UBS U.S. Allocation Fund
Semiannual Report
February 28, 2009
UBS U.S. Allocation Fund
April 15, 2009
Dear shareholder, | UBS U.S. Allocation Fund Investment goal: Total return, consisting of long-term capital appreciation and current income Portfolio Managers: Portfolio Management Team, including Edwin M. Denson, PhD.* UBS Global Asset Management (Americas) Inc. | ||
Commencement: Class A—May 10, 1993 Class B—January 30, 1996 Class C—July 22, 1992 Class Y—May 10, 1993 | |||
Dividend payments: Annually, if any | |||
Q. | Can you describe the economic environment during the Fund’s reporting period? | |
A. | When the reporting period began, there continued to be hope that if the US fell into a recession, it would be modest and brief. By the end |
* | Effective April 30, 2009, Curt Custard, a Managing Director and head of Global Investment Solutions at UBS Global Asset Management, will become primarily responsible for the day-to-day portfolio management of the Fund. | |
** | The UBS U.S. Allocation Fund Index is an unmanaged index compiled by the advisor, constructed as follows: from September 28, 1998 (the Fund’s inception) until February 29, 2004: 100% S&P 500 Index; from March 1, 2004 until May 31, 2005: 65% Russell 3000 Index, 30% Barclays Capital US Aggregate Index (formerly known as the Lehman Brothers US Aggregate Index); and 5% Merrill Lynch US High Yield Cash Pay Index; and from June 1, 2005 until present: 65% Russell 3000 Index, 30% Barclays Capital US Aggregate Index (formerly known as the Lehman Brothers US Aggregate Index), and 5% Merrill Lynch US High Yield Cash Pay Constrained Index. Investors should note that indices do not reflect the deduction of fees, expenses or taxes. |
UBS U.S. Allocation Fund
of the period, the question was no longer if a recession would occur, it was how long it would last and how severe it was going to be. Looking back, economic growth weakened significantly in the third quarter of 2008. A sharp decline in personal spending, the intensification of the credit crunch and ongoing housing market weakness resulted in gross domestic product (GDP) declining 0.5% in the third quarter. The weakness continued into the fourth quarter, when GDP declined 6.3%. | ||
Near the end of 2008, the National Bureau of Economic Research (NBER) formally declared that the US economy was in a recession, placing its start back in December 2007. The NBER defines a recession as “a significant decline in economic activity, lasting more than a few months, normally visible in production, employment, real income and other indicators.” | ||
Q. | How did the Federal Reserve Board (the “Fed”) react in this economic environment? | |
A. | The Fed has been aggressive in attempting to stabilize the markets and keep the US economy from falling into a prolonged recession. Following Lehman Brothers’ bankruptcy, the Fed added billions of dollars into the financial system. It also announced an $85 billion rescue plan for insurance giant AIG. The US Treasury Department was actively involved as well, as it took over mortgage finance companies Fannie Mae and Freddie Mac and introduced its Troubled Assets Relief Program (TARP). The new administration in Washington has made the revival of the US economy a priority, with newly elected President Obama signing a $787 billion stimulus package into law in February 2009. | |
In further support of the economy, the Fed reduced the fed funds rate on several occasions during the reporting period. (The Federal funds rate, or “fed funds” rate, is the rate that banks charge one another for funds they borrow on an overnight basis.) When the period began, the fed funds rate was 2.00%. The Fed left rates on hold through September 2008, citing inflationary pressures triggered by soaring oil and food prices. | ||
However, with the global financial crisis rapidly escalating and oil prices falling sharply, the Fed again moved into action in October 2008. It first lowered the rate on October 8, 2008 in a coordinated interest rate cut with other central banks from around the world. This was followed by another rate reduction at the Fed’s regularly scheduled meeting on October 29, 2008. Together, these moves brought the federal funds rate to 1.00%. Then, at its December 16, 2008 meeting, the Fed aggressively cut the rate to a range of 0.00% to 0.25%—a record low. |
UBS U.S. Allocation Fund
This rate was subsequently maintained at the Fed meetings that took place in January and March 2009. | ||
Q. | How did the equity and fixed income markets perform during the reporting period? | |
A. | There was no shortage of factors causing stock prices to fall sharply during the reporting period. Increasing concerns regarding the economy, falling corporate profits, turmoil in the financial markets and a severe credit crunch caused stock prices to plunge. | |
During much of the period, investor risk aversion was elevated, prompting flights to quality into US Treasury securities. During these periods, investors indiscriminately sold assets that were perceived to be risky, regardless of their underlying fundamentals. All told, the S&P 500 Index fell 41.82% during the six months ended February 28, 2009. | ||
Turning to the US bond market, Treasury yields fluctuated in response to mixed signals regarding the economy, rising inflation and expectations regarding future Fed monetary policy. Treasury yields ultimately moved lower, given the Fed’s numerous interest rate cuts and increased investor risk aversion. During the six-month reporting period, the overall US bond market, as measured by the Barclays Capital US Aggregate Index, returned 1.88%.(1) | ||
Q. | How was the Fund allocated at the end of the reporting period? | |
A. | We maintained an overweight to equities during the reporting period, as we felt the market’s selloff caused the asset class to be undervalued, and therefore attractive. Given several flights to quality, high yield bond spreads widened over the period, bringing them to levels that we deemed to be more attractive. (Spread is the difference between the yield paid on US Treasury bonds and higher-risk securities.) Given this backdrop, we remained overweight to high yield bonds as well. | |
While US investment grade bond prices fluctuated during the reporting period, we maintained our underweight to this area, finding other areas of the market to be more attractively valued based on our forward-looking risk and return expectations. |
(1) | The Barclays US Aggregate Index covers the USD-denominated, investment-grade, fixed-rate, taxable bond market of SEC-registered adjustable-rate mortgage securities. The Index includes bonds from the Treasury, government-related, corporate, mortgage-backed securities (agency fixed-rate and hybrid ARM passthroughs), and commercial mortgage-backed security sectors. US Agency Hybrid Adjustable-Rate Mortgage (ARM) securities were added to the US Aggregate Index on April 1, 2007. |
UBS U.S. Allocation Fund
Overall, the Fund’s asset allocation strategies detracted from results during the reporting period, due to the weak performance of US equities and, to a lesser extent, high yield bonds. Nonetheless, we continue to have conviction in our views, and we believe the Fund is well positioned to benefit when market fundamentals return to normal. | ||
At period end, the Fund was overweight to equities and high yield debt, and underweight to US bonds in relation to the target allocation of the UBS U.S. Allocation Fund Index. | ||
Q. | Which equity strategies performed well during the reporting period, and which areas produced disappointing results? | |
A. | During the reporting period, stock selection detracted from results. Sector positioning was also a negative contributor to performance, albeit to a lesser extent. |
• | In terms of stock selection, the Fund’s holdings in the consumer discretionary, financials and industrials sectors detracted from performance. Within the financial sector, investors remained fearful of problems in the credit markets and the weak housing markets in the US and Europe. While these fears are understandable, we believe sentiment has pushed stock prices for some financial firms meaningfully below justifiable levels. In addition, the Fund did not hold Exxon Mobil, which, unlike most energy stocks, posted positive absolute returns in the fourth quarter of 2008 as many investors viewed it to be a safe haven due to the large amount of cash on its balance sheet. | |
In contrast, stock selection in health care, information technology and utilities enhanced the Fund’s results. In particular, pharmaceutical company Wyeth, software manufacturer Intuit and gas utility Sempra Energy helped performance. The Fund also benefited from not holding Bank of America, which was a poor performer during a volatile time for financial stocks. | ||
• | At the sector level, the Fund’s underweight to materials and overweights to utilities and health care had a positive impact on performance. However, these results were not enough to offset the negative impact from an underweight in consumer staples, and overweights to financials and industrials. | |
Within the financial sector, some of our positions—including underweighting REITs, regional banks and mortgage brokers, while overweighting the larger, more diversified banking platforms—were |
UBS U.S. Allocation Fund
beneficial to performance. However, the financial sector was among the worst-performing in the US equity market during the reporting period, so our overweight to the sector ultimately had a negative impact on performance results. | ||
Q. | How did you manage yield curve positioning and duration within the fixed income portion of the Fund? | |
A. | Yield curve positioning positively contributed to performance. We maintained a steepening bias in the portfolio, which generated positive relative results when the yield curve steepened as the difference between short- and long-term interest rates increased. | |
We maintained a neutral duration versus the UBS U.S. Allocation Fund Index during the reporting period, which did not meaningfully impact performance. (Duration measures a portfolio’s sensitivity to interest rate changes.) | ||
Q. | How did you manage sector exposure within the fixed income portion of the Fund? | |
A. | The Fund’s allocation to the investment grade corporate bond sector was a modest positive contributor over the period. In particular, as the sector’s spreads reached historically wide levels, our underweight heading into the fourth quarter was beneficial. However, given the elevated spread levels of the sector, we felt the potential for a marked increase in defaults had been more than amply priced in. This made investment grade corporate bonds attractively valued, in our opinion, and we tactically added to our position. | |
The Fund’s exposure to inflation-linked bonds detracted from results relative to the UBS U.S. Allocation Fund Index. As inflationary pressures receded due to fears of a deep and prolonged recession, Treasury Inflation-Protected Securities (TIPS) prices moved lower, and our holdings performed poorly. However, we maintained our tactical position in TIPS, and even added to our exposure during the reporting period. We believe these securities are currently pricing in several years of deflation, while we believe the government’s aggressive actions to stimulate the economy will eventually re-ignite inflationary pressures—creating an environment in which TIPS are likely to benefit performance. | ||
Q. | How did you manage security selection within the fixed income portion of the Fund? |
A. | • | Whereas asset class exposure was a modest contributor to performance within the fixed income portion of the Fund, any positive contribution |
UBS U.S. Allocation Fund
was more than offset by the negative impact of security selection within the mortgage-backed sector. During the reporting period, the portfolio was overweight non-agency mortgage-backed securities (MBS) relative to the UBS U.S. Allocation Fund Index.(2) While these securities have historically performed similarly to agency mortgage-backed securities, this relationship changed in the wake of the housing downturn. Given the severe weakness in the US housing market and subsequent deterioration in the underlying mortgage loans, coupled with illiquidity and a lack of government support, the Fund’s positions in non-agency MBS performed poorly and lagged their agency counterparts severely during the reporting period. | ||
• | In recent months, we have made significant strides in transitioning the portfolio away from non-agency MBS. However, we have continued to add agency MBS, specifically Fannie Mae and Freddie Mac 30-year securities, given their backing by the US government. Our agency MBS enhanced results toward the end of the reporting period. | |
• | Security selection and an overweight position in asset-backed securities (ABS) negatively contributed to performance. In particular, our exposure to ABS backed by home equity loans was a significant drag on performance as mortgage foreclosures and defaults moved sharply higher during the reporting period. We continue to hold certain ABS securities as our analysis shows that, while headwinds remain, their current valuations are extremely attractive. | |
• | Our commercial mortgage-backed security (CMBS) holdings performed poorly during the reporting period. While we favored AAA-rated CMBS, they, too, were negatively impacted by increased risk aversion and fears that the weakening economy would adversely affect the commercial real estate market going forward. CMBS spreads reached historically wide levels during the fourth quarter of 2008, and they remained elevated at the end of the reporting period. We selectively added to the Portfolio’s exposure to AAA-rated CMBS, as we felt they offered high-quality cash flows and compelling long-term appreciation potential. |
(2) | These securities are generally considered to be liquid and high-quality, but are not government guaranteed. |
UBS U.S. Allocation Fund
Q. | What is your outlook for the economy? | |
A. | While the extraordinary actions by the Fed and other government initiatives to add liquidity and restore confidence have provided some relief from the credit-related issues plaguing the markets, we expect volatility to remain elevated. We also expect yields to remain low in the near future, in light of the historically low fed funds rate. | |
Given the ongoing credit crunch, the still-slowing housing market and a weakening labor market, we believe that the US economy should continue to contract in the upcoming months. However, while growth has weakened considerably, we believe that a complete collapse in the economy and a period of prolonged deflation are unlikely given the extraordinary combination of global fiscal and monetary policy responses. In addition, we expect that the Obama administration’s fiscal stimulus package should support the economy as the year progresses. |
UBS U.S. Allocation Fund
We thank you for your continued support and welcome any comments or questions you may have. For additional information on the UBS family of funds,* please contact your financial advisor, or visit us at www.ubs.com/globalam-us.
Sincerely,
Kai R. Sotorp | Edwin M. Denson, PhD. | |
President | Lead Portfolio Manager | |
UBS U.S. Allocation Fund | UBS U.S. Allocation Fund | |
Head—Americas | Senior Asset Allocation Analyst | |
UBS Global Asset Management | UBS Global Asset Management | |
(Americas) Inc. | (Americas) Inc. |
Special considerations Investors in the Fund should be able to withstand short-term fluctuations in the equity markets in return for potentially higher returns over the long term. The value of the Fund’s portfolio changes every day and may be affected by changes in interest rates, general market conditions and other political, social and economic developments, as well as specific matters relating to the companies in whose securities the Fund invests. It is important to note that an investment in the Fund is only one component of a balanced investment plan. Shares of the Fund are not deposits or obligations of any bank, government agency, are not guaranteed by the FDIC or any other agency, and involve investment risks such as the possible loss of the principal amount invested. |
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended February 28, 2009. The views and opinions in the letter were current as of April 15, 2009. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund’s future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
* | Mutual funds are sold by prospectus only. You should carefully read and consider a fund’s investment objectives, risks, charges, expenses and other important information before investing. The prospectus contains this and other information about the fund. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568, or by visiting our Web site at www.ubs.com/globalam-us. |
UBS U.S. Allocation Fund
Performance at a glance (unaudited) | ||||||||||
Average annual total returns for periods ended 02/28/09 | ||||||||||
6 months | 1 year | 5 years | 10 years | |||||||
Class A(1) | (40.60)% | (41.19)% | (6.40)% | (3.07)% | ||||||
Before deducting maximum sales charge | Class B(2) | (40.91)% | (41.80)% | (7.21)% | (3.52)% | |||||
Class C(3) | (40.84)% | (41.66)% | (7.10)% | (3.79)% | ||||||
Class Y(4) | (40.49)% | (41.00)% | (6.07)% | (2.75)% | ||||||
Class A(1) | (43.87)% | (44.41)% | (7.45)% | (3.61)% | ||||||
After deducting maximum sales charge | Class B(2) | (43.83)% | (44.66)% | (7.56)% | (3.52)% | |||||
Class C(3) | (41.41)% | (42.23)% | (7.10)% | (3.79)% | ||||||
S&P 500 Index(5) | (41.82)% | (43.32)% | (6.63)% | (3.43)% | ||||||
UBS U.S. Allocation Fund Index(6) | (30.27)% | (30.85)% | (2.86)% | (1.50)% | ||||||
Lipper Flexible Portfolio Funds median(7) | (27.94)% | (30.66)% | (2.41)% | 1.98% | ||||||
For most recent quarter-end performance, please refer to the “Average annual total return” table on page 10. | ||
(1) | Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees. | |
(2) | Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees. | |
(3) | Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. | |
(4) | The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees. | |
(5) | The S&P 500 Index is an unmanaged, weighted index comprising 500 widely held common stocks varying in composition and is not available for direct investment. Investors should note that indices do not reflect the deduction of fees, expenses or taxes. | |
(6) | The UBS U.S. Allocation Fund Index is an unmanaged index compiled by the advisor, constructed as follows: from July 22, 1992 (the Fund’s inception) until February 29, 2004: 100% S&P 500 Index; from March 1, 2004 until May 31, 2005: 65% Russell 3000 Index, 30% Barclays Capital US Aggregate Index (formerly known as the Lehman Brothers US Aggregate index), and 5% Merrill Lynch US High Yield Cash Pay Index; and from June 1, 2005 until present: 65% Russell 3000 Index, 30% Barclays Capital US Aggregate Index (formerly known as the Lehman Brothers US Aggregate Index), 5% Merrill Lynch US High Yield Cash Pay Constrained Index. Investors should note that indices do not reflect the deduction of fees, expenses or taxes. | |
(7) | Lipper peer group data calculated by Lipper Inc; used with permission. The Lipper median is the return of the fund that places in the middle of a Lipper peer group. If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus. |
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for the period of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
UBS U.S. Allocation Fund
Performance at a glance (unaudited) (concluded) | ||||||||||
Average annual total returns for periods ended 03/31/09 | ||||||||||
6 months | 1 year | 5 years | 10 years | |||||||
Class A(1) | (29.77)% | (36.38)% | (4.91)% | (2.75)% | ||||||
Before deducting maximum sales charge | Class B(2) | (30.15)% | (36.97)% | (5.74)% | (3.20)% | |||||
Class C(3) | (30.02)% | (36.88)% | (5.62)% | (3.47)% | ||||||
Class Y(4) | (29.63)% | (36.18)% | (4.57)% | (2.42)% | ||||||
Class A(1) | (33.62)% | (39.87)% | (5.97)% | (3.30)% | ||||||
After deducting maximum sales charge | Class B(2) | (33.59)% | (40.07)% | (6.10)% | (3.20)% | |||||
Class C(3) | (30.71)% | (37.50)% | (5.62)% | (3.47)% | ||||||
(1) | Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing I2b-1 service fees. | |
(2) | Maximum contingent deferred sales charge for Class B shares is 5% imposed on redemptions and is reduced to 0% after a maximum of six years. Class B shares bear ongoing 12b-1 service and distribution fees. | |
(3) | Maximum contingent deferred sales charge for Class C shares is 1% imposed on redemptions and is reduced to 0% after one year. Class C shares bear ongoing 12b-1 service and distribution fees. | |
(4) | The Fund offers Class Y shares to a limited group of eligible investors, including certain qualifying retirement plans. Class Y shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees. | |
If an investor sells or exchanges shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged will be deducted at the time of the transaction, except as noted otherwise in the prospectus. |
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for the period of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com.
