,156 | $ | 568,418,181 | $ | 35,603,880 | |||||||||
Shares outstanding | 29,145,886 | 64,730,089 | 5,302,513 | ||||||||||||
Net asset value and redemption proceeds per share | $ | 6.04 | $ | 8.78 | $ | 6.71 | |||||||||
Offering price per share (NAV per share plus maximum sales charge)2 | $ | 6.39 | $ | 9.29 | $ | 7.10 | |||||||||
Class B: | |||||||||||||||
Net assets | $ | 1,198,804 | $ | 3,957,117 | N/A | ||||||||||
Shares outstanding | 208,770 | 438,932 | N/A | ||||||||||||
Net asset value and offering price per share | $ | 5.74 | $ | 9.02 | N/A | ||||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 5.45 | $ | 8.57 | N/A | ||||||||||
Class C: | |||||||||||||||
Net assets | $ | 54,682,625 | $ | 262,718,863 | $ | 10,896,237 | |||||||||
Shares outstanding | 9,518,857 | 30,562,304 | 1,623,525 | ||||||||||||
Net asset value and offering price per share | $ | 5.74 | $ | 8.60 | $ | 6.71 | |||||||||
Redemption proceeds per share (NAV per share less maximum contingent deferred sales charge)2 | $ | 5.68 | $ | 8.51 | $ | 6.64 | |||||||||
Class Y: | |||||||||||||||
Net assets | $ | 46,793,585 | $ | 134,544,750 | $ | 1,635,845 | |||||||||
Shares outstanding | 7,604,144 | 15,039,316 | 243,710 | ||||||||||||
Net asset value per share, offering price per share, and redemption proceeds per share2 | $ | 6.15 | $ | 8.95 | $ | 6.71 |
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 sales 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.
See accompanying notes to financial statements.
48
The UBS Funds
Financial statements
Statement of operations
For the six months ended December 31, 2011 (unaudited)
UBS Dynamic Alpha Fund |
UBS Global Allocation Fund |
UBS Global Frontier Fund |
|||||||||||||
Investment income: | |||||||||||||||
Dividends | $ | 1,160,211 | $ | 3,959,998 | $ | 53,905 | |||||||||
Interest and other | 2,041,236 | 2,316,505 | 131,856 | ||||||||||||
Affiliated interest | 35,475 | 29,824 | 985 | ||||||||||||
Securities lending1 | 11,571 | 105,077 | 188 | ||||||||||||
Foreign tax withheld | (41,505 | ) | (206,115 | ) | | ||||||||||
Total income | 3,206,988 | 6,205,289 | 186,934 | ||||||||||||
Expenses: | |||||||||||||||
Advisory and administration | 1,448,596 | 4,655,194 | 282,881 | ||||||||||||
Service and distribution: | |||||||||||||||
Class A | 244,284 | 814,246 | 51,166 | ||||||||||||
Class B | 8,172 | 26,501 | | ||||||||||||
Class C | 305,872 | 1,492,520 | 63,082 | ||||||||||||
Transfer agency and related service fees: | |||||||||||||||
Class A | 92,451 | 211,638 | 9,282 | ||||||||||||
Class B | 2,502 | 7,562 | | ||||||||||||
Class C | 35,353 | 149,356 | 4,570 | ||||||||||||
Class Y | 6,343 | 13,863 | 388 | ||||||||||||
Custodian and fund accounting | 70,177 | 193,204 | 25,489 | ||||||||||||
Federal and state registration | 26,045 | 28,029 | 18,982 | ||||||||||||
Professional services | 65,750 | 67,274 | 44,688 | ||||||||||||
Shareholder reports | 17,183 | 49,506 | 2,691 | ||||||||||||
Trustees | 19,211 | 49,939 | 9,385 | ||||||||||||
Dividend expense and security loan fees for securities sold short | 536,322 | | | ||||||||||||
Other | 31,879 | 77,025 | 7,787 | ||||||||||||
Total expenses | 2,910,140 | 7,835,857 | 520,391 | ||||||||||||
Fee waivers and/or expense reimbursements by Advisor | (99,593 | ) | (3,145 | ) | (90,505 | ) | |||||||||
Net expenses | 2,810,547 | 7,832,712 | 429,886 | ||||||||||||
Net investment income (loss) | 396,441 | (1,627,423 | ) | (242,952 | ) | ||||||||||
Net realized gain (loss) on: | |||||||||||||||
Investments in unaffiliated issuers | (5,932,380 | ) | 19,178,174 | (454,049 | ) | ||||||||||
Investments in affiliated issuers | 13,455,115 | 17,504,101 | 8,208,798 | ||||||||||||
Futures contracts | 12,831,245 | (1,004,633 | ) | (2,669,392 | ) | ||||||||||
Options written | 1,892,293 | | | ||||||||||||
Securities sold short | (19,548,863 | ) | | | |||||||||||
Swap agreements | (2,164,719 | ) | | | |||||||||||
Forward foreign currency contracts | 6,445,060 | 2,995,648 | (58,821 | ) | |||||||||||
Foreign currency transactions | (974,275 | ) | 10,800 | 34,429 | |||||||||||
Net realized gain | 6,003,476 | 38,684,090 | 5,060,965 | ||||||||||||
Change in net unrealized appreciation/depreciation on: | |||||||||||||||
Investments | (50,645,451 | ) | (169,342,069 | ) | (13,815,725 | ) | |||||||||
Futures contracts | 8,778,329 | 913,101 | (798,988 | ) | |||||||||||
Options written | 745,925 | | | ||||||||||||
Securities sold short | 23,997,082 | | | ||||||||||||
Swap agreements | 11,797,350 | | | ||||||||||||
Forward foreign currency contracts | 2,290,555 | 2,273,697 | 62,300 | ||||||||||||
Translation of other assets and liabilities denominated in foreign currency | (180,711 | ) | (199,883 | ) | (31,341 | ) | |||||||||
Change in net unrealized appreciation/depreciation | (3,216,921 | ) | (166,355,154 | ) | (14,583,754 | ) | |||||||||
Net realized and unrealized gain (loss) | 2,786,555 | (127,671,064 | ) | (9,522,789 | ) | ||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 3,182,996 | $ | (129,298,487 | ) | $ | (9,765,741 | ) |
1 Includes affiliated income from UBS Private Money Market Fund LLC of $196, $949 and $6, for UBS Dynamic Alpha Fund, UBS Global Allocation Fund and UBS Global Frontier Fund, respectively.
See accompanying notes to financial statements.
