• UBS Global Allocation Fund (UK) is ranked in the top decile within the IMA Balanced Managed Sector for 3 months, 1 year, 2 years and since inception.

• Since launch in November 2007, security selection, asset allocation and currency allocation have all contributed to the Fund's impressive performance.

• Risk assets remain attractive, however non-valuation drivers have become increasingly important as markets have moved closer to fair value.

The UBS Global Allocation Fund (UK) has outperformed the IMA Balanced Managed Sector across all major periods to 28 February 2010 (as can be seen in the chart below). The Fund is ranked in the top decile within its sector over 3 months, 1 year, 2 years and since inception. This strong performance has been achieved against a background of unprecedented levels of volatility and market uncertainty.

Andreas Koester, Head of Asset Allocation and Currency within UBS's Global Investment Solutions team, and lead manager of GAF (UK), said “The performance of the Fund is testament both to the virtues of a diversified approach to investing, with multiple sources of risk and return, and a disciplined investment philosophy and process. Since launching in November 2007, security selection, asset allocation and currency allocation have all had their role to play in the Fund's impressive performance.”

Discipline in difficult conditions
The events of the past few years have been truly exceptional, and late 2008 / early 2009 represented not just an extreme market downturn, but also a dysfunctional market plagued by fears of a systemic collapse. Utilising UBS's disciplined valuation-driven investment process, the Fund was positioned to benefit from the enormous opportunities that this created across multiple asset classes.

Andreas went on to explain, “History has shown that investors occasionally behave irrationally in extreme economic and financial environments, temporarily losing sight of fundamentals. Such periods have often proved to be excellent investing opportunities for those investors able to take a longer term view. We took the view that investors' panic reaction to the credit crisis, and in particular to the failure of Lehman Brothers in September 2008, had the potential to be one of the more notable examples of this phenomenon.”

Consequently, GAF (UK) built up an overweight to risk assets during 2008 (in equities and corporate bonds) and an underweight to government bonds. These views contributed significantly to the Fund's performance in 2009, following the rally in risk assets and increase in government bond yields. Security selection within the underlying components, most notably in global equities, also contributed considerably to performance. More recently, positive contributions to performance have come from security selection, particularly from corporate bonds, as well as the Fund's currency strategy, highlighting the Fund's diverse range of sources of return.

Outlook
Andreas continued, “While it is evident that risk assets have recovered strongly over the past year or so, we still favour equities and corporate bonds. However, that said, we believe markets are now back to levels much closer to fair value and so non-valuation drivers, such as investor sentiment, have become increasingly important and have started to play a greater role in our investment decision making. For example, in January we reduced the Fund's equity overweight as we became concerned that an element of complacency had crept into the markets. We placed the proceeds into cash, some of which was reinvested in February, and are waiting for an opportune time to invest the remaining cash back into risk assets. “

Below is the Fund's current strategy relative to the benchmark