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HSBC PortfoliosWorld Selection Solutions
1
Introduction
HSBC Portfolios – World Selection is a series of portfolios investing
in an array of different funds and investments, each selected based
on powerful market intelligence. It invests globally into an expansive
range of types of investments, both modern and traditional, which
can include private equity, commodities, bonds and equities. World
Selection gives you access to the investment companies and fund
managers that we consider to be the best in the world, whether
they are from HSBC or not. It is this exceptional combination of
investment types and companies that provides balance, where the
impact of loss to any one investment may be reduced by the rise
of another. We believe it’s the more stable way to invest. What’s
more, because World Selection is monitored on a round-the-clock
basis, we can react to changing markets to help ensure that your
portfolio remains consistent with its objectives.
Who manages the HSBC World Selection Portfolios?
World Selection is currently managed by HSBC Multimanager,
the specialist business which forms part of HSBC Global Asset
Management. HSBC Multimanager is a specialist multimanager
business, providing multimanager solutions to clients globally.
HSBC Multimanager has one of the largest multimanager teams
in the world, comprising more than 40 investment professionals
(including a dedicated property multi-manager team) based in
11 locations around the world. The global reach of the team
locations adds value through highly localised and expert manager
insight and allows the Multimanager team to leverage their local
market knowledge when building truly global solutions for clients.
How are the HSBC Portfolios structured?
The HSBC Portfolios are structured as sub-funds of HSBC Portfolios, a
Luxembourg based SICAV (Société d’Investissement à Capital Variable).
It contains 5 sub-funds :
HSBC Portfolios – World Selection 1
HSBC Portfolios – World Selection 2
HSBC Portfolios – World Selection 3
HSBC Portfolios – World Selection 4
HSBC Portfolios – World Selection 5
Please refer to the simplified prospectus and full
prospectus before making an investment decision. As
with any investment where the underlying investments are
stocks and shares, the price of shares in HSBC Portfolios
and any income from them can go down as well as up, is
not guaranteed, and you may not get back the amount of
your original investment.
2
Multiple markets, multiple assets
World Selection uses investment techniques that not only invest
in worldwide markets but offer you access to a wide range of
respected managers and funds, within a single portfolio. Your
portfolio benefits from the skills of our global team of experts, who
specialise in selecting the best managers and funds, wherever they
are in the world and whomever they work for. This global team of
experts monitor your investments round-the-clock and around the
world.
All funds have exposure to different risks whilst different factors will
affect each one at different times. By putting together a portfolio,
which include overseas equities, bonds, alternative investments
(such as private equity and commodities) and cash, the risks are
spread through diversification – so that all risk is not borne in one
fund, one type of investment or one geographic region. The result
is that when the market dips for some types of investment they
could be offset by others that may continue to perform positively.
Intelligent investment of this kind produces a portfolio which should
be more stable in differing economic climates. You should note that
in extreme market conditions, all types of investment may produce
negative returns.
Creating and managing portfolios like World Selection requires a
strong, connected team of experts based around the globe, using
local knowledge and sophisticated modelling techniques to keep
your portfolio up-to-date in the face of a changing market-place.
Under our watchful eye, we monitor world markets round-the-clock.
Your portfolio is carefully managed on an ongoing basis. Specialists
within the fund management companies that manage the funds we
invest in have the ability to make necessary changes and react to.
3
How will the portfolio objective be met? Benefits of World Selection
Firstly, your portfolio is constructed with a focus on having the right
types of investment for the long-term, through a technique called
strategic asset allocation. In harmony with our realistic long-term
view, we also use a technique called tactical asset allocation to
take advantage of short-term market movements by altering our
weighting within the types of investment we hold. Using our global
team of experts, we identify and select the funds and managers
available worldwide who we consider to be the best in their field –
whether they are from HSBC or not. We then combine them with
the aim of achieving an optimal combination of attributes.
Thereafter, our dedicated, global team work together to monitor
your portfolio round-the-clock. The managers that we invest with
are tasked with proactively managing the underlying investments
and to make adjustments to their portfolios as they see fit using
their specialist knowledge. They can make changes to realign their
portfolios in order to ensure that the investments that they hold
reflect their investment approach. They will also ensure that the
investments managed by them are structured in such a way as to
reflect their long term views and perspectives on the areas within
financial markets in which they specialise.
