Ab
For marketing purposes only
UBS KeyInvest
UBS Bloomberg CMCI
UBS Bloomberg CMCI
A new perspective on commodity
investments
Table of Contents
01. Commodities as a standalone asset class 02. UBS Bloomberg CMCI – the first commodity index for the entire futures curve
03. Overview: UBS ETCs on UBS Bloomberg CMCI
04. Risks and opportunities of UBS ETCs
05. Glossary and further information
06
09
13
20
21
Introduction
This brochure is designed to draw your attention to an opportunity
for investing in commodities.
Say the word ‘commodities’ and most people will think of crude oil.
And that prices are always going up – annoying, if you happen to
be at a filling station. But the world of commodities is far more
varied than that and includes the entire energy market, precious
metals, agriculture and even livestock. This variety provides a good
opportunity to diversify an already well-assorted portfolio. Adding
a mix of commodities can have a positive effect on the overall
portfolio by reducing price fluctuation (volatility) while at the same
time enhancing performance.
Our aim here is to present this in the clearest possible terms. At the
end of the brochure you will also find a short glossary of commodity
investment terms that should answer some of your questions.
On keyinvest-ch-en.ubs.com/cmci you can obtain current prices
and monthly performance updates about products on
UBS Bloomberg CMCI indices.
UBS Bloomberg CMCI at a glance
– Comprehensive tracking of commodity markets by investing across the
entire futures curve and by tracking 27 commodities.
– Minimal tracking errors for underlying commodity prices.
– Minimising negative roll returns creates an opportunity for higher overall
returns than with traditional indices.
– Diversifying across the entire futures curve leads to lower volatility compared
with traditional indices.
– Higher risk/return ratio (Sharpe ratio): relative to traditional indices,
opportunities for returns are higher and the risk (volatility) is lower.
– Rolling on a daily trading basis allows ‘constant’ maturities.
01 Commodities as a standalone asset class
Commodities are a standalone asset class and can enhance the value
of your securities portfolio. The reason for this is that commodities
generally exhibit moderate correlation with other asset classes such
as equities, bonds and currencies, making them ideal for diversifying
a broad-based portfolio with a positive effect on the performance
of your overall portfolio.
Commodities profile
The UBS Bloomberg CMCI (Constant Maturity Commodity
Index) covers the energy, precious metals, industrial metals,
agriculture and livestock sectors. Although each of these
has its own characteristic profile, commodities are generally
seen as being a good hedge against inflation – a major
reason for investing in this asset class. This is because, as
real assets, commodities tend to increase in value when
consumer prices rise.
Most commodities are therefore sensitive to changes in the
business cycle. If the global economy is booming, demand
for commodities such as crude oil, natural gas and industrial
metals is particularly high. And in a positive economic envi­
04
ronment the overall prosperity of the world population
also rises, leading to a rise in demand so that needs can
be better served. For example, the desire for a healthy,
balanced diet increases along with the desire for a highquality supply of agricultural products and meat.
Precious metals occupy an exceptional position in the
commodities world. Gold in particular is seen as a crisis
currency that is accepted around the world. Although
this shiny yellow metal does not bear interest, it is valued
at times of inflation and other crises. Particularly when
there are fundamental doubts over the future value of
global currencies such as the US dollar or the euro, gold
is seen as a ‘safe haven’ in times of uncertainty.
Long-term outlook
Investing in commodities can be viewed as strategic investment. A long-term
argument in favour of commodities is the fact that resources are naturally limited
and thus finite. Agricultural commodities play a special role here. Although
soil conditions do restrict crop yields, they can also be influenced to a large extent
by other factors such as weather conditions, developments in agriculture (e.g.
improvements in seeds or intensive farming methods) and political subsidies. In a
market economy these restrictions in supply – and the connected expectations
of a steady decline – lead to rising prices even if demand remains flat. In fact, the
growth in the global population suggests that demand for commodities will rise
over the long term to secure provision. One example of the impact this can have is
China’s growing economy, which has developed a huge appetite for commodities
to fuel its growth.
Of course this is countered by the development of new technologies which are
used in the commodities sector to increase efficiency and productivity. For producers
this leads to falling costs, and a tendency for prices to fall for end consumers. But
the fact remains that commodities are limited, the global population is growing and
the demand for commodities is increasing.
How do I go about investing in commodities?
One very straightforward and effective way of investing in commodities is by using a
commodities index such as the UBS Bloomberg CMCI, for example in the form of
UBS ETCs (Exchange Traded Commodities). UBS ETCs are exchange traded securities
or open-ended bearer bonds which can be added to a portfolio in a simple and costefficient manner. This provides an enormous advantage over purchasing the physical
commodity: investors are not burdened with the time, effort and cost involved in
storing the commodity and other logistical factors.
UBS Exchange Traded Commodities are transparent investment vehicles that allow
you to invest in a cost-efficient manner in a particular index. All UBS ETCs on
a UBS Bloomberg CMCI index are tradable via the Scoach Switzerland derivatives
exchange. UBS acts as market maker and attempts to ensure liquid trading under
normal market conditions during trading hours.
At certain times there may be slight differences in performance between UBS ETCs
and the underlying index (tracking error) as a result of the fee charged, which is
needed to defray the costs of tracking the UBS Bloomberg CMCI. This fee covers in
full the costs of the transactions UBS needs to complete in the background to track
the index (for example rolling transactions). UBS ETCs are bearer bonds issued by
UBS, so the issuer risk should be taken into consideration.
Three UBS ETCs for three currencies
You can invest in the UBS Bloomberg CMCI Index Universe in US dollars, Swiss francs
or euros. This is because UBS offers three UBS ETCs (Exchange Traded Commodities)
for most indices from the UBS Bloomberg CMCI family. For exotic commodities such
as soybean meal and soybean oil, only one UBS ETC is offered (in USD). All three UBS
ETCs track the performance of the relevant index 1:1 without fixed maturities subject
to the respective management fee.
The three UBS ETCs differ primarily in terms of the trading currency (US dollars,
Swiss francs and euros). Since US dollars are the usual primary currency for commodities, the Swiss franc and euro value of the relevant UBS ETCs are hedged against
the US dollar (currency hedge) on a daily closing rate basis. This practice means that
a currency exchange risk to the US dollar can accumulate ‘intraday’ – between two
hedge transactions – for any amounts not yet hedged.
05
What is the roll effect and where does it come from?
The UBS Bloomberg CMCI Index Family relies, like other
commodity indices, on futures contracts (forward transactions)
to track commodity prices. Trading via the futures market
postpones the date of exercise of the contract (to
a point in the future). This normally gives the commodity
trader enough time to avoid physical delivery (and receipt).
To do this he just needs to ‘rebalance’ his position before
the futures contract expires. Rebalancing may involve,
for example, reselling purchased contracts. This allows
the trader to participate in the performance of the
underlying commodity up to maturity without actually
physically handling it.
Impact of roll effect on the commodity index
The structure of the futures curve determines whether roll
effects are positive or negative, and thus whether a ‘roll
gain’ or ‘roll loss’ occurs. The roll effect ultimately affects the
participation rate of the commodity index, since the number
of contracts that can be purchased using gains from each
sale can differ for each roll procedure. The index tracks the
participation rate, which increases with roll gains and falls with
roll losses, meaning that the accuracy with which it mirrors
the performance of underlying commodity prices rises or falls
following each roll procedure.
