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 |
(Exact name of registrant as specified in charter) |
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1285 Avenue of the Americas, New York, New York | | 10019-6028 |
(Address of principal executive offices) | | (Zip code) |
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Mark F. Kemper, Esq.
UBS Asset Management
1285 Avenue of the Americas
New York, NY 10019-6028 |
(Name and address of agent for service) |
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Copy to:
Jack W. Murphy, Esq.
Dechert LLP
1900 K Street, N.W.
Washington, DC 20006-2401 |
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Registrant’s telephone number, including area code: | 212-821 3000 | |
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Date of fiscal year end: | August 31 | |
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Date of reporting period: | February 29, 2016 | |
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Item 1. Reports to Stockholders.
UBS U.S. Allocation Fund
Semiannual Report
April 18, 2016
Dear shareholder,
We present you with the semiannual report for UBS U.S. Allocation Fund (the "Fund") for the six months ended February 29, 2016.
Performance
Over the six months ended February 29, 2016, the Fund's Class A shares declined 3.53% before deducting the maximum sales charge and fell 8.83% after deducting the maximum sales charge. During the same period, the Fund's benchmark, the S&P 500 Index, which tracks large cap US equities, declined 0.92%. Since the Fund invests in both stocks and bonds, we believe it is appropriate to also compare its performance to the UBS U.S. Allocation Fund Index (the "Index"),1 which declined 1.26% during the period. (Returns for all share classes over various time periods and descriptions of the indices are shown in "Performance at a glance" on page 7; please note that the returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares.)
Market commentary
The US economy continued to expand, but the pace was uneven during the reporting period. The US Commerce Department reported that gross domestic product ("GDP") expanded at a 3.9% seasonally adjusted annualized rate during the second quarter of 2015. GDP growth then slowed to a 2.0% rate for the third quarter of the year. Finally, the Commerce Department reported that second-quarter GDP growth was 1.4%.2
The US Federal Reserve Board (the "Fed") took its initial step toward normalizing monetary policy during the reporting period. In December 2015, the Fed raised the fed funds rates for the first time in nearly a decade. The US central bank boosted the fed funds rate from a range of 0% to 0.25% to a range between 0.25% and 0.50%.3 In its official statement the Fed said, "The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2% inflation...The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run." Finally, at the central bank's meetings that concluded on January 27, 2016 and March 16, 2016 (after the reporting period ended), the Fed kept rates on hold between 0.25% and 0.50%.
The US equity market experienced several periods of volatility over the six months ended February 29, 2016. Investor sentiment fluctuated given mixed economic data and corporate earnings reports, uncertainties regarding future monetary policy and numerous geopolitical issues. Risk aversion was elevated during the third quarter of 2015, as the global equity market experienced its first correction (a decline of at least 10%) since 2011. The
UBS U.S. Allocation Fund
Investment Objective:
Total return, consisting of long-term capital
appreciation and current income
Portfolio Manager:
Andreas Koester
UBS Asset Management
(Americas) Inc.
Commencement:
Class A—May 10, 1993
Class C—July 22, 1992
Class P (formerly Class Y)—May 10, 1993
Dividend payments:
Annually, if any
1 The UBS U.S. Allocation Fund Index is an unmanaged index compiled by the Advisor, constructed as follows: from July 22, 1992 (the Fund's inception) until February 29, 2004: 100% S&P 500 Index; from March 1, 2004 until May 31, 2005: 65% Russell 3000 Index, 30% Barclays US Aggregate Index and 5% BofA Merrill Lynch US High Yield Cash Pay Index; and from June 1, 2005 until present: 65% Russell 3000 Index, 30% Barclays US Aggregate Index and 5% BofA Merrill Lynch US High Yield Cash Pay Constrained Index. Investors should note that indices do not reflect the deduction of fees and expenses.
2 Based on the Commerce Department's third reading for GDP announced on March 25, 2016, after the reporting period had ended.
3 The federal funds rate, or the "fed funds rate," is the rate banks charge one another for funds they borrow on an overnight basis.
1
market then rallied sharply in October 2015 but ended the period on a weak note, as there was another correction in January 2016. All told, the US stock market, as measured by the S&P 500 Index, fell 0.92% for the six months ended February 29, 2016.4 International equities produced very poor results, as they were negatively impacted by moderating growth, fears of a "hard landing" for China's economy and sharply falling commodity prices. International developed equities, as measured by the MSCI EAFE Index (net), declined 9.48% during the period.5 Emerging market equities, as measured by the MSCI Emerging Markets Index (net), fell 8.85% over the same period.6
Turning to the fixed income market, it was not immune from periodic bouts of risk aversion during the reporting period. Mixed signals from the Fed regarding the timing for interest rate "liftoff" was just one of the factors impacting fixed income prices. The yield on the US 10-year Treasury fell from 2.21% to 1.74% during the reporting period, and the overall US bond market, as measured by the Barclays US Aggregate Index, gained 2.20%.7 Returns of riskier fixed income securities were mixed for the six months ended February 29, 2016. High yield bonds, as measured by the BofA Merrill Lynch US High Yield Cash Pay Constrained Index, declined 5.64%.8
Portfolio commentary
What worked
• In the US equity research portion of the Fund, stock selection in the utilities and telecommunication services sectors modestly contributed to results.
– Digital Realty Trust was a top contributor during the period. This real estate investment trust ("REIT") has enjoyed improved return on invested capital, and we believe is well positioned to benefit from the growing demand for data centers worldwide. Digital Realty Trust has aggressively strengthened its global datacenter portfolio through new developments and acquisitions, particularly in higher-margin overseas markets. In addition, we feel the firm should benefit from increased occupancy levels as older contracts expire and are replaced with higher-rent leases.
– Our underweight position in Apple, Inc. was beneficial for our relative performance as the stock declined due to concerns over weakness in iPhone orders. We have gradually reduced our position in Apple over the last year and fully sold out of the stock in the fourth quarter of 2015 (Apple, Inc. continued to be held by the US Large Cap Growth Equity sleeve of the Fund at the end of the reporting period). Given current valuations, we believe a more attractive way to the play the long-term opportunity for smartphones is through exposure to semiconductor components.
4 The S&P 500 Index is an unmanaged, weighted index composed of 500 widely held common stocks varying in composition and is not available for direct investment. Investors should note that indices do not reflect the deduction of fees and expenses.
5 The MSCI EAFE Index (net) is an index of stocks designed to measure the investment returns of developed economies outside of North America. Net total return indices reinvest dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
6 The MSCI Emerging Markets Index (net) is a market-capitalization-weighted index composed of different emerging market countries in Europe, Latin America and the Pacific Basin. Net total return indices reinvest dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. The index is constructed and managed with a view to being fully investable from the perspective of international institutional investors. Investors should note that indices do not reflect the deduction of fees and expenses.
7 The Barclays US Aggregate Index is an unmanaged broad-based index designed to measure the US dollar-denominated, investment grade, taxable bond market. The index includes bonds from the Treasury, government-related, corporate, mortgage-backed, asset-backed and commercial mortgage-backed sectors. Investors should note that indices do not reflect the deduction of fees and expenses.
8 The BofA Merrill Lynch US High Yield Cash Pay Constrained Index is an unmanaged index of publicly placed, non-convertible, coupon-bearing US dollar denominated, below investment grade corporate debt with a term to maturity of at least one year. The index is market capitalization weighted, so that larger bond issuers have a greater effect on the index's return. However, the representation of any single bond issuer is restricted to a maximum of 2% of the total index. Investors should note that indices do not reflect the deduction of fees and expenses.
2
– Philip Morris International, an American global cigarette and tobacco company, was a top contributor to results. Foreign exchange ("FX") became less of a headwind, and investors refocused on the company's solid fundamentals. In our view, Philip Morris' underlying business continues to be strong, with potential for additional upside following the launch of its new iQOS product, a smokeless cigarette which will be rolled out across 20 global markets in 2016.
• In the US equity research portion of the Fund, overweights to the information technology and materials sectors were modestly positive for performance.
• In the US growth equity portion of the Fund, stock selection in the consumer discretionary and materials sectors were additive for performance.
– Facebook, Inc., the social media giant, performed well as it reported revenue growth and earnings that exceeded expectations. Facebook has quickly become a dominant player in the digital advertising arena and has taken market share from traditional platforms such as television, newspapers and radio.
– Alphabet, Inc. is the parent company of Google. It benefited from earnings growth that exceeded expectations, as well as the trend toward digital advertising. Investors were also encouraged by Alphabet's Chief Financial Officer's efforts to increase transparency regarding the company's various product lines.
– The Estee Lauder Companies, Inc. is a leading cosmetics company. The company posted increased earnings despite the challenging global economic environment. The stock also benefited from positive investor sentiment for more defensive consumer staples companies during the reporting period.
• In the US growth equity portion of the Fund, overweights to the energy, information technology and materials sectors were beneficial for performance.
• The Fund's fixed income positioning contributed to performance. Throughout the reporting period, we maintained an underweight to US fixed income, as we found the asset class to be extremely overvalued. However, during the period we reduced our underweight to US fixed income by closing our underweight duration position. Additionally, we added to our Treasury Inflation-Protected Security ("TIPS") allocation, as we believed inflation would rise in the US over the medium term. We began and ended the reporting with a neutral allocation to high yield bonds.
What didn't work
• Overall, asset allocation detracted from performance during the reporting period, largely driven by the Fund's overweight equity position.8
—We tactically adjusted the portfolio during the six-month period given the changing economic and market environment. We began the reporting period overweight equities versus the Index, with a 66.0% allocation, while we were underweight fixed income, with a 15% allocation to US investment grade bonds. Elsewhere, we had a 5% allocation to US high yield bonds and a 14.0% cash position.
—At the end of the reporting period, the Fund was allocated as follows: US equities—65.0%; US investment grade bonds—25.3%; US high yield bonds—5%; cash—4.7%. For comparison purposes, neutral Index weights for the Fund are 65% equities and 35% fixed income.
8 Allocations include derivative exposure.
3
—From a strategy perspective, we ended the reporting period with a neutral equity exposure. That said, we maintained our preference for US equities over bonds and held some cash on the sidelines. We tactically adjusted the equity allocation over the period when the market rallied and added to our allocation during periods of weakness. Within US equities, our preference for small cap equities versus large cap equities was not favorable for results, and we opted to close it in December 2015 after discouraging earnings trends and merger and acquisition ("M&A") activity among smaller cap companies. Overall, we felt that equities were neutral to overvalued but that they could generate positive results given continued accommodative monetary policy and investor demand.
• Stock selection, overall, was negative for performance in the US growth equity portion of the Fund, with holdings in the financials, information technology and industrials sectors being the largest detractors from results.
– Vertex Pharmaceuticals, Inc. is a biotechnology company. Its shares were dragged down along with the overall biotechnology industry during the reporting period, as investor demand for higher valuation companies waned. We believe the investment thesis for Vertex Pharmaceuticals remains intact and that it continues to have solid fundamentals.
– VMware, Inc. provides cloud and virtualization software and services. The company lowered its sales guidance during the reporting period. In addition, in late 2015 VMware's parent company, EMC, announced that it would be acquired by Dell. We subsequently sold our shares in VMware.
– Mobileye N.V. is a technology company that develops vision-based advanced driver assistance systems that provide collision warnings in automobiles. Its shares underperformed as Mobileye lowered guidance in early 2016. In addition, its shares were negatively impacted by increased competition. We sold our position during the reporting period.
• Sector positioning, overall, detracted from results in the US growth equity portion of the Fund. In particular, an underweight to consumer staples, an overweight to health care and an underweight to telecommunication services were the largest detractors from relative results.
• Stock selection, overall, was negative for performance in the US equity research portion of the Fund, with holdings in the health care, energy and information technology sectors being the largest detractors from results.
– Chimerix, Inc. was a top detractor from results following the release of disappointing clinical data in the last week of December 2015. The development stage biotechnology company is working to advance an antiviral treatment for double-stranded DNA viruses. Its share price fell 80% in a single day on news that a key Phase 3 trial did not meet its primary endpoint. The result, which was fully considered in our risk models, was a setback. However, we believe there is still great value in the franchise.
– Alnylam Pharmaceuticals, Inc. was a top detractor as, biotechnology experienced an indiscriminate sell-off in the face of increasing risk aversion among investors. We believe the company's RNA interference (RNAi) technology has the potential to effectively silence disease-causing genes. Furthermore, while it is still early in development, there have been significant value-creating advances over the past two years.
4
– Micron Technology, Inc. was another top detractor during the period. We believe the market is failing to appreciate the semiconductor company's strong dynamic random-access memory (DRAM) business. Despite weak fundamentals (caused by moderating demand, not an irrational addition of supply), Micron's DRAM business has dramatically improved and we believe its position in DRAM will strengthen as it closes the technology gap with Samsung.
• Sector positioning, overall, detracted from results in the US equity research portion of the Fund. In particular, underweights to utilities, telecommunication services and consumer sectors were the largest detractors from results.
• The Fund's strategic cash overweight detracted from relative performance during the six-month reporting period.
• Certain fixed income derivative instruments, including interest rate futures, were used to facilitate specific duration and yield curve strategies. US Treasury futures were used to adjust the Fund's duration positioning. Our use of fixed income derivatives was a slight detractor from performance during the period.
• The use of equity futures decreased the Fund's results. These derivative instruments, which were utilized to manage the Fund's equity exposure, detracted from performance.
Outlook
We continue to prefer US equities over US bonds and are holding some cash on the sidelines. However, we anticipate bouts of volatility in 2016 and will tactically adjust these positions accordingly (either under or overweight risk) depending on financial market and economic developments. We have identified several catalysts that may prompt such a move. Among these are the evolution in the global price of oil, Chinese economic growth prospects, the degree to which the US recovery becomes self-sustaining, the effectiveness of central bank monetary policy in achieving its objectives and the health of the banking system.
Political risks are now firmly on our radar. The lead up to the US elections in November 2016 could well bring about bouts of heightened market volatility. Furthermore, the discourse in the UK and elsewhere about the merits of European Union membership could impact asset prices globally.
We thank you for your continued support and welcome any comments or questions you may have. For additional information on the UBS family of funds,* please contact your financial advisor or visit us at www.ubs.com/am-us.
Sincerely,
| | 
| |
Mark E. Carver
President
UBS U.S. Allocation Fund
Managing Director
UBS Asset Management
(Americas) Inc. | | Andreas Koester
Portfolio Manager
UBS U.S. Allocation Fund
Managing Director
UBS Asset Management
(Americas) Inc. | |
5
This letter is intended to assist shareholders in understanding how the Fund performed during the six months ended February 29, 2016. The views and opinions in the letter were current as of April 18, 2016. They are not guarantees of future performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program.
* Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. The prospectus contains this and other information about the fund. Prospectuses for most of our funds can be obtained from your Financial Advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com/am-us.
6
Performance at a glance (unaudited)
Average annual total returns for periods ended 02/29/2016 | | 6 months | | 1 year | | 5 years | | 10 years | |
Before deducting maximum sales charge | |
Class A1 | | | (3.53 | )% | | | (6.86 | )% | | | 6.79 | % | | | 4.28 | % | |
Class C2 | | | (3.89 | ) | | | (7.55 | ) | | | 5.98 | | | | 3.49 | | |
Class P3 | | | (3.40 | ) | | | (6.60 | ) | | | 7.09 | | | | 4.61 | | |
After deducting maximum sales charge | |
Class A1 | | | (8.83 | ) | | | (11.99 | ) | | | 5.59 | | | | 3.69 | | |
Class C2 | | | (4.85 | ) | | | (8.48 | ) | | | 5.98 | | | | 3.49 | | |
S&P 500 Index4 | | | (0.92 | ) | | | (6.19 | ) | | | 10.13 | | | | 6.44 | | |
UBS U.S. Allocation Fund Index5 | | | (1.26 | ) | | | (4.99 | ) | | | 7.68 | | | | 6.15 | | |
Lipper Flexible Portfolio Funds median | | | (4.28 | ) | | | (9.53 | ) | | | 2.68 | | | | 3.75 | | |
Most recent calendar quarter-end returns (unaudited)
Average annual total returns for periods ended 03/31/2016 | | 6 months | | 1 year | | 5 years | | 10 years | |
Before deducting maximum sales charge | |
Class A1 | | | 4.31 | % | | | (1.79 | )% | | | 7.87 | % | | | 4.72 | % | |
Class C2 | | | 3.93 | | | | (2.50 | ) | | | 7.07 | | | | 3.93 | | |
Class P3 | | | 4.49 | | | | (1.50 | ) | | | 8.18 | | | | 5.05 | | |
After deducting maximum sales charge | |
Class A1 | | | (1.43 | ) | | | (7.18 | ) | | | 6.66 | | | | 4.12 | | |
Class C2 | | | 2.93 | | | | (3.48 | ) | | | 7.07 | | | | 3.93 | | |
The annualized gross and net expense ratios, respectively, for each class of shares as in the December 29, 2015 prospectuses, were as follows: Class A—1.02% and 1.02%; Class C—1.78% and 1.78%; and Class P—0.76% and 0.76%.
Net expenses reflect fee waivers and/or expense reimbursements, if any, pursuant to an agreement that is in effect to cap the expenses. The Fund and UBS Asset Management (Americas) Inc. (formerly, UBS Global Asset Management (Americas) Inc.) have entered into a written agreement, separate from UBS AM's investment advisory agreement with the Fund, whereby UBS AM has agreed to permanently reduce its management fees based on the Fund's average daily net assets to the following rates: $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%; over $2 billion: 0.35%. Effective December 29, 2015, UBS AM has contractually undertaken to waive fees/reimburse a portion of the Fund's expenses, when necessary, so that the ordinary total annual operating expenses of each class through December 31, 2016 (excluding dividend expense, borrowing costs and interest expense relating to short sales, and expenses attributable to investments in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses, if any) would not exceed 1.15% for Class A, 1.90% for Class C and 0.90% for Class P.
