Amendment No. 1 dated February 13, 2018† toPROSPECTUS SUPPLEMENT dated May 2, 2017(To Prospectus dated April 29, 2016)

Issued by UBS AG$100,000,0001 VelocitySharesTM 1X Long VSTOXX Futures ETN linked to the VSTOXX

Short-Term Futures Investable Index due May 3, 2047 (the “Long Securities”)$100,000,0001 VelocitySharesTM 1X Daily Inverse VSTOXX Futures ETN linked to

the VSTOXX Short-Term Futures Inverse Investable Index due May 3, 2047(the “Inverse Securities”)

ETNsLeverageAmount

ETNType

ExchangeTicker

IndicativeValueTicker CUSIP ISIN

DailyInvestor

Fee

Long Securities . . . . . 1 Long EVIX EVIXIV 90274E 828 US90274E8286 1.35%Inverse Securities . . . . 1 Inverse EXIV EXIVIV 90274E 810 US90274E8104 1.35%UBS AG is offering and selling two separate series of exchange traded notes (each, a “series of Securities” and collectively, the“Securities”). Each series of Securities tracks the performance of a different underlying index (each, an “Index” and collectively, the“Indices”). Each Index is designed to provide exposure to either a long or short position in first and second month futures contracts.The Euro Stoxx 50 Volatility Index ® (the “VSTOXX”) is a European volatility benchmark designed to measure the 30-day impliedvolatility in European stocks and is calculated based on the prices of certain put and call options on the EURO STOXX 50® Index.Long Securities➤ The Long Securities are linked to the VSTOXX Short-Term Futures Investable Index (the “Long Investable Index”). The Long

Investable Index replicates the performance of a long position in a portfolio of VSTOXX futures designed to provide a longexposure to constant-maturity one-month forward, one-month implied volatilities on the underlying EURO STOXX 50® Index,taking into account the bid-ask spread in the roll procedure, which will reduce the value of the Long Investable Index, andtherefore the Long Securities. The Long Investable Index continuously rolls on a daily basis from the first month VSTOXXfutures contract to the second month contract. As a result of their long exposure to VSTOXX futures, the Long Securities aremore likely to increase in value when the volatility of European equities increases and more likely to decrease in value when thevolatility of European equities decreases.

Inverse Securities➤ The Inverse Securities are linked to the VSTOXX Short-Term Futures Inverse Investable Index (the “Inverse Investable Index”).

The Inverse Investable Index replicates the performance of a short position in a portfolio of VSTOXX futures designed toprovide a short exposure to constant-maturity one-month forward, one-month implied volatilities on the underlying EUROSTOXX 50® Index, taking into account the bid-ask spread in the roll procedure and the daily reset costs, which will reduce thevalue of the Inverse Securities. The Inverse Investable Index continuously rolls on a daily basis from a short position in the firstmonth VSTOXX futures contract to a short position in the second month contract. As a result of their short exposure toVSTOXX futures, the Inverse Securities are more likely to increase in value when the volatility of European equities decreasesand more likely to decrease in value when the volatility of European equities increases.

Risk Profile➤ Investing in the Securities requires an understanding of futures contracts denominated in a foreign currency, volatility of

international securities markets, the nature of the underlying securities market, currency markets, index construction andcalculation and the path dependence of investment returns. The Securities are intended to be daily trading tools for sophisticatedinvestors to manage daily trading risks as part of an overall diversified portfolio. They are designed to achieve their statedinvestment objectives on a daily basis, and their performance over longer periods of time can differ significantly from their stateddaily objectives. The Securities are riskier than securities that have intermediate or long-term investment objectives, and may not besuitable for investors who plan to hold them for a period other than one day. Investing in the Securities involves significant risksand the Securities may not be suitable as a long-term investment or a “buy and hold” strategy. The Securities should be purchasedonly by sophisticated investors who understand the potential consequences of investing in volatility indices with a limitedperformance history and of seeking long and inverse investment returns, the nature of the underlying securities market, currencymarkets, index construction and calculation and the path dependence of investment returns, and who are prepared to actively andfrequently monitor their investments in the Securities, even intraday. An investment in the Securities may result in a loss of some orall of your investment.

➤ The performance of the Securities is linked to the performance of the applicable underlying Index, less the Daily Investor Feeand taking into account the Daily Accrual. The Daily Accrual represents the rate of interest that could be earned or is payableon a notional capital reinvestment at the generic three-month USD adjusted German Bund Bill rate. The three-month USDadjusted German Bund Bill rate is negative as of the date of this Prospectus Supplement. As a result, to the extent that the three-month USD adjusted German Bund Bill rate is negative, the Daily Accrual will adversely affect the value of your Securities.

➤ The Securities do not guarantee any return of your initial investment. You may lose all or a substantial portion of yourprincipal if you invest in the Securities. The Securities will not pay any coupon or interest during their term. You will receive acash payment at maturity, acceleration or upon exercise by UBS of its call right, based on the performance of the applicableunderlying Index less the Daily Investor Fee, the creation fee and Daily Accrual, to the extent the Daily Accrual is a negativeamount, as described herein. You will receive a cash payment upon early redemption based on the performance of theapplicable underlying Index less the Daily Investor Fee, the Redemption Fee Amount and creation fee as well as the DailyAccrual, if and to the extent that the Daily Accrual is a negative amount, as described herein.

UBS Investment Bank (cover continued on next page)Prospectus Supplement dated February 13, 20181 For each series of Securities, $100,000,000 aggregate Stated Principal Amount is equal to 4,000,000 Securities.

➤ Any payment on the Securities at maturity, or upon acceleration, redemption or exercise by UBS of its Call Right, is subject tothe creditworthiness of UBS and is not guaranteed by any third party. In addition, the actual and perceived creditworthiness ofUBS will affect the market value, if any, of the Securities.

Although the Securities are listed on the BATS BZX Exchange (“BATS”), there is no guarantee that a liquid market will develop orbe maintained. See “Risk Factors” beginning on page S-27 for risks involved in investing in the Securities. No PRIIPs keyinformation document (KID) has been prepared as the Securities are not available to retail investors in the European EconomicArea.Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities orpassed upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to thecontrary is a criminal offense.The Securities are not deposit liabilities of UBS AG and are not insured by the Federal Deposit Insurance Corporation or anyother governmental agency in the United States, Switzerland or any other jurisdiction.General Considerations for the Securities➤ The Securities are senior Series B unsecured debt securities issued by UBS, maturing on May 3, 2047.➤ The initial issuance of the Securities will trade on May 2, 2017 and settle on May 5, 2017.➤ The Securities do not guarantee the return of any principal and do not pay any interest during their term.➤ The Closing Indicative Value for each series of Securities is recalculated each day to reflect the performance of the applicable

underlying Index.➤ For each series of Securities, a Daily Investor Fee calculated at the rate of 1.35% per annum of its Closing Indicative Value on

the previous calendar day is deducted each calendar day from its Closing Indicative Value on such calendar day.➤ You will receive a cash payment at maturity or upon exercise by UBS of its call right with respect to any series of Securities

based on its Closing Indicative Value on the applicable Valuation Date, as described herein.➤ You may exercise your right to early redemption with a minimum redemption amount of 50,000 Securities of any series if you

comply with the required procedures described herein. You will receive a cash payment upon early redemption based on theClosing Indicative Value of such series on the applicable Valuation Date, less the Redemption Fee Amount, as described herein.

➤ You will receive a cash payment following the acceleration upon occurrence of a Stop Loss Termination Event (as definedherein) with respect to any series of Securities based on its indicative value when such event occurs, as determined by UBSSecurities LLC, as Security Calculation Agent, in its sole discretion, acting in good faith and in a commercially reasonablemanner, as described herein.

➤ Each series of Securities is listed on BATS. The Long Securities and Inverse Securities have been approved for listing under thesymbols “EVIX” and “EXIV”, respectively. There can be no assurance that an active secondary market will develop.

➤ The intraday indicative value of each series of Securities will be published on each Exchange Business Day under the tickersymbols below:

Securities Bloomberg Yahoo! Finance

Long Securities EVIXIV <INDEX> ^EVIX-IVInverse Securities EXIVIV <INDEX> ^EXIV-IV

➤ The Securities are Series B senior unsecured debt securities issued by UBS AG (“UBS”). Any payment at maturity, uponacceleration, early redemption or call is subject to the creditworthiness of UBS and is not guaranteed by any third party. Inaddition, the actual or perceived creditworthiness of UBS will affect the market value, if any, of the Securities.

See “Risk Factors” beginning on page S-27 for additional risks related to an investment in the Securities.The principal terms of each series of the Securities are as follows:Issuer: UBS AG (London Branch)Series: Medium-Term Notes, Series B. Unlike UBS AG’s exchange-traded notes issued prior to June 14,

2015, which are part of a series of debt securities entitled “Medium-Term Notes, Series A,”having UBS Switzerland AG as a co-obligor, the Securities are part of a series of debt securitiesentitled “Medium Term Notes, Series B,” which do not benefit from the co-obligation of UBSSwitzerland AG.

Initial Trade Date: May 2, 2017Initial Settlement Date: May 5, 2017Term: Approximately 30 years, subject to your right to require UBS to redeem your Securities on any

Redemption Date and subject to the UBS Call Right and potential acceleration upon occurrenceof a Stop Loss Termination Event, each as described below.

Maturity Date: May 3, 2047, subject to adjustmentNo Interest Payments: We will not pay you interest during the term of the Securities.Stated Principal Amount: $25.00 per Security

Exchange Business Day: Any day on which the primary exchange for trading in the applicable series of Securities is openfor trading in the Securities.

Index Business Day: Any day on which the Primary Exchange and each Related Exchange are scheduled to be openfor trading.

Trading Day: Any day (i) on which the value of the applicable underlying Index is published by Bloomberg orThomson Reuters, (ii) on which trading is generally conducted on the Primary Exchanges onwhich the Index Contracts are traded, and (iii) which is an Exchange Business Day, in each caseas determined by the Security Calculation Agents in their sole discretion. Any Trading Day is alsoan Exchange Business Day and an Index Business Day.

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Underlying Indices: The return on each series of the Securities is linked to the performance of a different underlyingIndex that is designed to provide exposure to either a long or inverse position in first and secondmonth VSTOXX futures contracts. The Long Investable Index measures the return from a dailyrolling long position and the Inverse Investable Index measures the return from a daily rollingshort position in the first and second month futures contracts on the VSTOXX.The VSTOXX is a benchmark index designed to measure the 30-day implied volatility inEuropean stocks and is calculated based on the prices of certain put and call options on theEURO STOXX 50® Index. Assuming all other relevant factors remain constant, as the prices ofoptions on the EURO STOXX 50® Index generally increase, the VSTOXX, which indirectlymeasures implied volatility by measuring changes in these option prices, typically increases. TheVSTOXX has historically had a negative correlation to the EURO STOXX 50® Index.Futures on the VSTOXX (“VSTOXX futures contracts” or “VSTOXX futures”) were developedby Goldman Sachs and Deutsche Börse and first launched for trading in 2005 on the EurexFrankfurt AG Futures Exchange (referred to as “Eurex Deutschland”) and Eurex Zürich AGFutures Exchange (referred to as “Eurex Zürich”) (collectively, the “Eurex Exchange” or“Eurex”), which are located in Germany and Switzerland. VSTOXX futures have expirationsranging from the first month consecutively out to the twenty-fourth month and use a contractmultiplier of 100. Futures on the VSTOXX are denominated in euros and allow investors theability to invest in forward market volatility based on their view of the future direction ormovement of the VSTOXX. Investors that believe the implied volatility of the EURO STOXX50® (and thus the VSTOXX) will increase may buy VSTOXX futures. Conversely, investors thatbelieve that the implied volatility of the EURO STOXX 50® (and thus the VSTOXX) will declinemay sell VSTOXX futures. Futures, unlike securities or indices, have an expiration date.Accordingly, to maintain exposure to a futures position an investor must roll it from one monthto the next by liquidating expiring futures contracts and entering into a new futures contractsexpiring in later months. These transactions create the potential for positive or negative returnsthat are separate from outright price movements in the underlying index. As a result, the returnon a position in VSTOXX futures may vary significantly from the percentage changes of theVSTOXX itself. Typically, though not in all market conditions, this “roll cost” significantlydecreases the return for investors who are long VSTOXX futures while investors who are shortVSTOXX futures may benefit from a “roll yield.” Since each Index is based on the performanceof either a long or short position in a portfolio of VSTOXX futures designed to reflect a positionin constant-maturity one-month forward, one-month implied volatilities on the EURO STOXX50® Index, its performance may also be reduced by a roll cost or benefit from a roll yield andwill be reduced by the bid-ask spreads. Any investment in the Inverse Investable Index mayadditionally be reduced by the reset costs. For a detailed description of the Indices, see “TheIndices” beginning on page S-52.

Index Target Ratio/Rebalancings:

The Index underlying each series of Securities targets either a long or short exposure to VSTOXXfutures, rolling first month futures into second month futures on a daily basis to maintain aconstant weighted average maturity of one month. For a detailed description of the Indices, see“The Indices” beginning on page S-52.

Daily Investor Fee: Each series of Securities is subject to a “Daily Investor Fee.” On the Initial Trade Date, the DailyInvestor Fee is equal to zero. On each subsequent calendar day, the Daily Investor Fee for eachseries of Securities equals the product of (i) 1.35% divided by 365 times (ii) the ClosingIndicative Value for such series of Securities on the previous calendar day. For the purpose ofcalculating the Daily Investor Fee, if such previous calendar day was not an Exchange BusinessDay, the Closing Indicative Value will be calculated based on the Closing Indicative Value on theimmediately preceding Exchange Business Day.

Cash Settlement Amount atMaturity:

On the Maturity Date, you will receive a cash payment per Security of each series that you hold(the “Cash Settlement Amount at Maturity”) equal to its Closing Indicative Value as of the FinalValuation Date.

Closing Indicative Value: For each series of Securities, on the Initial Trade Date, the Closing Indicative Value is equal to$25.00 per Security. For each subsequent calendar day, the Closing Indicative Value per Securitywill equal:(its Closing Indicative Value on the previous calendar day × Daily Index Performance for theapplicable underlying Index) – Daily Investor Fee for such series of Securities for such calendar day.You will lose some or all of your investment if the applicable underlying Index level declines ordoes not increase by an amount sufficient to offset the cumulative effect of the Daily Investor Fee.

Daily Index Performance: For each Index, the “Daily Index Performance” on any Exchange Business Day will equal (i)(a)the Index Closing Level for the applicable underlying Index on such Exchange Business Day,divided by (b) the Index Closing Level for the applicable underlying Index on the immediatelypreceding Exchange Business Day, plus (ii) the Daily Accrual. The Daily Index Performance willequal one on any calendar day that is not an Exchange Business Day but which is an IndexBusiness Day. The Daily Index Performance will equal one on any calendar day that is neither anIndex Business Day nor an Exchange Business Day.For each Index, if the applicable underlying Index does not publish an Index Closing Level onany Exchange Business Day, the Index Closing Level of such applicable underlying Index withrespect to such Exchange Business Day will be the most recently published Index Closing Levelfor such Index, subject to adjustment in the case of a Market Disruption Event.

Index Closing Level: The closing level of the applicable underlying Index as reported on Bloomberg L.P. (or anysuccessor service).

Early Redemption: Subject to your compliance with the procedures described under “Specific Terms of theSecurities —Early Redemption at the Option of the Holders” and “Specific Terms of theSecurities —Redemption Procedures” beginning on pages S-77 and S-78, respectively, you may

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elect to require UBS to redeem your Securities of any series, in whole or in part, prior to theMaturity Date on any Trading Day commencing on May 9, 2017 through and including the finalRedemption Date, subject to a minimum redemption amount of at least 50,000 Securities of suchseries. UBS reserves the right from time to time to waive this minimum redemption amount in itssole discretion on a case-by-case basis. You should not assume you will be entitled to the benefitof any such waiver. If you redeem your Securities, you will receive a cash payment equal to theRedemption Amount, which will be determined on the applicable Redemption Valuation Dateand paid on the applicable Redemption Date. The first Redemption Date was May 9, 2017 andthe final Redemption Date will be April 26, 2047.

Redemption Amount: Upon early redemption of the Securities of any series, you will receive per Security a cashpayment on the relevant Redemption Date equal to its Closing Indicative Value as of theapplicable Valuation Date, minus the Redemption Fee Amount. If the amount so calculated isless than or equal to zero, the payment upon your exercise of redemption will be zero. We referto this cash payment as the “Redemption Amount.”

Redemption Fee Amount: As of any Valuation Date, an amount per Security of any series equal to the product of (i) 0.15%and (ii) its Closing Indicative Value as of such Valuation Date. UBS reserves the right from timeto time to reduce or waive the Redemption Fee Amount in its sole discretion on a case-by-casebasis. You should not assume you will be entitled to the benefit of any such waiver.

Redemption Procedures: To redeem your Securities prior to the Maturity Date, you must instruct your broker to deliver anotice of redemption to Janus Distributors LLC (“Janus Distributors”) by email no later than4:00 p.m. (New York City time) on the Trading Day on which you elect to exercise yourredemption right and you and your broker must follow the procedures described herein. If youfail to comply with these procedures, your notice will be deemed ineffective. UBS reserves theright from time to time to reduce or waive, in its sole discretion, any of the requirementscontained in the redemption procedures described under “Specific Terms of theSecurities — Early Redemption at the Option of the Holders” and “Specific Terms of theSecurities — Redemption Procedures” beginning on pages S-77 and S-78, respectively. UBS alsoreserves the right from time to time to accelerate, in its sole discretion on a case-by-case basis, theRedemption Valuation Date to the date on which the notice of redemption is received by JanusDistributors rather than the following Trading Day. You should not assume you will be entitledto the benefit of any such waiver or acceleration.

UBS Call Right: On any Trading Day on or after May 9, 2018 through and including the Maturity Date (anysuch date, the “Call Settlement Date”), UBS may at its option redeem all, but not less than all,issued and outstanding Securities of any series. To exercise this option (the “Call Right”), UBSmust provide notice (which may be provided via press release) to the holders of such series of theSecurities not less than ten calendar days prior to the Call Settlement Date. Upon earlyredemption in the event UBS exercises this right, you will receive on the Call Settlement Date acash payment (the “Call Settlement Amount”) equal to the Closing Indicative Value for eachapplicable Security as of the applicable Valuation Date. If the amount so calculated is less than orequal to zero, the payment upon exercise of the Call Right will be zero.

Acceleration Upon Occurrenceof a Stop Loss TerminationEvent; Stop Loss RedemptionValue:

The “Stop Loss Termination Event” provisions of the Inverse Securities provide for the early,automatic termination of the Inverse Securities in certain circumstances by way of a mandatoryredemption by UBS. If the stop loss termination provision is triggered with respect to the InverseSecurities, those Securities will be mandatorily redeemed and the holders will receive the StopLoss Redemption Value as described herein, which payment may be equal to zero. Holders ofInverse Securities will not benefit from any future exposure to the Inverse Investable Index after aStop Loss Termination Event.

If, at any time, the intraday indicative value of the Inverse Securities on any Trading Day,calculated as described in “Valuation of the Indices and the Securities — Intraday SecurityValues,” is equal to or less than 25.0% of the Closing Indicative Value of the Inverse Securities atthe end of the prior Exchange Business Day (such event with respect to the Inverse Securities, a“Stop Loss Termination Event” and the day on which such event occurs, a “Stop LossTermination Date”), all issued and outstanding Inverse Securities will be automaticallyaccelerated and mandatorily redeemed by UBS for a cash payment equal to the Stop LossRedemption Value.

The “Stop Loss Redemption Value” will be determined by UBS Securities LLC as SecurityCalculation Agent in its sole discretion, acting in good faith and in a commercially reasonablemanner, using the latest publicly available quotations for the intraday indicative value of theInverse Investable Index that are available as soon as reasonably practicable after the time thatan investor could reasonably be expected to unwind an investment in the first and second monthVSTOXX futures hypothetically required to replicate the performance of the Inverse InvestableIndex following the occurrence of a Stop Loss Termination Event, based on such factors asliquidity, market availability and practical time constraints. UBS Securities LLC, as SecurityCalculation Agent, will calculate, in its sole discretion, the Stop Loss Redemption Value of theInverse Securities as:

(Closing Indicative Value on the previous calendar day × Daily Intraday Index Performance forthe Inverse Investable Index as soon as reasonably practicable following the Stop LossTermination Event) – Daily Investor Fee for the Inverse Securities on the Stop Loss TerminationDate.

The Stop Loss Redemption Value (a) is not expected to be greater than 25.0% of the ClosingIndicative Value of the Inverse Securities at the end of the prior Trading Day and (b) shall not beless than $0 per Security.

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If a Stop Loss Termination Event occurs for the Inverse Securities, you will receive on the StopLoss Redemption Date only the Stop Loss Redemption Value in respect of your investment insuch Securities. If the Stop Loss Redemption Value so calculated is equal to or less than zero, thepayment upon acceleration will be zero. The “Stop Loss Redemption Date” will be the fifthBusiness Day following the Stop Loss Termination Date; provided that if the calculation of theStop Loss Redemption Value is postponed as a result of a market disruption event, the Stop LossRedemption Date will be the fifth business day after the Stop Loss Redemption Value iscalculated. For a discussion of the risks related to the occurrence of a Stop Loss TerminationEvent, see “Risk Factors — The Securities are highly sensitive to large changes in the marketprice of the underlying futures contracts and may be automatically accelerated and mandatorilyredeemed, resulting in a loss of all or a substantial portion of your investment.”

The Long Securities do not have a Stop Loss Termination Event mechanism and therefore cannotbe terminated as a result of a Stop Loss Termination Event.

Valuation Dates: The applicable “Valuation Date” means (i) with respect to an early redemption, the thirdTrading Day prior to the related Redemption Date, which day is also the first Trading Dayfollowing the date that a Redemption Notice and Redemption Confirmation are delivered incompliance with the redemption procedures (or, in the sole discretion of UBS, the same date thatthe Redemption Notice and Redemption Confirmation are delivered in compliance with theredemption procedures) (a “Redemption Valuation Date”), (ii) with respect to UBS’s exercise ofits Call Right, the third Trading Day prior to the Call Settlement Date, (iii) with respect to theMaturity Date, the Final Valuation Date and (iv) with respect to the occurrence of a Stop LossTermination Event, the Stop Loss Termination Date. The “Final Valuation Date” will be theTrading Day that falls on April 30, 2047. If any of the applicable Valuation Dates, including theFinal Valuation Date, is not a Trading Day, then such Valuation Date or Final Valuation Datewill be the next succeeding Trading Day, but in no event more than three Trading Days after theoriginally scheduled Valuation Date. See “Specific Terms of the Securities — Market DisruptionEvent” on page S-81.

Daily Accrual: The Daily Accrual represents the rate of interest that could be earned or is payable on a notionalcapital reinvestment at the generic three-month USD adjusted German Bund Bill rate as reportedon Bloomberg under the ticker: SOL3MBRU (or any successor ticker on Bloomberg or anysuccessor service). The Daily Accrual on any Exchange Business Day will equal:

Where Bbillst-1 is the generic three-month USD adjusted German Bund Bill rate reported onBloomberg (or any successor service) on the prior Exchange Business Day and d is the number ofcalendar days from and including the immediately prior Exchange Business Day to but excludingthe date of determination. The Daily Accrual is deemed to equal zero on any day that is not anExchange Business Day.

As of the date of this Prospectus Supplement, the German Bund Bill rate is negative and thereforethe Daily Accrual equals a negative amount. At any time the Daily Accrual equals a negativeamount, the Daily Index Performance will be adversely affected by the Daily Accrual and theDaily Accrual will therefore adversely affect the value of your Securities.

Index Calculation Agent: STOXX

Security Calculation Agents: UBS Securities LLC and Janus Index and Calculation Services LLC (“Janus Index”). See “SpecificTerms of the Securities – Security Calculation Agents” on page S-80 for more information.

Listing: Each series of Securities is listed on BATS. The Long Securities and Inverse Securities have beenapproved for listing under the symbols “EVIX” and “EXIV”, respectively. There can be noassurance that an active secondary market will develop; if it does, we expect that investors willpurchase and sell the Securities primarily in this secondary market.

Indicative Value: The “indicative value” of each series of Securities is calculated at any time on any ExchangeBusiness Day in accordance with the following equation:

(its Closing Indicative Value on the previous calendar day × Daily Intraday Index Performancefor the applicable underlying Index) – Daily Investor Fee for such series of Securities for suchcalendar day

Because the intraday indicative value of each series of Securities is calculated based on theperformance of the applicable underlying Index, and because the European markets on which theunderlying Indices trade will be open at different times from BATS, the market on which eachseries of Securities trade, the intraday indicative value of each series of Securities will not changeafter VSTOXX futures stop trading for the day until the following trading day. As a result, afterthe time the European markets close until the following trading day, the intraday indicative valuefor each series of Securities that is published for the rest of the U.S. trading day will not necessarilyreflect what the indicative value of the Securities would have been if the futures contracts thatcomprise the underlying Indices were trading and updated Index values were available and used inthe calculation. See “Risk Factors — Although each Index trades on Eurex, the Securities willtrade only during regular trading hours on BATS” beginning on page S-36.

The “Daily Intraday Index Performance” at any time is equal to (i)(a) the level of the applicableunderlying Index at such time divided by (b) the Index Closing Level for the applicable underlyingIndex on the immediately preceding Exchange Business Day plus (ii) the Daily Accrual. The DailyIntraday Index Performance will equal one on any calendar day that is not an Exchange Business

d 91 1 1- Tbills t-1 x 91 360 – 1 Tbills t-1

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Day but which is an Index Business Day. The Daily Intraday Index Performance will equal one onany calendar day that is neither an Index Business Day nor an Exchange Business Day.

For each Index, if the applicable underlying Index does not publish an Index Closing Level on anyExchange Business Day, the Index Closing Level of such applicable underlying Index with respectto such Exchange Business Day will be the most recently published Index Closing Level for suchIndex, subject to adjustment in the case of a Market Disruption Event.

Split or Reverse Split of theSecurities:

Janus Index may, at any time in its sole discretion, instruct us to initiate a split or reverse split ofany series of Securities. If Janus Index instructs us to initiate a split or reverse split, as applicable,such date shall be deemed to be the “announcement date,” and we will issue a notice (which maybe provided by press release) to holders of such series of Securities and a press releaseannouncing the split or reverse split, specifying the effective date of the split or reverse split. Therecord date for any split or reverse split will be the fifteenth calendar day after the announcementdate, provided that if such calendar day is not a Business Day, the record date for such split orreverse split will be the first Business Day following such calendar day. The effective date of anysplit or reverse split will be the next Business Day after the record date. The Securities of anyseries shall not be split or reverse split more than four times per calendar year in the aggregateper series of Securities. In the event of a split or reverse split, the Closing Indicative Value of suchseries of Securities will be adjusted accordingly. See “Valuation of the Indices and theSecurities — Split or Reverse Split of the Securities” beginning on page S-72.

Intraday Indicative ValueSymbols of the Securities:

The intraday indicative value of the Securities will be published on each Exchange Business Dayunder the ticker symbols:

Securities Bloomberg Yahoo! Finance

Long Securities EVIXIV <INDEX> EVIX-IV

Inverse Securities EXIVIV <INDEX> EXIV-IV

CUSIP and ISIN Numbers: Securities CUSIP ISIN

Long Securities 90274E 828 US90274E8286

Inverse Securities 90274E 810 US90274E8104

On the Initial Trade Date, we sold $25,000,000 aggregate Stated Principal Amount of each series of the Securities to UBS SecuritiesLLC at 100% of their stated Principal Amount. After the Initial Trade Date, from time to time we may sell a portion of each seriesof the Securities, and issue and sell additional Securities of each series at market prices prevailing at the time of sale, at prices relatedto market prices or at negotiated prices. We expect to receive proceeds equal to 100% of the price at which the Securities of eachseries are sold to the public, less any commissions paid to UBS Securities LLC. The Securities of each series may be sold at a pricethat is higher or lower than the Stated Principal Amount. UBS Securities LLC may charge normal commissions in connection withany purchase or sale of the Securities of each series and may receive a portion of the Daily Investor Fee for any Securities it sells.UBS Securities LLC may charge purchasers a creation fee, which may vary over time at UBS’s discretion. In addition, JanusDistributors will receive a fee in consideration for its role in marketing and placing each series of Securities under the“VelocitySharesTM” brand. Please see “Supplemental Plan of Distribution” on page S-94 for more information.

We may issue and sell additional Securities of any series at any time, but we are under no obligation to do so, and we may limit orrestrict such sales, and we may stop and subsequently resume selling additional Securities of any series, at any time for any reason.In addition, we may condition our acceptance of a market maker’s, other market participant’s or investor’s offer to purchaseSecurities of any series on its agreeing to purchase certain exchange traded notes issued by UBS or enter into certain transactionsconsistent with our hedging strategy, including but not limited to swaps, OTC derivatives, listed options, or securities. Any of theseactions could materially and adversely affect the trading price and liquidity of such series of Securities in the secondary market.Alternatively, a suspension of sales of any series of the Securities could lead to insufficient supply, causing the market price of suchseries of Securities to increase. Such an increase could represent a premium over the intraday indicative value of such series ofSecurities. If, following a suspension of sales, we were to resume sales of such series of Securities, it could result in the reduction orelimination of any premium in the market price over the intraday indicative value.

Additionally, the Securities are linked to euro denominated VSTOXX futures contracts which trade on European markets. For aperiod of time each Trading Day, the Securities will trade during hours when the VSTOXX futures contracts are not trading, andduring such period of time, the intraday indicative value of each series of Securities is likely to differ from the value of the Securitiesthat would be determined if the futures contracts that comprise the underlying Indices were trading and updated Index values wereavailable and used in the calculation.

You should, before trading in the secondary market, compare the intraday indicative value of such series of Securities with the then-prevailing trading price of such series and be aware that paying a premium purchase price over the intraday indicative value of suchseries of Securities could lead to significant losses in the event you sell your Securities at a time when such premium is no longerpresent in the market or such series of Securities is called, accelerated or matures.

We may use this prospectus supplement and the accompanying prospectus in the initial sale of the Securities of each series. Inaddition, UBS Securities LLC or another of our affiliates may use this prospectus supplement and the accompanying prospectus inmarket-making transactions in any Securities of any series after their initial sale. Unless we or our agent informs you otherwise inthe confirmation of sale or in a notice delivered at the same time as the confirmation of sale, this prospectus supplement and theaccompanying prospectus are being used in a market-making transaction. For more information about the plan of distribution andpossible market-making activities, see “Plan of Distribution” in the accompanying prospectus.

The Securities are not deposit liabilities of UBS AG and are not insured by the Federal Deposit Insurance Corporation (“FDIC”).

† This Amendment No. 1 to the prospectus supplement dated May 2, 2017 (as amended, the “prospectus supplement”) is beingfiled for the purposes of updating (i) “Simulated Historical Performance and Hypothetical Examples”, (ii) “Risk Factors”,(iii) “The Indices”, (iv) “Material U.S. Federal Income Tax Consequences” and (v) “Benefit Plan Investor Considerations”.Otherwise, all terms of the Securities remain as stated in the prospectus supplement.

The Securities being offered as described in this prospectus supplement and the accompanying prospectusconstitute one offering in a series of offerings of exchange-traded notes. We are offering and maycontinue to offer from time to time exchange-traded notes linked to different underlying indices and withthe same or different terms and conditions, relative to those set forth in this prospectus supplement. Youshould be sure to refer to the prospectus supplement for the particular offering of exchange-traded notesin which you are considering an investment.

This prospectus supplement contains the specific financial and other terms that apply to the securities beingoffered herein. Terms that apply generally to all our Medium-Term Notes, Series B, are described under“Description of Debt Securities We May Offer” in the accompanying prospectus. The terms described here(i.e., in this prospectus supplement) modify or supplement those described in the accompanying prospectusand, if the terms described here are inconsistent with those described there, the terms described here arecontrolling. The contents of any website referred to in this prospectus supplement are not incorporated byreference in this prospectus supplement or the accompanying prospectus.

You may access the accompanying prospectus dated April 29, 2016 at:http://www.sec.gov/Archives/edgar/data/1114446/000119312516569341/d161008d424b3.htm

PROHIBITION OF SALES TO EEA RETAIL INVESTORS—The Securities are not intended to beoffered, sold or otherwise made available to and should not be offered, sold or otherwise made availableto any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investormeans a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) ofDirective 2014/65/EU (as amended, “MiFID II”); (ii) a customer within the meaning of Directive2002/92/EC (as amended, the “Insurance Mediation Directive”), where that customer would not qualifyas a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investoras defined in Directive 2003/71/EC (as amended, the “Prospectus Directive”). Consequently no keyinformation document required by Regulation (EU) No 1286/2014 (the “PRIIPs Regulation”) foroffering or selling the Securities or otherwise making them available to retail investors in the EEA hasbeen prepared and therefore offering or selling the Securities or otherwise making them available to anyretail investor in the EEA may be unlawful under the PRIIPs Regulation.

We are responsible for the information incorporated by reference or provided in this prospectussupplement or the accompanying prospectus. We have not authorized anyone to provide you withdifferent information. We are not making an offer of these Securities in any state where the offer is notpermitted. You should not assume that the information in this prospectus supplement is accurate as ofany date other than the date on the front of the document.

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TABLE OF CONTENTS

Prospectus Supplement

Prospectus Supplement Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1Simulated Historical Performance and Hypothetical Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27The Indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52Valuation of the Indices and the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-71Specific Terms of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-74Use of Proceeds and Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-87Material U.S. Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-88Benefit Plan Investor Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-92Supplemental Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-94

Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-95Notice of Early Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1Broker’s Confirmation of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

Prospectus

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Cautionary Note Regarding Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Incorporation of Information About UBS AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Where You Can Find More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Presentation of Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Limitations on Enforcement of U.S. Laws Against UBS AG, Its Management and Others . . . . . . . . . . . . . . . . . . 7UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Swiss Regulatory Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Description of Debt Securities We May Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Description of Warrants We May Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Legal Ownership and Book-Entry Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Considerations Relating to Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency . . 56U.S. Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Tax Considerations Under the Laws of Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Benefit Plan Investor Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75Validity of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

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Prospectus Supplement SummaryThe following is a summary of terms of the Securities, as well as a discussion of factors you shouldconsider before purchasing any of the Securities. The information in this section is qualified in its entiretyby the more detailed explanations set forth elsewhere in this prospectus supplement and in theaccompanying prospectus. Please note that references to “UBS,” “we,” “our” and “us” refer only toUBS AG and not to its consolidated subsidiaries.

We may, without your consent, create and issue additional securities having the same terms andconditions as any series of Securities. We may consolidate the additional securities to form a single classwith the outstanding Securities of such series. In addition, we may suspend, cease, or resume sales of anyor all series of the Securities for any reason at our discretion, or we may condition our acceptance of amarket maker’s, other market participant’s or investor’s offer to purchase Securities of any series on itsagreeing to purchase certain exchange traded notes issued by UBS or enter into certain transactionsconsistent with our hedging strategy, including but not limited to swaps, OTC derivatives, listed options,or securities, any of which could materially and adversely affect the trading price and liquidity of suchSecurities in the secondary market. For more information about the plan of distribution and possiblemarket-making activities, see “Plan of Distribution” in the accompanying prospectus. We mayconsolidate the additional securities to form a single class with the outstanding Securities of a series. Inaddition, we may suspend sales of any series of Securities at any time for any reason, which could affectthe liquidity of the market for the Securities.

This section summarizes the following aspects of the Securities:

- What are the Securities and how do they work?

- How do you redeem your Securities?

- What are some of the risks of the Securities?

- Is this the right investment for you?

- Who calculates and publishes the Indices?

- What are the tax consequences of owning the Securities?

The Securities are intended only for sophisticated investors who understand futures and options markets,volatility, currency markets and path dependence of investment returns.

Investing in the Securities requires an understanding of euro denominated futures and options contracts,volatility of international securities markets, currency markets, the nature of the underlying securitiesmarket, index construction and calculation and path dependence of investment returns. The Securitiesare intended to be daily trading tools for sophisticated investors to manage daily trading risks as part ofan overall diversified portfolio and are not intended as a buy and hold investment. The Securities shouldbe purchased only by sophisticated investors who are prepared to actively and frequently monitor theirinvestments in the Securities, even intraday. Although the Securities are listed on BATS, there is noguarantee that a liquid market will develop or be maintained. In addition, the Inverse Securities may beautomatically accelerated and mandatorily redeemed prior to the Maturity Date in the event of a StopLoss Termination Event or upon exercise of UBS’s Call Right.

Unlike ordinary debt securities, the Securities do not pay interest during their term and do not guaranteeany return of principal at maturity or upon call, early redemption or acceleration. You may lose all or asubstantial portion of your initial investment. In addition, you will not receive any coupon payments onthe Securities.

See “Risk Factors” beginning on page S-27.

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What are the Securities and how do they work?

The Securities are senior unsecured medium-term notes issued by UBS with a return linked to changes inthe level of the Long Investable Index or the Inverse Investable Index, as applicable. The Daily InvestorFee (as well as the Redemption Fee Amount and creation fee, if applicable) associated with the Securitieswill reduce the amount payable at maturity or upon early redemption, acceleration or exercise of our callright. Additionally, as of the date of this Prospectus Supplement, the Daily Accrual equals a negativeamount and, as a result, to the extent that the Daily Accrual is negative at any given time it will adverselyaffect the value of your Securities. Each Index replicates the performance of a long or short position in aportfolio of VSTOXX futures designed to provide exposure to constant-maturity one-month forward,one-month implied volatilities on the underlying EURO STOXX 50® Index, which is denominated inEuros, (taking into account the bid-ask spread in the roll procedure, which will reduce the value of theSecurities) and continuously rolls on a daily basis from its long or short position, as applicable, in thefirst month VSTOXX Futures contract to that same position in the second month contract.

For a detailed description of the composition of each Index, see “— The Underlying Indices — The LongInvestable Index” and “— The Underlying Indices — The Inverse Investable Index” below.

The Long Investable Index measures the return from a daily rolling long position in the first and secondmonth futures contracts on the VSTOXX, while the Inverse Investable Index measures the return from adaily rolling short position in such first and second month futures contracts, each taking into account theroll cost or roll yield accruing to that position. Assuming a constant futures curve, an investormaintaining a desired long exposure in a futures position by replacing contracts expiring in one monthwith contracts expiring in the next month will incur a roll cost when purchasing the replacementcontracts at a higher price-point along the futures curve and will benefit from a roll yield whenpurchasing the replacement contracts at a lower price-point along the futures curve. Also, assuming aconstant futures curve, the value of the VSTOXX futures contracts held by an investor maintaining along exposure in a futures position will typically decline as they approach the applicable delivery datebecause prices of VSTOXX futures contracts are more commonly higher in distant delivery months thanin nearer delivery months (i.e., because the market is more commonly in “contango”). Conversely,assuming a constant futures curve, an investor maintaining a desired short exposure in a futures positionwill benefit from a roll yield when selling replacement contracts at a higher price-point along the futurescurve and incur a roll cost when selling replacement contracts at a lower price-point along the futurescurve. These implied roll costs or roll yields result from the shape of the futures curve and, while theymay affect performance, are not fees charged by UBS or a third party. In addition to any hypotheticaltrading costs related to paying the bid-offer spreads applicable when purchasing or selling near monthfutures contracts and distant month futures contracts, these implied roll costs may adversely affect theperformance of the applicable Security.

Assuming a constant futures curve in a contango market, an investor maintaining a long futures positionwill face an additional cost because the value of the VSTOXX futures contracts held by such investor willdecline as they approach the applicable delivery date. Therefore the long position is likely to decline invalue unless volatility increases sharply. On the other hand, an investor maintaining a short position inVSTOXX futures contracts in a contango market will typically benefit from a roll yield, and thereforethe short position is likely to increase in value unless volatility increases sharply. These relationships maybe reversed when prices of VSTOXX futures contracts in distant delivery months are lower than innearer delivery months (i.e., when the market is in “backwardation”). As described in “The Indices —Index Construction”, both the Long Investable Index and Inverse Investable Index take the roll cost orroll yield, as applicable, into account in determining the Index Closing Level for the applicable Index.The roll cost or roll yield, as applicable, is a variable, uncapped amount which will be determined by thesale or purchase prices and the target weights of the first and second month VSTOXX futures contractsbought and sold.

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In addition, as described below in “— The Underlying Indices — The Inverse Investable Index”, thevalue of the Inverse Investable Index will be affected by the “reset costs” associated with maintaining ahypothetical 1x short position in VSTOXX futures contracts. For a discussion of the Indices, see “TheIndices — The Underlying Indices,” and for a discussion of the futures markets, see “The Indices —Futures Markets.”

A Daily Investor Fee for each series of Securities calculated at the rate of 1.35% per annum of its ClosingIndicative Value on the previous calendar day is deducted each calendar day. Each series of Securitiesmay provide a cash payment at maturity or upon call, early redemption or acceleration if the applicableunderlying Index level at maturity or upon call, acceleration or early redemption, as applicable, hasappreciated sufficiently to offset the negative effect of the Daily Investor Fee and, if negative, the DailyAccrual.

In order to hedge its exposure, UBS may buy or sell an appropriate number of first and second monthVSTOXX futures on any calendar day so that its position in VSTOXX futures matches the notionalposition held by the applicable underlying Index.

The reduced liquidity of VSTOXX futures contracts will magnify any hedging activity by us or ouraffiliates and may impact our ability to effectively hedge. Although the rolling of first and second monthfutures contracts typically occurs at the close of business, we or our affiliates may hedge our position, inwhole or in part, during trading hours as well as during the trading day preceding the close of business.This hedging activity may adversely affect the price of the applicable underlying Index and, thereby, theprice of your Securities. The effect of any hedging activity by us or our affiliates will be magnified by thereduced liquidity profile of the VSTOXX futures contracts. Due to the reduced liquidity of VSTOXXfutures contracts, this hedging by us may cause you to lose some or all of your investment in theapplicable series of Securities.

As explained in “Risk Factors” beginning on page S-27, given the effects of the roll costs or roll yields, asapplicable, associated with the VSTOXX futures contracts underlying the Indices and the effect of theDaily Investor Fee, there is a significant possibility that the amount payable on the Securities at maturityor upon call, early redemption or acceleration will be less than the amount of your initial investment inthe Securities, and that you will lose part or all of your initial investment if you hold the Securities for along period of time.

The Underlying Indices

The return on each series of the Securities is linked to the performance of a different underlying Indexthat is designed to provide exposure to either a long or short position in first and second monthVSTOXX futures contracts. The long position is a long exposure to the Long Investable Index, and theshort position is a long exposure to the Inverse Investable Index. Each Index replicates the performanceof a long or short position in a portfolio of VSTOXX futures designed to provide exposure to constant-maturity one-month forward, one-month implied volatilities on the underlying EURO STOXX 50®

Index (taking into account the bid-ask spread in the roll procedure) and continuously rolls on a dailybasis from its long or short position, as applicable, in the first month VSTOXX Futures contract to thatsame position in the second month contract.

Both the Long and Short Investable Indices take into account the bid-offer spread for first and secondmonth VSTOXX futures contracts, which reduces the level of the applicable underlying Index andtherefore the Closing Indicative Value of the applicable series of Securities. VSTOXX futures contractstrade on an exchange but are less liquid compared to other financial futures contracts, such as the CBOEVIX futures contracts and the Eurex EuroStoxx index contracts and therefore may have a wider bid-offerspread. As a result, an investment in the Indices may incur significant additional bid-offer costs relative

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to an investment in an index based on more liquid futures contracts as a result of a wider bid-offerspread. This may also potentially increase the volatility of VSTOXX contracts, relative to other types offuture contracts.

All hypothetical purchases and sales of first and second month VSTOXX futures contracts will occur atthe bid-offer prices and will incur a cost as a result of the bid-offer spread.

The Long Investable Index

The Long Investable Index replicates the performance of a long position in a portfolio of VSTOXXfutures. As volatility increases, the Long Investable Index is more likely to increase in value, and asvolatility decreases, the Long Investable Index is more likely to decrease in value. However, assuming astable futures curve, the Long Investable Index will also suffer from implied roll costs in a contangomarket, which results from the value of the futures contracts declining as the applicable delivery dateapproaches, potentially offsetting any increase in volatility. As a result, the Long Investable Index coulddecline in value even as volatility increases. Conversely, the Long Investable Index will benefit fromimplied roll yields when the market is in backwardation, which will cause its value to increase,potentially offsetting any decrease in volatility. As a result, the Long Investable Index could decrease invalue even as volatility increases.

The Long Securities should only be purchased by sophisticated investors who understand the risks ofinvesting in volatility, the nature of the underlying securities market, currency markets, euro denominatedfutures contracts the construction and calculation of the Long Investable Index, and the path dependence ofinvestment returns, and who will actively monitor their investment, including intraday.

The Inverse Investable Index

The Inverse Investable Index replicates the performance of a short position in a portfolio of VSTOXXfutures designed to provide exposure to constant-maturity one-month forward, one-month impliedvolatilities on the underlying EURO STOXX 50® Index, taking into account the bid-ask spread in theroll procedure and daily reset, which will reduce the value of the Inverse Securities. The indexcontinuously rolls on a daily basis from a short position in the first month VSTOXX Futures contract toa short position in the second month contract.

As volatility increases, the Inverse Investable Index is more likely to decrease in value, and as volatilitydecreases, the Inverse Investable Index is more likely to increase in value. However, assuming a stablefutures curve, the Inverse Investable Index will also benefit from implied roll yields in a contango market,which results from the value of the futures contracts increasing as the applicable delivery dateapproaches, potentially offsetting any increase in volatility. As a result, the Inverse Investable Index couldincrease in value even as volatility increases. Conversely, the Inverse Investable Index will suffer fromimplied roll costs when the market is in backwardation, which will cause its value to decrease, potentiallyoffsetting any decrease in volatility. As a result, the Inverse Investable Index could decrease in value evenas volatility decreases.

Additionally, the value of the Inverse Investable Index will be reduced daily by what we refer to as “resetcosts”, which are the costs incurred by paying the bid-offer spreads in connection with the hypotheticalshort-selling of VSTOXX futures contracts in order to maintain a 1x short position. During an IndexBusiness Day, the number of first and second month VSTOXX futures contracts to which the InverseInvestable Index is exposed will not change intraday as the prices of the VSTOXX futures contractschange, which means the actual leverage amount of the Inverse Investable Index may be greater or lessthan 1 at any given time. As a result, as part of the roll period at the end of an Index Business Day, theInverse Investable Index will reset its exposure to VSTOXX futures contracts so that it has a leverage

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amount of -1x for the next day. Assuming no change in the prices of VSTOXX futures contracts, duringthe roll period the Inverse Investable Index would hypothetically buy first month VSTOXX futurescontracts and sell second month VSTOXX futures contracts. However, in order to maintain a leverageamount of -1x, it may instead be necessary to sell a number of first month VSTOXX futures or buy anumber of second month VSTOXX futures. As a result, in order to roll the futures contracts on anygiven Index Business Day, the Inverse Investable Index may sell both, buy both, or buy one and sell theother, depending on the change in VSTOXX futures prices over the applicable Index Business Day. Allhypothetical purchases and sales of first and second month VSTOXX futures contracts will occur at thebid-offer prices and will incur a cost as a result of the bid-offer spread. As described in “The Indices —Index Construction”, the reset costs associated with maintaining a short position are deducted from thepre-roll level of the Inverse Investable Index, which in turn reduces the Index Closing Level for theInverse Investable Index. As with the implied roll costs and roll yields, the reset cost associated with theInverse Investable Index is a variable, uncapped amount which will be determined by the sale andpurchase prices and the target weights of the first and second month VSTOXX futures contracts. Inaddition to reset costs, the resetting of exposure will lead to increased path dependency of returns, asdescribed in “The Underlying Indices — Path-Dependent Nature of the Indices.”

As a result, the Inverse Securities should only be purchased by sophisticated investors who understandthe risks of investing in volatility, the nature of the underlying securities market, currency markets, eurodenominated futures contracts the construction and calculation of the Inverse Investable Index, and thepath dependence of investment returns, and who will actively monitor their investment, includingintraday.

Path-Dependent Nature of the Indices

The performance of each Index is path dependent insofar as its level at any time depends not only on thelevel of the applicable underlying Index at such time but also on such Index’s level at prior times.Accordingly, periods of volatility in VSTOXX futures may have a particularly unpredictable andsignificant impact on the level of each applicable underlying Index. As a result, the value of yourinvestment in any series of Securities may diverge significantly from the value you might expect on thebasis of the strategy of the applicable underlying Index. At particularly high levels of volatility inVSTOXX futures you may lose all or a substantial portion of your investment even though the VSTOXXfutures have increased (if you hold Long Securities) or decreased (if you hold Inverse Securities).

The daily deduction of the applicable Daily Investor Fee introduces a further element of path dependencywith respect to the Closing Indicative Value of each series of Securities. The total amount of the DailyInvestor Fee deducted over the period you hold your Securities depends not on the level of the applicableIndex at the time your Securities mature or are redeemed, called or accelerated, or the time you sell yourSecurities, but rather upon the Closing Indicative Value of such Securities on each day during the term ofyour investment.

Similarly, in the case of the Inverse Investable Index, the reset costs incurred in order to maintain a shortposition in VSTOXX futures contracts will depend not just on prices of the first and second monthVSTOXX futures at the time your Securities mature or are redeemed, called or accelerated, or the timeyou sell your Securities, but rather upon the change in prices of the first and second month VSTOXXfutures contracts since the prior Index Business Day on each day during the term of your investment.Accordingly, the deduction of any reset costs applicable to the Inverse Investable Index, and associatedwith maintaining a short position from the pre-roll level of the Inverse Investable Index may, in turn,further increase the path dependence of the Inverse Investable Index.

In addition, even without accounting for the reset costs incurred in order to maintain a short position inVSTOXX futures contracts and the Daily Investor Fee, due to the path dependent nature of the Inverse

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Investable Index, it is likely that the value of the Inverse Securities will still decline even if VSTOXXfutures contracts return to the same level as on the initial date you purchase your Securities. For example,if VSTOXX futures decrease on the first trading day and then increase back to their prior level on thesecond trading day, the Inverse Investable Index will still decline over such two-day period because theindex reset after the first trading day and as a result of its higher level following the first trading day(increasing when VSTOXX decreased), it has additional exposure to subsequent VSTOXX futurescontract movements. Generally, we expect that higher ranges of volatility in VSTOXX futures contractsprices will have adverse effects on the performance of the Inverse Investable Index and the InverseSecurities and there is significant chance of a complete loss in the value of the Securities over longerholding periods.

Payments on the Securities

We will not pay you any interest on the Securities. None of the Securities guarantees any return ofprincipal at or prior to maturity, or upon early redemption, call or acceleration.

Payments at maturity or upon early redemption, acceleration or exercise of our call right for theSecurities of any series will be based on the Closing Indicative Value of the Securities of such series,determined as described below. You will lose some or all of your investment if the applicable underlyingIndex level declines or does not increase by an amount sufficient to offset the cumulative effect of theDaily Investor Fee and, if applicable, the Redemption Fee Amount, Daily Accrual and the creation fee,over the period that you hold your investment.

On the Initial Trade Date, the “Closing Indicative Value” for each series of Securities is equal to $25.00per Security. For each subsequent calendar day, the “Closing Indicative Value” for the Securities of anyseries will equal:

(Closing Indicative Value on the previous calendar day × Daily Index Performance for the applicableunderlying Index) — Daily Investor Fee for such series of Securities for such calendar day

For each Index, the “Daily Index Performance” on any Exchange Business Day will equal (i)(a) theclosing level of the Index for the applicable underlying Index (the “Index Closing Level”) as reported onBloomberg L.P. (“Bloomberg”) (or any successor service) on such Exchange Business Day, divided by (b)the Index Closing Level for the applicable underlying Index on the immediately preceding ExchangeBusiness Day, plus (ii) the Daily Accrual. The Daily Index Performance will equal one on any calendarday that is not an Exchange Business Day but which is an Index Business Day. The Daily IndexPerformance will equal one on any calendar day that is neither an Index Business Day nor an ExchangeBusiness Day.

For each Index, if the applicable underlying Index does not publish an Index Closing Level on anyExchange Business Day, the Index Closing Level of such applicable underlying Index with respect to suchExchange Business Day will be the most recently published Index Closing Level for such Index subject toadjustment in the case of a Market Disruption Event.

The Daily Accrual represents the rate of interest that could be earned or is payable on a notional capitalreinvestment at the generic three-month USD adjusted German Bund Bill rate as reported on Bloombergunder the ticker: SOL3MBRU (or any successor ticker on Bloomberg or any successor service). The DailyAccrual on any Exchange Business Day will equal:

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Where Bbillst-1 is the generic three-month USD adjusted German Bund Bill rate reported on Bloomberg(or any successor service) on the prior Exchange Business Day and d is the number of calendar days fromand including the immediately prior Exchange Business Day to but excluding the date of determination.The Daily Accrual is deemed to equal zero on any day that is not an Exchange Business Day.

As of the date of this Prospectus Supplement, the German Bund Bill rate is negative and therefore theDaily Accrual equals a negative amount. At any time the Daily Accrual equals a negative amount, theDaily Index Performance will be adversely affected by the Daily Accrual and the Daily Accrual willtherefore adversely affect the value of your Securities.

Each series of Securities is subject to a “Daily Investor Fee” that will be subtracted from the ClosingIndicative Value of each series of Securities on each calendar day. On the Initial Trade Date, the DailyInvestor Fee is equal to zero. On each subsequent calendar day, the Daily Investor Fee for the each seriesof Securities equals the product of (i) 1.35% divided by 365 times (ii) the Closing Indicative Value forsuch series of Securities on the previous calendar day. For the purpose of calculating the Daily InvestorFee, if such previous calendar day was not an Exchange Business Day, the Closing Indicative Value willbe calculated based on the Closing Indicative Value on the immediately preceding Exchange BusinessDay.

Each series of Securities is fully exposed to any decline in the level of the applicable underlying Index.You may lose all or a substantial portion of your investment if the Index level on the applicableValuation Date is not sufficient to offset the negative effect of the Daily Investor Fee and, if applicable,the Redemption Fee Amount and creation fee. Additionally, as of the date of this Prospectus Supplement,the Daily Accrual equals a negative amount and, as a result, to the extent that the Daily Accrual isnegative at any given time it will adversely affect the value of your Securities. In addition, the DailyInvestor Fee will be calculated based on a daily Closing Indicative Value and therefore will depend on thedaily fluctuations of the applicable underlying Index, including, with respect to the Inverse InvestableIndex, the reset costs described above.

See “Specific Terms of the Securities — Cash Settlement Amount at Maturity” and “— Daily InvestorFee,” beginning on pages S-74 and S-76, respectively.

Any series of Securities may be called by UBS prior to the Maturity Date pursuant to UBS’s Call Right.See “Specific Terms of the Securities — UBS’s Call Right” beginning on page S-79.

Maturity

At maturity, you will receive a cash payment (the “Cash Settlement Amount”) for each series ofSecurities you hold equal to its Closing Indicative Value as of the Final Valuation Date. If the ClosingIndicative Value for any series of Securities as of the Final Valuation Date is equal to or less than zero,the Cash Settlement Amount for such series of Securities will be zero.

UBS’s Call Right

On any Trading Day on or after May 9, 2018 through and including the Maturity Date, UBS may at itsoption redeem all, but not less than all, issued and outstanding Securities of any series. To exercise itsCall Right, UBS must provide notice (which may be provided via press release) to the holders of suchseries of Securities not less than ten calendar days prior to the Call Settlement Date specified by UBS. Inthe event UBS exercises this right, you will receive a cash payment per Security equal to its ClosingIndicative Value as of the Valuation Date. We refer to this cash payment as the “Call SettlementAmount.” In the event UBS exercises its Call Right, the applicable “Valuation Date” means the thirdTrading Day prior to the Call Settlement Date. See also “Description of the Debt Securities We MayOffer — Redemption and Payment” in the attached prospectus.

d 91 1 1- Tbills t-1 x 91 360 – 1 Tbills t-1 S-7

Acceleration Upon Occurrence of Stop Loss Termination Event

If, at any time on any Trading Day, the intraday indicative value of the Inverse Securities, calculated asdescribed under “Valuation of the Indices and the Securities — Intraday Security Values,” is equal to orless than 25.0% of its Closing Indicative Value at the end of the prior Exchange Business Day (such eventwith respect to the Inverse Securities, a “Stop Loss Termination Event” and the day on which such eventoccurs, a “Stop Loss Termination Date”), all issued and outstanding Inverse Securities will beautomatically accelerated and mandatorily redeemed by UBS for a cash payment equal to the Stop LossRedemption Value; provided that if the Stop Loss Redemption Value so calculated is less than or equal tozero, the payment upon acceleration will be zero.

If a Stop Loss Termination Event occurs for the Inverse Securities, you will receive on the Stop LossRedemption Date only the Stop Loss Redemption Value in respect of your investment in such Securities.If the Stop Loss Redemption Value so calculated is equal to or less than zero, the payment uponacceleration will be zero. The “Stop Loss Redemption Date” will be the fifth Business Day following theStop Loss Termination Date; provided that if the calculation of the Stop Loss Redemption Value ispostponed as a result of a Market Disruption Event, the Stop Loss Redemption Date will be the fifthbusiness day after the Stop Loss Redemption Value is calculated, subject to adjustment. For a discussionof the risks related to the occurrence of a Stop Loss Termination Event, see “Risk Factors — TheSecurities are highly sensitive to large changes in the market price of the underlying futures contracts andmay be automatically accelerated and mandatorily redeemed, resulting in a loss of all or a substantialportion of your investment.”

UBS must provide notice (which may be provided via press release) to the holders of the InverseSecurities not later than the second Trading Day after the occurrence of a Stop Loss Termination Eventthat such Stop Loss Termination Event has occurred. See “Specific Terms of the Securities —AccelerationUpon Occurrence of Stop Loss Termination Event” beginning on page S-79.

The Long Securities do not have a Stop Loss Termination Event mechanism and therefore cannot beterminated as a result of a Stop Loss Termination Event.

How do you redeem your Securities?

Early Redemption

You may elect to require UBS to redeem your Securities of any series, in whole or in part, prior to theMaturity Date on any Trading Day commencing on May 9, 2017 through and including the finalRedemption Date, subject to a minimum redemption amount of at least 50,000 Securities of such series,your compliance with the procedures described below and the potential postponements and adjustmentsas described under “Specific Terms of the Securities — Market Disruption Event.” To satisfy theminimum redemption amount, your broker or other financial intermediary may bundle your Securities ofsuch series for redemption with those of other holders of Securities of such series to reach this minimumamount of 50,000 Securities; however, there can be no assurance that they can or will do so. UBSreserves the right from time to time to reduce or waive this minimum redemption amount in its solediscretion on a case-by-case basis. You should not assume you will be entitled to the benefit of any suchwaiver. The first Redemption Date was May 9, 2017 and the final Redemption Date will be April 26,2047.

Upon early redemption, you will receive per Security a cash payment on the relevant Redemption Dateequal to its Closing Indicative Value as of the applicable Valuation Date, minus the Redemption FeeAmount. We refer to this cash payment as the “Redemption Amount.” If the amount so calculated is lessthan or equal to zero, the payment upon early redemption will be zero. We reserve the right from time totime to waive the Redemption Fee Amount in our sole discretion on a case-by-case basis. You should notassume you will be entitled to the benefit of any such waiver.

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For any early redemption, the applicable “Valuation Date” means the third Trading Day prior to therelated Redemption Date, which day is also the first Trading Day following the date on which youdeliver a redemption notice to Janus Distributors in compliance with the redemption procedures (or, inthe sole discretion of UBS, the same date that the redemption notice is delivered in compliance with theredemption procedures). The applicable “Redemption Date” means the third Trading Day following thecorresponding Valuation Date or, if such day is not a Business Day, the next following Trading Day thatis also a Business Day.

You may lose all or a substantial portion of your investment upon early redemption if the level of theapplicable underlying Index declines or does not increase by an amount sufficient to offset the combinednegative effect of the Daily Investor Fee and, if applicable, the Redemption Fee Amount and the creationfee. Additionally, as of the date of this Prospectus Supplement, the Daily Accrual equals a negativeamount and, as a result, to the extent that the Daily Accrual is negative at any given time it will adverselyaffect the value of your Securities.

The Securities may be called by UBS prior to the Maturity Date pursuant to UBS’s Call Right and will beautomatically accelerated and mandatorily redeemed upon the occurrence of a Stop Loss TerminationEvent. See “Specific Terms of the Securities — UBS’s Call Right” beginning on page S-79 and “SpecificTerms of the Securities — Acceleration Upon Occurrence of Stop Loss Termination Event” beginning onpage S-79.

Redemption Procedures

To redeem your Securities prior to the Maturity Date, you must instruct your broker to deliver aredemption notice to Janus Distributors by email no later than 4:00 p.m. (New York City time) on theTrading Day on which you elect to exercise your redemption right and you and your broker must followthe procedures described herein. If you fail to comply with these procedures, your notice will be deemedineffective. See “Specific Terms of the Securities — Redemption Procedures” beginning on page S-78 and“Description of the Debt Securities We May Offer — Redemption and Payment” in the accompanyingprospectus.

What are some of the risks of the Securities?

An investment in the Securities involves risks. Selected risks are summarized here, but we urge you toread the more detailed explanation of risks described under “Risk Factors” beginning on page S-27.

➤ You may lose all or a substantial portion of your investment — Each series of Securities is designedfor investors who seek exposure to the applicable underlying Index and are fully exposed to anydecline in the level of the applicable underlying Index. You will lose some or all of your investment ifthe applicable underlying Index level does not increase enough to offset the negative effect of theapplicable Daily Investor Fee and, if applicable, the Redemption Fee Amount and creation fee, of theapplicable series of Securities. Additionally, as of the date of this Prospectus Supplement, the DailyAccrual equals a negative amount and, as a result, to the extent that the Daily Accrual is negative atany given time it will adversely affect the value of your Securities. Each Index is volatile and subjectto a variety of market forces, some of which are described below and none of which may bepredictable in advance.

➤ Long holding period risk — The Securities are intended to be daily trading tools for sophisticatedinvestors to manage daily trading risks as part of an overall diversified portfolio and are not intendedas a buy and hold investment. The Securities involve significant risks and may not be suitable as along-term investment. There is a significant possibility that the amount payable on the Securities atmaturity or upon call, early redemption or acceleration will be less than the amount of your initialinvestment in the Securities, and that you will lose part or all of your initial investment if you hold theSecurities for a long period of time. We do not expect that any investor will hold the Securities from

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inception to maturity. Accordingly, the Securities should be purchased only by sophisticated investorswho understand the consequences of investing in volatility indices with a limited performance historyand of seeking inverse investment results, the nature of the underlying securities market, currencymarkets, euro denominated futures contracts, index construction and calculation and the pathdependence of investment returns. The Securities should be purchased only by sophisticated investorswho are prepared to actively and frequently monitor their investments in the Securities, even intraday.