For long-term commodity investment using futures contracts,
therefore, existing contracts must be swapped for new ones
before maturity to avoid physical delivery. This swapping,
commonly referred to as ‘rolling’ in the industry, makes it
possible to invest in commodities without fixed maturities.
Regardless of current performance in the commodity market,
futures trading still affects the value of an investment, since
contracts with differing maturities do not generally cost
the same. The difference between the selling price of the
expiring futures contract and the purchase price of a future
contract with a longer maturity affects the performance of a
commodity index. This effect is also referred to as ‘roll effect’,
‘roll returns’ or ‘roll yield’.
Roll gains: backwardation adds momentum
‘Backwardation’ is the term used to describe a downward
sloping futures curve. In this case, futures prices for later
delivery months are lower than spot prices. It is therefore less
expensive to switch (roll) to the next shortest-dated contract,
so that the number of futures contracts held increases after
the roll procedure. This positive roll effect (roll gain) leads
to an increase in the participation rate of the relevant
commodity index.
Example of contango
Upward sloping futures curve: negative roll returns
Example of backwardation
Downward sloping futures curve: roll gains
d:
rio
Buy: USD 100
n
ldi
Ho
e
gp
s
th
on
9M
Sell:
USD 40
3 Months
Price per futures contract
Price per futures contract
Negative roll returns: contango
‘Contango’ is the term for an upward sloping futures curve.
In this constellation, futures prices for later delivery months
are higher than spot prices. It is therefore more expensive
to switch (roll) to the next shortest-dated contract, so that
the number of futures contracts decreases after rolling.
This negative roll effect (roll loss) leads to a decline in
the participation rate for the relevant commodity index.
Ho
ldin
gp
erio
d: 9
Roll loss: USD 60
6 Months
1 Year
2 Years
3 Years
Maturity (Time to expiration)
06
Sell:
USD 80
3 Months
6 Months
Mo
nth
s
Buy:
USD 50
1 Year
Roll gain: USD 30
2 Years
3 Years
Maturity (Time to expiration)
Causes of upward or downward sloping futures curves
There can be a variety of reasons for differences in the shapes
of the futures curve. Interest, warehousing and insurance
costs (known as ‘cost of carry’) that would be incurred if the
derivative were physically acquired may mean for example
that rates quoted for futures contracts with longer maturities
tend to be higher than those of shorter maturity contracts
(upward-sloping futures curve). On the other hand, under
certain circumstances, a commodity’s immediate availability
(for example, due to short-term supply bottlenecks) may be
valued more highly than later delivery (known as ‘convenience
yield’), which leads to a downward-sloping futures curve.
Prevailing market opinion can also, of course, exert great
influence. According to one not uncontroversial theory, for
example, a contango situation (backwardation situation)
may arise when a majority of investors expect commodity
prices to rise (fall) in future and adopt a corresponding
position on the futures market in anticipation.
Another potential cause is where there are fundamental
differences in supply and demand streams for the various
contract maturities. These can be due partly to differences
in the needs of the real economy which can also be subject
to seasonal fluctuations. For example, spikes in energy demand
during heating periods may lead to generally higher prices of
crude oil during the winter months in the northern hemisphere.
Commodities can also be subject to seasonal supply-side
fluctuations, as the seasonal harvest cycle of agricultural
products shows.
According to estimates by the International
Energy Agency (IEA), global demand for
natural gas will increase by an average of
2.4% per year between now and 2018.
(Source: www.iea.org, 31.07.2014)
This all means that the performance of traditional commodity
indices can sometimes be unsatisfactory. Since commodities are
often in a contango situation, traditional commodity indices
may, over the long term, build up negative tracking errors in
comparison with the tracked index.
07
Impact of passive commodity exposures on futures markets
Despite shortcomings, the arrival of commodity indices sparked a minor revolution in
commodity markets. The development of financial products such as UBS ETCs considerably
simplified access to commodity markets. They allowed an increasing number of private
investors to gain exposure to the commodity markets. Alongside ‘active’ investors who use
the futures market to hedge prices of real assets, an increasing number of 'passive' investors
emerged who use the commodity futures market solely as an investment vehicle. This trend
is demonstrated by the volumes invested using commodity indices. According to figures from
the US CFTC (Commodity Futures Trading Commission) these rose by more than ten times
between the end of 2002 and the end of 2013, from around 15 billion US dollars to around
186 billion.
Volume increase in index-based commodity investments
250
200
In commodity indices
invested assets (in billion USD)
As of 31.12.2013
Source: U.S. Commodity Futures
Trading Commission, Index
Investment Data (www.cftc.gov)
150
100
50
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
Ready for transport: copper, here in the form of
industry-standard copper plates, is valued both in the
electrical engineering and the construction sector
for its excellent electrical and thermal conductivity.
08
02 UBS Bloomberg CMCI – the first commodity
index for the entire futures curve
The UBS Bloomberg CMCI Index Family was developed by UBS in cooperation
with Bloomberg to track real performance of commodity prices via futures
contracts as closely as possible. As the first commodities index, the UBS
Bloomberg CMCI Index Family uses up to five constant maturities while
maintaining broad-based diversification across 27 commodities futures
contracts. The index thus reflects the complete pricing picture and all market
opinions, while at the same time reducing negative roll returns. Daily rolling
of futures contracts ensures that the average time-to-maturity of the futures
contracts tracked in the UBS Bloomberg CMCI index is kept permanently
constant, unlike most traditional indices that only roll once a month.
Traditional commodity indices
Price
1. buy high
2. hold
4. reinvest
3. sell low
Maturity (time to expiration)
Traditional commodity indices
Traditional commodity indices
Price
Price
1. buy high
UBS Bloomberg CMCI
UBS Bloomberg CMCI
Continuous rolling process
2. hold
4. reinvest
Invested over
the entire futures curve
3. sell low
Maturity (time to expiration)
Price
Both graphs use the same example futures curve in which
contract
prices areCMCI
shown at various maturities. While the
UBS Bloomberg
hypothetical futures curve shows an upward trend at the
shorter end (contango situation), a downward trend is
Continuous rolling process
observed at the long end (backwardation situation).
Traditional indices (left) are generally invested exclusively in
short-term futures contracts. They therefore only consider a
small proportion of the commodity market. In a contango
situation, for example at the
shortover
end of the futures curve,
Invested
this limited method which
excludes
futures
the entire
futures
curve contracts with
longer maturities will inevitably lead to negative roll returns.
Maturity (time to expiration)
By contrast, the UBS Bloomberg CMCI index (right) exhibits
a substantially broader diversification across the available
maturities. This allows the commodity market to be tracked
more comprehensively. The effects of any negative roll returns
at the short end of the futures curve can be reduced (and
sometimes even moved into positive territory) by switching to
other maturities. We can generalise from this to say that using
all futures maturities reduces the direct impact of the short
end of the futures curve. (Source: Bloomberg, UBS AG)
Maturity (time to expiration)
10
11
09
UBS Bloomberg CMCI Index Universe
The UBS Bloomberg CMCI Index Family covers the most economically significant exchange
traded commodities. The UBS Bloomberg CMCI Index Universe permits investments in three
dimensions:
1.Broadly diversified commodity investment in the composite market that comprises
several commodity sectors (via the UBS Bloomberg CMCI Composite TR Index).
2.Investment in a particular commodity sector (for example, the energy sector via the
UBS Bloomberg CMCI Energy TR Index).
3.Targeted investment in a particular individual commodity (for example, coffee via the
UBS Bloomberg CMCI Coffee TR Index).
