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UBS USA Growth Fund
Montreux, May 2012
Kevin Barker – Head of Equity Capability Management
FOR PROFESSIONAL CLIENTS ONLY
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Disclaimer
For marketing and information purposes by UBS. For professional investors only. Representative in Switzerland for UBS funds established under foreign law: UBS Fund Management (Switzerland) AG, P.O. Box, CH-4002 Basel. Paying agent: UBS AG. Prospectuses, simplified prospectuses, the articles of association or the management regulations as well as annual and semi-annual reports of UBS funds are available free of charge from UBS AG, P.O. Box, CH-4002 Basel or from UBS Fund Management (Switzerland) AG, P.O. Box, CH-4002 Basel. UBS Institutional Funds under Swiss and Luxembourg law. Before investing in a product please read the latest prospectus carefully and thoroughly. This document is for distribution only under such circumstances as may be permitted by applicable law. It was written without reference to any specific or future investment objective, financial or tax situation or requirement on the part of a particular individual or group. The document is for information purposes only and is not intended to be construed as a solicitation or an invitation to make an offer, to conclude a contract, or to buy or sell any securities or related financial instruments. The products or securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. The information and opinions contained in this document have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith, but is not guaranteed as being accurate, nor is it a complete statement or summary of the securities, markets or developments referred to in the document. The details and opinions contained in this document are provided by UBS without any guarantee or warranty and are for the recipient's personal use and information purposes only. Past performance of investments (whether simulated or actual) is not necessarily an indicator of future results. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units. Commissions and costs have a negative impact on performance. Should the currency of a financial product or service not match your reference currency, performance may rise or fall due to currency fluctuations. All such information and opinions are subject to change without notice. UBS AG and / or other members of the UBS Group may have a position in and may make a purchase and / or sale of any of the securities or other financial instruments mentioned in this document. This document may not be reproduced, redistributed or republished for any purpose without the written permission of UBS AG. This document contains statements that constitute "forward-looking statements", including, but not limited to, statements relating to our future business development. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. Source for all data and charts (if not indicated otherwise): UBS Global Asset Management. © UBS 2012. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.
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Key messages
Consistent outperformance versus peers
Excellent time to buy growth fund
Continuity of management and process provides consistent results
UBS (Lux) USA Growth (USD) P acc
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Jul 1
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Overall Morningstar rating Lipper Rating
UBS USA Growth Fund – consistent returns
Source: Morningstar Direct, based on UBS (Lux) USA Growth (USD) P account, as at end March2012Note: Past performance is no guarantee of future results
History of Morningstar rating and Lipper rankings since inception
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Excellent time to buy growth
Source: Factset Data as at 31 March 2012
Growth stock valuations are low versus history
(10)
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30
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Dec
-84
Au
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v-89
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-93
Oct
-94
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-96
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-98
Sep
-99
May
-01
Jan
-03
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g-0
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Ap
r-06
Dec
-07
Jul-0
9
Mar
-11
Relative PE Historical growth/value spread has been 8.7
Current 4.1
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Why has our performance been so consistent?
