UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-06292
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UBS Investment Trust
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(Exact name of registrant as specified in charter)
51 West 52nd Street, New York, New York 10019-6114
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(Address of principal executive offices) (Zip code)
Mark F. Kemper, Esq.
UBS Global Asset Management (US) Inc.
51 West 52nd Street
New York, NY 10019-6114
(Name and address of agent for service)
Copy to:
Jack W. Murphy, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401
Registrant's telephone number, including area code: 212-882 5000
Date of fiscal year end: August 31
Date of reporting period: August 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
[UBS GLOBAL ASSET MANAGEMENT LOGO GRAPHIC OMITTED]
UBS U.S. ALLOCATION FUND
ANNUAL REPORT
AUGUST 31, 2004
UBS U.S. ALLOCATION FUND
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UBS U.S. ALLOCATION FUND
INVESTMENT GOAL:
Total return consisting of long-term capital appreciation and current income.
PORTFOLIO MANAGER:
Team, UBS Global Asset
Management (US) 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.
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October 15, 2004
Dear Shareholder,
We present you with the annual report for UBS U.S. Allocation Fund (formerly UBS
Tactical Allocation Fund), for the fiscal year ended August 31, 2004.
Performance
Over the 12 months ended August 31, 2004, UBS U.S. Allocation Fund's (the
"Fund") Class A shares returned 13.19% (6.96% after the deduction of the maximum
sales charge). Over the same timeframe, the Class Fund's benchmark returned
12.75%.
During the review period, the benchmark index changed given changes to the
Fund's investment strategy. We believed the former benchmark-the S&P 500
Index-was no longer an adequate measure against which to track performance. Over
the review period, the S&P 500 Index returned 11.46%. (For returns over various
time periods, please refer to "Performance at a Glance" on page 6). Please note
that those returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or on the redemption of Fund
shares.)
An Interview with Portfolio Manager Brian Singer
Q. DURING THE FISCAL YEAR, THERE WERE SEVERAL SIGNIFICANT CHANGES TO THE FUND.
WHILE THESE WERE EXPLAINED IN THE FUND'S SEMIANNUAL REPORT, CAN YOU PROVIDE
A SUMMARY OF THE CHANGES?
A. At UBS Global Asset Management, we continually review our investment
capabilities and processes as we strive to provide our clients with
competitive risk-adjusted returns throughout market cycles. We recognize
that markets and the factors influencing them are constantly changing, and
that it is necessary to respond to these changes.
To this end, our Investment Management and Research team conducted a
careful review of the Fund, and determined that it was in the best
interests of our shareholders to modify its investment strategy. As a
result of this work, and with the approval of the Fund's Board of Trustees,
we made modifications to
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UBS U.S. ALLOCATION FUND
the portfolio's investment strategy, which went into effect on February 15,
2004. These modifications have resulted in more active management of the
Fund's asset allocation process, as well as of specific asset classes in
the Fund. The Tactical Allocation Model, which had been the driving force
behind the Fund, is no longer a factor in its management.
Further to these changes, a team of portfolio managers, as opposed to an
individual, now oversees the Fund, which is more in line with UBS Global
Asset Management's team approach to investment management.
Q. HOW DO YOU THINK THESE CHANGES WILL BENEFIT THE FUND'S SHAREHOLDERS?
A. We believe shareholders now have the potential to fully benefit from the
institutional asset allocation and active, bottom-up securities selection
capabilities that define our firm. UBS Global Asset Management's investment
philosophy and institutional track record have been built on the
disciplined application of the price to intrinsic value approach to
determining valuations and return expectations of asset classes, regions,
sectors and securities. By following this time-tested investment
philosophy, we have been able to provide our institutional clients with
attractive risk-adjusted returns for over 22 years.
In fact, in the time since modifications were made to the Fund's investment
strategy, we have already seen the Fund's shareholders benefit. From
February 15, 2004 through September 30, 2004 (the most recent month-end as
of the writing of this letter), the Fund's Class A shares returned 0.50% on
a cumulative basis. This compares with a decline, over the same period, of
1.82% for the S&P 500 Index, which the Fund had closely tracked prior to
the time when investment strategy modifications were made.
Q. WHY DID THE FUND'S BENCHMARK CHANGE?
A. The Fund's benchmark is now constructed as follows: 65% Russell 3000 Index
(representing all capitalization stocks), 30% Lehman Brothers US Aggregate
Bond Index (representing US investment grade fixed income securities), and
5% Merrill Lynch High Yield Cash Pay Index (representing US high yield
securities). We believe this index better represents the asset classes in
which the Fund invests, and, as a result, consider it a more accurate
benchmark against which to track the Fund's performance.
Q. GIVEN THE MODIFICATIONS TO THE FUND'S INVESTMENT STRATEGY, HOW WAS ITS
PORTFOLIO ADJUSTED DURING THE FISCAL YEAR?
A. On February 15, 2004, the Fund maintained a 100% allocation to equities. In
accordance with the change in strategy and our views on the asset classes
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UBS U.S. ALLOCATION FUND
in which the Fund invests, the portfolio strategy was rebalanced as
follows: 65% stocks, 30% investment grade bonds and 5% high yield bonds. We
subsequently made several adjustments to the portfolio's allocation as the
period progressed. At the end of the fiscal year, the Fund's portfolio
increased its allocation to stocks to 71.0%, and held 26.3% in investment
grade bonds and 2.0% in high yield bonds.* The Fund's overweight position
in stocks versus the benchmark was due to the fact that equities were
trading below our estimate of their fair value. Conversely, both investment
grade and high yield bonds appeared overvalued.
Q. WERE THERE ANY ADDITIONAL MODIFICATIONS TO THE FUND AS THE REPORTING PERIOD
PROGRESSED?
A. Within investment grade fixed income, we maintained a defensive duration
posture before gradually raising duration to a neutral position versus the
Lehman Brothers US Aggregate Bond Index. Sector overweights included
collateralized mortgage-backed securities and asset-backed securities, and
underweights included US Treasuries and agencies. Toward the end of the
reporting period, we lowered the Fund's duration relative to its benchmark,
due to our belief that yields had moved significantly below our fair value
estimate.
In terms of the Fund's stock positioning, we utilized our bottom-up
investment process that calls for investing in companies that meet our
intrinsic value criteria. That said, sector overweights-which are a result
of our stock selection process-included bank financials, utilities and
pharmaceuticals. Conversely, the Fund had underweight positions in tech
hardware and energy.
Q. WHAT IS YOUR OUTLOOK FOR THE ECONOMY, AND HOW DO YOU ANTICIPATE STRUCTURING
THE PORTFOLIO GOING FORWARD?
A. At this point, we expect that the Fed will continue to raise interest rates
in the months to come. As of this writing, the futures market has priced in
a fed funds rate of 2.5% by the end of June 2005, an increase of 0.75% from
the current level. We are generally concerned about rising interest rates
in the US, especially for intermediate-term maturities. Equities are still
attractive in our view, both on an absolute basis and relative to
fixed-income securities. We believe
* As a percentage of net assets as of August 31, 2004.
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UBS U.S. ALLOCATION FUND
that the US economy will continue to perform well, and US companies'
earnings will justify equity prices higher than where they are today.
Through our disciplined investment approach, we will continue to seek to
identify compelling opportunities that we believe have the potential to
generate superior risk-adjusted returns over the long term.
We thank you for your continued support, and welcome any comments or questions
you may have. For more information on UBS U.S. Allocation Fund or any UBS
fund,** please contact your financial advisor, or visit us at www.ubs.com.
Sincerely,
/s/ Joseph A. Varnas
Joseph A. Varnas
President
UBS U.S. Allocation Fund
Managing Director
UBS Global Asset Management (US) Inc.
/s/ Brian Singer
Brian Singer
Portfolio Manager
UBS U.S. Allocation Fund
Managing Director
UBS Global Asset Management (US) Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the fiscal year ended August 31, 2004, and reflects our views
at the time of its writing. Of course, these views may change in response to
changing circumstances, and they do not guarantee the future performance of the
markets or the Fund. We encourage you to consult your financial advisor
regarding your personal investment program.
**Mutual funds are sold by prospectus only. The Fund's prospectus contains more
complete information regarding investment objectives, risks, charges and
expenses, and should be read carefully before investing.
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4
UBS U.S. ALLOCATION FUND
Performance At A Glance (unaudited)
Comparison of the change in value of a $10,000 investment in UBS U.S.
Allocation Fund (Class C) and UBS Tactical Allocation Fund Index and S&P 500
Index from August 31, 1994 through August 31, 2004.
UBS U.S. ALLOCATION FUND VS S&P 500 INDEX AND UBS TACTICAL ALLOCATION FUND INDEX
UBS US ALLOCATION FUND C S&P 500 INDEX RETURN US ALLOCATION FUND INDEX
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Aug-94 $10,000 $10,000 $10,000
Sep-94 $9,734 -2.44% $9,756 -2.45% $9,755
Oct-94 $9,945 2.25% $9,975 2.25% $9,975
Nov-94 $9,560 -3.64% $9,611 -3.64% $9,611
Dec-94 $9,632 1.48% $9,754 1.48% $9,754
Jan-95 $9,845 2.59% $10,007 2.59% $10,007
Feb-95 $10,176 3.90% $10,397 3.90% $10,397
Mar-95 $10,459 2.95% $10,704 2.95% $10,704
Apr-95 $10,743 2.94% $11,019 2.94% $11,019
May-95 $11,145 4.00% $11,459 4.00% $11,459
Jun-95 $11,377 2.32% $11,726 2.32% $11,726
Jul-95 $11,741 3.32% $12,114 3.32% $12,114
Aug-95 $11,757 0.25% $12,145 0.25% $12,145
Sep-95 $12,241 4.22% $12,657 4.22% $12,657
Oct-95 $12,178 -0.36% $12,612 -0.36% $12,612
Nov-95 $12,701 4.39% $13,166 4.39% $13,166
Dec-95 $12,917 1.93% $13,419 1.93% $13,419
Jan-96 $13,325 3.40% $13,876 3.40% $13,876
Feb-96 $13,418 0.93% $14,005 0.93% $14,005
Mar-96 $13,529 0.96% $14,140 0.96% $14,140
Apr-96 $13,707 1.47% $14,348 1.47% $14,348
May-96 $14,038 2.58% $14,718 2.58% $14,718
Jun-96 $14,072 0.38% $14,774 0.38% $14,774
Jul-96 $13,427 -4.42% $14,121 -4.42% $14,121
Aug-96 $13,698 2.11% $14,419 2.11% $14,419
Sep-96 $14,446 5.63% $15,231 5.63% $15,231
Oct-96 $14,829 2.76% $15,651 2.76% $15,651
Nov-96 $15,925 7.56% $16,834 7.56% $16,834
Dec-96 $15,586 -1.98% $16,500 -1.98% $16,500
Jan-97 $16,533 6.25% $17,531 6.25% $17,531
Feb-97 $16,627 0.78% $17,669 0.78% $17,669
Mar-97 $15,919 -4.11% $16,943 -4.11% $16,943
Apr-97 $16,857 5.97% $17,954 5.97% $17,954
May-97 $17,856 6.09% $19,047 6.09% $19,047
Jun-97 $18,633 4.48% $19,901 4.48% $19,901
Jul-97 $20,092 7.96% $21,484 7.96% $21,484
Aug-97 $18,932 -5.60% $20,281 -5.60% $20,281
Sep-97 $19,939 5.48% $21,391 5.48% $21,391
Oct-97 $19,239 -3.34% $20,677 -3.34% $20,677
Nov-97 $20,101 4.63% $21,634 4.63% $21,634
Dec-97 $20,418 1.72% $22,005 1.72% $22,005
Jan-98 $20,624 1.11% $22,249 1.11% $22,249
Feb-98 $22,077 7.21% $23,853 7.21% $23,853
Mar-98 $23,178 5.12% $25,075 5.12% $25,075
Apr-98 $23,315 1.01% $25,327 1.01% $25,327
May-98 $23,006 -1.72% $24,892 -1.72% $24,892
Jun-98 $23,891 4.06% $25,903 4.06% $25,903
Jul-98 $23,608 -1.07% $25,627 -1.07% $25,627
Aug-98 $20,160 -14.46% $21,922 -14.46% $21,922
Sep-98 $21,424 6.41% $23,326 6.41% $23,326
Oct-98 $23,135 8.13% $25,224 8.13% $25,224
Nov-98 $24,510 6.06% $26,752 6.06% $26,752
Dec-98 $25,885 5.76% $28,294 5.76% $28,294
Jan-99 $26,921 4.18% $29,477 4.18% $29,477
Feb-99 $26,043 -3.11% $28,561 -3.11% $28,561
Mar-99 $27,053 4.00% $29,704 4.00% $29,703
Apr-99 $28,071 3.87% $30,854 3.87% $30,854
May-99 $27,369 -2.36% $30,125 -2.36% $30,125
Jun-99 $28,843 5.55% $31,797 5.55% $31,797
Jul-99 $27,913 -3.12% $30,804 -3.12% $30,804
Aug-99 $27,737 -0.49% $30,652 -0.49% $30,652
Sep-99 $26,939 -2.74% $29,812 -2.74% $29,812
Oct-99 $28,606 6.33% $31,698 6.33% $31,698
Nov-99 $29,150 2.03% $32,343 2.03% $32,343
Dec-99 $30,447 5.89% $34,248 5.89% $34,248
Jan-00 $29,596 -5.02% $32,527 -5.02% $32,527
Feb-00 $29,354 -1.89% $31,912 -1.89% $31,912
Mar-00 $30,806 9.78% $35,034 9.78% $35,034
Apr-00 $30,367 -3.01% $33,980 -3.01% $33,980
May-00 $30,089 -2.05% $33,283 -2.05% $33,283
Jun-00 $30,474 2.47% $34,103 2.47% $34,103
Jul-00 $30,089 -1.56% $33,570 -1.56% $33,570
Aug-00 $31,496 6.21% $35,655 6.21% $35,655
Sep-00 $30,725 -5.28% $33,773 -5.28% $33,773
Oct-00 $30,689 -0.42% $33,630 -0.42% $33,630
Nov-00 $29,533 -7.88% $30,979 -7.88% $30,979
Dec-00 $29,554 0.49% $31,130 0.49% $31,130
Jan-01 $30,590 3.55% $32,235 3.55% $32,235
Feb-01 $27,759 -9.12% $29,296 -9.12% $29,296
Mar-01 $25,964 -6.34% $27,440 -6.34% $27,440
Apr-01 $27,948 7.77% $29,572 7.77% $29,572
May-01 $28,098 0.67% $29,771 0.67% $29,771
Jun-01 $27,380 -2.43% $29,046 -2.43% $29,046
Jul-01 $27,071 -0.98% $28,760 -0.98% $28,760
Aug-01 $25,346 -6.26% $26,960 -6.26% $26,960
Sep-01 $23,262 -8.08% $24,783 -8.08% $24,783
Oct-01 $23,671 1.91% $25,255 1.91% $25,255
Nov-01 $25,456 7.67% $27,192 7.67% $27,192
Dec-01 $25,643 0.88% $27,431 0.88% $27,431
Jan-02 $25,242 -1.46% $27,030 -1.46% $27,030
Feb-02 $24,721 -1.93% $26,509 -1.93% $26,509
Mar-02 $25,613 3.76% $27,506 3.76% $27,506
Apr-02 $24,019 -6.06% $25,838 -6.06% $25,838
May-02 $23,809 -0.74% $25,648 -0.74% $25,648
Jun-02 $22,084 -7.12% $23,821 -7.12% $23,821
Jul-02 $20,320 -7.79% $21,965 -7.79% $21,965
Aug-02 $20,430 0.66% $22,109 0.66% $22,109
Sep-02 $18,185 -10.87% $19,706 -10.87% $19,706
Oct-02 $19,759 8.80% $21,441 8.80% $21,441
Nov-02 $20,891 5.89% $22,703 5.89% $22,703
Dec-02 $19,628 -5.87% $21,369 -5.87% $21,369
Jan-03 $19,087 -2.62% $20,809 -2.62% $20,809
Feb-03 $18,776 -1.50% $20,497 -1.50% $20,497
Mar-03 $18,937 0.97% $20,696 0.97% $20,696
Apr-03 $20,460 8.24% $22,401 8.24% $22,401
May-03 $21,513 5.27% $23,581 5.27% $23,581
Jun-03 $21,764 1.28% $23,882 1.28% $23,882
Jul-03 $22,114 1.76% $24,303 1.76% $24,303
Aug-03 $22,515 1.95% $24,777 1.95% $24,777
Sep-03 $22,245 -1.06% $24,514 -1.06% $24,514
Oct-03 $23,468 5.66% $25,900 5.66% $25,900
Nov-03 $23,638 0.88% $26,128 0.88% $26,128
Dec-03 $24,835 5.24% $27,498 5.24% $27,498
Jan-04 $25,256 1.84% $28,003 1.84% $28,003
Feb-04 $25,567 1.39% $28,392 1.39% $28,392
Mar-04 $25,366 -1.51% $27,964 -0.51% $28,247
Apr-04 $25,005 -1.57% $27,525 -2.16% $27,637
May-04 $25,065 1.37% $27,903 0.74% $27,843
Jun-04 $25,487 1.94% $28,445 1.53% $28,270
Jul-04 $24,895 -3.31% $27,504 -2.09% $27,678
Aug-04 $25,296 0.40% $27,615 0.93% $27,936
The graph depicts the performance of UBS U.S. Allocation Fund Class C shares
versus the UBS Tactical Allocation Fund Index and S&P 500 Index over the 10
years ended August 31, 2004. The performance of the other share classes will
vary from the performance of the class shown based on the difference in sales
charges and fees paid by shareholders investing in different share classes. It
is important to note that the Fund is a professionally managed portfolio, while
the Index is not available for investment and is unmanaged. The comparison is
shown for illustrative purposes only.
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5
UBS U.S. ALLOCATION FUND
PERFORMANCE AT A GLANCE (UNAUDITED)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED 8/31/04
SINCE
6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION(o)
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Before Deducting Maximum Sales
Charge Class A* -0.69% 13.19% -1.09% 10.55% 10.16%
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Class B** -1.07 12.34 -1.84 N/A 8.11
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Class C*** -1.06 12.35 -1.83 9.73 9.43
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Class Y**** -0.49 13.58 -0.77 10.88 10.49
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After Deducting Maximum Sales
Charge Class A* -6.14 6.96 -2.21 9.93 9.62
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Class B** -6.01 7.34 -2.19 N/A 8.11
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Class C*** -2.05 11.35 -1.83 9.73 9.43
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S&P 500 Index -2.74 11.46 -2.07 10.69 10.61
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UBS Tactical Allocation Fund Index**** -1.61 12.75 -1.84 10.82 10.45
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Lipper Flexible Portfolio Funds Median -2.37 8.84 1.12 8.38 8.50
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For most recent quarter-end performance, please refer to the "Average
Annual Total Return" table on page 7.
