BEA Equity & FX Markets Capital Guaranteed Coupon Fund

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Home > Wealth Management > Unit Trusts > Funds Launched by BEA > BEA Equity & FX Markets Capital Guaranteed Coupon Fund

BEA Equity & FX Markets Capital Guaranteed Coupon Fund

Fund Features highlight

Guaranteed Cash Coupon every 6 months with step-up mechanism every 12 months (5% in total 4.75 years)

Bonus Coupon Payment to capture upside potential of both US stock market & AUD against USD at the same time

Better performing component will be given higher weighting

The summary provided herewith is only a brief introduction of the new Sub-Fund under the Bank of East Asia Investment Series II, namely, BEA Equity & FX Markets Capital Guaranteed Coupon Fund (the "Fund"). You have to refer to and carefully read the Explanatory Memorandum of the Fund for all relevant details and interpretation of terminology before you make investment decision to subscribe for Units of the Fund.

INVESTMENT OBJECTIVE

BENEFITS OF THE FUND

GROWTH POTENTIAL OF US STOCK MARKET AND AUD AGAINST USD

HOW DOES THE FUND WORK

PRIVILEGED OFFERS

FUND DETAILS

FUND PRICE AND COUPON PAYMENT

HOW TO REDEEM

FINANCIAL STATEMENTS

REMARKS

INVESTMENT OBJECTIVE

The Fund offers investors 100% capital protection¹ at maturity plus 5% total guaranteed coupon, payable semi-annually, over the 4.75-year investment period¹. In addition, investors are offered a golden opportunity to receive a Bonus Coupon Payment at maturity⁴, which captures both the positive performance of the US stock market as well as the strength of AUD against USD simultaneously³.

BENEFITS OF THE FUND

	Capital Guaranteed Investors will receive 100% of the invested capital at maturity¹.
	Guaranteed Cash Coupon Every 6 Months - Step Up Every 12 Months and 5% in Total in 4.75 Years Guaranteed coupons, incorporated with step up mechanism every 12 months, will be paid to investors on a semi-annual basis¹, totaling 5% over the 4.75-year investment period.
	Capture Upside Potential of Both the US Stock Market and AUD/USD Investors will enjoy an opportunity to receive a Bonus Coupon Payment at maturity⁴, which is linked to the positive performance of two components, namely the S&P 500^® Index⁵ and the AUD/USD spot rate. Investors can therefore capture the upside potential of both the US stock market and AUD against USD at the same time³.
	Better Performing Component, Higher Weighting In calculating the Bonus Coupon Payment⁴, the better performing component will be given a higher weighting, so that investors¡¦ total potential return can be enhanced.
	Negative Return Will Not be Counted In calculating the Bonus Coupon Payment⁴, only positive return will be taken into account and negative return of the component(s), if any, will not be counted (see "How Does the Fund Work" section below for details). The Bonus Coupon Payment⁴ will therefore not be dragged down by any component(s) recording a negative performance.
	No Preliminary Charge Preliminary charge is waived to maximize investors' total return.

GROWTH POTENTIAL OF US STOCK MARKET AND AUD AGAINST USD³

	S&P 500^® Index⁵ Already Hit Its 5-Year Low After the S&P500^® Index registered negative performances in the last 3 consecutive years and hit its 5-year low and given the current low interest rate environment, the upside potential of the US economy as well as corporate earnings are believed to be much higher than their downside risks over the forthcoming 4.75-year investment period.
	Australia Economy Remains Strong Compared with the US, Australia continues to achieve an outstanding economic growth. Interest rates differential between the two countries are also believed to provide strong support for AUD against USD.

HOW DOES THE FUND WORK

Guaranteed coupons¹ will be paid every 6-month after the Inception Date (a total of 9 coupon payments over the 4.75-year investment period).

