<Page>
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: 811-6637
--------------------------------------------
THE UBS FUNDS
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
51 West 52nd Street, New York, New York 10019-6114
---------------------------------------------------
(Address of principal executive offices) (Zip code)
Amy R. Doberman
UBS Global Asset Management (US)
Inc.
51 West 52nd Street
New York, NY 10019-6114
(Name and address of agent for
service)
Copy to:
Bruce Leto, Esq.
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 215-564
Registrant's telephone number, including area code: 212-882 5000
Date of fiscal year end: June 30, 2003
Date of reporting period: June 30, 2003
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
[UBS GLOBAL ASSET MANAGEMENT LOGO]
UBS GLOBAL ALLOCATION FUND
UBS GLOBAL EQUITY FUND
UBS GLOBAL BOND FUND
UBS U.S. BALANCED FUND
UBS U.S. EQUITY FUND
UBS U.S. LARGE CAP GROWTH FUND
UBS U.S. SMALL CAP GROWTH FUND
UBS U.S. BOND FUND
UBS HIGH YIELD FUND
UBS INTERNATIONAL EQUITY FUND
UBS U.S. VALUE EQUITY FUND
ANNUAL REPORT
JUNE 30, 2003
<Page>
TABLE OF CONTENTS
<Table>
Portfolio Managers' Commentary and Schedule of Investments
UBS Global Allocation Fund 3
UBS Global Equity Fund 16
UBS Global Bond Fund 24
UBS U.S. Balanced Fund 35
UBS U.S. Equity Fund 46
UBS U.S. Large Cap Growth Fund 53
UBS U.S. Small Cap Growth Fund 59
UBS U.S. Bond Fund 65
UBS High Yield Fund 74
UBS International Equity Fund 82
UBS U.S. Value Equity Fund 89
Statements of Assets and Liabilities 96
Statements of Operations 100
Statements of Changes in Net Assets 102
Financial Highlights 106
Notes to Financial Statements 128
Report of Independent Auditors 139
Trustee Information 140
Federal Tax Information 144
</Table>
1
<Page>
THE FUNDS' ADVISOR -- UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC.
Portfolio Managers'
Commentary
and Schedule of
Investments
2
<Page>
UBS GLOBAL ALLOCATION FUND
For the fiscal year ended June 30, 2003, Class Y shares of UBS Global Allocation
Fund returned 5.50%, versus 4.83% for the Fund's benchmark, the GSMI Mutual Fund
Index.* For comparison purposes, the MSCI World Equity (Free) Index declined
2.05%, while the Citigroup (formerly Salomon Smith Barney) World Government Bond
Index returned 16.51% over the same period. (Returns for all share classes over
various time periods are shown on page 5. Please note that these returns do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.)
12-MONTH MARKET REVIEW
The global economy was weak for much of the reporting period. During this time,
the financial markets were often volatile, reflecting the many uncertainties
facing investors both in the United States and abroad.
As the period began, there were common issues troubling the global equity
markets. Weak economies, corporate malfeasance, a lack of capital spending and
geopolitical unrest caused investors to shun stocks in favor of the relative
security offered by the fixed income market. As a result, stock prices fell,
while bonds posted strong results for the third quarter of 2002. The markets
reversed course in the fourth quarter, when signs of economic improvement,
combined with better-than-expected earnings reports, led investors back to
stocks. Over this time, the global equity markets gained roughly 8%, while the
bond markets faltered.
This type of volatility was also characteristic of the second half of the fiscal
year. During the first quarter of 2003, most global equity markets fell as the
imminence of a war with Iraq grew. Not surprisingly, the global bond markets
generated strong results during this time, just as they had in the third quarter
of 2002. However, the quick resolution of major conflict in Iraq fueled investor
optimism in the second quarter of 2003. Investors grew increasingly positive
about the potential for an economic revival and a subsequent upturn in corporate
profits. At the same time, their appetite for risk increased as the yields
available from many fixed income securities shrank, and stock prices surged.
Nonetheless, global bond markets continued to perform well due to the
uncertainty surrounding a global economic rebound and generalized concerns about
the prospects for global deflation.
STRATEGIC ALLOCATION DECISIONS PRODUCED POSITIVE RESULTS
During the review period, we continued to adhere to our disciplined investment
approach. Leveraging the expertise of an integrated global investment platform
of investment specialists, our process entails identifying the under- or
overvaluation of all liquid investable asset classes, and allocating assets
based upon the best relative opportunities. To narrow the expansive universe of
securities, we then carefully rank individual issues based on the difference
between their prices and their intrinsic values--as determined by our security
analysts--and maintain the flexibility to over- or underweight a particular
security based on its evolving risk and reward characteristics.
Our disciplined process led us to implement specific asset allocation decisions
over the fiscal year. In particular, we adjusted the Fund's stock and bond
allocation amid the extreme volatility that characterized the global financial
markets.
The Fund began the period neutral in US equities and overweight in international
(non-US) equities. As the period progressed, our focus on intrinsic value led us
to lower the Fund's overall bond allocation and increase our exposure to US
stocks to maximize what we believed were attractive opportunities. This proved
beneficial, as the Fund was able to avoid some of the equity market's weakness
during the third quarter of 2002, and to capitalize on the subsequent equity
market rally during October and November of 2002. We then moved back to a
neutral US equity position at the end of November, as our research indicated
that market had appreciated close to our estimate of intrinsic value. This again
was helpful as the equity markets stumbled in December 2002 through the first
quarter of 2003.
3
<Page>
With equity prices falling, and given the fact that international equities
hadn't appreciated to the same degree that US equities had during the fourth
quarter of 2002, we extended our overweight to international equities near the
end of the first quarter of 2003. We also felt that the long-term opportunities
in global equities were significant when compared to global fixed income issues.
Our analysis of market behavior indicated that investors were being drawn to the
relative safety of fixed income securities, and were bidding up prices beyond
what fundamentals were suggesting. A decrease in our weighting to
developed-country fixed income securities, therefore, funded the increase in our
overweight to global equities. This again proved beneficial, as stocks rallied
sharply during the last three months of the fiscal year.
Taking a closer look at the bond market, while we moved to underweight the asset
class as a whole, we maintained the Fund's overweight in US high yield bonds
during the first few months of 2003, since we believed they offered compelling
opportunities relative to investment grade debt. This strategy enhanced results,
as the prices of high yield bonds surged through April. Early in the second
quarter of 2003, though, we reduced this overweight. Spreads to Treasurys had
narrowed substantially, due in part to record inflows of money to high yield
bond mutual funds. As market prices increased, we concluded that this asset
class was less attractive, so we chose to capture profits.
On a currency level, the Fund also benefited from our strategic allocations. In
particular, our intrinsic value analysis led us to underweight the US dollar in
favor of the euro, Australian dollar and Canadian dollar. These currency
positions significantly enhanced results, as the US dollar weakened versus the
currencies in which we had overweight positions. In response to this price
appreciation, we subsequently reduced our Australian dollar and euro positions,
and we eliminated the Canadian dollar overweight during the first quarter of
2003. At period end, most major currencies were within close proximity to their
fair value.
LOOKING AHEAD
At the end of the period, the Fund was modestly overweight in equities and
underweight in developed-country investment grade fixed income. With yield
curves around the world at their lowest levels in decades, and yields likely to
increase across maturities, we believe the risk/reward ratio strongly favors
other asset classes. Within the equity markets, we have pared our exposure to
non-UK European securities. Reduced earnings assumptions in these countries have
lessened their attractiveness on an absolute basis and relative to other equity
markets. We believe the Fund's portfolio is currently well positioned, and we
intend to continue to utilize a disciplined approach that focuses on intrinsic
value while seeking to outperform the benchmark on a risk-adjusted basis over
the long-term.
* THE GSMI MUTUAL FUND INDEX IS AN UNMANAGED, PROPRIETARY INDEX COMPILED BY THE
ADVISOR THAT IS DESIGNED TO REPLICATE THE PERFORMANCE OF THE ASSET CLASSES IN
WHICH THE FUND INVESTS. IT REPRESENTS 65% EQUITY AND 35% FIXED INCOME ACROSS
SEVEN ASSET CLASSES. IT IS CURRENTLY CONSTRUCTED AS FOLLOWS: 40% WILSHIRE
5000 EQUITY INDEX, 22% MSCI WORLD EX USA (FREE) INDEX, 21% CITIGROUP BROAD
INVESTMENT GRADE (BIG) BOND INDEX, 9% CITIGROUP WGBI NON-US INDEX, 3% MERRILL
LYNCH CASH PAY INDEX, 3% MSCI EMERGING MARKETS FREE INDEX, AND 2% JP MORGAN
EMBI GLOBAL.
4
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
ENDED ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- -------------------------------------------------------------------------------------------------------------
UBS Global Allocation Fund Class A 11.01% 5.35% 5.05% 3.74% N/A 4.42%
- -------------------------------------------------------------------------------------------------------------
UBS Global Allocation Fund Class B 10.59 4.60 N/A N/A N/A 4.94
- -------------------------------------------------------------------------------------------------------------
UBS Global Allocation Fund Class C 10.58 4.55 N/A N/A N/A 5.51
- -------------------------------------------------------------------------------------------------------------
UBS Global Allocation Fund Class Y 11.12 5.50 5.21 3.95 7.50% 7.92
- -------------------------------------------------------------------------------------------------------------
UBS Global Allocation Fund Class A** 4.91 -0.47 3.09 2.57 N/A 3.45
- -------------------------------------------------------------------------------------------------------------
UBS Global Allocation Fund Class B** 5.59 -0.40 N/A N/A N/A 2.56
- -------------------------------------------------------------------------------------------------------------
UBS Global Allocation Fund Class C** 8.44 2.48 N/A N/A N/A 4.86
- -------------------------------------------------------------------------------------------------------------
GSMI Mutual Fund Index*** 10.42 4.83 -4.05 1.67 7.52 8.04
- -------------------------------------------------------------------------------------------------------------
MSCI World Equity (Free) Index 11.33 -2.05 -12.73 -2.85 6.17 6.98
- -------------------------------------------------------------------------------------------------------------
Citigroup World Government Bond Index 7.11 16.51 8.77 6.69 6.51 6.52
- -------------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS GLOBAL ALLOCATION FUND CLASS A IS 6/30/97. INCEPTION
DATES OF CLASS B AND CLASS C ARE 12/13/01 AND 11/22/01, RESPECTIVELY.
INCEPTION DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE INDICES, IS
8/31/92.
** RETURNS INCLUDE SALES CHARGES.
*** AN UNMANAGED INDEX COMPILED BY THE ADVISOR, CONSTRUCTED AS FOLLOWS: 40%
WILSHIRE 5000 INDEX; 22% MSCI WORLD EX USA (FREE) INDEX; 21% CITIGROUP BIG
INDEX; 9% CITIGROUP WGBI NON-US (IN USD); 2% J.P. MORGAN EMBI GLOBAL; 3%
MSCI EMERGING MARKETS FREE INDEX; AND 3% MERRILL LYNCH CASH PAY INDEX.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS Global
Allocation Fund Class Y shares, the GSMI Mutual Fund Index, the MSCI World
Equity (Free) Index and the Citigroup World Government Bond Index if you had
invested $10,000 on August 31, 1992, and had reinvested all your income
dividends and capital gain distributions through June 30, 2003. The performance
of Class A, Class B and Class C shares will vary based upon the different
inception dates, class specific expenses and sales charges. No adjustment has
been made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
[CHART]
UBS GLOBAL ALLOCATION FUND CLASS Y VS. GSMI MUTUAL FUND INDEX,
MSCI WORLD EQUITY (FREE) INDEX AND CITIGROUP WORLD GOVERNMENT BOND INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS GLOBAL ALLOCATION FUND MSCI WORLD GSMI CITIGROUP WORLD
CLASS Y EQUITY (FREE) INDEX MUTUAL FUND INDEX GOV'T BOND INDEX
$ 10,000 $ 10,000 $ 10,000 $ 10,000
$ 10,130 $ 9,914 $ 10,100 $ 10,053
$ 10,070 $ 9,647 $ 9,825 $ 9,975
$ 10,220 $ 9,819 $ 9,669 $ 10,174
$ 10,329 $ 9,902 $ 9,727 $ 10,308
$ 10,481 $ 9,936 $ 9,898 $ 10,424
$ 10,684 $ 10,171 $ 10,093 $ 10,555
$ 10,811 $ 10,760 $ 10,248 $ 10,873
$ 10,862 $ 11,258 $ 10,464 $ 10,939
$ 10,974 $ 11,516 $ 10,569 $ 11,169
6/30/1993 $ 11,076 $ 11,420 $ 10,546 $ 11,193
$ 11,106 $ 11,654 $ 10,576 $ 11,271
$ 11,341 $ 12,198 $ 10,894 $ 11,663
$ 11,341 $ 11,975 $ 11,024 $ 11,653
$ 11,433 $ 12,307 $ 11,005 $ 11,822
$ 11,310 $ 11,606 $ 10,927 $ 11,530
$ 11,481 $ 12,170 $ 11,019 $ 11,798
$ 11,736 $ 12,973 $ 11,107 $ 12,188
$ 11,523 $ 12,802 $ 11,035 $ 12,004
$ 11,183 $ 12,251 $ 11,020 $ 11,599
$ 11,225 $ 12,636 $ 11,032 $ 11,726
$ 11,246 $ 12,674 $ 10,935 $ 11,763
6/30/1994 $ 11,161 $ 12,637 $ 11,092 $ 11,648
$ 11,322 $ 12,878 $ 11,181 $ 11,890
$ 11,568 $ 13,268 $ 11,142 $ 12,204
$ 11,397 $ 12,917 $ 11,222 $ 12,012
$ 11,375 $ 13,289 $ 11,402 $ 12,199
$ 11,226 $ 12,716 $ 11,244 $ 11,852
$ 11,264 $ 12,837 $ 11,276 $ 11,966
$ 11,395 $ 12,649 $ 11,513 $ 12,087
$ 11,679 $ 12,836 $ 11,807 $ 12,413
$ 11,832 $ 13,456 $ 12,509 $ 12,812
$ 12,061 $ 13,926 $ 12,740 $ 13,112
$ 12,444 $ 14,052 $ 13,099 $ 13,440
6/30/1995 $ 12,564 $ 14,047 $ 13,177 $ 13,645
$ 12,841 $ 14,751 $ 13,208 $ 14,071
$ 13,007 $ 14,421 $ 12,754 $ 14,021
$ 13,228 $ 14,847 $ 13,038 $ 14,396
$ 13,328 $ 14,617 $ 13,135 $ 14,306
$ 13,715 $ 15,126 $ 13,283 $ 14,734
$ 13,982 $ 15,570 $ 13,423 $ 15,006
$ 14,243 $ 15,861 $ 13,258 $ 15,251
$ 14,183 $ 15,958 $ 13,190 $ 15,295
$ 14,290 $ 16,223 $ 13,172 $ 15,425
$ 14,479 $ 16,604 $ 13,119 $ 15,691
$ 14,527 $ 16,617 $ 13,122 $ 15,807
6/30/1996 $ 14,623 $ 16,706 $ 13,225 $ 15,840
$ 14,407 $ 16,115 $ 13,479 $ 15,423
$ 14,635 $ 16,306 $ 13,532 $ 15,672
$ 15,113 $ 16,945 $ 13,587 $ 16,188
$ 15,365 $ 17,062 $ 13,841 $ 16,350
$ 15,963 $ 18,024 $ 14,024 $ 17,038
$ 15,954 $ 17,737 $ 13,910 $ 16,886
$ 16,153 $ 17,955 $ 13,539 $ 17,133
$ 16,298 $ 18,159 $ 13,437 $ 17,214
$ 16,047 $ 17,796 $ 13,335 $ 16,835
$ 16,219 $ 18,380 $ 13,218 $ 17,176
$ 16,894 $ 19,517 $ 13,577 $ 18,044
6/30/1997 $ 17,370 $ 20,488 $ 13,739 $ 18,690
$ 17,925 $ 21,433 $ 13,632 $ 19,434
$ 17,462 $ 19,983 $ 13,624 $ 18,722
$ 18,005 $ 21,069 $ 13,914 $ 19,533
$ 17,476 $ 19,963 $ 14,203 $ 18,903
$ 17,515 $ 20,312 $ 13,986 $ 19,071
$ 17,709 $ 20,561 $ 13,944 $ 19,301
$ 17,913 $ 21,137 $ 14,079 $ 19,561
$ 18,570 $ 22,567 $ 14,193 $ 20,507
$ 18,993 $ 23,517 $ 14,053 $ 21,089
$ 19,023 $ 23,747 $ 14,278 $ 21,296
$ 18,920 $ 23,459 $ 14,310 $ 20,996
6/30/1998 $ 18,808 $ 24,007 $ 14,332 $ 21,262
$ 18,764 $ 23,971 $ 14,351 $ 21,151
$ 17,261 $ 20,776 $ 14,741 $ 19,011
$ 17,806 $ 21,146 $ 15,525 $ 19,668
$ 18,454 $ 23,060 $ 15,985 $ 20,842
$ 18,970 $ 24,434 $ 15,759 $ 21,694
$ 19,183 $ 25,622 $ 16,076 $ 22,476
$ 19,215 $ 26,185 $ 15,928 $ 22,788
$ 18,744 $ 25,489 $ 15,417 $ 22,184
$ 19,053 $ 26,546 $ 15,455 $ 22,885
$ 19,833 $ 27,597 $ 15,449 $ 23,681
$ 19,475 $ 26,580 $ 15,190 $ 23,082
6/30/1999 $ 19,703 $ 27,817 $ 14,924 $ 23,787
$ 19,654 $ 27,734 $ 15,289 $ 23,660
$ 19,343 $ 27,683 $ 15,360 $ 23,594
$ 19,064 $ 27,422 $ 15,599 $ 23,494
$ 19,031 $ 28,847 $ 15,592 $ 24,333
$ 19,113 $ 29,657 $ 15,428 $ 24,903
$ 19,469 $ 32,059 $ 15,391 $ 26,263
$ 18,894 $ 30,225 $ 15,063 $ 25,380
$ 18,615 $ 30,304 $ 14,955 $ 25,834
$ 19,260 $ 32,401 $ 15,418 $ 26,842
$ 19,260 $ 31,029 $ 14,914 $ 25,767
$ 19,312 $ 30,244 $ 15,030 $ 25,235
6/30/2000 $ 19,608 $ 31,262 $ 15,396 $ 26,156
$ 19,521 $ 30,381 $ 15,135 $ 25,689
$ 19,765 $ 31,370 $ 15,022 $ 26,579
$ 19,434 $ 29,704 $ 14,992 $ 25,731
$ 19,399 $ 29,207 $ 14,801 $ 25,255
$ 19,591 $ 27,431 $ 15,095 $ 24,064
$ 20,739 $ 27,866 $ 15,636 $ 24,659
$ 21,311 $ 28,406 $ 15,616 $ 25,292
$ 20,924 $ 26,009 $ 15,610 $ 23,874
$ 20,167 $ 24,299 $ 15,160 $ 22,729
$ 20,739 $ 26,097 $ 15,106 $ 23,827
$ 20,776 $ 25,767 $ 15,060 $ 23,806
6/30/2001 $ 20,628 $ 24,959 $ 14,922 $ 23,396
$ 20,684 $ 24,630 $ 15,299 $ 23,261
$ 20,721 $ 23,449 $ 15,874 $ 22,732
$ 19,521 $ 21,382 $ 15,990 $ 21,313
$ 20,019 $ 21,794 $ 16,117 $ 21,797
$ 20,924 $ 23,085 $ 15,890 $ 22,652
$ 21,196 $ 23,232 $ 15,481 $ 22,810
$ 21,075 $ 22,530 $ 15,195 $ 22,460
$ 21,237 $ 22,336 $ 15,273 $ 22,378
$ 21,844 $ 23,324 $ 15,231 $ 23,020
$ 22,026 $ 22,537 $ 15,777 $ 22,795
$ 22,229 $ 22,583 $ 16,223 $ 22,851
6/30/2002 $ 21,642 $ 21,215 $ 17,006 $ 22,037
$ 20,488 $ 19,429 $ 17,173 $ 20,813
$ 20,771 $ 19,466 $ 17,473 $ 21,017
$ 18,989 $ 17,326 $ 17,664 $ 19,675
$ 20,002 $ 18,607 $ 17,591 $ 20,540
$ 20,970 $ 19,613 $ 17,614 $ 21,342
$ 20,547 $ 18,666 $ 18,500 $ 20,923
$ 20,145 $ 18,102 $ 18,753 $ 20,597
$ 19,955 $ 17,791 $ 19,016 $ 20,458
$ 20,018 $ 17,738 $ 19,075 $ 20,474
$ 21,478 $ 19,316 $ 19,304 $ 21,756
$ 22,515 $ 20,425 $ 20,142 $ 22,834
6/30/2003 $ 22,833 $ 20,782 $ 23,102 $ 19,815
</Table>
8/31/92 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
5
<Page>
TOP TEN EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
Nextel Communications, Inc., Class A 1.6%
Citigroup, Inc. 1.4
Johnson & Johnson 1.2
Wells Fargo & Co. 1.2
UnitedHealth Group, Inc. 1.1
Microsoft Corp. 1.1
Burlington Northern Santa Fe Corp. 1.1
Allergan, Inc. 1.0
GreenPoint Financial Corp. 1.0
J.P. Morgan Chase & Co. 1.0
- ------------------------------------------------------------------------
Total 11.7%
</Table>
TOP TEN FIXED INCOME HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
U.S. Treasury Note
3.000%, due 02/15/08 2.6%
U.S. Treasury Note
4.375%, due 08/15/12 1.8
U.S. Treasury Note
1.625%, due 04/30/05 1.0
U.S. Treasury Note
3.625%, due 08/31/03 0.7
Federal National Mortgage Association
5.500%, due 01/01/18 0.7
U.S. Treasury Bond
6.250%, due 05/15/30 0.6
U.S. Treasury Note
2.000%, due 11/30/04 0.5
Fannie Mae
7.000%, due 03/01/33 0.4
Federal National Mortgage Association
7.500%, due 02/01/33 0.3
U.S. Treasury Note
1.625%, due 03/31/05 0.3
- ------------------------------------------------------------------------
Total 8.9%
</Table>
6
<Page>
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF JUNE 30, 2003
<Table>
EQUITES
U.S. EQUITES
Aerospace & Military 0.71%
Airlines 0.33
Autos/Durables 0.29
Banks 3.02
Biomedical 0.19
Broadcasting & Publishing 0.27
Business & Public Service 0.21
Capital Goods 1.20
Chemicals 0.70
Computer Software 1.09
Computer Systems 0.68
Construction 0.45
Consumer 0.54
Electric Components 0.58
Energy 3.29
Financial Services 5.73
Health: Drugs 3.35
Health: Non-Drugs 2.74
Housing/Paper 0.67
Industrial Components 0.61
Media and Entertainment 0.66
Metals Non-Ferrous 0.84
Recreation 0.45
Retail/Apparel 1.61
Services/Miscellaneous 1.87
Telecommunications-Services 2.32
Transportation 1.08
Utilities 1.17
-------
Total U.S. Equities 36.65
INTERNATIONAL EQUITIES
Aerospace & Defense 0.15
Appliances & Household Durables 0.11
Autos/Durables 0.82
Banks 4.20
Beverages & Tobacco 0.85
Broadcasting & Publishing 1.42
Chemicals 1.24
Computer Software 0.18
Construction 0.33
Data Processing 0.19
Electric Components 1.07
Electronics 0.10
Energy 1.31
Financial Services 1.32
Food & House Products 1.38
Forest Products 0.27
Health: Drugs 2.77
Health: Non-Drugs 0.50
Housing/Paper 0.31
Insurance 0.73
Machinery & Engineering 0.30
Merchandising 0.41
Metals Non-Ferrous 0.32
Multi-Industry 0.28
Oil 0.65
Real Estate 0.32
Recreation 0.66
Retail/Apparel 0.50
Services/Miscellaneous 0.62
Telecommunications 2.69%
Transportation 0.53
Utilities 0.79
Wholesale & International Trade 0.14
-------
Total International Equities 27.46
TOTAL EQUITIES 64.11
U.S. BONDS
U.S. Corporate Bonds
Aerospace & Military 0.02
Airlines 0.01
Autos/Durables 0.05
Banks 0.07
Beverages & Tobacco 0.05
Chemicals 0.01
Computer Systems 0.01
Construction 0.04
Consumer 0.02
Electric Components 0.02
Energy 0.08
Financial Services 0.42
Food & House Products 0.11
Health: Drugs 0.01
Household Durables 0.01
Housing/Paper 0.01
Insurance 0.01
Leisure & Tourism 0.02
Media and Entertainment 0.01
Metals Non-Ferrous 0.01
Multi-Industry 0.04
Real Estate 0.01
Retail/Apparel 0.01
Services/Miscellaneous 0.05
Telecommunications 0.05
Transportation 0.02
Utilities 0.03
-------
Total U.S. Corporate Bonds 1.20
Asset-Backed Corporates 0.34
International Dollar Bonds 0.16
Mortgage-Backed Securities 4.78
U.S. Government Obligations 7.54
-------
Total U.S. Bonds 14.02*
International Bonds 2.50
INVESTMENT COMPANIES 13.54
INVESTMENT OF CASH COLLATERAL 5.93
SHORT-TERM INVESTMENTS 6.21*
-------
TOTAL INVESTMENTS 106.31
LIABILITIES, LESS CASH AND
OTHER ASSETS (6.31)
-------
NET ASSETS 100.00%
=======
</Table>
- ----------
* THE FUND HELD A LONG POSITION IN U.S. TREASURY FUTURES, WHICH INCREASED THE
U.S. BOND EXPOSURE FROM 14.16% TO 15.80%. THESE ADJUSTMENTS RESULTED IN A
NET DECREASE TO THE FUND'S EXPOSURE TO SHORT-TERM INVESTMENTS FROM 6.21% TO
4.57%.
7
<Page>
UBS GLOBAL ALLOCATION FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
------------- -------------
EQUITIES -- 64.11%
U.S. EQUITIES -- 36.65%
Allergan, Inc. (c) 71,600 $ 5,520,360
American International Group, Inc. 55,821 3,080,203
American Standard Companies, Inc. (b) 50,300 3,718,679
Anthem, Inc.(b) 44,500 3,433,175
Baxter International, Inc. 52,205 1,357,330
Biomet, Inc. 31,800 911,388
Bristol-Myers Squibb Co. 138,100 3,749,415
Burlington Northern Santa Fe Corp. 211,200 6,006,528
Cephalon, Inc. (b) (c) 46,000 1,893,360
Citigroup, Inc. 185,907 7,956,820
CMS Energy Corp. (c) 93,800 759,780
Computer Sciences Corp. (b) 23,000 876,760
ConocoPhillips 55,134 3,021,343
Consolidated Edison, Inc. (c) 44,900 1,943,272
Continental Airlines, Inc., Class B (b) 39,000 583,830
Costco Wholesale Corp. (b) 79,900 2,924,340
Delta Air Lines, Inc. (c) 86,400 1,268,352
Dominion Resources, Inc. 24,300 1,561,761
Dow Chemical Co. (The) 66,300 2,052,648
Eastman Chemical Co. 34,700 1,098,949
Entergy Corp. 42,500 2,243,150
Exelon Corp. 70,600 4,222,586
ExxonMobil Corp. 71,300 2,560,383
First Data Corp. 63,260 2,621,495
FirstEnergy Corp. 98,463 3,785,902
FleetBoston Financial Corp. 83,115 2,469,347
Freddie Mac 82,900 4,208,833
Genzyme Corp. (b) 25,300 1,057,540
GreenPoint Financial Corp. 107,900 5,496,426
Hartford Financial Services Group,
Inc. (The) 39,500 1,989,220
Hewlett-Packard Co. 136,509 2,907,642
Illinois Tool Works, Inc. 68,500 4,510,725
IMC Global, Inc. 111,400 747,494
Ingersoll-Rand Co., Class A 71,400 3,378,648
Interpublic Group of Cos., Inc. (c) 85,200 1,139,976
J.P. Morgan Chase & Co. 156,500 5,349,170
Johnson & Johnson 131,138 6,779,835
Johnson Controls, Inc. 19,000 1,626,400
Kerr-McGee Corp. 19,350 866,880
Kimberly-Clark Corp. 57,600 3,003,264
Linear Technology Corp. 61,300 1,974,473
Martin Marietta Materials, Inc. 74,484 2,503,407
Masco Corp. 196,400 4,684,140
McGraw-Hill Cos., Inc. (The) 24,400 1,512,800
MeadWestvaco Corp. 52,900 1,306,630
Mellon Financial Corp. 81,000 2,247,750
Microsoft Corp. 237,300 6,077,253
Morgan Stanley 84,350 3,605,962
Motorola, Inc. 201,730 1,902,314
Newell Rubbermaid, Inc. (c) 106,200 2,973,600
Nextel Communications, Inc., Class A (b) 486,000 8,786,880
Omnicom Group 72,900 5,226,930
Pentair, Inc. 55,496 2,167,674
PNC Financial Services Group 42,500 2,074,425
Progress Energy, Inc. 41,600 1,826,240
RadioShack Corp. 61,400 1,615,434
Royal Caribbean Cruises Ltd. (c) 108,700 $ 2,517,492
SBC Communications, Inc. 86,300 2,204,965
Sempra Energy 69,400 1,979,982
SICOR, Inc. (b) 168,200 3,421,188
Texas Instruments, Inc. 70,500 1,240,800
TJX Companies, Inc. 76,800 1,446,912
United Technologies Corp. (c) 55,500 3,931,065
UnitedHealth Group, Inc. 122,600 6,160,650
Viacom, Inc., Class B (b) 83,700 3,654,342
Viad Corp. 55,200 1,235,928
Wells Fargo & Co. 134,300 6,768,720
Wyeth 88,100 4,012,955
-------------
Total U.S. Equities 203,744,120
-------------
INTERNATIONAL EQUITIES -- 27.46%
AUSTRALIA -- 0.81%
Lion Nathan Ltd. 107,110 385,027
Mayne Group Ltd. 194,742 357,854
News Corp., Ltd., Preferred 93,765 577,900
QBE Insurance Group Ltd. 165,313 1,033,283
Rio Tinto Ltd. 23,755 465,353
Westpac Banking Corp. 153,216 1,669,758
-------------
4,489,175
-------------
BELGIUM -- 0.23%
Fortis 72,840 1,264,732
-------------
CANADA -- 0.97%
Alcan, Inc. 21,120 652,991
Bank of Nova Scotia (c) 27,800 1,229,645
BCE, Inc. 49,500 1,131,532
Canadian National Railway Co. 18,800 900,463
Toronto Dominion Bank 53,700 1,476,528
-------------
5,391,159
-------------
FINLAND -- 0.89%
Nokia Oyj 181,340 2,986,203
Sampo Oyj, Class A (c) 60,300 442,481
UPM-Kymmene Oyj (c) 103,040 1,503,932
-------------
4,932,616
-------------
FRANCE -- 3.20%
Aventis S.A. 61,948 3,408,239
AXA 29,036 450,473
BNP Paribas (c) 46,094 2,342,256
Cap Gemini S.A. (b) 28,632 1,016,641
Compagnie de Saint-Gobain 17,258 679,174
France Telecom S.A. (b) 42,385 1,039,657
Sanofi-Synthelabo S.A. 36,199 2,120,037
Suez S.A. 57,379 913,257
Total S.A. 32,679 4,938,570
Unibail (c) 11,652 863,052
-------------
17,771,356
-------------
GERMANY -- 0.34%
Allianz AG 5,137 426,977
E.on AG (c) 8,572 440,703
Linde AG 27,538 1,019,540
-------------
1,887,220
-------------
</Table>
8
<Page>
<Table>
<Caption>
SHARES VALUE
------------- -------------
HONG KONG -- 0.24%
Cheung Kong Holdings Ltd. 118,000 $ 709,681
Sun Hung Kai Properties Ltd. 125,000 631,560
-------------
1,341,241
-------------
IRELAND -- 0.58%
Bank of Ireland 147,472 1,783,926
CRH PLC 93,758 1,469,662
-------------
3,253,588
-------------
ITALY -- 0.59%
Assicurazioni Generali Spa (c) 38,759 898,194
ENI Spa (c) 156,291 2,363,722
-------------
3,261,916
-------------
JAPAN -- 4.37%
AIFUL Corp. 23,800 1,014,832
Canon, Inc. 23,000 1,055,424
Daikin Industries Ltd. 20,000 367,271
Fuji Photo Film Co., Ltd. 62,000 1,791,713
Honda Motor Co., Ltd. 44,200 1,674,870
Kao Corp. 48,000 893,442
Keyence Corp. 1,600 293,150
Mitsubishi Corp. 114,000 790,856
Mitsubishi Tokyo Financial Group, Inc. 103 465,784
Mitsui Fudosan Co., Ltd. 32,000 204,406
Murata Manufacturing Co., Ltd. 27,700 1,088,853
Nintendo Co., Ltd. 25,600 1,861,237
Nippon Telegraph & Telephone Corp. 411 1,612,160
NTT DoCoMo, Inc. 440 952,738
Rohm Co., Ltd. 11,400 1,242,773
Sekisui House Ltd. 43,000 325,880
Sompo Japan Insurance, Inc. 221,000 1,205,538
Sony Corp. 21,300 599,575
Sumitomo Chemical Co., Ltd. (c) 229,000 718,992
Takeda Chemical Industries Ltd. 61,800 2,280,025
Takefuji Corp. 7,760 402,622
Toyota Motor Corp. 109,300 2,830,922
West Japan Railway Co. 161 610,077
-------------
24,283,140
-------------
NETHERLANDS -- 1.96%
ABN AMRO Holding NV 37,389 714,883
Akzo Nobel NV 27,216 721,335
Koninklijke Philips Electronics NV 66,872 1,271,690
Reed Elsevier NV 230,953 2,723,771
TPG NV 83,189 1,444,423
VNU NV 88,334 2,721,605
Wolters Kluwer NV 110,340 1,330,451
-------------
10,928,158
-------------
NORWAY -- 0.11%
Telenor ASA (c) 146,700 609,692
-------------
PORTUGAL -- 0.22%
Electricidade de Portugal S.A. 314,842 672,484
Portugal Telecom, SGPS, S.A. 79,603 570,415
-------------
1,242,899
-------------
SINGAPORE -- 0.23%
DBS Group Holdings Ltd. 218,000 1,275,071
-------------
SPAIN -- 0.73%
Banco Bilbao Vizcaya Argentaria S.A. 182,029 $ 1,912,662
Banco Santander Central Hispano S.A. 109,275 957,463
Telefonica S.A. 100,463 1,166,363
-------------
4,036,488
-------------
SWEDEN -- 0.90%
Nordea AB (c) 259,000 1,248,902
Svenska Cellulosa AB 50,800 1,735,651
Svenska Handelsbanken AB 54,320 888,940
Swedish Match AB 147,120 1,111,907
-------------
4,985,400
-------------
SWITZERLAND -- 2.18%
Adecco S.A. 35,122 1,446,833
Compagnie Financiere Richemont AG 60,906 984,712
Givaudan S.A. 1,841 774,700
Nestle S.A. (c) 22,299 4,601,211
Novartis AG 49,482 1,958,020
Roche Holding AG 22,454 1,761,277
Swiss Reinsurance Co. 10,628 588,854
-------------
12,115,607
-------------
UNITED KINGDOM -- 8.91%
Abbey National PLC 95,648 742,602
Allied Domecq PLC 95,739 527,662
Amersham PLC 82,451 618,713
ARM Holdings PLC (b) 344,631 381,021
AstraZeneca PLC 44,270 1,775,154
Barclays PLC 443,953 3,296,626
BOC Group PLC 50,998 654,295
BP PLC 687,186 4,765,432
BT Group PLC 404,172 1,358,889
Carlton Communications PLC 213,336 533,331
Centrica PLC 290,589 842,742
Compass Group PLC 161,596 871,297
Diageo PLC 123,279 1,316,175
Dixons Group PLC 242,963 529,218
Electrocomponents PLC 151,071 808,940
Gallaher Group PLC 277,794 2,727,470
GlaxoSmithKline PLC 156,306 3,154,440
HSBC Holdings PLC 104,120 1,230,176
Invensys PLC 805,004 272,315
Kingfisher PLC (b) 389,440 1,781,691
Lloyds TSB Group PLC 131,023 930,226
National Grid Transco PLC 230,722 1,564,772
Prudential PLC 114,479 693,286
Rentokil Initial PLC 642,840 2,007,516
Rio Tinto PLC 36,389 684,534
Rolls-Royce Group PLC 400,989 848,614
Royal Bank of Scotland Group PLC 124,180 3,483,540
Scottish & Southern Energy PLC 163,727 1,685,874
Shell Transport & Trading Co. PLC 546,133 3,604,779
Tesco PLC 636,814 2,303,947
Vodafone Group PLC 1,814,608 3,548,309
-------------
49,543,586
-------------
Total International Equities 152,613,044
-------------
Total Equities (Cost $336,152,772) 356,357,164
-------------
</Table>
9
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
BONDS -- 16.52%
U.S. BONDS -- 14.02%
U.S. CORPORATE BONDS -- 1.20%
Abbott Laboratories, Inc. (c)
5.625%, due 07/01/06 $ 20,000 $ 22,145
Alcoa, Inc. (c)
6.000%, due 01/15/12 25,000 28,161
Altria Group, Inc. (c)
7.750%, due 01/15/27 50,000 53,591
American Express Co.
3.750%, due 11/20/07 35,000 36,472
Anadarko Finance Co., Series B
7.500%, due 05/01/31 10,000 12,562
Anheuser Busch Cos., Inc.
9.000%, due 12/01/09 70,000 93,381
AOL Time Warner, Inc.
7.625%, due 04/15/31 175,000 201,968
Apache Corp. (c)
6.250%, due 04/15/12 30,000 34,932
AT&T Corp.
8.500%, due 11/15/31 20,000 22,678
AT&T Wireless Services, Inc. (c)
7.875%, due 03/01/11 40,000 47,241
Avalonbay Communities, Inc.
7.500%, due 08/01/09 30,000 35,577
Avon Products, Inc.
7.150%, due 11/15/09 40,000 48,431
Bank of America Corp.
7.400%, due 01/15/11 105,000 129,004
Bank One Corp.
7.875%, due 08/01/10 85,000 105,986
Bear Stearns Co., Inc.
4.000%, due 01/31/08 45,000 47,072
Boeing Capital Corp.
7.375%, due 09/27/10 25,000 29,624
Bombardier Capital, Inc., 144A (c)
6.125%, due 06/29/06 35,000 35,788
Bristol-Myers Squibb Co.
5.750%, due 10/01/11 35,000 38,951
Burlington Northern Santa Fe Corp.
6.875%, due 12/01/27 5,000 5,733
7.082%, due 05/13/29 45,000 52,878
Caterpillar, Inc.
6.550%, due 05/01/11 20,000 23,643
Cendant Corp. (c)
6.250%, due 01/15/08 105,000 116,194
Centex Corp.
9.750%, due 06/15/05 155,000 176,973
Cingular Wireless LLC
6.500%, due 12/15/11 15,000 17,283
Citigroup, Inc.
7.250%, due 10/01/10 140,000 169,626
Citizens Communications Co. (c)
9.250%, due 05/15/11 45,000 58,228
Coca-Cola Co. (The)
4.000%, due 06/01/05 35,000 36,628
Comcast Cable Communications, Inc.
6.750%, due 01/30/11 130,000 149,223
Commonwealth Edison Co., (c)
6.150%, due 03/15/12 $ 15,000 $ 17,198
Computer Sciences Corp. (c)
3.500%, due 04/15/08 50,000 51,059
Conagra Foods, Inc. (c)
6.750%, due 09/15/11 25,000 29,268
ConocoPhillips
8.500%, due 05/25/05 (c) 15,000 16,897
8.750%, due 05/25/10 25,000 32,539
Consolidated Edison, Inc., Series B
7.500%, due 09/01/10 65,000 79,727
Coors Brewing Co.,
6.375%, due 05/15/12 35,000 40,166
Countrywide Home Loans, Inc.
3.250%, due 05/21/08 100,000 100,483
Credit Suisse First Boston USA, Inc.
5.750%, due 04/15/07 25,000 27,774
6.500%, due 01/15/12 50,000 57,378
DaimlerChrysler N.A Holding Corp.
8.500%, due 01/18/31 25,000 29,447
Devon Financing Corp., ULC
6.875%, due 09/30/11 20,000 23,461
Dominion Resources, Inc., Class B
7.625%, due 07/15/05 55,000 61,174
DTE Energy Co.
7.050%, due 06/01/11 10,000 11,696
Duke Energy Field Services, LLC
7.875%, due 08/16/10 55,000 66,197
EOP Operating LP
7.000%, due 07/15/11 (c) 5,000 5,803
7.875%, due 07/15/31 20,000 24,182
Erac U.S.A. Finance Co., 144A
8.000%, due 01/15/11 50,000 59,570
First Data Corp.
5.625%, due 11/01/11 30,000 33,197
First Union National Bank (c)
7.800%, due 08/18/10 85,000 105,465
FirstEnergy Corp., Series B
6.450%, due 11/15/11 40,000 43,894
FleetBoston Financial Corp. (c)
7.375%, due 12/01/09 20,000 23,999
Ford Motor Co. (c)
7.450%, due 07/16/31 110,000 100,767
Ford Motor Credit Co.
5.800%, due 01/12/09 55,000 54,662
7.375%, due 02/01/11 (c) 30,000 31,016
General Dynamics Corp.
4.250%, due 05/15/13 70,000 70,334
General Electric Capital Corp. (c)
6.000%, due 06/15/12 320,000 361,206
6.750%, due 03/15/32 55,000 64,326
General Motors Acceptance Corp. (c)
6.875%, due 09/15/11 175,000 175,584
8.000%, due 11/01/31 185,000 181,516
General Motors Corp.
8.375%, due 07/15/33 100,000 98,219
Goldman Sachs Group, Inc. (c)
6.875%, due 01/15/11 85,000 100,296
</Table>
10
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
Harrah's Operating Co., Inc.
7.500%, due 01/15/09 $ 40,000 $ 47,393
Household Finance Corp.
6.750%, due 05/15/11 75,000 87,103
International Business Machines Corp. (c)
5.875%, due 11/29/32 15,000 16,090
International Paper Co. (c)
6.750%, due 09/01/11 35,000 40,482
John Deere Capital Corp. (c)
7.000%, due 03/15/12 85,000 100,912
Kerr-McGee Corp.
7.875%, due 09/15/31 10,000 12,233
Kimberly-Clark Corp., 144A
4.500%, due 07/30/05 45,000 47,562
Kohl's Corp.
7.250%, due 06/01/29 5,000 6,249
Kraft Foods, Inc. (c)
5.625%, due 11/01/11 185,000 201,589
Kroger Co. (c)
7.500%, due 04/01/31 155,000 183,836
Lehman Brothers Holdings, Inc.
6.625%, due 01/18/12 35,000 41,033
Lincoln National Corp.
6.200%, due 12/15/11 25,000 28,064
Marsh & McClennan Cos., Inc.
6.250%, due 03/15/12 25,000 28,497
MidAmerican Energy Co.
5.125%, due 01/15/13 10,000 10,615
Mirant Americas Generation, Inc. (c)
7.625%, due 05/01/06 75,000 57,750
Morgan Stanley
6.750%, due 04/15/11 150,000 175,452
Newell Rubbermaid, Inc.
4.000%, due 05/01/10 45,000 45,853
News America Holdings, Inc.
7.125%, due 04/08/28 15,000 16,702
Occidental Petroleum Corp.
8.450%, due 02/15/29 20,000 27,983
Pemex Project Funding Master Trust (c)
8.000%, due 11/15/11 125,000 143,125
Pepsi Bottling Group, Inc., 144A
5.625%, due 02/17/09 35,000 39,254
Praxair, Inc.
6.375%, due 04/01/12 30,000 34,940
Progress Energy, Inc. (c)
7.000%, due 10/30/31 35,000 38,626
Qwest Capital Funding, Inc.
7.900%, due 08/15/10 95,000 79,325
Rohm & Haas Co.
7.850%, due 07/15/29 10,000 12,948
Safeway, Inc.
6.500%, due 03/01/11 100,000 111,625
SBC Communications, Inc. (c)
5.875%, due 02/01/12 35,000 39,292
Sempra Energy (c)
7.950%, due 03/01/10 35,000 42,199
SLM Corp.
5.625%, due 04/10/07 60,000 66,592
Southern Power Co., Series B
6.250%, due 07/15/12 $ 15,000 $ 16,978
Southwestern Electric Power, Series B
4.500%, due 07/01/05 10,000 10,384
Sprint Capital Corp.
8.375%, due 03/15/12 55,000 65,852
Target Corp. (c)
7.000%, due 07/15/31 25,000 29,920
Transocean Sedco Forex, Inc. (c)
6.625%, due 04/15/11 45,000 52,130
U.S. Bank N.A., Minnesota
6.375%, due 08/01/11 60,000 70,042
Unilever Capital Corp. (c)
7.125%, due 11/01/10 50,000 60,579
Union Pacific Corp.
6.700%, due 12/01/06 60,000 67,479
United Technologies Corp.
6.100%, due 05/15/12 45,000 51,880
UST, Inc.
6.625%, due 07/15/12 35,000 40,526
Valero Energy Corp. (c)
7.500%, due 04/15/32 35,000 39,675
Verizon New England, Inc. (c)
6.500%, due 09/15/11 15,000 17,405
Verizon New York, Inc., Series B
7.380%, due 04/01/32 5,000 6,204
Viacom, Inc. (c)
6.625%, due 05/15/11 30,000 35,389
Walt Disney Co. (The) (c)
6.375%, due 03/01/12 35,000 39,895
Washington Mutual, Inc. (c)
5.625%, due 01/15/07 100,000 110,219
Wells Fargo Bank, N.A. (c)
6.450%, due 02/01/11 115,000 135,588
Weyerhaeuser Co. (c)
7.375%, due 03/15/32 20,000 22,990
---------------
6,664,932
---------------
ASSET-BACKED CORPORATES -- 0.34%
Americredit Automobile Receivables Trust,
03-AM, Class A2B FRN
1.584%, due 10/06/06 110,000 109,995
Capital One Multi-Asset Execution Trust,
03-A1, Class A1 FRN
1.570%, due 01/15/09 280,000 280,007
Comed Transitional Funding Trust,
98-1, Class A7
5.740%, due 12/25/10 500,000 566,625
Conseco Finance, 00-B, Class AF4
7.870%, due 02/15/31 85,000 88,448
Conseco Finance, 02-B, Class A2
5.590%, due 05/15/33 75,000 75,948
Peco Energy Transition Trust, 99-A, Class A7
6.130%, due 03/01/09 230,000 263,839
Sears Credit Account Master Trust,
01-1, Class A FRN
1.360%, due 02/15/10 280,000 278,835
</Table>
11
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
Structured Asset Securities Corp.,
03-AL2, Class A, 144A
3.356%, due 01/25/31 $ 196,873 $ 195,014
United Airlines, Inc. E.E.T.C. (d)(e)
7.811%, due 10/01/09 68,731 17,769
---------------
1,876,480
---------------
INTERNATIONAL DOLLAR BONDS -- 0.16%
Burlington Resources Finance Co.
6.680%, due 02/15/11 15,000 17,603
Canadian National Railway Co.
6.900%, due 07/15/28 15,000 17,797
Deutsche Telekom International Finance BV
8.250%, due 06/15/30 15,000 19,111
European Investment Bank (c)
4.875%, due 09/06/06 165,000 178,787
France Telecom S.A.
8.500%, due 03/01/31 15,000 20,756
HSBC Holdings PLC
5.250%, due 12/12/12 15,000 15,998
Inter-American Development Bank
5.750%, due 02/26/08 175,000 200,096
International Bank for
Reconstruction & Development
4.375%, due 09/28/06 225,000 243,207
Rio Tinto Finance USA Ltd.
2.625%, due 09/30/08 140,000 137,434
Telus Corp.
8.000%, due 06/01/11 20,000 23,100
---------------
873,889
---------------
MORTGAGE-BACKED SECURITIES -- 4.78%
Bear Stearns Commercial Mortgage Securities,
00-WF1, Class A2
7.780%, due 02/15/32 210,000 257,866
CS First Boston Mortgage Securities Corp.,
01-26 5A1 (f)
7.390%, due 11/25/31 412,462 434,388
CS First Boston Mortgage Securities Corp.,
02-10, Class 2A1
7.500%, due 05/25/32 150,183 157,754
DLJ Commercial Mortgage Corp.,
00-CKP1, Class A1B
7.180%, due 08/10/10 275,000 324,709
DLJ Commercial Mortgage Corp.,
99-CG2, Class A1B
7.300%, due 06/10/32 275,000 330,232
DLJ Commercial Mortgage Corp.,
99-CG3, Class A1B
7.340%, due 10/10/32 200,000 241,076
Fannie Mae
4.625%, due 05/01/13 145,000 149,121
5.500%, due 03/15/11 670,000 760,138
7.000%, due 03/01/33 2,339,051 2,463,247
Federal Home Loan Mortgage Corp., Gold
5.500%, due 09/01/17 120,790 125,282
5.500%, due 01/01/18 238,658 247,533
5.500%, due 04/01/18 855,030 886,862
6.000%, due 10/01/29 72,568 75,343
6.000%, due 12/01/30 $ 1,176,661 $ 1,220,256
6.500%, due 02/01/17 403,030 423,307
6.500%, due 04/01/29 278,915 290,246
Federal National Mortgage Association
3.967%, due 05/01/33 FRN 989,235 1,021,385
4.503%, due 06/01/33 FRN 999,082 1,021,428
5.500%, due 12/01/17 135,309 140,558
5.500%, due 01/01/18 3,631,055 3,771,911
5.500%, due 11/01/23 319,791 331,096
6.000%, due 11/01/28 453,712 471,683
6.000%, due 06/01/31 46,916 48,774
6.000%, due 11/01/32 1,338,179 1,391,183
6.500%, due 12/01/28 634,302 661,458
6.500%, due 11/01/31 27,529 28,708
6.500%, due 08/01/32 504,372 525,966
6.500%, due 09/01/32 164,895 171,954
6.500%, due 06/01/33 630,000 656,972
7.000%, due 05/01/33 699,432 736,589
7.500%, due 05/01/31 71,709 76,191
7.500%, due 02/01/33 1,735,465 1,844,694
Federal National Mortgage Association
Grantor Trust, 00-T6, Class A1
7.500%, due 06/25/30 155,441 173,462
Federal National Mortgage Association
Grantor Trust, 01-T5, Class A3
7.500%, due 06/19/30 259,155 289,201
Federal National Mortgage Association
Whole Loan, 01-W3, Class A
7.000%, due 09/25/41 198,600 216,536
Federal National Mortgage Association
Whole Loan, 03-W6, Class 6A FRN
5.210%, due 08/25/42 163,585 172,429
Federal National Mortgage Association
Whole Loan, 95-W3, Class A
9.000%, due 04/25/25 4,956 5,451
Freddie Mac
5.875%, due 03/21/11 165,000 185,603
6.000%, due 01/01/33 301,931 313,054
7.000%, due 06/01/28 932,658 977,834
GMAC Commercial Mortgage Securities, Inc.,
97-C2, Class A2
6.550%, due 04/16/29 125,000 135,084
Government National Mortgage Association
6.000%, due 11/20/28 151,359 157,792
6.000%, due 01/15/29 124,216 130,271
6.000%, due 02/20/29 133,084 138,740
6.000%, due 05/20/29 339,167 353,582
8.000%, due 12/15/22 44,456 48,480
9.000%, due 11/15/04 2,293 2,593
Greenwich Capital Commercial Funding Corp.,
03-FL1 A FRN
1.639%, due 07/05/18 239,951 239,951
GS Mortgage Securities Corp. II,
96-PL, Class A2
7.410%, due 02/15/27 58,741 61,206
LB Commercial Conduit Mortgage Trust,
99-C1, Class A1
6.410%, due 06/15/31 203,276 220,109
</Table>
12
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
LB Commercial Conduit Mortgage Trust,
99-C2, Class A2
7.325%, due 10/15/32 $ 70,000 $ 84,285
Merrill Lynch Mortgage Investors, Inc.,
97-C1, Class A3
7.120%, due 06/18/29 500,000 562,071
Morgan Stanley Dean Witter Capital I,
00-LIFE, Class A2
7.570%, due 12/15/09 150,000 183,069
Nomura Asset Securities Corp.,
95-MD3, Class A1B
8.150%, due 04/04/27 90,418 98,588
Norwest Asset Securities Corp.,
96-2, Class A9
7.000%, due 09/25/11 71,261 71,155
Norwest Asset Securities Corp.,
99-14, Class A5
6.500%, due 06/25/29 160,000 162,446
Salomon Brothers Mortgage Securities VII,
00-C3, Class A2
6.592%, due 12/18/33 80,000 93,370
Vanderbilt Mortgage Finance, 00-B, Class 1A3
8.255%, due 05/07/17 215,000 232,479
---------------
26,596,751
---------------
U.S. GOVERNMENT OBLIGATIONS -- 7.54%
U.S. Treasury Bond
6.250%, due 05/15/30 2,665,000 3,317,717
8.000%, due 11/15/21 5,000 7,243
U.S. Treasury Notes
1.625%, due 03/31/05 1,655,000 1,666,378
1.625%, due 04/30/05 5,345,000 5,380,074
2.000%, due 11/30/04 2,530,000 2,560,044
2.750%, due 09/30/03 620,000 622,907
3.000%, due 02/15/08 (c) 14,155,000 14,565,821
3.625%, due 08/31/03 (c) 3,820,000 3,836,861
4.375%, due 08/15/12 (c) 9,225,000 9,891,294
5.750%, due 08/15/10 25,000 29,263
---------------
41,877,602
---------------
Total U.S. Bonds 77,889,654
---------------
INTERNATIONAL BONDS -- 2.50%
AUSTRALIA -- 0.15%
Government of Australia
6.500%, due 05/15/13 AUD 318,000 237,291
9.000%, due 09/15/04 850,000 600,175
---------------
837,466
---------------
CANADA -- 0.21%
Government of Canada
5.000%, due 12/01/03 CAD 350,000 259,591
5.750%, due 06/01/29 165,000 132,850
6.000%, due 09/01/05 460,000 358,981
6.000%, due 06/01/08 100,000 80,824
6.000%, due 06/01/11 150,000 122,521
8.000%, due 06/01/23 195,000 196,161
---------------
1,150,928
---------------
CAYMAN ISLANDS -- 0.08%
SMFG Finance Ltd., 144A
2.250%, due 07/11/05 JPY 57,000,000 $ 441,987
---------------
DENMARK -- 0.08%
Kingdom of Denmark
5.000%, due 11/15/13 DKK 985,000 164,935
6.000%, due 11/15/09 460,000 81,385
7.000%, due 12/15/04 1,245,000 205,453
---------------
451,773
---------------
FINLAND -- 0.05%
Government of Finland
5.750%, due 02/23/11 EUR 225,000 296,089
---------------
FRANCE -- 0.38%
Government of France
3.500%, due 07/12/04 EUR 395,000 460,734
5.000%, due 10/25/16 70,000 86,915
5.500%, due 04/25/07 445,000 560,537
5.500%, due 04/25/10 436,000 565,677
5.500%, due 04/25/29 180,000 230,943
8.500%, due 10/25/19 120,000 204,843
---------------
2,109,649
---------------
GERMANY -- 0.48%
Bundesschatzanweisungen
2.500%, due 03/18/05 EUR 300,000 346,683
Deutsche Bundesrepublik
5.000%, due 07/04/12 385,000 483,987
6.000%, due 01/05/06 525,000 655,033
6.000%, due 01/04/07 260,000 331,123
6.500%, due 07/04/27 255,000 370,189
Treuhandanstalt
6.750%, due 05/13/04 380,000 454,017
---------------
2,641,032
---------------
ITALY -- 0.54%
Buoni Poliennali Del Tesoro
3.250%, due 04/15/04 EUR 590,000 684,101
5.000%, due 05/01/08 235,000 294,102
5.250%, due 11/01/29 410,000 502,989
5.500%, due 11/01/10 408,000 528,366
8.750%, due 07/01/06 710,000 960,938
---------------
2,970,496
---------------
MEXICO -- 0.02%
Mexico Government International Bond
8.125%, due 12/30/19 USD 105,000 119,700
---------------
NETHERLANDS -- 0.08%
Government of Netherlands
5.000%, due 07/15/11 EUR 370,000 465,850
---------------
QATAR -- 0.01%
State of Qatar, 144A
9.750%, due 06/15/30 USD 55,000 76,450
---------------
SPAIN -- 0.26%
Government of Spain
3.250%, due 01/31/05 EUR 400,000 467,824
4.250%, due 10/31/07 330,000 400,719
4.750%, due 07/30/14 245,000 300,561
</Table>
13
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
5.150%, due 07/30/09 EUR 115,000 $ 145,475
6.000%, due 01/31/29 95,000 129,954
---------------
1,444,533
---------------
SWEDEN -- 0.10%
Government of Sweden
5.000%, due 01/15/04 SEK 1,100,000 138,949
6.750%, due 05/05/14 900,000 134,647
8.000%, due 08/15/07 1,850,000 270,834
---------------
544,430
---------------
UNITED KINGDOM -- 0.06%
Royal Bank of Scotland
9.118%, due 03/31/10 GBP 15,000 19,342
U.K. Gilt
8.000%, due 12/07/15 35,000 78,112
U.K. Treasury
8.000%, due 09/27/13 120,000 260,392
---------------
357,846
---------------
Total International Bonds 13,908,229
---------------
Total Bonds (Cost $90,524,067) 91,797,883
---------------
<Caption>
SHARES
---------------
INVESTMENT COMPANIES -- 13.54%
UBS High Yield Relationship Fund 1,174,148 17,910,108
UBS Emerging Markets Debt
Relationship Fund 203,662 8,279,844
UBS Emerging Markets Equity
Relationship Fund 3,601,616 33,640,895
UBS U.S. Small Cap Equity
Relationship Fund 563,062 15,398,165
---------------
Total Investment Companies
(Cost $65,815,001) 75,229,012
---------------
SHORT-TERM INVESTMENTS -- 6.21%
OTHER -- 6.03%
UBS Supplementary Trust
U.S. Cash Management Prime Fund 33,536,135 33,536,135
---------------
<Caption>
FACE
AMOUNT
---------------
U.S. GOVERNMENT OBLIGATIONS -- 0.18%
U.S. Treasury Bill, due 08/07/03 (g) $ 1,000,000 998,939
---------------
Total Short-Term Investments
(Cost $34,535,074) 34,535,074
---------------
<Caption>
SHARES
---------------
INVESTMENTS OF CASH COLLATERAL FOR
SECURITIES LOANED -- 5.93%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $32,953,029) 32,953,029 32,953,029
---------------
Total Investments
(Cost $559,979,943) -- 106.31% (a) 590,872,162
Liabilities, less cash and
other assets -- (6.31)% (35,047,742)
---------------
Net Assets -- 100% $ 555,824,420
===============
</Table>
14
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $565,922,814; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 32,013,036
Gross unrealized depreciation (7,063,688)
------------
Net unrealized appreciation $ 24,949,348
============
</Table>
(b) Non-income producing security.
(c) Security, or portion thereof, was on loan at June 30, 2003.
(d) Security is in default.
(e) Security is illiquid. These securities amounted to $17,769 or 0.00% of net
assets.
(f) Variable rate note - The rate discolsed is that in effect at June 30, 2003.
