HSBC Asset Management

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1 HSBC Asset Management Prospectus HSBC Capital Protected Funds - HSBC Turbo Double 8 Dated 9 July 2004 Valid till 8 July 2005

2 i HSBC CAPITAL PROTECTED FUNDS Directory Managers HSBC Asset Management (Singapore) Limited Registered Address: 21, Collyer Quay, #14-01, HSBC Building, Singapore Business Address: 21, Collyer Quay, #13-02, HSBC Building, Singapore Directors of the Managers Lai Mun Kit Paul Joseph Lawrence Michael Young (alternate to Paul Joseph Lawrence) Nicholas Gary Winsor Ayaz Ebrahim Blair Chilton Pickerell Simeon Thomas Brown (alternate to Blair Chilton Pickerell) Trustee Dexia Trust Services Singapore Limited 9, Raffles Place, #42-01, Republic Plaza, Singapore Auditors KPMG 16, Raffles Quay, #22-00, Hong Leong Building, Singapore Solicitors to the Managers One Marina Boulevard, #28-00, Singapore Solicitors to the Trustee CW Lee Law Practice LLC 16, Upper Circular Road, Benning House Level 3, Singapore

3 ii HSBC CAPITAL PROTECTED FUNDS Important Information The managers of HSBC Capital Protected Funds (the Fund ), HSBC Asset Management (Singapore) Limited, accept full responsibility for the accuracy of information contained in this Prospectus and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in this Prospectus misleading. Unless otherwise stated, all terms not defined in this Prospectus have the same meanings as used in the Deed of Trust (as amended) relating to the Fund (the Deed ). Investors should consult the relevant provisions of the Deed and obtain independent professional advice in any event of any doubt or ambiguity relating thereto. The Fund and the sub-fund of the Fund offered in this Prospectus, HSBC Turbo Double 8, will not be listed on any stock exchange. There is no ready market for the units in HSBC Turbo Double 8. Investors may consequently only redeem their units in accordance with the provisions of the Deed. Potential investors should seek independent professional advice to ascertain (a) the possible tax consequences, (b) the legal requirements and (c) any foreign exchange transactions or exchange control requirements which they may encounter under the laws of the countries of their citizenship, residence or domicile, which may be relevant to the subscription, holding or disposal of Units in the HSBC Turbo Double 8. This Prospectus does not constitute an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not lawful or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such an offer or solicitation. Investors should also consider the risks of investing in HSBC Turbo Double 8 which are summarised in paragraph 10 of this Prospectus. All enquiries in relation to HSBC Turbo Double 8 should be directed to the managers, HSBC Asset Management (Singapore) Limited, or any agent or distributor appointed by the managers.

4 Table of Contents Contents Directory Important Information Page i ii 1 Basic Information 1 2 The Managers 4 3 The Trustee 4 4 The Investment Adviser 4 5 The Register of Holders 4 6 The Auditors 5 7 Structure of the Sub-Fund 5 8 Investment Objective, Focus and Approach 5 9 Fees and Charges 8 10 Risks 9 11 Subscription of Units Realisation of Units Switching of Units Obtaining Prices of Units Suspension of Dealing Soft Dollar Commissions / Arrangements Conflicts of Interest Reports Other Material Information Queries and Complaints 17 Appendix 1 Details of the Stock Basket 18 Appendix 2 Return calculation 24 Appendix 3 Non-Specialised Funds Investment Guidelines 25

5 1 HSBC CAPITAL PROTECTED FUNDS The sub-fund of HSBC Capital Protected Funds offered in this Prospectus, HSBC Turbo Double 8, is an authorised scheme under the Securities and Futures Act, Chapter 289 of Singapore ("SFA"). A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore ( MAS ). This Prospectus has been prepared in accordance with the requirements of the SFA. MAS assumes no responsibility for the contents of this Prospectus. The registration of this Prospectus by MAS does not imply that the SFA or any other legal or regulatory requirements have been complied with. MAS has not, in any way, considered the investment merits of the Fund or any sub-funds of the Fund. The meanings of terms not defined in this Prospectus can be found in the Deed of Trust (as amended) constituting the Fund. 1. Basic Information 1.1 HSBC Capital Protected Funds HSBC Capital Protected Funds (the "Fund") is a Singapore-authorised umbrella unit trust offering a group of separate and distinct portfolios of securities or obligations, each of which is a sub-fund. The Fund currently has 27 sub-funds but 26 of these sub-funds are no longer accepting subscriptions The sub-funds are generally established as feeder funds investing into other subfunds or funds as may be determined by the Managers (each an "Underlying Entity"), although at times a sub-fund may be a direct investment vehicle. 1.2 HSBC Turbo Double The Managers are currently offering a new sub-fund, HSBC Turbo Double 8 (the "Sub-Fund"), from 19 July 2004 to 31 August 2004 (or such other period as may be agreed between the Managers and the Trustee) (the "Offer Period") The interests being offered to the public are represented by units in the Sub-Fund ("Units"). The Units of the Sub-Fund are denominated in US dollars. 1.3 Date of registration and expiry date of Prospectus The date of registration of this Prospectus with MAS is 9 July This Prospectus shall expire on 8 July 2005, i.e., 12 months after the date of registration. 1.4 Trust Deed and supplemental deeds The Deed of Trust relating to the interests being offered to the public for subscription or purchase is dated 11 July 2000 (the "Principal Deed") and the parties to the Principal Deed are HSBC Asset Management (Singapore) Limited (the Managers ) and Dexia Trust Services Singapore Limited (the Trustee ) The Principal Deed was amended by the following supplemental deeds entered into between the Managers and the Trustee:

6 2 Supplemental Deed 1. First Supplemental Deed Dated 10 November 2000 Purpose To establish two new sub-funds, namely HSBC US Dollar Anglo-American Capital Protected Fund and HSBC US Dollar European Capital Protected Fund 2. Second Supplemental Deed 3. Third Supplemental Deed 4. Fourth Supplemental Deed 5. Fifth Supplemental Deed 6. Sixth Supplemental Deed 7. Seventh Supplemental Deed 8. Eighth Supplemental Deed 31 January 2001 To establish three new sub-funds, namely HSBC US Dollar World Growth Capital Protected Fund, HSBC US Dollar Nasdaq Annual Growth Capital Protected Fund and HSBC Euro World Growth Capital Protected Fund 12 April 2001 To establish a new sub-fund, namely the HSBC US Dollar Financial and Healthcare Capital Protected Fund 27 June 2001 To establish three new sub-funds, namely HSBC US Dollar World Growth II Capital Protected Fund, HSBC US Dollar Pan-European Growth II Capital Protected Fund and HSBC US Dollar Nasdaq Plus Growth Capital Protected Fund 17 October 2001 To establish two new sub-funds, namely HSBC US Dollar Global Titans Capital Protected Fund and HSBC US Dollar Nasdaq Plus Growth II Capital Protected Fund 6 February 2002 To establish three new sub-funds, namely HSBC US Dollar China Growth Capital Protected Fund, HSBC US Dollar US Performance Plus Growth Capital Protected Fund and the HSBC US Dollar Top Sectors Growth Capital Protected Fund 16 April 2002 To amend Clause 14(B) of the Deed 17 July 2002 To establish two new sub-funds, namely HSBC US Dollar Nasdaq Bonus Capital Protected Fund and HSBC US Dollar European Growth Capital Protected Fund

7 3 9. Amending and Restating Deed 16 October 2002 To amend the Deed to (i) establish a new sub-fund, namely HSBC US Dollar Asian Plus Growth Capital Protected Fund and (ii) comply with the prescribed requirements for trust deeds under the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2002 and (iii) incorporate CPF Investment Scheme provisions 10. First Supplemental Deed to the Amending and Restating Deed 31 December 2002 To amend the Deed to (i) establish a new sub-fund, namely the HSBC US Dollar Global Plus Growth Capital Protected Fund and (ii) incorporate the investment guidelines for Non- Specialised Funds issued by the MAS under the Code on Collective Investment Schemes (as updated on 5 December 2002) and the CPF Investment Guidelines issued by the CPF Board on 1 September Second Supplemental Deed to the Amending and Restating Deed 12. Third Supplemental Deed to the Amending and Restating Deed 13. Fourth Supplemental Deed to the Amending and Restating Deed 14. Second Amending and Restating Deed 10 February 2003 To amend the Deed to establish two new sub-funds, namely the HSBC US Dollar Asian Plus Growth II Capital Protected Fund and HSBC US Dollar Nasdaq Annual Growth II Capital Protected Fund 7 April 2003 To amend the Deed to establish a new sub-fund, namely the HSBC US Dollar Global Index Plus Growth Capital Protected Fund 15 April 2003 To amend the Deed to establish two new sub-funds, namely the HSBC US Dollar Asia Annual Growth Capital Protected Fund and HSBC US Dollar Nasdaq Bonus II Capital Protected Fund 2 April 2004 To amend the Deed to establish a new sub-fund, namely the HSBC Turbo 789 and to comply with all applicable laws, regulations or directives by competent authorities (whether or not having the force of law)

8 4 15. Third Amending and Restating Deed 8 July 2004 To amend the Deed to establish a new sub-fund, namely the HSBC Turbo Double 8 and to comply with all applicable laws, regulations or directives by competent authorities (whether or not having the force of law) The Principal Deed as amended by the First Supplemental Deed, the Second Supplemental Deed, the Third Supplemental Deed, the Fourth Supplemental Deed, the Fifth Supplemental Deed, the Sixth Supplemental Deed, the Seventh Supplemental Deed, the Eighth Supplemental Deed, the Amending and Restating Deed, the First Supplemental Deed to the Amending and Restating Deed, the Second Supplemental Deed to the Amending and Restating Deed, the Third Supplemental Deed to the Amending and Restating Deed, the Fourth Supplemental Deed to the Amending and Restating Deed, the Second Amending and Restating Deed and the Third Amending and Restating Deed shall be referred to below as the Deed The terms and conditions of the Deed shall be binding on each unitholder (each a Holder ) and persons claiming through such Holder as if such Holder had been a party to the Deed and as if the Deed contained covenants on such Holder to observe and be bound by the provisions of the Deed and an authorisation by each Holder to do all such acts and things as the Deed may require the Managers and/or the Trustee to do A copy of the Principal Deed, the supplemental deeds, the Amending and Restating Deed, the Second Amending and Restating Deed and the Third Amending and Restating Deed shall be made available for inspection free of charge, at all reasonable times and for at least two hours during normal business hours in each day at the business office of the Managers at 21, Collyer Quay, #13-02, HSBC Building, Singapore or will be supplied by the Managers to any person upon request at a charge of S$25 per copy of the document Accounts and reports 2. The Managers The latest copies of the annual and semi-annual reports, the auditors reports on the annual accounts and the annual and semi-annual accounts relating to the Fund may be obtained from the Managers upon request. The Managers of the Fund are HSBC Asset Management (Singapore) Limited, whose registered office is at 21, Collyer Quay, #14-01, HSBC Building, Singapore The Managers have been managing collective investment schemes and discretionary funds in Singapore since The Trustee The Trustee of the Fund is Dexia Trust Services Singapore Limited, whose registered office is at 9, Raffles Place, #42-01, Republic Plaza, Singapore