➤ Market and volatility risk — The return on the Securities, which may be positive or negative, isdirectly linked to the level of the applicable underlying Index, which, in turn, is designed to provideexposure to either a long or short position in first and second month futures contracts on theVSTOXX. The VSTOXX measures the 30-day implied volatility of the EURO STOXX 50® Index ascalculated based on the prices of certain put and call options on the EURO STOXX 50® Index. Thelevel of the EURO STOXX 50® Index, the prices of options on the EURO STOXX 50® Index, andthe level of the VSTOXX are each affected by a variety of factors and may change unpredictably,affecting the value of your Securities in unforeseeable ways.

➤ Risk Associated With Liquidity of VSTOXX Futures — First and second month VSTOXX futurescontracts trade on an exchange, but are relatively illiquid compared to other types of futurescontracts. The illiquidity of VSTOXX futures may increase the risk that the prices of VSTOXXfutures, and therefore the level of the applicable underlying Index and the value of the Securities, maybe highly volatile. The illiquidity of VSTOXX futures may also increase the risk that the bid-offerspread is likely to be highly volatile in comparison to other futures contracts, which could alsoincrease the volatility of the level of the applicable underlying Index and the value of the Securities. Inaddition, the prices of VSTOXX futures, and therefore the level of the applicable underlying Indexand the value of the Securities, will be subject to a variety of market forces, some of which aredescribed below and none of which may be predictable in advance, which may further increase therisk of volatility. This may also potentially increase the volatility of VSTOXX contracts, relative toother types of future contracts. Increased volatility may adversely affect the value of the InverseInvestable Index, and accordingly, the Inverse Securities.

➤ Risks associated with foreign equity securities — Each series of Securities is linked to an investableIndex which measures the implied volatility changes in the value of foreign equity securities.Investments in securities linked to changes in value of foreign equity securities involve risks associatedwith the securities markets in those countries, including risks of governmental intervention in thosemarkets and cross-shareholdings in companies in certain countries. The risk of volatility in thesemarkets is increased as there is generally less publicly available information about foreign companiesthan about U.S. companies that are subject to the reporting requirements of the Securities andExchange Commission, and foreign companies are generally subject to accounting, auditing andfinancial reporting standards and requirements and securities trading rules that are different fromthose applicable to U.S. reporting companies. The VSTOXX futures contracts underlying the Indicesmay be affected by political, economic, financial and social factors in those countries, or globalregions, including changes in government, economic and fiscal policies and currency exchange laws.Local securities markets may trade a small number of securities and may be unable to respondeffectively to increases in trading volume, potentially making prompt liquidation of holdings difficultor impossible at times leading to greater volatility in the EURO STOXX 50 Securities underlying theVSTOXX and thus, the Indices. Moreover, the economies in such countries may differ favorably orunfavorably from the economy in the United States in such respects as growth of gross nationalproduct, rate of inflation, capital reinvestment, resources, self-sufficiency and balance of paymentpositions which, since the Indices are linked to euro denominated futures contracts, may adverselyaffect the value of your Securities.

➤ Multiple Jurisdiction Risk — Each series of Securities is listed on BATS, which is located in theUnited States. VSTOXX futures contracts trade on the Eurex Exchange, and the equity securities that

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comprise the EURO STOXX 50® Index, which underlies the VSTOXX Index and therefore theVSTOXX futures contract that are used to calculate the value of the Indices, are traded on a numberof different exchanges located in Europe. As a result, VSTOXX futures contracts and the equitysecurities that comprise the EURO STOXX 50® Index are subject to different laws, regulators,regulations and rules than equity securities, futures contracts and exchanges in the United Statesincluding regulation by German, Swiss and European regulators. Differential regulation of theexchanges on which the Securities, the VSTOXX futures contracts or the equity securities thatcomprise the EURO STOXX 50® Index trade may affect the volatility of VSTOXX futures contracts,the Indices or the Securities in different ways and may have an adverse effect on the volatility, price orliquidity of the Securities or VSTOXX futures contracts (and therefore, the Indices). Such effects maycause you to lose some or all of your investment and cannot be predicted in advance.

➤ Exchange rate risk — The Indices are linked to prices of futures contracts on the VSTOXX, which aretraded in euro. The value of the euro may be subject to a high degree of fluctuation relative to theU.S. dollar. On a daily basis, the level of the applicable underlying Index will be translated from euroto dollar at the prevailing spot exchange rate. Accordingly if the euro depreciates relative to the U.S.dollar on a daily basis, your return on the Securities will underperform an alternative investment thatoffers exposure to the changes in the level of the VSTOXX without taking into account the exchangerate. Further, any currency fluctuations could affect the performance of the VSTOXX. Additionally,the Daily Accrual is based upon a USD adjusted German bond rate, which is denominated in eurosbefore being adjusted and therefore will be subject to similar value fluctuation and depreciation risks.

➤ Market Trading Risk — The EURO STOXX 50® Index is a European index, which has a differenttrading schedule than BATS. Consequently, there may be days or times on which the Securities maynot be tradeable, but on which the futures contracts underlying the applicable Index trade. You willbe unable to sell your Securities on any such date or during such times, and if the applicableunderlying Index decreases on such date or during such times, it may result in a loss of some or all ofyour investment in the Securities.

➤ Roll Costs — Unlike equity investments, an investment in the Securities replicates an investment in eurodenominated futures contracts. The calculation of each Index includes the hypothetical costs of buying andselling first and second month futures contracts. The contracts are never taken to delivery but rather arerolled on a daily basis so that prior to delivery they are replaced by similar contracts that have a laterexpiration. If prices are lower in the distant delivery months than in the nearer delivery months, the sale offront month contracts would take place at a price that is higher than the purchase price of the latercontract, thereby creating a positive implied roll yield to the Long Investable Index and an implied roll costto the Inverse Investable Index. If the prices of contracts are higher in the distant delivery months than inthe nearer delivery months, (which is commonly observed with respect to VSTOXX futures contracts) thisresults in an implied roll cost to the Long Investable Index and an implied roll yield to the InverseInvestable Index. Assuming that the futures curve remains constant, if the prices of contracts are higher inthe distant delivery months than in the nearer delivery months the value of the futures contractsunderlying the Long Investable Index will decline as they approach the applicable delivery date.

➤ Reset Costs — The return on the Inverse Securities is directly linked to the performance of the InverseInvestable Index. The Inverse Investable Index, as distinct from the Long Investable Index, is reduced byreset costs, which are the costs incurred by paying the bid-offer spreads required to maintain a 1X Dailyshort exposure to VSTOXX futures. The amount of the applicable reset costs depends on the change inprice for each of the first and second month VSTOXX futures contracts since the prior Index BusinessDay and on the number of each VSTOXX futures contract that must be bought or sold to maintain theshort position. The greater the change in price of each VSTOXX futures contract and the moreVSTOXX futures contracts that must be bought or sold, the higher the reset costs will be.

➤ Bid-Offer Spread Risk — All hypothetical purchases and sales of first and second month VSTOXXfutures contracts will occur at the bid or offer prices and will incur a cost as a result of the bid-offer

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spread. Since first and second month VSTOXX futures contracts are relatively illiquid compared toother types of futures contracts, the bid-offer spread is likely to be highly volatile in comparison toother futures contracts. The bid-offer spread may be very large, which will increase the cost of sellingor buying futures contracts, which will reduce the level of the Indices and adversely affect returns,which could result in losses and may cause you to lose some or all of your investment in theSecurities. The bid-offer spreads for VSTOXX futures are volatile and subject to a variety of marketforces, some of which are described below and none of which may be predictable in advance.

➤ Credit of issuer — The Securities are senior unsecured debt obligations of the issuer, UBS, and arenot, either directly or indirectly, an obligation of or guaranteed by any third party. Any payment tobe made on any series of Securities, including any payment at maturity, upon acceleration, earlyredemption or call, depends on the ability of UBS to satisfy its obligations as they come due. As aresult, the actual and perceived creditworthiness of UBS will affect the market value, if any, of eachseries of Securities prior to maturity, acceleration, call or early redemption. In addition, in the eventUBS were to default on its obligations, you may not receive any amounts owed to you under theterms of the Securities. The Securities do not benefit from any co-obligation of UBS Switzerland AG.

➤ No interest payments from the Securities — You will not receive any interest payments on any seriesof the Securities. The Securities are designed for investors who are willing to forgo cash paymentsand, if the applicable Index declines or does not increase enough to offset the effect of the fees asdescribed above, are willing to lose some or all of their principal.

➤ Potential automatic acceleration upon the occurrence of a Stop Loss Termination Event — If a StopLoss Termination Event occurs with respect to the Inverse Securities, all issued and outstandingInverse Securities will be automatically accelerated and mandatorily redeemed by UBS for a cashpayment equal to the Stop Loss Redemption Value; provided that if the Stop Loss Redemption Valueso calculated is less than or equal to zero, the payment upon acceleration will be zero. The Stop LossRedemption Value you receive on the Stop Loss Redemption Date may be significantly less than yourinvestment and may be zero. In addition, if the Inverse Securities are automatically accelerated andmandatorily redeemed by UBS, you will not benefit from any subsequent increase in the IndexClosing Level after the occurrence of the Stop Loss Termination Event, even if such increase occursprior to the Stop Loss Redemption Date.

➤ Path dependence — The return on each series of Securities will be path dependent. Accordingly, evenif the level of the applicable Index increases or decreases over the term of the applicable series ofSecurities, or over the term which you hold such series, the applicable series of Securities will increaseor decrease not only based on any change in the level of the applicable Index over a given time periodbut also based on the volatility of the level of such Index over such time period. The value of yourseries of Securities will depend not only upon the level of the applicable Index at maturity or uponcall, early redemption or acceleration, but also on the performance of the applicable Index over eachday that you hold your series of Securities. The value of the Inverse Investable Index will be especiallypath dependent due to its need to reset its exposure to VSTOXX futures contracts so that it has aleverage amount of -1x at the end of each Index Business Day. See “The Indices — The UnderlyingIndices — The Inverse Investable Index.” It is possible that you will suffer significant losses even if thelong-term performance of the applicable Index is positive. Accordingly, the returns on each series ofSecurities may not correlate with returns on the applicable Index over periods longer than one day.

➤ A trading market for the Securities may not develop — Although each series of Securities is listed onBATS, a trading market for the one or more series of the Securities may not develop. Certain affiliatesof UBS may engage in limited purchase and resale transactions in the Securities, although they are notrequired to and may stop at any time. We are not required to maintain any listing of the Securities onBATS or any other exchange. In addition, we are not obliged to, and may not, sell the full aggregateprincipal amount of the Securities shown on the cover of this prospectus supplement. We may

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suspend or cease sales of the Securities at any time, at our discretion. Therefore, the liquidity of theSecurities may be limited.

➤ Requirements upon early redemption — You must satisfy the requirements described herein for yourredemption request to be considered, including the minimum redemption amount of at least 50,000Securities of the applicable series, unless we determine otherwise or your broker or other financialintermediary bundles your Securities for redemption with those of other investors of the applicableseries to reach this minimum requirement and there can be no assurance that they can or will do so.Therefore, the liquidity of each series Securities may be limited. In addition, the payment you receiveupon early redemption will be reduced by the applicable Daily Investor Fee and the Redemption FeeAmount and, if applicable, the creation fee. While UBS reserves the right to reduce or waive theminimum redemption amount or the Redemption Fee Amount from time to time in its sole discretion,there can be no assurance that UBS will choose to waive any redemption requirements or fees or thatany holder of the Securities will benefit from UBS’s election to do so.

➤ Your redemption election is irrevocable — You will not know the Redemption Amount at the time youelect to request us to redeem your Securities of a series and you will not be able to rescind your electionto redeem your Securities of a series after your redemption notice is received by UBS. Accordingly, youwill be exposed to market risk in the event market conditions change after UBS receives your offer andbefore the Redemption Amount is determined on the applicable Valuation Date.

➤ Uncertain tax treatment — Significant aspects of the tax treatment of the Securities are uncertain.You should consult your own tax advisor about your own tax situation. See “Material U.S. FederalIncome Tax Consequences” beginning on page S-88.

➤ UBS’s Call Right — UBS may elect to redeem all outstanding Securities of any series on any TradingDay on or after May 9, 2018, as described under “Specific Terms of the Securities — UBS’s CallRight” beginning on page S-79. If UBS exercises its Call Right, the Call Settlement Amount may beless than your initial investment in the Securities.

Is this the right investment for you?

The Securities may be a suitable investment for you if:

➤ You are a sophisticated investor and understand the consequences of investing in volatility indiceswith a limited performance history, futures contracts, the nature of the underlying securities markets,currency markets, index construction and calculation, path dependence of investment returns and ofseeking inverse investment results.

➤ You are willing to accept the risk that you may lose all or a substantial portion of your investment.

➤ You seek an investment with a return linked to the performance of the applicable underlying Index,which will provide either long or short exposure to first and second month VSTOXX futures.

➤ You are willing and able to monitor an investment frequently, even intraday.

➤ You are willing to accept and understand the risk of fluctuations in volatility in general andfluctuations in the performance of the applicable underlying Index in particular.

➤ You willing to accept the risk of investing in indices with a limited performance history.

➤ You believe the level of the applicable Index will increase by an amount sufficient to offset thenegative effect of the Daily Investor Fee and, if applicable, any Redemption Fee Amount or creationfee, or any possible negative Daily Accrual over your intended holding period of the Securities and toprovide you with a satisfactory return on your investment.

➤ You are willing to accept the risk that the price at which you are able to sell each series of Securitiesmay be significantly less than the amount you invested.

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➤ You understand the risks of purchasing securities that have a long-term maturity (approximately 30years) even though the Securities are not suitable for a “buy and hold” strategy of long-terminvestment.

➤ You are willing to hold securities that are subject to the UBS Call Right on any Trading Day on orafter May 9, 2018.

➤ You do not seek current income from your investment.

➤ You are not seeking an investment for which there will be an active secondary market.

➤ You seek an investment which does not make regular interest payments.

➤ You are comfortable with the creditworthiness of UBS, as issuer of the Securities.

The Securities may NOT be a suitable investment for you if:

➤ You are not a sophisticated investor and/or do not understand the consequences of investing involatility indices with a limited performance history, futures contracts, the nature of the underlyingsecurities markets, currency markets, index construction and calculation, path dependence ofinvestment returns and of seeking inverse investment results.

➤ You are not willing to accept the risk that you may lose all or a substantial portion of yourinvestment.

➤ You do not seek an investment with a return linked to the performance of the applicable underlyingIndex, which will provide either long or short exposure to first and second month VSTOXX futures.

➤ You are not willing and able to monitor an investment frequently, even intraday.

➤ You are not willing to accept the risk of fluctuations in volatility in general and fluctuations in theperformance of the applicable underlying Index in particular.

➤ You are not willing to accept the risk of investing in indices with a limited performance history.

➤ You seek a long-term investment objective.

➤ You believe that, during the period that you hold the Securities, the level of the applicable Index willdecline or that any increase in the level of the applicable underlying Index will not be sufficient tooffset the negative effect of the Daily Investor Fee and, if applicable, any Redemption Fee Amountand creation fee, and any possible negative Daily Accrual and to provide you with a satisfactoryreturn on your investment.

➤ You are not willing to accept the risk that the price at which you are able to sell each series ofSecurities may be significantly less than the amount you invested.

➤ You are not willing to purchase securities that have a long-term maturity (approximately 30 years)even though the Securities are not suitable for a “buy and hold” strategy of long-term investment.

➤ You are not willing to hold securities that are subject to the UBS Call Right on any Trading Day onor after May 9, 2018.

➤ You prefer the lower risk and therefore accept the potentially lower returns of fixed-incomeinvestments with comparable maturities and credit ratings.

➤ You seek current income from your investment.

➤ You seek an investment for which there will be an active secondary market.

➤ You are not comfortable with the creditworthiness of UBS, as issuer of the Securities.

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Who calculates and publishes the Indices?

The level of the Indices is calculated and disseminated by the Index Calculation Agent in real-time oneach Index Business Day. Index information, including the level of the applicable underlying Index, isavailable from STOXX and Bloomberg for each of the Indices under the symbols set forth in the tablebelow.

Securities Underlying Index Underlying Index Ticker

Long Securities Long Investable Index VST1MSLInverse Securities Inverse Investable Index VST1MISL

The historical performance of the Indices is not indicative of the future performance of the Indices or theSecurities, or the level of the Indices or the Closing Indicative Value of the Securities on the applicableValuation Date.

What are the tax consequences of owning the Securities?

The United States federal income tax consequences of your investment in the Securities are uncertain.Some of these tax consequences are summarized below, but we urge you to read the more detaileddiscussion in “Material U.S. Federal Income Tax Consequences” on page S-88.

Pursuant to the terms of each series of Securities, you and we agree, in the absence of a statutory,regulatory, administrative or judicial ruling to the contrary, to characterize the Securities as a pre-paidforward contract with respect to the applicable Index. If your Securities are so treated, you shouldgenerally recognize capital gain or loss upon the sale, exchange, redemption or maturity of yourSecurities in an amount equal to the difference between the amount realized and the amount you paid foryour Securities. Such gain or loss should generally be long-term capital gain or loss if you held yourSecurities for more than one year. The deductibility of capital losses is subject to limitations.

In the opinion of our counsel, Sullivan & Cromwell LLP, the Securities should be treated in the mannerdescribed above. However, because there is no authority that specifically addresses the tax treatment ofthe Securities, it is possible that the Securities could be treated for tax purposes in an alternative mannerdescribed under “Material U.S. Federal Income Tax Consequences — Alternative Treatments” onpage S-89.

The Internal Revenue Service (the “IRS”) released a notice in 2007 that may affect the taxation ofholders of the Securities. According to the notice, the IRS and the Treasury Department are activelyconsidering, among other things, whether holders of instruments such as the Securities should berequired to accrue ordinary income on a current basis, whether gain or loss upon the sale, exchange,redemption or maturity of such instruments should be treated as ordinary or capital, whether foreignholders of such instruments should be subject to withholding tax, and whether the special “constructiveownership rules” of Section 1260 of the Internal Revenue Code of 1986, as amended (the “Code”),should be applied to such instruments. While it is impossible to anticipate how any ultimate guidancewould affect the tax treatment of instruments such as the Securities (and while any such guidance may beissued on a prospective basis only), such guidance could be applied retroactively and could in any caseincrease the likelihood that you will be required to accrue income over the term of an instrument such asthe Securities. The outcome of this process is uncertain.

Additionally, members of Congress have periodically made proposals to reform or otherwise modify theU.S. federal income tax treatment of financial instruments such as the Securities. For example, in 2017,legislation was proposed that, if enacted, would generally require holders of instruments such as the

S-15

Securities that are acquired after the bill is enacted to annually recognize gain or loss with respect to suchinstruments on a “mark-to-market” basis and to treat any such gain or loss as ordinary income or loss. Itis not possible to predict whether any such legislation will be enacted in the future, or whether any suchlegislation would affect the tax treatment of your Securities.

Holders are urged to consult their tax advisors concerning the significance and the potential impact ofthe above considerations. We intend to treat your Securities for United States federal income taxpurposes in accordance with the treatment described above and under “Material U.S. Federal IncomeTax Consequences” on page S-88 unless and until such time as there is a change in law or the TreasuryDepartment or IRS determines that some other treatment is more appropriate

Conflicts of Interest

UBS Securities LLC is an affiliate of UBS and, as such, has a “conflict of interest” in this offering withinthe meaning of Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5121. In addition, UBSwill receive the net proceeds from the initial public offering of the Securities, thus creating an additionalconflict of interest within the meaning of Rule 5121. Consequently, the offering is being conducted incompliance with the provisions of Rule 5121. UBS Securities LLC is not permitted to sell Securities inthis offering to an account over which it exercises discretionary authority without the prior specificwritten approval of the account holder.

S-16

Simulated Historical Performance and Hypothetical ExamplesSimulated Historical Performance of the Indices

The prices of the first and second month VSTOXX futures contracts underlying each of the Indices havebeen highly volatile in the past and the performance of the Indices cannot be predicted for any futureperiod. Any simulated historical or historical upward or downward trend in the applicable Index ClosingLevel is not an indication that the Indices are more or less likely to increase or decrease at any timeduring the term of your Securities. The Index Closing Level for each Index is deemed to have been10,000 on December 30, 2016. STOXX began independently calculating the Indices on March 29, 2017.Therefore, the performance data for the period from June 4, 2009 until March 29, 2017 is simulated andis provided as an illustration of how the Indices would have performed during the period had the IndexSponsor begun calculating the Indices on June 4, 2009 using the methodology described in “The Indices”beginning on page S-52 since that date. This data does not reflect actual performance, nor was acontemporaneous investment model run of the Indices. Simulated data has inherent limitations, as it isproduced by the retroactive application of a back-tested methodology. Such simulated data is based oncriteria applied retroactively with the benefit of hindsight and knowledge of factors that may havepositively affected its performance, and may reflect a bias toward strategies that have performed well inthe past. Performance data for the period from and after March 29, 2017 is based on the actualperformance of the Indices.

Any historical or simulated historical upward or downward trend in value of the Indices during anyperiod shown below is not an indication that the value of the Indices is more or less likely to increase ordecrease at any time during the term of the Securities. The historical or simulated historical total returnsof the Indices do not give an indication of future performance of the Indices. UBS cannot make anyassurance that the future performance of the Indices will result in holders of the Securities receiving apositive return on their investment.

Historical information presented is as of February 9, 2018 and is furnished as a matter of informationonly. Simulated historical and historical performance of each Index is not an indication of futureperformance. Future performance of the Indices may differ significantly from estimated historical andhistorical performance, either positively or negatively.

S-17

Simulated Historical Performance and Hypothetical Examples

The graphs below illustrate the simulated historical performance of the Indices from June 4, 2009 toMarch 28, 2017 and the live historical performance of the Indices from March 29, 2017 (the day onwhich the Index Sponsor began calculating the Indices) to February 9, 2018. The graphs below are basedon the total returns of each of the Indices.

0

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100,000200,000300,000400,000500,000

700,000

900,000

600,000

800,000

VSTOXX Short-Term Futures Investable USD ER Index

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10,000

20,000

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VSTOXX Short-Term Futures Inverse Investable USD ER Index

S-18

Simulated Historical Performance and Hypothetical Examples

Hypothetical Payment at Maturity or Upon Call or Early Redemption

The hypothetical examples set forth below illustrate how the Securities would perform at maturity orupon call or early redemption, in hypothetical circumstances. They are purely hypothetical and areprovided for illustrative purposes only. They should not be taken as an indication or prediction of futureinvestment results. If you sell your Securities in the secondary market prior to the Maturity Date, yourreturn will depend on the market value of your Securities at the time of sale, which may be affected by anumber of other factors not reflected in the tables below. See “Risk Factors” on page S-27 for furtherinformation. The hypothetical examples below do not take into account the effects of any applicabletaxes.

As described in this prospectus supplement, each Index is designed to provide exposure to either a longor short position in first and second month VSTOXX futures contracts. The Long Investable Indexreplicates the performance of a long position in a portfolio of VSTOXX futures which exposure is morelikely to increase in value when volatility increases and to decrease in value when volatility decreases. Asdescribed herein, however, the actual exposure of the Long Securities may differ from what is intendedand there is no guarantee that the Long Securities will have a net VSTOXX futures exposure that benefitsinvestors.

The Inverse Investable Index replicates the performance of a short position in a portfolio of VSTOXXfutures which exposure is more likely to increase in value when volatility decreases and to decrease invalue when volatility increases. The Inverse Investable Index is also intended to provide an opportunityto achieve a positive expected return from the roll yield in VSTOXX futures in a contango market,though it may incur reset costs. As described herein, however, the actual exposure of each series ofSecurities may differ from what is intended and there is no guarantee that the Securities will have a netVSTOXX futures exposure that benefits investors.

While each Index is intended to pursue a particular volatility strategy, the path dependence of each Indexmay cause its actual performance to deviate significantly from its expected performance given its long orshort exposure, as applicable, to VSTOXX futures. The return from each series of Securities will bereduced by the applicable Daily Investor Fee. Additionally, the performance of the Securities is linked tothe performance of the applicable underlying Index, less the Daily Investor Fee and taking into accountthe Daily Accrual. The Daily Accrual represents the rate of interest that could be earned or is payable ona notional capital reinvestment at the generic three-month USD adjusted German Bund Bill rate. Thethree-month USD adjusted German Bund Bill rate is currently negative. As a result, to the extent that thethree-month USD adjusted German Bund Bill rate is negative, the Daily Accrual will adversely affect thevalue of your Securities. The three-month USD adjusted German Bund Bill rate is assumed to be -.085%per annum in each of the examples.

The hypothetical examples below are not intended to demonstrate the expected return of the Indices orof any series of Securities, but merely to illustrate how the return on your Securities will be impacted bythe performance of the applicable underlying Index and the effect of the Daily Investor Fee and ifnegative, the Daily Accrual.

In Daily Example 1, the level of the applicable underlying Index increases 2% on odd numbered daysand decreases 3% on even numbered days (i.e., it increases 2% on the first day, decreases 3% on thesecond day, increases 2% on the third day, decreases 3% on the fourth day, and so on) for a period of 30days. In Daily Example 2, the level of the applicable underlying Index increases 5% on odd numbereddays and decreases 5% on even numbered days (i.e., it increases 5% on the first day, decreases 5% onthe second day, increases 5% on the third day, decreases 5% on the fourth day, and so on) for a period

S-19

Simulated Historical Performance and Hypothetical Examples

of 30 days. In Daily Example 3, the level of the applicable underlying Index increases 3% on oddnumbered days and decreases 2% on even numbered days (i.e., it increases 3% on the first day, decreases2% on the second day, increases 3% on the third day, decreases 2% on the fourth day, and so on) for aperiod of 30 days.

In Annual Example 1, the level of the applicable underlying Index decreases at a constant rate of 50%per year for a period of 10 years. In Annual Example 2, the level of the applicable underlying Indexdecreases 15% in odd numbered years and increases 5% in even numbered years (i.e., it decreases 15%in the first year, increases 5% in the second year, decreases 15% in the third year, increases 5% in thefourth year, and so on) for a period of 10 years. In Annual Example 3, the level of the applicableunderlying Index increases 20% in odd numbered years and decreases 5% in even numbered years (i.e., itincreases 20% in the first year, decreases 5% in the second year, increases 20% in the third year,decreases 5% in the fourth year, and so on) for a period of 10 years.

These examples highlight the impact of changes in the level of the applicable underlying Index, as well asof the applicable Daily Investor Fee, on the payment at maturity or upon call, upon early redemption oracceleration, under different circumstances. The figures in these examples have been rounded forconvenience.

The following assumptions are used in each of the six examples:

➤ The Closing Indicative Value on the first day is $25.00.

➤ The initial level of the applicable underlying Index is 100.00.

➤ The three-month USD adjusted German Bund Bill rate is -0.85% per annum.

The following assumptions are used in each of the three annual examples:

➤ The Daily Index Performance is calculated on an annual basis. (As described in “Specific Terms ofthe Securities — Daily Index Performance,” the Daily Index Performance will actually becalculated for each series of Securities on a daily basis.)

➤ The Daily Investor Fee is applied on an annual basis, assuming the Closing Indicative Value of theSecurities at the end of the previous year is the Closing Indicative Value for purposes ofcalculating such Daily Investor Fee. (As described in “Specific Terms of the Securities — DailyInvestor Fee,” the Daily Investor Fee will actually be applied to the Closing Indicative Value ofsuch Securities on a daily basis and will depend on the daily performance of the applicableunderlying Index.)

➤ The Securities were purchased at inception and held for a period of 10 years. (As described in thisprospectus supplement, we do not expect that any investor will hold the Securities for an extendedperiod of time, and the Securities are not intended as a buy and hold investment. Instead, theSecurities should be purchased only by sophisticated investors who understand the consequencesof investing in volatility indices with a limited performance history and of seeking inverse orleveraged investment results, the nature of the underlying securities market, currency markets,index construction and calculation and the path dependence of investment returns, and who willactively and frequently monitor their investment in the Securities, even intraday.)

S-20

Simulated Historical Performance and Hypothetical Examples

Daily Example 1 — The level of the applicable underlying Index increases 2% on oddnumbered days and decreases 3% on even numbered days (i.e., it increases 2% on thefirst day, decreases 3% on the second day, increases 2% on the third day, decreases 3%on the fourth day, and so on).

DayIndexLevel

Daily IndexPerformance Daily Investor Fee

ClosingIndicative

ValueRedemption

Amount

0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 25.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.00 1.01998 0.0009 25.50 25.462 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.94 0.96998 0.0009 24.73 24.693 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.92 1.01998 0.0009 25.23 25.194 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.89 0.96998 0.0009 24.47 24.435 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.85 1.01998 0.0009 24.95 24.926 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.85 0.96998 0.0009 24.20 24.177 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.79 1.01998 0.0009 24.69 24.658 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.83 0.96998 0.0009 23.95 23.919 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.74 1.01998 0.0009 24.42 24.3910 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.81 0.96998 0.0009 23.69 23.6511 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.71 1.01998 0.0009 24.16 24.1212 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.81 0.96998 0.0009 23.43 23.4013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.68 1.01998 0.0009 23.90 23.8714 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.81 0.96998 0.0009 23.18 23.1515 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.67 1.01998 0.0009 23.65 23.6116 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.83 0.96998 0.0009 22.93 22.9017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.66 1.01998 0.0008 23.39 23.3618 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.85 0.96998 0.0009 22.69 22.6519 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.67 1.01998 0.0008 23.14 23.1120 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.89 0.96998 0.0009 22.45 22.4121 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.69 1.01998 0.0008 22.89 22.8622 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88.94 0.96998 0,0008 22.20 22.1723 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.72 1.01998 0.0008 22.65 22.6124 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88.00 0.96998 0.0008 21.97 21.9325 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.76 1.01998 0.0008 22.40 22.3726 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.06 0.96998 0.0008 21.73 21.7027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88.80 1.01998 0.0008 22.16 22.1328 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.14 0.96998 0.0008 21.50 21.4729 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.86 1.01998 0.0008 21.93 21.8930 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.23 0.96998 0.0008 21.27 21.24

Cumulative Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14.77%Annualized Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -85.31%Cumulative Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . -15.06%Annualized Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . . -85.89%

S-21

Simulated Historical Performance and Hypothetical Examples

Daily Example 2 — The level of the applicable underlying Index increases 5% on oddnumbered days and decreases 5% on even numbered days (i.e., it increases 5% on thefirst day, decreases 5% on the second day, increases 5% on the third day, decreases 5%on the fourth day, and so on).

DayIndexLevel

Daily IndexPerformance Daily Investor Fee

ClosingIndicative

ValueRedemption

Amount

0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 25.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.00 1.04998 0.0009 26.25 26.212 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.75 0.94998 0.0010 24.93 24.903 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.74 1.04998 0.0009 26.18 26.144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.50 0.94998 0.0010 24.87 24.835 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.48 1.04998 0.0009 26.11 26.076 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.25 0.94998 0.0010 24.80 24.777 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.21 1.04998 0.0009 26.04 26.008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.00 0.94998 0.0010 24.74 24.709 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.95 1.04998 0.0009 25.97 25.9410 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.76 0.94998 0.0010 24.67 24.6411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.69 1.04998 0.0009 25.91 25.8712 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.51 0.94998 0.0010 24.61 24.5713 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.43 1.04998 0.0009 25.84 25.8014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.26 0.94998 0.0010 24.54 24.5115 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.18 1.04998 0.0009 25.77 25.7316 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.02 0.94998 0.0010 24.48 24.4417 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.92 1.04998 0.0009 25.70 25.6618 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.77 0.94998 0.0010 24.42 24.3819 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.66 1.04998 0.0009 25.64 25.6020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.53 0.94998 0.0009 24.35 24.3221 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.40 1.04998 0.0009 25.57 25.5322 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.28 0.94998 0.0009 24.29 24.2523 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.15 1.04998 0.0009 25.50 25.4624 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.04 0.94998 0.0009 24.22 24.1925 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.89 1.04998 0.0009 25.43 25.4026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.80 0.94998 0.0009 24.16 24.1327 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.64 1.04998 0.0009 25.37 25.3328 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.56 0.94998 0.0009 24.10 24.0629 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.38 1.04998 0.0009 25.30 25.2630 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.31 0.94998 0.0009 24.03 24.00

Cumulative Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.69%Annualized Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36.27%Cumulative Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . -4.00%Annualized Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . . -38.76%

S-22

Simulated Historical Performance and Hypothetical Examples

Daily Example 3 — The level of the applicable underlying Index increases 3% on oddnumbered days and decreases 2% on even numbered years (i.e., it increases 3% on thefirst day, decreases 2% on the second day, increases 3% on the third day, decreases 2%on the fourth day, and so on).

DayIndexLevel

Daily IndexPerformance Daily Investor Fee

ClosingIndicative

ValueRedemption

Amount

0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 25.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.00 1.02998 0.0009 25.75 25.712 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.94 0.97998 0.0010 25.23 25.193 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.97 1.02998 0.0009 25.99 25.954 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.89 0.97998 0.0010 25.47 25.435 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.95 1.02998 0.0009 26.23 26.196 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.85 0.97998 0.0010 25.70 25.667 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.93 1.02998 0.0010 26.47 26.438 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.81 0.97998 0.0010 25.94 25.909 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.93 1.02998 0.0010 26.72 26.6810 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.79 0.97998 0.0010 26.18 26.1411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.93 1.02998 0.0010 26.97 26.9212 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.77 0.97998 0.0010 26.42 26.3813 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.95 1.02998 0.0010 27.22 27.1714 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.77 0.97998 0.0010 26.67 26.6315 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109.97 1.02998 0.0010 27.47 27.4316 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.77 0.97998 0.0010 26.92 26.8817 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.01 1.02998 0.0010 27.72 27.6818 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.79 0.97998 0.0010 27.17 27.1319 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112.05 1.02998 0.0010 27.98 27.9420 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109.81 0.97998 0.0010 27.42 27.3821 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113.10 1.02998 0.0010 28.24 28.2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110.84 0.97998 0.0010 27.67 27.6323 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.17 1.02998 0.0010 28.50 28.4624 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.88 0.97998 0.0011 27.93 27.8925 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.24 1.02998 0.0010 28.77 28.7226 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112.93 0.97998 0.0011 28.19 28.1527 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116.32 1.02998 0.0010 29.03 28.9928 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.00 0.97998 0.0011 28.45 28.4129 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117.41 1.02998 0.0011 29.30 29.2630 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.07 0.97998 0.0011 28.71 28.67

Cumulative Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.07%Annualized Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438.76%Cumulative Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . 14.69%Annualized Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . 417.78%

S-23

Simulated Historical Performance and Hypothetical Examples

Annual Example 1 — The level of the applicable underlying Index decreases at aconstant rate of 50% per year.

YearIndexLevel

Daily IndexPerformance(calculatedannually)

Daily Investor Fee(calculatedannually)

ClosingIndicative

ValueRedemption

Amount

0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 25.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.00 0.4915 0.3375 11.95 11.932 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.00 0.4915 0.1613 5.71 5.703 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.50 0.4915 0.0771 2.73 2.734 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.25 0.4915 0.0369 1.31 1.305 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13 0.4915 0.0176 0.62 0.626 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.56 0.4915 0.0084 0,30 0.307 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.78 0.4915 0.0040 0.14 0.148 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.39 0.4915 0.0019 0.07 0.079 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.20 0.4915 0.0009 0.03 0.0310 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10 0.4915 0.0004 0.02 0.02

Cumulative Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -99.90%Annualized Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50.00%Cumulative Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . -99.94%Annualized Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . . -52.21%

Annual Example 2 — The level of the applicable underlying Index decreases 15% in oddnumbered years and increases 5% in even numbered years (i.e., it decreases 15% in thefirst year, increases 5% in the second year, decreases 15% in the third year, increases5% in the fourth year, and so on).

YearIndexLevel

Daily IndexPerformance(calculatedannually)

Daily Investor Fee(calculatedannually)

ClosingIndicative

ValueRedemption

Amount

0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 25.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.00 0.8415 0.3375 20.70 20.672 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.25 1.0415 0.2795 21.28 21.253 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.86 0.8415 0.2873 17.62 17.594 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79.66 1.0415 0.2379 18.11 18.095 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.71 0.8415 0.2445 15.00 14.976 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.09 1.0415 0.2025 15.42 15.397 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.43 0.8415 0.2081 12.77 12.758 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.45 1.0415 0.1723 13.12 13.109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.93 0.8415 0.1772 10.87 10.8510 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.63 1.0415 0.1467 11.17 11.15

Cumulative Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43.37%Annualized Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5.53%Cumulative Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . -55.39%Annualized Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . . -7.75%

S-24

Simulated Historical Performance and Hypothetical Examples

Annual Example 3 — The level of the applicable underlying Index increases 20% in oddnumbered years and decreases 5% in even numbered years (i.e., it increases 20% in thefirst year, decreases 5% in the second year, increases 20% in the third year, decreases5% in the fourth year, and so on).

YearIndexLevel

Daily IndexPerformance(calculatedannually)

Daily Investor Fee(calculatedannually)

ClosingIndicative

ValueRedemption

Amount

0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 25.001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120.00 1.1915 0.3375 29.45 29.412 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.00 0.9415 0.3976 27.33 27.293 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136.80 1.1915 0.3689 32.19 32.154 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129.96 0.9415 0.4346 29.88 29.835 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155.95 1.1915 0.4033 35.19 35.146 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148.15 0.9415 0.4751 32.66 32.617 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177.79 1.1915 0.4409 38.47 38.428 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168.90 0.9415 0.5194 35.70 35.659 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202.68 1.1915 0.4820 42.06 42.0010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192.54 0.9415 0.5678 39.03 38.97

Cumulative Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.54%Annualized Index Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.77%Cumulative Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . . 55.89%Annualized Return on Securities (assuming redemption) . . . . . . . . . . . . . . . . . . . . . . 4.54%

We cannot predict the actual applicable Index Closing Level of any series of Securities on any TradingDay or the market value of your Securities, nor can we predict the relationship between the applicableIndex and the market value of your series of Securities at the Maturity Date or any time prior thereto,including on any Valuation Date. The actual amount that a holder of the applicable Securities willreceive at maturity or upon call, acceleration or early redemption, as the case may be, and the rate ofreturn on each of the Securities of any series will depend on the actual applicable Index Closing Leveland the Daily Investor Fee on each day such holder holds its investment, and on the Redemption FeeAmount and creation fee, if applicable. Moreover, the assumptions on which the hypothetical returns arebased are purely for illustrative purposes. Consequently, the amount, in cash, to be paid in respect ofyour Securities, if any, on the Maturity Date, Call Settlement Date, Stop Loss Redemption Date or therelevant Redemption Date, as applicable, may be very different from the information reflected in thetables above.

Hypothetical Payment upon Stop Loss Termination Event

The following hypothetical example illustrates how the Securities may perform if a Stop LossTermination Event occurs and the Securities are mandatorily redeemed. The example is purelyhypothetical, provided for illustrative purposes only and should not be taken as an indication orprediction of future investment results. The example below does not take into account the effects of anyapplicable taxes or the Daily Investor Fee on the Stop Loss Termination Date. See “Specific Terms of theSecurities — Acceleration Upon Occurrence of Stop Loss Termination Event” beginning on page S-79 fora description of how the Stop Loss Redemption Value us calculated.

As discussed under “Risk Factors—The Securities are highly sensitive to large changes in the market priceof the underlying futures contracts and may be automatically accelerated and mandatorily redeemed,resulting in a loss of all or a substantial portion of your investment” beginning on page S-31 of thisprospectus supplement, if a Stop Loss Termination Event occurs, it is highly likely that it will occur

S-25

Simulated Historical Performance and Hypothetical Examples

during a period of extreme market conditions, including disruptions to trading markets, which mayhinder or delay the determination of the applicable Stop Loss Redemption Value. Market conditions onany Stop Loss Termination Date are beyond our control and are impossible to predict, and mayadversely affect the value of your Securities in unforeseen ways.

Previous Index Business Day’s Closing Indicative Value . . . . . . . . . . . . . . . . . . . . . $50.00Stop Loss Termination Event Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.50First Observed Intraday Indicative Value Below Threshold . . . . . . . . . . . . . . . . . . $12.44Hypothetical Value of the Security as Determined by Calculation Agent at Time

of Practicable Unwind of VSTOXX Future Contracts . . . . . . . . . . . . . . . . . . . . $ 6.00Stop Loss Redemption Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6.00*

* 88% decline from previous Index Business Day’s Closing Indicative Value.

The hypothetical examples above are provided for purposes of information only. The hypotheticalexamples are not indicative of the future performance of the applicable Index on any Index Business Dayor what the value of your Securities of the applicable series may be. Fluctuations in the hypotheticalexamples may be greater or less than fluctuations experienced by the holders of the Securities of theapplicable series. The performance data shown above is for illustrative purposes only and does notrepresent the actual future performance of any series of Securities.

S-26

Risk FactorsYour investment in the Securities will involve significant risks. The Securities are not secured debt andare riskier than ordinary unsecured debt securities. Unlike ordinary debt securities, the Securities do notpay interest during their term and the return on the Securities is linked to the performance of an Index.As described in more detail below, the trading price of the Securities may vary considerably due to eventsthat are difficult to predict and beyond our control. Investing in the Securities of any series is notequivalent to investing directly in the applicable underlying Index or in the VSTOXX futures contractsused to construct the applicable underlying Index. This section describes the most significant risksrelating to an investment in the Securities. We urge you to read the following information about theserisks as well as the risks described under “Considerations Relating to Indexed Securities” in theaccompanying prospectus, together with the other information in this prospectus supplement and theaccompanying prospectus, before investing in the Securities.

The Securities do not pay interest and do not guarantee any payment at maturity orupon call, acceleration or early redemption. The Securities are fully exposed to adecline in the level of the applicable underlying Index and you may lose all or asignificant portion of your investment in the Securities.

The Securities do not guarantee a minimum payment or payment of the Stated Principal Amount atmaturity or upon call, acceleration or early redemption, and you may receive less, and possiblysignificantly less, than the amount you originally invested. The cash payment (if any) that you receive onyour Securities at maturity or upon call, acceleration or early redemption, will be based primarily on anyincrease or decrease in the applicable underlying Index (as measured by the Daily Index Performance)and will be reduced by the Daily Investor Fee and, in the case of an early redemption, the RedemptionFee Amount. Additionally, as of the date of this Prospectus Supplement, the Daily Accrual equals anegative amount and, as a result, to the extent that the Daily Accrual is negative at any given time it willadversely affect the value of your Securities. The Daily Investor Fee will be calculated and applied basedon the applicable Daily Index Performance and will therefore depend on daily fluctuations of theapplicable underlying Index level. Each series of Securities is linked to the level of the applicableunderlying Index, which, in turn, provides exposure to VSTOXX futures contracts. All hypotheticalpurchases and sales of first and second month VSTOXX futures contracts will occur at the bid or offerprices and will incur a cost as a result of the bid-offer spread. In addition, the Inverse Investable Indexwill incur reset costs, which are costs related to paying the bid-offer spreads required to maintain a 1xshort position, based on the change in settlement price for each of the first and second month VSTOXXfutures contracts since the prior Index Business Day and on the number of each VSTOXX FuturesContract that must be bought or sold to maintain the 1x short position, and will therefore depend on anumber of market factors, all of which are beyond UBS’s control. Each Index is volatile and subject to avariety of market forces, some of which are described below. The Index Closing Level on any ValuationDate is therefore unpredictable. You may lose all or a substantial portion of your principal if the level ofthe applicable underlying Index decreases or does not increase by an amount sufficient to offset the DailyInvestor Fee and, if applicable, the Redemption Fee Amount and creation fee. This will be true even if thevalue of the applicable underlying Index as of some date or dates prior to the applicable Valuation Datewould have been sufficiently high to offset the Daily Investor Fee and, if applicable, the Redemption FeeAmount and creation fee.

S-27

Risk Factors

The Securities are not suitable for all investors. In particular, the Securities should bepurchased only by sophisticated investors who understand the consequences ofinvesting in volatility indices with a limited performance history and of seeking longor inverse investment results, futures contracts, the volatility of the securities markets,currency markets, the nature of the underlying securities market, roll costs, bid-offerspreads, the effects of a relatively illiquid market, and the path dependence of theIndices and the Securities, who do not intend to hold the Securities as a buy and holdinvestment, and who are willing and able to actively and frequently monitor theirinvestment, even intraday. The Securities are intended for sophisticated investors touse as part of an overall diversified portfolio, and should not be used as a buy andhold investment.

The Securities require an understanding of futures contracts, volatility of the securities markets, thenature of the underlying securities market, currency markets, index construction and calculation andpath dependence of investment results and are intended for sophisticated investors to use as part of anoverall diversified portfolio, and should not be used as a buy and hold investment. The Securities arerisky and may not be suitable for investors who plan to hold them for longer periods of time. Each seriesof Securities is designed to achieve its stated investment objectives (described under “The Indices —IndexConstruction” beginning on page S-59) over the short-term but will likely deviate from its statedinvestment objectives over periods longer than one day. Therefore, it is possible that you will suffersignificant losses even if the level of the applicable underlying Index, or the VSTOXX, increases over thelong term. In addition, because investors in VSTOXX futures contracts must roll their VSTOXX futurespositions from one month to the next, futures positions, unlike positions in securities, cannot be heldindefinitely and require frequent transactions in order to maintain the position in VSTOXX futures.Assuming a constant futures curve, the need to maintain a constant exposure to VSTOXX futures createsthe potential for positive or negative returns based on the shape of the VSTOXX futures curve (i.e.whether the market for VSTOXX futures is in contango or in backwardation). These changes areseparate from outright movements in VSTOXX futures. As a result, the return on a position in VSTOXXfutures may vary significantly from the percentage changes of the VSTOXX itself. Typically, though notin all market conditions, this implied “roll cost” significantly decreases the return for investors who arelong VSTOXX futures. As a result of this implied “roll cost” and other factors that may cause the valueof your Securities to decrease, the negative effect of the Daily Investor Fee, the bid-ask spreads and, in thecase of the Inverse Securities, the reset costs, there is a significant possibility that the amount payable onthe Securities at maturity or upon call, early redemption or acceleration will be less than the amount ofyour initial investment in the Securities, and that you will lose part or all of your initial investment if youhold the Securities for a long period of time. We do not expect that any investor will hold the Securitiesfrom inception to maturity. The Securities should be purchased only by sophisticated investors whounderstand the consequences of investing in volatility indices with a limited performance history and ofseeking long or inverse investment results, the volatility of the securities markets, currency markets,futures contracts, the nature of the underlying securities market, implied roll costs, bid-offer spreads, theeffects of a relatively illiquid market, and the path dependence of the Indices and the Securities, and whowill actively and frequently monitor their investment in the Securities, even intraday.

The replacement of futures contracts included in the Indices may result in a reducedamount payable at maturity or upon early redemption, call or acceleration of theSecurities.

The Indices are composed of VSTOXX futures contracts. Unlike equities, which typically entitle theholder to a continuing stake in a corporation, futures contracts specify a certain date for delivery of theunderlying asset or for settlement in cash based on the level of the underlying asset. As the futurescontracts that comprise the Index approach expiration, they are replaced by similar contracts that have a

S-28

Risk Factors

later expiration. Thus, for example, a futures contract purchased and held in August may specify aSeptember expiration. As time passes, the contract expiring in September may be replaced by a contractexpiring in October. The process of closing out (or deemed closing out) of positions to reflect the changein expirations is referred to as “rolling.” Assuming a constant futures curve, the need to liquidatepositions in expiring futures and establish positions in the next expiration month (“rolling”) creates thepotential for positive or negative returns that are separate from outright movements in futures contracts.As a result, the return on a position in VSTOXX futures may vary significantly from the percentagechanges of the VSTOXX itself.

If the market for these contracts is in “contango,” which means that the prices are higher in the distantdelivery months than in the nearer delivery months, and the futures curve remains constant, the value ofthe Long Investible Index has the potential to be reduced by a negative implied “roll cost” caused by thedecline of the value of the contracts as they approach their applicable delivery dates and by thereplacement of expiring contracts in nearer delivery months with higher-priced contracts in distantdelivery months. Conversely, under these conditions, the value of the Inverse Investible Index has thepotential to be bolstered by a positive implied “roll yield” caused by the increase in the value of thecontracts as they approach their applicable delivery dates and by the replacement of short positions inexpiring contracts in nearer delivery months with short positions in lower-priced contracts in distantdelivery months.

If the market for these contracts is in “backwardation,” which means that the prices are lower in thedistant delivery months than in the nearer delivery months, and the futures curve remains constant, thevalue of the Long Investible Index has the potential to be bolstered by a positive implied roll yield causedby the increase the value of the contracts as they approach their applicable delivery dates and by thereplacement of expiring contracts in nearer delivery months with lower-priced contracts in distantdelivery months. Conversely, under these conditions, the value of the Inverse Investible Index has thepotential to be reduced by a negative implied roll cost caused by the decrease in the value of the contractsas they approach their applicable delivery dates and by the replacement of short positions in expiringcontracts in nearer delivery months with short positions in higher-priced contracts in distant deliverymonths.

The VSTOXX futures contracts included in the Indices have not historically exhibited consistent periodsof backwardation, and backwardation will most likely not exist at many, if not most, times. Moreover,the VSTOXX futures contracts included in the Indices have historically traded in contango markets.VSTOXX futures contracts have, on average, exhibited very high contango in the past, resulting in asignificant implied cost to “roll” the futures for the Long Investable Index.

The existence of contango in the future markets will likely result in roll costs which could adverselyaffect the value of the Long Securities but will also likely result in implied roll yields which could increasethe value of the Inverse Securities. Conversely, the existence of backwardation in the future marketscould result in roll yields which could favorably affect the value of the Long Securities but could alsoresult in implied roll costs which could decrease the value of the Inverse Securities.

In addition to these implied roll costs or roll yields, the constant rolling of futures contracts requires aconstant hypothetical buying and selling of futures contracts. All sales and purchases of these futurescontracts occur at the bid or offer prices, between which there is a spread. Consequently, eachhypothetical sale or purchase of a futures contract will incur a cost related to paying the bid-offerspread.

S-29

Risk Factors

The Securities are subject to long holding period risk.

The Securities are only suitable for a very short investment horizon. The relationship between the level ofthe applicable underlying Index and the Current Indicative Value and intraday indicative value of theapplicable series of Securities will begin to break down as the length of an investor’s holding periodincreases. The Securities are not long-term substitutes for long or short positions in the futures contractsincluded in the Index. Further, over a longer holding period, the applicable Index is more likely toexperience a dramatic price movement that may result in the intraday indicative value of the InverseSecurities becoming equal to or less than 25.0% of the prior day’s Current Indicative Value. Upon suchan event, the Inverse Securities will be accelerated and you will likely lose all or a substantial portion ofyour investment. If you hold the Securities as a long-term investment, you may lose all or a substantialportion of your investment.

Credit of UBS.

The Securities are senior unsecured debt obligations of the issuer, UBS, and are not, either directly orindirectly, an obligation of or guaranteed by any other party. Any payment to be made on the Securities,including any payment at maturity or upon call, acceleration or early redemption, depends on the abilityof UBS to satisfy its obligations as they come due. As a result, the actual and perceived creditworthinessof UBS will affect the market value, if any, of the Securities prior to maturity, call, acceleration or earlyredemption. In addition, in the event UBS were to default on its obligations, you may not receive anyamounts owed to you under the terms of the Securities.

Changes in our credit ratings may affect the market value of the Securities.

Our credit ratings are an assessment of our ability to pay our obligations, including those on theSecurities. Consequently, actual or anticipated changes in our credit ratings may affect the market valueof the Securities, either positively or negatively. However, because the return on the Securities isdependent upon certain factors in addition to our ability to pay our obligations on the Securities, animprovement in our credit ratings will not reduce the other investment risks related to the Securities.Therefore, a deterioration in our credit ratings may have a negative effect on the market value of theSecurities but an improvement in our credit ratings may or may not result in an increase in the marketvalue of the Securities.

Investments in the Securities do not benefit from protections provided on bankdeposits.

An investment in the Securities may give rise to higher yields than a bank deposit placed with UBS orwith any other investment firm in the UBS Group (a “UBS Bank Deposit”). However, an investment inthe Securities carries risks which are very different from the risk profile of a UBS Bank Deposit. TheSecurities are expected to have greater liquidity than a UBS Bank Deposit since UBS Bank Deposits aregenerally not transferable. However, the Securities may have no established trading market when issued,and one may never develop. Investments in the Securities do not benefit from any protection providedpursuant to Directive 2014/49/EU of the European Parliament and of the Council of the European Unionon deposit guarantee schemes or any national implementing measures implementing this Directive in anyjurisdiction. Therefore, if we become insolvent or default on our obligations, investors investing in suchSecurities in a worst case scenario could lose their entire investment. Further, if UBS experiences financialdifficulties, the Swiss Financial Market Supervisory Authority has the power to open resolution orliquidation proceedings or impose protective measures in relation to UBS Group AG, UBS AG or UBSSwitzerland AG, and holders of the Securities may be subject to write-down or conversion into equity onany application of the general bail-in tool and non-viability loss absorption, which may result in suchholders losing some or all of their investment.

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Risk Factors

The Securities are highly sensitive to large changes in the market price of theunderlying futures contracts and may be automatically accelerated and mandatorilyredeemed, resulting in a loss of all or a substantial portion of your investment.

Because the Securities are linked to the daily performance of the applicable underlying Index andinclude either inverse or leveraged exposure, changes in the market price of the underlying futures willhave a greater likelihood of causing such Securities to be worth zero than if such Securities were notlinked to the inverse or leveraged return of the applicable underlying Index. As described in more detailunder “Specific Terms of the Securities — Acceleration Upon Occurrence of Stop Loss TerminationEvent” beginning on page S-79, in the event the intraday indicative value of the Inverse Securities isequal to or less than 25.0% of its Closing Indicative Value at the end of the prior Exchange BusinessDay, all issued and outstanding Securities of the Inverse Securities will be automatically accelerated andmandatorily redeemed and holders will receive only the Stop Loss Redemption Value; provided that ifthe Stop Loss Redemption Value so calculated is less than or equal to zero, the payment uponacceleration will be zero. Holders of Inverse Securities that are accelerated will not benefit from anysubsequent increase in the indicative value of the Inverse Investable Index, even if such increase occursprior to the Stop Loss Redemption Date and even if such increase causes the indicative value of theInverse Securities to exceed the intraday indicative value that triggered the Stop Loss TerminationEvent. The Stop Loss Redemption Value may be significantly less than the amount of your investmentin the Inverse Securities and may be zero.

In addition, because the intraday indicative value of the Inverse Securities must decrease by 75% or morefrom the prior Exchange Business Day’s Closing Indicative Value on a single Trading Day in order totrigger a Stop Loss Redemption Event, it is highly likely that any such Stop Loss Termination Event willoccur during a period of extreme market conditions, including disruptions to trading markets. Forexample, during any such period the liquidity of VSTOXX futures may be adversely affected, which mayhinder or delay the determination of the applicable Stop Loss Redemption Value. Market conditions onany Stop Loss Termination Date are beyond our control and are impossible to predict, and mayadversely affect the value of your Securities in unforeseen ways.

We may issue and sell additional Securities of any series at any time but we are underno obligation to do so, and we may limit or restrict such sales, and we may stop andsubsequently resume selling additional Securities of any series at any time. Any ofthese actions could materially and adversely affect the trading price and liquidity ofthe Securities of such series in the secondary market.

In our sole discretion, we may decide to issue and sell additional Securities of a series from time totime at a price that is higher or lower than the Stated Principal Amount. The price of the Securities ofa series in any subsequent sale may differ substantially (higher or lower) from the price paid inconnection with any other issuance of such Securities. Sales of the series of Securities will be made atmarket prices prevailing at the time of sale, at prices related to market prices or at negotiated prices.Additionally, any Securities of a series held by us or an affiliate in inventory may be resold atprevailing market prices or lent to market participants who may have made short sales of theSecurities of such series. However, we are under no obligation to issue or sell additional Securities ofa series at any time, and if we do sell additional Securities of a series, we may limit or restrict suchsales, and we may stop and subsequently resume selling additional Securities of such series at anytime. Any of these actions could materially and adversely affect the trading price and liquidity ofsuch series of Securities in the secondary market. Furthermore, unless we indicate otherwise, if wesuspend selling additional Securities of a series, we reserve the right to resume selling additionalSecurities of such series at any time, which might result in the reduction or elimination of anypremium in the trading price.

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Risk Factors

We reserve the right from time to time to reduce or waive the minimum redemptionamount, waive the Redemption Fee Amount and/or accelerate the RedemptionValuation Date to the date on which the notice of redemption is received by us ratherthan the following Trading Day, in each case in our sole discretion and on acase-by-case basis. However, there can be no assurance that we will choose to do so,that we will do so for any particular holder, or that any holder will benefit from ourexercise of such rights. You should not assume that you will be entitled to the benefitof any such waiver or acceleration.

As described under “Specific Terms of the Securities — Early Redemption at the Option of the Holders”and “Specific Terms of the Securities — Redemption Procedures” on pages S-77 and S-78, respectively,the right of holders of the Securities to elect to require us to redeem their Securities of a series is subjectto a minimum redemption amount of at least 50,000 Securities of such series. In addition, the amountthat holders of the Securities will receive upon early redemption will be reduced by the Redemption FeeAmount. However, we reserve the right from time to time to reduce or waive the minimum redemptionamount and/or the Redemption Fee Amount in our sole discretion on a case-by-case basis. However,there can be no assurance that we will choose waive any redemption requirements or that any holder ofthe Securities will benefit from our election to do so. You should not assume that you will be entitled tothe benefit of any such waiver.

Furthermore, as described in “Specific Terms of the Securities — Redemption Procedures,” theRedemption Valuation Date with respect to any particular exercise of the redemption right will generallybe the first Trading Day following the date that we receive the applicable redemption notice andredemption confirmation. However, we reserve the right from time to time to accelerate, in our solediscretion on a case-by-case basis, the Redemption Valuation Date to the date on which the notice ofredemption is received by UBS rather than the following Trading Day. There can be no assurance that wewill choose to accelerate the Redemption Valuation Date for any holder of the Securities or that anyholder of the Securities will benefit from our election to do so. You should not assume that you will beentitled to the benefit of any such acceleration.

We will be under no obligation to exercise the rights described above, or to make any announcementregarding any decision by us to exercise such rights. As a result, when considering making an investmentin the Securities, you should assume that we will not choose to exercise any of the rights describedabove, or that if we do exercise such rights, we will choose not to do so with respect to any redemptionrequests that you submit. Instead, you should assume that, with respect to the early redemption of yourSecurities, all requirements and procedures that are described in this prospectus supplement, includingthe Redemption Fee Amount and the minimum 50,000 Securities redemption amount, will apply at alltimes.

The bid-offer spread costs incurred by each of the Indices may vary significantly overtime, even from day to day, will be impacted by market factors beyond the control ofthe Index Sponsor or UBS and cannot be predicted in advance.

All hypothetical purchases and sales of first and second month VSTOXX futures contracts will occur atthe bid or offer prices and will incur a cost as a result of the bid-offer spread. Since first and secondmonth VSTOXX futures contracts are relatively illiquid compared to other types of futures contracts,the bid-offer spread is likely to be highly volatile in comparison to other futures contracts. Thebid-offer spread may be very large, which will cause you to lose some or all of your investment in theSecurities.

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Risk Factors

The prices of the VSTOXX futures contracts will depend on unpredictable market factors that arebeyond UBS’s control and may vary significantly from day to day, potentially resulting in high bid-offerspread costs which will reduce the value of the applicable underlying Index and, therefore, the value ofthe Securities. The bid-offer spread will erode the value of your Securities.

Moreover, as the Inverse Investable Index may require additional purchases or sales in order to “reset”its leverage on a daily basis, and because such purchases or sales will occur at the bid-offer spreads, theInverse Investable Index will be particularly affected by the bid-offer spread costs. This additionalexposure to bid-offer spread costs is referred to as a “reset cost.”

Therefore, investors should be extremely cautious when considering an investment in the Securitiesand, if they invest, they should frequently monitor their investment and the very likely negative effectof the bid-offer spreads on the return of the Indices and, therefore, on the applicable series ofSecurities.

The reset costs incurred by the Inverse Investable Index may vary significantly overtime, even from day to day, will be impacted by market factors beyond the control ofthe Index Sponsor or UBS and cannot be predicted in advance.

The Inverse Investable Index may require additional purchases or sales in order to “reset” its leverageon a daily basis, and because such purchases or sales will occur at the bid-offer spreads, the InverseInvestable Index will be particularly affected by the bid-offer spread costs. This additional exposure tobid-offer spread costs is referred to as a “reset cost.” The amount of the daily reset cost incurred bythe Inverse Investable Index is dependent on the changes in the settlement prices of the first andsecond month VSTOXX futures since the prior Index Business Day and on the number of first andsecond month VSTOXX futures that must be bought or sold in order to maintain a short position inVSTOXX futures. The prices of the VSTOXX futures contracts will depend on unpredictable marketfactors that are beyond UBS’s control and may vary significantly from day to day, potentiallyresulting in high reset costs which will reduce the value of the applicable underlying Index and,therefore, the value of the Securities. The bid-offer spread will erode the value of your Securities andwill affect the costs of resetting the Inverse Investable Index, each of which will have an adverse effecton the applicable series of Securities. Any roll costs and reset costs may be much higher than would beexpected based upon the historical and simulated historical performance of the Indices. Therefore,investors should be extremely cautious when considering an investment in the Securities and, if theyinvest, they should frequently monitor their investment and the very likely negative effect of the resetcosts on the return of the Inverse Investable Index and, therefore, on the applicable series ofSecurities.

Each series of Securities may trade at a substantial premium to or discount from itsintraday indicative value which could, in certain circumstances, result in a loss of someor all of your investment such series of Securities.

The market value of each series of Securities is influenced by many unpredictable factors, some of whichmay cause the price at which such series can be sold in the secondary market to vary substantially fromthe intraday indicative value that is calculated and disseminated throughout trading hours. For example,if UBS were to suspend sales of one or more series of Securities for any reason, the liquidity of the marketfor such series of Securities could be affected, potentially leading to insufficient supply, causing themarket price of such series of Securities to increase. Such an increase could represent a premium over theintraday indicative value of such series of Securities. If, following a suspension of sales, we were toresume sales of such series of Securities, it could result in the reduction or elimination of any premium inthe market price over the intraday indicative value.

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Risk Factors

Additionally, the Securities are linked to euro denominated VSTOXX futures contracts which trade onEuropean markets. For a period of time each Trading Day, the Securities will trade during hours whenthe VSTOXX futures contracts are not trading, and during such period of time, the intraday indicativevalue of each series of Securities is likely to differ from the value of the Securities that would bedetermined if the futures contracts that comprise the underlying Indices were trading and updated Indexvalues were available and used in the calculation.

You should, before trading in the secondary market, compare the intraday indicative value of such seriesof Securities with the then-prevailing trading price of such series and be aware that paying a premiumpurchase price over the intraday indicative value of such series of Securities could lead to significantlosses in the event you sell your Securities at a time when such premium is no longer present in themarket or such series of Securities is called, accelerated or matures.

The VSTOXX futures contracts underlying the Index and, thereby, the Securities, are relatively illiquid.The illiquidity of VSTOXX futures contracts may increase the risk that the prices of VSTOXX futures,and therefore the level of the applicable underlying Index and the value of the Securities, may be highlyvolatile. The reduced liquidity of VSTOXX futures contracts will magnify any hedging activity by us orour affiliates and may impact our ability to effectively hedge.

