HSBC Cash Fund and HSBC Term Fund Investment Statement. 1 October 2010

Transcription

1 HSBC Cash Fund and HSBC Term Fund Investment Statement 1 October 2010

2

3 This document is an Investment Statement for the purposes of the Securities Act Important information (The information in this section is required under the Securities Act 1978) Investment decisions are very important. They often have long term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. Choosing an investment When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below: Page What sort of investment is this? Who is involved in providing it for me? How much do I pay? What are the charges? What returns will I get? What are my risks? Can the investment be altered? How do I cash in my investment? Who do I contact with enquiries about my investment? Is there anyone to whom I can complain if I have problems with the investment? What other information can I obtain about this investment?.. 13 In addition to the information in this document, important information can be found in the current registered prospectus for the investment. You are entitled to a copy of that prospectus on request. Engaging an investment adviser An investment adviser must give you a written statement that contains information about the adviser and his or her ability to give advice. You are strongly encouraged to read that document and consider the information in it when deciding whether or not to engage an adviser. Tell the adviser what the purpose of your investment is. This is important because different investments are suitable for different purposes, and carry different levels of risk. The written statement should contain important information about the adviser, including: relevant experience and qualifications, and whether dispute resolution facilities are available to you; what types of investments the adviser gives advice about; whether the advice is limited to investments offered by one or more particular financial institutions; information that may be relevant to the adviser s character, including certain criminal convictions, bankruptcy, any adverse findings by a court against the adviser in a professional capacity, and whether the adviser has been expelled from, or prohibited from joining, a professional body; and any relationships likely to give rise to a conflict of interest. The adviser must also tell you about fees and remuneration before giving you advice about an investment. The information about fees and remuneration must include: the nature and level of the fees you will be charged for receiving the advice; and whether the adviser will or may receive a commission or other benefit from advising you. An investment adviser commits an offence if he or she does not provide you with the information required.

4 4 About HSBC HSBC Investments New Zealand Limited, established in 2007, is the issuer and Manager of the HSBC Cash Fund ( the Cash Fund ) and the HSBC Term Fund ( the Term Fund ) and is ultimately owned by The Hongkong and Shanghai Banking Corporation Limited, incorporated in the Hong Kong Special Administrative Region and operating as a branch and registered bank in New Zealand ( HSBC ). HSBC is the distributor of the Funds. None of the Manager, HSBC, any member of the HSBC Group, the Trustee or any of their directors guarantee the capital value or performance of either Fund. Established in Hong Kong in 1865, HSBC is a founding member of the HSBC Group one of the world s largest banking and financial services organisations. The HSBC Group serves the needs of an international customer base, and offers banking, insurance and wealth management to more than 100 million personal customers worldwide. HSBC first started conducting its banking services in New Zealand in 1987, and offers an extensive range of financial services including personal and commercial banking services, trade finance, treasury and financial markets and corporate finance. Personal Financial Services HSBC offers a range of products and services to meet the dayto-day banking and longer term financial goals of its personal banking customers. One of HSBC s points of difference is offering an experienced relationship manager as a direct point of contact to manage specific needs and goals. Commercial Banking HSBC s service proposition and global reach also extends to large and medium sized companies, whether listed or unlisted. The commercial team are experienced in negotiating large financial transactions, working with other financial institutions and liaising with product specialists to provide tailored solutions. Global Banking and Markets HSBC is a principal bank operating in the corporate banking sector in New Zealand. HSBC s corporate and institutional clients include major organisations with complex and international financial needs. HSBC specialises in working with other financial institutions as well as industrials, energy and utilities, transport and logistics, metals and mining, real estate and multinationals.

