UBS launches Exchange-Traded Note with significant monthly income potential and 2X leveraged exposure to a closed-end fund index

Significant income potential in the form of a variable monthly coupon linked to 2 times the cash distributions, if any, on the Index constituents. If the Index constituents do not make distributions, then investors will not receive any coupons.

Monthly compounded 2x leveraged exposure to an index comprised of 30 closed-end funds that vary by asset class, investment strategy, asset manager and investment region.

Potential for price appreciation as the closed-end funds in the Index are selected, in part, on the basis of their share price discount from net asset value.

“The index tracked by CEFL selects and ranks the 30 component closed-end funds on the basis of their income yield and their discount from NAV,” said Paul Somma, Senior ETRACS Structurer.  “So CEFL is expected to provide investors significant income potential, as well as the opportunity for price appreciation, all by way of a single, exchange-traded security.”

About the ISE High Income™ Index

The ISE High Income™ Index (the “Index”) measures the performance of 30 U.S. closed-end funds, as selected and ranked by the Index sponsor in accordance with the Index methodology.  To be eligible for inclusion in the Index, a fund must be domiciled in the U.S., be listed on a U.S. securities exchange and satisfy minimum market capitalization and liquidity requirements.  Each eligible fund is ranked in descending order in accordance with a multivariate ranking scheme based on three factors: yield; share price discount from net asset value; and trading liquidity, with the 30 highest-ranking funds included in the Index.  The Index constituent weights are determined by a modified linear weighting methodology that results in higher-ranked funds receiving a greater Index weighting than lower-ranked funds.  The Index is rebalanced yearly to ensure that Index constituents do not exceed Index target weightings. 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 are reflected in the variable monthly coupon that may be paid to investors of CEFL). The Index was created on April 11, 2013 and, therefore, has no performance history prior to that date.

Asset Managers Represented in the Index*