Structural benefits of growth index –Technology versus financials
Stability of manager and team
Blend different sources of growth to diversify returns
Fundamental research identifies mis-priced secular growth opportunities
Upside/downside modelling on all stocks – aim to find asymmetric risk/reward
Risk management integral to our approach
We aim for reliability, accuracy and precision
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21.3
5.2
4.2
3.2
2.6
-1.6
-1.9
-3.6
-6.8
-22.5
Information Technology
Consumer Discretionary
Consumer Staples
Industrials
Materials
Energy
Health Care
Telecommunication Services
Utilities
Financials
Active position (%)
Growth Index has exposure to the fastest growing sectors
Source: UBS Global Asset Management Data as at 31 Mar 2012
Russell 1000 Growth relative to Russell 1000 Value at 31 March 2012
-10.9
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Tech vs. Financials – faster growth; higher returns
(200)
(100)
0
100
200
300
400
500
Q1-2007
Q1-2008
Q1-2009
Q1-2010
Q1-2011
2012E
2013E
2014E
Financials EarningsIT EarningsFinancials Earnings ForecastIT Earnings Forecast
-0.05
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
Q1-2007
Q1-2008
Q1-2009
Q1-2010
Q1-2011
2012E
2013E
2014E
Financials ROEIT ROEFinancials ROE ForecastIT ROE Forecast
US Financials earnings vs. IT earnings US Financials ROE vs. IT ROE
Source: Citi, Bloomberg, as at end March 2012
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Consistency comes from stability of leadership
Source: UBS Global Asset Management, company fact sheets, Morningstar as at end of March 2012Note: Past performance is no guarantee of future results1 Lawrence Kemp has led the US Large Cap Growth Equity team since 2002
Fund Lead manager Morningstar rating AuM (USD bn) Date appointed
UBS USA Growth Lawrence Kemp 5 3.8 Oct 20041
Fidelity American Adrian Brass 4 1.8 Jan 2008
Franklin US Opportunities Conrad Herman 4 2.4 Jan 2006
JPM US Select Susan Bao / Tom Luddy 5 1.7 Aug 2008
Robeco US Premium Duilio Ramallo 4 5.4 Jan 2006
Natixis Actions US Value Gary Lisenbee 5 1.9 Dec 2005
Lead manager in place since 2002, and running product since launch
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Diversified sources of growth help deliver consistencyBlend of three types of growth stocks
Process for US Large Cap Select Growth Equity / US Large Cap Growth EquityInformation is supplemental to the US Large Cap Growth Composite and the US Large Cap Select Growth Composite.Note: The securities identified on this slide are current holdings as of the date of this presentation. This information should not be considered a recommendation to purchase or sell any particular security. Please see the additional disclosures at the end of this presentation for further information.
Gro
wth
Cycl
ical
Su
sta
ina
ble
ROICLow High
CyclicalConcho Resources
Schlumberger
EliteGoogle Apple
ClassicMcDonald’s
CVS Caremark
Valuat
ion
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GEN0190n.ppt
Diversified sources of growthHistorical allocations as of March 31, 2012
Source: US Large Cap Select Growth portfolio.Information is supplemental to the US Large Cap Select Growth Composite.As of March 31, 2012
0%
20%
40%
60%
80%
100%
Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
Elite Classic Cyclical
US-I
Fundamental company research
Portfolio Construction Risk management
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Example 1: Thinking further ahead
Dominant market player in room booking
Growing at 40-50% per annum
And yet single digit market share penetration
Valuation discounts no growth from 2014
Evaluate opportunity and competitive position of the company
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Example 2 – Challenging misconceptions: The past
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Las Vegas Sands – The future
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Example 2 – Las Vegas Sands
0.0
1.0
2.0
3.0
4.0
2008 2009 2010 2011 2012 E 2013 E 2014 E
USD
38% CAGR (2010-2014)
Fully diluted shares (mn) 394394 728 792 812 813 813 813
Analyst consensus
Strong revenue growth
+ Margin expansion
+ Cost control
+Reduced interest expense
+Elimination of preferred dividend
Strong EPS Growth
Source: Las Vegas Sands, as at end March 2012
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UBS USA Growth Fund – Our biggest viewsVs. Russell 1000 Growth as of 30 April 2012
Active position (%)
Visa 3.81
Amazon.com 3.33
CVS Caremark 3.10
Priceline.com 2.98
Estee Lauder 2.92
Allergan 2.58
Dollar General 2.50
Baidu 2.31
Nike 2.30
Salesforce 2.28
3.8
3.3
3.1
3.0
2.9
2.6
2.5
2.3
2.3
2.3
Ten largest overweights
Source: UBS Global Asset ManagementSupplemental information to the US Large Cap Select Growth Composite
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UBS USA Growth Fund – Key messages
Consistent outperformance versus peers
Excellent time to buy growth fund
Continuity of management and process provides consistent results
APPENDIX
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US Large Cap Growth Team
As of March 2012
