Pricing Supplement No. U390
To the Underlying Supplement dated June 24, 2010,
Product Supplement No. U-I dated October 18, 2010,
Prospectus Supplement dated March 25, 2009 and
Prospectus dated March 25, 2009
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Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-158199-10
April 28, 2011
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Financial
Products
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$1,757,000
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6 Month 9.85% per annum (approximately 4.925% for the term of the securities)
Callable Yield Notes due November 3, 2011 Linked to the Performance of the Russell 2000® Index,
the United States Natural Gas Fund, LP and the Market Vectors Gold Miners ETF
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The securities are designed for investors who are mildly bearish, neutral or mildly bullish on the Underlyings. Investors should be willing to lose some or all of their investment if a Knock-In Event occurs with respect to any Underlying. Any payment on the securities is subject to our ability to pay our obligations as they become due.
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Interest will be paid monthly in arrears at a rate of 9.85% per annum (approximately 4.925% for the term of the securities), subject to Early Redemption. Interest will be calculated on a 30/360 basis.
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The Issuer may redeem the securities, in whole but not in part, on the Interest Payment Dates scheduled to occur on July 5, 2011 or September 6, 2011. No interest will accrue or be payable following an Early Redemption.
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Senior unsecured obligations of Credit Suisse AG, acting through its Nassau Branch, maturing November 3, 2011.†
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Minimum purchase of $1,000. Minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.
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The securities priced on April 28, 2011 (the “Trade Date”) and are expected to settle on May 3, 2011. Delivery of the securities in book-entry form only will be made through The Depository Trust Company.
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Issuer:
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Credit Suisse AG ("Credit Suisse"), acting through its Nassau Branch
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Underlyings:
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Each Underlying is identified in the table below, together with its Bloomberg ticker symbol, Initial Level and Knock-In Level:
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Underlying
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Ticker
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Initial Level
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Knock-In Level
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Russell 2000® Index ("RTY")
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RTY
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861.55
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603.0850
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United States Natural Gas Fund, LP ("UNG")
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UNG UP
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11.79
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8.2530
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Market Vectors Gold Miners ETF ("GDX")
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GDX UP
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61.30
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42.9100
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Interest Rate:
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9.85% per annum (approximately 4.925% for the term of the securities). Interest will be calculated on a 30/360 basis.
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Interest Payment Dates:
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Unless redeemed earlier, interest will be paid monthly in arrears on June 3, 2011, July 5, 2011, August 3, 2011, September 6, 2011, October 3, 2011 and the Maturity Date, subject to the modified following business day convention. No interest will accrue or be payable following an Early Redemption.
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Redemption Amount:
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At maturity, the Redemption Amount you will be entitled to receive will depend on the individual performance of each Underlying and whether a Knock-In Event occurs. If the securities are not subject to Early Redemption, the Redemption Amount will be determined as follows:
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• If a Knock-In Event occurs during the Observation Period, the Redemption Amount will equal the principal amount of the securities you hold multiplied by the sum of one plus the Underlying Return of the Lowest Performing Underlying. In this case, the maximum Redemption Amount will equal the principal amount of the securities. Therefore, unless the Final Level of each of the Underlyings is greater than or equal to its Initial Level, the Redemption Amount will be less than the principal amount of the securities and you could lose your entire investment.
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• If a Knock-In Event does not occur during the Observation Period, the Redemption Amount will equal the principal amount of the securities you hold.
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Any payment on the securities is subject to our ability to pay our obligations as they become due.
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Early Redemption:
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The Issuer may redeem the securities in whole, but not in part, on the Interest Payment Dates scheduled to occur on July 5, 2011 or September 6, 2011, upon at least three business days notice at 100% of the principal amount of the securities, together with the interest payable on the relevant Interest Payment Date.
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Knock-In Event:
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A Knock-In Event will occur if the closing level of any Underlying reaches or falls below the Knock-In Level for that Underlying on any trading day during the Observation Period.
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Knock-In Level:
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For each Underlying, as set forth in the table above.
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Lowest Performing
Underlying:
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The Underlying with the lowest Underlying Return.
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Underlying Return:
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For each Underlying, the Underlying Return will be calculated as follows:
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Final Level – Initial Level
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; subject to a maximum of zero
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Initial Level
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Initial Level:*
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For each Underlying, as set forth in the table above.