(g) All or portion of these securities was pledged to cover margin requirements
for futures contracts.
% Represents a percentage of net assets.
E.E.T.C.: Enhanced Equipment Trust Certificate.
FRN: Floating rate note - The rate disclosed is that in effect at
June 30, 2003.
144A: Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified buyers. At June 30, 2003, the
value of these securities amounted to $895,625 or 0.16% of net assets.
FORWARD FOREIGN CURRENCY CONTRACTS
UBS Global Allocation Fund had the following open forward foreign currency
contracts as of June 30, 2003:
<Table>
<Caption>
SETTLEMENT LOCAL CURRENT UNREALIZED
DATE CURRENCY VALUE GAIN/(LOSS)
------------ ------------- ------------- -------------
FORWARD FOREIGN CURRENCY BUY CONTRACTS:
Australian Dollar (AUD) 12/03/03 13,500,000 $ 8,919,760 $ 362,245
Euro (EUR) 12/03/03 19,220,000 21,977,309 (493,191)
Japanese Yen (JPY) 12/03/03 1,310,000,000 10,964,687 (131,366)
FORWARD FOREIGN CURRENCY SALE CONTRACTS:
British Pound (GBP) 12/03/03 18,300,000 29,888,338 (113,917)
Swedish Krone (SEK) 12/03/03 18,900,000 2,343,445 57,439
Swiss Franc (CHF) 12/03/03 3,700,000 2,741,117 53,191
-------------
Total net unrealized loss on Forward Foreign
Currency Contracts $ (265,599)
=============
</Table>
FUTURES CONTRACTS
UBS Global Allocation Fund had the following open futures contracts as of
June 30, 2003:
<Table>
<Caption>
EXPIRATION CURRENT UNREALIZED
DATE COST VALUE GAIN
------------ ------------- ------------- -------------
U.S. INTEREST RATE FUTURES BUY CONTRACTS:
5 Year U.S. Treasury Notes, 79 contracts September 2003 $ 9,086,170 $ 9,094,875 $ 8,705
=============
</Table>
The aggregate market value of investments pledged to cover margin requirements
for the open futures positions at June 30, 2003 was $998,939.
See accompanying notes to financial statements
15
<Page>
UBS GLOBAL EQUITY FUND
For the fiscal year ended June 30, 2003, Class Y shares of UBS Global Equity
Fund declined 1.93%, outperforming, on a relative basis, the 2.05% decline
generated by its benchmark, the MSCI World Equity (Free) Index. (Returns for all
share classes over various time periods are shown on page 18. Please note that
these returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.)
Currency allocation contributed significantly to the Fund's overall performance
during the period, as the euro moved to historic highs versus the US dollar.
12-MONTH MARKET REVIEW
The global economy was weak for much of the reporting period. The financial
markets were often volatile, reflecting the many uncertainties facing investors
both in the US and abroad. As the period began, many of the issues troubling US
investors were also adversely affecting the international markets. The
sputtering economy, weak capital spending, geopolitical unrest and heightened
concerns over additional terrorist attacks caused investors to shun equities in
favor of the relative security offered by the bond market. As a result, stock
prices fell, while the fixed income markets posted strong results in the third
quarter of 2002. Stocks experienced a reversal of fortune in the fourth quarter,
when some signs of economic improvement and better-than-expected earnings
reports led investors back to stocks.
This type of volatility further characterized the remainder of the fiscal year.
Following the rally in the fourth quarter, most global equity markets fell over
the first three months of 2003. Investors flocking to the safe havens offered by
the global bond markets, at a time when the potential for a war in Iraq and weak
economic data helped renew investor risk aversion, spurred the decline. It was
short-lived, however, and stocks rallied in a reversal that was attributed in
large part to investors' sense of relief following the rapid resolution of major
conflict in Iraq. Investor appetite for risk increased, and the demand for
equities rose.
CURRENCY AND SECTOR ALLOCATION CONTRIBUTED TO RELATIVE PERFORMANCE
The fiscal year started off on a poor note as the equity markets both in the US
and abroad declined in value. However, using our vast global network of analysts
and investment specialists, we sought to construct a portfolio that was balanced
between sectors sensitive to an economic recovery and those less tied to further
economic weakness. In particular, the Fund benefited from its underweights in
consumer staples.
Another positive theme throughout the fiscal year was the Fund's holdings in the
pharmaceuticals area. Several well-publicized drug failures caused the sector as
a whole to decline in value early in the reporting period. Nevertheless, our
extensive research helped us uncover several companies that we believed
possessed strong long-term fundamentals, and these stocks enhanced results when
investors realized their true value and their prices rose substantially. As the
fiscal year progressed, we increased exposure to this area when the opportunity
arose.
Our move to pare the Fund's technology exposure late in the fiscal year was also
a key sector decision. Technology stocks rose sharply during the second quarter
of 2003, as the market anticipated a potential significant rebound in earnings.
However, we do not believe the rebound will ultimately reach the hoped-for
levels. Therefore, we cut back our holdings, especially in the most volatile
sub-sectors (such as semiconductors).
Geographically, we held an underweight position to the US, since our global
research network concluded that valuations outside of the US were more
attractive. We also maintained a modest underweight to Japan. The economic
prospects for Japan are poor, but this is counterbalanced by very low
expectations and depressed valuations. By and large, the Japan underweight
proved beneficial to performance during the second half of the review period.
16
<Page>
On a currency level, we leveraged the expertise of the team of currency analysts
at UBS Global Asset Management to implement allocation decisions for the Fund.
Ultimately, these decisions made a significant contribution to the Fund's
overall performance during the period. Specifically, against a backdrop whereby
the euro moved to historic highs versus the US dollar, an overweight to the euro
and an underweight to the US dollar provided positive results. An overweight to
the undervalued Australian dollar contributed positively to performance as well.
As the currency moved toward our fair value estimate over the year, we pared
back this overweight in stages. An underweight to the Japanese yen, at a time
when it appears that little effort at economic reform is being made in that
country, also had a positive impact on performance. Conversely, an underweight
to the UK pound sterling had a slightly negative impact on performance.
LOOKING AHEAD
At present, our top-down analysis of the global environment implies that the UK
and continental European markets are modestly more attractive than the US equity
market, although the valuation gap between these regions is relatively narrow.
The Japanese market has bounced off its bottom, but we still see no evidence of
economic or corporate reform. Reinforcing the speculative nature of the recent
rise in Japanese equities, the lowest-quality, financially distressed companies
have been the best performers.
From an industry and stock standpoint, our analysis has led us to hold a
portfolio with a beta that is similar to that of the overall market (beta is a
measure of a portfolio's sensitivity to changes in the market), and that is
currently investment style neutral. We have moved the Fund away from a defensive
position over the past year, as the valuation of defensive sectors has lessened.
We expect this move away from defensive sectors to continue as the prospective
valuations of more pro-cyclical sectors improve.
For example, healthcare is now one of our largest sector overweights. This
sector has been battered by investor nervousness over regulatory issues,
company-specific problems, and some scandals that have resulted in significant
fines and penalties. Ultimately, however, we believe that the demographics are
positive and that companies with proprietary products and healthy research and
development will continue to enjoy high returns of capital that are not
currently appreciated by the markets.
17
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- --------------------------------------------------------------------------------------------------------
UBS Global Equity Fund Class A 10.02% -2.23% -4.94% -0.68% 0.81%
- --------------------------------------------------------------------------------------------------------
UBS Global Equity Fund Class B 9.70 -2.91 N/A N/A -4.68
- --------------------------------------------------------------------------------------------------------
UBS Global Equity Fund Class C 9.60 -2.93 N/A N/A -4.70
- --------------------------------------------------------------------------------------------------------
UBS Global Equity Fund Class Y 10.17 -1.93 -4.60 -0.36 5.45
- --------------------------------------------------------------------------------------------------------
UBS Global Equity Fund Class A** 3.98 -7.66 -6.71 -1.80 -0.13
- --------------------------------------------------------------------------------------------------------
UBS Global Equity Fund Class B** 4.70 -7.64 N/A N/A -7.00
- --------------------------------------------------------------------------------------------------------
UBS Global Equity Fund Class C** 7.53 -4.79 N/A N/A -5.28
- --------------------------------------------------------------------------------------------------------
MSCI World Equity (Free) Index 11.33 -2.05 -12.73 -2.85 5.13
- --------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS GLOBAL EQUITY FUND CLASS A IS 6/30/97. INCEPTION DATES
OF CLASS B AND CLASS C ARE 12/11/01 AND 11/27/01, RESPECTIVELY. INCEPTION
DATE OF CLASS Y IS 1/23/94. FOR ILLUSTRATION PURPOSES, THE INCEPTION RETURN
OF THE INDEX IS CALCULATED AS OF 1/31/94, WHICH IS THE CLOSEST MONTH-END TO
THE INCEPTION DATE OF THE OLDEST SHARE CLASS (CLASS Y).
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS Global Equity
Fund Class Y shares and the MSCI World Equity (Free) Index if you had invested
$10,000 on January 31, 1994, and had reinvested all your income dividends and
capital gain distributions through June 30, 2003. The performance of Class A,
Class B and Class C shares will vary based upon the different inception dates,
class specific expenses and sales charges. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
[CHART]
UBS GLOBAL EQUITY FUND CLASS Y VS. MSCI WORLD EQUITY (FREE) INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS GLOBAL EQUITY FUND CLASS Y MSCI WORLD EQUITY (FREE) INDEX
$ 10,000 $ 10,000
$ 9,780 $ 9,869
$ 9,350 $ 9,443
$ 9,570 $ 9,741
$ 9,640 $ 9,770
6/30/1994 $ 9,530 $ 9,741
$ 9,671 $ 9,927
$ 10,083 $ 10,228
$ 9,811 $ 9,957
$ 9,832 $ 10,244
$ 9,570 $ 9,802
$ 9,565 $ 9,896
$ 9,423 $ 9,750
$ 9,575 $ 9,895
$ 9,656 $ 10,372
$ 9,910 $ 10,735
$ 10,042 $ 10,832
6/30/95 $ 10,108 $ 10,829
$ 10,576 $ 11,371
$ 10,750 $ 11,117
$ 10,944 $ 11,445
$ 10,924 $ 11,267
$ 11,312 $ 11,660
$ 11,663 $ 12,002
$ 12,013 $ 12,227
$ 12,067 $ 12,301
$ 12,275 $ 12,505
$ 12,613 $ 12,799
$ 12,646 $ 12,809
6/30/96 $ 12,702 $ 12,878
$ 12,296 $ 12,423
$ 12,515 $ 12,569
$ 12,933 $ 13,062
$ 12,976 $ 13,152
$ 13,635 $ 13,894
$ 13,677 $ 13,673
$ 13,797 $ 13,840
$ 13,989 $ 13,998
$ 13,929 $ 13,718
$ 14,013 $ 14,168
$ 14,842 $ 15,045
6/30/1997 $ 15,403 $ 15,793
$ 15,910 $ 16,522
$ 15,173 $ 15,404
$ 15,825 $ 16,241
$ 14,968 $ 15,389
$ 14,956 $ 15,658
$ 15,143 $ 15,849
$ 15,396 $ 16,294
$ 16,343 $ 17,396
$ 17,009 $ 18,128
$ 16,983 $ 18,305
$ 16,929 $ 18,083
6/30/1998 $ 16,788 $ 18,506
$ 16,707 $ 18,478
$ 14,873 $ 16,015
$ 15,114 $ 16,300
$ 16,118 $ 17,776
$ 16,734 $ 18,835
$ 17,268 $ 19,751
$ 17,268 $ 20,185
$ 16,760 $ 19,648
$ 17,282 $ 20,463
$ 18,476 $ 21,273
$ 17,804 $ 20,490
6/30/1999 $ 18,490 $ 21,443
$ 18,421 $ 21,379
$ 18,132 $ 21,340
$ 17,622 $ 21,139
$ 17,870 $ 22,237
$ 18,311 $ 22,861
$ 19,491 $ 24,713
$ 18,166 $ 23,299
$ 17,800 $ 23,360
$ 18,425 $ 24,977
$ 18,227 $ 23,919
$ 18,379 $ 23,314
6/30/2000 $ 18,988 $ 24,099
$ 18,562 $ 23,419
$ 18,897 $ 24,182
$ 18,333 $ 22,897
$ 18,546 $ 22,514
$ 18,394 $ 21,146
$ 19,475 $ 21,480
$ 19,900 $ 21,897
$ 18,743 $ 20,049
$ 17,653 $ 18,731
$ 18,709 $ 20,117
$ 18,556 $ 19,863
6/30/2001 $ 18,215 $ 19,240
$ 17,994 $ 18,986
$ 17,550 $ 18,076
$ 16,186 $ 16,483
$ 16,459 $ 16,800
$ 17,482 $ 17,796
$ 17,716 $ 17,909
$ 17,326 $ 17,368
$ 17,308 $ 17,218
$ 18,000 $ 17,980
$ 17,681 $ 17,373
$ 17,823 $ 17,409
6/30/2002 $ 16,811 $ 16,354
$ 15,320 $ 14,976
$ 15,480 $ 15,005
$ 13,527 $ 13,357
$ 14,699 $ 14,344
$ 15,622 $ 15,120
$ 14,964 $ 14,389
$ 14,414 $ 13,954
$ 14,102 $ 13,713
$ 13,919 $ 13,672
$ 15,313 $ 14,889
$ 16,174 $ 15,743
6/30/2003 $ 16,486 $ 16,019
</Table>
1/31/94 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
18
<Page>
TOP TEN INTERNATIONAL EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
BP PLC 2.2%
Nestle S.A. 2.1
Total S.A., Class B 1.9
Aventis S.A. 1.8
Shell Transport & Trading Co. PLC 1.2
Gallaher Group PLC 1.2
Reed Elsevier NV 1.2
ENI Spa 1.1
Rentokil Initial PLC 1.1
Barclays PLC 1.1
- ------------------------------------------------------------------------
Total 14.9%
</Table>
TOP TEN U.S. EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
Citigroup, Inc. 3.0%
Johnson & Johnson 2.5
Microsoft Corp. 2.2
Nextel Communications, Inc., Class A 2.0
Wyeth 2.0
Wells Fargo & Co. 1.7
Freddie Mac 1.6
SBC Communications, Inc. 1.6
Altria Group, Inc. 1.6
Bristol-Myers Squibb Co. 1.5
- ------------------------------------------------------------------------
Total 19.7%
</Table>
GEOGRAPHIC ALLOCATION
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
United States 51.3%
United Kingdom 15.9
Japan 7.5
France 6.7
Switzerland 4.5
Netherlands 3.8
Finland 1.7
Australia 1.7
Ireland 1.6
Italy 1.1
Sweden 1.1
Spain 0.7
Belgium 0.5
Bermuda 0.4
Germany 0.4
Portugal 0.4
Singapore 0.3
Hong Kong 0.2
Norway 0.2
- ------------------------------------------------------------------------
100.0%
</Table>
19
<Page>
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF JUNE 30, 2003
<Table>
U.S. EQUITIES
Aerospace & Military 0.65%
Banks 4.04
Beverages & Tobacco 1.56
Broadcasting & Publishing 0.02
Business & Public Service 0.50
Capital Goods 1.13
Computer Software 2.93
Computer Systems 1.82
Consumer 0.39
Electric Components 0.30
Energy 2.63
Financial Services 9.34
Health: Drugs 5.86
Health: Non-Drugs 3.91
Industrial Components 0.78
Insurance 0.27
Media and Entertainment 0.90
Metals Non-Ferrous 1.15
Multi-Industry 1.10
Retail/Apparel 2.16
Services/Miscellaneous 1.70
Telecommunications- Services 4.76
Transportation 0.79
Utilities 0.65
-------
Total U.S. Equities 49.34
INTERNATIONAL EQUITIES
Aerospace & Defense 0.57
Autos/Durables 1.28
Banks 5.96
Beverages & Tobacco 1.90
Broadcasting & Publishing 2.69
Chemicals 2.72
Commercial Services 0.45%
Computer Software 0.27
Construction 1.12
Electric Components 2.89
Electronics 0.33
Energy 3.00
Financial Services 2.05
Food & House Products 2.66
Forest Products 0.76
Health: Drugs 4.24
Health: Non-Drugs 0.91
Housing/Paper 0.70
Insurance 1.17
Machinery & Engineering 0.55
Merchandising 0.86
Metals-Non-Ferrous 0.28
Multi-Industry 0.64
Oil 1.23
Real Estate 0.40
Recreation 1.63
Retail/Apparel 0.87
Services/Miscellaneous 1.83
Telecommunications 2.66
Transportation 0.58
Utilities 1.45
-------
Total International Equities 48.65
International Bonds 0.04
SHORT-TERM INVESTMENTS 0.75
-------
TOTAL INVESTMENTS 98.78
CASH AND OTHER ASSETS,
LESS LIABILITIES 1.22
-------
NET ASSETS 100.00%
=======
</Table>
20
<Page>
UBS GLOBAL EQUITY FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
--------------- ---------------
EQUITIES -- 97.99%
U.S. EQUITIES -- 49.34%
Allergan, Inc. 42,500 $ 3,276,750
Altria Group, Inc. 146,100 6,638,784
American International Group, Inc. 58,447 3,225,106
Anthem, Inc.(b) 32,900 2,538,235
AOL Time Warner, Inc. (b) 134,300 2,160,887
Bank of New York Co., Inc. (The) 78,600 2,259,750
Baxter International, Inc. 68,300 1,775,800
BEA Systems, Inc. (b) 268,500 2,915,910
BellSouth Corp. 63,900 1,701,657
Bristol-Myers Squibb Co. 227,200 6,168,480
Burlington Northern Santa Fe Corp. 118,000 3,355,920
Cephalon, Inc. (b) 54,200 2,230,872
Citigroup, Inc. 296,700 12,698,760
Computer Sciences Corp. (b) 1,700 64,804
ConocoPhillips 53,318 2,921,826
Constellation Energy Group, Inc. 39,600 1,358,280
Costco Wholesale Corp. (b) 143,400 5,248,440
FirstEnergy Corp. 75,107 2,887,864
FleetBoston Financial Corp. 92,600 2,751,146
FPL Group, Inc. 21,000 1,403,850
Freddie Mac 135,900 6,899,643
General Electric Co. 162,500 4,660,500
GreenPoint Financial Corp. 31,700 1,614,798
Hewlett-Packard Co. 220,491 4,696,458
Illinois Tool Works, Inc. 73,000 4,807,050
Ingersoll-Rand Co., Class A 69,300 3,279,276
International Business Machines Corp. 35,300 2,912,250
Interpublic Group of Cos., Inc. 159,000 2,127,420
J.P. Morgan Chase & Co. 169,300 5,786,674
Johnson & Johnson 202,102 10,448,674
Kimberly-Clark Corp. 31,900 1,663,266
Masco Corp. 204,800 4,884,480
MeadWestvaco Corp. 103,700 2,561,390
Mellon Financial Corp. 134,400 3,729,600
Microsoft Corp. 371,900 9,524,359
Morgan Stanley 85,400 3,650,850
Motorola, Inc. 158,200 1,491,826
Newell Rubbermaid, Inc. 44,600 1,248,800
Nextel Communications, Inc., Class A (b) 475,200 8,591,616
Omnicom Group 34,800 2,495,160
Pfizer, Inc. 75,301 2,571,529
Principal Financial Group, Inc. (b) 33,700 1,086,825
RadioShack Corp. 102,100 2,686,251
SBC Communications, Inc. 266,600 6,811,630
Schlumberger Ltd. 37,400 1,779,118
Sempra Energy 125,900 3,591,927
SICOR, Inc. (b) 114,100 2,320,794
Texas Instruments, Inc. 72,900 1,283,040
Travelers Property Casualty Corp., Class B (b) 73,200 1,154,364
U.S. Bancorp 138,900 $ 3,403,050
United Technologies Corp. 39,100 2,769,453
UnitedHealth Group, Inc. 87,000 4,371,750
Verizon Communications, Inc. 41,000 1,617,450
Viacom, Inc., Class A (b) 2,060 90,022
Viacom, Inc., Class B (b) 87,100 3,802,786
Wells Fargo & Co. 141,100 7,111,440
Wyeth 182,500 8,312,875
---------------
Total U.S. Equities 209,421,515
---------------
INTERNATIONAL EQUITIES -- 48.65%
AUSTRALIA -- 1.66%
Mayne Group Ltd. 444,641 817,064
QBE Insurance Group Ltd. 377,354 2,358,636
Westpac Banking Corp. 355,091 3,869,806
---------------
7,045,506
---------------
BELGIUM -- 0.46%
Fortis 112,336 1,950,506
---------------
BERMUDA -- 0.45%
Accenture Ltd., Class A (b) 105,100 1,901,259
---------------
FINLAND -- 1.69%
Nokia Oyj 239,400 3,942,302
UPM-Kymmene Oyj 222,000 3,240,225
---------------
7,182,527
---------------
FRANCE -- 6.67%
Aventis S.A. 138,200 7,603,452
BNP Paribas 73,201 3,719,691
Cap Gemini S.A. (b) 33,236 1,180,116
Compagnie de Saint-Gobain 35,589 1,400,575
Sanofi-Synthelabo S.A. 48,026 2,812,699
Suez S.A. 117,379 1,868,229
Total S.A. 53,301 8,055,043
Unibail 22,873 1,694,180
---------------
28,333,985
---------------
GERMANY -- 0.42%
Linde AG 48,532 1,796,800
---------------
HONG KONG -- 0.20%
Sun Hung Kai Properties Ltd. 168,000 848,817
---------------
IRELAND -- 1.56%
Bank of Ireland 230,869 2,797,014
CRH PLC 245,253 3,844,356
---------------
6,641,370
---------------
ITALY -- 1.14%
Assicurazioni Generali SpA 4,954 114,803
ENI SpA 311,839 4,716,206
---------------
4,831,009
---------------
</Table>
21
<Page>
<Table>
<Caption>
SHARES VALUE
--------------- ---------------
JAPAN -- 7.46%
AIFUL Corp. 48,300 $ 2,059,513
Fuji Photo Film Co., Ltd. 126,000 3,641,224
Honda Motor Co., Ltd. 57,400 2,175,057
Kao Corp. 82,000 1,526,296
Mitsubishi Tokyo Financial Group, Inc. 174 786,858
Murata Manufacturing Co., Ltd. 68,100 2,676,927
Nintendo Co., Ltd. 44,900 3,264,435
Nippon Telegraph & Telephone Corp. 670 2,628,108
Rohm Co., Ltd. 30,400 3,314,062
Sekisui House Ltd. 120,000 909,432
Sompo Japan Insurance, Inc. 381,000 2,078,326
Takeda Chemical Industries Ltd. 77,100 2,844,497
Tokyo Electron Ltd. 11,100 525,996
Toyota Motor Corp. 125,000 3,237,560
---------------
31,668,291
---------------
NETHERLANDS -- 3.80%
Koninklijke Philips Electronics NV 119,373 2,270,090
Reed Elsevier NV 431,927 5,093,982
TPG NV 141,002 2,448,238
VNU NV 143,679 4,426,807
Wolters Kluwer NV 156,244 1,883,949
---------------
16,123,066
---------------
NORWAY -- 0.16%
Telenor ASA 164,800 684,916
---------------
PORTUGAL -- 0.38%
Electricidade de Portugal S.A. 750,426 1,602,867
---------------
SINGAPORE -- 0.34%
DBS Group Holdings Ltd. 246,000 1,438,842
---------------
SPAIN -- 0.69%
Banco Bilbao Vizcaya Argentaria S.A. 277,169 2,912,342
---------------
SWEDEN -- 1.10%
Svenska Cellulosa AB 86,450 2,953,682
Swedish Match AB 228,200 1,724,695
---------------
4,678,377
---------------
SWITZERLAND -- 4.53%
Adecco S.A. 77,499 3,192,532
Compagnie Financiere Richemont AG 102,197 1,652,294
Givaudan S.A. 5,040 2,120,852
Nestle S.A. 42,403 8,749,502
Roche Holding AG 24,826 1,947,335
Swiss Reinsurance Co. 28,646 1,587,156
---------------
19,249,671
---------------
UNITED KINGDOM -- 15.94%
Abbey National PLC 233,527 $ 1,813,080
Allied Domecq PLC 203,609 1,122,183
Amersham PLC 227,870 1,709,937
ARM Holdings PLC (b) 828,618 916,114
AstraZeneca PLC 32,807 1,315,507
Barclays PLC 604,123 4,485,988
BP PLC 1,359,193 9,425,601
Centrica PLC 417,043 1,209,474
Diageo PLC 100,129 1,069,016
Dixons Group PLC 646,060 1,407,236
Electrocomponents PLC 255,072 1,365,833
Gallaher Group PLC 529,926 5,202,983
GlaxoSmithKline PLC 138,891 2,802,985
HSBC Holdings PLC 32,100 379,261
Invensys PLC 1,569,633 530,973
Kingfisher PLC (b) 449,704 2,057,399
National Grid Transco PLC 102,224 693,290
Prudential PLC 150,470 911,247
Rentokil Initial PLC 1,462,237 4,566,399
Rio Tinto PLC 63,484 1,194,234
Rolls-Royce Group PLC 1,139,322 2,411,149
Royal Bank of Scotland Group PLC 152,818 4,286,903
Scottish & Southern Energy PLC 373,235 3,843,148
Shell Transport & Trading Co. PLC 790,070 5,214,897
Tesco PLC 1,011,400 3,659,171
Vodafone Group PLC 2,070,487 4,048,658
---------------
67,642,666
---------------
Total International Equities 206,532,817
---------------
Total Equities (Cost $370,174,405) 415,954,332
---------------
<Caption>
FACE
AMOUNT
---------------
INTERNATIONAL BONDS -- 0.04%
CAYMAN ISLANDS -- 0.04%
SMFG Finance Ltd. 144A
2.250%, due 07/11/05
(Cost $177,320) JPY 21,000,000 162,837
---------------
<Caption>
SHARES
---------------
SHORT-TERM INVESTMENTS -- 0.75%
OTHER -- 0.75%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $3,192,158) 3,192,158 3,192,158
---------------
Total Investments
(Cost $373,543,883) -- 98.78% (a) 419,309,327
Cash and other assets,
less liabilities -- 1.22% 5,156,432
---------------
Net Assets -- 100% $ 424,465,759
===============
</Table>
22
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $379,764,300; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 43,351,812
Gross unrealized depreciation (3,806,785)
------------
Net unrealized appreciation $ 39,545,027
============
</Table>
(b) Non-income producing security.
% Represents a percentage of net assets.
144A: Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified buyers. At June 30, 2003, the value
of these securities amounted to $162,837 or 0.04% of net assets.
FORWARD FOREIGN CURRENCY CONTRACTS
UBS Global Equity Fund had the following open forward foreign currency contracts
as of June 30, 2003:
<Table>
<Caption>
SETTLEMENT LOCAL CURRENT UNREALIZED
DATE CURRENCY VALUE GAIN/(LOSS)
------------ ------------- ------------- -------------
FORWARD FOREIGN CURRENCY BUY CONTRACTS:
Australian Dollar (AUD) 12/03/03 15,500,000 $ 10,241,206 $ 415,911
Canadian Dollar (CAD) 12/03/03 14,500,000 10,577,818 249,042
Euro (EUR) 12/03/03 3,550,000 4,059,284 (91,376)
FORWARD FOREIGN CURRENCY SALE CONTRACTS:
British Pound (GBP) 12/03/03 24,300,000 39,687,793 (229,696)
Swiss Franc (CHF) 12/03/03 9,200,000 6,815,751 202,072
-------------
Total net unrealized gain on Forward Foreign
Currency Contracts $ 545,953
=============
</Table>
See accompanying notes to financial statements
23
<Page>
UBS GLOBAL BOND FUND
Over the fiscal year ended June 30, 2003, Class Y shares of UBS Global Bond Fund
returned 16.72%, outperforming by a small margin the 16.51% return of the
Citigroup World Government Bond Index (or WGBI, formerly known as the Salomon
Smith Barney World Government Bond Index). (Returns for all share classes over
various time periods are shown on page 26. Please note that these returns do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.)
The strongest driver of the Fund's relative performance came from our active
currency strategy, but this was partly offset by the impact of duration
management. There was little impact from security selection as exposure to
non-government sectors had little effect overall, with spreads widening in the
second half of 2002, before tightening rapidly in 2003.
12-MONTH MARKET REVIEW
Overall, the global bond markets performed well during the period, propelled by
investors who were drawn to the relative security offered by bonds.
At the start of the period, weak global growth and mounting concerns over the
geopolitical situation caused investors to favor bonds over their riskier stock
counterparts. Most major economies experienced a weakening during this time, and
bond markets in the United States, Japan and Europe all rallied in this
environment. The economic news was slightly better as the year 2002 drew to a
close, leading to a rebound in the global equity markets. However, signs of
growth were not strong enough to satisfy central bankers, so both the Federal
Reserve Board (the "Fed") and the European Central Bank (the "ECB") cut interest
rates in an effort to stimulate their economies.
In the opening months of 2003, the global bond markets continued to generate
strong results. Risk-averse investors, cautious in the face of a probable war
with Iraq, drove the global bond markets to strong performance. Around this
time, both the ECB and Bank of England lowered their respective interest rates.
The Fed, on the other hand, chose to hold rates steady, though it made it clear
that further rate cuts were a distinct possibility. (In fact, a rate cut
eventually was implemented at its June 25, 2003 meeting.)
The 12-month period ended on a positive note for both stocks and bonds. Despite
the strong rally in the equity markets following the quick resolution of major
conflict in Iraq, bonds continued to perform well due to the uncertainty
surrounding a global economic rebound, unresolved geopolitical issues and
stubbornly high unemployment.
CURRENCY MANAGEMENT AND COUNTRY ALLOCATIONS CONTRIBUTED TO PERFORMANCE
Country allocations yielded positive results for the Fund over the period. In
the first half of the period, we maintained an overweight exposure to European
Monetary Union (EMU) bonds. As the period progressed, however, we shifted a
portion of this overweight back into the United States, due to the European
markets' outperformance of the dollar bloc.
A cautious view also led us to favor higher yielding global bond markets--in
particular, Canada, which we believed offered better value than other dollar
bloc markets. The Fund was rewarded for its position in Canada, in part because
it was ultimately the best performing major bond market over the first quarter
of 2003.
Our cautious approach also led us to limit our exposure to Japan. There were few
signs of any new initiatives by Japan's government or the Bank of Japan to halt
the persistent decline in nominal GDP. Against this backdrop, we maintained an
underweight in Japanese securities throughout the period, which helped Fund
performance. In particular, this underweight positioned the Fund well when, at
period end, an unexpected sharp rise in Japanese government bond yields resulted
in Japanese bonds lagging other markets.
In terms of our currency strategy, the in-depth research conducted by our team
of currency analysts led us to overweight the euro and Australian dollar, and
underweight the US dollar, the UK pound and the Japanese yen in the first half
of the period. These active currency positions all provided positive relative
returns for the portfolio as the US dollar
24
<Page>
plummeted against other major currencies and the UK pound underperformed other
European currencies.
Results from duration management were mixed. The Fund's shorter duration than
the benchmark in the first half of the reporting period, at a time when the bond
markets performed well, hurt relative results. As we entered 2003, the market's
continued strength drove yields substantially below our estimates of long-term
fair value. Therefore, we maintained the Fund's duration below benchmark levels.
LOOKING AHEAD
The yields on all major developed bonds have fallen sharply in recent months,
reaching unprecedented levels across the global markets. By mid-June, US bond
yields had reached the lowest levels yet recorded in a bull market that has now
lasted over twenty years. Ten-year Japanese government bonds traded as low as
0.45%, with the whole yield curve briefly dipping below 1%. Meanwhile, European
bond yields fell below the lows that had coincided with the start of the
European Monetary Union in January 1999. We believe the current low yields will
be hard to sustain, and, consequently, we are maintaining a short duration
stance.
Going forward, our country and currency weightings will continue to be driven by
our assessments of the global macroeconomic and political landscapes, maturity
decisions will be implemented with an eye on risk management, and we will
continue to select securities based on our determination of the intrinsic value
we believe they offer investors over the long term.
25
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- ---------------------------------------------------------------------------------------------------------
UBS Global Bond Fund Class A 7.69% 16.34% N/A N/A 14.31%
- ---------------------------------------------------------------------------------------------------------
UBS Global Bond Fund Class B 7.40 15.61 N/A N/A 16.08
- ---------------------------------------------------------------------------------------------------------
UBS Global Bond Fund Class C 7.47 N/A N/A N/A 15.84
- ---------------------------------------------------------------------------------------------------------
UBS Global Bond Fund Class Y 7.85 16.72 9.31% 6.06% 6.28
- ---------------------------------------------------------------------------------------------------------
UBS Global Bond Fund Class A** 2.87 11.16 N/A N/A 11.20
- ---------------------------------------------------------------------------------------------------------
UBS Global Bond Fund Class B** 2.40 10.61 N/A N/A 13.77
- ---------------------------------------------------------------------------------------------------------
UBS Global Bond Fund Class C** 5.62 N/A N/A N/A 13.95
- ---------------------------------------------------------------------------------------------------------
Citigroup World Government Bond Index 7.11 16.51 8.77 6.69 6.54
- ---------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS GLOBAL BOND FUND CLASS A IS 11/05/01. INCEPTION DATES
OF CLASS B AND CLASS C ARE 11/26/01 AND 7/02/02, RESPECTIVELY. INCEPTION
DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE INDEX, IS 7/31/93.
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS Global Bond
Fund Class Y shares and the Citigroup World Government Bond Index if you had
invested $10,000 on July 31, 1993, and had reinvested all your income dividends
and capital gain distributions through June 30, 2003. The performance of Class
A, Class B and Class C shares will vary based upon the different inception
dates, class specific expenses and sales charges. No adjustment has been made
for any income taxes payable by shareholders on income dividends and capital
gain distributions. Past performance is no guarantee of future results. Share
price and return will vary with market conditions; investors may realize a gain
or loss upon redemption.
[CHART]
UBS GLOBAL BOND FUND CLASS Y VS. CITIGROUP WORLD GOVERNMENT BOND INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS GLOBAL BOND FUND CLASS Y CITIGROUP WORLD GOV'T BOND INDEX
$ 10,000 $ 10,000
$ 10,190 $ 10,000
$ 10,220 $ 10,119
$ 10,321 $ 10,102
$ 10,230 $ 10,030
$ 10,386 $ 10,115
$ 10,458 $ 10,196
$ 10,210 $ 10,129
$ 10,076 $ 10,115
$ 10,025 $ 10,126
$ 9,942 $ 10,037
6/30/1994 $ 9,921 $ 10,182
$ 9,994 $ 10,263
$ 10,005 $ 10,227
$ 10,015 $ 10,301
$ 10,057 $ 10,466
$ 10,036 $ 10,321
$ 10,024 $ 10,350
$ 10,128 $ 10,568
$ 10,306 $ 10,838
$ 10,441 $ 11,482
$ 10,692 $ 11,694
$ 11,067 $ 12,024
6/30/1995 $ 11,046 $ 12,095
$ 11,227 $ 12,124
$ 11,344 $ 11,707
$ 11,482 $ 11,968
$ 11,674 $ 12,057
$ 11,908 $ 12,193
$ 12,061 $ 12,321
$ 12,121 $ 12,169
$ 12,001 $ 12,107
$ 12,049 $ 12,090
$ 12,170 $ 12,042
$ 12,206 $ 12,044
6/30/1996 $ 12,317 $ 12,140
$ 12,439 $ 12,373
$ 12,537 $ 12,421
$ 12,746 $ 12,472
$ 13,016 $ 12,705
$ 13,261 $ 12,873
$ 13,183 $ 12,769
$ 12,977 $ 12,428
$ 12,990 $ 12,334
$ 12,798 $ 12,241
$ 12,729 $ 12,133
$ 13,100 $ 12,463
6/30/1997 $ 13,266 $ 12,611
$ 13,211 $ 12,513
$ 13,169 $ 12,505
$ 13,431 $ 12,772
$ 13,610 $ 13,037
$ 13,431 $ 12,838
$ 13,398 $ 12,799
$ 13,513 $ 12,924
$ 13,599 $ 13,028
$ 13,456 $ 12,899
$ 13,628 $ 13,106
$ 13,628 $ 13,136
6/30/1998 $ 13,623 $ 13,156
$ 13,623 $ 13,173
$ 13,782 $ 13,531
$ 14,448 $ 14,251
$ 14,767 $ 14,673
$ 14,665 $ 14,466
$ 15,004 $ 14,756
$ 15,004 $ 14,621
$ 14,519 $ 14,151
$ 14,504 $ 14,187
$ 14,534 $ 14,181
$ 14,277 $ 13,943
6/30/1999 $ 14,049 $ 13,699
$ 14,309 $ 14,034
$ 14,248 $ 14,099
$ 14,386 $ 14,319
$ 14,309 $ 14,312
$ 14,095 $ 14,162
$ 14,063 $ 14,128
$ 13,705 $ 13,827
$ 13,628 $ 13,727
$ 13,923 $ 14,153
$ 13,426 $ 13,690
$ 13,503 $ 13,797
6/30/2000 $ 14,001 $ 14,132
$ 13,705 $ 13,893
$ 13,550 $ 13,789
$ 13,472 $ 13,761
$ 13,177 $ 13,586
$ 13,534 $ 13,856
$ 14,254 $ 14,353
$ 14,254 $ 14,335
$ 14,191 $ 14,329
$ 13,720 $ 13,915
$ 13,705 $ 13,866
$ 13,532 $ 13,824
6/30/2001 $ 13,438 $ 13,698
$ 13,846 $ 14,043
$ 14,410 $ 14,571
$ 14,410 $ 14,678
$ 14,567 $ 14,794
$ 14,452 $ 14,586
$ 14,064 $ 14,210
$ 13,833 $ 13,948
$ 13,926 $ 14,020
$ 13,899 $ 13,981
$ 14,446 $ 14,482
$ 14,944 $ 14,891
6/30/2002 $ 15,665 $ 15,610
$ 15,683 $ 15,763
$ 15,941 $ 16,039
$ 16,073 $ 16,214
$ 16,045 $ 16,147
$ 16,127 $ 16,168
$ 16,953 $ 16,981
$ 17,212 $ 17,214
$ 17,513 $ 17,455
$ 17,549 $ 17,509
$ 17,782 $ 17,719
$ 18,516 $ 18,488
6/30/2003 $ 18,284 $ 18,189
</Table>
7/31/93 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
26
<Page>
COUNTRY EXPOSURE, TOP FIVE
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- -----------------------------------------------------------------------
European Union 49.6%
U.S. 19.1
Japan 17.9
Canada 6.3
Australia 5.0
- -----------------------------------------------------------------------
Total 97.9%
</Table>
CURRENCY EXPOSURE, TOP FIVE
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- -----------------------------------------------------------------------
Euro 50.8%
U.S. Dollar 19.1
Japanese Yen 17.9
Canadian Dollar 6.3
British Pound 4.8
- -----------------------------------------------------------------------
Total 98.9%
</Table>
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF JUNE 30, 2003
<Table>
U.S. CORPORATE BONDS
Aerospace & Military 0.02%
Airlines 0.06
Autos/Durables 0.18
Banks 0.24
Beverages & Tobacco 0.10
Chemicals 0.02
Computer Systems 0.06
Construction 0.07
Consumer 0.05
Electric Components 0.08
Energy 0.17
Financial Services 1.64
Food & House Products 0.27
Forest Products 0.01
Health: Drugs 0.26
Hotel & Lodging 0.02
Housing/Paper 0.02
Insurance 0.01
Leisure & Tourism 0.04
Metals Non-Ferrous 0.02
Multi-Industry 0.10
Publishing 0.01
Real Estate 0.02%
Retail/Apparel 0.04
Services/Miscellaneous 0.08
Telecommunications 0.17
Telecommunications - Wireless 0.01
Transportation 0.29
Utilities 0.10
-------
Total U.S. Corporate Bonds 4.16
Asset-Backed Securities 0.67
International Dollar Bonds 0.34
Mortgage-Backed Securities 7.89
U.S. Government Obligations 4.74
-------
Total U.S. Bonds 17.80
International Bonds 89.28
-------
Total Bonds 107.08
SHORT-TERM INVESTMENTS 1.26
-------
TOTAL INVESTMENTS 108.34
LIABILITIES, LESS CASH AND
OTHER ASSETS (8.34)
-------
NET ASSETS 100.00%
=======
</Table>
TOP TEN FIXED INCOME HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- -----------------------------------------------------------------------
International Bank for
Reconstruction & Development
4.750%, due 12/20/04 5.0%
Government of Spain
3.100%, due 09/20/06 4.7
Government of Japan
0.100%, due 03/22/04 4.2
European Investment Bank
2.125%, due 09/20/07 3.6
Government of Netherlands
5.000%, due 07/15/11 3.6
Queensland Treasury Corp.
6.500%, due 06/14/05 3.5
Government of Japan
1.750%, due 06/21/10 3.2
Deutsche Bundesrepublik
6.000%, due 01/05/06 3.1
Deutsche Bundesrepublik
5.000%, due 07/04/12 2.8
Bundesrepublik Deutschland
6.000%, due 01/04/07 2.4
- -----------------------------------------------------------------------
Total 36.1%
</Table>
27
<Page>
UBS GLOBAL BOND FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
BONDS -- 107.08%
U.S. BONDS -- 17.80%
U.S. CORPORATE BONDS -- 4.16%
Abbott Laboratories, Inc.
5.625%, due 07/01/06 $ 5,000 $ 5,536
Alcoa, Inc.
6.000%, due 01/15/12 10,000 11,264
Anadarko Finance Co., Series B
7.500%, due 05/01/31 5,000 6,281
Anheuser Busch Cos., Inc.
9.000%, due 12/01/09 20,000 26,680
AOL Time Warner, Inc.
7.625%, due 04/15/31 25,000 28,853
Apache Corp.
6.250%, due 04/15/12 25,000 29,110
AT&T Corp.
8.500%, due 11/15/31 5,000 5,669
AT&T Wireless Services, Inc.
7.875%, due 03/01/11 10,000 11,810
Avalonbay Communities, Inc.
7.500%, due 08/01/09 5,000 5,929
Avon Products, Inc.
7.150%, due 11/15/09 20,000 24,216
Bank of America Corp.
7.400%, due 01/15/11 30,000 36,858
Bank One Corp.
7.875%, due 08/01/10 25,000 31,172
Baxter International, Inc.
5.750%, due 03/06/06 100,000 122,561
Boeing Capital Corp.
7.375%, due 09/27/10 25,000 29,624
Bristol-Myers Squibb Co.
5.750%, due 10/01/11 5,000 5,564
Burlington Northern Santa Fe Corp.
6.875%, due 12/01/27 5,000 5,733
7.082%, due 05/13/29 10,000 11,751
Cendant Corp.
6.875%, due 08/15/06 20,000 22,371
Centex Corp.
9.750%, due 06/15/05 25,000 28,544
Cingular Wireless LLC
6.500%, due 12/15/11 5,000 5,761
Citigroup, Inc.
7.250%, due 10/01/10 35,000 42,407
Citizens Communications Co.
9.250%, due 05/15/11 10,000 12,939
Comcast Cable Communications, Inc.
6.750%, due 01/30/11 20,000 22,957
Commonwealth Edison Co.,
6.150%, due 03/15/12 5,000 5,733
Computer Sciences Corp.
3.500%, due 04/15/08 25,000 25,530
Conagra Foods, Inc.
6.750%, due 09/15/11 10,000 11,707
ConocoPhillips
8.750%, due 05/25/10 5,000 6,508
Consolidated Edison, Inc., Series B
7.500%, due 09/01/10 $ 30,000 $ 36,797
Coors Brewing Co.,
6.375%, due 05/15/12 10,000 11,476
Credit Suisse First Boston USA, Inc.
5.750%, due 04/15/07 15,000 16,665
6.500%, due 01/15/12 10,000 11,476
DaimlerChrysler N.A Holding Corp.
8.500%, due 01/18/31 5,000 5,889
DaimlerChrysler NA Holding Corp.
5.625%, due 01/16/07 50,000 60,831
Devon Financing Corp., ULC
6.875%, due 09/30/11 10,000 11,730
Dominion Resources, Inc., Class B
7.625%, due 07/15/05 15,000 16,684
Duke Energy Field Services, LLC
6.875%, due 02/01/11 10,000 11,421
EOP Operating LP
7.000%, due 07/15/11 5,000 5,803
7.875%, due 07/15/31 5,000 6,045
Erac U.S.A. Finance Co., 144A
8.000%, due 01/15/11 15,000 17,871
First Data Corp.
5.625%, due 11/01/11 10,000 11,066
First Union National Bank
7.800%, due 08/18/10 25,000 31,019
FleetBoston Financial Corp.
7.375%, due 12/01/09 10,000 12,000
Ford Motor Co.
7.450%, due 07/16/31 15,000 13,741
Ford Motor Credit Co.
5.800%, due 01/12/09 15,000 14,908
6.250%, due 06/18/07 50,000 59,131
6.875%, due 02/01/06 5,000 5,303
7.375%, due 02/01/11 10,000 10,339
General Electric Capital Corp.
4.375%, due 01/20/10 300,000 356,525
6.000%, due 06/15/12 70,000 79,014
General Motors Acceptance Corp.
6.125%, due 03/15/07 50,000 58,729
6.875%, due 09/15/11 30,000 30,100
8.000%, due 11/01/31 30,000 29,435
Goldman Sachs Group, Inc.
6.875%, due 01/15/11 15,000 17,699
Harrah's Operating Co., Inc.
7.500%, due 01/15/09 10,000 11,848
Household Finance Corp.
6.750%, due 05/15/11 25,000 29,034
International Business Machines Corp.
5.875%, due 11/29/32 5,000 5,363
International Paper Co.
6.750%, due 09/01/11 10,000 11,566
John Deere Capital Corp.
7.000%, due 03/15/12 10,000 11,872
Kohl's Corp.
7.250%, due 06/01/29 5,000 6,249
</Table>
28
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
Kraft Foods, Inc.
5.625%, due 11/01/11 $ 25,000 $ 27,242
Kroger Co.
7.500%, due 04/01/31 5,000 5,930
8.050%, due 02/01/10 35,000 42,186
Lehman Brothers Holdings, Inc.
6.625%, due 01/18/12 10,000 11,724
Lincoln National Corp.
6.200%, due 12/15/11 10,000 11,226
Marsh & McClennan Cos., Inc.
6.250%, due 03/15/12 5,000 5,699
Mirant Americas Generation, Inc.
7.625%, due 05/01/06 15,000 11,550
Morgan Stanley
6.750%, due 04/15/11 30,000 35,090
News America Holdings, Inc.
7.125%, due 04/08/28 5,000 5,567
Occidental Petroleum Corp.
8.450%, due 02/15/29 10,000 13,991
Pemex Project Funding Master Trust
8.000%, due 11/15/11 25,000 28,625
Pepsi Bottling Group, Inc., 144A
5.625%, due 02/17/09 10,000 11,215
Praxair, Inc.
6.375%, due 04/01/12 5,000 5,823
Progress Energy, Inc.
7.000%, due 10/30/31 10,000 11,036
Qwest Capital Funding, Inc.
7.900%, due 08/15/10 30,000 25,050
Rohm & Haas Co.
7.850%, due 07/15/29 5,000 6,474
Safeway, Inc.
3.800%, due 08/15/05 25,000 25,665
SBC Communications, Inc.
5.875%, due 02/01/12 10,000 11,226
SLM Corp.
5.625%, due 04/10/07 20,000 22,197
Southern Power Co., Series B,
6.250%, due 07/15/12 5,000 5,659
Southwestern Electric Power, Series B
4.500%, due 07/01/05 5,000 5,192
Sprint Capital Corp.
8.375%, due 03/15/12 25,000 29,933
Target Corp.
7.000%, due 07/15/31 10,000 11,968
U.S. Bank N.A., Minnesota
6.375%, due 08/01/11 15,000 17,510
Unilever Capital Corp.
7.125%, due 11/01/10 15,000 18,174
Union Pacific Corp.
6.700%, due 12/01/06 15,000 16,870
United Technologies Corp.
6.100%, due 05/15/12 10,000 11,529
UST, Inc.
6.625%, due 07/15/12 10,000 11,579
Valero Energy Corp.
7.500%, due 04/15/32 10,000 11,336
Verizon New England, Inc.
6.500%, due 09/15/11 $ 5,000 $ 5,802
Verizon New York, Inc., Series B
7.380%, due 04/01/32 10,000 12,408
Viacom, Inc.
6.625%, due 05/15/11 10,000 11,796
Walt Disney Co. (The)
6.375%, due 03/01/12 10,000 11,399
Washington Mutual, Inc.
5.625%, due 01/15/07 25,000 27,555
Wells Fargo Bank, N.A
6.450%, due 02/01/11 30,000 35,371
Weyerhaeuser Co.
7.375%, due 03/15/32 5,000 5,748
---------------
2,168,042
---------------
ASSET-BACKED SECURITIES -- 0.67%
Americredit Automobile Receivables
Trust, 03-AM, Class A2B FRN
1.584%, due 10/06/06 30,000 29,999
Capital One Multi-Asset Execution
Trust, 03-A1, Class A1 FRN
1.570%, due 01/15/09 75,000 75,002
Comed Transitional Funding
Trust, 98-1, Class A7
5.740%, due 12/25/10 45,000 50,997
Conseco Finance, 00-B, Class AF4
7.870%, due 02/15/31 20,000 20,811
Peco Energy Transition Trust,
99-A, Class A7
6.130%, due 03/01/09 55,000 63,092
Sears Credit Account Master
Trust, 01-1, Class A FRN
1.360%, due 02/15/10 75,000 74,688
Structured Asset Securities Corp.,
03-AL2, Class A, 144A
3.356%, due 01/25/31 29,531 29,252
United Airlines, Inc. E.E.T.C. (c)(d)
7.811%, due 10/01/09 29,456 7,615
---------------
351,456
---------------
INTERNATIONAL DOLLAR BONDS -- 0.34%
Burlington Resources Finance Co.
6.680%, due 02/15/11 5,000 5,868
Canadian National Railway Co.
6.900%, due 07/15/28 5,000 5,932
Deutsche Telekom International Finance BV
8.250%, due 06/15/30 5,000 6,370
European Investment Bank
4.875%, due 09/06/06 25,000 27,089
France Telecom S.A.
8.500%, due 03/01/31 5,000 6,919
HSBC Holdings PLC
5.250%, due 12/12/12 5,000 5,333
Inter-American Development Bank
5.750%, due 02/26/08 25,000 28,585
</Table>
29
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
International Bank for
Reconstruction & Development
4.375%, due 09/28/06 $ 35,000 $ 37,832
Mexico Government International Bond
8.125%, due 12/30/19 15,000 17,100
Rio Tinto Finance USA Ltd.
2.625%, due 09/30/08 25,000 24,542
Telus Corp.
8.000%, due 06/01/11 10,000 11,550
---------------
177,120
---------------
MORTGAGE-BACKED SECURITIES -- 7.89%
CS First Boston Mortgage
Securities Corp., 02-10, Class 2A1
7.500%, due 05/25/32 42,051 44,171
CS First Boston Mortgage Securities Corp.,
03-8, Class 5A1
6.500%, due 04/25/33 37,854 38,967
DLJ Commercial Mortgage Corp.,
00-CKP1, Class A1B
7.180%, due 08/10/10 140,000 165,306
DLJ Commercial Mortgage Corp.,
99-CG1, Class A1B
6.460%, due 03/10/32 20,000 23,196
DLJ Commercial Mortgage Corp.,
99-CG3, Class A1B
7.340%, due 10/10/32 165,000 198,888
Fannie Mae
4.625%, due 05/01/13 25,000 25,710
7.125%, due 01/15/30 135,000 175,225
Federal Home Loan Mortgage Corp., Gold
5.500%, due 01/01/18 57,278 59,408
7.000%, due 10/15/13 55,686 60,039
8.000%, due 01/01/30 193,010 206,636
Federal National Mortgage Association
5.500%, due 01/01/18 1,165,189 1,210,389
5.500%, due 11/01/23 85,914 88,951
6.000%, due 03/01/29 55,772 57,981
6.000%, due 11/01/32 223,030 231,864
6.500%, due 08/01/32 90,039 93,894
7.000%, due 11/01/32 46,035 48,481
7.000%, due 05/01/33 99,919 105,227
Federal National Mortgage Association
Grantor Trust, 00-T6, Class A1
7.500%, due 06/25/30 65,449 73,037
Federal National Mortgage Association
Grantor Trust, 01-T10, Class A2
7.500%, due 12/25/41 110,247 123,029
Federal National Mortgage Association
Whole Loan, 03-W6, Class 6A FRN
5.210%, due 08/25/42 43,302 45,643
Federal National Mortgage Association
Whole Loan, 95-W3, Class A
9.000%, due 04/25/25 2,347 2,581
Freddie Mac
5.875%, due 03/21/11 35,000 39,370
GMAC Commercial Mortgage
Securities, Inc., 97-C2, Class A2
6.550%, due 04/15/29 $ 25,000 $ 27,017
Government National Mortgage Association
6.000%, due 11/20/28 42,636 44,448
6.000%, due 12/20/28 67,060 69,996
6.000%, due 05/20/29 83,598 87,151
6.500%, due 08/15/27 2,874 3,018
6.500%, due 12/15/29 74,246 78,077
7.000%, due 07/15/25 16,274 17,306
7.000%, due 07/15/31 199,533 210,757
Greenwich Capital Commercial
Funding Corp., 03-FL1 A FRN
1.639%, due 07/05/18 34,993 34,993
Impac Secured Assets Common
Owner, 01-3, Class A2 (b)
6.703%, due 04/25/31 46,878 48,428
LB Commercial Conduit Mortgage Trust,
99-C2, Class A2
7.325%, due 10/15/32 50,000 60,204
Merrill Lynch Mortgage Investors, Inc.,
96-C2, Class A3
6.960%, due 11/21/28 50,000 55,181
Merrill Lynch Mortgage Investors, Inc.,
97-C2, Class A2
6.540%, due 12/10/29 20,000 22,763
Morgan Stanley Dean Witter Capital I,
00-LIF2, Class A1
6.960%, due 10/15/33 33,966 38,333
Nomura Asset Securities Corp.,
95-MD3, Class A1B
8.150%, due 04/04/27 19,035 20,755
PNC Mortgage Securities Corp.,
94-3, Class A8
7.500%, due 07/25/24 121,567 122,692
Prudential Home Mortgage Securities,
96-7, Class A4
6.750%, due 06/25/11 28,510 28,562
Residential Funding Mortgage Securitization I,
98-56, Class A6
6.750%, due 03/25/28 21,620 21,598
---------------
4,109,272
---------------
U.S. GOVERNMENT OBLIGATIONS -- 4.74%
U.S. Treasury Bonds
6.250%, due 05/15/30 320,000 398,375
8.000%, due 11/15/21 5,000 7,244
U.S. Treasury Notes
1.625%, due 03/31/05 315,000 317,166
1.625%, due 04/30/05 165,000 166,083
2.000%, due 11/30/04 220,000 222,612
3.000%, due 02/15/08 675,000 694,590
3.625%, due 08/31/03 110,000 110,486
4.375%, due 08/15/12 60,000 64,334
5.750%, due 08/15/10 235,000 275,069
6.375%, due 08/01/11 210,000 210,984
---------------
2,466,943
---------------
Total U.S. Bonds 9,272,833
---------------
</Table>
30
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
INTERNATIONAL BONDS -- 89.28%
AUSTRALIA -- 5.02%
Australia & New Zealand Banking Group Ltd.
5.500%, due 02/23/05 EUR 100,000 $ 120,701
Government of Australia
6.500%, due 05/15/13 AUD 660,000 492,491
Queensland Treasury Corp.
6.500%, due 06/14/05 AUD 2,600,000 1,805,710
Telstra Corp., Ltd.
6.375%, due 06/29/11 EUR 150,000 197,622
---------------
2,616,524
---------------
AUSTRIA -- 0.23%
Bank Austria Creditanstalt AG
5.375%, due 01/26/05 EUR 100,000 120,326
---------------
CANADA -- 6.26%
Government of Canada
5.000%, due 12/01/03 CAD 770,000 571,101
5.750%, due 06/01/29 346,000 278,582
6.000%, due 09/01/05 460,000 358,981
6.000%, due 06/01/11 570,000 465,577
8.000%, due 06/01/23 510,000 513,037
Province of Ontario
5.200%, due 03/08/07 390,000 302,683
7.500%, due 01/19/06 950,000 770,908
---------------
3,260,869
---------------
CAYMAN ISLANDS -- 0.25%
Santander Central Hispano Issuances Ltd.
6.375%, due 07/05/10 EUR 100,000 130,668
---------------
DENMARK -- 2.30%
Kingdom of Denmark
5.000%, due 11/15/13 DKK 1,400,000 234,426
6.000%, due 11/15/09 2,650,000 468,849
7.000%, due 12/15/04 2,260,000 372,950
TDC A/S
5.875%, due 04/24/06 EUR 100,000 122,656
---------------
1,198,881
---------------
FINLAND -- 3.00%
Government of Finland
5.000%, due 04/25/09 EUR 925,000 1,163,994
5.375%, due 07/04/13 260,000 335,625
UPM-Kymmene Oyj
6.125%, due 01/23/12 50,000 63,006
---------------
1,562,625
---------------
FRANCE -- 6.65%
Aventis S.A.
5.000%, due 04/18/06 EUR 100,000 121,893
Carrefour S.A.
4.500%, due 03/18/09 100,000 120,568
Casino Guichard Perrachon S.A.
5.875%, due 11/23/07 50,000 61,954
France Telecom S.A
7.000%, due 12/23/09 50,000 66,059
GIE PSA Tresorerie
5.875%, due 09/27/11 100,000 127,018
GIE Suez Alliance
5.500%, due 02/20/09 EUR 100,000 $ 122,119
Government of France
3.500%, due 07/12/04 590,000 688,186
5.000%, due 10/25/16 140,000 173,829
5.500%, due 10/25/07 420,000 532,981
5.500%, due 04/25/10 405,000 525,456
5.500%, due 04/25/29 340,000 436,226
8.500%, due 10/25/19 140,000 238,984
LVMH Moet Hennessy Louis Vuitton S.A.
5.750%, due 02/28/05 50,000 60,074
Renault S.A.
6.125%, due 06/26/09 50,000 63,105
Veolia Environnement
5.875%, due 06/27/08 100,000 125,589
---------------
3,464,041
---------------
GERMANY -- 15.81%
Bundesschatzanweisungen
2.500%, due 03/18/05 EUR 990,000 1,144,055
Commerzbank AG
4.250%, due 10/25/09 100,000 116,958
Deutsche Bank AG
5.000%, due 05/19/05 200,000 240,075
Deutsche Bundesrepublik
5.000%, due 07/04/12 1,140,000 1,433,104
6.000%, due 01/05/06 1,290,000 1,609,508
6.000%, due 01/04/07 980,000 1,248,080
6.500%, due 07/04/27 740,000 1,074,274
Kredit Fuer Wiederaufbau
5.000%, due 01/04/09 300,000 376,245
Landwirt Rentenbk
1.375%, due 04/25/13 JPY 45,000,000 393,909
Treuhandanstalt
6.750%, due 05/13/04 EUR 400,000 477,913
VW Financial Services AG
5.375%, due 01/25/12 100,000 120,644
---------------
8,234,765
---------------
GREECE -- 0.11%
Public Power Corp.
