Yield Magnet Notes: In a Nutshell
Yield Magnet Notes are an equity linked investment that provide
for the return of principal at maturity. In order to benefit from
such principal protection, the notes must be held until maturity.
Yield Magnet Notes provide for a combination of fixed coupon
payments and variable coupon payments during the term of the notes.
The variable coupon payments are determined based on the price
performance of a portfolio of underlying stocks.
Two Magnet features act to "lock in"
the price appreciation of the underlying stocks when certain performance
criteria are met.
The first Magnet feature "locks in" the price performance
of one or more of the underlying stocks if a certain level of
price appreciation is achieved.
The second Magnet feature provides that each successive variable
coupon after the first variable coupon will not be less than the
prior variable coupon.
Underlying Stock Portfolio
Yield Magnet Notes provide investors with exposure to an underlying
portfolio of stocks in the form of variable coupon payments after
payment of an initial fixed coupon.
The underlying portfolio may provide investors with exposure
across various industry sectors, company sizes, company names
and geographic regions.
The underlying portfolio may also be selected to provide investors
with exposure to a specific industry group, such as "oil
and gas", while diversifying across geographic regions.
An example of an underlying portfolio that provides investors
with exposure to large-cap equity stocks and is diversified both
geographically and by industry sector is as follows:
[ Table: Company/Country/Industry Sector ]