Lawrence Kemp, CFA – Managing DirectorHead of US Large Cap Growth EquityPortfolio Manager26 years of investment experience
Albert Tsuei – Director Senior Investment AnalystInformation Technology20 years of investment experience
Brian Markovich, CFA – Director Senior Investment AnalystIndustrials, Materials13 years of investment experience
Sam Console – Executive Director Senior Investment AnalystConsumer Discretionary, Consumer Staples16 years of investment experience
Andrew Strommen, CFA - Director Investment AnalystFinancials, Materials, Telecom Services11 years of investment experience
Peter Bye – Executive Director Senior Investment AnalystHealth Care. Consumer Discretionary17 years of investment experience
Joseph Wilson – Director Investment AnalystInformation Technology, Consumer Discretionary8 years of investment experience
Wendy Nickerson, CFA – Executive Director Senior Investment AnalystEnergy, Materials, Industrials17 years of investment experience
Grant Bughman – DirectorClient Portfolio Manager Client Service and Business Development12 years of investment experience
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US Large Cap Select Growth Composite: PerformanceTotal returns for periods ending March 31, 2012 (in USD)
The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results.Performance figures are gross of fees. Please see attached disclosure information.1 UBS Global AM US Large Capitalization Select Growth Composite2 Inception date of October 31, 20043 UBS AG, New York Branch (“Advisor”) Large Cap Select Growth Equity Composite. UBS AG NY Branch data is supplemental to US Large Cap Select Growth Equity Composite data and represents the UBS Global Asset Management model managed in a substantially similar manner. 4 Inception as of February 1, 20005 Since inception standard deviation based on monthly logarithmic returns6 Tracking error is defined as annualized standard deviation of the difference between the monthly logarithmic returns of the portfolio and its benchmark7 Information ratio is defined as the added value divided by the Tracking error
Annualized
Month Quarter 1 year 3 years 5 years Since
inception2 Risk5 Track. error6
Info ratio7
US Large Cap Select Growth1 4.24% 19.50% 14.44% 28.05% 8.69% 10.08% 17.88% 4.55% 0.78
Russell 1000 Growth 3.29 14.69 11.02 25.28 5.10 6.56 16.77
Value added 0.95% 4.81% 3.42% 2.77% 3.59% 3.52%
Supplemental performance information
Annualized
Month Quarter 1 year 3 years 5 years Since
inception4 Risk5 Track. error6
Info ratio7
UBS AG, NY Branch US Large Cap Select Growth3
4.26% 19.57% 14.28% 28.14% 8.66% 3.51% 18.60% 5.30% 0.73
Russell 1000 Growth 3.29 14.69 11.02 25.28 5.10 -0.34 19.13
Value added 0.97% 4.88% 3.26% 2.86% 3.56% 3.85%
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Our research process is consistent and repeatable
Idea Generation
• Analysts screen their sectors for companies with characteristics of a good business or attractive valuation
• Quant screen organizes universe by sector, valuation, roe, and earnings revisions
Thesis construction
• Assess the sustainability of profitability and growth
• Scenario based valuation analysis, understand current expectation
— establish valuation-based upside / downside scenarios
— employ reverse DCF to evaluate market perception of the magnitude and duration of growth prospects
Execution
• Portfolio construction / risk management
— assess correlation of current holdings
— valuation + quality of business model drives allocation
— buy/hold/add – review/trim/sell decision making
Process for US Large Cap Select Growth Equity / US Large Cap Growth Equity
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A current stock case study: Visa (V)Evaluate opportunity and competitive position of the company
US-I
Note: The security identified on this slide represents one of the top five overweights in both the US Large Cap Growth and US Large Cap Select Growth portfolios as of March 31, 2012. This information should not be considered a recommendation to purchase or sell any particular security. Information is supplemental to the US Large Cap Growth and US Large Cap Select Growth Composites. Please see the additional disclosures at the end of this presentation for further information.
Case study
64%8,922 10%13,8692015E
63%7,981 11%12,6082014E
61%6,952 11%11,333 2013E
Implied earnings growth 2017 to 2021: 3.5%
65%9,814 9%15,1172016E
60%6,142 11%10,174 2012E
59%5,463 14%9,188 2011A
56%4,544 17%8,065 2010A
51%3,540 10%6,911 2009A
Margin($mm)Y/Y($mm)OperatingEBITGrowthRevenue
36.0%Long-term tax rate
65.0%Long-term operating margin
1.5%Terminal growth rate9.0%Weighted Average Cost of Capital
Other Assumptions
Upside Scenario: +32%Downside Scenario: -20%
Fundamental company research
Portfolio Construction Risk management
Visa benefits from 1) The shift from cash and check to debit and credit card payments for domestic payments in both developed economic countries, as well as developing nations with high rates of personal consumption growth. 2) Growth in cross-border transactions. 3) High barriers to entry for new potential new entrants into the payments space, which ensures stability in market share and pricing.
