UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
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PACE® Select Advisors Trust
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PACE® Alternative Strategies Investments
PACE® Select Advisors Trust | Information Statement
787 Seventh Avenue
New York, New York 10019
January 14, 2022
Dear Shareholder,
UBS Asset Management (Americas) Inc. ("UBS AM"), the manager of PACE Alternative Strategies Investments ("Fund"), selects subadvisors for the Fund, a portfolio of PACE Select Advisors Trust ("Trust"), subject to approval of the Board of Trustees ("Board" or "Trustees") of the Trust. A significant service you receive with the Fund is the on-going oversight by UBS AM of the Fund's subadvisors. We are pleased to inform you that UBS AM has entered into a new investment subadvisory agreement ("New Subadvisory Agreement"), on behalf of the Fund, with Allspring Global Investments, LLC ("Allspring") as a result of a transaction between Allspring Global Investments Holdings, LLC, the parent company of Allspring, and Wells Fargo Asset Management Holdings, LLC ("WFAM"), the parent company of Wells Capital Management Incorporated ("WellsCap"), a former subadvisor to the Fund, pursuant to which all outstanding equity interests in WFAM were acquired by Allspring Global Investments Holdings, LLC (the "Transaction"). This New Subadvisory Agreement is not expected to result in any material changes to the management of Allspring's (formerly WellsCap's) allocated portion of the Fund, including to the relevant investment strategies, fees, or portfolio management team.
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WellsCap had been a subadvisor to the Fund since 2009 and had been responsible for the day-to-day management of a separate portion of the Fund's assets until the consummation of the Transaction. On November 1, 2021, Allspring Global Investments Holdings, LLC was formed by GTCR LLC and Reverence Capital Partners, L.P., which acquired 100% of the equity interests in WFAM, and WellsCap subsequently changed its name to Allspring. Allspring Global Investments Holdings, LLC is indirectly owned by certain portfolio companies of GTCR LLC and Reverence Capital Partners, L.P. The New Subadvisory Agreement between UBS AM, on behalf of the Fund, and Allspring was approved by the Board at a Board meeting held on May 25-26, 2021, and became effective as of November 1, 2021. Allspring assumed investment advisory responsibility with respect to a portion of the Fund's portfolio on November 1, 2021. The terms of this New Subadvisory Agreement are substantially identical to those of the investment subadvisory agreement between UBS AM and WellsCap that was in place prior to the Transaction ("Prior Subadvisory Agreement").
First Quadrant, LLC, Sirios Capital Management, L.P., Aviva Investors Americas LLC, PCJ Investment Counsel Ltd., Kettle Hill Capital Management, LLC, DLD Asset Management, LP and Magnetar Asset Management LLC also currently serve as subadvisors of the Fund, and each will continue to be responsible for managing a separate portion of the Fund's assets (each separate portion, an "Allocated Portion"). UBS AM currently directly manages an Allocated Portion of the Fund and will continue to be responsible for managing such Allocated Portion. Each subadvisor manages a portion of the Fund's portfolio as allocated by UBS AM and overseen by the Board, with each employing different investment strategies, as discussed in the Fund's prospectus. The relative value of each subadvisor's share of the Fund's assets may change over time.
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Please note that, in reliance on exemptive relief obtained by UBS AM and the Trust from the US Securities and Exchange Commission ("SEC"), the appointment of Allspring and the approval of the New Subadvisory Agreement on the Fund's behalf do not require a shareholder vote. Therefore, we are not asking you for a proxy, and you are requested not to send us a proxy. The purpose of this document is to provide you with additional information about these changes that we are required to make available to you.
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Information regarding the PACESM Select Advisors Program
The PACESM Select Advisors Program ("PACE Program") and the Trust are designed to assist you in devising an asset allocation strategy to meet your individual needs. Through the PACE Program, UBS Financial Services Inc. combines its ability to evaluate your investment objectives and risk tolerance, based on information that you provide, with professional investment advice and provides a suggested allocation of your assets among the portfolios of the Trust that conforms to the evaluation of those tolerances and objectives. Class P shares of the Trust are offered through the PACE Program, certain other advisory programs and through certain brokerage platforms. Other share classes are offered to investors not participating in the PACE Program or the applicable other advisory programs and brokerage platforms.