5 5 What sort of investment is this? This Investment Statement contains an offer for you to subscribe for Units in the Cash Fund and the Term Fund. Each Fund is a separate unit trust established under the HSBC Investments New Zealand Master Unit Trust trust deed dated 1 May 2008 (as amended on 9 April 2009, 1 October 2009 and 30 October 2009). Your investment is a Unit in a Fund and each Unit represents an undivided beneficial interest in the net assets of the relevant Fund. There is no maximum number or amount of Units in either Fund. Changes in the Trust Fund Value will affect the Fund s Unit Value. The Unit Value will be calculated daily. Units in the Funds do not represent deposits or other liabilities of HSBC. Each Fund is a Portfolio Investment Entity ( PIE ) for the purposes of the Income Tax Act Please refer to the section What returns will I get? for information on PIEs. The objective of the Cash Fund is to provide you with a pre-tax return similar to the return on a call deposit with HSBC. The objective of the Term Fund is to provide you with a pre-tax return similar to the return on a term deposit with HSBC. Depending on your individual circumstances, the Cash Fund and Term Fund may provide you with an effective after tax return that is better than a call deposit or a term deposit respectively with HSBC (for general information about taxation please refer to the heading Taxation in the section What returns will I get? ). The Funds invest exclusively in separate New Zealand dollar denominated deposits issued by HSBC. The interest paid by HSBC on a Fund s deposits with HSBC matches the returns (before tax and any fees) to be paid to the Fund s Unit Holders. The rate of return paid on investments in the Cash Fund, and the Term Fund s current available standard rates of return and corresponding Terms, are published at The rate of return payable on investments in the Cash Fund, and the Term Fund s available standard rates of return and Terms, may change at any time without notice to you. Manager The Manager of each Fund is HSBC Investments New Zealand Limited. The Manager s address is: HSBC Investments New Zealand Limited HSBC House Level 9 1 Queen Street PO Box 5947 Wellesley Street Administration Manager The Manager has appointed MMc Limited as the Administration Manager to perform certain administrative services in relation to the Funds including Unit pricing and accounting of the Funds. The Administration Manager s address is: Level Customs Street Registrar The Manager has appointed Appello Services Limited to perform certain registry services in relation to the Fund. The Registrar s address is: Level 2 75 Queen Street CBD 1010 Trustee The Trustee of each of the Funds is The New Zealand Guardian Trust Company Limited. The Trustee is appointed under the Trust Who is involved in providing it for me? The Cash Fund and the Term Fund are each a unit trust under the Unit Trusts Act 1960, and are established pursuant to a Master Trust Deed (the Trust Deed ). The Cash Fund was established on 1 May 2008, commenced operating on 11 June 2008 and Units have been allotted since 16 June The Term Fund was established on 9 April 2009, commenced operating on 8 May 2009 and Units have been allotted since 12 May Deed to oversee the management and administration of the Funds. The Trustee provides a wide range of trustee services to personal and corporate clients throughout New Zealand. The Trustee s address is: Level 7 Vero Centre 48 Shortland Street The Trustee does not guarantee either the repayment of the Units or any earnings on the Units in a Fund.

6 6 How much do I pay? Subject to the minimum investment amounts, you choose the amount you wish to invest. This must be $10,000 or more for your initial investment in a Fund. Withdrawals must be at least $1,000, subject to maintaining a minimum balance of $10,000. Additional investments in the Cash Fund must be a minimum of $1,000. Additional investments in the Term Fund must be a minimum of $10,000. Additional investments in the Term Fund will be treated as separate investments, each with a separate Term and Maturity Date. After your initial investment you are not required to make further investments. The Manager may accept lesser investment amounts in its discretion and may vary the minimum initial and additional investment amounts and the minimum account balance from time to time without notice. To apply for Units in a Fund you must first become an HSBC Premier account holder. You can open an account by visiting any HSBC office or by opening a bank account online at www. hsbc.co.nz. You will not be charged any fees for opening an account although HSBC s normal account opening criteria and a minimum account balance may apply. Applications to subscribe for Units in a Fund are to be made by completing the application form attached to this Investment Statement and sending it with a cheque or any other payment method acceptable to the Manager to: The Manager HSBC Investments New Zealand Limited HSBC House Level 9, 1 Queen Street PO Box 5947 Wellesley Street For the Cash Fund, all payments made by cheque should be made payable to Guardian Trust Fund Nominees Limited HSBC Cash Fund and crossed Not Transferable. For the Term Fund, all payments made by cheque should be made payable to Guardian Trust Fund Nominees Limited HSBC Term Fund and crossed Not Transferable. Subsequent investments can be made by completing a change in details/transaction form or as otherwise agreed with the Manager. Any Units issued are void if the funds received to pay for those Units are not cleared. Withdrawals will be permitted only if the funds you use to pay for the relevant Units have been cleared. The Manager is able to refuse any application for Units in its discretion, including where to accept an application would threaten or cause either Fund to become ineligible to be a PIE. If the Manager refuses an application, the money received will be refunded in full without interest. Your application will be processed on the Business Day following the day we receive your application monies in cleared funds provided this is at or before 4pm on a Valuation Day. Applications received after 4pm will be treated as being received on the following Valuation Day, and will be processed on the next Business Day (process day). Applications will begin to earn income on the Business Day following the process day. What are the charges? For the Cash Fund, currently no charges or expenses are payable from the Fund or by Unit Holders. For the Term Fund, if the Manager approves in its absolute discretion a withdrawal of all or part of your investment prior to the set Maturity Date, a Break Fee may be charged. The Break Fee may take the form of a $100 administration fee plus a charge based on the economic cost of withdrawing your investment early. The economic cost is based on the difference between HSBC s Treasury Funding rates (Value of Funds) at the date your Units were issued and the date on which your Units are redeemed. The Value of Funds represents the market value of funds available to HSBC. The Manager will provide you with the specific amount of the economic cost of an early withdrawal prior to processing your request. An example of how the economic cost component will be applied is as follows: You wish to withdraw a $250,000 investment in Units in the Term Fund 80 days prior to the set Maturity Date. On the date your Units were issued, the Value of Funds was 6.380% per annum. On the date your Units are redeemed prior to maturity, the Value of Funds was 6.591% per annum. The economic cost of breaking your investment in the Term Fund is therefore 0.211% per annum. To convert the 0.211% per annum economic cost to a daily cost, divide by 365 days, which equates to % per day. The economic cost component is therefore ($250,000 x %) x 80 days. This equates to an economic cost of $ In this example the total Break Fee would be a $100 administration fee plus the $ economic cost of the early withdrawal. The total Break Fee would therefore be $ Where the Value of Funds has decreased between the date your Units were issued and the date you wish to withdraw your Units prior to maturity, no economic benefit will be passed on. The $100 administration fee would still apply. The Manager is currently responsible for paying any fees to the Trustee, the Administration Manager and the Registrar, and any other expenses associated with the administration of the Funds.

