The UBS Funds: 485(b) Filing dated 8/14/2006

485BPOS 1 ubs485b081406.htm The UBS Funds: 485(b) Filing dated 8/14/2006

As filed with the U.S. Securities and Exchange Commission on August 14, 2006
File No. 033-47287
File No. 811-06637

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 53 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 54

(Check appropriate box or boxes.)

THE UBS FUNDS
(Exact Name of Registrant as Specified in Charter)

One North Wacker, Chicago, Illinois 60606
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code 312-525-7100

Mark F. Kemper
UBS Global Asset Management (US) Inc.
51 West 52nd Street
New York, NY 10019-6114
(Name and Address of Agent for Service)

Please send copies of all communications to:

Bruce G. Leto, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
(215) 564-8027

It is proposed that this filing will become effective (check appropriate box):

_X__ immediately upon filing pursuant to paragraph (b)
____ on [Date]pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
____ on [Date] pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on [Date] pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

This Post-Effective Amendment relates only to the UBS U.S. Equity Alpha Fund. No
other information relating to any other series of the Registrant is amended or
superseded hereby.

[INSERT UBS LOGO]

The UBS Funds

UBS U.S. Equity Alpha Fund

Prospectus

August 14, 2006

This prospectus offers Class A, Class C and Class Y shares in the UBS U.S.
Equity Alpha Fund (the "Fund"), a series of The UBS Funds (the "Trust"). Each
class has different sales charges and ongoing expenses. You can choose the class
that is best for you based on how much you plan to invest and how long you plan
to hold your Fund shares. Class Y shares are available only to certain types of
investors.

As with all mutual funds, the U.S. Securities and Exchange Commission ("SEC")
has not approved or disapproved the Fund's shares or determined whether this
prospectus is complete or accurate. To state otherwise is a crime.

[Not FDIC Insured. May lose value. No bank guarantee.]

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UBS Global Asset Management

Contents

The UBS Funds
What every investor should know about the Fund

Page

Investment Objective, Strategies, Securities Selection and Risks........3
Performance.............................................................7
Expenses and Fee Tables.................................................8

Your Investment
Information for managing your Fund account

Managing Your Fund Account.............................................10
--Flexible Pricing
--Buying Shares
--Selling Shares
--Exchanging Shares
--Pricing and Valuation

Additional Information
Additional important information about the Fund

Management.............................................................22

Disclosure of Portfolio Holdings.......................................23

Dividends and Taxes....................................................25

Financial Highlights...................................................27

Where to learn more about the Fund.............................Back Cover

Please find the UBS Funds' Privacy Notice inside the back cover
of this prospectus

[The Fund is not a complete or balanced investment program.]

UBS U.S. Equity Alpha Fund
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Investment Objective, Strategies, Securities Selection and Risks

Fund Objective

The Fund seeks to maximize total return, consisting of capital appreciation and
current income, while controlling risk.

Principal Investment Strategies

Under normal circumstances, the Fund invests at least 80% of its net assets
(plus borrowings for investment purposes, if any) in equity securities of US
companies. The Fund will generally invest in equity securities of large and mid
capitalization companies but is permitted to invest up to 15% of its assets in
small capitalization companies. The Fund will maintain both long positions and
short positions in equity securities and securities with equity-like
characteristics. For purposes of the Fund's investments, US companies include
any company organized outside of the United States but which: (a) is included in
the Fund's benchmark index; (b) has its headquarters or principal location of
operations in the United States; (c) whose primary listing is on a securities
exchange or market in the United States; or (d) derives a majority of its
revenues in the United States.

The Fund will notify shareholders at least 60 days prior to any change in its
policy of investing at least 80% of its net assets in equity securities of US
companies.

The Fund may, but is not required to, invest in derivative instruments
("Derivatives") as a substitute for direct investment or to allow the Fund to
remain fully invested while maintaining liquidity. Generally, Derivatives are
financial contracts whose value depends upon, or is derived from, the value of
an underlying asset, reference rate, or index and may relate to stocks and
related indexes. Examples of Derivatives include options, futures, forward
agreements and swap agreements. The Fund may use Derivatives to earn income and
enhance returns, to manage or adjust the risk profile of the Fund, to replace
more traditional direct investments, or to obtain exposure to certain markets.

The Fund may also invest in Exchange Traded Funds ("ETFs") and similarly
structured pooled investments in order to provide exposure to the equity markets
while maintaining liquidity. The Fund may also engage in short sales of ETFs and
similarly structured pooled investments in order to reduce exposure to certain
sectors of the equity markets.

The Fund is a non-diversified fund.

Securities Selection

UBS Global Asset Management (Americas) Inc. is the Fund's investment advisor
(the "Advisor"). The Advisor's investment style is singularly focused on
investment fundamentals. The Advisor believes that investment fundamentals
determine and describe future cash flows that define fundamental investment
value. The Advisor tries to identify and exploit periodic discrepancies between
market prices and fundamental value. These price/value discrepancies are used as
the building blocks for portfolio construction.

In constructing the Fund's portfolio, the Advisor uses primarily fundamental
analysis and to a lesser extent quantitative analysis to identify securities
that are underpriced and overpriced relative to their fundamental value. In
general, the Advisor buys securities "long" for the Fund's portfolio that it
believes are underpriced and will increase in value, and sells securities
"short"

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that it believes are overpriced and will decline in value. The Fund anticipates
that it will normally maintain long positions in equity securities and
securities with equity-like characteristics equal to 120% to 140% of the value
of its assets, short positions in equity securities and securities with
equity-like characteristics equal to 20% to 40% of the value of its assets and
cash positions equal to 0% to 10% of the value of its assets. This active
management process is intended to produce performance that outperforms the
Fund's benchmark.

In employing its investment strategies for the Fund, the Advisor attempts to
outperform (before taking into account any Fund fees or expenses) the Russell
1000 Index by 2.50% to 5.00% per year with a similar level of market risk as the
benchmark over a full market cycle. A typical market cycle is 4 to 7 years. The
Advisor does not represent or guarantee that the Fund will meet this total
return goal.

The Fund may invest in cash or cash equivalent instruments, including shares of
an affiliated investment company. When market conditions warrant, the Fund may
make substantial temporary defensive investments in cash equivalents, which may
affect the Fund's ability to pursue its investment objective. The Advisor
actively manages the Fund. As such, increased portfolio turnover may result in
higher costs for brokerage commissions, transaction costs and taxable gains. The
trading costs and tax effects associated with portfolio turnover may adversely
affect the Fund's performance.

More about Short Sales. When the Fund takes a long position in a security, the
Advisor purchases the security outright for the Fund's portfolio. When the Fund
takes a short position in a security, the Advisor sells a security that the Fund
does not own at the current market price and delivers to the buyer a security
that the Fund has borrowed. To complete or close out the short sale transaction,
the Fund buys the same security in the market and returns it to the lender. The
Fund makes money when the market price of the security goes down after the short
sale. Conversely, if the price of the security goes up after the sale, the Fund
will lose money because it will have to pay more to replace the borrowed
security than it received.

Until the Fund replaces the borrowed security, the Fund is required to maintain
during the period of the short sale the short sale proceeds that the broker
holds (which may be invested in equity securities) and any additional assets the
lending broker requires as collateral. The Fund is also required to designate,
on its books or the books of its custodian, liquid assets (less any additional
collateral held by the broker) to cover the short sale obligation, marked to
market daily. The Fund is also required to repay the lender of the security any
dividends or interest that accrue on the security during the period of the loan.

Principal Risks

An investment in the Fund is not guaranteed; you may lose money by investing in
the Fund. The other principal risks presented by an investment in the Fund are:

Market Risk--The risk that the market value of the Fund's investments will
fluctuate as the stock and bond markets fluctuate. Market risk may affect a
single issuer, industry or section of the economy, or it may affect the market
as a whole.

Management Risk- The Advisor's judgments about the fundamental values of
securities acquired by the Fund may prove to be

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incorrect. While it is the intent of the Advisor to take long positions in
securities that are undervalued and are expected to subsequently outperform the
market and short positions in securities that are overvalued and are expected to
underperform the market, in various market conditions, there is no assurance
that the Advisor will be successful in its selection process.

Short Sales Risk - There are certain unique risks associated with the use of
short sales strategies. When selling a security short, the Advisor will sell a
security it does not own at the then-current market price and then borrow the
security to deliver to the buyer. The Fund is then obligated to buy the security
on a later date so it can return the security to the lender. Short sales
therefore involve the risk that the Fund will incur a loss by subsequently
buying a security at a higher price than the price at which the Fund previously
sold the security short. This would occur if the securities lender required the
Fund to deliver the securities the Fund had borrowed at the commencement of the
short sale and the Fund was unable to either purchase the security at a
favorable price or to borrow the security from another securities lender. If
this occurs at a time when other short sellers of the sale security also want to
close out their positions, a "short squeeze" can occur. A short squeeze occurs
when demand is greater than supply for the security sold short. Moreover,
because a Fund's loss on a short sale arises from increases in the value of the
security sold short, such loss, like the price of the security sold short, is
theoretically unlimited. By contrast, a Fund's loss on a long position arises
from decreases in the value of the security and therefore is limited by the fact
that a security's value cannot drop below zero. It is possible that the Fund's
securities held long will decline in value at the same time that the value of
the securities sold short increases, thereby increasing the potential for loss.

Small and Mid Capitalization Company Risk--The risk that investments in small
and mid capitalization size companies may be more volatile than investments in
larger companies, as small and mid capitalization companies generally experience
higher growth and failure rates than larger capitalization companies. The
trading volume of these securities is normally lower than that of larger
companies. Such securities may be less liquid than others and could make it
difficult to sell a security at a time or price desired. Changes in the demand
for these securities generally have a disproportionate effect on their market
price, tending to make prices rise more in response to buying demand and fall
more in response to selling pressure than prices for larger companies.

Derivatives Risk--Derivatives involve risks different from, and possibly greater
than, the risks associated with investing directly in securities and other
instruments. Derivatives require investment techniques and risk analyses
different from those of other investments. If the Advisor incorrectly forecasts
the value of securities or other economic factors in using Derivatives, the Fund
might have been in a better position if the Fund had not entered into the
Derivatives. While some strategies involving Derivatives can protect against the
risk of loss, the use of Derivatives can also reduce the opportunity for gain or
even result in losses by offsetting favorable price movements in other Fund
investments. Derivatives also involve the risk of mispricing or improper
valuation, the risk that changes in the value of a Derivative may not correlate
perfectly with the underlying asset, rate, index, or overall securities markets,
and counterparty and credit risk (the risk that the other party to a

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swap agreement or other Derivative will not fulfill its contractual obligations,
whether because of bankruptcy or other default). Gains or losses involving some
options, futures, and other Derivatives may be substantial (for example, for
some Derivatives, it is possible for the Fund to lose more than the amount the
Fund invested in the Derivatives). Some Derivatives tend to be more volatile
than other investments, resulting in larger gains or losses in response to
market changes. Derivatives are subject to a number of other risks, including
liquidity risk (the possible lack of a secondary market for Derivatives and the
resulting inability of the Fund to sell or otherwise close out the Derivatives).
Finally, the Fund's use of Derivatives may cause the Fund to realize higher
amounts of short-term capital gains (generally taxed at ordinary income tax
rates) than if the Fund had not used such instruments.

Unseasoned Company Risk--The Fund may invest in relatively new or unseasoned
companies that are in their early stages of development. Securities of
unseasoned companies present greater risks than securities of larger, more
established companies. The companies may have greater risks because they (i) may
be dependent on a small number of products or services; (ii) may lack
substantial capital reserves; and (iii) do not have proven track records.

Non-Diversification Risk - The risk that the Fund will be more volatile than a
diversified fund because it invests its assets in a smaller number of issuers.
The gains or losses on a single security many, therefore, have a greater impact
on the Fund's net asset value.

Other Information

Commodity Pool Operator Exemption--The Trust has claimed an exclusion from the
definition of the term "commodity pool operator" under the Commodity Exchange
Act ("CEA"), and, therefore, is not subject to registration or regulation as a
pool operator under the CEA.

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Performance

There is no performance information quoted for the Fund, as the Fund had not
commenced investment operations as of the date of this prospectus.

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Expenses and Fee Tables

Fees and Expenses These tables describe the fees and expenses that you may pay
if you buy, sell and hold shares of the Fund.

Shareholder Transaction Expenses (fees paid directly from your investment)

Class A Class C Class Y

Maximum Front-End Sales Charge
(Load) Imposed on Purchases
(as a % of offering price) 5.50% None None
Maximum Contingent Deferred
Sales Charge (Load) (CDSC)
(as a % of purchase or sales
price, whichever is less) None(1) 1.00% None
Exchange Fee None None None
Redemption Fee (as a percentage
of amount redeemed within 90
days of purchase, if
applicable) (2) (3) 1.00% None 1.00%

Annual Fund Operating Expenses (expenses that are deducted from Fund assets) (4)

Class A Class C Class Y

Management Fees 1.00% 1.00% 1.00%
Distribution and/or Service
(12b-1) Fees 0.25% 1.00% None
Other Expenses (5) 1.02% 1.02% 1.02%
----- ----- -----
Total Annual Fund Operating
Expenses 2.27% 3.02% 2.02%
===== ===== =====
Management Fee Waiver/Expense
Reimbursements 0.20% 0.20% 0.20%
----- ----- -----
Net Expenses(6) 2.07% 2.82% 1.82%
===== ===== =====

(1) Purchases of $1 million or more that were not subject to a front-end sales
charge are subject to a 1% CDSC if sold within one-year of the purchase
date.

(2) Securities dealers or other financial institutions, including UBS Financial
Services Inc., may charge a fee to process a redemption of shares. UBS
Financial Services Inc. currently charges a fee of $5.25.

(3) Please see the section entitled "Selling Shares" for additional information
concerning the applicability of the redemption fee.

(4) The fees and expenses are based on estimates.

(5) "Other Expenses" includes, among other expenses, an administrative fee of
0.075% paid by the Fund to UBS Global Asset Management (Americas) Inc. and
securities loan fees and dividend expense for securities sold short, which
are estimated at 0.57% for the fiscal year ended June 30, 2007.

(6) The Trust, with respect to the Fund, and the Advisor have entered into a
written agreement pursuant to which the Advisor has agreed to waive a
portion of its management fees and/or to reimburse expenses (excluding
securities loan fees and dividend expense for securities sold short) to the
extent necessary so that the Fund's expenses (excluding securities loan
fees and dividend expense for securities sold short), through the fiscal
year ending June 30, 2007, 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.

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Example

This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Fund has not projected
expenses beyond the three-year period shown because the Fund had not commenced
investment operations as of the date of this prospectus.

The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

1 year 3 years

Class A $748 $1,202
Class C (assuming sale of all shares at $385 $915
end of period)
Class C (assuming no sale of shares) $285 $915
Class Y $185 $615

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Managing Your Fund Account

Flexible Pricing

The Fund offers three classes of shares--Class A, Class C and Class Y. Each
class has different sales charges and ongoing expenses. You can choose the class
that is best for you, based on how much you plan to invest and how long you plan
to hold your shares of the Fund. Class Y shares are only available to certain
types of investors.

The Fund has adopted separate plans pertaining to the Class A and Class C shares
of the Fund under rule 12b-1 that allow the Fund to pay service and, for Class C
shares, distribution fees, for the sale of the Fund's shares and services
provided to shareholders. Because the 12b-1 fees for Class C shares are paid out
of the Fund's assets on an ongoing basis, over time they will increase the cost
of your investment and may cost you more than if you paid other types of sales
charges, such as the front-end sales charge for Class A shares.

You may qualify for a waiver of certain sales charges on Class A and Class C
shares. See "Sales Charge Waivers for Class A and Class C Shares" later in this
prospectus. You may also qualify for a reduced sales charge on Class A shares.
See "Sales Charge Reductions for Class A Shares" later in this Prospectus.

Class A Shares

Class A shares have a front-end sales charge that is included in the offering
price of the Class A shares. This sales charge is paid at the time of purchase
and is not invested in the Fund. Class A shares pay an annual service fee of
0.25% of average net assets, but they pay no distribution fees. The ongoing
expenses for Class A shares are lower than for Class C shares.

The Class A sales charges for the Fund are described in the following table:

Class A Sales Charges:

Reallowance to
Sales Charge as a Percentage of: Selected Dealers as
Amount of Investment Offering Price Net Amount Invested Percentage of Offering Price

Less than $50,000 5.50% 5.82% 5.00%
$50,000 to $99,999 4.50 4.71 4.00
$100,000 to $249,999 3.50 3.63 3.00
$250,000 to $499,999 2.50 2.56 2.00
$500,000 to $999,999 2.00 2.04 1.75
$1,000,000 and over (1) None None May pay up to 1.00(2)

(1) A contingent deferred sales charge of 1% of the shares' offering price or
the net asset value at the time of sale by the shareholder, whichever is
less, is charged on sales of shares made within one year of the purchase
date. Class A shares representing reinvestment of dividends are not subject
to this 1% charge. Withdrawals in the first year after purchase of up to
12% of the value of the fund account under the Fund's Automatic Cash
Withdrawal Plan are not subject to this charge.
(2) For sales of $1 million or more, UBS Global Asset Management (US) Inc. pays
to the dealer an amount based upon the following schedule: 1.00% on the
first $3 million, 0.75% on the next $2 million and 0.50% on the next $5
million.

If you intend to purchase more than $5 million of Class A shares, you should
instead purchase Class Y shares, which have lower on-going expenses.

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Class C Shares

Class C shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
Class C shares do not convert to another class of shares. This means that you
will pay the 12b-1 fees for as long as you own your shares.

Class C shares also have a contingent deferred sales charge of 1.00%, applicable
if you sell your shares within one year of the date you purchased them. We
calculate the deferred sales charge on sales of Class C shares by multiplying
1.00% by the lesser of the net asset value of the Class C shares at the time of
purchase or the net asset value at the time of sale.

Sales Charge Waivers for Class A and Class C Shares

Class A Front-end Sales Charge Waivers. Front-end sales charges will be waived
if you buy Class A shares with proceeds from the following sources:

1. Redemptions from any registered mutual fund for which UBS Global Asset
Management (US) Inc. ("UBS Global AM (US)") or any of its affiliates serves
as principal underwriter if you:

o Originally paid a front-end sales charge on the shares; and

o Reinvest the money within 60 days of the redemption date.

The Fund's front-end sales charge will also not apply to Class A purchases by or
through:

1. Employees of UBS AG and its subsidiaries and members of the employees'
immediate families; and members of the Board of Directors/Trustees (and
former board members who retire from such boards after December 1, 2005) of
any investment company for which UBS Global AM (US) or any of its
affiliates serve as principal underwriter.

2. Trust companies and bank trust departments investing on behalf of their
clients if clients pay the bank or trust company an asset-based fee for
trust or asset management services.

3. Retirement plans and deferred compensation plans that have assets of at
least $1 million or at least 25 eligible employees.

4. Broker-dealers and other financial institutions (including registered
investment advisers and financial planners) that have entered into a
selling agreement with UBS Global AM (US) (or otherwise have an arrangement
with a broker-dealer or other financial institution with respect to sales
of fund shares), on behalf of clients participating in a fund supermarket,
wrap program, or other program in which clients pay a fee for advisory
services, executing transactions in Fund shares, or for otherwise
participating in the program.

5. Employees of broker-dealers and other financial institutions (including
registered investment advisers and financial planners) that have entered
into a selling agreement with UBS

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Global AM (US) (or otherwise having an arrangement with a broker-dealer or
other financial institution with respect to sales of fund shares), and
their immediate family members, as allowed by the internal policies of
their employer.

6. Insurance company separate accounts.

7. Shareholders of the Class N shares of any UBS Fund who held such shares at
the time they were redesignated as Class A shares.

8. Reinvestment of capital gains distributions and dividends.

9. College savings plans organized under Section 529 of the Internal Revenue
Code (the "IRC").

10. A UBS Financial Services Inc. Advisor who was formerly employed as an
investment executive with a competing brokerage firm, and

o you were the Financial Advisor's client at the competing brokerage
firm;

o within 90 days of buying shares in the Fund, you sell shares of one or
more mutual funds that were principally underwritten by the competing
brokerage firm or its affiliates, and you either paid a sales charge
to buy those shares, pay a contingent deferred sales charge when
selling them or held those shares until the contingent deferred sales
charge was waived; and

o you purchase an amount that does not exceed the total amount of money
you received from the sale of the other mutual fund.

Class A and Class C Shares Contingent Deferred Sales Charge Waivers. The
contingent deferred sales charge will be waived for:

o Redemptions of Class A shares by former holders of Class N shares;

o Exchanges between funds for which UBS Global AM (US) or one of its
affiliates serves as principal underwriter, if purchasing the same class of
shares;

o Redemptions following the death or disability of the shareholder or
beneficial owner;

o Tax-free returns of excess contributions from employee benefit plans;

o Distributions from employee benefit plans, including those due to plan
termination or plan transfer;

o Redemptions made in connection with the Automatic Cash Withdrawal Plan,
provided that such redemptions:

-- are limited annually to no more than 12% of the original account
value;

-- are made in equal monthly amounts, not to exceed 1% per month; and

-- the minimum account value at the time the Automatic Cash Withdrawal
Plan was initiated was no less than $5,000; and

o Redemptions of shares purchased through certain retirement plans.

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Sales Charge Reductions for Class A Shares

Right of Accumulation

A purchaser of Class A shares may qualify for a reduction of the front-end sales
charge on purchases of Class A shares by combining a current purchase with
certain other Class A, Class B, Class C and/or Class P or Y shares of Family
Funds(1) already owned ("Family Funds" include other UBS Funds, UBS PACE Select
funds and other funds for which UBS Global AM (US) serves as principal
underwriter). To determine if you qualify for a reduction of the front-end sales
charge, the amount of your current purchase is added to the current net asset
value of your other Class A, Class B, Class C and/or Class P or Y shares, as
well as those Class A, Class B, Class C and/or Class P or Y shares of your
spouse and children under the age of 21 and who reside in the same household. If
you are the sole owner of a company, you may also add any company accounts,
including retirement plan accounts invested in Class A, Class B, Class C and/or
Class P or Y shares of the Family Funds. Companies with one or more retirement
plans may add together the total plan assets invested in Class A, Class B, Class
C and/or Class P or Y shares of the Family Funds to determine the front-end
sales charge that applies. To qualify for the discount on a purchase through a
financial institution, when each purchase is made, the investor or institution
must provide UBS Global AM (US) with sufficient information to verify that the
purchase qualifies for the privilege or discount. The right of accumulation may
be amended or terminated by UBS Global AM (US) at any time as to purchases
occurring thereafter.

___________________________

(1) Please note that any Family Fund that is a money market fund will not count
for purposes of the right of accumulation discount or for purposes of satisfying
the forms of a Letter of Intent.

Shares purchased through a broker/dealer may be subject to different procedures
concerning Rights of Accumulation. Please contact your investment professional
for more information.

Letter of Intent

Investors may also obtain reduced sales charges for Class A shares for
investments of a particular amount by means of a written Letter of Intent, which
expresses the investor's intention to invest that amount within a period of 13
months in shares of one or more Family Funds.(1) Each purchase of Class A shares
under a Letter of Intent will be made at the public offering price applicable at
the time of such purchase to a single transaction of the total dollar amount
indicated in the Letter of Intent. A Letter of Intent may include purchases of
Class A, Class C and/or Class Y shares made not more than three months prior to
the date that the investor signs a Letter of Intent and during the 13-month
period in which the Letter of Intent is in effect; however, the 13-month period
during which the Letter of Intent is in effect will begin on the date on which
the Letter of Intent is signed.

Investors do not receive credit for shares purchased by the reinvestment of
distributions. Investors qualifying for a right of accumulation discount
(described previously) may purchase shares under a single Letter of Intent.

The Letter of Intent is not a binding obligation upon the investor to purchase
the full amount indicated. The minimum initial investment under a Letter of
Intent is 5% of such amount, and must be invested immediately. Class A shares
purchased with the first 5% of such amount may be held in

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escrow to secure payment of the higher sales charge applicable to the shares
actually purchased if the full amount indicated is not purchased. When the full
amount indicated has been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been purchased, the
shares will be released only if the investor pays the sales charge that, without
regard to the Letter of Intent, would apply to the total investment made to
date.

Letter of Intent forms may be obtained from UBS Global AM (US) or from
investment professionals. Investors should read the Letter of Intent carefully.

Note on Sales Charge Reductions and Waivers for Class A and Class C Shares

Additional information concerning sales charge reductions and waivers is
available in the Fund's Statement of Additional Information ("SAI"). If you
think you qualify for any of the sales charge waivers or reductions described
previously, you may need to notify and/or provide documentation to UBS Global AM
(US). You will also need to notify UBS Global AM (US) of the existence of other
accounts in which there are holdings eligible to be aggregated to meet certain
sales load breakpoints. Information you may need to provide to UBS Global AM
(US) may include:

o Information or records regarding shares of the Fund or other funds held in
all accounts at any financial intermediary;

o Information or records regarding shares of the Fund or other funds held in
any account at any financial intermediary by related parties of the
shareholder, such as members of the same family; and/or

o Any information that may be necessary for UBS Global AM (US) to determine
your eligibility for a reduction or waiver of a sales charge.

For more information, you should contact your investment professional or call
1-800-647 1568. If you want information on the Automatic Cash Withdrawal Plan,
see the SAI or contact your investment professional. Also, information regarding
the Fund's distribution arrangements and the applicable sales charge reductions
and waivers is available on the Fund's Web Site, free of charge, at
http://www.ubs.com/globalam.

Class Y Shares

Shareholders pay no front-end sales charges on Class Y shares. However, UBS
Global AM (US), as principal underwriter of the Fund, may make payments out of
its own resources, to affiliated (UBS Financial Services Inc.) and unaffiliated
dealers, pursuant to written dealer agreements as follows: a one time finder's
fee consistent with the Fund's Class A share Reallowance to Selected Dealers'
schedule (see page 10) and beginning in month 13 an ongoing fee in an amount up
to 20 basis points. UBS Global AM (US) does not make these payments on employee
related Class Y share accounts and reserves the right not to make these payments
if it determines, in its sole discretion, that a dealer has been acting to the
detriment of the Fund.

The following are eligible to purchase Class Y shares:

o Shareholders of the Class I shares of any UBS Fund who held such shares as
of the date the shares were redesignated Class Y shares;

o Retirement plans with 5,000 or more eligible employees or $100 million or
more in plan assets;

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o Retirement plan platforms/programs that include Fund shares if the
platform/program covers plan assets of at least $100 million;

o Trust companies and bank trust departments purchasing shares on behalf of
their clients in a fiduciary capacity;

o Banks, registered investment advisors and other financial institutions
purchasing fund shares for their clients as part of a discretionary asset
allocation model portfolio;

o College savings plans organized under Section 529 of the IRC, if
shareholder servicing fees are paid exclusively outside of the
participating funds;

o Other investors as approved by the Fund's Board of Trustees;

o Shareholders who invest a minimum initial amount of $5 million in the Fund.
An institutional investor may aggregate its holdings with holdings of
certain related institutional investors to meet the foregoing minimums;

o Foundations, Endowments and Religious and other charitable organizations
described in Section 501(c)(3) of the IRC that invest a minimum initial
amount of $2,500,000;

o Employees of UBS Global Asset Management (Americas) Inc. ("UBS Global AM
(Americas)") or UBS Global AM (US) as long as the employee establishes an
account in his or her name directly at the Fund's transfer agent and
purchases a minimum initial amount of $50,000; and

o Members of the Board of Directors/Trustees (and former board members who
retire from such boards after December 1, 2005) of any investment company
for which UBS Global AM (US) or any of its affiliates serves as principal
underwriter, subject to a minimum initial purchase amount of $50,000 in an
account established by the member in his or her name directly at the Fund's
transfer agent.