(o) Since inception returns are calculated as of the commencement of
issuance on May 10, 1993 for Class A and Y shares, January 30, 1996 for
Class B shares and July 22, 1992 for Class C shares. The since inception
return for the S&P 500 Index is shown as of July 22, 1992, which is the
inception date of the oldest share class (Class C).The since inception
return for UBS Tactical Allocation Fund Index is shown as of July 31,
1992, which is the inception month end of the oldest share class (Class
C). The since inception return for the Lipper median is shown as of July
23, 1992, which is the closest available date to the inception of the
oldest share class (Class C).
* Maximum sales charge for Class A shares is 5.5%. Class A shares bear
ongoing 12b-1 service fees.
** 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 distribution and service fees.
*** 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 distribution and service fees.
**** The Fund offers Class Y shares to a limited group of eligible investors.
Class Y shares do not bear initial or contingent deferred sales charges
or ongoing 12b-1 distribution and service fees.
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.
**** An unmanaged index compiled by the Advisor, constructed as follows:
65% Russell 3000 Index, 30% Lehman U.S. Aggregate Bond Index, 5%
Merrill Lynch High Yield Cash Pay Index.
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. Total returns for periods of less than one year have not been
annualized.
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6
UBS U.S. ALLOCATION FUND
PERFORMANCE AT A GLANCE (UNAUDITED)
AVERAGE ANNUAL TOTAL RETURNS(1)
% RETURN WITHOUT DEDUCTING % RETURN AFTER DEDUCTING
MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE
--------------------------------------- ------------------------------------
CLASS CLASS
--------------------------------------- ------------------------------------
A* B** C*** A* B** C***
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Twelve Months Ended 09/30/04 15.95% 15.08% 15.07% 9.59% 10.08% 14.07%
- -----------------------------------------------------------------------------------------------------------------
Five Years Ended 09/30/04 -0.27 -1.03 -1.02 -1.39 -1.38 -1.02
- -----------------------------------------------------------------------------------------------------------------
Ten Years Ended 09/30/04 10.98 N/A 10.15 10.35 N/A 10.15
- -----------------------------------------------------------------------------------------------------------------
Commencement of Operations Through
09/30/04(+) 10.21 8.18 9.47 9.67 8.18 9.47
- -----------------------------------------------------------------------------------------------------------------
(1) Figures assume reinvestment of all dividends and capital gain distributions
at net asset value on the ex-dividend dates. Returns do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or
the redemption of Fund shares.
* Maximum sales charge for Class A shares is 5.5%. Class A shares bear
ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares if 5% imposed
on redemptions and is reduced to 0% after a maximum of six years. Class B
shares bear ongoing 12b-1 distribution and service fees.
*** 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 distribution and service fees.
+ Commencement of issuance for each class of shares is as follows: May 10,
1993, January 30, 1996 and July 22, 1992 for Class A, Class B and Class C
shares, respectively.
Note: The Fund offers Class Y shares to a limited group of eligible
investors. For the year ended August 31, 2004 and since inception, May 10,
1993 through August 31, 2004, Class Y shares had a total return of 13.58%
and 10.49%, respectively. For the one year, five year and 10-year periods
ended September 30, 2004 and since inception, May 10, 1993 through
September 30, 2004, Class Y shares have an average annual total return of
16.35%, 0.05%, 11.31% and 10.53%, respectively. Class Y shares do not have
initial or contingent deferred sales charges or ongoing 12b-1 distribution
and service fees. Returns do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
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7
UBS U.S. ALLOCATION FUND
EXPENSE EXAMPLE
HYPOTHETICAL $1,000 INVESTMENT AT BEGINNING OF PERIOD
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs (as applicable); including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; and (2) ongoing costs, including
management fees; distribution and/or service (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 six-month period starting March 1, 2004 and ending August 31, 2004.
ACTUAL EXPENSES
The first line for each class of shares in the table below provides information
about actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses that
you paid over a period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first line under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table below provides information
about hypothetical account values and hypothetical expenses based on 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.
- --------------------------------------------------------------------------------
8
UBS U.S. ALLOCATION FUND
EXPENSE EXAMPLE
Please note that the expenses shown in the table are meant to highlight your
ongoing cost only and do not reflect any transactional costs (as applicable),
such as sales charges (loads). Therefore, the second line for each class of
shares in the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have
been higher.
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
MARCH 1, 2004 AUGUST 31, 2004 3/1/04-8/31/04
- ---------------------------------------------------------------------------------------------------
Class A Actual $1,000.00 $993.10 $4.56
-----------------------------------------------------------------------------------------
Hypothetical (5% annual
return before expenses) 1,000.00 1,020.56 4.62
-----------------------------------------------------------------------------------------
Class B Actual 1,000.00 989.30 8.35
-----------------------------------------------------------------------------------------
Hypothetical (5% annual
return before expenses) 1,000.00 1,016.74 8.47
-----------------------------------------------------------------------------------------
Class C Actual 1,000.00 989.40 8.20
-----------------------------------------------------------------------------------------
Hypothetical (5% annual
return before expenses) 1,000.00 1,016.89 8.31
-----------------------------------------------------------------------------------------
Class Y Actual 1,000.00 995.10 2.81
-----------------------------------------------------------------------------------------
Hypothetical (5% annual
return before expenses) 1,000.00 1,022.32 2.85
- ---------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio: Class A: 0.91%,
Class B: 1.67%, Class C: 1.64%, Class Y: 0.56%, multiplied by the average
account value over the period, multiplied by 184 divided by 366 (to reflect
the one-half year period).
- --------------------------------------------------------------------------------
9
UBS U.S. ALLOCATION FUND
PORTFOLIO STATISTICS
CHARACTERISTICS 8/31/04 2/29/04
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets (bln) $ 1.3 $ 1.6
- ----------------------------------------------------------------------------------------------------------------------------
Number of Securities 509 386
- ----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
Stocks 71.0% 62.9%
- ----------------------------------------------------------------------------------------------------------------------------
Bonds 28.3 33.0
- ----------------------------------------------------------------------------------------------------------------------------
Cash Equivalents and Other Assets Less Liabilities 0.7 4.1
- ----------------------------------------------------------------------------------------------------------------------------
Total 100.0% 100.0%
- ----------------------------------------------------------------------------------------------------------------------------
TOP FIVE EQUITY SECTORS* 8/31/04 2/29/04
- ----------------------------------------------------------------------------------------------------------------------------
Financials 17.3% 15.2%
- ----------------------------------------------------------------------------------------------------------------------------
Health Care 13.6 12.0
- ----------------------------------------------------------------------------------------------------------------------------
Consumer Discretionary 10.0 8.6
- ----------------------------------------------------------------------------------------------------------------------------
Industrials 9.9 9.3
- ----------------------------------------------------------------------------------------------------------------------------
Information Technology 5.5 4.4
- ----------------------------------------------------------------------------------------------------------------------------
Total 56.3% 49.5%
- ----------------------------------------------------------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS* 8/31/04 2/29/04
Citigroup 3.0% Citigroup 2.5%
- ----------------------------------------------------------------------------------------------------------------------------
Nextel Communications 2.4 Nextel Communications 2.4
- ----------------------------------------------------------------------------------------------------------------------------
Wells Fargo 2.3 Wells Fargo 2.0
- ----------------------------------------------------------------------------------------------------------------------------
Microsoft 2.0 Allergan 1.7
- ----------------------------------------------------------------------------------------------------------------------------
UnitedHealth Group 1.9 Microsoft 1.7
- ----------------------------------------------------------------------------------------------------------------------------
Allergan 1.8 Burlington Northern Santa Fe 1.6
- ----------------------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe 1.8 UnitedHealth Group 1.6
- ----------------------------------------------------------------------------------------------------------------------------
Exxon Mobil 1.8 J.P. Morgan Chase 1.5
- ----------------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 1.8 Wyeth Pharmaceuticals 1.5
- ----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 1.8 Johnson & Johnson 1.5
- ----------------------------------------------------------------------------------------------------------------------------
Total 20.6% 18.0%
- ----------------------------------------------------------------------------------------------------------------------------
FIXED INCOME SECTOR ALLOCATION* 8/31/04 2/29/04
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Government & Agency Obligations 13.8% 19.0%
- ----------------------------------------------------------------------------------------------------------------------------
Corporate Bonds 7.3 10.8
- ----------------------------------------------------------------------------------------------------------------------------
Collateralized Mortgage Obligations 5.3 2.7
- ----------------------------------------------------------------------------------------------------------------------------
Asset-Backed Securities 1.6 0.3
- ----------------------------------------------------------------------------------------------------------------------------
International Obligations 0.3 0.2
- ----------------------------------------------------------------------------------------------------------------------------
Total 28.3% 33.0%
- ----------------------------------------------------------------------------------------------------------------------------
TOP TEN FIXED INCOME HOLDINGS* 8/31/04 2/29/04
- ----------------------------------------------------------------------------------------------------------------------------
GNMA II Certificates, 6.000% due 02/20/34 1.0% U.S. Treasury Notes, 1.875% due 11/30/05 5.4%
- ----------------------------------------------------------------------------------------------------------------------------
FNMA Certificates, 5.500% due 11/01/17 0.9 U.S. Treasury Notes, 3.125% due 09/15/08 3.2
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 5.375% due 02/15/31 0.9 U.S. Treasury Bonds, 6.250% due 05/15/30 2.3
- ----------------------------------------------------------------------------------------------------------------------------
FNMA REMIC, 6.000% due 01/25/32 0.8 FNMA Certificates, 6.500% due 08/01/29 to 11/01/30 1.9
- ----------------------------------------------------------------------------------------------------------------------------
FNMA Certificates, 6.500% due 08/01/29 0.8 FNMA Certificates, 5.500% due 09/01/17 to 11/01/17 1.5
- ----------------------------------------------------------------------------------------------------------------------------
FNMA REMIC, 4.053% due 01/25/43 0.7 U.S. Treasury Notes, 4.250% due 08/15/13 1.3
- ----------------------------------------------------------------------------------------------------------------------------
FHLMC Certificates, 5.000% due 01/30/14 0.7 FNMA Certificates, 2.625% due 01/19/07 0.7
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.250% due 05/15/30 0.7 FNMA REMIC, 6.000% due 01/25/32 0.7
- ----------------------------------------------------------------------------------------------------------------------------
FNMA Certificates, 5.500% due 09/01/17 0.7 GNMA REMIC, 5.500% due 09/20/29 0.7
- ----------------------------------------------------------------------------------------------------------------------------
FNMA Certificates, 2.625% due 01/19/07 0.6 FNMA REMIC, 4.310% due 01/25/43 0.7
- ----------------------------------------------------------------------------------------------------------------------------
Total 7.8% 18.4%
- ----------------------------------------------------------------------------------------------------------------------------
* Weightings represent percentages of net assets.
- --------------------------------------------------------------------------------
10
UBS U.S. Allocation Fund
Portfolio of Investments - August 31, 2004
Common Stocks - 70.98%
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------
AEROSPACE & DEFENSE - 2.64%
Boeing Co.(1) 239,600 $12,511,912
- -----------------------------------------------------------------------
Esterline Technologies Corp.* 57,400 1,821,302
- -----------------------------------------------------------------------
Lockheed Martin Corp.(1) 169,800 9,131,844
- -----------------------------------------------------------------------
Northrop Grumman Corp.(1) 190,500 9,839,325
- -----------------------------------------------------------------------
Triumph Group, Inc. * 20,400 656,880
- -----------------------------------------------------------------------
33,961,263
- -----------------------------------------------------------------------
AIRLINES - 0.23%
Delta Air Lines, Inc.(1)* 297,000 1,199,880
- -----------------------------------------------------------------------
Mesa Air Group, Inc.(1)* 110,000 704,550
- -----------------------------------------------------------------------
Pinnacle Airlines Corp.* 112,000 1,094,352
- -----------------------------------------------------------------------
2,998,782
- -----------------------------------------------------------------------
AUTO COMPONENTS - 0.80%
American Axle & Manufacturing
Holdings, Inc. 32,900 1,114,981
- -----------------------------------------------------------------------
Johnson Controls, Inc. 163,100 9,182,530
- -----------------------------------------------------------------------
10,297,511
- -----------------------------------------------------------------------
BANKS - 5.26%
Accredited Home Lenders
Holding Co.(1)* 44,400 1,765,788
- -----------------------------------------------------------------------
Boston Private Financial
Holdings, Inc. 40,800 993,888
- -----------------------------------------------------------------------
Colonial BancGroup, Inc. 80,300 1,620,454
- -----------------------------------------------------------------------
Cullen/Frost Bankers, Inc. 34,100 1,534,159
- -----------------------------------------------------------------------
First BanCorp. 27,000 1,240,920
- -----------------------------------------------------------------------
Mellon Financial Corp. 630,900 18,207,774
- -----------------------------------------------------------------------
Ocwen Financial
Corp.(1)* 111,200 1,007,472
- -----------------------------------------------------------------------
PNC Financial Services Group 187,000 10,036,290
- -----------------------------------------------------------------------
South Financial Group, Inc. 35,600 1,012,464
- -----------------------------------------------------------------------
Trustmark Corp. 40,000 1,199,200
- -----------------------------------------------------------------------
Wells Fargo & Co. 496,500 29,169,375
- -----------------------------------------------------------------------
67,787,784
- -----------------------------------------------------------------------
BIOTECHNOLOGY - 1.10%
Digene Corp.(1)* 14,000 350,700
- -----------------------------------------------------------------------
Genzyme Corp.(1)* 245,400 13,251,600
- -----------------------------------------------------------------------
Seattle Genetics, Inc.* 93,800 597,506
- -----------------------------------------------------------------------
14,199,806
- -----------------------------------------------------------------------
BUILDING PRODUCTS - 1.72%
Apogee Enterprises, Inc. 42,800 482,356
- -----------------------------------------------------------------------
Masco Corp.(1) 675,900 21,716,667
- -----------------------------------------------------------------------
22,199,023
- -----------------------------------------------------------------------
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------
CHEMICALS - 0.49%
Eastman Chemical Co. 119,400 $5,555,682
- -----------------------------------------------------------------------
Lubrizol Corp. 21,800 777,170
- -----------------------------------------------------------------------
6,332,852
- -----------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES - 0.90%
Equifax, Inc.(1) 174,100 4,248,040
- -----------------------------------------------------------------------
John H. Harland Co. 18,700 549,593
- -----------------------------------------------------------------------
McGrath Rentcorp. 56,900 1,951,101
- -----------------------------------------------------------------------
Mobile Mini, Inc.(1)* 60,600 1,651,350
- -----------------------------------------------------------------------
MoneyGram International, Inc. 189,700 3,167,990
- -----------------------------------------------------------------------
11,568,074
- -----------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.25%
Black Box Corp. 13,100 474,744
- -----------------------------------------------------------------------
Harris Corp. 41,800 2,013,088
- -----------------------------------------------------------------------
Tekelec(1)* 41,800 763,686
- -----------------------------------------------------------------------
3,251,518
- -----------------------------------------------------------------------
COMPUTERS & PERIPHERALS - 0.40%
Hewlett-Packard Co. 261,500 4,678,235
- -----------------------------------------------------------------------
Quantum Corp.* 182,500 428,875
- -----------------------------------------------------------------------
5,107,110
- -----------------------------------------------------------------------
CONSTRUCTION MATERIALS - 0.89%
Martin Marietta Materials, Inc. 256,236 11,528,058
- -----------------------------------------------------------------------
DIVERSIFIED FINANCIALS - 8.37%
Apollo Investment Corp.* 70,500 989,115
- -----------------------------------------------------------------------
Citigroup, Inc. 820,186 38,204,264
- -----------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 339,500 22,787,240
- -----------------------------------------------------------------------
IndyMac Bancorp, Inc. 30,500 1,052,250
- -----------------------------------------------------------------------
J.P. Morgan Chase & Co. 538,400 21,309,872
- -----------------------------------------------------------------------
Jackson Hewitt Tax Service, Inc. 60,000 1,161,000
- -----------------------------------------------------------------------
Morgan Stanley 437,850 22,212,130
- -----------------------------------------------------------------------
107,715,871
- -----------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION
SERVICES - 0.59%
SBC Communications, Inc. 296,900 7,657,051
- -----------------------------------------------------------------------
Electric Utilities - 4.09%
ALLETE, Inc. 48,500 1,312,410
- -----------------------------------------------------------------------
American Electric Power Co., Inc. 251,600 8,234,868
- -----------------------------------------------------------------------
CMS Energy Corp.(1)* 322,400 3,095,040
- -----------------------------------------------------------------------
Dominion Resources, Inc.(1) 83,700 5,431,293
- -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
11
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
COMMON STOCKS
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------
ELECTRIC UTILITIES - (CONCLUDED)
Exelon Corp. 485,900 $17,905,415
- -----------------------------------------------------------------------
FirstEnergy Corp. 338,791 13,632,950
- -----------------------------------------------------------------------
Pepco Holdings, Inc. 146,000 3,013,440
- -----------------------------------------------------------------------
52,625,416
ELECTRICAL EQUIPMENT - 0.03%
Ultralife Batteries, Inc.* 26,100 382,365
- -----------------------------------------------------------------------
Electronic Equipment &
Instruments - 1.10%
Methode Electronics, Inc. 63,100 831,658
- -----------------------------------------------------------------------
Mettler-Toledo
International, Inc.(1)* 211,600 9,742,064
- -----------------------------------------------------------------------
Newport Corp.* 47,400 592,500
- -----------------------------------------------------------------------
Park Electrochemical Corp. 66,700 1,477,405
- -----------------------------------------------------------------------
Regal-Beloit Corp.(1) 67,500 1,489,050
- -----------------------------------------------------------------------
14,132,677
- -----------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES - 0.26%
Oceaneering
International, Inc.* 50,800 1,626,616
- -----------------------------------------------------------------------
Offshore Logistics, Inc.* 56,300 1,677,740
- -----------------------------------------------------------------------
3,304,356
- -----------------------------------------------------------------------
FOOD & DRUG RETAILING - 1.05%
Albertson's, Inc.(1) 416,700 10,242,486
- -----------------------------------------------------------------------
Kroger Co.* 195,700 3,234,921
- -----------------------------------------------------------------------
13,477,407
- -----------------------------------------------------------------------
FOOD PRODUCTS - 0.07%
Hain Celestial Group, Inc.* 52,500 921,375
- -----------------------------------------------------------------------
GAS UTILITIES - 0.67%
Sempra Energy(1) 238,700 8,629,005
- -----------------------------------------------------------------------
HEALTH CARE EQUIPMENT &
SUPPLIES - 1.64%
Candela Corp.* 103,900 1,036,922
- -----------------------------------------------------------------------
Guidant Corp.(1) 103,500 6,189,300
- -----------------------------------------------------------------------
Haemonetics Corp.* 40,300 1,274,286
- -----------------------------------------------------------------------
ICU Medical, Inc.(1)* 28,000 733,320
- -----------------------------------------------------------------------
Medtronic, Inc. 193,000 9,601,750
- -----------------------------------------------------------------------
Mentor Corp. 29,400 1,034,292
- -----------------------------------------------------------------------
Ocular Sciences, Inc.* 23,400 1,020,240