1 Maximum sales charge for Class A shares is 5.5%. Class A shares bear ongoing 12b-1 service fees.
2 Maximum contingent deferred sales charge for Class 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.
3 Class P shares do not bear initial or contingent deferred sales charges or ongoing 12b-1 service and distribution fees, but Class P shares held through advisory programs may be subject to a program fee, which, if included, would have reduced performance.
4 The S&P 500 Index is an unmanaged, weighted index comprising 500 widely held common stocks varying in composition and is not available for direct investment. Investors should note that indices do not reflect the deduction of fees and expenses.
5 The UBS U.S. Allocation Fund Index is an unmanaged index compiled by the Advisor, constructed as follows: from July 22, 1992 (the Fund's inception) until February 29, 2004: 100% S&P 500 Index; from March 1, 2004 until May 31, 2005: 65% Russell 3000 Index, 30% Barclays US Aggregate Index, and 5% BofA Merrill Lynch US High Yield Cash Pay Index; and from June 1, 2005 until present: 65% Russell 3000 Index, 30% Barclays US Aggregate Index, and 5% BofA Merrill Lynch US High Yield Cash Pay Constrained Index. Investors should note that indices do not reflect the deduction of fees and expenses.
Prior to February 17, 2015, if an investor sold or exchanged shares less than 90 days after purchase, a redemption fee of 1.00% of the amount sold or exchanged was deducted at the time of the transaction, except as noted otherwise in the prospectus. For sales or exchanges taking place on or after February 17, 2015 but prior to August 3, 2015, there was a reduction in the redemption holding period from 90 days to 30 days. Effective August 3, 2015, the 1.00% redemption fee imposed on sales or exchanges of any class of shares of the funds made during the holding periods specified in the prospectus was eliminated. Please refer to the prospectus for further information.
Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance results assume reinvestment of all dividends and capital gain distributions at net asset value on the ex-dividend dates. Total returns for periods of less than one year have not been annualized. Current performance may be higher or lower than the performance data quoted. For month-end performance figures, please visit http://www.ubs.com/us-mutualfundperformance.
Lipper peer group data calculated by Lipper Inc.; used with permission. The Lipper median is the return of the fund that places in the middle of a Lipper peer group.
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Understanding your Fund's expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transactional costs (as applicable), including sales charges (loads); and (2) ongoing costs, including management fees; service and/or distribution (12b-1) fees (if applicable); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example below is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, September 1, 2015 to February 29, 2016.
Actual expenses (unaudited)
The first line for each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over a period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each class of shares under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes (unaudited)
The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return for each class of shares. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing Fund costs only and do not reflect any transactional costs (as applicable), such as sales charges (loads). Therefore, the second line in the table for each class of shares is useful in comparing ongoing Fund costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higer.
| | | | | Beginning
account value
September 1, 2015 | | Ending
account value
February 29, 2016 | | Expenses paid
during period1
09/01/15 to 02/29/16 | | Expense
ratio during
the period | |
| | Class A | | | Actual | | $ | 1,000.00 | | | $ | 964.70 | | | $ | 4.93 | | | | 1.01 | % | |
| | | | | Hypothetical
(5% annual return before expenses) | | | 1,000.00 | | | | 1,019.84 | | | | 5.07 | | | | 1.01 | | |
| | Class C | | | Actual | | | 1,000.00 | | | | 961.10 | | | | 8.58 | | | | 1.76 | | |
| | | | | Hypothetical
(5% annual return before expenses) | | | 1,000.00 | | | | 1,016.11 | | | | 8.82 | | | | 1.76 | | |
| | Class P | | | Actual | | | 1,000.00 | | | | 966.00 | | | | 3.62 | | | | 0.74 | | |
| | | | | Hypothetical
(5% annual return before expenses) | | | 1,000.00 | | | | 1,021.18 | | | | 3.72 | | | | 0.74 | | |
1 Expenses are equal to the Fund's annualized net expense ratio, multiplied by the average account value over the period, multiplied by 182 divided by 366 (to reflect the one-half year period).
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Portfolio statistics (unaudited)
Characteristics | | 02/29/16 | | 08/31/15 | | 02/28/15 | |
Net assets (mm) | | $ | 235.4 | | | $ | 255.0 | | | $ | 277.6 | | |
Number of securities | | | 459 | | | | 440 | | | | 411 | | |
Portfolio composition1 | | 02/29/16 | | 08/31/15 | | 02/28/15 | |
Stocks & investment company | | | 44.3 | % | | | 49.2 | % | | | 49.0 | % | |
Bonds and notes | | | 32.0 | | | | 27.6 | | | | 22.7 | | |
Futures | | | (1.2 | ) | | | (1.5 | ) | | | 1.3 | | |
Swaps | | | (0.0 | )2 | | | — | | | | 0.02 | | |
Cash equivalents and
other assets less liabilities | | | 24.9 | | | | 24.7 | | | | 27.0 | % | |
Total | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | |
Top five equity sectors1 | | 02/29/16 | | | | 08/31/15 | | | | 02/28/15 | |
Information Technology | | | 12.5 | % | | Information technology | | | 13.1 | % | | Information technology | | | 12.6 | % | |
Consumer Discretionary | | | 8.4 | | | Health care | | | 8.9 | | | Consumer discretionary | | | 10.8 | | |
Health Care | | | 6.8 | | | Consumer Discretionary | | | 8.7 | | | Health care | | | 7.4 | | |
Industrials | | | 4.0 | | | Financials | | | 4.2 | | | Industrials | | | 4.6 | | |
Financials | | | 3.4 | | | Industrials | | | 4.2 | | | Financials | | | 4.4 | | |
Total | | | 35.1 | % | | | | | 39.1 | % | | | | | 39.8 | % | |
Top ten equity securities1 | | 02/29/16 | | | | 08/31/15 | | | | 02/28/15 | |
Facebook, Inc., Class A | | | 2.0 | % | | Apple, Inc. | | | 2.4 | % | | Apple, Inc. | | | 3.2 | % | |
Amazon.com, Inc. | | | 1.4 | | | Facebook, Inc., Class A | | | 1.6 | | | Amazon.com, Inc. | | | 1.4 | | |
Alphabet, Inc., Class A | | | 1.3 | | | Amazon.com, Inc. | | | 1.3 | | | Facebook, Inc., Class A | | | 1.2 | | |
Apple, Inc. | | | 1.3 | | | Allergan PLC | | | 1.1 | | | Starbucks Corp. | | | 1.1 | | |
Microsoft Corp. | | | 1.3 | | | Google, Inc., Class A | | | 1.1 | | | Salesforce.com, Inc. | | | 1.0 | | |
The Home Depot, Inc. | | | 1.2 | | | The Home Depot, Inc. | | | 1.1 | | | Nike, Inc., Class B | | | 1.0 | | |
Allergan PLC | | | 1.1 | | | Visa, Inc., Class A | | | 1.0 | | | The Home Depot, Inc. | | | 1.0 | | |
The TJX Cos., Inc. | | | 0.9 | | | MasterCard, Inc., Class A | | | 1.0 | | | Google, Inc., Class A | | | 0.9 | | |
Starbucks Corp. | | | 0.8 | | | The TJX Cos., Inc. | | | 0.9 | | | Visa, Inc., Class A | | | 0.9 | | |
Salesforce.com, Inc. | | | 0.8 | | | Starbucks Corp. | | | 0.8 | | | Celgene Corp. | | | 0.8 | | |
Total | | | 12.1 | % | | | | | 12.3 | % | | | | | 12.5 | % | |
1 Weightings represent percentages of the Fund's net assets as of the dates indicated. The Fund's portfolio is actively managed and its composition will vary over time.
2 Weighting represents less than 0.05% of the Fund's net assets as of the dates indicated.
9
Portfolio statistics (unaudited) (concluded)
Long-term fixed income
sector allocation1 | | 02/29/16 | | 08/31/15 | | 02/28/15 | |
US government obligations | | | 15.0 | % | | | 11.6 | % | | | 6.1 | % | |
Corporate bonds | | | 7.9 | | | | 8.3 | | | | 8.5 | | |
Mortgage & agency debt securities | | | 6.0 | | | | 4.8 | | | | 5.4 | | |
Commercial mortgage-backed securities | | | 1.3 | | | | 1.3 | | | | 1.5 | | |
Asset-backed securities | | | 1.1 | | | | 0.9 | | | | 0.6 | | |
Non-US government obligations | | | 0.4 | | | | 0.3 | | | | 0.3 | | |
Municipal bonds and notes | | | 0.3 | | | | 0.4 | | | | 0.3 | | |
Collateralized mortgage obligations | | | 0.02 | | | | 0.02 | | | | 0.02 | | |
Total | | | 32.0 | % | | | 27.6 | % | | | 22.7 | % | |
Top ten fixed income
securities1 | | 02/29/16 | | | | 08/31/15 | | | | 02/28/15 | |
US Treasury Inflation Index Notes (TIPS),
0.375%, due 07/15/25 | | | 6.8 | % | | US Treasury Inflation Index Notes (TIPS),
0.375%, due 07/15/25 | | | 6.9 | % | | US Treasury Notes,
0.089%, due 04/30/16 | | | 2.3 | % | |
US Treasury Inflation Index Notes (TIPS),
0.125%, due 04/15/20 | | | 4.7 | | | FNMA Certificate,
3.500%, TBA | | | 1.2 | | | FNMA Certificate,
3.500%, TBA | | | 1.1 | | |
FNMA Certificate,
3.500%, TBA | | | 1.9 | | | US Treasury Notes,
1.125%, due 06/15/18 | | | 0.9 | | | US Treasury Bonds,
3.000%, due 11/15/44 | | | 0.8 | | |
US Treasury Notes,
2.125%, due 12/31/22 | | | 1.0 | | | FNMA Certificate,
3.000%, TBA | | | 0.6 | | | FNMA Certificate,
3.000%, TBA | | | 0.8 | | |
FNMA Certificate,
3.000%, TBA | | | 0.8 | | | US Treasury Notes,
1.625%, due 06/30/20 | | | 0.6 | | | US Treasury Inflation Index Notes (TIPS),
0.125%, due 04/15/19 | | | 0.7 | | |
FNMA Certificate,
4.500%, TBA | | | 0.7 | | | US Treasury Notes,
1.625%, due 07/31/20 | | | 0.6 | | | US Treasury Notes,
1.500%, due 11/30/19 | | | 0.6 | | |
GNMA Certificates II,
4.000%, TBA | | | 0.5 | | | US Treasury Notes,
2.125%, due 05/15/25 | | | 0.5 | | | US Treasury Notes,
0.625%, due 12/31/16 | | | 0.5 | | |
GNMA Certificates II,
3.500%, due 12/01/99 | | | 0.5 | | | GNMA Certificates I,
4.000%, TBA | | | 0.5 | | | FNMA Certificate,
4.000%, TBA | | | 0.5 | | |
US Treasury Notes,
2.250%, due 11/15/25 | | | 0.5 | | | GMMA Certificates II,
3.500%, TBA | | | 0.4 | | | US Treasury Notes,
1.875%, due 11/30/21 | | | 0.5 | | |
US Treasury Notes,
1.000%, due 08/15/18 | | | 0.4 | | | US Treasury Notes,
2.125%, due 06/30/22 | | | 0.4 | | | FNMA Certificate,
5.000%, TBA | | | 0.5 | | |
Total | | | 17.8 | % | | | | | 12.6 | % | | | | | 8.3 | % | |
1 Weightings represent percentages of the Fund's net assets as of the dates indicated. The Fund's portfolio is actively managed and its composition will vary over time.
2 Weighting represents less than 0.05% of the Fund's net assets as of the dates indicated.
10
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Shares | | Value | |
Common stocks—39.91% | |
Aerospace & defense—0.54% | |
TransDigm Group, Inc.* | | | 3,930 | | | $ | 839,369 | | |
United Technologies Corp. | | | 4,401 | | | | 425,225 | | |
| | | | | | 1,264,594 | | |
Airlines—0.63% | |
Delta Air Lines, Inc. | | | 19,176 | | | | 925,050 | | |
Spirit Airlines, Inc.* | | | 4,535 | | | | 216,546 | | |
United Continental Holdings, Inc.* | | | 6,101 | | | | 349,344 | | |
| | | | | | 1,490,940 | | |
Automobiles—0.28% | |
General Motors Co. | | | 22,495 | | | | 662,253 | | |
Banks—0.12% | |
U.S. Bancorp | | | 7,278 | | | | 280,349 | | |
Beverages—0.45% | |
PepsiCo, Inc. | | | 10,838 | | | | 1,060,173 | | |
Biotechnology—2.34% | |
Alnylam Pharmaceuticals, Inc.*,1 | | | 8,970 | | | | 525,373 | | |
Atara Biotherapeutics, Inc.*,1 | | | 8,443 | | | | 138,803 | | |
Celgene Corp.* | | | 14,732 | | | | 1,485,428 | | |
Gilead Sciences, Inc.1 | | | 16,099 | | | | 1,404,638 | | |
Lexicon Pharmaceuticals, Inc.*,1 | | | 67,151 | | | | 627,190 | | |
MacroGenics, Inc.* | | | 3,433 | | | | 54,859 | | |
Regulus Therapeutics, Inc.*,1 | | | 21,060 | | | | 138,364 | | |
TG Therapeutics, Inc.*,1 | | | 7,712 | | | | 64,241 | | |
Vertex Pharmaceuticals, Inc.* | | | 12,447 | | | | 1,064,094 | | |
| | | | | | 5,502,990 | | |
Capital markets—0.28% | |
Invesco Ltd. | | | 10,440 | | | | 279,166 | | |
Morgan Stanley | | | 14,848 | | | | 366,745 | | |
| | | | | | 645,911 | | |
Chemicals—1.65% | |
Ecolab, Inc. | | | 12,174 | | | | 1,248,444 | | |
Monsanto Co. | | | 4,716 | | | | 424,393 | | |
The Dow Chemical Co. | | | 6,995 | | | | 340,027 | | |
The Sherwin-Williams Co. | | | 6,907 | | | | 1,868,343 | | |
| | | | | | 3,881,207 | | |
Communications equipment—0.11% | |
Arista Networks, Inc.*,1 | | | 3,776 | | | | 258,807 | | |
Construction materials—0.12% | |
Martin Marietta Materials, Inc.1 | | | 2,032 | | | | 289,804 | | |
Consumer finance—0.80% | |
American Express Co. | | | 5,380 | | | | 299,020 | | |
Synchrony Financial* | | | 58,706 | | | | 1,582,127 | | |
| | | | | | 1,881,147 | | |
Diversified financial services—1.14% | |
Citigroup, Inc. | | | 17,198 | | | | 668,142 | | |
JPMorgan Chase & Co.1 | | | 14,583 | | | | 821,023 | | |
McGraw Hill Financial, Inc. | | | 13,346 | | | | 1,197,670 | | |
| | | | | | 2,686,835 | | |
| | | Shares | | Value | |
Common stocks—(continued) | |
Diversified telecommunication services—0.16% | |
pdvWireless, Inc.* | | | 300 | | | $ | 8,520 | | |
pdvWireless, Inc.*,2 | | | 13,139 | | | | 373,148 | | |
| | | | | | 381,668 | | |
Electric utilities—0.27% | |
NextEra Energy, Inc. | | | 5,627 | | | | 634,838 | | |
Electrical equipment—0.38% | |
AMETEK, Inc. | | | 19,407 | | | | 900,679 | | |
Electronic equipment, instruments & components—0.33% | |
CDW Corp. | | | 6,589 | | | | 260,793 | | |
Dolby Laboratories, Inc., Class A | | | 6,767 | | | | 267,296 | | |
Jabil Circuit, Inc.1 | | | 11,733 | | | | 244,633 | | |
| | | | | | 772,722 | | |
Energy equipment & services—0.26% | |
Halliburton Co. | | | 6,723 | | | | 217,018 | | |
McDermott International, Inc.*,1 | | | 77,923 | | | | 257,146 | | |
Noble Corp. PLC1 | | | 15,230 | | | | 126,866 | | |
| | | | | | 601,030 | | |
Food & staples retailing—0.16% | |
Walgreens Boots Alliance, Inc. | | | 4,659 | | | | 367,781 | | |
Food products—0.37% | |
Mondelez International, Inc., Class A | | | 21,607 | | | | 875,732 | | |
Health care equipment & supplies—1.31% | |
HeartWare International, Inc.*,1 | | | 6,416 | | | | 205,055 | | |