4.500%, due 03/12/09 EUR 50,000 59,048
---------------
IRELAND -- 0.25%
Bank of Ireland
6.450%, due 02/10/10 EUR 100,000 132,337
---------------
ITALY -- 5.32%
Buoni Poliennali Del Tesoro
3.250%, due 04/15/04 EUR 610,000 707,291
5.000%, due 05/01/08 240,000 300,359
5.250%, due 11/01/29 360,000 441,649
5.500%, due 11/01/10 300,000 388,504
8.750%, due 07/01/06 500,000 676,716
Unicredito Italiano SpA
6.000%, due 03/16/11 200,000 259,409
---------------
2,773,928
---------------
JAPAN -- 17.90%
Development Bank of Japan
1.750%, due 06/21/10 JPY 185,000,000 1,660,806
</Table>
31
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
European Investment Bank
2.125%, due 09/20/07 JPY 210,000,000 $ 1,882,564
Government of Japan
0.100%, due 03/22/04 260,000,000 2,167,024
International Bank for
Reconstruction & Development
2.000%, due 02/18/08 115,000,000 1,030,963
4.750%, due 12/20/04 290,000,000 2,581,037
---------------
9,322,394
---------------
LUXEMBOURG -- 0.37%
Michelin Finance Luxembourg S.A.
6.125%, due 04/16/09 EUR 50,000 63,511
Sogerim S.A.
7.000%, due 04/20/11 50,000 65,944
Syngenta Luxembourg Finance S.A.
5.500%, due 07/10/06 50,000 61,587
---------------
191,042
---------------
NETHERLANDS -- 8.03%
ABN Amro Bank NV
6.250%, due 06/28/10 EUR 100,000 130,100
Akzo Nobel NV
5.625%, due 05/07/09 100,000 123,931
Bank Nederlandse Gemeenten
5.250%, due 07/04/11 200,000 253,751
BMW Finance NV
5.250%, due 09/01/06 100,000 123,109
Deutsche Telekom International Finance BV
8.125%, due 05/29/12 50,000 70,653
E.ON International Finance BV
5.750%, due 05/29/09 100,000 127,562
Enbw International Finance BV
5.125%, due 02/28/07 100,000 122,839
Fortis Finance NV
4.625%, due 04/07/09 100,000 120,876
Generali Finance BV
4.750%, due 05/12/14 100,000 118,586
Government of Netherlands
5.000%, due 07/15/11 1,490,000 1,875,991
ING Bank NV
5.500%, due 01/04/12 200,000 250,198
Koninklijke Philips Electronics NV
5.750%, due 05/16/08 150,000 186,550
Linde Finance BV
6.375%, due 06/14/07 50,000 63,440
Olivetti Finance NV
6.125%, due 07/30/09 50,000 63,504
Portugal Telecom International Finance BV
5.750%, due 02/21/06 100,000 122,655
Royal KPN NV
8.000%, due 04/12/06 50,000 63,705
RWE Finance BV
5.500%, due 10/26/07 100,000 124,804
Telefonica Europe BV
5.125%, due 10/30/06 100,000 122,219
Unilever NV
4.250%, due 09/26/07 100,000 119,941
---------------
4,184,414
---------------
SINGAPORE -- 0.24%
Singapore Telecommunications Ltd.
6.000%, due 11/21/11 EUR 100,000 $ 126,673
---------------
SPAIN -- 9.81%
Government of Spain
3.250%, due 01/31/05 EUR 700,000 818,692
4.250%, due 10/31/07 425,000 516,078
4.750%, due 07/30/14 350,000 429,372
5.150%, due 07/30/09 545,000 689,424
6.000%, due 01/31/29 145,000 198,351
Government of Spain International Bond
3.100%, due 09/20/06 JPY 270,000,000 2,456,653
---------------
5,108,570
---------------
SWEDEN -- 2.95%
Fortum Power & Heat AB
6.375%, due 11/03/06 SEK 50,000 63,169
Government of Sweden
5.000%, due 01/15/04 2,250,000 284,214
6.750%, due 05/05/14 2,000,000 299,215
8.000%, due 08/15/07 5,200,000 761,264
Scania CV AB
6.000%, due 12/17/08 100,000 126,659
---------------
1,534,521
---------------
UNITED KINGDOM -- 4.78%
Abbey National PLC
4.625%, due 02/11/11 GBP 100,000 118,853
Allied Domecq Financial Services PLC
5.875%, due 06/12/09 50,000 62,332
Barclays Bank, PLC
4.875%, due 06/26/06 100,000 122,145
British Telecommunications PLC
6.125%, due 02/15/06 50,000 62,097
Gallaher Group PLC
5.875%, due 08/06/08 50,000 62,236
HBOS Treasury Services PLC
4.750%, due 02/06/07 100,000 122,324
HSBC Holdings PLC
5.375%, due 12/20/12 100,000 123,487
Imperial Tobacco Finance PLC
6.250%, due 06/06/07 50,000 62,772
Kelda Group PLC
5.250%, due 07/26/06 100,000 122,164
Lloyds TSB Bank PLC
4.750%, due 03/18/11 100,000 120,750
National Westminster Bank PLC
6.000%, due 01/21/10 200,000 258,953
OTE PLC
6.125%, due 02/07/07 100,000 123,980
Rio Tinto Finance PLC
5.125%, due 05/10/07 100,000 123,125
Tesco PLC
5.250%, due 05/07/08 50,000 62,169
U.K. Treasury
5.000%, due 03/07/12 160,000 280,127
5.750%, due 12/07/09 70,000 127,084
6.000%, due 12/07/28 112,000 225,908
8.500%, due 12/07/05 100,000 184,223
</Table>
32
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
--------------- ---------------
Vodafone Group PLC
5.750%, due 10/27/06 GBP 100,000 $ 124,711
---------------
2,489,440
---------------
Total International Bonds 46,511,066
---------------
Total Bonds (Cost $52,833,873) 55,783,899
---------------
<Caption>
SHARES
---------------
SHORT-TERM INVESTMENTS -- 1.26%
OTHER -- 1.26%
UBS Supplementary Trust,
U.S. Cash Management Prime Fund
(Cost $655,174) 655,174 655,174
---------------
Total Investments
(Cost $53,489,047) -- 108.34% (a) 56,439,073
Liabilities, less cash and
other assets -- (8.34)% (4,342,697)
---------------
Net Assets -- 100% $ 52,096,376
===============
</Table>
33
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $53,497,377; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 3,178,010
Gross unrealized depreciation (236,314)
---------------
Net unrealized appreciation $ 2,941,696
===============
</Table>
(b) Variable rate note - The rate disclosed is that in effect at June 30,
2003.
(c) Security is in default.
(d) Security is illiquid. These securities amounted to $7,615 or 0.01% of net
assets.
% Represents a percentage of net assets.
E.E.T.C.: Enhanced equipment trust certificate
FRN: Floating Rate Note - The rate disclosed is that in effect at June 30,
2003.
144A: Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June
30, 2003, the value of these securities amounted to $58,338 or 0.11%
of net assets.
FORWARD FOREIGN CURRENCY CONTRACTS
UBS Global Bond Fund had the following open forward foreign currency contracts
as of June 30, 2003:
<Table>
<Caption>
SETTLEMENT LOCAL CURRENT UNREALIZED
DATE CURRENCY VALUE GAIN/(LOSS)
------------- ------------- ------------- -------------
FORWARD FOREIGN CURRENCY BUY CONTRACTS:
Japanese Yen (JPY) 12/03/03 445,000,000 $ 3,724,646 $ (44,725)
Swiss Franc (CHF) 12/03/03 500,000 370,421 (15,357)
FORWARD FOREIGN CURRENCY SALE CONTRACTS:
Australian Dollar (AUD) 12/03/03 1,290,000 852,333 (34,614)
Canadian Dollar (CAD) 12/03/03 2,670,000 1,947,777 (39,395)
British Pounds (GBP) 12/03/03 260,000 424,643 (2,458)
Danish Krone (DKK) 12/03/03 3,000,000 461,650 10,553
Euro (EUR) 12/03/03 410,000 468,819 10,553
Swedish Krona (SEK) 12/03/03 6,350,000 787,348 19,298
-------------
Total net unrealized loss on Forward Foreign
Currency Contracts $ (96,145)
=============
</Table>
See accompanying notes to financial statements
34
<Page>
UBS U.S. BALANCED FUND
Over the fiscal year ended June 30, 2003, Class Y shares of UBS U.S. Balanced
Fund returned 5.70%, outperforming the 4.96% return for the Fund's benchmark,
the U.S. Balanced Mutual Fund Index.* (Returns for all share classes over
various time periods are shown on page 37. Please note that these returns do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.)
12-MONTH MARKET REVIEW
The US equity markets were extremely volatile during the 12-month period,
alternately falling and rising over the four quarters that made up the Fund's
reporting period. Early in the period, a weak economy, anemic corporate profits,
accounting issues and unrest in the Middle East led investors to shun stocks in
favor of the perceived security of the bond market. However, after falling to a
five-year low in early October 2002, stocks staged a surprising rally when, in
the aftermath of the market's sharp decline, investors found themselves drawn to
certain downtrodden sectors that were viewed as having compelling valuations.
Geopolitical issues came to the fore as the year 2003 began, as anticipation of
the war in Iraq, saber rattling in North Korea and renewed concerns about
terrorism preoccupied the country. Investor aversion to risk resurfaced, and the
majority of the sectors covered in the Index fell during the first quarter.
Nonetheless, the 12-month period ended on a positive note, as the end to major
fighting in Iraq eliminated one of the issues weighing most heavily on the
market. Investors grew increasingly optimistic about the potential for an
economic revival and subsequent upturn in corporate profits. At the same time,
their appetite for risk increased as the yields available from many fixed income
securities shrank. As a result, equity investors drove stocks to steep gains
over the final quarter of the period. The gains were broad-based, and many of
the best-performing sectors were the prior years' weakest-performing areas: the
utility, information technology, telecommunication services and industrial
sectors.
EQUITIES: CAREFUL ASSET ALLOCATION AND SECTOR STRATEGIES BOOSTED PERFORMANCE
Through the periods of extreme volatility in the financial markets during the
fiscal year, we employed our disciplined investment approach. Our focus remained
on intrinsic value, whereby we carefully analyze the expected cash flows that we
believe an investment will provide to determine whether its market price
reflects its intrinsic value.
On an asset allocation level, our analysis prompted us to decrease the Fund's
overall bond allocation, and overweight US stocks in order to take advantage of
attractive valuations. This position, though not beneficial during the first
quarter of the period, served to enhance results as the equity markets rallied
in October and November of 2002. In the months that followed, our overall asset
allocation strategy remained fairly constant.
On a sector level, our focus on intrinsic value within equities led to
overweight positions in utilities, health care and pharmaceuticals, banks and
transportation. In the banking sector, extensive research helped us to identify
several banks that were providing respectable growth, very attractive returns on
equity and compelling valuations. In health care and pharmaceuticals, our
positioning emphasized companies with strong, established drug pipelines. The
Fund's utility overweight was primarily in electric utilities that had little or
no exposure to trading operations (an area that suffered extensively in the wake
of Enron and the California electricity crisis).
Consistent with our philosophy, if we determine that the risk of holding
specific securities outweighs the potential rewards, we will minimize our
exposure. Such was the case with retailing and computer hardware stocks during
the period. Furthermore, as the period came to an end, we felt the price of many
technology and higher-beta stocks had moved too far, too fast, and were not
supported by appropriate fundamentals. As such, we chose to move to underweight
these areas as well.
* AN UNMANAGED INDEX COMPILED BY THE ADVISOR, CONSTRUCTED AS FOLLOWS: 65%
WILSHIRE 5000 EQUITY INDEX AND 35% LEHMAN US AGGREGATE BOND INDEX.
35
<Page>
FIXED INCOME: OUR ANALYSIS IDENTIFIED OPPORTUNITY IN TIPS
Performance in fixed income investments benefited from the Fund's exposure to
Treasury inflation-protected securities (TIPS). In the latter part of 2002, our
analysis indicated that there was significant value in the TIPS sector, which
led us to build an overweight in the portfolio versus the benchmark. Early in
2003, concerns about inflation arose on the back of higher oil prices as war
with Iraq loomed. As a result, TIPS performed well compared to nominal
Treasurys, so we proactively reduced our exposure to lock in gains. We sold out
of this position in February 2003, and have no allocation to TIPS as of period
end.
While the threat of deflation needs to be taken seriously, a general and
persistent fall in prices carries a low probability. The current economic
environment does make a strong case for short rates remaining accommodative.
However, these low interest rates, combined with stimulative fiscal policies,
rising budget deficits, geopolitical resolution and strengthening equity and
credit pricing reinforce our view that we will see a concurrent pickup in
economic activity and long-term interest rates from current levels. In response
to this view, we reduced our duration strategy at period end. To do so, we
increased our underweight to credits, and decreased our overweight to commercial
mortgage-backed securities (CMBS) and mortgage-backed securities (MBS). We made
a modest reduction to our agency overweight, and slightly increased the Fund's
exposure to asset-backed securities (ABS). At period end, CMBS was our largest
sector overweight, although the sector is less attractive as spreads have moved
tighter. We also had an overweight to MBS, a neutral weighting to ABS, and an
underweight to Treasuries, agencies and credit.
LOOKING AHEAD
Many of the concerns weighing down the market early in 2003 were not, in fact,
tied to fundamentals. During periods of extreme optimism or pessimism, many
investors have difficulty adhering to a disciplined valuation process, which can
result in an improperly positioned portfolio. Through the application of
high-quality research that follows a disciplined and consistent valuation
process, we endeavor to avoid such missteps. We expect to continue to manage the
portfolio using our proven process, in an attempt to generate superior
risk-adjusted returns over the long-term versus the benchmark.
36
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- ----------------------------------------------------------------------------------------------------------------------------
UBS U.S. Balanced Fund Class A 9.65% 5.43% 6.08% 3.30% 4.73%
- ----------------------------------------------------------------------------------------------------------------------------
UBS U.S. Balanced Fund Class B 9.22 4.67 N/A N/A 2.07
- ----------------------------------------------------------------------------------------------------------------------------
UBS U.S. Balanced Fund Class C 9.34 4.70 N/A N/A 2.35
- ----------------------------------------------------------------------------------------------------------------------------
UBS U.S. Balanced Fund Class Y 9.71 5.70 6.34 3.64 8.52
- ----------------------------------------------------------------------------------------------------------------------------
UBS U.S. Balanced Fund Class A** 3.67 -0.41 4.09 2.15 3.74
- ----------------------------------------------------------------------------------------------------------------------------
UBS U.S. Balanced Fund Class B** 4.22 -0.33 N/A N/A -0.31
- ----------------------------------------------------------------------------------------------------------------------------
UBS U.S. Balanced Fund Class C** 7.20 2.67 N/A N/A 1.76
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Balanced Mutual Fund Index*** 9.79 4.96 -3.32 2.21 10.20
- ----------------------------------------------------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Bond Index 3.93 10.40 10.08 7.54 8.58
- ----------------------------------------------------------------------------------------------------------------------------
Wilshire 5000 Equity Index 12.91 1.27 -10.59 -1.31 10.56
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS U.S. BALANCED FUND CLASS A IS 6/30/97. INCEPTION
DATES OF CLASS B AND CLASS C ARE 11/07/01 AND 11/06/01, RESPECTIVELY.
INCEPTION DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE INDICES, IS
12/30/94.
** RETURNS INCLUDE SALES CHARGES.
*** AN UNMANAGED INDEX COMPILED BY THE ADVISOR, CONSTRUCTED AS FOLLOWS: 65%
WILSHIRE 5000 EQUITY INDEX AND 35% LEHMAN U.S. AGGREGATE BOND INDEX.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS U.S. Balanced
Fund Class Y shares, the U.S. Balanced Mutual Fund Index, the Lehman Brothers
U.S. Aggregate Bond Index and the Wilshire 5000 Equity Index if you had invested
$10,000 on December 30, 1994, and had reinvested all your income dividends and
capital gain distributions through June 30, 2003. The performance of Class A,
Class B and Class C shares will vary based upon the different inception dates,
class specific expenses and sales charges. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
[CHART]
UBS U.S. BALANCED FUND CLASS Y VS. U.S. BALANCED MUTUAL FUND INDEX,
LEHMAN BROTHERS U.S. AGGREGRATE BOND INDEX AND WILSHIRE 5000 EQUITY INDEX
Wealth Value With Dividends
<Table>
<Caption>
LEHMAN BROTHERS
UBS U.S. BALANCED FUND U.S. BALANCED MUTUAL FUND U.S. AGGREGATE BOND
CLASS Y INDEX WILSHIRE 5000 EQUITY INDEX INDEX
$ 10,000 $ 10,000 $ 10,000 $ 10,000
$ 10,190 $ 10,204 $ 10,216 $ 10,198
$ 10,500 $ 10,542 $ 10,623 $ 10,441
$ 10,640 $ 10,743 $ 10,903 $ 10,504
$ 10,800 $ 10,964 $ 11,174 $ 10,651
$ 11,200 $ 11,338 $ 11,552 $ 11,064
6/30/1995 $ 11,391 $ 11,600 $ 11,921 $ 11,144
$ 11,543 $ 11,902 $ 12,412 $ 11,120
$ 11,705 $ 12,025 $ 12,533 $ 11,254
$ 11,928 $ 12,363 $ 13,011 $ 11,364
$ 11,999 $ 12,340 $ 12,880 $ 11,511
$ 12,365 $ 12,747 $ 13,426 $ 11,684
$ 12,548 $ 12,944 $ 13,645 $ 11,848
$ 12,788 $ 13,201 $ 14,011 $ 11,926
$ 12,733 $ 13,273 $ 14,256 $ 11,718
$ 12,766 $ 13,334 $ 14,412 $ 11,636
$ 12,799 $ 13,513 $ 14,768 $ 11,571
$ 12,842 $ 13,751 $ 15,172 $ 11,548
6/30/1996 $ 12,931 $ 13,740 $ 15,047 $ 11,703
$ 12,732 $ 13,271 $ 14,235 $ 11,734
$ 12,876 $ 13,540 $ 14,690 $ 11,714
$ 13,240 $ 14,091 $ 15,472 $ 11,918
$ 13,550 $ 14,330 $ 15,689 $ 12,183
$ 14,058 $ 15,030 $ 16,728 $ 12,391
$ 13,969 $ 14,873 $ 16,540 $ 12,276
$ 14,146 $ 15,410 $ 17,425 $ 12,314
$ 14,194 $ 15,412 $ 17,417 $ 12,345
$ 13,945 $ 14,914 $ 16,647 $ 12,208
$ 14,182 $ 15,412 $ 17,372 $ 12,391
$ 14,596 $ 16,172 $ 18,603 $ 12,509
6/30/1997 $ 14,935 $ 16,722 $ 19,458 $ 12,657
$ 15,555 $ 17,717 $ 20,954 $ 12,999
$ 15,305 $ 17,230 $ 20,166 $ 12,889
$ 15,639 $ 17,980 $ 21,356 $ 13,079
$ 15,484 $ 17,681 $ 20,645 $ 13,269
$ 15,591 $ 18,086 $ 21,321 $ 13,330
$ 15,815 $ 18,368 $ 21,715 $ 13,465
$ 15,974 $ 18,516 $ 21,833 $ 13,637
$ 16,386 $ 19,387 $ 23,422 $ 13,626
$ 16,705 $ 20,044 $ 24,594 $ 13,672
$ 16,665 $ 20,236 $ 24,886 $ 13,744
$ 16,705 $ 19,953 $ 24,224 $ 13,874
6/30/1998 $ 16,756 $ 20,465 $ 25,073 $ 13,992
$ 16,619 $ 20,189 $ 24,524 $ 14,021
$ 16,140 $ 18,254 $ 20,705 $ 14,250
$ 16,729 $ 19,179 $ 22,057 $ 14,583
$ 17,057 $ 20,077 $ 23,698 $ 14,506
$ 17,263 $ 20,937 $ 25,191 $ 14,589
$ 17,383 $ 21,831 $ 26,803 $ 14,633
$ 17,346 $ 22,409 $ 27,788 $ 14,736
$ 16,939 $ 21,743 $ 26,781 $ 14,479
$ 17,124 $ 22,332 $ 27,814 $ 14,558
$ 17,624 $ 23,054 $ 29,147 $ 14,605
$ 17,531 $ 22,652 $ 28,509 $ 14,476
6/30/1999 $ 17,550 $ 23,387 $ 29,985 $ 14,430
$ 17,288 $ 22,867 $ 29,024 $ 14,369
$ 17,026 $ 22,723 $ 28,753 $ 14,362
$ 16,652 $ 22,432 $ 28,002 $ 14,529
$ 16,465 $ 23,383 $ 29,783 $ 14,583
$ 16,465 $ 23,891 $ 30,780 $ 14,581
$ 16,175 $ 25,032 $ 33,117 $ 14,511
$ 15,829 $ 24,332 $ 31,743 $ 14,463
$ 15,328 $ 24,785 $ 32,454 $ 14,638
$ 16,021 $ 25,855 $ 34,381 $ 14,831
$ 16,561 $ 24,952 $ 32,590 $ 14,788
$ 16,753 $ 24,378 $ 31,452 $ 14,781
6/30/2000 $ 16,660 $ 25,255 $ 32,839 $ 15,088
$ 16,854 $ 25,001 $ 32,169 $ 15,226
$ 17,242 $ 26,306 $ 34,504 $ 15,447
$ 17,203 $ 25,571 $ 32,894 $ 15,544
$ 17,611 $ 25,274 $ 32,195 $ 15,646
$ 17,727 $ 23,783 $ 28,993 $ 15,903
$ 18,196 $ 24,216 $ 29,510 $ 16,199
$ 18,720 $ 24,959 $ 30,640 $ 16,463
$ 18,639 $ 23,498 $ 27,734 $ 16,606
$ 18,377 $ 22,513 $ 25,867 $ 16,689
$ 18,820 $ 23,680 $ 27,995 $ 16,619
$ 19,163 $ 23,887 $ 28,274 $ 16,719
6/30/2001 $ 19,024 $ 23,655 $ 27,800 $ 16,782
$ 19,206 $ 23,592 $ 27,341 $ 17,158
$ 18,943 $ 22,755 $ 25,687 $ 17,356
$ 18,073 $ 21,525 $ 23,379 $ 17,557
$ 18,458 $ 22,033 $ 23,974 $ 17,924
$ 19,347 $ 23,022 $ 25,807 $ 17,676
$ 19,601 $ 23,243 $ 26,271 $ 17,563
$ 19,642 $ 23,120 $ 25,945 $ 17,706
$ 19,622 $ 22,888 $ 25,412 $ 17,877
$ 19,997 $ 23,407 $ 26,524 $ 17,581
$ 19,830 $ 22,823 $ 25,229 $ 17,922
$ 19,747 $ 22,716 $ 24,932 $ 18,074
6/30/2002 $ 18,954 $ 21,747 $ 23,180 $ 18,231
$ 18,266 $ 20,697 $ 21,309 $ 18,452
$ 18,496 $ 20,897 $ 21,435 $ 18,764
$ 17,098 $ 19,652 $ 19,285 $ 19,068
$ 17,912 $ 20,599 $ 20,760 $ 18,980
$ 18,725 $ 21,405 $ 22,012 $ 18,974
$ 18,262 $ 20,788 $ 20,792 $ 19,367
$ 17,920 $ 20,453 $ 20,268 $ 19,384
$ 17,771 $ 20,327 $ 19,926 $ 19,652
$ 17,963 $ 20,471 $ 20,151 $ 19,636
$ 19,052 $ 21,621 $ 21,803 $ 19,799
$ 19,843 $ 22,620 $ 23,136 $ 20,167
6/30/2003 $ 20,035 $ 22,822 $ 23,478 $ 20,127
</Table>
12/30/94 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
37
<Page>
TOP TEN EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ----------------------------------------------------
Nextel Communications, Inc., Class A 2.8%
Citigroup, Inc. 2.5
Wells Fargo & Co. 2.1
Johnson & Johnson 2.1
UnitedHealth Group, Inc. 1.9
Microsoft Corp. 1.9
Burlington Northern Santa Fe Corp. 1.9
Allergan, Inc. 1.7
GreenPoint Financial Corp. 1.7
J.P. Morgan Chase & Co. 1.7
- ----------------------------------------------------
Total 20.3%
</Table>
TOP TEN FIXED INCOME HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
U.S. Treasury Note
3.000%, due 02/15/08 4.0%
Federal National Mortgage Association
6.000%, due 11/01/32 1.5
U.S. Treasury Note
3.625%, due 08/31/03 1.3
U.S. Treasury Bond
6.250%, due 05/15/30 1.2
U.S. Treasury Note
5.750%, due 08/15/10 1.1
U.S. Treasury Note
2.750%, due 09/30/03 1.1
Federal National Mortgage Association
5.500%, due 01/01/18 1.0
Morgan Stanley Dean Witter Capital I
6.660%, due 02/15/33 0.9
U.S. Treasury Note
1.625%, due 03/31/05 0.7
U.S. Treasury Note
4.375%, due 08/15/12 0.6
- ------------------------------------------------------------------------
Total 13.4%
</Table>
38
<Page>
UBS U.S. BALANCED FUND
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF JUNE 30, 2003
<Table>
U.S. EQUITIES
Aerospace & Military 1.23%
Airlines 0.62
Autos/Durables 0.50
Banks 5.26
Biomedical 0.34
Broadcasting & Publishing 0.48
Business & Public Service 0.36
Capital Goods 2.10
Chemicals 1.23
Computer Software 1.92
Computer Systems 1.18
Construction 0.78
Consumer 0.94
Electric Components 1.01
Energy 5.72
Financial Services 9.96
Health: Drugs 5.83
Health: Non-Drugs 4.78
Housing/Paper 1.17
Industrial Components 1.07
Media and Entertainment 1.15
Metals Non-Ferrous 1.47
Recreation 0.79
Retail/Apparel 2.81
Services/Miscellaneous 3.27
Telecommunications- Services 4.06
Transportation 1.84
Utilities 2.04
-------
Total Equities 63.91
U.S. CORPORATE BONDS
Aerospace & Military 0.14
Airlines 0.10
Autos/Durables 0.13
Banks 0.48
Beverages & Tobacco 0.22
Chemicals 0.04%
Computer Systems 0.10
Construction 0.13
Consumer 0.11
Electric Components 0.12
Energy 0.44
Financial Services 2.05
Food & House Products 0.51
Forest Products 0.04
Health: Drugs 0.04
Housing/Paper 0.04
Insurance 0.02
Leisure & Tourism 0.11
Media and Entertainment 0.04
Metals Non-Ferrous 0.04
Multi-Industry 0.17
Publishing 0.02
Real Estate 0.10
Retail/Apparel 0.06
Services/Miscellaneous 0.17
Telecommunications 0.31
Telecommunications - Wireless 0.02
Transportation 0.13
Utilities 0.11
-------
Total U.S. Corporate Bonds 5.99
Asset-Backed Securities 1.26
International Dollar Bonds 0.63
Mortgage-Backed Securities 15.98
U.S. Government Obligations 10.25
-------
Total Bonds 34.11
SHORT-TERM INVESTMENTS 2.41
-------
TOTAL INVESTMENTS 100.43
LIABILITIES, LESS CASH AND
OTHER ASSETS (0.43)
-------
NET ASSETS 100.00%
=======
</Table>
39
<Page>
UBS U.S. BALANCED FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
------------- -------------
U.S. EQUITIES -- 63.91%
AEROSPACE & MILITARY -- 1.23%
United Technologies Corp. 5,400 $ 382,482
-------------
AIRLINES -- 0.62%
Continental Airlines, Inc., Class B (b) 4,600 68,862
Delta Air Lines, Inc. 8,400 123,312
-------------
192,174
-------------
AUTOS/DURABLES -- 0.49%
Johnson Controls, Inc. 1,800 154,080
-------------
BANKS -- 5.26%
FleetBoston Financial Corp. 8,105 240,800
GreenPoint Financial Corp. 10,500 534,870
PNC Financial Services Group 4,100 200,121
Wells Fargo & Co. 13,100 660,240
-------------
1,636,031
-------------
BIOMEDICAL -- 0.34%
Genzyme Corp. (b) 2,500 104,500
-------------
BROADCASTING & PUBLISHING -- 0.48%
McGraw-Hill Cos., Inc. (The) 2,400 148,800
-------------
BUSINESS & PUBLIC SERVICE -- 0.36%
Interpublic Group of Cos., Inc. 8,300 111,054
-------------
CAPITAL GOODS -- 2.10%
Illinois Tool Works, Inc. 6,700 441,195
Pentair, Inc. 5,400 210,924
-------------
652,119
-------------
CHEMICALS -- 1.23%
Dow Chemical Co. (The) 6,500 201,240
Eastman Chemical Co. 3,400 107,678
IMC Global, Inc. 10,800 72,468
-------------
381,386
-------------
COMPUTER SOFTWARE -- 1.92%
Microsoft Corp. 23,300 596,713
-------------
COMPUTER SYSTEMS -- 1.18%
Computer Sciences Corp. (b) 2,200 83,864
Hewlett-Packard Co. 13,285 282,971
-------------
366,835
-------------
CONSTRUCTION -- 0.78%
Martin Marietta Materials, Inc. 7,236 243,202
-------------
CONSUMER -- 0.94%
Kimberly-Clark Corp. 5,600 291,984
-------------
ELECTRIC COMPONENTS -- 1.01%
Linear Technology Corp. 6,000 193,260
Texas Instruments, Inc. 6,900 121,440
-------------
314,700
-------------
ENERGY -- 5.72%
ConocoPhillips 5,360 293,728
Exelon Corp. 6,900 412,689
ExxonMobil Corp. 6,900 247,779
FirstEnergy Corp. 9,591 368,774
Kerr-McGee Corp. 1,850 $ 82,880
Progress Energy, Inc. 4,100 179,990
Sempra Energy 6,800 194,004
-------------
1,779,844
-------------
FINANCIAL SERVICES -- 9.96%
American International Group, Inc. 5,400 297,972
Anthem, Inc. (b) 4,300 331,745
Citigroup, Inc. 18,086 774,081
Freddie Mac 8,100 411,237
Hartford Financial Services Group,
Inc. (The) 3,800 191,368
J.P. Morgan Chase & Co. 15,200 519,536
Mellon Financial Corp. 7,900 219,225
Morgan Stanley 8,250 352,687
-------------
3,097,851
-------------
HEALTH: DRUGS -- 5.83%
Allergan, Inc. 7,000 539,700
Bristol-Myers Squibb Co. 13,400 363,810
Cephalon, Inc. (b) 4,500 185,220
SICOR, Inc. (b) 16,400 333,576
Wyeth 8,600 391,730
-------------
1,814,036
-------------
HEALTH: NON-DRUGS -- 4.78%
Baxter International, Inc. 5,200 135,200
Biomet, Inc. 3,100 88,846
Johnson & Johnson 12,764 659,899
UnitedHealth Group, Inc. 12,000 603,000
-------------
1,486,945
-------------
HOUSING/PAPER -- 1.16%
American Standard Companies, Inc. (b) 4,900 362,257
-------------
INDUSTRIAL COMPONENTS -- 1.06%
Ingersoll-Rand Co., Class A 7,000 331,240
-------------
MEDIA AND ENTERTAINMENT -- 1.15%
Viacom, Inc., Class B (b) 8,200 358,012
-------------
METALS NON-FERROUS -- 1.46%
Masco Corp. 19,100 455,535
-------------
RECREATION -- 0.79%
Royal Caribbean Cruises Ltd. 10,600 245,496
-------------
RETAIL/APPAREL -- 2.81%
Costco Wholesale Corp. (b) 7,800 285,480
Newell Rubbermaid, Inc. 10,300 288,400
RadioShack Corp. 6,000 157,860
TJX Companies, Inc. 7,500 141,300
-------------
873,040
-------------
SERVICES/MISCELLANEOUS -- 3.27%
First Data Corp. 6,116 253,447
MeadWestvaco Corp. 5,150 127,205
Omnicom Group 7,200 516,240
Viad Corp. 5,400 120,906
-------------
1,017,798
-------------
</Table>
40
<Page>
<Table>
<Caption>
SHARES VALUE
------------- -------------
TELECOMMUNICATIONS- SERVICES -- 4.06%
Motorola, Inc. 19,615 $ 184,969
Nextel Communications, Inc., Class A (b) 47,700 862,416
SBC Communications, Inc. 8,400 214,620
-------------
1,262,005
-------------
TRANSPORTATION -- 1.88%
Burlington Northern Santa Fe Corp. 20,600 585,864
-------------
UTILITIES -- 2.04%
CMS Energy Corp. 9,100 73,710
Consolidated Edison, Inc. 4,400 190,432
Dominion Resources, Inc. 2,400 154,248
Entergy Corp. 4,100 216,398
-------------
634,788
-------------
Total U.S. Equities (Cost $18,392,735) 19,880,771
-------------
<Caption>
FACE
AMOUNT
-------------
BONDS -- 34.11%
U.S. CORPORATE BONDS -- 5.99%
Abbott Laboratories, Inc.
5.625%, due 07/01/06 $ 5,000 5,536
Alcoa, Inc.
6.000%, due 01/15/12 10,000 11,264
American Express Co.
3.750%, due 11/20/07 25,000 26,051
Anadarko Finance Co., Series B
7.500%, due 05/01/31 5,000 6,281
Anheuser Busch Cos., Inc.
9.000%, due 12/01/09 25,000 33,351
AOL Time Warner, Inc.
7.625%, due 04/15/31 30,000 34,623
Apache Corp.
6.250%, due 04/15/12 25,000 29,110
AT&T Corp.
8.500%, due 11/15/31 5,000 5,669
AT&T Wireless Services, Inc.
7.875%, due 03/01/11 15,000 17,715
Avalonbay Communities, Inc.
7.500%, due 08/01/09 10,000 11,859
Avon Products, Inc.
7.150%, due 11/15/09 15,000 18,162
Bank of America Corp.
7.400%, due 01/15/11 35,000 43,001
Bank One Corp.
7.875%, due 08/01/10 30,000 37,407
Boeing Capital Corp.
7.375%, due 09/27/10 25,000 29,624
Bombardier Capital, Inc., 144A
6.125%, due 06/29/06 15,000 15,338
Bristol-Myers Squibb Co.
5.750%, due 10/01/11 5,000 5,564
Burlington Northern Santa Fe Corp.
7.082%, due 05/13/29 15,000 17,626
Caterpillar, Inc.
6.550%, due 05/01/11 10,000 11,822
Cendant Corp.
6.875%, due 08/15/06 15,000 16,778
<Caption>
FACE
AMOUNT VALUE
------------- -------------
Centex Corp.
9.750%, due 06/15/05 $ 25,000 $ 28,544
Cingular Wireless LLC
6.500%, due 12/15/11 5,000 5,761
Citigroup, Inc.
7.250%, due 10/01/10 50,000 60,581
Citizens Communications Co.
9.250%, due 05/15/11 15,000 19,409
Coca-Cola Co. (The)
4.000%, due 06/01/05 10,000 10,465
Comcast Cable Communications, Inc.
6.750%, due 01/30/11 25,000 28,697
Commonwealth Edison Co.,
6.150%, due 03/15/12 5,000 5,733
Computer Sciences Corp.
3.500%, due 04/15/08 25,000 25,530
Conagra Foods, Inc.
6.750%, due 09/15/11 10,000 11,707
ConocoPhillips
8.500%, due 05/25/05 20,000 22,529
8.750%, due 05/25/10 10,000 13,015
Consolidated Edison, Inc., Series B
7.500%, due 09/01/10 25,000 30,664
Coors Brewing Co.,
6.375%, due 05/15/12 10,000 11,476
Countrywide Home Loans, Inc.
3.250%, due 05/21/08 25,000 25,121
Credit Suisse First Boston USA, Inc.
5.750%, due 04/15/07 10,000 11,110
6.500%, due 01/15/12 15,000 17,213
DaimlerChrysler N.A Holding Corp.
8.500%, due 01/18/31 10,000 11,779
Devon Financing Corp., ULC
6.875%, due 09/30/11 10,000 11,730
Dominion Resources, Inc., Class B
7.625%, due 07/15/05 20,000 22,245
DTE Energy Co.
7.050%, due 06/01/11 5,000 5,848
Duke Energy Field Services, LLC
6.875%, due 02/01/11 5,000 5,710
7.875%, due 08/16/10 5,000 6,018
EOP Operating LP
7.000%, due 07/15/11 15,000 17,409
Erac U.S.A. Finance Co., 144A
8.000%, due 01/15/11 20,000 23,828
First Data Corp.
5.625%, due 11/01/11 10,000 11,066
First Union National Bank
7.800%, due 08/18/10 30,000 37,223
FleetBoston Financial Corp.
7.375%, due 12/01/09 5,000 6,000
Ford Motor Co.
7.450%, due 07/16/31 20,000 18,321
Ford Motor Credit Co.
5.800%, due 01/12/09 10,000 9,939
7.375%, due 02/01/11 15,000 15,508
General Dynamics Corp.
3.000%, due 05/15/08 25,000 25,157
</Table>
41
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
General Electric Capital Corp.
6.000%, due 06/15/12 $ 90,000 $ 101,589
General Motors Acceptance Corp.
6.875%, due 09/15/11 40,000 40,134
8.000%, due 11/01/31 25,000 24,529
Goldman Sachs Group, Inc.
6.875%, due 01/15/11 20,000 23,599
Harrah's Operating Co., Inc.
7.500%, due 01/15/09 15,000 17,773
Household Finance Corp.
6.750%, due 05/15/11 25,000 29,034
International Business Machines Corp.
5.875%, due 11/29/32 5,000 5,363
International Paper Co.
6.750%, due 09/01/11 10,000 11,566
John Deere Capital Corp.
7.000%, due 03/15/12 10,000 11,872
Kerr-McGee Corp.
7.875%, due 09/15/31 5,000 6,116
Kimberly-Clark Corp., 144A
4.500%, due 07/30/05 15,000 15,854
Kohl's Corp.
6.300%, due 03/01/11 5,000 5,793
Kraft Foods, Inc.
5.625%, due 11/01/11 25,000 27,242
Kroger Co.
7.500%, due 04/01/31 5,000 5,930
8.050%, due 02/01/10 40,000 48,212
Lehman Brothers Holdings, Inc.
6.625%, due 01/18/12 10,000 11,724
Lincoln National Corp.
6.200%, due 12/15/11 5,000 5,613
Marsh & McClennan Cos., Inc.
6.250%, due 03/15/12 5,000 5,699
MidAmerican Energy Co.
5.125%, due 01/15/13 10,000 10,615
Mirant Americas Generation, Inc.
7.625%, due 05/01/06 15,000 11,550
Morgan Stanley
6.750%, due 04/15/11 35,000 40,939
News America Holdings, Inc.
7.125%, due 04/08/28 5,000 5,567
Occidental Petroleum Corp.
8.450%, due 02/15/29 5,000 6,996
Pemex Project Funding Master Trust
8.000%, due 11/15/11 25,000 28,625
Pepsi Bottling Group, Inc., 144A
5.625%, due 02/17/09 15,000 16,823
Praxair, Inc.
6.375%, due 04/01/12 5,000 5,823
Progress Energy, Inc.
7.000%, due 10/30/31 10,000 11,036
Qwest Capital Funding, Inc.
7.900%, due 08/15/10 30,000 25,050
Rohm & Haas Co.
7.850%, due 07/15/29 5,000 6,474
Safeway, Inc.
3.800%, due 08/15/05 30,000 30,798
SBC Communications, Inc.
5.875%, due 02/01/12 $ 10,000 $ 11,226
SLM Corp.
5.625%, due 04/10/07 20,000 22,198
Southern Power Co., Series B
6.250%, due 07/15/12 5,000 5,659
Southwestern Electric Power, Series B
4.500%, due 07/01/05 5,000 5,192
Sprint Capital Corp.
8.375%, due 03/15/12 25,000 29,933
Suntrust Banks, Inc.
5.050%, due 07/01/07 5,000 5,460
Target Corp.
7.000%, due 07/15/31 10,000 11,968
U.S. Bank N.A., Minnesota
6.375%, due 08/01/11 20,000 23,347
Unilever Capital Corp.
7.125%, due 11/01/10 15,000 18,174
Union Pacific Corp.
6.700%, due 12/01/06 20,000 22,493
United Technologies Corp.
6.100%, due 05/15/12 15,000 17,293
UST, Inc.
6.625%, due 07/15/12 10,000 11,579
Valero Energy Corp.
7.500%, due 04/15/32 10,000 11,336
Verizon New England, Inc.
6.500%, due 09/15/11 5,000 5,802
Verizon New York, Inc., Series B
7.380%, due 04/01/32 5,000 6,204
Viacom, Inc.
6.625%, due 05/15/11 10,000 11,796
Walt Disney Co. (The)
6.375%, due 03/01/12 15,000 17,098
Washington Mutual, Inc.
5.625%, due 01/15/07 35,000 38,577
Wells Fargo Bank, N.A
6.450%, due 02/01/11 40,000 47,161
Weyerhaeuser Co.
7.375%, due 03/15/32 10,000 11,495
-------------
1,864,046
-------------
ASSET-BACKED SECURITIES -- 1.26%
Americredit Automobile Receivables Trust,
03-AM, Class A2B FRN
1.584%, due 10/06/06 30,000 29,999
Capital One Multi-Asset Execution Trust,
03-A1, Class A1 FRN
1.570%, due 01/15/09 80,000 80,002
Conseco Finance, 00-B, Class AF4
7.870%, due 02/15/31 25,000 26,014
Peco Energy Transition Trust,
99-A, Class A7
6.130%, due 03/01/09 55,000 63,092
Sears Credit Account Master Trust,
01-1, Class A FRN
1.360%, due 02/15/10 80,000 79,667
Structured Asset Securities Corp.,
03-AL2, Class A, 144A
3.356%, due 01/25/31 29,531 29,252
</Table>
42
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
United Airlines, Inc. E.E.T.C. (d)(e)
7.811%, due 10/01/09 $ 29,456 $ 7,615
Vanderbilt Mortgage Finance, 00-B, Class 1A3
8.255%, due 05/07/17 70,000 75,691
-------------
391,332
-------------
INTERNATIONAL DOLLAR BONDS -- 0.63%
Burlington Resources Finance Co.
6.680%, due 02/15/11 5,000 5,868
Canadian National Railway Co.
6.900%, due 07/15/28 5,000 5,932
Deutsche Telekom International Finance BV
8.250%, due 06/15/30 5,000 6,370
European Investment Bank
4.875%, due 09/06/06 25,000 27,089
France Telecom S.A.
8.500%, due 03/01/31 5,000 6,919
HSBC Holdings PLC
5.250%, due 12/12/12 5,000 5,333
Inter-American Development Bank
5.750%, due 02/26/08 30,000 34,302
International Bank for
Reconstruction & Development
4.375%, due 09/28/06 35,000 37,832
Mexico Government International Bond
8.125%, due 12/30/19 20,000 22,800
Rio Tinto Finance USA Ltd.
2.625%, due 09/30/08 25,000 24,542
Royal Bank of Scotland
9.118%, due 03/31/10 5,000 6,447
Telus Corp.
8.000%, due 06/01/11 10,000 11,550
-------------
194,984
-------------
MORTGAGE-BACKED SECURITIES -- 15.98%
Bear Stearns Commercial Mortgage Securities,
00-WF1, Class A2
7.780%, due 02/15/32 140,000 171,911
CS First Boston Mortgage Securities Corp.,
03-8, Class 5A1
6.500%, due 04/25/33 104,098 107,158
DLJ Commercial Mortgage Corp.,
99-CG2, Class A1B
7.300%, due 06/10/32 25,000 30,021
Fannie Mae
4.625%, due 05/01/13 35,000 35,995
5.500%, due 03/15/11 140,000 158,835
7.125%, due 01/15/30 135,000 175,225
Federal Home Loan Mortgage Corp., 1595 D
6.500%, due 11/01/32 149,802 155,888
Federal Home Loan Mortgage Corp., 2532 PD
5.5000%, due 06/15/26 90,000 93,277
Federal Home Loan Mortgage Corp., Gold
5.500%, due 09/01/17 46,590 48,322
5.500%, due 01/01/18 81,144 84,161
5.500%, due 04/01/18 76,857 79,718
6.000%, due 10/01/29 25,241 26,206
6.000%, due 03/01/32 18,340 19,016
6.500%, due 02/01/29 102,084 106,231
6.500%, due 04/01/29 99,068 103,093
Federal National Mortgage Association
4.500%, due 05/01/33 FRN $ 148,385 $ 153,207
4.503%, due 06/01/33 FRN 149,862 153,214
5.500%, due 12/01/17 51,546 53,546
5.500%, due 01/01/18 311,052 323,118
5.500%, due 02/01/18 117,959 122,535
6.000%, due 06/01/23 9,837 10,257
6.000%, due 03/01/29 55,772 57,981
6.000%, due 11/01/32 450,520 468,365
6.000%, due 06/01/33 34,960 36,345
6.500%, due 11/01/31 55,783 58,171
6.500%, due 08/01/32 110,817 115,561
7.000%, due 11/01/32 115,089 121,203
7.000%, due 05/01/33 160,000 168,500
7.500%, due 05/01/31 40,110 42,617
7.500%, due 02/01/33 140,713 149,569
Federal National Mortgage Association
Grantor Trust, 00-T6, Class A1
7.500%, due 06/25/30 87,265 97,382
Federal National Mortgage Association
Grantor Trust, 01-T10, Class A2
7.500%, due 12/25/41 6,176 6,892
Federal National Mortgage Association
Grantor Trust, 01-T5, Class A3
7.500%, due 06/19/30 106,711 119,083
Federal National Mortgage Association
Whole Loan, 01-W3, Class A
7.000%, due 09/25/41 68,607 74,803
Federal National Mortgage Association
Whole Loan, 03-W6, Class 6A FRN
5.210%, due 08/25/42 48,113 50,714
Federal National Mortgage Association,
93-73, Class ZA
7.500%, due 10/25/22 18,687 18,887
Freddie Mac
5.875%, due 03/21/11 45,000 50,619
GMAC Commercial Mortgage Securities, Inc.,
97-C2, Class A2
6.550%, due 04/16/29 35,000 37,824
Government National Mortgage Association
6.000%, due 11/20/28 27,714 28,892
6.000%, due 02/20/29 59,888 62,433
6.500%, due 10/15/28 69,857 73,350
7.000%, due 04/15/26 45,920 48,503
Greenwich Capital Commercial Funding Corp.,
03-FL1 A FRN
1.639%, due 07/05/18 34,993 34,993
GS Mortgage Securities Corp. II, 96-PL, Class A2
7.410%, due 02/15/27 18,074 18,832
GS Mortgage Securities Corp.,
01-2, Class A, 144A
7.500%, due 06/19/32 92,090 98,719
Impac Secured Assets Common Owner,
01-3, Class A2 (c)
6.703%, due 04/25/31 13,890 14,349
LB Commercial Conduit Mortgage Trust,
99-C1, Class A1
6.410%, due 06/15/31 84,169 91,139
</Table>
43
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
LB Commercial Conduit Mortgage Trust,
99-C2, Class A2
7.325%, due 10/15/32 $ 40,000 $ 48,163
Morgan Stanley Dean Witter Capital I,
00-LIF2, Class A1
6.960%, due 10/15/33 25,474 28,749
Morgan Stanley Dean Witter Capital I,
00-LIFE, Class A2
7.570%, due 12/15/09 135,000 164,762
Morgan Stanley Dean Witter Capital I,
01-TOP1, Class A4
6.660%, due 02/15/33 235,000 276,499
Nomura Asset Securities Corp.,
95-MD3, Class A1B
8.150%, due 04/04/27 66,624 72,644
Structured Asset Securities Corp.,
98-ALS1, Class 1A
6.900%, due 01/25/29 23,610 23,877
-------------
4,971,354
-------------
U.S. GOVERNMENT OBLIGATIONS -- 10.25%
U.S. Treasury Bonds
6.250%, due 05/15/30 310,000 385,926
8.000%, due 11/15/21 40,000 57,948
U.S. Treasury Notes
1.625%, due 03/31/05 225,000 226,547
3.000%, due 02/15/08 1,200,000 1,234,828
3.625%, due 08/31/03 405,000 406,788
4.375%, due 08/15/12 175,000 187,640
5.750%, due 08/15/10 300,000 351,152
2.750%, due 09/30/03 335,000 336,570
-------------
3,187,399
-------------
Total U.S. Bonds (Cost $10,312,818) 10,609,115
-------------
<Caption>
SHARES
-------------
SHORT-TERM INVESTMENTS -- 2.41%
OTHER -- 2.41%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $749,445) 749,445 749,445
-------------
Total Investments
(Cost $29,454,998) -- 100.43% (a) 31,239,331
Liabilities, less cash and
other assets -- (0.43)% (134,147)
-------------
Net Assets -- 100% $ 31,105,184
=============
</Table>
44
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $29,956,159; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 2,280,678
Gross unrealized depreciation (997,506)
------------
Net unrealized appreciation $ 1,283,172
============
</Table>
(b) Non-income producing security.
(c) Variable rate note - The rate disclosed is that in effect at June 30, 2003.
(d) Security is in default.
(e) Security is illiquid. These securities amounted to $7,615 or 0.02% of net
assets.
% Represents a percentage of net assets.
E.E.T.C.: Enhanced Equipment Trust Certificate.
FRN: Floating rate note - The rate disclosed is that in effect at
June 30, 2003.
144A: Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified buyers. At June 30, 2003, the
value of these securities amounted to $199,814 or 0.64% of net assets.
See accompanying notes to financial statements
45
<Page>
UBS U.S. EQUITY FUND
Over the fiscal year ended June 30, 2003, Class Y shares of UBS U.S. Equity Fund
returned 1.69%, slightly outperforming the 1.27% return of the Fund's benchmark,
the Wilshire 5000 Equity Index. Since the Fund's inception on February 22, 1994,
through June 30, 2003, its Class Y shares provided an average annual return of
10.00%. This compares to the 9.92% return of the Fund's benchmark. (Returns for
all share classes over various time periods are shown on page 48. Please note
that these returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.)
The Fund's slight outperformance of the Index over the period is attributable to
sector selection. In particular, a large underweight to the consumer sector was
a primary contributor to performance.
12-MONTH MARKET REVIEW
The US equity markets were extremely volatile during the 12-month period,
alternately falling and rising over the four quarters that made up the Fund's
reporting period. Early in the period, a weak economy, anemic corporate profits,
accounting issues and unrest in the Middle East led investors to shun stocks in
favor of the perceived security of the bond market. However, after falling to a
five-year low in early October 2002, stocks staged a surprising rally when, in
the aftermath of the market's sharp decline, investors found themselves drawn to
certain downtrodden sectors that were viewed as having compelling valuations.
Geopolitical issues came to the fore as the year 2003 began, as anticipation of
the war in Iraq, saber rattling in North Korea and renewed concerns about
terrorism preoccupied the country. Investor aversion to risk resurfaced, and the
majority of the sectors covered in the Index fell during the first quarter.
Nonetheless, the 12-month period ended on a positive note, as the end to major
fighting in Iraq eliminated one of the issues weighing most heavily on the
market. Investors grew increasingly optimistic about the potential for an
economic revival and subsequent upturn in corporate profits. At the same time,
their appetite for risk increased as the yields available from many fixed income
securities shrank. As a result, equity investors drove stocks to steep gains
over the final quarter of the period. The gains were broad-based, and many of
the best-performing sectors were the prior years' weakest-performing areas: the
utility, information technology, telecommunication services and industrial
sectors.
OUR IN-DEPTH RESEARCH IDENTIFIED COMPANIES WITH COMPELLING INTRINSIC VALUES
Our disciplined investment approach focuses on intrinsic value, which is
determined by the fundamentals that drive a security's future cash flow.
Discrepancies between market price and intrinsic value arise from market
behavior and provide us with opportunities to outperform the Fund's benchmark.
Throughout the period, our intrinsic value investment discipline led us to make
a number of sector decisions that helped drive the Fund's performance to surpass
that of its benchmark.
In particular, a large underweight to the consumer sector, specifically in
specialty retail and department stores, helped performance. Also, although our
semiconductor exposure was small, it made a significant positive contribution to
return due to the strong performance of these stocks through the last nine
months of the review period.
In the pharmaceuticals area, a number of drug failures from a small handful of
producers were dragging down the entire sector. However, the in-depth analysis
conducted by our analysts uncovered a number of solid companies selling at very
attractive valuations. In particular, we focused on firms with compelling and
established drug pipelines. These holdings subsequently rose in value when
investors realized their true value.
The Fund's selective holdings in the bank sector also aided returns. In this
area, our research directed us to companies that were enjoying the benefits of
earlier consolidations, and that were introducing superior new products.
On the other end of the spectrum, we were penalized for holding an underweight
to media throughout the period (although the names that we did hold in this
space did very well for
46
<Page>
us over the period). An underweight to computer hardware, which was consistent
with our belief that the space is overvalued, also created a drag on
performance, as did an overweight in railroads, which detracted at the sector
level, while the names we held added to performance.
The Fund's overweight position in utilities also hurt relative performance.
While our overweight in this sector was primarily in electric utilities with
little or no exposure to trading operations (which suffered extensively in the
wake of Enron and the California electricity crisis), these holdings did not
meet our expectations.
As the period drew to a close, the large difference between growth and value
stocks became less pronounced, as did the divergence in performance between the
very largest stocks in the Index and the rest of the market. As a result, the
importance of our extensive "bottom-up" determination of cash flows and
intrinsic value became increasingly important. In this environment, we continued
to find a number of compelling opportunities in banks, pharmaceutical companies
and utilities. Conversely, we felt the prices of many higher beta stocks--such
as the majority of those in the technology and telecommunications space--had
moved too far, too fast, and were not supported by appropriate fundamentals. As
a result, we maintained an underweight position in these sectors.
LOOKING AHEAD
Many of the concerns weighing down the market early in 2003 were not, in fact,
tied to fundamentals. During periods of extreme optimism or pessimism, many
investors have difficulty adhering to a disciplined valuation process, which can
result in an improperly positioned portfolio. Through the application of high
quality research that follows a disciplined and consistent valuation process, we
endeavor to avoid such missteps. We intend to continue managing the portfolio
using our proven process, whereby we employ a fundamental, disciplined
investment approach in an attempt to generate superior risk-adjusted returns
versus the benchmark over the long-term.
47
<Page>
UBS U.S. EQUITY FUND
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- ---------------------------------------------------------------------------------------------------
UBS U.S. Equity Fund Class A 12.65% 1.37% 0.89% -0.50% 2.81%
- ---------------------------------------------------------------------------------------------------
UBS U.S. Equity Fund Class B 12.18 0.63 N/A N/A -0.47
- ---------------------------------------------------------------------------------------------------
UBS U.S. Equity Fund Class C 12.19 0.68 N/A N/A -2.19
- ---------------------------------------------------------------------------------------------------
UBS U.S. Equity Fund Class Y 12.73 1.69 1.17 -0.20 10.00
- ---------------------------------------------------------------------------------------------------
UBS U.S. Equity Fund Class A** 6.48 -4.20 -0.99 -1.62 1.85
- ---------------------------------------------------------------------------------------------------
UBS U.S. Equity Fund Class B** 7.18 -4.22 N/A N/A -2.70
- ---------------------------------------------------------------------------------------------------
UBS U.S. Equity Fund Class C** 10.08 -1.29 N/A N/A -2.77
- ---------------------------------------------------------------------------------------------------
Wilshire 5000 Equity Index 12.91 1.27 -10.59 -1.31 9.92
- ---------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS U.S. EQUITY FUND CLASS A IS 6/30/97. INCEPTION DATES
OF CLASS B AND CLASS C ARE 11/05/01 AND 11/13/01, RESPECTIVELY. INCEPTION
DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE INDEX, IS 2/22/94.