1. Entire
Commodity
Sector
UBS Bloomberg CMCI Composite Index
Energy & Metals
UBS Bloomberg CMCI Energy & Metals Index
2. Industry
Focus
Energy
Industrial Metals
Precious Metals
Livestock
Agriculture
3. Single
Commodity
Focus
WTI Crude Oil
Copper
Gold
Live Cattle
Wheat
Brent Crude Oil
Zinc
Silver
Lean Hogs
Milling Wheat
Heating Oil
Aluminium
Platinum
Gasoil
Nickel
Soybeans
Gasoline
Lead
Soybean Meal
Natural Gas
Corn
Soybean Oil
Sugar
Cocoa
Coffee
Cotton
Rough Rice
10
Weighting procedure for UBS Bloomberg CMCI Index Family
Stage 1: Sector weighting
Determining the sector weighting is the first stage in the
weighting process. The UBS Bloomberg CMCI Composite
Index covers all five sectors: energy, industrial metals,
precious metals, agriculture and livestock. At sector level
a higher weighting is assigned to economic significance
(two thirds) than liquidity (one third).
Sector liquidity: sector liquidity is determined based
on two futures market indicators reported on the
relevant exchanges: open interest and market turnover
for the relevant commodity sector, which are each given
a 50% weighting. Open interest represents the nominal
market value of the open/outstanding futures contracts
in the relevant sector. Market turnover reflects the
accumulated nominal volumes of futures contracts traded.
Economic significance of the sector: the sector’s
economic significance is calculated by adding the relevant
commodity sector’s share in the consumer price index (CPI)
(two thirds) and in the producer price index (PPI) (one third)
and multiplying it by the sector’s share of the gross domestic
product (GDP) of the USA, EU and Japan.
Stage 1: Sector weighting
Sector’s economic significance
Sector liquidity
USA
(CPI (2/3) + PPI (1/3)) x GDP Weight
EU
(CPI (2/3) + PPI (1/3)) x GDP Weight
2/3
1/3
Japan
(CPI (2/3) + PPI (1/3)) x GDP Weight
Sector open interest
50%
Sector turnover
50%
Stage 2: Component weighting
Economic significance of components
Component liquidity
Share of components in the dollar
value of global consumption
Component’s share in the
sector’s open interest
50%
1/3
2/3
Component’s share
in the sector’s turnover
50%
Stage 2: Component weighting
The second stage of the process involves calculating the share
of the individual commodities within their allocated sector
through a process of component weighting. This determines
for example the share of WTI crude futures in the energy
sector. Economic significance and market liquidity are also
considered at the component level. However, at this point
a higher weighting is assigned to the component liquidity
for each commodity (two thirds) than to the economic
significance of the sector (one third).
Economic significance of components: the component’s
economic significance is determined by its share in the dollar
value of global consumption for each individual commodity
within the relevant sector. The greater the relative
consumption of a commodity, the greater its share tends
to be in the relevant sector.
Component liquidity: as at sector level, component
liquidity is again determined by two parameters on
the futures market: component liquidity is determined
by the respective commodity’s share in the sector’s open
interest (half) and the sector’s market turnover (half)
(see explanation above).
The UBS Bloomberg CMCI Composite Index represents the entire commodity market. The weighting of the commodity sectors
and commodity components it contains is therefore of especial importance. (With a UBS Bloomberg CMCI Sector Index, by
contrast, it is only the weighting of the commodity components that is brought to bear). The multi-staged weighting process
places value both on the economic significance of the commodities under consideration and on high market liquidity. This is
designed to track the economic significance of the individual components in the index as closely as possible and to ensure
that the individual components of the index are actually tradable on a daily basis at the lowest possible transaction costs.
11
Regular reviews ensure that weightings are allocated correctly over the
long term: weightings are rebalanced monthly according to the target weights
(over the last three business days of the month). The target weights for economic
significance are revised annually (in July). Liquidity target weights are revised
semi-annually by an Index Committee consisting of numerous commodities experts
from UBS and Bloomberg (in January and July). At sector level, each commodity
component is included in the calculations for the target weights with weightings
ranging from a maximum of 20 per cent to a minimum of 0.6 per cent.
Last updated on: 31.07.2014. (Source: CMCI Advisory Committee, UBS AG)
UBS Bloomberg CMCI index compared with traditional commodity indices
UBS Bloomberg
CMCI
S&P GSCI
Commodity
Index
Bloomberg
Commodity
Index
Rogers
International
Commodity
Index
JPMorgan
Commodity
Curve Index
Inception Date
January 2007
May 1991
July 1998
July 1998
November 2007
Rebalancing
Monthly
Yearly
Yearly
Monthly
Yearly
Roll Schedule
Daily
5th – 9th business
day of each month
5th – 9th business
day of each month
Last 2 and 1st
business days of
each month
1st – 10th business
day of each month
Futures-curve
positioning
Constant maturity
(3 months – 3 years)
Front month
Front month
Front month
Out to 3 years.
Holds contracts
along futures-curve
in proportion to
open interest
Diversification
Broad
Energy focus
Broad
Broad
Broad
Selection criteria
–Sector:
2/3 economic
weighting & 1/3
liquidity
–Components:
1/3 Consumption
& 2/3 liquidity
Weighting by
world production
in relation to
current prices
Weighting by
production, liquidity
& diversification
(Minimum &
maximum portion
per component
and sector)
RICI committee
decides without
given rules
Open interest &
market size in USD
UBS Bloomberg CMCI index rolls daily and provides broad diversification across the entire futures curve.
(Source: Index Manuals & Websites, WM CIO Research, as of 31.07.2014)
12
UBS Bloomberg CMCI indices on the
entire commodity sector
The UBS Bloomberg CMCI Composite Index is the most broadly diversified
CMCI index and covers the entire commodities market. It contains commodities
in five sectors: energy, industrial metals, precious metals, agriculture and livestock.
Broadly diversified commodity benchmark index: UBS Bloomberg CMCI Composite TR Index
Commodity sector
Energy
Agriculture
Industrial Metals
Precious Metals
Livestock
Weight
38.2%
28.0%
24.3%
5.4%
4.1%
As of 31.07.2014, Source: Bloomberg, UBS AG
The UBS Bloomberg CMCI Energy & Metals Index permits broad-based investment in
the commodity sector without agriculture and livestock. It covers the energy sector
as well as industrial and precious metals.
Commodity sector without agriculture and livestock: UBS Bloomberg CMCI Energy & Metals TR Index
Commodity sector
Energy
Industrial Metals
Livestock
Weight
56.2%
35.8%
8.0%
As of 31.07.2014, Source: Bloomberg, UBS AG
UBS ETCs on the UBS Bloomberg CMCI Composite and Energy & Metals TR Index
USD
Underlying
Index
Commodity Sector
CMCI Composite TR Index
Commodity Sector
CMCI Energy & Metals TR Index
SIX
Symbol
CHF currency hedged
EUR currency hedged
ISIN
Fee
p.a.
