FTSE Early Bonus Plan III

Transcription

1 HSBC GLOBAL MARKETS FTSE Early Bonus Plan III Growth linked to the FTSE 100 Index with early exit feature Capital is not guaranteed Plan series: 528 Plan/ISA Manager: Hedge provider:

2 Who is the Plan provider? The FTSE Early Bonus Plan III (the Plan ) and the FTSE Early Bonus ISA (the ISA ) are provided by Keydata Investment Services Limited (Keydata), a company authorised and regulated by the Financial Services Authority. As Plan Manager, Keydata is responsible for the management of the Plan. An investment in the Plan would be a contractual agreement with Keydata to purchase securities from HSBC, the hedge provider, and then to manage the securities. Your capital is at risk. You must be prepared to lose some or all of your capital. This is a capital at risk product and the return of your initial capital at the end of the investment term will be dependent on the performance of the underlying Index. The product is designed to be distributed by Financial Advisers and applications received in respect of this product are assumed to be on an advised basis with investors having taken professional financial advice before they apply. This is not a prospectus but an advertisement and investors should not subscribe for any transferable securities referred to in the advertisement except on the basis of information in the prospectus. An electronic copy of the prospectus is available from the Issuer or Keydata upon request.

3 The FTSE Early Bonus Plan III Plan Series: 528 Underlying Index FTSE 100 Index Issuer of Underlying Securities HSBC Bank plc Minimum investment 3,000. There is no maximum investment. Investment term and Payment Date 5 years Investment Start Date: 17 July 2009 Final Valuation Date: 17 July 2014 Maturity Payment Date: 31 July 2014 Investment Return You can choose between two different investment options: The Early Bonus 80 offers a bonus of 31.25% as long as the Final Index Level does not fall below 80% of the Initial Index Level, provided the Plan is held until maturity and the Early Exit Feature is not triggered OR The Early Bonus 100 offers a bonus of 56.25% as long as the Final Index Level is equal to, or better than, the Initial Index Level provided the Plan is held until maturity and the Early Exit Feature is not triggered Early Exit Feature At the same time both investment options offer an Early Exit Feature paying a fixed bonus at the specified rate detailed in the table on page 2 (Early Bonus 80) or page 5 (Early Bonus 100) following the Early Exit Dates below: 16 July 2010; 18 July 2011; 17 July 2012; 17 July 2013 Capital Repayment The Plan has the following capital repayment scenarios at maturity for both investment options: Original capital will be repaid in full where the Final Index Level is the same or higher than the Initial Index Level at the Final Valuation Date The FTSE Early Bonus Plan III Original capital will also be repaid in full where the Index at the Final Valuation Date has fallen by less than 50% Where the Final Index Level has fallen by 50% or more, your capital return at maturity will be reduced by 1% for each 1% that the Final Index Level is below the Initial Index Level at the Final Valuation Date. Therefore your invested capital is at risk Return of capital is subject to the issuer of the securities fulfilling its obligation. Offer Period 13 May to 3 July 2009 (subject to change and early termination at the discretion of HSBC Bank plc according to market movements and market conditions, by giving Keydata 24 hours notice). Deadline for ISA transfers is 19 June 2009 Charges and expenses Charges will not exceed 3.5% of the initial investment and are reflected in the returns shown. No further charges or fees will be levied during the term, other than an administration fee of 150+VAT for any surrenders, unless as a result of significant tax or regulatory change. Early redemption Early encashment is permissible at any time by giving written notice to the Plan Manager. Dealing dates are normally mid month and month end. Redemption proceeds will be payable within 30 days from date of receipt of instruction. Early encashment may lead to investors getting back substantially less than their initial investment. No partial withdrawals are permitted from the Plan. Tax investment Returns may be subject to Capital Gains Tax (CGT) where applicable. The Plan can be included in a tax-efficient ISA or a pension plan such as a SIPP or SSAS. 1

4 The FTSE Early Bonus Plan III What returns will the Plan payout? The Plan is designed to allow investors to benefit from the potential growth of the FTSE 100 Index (the Index ) with Early Exit Feature. Investors can choose between two different investment options: the Early Bonus 80 and the Early Bonus 100. Details of returns at maturity and Early Exit features for each investment option are described on the following pages. This is a capital at risk product and the return of your initial capital at the end of the investment term will be dependent on the performance of the FTSE 100 Index. The rise or fall in the Index (other than Early Exit Feature) is measured by comparing the Final Index Level and the Initial Index Level. The Initial Index Level is the closing Level of the Index on the Start Date of Investment. The Final Index Level is the closing Level of the Index on the Final Valuation Date (see page 1). Returns at maturity, provided the Early Exit Feature is not triggered, are detailed below: Early Bonus You will receive your initial investment plus a bonus of 31.25%, if the Final Index Level at the Final Valuation Date has not fallen below 80% of the Initial Index Level 3. If the Final Index Level has fallen by 50% or more, your capital return at maturity will be reduced on a 1:1 basis i.e. you will lose 1% of your original investment for each 1% that the Final Index Level is below the Initial Index Level. Where the difference results in a fraction of 1%, the fraction will be applied Early Bonus 80: Early Exit Feature If the Index Level on one of the Early Exit Dates (see below) is at, or above, 80% of the Initial Index Level, the Plan matures early and you receive your initial investment plus a predefined bonus at the respective Early Exit Payment Date as stated in the table below: EARLY EXIT DATE EARLY EXIT PAYMENT DATE BONUS 16 July July % 18 July July % 17 July July % 17 July July % 2. You will receive back your initial capital and no returns, if the Index at the Final Valuation Date has fallen below 80% but is more than 50% of the Initial Index Level, (i.e. where the Final Index Level has fallen no more than 49% from the Initial Index Level see illustration on page 4) 2 The FTSE Early Bonus Plan III