Information regarding UBS AM
UBS AM is the manager and primary provider of investment advisory services to each portfolio of the Trust, including the Fund. Pursuant to an investment management and administration agreement with the Trust ("Management Agreement"), UBS AM administers the Trust's affairs and has the ultimate authority, subject to oversight of the Trust's Board, to oversee the subadvisors for the Fund and recommend their hiring, termination and replacement and to allocate assets among the Fund's subadvisors. UBS AM continuously supervises and monitors the performance of each subadvisor on a quantitative and qualitative basis and regularly evaluates each subadvisor's investment strategy and investment performance as well as the consistency of the subadvisor's investment approach with the Fund's investment objective. In evaluating each subadvisor, UBS AM reviews a number of factors, including, but not limited to, the subadvisor's past investment performance during various market conditions, continued ability to meet the applicable fund's investment objective, investment management philosophy and processes employed, experience and qualifica-
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tions of key personnel, financial condition and stability, the correlation of the subadvisor's investment approach with those of other subadvisors of the applicable fund and the structure of the fund's overall portfolio.
UBS Asset Management (US) Inc. ("UBS AM (US)"), an affiliate of UBS AM, serves as the principal underwriter of each portfolio's shares under an underwriting contract that requires UBS AM (US) to use its best efforts, consistent with its other businesses, to sell each portfolio's shares. Pursuant to an agreement with UBS AM (US), UBS Financial Services Inc. also serves as a dealer for the portfolios' shares. As of September 30, 2021, UBS AM had approximately $296.3 billion in assets under management. UBS AM is an indirect asset management subsidiary of UBS Group AG and a member of the UBS Asset Management Division, which had approximately $1.2 trillion in assets under management worldwide as of September 30, 2021. UBS Group AG is an internationally diversified organization headquartered in Zurich, Switzerland with operations in many areas of the financial services industry. The principal business offices of UBS AM and UBS AM (US) are located at One North Wacker Drive, Chicago, IL 60606, at 1285 Avenue of the Americas, New York, NY 10019 and at 787 Seventh Avenue, New York, NY 10019. The principal business office of UBS Financial Services Inc. is located at 1285 Avenue of the Americas, New York, NY 10019.
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Table of Contents | |||||||
Information regarding the PACESM Select Advisors Program | iv | ||||||
Information regarding UBS AM | iv | ||||||
PACE Alternative Strategies Investments | 1 | ||||||
Background | 1 | ||||||
Investment strategies of Allspring | 1 | ||||||
New Subadvisory Agreement | 2 | ||||||
Trustees' considerations | 4 | ||||||
SEC exemptive order | 7 | ||||||
Additional information about UBS AM, UBS AM (US) and UBS Group AG | 7 | ||||||
Additional information about Allspring | 8 | ||||||
Reports to shareholders | Back cover |
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PACE Alternative Strategies Investments
Background
The Transaction resulted in an "assignment" and automatic termination of the Prior Subadvisory Agreement between UBS AM and WellsCap under the Investment Company Act of 1940, as amended ("Investment Company Act"), and the rules thereunder. UBS AM has entered into the New Subadvisory Agreement with Allspring, under which Allspring manages an Allocated Portion of the Fund's portfolio as allocated by UBS AM, subject to the Board's oversight. The terms of the New Subadvisory Agreement are substantially identical to those of the Prior Subadvisory Agreement with WellsCap. The Transaction has not resulted in any material changes to the investment team's management of the relevant portion of the Fund or to the relevant investment strategies, fees, or portfolio management team.
The New Subadvisory Agreement was approved by the Trust's Board at a meeting held on May 25-26, 2021 in anticipation of the Transaction, at the recommendation of UBS AM, and became effective as of November 1, 2021. The Trustees determined to approve the New Subadvisory Agreement after a thorough analysis of any impact the Transaction may have on the Fund. The material factors considered by the Trustees in approving the New Subadvisory Agreement are set forth below under "PACE Alternative Strategies Investments—Trustees' considerations."