UBS U.S. Allocation Fund
Understanding your Fund’s expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transactional costs (as applicable), including sales charges (loads); and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees (if applicable); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example below is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, September 1, 2008 to February 28, 2009.
Actual expenses
The first line for each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over a period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each class of shares under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return for each class of shares. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing Fund costs only and do not reflect any transactional costs (as applicable), such as sales charges (loads). Therefore, the second line in the table for each class of shares is useful in comparing ongoing Fund costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
UBS U.S. Allocation Fund
Understanding your Fund’s expenses (unaudited) (concluded) | |||||||||||||
Expenses | |||||||||||||
paid during | Expense | ||||||||||||
Beginning | Ending | period(1) | ratio | ||||||||||
account value | account value | 09/01/08 to | during the | ||||||||||
September 1, 2008 | February 28, 2009 | 02/28/09 | period | ||||||||||
Class A | Actual | $ | 1,000.00 | $594.00 | $ | 4.19 | 1.06% | ||||||
Hypothetical | |||||||||||||
(5% annual | |||||||||||||
return before | |||||||||||||
expenses) | 1,000.00 | 1,019.54 | 5.31 | 1.06% | |||||||||
Class B | Actual | 1,000.00 | 590.90 | 8.36 | 2.12% | ||||||||
Hypothetical | |||||||||||||
(5% annual | |||||||||||||
return before | |||||||||||||
expenses) | 1,000.00 | 1,014.28 | 10.59 | 2.12% | |||||||||
Class C | Actual | 1,000.00 | 591.60 | 7.14 | 1.81% | ||||||||
Hypothetical | |||||||||||||
(5% annual | |||||||||||||
return before | |||||||||||||
expenses) | 1,000.00 | 1,015.82 | 9.05 | 1.81% | |||||||||
Class Y | Actual | 1,000.00 | 595.10 | 2.61 | 0.66% | ||||||||
Hypothetical | |||||||||||||
(5% annual | |||||||||||||
return before | |||||||||||||
expenses) | 1,000.00 | 1,021.52 | 3.31 | 0.66% | |||||||||
(1) | Expenses are equal to the Fund’s annualized net expense ratios, multiplied by the average account value over the period, multiplied by 181 divided by 365 (to reflect the one-half year period). |
UBS U.S. Allocation Fund
Portfolio statistics (unaudited) | |||||||||||||
Characteristics | 02/28/09 | 08/31/08 | 02/29/08 | ||||||||||
Net assets (mm) | $287.9 | $546.7 | $621.9 | ||||||||||
Number of securities | 490 | 483 | 562 | ||||||||||
Portfolio | |||||||||||||
composition(1) | 02/28/09 | 08/31/08 | 02/29/08 | ||||||||||
Stocks | 66.2% | 73.6% | 65.3% | ||||||||||
Bonds | 26.2 | 22.4 | 30.6 | ||||||||||
Futures, options and | |||||||||||||
swap contracts | (3.3) | (0.3) | (0.2) | ||||||||||
Cash equivalents and | |||||||||||||
other assets less liabilities | 10.9 | 4.3 | 4.3 | ||||||||||
Total | 100.0% | 100.0% | 100.0% | ||||||||||
Top five equity | |||||||||||||
sectors(1) | 02/28/09 | 08/31/08 | 02/29/08 | ||||||||||
Information technology | 13.0% | Health care | 12.6% | Health care | 12.1% | ||||||||
Health care | 11.5 | Financials | 12.2 | Financials | 11.5 | ||||||||
Information | |||||||||||||
Consumer discretionary | 9.1 | technology | 12.1 | Industrials | 10.1 | ||||||||
Consumer | Consumer | ||||||||||||
Energy | 7.9 | discretionary | 10.8 | discretionary | 10.0 | ||||||||
Information | |||||||||||||
Industrials | 7.6 | Industrials | 10.7 | technology | 8.5 | ||||||||
Total | 49.1% | 58.4% | 52.2% | ||||||||||
Top ten equity | |||||||||||||
securities(1) | 02/28/09 | 08/31/08 | 02/29/08 | ||||||||||
Intel Corp. | 2.1% | Intel Corp. | 2.2% | General Electric Co. | 1.8% | ||||||||
Apple, Inc. | 1.9 | Wyeth | 1.8 | Intel Corp. | 1.7 | ||||||||
Allergan, Inc. | 1.6 | Wells Fargo & Co. | 1.8 | Wyeth | 1.6 | ||||||||
PepsiCo, Inc. | 1.6 | General Electric Co. | 1.7 | Wells Fargo & Co. | 1.6 | ||||||||
Comcast Corp., Class A | 1.6 | Halliburton Co. | 1.5 | Allergan, Inc. | 1.6 | ||||||||
Comcast Corp., | |||||||||||||
Wyeth | 1.4 | Class A | 1.5 | Citigroup, Inc. | 1.5 | ||||||||
Exelon Corp. | 1.4 | Citigroup, Inc. | 1.4 | Exelon Corp. | 1.5 | ||||||||
Burlington Northern | |||||||||||||
Microsoft Corp. | 1.4 | Baker Hughes, Inc. | 1.4 | Santa Fe Corp. | 1.4 | ||||||||
Illinois Tool Works, Inc. | 1.2 | Microsoft Corp. | 1.4 | Morgan Stanley | 1.3 | ||||||||
Medco Health | |||||||||||||
Solutions, Inc. | 1.1 | Genzyme Corp. | 1.4 | Johnson & Johnson | 1.2 | ||||||||
Total | 15.3% | 16.1% | 15.2% | ||||||||||
(1) | Weightings represent percentages of the Fund’s net assets as of the dates indicated. |
UBS U.S. Allocation Fund
Portfolio statistics (unaudited) (continued) | |||||||||||||
Long-term fixed income | |||||||||||||
sector allocation(1) | 02/28/09 | 08/31/08 | 02/29/08 | ||||||||||
Corporate bonds | 10.4 | % | 6.7 | % | 8.5% | ||||||||
Mortgage & agency debt securities | 10.3 | 9.5 | 12.7 | ||||||||||
US government obligations | 3.6 | 4.2 | 4.8 | ||||||||||
Commercial mortgage-backed securities | 1.3 | 1.6 | 3.4 | ||||||||||
Asset-backed securities | 0.6 | 0.3 | 1.1 | ||||||||||
Collateralized debt obligation | — | 0.1 | 0.1 | ||||||||||
Total | 26.2 | % | 22.4 | % | 30.6% | ||||||||
(1) | Weightings represent percentages of the Fund’s net assets as of the dates indicated. |
UBS U.S. Allocation Fund
Portfolio statistics (unaudited) (concluded) | |||||||||||||
Top ten fixed | |||||||||||||
income securities(1) | 02/28/09 | 08/31/08 | 02/29/08 | ||||||||||
US Treasury Notes, | |||||||||||||
FHLMC Certificates, | FNMA Certificates | 4.250% | |||||||||||
5.500% due 05/01/37 | 1.0% | TBA, 5.500% | 1.2% | due 09/30/12 | 1.3% | ||||||||
US Treasury | |||||||||||||
Inflation Index | US Treasury Notes, | ||||||||||||
US Treasury Notes, | Notes, 2.000% | 4.625% | |||||||||||
0.875% due 01/31/11 | 0.9 | due 01/15/16 | 1.0 | due 02/15/17 | 0.9 | ||||||||
US Treasury Notes, | US Treasury Bonds, | ||||||||||||
US Treasury Bonds, | 4.625% | 6.250% | |||||||||||
4.500% due 05/15/38 | 0.8 | due 02/15/17 | 0.9 | due 08/15/23 | 0.9 | ||||||||
FNMA Certificates, | |||||||||||||
GNMA Certificates II, | FNMA Certificates | 6.500% | |||||||||||
6.000% due 02/20/34 | 0.8 | TBA, 6.000% | 0.6 | due 01/01/36 | 0.8 | ||||||||
US Treasury Inflation | US Treasury Notes, | ||||||||||||
FNMA Certificates, | Index Notes, 2.375% | 3.250% | |||||||||||
3.500% due 04/28/11 | 0.7 | due 04/15/11 | 0.6 | due 12/31/09 | 0.6 | ||||||||
FHLMC Certificates, | US Treasury Inflation | ||||||||||||
FHLMC Certificates, | 5.500% | Index Notes, 2.375% | |||||||||||
5.500% due 03/01/37 | 0.7 | due 05/01/37 | 0.6 | due 04/15/11 | 0.6 | ||||||||
US Treasury Bonds, | FHLMC Certificates, | ||||||||||||
FHLMC Certificates ARM, | 5.375% | 5.500% | |||||||||||
5.354% due 03/01/37 | 0.7 | due 02/15/31 | 0.5 | due 05/01/37 | 0.5 | ||||||||
US Treasury Bonds, | FNMA Certificates, | ||||||||||||
FNMA Certificates, | 4.750% | 5.000% | |||||||||||
2.875% due 12/11/13 | 0.6 | due 02/15/37 | 0.5 | due 02/01/19 | 0.5 | ||||||||
FNMA REMIC, | |||||||||||||
US Treasury Inflation | Series 2004-W1, | FHLMC Certificates, | |||||||||||
Index Notes, 1.375% | Class 3A, 5.855% | 5.600% | |||||||||||
due 07/15/18 | 0.6 | due 01/25/43 | 0.5 | due 10/17/13 | 0.5 | ||||||||
US Treasury Inflation | GNMA Certificates II, | Lehman XS Trust, | |||||||||||
Index Notes, 0.875% | 6.000% | 6.000% | |||||||||||
due 04/15/10 | 0.6 | due 02/20/34 | 0.4 | due 12/25/35 | 0.5 | ||||||||
Total | 7.4% | 6.8% | 7.1% | ||||||||||
(1) | Weightings represent percentages of the Fund’s net assets as of the dates indicated. |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Common stocks—66.17%
Security description | Shares | Value | ||||
Aerospace & defense—0.50% | ||||||
BE Aerospace, Inc.* | 18,100 | $135,026 | ||||
General Dynamics Corp. | 8,000 | 350,560 | ||||
Hexcel Corp.(1),* | 18,500 | 114,885 | ||||
Precision Castparts Corp. | 3,700 | 205,091 | ||||
United Technologies Corp. | 15,400 | 628,782 | ||||
1,434,344 | ||||||
Air freight & logistics—1.11% | ||||||
Dynamex, Inc.(1),* | 9,500 | 109,440 | ||||
FedEx Corp. | 71,400 | 3,085,194 | ||||
3,194,634 | ||||||
Auto components—1.15% | ||||||
BorgWarner, Inc.(1) | 96,900 | 1,671,525 | ||||
Johnson Controls, Inc.(1) | 145,200 | 1,652,376 | ||||
3,323,901 | ||||||
Beverages—2.12% | ||||||
Boston Beer Co., Inc., Class A* | 4,700 | 112,659 | ||||
Constellation Brands, Inc., Class A* | 111,200 | 1,451,160 | ||||
PepsiCo, Inc. | 94,300 | 4,539,602 | ||||
6,103,421 | ||||||
Biotechnology—1.80% | ||||||
Amgen, Inc.(1),* | 51,600 | 2,524,788 | ||||
Genzyme Corp.* | 43,600 | 2,656,548 | ||||
5,181,336 | ||||||
Capital markets—2.20% | ||||||
BlackRock, Inc.(1) | 4,000 | 387,240 | ||||
Charles Schwab Corp. | 30,100 | 382,571 | ||||
Lazard Ltd., Class A(1) | 8,200 | 199,096 | ||||
Morgan Stanley(1) | 135,250 | 2,642,785 | ||||
T. Rowe Price Group, Inc.(1) | 11,200 | 254,688 | ||||
The Bank of New York Mellon Corp. | 110,700 | 2,454,219 | ||||
6,320,599 | ||||||
Security description | Shares | Value | ||||
Chemicals—0.97% | ||||||
Air Products & Chemicals, Inc.(1) | 8,100 | $374,625 | ||||
Airgas, Inc.(1) | 4,800 | 147,792 | ||||
Celanese Corp.(1) | 76,500 | 653,310 | ||||
Cytec Industries, Inc.(1) | 10,500 | 161,700 | ||||
Ecolab, Inc.(1) | 8,700 | 276,486 | ||||
Monsanto Co. | 7,000 | 533,890 | ||||
Praxair, Inc. | 11,400 | 646,950 | ||||
2,794,753 | ||||||
Commercial banks—0.78% | ||||||
Bank of Hawaii Corp.(1) | 3,000 | 96,120 | ||||
City National Corp.(1) | 27,300 | 875,784 | ||||
Cullen/Frost Bankers, Inc.(1) | 4,200 | 180,768 | ||||
SVB Financial Group(1),* | 3,800 | 62,130 | ||||
Wells Fargo & Co. | 84,500 | 1,022,450 | ||||
2,237,252 | ||||||
Commercial services & supplies—0.11% | ||||||
Innerworkings, Inc.(1),* | 34,800 | 73,080 | ||||
Interface, Inc., Class A(1) | 40,200 | 89,646 | ||||
Mobile Mini, Inc.(1),* | 16,700 | 162,825 | ||||
325,551 | ||||||
Communications equipment—1.01% | ||||||
Cisco Systems, Inc.* | 67,300 | 980,561 | ||||
F5 Networks, Inc.(1),* | 10,500 | 210,000 | ||||
Harris Corp. | 6,300 | 234,864 | ||||
NICE Systems Ltd., ADR* | 6,700 | 141,370 | ||||
QUALCOMM, Inc. | 40,500 | 1,353,915 | ||||
2,920,710 | ||||||
Computers & peripherals—2.22% | ||||||
Apple, Inc.* | 59,800 | 5,340,738 | ||||
Seagate Technology(1) | 207,400 | 891,820 | ||||
Stratasys, Inc.(1),* | 16,100 | 146,510 | ||||
6,379,068 | ||||||
16 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Common stocks—(continued)
Security description | Shares | Value | ||||
Consumer finance—0.39% | ||||||
Discover Financial Services(1) | 195,825 | $1,122,077 | ||||
Containers & packaging—0.07% | ||||||
AptarGroup, Inc.(1) | 7,000 | 196,420 | ||||
Distributors—0.10% | ||||||
LKQ Corp.(1),* | 21,700 | 292,950 | ||||
Diversified consumer services—0.10% | ||||||
Coinstar, Inc.(1),* | 11,000 | 287,540 | ||||
Diversified financial services—0.30% | ||||||
CME Group, Inc. | 2,600 | 474,240 | ||||
IntercontinentalExchange, Inc.* | 6,900 | 391,713 | ||||
865,953 | ||||||
Diversified telecommunication services—1.16% | ||||||
AT&T, Inc. | 135,500 | 3,220,835 | ||||
Cbeyond, Inc.(1),* | 9,000 | 129,690 | ||||
3,350,525 | ||||||
Electric utilities—2.29% | ||||||
American Electric Power Co., Inc. | 65,400 | 1,834,470 | ||||
Exelon Corp.(1) | 84,800 | 4,004,256 | ||||
Pepco Holdings, Inc. | 51,200 | 768,000 | ||||
6,606,726 | ||||||
Electrical equipment—0.13% | ||||||
A.O. Smith Corp.(1) | 5,400 | 137,862 | ||||
Regal-Beloit Corp.(1) | 8,000 | 229,440 | ||||
367,302 | ||||||
Electronic equipment, instruments & components—0.05% | ||||||
Daktronics, Inc.(1) | 20,200 | 138,572 | ||||
Energy equipment & services—2.17% | ||||||
Baker Hughes, Inc. | 85,200 | 2,497,212 | ||||
GulfMark Offshore, Inc.* | 6,700 | 139,963 | ||||
Halliburton Co.(1) | 172,300 | 2,810,213 | ||||
Security description | Shares | Value | ||||
Energy equipment & services—(concluded) | ||||||
Oceaneering International, Inc.(1),* | 5,900 | $187,443 | ||||
Oil States International, Inc.(1),* | 9,400 | 125,208 | ||||
Schlumberger Ltd.(1) | 7,200 | 274,032 | ||||
TETRA Technologies, Inc.(1),* | 40,500 | 115,830 | ||||
Weatherford International Ltd.(1),* | 10,300 | 109,901 | ||||
6,259,802 | ||||||
Food & staples retailing—0.72% | ||||||
Sysco Corp. | 80,500 | 1,730,750 | ||||
Wal-Mart Stores, Inc. | 6,700 | 329,908 | ||||
2,060,658 | ||||||
Food products—0.28% | ||||||
Campbell Soup Co.(1) | 13,400 | 358,718 | ||||
Fresh Del Monte Produce, Inc.* | 13,600 | 255,408 | ||||
Kellogg Co.(1) | 4,700 | 182,924 | ||||
797,050 | ||||||
Gas utilities—0.19% | ||||||
AGL Resources, Inc.(1) | 9,700 | 269,078 | ||||
EQT Corp.(1) | 8,700 | 267,525 | ||||
536,603 | ||||||
Health care equipment & supplies—3.46% | ||||||
Alcon, Inc. | 5,100 | 420,036 | ||||
AngioDynamics, Inc.(1),* | 16,800 | 199,416 | ||||
Baxter International, Inc. | 16,400 | 834,924 | ||||
CONMED Corp.* | 9,500 | 129,105 | ||||
Covidien Ltd. | 82,000 | 2,596,940 | ||||
Hill-Rom Holdings, Inc.(1) | 13,000 | 127,660 | ||||
Medical Action Industries, Inc.* | 26,091 | 174,288 | ||||
Medtronic, Inc. | 86,500 | 2,559,535 | ||||
17 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Common stocks—(continued)
Security description | Shares | Value | ||||
Health care equipment & supplies—(concluded) | ||||||
Orthofix | ||||||
International NV(1),* | 17,600 | $279,664 | ||||
Stryker Corp.(1) | 18,900 | 636,363 | ||||
The Cooper Cos., Inc.(1) | 13,700 | 301,263 | ||||
Zimmer Holdings, Inc.* | 46,300 | 1,621,426 | ||||
Zoll Medical Corp.(1),* | 4,900 | 67,375 | ||||
9,947,995 | ||||||
Health care providers & services—1.99% | ||||||
DaVita, Inc.* | 15,000 | 703,800 | ||||
Express Scripts, Inc.* | 11,800 | 593,540 | ||||
Henry Schein, Inc.* | 4,000 | 146,720 | ||||
Laboratory Corp. of America Holdings(1),* | 10,900 | 599,609 | ||||
Medco Health Solutions, Inc.* | 81,100 | 3,291,038 | ||||
MWI Veterinary Supply, Inc.* | 5,800 | 146,276 | ||||
Patterson Cos., Inc.(1),* | 6,100 | 110,227 | ||||
PSS World Medical, Inc.(1),* | 9,500 | 137,085 | ||||
5,728,295 | ||||||
Hotels, restaurants & leisure—1.85% | ||||||
Carnival Corp. | 107,000 | 2,092,920 | ||||
International Game Technology | 33,200 | 292,824 | ||||
Life Time Fitness, Inc.(1),* | 12,800 | 109,568 | ||||
McDonald’s Corp. | 8,900 | 465,025 | ||||
