|
ISSUER FREE WRITING PROSPECTUS NO. 1862BI
Filed Pursuant to Rule 433
Registration Statement No. 333-184193
Dated October 23, 2013
Deutsche Bank AG Trigger Autocallable Optimization Securities
|
 |
$•Deutsche Bank AG Securities Linked to the Common Stock of SanDisk Corporation due on or about October 31, 2018
$•Deutsche Bank AG Securities Linked to the Common Stock of Anadarko Petroleum Corporation due on or about October 31, 2018
|
Investment Description
|
Trigger Autocallable Optimization Securities (the “Securities”) are unsubordinated and unsecured obligations of Deutsche Bank AG, London Branch (the “Issuer”) with returns linked to the performance of the common stock of a specific company described herein (each, an “Underlying”). The Securities are designed for investors who want to express a moderately bullish view on the Underlying. If the Closing Price of the Underlying is greater than or equal to the Initial Price on any Observation Date (quarterly, beginning after one year, including the Final Valuation Date), Deutsche Bank AG will automatically call the Securities and pay you a Call Price equal to the Face Amount per Security plus the applicable Call Return based on the applicable Call Return Rate specified below. The Call Return increases the longer the Securities are outstanding. If the Securities are not automatically called and the Final Price is greater than or equal to the applicable Trigger Price, at maturity Deutsche Bank AG will pay you an amount equal to your initial investment. However, if the Securities are not automatically called and the Final Price is less than the applicable Trigger Price, Deutsche Bank AG will pay you less than your initial investment, resulting in a loss of 1.00% of your initial investment for every 1.00% decline in the Final Price as compared to the Initial Price. Under these circumstances you will lose a significant portion, and could lose all, of your initial investment. You will not receive coupon payments during the term of the Securities. Investing in the Securities is subject to significant risks, including the risk of losing your entire initial investment. The contingent repayment of your initial investment applies only if you hold the Securities to maturity. Any payment on the Securities, including any payment upon an automatic call or any repayment of your initial investment at maturity, is subject to the creditworthiness of the Issuer. If the Issuer were to default on its payment obligations, you might not receive any amounts owed to you under the terms of the Securities and you could lose your entire investment.
|
Features
|
Key Dates1
|
||
|
q Call Return — If the Closing Price of the Underlying is greater than or equal to the Initial Price on any Observation Date (quarterly, beginning after one year, including the Final Valuation Date), we will automatically call the Securities and pay you a Call Price equal to the Face Amount per Security plus the applicable Call Return based on the applicable Call Return Rate specified below. The Call Return increases the longer the Securities are outstanding. If the Securities are not automatically called, investors may have full downside market exposure to the Underlying at maturity.
q Downside Exposure with Contingent Repayment of Your Initial Investment at Maturity — If the Securities have not been called, you hold the Securities to maturity and the Final Price is greater than or equal to the applicable Trigger Price, we will pay you your initial investment at maturity. If the Final Price is less than the applicable Trigger Price, however, Deutsche Bank AG will repay less than the Face Amount per Security, resulting in a loss of 1.00% of your initial investment for every 1.00% decline in the Final Price as compared to the Initial Price. Under these circumstances, you will lose a significant portion, and could lose all, of your initial investment. The contingent repayment of your initial investment applies only if you hold the Securities to maturity. Any payment on the Securities, including any payment upon an automatic call or any repayment of your initial investment at maturity, is subject to the creditworthiness of the Issuer and if the Issuer were to default on its payment obligations, you could lose your entire investment.
|
Trade Date
Settlement Date2
Observation Dates3
Final Valuation Date3
Maturity Date3
|
October 29, 2013
October 31, 2013
Quarterly, after 1 year
October 25, 2018
October 31, 2018
|
|
|
1 Expected.
2 We expect to deliver each offering of the Securities against payment on or about the second business day following the Trade Date. Under Rule 15c6-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), trades in the secondary market generally are required to settle in three business days, unless the parties to a trade expressly agree otherwise.
2 See page 4 for additional details
|
|||
NOTICE TO INVESTORS: THE SECURITIES ARE SIGNIFICANTLY RISKIER THAN CONVENTIONAL DEBT INSTRUMENTS. THE ISSUER IS NOT NECESSARILY OBLIGATED TO REPAY THE FULL FACE AMOUNT OF THE SECURITIES AT MATURITY, AND THE SECURITIES CAN HAVE DOWNSIDE MARKET RISK SIMILAR TO THE UNDERLYING. THIS MARKET RISK IS IN ADDITION TO THE CREDIT RISK INHERENT IN PURCHASING AN OBLIGATION OF DEUTSCHE BANK AG. YOU SHOULD NOT PURCHASE THE SECURITIES IF YOU DO NOT UNDERSTAND OR ARE NOT COMFORTABLE WITH THE SIGNIFICANT RISKS INVOLVED IN INVESTING IN THE SECURITIES. THE SECURITIES WILL NOT BE LISTED ON ANY SECURITIES EXCHANGE.
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED UNDER “KEY RISKS” BEGINNING ON PAGE 6 OF THIS FREE WRITING PROSPECTUS AND UNDER “RISK FACTORS” BEGINNING ON PAGE 6 OF THE ACCOMPANYING PRODUCT SUPPLEMENT BEFORE PURCHASING ANY SECURITIES. EVENTS RELATING TO ANY OF THOSE RISKS, OR OTHER RISKS AND UNCERTAINTIES, COULD ADVERSELY AFFECT THE MARKET VALUE OF, AND THE RETURN ON, YOUR SECURITIES. YOU MAY LOSE SOME OR ALL OF YOUR INITIAL INVESTMENT IN THE SECURITIES.
|
Security Offering
|
We are offering two separate Trigger Autocallable Optimization Securities (each, a “Security”). Each Security is linked to the performance of the common stock of a different company and each has its own Call Return Rate and may have a different Initial Price and Trigger Price. The Securities are our unsubordinated and unsecured obligations and are offered at a minimum investment of $1,000 in denominations of $10.00 and integral multiples thereof. The Initial Price and Trigger Price for each Security will be determined on the Trade Date.
|
Underlying
|
Call Return Rate
|
Initial Price
|
Trigger Price
|
CUSIP/ ISIN
|
|
|
SanDisk Corporation (Ticker: SNDK)
|
10.00% per annum
|
$
|
54.00% - 60.00% of the Initial Price
|
25155G302 / US25155G3020
|
|
|
Anadarko Petroleum Corporation (Ticker: APC)
|
8.00% per annum
|
$
|
67.00% - 72.00% of the Initial Price
|
25155G401 / US25155G4010
|
See “Additional Terms Specific to the Securities” in this free writing prospectus. The Securities will have the terms specified in product supplement BI dated September 28, 2012, the prospectus supplement dated September 28, 2012 relating to our Series A global notes of which these Securities are a part, the prospectus dated September 28, 2012 and this free writing prospectus.
