HSBC Structured Medium Term Notes

Transcription

1 HSBC Structured Medium Term Notes HSBC Global Multi-Asset Alpha Strategy (EUR) Note 2013

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3 1 HSBC Structured Medium Term Notes HSBC Global Multi-Asset Alpha Strategy (EUR) Note 2013 HSBC Fund Management (Malta) Limited (HFMM) is pleased to bring to the market the fourth issue of Structured Medium Term Notes. The HSBC Global Multi-Asset Alpha Strategy (EUR) Note 2013 (a Medium Term Note or MTN ) with the following terms of issue. Is this a limited offer? This is strictly a limited offer. Offer opens on 21 January 2008 and is available up to 15 March The offer may close earlier if over subscribed. Product details: Issuer: HSBC Bank plc Rating of issuer: AA (Standard & Poor s) Currency: Eur Issue price: 100 Capital Protection*: 100% in euro if held until maturity Minimum Investment: 2,500 Reference Index*: HSBC Global Multi-Asset Alpha Index quoted in euro Issue/Strike date: 26 March 2008 Term: 5 years Performance payments (if any): Annually Final valuation date: 21 March 2013 Maturity date: 28 March 2013 Pricing: Daily Liquidity/sell orders: Weekly *Please refer to Important notes and Risks section. Return: The performance of the MTN is linked to the HSBC Global Multi-Asset Alpha Strategy Index quoted in euro, which gives access to well proven currency, interest rate, equity and money market strategies. At the end of each year, the issuer will calculate the growth, if any, achieved from this Index, in excess of the capital protected amount, and pay investors up to a maximum of 10% of the original investment**. Any growth in excess of the maximum 10% is carried forward to the next year and the original investment is then paid out together in full, at the end of the 5 year period. (Please refer to the section How are returns calculated? ). ** Return is gross of tax. Is there any incentive for early subscriptions? 4% per annum on your euro investment will be paid pro rata on your subscription amount from date of subscription up to the start of your investment (i.e. Strike date 26 March 2008). This amount will be credited directly to your bank account with HSBC Bank Malta p.l.c. What are the benefits? Full capital protection if investment is held until maturity*; A dynamically managed Multi-Asset Alpha Strategy Index, giving access to well proven foreign exchange, interest rate, equity and money market strategies; Attractive target potential annual return of 10%** i.e. returns are linked to the potential positive performance of the Reference Index payable in annual payments (in the first 4 years, the maximum return that may be paid each year is 10% of the original investment); 4% per annum paid pro rata from date of subscription until the investment starts; Ability to sell your holdings before maturity at weekly intervals (subject to conditions/early redemption charges set out in this leaflet). *Please refer to Important notes and Risks section. ** The target annual return is not guaranteed. How does this product work? This Medium Term Note (MTN) has an investment term of 5 years and is linked to the HSBC Global Multi-Asset Alpha Index quoted in euro, which gives access to well proven managed currency, interest rate, equity and money market strategies.

4 2 The relevant four strategies are the HSBC Global Capri strategy which manages a global basket of long and short positions of high quality currencies; the Global Interest Rate strategy which actively trades interest rate positions in USD, EUR and GBP through forward starting deposits/loans; the Global Equity strategy which aims to take advantage of discrepancies between global equity markets and their sectors; and the Global Money Market strategy which looks to provide a money market return through a portfolio of short term OTC deposits. The allocation of these strategies is rebalanced periodically in accordance with changes in the return and volatility of the above components to maintain an optimal return/risk relationship. At the start of the investment, depending on the reference index at that point in time, investors are allocated with a specific number of units (please refer to the section How are returns calculated? ). Then, at the end of each year, the issuer will calculate the growth, (if any), made in that particular year and pay out the growth (if any) in excess of the capital protected amount to investors, subject to a maximum payment of 10% of the original investment. Any return in excess of 10% of the original investment is added back to the capital and carried forward to the next year. If a performance payment is made, the investors holding in units will be reduced in an amount equivalent to the payment made. At the end of the investment term investors will be repaid back their initial investment plus any residual growth accruing from the previous years up to the Final Valuation date. Any growth accruing to investors during the last year of the investment is not subject to capping. PLEASE NOTE that if the strategy experiences a severe loss and its value falls to the value of the prevailing zero coupon bond (i.e. the asset necessary to ensure the capital protected amount), the full amount invested in the strategy would be switched to the zero coupon bond for the remaining period of the MTN to secure the capital. If this happens no gain will be made from that point onwards and you will only receive back your initial capital. The risk of the asset being switched to fixed income assets will increase over time, as positive performance is paid out to investors after every year. Your investment will be held through a Securities Account with HSBC Fund Management (Malta) Limited using the nominee system and your investment term will start on 26 March Returns (if any) made at the end of each year will be paid within 8 business days. Maturity proceeds and returns (if any) accruing in the final year will be paid back by 3 April Returns (if any) and your capital will be credited directly to your bank account with HSBC Bank Malta p.l.c. How is the index growth calculated? The growth/fall of the index is calculated by taking the value of the index at particular points in each year as follows: Year 1 (a) the value of the index, at close of business on 26 March 2008 as a starting point; and (b) the final value of the index, at close of business on 25 March Year 2 (a) the value of the index, at close of business on 25 March 2009 as a starting point; and (b) the final value of the index, at close of business on 25 March Year 3 (a) the value of the index, at close of business on 25 March 2010 as a starting point; and (b) the final value of the index, at close of business on 25 March Year 4 (a) the value of the index, at close of business on 25 March 2011 as a starting point; and (b) the final value of the index, at close of business on 26 March Year 5 (a) the value of the index, at close of business on 26 March 2012 as a starting point; and (b) the final value of the index, at close of business on 21 March 2013.

