Alternative/Hybrid

ETRACS 2xLeveraged Long Wells Fargo Business Development Company

The ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index is designed to track a leveraged investment in the Wells Fargo Business Development Company Index (the "Index"), and pay a variable quarterly coupon linked to the leveraged cash distributions associated with the underlying Business Development Company ("BDC") constituents, less financing costs and investor fees.

Market data
Number of holdings

Risks & Benefits

Product profile

Product Name	ETRACS 2xLeveraged Long Wells Fargo Business Development Company Index
Underlying Index	Wells Fargo Business Development Company Index
Issuer	UBS AG
Ticker Symbol	BDCL
Current Annual Index Yield*¹	7.84%
Current Annual Leveraged Yield*¹	14.57%
CUSIP	90267B765
Primary Exchange	NYSE Arca
Initial Trade Date	May 24, 2011
Maturity Date	May 24, 2041
Leveraged	2x
Annual Tracking Fee (%)*¹	0.85% accrued on a daily basis

* As of May 20, 2011. See 'Risk considerations & Benefits' as well as the 'Important legal information specific to ETRACS ETNs' link below for more information

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Market data

Closing Price	28.27	Volume	67,319
Net Change	0.11	20 Day Volume Average	81,297.30
% Change	0.00	Shares Outstanding	3,775,000
High (52 week)	30.30	Market Cap	106,719,253.54
Low (52 week)	18.71	Daily Indicative Value	28.23
Updated on: May 24, 2013

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Number of holdings: 26 BDCs

Top 10 Holdings
Ares Capital Corp	ARCC	10.00%
American Capital Ltd	ACAS	10.00%
Apollo Investment Corp	AINV	10.00%
Prospect Capital Corp	PSEC	9.56%
Fifth Street Finance Corp	FSC	6.98%
Solar Capital Ltd	SLRC	6.16%
BlackRock Kelso Capital Corp	BKCC	5.78%
PennantPark Investment Corp	PNNT	4.74%
MCG Capital Corp	MCGC	4.11%
Main Street Capital Corp	MAIN	3.27%

Source: Wells Fargo; as of May 20, 2011

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Key benefits & Selected risk considerations

Benefits:

Leveraged exposure to a portfolio of Business Development Companies through a single investment.
Leveraged income potential via variable quarterly coupons linked to the cash distributions, if any, paid on the BDCs in the Index, less investor fees. If the BDCs do not make distributions or those distributions do not overcome the investor fees, then investors will not receive any coupons.

Selected risk considerations:

An investment in the ETRACS ETNs involves risks. Selected risks are summarized here, but we urge you to read the more detailed explanation of risks described in the "Risk Factors" section of the prospectus supplement for the ETRACS ETNs (the "ETRACS Prospectus"). Capitalized terms used below (and elsewhere in this document) but not defined herein shall have the meanings attributed to them in the ETRACS Prospectus.

