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IMPORTANT DISCLOSURES
1Expense ratios are as of a fund's most recent prospectus. Prospectus dates vary among funds. Unless otherwise indicated, for UBS Funds, expense ratios are as of the October 28, 2011 prospectus, with the exception of the UBS U.S. Equity Opportunity Fund, which is effective as of the December 30, 2011 prospectus, as supplemented from time to time. For UBS U.S. Allocation Fund, expense ratios are as of the December 29, 2011 prospectus, as supplemented from time to time. For PACE® Funds, expense ratios are as of the November 28, 2011 prospectus, as supplemented from time to time.
2Net expenses reflect fee waivers and expense reimbursements pursuant to agreements that were in effect, as of a fund's most recent prospectus, to cap the expenses for each fund. In the event a fund's operating expense ratio for the period exceeds its expense cap, these waivers and reimbursements would apply. Current effective fee waivers and expense reimbursement agreements for each fund are as follows:
UBS U.S. Allocation Fund
The Fund and UBS Global AM have entered into a written agreement, separate from UBS Global AM's investment advisory agreement with the Fund, whereby UBS Global AM has agreed to permanently reduce its management fee based on the Fund's average daily net assets to the following rates: $0 to $250 million: 0.50%; in excess of $250 million up to $500 million: 0.45%; in excess of $500 million up to $2 billion: 0.40%; over $2 billion: 0.35%. Effective December 29, 2011, UBS Global AM has contractually undertaken to waive fees/reimburse a portion of the fund's expenses, when necessary, so that the ordinary total annual operating expenses of each class through December 31, 2012 (excluding dividend expense, borrowing costs and interest expense relating to short sales, and investments in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) would not exceed 1.15% for Class A, 1.90% for Class B, 1.90% for Class C and 0.90% for Class Y.
UBS International Equity Fund
The Advisor has agreed irrevocably to waive its fees and reimburse certain expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, and extraordinary expenses) so that total operating expenses of the Fund do not exceed 1.25% for Class A shares, 2.00% for Class B shares, 2.00% for Class C shares and 1.00% for Class Y shares.
For the following UBS Funds:
The Trust, with respect to the Fund, and the Advisor, UBS Global AM, have entered into a written agreement pursuant to which the Advisor has agreed to waive a portion of its management fees and/or to reimburse expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, and extraordinary expenses) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies, interest, taxes, brokerage commissions, and extraordinary expenses), through the period ending October 27, 2012 for all Funds, except the UBS U.S. Equity Opportunity Fund, which is through October 27, 2013, do not exceed the percentages for each Fund listed below. Pursuant to the written agreement, the Advisor is entitled to be reimbursed for any fees it waives and expenses it reimburses for a period of three years following such fee waivers and expense reimbursements, to the extent that such reimbursement of the Advisor by the Fund will not cause the Fund to exceed the applicable expense limit that is in place for each share class of the Fund as follows:
UBS Dynamic Alpha Fund
1.35% for Class A, 2.10% for Class B, 2.10% for Class C and 1.10% for Class Y (also excludes dividend expense and security loan fees for securities sold short.)
UBS Global Allocation Fund
1.35% for Class A, 2.10% for Class B, 2.10% for Class C and 1.10% for Class Y.
UBS Global Frontier Fund
1.40% for Class A, 2.15% for Class C and 1.15% for Class Y (also excludes dividend expense and security loan fees for securities sold short.)
UBS Global Equity Fund
1.50% for Class A, 2.25% for Class B, 2.25% for Class C and 1.25% for Class Y.
UBS U.S. Equity Alpha Fund
1.50% for Class A shares, 2.25% for Class C shares and 1.25% for Class Y shares (also excludes dividend expense and security loan fees for securities sold short.)
UBS U.S. Large Cap Equity Fund
1.20% for Class A, 1.95% for Class B, 1.95% for Class C, and 0.95% for Class Y.
UBS U.S. Equity Opportunity Fund (formerly, UBS U.S. Large Cap Value Equity Fund)
1.20% for Class A, 1.95% for Class B, 1.95% for Class C and 0.95% for Class Y.
UBS Market Neutral Multi-Strategy Fund
1.75% for Class A shares, 2.50% for Class C shares and 1.50% for Class Y shares (also excludes dividend expense and security loan fees for securities sold short.)
UBS U.S. Small Cap Growth Fund
1.40% for Class A, 2.15% for Class B, 2.15% for Class C and 1.15% for Class Y (also excludes dividend expense and security loan fees for securities sold short.)
