In terms of the Fund's high yield exposure, overweights to financials, pipelines, construction-related and technology sectors were beneficial for results. Security selection in the gaming, services and telecommunications sectors were also additive to performance.
With respect to the Fund's emerging markets debt exposure, our overweight to local Brazilian debt contributed to performance during the quarter. In particular, our longer-dated local Brazilian debt with inflation protection generated solid results, as it performed well given the decline in local yields and solid demand. Overweights to higher yielding countries such as Belarus and the Ukraine were rewarded during the last three months of the year.
We have a constructive outlook for the global economy, although pockets of weakness remain. Despite fiscal cliff-related headwinds, we believe that reasonable growth is sustainable in the US. We are less positive on growth in Europe given ongoing issues related to the sovereign debt crisis, high unemployment and extensive austerity measures. Japan also faces continued challenges, as it has fallen back into a recession.We have a generally positive view on the fixed income markets for 2013. In particular, we like the prospects for the credits markets given largely supportive fundamentals and supply/demand technicals. That said, given the amount of spread compression since the financial crisis, credit returns are not expected to be as robust in 2013. As was the case in prior years, we anticipate periods of heightened risk aversion to continue this year, as a number of macro issues remain unresolved. In contrast to developed markets, we maintain a more constructive outlook for emerging markets debt, and anticipate that, within that space, local currencies may lead performance in 2013, but not without potential for periods of heightened volatility. Disclaimers Regarding Fund Commentary - The Fund Commentary is intended to assist shareholders in understanding how the Fund performed during the period noted. Views and opinions were current as of the date of this press release. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the Fund and UBS Global AM reserve the right to change views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund’s future investment intent. Past performance does not predict future performance. The return and value of an investment will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. Any Fund net asset value ("NAV") returns cited in a Fund Commentary assume, for illustration only, that dividends and other distributions, if any, were reinvested at the NAV on the payable dates. Any Fund market price returns cited in a Fund Commentary assume that all dividends and other distributions, if any, were reinvested at prices obtained under the Fund's Dividend Reinvestment Plan. Returns for periods of less than one year have not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and other distributions, if any, or on the sale of Fund shares.