Investment strategies of Allspring
With respect to its Allocated Portion, Allspring employs a long/short global equity strategy. This strategy is implemented by taking long and short positions of equity securities publicly traded in the US and in foreign markets by direct equity investment (and may also be implemented through the use of derivatives). The fund buys securities "long" that Allspring believes will out-perform the market, and sells securities "short" that Allspring believes will under-perform the market. This is, however, not a market neutral strategy. The fund's long-short exposure will vary over time based on Allspring's assessment of market conditions and other factors. Allspring may increase the fund's short equity
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exposure when it believes that market conditions are particularly favorable for a short strategy, such as during periods of modest gains and moderate volatility in the global equity markets, or when the market is considered to be overvalued.
New Subadvisory Agreement
Under the New Subadvisory Agreement, subject to the supervision and direction of the Trustees and review by UBS AM and any written guidelines adopted by the Board or UBS AM, Allspring will provide a continuous investment program for the Fund (or any Allocated Portion thereof) including investment research and discretionary management with respect to all securities and investments and cash equivalents, and make decisions with respect to, and place orders for, all purchases and sales of the Fund's investments for its Allocated Portion, all in accordance with the Fund's investment objective, policies and restrictions as stated in the Trust's currently effective registration statement under the Investment Company Act.
Under the New Subadvisory Agreement, Allspring will bear all expenses incurred by it in connection with its services to its Allocated Portion of the Fund, but Allspring will not be responsible for any expenses incurred by the Trust, the Fund or UBS AM.
For the services provided and the expenses assumed by Allspring under the New Subadvisory Agreement, UBS AM (not the Fund) will pay to Allspring a fee, computed daily and payable monthly, based on an annual percentage of the average daily net assets of its Allocated Portion of the Fund.
The New Subadvisory Agreement will remain in effect for two years after its effective date and will continue thereafter for successive periods of twelve months each, provided that its continuance is approved at least annually (i) by a vote of a majority of the Trustees who are not "interested persons" (as defined in the Investment Company Act) of the Trust ("Independent Trustees"), cast in person at a meeting called for the purpose of voting on such approval or (ii) by vote of a majority of the outstanding voting securities of the Fund.
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The New Subadvisory Agreement provides that it will terminate automatically in the event of its "assignment," as defined in the Investment Company Act, or upon the termination of the Fund's Management Agreement with UBS AM. The New Subadvisory Agreement provides for termination, without payment of any penalty, by vote of the Board or by a vote of a majority of the Fund's outstanding voting securities on 30 days' written notice to Allspring. UBS AM also may terminate the New Subadvisory Agreement, without payment of any penalty: (i) upon 120 days' written notice to Allspring; (ii) upon material breach by Allspring of any of the representations, warranties and agreements contained in the New Subadvisory Agreement; or (iii) immediately if, in the reasonable judgment of UBS AM, Allspring becomes unable to discharge its duties and obligations under the New Subadvisory Agreement, including circumstances such as financial insolvency or other circumstances that could adversely affect the Fund. The New Subadvisory Agreement provides that Allspring may terminate the New Subadvisory Agreement, without payment of any penalty, on 120 days' written notice to UBS AM.
As described below under "Additional Information—SEC Exemptive Order," UBS AM has received an exemptive order from the SEC enabling it to enter into an investment subadvisory agreement with a subadvisor that has not been approved by a vote of the majority of the outstanding voting securities of a portfolio if certain conditions are met.
The New Subadvisory Agreement provides that Allspring shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund, the Trust or its shareholders or by UBS AM in connection with the matters to which the New Subadvisory Agreement relates, except a loss resulting from willful misfeasance, bad faith or negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under the New Subadvisory Agreement.
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Trustees' considerations
Background—At a meeting of the Board of the Trust on May 25-26, 2021, the members of the Board, including the Independent Trustees, considered and approved the proposed New Subadvisory Agreement between UBS AM and Allspring with respect to the Fund. Management noted that WellsCap is a wholly owned subsidiary of WFAM, which in turn is an indirect wholly-owned subsidiary of Wells Fargo & Company ("Wells Fargo"). Management noted that Wells Fargo had announced a definitive agreement to sell WFAM to two private equity firms, GTCR LLC and Reverence Capital Partners. Management explained that because the expected indirect change in control of WellsCap would constitute an "assignment," the Prior Subadvisory Agreement between UBS AM and WellsCap with respect to the Fund would terminate automatically upon consummation of the Transaction and, if approved, the proposed New Subadvisory Agreement would become effective. Management stated that the proposed New Subadvisory Agreement has substantially the same terms as the Prior Subadvisory Agreement, including the fee rates payable thereunder. The Board recognized its familiarity with UBS AM and the investment management and subadvisory agreements for this and the other funds of the Trust, including the extensive materials the Board had previously reviewed in connection with the annual reconsideration of the contracts for the funds. The Board also received a memorandum from UBS AM discussing UBS AM's reasons for recommending that WellsCap continue to serve as a subadvisor to the Fund.
