HSBC Asia Select Equity Fund. Product Disclosure Statement

Transcription

1 HSBC Asia Select Eqity Fnd Prodct Disclosre Statement ARSN Responsible Entity: Perpetal Trst Services Limited ABN , AFSL Investment Manager: HSBC Global Asset Management (Hong Kong) Limited ARBN Issed 30 September 2009 HSBC01208.indd 1

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3 Important Notice and Disclaimer This Prodct Disclosre Statement (PDS) is dated 30 September This PDS offers nits (Units) in the HSBC Asia Select Eqity Fnd (the Fnd). Perpetal Trst Services Limited (Responsible Entity) is the responsible entity of the Fnd and is the isser of this PDS and the Units in the Fnd. This PDS contains important information abot investing in the Fnd and may be sed by Direct Investors to apply for Units in the Fnd and for Indirect Investors to provide them with information in respect of the Fnd. This PDS does not constitte an offer or invitation in any place where, or to any person to whom, it wold be nlawfl to make sch an offer or invitation. The offer to which this PDS relates is available to persons receiving the PDS (inclding electronically) in Astralia. Terms sed in this PDS are defined in the Glossary in section 11. Unless otherwise specified, all dollar amonts in this PDS are Astralian dollars. The Fnd is sbject to investment risk, inclding possible delays in repayment and loss of income and principal invested. Yor investment does not represent deposits or other liabilities of the Responsible Entity, HSBC Global Asset Management (Hong Kong) Limited (Investment Manager), any other entity of the HSBC Grop (inclding HSBC Bank Astralia Limited (HSBC Astralia)) or any other person. None of the Fnd, the Responsible Entity, the Investment Manager, any other entity of the HSBC Grop (inclding HSBC Astralia) or any other person garantees the performance of the Fnd, that the Fnd will meet its objective, that capital will be repaid or that there will be any particlar retrn from, or any increase in the vale of, the Fnd. The Fnd invests in the HSBC Global Investment Fnds Asia ex Japan Eqity (the Underlying Fnd), a sb-fnd of HSBC Global Investment Fnds. None of the Underlying Fnd, the management company of the Underlying Fnd, any investment adviser of the Underlying Fnd or any sb fnd of the Underlying Fnd has in any way been involved in the preparation of this PDS, makes any statement in this PDS (express or implied) or is in any way associated with this invitation to apply for Units. PLEASE READ THIS PDS IN FULL BEFORE DECIDING WHETHER TO INVEST. The information in this PDS is crrent as at the date on which it was issed, except where otherwise stated. The Responsible Entity reserves the right to change the terms and conditions in this PDS from time to time. Changes to information relating to the Fnd that are not materially adverse may be pdated and made available to investors at A paper copy of any pdated information is also available free of charge on reqest from HSBC Investor Inqiries (see section 12). The information in this PDS is general information only and has been prepared withot taking into accont yor individal objectives, financial sitation or needs. Yo shold consider whether the information in this PDS or an investment in the Units is appropriate for yo in light of yor objectives, financial sitation and needs. Yo shold seek professional legal, taxation and financial advice to determine whether an investment in the Fnd is appropriate for yor needs. 1 HSBC01208.indd 1

4 TABLE OF CONTENTS 1. THE RELEVANT PARTIES...3 Abot the Responsible Entity...3 Abot the HSBC Grop...3 Abot the Investment Manager...3 Abot the Distribtor...3 Abot the Cstodian and Administrator KEY FEATURES THE FUND THE UNDERLYING FUND BENEFITS OF INVESTING IN THE FUND RISKS TO CONSIDER FEES AND OTHER COSTS TAX CONSIDERATIONS TRANSACTING YOUR INVESTMENT APPLICATIONS, WITHDRAWALS AND DISTRIBUTIONS ADDITIONAL INFORMATION GLOSSARY CORPORATE DIRECTORY HSBC01208.indd 2