For the Securities linked to the common stock of SanDisk Corporation, the Issuer’s estimated value of the Securities on the Trade Date is approximately $9.498 to $9.698 per $10.00 Face Amount of Securities. For the Securities linked to the common stock of Anadarko Petroleum Corporation, the Issuer’s estimated value of the Securities on the Trade Date is approximately $9.501 to $9.701 per $10.00 Face Amount of Securities. The Issuer’s estimated value of each Security is less than the Issue Price. Please see “Issuer’s Estimated Value of the Securities” on the following page of this free writing prospectus for additional information.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Securities or passed upon the accuracy or the adequacy of this free writing prospectus, the accompanying product supplement BI, prospectus supplement and prospectus. Any representation to the contrary is a criminal offense. The Securities are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.
|
Price to Public
|
Discounts and Commissions(1)
|
Proceeds to Us
|
||||
|
Offering of Securities
|
Total
|
Per Security
|
Total
|
Per Security
|
Total
|
Per Security
|
|
Securities linked to the common stock of SanDisk Corporation
|
$
|
$10.00
|
$
|
$0.25
|
$
|
$9.75
|
|
Securities linked to the common stock of Anadarko Petroleum Corporation
|
$
|
$10.00
|
$
|
$0.25
|
$
|
$9.75
|
|
(1)
|
For more information about discounts and commissions, please see “Supplemental Plan of Distribution (Conflicts of Interest)” on the last page of this free writing prospectus.
|
Deutsche Bank Securities Inc. (“DBSI”) is our affiliate. For more information see “Supplemental Plan of Distribution (Conflicts of Interest)” on the last page of this free writing prospectus.
|
UBS Financial Services Inc.
|
Deutsche Bank Securities
|
|
Issuer’s Estimated Value of the Securities
|
The Issuer’s estimated value of the Securities is equal to the sum of our valuations of the following two components of the Securities: (i) a bond and (ii) an embedded derivative(s). The value of the bond component of the Securities is calculated based on the present value of the stream of cash payments associated with a conventional bond with a principal amount equal to the Face Amount of the Securities, discounted at an internal funding rate, which is determined primarily based on our market-based yield curve, adjusted to account for our funding needs and objectives for the period matching the term of the Securities. The internal funding rate is typically lower than the rate we would pay when we issue conventional debt securities on equivalent terms. This difference in funding rate, as well as the agent’s commissions and the estimated cost of hedging our obligations under the Securities, reduces the economic terms of the Securities to you. The value of the embedded derivative(s) is calculated based on our internal pricing models using relevant parameter inputs such as expected interest and dividend rates and mid-market levels of price and volatility of the assets underlying the Securities or any futures, options or swaps related to such underlying assets. Our internal pricing models are proprietary and rely in part on certain assumptions about future events, which may prove to be incorrect.
The Issuer’s estimated value of the Securities on the Trade Date (as disclosed on the cover of this free writing prospectus) is less than the Issue Price of the Securities. The difference between the Issue Price and the Issuer’s estimated value of the Securities on the Trade Date is due to the inclusion in the Issue Price of the agent’s commissions and the cost of hedging our obligations under the Securities through one or more of our affiliates. Such hedging cost includes our or our affiliates’ expected cost of providing such hedge, as well as the profit we or our affiliates expect to realize in consideration for assuming the risks inherent in providing such hedge.
The Issuer’s estimated value of the Securities on the Trade Date does not represent the price at which we or any of our affiliates would be willing to purchase your Securities in the secondary market at any time. Assuming no changes in market conditions or our creditworthiness and other relevant factors, the price, if any, at which we or our affiliates would be willing to purchase the Securities from you in secondary market transactions, if at all, would generally be lower than both the Issue Price and the Issuer’s estimated value of the Securities on the Trade Date. Our purchase price, if any, in secondary market transactions will be based on the estimated value of the Securities determined by reference to (i) the then-prevailing internal funding rate (adjusted by a spread) or another appropriate measure of our cost of funds and (ii) our pricing models at that time, less a bid spread determined after taking into account the size of the repurchase, the nature of the assets underlying the Securities and then-prevailing market conditions. The price we report to financial reporting services and to distributors of our Securities for use on customer account statements would generally be determined on the same basis. However, during the period of approximately six and a quarter months beginning from the Trade Date, we or our affiliates may, in our sole discretion, increase the purchase price determined as described above by an amount equal to the declining differential between the Issue Price and the Issuer’s estimated value of the Securities on the Trade Date, prorated over such period on a straight-line basis, for transactions that are individually and in the aggregate of the expected size for ordinary secondary market repurchases.
2
|
Additional Terms Specific to the Securities
|
You should read this free writing prospectus, together with the product supplement BI dated September 28, 2012, the prospectus supplement dated September 28, 2012 relating to our Series A global notes of which these Securities are a part and the prospectus dated September 28, 2012. You may access these documents on the website of the Securities and Exchange Commission (the “SEC”) at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):
|
¨
|
Product supplement BI dated September 28, 2012:
|
|
¨
|
Prospectus supplement dated September 28, 2012:
|
|
¨
|
Prospectus dated September 28, 2012:
|
Deutsche Bank AG has filed a registration statement (including a prospectus) with the Securities and Exchange Commission for the offerings to which this free writing prospectus relates. Before you invest in the Securities offered hereby, you should read these documents and any other documents relating to these offerings that Deutsche Bank AG has filed with the SEC for more complete information about Deutsche Bank AG and these offerings. You may obtain these documents without cost by visiting EDGAR on the SEC website at www.sec.gov. Our Central Index Key, or CIK, on the SEC website is 0001159508. Alternatively, Deutsche Bank AG, any agent or any dealer participating in these offerings will arrange to send you the product supplement, prospectus supplement, prospectus and this free writing prospectus if you so request by calling toll-free 1-800-311-4409.
You may revoke your offer to purchase the Securities at any time prior to the time at which we accept such offer by notifying the applicable agent. We reserve the right to change the terms of, or reject any offer to purchase the Securities prior to their issuance. We will notify you in the event of any changes to the terms of the Securities, and you will be asked to accept such changes in connection with your purchase of the Securities. You may also choose to reject such changes, in which case we may reject your offer to purchase the Securities.
If the terms described in this free writing prospectus are inconsistent with those described in the accompanying product supplement, prospectus supplement or prospectus, the terms described in this free writing prospectus shall control.
References to “Deutsche Bank AG,” “we,” “our” and “us” refer to Deutsche Bank AG, including, as the context requires, acting through one of its branches. In this free writing prospectus, “Securities” refers to the Trigger Autocallable Optimization Securities that are offered hereby, unless the context otherwise requires. This free writing prospectus, together with the documents listed above, contains the terms of the Securities and supersedes all other prior or contemporaneous oral statements as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Key Risks” in this free writing prospectus and “Risk Factors” in the accompanying product supplement, as the Securities involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisers before deciding to invest in the Securities.
|
Investor Suitability
|
The suitability considerations identified below are not exhaustive. Whether or not the Securities are a suitable investment for you will depend on your individual circumstances, and you should reach an investment decision only after you and your investment, legal, tax, accounting and other advisors have carefully considered the suitability of an investment in the Securities in light of your particular circumstances. You should also review “Key Risks” on page 6 of this free writing prospectus and “Risk Factors” on page 6 of the accompanying product supplement.
|
The Securities may be suitable for you if, among other considerations:
|
The Securities may not be suitable for you if, among other considerations:
|
|
|
¨ You fully understand the risks inherent in an investment in the Securities, including the risk of loss of your entire initial investment.
¨ You can tolerate the loss of some or all of your investment and are willing to make an investment in which you could have the same downside market risk as an investment in the Underlying.
¨ You believe the Closing Price of the Underlying will be greater than or equal to the Initial Price on any Observation Date, including the Final Valuation Date.
¨ You understand and accept that you will not participate in any appreciation in the price of the Underlying and you are willing to make an investment the return of which is limited to the applicable Call Return.
¨ You can tolerate fluctuations in the price of the Securities prior to maturity that may be similar to or exceed the downside price fluctuations of the Underlying.
¨ You would be willing to invest in the Securities based on the applicable Call Return Rate set forth on the cover of this free writing prospectus.
¨ You would be willing to invest in the Securities if the applicable Trigger Price was set equal to the top of its applicable range as specified on the cover of this free writing prospectus (the actual Trigger Price for each offering of the Securities will be determined on the Trade Date).
¨ You do not seek current income from this investment and are willing to forgo any dividends paid on the Underlying.