Intuitive Surgical, Inc.* | | | 2,110 | | | | 1,188,057 | | |
The Cooper Cos., Inc.1 | | | 5,548 | | | | 793,142 | | |
Zimmer Biomet Holdings, Inc. | | | 9,349 | | | | 905,077 | | |
| | | | | | 3,091,331 | | |
Health care providers & services—0.76% | |
Envision Healthcare Holdings, Inc.* | | | 10,818 | | | | 237,888 | | |
Express Scripts Holding Co.* | | | 15,774 | | | | 1,110,174 | | |
UnitedHealth Group, Inc.1 | | | 3,775 | | | | 449,602 | | |
| | | | | | 1,797,664 | | |
Hotels, restaurants & leisure—1.34% | |
Chipotle Mexican Grill, Inc.*,1 | | | 839 | | | | 427,185 | | |
Starbucks Corp. | | | 34,072 | | | | 1,983,331 | | |
Yum! Brands, Inc. | | | 10,255 | | | | 743,180 | | |
| | | | | | 3,153,696 | | |
Industrial conglomerates—0.76% | |
Danaher Corp. | | | 16,575 | | | | 1,479,650 | | |
General Electric Co.1 | | | 10,926 | | | | 318,384 | | |
| | | | | | 1,798,034 | | |
Insurance—0.63% | |
Aflac, Inc. | | | 6,106 | | | | 363,429 | | |
Aon PLC | | | 3,950 | | | | 376,396 | | |
Lincoln National Corp. | | | 10,632 | | | | 388,387 | | |
MetLife, Inc. | | | 8,806 | | | | 348,365 | | |
| | | | | | 1,476,577 | | |
11
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Shares | | Value | |
Common stocks—(continued) | |
Internet & catalog retail—2.20% | |
Amazon.com, Inc.* | | | 5,750 | | | $ | 3,176,990 | | |
Expedia, Inc.1 | | | 2,473 | | | | 257,464 | | |
The Priceline Group, Inc.* | | | 656 | | | | 829,978 | | |
TripAdvisor, Inc.* | | | 14,545 | | | | 910,517 | | |
| | | | | | 5,174,949 | | |
Internet software & services—4.23% | |
Alphabet, Inc., Class A* | | | 4,406 | | | | 3,160,071 | | |
Alphabet, Inc., Class C*,1 | | | 2,550 | | | | 1,779,314 | | |
Cornerstone OnDemand, Inc.*,1 | | | 8,158 | | | | 234,950 | | |
Facebook, Inc., Class A* | | | 43,113 | | | | 4,609,642 | | |
Instructure, Inc.*,1 | | | 11,585 | | | | 165,666 | | |
| | | | | | 9,949,643 | | |
IT services—1.77% | |
Cognizant Technology Solutions Corp.,
Class A* | | | 19,885 | | | | 1,133,047 | | |
First Data Corp., Class A* | | | 13,702 | | | | 171,275 | | |
MasterCard, Inc., Class A | | | 14,122 | | | | 1,227,484 | | |
ServiceSource International, Inc.*,1 | | | 30,381 | | | | 123,347 | | |
Visa, Inc., Class A1 | | | 20,885 | | | | 1,511,865 | | |
| | | | | | 4,167,018 | | |
Machinery—0.42% | |
Caterpillar, Inc.1 | | | 5,555 | | | | 376,074 | | |
Colfax Corp.* | | | 9,907 | | | | 250,746 | | |
Cummins, Inc. | | | 3,774 | | | | 368,229 | | |
| | | | | | 995,049 | | |
Media—0.73% | |
CBS Corp., Class B | | | 12,098 | | | | 585,301 | | |
The Walt Disney Co. | | | 7,472 | | | | 713,725 | | |
Time Warner, Inc. | | | 6,189 | | | | 409,712 | | |
| | | | | | 1,708,738 | | |
Oil, gas & consumable fuels—0.65% | |
Chevron Corp.1 | | | 1,485 | | | | 123,909 | | |
Cobalt International Energy, Inc.* | | | 54,906 | | | | 146,050 | | |
EOG Resources, Inc. | | | 6,176 | | | | 399,834 | | |
Gulfport Energy Corp.*,1 | | | 2,684 | | | | 64,416 | | |
Laredo Petroleum, Inc.*,1 | | | 35,567 | | | | 181,747 | | |
Oasis Petroleum, Inc.* | | | 44,029 | | | | 237,316 | | |
PDC Energy, Inc.*,1 | | | 4,827 | | | | 241,881 | | |
SM Energy Co.1 | | | 14,805 | | | | 133,837 | | |
| | | | | | 1,528,990 | | |
Personal products—0.69% | |
The Estee Lauder Cos., Inc., Class A1 | | | 17,896 | | | | 1,634,442 | | |
Pharmaceuticals—2.37% | |
Allergan PLC* | | | 8,993 | | | | 2,608,959 | | |
Catalent, Inc.* | | | 8,828 | | | | 214,256 | | |
Chimerix, Inc.*,1 | | | 19,595 | | | | 90,333 | | |
Eli Lilly & Co. | | | 4,617 | | | | 332,424 | | |
Impax Laboratories, Inc.* | | | 4,947 | | | | 161,717 | | |
Mallinckrodt PLC* | | | 2,677 | | | | 174,085 | | |
Perrigo Co. PLC1 | | | 5,564 | | | | 702,455 | | |
| | | Shares | | Value | |
Common stocks—(continued) | |
Pharmaceuticals—(concluded) | |
Teva Pharmaceutical Industries Ltd., ADR | | | 4,630 | | | $ | 257,428 | | |
The Medicines Co.*,1 | | | 13,509 | | | | 434,450 | | |
Valeant Pharmaceuticals
International, Inc.* | | | 9,180 | | | | 604,044 | | |
| | | | | | 5,580,151 | | |
Professional services—0.46% | |
Verisk Analytics, Inc.*,1 | | | 14,833 | | | | 1,080,436 | | |
Real estate investment trusts—0.49% | |
Digital Realty Trust, Inc.1 | | | 7,910 | | | | 625,444 | | |
Simon Property Group, Inc. | | | 2,750 | | | | 521,757 | | |
| | | | | | 1,147,201 | | |
Road & rail—0.85% | |
Canadian Pacific Railway Ltd. | | | 10,967 | | | | 1,329,091 | | |
Norfolk Southern Corp. | | | 2,991 | | | | 218,851 | | |
Union Pacific Corp.1 | | | 5,644 | | | | 445,086 | | |
| | | | | | 1,993,028 | | |
Semiconductors & semiconductor equipment—1.65% | |
Broadcom Ltd. | | | 10,922 | | | | 1,463,220 | | |
Lam Research Corp. | | | 3,823 | | | | 280,226 | | |
Maxim Integrated Products, Inc. | | | 8,038 | | | | 272,167 | | |
Mellanox Technologies Ltd.* | | | 5,500 | | | | 279,455 | | |
Micron Technology, Inc.*,1 | | | 47,793 | | | | 508,040 | | |
NXP Semiconductors NV* | | | 3,432 | | | | 244,496 | | |
ON Semiconductor Corp.* | | | 32,949 | | | | 276,442 | | |
Qorvo, Inc.* | | | 6,287 | | | | 283,418 | | |
Skyworks Solutions, Inc. | | | 4,154 | | | | 276,033 | | |
| | | | | | 3,883,497 | | |
Software—2.94% | |
Atlassian Corp. PLC, Class A* | | | 20,800 | | | | 494,416 | | |
Check Point Software Technologies Ltd.*,1 | | | 2,150 | | | | 178,601 | | |
Microsoft Corp. | | | 58,118 | | | | 2,957,044 | | |
Salesforce.com, Inc.* | | | 28,558 | | | | 1,934,804 | | |
ServiceNow, Inc.* | | | 13,786 | | | | 758,092 | | |
Symantec Corp. | | | 5,085 | | | | 98,191 | | |
VMware, Inc., Class A* | | | 10,077 | | | | 508,788 | | |
| | | | | | 6,929,936 | | |
Specialty retail—2.20% | |
Best Buy Co., Inc.1 | | | 9,486 | | | | 307,251 | | |
The Home Depot, Inc. | | | 23,144 | | | | 2,872,633 | | |
The TJX Cos., Inc. | | | 27,026 | | | | 2,002,627 | | |
| | | | | | 5,182,511 | | |
Technology hardware, storage & peripherals—1.42% | |
Apple, Inc. | | | 31,855 | | | | 3,080,060 | | |
Western Digital Corp.1 | | | 6,195 | | | | 269,668 | | |
| | | | | | 3,349,728 | | |
Textiles, apparel & luxury goods—0.84% | |
Nike, Inc., Class B | | | 21,757 | | | | 1,340,014 | | |
Under Armour, Inc., Class A*,1 | | | 7,686 | | | | 643,241 | | |
| | | | | | 1,983,255 | | |
12
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Shares | | Value | |
Common stocks—(concluded) | |
Tobacco—0.39% | |
Philip Morris International, Inc. | | | 10,094 | | | $ | 918,857 | | |
Wireless telecommunication services—0.42% | |
SBA Communications Corp., Class A* | | | 7,765 | | | | 736,821 | | |
T-Mobile US, Inc.* | | | 6,997 | | | | 259,589 | | |
| | | | | | 996,410 | | |
Total common stocks
(cost—$94,621,862) | | | | | 93,960,601 | | |
Investment company—4.43% | |
iShares iBoxx $ Investment Grade
Corporate Bond ETF1
(cost—$10,994,228) | | | 90,700 | | | | 10,431,407 | | |
| | | Face
amount | | | |
US government obligations—15.02% | |
US Treasury Bonds
2.500%, due 02/15/46 | | $ | 225,000 | | | | 219,683 | | |
2.750%, due 11/15/42 | | | 575,000 | | | | 595,035 | | |
2.875%, due 05/15/43 | | | 800,000 | | | | 846,500 | | |
2.875%, due 08/15/45 | | | 150,000 | | | | 157,963 | | |
3.000%, due 05/15/45 | | | 50,000 | | | | 53,986 | | |
3.750%, due 11/15/43 | | | 100,000 | | | | 124,824 | | |
6.250%, due 05/15/30 | | | 200,000 | | | | 305,117 | | |
US Treasury Inflation Index Notes (TIPS)
0.125%, due 04/15/20 | | | 10,884,151 | | | | 10,979,529 | | |
0.375%, due 07/15/25 | | | 15,845,945 | | | | 15,942,304 | | |
0.625%, due 01/15/26 | | | 447,998 | | | | 461,642 | | |
US Treasury Notes
1.000%, due 08/15/18 | | | 1,025,000 | | | | 1,028,844 | | |
1.375%, due 01/31/21 | | | 200,000 | | | | 201,328 | | |
1.750%, due 01/31/23 | | | 950,000 | | | | 964,696 | | |
2.125%, due 12/31/22 | | | 2,225,000 | | | | 2,315,304 | | |
2.250%, due 11/15/25 | | | 1,110,000 | | | | 1,159,733 | | |
Total US government obligations
(cost—$34,722,327) | | | | | 35,356,488 | | |
Mortgage & agency debt securities—5.96% | |
Federal Home Loan Mortgage
Corporation Certificates,
5.000%, due 03/01/38 | | | 48,969 | | | | 54,202 | | |
5.000%, due 11/01/38 | | | 5,749 | | | | 6,320 | | |
5.500%, due 05/01/37 | | | 264,950 | | | | 295,794 | | |
5.500%, due 08/01/40 | | | 42,094 | | | | 47,347 | | |
6.500%, due 08/01/28 | | | 102,412 | | | | 119,603 | | |
| 3.000% TBA | | | 550,000 | | | | 562,783 | | |
| 3.500% TBA | | | 125,000 | | | | 130,476 | | |
Federal National Mortgage
Association Certificates,
4.000%, due 12/01/39 | | | 151,833 | | | | 162,117 | | |
4.000%, due 02/01/41 | | | 82,046 | | | | 87,799 | | |
4.000%, due 08/01/45 | | | 296,437 | | | | 319,606 | | |
4.500%, due 09/01/37 | | | 415,124 | | | | 454,948 | | |
5.000%, due 10/01/39 | | | 23,830 | | | | 26,401 | | |
5.000%, due 05/01/40 | | | 32,912 | | | | 36,606 | | |
| | | Face
amount | | Value | |
Mortgage & agency debt securities—(concluded) | | | |
5.500%, due 08/01/39 | | $ | 141,880 | | | $ | 159,334 | | |
7.000%, due 08/01/32 | | | 184,946 | | | | 206,302 | | |
7.500%, due 02/01/33 | | | 3,745 | | | | 4,359 | | |
| 3.000% TBA | | | 1,850,000 | | | | 1,895,688 | | |
| 3.500% TBA | | | 4,200,000 | | | | 4,400,894 | | |
| 4.000% TBA | | | 200,000 | | | | 213,430 | | |
| 4.500% TBA | | | 1,600,000 | | | | 1,738,520 | | |
Government National Mortgage
Association Certificates I,
4.000%, due 07/15/42 | | | 123,015 | | | | 132,759 | | |
Government National Mortgage
Association Certificates II,
6.000%, due 11/20/28 | | | 1,030 | | | | 1,176 | | |
6.000%, due 02/20/29 | | | 2,409 | | | | 2,806 | | |
6.000%, due 02/20/34 | | | 352,070 | | | | 390,515 | | |
| 3.000% TBA | | | 100,000 | | | | 103,562 | | |
| 3.500% TBA | | | 1,100,000 | | | | 1,161,531 | | |
| 4.000% TBA | | | 1,225,000 | | | | 1,308,262 | | |
Total mortgage & agency
debt securities
(cost—$13,890,623) | | | | | 14,023,140 | | |
Collateralized mortgage obligation—0.02% | | | |
First Horizon Mortgage Pass-Through
Trust, Series 2004-FL1, Class 1A1,
0.706%, due 02/25/353
(cost—$60,927) | | | 60,927 | | | | 54,393 | | |
Asset-backed securities—1.08% | | | |
AmeriCredit Automobile
Receivables Trust,
Series 2012-3, Class C,
2.420%, due 05/08/18 | | | 138,834 | | | | 139,180 | | |
Series 2013-5, Class D,
2.860%, due 12/09/19 | | | 225,000 | | | | 227,168 | | |
Series 2014-1, Class B,
1.680%, due 07/08/19 | | | 100,000 | | | | 99,900 | | |
Series 2014-1, Class D,
2.540%, due 06/08/20 | | | 200,000 | | | | 198,582 | | |
Capital Auto Receivables Asset Trust,
Series 2013-3, Class B,
2.320%, due 07/20/18 | | | 225,000 | | | | 226,368 | | |
Drive Auto Receivables Trust, | |
Series 2015-BA, Class D,
3.840%, due 07/15/212 | | | 300,000 | | | | 292,411 | | |
Series 2015-CA, Class D,
4.200%, due 09/15/212 | | | 225,000 | | | | 220,532 | | |
Series 2015-DA, Class D,
4.590%, due 01/17/232 | | | 200,000 | | | | 197,059 | | |
Ford Credit Auto Owner Trust,
Series 2014-A, Class C,
1.900%, due 09/15/19 | | | 250,000 | | | | 251,944 | | |
Santander Drive Auto Receivables Trust,
Series 2012-1, Class D,
4.560%, due 11/15/17 | | | 359,558 | | | | 362,222 | | |
Series 2012-2, Class D,
3.870%, due 02/15/18 | | | 300,000 | | | | 302,670 | | |
13
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Face
amount | | Value | |
Asset-backed securities—(concluded) | |
Series 2012-3, Class C,
3.010%, due 04/16/18 | | $ | 30,070 | | | $ | 30,133 | | |
Total asset-backed securities
(cost—$2,557,741) | | | | | 2,548,169 | | |
Commercial mortgage-backed securities—1.29% | |
Americold LLC Trust,
Series 2010-ARTA, Class C,
6.811%, due 01/14/292 | | | 125,000 | | | | 138,675 | | |
Boca Hotel Portfolio Trust,
Series 2013-BOCA, Class C,
2.581%, due 08/15/262,3 | | | 250,000 | | | | 248,808 | | |
CDGJ Commercial Mortgage Trust,
Series 2014-BXCH, Class DPA,
3.427%, due 12/15/272,3 | | | 100,000 | | | | 93,714 | | |
CG-CCRE Commercial Mortgage Trust,
Series 2014-FL1, Class C,
2.177%, due 06/15/312,3 | | | 150,000 | | | | 146,946 | | |
Citigroup Commercial Mortgage Trust,
Series 2015-GC33, Class AS,
4.114%, due 09/10/58 | | | 250,000 | | | | 256,430 | | |
COMM Mortgage Trust,
Series 2015-DC1, Class A5,
3.350%, due 02/10/48 | | | 200,000 | | | | 204,032 | | |
Series 2015-DC1, Class C,
4.353%, due 02/10/483 | | | 150,000 | | | | 141,665 | | |
CSMC Trust,
Series 2015-DEAL, Class D,
3.531%, due 04/15/292,3 | | | 275,000 | | | | 257,834 | | |
Extended Stay America Trust,
Series 2013-ESH7, Class B7,
3.604%, due 12/05/312 | | | 225,000 | | | | 223,919 | | |
FDIC Structured Sale Guaranteed Notes,
Series 2010-C1, Class A,
2.980%, due 12/06/202 | | | 86,538 | | | | 88,126 | | |
GAHR Commericial Mortgage Trust,
Series 2015-NRF, Class CFX,
3.382%, due 12/15/192,3 | | | 250,000 | | | | 243,211 | | |
GS Mortgage Securities Trust,
Series 2014-GSFL, Class D,
4.327%, due 07/15/312,3 | | | 300,000 | | | | 297,853 | | |
JP Morgan Chase Commercial
Mortgage Securities Trust,
Series 2014-FL5, Class D,
3.927%, due 07/15/312,3 | | | 300,000 | | | | 280,921 | | |
Morgan Stanley Bank of America
Merrill Lynch Trust,
Series 2015-C25, Class A5,
3.635%, due 10/15/48 | | | 150,000 | | | | 155,812 | | |
NLY Commercial Mortgage Trust,
Series 2014-FL1, Class B,
2.177%, due 11/15/302,3 | | | 172,999 | | | | 172,010 | | |
| | | Face
amount | | Value | |
Commercial mortgage-backed securities—(concluded) | |
WFCG Commercial Mortgage Trust,
Series 2015-BXRP, Class D,
2.998%, due 11/15/292,3 | | $ | 100,428 | | | $ | 96,650 | | |
Total commercial mortgage-backed
securities
(cost—$3,116,144) | | | | | 3,046,606 | | |
Corporate bonds—7.90% | |
Aerospace & defense—0.05% | |
Huntington Ingalls Industries, Inc.
5.000%, due 11/15/252 | | | 25,000 | | | | 26,203 | | |
TransDigm, Inc.
6.000%, due 07/15/22 | | | 100,000 | | | | 97,500 | | |
| | | | | | 123,703 | | |
Auto loans—0.02% | |
General Motors Financial Co., Inc.
3.700%, due 11/24/20 | | | 60,000 | | | | 59,011 | | |
Automobile OEM—0.09% | |
Ford Motor Co.
7.450%, due 07/16/31 | | | 61,000 | | | | 74,743 | | |
General Motors Co.