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS U.S. Equity
Fund Class Y shares and the Wilshire 5000 Equity Index if you had invested
$10,000 on February 22, 1994, and had reinvested all your income dividends and
capital gain distributions through June 30, 2003. The performance of Class A,
Class B and Class C shares will vary based upon the different inception dates,
class specific expenses and sales charges. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
[CHART]
UBS U.S. EQUITY FUND CLASS Y VS. WILSHIRE 5000 EQUITY INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS U.S. EQUITY FUND CLASS Y WILSHIRE 5000 EQUITY INDEX
$ 10,000 $ 10,000
$ 9,420 $ 9,547
$ 9,640 $ 9,639
$ 9,840 $ 9,733
6/30/1994 $ 9,690 $ 9,473
$ 9,911 $ 9,754
$ 10,544 $ 10,185
$ 10,182 $ 9,988
$ 10,132 $ 10,151
$ 9,781 $ 9,779
$ 9,827 $ 9,911
$ 10,030 $ 10,125
$ 10,487 $ 10,528
$ 10,752 $ 10,806
$ 10,985 $ 11,074
$ 11,392 $ 11,449
6/30/1995 $ 11,768 $ 11,815
$ 12,187 $ 12,301
$ 12,411 $ 12,421
$ 12,881 $ 12,895
$ 12,840 $ 12,765
$ 13,575 $ 13,306
$ 13,815 $ 13,523
$ 14,381 $ 13,886
$ 14,612 $ 14,129
$ 14,885 $ 14,283
$ 15,168 $ 14,636
$ 15,409 $ 15,036
6/30/1996 $ 15,367 $ 14,913
$ 14,629 $ 14,108
$ 15,188 $ 14,559
$ 15,872 $ 15,334
$ 16,209 $ 15,549
$ 17,336 $ 16,579
$ 17,359 $ 16,392
$ 17,989 $ 17,270
$ 18,092 $ 17,262
$ 17,496 $ 16,498
$ 18,035 $ 17,218
$ 19,354 $ 18,438
6/30/1997 $ 20,265 $ 19,285
$ 21,815 $ 20,767
$ 20,965 $ 19,986
$ 21,907 $ 21,166
$ 20,747 $ 20,461
$ 21,161 $ 21,131
$ 21,657 $ 21,521
$ 21,805 $ 21,638
$ 23,702 $ 23,213
$ 25,070 $ 24,375
$ 24,823 $ 24,665
$ 24,466 $ 24,008
6/30/1998 $ 24,617 $ 24,850
$ 23,999 $ 24,305
$ 20,574 $ 20,520
$ 22,070 $ 21,861
$ 23,752 $ 23,487
$ 24,741 $ 24,966
$ 25,680 $ 26,564
$ 25,509 $ 27,540
$ 24,575 $ 26,542
$ 25,377 $ 27,566
$ 27,665 $ 28,887
$ 27,323 $ 28,255
6/30/1999 $ 28,363 $ 29,718
$ 27,175 $ 28,765
$ 26,224 $ 28,497
$ 24,323 $ 27,752
$ 24,336 $ 29,517
$ 24,481 $ 30,506
$ 24,640 $ 32,822
$ 22,985 $ 31,460
$ 21,109 $ 32,164
$ 23,204 $ 34,075
$ 24,127 $ 32,300
$ 24,332 $ 31,171
6/30/2000 $ 23,541 $ 32,546
$ 23,629 $ 31,882
$ 25,138 $ 34,197
$ 24,274 $ 32,601
$ 25,094 $ 31,908
$ 24,464 $ 28,734
$ 25,437 $ 29,246
$ 26,621 $ 30,367
$ 25,615 $ 27,487
$ 24,464 $ 25,636
$ 25,810 $ 27,746
$ 26,524 $ 28,022
6/30/2001 $ 26,103 $ 27,553
$ 25,924 $ 27,098
$ 24,966 $ 25,458
$ 22,773 $ 23,171
$ 23,244 $ 23,760
$ 25,290 $ 25,577
$ 25,913 $ 26,037
$ 25,896 $ 25,714
$ 25,709 $ 25,185
$ 26,799 $ 26,287
$ 26,050 $ 25,004
$ 25,743 $ 24,710
6/30/2002 $ 23,971 $ 22,973
$ 22,284 $ 21,119
$ 22,557 $ 21,244
$ 19,848 $ 19,113
$ 21,313 $ 20,575
$ 22,744 $ 21,816
$ 21,624 $ 20,607
$ 21,020 $ 20,088
$ 20,576 $ 19,748
$ 20,789 $ 19,971
$ 22,725 $ 21,609
$ 23,950 $ 22,929
6/30/2003 $ 24,376 $ 23,269
</Table>
2/22/94 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
48
<Page>
UBS U.S. EQUITY FUND
TOP TEN EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- --------------------------------------------------
Nextel Communications, Inc., Class A 4.0%
Citigroup, Inc. 3.6
Johnson & Johnson 3.1
Wells Fargo & Co. 3.1
UnitedHealth Group, Inc. 2.8
Microsoft Corp. 2.8
Burlington Northern Santa Fe Corp. 2.7
Allergan, Inc. 2.5
GreenPoint Financial Corp. 2.5
J.P. Morgan Chase & Co. 2.4
- --------------------------------------------------
Total 29.5%
</Table>
49
<Page>
UBS U.S. EQUITY FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
------------- -------------
U.S. EQUITIES -- 93.37%
AEROSPACE & MILITARY -- 1.80%
United Technologies Corp. 26,800 $ 1,898,244
-------------
AIRLINES -- 0.90%
Continental Airlines, Inc., Class B (b) 22,800 341,316
Delta Air Lines, Inc. 41,800 613,624
-------------
954,940
-------------
AUTOS/DURABLES -- 0.75%
Johnson Controls, Inc. 9,200 787,520
-------------
BANKS -- 7.69%
FleetBoston Financial Corp. 40,155 1,193,005
GreenPoint Financial Corp. 52,200 2,659,068
PNC Financial Services Group 20,600 1,005,486
Wells Fargo & Co. 64,900 3,270,960
-------------
8,128,519
-------------
BIOMEDICAL -- 0.48%
Genzyme Corp. (b) 12,200 509,960
-------------
BROADCASTING & PUBLISHING -- 0.69%
McGraw-Hill Cos., Inc. (The) 11,800 731,600
-------------
BUSINESS & PUBLIC SERVICE -- 0.52%
Interpublic Group of Cos., Inc. 41,200 551,256
-------------
CAPITAL GOODS -- 3.05%
Illinois Tool Works, Inc. 33,100 2,179,635
Pentair, Inc. 26,800 1,046,808
-------------
3,226,443
-------------
CHEMICALS -- 1.78%
Dow Chemical Co. (The) 32,100 993,816
Eastman Chemical Co. 16,750 530,473
IMC Global, Inc. 53,900 361,669
-------------
1,885,958
-------------
COMPUTER SOFTWARE -- 2.80%
Microsoft Corp. 115,700 2,963,077
-------------
COMPUTER SYSTEMS -- 1.73%
Computer Sciences Corp. (b) 11,100 423,132
Hewlett-Packard Co. 66,088 1,407,674
-------------
1,830,806
-------------
CONSTRUCTION -- 1.15%
Martin Marietta Materials, Inc. 36,007 1,210,195
-------------
CONSUMER -- 1.38%
Kimberly-Clark Corp. 28,050 1,462,527
-------------
ELECTRIC COMPONENTS -- 1.48%
Linear Technology Corp. 30,000 966,300
Texas Instruments, Inc. 34,100 600,160
-------------
1,566,460
-------------
ENERGY -- 8.36%
ConocoPhillips 26,782 1,467,654
Exelon Corp. 34,100 2,039,521
Exxon Mobil Corp. 34,500 1,238,895
FirstEnergy Corp. 47,645 $ 1,831,950
Kerr-McGee Corp. 9,400 421,120
Progress Energy, Inc. 20,100 882,390
Sempra Energy 33,600 958,608
-------------
8,840,138
-------------
FINANCIAL SERVICES -- 14.59%
American International Group, Inc. 26,959 1,487,597
Anthem, Inc.(b) 21,600 1,666,440
Citigroup, Inc. 89,861 3,846,051
Freddie Mac 40,300 2,046,031
Hartford Financial Services Group,
Inc. (The) 19,100 961,876
J.P. Morgan Chase & Co. 75,800 2,590,844
Mellon Financial Corp. 39,200 1,087,800
Morgan Stanley 40,800 1,744,200
-------------
15,430,839
-------------
HEALTH: DRUGS -- 8.50%
Allergan, Inc. 34,600 2,667,660
Bristol-Myers Squibb Co. 66,800 1,813,620
Cephalon, Inc. (b) 22,200 913,752
SICOR, Inc. (b) 81,300 1,653,642
Wyeth 42,600 1,940,430
-------------
8,989,104
-------------
HEALTH: NON-DRUGS -- 6.98%
Baxter International, Inc. 25,600 665,600
Biomet, Inc. 15,400 441,364
Johnson & Johnson 63,644 3,290,395
UnitedHealth Group, Inc. 59,400 2,984,850
-------------
7,382,209
-------------
HOUSING/PAPER -- 1.70%
American Standard Companies, Inc. (b) 24,300 1,796,499
-------------
INDUSTRIAL COMPONENTS -- 1.54%
Ingersoll-Rand Co., Class A 34,500 1,632,540
-------------
MEDIA AND ENTERTAINMENT -- 1.68%
Viacom, Inc., Class B (b) 40,600 1,772,596
-------------
METALS NON-FERROUS -- 2.14%
Masco Corp. 95,000 2,265,750
-------------
RECREATION -- 1.15%
Royal Caribbean Cruises Ltd. 52,600 1,218,216
-------------
RETAIL/APPAREL -- 4.10%
Costco Wholesale Corp. (b) 38,700 1,416,420
Newell Rubbermaid, Inc. 51,400 1,439,200
RadioShack Corp. 29,700 781,407
TJX Companies, Inc. 37,200 700,848
-------------
4,337,875
-------------
SERVICES/MISCELLANEOUS -- 4.77%
First Data Corp. 30,560 1,266,406
MeadWestvaco Corp. 25,600 632,320
Omnicom Group 35,500 2,545,350
Viad Corp. 26,650 596,694
-------------
5,040,770
-------------
</Table>
50
<Page>
<Table>
<Caption>
SHARES VALUE
------------- -------------
TELECOMMUNICATIONS- SERVICES -- 5.93%
Motorola, Inc. 97,623 $ 920,585
Nextel Communications, Inc., Class A (b) 236,700 4,279,536
SBC Communications, Inc. 41,700 1,065,435
-------------
6,265,556
-------------
TRANSPORTATION -- 2.75%
Burlington Northern Santa Fe Corp. 102,200 2,906,568
-------------
UTILITIES -- 2.98%
CMS Energy Corp. 45,350 367,335
Consolidated Edison, Inc. 21,700 939,176
Dominion Resources, Inc. 11,800 758,386
Entergy Corp. 20,600 1,087,268
-------------
3,152,165
-------------
Total U.S. Equities (Cost $80,907,898) 98,738,330
-------------
SHORT-TERM INVESTMENTS -- 6.53%
OTHER -- 6.20%
UBS Supplementary Trust
U.S. Cash Management Prime Fund 6,558,296 6,558,296
-------------
<Caption>
FACE
AMOUNT
-------------
U.S. GOVERNMENT OBLIGATIONS -- 0.33%
U.S. Treasury Bill, due 08/07/03 (c) $ 350,000 349,629
-------------
Total Short-Term Investments
(Cost $6,907,925) 6,907,925
-------------
Total Investments
(Cost $87,815,823) -- 99.90% (a) 105,646,255
Cash and other assets,
less liabilities -- 0.10% 109,784
-------------
Net Assets -- 100% $ 105,756,039
=============
</Table>
51
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $90,953,604; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 19,488,882
Gross unrealized depreciation (4,796,231)
------------
Net unrealized appreciation $ 14,692,651
============
</Table>
(b) Non-income producing security.
(c) All or portion of these securities was pledged to cover margin requirements
for futures contracts.
% Represents a percentage of net assets.
FUTURES CONTRACTS
UBS U.S. Equity Fund had the following open futures contracts as of June 30,
2003:
<Table>
<Caption>
EXPIRATION CURRENT UNREALIZED
DATE COST VALUE LOSS
-------------- ----------- ----------- -----------
INDEX FUTURES BUY CONTRACTS:
Standard & Poor's 500, 24 contracts September 2003 $ 5,992,968 $ 5,839,800 $ (153,168)
===========
</Table>
The aggregate market value of investments pledged to cover margin requirements
for the open futures positions at June 30, 2003 was $349,629.
See accompanying notes to financial statements
52
<Page>
UBS U.S. LARGE CAP GROWTH FUND
Over the fiscal year ended June 30, 2003, Class Y shares of UBS U.S. Large Cap
Growth Fund returned 0.31%, compared to the 2.94% return of the Russell 1000
Growth Index. (Returns for all share classes over various time periods are shown
on page 55. Please note that these returns do not reflect the deduction of taxes
that a shareholder would pay on Fund distributions or the redemption of Fund
shares.)
Over the review period, the Fund's performance was strong enough to place it
within the top half of other large cap growth funds within its peer group.
Nonetheless, performance did lag the benchmark. The primary reason behind this
relates to the strong performance over the period of the stocks that we would
classify as being relatively lower quality. These are depressed companies that,
among other things, may have at one time teetered on the edge of financial
disruption, and include many technology companies. Our stock selection process
focuses on stocks that we believe have strong, long-term investment potential
over time. As a result, we did not hold many of the stocks that performed best
over this recovery period.
12-MONTH MARKET REVIEW
Over the 12-month period, growth and value stocks alternated between over- and
underperformance on a quarterly basis. Investors switched between favoring one
asset class over the other, based on their perception of the economy. When
investors were optimistic about economic recovery, and favored cyclical stocks,
value did well; when uncertainty about the economy prevailed, investors favored
growth. Ultimately, when the period was over, growth stocks held a slight lead,
returning 13.09% compared to the 11.57% return of value stocks, as measured by
the Russell 1000 Growth and Russell 1000 Value Indexes, respectively.
Large-cap growth stocks took their lead from the overall US equity market during
the fiscal year. Over the third quarter of 2002, large-cap growth stocks, as
measured by the Russell 1000 Growth Index, declined 15.05% as the weak economy,
anemic corporate profits, accounting irregularities and conflict in the Middle
East caused investors to flee stocks in favor of the security offered by bonds.
However, after falling to a five-year low in early October 2002, stocks staged a
surprising rally. In the aftermath of the market's sharp decline, investors
found themselves drawn to certain downtrodden sectors that were viewed as having
compelling valuations. As a result, large-cap growth stocks rose 7.15% during
the fourth quarter, as measured by the Index.
The year 2003 began on a weak note, as geopolitical issues came to the fore at
the start of the year. Anticipation of the war in Iraq, saber rattling in North
Korea and renewed concerns about terrorism preoccupied the country. Investor
aversion to risk resurfaced, and large cap stocks fell 1.07% over the first
quarter. However, the majority of sectors covered in the Index rebounded sharply
during the second quarter of 2003, in a reversal that was attributed primarily
to investor relief following the short duration of major conflict in Iraq. With
this uncertainty lifted, investors grew increasingly optimistic about the
potential for an economic revival and subsequent upturn in corporate profits. At
the same time, their appetite for risk increased as the yields available from
many fixed income securities shrank. Some of the poorest performing sectors
during the lengthy bear market did well during the second half of the reporting
period, including stocks in the information technology, telecommunication
services, utility and industrial areas.
OUR RIGOROUS INVESTMENT PROCESS IDENTIFIED OPPORTUNITIES
Throughout the reporting period, our rigorous fundamental analysis and
disciplined screening process played important roles in the structure and
performance of the Fund's portfolio. In the first half of the period, our focus
on risk management research led us to reduce our weightings in technology. We
also moved to lower our exposure to pharmaceuticals, since increasing pricing
pressure from the government was adversely affecting the sector. Conversely, we
saw valuable opportunities in the financial and consumer sectors and the rest of
health care (that is, outside of pharmaceuticals), particularly biotechnology.
53
<Page>
These decisions were ultimately positive contributors to overall portfolio
performance.
As we moved into 2003, it became evident to us that companies that offered
quality growth prospects were a commodity that was in very short supply. Even
those companies whose earnings normally would be fairly assured were facing
difficult pricing and distribution issues that could make their earnings trends
less attractive or, worse, suspect. Therefore, our analysis began to focus on
identifying individual companies that appeared to have the potential to escape
the overall economic and psychological pressures of their environment, and still
perform well. To this end, we found several Internet service providers that met
our criteria. Fundamentals within this sector are developing even more rapidly
than we would have predicted a year ago. This is particularly true with regard
to the growth in broadband PC connections, which is stimulating more Internet
usage and making the Web a much better advertising medium. We also identified
select holdings in smaller pharmaceutical and biotechnology companies, from
which we expect to see superior growth for some time to come. In fact, this
focus benefited during the market's strong rally in the second quarter of 2003.
LOOKING AHEAD
Given the lack of rebound in the economy, companies that possess consistent,
above-average earnings prospects are still in very short supply. However, we
believe that many of these firms are now priced more favorably, on a relative
basis, than they were at the end of the first quarter of 2003. With the nature
and magnitude of an economic turn still in question, we will seek to position
our portfolio in companies that have the potential to grow at above-average
rates in almost any economic environment.
As always, we will seek to invest in companies that we believe possess a
dominant market position and franchise, a major technical edge, or a unique
competitive advantage that will enable them to generate above average sales and
profit growth. To identify these opportunities, we will conduct rigorous
research and adhere to our risk management processes.
54
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- --------------------------------------------------------------------------------------------------------
UBS U.S. Large Cap Growth Class A 12.11% 0.16% -20.94% N/A -8.26%
- --------------------------------------------------------------------------------------------------------
UBS U.S. Large Cap Growth Class B 11.66 -0.63 N/A N/A -12.11
- --------------------------------------------------------------------------------------------------------
UBS U.S. Large Cap Growth Class C 11.66 -0.47 N/A N/A -14.48
- --------------------------------------------------------------------------------------------------------
UBS U.S. Large Cap Growth Class Y 12.09 0.31 -20.70 -5.35% -2.70
- --------------------------------------------------------------------------------------------------------
UBS U.S. Large Cap Growth Class A** 5.97 -5.33 -22.41 N/A -9.41
- --------------------------------------------------------------------------------------------------------
UBS U.S. Large Cap Growth Class B** 6.66 -5.60 N/A N/A -14.25
- --------------------------------------------------------------------------------------------------------
UBS U.S. Large Cap Growth Class C** 9.50 -2.39 N/A N/A -15.00
- --------------------------------------------------------------------------------------------------------
Russell 1000 Growth Index 13.09 2.94 -21.54 -5.03 -1.44
- --------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS U.S. LARGE CAP GROWTH FUND CLASS A IS 12/31/98.
INCEPTION DATES OF CLASS B AND CLASS C ARE 11/07/01 AND 11/19/01,
RESPECTIVELY. INCEPTION DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE
INDEX, IS 10/14/97.
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS U.S. Large Cap
Growth Fund Class Y shares and the Russell 1000 Growth Index if you had invested
$10,000 on October 14, 1997, and had reinvested all your income dividends and
capital gain distributions through June 30, 2003. The performance of Class A,
Class B and Class C shares will vary based upon the different inception dates,
class specific expenses and sales charges. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
[CHART]
UBS U.S. LARGE CAP GROWTH FUND CLASS Y VS. RUSSELL 1000 GROWTH INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS U.S. LARGE CAP GROWTH FUND CLASS Y RUSSELL 1000 GROWTH INDEX
$ 10,000 $ 10,000
$ 9,750 $ 9,787
$ 9,943 $ 9,897
$ 9,872 $ 10,193
$ 10,444 $ 10,959
$ 10,855 $ 11,396
$ 11,075 $ 11,554
$ 10,825 $ 11,226
6/30/1998 $ 11,256 $ 11,914
$ 11,205 $ 11,835
$ 9,321 $ 10,059
$ 9,822 $ 10,831
$ 10,805 $ 11,702
$ 11,587 $ 12,592
$ 12,421 $ 13,727
$ 13,208 $ 14,533
$ 12,631 $ 13,869
$ 13,250 $ 14,600
$ 13,743 $ 14,619
$ 13,575 $ 14,169
6/30/1999 $ 14,592 $ 15,162
$ 13,994 $ 14,680
$ 13,984 $ 14,920
$ 13,512 $ 14,606
$ 14,257 $ 15,709
$ 14,980 $ 16,557
$ 16,486 $ 18,279
$ 15,847 $ 17,422
$ 16,576 $ 18,274
$ 17,665 $ 19,582
$ 17,182 $ 18,650
$ 16,509 $ 17,711
6/30/2000 $ 17,148 $ 19,053
$ 16,733 $ 18,259
$ 17,698 $ 19,912
$ 16,105 $ 18,028
$ 15,790 $ 17,175
$ 14,062 $ 14,644
$ 13,833 $ 14,180
$ 14,592 $ 15,160
$ 12,457 $ 12,586
$ 11,147 $ 11,216
$ 12,339 $ 12,635
$ 12,195 $ 12,449
6/30/2001 $ 11,776 $ 12,161
$ 11,449 $ 11,857
$ 10,479 $ 10,888
$ 9,418 $ 9,800
$ 9,877 $ 10,314
$ 10,807 $ 11,305
$ 10,685 $ 11,284
$ 10,461 $ 11,085
$ 9,987 $ 10,625
$ 10,330 $ 10,992
$ 9,526 $ 10,095
$ 9,328 $ 9,851
6/30/2002 $ 8,525 $ 8,940
$ 7,945 $ 8,448
$ 7,998 $ 8,473
$ 7,141 $ 7,595
$ 7,800 $ 8,291
$ 8,156 $ 8,741
$ 7,629 $ 8,137
$ 7,497 $ 7,939
$ 7,471 $ 7,903
$ 7,589 $ 8,050
$ 8,064 $ 8,646
$ 8,459 $ 9,077
6/30/2003 $ 8,551 $ 9,202
</Table>
10/14/97 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
55
<Page>
TOP TEN EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------
Pfizer, Inc. 4.9%
iShares Russell 1000 Growth Index Fund 4.8
Microsoft Corp. 3.8
General Electric Co. 3.6
Johnson & Johnson 3.5
Citigroup, Inc. 2.8
Intel Corp. 2.7
Amgen, Inc. 2.7
Cisco Systems, Inc. 2.3
Amazon.Com, Inc. 2.2
- ------------------------------------------------------
Total 33.3%
</Table>
56
<Page>
UBS U.S. LARGE CAP GROWTH FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
------------- -------------
U.S. EQUITIES -- 97.99%
AEROSPACE & MILITARY -- 1.53%
United Technologies Corp. 800 $ 56,664
-------------
AUTOS/DURABLES -- 1.85%
Autozone, Inc. (b) 900 68,373
-------------
BANKS -- 1.50%
Wells Fargo & Co. 1,100 55,440
-------------
BIOMEDICAL -- 3.08%
Amgen, Inc. (b) 1,516 100,723
Chiron Corp. (b) 300 13,116
-------------
113,839
-------------
COMPUTER SOFTWARE -- 5.03%
Microsoft Corp. 5,500 140,855
Oracle Corp. (b) 3,750 45,075
-------------
185,930
-------------
COMPUTER SYSTEMS -- 8.62%
Cisco Systems, Inc. (b) 5,200 86,788
Dell Computer Corp. (b) 2,500 79,900
EMC Corp. (b) 4,300 45,021
Hewlett-Packard Co. 1,908 40,640
International Business Machines Corp. 800 66,000
-------------
318,349
-------------
CONSUMER -- 1.52%
H & R Block, Inc. 1,300 56,225
-------------
ELECTRIC COMPONENTS -- 3.89%
Intel Corp. 4,850 100,802
Novellus Systems, Inc. (b) 550 20,142
Texas Instruments, Inc. 1,300 22,880
-------------
143,824
-------------
ELECTRONICS -- 0.96%
Lexmark International, Inc. (b) 500 35,385
-------------
ENERGY -- 2.35%
Anadarko Petroleum Corp. 700 31,129
Devon Energy Corp. 600 32,040
Schlumberger Ltd. 500 23,785
-------------
86,954
-------------
FINANCIAL SERVICES -- 7.17%
Citigroup, Inc. 2,383 101,992
Freddie Mac 950 48,232
Moody's Corp. 1,000 52,710
Morgan Stanley 1,450 61,987
-------------
264,921
-------------
HEALTH: DRUGS -- 9.55%
Allergan, Inc. 950 73,245
Barr Laboratories, Inc. (b) 600 39,300
Cephalon, Inc. (b) 600 24,696
Forest Laboratories, Inc. (b) 600 32,850
Pfizer, Inc. 5,350 182,703
-------------
352,794
-------------
HEALTH: NON-DRUGS -- 11.70%
Guidant Corp. 1,200 53,268
Johnson & Johnson 2,522 $ 130,387
Laboratory Corp. of America Holdings (b) 1,900 57,285
Medtronic, Inc. 1,300 62,361
UnitedHealth Group, Inc. 1,000 50,250
WellPoint Health Networks (b) 400 33,720
Zimmer Holdings, Inc. (b) 1,000 45,050
-------------
432,321
-------------
INSURANCE -- 0.97%
Allstate Corp. (The) 1,000 35,650
-------------
INTERNET SERVICES -- 3.18%
InterActiveCorp (b) 1,000 39,570
Symantec Corp. (b) 800 35,088
Yahoo!, Inc. (b) 1,300 42,588
-------------
117,246
-------------
INVESTMENT COMPANIES -- 4.78%
iShares Russell 1000 Growth Index Fund 4,300 176,515
-------------
MEDIA AND ENTERTAINMENT -- 1.24%
Viacom, Inc., Class B (b) 1,046 45,668
-------------
MEDICAL PRODUCTS -- 1.32%
AmerisourceBergen Corp. 700 48,545
-------------
MULTI-INDUSTRY -- 6.56%
Black & Decker Corp. 1,100 47,795
General Electric Co. 4,600 131,928
Proctor & Gamble Co. 700 62,426
-------------
242,149
-------------
NON-DURABLES -- 1.45%
PepsiCo, Inc. 1,200 53,400
-------------
RESEARCH & DEVELOPMENT -- 0.78%
Genentech, Inc. (b) 400 28,848
-------------
RETAIL/APPAREL -- 4.00%
Gap, Inc. (The) 1,800 33,768
Ross Stores, Inc. 1,100 47,014
Wal-Mart Stores, Inc. 1,250 67,088
-------------
147,870
-------------
SERVICES/MISCELLANEOUS -- 7.76%
Amazon.com, Inc. (b) 2,200 80,278
AOL Time Warner, Inc. (b) 3,650 58,729
eBay, Inc. (b) 700 72,926
First Data Corp. 1,800 74,592
-------------
286,525
-------------
TECHNOLOGY -- 1.41%
Analog Devices, Inc. (b) 1,500 52,230
-------------
TELECOMMUNICATIONS EQUIPMENT -- 1.84%
QUALCOMM, Inc. 1,900 67,925
-------------
TELECOMMUNICATIONS- SERVICES -- 3.05%
Echostar Communications Corp., Class A (b) 1,950 67,509
Nextel Communications, Inc., Class A (b) 2,500 45,200
-------------
112,709
-------------
THERAPEUTICS -- 0.90%
Gilead Sciences, Inc. (b) 600 33,348
-------------
Total U.S. Equities (Cost $3,640,220) 3,619,647
-------------
</Table>
57
<Page>
<Table>
<Caption>
SHARES VALUE
------------- -------------
SHORT-TERM INVESTMENTS -- 3.93%
OTHER -- 3.93%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $145,024) 145,024 $ 145,024
-------------
Total Investments
(Cost $3,785,244)-- 101.92% (a) 3,764,671
Liabilities, less cash and
other assets -- (1.92)% (70,825)
-------------
Net Assets -- 100% $ 3,693,846
=============
</Table>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $4,165,598; and net
unrealized depreciation consisted of:
<Table>
Gross unrealized appreciation $ 143,398
Gross unrealized depreciation (544,325)
----------
Net unrealized depreciation $ (400,927)
==========
</Table>
(b) Non-income producing security.
% Represents a percentage of net assets.
See accompanying notes to financial statements
58
<Page>
UBS U.S. SMALL CAP GROWTH FUND
For the fiscal year ended June 30, 2003, Class Y shares of UBS U.S. Small Cap
Growth Fund returned 2.32%, outperforming the 0.69% return of the Russell 2000
Growth Index. Since the Fund's inception on September 30, 1997, through June 30,
2003, its Class Y shares provided an average annual return of 4.60%--a far
better performance than the decline of 4.25% generated by the Index. (Returns
for all share classes over various time periods are shown on page 61. Please
note that these returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.)
Fiscal year results were primarily helped by good stock selection, especially in
the consumer and healthcare sectors. Sector selection had a slightly negative
impact on return over the fiscal year, due to an overweight in the poorly
performing consumer staples sector. However, an overweight in the strongly
performing financial sector helped returns.
12-MONTH MARKET REVIEW
The U.S equity markets were extremely volatile during the 12-month period,
alternately falling and rising over the four quarters that made up the Fund's
reporting period. Early in the period, a weak economy, anemic corporate profits,
accounting issues and unrest in the Middle East led investors to shun stocks in
favor of the perceived security of the bond market. However, after falling to a
five-year low in early October 2002, stocks staged a surprising rally. In the
aftermath of the market's sharp decline, investors found themselves drawn to
certain downtrodden sectors that were viewed as having compelling valuations.
Small-cap stocks performed in line with the broader equity market, posting a
return of 7.5% (as measured by the Index) over the last three months of 2002.
Geopolitical issues came to the fore as the year 2003 began, as anticipation of
the war in Iraq, saber rattling in North Korea and renewed concerns about
terrorism preoccupied the country. Investor aversion to risk resurfaced, and the
majority of the sectors covered in the Index fell during the first quarter.
Nonetheless, the 12-month period ended on a positive note, as the end to major
fighting in Iraq eliminated one of the issues weighing most heavily on the
market. Investors grew increasingly optimistic about the potential for an
economic revival and subsequent upturn in corporate profits. At the same time,
their appetite for risk increased as the yields available from many fixed income
securities shrank. As a result, equity investors drove stocks to steep gains
over the final quarter of the period. The gains were broad-based, and many of
the best-performing sectors were the prior years' weakest-performing areas: the
utility, information technology, telecommunication services and industrial
sectors.
A PRUDENT STRATEGY LIMITED LOSSES AND ENABLED PARTICIPATION IN MARKET RALLIES
Similar to the market's performance, the Fund's performance fluctuated widely
during the fiscal year. However, our disciplined investment strategy, through
which we focus on relatively higher quality stocks with strong business
franchises and attractive competitive positions that are generating strong gains
in both the top and bottom lines, helped us to outperform the Index on a
relative basis. Furthermore, our diversified approach to investing at the sector
level helped to reduce the Fund's relative risk profile.
Our investment approach tends to favor larger, more liquid stocks with stable
income streams and strong balance sheets. Typically, the Fund is underweight
high volatility stocks, especially those with substantial earnings variability.
For example, early in the fiscal year, the Fund benefited from an underweight
position in the information technology sector. However, by leveraging the
fundamental research conducted by our analysts through our integrated global
investment research platform, we were able to identify increasing signs of
stability in this sector. As a result, we increased our exposure to the sector,
and benefited when the sector rallied late in 2002.
In the latter portion of the period, the Fund generated very strong absolute
results, but underperformed the Index on a relative basis. Although our
investment approach seeks to fare well over the course of a market cycle, it
tends to lag somewhat during short upward spurts that favor more speculative
stocks,
59
<Page>
especially low-priced equities that are losing money. This was exactly
the market environment that existed during the second quarter of 2003.
LOOKING AHEAD
Over the course of a market cycle, stock price movements tend to be governed by
earnings growth and relative valuations. On both of these measures, small-cap
stocks continue to stack up well relative to their larger counterparts. In terms
of earnings, small caps have been growing earnings faster than large caps for
most of the last three years. While small-cap relative valuations are no longer
at their record lows of the late 1990s, they are still below their long-term
historical averages.
Assuming the economy gradually picks up steam, we believe that small-cap stocks
will continue to have a favorable environment in which to potentially maintain
an outperformance cycle that dates back to the spring of 1999.
We intend to continue to remain focused on identifying high-quality small-cap
growth companies that have strong competitive positions and a demonstrated
ability to generate above-average earnings growth over time. Over a full market
cycle, this strategy is designed to provide patient investors with the
opportunity for attractive, risk-adjusted long-term results.
60
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- -------------------------------------------------------------------------------------------------------
UBS U.S. Small Cap Growth Class A 15.61% 2.14% -7.61% N/A 8.64%
- -------------------------------------------------------------------------------------------------------
UBS U.S. Small Cap Growth Class B 15.27 1.44 N/A N/A 0.74
- -------------------------------------------------------------------------------------------------------
UBS U.S. Small Cap Growth Class C 15.29 1.44 N/A N/A -0.46
- -------------------------------------------------------------------------------------------------------
UBS U.S. Small Cap Growth Class Y 15.74 2.32 -7.34 5.93% 4.60
- -------------------------------------------------------------------------------------------------------
UBS U.S. Small Cap Growth Class A** 9.29 -3.48 -9.33 N/A 7.29
- -------------------------------------------------------------------------------------------------------
UBS U.S. Small Cap Growth Class B** 10.27 -3.56 N/A N/A -1.63
- -------------------------------------------------------------------------------------------------------
UBS U.S. Small Cap Growth Class C** 13.10 -0.58 N/A N/A -1.05
- -------------------------------------------------------------------------------------------------------
Russell 2000 Growth Index 19.33 0.69 -16.66 -4.25 -4.25
- -------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS U.S. SMALL CAP GROWTH FUND CLASS A IS 12/31/98.
INCEPTION DATES OF CLASS B AND CLASS C ARE 11/07/01 AND 11/19/01,
RESPECTIVELY. INCEPTION DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE
INDEX, IS 9/30/97.
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
THE FUND MAY INVEST IN IPOs, WHICH MAY HAVE A MAGNIFIED IMPACT ON PERFORMANCE.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS U.S. Small Cap
Growth Fund Class Y shares and the Russell 2000 Growth Index if you had invested
$10,000 on September 30, 1997, and had reinvested all your income dividends and
capital gain distributions through June 30, 2003. The performance of Class A,
Class B and Class C shares will vary based upon the different inception dates,
class specific expenses and sales charges. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
[CHART]
UBS U.S. SMALL CAP GROWTH FUND CLASS Y VS. RUSSELL 2000 GROWTH INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS U.S. SMALL CAP GROWTH FUND CLASS Y RUSSELL 2000 GROWTH INDEX
$ 10,000 $ 10,000
$ 9,540 $ 9,399
$ 9,370 $ 9,175
$ 9,440 $ 9,180
$ 9,330 $ 9,058
$ 10,080 $ 9,858
$ 10,500 $ 10,271
$ 10,470 $ 10,334
$ 9,910 $ 9,583
6/30/1998 $ 9,710 $ 9,681
$ 8,880 $ 8,873
$ 7,000 $ 6,825
$ 7,395 $ 7,517
$ 7,885 $ 7,909
$ 8,075 $ 8,522
$ 8,806 $ 9,293
$ 8,816 $ 9,711
$ 8,075 $ 8,823
$ 8,255 $ 9,137
$ 8,235 $ 9,944
$ 8,595 $ 9,960
6/30/1999 $ 9,186 $ 10,484
$ 9,266 $ 10,160
$ 9,066 $ 9,780
$ 9,386 $ 9,969
$ 9,746 $ 10,224
$ 11,277 $ 11,305
$ 12,478 $ 13,298
$ 12,128 $ 13,174
$ 14,059 $ 16,239
$ 15,270 $ 14,532
$ 14,729 $ 13,065
$ 13,779 $ 11,921
6/30/2000 $ 16,280 $ 13,461
$ 15,440 $ 12,307
$ 17,571 $ 13,602
$ 17,251 $ 12,926
$ 16,711 $ 11,877
$ 13,799 $ 9,721
$ 15,279 $ 10,315
$ 15,634 $ 11,150
$ 13,784 $ 9,622
$ 12,497 $ 8,747
$ 14,164 $ 9,818
$ 14,213 $ 10,045
6/30/2001 $ 14,531 $ 10,319
$ 13,784 $ 9,439
$ 13,110 $ 8,849
$ 11,517 $ 7,422
$ 12,191 $ 8,136
$ 13,036 $ 8,815
$ 13,716 $ 9,363
$ 13,461 $ 9,030
$ 13,078 $ 8,446
$ 14,125 $ 9,180
$ 13,933 $ 8,981
$ 13,334 $ 8,456
6/30/2002 $ 12,657 $ 7,739
$ 11,496 $ 6,550
$ 11,496 $ 6,546
$ 10,807 $ 6,074
$ 11,509 $ 6,381
$ 11,968 $ 7,013
$ 11,190 $ 6,529
$ 10,858 $ 6,352
$ 10,680 $ 6,182
$ 10,718 $ 6,276
$ 11,598 $ 6,869
$ 12,542 $ 7,643
6/30/2003 $ 12,951 $ 7,791
</Table>
9/30/97 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
61
<Page>
TOP TEN EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- -----------------------------------------------------
Career Education Corp. 3.0%
UCBH Holdings, Inc. 2.9
New York Community Bancorp, Inc. 2.6
Patterson Dental Co. 2.3
Cognizant Technology Solutions Corp. 2.2
Fair Isaac Corp. 2.2
Chico's FAS, Inc. 2.1
Odyssey HealthCare, Inc. 1.9
CACI International, Inc. 1.9
Pediatrix Medical Group, Inc. 1.9
- -----------------------------------------------------
Total 23.0%
</Table>
62
<Page>
UBS U.S. SMALL CAP GROWTH FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
------------- -------------
U.S. EQUITIES -- 98.20%
AEROSPACE & DEFENSE -- 0.77%
Engineered Support Systems, Inc. 9,450 $ 395,482
-------------
AUTO PARTS & EQUIPMENT -- 1.12%
American Axle & Manufacturing Holdings, Inc. (b) 24,100 575,990
-------------
BANKS -- 8.02%
BankUnited Financial Corp., Class A (b) 36,400 733,460
New York Community Bancorp, Inc. 46,595 1,355,448
Sterling Bancshares, Inc. 40,400 528,432
UCBH Holdings, Inc. 52,800 1,514,304
-------------
4,131,644
-------------
BEVERAGES -- 1.12%
Cott Corp. (b) 28,000 579,320
-------------
BROADCASTING & CABLE TV -- 1.83%
Cumulus Media, Inc., Class A (b) 38,700 732,591
Salem Communications Corp., Class A (b) 10,600 212,117
-------------
944,708
-------------
CAPITAL GOODS -- 1.39%
Cognex Corp. (b) 32,100 717,435
-------------
CHEMICALS -- 1.08%
Albemarle Corp. 19,800 553,806
-------------
COMPUTER SOFTWARE -- 6.66%
Borland Software Corp. (b) 43,600 425,972
Fair, Isaac Corp. 22,200 1,142,190
Magma Design Automation, Inc. (b) 37,500 643,125
Mercury Interactive Corp. (b) 9,200 355,212
THQ, Inc. (b) 22,550 405,900
Verisity Ltd. (b) 38,600 460,884
-------------
3,433,283
-------------
CONSTRUCTION -- 1.94%
Hovnanian Enterprises, Inc. (b) 8,600 506,970
NVR, Inc. (b) 1,200 493,200
-------------
1,000,170
-------------
CONSTRUCTION & ENGINEERING -- 1.27%
EMCOR Group, Inc. (b) 13,300 656,488
-------------
CONSUMER -- 1.03%
Leapfrog Enterprises, Inc. (b) 16,600 528,046
-------------
DISTILLER & VINTNERS -- 1.77%
Constellation Brands, Inc., Class A (b) 29,100 913,740
-------------
ELECTRIC COMPONENTS -- 3.64%
Artisan Components, Inc. (b) 19,900 449,939
Cree, Inc. (b) 14,900 242,572
Foundry Networks, Inc. (b) 37,900 545,760
Smith, A.O., Corp. 22,700 639,005
-------------
1,877,276
-------------
ELECTRONICS -- 1.49%
Benchmark Electronics, Inc. (b) 25,000 769,000
-------------
ENERGY -- 5.06%
Patina Oil & Gas Corp. 20,700 665,505
Patterson-UTI Energy, Inc. (b) 16,800 544,320
Quicksilver Resources, Inc. (b) 23,500 562,825
Tetra Technologies, Inc. (b) 28,100 $ 833,165
-------------
2,605,815
-------------
FINANCIAL SERVICES -- 2.81%
First Niagara Financial Group, Inc. 14,500 202,420
Harbor Florida Bancshares, Inc. 14,400 345,024
Investors Financial Services Corp. 31,100 902,211
-------------
1,449,655
-------------
FOOD DISTRIBUTORS -- 1.30%
Performance Food Group Co. (b) 18,100 669,700
-------------
GENE -- 1.07%
Affymetrix, Inc. (b) 9,900 195,129
InterMune, Inc. (b) 6,400 103,104
Telik, Inc. (b) 15,800 253,906
-------------
552,139
-------------
HEALTH: DRUGS -- 1.95%
Amylin Pharmaceuticals, Inc. (b) 13,200 288,948
Taro Pharmaceutical Industries (b) 13,000 713,440
-------------
1,002,388
-------------
HEALTH: NON-DRUGS -- 11.71%
Advanced Neuromdulation Systems, Inc. (b) 17,200 890,444
Fisher Scientific International, Inc. (b) 13,000 453,700
Inamed Corp. (b) 14,700 789,243
Patterson Dental Co. (b) 26,000 1,179,880
Pediatrix Medical Group, Inc. (b) 27,200 969,680
ResMed, Inc. (b) 6,400 250,880
Select Medical Corp. (b) 32,000 794,560
VCA Antech, Inc. (b) 36,100 706,477
-------------
6,034,864
-------------
HEALTHCARE FACILITY -- 1.93%
Odyssey HealthCare, Inc. (b) 26,850 993,450
-------------
INSURANCE -- 2.06%
Hilb, Rogal & Hamilton Co. 9,400 319,976
Hub International Ltd. 21,900 374,490
RLI Corp. 11,100 365,190
-------------
1,059,656
-------------
INTERNET SERVICES -- 0.82%
Avocent Corp. (b) 14,100 422,013
-------------
INTERNET SOFTWARE & SERVICES -- 0.75%
Overture Services, Inc. (b) 21,200 384,356
-------------
IT CONSULTING & SERVICES -- 4.17%
CACI International, Inc., Class A (b) 28,900 991,270
Cognizant Technology Solutions Corp. (b) 47,400 1,154,664
-------------
2,145,934
-------------
LEISURE PRODUCTS -- 0.60%
Action Performance Companies, Inc. 16,200 307,800
-------------
MACHINERY INDUSTRIAL -- 2.24%
ESCO Technologies, Inc. (b) 15,800 695,200
Flowserve Corp. (b) 23,200 456,344
-------------
1,151,544
-------------
NON-DURABLES -- 1.57%
Moore Wallace, Inc. (b) 55,000 807,400
-------------
</Table>
63
<Page>
<Table>
<Caption>
SHARES VALUE
------------- -------------
PHARMACEUTICALS -- 4.28%
Isis Pharmaceuticals, Inc. (b) 36,500 $ 193,450
Neurocrine Biosciences, Inc. (b) 13,400 669,196
NPS Pharmaceuticals, Inc. (b) 18,000 438,120
Penwest Pharmaceuticals Co. (b) 27,000 657,990
Sangstat Medical Corp. (b) 18,900 247,401
-------------
2,206,157
-------------
REAL ESTATE -- 3.81%
American Financial Realty TR (REIT) 29,300 436,863
Jones Lang LaSalle, Inc. (b) 24,500 387,100
Mills Corp. (The) (REIT) 16,800 563,640
Ventas, Inc. (REIT) 38,100 577,215
-------------
1,964,818
-------------
RESEARCH & DEVELOPMENT -- 1.29%
Pharmaceutical Product Development, Inc. (b) 23,200 666,536
-------------
RESTAURANTS -- 2.95%
Panera Bread Co., Class A (b) 17,100 684,000
Ruby Tuesday, Inc. 33,700 833,401
-------------
1,517,401
-------------
RETAIL-COMPUTERS/ELECTRONICS -- 1.00%
Electronics Boutique Holdings Corp. (b) 22,400 517,664
-------------
RETAIL/APPAREL -- 4.23%
Chico's FAS, Inc. (b) 50,700 1,067,235
Gart Sports Co. (b) 15,700 445,252
Petco Animal Supplies, Inc. (b) 30,600 665,244
-------------
2,177,731
-------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS -- 0.64%
Rudolph Technologies, Inc. (b) 20,500 $ 327,180
-------------
SEMICONDUCTORS -- 3.92%
Exar Corp. (b) 32,700 517,641
Formfactor, Inc. (b) 1,500 26,550
Intersil Corp. (b) 23,852 634,702
Pericom Semiconductor Corp. (b) 23,900 222,270
Power Integrations, Inc. (b) 25,500 620,160
-------------
2,021,323
-------------
SERVICES-DATA PROCESSING -- 1.01%
Factset Research Systems, Inc. 11,800 519,790
-------------
SERVICES-DIVERSIFIED COMMERCIAL -- 3.03%
Career Education Corp. (b) 22,800 1,559,976
-------------
TRANSPORTATION -- 0.87%
UTI Worldwide, Inc. 14,300 446,017
-------------
Total U.S. Equities (Cost $45,168,201) 50,587,695
-------------
SHORT-TERM INVESTMENTS -- 13.66%
OTHER -- 13.66%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $7,037,939) 7,037,939 7,037,939
-------------
Total Investments
(Cost $52,206,140) -- 111.86% (a) 57,625,634
Liabilities, less cash and
other assets -- (11.86)% (6,110,156)
-------------
Net Assets -- 100% $ 51,515,478
=============
</Table>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $53,095,316; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 7,459,427
Gross unrealized depreciation (2,929,109)
------------
Net unrealized appreciation $ 4,530,318
============
</Table>
(b) Non-income producing.
% Represents a percentage of net assets.
See accompanying notes to financial statements
64
<Page>
UBS U.S. BOND FUND
For the fiscal year ended June 30, 2003, Class Y shares of UBS U.S. Bond Fund
returned 9.42%, underperforming the Fund's benchmark index, the Lehman Brothers
U.S. Aggregate Bond Index, which returned 10.40%. Since the Fund's inception on
August 31, 1995, through June 30, 2003, its Class Y shares produced an average
annual return of 7.40%, compared to 7.70% for the Index. (Returns for all share
classes over various time periods are shown on page 67. Please note that these
returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of Fund shares.)
The Fund's underperformance versus the Index over the reporting period was
primarily due to an overweight to Treasurys. In addition, an underweight to the
credit sector detracted from performance, as the sector performed well when
spreads tightened considerably.
12-MONTH MARKET REVIEW
Despite periods of volatility, the US bond market performed well during the
Fund's fiscal year. The first half of the period was characterized by tepid
economic growth, lackluster stock returns and geopolitical unrest that caused
investors to flock to the relative safety offered by fixed income securities. A
number of sectors excelled in this environment, including home mortgage and
commercial mortgage securities, as well as US government bonds. In contrast,
lower quality corporate bonds underperformed early in the period, as accounting
scandals, higher default rates and investors' general aversion to risk took
their toll. By mid-period, however, better-than-expected third quarter earnings
reports and a stronger stock market helped drive a rally in higher yielding
bonds.
Economic growth remained weak as the year progressed. Anticipation of a war with
Iraq, saber rattling in North Korea and heightened concerns about terrorism
preoccupied the country and helped to undermine the economy. This was good news
for the bond market, as investors shunned stocks in favor of the relative safety
offered by fixed income securities.
With the end to major fighting in Iraq, one of the larger geopolitical issues
affecting the stock market was eliminated. Investors became increasingly
optimistic about the potential for an economic revival and subsequent upturn in
corporate profits. At the same time, their appetite for risk increased as the
yields available from many fixed income securities shrank.
However, ahead of the release of second quarter 2003 gross domestic product
figures, it was widely believed that an expected up-tick in economic growth was
not going to materialize. In addition, in an endnote to the period, the Federal
Reserve Board (the "Fed"), at its June 25, 2003 Federal Open Market Committee
meeting, moved to lower the federal funds rate by a quarter of a percentage
point, to 1.0%. The move--the first since November 2002--brought the rate to its
lowest level since 1958. In explaining the move, the Fed cited the fact that the
economy had yet to exhibit sustainable growth, and that "a slightly more
expansive monetary policy would add further support for an economy which it
expects to improve over time." Thus, while investor appetite for risk increased
during the last three months of the period and the stock market rallied sharply,
the bond market in general continued to perform well given the uncertainty
surrounding the economy.
WE ADJUSTED THE PORTFOLIO TO CAPTURE OPPORTUNITIES
Throughout the reporting period, we proactively adjusted the Fund's portfolio to
maximize the opportunities we identified in the marketplace.
For example, in the first half of the fiscal year, the Fund's overweight in
mortgage-backed and commercial mortgage-backed securities (MBS and CMBS,
respectively) performed well. Not only did our sector weightings boost returns,
but our security selection within these areas also enhanced results. As the
reporting period wound down to a close, we lowered our overweights to these
sectors. Although CMBS continues to be our largest sector overweight, we believe
it has become somewhat less attractive as yield spreads over Treasurys have
moved tighter.
We identified another opportunity in Treasury inflation-protected securities
(TIPS). In the latter
65
<Page>
part of 2002, our analysis indicated that there was significant value in the
TIPS sector, which led us to build an overweight in the portfolio versus the
benchmark. Early in 2003, concerns about inflation arose on the back of higher
oil prices as war with Iraq loomed. As a result, TIPS performed well compared to
nominal Treasurys, so we proactively reduced our exposure to lock in gains. We
sold out of this position in February 2003, and have no allocation to TIPS as of
period end.
Over the period, duration management made a slightly negative contribution to
performance. In the first half of the period, duration strategy hurt performance
slightly due to the Fund's shorter-than-benchmark duration for part of the
period and the fact that, during this time, the bond market rallied. As the
period progressed, our analysis led us to further shorten the Fund's duration
versus its benchmark. Low interest rates combined with accommodative fiscal
policies, rising budget deficits, geopolitical resolution (the war in Iraq) and
strengthening equity and credit pricing reinforced our belief that there will be
a concurrent pickup in economic activity and long-term interest rates. As a
result, early in the second quarter of 2003, our duration strategy was reduced
from 90% to 85% of the benchmark. We also felt this move was prudent because
market movements--particularly in the long-end of the curve--had driven yields
below our fair value estimates. Toward the end of the quarter, we reversed our
duration shortening strategy, bringing the portfolio back to 90% of the
benchmark. Yields on 30-year Treasurys rose approximately 30 basis points in the
period after we shortened duration, while shorter-term rates remained unchanged.
LOOKING AHEAD
There is a consistent theme throughout the fixed income markets. Investors have
been rewarded recently for taking on risk in the form of either longer duration
or lower quality. The Fed indicates that it will keep short-term rates low for
"a considerable amount of time," and investors have used the Fed's mention of a
remote deflation risk as an excuse to drive long-term interest rates to
near-record lows as of the end of June. So, the market has reinforcement,
self-fulfillment and promise for the foreseeable future. The extent to which
fixed income market participants are taking on inappropriate risk and becoming
complacent will really only be apparent when the tide turns. However, the
current pricing indicates that the scales are tipped too heavily toward risk
tolerance. We view current yields and credit spreads as being too low.
Therefore, we anticipate maintaining a more defensive approach with regard to
the management of the Fund's portfolio.
66
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- --------------------------------------------------------------------------------------------------------
UBS U.S. Bond Class A 3.56% 9.17% 9.38% 6.82% 7.39%
- --------------------------------------------------------------------------------------------------------
UBS U.S. Bond Class B 3.18 8.30 N/A N/A 5.41
- --------------------------------------------------------------------------------------------------------
UBS U.S. Bond Class C 3.32 8.65 N/A N/A 5.64
- --------------------------------------------------------------------------------------------------------
UBS U.S. Bond Class Y 3.68 9.42 9.63 7.07 7.40
- --------------------------------------------------------------------------------------------------------
UBS U.S. Bond Class A** -1.10 4.21 7.71 5.83 6.57
- --------------------------------------------------------------------------------------------------------
UBS U.S. Bond Class B** -1.82 3.30 N/A N/A 3.05
- --------------------------------------------------------------------------------------------------------
UBS U.S. Bond Class C** 1.54 6.78 N/A N/A 4.99
- --------------------------------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Bond Index 3.93 10.40 10.08 7.54 7.70
- --------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS U.S. BOND FUND CLASS A IS 6/30/97. INCEPTION DATES OF
CLASS B AND CLASS C ARE 11/06/01 AND 11/08/01, RESPECTIVELY. INCEPTION DATE
OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE INDEX, IS 8/31/95.
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS U.S. Bond Fund
Class Y shares and the Lehman Brothers U.S. Aggregate Bond Index if you had
invested $10,000 on August 31, 1995, and had reinvested all your income
dividends and capital gain distributions through June 30, 2003. The performance
of Class A, Class B and Class C shares will vary based upon the different
inception dates, class specific expenses and sales charges. No adjustment has
been made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
[CHART]
UBS U.S. BOND FUND CLASS Y VS. LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS U.S. BOND FUND CLASS Y LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX
$ 10,000 $ 10,000
$ 10,090 $ 10,097
$ 10,240 $ 10,228
$ 10,400 $ 10,382
$ 10,549 $ 10,527
$ 10,611 $ 10,597
$ 10,386 $ 10,412
$ 10,314 $ 10,339
$ 10,232 $ 10,281
$ 10,201 $ 10,261
6/30/1996 $ 10,360 $ 10,398
$ 10,391 $ 10,426
$ 10,329 $ 10,409
$ 10,548 $ 10,590
$ 10,819 $ 10,825
$ 11,090 $ 11,010
$ 10,922 $ 10,908
$ 10,943 $ 10,941
$ 10,965 $ 10,969
$ 10,813 $ 10,847
$ 10,987 $ 11,010
$ 11,095 $ 11,114
6/30/1997 $ 11,236 $ 11,247
$ 11,587 $ 11,550
$ 11,488 $ 11,452
$ 11,642 $ 11,621
$ 11,806 $ 11,790
$ 11,839 $ 11,844
$ 11,975 $ 11,964
$ 12,113 $ 12,117
$ 12,113 $ 12,107
$ 12,148 $ 12,148
$ 12,206 $ 12,212
$ 12,322 $ 12,328
6/30/1998 $ 12,426 $ 12,432
$ 12,438 $ 12,459
$ 12,649 $ 12,662
$ 12,872 $ 12,958
$ 12,825 $ 12,889
$ 12,919 $ 12,963
$ 12,977 $ 13,002
$ 13,087 $ 13,094
$ 12,867 $ 12,865
$ 12,952 $ 12,935
$ 12,989 $ 12,977
$ 12,855 $ 12,863
6/30/1999 $ 12,795 $ 12,822
$ 12,733 $ 12,768
$ 12,696 $ 12,761
$ 12,858 $ 12,909
$ 12,870 $ 12,957
$ 12,895 $ 12,956
$ 12,842 $ 12,894
$ 12,789 $ 12,851
$ 12,934 $ 13,007
$ 13,092 $ 13,178
$ 13,013 $ 13,140
$ 12,960 $ 13,133
6/30/2000 $ 13,273 $ 13,407
$ 13,380 $ 13,529
$ 13,565 $ 13,725
$ 13,658 $ 13,811
$ 13,711 $ 13,902
$ 13,977 $ 14,130
$ 14,231 $ 14,393
$ 14,456 $ 14,628
$ 14,597 $ 14,755
$ 14,682 $ 14,829
$ 14,569 $ 14,767
$ 14,654 $ 14,855
6/30/2001 $ 14,715 $ 14,912
$ 15,099 $ 15,246
$ 15,256 $ 15,421
$ 15,455 $ 15,600
$ 15,765 $ 15,926
$ 15,524 $ 15,706
$ 15,429 $ 15,606
$ 15,558 $ 15,732
$ 15,711 $ 15,885
$ 15,420 $ 15,621
$ 15,750 $ 15,924
$ 15,882 $ 16,059
6/30/2002 $ 15,981 $ 16,199
$ 16,111 $ 16,395
$ 16,391 $ 16,672
$ 16,601 $ 16,942
$ 16,531 $ 16,864
$ 16,547 $ 16,859
$ 16,866 $ 17,208
$ 16,880 $ 17,224
$ 17,084 $ 17,461
$ 17,081 $ 17,447
$ 17,237 $ 17,592
$ 17,521 $ 17,919
6/30/2003 $ 17,487 $ 17,884
</Table>
8/31/95 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
67
<Page>
TOP TEN US BOND HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
U.S. Treasury Bond
6.250%, due 05/15/30 6.1%
U.S. Treasury Note
2.75%, due 09/30/03 5.5
U.S. Treasury Note
3.000%, due 02/15/08 4.6
U.S. Treasury Note
3.625%, due 08/31/03 4.2
Federal National Mortgage Association
5.500%, due 01/01/18 3.9
U.S. Treasury Note
1.625%, due 03/31/05 3.3
Federal National Mortgage Association
6.000%, due 11/01/32 2.9
Pool# 681599 Federal National
Mortgage Association 5.500%, due 03/15/11 2.7
Benchmark Note CS First Boston Mortgage
Securities Corp., 03-8, Class 5A1
6.500%, due 04/25/33 1.5
Government National Mortgage Association
6.000%, due 05/20/29 1.4
- ------------------------------------------------------------------------
Total 36.1%
</Table>
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF JUNE 30, 2003
<Table>
U.S. CORPORATE BONDS
Aerospace & Military 0.32%
Airlines 0.13
Autos/Durables 0.60
Banks 1.50
Beverages & Tobacco 0.78
Chemicals 0.11
Computer Systems 0.21
Construction 0.42
Consumer 0.16
Electric Components 0.38
Energy 1.83
Financial Services 6.48
Food & House Products 1.14
Forest Products 0.09
Health: Drugs 0.19
Household Durables 0.10
Housing/Paper 0.13
Insurance 0.09
Leisure & Tourism 0.30
Media and Entertainment 0.12
Metals Non-Ferrous 0.10
Multi-Industry 0.33%
Publishing 0.06
Real Estate 0.08
Retail/Apparel 0.14
Services/Miscellaneous 0.67
Telecommunications 0.82
Telecommunications - Wireless 0.07
Transportation 0.43
Utilities 0.59
-------
Total U.S. Corporate Bonds 18.37
Asset-Backed Securities 4.59
International Corporate Bonds 0.76
Sovereign\Supranational Bonds 1.56
Commercial Mortgage-Backed Securities 9.55
Mortgage-Backed Securities 34.86
U.S. Government Agency 4.16
U.S. Government Obligations 26.35
SHORT-TERM INVESTMENTS 1.95
-------
TOTAL INVESTMENTS 102.15
LIABILITIES, LESS CASH AND
OTHER ASSETS (2.15)
-------
NET ASSETS 100.00%
=======
</Table>
68
<Page>
UBS U.S. BOND FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
BONDS -- 100.20%
U.S. CORPORATE BONDS -- 18.37%
Abbott Laboratories, Inc.
5.625%, due 07/01/06 $ 85,000 $ 94,115
Alcoa, Inc.
6.000%, due 01/15/12 105,000 118,275
Altria Group, Inc.
7.750%, due 01/15/27 110,000 117,900
American Express Co.
3.750%, due 11/20/07 110,000 114,626
Anadarko Finance Co., Series B
7.500%, due 05/01/31 55,000 69,090
Anheuser Busch Cos., Inc.
9.000%, due 12/01/09 280,000 373,526
AOL Time Warner, Inc.
7.625%, due 04/15/31 335,000 386,625
Apache Corp.
6.250%, due 04/15/12 100,000 116,439
AT&T Corp.
8.500%, due 11/15/31 85,000 96,381
AT&T Wireless Services, Inc.
7.875%, due 03/01/11 160,000 188,964
Avon Products, Inc.
7.150%, due 11/15/09 150,000 181,617
Bank of America Corp.
7.400%, due 01/15/11 440,000 540,589
Bank One Corp.
7.875%, due 08/01/10 345,000 430,180
Bear Stearns Co., Inc.
4.000%, due 01/31/08 140,000 146,445
Boeing Capital Corp.
7.375%, due 09/27/10 80,000 94,796
Bombardier Capital, Inc., 144A
6.125%, due 06/29/06 175,000 178,938
Bristol-Myers Squibb Co.
5.750%, due 10/01/11 110,000 122,418
Burlington Northern Santa Fe Corp.
7.082%, due 05/13/29 200,000 235,011
Caterpillar, Inc.
6.550%, due 05/01/11 55,000 65,019
Cendant Corp.
6.250%, due 01/15/08 180,000 199,190
Centex Corp.
9.750%, due 06/15/05 320,000 365,363
Cingular Wireless LLC
6.500%, due 12/15/11 70,000 80,652
Citigroup, Inc.
7.250%, due 10/01/10 570,000 690,621
Citizens Communications Co.
9.250%, due 05/15/11 180,000 232,911
Coca-Cola Co. (The)
4.000%, due 06/01/05 105,000 109,884
Comcast Cable Communications, Inc.
6.750%, due 01/30/11 300,000 344,361
Commonwealth Edison Co.,
6.150%, due 03/15/12 65,000 74,525
Computer Sciences Corp.
3.500%, due 04/15/08 165,000 168,496
Conagra Foods, Inc.
6.750%, due 09/15/11 $ 100,000 $ 117,073
Conoco, Inc.
5.900%, due 04/15/04 320,000 331,004
ConocoPhillips
8.500%, due 05/25/05 190,000 214,025
8.750%, due 05/25/10 75,000 97,616
Consolidated Edison, Inc., Series B
7.500%, due 09/01/10 300,000 367,971
Coors Brewing Co.,
6.375%, due 05/15/12 135,000 154,926
Countrywide Home Loans, Inc.
3.250%, due 05/21/08 205,000 205,990
Credit Suisse First Boston USA, Inc.
5.750%, due 04/15/07 130,000 144,427
6.500%, due 01/15/12 180,000 206,560
DaimlerChrysler N.A Holding Corp.
8.500%, due 01/18/31 105,000 123,676
Devon Financing Corp., ULC
6.875%, due 09/30/11 105,000 123,169
Dominion Resources, Inc., Class B
7.625%, due 07/15/05 235,000 261,378
DTE Energy Co.
7.050%, due 06/01/11 45,000 52,630
Duke Energy Field Services, LLC
6.875%, due 02/01/11 85,000 97,075
7.875%, due 08/16/10 65,000 78,232
EOP Operating LP
7.000%, due 07/15/11 85,000 98,648
7.875%, due 07/15/31 55,000 66,499
Erac U.S.A. Finance Co., 144A
8.000%, due 01/15/11 200,000 238,280
First Data Corp.
5.625%, due 11/01/11 85,000 94,056
First Union National Bank
7.800%, due 08/18/10 345,000 428,063
FirstEnergy Corp., Series B
6.450%, due 11/15/11 105,000 115,223
FleetBoston Financial Corp.