¨ You are willing and able to hold Securities that will be automatically called on any Observation Date on which the Closing Price of the Underlying is greater than or equal to the Initial Price, and you are otherwise willing and able to hold the Securities to maturity for a term of approximately 5 years, and are not seeking an investment for which there will be an active secondary market.
¨ You are willing to assume the credit risk associated with Deutsche Bank AG, as Issuer of the Securities, and understand that if Deutsche Bank AG defaults on its obligations you might not receive any amounts due to you including any payment upon an earlier automatic call or any repayment of your initial investment at maturity.
|
¨ You do not fully understand the risks inherent in an investment in the Securities, including the risk of loss of your entire initial investment.
¨ You cannot tolerate the loss of a substantial portion or all of your investment and you are not willing to make an investment in which you could have the same downside market risk as an investment in the Underlying.
¨ You require an investment designed to provide a full return of your initial investment at maturity.
¨ You believe the Securities will not be automatically called and the Final Price will be less than the applicable Trigger Price.
¨ You seek an investment that participates in the full appreciation in the price of the Underlying or that has unlimited return potential.
¨ You cannot tolerate fluctuations in the price of the Securities prior to maturity that may be similar to or exceed the downside price fluctuations of the Underlying.
¨ You would be unwilling to invest in the Securities based on the applicable Call Return Rate set forth on the cover of this free writing prospectus.
¨ You would be unwilling to invest in the Securities if the applicable Trigger Price was set equal to the top of its applicable range as specified on the cover of this free writing prospectus (the actual Trigger Price for each offering of the Securities will be determined on the Trade Date).
¨ You prefer the lower risk, and therefore accept the potentially lower returns, of fixed income investments with comparable maturities and credit ratings.
¨ You seek current income from this investment or you prefer to receive dividends paid on the Underlying.
¨ You are unwilling or unable to hold Securities that will be automatically called on any Observation Date on which the Closing Price of the Underlying is greater than or equal to the Initial Price, or you are otherwise unable or unwilling to hold the Securities to maturity for a term of approximately 5 years, and seek an investment for which there will be an active secondary market.
¨ You are unwilling or unable to assume the credit risk associated with Deutsche Bank AG, as Issuer of the Securities for all payments on the Securities, including any payment upon an earlier automatic call or any repayment of your initial investment at maturity.
|
3
|
Indicative Terms
|
|
|
Issuer
|
Deutsche Bank AG, London Branch
|
|
Issue Price
|
100% of the Face Amount per Security
|
|
Face Amount
|
$10.00
|
|
Term
|
Approximately 5 years, subject to a quarterly automatic call beginning after one year
|
|
Trade Date1
|
October 29, 2013
|
|
Settlement Date1
|
October 31, 2013
|
|
Final Valuation Date1, 2
|
October 25, 2018
|
|
Maturity Date1, 2, 3
|
October 31, 2018
|
|
Underlyings
|
Common stock of SanDisk Corporation (Ticker: SNDK)
Common stock of Anadarko Petroleum Corporation (Ticker: APC)
|
|
Call Feature
|
The Securities will be automatically called if the Closing Price of the relevant Underlying on any Observation Date is greater than or equal to its Initial Price. If the Securities are automatically called, Deutsche Bank AG will pay you on the applicable Call Settlement Date a cash payment per $10.00 Face Amount of Securities equal to the applicable Call Price for the applicable Observation Date.
|
|
Observation Dates1, 2
|
Quarterly, beginning after one year, on the dates set forth in the tables below.
|
|
Call Settlement Dates
|
Two business days following the relevant Observation Date, except the Call Settlement Date for the Final Valuation Date will be the Maturity Date.
|
|
Call Return and Call Return Rate
|
The Call Return for each Underlying increases the longer the Securities are outstanding and is based upon the applicable Call Return Rate specified on the cover hereof.
|
|
Call Price
|
The Call Price for each Underlying per $10.00 Face Amount of Securities equals the Face Amount plus the product of the Face Amount and the applicable Call Return.
|
|
For the Securities linked to the common stock of SanDisk Corporation:
|
For the Securities linked to the common stock of Anadarko Petroleum Corporation:
|
|||||
|
Observation Dates
|
Expected Call Settlement Dates
|
Call Return
|
Call Price (per $10.00 Face Amount of Securities)
|
Call Return
|
Call Price
(per $10.00 Face Amount of Securities)
|
|
|
November 3, 2014
|
November 5, 2014
|
10.00%
|
$11.00
|
8.00%
|
$10.80
|
|
|
January 28, 2015
|
January 30, 2015
|
12.50%
|
$11.25
|
10.00%
|
$11.00
|
|
|
April 28, 2015
|
April 30, 2015
|
15.00%
|
$11.50
|
12.00%
|
$11.20
|
|
|
July 29, 2015
|
July 31, 2015
|
17.50%
|
$11.75
|
14.00%
|
$11.40
|
|
|
October 28, 2015
|
October 30, 2015
|
20.00%
|
$12.00
|
16.00%
|
$11.60
|
|
|
January 27, 2016
|
January 29, 2016
|
22.50%
|
$12.25
|
18.00%
|
$11.80
|
|
|
April 27, 2016
|
April 29, 2016
|
25.00%
|
$12.50
|
20.00%
|
$12.00
|
|
|
July 27, 2016
|
July 29, 2016
|
27.50%
|
$12.75
|
22.00%
|
$12.20
|
|
|
October 27, 2016
|
October 31, 2016
|
30.00%
|
$13.00
|
24.00%
|
$12.40
|
|
|
January 27, 2017
|
January 31, 2017
|
32.50%
|
$13.25
|
26.00%
|
$12.60
|
|
|
April 26, 2017
|
April 28, 2017
|
35.00%
|
$13.50
|
28.00%
|
$12.80
|
|
|
July 27, 2017
|
July 31, 2017
|
37.50%
|
$13.75
|
30.00%
|
$13.00
|
|
|
October 27, 2017
|
October 31, 2017
|
40.00%
|
$14.00
|
32.00%
|
$13.20
|
|
|
January 29, 2018
|
January 31, 2018
|
42.50%
|
$14.25
|
34.00%
|
$13.40
|
|
|
April 26, 2018
|
April 30, 2018
|
45.00%
|
$14.50
|
36.00%
|
$13.60
|
|
|
July 27, 2018
|
July 31, 2018
|
47.50%
|
$14.75
|
38.00%
|
$13.80
|
|
|
October 25, 2018 (Final Valuation Date)
|
October 31, 2018 (Maturity Date)
|
50.00%
|
$15.00
|
40.00%
|
$14.00
|
|
|
Payment at Maturity (per $10.00 Face Amount of Securities)
|
If the Securities are not automatically called and the Final Price is greater than or equal to the applicable Trigger Price, Deutsche Bank AG will pay you a cash payment at maturity equal to $10.00 per $10.00 Face Amount of Securities.