6.250%, due 10/02/43 | | | 100,000 | | | | 97,864 | | |
6.600%, due 04/01/36 | | | 40,000 | | | | 41,115 | | |
| | | | | | 213,722 | | |
Automotive parts—0.18% | |
Meritor, Inc.
6.250%, due 02/15/24 | | | 50,000 | | | | 40,875 | | |
Schaeffler Holding Finance BV
6.875%, due 08/15/182,4 | | | 200,000 | | | | 205,000 | | |
The Goodyear Tire & Rubber Co.
5.125%, due 11/15/23 | | | 25,000 | | | | 25,687 | | |
ZF North America Capital, Inc.
4.750%, due 04/29/252 | | | 150,000 | | | | 143,250 | | |
| | | | | | 414,812 | | |
Banking-non-US—0.13% | |
Australia & New Zealand Banking Group Ltd. MTN
2.700%, due 11/16/20 | | | 50,000 | | | | 50,844 | | |
Lloyds Banking Group PLC
4.500%, due 11/04/24 | | | 200,000 | | | | 198,244 | | |
RBS Capital Trust II
6.425%, due 01/03/343,5 | | | 50,000 | | | | 51,500 | | |
| | | | | | 300,588 | | |
Banking-US—0.69% | |
BB&T Corp. MTN
2.625%, due 06/29/20 | | | 140,000 | | | | 142,025 | | |
CIT Group, Inc.
5.500%, due 02/15/192 | | | 100,000 | | | | 103,312 | | |
Citigroup, Inc.
1.750%, due 05/01/18 | | | 115,000 | | | | 113,862 | | |
5.500%, due 09/13/25 | | | 135,000 | | | | 144,630 | | |
JPMorgan Chase & Co.
4.625%, due 05/10/21 | | | 260,000 | | | | 284,071 | | |
6.750%, due 02/01/243,5 | | | 100,000 | | | | 106,000 | | |
14
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Banking-US—(concluded) | |
Morgan Stanley
4.875%, due 11/01/22 | | $ | 100,000 | | | $ | 105,432 | | |
Morgan Stanley MTN
4.350%, due 09/08/26 | | | 50,000 | | | | 49,813 | | |
5.625%, due 09/23/19 | | | 100,000 | | | | 109,749 | | |
PNC Funding Corp.
3.300%, due 03/08/22 | | | 90,000 | | | | 93,356 | | |
SunTrust Bank
7.250%, due 03/15/18 | | | 100,000 | | | | 110,329 | | |
The Goldman Sachs Group, Inc.
2.875%, due 02/25/21 | | | 30,000 | | | | 30,066 | | |
5.150%, due 05/22/45 | | | 30,000 | | | | 28,609 | | |
5.750%, due 01/24/22 | | | 30,000 | | | | 34,087 | | |
6.150%, due 04/01/18 | | | 105,000 | | | | 113,173 | | |
Wells Fargo & Co.
5.375%, due 11/02/43 | | | 60,000 | | | | 64,921 | | |
| | | | | | 1,633,435 | | |
Building materials—0.22% | |
Boise Cascade Co.
6.375%, due 11/01/20 | | | 125,000 | | | | 121,875 | | |
Builders FirstSource, Inc.
7.625%, due 06/01/212 | | | 75,000 | | | | 76,125 | | |
Masco Corp.
4.450%, due 04/01/25 | | | 100,000 | | | | 99,312 | | |
Summit Materials LLC/
Summit Materials Finance Corp.
6.125%, due 07/15/23 | | | 50,000 | | | | 44,625 | | |
Vulcan Materials Co.
4.500%, due 04/01/25 | | | 50,000 | | | | 50,000 | | |
7.500%, due 06/15/21 | | | 100,000 | | | | 115,750 | | |
| | | | | | 507,687 | | |
Chemicals—0.05% | |
LYB International Finance BV
4.875%, due 03/15/44 | | | 70,000 | | | | 63,815 | | |
Valspar Corp.
4.200%, due 01/15/22 | | | 60,000 | | | | 62,579 | | |
| | | | | | 126,394 | | |
Commercial services—0.07% | |
AECOM
5.875%, due 10/15/24 | | | 100,000 | | | | 99,500 | | |
The ADT Corp.
6.250%, due 10/15/21 | | | 75,000 | | | | 73,125 | | |
| | | | | | 172,625 | | |
Consumer products—0.17% | |
Kimberly-Clark Corp.
3.625%, due 08/01/20 | | | 45,000 | | | | 48,121 | | |
Party City Holdings, Inc.
6.125%, due 08/15/232 | | | 50,000 | | | | 49,000 | | |
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Consumer products—(concluded) | |
Reynolds Group Issuer, Inc./
Reynolds Group Issuer LLC/
Reynolds Group Issuer
(Luxembourg) SA
8.250%, due 02/15/216 | | $ | 200,000 | | | $ | 196,500 | | |
Spectrum Brands, Inc.
6.625%, due 11/15/22 | | | 100,000 | | | | 107,625 | | |
| | | | | | 401,246 | | |
Consumer services—0.11% | |
United Rentals North America, Inc.
4.625%, due 07/15/23 | | | 50,000 | | | | 50,000 | | |
6.125%, due 06/15/23 | | | 150,000 | | | | 153,937 | | |
XLIT Ltd.
6.375%, due 11/15/24 | | | 40,000 | | | | 46,802 | | |
| | | | | | 250,739 | | |
Diversified financial services—0.03% | |
Intercontinental Exchange, Inc.
2.750%, due 12/01/20 | | | 60,000 | | | | 60,990 | | |
Diversified manufacturing—0.06% | |
Illinois Tool Works, Inc.
3.500%, due 03/01/24 | | | 60,000 | | | | 63,643 | | |
WESCO Distribution, Inc.
5.375%, due 12/15/21 | | | 75,000 | | | | 70,687 | | |
| | | | | | 134,330 | | |
Electric-generation—0.12% | |
Calpine Corp.
6.000%, due 01/15/222 | | | 100,000 | | | | 102,500 | | |
NRG Energy, Inc.
6.250%, due 07/15/22 | | | 75,000 | | | | 63,375 | | |
Tennessee Valley Authority
2.875%, due 09/15/24 | | | 120,000 | | | | 126,029 | | |
| | | | | | 291,904 | | |
Electric-integrated—0.47% | |
Alabama Power Co.
6.000%, due 03/01/39 | | | 30,000 | | | | 36,880 | | |
Berkshire Hathaway Energy Co.
3.750%, due 11/15/23 | | | 80,000 | | | | 85,179 | | |
Consolidated Edison Co. of
New York, Inc.
5.850%, due 03/15/36 | | | 45,000 | | | | 54,592 | | |
DTE Electric Co.
3.700%, due 03/15/45 | | | 50,000 | | | | 48,591 | | |
Duke Energy Indiana LLC
6.350%, due 08/15/38 | | | 30,000 | | | | 39,008 | | |
Duke Energy Progress LLC
3.000%, due 09/15/21 | | | 240,000 | | | | 250,715 | | |
Exelon Generation Co. LLC
2.950%, due 01/15/20 | | | 170,000 | | | | 170,069 | | |
Florida Power & Light Co.
5.950%, due 02/01/38 | | | 50,000 | | | | 64,474 | | |
15
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Electric-integrated—(concluded) | |
National Rural Utilities
Cooperative Finance Corp.
2.300%, due 11/01/20 | | $ | 50,000 | | | $ | 50,451 | | |
Northern States Power Co.
2.600%, due 05/15/23 | | | 50,000 | | | | 50,851 | | |
Pacific Gas & Electric Co.
2.950%, due 03/01/26 | | | 30,000 | | | | 30,262 | | |
5.800%, due 03/01/37 | | | 40,000 | | | | 48,319 | | |
PacifiCorp
6.000%, due 01/15/39 | | | 30,000 | | | | 37,707 | | |
Southern California Edison Co.
5.950%, due 02/01/38 | | | 55,000 | | | | 69,835 | | |
Southern Power Co.
5.250%, due 07/15/43 | | | 10,000 | | | | 9,472 | | |
Virginia Electric & Power Co.
3.450%, due 09/01/22 | | | 60,000 | | | | 62,633 | | |
| | | | | | 1,109,038 | | |
Energy-independent—0.07% | |
Anadarko Finance Co., Series B
7.500%, due 05/01/31 | | | 20,000 | | | | 17,928 | | |
Devon Energy Corp.
4.000%, due 07/15/21 | | | 50,000 | | | | 40,842 | | |
Newfield Exploration Co.
5.625%, due 07/01/24 | | | 25,000 | | | | 22,750 | | |
5.750%, due 01/30/22 | | | 25,000 | | | | 23,438 | | |
Repsol Oil & Gas Canada, Inc.
3.750%, due 02/01/21 | | | 50,000 | | | | 35,538 | | |
SM Energy Co.
6.125%, due 11/15/22 | | | 50,000 | | | | 21,750 | | |
| | | | | | 162,246 | | |
Energy-integrated—0.14% | |
BP Capital Markets PLC
3.062%, due 03/17/22 | | | 90,000 | | | | 88,088 | | |
Chevron Corp.
3.191%, due 06/24/23 | | | 90,000 | | | | 90,657 | | |
Exxon Mobil Corp.
4.114%, due 03/01/46 | | | 60,000 | | | | 60,000 | | |
Petro-Canada
6.050%, due 05/15/18 | | | 60,000 | | | | 61,384 | | |
Total Capital International SA
3.750%, due 04/10/24 | | | 40,000 | | | | 40,699 | | |
| | | | | | 340,828 | | |
Energy-refining & marketing—0.04% | |
Calumet Specialty Products Partners LP/
Calumet Finance Corp.
6.500%, due 04/15/21 | | | 25,000 | | | | 15,062 | | |
Valero Energy Corp.
6.625%, due 06/15/37 | | | 75,000 | | | | 74,635 | | |
| | | | | | 89,697 | | |
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Finance-diversified—0.09% | |
Bank of America Corp.
6.110%, due 01/29/37 | | $ | 100,000 | | | $ | 108,864 | | |
Quicken Loans, Inc.
5.750%, due 05/01/252 | | | 100,000 | | | | 93,500 | | |
| | | | | | 202,364 | | |
Finance-non-captive diversified—0.07% | |
Ally Financial, Inc.
4.125%, due 02/13/22 | | | 100,000 | | | | 97,250 | | |
General Electric Co.
6.750%, due 03/15/32 | | | 50,000 | | | | 66,493 | | |
| | | | | | 163,743 | | |
Finance-other—0.38% | |
General Electric Co. MTN
4.650%, due 10/17/21 | | | 50,000 | | | | 56,615 | | |
International Lease Finance Corp.
5.875%, due 04/01/19 | | | 200,000 | | | | 211,250 | | |
KCG Holdings, Inc.
6.875%, due 03/15/202 | | | 100,000 | | | | 84,500 | | |
KfW
0.000%, due 04/18/36 | | | 105,000 | | | | 59,340 | | |
Navient Corp. MTN
8.000%, due 03/25/20 | | | 100,000 | | | | 98,750 | | |
Private Export Funding Corp.
2.300%, due 09/15/20 | | | 250,000 | | | | 257,136 | | |
Springleaf Finance Corp.
5.250%, due 12/15/19 | | | 125,000 | | | | 109,375 | | |
SquareTwo Financial Corp.
11.625%, due 04/01/177 | | | 100,000 | | | | 28,000 | | |
| | | | | | 904,966 | | |
Food/beverage—0.28% | |
Agrokor D.D.
8.875%, due 02/01/202 | | | 200,000 | | | | 209,800 | | |
Anheuser-Busch InBev Finance, Inc.
4.700%, due 02/01/36 | | | 100,000 | | | | 104,859 | | |
4.900%, due 02/01/46 | | | 80,000 | | | | 85,752 | | |
Dean Foods Co.
6.500%, due 03/15/232 | | | 50,000 | | | | 52,610 | | |
Diamond Foods, Inc.
7.000%, due 03/15/192 | | | 25,000 | | | | 25,875 | | |
Kraft Heinz Foods Co.
5.200%, due 07/15/452 | | | 20,000 | | | | 21,538 | | |
PepsiCo, Inc.
4.875%, due 11/01/40 | | | 30,000 | | | | 33,412 | | |
The Kroger Co.
3.850%, due 08/01/23 | | | 110,000 | | | | 117,589 | | |
| | | | | | 651,435 | | |
Gaming—0.17% | |
GLP Capital LP/GLP Financing II, Inc.
4.875%, due 11/01/20 | | | 50,000 | | | | 50,610 | | |
Scientific Games International, Inc.
10.000%, due 12/01/22 | | | 150,000 | | | | 117,750 | | |
16
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Gaming—(concluded) | |
Shingle Springs Tribal Gaming Authority
9.750%, due 09/01/212 | | $ | 100,000 | | | $ | 107,500 | | |
Wynn Las Vegas LLC/
Wynn Las Vegas Capital Corp.
5.375%, due 03/15/22 | | | 125,000 | | | | 125,756 | | |
| | | | | | 401,616 | | |
Gas distributors—0.06% | |
Phillips 66 Partners LP
3.605%, due 02/15/25 | | | 50,000 | | | | 42,609 | | |
Sempra Energy
9.800%, due 02/15/19 | | | 90,000 | | | | 107,621 | | |
| | | | | | 150,230 | | |
Gas pipelines—0.23% | |
Blue Racer Midstream LLC/
Blue Racer Finance Corp.
6.125%, due 11/15/222 | | | 75,000 | | | | 56,250 | | |
Energy Transfer Partners LP
9.000%, due 04/15/19 | | | 110,000 | | | | 113,087 | | |
Genesis Energy LP/
Genesis Energy Finance Corp.
6.000%, due 05/15/23 | | | 50,000 | | | | 39,125 | | |
Kinder Morgan Energy Partners LP
5.000%, due 10/01/21 | | | 85,000 | | | | 79,272 | | |
Sabine Pass Liquefaction LLC
5.625%, due 02/01/216 | | | 100,000 | | | | 95,438 | | |
Sunoco LP/Sunoco Finance Corp.
5.500%, due 08/01/202 | | | 100,000 | | | | 95,500 | | |
Targa Resources Partners LP/
Targa Resources Partners Finance Corp.
6.875%, due 02/01/21 | | | 25,000 | | | | 21,750 | | |
Williams Partners LP
4.300%, due 03/04/24 | | | 60,000 | | | | 46,901 | | |
| | | | | | 547,323 | | |
Health care—0.30% | |
CHS/Community Health Systems, Inc.
7.125%, due 07/15/20 | | | 100,000 | | | | 90,000 | | |
HCA, Inc.
7.500%, due 02/15/22 | | | 200,000 | | | | 225,960 | | |
Hologic, Inc.
5.250%, due 07/15/222 | | | 50,000 | | | | 52,370 | | |
Medtronic, Inc.
4.375%, due 03/15/35 | | | 90,000 | | | | 93,217 | | |
Tenet Healthcare Corp.
6.000%, due 10/01/20 | | | 100,000 | | | | 105,812 | | |
UnitedHealth Group, Inc.
4.625%, due 07/15/35 | | | 50,000 | | | | 53,687 | | |
WellCare Health Plans, Inc.
5.750%, due 11/15/20 | | | 25,000 | | | | 25,688 | | |
Zimmer Biomet Holdings, Inc.
2.700%, due 04/01/20 | | | 50,000 | | | | 50,055 | | |
| | | | | | 696,789 | | |
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Home construction—0.10% | |
CalAtlantic Group, Inc.
8.375%, due 01/15/21 | | $ | 100,000 | | | $ | 114,000 | | |
K. Hovnanian Enterprises, Inc.
7.250%, due 10/15/202 | | | 40,000 | | | | 31,200 | | |
KB Home
7.000%, due 12/15/21 | | | 100,000 | | | | 95,000 | | |
| | | | | | 240,200 | | |
Insurance-life—0.12% | |
Aon PLC
3.500%, due 06/14/24 | | | 60,000 | | | | 60,592 | | |
CNA Financial Corp.
4.500%, due 03/01/26 | | | 40,000 | | | | 40,049 | | |
Hartford Financial Services Group, Inc.
5.950%, due 10/15/36 | | | 40,000 | | | | 47,095 | | |
MetLife, Inc.
4.125%, due 08/13/42 | | | 30,000 | | | | 27,161 | | |
Principal Financial Group, Inc.
8.875%, due 05/15/19 | | | 50,000 | | | | 59,264 | | |
Prudential Financial, Inc. MTN
6.625%, due 12/01/37 | | | 48,000 | | | | 56,429 | | |
| | | | | | 290,590 | | |
Insurance-personal & casualty—0.04% | |
HUB International Ltd.
7.875%, due 10/01/212 | | | 100,000 | | | | 89,500 | | |
Leisure—0.05% | |
NCL Corp. Ltd.
4.625%, due 11/15/202 | | | 35,000 | | | | 34,037 | | |
Royal Caribbean Cruises Ltd.
5.250%, due 11/15/22 | | | 75,000 | | | | 76,125 | | |
| | | | | | 110,162 | | |
Lodging—0.08% | |
Starwood Hotels &
Resorts Worldwide, Inc.
4.500%, due 10/01/34 | | | 80,000 | | | | 72,723 | | |
Wyndham Worldwide Corp.
5.625%, due 03/01/21 | | | 118,000 | | | | 128,215 | | |
| | | | | | 200,938 | | |
Machinery-diversified—0.02% | |
John Deere Capital Corp. MTN
2.450%, due 09/11/20 | | | 40,000 | | | | 40,718 | | |
Media-broadcast/outdoor—0.17% | |
Clear Channel Worldwide
Holdings, Inc., Series B
7.625%, due 03/15/20 | | | 50,000 | | | | 44,000 | | |
iHeartCommunications, Inc.
9.000%, due 12/15/19 | | | 75,000 | | | | 52,875 | | |
Netflix, Inc.