7.375%, due 12/01/09 110,000 131,996
Ford Motor Co.
7.450%, due 07/16/31 220,000 201,534
Ford Motor Credit Co.
5.800%, due 01/12/09 225,000 223,618
7.375%, due 02/01/11 170,000 175,758
General Dynamics Corp.
4.250%, due 05/15/13 160,000 160,762
General Electric Capital Corp.
6.000%, due 06/15/12 835,000 942,521
6.750%, due 03/15/32 140,000 163,739
General Motors Acceptance Corp.
6.875%, due 09/15/11 275,000 275,918
8.000%, due 11/01/31 290,000 284,538
General Motors Corp.
8.375%, due 07/15/33 155,000 152,239
Goldman Sachs Group, Inc.
6.875%, due 01/15/11 250,000 294,987
Harrah's Operating Co., Inc.
7.500%, due 01/15/09 155,000 183,649
</Table>
69
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
Household Finance Corp.
6.750%, due 05/15/11 $ 295,000 $ 342,604
International Business Machines Corp.
5.875%, due 11/29/32 70,000 75,084
International Lease Finance Corp.
6.375%, due 03/15/09 180,000 201,592
International Paper Co.
6.750%, due 09/01/11 130,000 150,361
John Deere Capital Corp.
7.000%, due 03/15/12 145,000 172,144
Kerr-McGee Corp.
5.375%, due 04/15/05 250,000 263,010
Kraft Foods, Inc.
5.625%, due 11/01/11 320,000 348,694
Kroger Co.
7.500%, due 04/01/31 245,000 290,579
Lehman Brothers Holdings, Inc.
6.625%, due 01/18/12 145,000 169,995
Lincoln National Corp.
6.200%, due 12/15/11 80,000 89,806
Marsh & McClennan Cos., Inc.
6.250%, due 03/15/12 90,000 102,590
MBNA Capital, Series B FRN
2.713%, due 02/01/27 205,000 150,689
MidAmerican Energy Co.
5.125%, due 01/15/13 45,000 47,769
Mirant Americas Generation, Inc.
7.625%, due 05/01/06 210,000 161,700
Morgan Stanley
6.750%, due 04/15/11 450,000 526,356
Newell Rubbermaid, Inc.
4.000%, due 05/01/10 120,000 122,276
News America Holdings, Inc.
7.125%, due 04/08/28 65,000 72,374
Occidental Petroleum Corp.
8.450%, due 02/15/29 95,000 132,917
Pemex Project Funding Master Trust
8.000%, due 11/15/11 310,000 354,950
Pepsi Bottling Group, Inc., 144A
5.625%, due 02/17/09 145,000 162,623
Praxair, Inc.
6.375%, due 04/01/12 55,000 64,057
Progress Energy, Inc.
7.000%, due 10/30/31 145,000 160,020
Qwest Capital Funding, Inc.
7.900%, due 08/15/10 360,000 300,600
Rohm & Haas Co.
7.850%, due 07/15/29 50,000 64,738
Safeway, Inc.
6.500%, due 03/01/11 155,000 173,019
SBC Communications, Inc.
5.875%, due 02/01/12 145,000 162,781
Sempra Energy
7.950%, due 03/01/10 100,000 120,569
U.S.A. Education Corp.
5.625%, due 04/10/07 250,000 277,469
Southern Power Co., Series B,
6.250%, due 07/15/12 55,000 62,253
Southwestern Electric Power, Series B
4.500%, due 07/01/05 $ 45,000 $ 46,730
Sprint Capital Corp.
8.375%, due 03/15/12 95,000 113,745
Target Corp.
7.000%, due 07/15/31 135,000 161,570
Transocean Sedco Forex, Inc.
6.625%, due 04/15/11 100,000 115,844
U.S. Bank N.A., Minnesota
6.375%, due 08/01/11 240,000 280,167
Unilever Capital Corp.
7.125%, due 11/01/10 200,000 242,314
Union Pacific Corp.
6.700%, due 12/01/06 235,000 264,292
United Airlines, Inc. E.E.T.C. (c) (d)
7.811%, due 10/01/09 220,922 57,115
United Technologies Corp.
6.100%, due 05/15/12 185,000 213,285
UST, Inc.
6.625%, due 07/15/12 135,000 156,316
Valero Energy Corp.
7.500%, due 04/15/32 150,000 170,038
Verizon New England, Inc.
6.500%, due 09/15/11 65,000 75,422
Verizon New York, Inc., Series B
7.375%, due 04/01/32 70,000 86,856
Viacom, Inc.
6.625%, due 05/15/11 120,000 141,555
Walt Disney Co. (The)
6.375%, due 03/01/12 150,000 170,980
Washington Mutual, Inc.
5.625%, due 01/15/07 410,000 451,898
Wells Fargo Bank, N.A
6.450%, due 02/01/11 480,000 565,933
Weyerhaeuser Co.
7.375%, due 03/15/32 90,000 103,457
-------------
21,485,873
-------------
ASSET-BACKED SECURITIES -- 4.59%
Americredit Automobile Receivables
Trust, 03-AM, Class A2B FRN
1.584%, due 10/06/06 390,000 389,981
Capital One Multi-Asset Execution
Trust, 03-A1, Class A1 FRN
1.570%, due 01/15/09 970,000 970,024
Comed Transitional Funding
Trust, 98-1, Class A7
5.740%, due 12/25/10 500,000 566,625
Conseco Finance, 00-B, Class AF4
7.870%, due 02/15/31 230,000 239,330
Greentree Financial Corp.,
94-5, Class A5
8.300%, due 11/15/19 289,938 311,617
Greentree Financial Corp.,
99-3, Class A5
6.160%, due 02/01/31 1,000,000 990,275
Norwest Asset Securities Corp.,
99-14, Class A5
6.500%, due 06/25/29 570,000 578,715
</Table>
70
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
Sears Credit Account Master Trust,
01-1, Class A FRN
1.360%, due 02/15/10 $ 970,000 $ 965,963
Structured Asset Securities Corp.,
03-AL2, Class A, 144A
3.357%, due 01/25/31 364,215 360,776
-------------
5,373,306
-------------
INTERNATIONAL CORPORATE BONDS -- 0.76%
Burlington Resources Finance Co.
6.680%, due 02/15/11 65,000 76,281
Canadian National Railway Co.
6.900%, due 07/15/28 65,000 77,120
Deutsche Telekom International Finance BV
8.250%, due 06/15/30 75,000 95,557
France Telecom S.A.
8.500%, due 03/01/31 70,000 96,861
HSBC Holdings PLC
5.250%, due 12/12/12 65,000 69,324
Rio Tinto Finance USA Ltd.
2.625%, due 09/30/08 240,000 235,602
Royal Bank of Scotland
9.118%, due 12/31/10 70,000 90,261
Telus Corp.
8.000%, due 06/01/11 125,000 144,375
-------------
885,381
-------------
SOVEREIGN\SUPRANATIONAL BONDS -- 1.56%
European Investment Bank
4.875%, due 09/06/06 315,000 341,320
Inter-American Development Bank
5.750%, due 02/26/08 325,000 371,606
International Bank for
Reconstruction & Development
4.375%, due 09/28/06 425,000 459,391
Mexico Government International Bond
8.125%, due 12/30/19 260,000 296,400
State of Qatar, 144A
9.750%, due 06/15/30 155,000 215,450
Westdeutsche Landesbank
6.750%, due 06/15/05 130,000 141,577
-------------
1,825,744
-------------
COMMERCIAL MORTGAGE-BACKED SECURITIES -- 9.55%
Bear Stearns Commercial Mortgage
Securities, 00-WF1, Class A2
7.780%, due 02/15/32 1,215,000 1,491,940
DLJ Commercial Mortgage Corp., 00-CKP1,
Class A1B
7.180%, due 08/10/10 850,000 1,003,646
DLJ Commercial Mortgage Corp., 99-CG1,
Class A1B
6.460%, due 03/10/32 220,000 255,152
DLJ Commercial Mortgage Corp., 99-CG2,
Class A1B
7.300%, due 06/10/32 1,012,000 1,215,252
DLJ Commercial Mortgage Corp., 99-CG3,
Class A1B
7.340%, due 10/10/32 400,000 482,152
GMAC Commercial Mortgage
Securities, Inc., 97-C2, Class A2
6.550%, due 04/16/29 $ 330,000 $ 356,622
Greenwich Capital Commercial
Funding Corp., 03-FL1 A FRN
1.639%, due 07/05/18 444,910 444,910
Heller Financial Commercial Mortgage
Assets, 99-PH1, Class A1
6.500%, due 05/15/31 860,701 947,709
JP Morgan Commercial Mortgage
Finance Corp., 99-C8, Class A1
7.325%, due 07/15/31 365,942 404,686
LB Commercial Conduit Mortgage
Trust, 99-C1, Class A1
6.410%, due 06/15/31 561,998 608,537
LB Commercial Conduit Mortgage
Trust, 99-C2, Class A2
7.325%, due 10/15/32 325,000 391,325
Merrill Lynch Mortgage
Investors, Inc., 96-C2, Class A3
6.960%, due 11/21/28 535,000 590,436
Merrill Lynch Mortgage
Investors, Inc., 97-C2, Class A2
6.540%, due 12/10/29 265,000 301,611
Morgan Stanley Dean Witter Capital I,
00-LIF2, Class A1
6.960%, due 10/15/33 318,427 359,362
Nomura Asset Securities Corp.,
95-MD3, Class A1B
8.150%, due 04/04/27 328,360 358,029
Prudential Mortgage Capital
Funding, LLC, 00-ROCK, Class A2
6.605%, due 05/10/34 115,000 134,836
Salomon Brothers Mortgage
Securities VII, 00-C1, Class A2
7.520%, due 12/18/09 1,250,000 1,516,800
Strategic Hotel Capital, Inc.,
03-1, Class D, 144A FRN
2.330%, due 02/15/13 310,000 310,000
-------------
11,173,005
-------------
MORTGAGE-BACKED SECURITIES -- 34.86%
Bank One Mortgage-Backed
Pass-Through, 2000-2, Class 8A (b)
6.780%, due 03/15/30 237,928 240,908
Bank One Mortgage-Backed
Pass-Through, 2000-2, Class A6 (b)
6.580%, due 03/15/30 16,844 17,035
Citicorp Mortgage Securities, Inc.,
94-9, Class A8
5.750%, due 06/25/09 250,530 253,759
CS First Boston Mortgage
Securities Corp., 02-10, Class 2A1
7.500%, due 05/25/32 1,201,464 1,262,033
CS First Boston Mortgage
Securities Corp., 03-8, Class 5A1
6.500%, due 04/25/33 1,750,739 1,802,199
Federal Home Loan Mortgage Corp., 1595 D
6.500%, due 11/01/32 166,446 173,208
</Table>
71
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
Federal Home Loan Mortgage Corp., 2532 PD
5.500%, due 06/15/26 $ 700,000 $ 725,486
Federal Home Loan Mortgage Corp., Gold
5.500%, due 09/01/17 526,298 545,869
5.500%, due 01/01/18 954,632 990,131
5.500%, due 04/01/18 912,673 946,651
6.000%, due 10/01/29 766,695 796,010
6.500%, due 09/01/29 549,647 571,976
6.500%, due 03/01/32 135,874 141,394
7.000%, due 10/15/13 401,737 433,144
Federal National Mortgage Association
4.503%, due 06/01/33 FRN 384,647 393,250
5.500%, due 09/01/24 1,136,791 1,176,979
5.500%, due 03/01/33 1,091,679 1,130,272
5.500%, due 12/01/17 591,173 614,106
5.500%, due 01/01/18 5,767,810 5,991,574
5.500%, due 03/01/33 985,768 1,020,617
6.000%, due 06/01/23 521,350 543,601
6.000%, due 03/01/28 229,629 239,064
6.000%, due 03/01/29 272,167 282,947
6.000%, due 05/01/29 278,114 289,130
6.000%, due 06/01/31 206,362 214,536
6.000%, due 11/01/32 3,305,302 3,436,222
6.000%, due 06/01/33 194,776 202,491
6.500%, due 08/01/32 1,128,945 1,177,277
6.500%, due 09/01/32 725,293 756,344
7.000%, due 03/01/31 99,281 104,891
7.000%, due 11/01/31 592,257 623,721
7.000%, due 04/01/32 763,649 804,218
7.000%, due 08/01/32 859,482 905,142
7.000%, due 11/01/32 1,587,175 1,671,494
Federal National Mortgage Association
Grantor Trust, 00-T6, Class A1
7.500%, due 06/25/30 1,497,145 1,670,721
Federal National Mortgage Association
Grantor Trust, 01-T10, Class A2
7.500%, due 12/25/41 163,672 182,648
Federal National Mortgage Association
Grantor Trust, 01-T5, Class A3
7.500%, due 06/19/30 213,422 238,166
Federal National Mortgage Association
Whole Loan, 03-W6, Class 6A FRN
5.210%, due 08/25/42 562,924 593,357
Federal National Mortgage Association
Whole Loan, 95-W3, Class A
9.000%, due 04/25/25 30,515 33,562
Government National Mortgage Association
6.000%, due 12/20/28 335,302 349,982
6.000%, due 05/20/29 1,621,796 1,690,722
6.000%, due 08/20/29 1,183,992 1,234,312
6.500%, due 10/15/24 1,078,846 1,139,879
6.500%, due 08/15/27 5,748 6,035
7.000%, due 07/15/25 27,762 29,523
7.000%, due 07/15/31 329,532 348,068
8.500%, due 12/15/17 501,328 551,445
9.000%, due 11/15/04 2,021 2,286
GS Mortgage Securities Corp. II,
96-PL, Class A2
7.410%, due 02/15/27 171,706 178,911
GS Mortgage Securities Corp.,
01-2, Class A, 144A
7.500%, due 06/19/32 $ 429,752 $ 460,685
Impac Secured Assets Common Owner,
01-3, Class A2 (b)
6.703%, due 04/25/31 326,406 337,199
PNC Mortgage Securities Corp.,
94-3, Class A8
7.500%, due 07/25/24 239,934 242,153
Residential Funding Mortgage
Securitization I, 95-S16, Class A7
7.500%, due 11/25/25 264,350 264,088
Structured Asset Securities Corp.,
98-ALS1, Class 1A
6.900%, due 01/25/29 472,208 477,557
Washington Mutual, 99-WM2, Class 2A
7.000%, due 11/19/14 244,720 250,308
-------------
40,759,286
-------------
U.S. GOVERNMENT AGENCY -- 4.16%
Fannie Mae
4.625%, due 05/01/13 455,000 467,931
5.500%, due 03/15/11 2,770,000 3,142,662
7.125%, due 01/15/30 510,000 661,960
Freddie Mac
5.875%, due 03/21/11 525,000 590,556
-------------
4,863,109
-------------
U.S. GOVERNMENT OBLIGATIONS -- 26.35%
U.S. Treasury Bonds
6.250%, due 05/15/30 5,740,000 7,145,852
6.625%, due 02/15/27 1,105,000 1,422,126
8.000%, due 11/15/21 260,000 376,665
U.S. Treasury Notes
1.625%, due 03/31/05 3,880,000 3,906,675
1.625%, due 04/30/05 70,000 70,459
2.000%, due 11/30/04 65,000 65,772
2.750%, due 09/30/03 6,425,000 6,455,120
3.000%, due 02/15/08 5,240,000 5,392,081
3.625%, due 08/31/03 4,905,000 4,926,651
4.375%, due 08/15/12 405,000 434,252
5.750%, due 08/15/10 535,000 626,222
-------------
30,821,875
-------------
Total Bonds (Cost $113,622,871) 117,187,579
-------------
<Caption>
SHARES
-------------
SHORT-TERM INVESTMENTS -- 1.95%
OTHER -- 1.95%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $2,285,654) 2,285,654 2,285,654
-------------
Total Investments
(Cost $115,908,525) -- 102.15% (a) 119,473,233
Liabilities, less cash and
other assets -- (2.15)% (2,519,566)
-------------
Net Assets -- 100% $ 116,953,667
=============
</Table>
72
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $115,908,676; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 4,076,978
Gross unrealized depreciation (512,421)
-------------
Net unrealized appreciation $ 3,564,557
=============
</Table>
(b) Variable rate note -- The rate disclosed is that in effect at June 30, 2003.
(c) Security is in default.
(d) Security is illiquid. These securities amounted to $57,115 or 0.05% of net
assets.
% Represents a percentage of net assets.
E.E.T.C.: Enhanced Equipment Trust Certificate.
FRN: Floating rate note -- The rate disclosed is that in effect at
June 30, 2003.
144A: Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified buyers. At June 30, 2003,
the value of these securities amounted to $1,926,752 or 1.65% of net
assets.
See accompanying notes to financial statements
73
<Page>
UBS HIGH YIELD FUND
For the fiscal year ended June 30, 2003, Class Y shares of UBS High Yield Fund
returned 18.08%, underperforming the Fund's benchmark, the Merrill Lynch High
Yield Cash Pay Index, which returned 21.11%. Since its inception on September
30, 1997, the Fund's Class Y shares have returned an average of 4.34% per year,
in line with the 4.37% return of the Index. (Returns for all share classes over
various time periods are shown on page 75. Please note that these returns do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.)
12-MONTH MARKET REVIEW
As the review period began, the high yield market was one of the few sectors of
the fixed income market that was generating disappointing results. Despite low
interest rates and mounting hopes for an economic recovery, investors shunned
high yield bonds during the first three months of the reporting period.
Continued accounting scandals, a weak stock market, poor corporate profits,
disappointing second-quarter economic results and the growing threat of a war
with Iraq all took their toll on the market. In this environment, while all
securities declined in value, those with relatively higher credit ratings
outperformed their lower-rated counterparts.
High yield market performance then changed course and generated strong returns
during the remaining nine months of the period. The mitigating factors behind
this reversal were better-than-expected third-quarter 2002 earnings reports,
gains in the stock market and a large inflow of cash to high yield mutual funds.
During the fourth quarter of 2002 and over the first six months of 2003, the
riskiest segment of the high yield market posted the best returns, as the
CCC-rated sector outpaced both the B-rated and the BB-rated sectors.
Even in the wake of mixed economic news, high yield bonds continued to rise,
buoyed by fundamental and technical improvements. On a fundamental level, a
declining default rate, a falling distress ratio, improvement in the ratio of
downgrades to upgrades, and companies reporting operating results in line with
or better than expectations positively influenced the market. In fact, the
number of downgrades to every upgrade fell to a level not seen in several years.
From a technical perspective, cash flows into the sector were unusually large.
New issuance was met with very strong customer demand, which boded well for high
yield issuers who may have needed to refinance debt.
WE ADJUSTED SECTOR WEIGHTS TO MAXIMIZE OPPORTUNITIES
Throughout the reporting period, our globally integrated investment
platform--which allows our investment specialists from around the world to share
ideas and information--helped us to avoid the fallout from certain high profile
bankruptcies that occurred in the high yield market. For example, our telecom
analyst in the equity group provided useful insight in determining our
investment thesis regarding WorldCom. Ultimately, the collective effort of
several analysts within the firm led us to completely avoid the company.
During the fiscal year, we also utilized the expertise of our analysts to
proactively adjust the Fund's portfolio in order to take advantage of areas that
we believed held the most promise for the Fund. As a result, during the first
half of the reporting period, our overweights to the broadcasting, gaming, and
printing and publishing sectors added to the Fund's performance. In the first
quarter of 2003, however, many securities in the Fund were called or tendered.
Given that a number of these holdings were in broadcasting, we took the
opportunity to reduce our overweight to this area. At the same time, our
analysis led us to add to the Fund's position in printing and publishing and
chemicals.
As the period drew to a close, we reduced our overweight to gaming as a result
of analysis that pointed to less attractive valuations and increased competitive
activity within the industry. We further increased our holdings in printing, and
reduced our weighting to yellow page publishers at this time.
LOOKING AHEAD
At current levels, we believe the US high yield market holds value for long-term
investors. This view is based on our outlook for moderate economic improvement
and expected lower default rates, coupled with generally improving credit
fundamentals.
74
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- --------------------------------------------------------------------------------------------------------
UBS High Yield Fund Class A 12.78% 17.70% 3.71% N/A 3.04%
- --------------------------------------------------------------------------------------------------------
UBS High Yield Fund Class B 12.19 16.83 N/A N/A 8.10
- --------------------------------------------------------------------------------------------------------
UBS High Yield Fund Class C 12.50 17.29 N/A N/A 8.47
- --------------------------------------------------------------------------------------------------------
UBS High Yield Fund Class Y 12.67 18.08 3.99 3.36% 4.34
- --------------------------------------------------------------------------------------------------------
UBS High Yield Fund Class A** 7.67 12.40 2.14 N/A 1.99
- --------------------------------------------------------------------------------------------------------
UBS High Yield Fund Class B** 7.19 11.83 N/A N/A 5.84
- --------------------------------------------------------------------------------------------------------
UBS High Yield Fund Class C** 10.69 15.45 N/A N/A 7.82
- --------------------------------------------------------------------------------------------------------
Merrill Lynch High Yield Cash Pay Index 17.24 21.11 6.22 3.59 4.37
- --------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS HIGH YIELD FUND CLASS A IS 12/31/98. INCEPTION DATE OF
CLASS B AND CLASS C IS 11/07/01. INCEPTION DATE OF CLASS Y AND, FOR
ILLUSTRATION PURPOSES, THE INDEX, IS 9/30/97.
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS High Yield Fund
Class Y shares and the Merrill Lynch High Yield Cash Pay Index if you had
invested $10,000 on September 30, 1997, and had reinvested all your income
dividends and capital gain distributions through June 30, 2003. The performance
of Class A, Class B and Class C shares will vary based upon the different
inception dates, class specific expenses and sales charges. No adjustment has
been made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
[CHART]
UBS HIGH YIELD FUND CLASS Y VS. MERRILL LYNCH HIGH YIELD CASH PAY INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS HIGH YIELD FUND CLASS Y MERRILL LYNCH HIGH YIELD CASH PAY INDEX
$ 10,000 $ 10,000
$ 9,952 $ 10,066
$ 10,052 $ 10,162
$ 10,239 $ 10,258
$ 10,470 $ 10,411
$ 10,542 $ 10,454
$ 10,673 $ 10,544
$ 10,680 $ 10,594
$ 10,710 $ 10,668
6/30/1998 $ 10,822 $ 10,721
$ 10,979 $ 10,782
$ 10,424 $ 10,317
$ 10,571 $ 10,337
$ 10,504 $ 10,167
$ 11,101 $ 10,630
$ 11,028 $ 10,634
$ 11,293 $ 10,739
$ 11,349 $ 10,657
$ 11,470 $ 10,749
$ 11,636 $ 10,917
$ 11,404 $ 10,841
6/30/1999 $ 11,349 $ 10,821
$ 11,337 $ 10,837
$ 11,280 $ 10,727
$ 11,246 $ 10,686
$ 11,246 $ 10,623
$ 11,474 $ 10,745
$ 11,564 $ 10,801
$ 11,419 $ 10,748
$ 11,383 $ 10,757
$ 11,118 $ 10,606
$ 11,191 $ 10,610
$ 11,154 $ 10,493
6/30/2000 $ 11,351 $ 10,673
$ 11,474 $ 10,750
$ 11,610 $ 10,881
$ 11,462 $ 10,818
$ 11,104 $ 10,500
$ 10,597 $ 10,171
$ 10,965 $ 10,392
$ 11,535 $ 11,011
$ 11,657 $ 11,185
$ 11,454 $ 11,037
$ 11,440 $ 10,917
$ 11,535 $ 11,127
6/30/2001 $ 11,144 $ 10,897
$ 11,270 $ 11,067
$ 11,369 $ 11,174
$ 10,636 $ 10,457
$ 10,976 $ 10,765
$ 11,471 $ 11,115
$ 11,419 $ 11,036
$ 11,414 $ 11,098
$ 11,161 $ 10,991
$ 11,389 $ 11,253
$ 11,503 $ 11,431
$ 11,371 $ 11,370
6/30/2002 $ 10,811 $ 10,561
$ 10,625 $ 10,141
$ 10,889 $ 10,395
$ 10,731 $ 10,228
$ 10,745 $ 10,142
$ 11,250 $ 10,750
$ 11,331 $ 10,911
$ 11,502 $ 11,225
$ 11,612 $ 11,370
$ 11,969 $ 11,665
$ 12,479 $ 12,320
$ 12,497 $ 12,453
6/30/2003 $ 12,766 $ 12,793
</Table>
9/30/97 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
75
<Page>
TOP TEN FIXED INCOME HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ------------------------------------------------------------------------
NUCO, Inc.
12.000%, due 10/31/04 2.5%
Mediacom LLC
9.500%, due 01/15/13 1.4
AES Corp.
9.375%, due 09/15/10 1.4
Tommy Hilfiger USA, Inc.
6.850%, due 06/01/08 1.1
Sequa Corp.
9.000%, due 08/01/09 0.9
Insight Communications Co., Inc.
0.000%, due 02/15/11 0.9
Luigino's, Inc.
10.000%, due 02/01/06 0.9
HMH Properties, Inc.
8.450%, due 12/01/08 0.9
Grey Wolf, Inc.
8.875%, due 07/01/07 0.9
Levi Strauss & Co.
12.250%, due 12/15/12 0.9
- -----------------------------------------------------------------------
Total 11.8%
</Table>
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF JUNE 30, 2003
<Table>
U.S. CORPORATE BONDS
Aerospace & Defense 0.31%
Aerospace & Military 2.15
Appliances & Household Durables 0.70
Autos/Durables 1.71
Building Materials 2.92
CableTV/Pay Services 4.06
Chemicals 4.71
Computer Systems 1.22
Construction 0.78
Consumer 0.51
Consumer Durables 0.76
Electric Components 2.02
Energy 6.96
Environmental 0.59
Financial Services 2.77
Food & Household Products 5.00
Food and Beverage 0.51
Gaming 3.64
Health: Drugs 0.89
Health: Non-Drugs 3.11
Healthcare 0.62
Housing/Paper 1.92
Industrial Components 1.55
Leisure & Tourism 4.64
Machinery & Engineering 0.88
Metals Steel 0.60
Multi-Industry 0.42
Non-Durables 1.97
Packaging & Containers 0.45%
Publishing 5.56
Radio Broadcasting 1.17
Real Estate 0.71
Recreation 0.64
Restaurants 0.24
Retail/Apparel 4.65
Services/Miscellaneous 8.32
Technology 0.12
Telecommunications 5.56
Telecommunications - Wireless 3.49
Telecommunications - Services 0.51
Television Broadcasting 4.36
Transportation 0.89
Utilities 2.95
-------
Total U.S. Corporate Bonds 97.54
U.S. EQUITIES
Retail/Apparel 0.01
Services/Miscellaneous 0.31
-------
Total U.S. Equities 0.32
Convertible Preferred 0.17
International Dollar Bonds 0.29
Warrants 0.17
-------
TOTAL INVESTMENTS 98.49
CASH AND OTHER ASSETS,
LESS LIABILITIES 1.51
-------
NET ASSETS 100.00%
=======
</Table>
76
<Page>
UBS HIGH YIELD FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
U.S. BONDS -- 97.83%
U.S. CORPORATE BONDS -- 97.54%
Acetex Corp.
10.875%, due 08/01/09 $ 300,000 $ 333,375
Adelphia Communications Corp., Series B (e)
8.375%, due 02/01/08 1,650,000 1,023,000
Advanced Medical Optics, Inc.
9.250%, due 07/15/10 325,000 352,625
AES Corp.
9.375%, due 09/15/10 2,521,000 2,533,605
Ainsworth Lumber Co., Ltd.
12.500%, due 07/15/07 1,250,000 1,412,500
AK Steel Corp.
7.750%, due 06/15/12 1,300,000 1,079,000
Alamosa Delaware, Inc.
12.500%, due 02/01/11 1,750,000 1,435,000
Alamosa Holdings, Inc. (c)
12.875%, due 02/15/10 350,000 203,000
Alderwoods Group, Inc.
12.250%, due 01/02/09 1,000,000 1,045,000
Allbritton Communications Co., 144A
7.750%, due 12/15/12 550,000 567,875
Alliance Gaming Corp., Series B
10.000%, due 08/01/07 250,000 259,375
Allied Waste North America
7.875%, due 04/15/13 325,000 340,031
8.500%, due 12/01/08 Series B 250,000 268,750
10.000%, due 08/01/09 Series B 1,000,000 1,062,500
American Color Graphics, Inc., 144A
10.000%, due 06/15/10 850,000 845,750
American Eco Corp., Series B (e) (f)
9.625%, due 05/15/08 5,500,000 550
American Restaurant Group, Inc., Series D
11.500%, due 11/01/06 523,000 360,870
Ameristar Casino, Inc.
10.750%, due 02/15/09 1,000,000 1,133,750
AMI Semiconductor, Inc., 144A
10.750%, due 02/01/13 825,000 932,250
Amkor Technology, Inc.
7.750%, due 05/15/13 144A 750,000 712,500
9.250%, due 02/15/08 500,000 520,000
Anchor Glass Container Corp., 144A
11.000%, due 02/15/13 700,000 764,750
Argo-Tech Corp.
8.625%, due 10/01/07 600,000 558,000
Atrium Cos., Inc., Series B
10.500%, due 05/01/09 1,175,000 1,257,250
B&G Foods, Inc., Series D
9.625%, due 08/01/07 975,000 1,004,250
Bally Total Fitness Holding Corp.,
9.875%, due 10/15/07 Series D 450,000 410,625
10.500%, due 07/15/11 144A 600,000 600,000
BE Aerospace, Inc., Series B
8.875%, due 05/01/11 1,500,000 1,177,500
Bear Island Paper Co., LLC, Series B
10.000%, due 12/01/07 525,000 435,750
Belden & Blake Corp., Series B
9.875%, due 06/15/07 1,250,000 1,181,250
Berry Plastics Corp.
10.750%, due 07/15/12 $ 1,050,000 $ 1,155,000
Better Minerals & Aggreg
13.000%, due 09/15/09 825,000 548,625
Block Communications, Inc.
9.250%, due 04/15/09 500,000 545,000
Brickman Group Ltd., (The) 144A
11.750%, due 12/15/09 750,000 838,125
Buckeye Technologies, Inc.
8.500%, due 12/15/05 1,475,000 1,467,625
Buffets, Inc.
11.250%, due 07/15/10 1,250,000 1,237,500
Building Materials Corp. of America, Series B
7.750%, due 07/15/05 750,000 735,000
Cadmus Communications Corp.
9.750%, due 06/01/09 995,000 1,060,919
Calpine Corp.
8.500%, due 02/15/11 1,050,000 787,500
Centennial Cellular Corp.
10.750%, due 12/15/08 850,000 782,000
Centennial Cellular Operating Co., 144A
10.125%, due 06/15/13 500,000 495,000
Charter Communications Holdings
8.250%, due 04/01/07 1,500,000 1,155,000
10.000%, due 04/01/09 2,000,000 1,530,000
Chesapeake Energy Corp.
8.125%, due 04/01/11 875,000 942,812
Chippac International Co., Ltd., Series B
12.750%, due 08/01/09 575,000 646,875
Coaxial Communications of Central Ohio, Inc.
10.000%, due 08/15/06 825,000 850,781
Collins & Aikman Products
10.750%, due 12/31/11 1,575,000 1,386,000
Cooperative Computing, Inc., 144A
10.500%, due 06/15/11 600,000 615,000
Crown Castle International Corp.
9.375%, due 08/01/11 1,000,000 1,040,000
10.750%, due 08/01/11 850,000 926,500
Crown Cork & Seal Co., Inc.
8.000%, due 04/15/23 500,000 402,500
Crown European Holdings S.A., 144A
9.500%, due 03/01/11 875,000 945,000
10.875%, due 03/01/13 1,000,000 1,090,000
CSC Holdings, Inc.
7.625%, due 04/01/11 135,000 136,350
7.875%, due 12/15/07 750,000 766,875
8.125%, due 08/15/09 Series B 1,050,000 1,086,750
Dayton Superior Corp.,
10.750%, due 09/15/08 144A 1,000,000 990,000
13.000%, due 06/15/09 (f) 675,000 573,750
Delhaize America, Inc.
8.125%, due 04/15/11 1,275,000 1,396,125
Desa International, Inc.
9.875%, due 12/15/07 (e) 3,000,000 30,000
Dex Media East LLC
12.125%, due 11/15/12 425,000 502,563
DirecTV Holdings LLC, 144A
8.375%, due 03/15/13 500,000 557,500
</Table>
77
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
Doane Pet Care Co.
10.750%, due 03/01/10 $ 700,000 $ 763,000
Doane Products
9.750%, due 05/15/07 300,000 283,500
Dobson Communications Corp.
10.875%, due 07/01/10 1,150,000 1,242,000
Dobson Sygnet Communications Co.
12.250%, due 12/15/08 250,000 267,500
Dura Operating Corp., Series D
9.000%, due 05/01/09 1,000,000 920,000
Dynegy Holdings, Inc.
6.875%, due 04/01/11 1,750,000 1,470,000
8.125%, due 03/15/05 450,000 437,625
Equistar Chemicals LP
6.500%, due 02/15/06 1,300,000 1,241,500
Esterline Technologies Corp., 144A
7.750%, due 06/15/13 1,000,000 1,025,000
Extendicare Health Services, Inc.
9.350%, due 12/15/07 1,250,000 1,190,625
9.500%, due 07/01/10 365,000 383,250
Fedders North America
9.375%, due 08/15/07 120,000 99,600
Felcor Lodging LP
8.500%, due 06/01/11 175,000 176,313
9.500%, due 09/15/08 450,000 464,625
Fisher Scientific International, Inc.
8.125%, due 05/01/12 300,000 321,000
8.125%, due 05/01/12 144A 200,000 214,000
Fort James Corp.
6.875%, due 09/15/07 350,000 356,125
Four M Corp., Series B
12.000%, due 06/01/06 850,000 854,250
Frontier Corp., 144A
8.000%, due 04/15/13 400,000 418,000
Frontier Oil Corp.
11.750%, due 11/15/09 400,000 440,000
FrontierVision Holdings L.P., Series B (e)
11.875%, due 09/15/07 275,000 220,000
GEO Specialty Chemicals
10.125%, due 08/01/08 800,000 480,000
Georgia-Pacific Corp.,
9.375%, due 02/01/13 144A 750,000 826,875
9.500%, due 12/01/11 500,000 550,625
Giant Industries
9.000%, due 09/01/07 1,225,000 1,157,625
Granite Broadcasting Corp.
8.875%, due 05/15/08 500,000 488,750
10.375%, due 05/15/05 300,000 299,250
Gray Television, Inc.
9.250%, due 12/15/11 680,000 751,400
Grey Wolf, Inc., Series C
8.875%, due 07/01/07 1,500,000 1,541,250
Hanger Orthopedic Group, Inc.
11.250%, due 06/15/09 775,000 837,000
HMH Properties, Inc., Series C
8.450%, due 12/01/08 1,495,000 1,543,587
Hollinger International Publishing Corp.
9.000%, due 12/15/10 750,000 802,500
Hollinger, Inc., 144A
11.875%, due 03/01/11 $ 425,000 $ 471,750
Hornbeck-Leevac Marine Services
10.625%, due 08/01/08 750,000 826,875
Host Marriott LP, Series E
8.375%, due 02/15/06 900,000 931,500
Houghton Mifflin Co., 144A
9.875%, due 02/01/13 775,000 840,875
Huntsman ICI Chemicals, LLC
10.125%, due 07/01/09 700,000 672,000
Hyperion Telecommunications (e)
12.000%, due 11/01/07 2,000,000 20,000
IASIS Healthcare Corp., 144A
8.500%, due 10/15/09 500,000 505,000
IMC Global, Inc., 144A
11.250%, due 06/01/11 1,000,000 1,040,000
Ingles Markets, Inc.
8.875%, due 12/01/11 1,000,000 1,006,250
Insight Communications Co., Inc. (c)
0.000%, due 02/15/11 2,000,000 1,660,000
Insight Midwest, LP
10.500%, due 11/01/10 695,000 762,762
InterAct Operating Co., Inc. (e) (f) (g)
14.000%, due 08/01/03 13,545,110 0
Interface, Inc.
10.375%, due 02/01/10 1,000,000 960,000
IPC Acquisition Corp.,
11.500%, due 12/15/09 825,000 874,500
Iron Mountain, Inc.
7.750%, due 01/15/15 475,000 502,313
Jafra Cosmetics International, Inc., 144A
10.750%, due 05/15/11 500,000 522,500
John Q. Hammons Hotels, Inc., Series B
8.875%, due 05/15/12 1,400,000 1,470,000
Kansas City Southern
7.500%, due 06/15/09 750,000 777,187
Le-Natures, Inc., 144A
9.000%, due 06/15/13 900,000 927,000
Levi Strauss & Co
12.250%, due 12/15/12 1,850,000 1,540,125
Lodgenet Entertaiment Corp.
9.500%, due 06/15/13 700,000 717,500
Luigino's, Inc.
10.000%, due 02/01/06 1,550,000 1,612,000
Lyondell Chemical Co., Series A
9.625%, due 05/01/07 500,000 490,000
Mail-Well Corp.,
8.750%, due 12/15/08 Series B 250,000 236,250
9.625%, due 03/15/12 1,000,000 1,052,500
Majestic Investment Holdings LLC,
11.653%, due 11/30/07 1,000,000 1,003,750
Majestic Star Casino LLC, Series B
10.875%, due 07/01/06 1,000,000 1,046,250
Massey Energy Co.
6.950%, due 03/01/07 1,075,000 1,032,000
Mediacom LLC
9.500%, due 01/15/13 2,440,000 2,580,300
Merisant Co., 144A
9.500%, due 07/15/13 600,000 621,000
</Table>
78
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
Meristar Hospitality Corp.
9.000%, due 01/15/08 $ 625,000 $ 617,188
9.125%, due 01/15/11 200,000 196,000
Millennium America, Inc.
7.000%, due 11/15/06 500,000 505,000
9.250%, due 06/15/08 900,000 967,500
Mirant Americas Generation, Inc.
7.625%, due 05/01/06 1,450,000 1,116,500
Mortons Restaurant Group, Inc., 144A
7.500%, due 07/01/10 500,000 427,500
Mothers Work, Inc.
11.250%, due 08/01/10 700,000 756,000
MTR Gaming Group, Inc., 144A
9.750%, due 04/01/10 1,350,000 1,390,500
Nexstar Finance Holdings, Inc., LLC, 144A (c)
0.000%, due 04/01/13 975,000 649,594
Nexstar Finance, Inc., LLC
12.000%, due 04/01/08 760,000 847,400
Nextel Partners, Inc.,
8.125%, due 07/01/11 144A 675,000 673,313
12.500%, due 11/15/09 525,000 590,625
Nextmedia Operating, Inc.
10.750%, due 07/01/11 250,000 280,000
Nortek Holdings, Inc., Series B
9.125%, due 09/01/07 600,000 627,000
9.250%, due 03/15/07 625,000 643,750
9.875%, due 06/15/11 200,000 210,500
NUCO, Inc. (g) (f)
12.000%, due 10/31/04 5,000,000 4,500,000
Orion Refining Corp. (e) (f) (g)
10.000%, due 11/15/04 3,829,177 38
Owens-Brockway Glass Corp.
8.875%, due 02/15/09 850,000 922,250
Owens-Illinois, Inc.
7.350%, due 05/15/08 400,000 400,000
Pacifica Papers, Inc.
10.000%, due 03/15/09 595,000 633,675
Parker Drilling Corp.
5.500%, due 08/01/04 450,000 449,438
10.125%, due 11/15/09 Series B 1,000,000 1,080,000
Pathmark Stores, Inc.
8.750%, due 02/01/12 1,000,000 1,035,000
Paxson Communications Corp. (c)
0.000%, due 01/15/09 1,100,000 918,500
Penn National Gaming, Inc.
8.875%, due 03/15/10 975,000 1,033,500
11.125%, due 03/01/08 Series B 220,000 243,650
Per-Se Technologies, Inc., Series B
9.500%, due 02/15/05 1,000,000 1,020,000
Perry Ellis International, Inc., Series B
9.500%, due 03/15/09 1,000,000 1,037,500
Petco Animal Supplies, Inc.,
10.750%, due 11/01/11 1,190,000 1,356,600
Phillips-Van Heusen Corp.
9.500%, due 05/01/08 500,000 517,500
Plains Exploration & Production Co., Series B
8.750%, due 07/01/12 950,000 1,016,500
Pliant Corp., 144A
11.125%, due 09/01/09 700,000 743,750
PolyOne Corp., 144A
10.625%, due 05/15/10 $ 750,000 $ 731,250
Premier Graphics, Inc. (e) (f)
11.500%, due 12/01/05 4,250,000 0
Premier Parks, Inc.
9.750%, due 06/15/07 325,000 321,750
Prime Hospitality Corp., Series B
8.375%, due 05/01/12 575,000 552,000
Prime Medical Services, Inc.
8.750%, due 04/01/08 1,400,000 1,316,000
PRIMEDIA, Inc.
8.875%, due 05/15/11 1,000,000 1,052,500
Qwest Capital Funding, Inc.
5.875%, due 08/03/04 750,000 718,125
7.000%, due 08/03/09 1,250,000 1,028,125
Qwest Corp., 144A
8.875%, due 03/15/12 550,000 614,625
Qwest Services Corp., 144A
13.500%, due 12/15/10 1,143,000 1,291,590
R.H. Donnelly, Inc.
9.125%, due 06/01/08 1,100,000 1,122,000
Reliant Resources, Inc., 144A
9.250%, due 07/15/10 350,000 351,750
9.500%, due 07/15/13 500,000 503,750
Rhodia S.A., 144A
8.875%, due 06/01/11 750,000 776,250
Rite Aid Corp., 144A
8.125%, due 05/01/10 550,000 569,250
Riverwood International Corp.
10.875%, due 04/01/08 525,000 538,125
Roundy's, Inc., Series B
8.875%, due 06/15/12 600,000 627,000
Samina Corp., 144A
10.375%, due 01/15/10 750,000 836,250
Samsonite Corp.
10.750%, due 06/15/08 1,200,000 1,227,000
SBA Communications Corp.
10.250%, due 02/01/09 575,000 529,000
Sbarro, Inc.
11.000%, due 09/15/09 930,000 795,150
Seagate Technology Hdd Holdings
8.000%, due 05/15/09 750,000 811,875
Semco Energy, Inc., 144A
7.125%, due 05/15/08 450,000 470,250
Sequa Corp.
9.000%, due 08/01/09 1,575,000 1,669,500
Silgan Corp.
9.000%, due 06/01/09 550,000 569,250
Sinclair Broadcast Group, Inc.
8.000%, due 03/15/12 725,000 773,937
8.750%, due 12/15/11 750,000 823,125
Six Flags, Inc.
8.875%, due 02/01/10 1,000,000 960,000
9.500%, due 02/01/09 100,000 98,500
9.750%, due 04/15/13 144A 250,000 247,500
Southern Energy, 144A
7.400%, due 07/15/04 525,000 391,125
Spanish Broadcasting System
9.625%, due 11/01/09 1,250,000 1,328,125
</Table>
79
<Page>
<Table>
<Caption>
FACE
AMOUNT VALUE
------------- -------------
SPX Corp.
7.500%, due 01/01/13 $ 500,000 $ 541,250
Starwood Hotels & Resorts Worldwide, Inc.
7.190%, due 05/01/12 1,000,000 1,095,000
Stone Container Corp.
8.375%, due 07/01/12 500,000 536,250
Superior National Capital Trust I (c) (e) (f)
10.750%, due 12/01/17 900,000 0
Sybron Dental Specialties, Inc.
8.125%, due 06/15/12 750,000 791,250
Team Health, Inc., Series B
12.000%, due 03/15/09 1,100,000 1,127,500
Tembec Industries, Inc.
7.750%, due 03/15/12 1,000,000 970,000
8.500%, due 02/01/11 250,000 247,500
Tenneco Automotive, Inc., 144A
10.250%, due 07/15/13 750,000 759,375
Terra Capital, Inc.
12.875%, due 10/15/08 750,000 798,750
Terra Capital, Inc., 144A
11.500%, due 06/01/10 500,000 460,000
Tesoro Petroleum Corp., Series B
9.000%, due 07/01/08 1,250,000 1,131,250
Tommy Hilfiger USA, Inc.
6.850%, due 06/01/08 2,050,000 2,039,750
Town Sports Int'l, Inc., 144A
9.625%, due 04/15/11 300,000 313,500
Triad Hospitals, Inc., Series B
8.750%, due 05/01/09 450,000 478,688
Trico Marine Services, Inc.
8.875%, due 05/15/12 1,000,000 860,000
Triton PCS, Inc.,
8.500%, due 06/01/13 144A 500,000 537,500
9.375%, due 02/01/11 1,425,000 1,457,062
Tropical Sportswear Int'l Corp., Series A
11.000%, due 06/15/08 275,000 283,250
United Components, Inc., 144A
9.374%, due 06/15/13 750,000 778,125
Unisys Corp.
6.875%, due 03/15/10 750,000 780,000
Vertis, Inc.,
9.750%, due 04/01/09 144A 450,000 468,000
10.875%, due 06/15/09 Series B 650,000 650,000
Von Hoffmann Press, Inc.
10.250%, due 03/15/09 725,000 775,750
10.375%, due 05/15/07 (d) 750,000 752,812
Wheeling Island Gaming, Inc.
10.125%, due 12/15/09 1,275,000 1,282,969
William Carter Co., Series B
10.875%, due 08/15/11 775,000 875,750
Winsloew Furniture, Inc., Series B
12.750%, due 08/15/07 250,000 148,125
WRC Media, Inc.
12.750%, due 11/15/09 1,000,000 1,041,250
Wynn Las Vegas LLC
12.000%, due 11/01/10 500,000 552,500
XM Satellite Radio, Inc., 144A
12.000%, due 06/15/10 800,000 784,000
Young Broadcasting, Inc.
8.500%, due 12/15/08 $ 1,375,000 $ 1,471,250
10.000%, due 03/01/11 136,000 147,220
-------------
175,788,892
-------------
INTERNATIONAL DOLLAR BONDS -- 0.29%
Methanex Corp.
7.750%, due 08/15/05 500,000 525,000
-------------
Total U.S. Bonds (Cost $208,474,164) 176,313,892
-------------
<Caption>
SHARES
-------------
EQUITIES -- 0.66%
COMMON STOCKS -- 0.32%
AIRLINES -- 0.00%
Sabreliner Corp. (f) (g) 8,400 0
-------------
ELECTRONICS -- 0.00%
Communications & Power Industries
Holding Corp. (b) 1,400 14
-------------
FOOD & HOUSEHOLD PRODUCTS -- 0.00%
Aurora Foods, Inc. (b) 174 61
-------------
RETAIL/APPAREL -- 0.01%
Samuels Jewelers, Inc.(b) (f) (g) 605,400 27,243
-------------
SERVICES/MISCELLANEOUS -- 0.31%
Metal Management, Inc. (b) (f) 16,785 298,270
Packaged Ice, Inc. (b) 74,223 253,100
Song Networks Holding AB, ADR (f) (g) 61,644 0
Waste Systems International, Inc. (f) (g) 664,249 0
-------------
551,370
-------------
TELECOMMUNICATIONS- SERVICES -- 0.00%
PNV, Inc.(b) 79,417 24
RCN Corp. (b) 466 922
-------------
946
-------------
579,634
-------------
CONVERTIBLE PREFERRED -- 0.17%
METALS - STEEL -- 0.00%
Weirton Steel Corp., Series C
Convertible (Zero Coupon) 1,800 18
-------------
PUBLISHING -- 0.17%
CSC Holdings, Inc. (b)
Series M, 11.125% 3,000 307,500
-------------
SERVICES/MISCELLANEOUS -- 0.00%
American Restaurant Group, Inc., (f) (g)
Series B, PIK 12.000% 78 0
DigitalGlobe, Inc.,
Series C PIK 8.500% 401,431 4,014
ICG Holdings, Inc., (e) (f) (g)
PIK 14.000% Preferred 2,218 0
Waste Systems International, Inc., (e) (f) (g)
Series E, PIK 8.000% 5,428 0
-------------
4,014
-------------
TELECOMMUNICATION SERVICES -- 0.00%
InterAct Electronic Marketing, Inc. (f) (g)
14.000% 19,500 0
-------------
311,532
-------------
</Table>
80
<Page>
<Table>
<Caption>
NUMBER OF
WARRANTS VALUE
------------- -------------
WARRANTS (b) -- 0.17%
Arcadia Financial Ltd.,
expires 04/15/08 (f) (g) 6,000 $ 0
Dayton Superior Corp., 144A,
expires 06/15/09 (f) (g) 225 2
Electronic Retailing Systems International, Inc., 144A
expires 02/01/04 (f) (g) 13,700 0
InterAct Electronic Marketing, Inc., 144A
expires 08/01/03 (f) (g) 19,500 0
InterAct Electronic Marketing, Inc.,
expires 12/31/09 (f) (g) 19,500 0
Knology, Inc., expires 10/15/07 (b) (f) (g), 144A 16,995 0
Leap Wireless International, Inc., 144A,
expires 04/15/10 (f) (g) 200 0
Nuco2 Inc (f) (g) 109,290 301,641
Pathnet, Inc.,
expires 03/15/07 (f) (g) 6,275 0
Pliant Corp., 144A,
expires 06/01/10 (f) 160 160
Samuels Jewelers, Inc.,
expires 09/29/03 (f) (g) 13,146 $ 13
UIH Australia Pacific, Inc., 144A
expires 05/15/06 (b) (f) (g) 10,000 0
Wam!Net, Inc.,
expires 03/01/05 (f) (g) 26,250 0
Winsloew Furniture, Inc., 144A,
expires 08/15/07 (f) 250 3
-------------
301,819
-------------
Total Equities (Cost $25,022,256) 1,192,985
-------------
Total Investments
(Cost $233,496,420) -- 98.49% (a) 177,506,877
Cash and other assets,
less liabilities -- 1.51% 2,719,768
-------------
Net Assets -- 100% $ 180,226,645
=============
</Table>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $233,789,078; and net
unrealized depreciation consisted of:
<Table>
Gross unrealized appreciation $ 8,915,369
Gross unrealized depreciation (65,197,570)
-------------
Net unrealized depreciation $ (56,282,201)
=============
</Table>
(b) Non-income producing security.
(c) Step bonds -- coupon rate increases in increments to maturity. Rate
disclosed is as of June 30, 2003. Maturity date disclosed is the ultimate
maturity date.
(d) Variable rate note -- The rate disclosed is that in effect at June 30, 2003.
(e) Security is in default.
(f) Security is illiquid. These securities amounted to $5,701,512 or 3.16% of
net assets.
(g) Security is being fair valued by a management committee under the direction
of the Board of Trustees. At June 30, 2003, the value of these securities
amounted to $4,828,937 or 2.68% of net assets.
% Represents a percentage of net assets.
144A: Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified buyers. At June 30, 2003, the value of
these securities amounted to $32,134,662 or 17.83% of net assets.
ADR: America Depositary Receipt.
PIK: Payment In Kind.
See accompanying notes to financial statements
81
<Page>
UBS INTERNATIONAL EQUITY FUND
For the fiscal year ended June 30, 2003, Class Y shares of UBS International
Equity Fund declined 9.21%, underperforming the 5.53% decline of the MSCI World
Ex USA (Free) Index. However, since its inception on August 31, 1993 through
June 30, 2003, the Fund has slightly outperformed the Index, generating an
annual return of 2.39%, compared to a 2.25% return for the Index. (Returns for
all share classes over various time periods are shown on page 84. Please note
that these returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.)
Recent underperformance has been driven primarily by stock selection within
industries. Positive contributions from holdings within banks, insurance and
retailing have been overshadowed by negative impacts from selection within
consumer durables, tech hardware and utilities. Our currency strategy proved to
be a positive contributor to the Fund's performance over the period, as the euro
moved to historic highs.
12-MONTH MARKET REVIEW
The international equity markets took their lead from the US markets over the
period, alternating between rising and falling over the four quarters that
comprised the fiscal year.
As the period began, many of the issues troubling US investors were also
adversely affecting the international markets. The sputtering economy, weak
capital spending, geopolitical unrest and heightened concerns over additional
terrorist attacks caused investors to shun equities in favor of the relative
security offered by the bond market. As a result, stock prices fell, while the
fixed income markets posted strong results.
There was a reversal of fortune in the fourth quarter of 2002, as equities
outperformed their bond counterparts. Some signs of economic improvement and
better-than-expected earnings reports supported global stocks.
This type of volatility continued into the second half of the period. During the
first quarter of 2003, most global equity markets fell over concerns relating to
the impending war in Iraq. However, positive investor reaction to the short
duration of major conflict in Iraq fueled an equity rally. Many of the sectors
that performed the poorest during the lengthy bear market did well during this
time, including the information technology, telecommunication services, utility
and industrial sectors.
SECTOR SELECTION AND RISK MANAGEMENT PLAYED A CRITICAL ROLE
We used the insight provided by our team of analysts via our integrated global
investment platform and our proprietary risk management system to strike a
prudent balance between sectors sensitive to an economic recovery and those that
were relatively immune to economic weakness.
Based on this strategy, the Fund held an overweight position to healthcare.
Within the sector, we focused on pharmaceutical companies that offered
attractive valuations and the potential to deliver long-term sustainable growth.
As the period continued, we added to our overweight in pharmaceuticals, and
healthcare stocks became the largest overweight position in the Fund by period
end. Notable holdings included Aventis (2.1%), Sanofi (1.31%) and Takeda
(1.5%).* The Fund also held an overweight to the consumer discretionary sector,
with a meaningful overweight to media, throughout the period. However, this
position detracted from overall Fund performance.
Underweighted sectors during the period included financials, and at period end
it was our largest underweighted position. Within the sector, we underweighted
insurance and diversified financial stocks, and alternated between
underweighting and overweighting banks, ending the period with an overweight.
Holdings at period end included Royal Bank of
- ----------
* WEIGHTINGS REPRESENT A PERCENTAGE OF NET ASSETS AS OF 6/30/03. THE FUND'S
COMPOSITION WILL DIFFER OVER TIME.
82
<Page>
Scotland (2.1%), Barclays (2.0%) and Toronto Dominion (0.89%).*
On a stock level, as we've already mentioned, more recent stock selection
decisions within industries led to the Fund's relative underperformance during
the period. Positive contributions from holdings within banks, insurance and
retailing were overshadowed by the negative impact of stock selection within
consumer durables, tech hardware and utilities.
On a currency management level, we leveraged the expertise of the team of
currency analysts to implement currency allocation decisions for the Fund.
Ultimately, these decisions made a significant contribution to the Fund's
overall performance during the period. Specifically, against a backdrop whereby
the euro moved to historic highs, we overweighted the euro. An overweight to the
undervalued Australian dollar contributed positively to performance, as well. As
the currency moved to our fair value estimate over the year, we pared back this
overweight in stages. An underweight to the Japanese yen, at a time when it
appears that little effort at economic reform is being made in that country,
also had a positive impact on performance.
LOOKING AHEAD
Economic data continues to show that the UK is on a moderately improving path.
The consumer picture has been very solid, with mortgage refinancing helping the
trend continue. In continental Europe, the picture is different. The
strengthening of the euro versus the US dollar has bolstered equity returns, but
is hurting the competitive position of the European export sector. While
companies in Europe have diversified their manufacturing base over the past
decade and can shift production to help offset the unfavorable currency
position, they cannot completely insulate themselves from the effect of a
stronger euro. The Japanese market has bounced off its bottom, but we still see
no evidence of economic or corporate reform. Reinforcing the speculative nature
of its recent market rise, the lowest-quality, financially distressed companies
have been the best performers.
On an industry level, we continue to find attractive valuations in the
pharmaceutical sector. This sector has been battered by investor nervousness
over regulatory issues, company-specific problems, and some scandals that have
resulted in significant fines and penalties. Ultimately, however, we believe
that the demographics are positive and that companies with proprietary products
and healthy research and development will continue to enjoy high returns of
capital that are not currently appreciated by the markets.
- ----------
* WEIGHTINGS REPRESENT A PERCENTAGE OF NET ASSETS AS OF 6/30/03. THE FUND'S
COMPOSITION WILL DIFFER OVER TIME.
83
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION*
ENDED ENDED ENDED ENDED TO
6/30/03 6/30/03 6/30/03 6/30/03 6/30/03
- ---------------------------------------------------------------------------------------------------------
UBS International Equity Class A 6.39% -9.24% -10.61% -3.83% -2.49%
- ---------------------------------------------------------------------------------------------------------
UBS International Equity Class B 5.97 -9.94 N/A N/A -4.73
- ---------------------------------------------------------------------------------------------------------
UBS International Equity Class C 5.83 -10.29 N/A N/A -4.82
- ---------------------------------------------------------------------------------------------------------
UBS International Equity Class Y 6.37 -9.21 -10.48 -3.64 2.39
- ---------------------------------------------------------------------------------------------------------
UBS International Equity Class A** 0.58 -14.23 -12.29 -4.92 -3.40
- ---------------------------------------------------------------------------------------------------------
UBS International Equity Class B** 0.97 -14.24 N/A N/A -7.38
- ---------------------------------------------------------------------------------------------------------
UBS International Equity Class C** 3.71 -12.02 N/A N/A -5.51
- ---------------------------------------------------------------------------------------------------------
MSCI World Ex USA (Free) Index 10.34 -5.53 -13.29 -3.66 2.25
- ---------------------------------------------------------------------------------------------------------
</Table>
* INCEPTION DATE OF UBS INTERNATIONAL EQUITY FUND CLASS A IS 6/30/97. INCEPTION
DATES OF CLASS B AND CLASS C ARE 2/12/02 AND 1/25/02, RESPECTIVELY. INCEPTION
DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE INDEX, IS 8/31/93.
