HVB DIP 2006-Title Summaryv13.DOC - UniCredit

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Certificate and such valuation date. Even if the underlying asset performed well in the period prior to the valuation
date but only decreased on such valuation date the calculation of the redemption amount would only be
based on the valuation date. Especially for underlying assets showing a high volatility this may lead to a redemption
amount being significantly lower than the value of the underlying asset prior to the valuation date might
have suggested.
Risk-Hedging Transactions
Holders of Certificates may not be able to make transactions to preclude or limit risks at all times during the term
of the Certificate. Their ability to do so will depend on market conditions and the underlying terms and conditions.
In some cases investors may be able to make such transactions only at a market price that is disadvantageous
to them, so that a significant loss would be incurred.
Open-End Certificates
Open End Certificates give their holder an entitlement to the payment of a redemption amount or to the delivery
of an underlying asset on redemption dates or termination dates to be decided by the Issuer. No automatic payment
of the redemption amount, or automatic delivery of the underlying asset is specified for any date. In order
for payment or delivery to take place, either the bearer of the Certificate must redeem the Certificate in accordance
with § 3 of the applicable Certificate terms and conditions, or the Issuer must terminate the Certificate in
accordance with § [4][5] of those terms and conditions. Because the Issuer has a right to terminate, the term of
open-end Certificates may be truncated. In that case, there can be no assurance that the price of the Certificate
will recover before the termination date. Payment of the redemption amount or the delivery of the underlying
asset is based on the trading price or the value of the underlying interest on one or more dates stated in the Certificate's
terms and conditions.
Certificates with Early Termination Rights
When the Issuer has an early termination right, the term of Certificates may be truncated at the Issuer’s discretion.
In that case, there can be no assurance that the price of the Certificate will recover before the termination
date.
Certificates with Extension Option
For Certificates with an extension option, the Issuer has the right to postpone the maturity date by several months
or years on one or more occasions. However, there can be no assurance that the Issuer will exercise its right to
extend the maturity date if the Certificate's value has deteriorated.
Risks Relating in particular to Warrants
General
Warrantholders should take the following into account:
– The price performance of Warrants is linked to the performance of an underlying interest (a share, a
share basket, an index, an index basket etc.).
– A change in trading price, or even the non-occurrence of an expected change in trading price, and the
volatility of the underlying interest, as well as changes in interest rates, may disproportionately affect the price of
the Warrant relative to the capital invested, to the point of rendering the Warrant valueless.
– Holders of a Call Warrant may be exposed to the risk that the value of their Warrant may decline to
the point where their invested capital (the price paid for the Warrant) will be lost entirely if the trading price of
the underlying interest falls.
– Holders of a Put Warrant may be exposed to the risk that the value of their Warrant may decline to the
point where your invested capital (the price you paid for the Warrant) will be lost entirely if the trading price of
the underlying interest rises.
– Share Warrants and Share Basket Warrants do not carry dividend protection. Dividend discounts may
therefore adversely affect the price performance of a Call Warrant, because they reduce the trading price of the
associated Share.
– If the established trading price of the underlying interest is above (in the case of a put) or below (in the
case of a call) the exercise price indicated in § 1 (1) of the Terms and Conditions (Warrants), or if the exercise
price is identical with the established trading price of the underlying interest, the price of the Warrant will be
determined on the basis of the fair value. Fair value is affected by the declining time to maturity, and the associated
declining probability that the Warrant can be exercised. Accordingly, the price of the Warrant will decline
to zero by the last day of the term of the option right such Warrant represents, and this decline in value of the
Warrant will accelerate toward the maturity date.