7 7 The Manager is permitted under the Trust Deed to charge various fees in respect of the Funds. If any such fees (other than the Break Fee for the Term Fund) are to be charged, the Manager will give you at least one month s prior notice. The Break Fee may be amended from time to time in accordance with the Trust Deed. The fees that the Manager is permitted to charge (but is not charging as at the date of this Investment Statement) are: Entry Fee Up to 5% of the application amount Exit Fee Up to 5% of the Withdrawal Amount as determined by the Manager Management Fee Up to 2% per annum of the Trust Fund Value as determined by the Manager Currently the Trustee Fee is paid by the Manager and not by the Funds. The Trustee is entitled to a fee out of each Fund of up to 0.04% per annum of the Trust Fund Value as agreed upon with the Manager from time to time. The Trustee s fee is subject to a minimum fee of $15,000 per annum per Fund for the subsequent years. The Manager and the Trustee are entitled to be reimbursed out of the Funds for expenses incurred in respect of the Funds. There is no limit upon the amount of these expenses. Currently the Manager has determined that these expenses are not payable out of the Funds. If expenses are charged in relation to a Fund, the amount of the expenses will be shown in the Fund s financial statements. What returns will I get? Returns The objective of the Cash Fund is to provide you with a pre-tax return similar to a call deposit with HSBC. The objective of the Term Fund is to provide you with a pre-tax return similar to the return on a term deposit with HSBC. Depending on your individual circumstances, the Cash Fund and Term Fund may provide you with an effective after tax return that is better than a call deposit or a term deposit respectively with HSBC (for general information about taxation please refer to the heading Taxation in the section What returns will I get? ). The Funds invest exclusively in separate New Zealand dollar denominated deposits issued by HSBC. The interest paid to a Fund by HSBC on the Fund s deposits with HSBC matches the returns (before tax and any fees) to be paid to the Fund s Unit Holders. The Trustee will not be involved in setting the interest rates on the deposits. For the Cash Fund, the main factor that will affect your returns is the interest rate payable on the Fund s deposits with HSBC. If you would like to know the current interest rate applicable to the Fund s deposits with HSBC, please visit our website at or contact your local HSBC office or your relationship manager. For the Term Fund, the main factors that will affect your returns are the amount of your investment and the agreed rate of return on your Units in the Term Fund. The current available standard rates of return (before tax) and corresponding Terms are published by HSBC at and can change at any time. Returns take the form of any capital growth in the Unit price of the relevant Fund and any distributions in respect of the Fund. The Manager does not intend to pay distributions to Unit Holders, however the Manager reserves the right to vary the distribution policy at any time. You will receive your return when you make a withdrawal from the Cash Fund or the Term Fund, or in the case of the Term Fund, on the Maturity Date. It is up to you to decide when you wish to make a withdrawal from the Cash Fund. The Maturity Date will be set when you make your investment in the Term Fund. Please refer to How do I cash in my Investment? for further information on withdrawals. The Trustee does not guarantee either the repayment of the Units or any earnings on the Units in the Funds. Where the Manager elects to repurchase units upon receiving a withdrawal notice, the Manager is legally liable to pay the withdrawal value. Where the Manager requests the Trustee to redeem units upon receiving a withdrawal notice, the Trustee is legally liable to pay the withdrawal value, although the Manager will make the actual payment. The Manager determines when distributions are made (if any) and will make any actual payments, although the Trustee is legally liable to pay any distribution (upon request from the Manager). You may also sell your Units to a third party, in which case that person will be legally liable to pay you for your Units. No particular return has been promised. The Manager will cancel Units to fund tax payable on income allocated to Unit Holders as described in the Taxation section below. Tax may also be deducted from any payment made to a Unit Holder if required.