Visa enjoys very high incremental operating margins as the costs to process additional transactions are minimal, and the necessary marketing, personnel, and technology costs to support future growth are modest.
Visa’s return on invested capital (ROIC) is both high and sustainable, as it can scale double-digit transaction growth with modest capital outlays and working capital investment. Converting earnings to free cash flow has enabled the company to consistently return capital to shareholders while delivering top and bottom-line growth.
Current valuation implies Visa will reach mature single digit FCF growth in the 2017-2021 time period. We believe higher growth rates are sustainable because:
75% of U.S. transactions are comprised of debit which is growing in the mid teens due to continued shift from cash. 43% of revenues are generated outside the U.S. where volumes are growing at 14% (debit/credit combined) as foreign markets are in earlier stages of migrating away from cash and check.
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Objectives: US Large Cap Select Growth
Investment goals
Seek to outperform Russell 1000 Growth Index by 300 basis points per annum over the course of a market cycle1
Investment universe
All US markets
Approximately 1,000 stocks
How we aim to achieve this goal:
Ex-ante tracking error: Normal range 4% - 9%
Number of equity holdings: Approximately 35 to 55
Individual stock weights: Maximum position size of 8%
Sector weights: Maximum 15% over/underweight vs benchmark
Fully invested: Maximum 5% cash
Investment goals and risk parameters
This is a brief summary of certain investment guidelines by which the strategy is managed. Actual investment guidelines for any client account may differ.1 Market cycle is typically 3-5 years
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Focus on risk managementFoundation for consistent alpha generation
Type of risk Action
Thesis construction risk
Macroeconomic risks
Valuation risks
• Diversification: 35-55 stocks, limits on individual stock position size
• Bias towards quality businesses
• Invest in 3 diverse sources of growth• Manage weights within distinct growth
buckets• Focus on non-correlated risks
• Probability-weighted scenario analysis• Adherence to target prices• Buy/sell discipline
• Business/monetary cycle risk
• Widening of potential future outcomes
US Large Cap Select Growth Equity
• Price/unit assumptions too high
• Margins not sustainable
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Risk management: A hallmark of UBS Global AMSeeks to ensure risks are understood and intended
Major stock level, style, sector and
country contributors
to risk
Exposures to country / industry / size
Further analysis drills deeper into the portfolio
Global Equity Risk Management System
Headline active risk:(key risk measure)
Beta: (sensitivity to market)
Statisticalfactor
analysis
Cap/style screen & growth rankings
Fundamental company research
Construction & risk management
For illustrative purposes only. This information should not be considered a recommendation to purchase or sell any particular security.
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US Large Cap Select Growth: Strategy summaryAs of March 31, 2012
US Large Cap Select Growth Equity
Marketstrategy1
Factorexposures
Industryweightings
Stockselection2
Beta 1.03Tracking Error 4.52Yield 0.63# Holdings 46
++ Growth++ Momentum++ Trading Activity+ Currency+ Price Volatility- Leverage-- Earnings / Price-- Yield
++ Internet+ Apparel & Textiles+ Computer Hardware+ Electronic Equipment+ Financial Services+ Hotels- Information Services- Tobacco-- Computer Software-- Food & Beverages
Supplemental information to the US Large Cap Select Growth Composite1 Beta and tracking error figures are forward-looking (ex-ante) estimates calculated using the BARRA risk system or other suitable systems. The actual active risk level will vary according to
market conditions and our views. There is no guarantee these projections will ultimately be realized.2 Note: Holdings represent ten largest positions in portfolio as of March 31, 2012
AllerganAmazon.comAppleCVS CaremarkGoogleLas Vegas SandsEstee LauderPriceline.comQualcommVisa
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Consistent excess returns
0%
2%
4%
6%
8%
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
US Large Cap Select Growth Composite
Supplemental - UBS AG Large Cap Select Growth
Rolling three-year periods excess returnsAs of March 31, 2012
UBS Global AM US Large Capitalization Select Growth Composite inception date of October 31, 2004.UBS AG, New York Branch (“Advisor”) Large Cap Select Growth Equity Composite. UBS AG NY Branch data is supplemental to US Large Cap Select Growth Equity Composite data and represents the UBS Global Asset Management model managed in a substantially similar manner. Inception as of February 1, 2000.The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results.Performance figures are gross of fees. Please see attached disclosure information.Excess returns calculated by subtracting benchmark returns from portfolio returns. Returns greater than one year annualized. Returns in USD. Benchmark used for excess return calculation is the Russell 1000 Growth Index.