5 Early Bonus 80: Payout Explained The chart below illustrates what you will get back from the Plan: Start Date of Investment Initial Index Level Bonus Year 1 Early Exit Date Is the closing level of the index on 16 July % or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital. 6.25% No Year 2 Early Exit Date Is the closing level of the index on 18 July % or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital % No Year 3 Early Exit Date Is the closing level of the index on 17 July % or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital % No Year 4 Early Exit Date Is the closing level of the index on 17 July % or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital. 25% No Final Valuation Date (1) Did the closing level of the index on 17 July 2014 close at, or above, 80% of the Initial Index Level? No Final Valuation Date (2) Did the level of the index close at more than 50% but less than 80% of its Initial Index Level at the Final Valuation Date? No Final Valuation Date (3) Did the Final Index Level close at or below 50% of the Initial Index Level? Yes Yes Yes The Plan matures paying a Bonus PLUS repayment of your original capital. The Plan matures repaying your original capital and NO returns % The Plan matures and your capital will be reduced on a 1:1 basis, i.e. you will lose 1% of your original investment for each 1% that the Final Index Level is below the Initial Index Level. Where the difference results in a fraction of 1%, the fraction will be applied. The FTSE Early Bonus Plan III 3

6 Early Bonus 80: Investment scenario analysis The following table illustrates what you might receive from your investment if you remain invested in the Plan until the Final Valuation Date based on a 10,000 investment, provided the Early Exit Feature is not triggered. Capital return at maturity will only be determined at the Final Valuation Date, i.e. should the Index fall by 50% or more during the investment period, you will still receive back your original capital at the end of the investment period, as long as the Final Index Level recovers to more than 50% of the Initial Index Level. As illustrated however, you will receive back less than your original capital if the Final Index Level has fallen by 50% or more of the Initial Index Level at the Final Valuation Date. These figures are examples only and changes in the Index Level have been chosen to demonstrate the potential returns under the Plan only. What you will get back depends on the performance of the underlying Index. You could get less than these example returns. INITIAL CAPITAL PERCENTAGE CHANGE IN FINAL INDEX LEVEL BONUS PAYMENT CAPITAL REPAYMENT TOTAL 10, % or more 3,125 10,000 13,125 10,000 0% 3,125 10,000 13,125 10,000-1% to -20% 3,125 10,000 13,125 10,000-21% to -49% 0 10,000 10,000 10,000-50% 0 5,000 5,000 10,000-60% 0 4,000 4,000 10,000-70% 0 3,000 3,000 10,000-90% 0 1,000 1,000 10, % The FTSE Early Bonus Plan III

7 Early Bonus 100 Returns if Early Exit Feature is not triggered: 1. You will receive your initial investment plus a bonus of 56.25%, if the Final Index Level at the Final Valuation Date is the same or higher than the Initial Index Level 2. You will receive back your initial capital and no returns, if the Index at the Final Valuation Date has fallen by less than 50%, (i.e. where the Final Index Level has fallen no more than 49% from the Initial Index Level see illustration on page 7) 3. If the Final Index Level has fallen by 50% or more, your capital return at maturity will be reduced on a 1:1 basis i.e. you will lose 1% of your original investment for each 1% that the Final Index Level is below the Initial Index Level. Where the difference results in a fraction of 1%, the fraction will be applied Early Bonus 100: Early Exit Feature If the Index Level on one of the Early Exit Dates (see below) is at or above the Initial Index Level, the Plan matures early and you receive your initial investment plus a predefined bonus at the respective Early Exit Payment Date as stated in the table below: EARLY EXIT DATE EARLY EXIT PAYMENT DATE BONUS 16 July July % 18 July July % 17 July July % 17 July July % The FTSE Early Bonus Plan III 5

8 Early Bonus 100: Payout Explained The chart below illustrates what you will get back from the Plan: Start Date of Investment Initial Index Level Bonus Year 1 Early Exit Date Is the closing level of the index on 16 July 2010 the same or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital % 12.5% No Year 2 Early Exit Date Is the closing level of the index on 18 July 2011 the same or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital % No Year 3 Early Exit Date Is the closing level of the index on 17 July 2012 the same or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital % No Year 4 Early Exit Date Is the closing level of the index on 17 July 2013 the same or higher than the Initial Index Level? Yes The Plan matures early paying an early Bonus PLUS repayment of your original capital. 45% No Final Valuation Date (1) Is the closing level of the index on 17 July 2014 the same or higher than the Initial Index Level? No Final Valuation Date (2) Did the level of the index close at more than 50% of its Initial Index Level at the Final Valuation Date? No Final Valuation Date (3) Did the Final Index Level close at or below 50% of the Initial Index Level? Yes Yes Yes The Plan matures paying a Bonus PLUS repayment of your original capital. The Plan matures repaying your original capital and NO returns % The Plan matures and your capital will be reduced on a 1:1 basis, i.e. you will lose 1% of your original investment for each 1% that the Final Index Level is below the Initial Index Level. Where the difference results in a fraction of 1%, the fraction will be applied. 6 The FTSE Early Bonus Plan III