If the Securities are not automatically called and the Final Price is less than the applicable Trigger Price, Deutsche Bank AG will pay you a cash payment at maturity per $10.00 Face Amount of Securities less than the $10.00 Face Amount of Securities, equal to:
$10.00 + ($10.00 x Underlying Return)
Under these circumstances, you will lose a significant portion, and could lose all, of your initial investment in an amount proportionate to the negative Underlying Return.
|
|
Underlying Return
|
For each Security:
Final Price – Initial Price
Initial Price
|
|
Trigger Price
|
For the Securities linked to the common stock of SanDisk Corporation, 54.00% - 60.00% of the Initial Price
For the Securities linked to the common stock of Anadarko Petroleum Corporation, 67.00% - 72.00% of the Initial Price
The actual Trigger Price for each Security will be determined on the Trade Date.
|
|
Closing Price
|
On any scheduled trading day, the last reported sale price of one share of the relevant Underlying on the relevant exchange, as determined by the calculation agent multiplied by the relevant Stock Adjustment Factor.
|
|
Initial Price
|
The Closing Price of the relevant Underlying on the Trade Date
|
|
Final Price
|
The Closing Price of the relevant Underlying on the Final Valuation Date
|
|
Stock Adjustment Factor
|
Initially 1.0 for each Underlying, subject to adjustment for certain actions affecting each Underlying. See “Description of Securities — Anti-Dilution Adjustments for Reference Stock” in the accompanying product supplement.
|
INVESTING IN THE SECURITIES INVOLVES SIGNIFICANT RISKS. YOU MAY LOSE SOME OR ALL OF YOUR INITIAL INVESTMENT. ANY PAYMENT ON THE SECURITIES, INCLUDING ANY PAYMENT UPON AN AUTOMATIC CALL OR ANY REPAYMENT OF YOUR INITIAL INVESTMENT AT MATURITY, IS SUBJECT TO THE CREDITWORTHINESS OF THE ISSUER. IF DEUTSCHE BANK AG WERE TO DEFAULT ON ITS PAYMENT OBLIGATIONS, YOU MIGHT NOT RECEIVE ANY AMOUNTS OWED TO YOU UNDER THE SECURITIES AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.
4
|
Investment Timeline
|
|
Trade Date:
|
The Closing Price of the relevant Underlying (Initial Price) is observed and the relevant Trigger Price is determined.
|
||
 |
|||
|
Quarterly, after 1 year (including at maturity):
|
The Securities will be automatically called if the Closing Price of the relevant Underlying on any Observation Date is greater than or equal to its Initial Price.
If the Securities are automatically called, Deutsche Bank AG will pay you on the applicable Call Settlement Date a cash payment per $10.00 Face Amount of Securities equal to the applicable Call Price for the applicable Observation Date.
|
||
|
|
|||
|
Maturity Date:
|
The Final Price and Underlying Return for the relevant Underlying will be determined on the Final Valuation Date.
If the Securities are not automatically called and the Final Price is greater than or equal to the applicable Trigger Price, Deutsche Bank AG will pay you a cash payment at maturity equal to $10.00 per $10.00 Face Amount of Securities.
If the Securities are not automatically called and the Final Price is less than the applicable Trigger Price, Deutsche Bank AG will pay you a cash payment at maturity per $10.00 Face Amount of Securities less than the $10.00 Face Amount of Securities, equal to:
$10.00 + ($10.00 x Underlying Return)
Under these circumstances, you will lose a significant portion, and could lose all, of your initial investment in an amount proportionate to the negative Underlying Return.
|
|
1
|
In the event that we make any change to the expected Trade Date and Settlement Date, the Final Valuation Date, Maturity Date and Observation Dates may be changed to ensure that the stated term of the Securities remains the same.
|
|
2
|
Subject to postponement as described under “Description of Securities — Adjustments to Valuation Dates and Payment Dates” in the accompanying product supplement.
|
|
3
|
Notwithstanding the provisions under “Description of Securities — Adjustments to Valuation Dates and Payment Dates” in the accompanying product supplement, in the event the Final Valuation Date is postponed, the Maturity Date will be the fourth business day after the Final Valuation Date as postponed.
|
5
|
Key Risks
|
An investment in the Securities involves significant risks. Investing in the Securities is not equivalent to investing directly in the Underlying. Some of the risks that apply to an investment in each Security offered hereby are summarized below, but we urge you to read the more detailed explanation of risks relating to the Securities generally in the “Risk Factors” section of the accompanying product supplement. We also urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the Securities offered hereby.
|
¨
|
Your Investment in the Securities May Result in a Loss of Your Initial Investment — The Securities differ from ordinary debt securities in that Deutsche Bank AG will not necessarily pay you your initial investment in the Securities at maturity. If the Securities are not automatically called, the return on the Securities at maturity will depend on whether the Final Price is greater than or equal to the applicable Trigger Price. If the Securities are not automatically called and the Final Price is greater than or equal to the applicable Trigger Price, Deutsche Bank AG will pay you your initial investment. However, if the Securities are not automatically called on any Observation Date and the Final Price is less than the applicable Trigger Price, you will be fully exposed to any negative Underlying Return, resulting in a loss of your initial investment of 1.00% of your initial investment for every 1.00% decline in the Final Price as compared to the Initial Price. Accordingly, you could lose your entire initial investment.
|
|
¨
|
Limited Return Potential — If the Securities are called, the return potential of the Securities is limited to the applicable Call Return which is based on the applicable Call Return Rate, regardless of the performance of the Underlying. Because the Call Return increases the longer the Securities are outstanding and the Securities could be automatically called as early as the first Observation Date (approximately one year after the Trade Date), the term of your investment could be cut short, and your return on the Securities would then be less than if the Securities were automatically called at a later date. As a result, an investment directly in the Underlying could provide a better return than an investment in the Securities. If the Securities are not automatically called, you may be fully exposed to the full downside performance of the Underlying even though you cannot participate in any of the Underlying's potential appreciation. Furthermore, because the closing price of the Underlying at various times during the term of the Securities could be higher than on the Observation Dates and on the Final Valuation Date, you may receive a lower payment if the Securities are automatically called or at maturity, as the case may be, than you would have if you had invested directly in the Underlying.
|
|
¨
|
Contingent Repayment of Your Initial Investment Applies Only if You Hold the Securities to Maturity — If your Securities are not automatically called, you should be willing to hold your Securities to maturity. If you are able to sell your Securities prior to maturity in the secondary market, you may have to sell them at a loss relative to your initial investment even if the Closing Price of the Underlying is above the applicable Trigger Price.
|
|
¨
|
Higher Call Return Rates Are Generally Associated with a Greater Risk of Loss — Greater expected volatility with respect to the Underlying reflects a higher expectation as of the Trade Date that the Closing Price of the Underlying could close below the applicable Trigger Price on the Final Valuation Date of the Securities. This greater expected risk will generally be reflected in a higher Call Return Rate for the Securities. However, while the Call Return Rate is a fixed amount, the Underlying’s volatility can change significantly over the term of the Securities. The price of the Underlying could fall sharply, which could result in a significant loss of your initial investment.
|
|
¨
|
Reinvestment Risk — If your Securities are automatically called early, the holding period over which you would receive the applicable Call Return which is based on the applicable Call Return Rate could be as little as one year. There is no guarantee that you would be able to reinvest the proceeds from an investment in the Securities at a comparable return for a similar level of risk in the event the Securities are automatically called prior to the Maturity Date.
|
|
¨
|
No Coupon Payments — Deutsche Bank AG will not pay any coupon payments with respect to the Securities.
|
|
¨
|
Risks Relating to the Credit of the Issuer — The Securities are unsubordinated and unsecured obligations of the Issuer, Deutsche Bank AG, and are not, either directly or indirectly, an obligation of any third party. Any payment to be made on the Securities, including any payment upon an automatic call or any repayment of your initial investment at maturity, depends on the ability of Deutsche Bank AG to satisfy its obligations as they come due. An actual or anticipated downgrade in Deutsche Bank AG’s credit rating or increase in the credit spreads charged by the market for taking our credit risk will likely have an adverse effect on the value of the Securities. As a result, the actual and perceived creditworthiness of Deutsche Bank AG will affect the value of the Securities, and in the event Deutsche Bank AG were to default on its obligations, you might not receive any amount(s) owed to you under the terms of the Securities and you could lose your entire investment.