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GEN0190n.ppt
As of March 31, 2012.UBS Global AM US Large Capitalization Select Growth Composite inception date of October 31, 2004.UBS AG, New York Branch (“Advisor”) Large Cap Select Growth Equity Composite. UBS AG NY Branch data is supplemental to US Large Cap Select Growth Equity Composite data and represents the UBS Global Asset Management model managed in a substantially similar manner. Inception as of February 1, 2000.Performance data shows UBS AG NY Branch supplemental performance from February 1, 2000 until October 31, 2004 and UBS Global AM US Large Cap Select Growth Composite for all subsequent periods.The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results.Performance figures are gross of fees. Please see attached disclosure information.Excess returns calculated by subtracting benchmark returns from portfolio returns. Returns greater than one year annualized. Returns in USD. Benchmark used for excess return calculation is the Russell 1000 Growth Index. Growth performance is measured by the Russell 1000 Growth Index. Value performance is measured by the Russell 1000 Value Index.
Rolling one-year excess returns since inception As of March 31, 2012
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
% R
etu
rn
Value outperforms Growth
Growth outperforms Value
Rolling 1 year alpha: US Large Cap Select Growth Strategy
Inception of UBS Global AM US Large Capitalization Select Growth Composite
Value added over style cycles
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GEN0190n.ppt
As of March 31, 2012.UBS Global AM US Large Capitalization Select Growth Composite inception date of October 31, 2004.UBS AG, New York Branch (“Advisor”) Large Cap Select Growth Equity Composite. UBS AG NY Branch data is supplemental to US Large Cap Select Growth Equity Composite data and represents the UBS Global Asset Management model managed in a substantially similar manner. Inception as of February 1, 2000.Performance data shows UBS AG NY Branch supplemental performance from February 1, 2000 until October 31, 2004 and UBS Global AM US Large Cap Select Growth Composite for all subsequent periods.The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results.Performance figures are gross of fees. Please see attached disclosure information.Excess returns calculated by subtracting benchmark returns from portfolio returns. Returns greater than one year annualized. Returns in USD. Benchmark used for excess return calculation is the Russell 1000 Growth Index.
Rolling one-year excess returns since inception As of March 31, 2012
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
% R
etu
rn
Rolling 1-year benchmark return
Rolling 1-year alpha: US Large Cap Select Growth Strategy
Inception of UBS Global AM US Large Capitalization Select Growth Composite
Value added in up and down markets
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A look at upside performance/downside performance
Upside Market Capture Ratio – A measure of the manager’s performance in up markets relative to the market itself. A value of 110 suggests the manager performs ten percent better thanthe market when the market is up during the selected time period. The return for the market for each period is considered an up market if it is greater than or equal to zero. The Upside Capture Ratio is calculated by dividing the return of the manager during the up market periods by the return of the market during the same periods.Downside Market Capture Ratio – A measure of the manager’s performance in down markets relative to the market itself. A value of 90 suggests the manager’s loss is only nine tenths of the market’s loss during the selected time period. A market is considered down if the return for the benchmark is less than zero. The Downside Capture Ratio is calculated by dividing the return of the manager during the down market periods by the return of the market during the same periods.Source: eVestment AllianceAs of March 31, 2012.UBS Global AM US Large Capitalization Select Growth Composite inception date of October 31, 2004.The returns shown above are based on currently available information and are subject to revision. Past performance is no guarantee of future results.Performance figures are gross of fees. Please see attached disclosure information.Returns greater than one year are annualized. Returns in USD. Benchmark used for calculation is the Russell 1000 Growth Index. Information is supplemental to the US Large Cap Select Growth Composite.The eVestment Universe comprises 265 peers who are considered US Large Cap Growth
US Large Cap Select Growth vs. eVestment peer average
Since Inception
3 years
5 years
eVestment peermedian (Since Inception)
80
85
90
95
100
105
110
115
120
125
80 90 100 110 120 130 140 150
Downside (%)
Up
sid
e (%
)
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US Large Capitalization Select Growth CompositeSchedule of composite performance
The composite's past performance is not necessarily an indication of how it will perform in the future.
