UBS Announces New Exchange Traded Note Linked to 2X Leveraged Wells Fargo Business Development Company Index

UBS Investment Bank announced today that it has expanded its ETRACS Exchange Traded Notes (“ETNs”) platform by adding the new ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index. It began trading today on NYSE Arca under the ticker symbol, BDCL, and provides leveraged exposure to Business Development Companies through a single investment.

“We are excited to add this ETN to our growing family of ETRACS ETNs. This new ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index is particularly useful for investors seeking exposure to the BDC space and with 2X leverage, the Current Annual Leveraged Yield is 14.57%*”

“We are excited to add this ETN to our growing family of ETRACS ETNs. This new ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index is particularly useful for investors seeking exposure to the BDC space and with 2X leverage, the Current Annual Leveraged Yield is 14.57%*,” said Christopher Yeagley, Managing Director and US Head of Equity Structured Products. “This ETN follows our successful launch of the Wells Fargo Business Development Company Index ETN (NYSE:BDCS), the first exchange traded product giving exclusive exposure to BDCs, on April 28, 2011. It is our third ETN with Wells Fargo and we are pleased to partner with them once again.”

BDCs are public vehicles that invest in private equity and debt and were created to increase financing available to small businesses. They function much like private equity funds, although BDCs allow various investors, regardless of size, to participate. A BDC lends to small and midsized companies at high yield equivalent rates and often takes equity stakes in these companies.

The Wells Fargo Business Development Company Index is comprised of 26 BDCs and is a float adjusted, capitalization-weighted index that is intended to measure the performance of BDCs that are publicly listed and satisfy specified market capitalization and other eligibility requirements.

About ETRACS

ETRACS belong to an innovative class of investment products offering access to markets and strategies that had not previously been readily available to investors, and offer unique diversification opportunities in a number of different sectors.

UBS has 19 other existing ETRACS ETNs – 10 that track the performance of various UBS Bloomberg CMCI indexes, like platinum, silver, gold, livestock, food, etc; one that tracks the total return of the Dow Jones-UBS Commodity Index; one linked to the S&P 500 Gold Hedged Index; one linked to the Wells Fargo Business Development Company Index; one linked to the Alerian MLP Infrastructure Index; one that offers 2x leveraged exposure to the Alerian MLP Infrastructure Index; one linked to the Alerian Natural Gas MLP Index; one that offers 1x monthly short exposure to the Alerian MLP Infrastructure Total Return Index; one linked to the Wells Fargo MLP Index; and one linked to the S&P 500 VIX Futures Term-Structure Index.

ETRACS are senior unsecured notes issued by UBS AG, are traded on NYSE Arca, and can be bought and sold through a broker or financial advisor. An investment in ETRACS is subject to a number of risks, including the risk of loss of some or all of the investor’s principal. We urge you to read the more detailed explanation of risks described under “Risk Factors” in the prospectus supplement for the ETRACS ETN. For more information about ETRACS, please visit www.ubs.com/etracs.

The contents of any website referred to in this communication are not part of, or incorporated by reference in, this communication. UBS has filed a registration statement (including a prospectus, as supplemented by a prospectus supplement for the offering of the ETRACS ETNs) with the Securities and Exchange Commission (the “SEC”) for the offering to which this communication relates. Before you invest, you should read these documents and any other documents that UBS has filed with the SEC for more complete information about UBS and the offering to which this communication relates. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, you can request the prospectus and the applicable prospectus supplement by calling toll-free (+1-877-387 2275).

Wells Fargo and Wells Fargo Business Development Company Index are trademarks of Wells Fargo & Company and have been licensed for use by UBS AG. ETRACS ETNs are not issued by, sponsored or advised by Wells Fargo & Company or its affiliates and Wells Fargo & Company makes no representation or guarantee regarding the performance of investing in the ETRACS ETNs. Wells Fargo & Company does not guarantee that the Index referenced by the ETRACS ETNs has been accurately calculated and shall not have any liability for any error in the calculation.

