Semi-Annual Report 2010.

Investment Fund under Swiss Law

Unaudited semi-annual report as of 31 December 2010

UBS–ETF SLI Swiss Leader Index® Organization Semi-Annual Report as of 31 December 2010

Fund Management Custodian Bank

UBS Fund Management (Switzerland) AG, UBS AG, Basel and Zurich Brunngässlein 12, 4002 Basel

Auditors Board of Directors Ernst & Young Ltd, Basel Thomas Rose, Chairman Managing Director, UBS AG, Basel and Zurich Delegation of investment decisions Reto Ketterer, Vice Chairman Managing Director, UBS AG, Basel and Zurich UBS Global Asset Management, a business group of Markus Steiner, Delegate UBS AG, Basel and Zurich Jean-Paul Gennari (until 5 October 2010) Managing Director, UBS Fund Services Delegation of other duties (Luxembourg) S.A., Luxembourg Christian Eibel UBS Fund Management (Switzerland) AG jointly Executive Director, UBS AG, Basel and Zurich operates and utilises a fund administration platform with UBS Fund Services (Luxembourg) S.A. UBS Fund Markus Lesmann Services (Luxembourg) S.A. is responsible for the Director, UBS AG, Basel and Zurich processing of master data under this arrangement. The precise terms of the work carried out are set out in an agreement between the parties dated 28 Executive Board March 2007. In addition, various IT services con- nected with the maintenance and upkeep of the Markus Steiner hardware and software components of the fund Managing Director and administration platform (e.g. technical installations, Delegate of the Board of Directors configurations, system tests, archiving of data) are André Valente furnished by UBS Fund Services (Luxembourg) S.A. Deputy Managing Director The specific scope of these services is governed by an agreement between the parties dated 8 May 2009. Riccardo Boscardin All other fund management duties and the monitor- Head of Real Estate Funds ing of other delegated duties are carried out in Franz Cadalbert Switzerland. Head of Finance, Controlling and Accounting André Debrunner Head of Fund Reporting & Information Services Paying agents Eugène Del Cioppo UBS AG, Basel and Zurich, Head Business Development and and its branches in Switzerland Client Relationship Management Karsten Illy Head of Operations Securities Funds Contact addresses in Liechtenstein Beat Schmidlin Representative and Paying agent Head of Legal and Tax Liechtensteinische Landesbank Aktiengesellschaft, Thomas Zimmerli Städtle 44, FL-9490 Vaduz Head of Compliance and Risk Control

2 UBS–ETF SLI Swiss Leader Index® Category Other Funds for Traditional Investments

Most important figures

ISIN 31.12.2010 30.6.2010 30.6.2009 Net fund assets in CHF 148 771 881.37 131 975 682.71 73 858 621.68 CH0032912732 Net asset value per unit in CHF 102.60 94.27 82.07 Number of units outstanding 1 450 000.0000 1 400 000.0000 900 000.0000

Structure of the securities portfolio

The 10 largest issuers in % of total assets AG 9.42 NESTLE SA 9.04 ROCHE Holding AG 8.88 UBS AG 8.73 ABB Ltd 4.69 Zurich Financial Services AG 4.57 Cie Financiere SA 4.53 Group AG 4.46 Syngenta AG 4.42 Holcim Ltd 4.27 Others 36.89 Total 99.90

There may be differences in the way the percentages mentioned above are rounded off.

Breakdown by sectors in % of total assets Pharmaceuticals, cosmetics & medical products 22.52 Banks & credit institutions 15.40 Insurance 10.82 Food & soft drinks 9.04 Finance & holding companies 8.73 Chemicals 8.52 Building industry & materials 6.45 Electrical devices & components 4.69 Miscellaneous services 4.33 Watches & jewellery 3.15 Others 6.25 Total 99.90

There may be differences in the way the percentages mentioned above are rounded off.

3 Semi-Annual Report as of 31 December 2010 UBS–ETF SLI Swiss Leader Index®

Statement of assets 31.12.2010 30.6.2010 Market values CHF CHF Bank deposits – at sight 135 796.57 0.00 Securities – Shares and other equity instruments 148 644 780.73 131 945 487.19 Other assets 18 165.47 339 988.63 Total fund assets 148 798 742.77 132 285 475.82

Loans 0.00 –284 816.12 Other liabilities –26 861.40 –24 976.99 Net fund assets 148 771 881.37 131 975 682.71

Statement of income 1.7.2010–31.12.2010 1.7.2009–30.6.2010 Income CHF CHF Income from bank assets 37.13 124.17 Income from securities – from shares and other equity instruments1 0.00 3 310 785.67 – from bonus shares 0.00 843.10 Offset payments from securities lending 51 862.31 73 801.90 Commission income from securities lending 11 727.27 28 123.36 Purchase of current net income on issue of units –4 257.68 –11 313.72 Total income 59 369.03 3 402 364.48