9 5 4. The Investment Adviser The Managers have appointed Sinopia Asset Management (Asia Pacific) Limited as the investment adviser of HSBC Turbo Double 8. The Managers retain full discretion over the investments of the Sub-Fund. 5. The Register of Holders The Register of Holders (the Register ) is kept at the business office of the Managers as agent of the Trustee at 21, Collyer Quay, #13-02, HSBC Building, Singapore and is accessible to the public during normal business hours. The Register is conclusive evidence of the number of Units in the Sub-Fund held by each Holder and the details in the Register shall prevail in the event of any discrepancy between the entries in the Register and the details appearing on any statement of holding, unless the Holder proves to the satisfaction of the Managers and the Trustee that the Register is incorrect. 6. The Auditors The auditors of the accounts relating to the interests under the Deed are KPMG whose registered office is at 16, Raffles Quay, #22-00, Hong Leong Building, Singapore (the "Auditors"). 7. Structure of the Sub-Fund HSBC Turbo Double 8 is organised as a sub-fund of the Fund. The Sub-Fund has been structured as a direct investment vehicle. 8. Investment Objective, Focus and Approach of Sub-Fund 8.1 Investment objective The HSBC Turbo Double 8 aims to achieve 100% capital protection at maturity or early termination, as the case may be, plus a potential total payout of 17% of the initial offer price over the whole investment period (the "Total Payout"). The Sub-Fund will operate for a limited period commencing on 6 September 2004 (or such other date as applicable depending on the Offer Period) (the Start Date ) and will last for a minimum period of two years to a maximum period of ten years (the Investment Period ) until 6 September 2014 (or such other date as applicable depending on the Offer Period and the Start Date) (the Maturity Date ). The Sub-Fund aims to pay the Total Payout to investors by means of distributions of which the first one will be at the end of the first six months. Subsequent distributions (if applicable) are then made on an annual basis from the Start Date. The distributions at the end of the first six months and at the end of the first year are fixed at 8% each of the initial offer price. The distribution for the remaining years of the Investment Period is 1% of the initial offer price. The length of the Investment Period and when the remaining 1% is to be distributed will depend on the performance of a stock basket comprising 8 stocks which the Manager believes will benefit from the expected growth potential in Asia Pacific region (the Stock Basket ). Details of the Stock Basket can be found in Appendix 1.

10 6 The Sub-Fund aims to either: (a) (b) be terminated prior to the Maturity Date when the total distribution paid or to be paid reaches 17% of the initial offer price per Unit (an Early Termination Event ) with 100% of the capital returned at the same time to investors; or if there is no Early Termination Event, mature at the end of 10 years from the Start Date, upon which the Sub-Fund will in any case make a final distribution equal to 1% and return 100% of the initial capital invested to investors. Investors should note that the Managers reserve the right to substantially change the composition of the Stock Basket prior to the Start Date. If any of the constituent stocks of the Stock Basket are changed, the Sub-Fund s potential payouts will be subject to the performance of the stocks comprised in the revised Stock Basket instead of the stocks set out in Appendix 1. If any of the constituent stocks of the Stock Basket are changed, the Managers will, by way of the Managers monthly newsletter, provide investors with details of the actual composition of the Stock Basket following the Start Date. Investors should note that the 100% capital protection and the potential payouts are not guaranteed. 8.2 Investment focus and approach To achieve the investment objective, the majority of the assets of the Sub-Fund will be invested in USD instruments including but not limited to fixed rate bonds, floating rate bonds, money market instruments, equity-linked structured notes and/or swaps, including interest rate swaps and asset swaps (the "Notes and Swaps"). The Notes and Swaps will be structured such that the interest income/payment from the Notes and/or payment from the Swaps will be used for purposes of meeting the distributions (if any) to be made by the Sub-Fund to investors, as well as to meet on-going fees and expenses incurred by the Sub-Fund. The potential payouts (all potential payouts are expressed as a percentage of the initial offer price per Unit) to be made by the Sub-Fund starting from the end of the first six months are: (i) (ii) (iii) A fixed distribution of 8% at the end of the first six months and Another fixed distribution of 8% at the end of Year 1; and A final distribution of 1% upon the occurrence of either of the two scenarios: (a) (b) when the accumulated Annual Variable Coupon (defined below) has reached 1% or more at the subsequent annual periods starting from Year 2 onwards till Year 10 (until the occurrence of an Early Termination Event); OR on the Maturity Date at the end of the Year 10 where there is no Early Termination Event. The Annual Variable Coupon is defined as the positive performance of the least performing

