UBS (Canada) Global Allocation Fund Offering of Series A, D and F Units Simplified Prospectus dated June 3, 2014 No securities regulatory authority has expressed an opinion about this mutual fund and it is an offence to claim otherwise.
Contents CONTENTS... 1 INTRODUCTION... 2 WHAT IS A MUTUAL FUND AND WHAT ARE THE RISKS OF INVESTING IN A MUTUAL FUND?... 3 PURCHASES, SWITCHES AND REDEMPTIONS... 6 FEES AND EXPENSES... 9 Fees and expenses payable by the Fund... 9 Fees and expenses payable directly by Unitholders... 10 Impact of Sales Charges... 10 DEALER COMPENSATION... 11 INCOME TAX CONSIDERATIONS FOR UNITHOLDERS... 11 WHAT ARE YOUR LEGAL RIGHTS?... 12 SPECIFIC INFORMATION ABOUT UBS (CANADA) GLOBAL ALLOCATION FUND... 13 ORGANIZATION AND MANAGEMENT OF THE FUND... 13 FUND DETAILS... 15 WHAT DOES THE FUND INVEST IN?... 15 WHAT ARE THE RISKS OF INVESTING IN THIS FUND?... 17 WHO SHOULD INVEST IN THIS FUND?... 18 DISTRIBUTION POLICY... 19 FUND EXPENSES INDIRECTLY BORNE BY UNITHOLDERS... 19 Page
Introduction This Simplified Prospectus contains selected important information to help you make an informed investment decision and to help you understand your rights as an investor. In this Simplified Prospectus, the Fund means the UBS (Canada) Global Allocation Fund. We, us and our mean UBS Global Asset Management (Canada) Inc., the manager of the Fund. Units refers to the units of the Fund, which are issuable in series. An owner of the units is referred to as a unitholder. This Simplified Prospectus contains information about the Fund and the risks of investing in mutual funds generally, as well as the names of the firms responsible for the management of the Fund. Additional information about the Fund is available in the following documents: the Fund s Annual Information Form, the most recently filed Fund Facts, the most recently filed annual financial statements of the Fund, any interim financial statements of the Fund which are filed after those annual financial statements are filed, the most recently filed annual management report of fund performance of the Fund, and any interim management report of fund performance of the Fund which is filed after that annual management report of fund performance. These documents are incorporated by reference into this Simplified Prospectus, which means that they are legally part of this document, just as if they were printed as part of this document. You can get a copy of these documents, at your request and at no cost, by calling us toll free at 1-866-UBS-9300, or by writing to us at UBS Global Asset Management (Canada) Inc., Brookfield Place, 161 Bay Street, Suite 4100, Box 618, Toronto, Ontario M5J 2S1, or from your dealer. These documents and other information about the Fund are also available on our website at www.ubs.com/1/e/globalam/americas/canada/ca_retail.html, or at www.sedar.com. - 2 -
What is a mutual fund and what are the risks of investing in a mutual fund? A mutual fund provides a convenient way for unitholders with similar investment goals to combine their money, which is then used to buy different types of investments on behalf of all of the unitholders in the fund. When we buy investments, we follow the investment objectives and investment strategies of the Fund. These are described later in this document. Unitholders share in any profits the Fund makes or losses it suffers. There are many potential advantages of investing in mutual funds, but there are also some risks you should know about. Some of these risks are common to all mutual funds, and some are more specific to the Fund. Risks Common to All Mutual Funds Investing in mutual funds is not like putting your money in a savings account. Unlike a savings account or a GIC, neither the Canada Deposit Insurance Corporation nor any other government deposit insurer insures your investment in units of a mutual fund. Furthermore, the full amount of your investment in a mutual fund is not guaranteed. Mutual funds own different types of investments, depending upon their investment objectives and strategies. The value of a mutual fund may change each day as the value of those investments change, reflecting changes in interest rates, economic conditions and stock market and company news. As a result, units of a fund go up and down, and when you sell your units of a mutual fund, you may receive less than the amount you invested when you bought those units. Like all mutual funds, in exceptional circumstances we will not accept any orders to sell Units of the Fund. These circumstances are explained under Purchases, switches and redemptions. Additional Risks Applicable to the Fund No Assurance of Achieving Investment Objectives: There is no assurance that the Fund will be able to achieve its investment objectives. A drop in the global equity and fixed income markets is likely to have a negative effect on the Fund. Impact of Taxation: The after-tax return from an investment in a series of Units to a taxable Canadian investor will depend in part on the composition for tax purposes of the distributions paid by the Fund (a portion of which may be fully or partially taxable or in exceptional circumstances may constitute non-taxable returns of capital). This composition may change over time, thus affecting the after-tax return to unitholders of the Fund, and the tax rates applicable to different types of income may change as a result of changes in government policies. Changes in Tax Laws: There can be no assurance that Canadian federal income tax laws and the administrative policies and assessing practices of the Canada Revenue Agency respecting the treatment of mutual fund trusts will not be changed in a manner that may adversely affect the Fund. - 3 -