In its consideration of the approval of the New Subadvisory Agreement, the Board considered the following factors:
Nature, extent and quality of the services under the New Subadvisory Agreement—The Board's evaluation of the services to be provided by WellsCap to the Fund took into account the Board's knowledge and familiarity gained as board members of funds in the UBS New York fund complex, including the Trust and its funds. The Board considered management's reasons for recommending that WellsCap continue to serve as a subadvisor to the Fund, including that there were no expected material changes with respect to the current
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investment team at WellsCap or its management of the Fund as a result of the Transaction. In considering the approval of the New Subadvisory Agreement, the Board was able to draw on its knowledge of the Trust, its funds and UBS AM. The Board was also able to draw on its knowledge of the current investment team members, including materials it previously received from, and meetings it previously held with, representatives of WellsCap who discussed with the Board the investment philosophy and the backgrounds and qualifications of the investment team. The Board concluded that, overall, it was satisfied with the nature, extent and quality of services expected to be provided to the Fund under the New Subadvisory Agreement.
Subadvisory fee—The Board reviewed and considered the proposed contractual subadvisory fee to be payable by UBS AM to WellsCap in light of the nature, extent and quality of the subadvisory services anticipated to be provided by WellsCap. The Board noted that the subadvisory fee rate in the New Subadvisory Agreement was the same as that in the Prior Subadvisory Agreement. The Board determined that the proposed subadvisory fee was reasonable in light of the nature, extent and quality of the services proposed to be provided to the Fund under the New Subadvisory Agreement.
Fund performance—The Board noted that it previously received and considered performance information provided by UBS AM, including relative performance information from independent providers of investment company data. The Board also noted that UBS AM believes that the Fund's investment team would continue to perform at the same level as it did prior to the Transaction. The Board concluded that, overall, it was satisfied with the performance of the Fund.
Advisor profitability—Profitability of WellsCap or its affiliates or UBS AM or its affiliates in providing services to the Fund was not a significant factor considered by the Board, as the subadvisory fee would be paid by UBS AM out of the management fee paid to it by the Fund, and not by the Fund. As noted above, the Board observed that the contractual subadvisory fee paid by UBS AM to WellsCap would be
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the same as the fee that was paid by UBS AM to WellsCap under the Prior Subadvisory Agreement.
Economies of scale—The Board noted that, as the subadvisory fee for the Fund would be paid by UBS AM, not by the Fund, consideration of economies of scale with respect specifically to the subadvisory fee was not relevant.
Other benefits to WellsCap—The Board was informed by management that WellsCap's relationship with the Fund would continue to be limited to its provision of subadvisory services to the Fund and that therefore management believed that WellsCap would not receive tangible ancillary benefits as a result of its relationship with the Fund, with the exception of possible benefits from soft dollars (e.g., research credits related to transaction commissions) for the Fund (which would also potentially benefit the Fund). The Board recognized that WellsCap could receive intangible benefits from its association with the Fund, such as increased name recognition or publicity from being selected as a subadvisor to the Fund after an extensive review process. Similarly, the Fund could benefit from having a subadvisor with an established or well-regarded reputation.
In light of all of the foregoing, the Board, including a majority of the Independent Trustees, approved the proposed New Subadvisory Agreement for the Fund. No single factor reviewed by the Board was identified by the Board as the principal factor in determining whether to approve the New Subadvisory Agreement. The Independent Trustees were advised by separate independent legal counsel throughout the process.
After the Board meeting on May 25-26, 2021, WellsCap was re-named to Allspring. Therefore, the forgoing Trustee considerations refer to WellsCap as the subadvisor to the Fund.