- -----------------------------------------------------------------------
Theragenics Corp.* 50,400 189,000
- -----------------------------------------------------------------------
21,079,110
- -----------------------------------------------------------------------
HEALTH CARE PROVIDERS &
SERVICES - 3.26%
Anthem, Inc.(1)* 100,800 8,188,992
- -----------------------------------------------------------------------
LifePoint Hospitals, Inc.* 23,500 678,915
- -----------------------------------------------------------------------
Molina Healthcare, Inc.* 24,000 796,800
- -----------------------------------------------------------------------
Quest Diagnostics, Inc.(1) 61,500 5,264,400
- -----------------------------------------------------------------------
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------
HEALTH CARE PROVIDERS &
SERVICES - (CONCLUDED)
RehabCare Group,
Inc.(1)* 26,400 $606,936
- -----------------------------------------------------------------------
Renal Care Group, Inc.* 68,550 2,170,978
- -----------------------------------------------------------------------
UnitedHealth Group, Inc. 367,500 24,302,775
- -----------------------------------------------------------------------
42,009,796
- -----------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE - 0.12%
Bally Total Fitness Holding
Corp.(1)* 63,700 250,341
- -----------------------------------------------------------------------
CBRL Group, Inc.(1) 41,800 1,332,584
- -----------------------------------------------------------------------
1,582,925
- -----------------------------------------------------------------------
HOUSEHOLD DURABLES - 0.39%
Department 56, Inc.* 95,000 1,475,350
- -----------------------------------------------------------------------
Furniture Brands
International, Inc. 49,400 1,136,200
- -----------------------------------------------------------------------
Ryland Group, Inc.(1) 14,700 1,295,805
- -----------------------------------------------------------------------
Snap-On, Inc. 33,400 1,061,118
- -----------------------------------------------------------------------
4,968,473
- -----------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.03%
Kimberly Clark Corp. 198,300 13,226,610
- -----------------------------------------------------------------------
INSURANCE - 3.29%
AFLAC, Inc. 189,900 7,614,990
- -----------------------------------------------------------------------
American International
Group, Inc. 192,000 13,678,080
- -----------------------------------------------------------------------
AmerUs Group Co. 38,200 1,522,652
- -----------------------------------------------------------------------
Hartford Financial Services
Group, Inc.(1) 136,000 8,317,760
- -----------------------------------------------------------------------
Selective Insurance
Group, Inc.(1) 26,700 921,951
- -----------------------------------------------------------------------
Willis Group Holdings Ltd. 295,200 10,323,144
- -----------------------------------------------------------------------
42,378,577
- -----------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES - 0.05%
Tumbleweed Communications
Corp.* 312,800 656,880
- -----------------------------------------------------------------------
IT CONSULTING & SERVICES - 0.06%
BearingPoint, Inc.(1)* 35,500 286,485
Computer Task Group,
Inc.* 159,400 518,050
- -----------------------------------------------------------------------
804,535
- -----------------------------------------------------------------------
MACHINERY - 2.40%
Gardner Denver, Inc.* 36,400 1,009,372
- -----------------------------------------------------------------------
Illinois Tool Works, Inc.(1) 235,700 21,517,053
- -----------------------------------------------------------------------
Ingersoll Rand Co.,
Class A 122,400 7,957,224
- -----------------------------------------------------------------------
Nordson Corp. 10,900 371,202
- -----------------------------------------------------------------------
30,854,851
- -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
12
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
COMMON STOCKS
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- -----------------------------------------------------------
MEDIA - 5.44%
Dex Media, Inc.(1)* 197,100 $3,823,740
- -----------------------------------------------------------
Gannett Co., Inc. 73,200 6,200,040
- -----------------------------------------------------------
Interpublic Group Cos.,
Inc.(1)* 552,200 5,825,710
- -----------------------------------------------------------
Omnicom Group, Inc.(1) 212,600 14,629,006
- -----------------------------------------------------------
Radio One, Inc.,
Class D(1)* 74,900 1,168,440
- -----------------------------------------------------------
Saga Communications,
Inc., Class A* 62,500 1,121,875
- -----------------------------------------------------------
Time Warner, Inc.* 925,900 15,138,465
- -----------------------------------------------------------
Viacom, Inc., Class B 642,000 21,385,020
- -----------------------------------------------------------
Westwood One, Inc.* 33,200 745,008
- -----------------------------------------------------------
70,037,304
- -----------------------------------------------------------
METALS & MINING - 0.00%
Quanex Corp. 200 9,216
- -----------------------------------------------------------
MULTI-LINE RETAIL - 2.09%
Costco Wholesale Corp.(1) 439,800 18,106,566
- -----------------------------------------------------------
Kohl's Corp.(1)* 177,100 8,762,908
- -----------------------------------------------------------
26,869,474
- -----------------------------------------------------------
OIL & GAS - 2.99%
Cimarex Energy Co.* 31,100 930,823
- -----------------------------------------------------------
ConocoPhillips, Inc. 73,760 5,489,957
- -----------------------------------------------------------
Equitable Resources, Inc. 31,300 1,641,059
- -----------------------------------------------------------
Exxon Mobil Corp. 498,200 22,967,020
- -----------------------------------------------------------
Kerr-McGee Corp.(1) 66,650 3,517,787
- -----------------------------------------------------------
Marathon Oil Corp. 110,000 3,989,700
- -----------------------------------------------------------
38,536,346
- -----------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.11%
MeadWestvaco Corp. 45,450 1,370,318
- -----------------------------------------------------------
PERSONAL PRODUCTS - 0.09%
Nu Skin Enterprises, Inc.(1) 45,400 1,172,228
- -----------------------------------------------------------
PHARMACEUTICALS - 7.55%
Advancis Pharmaceutical
Corp.* 32,900 260,272
- -----------------------------------------------------------
Alkermes, Inc.* 49,100 521,933
- -----------------------------------------------------------
Allergan, Inc.(1) 318,400 23,768,560
- -----------------------------------------------------------
Bristol-Myers Squibb
Co.(1) 316,400 7,508,172
- -----------------------------------------------------------
Cephalon, Inc.(1)* 158,200 7,436,982
- -----------------------------------------------------------
Johnson & Johnson 394,964 22,947,408
- -----------------------------------------------------------
K-V Pharmaceutical Co.,
Class A* 30,200 480,784
- -----------------------------------------------------------
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- -----------------------------------------------------------
PHARMACEUTICALS - (CONCLUDED)
Ligand Pharmaceuticals, Inc.* 45,400 $446,282
- -----------------------------------------------------------
Mylan Laboratories,
Inc.(1) 746,150 12,997,933
- -----------------------------------------------------------
Trimeris, Inc.(1)* 29,200 351,568
- -----------------------------------------------------------
Vicuron Pharmaceuticals,
Inc.(1)* 22,900 342,126
- -----------------------------------------------------------
Wyeth Pharmaceuticals 552,400 20,201,268
- -----------------------------------------------------------
97,263,288
-----------------------------------------------------------
REAL ESTATE - 0.35%
Government Properties
Trust, Inc. 33,300 312,687
- -----------------------------------------------------------
Innkeepers USA Trust 36,100 416,594
- -----------------------------------------------------------
Kilroy Realty Corp. 32,200 1,218,770
- -----------------------------------------------------------
Parkway Properties, Inc. 24,900 1,176,525
- -----------------------------------------------------------
Thornburg Mortgage,
Inc.(1) 49,800 1,449,180
- -----------------------------------------------------------
4,573,756
- -----------------------------------------------------------
ROAD & RAIL - 2.01%
Burlington Northern Santa
Fe, Inc. 648,900 23,230,620
- -----------------------------------------------------------
Genesee & Wyoming Inc.,
Class A* 22,550 504,669
- -----------------------------------------------------------
Werner Enterprises, Inc. 50,300 891,316
- -----------------------------------------------------------
Yellow Roadway Corp.* 29,500 1,210,680
- -----------------------------------------------------------
25,837,285
- -----------------------------------------------------------
SEMICONDUCTOR EQUIPMENT &
PRODUCTS - 0.10%
DuPont Photomasks,
Inc.(1)* 63,000 984,060
- -----------------------------------------------------------
Integrated Silicon
Solution, Inc.* 45,500 358,995
- -----------------------------------------------------------
1,343,055
- -----------------------------------------------------------
SOFTWARE - 3.53%
Mentor Graphics
Corp.(1)* 83,800 916,772
- -----------------------------------------------------------
Microsoft Corp. 954,600 26,060,580
- -----------------------------------------------------------
MSC.Software Corp.(1)* 142,400 1,038,096
- -----------------------------------------------------------
Oracle Corp.* 1,070,200 10,669,894
- -----------------------------------------------------------
Reynolds & Reynolds Co.,
Class A 37,500 919,125
- -----------------------------------------------------------
VERITAS Software Co.* 348,700 5,830,264
- -----------------------------------------------------------
45,434,731
- -----------------------------------------------------------
- --------------------------------------------------------------------------------
13
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
COMMON STOCKS - (CONCLUDED)
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------------------------------------
SPECIALTY RETAIL - 1.12%
Advance Auto Parts, Inc.* 84,100 $3,116,746
- ---------------------------------------------------------
Linens 'n Things, Inc.(1)* 39,000 978,120
- ---------------------------------------------------------
Movado Group, Inc. 63,856 916,334
- ---------------------------------------------------------
Party City Corp.* 96,400 1,303,328
- ---------------------------------------------------------
Rent-A-Center, Inc.* 40,000 1,204,000
- ---------------------------------------------------------
School Specialty, Inc.* 16,000 567,200
- ---------------------------------------------------------
Sharper Image Corp.(1)* 40,800 732,360
- ---------------------------------------------------------
TJX Cos., Inc.(1) 264,300 5,592,588
- ---------------------------------------------------------
14,410,676
- ---------------------------------------------------------
NUMBER OF
SECURITY DESCRIPTION SHARES VALUE
- ---------------------------------------------------------
TEXTILES & APPAREL - 0.05%
Kellwood Co. 17,200 $627,800
- ---------------------------------------------------------
WIRELESS TELECOMMUNICATION
SERVICES - 2.40%
Nextel Communications,
Inc., Class A(1)* 1,330,100 30,845,019
- ---------------------------------------------------------
Total Common Stocks
(cost-$906,573,332) 913,969,557
- ---------------------------------------------------------
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 3.22%
- -------------------------------------------------------------------------
$2,965 U.S. Treasury Bonds 05/15/17 8.750% $4,180,419
- -------------------------------------------------------------------------
5,360 U.S. Treasury Bonds(1) 08/15/23 6.250 6,226,187
- -------------------------------------------------------------------------
2,320 U.S. Treasury Bonds 08/15/25 6.875 2,894,563
- -------------------------------------------------------------------------
7,535 U.S. Treasury Bonds(1) 05/15/30 6.250 8,884,827
- -------------------------------------------------------------------------
10,470 U.S. Treasury Bonds(1) 02/15/31 5.375 11,147,283
- -------------------------------------------------------------------------
1,340 U.S. Treasury Notes 05/31/06 2.500 1,344,607
- -------------------------------------------------------------------------
3,420 U.S. Treasury Notes(1) 02/15/09 3.000 3,391,946
- -------------------------------------------------------------------------
3,470 U.S. Treasury Notes 02/15/14 4.000 3,439,637
- -------------------------------------------------------------------------
Total U.S. Government Obligations (cost-$40,019,660) 41,509,469
- -------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES - 1.62%
- -------------------------------------------------------------------------
20 GNMA 04/15/26 7.000 21,209
- -------------------------------------------------------------------------
29 GNMA 10/15/28 6.500 30,374
- -------------------------------------------------------------------------
7,178 GNMA 07/15/29 6.000 7,483,049
- -------------------------------------------------------------------------
69 GNMA 04/15/31 6.500 73,242
- -------------------------------------------------------------------------
13 GNMA II 11/20/28 6.000 13,895
- -------------------------------------------------------------------------
29 GNMA II 02/20/29 6.000 29,659
- -------------------------------------------------------------------------
12,755 GNMA II 02/20/34 6.000 13,248,357
- -------------------------------------------------------------------------
Total Government National Mortgage Association
Certificates (cost-$20,954,288) 20,899,785
- -------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES - 2.29%
- -------------------------------------------------------------------------
4,550 FHLMC(1) 12/15/06 2.875 4,564,301
- -------------------------------------------------------------------------
11 FHLMC 11/01/07 5.000 11,488
- -------------------------------------------------------------------------
5,000 FHLMC 01/12/09 3.875 5,013,450
- -------------------------------------------------------------------------
3,315 FHLMC 07/15/12 5.125 3,484,672
- -------------------------------------------------------------------------
8,910 FHLMC 01/30/14 5.000 8,941,951
- -------------------------------------------------------------------------
32 FHLMC 09/01/17 5.500 33,020
- -------------------------------------------------------------------------
58 FHLMC 12/01/17 6.000 60,738
- -------------------------------------------------------------------------
61 FHLMC 01/01/18 5.500 62,967
- -------------------------------------------------------------------------
50 FHLMC 04/01/18 5.500 52,215
- -------------------------------------------------------------------------
90 FHLMC 12/01/18 5.500 92,996
- -------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- -------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES -
(CONCLUDED)
- -------------------------------------------------------
$3,024 FHLMC 08/01/28 6.500% $3,192,573
- -------------------------------------------------------
42 FHLMC 02/01/29 6.500 44,081
- -------------------------------------------------------
41 FHLMC 04/01/29 6.500 43,042
- -------------------------------------------------------
16 FHLMC 10/01/29 6.000 16,594
- -------------------------------------------------------
12 FHLMC 03/01/32 6.000 12,399
- -------------------------------------------------------
83 FHLMC 11/01/32 6.500 87,962
- -------------------------------------------------------
111 FHLMC 10/01/33 6.000 114,843
- -------------------------------------------------------
3,556 FHLMC 02/01/34 6.000 3,682,211
- -------------------------------------------------------
Total Federal Home Loan Mortgage
Corporation Certificates
(cost-$29,375,747) 29,511,503
- -------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES - 6.64%
- -------------------------------------------------------
7,760 FNMA 01/19/07 2.625 7,716,769
- -------------------------------------------------------
2,550 FNMA 02/01/11 6.250 2,816,755
- -------------------------------------------------------
3,977 FNMA 02/01/14 6.000 4,185,908
- -------------------------------------------------------
122 FNMA 03/01/17 6.500 130,087
- -------------------------------------------------------
25 FNMA 07/01/17 6.000 26,680
- -------------------------------------------------------
8,254 FNMA 09/01/17 5.500 8,563,387
- -------------------------------------------------------
11,533 FNMA 11/01/17 5.500 11,965,344
- -------------------------------------------------------
27 FNMA 12/01/17 5.500 27,633
- -------------------------------------------------------
210 FNMA 01/01/18 5.500 217,608
- -------------------------------------------------------
5,571 FNMA 02/01/19 5.000 5,688,276
- -------------------------------------------------------
7 FNMA 06/01/23 6.000 7,193
- -------------------------------------------------------
26 FNMA 03/01/29 6.000 27,452
- -------------------------------------------------------
71 FNMA 04/01/29 6.500 74,816
- -------------------------------------------------------
9,425 FNMA 08/01/29 6.500 9,933,979
- -------------------------------------------------------
29 FNMA 05/01/30 6.500 30,646
- -------------------------------------------------------
5,166 FNMA 07/01/30 6.500 5,445,365
- -------------------------------------------------------
6,408 FNMA 11/01/30 6.500 6,759,358
- -------------------------------------------------------
24 FNMA 05/01/31 7.500 25,838
- -------------------------------------------------------
31 FNMA 11/01/31 6.500 32,725
- -------------------------------------------------------
4,069 FNMA 08/01/32 7.000 4,346,318
- -------------------------------------------------------
38 FNMA 11/01/32 7.000 40,942
- -------------------------------------------------------
61 FNMA 02/01/33 7.500 65,684
- -------------------------------------------------------
65 FNMA 05/01/33 7.000 69,525
- -------------------------------------------------------
28 FNMA 06/01/33 6.000 29,503
- -------------------------------------------------------
224 FNMA 10/01/33 6.000 232,122
- -------------------------------------------------------
4,890 FNMA 01/01/34 6.000 5,072,285
- -------------------------------------------------------
4,408 FNMA 01/01/34 7.000 4,708,671
- -------------------------------------------------------
3,045 FNMA 02/01/34 6.000 3,158,521
- -------------------------------------------------------
4,060 FNMA 03/01/34 5.000 4,041,468
- -------------------------------------------------------
Total Federal National Mortgage
Association Certificates (cost-$85,510,297) 85,440,858
- -------------------------------------------------------
- --------------------------------------------------------------------------------
15
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.36%
- ------------------------------------------------------------------------------------------------
$96 FHLMC REMIC, Series 2148, Class ZA 04/15/29 6.000% $99,587
- ------------------------------------------------------------------------------------------------
70 FHLMC REMIC, Series 2426, Class GH 08/15/30 6.000 71,819
- ------------------------------------------------------------------------------------------------
2,208 FHLMC REMIC, Series 2430, Class UC 09/15/16 6.000 2,298,622
- ------------------------------------------------------------------------------------------------
90 FHLMC REMIC, Series 2532, Class PD 06/15/26 5.500 93,938
- ------------------------------------------------------------------------------------------------
5,326 FHLMC REMIC, Series T-42, Class A5 02/25/42 7.500 5,780,392
- ------------------------------------------------------------------------------------------------
10,000 FNMA REMIC, Series 2002-53, Class PD 01/25/32 6.000 10,485,231
- ------------------------------------------------------------------------------------------------
8,763 FNMA REMIC, Series 2004-W1, Class 3A 01/25/43 4.053(+/+) 9,158,489
- ------------------------------------------------------------------------------------------------
5,150 Asset Securitization Corp.,
Series 1995-MD4, Class A3 08/13/29 7.384 5,721,458
- ------------------------------------------------------------------------------------------------
80 Citibank Omni-S Master Trust,
Series 2001-1, Class A 02/15/10 1.780(+/+) 79,974
- ------------------------------------------------------------------------------------------------
755 Commercial Mortgage Pass-Through
Certificates, Series 2001-FL5A, Class E** 11/15/13 3.100(+/+) 754,925
- ------------------------------------------------------------------------------------------------
880 Commercial Mortgage Pass-Through
Certificates, Series 2001-FL5A, Class F** 11/15/13 2.243(+/+) 880,206
- ------------------------------------------------------------------------------------------------
1,459 First Union Lehman-Brothers Commercial
Mortgage, Series 1997-C2, Class A3 11/18/29 6.650 1,577,594
- ------------------------------------------------------------------------------------------------
26 Greenwich Capital Commercial Funding
Corp., Series 2003-FL1, Class A** 07/05/18 1.845(+/+) 26,096
- ------------------------------------------------------------------------------------------------
0 GS Mortgage Securities Corp. II,
Series 1996-PL, Class A2 02/15/27 7.410 71
- ------------------------------------------------------------------------------------------------
1,182 GSMPS Mortgage Loan Trust,
Series 2001-2, Class A** 06/19/32 7.500 1,274,073
- ------------------------------------------------------------------------------------------------
1,300 Host Marriott Pool Trust,
Series 1999-HMTA, Class C** 08/03/15 7.730 1,486,997
- ------------------------------------------------------------------------------------------------
800 Host Marriott Pool Trust,
Series 1999-HMTA, Class D** 08/03/15 7.970 910,236
- ------------------------------------------------------------------------------------------------
800 Host Marriott Pool Trust,
Series 1999-HMTA, Class E** 8/3/2015 8.070 895,789
- ------------------------------------------------------------------------------------------------
2 Impac Secured Assets Common Owner Trust,
Series 2001-3, Class A2 04/25/31 7.250 2,386
- ------------------------------------------------------------------------------------------------
6,250 JP Morgan Commercial Mortgage Finance
Corp., Series 1998-C6, Class A3 01/15/30 6.613 6,790,254
- ------------------------------------------------------------------------------------------------
61 JP Morgan Commercial Mortgage Finance
Corp., Series 1999-C8, Class A1 07/15/31 7.325 63,961
- ------------------------------------------------------------------------------------------------
58 LB Commercial Conduit Mortgage Trust,
Series 1999-C1, Class A1 06/15/31 6.410 60,522
- ------------------------------------------------------------------------------------------------
1,267 MLCC Mortgage Investors, Inc.,
Series 2003-D, Class XA1(2) 08/25/28 1.000(+/+) 19,652
- ------------------------------------------------------------------------------------------------
2,000 MorganStanley Capital I,
Series 1997-ALIC, Class D 12/15/07 7.230 2,174,772
- ------------------------------------------------------------------------------------------------
19 MorganStanley Dean Witter Capital I,
Series 2000-LIF2, Class A1 10/15/33 6.960 20,569
- ------------------------------------------------------------------------------------------------
51 NomuraAsset Securities Corp.,
Series 1995-MD3, Class A1B 04/04/27 8.150 52,475
- ------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
16
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - (CONCLUDED)
- --------------------------------------------------------------------------------------------------
$3,502 Nomura Asset Securities Corp.,
Series 1996-MD5, Class A4 04/13/39 8.256%(+/+) $3,803,093
- --------------------------------------------------------------------------------------------------
1,400 Paragon Mortgages PLC,