8 8 Withdrawals Subject to maintaining the prescribed minimum balances (unless you are withdrawing your entire investment), the funds in your investment being cleared and the restrictions on withdrawal described below: for the Cash Fund, you may usually withdraw part or all of your investment at any time; and for the Term Fund, your investment is generally locked in for the Term of your investment, until the Maturity Date. If you need to withdraw part or all of your investment before the Maturity Date, you can apply to do so. For a partial withdrawal, you must continue to meet the minimum requirements set out under How much do I pay?. A Break Fee may be charged for any early withdrawal. See the What are the charges? section for further details. In extraordinary circumstances, the Manager may decline your early withdrawal request. The Trust Deed allows the Manager to suspend withdrawals from a Fund in certain circumstances described in the Deed, subject to any restrictions described in the Offer Documents for the relevant Fund. In the case of this offer of the Funds, withdrawals may be suspended only if the Manager in good faith forms the opinion that it would be materially prejudicial to the interests of Unit Holders in the relevant Fund as a whole for the Manager to give effect to withdrawals, or a withdrawal would threaten the relevant Fund s eligibility as a portfolio tax rate entity as defined in section YA 1 of the Income Tax Act A suspension will be effected by the Manager giving notice to that effect to any Unit Holder in the relevant Fund who gives or has given a withdrawal notice to which the effect has not been given. A suspension may last up to 3 months and may be extended with the consent of the Trustee. Taxation Returns are likely to be affected by taxation. The following statements in relation to taxation are of a general nature only and are based on current legislation which may change. The impact of taxation will vary depending upon your individual circumstances. It is important that you seek personalised tax advice from your taxation advisor. None of the Manager, HSBC, the Administration Manager, the Registrar, the Trustee, or any of their respective directors, or any other person takes any responsibility for the taxation liability of Unit Holders in the Funds. The taxation rules applying to the Funds are set out below. The explanation is based on each Fund being and remaining a Portfolio Investment Entity (PIE). Should a Fund cease to be a PIE, the taxation rules applying to that Fund would alter. Each Fund has elected to become a PIE. As a PIE, each Fund will allocate all its taxable income (or losses) between its Unit Holders based on the number of Units held by them. The Manager will then calculate tax payable on such income allocated to each Unit Holder at their nominated Prescribed Investor Rate (PIR). Tax is then paid as described under the Tax-paying investors heading below. You must notify the Manager of your IRD number and applicable PIR when you join the relevant Fund and when these details change. If you do not give notification of both your IRD number and PIR then you will have tax paid by the Fund on income allocated to you at the default rate of 28%. The Manager will seek reconfirmation of these details annually. New Zealand resident entities such as companies, unit trusts, other PIEs, charities, superannuation funds and trusts that have not elected the 28% rate, and custodians, nominees and Wrap Account providers have a 0% (or zero-rated ) PIR. The PIR for New Zealand residents who do not qualify for the 0% PIR will be the PIR derived from the following table using the Unit Holder s income and PIE income in whichever of the last two income years gives the lower rate (each income year generally commences on 1 April in any year and ends on 31 March the following year): Taxable Income (excluding income from PIEs) Taxable + PIE Income (after deducting PIE losses) PIR $0 - $14,000 $0 - $48, % $0 - $14,000 $48,001 - $69, % $14,001 - $47,999 $0 $69, % $48,000 and over Any 28% Any $70,000 and over 28% If before 1 October 2010 a person has notified a PIR of 30%, 19.5% or 12.5%, then that person s PIR will be 28%, 17.5% or 10.5% respectively (until any change is notified). Trusts (other than unit trusts and charitable trusts) may elect a PIR of 17.5% and certain testamentary trusts may elect a PIR of 10.5%. A trust that elects a rate less than 28% will need to file a tax return including its share of the Fund s income and pay tax on that income, with a credit being available for any PIE Tax paid. The Commissioner of Inland Revenue can, by notice, require the Funds to ignore the PIR provided by a Unit Holder, in which case the Unit Holder s PIR would become the PIR notified by the Commissioner.

9 9 The Manager is required to provide you with an annual tax certificate, which will include the PIE income allocated to you and the amount of tax paid at your PIR. For New Zealand resident individuals, this information will be necessary when determining if a rate of 10.5% or 17.5% can be selected in the future. Tax-paying investors Unit Holders with a PIR of more than 0% are referred to as tax-paying investors. The Funds will pay tax on the income allocated to such a Unit Holder at their PIR. Each Fund s tax liability on PIE income allocated to a tax-paying investor will be deducted from that Unit Holder s interest in the relevant Fund upon any full or partial withdrawal (including maturity), switch or transfer. Tax will be deducted by cancelling Units (but the Manager reserves the right to also deduct from payments if need be) equal to the value of the tax liability. The Manager will retain and be solely responsible for the monies held for PIE Tax payments in its own account and any interest derived pending payment to Inland Revenue. If the correct tax rate has been elected, the tax paid by the Funds on income allocated to tax-paying investors will be a final tax and no obligation to file a tax return (in respect of this investment) will arise as a consequence (except for a trustee who has elected a rate less than 28%). Nor will it impact on family assistance eligibility, student loan repayment obligations or child support payment obligations. Tax-paying investors must advise the Manager if their PIR changes. Failure to advise, or providing a lower rate than that applicable, will mean the Unit Holder is personally liable to pay any resulting tax shortfall including penalties and interest and may be required to file a tax return. The Manager cannot retrospectively change a Unit Holder s PIR after PIE tax has been paid. Therefore, tax-paying investors should advise the Manager if their PIR changes from 28% to a lower rate. PIE Tax is a final tax and no credit or refund is available if too much tax has been paid (except for a trustee who has elected a rate less than 28%). Where the value of a tax-paying investor s Units is not regarded as sufficient, or likely to be sufficient, to fund the PIE Tax liability on income allocated to that Unit Holder, the Units will be redeemed to fund that liability. Where the Manager treats an application for transfer or switch of Units as a cancellation of the original Units and the issue of new Units, a payment of PIE Tax will be triggered upon cancellation. Zero-rated investors Unit Holders with a PIR of 0% are referred to as zero-rated investors. These entities must return the PIE income and pay tax themselves. These entities will have a tax liability in respect of the PIE income allocated to them, regardless of whether a Fund makes any distributions to them. The Funds will not cancel any Units or otherwise adjust the interests of their zero-rated investors for PIE Tax, as the Funds do not pay tax on the income allocated to such Unit Holders. Zero-rated investors may claim as a credit any PIE Tax paid by the Funds on income allocated to them at the default rate of 28%. Taxation of Redemptions Withdrawals are made by way of redemption of Units and redemption gains and distributions (if any) are non-taxable excluded income. Joint investors The Manager may in its sole discretion treat joint investors as separate investors (in shares reflecting their legal interests), or treat them as a single investor, with a PIR equal to the highest PIR of the joint investors if they are different or at the rate of one of the joint investors if they have the same rate. The Manager has exercised its discretion and will permit joint investors who notify a 50/50 legal interest to be treated as separate investors. If no notice of election is received tax will be paid on all the income allocated to the joint holders at the highest of their PIRs. Tax adjustments The Manager will cancel Units to fund tax payable on income allocated to Unit Holders as described in this Taxation section. Tax may also be deducted from any payment made to a Unit Holder if required. Investing through a custodian, nominee or Wrap Account If an underlying investor invests through a custodian, nominee or Wrap Account (the Provider ): the underlying investor s Units will be held by the Provider on the underlying investor s behalf; the Provider will be the registered holder of the Units and the underlying investor will be the beneficial owner of the Units. The underlying investor will have the same rights, benefits and entitlements as if the underlying investor was the registered holder of the Units, except that the relevant Provider will be recorded in the register as the Unit Holder and will hold the Units for the underlying investor on the underlying investor s behalf. The Provider will be the only