5 3 The percentage change between the starting value and the final value of the Index in each year is the growth/fall achieved by that index in that year. The growth in the index is represented by a corresponding increase in the price of each unit held in the MTN. At the end of each year the issuer will calculate the value of the units held by an investor (by multiplying the number of units held with the price of the reference index at that point in time) and redeem units equivalent to the growth (if any) in excess of the capital protected amount, subject to a maximum of 10% of the original amount invested. Any growth accruing to investors during the last year of the investment is not subject to capping. Step 2 At the end of each year, the issuer will calculate the value of the units held by an investor (by multiplying the number of units held with the price of the reference index at that point in time) and redeem units equivalent to the growth (if any) in excess of the capital protected amount. During the first 4 years, these redemptions are subject to a maximum of 10% of the original investment. In the above example, this means that the potential maximum amount payable to investors in the first four years could be of 500 each year. Any growth accruing to investors during the last year of the investment is not subject to capping. Please see tables overleaf with worked examples illustrating different market scenarios. How are returns calculated? The following is a step by step example showing how returns would be calculated on an original investment of 5,000. Step 1 Original investment 5, Margin of 3.75% retained/received by issuer, distributor, etc. 4, Price per unit, as set by issuer 100 Units allocated to investor at start of investment units Note: Although the units allocated to investor take into account the margin retained or received by the issuer/ distributor - this does not affect the investor s entitlement to receive the full original investment of 5, upon maturity.

6 4 The examples below are not based on past performance and are for illustrative purposes only. SCENARIO 1 Value % value Units Units at Value at above/below above/below Growth redeemed Balance start of end of capital capital exceeds 10% (max 10% of units Initial relevant Unit relevant protected protected Units of original of original at end of Return* Investment year price year amount amount equivalent amount amount in relevant paid to 5,000 (a) (b) (c) (d) (e) to (e) Yes/No years 1 to 4) year investor , Year , % n/a no Year , % yes Year , % no Year , % yes Year , , % n/a n/a SCENARIO 2 Total return in 5 years 1,082.50* + Plus original investment paid back to investor 5, Total received by investor by end of year 5 6, Equivalent to 21.65% Value % value Units Units at Value at above/below above/below Growth redeemed Balance start of end of capital capital exceeds 10% (max 10% of units Initial relevant Unit relevant protected protected Units of original of original at end of Return* Investment year price year amount amount equivalent amount amount in relevant paid to 5,000 (a) (b) (c) (d) (e) to (e) Yes/No years 1 to 4) year investor , Year , % no Year , % no Year , % no Year , % 0 no Year , % n/a no Total return in 5 years * + Plus original investment paid back to investor 5, Total received by investor by end of year 5 5, Equivalent to 5.77% SCENARIO 3 Value % value Units Units at Value at above/below above/below Growth redeemed Balance start of end of capital capital exceeds 10% (max 10% of units Initial relevant Unit relevant protected protected Units of original of original at end of Return* Investment year price year amount amount equivalent amount amount in relevant paid to 5,000 (a) (b) (c) (d) (e) to (e) Yes/No years 1 to 4) year investor , Year , % yes Year , % yes Year , % yes Year , % yes Year , % yes *Illustrated returns are gross of tax. Please also refer to Important notes and Risks section. Total return in 5 years 2,644.15* + Plus original investment paid back to investor 5, Total received by investor by end of year 5 7, Equivalent to 52.88%