Series 7A, Class B1A** 05/15/43 2.305(+/+) 1,403,716
- --------------------------------------------------------------------------------------------------
5,375 PNC Mortgage Acceptance Corp.,
Series 2000-C1, Class A2 02/15/10 7.610 6,205,964
- --------------------------------------------------------------------------------------------------
4,000 Salomon Brothers Mortgage Securities VII,
Series 2003-CDCA, Class C** 02/15/15 2.150(+/+) 4,024,742
- --------------------------------------------------------------------------------------------------
2,684 Structured Adjustable Rate Mortgage Loan,
Series 2004-3AC, Class A1 03/25/34 4.940 2,716,915
- --------------------------------------------------------------------------------------------------
35 Vanderbilt Mortgage Finance, Series 2000-B,
Class IA3 05/07/17 8.255 36,121
- --------------------------------------------------------------------------------------------------
Total Collateralized Mortgage
Obligations (cost-$68,843,250) 68,970,639
- --------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 1.66%
- --------------------------------------------------------------------------------------------------
7 Americredit Automobile Receivables Trust,
Series 2003-AM, Class A2B 10/06/06 1.630(+/+) 7,243
- --------------------------------------------------------------------------------------------------
80 Capital One Multi-Asset Execution Trust,
Series 2003-A1, Class A1 01/15/09 1.990(+/+) 80,403
- --------------------------------------------------------------------------------------------------
5,000 Conseco Finance Securitizations Corp.,
Series 2000-2, Class A4 12/01/31 8.480 5,129,001
- --------------------------------------------------------------------------------------------------
0 Conseco Finance Securitizations Corp.,
Series 2000-B, Class AF4 02/15/31 7.870 256
- --------------------------------------------------------------------------------------------------
4,820 Conseco Finance Securitizations Corp.,
Series 2001-1, Class A4 05/01/31 7.620 4,895,070
- --------------------------------------------------------------------------------------------------
43 Countrywide Asset-Backed Certificates,
Series 2004-SD1, Class A1** 06/25/33 1.955(+/+) 43,512
- --------------------------------------------------------------------------------------------------
1,891 FirstFranklin Mortgage Loan Asset Backed
Certificates, Series 2004-FFB, Class A1 06/25/24 4.167(+/+) 1,894,030
- --------------------------------------------------------------------------------------------------
3,300 MMCA Automobile Trust,
Series 2001-1, Class B 06/15/07 6.190 3,333,030
- --------------------------------------------------------------------------------------------------
55 Peco Energy Transition Trust,
Series 1999-A, Class A7 03/01/09 6.130 59,882
- --------------------------------------------------------------------------------------------------
4,500 Permanent Financing PLC,
Series 4, Class 2C 06/10/42 2.130(+/+) 4,499,690
- --------------------------------------------------------------------------------------------------
660 Providian Gateway Master Trust,
Series 2004-AA, Class C** 03/15/11 2.500(+/+) 654,258
- --------------------------------------------------------------------------------------------------
770 Providian Gateway Master Trust,
Series 2004-AA, Class D** 03/15/11 3.450(+/+) 771,771
- --------------------------------------------------------------------------------------------------
44 RAFC Asset-Backed Trust,
Series 2001-1, Class A3 11/25/29 5.115 45,513
- --------------------------------------------------------------------------------------------------
Total Asset-Backed Securities (cost-$21,553,117) 21,413,659
- --------------------------------------------------------------------------------------------------
CORPORATE BONDS - 7.26%
- --------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE - 0.24%
175 ArmorHoldings, Inc. 08/15/13 8.250 189,000
- --------------------------------------------------------------------------------------------------
250 BE Aerospace, Inc., Series B 05/01/11 8.875 243,750
- --------------------------------------------------------------------------------------------------
450 Boeing Capital Corp. 09/27/10 7.375 522,617
- --------------------------------------------------------------------------------------------------
650 Bombardier Capital, Inc.** 06/29/06 6.125 643,688
- --------------------------------------------------------------------------------------------------
550 Bombardier, Inc.** 05/01/14 6.300 467,059
- --------------------------------------------------------------------------------------------------
250 DRS Technologies, Inc. 11/01/13 6.875 257,500
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
17
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- -----------------------------------------------------------------------------------------------
CORPORATE BONDS - (CONTINUED)
- -----------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE - (CONCLUDED)
$300 Lockheed Martin Corp. 12/01/29 8.500% $393,035
- -----------------------------------------------------------------------------------------------
250 Sequa Corp. 08/01/09 9.000 272,500
- -----------------------------------------------------------------------------------------------
50 Standard Aero Holdings, Inc.** 09/01/14 8.250 51,375
- -----------------------------------------------------------------------------------------------
3,040,524
- -----------------------------------------------------------------------------------------------
AIRLINES - 0.12%
1,100 American Airlines(1) 04/01/11 8.608 955,469
- -----------------------------------------------------------------------------------------------
166 Continental Airlines, Inc., Series 974B 01/02/17 6.900 130,588
- -----------------------------------------------------------------------------------------------
469 Northwest Airlines, Series 2000-1, Class G 04/01/21 8.072 514,446
- -----------------------------------------------------------------------------------------------
1,600,503
- -----------------------------------------------------------------------------------------------
APPAREL/TEXTILES - 0.03%
100 Levi Strauss & Co.(1) 01/15/08 11.625 103,500
- -----------------------------------------------------------------------------------------------
150 Levi Strauss & Co. 12/15/12 12.250 155,625
- -----------------------------------------------------------------------------------------------
150 Tommy Hilfiger USA, Inc. 06/01/08 6.850 153,375
- -----------------------------------------------------------------------------------------------
412,500
- -----------------------------------------------------------------------------------------------
AUTOMOBILE OEM - 0.49%
1,700 DaimlerChrysler N.A. Holding Corp. 06/04/08 4.050 1,712,425
- -----------------------------------------------------------------------------------------------
520 Ford Motor Co. 07/16/31 7.450 509,885
- -----------------------------------------------------------------------------------------------
1,960 Ford Motor Credit Co. 01/12/09 5.800 2,024,378
- -----------------------------------------------------------------------------------------------
850 General Motors Acceptance Corp. 09/15/11 6.875 889,907
- -----------------------------------------------------------------------------------------------
650 General Motors Acceptance Corp. 11/01/31 8.000 673,479
- -----------------------------------------------------------------------------------------------
475 General Motors Corp. 07/15/33 8.375 504,955
- -----------------------------------------------------------------------------------------------
6,315,029
- -----------------------------------------------------------------------------------------------
AUTOMOTIVE PARTS - 0.08%
225 Advanced Accesory Systems 06/15/11 10.750 213,750
- -----------------------------------------------------------------------------------------------
175 Collins & Aikman Products Co. 12/31/11 10.750 180,250
- -----------------------------------------------------------------------------------------------
150 Collins & Aikman Products Co.** 08/15/12 12.875 149,625
- -----------------------------------------------------------------------------------------------
200 Delco Remy International, Inc. 04/15/12 9.375 203,500
- -----------------------------------------------------------------------------------------------
150 Dura Operating Corp., Series D(1) 05/01/09 9.000 148,500
- -----------------------------------------------------------------------------------------------
150 Stanadyne Corp.** 08/15/14 10.000 155,250
- -----------------------------------------------------------------------------------------------
1,050,875
- -----------------------------------------------------------------------------------------------
BANKING - NON-U.S. - 0.09%
GREAT BRITAIN - 0.09%
275 Abbey National PLC 10/26/29 7.950 346,074
- -----------------------------------------------------------------------------------------------
325 HSBC Holdings PLC 12/12/12 5.250 336,738
- -----------------------------------------------------------------------------------------------
400 Royal Bank of Scotland Group PLC, Series 1 03/31/49 9.118 490,895
- -----------------------------------------------------------------------------------------------
1,173,707
- -----------------------------------------------------------------------------------------------
BANKING - U.S. - 0.75%
1,500 Bank of America Corp. 01/15/11 7.400 1,747,438
- -----------------------------------------------------------------------------------------------
525 Bank One Corp. 08/01/10 7.875 619,323
- -----------------------------------------------------------------------------------------------
1,825 Citigroup, Inc. 10/01/10 7.250 2,147,060
- -----------------------------------------------------------------------------------------------
425 CS First Boston, Inc. 01/15/09 3.875 425,153
- -----------------------------------------------------------------------------------------------
400 CS First Boston, Inc. 01/15/12 6.500 444,332
- -----------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
18
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------
CORPORATE BONDS - (CONTINUED)
- ------------------------------------------------------------------------------------------
BANKING - U.S. - (CONCLUDED)
$1,000 J.P. Morgan Chase & Co. 02/01/11 6.750% $1,117,847
- ------------------------------------------------------------------------------------------
300 US Bank, N.A. 08/01/11 6.375 335,222
- ------------------------------------------------------------------------------------------
425 Wachovia Bank N.A. 08/18/10 7.800 501,023
- ------------------------------------------------------------------------------------------
1,625 Washington Mutual, Inc. 01/15/07 5.625 1,716,366
- ------------------------------------------------------------------------------------------
500 Wells Fargo Bank N.A. 02/01/11 6.450 562,280
- ------------------------------------------------------------------------------------------
9,616,044
- ------------------------------------------------------------------------------------------
BROADCAST - 0.08%
75 Allbritton Communication 12/15/12 7.750 76,312
- ------------------------------------------------------------------------------------------
250 Granite Broadcasting 12/01/10 9.750 235,625
- ------------------------------------------------------------------------------------------
300 News America, Inc. 04/08/28 7.125 331,591
- ------------------------------------------------------------------------------------------
500 Nexstar Finance Holdings LLC, Inc. 04/01/13 11.375# 375,625
- ------------------------------------------------------------------------------------------
1,019,153
- ------------------------------------------------------------------------------------------
BROKERAGE - 0.28%
1,375 Goldman Sachs Group, Inc. 01/15/11 6.875 1,552,044
- ------------------------------------------------------------------------------------------
1,825 Morgan Stanley 04/15/11 6.750 2,048,849
- ------------------------------------------------------------------------------------------
3,600,893
- ------------------------------------------------------------------------------------------
BUILDING MATERIALS - 0.02%
75 Blount, Inc. 08/01/12 8.875 78,375
- ------------------------------------------------------------------------------------------
200 Building Materials Corp., Series B 07/15/05 7.750 202,500
- ------------------------------------------------------------------------------------------
280,875
- ------------------------------------------------------------------------------------------
BUSINESS SERVICES - 0.06%
200 Activant Solutions, Inc. 06/15/11 10.500 208,000
- ------------------------------------------------------------------------------------------
250 Da-Lite Screen Co., Inc.** 05/15/11 9.500 262,500
- ------------------------------------------------------------------------------------------
300 Invensys PLC** 03/15/11 9.875 304,500
- ------------------------------------------------------------------------------------------
775,000
- ------------------------------------------------------------------------------------------
CABLE - 0.19%
350 Charter Communications Operating Capital
Corp.** 04/30/14 8.375 346,500
- ------------------------------------------------------------------------------------------
1,275 Comcast Cable Communications, Inc. 01/30/11 6.750 1,411,727
- ------------------------------------------------------------------------------------------
250 CSC Holdings, Inc., Series B 04/01/11 7.625 259,375
- ------------------------------------------------------------------------------------------
200 Insight Communications, Inc. 02/15/11 12.250# 179,500
- ------------------------------------------------------------------------------------------
200 Mediacom Broadband LLC 01/15/13 9.500 196,000
- ------------------------------------------------------------------------------------------
50 Rainbow National Services LLC** 09/01/12 8.750 51,375
- ------------------------------------------------------------------------------------------
2,444,477
- ------------------------------------------------------------------------------------------
CHEMICALS - 0.32%
800 Dow Chemical Co. 02/01/11 6.125 872,873
- ------------------------------------------------------------------------------------------
200 Equistar Chemicals LP 05/01/11 10.625 225,000
- ------------------------------------------------------------------------------------------
675 ICI Wilmington, Inc. 12/01/08 4.375 680,294
- ------------------------------------------------------------------------------------------
300 Omnova Solutions, Inc. 06/01/10 11.250 330,000
- ------------------------------------------------------------------------------------------
475 Praxair, Inc. 04/01/12 6.375 531,193
- ------------------------------------------------------------------------------------------
100 Rhodia SA 06/01/10 10.250 102,000
- ------------------------------------------------------------------------------------------
200 Rhodia SA 06/01/11 8.875 169,000
- ------------------------------------------------------------------------------------------
250 Rockwood Specialties Group, Inc. 05/15/11 10.625 272,500
- ------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
19
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ----------------------------------------------------------------------------------------
CORPORATE BONDS - (CONTINUED)
- ----------------------------------------------------------------------------------------
CHEMICALS - (CONCLUDED)
$275 Rohm & Haas Co. 07/15/29 7.850% $347,856
- ----------------------------------------------------------------------------------------
75 Terra Capital, Inc. 10/15/08 12.875 92,250
- ----------------------------------------------------------------------------------------
250 Terra Capital, Inc. 06/01/10 11.500 278,750
- ----------------------------------------------------------------------------------------
250 Westlake Chemical Corp. 07/15/11 8.750 278,125
- ----------------------------------------------------------------------------------------
4,179,841
- ----------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 0.03%
325 Cendant Corp. 01/15/08 6.250 351,668
- ----------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 0.02%
200 Amscan Holdings, Inc.** 05/01/14 8.750 199,250
- ----------------------------------------------------------------------------------------
150 Fedders North America, Inc. 03/01/14 9.875 120,000
- ----------------------------------------------------------------------------------------
319,250
- ----------------------------------------------------------------------------------------
CONSUMER PRODUCTS - NONDURABLES - 0.07%
335 Avon Products, Inc. 11/15/09 7.150 385,944
- ----------------------------------------------------------------------------------------
500 Newell Rubbermaid, Inc. 05/01/10 4.000 486,155
- ----------------------------------------------------------------------------------------
872,099
- ----------------------------------------------------------------------------------------
CONTAINERS & PACKAGING - 0.10%
200 Anchor Glass Container Corp. 02/15/13 11.000 228,000
- ----------------------------------------------------------------------------------------
175 Constar International(1) 12/01/12 11.000 168,875
- ----------------------------------------------------------------------------------------
400 Crown Cork & Seal, Inc. 04/15/23 8.000 372,000
- ----------------------------------------------------------------------------------------
100 Owens-Brockway Glass Container, Inc. 02/15/09 8.875 108,750
- ----------------------------------------------------------------------------------------
250 Solo Cup Co. 02/15/14 8.500 242,500
- ----------------------------------------------------------------------------------------
200 Tekni-Plex, Inc., Series B 06/15/10 12.750 193,000
- ----------------------------------------------------------------------------------------
1,313,125
- ----------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.49%
550 American Electric Power Co., Series A 05/15/06 6.125 579,234
- ----------------------------------------------------------------------------------------
300 Calpine Canada Energy Finance(1) 05/01/08 8.500 191,250
- ----------------------------------------------------------------------------------------
200 Comstock Resources, Inc. 03/01/12 6.875 201,000
- ----------------------------------------------------------------------------------------
275 Consolidated Edison Co. of New York,
Series B 09/01/10 7.500 322,557
- ----------------------------------------------------------------------------------------
280 Dominion Resources, Inc., Series A 06/15/10 8.125 331,840
- ----------------------------------------------------------------------------------------
325 Dynegy Holdings, Inc.(1) 04/01/11 6.875 302,250
- ----------------------------------------------------------------------------------------
275 Edison Mission Energy 08/15/08 10.000 319,000
- ----------------------------------------------------------------------------------------
450 FirstEnergy Corp., Series B 11/15/11 6.450 486,860
- ----------------------------------------------------------------------------------------
425 FPL Group Capital, Inc. 09/15/06 7.625 464,147
- ----------------------------------------------------------------------------------------
150 Midwest Generation LLC** 05/01/34 8.750 159,375
- ----------------------------------------------------------------------------------------
325 Progress Energy, Inc. 10/30/31 7.000 350,189
- ----------------------------------------------------------------------------------------
400 PSEG Power 04/15/11 7.750 461,874
- ----------------------------------------------------------------------------------------
150 Reliant Resources, Inc. 07/15/13 9.500 165,750
- ----------------------------------------------------------------------------------------
650 Southern California Edison 02/15/07 8.000 724,130
- ----------------------------------------------------------------------------------------
340 Southern Power Co., Series B 07/15/12 6.250 369,503
- ----------------------------------------------------------------------------------------
515 TXU Energy Co. 03/15/13 7.000 577,240
- ----------------------------------------------------------------------------------------
300 Xcel Energy, Inc. 12/01/10 7.000 338,805
- ----------------------------------------------------------------------------------------
6,345,004
- ----------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
20
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ----------------------------------------------------------------------------------------
CORPORATE BONDS - (CONTINUED)
- ----------------------------------------------------------------------------------------
ENERGY - 0.10%
$175 Chesapeake Energy Corp. 06/15/14 7.500% $186,813
- ----------------------------------------------------------------------------------------
475 Devon Financing Corp., U.L.C. 09/30/11 6.875 535,953
- ----------------------------------------------------------------------------------------
225 Gulfmark Offshore, Inc.** 07/15/14 7.750 223,313
- ----------------------------------------------------------------------------------------
275 Whiting Petroleum Corp. 05/01/12 7.250 277,062
- ----------------------------------------------------------------------------------------
1,223,141
- ----------------------------------------------------------------------------------------
ENERGY - INTEGRATED - 0.14%
700 ConocoPhillips, Inc. 05/25/10 8.750 862,373
- ----------------------------------------------------------------------------------------
390 Marathon Oil Corp. 03/15/12 6.125 422,173
- ----------------------------------------------------------------------------------------
465 PPL Capital Funding 03/01/09 4.330 460,324
- ----------------------------------------------------------------------------------------
1,744,870
- ----------------------------------------------------------------------------------------
ENTERTAINMENT - 0.10%
75 LCE Acquisition Corp.** 08/01/14 9.000 76,125
- ----------------------------------------------------------------------------------------
625 Time Warner, Inc. 04/15/31 7.625 713,045
- ----------------------------------------------------------------------------------------
425 Viacom, Inc. 05/15/11 6.625 472,018
- ----------------------------------------------------------------------------------------
1,261,188
- ----------------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES - 0.04%
200 Allied Waste North America, Inc. 02/15/11 5.750 192,000
- ----------------------------------------------------------------------------------------
300 Waste Management, Inc. 08/01/10 7.375 345,154
- ----------------------------------------------------------------------------------------
537,154
- ----------------------------------------------------------------------------------------
FINANCE - NONCAPTIVE CONSUMER - 0.16%
350 Countrywide Home Loans 05/21/08 3.250 344,410
- ----------------------------------------------------------------------------------------
925 Household Finance Corp. 05/15/11 6.750 1,039,170
- ----------------------------------------------------------------------------------------
650 SLM Corp. 04/10/07 5.625 688,005
- ----------------------------------------------------------------------------------------
2,071,585
- ----------------------------------------------------------------------------------------
FINANCE - NONCAPTIVE DIVERSIFIED - 0.38%
430 GATX Financial Corp. 11/01/04 6.875 433,247
- ----------------------------------------------------------------------------------------
3,325 General Electric Capital Corp. 06/15/12 6.000 3,642,936
- ----------------------------------------------------------------------------------------
450 General Electric Capital Corp. 03/15/32 6.750 511,135
- ----------------------------------------------------------------------------------------
350 International Lease Finance Corp. 04/01/09 3.500 341,474
- ----------------------------------------------------------------------------------------
4,928,792
- ----------------------------------------------------------------------------------------
FOOD - 0.17%