Starbucks Corp.* | 258,800 | 2,368,020 | ||||
5,328,357 | ||||||
Household durables—0.49% | ||||||
Fortune Brands, Inc.(1) | 59,300 | 1,408,375 | ||||
Household products—0.26% | ||||||
Colgate-Palmolive Co. | 8,600 | 517,548 | ||||
Procter & Gamble Co. | 4,900 | 236,033 | ||||
753,581 | ||||||
Security description | Shares | Value | ||||
Independent power producers & energy traders—0.08% | ||||||
Dynegy, Inc., Class A* | 175,400 | $228,020 | ||||
Industrial conglomerates—1.07% | ||||||
General Electric Co. | 362,200 | 3,082,322 | ||||
Insurance—1.79% | ||||||
ACE Ltd. | 64,500 | 2,354,895 | ||||
AFLAC, Inc.(1) | 38,700 | 648,612 | ||||
MetLife, Inc. | 39,200 | 723,632 | ||||
Principal Financial Group, Inc.(1) | 97,400 | 778,226 | ||||
Seabright Insurance Holdings* | 13,100 | 127,332 | ||||
Tower Group, Inc.(1) | 7,800 | 159,042 | ||||
Validus Holdings Ltd. | 15,200 | 363,888 | ||||
5,155,627 | ||||||
Internet & catalog retail—0.32% | ||||||
Amazon.com, Inc.(1),* | 14,000 | 907,060 | ||||
Internet software & services—0.75% | ||||||
Art Technology Group, Inc.* | 95,500 | 208,190 | ||||
Dice Holdings, Inc.* | 1,800 | 4,266 | ||||
Google, Inc., Class A* | 4,700 | 1,588,553 | ||||
TheStreet.com, Inc.(1) | 45,900 | 90,423 | ||||
ValueClick, Inc.(1),* | 23,100 | 144,837 | ||||
Websense, Inc.(1),* | 11,700 | 130,572 | ||||
2,166,841 | ||||||
IT services—1.16% | ||||||
Automatic Data Processing, Inc.(1) | 10,400 | 355,160 | ||||
MasterCard, Inc., Class A(1) | 8,000 | 1,264,240 | ||||
NeuStar, Inc., Class A(1),* | 8,400 | 130,116 | ||||
RightNow Technologies, Inc.* | 15,540 | 123,543 | ||||
Visa, Inc., Class A(1) | 25,900 | 1,468,789 | ||||
3,341,848 | ||||||
18 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Common stocks—(continued)
Security description | Shares | Value | ||||
Life sciences tools & services—0.98% | ||||||
Millipore Corp.(1),* | 29,800 | $1,640,788 | ||||
Pharmaceutical Product Development, Inc. | 35,880 | 860,761 | ||||
Waters Corp.(1),* | 9,300 | 327,546 | ||||
2,829,095 | ||||||
Machinery—2.89% | ||||||
Chart Industries, Inc.(1),* | 4,205 | 26,996 | ||||
Illinois Tool Works, Inc.(1) | 122,600 | 3,408,280 | ||||
Nordson Corp.(1) | 6,400 | 159,360 | ||||
PACCAR, Inc.(1) | 112,800 | 2,827,896 | ||||
Pall Corp. | 80,200 | 1,906,354 | ||||
8,328,886 | ||||||
Media—3.24% | ||||||
Cinemark Holdings, Inc.(1) | 42,000 | 322,980 | ||||
Comcast Corp., Class A | 341,800 | 4,463,908 | ||||
Interpublic Group of Cos., Inc.(1),* | 340,100 | 1,295,781 | ||||
News Corp., Class A(1) | 250,500 | 1,392,780 | ||||
Omnicom Group, Inc.(1) | 77,100 | 1,852,713 | ||||
9,328,162 | ||||||
Metals & mining—0.16% | ||||||
Brush Engineered Materials, Inc.(1),* | 14,100 | 174,840 | ||||
Haynes International, Inc.(1),* | 8,400 | 113,400 | ||||
Steel Dynamics, Inc. | 19,200 | 160,320 | ||||
448,560 | ||||||
Multi-utilities—0.93% | ||||||
Sempra Energy(1) | 64,600 | 2,685,422 | ||||
Multiline retail—1.04% | ||||||
J.C. Penney Co., Inc.(1) | 99,500 | 1,525,335 | ||||
Macy’s, Inc.(1) | 185,600 | 1,460,672 | ||||
2,986,007 | ||||||
Security description | Shares | Value | ||||
Oil, gas & consumable fuels—6.64% | ||||||
Anadarko Petroleum Corp. | 80,700 | $2,820,465 | ||||
Chevron Corp. | 49,800 | 3,023,358 | ||||
EOG Resources, Inc. | 21,400 | 1,070,856 | ||||
Foundation Coal Holdings, Inc.(1) | 9,200 | 147,936 | ||||
Hess Corp. | 52,200 | 2,854,818 | ||||
Marathon Oil Corp. | 90,700 | 2,110,589 | ||||
Peabody Energy Corp.(1) | 103,600 | 2,452,212 | ||||
Southwestern Energy Co.* | 11,400 | 327,978 | ||||
Ultra Petroleum Corp.(1),* | 82,500 | 2,899,050 | ||||
Williams Cos., Inc. | 91,100 | 1,029,430 | ||||
XTO Energy, Inc. | 12,050 | 381,503 | ||||
19,118,195 | ||||||
Personal products—0.08% | ||||||
Mead Johnson Nutrition Co., Class A* | 2,462 | 67,927 | ||||
Prestige Brands Holdings, Inc.* | 29,800 | 163,006 | ||||
230,933 | ||||||
Pharmaceuticals—3.28% | ||||||
Abbott Laboratories | 15,000 | 710,100 | ||||
Allergan, Inc. | 121,500 | 4,706,910 | ||||
Wyeth | 98,500 | 4,020,770 | ||||
9,437,780 | ||||||
Real estate investment trusts (REITs)—0.22% | ||||||
Digital Realty Trust, Inc.(1) | 4,500 | 134,505 | ||||
Entertainment Properties Trust(1) | 8,700 | 129,717 | ||||
Hatteras Financial Corp. | 15,100 | 360,135 | ||||
624,357 | ||||||
19 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Common stocks—(concluded)
Security description | Shares | Value | ||||
Real estate management & development—0.01% | ||||||
Maui Land & Pineapple Co., Inc.(1),* | 3,877 | $30,551 | ||||
Road & rail—1.72% | ||||||
Burlington Northern Santa Fe Corp.(1) | 40,800 | 2,397,816 | ||||
Kansas City Southern(1),* | 13,500 | 238,815 | ||||
Knight Transportation, Inc.(1) | 16,100 | 208,656 | ||||
Old Dominion Freight Line, Inc.(1),* | 10,600 | 230,974 | ||||
Ryder System, Inc. | 53,000 | 1,211,580 | ||||
Union Pacific Corp.(1) | 17,400 | 652,848 | ||||
4,940,689 | ||||||
Semiconductors & semiconductor equipment—4.87% | ||||||
Analog Devices, Inc. | 78,200 | 1,457,648 | ||||
Broadcom Corp., Class A(1),* | 158,800 | 2,612,260 | ||||
Intel Corp. | 463,700 | 5,907,538 | ||||
Intersil Corp., Class A | 69,300 | 700,623 | ||||
KLA-Tencor Corp. | 57,400 | 990,150 | ||||
Marvell Technology Group Ltd.* | 190,900 | 1,433,659 | ||||
National Semiconductor Corp. | 77,600 | 845,840 | ||||
ON Semiconductor Corp.(1),* | 23,600 | 86,376 | ||||
14,034,094 | ||||||
Software—3.46% | ||||||
Adobe Systems, Inc.* | 16,200 | 270,540 | ||||
Factset Research Systems, Inc.(1) | 2,000 | 77,080 | ||||
Intuit, Inc.* | 107,100 | 2,440,809 | ||||
Microsoft Corp. | 246,500 | 3,980,975 | ||||
Nuance Communications, Inc.(1),* | 25,900 | 229,474 | ||||
Security description | Shares | Value | ||||
Software—(concluded) | ||||||
Oracle Corp.* | 25,400 | $394,716 | ||||
Quest Software, Inc.* | 14,000 | 158,200 | ||||
Smith Micro Software, Inc.* | 22,700 | 96,475 | ||||
VASCO Data Security International, Inc.(1),* | 1,834 | 9,060 | ||||
VMware, Inc., Class A(1),* | 111,500 | 2,314,740 | ||||
9,972,069 | ||||||
Specialty retail—0.38% | ||||||
Abercrombie & Fitch Co., Class A(1) | 6,000 | 131,940 | ||||
Hibbett Sports, Inc.(1),* | 22,100 | 309,842 | ||||
PetSmart, Inc.(1) | 12,300 | 246,492 | ||||
The Sherwin-Williams Co.(1) | 8,600 | 395,170 | ||||
1,083,444 | ||||||
Textiles, apparel & luxury goods—0.36% | ||||||
Coach, Inc.* | 60,700 | 848,586 | ||||
Movado Group, Inc.(1) | 18,456 | 105,384 | ||||
Steven Madden Ltd.(1),* | 4,400 | 71,368 | ||||
1,025,338 | ||||||
Trading companies & distributors—0.08% | ||||||
Interline Brands, Inc.* | 29,300 | 232,642 | ||||
Wireless telecommunication services—0.69% | ||||||
American Tower Corp., Class A* | 11,700 | 340,704 | ||||
Sprint Nextel Corp.(1),* | 503,394 | 1,656,166 | ||||
1,996,870 | ||||||
Total common stocks (cost—$304,046,962) | 190,479,162 | |||||
Preferred stock—0.01% | ||||||
Diversified financial services—0.01% | ||||||
Preferred Blocker, Inc.(1),(2),(3),* (cost—$18,400) | 92 | 15,709 | ||||
20 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
US government obligations—3.59% | ||||||||
US Treasury Bonds, | ||||||||
4.500%, due 05/15/38(1) | $2,075,000 | $2,355,772 | ||||||
8.125%, due 08/15/19 | 335,000 | 465,964 | ||||||
US Treasury Inflation Index Notes (TIPS), | ||||||||
0.875%, due 04/15/10(1) | 1,637,427 | 1,614,402 | ||||||
1.375%, due 07/15/18(1) | 1,745,733 | 1,624,077 | ||||||
2.000%, due 01/15/16(1) | 747,018 | 725,774 | ||||||
US Treasury Notes, | ||||||||
0.875%, due 01/31/11 | 2,500,000 | 2,494,625 | ||||||
1.750%, due 01/31/14(1) | 410,000 | 405,482 | ||||||
2.750%, due 02/15/19(1) | 680,000 | 663,000 | ||||||
Total US government obligations (cost—$10,344,221) | 10,349,096 | |||||||
Mortgage & agency debt securities—10.25% | ||||||||
Banc of America Funding Corp., Series 2006-H, Class B1, | ||||||||
6.056%, due 09/20/46(4) | 2,375,269 | 100,949 | ||||||
Countrywide Alternative Loan Trust, Series 2005-J2, Class 2A1, | ||||||||
7.500%, due 12/25/34 | 663,908 | 403,739 | ||||||
Federal Home Loan Mortgage Corporation Certificates,** | ||||||||
5.000%, due 09/01/38 | 745,445 | 757,758 | ||||||
5.000%, due 11/01/38 | 848,759 | 862,778 | ||||||
5.500%, due 03/01/37 | 1,878,064 | 1,925,287 | ||||||
5.500%, due 05/01/37 | 2,900,486 | 2,973,418 | ||||||
5.500%, due 07/01/38 | 950,338 | 974,234 | ||||||
5.500%, due 09/01/38 | 883,723 | 905,944 | ||||||
6.000%, due 03/01/32 | 4,559 | 4,771 | ||||||
6.500%, due 08/01/28 | 1,020,915 | 1,078,569 | ||||||
6.500%, due 04/01/29 | 14,070 | 14,856 | ||||||
Federal Home Loan Mortgage Corporation Certificates ARM,** | ||||||||
5.354%, due 03/01/37 | 1,845,244 | 1,901,998 | ||||||
Federal National Mortgage Association Certificates,** | ||||||||
2.875%, due 12/11/13(1) | 1,680,000 | 1,697,509 | ||||||
3.500%, due 04/28/11 | 1,945,000 | 1,950,948 | ||||||
5.500%, due 07/01/33 | 1,515,146 | 1,558,301 | ||||||
5.500%, due 05/01/36 | 1,284,340 | 1,318,513 | ||||||
5.500%, due 05/01/38 | 888,104 | 910,713 | ||||||
6.000%, due 06/01/33 | 10,885 | 11,358 | ||||||
6.000%, due 12/01/36 | 1,364,294 | 1,411,679 | ||||||
21 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Mortgage & agency debt securities—(concluded) | ||||||||
Federal National Mortgage Association Certificates,** (concluded) | ||||||||
6.000%, due 08/01/37 | $303,869 | $314,168 | ||||||
6.000%, due 04/01/38 | 1,017,966 | 1,052,470 | ||||||
6.000%, due 06/01/38 | 1,021,701 | 1,056,332 | ||||||
6.500%, due 03/01/17 | 694,856 | 728,131 | ||||||
7.000%, due 08/01/32 | 946,683 | 1,011,779 | ||||||
7.500%, due 05/01/31 | 7,167 | 7,702 | ||||||
7.500%, due 02/01/33 | 13,065 | 13,977 | ||||||
Federal National Mortgage Association Certificates,** | ||||||||
4.000%, TBA | 100,000 | 98,156 | ||||||
First Horizon Mortgage Pass-Through Trust, | 150,771 | 92,369 | ||||||
Government National Mortgage Association Certificates, | ||||||||
6.500%, due 10/15/24 | 1,459,264 | 1,524,615 | ||||||
6.500%, due 10/15/28 | 10,076 | 10,576 | ||||||
7.000%, due 04/15/26 | 5,964 | 6,451 | ||||||
Government National Mortgage Association Certificates II, | ||||||||
6.000%, due 11/20/28 | 4,437 | 4,610 | ||||||
6.000%, due 02/20/29 | 9,743 | 10,115 | ||||||
6.000%, due 02/20/34 | 2,223,772 | 2,297,860 | ||||||
Washington Mutual Mortgage Pass-Through Certificates, | ||||||||
Series 2002-AR17, Class 1A, 3.023%, due 11/25/42(4) | 742,971 | 333,232 | ||||||
Series 2007-HY7, Class LB1, 5.822%, due 07/25/37(4) | 1,171,990 | 184,814 | ||||||
Total mortgage & agency debt securities (cost—$32,869,119) | 29,510,679 | |||||||
Commercial mortgage-backed securities—1.25% | ||||||||
Bear Stearns Commercial Mortgage Securities, | ||||||||
Series 2005-PWR7, Class A2, 4.945%, due 02/11/41 | 343,151 | 293,557 | ||||||
Series 2006-PW12, Class A4, 5.718%, due 09/11/38(4) | 300,000 | 215,263 | ||||||
Greenwich Capital Commercial Funding Corp., | ||||||||
Series 2006-RR1, Class A1, 5.778%, due 03/18/49(2),(4) | 3,500,000 | 1,050,000 | ||||||
Series 2007-GG9, Class A4, 5.444%, due 03/10/39 | 375,000 | 234,930 | ||||||
GS Mortgage Securities Corp. II, | ||||||||
Series 2006-CC1, Class A, 5.379%, due 03/21/46(4),(5),(6) | 3,405,967 | 749,313 | ||||||
Series 2006-RR2, Class A1, 5.691%, due 06/23/46(4),(5),(6) | 2,534,746 | 506,949 | ||||||
Series 2007-GG10, Class A2, 5.778%, due 08/10/45 | 300,000 | 229,154 | ||||||
Series 2007-GG10, Class A4 5.799%, due 08/10/45(4) | 470,000 | 271,826 | ||||||
22 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Commercial mortgage-backed securities—(concluded) | ||||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust, | ||||||||
Series 2006-3, Class B, | ||||||||
5.525%, due 07/12/46(4) | $275,000 | $41,540 | ||||||
Total commercial mortgage-backed securities (cost—$11,017,690) | 3,592,532 | |||||||
Asset-backed securities—0.61% | ||||||||
Citibank Credit Card Issuance Trust, | ||||||||
Series 2002-A8, Class A8, | ||||||||
0.638%, due 11/07/11(4) | 400,000 | 392,835 | ||||||
Ford Credit Auto Owner Trust, | ||||||||
Series 2007-B, Class A3A, | ||||||||
5.150%, due 11/15/11 | 170,000 | 165,902 | ||||||
GSAMP Trust, | ||||||||
Series 2006-S5, Class A2, | ||||||||
5.658%, due 12/12/36(5),(7) | 293,920 | 7,348 | ||||||
Home Equity Mortgage Trust, | ||||||||
Series 2006-5, Class A1, 5.500%, due 01/25/37(7) | 504,190 | 108,216 | ||||||
Series 2006-6, Class 2A1, 0.574%, due 03/25/37(4) | 179,447 | 14,632 | ||||||
MBNA Credit Card Master Note Trust, | ||||||||
Series 2004-A7, Class A7, 0.561%, due 12/15/11(4) | 350,000 | 346,136 | ||||||
Series 2004-A10, Class A, 0.541%, due 03/15/12(4) | 300,000 | 294,220 | ||||||
Merrill Lynch First Franklin Mortgage Loan, | ||||||||
Series 2007-A, Class A1, | ||||||||
1.574%, due 09/25/27(4) | 78,464 | 74,566 | ||||||
Washington Mutual Master Note Trust, | ||||||||
Series 2007-A5A, Class A5, | ||||||||
1.205%, due 10/15/14(2),(4) | 450,000 | 357,830 | ||||||
Total asset-backed securities (cost—$2,596,673) | 1,761,685 | |||||||
Corporate bonds—10.44% | ||||||||
Aerospace & defense—0.09% | ||||||||
DAE Aviation Holdings | ||||||||
11.250%, due 08/01/15(2) | 336,000 | 120,120 | ||||||
Esterline Technologies Corp. | ||||||||
6.625%, due 03/01/17 | 155,000 | 139,500 | ||||||
Hawker Beechcraft Acquisition Co. | ||||||||
8.875%, due 04/01/15(1),(8) | 100,000 | 8,500 | ||||||
268,120 | ||||||||
23 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Agriculture—0.05% | ||||||||
American Rock Salt Co. LLC | ||||||||
9.500%, due 03/15/14 | $150,000 | $146,625 | ||||||
Automobile OEM—0.36% | ||||||||
Ford Motor Co. | ||||||||
7.400%, due 11/01/46 | 125,000 | 18,750 | ||||||
7.750%, due 06/15/43 | 450,000 | 67,500 | ||||||
Ford Motor Credit Co. LLC | ||||||||
7.375%, due 10/28/09 | 640,000 | 509,726 | ||||||
8.000%, due 12/15/16 | 70,000 | 32,974 | ||||||
9.875%, due 08/10/11 | 25,000 | 14,532 | ||||||
General Motors Acceptance Corp. | ||||||||
7.250%, due 03/02/11(1) | 510,000 | 314,791 | ||||||
General Motors Corp. | ||||||||
7.200%, due 01/15/11(1) | 485,000 | 77,600 | ||||||
1,035,873 | ||||||||
Automotive parts—0.06% | ||||||||
Allison Transmission, Inc. | ||||||||
11.000%, due 11/01/15(2) | 120,000 | 58,200 | ||||||
ArvinMeritor, Inc. | ||||||||
8.750%, due 03/01/12 | 60,000 | 15,000 | ||||||
Lear Corp. Series B | ||||||||
8.500%, due 12/01/13 | 85,000 | 15,300 | ||||||
Tenneco, Inc. | ||||||||
8.625%, due 11/15/14 | 220,000 | 30,800 | ||||||
TRW Automotive, Inc. | ||||||||
7.000%, due 03/15/14(2) | 170,000 | 47,600 | ||||||
166,900 | ||||||||