11 7 stock in the Stock Basket over and above a hurdle rate (the Hurdle Rate ) 1 (as defined hereinafter) as observed on each annual period starting from Year 2 till Year 10 (the Annual Period ). Investors should note that once the potential 1% distribution in scenario (iii)(a) above is determined to be distributed, the Sub-Fund will be terminated immediately (prior to the Maturity Date) and no further distributions will be made. The performance of a stock on an Annual Period is measured by comparing its averaged closing price on the 5 Exchange Business Days (as defined in Appendix 2) on and following such date versus its initial reference price, which shall be the averaged closing price of such stock on the 5 Exchange Business Days on and following the Start Date of the Sub-Fund. The estimated Hurdle Rate is currently 0%. The exact Hurdle Rate will be determined by the Managers at the Start Date, depending on the prevailing market conditions, and notified to investors by way of the Manager s monthly newsletter. Further, if the Managers feel that it is in the best interest of investors to hedge against movements in interest rates or other market conditions prior to the end of the Offer Period, the Managers (or its agent) may (subject to the prior approval of the Trustee) do so. Please refer to Appendix 2 which illustrates the mechanics for the calculation of returns of the Sub-Fund. Please find below: (i) (ii) Scenario 1 which illustrates a scenario where there is an Early Termination Event; and Scenario 2, which illustrates a scenario where there is no Early Termination Event and the Sub-Fund continues to operate till the Maturity Date. Example Both scenarios assume a Hurdle Rate of 0%. Scenario 1: 17% Total Payout met at the end of Year 5 and early termination of Sub-Fund materialises. Period Return of the Least Performing Stock Return attributable to the Total Payout Investor Accumulated Return H1 - Y1-8.00% 8.00% (payable at the end of the first 6 months) H2 - Y1-8.00% 16.00% (payable at the end of Year 1) 1 Hurdle Rate is the fixed minimum rate against which the performance of the least performing stock in the Stock Basket would be measures at each Annual Period whereupon any positive performance of the stock over and above the fixed minimum rate would be accumulated for purposes of determining the final 1% potential payout.

12 8 End of Y2 0.30% 0.30% 16.30% End of Y3-6.50% % End of Y4-8.70% % End of Y5 1.00% 0.70% (the Total Payout is capped at 17%) 17.00% (the final 1% is payable at the end of Year 5) The Sub-Fund is terminated as an Early Termination Event has occured Scenario 2: No early termination of the Sub-Fund and Sub-Fund continues to operate till the Maturity Date. Period Return of the Least Performing Stock Return attributable to the Total Payout H1 - Y1-8.00% (payable at the end of first 6 months) H2 - Y1-8.00% Investor Accumulated Return 8.00% 16.00% (payable at the end of Year 1) End of Y % % End of Y3-6.00% 16.00% End of Y4-9.00% % End of Y5-7.00% % End of Y6 0.10% 0.10% 16.10% End of Y7-6.00% % End of Y8-8.00% % End of Y9 0.30% 0.30% 16.40% End of Y % 0.60% (the structure aims to return at least a 1% final payout at maturity) 17.00% (the final 1% is payable on the Maturity Date) The above figures are only examples and do not represent past or any future performance of the Sub- Fund.

13 9 8.3 Benefits Investors in HSBC Turbo Double 8 may enjoy: % capital protection (provided Units are held for the Investment Period); and % protected payout at the end of the first six months and another 8% protected payout at the end of the first year; and possibility of early termination and 1% payout once the accumulated Annual Variable Coupon reaches 1% or more; or a protected 1% payout to be paid at maturity even if there is no early termination. 9. Fees and Charges HSBC Turbo Double 8 Fees and Charges Payable by Holder Preliminary Charge Currently 0%. Maximum 5%. Realisation Charge Currently 0%. Maximum 3%. Fees Payable by Sub-Fund to Managers and Trustee Management fee Up to 4.8% of the aggregate subscription proceeds received during the Offer Period for the first 2 year period (to be deducted at the commencement of the Sub-Fund for the first 2 year period); and 0.1% p.a. of the Aggregate Nominal Value of Units (as defined below) for each of the remaining years of the Investment Period of the Fund accrued on and calculated as at each Dealing Day and payable yearly in arrears starting from the 25 th month of the Investment Period of the Sub-Fund for the remaining 8 year period Trustee/Custodian Fee % p.a. of the aggregate subscription proceeds received during the Offer Period for the first 2 year period (to be deducted at the commencement of the Sub-Fund for the first 2 year period, i.e., 0.125% deducted upfront); and % p.a. of the Aggregate Nominal Value of Units for each of the remaining years of the Investment Period of the Sub-Fund accrued on and calculated as at each Dealing Day and payable yearly in arrears starting from the 25 th month of the Investment Period of the Sub-Fund for the remaining 8 year period Registrar Fee 0.05% p.a. of the aggregate subscription proceeds received during the Offer Period for the first 2 year