9 Early Bonus 100: Investment scenario analysis The following table illustrates what you might receive from your investment if you remain invested in the Plan until the Final Valuation Date based on a 10,000 investment, provided the Early Exit Feature is not triggered. Capital return at maturity will only be determined at the Final Valuation Date, i.e. should the Index fall by 50% or more during the investment period, you will still receive back your original capital at the end of the investment period, as long as the Final Index Level recovers to more than 50% of the Initial Index Level. As illustrated however, you will receive back less than your original capital if the Final Index Level has fallen by 50% or more of the Initial Index Level at the Final Valuation Date. These figures are examples only and changes in the Index Level have been chosen to demonstrate the potential returns under the Plan only. What you will get back depends on the performance of the underlying Index. You could get less than these example returns. INITIAL CAPITAL PERCENTAGE CHANGE IN FINAL INDEX LEVEL BONUS PAYMENT CAPITAL REPAYMENT TOTAL 10, % or more 5,625 10,000 15,625 10,000 0% 5,625 10,000 15,625 10,000-1% to -49% 0 10,000 10,000 10,000-50% 0 5,000 5,000 10,000-60% 0 4,000 4,000 10,000-70% 0 3,000 3,000 10,000-90% 0 1,000 1,000 10, % The FTSE Early Bonus Plan III 7

10 More about the FTSE 100 Index The FTSE 100 Index (the Index ) is recognised as the benchmark index for UK-listed companies. The Index consists of the largest 100 UK companies by market value. Many of the companies in the Index are household names such as BP, Vodafone and HSBC Bank plc. The Index is rebalanced each quarter allowing companies that are growing to enter the 100 at the expense of companies whose share price may be falling, or underperforming its peers. When considering an investment in the FTSE Early Bonus Plan III you should also consider the following: Your capital is not protected. You could lose some or all of your original investment The returns from the Plan will differ from those achieved by investing directly into the underlying shares The Plan does not benefit from dividend payments paid by companies which comprise the FTSE 100 Index Performance of the FTSE 100 Index may turn out to be better than the return you will receive under the Plan Early Exit Feature, if triggered, will terminate your investment early Investors (who would be able to utilise UK Capital Gains Tax allowances) might maximise tax-free benefits by choosing an income product within an ISA wrapper Performance of the FTSE 100 Index Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Source Bloomberg: Period under review: to This information relates to the past. Past performance is not a reliable indicator of future returns. YEAR ON YEAR PERCENTAGE CHANGE TO TO TO TO TO FTSE 100 Index 11.41% 22.59% 4.83% -7.33% % This information relates to the past. Past performance is not a reliable indicator of future returns. 8 The FTSE Early Bonus Plan III

11 The FTSE Early Bonus Plan III how the Plan works As Plan Manager, Keydata is responsible for the management of the Plan. An investment in the Plan would be a contractual agreement with Keydata to purchase securities from HSBC, the hedge provider, and then to manage the securities. The securities which are linked to the Index are issued by HSBC Bank plc, whose long-term senior debt rating is Aa2 (Moody s), AA (Standard & Poor s) as at 6 May The securities however, are not rated. A bank rated AA has very strong financial security with characteristics differing only slightly with those rated higher Source: Standard & Poor s. At maturity, the proceeds from the securities are paid by the hedge provider to the Plan Manager and distributed to investors in the Plan. Return of capital is subject to HSBC Bank plc fulfilling its obligation. Is the Plan right for you? The Plan may be suitable if: You want to get exposure to the 100 largest companies by market capitalisation listed on the London Stock Exchange for the potential of capital gain You are prepared to lose some or all of your capital You are using the Plan as part of a diversified portfolio You want to receive a return of 31.25% if the Index at the Final Valuation Date has not fallen by more than 20% compared to its starting point (Early Bonus 80) OR a return of 56.25% if the FTSE 100 Index is equal to, or better than, its starting point at the Final Valuation Date (Early Bonus 100) You want to get the potential benefit of an Early Exit and a fixed bonus as specified in the table on page 2 (Early Bonus 80) or page 5 (Early Bonus 100) You want to avoid currency risk The FTSE Early Bonus Plan III You are able to leave your capital invested for the full investment term You have a minimum of 3,000 to invest The Plan may not be suitable if: You are not prepared to put your capital at risk You do not wish to have exposure to the FTSE 100 Index You cannot remain invested for the full investment term You want to add to your investment on a regular basis You do not want your investment to terminate before the end of investment term You are concerned that inflation may reduce the value of your investment return How do you make an investment? There are a number of ways you can invest in the Plan. Some of the options enable you to make the most of certain tax-free allowances, so it is important to consider your tax situation before investing and consult your financial adviser. Direct investment You can make a direct investment into the Plan subject to the minimum and maximum amount listed in the table on page 10. Using your ISA allowance An ISA can be a tax efficient way of investing depending on your tax position. From April 2008 you can now invest in two separate types of ISA in one tax year a Cash ISA and a Stocks and Shares ISA. The overall subscription limit for 2009/2010 tax year is 7,200, of which up to 3,600 can be subscribed to a Cash ISA. You cannot subscribe to more than one of each type of ISA per tax year. The FTSE Early Bonus ISA III is a Stocks and Shares ISA and is subject to the minimum and maximum amount listed in the table opposite. 9