300 Conagra Foods, Inc. 09/15/11 6.750 336,953
- ----------------------------------------------------------------------------------------
650 Kraft Foods, Inc. 11/01/11 5.625 688,098
- ----------------------------------------------------------------------------------------
175 Land O'Lakes, Inc. 11/15/11 8.750 163,625
- ----------------------------------------------------------------------------------------
250 Merisant Co.** 07/15/13 9.500 250,000
- ----------------------------------------------------------------------------------------
150 Pinnacle Foods Holding Corp.** 12/01/13 8.250 142,875
- ----------------------------------------------------------------------------------------
200 Seminis Vegetable Seeds, Inc. 10/01/13 10.250 222,000
- ----------------------------------------------------------------------------------------
300 Unilever Capital Corp. 11/01/10 7.125 348,308
- ----------------------------------------------------------------------------------------
2,151,859
- ----------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
21
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------------------------------------------------------------------------------------
CORPORATE BONDS - (CONTINUED)
- ------------------------------------------------------------------------------------------
FOOD PROCESSORS/BEVERAGE/BOTTLING - 0.14%
$325 Coors Brewing Co. 05/15/12 6.375% $358,025
- ------------------------------------------------------------------------------------------
325 Le-Natures, Inc.** 06/15/13 10.000 339,625
- ------------------------------------------------------------------------------------------
650 Miller Brewing Co.** 08/15/13 5.500 676,533
- ------------------------------------------------------------------------------------------
380 Pepsi Bottling Holdings, Inc.** 02/17/09 5.625 410,273
- ------------------------------------------------------------------------------------------
1,784,456
- ------------------------------------------------------------------------------------------
GAMING - 0.15%
200 Chukchansi Economic Development
- ------------------------------------------------------------------------------------------
Authority** 06/15/09 14.500 250,000
- ------------------------------------------------------------------------------------------
150 Circus & Eldorado 03/01/12 10.125 155,625
- ------------------------------------------------------------------------------------------
325 Harrahs Operating Co., Inc. 01/15/09 7.500 361,741
- ------------------------------------------------------------------------------------------
125 Herbst Gaming, Inc.** 06/01/12 8.125 125,938
- ------------------------------------------------------------------------------------------
125 Majestic Star Casino LLC 10/15/10 9.500 127,813
- ------------------------------------------------------------------------------------------
200 MTR Gaming Group, Inc. 04/01/10 9.750 218,000
- ------------------------------------------------------------------------------------------
200 River Rock Entertainment 11/01/11 9.750 212,000
- ------------------------------------------------------------------------------------------
150 Seneca Gaming Corp.** 05/01/12 7.250 152,812
- ------------------------------------------------------------------------------------------
300 Wheeling Island Gaming, Inc. 12/15/09 10.125 318,000
- ------------------------------------------------------------------------------------------
1,921,929
- ------------------------------------------------------------------------------------------
HEALTHCARE - 0.07%
250 Alliance Imaging 04/15/11 10.375 268,125
- ------------------------------------------------------------------------------------------
400 McKesson Corp. 02/01/12 7.750 464,572
- ------------------------------------------------------------------------------------------
200 Universal Hospital Services 11/01/11 10.125 203,000
- ------------------------------------------------------------------------------------------
935,697
- ------------------------------------------------------------------------------------------
HOME BUILDERS - 0.03%
25 Centex Corp. 06/15/05 9.750 26,291
- ------------------------------------------------------------------------------------------
300 Centex Corp. 02/01/11 7.875 347,969
- ------------------------------------------------------------------------------------------
374,260
- ------------------------------------------------------------------------------------------
INDUSTRIAL - OTHER - 0.05%
350 Aearo Co. I 04/15/12 8.250 358,750
- ------------------------------------------------------------------------------------------
200 FastenTech, Inc.** 05/01/11 11.500 223,500
- ------------------------------------------------------------------------------------------
582,250
- ------------------------------------------------------------------------------------------
INSURANCE - LIFE - 0.03%
325 Lincoln National Corp. 12/15/11 6.200 354,941
- ------------------------------------------------------------------------------------------
INSURANCE - MULTILINE - 0.03%
300 Allstate Corp. 12/01/09 7.200 345,592
- ------------------------------------------------------------------------------------------
INSURANCE - PERSONAL & Casualty - 0.11%
525 Hartford Financial Services Group, Inc. 09/01/07 4.700 543,967
- ------------------------------------------------------------------------------------------
425 Marsh & McLennan Co., Inc. 03/15/12 6.250 470,101
- ------------------------------------------------------------------------------------------
350 Travelers Property Casualty Corp. 03/15/13 5.000 347,706
- ------------------------------------------------------------------------------------------
1,361,774
- ------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
22
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------------------------------------------------------------------------------------------------
CORPORATE BONDS - (CONTINUED)
- --------------------------------------------------------------------------------------------------
LEISURE - 0.05%
$125 Bally Total Fitness Holding Corp. 07/15/11 10.500% $117,187
- --------------------------------------------------------------------------------------------------
50 Bally Total Fitness Holding Corp., Series D 10/15/07 9.875 39,250
- --------------------------------------------------------------------------------------------------
200 Equinox Holdings, Inc.(1)** 12/15/09 9.000 205,000
- --------------------------------------------------------------------------------------------------
300 Jacobs Entertainment Co. 02/01/09 11.875 336,750
- --------------------------------------------------------------------------------------------------
698,187
- --------------------------------------------------------------------------------------------------
MACHINERY - AG & CONSTRUCTION - 0.07%
300 Caterpillar, Inc. 05/01/11 6.550 339,777
- --------------------------------------------------------------------------------------------------
450 John Deere Capital Corp. 03/15/12 7.000 519,352
- --------------------------------------------------------------------------------------------------
859,129
- --------------------------------------------------------------------------------------------------
MANUFACTURING - DIVERSIFIED - 0.03%
100 Maax Corp.** 06/15/12 9.750 105,500
- --------------------------------------------------------------------------------------------------
300 United Technologies Corp. 05/15/12 6.100 331,229
- --------------------------------------------------------------------------------------------------
436,729
- --------------------------------------------------------------------------------------------------
METALS & MINING - 0.09%
300 AK Steel Corp. 06/15/12 7.750 282,000
- --------------------------------------------------------------------------------------------------
325 Alcoa, Inc. 01/15/12 6.000 354,450
- --------------------------------------------------------------------------------------------------
300 American Rock Salt Co. LLC** 03/15/14 9.500 309,750
- --------------------------------------------------------------------------------------------------
150 Century Aluminum Co.** 08/15/14 7.500 154,125
- --------------------------------------------------------------------------------------------------
1,100,325
- --------------------------------------------------------------------------------------------------
OIL & GAS - 0.19%
425 Duke Energy Field Services 08/16/10 7.875 499,019
- --------------------------------------------------------------------------------------------------
295 Parker Drilling Co. 10/01/13 9.625 318,600
- --------------------------------------------------------------------------------------------------
250 Petroleum Geo-Services 11/05/10 10.000 268,750
- --------------------------------------------------------------------------------------------------
400 Sempra Energy 03/01/10 7.950 470,495
- --------------------------------------------------------------------------------------------------
775 Transocean, Inc. 04/15/11 6.625 868,706
- --------------------------------------------------------------------------------------------------
2,425,570
- --------------------------------------------------------------------------------------------------
OIL REFINING - 0.06%
149 Giant Industries, Inc. 05/15/12 11.000 168,743
- --------------------------------------------------------------------------------------------------
110 Pride International, Inc.** 07/15/14 7.375 117,150
- --------------------------------------------------------------------------------------------------
450 Valero Energy Corp. 04/15/32 7.500 520,867
- --------------------------------------------------------------------------------------------------
806,760
- --------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.18%
75 Blue Ridge Paper Products, Inc. 12/15/08 9.500 66,750
- --------------------------------------------------------------------------------------------------
200 Buckeye Technologies, Inc. 10/15/10 8.000 197,500
- --------------------------------------------------------------------------------------------------
200 Cellu Tissue Holdings** 03/15/10 9.750 200,000
- --------------------------------------------------------------------------------------------------
300 Georgia-Pacific Corp. 05/15/31 8.875 346,500
- --------------------------------------------------------------------------------------------------
425 International Paper Co. 09/01/11 6.750 471,876
- --------------------------------------------------------------------------------------------------
150 Pliant Corp. 09/01/09 11.125 160,875
- --------------------------------------------------------------------------------------------------
200 Port Townsend Paper Corp.** 04/15/11 11.000 204,000
- --------------------------------------------------------------------------------------------------
250 Riverside Forest Products Ltd. 03/01/14 7.875 262,500
- --------------------------------------------------------------------------------
23
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------------------------------------------------------------------------------------
CORPORATE BONDS - (CONTINUED)
- --------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - (CONCLUDED)
$100 Tembec Industries, Inc. 06/30/09 8.625% $104,250
- --------------------------------------------------------------------------------------
300 Weyerhaeuser Co. 03/15/32 7.375 344,272
- --------------------------------------------------------------------------------------
2,358,523
- --------------------------------------------------------------------------------------
PHARMACEUTICALS - 0.05%
325 Bristol-Myers Squibb Co. 10/01/11 5.750 347,537
- --------------------------------------------------------------------------------------
350 Wyeth Pharmaceuticals 03/15/13 5.500 352,598
- --------------------------------------------------------------------------------------
700,135
- --------------------------------------------------------------------------------------
PUBLISHING - 0.14%
150 Advanstar Communications, Inc. 08/15/10 10.750 165,375
- --------------------------------------------------------------------------------------
200 American Color Graphics 06/15/10 10.000 170,000
- --------------------------------------------------------------------------------------
225 Cadmus Communications Corp.** 06/15/14 8.375 239,062
- --------------------------------------------------------------------------------------
300 Houghton Mifflin Co. 02/01/11 8.250 309,375
- --------------------------------------------------------------------------------------
200 Sheridan Acquisition Corp.** 08/15/11 10.250 213,000
- --------------------------------------------------------------------------------------
250 Vertis, Inc. 06/15/09 10.875 270,000
- --------------------------------------------------------------------------------------
200 Von Hoffman Corp. 03/15/09 10.250 222,500
- --------------------------------------------------------------------------------------
225 Warner Music Group** 04/15/14 7.375 223,875
- --------------------------------------------------------------------------------------
1,813,187
- --------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.07%
325 Avalonbay Communities 08/01/09 7.500 372,324
- --------------------------------------------------------------------------------------
475 EOP Operating LP 06/15/28 7.250 511,128
- --------------------------------------------------------------------------------------
883,452
- --------------------------------------------------------------------------------------
RESTAURANTS - 0.04%
200 Buffets, Inc. 07/15/10 11.250 210,000
- --------------------------------------------------------------------------------------
200 El Pollo Loco, Inc.** 12/15/09 9.250 203,000
- --------------------------------------------------------------------------------------
100 Sbarro, Inc. 09/15/09 11.000 90,250
- --------------------------------------------------------------------------------------
503,250
- --------------------------------------------------------------------------------------
RETAIL - 0.28%
200 Couche-Tard 12/15/13 7.500 211,000
- --------------------------------------------------------------------------------------
425 Federated Department Stores 04/01/11 6.625 474,466
- --------------------------------------------------------------------------------------
250 Ingles Markets, Inc. 12/01/11 8.875 265,000
- --------------------------------------------------------------------------------------
200 Jean Coutu Group PJC, Inc.** 08/01/14 8.500 201,500
- --------------------------------------------------------------------------------------
300 Kohl's Corp. 06/01/29 7.250 349,711
- --------------------------------------------------------------------------------------
400 Kroger Co. 04/01/31 7.500 463,229
- --------------------------------------------------------------------------------------
150 Pantry, Inc. 02/15/14 7.750 150,375
- --------------------------------------------------------------------------------------
150 Pathmark Stores, Inc. 02/01/12 8.750 150,750
- --------------------------------------------------------------------------------------
425 Safeway, Inc. 03/01/11 6.500 464,680
- --------------------------------------------------------------------------------------
775 Wal-Mart Stores, Inc. 08/10/09 6.875 880,530
- --------------------------------------------------------------------------------------
3,611,241
- --------------------------------------------------------------------------------------
ROAD & RAIL - 0.10%
325 Burlington Northern Santa Fe Corp. 05/13/29 7.082 367,221
- --------------------------------------------------------------------------------------
800 Union Pacific Corp. 12/01/06 6.700 861,654
- --------------------------------------------------------------------------------------
1,228,875
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
24
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ----------------------------------------------------------------------------------------------
CORPORATE BONDS - (CONCLUDED)
- ----------------------------------------------------------------------------------------------
TECHNOLOGY - HARDWARE - 0.07%
$325 Eastman Kodak Co. 06/15/06 6.375% $40,006
- ----------------------------------------------------------------------------------------------
150 IPC Acquisition Corp. 12/15/09 11.500 165,000
- ----------------------------------------------------------------------------------------------
300 Motorola, Inc. 11/15/10 7.625 349,215
- ----------------------------------------------------------------------------------------------
854,221
- ----------------------------------------------------------------------------------------------
TECHNOLOGY - SOFTWARE - 0.06%
350 Computer Sciences Corp. 04/15/08 3.500 349,724
- ----------------------------------------------------------------------------------------------
375 First Data Corp. 08/01/08 3.375 373,153
- ----------------------------------------------------------------------------------------------
722,877
- ----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.03%
400 Qwest Communications International, Inc.** 02/15/11 7.250 370,000
- ----------------------------------------------------------------------------------------------
75 Qwest Corp.** 09/01/11 7.875 75,937
- ----------------------------------------------------------------------------------------------
445,937
- ----------------------------------------------------------------------------------------------
TOBACCO - 0.05%
325 Altria Group, Inc. 01/15/27 7.750 343,652
- ----------------------------------------------------------------------------------------------
300 UST, Inc. 07/15/12 6.625 335,033
- ----------------------------------------------------------------------------------------------
678,685
- ----------------------------------------------------------------------------------------------
TRANSPORTATION SERVICES - 0.06%
150 CHC Helicopter Corp. 05/01/14 7.375 151,688
- ----------------------------------------------------------------------------------------------
400 ERAC USA Finance Co.** 01/15/11 8.000 475,948
- ----------------------------------------------------------------------------------------------
200 Stena AB 11/01/13 7.500 199,250
- ----------------------------------------------------------------------------------------------
826,886
- ----------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES - 0.48%
200 American Cellular Corp., Series B 08/01/11 10.000 162,500
- ----------------------------------------------------------------------------------------------
50 AT&T Corp. 11/15/11 8.050 54,375
- ----------------------------------------------------------------------------------------------
550 AT&T Corp. 11/15/31 8.750 577,500
- ----------------------------------------------------------------------------------------------
415 AT&T Wireless Services, Inc. 03/01/31 8.750 537,121
- ----------------------------------------------------------------------------------------------
200 Cincinnati Bell, Inc. 01/15/14 8.375 177,000
- ----------------------------------------------------------------------------------------------
800 Citizens Communications Co. 05/15/11 9.250 864,000
- ----------------------------------------------------------------------------------------------
275 Deutsche Telekom International Finance BV 06/15/30 8.750 352,514
- ----------------------------------------------------------------------------------------------
200 Dobson Communications Corp. 10/01/13 8.875 137,000
- ----------------------------------------------------------------------------------------------
250 France Telecom SA 03/01/31 9.500 329,093
- ----------------------------------------------------------------------------------------------
200 SBA Communications Corp.(1) 02/01/09 10.250 210,500
- ----------------------------------------------------------------------------------------------
300 Sprint Capital Corp. 03/15/12 8.375 361,521
- ----------------------------------------------------------------------------------------------
350 Telecom Italia Capital** 11/15/13 5.250 355,434
- ----------------------------------------------------------------------------------------------
300 Telus Corp. 06/01/11 8.000 348,791
- ----------------------------------------------------------------------------------------------
250 Triton PCS, Inc.(1) 02/01/11 9.375 177,500
- ----------------------------------------------------------------------------------------------
150 US Unwired, Inc., Series B 06/15/12 10.000 153,750
- ----------------------------------------------------------------------------------------------
925 Verizon New York, Inc., Series A 04/01/12 6.875 1,024,264
- ----------------------------------------------------------------------------------------------
325 Vodafone Group PLC 02/15/30 7.875 406,786
- ----------------------------------------------------------------------------------------------
6,229,649
- ----------------------------------------------------------------------------------------------
Total Corporate Bonds (cost-$94,260,103) 93,473,673
- ----------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
25
UBS U.S. ALLOCATION FUND
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2004
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------------------------------------------------------------------------------------------------------------
INTERNATIONAL OBLIGATIONS - 0.28%
- ---------------------------------------------------------------------------------------------------------------
MEXICO - 0.14%
$330 Pemex Project Funding Master Trust 11/15/11 8.000% $376,200
- ---------------------------------------------------------------------------------------------------------------
1,225 United Mexican States 12/30/19 8.125 1,408,750
- ---------------------------------------------------------------------------------------------------------------
1,784,950
- ---------------------------------------------------------------------------------------------------------------
RUSSIA - 0.14%
1,826 Russian Federation** 03/31/30 5.000 # 1,749,718
- ---------------------------------------------------------------------------------------------------------------
Total International Obligations (cost-$3,443,968) 3,534,668
- ---------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.25%
- ---------------------------------------------------------------------------------------------------------------
16,116 Repurchase Agreement dated 08/31/04 with
State Street Bank & Trust Co., collateralized by
$15,786,823 U.S. Treasury Bonds, 5.250%
due 11/15/28; (value - $16,439,529)
proceeds $16,116,627 (cost-$16,116,000) 09/01/04 1.400 16,116,000
- ---------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES
(000)
- ---------------------------------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES LOANED - 13.07%
- ---------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS(+) - 13.07%
1 AIM Liquid Assets Portfolio 1.343 907
- ---------------------------------------------------------------------------------------------------------------
57,565 Barclays Prime Money Market Fund 1.478 57,565,170
- ---------------------------------------------------------------------------------------------------------------
4,772 Dreyfus Institutional Cash Advantage Fund 1.457 4,771,655
- ---------------------------------------------------------------------------------------------------------------
105,891 UBS Private Money Market Fund LLC ++ 1.439 105,891,164
- ---------------------------------------------------------------------------------------------------------------
Total Money Market Funds (cost-$168,228,896) 168,228,896
- ---------------------------------------------------------------------------------------------------------------
Total Investments (cost-$1,454,878,658)-113.63% 1,463,068,707
- ---------------------------------------------------------------------------------------------------------------
Liabilities in excess of other assets-(13.63)% (175,491,157)
- ---------------------------------------------------------------------------------------------------------------
Net Assets-100.00% $1,287,577,550
- ---------------------------------------------------------------------------------------------------------------
* Non-income producing security.
** Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities, which represent 1.88% of net assets as of
August 31, 2004, are considered liquid and may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
+ Interest rates shown reflect yield at August 31, 2004.
(+/+) Floating rate securities. The interest rates shown are the current rates
as of August 31, 2004.
# Denotes a step-up bond or zero coupon bond that converts to the noted
fixed rate at a designated future date.
(1) Security, or portion thereof, was on loan at August 31, 2004.
(2) Interest Only Security. This security entitles the holder to receive
interest payments from an underlying pool of mortgages. The risk
associated with this security is related to the speed of the principal
paydowns. High prepayments would result in a smaller amount of interest
being received and cause the yield to decrease. Low prepayments would
result in a greater amount of interest being received and cause the yield
to increase.
++ Affiliated issuer. See table below for more information.
NUMBER OF SHARES PURCHASED SHARES SOLD NUMBER OF
SHARES HELD DURING THE YEAR DURING THE YEAR SHARES HELD
SECURITY DESCRIPTION AT 08/31/03 ENDED 08/31/04 ENDED 08/31/04 AT 08/31/04
- ------------------------------ ------------- ------------------ ----------------- ------------
UBS Private Money Market LLC 40,261,623 1,253,375,329 1,187,745,788 105,891,164
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
26
UBS U.S. ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES - AUGUST 31, 2004
ASSETS
Investments in unaffiliated securities, at value (cost-$1,348,987,494)* $1,357,177,543
- ------------------------------------------------------------------------------------------
Investment in affliliated security, at value (cost-$105,891,164) 105,891,164
- ------------------------------------------------------------------------------------------
Cash 282
- ------------------------------------------------------------------------------------------
Receivable for investments sold 8,456,046
- ------------------------------------------------------------------------------------------
Receivable for shares of beneficial interest sold 113,472
- ------------------------------------------------------------------------------------------
Receivable for dividends and interest 4,752,726
- ------------------------------------------------------------------------------------------
Other assets 42,361
- ------------------------------------------------------------------------------------------
Total assets 1,476,433,594
- ------------------------------------------------------------------------------------------
LIABILITIES
Payable for cash collateral from securities loaned 168,228,896
- ------------------------------------------------------------------------------------------
Payable for investments purchased 12,595,518
- ------------------------------------------------------------------------------------------
Payable for shares of beneficial interest repurchased 5,542,457
- ------------------------------------------------------------------------------------------
Payable to affiliates 1,556,466
- ------------------------------------------------------------------------------------------
Payable for foreign witholding taxes 1,617
- ------------------------------------------------------------------------------------------
Accrued expenses and other liabilities 931,090
- ------------------------------------------------------------------------------------------
Total liabilities 188,856,044
- ------------------------------------------------------------------------------------------
NET ASSETS
Beneficial interest-$0.001 par value (unlimited amount authorized) 1,557,992,984
- ------------------------------------------------------------------------------------------
Accumulated undistributed net investment income 13,148,795
- ------------------------------------------------------------------------------------------
Accumulated net realized loss from investments and futures transactions (291,754,278)
- ------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 8,190,049
- ------------------------------------------------------------------------------------------
Net assets $1,287,577,550
==========================================================================================
* Includes $195,580,750 of investments in securities on loan, at value.
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
27
UBS U.S. ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES - AUGUST 31, 2004
CLASS A:
Net assets $552,195,288
- ------------------------------------------------------------------------------
Shares outstanding 21,390,858
- ------------------------------------------------------------------------------
Net asset value per share $25.81
- ------------------------------------------------------------------------------
Maximum offering price per share (net asset value plus sales
charge of 5.50%) $27.31
- ------------------------------------------------------------------------------
CLASS B:
Net assets $277,891,045
- ------------------------------------------------------------------------------
Shares outstanding 11,096,138
- ------------------------------------------------------------------------------
Net asset value and offering price per share $25.04
- ------------------------------------------------------------------------------
CLASS C:
Net assets $333,764,404
- ------------------------------------------------------------------------------
Shares outstanding 13,237,677
- ------------------------------------------------------------------------------
Net asset value and offering price per share $25.21
- ------------------------------------------------------------------------------
CLASS Y:
Net assets $123,726,813
- ------------------------------------------------------------------------------
Shares outstanding 4,723,785
- ------------------------------------------------------------------------------
Net asset value, offering price and redemption value per share $26.19
==============================================================================
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
28
UBS U.S. ALLOCATION FUND
STATEMENT OF OPERATIONS
For the
Year Ended
August 31, 2004
- -------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $688) $22,128,492
- -------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $1,617) 9,821,914
- -------------------------------------------------------------------------------------
Securities lending income (includes $34,809 earned from
an affiliated entity) 46,511
- -------------------------------------------------------------------------------------
31,996,917
- -------------------------------------------------------------------------------------
EXPENSES:
Investment advisory and administration fees 7,017,293
- -------------------------------------------------------------------------------------
Service fees-Class A 1,537,457
- -------------------------------------------------------------------------------------
Service and distribution fees-Class B 3,799,143
- -------------------------------------------------------------------------------------
Service and distribution fees-Class C 4,032,666
- -------------------------------------------------------------------------------------
Transfer agency and related services fees-Class A 831,935
- -------------------------------------------------------------------------------------
Transfer agency and related services fees-Class B 609,777
- -------------------------------------------------------------------------------------
Transfer agency and related services fees-Class C 503,300
- -------------------------------------------------------------------------------------
Transfer agency and related services fees-Class Y 53,928
- -------------------------------------------------------------------------------------
Custody and accounting 765,810
- -------------------------------------------------------------------------------------
Reports and notices to shareholders 343,746
- -------------------------------------------------------------------------------------
S&P 500 licensing fee 223,745
- -------------------------------------------------------------------------------------
Professional fees 93,093
- -------------------------------------------------------------------------------------
State registration fees 83,091
- -------------------------------------------------------------------------------------
Insurance expense 41,648
- -------------------------------------------------------------------------------------
Trustees' fees 22,489
- -------------------------------------------------------------------------------------
Interest expense 4,639
- -------------------------------------------------------------------------------------
Other expenses 39,153
- -------------------------------------------------------------------------------------
20,002,913
- -------------------------------------------------------------------------------------
Less: Fee waivers from investment advisor and administrator (348,072)
- -------------------------------------------------------------------------------------
Net expenses 19,654,841
- -------------------------------------------------------------------------------------
Net investment income 12,342,076
- -------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT ACTIVITIES:
Net realized gains from:
Investments 257,521,273
- -------------------------------------------------------------------------------------
Futures 327,965
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation of Investments (68,549,968)
- -------------------------------------------------------------------------------------
Net realized and unrealized gain from investment activities 189,299,270
- -------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $201,641,346
=====================================================================================
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
29
UBS U.S. ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended August 31,
--------------------------------
2004 2003
- -----------------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income $ 12,342,076 $ 7,818,926
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investments and futures
transactions 257,849,238 (247,218,276)
- -----------------------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation of
investments (68,549,968) 394,242,877
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 201,641,346 154,843,527
- -----------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income-Class A (5,642,463) (2,382,218)
- -----------------------------------------------------------------------------------------
Net investment income-Class C (418,532) -
- -----------------------------------------------------------------------------------------
Net investment income-Class Y (1,591,377) (846,901)
- -----------------------------------------------------------------------------------------
(7,652,372) (3,229,119)
- -----------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares 51,030,813 119,384,887
- -----------------------------------------------------------------------------------------
Cost of shares repurchased (688,105,292) (552,215,452)
- -----------------------------------------------------------------------------------------
Proceeds from dividends reinvested 7,312,587 3,147,000
- -----------------------------------------------------------------------------------------
Proceeds from shares issued in connection with fund
merger 16,977,394 -
- -----------------------------------------------------------------------------------------
Net decrease in net assets from beneficial interest
transactions (612,784,498) (429,683,565)
- -----------------------------------------------------------------------------------------
Net decrease in net assets (418,795,524) (278,069,157)
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 1,706,373,074 1,984,442,231
- -----------------------------------------------------------------------------------------
End of year 1,287,577,550 1,706,373,074
- -----------------------------------------------------------------------------------------
Accumulated undistributed net investment income $ 13,148,795 $ 7,680,497
=========================================================================================
See accompanying notes to financial statements
- --------------------------------------------------------------------------------
30
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
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.
On March 30, 2004, the Trust's Board of Trustees ("the Board") approved the
name change of UBS Investment Trust - UBS Tactical Allocation Fund to UBS
Investment Trust - UBS U.S. Allocation Fund that became effective on July 1,
2004.
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.
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.
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires Fund 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
- --------------------------------------------------------------------------------
31
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
to valuation. Securities which are listed on U.S. 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 (US) Inc. ("UBS Global AM"), the investment advisor, administrator
and principal underwriter of the Fund. UBS Global AM is an indirect wholly
owned asset management subsidiary of UBS AG, an internationally diversified
organization with headquarters in Zurich, Switzerland and operations in many
areas of the financial services industry. 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 Board. 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.
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
on a mark-to-market basis 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. Repurchase
agreements involving obligations other than U.S. 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
- --------------------------------------------------------------------------------
32
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
basis. Discounts are accreted and premiums are amortized as adjustments to
interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of
dividend-eligible shares, as appropriate) of each class at the beginning of the
day (after adjusting for current capital share activity of the respective
classes). Class-specific expenses are charged directly to the applicable class
of shares.
FUTURES CONTRACTS-Upon entering into a financial futures contract, the Fund is
required to deposit in a segregated account with its custodian, in the name of
the futures broker through which the transaction was effected, an amount of
cash and/or U.S. securities equal to a certain percentage of the contract
amount. This amount is known as the "initial margin". Subsequent payments,
known as "variation margin", are made or received by the Fund each day,
depending on the daily fluctuations in the value of the underlying financial
futures contracts. Such variation margin is recorded for financial statement
purposes on a daily basis as an 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. Variation margin calls could be
substantial in the event of adverse price movements.
Using financial futures contracts involves various market risks. If the Fund
were 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. The Fund 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 segregated 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 distortions.
There were no outstanding futures contracts at August 31, 2004.
DIVIDENDS AND DISTRIBUTIONS-Dividends and distributions to shareholders are
recorded on the ex-date. The amount of dividends and distributions is
determined in accordance with federal income tax regulations, which may differ
from U.S. 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.
- --------------------------------------------------------------------------------
33
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
REORGANIZATION INVOLVING UBS U.S. ALLOCATION FUND
Effective as of the close of business on June 25, 2004 (the "Reorganization
Date"), the Fund acquired all of the assets and assumed all of the stated
liabilities of UBS U.S. Allocation Fund ("U.S. Allocation"). The acquisition
was accomplished by a tax-free exchange of 972,721, 383,669, 288,317 and
281,952 Class A, B, C and Y shares outstanding, respectively, of U.S.
Allocation on the Reorganization Date for 331,039, 133,335, 99,487 and 95,420
Class A, B, C and Y shares, respectively, of the Fund. The U.S. Allocation's
net assets on that date, valued at $16,977,394, including net realized losses
of $233,050 and net unrealized appreciation of investments of $628,397 were
combined with those of the Fund. All shares were exchanged at net asset value.
The Fund's Statement of Operations, Statement of Changes in Net Assets and
Financial Highlights do not include the operations of U.S. Allocation prior to
the Reorganization Date.
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 pays UBS Global AM an investment advisory and administration fee, which is
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.
Effective December 12, 2003, UBS Global AM has agreed to permanently reduce its
advisory and administration fee based on the Fund's average daily net assets 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 period December 12, 2003 through
August 31, 2004, UBS Global AM waived $348,072 in investment advisory and
administration fees. At August 31, 2004, the Fund owed UBS Global AM $948,960
in investment advisory and administration fees. At August 31, 2004, UBS Global
AM owed the Fund $33,267 for fee waivers under the above agreement.
For the year ended August 31, 2004, the Fund paid $43,775 in brokerage
commissions to UBS Financial Services Inc., an indirect wholly owned subsidiary
of UBS AG, for transactions executed on behalf of the Fund.
- --------------------------------------------------------------------------------
34
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
SERVICE AND DISTRIBUTION PLANS
UBS Global AM 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 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 August 31, 2004, the Fund owed UBS
Global AM $634,778 in service and distribution fees.
UBS Global AM 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 has informed the Fund that for the year ended
August 31, 2004, it earned $172,000, $1,049,835, and $35,241 in initial sales
and deferred sales charges on Class A, Class B and Class C shares,
respectively.
TRANSFER AGENCY AND RELATED SERVICES FEES
Prior to January 1, 2004, UBS Global AM provided transfer agency and related
services to the Fund pursuant to a delegation of authority from PFPC, Inc.
("PFPC"), the Fund's transfer agent, and was compensated for these services by
PFPC, not the Fund. Effective January 1, 2004, such delegated services are
performed by UBS Financial Services Inc., which is compensated for these
services by PFPC (not the Fund).
For the year ended August 31, 2004, UBS Global AM and UBS Financial Services
Inc. received from PFPC, not the Fund, $952,533 of the total transfer agency
and related services fees paid by the Fund to PFPC.
SECURITIES LENDING
The Fund may lend securities up to 331|M/3% of its total assets to qualified
broker-dealers or institutional investors. The loans are secured at all times
by cash, U.S. 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 will regain ownership of loaned securities to exercise
certain beneficial rights; however, the Fund may bear the risk of delay in
recovery of, or even loss of rights in, the securities loaned should the
borrower fail financially. The Fund receives compensation for lending its
securities from interest or dividends earned on the cash, U.S. government
securities or irrevocable letters of credit held as collateral, net of fee
rebates paid to the borrower plus reasonable administrative and custody fees.
UBS Financial Services Inc. and other affiliated broker-dealers have been
approved as borrowers under the Fund's securities
- --------------------------------------------------------------------------------
35
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
lending program. UBS Securities LLC is the Fund's lending agent. For the year
ended August 31, 2004, UBS Securities LLC (or UBS Financial Services, Inc.
which provided such services prior to UBS Securities LLC) earned $27,299 in
compensation as the Fund's lending agent. At August 31, 2004, the Fund owed UBS
Securities LLC $5,995 in compensation as the Fund's lending agent.
At August 31, 2004, the Fund had securities on loan having a market value of
$195,580,750. The custodian for the Fund held cash and cash equivalents as
collateral for securities loan of $168,228,896. In addition, the Fund held U.S.
Government and agency securities having an aggregate value of $33,134,168 as
collateral for portfolio securities loaned as follows:
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------------------------------------------------------------------------------
$ 2,000 Federal National Mortgage
Association 01/02/14 5.125% $ 2,040,625
- --------------------------------------------------------------------------------
8,000 U.S. Treasury Bonds 08/15/23 6.250 9,292,816
- --------------------------------------------------------------------------------
7,500 U.S. Treasury Bonds 05/15/30 6.250 8,843,558
- --------------------------------------------------------------------------------
10,400 U.S. Treasury Bonds 02/15/31 5.375 11,072,755
- --------------------------------------------------------------------------------
1,900 U.S. Treasury Notes 02/15/09 3.000 1,884,414
- --------------------------------------------------------------------------------
$33,134,168
================================================================================
BANK LINE OF CREDIT
The Fund could borrow until November 20, 2003 up to $10 million under a
short-term unsecured line of credit with the Fund's custodian ("Line of
Credit"). The Fund participated until September 10, 2003 with other funds
managed, advised or sub-advised by UBS Global AM in a $300 million committed
credit facility ("Facility") with UBS AG, Stamford Branch, 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 the shareholders and other temporary or emergency purposes. Under the
Facility arrangement, the Fund had agreed to pay commitment fees, pro rata,
based on the relative asset size of the funds in the Facility. Interest would
have been charged to the Fund at rates based on prevailing market rates in
effect at the time of borrowings. For the period September 1, 2003 through
November 20, 2003, the Fund had an average daily amount of borrowing
outstanding under the Line of Credit of $1,915,538 for 39 days with a related
weighted average annualized interest rate of 1.534%. For the period September
1, 2003 through September 10, 2003, the Fund did not borrow under the Facility.