49
The UBS Funds
Financial statements
Statement of changes in net assets
UBS Dynamic Alpha Fund | UBS Global Allocation Fund | ||||||||||||||||||
Six months 2011 (unaudited) |
ended December 31, Year ended June 30, 2011 |
Six months 2011 (unaudited) |
ended December 31, Year ended June 30, 2011 |
||||||||||||||||
Operations: | |||||||||||||||||||
Net investment income (loss) | $ | 396,441 | $ | 4,116,479 | $ | (1,627,423 | ) | $ | (1,864,654 | ) | |||||||||
Net realized gain (loss) | 6,003,476 | (29,681,152 | ) | 38,684,090 | 171,053,827 | ||||||||||||||
Change in net unrealized appreciation/depreciation | (3,216,921 | ) | 47,078,632 | (166,355,154 | ) | 133,154,325 | |||||||||||||
Net increase (decrease) in net assets from operations | 3,182,996 | 21,513,959 | (129,298,487 | ) | 302,343,498 | ||||||||||||||
Dividends and distributions to shareholders by class: | |||||||||||||||||||
Class A: | |||||||||||||||||||
Net investment income and net foreign currency gains | | (7,507,567 | ) | (27,265,006 | ) | (35,643,712 | ) | ||||||||||||
Class B: | |||||||||||||||||||
Net investment income and net foreign currency gains | | (74,697 | ) | (70,597 | ) | (271,858 | ) | ||||||||||||
Class C: | |||||||||||||||||||
Net investment income and net foreign currency gains | | (1,529,009 | ) | (9,883,866 | ) | (13,451,079 | ) | ||||||||||||
Class Y: | |||||||||||||||||||
Net investment income and net foreign currency gains | | (2,642,703 | ) | (6,688,859 | ) | (8,188,472 | ) | ||||||||||||
Decrease in net assets from dividends and distributions | | (11,753,976 | ) | (43,908,328 | ) | (57,555,121 | ) | ||||||||||||
Beneficial interest transactions: | |||||||||||||||||||
Proceeds from shares sold | 5,548,147 | 38,956,835 | 11,216,133 | 77,483,013 | |||||||||||||||
Shares issued on reinvestment of dividends and distributions | | 11,063,907 | 39,684,007 | 53,431,280 | |||||||||||||||
Cost of shares redeemed | (102,292,928 | ) | (213,836,745 | ) | (197,894,190 | ) | (467,500,598 | ) | |||||||||||
Redemption fees | 3,935 | 13,204 | 9,787 | 25,304 | |||||||||||||||
Net decrease in net assets resulting from beneficial interest transactions | (96,740,846 | ) | (163,802,799 | ) | (146,984,263 | ) | (336,561,001 | ) | |||||||||||
Increase (decrease) in net assets | (93,557,850 | ) | (154,042,816 | ) | (320,191,078 | ) | (91,772,624 | ) | |||||||||||
Net assets, beginning of period | 372,392,020 | 526,434,836 | 1,289,829,989 | 1,381,602,613 | |||||||||||||||
Net assets, end of period | $ | 278,834,170 | $ | 372,392,020 | $ | 969,638,911 | $ | 1,289,829,989 | |||||||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income | $ | 2,565,894 | $ | 2,169,453 | $ | (3,450,847 | ) | $ | 42,084,904 |
50
The UBS Funds
Financial statements
UBS Global Frontier Fund | |||||||||||
Six months 2011 (unaudited) |
ended December 31, Year ended June 30, 2011 |
||||||||||
Operations: | |||||||||||
Net investment income (loss) | $ | (242,952 | ) | $ | (905,608 | ) | |||||
Net realized gain (loss) | 5,060,965 | 12,934,617 | |||||||||
Change in net unrealized appreciation/depreciation | (14,583,754 | ) | 9,195,277 | ||||||||
Net increase (decrease) in net assets from operations | (9,765,741 | ) | 21,224,286 | ||||||||
Dividends and distributions to shareholders by class: | |||||||||||
Class A: | |||||||||||
Net investment income and net foreign currency gains | (1,967,450 | ) | (1,678,450 | ) | |||||||
Class B: | |||||||||||
Net investment income and net foreign currency gains | | | |||||||||
Class C: | |||||||||||
Net investment income and net foreign currency gains | (551,404 | ) | (361,050 | ) | |||||||
Class Y: | |||||||||||
Net investment income and net foreign currency gains | (103,964 | ) | (28,269 | ) | |||||||
Decrease in net assets from dividends and distributions | (2,622,818 | ) | (2,067,769 | ) | |||||||
Beneficial interest transactions: | |||||||||||
Proceeds from shares sold | 2,027,825 | 11,145,739 | |||||||||
Shares issued on reinvestment of dividends and distributions | 2,479,555 | 1,915,760 | |||||||||
Cost of shares redeemed | (10,534,224 | ) | (28,131,068 | ) | |||||||
Redemption fees | 833 | 7,126 | |||||||||
Net decrease in net assets resulting from beneficial interest transactions | (6,026,011 | ) | (15,062,443 | ) | |||||||
Increase (decrease) in net assets | (18,414,570 | ) | 4,094,074 | ||||||||
Net assets, beginning of period | 66,550,532 | 62,456,458 | |||||||||
Net assets, end of period | $ | 48,135,962 | $ | 66,550,532 | |||||||
Net assets include accumulated undistributed (distributions in excess of) net investment income | $ | (441,034 | ) | $ | 2,424,736 |
See accompanying notes to financial statements.
51
UBS Dynamic Alpha Fund
Financial highlights
The table below sets forth data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.98 | $ | 5.92 | $ | 5.45 | $ | 9.89 | $ | 11.42 | $ | 11.04 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.06 | 0.02 | 0.14 | 0.04 | 0.01 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.05 | 0.16 | 0.75 | (1.84 | ) | (0.56 | ) | 0.37 | |||||||||||||||||||
Net increase from payment by Advisor | | | | 0.003 | | | |||||||||||||||||||||
Total income (loss) | 0.06 | 0.22 | 0.77 | (1.70 | ) | (0.52 | ) | 0.38 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.16 | ) | (0.30 | ) | | (0.01 | ) | (0.00 | )3 | |||||||||||||||||
From net realized gains | | | | (2.74 | ) | (1.00 | ) | | |||||||||||||||||||
Total dividends/distributions | | (0.16 | ) | (0.30 | ) | (2.74 | ) | (1.01 | ) | (0.00 | )3 | ||||||||||||||||
Net asset value, end of period | $ | 6.04 | $ | 5.98 | $ | 5.92 | $ | 5.45 | $ | 9.89 | $ | 11.42 | |||||||||||||||
Total investment return2 | 0.83 | % | 3.58 | % | 14.19 | % | (14.31 | )%4 | (4.95 | )% | 3.44 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.76 | %5 | 1.79 | % | 1.74 | % | 1.54 | % | 1.20 | % | 1.17 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.69 | %5 | 1.76 | % | 1.72 | % | 1.54 | % | 1.20 | % | 1.17 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short |
1.35 | %5 | 1.35 | % | 1.35 | % | 1.30 | % | 1.20 | % | 1.17 | % | |||||||||||||||
Net investment income (loss) | 0.37 | %5 | 0.95 | % | 0.31 | % | 1.99 | % | 0.35 | % | 0.06 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 176,159 | $ | 216,297 | $ | 334,131 | $ | 398,321 | $ | 1,178,342 | $ | 2,168,596 | |||||||||||||||
Portfolio turnover rate | 115 | % | 65 | % | 58 | % | 139 | % | 39 | % | 28 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.71 | $ | 5.65 | $ | 5.20 | $ | 9.68 | $ | 11.26 | $ | 10.98 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | 0.01 | (0.03 | ) | 0.08 | (0.04 | ) | (0.09 | ) | |||||||||||||||||
Net realized and unrealized gain (loss) | 0.04 | 0.16 | 0.73 | (1.82 | ) | (0.54 | ) | 0.37 | |||||||||||||||||||
Net increase from payment by Advisor | | | | 0.003 | | | |||||||||||||||||||||
Total income (loss) | 0.03 | 0.17 | 0.70 | (1.74 | ) | (0.58 | ) | 0.28 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.11 | ) | (0.25 | ) | | | | |||||||||||||||||||
From net realized gains | | | | (2.74 | ) | (1.00 | ) | | |||||||||||||||||||
Total dividends/distributions | | (0.11 | ) | (0.25 | ) | (2.74 | ) | (1.00 | ) | | |||||||||||||||||
Net asset value, end of period | $ | 5.74 | $ | 5.71 | $ | 5.65 | $ | 5.20 | $ | 9.68 | $ | 11.26 | |||||||||||||||
Total investment return2 | 0.53 | % | 2.86 | % | 13.11 | % | (14.98 | )%4 | (5.62 | )% | 2.64 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.74 | %5 | 2.63 | % | 2.58 | % | 2.39 | % | 1.99 | % | 1.95 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.45 | %5 | 2.50 | % | 2.47 | % | 2.36 | % | 1.99 | % | 1.95 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short |
2.10 | %5 | 2.10 | % | 2.10 | % | 2.10 | % | 1.99 | % | 1.95 | % | |||||||||||||||
Net investment income (loss) | (0.48 | )%5 | 0.15 | % | (0.44 | )% | 1.23 | % | (0.42 | )% | (0.78 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 1,199 | $ | 2,003 | $ | 4,597 | $ | 6,733 | $ | 14,905 | $ | 25,790 | |||||||||||||||
Portfolio turnover rate | 115 | % | 65 | % | 58 | % | 139 | % | 39 | % | 28 | % |
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.