12 It is important to consider that ISA rules could change in the future and that the tax advantages of investing through an ISA may not be maintained. ISA transfers You can consolidate existing ISA holdings by transferring them into the Plan. As well as transferring Stocks and Shares ISAs, you can now also transfer funds held in a Cash ISA from previous tax years into a Stocks and Shares ISA without affecting your annual allowance. Prior to transfer, you should consider any exit and associated charges of encashing your existing investments and the potential for loss of income or growth whilst the transfer is pending. An ISA Transfer investment into the Plan is subject to the minimum and maximum amount listed in the table opposite. Top up your ISA with direct investment If you wish to invest using your ISA allowances (minimum 3,000 and maximum 7,200 for 2009/2010) and would still like to invest additional amounts, you can invest outside your ISA investment with a direct investment. Please note, you must invest a minimum of 3,000 in the direct option. These will be treated as two plans for administration purposes. Other arrangements The Plan is eligible for SIPP (Self Invested Pension Plan) and SSAS (Small Self Administered Scheme) investment. It is important that you discuss your pension arrangements with your financial adviser if choosing this option. SIPP/SSAS investments into the Plan are subject to the minimum and maximum amount listed in the table opposite. The minimum and maximum investment amounts are illustrated below. INVESTMENT METHOD Stock & Shares ISA for 2009/2010 *Provided you have not already used your allowance for the tax year. Early redemption If you sell your investment before the relevant Final Valuation Date, you may not receive the full amount you originally invested. The actual amount you will receive will depend on a number of factors, including the prevailing market conditions. Early encashment may result in substantial loss of capital. To apply MINIMUM (FOR THIS PLAN) MAXIMUM 3,000 7,200* ISA Transfers 3,000 No maximum Direct Investment 3,000 No maximum SIPP and SSAS 3,000 No maximum You should seek professional financial advice before making any investment decisions. Having read and understood the full terms and conditions of the Plan and the rest of the brochure, simply fill in the Application Form that accompanies this brochure. Return it with your payment to Keydata at the address shown on the Application Form by the relevant deadline noted on page 1. Please make cheques payable to Keydata Client A/C if your cheque is from a building society, it should reference your name (e.g. Keydata Client A/C A Smith ). The dates for application deadlines (see page 1) reflect those required by Keydata as Plan Manager. Where Application Forms are routed via your financial adviser, you will need to allow for a minimum of at least 2 extra days (check with your financial adviser). 10 The FTSE Early Bonus Plan III

13 Who are the parties to the Plan? Hedge Provider HSBC Global Markets, part of HSBC Bank plc 8 Canada Square London E14 5HQ Telephone: Authorised and regulated by the Financial Services Authority. FSA registration number As the hedge provider, HSBC Bank plc is the issuer of the Securities designed to give investors back their capital and any returns. HSBC is one of the world s largest banking and financial services providers. It delivers solutions in personal financial services, commercial, corporate and investment banking, and wealth and asset management to more than 128 million customers worldwide. HSBC s understanding of local cultures and markets worldwide lies at the heart of the financial services it offers clients. Their in-depth knowledge of global economies, sectors, industries and institutions allows them to deliver innovative solutions to clients needs. Through their global banking expertise and their skills in financial products design, planning and execution they empower their clients to take advantage of any growth opportunities in domestic, cross-border and emerging markets. Plan Manager Plans are established investment structures designed to give exposure to the performance of a specified underlying asset. The Plan is issued and approved by Keydata Investment Services Limited, who are authorised and regulated by the Financial Services Authority. FSA registration number Keydata Investment Services Limited Floor 8 Fountain House 2 Queens Walk Reading RG1 7QF Telephone: ISA Manager ISA products (tax-efficient savings vehicles) within the Plan are provided and managed by Keydata Investment Services Limited, who are authorised and regulated by the Financial Services Authority. FSA registration number Keydata Investment Services Limited Floor 8 Fountain House 2 Queens Walk Reading RG1 7QF Telephone: The FTSE Early Bonus Plan III 11