5.875%, due 02/15/25 | | | 100,000 | | | | 104,750 | | |
Sirius XM Radio, Inc.
5.875%, due 10/01/202 | | | 100,000 | | | | 104,500 | | |
17
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Media-broadcast/outdoor—(concluded) | |
The Walt Disney Co. GMTN
2.150%, due 09/17/20 | | $ | 50,000 | | | $ | 50,966 | | |
4.125%, due 06/01/44 | | | 40,000 | | | | 41,266 | | |
| | | | | | 398,357 | | |
Media-cable—0.45% | |
Altice SA
7.750%, due 05/15/222 | | | 200,000 | | | | 193,500 | | |
CCO Holdings LLC/
CCO Holdings Capital Corp.
6.500%, due 04/30/21 | | | 225,000 | | | | 233,860 | | |
Comcast Corp.
6.950%, due 08/15/37 | | | 30,000 | | | | 39,965 | | |
DIRECTV Holdings LLC/
DIRECTV Financing Co., Inc.
6.000%, due 08/15/40 | | | 70,000 | | | | 72,170 | | |
DISH DBS Corp.
5.875%, due 11/15/24 | | | 75,000 | | | | 67,391 | | |
NBCUniversal Media LLC
4.375%, due 04/01/21 | | | 40,000 | | | | 44,146 | | |
Numericable-SFR SA
6.250%, due 05/15/242 | | | 200,000 | | | | 195,000 | | |
TCI Communications, Inc.
7.875%, due 02/15/26 | | | 50,000 | | | | 68,177 | | |
Time Warner Entertainment Co. LP
8.375%, due 03/15/23 | | | 35,000 | | | | 42,520 | | |
Unitymedia Hessen GmbH & Co. KG/
Unitymedia NRW GmbH
5.500%, due 01/15/232 | | | 100,000 | | | | 104,750 | | |
| | | | | | 1,061,479 | | |
Media-diversified—0.05% | |
TEGNA, Inc.
6.375%, due 10/15/23 | | | 100,000 | | | | 107,250 | | |
Media-non cable—0.03% | |
Intelsat Jackson Holdings SA
5.500%, due 08/01/23 | | | 100,000 | | | | 65,000 | | |
Media-publishing—0.02% | |
The McClatchy Co.
9.000%, due 12/15/22 | | | 50,000 | | | | 44,000 | | |
Metals & mining—0.17% | |
Alcoa, Inc.
5.125%, due 10/01/24 | | | 40,000 | | | | 36,150 | | |
ArcelorMittal
7.250%, due 02/25/226 | | | 50,000 | | | | 45,000 | | |
10.850%, due 06/01/196 | | | 75,000 | | | | 78,938 | | |
Barrick North America Finance LLC
4.400%, due 05/30/21 | | | 25,000 | | | | 24,517 | | |
Steel Dynamics, Inc.
5.250%, due 04/15/23 | | | 50,000 | | | | 46,875 | | |
TMS International Corp.
7.625%, due 10/15/218 | | | 150,000 | | | | 113,625 | | |
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Metals & mining—(concluded) | |
Vale Overseas Ltd.
4.375%, due 01/11/22 | | $ | 65,000 | | | $ | 49,868 | | |
| | | | | | 394,973 | | |
Oil & gas—0.13% | |
Petroleos Mexicanos
3.500%, due 07/18/18 | | | 100,000 | | | | 99,250 | | |
3.500%, due 01/30/23 | | | 110,000 | | | | 95,205 | | |
6.375%, due 01/23/45 | | | 80,000 | | | | 69,196 | | |
Statoil ASA
4.800%, due 11/08/43 | | | 50,000 | | | | 50,107 | | |
| | | | | | 313,758 | | |
Oil field equipment & services—0.01% | |
SESI LLC
7.125%, due 12/15/21 | | | 50,000 | | | | 30,688 | | |
Packaging & containers—0.08% | |
Ball Corp.
4.375%, due 12/15/20 | | | 50,000 | | | | 52,250 | | |
Berry Plastics Corp.
5.125%, due 07/15/23 | | | 50,000 | | | | 50,000 | | |
Owens-Brockway Glass Container, Inc.
5.875%, due 08/15/232 | | | 75,000 | | | | 77,250 | | |
| | | | | | 179,500 | | |
Paper & forest products—0.03% | |
Georgia-Pacific LLC
8.000%, due 01/15/24 | | | 20,000 | | | | 25,218 | | |
International Paper Co.
3.800%, due 01/15/26 | | | 50,000 | | | | 48,501 | | |
| | | | | | 73,719 | | |
Pharmaceuticals—0.40% | |
AbbVie, Inc.
2.500%, due 05/14/20 | | | 120,000 | | | | 119,920 | | |
Actavis Funding SCS
3.000%, due 03/12/20 | | | 50,000 | | | | 50,861 | | |
3.800%, due 03/15/25 | | | 40,000 | | | | 41,186 | | |
Biogen, Inc.
4.050%, due 09/15/25 | | | 50,000 | | | | 52,041 | | |
Capsugel SA
7.000%, due 05/15/192,4 | | | 175,000 | | | | 175,109 | | |
Endo Finance LLC & Endo Finco, Inc.
7.750%, due 01/15/222,6 | | | 125,000 | | | | 129,687 | | |
Gilead Sciences, Inc.
4.750%, due 03/01/46 | | | 90,000 | | | | 94,928 | | |
Pfizer, Inc.
7.200%, due 03/15/39 | | | 70,000 | | | | 97,516 | | |
Teva Pharmaceutical Finance IV BV
3.650%, due 11/10/21 | | | 41,000 | | | | 42,218 | | |
Valeant Pharmaceuticals International, Inc.
6.750%, due 08/15/182 | | | 100,000 | | | | 94,000 | | |
7.500%, due 07/15/212 | | | 50,000 | | | | 45,750 | | |
| | | | | | 943,216 | | |
18
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Railroads—0.03% | |
Burlington Northern Santa Fe LLC
6.150%, due 05/01/37 | | $ | 25,000 | | | $ | 30,604 | | |
Norfolk Southern Corp.
3.250%, due 12/01/21 | | | 50,000 | | | | 50,308 | | |
| | | | | | 80,912 | | |
Real estate investment trusts—0.11% | |
AvalonBay Communities, Inc. MTN
3.450%, due 06/01/25 | | | 70,000 | | | | 71,430 | | |
ERP Operating LP
4.500%, due 06/01/45 | | | 20,000 | | | | 20,442 | | |
4.750%, due 07/15/20 | | | 35,000 | | | | 38,014 | | |
Ventas Realty LP
3.500%, due 02/01/25 | | | 35,000 | | | | 33,915 | | |
3.750%, due 05/01/24 | | | 90,000 | | | | 89,927 | | |
| | | | | | 253,728 | | |
Restaurants—0.02% | |
McDonald's Corp. MTN
2.100%, due 12/07/18 | | | 40,000 | | | | 40,517 | | |
Retail-specialty—0.26% | |
Beacon Roofing Supply, Inc.
6.375%, due 10/01/232 | | | 25,000 | | | | 26,375 | | |
CVS Health Corp.
3.500%, due 07/20/22 | | | 60,000 | | | | 62,671 | | |
4.750%, due 12/01/222 | | | 100,000 | | | | 109,501 | | |
5.125%, due 07/20/45 | | | 25,000 | | | | 28,056 | | |
Dollar General Corp.
3.250%, due 04/15/23 | | | 80,000 | | | | 78,973 | | |
Dollar Tree, Inc.
5.750%, due 03/01/232 | | | 25,000 | | | | 26,594 | | |
Lowe's Cos., Inc.
4.650%, due 04/15/42 | | | 60,000 | | | | 64,793 | | |
Michaels Stores, Inc.
5.875%, due 12/15/202 | | | 100,000 | | | | 103,000 | | |
The Home Depot, Inc.
3.350%, due 09/15/25 | | | 40,000 | | | | 42,517 | | |
Wal-Mart Stores, Inc.
4.300%, due 04/22/44 | | | 60,000 | | | | 63,348 | | |
| | | | | | 605,828 | | |
Technology-hardware—0.15% | |
Cisco Systems, Inc.
5.900%, due 02/15/39 | | | 50,000 | | | | 61,891 | | |
Equinix, Inc.
5.375%, due 04/01/23 | | | 100,000 | | | | 106,970 | | |
NCR Corp.
6.375%, due 12/15/23 | | | 75,000 | | | | 73,500 | | |
NXP BV/NXP Funding LLC
5.750%, due 02/15/212 | | | 100,000 | | | | 104,000 | | |
| | | | | | 346,361 | | |
| | | Face
amount | | Value | |
Corporate bonds—(continued) | |
Technology-software—0.34% | |
Apple, Inc.
3.850%, due 05/04/43 | | $ | 80,000 | | | $ | 74,826 | | |
First Data Corp.
5.750%, due 01/15/242 | | | 30,000 | | | | 30,188 | | |
7.000%, due 12/01/232 | | | 75,000 | | | | 74,887 | | |
Infor US, Inc.
6.500%, due 05/15/222 | | | 100,000 | | | | 86,750 | | |
International Business Machines Corp.
2.250%, due 02/19/21 | | | 50,000 | | | | 50,324 | | |
Iron Mountain, Inc.
6.000%, due 10/01/202 | | | 50,000 | | | | 53,000 | | |
Juniper Networks, Inc.
3.300%, due 06/15/20 | | | 70,000 | | | | 70,655 | | |
Microsoft Corp.
2.375%, due 02/12/22 | | | 80,000 | | | | 81,532 | | |
4.450%, due 11/03/45 | | | 40,000 | | | | 42,891 | | |
MSCI, Inc.
5.750%, due 08/15/252 | | | 75,000 | | | | 80,906 | | |
Oracle Corp.
2.500%, due 05/15/22 | | | 80,000 | | | | 80,453 | | |
5.375%, due 07/15/40 | | | 30,000 | | | | 34,368 | | |
Texas Instruments, Inc.
1.650%, due 08/03/19 | | | 30,000 | | | | 30,029 | | |
| | | | | | 790,809 | | |
Telecom-wireless—0.11% | |
America Movil SAB de CV
3.125%, due 07/16/22 | | | 40,000 | | | | 39,858 | | |
Rogers Communications, Inc.
5.000%, due 03/15/44 | | | 30,000 | | | | 30,734 | | |
Sprint Corp.
7.250%, due 09/15/21 | | | 175,000 | | | | 131,688 | | |
7.625%, due 02/15/25 | | | 75,000 | | | | 53,625 | | |
| | | | | | 255,905 | | |
Telephone-integrated—0.41% | |
CenturyLink, Inc.
6.750%, due 12/01/23 | | | 125,000 | | | | 122,500 | | |
Cogent Communications Group, Inc.
5.375%, due 03/01/222 | | | 75,000 | | | | 72,562 | | |
Frontier Communications Corp.
8.500%, due 04/15/20 | | | 125,000 | | | | 127,187 | | |
10.500%, due 09/15/222 | | | 25,000 | | | | 25,344 | | |
11.000%, due 09/15/252 | | | 50,000 | | | | 50,063 | | |
Sprint Communications, Inc.
9.000%, due 11/15/182 | | | 175,000 | | | | 181,667 | | |
Verizon Communications, Inc.
4.500%, due 09/15/20 | | | 200,000 | | | | 217,506 | | |
4.522%, due 09/15/48 | | | 115,000 | | | | 104,919 | | |
6.400%, due 09/15/33 | | | 11,000 | | | | 12,820 | | |
Windstream Services LLC
7.750%, due 10/01/21 | | | 75,000 | | | | 60,516 | | |
| | | | | | 975,084 | | |
19
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
| | | Face
amount | | Value | |
Corporate bonds—(concluded) | |
Textiles & apparel—0.02% | |
The William Carter Co.
5.250%, due 08/15/21 | | $ | 50,000 | | | $ | 51,000 | | |
Tobacco—0.14% | |
Altria Group, Inc.
9.250%, due 08/06/19 | | | 50,000 | | | | 61,237 | | |
9.950%, due 11/10/38 | | | 21,000 | | | | 34,391 | | |
Philip Morris International, Inc.
2.900%, due 11/15/21 | | | 230,000 | | | | 239,179 | | |
| | | | | | 334,807 | | |
Transportation services—0.07% | |
FedEx Corp.
2.625%, due 08/01/22 | | | 110,000 | | | | 108,030 | | |
Navios Maritime Acquisition Corp./
Navios Acquisition Finance US, Inc.
8.125%, due 11/15/212 | | | 75,000 | | | | 52,687 | | |
| | | | | | 160,717 | | |
Total corporate bonds
(cost—$19,334,186) | | | | | 18,591,177 | | |
Non-US government obligations—0.45% | |
Chile Government International Bond
3.250%, due 09/14/21 | | | 100,000 | | | | 105,750 | | |
Colombia Government International Bond
8.125%, due 05/21/24 | | | 80,000 | | | | 96,200 | | |
Israel Government International Bond
5.500%, due 09/18/33 | | | 175,000 | | | | 237,279 | | |
Mexico Government International Bond
4.000%, due 10/02/23 | | | 160,000 | | | | 164,560 | | |
Mexico Government International Bond MTN
6.750%, due 09/27/34 | | | 25,000 | | | | 30,938 | | |
Peruvian Government International Bond
7.350%, due 07/21/25 | | | 100,000 | | | | 128,000 | | |
Philippine Government International Bond
10.625%, due 03/16/25 | | | 80,000 | | | | 128,100 | | |
Poland Government International Bond
5.000%, due 03/23/22 | | | 35,000 | | | | 39,132 | | |
Turkey Government International Bond
6.750%, due 04/03/18 | | | 120,000 | | | | 128,520 | | |
Total non-US government obligations
(cost—$1,046,333) | | | | | 1,058,479 | | |
Municipal bonds and notes—0.27% | |
California—0.12% | |
California (Build America Bonds)
7.550%, due 04/01/39 | | | 180,000 | | | | 268,221 | | |
Illinois—0.13% | |
Chicago Transit Authority Sales &
Transfer Tax Receipts Revenue,
Taxable Pension Funding, Series A,
6.899%, due 12/01/40 | | | 55,000 | | | | 65,297 | | |
State of Illinois
5.877%, due 03/01/19 | | | 225,000 | | | | 241,794 | | |
| | | | | | 307,091 | | |
| | | Face
amount | | Value | |
Municipal bonds and notes—(concluded) | |
New York—0.02% | |
Metropolitan Transportation
Authority Revenue (Build America Bonds)
6.668%, due 11/15/39 | | $ | 40,000 | | | $ | 54,042 | | |
Total municipal bonds and notes
(cost—$604,835) | | | | | 629,354 | | |
Short-term US government obligations—10.74% | |
US Treasury Bills
0.240%, due 03/10/169 | | | 24,000,000 | | | | 23,998,944 | | |
0.282%, due 06/09/169 | | | 1,280,000 | | | | 1,278,884 | | |
Total short-term US government
obligations
(cost—$25,277,615) | | | | �� | 25,277,828 | | |
Repurchase agreement—15.81% | |
Repurchase agreement dated
02/29/16 with State Street Bank
and Trust Co., 0.010% due
03/01/16, collateralized by
$12,338,776 US Treasury Bonds,
8.000% to 8.125% due 08/15/21
to 11/15/21 and $19,985,771
US Treasury Notes, 1.625% to
3.750% due 11/15/18 to
08/15/21; (value—$37,958,453);
proceeds: $37,214,010
(cost—$37,214,000) | | | 37,214,000 | | | | 37,214,000 | | |
| | | Shares | | | |
Investment of cash collateral from securities loaned—5.23% | |
Money market fund—5.23% | |
UBS Private Money Market Fund LLC10
(cost—$12,314,252) | | | 12,314,252 | | | | 12,314,252 | | |
Total investments
(cost—$255,755,073)—108.11% | | | | | 254,505,894 | | |
Liabilities in excess of
other assets—(8.11)% | | | | | (19,094,915 | ) | |
Net assets—100.00% | | | | $ | 235,410,979 | | |
20
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
For a listing of defined portfolio acronyms that are used throughout the Portfolio of investments as well as the tables that follow, please refer to page 23.