52
UBS Dynamic Alpha Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.71 | $ | 5.65 | $ | 5.21 | $ | 9.68 | $ | 11.26 | $ | 10.97 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | 0.01 | (0.03 | ) | 0.08 | (0.04 | ) | (0.08 | ) | |||||||||||||||||
Net realized and unrealized gain (loss) | 0.04 | 0.15 | 0.72 | (1.81 | ) | (0.54 | ) | 0.37 | |||||||||||||||||||
Net increase from payment by Advisor | | | | 0.003 | | | |||||||||||||||||||||
Total income (loss) | 0.03 | 0.16 | 0.69 | (1.73 | ) | (0.58 | ) | 0.29 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.10 | ) | (0.25 | ) | | | | |||||||||||||||||||
From net realized gains | | | | (2.74 | ) | (1.00 | ) | | |||||||||||||||||||
Total dividends/distributions | | (0.10 | ) | (0.25 | ) | (2.74 | ) | (1.00 | ) | | |||||||||||||||||
Net asset value, end of period | $ | 5.74 | $ | 5.71 | $ | 5.65 | $ | 5.21 | $ | 9.68 | $ | 11.26 | |||||||||||||||
Total investment return2 | 0.53 | % | 2.82 | % | 13.15 | % | (14.98 | )%4 | (5.62 | )% | 2.64 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.54 | %5 | 2.55 | % | 2.50 | % | 2.32 | % | 1.97 | % | 1.93 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
2.44 | %5 | 2.51 | % | 2.47 | % | 2.32 | % | 1.97 | % | 1.93 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short |
2.10 | %5 | 2.10 | % | 2.10 | % | 2.07 | % | 1.97 | % | 1.93 | % | |||||||||||||||
Net investment income (loss) | (0.37 | )%5 | 0.20 | % | (0.44 | )% | 1.24 | % | (0.41 | )% | (0.72 | )% | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 54,683 | $ | 66,349 | $ | 104,146 | $ | 131,745 | $ | 317,450 | $ | 579,916 | |||||||||||||||
Portfolio turnover rate | 115 | % | 65 | % | 58 | % | 139 | % | 39 | % | 28 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 6.09 | $ | 6.03 | $ | 5.54 | $ | 9.96 | $ | 11.48 | $ | 11.07 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.02 | 0.08 | 0.03 | 0.17 | 0.08 | 0.05 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | 0.04 | 0.16 | 0.78 | (1.85 | ) | (0.56 | ) | 0.36 | |||||||||||||||||||
Net increase from payment by Advisor | | | | 0.003 | | | |||||||||||||||||||||
Total income (loss) | 0.06 | 0.24 | 0.81 | (1.68 | ) | (0.48 | ) | 0.41 | |||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | | (0.18 | ) | (0.32 | ) | | (0.04 | ) | (0.00 | )3 | |||||||||||||||||
From net realized gains | | | | (2.74 | ) | (1.00 | ) | | |||||||||||||||||||
Total dividends/distributions | | (0.18 | ) | (0.32 | ) | (2.74 | ) | (1.04 | ) | (0.00 | )3 | ||||||||||||||||
Net asset value, end of period | $ | 6.15 | $ | 6.09 | $ | 6.03 | $ | 5.54 | $ | 9.96 | $ | 11.48 | |||||||||||||||
Total investment return2 | 0.99 | % | 3.89 | % | 14.49 | % | (13.99 | )%4 | (4.64 | )% | 3.80 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.44 | %5 | 1.49 | % | 1.42 | % | 1.22 | % | 0.91 | % | 0.89 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and after dividend expense and security loan fees for securities sold short |
1.44 | %5 | 1.49 | % | 1.42 | % | 1.22 | % | 0.91 | % | 0.89 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement and before dividend expense and security loan fees for securities sold short |
1.10 | %5 | 1.07 | % | 1.04 | % | 1.00 | % | 0.91 | % | 0.89 | % | |||||||||||||||
Net investment income (loss) | 0.55 | %5 | 1.25 | % | 0.56 | % | 2.23 | % | 0.69 | % | 0.40 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 46,794 | $ | 87,743 | $ | 83,561 | $ | 77,254 | $ | 320,839 | $ | 478,785 | |||||||||||||||
Portfolio turnover rate | 115 | % | 65 | % | 58 | % | 139 | % | 39 | % | 28 | % |
3 Amount represents less than $0.005 per share.
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 Annualized
See accompanying notes to financial statements.
53
UBS Global Allocation Fund
Financial highlights
The table below sets forth data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.27 | $ | 8.66 | $ | 8.18 | $ | 12.59 | $ | 14.81 | $ | 13.86 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.01 | ) | 0.003 | 0.003 | 0.08 | 0.17 | 0.19 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | (1.05 | ) | 2.05 | 1.11 | (3.08 | ) | (1.34 | ) | 1.83 | ||||||||||||||||||
Total income (loss) | (1.06 | ) | 2.05 | 1.11 | (3.00 | ) | (1.17 | ) | 2.02 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.43 | ) | (0.44 | ) | (0.63 | ) | (0.46 | ) | (0.23 | ) | (0.27 | ) | |||||||||||||||
From net realized gains | | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | ||||||||||||||||||
Total dividends/distributions | (0.43 | ) | (0.44 | ) | (0.63 | ) | (1.41 | ) | (1.05 | ) | (1.07 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.78 | $ | 10.27 | $ | 8.66 | $ | 8.18 | $ | 12.59 | $ | 14.81 | |||||||||||||||
Total investment return2 | (10.30 | )% | 23.87 | % | 13.11 | % | (22.36 | )% | (8.43 | )% | 14.93 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses | 1.25 | %4 | 1.21 | % | 1.21 | % | 1.19 | % | 1.09 | % | 1.13 | % | |||||||||||||||
Net investment income (loss) | (0.12 | )%4 | 0.05 | % | 0.01 | % | 0.84 | % | 1.19 | % | 1.28 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 568,418 | $ | 753,750 | $ | 814,760 | $ | 996,059 | $ | 2,396,937 | $ | 3,094,036 | |||||||||||||||
Portfolio turnover rate | 51 | % | 68 | % | 90 | % | 122 | % | 83 | % | 74 | % | |||||||||||||||
Class B | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.28 | $ | 8.56 | $ | 8.00 | $ | 12.35 | $ | 14.52 | $ | 13.60 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.05 | ) | (0.08 | ) | (0.08 | ) | 0.003 | 0.05 | 0.07 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (1.05 | ) | 2.03 | 1.08 | (3.01 | ) | (1.31 | ) | 1.79 | ||||||||||||||||||
Total income (loss) | (1.10 | ) | 1.95 | 1.00 | (3.01 | ) | (1.26 | ) | 1.86 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.16 | ) | (0.23 | ) | (0.44 | ) | (0.39 | ) | (0.09 | ) | (0.14 | ) | |||||||||||||||
From net realized gains | | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | ||||||||||||||||||
Total dividends/distributions | (0.16 | ) | (0.23 | ) | (0.44 | ) | (1.34 | ) | (0.91 | ) | (0.94 | ) | |||||||||||||||
Net asset value, end of period | $ | 9.02 | $ | 10.28 | $ | 8.56 | $ | 8.00 | $ | 12.35 | $ | 14.52 | |||||||||||||||
Total investment return2 | (10.68 | )% | 22.86 | % | 12.14 | % | (22.98 | )% | (9.14 | )% | 13.96 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.22 | %4 | 2.07 | % | 2.09 | % | 2.02 | % | 1.91 | % | 1.93 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.10 | %4 | 2.07 | % | 2.09 | % | 2.02 | % | 1.91 | % | 1.93 | % | |||||||||||||||
Net investment income (loss) | (0.97 | )%4 | (0.86 | )% | (0.90 | )% | 0.01 | % | 0.36 | % | 0.48 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 3,957 | $ | 7,484 | $ | 15,190 | $ | 33,685 | $ | 90,258 | $ | 139,061 | |||||||||||||||
Portfolio turnover rate | 51 | % | 68 | % | 90 | % | 122 | % | 83 | % | 74 | % |
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.