Conversely, suspension of additional issuances of a series of Securities can also result in a significantreduction in the number of outstanding Securities of such series if investors subsequently exercise theirearly redemption right. If the total number of outstanding Securities of a series has fallen to a level that isclose to or below the minimum redemption amount, you may not be able to purchase enough Securitiesof such series to meet the minimum size requirement in order to exercise your early redemption right.The unavailability of the redemption right could result in the Securities of such series trading in thesecondary market at discounted prices below the intraday indicative value. Having to sell your Securitiesat a discounted market price below the intraday indicative value of the Securities could lead to significantlosses.

The reduced liquidity profile of VSTOXX futures greatly increases the risks of the market price of theSecurities trading above the intraday indicative value and increases the risk of an investor paying apremium to purchase the Securities over the intraday indicative value of such series of Securities. Inaddition, the illiquidity of VSTOXX futures contracts may magnify the risks of any suspension ofadditional issuances of a series of Securities. Prior to making an investment in any series of Securities,you should take into account whether or not the market price is tracking its intraday indicative value andconsider the prospects of it continuing to do so.

If the Closing Indicative Value of any series of Securities increases above its StatedPrincipal Amount, at any time, any subsequent adverse daily performance of theapplicable underlying Index will result in a larger decrease in the level of such ClosingIndicative Value than if the current Closing Indicative Value of such series hadremained constant at its Stated Principal Amount.

If the current Closing Indicative Value of any series of Securities increases above its Stated PrincipalAmount, the amount of decrease of such Closing Indicative Value resulting from an adverse dailyperformance of the applicable underlying Index will increase accordingly. This is because the applicableDaily Index Performance will be applied to a Closing Indicative Value larger than its Stated PrincipalAmount. As such, the amount of decrease from any adverse daily performance of the applicableunderlying Index will be more than if such Closing Indicative Value were maintained constant at itsStated Principal Amount. This means that if the Closing Indicative Value of such series of Securitiesincreases above its Stated Principal Amount, it will take smaller adverse daily performances to decrease

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Risk Factors

such Closing Indicative Value (and subsequently the value of your investment) back to its initial valuethan would have been the case if such Closing Indicative Value were maintained at its Stated PrincipalAmount.

If the Closing Indicative Value for any series of Securities decreases below its StatedPrincipal Amount, at any time, any subsequent beneficial daily performance of theapplicable underlying Index will result in a smaller increase in the level of such ClosingIndicative Value than if the current respective Closing Indicative Value of such serieshad remained constant at its Stated Principal Amount.

If the current Closing Indicative Value for any series of Securities decreases below its Stated PrincipalAmount, the amount of increase of such Closing Indicative Value resulting from a beneficial dailyperformance of the applicable underlying Index will decrease correspondingly. This is because theapplicable Daily Index Performance will be applied to a smaller Closing Indicative Value than its StatedPrincipal Amount. As such, the amount of increase from any beneficial daily performance of theapplicable underlying Index will be less than if such Closing Indicative Value were maintained constantat its Stated Principal Amount. This means that if the Closing Indicative Value of such series of Securitiesdecreases below its Stated Principal Amount, it will take larger beneficial daily performances to restoresuch Closing Indicative Value (and subsequently the value of your investment) back to its initial valuethan would have been the case if such Closing Indicative Value were maintained at its Stated PrincipalAmount.

The Securities are not linked to the VSTOXX.

Each series of Securities is linked to the daily performance of one of the applicable underlying Indices,which in turn is linked to prices of futures contracts on the VSTOXX. Each applicable underlying Indextracks either a long or short exposure to VSTOXX futures. The performance of these futures contractswill not necessarily track the performance of the VSTOXX and none of the Indices is designed to trackthe performance of the VSTOXX. Your Securities may not benefit from increases (or in the case of theInverse Investable Index, decreases) in the level of the VSTOXX because such increases (or in the case ofthe Inverse Investable Index, decreases) will not necessarily cause the level of the relevant futurescontracts on the VSTOXX to increase (or in the case of the Inverse Investable Index, decrease).Additionally, the rolling of the futures contracts that are used to construct the applicable underlyingIndex may decrease your returns. A hypothetical investment that was linked directly to the performanceof the VSTOXX could generate a higher return than your series of Securities.

The mismatch between the Index Business Day and Exchange Business Day could resultin the value of the Securities not accurately reflecting the current value of the Index.

VSTOXX futures are based on the EURO STOXX 50® Index, which trades on the Eurex Exchange. TheEurex Exchange may have a different trading calendar and thus may trade on different days than yourseries of Securities. On any day BATS (or another primary exchange for trading in the applicable series ofSecurities) is open for trading in the applicable series of Securities (each such day a “Exchange BusinessDay”), the Closing Indicative Value shall be calculated as (Closing Indicative Value on the previouscalendar day × Daily Index Performance for the applicable underlying Index) — Daily Investor Fee forsuch series of Securities for such calendar day. For each Index, the Daily Index Performance on anyExchange Business Day will equal (i)(a) the Index Closing Level of the applicable underlying Index onsuch Exchange Business Day, divided by (b) the Index Closing Level for the applicable underlying Indexon the immediately preceding Exchange Business Day, plus (ii) the Daily Accrual. The Daily IndexPerformance will equal one on any calendar day that is not an Exchange Business Day but which is anIndex Business Day. The Daily Index Performance will equal one on any calendar day that is neither anIndex Business Day nor an Exchange Business Day.

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Risk Factors

For each Index, if the applicable underlying Index does not publish an Index Closing Level on anyExchange Business Day, the Index Closing Level of such applicable underlying Index with respect to suchExchange Business Day will be the most recently published Index Closing Level for such Index, subject toadjustment in the case of a Market Disruption Event. If any day is an Index Business Day, but is not anExchange Business Day, the value of your series of Securities may change during such Index Business Dayeven though you will be unable to buy or sell your Securities. Accordingly, if the applicable underlyingIndex decreases in value, you may lose some or all of your investment in the applicable series ofSecurities on such Index Business Day.

Although each Index trades on Eurex, the Securities will trade only during regulartrading hours on BATS.

VSTOXX futures contracts trade Monday to Friday, from 8:50 a.m. to 10:00 p.m. CET, and options onVSTOXX futures trade Monday to Friday, from 8:50 a.m. to 5:30 p.m. CET. The Indices trade Mondayto Friday from 8:50 a.m. to 5:30 p.m. CET. By contrast, the Securities will trade on BATS only duringthe hours that BATS is open (typically from 9:30 a.m. to 4:00 p.m. New York City time, Monday toFriday), and the Securities will not trade on BATS holidays.

Significant movements in the price of VSTOXX futures contracts, and therefore the level of the Indices,may take place at times when BATS is closed, and you will not have the opportunity to trade theSecurities until BATS is open. For example, an announcement or development that has a significantimpact on European equities may take place when BATS is closed but the European markets on whichthe Indices trade or VSTOXX futures contracts trade are open. By the time BATS opens, a significantchange in the price of VSTOXX futures contracts may already have taken place, and the price of theSecurities may be significantly lower or higher than it may otherwise have been had you been able totrade the Securities sooner. If there is a dramatic overnight movement in the performance of the InverseInvestable Index, the intraday indicative value of the Inverse Securities may be zero when the InverseSecurities begin to trade on BATS, in which case the Inverse Securities would be automaticallyaccelerated and we would not pay holders anything in respect of their Inverse Securities upon suchacceleration.

In addition, as discussed above, the Securities will also trade during periods that the VSTOXX futurescontracts are not trading. During such periods, the intraday indicative value of each series of theSecurities will not change because the European markets will be closed and the underlying Index valueswill not be updated until the following trading day. Throughout such periods, the intraday indicativevalue of each series of the Securities will continue to be disseminated based on the most recentlypublished closing level of the Indices, but because the European markets will be closed, the Indices andthe intraday indicative value of each series of the Securities will not change. Accordingly, under suchcircumstances, the intraday indicative value of each applicable series of Securities may not reflect the truevalue of the Securities of such series.

For these reasons, the intraday indicative value of each series of Securities is likely to differ from thevalue of the Securities that would be determined if the futures contracts that comprise the underlyingIndices were trading and updated Index values were available and used in the calculation. As a result, weexpect there to be uncertainty about the intrinsic value of the Securities during these time periods, andthe trading price of the Securities is likely to diverge from the intraday indicative value during these timeperiods. Investors should exercise caution in connection with any trading in these time periods,particularly if there is a significant move in futures prices during these time periods.

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Risk Factors

The value of the Securities at any time may not accurately reflect the current U.S.dollar/euro exchange rate and, when such rate is accurately reflected, the value of theSecurities could be significantly higher or lower, as the case may be.

The interbank market for the U.S. dollar and the euro is a global, around-the-clock market. Each seriesof the Securities has been approved for listing, subject to official notice of issuance, on BATS, and theSecurities will trade only during the hours that BATS is open. To the extent that BATS is closed while themarkets for the U.S. dollar and the euro remain open, significant price and rate movements may takeplace in the underlying foreign exchange markets that will not be reflected immediately in the price of theSecurities.

The Securities are not linked to options used to calculate the VSTOXX, the actualvolatility of the EURO STOXX 50® Index or the equity securities included in the EUROSTOXX 50® Index, nor will the return on your Securities be a participation in the actualvolatility of the EURO STOXX 50® Index.

The VSTOXX measures the 30-day implied volatility of the EURO STOXX 50® Index as calculatedbased on the prices of certain put and call options on the EURO STOXX 50® Index. The actual volatilityof the EURO STOXX 50® Index may differ significantly from the level predicted by the VSTOXX orderived from the prices of the options used in the calculation of the VSTOXX. The Closing IndicativeValue and the intraday indicative value of each series of Securities are based on the value of theapplicable underlying Index, which is based on the relevant futures on the VSTOXX. Your Securities arenot linked to the realized volatility of the EURO STOXX 50® Index and will not reflect the return youwould realize if you owned, or held a short position in, the equity securities underlying the EUROSTOXX 50® Index or if you traded the options on the EURO STOXX 50® Index used to calculate thelevel of the VSTOXX.

The VSTOXX is subject to risks associated with foreign equity securities.

Each series of Securities is linked to an investable Index which measures the implied volatility changesin the value of foreign equity securities. Investments in securities linked to changes in value of foreignequity securities involve risks associated with the securities markets in those countries, including risksof governmental intervention in those markets and cross-shareholdings in companies in certaincountries. The risk of volatility in these markets is increased as there is generally less publicly availableinformation about foreign companies than about U.S. companies that are subject to the reportingrequirements of the Securities and Exchange Commission, and foreign companies are generally subjectto accounting, auditing and financial reporting standards and requirements and securities trading rulesthat are different from those applicable to U.S. reporting companies. The VSTOXX futures contractsunderlying the Indices may be affected by political, economic, financial and social factors in thosecountries, or global regions, including changes in government, economic and fiscal policies andcurrency exchange laws. Local securities markets may trade a small number of securities and may beunable to respond effectively to increases in trading volume, potentially making prompt liquidation ofholdings difficult or impossible at times leading to greater volatility in the EURO STOXX 50 Securitiesunderlying the VSTOXX and thus, the Indices. Moreover, the economies in such countries may differfavorably or unfavorably from the economy in the United States in such respects as growth of grossnational product, rate of inflation, capital reinvestment, resources, self-sufficiency and balance ofpayment positions which, since the Indices are linked to euro denominated futures contracts, mayadversely affect the value of your Securities.

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Risk Factors

The performance of the VSTOXX futures will be affected by changes in the exchangerate between the euro and the U.S. dollar.

Each series of Securities is linked to the daily performance of one of the applicable underlying Indices,which in turn is linked to prices of futures contracts on the VSTOXX, which are traded in euro. Thevalue of the euro may be subject to a high degree of fluctuation relative to the U.S. dollar. On a dailybasis, the level of the applicable underlying Index will be translated from euro to dollar at the prevailingspot exchange rate. Accordingly if the euro depreciates relative to the U.S. dollar on a daily basis, yourreturn on the Securities will underperform an alternative investment that offers exposure to the changesin the level of the VSTOXX without taking into account the exchange rate. Further, any currencyfluctuations could affect the performance of the VSTOXX.

The Daily Accrual represents the rate of interest that could be earned or is payable on a notional capitalreinvestment at the generic three-month USD adjusted German Bund Bill rate as reported on Bloombergunder the ticker: SOL3MBRU (or any successor ticker on Bloomberg or any successor service). The DailyAccrual is based upon a USD adjusted German bond rate, which is denominated in euros before beingadjusted and therefore will be subject to similar value fluctuation and depreciation risks.

As of the date of this Prospectus Supplement, the German Bund Bill rate is negative and therefore theDaily Accrual equals a negative amount. At any time the Daily Accrual equals a negative amount, theDaily Index Performance will be adversely affected by the Daily Accrual and the Daily Accrual willtherefore adversely affect the value of your Securities.

The VSTOXX is a theoretical calculation and is not a tradable index.

The VSTOXX is a theoretical calculation and cannot be traded on a spot price basis. The settlementprice at maturity of the VSTOXX futures contracts is based on this theoretically derived calculation. As aresult, the behavior of the futures contracts may be different from, and more volatile and unpredictablethan, the behavior of futures contracts whose settlement prices are based on a tradable asset, which couldcause the value of the Securities to be more volatile than the value of securities linked to futures contractswhose settlement prices are based on a tradable asset.

The Securities are part of a series of UBS AG debt securities entitled “Medium-TermNotes, Series B” and do not benefit from a co-obligation of UBS Switzerland AG.

Unlike UBS AG’s exchange-traded notes issued prior to June 14, 2015, which are part of a series of debtsecurities entitled “Medium-Term Notes, Series A” having UBS Switzerland AG as a co-obligor of such debtsecurities, the Securities are part of a separate series of debt securities entitled “Medium-Term Notes,Series B,” and were issued after June 14, 2015. As a result, UBS Switzerland AG is not a co-obligor of theSecurities and has no liability with respect to the Securities. If UBS AG fails to perform and observe everycovenant of the indenture to be performed or observed by UBS AG with respect to the Securities, holders ofthe Securities will have recourse only against UBS AG, and not against UBS Switzerland AG.

There are restrictions on the minimum number of Securities you may redeem and onthe procedures and timing for early redemption.

You must redeem at least 50,000 Securities of an applicable series at one time in order to exercise yourright to redeem your Securities on any Redemption Date, unless we elect to reduce or waive theminimum redemption amount in our sole discretion, on a case-by-case basis, or your broker or otherfinancial intermediary bundles your Securities for redemption with those of other holders of theapplicable series to reach this minimum requirement. You should not assume you will be entitled to thebenefit of any such reduction or waiver. You may only redeem your Securities on a Redemption Date if

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Risk Factors

Janus Distributors receives a notice of redemption from your broker by no later than 4:00 p.m. (NewYork City time) and a confirmation of redemption by no later than 4:00 p.m. (New York City time) onthe Trading Day prior to the applicable Valuation Date. If Janus Distributors does not receive yournotice of redemption by 4:00 p.m. (New York City time), or the confirmation of redemption by4:00 p.m. (New York City time) on the Trading Day prior to the applicable Valuation Date, your noticewill not be effective and we will not redeem your Securities on the applicable Redemption Date. Yournotice of redemption will not be effective until Janus Distributors confirms receipt. In addition, JanusDistributors may request a medallion signature guarantee or such assurances of delivery as JanusDistributors may deem necessary in its sole discretion. See “Specific Terms of the Securities — EarlyRedemption at the Option of the Holders” beginning on page S-77. We also reserve the right from timeto time to accelerate, in our sole discretion on a case-by-case basis, the Redemption Valuation Date tothe date on which the notice of redemption is received by Janus Distributors rather than the followingTrading Day. You should not assume you will be entitled to the benefit of any such acceleration.

You will not know the Redemption Amount at the time you elect to request that weredeem your Securities.

You will not know the Redemption Amount you will receive at the time you elect to request that weredeem your Securities. Your notice to Janus Distributors to redeem your Securities is irrevocable andmust be received by Janus Distributors no later than 4:00 p.m. (New York City time) on the Trading Dayimmediately preceding the Redemption Valuation Date and a completed and signed confirmation of suchredemption must be received by Janus Distributors no later than 4:00 p.m. (New York City time) on thesame date. The Redemption Valuation Date is the third Trading Day prior to the related RedemptionDate and also the first Trading Day following the date on which such notice and confirmation arereceived by Janus Distributors, except that we reserve the right from time to time to accelerate, in oursole discretion on a case-by-case basis, the Redemption Valuation Date to the date on which the notice ofredemption is received by Janus Distributors rather than the following Trading Day. You will not knowthe Redemption Amount until after the Redemption Valuation Date, and we will pay you theRedemption Amount, if any, on the Redemption Date, which is the third Trading Day following thecorresponding Redemption Valuation Date. As a result, you will be exposed to market risk in the eventthe market fluctuates after we confirm the validity of your notice of election to exercise your right tohave us redeem your Securities, and prior to the relevant Redemption Date.

The liquidity of the market for the Securities may vary materially over time, and youmay be unable to redeem the Securities if you do not hold at least 50,000 Securities ofa series.

As stated on the cover of this prospectus supplement, we sold a portion of the Securities on the InitialTrade Date, and the remainder of the Securities may be offered and sold from time to time, through UBSSecurities LLC, our affiliate, as agent, to investors and dealers acting as principals. Also, the number ofSecurities outstanding or held by persons other than our affiliates could be reduced at any time due toearly redemptions. We may suspend or cease sales of the Securities at any time, at our discretion.Accordingly, the liquidity of the market for the Securities could vary materially over their term. Whileyou may elect to redeem your Securities of any series prior to maturity, early redemption is subject to theconditions and procedures described elsewhere in this prospectus supplement, including the conditionthat you must redeem at least 50,000 Securities of the applicable series at one time in order to exerciseyour right to redeem your Securities on any Redemption Date.

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The VSTOXX futures contracts underlying the VSTOXX are less liquid than otherexchange-traded futures contracts, which could cause increased volatility and impactour ability to hedge.

First and second month VSTOXX futures contracts trade on an exchange, but are relatively illiquidcompared to other types of futures contracts. The illiquidity of VSTOXX futures may increase the riskthat the prices of VSTOXX futures, and therefore the level of the applicable underlying Index and thevalue of the Securities, may be highly volatile. In addition, the prices of VSTOXX futures, and thereforethe level of the applicable underlying Index and the value of the Securities, will be subject to a variety ofmarket forces, none of which may be predictable in advance, which may further increase the risk ofvolatility.

The reduced liquidity of VSTOXX futures contracts will magnify any hedging activity by us or ouraffiliates and may impact our ability to effectively hedge. Although the rolling of first and second monthfutures contracts typically occurs at the close of business, we or our affiliates may hedge our position, inwhole or in part, during trading hours as well as during the trading day preceding the close of business.This hedging activity may adversely affect the price of the applicable underlying Index and, thereby, theprice of your Securities. The effect of any hedging activity by us or our affiliates will be magnified by thereduced liquidity profile of the VSTOXX futures contracts. Due to the reduced liquidity of VSTOXXfutures contracts, this hedging by us may cause you to lose some or all of your investment in theapplicable series of Securities.

You will not receive interest payments on the Securities or have rights in respect ofany of the VSTOXX futures contracts underlying the Indices.

You will not receive any periodic interest payments on the Securities. However, because it is possible thatthe Securities may be classified as contingent payment debt instruments rather than a pre-paid forwardcontract, you may be required to accrue interest income over the term of your Securities. See “MaterialU.S. Federal Income Tax Consequences — Alternative Treatments.”

As an owner of the Securities, you will not have rights that investors in the futurescontracts underlying the Indices (the “Index Contracts”) may have. Your Securities willbe paid in cash, and you will have no right to receive any dividends or distributionsrelating to such contracts. The market value of the Securities may be influenced bymany unpredictable factors.

The market value of your Securities may fluctuate between the date you purchase them and theapplicable Valuation Date. Therefore, you may sustain a significant loss if you sell your Securities in thesecondary market. We expect that generally the value of the Index Contracts and the applicableunderlying Index will affect the market value of the Securities more than any other factor, althoughseveral other factors, many of which are beyond our control, will also influence the market value of theSecurities. Factors that may influence the market value of the Securities include:

➤ Prevailing market prices and forward volatility index levels of the European stock markets andprevailing market prices of options on the EURO STOXX 50® Index, the VSTOXX, and relevantfutures contracts on the VSTOXX;

➤ supply and demand for the Securities, including inventory positions with UBS Securities LLC orany market maker or additional issues of the Securities and any suspensions or limits on suchactivity;

➤ the time remaining to the maturity of the Securities;

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➤ interest rates;

➤ foreign exchange rates;

➤ economic, financial, political, regulatory, geographical, judicial or force majeure events that affectthe level of the applicable underlying Index, the market price of the European and global stockmarkets or the Index Contracts, or that affect markets generally;

➤ the size of the bid and offer spreads for first and second month VSTOXX futures contracts;

➤ the daily change in the settlement prices of first and second month VSTOXX futures contracts;

➤ the actual and perceived creditworthiness of UBS; or

➤ supply and demand as well as hedging activities in the equity-linked structured product markets.

These factors interrelate in complex ways, and the effect of one factor on the market value of yourSecurities may offset or enhance the effect of another factor in an unpredictable manner, which couldnegatively affect the market value of the Securities.

The United Kingdom’s withdrawal from the European Union may affect the value ofthe applicable series of Securities.

Pursuant to the European Referendum Act 2015, a referendum on the United Kingdom’s membership ofthe European Union (the “UK’s EU Referendum”) was held on June 23, 2016 with the majority votingto leave the European Union (the “EU”). While the result of the UK’s EU Referendum does not bind theUnited Kingdom (the “UK”) Government or the UK Parliament to a particular course of action, it iscurrently expected that the UK Government will exercise its right under Article 50 of the Lisbon Treatyto leave the EU. Notification of the UK’s election to exercise its right under Article 50 of the LisbonTreaty was sent to the European Union on March 29, 2017. The timing and the manner of the UK’swithdrawal from the EU is currently unknown and may not become clear in the short-term.

While the medium- to long-term consequences of the decision to leave the EU remain uncertain, it isexpected that there will be a short-term negative impact to the general economic conditions in the UK andbusiness and consumer confidence in the UK, which may in turn have a negative impact elsewhere in theEU and more widely. This may be affected by the length of time it takes for the UK to leave the EU and theterms of any future arrangements the UK has with the remaining member states of the EU. Among otherthings, the UK’s decision to leave the EU could lead to instability in the foreign exchange and foreign equitymarkets, including volatility in the value of the pound sterling or the euro, as well as equity securities tradedon foreign exchanges. Among other things, the UK’s decision to leave the EU could lead to instability orvolatility in the prices of equity securities on the EURO STOXX 50 Index, the VSTOXX, VSTOXX futurescontracts or the Indices, which may adversely affect the value of your Securities.

There may not be an active trading market in the applicable Securities; sales in thesecondary market may result in significant losses.

Each series of the Securities is listed on BATS. However, we are not required to maintain any listing ofthe Securities on BATS or any other exchange. Certain affiliates of UBS may engage in limited purchaseand resale transactions in the Securities, although they are not required to do so and may stop at anytime. As a result, if an active secondary market develops, we expect that investors will purchase and sellthe Securities primarily in this secondary market. Even if an active secondary market for the Securitiesdevelops, it may not provide significant liquidity or trade at prices advantageous to you. As a result, ifyou sell your Securities in the secondary market, you may have to do so at a discount from the issue priceor the intraday indicative value of the Securities and you may suffer significant losses.

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The Index Sponsor may, in its sole discretion, discontinue the public disclosure of theintraday indicative value of the Indices and the end-of-day closing value of the Indices,which could result in the Securities being delisted from BATS.

Each series of Securities is listed on BATS. The Long Securities are listed under the symbol “EVIX”. TheInverse Securities are listed under the symbol “EXIV”. The indicative value of the Long Investable Indexis published under the symbol “VST1MSL” and the indicative value of the Inverse Investable Index ispublished under the symbol “VST1MISL”. The Index Sponsor is not under any obligation to continue tocalculate the intraday indicative value of any Index and end-of-day official closing value of any Index orrequired to calculate similar values for any successor indices. If the Index Sponsor discontinues suchpublic disclosure, we may not be able to provide the intraday indicative values related to the applicableIndex required to maintain any listing of the Securities on BATS. If the Securities become delisted, theliquidity of the market for the Securities may be materially and adversely affected and you may sustainsignificant losses if you sell your Securities in the secondary market. We are not required to maintain anylisting of the Securities on BATS or any other exchange.

The Index Sponsor may adjust each Index in a way that affects the applicable IndexClosing Level, and the Index Sponsor has no obligation to consider your interests as aholder of the Securities.

The Index Sponsor is responsible for calculating and publishing the Indices, and can edit, add, delete orsubstitute the Index Contracts or make other methodological changes that could change the applicableIndex Closing Level. You should realize that the changing of underlying futures contracts included in theapplicable Index may affect the applicable Index, as a newly added contract may perform significantlybetter or worse than the existing contract. Additionally, the Index Sponsor may alter, discontinue orsuspend calculation or dissemination of any Index. Any of these actions could adversely affect the valueof the Securities. The Index Sponsor has no obligation to consider your interests as a holder of theSecurities in calculating or revising the Indices. See “The Indices.”

Simulated historical and historical levels of the Indices should not be taken as anindication of future performance during the term of the Securities.

The performance data in this prospectus supplement is presented for information only and the actualperformance of the Indices over the term of the Securities, as well as the amount payable at maturity orupon call, early redemption or acceleration, may bear little relation to the historical and simulatedhistorical performance of the Indices, which is limited as of the date of this prospectus supplement. Theperformance of the futures contracts on the VSTOXX and the long or short exposure of the applicableunderlying Index will determine the applicable Index Closing Level on any given Valuation Date or atother times during the term of the Securities. As a result, it is impossible to predict whether the level ofeach of the Indices will rise or fall.

The Indices, the VSTOXX and VSTOXX futures contracts have limited historicalinformation.

The Long Investable Index and the Inverse Investable Index were created on March 29, 2017 andtherefore each has a limited history. Furthermore, the Index Sponsor has published limited informationabout how the Indices would have performed had they been calculated in the past. In addition, futureson the VSTOXX have only traded since 2005, and not all futures of all relevant maturities have traded atall times since that date.

Because the Indices and the VSTOXX futures contracts that underlie them are of recent origin andlimited or no historical performance data exists with respect to them, your investment in the Securities

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may involve a greater risk than investing in alternate securities linked to one or more indices with anestablished record of performance. A longer history of actual performance may have been helpful inproviding more reliable information on which to assess the validity of the proprietary methodology thateach Index makes use of as the basis for an investment decision.

We have provided hypothetical, or “backtested,” returns for the Indices dating from June 4, 2009. See“Simulated Historical Performance and Hypothetical Examples.” This data may be considered whenmaking an investment decision concerning the Securities and evaluating the potential performance ofeach Index, but it is solely hypothetical and does not guarantee future performance.

Changes in the three-month USD adjusted German Bund Bill rate will affect the valueof your Securities.

Because the Daily Index Performance for each series of Securities is affected on each Index Business Dayby the Daily Accrual, which is based on the three-month USD adjusted German Bund Bill rate, changesin the three-month USD adjusted German Bund Bill rate will affect the amount payable on each series ofSecurities at maturity, or upon call, early redemption or acceleration and will therefore affect the marketvalue of each series of Securities. An increase in the three-month USD adjusted German Bund Bill ratewill result in a larger Daily Accrual on the applicable Index Business Day and will therefore increase theDaily Index Performance, and the Closing Indicative Value, of each series of the Securities from what itwould have been if the three-month USD adjusted German Bund Bill rate had remained constant. Adecrease in the three-month USD adjusted German Bund Bill rate will result in a smaller Daily Accrualon the applicable Index Business Day and will therefore reduce the Daily Index Performance, and theClosing Indicative Value, of each series of Securities from what it would have been if the three-monthUSD adjusted German Bund Bill rate had remained constant.

Additionally, as of the date of this Prospectus Supplement, the German Bund Bill rate is negative andtherefore the Daily Accrual equals a negative amount. At any time the Daily Accrual equals a negativeamount, the Daily Index Performance will be adversely affected by the Daily Accrual and the DailyAccrual will therefore adversely affect the value of your Securities.

The policies of the Index Sponsor and the Eurex Exchange, and changes that affect thecomposition and valuation of the applicable underlying Indices, the EURO STOXX 50®

Index, the VSTOXX or the futures contracts underlying the Indices, could affect theamount payable on your Securities and their market value.

The policies of the STOXX as the Index Sponsor and the Eurex Exchange concerning the calculation ofeach Index, the EURO STOXX 50® Index, the VSTOXX, as applicable, and any additions, deletions orsubstitutions of equity securities, options contracts or futures contracts and the manner in which changesaffecting the equity securities, options contracts or futures contracts are reflected in the EURO STOXX50® Index or the VSTOXX, could affect the value of any Index or the VSTOXX, and, therefore, theamount payable on your Securities at maturity, or upon call, early redemption or acceleration and themarket value of your Securities prior to maturity.

STOXX can add, delete or substitute the equity securities underlying the EURO STOXX 50® Index ormake other methodological changes to the EURO STOXX 50® Index. STOXX can also add, delete orsubstitute the futures contracts underlying the Indices or make other methodological changes that couldchange the level of the Indices. The changing of equity securities included in the EURO STOXX 50®

Index may affect the value of the put and call options used to calculate the level of the VSTOXX. Thechanging of the futures contracts underlying the Indices may affect the performance of the Indices insimilar ways. Additionally, STOXX may alter, discontinue or suspend calculation or dissemination of the

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EURO STOXX 50® Index or the Indices. Any of these actions could adversely affect the value of yourSecurities. EURO STOXX 50 has no obligation to consider your interests in calculating or revising theEURO STOXX 50® Index or the Indices. See “The Indices.”

STOXX can make methodological changes to the calculation of the VSTOXX that could affect the valueof futures contracts on the VSTOXX and, consequently, the value of your Securities. There can be noassurance that STOXX will not change the VSTOXX calculation methodology in a way which mayaffect the value of your Securities. Additionally, the STOXX or the Eurex Exchange may alter,discontinue or suspend calculation or dissemination of the VSTOXX and/or the exercise settlementvalue. Any of these actions could adversely affect the value of your Securities. Neither STOXX nor theEurex Exchange has any obligation to consider your interests in calculating or revising the VSTOXX orin calculating the exercise settlement value. See “The Indices — The VSTOXX” below.

In addition, the policies of the Eurex Exchange, with respect to the futures contracts underlying theIndices, and any changes in such policies, could affect the value of such futures contracts and the Indicesand, therefore, the market value of your Securities.

If events such as these occur, or if the value of the applicable underlying Index, the EURO STOXX 50®

Index or the Indices is not available or cannot be calculated because of a market disruption event or forany other reason, the Security Calculation Agents may be required to make a good faith estimate in theirsole discretion of the value of the applicable underlying Index. The circumstances in which the SecurityCalculation Agents will be required to make such a determination are described more fully under“Specific Terms of the Securities — Market Disruption Event.”

Changes in law or regulation relating to commodities futures contracts may adverselyaffect the market value of the Securities and the amounts payable on your Securities.

Commodity futures contracts, such as the Index Contracts, are subject to legal and regulatory regimesthat are in the process of changing in countries including Switzerland, Germany and all other memberstates in the European Union.

In the European Union, Germany and Switzerland, commodity futures contracts are subject toregulation, including, in the EU, the European Market Infrastructure Regulation (“EMIR”); the MarketAbuse Regulation (“MAR”); the Markets in Financial Instruments Directive 2 (“MiFID 2”), the Marketsin Financial Instruments Regulation (“MiFIR”) and other regulations that came into effect startingJanuary 2018.

In Germany, the European rules, as set out above, have been or are being implemented in Germany (tothe extent they are not already directly applicable), and the EU and German rules apply to EurexDeutschland and, in certain aspects, those trading on the Eurex Deutschland. Additionally, the primarilyapplicable statute governing trading on European futures exchanges in Germany is the German SecuritiesTrading Act (Wertpapierhandelsgesetz). Additionally, other acts such the German Insolvency Code(Insolvenzordnung) and the German Civil Code (Bürgerliches Gesetzbuch) may be relevant to certainaspects of trading, in particular where trades may be governed by German law. In Germany, theregulators will generally be the German Federal Financial Supervisory Authority (Bundesanstalt fürFinanzdienstleistungsaufsicht), although the exchanges also have established supervising bodies, the socalled Trading Surveillance Offices (Handelsüberwachungsstellen), which in the case of EurexDeutschland is the Exchange Supervisory Authority of the State of Hesse.

Although it is not part of the EU, Switzerland has adopted a framework that resembles the EU directivesand regulations listed above. The main relevant pieces of Swiss regulation are the Financial Market

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Infrastructure Act (“FMIA”); the Stock Exchange and Securities Trading Act (“SESTA”); the Swiss DebtEnforcement and Bankruptcy Act; and the Swiss Code of Obligations. The main Swiss regulator is theSwiss Financial Market Supervisory Authority, (“FINMA”).

If UBS were to be subject to restructuring proceedings, the market value of theSecurities may be adversely affected.

Under certain circumstances, the Swiss FINMA has the power to open restructuring or liquidationproceedings in respect of, and/or impose protective measures in relation to, UBS, which proceedings ormeasures may have a material adverse effect on the terms and market value of the Securities and/or theability of UBS to make payments thereunder. Pursuant to article 25 et seq. of the Swiss Banking Act,FINMA has broad statutory powers to take measures and actions in relation to UBS if it (i) isoverindebted, (ii) has serious liquidity problems or (iii) fails to fulfill the applicable capital adequacyprovisions after expiration of a deadline set by FINMA. If one of these prerequisites is met, FINMA isauthorized to open restructuring proceedings (Sanierungsverfahren) or liquidation (bankruptcy)proceedings (Bankenkonkurs) in respect of, and/or impose protective measures (Schutzmassnahmen) inrelation to, UBS. The Swiss Banking Act, grants significant discretion to FINMA in connection with theaforementioned proceedings and measures. In particular, a broad variety of protective measures may beimposed by FINMA, including a bank moratorium (Stundung) or a maturity postponement(Fälligkeitsaufschub), which measures may be ordered by FINMA either on a stand-alone basis or inconnection with restructuring or liquidation proceedings. In a restructuring proceeding, the resolutionplan may, among other things, (a) provide for the transfer of UBS’s assets or a portion thereof, togetherwith debts and other liabilities, and contracts of UBS, to another entity, (b) provide for the conversion ofUBS’s debt and/or other obligations, including its obligations under the Securities, into equity, and/or(c) potentially provide for haircuts on obligations of UBS, including its obligations under the Securities.As of the date of this prospectus supplement, there are no precedents as to what impact the revisedregime would have on the rights of holders of the Securities or the ability of UBS to make paymentsthereunder if one or several of the measures under the revised insolvency regime were imposed inconnection with a resolution of UBS.

Trading and other transactions by UBS or its affiliates in equity securities underlyingthe EURO STOXX 50® Index or instruments linked to the EURO STOXX 50® Index, theapplicable underlying Index or the VSTOXX may impair the market value of theSecurities.

As described below under “Use of Proceeds and Hedging” in this prospectus supplement, we or one ormore of our affiliates may hedge our obligations under the Securities by purchasing or selling equitysecurities underlying the EURO STOXX 50® Index or listed or over-the-counter options, futures, swapsor other derivative financial instruments linked to the EURO STOXX 50® Index (including the put andcall options used to calculate the level of the VSTOXX), the applicable underlying Index and theVSTOXX (including the VSTOXX futures) , and we may adjust these hedges by, among other things,purchasing or selling any of the foregoing at any time. In particular, we may buy or sell an appropriatenumber of first and second month VSTOXX futures on each Index Business Day so that our position inVSTOXX futures matches the national position held by the applicable underlying Index. Although theyare not expected to, any of these hedging activities may affect the market price and/or the volatility ofthose items and, therefore, could adversely affect the market value of the Securities. It is possible that weor one or more of our affiliates could receive substantial returns from these hedging activities while themarket value of the Securities declines. The relative illiquidity of VSTOXX futures, as compared to otherfutures contracts, will magnify the effects of any hedging activity by us or one of our affiliates.

We or one or more of our affiliates may also engage in trading in equity securities underlying the EUROSTOXX 50® Index or listed or over-the-counter options, futures, swaps or other derivative financial

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instruments linked to the EURO STOXX 50® Index (including the put and call options used to calculatethe level of the VSTOXX), the applicable underlying Index and the VSTOXX (including the VSTOXXfutures) on a regular basis as part of our general broker-dealer and other businesses, for proprietaryaccounts, for other accounts under management or to facilitate transactions for customers. Any of theseactivities could affect the market price and/or volatility of those items and, therefore, could adverselyaffect the market value of the Securities. We or one or more of our affiliates may also issue or underwriteother securities or financial or derivative instruments with returns linked or related to changes in theperformance of any of the foregoing. By introducing competing products into the marketplace in thismanner, we or one or more of our affiliates could adversely affect the market value of the Securities.With respect to any of the activities described above, neither UBS nor its affiliates has any obligation totake the needs of any buyer, seller or holder of the Securities into consideration at any time.

The business activities of UBS or its affiliates may create conflicts of interest.

We and our affiliates expect to play a variety of roles in connection with the issuance of the Securities.

As noted above, we and our affiliates expect to engage in trading activities related the Indices and theIndex Contracts that are not for the account of holders of the Securities or on their behalf. These tradingactivities may present a conflict between the holders’ interest in the Securities and the interests that weand our affiliates will have in our and our affiliates’ proprietary accounts, in facilitating transactions,including options and other derivatives transactions, for our and our affiliates’ customers and in accountsunder our and our affiliates’ management. These trading activities, if they influence the level of theIndices, could be adverse to the interests of the holders of the Securities.

Moreover, we and our affiliates may have published and in the future may publish research reports withrespect to the futures contracts underlying the Indices or listed or over-the-counter options, futures,swaps or other derivative financial instruments linked to the Indices and the commodity futures contractsunderlying the Indices. This research is modified from time to time without notice and may expressopinions or provide recommendations that are inconsistent with purchasing or holding the Securities.The research should not be viewed as a recommendation or endorsement of the Securities in any way andinvestors must make their own independent investigation of the merits of this investment.

Any of these activities could adversely affect the level of the Indices and, therefore, the indicative value ofthe Securities. Furthermore, any of these activities, if occurring on any Valuation Date, could adverselyaffect the payment at maturity, call, acceleration or redemption of any series of the Securities.

There are potential conflicts of interest between you and the Security CalculationAgents.

Our affiliate, UBS Securities LLC, and Janus Index, will serve as the Security Calculation Agents. UBSSecurities LLC will, among other things, decide the amount of the return paid out to you on theSecurities at maturity, or upon call, early redemption or acceleration. For a fuller description of theSecurity Calculation Agents’ roles, see “Specific Terms of the Securities — Security Calculation Agents”on page S-80. The Security Calculation Agents will exercise their judgment when performing theirfunctions. For example, the Security Calculation Agents may have to determine whether a marketdisruption event affecting the Index Contracts or any applicable Index has occurred or is continuing on aday when the Security Calculation Agents will determine the applicable Index Closing Level. Thisdetermination may, in turn, depend on the Security Calculation Agents’ judgments as to whether theevent has materially interfered with our ability to unwind our hedge positions. Since these determinationsby the Security Calculation Agents may affect the market value of the Securities, the Security CalculationAgents may have a conflict of interest with you if they need to make any such decision.

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The Securities are not regulated by the Commodity Futures Trading Commission, anyEU, German or Swiss regulators.

Unlike an investment in the Securities, an investment in a collective investment vehicle that invests infutures contracts on behalf of its participants may be regulated as a commodity pool and its operatormay be required to be registered with and regulated by the Commodity Futures Trading Commission(“CFTC”) as a “commodity pool operator” or with various German, Swiss or EU regulators. Because theSecurities are not interests in a commodity pool, the Securities will not be regulated by the CFTC asinterests in a commodity pool, UBS will not be registered with the CFTC as a “commodity pooloperator” and you will not benefit from the CFTC’s or any non-United States regulatory authority’sregulatory protections afforded to persons who trade in futures contracts or who invest in regulatedcommodity pools. The Securities do not constitute investments by you or UBS on your behalf in futurescontracts traded on regulated futures exchanges, which may only be transacted through a personregistered with the CFTC as a “futures commission merchant.” UBS is not registered with the CFTC as a“futures commission merchant” and you will not benefit from the CFTC’s or any other non-UnitedStates regulatory authority’s regulatory protections afforded to persons who trade in futures contracts ona regulated futures exchange through a registered futures commission merchant.

UBS and its affiliates have no affiliation with the Index Sponsor and are notresponsible for its public disclosure of information.

We and our affiliates are not affiliated with the Index Sponsor (except for licensing arrangements discussedunder “The Indices — License Agreement”) and have no ability to control or predict its actions, includingany errors in or discontinuation of public disclosure regarding methods or policies relating to thecalculation of the Indices. In addition, if our license agreement with the Index Sponsor were to terminate,we would no longer have the right to use the Indices or the related trademarks. If the Index Sponsordiscontinues or suspends the calculation of one or more of the Indices, or if our license agreement with theIndex Sponsor terminates, it may become difficult to determine the market value of one or more series ofthe Securities and the payment at maturity, call, acceleration or redemption. The Security CalculationAgents may designate a successor index in their sole discretion. If the Security Calculation Agents determinein their sole discretion that no successor index comparable to the applicable underlying Index exists, thepayment you receive at maturity or upon call, early redemption or acceleration will be determined by UBSSecurities LLC, as Security Calculation Agent. See “Specific Terms of the Securities — Security CalculationAgents” on page S-80, “Specific Terms of the Securities —Market Disruption Event” on page S-81 and“Specific Terms of the Securities —Discontinuance or Modification of an Index or Termination of OurLicense Agreement with the Index Sponsor” on page S-85. The Index Sponsor is not involved in the offer ofthe Securities in any way, and has no obligation to consider your interest as an owner of the Securities intaking any actions that might affect the market value of your Securities.

We have derived the information about the Index Sponsor and the Indices from publicly availableinformation, without independent verification. Neither we nor any of our affiliates have performed anindependent review or due diligence of publicly available information with respect to Index Sponsor orthe Indices contained in this prospectus supplement. You, as an investor in the Securities, should makeyour own independent investigation into the Index Sponsor and the Indices.

Suspension or disruptions of market trading in VSTOXX futures may adversely affectthe value of your Securities.

Some futures exchanges have regulations that limit the amount of fluctuation in futures contract prices thatmay occur during a single day. These limits are generally referred to as “daily price fluctuation limits” andthe maximum or minimum price of a contract on any given day as a result of these limits is referred to as a

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“limit price.” Once the limit price has been reached in a particular contract, no trades may be made at adifferent price. Limit prices have the effect of precluding trading in a particular contract or forcing theliquidation of contracts at disadvantageous times or prices. These circumstances could adversely affect thelevel of the Indices and, therefore, the applicable underlying Index and the value of your Securities.Although VSTOXX futures are not currently subject to such daily price fluctuation limits, the EurexExchange may impose such limits in the future. Also, the Eurex Exchange currently provides for a“volatility interruption” in the event that the price range for a specific instrument is outside of a specificrange within a certain time frame. If the conditions required for a volatility interruption are satisfied for aparticular instrument, an interruption of continuous trading in such instrument will occur, and theManagement Boards of the Eurex Exchanges may, in addition, interrupt continuous trading for allinstruments of the respective product. The relevant price ranges and time frames for each product aredetermined by the Management Boards of the Eurex Exchanges and are not made publically available.

The return on the Securities is linked to the performance of the applicable underlyingIndex, which may be highly volatile and the performance of the Securities maysignificantly differ from the past performance of the applicable underlying Index.

Each series of the Securities is linked to a different applicable underlying Index. The performance of eachapplicable underlying Index may be highly volatile, as it can be affected by many unpredictable factors,including: market interest and yield rates; prevailing market prices and volatility levels of the US orEuropean stock markets, as the case may be, and, in particular, the equity securities and/or futurescontracts included in the EURO STOXX 50® Index and the VSTOXX, prevailing market prices ofoptions on the EURO STOXX 50® and the VSTOXX, options on the VSTOXX, relevant futurescontracts on the VSTOXX, or any other financial instruments related to the EURO STOXX 50® Indexand/or the VSTOXX; fluctuations in currency exchange rates; economic, financial, regulatory, political,terrorist, military or other events in one or more jurisdictions; and changes in laws or regulations. Anyinformation about the past performance of the applicable underlying Index available at the time ofissuance of the Securities should not be regarded as indicative of the range of, or trends in, fluctuations inthe price or value of the applicable underlying Index that may occur in the future. It is not possible topredict the value of the Securities in the future based on such past performance, so investors should beaware of the risk that they cannot accurately anticipate future performance of the relevant Index and, asa result, the return on the Securities, on the basis of past performance.

In the past, the level of the VSTOXX has typically reverted over the longer term to a historical mean, andits absolute level has been constrained within a band. It is likely that the spot level of the VSTOXX willcontinue to do so in future. If this happens, the value of futures contracts on the VSTOXX will likelydecrease, reflecting the market expectation of reduced volatility in the future, and the potential upside ofan investment in the Long Securities may correspondingly be limited as a result.

Index calculation disruption events may require an adjustment to the calculation ofthe applicable underlying Index.

At any time during the term of the Securities, the intraday and daily calculations of the level of theapplicable underlying Index may be adjusted in the event that the Security Calculation Agents determinethat any of the following Index calculation disruption events exists: the Index Sponsor does not publishthe level of the applicable underlying Index; disruptions in trading of the equity securities included in theEURO STOXX 50® Index; disruptions in the price and trade reporting systems of any RelevantExchange (as defined in “Specific Terms of the Securities — Market Disruption Event”) for the EUROSTOXX 50® Index; disruptions or a breakdown in the price and reporting systems for any RelevantExchange for the VSTOXX; disruptions or a breakdown in the price and reporting systems for anyRelevant Exchange for the Indices; a decision to permanently discontinue trading in options or futures on

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the VSTOXX; the occurrence or existence, or a lack of, or a material decline in, the liquidity in themarket for trading in any futures contract in the Indices; any event or condition, the occurrence of whichresults in an illiquid market for trading in any futures contract on the Indices; the declaration orcontinuance of a general moratorium in respect of banking activities in any relevant city; or any forcemajeure event, the occurrence of which, as determined by the Security Calculation Agents, wouldmaterially affect the applicable underlying Index, the EURO STOXX 50® Index, any futures contractunderlying any the Indices or the calculation of the VSTOXX. Any such Index calculation disruptionevent may have an adverse impact on the level of the applicable underlying Index or the manner in whichit is calculated and, therefore, may have an adverse effect on the market value of the Securities. See“Specific Terms of the Securities — Market Disruption Event.” In addition, any such Index calculationdisruption event may be resolved through the exercise of discretion by the Security Calculation Agents,which could in turn give rise to conflicts between our interests and the interests of investors in theSecurities.

Changes that affect the composition, methodology, policies and calculation of theIndices will affect the amount payable on and the market value of the Securities.

The amount payable on the Securities and their market value could be affected if the Index Sponsor, inits sole discretion, discontinues or suspends calculation of any Index in which case it may becomedifficult to determine the market value of the applicable Securities. If events such as these occur, or if theapplicable Index Closing Level is not available because of a market disruption event or for any otherreason, the Security Calculation Agents will make a good-faith estimate in their sole discretion of theapplicable Index Closing Level that would have prevailed in the absence of the market disruption event.If the Security Calculation Agents determine that the publication of the applicable Index is discontinuedand that there is no successor index on the date when the Index Closing Level is required to bedetermined, the Security Calculation Agents will instead make a good-faith estimate in their solediscretion of the applicable Index Closing Level.

In addition, changes by the Index Sponsor of its policies relating to any of the Indices, the calculation ofthe Indices or to the underlying future contracts could affect the level of the Indices and, therefore, thevalue of your Securities. The Index Sponsor could also change its methodology concerning constituentsthat qualify for inclusion in each applicable Index and how it calculates the applicable Index, whichcould adversely affect the value of such series of Securities. The Index Sponsor has no obligation toconsider your interests in calculating or revising the Indices.

In addition, the Index Sponsor may modify the methodology for determining the composition andweighting of each Index, for calculating its value in order to assure that each Index represents anadequate measure of market performance or for other reasons, or for calculating the value of each Index.A number of modifications to the methodology for determining the contracts to be included in theIndices and for valuing the Indices have been made in the past several years and further modificationsmay be made in the future. The Index Sponsor may also discontinue or suspend calculation orpublication of an Index, in which case it may become difficult to determine the market value of theapplicable Index. Any such changes could adversely affect the value of the series of Securities.

The Security Calculation Agents can postpone the determination of the Index ClosingLevel and thus the applicable Redemption Date, the Stop Loss Redemption Date, theCall Settlement Date or the Maturity Date if a market disruption event occurs on theapplicable Valuation Date.

The determination of the applicable Index Closing Level may be postponed if the Security CalculationAgents determine that a market disruption event has occurred or is continuing on the applicable ValuationDate, including the Final Valuation Date. If such a postponement occurs, then the Security Calculation

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Agents will instead use the applicable Index Closing Level on the next following Trading Day on which nomarket disruption event occurs or is continuing. In no event, however, will the applicable Valuation Datefor the Securities be postponed by more than three Trading Days. As a result, the applicable RedemptionDate, the Stop Loss Redemption Date, the Call Settlement Date or the Maturity Date for the Securitiescould also be postponed, although not by more than three Trading Days. If the applicable Valuation Dateor Final Valuation Date is postponed to the last possible day, but a market disruption event occurs or iscontinuing on such last possible day, that day will nevertheless be the applicable Valuation Date. If amarket disruption event is occurring on the applicable Valuation Date, then the Security Calculation Agentswill make a good-faith estimate in their sole discretion of the Index Closing Level that would have prevailedin the absence of the market disruption event. See “Specific Terms of the Securities — Market DisruptionEvent” on page S-81. As a result of such market disruption, the Security Calculation Agents’ good-faithestimate could result in a valuation that differs, and potentially differs materially, from the valuation thatwould have been obtained had no market disruption occurred.

Because your payment at maturity, or upon call, early redemption or acceleration is a function of, amongother things, the Daily Index Performance on the relevant Valuation Date, the postponement of theapplicable Valuation Date may result in the application of a different applicable Index Closing Level and,therefore, a different Daily Index Performance, which could decrease the Closing Indicative Value ascompared to the Closing Indicative Value that you would have received based on the Index Closing Levelon the originally scheduled Valuation Date.

UBS may call the Securities prior to the Maturity Date.

On any Trading Day on or after May 9, 2018, UBS may elect to call all, but not less than all, theoutstanding Securities of any series upon not less than ten calendar days’ prior notice.

If UBS elects to redeem your Securities pursuant to its Call Right, you may not be able to reinvest atcomparable terms or returns. If the Securities have increased in value, you may have to invest yourproceeds in a lower-return investment.

Significant aspects of the tax treatment of the Securities are uncertain.

Significant aspects of the tax treatment of the Securities are uncertain. We do not plan to request a rulingfrom the IRS regarding the tax treatment of the Securities, and the IRS or a court may not agree with thetax treatment described in this prospectus supplement. Please read carefully the section entitled “Whatare the tax consequences of owning the Securities?” in the summary section on page S-15, the sectionentitled “Material U.S. Federal Income Tax Consequences” on page S-88, and the section entitled “U.S.Tax Considerations” in the accompanying prospectus. You should consult your tax advisor about yourown tax situation.

The IRS released a notice in 2007 that may affect the taxation of holders of the Securities. According tothe notice, the IRS and the Treasury Department are actively considering, among other things, whetherholders of instruments such as the Securities should be required to accrue ordinary income on a currentbasis, whether gain or loss upon the sale, exchange, redemption or maturity of such instruments shouldbe treated as ordinary or capital, whether foreign holders of such instruments should be subject towithholding tax, and whether the special “constructive ownership rules” of Section 1260 of the Codeshould be applied to such instruments. While it is impossible to anticipate how any ultimate guidancewould affect the tax treatment of instruments such as the Securities (and while any such guidance may beissued on a prospective basis only), such guidance could be applied retroactively and could in any caseincrease the likelihood that you will be required to accrue income over the term of an instrument such asthe Securities. The outcome of this process is uncertain.

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Risk Factors

Additionally, members of Congress have periodically made proposals to reform or otherwise modify theU.S. federal income tax treatment of financial instruments such as the Securities. For example, in 2017,legislation was proposed that, if enacted, would generally require holders of instruments such as theSecurities that are acquired after the bill is enacted to annually recognize gain or loss with respect to suchinstruments on a “mark-to-market” basis and to treat any such gain or loss as ordinary income or loss. Itis not possible to predict whether any such legislation will be enacted in the future, or whether any suchlegislation would affect the tax treatment of your Securities.

In addition, as discussed in more detail below under “Material U.S. Federal Income TaxConsequences — Alternative Treatments,” the IRS could possibly assert that a holder of Securities shouldbe required to include amounts in income prior to the sale, exchange, redemption or maturity of theSecurities.

Holders are urged to consult their tax advisors concerning the significance and the potential impact ofthe above considerations. We intend to treat your Securities for United States federal income taxpurposes in accordance with the treatment described above and under “Material U.S. Federal IncomeTax Consequences” on page S-88 unless and until such time as there is a change in law or the TreasuryDepartment or IRS determines that some other treatment is more appropriate.

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The IndicesWe have derived the following description of the Indices, the EURO STOXX 50® Index and theVSTOXX from the STOXX Index Methodology Guide, which governs the management and calculationof those indices. We have also derived certain information about the Indices, the EURO STOXX 50®

Index and the VSTOXX from public sources without independent verification. Such information reflectsthe policies of and is subject to change by the Index Sponsor. Neither we nor any of our affiliates haveperformed an independent review or due diligence of publicly available information with respect to theIndices or the Index Sponsor. You, as an investor in the Securities, should make your own independentinvestigation into the Index Sponsor and the applicable underlying Index.

The Indices, the EURO STOXX 50® and the VSTOXX are calculated, maintained and published bySTOXX Limited (“STOXX” or the “Index Sponsor”). The Index Sponsor has no obligation to continueto publish, and may discontinue the publication of, any or all of the Indices. The information containedherein with respect to the Indices reflects the policies of the Index Sponsor at the date of this prospectussupplement. The Indices and the policies of the Index Sponsor are subject to change by the Index Sponsorat any time.

The VSTOXX is a European volatility benchmark designed to measure the 30-day implied volatility inEuropean stocks and is calculated based on the prices of certain put and call options on the EUROSTOXX 50® Index. VSTOXX futures contracts are designed to measure the 30-day forward impliedvolatility in European stocks.

Each of the Long Investable Index and Inverse Investable Index replicates the performance of a long orshort position in a portfolio of VSTOXX futures contracts designed to provide exposure to constant-maturity one-month forward, one-month implied volatilities on the EURO STOXX 50® Indexunderlying the VSTOXX (taking into account the bid-ask spread in the roll procedure), and eachapplicable underlying Index continuously rolls on a daily basis from its long or short position, asapplicable, in the first month VSTOXX Futures contract to that same position in the second monthcontract.

For a detailed description of the composition of each underlying Index, see “— The Underlying Indices— The Long Investable Index” and “— The Underlying Indices — The Inverse Investable Index” below.For a detailed description of the VSTOXX, see “The Indices — VSTOXX” below.

Futures Markets

Futures contracts based on the VSTOXX are traded on the Eurex Exchange, which is a regulated futuresexchange, and other types of derivatives based on the VSTOXX may be traded in the over-the-countermarket and on various types of electronic trading facilities and markets. At present, all VSTOXX futurescontracts used in the calculation of the Indices are exchange-traded futures contracts. An exchange-traded futures contract provides for the purchase and sale of a specified type and quantity of acommodity or financial instrument during a stated delivery month for a fixed price, or for payment of acash settlement amount based on a reference price or index. The VSTOXX is not a tangible item that canbe purchased and sold directly, and as a result, futures contracts on the VSTOXX provide for paymentand receipt of cash based on the level of the VSTOXX at settlement or liquidation of the contract.

As described below, the VSTOXX measures the 30-day implied volatility of the EURO STOXX 50®

Index as implied by the variance across all options of a given time to expiry; thus, on any given TradingDay, the level of the VSTOXX measures the spot 30-day implied volatility, or the volatility expected forthe 30 days beginning on such Trading Day. VSTOXX futures, on the other hand, are standard futures

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contracts that cash settle to a final settlement price established by Eurex on the final settlement day,which is the day 30 calendar days prior to the expiration day of the underlying options, based on theaverage of the index values of the underlying options on the last trading day between 11:30 a.m. and12:00 noon CET. As a result, VSTOXX futures are contracts on forward 30-day implied volatilities. Forexample, in March, the level of the VSTOXX measures the 30-day implied volatility for the 30 daysbeginning on such date, while a May VSTOXX futures contract is a forward contract on what the30-day implied volatility will be for the period beginning on the May expiration date.

There is no purchase price paid or received on the purchase or sale of a futures contract. Instead, anamount of cash or cash equivalents must be deposited with the broker as “initial margin.” This margindeposit provides collateral for the obligations of the parties to the futures contract.

By depositing margin, which may vary in form depending on the exchange, with the clearing house orbroker/clearing member involved, a market participant may be able to earn interest on its margin funds,thereby increasing the total return that it may realize from an investment in futures contracts. Themarket participant normally makes to, and receives from, the broker/clearing member subsequent dailypayments as the price of the futures contract fluctuates. These payments are called “variation margin”and are made as the existing positions in the futures contract become more or less valuable, a processknown as “marking to the market.”

Futures contracts are traded on organized exchanges, known as “designated contract markets” in theUnited States and “regulated markets” in the European Union, (as well as other platforms such asmultilateral trading facilities (“MTF’s”) which are subject to a lower level of regulatory requirementsthan regulated markets).

At any time prior to the expiration of a futures contract, subject to the availability of a liquid secondarymarket, a trader may elect to close out its position by taking an opposite position on the exchange onwhich the trader obtained the position. This operates to terminate the position and fix the trader’s profitor loss. Futures contracts are cleared through the facilities of a centralized clearing house and abrokerage firm, referred to in the U.S. as a “futures commission merchant,” or “FCM” or a clearingmember in the EU, which are members of the clearing house. The clearing house guarantees theperformance of each clearing member that is a party to a futures contract by, in effect, taking theopposite side of the transaction. Clearing houses do not guarantee the performance by clearing membersof their obligations to their customers, although most jurisdictions require FCMs/clearing members toprotect customers’ positions and assets by segregating them from their own positions and assets.

Unlike equity securities, futures contracts, by their terms, have stated expirations and, at a specified pointin time prior to expiration, trading in a futures contract for the current delivery month will cease. As aresult, a market participant wishing to maintain its exposure to a futures contract on a particularcommodity with the nearest expiration must close out its position in the expiring contract and establish anew position in the contract for the next delivery month, a process referred to as “rolling.” For example,a market participant with a long position in November VSTOXX futures that wishes to maintain aposition in the nearest delivery month will, as the November contract nears expiration, sell Novemberfutures, which serves to close out the existing long position, and buy December futures. This will “roll”the November position into a December position, and, when the November contract expires, the marketparticipant will still have a long position in the nearest delivery month.

Assuming a constant futures curve, the need to roll futures contracts in order to maintain exposure leadsto the incurrence of “roll costs” or “roll yields,” depending on the state of the market. Over the long-term, volatility is usually stable, and as a result, the market for VSTOXX futures contracts is typically in

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“contango,” which means the prices of contracts are higher in the distant delivery months than in thenearer delivery months. In a contango market, a long position in VSTOXX futures contracts will incur“roll costs” when rolling into contracts with a later delivery date (because such contracts have a higherprice than the contracts currently held), and therefore is likely to decline in value unless volatilityincreases sharply. On the other hand, a short position in VSTOXX futures contracts will instead benefitfrom such price differential when rolling into contracts with a later delivery date, which is referred to as“roll yield,” and therefore is likely to increase in value.

Futures exchanges and clearing houses in the European Union, Germany and Switzerland, commodityfutures contracts are subject to regulation, including, in the EU, the European Market InfrastructureRegulation (“EMIR”); the Market Abuse Regulation (“MAR”); the Markets in Financial InstrumentsDirective 2 (“MiFID 2”), the Markets in Financial Instruments Regulation (“MiFIR”) and otherregulations that came into effect starting January 2018.

In Germany, the European rules, as set out above, have been or are being implemented in Germany (tothe extent they are not already directly applicable), and the EU and German rules apply to EurexDeutschland and those trading on the Eurex Deutschland. Additionally, the primarily applicable statutegoverning trading on European futures exchanges in Germany is the German Securities Trading Act(Wertpapierhandelsgesetz). Additionally, other acts such the German Insolvency Code(Insolvenzordnung) and the German Civil Code (Bürgerliches Gesetzbuch) may be relevant to certainaspects of trading, in particular where trades may be governed by German law. In Germany, theregulators will generally be the German Federal Financial Supervisory Authority (Bundesanstalt fürFinanzdienstleistungsaufsicht), although the exchanges also have established supervising bodies, the socalled Trading Surveillance Offices (Handelsüberwachungsstellen), which in the case of EurexDeutschland is the Exchange Supervisory Authority of the State of Hesse.

Although it is not part of the EU, Switzerland has adopted a framework that resembles, the EU directivesand regulations listed above. The main relevant pieces of Swiss regulation are the Financial MarketInfrastructure Act (“FMIA”); the Stock Exchange and Securities Trading Act (“SESTA”); the Swiss DebtEnforcement and Bankruptcy Act; and the Swiss Code of Obligations. The main Swiss regulator is theSwiss Financial Market Supervisory Authority, (“FINMA”).

Futures exchanges and clearing houses in the European Union are subject to regulation by the EuropeanSecurities and Markets Authority as well as the various regulators listed above for each EU member state.Exchanges may adopt rules and take other actions that affect trading, including imposing speculativeposition limits, maximum price fluctuations and trading halts and suspensions and requiring liquidationof contracts in certain circumstances.

The VSTOXX

We have derived all information contained in this prospectus supplement regarding the VSTOXX,including, without limitation, its make-up, method of calculation and changes in its components, frompublicly available information. Such information reflects the policies of, and is subject to change by, theIndex Sponsor. We make no representation or warranty as to the accuracy or completeness of suchinformation.

The VSTOXX was developed by Goldman Sachs and Deutsche Börse and is calculated, maintained andpublished by STOXX. STOXX has no obligation to continue to publish, and may discontinue thepublication of, the VSTOXX. The VSTOXX is reported by Eurex under the ticker symbol “V2X”.

The VSTOXX is a benchmark index designed to measure the 30-day implied volatility in Europeanstocks. Volatility is a measure of the level of uncertainty prevailing in certain markets. In principle, there

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are two different approaches to estimate volatility. Historical volatility involves measuring the standarddeviation of historical closing prices for any particular security over a given period of time. Impliedvolatility, on the other hand, is derived from option prices. This kind of volatility represents the estimatesand assumptions of market participants involved in a trade, on the basis of a given option price.