Expenses Interest payable –200.77 –433.61 Commission remuneration of the Fund Management in accordance with the fund contract –246 912.65 –427 605.57 Total expenses –247 113.42 –428 039.18

Net income –187 744.39 2 974 325.30

Realized capital gains and losses2 469 406.53 216 657.67 Realized result 281 662.14 3 190 982.97

Unrealized capital gains and losses 11 700 278.84 10 743 264.34 Total result 11 981 940.98 13 934 247.31

Changes in net fund assets 1.7.2010–31.12.2010 1.7.2009–30.6.2010 CHF CHF Net fund assets at the beginning of the financial year 131 975 682.71 73 858 621.68 Ord. annual distribution –350 000.00 –430 000.00 Interim distribution 0.00 –2 613 000.00 3 Balance of unit movements 5 164 257.68 47 225 813.72 Total result 11 981 940.98 13 934 247.31 Net fund assets at the end of the reporting period 148 771 881.37 131 975 682.71

Development of the outstanding units 1.7.2010–31.12.2010 1.7.2009–30.6.2010 Number Number Situation at the beginning of the financial year 1 400 000.0000 900 000.0000 Units issued 50 000.0000 500 000.0000 Units redeemed 0.0000 0.0000 Situation at the end of the period 1 450 000.0000 1 400 000.0000

Difference between units issued and units redeemed 50 000.0000 500 000.0000

1 This income may include offset payments which were received in place of the actual dividend payment as part of securities lending (manufactured dividends). 2 Realized capital gains and losses may include income and expenses which were received from Swinging Single Pricing (Art. 83 para. 3 of the Collective Investment Schemes Act). 3 Contains the interim distribution: Interim distribution (coupon No. 5 / gross CHF 0.47 / ex - date 4.3.2010 / value date 9.3.2010) Interim distribution (coupon No. 6 / gross CHF 0.80 / ex - date 19.4.2010 / value date 22.4.2010) Interim distribution (coupon No. 7 / gross CHF 0.74 / ex - date 4.5.2010 / value date 7.5.2010)

4 Semi-Annual Report as of 31 December 2010 UBS–ETF SLI Swiss Leader Index®

Inventory of Fund assets

Security 30.06.2010 Purchases1 Sales2 31.12.2010 Market value3 in %3 Quantity/ Quantity/ in CHF Nominal Nominal

Securities traded on an exchange

Bearer shares Switzerland NOBEL BIOCARE AG CHF0.40(REGD) CHF 47 090 1 650 3 674 45 0664 794 514 0.53 RICHEMONT(CIE FIN) CHF1 CHF 148 412 5 536 31 465 122 483 6 736 565 4.53 SWATCH GROUP CHF2.25(BR) CHF 11 710 482 941 11 2514 4 689 417 3.15 SYNTHES INC CHF0.001 CHF 23 957 4 238 1 780 26 4154 3 336 215 2.24 Total Switzerland 15 556 710 10.45

Total Bearer shares 15 556 710 10.45

Other shares Switzerland ROCHE HLDGS AG GENUSSCHEINE NPV CHF 80 120 16 567 272 96 415 13 208 855 8.88 Total Switzerland 13 208 855 8.88

Total Other shares 13 208 855 8.88

Registered shares Switzerland ABB LTD CHF1.03(REGD) CHF 307 381 34 661 6 719 335 323 6 984 778 4.69 ACTELION CHF0.50(REGD) CHF 45 862 1 810 4 138 43 534 2 228 941 1.50 ADECCO SA CHF1(REGD) CHF 46 646 3 288 3 071 46 8634 2 870 359 1.93 BALOISE-HLDGS CHF0.1(REGD) CHF 18 979 666 1 471 18 174 1 653 834 1.11 CHF4.00(REGD) CHF 87 575 3 662 6 958 84 2794 1 596 244 1.07 CREDIT SUISSE GRP CHF0.04(REGD) CHF 276 503 40 166 140 655 176 014 6 630 447 4.46 CHF0.10(REGD) CHF 15 557 626 1 130 15 0534 3 254 459 2.19 AG CHF10 CHF 3 134 129 214 3 049 3 076 441 2.07 HOLCIM CHF2(REGD) CHF 82 128 13 664 5 923 89 8694 6 349 245 4.27 JULIUS BAER GRUPPE CHF0.02 (REGD) CHF 78 451 3 051 6 085 75 4174 3 303 265 2.22 KUEHNE&NAGEL INTL CHF1(REGD)(POST-SUBD) CHF 20 158 1 624 1 314 20 4684 2 660 840 1.79 INTL CHF0.25(REGD) (POST-SUBD) CHF 62 651 2 205 4 675 60 1814 1 071 222 0.72 AG CHF1(REGD) CHF 20 124 705 1 598 19 2314 1 441 363 0.97 NESTLE SA CHF0.10(REGD) CHF 230 418 15 997 652 245 763 13 455 524 9.04 NOVARTIS AG CHF0.50(REGD) CHF 224 190 31 857 849 255 198 14 023 130 9.42 PETROPLUS HOLDINGS CHF7.48(REGD) CHF 36 250 1 269 2 818 34 7014 427 516 0.29 SGS LTD CHF1(REGD) CHF 2 362 212 569 2 005 3 145 845 2.11 HOLDING AG CHF 17 530 1 102 1 136 17 4964 2 111 767 1.42 HLDG CHF9.6(REGD) CHF 10 341 366 694 10 0134 1 353 758 0.91 SWISS REINSURANCE CHF0.1(REGD) CHF 129 883 5 308 10 111 125 0804 6 291 524 4.23 AG CHF1(REGD) CHF 8 467 344 685 8 126 3 340 599 2.25 SYNGENTA CHF0.1(REGD) CHF 23 911 2 114 2 004 24 021 6 569 744 4.42 UBS AG CHF0.1 CHF 415 846 431 719 1 480 846 0854 12 987 405 8.73 ZURICH FIN SVS GRP CHF0.10 CHF 25 667 2 481 72 28 076 6 800 007 4.57 Total Switzerland 113 628 256 76.36