54
UBS Global Allocation Fund
Financial highlights
Class C | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.00 | $ | 8.42 | $ | 7.96 | $ | 12.29 | $ | 14.48 | $ | 13.58 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | (0.04 | ) | (0.07 | ) | (0.07 | ) | 0.003 | 0.05 | 0.07 | ||||||||||||||||||
Net realized and unrealized gain (loss) | (1.03 | ) | 1.99 | 1.07 | (2.99 | ) | (1.30 | ) | 1.79 | ||||||||||||||||||
Total income (loss) | (1.07 | ) | 1.92 | 1.00 | (2.99 | ) | (1.25 | ) | 1.86 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.33 | ) | (0.34 | ) | (0.54 | ) | (0.39 | ) | (0.12 | ) | (0.16 | ) | |||||||||||||||
From net realized gains | | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | ||||||||||||||||||
Total dividends/distributions | (0.33 | ) | (0.34 | ) | (0.54 | ) | (1.34 | ) | (0.94 | ) | (0.96 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.60 | $ | 10.00 | $ | 8.42 | $ | 7.96 | $ | 12.29 | $ | 14.48 | |||||||||||||||
Total investment return2 | (10.67 | )% | 22.90 | % | 12.29 | % | (22.93 | )% | (9.15 | )% | 14.02 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses | 2.03 | %4 | 1.99 | % | 2.00 | % | 1.97 | % | 1.89 | % | 1.90 | % | |||||||||||||||
Net investment income (loss) | (0.91 | )%4 | (0.73 | )% | (0.78 | )% | 0.06 | % | 0.40 | % | 0.51 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 262,719 | $ | 348,721 | $ | 381,137 | $ | 456,577 | $ | 985,156 | $ | 1,274,539 | |||||||||||||||
Portfolio turnover rate | 51 | % | 68 | % | 90 | % | 122 | % | 83 | % | 74 | % | |||||||||||||||
Class Y | |||||||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, | ||||||||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||||||||
Net asset value, beginning of period | $ | 10.48 | $ | 8.84 | $ | 8.34 | $ | 12.80 | $ | 15.04 | $ | 14.06 | |||||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.04 | 0.03 | 0.10 | 0.21 | 0.23 | |||||||||||||||||||||
Net realized and unrealized gain (loss) | (1.08 | ) | 2.07 | 1.14 | (3.13 | ) | (1.37 | ) | 1.85 | ||||||||||||||||||
Total income (loss) | (1.07 | ) | 2.11 | 1.17 | (3.03 | ) | (1.16 | ) | 2.08 | ||||||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||||||
From net investment income | (0.46 | ) | (0.47 | ) | (0.67 | ) | (0.48 | ) | (0.26 | ) | (0.30 | ) | |||||||||||||||
From net realized gains | | | | (0.95 | ) | (0.82 | ) | (0.80 | ) | ||||||||||||||||||
Total dividends/distributions | (0.46 | ) | (0.47 | ) | (0.67 | ) | (1.43 | ) | (1.08 | ) | (1.10 | ) | |||||||||||||||
Net asset value, end of period | $ | 8.95 | $ | 10.48 | $ | 8.84 | $ | 8.34 | $ | 12.80 | $ | 15.04 | |||||||||||||||
Total investment return2 | (10.11 | )% | 24.15 | % | 13.54 | % | (22.12 | )% | (8.20 | )% | 15.18 | % | |||||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 0.95 | %4 | 0.92 | % | 0.93 | % | 0.90 | % | 0.82 | % | 0.88 | % | |||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.95 | %4 | 0.92 | % | 0.93 | % | 0.90 | % | 0.82 | % | 0.88 | % | |||||||||||||||
Net investment income (loss) | 0.18 | %4 | 0.35 | % | 0.29 | % | 1.14 | % | 1.46 | % | 1.53 | % | |||||||||||||||
Supplemental data: | |||||||||||||||||||||||||||
Net assets, end of period (000's) | $ | 134,545 | $ | 179,875 | $ | 170,517 | $ | 224,281 | $ | 477,603 | $ | 648,479 | |||||||||||||||
Portfolio turnover rate | 51 | % | 68 | % | 90 | % | 122 | % | 83 | % | 74 | % |
3 Amount represents less than $0.005 per share.
4 Annualized.
See accompanying notes to financial statements.
55
UBS Global Frontier Fund
Financial highlights
The table below sets forth data for one share of beneficial interest outstanding throughout each period presented.