UBS Global Bond Fund
1.15% for Class A, 1.90% for Class B, 1.65% for Class C and 0.90% for Class Y.
UBS High Yield Fund
1.20% for Class A, 1.95% for Class B, 1.70% for Class C and 0.95% for Class Y (also excludes dividend expense and security loan fees for securities sold short.)
UBS Core Plus Bond Fund
0.64% for Class A, 1.39% for Class B, 1.14% for Class C and 0.39% for Class Y.
UBS Fixed Income Opportunities Fund
0.95% for Class A, 1.45% for Class C and 0.70% for Class Y (also excludes dividend expense and security loan fees for securities sold short.)
PACE® Government Securities Fixed Income Investments
The fund and UBS Global AM have entered into a written fee waiver/expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to (1) waive its management fees through November 28, 2012 to the extent necessary to reflect the lower sub-advisory fee paid by UBS Global AM to Pacific Investment Management Company LLC, the fund's investment advisor; and (2) waive its management fees and/or reimburse expenses so that the fund's ordinary total operating expenses of each class through November 28, 2012 (excluding dividend expense, borrowing costs and interest expense relating to short sales, and expenses attributable to investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) would not exceed 1.02% for Class A, 1.77% for Class B, 1.52% for Class C, 0.77% for Class Y and 0.77% for Class P. The fund has agreed to repay UBS Global AM for any waived fees/reimbursed expenses (pursuant to item (2)) to the extent it can do so over the following three fiscal years without causing the fund's expenses in any of those three years to exceed these expense caps. The fee waiver/expense reimbursement agreement may be terminated by the fund's board at any time and also will terminate automatically upon the expiration or termination of the fund's advisory contract with UBS Global AM. Upon termination of the agreement, however, UBS Global AM's three year recoupment rights will survive.
PACE® International Fixed Income Investments
The fund and UBS Global AM have entered into a written fee waiver/expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to (1) waive its management fees through November 28, 2012 to the extent necessary to reflect the lower sub-advisory fee paid by UBS Global AM to Rogge Global Partners plc, the fund's investment advisor; and (2) waive its management fees and/or reimburse expenses so that the fund's ordinary total operating expenses of each class through November 28, 2012 (excluding dividend expense, borrowing costs and interest expense relating to short sales, and expenses attributable to investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) would not exceed 1.25% for Class A, 2.00% for Class B, 1.75% for Class C, 1.00% for Class Y and 1.00% for Class P. The fund has agreed to repay UBS Global AM for any waived fees/reimbursed expenses (pursuant to item (2)) to the extent it can do so over the following three fiscal years without causing the fund's expenses in any of those three years to exceed these expense caps. The fee waiver/expense reimbursement agreement may be terminated by the fund's board at any time and also will terminate automatically upon the expiration or termination of the fund's advisory contract with UBS Global AM. Upon termination of the agreement, however, UBS Global AM's three year recoupment rights will survive.
PACE® Alternative Strategies Investments
The fund and UBS Global AM have entered into a written fee waiver/expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to (1) waive its management fees equal to 0.05% of the fund's average daily net assets through November 28, 2012; and (2) waive its management fees and/or reimburse expenses so that the fund's ordinary total operating expenses of each class through November 28, 2012 (excluding dividend expense, borrowing costs and interest expense relating to short sales, and expenses attributable to investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) would not exceed 1.95% for Class A, 2.70% for Class B, 2.70% for Class C, 1.70% for Class Y and 1.70% for Class P. The fund has agreed to repay UBS Global AM for any waived fees/reimbursed expenses (pursuant to item (2)) to the extent it can do so over the following three fiscal years without causing the fund's expenses in any of those three years to exceed these expense caps. The fee waiver/expense reimbursement agreement may be terminated by the fund's board at any time and also will terminate automatically upon the expiration or termination of the fund's advisory contract with UBS Global AM. Upon termination of the agreement, however, UBS Global AM's three year recoupment rights will survive.
For the following PACE® Funds:
The funds and UBS Global AM have entered into a written fee waiver/expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to waive its management fees and/or reimburse expenses so that the fund's ordinary total operating expenses of each class through November 28, 2012 (excluding dividend expense, borrowing costs and interest expense relating to short sales, and expenses attributable to investment in other investment companies, interest, taxes, brokerage commissions and extraordinary expenses) would not exceed the percentages for each fund listed below. The funds listed below have agreed to repay UBS Global AM for any waived fees/reimbursed expenses to the extent that they can do so over the following three fiscal years without causing the funds' expenses in any of those three years to exceed the expense caps for each share class as detailed below. The fee waiver/expense reimbursement agreement may be terminated by the fund's board at any time and also will terminate automatically upon the expiration or termination of the fund's advisory contract with UBS Global AM. Upon termination of the agreement, however, UBS Global AM's three year recoupment rights will survive.
