DIE ERSTE österreichische Spar-Casse ... - ERSTE Stiftung

Zero Coupon Notes do not pay current interest but are issued at a discount from their nominal
value. Instead of periodical interest payments, the difference between the redemption price
and the issue price constitutes interest income until maturity and reflects the market interest
rate. A holder of Zero Coupon Notes is exposed to the risk that the price of such Notes falls
as a result of changes in the market interest rate. Prices of Zero Coupon Notes are more
volatile than the prices of Fixed Rate Notes and more sensitive to changes in market interest
rates than interest bearing notes with a similar maturity.
Structured Notes bear a special risk
In general, an investment in Notes under which the premium and/or the interest and/or the
redemption amount is determined by reference to one or more formulae, either directly or
inversely, may entail significant risks not associated with similar investments in conventional
Notes. Such risks include the risks that the holder of such Notes will receive no interest at all
or that the resulting interest rate will be less than that payable on a conventional debt security
at the same time and/or that the holder of such Notes could lose all or a substantial portion of
the redemption amount of the Notes. In addition, investors should be aware that the market
price of such Notes may be very volatile.
In the case of a cap, a Noteholder will not be able to benefit from any favourable
development beyond the cap
If the interest rate and/or the redemption amount of an issue of Notes are not fixed but will be
determined according to the structure of Notes as set out in the relevant Final Terms of the
Notes, such an issue may also incorporate a cap. The effect of a cap is that the amount of
interest and/or the redemption amount will never rise above the predetermined cap, so that
the holder will not be able to benefit from any favourable development beyond the cap. The
yield could therefore be considerably lower than that of similarly structured Notes without a
cap.
If a loan or credit is used to finance the acquisition of the Notes, the risk of a loss may
be significantly increased
If a credit or loan is used by an investor to finance the acquisition of the Notes and the Notes
subsequently go into default, or if their trading price diminishes significantly, the investor may
not only incur a loss on the investment but will also have to repay the loan and interest
payable thereon. A credit or loan may significantly increase the risk of a loss. Investors should
not assume that they will be able to repay the loan or pay interest thereon from the profits of a
transaction or income from Notes. Instead, investors should assess their financial situation
prior to an investment as to whether they are able to pay interest on the loan as well as repay
the loan on demand and consider that they may suffer losses instead of realising gains.
Incidental costs associated with the purchase and sale of the Notes may have a
significant impact on the potential return on the Notes
When Notes are purchased or sold, several types of incidental costs (including transaction
fees and commissions) may be incurred in addition to the purchase or sale price of the Notes.
These incidental costs may significantly reduce or eliminate any income from holding the
Notes. Credit institutions as a rule charge commissions either as fixed minimum commissions
or as pro-rata commissions depending on the order value. To the extent that additional –
domestic or foreign – parties are involved in the execution of an order, including but not
limited to domestic dealers or brokers in foreign markets, investors may also be charged
brokerage fees, commissions and other fees and expenses of such parties (third-party costs).
In addition to the costs directly related to the purchase of Notes (direct costs), investors must
also take into account follow-up costs (such as custodian fees). Investors should inform
themselves about any additional costs incurred in connection with the purchase, custody or
sale of the Notes before investing in the Notes.
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