The VSTOXX does not measure implied volatilities of at-the-money EURO STOXX 50 options, but thesquare root of the implied variance across all options of a given time to expiry. The option contracts onthe EURO STOXX 50® Index are among the Eurex products with highest trading volume.

The VSTOXX model has been jointly developed by Goldman Sachs and Deutsche Börse and is calculatedbased on the prices of certain put and call options on the EURO STOXX 50® Index. Assuming all otherrelevant factors remain constant, as the prices of options on the EURO STOXX 50® Index generallyincrease, the VSTOXX, which indirectly measures implied volatility by measuring changes in theseoption prices, typically increases. The VSTOXX has historically had a negative correlation to the EUROSTOXX 50® Index.

The calculation of the VSTOXX involves a formula that uses the prices of a weighted series of options onthe level of the EURO STOXX 50® Index (“options”) with two adjacent expiry terms to derive aconstant 30-day implied measure of market volatility. The VSTOXX is calculated independent of anyparticular option pricing model and in doing so seeks to eliminate any biases which may otherwise beincluded in using options pricing methodology based on certain assumptions.

The 12 VSTOXX main indices are calculated for rolling 30, 60, 90, 120, 150, 180, 210, 240, 270, 300,330 and 360 days to expiry via linear interpolation of the suiting sub-indices. The VSTOXX main indicesare therefore independent of a specific time to expiry, i.e. they do not expire. This helps to eliminateeffects that typically result in strong volatility fluctuations close to expiry.

Apart from the VSTOXX main indices, 8 sub-indices are calculated and distributed, covering the EUROSTOXX 50 option expiries ranging from one month to two years. For options with longer time toexpiry, no such sub-indices are currently available.

The VSTOXX sub-indices are calculated on the basis of all options available in the Eurex system.

Futures on the VSTOXX were first launched for trading in 2005. VSTOXX futures have expirationsranging from the first month consecutively out to the twenty-fourth month. Futures on the VSTOXXallow investors the ability to invest in forward market volatility based on their view of the futuredirection or movement of the VSTOXX. Investors that believe the implied volatility of the EUROSTOXX 50® Index will increase may buy VSTOXX futures, expecting that the level of the VSTOXX willincrease. Conversely, investors that believe that the implied volatility of the EURO STOXX 50® Indexwill decline may sell VSTOXX futures, expecting that the level of the VSTOXX will fall. VSTOXXfutures are reported by Bloomberg under the ticker symbol “FVS”.

Bid-Offer Spread Costs

Each series of Securities is linked to the level of the applicable underlying Index, which, in turn, providesexposure to VSTOXX futures contracts. All hypothetical purchases and sales of first and second monthVSTOXX futures contracts will occur at the bid or offer prices and will incur a cost as a result of thebid-offer spread. Since first and second month VSTOXX futures contracts are relatively illiquidcompared to other types of futures contracts, the bid-offer spread is likely to be highly volatile incomparison to other futures contracts. The bid-offer spread may be very large, which will cause you tolose some or all of your investment in the Securities.

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The Indices

The prices of the VSTOXX futures contracts will depend on unpredictable market factors that arebeyond UBS’s control and may vary significantly from day to day, potentially resulting in high bid-offerspread costs which will reduce the value of the applicable underlying Index and, therefore, the value ofthe Securities.

Moreover, as the Inverse Investable Index may require additional purchases or sales in order to “reset”its leverage on a daily basis, and such purchases or sales will occur at the bid-offer spreads, the InverseInvestable Index will be particularly affected by the bid-offer spread costs. We refer to these costs as the“reset costs” incurred by the Inverse Investable Index.

For a detailed description of the composition of each Index, see “— The Underlying Indices — The LongInvestable Index” and “— The Underlying Indices — The Inverse Investable Index” below.

Implied Roll Costs or Roll Yields

The Long Investable Index measures the return from a daily rolling long position in the first and secondmonth futures contracts on the VSTOXX, while the Inverse Investable Index measures the return from adaily rolling short position in such first and second month futures contracts, each taking into account theimplied roll cost or roll yield accruing to that position. Assuming a constant futures curve, an investormaintaining a desired long exposure in a futures position by replacing contracts expiring in one monthwith contracts expiring in the next month will incur an implied roll cost when purchasing thereplacement contracts at a higher price-point along the futures curve and will benefit from an implied rollyield when purchasing the replacement contracts at a lower price-point along the futures curve.Assuming a constant futures curve, the value of the VSTOXX futures contracts held by an investormaintaining a long exposure in a futures position will typically decline as they approach the applicabledelivery date because prices of VSTOXX futures contracts are more commonly higher in distant deliverymonths than in nearer delivery months. Conversely, assuming a constant futures curve, an investormaintaining a desired short exposure in a futures position will benefit from a roll yield when sellingreplacement contracts at a higher price-point along the futures curve and incur a roll cost when sellingreplacement contracts at a lower price-point along the futures curve. These implied roll costs or rollyields result from the shape of the futures curve and, while they may affect performance, are not feescharged by UBS or a third party. In addition to any hypothetical trading costs related to paying thebid-offer spreads applicable when purchasing or selling near month futures contracts and distant monthfutures contracts, these implied roll costs may adversely affect the performance of the applicable Security.

Since the prices of VSTOXX futures contracts are more commonly higher in distant delivery months thanin nearer delivery months (i.e., when the market is in “contango”), an investor maintaining a longposition in VSTOXX futures contracts will typically incur “roll costs” when rolling into contracts with alater delivery date (because such contracts have a higher price than the contracts currently held).Assuming a constant futures curve in a contango market, an investor maintaining a long position willface some additional cost because the value of the VSTOXX futures contracts held by such investor willdecline as they approach the applicable delivery date. Therefore the long position is likely to decline invalue unless volatility increases sharply. On the other hand, an investor maintaining a short position inVSTOXX futures contracts in a contango market will typically benefit from a roll yield, and thereforethe short position is likely to increase in value unless volatility increases sharply. These relationships maybe reversed when prices of VSTOXX futures contracts in distant delivery months are lower than innearer delivery months (i.e., when the market is in “backwardation”). The roll cost or roll yield, asapplicable, is a variable, uncapped amount which will be determined by the sale or purchase prices andthe target weights of the first and second month VSTOXX futures contracts bought and sold.

In addition, as described below in “— The Underlying Indices — The Inverse Investable Index”, thevalue of the Inverse Investable Index will be affected by the “reset costs” associated with maintaining a

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hypothetical 1x short position in VSTOXX futures contracts. For a discussion of the Indices, see “TheIndices — The Underlying Indices,” and for a discussion of the futures markets, see “The Indices —Futures Markets.”

Historically, the VSTOXX has a negative correlation to the EURO STOXX 50® Index. While the spotVSTOXX is difficult or impossible to replicate as a practical matter, there is a market in VSTOXXfutures and options, and investors trade them to express their view on the EURO STOXX 50® Index’simplied volatility.

The return on each series of Securities will be determined by the performance of the applicableunderlying Index to which such Securities are linked, as reduced by the Daily Investor Fee and, ifapplicable, the Redemption Fee Amount and creation fee. Additionally, as of the date of this ProspectusSupplement, the Daily Accrual equals a negative amount and, as a result, to the extent that the DailyAccrual is negative at any given time it will adversely affect the value of your Securities.

The Underlying Indices

The return on each series of the Securities is linked to the performance of a different underlying Indexthat is designed to provide exposure to either a long or short position in first and second monthVSTOXX futures contracts. The long position is a long exposure to the Long Investable Index, and theshort position is a long exposure to the Inverse Investable Index. Each Index replicates the performanceof a long or short position in a portfolio of VSTOXX futures designed to provide exposure to constant-maturity one-month forward, one-month implied volatilities on the underlying EURO STOXX 50®

Index (taking into account the bid-ask spread in the roll procedure) and continuously rolls on a dailybasis from its long or short position, as applicable, in the first month VSTOXX Futures contract to thatsame position in the second month contract.

Both the Long and Short Investable Indices take into account the bid-offer spread for first and secondmonth VSTOXX futures contracts, which reduces the level of the applicable underlying Index and thereforethe Closing Indicative Value of the applicable series of Securities. VSTOXX futures contracts trade on anexchange but are less liquid compared to other financial futures contracts, such as the CBOE VIX futurescontracts and the Eurex EuroStoxx index contracts and therefore may have a wider bid-offer spread. As aresult, an investment in the Indices may incur significant additional bid-offer costs relative to an investmentin an index based on more liquid futures contracts as a result of a wider bid-offer spread. This may alsopotentially increase the volatility of VSTOXX contracts, relative to other types of future contracts.

The Long Investable Index

The Long Investable Index replicates the performance of a long position in a portfolio of VSTOXXfutures designed to provide exposure to constant-maturity one-month forward, one-month impliedvolatilities on the underlying EURO STOXX 50® Index, taking into account the bid-ask spread in theroll procedure, which will reduce the value of the Long Securities. The Long Investable Indexcontinuously rolls on a daily basis from the first month VSTOXX Futures contract to the second monthcontract.

As volatility increases, the Long Investable Index is more likely to increase in value, and as volatilitydecreases, the Long Investable Index is more likely to decrease in value. However, assuming a stable futurescurve, the Long Investable Index will also suffer from implied roll costs in a contango market, which resultsfrom the value of the futures contracts declining as the applicable delivery date approaches, potentiallyoffsetting any increase in volatility. As a result, the Long Investable Index could decline in value even asvolatility increases. Conversely, the Long Investable Index will benefit from implied roll yields when themarket is in backwardation, which will cause its value to increase, potentially offsetting any decrease involatility. As a result, the Long Investable Index could decrease in value even as volatility increases.

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While the Long Investable Index is intended to pursue a long volatility strategy, the path dependence ofthe Long Investable Index may cause its actual performance to deviate significantly from its expectedlong performance given its exposure to VSTOXX futures. In addition, the return from the LongSecurities will be reduced by the applicable Daily Investor Fee. As a result, the Long Securities shouldonly be purchased by sophisticated investors who understand the risks of investing in volatility, thenature of the underlying securities market, currency markets, index construction and calculation and thepath dependence of investment returns, and who will actively monitor their investment, includingintraday.

The Inverse Investable Index

The Inverse Investable Index replicates the performance of a short position in a portfolio of VSTOXXfutures designed to provide exposure to constant-maturity one-month forward, one-month impliedvolatilities on the underlying EURO STOXX 50® Index, taking into account the bid-ask spread in theroll procedure and daily reset, which will reduce the value of the Inverse Securities. The indexcontinuously rolls on a daily basis from a short position in the first month VSTOXX Futures contract toa short position in the second month contract.

As volatility increases, the Inverse Investable Index is more likely to decrease in value, and as volatilitydecreases, the Inverse Investable Index is more likely to increase in value. However, assuming a stablefutures curve, the Inverse Investable Index will also benefit from implied roll yields in a contango market,which results from the value of the futures contracts decreasing as the applicable delivery dateapproaches, potentially offsetting any increase in volatility. As a result, the Inverse Investable Index couldincrease in value even as volatility increases. Conversely, the Inverse Investable Index will suffer fromimplied roll costs when the market is in backwardation, which will cause its value to decrease, potentiallyoffsetting any decrease in volatility. As a result, the Inverse Investable Index could decrease in value evenas volatility decreases.

Additionally, the value of the Inverse Investable Index may be reduced daily by what we refer to as “resetcosts”, which are costs related to the hypothetical short-selling of VSTOXX futures contracts in order tomaintain a short position. During an Index Business Day, the number of first and second monthVSTOXX futures contracts to which the Inverse Investable Index is exposed will not change intraday asthe prices of the VSTOXX futures contracts change, which means the actual leverage amount of theInverse Investable Index may be greater or less than 1 at any given time. As a result, at the end of anIndex Business Day, the Inverse Investable Index will reset its exposure to VSTOXX futures contracts sothat it has a leverage amount of -1x for the next day. Assuming no change in the prices of VSTOXXfutures contracts, during the roll period the Inverse Investable Index would hypothetically buy firstmonth VSTOXX futures contracts and sell second month VSTOXX futures contracts. However, in orderto maintain a leverage amount of -1x, it may instead be necessary to sell a number of first monthVSTOXX futures or buy a number of second month VSTOXX futures. As a result, in order to roll thefutures contracts on any given Index Business Day, the Inverse Investable Index may sell both, buy both,or buy one and sell the other, depending on the change in VSTOXX futures prices over the applicableIndex Business Day. Reset costs result from the additional costs incurred as a result of the need topurchase or sell more VSTOXX futures as volatility shifts. As discussed, all hypothetical purchases andsales of first and second month VSTOXX futures contracts will occur at the bid-offer prices and willincur a cost as a result of the bid-offer spread. These costs are uncapped, and may significantly reducethe returns on the Inverse Investable Index.

In addition, even without accounting for the reset costs incurred in order to maintain a short position inVSTOXX futures contracts and the Daily Investor Fee, due to the path dependent nature of the Inverse

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Investable Index, it is likely that the value of the Inverse Securities will still decline even if VSTOXXfutures contracts return to the same level as on the initial date you purchase your Securities. For example,if VSTOXX futures decrease on the first trading day and then increase back to their prior level on thesecond trading day, the Inverse Investable Index will still decline over such two-day period because theindex reset after the first trading day and as a result of its higher level following the first trading day(increasing when VSTOXX decreased), it has additional exposure to subsequent VSTOXX futurescontract movements. Generally, we expect that higher ranges of volatility in VSTOXX futures contractsprices will have adverse effects on the performance of the Inverse Investable Index and the InverseSecurities and there is significant chance of a complete loss in the value of the Securities over longerholding periods.

While the Inverse Investable Index is intended to pursue a short volatility strategy, the path dependenceof the Inverse Investable Index may cause its actual performance to deviate significantly from its expectedinverse performance given its exposure to VSTOXX futures. In addition, the return from the InverseSecurities will be reduced by the applicable Daily Investor Fee. As a result, the Inverse Securities shouldonly be purchased by sophisticated investors who understand the risks of investing in volatility, thenature of the underlying securities market, currency markets, inverse investments, daily reset costs, indexconstruction and calculation and the path dependence of investment returns, and who will activelymonitor their investment, including intraday.

Index Construction

The underlying Indices are constructed so that the Long Investable Index and Inverse Investable Indexhave daily rebalanced long and short positions, respectively, in a portfolio of VSTOXX futures designedto reflect a position in constant-maturity one-month forward, one-month implied volatilities on theunderlying EURO STOXX 50® Index, taking into account the bid-ask spread in the roll procedures.

The calculation of each Index on each Index Business Day proceeds as follows:

The Long Investable Index

Index Formula

The daily index level is defined as

where:

= number of contracts of future x held at the end of day t after the roll

= mid-price of future X on day t based on last bid and ask at 17:30:00 CET

The index is available in EUR and USD.

Roll Procedure

The roll period starts from, and includes, the monthly Eurex VSTOXX futures settlement date and runsup to, but excludes, the subsequent monthly Eurex VSTOXX futures settlement date.

On the futures settlement days the first and second month futures designations refer to the contracts withone month and two months to expiration respectively, as what had previously been second monthfutures becomes first month futures.

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The daily roll is required to satisfy a target allocation restraint and a self-financing constraint, asexplained below:

Target Allocation Restraint (I)

After the roll, the number of contracts of each expiration month included in the index (i.e., the first andsecond months) must satisfy the target weights with

The target weight after the roll on day t of contract 1, , is defined as where:

d = number of index business days between t and the next settlement date excluding day t andexcluding the next settlement date

T = the total number of index business days in the current roll period including the previous finalsettlement date and excluding the next

The futures’ final settlement dates are as defined by Eurex.

Final settlement day is 30 calendar days prior to the expiration day of the underlying options (i.e., 30days prior to the third Friday of the expiration month of the underlying options, if this is an exchangeday). This is usually the Wednesday prior to the second to last Friday of the respective maturity month, ifthis is an exchange day; otherwise the exchange day immediately preceding that day.

Self-Financing Constraint (II)

The post-roll index level has to be equal to the pre-roll index level minus the cost of trading (sellingcontract 1 at bid and buying contract 2 at ask).

= number of contracts of future x held at the end of day t before the roll; equivalent to numberof contracts of the same futures contract held on day t-1 post roll

= bid price, last available at 17:30:00 CET

= ask price, last available at 17:30:00 CET

Determination of the Number of Contracts

The target allocation (I) and self-financing (II) constraint equations can be solved for the post-rollnumber of contracts:

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At the close of the last index business day of any roll period (the index business day immediatelypreceding a Eurex VSTOXX futures settlement date) all of the weight is allocated to the second monthEurex VSTOXX futures contract:

On the Eurex VSTOXX futures settlement date, the second month contract position becomes the firstmonth contract at settlement. On the settlement date the post-roll number of contracts is calculated by:

On the final settlement date, refers to the first Eurex VSTOXX future which at the end of thesettlement date is the contract with one-month to expiration which on the prior day had been the secondmonth contract, .

The Inverse Investable Index

Index Formula

The daily index level is defined as

where:

= number of contracts of future x held at the end of day t after the roll

= mid-price of future x on day t based on last bid and ask at 17:30:00 CET

The index is available in EUR and USD.

The pre-roll index level is calculated due to the short selling of contracts as

= number of contracts of future x held at the end of day t before the roll; equivalent to thenumber of contracts of the same futures contract held on day t-1 post roll

Substituting the post-roll index level formula, using the identity , and reordering yields:

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Roll Procedure

The roll period starts from, and includes, the monthly Eurex VSTOXX futures settlement date and runsup to, but excludes, the subsequent monthly Eurex VSTOXX futures settlement date.

On the futures settlement days the first and second month futures designations refer to the contracts withone month and two months to expiration respectively, as what had previously been second monthfutures becomes first month futures.

The daily roll has to satisfy a target allocation restraint and a self-financing constraint, as explainedbelow:

Target Allocation Restraint (I)

After the roll, the contract number allocation has to satisfy the target weights with .

The target weight after the roll on day t of contract 1, , is defined as where:

d = number of index business days between t and the next settlement date excluding day tand excluding the next settlement date

T = the total number of index business days in the current roll period including the previous finalsettlement date and excluding the next

The futures’ final settlement dates are as defined by Eurex.

The final settlement day is 30 calendar days prior to the expiration day of the underlying options (i.e., 30days prior to the third Friday of the expiration month of the underlying options, if this is an exchangeday). This is usually the Wednesday prior to the second to last Friday of the respective maturity month, ifthis is an exchange day; otherwise the exchange day immediately preceding that day.

Self-Financing Constraint (II)

The post-roll index level has to be equal to the pre-roll index level minus the cost of trading. Herebyrefers to either the bid price or ask price depending on whether the corresponding contract has tobe bought (at ask) or sold (at bid); details at the end of this section.

= bid price, last available at 17:30:00 CET

= ask price, last available at 17:30:00 CET

Substituting the post-roll index into the self-financing constraint (II) and reordering yields:

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Determination of the Number of Contracts

The above equation together with the target allocation constraint (I) can be solved for the post-rollnumber of contracts:

At the close of the last index business day of any roll period (the index business day immediatelypreceding a Eurex VSTOXX futures settlement date) all of the weight is allocated to the second monthEurex VSTOXX futures contract:

On the Eurex VSTOXX futures settlement date, the second month contract position becomes the firstmonth contract at settlement. On the settlement date, the post-roll number of contracts is calculated by:

On the final settlement date, refers to the first Eurex VSTOXX future which at the end of thesettlement date is the contract with one-month to expiration which on the prior day had been the secondmonth contract, .

One has to note that in the above formulas and refer to the futures prices on different days ofcontracts with identical expiration dates.

In order to determine whether bid or ask prices are to be used and are calculated for all fourscenarios by using the appropriate bid and ask prices in above formulas.

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On most days the Inverse Investable Index roll procedure will have the first contract bought and thesecond contract sold. On a few occasions other trading scenarios might be required (e.g., buy firstcontract and buy second contract). In those cases, the self-financing constraint needs to be adjusted andthe correct bid or ask prices have to be used as one always buys at ask and sells at bid.

The second column shows each scenario’s respective self-financing constraint that has to be used toderive the post-roll amount of contracts.

A solution is feasible if the trading it implies is consistent with the scenario’s assumption. For example, inthe sell/sell scenario the solution is feasible if the calculated post-roll contracts imply that both contractshave to be sold.

In the unexpected case that there is more than one feasible solution STOXX picks out of all feasiblesolutions the one that has the least negative cost (i.e. causes the highest post-roll index value).

If an index disruption event in relation to the Eurex futures contract occurs on index dissemination days,then the following applies:

STOXX Ltd. will repeat the end of day index value of the previous day and the roll for that day will bepostponed to the next index business day (i.e., the number of contracts held of each contract remainsunchanged).

Valid quotes from the same day not being available at the end of day index value calculation isconsidered an index disruption event.

If an exchange fails to open due to unforeseen circumstances, STOXX Ltd. may determine not to publishthe index for that day.

In situations where an exchange introduces a holiday during the month of the index calculation, theindex will not be published, and the roll for that day will be carried to the next index business day, asdescribed in the roll procedure section.

Currency Conversion

All real-time indices use the following currency rates:

➤ From 09:00 a.m. to 5:30 p.m. Central European Time (“CET”), the mid between the latest real-time bid and ask prices is used as the currency rate in order to calculate the indices for Europe,Eastern Europe and the EU Enlarged region.

The fixed foreign exchange rates are provided by the WM Company — which may be found under theReuters symbol “WMRSPOT01” or Bloomberg symbol” WMCO”.

Publication of Index Value

The level of each Index is calculated in accordance with the method described above. The value of eachIndex in real time and at the close of trading on each Index Business Day will be published by Bloombergor a successor under the ticker symbols shown below:

IndexUnderlying

Index Ticker

Long Investable Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VST1MSLInverse Investable Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VST1MISL

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Index Governance

The Executive Board Oversight Committee, Index Management Committee, Index OperationsCommittee, Product Initiation Committee and Product Approval Committee (collectively the “IndexCommittees”) maintain the Indices. The Index Committees meet on a regular basis.

Executive Board Oversight Committee

The Executive Board Oversight Committee (the “EB”) is a management committee which assumes theoverall operational responsibility for STOXX. The Board of Directors appoints all of the voting membersbased on their responsibilities within the company and non-voting guests are appointed by the CEO. Allremain members until dismissed by their appointer or upon dismissal upon their own request. The CEOmakes all decisions for the Executive Board Committee, in consultation with the other members.

The Oversight Committee

The purpose of the Oversight Committee (the “OC’) is to oversee all areas of the benchmarkdetermination process and to make final decisions in cases where Operations, the Index OperationCommittee and the Index Management Committee are not capable or allowed to make decisions, unlessa decision is required to be further escalated to the EB, due to the risk of substantial financial and/orreputational impact. The committee members are nominated by the committee chair and remainmembers until dismissed by the committee chair or on own request. The committee chair is nominatedand approved by the EB. Criteria for nominations are the level of seniority, relevant responsibilities aswell as experience and know-how. If members are replaced, the committee chair must ensure that thecomposition of the committee retains its independent nature, meaning one department should not have acontrolling influence. In addition to the CEO there should be at least one voting member who is notinvolved in Operations, Product Development, nor in Sales. Voting occurs on a qualified majority basisfor both rejection and approval, however the CEO has a right to veto any approvals.

The Index Management Committee

The main purpose of the Index Management Committee (the “IMC”) is to oversee the decisions made bythe Index Operation Committee (the “IOC”) and to make decisions in cases where the IOC has escalateda decision to the IMC. The other purposes of the IMC are (a) to monitor rules for existing indices; (b) todecide on rule changes and the corresponding impact analysis; (c) the development of guidelines for theregular review of index methodologies; (d) the oversight of the results of suitability assessment conductedby Product Development and Operations; (e) the periodic review of the current index methodology andthe consideration to terminate indices. The committee members are nominated by the committee chairand remain members until dismissed by the committee chair or upon resignation. The committee chairposition must be approved by the EB. Any actions or decisions require majority approval.

Index Operations Committee

The purpose of the IOC is to oversee those areas of Operations that deal with questions, problems, orissues that arise as a result of the administration of indices; hence, the overall objective of the IOC is toensure that the benchmark administration process results in the correct and timely determination,calculation, and dissemination of indices. Furthermore, it must define and oversee measures that allowfor mitigation of operational risks. The committee members are nominated by the committee chair andremain members until dismissed by the committee chair or upon resignation. The committee chairposition must be approved by the EB. Any actions or decisions require majority approval.

At any meeting, the Index Committees may revise index policy for timing of rebalancing or othermatters. STOXX considers information about changes to its indices and related matters to be potentiallymarket moving and material. Therefore, all Index Committee discussions are confidential.

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Announcements

Announcements of the daily Index values are made after the equity and futures market close each day.Announcements of changes to the Index methodology, which require performing a market consultationand contacting clients that use the Index, are made after the equity and futures market close on the dayon which such requirements are satisfied.

Holiday Schedule

The Indices are calculated daily when the German futures exchanges are open for official trading,excluding holidays and weekends.

Unscheduled Market Closures

In situations where an exchange is forced to close early due to unforeseen events, such as computer orelectric power failures, weather conditions or other events, STOXX will calculate the value of the Indicesbased on most recent prices published by the exchanges. If the Eurex Exchange closes early due tounforeseen circumstances, the appropriate committee will meet and decide an appropriate action basedon the particular reason for the Eurex Exchange’s closure in its sole discretion. If an exchange fails toopen due to unforeseen circumstances, STOXX may determine not to publish the Indices for that day. Ifa market disruption occurs on any day, the roll/rebalancing is performed on the next business day thatthe Eurex Exchange is open. Prices of VSTOXX futures on the actual roll/rebalancing day are used.

Simulated Historical and Historical Performance

Any simulated historical or historical upward or downward trend in the applicable Index Closing Level isnot an indication that the Indices are more or less likely to increase or decrease at any time during theterm of your Securities. The Index Closing Level for each Index is deemed to have been 10,000 onDecember 30, 2016. STOXX began independently calculating the Indices on March 29, 2017. Therefore,the performance data for the period from June 4, 2009 until March 29, 2017 is simulated and isprovided as an illustration of how the Indices would have performed during the period had the IndexSponsor begun calculating the Indices on June 4, 2009 using the methodology described above since thatdate. This data does not reflect actual performance, nor was a contemporaneous investment model run ofthe Indices. Simulated data has key inherent limitations, as it is produced by the retroactive applicationof a back-test methodology. Such simulated data is based on criteria applied retroactively with thebenefit of hindsight and knowledge of factors that may have positively affected its performance, and mayreflect a bias toward strategies that have well in the past. Performance data for the period from and afterMarch 29, 2017 is based on the actual performance of the Indices.

Any historical or simulated historical upward or downward trend in value of the Indices during anyperiod shown below is not an indication that the value of the Indices is more or less likely to increase ordecrease at any time during the term of the Securities. The historical or simulated historical total returnsof the Indices do not give an indication of future performance of the Indices. UBS cannot make anyassurance that the future performance of the Indices will result in holders of the Securities receiving apositive return on their investment.

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The table below shows the simulated historical and historical performance of each of the Indices fromJune 4, 2009 through February 9, 2018.

Simulated Historical and Historical Results for the periodJune 4, 2009 through February 9, 2018

Long Investable Index Inverse Investable Index

Date Ending LevelAnnualReturn

EndingLevel

AnnualReturn

June 4, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830,978.69 9,898.942009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,579.59 -55.28% 13,084.44 32.18%2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,822.20 -59.14% 11,957.08 -8.62%2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,741.72 5.22% 6,447.08 -46.08%2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,812.93 -68.82% 14,305.91 121.90%2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,337.67 -55.16% 24,537.57 71.52%2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,147.58 -9.80% 14,743.35 -39.92%2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,870.58 -1.37% 7,817.24 -46.98%2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000.00 -49.67% 10,000.00 27.92%2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,717.05 -72.83% 35,111.25 251.11%2018 (through 2/9/18) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,947.00 45.27% 20,240.63 -42.35%

PAST HISTORICAL AND SIMULATED HISTORICAL PERFORMANCEIS NOT INDICATIVE OF FUTURE RESULTS.

The table below shows the simulated historical and historical performance of each Index from June 4,2009 through February 9, 2018.

LongInvestable

Index

InverseInvestable

Index

Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -99.67% 254.70%Annualized Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48.72% 15.92%

Historical information presented is as of February 9, 2018, and is furnished as a matter of informationonly. Simulated historical and historical performance of each Index is not an indication of futureperformance. Future performance of the Indices may differ significantly from simulated historical andhistorical performance, either positively or negatively.

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The graphs below illustrate the simulated historical performance of the Indices from June 4, 2009 toMarch 28, 2017 and the live historical performance of the Indices from March 29, 2017 (the day onwhich the Index Sponsor began calculating the Indices) to February 9, 2018. The graphs below are basedon the total returns of each of the Indices.

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License Agreement

We have entered into an agreement with the Index Sponsor that provides us and our affiliates with anon-transferable, limited license for a fee, with the right to use the Index in connection with securities,including the Securities. The Indices are owned and published by STOXX.

Modifications to the Indices

The Index Sponsor may revise Index policy for timing of rebalancings or other matters as describedabove under “— Index Governance.” The Index Sponsor or the calculation agents may also makedeterminations relating to market disruption and force majeure events as described below.

Disclaimers

STOXX Limited, Deutsche Börse Group and their licensors, research partners or data providers have norelationship to UBS, other than the licensing of the VSTOXX Short-Term Futures Investible Index® andthe VSTOXX Short-Term Futures Inverse Investible Index and the related trademarks for use inconnection with the VelocityShares™ 1X Long VSTOXX Futures ETN and the VelocityShares 1X DailyInverse VSTOXX Futures ETN.

STOXX, Deutsche Börse Group and their licensors, research partners or data providersdo not:

➤ sponsor, endorse, sell or promote the Securities.

➤ recommend that any person invest in the Securities or any other securities.

➤ have any responsibility or liability for or make any decisions about the timing, amount or pricingof the Securities.

➤ have any responsibility or liability for the administration, management or marketing of the Securities.

➤ consider the needs of the Securities or the owners of the Securities in determining, composing orcalculating the Indices or have any obligation to do so.

STOXX, Deutsche Börse Group and their licensors, research partners or data providers give nowarranty, and exclude any liability (whether in negligence or otherwise), in connection with theSecurities or their performance.

STOXX does not assume any contractual relationship with the purchasers of the Securities or any otherthird parties.

Specifically,

➤ STOXX, Deutsche Börse Group and their licensors, research partners or data providers do notgive any warranty, express or implied, and exclude any liability about:

– The results to be obtained by the Securities, the owner of the Securities or any other person inconnection with the use of the Indices and the data included in the Indices;

– The accuracy, timeliness, and completeness of the Indices and their data;

– The merchantability and the fitness for a particular purpose or use of the Indices and theirdata;

– The performance of the Securities generally.

➤ STOXX, Deutsche Börse Group and their licensors, research partners or data providers give nowarranty and exclude any liability, for any errors, omissions or interruptions in the Indices ortheir data;

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➤ Under no circumstances will STOXX, Deutsche Börse Group or their licensors, research partnersor data providers be liable (whether in negligence or otherwise) for any lost profits or indirect,punitive, special or consequential damages or losses, arising as a result of such errors, omissionsor interruptions in the Indices or their data or generally in relation to the Securities, even incircumstances where STOXX, Deutsche Börse Group or their licensors, research partners or dataproviders are aware that such loss or damage may occur.

The licensing Agreement between UBS and STOXX is solely for their benefit and not for the benefit ofthe owners of the Securities or any other third parties.

ALTHOUGH JANUS INDEX & CALCULATION SERVICES LLC SHALL OBTAIN INFORMATIONFOR INCLUSION IN OR FOR USE IN CALCULATIONS RELATED TO THE SECURITIES AND/ORINDICES FROM SOURCES WHICH JANUS INDEX & CALCULATION SERVICES LLC CONSIDERSRELIABLE, NEITHER JANUS INDEX & CALCULATION SERVICES LLC NOR ANY OTHER PARTYGUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE INDICES OR ANY DATAINCLUDED THEREIN OR ANY CALCULATIONS MADE WITH RESPECT TO THE SECURITIES.NEITHER JANUS INDEX & CALCULATION SERVICES LLC NOR ANY OTHER PARTY MAKESANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY UBS, UBS’SCUSTOMERS AND COUNTERPARTIES, HOLDERS OF THE SECURITIES, OR ANY OTHERPERSON OR ENTITY FROM THE USE OF THE INDICES OR ANY DATA INCLUDED THEREIN ORANY CALCULATIONS MADE WITH RESPECT TO THE SECURITIES IN CONNECTION WITH THERIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. NEITHER JANUS INDEX &CALCULATION SERVICES LLC NOR ANY OTHER PARTY MAKES ANY EXPRESS OR IMPLIEDWARRANTIES, AND JANUS INDEX & CALCULATION SERVICES LLC HEREBY EXPRESSLYDISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULARPURPOSE WITH RESPECT TO THE INDICES OR ANY DATA INCLUDED THEREIN OR ANYCALCULATIONS MADE WITH RESPECT TO THE SECURITIES. WITHOUT LIMITING ANY OFTHE FOREGOING, IN NO EVENT SHALL JANUS INDEX & CALCULATION SERVICES LLC ORANY OTHER PARTY HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE,CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIEDOF THE POSSIBILITY OF SUCH DAMAGES.

NEITHER JANUS INDEX & CALCULATION SERVICES LLC AND ITS AFFILIATES (TOGETHER,“JANUS”) NOR ANY OTHER PARTY MAKES ANY REPRESENTATION OR WARRANTY, EXPRESSOR IMPLIED, TO THE OWNERS OF THE SECURITIES OR ANY MEMBER OF THE PUBLICREGARDING THE ADVISABILITY OF INVESTING IN THE SECURITIES GENERALLY OR THESIMILARITIES OR VARIATIONS BETWEEN THE PERFORMANCE OF THE SECURITIES OR THEINDICES AND THE PERFORMANCE OF THE UNDERLYING SECURITIES OR FINANCIALINSTRUMENTS. JANUS IS THE LICENSOR OF CERTAIN TRADEMARKS, SERVICE MARKS ANDTRADE NAMES OF VELOCITY SHARES. NEITHER JANUS NOR ANY OTHER PARTYGUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE INDICES OR ANY DATAINCLUDED THEREIN OR ANY CALCULATIONS MADE WITH RESPECT TO THE SECURITIES.JANUS DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANYPARTICULAR PURPOSE WITH RESPECT TO THE INDICES OR ANY DATA INCLUDED THEREIN.

THE SECURITIES ARE NOT SPONSORED, ENDORSED OR SOLD BY JANUS INDEX &CALCULATION SERVICES LLC OR ITS AFFILIATES NOR DOES JANUS INDEX &CALCULATION SERVICES LLC MAKE ANY REPRESENTATION REGARDING THEADVISABILITY OF INVESTING IN ANY OF THE SECURITIES.

“VelocityShares”, the “V logo” and the “V VelocityShares logo” are service marks of Janus Index &Calculation Services LLC and are used herein under license.

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Valuation of the Indices and the SecuritiesIntraday Index Values

On each Index Business Day, STOXX, or a successor Index Calculation Agent, will calculate and publishthe intraday indicative value of each of the Indices every 15 seconds during normal trading hours onBloomberg under the ticker symbols “VST1MSL” and “VST1MISL”. The actual applicable IndexClosing Level for each series of the Securities may vary, and on a cumulative basis over the term of theapplicable Securities may vary significantly, from the intraday indicative value of the applicable Index.

The intraday indicative calculation of the level of the Indices will be provided for reference purposesonly. Published calculations of the level of the Indices from the Index Calculation Agent mayoccasionally be subject to delay or postponement. Any such delays or postponements will affect thecurrent level of each applicable Index and therefore the value of the applicable Securities in the secondarymarket. The intraday indicative value of the Indices published every 15 seconds will be based on theintraday levels of the Index Contracts.

Intraday Security Values

On each Exchange Business Day, Janus Index will be responsible for calculating an intraday “indicativevalue” for each series of the Securities meant to approximate the expected trading value of the Securitiesin a liquid market and publishing it to Bloomberg and Thomson Reuters (based in part on informationprovided by STOXX) or a successor via the facilities on the Consolidated Tape Association. The LongSecurities are listed under the symbol “EVIX”. The Inverse Securities are listed under the symbol“EXIV”.

In connection with your Securities of any series, the term “indicative value” is calculated in accordancewith the following equation:

(Closing Indicative Value of such series of Securities on the previous calendar day × DailyIntraday Index Performance for the applicable underlying Index) – Daily Investor Fee for such series of

Securities for such calendar day

The “Daily Intraday Index Performance” at any time is equal to (i)(a) the level of the applicableunderlying Index at such time divided by (b) the Index Closing Level for the applicable underlying Indexon the immediately preceding Exchange Business Day plus (ii) the Daily Accrual. The Daily IntradayIndex Performance will equal one on any calendar day that is not an Exchange Business Day but which isan Index Business Day. The Daily Intraday Index Performance will equal one on any calendar day that isneither an Index Business Day nor an Exchange Business Day.

For each Index, if the applicable underlying Index does not publish an Index Closing Level on anyExchange Business Day, the Index Closing Level of such applicable underlying Index with respect to suchExchange Business Day will be the most recently published Index Closing Level for such Index, subject toadjustment in the case of a Market Disruption Event.

The “Index Closing Level” is the closing level of the applicable underlying Index as reported onBloomberg (or any successor service).

The intraday indicative value calculation will be used to determine whether the Inverse Securities will beaccelerated, as discussed under “Specific Terms of the Securities — Acceleration Upon Occurrence ofStop Loss Termination Event”. The intraday indicative value calculation is not intended as a price orquotation, or as an offer or solicitation for the purpose or sale of your Securities, nor will it reflecthedging or other transactional costs, credit considerations, market liquidity or bid-offer spreads. For thisreason and others, the actual trading price of the Securities may be different from their indicative value.

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The calculation of the intraday indicative value shall not constitute a recommendation or solicitation toconclude a transaction at the level stated, and should not be treated as giving investment advice.

The publishing of the intraday indicative value of each series of the Securities by Bloomberg mayoccasionally be subject to delay or postponement. The actual trading price of each series of the Securitiesmay be different from their intraday indicative value. The intraday indicative value of each series of theSecurities is published at least every 15 seconds during BATS’s Core Trading Session, which is currentlyfrom 9:30 a.m. to 4:00 p.m., New York City time, and may not be equal to the payment at maturity orupon call, early redemption or acceleration.

These intraday indicative value calculations will be prepared as of a particular time and date and willtherefore not reflect subsequent changes in market values or prices or in any other factors relevant totheir determination.

Split or Reverse Split of the Securities

Subject to the limitation described below, Janus Index may instruct us, at any time in its sole discretion,to initiate a split or reverse split of one or more series of Securities. The record date for any split orreverse split will be the fifteenth calendar day after the day on which we announce, by means of a pressrelease specifying the date of the split or reverse split, as applicable, that Janus Index is exercising itsright to initiate a split or reverse split, as applicable, provided that if such calendar day is not a BusinessDay, the record date for such split or reverse split will be the first Business Day following such calendarday. The effective date will be the next Business Day after the record date. The Securities of any seriesshall not be split or reverse split more than four times per calendar year in the aggregate per series ofSecurities.

If the Securities of any series undergo a split, Janus Index, as Security Calculation Agent, will adjust theClosing Indicative Value of such series of Securities accordingly. For example, if the Securities of a seriesundergo a 4:1 split, every investor who holds a Security of such series via The Depository TrustCompany (“DTC”) on the relevant record date will, after the split, hold four Securities of such series,and adjustments will be made as described below. The Closing Indicative Value on such record datewould be divided by four to reflect the 4:1 split of the Securities of such series. Any adjustment of theClosing Indicative Value will be rounded to eight decimal places. The split will become effective at theopening of trading of such series of Securities on the Business Day immediately following the record date.If, prior to the effectiveness of the split, a Stop Loss Termination Event occurs, the split will not occur.The effects of any split will not trigger a Stop Loss Termination Event.

In the case of a reverse split, the Closing Indicative Value of any series of Securities will be adjustedaccordingly, and we reserve the right to address odd numbers of Securities (commonly referred to as“partials”) in a manner determined by us in our sole discretion. For example, if the Securities of a seriesundergo a 1:4 reverse split, every investor who holds four Securities of such series via DTC on therelevant record date will, after the reverse split, hold only one Security of such series and the ClosingIndicative Value of the Securities of such series on such record date would be multiplied by four to reflectthe 1:4 reverse split of the Securities of such series. Any adjustment of the Closing Indicative Value willbe rounded to eight decimal places. The reverse split will become effective at the opening of trading ofsuch series of Securities on the Business Day immediately following the record date. If, prior to theeffectiveness of the reverse split, a Stop Loss Termination Event occurs, the reverse split will not occur.

Holders who own a number of Securities of such series on the record date that is not evenly divisible bythe reverse split divisor (which in the case of a 1:4 reverse split, for example, will be 4) will receive thesame treatment as all other holders of such series of Securities for the maximum number of Securities of

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such series they hold which is evenly divisible by the reverse split divisor, and we will have the right tocompensate holders of such series of Securities for their remaining or “partial” Securities of such series ina manner determined by us in our sole discretion. Our current intention is to provide holders with a cashpayment for their partials on the sixth Business Day following the effective date in an amount equal tothe appropriate percentage of the Closing Indicative Value of the reverse split-adjusted Securities of suchseries on the third Business Day following the effective date. For example, in the case of a 1:4 reversesplit, a holder who held 23 Securities of a series via DTC on the record date would receive five post-reverse split Securities of such series on the effective date (which will be the immediately followingBusiness Day), and a cash payment on the sixth Business Day following the effective date that is equal to3⁄4 of the Closing Indicative Value of the reverse split-adjusted Securities of such series on the thirdBusiness Day following the effective date.

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Specific Terms of the SecuritiesIn this section, references to “holders” mean those who own the Securities registered in their own names,on the books that we or the trustee maintain for this purpose, and not those who own beneficial interestsin the Securities registered in street name or in the Securities issued in book-entry form through DTC oranother depositary. Owners of beneficial interests in the Securities should read the section entitled “LegalOwnership and Book-Entry Issuance” in the accompanying prospectus.

The Securities are part of a series of debt securities entitled “Medium-Term Notes, Series B” that we mayissue, from time to time, under the indenture more particularly described in the accompanyingprospectus. This prospectus supplement summarizes specific financial and other terms that apply to theSecurities. Terms that apply generally to all Medium-Term Notes, Series B are described in “Descriptionof Debt Securities We May Offer” in the accompanying prospectus. The terms described here (i.e., in thisprospectus supplement) supplement those described in the accompanying prospectus and, if the termsdescribed here are inconsistent with those described there, the terms described here are controlling.

The Securities are issued under our indenture dated as of June 12, 2015 between us and U.S. Bank TrustNational Association, as trustee.

Please note that the information about the price to the public and the net proceeds to UBS on the frontcover of this prospectus supplement relates only to the initial sale of the Securities. If you have purchasedthe Securities in a secondary market transaction after the initial sale, information about the price anddate of sale to you will be provided in a separate confirmation of sale.

We describe the terms of each series of the Securities in more detail below.

Coupon

We will not pay you interest during the term of the Securities.

Denomination

The Stated Principal Amount of the Securities is $25 per Security.

Cash Settlement Amount at Maturity

Each Security does not guarantee any return of principal at or prior to, maturity or upon call, earlyredemption or acceleration. Instead, on the Maturity Date, you will receive a cash payment (the “CashSettlement Amount”) per Security equal to the Closing Indicative Value for the applicable Security as ofthe Final Valuation Date.

Closing Indicative Value

On the Initial Trade Date, the “Closing Indicative Value” for each series of Securities is equal to $25.00per Security. For each subsequent calendar day, such Closing Indicative Value will equal:

(Closing Indicative Value on the previous calendar day × Daily Index Performance for the applicableunderlying Index) – Daily Investor Fee for such series of Securities for such calendar day

Daily Index Performance

For each Index, the “Daily Index Performance” on any Exchange Business Day will equal (i)(a) the IndexClosing Level for the applicable underlying Index on such Exchange Business Day, divided by (b) the IndexClosing Level for the applicable underlying Index on the immediately preceding Exchange Business Day,plus (ii) the Daily Accrual. The Daily Index Performance will equal one on any calendar day that is not anExchange Business Day but which is an Index Business Day. The Daily Index Performance will equal oneon any calendar day that is neither an Index Business Day nor an Exchange Business Day.

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Specific Terms of the Securities

For each Index, if the applicable underlying Index does not publish an Index Closing Level on anyExchange Business Day, the Index Closing Level of such applicable underlying Index with respect to suchExchange Business Day will be the most recently published Index Closing Level for such Index, subject toadjustment in the case of a Market Disruption Event.

For purposes of calculating the Closing Indicative Value of each Index at maturity or upon call, earlyredemption or acceleration, the Daily Index Performance will be determined as of the Final ValuationDate or corresponding Valuation Date, as the case may be. If the amount calculated above is equal to orless than zero, the payment at maturity will be zero.

“Exchange Business Day” means any day on which the primary exchange for trading in the applicableseries of Securities is open for trading in the Securities.

“Index Business Day” means any day on which the Primary Exchange and each Related Exchange arescheduled to be open for trading.

“Primary Exchange” means, with respect to each of the Index Contracts, the exchange where the IndexContracts are listed.

“Related Exchange” means, with respect to each of the Index Contracts, each exchange or quotationsystem where trading has a material effect (as determined by the Security Calculation Agents) on theoverall market for futures or options contracts relating to such Index Contract.

“record date” means with respect to any split or reverse split, the fifteenth calendar day after theannouncement date, provided that if such calendar day is not a Business Day, the record date for suchsplit or reverse split will be the first Business Day following such calendar day.

A “Trading Day” means any day (i) on which the value of the applicable underlying Index is publishedby Bloomberg or Thomson Reuters, (ii) on which trading is generally conducted on the PrimaryExchanges on which the Index Contracts are traded, and (iii) which is an Exchange Business Day, in eachcase as determined by the Security Calculation Agents in their sole discretion. Any Trading Day is also anExchange Business Day and an Index Business Day.

Daily Accrual

The Daily Accrual represents the rate of interest that could be earned or is payable on a notional capitalreinvestment at the generic three-month USD adjusted German Bund Bill rate as reported on Bloombergunder the ticker: SOL3MBRU (or any successor ticker on Bloomberg or any successor service). The DailyAccrual on any Exchange Business Day will equal:

Where Bbillst-1 is the generic three-month USD adjusted German Bund Bill rate reported on Bloomberg(or any successor service) on the prior Exchange Business Day and d is the number of calendar days fromand including the immediately prior Exchange Business Day to but excluding the date of determination.The Daily Accrual is deemed to equal zero on any day that is not an Exchange Business Day.

As of the date of this Prospectus Supplement, the German Bund Bill rate is negative and therefore theDaily Accrual equals a negative amount. At any time the Daily Accrual equals a negative amount, theDaily Index Performance will be adversely affected by the Daily Accrual and the Daily Accrual willtherefore adversely affect the value of your Securities.

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Specific Terms of the Securities

Daily Investor Fee

Each series of Securities is subject to a “Daily Investor Fee” per Security that will be subtracted from theClosing Indicative Value of each series of Securities on each calendar day. On the Initial Trade Date, theDaily Investor Fee is equal to zero. On each subsequent calendar day, the Daily Investor Fee for eachseries of Securities equals the product of (i) 1.35% divided by 365 times (ii) the Closing Indicative Valuefor such series of Securities on the previous calendar day. For the purpose of calculating the DailyInvestor Fee, if such previous calendar day was not an Exchange Business Day, the Closing IndicativeValue will be calculated based on the Closing Indicative Value on the immediately preceding ExchangeBusiness Day.

Maturity Date

The “Maturity Date” for each series of Securities will be May 3, 2047 unless that day is not a BusinessDay, in which case the Maturity Date for each series of Securities will be the next following BusinessDay. If the third Trading Day before May 3, 2047 does not qualify as the Final Valuation Date asdetermined in accordance with “— Valuation Dates” below, then the Maturity Date will be the thirdTrading Day following the Final Valuation Date. The Security Calculation Agents may postpone theFinal Valuation Date — and therefore the Maturity Date — if a Market Disruption Event or ForceMajeure Event occurs or is continuing on a day that would otherwise be the Final Valuation Date. Wedescribe Market Disruption Events and Force Majeure Events under “— Market Disruption Event”below.

Unlike ordinary debt securities, the Securities do not pay interest and do not guarantee any return ofprincipal at maturity or upon call, early redemption or acceleration.

Each series of Securities is fully exposed to any decline in the level of the applicable underlying Index.You may lose all or a substantial portion of your investment if the Index level on the applicableValuation Date is not sufficient to offset the negative effect of the Daily Investor Fee and, if negative, theDaily Accrual. In addition, the Daily Investor Fee will be calculated based on a daily Closing IndicativeValue and therefore will depend on the daily fluctuations of the applicable underlying Index. If theClosing Indicative Value as of the Final Valuation Date is equal to or less than zero, the payment atmaturity will be zero.

The Securities may be called by UBS prior to the Maturity Date pursuant to UBS’s Call Right and, uponthe occurrence of a Stop Loss Termination Event, the Securities will be automatically accelerated andmandatorily redeemed. See “— UBS’s Call Right” beginning on page S-79 and “— Acceleration UponOccurrence of Stop Loss Termination Event” beginning on page S-79.

Valuation Dates

The applicable Valuation Date means (i) with respect to an early redemption, the third Trading Dayprior to the related Redemption Date, which day is also the first Trading Day following the date that aRedemption Notice and Redemption Confirmation are delivered in compliance with the redemptionprocedures, (ii) with respect to UBS’s exercise of its Call Right, the third Trading Day prior to the CallSettlement Date, (iii) with respect to the Maturity Date, the Final Valuation Date, and with respect to theoccurrence of a Stop Loss Termination Event, the Stop Loss Termination Date. The “Final ValuationDate” will be the Trading Day that falls on April 30, 2047.

If the Security Calculation Agents determine that a market disruption event or force majeure event occursor is continuing on a Valuation Date, the applicable Valuation Date will be the first following Trading

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Specific Terms of the Securities

Day on which the Security Calculation Agents determine that a market disruption event or force majeureevent does not occur and is not continuing. In no event, however, will the applicable Valuation Date forthe Securities be postponed by more than three Trading Days.

If the Security Calculation Agents determine that a market disruption event or force majeure event occursor is continuing on April 30, 2047, then the Final Valuation Date will be the first following Trading Dayon which the Security Calculation Agents determine that a market disruption event or force majeureevent does not occur and is not continuing. In no event, however, will the Final Valuation Date bepostponed by more than three Trading Days.

Early Redemption at the Option of the Holders

Subject to your compliance with the procedures described below and the potential postponements andadjustments as described under “— Market Disruption Event,” you may submit a request to have usredeem your Securities of any series on any Trading Day no later than 4:00 p.m. (New York City time)and a confirmation of redemption by no later than 4:00 p.m. (New York City time) on any Trading Day,provided that you request that we redeem a minimum of 50,000 Securities of the applicable series. Wereserve the right from time to time to waive or reduce this minimum redemption amount in our solediscretion on a case-by-case basis. You should not assume you will be entitled to the benefit of any suchwaiver or reduction. For any applicable redemption request, the “Redemption Valuation Date” will bethe first Trading Day following the date that the applicable redemption notice and redemptionconfirmation are delivered, except that we reserve the right from time to time to accelerate, in our solediscretion on a case-by-case basis, the Redemption Valuation Date to the date on which the notice ofredemption is received by UBS rather than the following Trading Day. You should not assume you willbe entitled to the benefit of any such acceleration. To satisfy the minimum redemption amount, yourbroker or other financial intermediary may bundle your Securities for redemption with those of otherholders of the applicable series to reach this minimum amount of 50,000 Securities of the applicableseries. The first Redemption Date was May 9, 2017 and the final Redemption Date will be April 26,2047.

Upon early redemption, you will receive per Security a cash payment on the relevant Redemption Dateequal to the Closing Indicative Value for the applicable Security as of the applicable Valuation Date,minus the Redemption Fee Amount as of the applicable Valuation Date. We refer to this cash payment asthe “Redemption Amount.” If the amount calculated above is less than or equal to zero, the paymentupon early redemption will be zero. We reserve the right from time to time to waive or reduce theRedemption Fee Amount in our sole discretion on a case-by-case basis. You should not assume you willbe entitled to the benefit of any such waiver or reduction.

As of any Valuation Date, the “Redemption Fee Amount” means an amount per Security equal to theproduct of (i) 0.15% and (ii) the Closing Indicative Value for the applicable Security as of such ValuationDate.

You may lose all or a substantial portion of your investment upon early redemption if the level of theapplicable underlying Index declines or does not increase by an amount sufficient to offset the combinednegative effect of the Daily Investor Fee, the Daily Accrual, if negative and, if applicable, the RedemptionFee Amount and the creation fee.

We discuss these matters in the accompanying prospectus under “Description of Debt Securities We MayOffer — Redemption and Payment.”

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Specific Terms of the Securities

The redemption feature is intended to induce arbitrageurs to counteract any trading of the Securities at adiscount to their indicative value, though there can be no assurance that arbitrageurs will employ theredemption feature in this manner or that they will be successful in counteracting any divergence in themarket price of the Securities and their indicative value.

The Securities may be called by UBS prior to the Maturity Date pursuant to UBS’s Call Right. See“— UBS’s Call Right” beginning on page S-79.

Redemption Dates

The applicable “Redemption Date” means the third Trading Day following the corresponding ValuationDate (other than the Final Valuation Date) or, if such day is not a Trading Day, the next followingTrading Day. The final Redemption Date will be April 26, 2047.

Redemption Procedures

To redeem your Securities, you must instruct your broker or other person through whom you hold yourSecurities to take the following steps through normal clearing system channels:

➤ deliver a notice of redemption, which is attached to this prospectus supplement as Annex A, toJanus Distributors via email no later than 4:00 p.m. (New York City time) on the Trading Dayimmediately preceding the applicable Valuation Date. If Janus Distributors receives your notice bythe time specified in the preceding sentence, Janus Distributors will respond by sending you aform of confirmation of redemption which is attached to this prospectus supplement as Annex B;

➤ deliver the signed confirmation of redemption to Janus Distributors via e-mail in the specifiedform by 4:00 p.m. (New York City time) on the same day. Janus Distributors must acknowledgereceipt in order for your confirmation to be effective;

➤ instruct your DTC custodian to book a delivery vs. payment trade with respect to your Securitieson the applicable Valuation Date at a price equal to the Redemption Amount; and

➤ cause your DTC custodian to deliver the trade as booked for settlement via DTC at or prior to10:00 a.m. (New York City time) on the applicable Redemption Date.

Different brokerage firms may have different deadlines for accepting instructions from their customers.Accordingly, as a beneficial owner of the Securities, you should consult the brokerage firm throughwhich you own your interest for the relevant deadline. If your broker delivers your notice of redemptionafter 4:00 p.m. (New York City time), or your confirmation of redemption after 4:00 p.m. (New YorkCity time), on the Trading Day prior to the applicable Valuation Date, your notice will not be effective,you will not be able to redeem your Securities on the applicable Redemption Date and your broker willneed to complete all the required steps if you should wish to redeem your Securities on any subsequentRedemption Date. In addition, Janus Distributors may request a medallion signature guarantee or suchassurances of delivery as it may deem necessary in its sole discretion. All instructions given toparticipants from beneficial owners of Securities relating to the right to redeem their Securities will beirrevocable.

We reserve the right from time to time to waive the minimum redemption amount or the Redemption FeeAmount in our sole discretion on a case-by-case basis. In addition, we reserve the right from time to timeto accelerate, in our sole discretion on a case-by-case basis, the Redemption Valuation Date to the dateon which the notice of redemption is received by Janus Distributors rather than the following TradingDay. You should not assume you will be entitled to the benefit of any such waiver or election toaccelerate the Redemption Valuation Date.

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Specific Terms of the Securities

UBS’s Call Right

On any Trading Day on or after May 9, 2018 through and including the Maturity Date, UBS may at itsoption redeem all, but not less than all, issued and outstanding Securities of any series. To exercise itsCall Right, UBS must provide notice (which may be provided via press release) to the holders of suchSecurities not less than ten calendar days prior to the Call Settlement Date specified by UBS. In the eventUBS exercises this right, you will receive a cash payment per Security equal to its Closing IndicativeValue as of the Valuation Date. We refer to this cash payment as the “Call Settlement Amount.” See also“Description of the Debt Securities We May Offer — Redemption and Payment” in the attachedprospectus.

You may lose all or a substantial portion of your investment upon UBS’s exercise of its Call Right if thelevel of the applicable underlying Index declines or does not increase by an amount sufficient to offset thenegative effect of the Daily Investor Fee and, if negative, the Daily Accrual.

Acceleration Upon Occurrence of Stop Loss Termination Event

If, at any time on any Trading Day, the intraday indicative value of the Inverse Securities, calculated asdescribed above in “Valuation of the Indices and the Securities — Intraday Security Values,” is equal toor less than 25.0% of the Closing Indicative Value of the Inverse Securities at the end of the priorExchange Business Day (each such event, a “Stop Loss Termination Event,” and each such day, a “StopLoss Termination Date”), all issued and outstanding Inverse Securities will be automatically acceleratedand mandatorily redeemed by UBS for a cash payment equal to the Stop Loss Redemption Value;provided that if the Stop Loss Redemption Value so calculated is less than or equal to zero, the paymentupon acceleration will be zero.

The “Stop Loss Redemption Value” will be determined by UBS Securities LLC, as Security CalculationAgent in its sole discretion, acting in good faith and in a commercially reasonable manner, using thelatest publicly available quotations for the intraday indicative value of the Inverse Investable Index thatare available as soon as reasonably practicable after the time that an investor could reasonably beexpected to unwind an investment in the first and second month VSTOXX futures hypotheticallyrequired to replicate the performance of the Inverse Investable Index following the occurrence of suchStop Loss Termination Event, based on such factors as liquidity, market availability and practical timeconstraints. UBS Securities LLC, as Security Calculation Agent, will calculate, in its sole discretion, theStop Loss Redemption Value of the Inverse Securities as:

(its Closing Indicative Value on the previous calendar day × Daily Intraday Index Performance for theInverse Investable Index as soon as reasonably practicable following the Stop Loss Termination

Event) – Daily Investor Fee for the Inverse Securities on the Stop Loss Termination Date

The Stop Loss Redemption Value (a) is not expected to be greater than 25.0% of its Closing IndicativeValue at the end of the prior Exchange Business Day and (b) shall not be less than $0 per Security.

If a Stop Loss Termination Event occurs, you will receive on the Stop Loss Redemption Date only theStop Loss Redemption Value in respect of your investment in the Inverse Securities. If the Stop LossRedemption Value so calculated is equal to or less than zero, the payment upon acceleration will be zero.The “Stop Loss Redemption Date” will be the fifth Business Day following the Stop Loss TerminationDate; provided that if the calculation of the Stop Loss Redemption Value is postponed as a result of aMarket Disruption Event, the Stop Loss Redemption Date will be the fifth Business Day after the StopLoss Redemption Value is calculated, subject to adjustment. For a discussion of the risks related to theoccurrence of a Stop Loss Termination Event, see “Risk Factors — The Securities are highly sensitive to

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large changes in the market price of the underlying futures contracts and may be automaticallyaccelerated and mandatorily redeemed, resulting in a loss of all or a substantial portion of yourinvestment.”

Subject to the prior verification by UBS Securities LLC, as Security Calculation Agent, that the intradayindicative value of the Inverse Securities was accurately calculated to be less than or equal to 25.0% of itsClosing Indicative Value at the end of the prior Exchange Business Day, UBS must provide notice (whichmay be provided via press release) to the holders of the Inverse Securities not later than the secondTrading Day after the occurrence of a Stop Loss Termination Event that such Stop Loss TerminationEvent has occurred.

You may lose some or all of your investment upon acceleration. The negative effect of the Daily InvestorFee and the Daily Accrual, if negative will reduce your final payment. If the return of the applicableunderlying Index is insufficient to offset the negative effect of the Daily Investor Fee and the DailyAccrual, if negative or if the return of the Inverse Investable Index is negative over the period you holdyour Securities, you will lose some or all of your investment upon acceleration.

Security Calculation AgentsUBS Securities LLC and Janus Index will act as the Security Calculation Agents. UBS Securities LLC will,in its sole discretion, make all determinations with respect to any reduction of the minimum redemptionamount of 50,000 Securities or with respect to whether a Stop Loss Termination Event has occurred andwill calculate for each series of Securities (i) the intraday indicative value for purposes of calculating anyStop Loss Redemption Value, (ii) the Stop Loss Redemption Value, if any, that we will pay you upon theoccurrence of a Stop Loss Termination Event, (iii) whether any day is a Trading Day or ExchangeBusiness Day (iv) any amounts due upon default, (v) the Closing Indicative Value for purposes ofcalculating the Redemption Amount, Call Settlement Amount, Stop Loss Redemption Value, or any suchother amounts payable at maturity or upon call, acceleration or early redemption, (vi) the RedemptionAmount, Call Settlement Amount, Stop Loss Redemption Value or Cash Settlement Amount or any suchother amounts payable at maturity or upon call, acceleration or early redemption.

Janus Index will determine, in its sole discretion, (i) the Closing Indicative Value for each series of theSecurities (other than as described above), (ii) the intraday indicative value for each series of theSecurities (other than in the case of a Market Disruption Event), (iii) whether any day is a Business Dayor Index Business Day and (iv) whether the Securities of any series shall be split or reverse-split and anyadjustments to be made as a result of any such split or reverse split. Janus Index may, in its solediscretion, outsource the calculation of the intraday indicative value for each series of the Securities tothird-party agents.

The Security Calculation Agents will jointly be responsible for (i) determining whether a MarketDisruption Event has occurred and, if so, the applicable Closing Indicative Value, (ii) determiningwhether any Index has been discontinued or whether there has been a material change in any Index and,if so, whether to replace such Index, and (iii) all other matters or calculations to be made by the SecurityCalculation Agents not specifically described above.

All determinations made by the Security Calculation Agents will be at the sole discretion of the SecurityCalculation Agents and will, in the absence of manifest error, be conclusive for all purposes and bindingon you and on us. We may appoint one or more different Security Calculation Agents from time to timeafter the date of this prospectus supplement without your consent and without notifying you.

The Security Calculation Agents will provide written notice to the trustee at its New York office, onwhich notice the trustee may conclusively rely, of the amount to be paid at maturity or upon call, earlyredemption or acceleration on or prior to 4:00 p.m., New York City time, on the Business Dayimmediately preceding the Maturity Date or any Redemption Date, Stop Loss Redemption Date or CallSettlement Date, as applicable.

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All dollar amounts related to determination of the Closing Indicative Value, the Daily Investor Fee, theRedemption Amount and Redemption Fee Amount per Security, and the Call Settlement Amount or StopLoss Redemption Amount, if any, per Security will be rounded to the nearest ten-thousandth, with fiveone hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollaramounts paid on the aggregate principal amount of Securities per holder will be rounded to the nearestcent, with one-half cent rounded upward.