14 10 received during the Offer Period for the first 2 year period (to be deducted at the commencement of the Sub-Fund for the first 2 year period, i.e., 0.1% deducted upfront); and 0.05% p.a. of the Aggregate Nominal Value of Units (as defined below) for each of the remaining years of the Investment Period of the Sub-Fund accrued on and calculated as at each Dealing Day and payable yearly in arrears starting from the 25 th month of the Investment Period of the Sub-Fund for the remaining 8 year period 10. Risks For the purposes of calculating the Management Fee, Trustee Fee, Custodian Fee, and Registrar Fee, the "Aggregate Nominal Value of Units" means the number of Units of the Sub-Fund in issue as at each relevant Dealing Day multiplied by the initial offer price. As required by the Code on Collective Investment Schemes issued by the MAS (the Code ), all marketing, promotional and advertising expenses in relation to the Sub-Fund will be borne by the Managers and not charged to the deposited property of the Sub-Fund General risks Investors should consider and satisfy themselves as to the risks of investing in the Sub-Fund. Generally, some of the risk factors that should be considered by investors are credit risk of issuers, early redemption risk, investment risk, currency risk, foreign currency risk, tax risk, counterparty risk and general market risk, as well as risks associated with investments in debt securities which are default and interest rate risks. No guarantee is given, express or implied, that investors will receive back any amount invested. An investment in the Sub-Fund is meant to produce returns over the long-term. Investors should not expect to obtain short-term gains from such investment. Investors should note that the value of Units, and the income accruing to the Units, may fall or rise and that investors may not get back their original investment.

15 Specific risks Investors in the Sub-Fund should carefully consider the following: Single party risk As an exception to the 10% single party limit under Appendix 1 of the Code, the Sub- Fund may invest up to one-third of its deposited property in debt securities issued by a corporation, government, government agency or supranational with at least A rating by Standard & Poor s or equivalent (including such sub-categories or gradations therein) and/or place up to one-third of its deposited property in deposits with a financial institution rated at least B by Moody s, provided that not more than one-third of the deposited property of the Sub-Fund will be invested or placed with the same entity. The Sub-Fund may also invest above one-third and up to 100% of its deposited property in debt securities issued or guaranteed by a government, government agency, or supranational with at least AA rating by Standard & Poor s or equivalent (including such sub-categories or gradations therein). The Sub-Fund may therefore be subject to a higher level of risk than a portfolio diversifying its holdings across different issuers Over-concentration risk As a result of having the possibility of a significant proportion of the assets being placed with a small number of issuers, the default or insolvency of such issuers would accordingly adversely affect the ability of such issuers to meet their payment obligations to the Sub-Fund. The default in payment by such issuers in relation to the Notes and Swaps held by the Sub-Fund would substantially affect the Sub-Fund's ability to meet payment obligations in relation to any capital protection and/or return to the investors Credit risk of issuers The default in payment by the issuer of the Notes and Swaps held by the Sub-Fund may affect the Sub-Fund's ability to pay the capital protection amount on the Maturity Date or early termination and the payout of the distributions starting from the end of the first six months. No guarantee is given, express or implied, that Holders will receive back any amount invested in the Sub-Fund Tax risk The Sub-Fund may be subject to tax exposure on its underlying investments, whether in Singapore or elsewhere. Any such tax exposure will be borne by the Sub-Fund and may impact on the value of the Sub-Fund. Without prejudice to the generality of the foregoing, any imposition of withholding tax on payments under the Notes and Swaps transactions could result in a consequent depreciation in the value of the investments. The degree of loss to the Sub-Fund, in such circumstances, would depend on when such imposition occurred and the value of the Notes and Swaps on the occurrence of such imposition Early redemption risk The value of Units in the Sub-Fund may go up or down and consequently Holders seeking the redemption of their Units prior to the Maturity Date or the Early

16 12 Termination Date (as the case may be) of the Sub-Fund will run the risk of losing part of the value of their capital investment in the Sub-Fund. Accordingly, investment in the Sub-Fund should be viewed as medium to long term General market risk The investments of the Sub-Fund are subject to normal market fluctuations and other risks inherent in investing in securities and there can be no assurance that any appreciation in value will occur. The value of investments and therefore the value of Units in the Sub-Fund can fall as well as rise and investors may not realise the same amount that they invest Counterparty risk Investors should be aware that the default in payment by any counterparty under the Notes and Swaps transactions may affect the Sub-Fund's ability to meet its payment obligations Currency risk The assets and liabilities of the Sub-Fund may be denominated in currencies different to the currency of denomination of the Sub-Fund i.e. the US Dollar. The Sub-Fund may be affected favourably or unfavourably by exchange control regulations or changes in the exchange rates between the US Dollar and other currencies. If the currency in which an investment is denominated appreciates against the US Dollar, the value of the investment would increase. Conversely, a decline in the exchange rate of the currency would adversely affect the value of the investment. Depending on market conditions, the Managers will hedge the full foreign exchange exposure by entering into one or more foreign exchange forward contracts and/or cross currency swap transactions Investment risk The default in payment by an issuer of any instruments held by the Sub-Fund may affect the Managers' ability to meet its payment obligations. No guarantee is given, express or implied, that Holders will receive back the amount of their investment in the Units in the Sub-Fund Liquidity risk Notes and Swaps positions can be illiquid. In order to meet realisation requests prior to the Maturity Date, the counterparties are obliged to quote a price to bid or unwind part of the Notes and Swaps transactions twice a month. This price will reflect the market liquidity condition and the size of the transactions Investment Period of up to 10 years Investors should be aware that the Sub-Fund s Investment Period may last from 2 to 10 years and investors may need to hold their investment in the Sub-Fund for up to 10 years before they can receive the capital protected amount. Although the Sub-Fund may terminate earlier, investors should regard the Sub-Fund as a 10-year investment.