7 5 SCENARIO 4 Value % value Units Units at Value at above/below above/below Growth redeemed Balance start of end of capital capital exceeds 10% (max 10% of units Initial relevant Unit relevant protected protected Units of original of original at end of Return* Investment year price year amount amount equivalent amount amount in relevant paid to 5,000 (a) (b) (c) (d) (e) to (e) Yes/No years 1 to 4) year investor , Year , % no Year , % no Year , % yes Year , % n/a no Year , % yes *Illustrated returns are gross of tax. Please also refer to Important notes and Risks section. SCENARIO 5 Total return in 5 years 1,573.63* + Plus original investment paid back to investor 5, Total received by investor by end of year 5 6, Equivalent to 31.47% PLEASE NOTE that if the strategy experiences a severe loss and its value falls to the value of the prevailing zero coupon bond (i.e. the asset necessary to ensure the capital protected amount), the full amount invested in the strategy would be switched to the zero coupon bond for the remaining period of the MTN to secure the capital. If this happens no gain will be made from that point onwards and the investor is repaid back only the initial capital investment. The risk of the asset being switched to fixed income assets will increase over time, as the positive performance is paid out to investors after every year. Step 3 Irrespective of the potential growth levels illustrated in the scenarios above, at maturity, the investor will be paid back the initial capital investment, in this example 5,000. Please also note that if your reference currency is not the euro, currency fluctuations and charges of conversion may result in your getting back less than your original investment.

8 6 Looking back The details below refer to the past performance of a 100% principal protected Note of 5 years investing 100% into the Global Multi-Asset Alpha Index* In the chart below, 23 five year periods since 2001 (i.e. from January 2001 to November 2007) have been analysed and yearly returns have been calculated. The following results have emerged: Average Yearly Returns are 11.5% 74% of the MTNs show annual returns above 10% Latest 5 year period shows annual returns of 9% * Quoted performance is net of fees. Historical data for the Index are based on simulations, and is not a reliable indicator of future performance of this investment year euro MTN past performance 5 year periods Distribution of 5 year Absolute Returns How can I acquire this Medium Term Note and what about charges? Applications to subscribe to the MTN are available from all branches of HSBC Bank Malta p.l.c. during the offer period. You will be required to open a Securities Account with HSBC Fund Management (Malta) Limited in order for HFMM to hold your investment as your nominee and you will be sent a statement with details of your holdings one business day after Strike Date. In making available this offer the issuer and the distributor may receive a margin of up to 4% of the issue price of the MTN. A part of this fee may then be re-allowed to HFMM for providing the nominee service or discounted to investors at the discretion of HFMM. None the less, if you keep your holding until the end of the investment term, you are entitled to receive back the full amount initially subscribed for and such amount will not be affected by the payment, or reimbursement, of any fees, charges and expenses relating to the offering. Please refer to the next section for details on charges if you intend to sell your MTN prior to its due date < 8% 8 to 9% 9 to 10% 10 to 11% 11 to 12% 12 to 13% 13 to 14% 14 to 15% Source: HSBC Bank plc, Global Banking and Markets. Please note that past performance is not a reliable guide of future performance of this investment. Furthermore, if the strategy experiences a severe loss and its value falls to the value of the prevailing zero coupon bond (i.e. the asset necessary to ensure the capital protected amount), the full amount invested in the strategy would be switched to the zero coupon bond for the remaining period of the MTN to secure the capital. If this happens no gain will be made from that point onwards and the investor is repaid back only the initial capital investment. > 15% Returns Can I sell the Medium Term Note at any time? You may submit your orders to sell your MTN at any branch of HSBC Bank Malta p.l.c. Sell orders, in multiples of 2,500 nominal only, from your Securities Account with HFMM will be processed on a weekly basis (on a Friday) at the prevailing market bid price, net of any transaction and/or bank charges, and proceeds will be credited directly to your account held with HSBC Bank Malta p.l.c. Furthermore, if you want to sell your investment prior to the maturity date, there will also be an early redemption fee as follows: In 1st year 2% of principal amount redeemed In 2nd and 3rd year 1% of principal amount redeemed Thereafter Not applicable