UBS Global Asset Management (the Firm) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. UBS Global Asset Management has been independently verified for the periods January 1, 2002 through December 31, 2010. Verification assesses whether (1) the Firm has complied with all the composite construction requirements of the GIPS standards on a Firm-wide basis and (2) the Firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The US Large Capitalization Select Growth Composite has been examined for the periods November 1, 2004 through December 31, 2010. The verification and performance examination reports are available upon request. 1. US Large Capitalization Select Growth Composite - A composite of accounts investing in the common stocks of US companies whose returns and earnings or cash flow growth prospects are above the average large capitalization company ($2.5 billion or larger). The investment
strategy emphasizes stock selection with attention given to factor and sector exposures relative to the benchmark. Accounts in this strategy will hold a smaller number of securities than the typical US Large Cap Growth portfolio. The benchmark is the Russell 1000 Growth Index.
2. A complete list of all Firm composite descriptions is available upon request. The Firm is defined as all actively and passively managed institutional and retail accounts of UBS Global Asset Management (the Firm). The effective date of the Firm is January 1, 2002. Prior to that, the Firm originally consisted of the following entities: UBS Global Asset Management (Americas) Inc., UBS Global Asset Management Trust Company, UBS Realty Investors LLC & UBS AgriVest LLC. As of 2001, the Firm assets reflect the integration of the investment management platform of UBS Global Asset Management (UK) Ltd and UBS Global Asset Management International Ltd into the existing Firm definition. Each of the entities comprising the Firm definition is an affiliate of UBS AG.
3. Composites consisting of more than one portfolio are asset weighted by beginning-of-period asset values. Investment results are time-weighted performance calculations representing total return. Returns are calculated using geometric linking of monthly returns. Composites are valued at least monthly, taking into account cash flows. All realized and unrealized capital gains and losses, as well as all dividends and interest from investments and cash balances, are included. Interest income from fixed income securities is accrued, and equity dividends are accrued as of the ex-dividend date. Investment transactions are accounted for on a trade date basis with the exception of selected equity accounts. The rates of return are presented both net and gross of investment management fees. Gross of fee returns are calculated net of transaction fees and other trading expenses. Net of fee performance reflects the deduction of the highest fee charged, as described in Part II of Form ADV. The highest fee charged for accounts of this type is up to 2.04%. Due to the graduated nature of fees, as account size increases, the annual percentage fee will decline. Net of fee returns are calculated by geometrically deducting the deannualized highest annual management fee from each monthly gross return and geometrically linking the monthly returns for each period. Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.
4. Results include all actual fee-paying, discretionary client portfolios including those clients no longer with the Firm. Portfolios are included in the composite beginning with the first full month of performance to the present or to the cessation of the client’s relationship with the Firm. Terminated accounts are included through the last full month in which they were fully invested, and no alterations of composites have occurred due to changes in personnel.
5. Composite dispersion represents the consistency of the Firm’s composite performance results with respect to the individual portfolio returns within the composite. Presented is the asset-weighted dispersion (standard deviation) of the portfolios within the composite. Only portfolios in the composite for each full time period are included in the dispersion calculation, and no dispersion is presented for composites consisting of only a single portfolio.
Composite Performance: US Large Capitalization Select Growth Composite November 1, 2004 through December 31, 2010
Amounts and returns expressed in USD Year Gross Asset-
Weighted Return (%)
Benchmark Return (%)
Net Asset-Weighted Return
(%)
Composite 3 Yr St Dev (%)
Benchmark 3 Yr St Dev (%)
# of Portfolios End of Period
Total Composite Assets End of Period (millions)
Asset-Weighted Dispersion (%)
Composite Assets as % of Firm Assets
Firm Assets (billions)
2004* 7.33 7.49 6.98 1 5 NA 0.00 500
2005 16.04 5.27 13.72 1 82 NA 0.02 542
2006 5.88 9.07 3.74 1 239 NA 0.04 641
2007 18.48 11.81 16.11 11.15 8.60 1 408 NA 0.06 675
2008 -37.96 -38.44 -38.94 19.03 17.50 2 1,449 NA 0.32 452
2009 49.76 37.21 47.90 21.26 20.65 6 3,888 0.18 0.81 481
2010 15.34 16.71 13.06 23.09 22.94 6 3,647 0.27 0.71 514
Performance presented from November through December. No statistics are annualized. Composite created October 31, 2004. Benchmark returns are not covered by the Report of Independent Accountants. The 3-year annualized ex-post standard deviations are based on monthly returns, shown starting with the first full 3-year calendar period.