Class A | |||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | June 30, 20083 | |||||||||||||||||||
Net asset value, beginning of period | $ | 8.36 | $ | 6.32 | $ | 5.59 | $ | 8.75 | $ | 10.00 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment loss1 | (0.03 | ) | (0.09 | ) | (0.07 | ) | (0.06 | ) | (0.05 | ) | |||||||||||||
Net realized and unrealized gain (loss) | (1.24 | ) | 2.38 | 1.12 | (2.98 | ) | (1.10 | ) | |||||||||||||||
Total income (loss) | (1.27 | ) | 2.29 | 1.05 | (3.04 | ) | (1.15 | ) | |||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||
From net investment income | (0.38 | ) | (0.25 | ) | (0.32 | ) | (0.12 | ) | (0.03 | ) | |||||||||||||
From net realized gains | | | | | (0.07 | ) | |||||||||||||||||
Total dividends/distributions | (0.38 | ) | (0.25 | ) | (0.32 | ) | (0.12 | ) | (0.10 | ) | |||||||||||||
Net asset value, end of period | $ | 6.71 | $ | 8.36 | $ | 6.32 | $ | 5.59 | $ | 8.75 | |||||||||||||
Total investment return2 | (15.06 | )% | 36.53 | % | 18.30 | % | (34.51 | )% | (11.60 | )% | |||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.72 | %5 | 1.64 | % | 1.62 | % | 1.66 | % | 1.59 | %5 | |||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.40 | %5 | 1.40 | % | 1.40 | % | 1.40 | % | 1.40 | %5 | |||||||||||||
Net investment loss | (0.72 | )%5 | (1.14 | )% | (1.01 | )% | (1.01 | )% | (0.52 | )%5 | |||||||||||||
Supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 35,604 | $ | 50,167 | $ | 48,479 | $ | 48,395 | $ | 79,572 | |||||||||||||
Portfolio turnover rate | 54 | % | 33 | % | 54 | % | 148 | % | 84 | % |
Class Y | |||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | June 30, 20083 | |||||||||||||||||||
Net asset value, beginning of period | $ | 8.36 | $ | 6.32 | $ | 5.60 | $ | 8.77 | $ | 10.00 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment loss1 | (0.02 | ) | (0.07 | ) | (0.05 | ) | (0.04 | ) | (0.02 | ) | |||||||||||||
Net realized and unrealized gain (loss) | (1.23 | ) | 2.38 | 1.11 | (2.99 | ) | (1.10 | ) | |||||||||||||||
Total income (loss) | (1.25 | ) | 2.31 | 1.06 | (3.03 | ) | (1.12 | ) | |||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||
From net investment income | (0.40 | ) | (0.27 | ) | (0.34 | ) | (0.14 | ) | (0.04 | ) | |||||||||||||
From net realized gains | | | | | (0.07 | ) | |||||||||||||||||
Total dividends/distributions | (0.40 | ) | (0.27 | ) | (0.34 | ) | (0.14 | ) | (0.11 | ) | |||||||||||||
Net asset value, end of period | $ | 6.71 | $ | 8.36 | $ | 6.32 | $ | 5.60 | $ | 8.77 | |||||||||||||
Total investment return2 | (14.89 | )% | 36.66 | % | 18.54 | % | (34.30 | )% | (11.33 | )% | |||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.48 | %5 | 1.43 | % | 1.35 | % | 1.35 | % | 1.31 | %5 | |||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.15 | %5 | 1.15 | % | 1.15 | % | 1.15 | % | 1.15 | %5 | |||||||||||||
Net investment loss | (0.46 | )%5 | (0.87 | )% | (0.72 | )% | (0.73 | )% | (0.26 | )%5 | |||||||||||||
Supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 1,636 | $ | 1,395 | $ | 185 | $ | 1,699 | $ | 7,395 | |||||||||||||
Portfolio turnover rate | 54 | % | 33 | % | 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.
56
UBS Global Frontier Fund
Financial highlights
Class C | |||||||||||||||||||||||
Six months ended December 31, 2011 |
Year ended June 30, |
For the period ended |
|||||||||||||||||||||
(unaudited) | 2011 | 2010 | 2009 | June 30, 20083 | |||||||||||||||||||
Net asset value, beginning of period | $ | 8.34 | $ | 6.31 | $ | 5.58 | $ | 8.71 | $ | 10.00 | |||||||||||||
Income (loss) from investment operations: | |||||||||||||||||||||||
Net investment loss1 | (0.05 | ) | (0.15 | ) | (0.12 | ) | (0.10 | ) | (0.12 | ) | |||||||||||||
Net realized and unrealized gain (loss) | (1.23 | ) | 2.37 | 1.12 | (2.96 | ) | (1.10 | ) | |||||||||||||||
Total income (loss) | (1.28 | ) | 2.22 | 1.00 | (3.06 | ) | (1.22 | ) | |||||||||||||||
Less dividends/distributions: | |||||||||||||||||||||||
From net investment income | (0.35 | ) | (0.19 | ) | (0.27 | ) | (0.07 | ) | (0.00 | )4 | |||||||||||||
From net realized gains | | | | | (0.07 | ) | |||||||||||||||||
Total dividends/distributions | (0.35 | ) | (0.19 | ) | (0.27 | ) | (0.07 | ) | (0.07 | ) | |||||||||||||
Net asset value, end of period | $ | 6.71 | $ | 8.34 | $ | 6.31 | $ | 5.58 | $ | 8.71 | |||||||||||||
Total investment return2 | (15.29 | )% | 35.39 | % | 17.50 | % | (35.03 | )% | (12.22 | )% | |||||||||||||
Ratios to average net assets: | |||||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 2.50 | %5 | 2.41 | % | 2.41 | % | 2.48 | % | 2.40 | %5 | |||||||||||||
Expenses after fee waivers and/or expense reimbursement | 2.15 | %5 | 2.15 | % | 2.15 | % | 2.15 | % | 2.15 | %5 | |||||||||||||
Net investment loss | (1.47 | )%5 | (1.89 | )% | (1.76 | )% | (1.76 | )% | (1.27 | )%5 | |||||||||||||
Supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 10,896 | $ | 14,989 | $ | 13,792 | $ | 14,559 | $ | 22,882 | |||||||||||||
Portfolio turnover rate | 54 | % | 33 | % | 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.
57
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 14 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 Advisor Trust 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. Effective on or about March 1, 2012, all outstanding Class B shares will be converted to Class A shares of the same fund. 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 "evaluation" systems that derive values based on comparable securities or instruments. An evaluation 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.
58
The UBS Funds
Notes to financial statements (unaudited)
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 of the fair valuation hierarchy at the end of the reporting period.
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' 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.
59
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 Funds' 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 2010-06"). ASU 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. The disclosures surrounding purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements have been implemented for annual and interim periods beginning after December 15, 2010.
In April 2011, FASB issued Accounting Standards Update No. 2011-03 "Transfers and Servicing (Topic 860) Reconsideration of Effective Control for Repurchase Agreements" ("ASU 2011-03") which relates to the accounting for repurchase agreements and similar agreements, including mortgage dollar rolls, that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU 2011-03 modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. ASU 2011-03 is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011. Management is currently evaluating the implications of this change and its impact on the financial statements.
In May 2011, FASB issued Accounting Standards Update No. 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS")" ("ASU 2011-04"). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU 2011-04 and its impact on the financial statements.
60
The UBS Funds
Notes to financial statements (unaudited)
In December 2011, FASB issued Accounting Standards Update No. 201111 "Disclosures about Offsetting Assets and Liabilities" ("ASU 201111"). These disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company's financial position. They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition, ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. ASU 2011-11 requires entities to: disclose both gross and net information about both instruments and transactions eligible for offset in the financial statements; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. At this time, management is evaluating the implications of ASU 2011-11 and its impact 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. Certain derivative contracts entered into by the Funds may contain credit-risk related contingent features that could be triggered subject to certain circumstances. Such circumstances include agreed upon net asset value thresholds. If triggered, the derivative counterparty could request additional cash margin and/or terminate the derivative contract. The aggregate fair value of the derivative contracts that are in a net liability position that contain these triggers can be found in the Portfolio of investments. The aggregate fair value of assets that are already posted as collateral as of December 31, 2011 is reflected in the Statement of assets and liabilities. If the applicable credit-risk related contingent features were triggered as of December 31, 2011, the Fund would be required to post additional collateral or may be required to terminate the contract and settle any amounts outstanding. The volume of derivatives as disclosed in UBS Global Allocation Fund and UBS Global Frontier Fund's Portfolio of investments is representative of the volume of derivatives outstanding during the period ended December 31, 2011, except for forward foreign currency contracts, for which the average volume during the six month period was greater than at period end. The average volume of all derivatives as disclosed in UBS Dynamic Alpha Fund's Portfolio of investments was greater during the six month period than at period end. 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).
