UBS PERLES

Outperformance in a range of market conditions 

This is a summary only – potential investors should obtain a copy of the relevant Information Memorandum (IM) before making a decision to invest in any of the UBS PERLES series. Capitalised terms used in this document have the meaning given to them in the relevant IM.

General product description

PERLES products aim to deliver exposure to the performance of an underlying asset - e.g. a stock, a basket of stocks, an equity index, an investment strategy, a commodity. As such, they can be used by investors to gain the exposure that they would have been able to achieve (net of fees) if they had purchased the underlying asset directly, noting that dividends are forgone. PERLES often provide access to underlying asset classes, to which an investor would find it impossible or expensive to gain access, e.g. a private investor seeking exposure to a basket of foreign equity indices hedged back to Australian dollars. Depending on the underlying asset and the investment term, a greater than 100% participation rate may also be possible but this will provide a leveraged exposure and will entail greater capital risk for the investor i.e. greater participation also magnifies positive and negative returns.

At Maturity, Investors will receive a Delivery Parcel made up of a number of the Delivery Assets (as specified in the IM for the relevant Series) equal in value to the Final Value (less Costs and Taxes, if any). Investors may take advantage of the Agency Sale Agreement (described in the relevant IM) to sell their Delivery Parcel and receive the Sale Proceeds in cash.

Some more specific examples of PERLES structures are:

Basket and index-linked PERLES

A PERLES linked to an equity basket lets you invest on a diversified basis in, say, a specific sector with little capital and administrative outlay. Alternatively, you can invest in a product that aims to replicate the performance of an index e.g. S&P 500 Index by investing in PERLES linked to indices.

Outperformance PERLES

The value of an Outperformance PERLES is impacted by the excess performance or underperformance of one underlying asset relative to another. By investing in an Outperformance PERLES product, the investor is able to express a view on two underlying assets at the same time (these can be single shares, baskets, indices, etc). Outperformance PERLES may be subject to a stop loss limit whereby an early maturity can be triggered if the value of the investment falls below a certain level prior to maturity.

Strategy PERLES

Strategy PERLES aim to replicate the performance of a systematic investment strategy developed by UBS, which may be a growth or value strategy or a combination of the two (e.g. a price/earnings to growth strategy – “PEG”). The individual underlyings are selected, weighted and if necessary switched by UBS at predetermined times in line with this strategy.

Investor profile and suitability

• Experienced investors familiar with structured products.
• Looking for an instrument that offers broad risk diversification
• Have a clear directional view on the performance of the underlying asset(s) over the investment term, e.g. investor expects the price of the underlying to rise and would like to profit from this.
• Have an understanding of the risks of investing in PERLES and also in a position to take risks when investing.

Key benefits of investing in UBS PERLES

• Enables an investment where direct access to the underlying is otherwise difficult, expensive or impossible for an individual investor
• Diversification (except where only one underlying is selected)
• Can be used to deliver a currency hedged foreign asset exposure to Australian investors

Risks

• The potential loss on a PERLES will be magnified if there is leveraged exposure to the underlying asset and it will be more than the loss on a direct investment in the underlying plus fees, so investors must be aware that they could lose all of their invested capital in the worst-case scenario.
• Unlike a direct investment, the holder will not receive distributions, other shareholder benefits or related tax credits.
• Limited liquidity (at the discretion of UBS)
• Any payments under the PERLES products or delivery of Delivery Assets are subject to the creditworthiness of the Issuer of the product, which is set out in IM for the relevant Series.

This is not a full list of the risks of investing. UBS recommends that Investors obtain the IM or other documentation for the relevant product and read it before making a decision to invest. The IM is available from UBS by calling 1800 633 100.

Important Disclaimer

Global Sales and Trading Disclaimer.