For the period September 1, 2003 through September 10, 2003, the Fund paid
commitment fees of $4,651 to UBS AG, Stamford Branch.
- --------------------------------------------------------------------------------
36
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
Effective November 21, 2003, the Fund participates with other funds managed or
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 had agreed to pay commitment fees, pro
rata, based on the relative asset size of the funds in the Committed Credit
Facility. Interest would be charged to the Fund at the federal funds rate in
effect at the time of borrowings, plus 0.50%. For the period November 21, 2003
through August 31, 2004, the Fund had an average daily amount of borrowing
outstanding under the Committed Credit Facility of $1,809,105 for 19 days with
a related weighted average annualized interest rate of 1.525%.
PURCHASES AND SALES OF SECURITIES
For the year ended August 31, 2004, aggregate purchases and sales of portfolio
securities, excluding short-term securities and U.S. Government securities,
were $1,257,859,958 and $2,091,652,822, respectively.
For the year ended August 31, 2004, aggregate purchases and sales of U.S.
Government securities, excluding short-term securities were $665,611,441 and
$457,158,172, respectively.
FEDERAL TAX STATUS
The Fund intends to distribute 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, 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 years ended August
31, 2004 and August 31, 2003 were as follows:
DISTRIBUTIONS PAID FROM: 2004 2003
- -------------------------------------------------------------------------------
Ordinary income $7,652,372 $3,229,119
================================================================================
At August 31, 2004 the components of accumulated deficit on a tax basis were as
follows:
Undistributed ordinary income $13,148,795
- -------------------------------------------------------------------------------
Accumulated realized capital and other losses (266,417,137)
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments (17,147,092)
- -------------------------------------------------------------------------------
Total accumulated deficit $(270,415,434)
===============================================================================
- -------------------------------------------------------------------------------
37
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
The differences between book-basis and tax-basis unrealized
appreciation/depreciation is attributable primarily to the tax deferral of
losses on wash sales.
At August 31, 2004, the Fund had a net capital loss carryforward of
$266,417,137. This loss carryforward is available as a reduction, to the extent
provided in the regulations, of any future net realized 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. In
addition, the Fund utilized $59,667,368 of the capital loss carryforward to
offset current year realized gains.
For federal income tax purposes, the tax cost of investments and the components
of net unrealized depreciation of investments at August 31, 2004 were as
follows:
Tax cost of investments $1,480,215,799
- ---------------------------------------------------------------------------------------
Gross appreciation (investments having an excess of value over cost) 69,461,365
- ---------------------------------------------------------------------------------------
Gross depreciation (investments having an excess of cost over value) (86,608,456)
- ---------------------------------------------------------------------------------------
Net unrealized depreciation of investments $(17,147,091)
=======================================================================================
To reflect reclassifications arising from permanent "book/tax" differences for
the year ending August 31, 2004, undistributed net investment income was
increased by $778,594, accumulated net realized losses from investment
transactions were increased by $779,690 and beneficial interest was increased
by $1,096. These differences are primarily due to return of capital adjustments
from real estate investment trusts and paydown reclasses.
- --------------------------------------------------------------------------------
38
[THIS PAGE INTENTIONALLY LEFT BLANK]
- --------------------------------------------------------------------------------
39
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
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
-----------------------------------------------------------------------
YEAR ENDED
AUGUST 31, 2004: SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
Shares sold 1,118,407 $ 27,900,437 291,139 $6,986,676
- -----------------------------------------------------------------------------------------------------
Shares repurchased (12,566,094) (316,262,158) (5,853,194) (142,922,439)
- -----------------------------------------------------------------------------------------------------
Shares converted from
Class B to Class A 4,048,078 101,721,753 (4,166,982) (101,721,753)
- -----------------------------------------------------------------------------------------------------
Dividends reinvested 219,412 5,344,877 - -
- -----------------------------------------------------------------------------------------------------
Shares issued in connection
with fund merger 331,039 8,585,434 133,335 3,359,333
- -----------------------------------------------------------------------------------------------------
Net decrease (6,849,158) $(172,709,657) (9,595,702) $(234,298,183)
- -----------------------------------------------------------------------------------------------------
YEAR ENDED
AUGUST 31, 2003:
- -----------------------------------------------------------------------------------------------------
Shares sold 2,923,683 $ 60,047,888 1,027,115 $20,535,629
- -----------------------------------------------------------------------------------------------------
Shares repurchased (10,819,151) (222,152,589) (7,393,573) (145,542,656)
- -----------------------------------------------------------------------------------------------------
Shares converted from
Class B to Class A 2,816,185 58,999,083 (2,898,159) (58,999,083)
- -----------------------------------------------------------------------------------------------------
Dividends reinvested 112,993 2,309,586 - -
- -----------------------------------------------------------------------------------------------------
Net decrease (4,966,290) $(100,796,032) (9,264,617) $(184,006,110)
- -----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
40
UBS U.S. ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS
CLASS C CLASS Y
- --------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------
390,847 $9,385,318 263,841 $6,758,382
- --------------------------------------------------------------------
(7,668,345) (188,460,551) (1,588,618) (40,460,144)
- --------------------------------------------------------------------
- - - -
- --------------------------------------------------------------------
16,792 401,491 63,538 1,566,219
- --------------------------------------------------------------------
99,487 2,523,302 95,420 2,509,325
- --------------------------------------------------------------------
(7,161,219) $(176,150,440) (1,165,819) $(29,626,218)
====================================================================
1,244,604 $24,959,149 681,553 $13,842,221
- --------------------------------------------------------------------
(7,250,183) (144,486,902) (1,936,431) (40,033,305)
- --------------------------------------------------------------------
- - - -
- --------------------------------------------------------------------
- - 40,494 837,414
- --------------------------------------------------------------------
(6,005,579) $(119,527,753) (1,214,384) $(25,353,670)
====================================================================
- --------------------------------------------------------------------------------
41
UBS U.S. ALLOCATION FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
year is presented below:
Class A
---------------------------------------------------------------------------
For the Years Ended August 31,
---------------------------------------------------------------------------
2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF YEAR $ 23.00 $ 20.80 $ 25.78 $35.59 $31.79
- ---------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.30@ 0.18@ 0.13@ 0.32@ 0.60@
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains
(losses) from investment activities 2.72 2.10 (4.94) (6.45) 3.92
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
operations 3.02 2.28 (4.81) (6.13) 4.52
- ---------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.21) (0.08) (0.03) (0.77) (0.02)
- ---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
from investment activities - - (0.14) (2.91) (0.70)
- ---------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.21) (0.08) (0.17) (3.68) (0.72)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $25.81 $23.00 $20.80 $25.78 $35.59
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN(1) 13.19% 10.99% (18.79)% (18.89)% 14.37%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $552,195 $649,582 $690,546 $958,783 $866,956
- ---------------------------------------------------------------------------------------------------------------------
Expenses to average net assets, net of
fee waivers by advisor(2) 0.93% 0.98% 0.89% 0.84% 0.84%
- ---------------------------------------------------------------------------------------------------------------------
Expenses to average net assets, before
fee waivers by advisor(2) 0.95% 0.98% 0.89% 0.85% 0.84%
- ---------------------------------------------------------------------------------------------------------------------
Net investment income (loss) to
average net assets, net of fee
waivers by advisor(2) 1.18% 0.84% 0.54% 1.08% 1.77%
- ---------------------------------------------------------------------------------------------------------------------
Net investment income (loss) to
average net assets, before fee
waivers by advisor(2) 1.16% 0.84% 0.54% 1.07% 1.77%
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover 128% 2% 5% 38% 122%
=====================================================================================================================
@ Calculated using the average month end shares outstanding for the year.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions, if any, at net asset value on the ex-dividend dates, and a
sale at net asset value on the last day of each year reported. The figures
do not include any applicable sales charges or program fees; results would
be lower if they were included. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption
of Fund shares.
(2) During the years ended August 31, 2003 and August 31, 2002, UBS Global AM
did not waive any advisory and administration fees. During the year ended
August 31, 2000, UBS Global AM waived a portion of its advisory and
administration fees. The ratios excluding the waiver were the same since
the fee waiver represents less than 0.005%.
- --------------------------------------------------------------------------------
42
Class B
- ------------------------------------------------------------------------------
For the Years Ended August 31,
- ------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------
$22.29 $20.23 $25.24 $34.92 $31.41
- ------------------------------------------------------------------------------
0.09@ 0.02@ (0.05)@ 0.11@ 0.33@
- ------------------------------------------------------------------------------
2.66 2.04 (4.82) (6.36) 3.88
- ------------------------------------------------------------------------------
2.75 2.06 (4.87) (6.25) 4.21
- ------------------------------------------------------------------------------
- - - (0.52) -
- ------------------------------------------------------------------------------
- - (0.14) (2.91) (0.70)
- ------------------------------------------------------------------------------
- - (0.14) (3.43) (0.70)
- ------------------------------------------------------------------------------
$25.04 $22.29 $20.23 $25.24 $34.92
- ------------------------------------------------------------------------------
12.34% 10.18% (19.41)% (19.54)% 13.54%
- ------------------------------------------------------------------------------
$277,891 $461,273 $606,133 $935,056 $1,091,107
- ------------------------------------------------------------------------------
1.70% 1.74% 1.65% 1.60% 1.60%
- ------------------------------------------------------------------------------
1.72% 1.74% 1.65% 1.61% 1.60%
- ------------------------------------------------------------------------------
0.36% 0.08% (0.22)% 0.38% 1.00%
- ------------------------------------------------------------------------------
0.34% 0.08% (0.22)% 0.37% 1.00%
- ------------------------------------------------------------------------------
128% 2% 5% 38% 122%
==============================================================================
- --------------------------------------------------------------------------------
43
UBS U.S. ALLOCATION FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
year is presented below:
Class C
-----------------------------------------------------------------------
For the Years Ended August 31,
-----------------------------------------------------------------------
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 22.46 $ 20.38 $ 25.42 $ 35.14 $ 31.60
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.10@ 0.02@ (0.05)@ 0.11@ 0.34@
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains
(losses) from investment activities 2.67 2.06 (4.85) (6.40) 3.90
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
operations 2.77 2.08 (4.90) (6.29) 4.24
- ------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.02) - - (0.52) -
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains
from investment activities - - (0.14) (2.91) (0.70)
- ------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.02) - (0.14) (3.43) (0.70)
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $25.21 $22.46 $20.38 $25.42 $35.14
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN(1) 12.35% 10.21% (19.39)% (19.53)% 13.55%
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's) $333,765 $458,117 $538,109 $790,704 $868,545
- ------------------------------------------------------------------------------------------------------------------
Expenses to average net assets, net of
fee waivers by advisor(2) 1.67% 1.72% 1.63% 1.60% 1.60%
- ------------------------------------------------------------------------------------------------------------------
Expenses to average net assets, before
fee waivers by advisor(2) 1.69% 1.72% 1.63% 1.61% 1.60%
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss) to
average net assets, net of fee
waivers by advisor(2) 0.42% 0.10% (0.20)% 0.38% 1.01%
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss) to
average net assets, before fee
waivers by advisor(2) 0.40% 0.10% (0.20)% 0.37% 1.01%
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover 128% 2% 5% 38% 122%
- ------------------------------------------------------------------------------------------------------------------
@ Calculated using the average monthly shares outstanding for the year.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions, if any, at net asset value on the ex-dividend dates, and a
sale at net asset value on the last day of each year reported. The figures
do not include any applicable sales charges or program fees; results would
be lower if they were included. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption
of Fund shares.
(2) During the years ended August 31, 2003 and August 31, 2002, UBS Global AM
did not waive any advisory and administration fees. During the year ended
August 31, 2000, UBS Global AM waived a portion of its advisory and
administration fees. The ratios excluding the waiver were the same since
the fee waiver represents less than 0.005%.
- --------------------------------------------------------------------------------
44
Class Y
- --------------------------------------------------------------------------------
For the Years Ended August 31,
- --------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------
$23.33 $21.07 $26.05 $35.92 $31.99
- --------------------------------------------------------------------------------
0.39@ 0.25@ 0.21@ 0.41@ 0.71@
- --------------------------------------------------------------------------------
2.76 2.13 (5.00) (6.50) 3.95
- --------------------------------------------------------------------------------
3.15 2.38 (4.79) (6.09) 4.66
- --------------------------------------------------------------------------------
(0.29) (0.12) (0.05) (0.87) (0.03)
- --------------------------------------------------------------------------------
- - (0.14) (2.91) (0.70)
- --------------------------------------------------------------------------------
(0.29) (0.12) (0.19) (3.78) (0.73)
- --------------------------------------------------------------------------------
$26.19 $23.33 $21.07 $26.05 $35.92
- --------------------------------------------------------------------------------
13.58% 11.39% (18.54)% (18.63)% 14.72%
- --------------------------------------------------------------------------------
$123,727 $137,401 $149,653 $211,520 $199,095
- --------------------------------------------------------------------------------
0.58% 0.63% 0.58% 0.56% 0.56%
- --------------------------------------------------------------------------------
0.60% 0.63% 0.58% 0.57% 0.56%
- --------------------------------------------------------------------------------
1.53% 1.19% 0.85% 1.36% 2.09%
- --------------------------------------------------------------------------------
1.51% 1.19% 0.85% 1.35% 2.09%
- --------------------------------------------------------------------------------
128% 2% 5% 38% 122%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
45
UBS U.S. ALLOCATION FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Trustees of
UBS U.S. Allocation Fund
We have audited the accompanying statement of assets and liabilities of UBS
U.S. Allocation Fund (the sole Fund comprising UBS Investment Trust) (the
"Fund"), including the portfolio of investments, as of August 31, 2004, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We have conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of
August 31, 2004, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of UBS
U.S. Allocation Fund at August 31, 2004 and the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the indicated
periods, in conformity with U.S. generally accepted accounting principles.
/s/ Ernest & Young LLP
New York, New York
October 15, 2004
- --------------------------------------------------------------------------------
46
UBS U.S. ALLOCATION FUND
TAX INFORMATION (UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (August 31,
2004) as to the federal tax status of distributions received by shareholders
during such fiscal year. The percentage of dividends paid that qualify for the
70% dividends received deduction for corporate shareholders is 100%.
For the fiscal year ended August 31, 2004, certain dividends paid by UBS
Tactical Allocation Fund may be subject to a maximum tax rate of 15%, as
provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of
the distributions paid during the fiscal year, $7,652,372 represents the maximum
amount that may be considered qualified dividend income.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be
reported as taxable income. Some retirement trusts (e.g., corporate, Keogh and
403(b)(7) plans) may need this information for their annual information
reporting.
Since the Fund's fiscal year is not the calendar year, another notification will
be sent in respect of calendar year 2004. The second notification, which will
reflect the amount to be used by calendar year taxpayers on their federal income
tax returns, will be made in conjunction with Form 1099 DIV and will be mailed
in January 2005. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Fund.
GENERAL INFORMATION (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
You may obtain a description of the Fund's proxy voting policies, procedures and
voting records, without charge, upon request by contacting the Fund directly at
1-800-647-1568, online on the Fund's website www.ubs.com/ubsglobalam-proxy, or
on the EDGAR Database on the SEC's website (http://www.sec.gov).
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
website 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 calling 1-800-647-1568.
- --------------------------------------------------------------------------------
47
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD OF TRUSTEES & Officers
The Trust is governed by a Board of Trustees which oversees the Fund's
operations. Each Trustee serves an indefinite term of office. Officers are
appointed by the Trustees and serve at the pleasure of the Board. The table
below shows, for each Trustee and Officer, his or her name, address and age, the
position held with the Trust, the length of time served as a Trustee and Officer
of the Trust, the Trustee's or Officer's principal occupations during the last
five years, the number of portfolios in the UBS fund complex overseen by the
Trustee or for which a person served as an Officer, and other directorships held
by the Trustee.
The Trust's Statement of Additional Information contains additional information
about the Trustees and is available, without charge, upon request by calling
1-800-647 1568.
INTERESTED TRUSTEE
Term of
Office+ and
Position(s) Length of
Name, Address, Held with Time Principal Occupation(s)
and Age Trust Served During Past 5 Years
- -------------------------- ------------- ------------- -------------------------------------------
Margo N. Alexander*++; Trustee Since 1995 Mrs. Alexander is retired. She was an
57 executive vice president of UBS Financial
c/o UBS Global Asset Services Inc. (from March 1984 to
Management December 2002). She was chief executive
57 West 52nd Street officer (from January 1995 to
New York, NY 10019 October 2000), a director (from
January 1995 to September 2001) and
chairman (from March 1999 to
September 2001) of UBS Global AM
(formerly known as Mitchell Hutchins Asset
Management Inc.).
- --------------------------------------------------------------------------------
48
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
Number of
Portfolios in Fund Complex Other Directorships
Overseen by Trustee Held by Trustee
- ---------------------------------------------------- --------------------
Mrs. Alexander is a director or trustee of 16 None
investment companies (consisting of 33 portfolios)
for which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.
- --------------------------------------------------------------------------------
49
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
INDEPENDENT TRUSTEES
Term of
Office+ and
Position(s) Length of
Name, Address, Held with Time Principal Occupation(s)
and Age Trust Served During Past 5 Years
- -------------------------- -------------- ------------- ----------------------------------------------
Richard Q. Armstrong; 69 Trustee and Since 2004 Mr. Armstrong is chairman and principal of
c/o Willkie, Farr & Interim R.Q.A. Enterprises (management consulting
Gallagher LLP Chairman of firm) (since April 1991 and principal
787 Seventh Avenue the Board of occupation since March 1995).
New York, NY 10019-6099 Trustees
David J. Beaubien; 70 Trustee Since 1995 Mr. Beaubien is retired (since 2003). He was
84 Doane Road chairman of Yankee Environmental
Ware, MA 01082 Systems, Inc., a manufacturer of
meteorological measuring systems (since
1991).
Richard R. Burt; 57 Trustee Since 1995 Mr. Burt is chairman of Diligence LLC
1275 Pennsylvania Ave., (international information and security firm)
N.W. Washington, D.C. and IEP Advisors (international investments
20004 and consulting firm).
Meyer Feldberg; 62 Trustee Since 1997 Professor Feldberg is Dean Emeritus and
Columbia Business School Sanford Bernstein Professor of Leadership
33 West 60th Street and Ethics at Columbia Business School.
7th Floor Prior to July 2004, he was Dean and
New York, NY 10023-7905 Professor of Management of the Graduate
School of Business at Columbia University
(since 1989).
- --------------------------------------------------------------------------------
50
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
Number of
Portfolios in Fund Complex Other Directorships
Overseen by Trustee Held by Trustee
- ---------------------------------------------------- ----------------------------------------------------------------
Mr. Armstrong is a director or trustee of 16 None
investment companies (consisting of 33 portfolios)
for which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.
Mr. Beaubien is a director or trustee of 16 Mr. Beaubien is also a director of IEC Electronics, Inc., a
investment companies (consisting of 33 portfolios) manufacturer of electronic assemblies.
for which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.