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Final Level:
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For each Underlying, the closing level of such Underlying on the Valuation Date.
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Observation Period:
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The period from but excluding the Trade Date to and including the Valuation Date.
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Valuation Date:†
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October 31, 2011
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Maturity Date:†
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November 3, 2011
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Listing:
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The securities will not be listed on any securities exchange.
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CUSIP:
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22546E5C4
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Price to Public
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Underwriting Discounts and Commissions (1)
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Proceeds to Issuer
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Per security
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$1,000.00
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$15.00
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$985.00
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Total
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$1,757,000.00
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$22,610.00
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$1,734,390.00
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Title of Each Class of Securities Offered
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Maximum Aggregate Offering Price
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Amount of Registration Fee
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Notes
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$1,757,000.00
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$203.99
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Underlying supplement dated June 24, 2010:
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Product supplement No. U-I dated October 18, 2010:
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Prospectus supplement dated March 25, 2009:
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Prospectus dated March 25, 2009:
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Percentage
Change from the
Initial Level to
the Final Level
for the Lowest
Performing
Underlying
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Underlying
Return of the
Lowest
Performing
Underlying
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Redemption Amount per
$1,000 Principal Amount
of Securities
(Knock-In Event
does not occur)
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Total Interest
Payment per $1,000
Principal Amount of
Securities
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Total
Payment per
$1,000 Principal
Amount of
Securities
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50%
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0%
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$1,000
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$49.25
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$1,049.25
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40%
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0%
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$1,000
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$49.25
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$1,049.25
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30%
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0%
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$1,000
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$49.25
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$1,049.25
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20%
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0%
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$1,000
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$49.25
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$1,049.25
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10%
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0%
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$1,000
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$49.25
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$1,049.25
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0%
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0%
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$1,000
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$49.25
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$1,049.25
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-10%
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-10%
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$1,000
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$49.25
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$1,049.25
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-20%
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-20%
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$1,000
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$49.25
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$1,049.25
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-29.99%
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-29.99%
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$1,000
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$49.25
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$1,049.25
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Percentage
Change from
the Initial Level
to the Final
Level for the
Lowest
Performing
Underlying
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Underlying
Return of the
Lowest
Performing
Underlying
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Redemption Amount per
$1,000 Principal Amount of
Securities
(Knock-In Event occurs)
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Total Interest
Payment per $1,000
Principal Amount
of Securities
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Total
Payment per
$1,000 Principal
Amount of
Securities
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50%
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0%
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$1,000
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$49.25
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$1,049.25
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40%
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0%
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$1,000
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$49.25
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$1,049.25
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30%
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0%
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$1,000
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$49.25
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$1,049.25
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20%
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0%
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$1,000
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$49.25
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$1,049.25
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10%
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0%
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$1,000
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$49.25
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$1,049.25
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0%
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0%
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$1,000
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$49.25
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$1,049.25
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-10%
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-10%
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$900
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$49.25
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$949.25
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-20%
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-20%
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$800
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$49.25
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$849.25
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-30%
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-30%
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$700
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$49.25
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$749.25
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-40%
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-40%
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$600
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$49.25
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$649.25