Investors who place all of their money in one investment type, such
as property or shares, or only in one part of the world, take on very
specific risks that are likely to exaggerate the variability of short term
performance in comparison with a more diversified and global approach.
We believe the optimal approach to investing is to spread your money
across as wide a range of investments as possible so that should one
investment fall, the losses may be reduced by the rise of another.
World Selection provides this optimal spread by holding a diverse array
of investment types from multiple geographies. This approach aims to
maximise your return while reducing the amount of risk you need to
take. You gain access to investment types previously unavailable to the
private investor through a rigorous investment process that uses the full
potential of HSBC’s global expertise, including the advanced expertise
of our dedicated global team, combined with sophisticated computer-
modelling techniques.
Our team has outstanding expertise in selecting what we believe to
be the best available funds and managers the world has to offer –
whether or not they are from HSBC.
We work harder for your money by monitoring world markets
round-the-clock to identify hidden gems of potential growth.
4
Dealing times and charges
Shares are allocated at the Offer Price per share calculated on the
Business Day following the Dealing Day using the latest available
prices of assets.
Applications received after the 10:00 am Jersey time on any Dealing
Day will normally be dealt on the next Dealing Day. Shares are
normally dealt on each Business Day (other than days during a
period of suspension of dealing in shares and other than a Business
Day immediately following the end of a period of such suspension)
and which is also for the Portfolio, a day where stock exchanges
and regulated markets in countries where the Portfolio is materially
invested are open for normal trading.
Valuation
On the Business Day following the Dealing Day
Naturally there are charges involved when you make any type of
investment.
Initial charge
This is up to 4.17% and is included in the purchase price of your
shares in each fund. The initial charge is a one off fee and therefore
will not be refunded if you decide to cash in your investment. We
do not make a charge when you sell your shares.
Annual management charge
An annual charge is levied on each of the funds within HSBC
Portfolios – World Selection and will be between 1.00% and 1.30%
(please see the prospectus for full details). This varies according
to the complexity and costs involved in managing the underlying
investments of each fund.
Switching fee
If you switch to another fund in the Freedom Plus range that has a higher
initial charge, the difference will be deducted from your investment.
5
Tax
HSBC Portfolios is based in Luxembourg, an internationally
recognised financial centre. As a result, the internal taxation of the
funds is very low at just 0.05% per annum of their net asset value.
You may be liable to personal taxation on the profits, income and
gains realised from, or accruing within, the underlying investments
under the domestic tax laws of the country in which you are resident
and/or a country in which you are liable to taxation. We therefore
recommend that you seek independent tax advice as to the treatment
of your investments if you decide to invest through this service.
Will I have to pay tax in return ?
The Council of the European Union adopted on 3rd June 2003
Council Directive 2003/48/EC on the taxation on savings income.
Under this Directive, Member States of the European Union
(“Member States”) will be required to provide the tax authorities of
another Member State with details of payments of interest or other
similar income paid by a person within its jurisdiction to an individual
resident in that other Member State.
It is presently not clear if and to what extent dividends distributed
by the Fund and capital gains realised by Shareholders on the
disposal of shares will be subject to such reporting.
HSBC Portfolios (‘The Company’) reserves the right to reject any
application for shares if the information provided by any prospective
investor does not meet the standards required by legalisation
enacted as a result of this Directive.
The way your returns are treated for tax purposes will depend on your
country of residence, local regulations and your personal circumstances.
As with any investment you should ensure that the fund is
appropriate not only to your tax position but also to your personal
investment needs. Any tax information in this brochure is based on
our understanding of current and proposed legislation and practice.
The accuracy of this information or its completeness cannot be
guaranteed. The legislation and practice may be subject to change.
If you require specific details in respect of this legislation we
strongly recommend that you consult with your tax or legal adviser,
as we cannot provide individual guidance on personal tax matters.
6
Key risks
Market risk
The value of investments and the income derived there from may
fall as well as rise and investors may not recoup the original amount
invested in the Company. In particular, the value of investments
may be affected by uncertainties such as international, political and
economic developments or changes in government policies.
Foreign exchange risk
Because a Portfolios’ assets and liabilities may be denominated
in currencies different to the Base Currency, the Portfolio may
be affected favourably or unfavourably by exchange control
regulations or changes in the exchange rates between the Base
Currency and other currencies. Changes in currency exchange
rates may influence the value of a Portfolio’s shares, the dividends
or interest earned and the gains and losses realised. Exchange
rates between currencies are determined by supply and demand
in the currency exchange markets, the international balance of
payments, governmental intervention, speculation and other
economic and political conditions. If the currency in which a security
is denominated appreciates against the Base Currency, the value
of the security will increase. Conversely, a decline in the exchange
rate of the currency would adversely affect the value of the security.