** RETURNS INCLUDE SALES CHARGES.
PERFORMANCE IS NET OF WITHHOLDING TAXES ON DIVIDENDS PAID ON INVESTMENTS.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS International
Equity Fund Class Y shares and the MSCI World Ex USA (Free) Index if you had
invested $10,000 on August 31, 1993, and had reinvested all your income
dividends and capital gain distributions through June 30, 2003. The performance
of Class A, Class B and Class C shares will vary based upon the different
inception dates, class specific expenses and sales charges. No adjustment has
been made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
[CHART]
UBS INTERNATIONAL EQUITY FUND CLASS Y VS. MSCI WORLD EX USA (FREE) INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS INTERNATIONAL EQUITY FUND CLASS Y MSCI WORLD EX USA (FREE) INDEX
$ 10,000 $ 10,000
$ 9,720 $ 9,768
$ 9,970 $ 10,096
$ 9,290 $ 9,232
$ 9,655 $ 9,888
$ 10,336 $ 10,709
$ 10,026 $ 10,657
$ 9,575 $ 10,198
$ 9,845 $ 10,619
$ 9,855 $ 10,569
6/30/1994 $ 9,755 $ 10,688
$ 9,906 $ 10,807
$ 10,198 $ 11,078
$ 9,906 $ 10,752
$ 10,078 $ 11,095
$ 9,745 $ 10,560
$ 9,745 $ 10,628
$ 9,403 $ 10,213
$ 9,363 $ 10,210
$ 9,524 $ 10,840
$ 9,836 $ 11,241
$ 9,846 $ 11,136
6/30/1995 $ 9,745 $ 10,955
$ 10,329 $ 11,618
$ 10,490 $ 11,191
$ 10,662 $ 11,406
$ 10,561 $ 11,111
$ 10,823 $ 11,427
$ 11,261 $ 11,875
$ 11,486 $ 11,956
$ 11,443 $ 11,991
$ 11,593 $ 12,243
$ 12,022 $ 12,604
$ 11,968 $ 12,388
6/30/1996 $ 12,049 $ 12,447
$ 11,715 $ 12,081
$ 11,768 $ 12,133
$ 12,124 $ 12,463
$ 12,092 $ 12,378
$ 12,707 $ 12,895
$ 12,696 $ 12,719
$ 12,628 $ 12,330
$ 12,834 $ 12,513
$ 12,914 $ 12,519
$ 13,005 $ 12,599
$ 13,853 $ 13,432
6/30/1997 $ 14,491 $ 14,144
$ 14,756 $ 14,407
$ 13,720 $ 13,324
$ 14,491 $ 14,072
$ 13,582 $ 13,013
$ 13,352 $ 12,860
$ 13,425 $ 12,982
$ 13,873 $ 13,539
$ 14,606 $ 14,420
$ 15,165 $ 14,887
$ 15,290 $ 15,002
$ 15,290 $ 14,935
6/30/1998 $ 15,184 $ 14,998
$ 15,333 $ 15,097
$ 13,434 $ 13,169
$ 13,109 $ 12,793
$ 14,121 $ 14,128
$ 14,846 $ 14,846
$ 15,357 $ 15,405
$ 15,319 $ 15,403
$ 14,825 $ 15,016
$ 15,256 $ 15,636
$ 15,965 $ 16,312
$ 15,129 $ 15,477
6/30/1999 $ 15,737 $ 16,074
$ 16,196 $ 16,539
$ 16,107 $ 16,584
$ 16,031 $ 16,769
$ 16,413 $ 17,417
$ 16,809 $ 18,024
$ 18,300 $ 19,683
$ 16,914 $ 18,488
$ 16,965 $ 19,006
$ 17,523 $ 19,787
$ 16,836 $ 18,758
$ 16,667 $ 18,304
6/30/2000 $ 17,588 $ 19,094
$ 16,914 $ 18,364
$ 16,978 $ 18,603
$ 16,253 $ 17,639
$ 15,825 $ 17,159
$ 15,747 $ 16,466
$ 16,636 $ 17,032
$ 16,471 $ 17,064
$ 15,518 $ 15,713
$ 14,593 $ 14,647
$ 15,463 $ 15,671
$ 15,035 $ 15,160
6/30/2001 $ 14,748 $ 14,541
$ 14,526 $ 14,286
$ 14,401 $ 13,905
$ 13,195 $ 12,500
$ 13,361 $ 12,806
$ 13,639 $ 13,309
$ 13,810 $ 13,393
$ 13,211 $ 12,712
$ 13,314 $ 12,788
$ 13,913 $ 13,468
$ 14,084 $ 13,551
$ 14,375 $ 13,732
6/30/2002 $ 13,895 $ 13,175
$ 12,458 $ 11,864
$ 12,407 $ 11,844
$ 10,935 $ 10,588
$ 11,671 $ 11,144
$ 12,236 $ 11,657
$ 11,860 $ 11,280
$ 11,230 $ 10,850
$ 10,942 $ 10,636
$ 10,762 $ 10,431
$ 11,770 $ 11,437
$ 12,436 $ 12,149
6/30/2003 $ 12,616 $ 12,447
</Table>
8/31/93 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
84
<Page>
TOP TEN INTERNATIONAL EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- -----------------------------------------------------
Total S.A., Class B 3.0%
BP PLC 2.9
Nestle S.A. 2.9
Shell Transport & Trading Co. PLC 2.2
Vodafone Group PLC 2.2
Royal Bank of Scotland Group PLC 2.1
Aventis S.A. 2.1
Barclays PLC 2.0
GlaxoSmithKline PLC 1.9
Nokia Oyj 1.8
- -----------------------------------------------------
Total 23.1%
</Table>
INDUSTRY DIVERSIFICATION
AS A PERCENT OF NET ASSETS
AS OF JUNE 30, 2003
<Table>
INTERNATIONAL EQUITIES
Aerospace & Defense 0.52%
Appliances & Household Durables 0.38
Autos/Durables 2.91
Banks 14.48
Beverages & Tobacco 2.91
Broadcasting & Publishing 5.04
Chemicals 4.28
Computer Software 0.63
Construction 1.16
Data Processing 0.68
Electric Components 3.75
Electronics 0.33
Energy 4.56
Financial Services 4.64
Food & House Products 4.77
Forest Products 0.93
Health: Drugs 9.57
Health: Non-Drugs 1.70
Housing/Paper 1.07
Insurance 2.55
Machinery & Engineering 1.02
Merchandising 1.42%
Metals Non-Ferrous 1.12
Multi-Industry 0.97
Oil 2.22
Real Estate 1.13
Recreation 2.37
Retail/Apparel 1.70
Services/Miscellaneous 2.08
Telecommunications 9.39
Transportation 1.83
Utilities 2.69
Wholesale & International Trade 0.50
------
Total International Equities 95.30
International Dollar Bonds 0.37
INVESTMENTS COMPANIES 3.76
SHORT-TERM INVESTMENTS 2.71
INVESTMENTS OF CASH COLLATERAL 10.16
------
TOTAL INVESTMENTS 112.30
LIABILITIES, LESS CASH AND
OTHER ASSETS (12.30)
------
NET ASSETS 100.00%
======
</Table>
85
<Page>
UBS INTERNATIONAL EQUITY FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
------------- -------------
EQUITIES -- 99.06%
INTERNATIONAL EQUITIES -- 95.30%
AUSTRALIA -- 2.91%
Lion Nathan Ltd. 68,493 $ 246,211
Mayne Group Ltd. 115,596 212,417
News Corp., Ltd., Preferred 57,155 352,262
QBE Insurance Group Ltd. (c) 100,592 628,746
Rio Tinto Ltd. 14,477 283,600
Westpac Banking Corp. 93,485 1,018,806
-------------
2,742,042
-------------
BELGIUM -- 0.77%
Fortis 42,019 729,582
-------------
CANADA -- 3.30%
Alcan, Inc. 12,240 378,438
Bank of Nova Scotia (c) 16,200 716,556
BCE, Inc. 28,800 658,346
Canadian National Railway Co. 10,900 522,077
Toronto Dominion Bank 30,700 844,123
-------------
3,119,540
-------------
FINLAND -- 3.04%
Nokia Oyj 105,442 1,736,358
Sampo Oyj, Class A 34,960 256,536
UPM-Kymmene Oyj (c) 59,878 873,956
-------------
2,866,850
-------------
FRANCE -- 10.94%
Aventis S.A. (c) 36,018 1,981,629
AXA (c) 16,855 261,493
BNP Paribas (b) (c) 26,797 1,361,683
Cap Gemini S.A. (b) (c) 16,636 590,697
Compagnie de Saint-Gobain 10,063 396,021
France Telecom S.A. (b) 24,523 601,522
Sanofi-Synthelabo S.A. 21,045 1,232,525
Suez S.A. 33,341 530,663
Total S.A. 19,002 2,871,652
Unibail (c) 6,769 501,373
-------------
10,329,258
-------------
GERMANY -- 1.16%
Allianz AG (c) 2,981 247,775
E.on AG (c) 4,976 255,826
Linde AG (c) 16,003 592,479
-------------
1,096,080
-------------
HONG KONG -- 0.87%
Cheung Kong Holdings Ltd. 72,000 433,026
Sun Hung Kai Properties Ltd. 76,000 383,988
-------------
817,014
-------------
IRELAND -- 2.06%
Bank of Ireland 86,435 1,043,203
CRH PLC 57,204 896,676
-------------
1,939,879
-------------
ITALY -- 2.08%
Assicurazioni Generali Spa (c) 22,521 521,898
ENI Spa (c) 95,000 1,436,766
-------------
1,958,664
-------------
JAPAN -- 15.81%
AIFUL Corp. 14,500 $ 618,280
Canon, Inc. 14,000 642,432
Daikin Industries Ltd. 12,000 220,362
Fuji Photo Film Co., Ltd. 38,000 1,098,147
Honda Motor Co., Ltd. 26,900 1,019,321
Kao Corp. 30,000 558,401
Keyence Corp. 1,000 183,219
Mitsubishi Corp. 70,000 485,613
Mitsubishi Tokyo Financial Group, Inc. 62 280,375
Mitsui Fudosan Co., Ltd. 21,000 134,141
Murata Manufacturing Co., Ltd. 17,000 668,249
Nintendo Co., Ltd. 15,700 1,141,462
Nippon Telegraph & Telephone Corp. 262 1,027,708
NTT DoCoMo, Inc. 274 593,296
Rohm Co., Ltd. 7,000 763,106
Sekisui House Ltd. 26,000 197,044
Sompo Japan Insurance, Inc. (c) 135,000 736,415
Sony Corp. (c) 12,800 360,308
Sumitomo Chemical Co., Ltd. 141,000 442,698
Taiheiyo Cement Corp. 600 1,029
Takeda Chemical Industries Ltd. 37,900 1,398,268
Takefuji Corp. 4,980 258,383
Toyota Motor Corp. 66,800 1,730,152
West Japan Railway Co. 97 367,562
-------------
14,925,971
-------------
NETHERLANDS -- 6.84%
ABN AMRO Holding NV 21,721 415,308
Akzo Nobel NV 15,809 419,003
Koninklijke Philips Electronics NV 38,867 739,125
Reed Elsevier NV 134,277 1,583,612
TPG NV 48,352 839,543
VNU NV 51,886 1,598,628
Wolters Kluwer NV 71,760 865,263
-------------
6,460,482
-------------
NORWAY -- 0.41%
Telenor ASA 94,100 391,084
-------------
PORTUGAL -- 0.76%
Electricidade de Portugal S.A. 182,625 390,076
Portugal Telecom, SGPS, S.A. 46,234 331,301
-------------
721,377
-------------
SINGAPORE -- 0.82%
DBS Group Holdings Ltd. 133,000 777,910
-------------
SPAIN -- 2.48%
Banco Bilbao Vizcaya Argentaria S.A. 105,819 1,111,889
Banco Santander Central Hispano S.A. 63,494 556,332
Telefonica S.A. 58,323 677,123
-------------
2,345,344
-------------
SWEDEN -- 3.09%
Nordea AB (c) 150,500 725,713
Svenska Cellulosa AB 29,590 1,010,983
Svenska Handelsbanken AB 34,850 570,316
Swedish Match AB 80,640 609,463
-------------
2,916,475
-------------
</Table>
86
<Page>
<Table>
<Caption>
SHARES VALUE
------------- -------------
SWITZERLAND -- 7.45%
Adecco S.A. 19,647 $ 809,348
Compagnie Financiere Richemont AG 35,392 572,208
Givaudan S.A. 1,070 450,260
Nestle S.A. (c) 13,059 2,694,615
Novartis AG 28,935 1,144,968
Roche Holding AG 13,052 1,023,790
Swiss Reinsurance Co. 6,174 342,076
-------------
7,037,265
-------------
UNITED KINGDOM -- 30.51%
Abbey National PLC 55,147 428,156
Allied Domecq PLC 55,761 307,324
Amersham PLC 47,887 359,344
ARM Holdings PLC (b) 204,180 225,740
AstraZeneca PLC 25,734 1,031,891
Barclays PLC 260,572 1,934,909
BOC Group PLC 29,665 380,597
BP PLC 399,583 2,770,990
BT Group PLC 234,907 789,794
Carlton Communications PLC 141,967 354,912
Centrica PLC 169,383 491,230
Compass Group PLC 90,380 487,313
Diageo PLC 71,127 759,380
Dixons Group PLC 141,410 308,017
Electrocomponents PLC 87,764 469,950
Gallaher Group PLC 161,512 1,585,776
GlaxoSmithKline PLC 90,881 1,834,086
HSBC Holdings PLC 60,513 714,960
Invensys PLC 440,363 148,965
Kingfisher PLC (b) 226,046 1,034,162
Lloyds TSB Group PLC 75,847 538,492
National Grid Transco PLC 134,115 909,577
Prudential PLC 68,061 412,178
Rentokil Initial PLC 368,577 1,151,024
Rio Tinto PLC 21,001 395,062
Rolls-Royce Group PLC 232,788 492,650
Royal Bank of Scotland Group PLC 71,461 2,004,648
Scottish & Southern Energy PLC 95,177 980,024
Shell Transport & Trading Co. PLC 317,546 2,095,979
Tesco PLC 370,779 1,341,451
Vodafone Group PLC 1,055,103 2,063,162
-------------
28,801,743
-------------
Total International Equities
(Cost $76,740,399) 89,976,560
-------------
INVESTMENT COMPANIES -- 3.76%
JAPAN -- 0.80%
iShares MSCI Japan Index Fund 104,000 756,080
-------------
UNITED KINGDOM -- 1.45%
iShares MSCI United Kingdom Index Fund 104,500 1,372,085
-------------
OTHER -- 1.51%
iShares MSCI EMU Index Fund 29,000 1,421,000
-------------
Total Investment Companies
(Cost $3,569,425) 3,549,165
-------------
<Caption>
FACE
AMOUNT VALUE
-------------- -------------
INTERNATIONAL BONDS -- 0.37%
CAYMAN ISLANDS -- 0.37%
SMFG Finance Ltd., 144A,
2.25%, due 07/11/05
(Cost $379,971) JPY 45,000,000 $ 348,938
-------------
<Caption>
SHARES
--------------
SHORT-TERM INVESTMENT -- 2.71%
OTHER -- 2.71%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $2,559,264) 2,559,264 2,559,264
-------------
INVESTMENTS OF CASH COLLATERAL FOR
SECURITIES LOANED -- 10.16%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $9,586,388) 9,586,388 9,586,388
-------------
Total Investments
(Cost $92,835,447) -- 112.30% (a) 106,020,315
Liabilities, less cash and
other assets -- (12.30)% (11,608,839)
-------------
Net Assets -- 100% $ 94,411,476
=============
</Table>
87
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $94,944,380; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 15,267,829
Gross unrealized depreciation (4,191,894)
-------------
Net unrealized appreciation $ 11,075,935
=============
</Table>
(b) Non-income producing security.
(c) Security, or portion thereof, was on loan at June 30, 2003.
% Represents a percentage of net assets.
FORWARD FOREIGN CURRENCY CONTRACTS
UBS International Equity Fund had the following open forward foreign currency
contracts as of June 30, 2003:
<Table>
<Caption>
SETTLEMENT LOCAL CURRENT UNREALIZED
DATE CURRENCY VALUE GAIN/(LOSS)
------------ ------------ ------------ -------------
FORWARD FOREIGN CURRENCY BUY CONTRACTS:
Australian Dollar (AUD) 12/03/03 5,400,000 $ 3,567,904 $ 144,898
Canadian Dollar (CAD) 12/03/03 3,250,000 2,370,890 37,441
Danish Krone (DKK) 12/03/03 4,500,000 692,475 (15,830)
Euro (EUR) 12/03/03 1,270,000 1,452,195 (30,609)
Hong Kong Dollar (HKD) 12/03/03 3,600,000 461,536 178
Japanese Yen (JPY) 12/03/03 252,800,000 2,115,933 (25,351)
Swiss Franc (CHF) 12/03/03 1,150,000 851,969 (35,322)
FORWARD FOREIGN CURRENCY SALE CONTRACTS:
British Pound (GBP) 12/03/03 5,750,000 9,391,144 (47,193)
Swedish Krona (SEK) 12/03/03 9,200,000 1,140,725 27,960
Swiss Franc (CHF) 12/03/03 1,800,000 1,333,517 40,758
-----------
Total net unrealized gain on Forward
Foreign Currency Contracts $ 96,930
===========
</Table>
See accompanying notes to financial statements.
88
<Page>
UBS U.S. VALUE EQUITY FUND
Over the 12 months ended June 30, 2003, Class Y shares of UBS U.S. Value Equity
Fund returned 0.89%, outperforming the 1.02% decline of the Russell 1000 Value
Index over the same period. Since the Fund's inception on June 29, 2001 through
June 30, 2003, its Class Y shares produced a decline of 2.72% on an annualized
basis. This compares to the 5.07% decline in the Fund's benchmark. (Returns for
all share classes over various time periods are shown on page 91. Please note
that these returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.)
During the review period, an overweight to healthcare--specifically to drugs and
medical products--and an underweight to defense and aerospace, helped drive the
Fund's relative outperformance over the Index.
12-MONTH MARKET REVIEW
Value stocks took their lead from the overall US equity market during the fiscal
year, alternately rising and falling over the four quarters that comprised the
12-month period.
The period began on a negative note for value stocks (and the broader equity
market as a whole) as the weak economy, anemic corporate profits, accounting
irregularities and conflict in the Middle East caused investors to flee stocks
in favor of the relative security offered by bonds. However, after falling to a
five-year low in early October 2002, stocks staged a rally as compelling
valuations in certain downtrodden sectors attracted investors. When all was said
and done, investors drove value stocks to a 9.22% gain over the fourth quarter.
The tide turned again in the first quarter of 2003, when geopolitical issues
came to the fore at the start of the year. Anticipation of the war in Iraq,
saber rattling in North Korea and renewed concerns about terrorism preoccupied
the country. Investor aversion to risk resurfaced, and value stocks fell 4.86%.
However, the majority of sectors covered in the Index rebounded sharply during
the second quarter of 2003, in a reversal that was attributed in large part to
investor relief following the short duration of major conflict in Iraq. With
this uncertainty lifted, investors grew increasingly optimistic about the
potential for an economic revival and subsequent upturn in corporate profits. At
the same time, their appetite for risk increased as the yields available from
many fixed income securities shrank.
The breadth of the market's rebound in the second quarter of 2003 took many by
surprise. Some of the poorest performing sectors during the lengthy bear market
were the ones that performed strongly during the second half of the reporting
period, including stocks in the information technology, telecommunication
services, utility and industrial areas.
SEARCH FOR INTRINSIC VALUE HELPED RELATIVE PERFORMANCE
Our focus on finding stocks with compelling intrinsic values served the Fund
well amid the volatility that characterized the reporting period. Using our
extensive network of analysts and investment specialists, we thoroughly review a
company's underlying fundamentals and employ forward-looking projections to
determine what we believe is the true value of a company's underlying stock.
During the reporting period, our valuation analysis directed us to attractive
opportunities in banks, pharmaceuticals and utilities, which resulted in
overweights to these sectors. In pharmaceuticals, a number of drug failures from
a small handful of producers were dragging down the entire sector. However, the
in-depth analysis conducted by our global equity analysts uncovered a number of
solid companies selling at very attractive valuations. In particular, we focused
on firms with compelling and established drug pipelines. These holdings
subsequently rose in value when investors realized their true value.
The Fund's selective holdings in the bank sector also aided returns. In this
area, our research directed us to companies that were enjoying the benefits of
earlier consolidations, and that were introducing superior new products.
While we enjoyed strong performance from our positions in the two aforementioned
sectors, our strategy to overweight utilities detracted from performance.
89
<Page>
Despite the fact that utilities are most often among the strongest relative
performers during periods of economic weakness, companies in the utility
industry did not perform well over the period. However, we maintained our
exposure to this sector, since our research team determined that the
fundamentals in this industry were appealing, especially in light of the
proposal to lower the tax rates on corporate dividend payments. The exception
was those companies that had exposure to trading operations, which suffered
extensively in the wake of Enron and the California electricity crisis.
Sectors that for the most part did not meet our intrinsic value criteria over
the period included retailing, food and beverage, and computer hardware, so we
reduced our positions in those areas. In general, we were also cautious about
the technology sector, as the sharp gains it posted during the period did not
seem warranted from a market fundamental perspective. These positions all
ultimately benefited performance on a relative basis.
LOOKING AHEAD
During the reporting period, it was clear that market fundamentals were often
not the driving forces behind stock prices. We have found that during periods of
extreme optimism or pessimism, many investors lose sight of the critical factors
that should dictate the fair value of a stock's price. It is during those times
that our disciplined investment process and globally integrated investment
platform can be especially valuable in helping us to identify compelling
intrinsic values in the marketplace. As we move into the second half of 2003, we
expect to continue emphasizing our "bottom-up" investment process, which focuses
on a company's cash flow to identify intrinsic value that aims to lead to
superior risk-adjusted returns over an entire market cycle.
90
<Page>
TOTAL RETURN
<Table>
<Caption>
6 MONTHS 1 YEAR INCEPTION*
ENDED ENDED TO
6/30/03 6/30/03 6/30/03
- --------------------------------------------------------------------------------------
UBS U.S. Value Equity Fund Class A 12.17% 0.61% -3.46%
- --------------------------------------------------------------------------------------
UBS U.S. Value Equity Fund Class B 11.77 -0.17 -2.02
- --------------------------------------------------------------------------------------
UBS U.S. Value Equity Fund Class C 11.76 -0.13 -2.76
- --------------------------------------------------------------------------------------
UBS U.S. Value Equity Fund Class Y 12.41 0.89 -2.72
- --------------------------------------------------------------------------------------
UBS U.S. Value Equity Fund Class A** 6.04 -4.97 -6.90
- --------------------------------------------------------------------------------------
UBS U.S. Value Equity Fund Class B** 6.77 -5.11 -4.40
- --------------------------------------------------------------------------------------
UBS U.S. Value Equity Fund Class C** 9.69 -2.07 -3.40
- --------------------------------------------------------------------------------------
Russell 1000 Value Index 11.57 -1.02 -5.07
- --------------------------------------------------------------------------------------
</Table>
* INCEPTION DATES OF UBS U.S. VALUE EQUITY FUND CLASS A IS 12/07/01. INCEPTION
DATES OF CLASS B AND CLASS C ARE 11/08/01 AND 12/12/01, RESPECTIVELY.
INCEPTION DATE OF CLASS Y AND, FOR ILLUSTRATION PURPOSES, THE INDEX, IS
6/29/01.
** RETURNS INCLUDE SALES CHARGES.
TOTAL RETURN INCLUDES REINVESTMENT OF ALL CAPITAL GAIN AND INCOME DISTRIBUTIONS.
TOTAL RETURN DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
ALL TOTAL RETURNS IN EXCESS OF 1 YEAR ARE AVERAGE ANNUALIZED RETURNS.
ALL TOTAL RETURNS LESS THAN 1 YEAR ARE CUMULATIVE RETURNS.
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
This chart shows the growth in the value of an investment in UBS U.S. Value
Equity Fund Class Y shares and the Russell 1000 Value Index if you had invested
$10,000 on June 29, 2001, and had reinvested all your income dividends and
capital gain distributions through June 30, 2003. The performance of Class A,
Class B and Class C shares will vary based upon the different inception dates,
class specific expenses and sales charges. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
[CHART]
UBS U.S. VALUE EQUITY FUND CLASS Y VS. RUSSELL 1000 VALUE INDEX
Wealth Value With Dividends
<Table>
<Caption>
UBS U.S. VALUE EQUITY FUND CLASS Y RUSSELL 1000 VALUE INDEX
$ 10,000 $ 10,000
$ 10,110 $ 9,979
$ 9,730 $ 9,579
$ 9,180 $ 8,905
$ 9,170 $ 8,828
$ 9,800 $ 9,341
12/31/2001 $ 9,970 $ 9,561
$ 9,870 $ 9,488
$ 9,900 $ 9,503
$ 10,330 $ 9,953
$ 10,020 $ 9,611
$ 9,990 $ 9,659
6/30/2002 $ 9,380 $ 9,105
$ 8,640 $ 8,258
$ 8,810 $ 8,321
$ 7,670 $ 7,396
$ 8,260 $ 7,944
$ 8,750 $ 8,444
12/31/2002 $ 8,419 $ 8,077
$ 8,246 $ 7,882
$ 8,043 $ 7,672
$ 8,084 $ 7,685
$ 8,865 $ 8,361
$ 9,352 $ 8,901
6/30/2003 $ 9,463 $ 9,033
</Table>
6/29/01 = $10,000
FUND RETURNS ARE NET OF ALL FEES AND COSTS, WHILE THE INDEX RETURNS ARE BASED
SOLELY ON MARKET RETURNS WITHOUT DEDUCTION FOR FEES OR TRANSACTION COSTS FOR
REBALANCING.
91
<Page>
TOP TEN EQUITY HOLDINGS
AS OF JUNE 30, 2003
<Table>
<Caption>
PERCENTAGE OF
NET ASSETS
- ----------------------------------------------------
Citigroup, Inc. 5.8%
Nextel Communications, Inc., Class A 4.9
J.P. Morgan Chase & Co. 4.4
Wells Fargo & Co. 4.1
GreenPoint Financial Corp. 3.4
UnitedHealth Group, Inc. 3.1
ExxonMobil Corp. 2.9
ConocoPhillips 2.8
Morgan Stanley 2.8
SPDR Trust, Series 1 2.6
- ----------------------------------------------------
Total 36.8%
</Table>
92
<Page>
UBS U.S. VALUE EQUITY FUND -- SCHEDULE OF INVESTMENTS
JUNE 30, 2003
<Table>
<Caption>
SHARES VALUE
------------ -------------
U.S. EQUITIES -- 98.47%
AEROSPACE & MILITARY -- 2.33%
United Technologies Corp. 2,500 $ 177,075
-------------
AUTOS/DURABLES -- 1.01%
Johnson Controls, Inc. 900 77,040
-------------
BANKS -- 12.18%
Bank of America Corp. 900 71,127
FleetBoston Financial Corp. 4,485 133,249
GreenPoint Financial Corp. 5,100 259,794
PNC Financial Services Group 3,000 146,430
Wells Fargo & Co. 6,250 315,000
-------------
925,600
-------------
CAPITAL GOODS -- 3.76%
Illinois Tool Works, Inc. 2,850 187,673
Pentair, Inc. 2,500 97,650
-------------
285,323
-------------
CHEMICALS -- 2.24%
Dow Chemical Co. (The) 5,500 170,280
-------------
COMPUTER SYSTEMS -- 1.99%
Hewlett-Packard Co. 7,100 151,230
-------------
CONSTRUCTION -- 1.68%
Martin Marietta Materials, Inc. 3,800 127,718
-------------
CONSUMER -- 1.17%
Kimberly-Clark Corp. 1,700 88,638
-------------
ENERGY -- 15.38%
ConocoPhillips 3,949 216,405
DTE Energy Co. 2,550 98,532
Exelon Corp. 3,150 188,402
ExxonMobil Corp. 6,150 220,846
FirstEnergy Corp. 4,700 180,715
Progress Energy, Inc. 3,400 149,260
Sempra Energy 4,000 114,120
-------------
1,168,280
-------------
FINANCIAL SERVICES -- 20.84%
American International Group, Inc. 2,476 136,626
Anthem, Inc.(b) 1,000 77,150
Citigroup, Inc. 10,296 440,669
Freddie Mac 3,350 170,079
Hartford Financial Services Group, Inc. (The) 2,250 113,310
J.P. Morgan Chase & Co. 9,700 331,546
Mellon Financial Corp. 3,600 99,900
Morgan Stanley 5,000 213,750
-------------
1,583,030
-------------
HEALTH: DRUGS -- 6.15%
Bristol-Myers Squibb Co. 5,600 152,040
Cephalon, Inc. (b) 2,000 82,320
SICOR, Inc. (b) 3,400 69,156
Wyeth 3,600 163,980
-------------
467,496
-------------
HEALTH: NON-DRUGS -- 5.61%
Baxter International, Inc. 1,750 $ 45,500
Johnson & Johnson 2,800 144,760
UnitedHealth Group, Inc. 4,700 236,175
-------------
426,435
-------------
LEISURE & TOURISM -- 0.94%
Walt Disney Co. (The) 3,600 71,100
-------------
MEDIA AND ENTERTAINMENT -- 1.49%
Viacom, Inc., Class B (b) 2,600 113,516
-------------
METALS NON-FERROUS -- 2.03%
Masco Corp. 6,450 153,833
-------------
RETAIL/APPAREL -- 1.36%
Newell Rubbermaid, Inc. 3,700 103,600
-------------
SERVICES/MISCELLANEOUS -- 4.21%
First Data Corp. 3,000 124,320
SPDR Trust, Series 1 2,000 195,260
-------------
319,580
-------------
TELECOMMUNICATIONS- SERVICES -- 9.88%
BellSouth Corp. 4,400 117,172
Motorola, Inc. 7,800 73,554
Nextel Communications, Inc., Class A (b) 20,600 372,448
SBC Communications, Inc. 7,350 187,792
-------------
750,966
-------------
TRANSPORTATION -- 3.68%
Burlington Northern Santa Fe Corp. 4,700 133,668
Norfolk Southern Corp. 7,600 145,920
-------------
279,588
-------------
UTILITIES -- 0.54%
CMS Energy Corp. 5,050 40,905
-------------
Total U.S. Equities (Cost $7,034,620) 7,481,233
-------------
SHORT-TERM INVESTMENTS -- 2.57%
OTHER -- 2.57%
UBS Supplementary Trust
U.S. Cash Management Prime Fund
(Cost $195,394) 195,394 195,394
-------------
Total Investments
(Cost $7,230,014) -- 101.04% (a) 7,676,627
Liabilities, less cash and
other assets -- (1.04)% (79,283)
-------------
Net Assets -- 100% $ 7,597,344
=============
</Table>
93
<Page>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $7,413,018; and net
unrealized appreciation consisted of:
<Table>
Gross unrealized appreciation $ 693,541
Gross unrealized depreciation (429,932)
-------------
Net unrealized appreciation $ 263,609
=============
</Table>
(b) Non-income producing.
% Represents a percentage of net assets.
See accompanying notes to financial statements
94
<Page>
This page intentionally left blank.
<Page>
THE UBS FUNDS -- FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2003
<Table>
<Caption>
UBS
GLOBAL UBS UBS
ALLOCATION GLOBAL EQUITY GLOBAL BOND
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost:
Unaffiliated issuers $ 427,675,778 $ 370,351,725 $ 52,833,873
Affiliated issuers 99,351,136 3,192,158 655,174
Investments of cash collateral received for securities
loaned, at cost 32,953,029 -- --
Foreign currency, at cost 1,199,706 5,646,946 317,259
--------------- --------------- ---------------
$ 561,179,649 $ 379,190,829 $ 53,806,306
=============== =============== ===============
Investments, at value:
Unaffiliated issuers $ 449,153,986 $ 416,117,169 $ 55,783,899
Affiliated issuers 108,765,147 3,192,158 655,174
Investments of cash collateral received for securities
loaned, at value 32,953,029 -- --
Foreign currency, at value 1,196,049 5,620,882 317,048
Cash 183,189 27,112 --
Receivables:
Investment securities sold 3,081,376 2,271,154 794,630
Due from Advisor -- -- --
Dividends 489,854 1,024,362 499
Interest 1,005,776 6,102 977,868
Fund shares sold 30,555,485 424,053 868,438
Variation margin 20,984 -- --
Other assets 2,201 688 430
Net unrealized appreciation on forward foreign
currency contracts 472,875 867,025 40,404
--------------- --------------- ---------------
TOTAL ASSETS 627,879,951 429,550,705 59,438,390
--------------- --------------- ---------------
LIABILITIES:
Payables:
Cash collateral from securities loaned 32,953,029 -- --
Investment securities purchased 31,616,579 2,197,571 338,990
Investment advisory fees 386,126 229,944 15,472
Fund shares redeemed 5,651,207 1,627,796 1,472,494
Distribution and service fee 172,796 229,107 5,452
Trustees' fees 625 1,985 1,215
Due to custodian bank -- -- --
Loan payable -- -- 5,259,310
Accrued expenses 536,695 477,471 112,532
Net unrealized depreciation on forward foreign
currency contracts 738,474 321,072 136,549
--------------- --------------- ---------------
TOTAL LIABILITIES 72,055,531 5,084,946 7,342,014
--------------- --------------- ---------------
NET ASSETS $ 555,824,420 $ 424,465,759 $ 52,096,376
=============== =============== ===============
NET ASSETS CONSIST OF:
Paid in Capital $ 533,753,109 $ 1,293,729,530 $ 48,201,581
Accumulated/undistributed net investment
income (loss) 7,743,158 4,343,999 2,541,437
Accumulated/undistributed net realized gain (loss) (16,310,483) (919,917,665) (1,520,660)
Net unrealized appreciation (depreciation) 30,638,636 46,309,895 2,874,018
--------------- --------------- ---------------
NET ASSETS $ 555,824,420 $ 424,465,759 $ 52,096,376
=============== =============== ===============
</Table>
See accompanying notes to financial statements
96
<Page>
<Table>
<Caption>
UBS UBS UBS
U.S. BALANCED U.S. EQUITY U.S LARGE CAP
FUND FUND GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost:
Unaffiliated issuers $ 28,705,553 $ 81,257,527 $ 3,640,220
Affiliated issuers 749,445 6,558,296 145,024
Investments of cash collateral received for securities
loaned, at cost -- -- --
Foreign currency, at cost -- -- --
--------------- --------------- ---------------
$ 29,454,998 $ 87,815,823 $ 3,785,244
=============== =============== ===============
Investments, at value:
Unaffiliated issuers $ 30,489,886 $ 99,087,959 $ 3,619,647
Affiliated issuers 749,445 6,558,296 145,024
Investments of cash collateral received for securities
loaned, at value -- -- --
Foreign currency, at value -- -- --
Cash 52,821 -- --
Receivables:
Investment securities sold 405,028 364,403 28,124
Due from Advisor -- -- 7,652
Dividends 20,480 98,680 1,796
Interest 97,750 6,306 144
Fund shares sold 99,199 420,262 2,759
Variation margin -- 10,135 --
Other assets 285 1,149 48
Net unrealized appreciation on forward foreign
currency contracts -- -- --
--------------- --------------- ---------------
TOTAL ASSETS 31,914,894 106,547,190 3,805,194
--------------- --------------- ---------------
LIABILITIES:
Payables:
Cash collateral from securities loaned -- -- --
Investment securities purchased 602,380 -- 41,445
Investment advisory fees 7,506 54,455 --
Fund shares redeemed 116,892 539,604 25,795
Distribution and service fee 5,766 2,253 1,979
Trustees' fees 2,971 2,844 496
Due to custodian bank -- -- --
Loan payable -- -- --
Accrued expenses 74,195 191,995 41,633
Net unrealized depreciation on forward foreign
currency contracts -- -- --
--------------- --------------- ---------------
TOTAL LIABILITIES 809,710 791,151 111,348
--------------- --------------- ---------------
NET ASSETS $ 31,105,184 $ 105,756,039 $ 3,693,846
=============== =============== ===============
NET ASSETS CONSIST OF:
Paid in Capital $ 31,718,277 $ 97,315,051 $ 7,765,338
Accumulated/undistributed net investment
income (loss) 251,753 1,010,080 1,979
Accumulated/undistributed net realized gain (loss) (2,649,179) (10,246,356) (4,052,898)
Net unrealized appreciation (depreciation) 1,784,333 17,677,264 (20,573)
--------------- --------------- ---------------
NET ASSETS $ 31,105,184 $ 105,756,039 $ 3,693,846
=============== =============== ===============
<Caption>
UBS UBS UBS
U.S. SMALL CAP U.S. BOND HIGH YIELD
GROWTH FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost:
Unaffiliated issuers $ 45,168,201 $ 113,622,871 $ 233,496,420
Affiliated issuers 7,037,939 2,285,654 --
Investments of cash collateral received for securities
loaned, at cost -- -- --
Foreign currency, at cost -- -- --
--------------- --------------- ---------------
$ 52,206,140 $ 115,908,525 $ 233,496,420
=============== =============== ===============
Investments, at value:
Unaffiliated issuers $ 50,587,695 $ 117,187,579 $ 177,506,877
Affiliated issuers 7,037,939 2,285,654 --
Investments of cash collateral received for securities
loaned, at value -- -- --
Foreign currency, at value -- -- --
Cash 3,837 922,352 --
Receivables:
Investment securities sold 1,067,536 1,144,745 7,023,272
Due from Advisor -- -- --
Dividends 5,734 -- 60,755
Interest 2,292 996,179 3,758,246
Fund shares sold 200,614 532,979 784,699
Variation margin -- -- --
Other assets 471 1,027 1,998
Net unrealized appreciation on forward foreign
currency contracts -- -- --
--------------- --------------- ---------------
TOTAL ASSETS 58,906,118 123,070,515 189,135,847
--------------- --------------- ---------------
LIABILITIES:
Payables:
Cash collateral from securities loaned -- -- --
Investment securities purchased 6,264,380 4,124,337 4,949,328
Investment advisory fees 40,968 34,284 31,489
Fund shares redeemed 1,001,317 1,822,821 3,019,175
Distribution and service fee 4,232 11,503 83,721
Trustees' fees 1,285 1,266 1,299
Due to custodian bank -- -- 563,057
Loan payable -- -- --
Accrued expenses 78,458 122,637 261,133
Net unrealized depreciation on forward foreign
currency contracts -- -- --
--------------- --------------- ---------------
TOTAL LIABILITIES 7,390,640 6,116,848 8,909,202
--------------- --------------- ---------------
NET ASSETS $ 51,515,478 $ 116,953,667 $ 180,226,645
=============== =============== ===============
NET ASSETS CONSIST OF:
Paid in Capital $ 49,050,132 $ 113,702,481 $ 463,506,138
Accumulated/undistributed net investment
income (loss) -- 90,878 29,500
Accumulated/undistributed net realized gain (loss) (2,954,148) (404,400) (227,319,450)
Net unrealized appreciation (depreciation) 5,419,494 3,564,708 (55,989,543)
--------------- --------------- ---------------
NET ASSETS $ 51,515,478 $ 116,953,667 $ 180,226,645
=============== =============== ===============
<Caption>
UBS UBS
INTERNATIONAL U.S. VALUE
EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost:
Unaffiliated issuers $ 80,689,795 $ 7,034,620
Affiliated issuers 2,559,264 195,394
Investments of cash collateral received for securities
loaned, at cost 9,586,388 --
Foreign currency, at cost 675,799 --
--------------- ---------------
$ 93,511,246 $ 7,230,014
=============== ===============
Investments, at value:
Unaffiliated issuers $ 93,874,663 $ 7,481,233
Affiliated issuers 2,559,264 195,394
Investments of cash collateral received for securities
loaned, at value 9,586,388 --
Foreign currency, at value 678,307 --
Cash -- --
Receivables:
Investment securities sold 765,691 --
Due from Advisor -- 24,083
Dividends 369,274 9,791
Interest 11,581 170
Fund shares sold 1,555,842 33,685
Variation margin -- --
Other assets 1,078 89
Net unrealized appreciation on forward foreign
currency contracts 251,235 --
--------------- ---------------
TOTAL ASSETS 109,653,323 7,744,445
--------------- ---------------
LIABILITIES:
Payables:
Cash collateral from securities loaned 9,586,388 --
Investment securities purchased 4,071,328 --
Investment advisory fees 154,693 1,642
Fund shares redeemed 1,049,140 78,894
Distribution and service fee 1,533 2,772
Trustees' fees 4,815 --
Due to custodian bank 21 525
Loan payable -- --
Accrued expenses 219,624 63,268
Net unrealized depreciation on forward foreign
currency contracts 154,305 --
--------------- ---------------
TOTAL LIABILITIES 15,241,847 147,101
--------------- ---------------
NET ASSETS $ 94,411,476 $ 7,597,344
=============== ===============
NET ASSETS CONSIST OF:
Paid in Capital $ 98,171,359 $ 9,061,485
Accumulated/undistributed net investment
income (loss) 2,126,527 83,688
Accumulated/undistributed net realized gain (loss) (19,198,697) (1,994,442)
Net unrealized appreciation (depreciation) 13,312,287 446,613
--------------- ---------------
NET ASSETS $ 94,411,476 $ 7,597,344
=============== ===============
</Table>
97
<Page>
THE UBS FUNDS -- FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
JUNE 30, 2003
<Table>
<Caption>
UBS
GLOBAL UBS UBS
ALLOCATION GLOBAL EQUITY GLOBAL BOND
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A:
Net assets $ 175,415,453 $ 123,755,651 $ 11,659,483
Shares outstanding 16,415,820 13,916,183 1,138,243
Net asset value per share (NAV per share / shares
outstanding) $ 10.69 $ 8.89 $ 10.24
Offering price per share (NAV per share / maximum
sales charge)(a) $ 11.31 $ 9.41 $ 10.72
Redemption proceeds per share $ 10.69 $ 8.89 $ 10.24
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B:
Net assets $ 49,573,308 $ 144,231,911 $ 1,755,009
Shares outstanding 4,699,644 16,352,726 171,211
Net asset value per share (NAV per share / shares
outstanding) $ 10.55 $ 8.82 $ 10.25
Offering price per share $ 10.55 $ 8.82 $ 10.25
Redemption proceeds per share
(after maximum redemption charge)(a) $ 10.02 $ 8.38 $ 9.74
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C:
Net assets $ 137,077,671 $ 93,604,705 $ 3,197,982
Shares outstanding 12,980,335 10,646,430 312,551
Net asset value per share (NAV per share / shares
outstanding) $ 10.56 $ 8.79 $ 10.23
Offering price per share (NAV per share / maximum
sales charge)(a) $ 10.67 $ 8.88 $ 10.33
Redemption proceeds per share
(after maximum redemption charge)(a) $ 10.45 $ 8.70 $ 10.13
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y:
Net assets $ 193,757,988 $ 62,873,492 $ 35,483,902
Shares outstanding 17,952,632 6,992,842 3,179,678
Net asset value per share (NAV per share / shares
outstanding) $ 10.79 $ 8.99 $ 11.16
Offering price per share $ 10.79 $ 8.99 $ 11.16
Redemption proceeds per share $ 10.79 $ 8.99 $ 11.16
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
(a) For Class A, the maximum sales charge is 5.50% of offering price, except
for the UBS Global Bond Fund, UBS U.S. Bond Fund, and the UBS High Yield
Fund which is 4.50% of offering price, Class C maximum sales charge is
1.00%. Classes B and Y have no sales charges. For Class B, the maximum
redemption charge is 5.00%, Class C maximum redemption charge is 1.00%,
except for UBS Global Bond Fund, UBS U.S. Bond and UBS High Yield Fund
which is 0.75%. Classes A and Y have no redemption charges.
See accompanying notes to financial statements
98
<Page>
<Table>
<Caption>
UBS UBS UBS
U.S. BALANCED U.S. EQUITY U.S LARGE CAP
FUND FUND GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A:
Net assets $ 4,163,671 $ 4,702,494 $ 1,163,221
Shares outstanding 446,629 345,087 181,982
Net asset value per share (NAV per share / shares
outstanding) $ 9.32 $ 13.63 $ 6.39
Offering price per share (NAV per share / maximum
sales charge)(a) $ 9.86 $ 14.42 $ 6.76
Redemption proceeds per share $ 9.32 $ 13.63 $ 6.39
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B:
Net assets $ 2,732,975 $ 634,883 $ 320,656
Shares outstanding 295,839 47,197 50,714
Net asset value per share (NAV per share / shares
outstanding) $ 9.24 $ 13.45 $ 6.32
Offering price per share $ 9.24 $ 13.45 $ 6.32
Redemption proceeds per share
(after maximum redemption charge)(a) $ 8.78 $ 12.78 $ 6.00
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C:
Net assets $ 1,880,955 $ 1,020,380 $ 266,717
Shares outstanding 203,421 75,945 42,208
Net asset value per share (NAV per share / shares
outstanding) $ 9.25 $ 13.44 $ 6.32
Offering price per share (NAV per share / maximum
sales charge)(a) $ 9.34 $ 13.58 $ 6.38
Redemption proceeds per share
(after maximum redemption charge)(a) $ 9.16 $ 13.31 $ 6.26
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y:
Net assets $ 22,327,583 $ 99,398,282 $ 1,943,252
Shares outstanding 2,379,105 7,240,655 299,194
Net asset value per share (NAV per share / shares
outstanding) $ 9.38 $ 13.73 $ 6.49
Offering price per share $ 9.38 $ 13.73 $ 6.49
Redemption proceeds per share $ 9.38 $ 13.73 $ 6.49
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
UBS UBS UBS
U.S. SMALL CAP U.S. BOND HIGH YIELD
GROWTH FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A:
Net assets $ 9,841,092 $ 31,336,691 $ 76,308,943
Shares outstanding 983,944 2,851,296 11,163,330
Net asset value per share (NAV per share / shares
outstanding) $ 10.00 $ 10.99 $ 6.84
Offering price per share (NAV per share / maximum
sales charge)(a) $ 10.58 $ 11.51 $ 7.16
Redemption proceeds per share $ 10.00 $ 10.99 $ 6.84
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B:
Net assets $ 1,131,982 $ 3,646,308 $ 13,130,371
Shares outstanding 114,500 332,374 1,921,266
Net asset value per share (NAV per share / shares
outstanding) $ 9.89 $ 10.97 $ 6.83
Offering price per share $ 9.89 $ 10.97 $ 6.83
Redemption proceeds per share
(after maximum redemption charge)(a) $ 9.40 $ 10.42 $ 6.49
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C:
Net assets $ 757,125 $ 3,163,865 $ 18,968,737
Shares outstanding 76,668 288,252 2,775,183
Net asset value per share (NAV per share / shares
outstanding) $ 9.88 $ 10.98 $ 6.84
Offering price per share (NAV per share / maximum
sales charge)(a) $ 9.98 $ 11.09 $ 6.89
Redemption proceeds per share
(after maximum redemption charge)(a) $ 9.78 $ 10.90 $ 6.79
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y:
Net assets $ 39,785,279 $ 78,806,803 $ 71,818,594
Shares outstanding 3,918,764 7,159,580 10,447,692
Net asset value per share (NAV per share / shares
outstanding) $ 10.15 $ 11.01 $ 6.87
Offering price per share $ 10.15 $ 11.01 $ 6.87
Redemption proceeds per share $ 10.15 $ 11.01 $ 6.87
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
UBS UBS
INTERNATIONAL U.S. VALUE
EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------
CLASS A:
Net assets $ 3,146,452 $ 1,072,523
Shares outstanding 450,167 115,199
Net asset value per share (NAV per share / shares
outstanding) $ 6.99 $ 9.31
Offering price per share (NAV per share / maximum
sales charge)(a) $ 7.40 $ 9.85
Redemption proceeds per share $ 6.99 $ 9.31
- -----------------------------------------------------------------------------------------------------------
CLASS B:
Net assets $ 352,033 $ 709,121
Shares outstanding 50,897 76,980
Net asset value per share (NAV per share / shares
outstanding) $ 6.92 $ 9.21
Offering price per share $ 6.92 $ 9.21
Redemption proceeds per share
(after maximum redemption charge)(a) $ 6.57 $ 8.75
- -----------------------------------------------------------------------------------------------------------
CLASS C:
Net assets $ 399,110 $ 1,025,446
Shares outstanding 57,819 111,184
Net asset value per share (NAV per share / shares
outstanding) $ 6.90 $ 9.22
Offering price per share (NAV per share / maximum
sales charge)(a) $ 6.97 $ 9.31
Redemption proceeds per share
(after maximum redemption charge)(a) $ 6.83 $ 9.13
- -----------------------------------------------------------------------------------------------------------
CLASS Y:
Net assets $ 90,513,881 $ 4,790,254
Shares outstanding 12,904,913 513,457
Net asset value per share (NAV per share / shares
outstanding) $ 7.01 $ 9.33
Offering price per share $ 7.01 $ 9.33
Redemption proceeds per share $ 7.01 $ 9.33
- -----------------------------------------------------------------------------------------------------------
</Table>
99
<Page>
THE UBS FUNDS -- FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
JUNE 30, 2003
<Table>
<Caption>
UBS
GLOBAL UBS UBS
ALLOCATION GLOBAL EQUITY GLOBAL BOND
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 4,047,357 $ 5,194,552 $ --
Interest 1,641,435 255 1,535,338
Securities lending-net 42,830 -- --
Foreign tax withheld (180,560) (370,723) --
--------------- --------------- ---------------
TOTAL INCOME 5,551,062 4,824,084 1,535,338
--------------- --------------- ---------------
EXPENSES:
Advisory and administration 2,049,875 1,311,700 345,469
Professional services 61,382 50,031 63,813
Shareholder reports 143,022 31,855 30,989
Distribution and service fees:
Class A 115,575 106,214 11,430
Class B 120,405 384,267 11,178
Class C 282,199 254,957 5,578
Custodian 193,099 122,722 34,710
Federal and state registration 66,956 57,484 59,992
Transfer agent 92,287 238,582 17,551
Trustees 7,665 5,110 4,745
Other 9,169 4,245 2,406
--------------- --------------- ---------------
TOTAL OPERATING EXPENSES 3,141,634 2,567,167 587,861
--------------- --------------- ---------------
Expenses waived by Advisor (10,303) (292,512) (174,472)
--------------- --------------- ---------------
NET OPERATING EXPENSES 3,131,331 2,274,655 413,389
Interest Expense 403 -- 1,902
--------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS) 2,419,328 2,549,429 1,120,047
--------------- --------------- ---------------
Net realized gain (loss) on:
Investments (8,037,560) (21,133,330) 1,164,046
Futures contracts 3,173,845 -- --
Foreign currency transactions 8,743,259 2,695,345 3,853,253
--------------- --------------- ---------------
Net realized gain (loss) 3,879,544 (18,437,985) 5,017,299
--------------- --------------- ---------------
Change in net unrealized appreciation (depreciation) on:
Investments and foreign currency 29,437,108 45,251,240 550,783
Futures contracts (637,031) -- --
Forward contracts (3,793,240) (354,640) (525,459)
Translation of other assets and liabilities
denominated in foreign currency (23,883) (7,142) (20,829)
--------------- --------------- ---------------
Change in net unrealized appreciation (depreciation) 24,982,954 44,889,458 4,495
--------------- --------------- ---------------
Net realized and unrealized gain (loss) 28,862,498 26,451,473 5,021,794
--------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations $ 31,281,826 $ 29,000,902 $ 6,141,841
=============== =============== ===============
</Table>
See accompanying notes to financial statements
100
<Page>
<Table>
<Caption>
UBS UBS UBS
U.S. BALANCED U.S. EQUITY U.S LARGE CAP
FUND FUND GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 320,048 $ 1,716,953 $ 37,101
Interest 423,463 53,518 1,183
Securities lending-net -- -- --
Foreign tax withheld -- -- --
--------------- --------------- ---------------
TOTAL INCOME 743,511 1,770,471 38,284
--------------- --------------- ---------------
EXPENSES:
Advisory and administration 193,080 688,970 26,425
Professional services 43,385 39,643 28,899
Shareholder reports 13,418 55,080 2,263
Distribution and service fees:
Class A 7,547 20,611 2,588
Class B 18,866 3,609 1,725
Class C 11,165 3,656 3,933
Custodian 13,383 47,808 1,836
Federal and state registration 59,347 60,517 58,198
Transfer agent 9,821 47,631 7,418
Trustees 4,380 7,300 3,650
Other 2,141 6,259 677
--------------- --------------- ---------------
TOTAL OPERATING EXPENSES 376,533 981,084 137,612
--------------- --------------- ---------------
Expenses waived by Advisor (134,454) (222,632) (101,307)
--------------- --------------- ---------------
NET OPERATING EXPENSES 242,079 758,452 36,305
Interest Expense -- 995 --
--------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS) 501,432 1,011,024 1,979
--------------- --------------- ---------------
Net realized gain (loss) on:
Investments (1,175,751) (6,823,240) (1,284,113)
Futures contracts (68,295) 76,396 --
Foreign currency transactions -- -- --
--------------- --------------- ---------------
Net realized gain (loss) (1,244,046) (6,746,844) (1,284,113)
--------------- --------------- ---------------
Change in net unrealized appreciation (depreciation) on:
Investments and foreign currency 2,363,714 7,887,299 1,210,064
Futures contracts 2,799 (81,631) --
Forward contracts -- -- --
Translation of other assets and liabilities
denominated in foreign currency -- -- --
--------------- --------------- ---------------
Change in net unrealized appreciation (depreciation) 2,366,513 7,805,668 1,210,064
--------------- --------------- ---------------
Net realized and unrealized gain (loss) 1,122,467 1,058,824 (74,049)
--------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations $ 1,623,899 $ 2,069,848 $ (72,070)
=============== =============== ===============
<Caption>
UBS UBS UBS
U.S. SMALL CAP U.S. BOND HIGH YIELD
GROWTH FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 159,019 $ -- $ 33,655
Interest 25,273 4,687,702 15,541,851
Securities lending-net -- -- --
Foreign tax withheld -- -- --
--------------- --------------- ---------------
TOTAL INCOME 184,292 4,687,702 15,575,506
--------------- --------------- ---------------
EXPENSES:
Advisory and administration 392,582 551,552 1,061,286
Professional services 24,657 25,354 67,478
Shareholder reports 24,634 57,234 160,639
Distribution and service fees:
Class A 10,054 61,615 172,899
Class B 7,239 33,420 139,896
Class C 5,403 14,270 134,876
Custodian 19,480 51,807 84,611
Federal and state registration 64,168 48,336 61,388
Transfer agent 21,907 28,311 230,204
Trustees 4,745 5,475 5,110
Other 1,593 10,791 9,288
--------------- --------------- ---------------
TOTAL OPERATING EXPENSES 576,462 888,165 2,127,675
--------------- --------------- ---------------
Expenses waived by Advisor (125,873) (185,453) (554,866)
--------------- --------------- ---------------
NET OPERATING EXPENSES 450,589 702,712 1,572,809
Interest Expense -- -- --
--------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS) (266,297) 3,984,990 14,002,697
--------------- --------------- ---------------
Net realized gain (loss) on:
Investments (1,381,955) 1,963,615 (17,579,211)
Futures contracts -- -- --
Foreign currency transactions -- -- --
--------------- --------------- ---------------
Net realized gain (loss) (1,381,955) 1,963,615 (17,579,211)
--------------- --------------- ---------------
Change in net unrealized appreciation (depreciation) on:
Investments and foreign currency 3,331,910 2,696,545 31,593,930
Futures contracts -- -- --
Forward contracts -- -- --
Translation of other assets and liabilities
denominated in foreign currency -- -- --
--------------- --------------- ---------------
Change in net unrealized appreciation (depreciation) 3,331,910 2,696,545 31,593,930
--------------- --------------- ---------------
Net realized and unrealized gain (loss) 1,949,955 4,660,160 14,014,719
--------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations $ 1,683,658 $ 8,645,150 $ 28,017,416
=============== =============== ===============
<Caption>
UBS UBS
INTERNATIONAL U.S. VALUE
EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 2,485,046 $ 149,796
Interest 24,191 1,790
Securities lending-net 60,942 --
Foreign tax withheld (237,313) --
--------------- ---------------
TOTAL INCOME 2,332,866 151,586
--------------- ---------------
EXPENSES:
Advisory and administration 744,060 47,527
Professional services 46,246 28,371
Shareholder reports 52,082 936
Distribution and service fees:
Class A 6,476 2,736
Class B 2,594 5,356
Class C 3,003 6,728
Custodian 95,708 3,267
Federal and state registration 79,800 56,848
Transfer agent 24,893 10,204
Trustees 8,030 3,650
Other 5,328 7,332
--------------- ---------------
TOTAL OPERATING EXPENSES 1,068,220 172,955
--------------- ---------------
Expenses waived by Advisor (183,386) (105,155)
--------------- ---------------
NET OPERATING EXPENSES 884,834 67,800
Interest Expense -- --
--------------- ---------------
NET INVESTMENT INCOME (LOSS) 1,448,032 83,786
--------------- ---------------
Net realized gain (loss) on:
Investments (7,081,574) (837,648)
Futures contracts -- --
Foreign currency transactions 1,436,849 --
--------------- ---------------
Net realized gain (loss) (5,644,725) (837,648)
--------------- ---------------
Change in net unrealized appreciation (depreciation) on:
Investments and foreign currency (3,223,188) 795,473
Futures contracts -- --
Forward contracts (634,274) --
Translation of other assets and liabilities
denominated in foreign currency 2,526 --
--------------- ---------------
Change in net unrealized appreciation (depreciation) (3,854,936) 795,473
--------------- ---------------
Net realized and unrealized gain (loss) (9,499,661) (42,175)
--------------- ---------------
Net increase (decrease) in net assets resulting
from operations $ (8,051,629) $ 41,611
=============== ===============
</Table>
101
<Page>
THE UBS FUNDS -- FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
UBS UBS
GLOBAL ALLOCATION FUND GLOBAL EQUITY FUND
-------------------------------- ---------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 2,419,328 $ 2,109,235 $ 2,549,429 $ 486,984
Net realized gain (loss) 3,879,544 (1,202,175) (18,437,985) (4,019,795)
Change in net unrealized appreciation (depreciation) 24,982,954 6,940,305 44,889,458 (760,540)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets from operations 31,281,826 7,847,365 29,000,902 (4,293,351)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS BY CLASS:
Class A:
Distributions from net investment income and
net foreign currency gains (816,676) (92,144) (391,438) (77,577)
Distributions from net realized gain -- (388,420) -- (419,643)
-------------- -------------- -------------- --------------
Total Class A distributions (816,676) (480,564) (391,438) (497,220)
-------------- -------------- -------------- --------------
Class B:
Distributions from net investment income and
net foreign currency gains (159,173) (2,885) (18,143) (123)
Distributions from net realized gain -- (6,162) -- (668)
-------------- -------------- -------------- --------------
Total Class B distributions (159,173) (9,047) (18,143) (791)
-------------- -------------- -------------- --------------
Class C:
Distributions from net investment income and
net foreign currency gains (255,507) (438) (28,866) (1,134)
Distributions from net realized gain -- (1,867) -- (6,132)
-------------- -------------- -------------- --------------
Total Class C distributions (255,507) (2,305) (28,866) (7,266)
-------------- -------------- -------------- --------------
Class Y:
Distributions from net investment income and
net foreign currency gains (6,269,057) (2,763,739) (1,343,765) (244,638)
Distributions from net realized gain -- (11,553,728) -- (1,324,139)
-------------- -------------- -------------- --------------
Total Class Y distributions (6,269,057) (14,317,467) (1,343,765) (1,568,777)
-------------- -------------- -------------- --------------
Decrease in net assets from distributions (7,500,413) (14,809,383) (1,782,212) (2,074,054)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS BY CLASS:
Class A:
Shares sold 169,870,324 7,853,473 118,638,055** 30,870,623
Shares issued on reinvestment of distributions 694,883 442,708 329,028 396,391
Shares redeemed (13,014,963) (1,383,496) (18,681,217) (15,694,357)
-------------- -------------- -------------- --------------
Total Class A transactions 157,550,244 6,912,685 100,285,866 15,572,657
-------------- -------------- -------------- --------------
Class B:
Shares sold 51,012,178 1,761,729 141,490,442** 432,203
Shares issued on reinvestment of distributions 153,482 9,047 17,409 792
Shares redeemed (5,976,414) (181,252) (9,779,696) (99)
-------------- -------------- -------------- --------------
Total Class B transactions 45,189,246 1,589,524 131,728,155 432,896
-------------- -------------- -------------- --------------
Class C:
Shares sold 136,999,043 1,562,320 93,437,144** 428,669
Shares issued on reinvestment of distributions 238,616 2,241 21,402 7,265
Shares redeemed (9,106,623) (23,300) (8,141,946) (62,915)
-------------- -------------- -------------- --------------
Total Class C transactions 128,131,036 1,541,261 85,316,600 373,019
-------------- -------------- -------------- --------------
Class Y:
Shares sold 74,326,144 87,020,622 58,747,356** 126,818,221
Shares issued on reinvestment of distributions 4,205,702 9,091,252 972,071 1,024,427
Shares redeemed (52,998,670) (79,981,613) (36,459,204) (132,070,159)
-------------- -------------- -------------- --------------
Total Class Y transactions 25,533,176 16,130,261 23,260,223 (4,227,511)
-------------- -------------- -------------- --------------
UBS Investment Funds Class+:
Shares sold -- 143,261 -- 142,132
Shares issued on reinvestment of distributions -- -- -- --
Shares redeemed -- (7,052,896) -- (18,825,671)
-------------- -------------- -------------- --------------
Total UBS Investment Funds Class transactions -- (6,909,635) -- (18,683,539)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions 356,403,702 19,264,096 340,590,844 (6,532,478)
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS 380,185,115 12,302,078 367,809,534 (12,899,883)
NET ASSETS, BEGINNING OF PERIOD 175,639,305 163,337,227 56,656,225 69,556,108
-------------- -------------- -------------- --------------
NET ASSETS, END OF PERIOD $ 555,824,420 $ 175,639,305 $ 424,465,759 $ 56,656,225
============== ============== ============== ==============
Net assets include accumulated undistributed
net investment income (loss) $ 7,743,158 $ 2,392,980 $ 4,343,999 $ 881,437
============== ============== ============== ==============
</Table>
* The amount represents a distribution from return of capital for the UBS
Global Bond Fund.