TCMCI CH0031794263 0,38% CCMCI CH0034808169 0,81%
ECMCI CH0034808136
0,50%
TCMCI CH0197973420 0,38% CCMCI CH0197973412 0,81%
ECMCI CH0197973438
0,50%
ISIN
Fee
SIX
p.a. Symbol
ISIN
Fee
SIX
p.a. Symbol
You can find more information on the products presented, including opportunities and risks, in the glossary and the risk warning at the end of this document as well as in the term
sheets and factsheets that can be inspected on the internet using the Valor or ISIN number: www.ubs.com/keyinvest
13
UBS Bloomberg CMCI indices with a focus
on the energy sector
Energy has an essential place in the global economy. Crude oil and fuels produced
from it, such as fuel oil and gasoline in particular, keep the economy going. If oil prices
rise, the global economy can falter. The industrialised world first experienced this
dependence during the oil crises in the 1970s when the Organisation of Petroleum
Exporting Countries (OPEC) reduced their supply quotas, causing oil prices to rocket.
Since then governments in the industrialised world have been attempting to reduce
their dependence on energy imports. But even forty years after the first oil crisis fossil
fuels continue to be of enormous importance for the global economy.
Composition of UBS Bloomberg CMCI Energy TR Index
Composition of UBS Bloomberg CMCI Energy TR Index
Commodity futures contract
Brent Crude Oil
WTI Crude Oil (NYMEX)
RBOB Gasoline
Gasoil
Heating Oil
Natural Gas
WTI Crude Oil (ICE)
Weight
25.2%
20.5%
13.3%
12.8%
11.1%
10.5%
6.7%
As of 31.07.2014, Source: Bloomberg, UBS AG
UBS ETCs on UBS Bloomberg CMCI Energy Indices
USD
SIX
Symbol
CHF currency hedged
ISIN
Fee
SIX
p.a. Symbol
Underlying
Index
Energy Sector
CMCI Energy TR Index
TENCI CH0042990041 0.40%
WTI Crude Oil
CMCI WTI TR Index
TCLCI CH0033333326 0.30%
Brent Crude Oil
CMCI Brent TR Index
TCOCI CH0032661685 0.30%
Gasoil
CMCI Gasoil TR Index
TQSCI CH0037787592 0.40%
Gasoline
CMCI Gasoline TR Index
TXBCI CH0036834908 0.40%
Heating Oil
CMCI Heating Oil TR Index
THOCI CH0037787600 0.40%
Natural Gas
CMCI Natural Gas TR Index
TNGCI CH0037787659 0.40%
EUR currency hedged
ISIN
Fee
p.a.
CENCI CH0042990074 0.84%
EENCI CH0042990066
0.52%
CCLCI CH0037069876 0.72%
ECLCI CH0037069843
0.42%
CCOCI CH0035787859 0.72%
ECOCI CH0035787909
0.42%
CXBCI CH0036834981 0.84%
EXBCI CH0036834882
0.52%
CNGCI CH0042990090 0.84%
ENGCI CH0042990082
0.52%
ISIN
Fee
SIX
p.a. Symbol
You can find more information on the products presented, including opportunities and risks, in the glossary and the risk warning at the end of this document as well as in the term
sheets and factsheets that can be inspected on the internet using the Valor or ISIN number: www.ubs.com/keyinvest
14
UBS Bloomberg CMCI indices with a focus
on industrial metals
Industrial metals form the backbone of the global economy. No car, no modern
building and no electrical device can be manufactured without the use of industrial
metals. ‘Industrial metals’ are metals which are so important that an entire industry
has grown up around them. This is the case, amongst others, with copper, zinc,
aluminium, nickel and lead. Each of these metals has specific properties that are
in demand in a variety of applications and situations.
29 million tonnes of aluminium are
needed yearly to satisfy global demand.
The image shows how aluminium was
used as a material for the frontage of
an office complex in Warsaw, Poland.
Composition of UBS Bloomberg CMCI Industrial Metals TR Index
Composition of UBS Bloomberg CMCI Industrial Metals TR Index
Commodity futures contract
LME Copper
LME Aluminium
High Grade Copper
LME Zinc
LME Nickel
LME Lead
Weight
36.4%
25.1%
14.5%
9.2%
9.0%
5.7%
As of 31.07.2014, Source: Bloomberg, UBS AG
UBS ETCs on UBS Bloomberg CMCI Industrial Metals Indices
USD
SIX
Symbol
CHF currency hedged
EUR currency hedged
ISIN
Fee
p.a.
CIMCI CH0036249024 0.81%
EIMCI CH0036249016
0.49%
CLACI CH0037787899 0.81%
ELACI CH0039918609
0.49%
TLPCI CH0037787584 0.37%
CLPCI CH0037787907 0.81%
ELPCI CH0039918591
0.49%
CMCI Lead TR Index
TLLCI CH0037787626 0.37%
CLLCI CH0037787949 0.81%
ELLCI CH0037787782
0.49%
Nickel
CMCI Nickel TR Index
TLNCI CH0037787667 0.37%
CLNCI CH0037787980 0.81%
ELNCI CH0037787824
0.49%
Zinc
CMCI Zinc TR Index
TLXCI CH0037787717 0.37%
CLXCI CH0037788038 0.81%
ELXCI CH0037787873
0.49%
ISIN
Fee
SIX
p.a. Symbol
Underlying
Index
Industrial Metals Sector
CMCI Industrial Metals TR Index
TIMCI CH0035657417 0.37%
Aluminium
CMCI Aluminium TR Index
TLACI CH0037787576 0.37%
Copper
CMCI Copper TR Index
Lead
ISIN
Fee
SIX
p.a. Symbol
You can find more information on the products presented, including opportunities and risks, in the glossary and the risk warning at the end of this document as well as in the term
sheets and factsheets that can be inspected on the internet using the Valor or ISIN number: www.ubs.com/keyinvest
15
UBS Bloomberg CMCI indices with a focus
on precious metals
Precious metals, above all gold, have fascinated human beings since time
immemorial. This is partly because they are highly resistant to corrosion and thus
retain their value over time. Gold is also seen as a 'safe haven', particularly at times
of crisis. Precious metals include gold and silver as well as platinum and palladium.
The latter two metals – even more than silver – have a dual value, as they are also
heavily used in the industrial sector.
Gold is increasingly in demand. The shiny yellow metal
is not only used as an ornament and an investment but
is also used in medicine and electrical devices such as
computers. The image shows how gold is used in circuitry.
Composition of UBS Bloomberg CMCI Precious Metals TR Index
Composition of UBS Bloomberg CMCI Precious Metals TR Index
Commodity futures contract
Gold (COMEX)
Silver
Weight
80.2%
19.8%
As of 31.07.2014, Source: Bloomberg, UBS AG
UBS ETCs on UBS Bloomberg CMCI Precious Metals Indices
USD
SIX
Symbol
CHF currency hedged
EUR currency hedged
ISIN
Fee
p.a.
CPMCI CH0042990199 0.92%
EPMCI CH0042990116
0.61%
CGCCI CH0036249057 0.66%
EGCCI CH0036248992
0.38%
TSICI CH0036991435 0.37%
CSICI CH0036249040 0.80%
ESICI CH0036249008
0.49%
TPLCI CH0039194219 0.49%
CPLCI CH0039205601 0.92%
EPLCI CH0039205627
0.61%
ISIN
Fee
SIX
p.a. Symbol
Underlying
Index
Precious Metals Sector
CMCI Precious Metals TR Index
TPMCI CH0042990108 0.49%
Gold
CMCI Gold TR Index
TGCCI CH0036991427 0.26%
Silver
CMCI Silver TR Index
Platinum
CMCI Platinum TR Index
ISIN
Fee
SIX
p.a. Symbol
You can find more information on the products presented, including opportunities and risks, in the glossary and the risk warning at the end of this document as well as in the term
sheets and factsheets that can be inspected on the internet using the Valor or ISIN number: www.ubs.com/keyinvest
16
UBS Bloomberg CMCI indices with the focus
on agriculture
As a result of global population growth and the global increase in prosperity
of an increasing number of people, eating habits are changing and global
demand for agricultural commodities such as grain is rising. This means that
agricultural commodities such as corn, wheat and sugar but also coffee, cocoa
and soya products are key in meeting basic needs. Agricultural commodities are
also increasingly used to manufacture biofuels. Prices of agricultural commodities,
also referred to as 'soft commodities' are subject to seasonal fluctuations as they
follow the natural cycle of sowing and harvesting. As a result, prices generally also
react sensitively to weather conditions in the corresponding major farming areas.