United States TRANSOCEAN LTD COM CHF15 ''REGISTERED' CHF 116 740 4 065 23 210 97 5954 6 250 960 4.20 Total United States 6 250 960 4.20

Total Registered shares 119 879 216 80.56

Total Securities traded on an exchange 148 644 781 99.90

5 Semi-Annual Report as of 31 December 2010 UBS–ETF SLI Swiss Leader Index®

Total securities and similar instruments 148 644 781 99.90 (thereof in lending 32 257 387 21.68)

Bank deposits at sight 135 797 0.09 Other assets 18 165 0.01 Total fund assets 148 798 743 100.00

Other liabilities –26 861 Net fund assets 148 771 881

1 Purchases include the following transactions: allotment from subscription / allotment from option rights / option rights / allotment of subscription rights from underlying stocks / bonus securities / change of corporate names / conversions / purchases / share exchange between companies / stock splits / stock dividends / optional dividends / transfers / transfer due to redenomination in euro 2 Sales include the following transactions: cancellation as a result of expiry / draws by lot / exercise of rights / options / repayments / reverse-splits / sales / share exchange between companies / transfers / transfer due to redenomination in euro 3 Divergences in the totals may be attributed to rounding differences 4 Securities entirely or partly lent out (securities lending)

6 Semi-Annual Report as of 31 December 2010 UBS–ETF SLI Swiss Leader Index®

Supplementary information

Derivative financial instruments Total Expense Ratio (TER)

(Risk assessment process: Commitment approach I This ratio was calculated in accordance with the [Art. 37 CISO-FINMA]) Swiss Funds Association’s (SFA) “Guidelines on the calculation and disclosure of the TER and PTR” in the current version and expresses the sum of all costs Repurchase agreements and commissions charged on an ongoing basis to the net assets (operating expenses) taken retrospec- No securities were used in repurchase agreements tively as a percentage of the net assets. at balance sheet date. TER for the last 12 months: 0.35%

Remuneration of the Fund Management Use of the brand name Flat fee SLI Swiss Leader Index® – Actual flat fee: 0.0291% per month (0.35% p.a.); – Maximum flat fee as specified in the fund contract: UBS–ETF SLI Swiss Leader Index® is not supported, 0.05% per month (0.6% p.a.); pledged, sold or advertised by SIX Swiss Exchange based on the average net fund assets and SIX Swiss Exchange does not assume any war- ranty of any kind (either explicit or implied), for the results that may be achieved through use of the SLI® Soft Commission Arrangements Index (the “Index”) and/or for the level of the Index at a particular moment or on a particular date. SIX The fund management company has not concluded Swiss Exchange is not liable (whether by reason of any arrangements on retrocessions in the form of negligence or any other conduct) for any errors which “soft commission arrangements”. may appear in the Index and SIX Swiss Exchange is in no way responsible for alerting clients to such errors.

Portfolio Turnover Rate (PTR)

This ratio was calculated in accordance with the Swiss Funds Association’s (SFA) “Guidelines on the calculation and disclosure of the TER and PTR” in the current version. The PTR is considered an indicator of the relevance of the additional costs incurred when buying and selling investments. It shows how many security transactions occurred as a result of voluntary investment shifts in relation to the average net as- sets. Transactions that resulted from uncontrollable subscriptions and redemptions are not included in this rate.

PTR: 23.28%

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