The Foreign Account Tax Compliance provisions of the United States ( U.S. ) Hiring Incentive to Restore Employment Act ( FATCA ) generally impose a reporting and 30% withholding tax regime with respect to (a) certain U.S. source income (including interest and dividends) and gross proceeds from the sale or other disposition of property that can produce U.S. source interest or dividends ( withholdable payments ) and (b) passthru payments (generally, withholdable payments and payments that are attributable to withholdable payments) made by non-u.s. financial institutions. Absent the existence of an intergovernmental agreement between Canada and the US, unless the Fund entered into an agreement with the U.S. Internal Revenue Service (the IRS ) pursuant to which it agrees to report to the IRS information regarding the U.S. holders of, and certain U.S. persons that indirectly hold, interests in the Fund (other than equity and debt interests that are regularly traded on an established securities market), and to comply with other reporting, verification, due diligence and other procedures established by the IRS, the Fund could have been subject to 30% withholding tax on withholdable payments made to it after June 30, 2014 and on foreign passthru payments (the definition of foreign passthru payments is reserved) made to it after December 31, 2016 by non-u.s. financial institutions that have an agreement with the IRS in effect. On February 5, 2014, the governments of Canada and the United States entered into an Intergovernmental Agreement ( IGA ) which establishes a framework for cooperation and information sharing between the two countries and is intended to provide a different approach for non-us financial institutions in Canada, potentially including the Fund, to comply with the FATCA rules without entering into a FATCA Agreement. Pursuant to proposed Canadian legislation implementing the IGA, which has received second reading in Parliament, (the Proposed Canadian IGA Legislation ), the Fund may be required to provide information about unitholders to the CRA, which information, in turn, may be provided to the IRS. Under the IGA, the Fund will generally be relieved from the obligation to enter into a FATCA Agreement with the IRS and will generally not be subject to FATCA withholding on payments received by the Fund, provided that (i) the Fund complies with the Proposed Canadian IGA Legislation and (ii) the government of Canada complies with the terms of the IGA. The Fund will endeavor to comply with the requirements imposed under the Proposed Canadian IGA Legislation. Accordingly, the Fund anticipates that unitholders may be required to provide identity, residency and other information to the Fund, which information may be provided by the Fund to the CRA and by the CRA to the IRS to the extent a unitholder is determined to be US reportable. Although, if ratified, the IGA is intended to relieve the Fund from being subject to potential FATCA withholding, a Fund may be subject to FATCA withholdings if it is in significant and long-term noncompliance with the obligations under the IGA and the Canadian IGA Legislation and if that Fund is otherwise unable to comply with the requirements of FATCA. This description is based on the IGA entered into between Canada and the United States, Canadian proposed legislation to implement the IGA, and guidance, regulations and temporary and final amendments issued by the IRS. Future guidance and legislative changes may affect the application of FATCA to the units of the Fund. Risk of Interest Rate Fluctuations: The Fund will generally have a portion of its assets invested in fixed income securities. The value of a Fund s bonds, debentures, notes and other fixed-income debt instruments will vary with interest rates. When interest rates rise, the value of securities with a fixed rate of interest will decline. Conversely, when interest rates fall, the value of such securities will increase. - 4 -
Risk of Defaulting Bonds: The Fund may invest in high-yield bonds. Issuers of bonds with ratings of below investment grade, and which constitute high yield debt, may default or otherwise be unable to honour a financial obligation. These bonds are considered to be predominately speculative with respect to an issuer s capacity to pay interest and repay principal in accordance with the terms of the obligations. Small Company Risk: The Fund may invest a portion of its assets in the equity securities of small or medium size companies. Investments in small and medium size companies may be more volatile than investments in larger companies, as small and medium size companies generally experience higher growth and higher failure rates. The trading volume of these securities is normally lower than that of larger companies. Such securities may be less liquid than other securities, which may make it more difficult to buy or sell such securities at a particular time or at a particular price. Changes in the demand for these securities generally have a disproportionate effect on market price of such securities, tending to make the prices for such securities rise more in response to an increase in interest and to fall more in response to a lack of interest in such securities. Risks of Investment in Foreign or Emerging Markets Securities: The Fund may invest a portion of its assets in securities of companies domiciled or operating in countries other than Canada, including emerging markets countries. Prices of the Fund s investments in foreign securities may decrease in value because of unfavourable foreign government actions, political instability or the absence of accurate information about foreign issuers. Foreign securities may also be less liquid, harder to sell and harder to