UBS Launches ETN With Significant Monthly Income Potential and Exposure To A Diversified, Multi-Asset Index

ubs1UBS Investment Bank announced that today is the first day of trading on the NYSE Arca® for the ETRACS Diversified High Income ETN (NYSE:DVHI). DVHI is linked to the performance of the NYSE® Diversified High Income Index (the “Index”).

“Investors seeking high yields typically turn to investments in narrowly-focused asset classes or sectors”

DVHI Profile
Underlying Index NYSE® Diversified High Income Index
Index Yield* 7.71%
Income Potential Variable monthly coupon linked to the cash distributions, if any, of the 138 Index constituents, less investor fees and any withholding taxes

*The Index Yield is calculated as of September 13, 2013 by the sponsor of the Index, NYSE Group, Inc. Because the Index Yield does not reflect investor fees or applicable withholding taxes, and the variable monthly coupon that may be paid by the ETN, if any, is subject to fees and withholding taxes, the yield on the ETNs will always be less than the Index Yield (and the total return on the ETNs will always be less than the total return on a hypothetical direct investment in the Index or Index constituents). Investors are not guaranteed any coupon or distribution amount under the ETN.

DVHI Offers Investors:

  • Significant income potential in the form of a variable monthly coupon linked to the cash distributions, if any, on the Index constituents, less investor fees and any withholding taxes.
  • Exposure to an index comprised of a diversified portfolio of 138 publicly-traded, income-producing securities.
  • Diversification across geographic regions (e.g., emerging market bonds and international equities) and across asset classes and sectors(e.g., equities, fixed income, MLPs, BDCs, REITs, preferred stock, high yield bonds, etc.).

“Investors seeking high yields typically turn to investments in narrowly-focused asset classes or sectors,” said Paul Somma, Senior ETRACS Structurer. “DVHI’s exposure to a multi-asset index provides investors with access to a diversified portfolio of income-producing assets in a single, transparent, exchange-traded security.”

About the NYSE® Diversified High Income Index

The NYSE® Diversified High Income Index (the “Index”) measures the performance of a diversified basket of 138 publicly-traded securities that historically pay significant dividends or distributions (referred to herein as “dividends”). According to the Index sponsor, NYSE Group, Inc., the Index’s features and construction seek to highlight income, while the diversification of the Index constituent sectors seeks to reduce price volatility. The Index methodology incorporates minimum free float market capitalization, as well as dividend yield, liquidity and asset class and sector weighting requirements. The Index is rebalanced quarterly to maintain the sector target weightings set forth in Table 1 below. The Index is a price return index (i.e., the reinvestment of dividends is not reflected in the Index; rather, any cash distributions on the Index constituents, less investor fees and any withholding taxes, are reflected in the variable monthly coupon that may be paid to investors of the ETN). The Index was created on August 20, 2013 and, therefore, has no performance history prior to that date.

Table 1 – Asset Classes, Sectors and Sector Target Weightings
Asset Class Asset Class
Weighting
Sector Sector Securities Number of
Constituents
Sector Target
Weighting
Equities 60.00% Business
Development
Companies
Business
Development
Companies
15 15.00%
Energy MLPs Energy MLPs 25 15.00%
Mortgage REITs Mortgage REITs 15 7.50%
REITs REITs 20 7.50%
U.S.-listed Equities U.S.-listed Equities 50 7.50%
International
Equities
International
Equities ETFs
4 7.50%
Fixed Income,
Bonds and Related
Assets
40.00% Municipal Bonds Municipal Bond
ETFs
3 10.00%
High Yield Bonds High Yield Bond
ETF
1 10.00%
Emerging Markets
Bonds
Emerging Markets
Bond ETF
1 10.00%
Preferred Stock Preferred Stock
ETFs
4 10.00%
Source: NYSE Group, Inc.
Top 10 Index Constituents
Name Ticker Sector % Weight
PowerShares Emerging Markets Sovereign Debt ETF PCY Emerging Markets Bonds 9.97%
iShares iBoxx $ High Yield Corporate Bond ETF HYG High Yield Bonds 9.93%
iShares US Preferred Stock ETF PFF Preferred Stock 7.04%
Market Vectors High Yield Municipal Index ETF HYD Municipal Bonds 4.94%
Ares Capital Corp ARCC Business Development
Companies
4.15%
Energy Transfer Partners LP ETP Energy MLPs 4.00%
iShares International Select Dividend ETF IDV International Equities 3.80%
PowerShares Insured National Municipal Bond ETF PZA Municipal Bonds 3.74%
Prospect Capital Corp PSEC Business Development
Companies
2.66%
American Capital Agency Corp AGNC Mortgage REITs 2.66%
Source: NYSE Group, Inc., as of September 13, 2013

About ETRACS

For further information about ETRACS ETNs, go to www.etracs.com.

ETRACS ETNs are exchange-traded notes, an innovative class of investment products offering access to markets and strategies that may not be readily available to investors, and offer unique diversification opportunities in a number of different sectors. ETRACS ETNs may offer:

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