10 10 What are my risks? person able to exercise any rights benefits and entitlements in relation to the Units; the Provider should complete the application form attached to this Investment Statement on behalf of the underlying investor; underlying investors should refer to that Provider s terms and the relevant marketing information, which apply to the underlying investor in addition to the terms governing any investment in the relevant Fund; and all underlying investors are required to obtain and read a copy of the Investment Statement and relevant documents before investing or instructing the Provider to invest on their behalf. A custodian, nominee or Wrap Account that holds Units for underlying investors may give notice to a Fund that it is a portfolio investor proxy (the Proxy ). If an underlying investor invests through a Proxy then the following responsibilities will not be undertaken by the Manager or the Trustee, but will be undertaken by that Proxy: allocating to the underlying investors amounts allocated to the Proxy by the relevant Fund; paying the tax liability on income allocated to the Proxy applying the PIRs of the underlying investors; making adjustments to the Units held on behalf of underlying investors (by redeeming Units) or the distributions (if any) made to underlying investors to reflect the tax liability on income allocated to the underlying investors; providing returns and other information to the Inland Revenue Department; and providing to the relevant Fund any information concerning the underlying investors that may be relevant to whether the Fund continues to meet the eligibility requirements for a PIE (such as the investor size requirement and the investor spread requirement). Proxies may be required to enter into contractual arrangements with the Manager regarding compliance by the Proxies with the requirements of tax legislation Risks generally All investments carry risk. As the Funds each invest exclusively in deposits with HSBC, they are not diversified. The main risks of you not recovering your investment or the returns described above are: HSBC risk: the insolvency, receivership, liquidation or statutory management of HSBC; market risk generally: markets are affected by a host of factors, including economic, taxation and regulatory conditions, market sentiment, political events, interest rate movements, currency movements and environmental and technology issues; administrative risk: technological or other failure impacting on the Funds or financial markets in which the Funds invest; interest rate movement risk: the interest rate payable on the Cash Fund s deposits with HSBC will fluctuate from time to time and affect returns to Unit Holders in the Cash Fund; regulatory risk: future changes to tax or legislation or applicable regulations which could affect the operation of the Funds or distributions (if any) or the level or nature of returns from the Funds. Although the Funds will invest with HSBC, an investment in a Fund does not represent an investment in or other liability of HSBC or any of its related entities. Taxation risk Changes to taxation law or the relevant Fund s taxation status may impact on your returns. If a Fund loses its PIE status due to an event such as the number of Unit Holders reducing to below 20, that Fund would be taxed as a widely held unit trust at 30% (28% from 1 April 2011) on its taxable income rather than at a Unit Holder s PIR and any distributions or redemptions will become taxable to the Unit Holder at their marginal tax rate with a credit for any imputation credits. PIEs have restrictions on the percentage of Units any one Unit Holder and associated parties holding interests of 5% or more can hold. Generally no Unit Holder, together with such associates can hold more than 20% of a Fund (although this restriction does not apply to Unit Holders who are other PIEs or fall within a narrow class of other specified entities). The Manager has implemented processes to monitor ongoing PIE eligibility compliance for the Funds and has a number of powers available to it to proactively manage this risk. This includes the Manager s power to redeem or void Units