value than Canadian securities. These risks will be even more severe for issuers that are located in emerging market countries. While the Fund hedges its currency exposure to major world currencies, it does not currently hedge its exposure to emerging markets currencies, and to the extent it does not do so in the future, a decline in the value of these emerging markets currencies relative to the Canadian dollar will also reduce the value of securities denominated in those currencies. Derivatives Risk: The Fund may invest in and use derivative instruments as part of its investment strategy and may use such instruments for hedging and other purposes to the extent, if any, considered appropriate, taking into account various factors including transaction costs. There can be no assurance that the Fund s use of derivatives and hedging strategies will be effective. When derivatives are utilized, the Fund will be subject to the credit risk that its counterparty (whether a clearing corporation in the case of exchange-traded instruments or another third party in the case of over-the-counter instruments) may be unable to meet its obligations. In addition, there is a risk of loss by the Fund on margin deposits in the event of the bankruptcy of the dealer with whom the Fund has an open position in an option or futures or forward contract. The ability of the Fund to close out its positions may also be affected by exchange-imposed daily trading limits on options and futures contracts. If the Fund is unable to close out a position, it will be unable to realize its profit or limit its losses until such time as the option becomes exercisable or expires or the futures or forward contract terminates, as the case may be. The inability to close out options, futures and forward positions could also have an adverse impact on the Fund s ability to use derivative instruments to effectively hedge its portfolio or implement its investment strategy. Securities Lending: The Fund may engage in securities lending. Although the Fund will receive collateral when it lends securities and such collateral will be marked-to-market, the Fund will be exposed to the risk of loss should the borrower default on its obligation to - 5 -
return the borrowed securities and/or if the collateral is insufficient to reconstitute the portfolio of loaned securities. Multi-series risk: Although the Fund offers separate series of Units, the Fund is taxed as one entity. Accordingly, the investment performance, expenses or liabilities of one series may affect the value of Units of another series. Units of the Fund Purchases, switches and redemptions The Units of the Fund are currently divided into five series: Series A Units, Series B Units, Series C Units, Series D Units and Series F Units. Each series of Units is intended for a different type of investor. Only Series A, D and F Units are offered under this Simplified Prospectus. Series A Units are available to all unitholders. Series B Units are available to institutional clients who have signed an agreement with the Manager. Series C Units are available for purchase by high net worth individuals who are clients of third party dealers. As of the date of this Simplified Prospectus, there are no Series C Units issued. Series F Units typically have lower fees than Series A Units and are available for sale to unitholders who hold an account with dealers who have entered into a dealer agreement with us. These unitholders pay their dealer a fee directly for investment advice or other services. Series D Units are available to unitholders who have an account with discount brokers. Each Unit of a series of the Fund is of equal value. The number of Units of a series that may be issued is unlimited, unless we determine otherwise in our sole discretion. Each Unit of a series ranks equally with every other Unit of that series, except that holders of a fraction of a Unit of a series of the Fund will not be entitled to vote at meetings of unitholders of that series in respect of the fractional unit. Outstanding Units of a series participate equally in distributions of the assets of the Fund on the termination of the Fund. We may at any time sub-divide or consolidate all Units of a series that are outstanding. Purchasing Units of the Fund The net asset value per Unit is the amount that an investor pays to buy or sell a Unit. We will determine the net asset value per Unit at the close of business on each day that the Toronto Stock Exchange is open. If we receive instructions in good order to buy Units by 4:00 p.m., Eastern time, we will process the order using the values calculated at the close of business that day. Otherwise, we will process the order the next business day, using the net asset value calculated at the close of business on that day. For more details about how we calculate the net asset value of a Unit, please refer to the section Valuation of Portfolio Securities in the Fund s Annual Information Form. We have the right to restrict, reject or cancel, without any prior notice, any purchase or switch order, including transactions that are deemed to represent inappropriate or excessive short-term trading. We must do so within one business day from the time we receive the order. If we refuse your order to purchase or switch, we will immediately return any monies we received with your order. Sales charges - 6 -