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Additional information
SEC exemptive order
In October 2012, UBS AM and the Trust received an amended exemptive order ("Amended Order") from the SEC exempting them from certain provisions of the Investment Company Act. Specifically, the Amended Order permits the Trust and UBS AM, so long as certain conditions are satisfied, to enter into an investment subadvisory agreement with a subadvisor that has not been approved by a vote of the majority of the outstanding voting securities of a portfolio. The Amended Order generally requires that shareholders of each affected portfolio be notified of an investment subadvisory agreement that has been entered into within 90 days of the effectiveness of the investment subadvisory agreement, and that the portfolio make available to shareholders information similar to that which would have been included in a proxy statement to shareholders.
Additional information about UBS AM, UBS AM (US) and UBS Group AG
UBS AM, a Delaware corporation, is the manager and administrator of the Fund. UBS AM (US), a Delaware corporation, serves as the principal underwriter of the Fund. UBS AM's and UBS AM (US)'s principal business offices are located at One North Wacker Drive, Chicago, IL 60606, at 1285 Avenue of the Americas, New York, NY 10019, and at 787 Seventh Avenue, New York, NY 10019. UBS AM and UBS AM (US) are indirect subsidiaries of UBS Group AG. UBS AM is an investment adviser registered with the SEC and is a member of the UBS Asset Management Division, which had approximately $1.2 trillion in assets under management worldwide as of September 30, 2021. UBS Group AG is an internationally diversified organization with headquarters in Zurich, Switzerland with operations in many areas of the financial services industry. As of September 30, 2021, UBS AM had approximately $296.3 billion in assets under management.
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Additional information about Allspring
Allspring's principal address is 525 Market Street, 10th Floor, San Francisco, CA 94105-2724. As of September 30, 2021, Allspring had approximately $488.2 billion in assets under management. Dennis Bein, Harindra de Silva and David Krider are the portfolio managers primarily responsible for the day-to-day management of Allspring's Allocated Portion of the Fund.
The principal executive officers of Allspring, as of the date of this document, are set forth below:
Name and Address | Position with Allspring* | ||||||
Sallie Clements Squire 525 Market Street, 10th Floor San Francisco, CA 94105-2724 | Chief Operating Officer | ||||||
Francis Jon Baranko 525 Market Street, 10th Floor San Francisco, CA 94105-2724 | President, Chief Investment Officer—Global Fundamental Investments | ||||||
Karin Lynn Brotman 525 Market Street, 10th Floor San Francisco, CA 94105-2724 | Chief Compliance Officer | ||||||
Molly Festa McMillin 525 Market Street, 10th Floor San Francisco, CA 94105-2724 | Chief Financial Officer |
* None of the principal executive officers or directors above have principal employment other than their positions with Allspring and its affiliates.
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Below is information concerning other US registered investment companies with an investment objective similar to that of Allspring's Allocated Portion of the Fund, for which Allspring acts as the subadvisor:
Fund | Assets under management (as of December 31, 2021) | Management fee rate (as a percentage of average daily net assets) | |||||||||
361 Global Long/Short Equity Fund | $689.5 million | 0.625 | % |
During the last fiscal year, the Fund did not pay commissions to any affiliated broker of Allspring. Other than sub-advisory fees paid to WellsCap prior to the Transaction, the Fund did not pay any fees to Allspring or its affiliates for services provided to the Fund during the last fiscal year.
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Reports to shareholders
The Trust will furnish, without charge, a copy of the most recent Annual Report and the most recent Semiannual Report succeeding the Annual Report, if any, to shareholders of the Trust upon request. Requests for reports should be made by calling the Trust's transfer agent, BNY Mellon Investment Servicing (US) Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809, toll-free at 1-800-647 1568.
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If you have any questions, please contact your investment professional.
January 14, 2022
787 Seventh Avenue
New York, NY 10019
© UBS 2022. All rights reserved.
UBS Asset Management (Americas) Inc. is a subsidiary of UBS Group AG.
www.ubs.com/am-us
PACE® Select Advisors Trust
PACE® Alternative Strategies Investments
PACE Select | Information Statement—Notice
787 Seventh Avenue
New York, New York 10019
IMPORTANT NOTICE OF INTERNET AVAILABILITY OF INFORMATION STATEMENT
January 14, 2022
This communication presents only an overview of the more complete Information Statement that is available to you on the Internet relating to PACE Alternative Strategies Investments ("Fund"), a portfolio of PACE Select Advisors Trust ("Trust"). We encourage you to access and review all of the important information contained in the Information Statement.