17 Subscription of Units 11.1 Subscription procedure Applications for Units may be made through any agent or distributor appointed by the Managers or their ATMs or the Internet or any other sales channels, if applicable. No subscriptions will be accepted and no Units will be issued after the Offer Period Minimum subscription amount The minimum subscription amount in the Sub-Fund is US$5, Initial offer price The initial offer price of Units of HSBC Turbo Double 8 during the Offer Period shall be pegged at US$10 per Unit Dealing deadline and pricing basis The dealing deadline for subscriptions during the Offer Period is 3.00 p.m. Singapore time on any Business Day during the Offer Period. A Business Day is any day (other than a Saturday or Sunday) on which commercial banks are open for business in Singapore. Units will be issued at US$10.00 per Unit during the Offer Period. No subscriptions will be accepted and no Units will be issued after the Offer Period Numerical example of how Units are allotted e.g. US$5,000 / US$10.00 = 500 Units Your initial investment Initial offer price No. of Units you will receive 11.6 Confirmation of purchase A confirmation note detailing your investment amount and the number of Units allocated to you in the Sub-Fund will be sent to Holders within 14 business days from the close of the Offer period Terms of Offering The offer of Units of HSBC Turbo Double 8 is conditional upon: (a) the Sub-Fund receiving minimum subscriptions of US$20 million (or such other amount as the Managers may decide upon) upon the expiration of the Offer Period; and (b) the Managers being able to secure the Notes and Swaps transactions such that they are able to set the Hurdle Rate at or below 0% Return of contributions The Managers reserve the right not to issue Units and to return any application monies received (without interest) for the subscription of Units in the event that the above conditions in paragraph Terms of Offering are not met.

18 Cancellation of Initial Subscription of Units by Holders Holders shall, subject to Clause 13A of the Deed and to the cancellation terms and conditions attached to the application form, have the right to cancel their purchase of Units in the Sub- Fund within seven calendar days from the date of subscription or purchase of Units (or such longer period as may be agreed between the Managers and the Trustee or such other period as may be prescribed by the MAS) by providing notice in writing to the Managers or their authorised agents. Full details of the provisions relating to the cancellation of Units may be found in the terms and conditions for cancellation of Units attached to the application form for the subscription of Units in the Sub-Fund. 12. Realisation of Units 12.1 Realisation procedure Holders may realise their Units on any Dealing Day. The Dealing Day for HSBC Turbo Double 8 is every 1 st and 3 rd Thursday of each month, except for the first Dealing Day which shall be 24 September 2004 (or such other date as may be applicable, depending on the Offer Period of the Sub-Fund), and subject to business day conventions in New York, Singapore, Tokyo, Taipei, Korea and Hong Kong SAR. Holders must ensure that their written instructions on the prescribed form are received by the Managers by the Dealing Deadline. Realisation requests received after the Dealing Deadline in relation to a particular Dealing Day shall be treated as having been received on the next Dealing Day. The 100% capital protection will not apply to Units realised before the Maturity Date or the Early Termination Date Realisation on the Maturity Date Holders who hold their Units in the Sub-Fund until the Maturity Date or the Early Termination Date shall be deemed to have submitted their realisation requests on such Maturity Date or Early Termination Date and will be entitled to the higher of the Capital Protected Amount or the prevailing net asset value of Units. No realisation charge will be imposed in respect of Units realised on the Maturity Date or the Early Termination Date Realisation before Maturity Date Although there is no realisation charge, unitholders should note the fact that most of the expenses and fees for the first two years are charged up-front at the inception of the Sub- Fund. This mechanism is imposed to encourage the investors to stay in the Sub-Fund until the Maturity Date or the Early Termination Date and to ensure that the unitholders who hold their investments for the Investment Period will not be required to bear a disproportionate share of the fees and expenses of the Sub-Fund. Thus, even if you decide to realise prior to the Maturity Date, the realisation price will have already deducted these fees/expenses. You should also be aware that because the Sub-Fund is designed to mature over a ten year term, the capital protection strategy will not apply to units realised before the Maturity Date (except upon an Early Termination Event). This realisation price will be determined by the prevailing market value of the Sub-Fund's holdings, and may be more, or less, than your initial investment. The Managers will be entitled to retain any residual amount remaining in the Sub-Fund at the Maturity Date or Early Termination Date (for example, the residual sum of any expenses provision which exceeds the actual disbursement) following payment of the realisation