Banking-non-US—0.11% | ||||||||
Abbey National PLC | ||||||||
7.950%, due 10/26/29 | 265,000 | 228,607 | ||||||
Royal Bank of Scotland Group PLC | ||||||||
7.640%, due 03/31/49(9),(10) | 100,000 | 13,000 | ||||||
9.118%, due 03/31/49(9) | 200,000 | 73,000 | ||||||
314,607 | ||||||||
24 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Banking-US—0.29% | ||||||||
Bank of America Corp. | ||||||||
5.420%, due 03/15/17 | $500,000 | $356,342 | ||||||
Citigroup, Inc. | ||||||||
6.125%, due 05/15/18(1) | 250,000 | 215,590 | ||||||
Washington Mutual, Inc. | ||||||||
5.500%, due 01/15/13(11) | 585,000 | 59 | ||||||
Wells Fargo Bank N.A. | ||||||||
5.950%, due 08/26/36 | 310,000 | 256,877 | ||||||
828,868 | ||||||||
Beverage/bottling—0.04% | ||||||||
Diageo Capital PLC | ||||||||
7.375%, due 01/15/14 | 95,000 | 105,664 | ||||||
Broadcast—0.01% | ||||||||
CMP Susquehanna | ||||||||
9.875%, due 05/15/14 | 125,000 | 3,750 | ||||||
Nexstar Finance, Inc. | ||||||||
7.000%, due 01/15/14 | 85,000 | 29,856 | ||||||
Univision Communications, Inc. | ||||||||
9.750%, due 03/15/15(2),(8) | 100,000 | 7,500 | ||||||
41,106 | ||||||||
Brokerage—0.23% | ||||||||
Lehman Brothers Holdings MTN | ||||||||
6.750%, due 12/28/17(11) | 200,000 | 20 | ||||||
6.875%, due 05/02/18(11) | 195,000 | 25,350 | ||||||
Merrill Lynch & Co. | ||||||||
5.700%, due 05/02/17 | 105,000 | 74,209 | ||||||
Morgan Stanley | ||||||||
1.950%, due 06/20/12 | 325,000 | 320,972 | ||||||
Morgan Stanley MTN | ||||||||
6.625%, due 04/01/18 | 250,000 | 230,850 | ||||||
651,401 | ||||||||
Building materials—0.18% | ||||||||
Ahern Rentals, Inc. | ||||||||
9.250%, due 08/15/13 | 225,000 | 70,313 | ||||||
Coleman Cable, Inc. | ||||||||
9.875%, due 10/01/12 | 180,000 | 117,900 | ||||||
25 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Building materials—(concluded) | ||||||||
Hanson Australia Funding | ||||||||
5.250%, due 03/15/13 | $170,000 | $78,049 | ||||||
Hanson PLC | ||||||||
6.125%, due 08/15/16 | 135,000 | 60,096 | ||||||
Interface, Inc. | ||||||||
10.375%, due 02/01/10 | 100,000 | 93,000 | ||||||
US Concrete, Inc. | ||||||||
8.375%, due 04/01/14 | 235,000 | 88,712 | ||||||
508,070 | ||||||||
Business services—0.05% | ||||||||
Da-Lite Screen Co., Inc. | ||||||||
9.500%, due 05/15/11 | 125,000 | 113,438 | ||||||
West Corp. | ||||||||
11.000%, due 10/15/16 | 50,000 | 32,000 | ||||||
145,438 | ||||||||
Cable—0.20% | ||||||||
CCH II LLC/CCH II Capital | ||||||||
10.250%, due 09/15/10(1) | 240,000 | 193,200 | ||||||
CCO Holdings LLC/Capital Corp. | ||||||||
8.750%, due 11/15/13(1) | 150,000 | 117,000 | ||||||
Charter Communications Operating LLC/Capital | ||||||||
8.000%, due 04/30/12(2) | 120,000 | 106,800 | ||||||
CSC Holdings, Inc. | ||||||||
8.500%, due 04/15/14(2) | 25,000 | 24,000 | ||||||
8.625%, due 02/15/19(2) | 45,000 | 41,850 | ||||||
Time Warner Cable, Inc. | ||||||||
6.750%, due 07/01/18(1) | 100,000 | 94,807 | ||||||
577,657 | ||||||||
Chemicals—0.10% | ||||||||
Airgas, Inc. | ||||||||
7.125%, due 10/01/18(2) | 201,000 | 190,950 | ||||||
Ineos Group Holdings PLC | ||||||||
8.500%, due 02/15/16(2) | 160,000 | 9,600 | ||||||
Momentive Performance | ||||||||
9.750%, due 12/01/14(1) | 50,000 | 19,000 | ||||||
10.125%, due 12/01/14(8) | 230,437 | 63,370 | ||||||
282,920 | ||||||||
26 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Commercial services & supplies—0.10% | ||||||||
United Rentals N.A., Inc. | ||||||||
7.750%, due 11/15/13(1) | $100,000 | $57,000 | ||||||
Xerox Capital Trust I | ||||||||
8.000%, due 02/01/27 | 300,000 | 224,302 | ||||||
281,302 | ||||||||
Consumer products—0.09% | ||||||||
Fortune Brands, Inc. | ||||||||
5.375%, due 01/15/16 | 170,000 | 147,731 | ||||||
Goodyear Tire & Rubber Co. | ||||||||
9.000%, due 07/01/15(1) | 20,000 | 15,100 | ||||||
Yankee Acquisition Corp., Series B | ||||||||
8.500%, due 02/15/15(1) | 165,000 | 88,275 | ||||||
251,106 | ||||||||
Containers & packaging—0.13% | ||||||||
Exopack Holding Corp. | ||||||||
11.250%, due 02/01/14 | 50,000 | 29,125 | ||||||
Graham Packaging Co. | ||||||||
9.875%, due 10/15/14 | 300,000 | 189,000 | ||||||
Owens-Illinois, Inc. | ||||||||
7.500%, due 05/15/10(1) | 150,000 | 152,250 | ||||||
370,375 | ||||||||
Diversified manufacturing—0.10% | ||||||||
Harland Clarke Holdings | ||||||||
5.984%, due 05/15/15(4) | 500,000 | 173,750 | ||||||
SPX Corp. | ||||||||
7.625%, due 12/15/14(2) | 120,000 | 111,300 | ||||||
285,050 | ||||||||
Electric-generation—0.14% | ||||||||
Electricite de France | ||||||||
6.500%, due 01/26/19(1),(2) | 100,000 | 101,499 | ||||||
National Rural Utilities Cooperative | ||||||||
10.375%, due 11/01/18 | 50,000 | 59,201 | ||||||
Orion Power Holdings, Inc. | ||||||||
12.000%, due 05/01/10 | 250,000 | 256,563 | ||||||
417,263 | ||||||||
27 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Electric-integrated—0.27% | ||||||||
Nisource Finance Corp. | ||||||||
5.450%, due 09/15/20 | $30,000 | $20,543 | ||||||
6.800%, due 01/15/19 | 60,000 | 47,051 | ||||||
Southern California Edison | ||||||||
5.500%, due 08/15/18 | 60,000 | 61,993 | ||||||
Texas Competitive Electric Holdings LLC, | ||||||||
Series A 10.250%, due 11/01/15(7) | 1,060,000 | 535,300 | ||||||
Series B 10.250%, due 11/01/15(7) | 200,000 | 101,000 | ||||||
765,887 | ||||||||
Electric utilities—0.97% | ||||||||
AES Corp. | ||||||||
8.000%, due 06/01/20(1),(2) | 775,000 | 643,250 | ||||||
Dominion Resources, Inc. | ||||||||
5.950%, due 06/15/35 | 150,000 | 129,015 | ||||||
E. ON International Finance BV | ||||||||
5.800%, due 04/30/18(2) | 175,000 | 167,291 | ||||||
Edison Mission Energy | ||||||||
7.000%, due 05/15/17(1) | 450,000 | 380,250 | ||||||
7.625%, due 05/15/27 | 100,000 | 75,000 | ||||||
MidAmerican Energy Holdings | ||||||||
5.950%, due 05/15/37 | 110,000 | 98,512 | ||||||
Mirant Americas Generation LLC | ||||||||
9.125%, due 05/01/31 | 375,000 | 262,500 | ||||||
NRG Energy, Inc. | ||||||||
7.375%, due 02/01/16 | 550,000 | 507,375 | ||||||
7.375%, due 01/15/17 | 100,000 | 92,500 | ||||||
Oncor Electric Delivery Co. | ||||||||
6.800%, due 09/01/18(2) | 80,000 | 78,670 | ||||||
Reliant Energy, Inc. | ||||||||
6.750%, due 12/15/14 | 400,000 | 352,000 | ||||||
2,786,363 | ||||||||
Electronics—0.00% | ||||||||
NXP BV/NXP Funding LLC | ||||||||
7.875%, due 10/15/14 | 50,000 | 10,000 | ||||||
28 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Energy—0.49% | ||||||||
Canadian Natural Resources | ||||||||
6.750%, due 02/01/39 | $100,000 | $79,725 | ||||||
Chesapeake Energy Corp. | ||||||||
6.625%, due 01/15/16 | 145,000 | 118,538 | ||||||
7.250%, due 12/15/18 | 100,000 | 81,250 | ||||||
9.500%, due 02/15/15 | 165,000 | 153,450 | ||||||
Denbury Resources, Inc. | ||||||||
9.750%, due 03/01/16 | 80,000 | 75,200 | ||||||
Forest Oil Corp. | ||||||||
8.500%, due 02/15/14(2) | 80,000 | 72,800 | ||||||
Gulfmark Offshore, Inc. | ||||||||
7.750%, due 07/15/14 | 100,000 | 76,500 | ||||||
Helix Energy Solutions | ||||||||
9.500%, due 01/15/16(2) | 150,000 | 84,000 | ||||||
Key Energy Services, Inc. | ||||||||
8.375%, due 12/01/14 | 70,000 | 45,500 | ||||||
Newfield Exploration Co. | ||||||||
7.125%, due 05/15/18(1) | 66,000 | 58,080 | ||||||
PetroHawk Energy Corp. | ||||||||
7.875%, due 06/01/15(2) | 80,000 | 68,800 | ||||||
10.500%, due 08/01/14(1),(2) | 105,000 | 103,425 | ||||||
Plains Exploration & Production | ||||||||
7.625%, due 06/01/18 | 131,000 | 113,970 | ||||||
Southwestern Energy Co. | ||||||||
7.500%, due 02/01/18(2) | 50,000 | 47,250 | ||||||
Transocean, Inc. | ||||||||
7.500%, due 04/15/31 | 85,000 | 78,716 | ||||||
Whiting Petroleum Corp. | ||||||||
7.250%, due 05/01/12 | 200,000 | 168,000 | ||||||
1,425,204 | ||||||||
Energy-integrated—0.16% | ||||||||
PPL Energy Supply LLC | ||||||||
6.000%, due 12/15/36 | 185,000 | 144,300 | ||||||
Series A | ||||||||
6.400%, due 11/01/11 | 250,000 | 249,443 | ||||||
Shell International Finance | ||||||||
6.375%, due 12/15/38 | 65,000 | 67,662 | ||||||
461,405 | ||||||||
29 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Energy-refining & marketing—0.07% | ||||||||
Petroplus Finance Ltd. | ||||||||
7.000%, due 05/01/17(2) | $100,000 | $74,000 | ||||||
Valero Energy Corp. | ||||||||
7.500%, due 04/15/32 | 140,000 | 117,809 | ||||||
191,809 | ||||||||
Environmental services—0.09% | ||||||||
Allied Waste North America, Inc. | ||||||||
6.500%, due 11/15/10(1) | 251,000 | 249,745 | ||||||
Finance-noncaptive consumer—0.02% | ||||||||
American General Finance | ||||||||
4.875%, due 07/15/12 | 135,000 | 60,935 | ||||||
Finance-noncaptive diversified—0.18% | ||||||||
GMAC LLC | ||||||||
5.625%, due 05/15/09 | 80,000 | 71,572 | ||||||
6.750%, due 12/01/14(2) | 325,000 | 157,814 | ||||||
6.875%, due 09/15/11(2) | 24,000 | 15,624 | ||||||
7.250%, due 03/02/11(2) | 232,000 | 160,249 | ||||||
8.000%, due 11/01/31(1) | 80,000 | 29,603 | ||||||
8.000%, due 11/01/31(2) | 200,000 | 89,784 | ||||||
524,646 | ||||||||
Food—0.07% | ||||||||
Ameriqual Group LLC | ||||||||
9.500%, due 04/01/12(2) | 200,000 | 120,000 | ||||||
Land O’Lakes Capital Trust I | ||||||||
7.450%, due 03/15/28(2) | 70,000 | 40,600 | ||||||
Tyson Foods, Inc. | ||||||||
10.500%, due 03/01/14(2) | 35,000 | 32,987 | ||||||
193,587 | ||||||||
Gaming—0.45% | ||||||||
Boyd Gaming Corp. | ||||||||
7.750%, due 12/15/12(1) | 100,000 | 75,000 | ||||||
Caesars Entertainment | ||||||||
7.875%, due 03/15/10(1) | 300,000 | 86,250 | ||||||
Circus & Eldorado | ||||||||
10.125%, due 03/01/12 | 100,000 | 62,000 | ||||||
FireKeepers Development Authority | ||||||||
13.875%, due 05/01/15(2) | 356,000 | 224,280 | ||||||
30 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Gaming—(concluded) | ||||||||
Harrah’s Operating Co., Inc. | ||||||||
5.500%, due 07/01/10 | $500,000 | $127,500 | ||||||
Jacobs Entertainment, Inc. | ||||||||
9.750%, due 06/15/14 | 375,000 | 200,625 | ||||||
MGM Mirage, Inc. | ||||||||
13.000%, due 11/15/13(1),(2) | 200,000 | 144,000 | ||||||
Pokagon Gaming Authority | ||||||||
10.375%, due 06/15/14(2) | 93,000 | 81,840 | ||||||
River Rock Entertainment | ||||||||
9.750%, due 11/01/11 | 350,000 | 178,500 | ||||||
San Pasqual Casino | ||||||||
8.000%, due 09/15/13(2) | 150,000 | 111,750 | ||||||
1,291,745 | ||||||||
Gas pipelines—0.41% | ||||||||
Atlas Pipeline Partner/Finance | ||||||||
8.125%, due 12/15/15 | 300,000 | 190,500 | ||||||
Atlas Pipeline Partners | ||||||||
8.750%, due 06/15/18 | 50,000 | 31,000 | ||||||
Dynegy Holdings, Inc. | ||||||||
7.500%, due 06/01/15 | 305,000 | 189,100 | ||||||
7.625%, due 10/15/26 | 100,000 | 40,000 | ||||||
7.750%, due 06/01/19 | 60,000 | 36,300 | ||||||
El Paso Corp. MTN | ||||||||
7.800%, due 08/01/31 | 650,000 | 495,836 | ||||||
8.250%, due 02/15/16 | 150,000 | 139,500 | ||||||
Trans-Canada Pipelines | ||||||||
7.625%, due 01/15/39 | 60,000 | 59,922 | ||||||
1,182,158 | ||||||||
Health care—0.65% | ||||||||
Bausch & Lomb, Inc. | ||||||||
9.875%, due 11/01/15(1),(2) | 25,000 | 22,687 | ||||||
Biomet, Inc. | ||||||||
10.375%, due 10/15/17(8) | 100,000 | 87,250 | ||||||
11.625%, due 10/15/17(1) | 291,000 | 269,175 | ||||||
Carriage Services, Inc. | ||||||||
7.875%, due 01/15/15 | 200,000 | 168,000 | ||||||
31 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Health care—(concluded) | ||||||||
CHS/Community Health Systems | ||||||||
8.875%, due 07/15/15(1) | $295,000 | $279,144 | ||||||
DaVita, Inc. | ||||||||
7.250%, due 03/15/15 | 100,000 | 97,000 | ||||||
HCA, Inc. | ||||||||
9.125%, due 11/15/14 | 140,000 | 131,250 | ||||||
9.250%, due 11/15/16 | 215,000 | 196,725 | ||||||
9.625%, due 11/15/16(8) | 490,000 | 409,150 | ||||||
UnitedHealth Group, Inc. | ||||||||
6.875%, due 02/15/38 | 95,000 | 87,703 | ||||||
Universal Hospital Services | ||||||||
8.500%, due 06/01/15(8) | 20,000 | 17,400 | ||||||
Vanguard Health Holding II | ||||||||
9.000%, due 10/01/14 | 125,000 | 114,375 | ||||||
1,879,859 | ||||||||
Industrial-other—0.14% | ||||||||
Aramark Services, Inc. | ||||||||
4.670%, due 02/01/15(4) | 500,000 | 392,500 | ||||||
Tube City IMS Corp. | ||||||||
9.750%, due 02/01/15 | 100,000 | 20,500 | ||||||
413,000 | ||||||||
Insurance-life—0.07% | ||||||||
American International Group MTN | ||||||||
5.850%, due 01/16/18 | 185,000 | 97,773 | ||||||
Hartford Financial Services Group MTN | ||||||||
6.000%, due 01/15/19 | 175,000 | 94,816 | ||||||
192,589 | ||||||||
Lodging—0.04% | ||||||||
Royal Caribbean Cruises | ||||||||
6.875%, due 12/01/13 | 140,000 | 75,600 | ||||||
7.500%, due 10/15/27 | 90,000 | 41,400 | ||||||
117,000 | ||||||||
Machinery-agriculture & construction—0.10% | ||||||||
Caterpillar Financial Services | ||||||||
6.125%, due 02/17/14 | 100,000 | 97,441 | ||||||
32 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Machinery-agriculture & construction—(concluded) | ||||||||
Clondalkin Acquisition | ||||||||
3.996%, due 12/15/13(2),(4) | $330,000 | $204,600 | ||||||
302,041 | ||||||||
Media—0.16% | ||||||||
Affinion Group, Inc. | ||||||||
10.125%, due 10/15/13 | 100,000 | 77,500 | ||||||
Baker & Taylor, Inc. | ||||||||
11.500%, due 07/01/13(2) | 75,000 | 11,437 | ||||||
LIN Television Corp. | ||||||||
6.500%, due 05/15/13(1) | 200,000 | 104,000 | ||||||
6.500%, due 05/15/13 | 225,000 | 117,000 | ||||||
Nielsen Finance LLC | ||||||||
11.625%, due 02/01/14(2) | 40,000 | 34,600 | ||||||
12.500%, due 08/01/16(7) | 170,000 | 66,300 | ||||||
Sinclair Television Group | ||||||||
8.000%, due 03/15/12(1) | 100,000 | 60,000 | ||||||
470,837 | ||||||||
Metals & mining—0.06% | ||||||||
Massey Energy Co. | ||||||||
6.875%, due 12/15/13 | 100,000 | 88,000 | ||||||
Peabody Energy Corp. Series B | ||||||||
6.875%, due 03/15/13 | 90,000 | 87,525 | ||||||
175,525 | ||||||||
Oil & gas—0.43% | ||||||||
Ferrellgas Partners LP | ||||||||
6.750%, due 05/01/14(2) | 153,000 | 131,580 | ||||||
8.750%, due 06/15/12 | 75,000 | 64,125 | ||||||
Inergy LP/Inergy Finance | ||||||||
8.250%, due 03/01/16 | 175,000 | 168,000 | ||||||
8.750%, due 03/01/15(2) | 80,000 | 78,400 | ||||||
Kinder Morgan Energy Partners | ||||||||
5.800%, due 03/15/35 | 650,000 | 518,734 | ||||||
NGPL PipeCo LLC | ||||||||
7.119%, due 12/15/17(2) | 75,000 | 69,571 | ||||||
Nustar Logistics | ||||||||
7.650%, due 04/15/18 | 240,000 | 199,344 | ||||||
1,229,754 | ||||||||
33 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Paper & forest products—0.17% | ||||||||
Boise Cascade LLC | ||||||||
7.125%, due 10/15/14 | $188,000 | $84,600 | ||||||
Cellu Tissue Holdings, Inc. | ||||||||