Market Disruption Event

If an applicable underlying Index is not published on an Index Business Day, or if a Market DisruptionEvent or a Force Majeure Event (each as defined below) has occurred or is occurring, and such eventaffects such Index and/or the ability to hedge such Index on any Index Business Day, Trading Day orExchange Business Day, the Security Calculation Agents may (but are not required to) makedeterminations and/or adjustments to such Index or method of calculating such Index. The determinationof the value of a Security on a Valuation Date, including the Final Valuation Date, may be postponed ifthe Security Calculation Agents determine that a Market Disruption Event or Force Majeure Event hasoccurred or is continuing on such Valuation Date. In that event, the applicable Valuation Date will bethe next following Trading Day on which no Market Disruption Event or Force Majeure Event hasoccurred or is continuing. In no event, however, will a Valuation Date be postponed by more than threeTrading Days. If a Valuation Date is postponed until the third Trading Day following the scheduledValuation Date but a Market Disruption Event or Force Majeure Event occurs or is continuing on suchday, that day will nevertheless be the Valuation Date and the Security Calculation Agents will make agood faith estimate in their sole discretion of the value of the Index Closing Level for applicableunderlying Index for such day. All determinations and adjustments to be made by the SecurityCalculation Agents may be made in the Security Calculation Agents’ sole discretion. See “Risk Factors”in this prospectus supplement for a discussion of certain conflicts of interest which may arise with respectto the Security Calculation Agents.

A “Market Disruption Event” will be any event that, in the determination of the Security CalculationAgents in their sole discretion, could materially interfere with our, our affiliates, third parties with whomwe transact, or similarly situated third parties’ ability to establish, maintain or unwind all or a materialportion of a hedge that could be effected with respect to the Securities, including, but not limited to:

➤ the Index Sponsor does not publish the level of the applicable underlying Index on any IndexBusiness Day;

➤ a suspension, absence or material limitation of trading of equity securities then constituting 20%or more of the level of the EURO STOXX 50® Index on the Relevant Exchanges (as definedbelow) for such securities for more than two hours of trading (one hour on any day that is an“index roll date” for purposes of calculating the VSTOXX or the relevant successor index)during, or during the one hour period preceding the close of, the principal trading session on suchRelevant Exchange;

➤ a breakdown or failure in the price and trade reporting systems of any Relevant Exchange for theEURO STOXX 50® Index as a result of which the reported trading prices for equity securitiesthen constituting 20% or more of the level of the EURO STOXX 50® Index are materiallyinaccurate (i) during the one hour preceding the close of the principal trading session on suchRelevant Exchange or (ii) during any one hour period of trading on such Relevant Exchange onany day that is an “index roll date” for purpose of calculating the VSTOXX or the relevantsuccessor index;

➤ a suspension, absence or material limitation of trading on any Relevant Exchange for futurescontracts, options or other products on the VSTOXX (or any relevant successor index) traded on

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such Relevant Exchange for more than two hours of trading (one hour on any day that is an“index roll date” for purposes of calculating the VSTOXX or the relevant successor index)during, or during the one hour period preceding the close of, the principal trading session on suchRelevant Exchange;

➤ a breakdown or failure in the price and trade reporting systems of any Relevant Exchange forfutures contracts on the VSTOXX (or the relevant successor index) as a result of which thereported trading prices for futures on the VSTOXX (or futures on the relevant successor index)during the one hour period preceding, and including, the scheduled time at which the value of theVSTOXX is calculated for purposes of the Indices (or the relevant successor index) are materiallyinaccurate;

➤ a suspension, absence or material limitation of trading on any Relevant Exchange for theapplicable Index (or any relevant successor index) for more than two hours of trading (one houron any day that is an “index roll date” for purposes of calculating the applicable Index or therelevant successor index) during, or during the one hour period preceding the close of, theprincipal trading session on such Relevant Exchange;

➤ a breakdown or failure in the price and trade reporting systems of any Relevant Exchange for theIndices (or a relevant successor index) as a result of which the reported trading prices for therelevant futures contracts on the VSTOXX (or futures on the relevant successor indices) duringthe one hour period preceding, and including, the scheduled time at which the value of the futurescontracts on the VSTOXX is calculated for purposes of the Indices (or a relevant successor index)are materially inaccurate;

➤ a decision to permanently discontinue trading in futures on the VSTOXX (or futures on therelevant successor index);

➤ on any Index Business Day, the occurrence or existence of a lack of, or a material decline in, theliquidity in the market for trading in any futures contract included in the Indices or any Index;

➤ any event or any condition (including without limitation any event or condition that occurs as aresult of the enactment, promulgation, execution, ratification, interpretation or application of, orany change in or amendment to, any law, rule or regulation by an applicable governmentalauthority) that results in an illiquid market for trading in any futures contract underlying theIndices or any Index; and

➤ the declaration or continuance of a general moratorium in respect of banking activities in anyrelevant city.

A “Force Majeure Event” includes any event or circumstance (including, without limitation, a systemsfailure, natural or man-made disaster, act of God, armed conflict, act of terrorism, riot or labordisruption or any similar intervening circumstance) that the Security Calculation Agents determine to bebeyond their reasonable control and materially affect any Index, the EURO STOXX 50® Index or theVSTOXX (or the relevant successor index) or any futures contract underlying any Index (or the relevantsuccessor index).

For purposes of determining whether a Market Disruption Event has occurred:

➤ a limitation on the hours or number of days of trading will not constitute a Market DisruptionEvent if it results from an announced change in the regular business hours of any RelevantExchange for the EURO STOXX 50® Index or the VSTOXX (or the relevant successor index);

➤ limitations pursuant to the rules of any Relevant Exchange similar to BATS Rule 20.3 (or anyapplicable rule or regulation enacted or promulgated by any other self-regulatory organization or

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any government agency of scope similar to BATS Rule 20.3 as determined by the Index Sponsor)on trading during significant market fluctuations will constitute a suspension, absence or materiallimitation of trading;

➤ a suspension of trading in an option or a futures contract on the VSTOXX (or futures contract onthe relevant successor index) by the Relevant Exchange for the VSTOXX (or the relevantsuccessor index) by reason of:

➤ a price change exceeding limits set by such Relevant Exchange,

➤ an imbalance of orders relating to such option or futures contract, as applicable, or

➤ a disparity in bid and ask quotes relating to such option or futures contract, as applicable, will, ineach such case, constitute a suspension, absence or material limitation of trading on such RelevantExchange; and

➤ a “suspension, absence or material limitation of trading” on any Relevant Exchange will notinclude any time when such Relevant Exchange is itself closed for trading under ordinarycircumstances.

“Relevant Exchange” means, with respect to the EURO STOXX 50® Index, the primary exchange ormarket of trading for any equity security (or any combination thereof) then included in the EUROSTOXX 50® Index or, with respect to the VSTOXX or any relevant successor index, the primaryexchange or market for options or futures on the VSTOXX (or futures on the relevant successor index),as applicable, or, with respect to the Indices or any relevant successor index, the primary exchange ormarket for the relevant futures contracts on the VSTOXX (or futures on the relevant successor index tothe VSTOXX).

Redemption Price Upon Optional Tax Redemption

We have the right to redeem the Securities in the circumstances described under “Description of DebtSecurities We May Offer — Optional Tax Redemption” in the accompanying prospectus. If we exercisethis right, the redemption price of the Securities will be determined by UBS Securities LLC, as SecurityCalculation Agent in a manner reasonably calculated to preserve your and our relative economicposition.

Default Amount on Acceleration

If an event of default occurs and the maturity of the Securities is accelerated, the default amount inrespect of the principal of the Securities shall become due and payable. We describe the default amountbelow under “— Default Amount.”

For the purpose of determining whether the holders of our Medium-Term Notes, Series B, of which theSecurities are a part, are entitled to take any action under the indenture, we will treat Stated PrincipalAmount of the Securities as their outstanding principal amount. Although the terms of the Securities maydiffer from those of the other Medium-Term Notes, Series B, holders of specified percentages in principalamount of all Medium-Term Notes, Series B, together in some cases with other series of our debtsecurities, will be able to take action affecting all the Medium-Term Notes, Series B, including theSecurities. This action may involve changing some of the terms that apply to the Medium-Term Notes,Series B, accelerating the maturity of the Medium-Term Notes, Series B, including the Securities, after adefault or waiving some of our obligations under the indenture. We discuss these matters in the attachedprospectus under “Description of Debt Securities We May Offer — Default, Remedies and Waiver ofDefault” and “Description of Debt Securities We May Offer — Modification and Waiver of Covenants.”

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Default Amount

The default amount for the Securities of any series on any day will be an amount, in U.S. dollars, asdetermined by UBS Securities LLC, as Security Calculation Agent, in its sole discretion, equal to the costof having a qualified financial institution, of the kind and selected as described below, expressly assumeall our payment and other obligations with respect to the Securities of such series as of that day and as ifno default or acceleration had occurred, or to undertake other obligations providing substantiallyequivalent economic value to you with respect to the Securities of such series. That cost will equal:

➤ the lowest amount that a qualified financial institution would charge to effect this assumption orundertaking, plus

➤ the reasonable expenses, including reasonable attorneys’ fees, incurred by the holders of theSecurities in preparing any documentation necessary for this assumption or undertaking.

During the default quotation period for the Securities, which we describe below, the holders of theSecurities and/or we may request a qualified financial institution to provide a quotation of the amount itwould charge to effect this assumption or undertaking. If either party obtains a quotation, it must notifythe other party in writing of the quotation. The amount referred to in the first bullet point above willequal the lowest — or, if there is only one, the only — quotation obtained, and as to which notice is sogiven, during the default quotation period. With respect to any quotation, however, the party notobtaining the quotation may object, on reasonable and significant grounds, to the assumption orundertaking by the qualified financial institution providing the quotation and notify the other party inwriting of those grounds within two Business Days after the last day of the default quotation period, inwhich case that quotation will be disregarded in determining the default amount.

Default Quotation Period

The default quotation period is the period beginning on the day the default amount first becomes dueand ending on the third Business Day after that day, unless:

➤ no quotation of the kind referred to above is obtained; or

➤ every quotation of that kind obtained is objected to within five Business Days after the due date asdescribed above.

If either of these two events occurs, the default quotation period will continue until the third BusinessDay after the first Business Day on which prompt notice of a quotation is given as described above. Ifthat quotation is objected to as described above within five Business Days after that first Business Day,however, the default quotation period will continue as described in the prior sentence and this sentence.

In any event, if the default quotation period and the subsequent two Business Day objection period havenot ended before the Final Valuation Date, then the default amount will equal the Stated PrincipalAmount of the Securities.

Qualified Financial Institutions

For the purpose of determining the default amount at any time, a qualified financial institution must be afinancial institution organized under the laws of any jurisdiction in the United States of America, Europeor Japan, which at that time has outstanding debt obligations with a stated maturity of one year or lessfrom the date of issue and rated either:

➤ A-1 or higher by Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-HillCompanies, Inc., or any successor, or any other comparable rating then used by that ratingagency; or

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➤ P-1 or higher by Moody’s Investors Service or any successor, or any other comparable rating thenused by that rating agency.

Discontinuance or Modification of an Index or Termination of Our License Agreementwith the Index Sponsor

If the Index Sponsor discontinues publication of any Index, or if our license agreement with the IndexSponsor terminates, and any other person or entity publishes an index that the Security CalculationAgents determine is comparable to such Index and the Security Calculation Agents in their sole discretionapprove such index as a successor index, then the Security Calculation Agents will determine the value ofthe applicable underlying Index on the applicable Valuation Date and the amount payable at maturity orupon call, early redemption or acceleration by reference to such successor index.

If our license agreement with the Index Sponsor terminates, or if the publication of any Index isdiscontinued, and the Security Calculation Agents determine in their sole discretion that no successorindex comparable to the applicable underlying Index exists, or if the Security Calculation Agentsdetermine that a market disruption event or force majeure event has occurred and is continuing on thedate on which the value of the applicable underlying Index is required to be determined, the SecurityCalculation Agents will determine the amount payable by a computation methodology that the SecurityCalculation Agents determine will as closely as reasonably possible replicate such Index.

If the Security Calculation Agents determine that any Index or the method of calculating any Index hasbeen changed at any time in any respect, including whether the change is made by the Index Sponsorunder its existing policies or following a modification of those policies, is due to the publication of asuccessor index, or is due to any other reason, then the Security Calculation Agents will be permitted(but not required) to make such adjustments to such Index or method of calculating such Index as itbelieves are appropriate to ensure that the value of such Index used to determine the amount payable atmaturity or upon call, early redemption or acceleration is equitable.

All determinations and adjustments to be made by the Security Calculation Agents may be made in theSecurity Calculation Agents’ sole discretion. See “Risk Factors” in this prospectus supplement for adiscussion of certain conflicts of interest which may arise with respect to the calculation agents.

Termination of Janus Agreements

UBS and its affiliates have entered into various agreements with Janus Distributors and Janus Index withrespect to the Securities, including a Services Agreement, a Co-Calculation Agents Agreement and aTrademark License Agreement (collectively, the “Agreements”). Each of UBS, Janus Distributors andJanus Index has the right to terminate the Agreements under certain circumstances. In the event that theAgreements are terminated, UBS may be required to suspend further issuances of the Securities and toexercise its Call Right, which could result in the loss of some or all of your investment in the Securities.

Manner of Payment and Delivery

Any payment on or delivery of the Securities at maturity or upon call, acceleration or early redemptionwill be made to accounts designated by you and approved by us, or at the corporate trust office of thetrustee in New York City, but only when the Securities are surrendered to the trustee at that office. Wealso may make any payment or delivery in accordance with the applicable procedures of the depositary.

Business Day

When we refer to a Business Day with respect to the Securities, we mean a day that is a Business Day ofthe kind described in “Description of Debt Securities We May Offer — Payment Mechanics for DebtSecurities” in the accompanying prospectus.

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Modified Business Day

As described in “Description of Debt Securities We May Offer — Payment Mechanics for DebtSecurities” in the attached prospectus, any payment on the Securities that would otherwise be due on aday that is not a Business Day may instead be paid on the next day that is a Business Day, with the sameeffect as if paid on the original due date, except as described under “— Cash Settlement Amount atMaturity,” “— UBS’s Call Right,” “Acceleration Upon Occurrence of Stop Loss Termination Event” and“— Early Redemption at the Option of the Holders” above.

Defeasance

Neither full defeasance nor covenant defeasance, as described in the accompanying prospectus under“Description of Debt Securities We May Offer — Defeasance and Covenant Defeasance,” will apply tothe Securities.

Reissuances or Reopened Issues

We may, at our sole discretion, “reopen” or reissue any series of Securities. We issued each series ofSecurities initially in amounts having the aggregate stated principal amount specified on the cover of thisprospectus supplement. We may issue additional Securities of any series in amounts that exceed suchamount at any time, without your consent and without notifying you. The Securities do not limit ourability to incur other indebtedness or to issue other securities. Also, we are not subject to financial orsimilar restrictions by the terms of the Securities. For more information, please refer to “Description ofDebt Securities We May Offer — Amounts That We May Issue” in the accompanying prospectus.

These further issuances, if any, will be consolidated to form a single class with such series of originallyissued Securities and will have the same CUSIP number and will trade interchangeably with such series ofSecurities immediately upon settlement. Any additional issuances will increase the aggregate statedprincipal amount of the outstanding of Securities of such series, plus the aggregate stated principalamount of any Securities bearing the same CUSIP number that are issued pursuant to any futureissuances of Securities bearing the same CUSIP number. The price of any additional offering will bedetermined at the time of pricing of that offering.

Booking Branch

The Securities will be booked through UBS AG, London Branch.

Clearance and Settlement

The DTC participants that hold the Securities through DTC on behalf of investors will follow thesettlement practices applicable to equity securities in DTC’s settlement system with respect to the primarydistribution of the Securities and secondary market trading between DTC participants.

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Use of Proceeds and HedgingWe will use the net proceeds we receive from the sale of the Securities for the purposes we describe in theattached prospectus under “Use of Proceeds.” We or our affiliates may also use those proceeds intransactions intended to hedge our obligations under the Securities as described below.

In anticipation of the sale of the Securities, we or our affiliates expect to enter into hedging transactionsinvolving purchases or sales of securities and/or futures contracts underlying any of the Indices or listedor over-the-counter options, futures, swaps or other derivative financial instruments linked to any of theIndices and/or any of the futures contracts underlying any of the Indices prior to and/or on the InitialTrade Date. In addition, after the Initial Trade Date, we expect to regularly enter into additional hedgingtransactions, and from time to time we may unwind those we have previously entered into. In thisregard, we or our affiliates may:

➤ acquire or dispose of long or short positions in listed or over-the-counter options, futures,exchange-traded funds or other instruments linked to the Indices and/or any of the futurescontracts underlying the Indices;

➤ acquire or dispose of long or short positions in listed or over-the-counter options, futures, orexchange-traded funds or other instruments based on the level of other similar market indices orfutures contracts; or

➤ any combination of the above.

We or our affiliates may acquire a long or short position in securities similar to the Securities from timeto time and may, in our or their sole discretion, hold or resell those securities.

We or our affiliates may close out our or their hedge on or before the relevant Valuation Date or theFinal Valuation Date. That step may involve sales or purchases of futures contracts underlying any of theIndices or listed or over-the-counter options, futures, swaps or other derivative financial instrumentslinked to any of the Indices and/or any of the futures contracts underlying any of the Indices, or otherinstruments based on indices designed to track the performance of any of the Indices.

The hedging activity discussed above may adversely affect the market value of the Securities from time totime. See “Risk Factors” on page S-27 for a discussion of these adverse effects.

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Material U.S. Federal Income Tax ConsequencesThe following is a general description of the material United States federal tax considerations relating tothe Securities. It does not purport to be a complete analysis of all tax considerations relating to theSecurities. Prospective purchasers of the Securities should consult their tax advisors as to theconsequences under the tax laws of the country of which they are resident for tax purposes and the taxlaws of the United States of acquiring, holding and disposing of the Securities and receiving paymentsunder the Securities. This summary is based upon the law as in effect on the date of this prospectussupplement and is subject to any change in law that may take effect after such date.

The discussion below supplements, and to the extent inconsistent replaces, the discussion under “U.S.Tax Considerations” in the attached prospectus. This discussion applies to you only if you hold yourSecurities as capital assets for tax purposes. This section does not apply to you if you are a member of aclass of holders subject to special rules, such as:

➤ a dealer in securities,

➤ a trader in securities that elects to use a mark-to-market method of tax accounting for yoursecurities holdings,

➤ a bank,

➤ a life insurance company,

➤ a tax-exempt organization,

➤ a person subject to alternative minimum tax,

➤ a person that purchases or sells the Securities as part of a wash sale for tax purposes,

➤ a person that owns Securities as part of a straddle or a hedging or conversion transaction for taxpurposes, or

➤ a United States holder (as defined below) whose functional currency for tax purposes is not theU.S. dollar.

This discussion is based on the Code, its legislative history, existing and proposed regulations under theCode, published rulings and court decisions, all as currently in effect. These laws are subject to change,possibly on a retroactive basis.

If a partnership holds the Securities, the United States federal income tax treatment of a partner willgenerally depend on the status of the partner and the tax treatment of the partnership. A partner in apartnership holding the Securities should consult its tax advisor with regard to the United States federalincome tax treatment of an investment in the Securities.

Except as otherwise noted under “Non-United States Holders” below, this discussion is only applicableto you if you are a United States holder. You are a United States holder if you are a beneficial owner of aSecurity and you are: (i) a citizen or resident of the United States; (ii) a domestic corporation; (iii) anestate whose income is subject to United States federal income tax regardless of its source; or (iv) a trustif a United States court can exercise primary supervision over the trust’s administration and one or moreUnited States persons are authorized to control all substantial decisions of the trust.

NO STATUTORY, REGULATORY, JUDICIAL OR ADMINISTRATIVE AUTHORITY DIRECTLYDISCUSSES HOW THE SECURITIES SHOULD BE TREATED FOR UNITED STATES FEDERALINCOME TAX PURPOSES. AS A RESULT, THE UNITED STATES FEDERAL INCOME TAXCONSEQUENCES OF YOUR INVESTMENT IN THE SECURITIES ARE UNCERTAIN.

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ACCORDINGLY, WE URGE YOU TO CONSULT YOUR TAX ADVISOR AS TO THE TAXCONSEQUENCES OF HAVING AGREED TO THE REQUIRED TAX TREATMENT OF YOURSECURITIES DESCRIBED BELOW AND AS TO THE APPLICATION OF STATE, LOCAL, OROTHER TAX LAWS TO YOUR INVESTMENT IN YOUR SECURITIES.

In the opinion of our counsel, Sullivan & Cromwell LLP, the Securities should be treated as a pre-paidforward contract with respect to the applicable Index and the terms of the Securities require you and us(in the absence of a statutory, regulatory, administrative or judicial ruling to the contrary) to treat theSecurities for all tax purposes in accordance with such characterization. If the Securities are so treated,you should generally recognize capital gain or loss upon the sale, exchange, redemption or maturity ofyour Securities in an amount equal to the difference between the amount you receive at such time andyour tax basis in the Securities. Such gain or loss should generally be long-term capital gain or loss if youheld your Securities for more than one year. In general, your tax basis in your Securities will be equal tothe price you paid for them (including the amount, if any, of the creation fee you paid in respect of yourSecurities). Capital gain of a non-corporate United States holder is generally taxed at preferential rateswhere the property is held for more than one year. The deductibility of capital losses is subject tolimitations.

Alternative Treatments. The IRS released a notice in 2007 that may affect the taxation of holders of theSecurities. According to the notice, the IRS and the Treasury Department are actively considering, amongother things, whether holders of instruments such as the Securities should be required to accrue ordinaryincome on a current basis, whether additional gain or loss upon the sale, exchange, redemption ormaturity of such instruments should be treated as ordinary or capital, whether foreign holders of suchinstruments should be subject to withholding tax, and whether the special “constructive ownershiprules” of Section 1260 of the Code should be applied to such instruments. While it is impossible toanticipate how any ultimate guidance would affect the tax treatment of instruments such as the Securities(and while any such guidance may be issued on a prospective basis only), such guidance could be appliedretroactively and could in any case increase the likelihood that you will be required to accrue incomeover the term of an instrument such as the Securities. The outcome of this process is uncertain. Holdersare urged to consult their tax advisors concerning the significance and the potential impact of the aboveconsiderations. UBS intends to treat your Securities for United States federal income tax purposes inaccordance with the treatment described above unless and until such time as the Treasury Department orIRS determines that some other treatment is more appropriate.

Additionally, members of Congress have periodically made proposals to reform or otherwise modify theU.S. federal income tax treatment of financial instruments such as the Securities. For example, in 2017,legislation was proposed that, if enacted, would generally require holders of instruments such as theSecurities that are acquired after the bill is enacted to annually recognize gain or loss with respect to suchinstruments on a “mark-to-market” basis and to treat any such gain or loss as ordinary income or loss. Itis not possible to predict whether any such legislation will be enacted in the future, or whether any suchlegislation would affect the tax treatment of your Securities.

In addition, it is possible that the Securities could be treated as a debt instrument subject to the specialtax rules governing contingent debt instruments. If the Securities are so treated, you would be required toaccrue interest income over the term of your Securities based upon the yield at which we would issue anon-contingent fixed-rate debt instrument with other terms and conditions similar to your Securities.You would recognize gain or loss upon the sale, exchange, redemption or maturity of your Securities inan amount equal to the difference, if any, between the amount you receive at such time and your

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adjusted basis in your Securities. In general, your adjusted basis in your Securities would be equal to theamount you paid for your Securities (including the amount, if any, of the creation fee you paid in respectof your Securities), increased by the amount of interest you previously accrued with respect to yourSecurities. Any gain you recognize upon the sale, exchange, redemption or maturity of your Securitieswould be ordinary income and any loss recognized by you at such time would be ordinary loss to theextent of interest you included in income in the current or previous taxable years in respect of yourSecurities, and thereafter, would be capital loss.

If the Securities are treated as a contingent debt instrument and you purchase your Securities in thesecondary market at a price that is at a discount from, or in excess of, the adjusted issue price of theSecurities, such excess or discount would not be subject to the generally applicable market discount oramortizable bond premium rules described under “U.S. Tax Considerations — Taxation of DebtSecurities — Market Discount” and “U.S. Tax Considerations — Taxation of Debt Securities — DebtSecurities Purchased at a Premium” in the accompanying prospectus but rather would be subject tospecial rules set forth in Treasury Regulations governing contingent debt instruments. Accordingly, if youpurchase your Securities in the secondary market, you should consult your tax advisor as to the possibleapplication of such rules to you.

It is also possible that the IRS could assert that you should be treated as if you owned the VSTOXXfutures contracts that are referenced by the applicable Index. Under such characterization, it is possiblethat Section 1256 of the Code could apply to your Securities. If Section 1256 were to apply to yourSecurities, gain or loss recognized with respect to your Securities would be treated as 60% long-termcapital gain or loss and 40% short-term capital gain or loss, without regard to your holding period in theSecurities. You would also be required to mark your Securities to market at the end of your taxable year(i.e., recognize income as if the Securities had been sold for fair market value).

In addition, it is possible that you could be required to recognize gain or loss in respect of all or a portionof Securities each time a VSTOXX futures contract rolls or if there is an adjustment to the componentsof or the rules governing the Index (or if the Index is replaced by a successor Index). The amount of lossrecognized in this case could be deferred on account of the “wash sale” rules of Section 1091 of theCode.

In addition, the IRS could potentially assert that you should be required to treat amounts attributable tothe Daily Investor Fee, the negative amount of the Daily Accrual (if any) and the Redemption FeeAmount, (if any), as expenses that you are deemed to pay in respect of the Securities. If you are anindividual, the deduction of any such deemed expenses would generally be disallowed as a miscellaneousitemized deduction. Such amounts would correspondingly increase the amount of gain or decrease theamount of loss that you recognize with respect to your Securities.

Furthermore, the IRS could possibly assert that (i) you should recognize ordinary income in respect of thepositive interest component (if any) that is included in the Daily Accrual, (ii) any gain or loss that yourecognize upon the exchange, redemption or maturity of your Inverse Securities that is attributable to theshort positions in the Inverse Investable Index should be short-term capital gain or loss, (iii) some or allof the gain or loss that you recognize upon the sale, exchange, redemption or maturity of your Securitiesshould be treated as ordinary gain or loss, (iv) you should be required to accrue interest income over theterm of the Securities, or (v) your Securities should be treated as a notional principal contract for taxpurposes. You should consult your tax advisor as to the tax consequences of such characterizations andany possible alternative characterizations of your Securities for U.S. federal income tax purposes.

S-90

Material U.S. Federal Income Tax Consequences

Medicare Tax. If you are an individual or estate, or a trust that does not fall into a special class of truststhat is exempt from such tax, you are subject to a 3.8% tax (the “Medicare Tax”) on the lesser of(1) your “net investment income” (or “undistributed net investment income” in the case of an estate ortrust) for the relevant taxable year and (2) the excess of your modified adjusted gross income for thetaxable year over a certain threshold (which in the case of individuals is between $125,000 and$250,000, depending on the individual’s circumstances). Your net investment income includes any netgain recognized upon the sale, exchange, redemption or maturity of your Securities, unless such net gainis derived in the ordinary course of the conduct of a trade or business (other than a trade or business thatconsists of certain passive or trading activities). If you are a United States holder that is an individual,estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare taxto your net investment income in respect of your investment in the Securities.

Information with Respect to Foreign Financial Assets. Owners of “specified foreign financial assets” withan aggregate value in excess of $50,000 (and in some circumstances, a higher threshold), may be requiredto file an information report with respect to such assets with their tax returns. “Specified foreignfinancial assets” include any financial accounts maintained by foreign financial institutions as well as anyof the following (which may include your Securities), but only if they are held for investment and notheld in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons,(ii) financial instruments and contracts that have non-U.S. issuers or counterparties, and (iii) interests inforeign entities. Holders are urged to consult their tax advisors regarding the application of this reportingrequirement to their ownership of the Securities.

Treasury Regulations Requiring Disclosure of Reportable Transactions. Treasury regulations requireUnited States taxpayers to report certain transactions (“Reportable Transactions”) on IRS Form 8886.An investment in the Securities or the sale, exchange, redemption or maturity of the Securities shouldgenerally not be treated as a Reportable Transaction under current law, but it is possible that futurelegislation, regulations or administrative rulings could cause your investment in the Securities or the sale,exchange, redemption or maturity of the Securities to be treated as a Reportable Transaction. Youshould consult your tax advisor regarding any tax filing and reporting obligations that may apply inconnection with acquiring, owning and disposing of the Securities.

Backup Withholding and Information Reporting. Notwithstanding that we do not intend to treat theSecurities as debt for tax purposes, we intend to apply the information reporting and backup withholdingrules that are described under “U.S. Tax Considerations — Taxation of Debt Securities — BackupWithholding and Information Reporting” in the accompanying prospectus to any payments made onyour Securities.

Non-United States Holders. If you are not a United States holder, you should not be subject to UnitedStates withholding tax with respect to payments on your Securities but you will be subject to generallyapplicable information reporting and backup withholding requirements with respect to payments madeon your Securities unless you comply with certain certification and identification requirements as to yourforeign status.

S-91

Benefit Plan Investor ConsiderationsA fiduciary of a pension, profit-sharing or other employee benefit plan subject to the U.S. EmployeeRetirement Income Security Act of 1974, as amended (“ERISA”), including entities such as collectiveinvestment funds, partnerships and separate accounts whose underlying assets include the assets of suchplans (collectively, “Plans”), should consider the fiduciary standards of ERISA in the context of thePlan’s particular circumstances before authorizing an investment in the Securities. Among other factors,the fiduciary should consider whether the investment would satisfy the prudence and diversificationrequirements of ERISA and would be consistent with the documents and instruments governing the Plan,and whether the investment would involve a prohibited transaction under ERISA or the Code.

Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as individual retirementaccounts (“IRAs”), Keogh plans and any other plans that are subject to Section 4975 of the Code (also“Plans”), from engaging in certain transactions involving “plan assets” with persons who are “parties ininterest” under ERISA or “disqualified persons” under the Code with respect to the Plan. A violation ofthese prohibited transaction rules may result in excise tax or other liabilities under ERISA or the Codefor those persons, unless exemptive relief is available under an applicable statutory, regulatory oradministrative exemption. Employee benefit plans that are governmental plans (as defined inSection 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and non-U.S. plans(as described in Section 4(b)(4) of ERISA) (“Non-ERISA Arrangements”) are not subject to therequirements of Section 406 of ERISA or Section 4975 of the Code but may be subject to similarprovisions under applicable federal, state, local, non-U.S. or other laws (“Similar Laws”).

The acquisition of the Securities by a Plan with respect to which we, UBS Securities LLC, JanusDistributors or any of our or their affiliates (collectively, the “Transaction Parties”) may be or becomeparties in interest or disqualified persons may result in a prohibited transaction under ERISA orSection 4975 of the Code, unless the Securities are acquired pursuant to an applicable exemption. TheU.S. Department of Labor has issued five prohibited transaction class exemptions, or “PTCEs,” that mayprovide exemptive relief if required for direct or indirect prohibited transactions that may arise from thepurchase or holding of the Securities. These exemptions are PTCE 84-14 (for certain transactionsdetermined by independent qualified professional asset managers), PTCE 90-1 (for certain transactionsinvolving insurance company pooled separate accounts), PTCE 91-38 (for certain transactions involvingbank collective investment funds), PTCE 95-60 (for transactions involving certain insurance companygeneral accounts), and PTCE 96-23 (for transactions managed by in-house asset managers). In addition,ERISA Section 408(b)(17) and Section 4975(d)(20) of the Code may provide an exemption (the “serviceprovider exemption”) for the purchase and sale of the Securities, provided that neither the issuer of theSecurities nor any of its affiliates has or exercises any discretionary authority or control or render anyinvestment advice with respect to the assets of any Plan involved in the transaction, and provided furtherthat the Plan pays no more and receives no less than “adequate consideration” in connection with thetransaction. There can be no assurance that all of the conditions of any such exemptions will be satisfied.

Any purchaser or holder of the Securities or any interest therein will be deemed to have represented by itspurchase and holding of the Securities that it either (1) is not a Plan or a Non-ERISA Arrangement and isnot purchasing the Securities on behalf of or with the assets of any Plan or Non-ERISA Arrangement or(2) the purchase or holding of the Securities will not result in a non-exempt prohibited transaction or asimilar violation under any applicable Similar Laws.

Any purchaser or holder of Securities or any interest therein that is a Plan will be deemed to haverepresented by its purchase and holding of Securities offered hereby that a fiduciary (the “Fiduciary”)

S-92

Benefit Plan Investor Considerations

independent of the Transaction Parties acting on the Plan’s behalf is responsible for the Plan’s decision toacquire or hold the Securities and that such Fiduciary:

(i) is either a U.S. bank, a U.S. insurance carrier, a U.S. registered investment adviser, a U.S.registered broker-dealer or an independent fiduciary with at least $50 million of assets undermanagement or control, in each case under the requirements specified in the U.S. Code of FederalRegulations, 29 C.F.R. Section 2510.3-21(c)(1)(i), as amended from time to time,

(ii) in the case of a Plan that is an IRA , is not the IRA owner, beneficiary of the IRA or relative ofthe IRA owner or beneficiary,

(iii) is capable of evaluating investment risks independently, both in general and with regard to theprospective investment in the Securities,

(iv) is a fiduciary under ERISA or the Code, or both, with respect to the decision to acquire or holdthe Securities,

(v) has exercised independent judgment in evaluating whether to invest the assets of the Plan in theSecurities,

(vi) understands and has been fairly informed of the existence and the nature of the financialinterests of the Transaction Parties in connection with the Plan’s acquisition or holding of theSecurities,

(vii) understands that the Transaction Parties are not undertaking to provide impartial investmentadvice, or to give advice in a fiduciary capacity to the Plan, in connection with the Plan’s acquisitionor holding of the Securities, and

(viii) confirms that no fee or other compensation will be paid directly to any of the TransactionParties by the Plan, or any fiduciary, participant or beneficiary of the Plan, for the provision ofinvestment advice (as opposed to other services) in connection with the Plan’s acquisition or holdingof the Securities.

Due to the complexity of these rules and the penalties that may be imposed upon persons involved innon-exempt prohibited transactions, it is important that fiduciaries or other persons consideringpurchasing the Securities on behalf of or with the assets of any Plan or Non-ERISA Arrangement consultwith their counsel regarding the availability of exemptive relief under any of the PTCEs listed above, theservice provider exemption or the potential consequences of any purchase or holding under Similar Laws,as applicable. Purchasers of the Securities have exclusive responsibility for ensuring that their purchaseand holding of the Securities do not violate the fiduciary or prohibited transaction rules of ERISA or theCode or any similar provisions of Similar Laws. The sale of any of the Securities to a Plan or Non-ERISAArrangement is in no respect a representation by us or any of our affiliates or representatives that suchan investment meets all relevant legal requirements with respect to investments by any such Plans orNon-ERISA Arrangements generally or any particular Plan or Non-ERISA Arrangement or that suchinvestment is appropriate for such Plans or Non-ERISA Arrangements generally or any particular Plan orNon-ERISA Arrangement.

S-93

Supplemental Plan of DistributionOn the Initial Trade Date, we sold $25,000,000 aggregate Stated Principal Amount of each series ofSecurities to UBS Securities LLC. After the Initial Trade Date, from time to time we may registeradditional Securities of each series and sell them at market prices prevailing at the time of sale, at pricesrelated to market prices or at negotiated prices. We expect to receive proceeds equal to 100% of the priceat which the Securities are sold to the public, less any commissions paid to UBS Securities LLC. TheSecurities may be sold at a price that is higher or lower than the Stated Principal Amount of such series.UBS Securities LLC may charge normal commissions for the sale of the Securities and may also receive aportion of the Daily Investor Fee in connection with future distributions.

Additional Securities of any series may be offered and sold from time to time through UBS SecuritiesLLC, as agent, to investors and to dealers acting as principals for resale to investors. We are not,however, obliged to, and may not, sell additional Securities of any series or the full aggregate statedprincipal amount of the Securities of any series set forth on the cover of this prospectus supplement. Wemay suspend or cease sales of the Securities of any series at any time, at our discretion, or resume sales ofsuch Securities, or we may condition our acceptance of a market maker’s, other market participant’s orinvestor’s offer to purchase Securities of any series on its agreeing to purchase certain exchange tradednotes issued by UBS or enter into certain transactions consistent with our hedging strategy, including butnot limited to swaps, OTC derivatives, listed options, or securities, any of which could materially andadversely affect the trading price and liquidity of such Securities in the secondary market. For moreinformation about the plan of distribution and possible market-making activities, see “Plan ofDistribution” in the accompanying prospectus.

Broker-dealers may make a market in the Securities, although none of them are obligated to do so andany of them may stop doing so at any time without notice. This prospectus (including this prospectussupplement and the accompanying prospectus) may be used by such dealers in connection with market-making transactions. In these transactions, dealers may resell a Security covered by this prospectus thatthey acquire from other holders after the original offering and sale of the Securities, or they may sell aSecurity covered by this prospectus in short sale transactions.

As described in more detail under “Use of Proceeds and Hedging” on page S-87, we or one of ouraffiliates may enter into swap agreements or related hedge transactions with one of our other affiliates orunaffiliated counterparties in connection with the sale of the Securities. UBS and/or its affiliates may earnadditional income as a result of payments pursuant to these swap or related hedge transactions.

Broker-dealers and other persons are cautioned that some of their activities may result in their beingdeemed participants in the distribution of the Securities in a manner that would render them statutoryunderwriters and subject them to the prospectus delivery and liability provisions of the U.S. SecuritiesAct of 1933. Among other activities, broker-dealers and other persons may make short sales of theSecurities and may cover such short positions by borrowing Securities from UBS or its affiliates or bypurchasing Securities from UBS or its affiliates subject to its obligation to repurchase such Securities at alater date. As a result of these activities, these market participants may be deemed statutory underwriters.A determination of whether a particular market participant is an underwriter must take into account allthe facts and circumstances pertaining to the activities of the participant in the particular case, and theexample mentioned above should not be considered a complete description of all the activities that wouldlead to designation as an underwriter and subject a market participant to the prospectus-delivery andliability provisions of the U.S. Securities Act of 1933. This prospectus will be deemed to cover any shortsales of Securities by market participants who cover their short positions with Securities borrowed oracquired from us or our affiliates in the manner described above.

S-94

Supplemental Plan of Distribution

We have retained Janus Distributors, a member of the Financial Industry Regulatory Authority, Inc., toprovide certain services relating to the placement and marketing of the Securities of any series. JanusDistributors will receive a fee in consideration for its role in marketing and placing the Securities. Theactual amount received by Janus Distributors in a given year will depend on the number of Securities ofany series then outstanding and the number of other then outstanding Securities of any series issued by usand marketed and/or placed by Janus Distributors. From time to time, Janus Distributors and itsaffiliates may engage in transactions with and perform services for us for which they may be paidcustomary fees. The terms of our agreements with Janus Distributors give them the right to cause anearly acceleration should such agreements be terminated. Janus Index, an affiliate of Janus Distributors,is responsible for computing and disseminating the closing indicative value and intraday indicative valueof the Securities, as described above under “Specific Terms of the Securities — Security CalculationAgents.”

UBS reserves the right to pay a portion of the Daily Investor Fee to UBS Securities LLC and certainbroker-dealers in consideration for services relating to the Securities including, but not limited to,promotion and distribution.

Conflicts of Interest

UBS Securities LLC is an affiliate of UBS and, as such, has a “conflict of interest” in this offering withinthe meaning of FINRA Rule 5121. In addition, UBS will receive the net proceeds (excluding anyunderwriting discount) from the public offering of the Securities, thus creating an additional conflict ofinterest within the meaning of Rule 5121. Consequently, the offering is being conducted in compliancewith the provisions of Rule 5121. UBS Securities LLC is not permitted to sell Securities in this offering toan account over which it exercises discretionary authority without the prior specific written approval ofthe account holder.

S-95

ANNEX A

NOTICE OF EARLY REDEMPTION

To: ETNOrders@velocityshares.com

Subject: VelocityShares Notice of Early Redemption, CUSIP No. [Š]

[BODY OF EMAIL]

Name of broker: [ ]

Name of beneficial holder: [ ]

Number of Securities to be redeemed: [ ]

Applicable Redemption Valuation Date: [ ], 20[ ]*

Broker Contact Name: [ ]

Broker Telephone #: [ ]

Broker DTC # (and any relevant sub-account): [ ]

The undersigned acknowledges that in addition to any other requirements specified in the prospectussupplement relating to the Securities being satisfied, the Securities will not be redeemed unless (i) thisnotice of redemption is delivered to Janus Distributors by 4:00 p.m. (New York City time) on theTrading Day prior to the applicable Redemption Valuation Date; (ii) the confirmation, as completed andsigned by the undersigned is delivered to Janus Distributors by 4:00 p.m. (New York City time) on thesame day the notice of redemption is delivered; (iii) the undersigned has booked a delivery vs. payment(“DVP”) trade on the applicable Valuation Date, facing UBS Securities LLC DTC 442 and (iv) theundersigned instructs DTC to deliver the DVP trade to UBS Securities LLC as booked for settlement viaDTC at or prior to 10:00 a.m. (New York City time) on the applicable Redemption Date.

The undersigned further acknowledges that the undersigned has read the section “Risk Factors — Youwill not know the Redemption Amount at the time you elect to request that we redeem your Securities”in the prospectus supplement relating to the Securities and the undersigned understands that it will beexposed to market risk on the Redemption Valuation Date. Terms used but not defined in this noticeshall have the meanings ascribed to them in the prospectus supplement relating to the Securities.

* Subject to adjustment as described in the prospectus supplement relating to the Securities.

A-1

ANNEX B

BROKER’S CONFIRMATION OF REDEMPTION

[TO BE COMPLETED BY BROKER]

Dated:

Janus Distributors LLC.

Janus Index, as Calculation Agent

Email: ETNOrders@velocityshares.com

To Whom It May Concern:

The holder of VelocityShares™ ETN due [Š], CUSIP No. [Š] (the “Securities”) hereby irrevocablyelects to exercise, on the Redemption Date of [holder to specify]*, with respect to the number ofSecurities indicated below, as of the date hereof, the redemption right as described in the prospectussupplement relating to the Securities (the “Prospectus”). Terms not defined herein have the meaningsgiven to such terms in the Prospectus.

The undersigned certifies to you that it will (i) book a DVP trade on the applicable Valuation Date withrespect to the number of Securities specified below at a price per Security equal to the RedemptionAmount, facing UBS Securities LLC DTC 642 and (ii) deliver the trade as booked for settlement via DTCat or prior to 10:00 a.m. (New York City time) on the applicable Redemption Date.

The undersigned acknowledges that in addition to any other requirements specified in the Prospectusbeing satisfied, the Securities will not be redeemed unless (i) this confirmation is delivered to JanusDistributors LLC by 4:00 p.m. (New York City time) on a Business Day which is the same day the noticeof redemption is delivered; (ii) the Redemption Agent has responded by sending an acknowledgment ofthe Confirmation of Redemption accepting the redemption request; (iii) the undersigned has booked aDVP trade on the applicable Valuation Date, facing UBS Securities LLC DTC 642; and (iv) theundersigned will deliver the DVP trade to UBS Securities LLC as booked for settlement via DTC at orprior to 10:00 a.m. (New York City time) on the applicable Redemption Date.

The undersigned acknowledges that the redemption obligation is solely an obligation of UBS AG andJanus Distributors LLC is acting only to facilitate the redemption for UBS.

Very truly yours,[NAME OF DTC PARTICIPANT HOLDER]

Name:Title:Telephone:E-mail:

Number of Securities surrendered for redemption:DTC # (and any relevant sub-account):Contact Name:Telephone:E-mail:

(At least 50,000 Securities must be redeemed at one time to exercise the right to early redemption on anyredemption date.)

* Subject to adjustment as described in the prospectus supplement relating to the Securities.

B-1

You should rely only on the informationincorporated by reference or provided in thisprospectus supplement or the accompanyingprospectus. We have not authorized anyone toprovide you with different information. We are notmaking an offer of these securities in any statewhere the offer is not permitted. You should notassume that the information in this prospectussupplement is accurate as of any date other thanthe date on the front of the document.

TABLE OF CONTENTS

Prospectus Supplement

Prospectus Supplement Summary . . . . . . . . . . . . S-1Simulated Historical Performance and

Hypothetical Examples . . . . . . . . . . . . . . . . . . S-17Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27The Indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52Valuation of the Indices and the Securities . . . . . S-71Specific Terms of the Securities . . . . . . . . . . . . . . S-74Use of Proceeds and Hedging . . . . . . . . . . . . . . . S-87Material U.S. Federal Income Tax

Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . S-88Benefit Plan Investor Considerations . . . . . . . . . S-92Supplemental Plan of Distribution . . . . . . . . . . . S-94

Conflicts of Interest . . . . . . . . . . . . . . . . . . . S-95Notice of Early Redemption . . . . . . . . . . . . . . . . . . . A-1Broker’s Confirmation of Redemption . . . . . . . . . . B-1

Prospectus

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Cautionary Note Regarding Forward-Looking

Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Incorporation of Information About UBS AG . . 5Where You Can Find More Information . . . . . . 6Presentation of Financial Information . . . . . . . . 7Limitations on Enforcement of U.S. Laws

Against UBS AG, Its Management andOthers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Swiss Regulatory Powers . . . . . . . . . . . . . . . . . . . 11Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 12Description of Debt Securities We May Offer . . 13Description of Warrants We May Offer . . . . . . . 33Legal Ownership and Book-Entry Issuance . . . . 48Considerations Relating to Indexed Securities . . 53Considerations Relating to Securities

Denominated or Payable in or Linked to aNon-U.S. Dollar Currency . . . . . . . . . . . . . . . . 56

U.S. Tax Considerations . . . . . . . . . . . . . . . . . . . 59Tax Considerations Under the Laws of

Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Benefit Plan Investor Considerations . . . . . . . . . 72Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 74Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . 75Validity of the Securities . . . . . . . . . . . . . . . . . . . 76Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

$100,000,000VelocityShares™ 1X LongVSTOXX Futures ETNlinked to the VSTOXXShort-Term FuturesInvestable Index dueMay 3, 2047

$100,000,000VelocityShares™ 1X DailyInverse VSTOXX FuturesETN linked to the VSTOXXShort-Term FuturesInverse Investable Indexdue May 3, 2047Amendment No. 1 dated February 13, 2018† toProspectus Supplement dated May 2, 2017(To Prospectus dated April 29, 2016)

UBS Investment Bank

PROSPECTUS

$17,558,384,984UBS AG

DEBT SECURITIES ANDWARRANTS

UBS AG from time to time may offer to sell debt securities and warrants.

UBS AG may offer and sell these securities to or through one or more underwriters, dealers and agents, includingthe firms named below, or directly to purchasers, on a delayed or continuous basis.

This prospectus describes some of the general terms that may apply to these securities and the general manner inwhich they may be offered. The specific terms of any securities to be offered, and the specific manner in whichthey may be offered, will be described in the applicable prospectus supplement.

Neither the Securities and Exchange Commission nor any other regulatory body has approved ordisapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Anyrepresentation to the contrary is a criminal offense.

The securities are not deposit liabilities of UBS AG and are not insured by the United States Federal DepositInsurance Corporation or any other governmental agency of the United States, Switzerland or any otherjurisdiction.

UBS AG may use this prospectus in the initial sale of the securities. In addition, UBS AG, UBS Securities LLC,UBS Financial Services Inc. or any other affiliate of UBS AG may use this prospectus in market-makingtransactions involving the securities or similar securities after their initial sale. Unless UBS AG or its agentinforms the purchaser otherwise in the confirmation of sale, this prospectus is being used in a market-makingtransaction.

UBS Investment Bank UBS Financial Services Inc.

The date of this Prospectus is April 29, 2016

TABLE OF CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Cautionary Note Regarding Forward-Looking

Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Incorporation of Information About UBS AG . . . . . 5Where You Can Find More Information . . . . . . . . . 6Presentation of Financial Information . . . . . . . . . . . 7Limitations on Enforcement of U.S. Laws Against

UBS, Its Management and Others . . . . . . . . . . . . 7UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Swiss Regulatory Powers . . . . . . . . . . . . . . . . . . . . . 11Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Description of Debt Securities We May Offer . . . . 13Description of Warrants We May Offer . . . . . . . . . 33

Legal Ownership and Book-Entry Issuance . . . . . . . 48Considerations Relating to Indexed Securities . . . . 53Considerations Relating to Securities Denominated

or Payable in or Linked to a Non-U.S. DollarCurrency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

U.S. Tax Considerations . . . . . . . . . . . . . . . . . . . . . 59Tax Considerations Under the Laws of

Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Benefit Plan Investor Considerations . . . . . . . . . . . . 72Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 74Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . 75Validity of the Securities . . . . . . . . . . . . . . . . . . . . . 76Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

CERTAIN TERMS

In this prospectus:

• when we refer to “UBS AG” or “us,” we mean UBS AG on a parent only basis.

• when we refer to “UBS,” we mean UBS AG and its consolidated subsidiaries.

• when we refer to “Group,” we mean UBS Group AG and its consolidated subsidiaries.

• when we refer to “USD,” we mean United States dollars.

• when we refer to “CHF,” we mean Swiss francs.

i

Introduction

The Securities We Are Offering

We may offer debt securities and warrants from time to time. When we use the term “securities” in this prospectus,we mean any of the securities we may offer with this prospectus, unless we say otherwise. This prospectus,including the following summary, describes the general terms that may apply to the securities; the specific terms ofany particular securities that we may offer will be described in a separate supplement to this prospectus. If there aredifferences between this prospectus and your prospectus supplement, your prospectus supplement will control.

Debt Securities

For any particular debt securities we offer, the applicable prospectus supplement will describe the specificdesignation, the aggregate principal or face amount and the purchase price; the stated maturity; the redemptionterms, if any; the rate or manner of calculating the rate and payment dates for interest, if any; the amount, or mannerof calculating the amount, payable at maturity and whether that amount may be paid by delivering cash, securities orother property; the terms on which the debt securities may be convertible into or exercisable or exchangeable forcommon stock or other securities of issuers other than UBS AG, if any; whether the obligations of UBS AG underthe debt securities are secured by any form of collateral or credit support and, if so, its nature and terms; and anyother specific terms.

The debt securities are not deposit liabilities of UBS AG and are not insured by the United States Federal DepositInsurance Corporation or any other governmental agency of the United States, Switzerland or any other jurisdiction.We will issue the debt securities under a debt indenture between us and U.S. Bank Trust National Association, astrustee.

Warrants

We may offer two types of warrants:

• warrants to purchase our debt securities; and

• warrants to purchase or sell, or whose cash value is determined by reference to the performance, level orvalue of, one or more of the following:

• securities of one or more issuers other than UBS AG;

• one or more currencies;

• one or more commodities;

• any other financial, economic or other measure or instrument, including the occurrence or non-occurrence of any event or circumstance; and

• one or more indices or baskets of the items described above.

For any particular warrants we offer, the applicable prospectus supplement will describe the underlying property;the expiration date; the exercise price or the manner of determining the exercise price; the amount and kind, or themanner of determining the amount and kind, of property to be delivered by you or us upon exercise; and any otherspecific terms. We may issue the warrants under a warrant indenture between us and U.S. Bank Trust NationalAssociation, or under warrant agreements between us and one or more other warrant agents that will be named inthe applicable prospectus supplement.

Form of Securities

We will issue the securities in book-entry form through one or more depositaries, such as The Depository TrustCompany, Euroclear or Clearstream, named in the applicable prospectus supplement. Each sale of a security in

1

book-entry form will settle in immediately available funds through the depositary, unless otherwise stated. In mostcases, we will issue the securities only in registered form, without coupons, although we may issue the securities inbearer form if so specified in the applicable prospectus supplement.

Payment Currencies

Amounts payable in respect of the securities, including the purchase price, will be payable in U.S. dollars, unless theapplicable prospectus supplement says otherwise.

If any securities are to be listed or quoted on a securities exchange or quotation system, the applicable prospectussupplement will say so.

Use of Proceeds

We intend to use the net proceeds from the sales of securities to provide additional funds for our operations and forother general corporate purposes outside of Switzerland.

Plan of Distribution

The securities will be offered in connection with their initial issuance or in market-making transactions by us or ouraffiliates after initial issuance. Those offered in market-making transactions may be securities that we will not issueuntil after the date of this prospectus as well as securities that we have previously issued.

When we issue new securities, we may offer them for sale to or through underwriters, dealers and agents, includingour affiliates, or directly to purchasers. The applicable prospectus supplement will include any required informationabout the firms we use and the discounts or commissions we may pay them for their services.

Our affiliates that we refer to above may include, among others, UBS Securities LLC and UBS Financial ServicesInc.

Branches

We expect the securities will be booked through our Jersey branch, our London branch, or such other branch as isspecified in the applicable prospectus supplement.

Conflicts of Interest

Each of UBS Securities LLC and UBS Financial Services Inc. is an affiliate of UBS and, as such, has a “conflict ofinterest” in any offering of the securities within the meaning of Rule 5121 of the Financial Industry RegulatoryAuthority, Inc. (“FINRA”). Consequently, any offering of the securities will be conducted in compliance with theprovisions of Rule 5121. Neither UBS Securities LLC nor UBS Financial Services Inc. will be permitted to sellsecurities in any offering to an account over which it exercises discretionary authority without the prior specificwritten approval of the account holder.

Risk Factors Relating to UBS and Other Considerations Relating to the Securities

For a discussion of important business and financial risks relating to UBS, please see “Risk Factors” in Part I,Item 3D of our Annual Report on Form 20-F for the fiscal year ended December 31, 2015, which is incorporated inthis prospectus by reference (and in any of our annual or quarterly reports for a subsequent fiscal period that are soincorporated).

There are a number of considerations that you should take into account prior to investing in the securities. Pleaseread “Considerations Relating to Indexed Securities” and “Considerations Relating to Securities Denominated orPayable in or Linked to a Non-U.S. Dollar Currency” for more information.

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Cautionary Note Regarding Forward-Looking StatementsThis prospectus and the documents incorporated by reference herein contain statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance andstatements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and futuredevelopment. While these forward-looking statements represent UBS’s judgments and expectations concerning thematters described, a number of risks, uncertainties and other important factors could cause actual developments andresults to differ materially from UBS’s expectations. These factors include, but are not limited to: (1) the degree towhich we are successful in executing our announced strategic plans, including its cost reduction and our efficiencyinitiatives and the planned further reduction in Basel III risk-weighted assets (RWA) and leverage ratio denominator(LRD), and the degree to which UBS is successful in implementing changes to its wealth management businesses tomeet changing market, regulatory and other conditions; (2) the continuing low or negative interest rate environment,developments in the macroeconomic climate and in the markets in which UBS operates or to which it is exposed,including movements in securities prices or liquidity, credit spreads, and currency exchange rates and the effect ofeconomic conditions and market developments on the financial position or creditworthiness of UBS’s clients andcounterparties; (3) changes in the availability of capital and funding, including any changes in UBS’s credit spreadsand ratings, as well as availability and cost of funding to meet requirements for debt that will be eligible for total loss-absorbing capacity (TLAC) requirements, or loss-absorbing capital; (4) changes in or the implementation of financiallegislation and regulation in Switzerland, the U.S., the UK and other financial centers that may impose, or result in,more stringent capital (including leverage ratio), liquidity and funding requirements, incremental tax requirements,additional levies, limitations on permitted activities, constraints on remuneration or other measures; (5) uncertainty asto when and to what degree the Swiss Financial Market Supervisory Authority (FINMA) will approve reductions to theincremental RWA resulting from the supplemental operational risk capital analysis mutually agreed to by UBS andFINMA, or will approve a limited reduction of capital or gone concern requirements due to measures to reduceresolvability risk; (6) the degree to which UBS is successful in implementing changes to its legal structure to improveits resolvability and meet related regulatory requirements, including changes in legal structure and reporting required toimplement US enhanced prudential standards, implementing a service company model, the transfer of the AssetManagement business to a holding company and the potential need to make further changes to the legal structure orbooking model of UBS Group in response to legal and regulatory requirements relating to capital requirements,resolvability requirements and proposals in Switzerland and other countries for mandatory structural reform of banks;(7) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirementsamong the major financial centers will adversely affect UBS’s ability to compete in certain lines of business;(8) changes in the standards of conduct applicable to UBS’s business that may result from new regulation or newenforcement of existing standards, including measures to impose new or enhanced duties when interacting withcustomers or in the execution and handling of customer transactions; (9) the liability to which UBS may be exposed, orpossible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claimsand regulatory investigations, including the potential for disqualification from certain businesses or loss of licenses orprivileges as a result of regulatory or other governmental sanctions; (10) the effects on our cross-border bankingbusiness of tax or regulatory developments and of possible changes in our policies and practices relating to thisbusiness; (11) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, supportand control its businesses, which may be affected by competitive factors including differences in compensationpractices; (12) changes in accounting or tax standards or policies, and determinations or interpretations affecting therecognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters;(13) limitations on the effectiveness of internal processes for risk management, risk control, measurement andmodeling, and of financial models generally; (14) whether UBS will be successful in keeping pace with competitors inupdating its technology, particularly in trading businesses; (15) the occurrence of operational failures, such as fraud,misconduct, unauthorized trading, financial crime, cyber-attacks, and systems failures; (16) restrictions to the ability ofUBS Group AG to make payments or distributions, including due to restrictions on the ability of its subsidiaries tomake loans or distributions, directly or indirectly, or, in the case of financial difficulties, due to the exercise by FINMAof its broad statutory powers in relation to protective measures, restructuring and liquidation proceedings; (17) the

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Cautionary Note Regarding Forward-Looking Statements

degree to which changes in regulation, capital or legal structure, financial results or other factors, includingmethodology, assumptions and stress scenarios, may affect UBS’s ability to maintain its stated capital return objective;and (18) the effect that these or other factors or unanticipated events may have on our reputation and the additionalconsequences that this may have on our business and performance. The sequence in which the factors above arepresented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Ourbusiness and financial performance could be affected by other factors identified in our past and future filings andreports, including those filed with the SEC. More detailed information about those factors is set forth in documentsfurnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the yearended December 31, 2015. UBS is not under any obligation to (and expressly disclaims any obligation to) update oralter its forward-looking statements, whether as a result of new information, future events, or otherwise.

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Incorporation of Information About UBS AGThe SEC allows us to “incorporate by reference” into this prospectus the information that we file with them, whichmeans that:

• The incorporated documents are considered part of this prospectus.

• We can disclose important information to you by referring you to those documents.

• Information that we file with the SEC from time to time will automatically be considered to update andsupersede the information in this prospectus.

We incorporate by reference in this prospectus:

• UBS AG’s Annual Report on Form 20-F for the year ended December 31, 2015, which UBS AG filed withthe SEC on March 18, 2016; and

• UBS AG’s Reports of Foreign Issuer on Form 6-K, which UBS AG filed with the SEC on February 2, 2016(three Reports) and March 18, 2016.

All subsequent reports that we file on Form 20-F under the Securities Exchange Act of 1934 prior to the termination ofthis offering will also be deemed to be incorporated by reference into this prospectus. We may also incorporate anyother Form 6-K that we submit to the SEC on or after the date of this prospectus and prior to the termination of thisoffering if the Form 6-K filing specifically states that it is incorporated by reference into the registration statement ofwhich this prospectus forms a part.

Any statement in this prospectus contained in a document incorporated or deemed to be incorporated by reference intothis prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that astatement in this prospectus or in any later filed document modifies or supersedes that statement. Any statement that ismodified or superseded in this manner will no longer be a part of this prospectus, except as modified or superseded.

You (including any beneficial owner) may request a copy, at no cost, of any or all of the documents that areincorporated by reference into this prospectus, excluding exhibits (other than those that we specifically incorporate byreference into the documents that you request) by contacting us, orally or in writing, at the following address:

UBS AGInvestor RelationsBahnhofstrasse 45P.O. BoxCH-8098 ZurichSwitzerlandPhone: +41-44-234 41 00Fax: +41-44-234 34 15E-mail: SH-investorrelations@ubs.comInternet: www.ubs.com/investor-relations

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Where You Can Find More InformationUBS AG files periodic reports and other information with the SEC. You may read and copy any document that UBSAG files with the SEC at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549.Please call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference room. The SECalso maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements, and otherinformation about issuers like UBS AG that file electronically with the SEC.

We have filed a registration statement under the Securities Act of 1933 on Form F-3 with the SEC covering thesecurities. For further information about the securities and UBS, you should review our registration statement, itsexhibits and the documents incorporated by reference into this prospectus. This prospectus summarizes materialprovisions of the contracts and other documents that we refer you to. Since this prospectus may not contain all theinformation that you may find important, you should review the full text of these documents. We have included copiesof these documents as exhibits to our registration statement.

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Presentation of Financial InformationUBS’s financial statements, which are incorporated by reference into this prospectus, have been prepared in accordancewith International Financial Reporting Standards and are denominated in Swiss francs, or “CHF,” the legal tender ofSwitzerland.

The tables below set forth, for the periods and dates indicated, information concerning the noon buying rate for theSwiss franc, expressed in United States dollars or “USD,” per one Swiss franc. The “noon buying rate” is the rate inNew York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bankof New York. On February 29, 2016, the noon buying rate was 1.0040 per 1 CHF.

(USD per 1 CHF)Year ended December 31, High Low Average rate(1) At period end

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3706 1.0251 1.1398 1.06682012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1174 1.0043 1.0724 1.09232013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1292 1.0190 1.0826 1.12312014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1478 1.0066 1.0893 1.00662015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1781 0.9704 1.0398 0.9983

Month High Low

September 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0401 1.0225October 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0539 1.0086November 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0149 0.9704December 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0180 0.9713January 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0028 0.9779February 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0303 0.9779

(1) The average of the noon buying rates on the last business day of each full month during the relevant period.

Limitations on Enforcement of U.S. Laws Against UBS, ItsManagement and OthersUBS AG is a Swiss bank. Many of its directors and executive officers, including the majority of the persons whosigned the registration statement of which this prospectus is a part, and certain experts named in this prospectus, areresident outside the United States, and all or a substantial portion of our assets and the assets of those persons arelocated outside the United States. As a result, it may be difficult for you to serve legal process on UBS AG or itsmanagement or have any of them appear in a U.S. court. We have been advised by UBS AG internal counsel that thereis doubt as to the enforceability in Switzerland, in original actions or in actions for enforcement of judgments of U.S.courts, of liabilities based solely on the federal securities laws of the United States.

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UBS

OVERVIEW

UBS AG is a wholly owned subsidiary of UBS Group AG, which, with its subsidiaries, draws on its over 150-yearheritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. UBS’sbusiness strategy is centered on its (in UBS’s own opinion) pre-eminent global wealth management businesses and its(in UBS’s own opinion) leading universal bank in Switzerland, complemented by its Asset Management business andits Investment Bank, with a focus on capital efficiency and businesses that offer a superior structural growth andprofitability outlook. Headquartered in Zurich and Basel, Switzerland, UBS has offices in more than 50 countries,including all major financial centers.