|
|
¨
|
The Issuer’s Estimated Value of the Securities on the Trade Date Will Be Less than the Issue Price of the Securities — The Issuer’s estimated value of the Securities on the Trade Date (as disclosed on the cover of this free writing prospectus) is less than the Issue Price of the Securities. The difference between the Issue Price and the Issuer’s estimated value of the Securities on the Trade Date is due to the inclusion in the Issue Price of the agent’s commissions and the cost of hedging our obligations under the Securities through one or more of our affiliates. Such hedging cost includes our or our affiliates’ expected cost of providing such hedge, as well as the profit we or our affiliates expect to realize in consideration for assuming the risks inherent in providing such hedge. The Issuer’s estimated value of the Securities is determined by reference to an internal funding rate and our pricing models. The internal funding rate is typically lower than the rate we would pay when we issue conventional debt securities on equivalent terms. This difference in funding rate, as well as the agent’s commissions and the estimated cost of hedging our obligations under the Securities, reduces the economic terms of the Securities to you. In addition, our internal pricing models are proprietary and rely in part on certain assumptions about future events, which may prove to be incorrect. If at any time a third party dealer were to quote a price to purchase your Securities or otherwise value your Securities, that price or value may differ materially from the estimated value of the Securities determined by reference to our internal funding rate and pricing models. This difference is due to, among other things, any difference in funding rates, pricing models or assumptions used by any dealer who may purchase the Securities in the secondary market.
|
|
¨
|
Past Performance of the Underlying Is No Guide to Future Performance — The actual performance of the Underlying may bear little relation to the historical prices of the relevant Underlying, and may bear little relation to the hypothetical return examples set forth elsewhere in this free writing prospectus. We cannot predict the future performance of the Underlying.
|
|
¨
|
Investing in the Securities Is Not the Same as Investing in the Underlying — The return on your Securities may not reflect the return you would realize if you invested directly in the Underlying. For instance, you will not receive or be entitled to receive any dividend payments or other distributions or other rights that holders of the Underlying would have. Further, you will not participate in any potential appreciation of the Underlying, which could be significant.
|
6
|
¨
|
Single Stock Risk — Each Security is linked to the common stock of a single Underlying. The price of each Underlying can rise or fall sharply due to factors specific to such Underlying and its issuer (the “Underlying Issuer”), such as stock price volatility, earnings, financial conditions, corporate, industry and regulatory developments, management changes and decisions and other events, as well as general market factors, such as general stock market volatility and levels, interest rates and economic and political conditions. We urge you to review financial and other information filed periodically by the Underlying Issuer with the SEC. For additional information about each Underlying and its Underlying Issuer, please see “The Underlyings,” “SanDisk Corporation” and “Anadarko Petroleum Corporation” in this free writing prospectus and each Underlying Issuer's SEC filings referred to in those sections.
|
|
¨
|
If the Price of the Underlying Changes, the Value of Your Securities May Not Change in the Same Manner — Your Securities may trade quite differently from the Underlying. Changes in the market price of the Underlying may not result in a comparable change in the value of your Securities.
|
|
¨
|
The Anti-Dilution Protection Is Limited — The calculation agent will make adjustments to the relevant Stock Adjustment Factor, which will initially be set at 1.0, for certain corporate events affecting the Underlying. The calculation agent is not required, however, to make such adjustments in response to all events that could affect the relevant Underlying. 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. In addition, you should be aware that the calculation agent may, at its sole discretion, make adjustments to the relevant Stock Adjustment Factor or any other terms of the Securities that are in addition to, or that differ from, those described in the accompanying product supplement to reflect changes occurring in relation to the Underlying in circumstances where the calculation agent determines that it is appropriate to reflect those changes to ensure an equitable result. Any alterations to the specified anti-dilution adjustments for the Underlying described in the accompanying product supplement may be materially adverse to investors in the Securities. You should read “Description of Securities — Anti-Dilution Adjustments for Reference Stock” in the accompanying product supplement in order to understand the adjustments that may be made to the Securities.
|
|
¨
|
There Is No Affiliation Between the Underlying Issuers and Us, and We Have Not Participated in the Preparation of, or Independently Verified, Any Disclosure by Such Issuer— We are not affiliated with the Underlying Issuers. However, we and our affiliates may currently or from time to time in the future engage in business with the Underlying Issuers. Nevertheless, neither we nor our affiliates have participated in the preparation of, or independently verified, any information about the Underlyings and the Underlying Issuers. You, as an investor in the Securities, should make your own investigation into the Underlyings and the Underlying Issuers. None of the Underlying Issuers is involved in the Securities offered hereby in any way and none of them has any obligation of any sort with respect to your Securities. None of the Underlying Issuers has any obligation to take your interests into consideration for any reason, including when taking any corporate actions that might affect the value of your Securities.
|
|
¨
|
There May Be Little or No Secondary Market for the Securities — The Securities will not be listed on any securities exchange. Deutsche Bank AG or its affiliates intends to offer to purchase the Securities in the secondary market but are not required to do so and may cease such market-making activities at any time. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell your Securities easily. 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 Deutsche Bank AG or its affiliates may be willing to buy the Securities.
|
|
¨
|
Assuming No Changes in Market Conditions and Other Relevant Factors, the Price You May Receive for Your Securities in Secondary Market Transactions Would Generally Be Lower than Both the Issue Price and the Issuer’s Estimated Value of the Securities on the Trade Date — While the payment(s) on the Securities described in this free writing prospectus is based on the full Face Amount of your Securities, the Issuer’s estimated value of the Securities on the Trade Date (as disclosed on the cover of this free writing prospectus) is less than the Issue Price of the Securities. The Issuer’s estimated value of the Securities on the Trade Date does not represent the price at which we or any of our affiliates would be willing to purchase your Securities in the secondary market at any time. Assuming no changes in market conditions or our creditworthiness and other relevant factors, the price, if any, at which we or our affiliates would be willing to purchase the Securities from you in secondary market transactions, if at all, would generally be lower than both the Issue Price and the Issuer’s estimated value of the Securities on the Trade Date. Our purchase price, if any, in secondary market transactions would be based on the estimated value of the Securities determined by reference to (i) the then-prevailing internal funding rate (adjusted by a spread) or another appropriate measure of our cost of funds and (ii) our pricing models at that time, less a bid spread determined after taking into account the size of the repurchase, the nature of the assets underlying the Securities and then-prevailing market conditions. The price we report to financial reporting services and to distributors of our Securities for use on customer account statements would generally be determined on the same basis. However, during the period of approximately six and a quarter months beginning from the Trade Date, we or our affiliates may, in our sole discretion, increase the purchase price determined as described above by an amount equal to the declining differential between the Issue Price and the Issuer’s estimated value of the Securities on the Trade Date, prorated over such period on a straight-line basis, for transactions that are individually and in the aggregate of the expected size for ordinary secondary market repurchases.
|
In addition to the factors discussed above, the value of the Securities and our purchase price in secondary market transactions after the Trade Date, if any, will vary based on many economic market factors, including our creditworthiness, and cannot be predicted with accuracy. These changes may adversely affect the value of your Securities, including the price you may receive in any secondary market transactions. 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.
|
¨
|
Many Economic and Market Factors Will Affect the Value of the Securities — While we expect that, generally, the price of the Underlying will affect the value of the Securities more than any other single factor, the value of the Securities prior to maturity will also be affected by a number of other factors that may either offset or magnify each other, including:
|
|
|
¨
|
the expected volatility of the Underlying;
|
|
|
¨
|
the time remaining to maturity of the Securities;
|
|
|
¨
|
the market price and dividend rates of the Underlying and the stock market generally;
|
|
|
¨
|
the real and anticipated results of operations of the Underlying Issuer;
|
|
|
¨
|
actual or anticipated corporate reorganization events, such as mergers or takeovers, which may affect the Underlying Issuer;
|
7
|
|
¨
|
interest rates and yields in the market generally and in the markets of the Underlying;
|
|
|
¨
|
geopolitical conditions and a variety of economic, financial, political, regulatory or judicial events that affect the Underlying or markets generally;
|
|
|
¨
|
supply and demand for the Securities; and
|
|
|
¨
|
our creditworthiness, including actual or anticipated downgrades in our credit ratings.