Class Y shares do not pay ongoing 12b-1 distribution or service fees. The
ongoing expenses for Class Y shares are the lowest of all the classes.

Buying Shares

You can buy Fund shares through your investment professional at a broker-dealer
or other financial institution with which UBS Global AM (US) has a dealer
agreement.

If you wish to invest in other Family Funds, you can do so by:

o Contacting your investment professional (if you have an account at a
financial institution that has entered into a dealer agreement with UBS
Global AM (US));

o Buying shares through the transfer agent as described later in this
prospectus; or

o Opening an account by exchanging shares from another Family Fund.

Selected securities dealers or other financial institutions, including UBS
Financial Services Inc., may charge a processing fee to confirm a purchase. UBS
Financial Services Inc. currently charges a fee of $5.25.

The Fund and UBS Global AM (US) reserve the right to reject a purchase order or
suspend the offering of shares.

Through Financial Institutions/Professionals

As mentioned above, the Fund has entered into one or more sales agreements with
brokers, dealers or other financial

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intermediaries ("Service Providers"), as well as with financial institutions
(banks and bank trust departments) (each an "Authorized Dealer"). The Authorized
Dealer, or intermediaries designated by the Authorized Dealer (a
"Sub-designee"), may in some cases be authorized to accept purchase and
redemption orders that are in "good form" on behalf of the Fund. The Fund will
be deemed to have received a purchase or redemption order when the Authorized
Dealer or Sub-designee receives the order in good form. Such orders will be
priced at the Fund's net asset value next computed after such order is received
in good form by the Authorized Dealer or Subdesignee. These Authorized Dealers
may charge the investor a transaction fee or other fee for their services at the
time of purchase. These fees would not be otherwise charged if you purchased
shares directly from the Fund. It is the responsibility of such Authorized
Dealers or Sub-designees to promptly forward purchase orders with payments to
the Fund.

Additional Compensation to Affiliated Dealer

UBS Global AM (US) pays its affiliate, UBS Financial Services Inc., the
following additional compensation in connection with the sale of Fund shares:

o 0.05% of the value (at the time of sale) of all shares of the Fund sold
through UBS Financial Services Inc.

o a monthly retention fee at the annual rate of 0.10% of the value of shares
of the Fund that are held in a UBS Financial Services Inc. account at
month-end.

The foregoing payments are made by UBS Global AM (US) out of its own resources.

Minimum Investments:

Class A and Class C shares:

To open an account......... $1,000
To add to an account....... $100

The Fund may waive or reduce these amounts for:

o Employees of UBS Global AM (US) or its affiliates; or

o Participants in certain pension plans, retirement accounts, unaffiliated
investment programs or the Fund's automatic investment plan.

Market Timers. The interests of the Fund's long-term shareholders and the Fund's
ability to manage its investments may be adversely affected when the Fund's
shares are repeatedly bought and sold in response to short-term market
fluctuations--also known as "market timing." Market timing may cause the Fund to
have difficulty implementing long-term investment strategies, because it cannot
predict how much cash it will have to invest. Market timing also may force the
Fund to sell portfolio securities at disadvantageous times to raise the cash
needed to buy a market timer's Fund shares. These factors may hurt the Fund's
performance and its shareholders.

The Board of Trustees of the Trust has adopted the following policies as a means
to discourage, detect and prevent market timing. The Fund will reject purchase
orders and exchanges into the Fund by any person, group or account that UBS
Global AM (Americas), as the Fund's Advisor and Administrator, determines to be
a market timer. UBS Global AM (Americas) maintains market timing prevention
procedures under which it reviews daily reports from the Fund's transfer agent
of all accounts that engaged in transactions in

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Fund shares that exceed a specified monetary threshold and effected such
transactions within a certain period of time to evaluate whether any such
account had engaged in market timing activity. In evaluating the account
transactions, UBS Global AM (Americas) will consider the potential harm of the
trading or exchange activity to the Fund or its shareholders. If UBS Global AM
(Americas) determines, in its sole discretion, that a shareholder has engaged in
market timing, the shareholder will be permanently barred from making future
purchases or exchanges into the Fund. Additionally, in making a determination as
to whether a shareholder has engaged in market timing, the shareholder's account
may be temporarily barred from making additional investments into the Fund
pending a definitive determination. In addition, if a Financial Advisor is
identified as the Financial Advisor of two or more accounts that have engaged in
market timing, UBS Global AM (Americas) will attempt to prohibit the Financial
Advisor from making additional purchases of the Fund on behalf of its clients.

Shares of the Fund may be held through omnibus account arrangements, whereby a
broker-dealer, investment advisor, retirement plan sponsor or other financial
intermediary (each a "Financial Intermediary") maintains an omnibus account with
the Fund for trading on behalf of its customers or participants. Omnibus
accounts are accounts that aggregate the transactions of underlying
shareholders, thus making it difficult to identify individual underlying account
holder activity. UBS Global AM (Americas) reviews purchase and redemption
activity in omnibus accounts on a daily basis to seek to identify an unusual
pattern of trading activity within a short period of time. If UBS Global AM
(Americas) detects an unusual pattern of trading activity, UBS Global AM
(Americas) will notify the Financial Intermediary of the omnibus account and
will request that the Financial Intermediary use its best efforts to identify
and bar any customer or participant that is engaging in market timing, if
possible.

While the Fund will encourage Financial Intermediaries to apply the Fund's
market timing policies to their customers or participants who invest in the Fund
through an omnibus account, the Fund is limited in its ability to monitor the
trading activity or enforce the Fund's market timing policies with respect to
customers of Financial Intermediaries. For example, although UBS Global AM
(Americas) reviews the trading activity of omnibus accounts, UBS Global AM
(Americas) may not be able to detect market timing that may be facilitated by
Financial Intermediaries or made difficult to identify in the omnibus accounts
used by those Financial Intermediaries for aggregated purchases, exchanges and
redemptions on behalf of their customers or participants.

While the Fund will seek to take actions (directly and with the assistance of
Financial Intermediaries) that will detect market timing, the Fund's efforts may
not be completely successful in minimizing or eliminating such trading activity.

Certain types of transactions will also be exempt from the market timing
prevention procedures. These exempt transactions are purchases and redemptions
through the Automatic Cash Withdrawal Plan, purchases through an automatic
investment plan and redemptions by wrap fee accounts that have an automatic
rebalancing feature.

Selling Shares

You can sell your Fund shares at any time. If you own more than one class of
shares,

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you should specify which class you want to sell. If you do not, the Fund will
assume that you want to sell shares in the following order: Class A, then Class
C, and last, Class Y.

If you want to sell shares that you purchased recently, the Fund may delay
payment until it verifies that it has received good payment. If you hold your
shares through a financial institution, you can sell shares by contacting your
investment professional, or an Authorized Dealer or Sub-designee, for more
information. Important note: Each institution or professional may have its own
procedures and requirements for selling shares and may charge fees. If you
purchased shares through the Fund's transfer agent, you may sell them as
explained later in this prospectus.

If you sell Class A shares and then repurchase Class A shares of the same Fund
within 365 days of the sale, you can reinstate your account without paying a
sales charge.

Securities dealers or other financial institutions, including UBS Financial
Services Inc., may charge a fee to process a redemption of shares. UBS Financial
Services Inc. currently charges a fee of $5.25.

The Fund reserves the right to pay redemptions "in kind" (i.e., payment in
securities rather than cash) if the investment you are redeeming is large enough
to affect the Fund's operations (for example, if it represents more than
$250,000 or 1% of the Fund's assets). In these cases, you might incur brokerage
costs converting the securities to cash.

It costs the Fund money to maintain shareholder accounts. Therefore, the Fund
reserves the right to repurchase all shares in any account that has a net asset
value of less than $500. Any applicable deferred sales charge may be assessed on
such redemptions. If the Fund elects to do this with your account, it will
notify you that you can increase the amount invested to $500 or more within 60
days. The Fund will not repurchase shares in accounts that fall below $500
solely because of a decrease in the Fund's net asset value.

To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. If you
do not provide the information requested, the Fund may not be able to maintain
your account. If the Fund is unable to verify your identity or that of another
person(s) authorized to act on your behalf, the Fund and UBS Global AM
(Americas) reserve the right to close your account and/or take such other action
they deem reasonable or required by law. Fund shares will be redeemed and valued
in accordance with the net asset value next calculated after the determination
has been made to close the account.

Redemption Fee

If you sell or exchange Class A shares or sell Class Y shares of the Fund less
than 90 days after you purchased them, a redemption fee of 1.00% of the amount
sold or exchanged will be deducted at the time of the transaction, except as
noted below. This amount will be paid to the Fund, not to the Advisor or UBS
Global AM (US). The redemption fee is designed to offset the costs associated
with fluctuations in Fund asset levels and cash flow caused by short-term
shareholder trading. Shares held the longest will be redeemed first for purposes
of calculating the redemption fee. The

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redemption fee will not apply to Class A or Class Y shares of the Fund that:

o are held through certain omnibus accounts, including retirement plans
qualified under Section 401 (k) of the IRC or plans administered as college
savings programs under Section 529 of the IRC;

o are sold or exchanged under automatic withdrawal plans;

o are held through certain managed account programs with automatic asset
allocation rebalancing features; or

o are sold due to death or disability of the shareholder.

Exchanging Shares

You may exchange Class A or Class C shares of the Fund for shares of the same
class of most other Family Funds. You may not exchange Class Y shares.

You will not pay either a front-end sales charge or a deferred sales charge when
you exchange shares. You may have to pay a deferred sales charge if you later
sell the shares you acquired in the exchange. A fund will use the date of your
original share purchase to determine whether you must pay a deferred sales
charge when you sell the shares of the fund acquired in the exchange.

Other Family Funds may have different minimum investment amounts. You may not be
able to exchange your shares if the value of shares you exchange is not as large
as the minimum investment amount in that other fund.

You may exchange shares of one fund for shares of another fund only after the
first purchase has settled and the first fund has received your payment.

If you hold your Fund shares through a financial institution, you may exchange
your shares by placing an order with that institution. If you hold Fund shares
through the Fund's transfer agent, you may exchange your shares as explained
below.

The Fund may modify or terminate the exchange privilege at any time.

Transfer Agent

If you wish to invest in this Fund or any other of the Family Funds through the
Fund's transfer agent, PFPC Inc., you can obtain an application by calling
1-800-647 1568. You must complete and sign the application and mail it, along
with a check to the transfer agent.

You may also sell or exchange your shares by writing to the Fund's transfer
agent. Your letter must include:

o Your name and address;

o Your account number;

o The name of the fund whose shares you are selling, and if exchanging
shares, the name of the fund whose shares you want to buy;

o The dollar amount or number of shares you want to sell and/or exchange; and

o A guarantee of each registered owner's signature. A signature guarantee may
be obtained from a financial institution, broker, dealer or clearing agency
that is a participant in one of the medallion programs recognized by the
Securities Transfer Agents Association. These are: Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP)
and the New York Stock Exchange Medallion Signature Program (MSP). The Fund

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will not accept signature guarantees that are not part of these programs.

Applications to purchase shares (along with a check), and letters requesting
redemptions of shares or exchanges of shares through the transfer agent should
be mailed to:

PFPC Inc.
UBS Global Asset Management
P.O. Box 9786
Providence, RI 02940

You do not have to complete an application when you make additional investments
in the Fund.

Transfer of Accounts

If you hold Class A, Class C or Class Y shares of the Fund in a brokerage
account and you transfer your brokerage account to another firm, your Fund
shares will be moved to an account with PFPC Inc., the Fund's transfer agent.
However, if the other firm has entered into a dealer agreement relating to the
Fund with UBS Global AM (US), the Fund's principal underwriter, you may be able
to hold Fund shares in an account with the other firm.

Pricing and Valuation

The price at which you may buy, sell or exchange Fund shares is based on the net
asset value per share. The Fund calculates net asset value on days that the New
York Stock Exchange ("NYSE") is open. The Fund calculates net asset value
separately for each class as of the close of regular trading on the NYSE
(generally, 4:00 p.m., Eastern time). The NYSE normally is not open, and the
Fund does not price its shares, on most national holidays and on Good Friday.

Your price for buying, selling or exchanging shares of the Fund will be based on
the net asset value (adjusted for any applicable sales charges) that is next
calculated after the Fund (or an Authorized Dealer or Sub-designee) receives
your order in good form. If you place your order through a financial
institution, your investment professional is responsible for making sure that
your order is promptly sent to the Fund.

The Fund calculates its net asset value based on the current market value of its
portfolio securities. The Fund normally obtains market values for its securities
from independent pricing services that use reported last sales prices, current
market quotations or, if market prices are not readily available, valuations
from computerized "matrix" systems that derive values based on comparable
securities. If a market value is not available from an independent pricing
source for a particular security, that security is valued at a fair value
determined by or under the direction of the Trust's Board of Trustees. The Fund
normally uses the amortized cost method to value bonds that will mature in 60
days or less.

The Trust's Board of Trustees has delegated to the UBS Global Asset Management
Funds' Valuation Committee the responsibility for making fair value
determinations with respect to the Fund's portfolio securities. The types of
securities for which such fair value pricing may be necessary include, but are
not limited to: foreign securities under some circumstances, as discussed below;
securities of an issuer that has entered into a restructuring; securities whose
trading has been halted or suspended; fixed-income securities that are in
default and for which there is no current market value quotation; and securities
that are restricted as to transfer or resale. The need to fair value the Fund's
portfolio

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securities may also result from low trading volume in foreign markets or thinly
traded domestic securities, and when a security subject to a trading limit or
collar on the exchange or market on which it is primarily traded reaches the
"limit up" or "limit down" price and no trading has taken place at that price.

The Fund expects to price most of its portfolio securities based on current
market value, as discussed previously. Securities and assets for which market
quotations are not readily available may be valued based upon appraisals
received from a pricing service using a computerized matrix system or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. Securities also may be valued based upon
appraisals derived from information concerning the security or similar
securities received from recognized dealers in those securities. If the Fund
concludes that a market quotation is not readily available for a portfolio
security for any number of reasons, including the occurrence of a "significant
event" (e.g., natural disaster or governmental action), after the close of
trading in its principal domestic or foreign market but before the close of
regular trading on the NYSE, the Fund will use fair value methods to reflect
those events. This policy is intended to assure that each Fund's net asset value
fairly reflects security values as of the time of pricing.

Valuing securities at fair value involves greater reliance on judgment than
valuing securities that have readily available market quotations. Fair value
determinations can also involve reliance on quantitative models employed by a
fair value pricing service. There can be no assurance that the Fund could obtain
the fair value assigned to a security if it were to sell the security at
approximately the time at which the Fund determines its net asset value per
share. As a result, the Fund's sale or redemption of its shares at net asset
value, at a time when a holding or holdings are valued at fair value, may have
the effect of diluting or increasing the economic interest of existing
shareholders.

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Management

Investment Advisor

UBS Global Asset Management (Americas) Inc. ("UBS Global AM (Americas)" or the
"Advisor"), a Delaware corporation located at One North Wacker Drive, Chicago,
IL 60606, is an investment advisor registered with the SEC. UBS Global AM serves
as investment advisor to the Fund managing the investment of assets of the Fund.
As of March 31, 2006, the Advisor had approximately $77.8 billion in assets
under management. The Advisor is an indirect, wholly owned subsidiary of UBS AG
("UBS") and a member of the UBS Global Asset Management Division, which had
approximately $613.7 billion in assets under management as of March 31, 2006.
UBS is an internationally diversified organization headquartered in Zurich and
Basel, Switzerland, with operations in many areas of the financial services
industry.

Portfolio Management

John Leonard, Thomas M. Cole, Thomas Digenan, Scott Hazen and Scott Bondurant
are the members of the North American Equities investment management team
primarily responsible for the day-to-day management of the Fund. Mr. Leonard as
the head of the investment management team oversees the other members of the
team, leads the portfolio construction process and reviews the overall
composition of the Fund's portfolio to ensure compliance with its stated
investment objectives and strategies. Mr. Cole as the director of research for
the investment management team oversees the analyst team that provides the
investment research on the large cap markets that is used in making the security
selections for the Fund's portfolio. Mr. Digenan and Mr. Hazen as the primary
strategists for the investment management team provide cross-industry
assessments and risk management assessments for portfolio construction for the
Fund. Mr. Bondurant oversees phases of development and management for the Fund.
Information about Messrs. Leonard, Cole, Digenan, Hazen and Bondurant is
provided below.

John Leonard is Head of North American Equities and Deputy Global Head of
Equities at UBS Global Asset Management. Mr. Leonard is also a Managing Director
of UBS Global Asset Management and has been an investment professional with UBS
Global Asset Management since 1991 and a portfolio manager of the Fund since its
inception.

Thomas M. Cole is Head of Research - North American Equities and a Managing
Director at UBS Global Asset Management. Mr. Cole has been an investment
professional with UBS Global Asset Management since 1995 and a portfolio manager
of the Fund since its inception.

Thomas Digenan has been a North American Equity Strategist at UBS Global Asset
Management since 2001 and is a Managing Director of UBS Global Asset Management.
Mr. Digenan was President of The UBS Funds from 1993 to 2001. Mr. Digenan has
been a portfolio manager of the Fund since its inception.

Scott Hazen has been a North American Equity Strategist at UBS Global Asset
Management since 2004 and is an Executive Director of UBS Global Asset
Management. From 1992 until 2004, Mr. Hazen was a Client Service and
Relationship Management professional with UBS Global Asset Management. Mr. Hazen
has been a portfolio manager of the Fund since its inception.

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Scott Bondurant has been an Executive Director and a Long Short Equity
Strategist at UBS Global Asset Management since 2005. Prior to joining the firm,
Mr. Bondurant had been in institutional equities for over 15 years including his
role as Executive Director at Morgan Stanley for nine years, from 1996 to 2005.
Previously, he was Senior Vice President at Paine Webber and prior to that, Mr.
Bondurant was Vice President and manager of the Atlanta office for Kidder
Peabody. Mr. Bondurant has been a portfolio manager of the Fund since its
inception.

The Fund's SAI provides information about the Fund's portfolio managers'
compensation, other accounts managed by the portfolio managers and the portfolio
managers' ownership of Fund shares.

Advisory Fees

The investment advisory fee (expressed as a percentage of average net assets)
payable to the Advisor, before fee waivers and/or expense reimbursements by the
Fund is presented in the table that follows.

The Advisor has contractually agreed to waive its fees and/or reimburse certain
expenses so that the total operating expenses (excluding securities loan fees
and dividend expense for securities sold short) of the Fund do not exceed the
amounts listed in the footnote to the Fund's Expense Table. The contractual fee
waiver and/or expense reimbursement agreement will remain in place for the
Fund's fiscal year ending June 30, 2007. Thereafter, the expense limit for the
Fund will be reviewed each year, at which time the continuation of the expense
limit will be discussed by the Advisor and the Board of Trustees. The
contractual fee waiver agreement also provides that the Advisor is entitled to
reimbursement of fees it waived and/or expenses it reimbursed for a period of
three years following such fee waivers and expense reimbursements, provided that
the reimbursement by the 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.

Advisory Fee Breakpoint Schedule
Assets under Fee
Management
$0 - $500 million 1.00%
On the next $500
million - $1
billion 0.90%
Above $1 billion 0.85%

The Fund has not yet commenced operations as of the date of this Prospectus. A
discussion regarding the basis for the Board of Trustees' annual approval of the
investment advisory agreement between the Trust and Advisor on behalf of the
Fund will be available in future annual or semiannual reports to shareholders of
the Fund.

Administrator

UBS Global AM (Americas) is also the administrator of the Fund. The Fund pays
UBS Global AM (Americas) an annual contract rate of 0.075% of its average daily
net assets for administrative services.

Disclosure of Portfolio Holdings

The Fund will generally post on its Web Site at http://www.ubs.com/globalam, the
ten largest stock portfolio holdings of the Fund, and the percentage that each
of these holdings represents of the Fund's total assets, as of the most recent
calendar-quarter end, 25 calendar days after the end of the calendar quarter.
The Fund will file its complete schedule of portfolio holdings with the SEC for
the first and third quarters of

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each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the SEC's
Web Site at www.sec.gov. The Fund's 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 1-202-551 8090.
Additionally, you may obtain copies of Forms N-Q from the Fund upon request by
calling 1-800-647 1568. The Fund's complete schedule of portfolio holdings for
the second and fourth quarters of each fiscal year is filed with the SEC on Form
N-CSR and appears in the semi-annual and annual reports, respectively, sent to
shareholders. The semiannual and annual reports for the Fund will be posted on
the Fund's Web Site at http://www.ubs.com/globalam. Please consult the Fund's
SAI for a description of the policies and procedures that govern disclosure of
the Fund's portfolio holdings.

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Dividends and Taxes

Dividends and Distributions

Dividends and Distributions. The Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code. As
such, the Fund generally pays no federal income tax on the income and gains it
distributes to you. The Fund expects to declare and distribute all of its net
investment income, if any, to shareholders as dividends annually. The Fund will
also distribute capital gains, if any, at least annually typically in December.
The amount of any distribution will vary, and there is no guarantee the Fund
will pay either an income dividend or a capital gain distribution.

Classes with higher expenses are expected to have lower income dividends. For
example, Class C shares are expected to have the lowest dividends of the Fund's
shares, while Class Y shares are expected to have the highest.

You will receive income dividends and capital gain distributions in additional
shares of the same class of the Fund unless you notify your investment
professional or the Fund in writing that you elect to receive them in cash.
Distribution options may be changed at any time by requesting a change in
writing. Dividends and distributions are reinvested on the reinvestment date at
the net asset value determined at the close of business on that date.

Annual Statements. Every January, you will receive a statement that shows the
tax status of distributions you received the previous year. Distributions
declared in December but paid in January are taxable as if they were paid in
December. Mutual funds may reclassify income after your tax reporting statement
is mailed to you. This can result from the rules in the Internal Revenue Code
that effectively prevent mutual funds, such as the Fund, from ascertaining with
certainty, until after the calendar year end, and in some cases the Fund's
fiscal year end, the final amount and character of distributions the Fund has
received on its investments during the prior calendar year. Prior to issuing
your statement, the Fund makes every effort to search for reclassified income to
reduce the number of corrected forms mailed to shareholders. However, when
necessary, the Fund will send you a corrected Form 1099-DIV to reflect
reclassified information.

Avoid "Buying A Dividend." If you invest in the Fund shortly before the record
date of a taxable distribution, the distribution will lower the value of the
Fund's shares by the amount of the distribution and, in effect, you will receive
some of your investment back in the form of a taxable distribution.

Taxes

Tax Considerations. In general, if you are a taxable investor, Fund
distributions are taxable to you at either ordinary income or capital gains tax
rates. This is true whether you reinvest your distributions in additional Fund
shares or receive them in cash.

For federal income tax purposes, Fund distributions of short-term capital gains
are taxable to you as ordinary income. Fund distributions of long-term capital
gains are taxable to you as long-term capital gains no matter how long you have
owned your shares. A portion of income dividends designated by the Fund may be
qualified dividend income eligible for taxation by individual shareholders at
long-term capital gain rates, provided certain holding period requirements are
met.

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UBS Global Asset Management 25

UBS U.S. Equity Alpha Fund
--------------------------------------------------------------------------------

Sale or Exchange of Fund Shares. A sale or redemption of Fund shares is a
taxable event and, accordingly, a capital gain or loss may be recognized. For
tax purposes, an exchange of your Fund shares for shares of a different Family
Fund is the same as a sale.

Backup Withholding. By law, if you do not provide the Fund with your proper
taxpayer identification number and certain required certifications, you may be
subject to backup withholding on any distributions of income, capital gains or
proceeds from the sale of your shares. The Fund also must withhold if the IRS
instructs it to do so. When withholding is required, the amount will be 28% of
any distributions or proceeds paid.

Other. Fund distributions and gains from the sale or exchange of your Fund
shares generally are subject to state and local taxes. Non-US investors may be
subject to US withholding or estate tax, and are subject to special US tax
certification requirements.

This discussion of "Dividends and Taxes" is not intended or written to be used
as tax advice. Because everyone's tax situation is unique, you should consult
your tax professional about federal, state, local or foreign tax consequences
before making an investment in the Fund.

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UBS Global Asset Management 26

UBS U.S. Equity Alpha Fund
--------------------------------------------------------------------------------

Financial Highlights

No financial information is presented for the Fund because it had not commenced
operations as of the date of this prospectus.

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UBS Global Asset Management 27

UBS U.S. Equity Alpha Fund
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Funds' privacy notice

This notice describes the privacy policy of the UBS Family of Funds, the UBS
PACE Funds and all closed-end funds managed by UBS Global Asset Management
(collectively, the "Funds"). The Funds are committed to protecting the personal
information that they collect about individuals who are prospective, current or
former investors.

The Funds collect personal information in order to process requests and
transactions and to provide customer service. Personal information, which is
obtained from applications, may include name(s), address, social security number
or tax identification number, bank account information, other Fund holdings and
any affiliation the person has with UBS Financial Services Inc. or its
subsidiaries ("Personal Information"). The Funds limit access to Personal
Information to those individuals who need to know that information in order to
process transactions and service accounts. These individuals are required to
maintain and protect the confidentiality of Personal Information. The Funds
maintain physical, electronic and procedural safeguards to protect Personal
Information. The Funds may share Personal Information described above with their
affiliates for marketing and other business purposes, such as to facilitate the
servicing of accounts. The Funds may share Personal Information described above
with a non-affiliated third party if the entity is under contract to perform
transaction processing or to service and maintain shareholder accounts on behalf
of the Funds and otherwise as permitted by law. Any such contract will include
provisions designed to ensure that the third party will uphold and maintain
privacy standards when handling Personal Information. The Funds may also
disclose Personal Information to regulatory authorities as required by
applicable law. Except as described in this privacy notice, the Funds will not
use Personal Information for any other purpose unless the Funds describe how
such Personal Information will be used and clients are given an opportunity to
decline approval of such use of Personal Information relating to them. The Funds
endeavor to keep their customer files complete and accurate. The Funds should be
notified if any Personal Information needs to be corrected or updated. Please
call 1-800-647 1568 with any questions or concerns regarding your Personal
Information or this privacy notice.

[INSERT UBS LOGO]

If you want more information about
the Fund, the following documents are
available free upon request: The UBS Funds

Annual/Semiannual Reports UBS U.S. Equity Alpha Fund

Additional information about the Prospectus
Fund's investments will be available
in the Fund's annual and semiannual
reports to shareholders. As of the
date of this prospectus, annual and
semiannual reports are not yet
available because the Fund has not
commenced operations.

Statement of Additional Information
(SAI)

The SAI provides more detailed
information about the Fund and is
incorporated by reference into this
prospectus (i.e., it is legally
considered a part of this prospectus).

You may discuss your questions about
the Fund by contacting your
investment professional. You may
obtain free copies of the Fund's
annual and semiannual reports and the
SAI by contacting the Fund directly
at 1-800-647 1568. Because of
limited investor requests for the SAI
and the availability of the SAI via a
toll free number, the Advisor has not
made the SAI available on its Web
Site.