The initial sales charges, if any, that are payable by a unitholder in respect of the Series A Units will be subject to negotiation between the unitholder and the dealer selling Series A Units to the unitholder, to a maximum of 5% of the subscription amount. There are no sales charges paid to us when you purchase Series F Units. Unitholders may pay fees to their dealer on the value of their invested assets. You should confirm with your discount broker what brokerage commissions or transactions charges, if any, your broker will charge when you buy or redeem Series D Units. Minimum balances for all series You must invest and maintain a minimum balance for the Fund. The table below outlines these minimums along with the minimum requirements for additional investments and redemptions. Series Minimum Balance Minimum additional investments/redemptions (1)(2) Series A $1,000 $100 Series F $1,000 $100 Series D $1,000 $100 (1) Unitholders purchasing through dealers may be subject to higher minimum initial or additional investment/redemption amounts. (2) Minimums are per transaction. - 7 -
Switch Rights While Units are redeemable as discussed below, there are no special provisions that would permit unitholders to switch their Units for units of another Series. Redeeming Units of the Fund Unitholders may redeem Units of the Fund at any time so long as redemption rights have not been suspended. Any redemption request received by us in good order before 4:00 p.m., Eastern time, will normally be processed on that day so that Units will be redeemed at a net asset value calculated at the end of that day. If a redemption request is received after this time, the request will be processed on the next business day. We may take up to three business days to send the redemption proceeds. We reserve the right, in our sole and absolute discretion, to at any time require the redemption of any Units held by any investor. In extraordinary circumstances, such as when normal trading in securities, options or futures are suspended on stock exchanges (within or outside Canada) on which more than one-half of the Fund s securities are listed, or upon any lower threshold as may be agreed to by the regulators, and if those securities or specified derivatives are not traded on any other exchange that represents a reasonably practical alternative for the Fund, or with the consent of Canadian securities regulatory authorities, the right to redeem Units could be suspended. Short Term Trading Where Unitholders make short-term trades in mutual fund securities, buying such securities one day and selling them a short time thereafter, there can be adverse effects on the other unitholders in the mutual fund. The mutual fund may incur additional trading costs in first purchasing portfolio securities with the short term investor s subscription funds, and then in selling portfolio securities to pay the proceeds of redemption to that investor, depending upon the mutual fund s cash position. Further, such an investor may enjoy the benefits of any capital appreciation incurred in the mutual fund without that investor s contribution actually being invested in time to contribute to that appreciation. For this reason, the Manager has the right to impose a short-term trading charge if Units are redeemed within 60 days of the date of purchase. See Fees and Expenses Fees and Expenses Payable Directly by Unitholders. Such fee would generally not be charged if the reason for the early redemption was an unexpected change in personal or financial circumstances, or other legitimate reason, and was not part of a course of conduct of short-term trading. Where the Manager detects repeated short-term trading occurring by an investor, in addition to charging the short-term trading fee, the Manager may decline to accept future purchase orders from that investor. - 8 -
Fees and expenses There are certain fees and expenses associated with investing in the Fund. The Fund will pay some of these fees and expenses, which reduces the value of a direct or indirect investment in the Fund. Unitholders will pay other fees and expenses directly. Fees and expenses payable by the Fund Management fees UBS Global Asset Management (Canada) Inc. is entitled to an annual management fee for acting as the Manager of the Funds. The management fee varies for each series and each Fund. Out of this management fee, the Manager will pay any fee payable to the Investment Advisor in accordance with their inter-company agreements in this regard. Fund Series A Series F Series D UBS Global Allocation Fund 1.90% 0.90% 1.15% Effect of GST/HST on Management Fees Management fees are subject to applicable taxes, including GST and HST, which have an impact on the management expense ratio (MER) of the Funds. In general, the total HST paid by the Funds will depend on the distribution by provincial residence of the Funds unitholders. Changes in existing HST rates, and changes to the group of provinces that have adopted harmonization will have an impact on the MER of each Series of the Funds. Operating expenses The Fund pays its own operating expenses. These expenses include audit fees, custodial expenses, accounting and recordkeeping costs, legal expenses, prospectus preparation and filing, and other day-today operating expenses. The Fund is also responsible for the fees and expenses of its Independent Review Committee. Each member of the Independent Review Committee is paid $16,000 per annum plus a $1,000 per meeting fee. The Independent Review Committee, or IRC, provides independent oversight and impartial judgment on conflicts of interest involving the Funds. Among other matters, the IRC prepares, at least annually, a report of its activities for unitholders of the Funds which is available upon request or at www.sedar.com. The cost of the Independent Review Committee is shared across the other funds managed by the Manager. The Fund also pays Harmonized Sales Tax (HST) on applicable fees and expenses. - 9 -
