ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN
ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN (Ticker: RWXL) ("RWXL" or the "ETN") is an exchange-traded note linked to the monthly compounded 2x leveraged performance of the Dow Jones Global ex-U.S. Select Real Estate Securities Index (the "Index"), reduced by the accrued fees. While the Index constituents are all non-US real estate securities, RWXL is listed on the NYSE Arca exchange, is denominated in USD, and pays a USD-denominated variable monthly coupon linked to 2 times the cash distributions, if any, on the Index constituents, less any withholding taxes. Each Index constituent's closing price and cash distributions denominated in non-USD are converted to USD using the official WM/Reuters currency rates calculated at or around 4:00pm UK time.
The Index was created at on March 21, 2006 and has no performance history prior to that date.
||ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN
||Dow Jones Global ex-U.S. Select Real Estate Securities Index
||2x leverage with monthly reset
|2x Index yield*
|Initial trade date
||March 20, 2012
||March 19, 2042
|Annual Tracking Rate
||0.6% per annum
* Based on 2 times the index dividend yield calculated in USD as of February 29, 2012 by CME Group Index Services LLC. Investors are not guaranteed any coupon or distribution amount. See 'Risks considerations & Benefits' as well as the 'Important legal information specific to ETRACS ETNs' link below for more information.
||20 Day Volume Average
|High (52 week)
|Low (52 week)
||Daily Indicative Value
|Updated on: May 24, 2013
||Amount per security
|Total annual dividend paid 2012: $1.2359
Source: UBS, NYSE and Bloomberg.
Top 10 Index constituents*
||WDC AU EQUITY <GO>
||UL FP EQUITY <GO>
|Brookfield Asset Mgmt Inc. Cl A
||BAM/A CN EQUITY <GO>
|Mitsui Fudosan Co. Ltd.
||8801 JP EQUITY <GO>
|Land Securities Group PLC
||LAND LN EQUITY <GO>
|Hang Lung Properties Ltd.
||101 HK EQUITY <GO>
|Link Real Estate Investment Trust
||823 HK EQUITY <GO>
|Westfield Retail Trust
||WRT AU EQUITY <GO>
|Hongkong Land Holdings Ltd.
||HKL SP EQUITY <GO>
|British Land Co. PLC
||BLND LN EQUITY <GO>
Source: CME Group Index Services LLC
* Data calculated in USD as of February 29, 2012. Number of index contituents: 127
Index country allocations*
Source: CME Group Index Services LLC
* Data calculated in USD as of February 29, 2012.
Risks and Benefits
- Monthly compounded 2x leveraged exposure to the Dow Jones Global ex-U.S. Select Real Estate Securities Index, less fees.
- Monthly income potential in the form of a variable coupon linked to 2 times the cash distributions, if any, on the Index constituents, less any withholding taxes. If the Index constituents do not make any distributions, no coupon will be paid.
- Geographically diversified investment in 127 international real estate securities from 22 countries.*
- Convenience of a single, USD-denominated, exchange-traded security and USD-denominated income.
* Constituent and country data as February 29, 2012 and sourced from CME Group Index Services LLC.
Selected risk considerations:
An investment in the ETNs involves risks. Selected risks are summarized here, but we urge you to read the more detailed explanation of risks described in the "Risk Factors" sections of the applicable product supplement and pricing supplement for the ETNs (collectively, the "ETRACS Prospectus"). Capitalized terms used below (and elsewhere in this document) but not defined herein shall have the meanings attributed them in the ETRACS Prospectus.
- You may lose some or all of your investment - The ETNs are exposed to two times any monthly decline in the level of the Index. The monthly compounded leveraged return of the Index will need to be sufficient to offset the negative effect of the Accrued Fees and Redemption Fee, if applicable, less any Coupon Amounts and Stub Reference Distribution Amount, if any, in order for you to receive an aggregate amount over the term of the ETNs equal to your initial investment in the ETNs. If the monthly compounded leveraged return of the Index is insufficient to offset such negative effect, or if the monthly compounded leveraged return of the Index is negative, you will lose some or all of your investment at maturity or call, or upon early redemption or acceleration.
- Correlation and compounding Risk - A number of factors may affect the ETN's ability to achieve a high degree of correlation with the performance of the Index, and there can be no guarantee that the ETN will achieve a high degree of correlation. Because the Current Principal Amount is reset monthly, you will be exposed to compounding of monthly returns. As a result, the performance of the ETNs for periods greater than one month is likely to be either greater than or less than the Index performance times the leverage factor of two, before accounting for Accrued Fees and the Redemption Fee, if any. In particular, significant negative monthly performances of your ETNs may not be offset by subsequent positive monthly performances of equal magnitude.
- Leverage risk - The ETNs are two times leveraged long with respect to the Index, which means that you will benefit two times from any positive, but will be exposed to two times any negative, monthly performance of the Index, before accounting for the Accrued Fees and Redemption Fee, if any.