|
|
¨
|
Trading and Other Transactions by Us or Our Affiliates, or UBS AG or its Affiliates, in the Equity and Equity Derivative Markets May Affect the Value of the Securities — We or one or more of our affiliates expect to hedge our exposure from the Securities by entering into equity and equity derivative transactions, such as over-the-counter options or exchange-traded instruments. Such trading and hedging activities may affect the Underlying and make it less likely that you will receive a positive return on your investment in the Securities. It is possible that we or our affiliates could receive substantial returns from these hedging activities while the value of the Securities declines. We or our affiliates, or UBS AG or its affiliates, may also engage in trading in instruments linked to the Underlying on a regular basis as part of our general broker-dealer and other businesses, for proprietary accounts, for other accounts under management or to facilitate transactions for customers, including block transactions. We or our affiliates, or UBS AG or its affiliates, may also issue or underwrite other securities or financial or derivative instruments with returns linked or related to the Underlying. By introducing competing products into the marketplace in this manner, we or our affiliates, or UBS AG or its affiliates, could adversely affect the value of the Securities. Any of the foregoing activities described in this paragraph may reflect trading strategies that differ from, or are in direct opposition to, investors’ trading and investment strategies related to the Securities.
|
|
¨
|
We, Our Affiliates and Agents, or UBS AG and its Affiliates, May Publish Research, Express Opinions or Provide Recommendations that Are Inconsistent With Investing in or Holding the Securities. Any Such Research, Opinions or Recommendations Could Affect the Stock Price of the Underlying and the Value of the Securities — We, our affiliates and agents, and UBS AG and its affiliates, publish research from time to time on financial markets and other matters that may influence the value of the Securities, or express opinions or provide recommendations that may be inconsistent with purchasing or holding the Securities. Any research, opinions or recommendations expressed by us, our affiliates or agents, or UBS AG or its affiliates, may not be consistent with each other and may be modified from time to time without notice. Investors should make their own independent investigation of the merits of investing in the Securities and the Underlying to which the Securities are linked.
|
|
¨
|
Potential Deutsche Bank AG Impact on Price — Trading or transactions by Deutsche Bank AG or its affiliates in the Underlying and/or over-the-counter options, futures or other instruments with returns linked to the performance of the Underlying, may adversely affect the market price of the Underlying and, therefore, the value of the Securities.
|
|
¨
|
Potential Conflict of Interest — Deutsche Bank AG and its affiliates may engage in business with the Underlying Issuer, which may present a conflict between the obligations of Deutsche Bank AG and you, as a holder of the Securities. Deutsche Bank AG, as the calculation agent, will determine the Final Price of the Underlying and payment at maturity or upon an automatic call based on the Closing Price of the Underlying. The calculation agent can postpone the determination of the Closing Price of the Underlying if a market disruption event occurs on any Observation Date (including the Final Valuation Date). In addition, the calculation agent retains a degree of discretion about certain adjustments to the Stock Adjustment Factor upon the occurrence of certain corporate events that affect the Underlying. Deutsche Bank AG will also determine the Issuer’s estimated value of the Securities on the Trade Date and the price, if any, at which Deutsche Bank AG or our affiliates would be willing to purchase the Securities from you in secondary market transactions. In performing these roles, our economic interests and those of our affiliates are potentially adverse to your interests as an investor in the Securities.
|
|
¨
|
The U.S. Federal Income Tax Consequences of an Investment in the Securities Are Uncertain — There is no direct legal authority regarding the proper U.S. federal income tax treatment of the Securities, and we do not plan to request a ruling from the Internal Revenue Service (the “IRS”). Consequently, significant aspects of the tax treatment of the Securities are uncertain, and the IRS or a court might not agree with the treatment of the Securities as prepaid financial contracts that are not debt. If the IRS were successful in asserting an alternative treatment for the Securities, the tax consequences of ownership and disposition of the Securities could be materially and adversely affected. In addition, as described below under “What Are the Tax Consequences of an Investment in the Securities?”, in 2007 the U.S. Treasury Department and the IRS released a notice requesting comments on various issues regarding the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. Any Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of an investment in the Securities, possibly with retroactive effect. You should review carefully the section of the accompanying product supplement entitled “U.S. Federal Income Tax Consequences,” and consult your tax adviser regarding the U.S. federal tax consequences of an investment in the Securities (including possible alternative treatments and the issues presented by the 2007 notice), as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
|
8
|
Scenario Analysis and Hypothetical Examples of Payment upon an Automatic Call or at Maturity
|
The following table and hypothetical examples below illustrate the Payment at Maturity or Call Price due upon an automatic call for a hypothetical range of performances for the Underlying. The following examples and table are hypothetical and provided for illustrative purposes only. They do not purport to be representative of every possible scenario concerning increases or decreases in the price of any Underlying relative to its Initial Price. We cannot predict the Final Price or the Closing Price of the Underlying on any of the Observation Dates (including the Final Valuation Date). You should not take these examples as an indication or assurance of the expected performance of any Underlying. You should consider carefully whether the Securities are suitable to your investment goals. The numbers in the examples and table below have been rounded for ease of analysis.
The following examples and table illustrate the Payment at Maturity or Call Price due upon an automatic call per Security on a hypothetical offering of Securities based on the following assumptions*:
|
Term:
|
Approximately 5 years, subject to a quarterly automatic call beginning after the first year
|
|
Hypothetical Initial Price*:
|
$100.00
|
|
Hypothetical Trigger Price*:
|
$60.00 (60.00% of the hypothetical Initial Price)
|
Call Return and Call Prices*:
|
Observation Dates
|
Expected Call Settlement Dates
|
Call Return*
|
Call Price*
|
|
November 3, 2014
|
November 5, 2014
|
9.00%
|
$10.900
|
|
January 28, 2015
|
January 30, 2015
|
11.25%
|
$11.125
|
|
April 28, 2015
|
April 30, 2015
|
13.50%
|
$11.350
|
|
July 29, 2015
|
July 31, 2015
|
15.75%
|
$11.575
|
|
October 28, 2015
|
October 30, 2015
|
18.00%
|
$11.800
|
|
January 27, 2016
|
January 29, 2016
|
20.25%
|
$12.025
|
|
April 27, 2016
|
April 29, 2016
|
22.50%
|
$12.250
|
|
July 27, 2016
|
July 29, 2016
|
24.75%
|
$12.475
|
|
October 27, 2016
|
October 31, 2016
|
27.00%
|
$12.700
|
|
January 27, 2017
|
January 31, 2017
|
29.25%
|
$12.925
|
|
April 26, 2017
|
April 28, 2017
|
31.50%
|
$13.150
|
|
July 27, 2017
|
July 31, 2017
|
33.75%
|
$13.375
|
|
October 27, 2017
|
October 31, 2017
|
36.00%
|
$13.600
|
|
January 29, 2018
|
January 31, 2018
|
38.25%
|
$13.825
|
|
April 26, 2018
|
April 30, 2018
|
40.50%
|
$14.050
|
|
July 27, 2018
|
July 31, 2018
|
42.75%
|
$14.275
|
|
October 25, 2018 (Final Valuation Date)
|
October 31, 2018 (Maturity Date)
|
45.00%
|
$14.500
|
|
*
|
Based on a hypothetical Call Return Rate of 9.00% per annum. The actual Call Return Rate for each offering of the Securities is set forth on the cover of this free writing prospectus. The actual Initial Price and Trigger Price for each offering of the Securities will be set on the Trade Date.
|
Example 1 — The Closing Price of the Underlying on the first Observation Date is $110.00, which is greater than the Initial Price of $100.00 — the Securities are automatically called.