You may review and copy information
about the Fund, including shareholder August 14, 2006
reports and the SAI, at the Public
Reference Room of the U.S. Securities
and Exchange Commission (SEC) in
Washington, D.C. You may obtain
information about the operations of
the SEC's Public Reference Room by
calling the SEC at 1-202-551 8090.
You may get copies of reports and
other information about the Fund:

o For a fee, by electronic
request at publicinfo@sec.gov or
by writing the SEC's Public
Reference Section, Washington,
D.C. 20549-0102; or

o Free from the EDGAR Database
on the SEC's Internet Web Site
at: http://www.sec.gov.

The UBS Funds
Investment Company Act File No.
811-6637

[INSERT UBS LOGO]

The UBS Funds
UBS U.S. Equity Alpha Fund

One North Wacker Drive
Chicago, Illinois 60606

STATEMENT OF ADDITIONAL INFORMATION

Dated August 14, 2006

The UBS U.S. Equity Alpha Fund (the "Fund") is a series of The UBS Funds, an
open-end management investment company (the "Trust").

UBS Global Asset Management (Americas) Inc., an indirect wholly owned subsidiary
of UBS AG ("UBS"), serves as the investment advisor and administrator for the
Fund. UBS Global Asset Management (US) Inc. ("UBS Global AM (US)") serves as the
underwriter for the Fund. UBS Global AM (US) is an indirect wholly owned asset
management subsidiary of UBS.

This SAI is not a prospectus and should be read only in conjunction with the
Fund's current Prospectus, dated August 14, 2006. A copy of the Prospectus may
be obtained by calling your investment professional or by calling the Trust toll
free at 1-800-647 1568. The Prospectus contains more complete information about
the Fund. You should read it carefully before investing.

Table of Contents

GENERAL INFORMATION ABOUT THE TRUST.........................................1

Diversification Status...................................................1

General Definitions......................................................1

INVESTMENT STRATEGIES.......................................................2

Cash and Cash Equivalents................................................2

Repurchase Agreements....................................................3

Reverse Repurchase Agreements............................................3

Borrowing................................................................4

Loans of Portfolio Securities............................................4

Swaps....................................................................5

Futures..................................................................6

Options..................................................................7

Index Options...........................................................10

Special Risks of Options on Indices.....................................11

Rule 144A and Illiquid Securities.......................................12

Investment Company Securities and Investments
in Affiliated Investment Companies......................................12

Equity Securities.......................................................13

Exchange-Traded Index Securities........................................13

Short Sales.............................................................14

Convertible Securities..................................................14

Other Investments.......................................................15

SECONDARY RISKS............................................................15

INVESTMENT RESTRICTIONS....................................................15

MANAGEMENT OF THE TRUST....................................................16

Trustees and Officers...................................................16

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES........................23

INVESTMENT ADVISORY, PRINCIPAL UNDERWRITING AND
OTHER SERVICE ARRANGEMENTS.................................................24

Advisor.................................................................24

Administrative, Accounting and Custody Services.........................29

Principal Underwriting Arrangements.....................................29

Transfer Agency Services................................................32

Independent Registered Public Accounting Firm...........................32

Legal Counsel...........................................................32

Personal Trading Policies...............................................32

Proxy Voting Policies...................................................33

Portfolio Holdings Disclosure Policies and Procedures...................34

Bank Line of Credit.....................................................38

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS...........................38

Portfolio Turnover......................................................39

SHARES OF BENEFICIAL INTEREST..............................................40

REDUCED SALES CHARGES, ADDITIONAL PURCHASE, EXCHANGE AND
REDEMPTION INFORMATION AND OTHER SERVICES..................................41

Sales Charge Reductions and Waivers.....................................41

Additional Information Regarding Purchases Through
Letter of Intent........................................................42

Automatic Cash Withdrawal Plan--Class A and Class C.....................44

Individual Retirement Accounts..........................................45

Transfer of Accounts....................................................45

Transfer of Securities..................................................45

NET ASSET VALUE............................................................45

TAXATION...................................................................46

Additional Information on Distributions and Taxes.......................46

Distributions...........................................................46

PERFORMANCE CALCULATIONS...................................................53

FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM..........................................54

APPENDIX A - SECONDARY RISKS..............................................A-1

iii

GENERAL INFORMATION ABOUT THE TRUST

The Trust currently offers shares of the following eighteen series, representing
separate portfolios of investments: UBS U.S. Bond Fund, UBS High Yield Fund, UBS
U.S. Large Cap Equity Fund, UBS U.S. Large Cap Value Equity Fund, UBS U.S. Large
Cap Growth Fund, UBS U.S. Small Cap Equity Fund, UBS U.S. Small Cap Growth Fund,
UBS U.S. Real Estate Equity Fund, UBS Global Allocation Fund, UBS Global Equity
Fund, UBS Global Bond Fund, UBS Absolute Return Bond Fund, UBS Dynamic Alpha
Fund, UBS International Equity Fund, UBS Emerging Markets Debt Fund, UBS
Emerging Markets Equity Fund, UBS U.S. Mid Cap Growth Equity Fund and UBS U.S.
Equity Alpha Fund. This SAI relates to the UBS U.S. Equity Alpha Fund (the
"Fund") only. The Fund currently offers three classes of shares: the Class A
shares, the Class C shares and the Class Y shares. Class A shares have a
front-end sales charge, a contingent deferred sales charge ("CDSC") on purchases
over $1 million and sold within one year of the purchase date, and are subject
to annual 12b-1 plan service fees of 0.25% of average daily net assets. Class C
shares have a CDSC and are subject to annual 12b-1 plan distribution fees of
0.75% of average daily net assets, as well as annual 12b-1 plan service fees of
0.25% of average daily net assets. Class Y shares, which are designed primarily
for institutional investors, have no sales charges and are not subject to annual
12b-1 plan expenses. The Trust is a Delaware statutory trust organized on August
13, 1993.

Diversification Status

The Fund is classified as "non-diversified" for purposes of the Investment
Company Act of 1940, as amended (the "Act"), which means that the Fund is not
limited by the Act with regard to the portion of its assets that may be invested
in the securities of a single issuer. To the extent that the Fund as a
non-diversified Fund makes investments in excess of 5% of its total assets in
the securities of a particular issuer, its exposure to the risks associated with
that issuer is increased. Because the Fund may invest in a limited number of
issuers, the performance of particular securities may adversely affect the
performance of the Fund or subject the Fund to greater price volatility than
that experienced by diversified investment companies.

General Definitions

As used throughout this SAI, the following terms shall have the meanings listed:

"Act" shall mean the Investment Company Act of 1940, as amended.

"Administrator" or "UBS Global AM (Americas)" shall mean UBS Global Asset
Management (Americas) Inc., which serves as the Fund's administrator.

"Advisor" or "UBS Global AM (Americas)" shall mean UBS Global Asset Management
(Americas) Inc., which serves as the Fund's investment advisor.

"Board" shall mean the Board of Trustees of the Trust.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Family Funds" shall mean the Fund and other funds for which UBS Global Asset
Management (US) Inc. or any of its affiliates serves as principal underwriter.

"Fund" or "Series" shall mean the UBS U.S. Equity Alpha Fund.

"Moody's" shall mean Moody's Investors Service, Inc.

"SEC" shall mean the U.S. Securities and Exchange Commission.

"S&P" shall mean Standard & Poor's Ratings Group.

"Trust" shall mean The UBS Funds, an open-end management investment company
registered under the Act.

"Underwriter" or "UBS Global AM (US)" shall mean UBS Global Asset Management
(US) Inc., which serves as the Fund's underwriter.

"1933 Act" shall mean the Securities Act of 1933, as amended.

INVESTMENT STRATEGIES

The following discussion of investment techniques and instruments supplements
and should be read in conjunction with the investment objective and policies set
forth in the Fund's Prospectus. The investment practices described below, except
for the discussion of percentage limitations with respect to portfolio loan
transactions and borrowing, are not fundamental and may be changed by the Board
without the approval of the shareholders.

Cash and Cash Equivalents

The Series may invest a portion of its assets in short-term debt securities
(including repurchase agreements and reverse repurchase agreements) of
corporations, the US government and its agencies and instrumentalities and banks
and finance companies, which may be denominated in any currency.

The Series may also invest a portion of its assets in shares issued by money
market mutual funds. When unusual market conditions warrant, the Series may make
substantial temporary defensive investments in cash equivalents up to a maximum
of 100% of its net assets. Cash equivalent holdings may be in any currency
(although such holdings may not constitute "cash or cash equivalents" for tax
diversification purposes under the Code). When the Series invests for defensive
purposes, it may affect the attainment of the Series' investment objective.

Under the terms of an exemptive order issued by the SEC, the Series may invest
cash (i) held for temporary defensive purposes; (ii) not invested pending
investment in securities; (iii) that is set aside to cover an obligation or
commitment of the Series to purchase securities or other assets at a later date;
(iv) to be invested on a strategic management basis (i-iv are herein referred to
as "Uninvested Cash"); and (v) collateral that it receives from the borrowers of
its portfolio securities in connection with the Series' securities lending
program, in a series of shares of UBS Supplementary Trust (the "Supplementary
Trust Series") or a series of shares of UBS

Relationship Funds ("Relationship Funds Cash Series"). UBS Supplementary Trust
is a private investment pool which has retained the Advisor to manage its
investments and UBS Relationship Funds is a registered investment company
advised by the Advisor. Certain Trustees of the Trust also serve as Trustees of
the UBS Supplementary Trust and UBS Relationship Funds. The Supplementary Trust
Series and Relationship Funds Cash Series each invests in US dollar denominated
money market instruments having a dollar-weighted average maturity of 90 days or
less, and operates in accordance with Rule 2a-7 under the Act. The Series'
investment of Uninvested Cash in shares of the Supplementary Trust Series or
Relationship Funds Cash Series will not exceed 25% of the Series' total assets.

Repurchase Agreements

When the Series enters into a repurchase agreement, it purchases securities from
a bank or broker-dealer which simultaneously agrees to repurchase the securities
at a mutually agreed upon time and price, thereby determining the yield during
the term of the agreement. As a result, a repurchase agreement provides a fixed
rate of return insulated from market fluctuations during the term of the
agreement. The term of a repurchase agreement generally is short, possibly
overnight or for a few days, although it may extend over a number of months (up
to one year) from the date of delivery. Repurchase agreements are considered
under the Act to be collateralized loans by the Series to the seller secured by
the securities transferred to the Series. Repurchase agreements will be fully
collateralized and the collateral will be marked-to-market daily. The Series may
not enter into a repurchase agreement having more than seven days remaining to
maturity if, as a result, such agreement, together with any other illiquid
securities held by the Series, would exceed 15% of the value of the net assets
of the Series.

Repurchase agreements are securities for purposes of the tax diversification
requirements that must be met for pass-through treatment under the Code.
Accordingly, the Series will limit the value of its repurchase agreements on
each of the quarterly testing dates to ensure compliance with Subchapter M of
the Code.

Reverse Repurchase Agreements

Reverse repurchase agreements involve sales of portfolio securities of the
Series to member banks of the Federal Reserve System or securities dealers
believed creditworthy, concurrently with an agreement by the Series to
repurchase the same securities at a later date at a fixed price which is
generally equal to the original sales price plus interest. The Series retains
record ownership and the right to receive interest and principal payments on the
portfolio securities involved. In connection with each reverse repurchase
transaction, the Series will direct its custodian bank to place cash, US
government securities, equity securities and/or investment and non-investment
grade debt securities in a segregated account of the Series in an amount equal
to the repurchase price. Any assets designated as segregated by the Series with
respect to any reverse repurchase agreements, when-issued securities, options,
futures, forward contracts or other derivative transactions shall be liquid,
unencumbered and marked-to-market daily (any such assets designated as
segregated are referred to in this SAI as "Segregated Assets"), and such
Segregated Assets shall be maintained in accordance with pertinent positions of
the SEC.

A reverse repurchase agreement involves the risk that the market value of the
securities retained by a Series may decline below the price of the securities
the Series has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, the Series' use of the proceeds of the
agreement may be restricted pending a determination by the other party, or its
trustee or receiver, whether to enforce the Series' obligation to repurchase the
securities. Reverse repurchase agreements are considered borrowings by the
Series and as such, are subject to the same investment limitations.

Borrowing

The Series may borrow money as a temporary measure for extraordinary purposes or
to facilitate redemptions. The Series may also borrow money for investment
purposes. The Series will not borrow money in excess of 33 1/3% of the value of
its total assets. Any borrowing will be done from a bank with the required asset
coverage of at least 300%. In the event that such asset coverage shall at any
time fall below 300%, the Series shall, within three days thereafter (not
including Sundays or holidays), or such longer period as the SEC may prescribe
by rules and regulations, reduce the amount of its borrowings to such an extent
that the asset coverage of such borrowings shall be at least 300%.

When the Series borrows money for investment purposes, it is engaging in a form
of leverage, which increases investment risk while increasing investment
opportunity. The money borrowed for such leveraging purposes will be subject to
interest costs which may or may not be recovered by appreciation of the
securities purchased and may exceed the income from the securities purchased.

Loans of Portfolio Securities

The Series may lend portfolio securities to qualified broker-dealers and
financial institutions pursuant to agreements provided: (1) the loan is secured
continuously by collateral marked-to-market daily and maintained in an amount at
least equal to the current market value of the securities loaned; (2) the Series
may call the loan at any time and receive the securities loaned; (3) the Series
will receive any interest or dividends paid on the loaned securities; and (4)
the aggregate market value of securities loaned will not at any time exceed 33
1/3% of the total assets of the Series.

When loaning portfolio securities, the Series will initially require the
borrower to provide the Series with collateral in an amount at least equal to
102% of the current market value of the loaned securities with respect to US
securities and 105% of the current market value of the loaned securities with
respect to foreign securities. Thereafter, collateral will be maintained in an
amount at least equal to 100% of the current market value of the loaned
securities. Collateral will consist of US and non-US securities, cash
equivalents or irrevocable letters of credit. Loans of securities involve a risk
that the borrower may fail to return the securities or may fail to maintain the
proper amount of collateral, which may result in a loss of money by the Fund or
a delay in recovering the loaned securities. In addition, in the event of
bankruptcy of the borrower, a Fund could experience delays in recovering the
loaned securities or only recover cash or a

security of equivalent value. Therefore, the Series will only enter into
portfolio loans after a review of all pertinent factors by the Advisor under the
supervision of the Board, including the creditworthiness of the borrower and
then only if the consideration to be received from such loans would justify the
risk. Creditworthiness will be monitored on an ongoing basis by the Advisor.

Swaps

The Series may engage in swaps, including but not limited to interest rate,
currency and equity swaps and the purchase or sale of related caps, floors,
collars and other derivative instruments. The Series expects to enter into these
transactions to preserve a return or spread on a particular investment or
portion of the portfolio's duration, to protect against any increase in the
price of securities the Series anticipates purchasing at a later date, or to
gain exposure to certain markets in the most economical way possible.

Interest rate swaps involve the exchange by the Series with another party of
their respective commitments to receive or pay interest (e.g., an exchange of
fixed rate payments for floating rate payments) with respect to a notional
amount of principal. Currency swaps involve the exchange of cash flows on a
notional amount based on changes in the values of referenced currencies.

The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of an
interest rate floor entitles the purchaser to receive payments on a notional
principal amount from the party selling the floor to the extent that a specified
index falls below a predetermined interest rate or amount. A collar is a
combination of a cap and a floor that preserves a certain return with a
predetermined range of interest rates or values.

The use of swaps involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. If the Advisor is
incorrect in its forecast of market values, interest rates and other applicable
factors, the investment performance of the Series will be less favorable than it
would have been if this investment technique was never used. Swaps do not
involve the delivery of securities or other underlying assets or principal, and
are subject to counterparty risk. If the other party to a swap defaults and
fails to consummate the transaction, the Series' risk of loss consists of the
net amount of interest payments that the Series is contractually entitled to
receive. Under Internal Revenue Service rules, any lump sum payment received or
due under the notional principal contract must be amortized over the life of the
contract using the appropriate methodology prescribed by the Internal Revenue
Service.

Equity swaps or other swaps relating to securities or other instruments are
based on changes in the value of the underlying securities or instruments. For
example, an equity swap might involve an exchange of the value of a particular
security or securities index in a certain notional amount for the value of
another security or index or for the value of interest on that notional amount
at a specified fixed or variable rate. The Series will only enter into an equity
swap contract on a net basis, i.e., the two parties' obligations are netted out,
with the Series paying or receiving, as the case may be, only the net amount of
the payments. Payments under an equity swap contract may be made at the
conclusion of the contract or periodically during its term.

If there is a default by the counterparty to a swap contract, the Series will be
limited to contractual remedies pursuant to the agreements related to the
transaction. There is no assurance that a swap contract counterparty will be
able to meet its obligations pursuant to a swap contract or that, in the event
of a default, the Series will succeed in pursuing contractual remedies. The
Series thus assumes the risk that it may be delayed in or prevented from
obtaining payments owed to it pursuant to a swap contract. However, the amount
at risk is only the net unrealized gain, if any, on the swap, not the entire
notional amount. The Advisor will closely monitor, subject to the oversight of
the Board, the creditworthiness of swap counterparties in order to minimize the
risk of swaps.

The Advisor and the Trust do not believe that the Series' obligations under swap
contracts are senior securities and, accordingly, the Series will not treat them
as being subject to its borrowing or senior securities restrictions. However,
the net amount of the excess, if any, of the Series' obligations over its
entitlements with respect to each swap contract will be accrued on a daily basis
and an amount of Segregated Assets having an aggregate market value at least
equal to the accrued excess will be segregated in accordance with SEC positions.
To the extent that the Series cannot dispose of a swap in the ordinary course of
business within seven days at approximately the value at which the Series has
valued the swap, the Series will treat the swap as illiquid and subject to its
overall limit on illiquid investments of 15% of the Series' net assets.

Futures

The Series may enter into contracts for the purchase or sale for future delivery
of securities, indices and foreign currencies.

A purchase of a futures contract means the acquisition of a contractual right to
obtain delivery to the Series of the securities or foreign currency called for
by the contract at a specified price during a specified future month. When a
futures contract is sold, the Series incurs a contractual obligation to deliver
the securities or foreign currency underlying the contract at a specified price
on a specified date during a specified future month.

When the Series enters into a futures transaction, it must deliver to the
futures commission merchant (an "FCM") selected by the Series, an amount
referred to as "initial margin." The initial margin is required to be deposited
in cash or government securities with an FCM. Minimum initial margin
requirements are established by the futures exchange and FCMs may establish
initial margin requirements which are higher than the exchange requirements.
After a futures contract position is opened, the value of the contract is
marked-to-market daily. If a futures contact price changes to the extent that
the margin deposit does not satisfy margin requirements, payment of a "variation
margin" to be held by the FCM, will be required. Conversely, a reduction in the
contract value may reduce the required margin resulting in a repayment of excess
margin to the custodial accounts of the Fund. The Series may also effect futures
transactions through futures commission merchants who are affiliated with the
Advisor or the Series in accordance with procedures adopted by the Board.

The Series will enter into futures transactions on domestic exchanges and, to
the extent such transactions have been approved by the Commodity Futures Trading
Commission for sale to customers in the United States, on foreign exchanges. In
addition, the Series may sell stock index futures in anticipation of or during a
market decline to attempt to offset the decrease in market value of its common
stocks that might otherwise result; and it may purchase such contracts in order
to offset increases in the cost of common stocks that it intends to purchase.
Unlike other futures contracts, a stock index futures contract specifies that no
delivery of the actual stocks making up the index will take place. Instead,
settlement in cash must occur upon the termination of the contract.

While futures contracts provide for the delivery of securities, deliveries
usually do not occur. Contracts are generally terminated by entering into
offsetting transactions.

The Series may enter into futures contracts to protect against the adverse
affects of fluctuations in security prices, interest or foreign exchange rates
without actually buying or selling the securities or foreign currency. For
example, if interest rates are expected to increase, the Series might enter into
futures contracts for the sale of debt securities. Such a sale would have much
the same effect as selling an equivalent value of the debt securities owned by
the Series. If interest rates did increase, the value of the debt securities in
the portfolio would decline, but the value of the futures contracts to the
Series would increase at approximately the same rate, thereby keeping the net
asset value of the Series from declining as much as it otherwise would have.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to hedge in anticipation of subsequent purchases of
securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, the Series could take
advantage of the anticipated rise in value of debt securities without actually
buying them until the market had stabilized. At that time, the futures contracts
could be liquidated and the Series could then buy debt securities on the cash
market. The Series may also enter into futures contracts as a low cost method
for gaining or reducing exposure to a particular currency or securities market
without directly investing in those currencies or securities.

To the extent that market prices move in an unexpected direction, the Series may
not achieve the anticipated benefits of futures contracts or may realize a loss.
For example, if the Series is hedged against the possibility of an increase in
interest rates, which would adversely affect the price of securities held in its
portfolio, and interest rates decrease instead, the Series would lose part or
all of the benefit of the increased value which it has because it would have
offsetting losses in its futures position. In addition, in such situations, if
the Series had insufficient cash, it may be required to sell securities from its
portfolio to meet daily variation margin requirements. Such sales of securities
may, but will not necessarily, be at increased prices that would reflect the
rising market. The Series may be required to sell securities at a time when it
may be disadvantageous to do so.

Options

The Series may purchase and write call or put options on foreign or US
securities and indices and enter into related closing transactions. The Series
may also purchase exchange-listed call options on particular market segment
indices to achieve temporary exposure to a specific industry.

The Series may invest in options that are either listed on US or recognized
foreign exchanges or traded over-the-counter. Certain over-the-counter options
may be illiquid. Thus, it may not be possible to close options positions and
this may have an adverse impact on the Series' ability to effectively hedge its
securities. The Trust has been notified by the SEC that it considers
over-the-counter options to be illiquid. Accordingly, the Series will only
invest in such options to the extent consistent with its 15% limit on
investments in illiquid securities.

Purchasing Call Options--The Series may purchase call options on securities to
the extent that premiums paid by the Series do not aggregate more than 20% of
the Series' total assets. When the Series purchases a call option, in return for
a premium paid by the Series to the writer of the option, the Series obtains the
right to buy the security underlying the option at a specified exercise price at
any time during the term of the option. The writer of the call option, who
receives the premium upon writing the option, has the obligation, upon exercise
of the option, to deliver the underlying security against payment of the
exercise price. The advantage of purchasing call options is that the Series may
alter portfolio characteristics and modify portfolio maturities without
incurring the cost associated with transactions.

The Series may, following the purchase of a call option, liquidate its position
by effecting a closing sale transaction. This is accomplished by selling an
option of the same series as the option previously purchased. The Series will
realize a profit from a closing sale transaction if the price received on the
transaction is more than the premium paid to purchase the original call option;
the Series will realize a loss from a closing sale transaction if the price
received on the transaction is less than the premium paid to purchase the
original call option.

Although the Series will generally purchase only those call options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange will exist for any particular option, or
at any particular time, and for some options no secondary market on an exchange
may exist. In such event, it may not be possible to effect closing transactions
in particular options, with the result that the Series would have to exercise
its options in order to realize any profit and would incur brokerage commissions
upon the exercise of such options and upon the subsequent disposition of the
underlying securities acquired through the exercise of such options. Further,
unless the price of the underlying security changes sufficiently, a call option
purchased by the Series may expire without any value to the Series, in which
event the Series would realize a capital loss which will be short-term unless
the option was held for more than one year.

Call Writing--The Series may write call options from time to time on such
portions of its portfolio, without limit, as the Advisor determines is
appropriate in seeking to achieve the Series' investment objective. The
advantage to the Series of writing calls is that the Series receives a premium
which is additional income. However, if the security rises in value, the Series
may not fully participate in the market appreciation.

During the option period for a call option, the writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold,
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
or upon entering a closing purchase transaction. A closing purchase transaction,
in which the Series, as writer of an option, terminates its obligation by
purchasing an

option of the same series as the option previously written, cannot be effected
once the option writer has received an exercise notice for such option.

Closing purchase transactions will ordinarily be effected to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
to permit the sale of the underlying security or to enable the Series to write
another call option on the underlying security with either a different exercise
price or expiration date or both. The Series may realize a net gain or loss from
a closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline in
the market value of the underlying security.

If a call option expires unexercised, the Series will realize a short-term
capital gain in the amount of the premium on the option less the commission
paid. Such a gain, however, may be offset by depreciation in the market value of
the underlying security during the option period. If a call option is exercised,
the Series will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security and the
proceeds of the sale of the security plus the amount of the premium on the
option less the commission paid.

The Series will generally write call options on a covered basis. A call option
written by a Series is "covered" if the Series owns the underlying security
covered by the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account by the Series' custodian) upon
conversion or exchange of other securities held by the Series. A call option is
also deemed to be covered if the Series holds a call on the same security and in
the same principal amount as the call written and the exercise price of the call
held (i) is equal to or less than the exercise price of the call written or (ii)
is greater than the exercise price of the call written if the difference is
maintained by the Series in Segregated Assets in a segregated account with its
custodian.

From time to time, the Series will write a call option that is not covered as
indicated above but where the Series will maintain, with its custodian for the
term of the option, Segregated Assets in a segregated account having a value
equal to the fluctuating market value of the optioned securities or currencies.
While such an option would be "covered" with sufficient collateral to satisfy
SEC prohibitions on issuing senior securities, this type of strategy would
expose the funds to the risks of writing uncovered options. When writing
uncovered call options, the Series is subject to the risk of having to purchase
the security or currency subject to the option at a price higher than the
exercise price of the option. As the price of a security or currency could
appreciate substantially, the Series' loss could be significant.

Purchasing Put Options--The Series may only purchase put options to the extent
that the premiums on all outstanding put options do not exceed 20% of a Series'
total assets. The Series will, at all times during which it holds a put option,
own the security covered by such option.

With regard to the writing of put options, the Series will limit the aggregate
value of the obligations underlying such put options to 50% of its total assets.

A put option purchased by the Series gives it the right to sell one of its
securities for an agreed price up to an agreed date. The Series intends to
purchase put options in order to protect against a decline in the market value
of the underlying security below the exercise price less the premium paid for
the option ("protective puts"). The ability to purchase put options will allow
the Series to protect unrealized gains in an appreciated security in their
portfolios without actually selling the security. If the security does not drop
in value, the Series will lose the value of the premium paid. The Series may
sell a put option which it has previously purchased prior to the sale of the
securities underlying such option. Such sale will result in a net gain or loss
depending on whether the amount received on the sale is more or less than the
premium and other transaction costs paid on the put option which is sold.

The Series may sell a put option purchased on individual portfolio securities.
Additionally, the Series may enter into closing sale transactions. A closing
sale transaction is one in which the Series, when it is the holder of an
outstanding option, liquidates its position by selling an option of the same
series as the option previously purchased.

Writing Put Options--The Series may also write put options on a secured basis
which means that the Series will maintain in a segregated account with its
custodian Segregated Assets in an amount not less than the exercise price of the
option at all times during the option period. The amount of Segregated Assets
held in the segregated account will be adjusted on a daily basis to reflect
changes in the market value of the securities covered by the put option written
by the Series. Secured put options will generally be written in circumstances
where the Advisor wishes to purchase the underlying security for the Series'
portfolio at a price lower than the current market price of the security. In
such event, the Series would write a secured put option at an exercise price
which, reduced by the premium received on the option, reflects the lower price
it is willing to pay.