* The Current Annual Index Yield as of May 20, 2011 is calculated by Wells Fargo and is determined by taking the most recently declared distribution of each of the Business Development Companies that constitute the Index (“constituent BDC”), and creating an annualized yield for each constituent BDC by (i) multiplying that number by the dividend frequency and (ii) dividing the resulting number by the current market price of the applicable constituent BDC. The Current Annual Index Yield is the sum of the products of those individual annualized yields of each constituent BDC and their relative weights in the Index. The Current Annual Leveraged Yield is derived by multiplying the Current Annual Index Yield by the leverage factor, 2, and subtracting hypothetical fees of 1.11%. The hypothetical fees include the Annual Tracking Fee of .85% and an assumed financing rate of .258%. The actual Coupon Amounts payable under the ETNs (if any) are based on the cash distributions that a hypothetical holder of Index constituents would have been entitled to receive during the relevant period, reduced by the Accrued Fees. The Accrued Fees as of any date of determination are the sum of (i) The Accrued Tracking Fee as of such date (which is based on the Annual Tracking Fee), (ii) the Accrued Financing Charge as of such date and (iii) the Fee Shortfall as of the immediately preceding Coupon Valuation Date, if any. Because the Accrued Fees take into account the performance of the Index, as measured by the Index Factor, the absolute level of the Accrued Fees are dependant on the path taken by the Index Closing Level to arrive at its ending level. In addition, the Accrued Fees include a floating financing rate (i.e., a variable rate) rather than a fixed rate of .258%. Therefore, the assumed fees and financing charges used to calculate the Current Annual Leveraged Yield are purely hypothetical and will necessarily be different, and could be substantially different (either greater or less) than the actual fees and financing charges (i.e., the Accrued Fees) that will reduce the Coupon Amounts and ultimately determine the actual annual yield that an investor might receive under the ETNs. THE ACTUAL ANNUAL ETN YIELD THAT INVESTORS MAY RECEIVE WILL BE DIFFERENT, AND COULD BE SUBSTANTIALLY DIFFERENT (EITHER GREATER OR LESS) THAN THE CURRENT ANNUAL LEVERAGED YIELD. YOU ARE NOT GUARANTEED ANY COUPON OR DISTRIBUTION AMOUNT UNDER THE ETN. Capitalized terms used above but not defined herein shall have the meanings attributed to them in the prospectus supplement for the ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index.

UBS Investment Bank announced today that it has expanded its ETRACS Exchange Traded Notes (“ETNs”) platform by adding the new ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index. It began trading today on NYSE Arca under the ticker symbol, BDCL, and provides leveraged exposure to Business Development Companies through a single investment.

“We are excited to add this ETN to our growing family of ETRACS ETNs. This new ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index is particularly useful for investors seeking exposure to the BDC space and with 2X leverage, the Current Annual Leveraged Yield is 14.57%*”

“We are excited to add this ETN to our growing family of ETRACS ETNs. This new ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index is particularly useful for investors seeking exposure to the BDC space and with 2X leverage, the Current Annual Leveraged Yield is 14.57%*,” said Christopher Yeagley, Managing Director and US Head of Equity Structured Products. “This ETN follows our successful launch of the Wells Fargo Business Development Company Index ETN (Ticker: BDCS), the first exchange traded product giving exclusive exposure to BDCs, on April 28, 2011. It is our third ETN with Wells Fargo and we are pleased to partner with them once again.”

BDCs are public vehicles that invest in private equity and debt and were created to increase financing available to small businesses. They function much like private equity funds, although BDCs allow various investors, regardless of size, to participate. A BDC lends to small and midsized companies at high yield equivalent rates and often takes equity stakes in these companies.

The Wells Fargo Business Development Company Index is comprised of 26 BDCs and is a float adjusted, capitalization-weighted index that is intended to measure the performance of BDCs that are publicly listed and satisfy specified market capitalization and other eligibility requirements.

About ETRACS

ETRACS belong to an innovative class of investment products offering access to markets and strategies that had not previously been readily available to investors, and offer unique diversification opportunities in a number of different sectors.