For example, drought in Brazil can lead to a boom in coffee prices.
Composition of UBS Bloomberg CMCI Agriculture TR Index
Composition of UBS Bloomberg CMCI Agriculture TR Index
Commodity futures contract
Soybeans
Corn
Sugar #11
SRW Wheat
Sugar #5
Soybean Metals
Soybean Oil
Cotton
Coffee «C» Arabica
HRW Wheat
Cocoa
Weight
22.5%
19.0%
16.6%
8.0%
7.5%
6.4%
5.4%
4.5%
3.6%
3.6%
2.9%
As of 31.07.2014, Source: Bloomberg, UBS AG
UBS ETCs on UBS Bloomberg CMCI Agriculture Indices
USD
SIX
Symbol
CHF currency hedged
EUR currency hedged
ISIN
Fee
p.a.
CAGCI CH0035787800 0.84%
EAGCI CH0035787842
0.55%
CFOCI CH0038468846 0.92%
EFOCI CH0038468838
0.63%
TQCCI CH0035657383 0.56%
CQCCI CH0036985031 0.99%
EQCCI CH0036985049
0.68%
CMCI Coffee TR Index
TKCCI CH0035657409 0.54%
CKCCI CH0036985015 0.98%
EKCCI CH0036985023
0.66%
Corn
CMCI Corn TR Index
TCNCI CH0034478849 0.47%
CCNCI CH0036835012 0.91%
ECNCI CH0036834890
0.59%
Cotton
CMCI Cotton TR Index
TCTCI CH0035657425 0.46%
CCTCI CH0036984992 0.90%
ECTCI CH0036985007
0.58%
Milling Wheat
CMCI Milling Wheat TR Index
TCACI CH0131514173 0.59%
CCACI CH0131514181 1.01%
ECACI CH0131514165
0.57%
Soybeans
CMCI Soybeans TR Index
TSYCI CH0036834866 0.46%
CSYCI CH0036835038 0.90%
ESYCI CH0036834924
0.58%
Soybeans
CMCI Soybeans TR Index
TSMCI CH0037787675 0.53%
Soybean Oil
CMCI Soybean Oil TR Index
TBOCI CH0037787683 0.53%
Sugar
CMCI Sugar #11 TR Index
CSBCI CH0036835046 1.07%
ESBCI CH0036834940
0.74%
Wheat
CMCI Wheat TR Index
TWWCI CH0034478864 0.47% CWWCI CH0036835020 0.91% EWWCI CH0036834965
0.59%
Rough Rice
CMCI Rough Rice TR Index
ISIN
Fee
SIX
p.a. Symbol
Underlying
Index
Agriculture Sector
CMCI Agriculture TR Index
TAGCI CH0033726370 0.47%
Food
CMCI Food TR Index
TFOCI CH0038468804 0.55%
Cocoa
CMCI Cocoa TR Index
Coffee
TSBCI CH0035657391 0.63%
TRRCI CH0118479614 0.96%
ISIN
Fee
SIX
p.a. Symbol
CRRCI CH0118479630 1.18%
ERRCI CH0118479622
1.08%
You can find more information on the products presented, including opportunities and risks, in the glossary and the risk warning at the end of this document as well as in the term
sheets and factsheets that can be inspected on the internet using the Valor or ISIN number: www.ubs.com/keyinvest
17
UBS Bloomberg CMCI indices with a focus
on livestock
When it comes to large herds of cattle in the USA your first thought might be
of images from the early 19th century when cowboys drove cattle from Texas
to the northern USA. During the same period, Chicago also made a name for
itself as a place where livestock was bought and sold, which ultimately led to
the establishment of futures markets with contracts for live cattle and lean hogs.
Although these enormous cattle drives no longer take place today, there is still
lively trading in futures contracts on the Chicago Mercantile Exchange (CME).
Composition of UBS Bloomberg CMCI Livestock TR Index
Composition of UBS Bloomberg CMCI Livestock TR Index
Commodity futures contract
Live Cattle
Lean Hogs
Weight
56.1%
43.9%
As of 31.07.2014, Source: Bloomberg, UBS AG
UBS ETCs on UBS Bloomberg CMCI Livestock Indices
USD
SIX
Symbol
CHF currency hedged
ISIN
Fee
SIX
p.a. Symbol
Underlying
Index
Lean Hogs
CMCI Lean Hogs TR Index
TLHCI CH0037787634 0.54%
Live Cattle
CMCI Live Cattle TR Index
TLCCI CH0037787642 0.49%
EUR currency hedged
ISIN
Fee
p.a.
CLHCI CH0042990223 0.98%
ELHCI CH0042990215
0.66%
CLCCI CH0042990264 0.93%
ELCCI CH0042990231
0.61%
ISIN
Fee
SIX
p.a. Symbol
You can find more information on the products presented, including opportunities and risks, in the glossary and the risk warning at the end of this document as well as in the term
sheets and factsheets that can be inspected on the internet using the Valor or ISIN number: www.ubs.com/keyinvest
18
03 Overview:
UBS ETCs on UBS Bloomberg CMCI
USD
Index
SIX
Symbol
CHF currency hedged
ISIN
Fee
SIX
p.a. Symbol
ISIN
EUR currency hedged
Fee
SIX
p.a. Symbol
ISIN
Fee
p.a.