Following the writing of a put option, the Series may wish to terminate the
obligation to buy the security underlying the option by effecting a closing
purchase transaction. This is accomplished by buying an option of the same
series as the option previously written. The Series may not, however, effect
such a closing transaction after it has been notified of the exercise of the
option.

Index Options

The Series may purchase exchange-listed call options on stock and fixed income
indices and sell such options in closing sale transactions for hedging purposes.
The Series also may purchase call options on indices primarily as a substitute
for taking positions in certain securities or particular market segment. The
Fund may also purchase call options on an index to protect against increases in
the price of securities underlying that index that the Fund intends to purchase
pending its ability to invest in such securities.

In addition, the Series may purchase put options on stock and fixed income
indices and sell such options in closing sale transactions. The Series may
purchase put options on broad market indices in order to protect its fully
invested portfolio from a general market decline. Put options

on market segments may be bought to protect the Series from a decline in value
of heavily weighted industries in the Series' portfolio. Put options on stock
and fixed income indices may also be used to protect the Series' investments in
the case of a major redemption.

The Series may also write (sell) put and call options on stock and fixed income
indices. While the option is open, the Series will maintain a segregated account
with its custodian in an amount equal to the market value of the option.

Options on indices are similar to regular options except that an option on an
index gives the holder the right, upon exercise, to receive an amount of cash if
the closing level of the index upon which the option is based is greater than
(in the case of a call) or lesser than (in the case of a put) the exercise price
of the option. This amount of cash is equal to the difference between the
closing price of the index and the exercise price of the option expressed in
dollars times a specified multiple (the "multiplier"). The indices on which
options are traded include both US and non-US markets.

Special Risks of Options on Indices

The Series' purchases of options on indices will subject it to the risks
described below.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular security, whether the Series will
realize gain or loss on the purchase of an option on an index depends upon
movements in the level of prices in the market generally or in an industry or
market segment rather than movements in the price of a particular security.
Accordingly, successful use by the Series of options on indices is subject to
the Advisor's ability to predict correctly the direction of movements in the
market generally or in a particular industry. This requires different skills and
techniques than predicting changes in the prices of individual securities.

Index prices may be distorted if trading of a substantial number of securities
included in the index is interrupted causing the trading of options on that
index to be halted. If a trading halt occurred, the Series would not be able to
close out options which it had purchased and the Series may incur losses if the
underlying index moved adversely before trading resumed. If a trading halt
occurred and restrictions prohibiting the exercise of options were imposed
through the close of trading on the last day before expiration, exercises on
that day would be settled on the basis of a closing index value that may not
reflect current price information for securities representing a substantial
portion of the value of the index.

If a Series holds an index option and exercises it before final determination of
the closing index value for that day, it runs the risk that the level of the
underlying index may change before closing. If such a change causes the
exercised option to fall "out-of-the-money," the Series will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer. Although the
Series may be able to minimize this risk by withholding exercise instructions
until just before the daily cutoff time or by selling rather than exercising the
option when the index level is close to the exercise price, it may not be
possible to eliminate this risk entirely because the cutoff times for index
options

may be earlier than those fixed for other types of options and may occur before
definitive closing index values are announced.

Rule 144A and Illiquid Securities

The Series may invest in securities that are exempt under Rule 144A from the
registration requirements of the 1933 Act. Those securities purchased under Rule
144A are traded among qualified institutional investors.

The Board has instructed the Advisor to consider the following factors in
determining the liquidity of a security purchased under Rule 144A: (i) the
security can be sold within seven days at approximately the same amount at which
it is valued by the Series; (ii) there is reasonable assurance that the security
will remain marketable throughout the period it is expected to be held by the
Series, taking into account the actual frequency of trades and quotations for
the security (expected frequency in the case of initial offerings); (iii) at
least two dealers make a market in the security; (iv) there are at least three
sources from which a price for the security is readily available; (v) settlement
is made in a "regular way" for the type of security at issue; and (vi) for Rule
144A securities that are also exempt from registration under Section 3(c)(7) of
the Act, there is a sufficient market of "qualified purchasers" (as defined in
the Act) to assure that it will remain marketable throughout the period it is
expected to be held by the Series. Although having delegated the day-to-day
functions, the Board will continue to monitor and periodically review the
Advisor's selection of Rule 144A securities, as well as the Advisor's
determinations as to their liquidity. Investing in securities under Rule 144A
could have the effect of increasing the level of the Series' illiquidity to the
extent that qualified institutional buyers become, for a time, uninterested in
purchasing these securities. After the purchase of a security under Rule 144A,
however, the Board and the Advisor will continue to monitor the liquidity of
that security to ensure that the Series has no more than 15% of its net assets
in illiquid securities.

The Series will limit investments in securities of issuers which the Series is
restricted from selling to the public without registration under the 1933 Act to
no more than 15% of the Series' net assets, excluding restricted securities
eligible for resale pursuant to Rule 144A that have been determined to be liquid
pursuant to a policy and procedures adopted by the Trust's Board which includes
continuing oversight by the Board.

If the Advisor determines that a security purchased in reliance on Rule 144A
which was previously determined to be liquid, is no longer liquid and, as a
result, the Series' holdings of illiquid securities exceed the Series' 15% limit
on investment in such securities, the Advisor will determine what action shall
be taken to ensure that the Series continues to adhere to such limitation,
including disposing of illiquid assets which may include such Rule 144A
securities.

Investment Company Securities and Investments in Affiliated Investment Companies

Subject to the provisions of any exemptive orders issued by the SEC (as
described in the following paragraphs), securities of other investment companies
may be acquired by the Series to the extent that such purchases are consistent
with the Series' investment objective and restrictions and are permitted under
the Act. The Act requires that, as determined immediately after a purchase is
made, (i) not more than 5% of the value of the Series' total assets will be

invested in the securities of any one investment company, (ii) not more than 10%
of the value of the Series' total assets will be invested in securities of
investment companies as a group and (iii) not more than 3% of the outstanding
voting stock of any one investment company will be owned by the Series. Certain
exceptions to these limitations may apply. As a shareholder of another
investment company, the Series would bear, along with other shareholders, its
pro rata portion of the other investment company's expenses, including advisory
fees. These expenses would be in addition to the expenses that the Series would
bear in connection with its own operations.

The Series may invest in securities issued by other registered investment
companies advised by the Advisor pursuant to exemptive relief granted by the SEC
or rules promulgated by the SEC. The Series may invest in corresponding
portfolios of UBS Relationship Funds to the extent that the Advisor determines
that such investments are a more efficient means for the Series to gain exposure
to certain asset classes than by the Series investing directly in individual
securities. The Series may only invest in portfolios of UBS Relationship Funds
to the extent the asset class exposure in such portfolios of UBS Relationship
Funds is consistent with the permissible asset class exposure for the Series had
the Series invested directly in securities and the portfolios of UBS
Relationship Funds are subject to similar risks and limitations as the Series.

Equity Securities

The Series may invest in a broad range of equity securities of US issuers,
including common stocks of companies or closed-end investment companies,
preferred stocks, debt securities convertible into or exchangeable for common
stock and securities such as warrants or rights that are convertible into common
stock. The Series expects its equity investments to emphasize large and mid
capitalization companies. The Series may also invest in up to 15% of its assets
in small capitalization companies. The Series may invest in equity securities of
companies considered by the Advisor to be in their post-venture capital stage,
or "post-venture capital companies." A post-venture capital company is a company
that has received venture capital financing either: (a) during the early stages
of the company's existence or the early stages of the development of a new
product or service, or (b) as part of a restructuring or recapitalization of the
company.

Exchange-Traded Index Securities

Subject to the limitations on investment in investment company securities and
its own investment objective, the Series may invest in exchange-traded index
securities that are currently operational and that may be developed in the
future. Exchange-traded index securities generally trade on the American Stock
Exchange or New York Stock Exchange and are subject to the risks of an
investment in a broadly based portfolio of common stocks, including the risk
that the general level of stock prices may decline, thereby adversely affecting
the value of the investment. These securities generally bear certain operational
expenses. To the extent the Series invests in these securities, the Series must
bear these expenses in addition to the expenses of its own operation.

Short Sales

The Series may sell securities short. In a short sale, the Series sells a
security it does not own in anticipation of a decline in the market value of
that security. To complete the transaction, the Series must borrow the security
to make delivery to the buyer. The Series is then obligated to replace the
security borrowed by purchasing it at the market price at the time of
replacement. Until the security is replaced, the Series must pay the lender any
dividends or interest that accrues during the period of the loan. To borrow the
security, the Series may also be required to pay a premium, which would increase
the cost of the security sold. The proceeds of the short sale (which may be
invested in equity securities) will be retained by the broker, to the extent
necessary to meet margin requirements, until the short position is closed out.

The Series will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Series replaces the borrowed security, and the Series will realize a gain if the
security declines in price between those same dates. The amount of any gain will
be decreased, and the amount of any loss increased, by the amount of any
premium, dividends or interest the Series is required to pay in connection with
the short sale.

Until the Series replaces a borrowed security, the Series will designate liquid
assets it owns as segregated assets on the books of its custodian in an amount
equal to its obligation to purchase the stocks sold short, as required by law.
The amount segregated in this manner will be increased or decreased each
business day to equal the change in market value of the Series' obligation to
purchase the security sold short. If the lending broker requires the Series to
deposit additional collateral (in addition to the short sales proceeds that the
broker holds during the period of the short sale), the amount of the additional
collateral may be deducted in determining the amount of cash or liquid assets
the Series is required to segregate to cover the short sale obligation. The
amount segregated must be unencumbered by any other obligation or claim than the
obligation that is being covered. The Advisor and the Series believe that short
sale obligations that are covered, either by an offsetting asset or right
(acquiring the stock sold short or having an option to purchase the stock sold
short at a exercise price that covers the obligation), or by the Series'
segregated assets procedures (or a combination thereof), are not senior
securities under the Investment Company Act and are not subject to the Series'
borrowing restrictions.

Convertible Securities

The Series may invest in convertible securities which generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality. The value of convertible securities may reflect changes in the value of
the underlying common stock. Convertible securities entail less credit risk than
the issuer's common stock because they rank senior to common stock. Convertible
securities entitle the holder to exchange the securities for a specified number
of shares of common stock, usually of the same company, at specified prices
within a certain period of time and to receive interest or dividends until the
holder elects to convert. The provisions of any convertible security determine
its ranking in a company's capital structure. In the case of subordinated
convertible debentures, the holder's claims on assets and earnings are
subordinated to the claims of other creditors and are senior to the claims of
preferred and common

shareholders. In the case of preferred stock and convertible preferred stock,
the holder's claim on assets and earnings are subordinated to the claims of all
creditors but are senior to the claims of common shareholders.

Other Investments

The Board may, in the future, authorize the Series to invest in securities other
than those listed in this SAI and in the Prospectus, provided such investment
would be consistent with the Series' investment objective and that it would not
violate any fundamental investment policies or restrictions applicable to the
Series.

SECONDARY RISKS

The principal risks of investing in the Series are described in the "Principal
Risks" section of the Prospectus. The secondary risks of investing in the Series
are described in Appendix A hereto.

INVESTMENT RESTRICTIONS

The investment restrictions set forth below are fundamental policies and may not
be changed as to the Series without the approval of a majority of the
outstanding voting securities (as defined in the Act) of the Series. Unless
otherwise indicated, all percentage limitations listed below apply to the Series
only at the time of the transaction. Accordingly, if a percentage restriction is
adhered to at the time of investment, a later increase or decrease in the
percentage that results from a relative change in values or from a change in the
Series' total assets will not be considered a violation. The Fund may not:

(i) Purchase or sell real estate, except that the Fund may purchase or sell
securities of real estate investment trusts;

(ii) Purchase or sell commodities, except that the Fund may purchase or
sell currencies, may enter into futures contracts on securities, currencies and
other indices or any other financial instruments, and may purchase and sell
options on such futures contracts;

(iii) Issue securities senior to the Fund's presently authorized shares of
beneficial interest, except that this restriction shall not be deemed to
prohibit the Fund from: (a) making any permitted borrowings, loans or pledges;
(b) entering into options, futures contracts, forward contracts, repurchase
transactions, or reverse repurchase transactions; or (c) making short sales of
securities to the extent permitted by the Act and any rule or order thereunder,
or SEC staff interpretations thereof;

(iv) Make loans to other persons, except: (a) through the lending of its
portfolio securities; (b) through the purchase of debt securities, loan
participations and/or engaging in direct corporate loans for investment purposes
in accordance with its investment objectives and policies; (c) to the extent the
entry into a repurchase agreement is deemed to be a loan and (d) to affiliated
investment companies to the extent permitted by the Act or any exemptions that
may be granted by the SEC;

(v) Borrow money in excess of 33 1/3% of the value of its assets, except as
a temporary measure for extraordinary or emergency purposes to facilitate
redemptions. All borrowings will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of the Fund's assets, asset coverage of at
least 300% is required;

(vi) Concentrate (invest more than 25% of its net assets) in securities of
issuers in a particular industry (other than securities issued or guaranteed by
the US government or any of its agencies); and

(vii) Act as an underwriter, except to the extent the Fund may be deemed to
be an underwriter when selling its own shares.

MANAGEMENT OF THE TRUST

The Trust is a Delaware statutory trust. Under Delaware law, the Board has
overall responsibility for managing the business and affairs of the Trust. Each
Trustee of the Trust is an Independent Trustee because he or she is not
considered an "interested person" of the Trust under the 1940 Act. The Trustees
elect the officers of the Trust, who are responsible for administering the
day-to-day operations of the Series.

The Trustees and executive officers of the Trust, along with their principal
occupations over the past five years and their affiliations, if any, with the
Advisor, are listed below. None of the Trustees is an "interested person" (as
defined in the Investment Company Act) of the Trust. The Trustees may be
referred to herein as "Independent Trustees."

Trustees and Officers

Term of Principal
Position(s) Office(1) and Occupation(s) Number of Portfolios in
Name, Address and Held Length of During Past 5 Fund Complex Overseen by Other Directorships Held by
Age with Trust Time Served Years Trustee Trustee

Walter E. Auch(2) Trustee Since 1994 Mr. Auch is Mr. Auch is a trustee of Mr. Auch is a
6001 N. 62nd Place retired (since three investment companies Trustee/Director of
Paradise Valley, AZ 1986). (consisting of 55 Advisors Series Trust (16
85253 portfolios) for which UBS portfolios); Smith Barney
Age: 85 Global AM (Americas) or Fund Complex (12
one of its affiliates portfolios); Nicholas
serves as investment Applegate Institutional
advisor, sub-advisor or Funds (15 portfolios); and
manager. Chairman of the Board of
Sound Surgical
Technologies.

Frank K. Reilly(2) Chairman and Since 1993 Mr. Reilly is a Mr. Reilly is a director Mr. Reilly is a Director of
Mendoza College of Trustee Professor at the or trustee of four Discover Bank, Morgan
Business University of investment companies Stanley Trust and FSB.
University of Notre Notre Dame since (consisting of 56
Dame 1982. portfolios) for which UBS
Notre Dame, IN Global AM (Americas) or
46556-5649 one of its affiliates
Age: 70 serves as investment
advisor, sub-advisor or
manager.

Edward M. Roob(2) Trustee Since 1994 Mr. Roob is Mr. Roob is a director or None.
841 Woodbine Lane retired (since trustee of four investment
Northbrook, IL 60002 1993). companies (consisting of
Age: 71 56 portfolios) for which
UBS Global AM (Americas)
or one of its affiliates
serves as investment
advisor, sub-advisor or
manager.

Adela Cepeda(2) Trustee Since 2004 Ms. Cepeda is Ms. Cepeda is a director Ms. Cepeda is a director of
A.C. Advisory, Inc. founder and or trustee of four Lincoln National Income
161 No. Clark Street president of A.C. investment companies Fund, Inc. (since 1992) and
Suite 4975 Advisory, Inc. (consisting of 56 MGI Funds (7 portfolios)
Chicago, IL 60601 (since 1995). portfolios) for which UBS (since 2005). She is also
Age: 48 Global AM (Americas) or a Director of Amalgamated
one of its affiliates Bank of Chicago (since
serves as investment 2003).
advisor, sub-advisor or
manager.

J. Mikesell Trustee Since 2004 Mr. Thomas is Mr. Thomas is a director Mr. Thomas is a director
Thomas(2) President and CEO or trustee of four and chairman of the Audit
Federal Home Loan of Federal Home investment companies Committee for Evanston
Bank of Chicago Loan Bank of (consisting of 56 Northwestern Healthcare.
111 East Wacker Chicago (since portfolios) for which UBS
Drive 2004). Mr. Global AM (Americas) or
Chicago, IL 60601 Thomas was an one of its affiliates
Age: 55 independent serves as investment
financial advisor advisor, sub-advisor or
(2001 to 2004). manager.
He was managing
director of
Lazard Freres &
Co. (1995 to
2001).

(1) Each Trustee holds office for an indefinite term.

(2) Messrs. Auch, Reilly and Roob are also Independent Trustees of UBS
Supplementary Trust and UBS Private Portfolios Trust, which are both
investment vehicles advised by UBS Global AM (Americas) and are excluded
from registration under the Act in reliance on the exemptions afforded by
Section 3(c)(7) of the Act. Ms. Cepeda and Mr. Thomas are also Independent
Trustees of UBS Private Portfolios Trust.

Term of
Name, Address and Position(s) Office+ and
Age Held with the Length of Time
Trust Served Principal Occupation(s) During Past 5 Years

Joseph J. Allessie* Vice President Since 2005 Mr. Allessie is director and deputy general
Age: 41 and Assistant counsel at UBS Global AM (US) and UBS Global AM
Secretary (Americas) (collectively, "UBS Global AM -
Americas region) (since 2005). Prior to joining
UBS Global AM-Americas region, he was senior vice
president and general counsel of Kenmar Advisory
Corp. (from 2004 to 2005). Prior to that Mr.
Allessie was general counsel and secretary of GAM
USA Inc., GAM Investments, GAM Services, GAM
Funds, Inc. and the GAM Avalon Funds (from 1999 to
2004). Mr. Allessie is a vice president and
assistant secretary of 20 investment companies
(consisting of 91 portfolios) for which UBS Global
AM - Americas region or one of its affiliates
serves as investment advisor, sub-advisor or
manager.

W. Douglas Beck* President Since 2005 Mr. Beck is an executive director and head of
Age: 39 product development and management for UBS Global
AM-Americas region (since 2002). From March 1998
to November 2002, he held various positions at
Merrill Lynch, the most recent being first vice
president and co-manager of the managed solutions
group. Mr. Beck is president of 20 investment
companies (consisting of 91 portfolios) for which
UBS Global AM - Americas region or one of its
affiliates serves as investment advisor,
sub-advisor or manager, and was vice president of
such investment companies from 2003 to 2005.

Rose Ann Bubloski* Vice President Since 2004 Ms. Bubloski is an associate director (since 2003)
Age: 38 and Assistant and a senior manager of the mutual fund finance
Treasurer department of UBS Global AM-Americas region.
Ms. Bubloski is vice president and assistant
treasurer of four investment companies (consisting
of 56 portfolios) for which UBS Global AM -
Americas region or one of its affiliates serves as
investment advisor, sub-advisor or manager.

Thomas Disbrow* Vice President Since 2000 and Mr. Disbrow is a director (since 2001), head of
Age: 40 and Assistant 2004, retail mutual fund operations and co-head of the
Treasurer respectively mutual fund finance (since 2004) department of UBS
Global AM-Americas region. Mr. Disbrow is vice
president and treasurer of 16 investment companies
(consisting of 35 portfolios) and vice president
and assistant treasurer of four investment
companies (consisting of 56 portfolios) for which
UBS Global AM - Americas region or one of its
affiliates serves as investment advisor,
sub-advisor or manager.

Term of
Name, Address and Position(s) Office+ and
Age Held with the Length of Time
Trust Served Principal Occupation(s) During Past 5 Years

Mark F. Kemper** Vice President Since 1999 and Mr. Kemper is general counsel of UBS Global
Age: 48 and Secretary 2004, AM-Americas region (since 2004). Mr. Kemper is
respectively also a managing director of UBS Global AM-Americas
region (since 2006). He was deputy general
counsel of UBS Global AM (Americas) from July 2001
to July 2004. He has been secretary of UBS Global
AM - Americas region since 1999 and assistant
secretary of UBS Global Asset Management Trust
Company since 1993. Mr. Kemper is secretary of
UBS Global AM - Americas region (since 2004). Mr.
Kemper is vice president and secretary of 20
investment companies (consisting of 91 portfolios)
for which UBS Global AM - Americas region or one
of its affiliates serves as investment advisor,
sub-advisor or manager.

Tammie Lee* Vice President Since 2005 Ms. Lee is a director and associate general
Age: 35 and Assistant counsel of UBS Global AM-Americas region (since
Secretary 2005). Prior to joining UBS Global AM-Americas
region, she was vice president and counsel at
Deutsche Asset Management/Scudder Investments from
2003 to 2005. Prior to that she was assistant
vice president and counsel at Deutsche Asset
Management/Scudder Investments from 2000 to 2003.
Ms. Lee is a vice president and assistant
secretary of 20 investment companies (consisting
of 91 portfolios) for which UBS Global AM -
Americas region or one of its affiliates serves as
investment advisor, sub-advisor or manager.

Joseph T. Malone* Vice President, Since 2001 Mr. Malone is a director (since 2001) and co-head
Age: 38 Treasurer and (Vice of the mutual fund finance department (since 2004)
Principal President) and of UBS Global AM-Americas region. From August
Accounting since 2004 2000 through June 2001, he was controller at AEA
Officer (Treasurer and Investors Inc. Mr. Malone is the vice president
Principal and assistant treasurer of 16 investment companies
Accounting (consisting of 35 portfolios) and vice president,
Officer) treasurer and principal accounting officer of four
investment companies (consisting of 56 portfolios)
for which UBS Global AM - Americas region or one
of its affiliates serves as investment advisor,
sub-advisor or manager.

Joseph McGill* Vice President Since 2004 Mr. McGill is managing director (since 2006) and
Age: 44 and Chief chief compliance officer at UBS Global AM-Americas
Compliance region (since 2003). Prior to joining UBS Global
Officer AM-Americas region, he was assistant general
counsel at J.P. Morgan Investment Management (from
1999 to 2003). Mr. McGill is a vice president and
chief compliance officer of 20 investment
companies (consisting of 91 portfolios) for which
UBS Global AM - Americas region or one of its
affiliates serves as investment advisor,
sub-advisor or manager.

Eric Sanders* Vice President Since 2005 Mr. Sanders is a director and associate general
Age: 40 and Assistant counsel of UBS Global AM-Americas Region (since
Secretary 2005). From 1996 until June 2005, he held various
positions at Fred Alger & Company, Incorporated,
the most recent being assistant vice president and
associate general counsel. Mr. Sanders is a vice
president and assistant secretary of 20 investment
companies (consisting of 91 portfolios) for which
UBS Global AM - Americas region or one of its
affiliates serves as investment advisor,
sub-advisor or manager.

Term of
Name, Address and Position(s) Office+ and
Age Held with the Length of Time
Trust Served Principal Occupation(s) During Past 5 Years

Keith A. Weller* Vice President Since 2004 Mr. Weller is an executive director and senior
Age: 45 and Assistant associate general counsel of UBS Global
Secretary AM-Americas region (since 2005) and has been an
attorney with affiliated entities since 1995. Mr.
Weller is a vice president and assistant secretary
of 20 investment companies (consisting of 91
portfolios) for which UBS Global AM - Americas
region or one of its affiliates serves as
investment advisor, sub-advisor or manager.
____________________
+ Officers of the Trust are appointed by the Trustees and serve at the
pleasure of the Board.

* This person's business address is 51 West 52nd Street, New York, NY
10019-6114.

** This person's business address is One North Wacker Drive, Chicago, IL
60606.

INFORMATION ABOUT INDEPENDENT TRUSTEE OWNERSHIP OF SECURITIES
ISSUED BY UBS GLOBAL AM (AMERICAS) OR GLOBAL AM (US)
OR ANY COMPANY CONTROLLING, CONTROLLED BY OR UNDER
COMMON CONTROL WITH UBS GLOBAL AM (AMERICAS) OR UBS GLOBAL AM (US)

As of December 31, 2005, the Independent Trustees did not own any securities
issued by UBS Global AM (Americas) or UBS Global AM (US) or any company
controlling, controlled by or under common control with Global AM (Americas) or
UBS Global AM (US).

INFORMATION ABOUT TRUSTEE OWNERSHIP OF FUND SHARES

Aggregate Dollar Range of Equity Securities in All
Registered Investment Companies Overseen by
Trustee for which UBS Global AM (Americas) or an
Dollar Range of Affiliate Serves as
Independent Equity Securities in
Trustees Fund+ Investment Advisor, Sub-Advisor or Manager+

Walter E. Auch None $50,001 - $100,000

Frank K. Reilly None over $100,000

Edward M. Roob None over $100,000

Adela Cepeda None $10,001 - $50,000

J.Mikesell None None
Thomas

+ Information regarding ownership is as of December 31, 2005.

NOTE REGARDING RANGES: In disclosing the dollar range of equity securities
beneficially owned by a Trustee in these columns, the following ranges will be
used: (i) none; (ii) $1-$10,000; (iii) $10,001-$50,000; (iv) $50,001-$100,000;
or (v) over $100,000.

COMPENSATION TABLE

Trustees

Pension or Total
Annual Retirement Compensation
Aggregate Benefits Accrued From the Trust and
Compensation As Part of Fund Fund Complex
Name and Position Held From the Trust(1) Expenses Paid to Trustees(2)

Walter E. Auch, Trustee $23,469 N/A $58,438
Frank K. Reilly, Trustee $22,310 N/A $58,975
Edward M. Roob, Trustee $22,310 N/A $58,975
Adela Cepeda, Trustee $23,678 N/A $63,050
J. Mikesell Thomas, $24,177 N/A $65,050
Trustee

(1) Represents aggregate annual compensation paid by the Trust to each Trustee
indicated for the fiscal year ended June 30, 2005.

(2) This amount represents the aggregate amount of compensation paid to the
Trustees for service on the Board of Directors/Trustees of four registered
investment companies (three registered investment companies with regard to
Mr. Auch) managed by UBS Global AM (Americas) or an affiliate for the
fiscal year ended June 30, 2005.

No officer or Trustee of the Trust who is also an officer or employee of the
Advisor receives any compensation from the Trust for services to the Trust.

Each Independent Trustee receives, in the aggregate from the UBS Global AM
family of funds for his or her service to four registered investment companies
(three with respect to Mr. Auch) and two unregistered investment companies (one
with respect to Ms. Cepeda and Mr. Thomas) managed by UBS Global AM (Americas),
an annual retainer of $40,000 for serving as a Board member, a $5,000 retainer
for serving as an Audit Committee member, and a $5,000 retainer for serving as a
Nominating, Compensation and Governance Committee member. In addition, the
chairman of the Board, for serving as chairman of the Board, and the chairman of
the Audit Committee, for serving as chairman of the Audit Committee, receive, in
the aggregate from the UBS Global AM family of funds, an annual retainer of
$10,000 and $5,000, respectively. The foregoing fees will be allocated among all
such funds as follows: (i) one-half of the expense will be allocated pro rata
based on the funds' relative net assets at the end of the calendar quarter
preceding the date of payment; and (ii) one-half of the expense will be
allocated equally according to the number of such funds (i.e., expenses divided
by number of funds). Each Independent Trustee will receive $300 per Fund for
each regular Board meeting (and each in-person special meeting) actually
attended from the Trust. In addition, each Independent Trustee will receive $200
and $100, respectively, for each Audit Committee meeting and Nominating
Committee meeting actually attended from the Trust. The Trust reimburses each
Trustee and officer for out-of-pocket expenses in connection with travel and
attendance at Board meetings.