Aggregate cost for federal income tax purposes was substantially the same for book purposes; and net unrealized depreciation consisted of:
Gross unrealized appreciation | | $ | 9,605,478 | | |
Gross unrealized depreciation | | | (10,854,657 | ) | |
Net unrealized depreciation | | $ | (1,249,179 | ) | |
Futures contracts
Number of
contracts | | | | Expiration
date | | Cost | | Current
value | | Unrealized
appreciation
(depreciation) | |
Index futures buy contracts: | | | |
| | 88 | | | Russell 2000 Mini Index Futures | | March 2016 | | $ | 9,838,444 | | | $ | 9,078,960 | | | $ | (759,484 | ) | |
| | 514 | | | S&P 500 E-Mini Index Futures | | March 2016 | | | 51,616,041 | | | | 49,588,150 | | | | (2,027,891 | ) | |
| | | | | | | | | $ | 61,454,485 | | | $ | 58,667,110 | | | $ | (2,787,375 | ) | |
| | | | | | | Proceeds | | | | | |
US Treasury futures sell contracts: | | | |
| | 73 | | | US Treasury Note 5 Year Futures | | June 2016 | | $ | 8,820,916 | | | $ | 8,831,859 | | | $ | (10,943 | ) | |
| | 83 | | | US Treasury Note 10 Year Futures | | June 2016 | | | 10,896,267 | | | | 10,832,797 | | | | 63,470 | | |
| | | | | | | | | $ | 19,717,183 | | | $ | 19,664,656 | | | $ | 52,527 | | |
| | | | | | | | | | | | | $ | (2,734,848 | ) | |
Total return swap agreements7
Counterparty | | Notional
amount | | Termination
date | | Payments
made by
the Portfolio11 | | Payments
received by
the Portfolio11 | | Upfront
payments
received
(made) | | Value | | Unrealized
appreciation
(depreciation) | |
BOA
| | | 650,000
| | | 03/21/16
| | 3 month USD
LIBOR | | IBOXX Liquid High
Yield Index | | $ | — | | | $ | (18,904 | ) | | $ | (18,904 | ) | |
GSI
| | | 1,000,000
| | | 03/21/16
| | 3 month USD
LIBOR | | IBOXX Liquid High
Yield Index | | | — | | | | (56,676 | ) | | | (56,676 | ) | |
JPMCB
| | | 150,000
| | | 06/20/16
| | 3 month USD
LIBOR | | IBOXX Liquid High
Yield Index | | | — | | | | 460 | | | | 460 | | |
| | | | | | | | | | | | | | (75,120 | ) | | | (75,120 | ) | |
Fair valuation summary
The following is a summary of the fair valuations according to the inputs used as of February 29, 2016 in valuing the Fund's investments:
Description | | Unadjusted
quoted prices in
active markets for
identical investments
(Level 1) | | Other significant
observable inputs
(Level 2) | | Unobservable
inputs
(Level 3) | | Total | |
Assets | |
Common stocks | | $ | 93,960,601 | | | $ | — | | | $ | — | | | $ | 93,960,601 | | |
Investment company | | | 10,431,407 | | | | — | | | | — | | | | 10,431,407 | | |
US government obligations | | | — | | | | 35,356,488 | | | | — | | | | 35,356,488 | | |
Mortgage & agency debt securities | | | — | | | | 14,023,140 | | | | — | | | | 14,023,140 | | |
Collateralized mortgage obligation | | | — | | | | 54,393 | | | | — | | | | 54,393 | | |
Asset-backed securities | | | — | | | | 2,548,169 | | | | — | | | | 2,548,169 | | |
21
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
Description | | Unadjusted
quoted prices in
active markets for
identical investments
(Level 1) | | Other significant
observable inputs
(Level 2) | | Unobservable
inputs
(Level 3) | | Total | |
Commercial mortgage-backed securities | | $ | — | | | $ | 3,046,606 | | | $ | — | | | $ | 3,046,606 | | |
Corporate bonds | | | — | | | | 18,591,177 | | | | — | | | | 18,591,177 | | |
Non-US government obligations | | | — | | | | 1,058,479 | | | | — | | | | 1,058,479 | | |
Municipal bonds and notes | | | — | | | | 629,354 | | | | — | | | | 629,354 | | |
Short-term US government obligations | | | — | | | | 25,277,828 | | | | — | | | | 25,277,828 | | |
Repurchase agreement | | | — | | | | 37,214,000 | | | | — | | | | 37,214,000 | | |
Investment of cash collateral from securities loaned | | | — | | | | 12,314,252 | | | | — | | | | 12,314,252 | | |
Futures contracts | | | 63,470 | | | | — | | | | — | | | | 63,470 | | |
Swap agreements | | | — | | | | 460 | | | | — | | | | 460 | | |
Total | | $ | 104,455,478 | | | $ | 150,114,346 | | | $ | — | | | $ | 254,569,824 | | |
Liabilities | |
Futures contracts | | $ | (2,798,318 | ) | | $ | — | | | $ | — | | | $ | (2,798,318 | ) | |
Swap agreements | | | — | | | | (75,580 | ) | | | — | | | | (75,580 | ) | |
Total | | $ | (2,798,318 | ) | | $ | (75,580 | ) | | $ | — | | | $ | (2,873,898 | ) | |
At February 29, 2016, there were no transfers between Level 1 and Level 2.
Issuer breakdown by country or territory of origin
| | | Percentage of
total investments | |
United States | | | 94.7 | % | |
Ireland | | | 1.4 | | |
Canada | | | 0.9 | | |
Singapore | | | 0.6 | | |
United Kingdom | | | 0.5 | | |
Israel | | | 0.4 | | |
Luxembourg | | | 0.3 | | |
Netherlands | | | 0.2 | | |
Mexico | | | 0.2 | | |
Bermuda | | | 0.1 | | |
Panama | | | 0.1 | | |
France | | | 0.1 | | |
Croatia | | | 0.1 | | |
Germany | | | 0.1 | | |
Turkey | | | 0.1 | | |
Philippines | | | 0.1 | | |
Peru | | | 0.1 | | |
Chile | | | 0.0 | † | |
Cayman Islands | | | 0.0 | † | |
Colombia | | | 0.0 | † | |
Liberia | | | 0.0 | † | |
Marshall Islands | | | 0.0 | † | |
Australia | | | 0.0 | † | |
Norway | | | 0.0 | † | |
Curacao | | | 0.0 | † | |
Poland | | | 0.0 | † | |
Total | | | 100.0 | % | |
† Amount represents less than 0.05%
22
UBS U.S. Allocation Fund
Portfolio of investments—February 29, 2016 (unaudited)
Portfolio footnotes
* Non-income producing security.
1 Security, or portion thereof, was on loan at February 29, 2016.
2 Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. These securities, which represent 3.07% of net assets as of February 29, 2016, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
3 Variable or floating rate security. The interest rate shown is the current rate as of February 29, 2016 and changes periodically. The maturity date reflects earlier of reset date or stated maturity date.
4 Payment-in-kind security for which interest may be paid in cash or additional principal, at the discretion of the issuer.
5 Perpetual investment. The maturity date reflects the next call date.
6 Step bond that converts to the noted fixed rate at a designated future date.
7 Illiquid investment as of February 29, 2016.
8 Security exempt from registration pursuant to Rule 144A under the Security Act of 1933. This security, which represents 0.05% of net assets as of February 29, 2016, is considered illiquid and may be sold in transactions exempt from registration, normally to qualified buyers.
9 Rates shown are the discount rates at dates of purchase unless otherwise noted.
10 Investment in affiliated company. See notes to financial statements for additional information
11 Payments made or received are based on the notional amount.
Portfolio acronyms
ADR American Depositary Receipt
BOA Bank of America
FDIC Federal Deposit Insurance Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
GSI Goldman Sachs International
JPMCB JPMorgan Chase Bank
MSCI Morgan Stanley Capital International
MTN Medium Term Note
OEM Original Equipment Manufacturer
TBA (To Be Announced) Security is purchased on a forward commitment basis with an approximate principal amount (generally +/- 1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned.
TIPS Treasury inflation protected securities ("TIPS") are debt securities issued by the US Treasury whose principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. The interest rate paid by the TIPS is fixed, while the principal value rises or falls based on changes in a published Consumer Price Index ("CPI"). Thus, if inflation occurs, the principal and interest payments on TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest payments decrease, although the TIPS principal amounts will not drop below their face amounts at maturity. In exchange for the inflation protection, the TIPS generally pay lower interest rates than typical US Treasury securities. Only if inflation occurs will TIPS offer a higher real yield than a conventional Treasury bond of the same maturity.
See accompanying notes to financial statements.
23
UBS U.S. Allocation Fund
Statement of assets and liabilities
February 29, 2016 (unaudited)
Assets: | |
Investments in unaffiliated securities, at value (cost—$206,226,821)1 | | $ | 204,977,642 | | |
Investments of cash collateral in affiliated issuer from securities loaned, at value (cost—$12,314,252) | | | 12,314,252 | | |
Repurchase agreement, at value (cost—$37,214,000) | | | 37,214,000 | | |
Total investments in securities, at value (cost—$255,755,073) | | $ | 254,505,894 | | |
Cash | | | 11,550 | | |
Cash collateral on futures | | | 3,094,450 | | |
Receivable for investments sold | | | 16,697,758 | | |
Receivable for shares of beneficial interest sold | | | 9,094 | | |
Due from broker | | | 4,112,675 | | |
Receivable for dividends and interest | | | 486,369 | | |
Swap agreements, at value | | | 460 | | |
Other assets | | | 27,923 | | |
Total assets | | | 278,946,173 | | |
Liabilities: | |
Payable for investments purchased | | | 27,873,432 | | |
Payable for cash collateral from securities loaned | | | 12,314,252 | | |
Payable for variation margin on futures contracts | | | 2,734,320 | | |
Payable for shares of beneficial interest repurchased | | | 293,001 | | |
Payable to affiliates | | | 99,587 | | |
Swap agreements, at value | | | 75,580 | | |
Payable for foreign withholding taxes | | | 394 | | |
Accrued expenses and other liabilities | | | 144,628 | | |
Total liabilities | | | 43,535,194 | | |
Net assets: | |
Beneficial interest shares of $0.001 par value (unlimited amount authorized) | | | 260,982,172 | | |
Accumulated undistributed net investment income | | | 33,879 | | |
Accumulated net realized loss | | | (21,545,925 | ) | |
Net unrealized depreciation | | | (4,059,147 | ) | |
Net assets | | $ | 235,410,979 | | |
Class A | |
Net assets | | $ | 149,260,774 | | |
Shares outstanding | | | 3,845,510 | | |
Net asset value per share | | $ | 38.81 | | |
Maximum offering price per share (net asset value plus maximum sales charge of 5.50%) | | $ | 41.07 | | |
Class C | |
Net assets | | $ | 63,666,521 | | |
Shares outstanding | | | 1,693,547 | | |
Net asset value and offering price per share | | $ | 37.59 | | |
Class P | |
Net assets | | $ | 22,483,684 | | |
Shares outstanding | | | 569,723 | | |
Net asset value and offering price per share | | $ | 39.46 | | |
1 Includes $28,067,114 of investments in securities on loan, at value, plus accrued interest and dividends, if any.
See accompanying notes to financial statements.
24
UBS U.S. Allocation Fund
Statement of operations
For the six months ended February 29, 2016 (unaudited)
Investment income: | |
Dividends (net of foreign withholding taxes of $1,403) | | $ | 750,202 | | |
Interest | | | 716,579 | | |
Securities lending income (includes $4,397 earned from an affiliated entity) | | | 34,247 | | |
| | | | 1,501,028 | | |
Expenses: | |
Investment management and administration fees | | | 617,120 | | |
Service fees—Class A | | | 195,659 | | |
Service and distribution fees—Class C | | | 334,824 | | |
Transfer agency and related services fees—Class A | | | 62,712 | | |
Transfer agency and related services fees—Class C | | | 27,875 | | |
Transfer agency and related services fees—Class P | | | 7,530 | | |
Professional fees | | | 82,591 | | |
Custody and accounting fees | | | 49,356 | | |
Reports and notices to shareholders | | | 40,099 | | |
State registration fees | | | 21,871 | | |
Trustees' fees | | | 11,664 | | |
Insurance expense | | | 3,500 | | |
Other expenses | | | 14,293 | | |
Total expenses | | | 1,469,094 | | |
Net investment income | | | 31,934 | | |
Net realized and unrealized gains (losses) from investment activities: | |
Net realized gains (losses) from: | |
Investments | | | 95,837 | | |
Futures | | | (3,200,283 | ) | |
Swaps | | | (469 | ) | |
Foreign currency transactions | | | (52 | ) | |
Net realized loss | | | (3,104,967 | ) | |
Net change in unrealized appreciation/depreciation of: | |
Investments | | | (6,817,867 | ) | |
Futures | | | 1,021,934 | | |
Swaps | | | (75,120 | ) | |
Net change in unrealized appreciation/depreciation | | | (5,871,053 | ) | |
Net realized and unrealized loss from investment activities | | | (8,976,019 | ) | |
Contribution from Advisor | | | 71,624 | | |
Net increase in net assets resulting from operations | | $ | (8,872,462 | ) | |
See accompanying notes to financial statements.
25
UBS U.S. Allocation Fund
Statement of changes in net assets
| | | For the
six months ended
February 29, 2016
(unaudited) | | For the
year ended
August 31, 2015 | |
From operations: | |
Net investment income (loss) | | $ | 31,934 | | | $ | (46,702 | ) | |
Net realized gain (loss) | | | (3,104,967 | ) | | | 26,106,950 | | |
Net change in unrealized depreciation | | | (5,871,053 | ) | | | (23,109,349 | ) | |
Contribution from Advisor | | | 71,624 | | | | — | | |
Net increase (decrease) in net assets resulting from operations | | | (8,872,462 | ) | | | 2,950,899 | | |
Dividends to shareholders from: | |
Net investment income—Class A | | | — | | | | (381,594 | ) | |
Net investment income—Class P | | | — | | | | (105,340 | ) | |
Total dividends to shareholders | | | — | | | | (486,934 | ) | |
From beneficial interest transactions: | |
Net proceeds from shares sold | | | 2,018,381 | | | | 5,835,770 | | |
Cost of shares repurchased | | | (12,692,934 | ) | | | (28,585,394 | ) | |
Proceeds from dividends reinvested | | | — | | | | 439,095 | | |
Net decrease in net assets from beneficial interest transactions | | | (10,674,553 | ) | | | (22,310,529 | ) | |
Redemption fees | | | — | | | | 2,512 | | |
Net decrease in net assets | | | (19,547,015 | ) | | | (19,844,052 | ) | |
Net assets: | |
Beginning of period | | | 254,957,994 | | | | 274,802,046 | | |
End of period | | $ | 235,410,979 | | | $ | 254,957,994 | | |
Accumulated undistributed net investment income | | $ | 33,879 | | | $ | 1,945 | | |
See accompanying notes to financial statements.
26
UBS U.S. Allocation Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
| | | Class A | |
| | | Six months ended
February 29, 2016 | | Years ended August 31, | |
| | | (unaudited) | | 2015 | | 2014 | | 2013 | | 2012 | | 2011 | |
Net asset value, beginning of period | | $ | 40.23 | | | $ | 39.87 | | | $ | 33.85 | | | $ | 30.13 | | | $ | 27.34 | | | $ | 24.16 | | |
Net investment income1 | | | 0.04 | | | | 0.07 | | | | 0.13 | | | | 0.16 | | | | 0.15 | | | | 0.25 | | |
Net realized and unrealized gains (losses) | | | (1.47 | ) | | | 0.38 | | | | 6.06 | | | | 3.72 | | | | 2.94 | | | | 3.34 | | |
Net increase from payment by Advisor | | | 0.01 | | | | — | | | | — | | | | — | | | | — | | | | — | | |
Net increase (decrease) from operations | | | (1.42 | ) | | | 0.45 | | | | 6.19 | | | | 3.88 | | | | 3.09 | | | | 3.59 | | |
Dividends from net investment income | | | — | | | | (0.09 | ) | | | (0.17 | ) | | | (0.16 | ) | | | (0.30 | ) | | | (0.41 | ) | |
Net asset value, end of period | | $ | 38.81 | | | $ | 40.23 | | | $ | 39.87 | | | $ | 33.85 | | | $ | 30.13 | | | $ | 27.34 | | |
Total investment return2 | | | (3.53 | )%3 | | | 1.13 | % | | | 18.35 | % | | | 12.92 | % | | | 11.42 | % | | | 14.85 | % | |
Ratios to average net assets: | |
Expenses | | | 1.01 | %4 | | | 0.99 | % | | | 1.00 | % | | | 1.03 | % | | | 1.03 | % | | | 1.02 | % | |
Net investment income | | | 0.20 | %4 | | | 0.16 | % | | | 0.35 | % | | | 0.51 | % | | | 0.53 | % | | | 0.92 | % | |
Supplemental data: | |
Net assets, end of period (000's) | | $ | 149,261 | | | $ | 161,437 | | | $ | 175,249 | | | $ | 167,031 | | | $ | 173,218 | | | $ | 178,780 | | |
Portfolio turnover | | | 141 | % | | | 283 | % | | | 240 | % | | | 148 | % | | | 150 | % | | | 157 | % | |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges or redemption fees; results would be lower if they were included. Total investment return for the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
3 During the period ended February 29, 2016, the Advisor reimbursed the Fund for a trading error in the amount of $71,624. If payment from Advisor was not made, total return would have been -3.55% for Class A.
4 Annualized.
See accompanying notes to financial statements.
27
UBS U.S. Allocation Fund
Financial highlights (continued)
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
| | | Class C | |
| | | Six months ended
February 29, 2016 | | Years ended August 31, | |
| | | (unaudited) | | 2015 | | 2014 | | 2013 | | 2012 | | 2011 | |
Net asset value, beginning of period | | $ | 39.11 | | | $ | 38.97 | | | $ | 33.17 | | | $ | 29.60 | | | $ | 26.83 | | | $ | 23.70 | | |
Net investment income (loss)1 | | | (0.11 | ) | | | (0.24 | ) | | | (0.15 | ) | | | (0.08 | ) | | | (0.06 | ) | | | 0.04 | | |
Net realized and unrealized gains (losses) | | | (1.42 | ) | | | 0.38 | | | | 5.95 | | | | 3.65 | | | | 2.89 | | | | 3.28 | | |
Net increase from payment by Advisor | | | 0.01 | | | | — | | | | — | | | | — | | | | — | | | | — | | |
Net increase (decrease) from operations | | | (1.52 | ) | | | 0.14 | | | | 5.80 | | | | 3.57 | | | | 2.83 | | | | 3.32 | | |
Dividends from net investment income | | | — | | | | — | | | | — | | | | — | | | | (0.06 | ) | | | (0.19 | ) | |
Net asset value, end of period | | $ | 37.59 | | | $ | 39.11 | | | $ | 38.97 | | | $ | 33.17 | | | $ | 29.60 | | | $ | 26.83 | | |
Total investment return2 | | | (3.89 | )%3 | | | 0.36 | % | | | 17.49 | % | | | 12.06 | % | | | 10.59 | % | | | 14.00 | % | |
Ratios to average net assets: | |
Expenses | | | 1.76 | %4 | | | 1.75 | % | | | 1.75 | % | | | 1.79 | % | | | 1.79 | % | | | 1.77 | % | |
Net investment income (loss) | | | (0.55 | )%4 | | | (0.59 | )% | | | (0.41 | )% | | | (0.25 | )% | | | (0.23 | )% | | | 0.16 | % | |
Supplemental data: | |
Net assets, end of period (000's) | | $ | 63,667 | | | $ | 68,772 | | | $ | 74,707 | | | $ | 68,735 | | | $ | 70,215 | | | $ | 74,702 | | |
Portfolio turnover | | | 141 | % | | | 283 | % | | | 240 | % | | | 148 | % | | | 150 | % | | | 157 | % | |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges or redemption fees; results would be lower if they were included. Total investment return for the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
3 During the period ended February 29, 2016, the Advisor reimbursed the Fund for a trading error in the amount of $71,624. If payment from Advisor was not made, total return would have been -3.91% for Class C.