Fees and expenses payable directly by Unitholders Sales charges on initial sales Unitholders acquiring Series A Units may have to pay a sales charge. This depends upon the arrangements you make with any dealer selling the Series A Units to you. This sales charge will not exceed 5.00% of the amount invested by a unitholder in Series A Units. Unitholders acquiring Series F Units do not pay sales charges, but typically are required to pay ongoing fees to their dealer on the value of their invested assets. Unitholders acquiring Series D Units will pay such brokerage fees or other transactions costs, if any, as are charged by their discount broker. Switch fees Redemption fees Short-term trading fees Other Fees and Expenses Not applicable. None charged by the Manager. The Funds may charge a short-term trading fee if you redeem or switch your units. The Funds may charge up to 2% of the net asset value of the redeemed Units. If a unitholder fails to make proper payment for units purchased, and we are required to redeem those units, and the redemption payment is insufficient to meet the purchase price owing, the unitholder may be responsible for reimbursing the dealer who sold the units if the dealer suffers a loss as a result. Similarly, if a unitholder fails to properly complete a redemption request, and we are required to issue units to the unitholder having a value in excess of the redemption amount otherwise owing to the unitholder, the unitholder may also be responsible for reimbursing the dealer through which the units are held. Impact of Sales Charges The following table shows the sales charges that you would pay in respect of the various classes of units if you made an investment of $1,000 in the Fund, and if you held that investment in the Fund for one, three, five or 10 years and redeemed your units immediately before the end of each of those periods in Series A Units. At the time of purchase 1 year 3 years 5 years 10 years Series A units $50.00 (1) Nil Nil Nil Nil (1) Based on the maximum initial sales charge of 5.0%. - 10 -
Dealer compensation We pay dealers a quarterly service fee, known as a trailing commission, based on the total net asset value of the Series A Units and Series D Units held by clients of the dealer, for so long as such clients hold the investment. We do not pay trailing commissions in respect of Series F Units. We also pay trailing commissions to the discount broker for the Series D Units you purchase through your discount brokerage account. The trailing commission will equal to 1.00% per annum of the net asset value attributable to the Series A Units held by clients of the dealer, and 0.25% per annum of the net asset value attributable to the Series D Units held by clients of the dealer plus applicable taxes. It will be paid as soon as practicable after the end of each calendar quarter. We may change the terms of the trailing commissions paid to your dealer without informing you. Dealers typically pay a portion of the trailing commissions they receive to their investment advisors for the services they provide to their clients. Income tax considerations for unitholders This section is a general summary of how an investment in the Fund is taxed. It applies to unitholders who are taxable investor residents of Canada, hold their Units as capital property and deal at arm s length with and are not affiliated with the Fund. Distributions The Fund may earn dividends, interest income or certain other types of income from its investments. It may also realize capital gains when it sells investments at a profit. When the Fund pays out its income (after deducting expenses), net realized capital gains or other amounts to unitholders, these payments are called distributions. Distributions are automatically invested in additional Units. There are no sales charges on Units that are purchased with reinvested distributions. A record of the distributions made by the Fund is provided in the annual financial statements of the Fund. Unitholders have to report the distributions they receive (whether received in cash or reinvested in additional units) on their income tax return. They will receive a tax slip each year that shows their share of the Fund s distributions of dividends from Canadian corporations, capital gains, other income, and return of capital. The higher the Fund s portfolio turnover rate, the greater the chance of an investor receiving taxable capital gains during the year. If an investor redeems Units, it will have to pay income tax on one-half of the difference between the redemption proceeds (less any reasonable expenses of the redemption) and the adjusted cost base of the units sold. It will also have to pay income tax on one-half of - 11 -
any distributions of capital gains. However, in appropriate circumstances, it may be entitled to offset any capital losses incurred against these or other capital gains. The adjusted cost base of a Unit is a tax concept used to determine how much of a capital gain or capital loss must be reported for tax purposes when Units are redeemed. The adjusted cost base of a Unit is generally equal to the total of all amounts paid to purchase the Units, plus the amount of any distributions of the income or capital gains of the Fund that were satisfied by the issue of additional Units, less the adjusted cost base of any Units previously redeemed, less any distributions of the capital of the Fund, with certain adjustments, divided by the number of Units owned. When we pay distributions we do not take into account when Units were purchased. Therefore, unitholders may be taxed on a portion of the income and net realized capital gains that the Fund generated before they bought Units. This will be particularly relevant if Units are purchased late in a year. What are your legal rights? Securities legislation in some provinces gives unitholders the right to withdraw from an agreement to buy Units within two business days of receiving the Simplified Prospectus, or to cancel a purchase within 48 hours of receiving confirmation of its order. Securities legislation in some provinces and territories also allows unitholders to cancel an agreement to buy Units and get their money back, or to make a claim for damages, if the Simplified Prospectus, Annual Information Form, financial statements or management reports of fund performance misrepresent any facts about the Fund. These rights must usually be exercised within certain time limits. For more information, refer to the securities legislation of your province or territory, or consult your lawyer. - 12 -