Each Trustee sits on the Trust's Audit Committee, which has the responsibility,
among other things, to: (i) select, oversee and set the compensation of the
Trust's independent registered public accounting firm; (ii) oversee the Trust's
accounting and financial reporting policies and practices, its internal controls
and, as appropriate, the internal controls of certain service providers; (iii)
oversee the quality and objectivity of the Fund's financial statements and the
independent audit(s) thereof; and (iv) act as a liaison between the Trust's
independent registered public accounting firm and the full Board. The Audit
Committee met three times during the fiscal year ended June 30, 2006.

Each Trustee sits on the Trust's Nominating, Compensation and Governance
Committee (the "Nominating Committee"), which has the responsibility, among
other things, to: (i) make recommendations and to consider shareholder
recommendations for nominations for Board members; (ii) review Board governance
procedures and recommend any appropriate changes to the full Board; (iii)
periodically review Independent Trustee compensation and recommend any changes
to the Independent Trustees as a group; and (iv) make recommendations to the
full Board for nominations for membership on all committees, review all
committee assignments annually and periodically review the responsibilities and
need for all committees of the Board.

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,1/2of 1% or more of the Trust's outstanding
shares and (ii) has been a shareholder of at least1/2of 1% of the Trust's 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,
Mr. Walter Auch, care of the Secretary of the Trust at UBS Global Asset
Management, One North Wacker Drive, Chicago, Illinois 60606 and indicate on the
envelope "Nominating Committee." The Qualifying Fund Shareholder's 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 nominee's
resume or curriculum vitae. The Qualifying Fund Shareholder's 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.

The Nominating, Compensation and Governance Committee met twice during the
fiscal year ended June 30, 2006.

There is not a separate Investment Committee. Items pertaining to these matters
are submitted to the full Board.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of the date of this SAI, UBS Global AM (Americas) owned 100% of all
outstanding shares of the Fund and thus may be deemed a controlling shareholder
of the Fund until additional shareholders purchase shares. As of the same date,
none of the Trustees or officers of the Fund beneficially owned any of the
outstanding shares of the Fund.

Any person who owns beneficially, either directly or through one or more
controlled companies, more than 25% of the voting securities of the Fund is
presumed to control the Fund under the provisions of the Act. Note that a
controlling person possesses the ability to control the outcome of matters
submitted for shareholder vote of the Fund.

To the extent that UBS Global AM (Americas) maintains a greater than 24.99%
interest in the Fund, UBS Global AM (Americas) will be deemed to "control" the
Fund for purposes of the U.S. Bank Holding Company Act of 1956, as amended
("BHCA"). Accordingly, the Fund may be subject to certain limitations on its
ability to own equity securities of certain issuers set forth in the BHCA. These
limitations may be eliminated as UBS Global AM (Americas) reduces its percentage
interest in the Fund through redemptions.

INVESTMENT ADVISORY, PRINCIPAL UNDERWRITING AND OTHER SERVICE ARRANGEMENTS

Advisor

UBS Global Asset Management (Americas) Inc., with its principal office located
at One North Wacker Drive, Chicago Illinois 60606, manages the assets of the
Fund pursuant to its investment advisory agreement with the Fund (the
"Agreement"). The Advisor is an investment management firm managing
approximately $77.8 billion, as of March 31, 2006, primarily for institutional
pension and profit sharing funds. The Advisor is an indirect, wholly owned
subsidiary of UBS AG ("UBS") and a member of the UBS Global Asset Management
Division, which had approximately $613.7 billion in assets under management as
of March 31, 2006.

The Advisor also serves as the investment advisor or sub-advisor to thirty-four
other investment companies: The Park Avenue Portfolio - The Guardian UBS Large
Cap Value Fund, The Park Avenue Portfolio - The Guardian UBS Small Cap Value
Fund, The Guardian Variable Contracts Fund, Inc. - The Guardian UBS VC Large Cap
Value Fund, The Guardian Variable Contracts Fund, Inc. - The Guardian UBS VC
Small Cap Value Fund, John Hancock Trust - Global Allocation Trust, John Hancock
Trust - Large Cap Trust, John Hancock Funds Ii - Large Cap Fund, JP Morgan
Fleming Series Trust - JPMorgan Multi-Manager Small Cap Growth Fund, Principal
Investors Fund, Inc. - Partners SmallCap Growth Fund II, Principal Investors
Fund, Inc. - Partners LargeCap Value Fund I, Principal Variable Contracts Fund,
Inc. - SmallCap Growth Account, AXP Strategy Series Inc. - RiverSource Small Cap
Growth Fund, Lincoln Variable Insurance Products Trust - Global Asset Allocation
Fund, ING UBS U S. Allocation Portfolio, ING UBS U.S. Large Cap Equity
Portfolio, INS UBS U.S. Small Cap Growth Portfolio, BB&T International Equity
Fund, TA IDEX UBS Large Cap Value, AXA Enterprise Growth and Income Fund, EQ/UBS
Growth and Income Portfolio, The UBS Funds, Fort Dearborn Income Securities,
Inc., SMA Relationship Trust., UBS Cashfund Inc., UBS Index Trust,- UBS S&P 500
Index Fund, UBS Investment Trust - UBS U.S. Allocation Fund, UBS Money Series -
UBS Select Money Market Fund - UBS Select Treasury Fund - UBS Cash Reserves Fund
- UBS Liquid Assets Fund, UBS Managed Municipal Trust - UBS RMA New York
Municipal Money Fund - UBS RMA California Municipal Money Fund, UBS Master
Series, Inc. - UBS Money Market Fund, UBS Municipal Money Market Series - UBS
RMA New Jersey Municipal Money Fund, UBS RMA Money Fund, Inc. - UBS RMA Money
Market Portfolio - UBS RMA U.S. Government Portfolio - UBS Retirement Money
Fund, UBS RMA Tax-Free Fund, Inc., UBS Series Trust - U.S. Allocation Portfolio
and UBS PACE Money Market Fund.

Pursuant to its Agreement with the Trust, on behalf of the Fund, the Advisor
will receive from the Fund for providing investment advisory services a monthly
fee at an annual rate according to the following fee schedule: 1.00% on the
first $500 million of assets under management; 0.90% on the next $500 million to
$1 billion of assets under management; and 0.85% above $1 billion of assets
under management. The Advisor is responsible for paying its expenses. The Fund
will pay the following expenses: (1) the fees and expenses of the Trust's
disinterested Trustees; (2) the salaries and expenses of any of the Trust's
officers or employees who are not affiliated with the Advisor; (3) interest
expenses; (4) taxes and governmental fees; (5) brokerage commissions and other
expenses incurred in acquiring or disposing of portfolio securities; (6) the
expenses of

registering and qualifying shares for sale with the SEC and with various state
securities commissions; (7) auditing and legal costs; (8) insurance premiums;
(9) fees and expenses of the Trust's custodian, administrator and transfer agent
and any related services; (10) expenses of obtaining quotations of the Fund's
portfolio securities and of pricing the Fund's shares; (11) expenses of
maintaining the Trust's legal existence and of shareholders' meetings; (12)
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses; and (13) fees and expenses of membership in industry
organizations.

The Fund is subject to a one-year contractual expense limit at the rate of 1.25%
of the Fund's average daily net assets, excluding any 12b-1 Plan fees and
securities loan fees and dividend expenses for securities sold short ("Equity
Alpha Total Expense Limit"). The contractual fee waiver and/or expense
reimbursement agreement will remain in place until June 30, 2007. Thereafter,
the Equity Alpha Total Expense Limit will be reviewed each year, at which time
the continuation of the Equity Alpha Total Expense Limit will be considered by
the Advisor and the Board of Trustees. The contractual fee waiver agreement also
provides that the Advisor is entitled to reimbursement of fees it waived and/or
expenses it reimbursed for a period of three years following such fee waivers
and expense reimbursements, provided that the reimbursement by the Fund of the
Advisor will not cause the Equity Alpha Total Expense Limit to exceed the
contractual limit as then may be in effect for the Fund.

General expenses of the Trust (such as costs of maintaining corporate existence,
legal fees, insurance, etc.) will be allocated among the Fund and the other
series of the Trust in proportion to their relative net assets. Expenses which
relate exclusively to the Fund, such as certain registration fees, brokerage
commissions and other portfolio expenses, will be borne directly by the Fund.

Portfolio Managers. UBS Global AM (Americas)'s investment professionals are
organized into investment management teams, with a particular team dedicated to
a specific asset class. John Leonard, Thomas M. Cole, Thomas Digenan, Scott
Hazen and Scott Bondurant are the members of the North American Equities
investment management team primarily responsible for the day-to-day management
of the Fund. (the "Portfolio Managers").

The following table provides information relating to other accounts managed by
the Portfolio Managers listed above as of March 31, 2006:

Registered Other Pooled
Investment Investment Other
Companies Vehicles Accounts
John C. Leonard

Number of Accounts Managed 12 60 17

Number of Accounts Managed
with
Performance-Based Advisory Fees None 3 1

Registered Other Pooled
Investment Investment Other
Companies Vehicles Accounts

Assets Managed (in millions) $2,346 $15,460 $3,077

Assets Managed with
Performance-Based
Advisory Fees (in millions) None $1,972 $248

Thomas M. Cole

Number of Accounts Managed 12 60 20

Number of Accounts Managed
with
Performance-Based Advisory Fees None 3 1

Assets Managed (in millions) $2,346 $15,460 $3,077

Assets Managed with
Performance-Based
Advisory Fees (in millions) None $1,972 $248

Thomas Digenan

Number of Accounts Managed 12 60 23

Number of Accounts Managed
with
Performance-Based Advisory Fees None 3 1

Assets Managed (in millions) $2,346 $15,460 $3,076

Assets Managed with
Performance-Based
Advisory Fees (in millions) None $1,972 $248

Registered Other Pooled
Investment Investment Other
Companies Vehicles Accounts

Scott Hazen

Number of Accounts Managed 12 60 13

Number of Accounts Managed
with
Performance-Based Advisory Fees None 3 1

Assets Managed (in millions) $2,346 $15,460 $3,075

Assets Managed with
Performance-Based
Advisory Fees (in millions) None $1,972 $248

Scott Bondurant

Number of Accounts Managed 1 None 8

Number of Accounts Managed
with Performance-Based
Advisory Fees None None None

Assets Managed (in millions) $362 None $1.0

Assets Managed with
Performance-Based
Advisory Fees (in millions) None None None

The portfolio management team's management of the Fund and other accounts could
result in potential conflicts of interest if the Fund and other accounts have
different objectives, benchmarks and fees because the portfolio management team
must allocate its time and investment expertise across multiple accounts,
including the Fund. The Portfolio Managers and their team manage the Fund and
other accounts utilizing a model portfolio approach that groups similar accounts
within a model portfolio. The Advisor manages accounts according to the
appropriate model portfolio, including where possible, those accounts that have
specific investment restrictions. Accordingly, portfolio holdings, position
sizes, and industry and sector exposures tend to be similar across accounts,
which may minimize the potential for conflicts of interest.

If a portfolio manager identifies a limited investment opportunity that may be
suitable for more than one account or model portfolio, the Fund may not be able
to take full advantage of that opportunity due to an allocation of filled
purchase or sale orders across all eligible model portfolios and accounts. To
deal with these situations, the Advisor has adopted procedures for allocating
portfolio trades across multiple accounts to provide fair treatment to all
accounts.

The management of personal accounts by a portfolio manager may also give rise to
potential conflicts of interest. The Advisor and the Trust have adopted Codes of
Ethics that govern such personal trading but there is no assurance that the
Codes will adequately address all such conflicts.

The compensation received by the portfolio managers at UBS Global AM (Americas),
includes a base salary and incentive compensation as detailed below. UBS Global
Asset Management's compensation and benefits programs are designed to provide
its investment professionals with incentives to excel, and to promote an
entrepreneurial, performance-oriented culture. They also align the interests of
the investment professionals with the interests of UBS Global Asset Management's
clients. Overall compensation can be grouped into three categories:

o Competitive salary, benchmarked to maintain competitive compensation
opportunities.

o Annual bonus, tied to individual contributions and investment
performance.

o UBS equity awards, promoting company-wide success and employee
retention.

Base salary is fixed compensation used to recognize the experience, skills and
knowledge that the investment professionals bring to their roles. Salary levels
are monitored and adjusted periodically in order to remain competitive within
the investment management industry.

Annual bonuses are correlated with performance. As such, annual incentives can
be highly variable, and are based on three components: 1) the firm's overall
business success; 2) the performance of the respective asset class and/or
investment mandate; and 3) an individual's specific contribution to the firm's
results. UBS Global Asset Management strongly believes that tying bonuses to
both long-term (3-year) and shorter-term (1-year) portfolio pre-tax performance
closely aligns the investment professionals' interests with those of UBS Global
Asset Management's clients. Each portfolio manager's bonus is based on the
performance of each Fund the portfolio manager manages as compared to the Fund's
broad-based index over a three-year rolling period.

UBS AG Equity. Senior investment professionals may receive a portion of their
annual performance-based incentive in the form of deferred or restricted UBS AG
shares or employee stock options. UBS Global Asset Management believes that this
reinforces the critical importance of creating long-term business value and also
serves as an effective retention tool as the equity shares typically vest over a
number of years.

Broader equity share ownership is encouraged for all employees through "Equity
Plus." This long-term incentive program gives employees the opportunity to
purchase UBS stock with after-

tax funds from their bonus and/or salary. Two UBS stock options are given for
each share acquired and held for two years. UBS Global Asset Management feels
this engages its employees as partners in the firm's success, and helps to
maximize its integrated business strategy.

As of the date of this SAI, the Portfolio Managers identified above owned no
shares of the Fund because the Fund has not yet been publicly offered.

Administrative, Accounting and Custody Services

Administrative and Accounting Services. UBS Global AM (Americas), with its
principal office located at One North Wacker Drive, Chicago, Illinois 60606,
serves as the Fund's administrator. The Administrator is an indirect wholly
owned asset management subsidiary of UBS.

As administrator, the Administrator supervises and manages all aspects (other
than investment advisory activities) of the Fund's operations. Under the
Administration Contract, the Administrator will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund, the Trust or
any of its shareholders in connection with the performance of the Administration
Contract, except to the extent that such a loss results from negligence, willful
misfeasance, bad faith or gross negligence on the part of the Administrator in
the performance of its duties or from reckless disregard of its duties and
obligations thereunder. The Administration Contract is terminable at any time
without penalty by the Board or by vote of the holders of a majority of the
Fund's outstanding voting securities, on 60 days' written notice to the
Administrator, or by the Administrator on 60 days' written notice to the Trust.
The Fund pays a fee to the Administrator that is computed daily and paid monthly
at an annual rate of 0.075% of average daily net assets of the Fund.

J.P. Morgan Investors Services Co. ("J.P. Morgan") provides accounting,
portfolio valuation and certain administrative services for the Fund under a
Multiple Services Agreement between the Trust and JPMorgan Chase Bank ("JPMorgan
Chase Bank"). J.P. Morgan is located at 73 Tremont Street, Boston, Massachusetts
02108-3913 and is a corporate affiliate of JPMorgan Chase.

Custody Services. JPMorgan Chase Bank, located at 270 Park Avenue, New York, New
York 10017, provides custodian services for the securities and cash of the Fund.
The custody fee schedule is based primarily on the net amount of assets held
during the period for which payment is being made plus a per transaction fee for
transactions during the period. JPMorgan Chase Bank utilizes foreign
sub-custodians under procedures approved by the Board in accordance with
applicable legal requirements.

Principal Underwriting Arrangements

UBS Global AM (US) (the "Underwriter"), with its principal office located at 51
West 52nd Street, New York, New York 10019-6114, acts as the principal
underwriter of each class of shares of the Fund pursuant to a Principal
Underwriting Contract with the Trust. The Principal Underwriting Contract
requires the Underwriter to use its best efforts, consistent with its other
businesses, to sell shares of the Fund. Shares of the Fund are offered
continuously. The

Underwriter enters into dealer agreements with other broker-dealers (affiliated
and non-affiliated) and with other financial institutions to authorize them to
sell Fund shares.

Under separate plans pertaining to the Class A and Class C shares of the Fund
adopted by the Trust in the manner prescribed under Rule 12b-1 under the Act
(each, respectively, a "Class A Plan" and "Class C Plan," and collectively,
"Plans"), the Fund pays the Underwriter a service fee, accrued daily and payable
monthly, at the annual rate of 0.25% of the average daily net assets of each
class of shares. Under the Class C Plan, the Fund pays the Underwriter a
distribution fee, accrued daily and payable monthly, at the annual rate of 0.75%
of the average daily net assets of the class of shares. There is no distribution
plan with respect to the Fund's Class Y shares and the Fund pays no service or
distribution fees with respect to its Class Y shares.

The Underwriter uses the service fees under the Plans for Class A and Class C
shares primarily to pay dealers for shareholder servicing, currently at the
annual rate of 0.25% of the aggregate investment amounts maintained in the Fund
by each dealer. Each dealer then compensates its investment professionals for
shareholder servicing that they perform and offsets its own expenses in
servicing and maintaining shareholder accounts including related overhead
expenses.

The Underwriter uses the distribution fees under the Class C Plans to offset the
commissions it pays to dealers for selling the Fund's Class C shares, and to
offset the Fund's marketing costs attributable to such Class, such as the
preparation, printing and distribution of sales literature, advertising and
prospectuses and other shareholder materials to prospective investors. The
Underwriter may also use distribution fees to pay additional compensation to
dealers and to offset other costs allocated to the Underwriter's distribution
activities.

The Underwriter receives the proceeds of the initial sales charge paid when
Class A shares are bought and of the contingent deferred sales charge paid upon
sales of shares. These proceeds also may be used to cover distribution expenses.

UBS Global AM (US) may also make cash and non-cash payments to banks,
broker-dealers, insurance companies, financial planning firms and other
financial intermediaries (collectively, "Financial Intermediaries"), subject to
UBS Global AM (US)'s internal policies and procedures. UBS Global AM (US)
provides Financial Intermediaries with sales literature and advertising
materials relating to the registered investment companies advised by UBS Global
AM (US). UBS Global AM (US) also shares expenses with Financial Intermediaries
for costs incurred in hosting seminars for employees and clients of Financial
Intermediaries, subject to UBS Global AM (US)'s internal policies and procedures
governing payments for such seminars. These seminars may take place at UBS
Global AM (US)'s headquarters or other appropriate locations and may include
reimbursement of travel expenses (i.e., transportation, lodging and meals) of
employees of Financial Intermediaries in connection with training and education
seminars. Subject to UBS Global AM (US)'s internal policies and procedures, UBS
Global AM (US) may provide any or all of the following to employees of Financial
Intermediaries and their guest(s): (i) an occasional meal, a sporting event or
theater ticket or other comparable entertainment; (ii) gifts of less than $100
per person per year; and/or (iii) UBS Global AM (US)'s promotional items of
nominal value (golf balls, shirts, etc.). In addition, Financial Intermediaries
may have omnibus accounts and similar arrangements with UBS Global AM (US) and
may be paid by

UBS Global AM (US) for providing sub-transfer agency and other services. Such
expenses paid by UBS Global AM (US) are included in the annual operating
expenses set forth in the Fund's prospectuses.

The Plans and the Principal Underwriting Contract specify that the Fund must pay
service and distribution fees to the Underwriter as compensation for its service
and distribution related activities, not as reimbursement for specific expenses
incurred. Therefore, even if the Underwriter's expenses for the Fund exceed the
service or distribution fees it receives, the Fund will not be obligated to pay
more than those fees. On the other hand, if the Underwriter's expenses are less
than such fees, it will retain its full fees and realize a profit. Expenses in
excess of service and distribution fees received or accrued through the
termination date of any Plan will be the Underwriter's sole responsibility and
not that of the Fund. Annually, the Board reviews the Plans and the
Underwriter's corresponding expenses for each class of shares of the Fund
separately from the Plans and expenses of the other classes of shares.

Among other things, each Plan provides that (1) the Underwriter will submit to
the Board at least quarterly, and the Board members will review, reports
regarding all amounts expended under the Plan and the purposes for which such
expenditures were made, (2) the Plan will continue in effect only so long as it
is approved at least annually, and any material amendment thereto is approved,
by the Board, including those Board members who are not "interested persons" of
the Trust and who have no direct or indirect financial interest in the operation
of the Plan or any agreement related to the Plan, acting in person at a meeting
called for that purpose, (3) payments by the Fund under the Plan shall not be
materially increased without the approval by a majority of the outstanding
voting securities of the relevant class of the Fund, and (4) while the Plan
remains in effect, the selection and nomination of Board members who are not
"interested persons" of the Trust shall be committed to the discretion of the
Board members who are not "interested persons" of the Trust.

In reporting amounts expended under the Plans to the Board members, the
Underwriter allocates expenses attributable to the sale of each class of the
Fund's shares to such class based on the ratio of sales of shares of such class
to the sales of all three classes of shares. The fees paid by one class of the
Fund's shares will not be used to subsidize the sale of any other class of the
Fund's shares.

In approving the Class A Plan and the Class C Plan, the Board considered all the
features of the distribution system and the anticipated benefits to the Fund and
its shareholders. With regard to each Plan, the Board considered (1) the
advantages to the shareholders of economies of scale resulting from growth in
the Fund's assets and potential continued growth, (2) the services provided to
the Fund and its shareholders by the Underwriter, (3) the services provided by
dealers pursuant to each dealer agreement with the Underwriter, and (4) the
Underwriter shareholder service-related and, where applicable,
distribution-related expenses and costs.

With respect to each Plan, the Board considered all compensation that the
Underwriter would receive under the Plan and the Principal Underwriting
Contract, including service fees and, as applicable, initial sales charges,
distribution fees and contingent deferred sales charges. The Board also
considered the benefits that would accrue to the Underwriter under each Plan in
that the Underwriter would receive service, distribution, advisory and
administrative fees that are

calculated based upon a percentage of the average net assets of the Fund which
fees would increase if the Plans were successful and the Fund attained and
maintained significant asset levels.

Transfer Agency Services

PFPC Inc. ("PFPC"), a subsidiary of PNC Bank, N.A., serves as the Trust's
transfer and dividend disbursing agent. It is located at 760 Moore Road, King of
Prussia, Pennsylvania 19406.

Independent Registered Public Accounting Firm

Ernst & Young LLP, 5 Times Square, New York, New York 10036, is the independent
registered public accounting firm of the Trust.

Legal Counsel

Stradley, Ronon, Stevens & Young, LLP, Philadelphia, Pennsylvania, is legal
counsel to the Trust and the Independent Trustees.

Personal Trading Policies

The Trust, the Advisor and the Underwriter have adopted a Code of Ethics. The
Code of Ethics establishes standards by which employees of UBS Global Asset
Management (including all employees of the Advisor and Underwriter) (together,
"Covered Persons") must abide when engaging in personal securities trading
conduct.

Under the Code of Ethics, Covered Persons are prohibited from: (i) knowingly
buying, selling or transferring any security (subject to narrow exceptions)
within five calendar days before or after that same security, or an equivalent
security, is purchased or sold by the Fund; (ii) entering into a net short
position with respect to any security that is held by the Fund; (iii) purchasing
or selling futures (except currency forwards) that are not traded on an
exchange, as well as options on any type of futures; (iv) purchasing securities
issued by a supplier or vendor about which the Covered Person has information or
with whom the Covered Person is directly involved in negotiating a contract; and
(v) acquiring securities in an initial public offering (other than a new
offering of a registered open-end investment company).

In addition, Covered Persons must obtain prior written approval before
purchasing, selling or transferring any security subject to certain exceptions
listed in the Code of Ethics. Covered Persons and Trustees are required to file
the following reports: (1) an initial holdings report disclosing all securities
owned by the Covered Person or Interested Trustee and any securities accounts
maintained by the Covered Person or Interested Trustee, which must be filed
within ten days of becoming a Covered Person or Interested Trustee (Independent
Trustees are not required to file this report); and (2) quarterly reports of
security investment transactions and new securities accounts. Independent
Trustees need only report a transaction in a security if such Trustee, at the
time of the transaction, knew or should have known, in the ordinary course of
fulfilling his official duties as a Trustee, that, during the 15-day period
immediately preceding or

after the date of the transaction by the Trustee, such security was purchased or
sold by the Fund, or was being considered for purchase or sale by the Fund.

A copy of the Code of Ethics has been filed with and is available through the
SEC.

Proxy Voting Policies

The Board of Trustees believes that the voting of proxies on securities held by
the Fund is an important element of the overall investment process. As such, the
Board has delegated the responsibility to vote such proxies to UBS Global AM
(Americas). Following is a summary of UBS Global AM (Americas)'s proxy voting
policy.

You may obtain information about the Fund's proxy voting decisions, without
charge, online on the Trust's Web Site (www.ubs.com/ubsglobalam-proxy) or the
EDGAR database on the SEC's Web Site (www.sec.gov).

The proxy voting policy of UBS Global AM (Americas) is based on its belief that
voting rights have economic value and must be treated accordingly. Generally,
UBS Global AM (Americas) expects the boards of directors of companies issuing
securities held by its clients to act as stewards of the financial assets of the
company, to exercise good judgment and practice diligent oversight with the
management of the company. While there is no absolute set of rules that
determine appropriate corporate governance under all circumstances and no set of
rules will guarantee ethical behavior, there are certain benchmarks, which, if
substantial progress is made toward, give evidence of good corporate governance.
UBS Global AM (Americas) may delegate to an independent proxy voting and
research service the authority to exercise the voting rights associated with
certain client holdings. Any such delegation shall be made with the direction
that the votes be exercised in accordance with UBS Global AM (Americas)'s proxy
voting policy.

When UBS Global AM (Americas)'s view of a company's management is favorable, UBS
Global AM (Americas) generally supports current management initiatives. When UBS
Global AM (Americas)'s view is that changes to the management structure would
probably increase shareholder value, UBS Global AM (Americas) may not support
existing management proposals. In general, UBS Global AM (Americas): (1) opposes
proposals which act to entrench management; (2) believes that boards should be
independent of company management and composed of persons with requisite skills,
knowledge and experience; (3) opposes structures which impose financial
constraints on changes in control; (4) believes remuneration should be
commensurate with responsibilities and performance; and (5) believes that
appropriate steps should be taken to ensure the independence of the registered
public accounting firm.

UBS Global AM (Americas) has implemented procedures designed to identify whether
it has a conflict of interest in voting a particular proxy proposal, which may
arise as a result of its or its affiliates' client relationships, marketing
efforts or banking, investment banking and broker/dealer activities. To address
such conflicts, UBS Global AM (Americas) has imposed information barriers
between it and its affiliates who conduct banking, investment banking and
broker/dealer activities and has implemented procedures to prevent business,
sales and marketing issues from influencing its proxy votes. Whenever UBS Global
AM (Americas) is aware of a

conflict with respect to a particular proxy, its appropriate local corporate
governance committee is required to review and agree to the manner in which such
proxy is voted.