11 11 exceeding the permitted threshold so as to ensure PIE status can be maintained. If your Units are voided you will receive a refund of your subscription monies, but any additional compensation is at the discretion of the Trustee in consultation with the Manager. Refer to the Taxation section under the heading What returns will I get? for details of the risk of tax being deducted by cancelling Units where the value of your remaining Units is not regarded as sufficient to fund your tax liability. A Unit Holder advising a lower PIR than that applicable or not advising a change to a higher rate, is obliged to pay the tax shortfall plus any interest and penalties, and may be required to file a tax return. If a Unit Holder advises a higher rate than that applying the excess tax paid cannot be claimed back as PIE Tax is a final tax. Zero-rated investors and tax-paying investors who elect a PIR which is too low may obtain a credit for any PIE Tax paid on income allocated to them. The Commissioner of Inland Revenue can, by notice, require the Funds to ignore the PIR information provided by a Unit Holder, in which case the Unit Holder s PIR would become the rate notified by the Commissioner. A trust that elects a PIR of 28% will be unable to provide the PIE income to beneficiaries at rates lower than 28%. Refer to the Taxation section under the heading What returns will I get? for details of the manner in which joint investors who have not notified a 50/50 legal interest are allocated income to one Unit Holder only, which may impact on that Unit Holder s ability to retain a PIR of less than 28%. In the event of insolvency The Manager has appointed the Trustee, an independent trustee, to supervise the management and administration of your funds on your behalf. In the unlikely event of the insolvency of a Fund, Unit Holders in the relevant Fund will not be liable to make any further contributions. In this situation, creditors claims will rank ahead of those of Unit Holders. All Unit Holders claims rank equally. Winding up or liquidation of a Fund In the event that a decision is made to wind up or liquidate a Fund, Unit Holders in the Fund would be notified, prior to the final closing date, after which no further investments would be accepted. In this situation, creditors claims will rank ahead of those of Unit Holders. All Unit Holders claims rank equally. Personal Liability Unit Holders will have tax paid at their PIR (either from a deduction from any payments or a cancellation of Units). If a Unit Holder s Units are insufficient to fund PIE Tax on income allocated to them, they personally indemnify the Manager and the Trustee for the shortfall. If a Unit Holder has advised an incorrect PIR or failed to advise the Manager of a change to the PIR, the Unit Holder will be personally liable for any tax shortfall arising (including interest and penalties if applicable) and may be required to file a tax return. Other than in relation to tax obligations, there are no circumstances in which you will be obliged to pay any further money. Can the investment be altered? The Manager may, at any time: with the agreement of the Trustee, vary any investment guidelines or objective for a Fund, alter the dates for distribution of income (if any), or vary the Trustee s fee; vary the authorised investments of a Fund only by giving Unit Holders in the Fund one month s written notice of any such change, provided Unit Holders holding not less than 10% of the number of Units on issue at the date of such notification do not give notice of their intention to call a meeting of Unit Holders within 30 days of the date of the notice; introduce new fees or charges (or alter any fees or charges), though as at the date of this Investment Statement the Manager has no intention to do so; alter the minimum investment, transfer, withdrawal and account balance requirements; alter the terms of the Units in the Funds being offered by amending this Investment Statement and the Prospectus for the Funds; cease or suspend the issue of Units, or wind up the Funds as described in the How do I cash in my investment? section; alter your investment (including at the time of a full or partial withdrawal, switch or transfer) to reflect any returns, tax or fees; withdraw your investment in a Fund in full, if your balance falls below $100 for any reason; and take all steps necessary to ensure the Funds are eligible, or continue to be eligible, for PIE status or otherwise comply with the requirements of tax legislation relating to PIEs (including rejecting applications and suspending withdrawal requests or withdrawing your Units, in its discretion).