19 15 proceeds on the Maturity Date or Early Termination Date calculated in accordance with Appendix 2. Since the objective of the Managers is to minimise the Hurdle Rate and to manage the Sub-Fund to ensure that investors can on the Maturity Date or Early Termination Date receive the value calculated according to the formula set out in Appendix 2, the Managers do not expect the value of the remaining assets to be substantial in nature Minimum holding The minimum holding for HSBC Turbo Double 8 is 500 Units Dealing Deadline and pricing basis The Dealing Deadline is 3.00 p.m. Singapore time, one (1) Business Day before the Dealing Day, not including that Dealing Day. The realisation price is determined on a forward pricing basis and calculated in accordance with Clause 14(G) of the Deed Numerical examples of realisation of Units e.g. 500 Units X US$10.70 = US$5,350 Your realisation request Realisation price Realisation proceeds This example is given for illustration only Payment of realisation proceeds Realisation proceeds shall normally be paid within 6 Business Days in Singapore of the Dealing Day following the receipt and acceptance of the realisation form by the Managers and within 15 Business Days in Singapore following the Maturity Date or the Early Termination Date of the Sub-Fund unless the realisation of Units has been suspended in accordance with paragraph 15 of this Prospectus. 13. Switching of Units No switching of Units is permitted. 14. Obtaining Prices of Units The indicative Realisation Price is published in The Straits Times, The Business Times, Lianhe Zaobao, Today and the Managers' website at Suspension of Dealing The Managers may, with the prior written approval of the Trustee, suspend the calculation of the Value of Units and the realisation of Units in the Sub-Fund under the following circumstances: (a) any period when the over-the-counter market or over-the-telephone market on which any Authorised Investments forming part of Deposited Property for the time being are dealt in is closed (otherwise than for ordinary holidays) or during which dealings are restricted or suspended;

20 16 (b) (c) (d) (e) (f) (g) the existence of any state of affairs which, in the opinion of the Managers and the Trustee might seriously prejudice the interests of the Holders as a whole or of the Deposited Property of the Sub-Fund; any breakdown in the means of communication normally employed in determining the price of any of such Authorised Investments or the current price thereof on that overthe-counter market or over-the-telephone market or when for any reason the prices of any of such Authorised Investments cannot be promptly and accurately ascertained (including any period when the fair value of a material portion of the Authorised Investments cannot be determined); any period when remittance of money which will or may be involved in the realisation of such Authorised Investments or in the payment for such Authorised Investments cannot, in the opinion of the Managers, be carried out at normal rates of exchange; any 48 hour period (or such longer period as the Managers and the Trustee may agree) prior to the date of any meeting of Holders (or any adjourned meeting thereof); any period where dealing of Units is suspended pursuant to any order or direction of the MAS; or any period when the business operations of the Managers or the Trustee in respect to the operation of the Sub-Fund are substantially interrupted or closed as a result of or arising from pestilence, acts of war, terrorism, insurrection, civil unrest or acts of God. Such suspension shall take effect forthwith upon the declaration in writing thereof to the Trustee by the Managers (or, as the case may be, to the Managers by the Trustee) and shall terminate on the day following the first Business Day in Singapore on which the condition giving rise to the suspension shall have ceased to exist and no other conditions under which suspension is authorised under this paragraph 15 shall exist upon the declaration in writing thereof by the Managers (or, as the case may be, by the Trustee). 16. Soft Dollar Commissions/Arrangements The Managers currently do not receive or enter into soft-dollar commissions or arrangements in respect of the Fund but they may do so in the future. The Managers may not receive or enter into soft-dollar commissions or arrangements unless (a) such soft-dollar commissions or arrangements shall reasonably assist the Managers in their management of the Fund, (b) the Managers shall ensure at all times that the transactions are executed at the best available terms taking into account the relevant market at the time for transactions of this kind and size concerned, and (c) that no unnecessary trades are entered into in order to qualify for such soft-dollar commissions or arrangements. The Managers shall not receive goods and services such as travel accommodation and entertainment. 17. Conflicts of Interest The Managers and the Trustee will conduct all transactions with the Fund and the Sub-Fund at arm's length.

21 Reports Financial year-end and distribution of reports and accounts The financial year-end for the Fund is 31 March. The annual report, annual accounts and the auditor's report on the annual accounts will be prepared and sent within 3 months of the financial year-end (or such other period as may be permitted by the MAS). The semi-annual report and semi-annual accounts will be prepared and sent within 2 months of the financial half-year end, i.e., 30 September (or such other period as may be permitted by the MAS). 19. Other Material Information 19.1 Information on Investments At the end of each quarter, Holders will receive a statement showing the value of their investment, including any transactions during the quarter. However, if there is any transaction within a particular month, Holders will receive an additional statement at the end of that month Distribution The Sub-Fund aims to make the first distribution of US$0.80 per Unit at the end of the first six months and the second distribution of US$0.80 per Unit at the end of the first year of the Investment Period i.e. a total protected payout of 16% within the first year. The first distribution is expected to be payable approximately 6 months after the Start Date i.e. 6 March 2005 (the First Income Date ) (or such other date as may be applicable, depending on the Offer Period, Start Date and Maturity Date of the Sub-Fund), subject to business day convention. The second distribution is expected to be payable approximately 12 months after the Start Date i.e. 6 September 2005 (the Second Income Date ). Distributions will be paid to persons registered as unitholders on the relevant Income Date. The Sub-Fund aims to make the third distribution of 1% either at the Maturity Date or at the Early Termination Date (as the case may be). Distributions will normally be paid to persons registered as unitholders on the Maturity Date or the Early Termination Date (as the case may be) not later than one calendar month after the Maturity Date or the Early Termination Date (as the case may be) Investment restrictions The investment and borrowing guidelines for Non-Specialised Funds set out in Appendix 3, which guidelines may be amended from time to time, shall apply to the Sub-Fund Holders right to vote A meeting of the Holders of all the sub-funds of the Fund duly convened and held in accordance with the provisions of the Schedule to the Deed shall be competent by Extraordinary Resolution: (i) (ii) to sanction any modification, alteration or addition to the provisions of the Deed which shall be agreed by the Trustee and the Managers as provided in Clause 36 of the Deed; to sanction a supplemental deed increasing the maximum permitted percentage of the management participation in relation to a sub-fund as provided in Clause 22(A) of the Deed;