Portfolio Holdings Disclosure Policies and Procedures

Introduction. UBS Global AM (Americas) and the Trust's Board of Trustees have
adopted portfolio holdings disclosure policies and procedures to govern the
disclosure of the portfolio holdings of the Fund (the "Disclosure Policy"). The
Trust's policy with respect to the release of portfolio holdings is to only
release such information consistent with applicable legal requirements and the
fiduciary duties owed to shareholders. Subject to the limited exceptions
described below, the Fund's portfolio holdings will not be made available to
anyone outside of UBS Global AM (Americas) unless and until the information has
been made available to all shareholders or the general public in a manner
consistent with the spirit and terms of the Disclosure Policy. A description of
the type and frequency of portfolio holdings that are disclosed to the public is
contained in the Fund's Prospectus.

The Disclosure Policy requires that the UBS Global AM (Americas) Legal and
Compliance Departments address any material conflicts of interest regarding a
disclosure of portfolio holdings and determine whether a disclosure of the
Fund's portfolio holdings is for a legitimate business purpose and in the best
interest of the Fund's shareholders prior to the Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary of the Trust or an attorney in the UBS Global
AM (Americas) Legal and Compliance Departments authorizing the disclosure of
portfolio holdings. The UBS Global AM (Americas) Legal and Compliance
Departments will periodically review how the Fund's portfolio holdings are being
disclosed to and used by, if at all, service providers, UBS Global AM (Americas)
affiliates, fiduciaries, and broker-dealers, to ensure that such use is for
legitimate business reasons and in the best interests of the Fund's
shareholders.

The Trust's Board of Trustees exercises continuing oversight of the disclosure
of Fund portfolio holdings by: (i) overseeing the implementation and enforcement
by the Chief Compliance Officer of the Trust of the Disclosure Policy, the
Trust's code of ethics and policies and procedures regarding the misuse of
inside information; (ii) considering reports and recommendations by the Chief
Compliance Officer concerning any material compliance matters (as defined in
Rule 38a-1 under the Act and Rule 206(4)-7 under the Investment Advisers Act of
1940) that may arise in connection with any policies governing portfolio
holdings; and (iii) considering whether to approve or ratify any amendment to
any policies governing portfolio holdings. The Disclosure Policy may be amended
from time to time, subject to approval by the Board of Trustees.

Disclosure of Complete Portfolio Holdings to Service Providers Subject to
Confidentiality and Trading Restrictions. UBS Global AM (Americas), for
legitimate fund business purposes, may disclose the Fund's complete portfolio
holdings if it deems such disclosure necessary and appropriate to rating and
ranking organizations, financial printers, proxy voting service providers,
pricing information vendors, third-parties that deliver analytical, statistical
or consulting services, custodians or a redeeming party's custodian or transfer
agent, as necessary in connection with redemptions in kind, and other third
parties that provide services (collectively, "Service Providers") to UBS Global
AM (Americas) and/or the Fund.

Disclosure of complete portfolio holdings to a Service Provider is conditioned
on the Service Provider being subject to a written duty of confidentiality,
including a duty not to trade on the basis of any material non-public
information, pursuant to the terms of the service agreement between the Service
Provider and the Trust or UBS Global AM (Americas), or the terms of a separate
confidentiality agreement. The frequency with which complete portfolio holdings
may be disclosed to a Service Provider, and the length of lag, if any, between
the date of information and the date on which the information is disclosed to
the Service Provider, is to be determined based on the facts and circumstances,
including, without limitation, the nature of the portfolio holdings information
to be disclosed, the risk of harm to the Fund's shareholders, and the legitimate
fund business purposes served by such disclosure. Disclosure of Fund complete
portfolio holdings to a Service Provider must be authorized in writing by the
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the Trust or
by an attorney in the UBS Global AM (Americas) Legal Department and such
authorization must be documented and retained in accordance with the UBS Global
AM (Americas) Record Keeping Procedures.

Disclosure of Complete Portfolio Holdings to UBS Global Asset Management
Affiliates and Certain Fiduciaries Subject to Confidentiality and Trading
Restrictions. The Fund's complete portfolio holdings may be disclosed between
and among the following persons (collectively, "Affiliates and Fiduciaries"),
subject to authorization by the Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary of the Trust, or an attorney in the UBS Global AM (Americas)
Legal and Compliance Departments, for legitimate fund business purposes within
the scope of their official duties and responsibilities, and subject to such
Affiliate/Fiduciary's continuing duty of confidentiality and duty not to trade
on the basis of any material non-public information, as such duties are imposed
under the Trust's and/or UBS Global AM (Americas)'s Code of Ethics, the Fund's
policies and procedures regarding the prevention of the misuse of inside
information, by agreement or under applicable laws, rules and regulations: (i)
persons who are subject to the UBS Global AM (Americas)'s Codes of Ethics or the
policies and procedures regarding the prevention of the misuse of inside
information; (ii) an investment adviser, distributor, administrator,
sub-administrator, transfer agent, custodian or securities lending agent to the
Fund; (iii) an accounting firm, an auditing firm or outside legal counsel
retained by UBS Global AM (Americas) or the Fund; (iv) an investment adviser to
whom complete portfolio holdings are disclosed for due diligence purposes when
the adviser is in merger or acquisition talks with the Fund's current adviser;
and (v) a newly hired investment adviser or sub-adviser to whom complete
portfolio holdings are disclosed prior to the time it commences its duties.

The frequency with which complete portfolio holdings may be disclosed
between and among Affiliates and Fiduciaries, and the length of the lag, if any,
between the date of the information and the date on which the information is
disclosed between and among the Affiliates and Fiduciaries, is to be determined
by the UBS Global AM (Americas) Legal and Compliance Departments based on the
facts and circumstances, including, without limitation, the nature of the
portfolio holdings information to be disclosed, and the risk of harm to the Fund
and its shareholders, and the legitimate fund business purposes served by such
disclosure.

Arrangements to Disclose Portfolio Holdings to Service Providers and
Fiduciaries. As of the date of this SAI, the specific Service Providers and
Fiduciaries with whom the Trust has

arrangements to provide portfolio holdings in advance of their release to the
general public in the course of performing or to enable them to perform services
for the Fund are:

o JP Morgan Chase Bank, the Fund's Custodian, receives portfolio
holdings information daily on a real-time basis.

o Thomson Corporation receives portfolio holdings information so that it
may assist the Fund in production of its quarterly fact sheet on a
quarterly basis. The portfolio holdings information is provided with a
one-day lag between the date of the portfolio holdings information and
the date on which the information is disclosed to Thomson Corporation.

o Ernst & Young LLP, the Fund's independent registered public accounting
firm, receives portfolio holdings information on an annual and
semiannual basis for reporting purposes. There is a 30-day lag between
the date of portfolio holdings information and the date on which the
information is disclosed to Ernst & Young. Ernst & Young also receives
portfolio holdings information annually at year-end for audit
purposes. In this case, there is no lag between the date of the
portfolio holdings information and the date on which the information
is disclosed to Ernst & Young.

o The rating agencies of Morningstar, Standard & Poor's and Lipper
receive portfolio holdings information on a monthly basis so that the
Fund may be included in each rating agency's industry reports and
other materials. There is a 30-day lag between the date of the
portfolio holdings information and the date on which the information
is disclosed to the rating agencies.

Disclosure of Portfolio Holdings to Broker-Dealers in the Normal Course of
Managing Fund Assets. An investment adviser, administrator or custodian for the
Fund may, for legitimate fund business purposes within the scope of their
official duties and responsibilities, disclose portfolio holdings (whether
partial portfolio holdings or complete portfolio holdings) and other investment
positions comprising the Fund to one or more broker-dealers during the course
of, or in connection with, normal day-to-day securities and derivatives
transactions with or through such broker-dealers subject to the broker-dealer's
legal obligation not to use or disclose material non-public information
concerning the Fund's portfolio holdings, other investment positions, securities
transactions or derivatives transactions without the consent of the Trust or the
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the Trust or
an attorney in the UBS Global AM (Americas) Legal and Compliance Departments (an
"Approved Representative"). The Trust has not given its consent to any such use
or disclosure and no person or Approved Representative of UBS Global AM
(Americas) is authorized to give such consent except as approved by the Trust's
Board of Trustees. In the event consent is given to disclose portfolio holdings
to a broker-dealer, the frequency with which the portfolio holdings may be
disclosed to a broker-dealer, and the length of the lag, if any, between the
date of the information and the date on which the information is disclosed to
the broker-dealer, is to be determined based on the facts and circumstances,
including, without limitation, the nature of the portfolio holdings information
to be disclosed, and the risk of harm to the Fund and its shareholders, and the
legitimate fund business purposes served by such disclosure.

Disclosure of Non-Material Information. Policies and procedures regarding
disclosure of non-material information permit the officers of the Trust, UBS
Global Asset Management Fund portfolio managers and senior officers of UBS
Global AM (Americas) Finance, UBS Global AM (Americas) Legal and Compliance
Departments, and anyone employed by or associated with UBS Global AM (Americas)
who has been authorized by the UBS Global AM (Americas) Legal Department
(collectively, "Approved Representatives") to disclose any views, opinions,
judgments, advice or commentary, or any analytical, statistical, performance or
other information, in connection with or relating to the Fund or its portfolio
holdings and/or other investment positions (collectively, commentary and
analysis) or any changes in the portfolio holdings of the Fund that occurred
after the most recent calendar-quarter end (recent portfolio changes) to any
person if such information does not constitute material non-public information.

An Approved Representative must make a good faith determination whether the
information constitutes material non-public information, which involves an
assessment of the particular facts and circumstances. UBS Global AM (Americas)
believes that in most cases recent portfolio changes that involve a few or even
several securities in a diversified portfolio or commentary and analysis would
be immaterial and would not convey any advantage to a recipient in making an
investment decision concerning the Fund. Nonexclusive examples of commentary and
analysis include: (i) the allocation of the Fund's portfolio holdings and other
investment positions among various asset classes, sectors, industries and
countries; (ii) the characteristics of the stock and bond components of the
Fund's portfolio holdings and other investment positions; (iii) the attribution
of Fund returns by asset class, sector, industry and country; and (iv) the
volatility characteristics of the Fund. An Approved Representative may in his or
her sole discretion determine whether to deny any request for information made
by any person, and may do so for any reason or no reason. Any authorization by
an Approved Representative must be documented and retained in accordance with
UBS Global AM (Americas) Record Keeping Procedures.

Disclosure of Portfolio Holdings As Required by Applicable Law. Fund
portfolio holdings and other investment positions comprising the Fund may be
disclosed to any person as required by applicable laws, rules and regulations.
Examples of such required disclosure include, but are not limited to, disclosure
of Fund portfolio holdings: (i) in a filing or submission with the SEC or
another regulatory body; (ii) in connection with seeking recovery on defaulted
bonds in a federal bankruptcy case; (iii) in connection with a lawsuit; or (iv)
as required by court order, subpoena or similar process (e.g., arbitration
proceedings).

Prohibitions on Disclosure of Portfolio Holdings. No person is authorized
to disclose Fund portfolio holdings or other investment positions (whether
online at www.ubs.com, in writing, by fax, by e-mail, orally or by other means)
except in accordance with the Disclosure Policy. In addition, no person is
authorized to make disclosure pursuant to the Disclosure Policy if such
disclosure would be unlawful under the antifraud provisions of the federal
securities laws (as defined in Rule 38a-1 under the Act). Furthermore, UBS
Global AM (Americas), in its sole discretion, may determine not to disclose
portfolio holdings or other investment positions comprising the Fund to any
person who might otherwise be eligible to receive such information under the
Disclosure Policy, or may determine to make such disclosures publicly as
described above.

Prohibitions on Receipt of Compensation or Other Consideration. Neither UBS
Global AM (Americas), the Fund nor any other person may pay or receive any
compensation or other consideration of any type for the purpose of obtaining
disclosure of Fund portfolio holdings or other investment positions.
"Consideration" includes any agreement to maintain assets in the Fund or in
other investment companies or accounts managed by the investment adviser or by
any affiliated person of the investment adviser.

Bank Line of Credit

The Fund participates with other funds managed by the Advisor in a $50 million
committed credit facility with JPMorgan Chase Bank, to be utilized for temporary
financing until the settlement of sales or purchases of portfolio securities,
the repurchase or redemption of shares at the request of shareholders and other
temporary or emergency purposes. Under the credit facility arrangement, the Fund
has agreed to pay a commitment fee, pro rata, based on the relative asset size
of the funds participating in the credit facility. Interest is charged to each
fund at rates based on prevailing market rates at the time of borrowings.

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

The Advisor is responsible for decisions to buy and sell securities for the Fund
and for the placement of the Fund's portfolio business and the negotiation of
commissions, if any, paid on such transactions. Fixed income securities in which
the Fund invests are traded in the over-the-counter market. These securities are
generally traded on a net basis with dealers acting as principal for their own
accounts without a stated commission, although the bid/ask spread quoted on
securities includes an implicit profit to the dealers. In over-the-counter
transactions, orders are placed directly with a principal market-maker unless a
better price and execution can be obtained by using a broker. Brokerage
commissions are paid on transactions in listed securities, futures contracts and
options thereon. The Advisor is responsible for effecting portfolio transactions
and will do so in a manner deemed fair and reasonable to the Fund. Under its
advisory agreements with the Fund, the Advisor is authorized to utilize the
trading desk of its foreign affiliates to execute foreign securities
transactions, but monitors the selection by such affiliates of brokers and
dealers used to execute transactions for the Fund.

The primary consideration in all portfolio transactions will be prompt execution
of orders in an efficient manner at the most favorable price. However, subject
to policies established by the Board of the Trust, the Fund may pay a
broker-dealer a commission for effecting a portfolio transaction for the Fund in
excess of the amount of commission another broker-dealer would have charged if
the Advisor determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such broker-dealer,
viewed in terms of that particular transaction or such firm's overall
responsibilities with respect to the clients, including the Fund, as to which
the Advisor exercises investment discretion. In selecting and monitoring
broker-dealers and negotiating commissions, the Advisor considers the firm's
reliability, the quality of its execution services on a continuing basis and its
financial condition. When more than one firm is believed to meet these criteria,
preference may be given to brokers who provide research or statistical material
or other services to the Fund or to the Advisor. Such services include advice,
both directly and in writing, as to the value of the securities; the
advisability of investing in, purchasing or selling securities; and the
availability of securities, or

purchasers or sellers of securities, as well as analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. This allows the Advisor to supplement its own
investment research activities and obtain the views and information of others
prior to making investment decisions. The Advisor is of the opinion that,
because this material must be analyzed and reviewed by its staff, the receipt
and use of such material does not tend to reduce expenses but may benefit the
Fund by supplementing the Advisor's research.

The Advisor effects portfolio transactions for other investment companies and
advisory accounts. Research services furnished by dealers through whom the Fund
effects its securities transactions may be used by the Advisor, or its
affiliated investment advisers, in servicing all of their accounts; not all such
services may be used in connection with the Fund. In the opinion of the Advisor,
it is not possible to measure separately the benefits from research services to
each of the accounts (including the Fund). The Advisor will attempt to equitably
allocate portfolio transactions among the Fund and others whenever concurrent
decisions are made to purchase or sell securities by the Fund and another. In
making such allocations between the Fund and others, the main factors to be
considered are the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held and the
opinions of the persons responsible for recommending investments to the Fund and
the others. In some cases, this procedure could have an adverse effect on the
Fund. In the opinion of the Advisor, however, the results of such procedures
will, on the whole, be in the best interest of each of the clients.

When buying or selling securities, the Fund may pay commissions to brokers who
are affiliated with the Advisor or the Fund. The Fund may purchase securities in
certain underwritten offerings for which an affiliate of the Fund or the Advisor
may act as an underwriter. The Fund may effect futures transactions through, and
pay commissions to, futures commission merchants who are affiliated with the
Advisor or the Fund in accordance with procedures adopted by the Board.

The Fund maintains a commission recapture program with certain brokers for the
Fund. Under the program, a percentage of commissions generated by portfolio
transactions for the Fund is rebated to the Fund by the brokers.

Portfolio Turnover

The Fund is free to dispose of its portfolio securities at any time, subject to
complying with the Code and the Act, when changes in circumstances or conditions
make such a move desirable in light of the Fund's investment objective. The Fund
will not attempt to achieve or be limited to a predetermined rate of portfolio
turnover, such a turnover always being incidental to transactions undertaken
with a view to achieving that Fund's investment objective.

The Fund does not intend to use short-term trading as a primary means of
achieving its investment objective. The rate of portfolio turnover shall be
calculated by dividing (a) the lesser of purchases and sales of portfolio
securities for the particular fiscal year by (b) the monthly average of the
value of the portfolio securities owned by the Fund during the particular fiscal
year. Such monthly average shall be calculated by totaling the values of the
portfolio securities

as of the beginning and end of the first month of the particular fiscal year and
as of the end of each of the succeeding eleven months and dividing the sum by
13.

The portfolio turnover rate for the Fund may exceed 100%. A high portfolio
turnover rate (over 100%) may involve correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Fund and ultimately by the Fund's shareholders. In addition, high portfolio
turnover may result in increased short-term capital gains, which, when
distributed to shareholders, are treated as ordinary income.

SHARES OF BENEFICIAL INTEREST

The Trust currently offers three classes of shares for the Fund: the UBS U.S.
Equity Alpha Fund-Class A (the Class A shares), the UBS U.S. Equity Alpha
Fund-Class C (the Class C shares) and the UBS U.S. Equity Alpha Fund-Class Y
(the Class Y shares). The Fund is authorized to issue an unlimited number of
shares of beneficial interest with a $0.001 par value per share. Each share of
beneficial interest represents an equal proportionate interest in the assets and
liabilities of the Fund and has identical voting, dividend, redemption,
liquidation, and other rights and preferences as the other class of the Fund,
except that only the Class A shares may vote on any matter affecting the Class A
Plan. Similarly, only Class C shares may vote on matters that affect only the
Class C Plan. No class may vote on matters that affect only another class. Under
Delaware law, the Trust does not normally hold annual meetings of shareholders.
Shareholders' meetings may be held from time to time to consider certain
matters, including changes to the Fund's fundamental investment objective and
fundamental investment policies, changes to the Fund's investment advisory
agreement and the election of Trustees when required by the Act. When matters
are submitted to shareholders for a vote, shareholders are entitled to one vote
per share with proportionate voting for fractional shares. The shares of the
Fund do not have cumulative voting rights or any preemptive or conversion
rights, and the Trustees have authority, from time to time, to divide or combine
the shares of the Fund into a greater or lesser number of shares so affected. In
the case of a liquidation of the Fund, each shareholder of the Fund will be
entitled to share, based upon the shareholder's percentage share ownership, in
the distribution out of assets, net of liabilities, of the Fund. No shareholder
is liable for further calls or assessment by the Fund.

On any matters affecting only one series or class, only the shareholders of that
series or class are entitled to vote. On matters relating to the Trust but
affecting the series of the Trust differently, separate votes by the affected
series or classes are required. With respect to the submission to shareholder
vote of a matter requiring separate voting by series or class, the matter shall
have been effectively acted upon with respect to any series or class if a
majority of the outstanding voting securities of that series or class votes for
the approval of the matter, notwithstanding that: (1) the matter has not been
approved by a majority of the outstanding voting securities of any other series
or class; and (2) the matter has not been approved by a majority of the
outstanding voting securities of the Trust.

The Trustees of the Trust do not intend to hold annual meetings of shareholders
of the Fund. The SEC, however, requires the Trustees to promptly call a meeting
for the purpose of voting upon the question of removal of any Trustee when
requested to do so by not less than 10% of the outstanding shareholders of the
Fund. In addition, subject to certain conditions, shareholders of

the Fund may apply to the Fund to communicate with other shareholders to request
a shareholders' meeting to vote upon the removal of a Trustee or Trustees.

REDUCED SALES CHARGES, ADDITIONAL PURCHASE, EXCHANGE AND
REDEMPTION INFORMATION AND OTHER SERVICES

Sales Charge Reductions and Waivers

Waivers of Sales Charges--Class A Shares. The following additional sales charge
waivers are available for Class A shares if you:

o Acquire shares in connection with a reorganization pursuant to which the
Fund acquires substantially all of the assets and liabilities of another
fund in exchange solely for shares of the acquiring Fund;

o Acquire shares in connection with the disposition of proceeds from the sale
of shares of Managed High Yield Plus Fund Inc. that were acquired during
that fund's initial public offering of shares and that meet certain other
conditions described in its prospectus; or

o Acquire shares in connection with shares purchased by UBS Global AM (US) or
any affiliate on behalf of a discretionary advisory client.

Reinstatement Privilege--Class A Shares. Shareholders who have redeemed Class A
shares may reinstate their account without a sales charge by notifying the
transfer agent of such desire and forwarding a check for the amount to be
purchased within 365 days after the date of redemption. The reinstatement will
be made at the net asset value per share next computed after the notice of
reinstatement and check are received. The amount of a purchase under this
reinstatement privilege cannot exceed the amount of the redemption proceeds.
Gain on a redemption will be taxable regardless of whether the reinstatement
privilege is exercised, although a loss arising out of a redemption will not be
deductible to the extent the reinstatement privilege is exercised within 30 days
after redemption, in which event an adjustment will be made to the shareholder's
tax basis for shares acquired pursuant to the reinstatement privilege. Gain or
loss on a redemption also will be readjusted for federal income tax purposes by
the amount of any sales charge paid on Class A shares, under the circumstances
and to the extent described in "Taxes--Special Rule for Class A and C
Shareholders," below.

Purchases of Class A Shares Through the UBS Financial Services Inc.
InsightOne(SM) Program. Investors who purchase shares through the UBS Financial
Services Inc. InsightOne(SM) Program are eligible to purchase Class A shares of
the funds for which the Underwriter or its affiliates serves as investment
advisor or investment manager without a sales load, and may exchange those
shares for Class A shares of the Fund. The UBS Financial Services Inc.
InsightOne(SM) Program offers a nondiscretionary brokerage account to UBS
Financial Services Inc. clients for an asset-based fee at an annual rate of up
to 1.50% of the assets in the account. Account holders may purchase or sell
certain investment products without paying commissions or other
markups/markdowns.

Purchases of Shares Through the PACE(SM) Multi Advisor Program. An investor who
participates in the PACE(SM) Multi Advisor Program is eligible to purchase Class
A shares. The

PACE(SM) Multi Advisor Program is an advisory program sponsored by UBS Financial
Services Inc. that provides comprehensive investment services, including
investor profiling, a personalized asset allocation strategy using an
appropriate combination of funds, and a quarterly investment performance review.
Participation in the PACE(SM) Multi Advisor Program is subject to payment of an
advisory fee at the effective maximum annual rate of 1.5% of assets. Employees
of UBS Financial Services Inc. and its affiliates are entitled to a waiver of
this fee. Please contact your UBS Financial Services Inc. Financial Advisor or
UBS Financial Services Inc. correspondent firms for more information concerning
mutual funds that are available through the PACE(SM) Multi Advisor Program.

Payments by UBS Global AM (US)--Class Y Shares. Class Y shares are sold without
sales charges and do not pay ongoing 12b-1 distribution or service fees.
However, UBS Global AM (US), as principal underwriter of the Fund, may make
payments out of its own resources, to affiliated (UBS Financial Services Inc.)
and unaffiliated dealers, pursuant to written dealer agreements as follows: a
one time finder's fee consistent with the Fund's Class A share Reallowance to
Selected Dealers' schedule, as provided in the prospectus, and, beginning in
month 13, an ongoing fee in an amount up to 20 basis points. UBS Global AM (US)
does not make these payments on employee related Class Y share accounts and
reserves the right not to make these payments if it determines, in its sole
discretion, that a dealer has been acting to the detriment of the Fund.

Additional Compensation to Affiliated Dealer. UBS Global AM (US) pays its
affiliate, UBS Financial Services Inc., the following additional compensation in
connection with the sale of Fund shares:

o 0.05% of the value (at the time of sale) of all shares of the Fund sold
through UBS Financial Services Inc.

o a monthly retention fee at the annual rate of 0.10% of the value of shares
of the Fund that are held in a UBS Financial Services Inc. account at
month-end.

The foregoing payments are made by UBS Global AM (US) out of its own resources.

Additional Information Regarding Purchases Through Letter of Intent

To the extent that an investor purchases less than the dollar amount indicated
on the Letter of Intent within the 13-month period, the sales charge will be
adjusted upward for the entire amount purchased at the end of the 13-month
period. This adjustment will be made by redeeming shares first from amounts held
in escrow, and then from the account to cover the additional sales charge, the
proceeds of which will be paid to the investor's investment professional and UBS
Global Asset Management, as applicable, in accordance with the prospectus.

Letters of Intent are not available for certain employee benefit plans.

Additional Exchange and Redemption Information. As discussed in the Prospectus,
eligible shares of the Fund may be exchanged for shares of the corresponding
class of other series of the Trust and most other Family Funds. Class Y shares
are not eligible for exchange.

Shareholders will receive at least 60 days' notice of any termination or
material modification of the exchange offer, except no notice need be given if,
under extraordinary circumstances, either redemptions are suspended under the
circumstances described below or the Fund temporarily delays or ceases the sales
of its shares because it is unable to invest amounts effectively in accordance
with the Fund's investment objective, policies and restrictions.

The Trust will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Advisor or
the Board, result in the necessity of the Fund selling assets under
disadvantageous conditions and to the detriment of the remaining shareholders of
the Fund. Pursuant to the Trust's Agreement and Declaration of Trust, payment
for shares redeemed may be made either in cash or in-kind, or partly in cash and
partly in-kind. Under unusual circumstances, when the Board deems it in the best
interest of the Fund's shareholders, the Trust may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current values. With respect to such redemptions in kind, the Trust has made an
election pursuant to Rule 18f-1 under the Act. This will require the Trust to
redeem in cash at a shareholder's election in any case where the redemption
involves less than $250,000 (or 1% of the Fund's net asset value at the
beginning of each 90-day period during which such redemptions are in effect, if
that amount is less than $250,000), during any 90-day period for any one
shareholder. Should payment be made in securities, the redeeming shareholder may
incur brokerage costs in converting such securities to cash. In-kind payments to
non-affiliated shareholders need not constitute a cross-section of the Fund's
portfolio. Where a shareholder has requested redemption of all or a part of the
shareholder's investment and where the Fund computes such redemption in-kind,
the Fund will not recognize gain or loss for federal tax purposes on the
securities used to compute the redemption, but the shareholder will recognize
gain or loss equal to the difference between the fair market value of the
securities received and the shareholder's basis in the Fund shares redeemed.
Pursuant to redemption in-kind procedures adopted by the Board on behalf of the
Fund, the Trust is permitted to pay redemptions in-kind to shareholders that are
affiliated persons of the Fund by nature of a greater than 5% ownership interest
in the Fund.

The Fund may suspend redemption privileges or postpone the date of payment
during any period (1) when the New York Stock Exchange ("NYSE") is closed or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, that makes it not reasonably
practicable for the Fund to dispose of securities owned by it or fairly to
determine the value of its assets, or (3) as the SEC may otherwise permit. The
redemption price may be more or less than the shareholder's cost, depending on
the market value of the Fund's portfolio at the time.

Financial Institutions. The Fund may authorize financial institutions, or their
agents, to accept on the Fund's behalf purchase and redemption orders that are
in "good form" in accordance with the policies of those institutions. The Fund
will be deemed to have received these purchase and redemption orders when such
financial institution or its agent accepts them. Like all customer orders, these
orders will be priced based on the Fund's net asset value next computed after
receipt of the order by the financial institutions or their agents. Financial
institutions may include retirement plan service providers who aggregate
purchase and redemption instructions received from numerous retirement plans or
plan participants.