14 The FTSE Early Bonus Plan III (the Plan ) and the FTSE Early Bonus ISA III (the ISA ) The Financial Services Authority is the independent financial services regulator. It requires us, Keydata Investment Services Limited, to give you this important information to help you to decide whether our Plan and ISA is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. 1. Plan aims Early Bonus 80: To provide investors with a bonus of 31.25% if the FTSE 100 Index at the Final Valuation Date has not fallen by more than 20% compared to the Initial Index Level, provided the Early Exit Feature is not triggered Early Bonus 100: To provide investors with a bonus of 56.25% if the FTSE 100 Index is equal to, or better than, its starting point at the Final Valuation Date, provided the Early Exit Feature is not triggered To provide investors with an Early Exit Feature paying a fixed bonus as specified in the table on page 2 (Early Bonus 80) or page 5 (Early Bonus 100) To return the full amount invested at the end of the investment period, provided the Index has not fallen by 50% or more compared to its starting point at the Final Valuation Date 2. Your commitment The minimum investment is 3,000. You should be prepared to hold your investment for the full investment term until the Final Valuation Date (see page 1). 3. Risk factors The returns provided by this Plan are achieved by exposing your capital to risk. Accordingly, at the end of the investment term you may not receive back any or all of the original capital that you invested Where the Final Index Level has fallen by 50% or more below the Initial Index Level, your capital return at maturity will be reduced on a 1:1 basis i.e. you will lose 1% of your original investment for each 1% that the Final Index Level is below the Initial Index Level. Where the difference results in a fraction of 1%, the fraction will be applied If you cash in your Plan prior to Maturity, you may get back substantially less than what you had originally invested The value of your investment may not go up and inflation will reduce what you could buy in the future Early Exit Feature, if triggered, will terminate your investment early Tax rules could change If you use your right to cancel your Plan within the first 14 days, and the value of your investment has fallen by the time we receive your instructions, the amount you get will be less than the amount you ve paid in If you have invested via an ISA and subsequently decide to cancel, once you have passed the cancellation period it may not be possible to invest in another ISA for the relevant tax year in which you invested The Plan is not the same as a bank or building society account where capital is guaranteed, and with instant access accounts, is readily available without penalty 12 The FTSE Early Bonus Plan III

15 4. Questions and answers Who can invest? UK investors aged 18 and over can invest via an ISA or the Direct Investment option. Investments can also be made through the Direct Investment option on behalf of a person under the age of 18. You can also transfer existing ISA investments from other Plan Managers. How do I invest? You should discuss with your Financial Adviser before making any investment decisions. Once you have decided to invest and have read and understood the brochure and the Terms and Conditions, complete and sign the relevant sections of the Application Form. The completed Application Form and cheque should be sent to your Financial Adviser or to Keydata Investment Services Limited, Fountain House, 2 Queens Walk, Reading, RG1 7QF. What documentation will I receive? Within five working days of receipt of your application, we will send you an acknowledgement which will include details on your right to cancel. Within 25 business days, following the Start Date of Investment into the Securities, which provide the Plan returns, a statement showing your investment within your Plan will be sent to you. Every six months thereafter, you will receive a statement and valuation of your investment. This will be issued within 25 business days of the Plan s six month investment anniversary. You can also request statements every three months should you require them more regularly. All investments will be registered in the name of the nominee company Keydata Investment Product Nominees Limited or other such nominee approved by the Plan Manager, although your holding is recorded and separately identified by us. No certificates will be issued. The FTSE Early Bonus Plan III 13

16 Which Index is investment performance linked to? Your investment is linked to the FTSE 100 Index The Index. The Index contains the 100 largest UK companies by market capitalisation listed, at the time this Plan is launched, on the London Stock Exchange. The Index is a capital-only index. Investors will not benefit from any dividends paid by the companies which are comprised in the Plan over the investment term. The returns from the Plan may not be the same as what you would receive if you invested directly in shares of the companies in the Index, as returns from shares include dividends, which are not added to the Plan. There is a risk that the Index may be discontinued, amended or replaced during the term of the Plan. If any of these events occur, the issuer of the investments may be able to amend the terms of those investments or defer payments under those investments. In addition, the calculation agent for those investments may be able to determine the amount payable without referring to the discontinued or disrupted index. As a result, investors may receive less than they would otherwise or may have to wait for the proceeds. What is my capital invested in? The investments that we will purchase for you will be Securities with a fixed maturity issued by HSBC Bank plc. They have been structured to match the investment objectives of your Plan. What is my tax liability? If you have invested via an ISA, all investment returns from your Plan are currently free of UK income tax and capital gains tax. Investors may be subject, depending on their personal circumstances, to capital gains tax (CGT) on any arising gains on the disposal of their Securities. The previous comments are intended as general guidance only and apply to investors who are resident or ordinarily resident in the United Kingdom for tax purposes, who invest in the Plan as an investment and not in the course of trade and are beneficial owners of the Securities at all times prior to the sale or exercise of the Securities. The comments are based on our understanding of current UK tax legislation and published HM Revenue & Customs practice in force at the date of this document going to print. Tax law and practice and any change could be applied retrospectively. If you are in doubt about your tax circumstances, please contact your professional adviser. 14 The FTSE Early Bonus Plan III