22 18 (iii) (iv) (v) (vi) (vii) to terminate the Trust as provided in Clause 33(F) of the Deed; to remove the Auditors as provided in Clause 29(D) of the Deed; to remove the Trustee as provided in Clause 30(C)(iii) of the Deed; to remove the Managers as provided in Clause 31(A)(iii) of the Deed; and to direct the Trustee to take any action (including the termination of the Fund) pursuant to Section 295 of the SFA, but shall not have any further or other powers A meeting of the Holders of the Sub-Fund duly convened and held in accordance with the provisions of the Schedule to the Deed shall be competent by Extraordinary Resolution: (i) (ii) (iii) (iv) (v) (vi) to approve any change in the investment objective of the Sub-Fund as provided in Clause 16(C) of the Deed; to sanction any modification, alteration or addition to the provisions of the Deed which shall be agreed by the Trustee and the Managers as provided in Clause 36 of the Deed to the extent that such modification, alteration or addition affects the Holders of the Sub-Fund; to sanction a supplemental deed increasing the maximum permitted percentage of the management participation or the maximum permitted percentage of the Trustee s remuneration in relation to the Sub-Fund; to terminate the Sub-Fund as provided in Clause 33(F) of this Deed; to sanction a scheme of reconstruction, whether by way of amalgamation, merger or dissolution of the Trust or any Sub-Fund; and to direct the Trustee to take any action (including the termination of the Sub- Fund) pursuant to Section 295 of the SFA, but shall not have any further or other powers Extraordinary Resolution is defined in the Deed to mean a resolution proposed and passed as such by a majority consisting of seventy-five per cent. or more of the total number of votes cast for and against such resolution. 20. Queries and Complaints If you have questions concerning your investment in HSBC Turbo Double 8, you may call

23 19 Information on the Stock Basket Appendix 1 Details of the Stock Basket (HSBC Turbo Double 8) The Stock Basket will be comprised of eight stocks selected from the Asia Pacific region (each a "Selected Stock"). The details of the proposed Stock Basket are set out in the following table. Selected Stocks are selected with the objective of achieving the Total Payout whilst taking into consideration the leadership position of the relevant companies, their market capitalization, their financial sustainability and the sector and geographical diversification of the Stock Basket. The constituent stocks of the Stock Basket may be changed substantially before the Start Date. On request the Managers will provide investors with information on the actual composition of the Stock Basket after the Start Date. Stock Name China Mobile (Hong Kong) Limited Relevant Exchange Hong Kong Stock Exchange Description As the leading mobile services provider in the world s largest mobile telecommunications market, China Mobile is the only operator exclusively specialized in mobile telecommunications in Mainland China, with the world s largest unified, contiguous all-digital mobile network and the world s largest mobile subscriber base. In 2003, China Mobile was once again selected as one of The World s 400 A-List Companies by the internationally renowned business magazine Forbes and is the only Chinese company inducted into this A-List for two consecutive years. HSBC plc Holdings Hong Kong Stock Exchange HSBC Holdings is the holding company for the HSBC Group and provides a variety of international banking and financial services, including retail and corporate banking, trade, trusteeship, securities, custody, capital markets, treasury, private and investment banking and insurance on a worldwide basis. Sun Hung Kai Properties Limited Hong Kong Stock Exchange Sun Hung Kai Properties Limited, through its subsidiaries, develops and invests in properties, operates hotels, manages properties, car parking and transportation infrastructure. In addition, Sun Hung Kai also carries out business activities in diversified areas including the logistics business, construction, financial services, telecommunications, Internet infrastructure and enabling services.

24 20 PetroChina Company Ltd Hong Kong Stock Exchange PetroChina Company Ltd explores, develops and produces crude oil and natural gas. PetroChina also refines, transports and distributes crude oil and petroleum products, produces and sells chemicals, and transmits, markets and sells natural gas. Canon Inc. Tokyo Stock Exchange Canon Inc. is a professional and consumer imaging solutions company and patent-holder of digital imaging technologies. Canon s products include networked multifunction devices, digital and analog copiers, computer peripherals, facsimile machines, image filing systems, camcorders, cameras and lenses, semiconductor, broadcasting and medical equipment. SK Telecom Co., Ltd Samsung Electronics Co Ltd Korea Exchange Korea Exchange Stock Stock SK Telecom Co., Ltd., an affiliate of SK Group, offers telecommunications services and products in South Korea. SK Telecom provides mobile phone services under the brand names Speed 011. In addition, SK Telecom and its subsidiaries offer other wireless services including data, paging, and Internet services. Samsung Electronics manufactures a wide range of consumer and industrial electronic equipment and products such as semiconductors, personal computers, peripherals, monitors, televisions, and home appliances including air conditioners and microwave ovens. Samsung Electronics also produces Internet access network systems and telecommunications equipment including mobile phones. United Microelectronics Corporation Taiwan Exchange Stock UMC is a world-leading semiconductor foundry, specializing in the contract manufacturing of customer designed ICs for high performance semiconductor applications. UMC employs over 8,500 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States.