5 1. The Relevant Parties Abot the Responsible Entity Perpetal Trst Services Limited (ABN , AFSL nmber ), the Responsible Entity, is part of the Perpetal Limited grop of companies which has been in operation for over 120 years. The Responsible Entity is responsible for the operation of the Fnd and has the power to delegate certain of its dties. The Responsible Entity has appointed the Investment Manager to provide investment management services to the Fnd and RBC Dexia Investor Services Trst as the cstodian of the Fnd s assets (Cstodian) and administrator of the Fnd (Administrator). Abot the HSBC Grop Headqartered in London, the HSBC Grop is one of the largest banking and financial services organisations in the world, with arond 8,500 offices, in 86 contries and territories in Erope, the Asia-Pacific region, the Americas, the Middle East and Africa. The HSBC Grop serves over 100 million cstomers and has assets of over USD 2,422 billion at 30 Jne With listings on the London, Hong Kong, New York, Paris and Bermda stock exchanges, shares in HSBC Holdings plc are held by arond 220,000 shareholders in some 119 contries and territories. Management has strong relationships with corporates, instittions and financial intermediaries of all sizes and types. The Investment Manager does not hold an AFSL and is exempt from the reqirement to hold an AFSL for the investment management services which it provides to the Responsible Entity in respect of the Fnd. This exemption is granted on terms determined by ASIC and on the basis that the Investment Manager is reglated by the SFC nder Hong Kong laws, which differ from Astralian laws. Abot the Distribtor HSBC Bank Astralia Limited (ABN , AFSL nmber ) has the exclsive role as the distribtor to ndertake the sales and marketing activities of the Fnd throgh its Global Investments division. HSBC Astralia is a sbsidiary of the HSBC Grop and offers an extensive range of financial services in Astralia. Abot the Cstodian and Administrator RBC Dexia Investor Services Trst (ABN , AFSL nmber ) is a company established by joint ventre and is eqally owned by Royal Bank of Canada and Dexia. It is incorporated nder the laws of Canada and has an AFSL. RBC Dexia Investor Services Bank S.A. is an associated company within the RBC Dexia Grop and is the administrator for all the HSBC Global Investment Fnds (HGIF) inclding the Underlying Fnd. Throgh an international network linked by advanced technology, inclding a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services throgh for cstomer grops and global bsinesses: Personal Financial Services (inclding consmer finance); Commercial Banking; Global Banking and Markets; and Private Banking. Abot the Investment Manager HSBC Global Asset Management (Hong Kong) Limited (ARBN ), the Investment Manager of the Fnd, is a company incorporated with limited liability in the Hong Kong Special Administrative Region (Hong Kong SAR) and is athorised and reglated by the Secrities and Ftres Commission of Hong Kong (SFC). The company was incorporated in 1973 and acts as the asset management bsiness of the HSBC Grop. The Investment Manager is a registered foreign company in Astralia and has its principal place of bsiness in Hong Kong SAR. The offer of Units in this PDS is not reglated by the SFC. The Investment Manager is part of the HSBC Global Asset Management bsiness of the HSBC Grop, which comprises for specialist bsinesses: Halbis, Sinopia, Mltimanager and Liqidity (HSBC Global Asset Management). HSBC Global Asset Management acts as the global representative of its specialist investment bsinesses and manages assets totalling USD billion (at 30 Jne 2009). As one of the world s leading emerging markets asset management bsinesses, throgh its network of offices in over 20 contries arond the world, HSBC Global Asset 3 HSBC01208.indd 3

6 2. Key Featres This table indicates the kind of information yo can find in this PDS. It is not intended to be a complete smmary. Yo shold read the entire PDS before deciding whether to invest in the Fnd. Topic Highlights For more information Fnd HSBC Asia Select Eqity Fnd ARSN Section 3 Responsible Entity Perpetal Trst Services Limited Section 1 Investment Manager HSBC Global Asset Management (Hong Kong) Limited Section 1 Cstodian and Administrator RBC Dexia Investor Services Trst Section 1 Direct Investors who are wholesale clients as defined in section 761G of the Corporations Act (eg trstees of sperannation fnds, incorporated bodies and Operators); and Who can invest? Sggested minimm investment period What is the Fnd s investment objective? Indirect Investors via an Operator (ie retail investors investing throgh an IDPS). Indirect Investors do not become Unitholders in the Fnd. The Responsible Entity athorises the se of this PDS as disclosre to Indirect Investors investing throgh an IDPS. Section 9 5 years or more Section 3 The Fnd aims to provide long-term capital growth for investors by providing exposre to eqity or eqity eqivalent investments in the Asian region (exclding Japan) by directly investing a sbstantial proportion of its assets in shares of the Underlying Fnd. Section 3 Income Potential Low # Sections 3 & 4 Growth Potential High # Sections 3 & 4 Volatility High Sections 3 & 4 Crrency Strategy Un-hedged Section 6 What is the Underlying Fnd? What is the Underlying Fnd s investment objective? Inception date of the Underlying Fnd What are the benefits of investing in the Fnd? The Underlying Fnd is the HSBC Global Investment Fnds Asia ex Japan Eqity, a sb-fnd of the HSBC Global Investment Fnds. The Underlying Fnd seeks long-term capital growth by investing primarily in a well-diversified portfolio of investments in eqity and eqity-eqivalent investments issed by companies which have their registered office in, and with an official listing on a major stock exchange or other Reglated Market of any Asian contry (exclding Japan), as well as companies which carry ot a preponderant part of their economic activities in the Asian region (exclding Japan). 01 April 1993 Investing in the Fnd provides exposre to a diversified portfolio of investments in eqity and eqity-eqivalent investments in the Asian region (exclding Japan), with an aim to achieve long-term capital growth via investment in the Underlying Fnd. Section 4 Section 4 Section 5 # The statements above referring to income potential and growth potential are not intended to be representations as to the ftre retrn to investors from an investment in the Fnd. Rather they are references to the asset class to which the Fnd is exposed via its investment in the Underlying Fnd. Specifically, the asset class of investments in the Asian region (exclding Japan) is a highly volatile asset class which means that growth potential may be highly positive or negative and income may be low. 4 HSBC01208.indd 4