** The following capital share transactions include amounts from a tax-free
reorganization in which the UBS Global Equity Fund acquired the assets and
liabilities of the UBS Strategy Fund on March 21, 2003. The amounts were
$102,576,449 for Class A, $135,637,778 for Class B, $88,842,381 for Class
C, and $2,358,930 for Class Y.
+ UBS Investment Funds Class was liquidated effective November 9, 2001.
See accompanying notes to financial statements
102
<Page>
<Table>
<Caption>
UBS UBS
GLOBAL BOND FUND U.S. BALANCED FUND
-------------------------------- ---------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 1,120,047 $ 1,273,573 $ 501,432 $ 612,007
Net realized gain (loss) 5,017,299 (1,972,049) (1,244,046) (12,971)
Change in net unrealized appreciation (depreciation) 4,495 5,897,508 2,366,513 (1,272,222)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets from operations 6,141,841 5,199,032 1,623,899 (673,186)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS BY CLASS:
Class A:
Distributions from net investment income and
net foreign currency gains (105,953) (23,082)* (64,035) (35,339)
Distributions from net realized gain -- -- -- --
-------------- -------------- -------------- --------------
Total Class A distributions (105,953) (23,082) (64,035) (35,339)
-------------- -------------- -------------- --------------
Class B:
Distributions from net investment income and
net foreign currency gains (17,619) (1,816)* (35,979) (3,889)
Distributions from net realized gain -- -- -- --
-------------- -------------- -------------- --------------
Total Class B distributions (17,619) (1,816) (35,979) (3,889)
-------------- -------------- -------------- --------------
Class C:
Distributions from net investment income and
net foreign currency gains (13,518) -- (21,002) (781)
Distributions from net realized gain -- -- -- --
-------------- -------------- -------------- --------------
Total Class C distributions (13,518) -- (21,002) (781)
-------------- -------------- -------------- --------------
Class Y:
Distributions from net investment income and
net foreign currency gains (853,243) (700,361)* (431,180) (520,386)
Distributions from net realized gain -- -- -- --
-------------- -------------- -------------- --------------
Total Class Y distributions (853,243) (700,361) (431,180) (520,386)
-------------- -------------- -------------- --------------
Decrease in net assets from distributions (990,333) (725,259)* (552,196) (560,395)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS BY CLASS:
Class A:
Shares sold 12,487,314 8,168,545 2,034,371 2,792,372
Shares issued on reinvestment of distributions 89,825 16,968 60,100 34,527
Shares redeemed (3,273,617) (6,346,130) (694,275) (175,467)
-------------- -------------- -------------- --------------
Total Class A transactions 9,303,522 1,839,383 1,400,196 2,651,432
-------------- -------------- -------------- --------------
Class B:
Shares sold 1,854,490 378,073 2,317,056 1,128,265
Shares issued on reinvestment of distributions 15,420 1,722 29,916 3,643
Shares redeemed (639,402) -- (703,282) (178,788)
-------------- -------------- -------------- --------------
Total Class B transactions 1,230,508 379,795 1,643,690 953,120
-------------- -------------- -------------- --------------
Class C:
Shares sold 3,390,992 -- 1,512,637 436,391
Shares issued on reinvestment of distributions 10,557 -- 18,542 781
Shares redeemed (267,872) -- (173,434) (20,000)
-------------- -------------- -------------- --------------
Total Class C transactions 3,133,677 -- 1,357,745 417,172
-------------- -------------- -------------- --------------
Class Y:
Shares sold 48,090,421 15,342,104 6,497,803 11,358,860
Shares issued on reinvestment of distributions 662,981 450,050 418,301 493,900
Shares redeemed (52,213,738) (23,493,711) (6,953,197) (14,710,999)
-------------- -------------- -------------- --------------
Total Class Y transactions (3,460,336) (7,701,557) (37,093) (2,858,239)
-------------- -------------- -------------- --------------
UBS Investment Funds Class+:
Shares sold -- 2,139 -- 5,273
Shares issued on reinvestment of distributions -- -- -- --
Shares redeemed -- (1,125,010) -- (1,291,178)
-------------- -------------- -------------- --------------
Total UBS Investment Funds Class transactions -- (1,122,871) -- (1,285,905)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions 10,207,371 (6,605,250) 4,364,538 (122,420)
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS 15,358,879 (2,131,477) 5,436,241 (1,356,001)
NET ASSETS, BEGINNING OF PERIOD 36,737,497 38,868,974 25,668,943 27,024,944
-------------- -------------- -------------- --------------
NET ASSETS, END OF PERIOD $ 52,096,376 $ 36,737,497 $ 31,105,184 $ 25,668,943
============== ============== ============== ==============
Net assets include accumulated undistributed
net investment income (loss) $ 2,541,437 $ (1,457,616) $ 251,753 $ 277,550
============== ============== ============== ==============
<Caption>
UBS UBS
U.S. EQUITY FUND U.S. LARGE CAP GROWTH FUND
-------------------------------- ---------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 1,011,024 $ 993,283 $ 1,979 $ (17,572)
Net realized gain (loss) (6,746,844) 6,100,564 (1,284,113) (2,195,537)
Change in net unrealized appreciation (depreciation) 7,805,668 (16,018,358) 1,210,064 475,180
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets from operations 2,069,848 (8,924,511) (72,070) (1,737,929)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS BY CLASS:
Class A:
Distributions from net investment income and
net foreign currency gains (35,257) (33,362) -- --
Distributions from net realized gain (174,016) (531,722) -- (13,807)
-------------- -------------- -------------- --------------
Total Class A distributions (209,273) (565,084) -- (13,807)
-------------- -------------- -------------- --------------
Class B:
Distributions from net investment income and
net foreign currency gains (3,439) (206) -- --
Distributions from net realized gain (15,413) (3,285) -- (244)
-------------- -------------- -------------- --------------
Total Class B distributions (18,852) (3,491) -- (244)
-------------- -------------- -------------- --------------
Class C:
Distributions from net investment income and
net foreign currency gains (2,486) (60) -- --
Distributions from net realized gain (8,679) (955) -- (3,707)
-------------- -------------- -------------- --------------
Total Class C distributions (11,165) (1,015) -- (3,707)
-------------- -------------- -------------- --------------
Class Y:
Distributions from net investment income and
net foreign currency gains (897,680) (314,778) -- --
Distributions from net realized gain (2,331,732) (5,018,843) -- (15,304)
-------------- -------------- -------------- --------------
Total Class Y distributions (3,229,412) (5,333,621) -- (15,304)
-------------- -------------- -------------- --------------
Decrease in net assets from distributions (3,468,702) (5,903,211) -- (33,062)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS BY CLASS:
Class A:
Shares sold 4,229,809 10,524,445 775,010 2,494,053
Shares issued on reinvestment of distributions 135,067 163,489 -- 13,610
Shares redeemed (12,394,051) (2,721,652) (756,172) (1,041,589)
-------------- -------------- -------------- --------------
Total Class A transactions (8,029,175) 7,966,282 18,838 1,466,074
-------------- -------------- -------------- --------------
Class B:
Shares sold 593,667 349,959 440,475 210,860
Shares issued on reinvestment of distributions 18,852 3,491 -- 244
Shares redeemed (205,380) (103,306) (239,759) (67,097)
-------------- -------------- -------------- --------------
Total Class B transactions 407,139 250,144 200,716 144,007
-------------- -------------- -------------- --------------
Class C:
Shares sold 903,316 79,070 257,136 794,762
Shares issued on reinvestment of distributions 10,921 1,015 -- 3,708
Shares redeemed (31,363) (3,915) (529,714) (68,579)
-------------- -------------- -------------- --------------
Total Class C transactions 882,874 76,170 (272,578) 729,891
-------------- -------------- -------------- --------------
Class Y:
Shares sold 28,395,966 36,606,235 435,368 674,289
Shares issued on reinvestment of distributions 2,905,921 4,877,452 -- 13,460
Shares redeemed (19,108,822) (66,693,377) (749,106) (814,297)
-------------- -------------- -------------- --------------
Total Class Y transactions 12,193,065 (25,209,690) (313,738) (126,548)
-------------- -------------- -------------- --------------
UBS Investment Funds Class+:
Shares sold -- 235,795 -- 203,529
Shares issued on reinvestment of distributions -- -- -- --
Shares redeemed -- (5,719,369) -- (3,266,791)
-------------- -------------- -------------- --------------
Total UBS Investment Funds Class transactions -- (5,483,574) -- (3,063,262)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions 5,453,903 (22,400,668) (366,762) (849,838)
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS 4,055,049 (37,228,390) (438,832) (2,620,829)
NET ASSETS, BEGINNING OF PERIOD 101,700,990 138,929,380 4,132,678 6,753,507
-------------- -------------- -------------- --------------
NET ASSETS, END OF PERIOD $ 105,756,039 $ 101,700,990 $ 3,693,846 $ 4,132,678
============== ============== ============== ==============
Net assets include accumulated undistributed
net investment income (loss) $ 1,010,080 $ 938,569 $ 1,979 $ --
============== ============== ============== ==============
</Table>
103
<Page>
THE UBS FUNDS -- FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
UBS UBS
U.S. SMALL CAP GROWTH FUND U.S. BOND FUND
-------------------------------- -------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (266,297) $ (324,060) $ 3,984,990 $ 4,478,203
Net realized gain (loss) (1,381,955) (431,999) 1,963,615 1,921,383
Change in net unrealized appreciation (depreciation) 3,331,910 (4,904,899) 2,696,545 925,071
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets from operations 1,683,658 (5,660,958) 8,645,150 7,324,657
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS BY CLASS:
Class A:
Distributions from net investment income and
net foreign currency gains -- -- (1,055,349) (308,304)
Distributions from net realized gain -- (61,112) -- --
-------------- -------------- -------------- --------------
Total Class A distributions -- (61,112) (1,055,349) (308,304)
-------------- -------------- -------------- --------------
Class B:
Distributions from net investment income and
net foreign currency gains -- -- (120,485) (15,882)
Distributions from net realized gain -- (3,713) -- --
-------------- -------------- -------------- --------------
Total Class B distributions -- (3,713) (120,485) (15,882)
-------------- -------------- -------------- --------------
Class C:
Distributions from net investment income and
net foreign currency gains -- -- (71,609) (27,034)
Distributions from net realized gain -- (767) -- --
-------------- -------------- -------------- --------------
Total Class C distributions -- (767) (71,609) (27,034)
-------------- -------------- -------------- --------------
Class Y:
Distributions from net investment income and
net foreign currency gains -- -- (3,120,824) (5,307,109)
Distributions from net realized gain -- (1,477,411) -- --
-------------- -------------- -------------- --------------
Total Class Y distributions -- (1,477,411) (3,120,824) (5,307,109)
-------------- -------------- -------------- --------------
UBS Investment Funds Class+:
Distributions from net investment income and
net foreign currency gains -- -- -- (38,696)
-------------- -------------- -------------- --------------
Decrease in net assets from distributions -- (1,543,003) (4,368,267) (5,697,025)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS BY CLASS:
Class A:
Shares sold 10,938,839 2,179,415 30,904,206 20,944,347
Shares issued on reinvestment of distributions -- 60,938 774,239 243,825
Shares redeemed (3,805,325) (366,992) (19,984,705) (2,899,216)
-------------- -------------- -------------- --------------
Total Class A transactions 7,133,514 1,873,361 11,693,740 18,288,956
-------------- -------------- -------------- --------------
Class B:
Shares sold 851,729 859,490 4,225,401 1,536,154
Shares issued on reinvestment of distributions -- 3,713 77,727 9,884
Shares redeemed (421,955) (153,113) (2,182,579) (143,152)
-------------- -------------- -------------- --------------
Total Class B transactions 429,774 710,090 2,120,549 1,402,886
-------------- -------------- -------------- --------------
Class C:
Shares sold 475,355 580,457 3,233,996 1,767,103
Shares issued on reinvestment of distributions -- 768 50,843 11,416
Shares redeemed (151,517) (133,522) (1,334,026) (634,562)
-------------- -------------- -------------- --------------
Total Class C transactions 323,838 447,703 1,950,813 1,143,957
-------------- -------------- -------------- --------------
Class Y:
Shares sold 22,370,201 24,755,474 40,216,437 273,440,239
Shares issued on reinvestment of distributions -- 1,389,547 3,009,977 4,731,214
Shares redeemed (19,597,886) (27,169,494) (27,160,470) (282,313,285)
-------------- -------------- -------------- --------------
Total Class Y transactions 2,772,315 (1,024,473) 16,065,944 (4,141,832)
-------------- -------------- -------------- --------------
UBS Investment Funds Class+
Shares sold -- 268,873 -- 207,611
Shares issued on reinvestment of distributions -- -- -- 29,558
Shares redeemed -- (2,293,974) -- (3,107,604)
-------------- -------------- -------------- --------------
Total UBS Investment Funds Class transactions -- (2,025,101) -- (2,870,435)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions 10,659,441 (18,420) 31,831,046 13,823,532
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS 12,343,099 (7,222,381) 36,107,929 15,451,164
NET ASSETS, BEGINNING OF PERIOD 39,172,379 46,394,760 80,845,738 65,394,574
-------------- -------------- -------------- --------------
NET ASSETS, END OF PERIOD $ 51,515,478 $ 39,172,379 $ 116,953,667 $ 80,845,738
============== ============== ============== ==============
Net assets include accumulated undistributed
net investment income (loss) $ -- $ -- $ 90,878 $ 105,723
============== ============== ============== ==============
</Table>
* For the period June 29, 2001, commencement of investment operations, to
June 30, 2002.
** The following capital share transactions include amounts from a tax-free
reorganization in which the UBS U.S. Value Equity Fund acquired the assets
and liabilities of the UBS U.S. Large Cap Equity Fund on October 4, 2002.
The amounts were $524,863 for Class A, $149,087 for Class B, $549,128 for
Class C, and $1,680,096 for Class Y.
+ UBS Investment Funds Class was liquidated effective November 9, 2001.
See accompanying notes to financial statements
104
<Page>
<Table>
<Caption>
UBS UBS
HIGH YIELD FUND INTERNATIONAL EQUITY FUND
-------------------------------- -------------------------------
YEAR ENDED JUNE 30, YEAR ENDED JUNE 30,
2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 14,002,697 $ 11,343,538 $ 1,448,032 $ 1,457,063
Net realized gain (loss) (17,579,211) (27,901,284) (5,644,725) (7,755,636)
Change in net unrealized appreciation (depreciation) 31,593,930 7,837,661 (3,854,936) 1,110,495
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets from operations 28,017,416 (8,720,085) (8,051,629) (5,188,078)
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS BY CLASS:
Class A:
Distributions from net investment income and
net foreign currency gains (6,210,427) (4,859,620) (102,615) (36,545)
Distributions from net realized gain -- -- (3,166) (218,141)
-------------- -------------- -------------- --------------
Total Class A distributions (6,210,427) (4,859,620) (105,781) (254,686)
-------------- -------------- -------------- --------------
Class B:
Distributions from net investment income and
net foreign currency gains (1,155,342) (1,062,540) (12,207) --
Distributions from net realized gain -- -- (392) --
-------------- -------------- -------------- --------------
Total Class B distributions (1,155,342) (1,062,540) (12,599) --
-------------- -------------- -------------- --------------
Class C:
Distributions from net investment income and
net foreign currency gains (1,524,490) (1,219,662) (10,789) (28)
Distributions from net realized gain -- -- (354) (166)
-------------- -------------- -------------- --------------
Total Class C distributions (1,524,490) (1,219,662) (11,143) (194)
-------------- -------------- -------------- --------------
Class Y:
Distributions from net investment income and
net foreign currency gains (5,513,259) (5,509,093) (4,107,868) (2,957,696)
Distributions from net realized gain -- -- (119,936) (17,649,540)
-------------- -------------- -------------- --------------
Total Class Y distributions (5,513,259) (5,509,093) (4,227,804) (20,607,236)
-------------- -------------- -------------- --------------
UBS Investment Funds Class+:
Distributions from net investment income and
net foreign currency gains -- (153,732) -- --
-------------- -------------- -------------- --------------
Decrease in net assets from distributions (14,403,518) (12,804,647) (4,357,327) (20,862,116)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS BY CLASS:
Class A:
Shares sold 34,591,438 85,975,437 12,910,694 10,837,418
Shares issued on reinvestment of distributions 2,814,936 2,162,926 100,144 241,742
Shares redeemed (32,540,087) (13,264,252) (12,304,565) (8,692,780)
-------------- -------------- -------------- --------------
Total Class A transactions 4,866,287 74,874,111 706,273 2,386,380
-------------- -------------- -------------- --------------
Class B:
Shares sold 2,018,183 23,835,512 273,328 137,033
Shares issued on reinvestment of distributions 471,694 410,680 12,357 --
Shares redeemed (5,977,148) (6,409,813) (40,559) (15,060)
-------------- -------------- -------------- --------------
Total Class B transactions (3,487,271) 17,836,379 245,126 121,973
-------------- -------------- -------------- --------------
Class C:
Shares sold 2,115,099 23,894,164 775,367 708,527
Shares issued on reinvestment of distributions 710,226 565,332 10,420 1
Shares redeemed (3,147,724) (4,088,587) (542,989) (531,255)
-------------- -------------- -------------- --------------
Total Class C transactions (322,399) 20,370,909 242,798 177,273
-------------- -------------- -------------- --------------
Class Y:
Shares sold 82,297,200 93,174,128 139,188,726 776,370,655
Shares issued on reinvestment of distributions 4,987,025 4,929,419 3,923,965 18,542,125
Shares redeemed (61,319,664) (104,801,747) (138,240,572) (863,839,409)
-------------- -------------- -------------- --------------
Total Class Y transactions 25,964,561 (6,698,200) 4,872,119 (68,926,629)
-------------- -------------- -------------- --------------
UBS Investment Funds Class+
Shares sold -- 83,673 -- 231,701
Shares issued on reinvestment of distributions -- 119,090 -- --
Shares redeemed -- (1,958,227) -- (4,025,287)
-------------- -------------- -------------- --------------
Total UBS Investment Funds Class transactions -- (1,755,464) -- (3,793,586)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions 27,021,178 104,627,735 6,066,316 (70,034,589)
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS 40,635,076 83,103,003 (6,342,640) (96,084,783)
NET ASSETS, BEGINNING OF PERIOD 139,591,569 56,488,566 100,754,116 196,838,899
-------------- -------------- -------------- --------------
NET ASSETS, END OF PERIOD $ 180,226,645 $ 139,591,569 $ 94,411,476 $ 100,754,116
============== ============== ============== ==============
Net assets include accumulated undistributed
net investment income (loss) $ 29,500 $ 430,319 $ 2,126,527 $ 3,475,868
============== ============== ============== ==============
<Caption>
UBS
U.S. VALUE EQUITY FUND
--------------------------------
YEAR ENDED JUNE 30,
2003 2002*
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 83,786 $ 36,677
Net realized gain (loss) (837,648) 41,135
Change in net unrealized appreciation (depreciation) 795,473 (348,860)
-------------- --------------
Net increase (decrease) in net assets from operations 41,611 (271,048)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS BY CLASS:
Class A:
Distributions from net investment income and
net foreign currency gains (6,980) --
Distributions from net realized gain (8,594) --
-------------- --------------
Total Class A distributions (15,574) --
-------------- --------------
Class B:
Distributions from net investment income and
net foreign currency gains (2,449) --
Distributions from net realized gain (5,316) --
-------------- --------------
Total Class B distributions (7,765) --
-------------- --------------
Class C:
Distributions from net investment income and
net foreign currency gains (2,890) --
Distributions from net realized gain (5,570) --
-------------- --------------
Total Class C distributions (8,460) --
-------------- --------------
Class Y:
Distributions from net investment income and
net foreign currency gains (32,891) --
Distributions from net realized gain (30,988) --
-------------- --------------
Total Class Y distributions (63,879) --
-------------- --------------
UBS Investment Funds Class+:
Distributions from net investment income and
net foreign currency gains -- --
-------------- --------------
Decrease in net assets from distributions (95,678) --
-------------- --------------
CAPITAL SHARE TRANSACTIONS BY CLASS:
Class A:
Shares sold 1,313,870** 944,284
Shares issued on reinvestment of distributions 14,112 --
Shares redeemed (983,232) (144,738)
-------------- --------------
Total Class A transactions 344,750 799,546
-------------- --------------
Class B:
Shares sold 834,994** 353,289
Shares issued on reinvestment of distributions 7,755 --
Shares redeemed (423,048) (33,608)
-------------- --------------
Total Class B transactions 419,701 319,681
-------------- --------------
Class C:
Shares sold 831,028** 256,183
Shares issued on reinvestment of distributions 2,916 --
Shares redeemed (109,240) (3,131)
-------------- --------------
Total Class C transactions 724,704 253,052
-------------- --------------
Class Y:
Shares sold 2,862,951** 4,355
Shares issued on reinvestment of distributions 48,665 --
Shares redeemed (854,907) (49)
-------------- --------------
Total Class Y transactions 2,056,709 4,306
-------------- --------------
UBS Investment Funds Class+
Shares sold -- --
Shares issued on reinvestment of distributions -- --
Shares redeemed -- --
-------------- --------------
Total UBS Investment Funds Class transactions -- --
-------------- --------------
Net increase (decrease) in net assets resulting from
capital share transactions 3,545,864 1,376,585
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS 3,491,797 1,105,537
NET ASSETS, BEGINNING OF PERIOD 4,105,547 3,000,010
-------------- --------------
NET ASSETS, END OF PERIOD $ 7,597,344 $ 4,105,547
============== ==============
Net assets include accumulated undistributed
net investment income (loss) $ 83,688 $ 37,360
============== ==============
</Table>
105
<Page>
UBS GLOBAL ALLOCATION FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS A 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.60 $ 11.10 $ 11.20 $ 11.99 $ 12.75
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.10** 0.10** 0.22 0.19** 0.27
Net realized and unrealized gain (loss) 0.41 0.40 0.31 (0.30) 0.25
--------- --------- --------- --------- ---------
Total income (loss) from investment operations 0.51 0.50 0.53 (0.11) 0.52
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.42) (0.19) -- (0.16) (0.44)
Distributions from net realized gains -- (0.81) (0.63) (0.52) (0.84)
--------- --------- --------- --------- ---------
Total distributions (0.42) (1.00) (0.63) (0.68) (1.28)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.69 $ 10.60 $ 11.10 $ 11.20 $ 11.99
========= ========= ========= ========= =========
Total return+ 5.35% 4.84% 4.95% (0.80)% 4.47%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 175,415 $ 6,914 $ 237 $ 202 $ 1,576
Ratio of expenses to average net assets:
Before expense reimbursement 1.35% 1.35% 1.30% 1.24% 1.21%
After expense reimbursement 1.35% 1.35% 1.30% 1.24% 1.21%
Ratio of net investment income to average net assets:
Before expense reimbursement 0.98% 0.98% 1.52% 1.74% 1.98%
After expense reimbursement 0.98% 0.98% 1.52% 1.74% 1.98%
Portfolio turnover rate 66% 116% 115% 98% 105%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.52 $ 11.21
-------------- --------------
Income from investment operations:
Net investment income 0.02** 0.12**
Net realized and unrealized gain 0.41 0.19
-------------- --------------
Total income from investment operations 0.43 0.31
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.40) (0.19)
Distributions from net realized gains -- (0.81)
-------------- --------------
Total distributions (0.40) (1.00)
-------------- --------------
Net asset value, end of period $ 10.55 $ 10.52
============== ==============
Total return+ 4.60% 3.00%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 49,573 $ 1,570
Ratio of expenses to average net assets:
Before expense reimbursement 2.10% 2.10%***
After expense reimbursement 2.10% 2.10%***
Ratio of net investment income to average net assets:
Before expense reimbursement 0.23% 2.17%***
After expense reimbursement 0.23% 2.17%***
Portfolio turnover rate 66% 116%
</Table>
* For the period December 13, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
See accompanying notes to financial statements
106
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.54 $ 11.10
-------------- --------------
Income from investment operations:
Net investment income 0.02** 0.11**
Net realized and unrealized gain 0.41 0.33
-------------- --------------
Total income from investment operations 0.43 0.44
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.41) (0.19)
Distributions from net realized gains -- (0.81)
-------------- --------------
Total distributions (0.41) (1.00)
-------------- --------------
Net asset value, end of period $ 10.56 $ 10.54
============== ==============
Total return+ 4.55% 4.23%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 137,078 $ 1,525
Ratio of expenses to average net assets:
Before expense reimbursement 2.10% 2.10%***
After expense reimbursement 2.10% 2.10%***
Ratio of net investment income to average net assets:
Before expense reimbursement 0.23% 1.77%***
After expense reimbursement 0.23% 1.77%***
Portfolio turnover rate 66% 116%
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS Y 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.69 $ 11.18 $ 11.25 $ 12.02 $ 12.77
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.12** 0.13** 0.25 0.23** 0.30
Net realized and unrealized gain (loss) 0.41 0.38 0.31 (0.30) 0.25
--------- --------- --------- --------- ---------
Total income (loss) from investment operations 0.53 0.51 0.56 (0.07) 0.55
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.43) (0.19) -- (0.18) (0.46)
Distributions from net realized gains -- (0.81) (0.63) (0.52) (0.84)
--------- --------- --------- --------- ---------
Total distributions (0.43) (1.00) (0.63) (0.70) (1.30)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.79 $ 10.69 $ 11.18 $ 11.25 $ 12.02
========= ========= ========= ========= =========
Total return++ 5.50% 4.91% 5.20% (0.48)% 4.76%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 193,758 $ 165,630 $ 156,130 $ 284,229 $ 469,080
Ratio of expenses to average net assets:
Before expense reimbursement 1.10% 1.10% 1.05% 0.99% 0.96%
After expense reimbursement 1.10% 1.10% 1.05% 0.99% 0.96%
Ratio of net investment income to average net assets:
Before expense reimbursement 1.23% 1.24% 1.77% 1.99% 2.23%
After expense reimbursement 1.23% 1.24% 1.77% 1.99% 2.23%
Portfolio turnover rate 66% 116% 115% 98% 105%
</Table>
* For the period November 22, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
See accompanying notes to financial statements
107
<Page>
UBS GLOBAL EQUITY FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS A 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.37 $ 10.61 $ 12.44 $ 13.40 $ 12.53
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.16** 0.04** 0.07 0.04** 0.10**
Net realized and unrealized gain (loss) (0.39) (0.88) (0.56) 0.27 1.09
--------- --------- --------- --------- ---------
Total income (loss) from investment operations (0.23) (0.84) (0.49) 0.31 1.19
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.25) (0.06) (0.02) (0.06) (0.14)
Distributions from net realized gains -- (0.34) (1.32) (1.21) (0.18)
--------- --------- --------- --------- ---------
Total distributions (0.25) (0.40) (1.34) (1.27) (0.32)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 8.89 $ 9.37 $ 10.61 $ 12.44 $ 13.40
========= ========= ========= ========= =========
Total return+ (2.23)% (8.05)% (4.45)% 2.49% 9.80%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 123,756 $ 15,173 $ 302 $ 224 $ 220
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.44% 1.47% 1.37% 1.33% 1.30%
After expense reimbursement and earnings credits 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 1.73% 0.17% 0.65% 0.23% 0.80%
After expense reimbursement and earnings credits 1.92% 0.39% 0.77% 0.31% 0.85%
Portfolio turnover rate 206% 117% 81% 111% 86%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.34 $ 10.17
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.10** 0.05**
Net realized and unrealized loss (0.39) (0.48)
-------------- --------------
Total loss from investment operations (0.29) (0.43)
-------------- --------------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.23) (0.06)
Distributions from net realized gains -- (0.34)
-------------- --------------
Total distributions (0.23) (0.40)
-------------- --------------
Net asset value, end of period $ 8.82 $ 9.34
============== ==============
Total return+ (2.91)% (4.38)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 144,232 $ 418
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.20% 2.25%***
After expense reimbursement and earnings credits 2.00% 2.00%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.97% 0.72%***
After expense reimbursement and earnings credits 1.17% 0.97%***
Portfolio turnover rate 206% 117%
</Table>
* For the period December 11, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
See accompanying notes to financial statements
108
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.33 $ 10.18
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.10** 0.04**
Net realized and unrealized loss (0.40) (0.49)
-------------- --------------
Total loss from investment operations (0.30) (0.45)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.24) (0.06)
Distributions from net realized gains -- (0.34)
-------------- --------------
Total distributions (0.24) (0.40)
-------------- --------------
Net asset value, end of period $ 8.79 $ 9.33
============== ==============
Total return+ (2.93)% (4.57)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 93,605 $ 351
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.24% 2.23%***
After expense reimbursement and earnings credits 2.00% 2.00%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.93% 0.55%***
After expense reimbursement and earnings credits 1.17% 0.78%***
Portfolio turnover rate 206% 117%
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS Y 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.47 $ 10.68 $ 12.47 $ 13.42 $ 12.54
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.18** 0.06** 0.09 0.07** 0.14**
Net realized and unrealized gain (loss) (0.39) (0.87) (0.54) 0.27 1.09
--------- --------- --------- --------- ---------
Total income (loss) from investment operations (0.21) (0.81) (0.45) 0.34 1.23
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.27) (0.06) (0.02) (0.08) (0.17)
Distributions from net realized gains -- (0.34) (1.32) (1.21) (0.18)
--------- --------- --------- --------- ---------
Total distributions (0.27) (0.40) (1.34) (1.29) (0.35)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 8.99 $ 9.47 $ 10.68 $ 12.47 $ 13.42
========= ========= ========= ========= =========
Total return++ (1.93)% (7.71)% (4.07)% 2.69% 10.14%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 62,873 $ 40,714 $ 49,306 $ 40,538 $ 42,106
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.16% 1.19% 1.12% 1.08% 1.05%
After expense reimbursement and earnings credits 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 2.01% 0.45% 0.90% 0.48% 1.05%
After expense reimbursement and earnings credits 2.17% 0.64% 1.02% 0.56% 1.10%
Portfolio turnover rate 206% 117% 81% 111% 86%
</Table>
* For the period November 27, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
See accompanying notes to financial statements
109
<Page>
UBS GLOBAL BOND FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS A 2003 2002* 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.01 $ 8.58 $ 9.09 $ 9.16 $ 9.40
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.24** 0.17** 0.33** 0.37** 0.37**
Net realized and unrealized gain (loss) 1.21 0.43 (0.72) (0.43) (0.07)
--------- --------- --------- --------- ---------
Total income (loss) from investment operations 1.45 0.60 (0.39) (0.06) 0.30
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.22) -- (0.06) -- (0.46)
Distributions from net realized gains -- -- -- (0.01) (0.08)
Distributions from return of capital -- (0.17) -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.22) (0.17) (0.06) (0.01) (0.54)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.24 $ 9.01 $ 8.64 $ 9.09 $ 9.16
========= ========= ========= ========= =========
Total return+ 16.34% 7.18%++ (4.27)% (0.66)% 2.89%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 11,659 $ 1,925 $ 3 $ 1 $ 1,085
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.53% 1.49%*** 1.37% 1.30% 1.15%
After expense reimbursement and earnings credits 1.15% 1.15%*** 1.15% 1.19%++ 1.15%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 2.06% 2.72%*** 3.60% 4.09% 3.80%
After expense reimbursement and earnings credits 2.44% 3.06%*** 3.82% 4.20% 3.80%
Portfolio turnover rate 145% 157% 165% 87% 138%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.01 $ 8.35
-------------- --------------
Income from investment operations:
Net investment income 0.16** 0.11**
Net realized and unrealized gain 1.23 0.69
-------------- --------------
Total income from investment operations 1.39 0.80
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.15) --
Distributions from return of capital -- (0.14)
-------------- --------------
Total distributions (0.15) (0.14)
-------------- --------------
Net asset value, end of period $ 10.25 $ 9.01
============== ==============
Total return+ 15.61% 9.67%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,755 $ 392
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.30% 2.25%***
After expense reimbursement and earnings credits 1.90% 1.90%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 1.29% 1.94%***
After expense reimbursement and earnings credits 1.69% 2.29%***
Portfolio turnover rate 145% 157%
</Table>
* On July 2, 2001 Class A was fully liquidated. For the period November 5,
2001 and November 26, 2001 (commencement of reissuance and issuance) for
Class A and Class B, respectively, through June 30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
++ The return is non-annualized.
+ The returns do not include sales charges.
^ The ratio of net operating expenses to average net assets for Class A was
1.15%, interest expense was 0.04% of net assets.
See accompanying notes to financial statements
110
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
FOR THE
PERIOD ENDED
CLASS C JUNE 30, 2003*
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.00
--------
Income from investment operations:
Net investment income 0.19**
Net realized and unrealized gain 1.22
--------
Total income from investment operations 1.41
--------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.18)
--------
Net asset value, end of period $ 10.23
========
Total return+ 15.84%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 3,198
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.01%***
After expense reimbursement and earnings credits 1.65%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 1.58%***
After expense reimbursement and earnings credits 1.94%***
Portfolio turnover rate 145%
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS Y 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.79 $ 8.57 $ 9.01 $ 9.18 $ 9.41
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.28** 0.31** 0.36** 0.40** 0.39**
Net realized and unrealized gain (loss) 1.33 1.09 (0.72) (0.43) (0.07)
--------- --------- --------- --------- ---------
Total income (loss) from investment operations 1.61 1.40 (0.36) (0.03) 0.32
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.24) -- (0.08) (0.13) (0.47)
Distributions from net realized gains -- -- -- (0.01) (0.08)
Distributions from return of capital -- (0.18) -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.24) (0.18) (0.08) (0.14) (0.55)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.16 $ 9.79 $ 8.57 $ 9.01 $ 9.18
========= ========= ========= ========= =========
Total return++ 16.72% 16.57% (4.02)% (0.34)% 3.13%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 35,484 $ 34,421 $ 37,822 $ 43,467 $ 92,832
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.32% 1.17% 1.12% 1.05% 0.90%
After expense reimbursement and earnings credits 0.90% 0.90% 0.90% 0.94%# 0.90%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 2.27% 3.14% 3.85% 4.34% 4.05%
After expense reimbursement and earnings credits 2.69% 3.41% 4.07% 4.45% 4.05%
Portfolio turnover rate 145% 157% 165% 87% 138%
</Table>
* For period July 2, 2002 (commencement of issuance) through June 30, 2003.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
# The ratio of net operating expenses to average net assets for Class Y was
0.90%, interest expense was 0.04% of net assets.
See accompanying notes to financial statements
111
<Page>
UBS U.S. BALANCED FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS A 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.04 $ 9.38 $ 8.57 $ 9.38 $ 12.27
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.16** 0.20** 0.28 0.23** 0.29**
Net realized and unrealized gain (loss) 0.31 (0.25) 0.89 (0.74) 0.18
--------- --------- --------- --------- ---------
Total income (loss) from investment operations 0.47 (0.05) 1.17 (0.51) 0.47
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.19) (0.29) (0.36) (0.24) (0.71)
Distributions from net realized gains -- -- -- (0.06) (2.65)
--------- --------- --------- --------- ---------
Total distributions (0.19) (0.29) (0.36) (0.30) (3.36)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 9.32 $ 9.04 $ 9.38 $ 8.57 $ 9.38
========= ========= ========= ========= =========
Total return+ 5.43% (0.60)% 13.89% (5.39)% 4.17%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 4,164 $ 2,583 $ 1 $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.56% 1.57% 1.39% 1.26% 1.21%
After expense reimbursement and earnings credits 1.05% 1.05% 1.05% 1.06%++ 1.05%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 1.35% 1.63% 2.81% 2.55% 2.75%
After expense reimbursement and earnings credits 1.86% 2.15% 3.15% 2.75% 2.91%
Portfolio turnover rate 96% 147% 159% 96% 113%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30,2002*
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.00 $ 9.39
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.10** 0.08**
Net realized and unrealized gain (loss) 0.31 (0.19)
-------------- --------------
Total income (loss) from investment operations 0.41 (0.11)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.17) (0.28)
-------------- --------------
Net asset value, end of period $ 9.24 $ 9.00
============== ==============
Total return+ 4.67% (1.18)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 2,733 $ 913
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.27% 2.41%***
After expense reimbursement and earnings credits 1.80% 1.80%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.64% 0.69%***
After expense reimbursement and earnings credits 1.11% 1.30%***
Portfolio turnover rate 96% 147%
</Table>
* For the period November 7, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ The ratio of net operating expenses to average net assets for Class A was
1.05%, interest expense was 0.01% of net assets.
See accompanying notes to financial statements
112
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30,2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.01 $ 9.36
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.10** 0.08**
Net realized and unrealized gain (loss) 0.31 (0.15)
-------------- --------------
Total income (loss) from investment operations 0.41 (0.07)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.17) (0.28)
-------------- --------------
Net asset value, end of period $ 9.25 $ 9.01
============== ==============
Total return+ 4.70% (0.76)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,881 $ 402
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.30% 2.37%***
After expense reimbursement and earnings credits 1.80% 1.80%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.61% 0.75%***
After expense reimbursement and earnings credits 1.11% 1.32%***
Portfolio turnover rate 96% 147%
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS Y 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.09 $ 9.41 $ 8.59 $ 9.38 $ 12.24
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.18** 0.24** 0.31 0.26** 0.34**
Net realized and unrealized gain (loss) 0.32 (0.27) 0.89 (0.74) 0.18
--------- --------- --------- --------- ---------
Total income (loss) from investment operations 0.50 (0.03) 1.20 (0.48) 0.52
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.21) (0.29) (0.38) (0.25) (0.73)
Distributions from net realized gains -- -- -- (0.06) (2.65)
--------- --------- --------- --------- ---------
Total distributions (0.21) (0.29) (0.38) (0.31) (3.38)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 9.38 $ 9.09 $ 9.41 $ 8.59 $ 9.38
========= ========= ========= ========= =========
Total return++ 5.70% (0.36)% 14.18% (5.07)% 4.74%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 22,328 $ 21,771 $ 25,719 $ 11,136 $ 37,603
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.34% 1.24% 1.14% 1.01% 0.96%
After expense reimbursement and earnings credits 0.80% 0.80% 0.80% 0.81%# 0.80%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 1.57% 2.17% 3.06% 2.80% 3.00%
After expense reimbursement and earnings credits 2.11% 2.61% 3.40% 3.00% 3.16%
Portfolio turnover rate 96% 147% 159% 96% 113%
</Table>
* For the period November 6, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
# The ratio of net operating expenses to average net assets for Class Y was
0.80%, interest expense was 0.01% of net assets.
See accompanying notes to financial statements
113
<Page>
UBS U.S. EQUITY FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS A 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.94 $ 15.97 $ 15.97 $ 21.39 $ 19.88
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.11** 0.08** 0.08** 0.13** 0.08**
Net realized and unrealized gain (loss) 0.04 (1.38) 1.56 (3.75) 2.67
--------- --------- --------- --------- ---------
Total income (loss) from investment operations 0.15 (1.30) 1.64 (3.62) 2.75
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.08) (0.04) (0.29) (0.03) (0.12)
Distributions from net realized gains (0.38) (0.69) (1.35) (1.77) (1.12)
--------- --------- --------- --------- ---------
Total distributions (0.46) (0.73) (1.64) (1.80) (1.24)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 13.63 $ 13.94 $ 15.97 $ 15.97 $ 21.39
========= ========= ========= ========= =========
Total return+ 1.37% (8.41)% 10.63% (17.24)% 14.75%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 4,702 $ 13,698 $ 7,067 $ 7,191 $ 7,563
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.30% 1.19% 1.17% 1.09% 1.05%
After expense reimbursement and earnings credits 1.05% 1.05% 1.05% 1.05% 1.05%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.64% 0.40% 0.37% 0.64% 0.57%
After expense reimbursement and earnings credits 0.89% 0.54% 0.49% 0.68% 0.57%
Portfolio turnover rate 33% 60% 54% 55% 48%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30,2002*
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.87 $ 14.76
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.02** 0.06**
Net realized and unrealized gain (loss) 0.02 (0.22)
-------------- --------------
Total income (loss) from investment operations 0.04 (0.16)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.08) (0.04)
Distributions from net realized gains (0.38) (0.69)
-------------- --------------
Total distributions (0.46) (0.73)
-------------- --------------
Net asset value, end of period $ 13.45 $ 13.87
============== ==============
Total return+ 0.63% (1.39)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 635 $ 223
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.04% 1.99%***
After expense reimbursement and earnings credits 1.80% 1.80%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits (0.10)% 0.46%***
After expense reimbursement and earnings credits 0.14% 0.65%***
Portfolio turnover rate 33% 60%
</Table>
* For the period November 5, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
See accompanying notes to financial statements
114
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30,2002*
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.88 $ 15.20
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.02** 0.07**
Net realized and unrealized gain (loss) 0.03 (0.66)
-------------- --------------
Total income (loss) from investment operations 0.05 (0.59)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.11) (0.04)
Distributions from net realized gains (0.38) (0.69)
-------------- --------------
Total distributions (0.49) (0.73)
-------------- --------------
Net asset value, end of period $ 13.44 $ 13.88
============== ==============
Total return+ 0.68% (4.18)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,020 $ 70
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.04% 1.97%***
After expense reimbursement and earnings credits 1.80% 1.80%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits (0.10)% 0.56%***
After expense reimbursement and earnings credits 0.14% 0.73%***
Portfolio turnover rate 33% 60%
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS Y 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.07 $ 16.07 $ 16.07 $ 21.48 $ 19.91
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.14** 0.12** 0.12** 0.16** 0.17**
Net realized and unrealized gain (loss) 0.04 (1.39) 1.57 (3.75) 2.67
--------- --------- --------- -------- ---------
Total income (loss) from investment operations 0.18 (1.27) 1.69 (3.59) 2.84
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.14) (0.04) (0.34) (0.05) (0.15)
Distributions from net realized gains (0.38) (0.69) (1.35) (1.77) (1.12)
--------- --------- --------- --------- ---------
Total distributions (0.52) (0.73) (1.69) (1.82) (1.27)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 13.73 $ 14.07 $ 16.07 $ 16.07 $ 21.48
========= ========= ========= ========= =========
Total return++ 1.69% (8.17)% 10.88% (17.00)% 15.22%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 99,398 $ 87,710 $ 125,997 $ 167,870 $ 713,321
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.04% 0.93% 0.92% 0.84% 0.80%
After expense reimbursement and earnings credits 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.90% 0.66% 0.62% 0.89% 0.82%
After expense reimbursement and earnings credits 1.14% 0.79% 0.74% 0.93% 0.82%
Portfolio turnover rate 33% 60% 54% 55% 48%
</Table>
* For the period November 13, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
See accompanying notes to financial statements
115
<Page>
UBS U.S. LARGE CAP GROWTH FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30, FOR THE
----------------------------------------------- PERIOD ENDED
CLASS A 2003 2002 2001 2000 JUNE 30, 1999(a)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.38 $ 8.90 $ 15.20 $ 13.88 $ 11.84
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) 0.00#** (0.02)** (0.07) (0.02)** (0.01)
Net realized and unrealized gain (loss) 0.01 (2.45) (4.32) 2.29 2.05
-------- -------- -------- -------- --------
Total income (loss) from investment operations 0.01 (2.47) (4.39) 2.27 2.04
-------- -------- -------- -------- --------
Less distributions:
Distributions from net realized gains -- (0.05) (1.91) (0.95) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 6.39 $ 6.38 $ 8.90 $ 15.20 $ 13.88
======== ======== ======== ======== ========
Total return+ 0.16% (27.89)% (31.59)% 17.18% 17.23%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,163 $ 1,155 $ 1 $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 3.91% 2.51% 1.59% 2.11% 2.63%***
After expense reimbursement and earnings credits 1.05% 1.05% 1.05% 1.05% 1.05%***
Ratio of net investment income (loss) to average
net assets:
Before expense reimbursement and earnings credits (2.82)% (1.71)% (0.91)% (1.22)% (1.51)%***
After expense reimbursement and earnings credits 0.04% (0.25)% (0.37)% (0.16)% 0.07%***
Portfolio turnover rate 86% 93% 56% 86% 51%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.36 $ 7.86
-------------- --------------
Income (loss) from investment operations:
Net investment loss (0.04)** (0.05)**
Net realized and unrealized loss 0.00# (1.40)
-------------- --------------
Total loss from investment operations (0.04) (1.45)
-------------- --------------
Less distributions:
Distributions from net realized gains -- (0.05)
-------------- --------------
Net asset value, end of period $ 6.32 $ 6.36
============== ==============
Total return+ (0.63)% (18.61)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 321 $ 115
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 4.54% 3.06%***
After expense reimbursement and earnings credits 1.80% 1.80%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits (3.45)% (2.28)%***
After expense reimbursement and earnings credits (0.71)% (1.02)%***
Portfolio turnover rate 86% 93%
</Table>
(a) For the period December 31, 1998 (commencement of operations) through June
30, 1999.
* For the period November 7, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
# Amount is less than $0.01 per share.
See accompanying notes to financial statements
116
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.35 $ 8.18
-------------- --------------
Income (loss) from investment operations:
Net investment loss (0.04)** (0.05)**
Net realized and unrealized gain (loss) 0.01 (1.73)
-------------- --------------
Total loss from investment operations (0.03) (1.78)
-------------- --------------
Less distributions:
Distributions from net realized gains -- (0.05)
-------------- --------------
Net asset value, end of period $ 6.32 $ 6.35
============== ==============
Total return+ (0.47)% (21.91)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 267 $ 572
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 4.71% 3.22%***
After expense reimbursement and earnings credits 1.80% 1.80%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits (3.62)% (2.44)%***
After expense reimbursement and earnings credits (0.71)% (1.02)%***
Portfolio turnover rate 86% 93%
<Caption>
YEAR ENDED JUNE 30, SIX MONTHS
----------------------------------------------- ENDED
CLASS Y 2003 2002 2001 2000 JUNE 30, 1999(a)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.47 $ 8.99 $ 15.28 $ 13.91 $ 11.84
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss) 0.02** 0.00# (0.01) 0.03** 0.02
Net realized and unrealized gain (loss) 0.00 (2.47) (4.37) 2.29 2.05
-------- -------- -------- -------- --------
Total income (loss) from investment operations 0.02 (2.47) (4.38) 2.32 2.07
-------- -------- -------- -------- --------
Less distributions:
Distributions from net investment income and
net foreign currency gains -- (0.05) -- -- --
Distributions from net realized gains -- -- (1.91) (0.95) --
-------- -------- -------- -------- --------
Total distributions -- (0.05) (1.91) (0.95) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 6.49 $ 6.47 $ 8.99 $ 15.28 $ 13.91
======== ======== ======== ======== ========
Total return++ 0.31% (27.61)% (31.33)% 17.52% 17.48%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,943 $ 2,291 $ 3,299 $ 5,885 $ 2,947
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 3.72% 2.14% 1.34% 1.86% 2.38%***
After expense reimbursement and earnings credits 0.80% 0.80% 0.80% 0.80% 0.80%***
Ratio of net investment income (loss) to average
net assets:
Before expense reimbursement and earnings credits (2.62)% (1.39)% (0.66)% (0.97)% (1.26)%***
After expense reimbursement and earnings credits 0.29% (0.05)% (0.12)% 0.09% 0.32%***
Portfolio turnover rate 86% 93% 56% 86% 51%
</Table>
* For the period November 19, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
(a) Reflects the Fund's change in fiscal year end from December 31 to June 30.
# Amount is less than $0.01 per share.
See accompanying notes to financial statements
117
<Page>
UBS U.S. SMALL CAP GROWTH FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30, FOR THE
----------------------------------------------- PERIOD ENDED
CLASS A 2003 2002 2001 2000 JUNE 30, 1999*
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.79 $ 11.76 $ 16.20 $ 9.16 $ 8.80
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment loss (0.08)** (0.11)** (0.09) (0.08)** (0.04)
Net realized and unrealized gain (loss) 0.29 (1.42) (1.52) 7.12 0.40
-------- -------- -------- -------- --------
Total income (loss) from investment operations 0.21 (1.53) (1.61) 7.04 0.36
-------- -------- -------- -------- --------
Less distributions:
Distributions from net realized gains -- (0.44) (2.83) -- --
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.00 $ 9.79 $ 11.76 $ 16.20 $ 9.16
======== ======== ======== ======== ========
Total return+ 2.14% (13.18)% (11.00)% 76.86% 4.09%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 9,841 $ 1,789 $ 2 $ 2 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.71% 1.69% 1.48% 1.56% 1.57%***
After expense reimbursement and earnings credits 1.40% 1.40% 1.40% 1.40% 1.40%***
Ratio of net investment loss to average net assets:
Before expense reimbursement and earnings credits (1.21)% (1.35)% (0.87)% (1.01)% (0.87)%***
After expense reimbursement and earnings credits (0.90)% (1.06)% (0.79)% (0.85)% (0.70)%***
Portfolio turnover rate 69% 71% 93% 104% 71%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002++
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.75 $ 10.18
-------------- --------------
Income from investment operations:
Net investment loss (0.14)** (0.11)**
Net realized and unrealized gain 0.28 0.12
-------------- --------------
Total income from investment operations 0.14 0.01
-------------- --------------
Less distributions:
Distributions from net realized gains -- (0.44)
-------------- --------------
Net asset value, end of period $ 9.89 $ 9.75
============== ==============
Total return+ 1.44% (0.11)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,132 $ 656
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.47% 2.46%***
After expense reimbursement and earnings credits 2.15% 2.15%***
Ratio of net investment loss to average net assets:
Before expense reimbursement and earnings credits (1.97)% (1.93)%***
After expense reimbursement and earnings credits (1.65)% (1.62)%***
Portfolio turnover rate 69% 71%
</Table>
* For the period December 31, 1998 (commencement of investment operations)
through June 30, 1999.
++ For the period November 7, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
See accompanying notes to financial statements
118
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.74 $ 10.37
-------------- --------------
Income (loss) from investment operations:
Net investment loss (0.14)** (0.10)**
Net realized and unrealized gain (loss) 0.28 (0.09)
-------------- --------------
Total loss from investment operations 0.14 (0.19)
-------------- --------------
Less distributions:
Distributions from net realized gains -- (0.44)
-------------- --------------
Net asset value, end of period $ 9.88 $ 9.74
============== ==============
Total return+ 1.44% (2.04)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 757 $ 410
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.47% 2.46%***
After expense reimbursement and earnings credits 2.15% 2.15%***
Ratio of net investment loss to average net assets:
Before expense reimbursement and earnings credits (1.97)% (1.90)%***
After expense reimbursement and earnings credits (1.65)% (1.59)%***
Portfolio turnover rate 69% 71%
<Caption>
YEAR ENDED JUNE 30, SIX MONTHS
----------------------------------------------- ENDED
CLASS Y 2003 2002 2001 2000 JUNE 30, 1999(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.92 $ 11.86 $ 16.27 $ 9.18 $ 8.80
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment loss (0.06)** (0.09)** (0.07) (0.03)** (0.02)
Net realized and unrealized gain (loss) 0.29 (1.41) (1.51) 7.12 0.40
-------- -------- -------- -------- --------
Total income (loss) from investment operations 0.23 (1.50) (1.58) 7.09 0.38
-------- -------- -------- -------- --------
Less distributions:
Distributions from net realized gains -- (0.44) (2.83) -- --
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.15 $ 9.92 $ 11.86 $ 16.27 $ 9.18
======== ======== ======== ======== ========
Total return++ 2.32% (12.90)% (10.74)% 77.23% 4.32%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 39,785 $ 36,318 $ 44,057 $ 50,975 $ 35,211
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.49% 1.41% 1.23% 1.31% 1.32%***
After expense reimbursement and earnings credits 1.15% 1.15% 1.15% 1.15% 1.15%***
Ratio of net investment loss to average net assets:
Before expense reimbursement and earnings credits (1.00)% (1.07)% (0.62)% (0.76)% (0.62)%***
After expense reimbursement and earnings credits (0.66)% (0.81)% (0.54)% (0.60)% (0.45)%***
Portfolio turnover rate 69% 71% 93% 104% 71%
</Table>
* For the period November 19, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
(a) Reflects the Fund's change in fiscal year end from December 31 to June 30.
See accompanying notes to financial statements
119
<Page>
UBS U.S. BOND FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------
CLASS A 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.51 $ 10.33 $ 9.99 $ 10.30 $ 10.58
--------- --------- --------- ------- ---------
Income from investment operations:
Net investment income 0.42** 0.53** 0.62** 0.58** 0.57**
Net realized and unrealized gain (loss) 0.52 0.32 0.41 (0.25) (0.26)
--------- --------- --------- ------- ---------
Total income from investment operations 0.94 0.85 1.03 0.33 0.31
--------- --------- --------- ------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.46) (0.67) (0.69) (0.64) (0.44)
Distributions from net realized gains -- -- -- -- (0.15)
--------- --------- --------- ------- ---------
Total distributions (0.46) (0.67) (0.69) (0.64) (0.59)
--------- --------- --------- ------- ---------
Net asset value, end of period $ 10.99 $ 10.51 $ 10.33 $ 9.99 $ 10.30
========= ========= ========= ======= =========
Total return+ 9.17% 8.41% 10.56% 3.29% 2.88%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 31,337 $ 18,558 $ 123 $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.04% 1.21% 0.98% 0.92% 0.86%
After expense reimbursement and earnings credits 0.85% 0.86%++ 0.85% 0.85% 0.85%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 3.70% 4.68% 5.86% 5.87% 5.17%
After expense reimbursement and earnings credits 3.89% 5.03% 5.99% 5.94% 5.18%
Portfolio turnover rate 180% 452% 314% 170% 260%
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.50 $ 10.76
------------- --------------
Income from investment operations:
Net investment income 0.34** 0.29**
Net realized and unrealized gain (loss) 0.52 (0.22)
------------- --------------
Total income from investment operations 0.86 0.07
------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.39) (0.33)
------------- --------------
Net asset value, end of period $ 10.97 $ 10.50
============= ==============
Total return+ 8.30% 0.70%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 3,646 $ 1,405
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.79% 1.96%***
After expense reimbursement and earnings credits 1.60% 1.60%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 2.95% 3.93%***
After expense reimbursement and earnings credits 3.14% 4.29%***
Portfolio turnover rate 180% 452%
</Table>
* For the period November 6, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ The ratio of net operating expenses to average net assets for Class A was
0.85%, interest expense was 0.01% of net assets.
See accompanying notes to financial statements
120
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.50 $ 10.77
-------------- --------------
Income from investment operations:
Net investment income 0.37** 0.31**
Net realized and unrealized gain (loss) 0.52 (0.24)
-------------- --------------
Total income from investment operations 0.89 0.07
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.41) (0.34)
-------------- --------------
Net asset value, end of period $ 10.98 $ 10.50
============== ==============
Total return+ 8.65% 0.72%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 3,164 $ 1,143
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.54% 1.61%***
After expense reimbursement and earnings credits 1.35% 1.35%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 3.20% 4.32%***
After expense reimbursement and earnings credits 3.39% 4.58%***
Portfolio turnover rate 180% 452%
</Table>
<Table>
<Caption>
YEAR ENDED JUNE 30,
-------------------------------------------------------------
CLASS Y 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.53 $ 10.35 $ 10.00 $ 10.28 $ 10.58
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.45** 0.56** 0.64** 0.62** 0.58**
Net realized and unrealized gain (loss) 0.52 0.31 0.42 (0.25) (0.26)
-------- -------- -------- -------- --------
Total income from investment operations 0.97 0.87 1.06 0.37 0.32
-------- -------- -------- -------- --------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.49) (0.69) (0.71) (0.65) (0.47)
Distributions from net realized gains -- -- -- -- (0.15)
-------- -------- -------- -------- --------
Total distributions (0.49) (0.69) (0.71) (0.65) (0.62)
-------- -------- -------- -------- --------
Net asset value, end of period $ 11.01 $ 10.53 $ 10.35 $ 10.00 $ 10.28
======== ======== ======== ======== ========
Total return++ 9.42% 8.59% 10.86% 3.74% 2.97%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 78,807 $ 59,740 $ 62,514 $ 58,121 $ 92,030
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 0.79% 0.80% 0.73% 0.67% 0.61%
After expense reimbursement and earnings credits 0.60% 0.64%# 0.60% 0.60% 0.60%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 3.95% 5.10% 6.11% 6.12% 5.42%
After expense reimbursement and earnings credits 4.14% 5.26% 6.24% 6.19% 5.43%
Portfolio turnover rate 180% 452% 314% 170% 260%
</Table>
* For the period November 8, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
# The ratio of net operating expenses to average net assets for Class Y was
0.60%, interest expense was 0.04%of net assets.
See accompanying notes to financial statements
121
<Page>
UBS HIGH YIELD FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30, FOR THE
----------------------------------------------- PERIOD ENDED
CLASS A 2003 2002 2001 2000 JUNE 30, 1999(a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.36 $ 7.87 $ 9.18 $ 9.95 $ 9.98
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income 0.56** 0.76** 0.85** 0.90** 0.42**
Net realized and unrealized gain (loss) 0.50 (0.96) (1.08) (0.90) (0.15)
-------- -------- -------- -------- --------
Total income (loss) from investment operations 1.06 (0.20) (0.23) - 0.27
-------- -------- -------- -------- --------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.58) (1.31) (1.08) (0.70) (0.30)
Distributions from net realized gains -- -- -- (0.07) --
-------- -------- -------- -------- --------
Total distributions (0.58) (1.31) (1.08) (0.77) (0.30)
-------- -------- -------- -------- --------
Net asset value, end of period $ 6.84 $ 6.36 $ 7.87 $ 9.18 $ 9.95
======== ======== ======== ======== ========
Total return+ 17.70% (3.01)% (2.28)% (0.13)% 2.71%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 76,309 $ 65,832 $ 1 $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.29% 1.26% 1.14% 1.11% 1.08%***
After expense reimbursement and earnings credits 0.95% 0.95% 0.97%++ 0.95% 0.95%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 8.38% 10.71% 9.65% 9.06% 8.29%***
After expense reimbursement and earnings credits 8.72% 11.02% 9.82% 9.22% 8.42%***
Portfolio turnover rate 71% 120% 87% 73% 77%
</Table>
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.35 $ 7.02
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.51** 0.45**
Net realized and unrealized gain (loss) 0.50 (0.61)
-------------- --------------
Total income (loss) from investment operations 1.01 (0.16)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.53) (0.51)
-------------- --------------
Net asset value, end of period $ 6.83 $ 6.35
============== ==============
Total return+ 16.83% (2.70)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 13,130 $ 15,692
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.05% 2.05%***
After expense reimbursement and earnings credits 1.70% 1.70%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 7.62% 9.88%***
After expense reimbursement and earnings credits 7.97% 10.23%***
Portfolio turnover rate 71% 120%
</Table>
(a) For the period December 31, 1998 (commencement of investment operations)
through June 30, 1999.