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-50%
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-50%
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$500
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$49.25
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$549.25
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Underlying
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Initial Level
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Lowest closing level of the Underlying
during the Observation Period
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Final Level on the Valuation Date
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RTY
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827
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827.00 (100% of Initial Level)
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909.70 (110% of Initial Level)
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UNG
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$11
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$9.90 (90% of Initial Level)
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$12.10 (110% of Initial Level)
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GDX
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$62
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$43.40 (70% of Initial Level)
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$43.40 (70% of Initial Level)
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Final Level of GDX
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―
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Initial Level of GDX
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; subject to a maximum of 0.00
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Initial Level of GDX
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Underlying
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Initial Level
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Lowest closing level of the Underlying
during the Observation Period
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Final Level on the Valuation Date
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RTY
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827
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578.90 (70% of Initial Level)
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909.70 (110% of Initial Level)
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UNG
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$11
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$9.90 (90% of Initial Level)
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$12.10 (110% of Initial Level)
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GDX
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$62
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$47.74 (77% of Initial Level)
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$47.74 (77% of Initial Level)
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Final Level of GDX
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―
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Initial Level of GDX
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; subject to a maximum of 0.00
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Initial Level of GDX
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Underlying
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Initial Level
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Lowest closing level of the Underlying
during the Observation Period
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Final Level on the Valuation Date
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RTY
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827
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578.90 (70% of Initial Level)
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909.70 (110% of Initial Level)
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UNG
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$11
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$10.45 (95% of Initial Level)
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$13.20 (120% of Initial Level)
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GDX
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$62
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$55.80 (90% of Initial Level)
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$74.40 (120% of Initial Level)
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Final Level of RTY
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―
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Initial Level of RTY
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; subject to a maximum of 0.00
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Initial Level of RTY
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Underlying
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Initial Level
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Lowest closing level of the Underlying
during the Observation Period
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Final Level on the Valuation Date
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RTY
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827
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636.79 (77% of Initial Level)
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909.70 (110% of Initial Level)
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UNG
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$11
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$8.58 (78% of Initial Level)
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$12.10 (110% of Initial Level)
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GDX
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$62
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$49.60 (80% of Initial Level)
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$68.20 (110% of Initial Level)
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YOU MAY RECEIVE LESS THAN THE PRINCIPAL AMOUNT AT MATURITY — You may receive less at maturity than you originally invested in the securities, or you may receive nothing, excluding any accrued or unpaid interest. If a Knock-In Event occurs during the Observation Period and the Final Level of the Lowest Performing Underlying is less than its Initial Level, you will be fully exposed to any depreciation in the Lowest Performing Underlying. In this case, the Redemption Amount you will be entitled to receive will be less than the principal amount of the securities and you could lose your entire investment. It is not possible to predict whether a Knock-In Event will occur, and in the event that there is a Knock-In Event, whether and by how much the Final Level of the Lowest Performing Underlying will decrease in comparison to its Initial Level. Any payment on the securities is subject to our ability to pay our obligations as they become due.
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THE SECURITIES WILL NOT PAY MORE THAN THE PRINCIPAL AMOUNT, PLUS ACCRUED AND UNPAID INTEREST, AT MATURITY OR UPON EARLY REDEMPTION — The securities will not pay more than the principal amount, plus accrued and unpaid interest, at maturity or upon early redemption. If the Final Level of each Underlying is greater than its respective Initial Level (regardless of whether a Knock-In Event has occurred), you will not receive the appreciation of any Underlying. Assuming the securities are held to maturity and the term of the securities is exactly 6 months, the maximum amount payable with respect to the securities will be $1,049.25 for each $1,000 principal amount of the securities.
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THE SECURITIES ARE SUBJECT TO THE CREDIT RISK OF CREDIT SUISSE — Although the return on the securities will be based on the performance of the Underlyings, the payment of any amount due on the securities, including any applicable interest payments, early redemption payment or payment at maturity, is subject to the credit risk of Credit Suisse. Investors are dependent on our ability to pay all amounts due on the securities and, therefore, investors are subject to our credit risk. In addition, any decline in our credit ratings, any adverse changes in the market’s view of our creditworthiness or any increase in our credit spreads is likely to adversely affect the value of the securities prior to maturity.
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THE REDEMPTION AMOUNT PAYABLE AT MATURITY WILL BE LESS THAN THE PRINCIPAL AMOUNT OF THE SECURITIES EVEN IF A KNOCK-IN EVENT OCCURS WITH RESPECT TO ONLY ONE UNDERLYING AND THE FINAL LEVEL OF ONLY ONE UNDERLYING FALLS BELOW ITS INITIAL LEVEL — Even if the closing level of only one Underlying reaches or falls below its Knock-In Level on any trading day during the Observation Period, a Knock-In Event will have occurred. In this case, the Redemption Amount payable at maturity will be less than the principal amount of the securities if, in addition to the occurrence of a Knock-In Event, the Final Level of just one Underlying falls below its Initial Level. This will be true even if the closing level of the Lowest Performing Underlying never reached or fell below its Knock-In Level on any trading day during the Observation Period.