12 12 The Trustee and the Manager may alter the Trust Deed in the following situations: if in the Trustee s opinion it is necessary to correct an error or where the amendment is of a formal or technical nature; if in the Manager s opinion it is necessary or desirable in the interests of the Funds or Unit Holders generally and in the Trustee s opinion the amendment is not prejudicial to the interest of Unit Holders generally; the amendment is authorised by an extraordinary resolution of Unit Holders; and the Manager gives Unit Holders one month s written notice of the amendment. For an investment in the Cash Fund, you may: make one-off lump sum additional investments at any time; and make a partial or full withdrawal at any time, provided you meet the minimum investment requirements set out under How much do I pay?. For an investment in the Term Fund, you may request a partial or full withdrawal at any time prior to the Maturity Date, provided you meet the minimum requirements set out under How much do I pay?. A Break Fee may be charged for any early withdrawal. See the What are the charges? section for further details. In extraordinary circumstances, the Manager may decline your early withdrawal request. Additional investments in the Term Fund will be treated as separate investments, each with a separate Term and Maturity Date. Refer to the Taxation section under the heading What returns will I get? for the tax implications of a withdrawal. How do I cash in my investment? Subject to maintaining the prescribed minimum balances (unless you are withdrawing your entire investment), the funds in your investment being cleared and the restrictions on withdrawal described under the heading What returns will I get? : for the Cash Fund, you may usually withdraw part or all of your investment at any time; for the Term Fund, your investment is generally locked in for the Term of your investment, until the Maturity Date. If you need to withdraw part or all of your investment before the Maturity Date, you can apply to do so. For a partial withdrawal, you must continue to meet the minimum requirements set out under How much do I pay?. A Break Fee may be charged for any early withdrawal. See the What are the charges? section for further details. In extraordinary circumstances, the Manager may decline your early withdrawal request. Withdrawal applications are made by completing a withdrawal notice. A withdrawal notice given at or before 4pm on a Valuation Day is processed on the following Business Day ( process day ), and payment is made on the Business Day following the process day. Withdrawal notices received after 4pm on a Valuation Day will be treated as received on the following Business Day with payment being made on the next Business Day. A withdrawal notice must be in the form prescribed by the Manager and may not be revoked once given. On receiving a withdrawal notice the Manager shall procure that the number of Units having an aggregate Unit Value equal to the Withdrawal Amount are redeemed (after providing for any tax at the Unit Holder s PIR by way of deduction from monies payable or by cancelling Units) and the Unit Holder is paid the Withdrawal Amount. If a withdrawal notice, once processed, would cause the relevant Fund to lose PIE status, the Manager may decline to action the notice until, or to the extent that, it can do so and maintain PIE status. Withdrawals of less than the prescribed minimum amount may be refused by the Manager, and if a withdrawal would result in you holding less than the minimum holding, the withdrawal can be treated as a withdrawal of all your Units. The Manager may withdraw your investment in a Fund in full, if your balance falls below $100 for any reason. The Manager does not intend to offer to repurchase Units. Units redeemed are deemed to have been cancelled. To satisfy a redemption the Manager may either direct the Trustee to realise investments of the Fund or borrow on behalf of the Fund to provide moneys to pay the amount withdrawn. No fees are currently payable for withdrawals from the Cash Fund. Withdrawals from the Term Fund prior to the Maturity Date may incur a Break Fee as described in the How much do I pay? section. You may sell your Units to another HSBC Premier account holder subject to maintaining the prescribed minimum balances and in accordance with the Trust Deed. The Manager may decline to register a transfer for the reasons set out in the Trust Deed. The Manager does not believe that there is an established market for such sales. There is currently no transfer fee, but the Manager has the discretion to charge such a fee.

13 13 Where the Manager treats an application for transfer of Units as a cancellation of the transferor s Units and the issue of new Units to the transferee, a payment of PIE Tax will be triggered upon cancellation. The Manager may suspend withdrawals from a Fund in accordance with the terms of the Trust Deed. See the What returns will I get? section for further details. The Manager may determine to wind up a Fund, if: following notice of the proposed winding up not more than 10% of the Unit Holders of the relevant Fund object; or the winding up is approved by extraordinary resolution of the Unit Holders of the relevant Fund. Who do I contact with enquiries about my investment? All enquiries should in the first instance be directed to your local HSBC office or your relationship manager. Please see the Directory at the back of this Investment Statement for a list of HSBC offices. You can also contact the directors of the Manager at: The Manager HSBC Investments New Zealand Limited HSBC House PO Box 5947 Wellesley Street Level 9, 1 Queen Street Phone (09) Is there anyone to whom I can complain if I have problems with the investment? In the first instance contact your local HSBC office or your relationship manager. You can also contact the directors of the Manager at: The Manager HSBC Investments New Zealand Limited HSBC House PO Box 5947 Wellesley Street Level 9, 1 Queen Street Phone (09) Or the Trustee as follows: Corporate Trusts The New Zealand Guardian Trust Company Limited Level 7, Vero Centre 48 Shortland Street Phone (09) There is no ombudsman to whom investment complaints in respect of the Funds can be made. If your complaint has not been resolved satisfactorily through these internal complaints procedures and relates to investment advice provided by an HSBC investment adviser (as opposed to the Funds or the Manager), you have the right to present your complaint to the Banking Ombudsman. The Banking Ombudsman will act, free of charge, as an independent party in the dispute. The Banking Ombudsman can be contacted at: 105 Featherston Street Wellington 6011 Phone What other information can I obtain about this investment? Current value and regular reports You can obtain an estimate of the current value of your investment at any time by contacting your local HSBC office or your relationship manager. For the Cash Fund, you will receive statements on a quarterly basis. For the Term Fund, you will receive a certificate when your investment commences. You will receive an annual tax summary reporting your investments in the Funds. You will also receive an annual report including financial statements for the Funds in which you invest (when available). Registers A register of Unit Holders in each Fund is maintained by the Manager and the Registrar. The register is open for inspection by each Unit Holder in the relevant Fund, in respect of that Unit Holder s units, during normal business hours at the office of the Registrar. You may request a copy of your entry in the egister free of charge.