4 Annualized.
See accompanying notes to financial statements.
28
UBS U.S. Allocation Fund
Financial highlights (concluded)
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
| | | Class P5 | |
| | | Six months ended
February 29, 2016 | | Years ended August 31, | |
| | | (unaudited) | | 2015 | | 2014 | | 2013 | | 2012 | | 2011 | |
Net asset value, beginning of period | | $ | 40.85 | | | $ | 40.45 | | | $ | 34.32 | | | $ | 30.54 | | | $ | 27.72 | | | $ | 24.51 | | |
Net investment income1 | | | 0.10 | | | | 0.18 | | | | 0.24 | | | | 0.26 | | | | 0.24 | | | | 0.34 | | |
Net realized and unrealized gains (losses) | | | (1.50 | ) | | | 0.38 | | | | 6.15 | | | | 3.76 | | | | 2.97 | | | | 3.37 | | |
Net increase from payment by Advisor | | | 0.01 | | | | — | | | | — | | | | — | | | | — | | | | — | | |
Net increase (decrease) from operations | | | (1.39 | ) | | | 0.56 | | | | 6.39 | | | | 4.02 | | | | 3.21 | | | | 3.71 | | |
Dividends from net investment income | | | — | | | | (0.16 | ) | | | (0.26 | ) | | | (0.24 | ) | | | (0.39 | ) | | | (0.50 | ) | |
Net asset value, end of period | | $ | 39.46 | | | $ | 40.85 | | | $ | 40.45 | | | $ | 34.32 | | | $ | 30.54 | | | $ | 27.72 | | |
Total investment return2 | | | (3.40 | )%3 | | | 1.40 | % | | | 18.71 | % | | | 13.24 | % | | | 11.74 | % | | | 15.17 | % | |
Ratios to average net assets: | |
Expenses | | | 0.74 | %4 | | | 0.73 | % | | | 0.72 | % | | | 0.75 | % | | | 0.75 | % | | | 0.73 | % | |
Net investment income | | | 0.47 | %4 | | | 0.43 | % | | | 0.63 | % | | | 0.78 | % | | | 0.81 | % | | | 1.20 | % | |
Supplemental data: | |
Net assets, end of period (000's) | | $ | 22,484 | | | $ | 24,749 | | | $ | 24,846 | | | $ | 19,054 | | | $ | 18,911 | | | $ | 19,287 | | |
Portfolio turnover | | | 141 | % | | | 283 | % | | | 240 | % | | | 148 | % | | | 150 | % | | | 157 | % | |
1 Calculated using the average shares method.
2 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, at net asset value on the ex-dividend dates, and a sale at net asset value on the last day of each period reported. The figures do not include any applicable sales charges or redemption fees; results would be lower if they were included. Total investment return for the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
3 During the period ended February 29, 2016, the Advisor reimbursed the Fund for a trading error in the amount of $71,624. If payment from Advisor was not made, total return would have been -3.43% for Class P.
4 Annualized.
5 Effective July 28, 2014, Class Y shares were redesignated as Class P shares.
See accompanying notes to financial statements.
29
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Organization and significant accounting policies
UBS U.S. Allocation Fund (the "Fund") is a series of UBS Investment Trust (the "Trust") and is registered with the US Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end, diversified management investment company. The Trust was organized on March 28, 1991, as a business trust under the laws of the Commonwealth of Massachusetts and currently has one operating series.
The Fund offers Class A, Class C and Class P shares (formerly 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. All classes of shares have equal voting privileges except that Class A and Class C shares each have exclusive voting rights with respect to their respective service and/or distribution plans. Class P 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 such claims or losses through February 29, 2016 pursuant to these contracts and expects the risk of loss to be remote.
The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") is the exclusive reference of authoritative US generally accepted accounting principles ("US GAAP") recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal laws are also sources of authoritative US GAAP for SEC registrants. The Fund's financial statements are prepared in accordance with US GAAP, which may require the use of management estimates and assumptions.
Actual results could differ from those estimates. The following is a summary of significant accounting policies:
Valuation of investments—The Fund calculates its net asset value on days that the New York Stock Exchange ("NYSE") is open. The Fund calculates net asset value separately for each class as of the close of regular trading on the NYSE (generally, 4:00 p.m., Eastern time). If trading on the NYSE is halted for the day before 4:00 p.m., Eastern time, the Fund's net asset value per share will be calculated as of the time trading was halted.
The Fund calculates its net asset value based on the current market value, where available, for its portfolio securities. The Fund normally obtains market values for its investments from independent pricing sources and broker-dealers. Independent pricing sources may use reported last sale prices, official market closing prices, current market quotations or valuations from computerized evaluation systems that derive values based on comparable investments. An evaluation system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluation by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio investments. Investments also may be valued based on appraisals derived from information concerning the investments or similar investments received from recognized dealers in those holdings.
Investments traded in the over-the-counter ("OTC") market and listed on The NASDAQ Stock Market, Inc. ("NASDAQ") normally are valued at the NASDAQ Official Closing Price. Other OTC securities are valued at the last bid price on the valuation date available prior to valuation. Investments which are listed on US and foreign stock exchanges normally are valued at the market closing price, the last sale price on the day the securities are valued or, lacking any sales on such day, at the last available bid price. In cases where investments are traded on more than one exchange, the investments are valued on the exchange designated as the primary market by UBS Asset Management (Americas) Inc. ("UBS AM" or the "Advisor"), the investment advisor of the Fund. UBS AM is an
30
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
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 readily available from an independent pricing source for a particular security, that investment is valued at fair value as determined in good faith by or under the direction of the Board of Trustees (the "Board"). Various factors may be reviewed in order to make a good faith determination of an investment's fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-US securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, these securities are fair valued.
The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt-instruments with 60 days or less remaining to maturity, unless the Board determines that this does not represent fair value. Investments in open-end investment companies are valued at the daily closing net asset value of the respective investment company. Pursuant to the Fund's use of the practical expedient within ASC Topic 820, investments in non-registered investment companies are also valued at the daily net asset value. Futures contracts are generally valued at the settlement price established each day on the exchange on which they are traded. Swaps are marked-to-market daily based upon values from third party vendors or quotations from market makers to the extent available. In the event that the market quotations are not readily available or deemed unreliable, the swap is valued at fair value as determined in good faith by or under the direction of the Board.
The Board has delegated to the UBS AM Global Valuation Committee ("GVC") the responsibility for making fair value determinations with respect to the Fund's holdings. The GVC is comprised of representatives of management. The GVC provides reports to the Board at each quarterly meeting regarding any investments that have been fair valued, valued pursuant to standing instructions approved by the GVC, or where non-vendor pricing sources had been used to make fair value determinations when sufficient information exists during the prior quarter. Fair valuation determinations are subject to review at least monthly by the GVC during scheduled meetings. Pricing decisions, processes, and controls over fair value determinations are subject to internal and external reviews, including annual internal compliance reviews and periodic internal audit reviews of securities valuations.
US GAAP requires disclosure regarding the various inputs that are used in determining the value of the Fund's investments. These inputs are summarized into the three broad levels listed below:
Level 1—Unadjusted quoted prices in active markets for identical investments.
Level 2—Other significant observable inputs, including but not limited to, quoted prices for similar investments, interest rates, prepayment speeds and credit risks.
Level 3—Unobservable inputs inclusive of the Fund's own assumptions in determining the fair value of investments.
In accordance with the requirements of US GAAP, a fair value hierarchy has been included near the end of the Fund's Portfolio of investments.
In May 2015, FASB issued Accounting Standards Update No. 2015-07, Fair Value Measurement (Topic 820): "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)" ("ASU 2015-07"). The modification removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. ASU 2015-07 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those fiscal periods. Management
31
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
is currently evaluating the implications of these changes and their impact on the financial statements and disclosures.
The provisions of ASC Topic 815 "Derivatives and Hedging" ("ASC Topic 815") require qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk related contingent features in derivative agreements. Since investment companies value their derivatives at fair value and recognize changes in fair value through the Statement of operations, they do not qualify for hedge accounting under ASC Topic 815. Accordingly, even though a Fund's investments in derivatives may represent economic hedges, they are considered to be non-hedge transactions for purposes of disclosure under ASC Topic 815. ASC Topic 815 requires (1) objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation, (2) the fair values of derivative instruments and their gains and losses be disclosed in a tabular format, and (3) information be disclosed about credit-risk contingent features of derivatives contracts. The Fund may enter into derivative contracts that may contain credit-risk related contingent features that could be triggered subject to certain circumstances. Such circumstances include agreed upon net asset value thresholds. If triggered, the derivative counterparty could request additional cash margin and/or terminate the derivative contract. Details of this disclosure can be found below as well as in the Portfolio of investments. The Advisor is not aware of any additional credit-risk contingent features on derivative contracts held by the Fund (other than those described earlier). The volume of derivatives that is presented in the Portfolio of investments of the Fund is consistent with the derivative activity during the six months ended February 29, 2016.
At February 29, 2016, the Fund had the following derivatives categorized by underlying risk:
Asset derivatives1
| | | Interest
rate risk | | Equity
risk | | Total | |
Futures contracts | | $ | 63,470 | | | $ | — | | | $ | 63,470 | | |
Swap agreements | | | — | | | | 460 | | | | 460 | | |
Total value | | $ | 63,470 | | | $ | 460 | | | $ | 63,930 | | |
Liability derivatives1 | |
| | | Interest
rate risk | | Equity
risk | | Total | |
Futures contracts | | $ | (10,943 | ) | | $ | (2,787,375 | ) | | $ | (2,798,318 | ) | |
Swap agreements | | | — | | | | (75,580 | ) | | | (75,580 | ) | |
Total value | | $ | (10,943 | ) | | $ | (2,862,955 | ) | | $ | (2,873,898 | ) | |
1 Swaps agreements are shown within swap agreements at value. Future contracts are reported in the table above using the cumulative appreciation (depreciation) as detailed in the futures contract table at the end of the Portfolio of investments, but only the variation margin to be received or paid, if any, is reported within the Statement of assets and liabilities.
32
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Net realized and unrealized gains (losses) from derivative instruments during the period ended February 29, 2016, were as follows:
| | Interest
rate risk | | Equity
risk | | Total | |
Net realized gain (loss)2 | | | | | | | |
Futures contracts | | $ | (164,846 | ) | | $ | (3,035,437 | ) | | $ | (3,200,283 | ) | |
Swap agreements | | | — | | | | (469 | ) | | | (469 | ) | |
Total net realized gain (loss) | | $ | (164,846 | ) | | $ | (3,035,906 | ) | | $ | (3,200,752 | ) | |
Net change in unrealized appreciation/depreciation3 | | | | | | | |
Futures contracts | | | 143 | | | | 1,021,791 | | | | 1,021,934 | | |
Swap agreements | | | — | | | | (75,120 | ) | | | (75,120 | ) | |
Total net change in unrealized appreciation/depreciation | | $ | 143 | | | $ | 946,671 | | | $ | 946,814 | | |
2 The net realized gains (losses) are shown in the Statement of operations in net realized gains from futures and swaps.
3 The net change in unrealized appreciation is shown in the Statement of operations in unrealized appreciation/depreciation of futures and swaps.
In January 2013, Accounting Standards Update 2013-01 ("ASU 2013-01"), "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities", replaced Accounting Standards Update 2011-11 ("ASU 2011-11"), "Disclosures about Offsetting Assets and Liabilities". ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 was intended to enhance disclosure requirements on the offsetting of financial assets and liabilities. ASU 2013-01 limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase and reverse repurchase agreements, and securities lending and borrowing transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting arrangement or similar agreement.
The Fund typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Fund typically may offset with the counterparty certain derivative financial instrument's payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination.
At February 29, 2016, derivative assets and liabilities (by type) on a gross basis were as follows:
Derivative Financial Instruments: | | Assets ($) | | Liabilities ($) | |
Futures contracts | | | 63,470 | | | | (2,798,318 | ) | |
Swap agreements | | | 460 | | | | (75,580 | ) | |
Total gross amount of derivative assets and liabilities in the Statement of Assets and Liabilities | | | 63,930 | | | | (2,873,898 | ) | |
Derivatives not subject to a master netting agreement or similar agreements ("MNA") | | | (63,470 | ) | | | 2,798,318 | | |
Total gross amount of assets and liabilities subject to MNA or similar agreements | | | 460 | | | | (75,580 | ) | |
33
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
The following tables present the Fund's derivative assets and liabilities by counterparty net of amounts available for offset under a MNA and net of the related collateral received/pledged by the Fund as of February 29, 2016.
| Counterparty | | Gross Amount of
Assets ($) | | Financial
Instruments
and
Derivatives
Available for
Offset ($) | | Collateral
Received ($) | | Net Amount
of
Assets ($) | |
JPMCB | | | 460 | | | | — | | | | — | | | | 460 | | |
| Counterparty | | Gross Amount of
Liabilities ($) | | Financial
Instruments
and
Derivatives
Available for
Offset ($) | | Collateral
Pledged ($) | | Net Amount
of
Liabilities ($) | |
BOA | | | (18,904 | ) | | | — | | | | — | | | | (18,904 | ) | |
GSI | | | (56,676 | ) | | | — | | | | — | | | | (56,676 | ) | |
Total | | | (75,580 | ) | | | — | | | | — | | | | (75,580 | ) | |
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 in an effort 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 US government securities (such as commercial paper, corporate bonds, equities 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 or advised by UBS AM in accordance with an exemptive order granted by the SEC pursuant to Section 17(d) of the 1940 Act and Rule 17d-1 thereunder.
The Fund may engage in a repurchase agreement transaction with a yield of zero in order to invest cash amounts remaining in its portfolio at the end of the day in order to avoid having the Fund potentially exposed to a fee for uninvested cash held in a business account at a bank.
Restricted securities—The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities, if any, is included at the end of the Fund's Portfolio of investments.
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.
34
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Interest income is recorded on an accrual basis. Discounts are accreted and premiums are amortized as adjustments to interest income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares (or the value of dividend eligible shares, as appropriate) of each class at the beginning of the day (after adjusting for current capital share activity of the respective classes). Class-specific expenses are charged directly to the applicable class of shares.
Securities traded on to-be-announced basis—The Fund may from time to time purchase securities on a to-be-announced ("TBA") basis. In a TBA transaction, the Fund commits to purchasing or selling securities for which all specific information is not yet known at the time of the trade, particularly the face amount and maturity date of the underlying security transactions. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, normally 15 to 45 days later. Beginning on the date the Fund enters into a TBA transaction, cash, US government securities or other liquid securities are segregated in an amount equal in value to the purchase price of the TBA security. These transactions are subject to market fluctuations, and their current value is determined in the same manner as for other securities.
Purchased options—The Fund may purchase put and call options. Purchasing call options tends to increase exposure to the underlying instrument. Purchasing put options tends to decrease exposure to the underlying instrument. The Fund pays a premium which is included on the Statement of assets and liabilities as an investment and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying future, security or currency transaction to determine the realized gain or loss. Purchased options are shown as fund holdings within the Portfolio of investments and are included in the Statement of assets and liabilities in investments in unaffiliated securities, at value. At February 29, 2016 the Fund did not hold purchased options.
Futures contracts—The Fund may use futures contracts as part of its investment strategy, for hedging purposes to adjust exposure to US and foreign markets in connection with a reallocation of the Fund's assets or to manage the average duration of the Fund. In addition, the Fund may purchase or sell futures contracts or purchase options thereon to increase or reduce its exposure to an asset class without purchasing or selling the underlying securities, either as a hedge or to enhance performance. Using futures contracts involves various market risks, including interest rate and equity risk. Risks of entering into futures contracts include the possibility that there may be an illiquid market or that a change in the value of the contract may not correlate with changes in the value of the underlying securities. To the extent that market prices move in an unexpected direction, there is a risk that the Fund will not achieve the anticipated benefits of the futures contract or may realize a loss.
Upon entering into a futures contract, the Fund is required to deliver to a broker an amount of cash and/or government securities equal to a certain percentage of the contract amount. This amount is known as the "initial margin." Subsequent payments, known as "variation margin", generally are made or received by the Fund each day, depending on the fluctuations in the value of the underlying futures contracts, except that in the case of certain futures contracts payments may be made or received at settlement. Such variation margin is recorded for financial statement purposes on a daily basis as an unrealized gain or loss on futures until the futures contract is closed, at which time the net gain or loss is reclassified to realized gain or loss on futures.
Swap agreements—The Fund may enter into interest rate swap agreements. This type of swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by
35
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
reference to a specified interest rate(s) for a specified amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap agreement to comply with the terms of the agreement. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Fund. Therefore, the Fund considers the creditworthiness of the counterparty to a swap agreement in evaluating potential credit risk.
Inflation swap agreements are used to hedge inflation risk by transferring inflation risk from one party to another through an exchange of cash flows. In an inflation swap, one party pays a fixed rate on a notional principal amount while the other party pays a floating rate linked to an inflation index on that same notional amount. The party paying the floating rate pays the inflation adjusted rate multiplied by the notional principal amount. If the average inflation rate over the term of the swap is the same as the fixed rate of the swap, the two legs will have the same value and the swap will break even.
