HSBC North American Opportunity Deposit Notes, Series 1

Secondary Market Price*: 105.70%
Last Updated: 31 May 2010

The Notes will pay, if held to maturity: i) 100% of the principal amount invested; and ii) a Variable Return, if any, linked to the increase, if any, in the value of a notional index basket comprised of two (2) equally weighted North American equity indices: S&P 500 ® Index and the S&P/TSX60® Index. The change in value of each Index will be measured from its closing level on 10 December 2008 to the arithmetic average of the closing levels of each Index on specified preset quarterly Observation Dates (10th of each of December, March, June, and September). The performance of each Index (positive or negative) will then be weighted equally to determine the Index Basket Return and multiplied by a Participation Rate of 85% to determine the Variable Return, if any.

Key features

Issue date: 15 December 2008
Maturity date: 15 December 2014
Note term: 6 years
CUSIP #: 40427HQG1
Currency: USD
Participation: 85%
Selling agent fees: 4.00% paid upfront

Highlights

  • Eligible for registered accounts
  • Principal protected at maturity
  • Linked to two equally weighted North American indices
  • Return based on quarterly averaging

Underlying asset(s)

Notional index basket
Index Ticker Index component weight
S&P 500 ® Index SPX 50%
S&P/TSX60 ® Index SPTSX60 50%

Are the Notes right for you?

The Notes may be an appropriate investment for you, if, among other things: (1) you are looking for safety of principal if held to maturity; (2) want exposure to an investment that is linked to the performance of North American equities while tracking the performance of generally recognised equity market indices; (3) want to diversify your exposure to more than one equity index; and (4) are investing for the longer term and believe that North American equity markets will appreciate.

The Notes do not provide investors with a return or income stream prior to maturity. The effective yield to maturity of the Notes may be less than that which would be payable on a conventional fixed-rate or floating-rate debt instrument. The Notes are generally more suitable for purchasing and holding up to maturity. Potential investors should consult with their own investment, legal and tax advisers to determine the suitability.

Early trading charges/secondary market

HSBC Securities (Canada) Inc intends, in normal market conditions, to use reasonable efforts to provide a secondary price for the Notes as principal, but reserves the right not to do so in the future in its sole discretion, without providing prior notice to the Noteholders. Sale of Notes prior to maturity may be subject to an early trading charge as follows:

Time period Early trading charge
Issue Date to and including March 13, 2009 4.0%
March 16, 2009 to and including June 15, 2009 3.5%
June 16, 2009 to and including September 15, 2009 3.0%
September 16, 2009 to and including December 15, 2009 2.5%
December 16, 2009 to and including March 15, 2010 2.0%
March 16, 2010 to and including June 15, 2010 1.5%
June 16, 2010 to and including September 15, 2010 1.0%
September 16, 2010 to and including the Maturity Date 0.5%

During the term of the Notes, you may inquire as to the net asset value of a Note or the level of the underlying Indices and how they relate to the variable return that may be payable under the Notes, if any, by contacting HSBC at the number below.

Please see the information statement for further details or contact your investment adviser.

Risk factors

Noteholders should carefully review and consider all risks set forth in the information statement with their investment adviser, including:

  • North American equity market exposure
  • The volatility or degree to which the level of each underlying index changes
  • Notes will not constitute insured deposits under Canada Deposit Insurance Corporation Act (Canada)
  • The principal amount is protected only if Notes are held to maturity and there is no assurance the Notes will pay any variable return
  • No guaranteed secondary market
  • Price or other movements in the instruments comprising the indices are unpredictable
  • The historical or pro forma performance of each index is not an indication of future performance
  • Special circumstances – HSBC may redeem the Notes prior to maturity under certain limited circumstances, including a change in the law, regulation, taxation regulations or taxation practice or other circumstances not within the control of the Bank
  • Conflicts of interest with the calculation agent

Additional information

Right of cancellation – A subscriber may cancel an order to purchase a Note (or cancel the purchase of a Note if the Note has been issued) by providing written instructions to HSBC directly or through his or her investment adviser any time up to 48 hours after the later of (i) the day on which the agreement to purchase the Note is entered into and (ii) deemed receipt of this information statement. Such notice should be directed to: Senior Vice President, HSBC Derivative Products Group, 70 York Street, 8th Floor, Toronto, ON M5J 1S9, Fax +1 416 868 3088. This rescission right does not extend to Noteholders buying a Note in any secondary market.

Please see the Information Statement for further details. Please do not hesitate to call us at +1 866 511 4722 or Fiera Capital at +1 866 323 5598 or send us an e-mail for more information.

*The price is before the application of an early trade charge that may apply. The secondary market price for a Note, if available, represents the bid price of such Note as a percentage (%) of the original principal amount invested. The bid price stated is only as of the date indicated.

Important: Please read the disclaimer carefully.