9.750%, due 03/15/10 | 235,000 | 188,000 | ||||||
Georgia-Pacific LLC | ||||||||
8.875%, due 05/15/31 | 45,000 | 34,650 | ||||||
Millar Western Forest | ||||||||
7.750%, due 11/15/13 | 150,000 | 73,500 | ||||||
Verso Paper Holdings LLC | ||||||||
9.125%, due 08/01/14 | 200,000 | 75,000 | ||||||
Verso Paper Holdings LLC, Series B | ||||||||
11.375%, due 08/01/16 | 150,000 | 31,500 | ||||||
487,250 | ||||||||
Pharmaceuticals—0.30% | ||||||||
Allergan, Inc. | ||||||||
5.750%, due 04/01/16 | 210,000 | 200,990 | ||||||
AstraZeneca PLC | ||||||||
6.450%, due 09/15/37 | 100,000 | 105,613 | ||||||
Axcan Intermediate Holdings | ||||||||
9.250%, due 03/01/15 | 135,000 | 132,300 | ||||||
12.750%, due 03/01/16 | 230,000 | 209,875 | ||||||
Bristol-Myers Squibb | ||||||||
5.875%, due 11/15/36 | 90,000 | 88,720 | ||||||
Teva Pharmaceutical Finance LLC | ||||||||
5.550%, due 02/01/16 | 140,000 | 137,687 | ||||||
875,185 | ||||||||
Publishing—0.11% | ||||||||
Deluxe Corp. | ||||||||
5.000%, due 12/15/12 | 300,000 | 211,500 | ||||||
Sheridan Acquisition Corp. | ||||||||
10.250%, due 08/15/11 | 200,000 | 118,000 | ||||||
329,500 | ||||||||
Real estate investment trusts—0.03% | ||||||||
ProLogis | ||||||||
5.625%, due 11/15/15 | 135,000 | 77,694 | ||||||
34 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Retail—0.27% | ||||||||
Gamestop Corp. & GS, Inc. | ||||||||
8.000%, due 10/01/12 | $225,000 | $225,000 | ||||||
Ingles Markets, Inc. | ||||||||
8.875%, due 12/01/11 | 500,000 | 485,000 | ||||||
Neiman Marcus Group, Inc. | ||||||||
9.000%, due 10/15/15(8) | 190,000 | 75,050 | ||||||
785,050 | ||||||||
Retail-discount—0.07% | ||||||||
Dollar General Corp. | ||||||||
11.875%, due 07/15/17(8) | 200,000 | 193,000 | ||||||
Retail-specialty—0.04% | ||||||||
Sally Holdings/Sally Capital | ||||||||
10.500%, due 11/15/16(1) | 125,000 | 108,438 | ||||||
Road & rail—0.05% | ||||||||
Burlington Northern Santa Fe Corp. | ||||||||
7.082%, due 05/13/29 | 85,000 | 84,285 | ||||||
Union Pacific Corp. | ||||||||
7.875%, due 01/15/19(1) | 55,000 | 60,269 | ||||||
144,554 | ||||||||
Special purpose entity—0.03% | ||||||||
AAC Group Holding Corp. | ||||||||
10.250%, due 10/01/12(2),(7) | 150,000 | 102,000 | ||||||
Technology-hardware—0.04% | ||||||||
Cisco Systems, Inc. | ||||||||
5.900%, due 02/15/39 | 50,000 | 46,559 | ||||||
Xerox Corp. | ||||||||
6.350%, due 05/15/18 | 75,000 | 63,000 | ||||||
109,559 | ||||||||
Technology-software—0.28% | ||||||||
First Data Corp. | ||||||||
9.875%, due 09/24/15(2) | 75,000 | 41,250 | ||||||
9.875%, due 09/24/15(1) | 440,000 | 242,000 | ||||||
Sungard Data Systems, Inc. | ||||||||
5.128%, due 02/28/14(2) | 108,000 | 91,260 | ||||||
9.125%, due 08/15/13 | 105,000 | 89,250 | ||||||
10.250%, due 08/15/15 | 495,000 | 339,075 | ||||||
802,835 | ||||||||
35 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(continued) | ||||||||
Telecom-satellite—0.23% | ||||||||
Intelsat Jackson Holdings Ltd. | ||||||||
11.250%, due 06/15/16(1) | $700,000 | $659,750 | ||||||
Telecommunications—0.98% | ||||||||
BellSouth Corp. | ||||||||
6.875%, due 10/15/31 | 65,000 | 60,368 | ||||||
Cincinnati Bell, Inc. | ||||||||
7.250%, due 07/15/13 | 140,000 | 133,700 | ||||||
Citizens Communications Co. | ||||||||
9.000%, due 08/15/31 | 460,000 | 335,800 | ||||||
Deutsche Telekom International Finance | ||||||||
6.750%, due 08/20/18(1) | 125,000 | 127,860 | ||||||
DirecTV Holdings/Finance | ||||||||
7.625%, due 05/15/16(1) | 246,000 | 236,160 | ||||||
Dish DBS Corp. | ||||||||
6.625%, due 10/01/14 | 250,000 | 225,000 | ||||||
7.125%, due 02/01/16 | 250,000 | 225,625 | ||||||
Dycom Industries, Inc. | ||||||||
8.125%, due 10/15/15 | 100,000 | 71,500 | ||||||
Fairpoint Communications | ||||||||
13.125%, due 04/01/18(2) | 110,000 | 45,650 | ||||||
Frontier Communications Corp. | ||||||||
7.875%, due 01/15/27 | 300,000 | 219,000 | ||||||
L-3 Communications Corp. | ||||||||
5.875%, due 01/15/15 | 300,000 | 276,750 | ||||||
Level 3 Financing, Inc. | ||||||||
9.250%, due 11/01/14 | 145,000 | 92,075 | ||||||
Qwest Capital Funding, Inc. | ||||||||
7.250%, due 02/15/11(1) | 50,000 | 47,625 | ||||||
7.750%, due 02/15/31 | 125,000 | 85,000 | ||||||
Qwest Communications International | ||||||||
7.250%, due 02/15/11 | 450,000 | 427,500 | ||||||
Series B | ||||||||
7.500%, due 02/15/14 | 150,000 | 127,125 | ||||||
Telefonica Emisiones SAU | ||||||||
6.221%, due 07/03/17 | 95,000 | 95,468 | ||||||
2,832,206 | ||||||||
36 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Corporate bonds—(concluded) | ||||||||
Tobacco—0.08% | ||||||||
Altria Group, Inc. | ||||||||
9.950%, due 11/10/38 | $125,000 | $124,846 | ||||||
Philip Morris International, Inc. | ||||||||
5.650%, due 05/16/18 | 100,000 | 97,062 | ||||||
221,908 | ||||||||
Transportation services—0.05% | ||||||||
ERAC USA Finance Co. | ||||||||
7.000%, due 10/15/37(2) | 115,000 | 64,683 | ||||||
8.000%, due 01/15/11(2) | 100,000 | 90,054 | ||||||
154,737 | ||||||||
Utilities-other—0.03% | ||||||||
Duke Capital LLC | ||||||||
5.668%, due 08/15/14 | 80,000 | 73,839 | ||||||
Wireless telecommunication services—0.52% | ||||||||
AT&T, Inc. | ||||||||
6.500%, due 09/01/37 | 50,000 | 46,153 | ||||||
MetroPCS Wireless, Inc. | ||||||||
9.250%, due 11/01/14(2) | 30,000 | 28,200 | ||||||
Nextel Communications | ||||||||
7.375%, due 08/01/15 | 245,000 | 112,700 | ||||||
Sprint Capital Corp. | ||||||||
6.875%, due 11/15/28 | 200,000 | 110,500 | ||||||
7.625%, due 01/30/11 | 175,000 | 151,813 | ||||||
8.375%, due 03/15/12 | 575,000 | 465,750 | ||||||
8.750%, due 03/15/32 | �� | 330,000 | 198,825 | |||||
Verizon Communications, Inc. | ||||||||
6.100%, due 04/15/18 | 100,000 | 99,009 | ||||||
Vodafone Group PLC | ||||||||
5.625%, due 02/27/17 | 70,000 | 67,953 | ||||||
Wind Acquisition Finance SA | ||||||||
10.750%, due 12/01/15(2) | 100,000 | 100,250 | ||||||
Windstream Corp. | ||||||||
8.625%, due 08/01/16 | 125,000 | 120,000 | ||||||
1,501,153 | ||||||||
Total corporate bonds (cost—$37,867,936) | 30,061,092 | |||||||
37 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Face | ||||||||
Security description | amount | Value | ||||||
Repurchase agreement—4.09% | ||||||||
Repurchase agreement dated 02/27/09 with State Street | ||||||||
Bank & Trust Co., 0.010% due 03/02/09, collateralized | ||||||||
by $5,099,126 US Cash Management Bills, zero coupon | ||||||||
due 05/15/09 and $6,908,697 US Treasury Bills, | ||||||||
zero coupon due 05/21/09 to 08/20/09; | ||||||||
(value—$11,997,460); proceeds: $11,762,010 | ||||||||
(cost—$11,762,000) | $11,762,000 | $11,762,000 | ||||||
Shares | ||||||||
Investment of cash collateral from securities loaned—20.74% | ||||||||
Money market fund(12)—20.74% | ||||||||
UBS Private Money Market Fund LLC(13) | ||||||||
0.545% | ||||||||
(cost—$59,707,989) | 59,707,989 | 59,707,989 | ||||||
Total investments (cost—$470,230,990)—117.15% | 337,239,944 | |||||||
Liabilities in excess of other assets—(17.15)% | (49,363,249 | ) | ||||||
Net assets—100.00% | $287,876,695 | |||||||
Aggregate cost for federal income tax purposes, which was substantially the same for book purposes, was $470,230,990; and net unrealized depreciation consisted of: | ||||||||
Gross unrealized appreciation | $2,700,508 | |||||||
Gross unrealized depreciation | (135,691,554 | ) | ||||||
Net unrealized depreciation | $(132,991,046 | ) | ||||||
* | Non-income producing security. | |
** | On September 7, 2008, the Federal Housing Finance Agency placed the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation into conservatorship, and the U.S. Treasury guaranteed the debt issued by these organizations. | |
(1) | Security, or portion thereof, was on loan at February 28, 2009. | |
(2) | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 2.04% of net assets as of February 28, 2009, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. | |
(3) | Cumulative preferred stock. The next call date is 12/31/11. | |
(4) | Floating rate security. The interest rate shown is the current rate as of February 28, 2009. | |
(5) | Security is illiquid. At February 28, 2009, the value of these securities amounted to $1,263,610 or 0.44% of net assets. |
38 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
(6) | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 0.44% of net assets as of February 28, 2009, are considered illiquid and restricted (see table below for more information). |
Acquisition | ||||||||||||||||
Illiquid and | cost as a | Value as a | ||||||||||||||
restricted | Acquisition | Acquisition | percentage | Value at | percentage | |||||||||||
security | dates | cost | of net assets | 02/28/09 | of net assets | |||||||||||
GS Mortgage | ||||||||||||||||
Securities Corp. II, | ||||||||||||||||
Series 2006-CC1, | ||||||||||||||||
Class A, 5.379%, | ||||||||||||||||
03/21/46 | 03/22/06 | $ | 3,355,973 | 1.17% | $ | 749,313 | 0.26% | |||||||||
GS Mortgage | ||||||||||||||||
Securities Corp. II, | ||||||||||||||||
Series 2006-RR2, | ||||||||||||||||
Class A1, 5.691%, | ||||||||||||||||
06/23/46 | 07/11/06 | 2,486,284 | 0.86 | 506,949 | 0.18 | |||||||||||
$ | 5,842,257 | 2.03% | $ | 1,256,262 | 0.44% | |||||||||||
(7) | Step bond. Coupon rate increases in increments to maturity. Rate disclosed is as of February 28, 2009. Maturity date indicated represents the instrument’s ultimate maturity date. | |
(8) | PIK - Payment-in-kind security. Income may be paid in cash or additional notes, at the discretion of the issuer. | |
(9) | Perpetual bond security. The maturity date reflects the next call date. | |
(10) | Variable rate security. The interest rate shown is the current rate as of February 28, 2009, and reset at the next call date. | |
(11) | Bond interest in default. | |
(12) | The rate shown reflects the yield at February 28, 2009. | |
(13) | The table below details the Fund’s transaction activity in an affiliated issuer for the six months ended February 28, 2009. |
Purchases | Sales | Net income | ||||||||
during the | during the | earned from | ||||||||
six months | six months | affiliate for the | ||||||||
Security | Value at | ended | ended | Value at | six months | |||||
description | 08/31/08 | 02/28/09 | 02/28/09 | 02/28/09 | ended 02/28/09 | |||||
UBS Private | ||||||||||
Money Market | ||||||||||
Fund LLC | $13,512,472 | $178,452,071 | $132,256,554 | $59,707,989 | $107,521 | |||||
39 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
ADR | American Depositary Receipt | |
ARM | Adjustable Rate Mortgage. The interest rate shown is the current rate as of February 28, 2009. | |
GMAC | General Motors Acceptance Corporation | |
GS | Goldman Sachs | |
GSAMP | Goldman Sachs Asset Mortgage Passthrough | |
MTN | Medium Term Note | |
OEM | Original Equipment Manufacturer | |
TBA | (To Be Announced) Security is purchased on a forward commitment basis with an approximate principal amount (generally +/- 1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. | |
TIPS | Treasury inflation protected securities (“TIPS”) are debt securities issued by the US Treasury whose principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. The interest rate paid by the TIPS is fixed, while the principal value rises or falls based on changes in a published Consumer Price Index (“CPI”). Thus, if inflation occurs, the principal and interest payments on the TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest payments decrease, although the TIPS principal amounts will not drop below their face amounts at maturity. In exchange for the inflation protection, the TIPS generally pay lower interest rates than typical US Treasury securities. Only if inflation occurs will TIPS offer a higher real yield than a conventional Treasury bond of the same maturity. |
Written options | ||||||||||
Number of | Put options | Expiration | Premiums | Current | Unrealized | |||||
contracts | written | date | received | value | appreciation | |||||
237 | Euro Dollar | |||||||||
June 2009 Futures, | ||||||||||
strike price @ 96.50 | 06/15/09 | $92,096 | $5,925 | $86,171 | ||||||
40 |
UBS U.S. Allocation Fund
Portfolio of investments—February 28, 2009 (unaudited)
Futures contracts | ||||||||||||||||
Unrealized | ||||||||||||||||
Number of | Expiration | Current | appreciation | |||||||||||||
contracts | Buy contracts | dates | Cost | value | (depreciation) | |||||||||||
220 | S&P 500 Index | |||||||||||||||
Futures | March 09 | $49,239,850 | $40,381,000 | $(8,858,850 | ) | |||||||||||
Sale contracts | Proceeds | |||||||||||||||
313 | US Treasury | |||||||||||||||
Note 5 Year | ||||||||||||||||
Futures | June 09 | 36,578,935 | 36,491,398 | 87,537 | ||||||||||||
$(8,771,313 | ) | |||||||||||||||
Issuer breakdown by country or territory of origin |
Percentage of total investments | |||
United States | 95.1 | % | |
Bermuda | 1.6 | ||
Canada | 0.9 | ||
Switzerland | 0.9 | ||
Panama | 0.6 | ||
Cayman Islands | 0.3 | ||
United Kingdom | 0.2 | ||
Netherlands | 0.2 | ||
Netherlands Antilles | 0.2 | ||
Total | 100.0 | % | |
See accompanying notes to financial statements |
41 |
UBS U.S. Allocation Fund
Statement of assets and liabilities—February 28, 2009 (unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value (cost—$410,523,001)(1) | $277,531,955 | |||
Investment in an affiliated security, at value (cost—$59,707,989) | 59,707,989 | |||
Total investments in securities, at value (cost—$470,230,990) | 337,239,944 | |||
Cash | 14,691,750 | (2) | ||
Receivable for investments sold | 8,433,189 | |||
Receivable for shares of beneficial interest sold | 7,487 | |||
Receivable for dividends and interest | 1,760,458 | |||
Swap contracts, at value(3) | 455,090 | |||
Due from broker for swap contracts | 360,093 | |||
Receivable for foreign tax reclaims | 2,849 | |||
Other assets | 41,684 | |||
Total assets | 362,992,544 | |||
Liabilities: | ||||
Payable for cash collateral from securities loaned | 59,707,989 | |||
Payable for variation margin | 9,139,165 | |||
Payable for investments purchased | 2,426,650 | |||
Swap contracts, at value(3) | 2,156,837 | |||
Payable for shares of beneficial interest repurchased | 895,999 | |||
Due to broker for swap contracts | 235,717 | |||
Payable to affiliates | 226,196 | |||
Payable for options written, at value (premiums received—$92,096) | 5,925 | |||
Payable for foreign withholding taxes | 361 | |||
Accrued expenses and other liabilities | 321,010 | |||
Total liabilities | 75,115,849 | |||
Net assets: | ||||