14 14 Prospectus, Trust Deed and Financial Statements Further detailed information about the Manager and the Funds can be found in the current registered Prospectus for the Funds, the Trust Deed, the Establishment Deeds and when prepared, the annual report and financial statements. These documents can be obtained free of charge from the Manager: The Manager HSBC Investments New Zealand Limited HSBC House Level 9, 1 Queen Street Copies may also be viewed (on payment of any prescribed fee) on the Manager s file at the Companies Office website www. companies.govt,nz, or by telephoning the Ministry of Economic Development Business Service Centre on or 0508 COMPANIES Request Information You may request, in writing, the following information in respect of the Funds free of charge, from the Manager: A copy of the most recent annual report (when available); A copy of the Trust Deed and the Establishment Deeds; A copy of the most recent Investment Statement; and A copy of the most recent registered Prospectus and financial statements and their respective associated documents (when available). Privacy The Trustee and the Manager will at all times respect and protect the confidentiality of all personal information in accordance with the Privacy Act Such personal information is collected and held by the Manager at HSBC House, Level 9, 1 Queen Street,. Changes to personal details Should your personal details change, for example, your tax rate, a PIR, bank account details, address or name, you must advise the Manager in writing by completing the change in details form attached at the back of this Investment Statement and provide appropriate supporting documentation.

15 15 Glossary Administration Manager MMc Limited Cash Fund HSBC Cash Fund Establishment Deeds The HSBC Cash Fund Establishment Deed dated 1 May 2008 and The HSBC Term Fund Establishment Deed dated 9 April 2009 (each as amended from time to time) Fund HSBC Cash Fund and/or HSBC Term Fund, as the context requires Trust Deed The HSBC Investments New Zealand Master Unit Trust Deed dated 1 May 2008 (as amended from time to time) Wrap Account A portfolio administration and investment service Trust Fund Value The total value of the Fund as defined in the Trust Deed Capitalised terms not contained in this Glossary but used in this Investment Statement have the meanings ascribed to them in the Trust Deed HSBC The Hongkong and Shanghai Banking Corporation Limited incorporated in the Hong Kong Special Administrative Region, acting through its New Zealand branch HSBC Group HSBC Holdings plc, its subsidiaries and associated companies Manager HSBC Investments New Zealand Limited Maturity Date The date on which an investment in the Term Fund ends PIE Portfolio investment entity as that term is defined in the Income Tax Act 2007 PIE Tax Tax payable by the Fund, the Trustee, or the Manager (whether deferred or current) which is determined by reference to PIRs of Unit Holders or is otherwise determined by the Trustee or the Manager to be attributable to income allocated to Unit Holders PIR The prescribed investor rate as that term is defined in the Income Tax Act 2007 Term The fixed amount of time a Unit Holder elects to have funds invested in the Term Fund, ending on the Maturity Date Term Fund HSBC Term Fund Trustee The New Zealand Guardian Trust Company Limited

16 16 Directory Manager HSBC Investments New Zealand Limited HSBC House Level 9, 1 Queen Street PO Box 5947 Wellesley Street Trustee The New Zealand Guardian Trust Company Limited Level 7, Vero Centre 48 Shortland Street PO Box 1934 Auditor KPMG KPMG Centre 18 Viaduct Harbour Avenue PO Box 1584 Solicitors to the Manager Chapman Tripp Level Albert Street PO Box 2206 Solicitors to the Trustee Buddle Findlay PricewaterhouseCoopers Tower 188 Quay Street PO Box 1433 HSBC International Banking Centre Ground Floor, 1 Queen Street HSBC Premier Centre Level 19, 1 Queen Street Takapuna Wealth Centre 495 Lake Road, Takapuna North Shore Sommerville Wealth Centre Meadowlands Drive Howick

17 Application Form 17 Please complete this form in block letters This application is for the HSBC Cash Fund or HSBC Term Fund pursuant to an Investment Statement dated 1 October Investment Options (please choose which fund you are investing in, by marking in the tick box) Cash Fund Term Fund Investor Type (please select one) Individual investor Joint investors** Partnership Incorporated Society/ Association Family or individual trust Company Other Company/Trust Details Name of company, trust, incorporated society/association or other entity IRD number Prescribed Investor Rate (PIR) (please tick one) 0% 10.5% 17.5% 28% Trusts should provide the IRD number and tax rate applicable to the trust. Only non individual investors may select a PIR of 0%. Please refer to the taxation section on pages 8 and 9 of the Investment Statement to assist you in completing this section. Contact address Personal Details **We can allocate income equally to each Joint Applicant, if you share your legal interest 50/50. If you would like this option please tick the 50/50 boxes below in addition to completing the other information required for each Joint Applicant. If the information is incomplete, or if Joint Applicants do not hold their legal interest 50/50, then tax will be paid on all the income allocated at the highest PIR (if they are different) and the income will be allocated to the first named joint holder. If you are unsure if your legal interest is 50/50 please check with your legal or tax advisor before investing. Title Mr Mrs Ms Miss Other (please specify) Given name(s) Surname Date of Birth / / IRD number Please allocate tax liability jointly 50/50 as per page 10 of the Investment Statement 0% 10.5% 17.5% 28% If a PIR is not selected or your IRD number is not provided the 28% rate will apply. Title Mr Mrs Ms Miss Other (please specify) Given name(s) Surname Date of Birth / / IRD number Please allocate tax liability jointly 50/50 as per page 10 of the Investment Statement Prescribed Investor Rate (PIR) (please tick one) 0% 10.5% 17.5% 28% If a PIR is not selected or your IRD number is not provided the 28% rate will apply. Address Details Postal Address Contact name Postcode Telephone ( ) (home) ( ) (work)