A Portfolio may engage in foreign currency transactions in order
to hedge against currency exchange risk, however there is no
guarantee that hedging or protection will be achieved. This strategy
may also limit the Portfolio from benefiting from the performance
of a Portfolio’s securities if the currency in which the securities held
by the Portfolio are denominated rises against the Base Currency. In
case of a hedged class, (denominated in a currency different from
the Base Currency), this risk applies systematically.
Liquidity risk
A Portfolio is exposed to the risk that a particular investment or
position cannot be easily unwound or offset due to insufficient
market depth or market disruption. This can affect the ability of a
shareholder to redeem funds from that Portfolio, and can also have
an impact on the value of the Portfolio.
Although the Portfolios will invest mainly in the Collective Investment
Schemes in which the shareholders are entitled to redeem their
shares within a reasonable timeframe, there may be exceptional
circumstances in which such Collective Investment Schemes can
not guarantee the liquidity of their shares/units. Absence of liquidity
may have a determined impact on the Portfolio and the value of its
investments. This liquidity risk is mitigated as the Portfolios will have
a well diversified exposure to a broad range of asset classes and will
be predominantly invested in securities listed on a Regulated Market.
In addition, the Company manages a robust risk management
process effective on a daily basis in identifying, measuring,
monitoring and controlling the liquidity risk for all assets classes
including, but not limited to, emerging markets equities, investment
grade, high yield and emerging markets debt securities, real estate,
hedge fund, private equity and absolute return strategies.
Specific nature of a fund of funds
Prospective investors should be aware of the specific features of a fund
of funds and the consequences of investing in the Collective Investment
Schemes. Although the Company will seek to monitor investments and
trading activities of the Collective Investment Schemes to which certain
Portfolios’ assets will be allocated, investment decisions are made
at the level of such Collective Investment Schemes and it is possible
that the managers of such Collective Investment Schemes will take
positions or engage in transactions in the same securities or in issues
of the same asset class, industry or country or currency at the same
time. Consequently there is a possibility that one Collective Investment
Scheme may purchase an asset at about the same time as another
Collective Investment Schemes may sell it. There can be no assurance
that the selection of the managers of the Collective Investment Schemes
will result in an effective diversification of investment styles and that
positions taken by the underlying Collective Investment Schemes will
always be consistent.
The above is not a full list of all the risks that apply to the funds
within HSBC Global Asset Management (International) Limited’s
range of funds. Investors and potential investors should read the
relevant simplified prospectus or full prospectus for a full list of
risk warnings prior to making an investment in a fund.
7
Important notes
As with any investment where the underlying investments are
stocks and shares, the price of shares in HSBC Portfolios and any
income from them can go down as well as up, is not guaranteed,
and you may not get back the amount of your original investment.
Remember, these funds should be considered as a medium to long-
term commitment, for example at least five years
Please see relevant Simplified Prospectus and Prospectuses for
more information.
Any decision to invest in HSBC Portfolios should be based on the
content of the Prospectus, Application Terms and Conditions and
Nominee Service Agreement.
UK and Isle of Man investors will not be protected by statutory
compensation arrangements if they invest in any of the HSBC
Portfolios . Should a fund fail, investors are reminded that they will
be excluded from the benefit of the rules and regulations made
under the UK Financial Services and Markets Act 2000 including
the UK Financial Services Compensation Scheme.
For further details on these sub-funds and past performance
please visit the web site at: www.offshore.hsbc.com or call
+44 1534 606389 (Monday to Friday exc. UK and Jersey Bank
Holidays, 9am to 5pm UK time).
To help us continually improve our services and in the interests of
security we may monitor and/or record your communications with us.
This offer is not available to residents of Australia, Canada, Hong
Kong, Malaysia, United States of America or New Zealand.
This is an integral part of the HSBC Freedom Plus brochure and
should be read in conjunction with it. Please refer to the main
brochure for additional important information. Before investing in
any of the products in the HSBC Portfolios, please read the full
Prospectus and the sub-funds relevant Simplified Prospectus for
more information and a detailed explanation of the risks involved.
173160 BRO 171/10/2009