UBS Asset Management (Americas) Inc. ("UBS AM"), the manager of the Fund, selects subadvisors for the Fund, a portfolio of the Trust, subject to approval of the Board of Trustees ("Board" or "Trustees") of the Trust. A significant service you receive with the Fund is the on-going oversight by UBS AM of the Fund's subadvisors. We are pleased to inform you that UBS AM has entered into a new investment subadvisory agreement ("New Subadvisory Agreement"), on behalf of the Fund, with Allspring Global Investments, LLC ("Allspring") as a result of a transaction between Allspring Global Investments Holdings, LLC, the parent company of Allspring, and Wells Fargo Asset Management Holdings, LLC, the parent company of Wells Capital Management Incorporated ("WellsCap"), a former subadvisor to the Fund, pursuant to which all outstanding equity interests in Wells Fargo Asset Management Holdings, LLC were acquired by Allspring Global Investments Holdings, LLC (the "Transaction"). This New Subadvisory Agreement is not expected to result in any material changes to the management of Allspring's (formerly WellsCap's) allocated portion of the Fund, including to the relevant investment strategies, fees, or portfolio management team.
WellsCap had been a subadvisor to the Fund since 2009 and had been responsible for the day-to-day management of a separate portion of the Fund's assets until the consummation of the Transaction. On November 1, 2021, Allspring Global Investments Holdings, LLC was formed by GTCR LLC and Reverence Capital Partners, L.P., which acquired 100% of the equity interests in Wells Fargo Asset Management Holdings, LLC, and WellsCap subsequently changed its name to Allspring. Allspring Global Investments Holdings, LLC is indirectly owned by certain portfolio companies of GTCR LLC and Reverence Capital Partners, L.P. The New Subadvisory Agreement between UBS AM, on behalf of the Fund, and Allspring was approved by the Board at a Board meeting held on May 25-26, 2021, and became effective as of November 1, 2021. Allspring assumed investment advisory responsibility with respect to a portion of the Fund's portfolio on November 1, 2021. The terms of this New Subadvisory Agreement are substantially identical to those of the investment subadvisory agreement between UBS AM and WellsCap that was in place prior to the Transaction.
First Quadrant, LLC, Sirios Capital Management, L.P., Aviva Investors Americas LLC, PCJ Investment Counsel Ltd., Kettle Hill Capital Management, LLC, DLD Asset Management, LP and Magnetar Asset Management LLC also currently serve as subadvisors of the Fund, and each will continue to be responsible for managing a separate portion of the Fund's assets (each separate portion, an "Allocated Portion"). UBS AM currently directly manages an Allocated Portion of the Fund and will continue to be responsible for managing such Allocated Portion. Each subadvisor manages a portion of the Fund's portfolio as allocated by UBS AM and overseen by the Board, with each employing different investment strategies, as discussed in the Fund's prospectus. The relative value of each subadvisor's share of the Fund's assets may change over time. Additional information about UBS AM, Allspring, the New Subadvisory Agreement between UBS AM and Allspring with respect to the Fund, and the Board's approval of the New Subadvisory Agreement is contained in the Information Statement.
Please note that, in reliance on exemptive relief obtained by UBS AM and the Trust from the US Securities and Exchange Commission, the appointment of Allspring and the approval of the Subadvisory Agreement on the Fund's behalf do not require a shareholder vote. Therefore, we are not asking you for a proxy, and you are requested not to send us a proxy.
This Notice of Internet Availability of the Information Statement is being mailed on or about January 26, 2022 to the Fund's shareholders of record as of January 11, 2022. The full Information Statement will be available for printing on the Fund's website at www.ubs.com/us/en/asset-management/individual-investors-and-financial-advisors/products/ii_pace.html until at least May 6, 2022. A paper or email copy of the full Information Statement may be obtained, without charge, by contacting the Fund at (888) 793 8637 (select option number 1). If you would like to receive a paper or e-mail copy of the full Information Statement, you must request one.