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THE SECURITIES ARE SUBJECT TO A POTENTIAL EARLY REDEMPTION, WHICH WOULD LIMIT YOUR ABILITY TO ACCRUE INTEREST OVER THE FULL TERM OF THE SECURITIES —The securities are subject to a potential early redemption. The securities may be redeemed on the Interest Payment Dates scheduled to occur on July 5, 2011 or September 6, 2011, upon at least three business days notice. If the securities are redeemed prior to the Maturity Date, you will be entitled to receive the principal amount of your securities and any accrued but unpaid interest payable on that Interest Payment Date. In this case, you will lose the opportunity to continue to accrue and be paid interest from the date of Early Redemption to the scheduled Maturity Date. If the securities are redeemed prior to the Maturity Date, you may be unable to invest in other securities with a similar level of risk that yield as much interest as the securities.
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SINCE THE SECURITIES ARE LINKED TO THE PERFORMANCE OF MORE THAN ONE UNDERLYING, YOU WILL BE FULLY EXPOSED TO THE RISK OF FLUCTUATIONS IN THE LEVEL OF EACH UNDERLYING — Since the securities are linked to the performance of more than one Underlying, the securities will be linked to the individual performance of each Underlying. Because the securities are not linked to a basket, in which case the risk is mitigated and diversified among all of the components of a basket, you will be exposed to the risk of fluctuations in the levels of the Underlyings to the same degree for each Underlying. For example, in the case of securities linked to a basket, the return would depend on the weighted aggregate performance of the basket components as reflected by the basket return. Thus, the depreciation of any basket component could be mitigated by the appreciation of another basket component, to the extent of the weightings of such components in the basket. However, in the case of securities linked to the lowest performing of each of three Underlyings, the individual performance of each Underlying is not combined to calculate your return and the depreciation of any Underlying is not mitigated by the appreciation of any other Underlying. Instead, if a Knock-In Event occurs, the Redemption Amount payable at maturity will depend on the lowest performing of the three Underlyings to which the securities are linked.
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CERTAIN BUILT-IN COSTS ARE LIKELY TO ADVERSELY AFFECT THE VALUE OF THE SECURITIES PRIOR TO MATURITY — While the payment at maturity described in this pricing supplement is based on the full principal amount of your securities, the original issue price of the securities includes the agent’s commission and the cost of hedging our obligations under the securities through one or more of our affiliates. As a result, the price, if any, at which Credit Suisse (or its affiliates), will be willing to purchase securities from you in secondary market transactions, if at all, will likely be lower than the original issue price, and any sale prior to the Maturity Date could result in a substantial loss to you. The securities are not designed to be short-term trading instruments. Accordingly, you should be able and willing to hold your securities to maturity.
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LACK OF LIQUIDITY — The securities will not be listed on any securities exchange. Credit Suisse (or its affiliates) intends to offer to purchase the securities in the secondary market but is not required to do so. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the securities when you wish to do so. Because other dealers are not likely to make a secondary market for the securities, the price at which you may be able to trade your securities is likely to depend on the price, if any, at which Credit Suisse (or its affiliates) is willing to buy the securities. If you have to sell your securities prior to maturity, you may not be able to do so or you may have to sell them at a substantial loss.
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POTENTIAL CONFLICTS — We and our affiliates play a variety of roles in connection with the issuance of the securities, including acting as calculation agent and hedging our obligations under the securities. In performing these duties, the economic interests of the calculation agent and other affiliates of ours are potentially adverse to your interests as an investor in the securities.
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MANY ECONOMIC AND MARKET FACTORS WILL AFFECT THE VALUE OF THE SECURITIES — In addition to the levels of the Underlyings on any trading day during the Observation Period, the value of the securities will be affected by a number of economic and market factors that may either offset or magnify each other, including:
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the expected volatility of the Underlyings;
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the time to maturity of the securities;
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the Early Redemption feature, which is likely to limit the value of the securities;
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interest and yield rates in the market generally;
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global gold and silver supply and demand, which is influenced by such factors as forward selling by gold and silver producers, purchases made by gold and silver producers to unwind gold and silver hedge positions, central bank purchases and sales of gold, and production and cost levels in major gold-producing countries and in major silver-producing countries;
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supply and demand for natural gas
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investors’ expectations with respect to the rate of inflation;
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geopolitical conditions and a variety of economic, financial, political, regulatory or judicial events that affect the components comprising the Underlyings, or markets generally and which may affect the levels of the Underlyings; and
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our creditworthiness, including actual or anticipated downgrades in our credit ratings.