Beneficial interest—$0.001 par value per share (unlimited amount authorized) | 618,021,467 | |||
Accumulated undistributed net investment income | 4,442,513 | |||
Accumulated net realized loss from investments, futures, options written, swaps and foreign currency contracts | (192,591,364 | ) | ||
Net unrealized depreciation of investments, futures, options written and swaps | (141,995,921 | ) | ||
Net assets | $287,876,695 | |||
(1) | Includes $56,969,455 of investments in securities on loan, at value. | |
(2) | Includes restricted cash of $14,690,756 delivered to broker as initial margin for futures contracts. | |
(3) | Net upfront payments received totaled $1,382,014. |
See accompanying notes to financial statements |
42 |
UBS U.S. Allocation Fund
Statement of assets and liabilities—February 28, 2009 (unaudited)
Class A: | ||||
Net assets | $180,400,731 | |||
Shares outstanding | 10,914,808 | |||
Net asset value per share | $16.53 | |||
Maximum offering price per share (net asset value plus maximum sales charge of 5.50%) | $17.49 | |||
Class B: | ||||
Net assets | $3,124,140 | |||
Shares outstanding | 188,923 | |||
Net asset value and offering price per share | $16.54 | |||
Class C: | ||||
Net assets | $77,644,992 | |||
Shares outstanding | 4,766,309 | |||
Net asset value and offering price per share | $16.29 | |||
Class Y: | ||||
Net assets | $26,706,832 | |||
Shares outstanding | 1,596,013 | |||
Net asset value and offering price per share | $16.73 | |||
See accompanying notes to financial statements |
43 |
UBS U.S. Allocation Fund
Statement of operations
For the six | ||||
months ended | ||||
February 28, 2009 | ||||
(unaudited) | ||||
Investment income: | ||||
Dividends (net of foreign witholding taxes of $1,419) | $3,067,547 | |||
Interest (net of foreign witholding taxes of $361) | 3,485,744 | |||
Securities lending income (includes $107,521, earned from | ||||
an affiliated entity) | 125,687 | |||
6,678,978 | ||||
Expenses: | ||||
Investment advisory and administration fees | 911,209 | |||
Service fees—Class A | 298,152 | |||
Service and distribution fees—Class B | 21,143 | |||
Service and distribution fees—Class C | 507,143 | |||
Transfer agency and related service fees—Class A | 223,344 | |||
Transfer agency and related service fees—Class B | 10,396 | |||
Transfer agency and related service fees—Class C | 90,840 | |||
Transfer agency and related service fees—Class Y | 4,774 | |||
Reports and notices to shareholders | 79,543 | |||
Custody and accounting fees | 75,486 | |||
Professional fees | 60,899 | |||
State registration fees | 27,263 | |||
Trustees’ fees | 8,560 | |||
Insurance expense | 7,601 | |||
Other expenses | 12,837 | |||
2,339,190 | ||||
Less: Fee waivers by investment advisor and administrator | (967 | ) | ||
Net expenses | 2,338,223 | |||
Net investment income | 4,340,755 | |||
Realized and unrealized gains (losses) from investment activities: | ||||
Net realized gains (losses) from: | ||||
Investments | (89,640,476 | ) | ||
Futures | (19,818,697 | ) | ||
Options written | (45,114 | ) | ||
Swaps | 261,212 | |||
Foreign currency transactions | (19,119 | ) | ||
Net change in unrealized appreciation/depreciation of: | ||||
Investments | (101,296,589 | ) | ||
Futures | (7,421,451 | ) | ||
Options written | 29,342 | |||
Swaps | 15,136 | |||
Net realized and unrealized loss from investment activities | (217,935,756 | ) | ||
Net decrease in net assets resulting from operations | $(213,595,001 | ) | ||
See accompanying notes to financial statements |
44 |
UBS U.S. Allocation Fund
Statement of changes in net assets
For the six | ||||||||
months ended | For the | |||||||
February 28, 2009 | year ended | |||||||
(unaudited) | August 31, 2008 | |||||||
From operations: | ||||||||
Net investment income | $4,340,755 | $13,456,812 | ||||||
Net realized gain (loss) from investments, futures, options written and swaps | (109,243,075 | ) | 21,292,735 | |||||
Foreign currency transactions | (19,119 | ) | — | |||||
Net change in unrealized appreciation/depreciation of investments, futures, options written and swaps | (108,673,562 | ) | (97,065,822 | ) | ||||
Net decrease in net assets resulting from operations | (213,595,001 | ) | (62,316,275 | ) | ||||
Dividends to shareholders from: | ||||||||
Net investment income—Class A | (7,667,059 | ) | (11,059,350 | ) | ||||
Net investment income—Class B | (60,274 | ) | (184,439 | ) | ||||
Net investment income—Class C | (2,140,813 | ) | (3,477,930 | ) | ||||
Net investment income—Class Y | (1,211,625 | ) | (1,651,935 | ) | ||||
(11,079,771 | ) | (16,373,654 | ) | |||||
From beneficial interest transactions: | ||||||||
Net proceeds from shares sold | 13,582,458 | 11,595,739 | ||||||
Cost of shares repurchased | (58,034,089 | ) | (146,471,551 | ) | ||||
Proceeds from dividends reinvested | 10,271,634 | 15,197,716 | ||||||
Net decrease in net assets from beneficial interest transactions | (34,179,997 | ) | (119,678,096 | ) | ||||
Redemption fees | 17,538 | 12,286 | ||||||
Contributions to capital from investment manager and custodian | — | 29,289 | ||||||
Net decrease in net assets | (258,837,231 | ) | (198,326,450 | ) | ||||
Net assets: | ||||||||
Beginning of period | 546,713,926 | 745,040,376 | ||||||
End of period | $287,876,695 | $546,713,926 | ||||||
Accumulated undistributed net investment income | $4,442,513 | $11,181,529 | ||||||
See accompanying notes to financial statements |
45 |
UBS U.S. Allocation Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
Class A | ||||
For the six | ||||
months ended | ||||
February 28, 2009 | ||||
(unaudited) | ||||
Net asset value, beginning of period | $28.83 | |||
Net investment income(1) | 0.26 | |||
Net realized and unrealized gains (losses) from investment activities | (11.88 | ) | ||
Net increase (decrease) from operations | (11.62 | ) | ||
Dividends from net investment income | (0.68 | ) | ||
Net asset value, end of period | $16.53 | |||
Total investment return(2) | (40.60 | )% | ||
Ratios/supplemental data: | ||||
Net assets, end of period (000’s) | $180,401 | |||
Expenses to average net assets, net of fee waivers by advisor | 1.06 | %(3),(4) | ||
Expenses to average net assets, before fee waivers by advisor | 1.06 | %(3),(4) | ||
Net investment income to average net assets | 2.48 | %(3) | ||
Portfolio turnover | 58 | % | ||
(1) | Calculated using the average shares method. | |
(2) | Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges or redemption fees; results would be lower if they were included. Total investment return for the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(3) | Annualized. | |
(4) | The ratios net and before fee waivers are the same since the fee waiver represents less than 0.01%. |
See accompanying notes to financial statements |
46 |
Class A | |||||||||||||||||
For the years ended August 31, | |||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||
$32.53 | $29.94 | $28.60 | $25.81 | $23.00 | |||||||||||||
0.70 | 0.68 | 0.56 | 0.51 | 0.30 | |||||||||||||
(3.57 | ) | 2.60 | 1.38 | 2.79 | 2.72 | ||||||||||||
(2.87 | ) | 3.28 | 1.94 | 3.30 | 3.02 | ||||||||||||
(0.83 | ) | (0.69 | ) | (0.60 | ) | (0.51 | ) | (0.21 | ) | ||||||||
$28.83 | $32.53 | $29.94 | $28.60 | $25.81 | |||||||||||||
(9.02 | )% | 11.04 | % | 6.84 | % | 12.85 | % | 13.19 | % | ||||||||
$344,910 | $452,439 | $472,213 | $525,711 | $552,195 | |||||||||||||
0.93 | % | 0.90 | % | 0.91 | % | 0.90 | % | 0.93 | % | ||||||||
0.95 | % | 0.92 | % | 0.94 | % | 0.93 | % | 0.95 | % | ||||||||
2.28 | % | 2.12 | % | 1.91 | % | 1.87 | % | 1.18 | % | ||||||||
98 | % | 85 | % | 82 | % | 67 | % | 128 | % | ||||||||
UBS U.S. Allocation Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
Class B | |||||||||||||||||
For the six | |||||||||||||||||
months ended | |||||||||||||||||
February 28, 2009 | |||||||||||||||||
(unaudited) | |||||||||||||||||
Net asset value, beginning of period | $28.41 | ||||||||||||||||
Net investment income(1) | 0.14 | ||||||||||||||||
Net realized and unrealized gains (losses) from investment activities | (11.73 | ) | |||||||||||||||
Net increase (decrease) from operations | (11.59 | ) | |||||||||||||||
Dividends from net investment income | (0.28 | ) | |||||||||||||||
Net asset value, end of period | $16.54 | ||||||||||||||||
Total investment return(2) | (40.91 | )% | |||||||||||||||
Ratios/supplemental data: | |||||||||||||||||
Net assets, end of period (000’s) | $3,124 | ||||||||||||||||
Expenses to average net assets, net of fee waivers by advisor | 2.12 | %(3),(4) | |||||||||||||||
Expenses to average net assets, before fee waivers by advisor | 2.12 | %(3),(4) | |||||||||||||||
Net investment income to average net assets | 1.39 | %(3) | |||||||||||||||
Portfolio turnover | 58 | % | |||||||||||||||
(1) | Calculated using the average shares method. | |
(2) | Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges or redemption fees; results would be lower if they were included. Total investment return for the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(3) | Annualized. | |
(4) | The ratios net and before fee waivers are the same since the fee waiver represents less than 0.01%. |
See accompanying notes to financial statements |
48 |
Class B | |||||||||||||||||
For the years ended August 31, | |||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||
$31.87 | $29.24 | $27.81 | $25.04 | $22.29 | |||||||||||||
0.41 | 0.39 | 0.30 | 0.28 | 0.09 | |||||||||||||
(3.56 | ) | 2.57 | 1.36 | 2.70 | 2.66 | ||||||||||||
(3.15 | ) | 2.96 | 1.66 | 2.98 | 2.75 | ||||||||||||
(0.31 | ) | (0.33 | ) | (0.23 | ) | (0.21 | ) | — | |||||||||
$28.41 | $31.87 | $29.24 | $27.81 | $25.04 | |||||||||||||
(9.96 | )% | 10.16 | % | 5.99 | % | 11.95 | % | 12.34 | % | ||||||||
$6,864 | $28,167 | $77,296 | $148,208 | $277,891 | |||||||||||||
1.80 | % | 1.72 | % | 1.71 | % | 1.70 | % | 1.70 | % | ||||||||
1.82 | % | 1.74 | % | 1.74 | % | 1.73 | % | 1.72 | % | ||||||||
1.39 | % | 1.29 | % | 1.07 | % | 1.08 | % | 0.36 | % | ||||||||
98 | % | 85 | % | 82 | % | 67 | % | 128 | % | ||||||||
UBS U.S. Allocation Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
Class C | |||||||||||||||||
For the six | |||||||||||||||||
months ended | |||||||||||||||||
February 28, 2009 | |||||||||||||||||
(unaudited) | |||||||||||||||||
Net asset value, beginning of period | $28.19 | ||||||||||||||||
Net investment income(1) | 0.18 | ||||||||||||||||
Net realized and unrealized gains (losses) from investment activities | (11.64 | ) | |||||||||||||||
Net increase (decrease) from operations | (11.46 | ) | |||||||||||||||
Dividends from net investment income | (0.44 | ) | |||||||||||||||
Net asset value, end of period | $16.29 | ||||||||||||||||
Total investment return(2) | (40.84 | )% | |||||||||||||||
Ratios/supplemental data: | |||||||||||||||||
Net assets, end of period (000’s) | $77,645 | ||||||||||||||||
Expenses to average net assets, net of fee waivers by advisor | 1.81 | %(3),(4) | |||||||||||||||
Expenses to average net assets, before fee waivers by advisor | 1.81 | %(3),(4) | |||||||||||||||
Net investment income to average net assets | 1.73 | %(3) | |||||||||||||||
Portfolio turnover | 58 | % | |||||||||||||||
(1) | Calculated using the average shares method. | |
(2) | Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges or redemption fees; results would be lower if they were included. Total investment return for the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(3) | Annualized. | |
(4) | The ratios net and before fee waivers are the same since the fee waiver represents less than 0.01%. |
See accompanying notes to financial statements |
50 |
Class C | |||||||||||||||||
For the years ended August 31, | |||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||
$31.80 | $29.27 | $27.95 | $25.21 | $22.46 | |||||||||||||
0.46 | 0.43 | 0.33 | 0.30 | 0.10 | |||||||||||||
(3.50 | ) | 2.55 | 1.35 | 2.72 | 2.67 | ||||||||||||
(3.04 | ) | 2.98 | 1.68 | 3.02 | 2.77 | ||||||||||||
(0.57 | ) | (0.45 | ) | (0.36 | ) | (0.28 | ) | (0.02 | ) | ||||||||
$28.19 | $31.80 | $29.27 | $27.95 | $25.21 | |||||||||||||
(9.70 | )% | 10.23 | % | 6.02 | % | 12.02 | % | 12.35 | % | ||||||||
$147,945 | $205,104 | $226,219 | $271,996 | $333,765 | |||||||||||||
1.68 | % | 1.65 | % | 1.65 | % | 1.65 | % | 1.67 | % | ||||||||
1.70 | % | 1.67 | % | 1.68 | % | 1.68 | % | 1.69 | % | ||||||||
1.53 | % | 1.38 | % | 1.16 | % | 1.12 | % | 0.42 | % | ||||||||
98 | % | 85 | % | 82 | % | 67 | % | 128 | % | ||||||||
UBS U.S. Allocation Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
Class Y | |||||||||||||||||
For the six | |||||||||||||||||
months ended | |||||||||||||||||
February 28, 2009 | |||||||||||||||||
(unaudited) | |||||||||||||||||
Net asset value, beginning of period | $29.27 | ||||||||||||||||
Net investment income(1) | 0.30 | ||||||||||||||||
Net realized and unrealized gains (losses) from investment activities | (12.06 | ) | |||||||||||||||
Net increase (decrease) from operations | (11.76 | ) | |||||||||||||||
Dividends from net investment income | (0.78 | ) | |||||||||||||||
Net asset value, end of period | $16.73 | ||||||||||||||||
Total investment return(2) | (40.49 | )% | |||||||||||||||
Ratios/supplemental data: | |||||||||||||||||
Net assets, end of period (000’s) | $26,707 | ||||||||||||||||
Expenses to average net assets, net of fee waivers by advisor | 0.66 | %(3),(4) | |||||||||||||||
Expenses to average net assets, before fee waivers by advisor | 0.66 | %(3),(4) | |||||||||||||||
Net investment income to average net assets | 2.90 | %(3) | |||||||||||||||
Portfolio turnover | 58 | % | |||||||||||||||
(1) | Calculated using the average shares method. | |
(2) | Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. Total investment return for the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(3) | Annualized. | |
(4) | The ratios net and before fee waivers are the same since the fee waiver represents less than 0.01%. |
See accompanying notes to financial statements |
52 |
Class Y | |||||||||||||||||
For the years ended August 31, | |||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||
$33.03 | $30.39 | $29.02 | $26.19 | $23.33 | |||||||||||||
0.81 | 0.79 | 0.67 | 0.61 | 0.39 | |||||||||||||
(3.62 | ) | 2.66 | 1.40 | 2.83 | 2.76 | ||||||||||||
(2.81 | ) | 3.45 | 2.07 | 3.44 | 3.15 | ||||||||||||
(0.95 | ) | (0.81 | ) | (0.70 | ) | (0.61 | ) | (0.29 | ) | ||||||||
$29.27 | $33.03 | $30.39 | $29.02 | $26.19 | |||||||||||||
(8.69 | )% | 11.42 | % | 7.22 | % | 13.22 | % | 13.58 | % | ||||||||