On December 31, 2015, UBS’s common equity tier 1 capital ratio1 was 15.4% on a fully applied basis and 19.5% on aphase-in basis, invested assets stood at CHF 2,689 billion and equity attributable to UBS shareholders was CHF55,248 million. On the same date, UBS employed 58,131 people2.

For further information about UBS, including more detailed descriptions of the Business Groups and Corporate Center,see “Where You Can Find More Information.”

BUSINESS OVERVIEW

UBS operates as a group with five business divisions (Wealth Management, Wealth Management Americas, Personal& Corporate Banking, Asset Management and the Investment Bank) and a Corporate Center. Each of the businessdivisions and the Corporate Center are described below. A description of the Group’s strategy can be found in theannual report of UBS AG as of December 31, 2015 (the “Annual Report 2015”) on pages 33-38 (inclusive); adescription of the businesses, strategies, clients, organizational structures, products and services of the businessdivisions and the Corporate Center can be found in the Annual Report 2015, on pages 41-58 (inclusive).

Wealth Management

Wealth Management provides comprehensive financial services to wealthy private clients around the world, with theexception of those served by Wealth Management Americas. UBS is a global firm with global capabilities, and itsclients benefit from the full spectrum of resources, including wealth planning, investment management solutions andcorporate finance advice, banking and lending solutions (e.g., securities–based lending), as well as a wide range ofspecific offerings. Wealth Management’s guided architecture model gives clients access to a wide range of productsfrom the world’s leading third-party institutions that complement its own products.

Wealth Management Americas

Wealth Management Americas is one of the leading wealth managers in the Americas in terms of financial advisorproductivity and invested assets. Its business includes UBS’s domestic US and Canadian wealth managementbusinesses, as well as international business booked in the US. It provides a fully integrated set of wealth managementsolutions designed to address the needs of ultra high net worth and high net worth clients.

1 Based on the Basel III framework, as applicable to Swiss systemically relevant banks. The common equity tier 1capital ratio is the ratio of common equity tier 1 capital to risk-weighted assets. The information provided on a fullyapplied basis entirely reflects the effects of the new capital deductions and the phase-out of ineligible capitalinstruments. The information provided on a phase-in basis gradually reflects those effects during the transitionperiod. For information as to how common equity tier 1 capital is calculated, refer to the “Capital management”section of the Annual Report 2015.

2 Full-time equivalents.

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UBS

Personal & Corporate Banking

Effective January 2016, the business division Retail & Corporate was renamed Personal and Corporate Banking.Personal & Corporate Banking provides comprehensive financial products and services to UBS’s private, corporate andinstitutional clients in Switzerland, maintaining a leading position in these segments and embedding its offering in amulti-channel approach. The business is a central element of UBS’s universal bank delivery model in Switzerland,supporting other business divisions by referring clients and growing the wealth of the firm’s private clients so they canbe transferred to Wealth Management. Personal & Corporate Banking leverages the cross-selling potential of UBS’sasset-gathering and investment bank businesses, and manages a substantial part of UBS’s Swiss infrastructure andbanking products platform.

Asset Management

Effective October 2015, the business division Global Asset Management was renamed Asset Management. AssetManagement is a large-scale asset manager, with a presence in 22 countries. It offers investment capabilities andinvestment styles across all major traditional and alternative asset classes to institutions, wholesale intermediaries andwealth management clients around the world. It is a leading fund house in Europe, the third-largest international assetmanager in Asia, the largest mutual fund manager in Switzerland and one of the largest fund of hedge funds and realestate investment managers in the world.

Investment Bank

The Investment Bank provides corporate, institutional and wealth management clients with expert advice, innovativesolutions, execution and comprehensive access to international capital markets. It offers advisory services and providesin-depth cross-asset research, along with access to equities, foreign exchange, precious metals and selected rates andcredit markets, through its business units, Corporate Client Solutions and Investor Client Services. The InvestmentBank is an active participant in capital markets flow activities, including sales, trading and market-making across arange of securities.

Corporate Center

Corporate Center is comprised of Services, Group Asset and Liability Management (“Group ALM”) and Non-core andLegacy Portfolio. Services includes the Group’s control functions such as finance, risk control (including compliance)and legal. In addition, it provides all logistics and support services, including operations, information technology,human resources, regulatory relations and strategic initiatives, communications and branding, corporate services,physical security, information security as well as outsourcing, nearshoring and offshoring. Group ALM is responsiblefor centrally managing the Group’s liquidity and funding position, as well as providing other balance sheet and capitalmanagement services to the Group. Non-core and Legacy Portfolio is comprised of the non-core businesses and legacypositions that were part of the Investment Bank prior to its restructuring.

CORPORATE INFORMATION

The legal and commercial name of the company is UBS AG. The company was incorporated under the name SBC AGon February 28, 1978, for an unlimited duration and entered in the Commercial Register of Canton Basel-City on thatday. On December 8, 1997, the company changed its name to UBS AG. The company in its present form was createdon June 29, 1998, by the merger of Union Bank of Switzerland (founded 1862) and Swiss Bank Corporation (founded1872). UBS AG is entered in the Commercial Registers of Canton Zurich and Canton Basel-City. The registrationnumber is CHE-101.329.561.

UBS AG is incorporated and domiciled in Switzerland and operates under the Swiss Code of Obligations and the SwissFederal Banking Law as an Aktiengesellschaft, a corporation that has issued shares of common stock to investors.

According to Article 2 of the Articles of Association of UBS AG (“Articles of Association”), the purpose of UBS AGis the operation of a bank. Its scope of operations extends to all types of banking, financial, advisory, trading andservice activities in Switzerland and abroad.

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UBS

Following the successful completion of the SESTA procedure (as described below), all UBS AG shares that remainedpublicly held were canceled and UBS Group AG shares were delivered as compensation.

The addresses and telephone numbers of UBS AG’s two registered offices and principal places of business are:Bahnhofstrasse 45, CH-8001 Zurich, Switzerland, telephone +41 44 234 1111; and Aeschenvorstadt 1, CH-4051 Basel,Switzerland, telephone +41 61 288 5050.

MEASURES TO MODIFY LEGAL STRUCTURE

Described below are certain measures taken by UBS which were intended to substantially improve the resolvability ofUBS in response to Swiss “too big to fail” requirements and applicable requirements in other countries in which UBSoperates.

In December 2014, UBS Group AG completed an exchange offer for the shares of UBS AG and established UBSGroup AG as the holding company for UBS Group. During 2015, UBS Group AG filed and completed a courtprocedure under article 33 of the Swiss Stock Exchange Act (the “SESTA procedure”) resulting in the cancellation ofthe shares of the remaining minority shareholders of UBS AG. As a result, UBS Group AG now owns 100% of theoutstanding shares of UBS AG.

In June 2015, the Personal & Corporate Banking and Wealth Management businesses booked in Switzerland weretransferred from UBS AG to UBS Switzerland AG through an asset transfer in accordance with the Swiss Merger Act.Under the Swiss Merger Act, UBS AG assumed joint liability for obligations existing on the asset transfer date, June14, 2015, which were transferred to UBS Switzerland AG. UBS AG has no liability for new obligations incurred byUBS Switzerland AG after the asset transfer date. As of the asset transfer date, UBS AG assumed joint liability forapproximately CHF 260 billion of obligations of UBS Switzerland AG, excluding the collateralized portion of securedcontractual obligations. The joint liability amount declines as obligations mature, terminate or are novated followingthe asset transfer date. As of December 31, 2015, the joint liability amounted to approximately CHF 55 billion. As ofDecember 31, 2015, the probability of an outflow under this joint and several liability was assessed to be remote.

In the second quarter of 2015, UBS AG also completed the implementation of a more self-sufficient business andoperating model for UBS Limited, its investment banking subsidiary in the UK, under which UBS Limited bears andretains a larger proportion of the risk and reward in its business activities. Also during 2015, UBS AG established anew subsidiary, UBS Americas Holding LLC, which UBS AG intends to designate as its intermediate holdingcompany for its US subsidiaries prior to the July 1, 2016 deadline under new rules for foreign banks in the US pursuantto the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). During the third quarter of 2015,UBS AG contributed its equity participation in the principal US operating subsidiaries to UBS Americas Holding LLCto meet the requirement under Dodd-Frank that the intermediate holding company own all of our US operations, exceptbranches of UBS AG. Lastly, UBS AG also established UBS Asset Management AG, a new subsidiary, in 2015.

These structural changes are being discussed on an ongoing basis with FINMA and other regulatory authorities, andremain subject to a number of uncertainties that may affect their feasibility, scope or timing.

For more information, refer to the “The legal structure of UBS Group” and “Significant accounting and financialreporting changes” sections of the Annual Report 2015, which is incorporated by reference into this prospectus, and todiscussions of further updates contained in any subsequent report UBS files with or submits to the SEC on or after thedate of this prospectus and prior to the termination of this offering that are incorporated by reference into thisprospectus or the registration statement of which this prospectus forms a part, as described above under “Incorporationof Information About UBS AG”.

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Swiss Regulatory PowersIf UBS AG experiences financial difficulties, FINMA has the power to open resolution or liquidation proceedings inrespect of, and/or impose protective measures in relation to, UBS, which proceedings or measures may have a materialadverse effect on the terms and market value of the debt securities and the warrants and/or the ability of UBS to makepayments thereunder.

Pursuant to article 25 et seq. of the Swiss Banking Act, FINMA has broad statutory powers to take measures andactions in relation to UBS if it: (i) is over-indebted; (ii) has serious liquidity problems; or (iii) fails to fulfil theapplicable capital adequacy provisions after expiry of a deadline set by FINMA. If one of these pre-requisites is met,FINMA is authorized: (a) to open restructuring proceedings (Sanierungsverfahren); (b) to open liquidation(bankruptcy) proceedings (Bankenkonkurs) in respect of UBS; and/or (c) to impose protective measures(Schutzmassnahmen) in relation to UBS. The Swiss Banking Act, as last amended as of January 1, 2016, grantssignificant discretion to FINMA in connection with the aforementioned proceedings and measures. In particular, abroad variety of protective measures may be imposed by FINMA, including a bank moratorium (Stundung) or amaturity postponement (Falligkeitsaufschub), which measures may be ordered by FINMA either on a stand-alone basisor in connection with reorganisation or liquidation proceedings.

The resolution regime of the Swiss Banking Act is further detailed in the FINMA Banking Insolvency Ordinance (BIO-FINMA) that entered into force as of 1 November 2012. In a restructuring proceeding, FINMA, as resolution authority,is competent to approve the resolution plan (Sanierungsplan). The resolution plan may, among other things, providefor: (i) the transfer of UBS’s assets or portions thereof, together with debts, other liabilities and contracts (which mayor may not include the contractual relationship between UBS and the holders) of UBS, or portions thereof, to anotherentity; (ii) the conversion of UBS’s debt and/or other obligations, including its obligations under the debt securities andthe warrants, into equity (a “debt-to-equity swap”); and/or (iii) the partial or full write-off of obligations owed by UBS(a “haircut”), including its obligations under the debt securities and the warrants. Pursuant to article 48 lit. a-c BIO-FINMA, a debt-to-equity swap and/or a partial or full haircut on its debt and other obligations including the debtsecurities and the warrants may only take place after: (i) all debt instruments issued by UBS AG qualifying asadditional tier 1 capital or tier 2 capital (such as contingent write-down bonds) have been converted into equity; and (ii)the existing equity of UBS AG has been fully cancelled. Further, pursuant to article 48 lit. d BIO-FINMA, debt-to-equity swaps (but arguably not haircuts) must occur in the following order: (i) all subordinated claims not qualifying asregulatory capital; (ii) all other claims not excluded by law from a debt-to-equity swap; and (iii) deposits (in excess ofthe amount privileged by law). With respect to a haircut, the BIO-FINMA does not contain any guidance as to theorder in which different categories of claims shall be partially or fully written off. Therefore, it cannot be excluded thatany resolution plan in respect of UBS AG could provide that the claims under or in connection with the debt securitiesand the warrants will be partially or fully converted or written-off, while, in case of a write-off, preserving claimsranking junior to or pari passu with the claims under the debt securities and the warrants. In such case, holders of thedebt securities and the warrants may lose all or some of their investment in such debt securities and warrants. In case ofa restructuring of a systemically important bank (such as UBS AG), the creditors whose claims are affected by theresolution plan will not have a right to vote on, opt out of, or dismiss the resolution plan. In addition, if a resolutionplan has been approved by the FINMA, the rights of a creditor to seek judicial review of the resolution plan (e.g., onthe grounds that the plan would unduly prejudice the rights of the holders of the debt securities and the warrants orotherwise be in violation of the Swiss Banking Act) are very limited in that the competent court may not grantsuspensory effect (aufschiebende Wirkung) to the approval of the resolution plan and, even if the objection of acreditor against the resolution plan is approved, the court can only award a compensation payment but not invalidate oroverride the resolution plan.

As of the date of this prospectus, there is no clear guidance on what impact it would have on the rights of holders of thedebt securities or warrants or the ability of UBS to make payments under the debt securities or warrants if one orseveral of the measures under the aforementioned insolvency regime were imposed in connection with a restructuringof UBS.

For a description of the regulation and supervision of UBS AG more generally, please see the Annual Report 2015 andthe other documents incorporated by reference into this prospectus.

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Use of ProceedsWe intend to use the proceeds from the sale of the securities to provide additional funds for our operations and forgeneral corporate purposes outside of Switzerland. We will receive the net proceeds from sales of the securities madein connection with their original issuance and in connection with any market-making resales that UBS AG itselfundertakes. We do not expect to receive any proceeds from resales of the securities, including the debt securities ofUBS Americas Inc., by UBS Securities LLC, UBS Financial Services Inc. or any of our other affiliates in market-making transactions. We expect our affiliates to retain the proceeds of their market-making resales and not to pay theproceeds to us.

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Description of Debt Securities We May OfferPlease note that in this section entitled “Description of Debt Securities We May Offer,” references to UBS, we, ourand us refer only to UBS AG and not to its consolidated subsidiaries. In particular, the debt securities are obligationssolely of UBS AG, and not of any of its subsidiaries, including, without limitation, UBS Switzerland AG. Also, in thissection, references to “holders” and “you” mean those who own debt securities registered in their own names on thebooks that we or the trustee maintain for this purpose, and not those who own beneficial interests in debt securitiesregistered in street name or in debt securities issued in book-entry form through one or more depositaries. Owners ofbeneficial interests in the debt securities should read the section below entitled “Legal Ownership and Book-EntryIssuance.”

The Debt Indenture

As required by U.S. federal law for publicly offered bonds and notes, the debt securities are governed by a documentcalled an indenture. The debt indenture is a contract between us and U.S. Bank Trust National Association, which actsas trustee. The debt securities offered by this prospectus will be issued under one or more indentures to be entered intoon or after the date of this prospectus.

The trustee has two main roles:

• First, the trustee can enforce your rights against us if we default. There are limitations on the extent to which thetrustee acts on your behalf, which we describe below under “—Default, Remedies and Waiver of Default.”

• Second, the trustee performs administrative duties for us, such as sending you interest payments and notices.

See “—Our Relationship with the Trustee” below for more information about the trustee.

We May Issue Many Series of Debt Securities Under the Debt Indenture

We may issue as many distinct series of debt securities under the debt indenture as we wish. This section summarizesterms of the debt securities that apply generally to all series. The provisions of the debt indenture allow us not only toissue debt securities with terms different from those of debt securities previously issued under the debt indenture, butalso to “reopen” a previous issue of a series of debt securities and issue additional debt securities of that series. Most ofthe financial and other specific terms of your series, will be described in the prospectus supplement accompanying thisprospectus. Those terms may vary from the terms described here.

We may issue debt securities separately or together with other debt securities or with our warrants.

As you read this section, please remember that the specific terms of your debt security as described in your prospectussupplement will supplement and, if applicable, may modify or replace the general terms described in this section. Ifthere are any differences between your prospectus supplement and this prospectus, your prospectus supplement willcontrol. Thus, the statements we make in this section may not apply to your debt security.

When we refer to a series of debt securities, we mean a series issued under the debt indenture. When we refer to yourprospectus supplement, we mean the prospectus supplement describing the specific terms of the debt security youpurchase. The terms used in your prospectus supplement will have the meanings described in this prospectus, unlessotherwise specified.

Unless we indicate otherwise in your prospectus supplement, the debt securities we issue to you will be part of theseries of debt securities referred to as our “medium-term notes, Series B.” The Series B notes are a single distinct seriesunder the debt indenture, and we may issue Series B notes in such amounts, at such times and on such terms as wewish. The Series B notes will differ from one another, and from any other series, in their terms, but all of the Series Bnotes together will constitute a single series for all purposes under the debt indenture pursuant to which they will beissued.

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Description of Debt Securities We May Offer

Amounts That We May Issue

The debt indenture does not limit the aggregate amount of debt securities that we may issue or the number of series orthe aggregate amount of any particular series. We may have already issued Series B notes, many of which maycurrently be outstanding. We intend to issue additional Series B notes, and may issue additional Series B notes at anytime, without your consent and without notifying you. We may also issue debt securities and other securities at anytime without your consent and without notifying you.

The debt indenture and the debt securities do not limit our ability to incur other indebtedness or to issue othersecurities. Also, we are not subject to financial or similar restrictions by the terms of the debt securities.

Principal Amount, Stated Maturity and Maturity

The principal amount of a debt security means the principal amount payable at its stated maturity, unless that amount isnot determinable, in which case the principal amount of a debt security is its face amount.

The term “stated maturity” with respect to any debt security means the day on which the principal amount of your debtsecurity is scheduled to become due. The principal may become due sooner, by reason of redemption or accelerationafter a default or otherwise in accordance with the terms of the debt security. The day on which the principal actuallybecomes due, whether at the stated maturity or earlier, is called the “maturity” of the principal.

We also use the terms “stated maturity” and “maturity” to refer to the days when other payments become due. Forexample, we may refer to a regular interest payment date when an installment of interest is scheduled to become due asthe “stated maturity” of that installment.

When we refer to the “stated maturity” or the “maturity” of a debt security without specifying a particular payment, wemean the stated maturity or maturity, as the case may be, of the principal.

This Section Is Only a Summary

The debt indenture and its associated documents, including your debt security, contain the full legal text governing thematters described in this section and your prospectus supplement. We have filed a copy of the debt indenture with theSEC as an exhibit to our registration statement. See “Where You Can Find More Information” above for informationon how to obtain a copy.

This section and your prospectus supplement summarize all the material terms of the debt indenture and your debtsecurity. They do not, however, describe every aspect of the debt indenture and your debt security. For example, in thissection and your prospectus supplement, we use terms that have been given special meaning in the debt indenture, butwe describe the meaning of only the more important of those terms.

Governing Law

The debt indenture is, and the debt securities will be, governed by New York law.

Currency of Debt Securities

Amounts that become due and payable on your debt security in cash will be payable in a currency, composite currency,basket of currencies or currency unit or units specified in your prospectus supplement. We refer to this currency,composite currency, basket of currencies or currency unit or units as a “specified currency.” The specified currency foryour debt security will be U.S. dollars, unless your prospectus supplement states otherwise. Some debt securities mayhave different specified currencies for principal and interest. You will have to pay for your debt securities by deliveringthe requisite amount of the specified currency to UBS Securities LLC, UBS Financial Services Inc. or another firm thatwe name in your prospectus supplement, unless other arrangements have been made between you and us or you andthat firm. We will make payments on your debt securities in the specified currency, except as described below in“—Payment Mechanics for Debt Securities.” See “Considerations Relating to Securities Denominated or Payable in orLinked to a Non-U.S. Dollar Currency” below for more information about risks of investing in this kind of debtsecurities.

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Description of Debt Securities We May Offer

Types of Debt Securities

We may issue any of the three types of debt securities described below. A debt security may have elements of each ofthe three types of debt securities described below. For example, a debt security may bear interest at a fixed rate forsome periods and at a floating rate in others. Similarly, a debt security may provide for a payment of principal atmaturity linked to an index and also bear interest at a fixed or floating rate.

Fixed Rated Debt Securities

A debt security of this type will bear interest at a fixed rate described in the applicable prospectus supplement. Thistype includes zero coupon debt securities, which bear no interest and are instead issued at a price lower than theprincipal amount. See “—Original Issue Discount Debt Securities” below for more information about zero coupon andother original issue discount debt securities.

Each fixed rate debt security, except any zero coupon debt security, will bear interest from its original issue date orfrom the most recent date to which interest on the debt security has been paid or made available for payment. Interestwill accrue on the principal of a fixed rate debt security at the fixed yearly rate stated in the applicable prospectussupplement, until the principal is paid or made available for payment or the security has been converted or exchanged.Each payment of interest due on an interest payment date or the date of maturity will include interest accrued from andincluding the last date to which interest has been paid, or made available for payment, or from the issue date if nonehas been paid or made available for payment, to but excluding the interest payment date or the date of maturity. Wewill compute interest on fixed rate debt securities on the basis of a 360-day year of twelve 30-day months. We will payinterest on each interest payment date and at maturity as described below under “—Payment Mechanics for DebtSecurities.”

Floating Rate Debt Securities

Interest Rate Formulas. A debt security of this type will bear interest at rates that are determined by reference to aninterest rate formula. In some cases, the rates may also be adjusted by adding or subtracting a spread or multiplying bya spread multiplier and may be subject to a minimum rate or a maximum rate. If your debt security is a floating ratedebt security, the formula and any adjustments that apply to the interest rate will be specified in your prospectussupplement.

Each floating rate debt security will bear interest from its original issue date or from the most recent date to whichinterest on the debt security has been paid or made available for payment. Interest will accrue on the principal of afloating rate debt security at the yearly rate determined according to the interest rate formula stated in the applicableprospectus supplement, until the principal is paid or made available for payment. We will pay interest on each interestpayment date and at maturity as described below under “—Payment Mechanics for Debt Securities.”

Calculation of Interest. Calculations relating to floating rate debt securities will be made by the calculation agent,an institution that we appoint as our agent for this purpose. That institution may include any affiliate of ours, such asUBS Securities LLC. The prospectus supplement for a particular floating rate debt security will name the institutionthat we have appointed to act as the calculation agent for that debt security as of its original issue date. We may appointa different institution to serve as calculation agent from time to time after the original issue date of the debt securitywithout your consent and without notifying you of the change. Absent manifest error, all determinations of thecalculation will be final and binding on you and us, without any liability on the part of the calculation agent.

For each floating rate debt security, the calculation agent will determine, on the corresponding interest calculation ordetermination date, as described in the applicable prospectus supplement, the interest rate that takes effect on eachinterest reset date. In addition, the calculation agent will calculate the amount of interest that has accrued during eachinterest period—i.e., the period from and including the original issue date, or the last date to which interest has beenpaid or made available for payment, to but excluding the payment date. For each interest period, the calculation agentwill calculate the amount of accrued interest by multiplying the face or other specified amount of the floating rate debtsecurity by an accrued interest factor for the interest period. This factor will equal the sum of the interest factors

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Description of Debt Securities We May Offer

calculated for each day during the interest period. The interest factor for each day will be expressed as a decimal andwill be calculated by dividing the interest rate, also expressed as a decimal, applicable to that day by 360 or by theactual number of days in the year, as specified in the applicable prospectus supplement.

Upon the request of the holder of any floating rate debt security, the calculation agent will provide the interest rate thenin effect for that debt security—and, if determined, the interest rate that will become effective on the next interest resetdate. The calculation agent’s determination of any interest rate, and its calculation of the amount of interest for anyinterest period, will be final and binding in the absence of manifest error.

All percentages resulting from any calculation relating to a debt security will be rounded upward or downward, asappropriate, to the next higher or lower one hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541)being rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being rounded up to 9.87655% (or.0987655). All amounts used in or resulting from any calculation relating to a floating rate debt security will berounded upward or downward, as appropriate, to the nearest cent, in the case of U.S. dollars, or to the nearestcorresponding hundredth of a unit, in the case of a currency other than U.S. dollars, with one-half cent or one-half of acorresponding hundredth of a unit or more being rounded upward.

In determining the base rate that applies to a floating rate debt security during a particular interest period, thecalculation agent may obtain rate quotes from various banks or dealers active in the relevant market, as described in theapplicable prospectus supplement. Those reference banks and dealers may include the calculation agent itself and itsaffiliates, as well as any underwriter, dealer or agent participating in the distribution of the relevant floating rate debtsecurities and its affiliates, and they may include UBS AG or its affiliates.

Indexed Debt Securities

A debt security of this type provides that the principal amount payable at its maturity, and/or the amount of interestpayable on an interest payment date, will be determined by reference to:

• securities of one or more issuers;

• one or more currencies;

• one or more commodities;

• any other financial, economic or other measure or instrument, including the occurrence or non-occurrence ofany event or circumstance; and/or

• one or more indices or baskets of the items described above.

If you are a holder of an indexed debt security, you may receive an amount at maturity (including upon accelerationfollowing an event of default) that is greater than or less than the face amount of your debt security depending upon theformula used to determine the amount payable and the value of the applicable index at maturity. The value of theapplicable index will fluctuate over time.

An indexed debt security may provide either for cash settlement or for physical settlement by delivery of theunderlying property or another property of the type listed above. An indexed debt security may also provide that theform of settlement may be determined at our option or at the holder’s option. Some indexed debt securities may beconvertible, exercisable or exchangeable, at our option or the holder’s option, into or for securities of an issuer otherthan UBS AG.

If you purchase an indexed debt security, your prospectus supplement will include information about the relevantindex, about how amounts that are to become payable will be determined by reference to the price or value of thatindex and about the terms on which the security may be settled physically or in cash. The prospectus supplement willalso identify the calculation agent that will calculate the amounts payable with respect to the indexed debt security andmay exercise significant discretion in doing so. The calculation agent may be UBS Securities LLC or another of ouraffiliates. See “Considerations Relating to Indexed Securities” for more information about risks of investing in debtsecurities of this type.

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Description of Debt Securities We May Offer

Original Issue Discount Debt Securities

A fixed rate debt security, a floating rate debt security or an indexed debt security may be an original issue discountdebt security. A debt security of this type is issued at a price lower than its principal amount and provides that, uponredemption or acceleration of its maturity, an amount less than its principal amount will be payable. An original issuediscount debt security may be a zero coupon debt security. A debt security issued at a discount to its principal may, forU.S. federal income tax purposes, be considered an original issue discount debt security, regardless of the amountpayable upon redemption or acceleration of maturity. See “U.S. Tax Considerations—Taxation of Debt Securities—Original Issue Discount” below for a brief description of the U.S. federal income tax consequences of owning anoriginal issue discount debt security.

Information In Your Prospectus Supplement

Your prospectus supplement will describe the specific terms of your debt security, which will include some or all of thefollowing:

• any limit on the total principal amount of the debt securities of the same series;

• the stated maturity;

• the specified currency or currencies for principal and interest, if not U.S. dollars;

• the price at which we originally issue your debt security, expressed as a percentage of the principal amount,and the original issue date;

• whether your debt security is a fixed rate debt security, a floating rate debt security or an indexed debtsecurity;

• if your debt security is a fixed rate debt security, the yearly rate at which your debt security will bear interest,if any, and the interest payment dates;

• if your debt security is a floating rate debt security, the interest rate basis; any applicable index currency ormaturity, spread or spread multiplier or initial base rate, maximum rate or minimum rate; the interest reset,determination, calculation and payment dates; the day count used to calculate interest payments for anyperiod; the business day convention; and the calculation agent;

• if your debt security is an indexed debt security, the principal amount, if any, we will pay you at maturity, theamount of interest, if any, we will pay you on an interest payment date or the formula we will use to calculatethese amounts, if any, and the terms on which your debt security will be exchangeable for or payable in cash,securities or other property;

• if your debt security may be converted into or exercised or exchanged for debt or equity securities of one ormore third parties, the terms on which conversion, exercise or exchange may occur, including whetherconversion, exercise or exchange is mandatory, at the option of the holder or at our option, the period duringwhich conversion, exercise or exchange may occur, the initial conversion, exercise or exchange price or rateand the circumstances or manner in which the amount of securities issuable upon conversion, exercise orexchange may be adjusted;

• if your debt security is also an original issue discount debt security, the yield to maturity;

• if applicable, the circumstances under which your debt security may be redeemed at our option or repaid atthe holder’s option before the stated maturity, including any redemption commencement date, repaymentdate(s), redemption price(s) and redemption period(s);

• the authorized denominations, if other than $1,000 and integral multiples of $1,000;

• the depositary for your debt security, if other than DTC, and any circumstances under which the holder mayrequest securities in non-global form, if we choose not to issue your debt security in book-entry form only;

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Description of Debt Securities We May Offer

• if your debt security will be issued in bearer form, any special provisions relating to bearer securities;

• if applicable, the circumstances under which we will pay additional amounts on any debt securities held by aperson who is not a United States person for tax purposes and under which we can redeem the debt securitiesif we have to pay additional amounts;

• the names and duties of any co-trustees, depositaries, authenticating agents, paying agents, transfer agents orregistrars for your debt security, as applicable; and

• any other terms of your debt security, which could be different from those described in this prospectus.

If you purchase your debt security—or any of our other securities we describe in this prospectus—in a market-makingtransaction, you will receive information about the price you pay and your trade and settlement dates in a separateconfirmation of sale. A market-making transaction is one in which we, UBS Securities LLC, UBS Financial ServicesInc. or another of our affiliates resells a security that it has previously acquired from another holder. A market-makingtransaction in a particular security occurs after the original issuance and sale of the security.

Extension of Maturity

If specified in the applicable prospectus supplement, we will have the option to extend the stated maturity of your debtsecurity for one or more periods of whole years up to but not beyond the final maturity date specified in the prospectussupplement. We call a debt security whose maturity we may extend an extendible debt security. We call the period oftime as to which we may extend the maturity the extension period. The following procedures will apply to extendibledebt securities, unless otherwise indicated in the applicable prospectus supplement.

We may extend the maturity of an extendible debt security by notifying the paying agent between 45 and 60 daysbefore the stated maturity then in effect. The stated maturity may be the original stated maturity, as described in theprospectus supplement, or a maturity that we previously extended by following these procedures. If we notify thepaying agent that we will extend the maturity, the paying agent will send a notice to each holder by first class mail,postage prepaid, or by other means agreed upon between us and the paying agent, at least 30 days before the statedmaturity then in effect. The notice sent by the paying agent will provide the following information:

• our election to extend the maturity of the extendible debt security;

• the extended maturity date or, if the maturity date had previously been extended, the new extended maturitydate;

• the interest rate that will apply during the extension period or, in the case of a floating rate debt security, thespread and/or spread multiplier, if any, applicable during the extension period; and

• the provisions, if any, for redemption and repayment during the extension period.

Once the paying agent has mailed the notice to each holder, the extension of the maturity date will take placeautomatically. All of the terms of the debt security will be the same as the terms of the debt security as originallyissued, except those terms that are described in the notice sent by the paying agent to each holder and except asdescribed in the following paragraph.

Not later than 10:00 a.m., New York City time, on the twentieth calendar day before the maturity date then in effect foran extendible debt security or, if that day is not a business day, on the next succeeding business day, we may revoke theinterest rate set forth in the extension notice sent by the paying agent to each holder and establish a higher interest ratefor the extension period. If we elect to establish a higher interest rate, the paying agent will send a notice to each holderby first class mail, postage prepaid, or by other means agreed between us and the paying agent, of the higher interestrate in the case of a floating rate debt security, the higher spread and/or spread multiplier, if any. The notice of thehigher rate cannot be revoked. All extendible debt securities as to which the maturity date has been extended will bearthe higher rate for the extension period, whether or not tendered for repayment.

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Description of Debt Securities We May Offer

If we elect to extend the maturity date of an extendible debt security, each holder may elect repayment of all or part ofits debt security on the maturity date then in effect at a price equal to the principal amount plus any accrued and unpaidinterest to that date. To elect repayment, a holder must give notice to the paying agent between 25 and 35 days beforethe maturity date in effect. The notice must consist of either:

• the debt security along with the completed form entitled “Option to Elect Repayment,” which will be attachedto your debt security.

• a telegram, facsimile transmission or letter from a member of a national securities exchange, the FinancialIndustry Regulatory Authority, Inc. or a commercial bank or trust company in the United States setting forththe name of the holder, the principal amount of the debt security, the principal amount of the debt security tobe repaid, the certificate number or a description of the tenor and terms of the debt security, a statement thatthe option to elect repayment is being elected and a guarantee that the debt security, together with thecompleted form entitled “Option to Elect Repayment” will be received by the paying agent no later than thefifth business day after the date of the telegram, facsimile transmission or letter. The telegram, facsimiletransmission or letter will become effective upon receipt, by that fifth business day, of the debt security andcomplete form.

The holder may revoke the election of repayment by sending to the paying agent written notice by 3:00 p.m., NewYork City time, on the twentieth day before the maturity date then in effect or, if that day is not a business day, on thenext succeeding business day.

If an extendible debt security is represented by a global debt security, the depositary or its nominee, as the holder, willbe the only person that can exercise the right to elect repayment or revoke such an election. Any indirect owners whoown beneficial interests in the global debt security and wish to make such an election must give proper and timelyinstructions to the banks or brokers through which they hold their interests, requesting that they notify the depositary tomake a repayment election or revoke such an election on their behalf. Different firms have different deadlines foraccepting instructions from their customers, and you should take care to act promptly enough to ensure that yourrequest is given effect by the depositary before the applicable deadline for exercise.

Redemption and Repayment

Unless otherwise indicated in your prospectus supplement, your debt security will not be entitled to the benefit of anysinking fund—that is, we will not deposit money on a regular basis into any separate custodial account to repay yourdebt securities. In addition, we will not be entitled to redeem your debt security before its stated maturity (except forcertain tax reasons, as described below) unless your prospectus supplement specifies a redemption date or redemptioncommencement date. You will not be entitled to require us to buy your debt security from you, before its statedmaturity, unless your prospectus supplement specifies one or more repayment dates.

If your prospectus supplement specifies one or more redemption dates, a redemption commencement date or arepayment date, it will also specify one or more redemption prices or repayment prices, which may be expressed as apercentage of the principal amount of your debt security. It may also specify one or more redemption periods duringwhich the redemption prices relating to a redemption of debt securities during those periods will apply.

If your prospectus supplement specifies one or more redemption dates, your debt security will be redeemable at ouroption on any of those dates. If your prospectus supplement specifies a redemption commencement date, your debtsecurity will be redeemable at our option at any time on or after that date. If we redeem your debt security, we will doso at the specified redemption price. If different prices are specified for different redemption periods, the price we paywill be the price that applies to the redemption period during which your debt security is redeemed.

If your prospectus supplement specifies a repayment date, your debt security will be repayable at your option on thespecified repayment date at the specified repayment price, together with interest accrued to the repayment date.

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Description of Debt Securities We May Offer

If we exercise an option to redeem any debt security, we will give the trustee and the holders written notice of theprincipal amount of the debt security to be redeemed, not less than 5 business days nor more than 60 days before theapplicable redemption date unless otherwise specified in your prospectus supplement. We will give the notice in themanner described below in “—Notices.”

If a debt security represented by a global debt security is subject to repayment at the holder’s option, the depositary orits nominee, as the holder, will be the only person that can exercise the right to repayment. Any indirect holders whoown beneficial interests in the global debt security and wish to exercise a repayment right must give proper and timelyinstructions to the banks or brokers through which they hold their interests, requesting that they notify the depositary toexercise the repayment right on their behalf. Different firms have different deadlines for accepting instructions fromtheir customers, and you should take care to act promptly enough to ensure that your request is given effect by thedepositary before the applicable deadline for exercise.

Street name and other indirect holders should contact their banks or brokers for information about how to exercise arepayment right in a timely manner.

We or our affiliates may purchase debt securities from investors who are willing to sell from time to time, either in theopen market at prevailing prices or in private transactions at negotiated prices. Debt securities that we or they purchasemay, at our discretion, be held, resold or cancelled.

Optional Tax Redemption

In addition to the situations described above under “—Redemption and Repayment,” we also have the option to redeemthe debt securities in two situations described below, unless otherwise indicated in your prospectus supplement. Theredemption price for the debt securities, other than original issue discount debt securities, will be equal to the principalamount of the debt securities being redeemed plus accrued interest and any additional amounts due on the date fixedfor redemption. The redemption price for original issue discount debt securities will be specified in the prospectussupplement for such debt securities. Furthermore, we must give you between 10 and 60 days’ notice before redeemingthe debt securities unless otherwise specified in your prospectus supplement.

• The first situation is where, as a result of a change in, execution of or amendment to any laws or treaties orthe official application or interpretation of any laws or treaties, we would be required to pay additionalamounts as described below under “—Payment of Additional Amounts.”

This applies only in the case of changes, executions, amendments, applications or interpretations that occuron or after the date specified in the prospectus supplement for the applicable debt securities and in a relevantjurisdiction, as defined in “—Payment of Additional Amounts” below. If UBS is succeeded by anotherentity, the applicable jurisdiction will be the jurisdiction in which the successor entity is organized, and theapplicable date will be the date the entity became a successor.

We would not have the option to redeem in this case if we could have avoided the payment of additionalamounts or the deduction or withholding by using reasonable measures available to us.

• The second situation is where a person located outside of a relevant jurisdiction into which UBS is merged orto whom it has conveyed, transferred or leased its property is required to pay an additional amount. We wouldhave the option to redeem the debt securities even if we are required to pay additional amounts immediatelyafter the merger, conveyance, transfer or lease. We are not required to use reasonable measures to avoid theobligation to pay additional amounts in this situation.

Payment of Additional Amounts

A relevant jurisdiction may require UBS to withhold amounts from payments on the principal or interest on a debtsecurity for taxes or any other governmental charges. If the relevant jurisdiction requires a withholding of this type,UBS may be required to pay you an additional amount so that the net amount you receive will be the amount specifiedin the debt security to which you are entitled.

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Description of Debt Securities We May Offer

By relevant jurisdiction, we mean Switzerland or a jurisdiction in which the UBS branch through which debt securitiesare issued is located. UBS will not have to pay additional amounts in respect of taxes or other governmental chargesthat are required to be deducted or withheld by any paying agent from a payment on a debt security, if such paymentcan be made without such deduction or withholding by any other paying agent, or in respect of taxes or othergovernmental charges that would not have been imposed but for

• the existence of any present or former connection between you and the relevant jurisdiction, other than themere holding of the debt security and the receipt of payments on it;

• your status as an individual resident of a member state of the European Union;

• a failure to comply with any reasonable certification, documentation, information or other reportingrequirement concerning your nationality, residence, identity or connection with the relevant jurisdiction, ifsuch compliance is required as a precondition to relief or exemption from such taxes or other governmentalcharges (including, without limitation, a certification that you are not resident in the relevant jurisdiction orare not an individual resident of a member state of the European Union); or

• a change in law that becomes effective more than 30 days after a payment on the debt security becomes dueand payable or on which the payment is duly provided for, whichever occurs later.

In addition, no additional amounts will be required to be paid on account of any deduction or withholding imposed orrequired pursuant to Sections 1471 through 1474 of the Internal Revenue Code (as defined below under “U.S. TaxConsiderations”), any current or future regulations or official interpretations thereof, any agreement entered intopursuant to Section 1471(b) of the Internal Revenue Code, or any fiscal or regulatory legislation, rules or practicesadopted pursuant to any intergovernmental agreement entered into in connection with the implementation of suchSections of the Internal Revenue Code.

These provisions will also apply to any taxes or governmental charges imposed by any jurisdiction in which asuccessor to UBS is organized. The prospectus supplement relating to the debt security may describe additionalcircumstances in which UBS would not be required to pay additional amounts.

Mergers and Similar Transactions

We are generally permitted to merge or consolidate with another firm. We are also permitted to sell our assetssubstantially as an entirety to another firm. With regard to any series of debt securities, we may not take any of theseactions, however, unless all the following conditions are met:

• If the successor firm in the transaction is not UBS, the successor firm must be organized as a corporation,partnership or trust and must expressly assume our obligations under the debt securities of that series and thedebt indenture. The successor firm must be organized under the laws of Switzerland.

• Immediately after the transaction, no default under the debt securities of that series has occurred and iscontinuing. For this purpose, “default under the debt securities of that series” means an event of default withrespect to that series or any event that would be an event of default with respect to that series if therequirements for giving us default notice and for our default having to continue for a specific period of timewere disregarded. We describe these matters below under “—Default, Remedies and Waiver of Default.”

If the conditions described above are satisfied with respect to the debt securities of any series, we will not need to obtainthe approval of the holders of those debt securities in order to merge or consolidate or to sell our assets. Also, theseconditions will apply only if we wish to merge or consolidate with another firm or sell our assets substantially as anentirety to another firm. We will not need to satisfy these conditions if we enter into other types of transactions, includingany transaction in which we acquire the stock or assets of another firm, any transaction that involves a change of controlof UBS but in which we do not merge or consolidate and any transaction in which we sell less than substantially all ourassets. We will also not need to satisfy these conditions if UBS AG merges into or consolidates with, or conveys, transfersor leases its properties and assets substantially as an entirety to any affiliate of UBS AG that is the parent or a wholly-owned subsidiary of the parent, provided that the parent shall expressly and irrevocably guarantee, by a supplemental

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Description of Debt Securities We May Offer

indenture, the due and punctual payment of the principal of and any premium and interest on all the securities and theperformance and observance of every covenant of the indenture to be performed and observed by UBS AG.

Also, if we merge, consolidate or sell our assets substantially as an entirety and the successor firm is a non-Swissentity, neither we nor any successor would have any obligation to compensate you for any resulting adverse taxconsequences to the debt securities.

Defeasance and Covenant Defeasance

If indicated in the applicable prospectus supplement for a debt security, the provisions for full defeasance and covenantdefeasance described below will apply to that debt security. In general, we expect these provisions to apply to eachdebt security that has a specified currency of U.S. dollars and is not a floating rate or indexed debt security.

Full Defeasance

If there is a change in U.S. federal tax law, as described below, we can legally release ourselves from all payment andother obligations on your debt security. This is called full defeasance. To do so, each of the following must occur:

• We must deposit in trust for the benefit of all holders of those debt securities, money, U.S. government orU.S. government agency notes or bonds or a combination of money and U.S. government or U.S. governmentagency notes or bonds that will, in each case, in the opinion of a nationally recognized firm of independentpublic accountants, generate enough cash to make interest, principal and any other payments on those debtsecurities on their various due dates.

• There must be a change in current U.S. federal tax law or an Internal Revenue Service ruling that lets us makethe above deposit without causing the holders to be taxed on those debt securities any differently than if wedid not make the deposit and just repaid the debt securities ourselves. Under current federal tax law, thedeposit and our legal release from your debt securities would be treated as though we took back your debtsecurity and gave you your share of the cash and notes or bonds deposited in trust. In that event, you couldrecognize gain or loss on your debt security.

• We must deliver to the trustee a legal opinion of our counsel confirming the tax law change described above.

If we ever fully defease your debt security, you would have to rely solely on the trust deposit for payments on yourdebt security. You would not be able to look to us for payment in the event of any shortfall.

Covenant Defeasance

Under current U.S. federal tax law, we can make the same type of deposit described above and be released from anyrestrictive covenants relating to your debt security that may be described in your prospectus supplement. This is calledcovenant defeasance. In that event, you would lose the protection of those restrictive covenants. In order to achievecovenant defeasance for any debt securities, we must do both of the following:

• We must deposit in trust for the benefit of all holders of those debt securities, money, U.S. government orU.S. government agency notes or bonds or a combination of money and U.S. government or U.S. governmentagency notes or bonds that will, in each case, in the opinion of a nationally recognized firm of independentpublic accountants, generate enough cash to make interest, principal and any other payments on those debtsecurities on their various due dates.

• We must deliver to the trustee a legal opinion of our counsel confirming that under U.S. federal income taxlaw as then in effect we may make the above deposit without causing you to be taxed on those debt securitiesany differently than if we did not make the deposit and just repaid those debt securities ourselves.

If we accomplish covenant defeasance with regard to your debt security, the following provisions of the debt indentureand your debt security would no longer apply:

• Any covenants that your prospectus supplement may state are applicable to your debt security; and

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Description of Debt Securities We May Offer

• The events of default resulting from a breach of covenants, described below in the fourth bullet point under“—Default, Remedies and Waiver of Default—Events of Default.”

Any right we have to redeem will survive covenant defeasance with regard to those debt securities.

If we accomplish covenant defeasance on your debt security, you can still look to us for repayment of your debtsecurity in the event of any shortfall in the trust deposit. You should note, however, that if one of the remaining eventsof default occurred, such as our bankruptcy, and your debt security became immediately due and payable, there may bea shortfall. Depending on the event causing the default you may not be able to obtain payment of the shortfall.

Default, Remedies and Waiver of Default

You will have special rights if an event of default with respect to your series of debt securities occurs and is not cured,as described in this subsection.

Events of Default

Unless your prospectus supplement says otherwise, when we refer to an event of default with respect to any series ofdebt securities, we mean any of the following:

• We do not pay the principal or any premium (including delivering any security or other property deliverable)on any debt security of that series at its maturity;

• We do not pay interest on any debt securities of that series within 30 days after it becomes due and payable;

• We do not deposit a sinking fund payment with regard to any debt securities of that series on its due date, butonly if the payment is required in the applicable prospectus supplement;

• We remain in breach of any other covenant we make in the debt indenture for the benefit of the debt securitiesof that series, for 60 days after we receive a notice of default stating that we are in breach and requiring us toremedy the breach. The notice must be sent by the trustee or the holders of not less than 10% in principalamount of the relevant series of debt securities then outstanding;

• We file for bankruptcy or certain other bankruptcy, insolvency or reorganization events relating to UBSoccur; or

• If the applicable prospectus supplement states that any additional event of default applies to your series, thatevent of default occurs.

Remedies If an Event of Default Occurs

If an event of default has occurred with respect to any series of debt securities and has not been cured or waived, thetrustee or the holders of not less than 25% in principal amount of all debt securities of that series then outstanding maydeclare the entire principal amount of the debt securities of that series to be due immediately. If an event of defaultoccurs because of bankruptcy, insolvency or reorganization events relating to UBS, the entire principal amount of thedebt securities of that series will be automatically accelerated, without any action by the trustee or any holder.

Each of the situations described above is called an acceleration of the maturity of the affected series of debt securities.If the maturity of any series is accelerated and a judgment for payment has not yet been obtained, the holders of amajority in principal amount of the debt securities of that series may cancel the acceleration for the entire series.

If an event of default occurs, the trustee will have special duties. The trustee will be obligated to use those of its rightsand powers under the debt indenture, and to use the same degree of care and skill in doing so, that a prudent personwould use in that situation in conducting his or her own affairs.

Except as described in the prior paragraph, the trustee is not required to take any action under the debt indenture at therequest of any holders unless the holders offer the trustee reasonable protection from expenses and liability. This iscalled an indemnity. If the trustee is provided with an indemnity reasonably satisfactory to it, the holders of a majorityin principal amount of all debt securities of the relevant series may direct the time, method and place of conducting any

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Description of Debt Securities We May Offer

lawsuit or other formal legal action seeking any remedy available to the trustee with respect to that series. Thesemajority holders may also direct the trustee in performing any other action under the debt indenture with respect to thedebt securities of that series.

Before you bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforceyour rights or protect your interests relating to any debt security, all of the following must occur:

• The holder of your debt security must give the trustee written notice that an event of default has occurred, andthe event of default must not have been cured or waived.

• The holders of not less than 25% in principal amount of all debt securities of your series must make a writtenrequest that the trustee take action because of the default, and they or other holders must offer to the trusteeindemnity reasonably satisfactory to the trustee against the cost and other liabilities of taking that action.

• The trustee must not have taken action for 60 days after the above steps have been taken.

• During those 60 days, the holders of a majority in principal amount of the debt securities of your series mustnot have given the trustee directions that are inconsistent with the written request of the holders of not lessthan 25% in principal amount of all debt securities of your series.

You are, however, entitled at any time to bring a lawsuit for the payment of money due on your debt security on orafter its due date.

Waiver of Default

The holders of not less than a majority in principal amount of the debt securities of any series may waive a default forall debt securities of that series. If this happens, the default will be treated as if it has not occurred. No one can waive apayment default on your debt security, however, without the approval of the particular holder of that debt security.

We Will Give the Trustee Information About Defaults Annually

We will furnish to the trustee every year a written statement of two of our officers certifying that to their knowledge weare in compliance with the debt indenture and the debt securities, or else specifying any default under the debtindenture.

Book-entry and other indirect holders should consult their banks or brokers for information on how to give notice ordirection to or make a request of the trustee and how to declare or cancel an acceleration of the maturity of the debtsecurities. Book-entry and other indirect owners are described below under “Legal Ownership and Book-EntryIssuance.”

Modification and Waiver of Covenants

There are three types of changes we can make to the debt indenture and the debt securities of any series.

Changes Requiring Each Holder’s Approval

First, there are changes that cannot be made without the approval of each holder of a debt security affected by thechange. Here is a list of those types of changes:

• change the stated maturity for any principal or interest payment on a debt security;

• reduce the principal amount, the amount payable on acceleration of the maturity after a default, the interestrate or the redemption price for a debt security;

• permit redemption of a debt security if not previously permitted;

• impair any right a holder may have to require repayment of his or her debt security;

• impair any right that a holder of an indexed or any other debt security may have to exchange or convert thedebt security for or into securities or other property;

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Description of Debt Securities We May Offer

• change the currency of any payment on a debt security other than as permitted by the debt security;

• change the place of payment on a debt security, if it is in non-global form;

• impair a holder’s right to sue for payment of any amount due on his or her debt security;

• reduce the percentage in principal amount of the debt securities of any one or more affected series, takenseparately or together, as applicable, the approval of whose holders is needed to change the debt indenture orthose debt securities;

• reduce the percentage in principal amount of the debt securities of any one or more affected series, takenseparately or together, as applicable, the consent of whose holders is needed to waive our compliance with thedebt indenture or to waive defaults; and

• change the provisions of the debt indenture dealing with modification and waiver in any other respect, exceptto increase any required percentage referred to above or to add to the provisions that cannot be changed orwaived without approval of the holder of each affected debt security.

Changes Not Requiring Approval of Holders

The second type of change does not require any approval by holders of the debt securities of an affected series. Thistype of change is limited to clarifications and changes that would not adversely affect the debt securities of that seriesin any material respect. We also do not need any approval to make changes that affect only debt securities to be issuedunder the debt indenture after the changes take effect.

We may also make changes or obtain waivers that do not adversely affect a particular debt security, even if they affectother debt securities. In those cases, we do not need to obtain the approval of the holder of the unaffected debt security;we need only obtain any required approvals from the holders of the affected debt securities.

Changes Requiring Majority Approval

Any other change to the debt indenture and the debt securities would require the following approval:

• If the change affects only the debt securities of a particular series, it must be approved by the holders of662⁄3% in principal amount of the debt securities of that series.

• If the change affects the debt securities of more than one series of debt securities issued under the debtindenture, it must be approved by the holders of 662⁄3% in principal amount of all series affected by thechange, with the debt securities of all the affected series voting together as one class for this purpose (and ofany affected series that by its terms is entitled to vote separately as a series, as described below).

In each case, the required approval must be given by written consent.

Majority approval would be required for us to obtain a waiver of any of our covenants in the debt indenture. Ourcovenants include the promises we make about merging, which we describe above under “—Mergers and SimilarTransactions.” If the holders approve a waiver of a covenant, we will not have to comply with that covenant. Theholders, however, cannot approve a waiver of any provision in a particular debt security, or in the debt indenture as itaffects that debt security, that we cannot change without the approval of the holder of that debt security as describedabove under “—Changes Requiring Each Holder’s Approval,” unless that holder approves the waiver.

Book-entry and other indirect holders should consult their banks or brokers for information on how approval may begranted or denied if we seek to change the debt indenture or the debt securities or request a waiver.

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Description of Debt Securities We May Offer

Special Rules for Action by Holders

When holders take any action under the debt indenture, such as giving a notice of default, declaring an acceleration,approving any change or waiver or giving the trustee an instruction, we will apply the following rules.

Only Outstanding Debt Securities Are Eligible

Only holders of outstanding debt securities of the applicable series will be eligible to participate in any action byholders of debt securities of that series. Also, we will count only outstanding debt securities in determining whether thevarious percentage requirements for taking action have been met. For these purposes, a debt security will not be“outstanding”:

• if it has been surrendered for cancellation;

• if we have deposited or set aside, in trust for its holder, money for its payment or redemption;

• if we have fully defeased it as described above under “—Defeasance and Covenant Defeasance—FullDefeasance”; or

• if we or one of our affiliates, such as UBS Securities LLC or UBS Financial Services Inc., is the beneficialowner.

Special Series Voting Rights

We may issue series of debt securities that are entitled, by their terms, to vote separately on matters (for example,modification or waiver of provisions in the debt indenture) that would otherwise require a vote of all affected series,voting together as a single class. Any such series would be entitled to vote together with all other affected series, votingtogether as one class, and would also be entitled to vote separately, as a series only. These special voting rights will bedescribed in the applicable prospectus supplement. For a series that does not have these special rights, voting will occuras described in the preceding section, but subject to any separate voting rights of any series having special rights. Wemay issue a series having these or other special voting rights without obtaining the consent of or giving notice toholders of outstanding series.

Eligible Principal Amount of Some Debt Securities

In some situations, we may follow special rules in calculating the principal amount of a debt security that is to betreated as outstanding for the purposes described above. This may happen, for example, if the principal amount ispayable in a non-U.S. dollar currency, increases over time or is not to be fixed until maturity. For any debt security ofthe kind described below, we will decide how much principal amount to attribute to the debt security as follows:

• For an original issue discount debt security, we will use the principal amount that would be due and payableon the action date if the maturity of the debt security were accelerated to that date because of a default.

• For a debt security whose principal amount is not known, we will use any amount that we indicate in theprospectus supplement for that debt security. The principal amount of a debt security may not be known, forexample, because it is based on an index that changes from time to time and the principal amount is not to bedetermined until a later date.

• For debt securities with a principal amount denominated in one or more non-U.S. dollar currencies orcurrency units, we will use the U.S. dollar equivalent, which we will determine.

Determining Record Dates for Action by Holders

We will generally be entitled to set any day as a record date for the purpose of determining the holders that are entitledto take action under the debt indenture. In certain limited circumstances, only the trustee will be entitled to set a recorddate for action by holders. If we or the trustee set a record date for an approval or other action to be taken by holders,that vote or action may be taken only by persons or entities who are holders on the record date and must be taken

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Description of Debt Securities We May Offer

during the period that we specify for this purpose, or that the trustee specifies if it sets the record date. We or thetrustee, as applicable, may shorten or lengthen this period from time to time. This period, however, may not extendbeyond the 180th day after the record date for the action. In addition, record dates for any global debt security may beset in accordance with procedures established by the depositary from time to time. Accordingly, record dates for globaldebt securities may differ from those for other debt securities.

Form, Exchange and Transfer of Debt Securities

We will issue each debt security in global—i.e., book-entry—form only, unless we specify otherwise in the applicableprospectus supplement. Debt securities in book-entry form will be represented by a global security registered in thename of a depositary, which will be the holder of all the debt securities represented by the global security. Those whoown beneficial interests in a global debt security will do so through participants in the depositary’s securities clearancesystem, and the rights of these indirect owners will be governed solely by the applicable procedures of the depositaryand its participants. We describe book-entry securities below under “Legal Ownership and Book-Entry Issuance.”Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York,New York, known as DTC, will be the depositary for all debt securities in global form.

In addition, we will generally issue each debt security in registered form, without coupons, unless we specify otherwisein the applicable prospectus supplement. If we issue a debt security in bearer form, the applicable prospectussupplement will describe the provisions that would apply to that security.

If a debt security is issued as a global debt security, only the depositary—e.g., DTC, Euroclear and Clearstream—willbe entitled to transfer and exchange the debt security or exercise any other rights of a holder as described in thissubsection, since the depositary will be the sole holder of the debt security.

If any debt securities cease to be issued in global form, then unless we indicate otherwise in your prospectussupplement, they will be issued:

• only in fully registered form;

• without interest coupons; and

• unless we indicate otherwise in your prospectus supplement, in denominations of $1,000 and integralmultiples of $1,000.

Holders may exchange their debt securities for debt securities of smaller denominations (subject to the limit above) orcombined into fewer debt securities of larger denominations, as long as the total principal amount is not changed. Youmay not exchange your debt securities for securities of a different series or having different terms, unless yourprospectus supplement says you may.

Holders may exchange or transfer their debt securities at the office of the trustee. They may also replace lost, stolen,destroyed or mutilated debt securities at that office. We have appointed the trustee to act as our agent for registeringdebt securities in the names of holders and transferring and replacing debt securities. We may appoint another entity toperform these functions or perform them ourselves.

Holders will not be required to pay a service charge to transfer or exchange their debt securities, but they may berequired to pay for any tax or other governmental charge associated with the exchange or transfer. The transfer orexchange, and any replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legalownership. The transfer agent may require an indemnity before replacing any debt securities.

If we have designated additional transfer agents for your debt security, they will be named in your prospectussupplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. Wemay also approve a change in the office through which any transfer agent acts.

If the debt securities of any series are redeemable and we redeem less than all those debt securities, we may block thetransfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice ofredemption and ending on the day of that mailing or during any other period specified in the applicable prospectus

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Description of Debt Securities We May Offer

supplement, in order to freeze the list of holders who will receive the mailing. We may also refuse to register transfersof or exchange any debt security selected for redemption, except that we will continue to permit transfers andexchanges of the unredeemed portion of any debt security being partially redeemed.

The rules for exchange described above apply to exchanges of debt securities for other debt securities of the sameseries and kind. If a debt security is convertible, exercisable or exchangeable into or for a different kind of security,such as one that we have not issued, or for other property, the rules governing that type of conversion, exercise orexchange will be described in the applicable prospectus supplement.

Payment Mechanics for Debt Securities

Who Receives Payments?

If interest is due on a debt security on an interest payment date, we will pay the interest to the person in whose namethe debt security is registered at the close of business on the regular record date described below relating to the interestpayment date. If interest is due at maturity but on a day that is not an interest payment date, we will pay the interest tothe person entitled to receive the principal of the debt security. If principal or another amount besides interest is due ona debt security at maturity, we will pay the amount to the holder of the debt security against surrender of the debtsecurity at a proper place of payment (or, in the case of a global debt security, in accordance with the applicablepolicies of the depositary).

Payment Dates and Regular Record Dates for Interest

Unless we specify otherwise in the applicable prospectus supplement, interest on any fixed rate debt security will bepayable semiannually each May 15 and November 15 and at maturity, and the regular record date relating to an interestpayment date for any fixed rate debt security will be the May 1 or November 1 next preceding that interest paymentdate. The regular record date relating to an interest payment date for any floating rate debt security will be the 15thcalendar day before that interest payment date. These record dates will apply whether or not a particular record date is abusiness day. For the purpose of determining the holder at the close of business on a regular record date when businessis not being conducted, the close of business will mean 5:00 P.M., New York City time, on that day.

The term “business day” means, for any debt security, a day that meets all the following applicable requirements:

• for all debt securities, is a Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on whichbanking institutions in New York City generally are authorized or obligated by law, regulation or executiveorder to close and that satisfies any other criteria specified in your prospectus supplement;

• if the debt security is a floating rate debt security whose interest rate is based on LIBOR, is also a day onwhich dealings in the relevant index currency specified in the applicable prospectus supplement are transactedin the London interbank market;

• if the debt security has a specified currency other than U.S. dollars or euros, is also a day on which bankinginstitutions are not authorized or obligated by law, regulation or executive order to close in the principalfinancial center of the country issuing the specified currency;

➣ if the debt security either is a floating rate debt security whose interest rate is based on EURIBOR or has aspecified currency of euros, is also a day on which the Trans-European Automated Real-time Gross settlementExpress Transfer (TARGET) System, or any successor system, is open for business;

➣ if the debt security is held through Euroclear, is also not a day on which banking institutions in Brussels, Belgiumare generally authorized or obligated by law, regulation or executive order to close; and

➣ if the debt security is held through Clearstream, is also not a day on which banking institutions in Luxembourg aregenerally authorized or obligated by law, regulation or executive order to close.

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Description of Debt Securities We May Offer

How We Will Make Payments Due in U.S. Dollars

We will follow the practices described in this subsection when paying amounts due in U.S. dollars. Payments ofamounts due in other currencies will be made as described in the next subsection.

Payments on Global Debt Securities. We will make payments on a global debt security in accordance with theapplicable policies of the depositary as in effect from time to time. Under those policies, we will pay directly to thedepositary, or its nominee, and not to any indirect owners who own beneficial interests in the global debt security. Anindirect owner’s right to receive those payments will be governed by the rules and practices of the depositary and itsparticipants, as described under “Legal Ownership and Book-Entry Issuance—What Is a Global Security?”

Payments on Non-Global Debt Securities. We will make payments on a debt security in non-global, registeredform as follows. We will pay interest that is due on an interest payment date by check mailed on the interest paymentdate to the holder at his or her address shown on the trustee’s records as of the close of business on the regular recorddate. We will make all other payments by check at the paying agent described below, against surrender of the debtsecurity. All payments by check will be made in next-day funds—that is, in funds that become available on the dayafter the check is cashed.

Alternatively, if a non-global debt security has a face amount of at least $1,000,000 and the holder asks us to do so, wewill pay any amount that becomes due on the debt security by wire transfer of immediately available funds to anaccount at a bank in New York City, on the due date. To request wire payment, the holder must give the paying agentappropriate wire transfer instructions at least five business days before the requested wire payment is due. In the caseof any interest payment due on an interest payment date, the instructions must be given by the person who is the holderon the relevant regular record date. In the case of any other payment, payment will be made only after the debt securityis surrendered to the paying agent. Any wire instructions, once properly given, will remain in effect unless and untilnew instructions are given in the manner described above.

Book-entry and other indirect owners should consult their banks or brokers for information on how they will receivepayments on their debt securities.

How We Will Make Payments Due in Other Currencies

We will follow the practices described in this subsection when paying amounts that are due in a specified currencyother than U.S. dollars.

Payments on Global Debt Securities. We will make payments on a global debt security in accordance with theapplicable policies of the depositary as in effect from time to time. We understand that these policies, as currently ineffect at DTC, are as follows:

Unless otherwise indicated in your prospectus supplement, if you are an indirect owner of global debt securitiesdenominated in a specified currency other than U.S. dollars and if you have the right to elect to receive payments inthat other currency and you do make that election, you must notify the participant through which your interest in theglobal debt security is held of your election:

• on or before the applicable regular record date, in the case of a payment of interest, or

• on or before the 16th day prior to stated maturity, or any redemption or repayment date, in the case ofpayment of principal or any premium.

You may elect to receive all or only a portion of any interest, principal or premium payment in a specified currencyother than U.S. dollars.

Your participant must, in turn, notify DTC of your election on or before the third DTC business day after that regularrecord date, in the case of a payment of interest, and on or before the 12th DTC business day prior to stated maturity, oron the redemption or repayment date if your debt security is redeemed or repaid earlier, in the case of a payment ofprincipal or any premium.

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Description of Debt Securities We May Offer

DTC, in turn, will notify the paying agent of your election in accordance with DTC’s procedures.

