IMPORTANT DISCLOSURES
1Expense ratios are as of a fund's most recent prospectus. Prospectus dates vary between funds. Unless otherwise indicated, for UBS Funds, expense ratios are as of the October 28, 2009 prospectus. For UBS S&P 500 Index Fund, expense ratios are as of the September 28, 2009 prospectus. For UBS U.S. Allocation Fund, expense ratios are as of the December 29, 2008 prospectus. For UBS PACE Funds, expense ratios are as of the November 28, 2008 prospectus.
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 S&P 500 Index Fund
The Fund and UBS Global Asset Management (Americas) Inc. ("UBS Global AM") have entered into a written expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to reimburse the Fund so that the annual total operating expenses of each class through September 30, 2010 (excluding interest expense, if any) would not exceed 0.70% for Class A, 1.10% for Class B, 1.45% for Class C, 1.10% for Class C-2 and 0.45% for Class Y. The Fund has agreed to repay UBS Global AM for any reimbursed expenses to the extent that it can do so over the following three years without causing the Fund's expenses in any of those three years to exceed those "Net Expenses" rates.
In light of the upcoming, contemplated liquidation of the Fund, the Fund has ceased the payment of the annual 12b-1 distribution fee that is charged to the shareholders of Class B, Class C and Class C-2 shares (0.40% of average net assets with respect to Class B and Class C-2 shares and 0.75% of average net assets with respect to Class C shares). The elimination of these charges has not been reflected above. The annual 12b-1 service fee of 0.25% of average net assets that is charged to Class A, Class B, Class C and Class C-2 shares will continue.
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%.
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 and interest expense) 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 and interest expense) to the extent necessary so that the Fund's operating expenses (excluding expenses incurred through investment in other investment companies and interest expense), through the fiscal year ending June 30, 2010, 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.
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 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. (Excludes securities loan fees and dividend expense 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. 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 Absolute Return Bond Fund
1.00% for Class A, 1.35% for Class C and 0.85% for Class Y.
UBS U.S. Mid Cap Growth Equity Fund
1.45% for Class A, 2.20% for Class C and 1.20% for Class Y.
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.
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 U.S. Bond Fund
0.64% for Class A, 1.39% for Class B, 1.14% for Class C and 0.39% 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.
UBS Global Frontier Fund
1.40% for Class A, 2.15% for Class C and 1.15% for Class Y.
UBS PACE Government Securities Fixed Income Investments
The fund and UBS Global AM have entered into a written fee waiver agreement pursuant to which UBS Global AM is contractually obligated to waive its management fees through November 30, 2009 to the extent necessary to reflect the lower sub-advisory fee paid by UBS Global AM to PIMCO. The fund and UBS Global AM have also entered into an additional written fee waiver/expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to waive its management fees and/or reimburse the fund so that the fund's ordinary total operating expenses of each class through November 30, 2009 (excluding dividend expense, borrowing costs and interest expense, if any) 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 under the preceding sentence to the extent that 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.
UBS PACE Global Fixed Income Investments
The fund and UBS Global AM have entered into a written fee waiver agreement pursuant to which UBS Global AM is contractually obligated to waive its management fees through November 30, 2009 to the extent necessary to reflect the lower sub-advisory fee paid by UBS Global AM to Rogge Global Partners. The fund and UBS Global AM have also entered into an additional written fee waiver/expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to waive its management fees and/or reimburse the fund so that the fund's ordinary total operating expenses of each class through November 30, 2009 (excluding dividend expense, borrowing costs and interest expense, if any) 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 under the preceding sentence to the extent that 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.
UBS PACE Large Co Growth Equity Investments
The fund and UBS Global AM have entered into a written fee waiver agreement pursuant to which UBS Global AM is contractually obligated to waive its management fees through November 30, 2009 to the extent necessary to reflect the lower sub-advisory fee paid by UBS Global AM to SSgA FM. The fund and UBS Global AM have also entered into an additional written fee waiver/expense reimbursement agreement pursuant to which UBS Global AM is contractually obligated to waive its management fees and/or reimburse the fund so that the fund's ordinary total operating expenses of each class through November 30, 2009 (excluding dividend expense, borrowing costs and interest expense, if any) would not exceed 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. The fund has agreed to repay UBS Global AM for any waived fees/reimbursed expenses to the extent that 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.
For the following UBS 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 the funds so that the fund's ordinary total operating expenses of each class through November 30, 2009 (excluding dividend expense, borrowing costs and interest expense, if any) 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 follows:
UBS 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.
UBS 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.
UBS 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.
UBS 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.
UBS 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.
UBS 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.
UBS 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.
UBS PACE International Equity Investments
1.65% for Class A, 2.40% for Class B, 2.40% for Class C, 1.40% for Class Y and 1.40% for Class P.
UBS PACE International Emerging Markets Equity Investments
2.25% for Class A, 3.00% for Class B, 3.00% for Class C, 2.00% for Class Y and 2.00% for Class P.
UBS 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.
UBS PACE Alternative Strategies Investments
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.
* Inception date of UBS PACE Alternative Strategies Investments - Class Y Shares is 04/03/06. There were no Class Y shares outstanding for this fund from 07/26/06 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 UBS PACE Global Real Estate Securities Investments - Class Y Shares is 11/30/06. There were no Class Y shares outstanding for this fund from 02/17/07 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 C-2 shares (S&P 500 Index Fund): Ongoing 12b-1 service and distribution fees. This class can only be purchased by the original shareholders (Enhanced S&P 500 Class C) who merged into the Fund. It's not available to the public.
Class Y shares are not subject to sales charges and are available for limited groups of eligible investors, including institutional investors.
UBS S&P 500 Index Fund, Class A: initial sales charge of 2.5%. UBS S&P 500 Index Fund charges a 0.50% CDSC on redemptions made within one year for purchases of $1 million or more.
UBS S&P 500 Index Fund, Class B: Maximum CDSC of 3%, which generally declines by 1% over six years. Converts to Class A shares after six years. However, reduced sales charges and shorter conversion to Class A shares are available for higher levels of investments. Please see prospectus for details.
UBS Absolute Return Bond Fund, Class A: initial sales charge of 2.50%. UBS Absolute Return Bond Fund charges a 0.50% CDSC on redemptions made within one year for purchases of $250,000 or more that were not subject to a front-end sales charge.
UBS Absolute Return Bond Fund, Class C: 0.50% CDSC on redemptions made within one year of purchase. Ongoing 12b-1 service and distribution fees. Please see prospectus for details.
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.
S&P 500 is a registered trademark of The McGraw-Hill Companies, Inc. ("S&P") and has been licensed for use by UBS Global Asset Management (US) Inc. The UBS S&P 500 Index Fund is not sponsored, endorsed, sold, or promoted by S&P, and S&P makes no representation regarding the advisability of investing in the Fund.