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NO OWNERSHIP RIGHTS RELATING TO THE UNDERLYINGS — Your return on the securities will not reflect the return you would realize if you actually owned the shares of the Market Vectors Gold Miners ETF and the United States Natural Gas Fund, LP (each, a “Reference Fund”) or the equity securities that comprise the Underlyings. The return on your investment, which is based on the percentage change in the Underlyings, is not the same as the total return you would receive based on the purchase of the shares of the Reference Funds or the equity securities that comprise the Underlyings.
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NO DIVIDEND PAYMENTS OR VOTING RIGHTS — As a holder of the securities, you will not have voting rights or rights to receive cash dividends or other distributions or other rights with respect to the Reference Funds and the equity securities that comprise the Underlyings.
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ANTI-DILUTION PROTECTION IS LIMITED — The calculation agent will make anti-dilution adjustments for certain events affecting the shares of each Reference Fund. However, the calculation agent will not make an adjustment in response to all events that could affect the shares of each Reference Fund. If an event occurs that does not require the calculation agent to make an adjustment, the value of the securities may be materially and adversely affected. For additional information, see “Description of the Securities—Adjustments—For reference funds” in the accompanying product supplement.
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THERE ARE RISKS ASSOCIATED WITH THE REFERENCE FUNDS — Although shares of the Reference Funds are listed for trading on a national securities exchange and a number of similar products have been traded on various national securities exchanges for varying periods of time, there is no assurance that an active trading market will continue for the shares of each Reference Fund or that there will be liquidity in the trading market. Each Reference Fund is subject to management risk, which is the risk that a fund’s investment strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. Pursuant to each Reference Fund’s investment strategy or otherwise, its investment advisor may add, delete or substitute the assets held by such Reference Fund. Any of these actions could adversely affect the price of the shares of each Reference Fund and consequently the value of the securities. For additional information about the Market Vectors Gold Miners ETF, see information set forth under “The Reference Funds—The Market Vectors Gold Miners ETF” in the accompanying underlying supplement, and for additional information about the United States Natural Gas Fund, LP, see “United States Natural Gas Fund, LP” herein.
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COMMODITY PRICES ARE CHARACTERIZED BY HIGH AND UNPREDICTABLE VOLATILITY, WHICH COULD LEAD TO A HIGH AND UNPREDICTABLE VOLATILITY IN THE PRICE FOR UNITS OF THE UNITED STATES NATURAL GAS FUND, LP — Market prices of the commodities and commodity futures contracts comprising the United States Natural Gas Fund, LP tend to be highly volatile. Commodity market prices are not related to the value of a future income or earnings stream, as tends to be the case with fixed income and equity investments, but are subject to rapid fluctuations based on numerous factors, including changes in supply and demand relationships, governmental programs and policies, national and international monetary, trade, political and economic events, changes in interest and exchange rates, speculation and trading activities in commodities and related contracts, weather, and agricultural, trade, fiscal and exchange control policies. The markets for many commodities are also highly cyclical. These factors may have a larger impact on commodity prices and commodity linked instruments than on traditional fixed income and equity securities. These variables may create additional investment risks that cause the value of the securities to be more volatile than the values of traditional securities. These and other factors may affect the price of the United States Natural Gas Fund, LP, and thus the value of your securities, in unpredictable or unanticipated ways. The high volatility and cyclical nature of commodity markets may render such an investment inappropriate as the focus of an investment portfolio.
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GLOBAL ENERGY COMMODITY PRICES ARE PRIMARILY AFFECTED BY THE GLOBAL DEMAND FOR AND SUPPLY OF THESE COMMODITIES, BUT ARE ALSO SIGNIFICANTLY INFLUENCED BY SPECULATIVE ACTIONS AND BY CURRENCY EXCHANGE RATES — Prices for energy commodities, which includes natural gas, crude oil, heating oil, gasoline, and other petroleum-based fuels, are affected by governmental programs and policies, national and international political and economic events, changes in interest and exchange rates, trading activities in commodities and related contracts, trade, fiscal, monetary and exchange control policies and with respect to oil specifically, drought, floods, weather, government intervention, environmental policies, embargoes and tariffs. Demand for natural gas products by consumers, as well as by businesses, affects the price of such commodities. Sudden disruptions in the supplies of energy commodities, such as those caused by war, natural events, accidents or acts of terrorism, may cause prices of energy commodities futures contracts to become extremely volatile and unpredictable. Also, sudden and dramatic changes in the futures market may occur, for example, upon a cessation of hostilities that may exist in countries producing energy commodities, the introduction of new or previously withheld supplies into the market or the introduction of substitute products or commodities. Demand for energy commodities is generally linked to economic activity, and will tend to reflect general economic conditions.