Mr. Burt is a director or trustee of 16 investment Mr. Burt is also a director of Hollinger International, Inc.
companies (consisting of 33 portfolios) for which (publishing), HCL Technologies, Ltd. (software and
UBS Global AM or one of its affiliates serves as information technologies), The Central European Fund, Inc.,
investment advisor, sub-advisor or manager. The Germany Fund, Inc., IGT, Inc. (provides technology to
gaming and wagering industry) and chairman of Weirton
Steel Corp. (makes and finishes steel products). He is also a
director or trustee of funds in the Scudder Mutual Funds
Family (consisting of 47 portfolios).
Professor Feldberg is a director or trustee of 30 Professor Feldberg is also a director of Primedia Inc.
investment companies (consisting of 47 portfolios) (publishing), Federated Department Stores, Inc. (operator of
for which UBS Global AM or one of its affiliates department stores), Revlon, Inc. (cosmetics), Select Medical
serves as investment advisor, sub-advisor or Inc. (healthcare services) and SAPPI, Ltd. (producer of paper).
manager.
- --------------------------------------------------------------------------------
51
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
INDEPENDENT TRUSTEES (CONCLUDED)
Term of
Office+ and
Position(s) Length of
Name, Address, Held with Time Principal Occupation(s)
and Age Trust Served During Past 5 Years
- ----------------------------- ------------- ------------- ------------------------------------------
Carl W. Schafer; 68 Trustee Since 2001 Mr. Schafer is president of the Atlantic
66 Witherspoon Street #1100 Foundation (charitable foundation) (since
Princeton, NJ 08542 1990).
William D. White; 70 Trustee Since 1995 Mr. White is retired (since 1994).
P.O. Box 199
Upper Black Eddy, PA 18972
- --------------------------------------------------------------------------------
52
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
Number of
Portfolios in Fund Complex Other Directorships
Overseen by Trustee Held by Trustee
- ------------------------------------------------------- -----------------------------------------------------------------
Mr. Schafer is a director or trustee of 16 investment Mr. Schafer is also a director of Labor Ready, Inc. (temporary
companies (consisting of 33 portfolios) for which employment), Guardian Life Insurance Company Mutual
UBS Global AM or one of its affiliates serves as Funds (consisting of 25 portfolios), the Harding, Loevner
investment advisor, sub-advisor or manager. Funds (consisting of three portfolios), E.I.I. Realty Securities
Trust (investment company) and Frontier Oil Corporation.
Mr. White is a director or trustee of 16 investment None
companies (consisting of 33 portfolios) for which
UBS Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
- --------------------------------------------------------------------------------
53
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
OFFICERS
Term of Principal Occupation(s)
Office+ and During Past 5 Years;
Position(s) Length of Number of Portfolios in
Name, Address, Held with Time Fund Complex for which person
and Age Trust Served serves as Officer
- ---------------------- ---------------- ------------------ ------------------------------------------------
W. Douglas Beck*; 37 Vice President Since 2003 Mr. Beck is an executive director and head
of mutual fund product management of
UBS Global AM (since 2002). From
March 1998 to November 2002, he held
various positions at Merrill Lynch, the most
recent being first vice president and
co-manager of the managed solutions
group. Mr. Beck is vice president of 19
investment companies (consisting of 74
portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
Thomas Disbrow*; 38 Vice President Since 2000 Mr. Disbrow is a director and co-head of the
and Treasurer (Vice President) mutual fund finance department of UBS
Since 2004 Global AM. Prior to November 1999, he
(Treasurer) was a vice president of Zweig/Glaser
Advisers. Mr. Disbrow is a vice president
and treasurer of 16 investment companies
(consisting of 33 portfolios) and assistant
treasurer of four investment companies
(consisting of 42 portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
Mark F. Kemper**; 46 Vice President Since 2004 Mr. Kemper is general counsel of UBS
and Secretary Global Asset Management-Americas
region (since July 2004). Mr. Kemper also is
an executive director of UBS Global Asset
Management (Americas) Inc. ("UBS Global
AM (Americas")) and was its deputy general
counsel from July 2001 to July 2004. He has
been secretary of UBS Global AM
(Americas) since 1999 and assistant
secretary of UBS Global AM (Americas) and
UBS Global Asset Management Trust
Company since 1993. Mr. Kemper is vice
president and secretary of 16 investment
companies (consisting of 33 portfolios) and
assistant secretary of four investment
companies (consisting of 42 portfolios) for
which UBS Global AM (Americas) or one of
its affiliates serves as investment advisor,
sub-advisor or manager.
- --------------------------------------------------------------------------------
54
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
OFFICERS (CONTINUED)
Term of Principal Occupation(s)
Office+ and During Past 5 Years;
Position(s) Length of Number of Portfolios in
Name, Address, Held with Time Fund Complex for which person
and Age Trust Served serves as Officer
- ------------------------- ---------------- -------------- ------------------------------------------------
Joanne M. Kilkeary*; 36 Vice President Since 2004 Ms. Kilkeary is an associate director and a
and Assistant senior manager of the mutual fund finance
Treasurer department of UBS Global AM. Ms. Kilkeary
is a vice president and assistant treasurer of
16 investment companies (consisting of 33
portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
Joseph T. Malone*; 36 Vice President Since 2004 Mr. Malone is a director and co-head of the
and Assistant mutual fund finance department of UBS
Treasurer Global AM. From August 2000 through
June 2001, he was the controller at AEA
Investors Inc. From March 1998 to August
2000, Mr. Malone was a manager within
investment management services of
PricewaterhouseCoopers LLC. Mr. Malone
is vice president and assistant treasurer of
16 investment companies (consisting of 33
portfolios) and treasurer and principal
accounting officer of four investment
companies (consisting of 42 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.
Brian D. Singer**, 44 Vice President Since 2004 Mr. Singer is chief investment officer-
Americas at UBS Global AM (since 2003).
Prior to 2003, he was global head of asset
allocation and risk management at UBS
Global AM. Mr. Singer is a vice president of
two investment companies (consisting of
two portfolios) for which UBS Global AM or
one of its affiliates serves as investment
advisor, sub-advisor or manager.
- --------------------------------------------------------------------------------
55
UBS U.S. ALLOCATION FUND
SUPPLEMENTAL INFORMATION (UNAUDITED)
OFFICERS (CONCLUDED)
Term of Principal Occupation(s)
Office+ and During Past 5 Years;
Position(s) Length of Number of Portfolios in
Name, Address, Held with Time Fund Complex for which person
and Age Trust Served serves as Officer
- ----------------------- ---------------- -------------- ----------------------------------------------
Joseph A. Varnas*; 36 President Since 2003 Mr. Varnas is a managing director (since
March 2003), global head of information
technology and operations (since March
2004) and head of product
management-Americas (since November
2002) of UBS Global AM. He was head of
technology of UBS Global AM from
November 2002 to March 2004. From 2000
to 2001, he was manager of product
development in Investment Consulting
Services at UBS Financial Services Inc. Mr.
Varnas was a senior analyst in the Global
Securities Research and Economics Group
at Merrill Lynch from 1995 to 1999. Mr.
Varnas is president of 20 investment
companies (consisting of 75 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.
Keith A. Weller*; 42 Vice President Since 1996 Mr. Weller is a director and senior associate
and Assistant general counsel of UBS Global AM. Mr.
Secretary Weller is a vice president and assistant
secretary of 16 investment companies
(consisting of 33 portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.
** This person's business address is One North Wacker Drive, Chicago, Illinois
60606.
+ Each Trustee holds office for an indefinite term. Each Trustee who has
attained the age of seventy-two (72) years will be subject to retirement on
the last day of the month in which he or she attains such age. Officers are
appointed by the Trustees and serve at the pleasure of the Board.
++ Mrs. Alexander is an "interested person" of the Trust as defined in the
Investment Company Act by virtue of her former positions with UBS Global AM
and/or any of its affiliates.
- --------------------------------------------------------------------------------
56
TRUSTEES
Richard Q. Armstrong Meyer Feldberg
Interim Chairman
Carl W. Schafer
Margo N. Alexander
William D. White
David J. Beaubien
Richard R. Burt
PRINCIPAL OFFICERS
Joseph A. Varnas Thomas Disbrow
President Vice President and Treasurer
Mark F. Kemper W. Douglas Beck
Vice President and Secretary Vice President
INVESTMENT ADVISOR,
ADMINISTRATOR AND PRINCIPAL UNDERWRITER
UBS Global Asset Management (US) Inc.
51 West 52nd Street
New York, New York 10019-6114
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.
(c) 2004 UBS Global Asset Management (US) Inc. All rights reserved.
[UBS LOGO] --------------
UBS Global Asset Management (US) Inc. Presorted
51 West 52nd Street Standard
New York, NY 10019-6114 US Postage
PAID
Smithtown, NY
Permit 700
--------------
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions pursuant to Section 406 of
the Sarbanes-Oxley Act of 2002. (The registrant has designated the code of
ethics adopted pursuant to Sarbanes-Oxley as a "Code of Conduct" to lessen the
risk of confusion with its separate code of ethics adopted pursuant to Rule
17j-1 under the Investment Company Act of 1940, as amended.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board has determined that the following person serving on the
registrant's Audit Committee is an "audit committee financial expert" as defined
in item 3 of Form N-CSR: Richard Q. Armstrong. Mr. Armstrong is independent as
defined in item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees:
-----------
For the fiscal years ended August 31, 2004 and August 31, 2003, the
aggregate Ernst & Young LLP (E&Y) audit fees for professional services
rendered to the registrant were approximately $70,100 and $73,200,
respectively.
Fees included in the audit fees category are those associated with the
annual audits of financial statements and services that are normally
provided in connection with statutory and regulatory filings.
(b) Audit-Related Fees:
-------------------
In each of the fiscal years ended August 31, 2004 and August 31, 2003, the
aggregate audit-related fees billed by E&Y for services rendered to the
registrant that are reasonably related to the performance of the audits of
the financial statements, but not reported as audit fees, were
approximately $1,193 and $4,425, respectively, which includes amounts
related to non-audit services prior to May 6, 2003 that would have been
subject to pre-approval if the SEC rules relating to the pre-approval of
non-audit services had been in effect at that time.
Fees included in the audit-related category are those associated with (1)
the reading and providing of comments on the 2003 semiannual financial
statements, (2) review of portions of the registrant's semiannual 2003 Form
N-SAR filing, and (3) review of the consolidated 2003 and 2002 report on
UBS Funds' profitability of UBS Global Asset Management (US) Inc. ("UBS
Global AM") to assist the board members in their annual
advisory/administration contract and service/distribution plan reviews.
There were no audit-related fees required to be approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years
indicated above.
(c) Tax Fees:
---------
In each of the fiscal years ended August 31, 2004 and August 31, 2003, the
aggregate tax fees billed by E&Y for professional services rendered to the
registrant were approximately
$20,100 and $7,500, respectively, which includes amounts related to tax
services prior to May 6, 2003 that would have been subject to pre-approval
if the SEC rules relating to the pre-approval of non-audit services had
been in effect at that time.
Fees included in the tax fees category comprise all services performed by
professional staff in the independent accountant's tax division except
those services related to the audits. This category comprises fees for
review of tax compliance, tax return preparation and excise tax
calculations.
There were no tax fees required to be approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years indicated
above.
(d) All Other Fees:
---------------
In each of the fiscal years ended August 31, 2004 and August 31, 2003,
there were no fees billed by E&Y for products and services, other than the
services reported in Item 4(a)-(c) above, rendered to the registrant.
Fees included in the all other fees category would consist of services
related to internal control reviews, strategy and other consulting,
financial information systems design and implementation, consulting on
other information systems, and other tax services unrelated to the
registrant.
There were no "all other fees" required to be approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years
indicated above.
(e) (1) Audit Committee Pre-Approval Policies and Procedures:
-----------------------------------------------------
The registrant's Audit Committee ("audit committee") has adopted an "Audit
Committee Charter (Amended and Restated as of May 12, 2004)" (the
"charter"). The charter contains the audit committee's pre-approval
policies and procedures. Reproduced below is an excerpt from the charter
regarding pre-approval policies and procedures:
The [audit ]Committee shall:
...
2. Pre-approve (a) all audit and permissible non-audit services1 to
be provided to the Fund and (b) all permissible non-audit
services to be provided by the Fund's independent auditors to UBS
Global [AM] and any Covered Service Providers, if the engagement
relates directly to the operations and financial reporting of the
Fund. In carrying out this responsibility, the Committee shall
seek periodically from UBS Global [AM] and from the independent
auditors a list of such audit and permissible non-audit services
that can be expected to be rendered to the Fund, UBS Global [AM]
or any Covered Service Providers by the Fund's independent
auditors, and an estimate of the fees sought to be paid in
connection with such services. The Committee may delegate its
responsibility to pre-approve any such audit and permissible
non-audit services to a sub-committee consisting of the
Chairperson of the Committee and two other members of the
Committee as the Chairperson, from time to time, may determine
and appoint, and such sub-committee shall
report to the Committee, at its next regularly scheduled meeting
after the sub-committee's meeting, its decision(s). From year to
year, the Committee shall report to the Board whether this system
of pre-approval has been effective and efficient or whether this
Charter should be amended to allow for pre-approval pursuant to
such policies and procedures as the Committee shall approve,
including the delegation of some or all of the Committee's
pre-approval responsibilities to other persons (other than UBS
Global [AM] or the Fund's officers).
---------------
1 The Committee will not approve non-audit services that the
Committee believes may taint the independence of the
auditors. Currently, permissible non-audit services include
any professional services (including tax services) that are
not prohibited services as described below, provided to the
Fund by the independent auditors, other than those provided
to the Fund in connection with an audit or a review of the
financial statements of the Fund. Permissible non-audit
services may not include: (i) bookkeeping or other services
related to the accounting records or financial statements of
the Fund; (ii) financial information systems design and
implementation; (iii) appraisal or valuation services,
fairness opinions or contribution-in-kind reports; (iv)
actuarial services; (v) internal audit outsourcing services;
(vi) management functions or human resources; (vii) broker
or dealer, investment adviser or investment banking
services; (viii) legal services and expert services
unrelated to the audit; and (ix) any other service the
Public Company Accounting Oversight Board determines, by
regulation, is impermissible.
Pre-approval by the Committee of any permissible non-audit
services is not required so long as: (i) the aggregate
amount of all such permissible non-audit services provided
to the Fund, UBS Global [AM] and any service providers
controlling, controlled by or under common control with UBS
Global [AM] that provide ongoing services to the Fund
("Covered Service Providers") constitutes not more than 5%
of the total amount of revenues paid to the independent
auditors (during the fiscal year in which the permissible
non-audit services are provided) by (a) the Fund, (b) its
investment adviser and (c) any entity controlling,
controlled by, or under common control with the investment
adviser that provides ongoing services to the Fund during
the fiscal year in which the services are provided that
would have to be approved by the Committee; (ii) the
permissible non-audit services were not recognized by the
Fund at the time of the engagement to be non-audit services;
and (iii) such services are promptly brought to the
attention of the Committee and approved by the Committee (or
its delegate(s)) prior to the completion of the audit.
(e) (2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X:
Audit-Related Fees:
-------------------
There were no amounts that were approved by the audit committee
pursuant to the de minimis exception for the fiscal years ended
August 31, 2004 and August 31, 2003 on behalf of the registrant.
There were no amounts that were required to be approved by the
audit committee pursuant to the de minimis exception for the
fiscal years ended August 31, 2004 and August 31, 2003 on behalf
of the registrant's service providers that relate directly to the
operations and financial reporting of the registrant.
Tax Fees:
---------
There were no amounts that were approved by the audit committee
pursuant to the de minimis exception for the fiscal years ended
August 31, 2004 and August 31, 2003 on behalf of the registrant.
There were no amounts that were required to be approved by the
audit committee pursuant to the de minimis exception for the
fiscal years ended August 31, 2004 and August 31, 2003 on behalf
of the registrant's service providers that relate directly to the
operations and financial reporting of the registrant.
All Other Fees:
---------------
There were no amounts that were approved by the audit committee
pursuant to the de minimis exception for the fiscal years ended
August 31, 2004 and August 31, 2003 on behalf of the registrant.
There were no amounts that were required to be approved by the
audit committee pursuant to the de minimis exception for the
fiscal years ended August 31, 2004 and August 31, 2003 on behalf
of the registrant's service providers that relate directly to the
operations and financial reporting of the registrant.
(f) According to E&Y, for the fiscal year ended August 31, 2004, the
percentage of hours spent on the audit of the registrant's financial
statements for the most recent fiscal year that were attributed to
work performed by persons who are not full-time, permanent employees
of E&Y was 0%.
(g) For the fiscal years ended August 31, 2004 and August 31, 2003, the
aggregate fees billed by E&Y of $3,749,781 and $3,093,759,
respectively, for non-audit services rendered on behalf of the
registrant ("covered"), its investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and any
entity controlling, controlled by, or under common control with the
adviser ("non-covered") that provides ongoing services to the
registrant for each of the last two fiscal years of the registrant is
shown in the table below:
2004 2003
---- ----
Covered Services $21,293 $11,925
Non-Covered Services 3,728,488 3,081,834
(h) The registrant's audit committee was not required to consider whether
the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose
role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling,
controlled by, or under
common control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of the report to shareholders filed under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant's Board has established a Nominating Committee. The Nominating
Committee will consider nominees recommended by shareholders if a vacancy occurs
among those board members who are not "interested persons" as defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended. In order to
recommend a nominee, a shareholder should send a letter to the chairperson of
the Nominating Committee, Mr. Meyer Feldberg, care of the Secretary of the
registrant at UBS Global Asset Management (US) Inc., 51 West 52nd Street, New
York, New York 10019-6114, and indicate on the envelope "Nominating Committee."
The shareholder's letter should state the nominee's name and should include the
nominee's resume or curriculum vitae, and must be accompanied by a written
consent of the individual to stand for election if nominated for the Board and
to serve if elected by shareholders.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940, as amended) are effective based on their evaluation of these controls
and procedures as of a date within 90 days of the filing date of this
document.
(b) The registrant's principal executive officer and principal financial
officer are aware of no changes in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal half-year that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a) (1) Code of Ethics as required pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 (and designated by registrant as a "Code of
Conduct") is attached hereto as Exhibit EX-99.CODE ETH.
(a) (2) Certifications of principal executive officer and principal
financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 is attached hereto as Exhibit EX-99.CERT.
(b) Certifications of principal executive officer and principal financial
officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
attached hereto as Exhibit EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
UBS Investment Trust
By: /s/ Joseph A. Varnas
---------------------
Joseph A. Varnas
President
Date: November 8, 2004
---------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Joseph A. Varnas
---------------------
Joseph A. Varnas
President
Date: November 8, 2004
---------------------
By: /s/ Thomas Disbrow
---------------------
Thomas Disbrow
Treasurer
Date: November 8, 2004
---------------------
