Investment Initial Allocation
 
Investment with UBS AG London 98% of the aggregate Investment Amounts
Cash or cash equivalents in Australia 2% of the aggregate Investment Amounts, less the expenses of establishing Vault 08 and the offer of Units. The establishment fee is 0.41% of the aggregate Investment Amounts.

Vault 08’s investment with UBS AG London comprises two components, a Deposit and a Swap, which are explained in more detail in the PDS.

At the end of the investment term, you will receive back from your investment amount, the investement amount as it is capital protected (subject to the terms set out in PDS) plus an amount form the Swap which is your proportionate share of the performance of the UBS investment strategies, referred to as the LTA Series, from the Issue Date to the Swap Maturity Date.

The diagrams below are graphical illustrations of how the Swap may operate over an investment term.

Investors should not rely on the information below as a basis for investment in Units as these are merely examples. The illustrations below are not based on any past performance of the LTA Series and do not provide or aim to provide any forecast about the performance of the Swap or the LTA Series or the return or distributions on the Units. There is no guarantee to investors of the performance, repayment of capital, income payments or any particular rate of capital or income return from the Swap, LTA Series or the Units. The data used to produce the illustrations below are purely hypothetical and provided for illustrative purposes only.

In these illustrations:

  • The 98% invested exposure represents the investment with UBS AG London at the commencement of the investment in the Swap.
  • The maximum investment exposure is the total exposure of the Swap to the LTA Series (including the Swap leverage) plus the Deposit Amount. The ‘CPPT on LTA Series’ line represents the exposure to the LTA Series using the CPPT allocation management mechanism. The close symmetry between the LTA Series and the ‘CPPT on LTA Series’ lines in the illustrations below illustrates how the CPPT mechanism may facilitate the protection of capital invested in the Swap.


Graphical illustration of the CPPT mechanism on the Swap assuming positive cumulative performance of the LTA Series

Graphical illustration of the CPPT mechanism on the Swap and the Put Option assuming negative cumulative performance of the LTA Series

How Vault 08 works for you

Your investment returns are a function of the returns generated by Vault 08 and the costs you incur in making your investment. An investment aim of Vault 08 is to provide capital appreciation over the investment term principally by way of a final payment at the end of the investment term.

The returns generated by Vault 08 comprise:

  1. the maturity payment that the Issuer receives under the Swap, and potentially annual payments under the Swap, which both depend on the performance of the LTA Series; and
  2. the returns the Issuer receives from the Vault 08 investments in the Deposit and in cash or cash equivalents; less
  3. the fees and expenses charged in relation to Vault 08.

These returns may be reduced by investors’ costs in relation to making their Vault 08 investment, being their Put Option Fee and, in the case of Borrowers, Loan interest.

The following is a worked example of an investment in Vault 08 based on an investor borrowing 100% of the Investment Amount. The worked example is not based on any past performance of an investment in Vault 08 and does not provide or aim to provide any forecast about the performance of the Swap or the LTA Series or the returns or distributions on the Units. There is no guarantee to investors of the performance, repayment of capital, income payments or any particular rate of capital or income return from the Swap, LTA Series or the Units.

The pricing of the LTA Series will be published monthly and may be viewed on Quattro’s website at www.quattroam.com.au.

The worked example assumes the following:

  1. an Investment Amount of $100,000;
  2. that the investor borrows 100% of his Investment Amount under a Loan Agreement;
  3. that the amount of the Loan equals the Investment Amount;
  4. Put Option Fee of 0.3% per annum of an investor’s Investment Amount (see section 4 of this PDS for more detail);
  5. an interest cost on the Loan of 10.6% of an investor’s Investment Amount;
  6. a marginal tax rate of 46.5% for the investor and that the investor pays tax at the highest marginal tax rate. Please see section 7 for more information in relation to the deductibility of interest; and
  7. The investors loan, for his Investment Amount, is repaid on the Maturity Date.


Worked Example: Borrower’s cash flow over the term of the investment and the return from Vault 08 required to equal the investor’s cost (post tax) of making the Vault 08 investment which is their interest payments and Put Option Fees

UBS AG London investments returns:
Average Swap annual distribution 1.40% p.a.          
Swap distribution at maturity 22.84%          
Return on cash and cash equivalents: 7.75% p.a.          
 
Investor cash flow Start Year 1 Year 2 Year 3 Year 4 Year 5
Annual cost to investor (post tax)* $ 5,971 $ 5,971 $ 5,971 $ 5,971 $ 5,971  
Vault 08 return            
Cash return   $ 123 $ 123 $ 123 $ 123 $ 123
Swap annual distribution   $ 1,372 $1,372 $1,372 $1,372 $1,372
Swap distribution at maturity           $ 22,379
Investors cash flow $ 5,971 $ 4,476 $ 4,476 $ 4,476 $ 4,476 $ 23,874
             
Investor cost*  $ 29,855          
Investor returns*  $ 29,855          

 * Refer to Section 7 of the PDS for information on taxation.