Composite Index
Commodity Sector
CMCI Composite TR Index
TCMCI CH0031794263 0.38% CCMCI CH0034808169 0.81%
CMCI Composite 3M TR Index
TCM3M CH0031794214 0.38%
CMCI Composite 6M TR Index
TCM6M CH0031794206 0.38%
CMCI Composite 1Y TR Index
TCM1Y CH0029777445 0.38%
ECMCI CH0034808136 0.50%
Energy
Energy Sector
CMCI Energy TR Index
TENCI CH0042990041 0.40%
CENCI CH0042990074 0.84%
EENCI CH0042990066 0.52%
WTI Crude Oil
CMCI WTI TR Index
TCLCI CH0033333326 0.30%
CCLCI CH0037069876 0.72%
ECLCI CH0037069843 0.42%
CCOCI CH0035787859 0.72%
ECOCI CH0035787909 0.42%
CXBCI CH0036834981 0.84%
EXBCI CH0036834882 0.52%
CNGCI CH0042990090 0.84%
ENGCI CH0042990082 0.52%
Brent Crude Oil
CMCI WTI 3M TR Index
TCL3M CH0033333342 0.30%
CMCI WTI 6M TR Index
TCL6M CH0033333359 0.30%
CMCI WTI 1Y TR Index
TCL1Y CH0033333367 0.30%
CMCI Brent TR Index
TCOCI CH0032661685 0.30%
CMCI Brent 3M TR Index
TCO3M CH0032661693 0.30%
CMCI Brent 6M TR Index
TCO6M CH0032661701 0.30%
CMCI Brent 1Y TR Index
TCO1Y CH0032661719 0.30%
Gasoil
CMCI Gasoil TR Index
Gasoline
CMCI Gasoline TR Index
TQSCI CH0037787592 0.40%
TXBCI CH0036834908 0.40%
Heating Oil
CMCI Heating Oil TR Index
THOCI CH0037787600 0.40%
Natural Gas
CMCI Natural Gas TR Index
TNGCI CH0037787659 0.40%
Industrial Metals
Industrial Metals Sector
CMCI Industrial Metals TR Index
TIMCI CH0035657417 0.37%
CIMCI CH0036249024 0.81%
EIMCI CH0036249016 0.49%
Aluminium
CMCI Aluminium TR Index
TLACI CH0037787576 0.37%
CLACI CH0037787899 0.81%
ELACI CH0039918609 0.49%
ELPCI CH0039918591 0.49%
Copper
CMCI Copper TR Index
TLPCI CH0037787584 0.37%
CLPCI CH0037787907 0.81%
Lead
CMCI Lead TR Index
TLLCI CH0037787626 0.37%
CLLCI CH0037787949 0.81%
ELLCI CH0037787782 0.49%
Nickel
CMCI Nickel TR Index
TLNCI CH0037787667 0.37%
CLNCI CH0037787980 0.81%
ELNCI CH0037787824 0.49%
Zinc
CMCI Zinc TR Index
TLXCI CH0037787717 0.37%
CLXCI CH0037788038 0.81%
ELXCI CH0037787873 0.49%
Precious Metals
Precious Metals Sector
CMCI Precious Metals TR Index
TPMCI CH0042990108 0.49%
CPMCI CH0042990199 0.92%
EPMCI CH0042990116 0.61%
Gold
CMCI Gold TR Index
TGCCI CH0036991427 0.26%
CGCCI CH0036249057 0.66%
EGCCI CH0036248992 0.38%
Silver
CMCI Silver TR Index
TSICI CH0036991435 0.37%
CSICI CH0036249040 0.80%
ESICI CH0036249008 0.49%
Platinum
CMCI Platinum TR Index
TPLCI CH0039194219 0.49%
CPLCI CH0039205601 0.92%
EPLCI CH0039205627 0.61%
CMCI Agriculture TR Index
TAGCI CH0033726370 0.47%
CAGCI CH0035787800 0.84%
EAGCI CH0035787842 0.55%
CMCI Agriculture 1 Year TR Index
TAG1Y CH0110257455 0.60%
Agriculture
Agriculture Sector
Food
CMCI Food TR Index
TFOCI CH0038468804 0.55%
CFOCI CH0038468846 0.92%
EFOCI CH0038468838 0.63%
Cocoa
CMCI Cocoa TR Index
TQCCI CH0035657383 0.56%
CQCCI CH0036985031 0.99%
EQCCI CH0036985049 0.68%
Coffee
CMCI Coffee TR Index
TKCCI CH0035657409 0.54%
CKCCI CH0036985015 0.98%
EKCCI CH0036985023 0.66%
Corn
CMCI Corn TR Index
TCNCI CH0034478849 0.47%
CCNCI CH0036835012 0.91%
ECNCI CH0036834890 0.59%
Cotton
CMCI Cotton TR Index
TCTCI CH0035657425 0.46%
CCTCI CH0036984992 0.90%
ECTCI CH0036985007 0.58%
Milling Wheat
CMCI Milling Wheat TR Index
TCACI CH0131514173 0.59%
CCACI CH0131514181 1.01%
ECACI CH0131514165 0.57%
CSYCI CH0036835038 0.90%
ESYCI CH0036834924 0.58%
CSBCI CH0036835046 1.07%
ESBCI CH0036834940 0.74%
Soybeans
CMCI Soybeans TR Index
TSYCI CH0036834866 0.46%
Soybean Meal
CMCI Soybean Meal TR Index
TSMCI CH0037787675 0.53%
TBOCI CH0037787683 0.53%
Soybean Oil
CMCI Soybean Oil TR Index
Sugar
CMCI Sugar #11 TR Index
Wheat
CMCI Wheat TR Index
Rough Rice
CMCI Rough Rice TR Index
TSBCI CH0035657391 0.63%
TWWCI CH0034478864 0.47% CWWCI CH0036835020 0.91% EWWCI CH0036834965 0.59%
TRRCI CH0118479614 0.96%
CRRCI CH0118479630 1.18%
ERRCI CH0118479622 1.08%
Livestock
Lean Hogs
CMCI Lean Hogs TR Index
TLHCI CH0037787634 0.54%
CLHCI CH0042990223 0.98%
ELHCI CH0042990215 0.66%
Live Cattle
CMCI Live Cattle TR Index
TLCCI CH0037787642 0.49%
CLCCI CH0042990264 0.93%
ELCCI CH0042990231 0.61%
CMCI Energy & Metals TR Index
TEMCI CH0197973420 0.38%
CEMCI CH0197973412 0.81%
EEMCI CH0197973438 0.50%
Energy & Metals
Benchmark Indices
S&P GSCI with CMCI weighting S&P GSCI weighted CMCI TR Index
GCMCI CH0048491788 0.50%
BCOM with CMCI weighting
TDJCM CH0116406890 0.50% CDJCM CH0116406916 0.72% EDJCM CH0116406908 0.62%
BCOM Constant Maturity TR Index
2x Leveraged
2x Long CMCI WTI Crude Oil ER Index
2x Long CMCI Gold ER Index
OIL2L CH0035730362 0.98%
GLD2L CH0102709042 0.94%
2x Long CMCI Silver ER Index
SIL2L CH0102709059 1.05%
2x Short CMCI WTI Crude Oil ER Index
OIL2S CH0035730370 0.98%
2x Short CMCI Gold ER Index
GLD2S CH0102725956 0.94%
2x Short CMCI Silver ER Index
SIL2S CH0102725964 1.05%
You can find more information on the products presented, including opportunities and risks, in the glossary and the risk warning at the end of this document as well as in the term
sheets and factsheets that can be inspected on the internet using the Valor or ISIN number: keyinvest-ch.ubs.com
19
04 Risks and opportunities of UBS ETCs
Investor profile
UBS ETCs are suitable for investors with a medium to high risk
preference who are looking to invest in commodities with low capital
and administrative costs. The method used by the UBS Bloomberg
CMCI index attempts to minimise any potential tracking error on the
performance of commodities.
Investing in UBS ETCs – risks and opportunities
Opportunities
– UBS ETCs allow cost-efficient, transparent participation
in the relevant UBS Bloomberg CMCI index.
– Commodities as stand-alone asset class exhibiting low
long-term correlation with shares, bonds and currencies
can offer diversification benefits in portfolio terms.
– You have a wide choice: the UBS Bloomberg CMCI Index
Family is broad-based and allows targeted investment in
a particular commodity, a particular commodity sector
or a market-wide commodity index.
– The UBS Bloomberg CMCI index is designed to minimise
negative roll returns (resulting from contango constellations
in the underlying futures contract) and is therefore
distinguished by diversification across a broad basket of
maturities and optionally daily traded rolling transactions.
– The Total Return Index reinvests the interest component
into the index.
– You have the opportunity to exceed traditional commodity
indices both in terms of performance and volatility.
– UBS ETCs offer cost-efficient access to commodity investing
that is based on futures contracts, thus avoiding physical
delivery (with no costs to the investor for commodity
warehousing capacities).