$46,994 | $59,330 | $116,888 | $122,743 | $123,727 | |||||||||||||
0.59 | % | 0.55 | % | 0.55 | % | 0.55 | % | 0.58 | % | ||||||||
0.61 | % | 0.57 | % | 0.57 | % | 0.58 | % | 0.60 | % | ||||||||
2.62 | % | 2.48 | % | 2.27 | % | 2.21 | % | 1.53 | % | ||||||||
98 | % | 85 | % | 82 | % | 67 | % | 128 | % | ||||||||
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Organization and significant accounting policies
UBS U.S. Allocation Fund (the “Fund”) is a series of UBS Investment Trust (the “Trust”) and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, as an open-end, diversified management investment company. The Trust was organized on March 28, 1991, as a business trust under the laws of the Commonwealth of Massachusetts and currently has one operating series.
Currently, the Fund offers Class A, Class B, Class C and Class Y shares. Each class represents interests in the same assets of the Fund, and the classes are identical except for differences in their sales charge structures, ongoing service and distribution charges and certain transfer agency and related services expenses. In addition, Class B shares and all corresponding reinvested dividend shares automatically convert to Class A shares within a certain number of years after issuance which varies depending upon the amount invested. All classes of shares have equal voting privileges except that Class A, Class B and Class C shares each have exclusive voting rights with respect to their respective service and/or distribution plans. Class Y shares have no service or distribution plan.
As of October 1, 2007, new or additional investments into Class B shares, including investments through an automatic investment plan, are not permitted. Existing shareholders of Class B shares may: (i) continue as Class B shareholders; (ii) continue to reinvest dividends and distributions into Class B shares; and (iii) exchange their Class B shares for Class B shares of other series of the UBS Family of Funds, as permitted by existing exchange priviledges. For Class B shares outstanding on October 1, 2007 and Class B shares acquired upon reinvestment of dividends or distributions or through exchanges, all Class B share attributes, including the associated Rule 12b-1 service plan and distribution fees, contingent deferred sales charges and conversion features will continue.
In the normal course of business the Fund may enter into contracts that contain a variety of representations or that provide indemnification for certain liabilities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
The preparation of financial statements in accordance with US generally accepted accounting principles requires the Fund’s management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies:
Valuation of investments—The Fund calculates net asset values based on the current market value for its portfolio securities. The Fund normally obtains market values for its securities from independent pricing sources. Independent pricing sources may use last reported sale prices, current market quotations or valuations from computerized “matrix” systems that derive values based on comparable securities. Securities traded in the over-the-counter (“OTC”) market and listed on The Nasdaq Stock Market, Inc. (“NASDAQ”) normally are valued at the NASDAQ Official Closing Price. Other OTC securities are valued at the last bid price available prior to valuation. Securities which are listed on US and foreign stock 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 valued on the exchange designated as the primary market by UBS Global Asset Management (Americas) Inc. (“UBS Global AM”). If a market value is not available from an independent pricing source for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Trust’s Board of Trustees (the “Board”). Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors may include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-US securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, these securities would be fair valued. The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt-instruments with sixty days or less remaining to maturity, unless the Board determines that this does not represent fair value.
On September 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157,
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
“Fair Value Measurements” (“FAS 157”). FAS 157 requires disclosure surrounding the various inputs that are used in determining the value of the Fund’s investments. These inputs are summarized into the three broad levels listed below:
Level 1—Quoted prices in active markets for identical investments.
Level 2—Other significant observable inputs, including but not limited to, quoted prices for similar investments, interest rates, prepayment speeds and credit risks.
Level 3—Unobservable inputs inclusive of the Fund’s own assumptions in determining the value of investments.
The following is a summary of the inputs used as of February 28, 2009 in valuing the Fund’s investments:
Quoted prices in | Significant | ||||||||||||||||
active markets | other | ||||||||||||||||
for identical | observable | Unobservable | |||||||||||||||
investments | inputs | inputs | |||||||||||||||
Description | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
Investments, at value | $190,479,162 | $145,497,172 | $1,263,610 | $337,239,944 | |||||||||||||
Other financial instruments(1) | (8,685,142 | ) | (319,733 | ) | — | (9,004,875 | ) | ||||||||||
Total | $181,794,020 | $145,177,439 | $1,263,610 | $328,235,069 | |||||||||||||
The following is a rollforward of the Fund’s investments that were using unobservable inputs (Level 3) during the six months ended February 28, 2009.
Investments, | |||||||||||||||||
at value | |||||||||||||||||
Beginning balance | $0 | ||||||||||||||||
Net purchases/(sales) | (119,313 | ) | |||||||||||||||
Accrued discounts/(premiums) | 3,574 | ||||||||||||||||
Total realized gain/(loss) | (460,480 | ) | |||||||||||||||
Net change in unrealized appreciation/(depreciation) | (1,935,306 | ) | |||||||||||||||
Net transfers in/(out) of Level 3 | 3,775,135 | ||||||||||||||||
Ending balance | $1,263,610 | ||||||||||||||||
(1) | Other financial instruments may include futures contracts, swap contracts and written options. Amounts represent unrealized appreciation (depreciation) at period end. |
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
In September 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. 133-1 and FIN 45-4, “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45” (the “FSP”). The FSP amends FASB Statement No. 133 (“FAS 133”), “Accounting for Derivative Instruments and Hedging Activities”, and also amends FASB Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”. The amendments to FAS 133 include required disclosure for (i) the nature and terms of the credit derivative, reasons for entering into the credit derivative, the events or circumstances that would require the seller to perform under the credit derivative, and the current status of the payment/performance risk of the credit derivative, (ii) the maximum potential amount of future payments (undiscounted) the seller could be required to make under the credit derivative, (iii) the fair value of the credit derivative, and (iv) the nature of any recourse provisions and assets held either as collateral or by third parties. The amendments to FIN 45 require additional disclosures about the current status of the payment/performance risk of a guarantee. All changes to accounting policies have been made in accordance with the FSP and incorporated for the current period as part of the Notes to the portfolio of investments and disclosures within the footnote, “Swap agreements”.
In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). The standard requires enhanced disclosures about the Fund’s derivative and hedging activities. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the impact that the adoption of FAS 161 may have on the Fund’s financial statement disclosures.
Repurchase agreements—The Fund may purchase securities or other obligations from a bank or securities dealer (or its affiliate), subject to the seller’s agreement to repurchase them at an agreed upon date (or upon demand) and price. The Fund maintains custody of the underlying obligations prior to their repurchase, either through its regular custodian or through a special “tri-party” custodian or sub-custodian that maintains a separate account for both the Fund and its counterparty. The underlying collateral is valued daily to ensure that the value, including accrued interest, is at least equal to the repurchase price. In the event of default of the obligation to repurchase, the Fund generally has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation.
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Repurchase agreements involving obligations other than US government securities (such as commercial paper, corporate bonds and mortgage loans) may be subject to special risks and may not have the benefit of certain protections in the event of counterparty insolvency. If the seller (or seller’s guarantor, if any) becomes insolvent, the Fund may suffer delays, costs and possible losses in connection with the disposition or retention of the collateral. Under certain circumstances, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. The Fund may participate in joint repurchase agreement transactions with other funds managed, advised or sub-advised by UBS Global AM.
Investment transactions, investment income and expenses—Investment transactions are recorded on the trade date. Realized gains and losses from investment transactions are calculated using the identified cost method. Dividend income is recorded on the ex-dividend date (“ex-date”). Interest income is recorded on an accrual basis. Discounts are accreted and premiums are amortized as adjustments to interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of oustanding shares (or the value of dividend eligible shares, as appropriate) of each class at the beginning of the day (after adjusting for current capital share activity of the respective classes). Class-specific expenses are charged directly to the applicable class of shares.
Securities traded on to-be-announced basis—The Fund may from time to time purchase securities on a to-be-announced (“TBA”) basis. In a TBA transaction, the Fund commits to purchasing or selling securities for which all specific information is not yet known at the time of the trade, particularly the face amount and maturity date of the underlying security transactions. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, normally 15 to 45 days later. Beginning on the date the Fund enters into a TBA transaction, cash, US government securities or other liquid securities are segregated in an amount equal in value to the purchase price of the TBA security. These transactions are subject to market fluctuations, and their current value is determined in the same manner as for other securities.
At February 28, 2009, the Fund held TBA securities with a total cost of $98,813.
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Option writing—The Fund may write (sell) put and call options on securities or derivative instruments in order to gain exposure to or protect against changes in the markets. When the Fund writes a call or a put option, an amount equal to the premium received by the Fund is included on the Fund’s Statement of assets and liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. If an option which the Fund has written either expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security or derivative instrument, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund recognizes a realized gain or loss (long-term or short-term, depending on the holding period of the underlying security) from the sale of the underlying security or derivative instrument and the proceeds from the sale are increased by the premium originally received. If a put option which the Fund has written is exercised, the amount of the premium originally received reduces the cost of the security or derivative instrument which the Fund purchases upon exercise of the option.
In writing an option, the Fund bears the market risk of an unfavorable change in the price of the derivative instrument, security or currency underlying the written option. Exercise of an option written by the Fund could result in the Fund selling or buying a derivative instrument, security or currency at a price different from current market value.
Written option activity for the six months ended February 28, 2009 was as follows:
Amount of | |||||||||||||||||
Number of | premiums | ||||||||||||||||
contracts | received | ||||||||||||||||
Options outstanding at August 31, 2008 | 280 | $337,704 | |||||||||||||||
Options written | 640 | 426,479 | |||||||||||||||
Options terminated in closing purchase transactions | (683 | ) | (672,087 | ) | |||||||||||||
Options outstanding at February 28, 2009(1) | 237 | $92,096 | |||||||||||||||
(1) | For additional information regarding the written options outstanding at February 28, 2009, please refer to the footnotes in the Portfolio of investments. |
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Purchased options—The Fund may also purchase put and call options. Purchasing call options tends to increase exposure to the underlying instrument. Purchasing put options tends to decrease exposure to the underlying instrument. The Fund pays a premium which is included in the Statement of assets and liabilities as an investment and subsequently market to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying future, security or currency transaction to determine the realized gain or loss.
Futures contracts—Upon entering into a financial futures contract, the Fund is required to deliver to a broker an amount of cash and/or securities equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin”, are made or received by the Fund each day, depending on the fluctuations in the value of the underlying financial futures contracts, except that in the case of certain futures contracts payments may be made or received at settlement. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss until the financial futures contract is closed, at which time the net gain or loss is reclassified to realized gain or loss on futures.