61
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, 2011 is as follows:
Asset derivatives
Interest rate risk |
Equity risk | Credit risk |
Foreign exchange risk |
Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | | $ | 2,621,192 | $ | 2,621,192 | |||||||||||||
Futures contracts2 | 233,345 | 1,399,841 | | | 1,633,186 | ||||||||||||||||||
Swap agreements1 | 4,046,638 | | 596,288 | | 4,642,926 | ||||||||||||||||||
Total value | $ | 4,279,983 | $ | 1,399,841 | $ | 596,288 | $ | 2,621,192 | $ | 8,897,304 |
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 within Due from broker.
Liability derivatives
Interest rate risk |
Equity risk | Credit risk |
Foreign exchange risk |
Total | |||||||||||||||||||
UBS Dynamic Alpha Fund | |||||||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | | $ | (2,269,215 | ) | $ | (2,269,215 | ) | |||||||||||
Futures contracts2 | (532,311 | ) | (361,108 | ) | | | (893,419 | ) | |||||||||||||||
Options written1 | | (4,479,300 | ) | | | (4,479,300 | ) | ||||||||||||||||
Swap agreements1 | (1,197,499 | ) | | (5,286,542 | ) | | (6,484,041 | ) | |||||||||||||||
Total value | $ | (1,729,810 | ) | $ | (4,840,408 | ) | $ | (5,286,542 | ) | $ | (2,269,215 | ) | $ | (14,125,975 | ) |
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 within Due to broker.
62
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2011, 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 | $ | | $ | | $ | | $ | 6,445,060 | $ | 6,445,060 | |||||||||||||
Futures contracts | 8,134,371 | 4,696,874 | | | 12,831,245 | ||||||||||||||||||
Options purchased3 | (1,480,236 | ) | (12,495,425 | ) | | (68,216 | ) | (14,043,877 | ) | ||||||||||||||
Options written | 266,853 | 1,259,024 | 298,200 | 68,216 | 1,892,293 | ||||||||||||||||||
Swap agreements | 1,364,383 | | (3,586,526 | ) | 57,424 | (2,164,719 | ) | ||||||||||||||||
Total net realized gain (loss) | $ | 8,285,371 | $ | (6,539,527 | ) | $ | (3,288,326 | ) | $ | 6,502,484 | $ | 4,960,002 | |||||||||||
Change in net unrealized appreciation/depreciation2 | |||||||||||||||||||||||
Forward contracts | $ | | $ | | $ | | $ | 2,290,555 | $ | 2,290,555 | |||||||||||||
Futures contracts | 1,128,196 | 7,650,133 | | | 8,778,329 | ||||||||||||||||||
Options purchased3 | 1,411,098 | (3,604,422 | ) | | 68,215 | (2,125,109 | ) | ||||||||||||||||
Options written | (447,020 | ) | 1,320,323 | (84,415 | ) | (42,963 | ) | 745,925 | |||||||||||||||
Swap agreements | 9,137,067 | | 2,698,237 | (37,954 | ) | 11,797,350 | |||||||||||||||||
Total change in net unrealized appreciation/depreciation |
$ | 11,229,341 | $ | 5,366,034 | $ | 2,613,822 | $ | 2,277,853 | $ | 21,487,050 |
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) on investments and change in net unrealized appreciation/depreciation on investments.
Asset derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Global Allocation Fund | |||||||||||||||
Forward contracts1 | $ | | $ | 4,696,706 | $ | 4,696,706 | |||||||||
Futures contracts2 | 327,545 | | 327,545 | ||||||||||||
Total value | $ | 327,545 | $ | 4,696,706 | $ | 5,024,251 |
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 within Due from broker.
Liability derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Global Allocation Fund | |||||||||||||||
Forward contracts1 | $ | | $ | (2,725,564 | ) | $ | (2,725,564 | ) | |||||||
Futures contracts2 | (516,779 | ) | | (516,779 | ) | ||||||||||
Total value | $ | (516,779 | ) | $ | (2,725,564 | ) | $ | (3,242,343 | ) |
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 within Due to broker.
63
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2011, were as follows:
Interest rate risk |
Equity risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Allocation Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 2,995,648 | $ | 2,995,648 | |||||||||||
Futures contracts | 8,336,843 | (9,341,476 | ) | | (1,004,633 | ) | |||||||||||||
Total net realized gain (loss) | $ | 8,336,843 | $ | (9,341,476 | ) | $ | 2,995,648 | $ | 1,991,015 | ||||||||||
Change in net unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 2,273,697 | $ | 2,273,697 | |||||||||||
Futures contracts | 122,936 | 790,165 | | 913,101 | |||||||||||||||
Total change in net unrealized appreciation/depreciation | $ | 122,936 | $ | 790,165 | $ | 2,273,697 | $ | 3,186,798 |
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
Interest rate risk |
Equity risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Frontier Fund | |||||||||||||||||||
Forward contracts1 | $ | | $ | | $ | 316,151 | $ | 316,151 | |||||||||||
Futures contracts2 | 50,982 | 98,714 | | 149,696 | |||||||||||||||
Total value | $ | 50,982 | $ | 98,714 | $ | 316,151 | $ | 465,847 |
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 within Due from broker.
Liability derivatives
Equity risk |
Foreign exchange risk |
Total | |||||||||||||
UBS Global Frontier Fund | |||||||||||||||
Forward contracts1 | $ | | $ | (232,237 | ) | $ | (232,237 | ) | |||||||
Futures contracts2 | (114,322 | ) | | (114,322 | ) | ||||||||||
Total value | $ | (114,322 | ) | $ | (232,237 | ) | $ | (346,559 | ) |
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 within Due to broker.
64
The UBS Funds
Notes to financial statements (unaudited)
Activities in derivative instruments during the period ended December 31, 2011, were as follows:
Interest rate risk |
Equity risk |
Foreign exchange risk |
Total | ||||||||||||||||
UBS Global Frontier Fund | |||||||||||||||||||
Net realized gain (loss)1 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | (58,821 | ) | $ | (58,821 | ) | |||||||||
Futures contracts | 205,596 | (2,874,988 | ) | | (2,669,392 | ) | |||||||||||||
Total net realized gain (loss) | $ | 205,596 | $ | (2,874,988 | ) | $ | (58,821 | ) | $ | (2,728,213 | ) | ||||||||
Change in net unrealized appreciation/depreciation2 | |||||||||||||||||||
Forward contracts | $ | | $ | | $ | 62,300 | $ | 62,300 | |||||||||||
Futures contracts | 50,982 | (849,970 | ) | | (798,988 | ) | |||||||||||||
Total change in net unrealized appreciation/depreciation | $ | 50,982 | $ | (849,970 | ) | $ | 62,300 | $ | (736,688 | ) |
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. Dividend income and expense are recorded on the ex-dividend date ("ex-date") except in the case of certain dividends for foreign securities which are recorded as soon after the ex-date as the respective Fund, using reasonable diligence, becomes aware of such dividends. 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
65
The UBS Funds
Notes to financial statements (unaudited)
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 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 non-cash settled 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 equal to the contract's full notional value. However, currency contracts with respect to identical currencies may be netted against each other and, in such cases, a Fund's custodian or sub-custodian will place assets in a segregated account of the Fund, in an amount equal to the net amount owed (the unrealized loss) by a Fund. 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 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 as part of Due to or Due from broker 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
66
The UBS Funds
Notes to financial statements (unaudited)
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 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 to receive or pay amounts based on changes in currency exchange rates in order 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
67
The UBS Funds
Notes to financial statements (unaudited)
agreement. Notional amounts of all credit default swap agreements outstanding as of December 31, 2011 for which a Fund is the seller of protection are disclosed under the section "Credit default swaps on credit indicessell protection" and "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.