The Bonus Coupon Payment⁴ will be determined by the performances of the S&P 500^® Index and the AUD/USD spot rate³. Performance of the component with better performance on the Maturity Date as compared with the Inception Date will be given a higher weighting of 70%. Performance of the component with lower performance will be given a lower weighting of 30%. The calculation of the Bonus Coupon Payment⁴ is stated as below.

Bonus Coupon Payment⁴

Invested Capital x Max [Participation Rate⁶x (70% x Return₍₁₎ + 30% x Return₍₂₎) - 5%, 0%]

Where

Invested Capital

the amount of the initial capital invested by an invester on the Inception Date

Return₍₁₎

Max [Return of S&P 500^® Index , Return of AUD/USD spot rate, 0]

Return₍₂₎

Max {0, Min [Return of S&P 500® Index , Return of AUD/USD spot rate]}

*	If a negative performance is recorded for one of the components (the performance will be deemed as zero), the performance of the other component will be given a higher weighting of 70%. No Bonus Coupon Payment⁴ will be payable if negative performance is recorded for both components.

Illustrative Example and Return Analysis
(Examples used are for illustration purposes only and are not indicative of the actual return)

Assumptions made in the following example: -

A Participation Rate⁶ of 35%;

The investor remains in the Fund until the Maturity Date of the Fund;

Performance of both components of the Underlying Assets are positive; and

Investor receives: the Guaranteed Coupon Payments¹, Bonus Coupon Payment⁴ and the Guaranteed Value¹

Level on the Inception Date

Level on the Maturity Date

Performance

Weighting

S&P 500^®Index
900.00

1,440.00

(1,440-900)/900x100%=60%

70%

AUD/USD
Spot Rate

0.6400

0.8320

(0.8320-0.6400)/0.6400x100%=30%

30%

Return Analysis

Guaranteed Coupon Dates	Return	Return per Unit (USD)
20 January, 2004	Guaranteed Coupon Payment 0.375%	0.0375
19 July, 2004	Guaranteed Coupon Payment 0.375%	0.0375
18 January, 2005	Guaranteed Coupon Payment 0.500%	0.0500
18 July, 2005	Guaranteed Coupon Payment 0.500%	0.0500
18 January, 2006	Guaranteed Coupon Payment 0.625%	0.0625
18 July, 2006	Guaranteed Coupon Payment 0.625%	0.0625
18 January, 2007	Guaranteed Coupon Payment 0.650%	0.0650
18 July, 2007	Guaranteed Coupon Payment 0.650%	0.0650
18 January, 2008	Guaranteed Coupon Payment 0.700%	0.0700
Sum of Guaranteed Coupon Payments¹	5.00%	0.5000
Bonus Coupon Payment⁴	Max [35% x ( 70% x 60% + 30% x 30% ) -5% , 0%] = 12.85%	1.2850
Total return to be obtained by investors (Total Guaranteed Coupon Payments¹ + Bonus Coupon Payment⁴) over the entire investment period of 4.75 years	17.85%	1.7850

Based on the above illustrative example, if an investor holds the Fund until maturity, the total proceeds to be received over the 4.75-year investment period would be USD11.785 (USD10+USD1.785) per Unit, representing an aggregate return of 17.85% or an average annual return of 3.76% over the investment period.

For more illustrative examples, please refer to the Explanatory Memorandum of the Fund.

PRIVILEGED OFFERS

	Preferential Deposit Rate A preferential deposit rate of 4% - 5% per annum over the Bank's counter rate will be offered to investors for a one-month Local Time Deposit in HKD or USD for one time with an equivalent amount not exceeding the investment amount.
	Overdraft Facility Investors can pledge their holdings to obtain overdraft facilities for maintaining financial flexibility.