7 Topic What are the key risks of the Fnd? What are the fees and other costs? How to invest in the Fnd Highlights Investing in the Fnd involves risks, inclding the risk that yo may lose all of the money yo invest. There is no garantee of the performance of the Fnd, that the Fnd will meet its objective, that capital will be repaid or that there will be any particlar retrn from, or increase in, the vale of the Fnd. Investing in the Fnd will provide yo with an exposre to the performance of the Asian region (exclding Japan). This incldes exposre to some Emerging Markets, which generally carry higher risks of nder-performance de to political, legal and economic ncertainties in Emerging Markets. Additionally, an investment in the Fnd is sbject to specific risks sch as eqity investment risk, foreig`n exchange risk and Underlying Fnd risk. Yo shold read section 6 careflly before investing in the Fnd. Management costs: 1.50% per annm of the total gross asset vale of the Fnd accred daily and paid monthly in arrears. Crrently, the Fnd does not charge a by/sell spread, contribtion fee or withdrawal fee. Applications are processed daily on each Astralian Bsiness Day. If yor completed application form (inclding identification docments) and cleared application monies are received and accepted by the Administrator by 3pm (Melborne time) on an Astralian Bsiness Day, yor application will be processed as at that Astralian Bsiness Day. If yor application form or cleared application monies are received and accepted after 3pm (Melborne time) on an Astralian Bsiness Day, yor application will be processed as at the next Astralian Bsiness Day. The Responsible Entity may accept or reject an application in its absolte discretion. Indirect Investors shold contact their Operator to make an application for Units. For more information Section 6 Section 7 Section 9 Minimm initial investment $500,000* Section 9 Minimm additional investment Whole mltiples of $50,000* Section 9 Minimm Unit holding $500,000* Section 9 Withdrawals are processed daily on each Astralian Bsiness Day. If yor withdrawal reqest is received and accepted by the Administrator by 3pm (Melborne time) on an Astralian Bsiness Day, yor withdrawal reqest will be processed as at that Astralian Bsiness Day. How to withdraw from the Fnd If yor withdrawal reqest is received and accepted after 3pm (Melborne time) on an Astralian Bsiness Day, yor reqest will be processed as at the next Astralian Bsiness Day. Withdrawal proceeds are generally paid within 10 Bsiness Days from the date as at which the withdrawal reqest was accepted. Withdrawals from the Fnd may be sspended in certain circmstances, please see section 9 for more information. Indirect Investors shold contact their Operator to make a withdrawal reqest. Section 9 5 HSBC01208.indd 5

8 Topic Unit pricing Distribtions Taxation Cooling off Highlights Applications and withdrawals will be processed at the Unit price calclated on the Bsiness Day immediately following the Astralian Bsiness Day as at which the application or withdrawal reqest is processed. Distribtions (if any) are expected to be made annally as at 30 Jne. For information abot the significant tax implications relating to investing in the Fnd, see section 8. Tax may be dedcted from any payment made to yo if yo do not provide a Tax File Nmber (TFN), Astralian Bsiness Nmber (ABN) or relevant exemption or if yo are a non-resident. Applicants nder this PDS do not have cooling off rights. For Indirect Investors, yor Operator can provide yo with details of any cooling off rights yo may have in relation to yor IDPS, master trst or wrap platform. For more information Section 9 Section 8 Section 10 * The Responsible Entity may accept lesser amonts or change these amonts from time to time. Indirect Investors shold contact their Operator for any applicable minimm amonts. 6 HSBC01208.indd 6