– Stick to your preferred currency: UBS ETCs can be traded
not only in US dollars but also in Swiss francs and euros. In
the case of CHF and EUR tranches, investment volumes are
covered by currency hedging at the end of each trading day.
– There is no restriction on maturity (open-ended).
– UBS generally buys and sells on a daily basis: liquid and
continuous secondary market trading generally takes
place on the SIX Structured Products Exchange on a daily
basis under normal market conditions.
20
Risks
– Your investment capital is not protected. The stock
market performance of UBS ETCs depends chiefly on the
performance of the relevant underlying UBS Bloomberg
CMCI index. Falls in the index will mean losses in the
relevant UBS ETC.
– Investors in UBS ETCs bear the credit risk of the issuer,
UBS AG, and thus risk losing their investment capital
regardless of the performance of the underlying index
if the issuer becomes insolvent (more detailed information
on the issuer can be obtained from the securities
prospectus, which is available free of charge from the
issuer or an office nominated by it).
– The performance of the index will continue to depend on
the structure and characteristics of the futures curve. It is
possible that the UBS Bloomberg CMCI method may not
reduce negative roll returns, leading to losses.
– Commodities and commodity futures are volatile and may
not be suitable for all investors.
– Due to the product-specific management fee the
performance of UBS ETCs is usually slightly poorer than
the relevant underlying index.
– The issuer intends to ensure liquidity on a daily trading basis
(OTC trading) in normal market phases. However, investors
should note that in some circumstances it may not be
possible to sell UBS ETCs at all times.
– Despite currency hedging at the end of each day of
trading, the CHF and EUR tranches may be subject
to currency fluctuation risks between the hedging
transactions (intraday).
– UBS ETCs are subject to market influences during their
period of validity (performance of underlying instruments,
futures curve etc.), which may affect the value of UBS ETCs.
– In accordance with the UBS ETC terms and conditions,
the issuer is entitled under certain conditions to terminate
a UBS ETC. You will find more information in the securities
prospectus.
05 Glossary and further information
Glossary
Backwardation is the technical term for a downward sloping
Futures Curve (q.v.) and generally leads to positive roll returns
in traditional indices.
CMCI (Constant Maturity Commodity Index) is the name
given to the commodity index family developed by UBS and
Bloomberg which aims to reduce negative roll returns by
tracking the commodity futures market.
Contango is the technical term for an upward sloping Futures
Curve (q.v.) and generally leads to negative roll returns in
traditional indices.
UBS ETCs (Exchange Traded Commodities) are investment
vehicles that allow simple and cost-effective participation in
the performance of a particular commodity index. The credit
risk of the issuer (UBS AG) should be taken into consideration.
Excess Return (ER): an excess return commodity index
calculates spot price performance along with roll returns from
a futures investment (see also Spot Return).
Futures Contracts (or forward contracts) are financial
instruments in which the parties agree to complete a
transaction (delivery or acceptance of the underlying
instrument) at a fixed date in the future at the currently
traded futures price. Commodities are mainly traded via
futures contracts since this allows costs of physical delivery
to be avoided.
The Futures Curve arises from the fact that at any point
in time there are multiple futures contracts for the same
commodity which only differ in terms of maturity. Plotting
commodity prices for futures contracts against maturities
creates a futures curve which can slope upward (contango)
or downward (backwardation).
The Market Value of an asset (for example, a
commodity): the market value of an asset corresponds
to the market price that an asset could achieve.
Correlation, in finance mathematics, is a term used to
indicate how closely two datasets (e.g. performance data)
track each other in terms of their changes. A diversification
benefit can be achieved in a portfolio if instruments which
exhibit low mutual correlation are combined.
Market Volume refers to the equivalent of all goods traded
on a market (e.g. the commodities market). It is calculated by
multiplying the volume traded by the market price and then
totalling this for a specific period (e.g. one month).
Open Interest is the total number of outstanding positions
in a forward or options contract.
p.a. stands for ‘per annum’ and refers to the (annualised)
percentage value over one year.
Performance refers to changes in value of shares etc. and
is generally given in percentage terms.
Real Economy: economists generally make a distinction
between the real economy and the financial sector. The real
economy is part of the whole economy and produces real
goods, trades in them or provides services. The financial sector
by contrast provides financial capital for the real economy.
Rolling refers to the simultaneous buying and selling of
futures contracts for the same commodity at different
maturities to rebalance the position in the futures contract.
Since the purchase and spot prices for the contracts concerned
are not usually identical, this leads to so-called roll returns (see
Roll Returns).
Roll Returns represent performance from rolling futures
contracts. Roll returns can be positive (in backwardation
situations) or negative (in contango situations).
Real Assets: real assets generally refer to assets such as real
estate, shares or commodities that have a utility value
independent of fluctuations in monetary value (e.g. inflation).
21
Further information
Sharpe Ratio is a risk-adjusted indicator of returns. A general
rule of thumb is that higher Sharpe ratios mean improved
profits and/or returns in comparison to the risk undergone,
which in the form of Volatility (q.v.) is integrated into the
Sharpe ratio formula.
Spot Return: a spot return or spot price performance index
tracks the performance of commodity prices regardless of the
futures curve. Contango and backwardation therefore play
no role.
Total Return (TR): a total return commodity index calculates
spot price performance along with roll returns and potential
interest income from a futures investment. Interest income is
possible with exposure in futures contracts since the margin
means that only a small part of the total of the contract value
must be paid. The remainder can be parked in short-term
interest-bearing facilities (see also Excess Return and
Spot Return).
Tracking Error is a measure of the precision with which
an asset tracks the performance of a target. In a commodity
index ‘roll returns’ may give rise to deviations between index
performance and spot price performance (see Spot Return).
Volatility represents the degree of fluctuation in performance
and is therefore a risk indicator. In mathematical terms it is
the standard deviation. A general rule of thumb is that lower
volatility reduces risk and increases the security of the relevant
instrument.
Currency-hedged: In the UBS Bloomberg CMCI Index
Family, currency hedging is always implemented at the
end of a trading day, which means that intraday (between
two currency hedges) currency losses may occur for any
non-hedged amounts.
22
UBS ETCs (Exchange Traded Commodities) are bearer bonds
held by UBS AG, which means that investors are subject to the
credit risk of the issuer, UBS AG.
Issuer: Rating: UBS AG, London Branch
A2 / A / A
Last updated on: 31.07.2014
Up to date information on current rates as well as
opportunities and risks of the products listed in this document
can be found on our webpage keyinvest-ch.ubs.com clicking
on the desired product via the respective Valor or ISIN using
the quick search facility. Here you can also inspect the available
documents and the legally binding securities prospectus along
with the term sheet and associated factsheet.
You can of course also request information on rates for the
UBS Bloomberg CMCI index and the associated UBS ETCs
in the Bloomberg rate information system. Corresponding
summaries are available to you using commands including
‘CMCN’ and ‘CMCX’.
This material has been prepared by UBS AG or an affiliate thereof (“UBS”). In certain countries UBS AG is referred to as UBS SA.
