BUSINESS: ETRACS Alerian MLP Infrastructure Index ETN Series B, linked to the SPECTRUM Large Cap U.S. Sector Momentum Index, due 4/2/2040, are senior unsecured debt securities issued by UBS AG and do not offer principal protection. INVESTMENT OBJECTIVE: The investment performance of these ETNs are linked to the performance of the SPECTRUM Large Cap U.S. Sector Momentum Index and pay a variable quarterly coupon linked to the cash distributions paid on the Master Limited Partnerships in the index, less investor fees. The ETNs can be bought and sold on a U.S. securities exchange. Fluctuations in the market price of the ETNs versus the indicative value of the ETNs meant to approximate the intrinsic economic value of the ETNs can affect the investment results.
INDEX DESCRIPTION: The return on the Securities is linked to the performance of the SPECTRUM Large Cap U.S. Sector Momentum Index developed by BNP Paribas. The Index tracks the value of a notional portfolio composed of the ten sub-indices of the S&P 500 Index. The level of the Index is based on the relative weights of the sub-indices within the Index; such weights are monitored and may be rebalanced daily based on a momentum strategy. According to this momentum strategy, the weights of sub-indices that outperform the S&P 500 Total Return Index (the SPTR) are increased in the Index, while the weights of sub-indices that underperform are reduced. The weights are then modified to account for the correlation between each sub-index and the SPTR. The Index is designed to take advantage of the disparate performance of the sub-indices relative to each other and to the SPTR. The Index is a proprietary index of BNP Paribas and is calculated and published by Standard & Poor’s and published on Bloomberg under the symbol SPBNPSP.
RETURNS AND MATURITY: The return on the ETNs are directly linked to the performance of the Index. At maturity you will receive a cash payment equal to the principal amount of your Securities times the index factor on the final valuation date times the fee factor on the final valuation date. FEES: The investor fee is equal to 0.75% per annum accrued on a daily basis.
ETN CAUTIONS: These ETNs are debt obligations of UBS AG and payments you are entitled to receive on these ETNs are subject to the ability of the issuer to pay their obligations. The tax treatment of these ETNs is uncertain and you should consult your tax advisor for specific advice.
PROSPECTUS: Before investing in this exchange traded note (ETN), investors need to click on the Link to IPO Prospectus provided below and carefully study the prospectus to understand this difficult to understand and speculative security.