Because the Closing Price of the Underlying on the first Observation Date is greater than or equal to the Initial Price, the Securities are automatically called and Deutsche Bank AG will pay you on the applicable Call Settlement Date the Call Price of $10.90 per $10.00 Face Amount of Securities, representing a 9.00% return on the Securities.
Example 2 — The Securities have not been automatically called prior to the Final Valuation Date and the Final Price of $120.00 is greater than the Initial Price of $100.00 — the Securities are automatically called.
Because the Securities were not previously automatically called and the Final Price is greater than or equal to the Initial Price, the Securities are automatically called and Deutsche Bank AG will pay you on the applicable Call Settlement Date (which coincides with the Maturity Date) the Call Price of $14.50 per $10.00 Face Amount of Securities, representing a 45.00% return on the Securities.
Example 3 — The Closing Price of the Underlying is not greater than or equal to the Initial Price on any of the Observation Dates and the Final Price of $65.00 is greater than or equal to the Trigger Price of $60.00 — the Securities are NOT automatically called.
Because the Closing Price of the Underlying on all of the Observation Dates is not greater than or equal to the Initial Price, the Securities are not automatically called. Because the Final Price is greater than or equal to the Trigger Price, Deutsche Bank AG will pay you a Payment at Maturity equal to $10.00 per $10.00 Face Amount of Securities, representing a 0.00% return on the Securities.
Example 4 — The Closing Price of the Underlying is not greater than or equal to the Initial Price on any of the Observation Dates and the Final Price of $50.00 is less than the Trigger Price of $60.00 — the Securities are NOT automatically called.
Because the Closing Price of the Underlying on all of the Observation Dates is not greater than or equal to the Initial Price, the Securities are not automatically called. Because the Final Price is less than the Trigger Price, your initial investment will be fully exposed to any negative Underlying Return. Accordingly, Deutsche Bank AG will pay you a Payment at Maturity calculated as follows:
$10.00 + ($10.00 × Underlying Return) =
$10.00 + ($10.00 × -50.00%) = $5.00
9
If the Securities are not automatically called and the Final Price is less than the Trigger Price, your initial investment will be fully exposed to any negative Underlying Return, resulting in a loss of 1.00% of the Face Amount of Securities for every 1.00% decline in the Final Price as compared to the Initial Price. Under these circumstances, you will lose a significant portion, and could lose all, of your initial investment. Any payment on the Securities, including any payment upon an automatic call or any repayment of your initial investment at maturity, is subject to the creditworthiness of the Issuer and if the Issuer were to default on its payment obligations, you could lose your entire investment.
|
The Underlyings
|
All disclosures contained in this free writing prospectus regarding the Underlyings are derived from publicly available information. Neither Deutsche Bank AG nor any of its affiliates have participated in the preparation of, or independently verified, such information about the Underlyings contained in this free writing prospectus. You should make your own investigation into the Underlyings.
Included on the following pages is a brief description of each Underlying Issuer. We obtained the closing price information set forth below from Bloomberg, and we have not participated in the preparation of, or verified, such information. You should not take the historical prices of the Underlyings as an indication of future performance. Each of the Underlyings is registered under the Exchange Act. Companies with securities registered under the Exchange Act are required to file certain financial and other information specified by the SEC periodically. Information filed by each Underlying Issuer with the SEC can be reviewed electronically through a web site maintained by the SEC. The address of the SEC’s web site is http://www.sec.gov. Information filed with the SEC by each Underlying Issuer under the Exchange Act can be located by reference to its SEC file number provided below.
In addition, information filed with the SEC can be inspected and copied at the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of this material can also be obtained from the Public Reference Section, at prescribed rates.
10
|
SanDisk Corporation
|
According to publicly available information, SanDisk Corporation designs, develops and manufactures data storage products using flash memory, proprietary controller and firmware technologies. Information filed by SanDisk Corporation with the SEC under the Exchange Act can be located by reference to its SEC file number: 000-26734, or its CIK Code: 0001000180. The common stock of SanDisk Corporation is traded on the NASDAQ Global Select Market under the symbol “SNDK.”
Historical Information
The following table sets forth the quarterly high and low closing prices for the common stock of SanDisk Corporation, based on daily closing prices on the primary exchange for SanDisk Corporation, as reported by Bloomberg. SanDisk Corporation’s closing price on October 21, 2013 was $69.71. The actual Initial Price will be the Closing Price of SanDisk Corporation’s common stock on the Trade Date.
|
Quarter Begin
|
Quarter End
|
Quarterly High
|
Quarterly Low
|
Quarterly Close
|
|
10/1/2008
|
12/31/2008
|
$18.38
|
$5.32
|
$9.60
|
|
1/1/2009
|
3/31/2009
|
$13.37
|
$7.65
|
$12.65
|
|
4/1/2009
|
6/30/2009
|
$16.44
|
$12.21
|
$14.69
|
|
7/1/2009
|
9/30/2009
|
$22.93
|
$13.33
|
$21.70
|
|
10/1/2009
|
12/31/2009
|
$30.13
|
$19.66
|
$28.99
|
|
1/1/2010
|
3/31/2010
|
$35.25
|
$25.42
|
$34.63
|
|
4/1/2010
|
6/30/2010
|
$49.70
|
$34.71
|
$42.07
|
|
7/1/2010
|
9/30/2010
|
$46.37
|
$33.24
|
$36.65
|
|
10/1/2010
|
12/31/2010
|
$51.64
|
$36.28
|
$49.86
|
|
1/1/2011
|
3/31/2011
|
$53.25
|
$42.09
|
$46.09
|
|
4/1/2011
|
6/30/2011
|
$50.62
|
$38.94
|
$41.50
|
|
7/1/2011
|
9/30/2011
|
$45.57
|
$32.37
|
$40.35
|
|
10/1/2011
|
12/31/2011
|
$53.38
|
$38.92
|
$49.21
|
|
1/1/2012
|
3/31/2012
|
$52.68
|
$45.88
|
$49.59
|
|
4/1/2012
|
6/30/2012
|
$50.05
|
$31.23
|
$36.48
|
|
7/1/2012
|
9/30/2012
|
$46.18
|
$32.81
|
$43.43
|
|
10/1/2012
|
12/31/2012
|
$44.81
|
$38.84
|
$43.56
|
|
1/1/2013
|
3/31/2013
|
$55.33
|
$44.68
|
$55.00
|
|
4/1/2013
|
6/30/2013
|
$63.04
|
$51.18
|
$61.10
|
|
7/1/2013
|
9/30/2013
|
$63.45
|
$54.02
|
$59.51
|
|
10/1/2013
|
10/21/2013*
|
$69.71
|
$61.16
|
$69.71
|
|
*
|
As of the date of this free writing prospectus, available information for the fourth calendar quarter of 2013 includes data for the period through October 21, 2013. Accordingly, the “Quarterly High,” “Quarterly Low” and “Quarterly Close” data indicated are for this shortened period only and do not reflect complete data for the fourth calendar quarter of 2013.
|
The graph below illustrates the performance of SanDisk Corporation’s common stock from October 21, 2008 through October 21, 2013, based on information from Bloomberg, and we have not participated in the preparation of, or verified, such information. The graph shows a hypothetical Trigger Price equal to 57.00% (the mid-point between 54.00% and 60.00%) of $69.71, which was the closing price of SanDisk Corporation’s common stock on October 21, 2013. The actual Initial Price and Trigger Price will be determined on the Trade Date. The historical prices of SanDisk Corporation’s common stock should not be taken as an indication of future performance, and no assurance can be given as to the Final Price or any Closing Price of the Underlying. We cannot give you assurance that the performance of the Underlying will result in a positive return on your initial investment and you could lose a significant portion or all of the Face Amount at maturity.