This material is for distribution only under such circumstances as may be permitted by applicable law. It has not been prepared with regard to the specific investment
objectives, financial situation or particular needs of any specific recipient. It is published solely for informational purposes and is not to be construed as a solicitation
or an offer to buy or sell any securities or related financial instruments. The recipient should not construe the contents of this material as legal, tax, accounting,
regulatory, or other specialist or technical advice or services or investment advice or a personal recommendation. No representation or warranty, either express or
implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein except with respect to information concerning UBS AG
its subsidiaries and affiliates, nor is it intended to be a complete statement or summary of the securities markets or developments referred to in this material. It should
not be regarded by recipients as a substitute for the exercise of their own judgment. Any opinions expressed in this material are subject to change without notice
and may differ or be contrary to opinions expressed by other business areas or groups of UBS as a result of using different assumptions and criteria. UBS is under no
obligation to update or keep current the information contained herein. UBS, its directors, officers, employees or clients may have or have had interest or long or short
positions in the securities or other financial instruments referred to herein and may at any time make purchases and/or sales in them as principal or agent. UBS may act
or have acted as market-maker in the securities or other financial instruments discussed in this material. Furthermore, UBS may have or have had a relationship with or
may provide or have provided investment banking, capital markets and/or other financial services to the relevant companies. Neither UBS nor any of its affiliates, nor
any of UBS’s affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material. Additional
information may be made available upon request.
UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the written permission of UBS and UBS accepts no liability
whatsoever for the actions of third parties in this respect.
UBS Bloomberg Constant Maturity Commodity Index
The Index Sponsors make no representation or warranty, express or implied, regarding the appropriateness of investing in products referenced to the UBS Bloomberg
Constant Maturity Commodity Index Family (the “CMCI”), commodity products in general or of the ability of the CMCI to track commodity market performance. In
determining the constituents of the CMCI and any amendment thereto, the Index Sponsors have no obligation to consider the needs of any counterparties that have
products referenced to the CMCI. The Index Sponsors have all proprietary rights with respect to the CMCI. Any third party product based on or in relation to the CMCI
(“Product”) may only be issued upon the prior written approval of UBS AG (“UBS”) and Bloomberg Finance L.P. (“Bloomberg Finance”) and upon the execution of a
license agreement between UBS, Bloomberg Finance and the party intending to launch a Product. Neither UBS nor Bloomberg Finance, its affiliates and its and their
respective partners, employees, subcontractors, agents, suppliers or vendors, make any representation or warranty, express or implied, to the holders of the Products or
any member of the public regarding the advisability of investing in the Product or commodities generally or in futures particularly, or as to results to be obtained from
the use of the CMCI or from the Product. Past performance of the CMCI is not necessarily indicative of future results.
THE INDEX SPONSORS AND THEIR AFFILIATES DO NOT GUARANTEE THE QUALITY, ACCURACY AND/OR THE COMPLETENESS OF THE CMCI OR ANY DATA INCLUDED
THEREIN AND SHALL NOT HAVE ANY LIABILITY FOR ANY ERRORS OR OMISSION OR INTERRUPTIONS IN THE CALCULATION AND/OR DISSEMINATION OF THE CMCI. THE
INDEX SPONSORS AND THEIR AFFILIATES MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY OR FROM THE USE OF THE CMCI OR ANY
DATA INCLUDED THEREIN OR FOR ANY OTHER USE (WHETHER DIRECTLY OR VIA ANY PRODUCT REFERENCED THERETO). NEITHER UBS NOR BLOOMBERG FINANCE,
ITS AFFILIATES AND ITS AND THEIR RESPECTIVE PARTNERS, EMPLOYEES, SUBCONTRACTORS, AGENTS, SUPPLIERS AND VENDORS, MAKE ANY EXPRESS OR IMPLIED
WARRANTIES, AND TO THE EXTENT PERMITTED BY LAW HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE WITH RESPECT TO THE CMCI OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, TO THE EXTENT PERMITTED BY LAW
UBS AND BLOOMBERG FINANCE, ITS AFFILIATES AND ITS AND THEIR RESPECTIVE PARTNERS, EMPLOYEES, SUBCONTRACTORS, AGENTS, SUPPLIERS OR VENDORS,
DISCLAIM ANY LIABILITY FOR ANY PUNITIVE, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH. TO THE EXTENT PERMITTED BY LAW, BLOOMBERG FINANCE, ITS AFFILIATES AND ITS AND THEIR RESPECTIVE PARTNERS, EMPLOYEES, SUBCONTRACTORS,
AGENTS, SUPPLIERS AND VENDORS SHALL HAVE NO LIABILITY OR RESPONSIBILITY, CONTINGENT OR OTHERWISE, FOR ANY INJURY OR DAMAGES, WHETHER CAUSED
BY THE NEGLIGENCE OF BLOOMBERG FINANCE, ITS AFFILIATES OR ITS OR THEIR RESPECTIVE PARTNERS, EMPLOYEES, SUBCONTRACTORS, AGENTS, SUPPLIERS OR
VENDORS OR OTHERWISE, ARISING IN CONNECTION WITH ANY PRODUCT.
The New York Mercantile Exchange, Inc. (including the COMEX division), Chicago Board of Trade, ICE Futures, European Energy Exchange, London Metal Exchange,
Kansas City Board of Trade, New York Board of Trade, Winnipeg Commodities Exchange, Euronext. Liffe, the Chicago Mercantile Exchange and a number of future
exchanges (collectively the “Exchanges”) provide data on commodity futures contracts which, in part, are used to compile and calculate the CMCI. However, the
Exchanges provide such data “as is” and without representation or warranty on their part.
Further, the Exchanges: (i) do not in any way participate in the offering, sale, administration of, or payments for, the CMCI or any products related thereto, (ii) do not in
any way ensure the accuracy of any of the statements made in any product materials or this document, (iii) are not liable for any error or omission in any settlement or
other price, index, or valuation used in connection with the CMCI, have not participated in the determination of the timing of, prices at, or quantities of the products to
be issued and have no obligation or liability in connection with the administration, marketing, or trading of the CMCI or any products thereon, (iv) are not in any way an
issuer, manager, operator, guarantor or offeror of CMCI or any products related thereto, and are not a partner, affiliate or joint venturer of any of the foregoing, (v) have
not approved, sponsored or endorsed the CMCI or its terms and are not responsible for any calculations involving the CMCI, (vi) make no representation or warranty,
express or implied, to the owners of the CMCI or any member of the public regarding the advisability of investing in securities generally or in the CMCI particularly, and
(vii) have no involvement with and accept no responsibility for the CMCI, its suitability as an investment or its future performance.
None of the information contained herein constitutes a solicitation, offer, opinion, or recommendation by the Index Sponsors or any of their affiliates to buy or sell
any security, or to provide legal, tax, accounting, or investment advice or services regarding the profitability or suitability of any security or investment. Under no
circumstances, including but not limited to negligence, shall the Index Sponsors, their parents, and their respective affiliates, suppliers, vendors, agents, subcontractors,
directors, officers, employees, representatives, partners, subsidiaries, successors, and assigns be liable for direct, indirect, incidental, consequential, special, punitive, or
exemplary damages even if the Index Sponsors and their affiliates have been advised specifically of the possibility of such damages, arising from the CMCI or Product,
such as, but not limited to, loss of revenue or anticipated profits or lost business.
This Material has not been reviewed by Bloomberg Finance.
© UBS 2014. The key symbol and UBS are among the registered and unregistered trademarks of UBS. Bloomberg is a trademark of Bloomberg L.P. and its affiliates
(collectively “Bloomberg”). UBS Bloomberg Constant Maturity Commodity Index, UBS Bloomberg CMCI and CMCI are service marks of UBS and/or Bloomberg.
All rights reserved.
23
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