New ‘Drag Levels’ for swap-based UBS ETFs

Following an extensive review of the markets, the annual Drag Level review for UBS swap-based ETFs has been completed. We are pleased to inform you that we have again achieved competitive pricing, with of course the unique added benefit of zero tracking error, giving you exactly the return of the index, less Drag Level. The new Drag Levels, which are fixed for the next one-year period, are valid as of 31 July 2012, the Index Tracking Reset Date.

UBS swap-based ETFs have a unique and fully transparent fee model, which is based on the concept of ‘Drag Level’ – i.e. the total expense ratio (TER) plus all transaction costs. In other words, the Drag Level reflects the future performance differential of the ETF versus the index it replicates. UBS defined the concept of Drag Level in order to be as transparent as possible, which is achievedby disclosing all costs involved to the investor in advance. Unlike the realised tracking error, or “Total Cost of Ownership”, which discloses the historic costs for the previous one-year period. Due to the dynamic nature of financial markets, historic costs are not an accurate indication of future costs.