EFTA00236788.pdf

* UBS AlphaKeys Funds UBS Funds Disclosure Statement under Rule 506(d) This brochure provides information about certain disciplinary matters relating to the AlphaKeys Funds and the UBS Funds (collectively, the Funds), our parent company UBS AG, UBS Fund Advisor LLC (the Funds' Member Designee, Managing Member or Administrator), UBS Financial Services, Inc. (the Funds' Distributor), as well as certain executive officers of those entities and other persons involved in the offering of the Funds. Additional information about UBS Fund Advisor LLC and UBS Financial Services, Inc. and their associated persons is also available on the SEC's website at www.adviserinfo.sec.gov. This brochure is current as of September 20, 2013 and is subject to change. ML281837-MAXWELL Page I of 4 CONFIDENTIAL UBSTERRAMAR00001132 EFTA00236788 Disclosure Statement under Rule 506(d) 1)85 Fund Advisor LLC (Member Designee, Managing Member, Administrator) 1. Date of Action: Jan. 9, 2009 Brought By: CFTC Allegations: UBS Fund Advisor LLC violated Sections 6(c) and 6(d) of Commodities Exchange Act and did not file with the National Futures Association the commodity pools' annual reports in a timely manner or deliver to pool participants. Disposition: Cease & Desist from violating Regulation 4.7(bX3)(i) and CFR 4.7(bX3XiX2008) and pay a civil penalty Civil Penalty 550,000 UBS Financial Services Inc. (Distributor) 2. Date of Action: August 22, 2011 Entity: UBS Financial Services, Inc. Brought By. New Hampshire Bureau of Securities Regulation Allegations: UBS sold Lehman Structured Products to clients (specifically referencing three particular investors), who were not made aware of the risks of these products and failed to inform clients of Lehman's financial condition prior to Lehman's bankruptcy. It was also alleged that the firm's recommendations to a small number of New Hampshire residents to purchase Lehman Structured Products were unsuitable. Disposition: Consent Order Administrative fine of $100,000; Investigation costs of S200,000; Administrative payment of $700,000 3. Date of Action: May 4, 2011 Brought By: SEC, Internal Revenue Service (IRS), Dept. of Justice (DOJ), State Attorney General of 24 States UBS AG and UBS Financial Services Inc reached settlements with the SEC. the IRS, the DOJ and a group of State Attorneys General regarding investigations into the conduct of certain former employees in UBS Financial Services former municipal reinvestment and derivatives group from 2001 to 2006. Allegations included violations of: Section I5(cX1XA) of the Securities Exchange Act of 1934, Section I of the Sherman Act, and IRS regulations in bidding practices and representations made involving the investment of proceeds of municipal securities transactions. Disposition: SEC: Waiver and Consent to Final Judgment enjoining UBS from violating Section 15(c) of the Act, disgorgement of profits, interest and civil penalty IRS: Closing Agreement; DOJ: Non- prosecution Agreement SEC: Disgorgement of $9,606,543 plus interest of 55,100,637 and civil penalty of $32,500,000; IRS: penalty of $18 million and restitution of 4.3 million; States: 570.8 million plus $20 million credited from the SEC settlement 4. Date of Action: Dec. 22, 2008 Brought By. Securities and Exchange Commission (SEC). Massachusetts Securities Division, New York State Attorney General (NYAG) and other members of the North American Securities Administrators Association. Auction Rate Securities (ARS): UBS is permanently enjoined from violations of the broker/dealer anti-fraud provisions. Allegations: violations of 34 Act Section 15(c) regarding the marketing and sale of Auction Rate Securities. Disposition: Cease & Desist Injunction; Civil Penalty; Consent Judgment Cease & Desist, and Fines in varying amounts currently being paid to all 50 states. UBS Financial Services Inc. (together with UBS Securities LLC) agreed to pay a fine of 5150 million ($75 million to the NYAG and S75 million allocated to the remaining states). ML281837-MAXWELL Page 2 of 4 CONFIDENTIAL UBSTERRAMAR00001133 EFTA00236789 Disclosure Statement under Rule 506(d) Date of Action: July 16, 2C3 Entity UBS Financial Services Brought By. Attorney General State of NY Allegations: Non-discretionary fee-based brokerage accounts offered by UBS were unsuitable for certain clients and fees/commissions were higher than non- fee based accounts Disposition: Remediation to Customers & Penalty to State of NY Remediation: $21,300,000; Penalty 52,000,000 6. Date of Action: March 7, 2005 Entity: UBS Financial Services Brought By. State of Illinois Allegations: Failure to provide investors with accurate account statements re: callable CD's and failure to supervise. Disposition: Fine Fine: 595,000 7. Date of Action: April 28, 2003 — March 19, 2004 Entity: UBS Financial Services and affiliates Brought By. Secretary of State of 47 States and Washington Allegations: Violation of Securities Act regulations regarding research practices and conflicts of interest arising from those practices. Violations of Section 17(b) of the Securities Act of 1933, NYSE Rules 476(aX6), 401, 472, 476(A)(6) and 342, NASD Rules 2210 and 2110 and state securities laws Disposition: Cease & Desist, Fine, Penalty, Disgorgement, Investor Education. Details: UBS Financial Services Inc. (together with UBS Securities LLC) paid a total of $80M (allocated among the states), which includes 525M penalty, 525M as disgorgement, 525M to be used for procurement of independent research and S5M for investor education. Fines varied by State. Finandal Advisors of UBS Finandal Semites, Inc 8. Date of Action: March 2007 Entity: Individual Financial Advisor Brought By. State of New York Department of Insurance Disposition: Final Order in connection with violations of sections 2123 of the NY Insurance Law and Department Regulation 60 01 NYCRR 51.5). 9. Date of Action: June 9, 2008 Entity: Individual Financial Advisor Brought By. State of New York Department of Insurance Disposition: Final Order issued in connection with violations of sections 2123 of the NY Insurance Law and Department Regulation 60 (11 NYCRR 51.5). 10. Date of Action: May 12, 2000 Entity: Individual Financial Advisor Brought By. Ohio Division of Securities Details: The Ohio Division of Securities issued a final order to deny the Financial Advisor's application for a securities sales cerson license. ML281837-MAXWELL Page 3 of 4 CONFIDENTIAL UBSTERRAMAR00001134 EFTA00236790 Disclosure Statement under Rule 506(d) ithacsisa 11. Date of Action: February 2, 2010 Entity: Individual Financial Advisor Brought By: State of Nevada Details: State of Nevada issued Final Order revoking the Financial Advisor's license to act as a sales representative on Feb. 2, 2010. UBS AG (Parent Company) 12. Date of Action: May 10, 2004 Entity. UBS AG Brought by: Federal Reserve Bank of New York Details: UBS engaged in U.S. Dollar banknote transactions with counterparties in jurisdictions subject to U.S. sanctions, and certain former officers and employees of UBS AG engaged in intentional acts aimed at concealing, which included falsifying reports, those banknote transactions from the Federal Reserve Bank of New York Disposition: UBS AG consented to the issuance of an order without admitting or denying the allegations and paid a civil penalty of $100 million. 13. Date of Action: February 2009 Brought By: SEC and US Department of Justice Allegations: UBS entered into a Deferred Prosecution Agreement with the D.O.J. and a Consent Order with the SEC in connection with an investigation into the firms Cross-Border business. UBS AG agreed to disgorge profits and pay back taxes. UBS AG will terminate cross-border business serving private clients out on non SEC registered entities. Disposition: Disgorgement ($200,000,000 is to the SEC); Back Taxes Payment, Monetary Sanctions: 5380,000,000; $400,000,000 14. Date of Action: January 2011 Disposition: SIX Swiss Exchange Regulation OBS AG was fined for (i) publishing too late internally available information related to expected losses in the summer of 2007 and (2) breaching rules on the provision of information about corporate governance in the 2008 UBS annual report. Disposition: Fine CHF100,000 15. Date of Action: December 2008 Brought By: Swiss Federal Banking Commission Allegations: The cross-border business of UBS AG private diems was investigated and the firm was required to cease operating its non-W9 relationships, and to establish an adequate risk management and control system for this business. Disposition: Injunction 16. Date of Action: December 12, 2012 Brought By. FSA, FINMA, CFTC Entity. UBS AG On 19 December 2012, UBS AG entered into settlements with the US Department of Justice (Dal), UK Financial Services Authority, and the Commodity Futures Trading Commission (CFTC) in connection with their investigations of manipulation of LIBOR and other benchmark interest rates. The Swiss Financial Market Supervisory Authority (FINMA) also issued an order concluding its formal proceedings with respect to UBS. UBS agreed to pay a total of approximately CHF 1.4 billion in fines and disgorgement. UBS will pay GBP 160 million in fines to the FSA and CHF 59 million as disgorgement of estimated profits to FINMA. FINMA: Reprimand and disgorgement of estimated profits CHF 59 million FSA: Fine GBP 160 million CFTC: Fine, USD 700 million ML281837-MAXWELL Page 4 of 4 CONFIDENTIAL UBSTERFtAMAR00001135 EFTA00236791