- Market risk - The return on the ETNs, which may be positive or negative, is linked to the monthly compounded leveraged return on the Index as measured by the Index Factor, and which, in turn, is affected by a variety of market and economic factors, interest rates in the markets and economic, financial, political, regulatory, judicial or other events that affect the Index Constituent Securities or the markets generally.
- Credit of Issuer - The ETNs are senior unsecured debt obligations of the issuer, UBS, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Any payment to be made on the ETNs, including any payment at maturity or call, or upon acceleration or upon early redemption, depends on the ability of UBS to satisfy its obligations as they come due. As a result, the actual and perceived creditworthiness of UBS will affect the market value, if any, of the ETNs prior to maturity or call, or upon acceleration or upon early redemption. In addition, in the event UBS were to default on its obligations, you may not receive any amounts owed to you under the terms of the ETNs.
- You are not guaranteed a coupon payment - You will not receive a coupon payment on a Coupon Payment Date if the Reference Distribution Amount for your ETNs is zero.
- The calculation of the Reference Distribution Amount and Stub
Reference Distribution Amount may have to take into account
withholding taxes, consequently reducing the Coupon Amount.
- The Coupon Amount, Reference Distribution Amount, and Stub
Reference Distribution are subject to exchange rate risk.
- The Index is concentrated in the global real estate industry, excluding the United States - The Index Constituent Securities are concentrated in the global real estate sector, excluding the United States, which means the Index, and, consequently, the ETNs, will be more affected by the performance of the global, non-U.S. real estate sector than an Index that was more diversified. Moreover, the Index is different than an Index that tracks U.S. real estate ETNs. Adverse economic, business, political or social developments affecting international real estate could have a major effect on the Index Closing Level, the Index Valuation Level and the return on the ETNs. Those factors include:
- decreases in real estate values;
- increased competition;
- other risks related to local or general economic conditions;
- increases in operating costs and property taxes;
- changes in zoning laws;
- casualty or condemnation losses;
- possible environmental liabilities;
- regulatory limitations on rent; and
- fluctuations in rental income.
Certain real estate securities have a relatively small market capitalization, which may tend to increase the volatility of the market price of these securities. Real estate securities are dependent upon specialized management skills, have limited diversification and are, therefore, subject to risks inherent in operating and financing a limited number of projects. Real estate securities are also subject to heavy cash flow dependency and defaults by borrowers.
- The Index Constituent Securities are subject to foreign exchange rate risk.
- A trading market for the ETNs may not develop - Although we intend to list the ETNs on NYSE Arca, a trading market for the ETNs may not develop. Certain affiliates of UBS may engage in limited purchase and resale transactions in the ETNs, although they are not required to and may stop at any time. We are not required to maintain any listing of the ETNs on NYSE Arca or any other exchange.
- The ETNs may not provide a hedge against price and/or value decreases or increases - The ETNs may not provide a hedge against a decrease or increase in the price and/or value of any asset, sector or index.
- Minimum redemption amount - You must elect to redeem at least 50,000 of the ETNs for UBS to repurchase your ETNs, unless we determine otherwise or your broker or other financial intermediary bundles your ETNs for redemption with those of other investors to reach this minimum requirement and there can be no assurance that they can or will do so. Therefore, the liquidity of the ETNs may be limited.
- Your redemption election is irrevocable - You will not be able to rescind your election to redeem your ETNs after your redemption notice is received by UBS. Accordingly, you will be exposed to market risk in the event market conditions change after UBS receives your offer and the Redemption Amount is determined on the Redemption Valuation Date.
- Potential automatic acceleration - In the event the indicative value of the ETNs is equal to $5.00 or less on any Trading Day or decreases 60% in value from the closing indicative value of the ETNs on the previous Monthly Valuation Date, the ETNs will be automatically accelerated and mandatorily redeemed by UBS and you will receive a cash payment equal to the Acceleration Amount as determined during the applicable Measurement Period. The Acceleration Amount you receive on the Acceleration Settlement Date may be significantly less than $5.00 per ETN and may be zero if the price of the ETNs continues to decrease during trading on one or more Trading Days during such Measurement Period.
- Uncertain tax treatment - Significant aspects of the tax treatment of the ETNs are uncertain. You should consult your own tax advisor about your own tax situation.
- UBS's Call Right - UBS may redeem all outstanding ETNs at any time on or after the date specified in the pricing supplement, as described in the ETRACS Prospectus.
UBS has filed a registration statement (including a prospectus, as supplemented by a prospectus supplement for each offering of the ETRACS ETNs) with the Securities and Exchange Commission (the "SEC") for the offerings to which this communication relates. Before you invest, you should read these documents and any other documents that UBS has filed with the SEC for more complete information about UBS and the offerings to which this communication relates. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, you can request the prospectus and any applicable prospectus supplement by calling toll-free (+1-877-387 2275).
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