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Exhibit 1: Despite Strong Asset Returns, Funding Ratios Continue On Their Downtrend Trend In The Second Quarter Of 2014. US Pension Fund Fitness Tracker Of The Typical US Corporate Plan's Funding Ratio. (Graphic: UBS Global Asset Management, Barclays, Markit.)

Stocks in this article: UBS

The UBS Global Asset Management US Pension Fund Fitness Tracker saw the funding ratio of the typical corporate US pension plan drop by approximately one percentage point to 90% in the second quarter of 2014.

"Continuing the downward trend seen in the first quarter of 2014, funding ratios have decreased on average about five percentage points year-to-date," said Robert Guzman, Head of Pension Risk Management at UBS Global Asset Management. "With many equities at all-time highs, we believe it may be prudent for plan sponsors to consider implementing downside protection in their equity portfolios."

Liability values increased 4.6% over the quarter, outpacing the positive investment returns of 3.5%. As a result, funding ratios decreased for the second consecutive quarter. These estimates are based on the average corporate plan’s reported asset allocation weightings from the UBS Global Asset Management Pension 500 Database and publicly available benchmark information.

Building on generally positive economic data in the US over the quarter, the total return of the S&P 500 Index was up 5.23%. Inflation came in slightly higher than forecasted in the US, but this has not yet been viewed as a headwind by the US Federal Reserve (Fed). In the eurozone, deflationary risks led the European Central bank (ECB) to ease monetary policy, using a set of measures that included cutting the deposit rate to -0.10% and extending the Long-Term Refinancing Operation (LTRO). The Monetary Policy Committee of the Bank of England (BoE) voted unanimously to maintain the existing benchmark interest rate, as well as the size of its asset purchase program. It is worth noting the comment made by the BoE Governor, Mark Carney, that rate hikes could happen "sooner than markets currently expect." Geopolitical risks still include instability in Ukraine (although to a lesser extent) and the political violence unfolding in Iraq. In US dollar (USD) terms, the Euro Stoxx Total Return Index was up 2.36% over the quarter. The MSCI Emerging Markets Total Return Index ended the quarter up 6.71% in USD terms.

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