Automatic Investment Plan--Class A and Class C Shares. The Underwriter or your
investment professional offers an automatic investment plan with a minimum
initial investment of $1,000 through which the Fund will deduct $50 or more on a
monthly, quarterly, semiannual or annual basis from the investor's bank account
to invest directly in the Fund's Class A or Class C shares. In addition to
providing a convenient and disciplined manner of investing, participation in the
automatic investment plan enables an investor to use the technique of "dollar
cost averaging." When a shareholder invests the same dollar amount each month
under the plan, the shareholder will purchase more shares when the Fund's net
asset value per share is low and fewer shares when the net asset value per share
is high. Using this technique, a shareholder's average purchase price per share
over any given period will be lower than if the shareholder purchased a fixed
number of shares on a monthly basis during the period. Of course, investing
through the automatic investment plan does not assure a profit or protect
against loss in declining markets. Additionally, because the automatic
investment plan involves continuous investing regardless of price levels, an
investor should consider his or her financial ability to continue purchases
through periods of both low and high price levels. An investor should also
consider whether a large, single investment would qualify for sales load
reductions.

Automatic Cash Withdrawal Plan--Class A and Class C

The Automatic Cash Withdrawal Plan allows investors to set up monthly, quarterly
(March, June, September and December), semiannual (June and December) or annual
(December) withdrawals from their Family Fund accounts. Minimum balances and
withdrawals vary according to the class of shares:

o Class A and Class C shares. Minimum value of Fund shares is $5,000; minimum
withdrawals of $100.

Withdrawals under the Automatic Cash Withdrawal Plan will not be subject to a
contingent deferred sales charge if the investor withdraws no more than 12% of
the value of the Fund account when the shareholder signed up for the plan during
the first year under the plan. Shareholders who elect to receive dividends or
other distributions in cash may not participate in the plan.

An investor's participation in the Automatic Cash Withdrawal Plan will terminate
automatically if the "Initial Account Balance" (a term that means the value of
the Fund account at the time the shareholder elects to participate in the
Automatic Cash Withdrawal Plan), less aggregate redemptions made other than
pursuant to the Automatic Cash Withdrawal Plan, is less than the minimum values
specified above. Purchases of additional shares of the Fund concurrent with
withdrawals are ordinarily disadvantageous to shareholders because of tax
liabilities and, for Class A shares, initial sales charges. On or about the 20th
of a month for monthly, quarterly and semiannual plans, your investment
professional will arrange for redemption by the Fund of sufficient Fund shares
to provide the withdrawal payments specified by participants in the Automatic
Cash Withdrawal Plan. The payments generally are mailed approximately five
Business Days (defined under "Net Asset Value") after the redemption date.
Withdrawal payments should not be considered dividends, but redemption proceeds.
If periodic withdrawals continually exceed reinvested dividends and other
distributions, a shareholder's investment may be correspondingly reduced. A
shareholder may change the amount of the automatic cash

withdrawal or terminate participation in the Automatic Cash Withdrawal Plan at
any time without charge or penalty by written instructions with signatures
guaranteed to your investment professional or PFPC. Instructions to participate
in the plan, change the withdrawal amount or terminate participation in the plan
will not be effective until five days after written instructions with signatures
guaranteed are received by PFPC. Shareholders may request the forms needed to
establish an Automatic Cash Withdrawal Plan from their investment professionals
or PFPC at 1-800-647 1568.

Individual Retirement Accounts

Self-directed IRAs are available in which purchases of shares of Family Funds
and other investments may be made. Investors considering establishing an IRA
should review applicable tax laws and should consult their tax advisors.

Transfer of Accounts

If investors holding Class A, Class C or Class Y shares of the Fund in a
brokerage account transfer their brokerage accounts to another firm, the Fund
shares will be moved to an account with PFPC. However, if the other firm has
entered into a dealer agreement with the Underwriter relating to the Fund, the
shareholder may be able to hold Fund shares in an account with the other firm.

Transfer of Securities

At the discretion of the Trust, investors may be permitted to purchase Fund
shares by transferring securities to the Fund that meet the Fund's investment
objective and policies. Securities transferred to the Fund will be valued in
accordance with the same procedures used to determine the Fund's net asset value
at the time of the next determination of net asset value after such acceptance.
Shares issued by the Fund in exchange for securities will be issued at net asset
value per share of the Fund determined as of the same time. All dividends,
interest, subscription, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. Investors who are permitted to transfer
such securities will be required to recognize a gain or loss on such transfer
and pay tax thereon, if applicable, measured by the difference between the fair
market value of the securities and the investors' basis therein. Securities will
not be accepted in exchange for shares of the Fund unless: (1) such securities
are, at the time of the exchange, eligible to be included in the Fund's
portfolio and current market quotations are readily available for such
securities; (2) the investor represents and warrants that all securities offered
to be exchanged are not subject to any restrictions upon their sale by the Fund
under the 1933 Act, or under the laws of the country in which the principal
market for such securities exists, or otherwise; and (3) the value of any such
security (except US government securities) being exchanged, together with other
securities of the same issuer owned by the Fund, will not exceed 5% of the
Fund's net assets immediately after the transaction.

NET ASSET VALUE

The Fund determines its net asset value per share separately for each class of
shares, normally as of the close of regular trading (usually 4:00 p.m., Eastern
time) on the NYSE on each Business

Day when the NYSE is open. Prices will be calculated earlier when the NYSE
closes early because trading has been halted for the day. Currently the NYSE is
open for trading every day (each such day a "Business Day") except Saturdays,
Sundays, and the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

Securities that are listed on exchanges normally are valued at 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 are traded on more than
one exchange, the securities are generally valued on the exchange considered by
the Advisor as the primary market. Securities traded in the over-the-counter
market and listed on the NASDAQ Stock Market ("NASDAQ") normally are valued at
the NASDAQ Official Closing Price ("NOCP"); other over-the-counter securities
are valued at the last bid price available prior to valuation (other than
short-term investments that mature in 60 days or less, which are valued as
described further below). Where market quotations are readily available,
portfolio securities are valued based upon market quotations, provided those
quotations adequately reflect, in the judgment of the Advisor, the fair value of
the security. Where those market quotations are not readily available,
securities are valued based upon appraisals received from an independent pricing
service using a computerized matrix system or based upon appraisals derived from
information concerning the security or similar securities received from
recognized dealers in those securities. All other securities and other assets
are valued at fair value as determined in good faith by or under the direction
of the Board. It should be recognized that judgment often plays a greater role
in valuing thinly traded securities, including many lower rated bonds, than is
the case with respect to securities for which a broader range of dealer
quotations and last-sale information is available. The amortized cost method of
valuation generally is used to value debt obligations with 60 days or less
remaining until maturity, unless the Board determines that this does not
represent fair value.

TAXATION

Additional Information on Distributions and Taxes

Distributions

Distributions of Net Investment Income. The Fund receives income generally in
the form of dividends and interest on its investments. This income, less
expenses incurred in the operation of the Fund, constitutes the Fund's net
investment income from which income dividends may be paid to you. The Fund
calculates income dividends and capital gains distributions the same way for
each class. The amount of any income dividends per share will differ, however,
generally due to any differences in the distribution and service (Rule 12b-1)
fees applicable to the classes. If you are a taxable investor, any income
dividends the Fund pays are generally taxable to you as ordinary income, except
that, a portion of the income dividends may be designated by the Fund as
qualified dividend income eligible for taxation by individual shareholders at
long-term capital gain rates.

Capital Gain Distributions. The Fund may derive capital gain and loss in
connection with sales or other dispositions of its portfolio securities.
Distributions derived from the excess of net short-term capital gain over net
long-term capital loss will be taxable to you at ordinary income.

Distributions paid from the excess of net long-term capital gain over net
short-term capital loss will be taxable to you as long-term capital gain,
regardless of how long you have held your shares in the Fund. Any net short-term
or long-term capital gain realized by the Fund (net of any capital loss
carryovers) generally will be distributed once each year and may be distributed
more frequently, if necessary, in order to reduce or eliminate federal excise or
income taxes on the Fund.

Returns of Capital. If the Fund's distributions exceed its taxable income and
capital gains realized during a taxable year, all or a portion of the
distributions made in the same taxable year may be recharacterized as a return
of capital to shareholders. A return of capital distribution will generally not
be taxable, but will reduce each shareholder's cost basis in the Fund and result
in a higher reported capital gain or lower reported capital loss when those
shares on which the distribution was received are sold.

Information on the Amount and Tax Character of Distributions. The Fund will
inform you of the amount and character of your distributions at the time they
are paid, and will advise you of the tax status of such distributions for
federal income tax purposes shortly after the close of each calendar year. If
you have not held your Fund shares for a full year, the Fund may designate and
distribute to you, as ordinary income, qualified dividends or capital gains, and
in the case of non-US shareholders, the Fund may further designate and
distribute as short-term capital gain dividends, a percentage of income that is
not equal to the actual amount of such income earned during the period of your
investment in the Fund. Taxable Distributions declared by the Fund in December,
but paid in January, are taxable to you as if they were paid in December.

Election to be Taxed as a Regulated Investment Company. The Fund intends to
elect to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code and intends to so qualify during the current fiscal year.
As a regulated investment company, the Fund generally pays no federal income tax
on the income and gains it distributes to you. The Board reserves the right not
to distribute the Fund's net long-term capital gain or not to maintain the
qualification of the Fund as a regulated investment company if it determines
such a course of action to be beneficial to shareholders. If net long-term
capital gain is retained, the Fund would be taxed on the gain, and shareholders
would be notified that they are entitled to a credit or refund for the tax paid
by the Fund. If the Fund fails to qualify as a regulated investment company, the
Fund would be subject to federal, and possibly state and city, corporate taxes
on its taxable income and gains, and distributions to you will be taxed as
dividend income to the extent of the Fund's earnings and profits.

In order to qualify as a regulated investment company for federal income tax
purposes, the Fund must meet certain specific requirements, including:

(i) The Fund must maintain a diversified portfolio of securities, wherein
no security, including the securities of a qualified publicly traded partnership
(other than US government securities and securities of other regulated
investment companies) can exceed 25% of the Fund's total assets, and, with
respect to 50% of the Fund's total assets, no investment (other than cash and
cash items, US government securities and securities of other regulated
investment

companies) can exceed 5% of the Fund's total assets or 10% of the outstanding
voting securities of the issuer;

(ii) The Fund must derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
disposition of stock, securities or foreign currencies, or other income derived
with respect to its business of investing in such stock, securities, or
currencies, and net income derived from an interest in a qualified publicly
traded partnership; and

(iii) The Fund must distribute to its shareholders at least 90% of its
investment company taxable income and net tax-exempt income for each of its
fiscal years.

Excise Tax Distribution Requirements. As a regulated investment company, the
Fund is required to distribute its income and gains on a calendar year basis,
regardless of the Fund's fiscal year end as follows:

Required Distributions. To avoid federal excise taxes, the Code requires the
Fund to distribute to you by December 31 of each calendar year, at a minimum,
the following amounts: 98% of its taxable ordinary income earned during the
calendar year; 98% of its capital gain net income earned during the twelve-month
period ending October 31; and 100% of any undistributed amounts from the prior
year. The Fund intends to declare and pay these distributions in December (or to
pay them in January, in which case you must treat them as received in December)
but can give no assurances that its distributions will be sufficient to
eliminate all taxes.

Post-October Losses. Because the periods for measuring a regulated investment
company's income are different for excise and income tax purposes special rules
are required to protect the amount of earnings and profits needed to support
excise tax distributions. For instance, if a regulated investment company that
uses October 31st as the measurement period for paying out capital gain net
income realizes a net capital loss after October 31 and before the close of its
taxable year, the fund likely would have insufficient earnings and profits for
that taxable year to support the dividend treatment of its required
distributions for that calendar year. Accordingly, the Fund is permitted to
elect to treat net capital losses realized between November 1 and its fiscal
year end of June 30 ( "post-October loss") as occurring on the first day of the
following tax year ( (i.e., July 1).

Sales, Exchanges and Redemption of Fund Shares. Sales, exchanges and redemptions
(including redemptions in kind) are taxable transactions for federal and state
income tax purposes. If you redeem your Fund shares, or exchange them for shares
of a different Family Fund, the Internal Revenue Service requires you to report
any gain or loss on your redemption or exchange. If you hold your shares as a
capital asset, any gain or loss that you realize is a capital gain or loss and
is long-term or short-term, generally depending on how long you have owned your
shares.

Redemptions at a Loss within Six Months of Purchase. Any loss incurred on the
redemption or exchange of shares held for six months or less is treated as a
long-term capital loss to the extent of any long-term capital gains distributed
to you by the Fund on those shares.

Deferral of basis-- A Shares only. In reporting gain or loss on the sale of your
Fund shares, you may be required to adjust your basis in the shares you sell
under the following circumstances:

IF:

o In your original purchase of Fund shares, you received a reinvestment
right (the right to reinvest your sales proceeds at a reduced or with
no sales charge), and

o You sell some or all of your original shares within 90 days of their
purchase, and

o You reinvest the sales proceeds in the Fund or in another Family Fund,
and the sales charge that would otherwise apply is reduced or
eliminated due to the 365-day reinstatement privilege or the exchange
privilege;

THEN: In reporting any gain or loss on your sale, all or a portion of the sales
charge that you paid for your original shares is excluded from your tax basis in
the shares sold and added to your tax basis in the new shares.

Wash Sales. All or a portion of any loss that you realize on the redemption of
your Fund shares is disallowed to the extent that you buy other shares in the
Fund (through reinvestment of dividends or otherwise) within 30 days before or
after your share redemption. Any loss disallowed under these rules is added to
your tax basis in the new shares.

US Government Securities. The income earned on certain US government securities
is exempt from state and local personal income taxes if earned directly by you.
States also grant tax-free status to mutual fund dividends paid to you from
interest earned on these securities, subject in some states to minimum
investment or reporting requirements that must be met by the Fund. The income on
Fund investments in certain securities, such as repurchase agreements,
commercial paper and federal agency-backed obligations (e.g., Government
National Mortgage Association (GNMA) or Fannie Mae securities), generally does
not qualify for tax-free treatment. The rules on exclusion of this income are
different for corporations.

Qualified Dividend Income for Individuals. For individual shareholders, a
portion of the dividends paid by the Fund may be designated as qualified
dividends eligible for taxation at long-term capital gain rates. This reduced
rate generally is available for dividends paid by the Fund out of dividends
earned on the Fund's investment in stocks of domestic corporations and qualified
foreign corporations.

Both the Fund and the investor must meet certain holding period requirements to
qualify Fund dividends for this treatment. Specifically, the Fund must hold the
stock for at least 61 days during the 121-day period beginning 60 days before
the stock becomes ex-dividend. Similarly, investors must hold their Fund shares
for at least 61 days during the 121-day period beginning 60 days before the Fund
distribution goes ex-dividend. The ex-dividend date is the first date following
the declaration of a dividend on which the purchaser of stock is not entitled to
receive the dividend payment. When counting the number of days you held your
Fund shares, include the day you sold your shares but not the day you acquired
these shares.

While the income received in the form of a qualified dividend is taxed at the
same rates as long-term capital gains, such income will not be considered as a
long-term capital gain for other

federal income tax purposes. For example, you will not be allowed to offset your
long-term capital losses against qualified dividend income on your federal
income tax return. Any qualified dividend income that you elect to be taxed at
these reduced rates also cannot be used as investment income in determining your
allowable investment interest expense. For other limitations on the amount of or
use of qualified dividend income on your income tax return, please contact your
personal tax advisor.

After the close of its fiscal year, the Fund will designate the portion of its
ordinary dividend income that meets the definition of qualified dividend income
taxable at reduced rates. If 95% or more of the Fund's income is from qualified
sources, it will be allowed to designate 100% of its ordinary income
distributions as qualified dividend income. This designation rule may have the
effect of converting small amounts of ordinary income or net short-term capital
gains, that otherwise would be taxable as ordinary income, into qualified
dividend income eligible for taxation at reduced rates.

Dividends-Received Deduction for Corporations. For corporate shareholders, a
portion of the dividends paid by the Fund may be designated as qualified
dividends eligible for the corporate dividends-received deduction. The portion
of dividends paid by the Fund that so qualifies will be designated each year in
a notice mailed to the Fund's shareholders, and cannot exceed the gross amount
of dividends received by the Fund from domestic (US) corporations that would
have qualified for the dividends-received deduction in the hands of the Fund if
the Fund was a regular corporation.

The availability of the dividends-received deduction is subject to certain
holding period and debt financing restrictions imposed under the Code on the
corporation claiming the deduction. The amount that the Fund may designate as
eligible for the dividends-received deduction will be reduced or eliminated if
the shares on which the dividends earned by the Fund were debt-financed or held
by the Fund for less than a minimum period of time, generally 46 days during a
91-day period beginning 45 days before the stock becomes ex-dividend. Similarly,
if your Fund shares are debt-financed or held by you for less than a 46-day
period then the dividends-received deduction for Fund dividends on your shares
may also be reduced or eliminated. In the case of certain dividends on preferred
stock, the minimum holding period is generally increased to 91 days during a
181-day period. Even if designated as dividends eligible for the
dividends-received deduction, all dividends (including any deducted portion)
must be included in your alternative minimum taxable income calculation.

Investment in Complex Securities. The Fund may invest in complex securities that
could require it to adjust the amount, timing and/or tax character (ordinary or
capital) of gains and losses it recognizes on these investments. This, in turn,
could affect the amount, timing and/or tax character of income distributed to
you. For example:

Derivatives. With respect to the Fund's investment in certain options, futures,
forwards or foreign currency contracts, it could be required to mark-to-market
these contracts and realize any unrealized gains and losses at its fiscal year
end even though it continues to hold the contracts. Under these rules, gains or
losses on the contracts generally would be treated as 60% long-term and 40%
short-term gains or losses, but gains or losses on certain foreign currency
contracts

would be treated as ordinary income or losses. In determining its net income for
excise tax purposes, the Fund also would be required to mark-to-market these
contracts annually as of October 31 (for capital gain net income) and to realize
and distribute any resulting income and gains.

Constructive Sales. The Fund's entry into a short sale transaction or an option
or other contract could be treated as the "constructive sale" of an "appreciated
financial position," causing it to realize gain, but not loss, on the position.

Tax Straddles. The Fund's investment in options, futures, forwards, or foreign
currency contracts (or in substantially similar or related property) in
connection with certain hedging transactions could cause it to hold offsetting
positions in securities. If the Fund's risk of loss with respect to specific
securities in its portfolio is substantially diminished by the fact that it
holds other securities, the Fund could be deemed to have entered into a tax
"straddle" or to hold a "successor position" that would require any loss
realized by it to be deferred for tax purposes.

Short Sales and Securities Lending Transactions. The Fund's entry into a short
sale transaction or an option or other contract could be treated as the
"constructive sale" of an "appreciated financial position," causing it to
realize gain, but not loss, on the position. Additionally, the Fund's entry into
securities lending transactions may cause the replacement income earned on the
loaned securities to fall outside of the definition of qualified dividend
income. This replacement income generally will not be eligible for reduced rates
of taxation on qualified dividend income.

Convertible debt. Convertible debt is ordinarily treated as a "single property"
consisting of a pure debt interest until conversion, after which the investment
becomes an equity interest. If the security is issued at a premium (i.e., for
cash in excess of the face amount payable on retirement), the creditor-holder
may amortize the premium over the life of the bond. If the security is issued
for cash at a price below its face amount, the creditor-holder must accrue
original issue discount in income over the life of the debt.

Backup Withholding. By law, the Fund must withhold a portion of your taxable
dividends and sales proceeds unless you:

o provide your correct social security or taxpayer identification
number,

o certify that this number is correct,

o certify that you are not subject to backup withholding, and

o certify that you are a US person (including a US resident alien).

The Fund also must withhold if the IRS instructs it to do so. When withholding
is required, the amount will be 28% of any dividends or proceeds paid. The
special US tax certification requirements applicable to non-US investors are
described under the "Non-US Investors" heading below.

Non-US Investors. Non-US Investors may be subject to US withholding and estate
tax and are subject to special US tax certification requirements. Foreign
persons should consult their tax advisors about the applicability of US tax
withholding and the use of the appropriate forms to certify their status.

In general. The United States imposes a flat 30% withholding tax (or lower
treaty rate) on US source dividends.

Capital Gain Dividends & Short-Term Capital Gain Dividends. In general, capital
gain dividends designated and paid by the Fund from either long-term or
short-term capital gains (other than gain realized on disposition of US real
property interests) are not subject to US withholding tax unless you are a
nonresident alien individual present in the United States for a period or
periods aggregating 183 days or more during the taxable year. However, with
respect to short-term capital gain dividends, intermediaries who have assumed
tax reporting responsibilities on these distributions may not have fully
developed systems that will allow tax withholding benefits to be passed through
to non-US investors.

Interest-Related Dividends. In general, interest-related dividends designated by
a regulated investment company as from qualified interest income are not subject
to US withholding tax. However, the Fund does not intend to account for or
designate interest-related dividends for the benefit of non-US Investors. As a
result, non-US Investors may be subject to more US withholding tax than would
otherwise be the case. "Qualified interest income" includes, in general, US
source (1) bank deposit interest, (2) short-term original discount and (3)
interest (including original issue discount, market discount, or acquisition
discount) on an obligation which is in registered form, unless it is earned on
an obligation issued by a corporation or partnership in which the Fund is a
10-percent shareholder or is contingent interest, and (4) any interest-related
dividend from another regulated investment company.

Other. Ordinary dividends paid by the Fund to non-US investors on the income
earned on portfolio investments in (i) the stock of domestic and foreign
corporations, and (ii) the debt of foreign issuers continue to be subject to US
withholding tax. If you hold your Fund shares in connection with a US trade or
business, your income and gains will be considered effectively connected income
and taxed in the US on a net basis, in which case you may be required to file a
nonresident US income tax return. The exemption from withholding for short-term
capital gain dividends (and interest-related dividends although the Fund does
not intend to account for such) paid by a regulated investment company is
effective for dividends paid with respect to taxable years of the Fund beginning
after December 31, 2004 and before January 1, 2008, unless such exemption is
extended or made permanent.

US Estate Tax. A partial exemption from US estate tax may apply to stock in the
Fund held by the estate of a nonresident decedent. The amount treated as exempt
is based upon the proportion of the assets held by the Fund at the end of the
quarter immediately preceding the decedent's death that are debt obligations,
deposits, or other property that would generally be treated as situated outside
the United States if held directly by the estate. This provision applies to
decedents dying after December 31, 2004 and before January 1, 2008, unless such
provision is extended or made permanent.

US Tax Certification Rules. Special US tax certification requirements apply to
non-US shareholders both to avoid US back up withholding imposed at a rate of
28% and to obtain the benefits of any treaty between the United States and the
shareholder's country of residence. In general, a non-US shareholder must
provide a Form W-8 BEN (or other applicable Form W-8) to establish that you are
not a US person, to claim that you are the beneficial owner of the income and,
if applicable, to claim a reduced rate of, or exemption from, withholding as a
resident of a country with which the United States has an income tax treaty. A
Form W-8BEN provided without a US taxpayer identification number will remain in
effect for a period beginning on the date signed and ending on the last day of
the third succeeding calendar year unless an earlier change of circumstances
makes the information on the form incorrect.

This discussion of "Taxation" is not intended or written to be used as tax
advice and does not purport to deal with all federal tax consequences applicable
to all categories of investors, some of which may be subject to special rules.
You should consult your own tax advisor regarding your particular circumstances
before making an investment in the Fund.

PERFORMANCE CALCULATIONS

From time to time, performance information, such as yield or total return, may
be quoted in advertisements or in communications to present or prospective
shareholders. Performance quotations represent the Fund's past performance and
should not be considered as representative of future results. The current yield
will be calculated by dividing the net investment income earned per share by the
Fund during the period stated in the advertisement (based on the average daily
number of shares entitled to receive dividends outstanding during the period) by
the maximum net asset value per share on the last day of the period and
annualizing the result on a semiannual compounded basis. The Fund's total return
may be calculated on an annualized and aggregate basis for various periods
(which periods will be stated in the advertisement). Average annual return
reflects the average percentage change per year in value of an investment in the
Fund. Aggregate total return reflects the total percentage change over the
stated period.

To help investors better evaluate how an investment in the Fund might satisfy
their investment objectives, advertisements regarding the Fund may discuss yield
or total return as reported by various financial publications. Advertisements
may also compare yield or total return to other investments, indices and
averages. The following publications, benchmarks, indices and averages may be
used: Lipper Mutual Fund Performance Analysis; Lipper Fixed Income Analysis;
Lipper Mutual Fund Indices; Morgan Stanley Indices; Lehman Brothers Treasury
Index; Salomon Smith Barney Indices; Dow Jones Composite Average or its
component indices; Standard & Poor's 500 Stock Index or its component indices;
Russell Indices; Wilshire Indices; The New York Stock Exchange composite or
component indices; CDA Mutual Fund Report; Weisenberger-Mutual Funds Panorama
and Investment Companies; Mutual Fund Values and Mutual Fund Service Book,
published by Morningstar, Inc.; comparable portfolios managed by the Advisor;
and financial publications, such as Business Week, Kiplinger's Personal Finance,
Financial World, Forbes, Fortune, Money Magazine, The Wall Street Journal,
Barron's, et al., which rate fund performance over various time periods.

The principal value of an investment in the Fund will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Any fees charged by banks or

other institutional investors directly to their customer accounts in connection
with investments in shares of the Fund will not be included in the Fund's
calculations of yield or total return.

Performance information for the various classes of shares of the Fund will vary
due to the effect of expense ratios on the performance calculations.

FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

Because the Fund is new, financial statements are not yet available for the
Fund.

APPENDIX A - SECONDARY RISKS

Listed below are the secondary risks of investing in the Fund.

Counterparty Risk The risk that when the Fund engages in repurchase, reverse
repurchase, derivative, when-issued, forward commitment, delayed settlement,
securities lending and swap transactions with another party, it relies on the
other party to consummate the transaction and is subject to the risk of default
by the other party. Failure of the other party to complete the transaction may
cause the Fund to incur a loss or to miss an opportunity to obtain a price
believed to be advantageous.

A-1

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THE UBS FUNDS

PART C

OTHER INFORMATION

ITEM 23. EXHIBITS

(a) Articles of Incorporation.

(1) Certificate of Trust of the Registrant dated August 9, 1993, as
filed with the Office of the Secretary of State of the State of
Delaware on August 13, 1993, is incorporated herein by reference
to Post-Effective Amendment No. 21 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the U.S. Securities and Exchange Commission
(the "SEC") on September 15, 1998.

(i) Amendment to Certificate of Trust dated February 15, 2002
changing the Trust's name to The UBS Funds, is incorporated
herein by reference to Post-Effective Amendment No. 39 to
Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC
on September 30, 2002.

(2) Amended and Restated Agreement and Declaration of Trust (the
"Declaration") effective as of September 28, 2004, as amended
March 8, 2006, is incorporated herein by reference to
Post-Effective Amendment No. 51 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on March 27, 2006.

(b) By-Laws.

(1) By-Laws of The UBS Funds (f/k/a The Brinson Funds) dated August
9, 1993, are incorporated herein by reference to Post-Effective
Amendment No. 17 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on August 29, 1996.

