OutlookWe maintain our positive long-term outlook for the emerging markets debt asset class. While global growth is generally moderating, most emerging market countries continue to have superior growth versus their developed country counterparts. In addition, solid fundamentals, including stable reserves, generally solid fiscal situations and lower indebtedness could be supportive for emerging markets sovereigns, quasi-sovereigns and currencies. We also feel that demand for emerging markets debt will be strong overall, given investors' search for yield in the low interest rate environment. Against this backdrop, we feel that additional spread tightening is possible as the year progresses. That being said, we expect to see periods of heightened short-term volatility. As was the case at times during 2011, this could be driven by macro issues, such as fears of contagion from the European sovereign debt crisis and concerns for global growth, and especially growth (or lack of it) in certain developed countries. 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.
1 Spreads refers to differences between the yields paid on US Treasury bonds and other types of debt, such as emerging market bonds. 2 Global High Income Fund Index is an unmanaged index compiled by the advisor, currently constructed as follows: 50% J.P. Morgan Emerging Markets Bond Index Global (EMBI Global) and 50% J.P. Morgan Government Bond Index-Emerging Markets Global Diversified (GBI-EM Global Diversified). Investors should note that indices do not reflect the deduction of fees and expenses. 3 Quasi-sovereign bonds are securities issued by entities supported by the local government.