Specific information about UBS (Canada) Global Allocation Fund Organization and management of the Fund The table below shows the companies responsible for providing important services to the Fund. Title Manager & Portfolio Advisor UBS Global Asset Management (Canada) Inc. Canada Trust Tower P.O. Box 618 161 Bay Street Suite 4100 Toronto, Ontario M5J 2S1 Portfolio Sub-Advisor * UBS Global Asset Management (Americas) Inc. Chicago, Illinois Services provided We manage the day-to-day operations of the Fund. While we have overall responsibility for the Fund s management, we have retained our affiliate, UBS Global Asset Management (Americas) Inc. and certain of its affiliates, to invest the Fund s assets in accordance with its investment objectives, strategies and restrictions. Trustee & Registrar CIBC Mellon Trust Company Toronto, Ontario Auditor Ernst & Young LLP Toronto, Canada CIBC Mellon Trust Company holds legal title to assets of the Fund and acts as trustee and registrar of the Fund. Ernst & Young is responsible for auditing the Fund s annual financial statements and providing an opinion as to whether they present fairly the Fund s financial position, results of operation and changes in net assets in accordance with International Financial Reporting Standards, which was effective January 1, 2014. - 13 -
Title Custodian Canadian Imperial Bank of Commerce Toronto, Ontario Services provided Canadian Imperial Bank of Commerce is also responsible for the safekeeping of the Fund s assets, and assists us by providing certain administrative and record-keeping services in respect of the Fund. * There may be difficulty in enforcing any legal rights against the Portfolio Sub- Advisor, because it is a resident outside of Canada and all or a substantial portion of its assets are situated outside of Canada. Independent Review Committee National Instrument 81-107 Independent Review Committee for Investment Funds ( NI 81-107 ) came into force on November 1, 2006. As required by the terms of NI 81-107, the Manager has appointed the initial Independent Review Committee ( IRC ) of the Fund consisting of Geoffrey Browne, Principal, MWI Partners Inc.; Garth Foster, Partner, Fasken Martineau DuMoulin LLP; and Priscilla Healy, Legal Counsel, Pallett Valo LLP. Biographical details of these individuals are contained in the Fund s Annual Information Form. The Manager is required to refer to the IRC those matters which it identifies as being conflicts of interest in relation to the Fund. A conflict of interest matter is any matter in which the interests of the Manager may be such that they conflict, or could be perceived to conflict, with its obligation to act in the best interests of the Fund. The mandate of the IRC under NI 81-107 and its charter is to make a recommendation relating to, or, in some limited cases, approve, the Manager s proposed course of action in such matters. The IRC also reviews and provides comments on the Manager s policies and procedures relating to conflicts of interest matters. The IRC prepares a report to unitholders of the Fund each year in respect of its activities during the previous fiscal year of the Fund. Such reports are available on SEDAR at www.sedar.com and the most recent of them may be found on the Manager s website at www.ubs.com/1/e/globalam/americas/canada/ca_retail.html. A copy of the most recent of such reports will also be provided, free of charge, by the Manager to any unitholder who requests a copy. Unitholders should contact the Manager by telephone or by writing the Manager at the telephone number and address specified on the last page of this Simplified Prospectus. - 14 -
Fund details Type of Fund: Date Fund was First Offered by way of Prospectus: Nature of Securities Offered: Registered Plan Eligibility: Global balanced fund. Series A August 13, 2013 Series D - May 9, 2006 Series F January 10, 2014 Series A, D and F Units Yes. Management Fees Series A - 1.90% Series D 1.15% Series F 0.90% Investment objectives What does the Fund invest in? The fundamental investment objectives of the Fund are to maximize total return for Unitholders, consisting of interest and dividend income and capital appreciation, by investing in a balanced global portfolio of equity and fixed income securities. The Fund s fundamental investment objectives may not be changed without the prior approval of the majority of its unitholders who vote at a meeting called for that purpose, except when the change is required because of changes in law. Investment strategies The Fund seeks to achieve its investment objectives by investing in a diversified portfolio of assets selected by employing the following three strategies: (i) active global asset allocation across various asset classes of global stocks and bonds; (ii) active security selection, based on a price/intrinsic value methodology used across all markets worldwide; and (iii) an active global currency overlay. This investment strategy (the Global Composite Strategy ) has been employed by the Investment Advisor and its affiliates for over 20 years. The Global Composite Strategy currently calls for the Fund to invest its assets in each of the following seven major asset classes: US equities, global (ex-us) equities, emerging markets equities, US bonds/fixed income, global (ex-us) bonds/fixed income, high-yield bonds/fixed income and emerging markets bonds/fixed income, based upon the Investment Advisor s assessment of prevailing market conditions. The allocation ranges for these seven asset classes and the current allocation to such asset classes of the Global Composite Strategy are as follows: - 15 -