You may lose some or all of your investment — The ETNs are exposed to two times any monthly decline in the level of the Index. The compounded leveraged monthly return of the Index will need to be sufficient to offset the negative effect of the Accrued Fees and Redemption Fee Amount, if applicable, less any Coupon Amounts and Stub Reference Distribution Amount, if any, in order for you to receive an aggregate amount over the term of the ETN equal to your initial investment in the ETN. If the compounded leveraged monthly return of the Index is insufficient to offset such negative effect, or if the compounded leveraged monthly return of the Index is negative, you will lose some or all of your investment at maturity, call, acceleration or upon early redemption. In addition, Coupon Amounts, if any, will be reduced by the Accrued Fees. See "Risk Factors — You are not guaranteed any coupon payments."
Correlation and compounding risk — A number of factors may affect the ETN's ability to achieve a high degree of correlation with the performance of the Index, and there can be no guarantee that the ETN will achieve a high degree of correlation. Because the Current Principal Amount is reset monthly, you will be exposed to compounding of monthly returns. As a result, the performance of the ETN for periods greater than one month is likely to be either greater than or less than the Index performance times the leverage factor of two, before accounting for Accrued Fees and the Redemption Fee Amount, if any. In particular, significant adverse monthly performances of your ETNs may not be offset by subsequent beneficial monthly performances of equal magnitude.
Leverage risk — The ETNs are two times leveraged long with respect to the Index, which means that you will benefit two times from any beneficial, but will be exposed to two times any adverse, monthly performance of the Index, before accounting for the Accrued Fees and Redemption Fee Amount, if any.
Market risk — The return on the ETNs, which may be positive or negative, is linked to the compounded leveraged monthly return on the Index which, in turn, is affected by a variety of market and economic factors, interest rates in the markets and economic, financial, political, regulatory, judicial or other events that affect the Index constituents or the markets generally.
Credit of issuer — The ETNs are senior unsecured debt obligations of the issuer, UBS, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Any payment to be made on the ETNs, including any payment at maturity, call or upon early redemption, depends on the ability of UBS to satisfy its obligations as they come due. As a result, the actual and perceived creditworthiness of UBS will affect the market value, if any, of the ETNs prior to maturity, call or early redemption. In addition, in the event UBS were to default on its obligations, you may not receive any amounts owed to you under the terms of the ETNs.²
A trading market for the ETNs may not develop — Although the ETNs have been approved for listing on NYSE Arca, subject to official notice of issuance, a trading market for the ETNs may not develop. Certain affiliates of UBS may engage in limited purchase and resale transactions in the ETNs, although they are not required to and may stop at any time. We are not required to maintain any listing of the ETNs on NYSE Arca or any other exchange. In addition, we are not obliged to, and may not, sell the full aggregate principal amount of the ETNs shown on the cover of the ETRACS prospectus. We may suspend or cease sales of the ETNs at any time, at our discretion. Therefore, the liquidity of the ETNs may be limited.
Limited performance history — The return on the ETNs is linked to the performance of the Index, which was introduced on January 28, 2011. As a result, the Index has a limited performance history, and it is uncertain how the Index will perform. Limited historical information will be available for you to consider in making an independent investigation of the Index performance, which may make it more difficult for you to make an informed decision with respect to an investment in the ETNs than if the Index had a longer performance history.
No redemption prior to June 3, 2011 — You may elect to redeem your ETNs on or after June 3, 2011. Accordingly, your ability to liquidate the ETNs may be limited prior to that date.
Minimum redemption amount — You must elect to redeem at least 50,000 ETNs for UBS to repurchase your ETNs, unless we determine otherwise or your broker or other financial intermediary bundles your ETNs for redemption with those of other investors to reach this minimum requirement and there can be no assurance that they can or will do so. Therefore, the liquidity of the ETNs may be limited.
Your redemption election is irrevocable — You will not be able to rescind your election to redeem your ETNs after your redemption notice is received by UBS. Accordingly, you will be exposed to market risk in the event market conditions change after UBS receives your offer and the Redemption Amount is determined on the Redemption Valuation Date.
Potential automatic acceleration — In the event the indicative value of the ETNs is equal to $5.00 or less on any Index Business Day or the intraday index value on any Index Business Day decreases 30% from the most recent Monthly Initial Closing Level, the ETNs will be automatically accelerated and mandatorily redeemed by UBS and you will receive a cash payment equal to the Acceleration Amount as determined during the Acceleration Measurement Period. The Acceleration Amount you receive on the Acceleration Settlement Date may be significantly less than $5.00 per ETN and may be zero if the level of the Index continues to decrease during trading on one or more Index Business Days during the Acceleration Measurement Period as measured by the Index Performance Ratio on one or more Index Business Days during the Acceleration Measurement Period.
You are not guaranteed a coupon payment — You will not receive a coupon payment on a Coupon Payment Date if the Reference Distribution Amount is less than the Accrued Fees. In addition, any Fee Shortfall will reduce the Coupon Amount, if any, for the following Coupon Valuation Date.
Uncertain tax treatment — Significant aspects of the tax treatment of the ETNs are uncertain. You should consult your own tax advisor about your own tax situation.
UBS's call right — UBS may elect to redeem all outstanding ETNs at any time on any Exchange Business Day (or if such day is not an Exchange Business Day, the next Exchange Business Day) on or after May 29, 2012, as described in the ETRACS Prospectus under the heading "Specific Terms of the ETNs — UBS's Call Right." If UBS exercises its Call Right, the Call Settlement Amount may be less than the Principal Amount of your ETNs. Alternatively, if the ETNs have increased in value, you may have to invest your proceeds in a lower-return investment.

¹ 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.

² The issuer credit rating is as of May 20, 2011 and pertains to the creditworthiness of UBS AG (that is, the ability of UBS AG to meet its obligations under the terms of the ETNs) and is not indicative of the market risk associated with the ETNs. The creditworthiness of UBS AG does not affect or enhance the likely performance of the ETNs other than with respect to the ability of UBS AG to meet its obligations thereunder. We have not obtained a rating from any rating organization with respect to the ETRACS ETNs.

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