(i) Amendment to the By-Laws dated April 25, 2002 is
incorporated herein by reference to Post-Effective Amendment
No. 37 to Registrant's Registration Statement on Form N-1A
(Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on July 19, 2002.

(1) Form of Specimen Share Certificate of The UBS Funds is
incorporated herein by reference to Post-Effective Amendment No.
21 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
September 15, 1998.

(2) The rights of security holders of the Registrant are further
defined in the following sections of the Registrant's By-Laws and
Declaration and are herein incorporated by reference to such
documents as applicable:

(i) By-Laws.

Article II - "Meeting of Shareholders."

(ii) Declaration.

Article III - "Shares" and Article IV - "Shareholders'
Voting Powers and Meetings."

(d) Investment Advisory Contracts.

(1) Investment Advisory Agreement dated July 1, 2002 between UBS
Global Asset Management (Americas) Inc. (the "Advisor") and the
Registrant on behalf of the UBS Global Allocation Fund is
incorporated herein by reference to Post-Effective Amendment No.
39 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
September 30, 2002.

(i) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS Global Allocation Fund is
incorporated herein by reference to Post-Effective Amendment
No. 43 to Registrant's Registration Statement on Form N-1A
(Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on October 28, 2004.

(2) Investment Advisory Agreement dated July 1, 2002 between the
Advisor and the Registrant on behalf of the UBS Global Bond Fund
is incorporated herein by reference to Post-Effective Amendment
No. 39 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
September 30, 2002.

(i) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS Global Bond Fund is
incorporated herein by reference to Post-Effective Amendment
No. 43 to Registrant's Registration Statement on Form N-1A
(Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on October 28, 2004.

(3) Investment Advisory Agreement dated April 25, 1995 between the
Advisor and the Registrant on behalf of the UBS International
Equity Fund (f/k/a Global (Ex-U.S.) Equity Fund and Brinson
Non-U.S. Equity Fund) is incorporated herein by reference to
Post-Effective Amendment No. 21 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on September 15, 1998.

(i) Certificate of the Secretary and resolutions redesignating
the Global (Ex-U.S.) Equity Fund as the International Equity
Fund is incorporated herein by reference to Post-Effective
Amendment No. 33 to Registrant's Registration Statement on
Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on December 7, 2000.

(ii) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated April 25, 1995 between the Advisor and the
Registrant on behalf of the UBS International Equity Fund is
incorporated herein by reference to Post-Effective Amendment
No. 43 to Registrant's Registration Statement on Form N-1A
(Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on October 28, 2004.

(4) Amended Investment Advisory Agreement dated July 1, 2002, as
amended July 1, 2003 and January 1, 2004, between the Advisor and
the Registrant on behalf of the UBS Global Equity Fund is
incorporated herein by reference to Post-Effective Amendment No.
43 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
October 28, 2004.

(5) Investment Advisory Agreement dated July 1, 2002 between the
Advisor and the Registrant on behalf of the UBS U.S. Large Cap
Equity Fund (f/k/a UBS U.S. Equity Fund) is incorporated herein
by reference to Post-Effective Amendment No. 39 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and 811-6637)
as filed electronically with the SEC on September 30, 2002.

(i) Amendment dated February 17, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS U.S. Large Cap Equity Fund
(f/k/a UBS U.S. Equity Fund) is incorporated herein by
reference to Post-Effective Amendment No. 43 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and
811-6637) as filed electronically with the SEC on October
28, 2004.

(ii) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS U.S. Large Cap Equity Fund
(f/k/a UBS U.S. Equity Fund) is incorporated herein by
reference to Post-Effective Amendment No. 43 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and
811-6637) as filed electronically with the SEC on October
28, 2004.

(6) Investment Advisory Agreement dated July 1, 2002 between the
Advisor and the Registrant on behalf of the UBS U.S. Bond Fund is
incorporated herein by reference to Post-Effective Amendment No.
39 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
September 30, 2002.

(i) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS U.S. Bond Fund is
incorporated herein by reference to Post-Effective Amendment
No. 43 to Registrant's Registration Statement on Form N-1A
(Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on October 28, 2004.

(7) Investment Advisory Agreement dated July 1, 2002 between the
Advisor and the Registrant on behalf of the UBS U.S. Large Cap
Growth Fund is incorporated herein by reference to Post-Effective
Amendment No. 39 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on September 30, 2002.

(i) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS U.S. Large Cap Growth Fund
is incorporated herein by reference to Post-Effective
Amendment No. 43 to Registrant's Registration Statement on
Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on October 28, 2004.

(8) Investment Advisory Agreement dated July 1, 2002 between the
Advisor and the Registrant on behalf of the UBS U.S. Small Cap
Growth Fund is incorporated herein by reference to Post-Effective
Amendment No. 39 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on September 30, 2002.

(i) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS U.S. Small Cap Growth Fund
is incorporated herein by reference to Post-Effective
Amendment No. 43 to Registrant's Registration Statement on
Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on October 28, 2004.

(9) Investment Advisory Agreement dated July 1, 2002 between the
Advisor and the Registrant on behalf of the UBS High Yield Fund
is incorporated herein by reference to Post-Effective Amendment
No. 39 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
September 30, 2002.

(i) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS High Yield Fund is
incorporated herein by reference to Post-Effective Amendment
No. 43 to Registrant's Registration Statement on Form N-1A
(Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on October 28, 2004.

(10) Investment Advisory Agreement dated December 10, 1998 between the
Advisor and the Registrant on behalf of the UBS Emerging Markets
Equity Fund is incorporated herein by reference to Post-Effective
Amendment No. 25 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on March 1, 1999.

(i) Form of Certificate of the Secretary and resolutions
restating the Investment Advisory Agreement of the UBS
Emerging Markets Equity Fund is incorporated herein by
reference to Post-Effective Amendment No. 34 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and
811-6637) as filed electronically with the SEC on July 31,
2001.

(11) Investment Advisory Agreement dated December 10, 1998 between the
Advisor and the Registrant on behalf of the UBS Emerging Markets
Debt Fund is incorporated herein by reference to Post-Effective
Amendment No. 25 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on March l, 1999.

(i) Form of Certificate of the Secretary and resolutions
restating the Investment Advisory Agreement of the UBS
Emerging Markets Debt Fund is incorporated herein by
reference to Post-Effective Amendment No. 34 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and
811-6637) as filed electronically with the SEC on July 31,
2001.

(12) Investment Advisory Agreement dated May 23, 2000 between the
Advisor and the Registrant on behalf of the UBS U.S. Small Cap
Equity Fund is incorporated herein by reference to Post-Effective
Amendment No. 31 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on August 29, 2000.

(i) Form of Certificate of the Secretary and resolutions
restating the Investment Advisory Agreement of the UBS U.S.
Small Cap Equity Fund is incorporated herein by reference to
Post-Effective Amendment No. 34 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on July 31, 2001.

(13) Investment Advisory Agreement dated July l, 2002 between the
Advisor and the Registrant on behalf of the UBS U.S. Large Cap
Value Equity Fund (f/k/a UBS U.S. Value Equity Fund) is
incorporated herein by reference to Post-Effective Amendment No.
39 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC
September 30, 2002.

(i) Amendment dated February 17, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS U.S. Large Cap Value Equity
Fund (f/k/a UBS U.S. Value Equity Fund) is incorporated
herein by reference to Post-Effective Amendment No. 43 to
Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC
on October 28, 2004.

(ii) Amendment dated July 1, 2004 to Investment Advisory
Agreement dated July 1, 2002 between the Advisor and the
Registrant on behalf of the UBS U.S. Large Cap Value Equity
Fund (f/k/a UBS U.S. Value Equity Fund) is incorporated
herein by reference to Post-Effective Amendment No. 43 to
Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC
on October 28, 2004.

(14) Investment Advisory Agreement dated December 7, 2000 between the
Advisor and the Registrant on behalf of the UBS U.S. Real Estate
Equity Fund is incorporated herein by reference to Post-Effective
Amendment No. 34 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on July 31, 2001.

(i) Form of Certificate of the Secretary and resolutions
restating the Investment Advisory Agreement of the UBS U.S.
Real Estate Equity Fund is incorporated herein by reference
to Post-Effective Amendment No. 34 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and
811-6637) as filed electronically with the SEC on July 31,
2001.

(15) Form of Investment Advisory Agreement between the Advisor and the
Registrant on behalf of the UBS Dynamic Alpha Fund is
incorporated herein by reference to Post-Effective Amendment No.
42 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
October 13, 2004.

(16) Form of Investment Advisory Agreement between the Advisor and the
Registrant on behalf of the UBS Absolute Return Bond Fund is
incorporated herein by reference to Post-Effective Amendment No.
44 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
December 21, 2004.

(17) Form of Investment Advisory Agreement between the Advisor and the
Registrant on behalf of the UBS U.S. Mid Cap Growth Equity Fund
is incorporated herein by reference to Post-Effective Amendment
No. 51 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
March 27, 2006.

(18) Form of Investment Advisory Agreement between the Advisor and the
Registrant on behalf of the UBS U.S. Equity Alpha Fund is filed
herewith as Exhibit No. EX-99.d.18.

(e) Underwriting Contracts.

(1) Principal Underwriting Contract, dated November 5, 2001, between
UBS Global Asset Management (US) Inc. (f/k/a Brinson Advisors,
Inc.) and the Registrant is incorporated herein by reference to
Post-Effective Amendment No. 37 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on July 19, 2002.

(f) Bonus or Profit Sharing Contracts.

Not Applicable.

(g) Custodian Agreements.

(1) Custodial arrangements are provided under the Multiple Services
Agreement dated May 9, 1997, as amended, between Morgan Stanley
Trust Company and succeeded by JPMorgan Chase Bank (f/k/a The
Chase Manhattan Bank), and the Registrant on behalf of each
series of the Registrant is incorporated herein by reference to
Post-Effective Amendment No. 25 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on March 1, 1999.

(i) Amendment dated May 9, 2000 relating to Fee Obligation and
Continuation of the Registrant's Multiple Services Agreement
is incorporated herein by reference to Post-Effective
Amendment No. 31 to Registrant's Registration Statement on
Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on August 29, 2000.

(ii) Amendment, dated May 21, 2001 relating to the Appointment of
Brinson Advisors, Inc. to serve as administrator to the
Trust is incorporated herein by reference to Post-Effective
Amendment No. 39 to Registrant's Registration Statement on
Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on September 30, 2002.

(iii) Form of Amended Attachment A (approved borrowers) to the
Registrant's Multiple Services Agreement is incorporated
herein by reference to Post-Effective Amendment No. 51 to
Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC
on March 27, 2006.

(iv) Form of Revised Schedule B3 (authorized signatories) to the
Registrant's Multiple Services Agreement is incorporated
herein by reference to Post-Effective Amendment No. 51 to
Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC
on March 27, 2006.

(v) Form of Amended Schedule B1 and Schedule F to the
Registrant's Multiple Services Agreement is filed herewith
as Exhibit No. EX-99.g.1.v.

(vi) Form of Revised Schedule A to the Registrant's Multiple
Services Agreement is filed herewith as Exhibit No.
EX-99.g.1.vi.

(h) Other Material Contracts.

(1) Administration Contract, dated May 21, 2001, as revised June 3,
2002, between UBS Global Asset Management (US) Inc. (f/k/a
Brinson Advisors Inc.) and the Registrant is incorporated herein
by reference to Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and 811-6637)
as filed electronically with the SEC on July 19, 2002.

(i) Amendment to Schedule A, dated as of August 14, 2006, of the
Administration Contract is filed herewith as Exhibit No.
EX-99.h.1.i.

(2) Form of Administration Contract, dated April 1, 2006, between UBS
Global Asset Management (Americas) Inc. and the Registrant is
incorporated herein by reference to Post-Effective Amendment No.
51 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
March 27, 2006.

(3) Transfer Agency and Related Services Agreement, dated August 20,
2001, between PFPC Inc. and the Registrant is incorporated herein
by reference to Post-Effective Amendment No. 37 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and 811-6637)
as filed electronically with the SEC on July 19, 2002.

(i) Amendment to Exhibit B to the Transfer Agency and Related
Services Agreement, approved August 19, 2003, between PFPC
Inc. and the Registrant is incorporated herein by reference
to Post-Effective Amendment No. 40 to Registrant's
Registration Statement on Form N-1A (Nos. 33-47287 and
811-6637) as filed electronically with the SEC on October
28, 2003.

(ii) Amendment to Exhibit A, dated as of August 14, 2006 of the
Transfer Agency and Related Services Agreement is filed
herewith as Exhibit No. EX-99.h.3.ii.

(i) Legal Opinion.

(1) Legal Opinion of Stradley, Ronon, Stevens & Young, LLP is filed
herewith as Exhibit No. EX-99.i.1.

(j) Other Opinions.

(1) Consent of Ernst & Young LLP, Independent Registered Public
Accounting Firm is incorporated herein by reference to
Post-Effective Amendment No. 47 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on October 28, 2005.

(2) Powers of Attorney appointing Mark F. Kemper, Keith A. Weller,
Joseph J. Allessie, Mary Capasso, Michael Calhoun, Stephen
Fleischer, Eric Sanders, Tammie Lee, Bruce G. Leto, Mark A.
Sheehan and Jana L. Cresswell attorneys-in-fact and agents to
Frank K. Reilly, Walter E. Auch, Edward M. Roob, Adela Cepeda, J.
Mikesell Thomas, Joseph T. Malone and W. Douglas Beck is
incorporated herein by reference to Post-Effective Amendment No.
48 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
December 20, 2005.

(k) Omitted Financial Statements.

Not Applicable.

(l) Initial Capital Agreements.

(1) Letter of Understanding Relating to Initial Capital, dated July
1, 1992, is incorporated herein by reference to Post-Effective
Amendment No. 21 to Registrant's Registration Statement on Form
N-1A (Nos. 33-47287 and 811-6637) as filed electronically with
the SEC on September 15, 1998.

(m) Rule 12b-1 Plan.

(1) Form of Shareholder Services Plan dated October 29, 2001, as
revised August 14, 2006, relating to Class A shares of each
series of the Registrant is filed herewith as Exhibit No.
EX-99.m.1.

(2) Form of Rule 12b-1 Plan relating to the Class B shares of each
series of the Registrant is incorporated herein by reference to
Post-Effective Amendment No. 43 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on October 28, 2004.

(3) Form of Rule 12b-1 Plan dated October 29, 2001, as revised August
14, 2006, relating to the Class C shares of each series of the
Registrant is filed herewith as Exhibit No. EX-99.m.3.

(i) Form of Addendum to Rule 12b-1 Plan relating to the Class C
shares of each series of the Registrant is incorporated
herein by reference to Post-Effective Amendment No. 44 to
Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC
on December 21, 2004.

(4) Form of Shareholder Services Plan relating to Class A shares on
behalf of the UBS Absolute Return Bond Fund is incorporated
herein by reference to Post-Effective Amendment No. 44 to
Registrant's Registration Statement on Form N-1A (Nos. 33-47287
and 811-6637) as filed electronically with the SEC on December
21, 2004.

(n) Rule 18f-3 Plan.

(1) Amended and Restated Multiple Class Plan pursuant to Rule 18f-3,
effective as of December 14, 2004, on behalf of each series of
the Registrant is incorporated herein by reference to
Post-Effective Amendment No. 44 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on December 21, 2004.

(p) Codes of Ethics.

(1) Joint Code of Ethics of Registrant, the investment adviser, the
sub-adviser and the principal underwriter of the Registrant, is
incorporated herein by reference to Post-Effective Amendment No.
47 to Registrant's Registration Statement on Form N-1A (Nos.
33-47287 and 811-6637) as filed electronically with the SEC on
October 28, 2005.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT

None.

ITEM 25. INDEMNIFICATION

Under the terms of the Delaware Statutory Trust Act ("DSTA") and the
Registrant's Amended and Restated Agreement and Declaration of Trust, as
amended, ("Declaration of Trust"), no officer or trustee of the Registrant shall
have any liability to the Registrant, its shareholders, or any other party for
damages, except to the extent such limitation of liability is precluded by
Delaware law, the Declaration of Trust or the By-Laws of the Registrant.

Subject to the standards and restrictions set forth in the Declaration of Trust,
DSTA, Section 3817, permits a statutory trust to indemnify and hold harmless any
trustee, beneficial owner or other person from and against any and all claims
and demands whatsoever. DSTA, Section 3803 protects trustees, officers, managers
and other employees, when acting in such capacity, from liability to any person
other than the Registrant or beneficial owner for any act, omission or
obligation of the Registrant or any trustee thereof, except as otherwise
provided in the Declaration of Trust.

Indemnification of the Trustees and officers of the Registrant is provided for
in Article VII, Sections 2 through 4 of the Registrant's Declaration of Trust
effective as of September 28, 2004, as amended, as follows:

Section 2. Indemnification and Limitation of Liability. The Trustees shall
not be responsible or liable in any event for any neglect or wrong-doing of
any officer, agent, employee, Manager or Principal Underwriter of the
Trust, nor shall any Trustee be responsible for the act or omission of any
other Trustee, and, subject to the provisions of the Bylaws, the Trust out
of its assets may indemnify and hold harmless each and every Trustee and
officer of the Trust from and against any and all claims, demands, costs,
losses, expenses, and damages whatsoever arising out of or related to such
Trustee's performance of his or her duties as a Trustee or officer of the
Trust; provided that nothing herein contained shall indemnify, hold
harmless or protect any Trustee or officer from or against any liability to
the Trust or any Shareholder to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.

Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the
Trust shall be conclusively deemed to have been issued, executed or done
only in or with respect to their or his or her capacity as Trustees or
Trustee, and such Trustees or Trustee shall not be personally liable
thereon.

Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers hereunder shall be binding
upon everyone interested in or dealing with the Trust. A Trustee shall be
liable to the Trust and to any Shareholder solely for his or her own
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee and shall not
be liable for errors of judgment or mistakes of fact or law. The Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and shall be under no liability for
any act or omission in accordance with such advice nor for failing to
follow such advice. The Trustees shall not be required to give any bond as
such, nor any surety if a bond is required.

Section 4. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses, reasonably incurred or paid or expected to
be paid by a Trustee or officer in connection with any claim, action, suit
or proceeding in which he or she becomes involved by virtue of his or her
capacity or former capacity with the Trust, whether or not the Trust would
have the power to indemnify him or her against such liability under the
provisions of this Article.

Indemnification of Registrant's advisors, custodian, transfer agent, accounting
services provider, administrator and distributor against certain stated
liabilities is provided for in the following documents:

(a) Each Series' investment advisory agreement between the Registrant, on
behalf of the series, and UBS Global Asset Management (Americas) Inc.,
all of which are incorporated herein by reference, as follows:

(1) Section 6 of the Investment Advisory Agreement on behalf of the
UBS International Equity Fund, dated April 25, 1995, as amended;

(2) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Bond Fund, dated July 1, 2002;

(3) Section 7 of the Investment Advisory Agreement on behalf of the
UBS High Yield Fund, dated July 1, 2002;

(4) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Equity Fund, dated July 1, 2002;

(5) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Value Equity Fund, dated July 1, 2002;

(6) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Large Cap Growth Fund, dated July 1, 2002;

(7) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Small Cap Equity Fund, dated May 23, 2000, as amended;

(8) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Small Cap Growth Fund, dated July 1, 2002;

(9) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Real Estate Equity Fund, dated December 7, 2000, as
amended;

(10) Section 7 of the Investment Advisory Agreement on behalf of the
UBS Global Allocation Fund, dated July 1, 2002;

(11) Section 7 of the Investment Advisory Agreement on behalf of the
UBS Global Bond Fund, dated July 1, 2002;

(12) Section 7 of the Investment Advisory Agreement on behalf of the
UBS Global Equity Fund, dated July 1, 2002, as amended and
restated July 1, 2003;

(13) Section 6 of the Investment Advisory Agreement on behalf of the
UBS Emerging Markets Debt Fund, dated December 10, 1998, as
amended;

(14) Section 6 of the Investment Advisory Agreement on behalf of the
UBS Emerging Markets Equity Fund, dated December 10, 1998, as
amended;

(15) Section 7 of the Form of Investment Advisory Agreement on behalf
of the UBS Dynamic Alpha Fund;

(16) Section 7 of the Form of Investment Advisory Agreement on behalf
of the UBS Absolute Return Bond Fund;

(17) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Mid Cap Growth Equity Fund; and

(18) Section 7 of the Investment Advisory Agreement on behalf of the
UBS U.S. Equity Alpha Fund.

(b) Sections I.8(a), I.8(c)(iii), I.10, II.A.2, II.B.5, II.C.6, III.1.,
III.2.(b) through III.2.(e), III.4.(e) and III.9.(b) of the Multiple
Services Agreement dated May 9, 1997, as amended, between Morgan
Stanley Trust Company, as succeeded by JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank) and the Registrant, on behalf of
its series, which is incorporated herein by reference.

(c) Section 9(a) of the Principal Underwriting Contract between UBS Global
Asset Management (US) Inc. (formerly known as Brinson Advisors, Inc.)
and the Registrant on behalf of each series dated November 5, 2001,
which is incorporated herein by reference.

(d) Section 12 of the Transfer Agency and Related Services Agreement
between PFPC Inc. and the Registrant on behalf of each series dated
August 20, 2001, which is incorporated herein by reference.

(e) Sections 8 and 9 of the Administration Contract between UBS Global
Asset Management (US) Inc. (formerly known as Brinson Advisors, Inc.)
and the Registrant on behalf of each series dated May 21, 2001, as
revised on June 3, 2002, which is incorporated herein by reference.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT MANAGER

UBS Global Asset Management (Americas) Inc. provides investment advisory
services consisting of portfolio management for a variety of individuals and
institutions. For information as to any other business, vocation or employment
of a substantial nature in which the Registrant's investment advisor and each
officer of the Registrant's investment advisor is or has been engaged for his or
her own account or in the capacity of director, officer, employee, partner or
trustee, within the last two fiscal years, see UBS Global Asset Management
(Americas) Inc.'s Form ADV (File #801-34910) filed under the Investment Advisers
Act of 1940, as amended, which is incorporated herein by reference.

ITEM 27. PRINCIPAL UNDERWRITER

(a) UBS Global Asset Management (US) Inc. serves as principal underwriter
and/or investment advisor, sub-advisor or manager for the following other
investment companies:

UBS Index Trust
UBS Investment Trust
UBS Master Series, Inc.
UBS Money Series
UBS Series Trust
Global High Income Dollar Fund Inc.
Insured Municipal Income Fund Inc.
Investment Grade Municipal Income Fund Inc.
Managed High Yield Plus Fund Inc.
UBS Pace Select Advisors Trust
Strategic Global Income Fund, Inc.
SMA Relationship Trust
UBS Cashfund Inc.
UBS Managed Municipal Trust
UBS Municipal Money Market Series
UBS RMA Money Fund Inc.
UBS RMA Tax-Free Fund Inc.

(b) UBS Global Asset Management (US) Inc. is the Registrant's principal
underwriter. The directors and officers of UBS Global Asset Management (US)
Inc., their principal business addresses and their positions and offices
with UBS Global Asset Management (US) Inc. are identified in its Form ADV
filed with the SEC (registration number 801-13219) and such information is
incorporated herein by reference. The information set forth below is
furnished for those directors and officers of UBS Global Asset Management
(US) Inc. who also serve as directors or officers of the Registrant.

Name and Positions and Offices with Positions and Offices with
Business Address* Underwriter the Registrant

W. Douglas Beck* Executive Director and Head of President
Mutual Fund Product Management
of UBS Global AM

Joseph J. Allessie* Director and Deputy General Vice President and
Counsel of UBS Global AM Assistant Secretary

Thomas Disbrow* Director and Co-Head of the Vice President and
Mutual Fund Finance Department Assistant Treasurer
of UBS Global AM

Mark F. Kemper** Managing Director, General Vice President and
Counsel and Secretary of UBS Secretary
Global AM

Roseann Bubloski* Associate Director and Senior Vice President and
Manager of the Mutual Fund Assistant Treasurer
Finance Department of UBS
Global AM

Joseph T. Malone* Director and Co-Head of the Vice President and
Mutual Fund Finance Department Treasurer
of UBS Global AM

Joseph McGill* Managing Director and Chief Vice President and Chief
Compliance Officer of UBS Compliance Officer
Global AM

Eric Sanders* Director and Associate General Vice President and
Counsel of UBS Global AM Assistant Secretary

Tammie Lee* Director and Associate General Vice President and
Counsel of UBS Global AM Assistant Secretary

Keith A. Weller* Executive Director and Vice President and
Associate General Counsel of Assistant Secretary
UBS Global AM

* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.

** This person's business address is One North Wacker Drive, Chicago, Illinois
60606.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by Section
31(a) [15 U.S.C. 80a-3-(a)] and rules under that section, are maintained by
JPMorgan Chase Bank ("JPMorgan Chase"), 270 Park Avenue, New York, New York
10017 with the exception of those maintained by the Registrant's investment
advisor, UBS Global Asset Management (Americas) Inc., One North Wacker Drive,
Chicago, IL, 60606.

JPMorgan Chase provides general sub-administrative, accounting, portfolio
valuation, and custodian services to the Registrant, including the coordination
and monitoring of any third-party service providers and maintains all such
records relating to these services.

ITEM 29. MANAGEMENT SERVICES

There are no management related service contracts not discussed in Part A or
Part B.

ITEM 30. UNDERTAKINGS

Not Applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness of
this registration statement under rule 485(b) under the Securities Act and has
duly caused Post-Effective Amendment No. 53/54 to this registration statement to
be signed on its behalf by the undersigned, duly authorized, in the City of New
York, and the State of New York on the 14th day of August 2006.

THE UBS FUNDS

By: /s/ W. Douglas Beck
W. Douglas Beck*
President

Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:

Signature Title Date

/s/ Frank K. Reilly Chairman and August 14, 2006
Frank K. Reilly* Trustee

/s/ Walter E. Auch Trustee August 14, 2006
Walter E. Auch*

/s/ Edward M. Roob Trustee August 14, 2006
Edward M. Roob*

/s/ Adela Cepeda Trustee August 14, 2006
Adela Cepeda*

/s/ J. Mikesell Thomas Trustee August 14, 2006
J. Mikesell Thomas*

/s/ Joseph T. Malone Treasurer and Principal August 14, 2006
Joseph T. Malone* Accounting Officer

* By: /s/ Joseph J. Allessie
Joseph J. Allessie, Attorney-in-Fact
(Pursuant to Power of Attorney incorporated herein by reference
to Post-Effective Amendment No. 48 to Registrant's Registration
Statement on Form N-1A (Nos. 33-47287 and 811-6637) as filed
electronically with the SEC on December 20, 2005.)

EXHIBITS INDEX

EXHIBITS EXHIBIT NO.

Form of Investment Advisory Agreement between the
Advisor and the Registrant. EX-99.d.18

Form of Amended Schedule B1 and Schedule F to the
Registrant's Multiple Services Agreement EX-99.g.1.v

Form of Revised Schedule A to the Registrant's
Multiple Services Agreement EX-99.g.1.vi

Amendment to Exhibit A, dated as of August 14, 2006
of the Transfer Agency and Related Services Agreement EX-99.h.3.ii

Legal Opinion of Stradley, Ronon, Stevens & Young, LLP EX-99.i.1

Form of Shareholder Services Plan dated October 29, 2001,
as revised August 14, 2006 EX-99.m.1

Form of Rule 12b-1 Plan dated October 29, 2001, as revised
August 14, 2006, relating to the Class C Shares of each
series of the Registrant EX-99.m.3