Asset Class (1) Minimum Allocation Maximum Allocation US Equities 10.0% 70.0% Global (Ex-US) Equities 0.0% 55.0% Emerging Markets Equities 0.0% 15.0% US Bonds/Fixed Income 0.0% 55.0% Global (Ex-US) Bonds/Fixed Income 0.0% 40.0% High-Yield Bonds/Fixed Income 0.0% 15.0% Emerging Markets Bonds/Fixed Income 0.0% 12.5% Cash and Cash Equivalents 0.0% 50.0% Notes: (1) When market conditions warrant, the Fund may temporarily hold cash or cash equivalents. The Fund s maximum temporary cash allocation is 50% of its portfolio assets. The Fund invests primarily in equity, debt and money market instruments traded on recognized exchanges or over-the-counter markets located in developed and emerging markets, including any combination of the following: common stocks or their equivalent, and securities convertible into such common stock, including convertible bonds, warrants, rights and options, and income trusts that are listed on an exchange; fixed income securities issued by governments and government agencies, supranational entities or corporations denominated in any currency including bonds, notes, mortgage backed and asset backed securities, zero coupon securities, payment-in-kind, inflation protected securities and repurchase agreements; private placements, including securities issued under SEC Rule 144A, within applicable regulatory limits; new issues, including initial and secondary public offerings of the types of securities referred to above; depository receipts for the types of securities referred to above; exchange traded funds, country funds, participation notes and closed end investment trusts investing primarily in the above securities; and exchange traded futures contracts, options, swaps, spot and forward currency contracts. The assets of the Fund may be invested in short term fixed income securities denominated in any currency. These include money market instruments, commercial paper, loans, - 16 -
repurchase agreements, bank deposits, government or governmental agencies obligations, and supranational organizations obligations. The Fund may also lend its portfolio securities to generate additional income for the Fund. In a securities lending transaction, the Fund lends its portfolio securities to a borrower, and receives collateral back from the borrower in return. That collateral can either be certain types of securities, in which event the Fund receives a fee from the borrower which represents income to the Fund, or cash, in which case the income earned by the Fund from the investment of that cash (net of amounts owed to the borrower) represents the Fund s fee for lending its securities. The aggregate amount of all securities lent by the Fund and not returned may not exceed 50% of the total assets of the Fund (and for these purposes total assets excludes any collateral held by the Fund in respect of its loaned securities). The Fund may buy or sell forward currency contracts, swaps, futures and options relating to currencies in order to manage the currency exposure to enhance the return or reduce the risk of the Fund. The Fund will hedge substantially all foreign currency exposure to major world currencies of its portfolio back to the Canadian dollar at all times. The Fund may achieve these investment strategies by investing in other mutual funds including mutual funds managed by the Manager or one of its affiliates to a maximum of 10% of the NAV of the Fund in order to obtain exposure to an asset class or type of security that may not otherwise be available on a segregated account basis. The Fund will pay management fees and expenses that are the same or lower than those payable by other similar unitholders in such funds. The Manager may also shift the exposure of the Fund from one currency to another or may enter into either a net long or net short position with respect to any currency. The Fund is also permitted to buy and sell futures and options contracts and enter into swap transactions to hedge its investments against price fluctuations, to quickly and efficiently implement strategy changes and to equitize cash and cash equivalents held in the Fund. Any such use of derivatives must be conducted within applicable regulatory limits and conditions. What are the Risks of Investing in this Fund? We assign an investment risk rating to each asset class or Fund to provide you with further information to help you determine whether the asset class or Fund is appropriate for you. Each asset class or Fund is assigned an investment risk rating in one of the following categories: low, low-to-medium, medium, medium-to-high, or high risk. The methodology we use to determine the risk rating of each asset class or Fund is based on the Secular Risk Estimate. The Secular Risk Estimate is defined as the forward-looking standard deviation assigned to each asset class. These are determined in an integrated fashion along with risk premiums, taking into account an asset class unique risks as well as the relationship of the riskiness of its returns to the global investable market and those of other asset classes or Funds. A higher Secular Risk Estimate figure implies greater expected risk. As a result, we determine the risk rating of each asset class or Fund by using the following process: - 17 -