17 What about my capital repayment? The rise or fall in the Index is measured by comparing the Final Index Level and the Initial Index Level. As long as the Final Index Level has not fallen by 50% or more below the Initial Index Level, you will receive back your original investment. Where the Final Index Level has fallen by 50% or more below the Initial Index Level, your capital return at maturity will be reduced on a 1:1 basis i.e. you will lose 1% of your original investment for each 1% that the Final Index Level is below the Initial Index Level. Where the difference results in a fraction of 1%, the fraction will be applied. The Initial Index Level is the closing level of the Index on the Start Date of Investment. The Final Index Level is the closing level of the Index on the Final Valuation Date (see page 1). At the same time the Plan offers an Early Exit Feature paying fixed bonus as specified in the table on page 2 (Early Bonus 80) or page 5 (Early Bonus 100). How will charges and expenses affect my investment? The anticipated charges for this Plan will not exceed 3.5% of your investment. There will be no further charges to pay during the term, other than an administration fee of 150+VAT for any surrenders or transfer of an ISA to another manager, unless we feel it is necessary to take into account significant regulatory changes. These charges and expenses are reflected in the returns shown. How much will any advice cost? If you receive advice from an Independent Financial Adviser they will give you details about the cost. If you are not taking advice commission may still be payable to an Independent Financial Adviser. The amount of commission payable will be 3% (or 0.60% per annum) on the amount you invest. The amount will also be included in your welcome letter. Commission is already accounted for in the terms offered and does not affect the return shown. What happens if I change my mind? You will have the right to cancel your Plan within 14 days of receiving from us a notice of your right to cancel. Withdrawal notices, which Keydata receives prior to the Start Date of the Investment (see page 1), will receive a full return of the initial investment. However, you should note that for notices received on, or after, the Start Date of the Investment, you cannot reclaim a full refund of your investment if the price at which assets within the Plan were purchased have fallen at the time you elect to cancel your investment. In these circumstances a cancellation administration fee of 150+VAT will be deducted. Also, the cash value is not guaranteed and will depend on prevailing market conditions including, but not limited to, interest rates and the levels of the Index. As all charges are reflected in the terms offered, the value of your investment is likely to be less than the amount originally invested for a substantial part of the investment period. If you exercise your right to cancel your Plan following an ISA transfer, and either request the funds or your previous ISA Account Manager will not accept the return of these funds to them, you will irrevocably lose any favourable tax treatment associated with that ISA holding. The FTSE Early Bonus Plan III 15

18 Can I withdraw before the end of the term? Yes you can, although should you decide to sell or transfer your investment at any time within the term you are likely to receive less than you originally invested, particularly during the early years of the plan. Please refer to How will charges and expenses affect my investment? Can I make a partial withdrawal before the end of the term? No partial withdrawals are permitted from your Plan. How do I sell my investment? If you decide to sell your investment you should contact us to arrange it. Given the nature of the investment, it is possible that you may get back significantly less than you originally invested if you sell before the end of the investment term. If I am considering an ISA transfer, is there anything else I should know? To complete an ISA transfer your existing Plan must be transferred in cash, which means that your existing Account Manager will sell your investment holdings. Your existing Account Manager may charge you an exit or transfer fee. There is the potential for loss of income or growth, if markets should rise, while your transfer remains pending. Please note that to ensure that the funds are received from the existing Account Manager in a timely manner, we have a deadline for ISA transfers (see page 1). We then ask your existing Account Manager to credit funds to us by five working days prior to the Start date of the Investment (see page 1) at the latest. If this date is missed, it may not be possible to reinstate your ISA with your previous Account Manager. 16 The FTSE Early Bonus Plan III

19 How to contact us: If you require further information or an up to date valuation on your Plan please contact us. Please note, we may monitor calls to improve our service. Client Services: Keydata Investment Services Limited Floor 8 Fountain House 2 Queens Walk Reading RG1 7QF Switch Board: client.services@keydata.co.uk Other information How to complain: All formal complaints should, in the first instance, be made to the Compliance Officer at Keydata Investment Services Limited, Floor 8, Fountain House, 2 Queens Walk, Reading RG1 7QF. In addition, and if you are not happy with our response, you have the right to complain directly to the Financial Ombudsman Service at the following address: Financial Ombudsman Service, South Quay Plaza, 18 Marsh Wall, London E14 9SR. Telephone: Please note that making a complaint will not prejudice your right to take legal proceedings. A statement describing our complaints handling procedure is available on request. Compensation scheme: Should Keydata Investment Services Limited become insolvent, compensation may be available from the Financial Services Compensation Scheme, 7th Floor, Lloyds Chambers, Portsoken Street, London E1 8BN. Telephone: A statement describing your rights to compensation is available on request. The amount and scope of the compensation scheme, being 100% of the first 30,000 invested and 90% of the next 20,000 invested, making a maximum compensation amount of 48,000. The FTSE Early Bonus Plan III 17

20 Standard & Poor s: The Standard & Poor s credit rating is a current opinion of an institution s overall financial capacity (its creditworthiness) to pay its financial obligations. The credit rating is not a recommendation to purchase, sell, or hold a financial obligation, as it does not comment on market price or suitability for a particular investor. Terms and Conditions 1. Definitions: In these terms the following words mean: Plan FTSE Early Bonus Plan III Plan Manager Keydata Investment Services Limited FSA The Financial Services Authority is a non-governmental body given statutory powers by the Financial Services and Markets Act 2000 Start Date of Investment see page 1 Maturity Payment Date see page 1 ISA Individual Savings Account Keydata Keydata Investment Services Limited Regulations The Individual Savings Account Regulations 1998 Securities Medium Term Notes or Warrants issued by a financial institution Issuer The financial institution which issues the securities and acts as calculation agent, HSBC Bank plc We, us & our Keydata Investment Services Limited, which is authorised and regulated by the Financial Services Authority You and your An investor who applies to open a Plan Referenced Asset FTSE 100 Index 18 The FTSE Early Bonus Plan III