FUND DETAILS

Launch Period	17 June, 2003 to 15 July, 2003
Inception Date	18 July, 2003
Maturity Date	18 April, 2008
Offer Price	USD 10.00
Minimum Investment	USD 5,000
Preliminary Charge	Nil
Early Redemption Charge	Nil⁷
Management Fee	3.325% (0.7% p.a.)⁸
Minimum Redemption	500 units
Dealing Day	1^st and 3^rd Wednesday of each month
Investment Manager	BEA Union Investment Management Limited
Guarantor	The Bank of East Asia, Limited
Participation Rate	35.2725%

HOW TO REDEEM

Unitholders wishing to have all or any of his Units redeemed before the Maturity Date¹^,⁷should fill in a redemption request which is available at any Bank of East Asia Branch, and submit the redemption request to the Manager of the Fund - BEA Union Investment Management Limited at 5/F., The Bank of East Asia Building, 10 Des Voeux Road Central, Hong Kong before the Dealing Deadline of the Fund.

Unitholders shall not be entitled to redeem Units other than in amounts equal to or above 500 Units.

Unitholders redeeming Units before the Maturity Date will receive a Redemption Price equal to the Net Asset Value of each Unit redeemed less all applicable charges and rounding adjustments. The redemption of Units will not be subject to any redemption charge. As most of the fees and expenses and the establishment costs are charged upfront, investors redeeming Units before the Maturity Date will have borne the total fees and expenses⁸ for the whole investment period and this will be reflected in the Net Asset Value per Unit applicable.

The Redemption Price will be expressed and paid in USD by direct transfer to Unitholder's account. However, arrangements can be made with the Manager of the Fund - East Asia Asset Management Company Limited for Unitholders wishing to redeem Units and receive payment in any other freely convertible currency approved by the Manager and / or to receive payment by telegraphic transfer, by bank draft or by cheque (at the Unitholder's risk). In such cases, the Unitholder is advised to make direct contact with the Manager of the Fund. Any conversion costs and relevant charges may be deducted by the Manager from the redemption proceeds.

FINANCIAL STATEMENTS

2003 Annual Report

2004 Interim Report

2004 Annual Report

2005 Interim Report

2005 Annual Report

2006 Interim Report

2006 Annual Report

2007 Interim Report

2007 Annual Report

REMARKS

1.	The guarantee is issued by The Bank of East Asia, Limited. Each Guaranteed Coupon Payment and the benefit of the 100% capital guarantee will only be applicable to Units held by investors on relevant Guaranteed Coupon Date and Maturity Date respectively.
2.	Realisation of upside potential is subject to the Participation Rate⁶ applied.
3.	The performances of the US stock market and AUD against USD over the 4.75-year investment period are subject to market fluctuations and to the risks inherent in the respective investments.
4.	The Bonus Coupon Payment, which is subject to the performances of the US stock market and AUD against USD over the 4.75-year investment period, is not guaranteed and may be zero.
5.	"Standard & Poor's^®", "S&P^®","S&P 500^®","Standard & Poor's 500" and "500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by East Asia Asset Management Company Limited. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Fund.
6.	Based on the market conditions on 9 June, 2003, the Manager expects the Participation Rate to be between 20% and 45% and, on a best effort basis, estimates the Participation Rate to be approximately 35%. The actual participation rate will be determined on the Inception Date and may be different from the estimated rate. The Manager will not proceed with the launch of the Fund if the Participation Rate falls below 20% on or before the Inception Date.
7.	Redemptions before the Maturity Date are fully exposed to fluctuations in the Net Asset Value of the Fund and the redemption value may be lower than the 100% guaranteed amount.
8.	The Management, Guarantor and Trustee Fees, and the establishment cost of the Fund for the whole investment period of 4.75 years, which amount to approximately 4.455% in aggregate, will be charged upfront at the inception of the Fund. Investor who redeems the Fund prior to the Maturity Date must bear the total fees and expenses incurring in the whole investment period.

Investment involves risk. The Fund is also subject to the credit risks of the Guarantor and the option counterparty as well as the liquidity risk of the underlying investment of the Fund. For further details of the guarantee and the definitions of specific words in capitalized form used herein, please refer to the Explanatory Memorandum of the Fund.