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
68
The UBS Funds
Notes to financial statements (unaudited)
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.
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 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, 2011, UBS Global Allocation Fund recorded $28,801 recaptured commissions which are reflected on the Statement of operations within the net realized gains (losses) on investments in unaffiliated issuers.
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.
69
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 following 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 dividend expense and securities loan fees 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 dividend expense and securities loan fees for securities sold short) do not exceed the expense limit of each class of shares as indicated in the following table. Investment advisory fees, including the dollar amount waived or reimbursed for the period ended December 31, 2011, 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 | % | $ | 1,331,293 | $ | 99,593 | |||||||||||||||
UBS Global Allocation Fund | 1.35 | 2.10 | 2.10 | 1.10 | 4,241,951 | 3,145 | |||||||||||||||||||||
UBS Global Frontier Fund | 1.40 | N/A1 | 2.15 | 1.15 | 262,225 | 90,505 |
1 UBS Global Frontier Fund does not offer Class B shares.
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, 2011 are subject to repayment through June 30, 2015. At December 31, 2011, the
70
The UBS Funds
Notes to financial statements (unaudited)
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, 2012 |
Expires June 30, 2013 |
Expires June 30, 2014 |
Expires June 30, 2015 |
||||||||||||||||||
UBS Dynamic Alpha FundClass A | $ | 196,161 | $ | | $ | 51,127 | $ | 76,312 | $ | 68,722 | |||||||||||||
UBS Dynamic Alpha FundClass B | 15,765 | 2,654 | 6,334 | 4,458 | 2,319 | ||||||||||||||||||
UBS Dynamic Alpha FundClass C | 102,398 | | 35,483 | 38,363 | 28,552 | ||||||||||||||||||
UBS Global Allocation FundClass B | 3,145 | | | | 3,145 | ||||||||||||||||||
UBS Global Frontier FundClass A | 447,910 | 137,121 | 118,867 | 126,291 | 65,631 | ||||||||||||||||||
UBS Global Frontier FundClass C | 154,526 | 50,614 | 41,974 | 39,777 | 22,161 | ||||||||||||||||||
UBS Global Frontier FundClass Y | 12,226 | 5,653 | 1,545 | 2,315 | 2,713 |
Each Fund pays UBS Global AM 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, 2011, the Funds owed and incurred administrative fees as follows:
Fund |
Administrative fees owed |
Administrative fees incurred |
|||||||||
UBS Dynamic Alpha Fund | $ | 17,970 | $ | 117,303 | |||||||
UBS Global Allocation Fund | 63,319 | 413,243 | |||||||||
UBS Global Frontier Fund | 3,139 | 20,656 |
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, 2011 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 included in securities lending income in the Statement of operations.
71
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, 2011, were as follows:
Fund | UBS AG | ||||||
UBS Dynamic Alpha Fund | $ | 30,657 |
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, 2011, certain Funds owed UBS Global AM (US) service and distribution fees, and for the period ended December 31, 2011, 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 | $ | 38,102 | $ | 5,160 | |||||||
UBS Dynamic Alpha FundClass B | 1,054 | 1,607 | |||||||||
UBS Dynamic Alpha FundClass C | 48,046 | 531 | |||||||||
UBS Global Allocation FundClass A | 125,332 | 39,061 | |||||||||
UBS Global Allocation FundClass B | 3,449 | 9,029 | |||||||||
UBS Global Allocation FundClass C | 229,568 | 1,858 | |||||||||
UBS Global Frontier FundClass A | 7,760 | 3,787 | |||||||||
UBS Global Frontier FundClass C | 9,577 | 468 |
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") as each Fund's transfer agent, and is compensated for these services by BNY Mellon, not the Funds.
72
The UBS Funds
Notes to financial statements (unaudited)
For the period ended December 31, 2011, UBS Financial Services Inc. received from BNY Mellon, not the Funds, total fees as follows:
Fund | Amount paid | ||||||
UBS Dynamic Alpha Fund | $ | 60,392 | |||||
UBS Global Allocation Fund | 157,637 | ||||||
UBS Global Frontier Fund | 6,846 |
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 Fund's Portfolio of investments. In addition, UBS Global Allocation Fund and UBS Global Frontier Fund received US Government Agency securities as collateral amounting to $7,059,046 and $40,931, respectively, which cannot be resold. The value of loaned securities and related collateral outstanding at December 31, 2011, 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 | $ | 1,460,425 | $ | 1,487,143 | $ | 1,487,143 | |||||||||
UBS Global Allocation Fund | 21,031,454 | 21,517,971 | 14,458,925 | ||||||||||||
UBS Global Frontier Fund | 80,910 | 82,376 | 41,445 |
6. Purchases and sales of securities
For the period ended December 31, 2011, 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 | $ | 340,112,608 | $ | 360,023,973 | |||||||
UBS Global Allocation Fund | 407,800,771 | 580,898,521 | |||||||||
UBS Global Frontier Fund | 25,567,509 | 35,788,970 |
73
The UBS Funds
Notes to financial statements (unaudited)
For the period ended December 31, 2011, 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 | $ | 9,240,967 | $ | 11,000,818 | |||||||
UBS Global Allocation Fund | 122,163,742 | 150,862,199 | |||||||||
UBS Global Frontier Fund | 2,081,440 | 2,354,084 |
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, 2011 were as follows:
2011 | |||||||
Fund |
Distributions paid from ordinary income |
||||||
UBS Dynamic Alpha Fund | $ | 11,753,976 | |||||
UBS Global Allocation Fund | 57,555,121 | ||||||
UBS Global Frontier Fund | 2,067,769 |
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, 2012.
At June 30, 2011, the following Funds had net capital loss carryforwards for federal income tax purposes available to offset future capital gains through the indicated expiration dates:
Fund |
June 30, 2017 |
June 30, 2018 |
June 30, 2019 |
||||||||||||
UBS Dynamic Alpha Fund | $ | 145,211,340 | $ | 202,927,795 | $ | 46,428,719 | |||||||||
UBS Global Allocation Fund | 278,395,017 | 862,762,158 | | ||||||||||||
UBS Global Frontier Fund | 12,841,328 | 9,543,610 | 3,241,353 |
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, 2011, the following Funds incurred, and elected to defer, losses of the following:
Fund |
Net capital losses |
Net currency losses |
|||||||||
UBS Dynamic Alpha Fund | $ | 4,902,321 | $ | 3,282,847 |
As of and during the period ended December 31, 2011, 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.
74
The UBS Funds
Notes to financial statements (unaudited)
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Act") was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an indefinite period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
Each of the tax years in the four year period ended June 30, 2011, 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 $50 million committed line of credit to the Funds ("Committed Credit Facility") to be utilized for temporary financing until the settlement of sales 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, 2011.