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THE SECURITIES ARE NOT SUBJECT TO REGULATION BY THE COMMODITY FUTURES TRADING COMMISSION — The proceeds to be received by us from the sale of the securities will not be used to purchase or sell any commodities futures contracts or options on futures contracts for your benefit. An investment in the securities thus does not constitute either an investment in futures contracts, options on futures contracts or in a collective investment vehicle that trades in these futures contracts (i.e., the securities will not constitute a direct or indirect investment by you in the futures contracts), and you will not benefit from the regulatory protections of the Commodity Futures Trading Commission, commonly referred to as the “CFTC.” The Issuer is not registered with the CFTC as a futures commission merchant and you will not benefit from the CFTC’s or any other non-U.S. regulatory authority’s regulatory protections afforded to persons who trade in futures contracts on a regulated futures exchange through a registered futures commission merchant. Unlike an investment in the securities, an investment in a collective investment vehicle that invests in futures contracts on behalf of its participants may be subject to regulation as a commodity pool and its operator may be required to be registered with and regulated by the CFTC as a commodity pool operator, or qualify for an exemption from the registration requirement. Because the securities will not be interests in a commodity pool, the securities will not be regulated by the CFTC as a commodity pool, we will not be registered with the CFTC as a commodity pool operator, and you will not benefit from the CFTC’s or any non-U.S. regulatory authority’s regulatory protections afforded to persons who invest in regulated commodity pools.
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THE PERFORMANCE OF THE UNITED STATES NATURAL GAS FUND, LP MAY NOT FULLY REPLICATE THE PERFORMANCE OF NATURAL GAS — United States Commodity Funds, LLC, the general partner of the United States Natural Gas Fund, LP, is responsible for investing the assets of the United States Natural Gas Fund, LP in accordance with the objectives and policies of the United States Natural Gas Fund, LP. The assets of the United States Natural Gas Fund, LP consist primarily of investments in futures contracts for natural gas, crude oil, heating oil, gasoline, and other petroleum-based fuels that are traded on the New York Mercantile Exchange, ICE Futures or other U.S. and foreign exchanges (collectively, “natural gas futures contracts”) and other natural gas-related investments such as cash-settled options on natural gas futures contracts and indices (collectively, “other natural gas interests” and together with natural gas futures contracts, “natural gas interests”). The United States Natural Gas Fund, LP seeks to achieve its investment objective by investing in a mix of natural gas futures contracts and other natural gas interests such that changes in the net asset value of the United States Natural Gas Fund, LP will closely track the changes in the price of a specified natural gas futures contract (the “benchmark natural gas futures contract”). The United States Natural Gas Fund, LP’s general partner believes that the benchmark natural gas futures contract historically has exhibited a close correlation with the spot price of natural gas. There is no assurance that the general partner of the United States Natural Gas Fund, LP will successfully implement its investment strategy and there is a risk that changes in the price of United States Natural Gas Fund, LP units will not closely track changes in the spot price of natural gas. This could happen if the price of the units does not correlate closely with the United States Natural Gas Fund, LP’s net asset value; changes in the United States Natural Gas Fund, LP’s net asset value do not closely correlate with changes in the price of the benchmark natural gas futures contract; or changes in the price of the benchmark natural gas futures contract do not closely correlate with changes in the cash or spot price of natural gas.