9 7 Please note that orders to sell the MTN are only accepted in multiples of 2,500 nominal. Sell orders submitted to any branch of HSBC Bank Malta p.l.c. from Monday to Saturday up to 12.30pm will be received on the following business day by HFMM* for verification of clients details held on the Securities Account. Such orders will then be transmitted for execution every week on a Friday (or the next business day, if this happens to be a public holiday) at the prevailing market price. Settlement of proceeds, after deduction of any applicable transaction and/or bank charges, will be effected within 8 business days from execution of the transaction. There will be no charges if you hold the investment until maturity. As explained above, if you sell your investment before the end of the investment term you will receive back less than your original capital. Furthermore, any residual growth carried forward or accrued in previous years may also be lost. Please refer to your personal financial advisor before you decide to surrender part or all of your investment so that you can make an informed decision. *Please note that orders to sell the MTN submitted to any branch of HSBC Bank Malta p.l.c. on Friday and Saturday will be received by HFMM the following Monday. How can I obtain the market value of my holding? The market price of your holding may be obtained on a daily basis from hsbc.com.mt or by calling Customer Service At least once annually, you will also receive a statement with details of your holdings and the market value at that point in time. Please note that any queries relating to your holdings in the Securities Account should be addressed to: The Administrator, HSBC Securities Services (Malta) Limited, at 116, Archbishop Street, Valletta VLT1444 or by calling on What about taxation? If you are a Maltese resident investor, any capital gains will be subject to a 15% final withholding tax, which shall be deducted at source. Alternatively, you may opt to receive such gains without deduction of tax, in which case you would be obliged to declare same in your personal income tax return and would be subject to tax at the normal rates of tax. Please note that the levels and basis of taxation are dependent on individual circumstances and subject to change and therefore it is highly recommended that you consult a professional tax adviser on your personal tax matters. What risks should I consider before investing in this product? The investment return on the MTN (whether positive or negative) will depend primarily on the performance of the Index and interest rates. Please note that the value of the Global Multi-Asset Alpha Index quoted in euro will be determined with respect to one or more different components and its value may be materially affected by the performance of a particular component, exchange rate fluctuations and possible restrictions in the convertibility of the currencies in question. A component may involve taking short positions and may also involve trading in futures, options, forward exchange contracts and other derivative instruments. These may represent significant investment risk and are only suitable for investors who understand the risks involved in trading in volatile and sophisticated markets. In addition, a currency trading strategy may involve leveraged trading positions. As a result, relatively small price movements may result in substantial losses or gains.

10 8 Furthermore, if the strategy experiences a severe loss and its value falls to the value of the prevailing zero coupon bond (i.e. the asset necessary to ensure the capital protected amount), the full amount invested in the strategy would be switched to the zero coupon bond for the remaining period of the MTN to secure the capital. If this happens no gain will be made from that point onwards and the investor is repaid back only the initial capital investment. Investors should also note that the capital investment made in the HSBC Global Multi-Asset Alpha Strategy (EUR) Note 2013 is not guaranteed and in the event of default of the issuer, such issuer may be unable to repay your capital and/or any returns. Investing in MTNs involves certain risks as outlined in the Base Prospectus. A prospective purchaser of this MTN should therefore carefully consider all the risks associated with any investment in these Notes. Important notes This leaflet is not a prospectus for the purposes of the Prospectus Directive, but an advertisement and investors should not subscribe for the Notes except on the basis of information contained in the Prospectus dated January 2008 relevant to this offer, the Base Prospectus dated 2 August 2007 and the Base Prospectus Supplements dated 8 August 2007, 6 September 2007, 29 November 2007 and 8 January 2008 issued by HSBC Bank plc. These documents have been approved by the United Kingdom Financial Services Authority and passported into Malta in terms of Directive 2003/71/EC ( the Prospectus Directive ) and relevant implementing measures in Malta. The prospectus/supplements will be made available to you on request from any branch of HSBC Bank Malta p.l.c. or from the registered office of HFMM during their normal opening days and hours. The MTN documentation will be in English. Investors may however communicate with HSBC Fund Management (Malta) Limited or HSBC Securities Services (Malta) Ltd in either English or Maltese. The offering is subject to the condition that prior to the expiration of the Offer Period the amount of at least 1.5 million is received from investors by way of subscription monies for the Notes. In the event that such a minimum amount is not received prior to the expiration of the offer period, then HSBC Bank Malta p.l.c., may at its discretion, decide not to sell/allot any Notes and to return all subscription monies to applicants. The Index Calculation Agent is HSBC Bank plc who is also the issuer of the MTN. The Index Calculation Agent (in its capacity as such) has no obligation to take into account the interests of the investors in constructing, determining or calculating the Index. The Index Calculation Agent shall not be liable, whether in negligence or otherwise, to any person for any error in the Index or under any obligation to advise any person of any error therein. The Index Calculation Agent does not guarantee the accuracy or completeness of the Index. If you ever need further information, have concerns or a complaint please contact HSBC Fund Management (Malta) Limited, 233, Republic Street, Valletta VLT1116 or call HSBC Securities Services (Malta) Ltd (as the Administrator) on We will investigate your query or complaint promptly and will give you a written reply as soon as possible. If your complaint is not dealt with to your satisfaction you can forward your complaint to the Consumer Complaints Manager at the Malta Financial Services Authority, Notabile Road, Attard BKR3000, Tel: More information is available at Making a complaint will not prejudice your right to take legal proceedings. The value of investment may fall as well as rise and past performance is not a guarantee to future returns. HSBC Fund Management (Malta) Limited and HSBC Securities Services (Malta) Limited are licensed by the Malta Financial Services Authority.

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12 hsbc.com.mt Customer Service Approved and issued by HSBC Fund Management (Malta) Limited HSBC Fund Management (Malta) Limited 233, Republic Street Valletta VLT1116 Malta 07/ /2008. Designed by BPC.