Total return swap agreements involve commitments to pay or receive interest in exchange for a market-linked return both based on a notional amount. To the extent the total return of the security or index underlying the transactions exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty. Total return swaps are marked-to-market daily, and the change, if any, is recorded as unrealized appreciation or depreciation. Total return swap agreements are subject to general market risk, liquidity risk, counterparty risk, interest risk, credit risk and the risk that there may be unfavorable changes in the underlying investments or instruments.
Certain clearinghouses currently offer clearing for limited types of derivatives transactions, such as interest and credit derivatives. In a cleared derivative transaction, the Fund typically enters into the transaction with a financial institution counterparty, and performance of the transaction is effectively guaranteed by a central clearinghouse, thereby reducing or eliminating the Fund's exposure to the credit risk of its original counterparty. The Fund will be required to post specified levels of margin with the clearinghouse or at the instruction of the clearinghouse; the margin required by a clearing house may be greater than the margin the Fund would be required to post in an un-cleared transaction. Only a limited number of transactions are currently eligible for clearing. Centrally cleared swap, if any, are reported on the Statement of assets and liabilities based on variation margin receivable or payable, if any.
The use of swaps involves investment techniques and risks different from those associated with ordinary portfolio security transactions. If UBS AM is incorrect in its forecast of market values, interest rates and other applicable factors, the investment performance of the Fund will be less favorable than it would have been if this investment technique was never used. Swap agreements do not involve the delivery of securities or other underlying assets or principal, and are subject to counterparty risk. If the other party to a swap agreement defaults and fails to consummate the transaction, the Fund's risk of loss will consist of the net amount of payments that the Fund is contractually entitled to receive. Therefore, the Fund would consider the creditworthiness of the counterparty to a swap agreement in evaluating potential credit risk.
The Fund accrues for interim payments on swap agreements on a daily basis, with the net amount recorded within swap agreements on the Statement of assets and liabilities. Once interim payments are settled in cash, the net amount is recorded as realized gain/loss on swaps, in addition to realized gain/loss recorded upon the termination of swap contracts on the Statement of operations. Fluctuations in the value of swap agreements are recorded for financial statement purposes as unrealized appreciation or depreciation of swaps within the Statement of operations.
36
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Dividends and distributions—Dividends and distributions to shareholders are recorded on the ex-dividend date. The amounts of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification.
Concentration of risk—Investing in securities of foreign issuers and currency transactions may involve certain considerations and risks not typically associated with investments in the United States. These risks include revaluation of currencies, adverse fluctuations in foreign currency values and possible adverse political, social and economic developments, including those particular to a specific industry, country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable US companies and US government securities. These risks are greater with respect to securities of issuers located in emerging market countries. 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, state or region.
Investment advisor and administrator fees and other transactions with affiliates
The Board has approved an Investment Advisory and Administration Contract (the "Advisory Contract"), under which UBS AM serves as investment advisor and administrator of the Fund. In accordance with the Advisory Contract, the Fund is to pay UBS AM an investment advisory and administration fee, which is to be accrued daily and paid monthly, at an annual rate of 0.50% of the Fund's average daily net assets up to $250 million and 0.45% thereafter.
UBS AM has agreed to permanently reduce its advisory and administration fee based on the Fund's average daily net assets so that it is assessed as follows: $0 to $250 million—0.50%; in excess of $250 million up to $500 million—0.45%; in excess of $500 million up to $2 billion—0.40%; and over $2 billion—0.35%. Accordingly, for the six months ended February 29, 2016, UBS AM did not waive any investment advisory and administration fees. At February 29, 2016, the Fund owed UBS AM $92,170 for investment advisory and administration fees.
UBS AM has contractually undertaken to waive fees/reimburse a portion of the Fund's expenses, when necessary, to maintain the total annual operating expenses (excluding (1) dividend expense, borrowing costs and interest expense relating to short sales, and (2) investments in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses, if any) of Class A, Class C and Class P shares at a level not to exceed 1.15%, 1.90% and 0.90%, respectively through December 31, 2016. The Fund will repay UBS AM for any previously waived fees/reimbursed expenses during the three-year period following August 31, 2013, to the extent that operating expenses (with certain exclusions such as dividend expense, borrowing costs, and interest expense relating to short sales, and interest, taxes, brokerage commissions and extraordinary expenses, if any) are otherwise below the expense caps in effect at the time the fees or expenses were waived/reimbursed. For the six months ended February 29, 2016, the Fund had no fee waivers/expense reimbursements subject to repayment.
For the six months ended February 29, 2016, the Fund paid $659 in brokerage commissions to UBS Securities LLC, an indirect wholly owned subsidiary of UBS AG, for transactions executed on behalf of the Fund.
Under normal conditions, the Fund invests cash collateral from securities lending activities into an affiliated private money market fund, UBS Private Money Market Fund LLC ("Private Money Market"), which operates in compliance with most of the substantive provisions of Rule 2a-7 of the 1940 Act. Private Money Market is managed by UBS AM and is currently offered as a cash management option to mutual funds and certain other accounts managed by the Fund's investment manager. UBS AM acts as managing member and receives a management fee from Private Money Market payable monthly in arrears at the annual rate of 0.10% of Private Money Market's average daily members' equity, minus the aggregate operating expenses of, and incurred by, Private Money Market during each
37
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
such related month, not including investment expenses (including brokerage commissions, taxes, interest charges and other costs with respect to transactions in securities) and extraordinary expenses including litigation expenses, if any. UBS AM may, in its sole discretion, waive all or any portion of the management fee to which it may be entitled from time to time in order to maintain operating expenses or net yields at a certain level. Distributions received from Private Money Market, if any, net of fee rebates paid to borrowers, are reflected as securities lending income in the Statement of operations.
Amounts relating to the investment of cash collateral from securities lending activities for the six months ended February 29, 2016 were as follows:
| Security description | | Value at
08/31/15 | | Purchases
during the
six months
ended
02/29/16 | | Sales
during the
six months
ended
02/29/16 | | Value at
02/29/16 | | Net income
earned from
affiliate for the
six months
ended
02/29/16 | |
UBS Private Money Market Fund LLC | | $ | 13,553,435 | | | $ | 162,538,786 | | | $ | 163,777,969 | | | $ | 12,314,252 | | | $ | 4,397 | | |
Additional information regarding compensation to affiliate of a board member
Professor Meyer Feldberg serves as a senior advisor to Morgan Stanley, a financial services firm with which the Fund may conduct transactions, resulting in him being an interested trustee of the Fund. The Fund has been informed that Professor Feldberg's role at Morgan Stanley does not involve matters directly affecting any UBS funds. Portfolio transactions are executed through Morgan Stanley based on that firm's ability to provide best execution of the transactions. During the six months ended February 29, 2016, the Fund paid brokerage commissions to Morgan Stanley in the amount of $1,744.
During the six months ended February 29, 2016, the Fund purchased and sold certain securities (e.g., fixed income securities) in principal trades with Morgan Stanley, having an aggregate value of $48,946,413. Morgan Stanley received compensation in connection with these trades, which may have been in the form of a "mark-up" or "mark-down" of the price of the securities, a fee from the issuer for maintaining a commercial paper program, or some other form of compensation. Although the precise amount of this compensation is not generally known by the Fund's investment manager, it is believed that under normal circumstances it represents a small portion of the total value of the transactions.
Service and distribution plans
UBS Asset Management (US) Inc. ("UBS AM (US)") is the principal underwriter of the Fund's shares. Under separate plans of service and/or distribution pertaining to Class A and Class C shares, the Fund pays UBS AM (US) monthly service fees at an annual rate of 0.25% of the average daily net assets of Class A and Class C shares and monthly distribution fees at the annual rate of 0.75% of the average daily net assets of Class C shares. At February 29, 2016, the Fund owed UBS AM (US) $79,041 for service and distribution fees.
UBS AM (US) also receives the proceeds of the initial sales charges paid by shareholders upon the purchase of Class A shares and the contingent deferred sales charges paid by shareholders upon certain redemptions of Class A and Class C shares. UBS AM (US) has informed the Fund that for the six months ended February 29, 2016, it earned $7,406 in initial sales charges on Class A shares and $69 in deferred sales charges on Class C shares.
Transfer agency related services
UBS Financial Services Inc. provides certain services to the Fund pursuant to a delegation of authority from BNY Mellon Investment Servicing (US) Inc. ("BNY Mellon"), the Fund's transfer agent, and is compensated for these services by BNY Mellon, not the Fund.
38
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
For the six months ended February 29, 2016, UBS Financial Services Inc. received from BNY Mellon, not the Fund, $40,441 of the total transfer agency and related service fees paid by the Fund to BNY Mellon.
Securities lending
The Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, US government securities or irrevocable letters of credit in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. The Fund 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, US government securities or irrevocable letters of credit held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees. Cash collateral received is invested in Private Money Market, which is included in the Fund's Portfolio of Investments. State Street Bank and Trust Company serves as the Fund's lending agent.
At February 29, 2016, the Fund had securities on loan at value, cash collateral and non-cash collateral as follows:
Value of securities
on loan | | Cash collateral | | Non-cash
collateral* | | Total collateral | | Security type held
as non-cash
collateral | |
| $ | 28,067,114 | | | $ | 12,314,252 | | | $ | 16,466,005 | | | $ | 28,780,257 | | | US Treasury Notes
and US Treasury Bills | |
* These securities are held for the benefit of the Fund at the Fund's custodian. The Fund cannot repledge or resell this collateral. As such, this collateral is excluded from the Statement of assets and liabilities
Pursuant to Accounting Standards Update ("ASU") No. 2014-11, Transfers & Servicing (Topic 860): "Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures" ("ASU 2014-11"), the gross amount of recognized liabilities for securities lending transactions at February 29, 2016 was $12,314,252. As the securities loaned are subject to termination by the Fund or the borrower at any time, the remaining contractual maturities of the equity securities on loan are considered to be overnight and continuous.
Bank line of credit
The Fund participates with other funds managed or advised by UBS AM in a $75 million committed credit facility with State Street Bank and Trust Company ("Committed Credit Facility"), to be utilized for temporary financing until the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Fund at the request of shareholders and other temporary or emergency purposes. Under the Committed Credit Facility arrangement, the Fund has agreed to pay a commitment fee, pro rata, based on the relative asset size of the funds in the Committed Credit Facility. The Fund borrows at prevailing rates in effect at the time of borrowings. The Fund did not borrow under the Committed Credit Facility during the six months ended February 29, 2016.
Purchases and sales of securities
For the six months ended February 29, 2016, aggregate purchases and sales of portfolio securities, excluding short-term securities and US Government securities, were $42,047,867 and $57,909,002, respectively.
For the six months ended February 29, 2016, aggregate purchases and sales of US Government securities, excluding short-term securities, were $227,109,480 and $220,387,441, respectively.
Shares of beneficial interest
Effective July 28, 2014, Class Y shares were redesignated as Class P shares.
39
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
There is an unlimited amount of $0.001 par value shares of beneficial interest authorized. Transactions in shares of beneficial interest were as follows:
For the six months ended February 29, 2016
| | | Class A | | Class C | | Class P | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 29,831 | | | $ | 1,227,330 | | | | 9,764 | | | $ | 382,258 | | | | 10,061 | | | $ | 408,793 | | |
Shares repurchased | | | (197,313 | ) | | | (7,904,961 | ) | | | (74,743 | ) | | | (2,901,055 | ) | | | (46,247 | ) | | | (1,886,918 | ) | |
Net decrease | | | (167,482 | ) | | $ | (6,677,631 | ) | | | (64,979 | ) | | $ | (2,518,797 | ) | | | (36,186 | ) | | $ | (1,478,125 | ) | |
For the year ended August 31, 2015
| | | Class A | | Class C | | Class P | |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
Shares sold | | | 51,608 | | | $ | 2,082,018 | | | | 11,623 | | | $ | 460,717 | | | | 79,699 | | | $ | 3,293,035 | | |
Shares repurchased | | | (442,614 | ) | | | (18,067,839 | ) | | | (170,283 | ) | | | (6,754,555 | ) | | | (90,519 | ) | | | (3,763,000 | ) | |
Dividends reinvested | | | 8,549 | | | | 340,057 | | | | — | | | | — | | | | 2,457 | | | | 99,038 | | |
Net decrease | | | (382,457 | ) | | $ | (15,645,764 | ) | | | (158,660 | ) | | $ | (6,293,838 | ) | | | (8,363 | ) | | $ | (370,927 | ) | |
Redemption fees
Prior to February 17, 2015 each class of the Fund imposed a 1% redemption fee on shares sold or exchanged within 90 days of their purchase date, subject to limited exemptions as noted in the prospectus. This amount was paid to the Fund. The redemption fees, if any, earned by the Fund are disclosed in the Statement of changes in net assets. Redemption fees for each class of the Fund represent less than $0.005 per share.
Effective February 17, 2015, for purchases of shares on or after that date, the redemption fee was calculated as a percentage of the amount redeemed within 30 days of purchase, if applicable.
Effective August 3, 2015, for purchases of shares on or after that date, the redemption fee was eliminated.
Contribution from Advisor
During the period ended February 29, 2016, the Advisor reimbursed the Fund in the amount of $71,624 for a trading error.
Federal tax status
The Fund intends to distribute substantially all of its income and to comply with the other requirements of the Internal Revenue Code applicable to regulated investment companies. Accordingly, no provision for federal income taxes is required. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, the Fund intends not to be subject to a federal excise tax.
The tax character of distributions paid during the fiscal year ended August 31, 2015 was as follows:
Distributions paid from: | | 2015 | |
Ordinary Income | | $ | 486,934 | | |
The tax character of distributions paid and components of accumulated earnings (deficit) on a tax basis for the current fiscal year will be calculated after the Fund's fiscal year ended August 31, 2016.
40
UBS U.S. Allocation Fund
Notes to financial statements (unaudited)
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"), net capital losses recognized by the Fund after December 22, 2010, may be carried forward indefinitely, and retain their character as short-term and/or long-term losses. The Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
At August 31, 2015, the Fund had a pre-enactment net capital loss carryforward of $21,331,159. This pre-enactment capital loss carryforward is available as a reduction, to the extent provided in the regulations, of any future net realized capital gains and the full amount will expire on August 31, 2018. To the extent that such losses are used to offset future net realized capital gains, it is probable these gains will not be distributed. During the fiscal year ended August 31, 2015, the Fund utilized $20,600,906 of capital loss carryforwards to offset current year realized gains.
ASC 740-10 "Income Taxes—Overall" set forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken. The Fund has analyzed and concluded as of February 29, 2016 that there are no significant uncertain tax positions taken or expected to be taken that would require recognition in the financial statements. The Fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of operations. During the six months ended February 29, 2016, the Fund did not incur any interest or penalties.
Under the applicable foreign tax laws, gains on certain securities held in certain foreign countries may be subject to taxes that will be paid by the Fund.
Each of the tax years in the four year period ended August 31, 2015, remains subject to examination by the Internal Revenue Service and state taxing authorities.
41
UBS U.S. Allocation Fund
General information (unaudited)
Quarterly Form N-Q portfolio schedule
The Fund will file its complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC 0330. Additionally, you may obtain copies of Forms N-Q from the Fund upon request by calling 1-800-647 1568.
Proxy voting policies, procedures and record
You may obtain a description of the Fund's (1) proxy voting policies, (2) proxy voting procedures and (3) information regarding how the Fund voted any proxies related to portfolio securities during the most recent 12-month period ended June 30 for which an SEC filing has been made, without charge, upon request by contacting the Fund directly at 1-800-647 1568, online on the Fund's Web site: www.ubs.com/ubsam-proxy, or on the EDGAR Database on the SEC's Web site (http://www.sec.gov).
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44
Trustees
Richard Q. Armstrong
Chairman
Alan S. Bernikow
Richard R. Burt | | Meyer Feldberg
Bernard H. Garil
Heather R. Higgins
David Malpass | |
Principal Officers
Mark E. Carver
President | | Thomas Disbrow
Vice President and Treasurer | |
Mark F. Kemper
Vice President and Secretary | | | |
Investment Advisor and
Administrator
UBS Asset Management (Americas) Inc.
1285 Avenue of the Americas
New York, New York 10019-6028
Principal Underwriter
UBS Asset Management (US) Inc.
1285 Avenue of the Americas
New York, New York 10019-6028
The financial information included herein is taken from the records of the Fund without examination by independent registered public accountants who do not express an opinion thereon.
This report is not to be used in connection with the offering of shares of the Fund unless accompanied or preceded by an effective prospectus.
© UBS 2016. All rights reserved.
PRESORTED
STANDARD
U.S. POSTAGE
PAID
COMPUTERSHARE
UBS Asset Management (Americas) Inc.
1285 Avenue of the Americas
New York, NY 10019-6028
Item 2. Code of Ethics.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 3. Audit Committee Financial Expert.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 4. Principal Accountant Fees and Services.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 5. Audit Committee of Listed Registrants.
Not applicable to the registrant.
Item 6. Investments.
(a) Included as part of the report to shareholders filed under Item 1 of this form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant’s Board has established a Nominating and Corporate Governance Committee. The Nominating and Corporate Governance 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 and Corporate Governance Committee, Richard R. Burt, care of the Secretary of the registrant at UBS Asset Management, UBS Building, One North Wacker Drive, Chicago, IL 60606, Attn: Mark Kemper, Secretary, and indicate on the envelope “Nominating and Corporate Governance 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 11. 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 (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics — Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
(a) (2) Certifications of principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit EX-99.CERT.
(a) (3) Written solicitation to purchase securities under Rule 23c-1 under the Investment Company Act of 1940 sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons — not applicable to the registrant.
(b) Certifications of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are 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/ Mark E. Carver | |
| Mark E. Carver |
| President |
| |
Date: | May 9, 2016 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Mark E. Carver | |
| Mark E. Carver |
| President |
| |
Date: | May 9, 2016 | |
| |
By: | /s/ Thomas Disbrow | |
| Thomas Disbrow |
| Vice President and Treasurer |
| |
Date: | May 9, 2016 | |