PACE® Intermediate Fixed Income Investments
0.93% for Class A, 1.68% for Class B, 1.43% for Class C, 0.68% for Class Y and 0.68% for Class P.
PACE® Strategic Fixed Income Investments
1.06% for Class A, 1.81% for Class B, 1.56% for Class C, 0.81% for Class Y and 0.81% for Class P.
PACE® Municipal Fixed Income Investments
0.93% for Class A, 1.68% for Class B, 1.43% for Class C, 0.68% for Class Y and 0.68% for Class P.
PACE® High Yield Investments
1.35% for Class A, 2.10% for Class B, 1.85% for Class C, 1.10% for Class Y and 1.10% for Class P.
PACE® Large Co Value Equity Investments
1.27% for Class A, 2.02% for Class B, 2.02% for Class C, 1.02% for Class Y and 1.02% for Class P.
PACE® Large Co Growth Equity Investments
1.30% for Class A, 2.05% for Class B, 2.05% for Class C, 1.05% for Class Y and 1.05% for Class P.
PACE® Small/Medium Co Value Equity Investments
1.41% for Class A, 2.16% for Class B, 2.16% for Class C, 1.16% for Class Y and 1.16% for Class P.
PACE® Small/Medium Co Growth Equity Investments
1.38% for Class A, 2.13% for Class B, 2.13% for Class C, 1.13%, for Class Y and 1.13% for Class P.
PACE® International Equity Investments
1.55% for Class A, 2.30% for Class B, 2.30% for Class C, 1.30% for Class Y and 1.30% for Class P.
PACE® International Emerging Markets Equity Investments
2.15% for Class A, 2.90% for Class B, 2.90% for Class C, 1.90% for Class Y and 1.90% for Class P.
PACE® Global Real Estate Securities Investments
1.45% for Class A, 2.20% for Class C, 1.20% for Class Y and 1.20% for Class P.
* Inception date of PACE® Alternative Strategies Investments - Class Y Shares is 04/03/06. There were no Class Y shares outstanding for this fund from 07/27/06 until 07/22/08. The inception return of the Class is calculated as of 07/23/08, which is the date since Class Y shares have been continuously outstanding.
** Inception date of PACE® Global Real Estate Securities Investments - Class Y Shares is 11/30/06. There were no Class Y shares outstanding for this fund from 02/16/07 until 12/25/08. The inception return of the Class is calculated as of 12/26/08, which is the date since Class Y shares have been continuously outstanding.
Performance Considerations
Performance results assume the reinvestment of all dividends and capital gains, and are shown both with and without the effect of the maximum applicable sales charges. The investment return and principal value of an investment will fluctuate, and Fund shares, when redeemed may be worth more or less than their original cost. Accordingly, you can lose money investing in a Fund. Performance is historical and no guarantee of future results. Certain Funds were subject to certain fee waivers and/or expense reimbursements for certain reported periods. The performance of such Funds would have been lower if the Fund had borne all the expenses that were waived or reimbursed.
Sales Charge and Expenses
Class A shares: Maximum initial sales charge of 5.50% on equity Funds and 4.5% on fixed income Funds. Ongoing 12b-1 service fees. 1% CDSC for redemptions of purchases of $1 million or more made within one year.
Class B shares: The Funds have ceased offering Class B shares (with exceptions for existing shareholders for exchanges or reinvesting dividends). No initial sales charge. Maximum CDSC of 5%, which generally declines by 1% over six years. Converts to Class A shares after six years. However, reduced sales charges and shorter conversions to Class A shares are available for higher levels of investment. Please see prospectus for details. Ongoing 12b-1 service and distribution fees.
Class C shares: 1% CDSC on equity Fund redemptions and 0.75% on fixed income Fund redemptions made within one year of purchase. Ongoing 12b-1 service and distribution fees.
Class Y shares are not subject to sales charges and are available for limited groups of eligible investors, including institutional investors.
Class P shares are subject to a maximum Program fee of 2.00% which, if included, would have reduced performance.
Investment Considerations
Investors should carefully read and consider a mutual Fund's investment objectives, risks, charges and expenses before investing. The prospectus contains this and other information about a mutual Fund. Contact your Financial Advisor, or UBS Global AM at 888-793 8637 for a current Fund prospectus.
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