21 2. Your Plan: i. If applicable you may open more than one Plan. ii. The Application Form you use is part of these Terms and Conditions and if the terms differ, those contained in our Application Form will prevail. iii. On the receipt of a duly completed Application Form and subscription(s), the Plan Manager may accept your investment subject to these Terms and Conditions. The Plan Manager reserves the right to reject an application for any reason. iv. In the case of an ISA investment, your Plan will be opened upon receipt by us of a duly completed application together with your initial cash subscription. Subject to the Regulations we may open a Plan provisionally where the information which you have supplied is insufficient. In respect of an ISA, where we open a Plan on a provisional basis you must supply the missing information within 30 days, otherwise the Plan must be voided in accordance with HM Revenue & Customs requirements. v. In the case of an ISA transfer, we will manage your Plan upon receipt by us of the proceeds of your previous ISA from your previous Account Manager. vi. You are classified as a retail client within the meaning of the FSA Handbook unless we specify otherwise in correspondence with you. vii. Your Plan will have the features including the investment returns and risks described elsewhere in this document. 3. Cancellation rights: You will have the right to cancel your Plan within 14 days of receiving from us a notice of your right to cancel. Withdrawal notices, which Keydata receives prior to investment on the Start Date of the Investment, will receive a full return of the initial investment. However, you should note that for notices received on or after the Start Date of the Investment, the date on which securities will be purchased, you cannot reclaim a full refund of your investment if the price at which assets within the Plan were purchased have fallen at the time you elect to cancel your investment. In these circumstances a cancellation administration fee of 150+VAT will be deducted. Also, the cash value is not guaranteed and will depend on prevailing market conditions including, but not limited to, interest rates and the levels of the Referenced Asset. As all charges are reflected in the terms offered, the value of your investment is likely to be less than the amount originally invested for a substantial part of the investment period. If you exercise your right to cancel your Plan following an ISA transfer, the proceeds will be paid direct to you and you will irrevocably lose any favourable tax treatment associated with that ISA holding. 4. Subscriptions: You must subscribe to the Plan with your own cash or by transfer of cash from an existing ISA. Once the ISA has been transferred, your ISA Plan will be subject to these Terms and Conditions. 5. Permitted investments: The Securities available under the Plan are either warrants for direct investments denominated in sterling or Medium Term Notes for the purposes of ISA investments. The returns on both Securities are structured to deliver returns based upon the performance of the Referenced Asset. Your investment objective is to invest in these Securities. The FTSE Early Bonus Plan III 19

22 6. Cash held within your Plan: Cash will be held in a pooled Keydata Client Account with a bank (which is not an associate of the Plan Manager). Within an ISA, cash can only be held pending an investment and if held in cash over a prolonged period there is a risk that HM Revenue & Customs may void your ISA. Please note that no interest will be paid on 2009/10 ISA investments. 7. Investment: All cash received by us for investment in your Plan will be applied to purchase Securities. Investment will be made on or before the Start Date of the Investment. The Plan Manager will be responsible for all purchases and sales of investments for your Plan. The Plan Manager may aggregate any transaction for an investor with one or more transactions for other investors; even though this may result in a less favourable price than if it had been carried out separately. The Plan Manager will take all reasonable steps to ensure that any aggregated transaction is carried out on the best terms generally available in the market at that time for transactions of a similar type and size. You have a right to inspect copies of contract notes, vouchers and entries in the Plan Manager s book, or computerised records relating to transactions carried out for your account. These records will be kept for at least six years. The final capital repayment will be credited directly into your Plan on or around the Maturity Payment Date. 8. Securities: By signing the Application Form, you have chosen to make an investment with the features (including the potential returns and risks) described elsewhere in this document. Your investment will be used to acquire Securities, which are designed to fund the investment returns offered by the Plan. 9.Tax treatment: Where Securities are held within an ISA Account any gains or losses on your investment will not be subject to UK Income or Capital Gains Tax. Investors may be subject, depending on their personal circumstances, to capital gains tax (CGT) on any arising gains on the disposal of their Securities. The above comments are intended as general guidance only and apply to investors who are residents or ordinarily residents in the United Kingdom for tax purposes, who invest in the Plan as an investment and not in the course of a trade and are beneficial owners of the Securities at all times prior to the sale or exercise of the Securities. The comments are based on our understanding of current UK tax legislation and published HM Revenue & Customs practice in force as at the date of this document going to print. Tax law and practice could change and any change could be applied retrospectively. If you are in doubt about your tax circumstances, please contact your professional adviser. 10. How investments are held: All assets within your Plan will be, and must at all times remain, in your beneficial ownership, and must not be used as security for a loan. None of the assets may be lent to or deposited by way of collateral with any third party, nor may you create any charge or security over any assets. We may not lend any of your assets to a third party, nor may we borrow against their security. Securities will be registered in the name of our nominee company, Keydata Investment Product Nominees Limited, which is not authorised under the Financial Service and Markets Act 2000, or any such nominee approved by us. We accept full responsibility for any loss that might arise as a result of any default by any nominee company in which name the assets are held. 20 The FTSE Early Bonus Plan III