* For the period November 7, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ The ratio of net operating expenses to average net assets for Class A was
0.95%.
See accompanying notes to financial statements
122
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.35 $ 7.02
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.53** 0.46**
Net realized and unrealized gain (loss) 0.51 (0.61)
-------------- --------------
Total income (loss) from investment operations 1.04 (0.15)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.55) (0.52)
-------------- --------------
Net asset value, end of period $ 6.84 $ 6.35
============== ==============
Total return+ 17.29% (2.54)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 18,969 $ 17,947
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.79% 1.79%***
After expense reimbursement and earnings credits 1.45% 1.45%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 7.88% 10.15%***
After expense reimbursement and earnings credits 8.22% 10.49%***
Portfolio turnover rate 71% 120%
</Table>
<Table>
<Caption>
YEAR ENDED JUNE 30, SIX MONTHS
----------------------------------------------- ENDED
CLASS Y 2003 2002 2001 2000 JUNE 30, 1999(a)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.38 $ 7.90 $ 9.19 $ 9.96 $ 9.98
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income 0.58** 0.81** 0.88** 0.91** 0.44**
Net realized and unrealized gain (loss) 0.50 (1.01) (1.08) (0.90) (0.15)
-------- -------- -------- -------- --------
Total income (loss) from investment operations 1.08 (0.20) (0.20) 0.01 0.29
-------- -------- -------- -------- --------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.59) (1.32) (1.09) (0.71) (0.31)
Distributions from net realized gains -- -- -- (0.07) --
-------- -------- -------- -------- --------
Total distributions (0.59) (1.32) (1.09) (0.78) (0.31)
-------- -------- -------- -------- --------
Net asset value, end of period $ 6.87 $ 6.38 $ 7.90 $ 9.19 $ 9.96
======== ======== ======== ======== ========
Total return++ 18.08% (2.98)% (1.83)% 0.02% 2.91%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 71,819 $ 40,120 $ 54,560 $ 50,845 $ 60,044
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.05% 1.02% 0.89% 0.86% 0.83%***
After expense reimbursement and earnings credits 0.70% 0.70%# 0.72%# 0.70% 0.70%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 8.62% 10.77% 9.90% 9.31% 8.54%***
After expense reimbursement and earnings credits 8.97% 11.09% 10.07% 9.47% 8.67%***
Portfolio turnover rate 71% 120% 87% 73% 77%
</Table>
* For the period November 7, 2001 (commencement of issuance) through June 30,
2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges
(a) Reflects the Fund's change in fiscal year end from December 31 to June 30.
++ Class Y does not have sales charges.
# The ratio of net operating expenses to average net assets for Class Y was
0. 70%.
See accompanying notes to financial statements
123
<Page>
UBS INTERNATIONAL EQUITY FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR ENDED JUNE 30,
-------------------------------------------------------------
CLASS A 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.08 $ 10.61 $ 13.57 $ 12.30 $ 12.14
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income 0.10** 0.13** --** 0.08** 0.12
Net realized and unrealized gain (loss) (0.87) (0.79) (2.15) 1.33 0.27
-------- -------- -------- -------- --------
Total income (loss) from investment operations (0.77) (0.66) (2.15) 1.41 0.39
-------- -------- -------- -------- --------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.31) (0.27) (0.04) -- (0.11)
Distributions from net realized gains (0.01) (1.60) (0.77) (0.14) (0.12)
-------- -------- -------- -------- --------
Total distributions (0.32) (1.87) (0.81) (0.14) (0.23)
-------- -------- -------- -------- --------
Net asset value, end of period $ 6.99 $ 8.08 $ 10.61 $ 13.57 $ 12.30
======== ======== ======== ======== ========
Total return+ (9.24)% (5.91)% (16.37)% 11.51% 3.30%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 3,146 $ 2,599 $ 301 $ 1 $ 15
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.47% 1.41% 1.31% 1.25% 1.24%
After expense reimbursement and earnings credits 1.25% 1.25% 1.28%# 1.25%++ 1.24%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 1.21% 1.38% 0.77% 0.64% 1.10%
After expense reimbursement and earnings credits 1.43% 1.54% 0.80% 0.64% 1.10%
Portfolio turnover rate 120% 82% 62% 59% 74%
</Table>
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.05 $ 7.75
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.04** 0.05**
Net realized and unrealized gain (loss) (0.86) 0.25
-------------- --------------
Total income (loss) from investment operations (0.82) 0.30
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.30) --
Distributions from net realized gains (0.01) --
-------------- --------------
(0.31) --
-------------- --------------
Net asset value, end of period $ 6.92 $ 8.05
============== ==============
Total return+ (9.94)% 3.87%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 352 $ 120
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.18% 2.05%***
After expense reimbursement and earnings credits 2.00% 2.00%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.50% 1.45%***
After expense reimbursement and earnings credits 0.68% 1.50%***
Portfolio turnover rate 120% 82%
</Table>
* For the period February 12, 2002 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ The ratio of net operating expenses to average net assets for Class A was
1.24%.
# The ratio of net operating expenses to average net assets for Class A was
1.25%.
See accompanying notes to financial statements
124
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.05 $ 7.75
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.04** 0.04**
Net realized and unrealized gain (loss) (0.89) 0.26
-------------- --------------
Total income (loss) from investment operations (0.85) 0.30
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.29) --
Distributions from net realized gains (0.01) --
-------------- --------------
Total distributions (0.30) --
-------------- --------------
Net asset value, end of period $ 6.90 $ 8.05
============== ==============
Total return+ (10.29)% 3.87%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 399 $ 183
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.21% 2.19%***
After expense reimbursement and earnings credits 2.00% 2.00%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 0.47% 0.91%***
After expense reimbursement and earnings credits 0.68% 1.10%***
Portfolio turnover rate 120% 82%
</Table>
<Table>
<Caption>
YEAR ENDED JUNE 30,
--------------------------------------------------------------
CLASS Y 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 8.12 $ 10.64 $ 13.57 $ 12.34 $ 12.15
-------- -------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income 0.11** 0.09** 0.13** 0.11** 0.16
Net realized and unrealized gain (loss) (0.88) (0.74) (2.25) 1.33 0.27
-------- -------- --------- --------- ---------
Total income (loss) from investment operations (0.77) (0.65) (2.12) 1.44 0.43
-------- -------- --------- --------- ---------
Less distributions:
Distributions from net investment income and
net foreign currency gains (0.33) (0.27) (0.04) (0.07) (0.12)
Distributions from net realized gains (0.01) (1.60) (0.77) (0.14) (0.12)
-------- -------- --------- --------- ---------
Total distributions (0.34) (1.87) (0.81) (0.21) (0.24)
-------- -------- --------- --------- ---------
Net asset value, end of period $ 7.01 $ 8.12 $ 10.64 $ 13.57 $ 12.34
======== ======== ========= ========= =========
Total return++ (9.21)% (5.78)% (16.15)% 11.76% 3.65%
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 90,514 $ 97,851 $ 192,408 $ 411,985 $ 490,322
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 1.21% 1.13% 1.06% 1.00% 0.99%
After expense reimbursement and earnings credits 1.00% 1.00% 1.03%## 1.00%# 0.99%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits 1.47% 0.92% 1.02% 0.89% 1.35%
After expense reimbursement and earnings credits 1.68% 1.05% 1.05% 0.89% 1.35%
Portfolio turnover rate 120% 82% 62% 59% 74%
</Table>
* For the period December 26, 2001 (commencement of issuance) through June
30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
# The ratio of net operating expenses to average net assets for Class Y was
0.99%.
## The ratio of net operating expenses to average net assets for Class Y was
1.00%.
See accompanying notes to financial statements
125
<Page>
UBS U.S. VALUE EQUITY FUND -- FINANCIAL HIGHLIGHTS
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT THE PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS A JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.37 $ 9.96
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.11** 0.05**
Net realized and unrealized loss (0.06) (0.64)
-------------- --------------
Total income (loss) from investment operations 0.05 (0.59)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.05) --
Distributions from net realized gains (0.06) --
-------------- --------------
Total distributions (0.11) --
-------------- --------------
Net asset value, end of period $ 9.31 $ 9.37
============== ==============
Total return+ 0.61% (5.92)%++
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,073 $ 751
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.85% 3.82%***
After expense reimbursement and earnings credits 1.10% 1.10%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits (0.42)% (1.85)%***
After expense reimbursement and earnings credits 1.33% 0.87%***
Portfolio turnover rate 59% 39%
</Table>
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS B JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.32 $ 9.62
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.05** 0.01**
Net realized and unrealized loss (0.07) (0.31)
-------------- --------------
Total loss from investment operations (0.02) (0.30)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.03) --
Distributions from net realized gains (0.06) --
-------------- --------------
Total distributions (0.09) --
-------------- --------------
Net asset value, end of period $ 9.21 $ 9.32
============== ==============
Total return+ (0.17)% (3.12)%++
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 709 $ 301
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 3.42% 4.66%***
After expense reimbursement and earnings credits 1.85% 1.85%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits (0.99)% (2.72)%***
After expense reimbursement and earnings credits 0.58% 0.09%***
Portfolio turnover rate 59% 39%
</Table>
* For the periods December 7, 2001 and November 8, 2001 (commencement of
issuance) for Class A and Class B, respectively, through June 30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
++ The return is non-annualized.
+ The returns do not include sales charges.
See accompanying notes to financial statements
126
<Page>
THE TABLE BELOW SETS FORTH FINANCIAL DATA FOR ONE SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT THE PERIOD PRESENTED.
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS C JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.33 $ 9.73
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.05** 0.00#**
Net realized and unrealized loss (0.07) (0.40)
-------------- --------------
Total loss from investment operations (0.02) (0.40)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.03) --
Distributions from net realized gains (0.06) --
-------------- --------------
Total distributions (0.09) --
-------------- --------------
Net asset value, end of period $ 9.22 $ 9.33
============== ==============
Total return+ (0.13)% (4.11)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 1,025 $ 234
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 3.04% 4.58%***
After expense reimbursement and earnings credits 1.85% 1.85%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits (0.61)% (2.68)%***
After expense reimbursement and earnings credits 0.58% 0.05%***
Portfolio turnover rate 59% 39%
</Table>
<Table>
<Caption>
YEAR FOR THE
ENDED PERIOD ENDED
CLASS Y JUNE 30, 2003 JUNE 30, 2002*
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.38 $ 10.00
-------------- --------------
Income (loss) from investment operations:
Net investment income 0.13** 0.11**
Net realized and unrealized loss (0.06) (0.73)
-------------- --------------
Total income (loss) from investment operations 0.07 (0.62)
-------------- --------------
Less distributions:
Distributions from net investment income and net foreign currency gains (0.06) --
Distributions from net realized gains (0.06) --
-------------- --------------
Total distributions (0.12) --
-------------- --------------
Net asset value, end of period $ 9.33 $ 9.38
============== ==============
Total return++ 0.89% (6.20)%^
Ratios/Supplemental data:
Net assets, end of period (in 000s) $ 4,790 $ 2,819
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits 2.62% 3.15%***
After expense reimbursement and earnings credits 0.85% 0.85%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits (0.19)% (1.17)%***
After expense reimbursement and earnings credits 1.58% 1.13%***
Portfolio turnover rate 59% 39%
</Table>
* For the periods December 12, 2001 and June 29, 2001 (commencement of
issuance) for Class C and Class Y, respectively, through June 30, 2002.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized.
^ The return is non-annualized.
+ The returns do not include sales charges.
++ Class Y does not have sales charges.
# Amount was less than $0.01 per share
See accompanying notes to financial statements
127
<Page>
THE UBS FUNDS -- NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The UBS Funds (the "Trust") is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, as a series
company. The Trust currently offers shares of eleven series: UBS Global
Allocation Fund, UBS Global Equity Fund, UBS Global Bond Fund, UBS U.S. Balanced
Fund, UBS U.S. Equity Fund, UBS U.S. Large Cap Growth Fund, UBS U.S. Small Cap
Growth Fund, UBS U.S. Bond Fund, UBS High Yield Fund, UBS International Equity
Fund, and UBS U.S. Value Equity Fund (each a "Fund" and collectively, the
"Funds"). Each Fund has four classes of shares outstanding, Class A, Class B,
Class C and Class Y. There are an unlimited number of shares of each class with
par value of $0.001 authorized. Each class represents interests in the same
assets of the applicable Portfolio and the classes are identical except for
differences in their sales charge structure, ongoing service and distribution
charges and certain transfer agency and related services expenses. The following
is a summary of significant accounting policies followed by the Funds in the
preparation of their financial statements.
A. INVESTMENT VALUATION: Each Fund calculates its net asset value based on the
current market value for its portfolio securities. The Funds normally obtain
market values for their securities from independent pricing sources. Independent
pricing sources may use last reported sale prices, current market quotations or
valuations from computerized "matrix" systems that derive values based on
comparable securities. Securities traded in the over-the-counter ("OTC") market
and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") normally are valued at
the Nasdaq official closing price. Other OTC securities are valued at the last
bid price available prior to valuation. Securities which are listed on U.S. and
foreign stock exchanges normally are valued at the last sale price on the day
the securities are valued or, lacking any sales on such day, at the last
available bid price. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market by UBS Global Asset Management (US) Inc. ("UBS Global AM"), the
investment manager and administrator of the Portfolios, or by the relevant
Portfolio investment advisor, where applicable. UBS Global AM is an indirect
wholly owned asset management subsidiary of UBS AG, an internationally
diversified organization with headquarters in Zurich, Switzerland and operations
in many areas of the financial services industry. If a market value is not
available from an independent pricing source for a particular security, that
security is valued at fair value as determined in good faith by or under the
direction of the Trust's Board of Trustees (the "Board").
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Forward foreign currency contracts are valued
daily using quoted forward exchange rates. Short-term obligations with a
maturity of 60 days or less are valued at amortized cost, which approximates
market value.
B. FOREIGN CURRENCY TRANSLATION: Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
using the WM/Reuters closing spot rates as of 4:00 p.m. London time. Purchases
and sales of portfolio securities, commitments under forward foreign currency
contracts and income receipts are translated at the prevailing exchange rate as
of the date of each transaction. Realized and unrealized foreign exchange gains
or losses on investments are included as a component of net realized and
unrealized gain or loss on investments in the statements of operations.
C. INVESTMENT TRANSACTIONS: Investment transactions are accounted for on a
trade date basis. Gains and losses on securities sold are determined on an
identified cost basis.
D. INVESTMENT INCOME: Interest income, which includes the amortization of
premiums and accretion of discounts, is recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date, except that occassionally certain
dividends from foreign securities are recorded as the information becomes
available.
E. FEDERAL INCOME TAXES: It is the Funds' policy to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute substantially all of their taxable income
to their shareholders. The Funds met the requirements of the Code applicable to
regulated investment companies for the year ended June 30, 2003, therefore, no
federal income tax provision was required.
128
<Page>
At June 30, 2003, the following Funds had capital loss carryforwards for federal
income tax purposes available to offset future net capital gains through the
indicated expiration dates:
<Table>
<Caption>
EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE
JUNE 30, 2008 JUNE 30, 2009 JUNE 30, 2010 JUNE 30, 2011
--------------- --------------- --------------- ---------------
UBS Global Allocation Fund -- -- -- $ 6,898,051
UBS Global Bond Fund -- $ 1,512,330 -- --
UBS U.S. Balanced Fund -- 751,452 -- 795,405
UBS U.S. Equity Fund -- -- -- 3,307,470
UBS U.S. Large Cap Growth Fund -- -- $ 1,265,393 1,745,070
UBS U.S. Small Cap Growth Fund -- -- -- 2,064,972
UBS U.S. Bond Fund -- 404,247 -- --
UBS International Equity Fund -- -- -- 11,448,738
UBS U.S. Value Equity Fund $ 746,499+ 83,503+ 273,335+ 333,903
</Table>
+ Due to merger with the UBS U.S. Large Cap Equity Fund, utilization of capital
loss carryforwards in subsequent years may be limited. Capital loss
carryforwards in the amount of $5,196,199 expired as of June 30, 2003.
At June 30, 2003 the UBS High Yield Fund had the following capital loss
carryforwards for federal income tax purposes available to offset future capital
gains through the indicated expiration dates:
<Table>
<Caption>
EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE
JUNE 30, 2004 JUNE 30, 2005 JUNE 30, 2006 JUNE 30, 2007
--------------- --------------- --------------- ---------------
$ 16,663,383 $ 10,089,023 $ 11,387,957 $ 18,661,457
<Caption>
EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE
JUNE 30, 2008 JUNE 30, 2009 JUNE 30, 2010 JUNE 30, 2011
- --------------- --------------- --------------- ---------------
$ 98,009,332+ $ 23,205,714+ $ 6,612,767+ $ 37,425,637+
</Table>
+ Due to merger with Paine Webber High Income Fund, utilization of capital loss
carryforwards in subsequent years may be limited.
Capital loss carryforwards in the amount of $36,527,101 expired as of June 30,
2003.
At June 30, 2003, the UBS Global Equity Fund had the following capital loss
carryforwards for federal income tax purposes available to offset future capital
gains through the indicated expiration dates:
<Table>
<Caption>
EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE EXPIRATION DATE
JUNE 30, 2007 JUNE 30, 2008 JUNE 30, 2009 JUNE 30, 2010 JUNE 30, 2011
--------------- --------------- --------------- --------------- ---------------
$ 104,630,955 $ 143,090,067 $ 389,124,210 $ 253,636,661+ $ 4,283,846+
</Table>
+ Due to merger with the UBS Strategy Fund, utilization of capital loss
carryforwards in subsequent years may be limited.
For the fiscal year end June 30, 2003, the UBS Global Bond Fund and the UBS U.S.
Bond Fund utilized capital loss carryforwards of $1,150,166 and $1,575,782,
respectively.
Post-October losses are deemed to arise on the first business day of a Fund's
next taxable year. For the year ended June 30, 2003, the following Funds
incurred, and elected to defer, losses of the following:
<Table>
<Caption>
NET NET
CAPITAL CURRENCY
LOSSES LOSSES
------------ --------
UBS Global Allocation Fund $ 3,460,854 --
UBS Global Equity Fund 22,673,561 --
UBS U.S. Balanced Fund 601,166 --
UBS U.S. Equity Fund 3,954,271 --
UBS U.S. Large Cap Growth Fund 662,081 --
UBS High Yield Fund 5,190,877 --
UBS International Equity Fund 5,641,025 --
UBS U.S. Value Equity Fund 400,193 --
</Table>
129
<Page>
The tax character of distributions paid during the fiscal years ended June 30,
2003 and 2002, were as follows:
<Table>
<Caption>
2003
-----------------------------------------------
DISTRIBUTIONS DISTRIBUTIONS
PAID FROM PAID FROM NET TOTAL
ORDINARY LONG-TERM DISTRIBUTIONS
FUND INCOME CAPITAL GAINS PAID
- ---- ------------- ------------- -------------
UBS Global Allocation Fund $ 7,500,413 -- $ 7,500,413
UBS Global Equity Fund 1,782,212 -- 1,782,212
UBS Global Bond Fund 990,333 -- 990,333
UBS U.S. Balanced Fund 552,196 -- 552,196
UBS U.S. Equity Fund 938,862 $ 2,529,840 3,468,702
UBS U.S. Large Cap Growth Fund -- -- --
UBS U.S. Small Cap Growth Fund -- -- --
UBS U.S. Bond Fund 4,368,267 -- 4,368,267
UBS High Yield Fund 14,403,518 -- 14,403,518
UBS International Equity Fund 4,357,327 -- 4,357,327
UBS U.S. Value Equity Fund 95,678 -- 95,678
<Caption>
2002
----------------------------------------------------------------
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PAID FROM PAID FROM NET FROM TOTAL
ORDINARY LONG-TERM RETURN OF DISTRIBUTIONS
FUND INCOME CAPITAL GAINS CAPITAL PAID
- ---- ------------- ------------- ------------- -------------
UBS Global Allocation Fund $ 5,031,352 $ 9,778,031 -- $ 14,809,383
UBS Global Equity Fund 689,423 1,384,778 -- 2,074,201
UBS Global Bond Fund -- -- $ 725,259 725,259
UBS U.S. Balanced Fund 560,395 -- -- 560,395
UBS U.S. Equity Fund 675,823 5,227,388 -- 5,903,211
UBS U.S. Large Cap Growth Fund -- 33,062 -- 33,062
UBS U.S. Small Cap Growth Fund 401,689 1,141,314 -- 1,543,003
UBS U.S. Bond Fund 5,697,025 -- -- 5,697,025
UBS High Yield Fund 12,804,647 -- -- 12,804,647
UBS International Equity Fund 4,444,207 16,417,909 -- 20,862,116
UBS U.S. Value Equity Fund -- -- -- --
</Table>
At June 30, 2003, the components of accumulated earnings (deficit) on a tax
basis were as follows:
<Table>
<Caption>
UNDISTRIBUTED ACCUMULATED
ORDINARY CAPITAL AND
FUND INCOME OTHER LOSSES
- ---- -------------- --------------
UBS Global Allocation Fund $ 7,900,532 $ (10,358,905)
UBS Global Equity Fund 4,889,951 (917,439,300)
UBS Global Bond Fund 4,133,362 (1,512,330)
UBS U.S. Balanced Fund 251,753 (2,148,023)
UBS U.S. Equity Fund 1,010,084 (7,261,741)
UBS U.S. Large Cap Growth Fund 1,980 (3,672,544)
UBS U.S. Small Cap Growth Fund -- (2,064,972)
UBS U.S. Bond Fund 90,877 (404,247)
UBS High Yield Fund 843,307 (227,246,147)
UBS International Equity Fund 2,239,108 (17,089,763)
UBS U.S. Value Equity Fund 83,686 (1,837,433)
</Table>
130
<Page>
Due to inherent differences in the recognition of income, expenses and realized
gains/losses under accounting principles generally accepted in the United States
and federal income tax purposes, permanent differences between book and tax
basis reporting for the current fiscal year have been identified and
appropriately reclassified. Reclassifications for the year ended June 30, 2003,
were as follows:
<Table>
<Caption>
ACCUMULATED
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED
FUND INCOME (LOSS) GAIN (LOSS) PAID IN CAPITAL
- ---- -------------- --------------- ---------------
UBS Global Allocation Fund $ 10,431,263 $ (9,682,557) $ (748,706)
UBS Global Equity Fund 2,695,345 (896,087,156) 893,391,811
UBS Global Bond Fund 3,869,339 (3,869,339) --
UBS U.S. Balanced Fund 24,967 (24,967) --
UBS U.S. Equity Fund (651) 651 --
UBS U.S. Small Cap Growth Fund 266,297 -- (266,297)
UBS U.S. Bond Fund 368,432 (368,432) --
UBS High Yield Fund 2 36,487,101 (36,487,103)
UBS International Equity Fund 1,436,106 (1,436,106) --
UBS U.S. Value Equity Fund 7,752 (1,147,461) 1,139,709
</Table>
F. DISTRIBUTIONS TO SHAREHOLDERS: It is the Funds' policy to distribute their
respective net investment income and net capital gains, if any, annually except
for UBS U.S. Bond Fund, UBS High Yield Fund and UBS Global Bond Fund. These
Funds will distribute their respective net income, if any, monthly.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from accounting principles generally accepted in
the United States. Differences in dividends from net investment income per share
between the classes are due to service and distribution related expenses.
G. INCOME AND EXPENSE ALLOCATION: All income earned and expenses incurred by
each Fund will be borne on a pro rata basis by each of the classes.
Class-specific expenses are charged directly to the applicable class of shares.
H. EARNINGS CREDITS: The Funds have entered into an arrangement with their
custodian whereby interest earned on uninvested cash balances is used to offset
a portion of the Fund's expenses. These amounts, if any, are reflected in the
statements of operations.
I. USE OF ESTIMATES: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results may differ from
those estimates.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
UBS Global Asset Management (Americas) Inc. ("UBS Global AM (Americas)" or the
"Advisor"), a registered investment advisor, provides the Funds with investment
management services. As compensation for these services, each Fund pays the
Advisor a monthly fee based on each Fund's respective average daily net assets.
With respect to UBS U.S. Large Cap Growth Fund, UBS U.S. Small Cap Growth Fund
and UBS High Yield Fund, UBS Global Asset Management (New York) Inc. (the
"Sub-Advisor"), an affiliate of the Advisor, serves as Sub-Advisor for these
Funds pursuant to a Sub-Advisory Agreement (the "Sub-Advisory Agreement") with
the Advisor. The Sub-Advisor receives 0.10% from the Advisor, not the Fund, for
services it provides under the Sub-Advisory Agreement.
131
<Page>
The advisory fees as of June 30, 2003 are as follows:
<Table>
<Caption>
FUND ADVISORY FEE
- ---- ------------
UBS Global Allocation Fund 0.80%
UBS Global Equity Fund 0.75
UBS Global Bond Fund 0.75
UBS U.S. Balanced Fund 0.70
UBS U.S. Equity Fund 0.70
UBS U.S. Large Cap Growth Fund 0.70
UBS U.S. Small Cap Growth Fund 1.00
UBS U.S. Bond Fund 0.50
UBS High Yield Fund 0.60
UBS International Equity Fund 0.80
UBS U.S. Value Equity Fund 0.70
</Table>
The Advisor has agreed to waive its fees and reimburse each Fund to the extent
that total annualized operating expenses exceed a specified percentage of each
Fund's respective average daily net assets. Investment advisory fees and other
transactions for the year ended June 30, 2003, were as follows:
<Table>
<Caption>
UBS CLASS A UBS CLASS B UBS CLASS C UBS CLASS Y ADVISORY FEES
FUND EXPENSE CAP EXPENSE CAP EXPENSE CAP EXPENSE CAP FEES WAIVED
- ---- ----------- ----------- ----------- ----------- ----------- ---------
UBS Global Allocation Fund 1.35% 2.10% 2.10% 1.10% $ 1,904,093 $ 10,303
UBS Global Equity Fund 1.25 2.00 2.00 1.00 1,209,097 292,512
UBS Global Bond Fund 1.15 1.90 1.65 0.90 320,858 174,472
UBS U.S. Balanced Fund 1.05 1.80 1.80 0.80 178,909 134,454
UBS U.S. Equity Fund 1.05 1.80 1.80 0.80 639,283 222,632
UBS U.S. Large Cap Growth Fund 1.05 1.80 1.80 0.80 24,553 101,307
UBS U.S. Small Cap Growth Fund 1.40 2.15 2.15 1.15 372,057 125,873
UBS U.S. Bond Fund 0.85 1.60 1.35 0.60 494,439 185,453
UBS High Yield Fund 0.95 1.70 1.45 0.70 969,141 554,866
UBS International Equity Fund 1.25 2.00 2.00 1.00 697,060 183,386
UBS U.S. Value Equity Fund 1.10 1.85 1.85 0.85 43,630 105,155
</Table>
Each Fund pays an administrative fee that is computed daily and paid monthly at
an annual rate of 0.075% of average daily net assets of such Fund.
The Funds may invest in shares of certain affiliated investment companies also
sponsored by the Advisor. These investments represented approximately 20% of UBS
Global Allocation Fund's net assets at June 30, 2003. Amounts relating to those
investments at June 30, 2003 and for the year then ended, were as follows:
<Table>
<Caption>
NET CHANGE IN
SALES REALIZED NET UNREALIZED
AFFILIATES PURCHASES PROCEEDS GAIN/(LOSS) GAIN/(LOSS) VALUE
- ---------- ------------- ------------- ----------- -------------- -------------
UBS U.S. Small Cap Equity Relationship Fund $ 10,300,000 -- -- $ 397,232 $ 15,398,165
UBS High Yield Relationship Fund 16,500,000 $ 6,000,000 $ 438,895 1,911,482 17,910,108
UBS Emerging Markets Equity Relationship Fund 21,200,000 -- -- 2,940,491 33,640,895
UBS Emerging Markets Debt Relationship Fund 3,800,000 -- -- 1,260,339 8,279,844
UBS Supplementary Trust U.S. Cash
Management Prime Fund 218,906,142 193,997,042 -- -- 33,536,135
</Table>
132
<Page>
The Funds may invest in shares of the UBS Supplementary Trust U.S. Cash
Management Prime Fund ("Supplementary Trust"). Supplementary Trust is managed by
the Advisor and is offered as a cash management option only to mutual funds and
certain other accounts managed by the Advisor. The Supplementary Trust pays no
management fees. Distributions received from the Supplementary Trust are
reflected as interest income in the statements of operations. Amounts relating
to those investments for the year ended June 30, 2003, were as follows:
<Table>
<Caption>
% OF
SALES INTEREST NET
FUND PURCHASES PROCEEDS INCOME VALUE ASSETS
- ---- ------------- ------------- ------------- ------------- ----------
UBS Global Allocation Fund $ 218,906,142 $ 193,997,042 $ 202,707 $ 33,536,135 6.03%
UBS Global Equity Fund 113,093,032 110,816,175 40,330 3,192,158 0.75
UBS Global Bond Fund 54,716,243 55,379,632 22,251 655,174 1.26
UBS U.S. Balanced Fund 13,739,997 15,871,651 18,188 749,445 2.41
UBS U.S. Equity Fund 33,813,954 29,031,197 49,540 6,558,296 6.20
UBS U.S. Large Cap Growth Fund 1,759,102 1,614,078 848 145,024 3.93
UBS U.S. Small Cap Growth Fund 32,462,127 28,527,331 25,273 7,037,939 13.66
UBS U.S. Bond Fund 90,495,104 91,045,817 67,587 2,285,654 1.95
UBS High Yield Fund 111,917,520 112,881,411 104,743 -- 0.00
UBS International Equity Fund 110,109,583 108,804,244 23,987 2,559,264 2.71
UBS U.S. Value Equity Fund 1,551,203 1,355,809 1,033 195,394 2.57
</Table>
The following Funds have incurred brokerage commissions with affiliated broker
dealers as listed below. Amounts relating to those transactions at June 30,
2003, were as follows:
<Table>
<Caption>
FUND UBS SECURITIES, LLC
- ---- -------------------
UBS Global Allocation Fund $ 37,064
UBS Global Equity Fund 187,694
UBS U.S. Balanced Fund 5,541
UBS U.S. Equity Fund 27,230
UBS U.S. Large Cap Growth Fund 684
UBS U.S. Small Cap Growth Fund 6,631
UBS U.S. Value Equity Fund 920
</Table>
3. INVESTMENT TRANSACTIONS
Investment transactions for the year ended June 30, 2003, excluding long-term
U.S. government securities and short-term investments, were as follows:
<Table>
<Caption>
SALES
FUND PURCHASES PROCEEDS
- ---- ------------- --------------
UBS Global Allocation Fund $ 403,795,731 $ 96,912,038
UBS Global Equity Fund 666,079,200 329,061,918
UBS Global Bond Fund 63,911,790 46,182,242
UBS U.S. Balanced Fund 16,474,538 10,600,514
UBS U.S. Equity Fund 29,001,954 31,002,893
UBS U.S. Large Cap Growth Fund 2,978,185 3,308,168
UBS U.S. Small Cap Growth Fund 37,746,716 25,247,486
UBS U.S. Bond Fund 95,310,469 62,162,252
UBS High Yield Fund 137,413,817 107,521,165
UBS International Equity Fund 109,944,475 103,294,869
UBS U.S. Value Equity Fund 7,064,787 3,574,921
</Table>
133
<Page>
For the year ended June 30, 2003, purchases and sales of long-term U.S.
government securities were:
<Table>
<Caption>
SALES
FUND PURCHASES PROCEEDS
- ---- -------------- --------------
UBS Global Allocation Fund $ 88,842,506 $ 55,588,684
UBS Global Bond Fund 13,343,456 13,800,635
UBS U.S. Balanced Fund 14,101,640 13,258,853
UBS U.S. Bond Fund 116,274,332 110,540,681
</Table>
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds may engage in portfolio hedging with respect to changes in currency
exchange rates by entering into forward foreign currency contracts to purchase
or sell currencies. Forward foreign currency contracts are also used to achieve
currency allocation strategies. A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Risks associated with such contracts include movement
in the value of the foreign currency relative to the U.S. dollar and the ability
of the counterparty to perform. The unrealized gain, if any, represents the
credit risk to each Fund on a forward foreign currency contract. Fluctuations in
the value of forward foreign currency contracts are recorded daily as net
unrealized gains or losses. The Funds realize a gain or loss upon settlement of
the contracts. The statements of operations reflect net realized and net
unrealized gains and losses on these contracts. The counterparty to all forward
foreign currency contracts during the year ended June 30, 2003, was the Funds'
custodian.
5. FUTURES CONTRACTS
The Funds may purchase or sell exchange-traded futures contracts, which are
contracts that obligate the Funds to make or take delivery of a financial
instrument or the cash value of a securities index at a specified future date at
a specified price. The Funds enter into such contracts to hedge a portion of
their portfolio or equitize cash. 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. Upon entering into a futures contract, the Funds are
required to deposit either cash or securities (initial margin). Subsequent
payments (variation margin) are made or received by the Funds, generally on a
daily basis. The variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains or losses. The Funds
recognize a realized gain or loss when the contract is closed or expires. The
statements of operations reflect net realized and net unrealized gains and
losses on these contracts.
6. SECURITY LENDING
UBS Global Allocation Fund and UBS International Equity Fund loaned securities
to certain brokers, with the Funds' custodian acting as the Funds' lending
agent. The Funds earned negotiated lender fees, which are included in securities
lending-net in the statements of operations. The Funds receive cash and/or
securities as collateral against the loaned securities. Cash collateral received
is invested in interest bearing securities which are included in the schedule of
investments. In addition, the Funds received securities as collateral amounting
to $154,640 which under certain circumstances can be resold. The Funds monitor
the market value of securities loaned on a daily basis and initially require
collateral against the loaned securities in an amount at least equal to 102% of
the value of domestic securities loaned and 105% of the value of foreign
securities loaned. The value of loaned securities and related collateral
outstanding at June 30, 2003, were as follows:
<Table>
<Caption>
MARKET COLLATERAL MARKET VALUE OF
VALUE OF RECEIVED FOR INVESTMENTS
SECURITIES SECURITIES OF CASH COLLATERAL
FUND LOANED LOANED RECEIVED
- ---- ------------ ------------ ------------------
UBS Global Allocation Fund $ 31,915,796 $ 32,953,029 $ 32,953,029
UBS International Equity Fund 9,219,376 9,741,028 9,586,388
</Table>
134
<Page>
7. DISTRIBUTION PLANS
The Trust has adopted distribution and/or service plans (the "Plans") pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended, for Class A,
Class B and Class C. Each Plan governs payments made for the expenses incurred
in the service and/or distribution of Class A, Class B and Class C. Annual fees
under the Plan as a percentage of the average daily net assets of the Class of
each of the Funds are as follows:
<Table>
<Caption>
FUND UBS CLASS A UBS CLASS B UBS CLASS C
- ---- ----------- ----------- -----------
UBS Global Allocation Fund 0.25% 1.00% 1.00%
UBS Global Equity Fund 0.25 1.00 1.00
UBS Global Bond Fund 0.25 1.00 0.75
UBS U.S. Balanced Fund 0.25 1.00 1.00
UBS U.S. Equity Fund 0.25 1.00 1.00
UBS U.S. Large Cap Growth Fund 0.25 1.00 1.00
UBS U.S. Small Cap Growth Fund 0.25 1.00 1.00
UBS U.S. Bond Fund 0.25 1.00 0.75
UBS High Yield Fund 0.25 1.00 0.75
UBS International Equity Fund 0.25 1.00 1.00
UBS U.S. Value Equity Fund 0.25 1.00 1.00
</Table>
8. TRANSFER AGENCY SERVICES FEES
PFPC, Inc. ("PFPC") serves as the Funds' transfer agent. Pursuant to the
Transfer Agency and Related Services Agreement between PFPC and the Trust, PFPC
may delegate to an affiliated or unaffiliated entity, its obligation to perform
certain transfer agency related services. PFPC has delegated certain services to
be provided by the Advisor, PFPC, not the Funds, compensates the Advisor for
delegated services.
For the year ended June 30, 2003, UBS Global AM, received from PFPC, not the
Funds, an approximate percentage of the total transfer agency and related
services fees paid by a Fund to PFPC as follows:
<Table>
<Caption>
FUNDS
- -----
UBS Global Allocation Fund 42%
UBS Global Bond Fund 28
UBS Global Equity Fund 51
UBS High Yield Fund 37
UBS International Equity Fund 5
UBS U.S. Balanced Fund 21
UBS U.S. Bond Fund 14
UBS U.S. Equity Fund 6
UBS U.S. Large Cap Growth Fund 4
UBS U.S. Small Cap Growth Fund 9
UBS U.S. Value Equity Fund 3
</Table>
9. LINE OF CREDIT
The Trust has entered into an agreement with UBS AG, Stamford Branch, to provide
a 364-day $300 million committed line of credit to a group of funds which
includes the Funds. Borrowings will be made for temporary purposes to fund
redemptions. Interest on amounts borrowed is calculated based on the Federal
Funds Rate plus 0.40%. The Funds pay an annual commitment fee of 0.09% of the
average daily balance of the line of credit not utilized. The commitment fee is
allocated across Funds covered based on the ratio of net assets to total Fund
net assets. The average borrowings under the agreement for the year ended June
30, 2003, were as follows:
<Table>
<Caption>
AVERAGE NUMBER OF DAYS INTEREST
FUND BORROWINGS OUTSTANDING PAID
- ---- ------------ -------------- --------
UBS Global Allocation Fund $ 3,400,000 2 $ 403
UBS U.S. Equity Fund 4,300,000 5 995
UBS Global Bond Fund 7,000,000 6 1,902
</Table>
135
<Page>
10. SHARES OF BENEFICIAL INTEREST
For the year ended June 30, 2003, transactions in shares of beneficial interest
for each of the Funds were as follows:
<Table>
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS A SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 16,991,102 (1,301,511) 73,689 15,763,280
UBS Global Equity Fund 14,517,105 (2,261,219) 40,521 12,296,407
UBS Global Bond Fund 1,256,762 (341,473) 9,261 924,550
UBS U.S. Balanced Fund 235,570 (81,666) 7,013 160,917
UBS U.S. Equity Fund 331,451 (980,185) 10,981 (637,753)
UBS U.S. Large Cap Growth Fund 129,700 (128,657) -- 1,043
UBS U.S. Small Cap Growth Fund 1,219,298 (418,061) -- 801,237
UBS U.S. Bond Fund 2,866,955 (1,851,490) 70,756 1,086,221
UBS High Yield Fund 5,332,355 (4,968,656) 440,850 804,549
UBS International Equity Fund 2,013,819 (1,900,579) 15,407 128,647
UBS U.S. Value Equity Fund 149,657 (116,271) 1,670 35,056
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS B SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 5,126,860 (592,823) 16,398 4,550,435
UBS Global Equity Fund 17,479,415 (1,173,562) 2,152 16,308,005
UBS Global Bond Fund 192,173 (66,084) 1,612 127,701
UBS U.S. Balanced Fund 273,604 (82,694) 3,507 194,417
UBS U.S. Equity Fund 46,863 (17,289) 1,546 31,120
UBS U.S. Large Cap Growth Fund 72,983 (40,434) -- 32,549
UBS U.S. Small Cap Growth Fund 96,447 (49,239) -- 47,208
UBS U.S. Bond Fund 393,451 (202,109) 7,237 198,579
UBS High Yield Fund 310,072 (932,620) 74,208 (548,340)
UBS International Equity Fund 40,115 (6,080) 1,913 35,948
UBS U.S. Value Equity Fund 95,615 (51,874) 923 44,664
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS C SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 13,726,993 (916,887) 25,466 12,835,572
UBS Global Equity Fund 11,577,407 (971,292) 2,655 10,608,770
UBS Global Bond Fund 338,536 (27,055) 1,070 312,551
UBS U.S. Balanced Fund 176,742 (20,124) 2,174 158,792
UBS U.S. Equity Fund 72,445 (2,457) 897 70,885
UBS U.S. Large Cap Growth Fund 43,721 (91,568) -- (47,847)
UBS U.S. Small Cap Growth Fund 52,671 (18,072) -- 34,599
UBS U.S. Bond Fund 299,008 (124,298) 4,717 179,427
UBS High Yield Fund 324,891 (485,387) 111,303 (49,193)
UBS International Equity Fund 123,008 (89,576) 1,615 35,047
UBS U.S. Value Equity Fund 98,897 (13,115) 347 86,129
</Table>
136
<Page>
<Table>
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS Y SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 7,296,906 (5,285,277) 441,775 2,453,404
UBS Global Equity Fund 6,974,293 (4,398,666) 118,545 2,694,172
UBS Global Bond Fund 4,534,872 (4,934,863) 63,735 (336,256)
UBS U.S. Balanced Fund 751,068 (814,679) 48,527 (15,084)
UBS U.S. Equity Fund 2,291,693 (1,521,384) 234,917 1,005,226
UBS U.S. Large Cap Growth Fund 69,600 (124,614) -- (55,014)
UBS U.S. Small Cap Growth Fund 2,476,254 (2,220,091) -- 256,163
UBS U.S. Bond Fund 3,717,186 (2,510,367) 279,068 1,485,887
UBS High Yield Fund 12,788,709 (9,404,453) 777,061 4,161,317
UBS International Equity Fund 21,088,509 (20,833,828) 601,835 856,516
UBS U.S. Value Equity Fund 309,081 (101,808) 5,752 213,025
</Table>
For the year ended June 30, 2002, transactions in shares of beneficial interest
for each of the Funds were as follows:
<Table>
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS A SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 715,521 (127,567) 43,233 631,187
UBS Global Equity Fund 3,128,725 (1,578,288) 40,866 1,591,303
UBS Global Bond Fund 984,747 (773,376) 2,030 213,401
UBS U.S. Balanced Fund 300,457 (18,636) 3,757 285,578
UBS U.S. Equity Fund 708,862 (179,477) 11,062 540,447
UBS U.S. Large Cap Growth Fund 319,480 (140,346) 1,699 180,833
UBS U.S. Small Cap Growth Fund 213,258 (36,510) 5,820 182,568
UBS U.S. Bond Fund 2,004,680 (274,863) 23,321 1,753,138
UBS High Yield Fund 1,406,628 (1,889,150) 314,424 (168,098)
UBS International Equity Fund 1,278,780 (1,016,129) 30,484 293,135
UBS U.S. Value Equity Fund 94,668 (14,525) -- 80,143
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS B SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 164,512 (16,187) 884 149,209
UBS Global Equity Fund 44,650 (10) 81 44,721
UBS Global Bond Fund 43,303 -- 207 43,510
UBS U.S. Balanced Fund 120,172 (19,146) 396 101,422
UBS U.S. Equity Fund 23,188 (7,347) 237 16,078
UBS U.S. Large Cap Growth Fund 27,444 (9,309) 30 18,165
UBS U.S. Small Cap Growth Fund 81,729 (14,792) 355 67,292
UBS U.S. Bond Fund 146,602 (13,754) 947 133,795
UBS High Yield Fund 408,633 (910,331) 59,686 (442,012)
UBS International Equity Fund 16,034 (1,872) 787 14,949
UBS U.S. Value Equity Fund 35,795 (3,479) -- 32,316
</Table>
137
<Page>
<Table>
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS C SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 146,726 (2,182) 219 144,763
UBS Global Equity Fund 43,240 (6,324) 744 37,660
UBS Global Bond Fund -- -- -- --
UBS U.S. Balanced Fund 46,781 (2,237) 85 44,629
UBS U.S. Equity Fund 5,264 (272) 68 5,060
UBS U.S. Large Cap Growth Fund 99,366 (9,774) 463 90,055
UBS U.S. Small Cap Growth Fund 54,771 (12,775) 73 42,069
UBS U.S. Bond Fund 169,007 (61,276) 1,094 108,825
UBS High Yield Fund 441,548 (585,864) 82,124 (62,192)
UBS International Equity Fund 85,602 (62,830) -- 22,772
UBS U.S. Value Equity Fund 25,369 (314) -- 25,055
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
CLASS Y SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- ------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 6,074,539 (5,947,592) 880,082 1,007,029
UBS Global Equity Fund 12,705,436 (13,129,371) 103,897 (320,038)
UBS Global Bond Fund 1,682,126 (2,629,806) 49,855 (897,825)
UBS U.S. Balanced Fund 1,214,669 (1,606,011) 53,510 (337,832)
UBS U.S. Equity Fund 2,474,912 (4,407,500) 327,346 (1,605,242)
UBS U.S. Large Cap Growth Fund 118,647 (133,138) 1,660 (12,831)
UBS U.S. Small Cap Growth Fund 2,812,018 (2,993,966) 131,213 (50,735)
UBS U.S. Bond Fund 25,786,380 (26,600,460) 448,819 (365,261)
UBS High Yield Fund 12,655,217 (14,030,481) 707,677 (667,587)
UBS International Equity Fund 84,473,748 (92,835,346) 2,329,414 (6,032,184)
UBS U.S. Value Equity Fund 431 -- -- 431
<Caption>
SHARE NET INCREASE
ISSUED FOR (DECREASE)
SHARES DIVIDENDS IN SHARES
UBS INVESTMENT FUNDS CLASS* SHARES SOLD REPURCHASED REINVESTED OUTSTANDING
- --------------------------- ----------- ----------- ---------- ------------
UBS Global Allocation Fund 29,669 (662,034) -- (632,365)
UBS Global Equity Fund 121,155 (2,013,474) -- (1,892,319)
UBS Global Bond Fund 34 (122,117) -- (122,083)
UBS U.S. Balanced Fund 535 (140,307) -- (139,772)
UBS U.S. Equity Fund 35,944 (400,785) -- (364,841)
UBS U.S. Large Cap Growth Fund 24,524 (418,933) -- (394,409)
UBS U.S. Small Cap Growth Fund 39,760 (241,359) -- (201,599)
UBS U.S. Bond Fund 38,862 (309,461) 2,786 (267,813)
UBS High Yield Fund 10,605 (272,296) 17,013 (244,678)
UBS International Equity Fund 39,536 (436,791) -- (397,255)
UBS U.S. Value Equity Fund -- -- -- --
</Table>
* Liquidated effective 11/9/2001
11. SUBSEQUENT EVENT
Effective July 1, 2003 the following Funds' expense caps were changed as
follows:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS Y
FUND EXPENSE CAP EXPENSE CAP EXPENSE CAP EXPENSE CAP
- ---- ----------- ----------- ----------- -----------
UBS U.S. Equity Fund 1.30% 2.05% 2.05% 1.05%
UBS High Yield Fund 1.20 1.95 1.70 0.95
</Table>
138
<Page>
THE UBS FUNDS -- REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
The UBS Funds
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of The UBS Funds -- UBS Global Allocation Fund,
UBS Global Equity Fund, UBS Global Bond Fund, UBS U.S. Balanced Fund, UBS U.S.
Equity Fund, UBS U.S. Large Cap Growth Fund, UBS U.S. Small Cap Growth Fund, UBS
U.S. Bond Fund, UBS High Yield Fund, UBS International Equity Fund and UBS U.S.
Value Equity Fund (collectively the "Funds") as of June 30, 2003, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of June 30, 2003, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
UBS Funds at June 30, 2003, and the results of their operations for the year
then ended, the statements of changes in their net assets for each of the two
years in the period then ended and the financial highlights for each of the
indicated periods, in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
New York, New York
August 13, 2003
139
<Page>
GENERAL INFORMATION (UNAUDITED)
Proxy Voting Policies and Procedures
You may obtain a description of the Funds' proxy voting policies and
procedures, without charge, upon request by contacting the Funds directly at
1-800-647-1568 or online on the Funds' Web site www.ubs.com/ubsglobalam-proxy.
TRUSTEE INFORMATION (UNAUDITED)
The Trust is a Delaware business trust. Under Delaware law, the Board has
overall responsibility for managing the business and affairs of the Trust,
including general supervision and review of its investment activities. The
Trustees elect the officers of the Trust who are responsible for administering
the day-to-day operations of the Trust and the Funds.
The table below shows, for each Trustee, his or her name, address and age, the
position held with the Trust, the length of time served as a Trustee of the
Trust, the Trustee's principal occupations during the last five years, the
number of funds in the UBS Family of Funds overseen by the Trustee, and other
directorships held by such Trustee.
The Funds' Statement of Additional Information contains additional information
about the Trustees and is available, without charge, upon request, by calling
1-800-647-1568.
NON-INTERESTED TRUSTEES:
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION HELD/ FUND COMPLEX
TERM/TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS, AND AGE SERVED (1) PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ---------------------- -------------- --------------------------------- ---------------------- ----------------------------
Walter E. Auch Trustee Mr. Auch is retired (since 1986). Mr. Auch is a Trustee Mr. Auch is a Trustee of
6001 N. 62nd Place since 1994 of four investment Advisors Series Trust (16
Paradise Valley, companies (consisting portfolios); Smith Barney
AZ 85253 of 43 portfolios)for Fund Complex(27 portfolios);
Age: 82 which UBS Global AM Nicholas Applegate
(Americas) or one of Institutional Funds (19
its affiliates serves portfolios) and Banyan
as investment Strategic Realty Trust. He
advisor, sub-advisor is also a Director of
or manager. Express America Holdings
Corp. and Semele Group Inc.
Frank K. Reilly Chairman Mr. Reilly is a Professor at the Mr. Reilly is a Mr. Reilly is a Director of
College of Business and Trustee University of Notre Dame since Director or Trustee Discover Bank; Morgan
Administration since 1993 1982. Mr. Reilly was a Director of five investment Stanley Trust, FSB; and
University of of Battery Park Funds Inc. companies (consisting NIBCO, Inc.
Notre Dame (1995-2001). of 44 portfolios for
Notre Dame, which UBS Global AM
IN 46556-0399 (Americas) or one of
Age: 67 its affiliates serves
as investment
advisor, sub-advisor
or manager.
</Table>
140
<Page>
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION HELD/ FUND COMPLEX
TERM/TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS, AND AGE SERVED (1) PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ---------------------- -------------- --------------------------------- ---------------------- ----------------------------
Edward M. Roob Trustee since Mr. Roob is retired (since 1993). Mr. Roob is a Mr. Roob is a Trustee of the
841 Woodbine Lane 1995 He was a Committee Member of the Director or Trustee CCM Fund Complex (9
Northbrook, IL 60002 Chicago Stock Exchange from 1993- of five investment portfolios).
Age: 68 1999. companies (consisting
of 44 portfolios for
which UBS Global AM
(Americas) or one of
its affiliates serves
as investment advisor,
sub-advisor or
manager.
</Table>
INTERESTED TRUSTEE:
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITION HELD/ FUND COMPLEX
TERM/TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS, AND AGE SERVED (1) PAST 5 YEARS TRUSTEE (2) HELD BY TRUSTEE
- ---------------------- -------------- --------------------------------- ---------------------- ----------------------------
Brian M. Storms+** Trustee Mr. Storms is chief executive Mr. Storms is a None
Age: 48 since 2001 officer of UBS Global Asset Trustee of four
Management.. America's region investment companies
(since July 2002). Mr. Storm's (consisting of 43
was chief operating officer of portfolios for which
UBS Global Asset Management (US) UBS Global AM
Inc. ("UBS Global AM") and (Americas) or one of
certain affiliated asset its affiliates serves
management companies from 1999 as investment
to July 2002. He was president advisor, sub-advisor
of Prudential Investments (1996- or manager.
1999).
</Table>
141
<Page>
OFFICERS:
<Table>
<Caption>
POSITION HELD/
TERM/TIME
NAME, ADDRESS AND AGE SERVED (1) PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- --------------------- ------------------------- ----------------------------------------------------------------------
W. Douglas Beck*; 36 Vice President Mr. Beck is an executive director and head of mutual fund product
since 2003 management of UBS Global AM (since 2002). From March 1998 to November
2002, he held various positions at Merrill Lynch, the most recent
being first vice president and co-manager of the managed solutions
group. Mr. Beck is vice president of 22 investment companies
(consisting of 81 portfolios) for which UBS Global AM or one of its
affiliates serves as investment advisor, sub-advisor or manager.
Amy R. Doberman**; 41 Vice President and Ms. Doberman is a managing director and general counsel of UBS Global
Assistant Secretary AM. From December 1997 through July 2000, she was general counsel of
since 2002 Aeltus Investment Management, Inc. Ms. Doberman is vice president and
assistant secretary of five investment companies (consisting of 44
portfolios) and vice president and secretary of 19 investment
companies (consisting of 40 portfolios) for which UBS Global AM
(Americas) or one of its affiliates serves as investment advisor,
sub-advisor or manager.
David M. Goldenberg**; 36 Vice President and Mr. Goldenberg is an executive director and deputy general counsel of
Secretary since UBS Global AM. From 2000-2002, he was director, legal affairs at
2002 Lazard Asset Management. Mr. Goldenberg served in various capacities
including most recently as global director of compliance for SSB Citi
Asset Management Group from 1998-2000. Mr. Goldenberg is a vice
president and secretary of five investment companies (consisting of
44 portfolios); and a vice president and assistant secretary of
19investment companies (consisting of 40 portfolios) for which UBS
Global AM (Americas) or one of its affiliates serves as investment
advisor, sub-advisor or manager.
Mark F. Kemper*; 45 Assistant Secretary Mr. Kemper is an executive director and deputy general counsel of UBS
since 1999 Global AM (Americas) since 2001. He was director of UBS Global AM
(Americas) 1997-2000; Secretary of UBS Global AM (Americas) since
1999; Assistant Secretary of UBS Global AM (Americas) 1993-1999;
Assistant Secretary of UBS Global Asset Management Trust Company since
1993. Mr. Kemper is secretary of UBS Global Asset Management
(New York) since 1998 and Assistant Secretary, Brinson Holdings, Inc.
1993-1998. Mr. Kemper is Assistant Secretary of four investment
companies (consisting of 43 portfolios) for which UBS Global AM
(Americas) or one of its affiliates serves as investment advisor,
sub-advisor or manager.
</Table>
142
<Page>
<Table>
<Caption>
POSITION HELD/
TERM/TIME
NAME, ADDRESS AND AGE SERVED (1) PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- --------------------- ------------------------- ----------------------------------------------------------------------
Joseph T. Malone**; 35 Assistant Treasurer Mr. Malone is a director and a senior manager of the mutual fund
since 2001 finance department of UBS Global AM. From August 2000 through June
2001, he was the controller at AEA Investors Inc. From March 1998 to
August 2000, Mr. Malone was a manager within investment management
services of PricewaterhouseCoopers LLC. Mr. Malone is an assistant
treasurer of four investment companies (consisting of 43 portfolios)
for which UBS Global AM (Americas) or one of its affiliates serves as
investment advisor, sub-advisor or manager.
Rita Rubin**; 33 Assistant Secretary Ms. Rubin is a director and associate general counsel of UBS Global
since 2002 AM. Prior to 2001, she was an attorney with the law firm of Kirk
patrick & Lockhart LLP. Ms. Rubin is an assistant secretary of four
investment companies (consisting of 43 portfolios) for which UBS
Global AM (Americas) or one of its affiliates serves as investment
advisor, sub-advisor or manager.
Paul H. Schubert**; 40 Treasurer and Mr. Schubert is an executive director and head of the mutual fund
Principal finance department of UBS Global AM. Mr. Schubert is treasurer and
Accounting Officer principal accounting officer of three investment companies (consisting
since 2001 of 41 portfolios), a vice president and treasurer of 20 investment
companies (consisting of 41 portfolios), treasurer and chief financial
officer of one investment company (consisting of two portfolios) and
treasurer of one investment company (consisting of two portfolios) for
which UBS Global AM (Americas) or one of its affiliates serves as
investment advisor, sub-advisor or manager.
Joseph A. Varnas**; 35 President Mr. Varnas is a managing director (since March 2003), chief
since 2003 technology officer (since March 2001) and head of product, technology
and operations of UBS Global AM (since November 2002). From 2000 to
2001, he was manager of product development in Investment Consulting
Services at UBS Financial Services. Prior to 2000, Mr. Varnas was a
senior analyst in the Global Securities Research and Economics Group
at Merrill Lynch.
</Table>
(1) Each Trustee holds office for an indefinite term.
* This person's business address is UBS Global Asset Management (Americas) Inc.,
One North Wacker Drive, Chicago, IL 60606.
** This person's business address is UBS Global Asset Management (US) Inc., 51
West 52nd Street, New York, NY 10019-6114.
+ Mr. Storms is an "interested person" of the Trust, as that term is defined in
the Investment Company Act of 1940 (as amended), by virtue of his positions with
the advisor, UBS Global AM and/or UBF Financial Services Inc.
143
<Page>
UBS FUNDS -- FEDERAL TAX INFORMATION (UNAUDITED)
For the year ended June 30, 2003, the percentage of dividends paid that qualify
for the 70% dividends received deduction for corporate shareholders, the
designation of long-term capital gain and the amounts expected to be passed
through to the shareholders as foreign tax credits are approximated as follows:
<Table>
<Caption>
DIVIDENDS 20%
RECEIVED LONG-TERM FOREIGN TAX
FUND DEDUCTION CAPITAL GAIN CREDIT
- ---- ------------- ------------- ------------
UBS Global Allocation Fund 20.0% $ -- $ --
UBS Global Equity Fund 25.1 -- --
UBS U.S. Balanced Fund 47.3 -- --
UBS U.S. Equity Fund 100.0 2,529,840 --
UBS International Equity Fund -- -- 237,312
UBS U.S. Value Equity 78.2 -- --
</Table>
In addition, for the year ended June 30, 2003, gross income derived from sources
within foreign countries amounted to $2,471,682 for UBS International Equity
Fund.
For the year ended June 30, 2003, the percentage of income earned from direct
treasury obligations approximately amounted to the following:
<Table>
<Caption>
DIRECT
TREASURY
FUND OBLIGATIONS
- ---- -----------
UBS Global Allocation Fund 15.2%
UBS Global Bond Fund 12.8
UBS U.S. Balanced Fund 17.6
UBS U.S. Bond Fund 23.2
UBS International Equity Fund 28.0
</Table>
144
<Page>
[UBS LOGO] Presorted
Standard
UBS GLOBAL ASSET MANAGEMENT U.S. Postage
One North Wacker Drive PAID
Chicago, Illinois 60606 Smithtown, NY
Permit 700
<Page>
ITEM 2. CODE OF ETHICS.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. [RESERVED BY SEC FOR FUTURE USE. ]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED - END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. [RESERVED BY SEC FOR FUTURE USE. ]
ITEM 9. 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.
<Page>
(b) The registrant's principal executive officer and principal financial
officer are aware of no changes in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal half-year that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics - Form N-CSR requirement not yet effective with
respect to the registrant.
(a)(2) Certification of principal executive officer and principal
financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 is attached hereto as Exhibit 99.CERT.
(b) Certification of principal executive officer and principal financial
officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
attached hereto as Exhibit 99.906CERT.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE UBS FUNDS
By: /s/ Joseph A. Varnas
---------------------
Joseph A. Varnas
President
Date: September 5, 2003
-----------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Joseph A. Varnas
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Joseph A. Varnas
President
Date: September 5, 2003
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By: /s/ Paul H. Schubert
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Paul H. Schubert
Treasurer
Date: September 5, 2003
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