If complete instructions are received by the participant and forwarded by the participant to DTC, and by DTC to thepaying agent, on or before the dates noted above, the paying agent, in accordance with DTC’s instructions, will makethe payments to you or your participant by wire transfer of immediately available funds to an account maintained byyou or your participant with a bank located in the country issuing the specified currency or in another jurisdictionacceptable to us and the paying agent.

If the foregoing steps are not properly completed, we expect DTC to inform the paying agent that payment is to bemade in U.S. dollars. In that case, we or our agent will convert the payment to U.S. dollars in the manner describedbelow under “—Conversion to U.S. Dollars.” We expect that we or our agent will then make the payment in U.S.dollars to DTC, and that DTC in turn will pass it along to its participants.

Book-entry and other indirect holders of a global debt security denominated in a currency other than U.S. dollarsshould consult their banks or brokers for information on how to request payment in the specified currency.

Payments on Non-Global Debt Securities. Except as described in the second to last paragraph under this heading,we will make payments on debt securities in non-global form in the applicable specified currency. We will make thesepayments by wire transfer of immediately available funds to any account that is maintained in the applicable specifiedcurrency at a bank designated by the holder and is acceptable to us and the trustee. To designate an account for wirepayment, the holder must give the paying agent appropriate wire instructions at least five business days before therequested wire payment is due. In the case of any interest payment due on an interest payment date, the instructionsmust be given by the person who is the holder on the regular record date. In the case of any other payment, the paymentwill be made only after the debt security is surrendered to the paying agent. Any instructions, once properly given, willremain in effect unless and until new instructions are properly given in the manner described above.

If a holder fails to give instructions as described above, we will notify the holder at the address in the trustee’s recordsand will make the payment within five business days after the holder provides appropriate instructions. Any latepayment made in these circumstances will be treated under the debt indenture as if made on the due date, and nointerest will accrue on the late payment from the due date to the date paid.

Although a payment on a debt security in non-global form may be due in a specified currency other than U.S. dollars,we will make the payment in U.S. dollars if the holder asks us to do so. To request U.S. dollar payment, the holdermust provide appropriate written notice to the trustee at least five business days before the next due date for whichpayment in U.S. dollars is requested. In the case of any interest payment due on an interest payment date, the requestmust be made by the person who is the holder on the regular record date. Any request, once properly made, will remainin effect unless and until revoked by notice properly given in the manner described above.

Indirect owners of a non-global debt security with a specified currency other than U.S. dollars should contact theirbanks or brokers for information about how to receive payments in the specified currency or in U.S. dollars.

Conversion to U.S. Dollars. When we are asked by a holder to make payments in U.S. dollars of an amount due inanother currency, either on a global debt security or a non-global debt security as described above, we will determinethe U.S. dollar amount the holder receives as follows. The exchange rate agent described below will request currencybid quotations expressed in U.S. dollars from three or, if three are not available, then two, recognized foreign exchangedealers in New York City, any of which may be the exchange rate agent, which may be UBS Securities LLC, anaffiliate of UBS, as of 11:00 A.M., New York City time, on the second business day before the payment date. Currencybid quotations will be requested on an aggregate basis, for all holders of debt securities requesting U.S. dollar paymentsof amounts due on the same date in the same specified currency. The U.S. dollar amount the holder receives will bebased on the highest acceptable currency bid quotation received by the exchange rate agent. If the exchange rate agentdetermines that at least two acceptable currency bid quotations are not available on that second business day, thepayment will be made in the specified currency.

To be acceptable, a quotation must be given as of 11:00 A.M., New York City time, on the second business day beforethe due date and the quoting dealer must commit to execute a contract at the quotation in the total amount due in that

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Description of Debt Securities We May Offer

currency on all series of debt securities. If some but not all of the relevant debt securities are LIBOR debt securities orEURIBOR debt securities, the second preceding business day will be determined for this purpose as if none of thosedebt securities were LIBOR debt securities or EURIBOR debt securities.

A holder that requests payment in U.S. dollars will bear all associated currency exchange costs, which will be deductedfrom the payment.

When the Specified Currency Is Not Available. If we are obligated to make any payment in a specified currencyother than U.S. dollars, and the specified currency or any successor currency is not available to us or cannot be paid toyou due to circumstances beyond our control—such as the imposition of exchange controls or a disruption in thecurrency markets—we will be entitled to satisfy our obligation to make the payment in that specified currency bymaking the payment in U.S. dollars, on the basis specified in the applicable prospectus supplement.

For a specified currency other than U.S. dollars, the exchange rate will be the noon buying rate for cable transfers ofthe specified currency in New York City as quoted by the Federal Reserve Bank of New York on the then-most recentday on which that bank has quoted that rate.

The foregoing will apply to any debt security, whether in global or non-global form, and to any payment, including apayment at maturity. Any payment made under the circumstances and in a manner described above will not result in adefault under any debt security or the debt indenture.

Exchange Rate Agent. If we issue a debt security in a specified currency other than U.S. dollars, we will appoint afinancial institution to act as the exchange rate agent and will name the institution initially appointed when the debtsecurity is originally issued in the applicable prospectus supplement. We may select UBS Securities LLC or another ofour affiliates to perform this role. We may change the exchange rate agent from time to time after the original issuedate of the debt security without your consent and without notifying you of the change.

All determinations made by the exchange rate agent will be at its sole discretion unless we state in your prospectussupplement that any determination is subject to our approval. In the absence of manifest error, those determinationswill be conclusive for all purposes and binding on you and us, without any liability on the part of the exchange rateagent.

Payment When Offices Are Closed

If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next daythat is a business day. Unless specified otherwise in the applicable prospectus supplement, payments postponed to thenext business day in this situation will be treated under the debt indenture as if they were made on the original due date.Postponement of this kind will not result in a default under any debt security or the debt indenture, and no interest willaccrue on the postponed amount from the original due date to the next day that is a business day. The term business dayhas a special meaning, which we describe above under “—Payment Dates and Regular Record Dates for Interest.”

Paying Agent

We may appoint one or more financial institutions to act as our paying agents, at whose designated offices debtsecurities in non-global entry form may be surrendered for payment at their maturity. We call each of those offices apaying agent. We may add, replace or terminate paying agents from time to time. We may also choose to act as ourown paying agent. Initially, we have appointed the trustee, at its corporate trust office in New York City, as the payingagent. We must notify the trustee of changes in the paying agents.

Settlement Mechanics

The settlement mechanics applicable to debt securities calling for physical settlement will be described in theapplicable prospectus supplement.

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Description of Debt Securities We May Offer

Unclaimed Payments

Regardless of who acts as paying agent, all money paid by us to a paying agent that remains unclaimed at the end oftwo years after the amount is due to a holder will be repaid to us. After that two-year period, the holder may look onlyto us for payment and not to the trustee, any other paying agent or anyone else.

Notices

Notices to be given to holders of a global debt security will be given only to the depositary, in accordance with itsapplicable policies as in effect from time to time. Notices to be given to holders of debt securities not in global formwill be sent by mail to the respective addresses of the holders as they appear in the trustee’s records, and will bedeemed given when mailed. Neither the failure to give any notice to a particular holder, nor any defect in a notice givento a particular holder, will affect the sufficiency of any notice given to another holder.

Book-entry and other indirect holders should consult their banks or brokers for information on how they will receivenotices.

Our Relationship with the Trustee

U.S. Bank Trust National Association has provided commercial banking and other services for us and our affiliates inthe past and may do so in the future. Among other things, U.S. Bank Trust National Association holds debt securitiesissued by us and serves as trustee or agent with regard to other obligations of UBS or its subsidiaries.

U.S. Bank Trust National Association is serving as the trustee for the debt securities and the warrants issued under ourwarrant indenture. Consequently, if an actual or potential event of default occurs with respect to any of these securities,the trustee may be considered to have a conflicting interest for purposes of the Trust Indenture Act of 1939. In thatcase, the trustee may be required to resign under one or more of the indentures, and we would be required to appoint asuccessor trustee. For this purpose, a “potential” event of default means an event that would be an event of default ifthe requirements for giving us default notice or for the default having to exist for a specific period of time weredisregarded.

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Description of Warrants We May OfferPlease note that in this section entitled “Description of Warrants We May Offer,” references to UBS AG, we, our andus refer only to UBS AG and not to its consolidated subsidiaries. In particular, the debt securities are obligationssolely of UBS AG, and not of any of its subsidiaries, including, without limitation, UBS Switzerland AG. Also, in thissection, references to “holders” mean those who own warrants registered in their own names, on the books that we orthe trustee or warrant agent, as applicable, maintain for this purpose, and not those who own beneficial interests inwarrants registered in street name or in warrants issued in book-entry form through one or more depositaries. Ownersof beneficial interests in the warrants should read the section below entitled “Legal Ownership and Book-EntryIssuance.”

We May Issue Many Series of Warrants

We may issue warrants that are debt warrants or universal warrants. We may offer warrants separately or together withother warrants or with our debt securities.

We may issue warrants in such amounts or in as many distinct series as we wish. We will issue each series of warrantsunder either a warrant indenture between UBS and U.S. Bank Trust National Association, or a warrant agreement, to beentered into before the first issuance of warrants under such warrant agreement, between UBS and a warrant agent tobe named in the prospectus supplement applicable to the first series of warrants to be issued pursuant to such a warrantagreement. This section summarizes terms of the warrant indenture and warrant agreements and terms of the warrantsthat apply generally to all series of warrants. Most of the financial and other specific terms of your warrant will bedescribed in the prospectus supplement accompanying this prospectus. Those terms may vary from the terms describedhere.

As you read this section, please remember that the specific terms of your warrant as described in your prospectussupplement will supplement and, if applicable, may modify or replace the general terms described in this section. Ifthere are differences between your prospectus supplement and this prospectus, your prospectus supplement willcontrol. Thus, the statements we make in this section may not apply to your warrant.

When we refer to a series of warrants, we mean all warrants issued as part of the same series under the warrantindenture or warrant agreement. When we refer to your prospectus supplement, we mean the prospectus supplementdescribing the specific terms of the warrant you purchase. The terms used in your prospectus supplement will have themeanings described in this prospectus, unless otherwise specified.

Types of Warrants

We may issue any of the following types of warrants:

Debt Warrants

We may issue warrants for the purchase of our debt securities on terms to be determined at the time of sale. We refer tothis type of warrant as a “debt warrant.”

Universal Warrants

We may also issue warrants, on terms to be determined at the time of sale, for the purchase or sale of, or whose cashvalue is determined by reference to the performance, level or value of, one or more of the following:

• securities of one or more issuers other than UBS AG;

• one or more currencies;

• one or more commodities;

• any other financial, economic or other measure or instrument, including the occurrence or non-occurrence ofany event or circumstance; and

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Description of Warrants We May Offer

• one or more indices or baskets of the items described above.

We refer to this type of warrant as a “universal warrant.” We refer to each property described above as a “warrantproperty.”

We may satisfy our obligations, if any, and the holder of a universal warrant may satisfy its obligations, if any, withrespect to any universal warrants by delivering:

• the warrant property;

• the cash value of the warrant property; or

• the cash value of the warrants determined by reference to the performance, level or value of the warrantproperty.

The applicable prospectus supplement will describe what we may deliver to satisfy our obligations, if any, and what theholder of a universal warrant may deliver to satisfy its obligations, if any, with respect to any universal warrants.

Information In Your Prospectus Supplement

All Warrants

Your prospectus supplement will describe the specific terms of your warrant, which will include some or all of thefollowing:

• the specific designation and aggregate number of, and the price at which we will issue, the warrants;

• the currency with which the warrants may be purchased;

• the warrant indenture or warrant agreement under which we will issue the warrants;

• the date on which the right to exercise the warrants will begin and the date on which that right will expire or,if you may not continuously exercise the warrants throughout that period, the specific date or dates on whichyou may exercise the warrants;

• whether the warrants will be issued in fully registered form or bearer form, in global or non-global form or inany combination of these forms;

• the identities of the warrant agent, any depositaries and any paying, transfer, calculation or other agents forthe warrants;

• any securities exchange or quotation system on which the warrants or any securities deliverable upon exerciseof the warrants may be listed;

• whether the warrants are to be sold separately or with other securities; and

• any other terms of the warrants.

If we issue warrants together with any other warrants or any debt securities, the applicable prospectus supplement willspecify whether the warrants will be separable from the other securities before the warrants’ expiration date.

No holder of a warrant will have any rights of a holder of the warrant property purchasable under the warrant.

An investment in a warrant may involve special risks, including risks associated with indexed securities and currency-related risks if the warrant or the warrant property is linked to an index or is payable in or otherwise linked to a non-U.S. dollar currency. We describe some of these risks below under “Considerations Relating to Indexed Securities” and“Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency.”

We and our affiliates may resell warrants in market-making transactions after their initial issuance. We discuss thesetransactions above under “Description of Debt Securities We May Offer—Information in Your ProspectusSupplement.”

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Description of Warrants We May Offer

Debt Warrants

If you purchase debt warrants, your prospectus supplement may contain, where applicable, the following additionalinformation about your warrants:

• the designation, aggregate principal amount, currency and terms of the debt securities that may be purchasedupon exercise of the debt warrants;

• the exercise price and whether the exercise price may be paid in cash, by the exchange of any debt warrants orother securities or both and the method of exercising the debt warrants; and

• the designation, terms and amount of debt securities, if any, to be issued together with each of the debtwarrants and the date, if any, after which the debt warrants and debt securities will be separately transferable.

Universal Warrants

If you purchase universal warrants, your prospectus supplement may contain, where applicable, the followingadditional information about your warrants:

• whether the universal warrants are put warrants or call warrants, including in either case warrants that may besettled by means of net cash settlement or cashless exercise, or any other type of warrants;

• the money or warrant property, and the amount or method for determining the amount of money or warrantproperty, payable or deliverable upon exercise of each universal warrant;

• the price at which and the currency with which the warrant property may be purchased or sold upon theexercise of each universal warrant, or the method of determining that price;

• whether the exercise price may be paid in cash, by the exchange of any universal warrants or other securitiesor both, and the method of exercising the universal warrants; and

• whether the exercise of the universal warrants is to be settled in cash or by delivery of the warrant property orboth and whether settlement will occur on a net basis or a gross basis.

This Section Is Only a Summary

The warrant indenture or warrant agreement and its associated documents, including your warrant, contain the fulllegal text of the matters described in this section and your prospectus supplement. We have filed a copy of the warrantindenture with the SEC as an exhibit to our registration statement. See “Where You Can Find More Information” abovefor information on how to obtain a copy of it. We will describe the warrant agreement under which we issue anywarrants in the applicable prospectus supplement, and we will file that agreement with the SEC as an exhibit to anamendment to the registration statement of which this prospectus is a part or as an exhibit to a Form 6-K andincorporated herein by reference. See “Where You Can Find More Information” above for information on how toobtain a copy of a warrant agreement when it is filed.

This section and your prospectus supplement summarize all the material terms of the warrant indenture or warrantagreement and your warrant. They do not, however, describe every aspect of the warrant indenture or warrantagreement and your warrant. For example, in this section and in your prospectus supplement, we use terms that havebeen given special meaning in the warrant indenture or warrant agreement, but we describe the meaning for only themore important of those terms.

The Warrant Indenture

We may issue universal warrants under the warrant indenture. Warrants of this kind will not be secured by anyproperty or assets of UBS or its subsidiaries. Thus, by owning a warrant issued under the warrant indenture, you holdone of our unsecured obligations.

The warrants issued under the warrant indenture will be contractual obligations of UBS and will rank equally with allof our other unsecured contractual obligations and unsecured and unsubordinated debt. The warrant indenture does notlimit our ability to incur additional contractual obligations or debt.

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Description of Warrants We May Offer

The warrant indenture is a contract between us and U.S. Bank Trust National Association, which acts as trustee. Thetrustee has two main roles:

• First, the trustee can enforce your rights against us if we default. There are limitations on the extent to whichthe trustee acts on your behalf, which we describe later under “—Default, Remedies and Waiver of Default.”

• Second, the trustee performs administrative duties for us, such as sending you payments and notices.

We May Issue Many Series of Warrants Under the Warrant Indenture

We may issue as many distinct series of warrants under the warrant indenture as we wish. This section summarizesterms of the warrants that apply generally to all series issued under the warrant indenture. The provisions of the warrantindenture allow us not only to issue warrants with terms different from those of warrants previously issued under thewarrant indenture, but also to “reopen” a previous issue of a series of warrants and issue additional warrants of thatseries.

Amounts That We May Issue

The warrant indenture does not limit the aggregate number of warrants that we may issue or the number of series or theaggregate amount of any particular series. We may issue warrants and other securities at any time without your consentand without notifying you.

The warrant indenture and the warrants do not limit our ability to incur other contractual obligations or indebtedness orto issue other securities. Also, the terms of the warrants do not impose financial or similar restrictions on us.

Expiration Date and Payment or Settlement Date

The term “expiration date” with respect to any warrant means the date on which the right to exercise the warrantexpires. The term “payment or settlement date” with respect to any warrant means the date when any money or warrantproperty with respect to that warrant becomes payable or deliverable upon exercise or redemption of that warrant inaccordance with its terms.

Governing Law

The warrant indenture is, and the warrants issued under it will be, governed by New York law.

Currency of Warrants

Amounts that become due and payable on your warrant will be payable in a currency, composite currency, basket ofcurrencies or currency unit or units specified in your prospectus supplement. We refer to this currency, compositecurrency, basket of currencies or currency unit or units as a “specified currency.” The specified currency for yourwarrant will be U.S. dollars, unless your prospectus supplement states otherwise. You will have to pay for your warrantby delivering the requisite amount of the specified currency to UBS Securities LLC, UBS Financial Services Inc. oranother firm that we name in your prospectus supplement, unless other arrangements have been made between you andus or you and that firm. We will make payments on your warrants in the specified currency, except as described belowin “—Payment Mechanics for Warrants.” See “Considerations Relating to Securities Denominated or Payable in orLinked to a Non-U.S. Dollar Currency” below for more information about risks of investing in warrants of this kind.

Redemption

We will not be entitled to redeem your warrant before its expiration date unless your prospectus supplement specifies aredemption commencement date.

If your prospectus supplement specifies a redemption commencement date, it will also specify one or more redemptionprices. It may also specify one or more redemption periods during which the redemption prices relating to a redemptionof warrants during those periods will apply.

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Description of Warrants We May Offer

If your prospectus supplement specifies a redemption commencement date, your warrant will be redeemable at ouroption at any time on or after that date or at a specified time or times. If we redeem your warrant, we will do so at thespecified redemption price. If different prices are specified for different redemption periods, the price we pay will bethe price that applies to the redemption period during which your warrant is redeemed.

If we exercise an option to redeem any warrant, we will give to the trustee and holders written notice of the redemptionprice of the warrant to be redeemed, not less than 10 days nor more than 60 days before the applicable redemption dateor within any other period before the applicable redemption date specified in the applicable prospectus supplement. Wewill give the notice in the manner described below in “—Notices.”

We or our affiliates may purchase warrants from investors who are willing to sell from time to time, either in the openmarket at prevailing prices or in private transactions at negotiated prices. Warrants that we or they purchase may, at ourdiscretion, be held, resold or cancelled.

Mergers and Similar Transactions

We are generally permitted to merge or consolidate with another corporation or other entity. We are also permitted tosell our assets substantially as an entirety to another corporation or other entity. With regard to any series of warrants,however, we may not take any of these actions unless all the following conditions are met:

• If the successor entity in the transaction is not UBS, the successor entity must be organized as a corporation,partnership or trust and must expressly assume our obligations under the warrants of that series and thewarrant indenture. The successor entity may be organized under the laws of any jurisdiction, whether inSwitzerland or elsewhere.

• Immediately after the transaction, no default under the warrants of that series has occurred and is continuing.For this purpose, “default under the warrants of that series” means an event of default with respect to thatseries or any event that would be an event of default with respect to that series if the requirements for givingus default notice and for our default having to continue for a specific period of time were disregarded. Wedescribe these matters below under “—Default, Remedies and Waiver of Default.”

If the conditions described above are satisfied with respect to the warrants of any series, we will not need to obtain theapproval of the holder of those warrants in order to merge or consolidate or to sell our assets. Also, these conditionswill apply only if we wish to merge or consolidate with another entity or sell our assets substantially as an entirety toanother entity. We will not need to satisfy these conditions if we enter into other types of transactions, including anytransaction in which we acquire the stock or assets of another entity, any transaction that involves a change of controlof UBS but in which we do not merge or consolidate and any transaction in which we sell less than substantially all ourassets. We will also not need to satisfy these conditions if UBS AG merges into or consolidates with, or conveys,transfers or leases its properties and assets substantially as an entirety to any affiliate of UBS AG that is the parent or awholly-owned subsidiary of the parent, provided that the parent shall expressly and irrevocably guarantee, by asupplemental indenture, the due and punctual payment of the principal of and any premium and interest on all thesecurities and the performance and observance of every covenant of the indenture to be performed and observed byUBS AG.

Also, if we merge, consolidate or sell our assets substantially as an entirety and the successor is a non-Swiss entity,neither we nor any successor would have any obligation to compensate you for any resulting adverse tax consequencesrelating to your warrants.

Default, Remedies and Waiver of Default

You will have special rights if an event of default with respect to your warrant occurs and is continuing, as described inthis subsection.

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Description of Warrants We May Offer

Events of Default. Unless your prospectus supplement says otherwise, when we refer to an event of default withrespect to any series of warrants issued under the warrant indenture, we mean that, upon satisfaction by the holder ofthe warrant of all conditions precedent to our relevant obligation or covenant to be satisfied by the holder, any of thefollowing occurs:

• We do not pay any money or deliver any warrant property with respect to that warrant on the payment orsettlement date in accordance with the terms of that warrant;

• We remain in breach of any covenant we make in the warrant indenture for the benefit of the holder of thatwarrant for 60 days after we receive a notice of default stating that we are in breach and requiring us toremedy the breach. The notice must be sent by the trustee or the holders of at least 10% in number of therelevant series of warrants;

• We file for bankruptcy or certain other bankruptcy, insolvency or reorganization events relating to UBSoccur; or

• If the applicable prospectus supplement states that any additional event of default applies to the series, thatevent of default occurs.

If we do not pay any money or deliver any warrant property when due with respect to a particular warrant of a series,as described in the first bullet point above, that failure to make a payment or delivery will not constitute an event ofdefault with respect to any other warrant of the same series or any other series.

Remedies If an Event of Default Occurs. If an event of default occurs with respect to any series of warrants issuedunder the warrant indenture, the trustee will have special duties. In that situation, the trustee will be obligated to usethose of its rights and powers under the warrant indenture, and to use the same degree of care and skill in doing so, thata prudent person would use in that situation in conducting his or her own affairs.

Except as described in the prior paragraph, the trustee is not required to take any action under the warrant indenture atthe request of any holders unless the holders offer the trustee reasonable protection from expenses and liability. This iscalled an indemnity. If the trustee is provided with an indemnity reasonably satisfactory to it, the holders of a majorityin number of all warrants of the relevant series may direct the time, method and place of conducting any lawsuit orother formal legal action seeking any remedy available to the trustee. These majority holders may also direct the trusteein performing any other action under the warrant indenture with respect to the warrants of that series.

Before you bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforceyour rights or protect your interests relating to any warrant issued under the warrant indenture, all of the followingmust occur:

• The holder of your warrant must give the trustee written notice that an event of default has occurred, and theevent of default must not have been cured or waived.

• The holders of not less than 25% in number of all warrants of your series must make a written request that thetrustee take action because of the default, and they or other holders must offer to the trustee indemnityreasonably satisfactory to the trustee against the cost and other liabilities of taking that action.

• The trustee must not have taken action for 60 days after the above steps have been taken.

• During those 60 days, the holders of a majority in number of the warrants of your series must not have giventhe trustee directions that are inconsistent with the written request of the holders of not less than 25% innumber of the warrants of your series.

You are, however, entitled at any time to bring a lawsuit for the payment of any money or delivery of any warrantproperty due on your warrant on or after its payment or settlement date.

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Description of Warrants We May Offer

Waiver of Default. The holders of not less than a majority in number of the warrants of any series may waive adefault for all warrants of that series. If this happens, the default will be treated as if it has not occurred. No one canwaive a default in payment of any money or delivery of any warrant property due on any warrant, however, without theapproval of the particular holder of that warrant.

We Will Give the Trustee Information About Defaults Annually. We will furnish to the trustee every year awritten statement of two of our officers certifying that to their knowledge we are in compliance with the warrantindenture and the warrants issued under it, or else specifying any default under the indenture.

Book-entry and other indirect owners should consult their banks or brokers for information on how to give notice ordirection to or make a request of the trustee. Book-entry and other indirect owners are described below under “LegalOwnership and Book-Entry Issuance.”

Modification and Waiver of Covenants

There are three types of changes we can make to the warrant indenture and the warrants of any series issued under thewarrant indenture.

Changes Requiring Each Holder’s Approval. First, there are changes that cannot be made without the approval ofeach holder of a warrant affected by the change. Here is a list of those types of changes:

• change the exercise price of the warrant;

• change the terms of any warrant with respect to the payment or settlement date of the warrant;

• reduce the amount of money payable or reduce the amount or change the kind of warrant property deliverableupon the exercise of the warrant or any premium payable upon redemption of the warrant;

• change the currency of any payment on a warrant;

• change the place of payment on a warrant;

• permit redemption of a warrant if not previously permitted;

• impair a holder’s right to exercise its warrant, or sue for payment of any money payable or delivery of anywarrant property deliverable with respect to its warrant on or after the payment or settlement date or, in thecase of redemption, the redemption date;

• if any warrant provides that the holder may require us to repurchase the warrant, impair the holder’s right torequire repurchase of the warrant;

• reduce the percentage in number of the warrants of any one or more affected series, taken separately ortogether, as applicable, the approval of whose holders is needed to change the indenture or those warrants;

• reduce the percentage in number of the warrants of any one or more affected series, taken separately ortogether, as applicable, the consent of whose holders is needed to waive our compliance with the indenture orto waive defaults; and

• change the provisions of the indenture dealing with modification and waiver in any other respect, except toincrease any required percentage referred to above or to add to the provisions that cannot be changed orwaived without approval of the holder of each affected warrant.

Changes Not Requiring Approval of Holders. The second type of change does not require any approval by holdersof the warrants of an affected series. These changes are limited to clarifications and changes that would not adverselyaffect the warrants of that series in any material respect. Nor do we need any approval to make changes that affect onlywarrants to be issued under the warrant indenture after the changes take effect.

We may also make changes or obtain waivers that do not adversely affect a particular warrant, even if they affect otherwarrants. In those cases, we do not need to obtain the approval of the holder of that warrant; we need only obtain anyrequired approvals from the holders of the affected warrants.

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Description of Warrants We May Offer

Changes Requiring Majority Approval. Any other change to the warrant indenture and the warrants issued underthe warrant indenture would require the following approval:

• If the change affects only the warrants of a particular series, it must be approved by the holders of a majorityin number of the warrants of that series.

• If the change affects the warrants of more than one series issued under the warrant indenture, it must beapproved by the holders of a majority in number of all series affected by the change, with the warrants of allthe affected series voting together as one class for this purpose.

In each case, the required approval must be given by written consent.

The same majority approval would be required for us to obtain a waiver of any of our covenants in the warrantindenture. If the holders approve a waiver of a covenant, we will not have to comply with that covenant. The holders,however, cannot approve a waiver of any provision in a particular warrant, or in the warrant indenture as it affects thatwarrant, that we cannot change without the approval of the holder of that warrant as described above in “—ChangesRequiring Each Holder’s Approval,” unless that holder approves the waiver.

Book-entry and other indirect owners should consult their banks or brokers for information on how approval may begranted or denied if we seek to change the warrant indenture or any warrants or request a waiver.

Special Rules for Action by Holders

When holders take any action under the warrant indenture, such as giving a notice of default, approving any change orwaiver or giving the trustee an instruction, we will apply the following rules.

Only Outstanding Warrants Are Eligible. Only holders of outstanding warrants of the applicable series will beeligible to participate in any action by holders of warrants of that series. Also, we will count only outstanding warrantsin determining whether the various percentage requirements for taking action have been met. For these purposes, awarrant will not be “outstanding”:

• if it has been surrendered for cancellation;

• if it has been called for redemption;

• if we have deposited or set aside, in trust for its holder, money or warrant property for its payment orsettlement; or

• if we or one of our affiliates, such as UBS Securities LLC or UBS Financial Services Inc., is the beneficialowner.

Determining Record Dates for Action by Holders. We will generally be entitled to set any day as a record date forthe purpose of determining the holders that are entitled to take action under the warrant indenture. In certain limitedcircumstances, only the trustee will be entitled to set a record date for action by holders. If we or the trustee set a recorddate for an approval or other action to be taken by holders, that vote or action may be taken only by persons or entitieswho are holders on the record date and must be taken during the period that we specify for this purpose, or that thetrustee specifies if it sets the record date. We or the trustee, as applicable, may shorten or lengthen this period fromtime to time. This period, however, may not extend beyond the 180th day after the record date for the action. Inaddition, record dates for any global warrant may be set in accordance with procedures established by the depositaryfrom time to time. Accordingly, record dates for global warrants may differ from those for other warrants.

Notices

Notices to be given to holders of a global warrant will be given only to the depositary, in accordance with its applicablepolicies as in effect from time to time. Notices to be given to holders of warrants not in global form will be sent bymail to the respective addresses of the holders as they appear in the trustee’s records, and will be deemed given whenmailed. Neither the failure to give any notice to a particular holder, nor any defect in a notice given to a particularholder, will affect the sufficiency of any notice given to another holder.

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Description of Warrants We May Offer

Book-entry and other indirect owners should consult their banks or brokers for information on how they will receivenotices.

The Warrant Agreements

We may issue debt warrants and some universal warrants in one or more series and under one or more warrantagreements, each to be entered into between us and a bank, trust company or other financial institution as warrantagent. We may add, replace or terminate warrant agents from time to time. We may also choose to act as our ownwarrant agent. We will describe the warrant agreement under which we issue any warrants in the applicable prospectussupplement, and we will file that agreement with the SEC as an exhibit to an amendment to the registration statementof which this prospectus is a part or as an exhibit to a Form 6-K and incorporated herein by reference. See “Where YouCan Find More Information” above for information on how to obtain a copy of a warrant agreement when it is filed.

We may also issue universal warrants under the warrant indenture. For these warrants, the applicable provisions of thewarrant indenture described above would apply instead of the provisions described in this section.

Enforcement of Rights

The warrant agent under a warrant agreement will act solely as our agent in connection with the warrants issued underthat agreement. The warrant agent will not assume any obligation or relationship of agency or trust for or with anyholders of those warrants. Any holder of warrants may, without the consent of any other person, enforce by appropriatelegal action, on its own behalf, its right to exercise those warrants in accordance with their terms. No holder of anywarrant will be entitled to any rights of a holder of the debt securities or any other warrant property purchasable uponexercise of the warrant, including any right to receive payments on those debt securities or other warrant property or toenforce any covenants or rights in the relevant indenture or any other agreement.

Warrant Agreement Will Not Be Qualified Under Trust Indenture Act

No warrant agreement will be qualified as an indenture, and no warrant agent will be required to qualify as a trustee,under the Trust Indenture Act. Therefore, holders of warrants issued under a warrant agreement will not have theprotection of the Trust Indenture Act with respect to their warrants.

Modification and Waiver of Covenants

There are three types of changes we can make to the warrants of any series and the related warrant agreement.

Changes Requiring Each Holder’s Approval. We may not amend any particular warrant or a warrant agreement withrespect to any particular warrant unless we obtain the consent of the holder of that warrant, if the amendment would:

• change the exercise price of the warrant;

• change the kind or reduce the amount of the warrant property or other consideration receivable upon exercise,cancellation or expiration of the warrant, except as permitted by the antidilution or other adjustmentprovisions of the warrant;

• shorten, advance or defer the period of time during which the holder may exercise the warrant or otherwiseimpair the holder’s right to exercise the warrant; or

• reduce the percentage of outstanding, unexpired warrants of any series or class the consent of whose holders isrequired to amend the series or class, or the applicable warrant agreement with regard to that series or class, asdescribed below.

Changes Not Requiring Approval of Holders. We and the applicable warrant agent may amend any warrant orwarrant agreement without the consent of any holder:

• to cure any ambiguity;

• to cure, correct or supplement any defective or inconsistent provision; or

• to make any other change that we believe is necessary or desirable and will not adversely affect the interestsof the affected holders in any material respect.

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Description of Warrants We May Offer

We do not need any approval to make changes that affect only warrants to be issued after the changes take effect. Wemay also make changes that do not adversely affect a particular warrant in any material respect, even if they adverselyaffect other warrants in a material respect. In those cases, we do not need to obtain the approval of the holder of theunaffected warrant; we need only obtain any required approvals from the holders of the affected warrants.

Changes Requiring Majority Approval. Any other change to a particular warrant agreement and the warrantsissued under that agreement would require the following approval:

• If the change affects only the warrants of a particular series issued under that agreement, the change must beapproved by the holders of a majority of the outstanding, unexpired warrants of that series.

• If the change affects the warrants of more than one series issued under that agreement, the change must beapproved by the holders of a majority of all outstanding, unexpired warrants of all series affected by thechange, with the warrants of all the affected series voting together as one class for this purpose.

In each case, the required approval must be given in writing.

Mergers and Similar Transactions Are Permitted; No Restrictive Covenants or Events of Default

The warrant agreements and any warrants issued under the warrant agreements will not restrict our ability to merge orconsolidate with, or sell our assets to, another corporation or other entity or to engage in any other transactions. If atany time we merge or consolidate with, or sell our assets substantially as an entirety to, another corporation or otherentity, the successor entity will succeed to and assume our obligations under the warrants and warrant agreements. Wewill then be relieved of any further obligation under the warrants and warrant agreements.

The warrant agreements and any warrants issued under the warrant agreements will not include any restrictions on ourability to put liens on our assets, including our interests in our subsidiaries, nor will they restrict our ability to sell ourassets. The warrant agreements and any warrants issued under the warrant agreements also will not provide for anyevents of default or remedies upon the occurrence of any events of default.

Governing Law

Each warrant agreement and any warrants issued under the warrant agreement will be governed by New York law.

Form, Exchange and Transfer of Warrants

We will issue each warrant in global—i.e., book-entry—form only, unless we say otherwise in the applicableprospectus supplement. Warrants in book-entry form will be represented by a global security registered in the name ofa depositary, which will be the holder of all the warrants represented by the global security. Those who own beneficialinterests in a global warrant will do so through participants in the depositary’s system, and the rights of these indirectowners will be governed solely by the applicable procedures of the depositary and its participants. We describe book-entry securities below under “Legal Ownership and Book-Entry Issuance.” Unless we specify otherwise in theapplicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be thedepositary for all warrants in global form.

If a warrant is issued as a registered global warrant, only the depositary—e.g., DTC, Euroclear and Clearstream—willbe entitled to transfer and exchange the warrant as described in this subsection, since the depositary will be the soleholder of the warrant.

In addition, we will issue each warrant in registered form, unless we say otherwise in the applicable prospectussupplement. If we issue a warrant in bearer form, the applicable prospectus supplement will describe the provisionsthat would apply to that security.

If any warrants cease to be issued in registered global form, then unless we indicate otherwise in your prospectussupplement, they will be issued:

• only in fully registered form; and

• in denominations of 100 warrants and any multiple of 100 warrants.

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Description of Warrants We May Offer

Holders may exchange their warrants for warrants of smaller denominations or combined into fewer warrants of largerdenominations, as long as the total number of warrants is not changed.

Holders of non-global warrants may exchange or transfer their warrants at the office of the trustee or warrant agent, asapplicable. They may also replace lost, stolen, destroyed or mutilated warrants at that office. We have appointed thetrustee or warrant agent, as applicable, to act as our agent for registering warrants in the names of holders andtransferring and replacing warrants. We may appoint another entity to perform these functions or perform themourselves.

Holders will not be required to pay a service charge to transfer or exchange their warrants, but they may be required topay for any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange, andany replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. Thetransfer agent may require an indemnity before replacing any warrants.

If we have the right to redeem, accelerate or settle any warrants before their expiration, and we exercise our right as toless than all those warrants, we may block the transfer or exchange of those warrants during the period beginning 15days before the day we mail the notice of exercise and ending on the day of that mailing or during any other periodspecified in the applicable prospectus supplement, in order to freeze the list of holders who will receive the mailing.We may also refuse to register transfers of or exchange any warrant selected for early settlement, except that we willcontinue to permit transfers and exchanges of the unsettled portion of any warrant being partially settled.

If we have designated additional transfer agents for your warrant, they will be named in your prospectus supplement.We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may alsoapprove a change in the office through which any transfer agent acts.

The rules for exchange described above apply to exchange of warrants for other warrants of the same series and kind. Ifa warrant is exercisable for a different kind of security, such as one that we have not issued, or for other property, therules governing that type of exercise will be described in the applicable prospectus supplement.

Payment Mechanics for Warrants

Who Receives Payment?

If money is due on a warrant at its payment or settlement date, we will pay the amount to the holder of the warrantagainst surrender of the warrant at a proper place of payment or, in the case of a global warrant, in accordance with theapplicable policies of the depositary.

How We Will Make Payments Due in U.S. Dollars

We will follow the practices described in this subsection when paying amounts due in U.S. dollars. Payments ofamounts due in other currencies will be made as described in the next subsection.

Payments on Global Warrants. We will make payments on a global warrant in accordance with the applicablepolicies of the depositary as in effect from time to time. Under those policies, we will pay directly to the depositary, orits nominee, and not to any indirect owners who own beneficial interests in the global warrant. An indirect owner’sright to receive those payments will be governed by the rules and practices of the depositary and its participants, asdescribed in the section entitled “Legal Ownership and Book-Entry Issuance—What Is a Global Security?”.

Payments on Non-Global Warrants. We will make payments on a warrant in non-global, registered form asfollows. We will make all payments by check at the paying agent described below, against surrender of the warrant. Allpayments by check will be made in next-day funds—that is, in funds that become available on the day after the checkis cashed.

Alternatively, if a non-global warrant has an original issue price of at least $1,000,000 and the holder asks us to do so,we will pay any amount that becomes due on the warrant by wire transfer of immediately available funds to an account

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at a bank in New York City, on the payment or settlement date. To request wire payment, the holder must give thepaying agent appropriate wire transfer instructions at least five business days before the requested wire payment is due.Payment will be made only after the warrant is surrendered to the paying agent.

Book-entry and other indirect owners should consult their banks or brokers for information on how they will receivepayments on their warrants.

How We Will Make Payments Due in Other Currencies

We will follow the practices described in this subsection when paying amounts that are due in a specified currencyother than U.S. dollars.

Payments on Global Warrants. We will make payments on a global warrant in accordance with the applicablepolicies of the depositary as in effect from time to time. We understand that these policies, as currently in effect atDTC, are as follows:

Unless otherwise indicated in your prospectus supplement, if you are an indirect owner of global warrants denominatedin a specified currency other than U.S. dollars and if you have the right to elect to receive payments in that othercurrency and do make that election, you must notify the participant through which your interest in the global warrant isheld of your election on or before the 16th day before the payment or settlement date. Your participant must, in turn,notify DTC of your election on or before the 12th DTC business day before the payment or settlement date.

DTC, in turn, will notify the paying agent of your election in accordance with DTC’s procedures.

If complete instructions are received by the participant and forwarded by the participant to DTC, and by DTC to thepaying agent, on or before the dates noted above, the paying agent, in accordance with DTC’s instructions, will makethe payment to you or your participant by wire transfer of immediately available funds to an account maintained by youor your participant with a bank located in the country issuing the specified currency or in another jurisdictionacceptable to us and the paying agent.

If the foregoing steps are not properly completed, we expect DTC to inform the paying agent that payment is to bemade in U.S. dollars. In that case, we or our agent will convert the payment to U.S. dollars in the manner describedbelow under “—Conversion to U.S. Dollars.” We expect that we or our agent will then make the payment in U.S.dollars to DTC, and that DTC in turn will pass it along to its participants.

Book-entry and other indirect owners of a global warrant denominated in a currency other than U.S. dollars shouldconsult their banks or brokers for information on how to request payment in the specified currency.

Payments on Non-Global Warrants. Except as described in the second to last paragraph under this heading, wewill make payments on warrants in non-global form in the applicable specified currency. We will make these paymentsby wire transfer of immediately available funds to any account that is maintained in the applicable specified currency ata bank designated by the holder and is acceptable to us and the trustee or warrant agent, as applicable. To designate anaccount for wire payment, the holder must give the paying agent appropriate wire instructions at least five businessdays before the requested wire payment is due. The payment will be made only after the warrant is surrendered to thepaying agent.

If a holder fails to give instructions as described above, we will notify the holder at the address in the records of thetrustee or warrant agent, as applicable, and will make the payment within five business days after the holder providesappropriate instructions. Any late payment made in these circumstances will be treated under the warrant indenture orwarrant agreement, as applicable, as if made on the payment or settlement date, and no interest will accrue on the latepayment from the payment or settlement date to the date paid.

Although a payment on a warrant in non-global form may be due in a specified currency other than U.S. dollars, wewill make the payment in U.S. dollars if the holder asks us to do so. To request U.S. dollar payment, the holder mustprovide appropriate written notice to the trustee or warrant agent, as applicable, at least five business days before thepayment or settlement date for which payment in U.S. dollars is requested.

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Description of Warrants We May Offer

Indirect owners of a non-global warrant with a specified currency other than U.S. dollars should contact their banks orbrokers for information about how to receive payments in the specified currency or in U.S. dollars.

Conversion to U.S. Dollars. When we are asked by a holder to make payments in U.S. dollars of an amount due inanother currency, either on a global warrant or a non-global warrant as described above, we will determine the U.S.dollar amount the holder receives as follows. The exchange rate agent described below will request currency bidquotations expressed in U.S. dollars from three or, if three are not available, then two, recognized foreign exchangedealers in New York City, any of which may be the exchange rate agent, an affiliate of UBS, as of 11:00 A.M., NewYork City time, on the second business day before the payment date. Currency bid quotations will be requested on anaggregate basis, for all holders of warrants requesting U.S. dollar payments of amounts due on the same date in thesame specified currency. The U.S. dollar amount the holder receives will be based on the highest acceptable currencybid quotation received by the exchange rate agent. If the exchange rate agent determines that at least two acceptablecurrency bid quotations are not available on that second business day, the payment will be made in the specifiedcurrency.

To be acceptable, a quotation must be given as of 11:00 A.M., New York City time, on the second business day beforethe due date and the quoting dealer must commit to execute a contract at the quotation in the total amount due in thatcurrency on all series of warrants. If some but not all of the relevant warrants are LIBOR warrants or EURIBORwarrants, the second preceding business day will be determined for this purpose as if none of those warrants wereLIBOR warrants or EURIBOR warrants.

A holder that requests payment in U.S. dollars will bear all associated currency exchange costs, which will be deductedfrom the payment.

When the Specified Currency Is Not Available. If we are obligated to make any payment in a specified currencyother than U.S. dollars, and the specified currency or any successor currency is not available to us due to circumstancesbeyond our control—such as the imposition of exchange controls or a disruption in the currency markets—we will beentitled to satisfy our obligation to make the payment in that specified currency by making the payment in U.S. dollars,on the basis specified in the applicable prospectus supplement.

For a specified currency other than U.S. dollars, the exchange rate will be the noon buying rate for cable transfers ofthe specified currency in New York City as quoted by the Federal Reserve Bank of New York on the then-most recentday on which that bank has quoted that rate.

The foregoing will apply to any warrant, whether in global or non-global form, and to any payment, including apayment at the payment or settlement date. Any payment made under the circumstances and in a manner describedabove will not result in a default under any warrant or the indenture.

Exchange Rate Agent. If we issue a warrant in a specified currency other than U.S. dollars, we will appoint afinancial institution to act as the exchange rate agent and will name the institution initially appointed when the warrantis originally issued in the applicable prospectus supplement. We may select UBS Securities LLC or another of ouraffiliates to perform this role. We may change the exchange rate agent from time to time after the original issue date ofthe warrant without your consent and without notifying you of the change.

All determinations made by the exchange rate agent will be in its sole discretion unless we state in the applicableprospectus supplement that any determination requires our approval. In the absence of manifest error, thosedeterminations will be conclusive for all purposes and binding on you and us, without any liability on the part of theexchange rate agent.

Payment When Offices Are Closed

If any payment or delivery of warrant property is due on a warrant on a day that is not a business day, we will make thepayment or delivery on the next day that is a business day. Unless otherwise specified in the applicable prospectussupplement, payments or deliveries postponed to the next business day in this situation will be treated under the

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indenture as if they were made on the original payment or settlement date. Postponement of this kind will not result ina default under any warrant or the indenture, and no interest will accrue on the postponed amount from the originalpayment or settlement date to the next day that is a business day.

The term “business day” means, for any warrant, a day that meets all the following applicable requirements:

• for all warrants, is a Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which bankinginstitutions in New York City generally are authorized or obligated by law, regulation or executive order toclose and that satisfies any other criteria specified in your prospectus supplement;

• if the warrant has a specified currency other than U.S. dollars or euros, is also a day on which bankinginstitutions are not authorized or obligated by law, regulation or executive order to close in the principalfinancial center of the country issuing the specified currency;

• if the warrant is held through Euroclear, is also not a day on which banking institutions in Brussels, Belgiumare generally authorized or obligated by law, regulation or executive order to close; and

• if the warrant is held through Clearstream, is also not a day on which banking institutions in Luxembourg aregenerally authorized or obligated by law, regulation or executive order to close.

Paying Agent

We may appoint one or more financial institutions to act as our paying agents, at whose designated offices warrants innon-global form may be surrendered for payment at their payment or settlement date. We call each of those offices apaying agent. We may add, replace or terminate paying agents from time to time. We may also choose to act as ourown paying agent. Initially, we have appointed the trustee, at its corporate trust office in New York City, as the payingagent for warrants issued under the warrant indenture. We must notify the trustee of changes in the paying agents forwarrants issued under the warrant indenture.

Unclaimed Payments

Regardless of who acts as paying agent, all money paid or warrant property delivered by us to a paying agent thatremains unclaimed at the end of two years after the amount is due to a holder will be repaid or redelivered to us. Afterthat two-year period, the holder may look only to us for payment of any money or delivery of any warrant property,and not to the trustee or warrant agent, as applicable, any other paying agent or anyone else.

Payment of Additional Amounts

A relevant jurisdiction may require UBS to withhold amounts from payments on a warrant for taxes or any othergovernmental charges. If the relevant jurisdiction requires a withholding of this type, UBS may be required to pay youan additional amount so that the net amount you receive will be the amount specified in the warrant to which you areentitled.

By relevant jurisdiction, we mean Switzerland or a jurisdiction in which the UBS branch through which warrants areissued is located. UBS will not have to pay additional amounts in respect of taxes or other governmental charges thatare required to be deducted or withheld by any paying agent from a payment on a warrant, if such payment can bemade without such deduction or withholding by any other paying agent, or in respect of taxes or other governmentalcharges that would not have been imposed but for

• the existence of any present or former connection between you and the relevant jurisdiction, other than themere holding of the warrant and the receipt of payments on it;

• your status as an individual resident of a member state of the European Union;

• a failure to comply with any reasonable certification, documentation, information or other reportingrequirement concerning your nationality, residence, identity or connection with the relevant jurisdiction, if

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such compliance is required as a precondition to relief or exemption from such taxes or other governmentalcharges (including, without limitation, a certification that you are not resident in the relevant jurisdiction orare not an individual resident of a member state of the European Union); or

• a change in law that becomes effective more than 30 days after a payment on the warrant becomes due andpayable or on which the payment is duly provided for, whichever occurs later.

In addition, no additional amounts will be required to be paid on account of any deduction or withholding imposed orrequired pursuant to Sections 1471 through 1474 of the Internal Revenue Code, any current or future regulations orofficial interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Internal Revenue Code,or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement enteredinto in connection with the implementation of such Sections of the Internal Revenue Code.

These provisions will also apply to any taxes or governmental charges imposed by any jurisdiction in which asuccessor to UBS is organized. The prospectus supplement relating to the warrant may describe additionalcircumstances in which UBS would not be required to pay additional amounts.

Calculation Agent

Calculations relating to warrants will be made by the calculation agent, an institution that we appoint as our agent forthis purpose. That institution may include any affiliate of ours, such as UBS Securities LLC. The prospectussupplement for a particular warrant will name the institution that we have appointed to act as the calculation agent forthat warrant as of its original issue date. We may appoint a different institution to serve as calculation agent from timeto time after the original issue date of the warrant without your consent and without notifying you of the change.

The calculation agent’s determination of any amount of money payable or warrant property deliverable with respect toa warrant will be final and binding in the absence of manifest error.

All percentages resulting from any calculation relating to a warrant will be rounded upward or downward, asappropriate, to the next higher or lower one hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541)being rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being rounded up to 9.87655% (or.0987655). All amounts used in or resulting from any calculation relating to a warrant will be rounded upward ordownward, as appropriate, to the nearest cent, in the case of U.S. dollars, or to the nearest corresponding hundredth of aunit, in the case of a currency other than U.S. dollars, with one-half cent or one-half of a corresponding hundredth of aunit or more being rounded upward.

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Legal Ownership and Book-Entry IssuanceIn this section, we describe special considerations that will apply to registered securities issued in global—i.e., book-entry—form. First we describe the difference between legal ownership and indirect ownership of registered securities.Then we describe special provisions that apply to global securities.

Who is The Legal Owner of a Registered Security?

Each debt security or warrant in registered form will be represented either by a certificate issued in definitive form to aparticular investor or by one or more global securities representing the entire issuance of securities. We refer to thosewho have securities registered in their own names, on the books that we or the trustee, warrant agent or other agentmaintain for this purpose, as the “holders” of those securities. These persons are the legal holders of the securities. Werefer to those who, indirectly through others, own beneficial interests in securities that are not registered in their ownnames as indirect owners of those securities. As we discuss below, indirect owners are not legal holders, and investorsin securities issued in book-entry form or in street name will be indirect owners.

Book-Entry Owners

We will issue each security in book-entry form only. This means securities will be represented by one or more globalsecurities registered in the name of a financial institution that holds them as depositary on behalf of other financialinstitutions that participate in the depositary’s book-entry system. These participating institutions, in turn, holdbeneficial interests in the securities on behalf of themselves or their customers.

Under each indenture or warrant agreement, only the person in whose name a security is registered is recognized as theholder of that security. Consequently, for securities issued in global form, we will recognize only the depositary as theholder of the securities and we will make all payments on the securities, including deliveries of any property other thancash, to the depositary. The depositary passes along the payments it receives to its participants, which in turn pass thepayments along to their customers who are the beneficial owners. The depositary and its participants do so underagreements they have made with one another or with their customers; they are not obligated to do so under the terms ofthe securities.

As a result, investors will not own securities directly. Instead, they will own beneficial interests in a global security,through a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds aninterest through a participant. As long as the securities are issued in global form, investors will be indirect owners, andnot holders, of the securities.

Street Name Owners

In the future we may terminate a global security or issue securities initially in non-global form. In these cases, investorsmay choose to hold their securities in their own names or in street name. Securities held by an investor in street namewould be registered in the name of a bank, broker or other financial institution that the investor chooses, and theinvestor would hold only a beneficial interest in those securities through an account he or she maintains at thatinstitution.

For securities held in street name, we will recognize only the intermediary banks, brokers and other financialinstitutions in whose names the securities are registered as the holders of those securities and we will make allpayments on those securities, including deliveries of any property other than cash, to them. These institutions passalong the payments they receive to their customers who are the beneficial owners, but only because they agree to do soin their customer agreements or because they are legally required to do so. Investors who hold securities in street namewill be indirect owners, not holders, of those securities.

Legal Holders

Our obligations, as well as the obligations of the trustee and the obligations, if any, of any warrant agents and any otherthird parties employed by us, the trustee or any of those agents, run only to the holders of the securities. We do not

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have obligations to investors who hold indirect interests in global securities, in street name or by any other indirectmeans. This will be the case whether an investor chooses to be an indirect owner of a security or has no choice becausewe are issuing the securities only in global form.

For example, once we make a payment or give a notice to the holder, we have no further responsibility for thatpayment or notice even if that holder is required, under agreements with depositary participants or customers or by law,to pass it along to the indirect owners but does not do so. Similarly, if we want to obtain the approval of the holders forany purpose—for example, to amend the indenture for a series of debt securities or warrants or the warrant agreementfor a series of warrants or to relieve us of the consequences of a default or of our obligation to comply with a particularprovision of the indenture—we would seek the approval only from the holders, and not the indirect owners, of therelevant securities. Whether and how the holders contact the indirect owners is up to the holders.

When we refer to “you” in this prospectus, we mean those who invest in the securities being offered by this prospectus,whether they are the holders or only indirect owners of those securities. When we refer to “your securities” in thisprospectus, we mean the securities in which you will hold a direct or indirect interest.

Special Considerations for Indirect Owners

If you hold securities through a bank, broker or other financial institution, either in book-entry form or in street name,you should check with your own institution to find out:

• how it handles securities payments and notices;

• whether it imposes fees or charges;

• whether and how you can instruct it to exercise any rights to purchase or sell warrant property under awarrant or to exchange or convert a security for or into other property;

• how it would handle a request for the holders’ consent, if ever required;

• whether and how you can instruct it to send you securities registered in your own name so you can be aholder, if that is permitted in the future;

• how it would exercise rights under the securities if there were a default or other event triggering the need forholders to act to protect their interests; and

• if the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.

What Is a Global Security?

We will issue each security in book-entry form only. Each security issued in book-entry form will be represented by aglobal security that we deposit with and register in the name of one or more financial institutions or clearing systems,or their nominees, which we select. A financial institution or clearing system that we select for any security for thispurpose is called the “depositary” for that security. A security will usually have only one depositary but it may havemore.

Each series of securities will have one or more of the following as the depositaries:

• The Depository Trust Company, New York, New York, which is known as “DTC”;

• a financial institution holding the securities on behalf of Morgan Guaranty Trust Company of New York,acting out of its Brussels, Belgium, office, as operator of the Euroclear system, which is known as“Euroclear”;

• a financial institution holding the securities on behalf of Clearstream Banking, société anonyme, which isknown as “Clearstream”; and

• any other clearing system or financial institution named in the applicable prospectus supplement. Thedepositaries named above may also be participants in one another’s systems. Thus, for example, if DTC is thedepositary for a global security, investors may hold beneficial interests in that security through Euroclear orClearstream, as DTC participants.

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The depositary or depositaries for your securities will be named in your prospectus supplement; if none is named, thedepositary will be DTC.

A global security may represent one or any other number of individual securities. Generally, all securities representedby the same global security will have the same terms. We may, however, issue a global security that representsmultiple securities of the same kind, such as debt securities, that have different terms and are issued at different times.We call this kind of global security a master global security. Your prospectus supplement will not indicate whetheryour securities are represented by a master global security.

A global security may not be transferred to or registered in the name of anyone other than the depositary or itsnominee, unless special termination situations arise. We describe those situations below under “—Holder’s Option toObtain a Non-Global Security; Special Situations When a Global Security Will Be Terminated.” As a result of thesearrangements, the depositary, or its nominee, will be the sole registered owner and holder of all securities representedby a global security, and investors will be permitted to own only indirect interests in a global security. Indirect interestsmust be held by means of an account with a broker, bank or other financial institution that in turn has an account withthe depositary or with another institution that does. Thus, an investor whose security is represented by a global securitywill not be a holder of the security, but only an indirect owner of an interest in the global security.

If the prospectus supplement for a particular security indicates that the security will be issued in global form only, thenthe security will be represented by a global security at all times unless and until the global security is terminated. Wedescribe the situations in which this can occur below under “—Holder’s Option to Obtain a Non-Global Security;Special Situations When a Global Security Will Be Terminated.” If termination occurs, we may issue the securitiesthrough another book-entry clearing system or decide that the securities may no longer be held through any book-entryclearing system.

Special Considerations for Global Securities

As an indirect owner, an investor’s rights relating to a global security will be governed by the account rules of thedepositary and those of the investor’s financial institution or other intermediary through which it holds its interest (suchas Euroclear or Clearstream, if DTC is the depositary), as well as general laws relating to securities transfers. We donot recognize this type of investor or any intermediary as a holder of securities and instead deal only with thedepositary that holds the global security.

If securities are issued only in the form of a global security, an investor should be aware of the following:

• An investor cannot require the securities to be registered in his or her own name, and cannot obtain non-global certificates for his or her interest in the securities, except in the special situations we describe below.

• An investor will be an indirect holder and must look to his or her own bank or broker for payments on thesecurities and protection of his or her legal rights relating to the securities, as we describe above under“—Who Is the Legal Owner of a Registered Security?”

• An investor may not be able to sell interests in the securities to some insurance companies and otherinstitutions that are required by law to own their securities in non-book-entry form.

• An investor may not be able to pledge his or her interest in a global security in circumstances wherecertificates representing the securities must be delivered to the lender or other beneficiary of the pledge inorder for the pledge to be effective.

• The depositary’s policies will govern payments, deliveries, transfers, exchanges, notices and other mattersrelating to an investor’s interest in a global security, and those policies may change from time to time. We,the trustee and any warrant agents will have no responsibility for any aspect of the depositary’s policies,actions or records of ownership interests in a global security. We, the trustee and any warrant agents also donot supervise the depositary in any way.

• The depositary will require that those who purchase and sell interests in a global security within its book-entry system use immediately available funds and your broker or bank may require you to do so as well.

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• Financial institutions that participate in the depositary’s book-entry system and through which an investorholds its interest in the global securities, directly or indirectly, may also have their own policies affectingpayments, deliveries, transfers, exchanges, notices and other matters relating to the securities, and thosepolicies may change from time to time. For example, if you hold an interest in a global security throughEuroclear or Clearstream, when DTC is the depositary, Euroclear or Clearstream, as applicable, will requirethose who purchase and sell interests in that security through them to use immediately available funds andcomply with other policies and procedures, including deadlines for giving instructions as to transactions thatare to be effected on a particular day. There may be more than one financial intermediary in the chain ofownership for an investor. We do not monitor and are not responsible for the policies or actions or records ofownership interests of any of those intermediaries.

Holder’s Option to Obtain a Non-Global Security; Special Situations When a Global Security Will Be

Terminated

If we issue any series of securities in book-entry form but we choose to give the beneficial owners of that series theright to obtain non-global securities, any beneficial owner entitled to obtain non-global securities may do so byfollowing the applicable procedures of the depositary, any transfer agent or registrar for that series and that owner’sbank, broker or other financial institution through which that owner holds its beneficial interest in the securities. If youare entitled to request a non-global certificate and wish to do so, you will need to allow sufficient lead time to enable usor our agent to prepare the requested certificate.

In addition, in a few special situations described below, a global security will be terminated and interests in it will beexchanged for certificates in non-global form representing the securities it represented. After that exchange, the choiceof whether to hold the securities directly or in street name will be up to the investor. Investors must consult their ownbanks or brokers to find out how to have their interests in a global security transferred on termination to their ownnames, so that they will be holders. We have described the rights of holders and street name investors above under“—Who Is the Legal Owner of a Registered Security?”

The special situations for termination of a global security are as follows:

• if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for thatglobal security and we do not appoint another institution to act as depositary within 60 days; or

• in the case of a global security representing debt securities or warrants issued under an indenture, if an eventof default has occurred with regard to these debt securities or warrants and has not been cured or waived.

If a global security is terminated, only the depositary, and not we, the trustee for any debt securities or warrants or thewarrant agent for any warrants, is responsible for deciding the names of the institutions in whose names the securitiesrepresented by the global security will be registered and, therefore, who will be the holders of those securities.

Considerations Relating to Euroclear and Clearstream

Euroclear and Clearstream are securities clearance systems in Europe. Both systems clear and settle securitiestransactions between their participants through electronic, book-entry delivery of securities against payment.

Euroclear and Clearstream may be depositaries for a global security. In addition, if DTC is the depositary for a globalsecurity, Euroclear and Clearstream may hold interests in the global security as participants in DTC.

As long as any global security is held by Euroclear or Clearstream as depositary, you may hold an interest in the globalsecurity only through an organization that participates, directly or indirectly, in Euroclear or Clearstream. If Euroclearor Clearstream is the depositary for a global security and there is no depositary in the United States, you will not beable to hold interests in that global security through any securities clearance system in the United States.

Payments, deliveries, transfers, exchanges, notices and other matters relating to the securities made through Euroclearor Clearstream must comply with the rules and procedures of those systems. Those systems could change their rules

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and procedures at any time. We have no control over those systems or their participants and we take no responsibilityfor their activities. Transactions between participants in Euroclear or Clearstream, on one hand, and participants inDTC, on the other hand, when DTC is the depositary, would also be subject to DTC’s rules and procedures.

Special Timing Considerations for Transactions in Euroclear and Clearstream

Investors will be able to make and receive through Euroclear and Clearstream payments, deliveries, transfers,exchanges, notices and other transactions involving any securities held through those systems only on days when thosesystems are open for business. Those systems may not be open for business on days when banks, brokers and otherinstitutions are open for business in the United States.

In addition, because of time-zone differences, U.S. investors who hold their interests in the securities through thesesystems and wish to transfer their interests, or to receive or make a payment or delivery or exercise any other right withrespect to their interests, on a particular day may find that the transaction will not be effected until the next businessday in Luxembourg or Brussels, as applicable. Thus, investors who wish to exercise rights that expire on a particularday may need to act before the expiration date. In addition, investors who hold their interests through both DTC andEuroclear or Clearstream may need to make special arrangements to finance any purchases or sales of their interestsbetween the U.S. and European clearing systems, and those transactions may settle later than would be the case fortransactions within one clearing system.

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Considerations Relating to Indexed SecuritiesWe use the term “indexed securities” to mean debt securities and warrants whose value is linked to an underlyingproperty or index, including equity, commodity and credit indexed securities and equity, commodity, currency andcredit linked securities. Indexed securities may present a high level of risk, and those who invest in some indexedsecurities may lose their entire investment. In addition, the treatment of indexed securities for U.S. federal income taxpurposes is often unclear due to the absence of any authority specifically addressing the issues presented by anyparticular indexed security. Thus, if you propose to invest in indexed securities, you should independently evaluate thefederal income tax consequences of purchasing an indexed security that apply in your particular circumstances. Youshould also read “U.S. Tax Considerations” for a discussion of U.S. tax matters.

Investors in Indexed Securities Could Lose Their Investment

The amount of principal and/or interest payable on an indexed debt security and the cash value or physical settlementvalue of a physically settled debt security and the cash value or physical settlement value of an indexed warrant will bedetermined by reference to the price, value or level of one or more securities, currencies, commodities or otherproperties, any other financial, economic or other measure or instrument, including the occurrence or non-occurrenceof any event or circumstance, and/or one or more indices or baskets of any of these items. We refer to each of these asan “index.” The direction and magnitude of the change in the price, value or level of the relevant index will determinethe amount of principal and/or interest payable on an indexed debt security and the cash value or physical settlementvalue of a physically settled debt security and the cash value or physical settlement value of an indexed warrant. Theterms of a particular indexed debt security may or may not include a promised return of a percentage of the faceamount at maturity or a minimum interest rate. An indexed warrant generally will not provide for any guaranteedminimum settlement value. Thus, if you purchase an indexed security, you may lose all or a portion of the principal orother amount you invest and may receive no interest on your investment.