11
|
Anadarko Petroleum Corporation
|
According to publicly available information, Anadarko Petroleum Corporation develops, acquires and explores for oil and natural-gas resources. Information filed by Anadarko Petroleum Corporation with the SEC under the Exchange Act can be located by reference to its SEC file number: 001-08968 or its CIK Code: 0000773910. The common stock of Anadarko Petroleum Corporation is traded on the New York Stock Exchange under the symbol “APC.”
Historical Information
The following table sets forth the quarterly high and low closing prices for the common stock of Anadarko Petroleum Corporation, based on daily closing prices on the primary exchange for Anadarko Petroleum Corporation, as reported by Bloomberg. Anadarko Petroleum Corporation’s closing price on October 21, 2013 was $96.03. The actual Initial Price will be the Closing Price of Anadarko Petroleum Corporation’s common stock on the Trade Date.
|
Quarter Begin
|
Quarter End
|
Quarterly High
|
Quarterly Low
|
Quarterly Close
|
|
10/1/2008
|
12/31/2008
|
$41.54
|
$27.17
|
$38.55
|
|
1/1/2009
|
3/31/2009
|
$43.84
|
$31.15
|
$38.89
|
|
4/1/2009
|
6/30/2009
|
$51.96
|
$40.86
|
$45.39
|
|
7/1/2009
|
9/30/2009
|
$64.85
|
$41.66
|
$62.73
|
|
10/1/2009
|
12/31/2009
|
$69.36
|
$57.11
|
$62.42
|
|
1/1/2010
|
3/31/2010
|
$74.31
|
$62.33
|
$72.83
|
|
4/1/2010
|
6/30/2010
|
$74.74
|
$34.83
|
$36.09
|
|
7/1/2010
|
9/30/2010
|
$57.68
|
$38.07
|
$57.05
|
|
10/1/2010
|
12/31/2010
|
$76.16
|
$56.05
|
$76.16
|
|
1/1/2011
|
3/31/2011
|
$83.17
|
$74.18
|
$81.92
|
|
4/1/2011
|
6/30/2011
|
$84.71
|
$69.65
|
$76.76
|
|
7/1/2011
|
9/30/2011
|
$84.28
|
$63.05
|
$63.05
|
|
10/1/2011
|
12/31/2011
|
$83.95
|
$60.53
|
$76.33
|
|
1/1/2012
|
3/31/2012
|
$88.05
|
$77.33
|
$78.34
|
|
4/1/2012
|
6/30/2012
|
$79.21
|
$57.12
|
$66.20
|
|
7/1/2012
|
9/30/2012
|
$75.59
|
$64.77
|
$69.92
|
|
10/1/2012
|
12/31/2012
|
$76.32
|
$66.18
|
$74.31
|
|
1/1/2013
|
3/31/2013
|
$88.88
|
$76.33
|
$87.45
|
|
4/1/2013
|
6/30/2013
|
$91.46
|
$79.45
|
$85.93
|
|
7/1/2013
|
9/30/2013
|
$95.53
|
$86.93
|
$92.99
|
|
10/1/2013
|
10/21/2013*
|
$97.53
|
$92.11
|
$96.03
|
12
|
*
|
As of the date of this free writing prospectus, available information for the fourth calendar quarter of 2013 includes data for the period through October 21, 2013. Accordingly, the “Quarterly High,” “Quarterly Low” and “Quarterly Close” data indicated are for this shortened period only and do not reflect complete data for the fourth calendar quarter of 2013.
|
The graph below illustrates the performance of Anadarko Petroleum Corporation’s common stock from October 21, 2008 through October 21, 2013, based on information from Bloomberg, and we have not participated in the preparation of, or verified, such information. The graph shows a hypothetical Trigger Price equal to 69.50% (the mid-point between 67.00% and 72.00%) of $96.03, which was the closing price of Anadarko Petroleum Corporation’s common stock on October 21, 2013. The actual Initial Price and Trigger Price will be determined on the Trade Date. The historical prices of Anadarko Petroleum Corporation’s common stock should not be taken as an indication of future performance, and no assurance can be given as to the Final Price or any Closing Price of the Underlying. We cannot give you assurance that the performance of the Underlying will result in a positive return on your initial investment and you could lose a significant portion or all of the Face Amount at maturity.
|
What Are the Tax Consequences of an Investment in the Securities?
|
In the opinion of our special tax counsel, Davis Polk & Wardwell LLP, which is based on prevailing market conditions, it is more likely than not that the Securities will be treated for U.S. federal income tax purposes as prepaid financial contracts that are not debt. If this treatment is respected, (i) you should not recognize taxable income or loss prior to the taxable disposition of your Securities (including at maturity or pursuant to a call) and (ii) your gain or loss on the Securities should be capital gain or loss and should be long-term capital gain or loss if you have held the Securities for more than one year. The IRS or a court might not agree with this treatment, however, in which case the timing and character of income or loss on your Securities could be materially and adversely affected.
In 2007, the U.S. Treasury Department and the IRS released a notice requesting comments on various issues regarding the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. The notice focuses in particular on whether beneficial owners of these instruments should be required to accrue income over the term of their investment. It also asks for comments on a number of related topics, including the character of income or loss with respect to these instruments; the relevance of factors such as the nature of the underlying property to which the instruments are linked; the degree, if any, to which income (including any mandated accruals) realized by non-U.S. persons should be subject to withholding tax; and whether these instruments are or should be subject to the “constructive ownership” regime, which very generally can operate to recharacterize certain long-term capital gain as ordinary income and impose a notional interest charge. While the notice requests comments on appropriate transition rules and effective dates, any Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of an investment in the Securities, possibly with retroactive effect.
You should review carefully the section of the accompanying product supplement entitled “U.S. Federal Income Tax Consequences.” The preceding discussion, when read in combination with that section, constitutes the full opinion of our special tax counsel regarding the material U.S. federal income tax consequences of owning and disposing of the Securities.
Under current law, the United Kingdom will not impose withholding tax on payments made with respect to the Securities.
For a discussion of certain German tax considerations relating to the Securities, you should refer to the section in the accompanying prospectus supplement entitled “Taxation by Germany of Non-Resident Holders.”
You should consult your tax adviser regarding the U.S. federal tax consequences of an investment in the Securities (including possible alternative treatments and the issues presented by the 2007 notice), as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
13
|
Supplemental Plan of Distribution (Conflicts of Interest)
|
UBS Financial Services Inc. and its affiliates, and Deutsche Bank Securities Inc., acting as agents for Deutsche Bank AG, will receive or allow as a concession or reallowance to other dealers discounts and commissions of $0.25 per $10.00 Face Amount of Securities. We will agree that UBS Financial Services Inc. may sell all or part of the Securities that it purchases from us to investors at the price to public indicated on the cover of the pricing supplement, the document that will be filed pursuant to Rule 424(b)(2) containing the final pricing terms of the Securities, or to its affiliates at the price to public indicated on the cover of the pricing supplement minus a concession not to exceed the discounts and commissions indicated on the cover. DBSI, one of the agents for this offering, is our affiliate. In accordance with Rule 5121 of the Financial Industry Regulatory Authority, Inc. (FINRA), DBSI may not make sales in this offering to any discretionary account without the prior written approval of the customer. See “Underwriting (Conflicts of Interest)” in the accompanying product supplement.
14