UBS has 19 other existing ETRACS ETNs – 10 that track the performance of various UBS Bloomberg CMCI indexes, like platinum, silver, gold, livestock, food, etc; one that tracks the total return of the Dow Jones-UBS Commodity Index; one linked to the S&P 500 Gold Hedged Index; one linked to the Wells Fargo Business Development Company Index; one linked to the Alerian MLP Infrastructure Index; one that offers 2x leveraged exposure to the Alerian MLP Infrastructure Index; one linked to the Alerian Natural Gas MLP Index; one that offers 1x monthly short exposure to the Alerian MLP Infrastructure Total Return Index; one linked to the Wells Fargo MLP Index; and one linked to the S&P 500 VIX Futures Term-Structure Index.

ETRACS are senior unsecured notes issued by UBS AG, are traded on NYSE Arca, and can be bought and sold through a broker or financial advisor. An investment in ETRACS is subject to a number of risks, including the risk of loss of some or all of the investor’s principal. We urge you to read the more detailed explanation of risks described under “Risk Factors” in the prospectus supplement for the ETRACS ETN. For more information about ETRACS, please visit www.ubs.com/etracs.

The contents of any website referred to in this communication are not part of, or incorporated by reference in, this communication. UBS has filed a registration statement (including a prospectus, as supplemented by a prospectus supplement for the offering of the ETRACS ETNs) with the Securities and Exchange Commission (the “SEC”) for the offering to which this communication relates. Before you invest, you should read these documents and any other documents that UBS has filed with the SEC for more complete information about UBS and the offering to which this communication relates. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, you can request the prospectus and the applicable prospectus supplement by calling toll-free (+1-877-387 2275).

Wells Fargo and Wells Fargo Business Development Company Index are trademarks of Wells Fargo & Company and have been licensed for use by UBS AG. ETRACS ETNs are not issued by, sponsored or advised by Wells Fargo & Company or its affiliates and Wells Fargo & Company makes no representation or guarantee regarding the performance of investing in the ETRACS ETNs. Wells Fargo & Company does not guarantee that the Index referenced by the ETRACS ETNs has been accurately calculated and shall not have any liability for any error in the calculation.

* The Current Annual Index Yield as of May 20, 2011 is calculated by Wells Fargo and is determined by taking the most recently declared distribution of each of the Business Development Companies that constitute the Index (“constituent BDC”), and creating an annualized yield for each constituent BDC by (i) multiplying that number by the dividend frequency and (ii) dividing the resulting number by the current market price of the applicable constituent BDC. The Current Annual Index Yield is the sum of the products of those individual annualized yields of each constituent BDC and their relative weights in the Index. The Current Annual Leveraged Yield is derived by multiplying the Current Annual Index Yield by the leverage factor, 2, and subtracting hypothetical fees of 1.11%. The hypothetical fees include the Annual Tracking Fee of .85% and an assumed financing rate of .258%. The actual Coupon Amounts payable under the ETNs (if any) are based on the cash distributions that a hypothetical holder of Index constituents would have been entitled to receive during the relevant period, reduced by the Accrued Fees. The Accrued Fees as of any date of determination are the sum of (i) The Accrued Tracking Fee as of such date (which is based on the Annual Tracking Fee), (ii) the Accrued Financing Charge as of such date and (iii) the Fee Shortfall as of the immediately preceding Coupon Valuation Date, if any. Because the Accrued Fees take into account the performance of the Index, as measured by the Index Factor, the absolute level of the Accrued Fees are dependant on the path taken by the Index Closing Level to arrive at its ending level. In addition, the Accrued Fees include a floating financing rate (i.e., a variable rate) rather than a fixed rate of .258%. Therefore, the assumed fees and financing charges used to calculate the Current Annual Leveraged Yield are purely hypothetical and will necessarily be different, and could be substantially different (either greater or less) than the actual fees and financing charges (i.e., the Accrued Fees) that will reduce the Coupon Amounts and ultimately determine the actual annual yield that an investor might receive under the ETNs. THE ACTUAL ANNUAL ETN YIELD THAT INVESTORS MAY RECEIVE WILL BE DIFFERENT, AND COULD BE SUBSTANTIALLY DIFFERENT (EITHER GREATER OR LESS) THAN THE CURRENT ANNUAL LEVERAGED YIELD. YOU ARE NOT GUARANTEED ANY COUPON OR DISTRIBUTION AMOUNT UNDER THE ETN. Capitalized terms used above but not defined herein shall have the meanings attributed to them in the prospectus supplement for the ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index.

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