Using financial futures contracts involves various market risks. If the Fund was unable to liquidate a futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses and would continue to be subject to market risk with respect to the position. In addition, the Fund would continue to be required to make variation margin payments and might be required to maintain the position being hedged or to maintain cash or securities in a separate account. Furthermore, certain characteristics of the futures market might increase the risk that movements in the prices of the financial futures contracts might not correlate perfectly with movements in the prices of the investments being hedged, including temporary price distortion. The separate account for margin will be maintained at the futures counterparty and may be subject to risks or delays if the counterparty becomes insolvent.
Interest rate swap agreements—The Fund may enter into interest rate swap agreements with another party to receive or pay interest (e.g., an
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
exchange of fixed rate payments for floating rate payments) to protect themselves from interest rate fluctuations. This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to a specified interest rate(s) for a specified amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the contract. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Fund. Therefore, the Fund considers the creditworthiness of the counterparty to a swap contract in evaluating potential credit risk.
The Fund accrues for interim payments on swap contracts on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap contracts on the Statement of assets and liabilities. Once interim payments are settled in cash, the net amount is recorded as realized gain/loss on swaps, in addition to realized gain/loss recorded upon the termination of swap contracts on the Statement of operations. Fluctuations in the value of swap contracts are recorded for financial statement purposes as unrealized appreciation or depreciation of swaps.
At February 28, 2009, the Fund had outstanding interest rate swaps with the following terms:
Rate type | |||||||||||||||||
Upfront | |||||||||||||||||
Notional | Payments | Payments | payments | Unrealized | |||||||||||||
amount | Termination | made by | received by | received | appreciation | ||||||||||||
(000) | dates | the Fund | the Fund | (made) | Value | (depreciation) | |||||||||||
USD 52,600* | 01/13/10 | 1.264%(1) | 0.496%(2) | $— | $(98,721 | ) | $(98,721 | ) | |||||||||
USD 52,600** | 01/13/19 | 0.496(2) | 1.264(1) | — | 260,206 | 260,206 | |||||||||||
USD 69,300*** | 01/13/10 | 1.264(1) | 0.496(2) | — | (81,753 | ) | (81,753 | ) | |||||||||
USD 69,300*** | 01/13/19 | 0.496(2) | 1.264(1) | — | 194,884 | 194,884 | |||||||||||
$274,616 | $274,616 | ||||||||||||||||
* | Credit Suisse is the counterparty of the contract. | |
** | Deutsche Bank AG is the counterparty of the contract. | |
*** | Merrill Lynch is the counterparty of the contract. | |
(1) | Rate based on 3 Month LIBOR (London Interbank Offered Rate). | |
(2) | Rate based on 1 Month LIBOR (London Interbank Offered Rate). | |
USD | United States Dollar |
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Credit default swap agreements—The Fund may use credit default swaps on credit indices to hedge a portfolio of credit default swaps or bonds with a credit default swap on indices which is less expensive than it would be to buy many credit default swaps to achieve a similar effect. Credit default swaps on indices are benchmarks for protecting investors owning bonds against default, and traders use them to speculate on changes in credit quality. Credit default swap agreements involve commitments to make or receive payments in the event of a default of a security or a credit event. As a buyer, the Fund would make periodic payments to the counterparty, and the Fund would receive payments only upon the occurrence of a credit event. If no credit event occurs, the Fund will lose its periodic stream of payments over the term of the contract. However, if a credit event does occur, the Fund typically would receive full notional value for a reference obligation that may have little or no value. As a seller, the Fund would receive periodic payments from the counterparty, and the Fund would make payments only upon the occurrence of a credit event. If no default or credit event occurs, the Fund will gain the periodic stream of payments it received over the term of the contract and the counterparty will lose its periodic stream of payments over the term of the contract. However, if a default or credit event occurs, the Fund typically pays full notional value for a reference obligation that may have little or no value. Credit default swaps may involve greater risks than if the Fund had invested in the reference obligation directly and are subject to general market risk, liquidity risk, and credit risk.
The maximum potential amount of future payments (undiscounted) that the Fund as a seller of protection could be required to make under a credit default swap agreement would be an amount equal to the notional amount of the agreement. Notional amounts of all credit default swap agreements outstanding as of February 28, 2009 for which the Fund is the seller of protection are disclosed in the table on page 63. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into, if any, by the Fund for the same referenced entity or entities.
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
At February 28, 2009, the Fund had outstanding credit default swap contracts with the following terms:
Credit default swaps on credit indicies—sell protection(1) | |||||||||||||||||
Rate type | |||||||||||||||||
Upfront | |||||||||||||||||
Notional | Payments | Payments | payments | ||||||||||||||
amount | Termination | made by | received by | received | Unrealized | Credit | |||||||||||
(000) | date | the Fund | the Fund | (made) | Value | depreciation | spread(2) | ||||||||||
USD 7,000* | 12/20/13 | 0.000%(3) | 5.000%(4) | $1,382,014 | $(1,976,363) | $(594,349) | 15.69% | ||||||||||
* | Goldman Sachs is the counterparty of the contract. | |
(1) | If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. | |
(2) | Credit spreads, where available, represented in absolute terms, utilized in determining the market value as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default of the credit derivative. The credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity. | |
(3) | Payment to the counterparty will be made upon the occurance of bankruptcy and/or by a restructuring event with respect to securities contained in the CDX North America High Yield Index Series 11. | |
(4) | Payments received are based on the notional amounts. | |
USD | United States Dollar |
Dividends and distributions—Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions is determined in accordance with federal income tax regulations, which may differ from US generally accepted accounting principles. These “book/tax” differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification.
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Concentration of risk
The ability of the issuers of the debt securities held by the Fund to meet their obligations may be affected by economic developments, including those particular to a specific industry, country or region.
Investment advisor and administrator
The Board has approved an Investment Advisory and Administration Contract (“Advisory Contract”), under which UBS Global AM serves as investment advisor and administrator of the Fund. In accordance with the Advisory Contract, the Fund is to pay UBS Global AM an investment advisory and administration fee, which is to be accrued daily and paid monthly, at an annual rate of 0.50% of the Fund’s average daily net assets up to $250 million and 0.45% thereafter.
UBS Global AM has agreed to permanently reduce its advisory and administration fee based on the Fund’s average daily net assets so that it is assessed as follows: $0 to $250 million – 0.50%; in excess of $250 million up to $500 million – 0.45%; in excess of $500 million up to $2 billion – 0.40%; and over $2 billion – 0.35%. Accordingly, for the six months ended February 28, 2009, UBS Global AM waived $967 in investment advisory and administration fees. At February 28, 2009, the Fund owed UBS Global AM $119,443 in investment advisory and administration fees. At February 28, 2009, UBS Global AM did not owe the Fund for fee waivers under the above agreement.
For the six months ended February 28, 2009, the Fund paid $19,073 in brokerage commissions to UBS Securities LLC., an indirect wholly owned subsidiary of UBS AG, for transactions executed on behalf of the Fund.
Additional information regarding compensation to affiliate of a board member
Effective March 1, 2005, Professor Meyer Feldberg accepted the position of senior advisor to Morgan Stanley, resulting in him becoming an interested trustee of the Fund. The Fund has been informed that Professor Feldberg’s role at Morgan Stanley does not involve matters directly affecting any UBS funds. Fund transactions are executed through Morgan Stanley based on that firm’s ability to provide best execution of the transactions. During the six months ended February 28, 2009, the Fund paid brokerage commissions to Morgan Stanley in the amount of $4,728. During the six months ended February 28, 2009, the Fund purchased and sold certain
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
securities (e.g., fixed income securities) in principal trades with Morgan Stanley having an aggregate value of $8,041,991. Morgan Stanley received compensation in connection with these trades, which may have been in the form of a “mark-up” or “mark-down” of the price of the securities, a fee from the issuer for maintaining a commercial paper program, or some other form of compensation. Although the precise amount of this compensation is not generally known by the Fund’s investment manager, it is believed that under normal circumstances it represents a small portion of the total value of the transactions.
Service and distribution plans
UBS Global Asset Management (US) Inc. (“UBS Global AM—US”) is the principal underwriter of the Fund’s shares. Under separate plans of service and/or distribution pertaining to Class A, Class B and Class C shares, the Fund pays UBS Global AM—US monthly service fees at an annual rate of 0.25% of the average daily net assets of Class A, Class B and Class C shares and monthly distribution fees at the annual rate of 0.75% of the average daily net assets of Class B and Class C shares. At February 28, 2009, the Fund owed UBS Global AM—US $106,753 for service and distribution fees.
UBS Global AM—US also receives the proceeds of the initial sales charges paid by shareholders upon the purchase of Class A shares and the contingent deferred sales charges paid by shareholders upon certain redemptions of Class A, Class B and Class C shares. UBS Global AM—US has informed the Fund that for the six months ended February 28, 2009, it earned $13,166, $6,638, and $608 in initial sales and deferred sales charges on Class A, Class B and Class C shares, respectively.
Redemption fees
There is a redemption fee of 1.00% on any class of shares if an investor sells or exchanges shares less than 90 days after purchase, subject to certain exemptions as noted in the prospectus. For the six months ended February 28, 2009, the Fund received $17,538 in redemption fees.
Transfer agency related services fees
UBS Financial Services Inc., an indirect wholly owned subsidiary of UBS AG, provides certain services pursuant to a delegation of authority from PNC Global Investment Servicing (“PNC”), the Fund’s transfer agent, and is compensated for these services by PNC, not the Fund.
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
For the six months ended February 28, 2009, UBS Financial Services, Inc. received from PNC, not the Fund, $134,830 of the total transfer agency and related services fees paid by the Fund to PNC.
Securities lending
The Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, US government securities or irrevocable letters of credit in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. The Fund may regain ownership of loaned securities to exercise certain beneficial rights; however, the Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. The Fund receives compensation for lending its securities from interest or dividends earned on the cash, US government securities or irrevocable letters of credit held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees. As of November 12, 2008, State Street Bank & Trust Company is the Fund’s lending agent. Prior to November 12, 2008, UBS Securities LLC was the Fund’s lending agent. For the period September 1, 2008 through November 12, 2008, UBS Securities LLC earned $3,573 in compensation as the Fund’s lending agent. At February 28, 2009, the Fund had securities on loan having a market value of $56,969,455.
Bank line of credit
The Fund participates with other funds managed, advised or sub-advised by UBS Global AM in a $100 million committed credit facility with State Street Bank and Trust Company (“Committed Credit Facility”), to be utilized for temporary financing until the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Fund at the request of shareholders and other temporary or emergency purposes. Under the Committed Credit Facility arrangement, the Fund has agreed to pay a commitment fee, pro rata, based on the relative asset size of the funds in the Committed Credit Facility. Interest is charged to the Fund at the overnight federal funds rate in effect at the time of borrowings, plus 0.50%. The Fund did not borrow under the Committed Credit Facility during the six months ended February 28, 2009.
Purchases and sales of securities
For the six months ended February 28, 2009, aggregate purchases and sales of portfolio securities, excluding short-term securities and
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
US Government securities, were $119,358,446 and $156,804,477, respectively.
For the six months ended February 28, 2009, aggregate purchases and sales of US Government securities, excluding short-term securities, were $93,822,218 and $122,120,474, respectively.
Federal tax status
The Fund intends to distribute substantially all of its income and to comply with the other requirements of the Internal Revenue Code applicable to regulated investment companies. Accordingly, no provision for federal income taxes is required. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, the Fund intends not to be subject to a federal excise tax.
The tax character of distributions paid during the fiscal year ended August 31, 2008 was as follows:
Distributions paid from: | 2008 | ||||||||||||||||
Ordinary income | $16,373,654 | ||||||||||||||||
The tax character of distributions paid and the components of accumulated earnings (deficit) on a tax basis for the current fiscal year will be determined after the Fund’s fiscal year ending August 31, 2009.
At August 31, 2008, the Fund had a net capital loss carryforward of $76,729,046. This loss carryforward is available as a reduction, to the extent provided in the regulations, of any future net realized capital gains and will expire August 31, 2011. To the extent that such losses are used to offset future net realized capital gains, it is probable these gains will not be distributed. For the year ended August 31, 2008, the Fund utilized $23,723,920 of the capital loss carryforward to offset current year realized gains.
As of and during the period ended February 28, 2009, the Fund did not have any liabilities for any unrecognized tax positions. The Fund recognizes interest and penalties, if any, related to unrecognized tax positions as income tax expense in the Statement of operations. During the period, the Fund did not incur any interest or penalties.
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Each of the tax years in the four year period ended August 31, 2008, remains subject to examination by the Internal Revenue Service and state taxing authorities.
Shares of beneficial interest
There is an unlimited amount of $0.001 par value shares of beneficial interest authorized. Transactions in shares of beneficial interest were as follows:
Class A | Class B | ||||||||||||||||
For the six months ended | |||||||||||||||||
February 28, 2009: | Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | 455,643 | $8,678,787 | 41,147 | $762,442 | |||||||||||||
Shares repurchased | (1,946,089 | ) | (39,654,648 | ) | (31,378 | ) | (621,835 | ) | |||||||||
Shares converted from Class B to Class A | 64,909 | 1,471,080 | (65,453 | ) | (1,471,080 | ) | |||||||||||
Dividends reinvested | 377,206 | 7,072,597 | 2,993 | 56,239 | |||||||||||||
Net decrease | (1,048,331 | ) | $(22,432,184 | ) | (52,691) | $(1,274,234) | |||||||||||
For the year ended | |||||||||||||||||
August 31, 2008: | |||||||||||||||||
Shares sold | 235,427 | $7,251,582 | 4,809 | $145,072 | |||||||||||||
Shares repurchased | (3,024,039 | ) | (91,986,202 | ) | (130,762 | ) | (3,934,198 | ) | |||||||||
Shares converted from Class B to Class A | 515,420 | 16,215,706 | (521,781 | ) | (16,215,706 | ) | |||||||||||
Dividends reinvested | 327,330 | 10,202,854 | 5,464 | 169,430 | |||||||||||||
Net decrease | (1,945,862 | ) | $(58,316,060 | ) | (642,270 | ) | $(19,835,402 | ) | |||||||||
Class C | Class Y | ||||||||||||||||
For the six months ended | |||||||||||||||||
February 28, 2009: | Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | 156,143 | $2,983,922 | 61,010 | $1,157,307 | |||||||||||||
Shares repurchased | (747,016 | ) | (15,021,467 | ) | (130,677 | ) | (2,736,139 | ) | |||||||||
Dividends reinvested | 108,165 | 2,001,045 | 60,219 | 1,141,753 | |||||||||||||
Net decrease | (482,708 | ) | $(10,036,500 | ) | (9,448 | ) | $(437,079 | ) | |||||||||
For the year ended | |||||||||||||||||
August 31, 2008: | |||||||||||||||||
Shares sold | 71,145 | $2,115,806 | 68,086 | $2,083,279 | |||||||||||||
Shares repurchased | (1,379,873 | ) | (41,111,148 | ) | (308,043 | ) | (9,440,003 | ) | |||||||||
Dividends reinvested | 107,102 | 3,281,599 | 48,902 | 1,543,833 | |||||||||||||
Net decrease | (1,201,626 | ) | $(35,713,743 | ) | (191,055 | ) | $(5,812,891 | ) | |||||||||
UBS U.S. Allocation Fund
General information (unaudited)
Quarterly Form N-Q portfolio schedule
The Fund will file its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s Web site at http://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 1-800-SEC 0330. Additionally, you may obtain copies of Forms N-Q from the Fund upon request by calling 1-800-647 1568.
Proxy voting policies, procedures and record
You may obtain a description of the Fund’s (1) proxy voting policies, (2) proxy voting procedures and (3) information regarding how the Fund voted any proxies related to portfolio securities during the most recent 12-month period ended June 30 for which an SEC filing has been made, without charge, upon request by contacting the Fund directly at 1-800-647 1568, online on the Fund’s Web site: www.ubs.com/ubsglobalam-proxy, or on the EDGAR Database on the SEC’s Web site (http://www.sec.gov).
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Trustees | ||
Richard Q. Armstrong | Meyer Feldberg | |
Chairman | ||
Bernard H. Garil | ||
Alan S. Bernikow | ||
Heather R. Higgins | ||
Richard R. Burt | ||
Principal Officers | ||
Kai R. Sotorp | Thomas Disbrow | |
President | Vice President and Treasurer | |
Mark F. Kemper | ||
Vice President and Secretary | ||
Investment Advisor and Administrator | ||
UBS Global Asset Management (Americas) Inc. | ||
51 West 52nd Street | ||
New York, New York 10019-6114 | ||
Principal Underwriter | ||
UBS Global Asset Management (Americas) Inc. | ||
51 West 52nd Street | ||
New York, New York 10019-6114 |
The financial information included herein is taken from the records of the Fund without examination by independent registered public accountants who do not express an opinion thereon.
This report is not to be used in connection with the offering of shares of the Fund unless accompanied or preceded by an effective prospectus.
© 2009 UBS Global Asset Management (Americas) Inc. All rights reserved.
UBS Global Asset Management (Americas) Inc.
51 West 52nd Street
New York, New York 10019-6114