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US Large Capitalization Select Growth Equity CompositeSupplemental performance information
The UBS AG, New York Branch (“Advisor”) Large Cap Select Growth Equity Composite represented below is a composite of diversified accounts, representative of the Private Bank Investor Services Growth Equity Model, a portfolio run in accordance with the Large Cap Select Growth Model as provided by UBS Growth Investors and managed in a substantially similar manner to the UBS Global AM US Large Capitalization Select Growth Strategy. The Account Composite Performance was obtained from the records maintained by the Advisor. Please note that the Account Composite Performance is not the UBS Global AM Large Cap Select Growth Strategy’s own historical performance and should not be considered a substitute for it. The Account Composite Performance is not necessarily an indication of the UBS Global AM Large Cap Select Growth Strategy’s future performance.
1. The presentation of historical investment performance sets forth the time-weighted rates of return (the “Returns”) of the Large Cap Growth Equity Composite (the “Composite”) of UBSNY. The performance results of the Composite represent the historical returns of all accounts managed by UBSNY (from February 1, 2000 to December 31, 2010) on a fully discretionary basis in accordance with the equity strategy described below. It should be noted that past performance may not be indicative of future results.
2. UBSNY employs a long-term approach in managing a focused portfolio of high quality securities of US companies whose returns and earnings or cash flow growth prospects are above the average large capitalization company ($2.5 billion or larger). The investment strategy emphasizes stock selection with attention given to factor and sector exposures relative to the benchmark, the Russell 1000 Growth Index.
3. The total rate of return for each of the time periods presented is equal to the change in the value of the Composite, including capital appreciation and depreciation, and dividend income, as a percentage of the beginning market value of the Composite, adjusted for the net of all contributions and withdrawals (the “cash flows”). The composite includes accounts where income received is withdrawn from the portfolio on a monthly basis in accordance with the client’s mandate.
4. The rate of return is calculated on a “time-weighted” basis for all investments. The “time-weighted” rate of return minimizes the effect of cash flows on the investment performance of the Composite. 5. The annual Composite total rate of return is derived by geometrically linking monthly total rates of return.6. The rates of return are after any trading expenses, and are presented gross of investment management fees. Generally, fees are charged quarterly in arrears and are based on the average of the month end market values. Performance is stated gross of
fees. Performance figures would be lower if shown net of fees. 7. Securities are valued at fair market value. Securities are valued using market quotations when readily available, provided such quotations adequately reflect, in the judgment of UBSNY, the fair value of the securities. Securities transactions are recorded on
trade dates and income is recognized when earned.
UBS AG NY Branch Large Cap Select Growth Equity Composite (February 1, 2000 through December 31, 2010)
Amounts and returns expressed in USD
Year Gross Asset-Weighted Return (%) Benchmark Return (%) Composite Market Value – end of Period
20001 (7.59) (18.61) $61,804,360 2001 (21.72) (20.42) 44,614,850 2002 (26.25) (27.88) 21,908,483 2003 32.52 29.75 34,412,470 2004 13.83 6.30 35,948,466 2005 15.90 5.26 59,188,543 2006 5.71 9.07 68,388,489 2007 18.66 11.82 25,332,283 2008 (38.20) (38.44) 37,292,897 2009 49.63 37.21 35,541,995 2010 15.44 16.71 41,910,509
Note: Composite created February 1, 2000.The Attestation Report of Independent Accountants, available upon request, is based on procedures performed on the composite from February 1, 2000 through December 31, 2010.Benchmark returns are not covered by the Report of Independent Accountants. The composite’s past performance is not necessarily an indication of how it will perform in the future. 1 Performance for the year 2000 is for the period from February 1 to December 31.
US-I, US-P (RU)