9. Shares of beneficial interest
For the period ended December 31, 2011, 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 | 677,761 | $ | 4,069,548 | | $ | | |||||||||||||
Shares repurchased | (7,757,392 | ) | (46,863,800 | ) | (54,001 | ) | (311,001 | ) | |||||||||||
Shares converted from Class B to Class A | 83,934 | 507,687 | (88,142 | ) | (507,687 | ) | |||||||||||||
Redemption fees | | 3,413 | | | |||||||||||||||
Net decrease | (6,995,697 | ) | $ | (42,283,152 | ) | (142,143 | ) | $ | (818,688 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 76,188 | $ | 436,536 | 87,070 | $ | 534,376 | |||||||||||||
Shares repurchased | (2,177,507 | ) | (12,520,594 | ) | (6,900,425 | ) | (42,089,846 | ) | |||||||||||
Redemption fees | | 415 | | 107 | |||||||||||||||
Net decrease | (2,101,319 | ) | $ | (12,083,643 | ) | (6,813,355 | ) | $ | (41,555,363 | ) |
75
The UBS Funds
Notes to financial statements (unaudited)
UBS Global Allocation Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 680,968 | $ | 6,386,956 | | $ | | |||||||||||||
Shares repurchased | (12,330,821 | ) | (114,975,488 | ) | (116,219 | ) | (1,111,334 | ) | |||||||||||
Shares converted from Class B to Class A | 180,110 | 1,728,485 | (180,375 | ) | (1,728,485 | ) | |||||||||||||
Dividends reinvested | 2,830,572 | 24,512,757 | 7,318 | 65,060 | |||||||||||||||
Redemption fees | | 7,631 | | | |||||||||||||||
Net decrease | (8,639,171 | ) | $ | (82,339,659 | ) | (289,276 | ) | $ | (2,774,759 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 167,902 | $ | 1,515,614 | 165,068 | $ | 1,585,078 | |||||||||||||
Shares repurchased | (5,565,380 | ) | (50,872,623 | ) | (2,964,703 | ) | (29,206,260 | ) | |||||||||||
Dividends reinvested | 1,072,315 | 9,093,234 | 681,741 | 6,012,956 | |||||||||||||||
Redemption fees | | 877 | | 1,279 | |||||||||||||||
Net decrease | (4,325,163 | ) | $ | (40,262,898 | ) | (2,117,894 | ) | $ | (21,606,947 | ) |
UBS Global Frontier Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 118,836 | $ | 884,905 | 52,662 | $ | 376,017 | 103,975 | $ | 766,903 | ||||||||||||||||||
Shares repurchased | (1,101,000 | ) | (8,073,468 | ) | (305,879 | ) | (2,175,911 | ) | (42,928 | ) | (284,845 | ) | |||||||||||||||
Dividends reinvested | 280,785 | 1,850,374 | 79,699 | 525,217 | 15,800 | 103,964 | |||||||||||||||||||||
Redemption fees | | 225 | | 587 | | 21 | |||||||||||||||||||||
Net increase (decrease) | (701,379 | ) | $ | (5,337,964 | ) | (173,518 | ) | $ | (1,274,090 | ) | 76,847 | $ | 586,043 |
For the year ended June 30, 2011, 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 | 3,877,616 | $ | 23,735,661 | 1,842 | $ | 10,987 | |||||||||||||
Shares repurchased | (25,525,034 | ) | (156,780,166 | ) | (202,120 | ) | (1,184,499 | ) | |||||||||||
Shares converted from Class B to Class A | 262,643 | 1,628,864 | (274,367 | ) | (1,628,864 | ) | |||||||||||||
Dividends reinvested | 1,128,708 | 6,941,554 | 12,288 | 72,375 | |||||||||||||||
Redemption fees | | 12,034 | | | |||||||||||||||
Net decrease | (20,256,067 | ) | $ | (124,462,053 | ) | (462,357 | ) | $ | (2,730,001 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 248,263 | $ | 1,456,605 | 1,974,534 | $ | 12,124,718 | |||||||||||||
Shares repurchased | (7,303,153 | ) | (42,802,216 | ) | (1,838,567 | ) | (11,441,000 | ) | |||||||||||
Dividends reinvested | 244,384 | 1,439,424 | 418,358 | 2,610,554 | |||||||||||||||
Redemption fees | | 561 | | 609 | |||||||||||||||
Net increase (decrease) | (6,810,506 | ) | $ | (39,905,626 | ) | 554,325 | $ | 3,294,881 |
76
The UBS Funds
Notes to financial statements (unaudited)
UBS Global Allocation Fund
Class A | Class B | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 5,496,418 | $ | 54,196,160 | 6,667 | $ | 66,091 | |||||||||||||
Shares repurchased | (30,247,628 | ) | (299,917,346 | ) | (359,847 | ) | (3,473,824 | ) | |||||||||||
Shares converted from Class B to Class A | 714,938 | 7,085,487 | (719,244 | ) | (7,085,487 | ) | |||||||||||||
Dividends reinvested | 3,337,041 | 32,702,995 | 25,649 | 252,385 | |||||||||||||||
Redemption fees | | 19,046 | | | |||||||||||||||
Net decrease | (20,699,231 | ) | $ | (205,913,658 | ) | (1,046,775 | ) | $ | (10,240,835 | ) |
Class C | Class Y | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||
Shares sold | 680,165 | $ | 6,577,919 | 936,573 | $ | 9,557,356 | |||||||||||||
Shares repurchased | (12,339,415 | ) | (118,547,892 | ) | (3,881,538 | ) | (38,476,049 | ) | |||||||||||
Dividends reinvested | 1,301,168 | 12,452,180 | 803,980 | 8,023,720 | |||||||||||||||
Redemption fees | | 3,791 | | 2,467 | |||||||||||||||
Net decrease | (10,358,082 | ) | $ | (99,514,002 | ) | (2,140,985 | ) | $ | (20,892,506 | ) |
UBS Global Frontier Fund
Class A | Class C | Class Y | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Shares sold | 1,148,039 | $ | 9,053,928 | 128,727 | $ | 1,018,619 | 138,711 | $ | 1,073,192 | ||||||||||||||||||
Shares repurchased | (3,015,895 | ) | (23,741,744 | ) | (563,344 | ) | (4,351,462 | ) | (4,765 | ) | (37,862 | ) | |||||||||||||||
Dividends reinvested | 199,143 | 1,539,376 | 44,976 | 348,115 | 3,662 | 28,269 | |||||||||||||||||||||
Redemption fees | | 5,441 | | 1,645 | | 40 | |||||||||||||||||||||
Net increase (decrease) | (1,668,713 | ) | $ | (13,142,999 | ) | (389,641 | ) | $ | (2,983,083 | ) | 137,608 | $ | 1,063,639 |
77
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).
78
PRESORTED
STANDARD
U.S. POSTAGE
PAID
COMPUTERSHARE
UBS Global Asset Management (Americas) Inc.
1285 Avenue of the Americas
New York, NY 10019
S1172
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, Ms. Adela Cepeda, care of Mark Kemper, 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 |
|
|
Mark E. Carver | |
|
President | |
|
| |
Date: |
March 09, 2012 |
|
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 |
|
|
Mark E. Carver | |
|
President | |
|
| |
Date: |
March 09, 2012 |
|
|
| |
By: |
/s/ Thomas Disbrow |
|
|
Thomas Disbrow | |
|
Vice President and Treasurer | |
|
| |
Date: |
March 09, 2012 |
|
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 |
|
|
Mark E. Carver | |
|
President | |
|
| |
Date: |
March 09, 2012 |
|
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 09, 2012 |
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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 09, 2012 |
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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 09, 2012 |
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By: |
/s/ Thomas Disbrow |
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Thomas Disbrow | |
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Vice President and Treasurer |
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.