The Issuer of a Security or Currency That Serves as an Index Could Take Actions That May

Adversely Affect an Indexed Security

The issuer of a security that serves as an index or part of an index for an indexed security will have no involvement inthe offer and sale of the indexed security and no obligations to the holder of the indexed security. The issuer may takeactions, such as a merger or sale of assets, without regard to the interests of the holder. Any of these actions couldadversely affect the value of a security indexed to that security or to an index of which that security is a component.

If the index for an indexed security includes a non-U.S. dollar currency or other asset denominated in a non-U.S. dollarcurrency, the government that issues that currency will also have no involvement in the offer and sale of the indexedsecurity and no obligations to the holder of the indexed security. That government may take actions that couldadversely affect the value of the security. See “Considerations Relating to Securities Denominated or Payable in orLinked to a Non-U.S. Dollar Currency—Government Policy Can Adversely Affect Currency Exchange Rates and anInvestment in a Non-U.S. Dollar Security” below for more information about these kinds of government actions.

An Indexed Security May Be Linked to a Volatile Index, Which Could Hurt Your Investment

Some indices are highly volatile, which means that their value may change significantly, up or down, over a shortperiod of time. The amount of principal or interest that can be expected to become payable on an indexed debt securityor the expected settlement value of an indexed warrant may vary substantially from time to time. Because the amountspayable with respect to an indexed security are generally calculated based on the value or level of the relevant index ona specified date or over a limited period of time, volatility in the index increases the risk that the return on the indexedsecurity may be adversely affected by a fluctuation in the level of the relevant index.

The volatility of an index may be affected by political or economic events, including governmental actions, or by theactivities of participants in the relevant markets. Any of these events or activities could adversely affect the value of anindexed security.

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Considerations Relating to Indexed Securities

An Index to Which a Security is Linked Could Be Changed or Become Unavailable

Some indices compiled by us or our affiliates or third parties may consist of or refer to several or many differentsecurities, commodities or currencies or other instruments or measures. The compiler of such an index typicallyreserves the right to alter the composition of the index and the manner in which the value or level of the index iscalculated. An alteration may result in a decrease in the value of or return on an indexed security that is linked to theindex. The indices for our indexed securities may include published indices of this kind or customized indicesdeveloped by us or our affiliates in connection with particular issues of indexed securities.

A published index may become unavailable, or a customized index may become impossible to calculate in the normalmanner, due to events such as war, natural disasters, cessation of publication of the index or a suspension or disruptionof trading in one or more securities, commodities or currencies or other instruments or measures on which the index isbased. If an index becomes unavailable or impossible to calculate in the normal manner, the terms of a particularindexed security may allow us to delay determining the amount payable as principal or interest on a debt security or thesettlement value of an indexed warrant, or we may use an alternative method to determine the value of the unavailableindex. Alternative methods of valuation are generally intended to produce a value similar to the value resulting fromreference to the relevant index. It is unlikely, however, that any alternative method of valuation we use will produce avalue identical to the value that the actual index would produce. If we use an alternative method of valuation for asecurity linked to an index of this kind, the value of the security, or the rate of return on it, may be lower than itotherwise would be.

Some indexed securities are linked to indices that are not commonly used or that have been developed only recently.The lack of a trading history may make it difficult to anticipate the volatility or other risks associated with an indexedsecurity of this kind. In addition, trading in these indices or their underlying stocks, commodities or currencies or otherinstruments or measures, or options or futures contracts on these stocks, commodities or currencies or otherinstruments or measures, may be limited, which could increase their volatility and decrease the value of the relatedindexed securities or their rates of return.

We May Engage in Hedging Activities That Could Adversely Affect an Indexed Security

In order to hedge an exposure on a particular indexed security, we may, directly or through our affiliates, enter intotransactions involving the securities, commodities or currencies or other instruments or measures that underlie theindex for that security, or involving derivative instruments, such as swaps, options or futures, on the index or any of itscomponent items. By engaging in transactions of this kind, we could adversely affect the value of an indexed security.It is possible that we could achieve substantial returns from our hedging transactions while the value of the indexedsecurity may decline.

Information About Indices May Not Be Indicative of Future Performance

If we issue an indexed security, we may include historical information about the relevant index in the applicableprospectus supplement. Any information about indices that we may provide will be furnished as a matter ofinformation only, and you should not regard the information as indicative of the range of, or trends in, fluctuations inthe relevant index that may occur in the future.

We May Have Conflicts of Interest Regarding an Indexed Security

UBS Securities LLC, UBS Financial Services Inc. and our other affiliates may have conflicts of interest with respect tosome indexed securities. UBS Securities LLC, UBS Financial Services Inc. and our other affiliates may engage intrading, including trading for hedging purposes, for their own accounts or for other accounts under their management,in indexed securities and in the securities, commodities or currencies or other instruments or measures on which theindex is based or in other derivative instruments related to the index or its component items. These trading activitiescould adversely affect the value of indexed securities. We and our affiliates may also issue or underwrite securities orderivative instruments that are linked to the same index as one or more indexed securities. By introducing competingproducts into the marketplace in this manner, we could adversely affect the value of an indexed security.

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Considerations Relating to Indexed Securities

UBS Securities LLC, UBS Financial Services Inc. or another of our affiliates may serve as calculation agent for theindexed securities and may have considerable discretion in calculating the amounts payable in respect of the securities.To the extent that UBS Securities LLC, UBS Financial Services Inc. or another of our affiliates calculates or compilesa particular index, it may also have considerable discretion in performing the calculation or compilation of the index.Exercising discretion in this manner could adversely affect the value of an indexed security based on the index or therate of return on the security.

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Considerations Relating to Securities Denominated or Payable in orLinked to a Non-U.S. Dollar CurrencyIf you intend to invest in a non-U.S. dollar security—e.g., a security whose principal and/or interest is payable in acurrency other than U.S. dollars or that may be settled by delivery of or reference to a non-U.S. dollar currency orproperty denominated in or otherwise linked to a non-U.S. dollar currency—you should consult your own financial andlegal advisors as to the currency risks entailed by your investment. Securities of this kind may not be an appropriateinvestment for investors who are unsophisticated with respect to non-U.S. dollar currency transactions.

The information in this prospectus is directed primarily to investors who are U.S. residents or whose base currency isthe U.S. dollar. Investors who are not U.S. residents or whose base currency is not the U.S. dollar should consult theirown financial and legal advisors about currency-related risks particular to their investment.

An Investment in a Non-U.S. Dollar Security Involves Currency-Related Risks

An investment in a non-U.S. dollar security entails significant risks that are not associated with a similar investment ina security that is payable solely in U.S. dollars and where settlement value is not otherwise based on a non-U.S. dollarcurrency. These risks include the possibility of significant changes in rates of exchange between the U.S. dollar and thevarious non-U.S. dollar currencies or composite currencies and the possibility of the imposition or modification offoreign exchange controls or other conditions by either the United States or non-U.S. governments. When payments aremade in the non-U.S. dollar currency, the total principal plus interest in that currency may be less than the initialprincipal invested on a U.S. dollar basis, if converted back into U.S. dollars at the then-current spot price, despite anyinterest or enhanced yield that may have been earned. These risks generally depend on factors over which we have nocontrol, such as economic and political events and the supply of and demand for the relevant currencies in the globalmarkets.

There Are Limited Facilities for Non-U.S. Dollar Currencies in the United States

At the present time, there are limited facilities in the United States for the conversion of U.S. dollars into foreigncurrencies, currency units or composite currencies and vice versa, and commercial banks generally do not offer non-U.S. dollar checking or savings account facilities in the United States. The agents are prepared to arrange for theconversion of U.S. dollars into the non-U.S. dollar specified currency in which a security may be denominated in orderto enable the purchaser to pay for the security, provided that a request is made to the applicable agent on or prior to thethird business day preceding the date of delivery of the security, or by such other day as determined by such agent.Each such conversion will be made by the applicable agent on such terms and subject to such conditions, limitationsand charges as the agent may from time to time establish in accordance with its regular foreign exchange practices. Allcosts of conversion will be borne by the purchaser of such security denominated in a non-U.S. dollar specifiedcurrency.

Changes in Currency Exchange Rates Can Be Volatile and Unpredictable

Rates of exchange between the U.S. dollar and many other currencies have been highly volatile, and this volatility maycontinue and perhaps spread to other currencies in the future. Fluctuations in currency exchange rates could adverselyaffect an investment in a security denominated in, or where value is otherwise linked to, a specified currency other thanU.S. dollars. Depreciation of the specified currency against the U.S. dollar could result in a decrease in the U.S. dollar-equivalent value of payments on the security, including the principal payable at maturity or settlement value payableupon exercise. That in turn could cause the market value of the security to fall. Depreciation of the specified currencyagainst the U.S. dollar could result in a loss to the investor on a U.S. dollar basis.

Government Policy Can Adversely Affect Currency Exchange Rates and an Investment in a Non-

U.S. Dollar Security

Currency exchange rates can either float or be fixed by sovereign governments. From time to time, governments use avariety of techniques, such as intervention by a country’s central bank or imposition of regulatory controls or taxes, to

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Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency

affect the exchange rate of their currencies. Governments may also issue a new currency to replace an existing currencyor alter the exchange rate or exchange characteristics by devaluation or revaluation of a currency. Thus, a special riskin purchasing non-U.S. dollar securities is that their yields or payouts could be significantly and unpredictably affectedby governmental actions. Even in the absence of governmental action directly affecting currency exchange rates,political or economic developments in the country issuing the specified currency for a non-U.S. dollar security orelsewhere could lead to significant and sudden changes in the exchange rate between the U.S. dollar and the specifiedcurrency. These changes could affect the value of the security as participants in the global currency markets move tobuy or sell the specified currency or U.S. dollars in reaction to these developments.

Governments have imposed from time to time and may in the future impose exchange controls or other conditions,including taxes, with respect to the exchange or transfer of a specified currency that could affect exchange rates as wellas the availability of a specified currency for a security at its maturity or on any other payment date. In addition, theability of a holder to move currency freely out of the country in which payment in the currency is received or toconvert the currency at a freely determined market rate could be limited by governmental actions.

Non-U.S. Dollar Securities May Permit Us to Make Payments in U.S. Dollars or Delay Payment If We

Are Unable to Obtain the Specified Currency

Securities payable in a currency other than U.S. dollars may provide that, if the other currency is subject toconvertibility, transferability, market disruption or other conditions affecting its availability at or about the time when apayment on the securities comes due because of circumstances beyond our control, we will be entitled to make thepayment in U.S. dollars or delay making the payment. These circumstances could include the imposition of exchangecontrols or our inability to obtain the other currency because of a disruption in the currency markets. If we madepayment in U.S. dollars, the exchange rate we would use would be determined in the manner described above under“Description of Debt Securities We May Offer—Payment Mechanics for Debt Securities—How We Will MakePayments Due in Other Currencies—When the Specified Currency Is Not Available” and “Description of Warrants WeMay Offer—Payment Mechanics for Warrants—How We Will Make Payments Due in Other Currencies—When theSpecified Currency Is Not Available.” A determination of this kind may be based on limited information and wouldinvolve significant discretion on the part of our foreign exchange agent. As a result, the value of the payment in U.S.dollars an investor would receive on the payment date may be less than the value of the payment the investor wouldhave received in the other currency if it had been available, or may be zero. In addition, a government may imposeextraordinary taxes on transfers of a currency. If that happens, we will be entitled to deduct these taxes from anypayment on notes payable in that currency.

We Will Not Adjust Non-U.S. Dollar Securities to Compensate for Changes in Currency Exchange

Rates

Except as described above, we will not make any adjustment or change in the terms of a non-U.S. dollar security in theevent of any change in exchange rates for the relevant currency, whether in the event of any devaluation, revaluation orimposition of exchange or other regulatory controls or taxes or in the event of other developments affecting thatcurrency, the U.S. dollar or any other currency. Consequently, investors in non-U.S. dollar securities will bear the riskthat their investment may be adversely affected by these types of events.

In a Lawsuit for Payment on a Non-U.S. Dollar Security, an Investor May Bear Currency Exchange

Risk

Our securities will be governed by New York law. Under Section 27 of the New York Judiciary Law, a state court inthe State of New York rendering a judgment on a security denominated in a currency other than U.S. dollars would berequired to render the judgment in the specified currency; however, the judgment would be converted into U.S. dollarsat the exchange rate prevailing on the date of entry of the judgment. Consequently, in a lawsuit for payment on asecurity denominated in a currency other than U.S. dollars, investors would bear currency exchange risk until judgmentis entered, which could be a long time.

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Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency

In courts outside of New York, investors may not be able to obtain judgment in a specified currency other than U.S.dollars. For example, a judgment for money in an action based on a non-U.S. dollar security in many other U.S. federalor state courts ordinarily would be enforced in the United States only in U.S. dollars. The date used to determine therate of conversion of the currency in which any particular security is denominated into U.S. dollars will depend uponvarious factors, including which court renders the judgment.

Information About Exchange Rates May Not Be Indicative of Future Performance

If we issue a non-U.S. dollar security, we may include in the applicable prospectus supplement currency disclosure thatprovides information about historical exchange rates for the relevant non-U.S. dollar currency or currencies. Anyinformation about exchange rates that we may provide will be furnished as a matter of information only, and youshould not regard the information as indicative of the range of, or trends in, fluctuations in currency exchange rates thatmay occur in the future. That rate will likely differ from the exchange rate used under the terms that apply to aparticular security.

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U.S. Tax ConsiderationsUnless as otherwise stated in the applicable prospectus supplement, this section describes the material United Statesfederal income tax consequences to United States holders, as defined below, of owning the debt securities. It is theopinion of Sullivan & Cromwell LLP, United States tax counsel to UBS. It applies to you only if you hold yoursecurities as capital assets for tax purposes. This section does not apply to you if you are a member of a class of holderssubject to special rules, such as:

• a dealer in securities or currencies;

• a trader in securities that elects to use a mark-to-market method of tax accounting for your securitiesholdings;

• a bank;

• a life insurance company;

• a tax-exempt organization;

• a person subject to alternative minimum tax;

• a person that owns debt securities that are a hedge or that are hedged against interest rate or currency risks;

• a person that owns debt securities as part of a straddle or conversion transaction for tax purposes;

• a person that purchases or sells debt securities as part of a wash sale for tax purposes;

• a person whose functional currency for tax purposes is not the U.S. dollar; or

• a person that is not a United States holder, as defined below.

This section deals only with debt securities that are booked through a non-U.S. branch of UBS AG, that are inregistered form and that are due to mature 30 years or less from the date on which they are issued. The United Statesfederal income tax consequences of owning debt securities that are booked through a U.S. branch of UBS AG, that aredue to mature more than 30 years from their date of issue or that are in bearer form, as well as the restrictions onownership for debt securities that are in bearer form, and the tax consequences of owning warrants will be discussed inan applicable prospectus supplement. This section is based on the U.S. Internal Revenue Code of 1986, as amended(the “Internal Revenue Code”), its legislative history, existing and proposed regulations under the Internal RevenueCode, and published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly ona retroactive basis.

If a partnership holds the debt securities, the United States federal income tax treatment of a partner will generallydepend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the debtsecurities should consult its tax advisor with regard to the United States federal income tax treatment of an investmentin the debt securities.

Please consult your own tax advisor concerning the consequences of owning these debt securities in your particularcircumstances under the Internal Revenue Code and the laws of any other taxing jurisdiction.

You are a United States holder if you are a beneficial owner of a debt security and you are:

• a citizen or resident of the United States;

• a domestic corporation;

• an estate whose income is subject to United States federal income tax regardless of its source; or

• a trust if a United States court can exercise primary supervision over the trust’s administration and one ormore United States persons are authorized to control all substantial decisions of the trust.

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U.S. Tax Considerations

Taxation of Debt Securities

This subsection describes the material United States federal income tax consequences of owning, selling and disposingof the debt securities UBS AG is offering.

Payments of Interest

Except as described below in the case of interest on a discount debt security that is not qualified stated interest, each asdefined below under “Original Issue Discount—General,” you will be taxed on any interest on your debt security,whether payable in U.S. dollars or a foreign currency, including a composite currency or basket of currencies otherthan U.S. dollars, as ordinary income at the time you receive the interest or it accrues, depending on your method ofaccounting for tax purposes.

Interest we pay on the debt securities and original issue discount, if any, accrued with respect to the debt securities (asdescribed below under “—Original Issue Discount”) and any additional amounts paid with respect to withholding taxon the debt securities, including withholding tax on payments of such additional amounts, constitutes income fromsources outside the United States, and will, depending on your circumstances be either “passive” or “general” incomefor purposes of the rules regarding the foreign tax credit allowable to a United States holder.

Cash Basis Taxpayers. If you are a taxpayer that uses the cash receipts and disbursements method of accounting fortax purposes and you receive an interest payment that is denominated in, or determined by reference to, a foreigncurrency, you must recognize income equal to the U.S. dollar value of the interest payment, based on the exchange ratein effect on the date of receipt, regardless of whether you actually convert the payment into U.S. dollars.

Accrual Basis Taxpayers. If you are a taxpayer that uses an accrual method of accounting for tax purposes, you maydetermine the amount of income that you recognize with respect to an interest payment denominated in, or determinedby reference to, a foreign currency by using one of two methods. Under the first method, you will determine theamount of income accrued based on the average exchange rate in effect during the interest accrual period or, withrespect to an accrual period that spans two taxable years, that part of the period within the taxable year.

If you elect the second method, you would determine the amount of income accrued on the basis of the exchange ratein effect on the last day of the accrual period or, in the case of an accrual period that spans two taxable years, theexchange rate in effect on the last day of the part of the period within the taxable year. Additionally, under this secondmethod, if you receive a payment of interest within five business days of the last day of your accrual period or taxableyear, you may instead translate the interest accrued into U.S. dollars at the exchange rate in effect on the day that youactually receive the interest payment. If you elect the second method, it will apply to all debt instruments that you holdat the beginning of the first taxable year to which the election applies and to all debt instruments that you subsequentlyacquire. You may not revoke this election without the consent of the Internal Revenue Service.

When you actually receive an interest payment, including a payment attributable to accrued but unpaid interest uponthe sale or retirement of your debt security, denominated in, or determined by reference to, a foreign currency forwhich you accrued an amount of income, you will recognize ordinary income or loss measured by the difference, ifany, between the exchange rate that you used to accrue interest income and the exchange rate in effect on the date ofreceipt, regardless of whether you actually convert the payment into U.S. dollars.

Original Issue Discount

General. If you own a debt security, other than a short-term debt security with a term of one year or less, it will betreated as a discount debt security issued at an original issue discount if the amount by which the debt security’s statedredemption price at maturity exceeds its issue price is more than a de minimis amount. Generally, a debt security’sissue price will be the first price at which a substantial amount of debt securities included in the issue of which the debtsecurity is a part is sold to persons other than bond houses, brokers, or similar persons or organizations acting in thecapacity of underwriters, placement agents, or wholesalers. A debt security’s stated redemption price at maturity is thetotal of all payments provided by the debt security that are not payments of qualified stated interest. Generally, an

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U.S. Tax Considerations

interest payment on a debt security is qualified stated interest if it is one of a series of stated interest payments on adebt security that are unconditionally payable at least annually at a single fixed rate, with certain exceptions for lowerrates paid during some periods, applied to the outstanding principal amount of the debt security. There are special rulesfor variable rate debt securities that are discussed under “—Variable Rate Debt Securities.”

In general, your debt security is not a discount debt security if the amount by which its stated redemption price atmaturity exceeds its issue price is less than the de minimis amount of 1/4 of 1% of its stated redemption price atmaturity multiplied by the number of complete years to its maturity. Your debt security will have de minimis originalissue discount if the amount of the excess is less than the de minimis amount. If your debt security has de minimisoriginal issue discount, you must include the de minimis amount in income as stated principal payments are made onthe debt security, unless you make the election described below under “—Election to Treat All Interest as OriginalIssue Discount.” You can determine the includible amount with respect to each such payment by multiplying the totalamount of your debt security’s de minimis original issue discount by a fraction equal to:

• the amount of the principal payment made

divided by

• the stated principal amount of the debt security.

Generally, if your discount debt security matures more than one year from its date of issue, you must include originalissue discount, or OID, in income before you receive cash attributable to that income. The amount of OID that youmust include in income is calculated using a constant-yield method, and generally you will include increasingly greateramounts of OID in income over the life of your debt security. More specifically, you can calculate the amount ofaccrued OID that you must include in income by adding the daily portions of OID with respect to your discount debtsecurity for each day during the taxable year or portion of the taxable year that you hold your discount debt security.You can determine the daily portion by allocating to each day in any accrual period a pro rata portion of the OIDallocable to that accrual period. You may select an accrual period of any length with respect to your debt security andyou may vary the length of each accrual period over the term of your debt security. However, no accrual period may belonger than one year and each scheduled payment of interest or principal on the debt security must occur on either thefirst or final day of an accrual period.

You can determine the amount of OID allocable to an accrual period by:

• multiplying your discount debt security’s adjusted issue price at the beginning of the accrual period by yourdebt security’s yield to maturity; and then

• subtracting from this figure the sum of the payments of qualified stated interest on your debt securityallocable to the accrual period.

You must determine the debt security’s yield to maturity on the basis of compounding at the close of each accrualperiod and adjusting for the length of each accrual period. Further, you can determine your discount debt security’sadjusted issue price at the beginning of any accrual period by:

• adding your debt security’s issue price and any accrued OID for each prior accrual period; and then

• subtracting any payments previously made on your debt security that were not qualified stated interestpayments.

If an interval between payments of qualified stated interest on your debt security contains more than one accrualperiod, then, when you determine the amount of OID allocable to an accrual period, you must allocate the amount ofqualified stated interest payable at the end of the interval, including any qualified stated interest that is payable on thefirst day of the accrual period immediately following the interval, pro rata to each accrual period in the interval basedon their relative lengths. In addition, you must increase the adjusted issue price at the beginning of each accrual periodin the interval by the amount of any qualified stated interest that has accrued prior to the first day of the accrual periodbut that is not payable until the end of the interval. You may compute the amount of OID allocable to an initial shortaccrual period by using any reasonable method if all other accrual periods, other than a final short accrual period, are ofequal length.

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U.S. Tax Considerations

The amount of OID allocable to the final accrual period is equal to the difference between:

• the amount payable at the maturity of your debt security, other than any payment of qualified stated interest;and

• your debt security’s adjusted issue price as of the beginning of the final accrual period.

Acquisition Premium. If you purchase your debt security for an amount that is less than or equal to the sum of allamounts, other than qualified stated interest, payable on your debt security after the purchase date but is greater thanthe amount of your debt security’s adjusted issue price, as determined above under “General,” the excess is acquisitionpremium. If you do not make the election described below under “Election to Treat All Interest as Original IssueDiscount,” then you must reduce the daily portions of OID by a fraction equal to:

• the excess of your adjusted basis in the debt security immediately after purchase over the adjusted issue priceof the debt security

divided by

• the excess of the sum of all amounts payable (other than qualified stated interest) on the debt security after thepurchase date over the debt security’s adjusted issue price.

Pre-Issuance Accrued Interest. An election may be made to decrease the issue price of your debt security by theamount of pre-issuance accrued interest if:

• a portion of the initial purchase price of your debt security is attributable to pre-issuance accrued interest;

• the first stated interest payment on your debt security is to be made within one year of your debt security’sissue date; and

• the payment will equal or exceed the amount of pre-issuance accrued interest.

If this election is made, a portion of the first stated interest payment will be treated as a return of the excluded pre-issuance accrued interest and not as an amount payable on your debt security.

Debt Securities Subject to Contingencies Including Optional Redemption. Your debt security is subject to acontingency if it provides for an alternative payment schedule or schedules applicable upon the occurrence of acontingency or contingencies, other than a remote or incidental contingency, whether such contingency relates topayments of interest or of principal. In such a case, you must determine the yield and maturity of your debt security byassuming that the payments will be made according to the payment schedule most likely to occur if:

• the timing and amounts of the payments that comprise each payment schedule are known as of the issue date;and

• one of such schedules is significantly more likely than not to occur.

If there is no single payment schedule that is significantly more likely than not to occur, other than because of amandatory sinking fund, you must include income on your debt security in accordance with the general rules thatgovern contingent payment obligations. These rules will be discussed in the applicable prospectus supplement.

Notwithstanding the general rules for determining yield and maturity, if your debt security is subject to contingencies,and either you or we have an unconditional option or options that, if exercised, would require payments to be made onthe debt security under an alternative payment schedule or schedules, then:

• in the case of an option or options that we may exercise, we will be deemed to exercise or not exercise anoption or combination of options in the manner that minimizes the yield on your debt security and,

• in the case of an option or options that you may exercise, you will be deemed to exercise or not exercise anoption or combination of options in the manner that maximizes the yield on your debt security.

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U.S. Tax Considerations

If both you and we hold options described in the preceding sentence, those rules will apply to each option in the orderin which they may be exercised. You may determine the yield on your debt security for the purposes of thosecalculations by using any date on which your debt security may be redeemed or repurchased as the maturity date andthe amount payable on the date that you chose in accordance with the terms of your debt security as the principalamount payable at maturity.

If a contingency, including the exercise of an option, actually occurs or does not occur contrary to an assumption madeaccording to the above rules then, except to the extent that a portion of your debt security is repaid as a result of thischange in circumstances and solely to determine the amount and accrual of OID, you must redetermine the yield andmaturity of your debt security by treating your debt security as having been retired and reissued on the date of thechange in circumstances for an amount equal to your debt security’s adjusted issue price on that date.

Election to Treat All Interest as Original Issue Discount. You may elect to include in gross income all interest thataccrues on your debt security using the constant-yield method described above under “General,” with the modificationsdescribed below. For purposes of this election, interest will include stated interest, OID, de minimis original issuediscount, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bondpremium, described below under “Debt Securities Purchased at a Premium,” or acquisition premium.

If you make this election for your debt security, then, when you apply the constant-yield method:

• the issue price of your debt security will equal your cost;

• the issue date of your debt security will be the date you acquired it; and

• no payments on your debt security will be treated as payments of qualified stated interest.

Generally, this election will apply only to the debt security for which you make it; however, if the debt security forwhich this election is made has amortizable bond premium, you will be deemed to have made an election to applyamortizable bond premium against interest for all debt instruments with amortizable bond premium, other than debtinstruments the interest on which is excludible from gross income, that you hold as of the beginning of the taxable yearto which the election applies or any taxable year thereafter. Additionally, if you make this election for a marketdiscount debt security, you will be treated as having made the election discussed below under “Market Discount” toinclude market discount in income currently over the life of all debt instruments having market discount that youacquire on or after the first day of the first taxable year to which the election applies. You may not revoke any electionto apply the constant-yield method to all interest on a debt security or the deemed elections with respect to amortizablebond premium or market discount debt securities without the consent of the Internal Revenue Service.

Variable Rate Debt Securities. Your debt security will be a variable rate debt security if:

• your debt security’s issue price does not exceed the total noncontingent principal payments by more than thelesser of:

1. .015 multiplied by the product of the total noncontingent principal payments and the number ofcomplete years to maturity from the issue date, or

2. 15 percent of the total noncontingent principal payments; and

• your debt security provides for stated interest, compounded or paid at least annually, only at:

1. one or more qualified floating rates,

2. a single fixed rate and one or more qualified floating rates,

3. a single objective rate, or

4. a single fixed rate and a single objective rate that is a qualified inverse floating rate; and

• the value of any floating rate on any date during the term of your debt security is set no earlier than threemonths prior to the first day on which that value is in effect and no later than one year following that first day.

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U.S. Tax Considerations

Your debt security will have a variable rate that is a qualified floating rate if:

• variations in the value of the rate can reasonably be expected to measure contemporaneous variations in thecost of newly borrowed funds in the currency in which your debt security is denominated; or

• the rate is equal to such a rate either:

1. multiplied by a fixed multiple that is greater than 0.65 but not more than 1.35, or

2. multiplied by a fixed multiple that is greater than 0.65 but not more than 1.35, increased or decreased bya fixed rate.

If your debt security provides for two or more qualified floating rates that are within 0.25 percentage points of eachother on the issue date or can reasonably be expected to have approximately the same values throughout the term of thedebt security, the qualified floating rates together constitute a single qualified floating rate.

Your debt security will not have a qualified floating rate, however, if the rate is subject to certain restrictions (includingcaps, floors, governors, or other similar restrictions) unless such restrictions are fixed throughout the term of the debtsecurity or are not reasonably expected to significantly affect the yield on the debt security.

Your debt security will have a variable rate that is a single objective rate if:

• the rate is not a qualified floating rate; and

• the rate is determined using a single, fixed formula that is based on objective financial or economicinformation that is not within the control of or unique to the circumstances of the issuer or a related party.

Your debt security will not have a variable rate that is an objective rate, however, if it is reasonably expected that theaverage value of the rate during the first half of your debt security’s term will be either significantly less than orsignificantly greater than the average value of the rate during the final half of your debt security’s term.

An objective rate as described above is a qualified inverse floating rate if:

• the rate is equal to a fixed rate minus a qualified floating rate; and

• the variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in thecost of newly borrowed funds.

Your debt security will also have a single qualified floating rate or an objective rate if interest on your debt security isstated at a fixed rate for an initial period of one year or less followed by either a qualified floating rate or an objectiverate for a subsequent period, and either:

• the fixed rate and the qualified floating rate or objective rate have values on the issue date of the debt securitythat do not differ by more than 0.25 percentage points; or

• the value of the qualified floating rate or objective rate is intended to approximate the fixed rate.

In general, if your variable rate debt security provides for stated interest at a single qualified floating rate or objectiverate (or one of those rates after a single fixed rate for an initial period), all stated interest on your debt security isqualified stated interest. In this case, the amount of OID, if any, is determined by using, for a qualified floating rate orqualified inverse floating rate, the value as of the issue date of the qualified floating rate or qualified inverse floatingrate, or, for any other objective rate, a fixed rate that reflects the yield reasonably expected for your debt security.

If your variable rate debt security does not provide for stated interest at a single qualified floating rate or a singleobjective rate, and also does not provide for interest payable at a fixed rate other than a single fixed rate for an initialperiod, you generally must determine the interest and OID accruals on your debt security by:

• determining a fixed rate substitute for each variable rate provided under your variable rate debt security;

• constructing the equivalent fixed rate debt instrument (using the fixed rate substitute described above);

• determining the amount of qualified stated interest and OID with respect to the equivalent fixed rate debtinstrument; and

• adjusting for actual variable rates during the applicable accrual period.

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U.S. Tax Considerations

When you determine the fixed rate substitute for each variable rate provided under the variable rate note, you generallywill use the value of each variable rate as of the issue date or, for an objective rate that is not a qualified inversefloating rate, a rate that reflects the reasonably expected yield on your debt security.

If your variable rate debt security provides for stated interest either at one or more qualified floating rates or at aqualified inverse floating rate, and also provides for stated interest at a single fixed rate other than a single fixed ratefor an initial period, you generally must determine interest and OID accruals by using the method described in theprevious paragraph. However, your variable rate debt security will be treated, for purposes of the first three steps of thedetermination, as if your debt security had provided for a qualified floating rate, or a qualified inverse floating rate,rather than the fixed rate. The qualified floating rate, or qualified inverse floating rate, that replaces the fixed rate mustbe such that the fair market value of your variable rate debt security as of the issue date approximates the fair marketvalue of an otherwise identical debt instrument that provides for the qualified floating rate, or qualified inverse floatingrate, rather than the fixed rate.

Short-Term Debt Securities. In general, if you are an individual or other cash basis United States holder of a short-term debt security, you are not required to accrue OID, as specially defined below for the purposes of this paragraph,for United States federal income tax purposes unless you elect to do so. However, you may be required to include anystated interest in income as you receive it. If you are an accrual basis taxpayer, a taxpayer in a special class, including,but not limited to, a regulated investment company, common trust fund, or a certain type of pass-through entity, or acash basis taxpayer who so elects, you will be required to accrue OID on short-term debt securities on either a straight-line basis or under the constant-yield method, based on daily compounding. If you are not required and do not elect toinclude OID in income currently, any gain you realize on the sale or retirement of your short-term debt security will beordinary income to the extent of the accrued OID, which will be determined on a straight-line basis unless you make anelection to accrue the OID under the constant-yield method, through the date of sale or retirement. However, if you arenot required and do not elect to accrue OID on your short-term debt securities, you will be required to defer deductionsfor interest on borrowings allocable to your short-term debt securities in an amount not exceeding the deferred incomeuntil the deferred income is realized.

When you determine the amount of OID subject to these rules, you must include all interest payments on your short-term debt security, including stated interest, in your short-term debt security’s stated redemption price at maturity.

Foreign Currency Discount Debt Securities. If your discount debt security is denominated in, or determined byreference to, a foreign currency, you must determine OID for any accrual period on your discount debt security in theforeign currency and then translate the amount of OID into U.S. dollars in the same manner as stated interest accruedby an accrual basis United States holder, as described under “—Payments of Interest.” You may recognize ordinaryincome or loss when you receive an amount attributable to OID in connection with a payment of interest or the sale orretirement of your debt security.

Market Discount

You will be treated as if you purchased your debt security, other than a short-term debt security, at a market discount,and your debt security will be a market discount note if:

• in the case of an initial purchaser, you purchase your debt security for less than its issue price as determinedabove under “—Original Issue Discount—General”; and

• in the case of all purchasers, the difference between the debt security’s stated redemption price at maturity or,in the case of a discount debt security, the debt security’s revised issue price, and the price you paid for yourdebt security is equal to or greater than 1/4 of 1 percent of your debt security’s stated redemption price atmaturity or revised issue price, respectively, multiplied by the number of complete years to the debt security’smaturity. To determine the revised issue price of your debt security for these purposes, you generally add anyOID that has accrued on your debt security to its issue price.

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U.S. Tax Considerations

If your debt security’s stated redemption price at maturity or, in the case of a discount debt security, its revised issueprice, exceeds the price you paid for the debt security by less than 1/4 of 1% multiplied by the number of completeyears to the debt security’s maturity, the excess constitutes de minimis market discount, and the rules discussed beloware not applicable to you.

You must treat any gain you recognize on the maturity or disposition of your market discount debt security as ordinaryincome to the extent of the accrued market discount on your debt security. Alternatively, you may elect to includemarket discount in income currently over the life of your debt security. If you make this election, it will apply to alldebt instruments with market discount that you acquire on or after the first day of the first taxable year to which theelection applies. You may not revoke this election without the consent of the Internal Revenue Service. If you own amarket discount debt security and do not make this election, you will generally be required to defer deductions forinterest on borrowings allocable to your debt security in an amount not exceeding the accrued market discount on yourdebt security until the maturity or disposition of your debt security.

If you own a market discount debt security, the market discount would accrue on a straight-line basis unless an electionis made to accrue market discount using a constant-yield method. If you make this election, it will apply only to thedebt security with respect to which it is made and you may not revoke it. You would, however, not include accruedmarket discount in income unless you elect to do so as described above.

Debt Securities Purchased at a Premium

If you purchase your debt security for an amount in excess of its principal amount (or, in the case of a discount debtsecurity, in excess of its stated redemption price at maturity), you may elect to treat the excess as amortizable bondpremium. If you make this election, you will reduce the amount required to be included in your income each year withrespect to interest on your debt security by the amount of amortizable bond premium allocable to that year, based onyour debt security’s yield to maturity. If your debt security is denominated in, or determined by reference to, a foreigncurrency, you will compute your amortizable bond premium in units of the foreign currency and your amortizable bondpremium will reduce your interest income in units of the foreign currency. Gain or loss recognized that is attributableto changes in exchange rates between the time your amortized bond premium offsets interest income and the time ofthe acquisition of your debt security is generally taxable as ordinary income or loss. If you make an election toamortize bond premium, it will apply to all debt instruments, other than debt instruments the interest on which isexcludible from gross income, that you hold at the beginning of the first taxable year to which the election applies orthat you thereafter acquire, and you may not revoke it without the consent of the Internal Revenue Service. See also“—Original Issue Discount—Election to Treat All Interest as Original Issue Discount.”

Purchase, Sale and Retirement of the Debt Securities

Your tax basis in your debt security will generally be the U.S. dollar cost, as defined below, of your debt security,adjusted by:

• adding any OID or market discount previously included in income with respect to your debt security; andthen

• subtracting any payments on your debt security that are not qualified stated interest payments and anyamortizable bond premium applied to reduce the interest on your debt security.

If you purchase your debt security with foreign currency, the U.S. dollar cost of your debt security will generally be theU.S. dollar value of the purchase price on the date of purchase. However, if you are a cash basis taxpayer, or an accrualbasis taxpayer if you so elect, and your debt security is traded on an established securities market, as defined in theapplicable Treasury regulations, the U.S. dollar cost of your debt security will be the U.S. dollar value of the purchaseprice on the settlement date of your purchase.

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U.S. Tax Considerations

You will generally recognize gain or loss on the sale or retirement of your debt security equal to the difference betweenthe amount you realize on the sale or retirement, excluding any amounts attributable to accrued but unpaid interest(which will be treated as interest payments), and your tax basis in your debt security. If your debt security is sold orretired for an amount in foreign currency, the amount you realize will be the U.S. dollar value of such amount on thedate the debt security is disposed of or retired, except that in the case of a debt security that is traded on an establishedsecurities market, as defined in the applicable Treasury regulations, a cash basis taxpayer, or an accrual basis taxpayerthat so elects, will determine the amount realized based on the U.S. dollar value of the foreign currency on thesettlement date of the sale.

You will recognize capital gain or loss when you sell or retire your debt security, except to the extent:

• described above under “—Original Issue Discount—Short-Term Debt Securities” or “—Market Discount,” or

• attributable to changes in exchange rates as described below.

Capital gain of a noncorporate United States holder is generally taxed at preferential rates where the property is heldfor more than one year.

You must treat any portion of the gain or loss that you recognize on the sale or retirement of a debt security as ordinaryincome or loss to the extent attributable to changes in exchange rates. However, you only take exchange gain or lossinto account to the extent of the total gain or loss you realize on the transaction.

Exchange of Amounts in Other Than U.S. Dollars

If you receive foreign currency as interest on your debt security or on the sale or retirement of your debt security, yourtax basis in the foreign currency will equal its U.S. dollar value when the interest is received or at the time of the saleor retirement. If you purchase foreign currency, you generally will have a tax basis equal to the U.S. dollar value of theforeign currency on the date of your purchase. If you sell or dispose of a foreign currency, including if you use it topurchase debt securities or exchange it for U.S. dollars, any gain or loss recognized generally will be ordinary incomeor loss.

Medicare Tax

A United States holder that is an individual or estate, or a trust that does not fall into a special class of trusts that isexempt from such tax, is subject to a 3.8% tax on the lesser of (1) the United States holder’s “net investment income”(or “undistributed net investment income” in the case of an estate or trust) for the relevant taxable year and (2) theexcess of the United States holder’s modified adjusted gross income for the taxable year over a certain threshold(which in the case of individuals is between $125,000 and $250,000, depending on the individual’s circumstances). AUnited States holder’s net investment income generally includes its interest income and its net gains from thedisposition of debt securities, unless such interest income or net gains are derived in the ordinary course of the conductof a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are aUnited States holder that is an individual, estate or trust, you are urged to consult your tax advisors regarding theapplicability of the Medicare tax to your income and gains in respect of your investment in the debt securities.

Extendible, Indexed and Other Debt Securities

The applicable prospectus supplement will discuss any special United States federal income tax rules with respect toextendible debt securities, contingent foreign currency debt securities, debt securities the payments on which aredetermined by reference to the value of any index or stock and debt securities that are subject to the rules governingcontingent payment obligations.

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U.S. Tax Considerations

Treasury Regulations Requiring Disclosure of Reportable Transactions

Treasury regulations require United States taxpayers to report certain transactions that give rise to a loss in excess ofcertain thresholds (a “Reportable Transaction”). Under these regulations, if the debt securities are denominated in, orlinked to, a foreign currency, a United States holder that recognizes a loss with respect to the debt securities that ischaracterized as an ordinary loss due to changes in currency exchange rates (under any of the rules discussed above)would be required to report the loss on Internal Revenue Service Form 8886 (Reportable Transaction Statement) if theloss exceeds the thresholds set forth in the regulations. For individuals and trusts, this loss threshold is $50,000 in anysingle taxable year. For other types of taxpayers and other types of losses, the thresholds are higher. You shouldconsult with your tax advisor regarding any tax filing and reporting obligations that may apply in connection withacquiring, owning and disposing of debt securities.

Foreign Account Tax Compliance Withholding

Certain non-U.S. financial institutions must comply with information reporting requirements or certificationrequirements in respect of their direct and indirect United States shareholders and/or United States accountholders toavoid becoming subject to withholding on certain payments. UBS and other non-U.S. financial institutions mayaccordingly be required to report information to the IRS regarding the holders of debt securities and to withhold on aportion of payments under the debt securities to certain holders that fail to comply with the relevant informationreporting requirements (or hold debt securities directly or indirectly through certain non-compliant intermediaries).However, such withholding would generally not apply to payments made before January 1, 2019. Moreover, suchwithholding would only apply to debt securities issued at least six months after the date on which final regulationsimplementing such rule are enacted. Holders are urged to consult their own tax advisors and any banks or brokersthrough which they will hold debt securities as to the consequences (if any) of these rules to them.

Information with Respect to Foreign Financial Assets

Owners of “specified foreign financial assets” with an aggregate value in excess of $50,000 (and in somecircumstances, a higher threshold) may be required to file an information report with respect to such assets with theirtax returns. “Specified foreign financial assets” may include financial accounts maintained by foreign financialinstitutions (which would include debt of a foreign financial institution that is not regularly traded on an establishedsecurities market, and thus may include your debt securities), as well as any of the following but only if they are heldfor investment and not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-United States persons, (ii) financial instruments and contracts that have non-United States issuers or counterparties, and(iii) interests in foreign entities. Holders are urged to consult their tax advisors regarding the application of thisreporting requirement to their ownership of the debt securities.

Backup Withholding and Information Reporting

If you are a noncorporate United States holder, information reporting requirements, on Internal Revenue Service Form1099, generally will apply to payments of principal and interest on a debt security within the United States, and thepayment of proceeds to you from the sale of a debt security effected at a United States office of a broker.

Additionally, backup withholding may apply to such payments if you fail to comply with applicable certificationrequirements or are notified by the Internal Revenue Service that you have failed to report all interest and dividendsrequired to be shown on your federal income tax returns.

Payment of the proceeds from the sale of a debt security effected at a foreign office of a broker generally will not besubject to information reporting or backup withholding. However, a sale effected at a foreign office of a broker couldbe subject to information reporting in the same manner as a sale within the United States (and in certain cases may besubject to backup withholding as well) if (i) the broker has certain connections to the United States, (ii) the proceeds orconfirmation are sent to the United States or (iii) the sale has certain other specified connections with the United States.

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U.S. Tax Considerations

You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed yourincome tax liability by filing a refund claim with the Internal Revenue Service.

Taxation of Warrants

U.S. tax considerations with respect to warrants will be discussed in an applicable prospectus supplement.

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Tax Considerations Under the Laws of SwitzerlandGeneral

Unless as otherwise stated in the applicable prospectus supplement, this section describes the principal taxconsequences under the laws of Switzerland for non-Swiss investors (i.e., for investors who are not residents ofSwitzerland and have no permanent establishment or fixed place of business situated in Switzerland for Swiss taxpurposes) of acquiring, owning or disposing of debt securities and warrants issued and booked by a non-Swiss branchof UBS AG, which has the status of a bank and the proceeds from which are used outside Switzerland. This summarydoes not address the tax treatment of Swiss investors (i.e., for investors who are residents of Switzerland or have apermanent establishment or fixed place of business situated in Switzerland for Swiss tax purposes). The taxinformation set forth below is based on the opinion of Homburger AG, Zürich, Switzerland, dated March 17, 2016, andhas been approved by them for its accuracy.

The following is a summary based on legislation as of the date of this prospectus and does not aim to be acomprehensive description of all the Swiss tax considerations that may be relevant to a decision to invest in debtsecurities and warrants. The tax treatment for each debt-holder and warrant-holder depends on the particular situation.All holders and prospective holders are advised to consult their own professional tax advisors in light of their particularcircumstances as to the Swiss tax legislation that could be relevant for them in connection with the purchase, ownershipand disposition of debt securities and warrants and the consequences of such actions under the tax legislation ofSwitzerland.

Swiss Income and Wealth Tax

Holders of debt securities and warrants who are not residents of Switzerland and have not engaged in a trade orbusiness through a permanent establishment or fixed place of business situated in Switzerland to which the debtsecurities and warrants are attributable or to which the debt securities and warrants belong will not be subject to anySwiss federal, cantonal or communal corporate or individual income and capital or wealth tax or capital gains tax onthe holding and disposition of the debt securities and warrants or the exercise of warrants.

Issuance Stamp Tax

Under the condition that UBS AG will book the debt securities and warrants in its Jersey branch, London branch or anyother branch not situated in Switzerland and under the conditions that the respective branch has the status of a bank andUBS AG does not use the proceeds of the sale of the debt securities and the warrants in Switzerland, the issuance of thedebt securities and warrants will not be a taxable event for Swiss issuance stamp tax purposes.

Withholding Tax

Under the condition that UBS AG will book the debt securities or warrants in its Jersey branch, London branch or anyother branch not situated in Switzerland and under the conditions that the respective branch has the status of a bank andUBS AG does not use the proceeds of the sale of the debt securities and warrants in Switzerland, the payment ofinterest on and the redemption of debt securities or warrants and the exercise of warrants is not subject to Swisswithholding tax.

On 4 November 2015 the Swiss Federal Council announced that it had mandated the Swiss Federal FinanceDepartment to appoint a group of experts to prepare a proposal for a reform of the Swiss withholding tax system. Theproposal is expected to, among other things, replace the current debtor-based regime applicable to interest paymentswith a paying agent-based regime for Swiss withholding tax. This paying agent-based regime is expected to be similarto the one contained in the draft legislation published by the Swiss Federal Council on 17 December 2014, which wassubsequently withdrawn on 24 June 2015. If such a new paying-agent based regime were to be enacted, and were toresult in the deduction or withholding of Swiss withholding tax on any interest payments in respect of debt securities orwarrants by any person other than the Issuer, the holder of such debt security or warrant would not be entitled toreceive any additional amounts as a result of such deduction or withholding under the terms of the debt securities orwarrants, as the case may be.

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Tax Considerations Under the Laws of Switzerland

Securities Turnover Tax

Dealings in debt securities or warrants where a bank or another securities dealer in Switzerland (as defined in the SwissFederal Stamp Tax Act) acts as an intermediary, or is a party, to the transaction, may be subject to Swiss federal stamptax on the turnover in securities at an aggregated rate of up to 0.3 percent of the purchase price of the debt securities orwarrants. A branch of UBS AG situated, or a subsidiary of UBS AG resident, outside Switzerland will not be a Swisssecurities dealer under the Swiss Federal Stamp Tax Act.

European Directive on the Taxation of Savings Income

On October 26, 2004, the European Community and Switzerland entered into an agreement on the taxation of savingsincome pursuant to which Switzerland will adopt measures equivalent to those of the European Directive 2003/48/ECof June 3, 2003 on the taxation of savings income in the form of interest payments. The agreement came into force asof July 1, 2005.

In accordance with this agreement, Swiss paying agents have to withhold tax at a rate of 35 percent on interestpayments made under the debt securities and warrants to a beneficial owner who is an individual and resident of an EUmember state, with the option of the individual to have the paying agent and Switzerland provide to the tax authoritiesof the EU member state the details of the interest payments in lieu of the withholding.

Foreign Final Withholding Tax

The Swiss Federal Council signed treaties with the United Kingdom and Austria providing, inter alia, for a finalwithholding tax. The treaties entered into force on 1 January 2013 and might be followed by similar treaties with otherEuropean countries.

According to the treaties, a Swiss paying agent may levy a final withholding tax on capital gains and on certain incomeitems deriving, inter alia, from debt securities and warrants. The final withholding tax will substitute the ordinaryincome tax due by an individual resident of a contracting state on such gains and income items. In lieu of the finalwithholding, individuals may opt for a voluntary disclosure of the relevant capital gains and income items to the taxauthorities of their state of residency.

Holders of debt securities and warrants who might be in the scope of the abovementioned treaties should consult theirown tax adviser as to the tax consequences relating to their particular circumstances.

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Benefit Plan Investor ConsiderationsA fiduciary of a pension, profit-sharing or other employee benefit plan subject to the U.S. Employee RetirementIncome Security Act of 1974, as amended (“ERISA”) (each, a “Plan”), should consider the fiduciary standards ofERISA in the context of the Plan’s particular circumstances before authorizing an investment in the debt securities andwarrants. Among other factors, the fiduciary should consider whether the investment would satisfy the prudence anddiversification requirements of ERISA and would be consistent with the documents and instruments governing thePlan, and whether the investment would involve a prohibited transaction under ERISA or the U.S. Internal RevenueCode (the “Code”).

Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as individual retirement accounts, Keoghplans and any other plans that are subject to Section 4975 of the Code (also “Plans”), from engaging in certaintransactions involving “plan assets” with persons who are “parties in interest” under ERISA or “disqualified persons”under the Code with respect to the Plan. A violation of these prohibited transaction rules may result in excise tax orother liabilities under ERISA or the Code for those persons, unless exemptive relief is available under an applicablestatutory, regulatory or administrative exemption. Employee benefit plans that are governmental plans (as defined inSection 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and non-U.S. plans (as describedin Section 4(b)(4) of ERISA) (“Non-ERISA Arrangements”) are not subject to the requirements of Section 406 ofERISA or Section 4975 of the Code but may be subject to similar provisions under applicable federal, state, local, non-U.S. or other laws (“Similar Laws”).

The acquisition of debt securities and warrants by a Plan or any entity whose underlying assets include “plan assets” byreason of any Plan’s investment in the entity (a “Plan Asset Entity”) with respect to which we, UBS Securities LLC,UBS Financial Services Inc. and other of our affiliates is or becomes a party in interest or disqualified person mayresult in a prohibited transaction under ERISA or Section 4975 of the Code, unless the debt securities and warrants areacquired pursuant to an applicable exemption. The U.S. Department of Labor has issued five prohibited transactionclass exemptions, or “PTCEs”, that may provide exemptive relief if required for direct or indirect prohibitedtransactions that may arise from the purchase or holding of debt securities and warrants. These exemptions are PTCE84-14 (for certain transactions determined by independent qualified professional asset managers), PTCE 90-1 (forcertain transactions involving insurance company pooled separate accounts), PTCE 91-38 (for certain transactionsinvolving bank collective investment funds), PTCE 95-60 (for transactions involving certain insurance companygeneral accounts), and PTCE 96-23 (for transactions managed by in-house asset managers). In addition, ERISASection 408(b)(17) and Section 4975(d)(20) of the Code may provide an exemption for the purchase and sale of debtsecurities and warrants offered hereby, provided that neither the issuer of securities offered hereby nor any of itsaffiliates have or exercise any discretionary authority or control or render any investment advice with respect to theassets of any Plan involved in the transaction, and provided further that the Plan pays no more and receives no less than“adequate consideration” in connection with the transaction (the “service provider exemption”). There can be noassurance that all of the conditions of any such exemptions will be satisfied.

Any purchaser or holder of debt securities and warrants or any interest therein will be deemed to have represented byits purchase and holding or conversion of debt securities and warrants offered hereby that it either (1) is not a Plan, aPlan Asset Entity or a Non-ERISA Arrangement and is not purchasing the debt securities and warrants on behalf of orwith the assets of any Plan, a Plan Asset Entity or Non-ERISA Arrangement or (2) the purchase or holding of the debtsecurities and warrants will not result in a non-exempt prohibited transaction or a similar violation under anyapplicable Similar Laws.

Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exemptprohibited transactions, it is important that fiduciaries or other persons considering purchasing debt securities andwarrants on behalf of or with the assets of any Plan, a Plan Asset Entity or Non-ERISA Arrangement consult with theircounsel regarding the availability of exemptive relief under any of the PTCEs listed above, the service providerexemption or the potential consequences of any purchase or holding under Similar Laws, as applicable. Purchasers ofdebt securities and warrants have exclusive responsibility for ensuring that their purchase and holding of debt securities

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and warrants do not violate the fiduciary or prohibited transaction rules of ERISA or the Code or any similar provisionsof Similar Laws. The sale of any debt securities and warrants to a Plan, Plan Asset Entity or Non-ERISA Arrangementis in no respect a representation by us or any of our affiliates or representatives that such an investment meets allrelevant legal requirements with respect to investments by any such Plans, Plan Asset Entities or Non-ERISAArrangements generally or any particular Plan, Plan Asset Entity or Non-ERISA Arrangement or that such investmentis appropriate for such Plans, Plan Asset Entities or Non-ERISA Arrangements generally or any particular Plan, PlanAsset Entity or Non-ERISA Arrangement.

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Plan of DistributionPlan of Distribution for the Initial Offer and Sale of Securities

We plan to issue the securities under a distribution agreement with UBS Securities LLC and UBS Financial ServicesInc., as the agents. We have filed a copy of the form of distribution agreement with the SEC as an exhibit to ourregistration statement. See “Where You Can Find More Information” above for information on how to obtain a copy ofit. Subject to certain conditions, the agents would agree to use their reasonable efforts to solicit purchases of thesecurities. We would have the right to accept offers to purchase securities and may reject any proposed purchase of thesecurities. The agents may also reject any offer to purchase securities. We would pay the agents a commission on anysecurities sold through the agents. In accordance with Rule 5110 of the Financial Industry Regulatory Authority, Inc.(“FINRA”), in no situation will underwriting compensation exceed 8% of the principal amount of the securities.

UBS Securities LLC and UBS Financial Services Inc. are affiliates of UBS. Rule 5121 of FINRA imposes certainrequirements when a FINRA member such as UBS Securities LLC or UBS Financial Services Inc. distributes anaffiliated company’s securities. UBS Securities LLC and UBS Financial Services Inc. have advised UBS that thisoffering will comply with the applicable requirements of Rule 5121.

We may also sell securities to the agents who will purchase the securities as principal for their own accounts. In that case, theagents will purchase the securities at a price equal to the issue price specified in the applicable prospectus supplement, less adiscount. The discount will equal the applicable commission on an agency sale of securities with the same stated maturity.

The agents may resell any securities they purchase as principal to other brokers or dealers at a discount, which mayinclude all or part of the discount the agents received from us. If all the securities are not sold at the initial offeringprice, the agents may change the offering price and the other selling terms.

We may also sell securities directly to investors. We will not pay commissions on securities we sell directly.

The agents, whether acting as agent or principal, may be deemed to be “underwriters” within the meaning of theSecurities Act of 1933. We have agreed to indemnify the agents against certain liabilities, including liabilities under theSecurities Act.

If the agents sell securities to dealers who resell to investors and the agents pay the dealers all or part of the discount orcommission they receive from us, those dealers may also be deemed to be “underwriters” within the meaning of theSecurities Act.

In connection with an offering, the agents may purchase and sell securities in the open market. These transactions mayinclude short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involvethe sale by an agent of a greater number of securities than they are required to purchase in an offering. Stabilizingtransactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in the marketprice of the securities while an offering is in progress.

The agents may also impose a penalty bid. This occurs when a particular agent repays to the agents a portion of thediscount received by it because the agents have repurchased securities sold by or for the account of that agent instabilizing or short-covering transactions.

These activities by the agents may stabilize, maintain or otherwise affect the market price of the securities. As a result,the price of the securities may be higher than the price that otherwise might exist in the open market. If these activitiesare commenced, they may be discontinued by the agents at any time. These transactions may be effected on anexchange or automated quotation system, if the securities are listed on that exchange or admitted for trading on thatautomated quotation system, or in the over-the-counter market or otherwise.

The purchase price of the securities will be required to be paid in immediately available funds in New York City,unless otherwise indicated in your prospectus supplement.

We may appoint agents other than or in addition to UBS Securities LLC and UBS Financial Services Inc. with respectto the securities. Any other agents will be named in the applicable prospectus supplements and those agents will enter

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into the distribution agreement referred to above. The other agents may be affiliates or customers of UBS and mayengage in transactions with and perform services for UBS in the ordinary course of business. UBS Securities LLC andUBS Financial Services Inc. may resell securities to or through another of our affiliates, as selling agents.

The securities are a new issue of securities, and there will be no established trading market for any security before itsoriginal issue date. We may or may not list the securities on a securities exchange or quotation system. We have beenadvised by UBS Securities LLC and UBS Financial Services Inc. that they intend to make a market in the securities.However, neither UBS Securities LLC, UBS Financial Services Inc. nor any of our other affiliates nor any other agentnamed in your prospectus supplement that makes a market is obligated to do so and any of them may stop doing so atany time without notice. No assurance can be given as to the liquidity or trading market for the securities.

Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required tosettle in three business days, unless the parties to any such trade expressly agree otherwise. Your prospectussupplement may provide that the original issue date for your securities may be more than three scheduled business daysafter the trade date for your securities. Accordingly, in such a case, if you wish to trade securities on any date prior tothe third business day before the original issue date for your securities, you will be required, by virtue of the fact thatyour securities initially are expected to settle in more than three scheduled business days after the trade date for yoursecurities, to make alternative settlement arrangements to prevent a failed settlement.

Market-Making Resales by Affiliates

This prospectus may be used by UBS, UBS Securities LLC, UBS Financial Services Inc. or any other affiliate of UBSin connection with offers and sales of the securities in market-making transactions. In a market-making transaction,each of UBS, UBS Securities LLC, UBS Financial Services Inc. or any other affiliate of UBS may resell a security itacquires from other holders, after the original offering and sale of the security. Resales of this kind may occur in theopen market or may be privately negotiated at prevailing market prices at the time of resale or at related or negotiatedprices. In these transactions, UBS, UBS Securities LLC, UBS Financial Services Inc. or any other affiliate of UBS mayact as principal or agent, including as agent for the counterparty in a transaction in which it acts as principal, or asagent for both counterparties in a transaction in which it does not act as principal. UBS, UBS Securities LLC, UBSFinancial Services Inc. or any other affiliate of UBS may receive compensation in the form of discounts andcommissions, including from both counterparties in some cases.

The securities to be sold in market-making transactions include securities to be issued after the date of this prospectusas well as securities previously issued.

UBS does not expect to receive any proceeds from market-making transactions other than those it undertakes on itsown. UBS does not expect that UBS Securities LLC, UBS Financial Services Inc. or any other affiliate that engages inthese transactions will pay any proceeds from its market-making resales to UBS.

Information about the trade and settlement dates, as well as the purchase price, for a market-making transaction will beprovided to the purchaser in a separate confirmation of sale.

Unless UBS or an agent informs you in your confirmation of sale that your security is being purchased in its originaloffering and sale, you may assume that you are purchasing your security in a market-making transaction.

Matters Relating to Initial Offering and Market-Making Resales

In this prospectus, the term “this offering” means the initial offering of the securities made in connection with theiroriginal issuance. This term does not refer to any subsequent resales of securities in market-making transactions.

Conflicts of Interest

Each of UBS Securities LLC and UBS Financial Services Inc. is an affiliate of UBS and, as such, has a “conflict ofinterest” in any offering of the securities within the meaning of Rule 5121. Consequently, any offering of the securitieswill be conducted in compliance with the provisions of Rule 5121. Neither UBS Securities LLC nor UBS FinancialServices Inc. will be permitted to sell securities in any offering to an account over which it exercises discretionaryauthority without the prior specific written approval of the account holder.

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Validity of the SecuritiesIn connection with particular offerings of the securities in the future, and if stated in the applicable prospectussupplement, the validity of those securities may be passed upon for UBS AG by Sullivan & Cromwell LLP as tomatters of New York law and by Homburger AG as to matters of Swiss law, and for any underwriters or agents bySullivan & Cromwell LLP or other counsel named in the applicable prospectus supplement.

ExpertsErnst & Young Ltd, independent registered public accounting firm, has audited UBS’s consolidated financialstatements included in UBS’s Annual Report on Form 20-F for the year ended December 31, 2015, and theeffectiveness of UBS’s internal control over financial reporting as of December 31, 2015, as set forth in their reports,which are incorporated by reference in the prospectuses and elsewhere in the registration statement. UBS’s financialstatements are incorporated by reference in reliance on Ernst & Young Ltd’s reports, given on their authority as expertsin accounting and auditing.

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You should rely only on the informationincorporated by reference or provided in thisprospectus supplement or the accompanyingprospectus. We have not authorized anyone toprovide you with different information. We are notmaking an offer of these securities in any statewhere the offer is not permitted. You should notassume that the information in this prospectussupplement is accurate as of any date other thanthe date on the front of the document.

TABLE OF CONTENTS

Prospectus Supplement

Prospectus Supplement Summary . . . . . . . . S-1Hypothetical Examples . . . . . . . . . . . . . . . . . . . . . S-18Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27The Indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-45Valuation of the Indices and the Securities . . . . . S-63Specific Terms of the Securities . . . . . . . . . . . . . . S-66Use of Proceeds and Hedging . . . . . . . . . . . . . . . . S-84Material U.S. Federal Income Tax

Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . S-85Benefit Plan Investor Considerations . . . . . . . . . . S-89Supplemental Plan of Distribution . . . . . . . . . . . . S-91

Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . S-92Notice of Early Redemption . . . . . . . . . . . . . . . . . A-1Broker’s Confirmation of Redemption . . . . . . . . B-1Hypothetical Calculation of the Futures Spread

Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

Prospectus

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Cautionary Note Regarding Forward-Looking

Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Incorporation of Information About UBS AG . . . 5Where You Can Find More Information . . . . . . . 6Presentation of Financial Information . . . . . . . . . 7Limitations on Enforcement of U.S. Laws

Against UBS AG, Its Management andOthers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Swiss Regulatory Powers . . . . . . . . . . . . . . . . . . . 11Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Description of Debt Securities We May Offer . . . 13Description of Warrants We May Offer . . . . . . . 33Legal Ownership and Book-Entry Issuance . . . . . 48Considerations Relating to Indexed Securities . . 53Considerations Relating to Securities

Denominated or Payable in or Linked to aNon-U.S. Dollar Currency. . . . . . . . . . . . . . . . . 56

U.S. Tax Considerations . . . . . . . . . . . . . . . . . . . . 59Tax Considerations Under the Laws of

Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Benefit Plan Investor Considerations . . . . . . . . . . 72Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 74Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . 75Validity of the Securities . . . . . . . . . . . . . . . . . . . . 76Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

$100,000,000 VelocitySharesTM

VIX Variable Long/Short ETNlinked to the S&P 500 VIXFutures Variable Long/ShortIndex TR – Short Term dueJuly 18, 2046

$100,000,000 VelocitySharesTM

VIX Tail Risk ETN linked tothe S&P 500 VIX Futures TailRisk Index TR – Short Termdue July 18, 2046

$100,000,000 VelocitySharesTM

VIX Short Volatility HedgedETN linked to the S&P 500VIX Futures Short VolatilityHedged Index TR – ShortTerm due July 18, 2046

Prospectus Supplement dated July 13, 2016(To Prospectus dated April 29, 2016)

UBS Investment Bank