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THE PERFORMANCE OF THE MARKET VECTORS GOLD MINERS ETF MAY NOT CORRELATE TO THE PERFORMANCE OF THE MARKET VECTORS GOLD MINERS ETF’S TRACKED INDEX — The Market Vectors Gold Miners ETF will generally invest in all of the equity securities included in the index tracked by the Market Vectors Gold Miners ETF (the “Tracked Index”). There may, however, be instances where the Market Vectors Gold Miners ETF’s investment advisor may choose to overweight a stock in s the Market Vectors Gold Miners ETF’s Tracked Index, purchase securities not included in the Market Vectors Gold Miners ETF’s Tracked Index that the investment advisor believes are appropriate to substitute for a security included in the Tracked Index or utilize various combinations of other available investment techniques in seeking to track accurately the Tracked Index. In addition, the performance of the Market Vectors Gold Miners ETF will reflect additional transaction costs and fees that are not included in the calculation of the Market Vectors Gold Miners ETF’s Tracked Index. Also, corporate actions with respect to the equity securities included in the Tracked Index (such as mergers and spin-offs) may impact the variance between the Market Vectors Gold Miners ETF and its Tracked Index. Finally, because the shares of the Market Vectors Gold Miners ETF are traded on a national securities exchange and are subject to market supply and investor demand, the market value of one share of the Market Vectors Gold Miners ETF may differ from the net asset value per share of the Market Vectors Gold Miners ETF. For all of the foregoing reasons, the performance of the Market Vectors Gold Miners ETF may not correlate with the performance of its Tracked Index.
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RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES WITH CONCENTRATION IN THE GOLD AND SILVER MINING INDUSTRY — The stocks comprising the NYSE Arca Gold Miners Index and that are generally tracked by the Market Vectors Gold Miners ETF are stocks of companies primarily engaged in the mining of gold or silver. The shares of the Market Vectors Gold Miners ETF may be subject to increased price volatility as they are linked to a single industry, market or sector and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that industry, market or sector. Because the Market Vectors Gold Miners ETF primarily invests in stocks and ADRs of companies that are involved in the gold mining industry, and to a lesser extent the silver mining industry, the shares of the Market Vectors Gold Miners ETF are subject to certain risks associated with such companies.
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Gold mining companies are highly dependent on the price of gold and subject to competition pressures that may have a significant effect on their financial condition. Gold prices are subject to volatile price movements over short periods of time and are affected by numerous factors. These include economic factors, including, among other things, the structure of and confidence in the global monetary system, expectations of the future rate of inflation, the relative strength of, and confidence in, the U.S. dollar (the currency in which the price of gold is generally quoted), interest rates and gold borrowing and lending rates, and global or regional economic, financial, political, regulatory, judicial or other events. Gold prices may also be affected by industry factors such as industrial and jewelry demand, lending, sales and purchases of gold by the official sector, including central banks and other governmental agencies and multilateral institutions which hold gold, levels of gold production and production costs, and short-term changes in supply and demand because of trading activities in the gold market.
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Silver mining companies are highly dependent on the price of silver. Silver prices can fluctuate widely and may be affected by numerous factors. These include general economic trends, technical developments, substitution issues and regulation, as well as specific factors including industrial and jewelry demand, expectations with respect to the rate of inflation, the relative strength of the U.S. dollar (the currency in which the price of silver is generally quoted) and other currencies, interest rates, central bank sales, forward sales by producers, global or regional political or economic events, and production costs and disruptions in major silver producing countries such as Peru, Mexico and China.
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RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES WITH CONCENTRATION IN THE NATURAL GAS INDUSTRY — The United States Natural Gas Fund, LP invests in exchange-traded futures contracts for natural gas, crude oil, heating oil, gasoline and other petroleum-based fuels. The shares of the United States Natural Gas Fund, LP may be subject to increased price volatility as they are linked to a single industry, market or sector and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that industry, market or sector.
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The prices of these exchange-traded futures contracts are subject to the risks and hazards inherent in this industry, which that can cause prices to widely fluctuate. The exploration for, and production of, natural gas is an uncertain process with many risks. The cost of drilling, completing and operating wells for natural gas is uncertain, and a number of factors can delay or prevent drilling operations or production, including unexpected drilling conditions, pressure or irregularities in formations, equipment, failures or repairs, fires or other accidents, adverse weather conditions, pipeline ruptures or spills and shortages or delays in the availability of drilling rigs and the delivery of equipment. These prices are also subject to economic factors including supply and demand for natural gas, crude oil, heating oil, gasoline and other petroleum-based fuels; changes in interest rates; governmental, agricultural, trade, fiscal, monetary and exchange control programs and policies; weather and climate conditions; changing supply and demand relationships; changes in balances of payments and trade; U.S. and international rates of inflation; currency devaluations and revaluations; U.S. and international political and economic events; and changes in the views of market participants.
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