23 11. Conflicts of interest: The FSA Principles of Business stipulate that a firm must manage conflicts of interest fairly, both between itself and its customers and between one customer and another. Keydata has a Conflicts Policy which fully meets this requirement. Keydata will identify conflicts and ensure these are properly managed in a fair manner. Procedures are already in place to monitor activities which could give rise to such a conflict. A copy of the Keydata Conflicts Policy is available on our website or on request. 12. Documents you receive: We will acknowledge in writing within five working days from receipt of your application(s). Within 25 business days, following investment into the Securities which provide the Plan returns, a statement showing your investment within your Plan will be sent to you. You will also receive a statement every six months prepared on the six month anniversary of the Start Date, each year. This will show details of all transactions affected during the previous six months and include a valuation of your Plan. The statement will be prepared in accordance with the rules of the FSA and will be issued within 25 business days of the valuation date and will not include any measure of comparative performance. You can also request statements every three months should you require them more regularly. We may produce a consolidated statement covering where applicable (i) all ISAs that are held with us; and (ii) an investment statement covering all Direct Investments held with us. 13. Withdrawal: No partial withdrawals are permitted from your Plan. 14.Transfer to another manager: Subject to the Regulations, you have the right at any time to transfer your ISA to another ISA Manager. To effect a transfer you must submit to us a written instruction and/or a letter of acceptance from your new ISA Manager. You may stipulate when you wish to transfer the proceeds of your Plan, but should be aware your Plan s proceeds will be realised in accordance with clause 15. We only effect the transfer in cash following the sale of all securities held by you. In accordance with the Regulations, if you wish to transfer an ISA for the current year, the transfer must be effected in respect of all the subscriptions made that year. In relation to ISAs opened in respect of a previous year, the transfer must be effected in respect of all holdings held in that year s Plan. No partial transfers will be allowed. 15.Termination: The Plan may be terminated immediately by the Plan Manager on giving written notice to you if, in its opinion, it is impossible to administer the Plan in accordance with the Regulations or you are in breach of the Regulations. (The ISA Plan will terminate automatically if it becomes void under the Regulations with immediate effect. The Plan Manager will notify you in writing if an ISA Plan becomes void.) The Plan Manager may terminate the Plan on one month's notice if you fail to pay any money due or are in breach of any of these Terms and Conditions. The Plan Manager may at any time terminate the Plan by giving you three months notice to that effect. You may terminate the Plan at any time by giving written notice to the Plan Manager that you wish to terminate your Plan. The FTSE Early Bonus Plan III 21

24 Following receipt, the Plan Manager will then sell your investments at the next practicable dealing date, normally mid month and month end. As with transfers, you may stipulate when you wish to realise the proceeds of your Plan, but be aware that dealing usually occurs twice monthly as above. Keydata must receive written notice of termination no later than two business days prior to the dealing date. On termination, the Plan Manager will account to you for the proceeds of investments and will be entitled to retain any cash or investments required to settle any transactions already initiated on your behalf and any outstanding fees. You will pay to the Plan Manager any fees and transaction charges accrued to the date of termination. 16. Death: Should you die during the term of the Plan your investment will either be sold or assigned to a beneficiary, as directed by the Executor(s), after probate has been granted or proven. Should the Executor(s) elect to sell the Plan, an administrative fee of 65 + VAT will apply. No charge is applied if the Plan is assigned to a beneficiary and remains in force until maturity. The total value of your investment forms part of your estate for inheritance tax purposes. Following notification of the death of the original investor any monies held on deposit whilst we await instructions will accrue interest at 0.5% below the Bank of England base rate, floored at zero. Once we release these payments any interest accrued will be paid gross and may need to be declared by the beneficiaries for tax purposes. ISA investments automatically lose their tax-free status upon death of the holder. Where the original Plan was held in joint names, following notification of the death of one of the investors, the Plan can be held in the sole name of the remaining investor until maturity. 17. Charges: The Plan is designed to be held for the full term. Should you subsequently withdraw at any time during the investment period, a withdrawal administration fee of 150+VAT will be deducted. Also, the cash value is not guaranteed and will depend on prevailing market conditions including, but not limited to, interest rates and the levels of the Referenced Asset. As all charges are reflected in the terms offered, the value of your investment is likely to be less than the amount originally invested for a substantial part of the investment period. However we reserve the right to introduce an additional charge in the future to cover any additional expenses incurred by us as a result of significant regulatory change. In any event no such charge will be introduced without giving you three months written notice. 18. Records of your Plan: We will (a) maintain all such records relating to your Plan, (b) make such returns to HM Revenue & Customs for the purposes of taxation, and (c) provide all taxation details to you, as may be required under the Regulations. 19. Delegation of functions: We may appoint a third party to act in respect of any function relevant to administration of your Plan, though we must satisfy ourselves that any such third party is competent to carry out those functions or responsibilities. We shall take full responsibility for the actions and omissions of any such third party. 22 The FTSE Early Bonus Plan III