1. Performing a detailed review of each asset class or Fund to identify and assess all relevant risk factors; 2. Calculating various risk and return metrics for each asset class or Fund including determining the Secular Risk Estimate of each asset classes volatility; 3. Determining the risk classification for each asset class by ranking the asset class or Fund using the Secular Risk Estimate methodology (the higher the number and the greater the chance of loss, the higher the risk ranking); and 4. Determining whether the risk classification assigned to each asset class in step 3 above is appropriate for the Fund and whether any adjustment is required in light of the qualitative factors identified in step 1 above. You can request a copy of our policy that describes the method we use to determine the investment risk level of each asset class or Fund, at no cost to you, by calling us at 1-866- UBS-9300 or by writing to us at 161 Bay Street, Suite 4100, Toronto, ON M5J 2S1. As of May 15, 2014, three investors owned, respectively, units representing approximately 60%, 26% and 14% of the net asset value of the Fund. Who Should Invest in this Fund? The Fund is a suitable investment for those unitholders: looking for a globally diversified portfolio; planning to hold his/her investment for medium-to-long term; and who can tolerate medium to high tolerance for risk. This is meant as a general guide only. For advice about your own circumstances, you should consult a financial advisor. The Fund is a suitable investment for those unitholders looking for an actively managed globally diversified portfolio and who have a medium to high tolerance for risk. In determining the risk level for a fund, both quantitative and qualitative considerations are measured. We break the funds down by asset types, regions, developed or emerging markets, and sector. We also take into consideration standard deviation which is a measure used to track the volatility and risk of an investment. Funds with higher standard deviations are generally classified as being more risky. Each fund is assigned an investment risk rating in one of the following categories: Low for funds with a level of risk that is typically associated with investments in money market funds and Canadian fixed income funds; Low to Medium - for funds with a level of risk that is typically associated with investments in domestic balanced funds, global and/or corporate fixed income funds; - 18 -
Medium for funds with a level of risk that is typically associated with investments in equity portfolios that are diversified among a number of large-capitalization Canadian and/or international equity securities; Medium to High: for funds with a level of risk that is typically associated with investments in balanced funds with a global focus, and/or international equity securities; High for funds with a level of risk that is typically associated with investment in equity portfolios that may concentrate their investments in specific regions or in specific sectors of the economy where there is a substantial risk of loss (e.g., emerging markets, precious metals). The manner in which we identify risks is available on request, at no cost, by contacting us using the information found at the back of this prospectus. Distribution Policy At the end of each year, the Fund will distribute any income and enough capital gains to ensure it does not have to pay income taxes. Fund Expenses Indirectly Borne By Unitholders This table is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It shows the notional equivalent dollar amount of the share of the Fund s fees and expenses that are indirectly paid by unitholders for the periods shown, assuming an initial investment of $1,000; a total return (after payment of expenses) of 5% in each year, not including any sales charges or other optional expenses; the re-investment of all distributions in each year; and is based on the Fund s MER in respect of the Series A (0.33%) Units for its 2013 fiscal period. See Fees and Expenses for more information on the fees and expenses payable by you, and note that management fees are paid outside the Fund. We also pay trailing commissions to the discount broker for securities you purchase through your discount brokerage account for Series D units. Fees and Expenses Paid Over 1 year Over 3 years Over 5 years Over 10 years Series A Units $3.38 $10.66 $18.69 $42.55 Series D Units n/a n/a n/a n/a Series F Units n/a n/a n/a n/a - 19 -
UBS (Canada) Global Allocation Fund Additional information about the Fund is or will be available in the Fund s Annual Information Form, annual and interim management reports of fund performance and annual and interim financial statements. These documents as they become available are incorporated by reference into this Simplified Prospectus, which means that they legally form part of this document just as if they were printed as part of this document. You can get a copy of these documents, at your request and at no cost, by calling us tollfree at 1-866-UBS-9300, or by writing to us at UBS Global Asset Management (Canada) Inc., Brookfield Place, Canada Trust Tower, 161 Bay Street, Suite 4100, Box 618, Toronto, Ontario M5J 2S1, or from your dealer. These documents and other information about the Fund are available at our website at www.ubs.com/1/e/globalam/americas/canada/ca_retail.html, or through SEDAR (the System for Electronic Document Analysis and Retrieval) at www.sedar.com. UBS Global Asset Management (Canada) Inc. Brookfield Place, P.O. Box 618 161 Bay Street Suite 4100 Toronto, Ontario M5J 2S1-20 -