9 3. The Fnd When yo invest in the Fnd, yo are investing in an Astralian-domiciled nit trst which is a managed investment scheme registered with ASIC nder the Corporations Act. The Fnd aims to provide Astralian investors with the potential for long-term capital growth and the opportnity to gain exposre to some of the world s fastest growing economies with one of the world s leading Emerging Markets asset managers. The Fnd aims to provide exposre to the Asian region (exclding Japan) by directly investing a sbstantial proportion of its assets in shares of the Underlying Fnd (with USD as the base crrency). The Fnd may also invest part of its assets in cash in an interest-bearing Astraliandollar bank accont held by the Cstodian. The Fnd s asset allocation range is: Asset Class Exposre to eqity and eqity eqivalent investments in the Asian region (exclding Japan) via the Underlying Fnd. Minimm Holding Maximm Holding 90% 100% Cash 0% 10% The Fnd s asset allocation can change within these ranges significantly and sometimes qickly. Frther, the Fnd may temporarily move otside these ranges de to short-term factors sch as significant cash flows into the Fnd. If this occrs, the Investment Manager will bring the Fnd back within these ranges as soon as practical. Althogh the Constittion permits the Responsible Entity to borrow or raise money, the Responsible Entity does not crrently intend to enter into any long-term borrowings in relation to the Fnd. Short-term borrowings may occr in the ongoing management of the Fnd, inclding to meet the day-to-day liqidity reqirements. The Fnd gains its exposre to the Asian region (exclding Japan) by investing in the Underlying Fnd, as set ot below. For information on the Underlying Fnd, see section 4. Cash HSBC Asia Select Eqity Fnd Underlying Fnd (Lxemborg-domiciled) Portfolio of investments in the Asian region (exclding Japan) The Fnd s retrn is linked to the performance of the Underlying Fnd. However, as the Fnd will hold some cash and will be sbject to fees and expenses and exchange rate risks, the Fnd s retrn will not be identical to the performance of the Underlying Fnd. De to the natre of exposre to the Underlying Fnd, an investment in the Fnd shold be viewed as a long-term investment. An exposre to the Underlying Fnd is most likely to be sitable for investors with a long-term investment horizon (ie. 5 years or more) as it is the intention of the Underlying Fnd to provide exposre to investments in companies throghot the Asian region (exclding Japan), and to provide long term capital growth for investors. Whilst there are no capitalisation restrictions, it is anticipated that the Underlying Fnd will seek to invest primarily in larger, established companies. 4. The Underlying Fnd 4.1 Abot the Underlying Fnd The Underlying Fnd is the HSBC Global Investment Fnds Asia ex Japan Eqity, a sb-fnd of the HSBC Global Investment Fnds (HGIF). HGIF was incorporated on 21 November 1986 and is established as an open-ended investment company with mltiple sb-fnds incorporated in the Grand Dchy of Lxemborg as a société anonyme qalifying as a société d investissement à capital variable. It exists for an nlimited period and qalifies as an Undertaking for Collective Investment in Transferable Secrities (commonly known as an UCITS) nder Part I of the Lxemborg law of 20 December 2002 on ndertakings for collective investment, implementing directive 85/611/ EEC (as amended by directives 2001/107/EC and 2001/108/ EC in particlar) into Lxemborg law. As a sb-fnd of HGIF, the Underlying Fnd forms part of the assets and liabilities of HGIF. This means that the assets of the Underlying Fnd are exclsively available to satisfy the rights of shareholders of that sb-fnd, and the rights of creditors whose claims have arisen in connection with the creation, operation or liqidation of that sb-fnd. 4.2 Who manages the Underlying Fnd? HSBC Investment Fnds (Lxemborg) S.A. has been appointed by HGIF as the management company of HGIF (Management Company). The Management Company of HGIF is responsible on a day-to-day basis, for the provision of administration, marketing, investment management and advisory services in respect of all the sb-fnds of HGIF (inclding the Underlying Fnd). In the performance of any of the fnctions for which it has responsibility, the Management Company may delegate the performance of sch fnctions to an agent. The Management Company has delegated the investment management services for the Underlying Fnd to Halbis Capital Management (Hong Kong) Limited (one of the investment specialist bsinesses of HSBC Global Asset Management), which focs on delivering sstainable valeadded performance in selected areas of the global market inclding Asia (exclding Japan) investments. 7 HSBC01208.indd 7

10 4.3 What does the Underlying Fnd invest in? The Underlying Fnd invests in the Asian region (exclding Japan). 4.4 What is the investment objective and approach of the Underlying Fnd? The Underlying Fnd seeks long-term capital growth by investing primarily in a well-diversified portfolio of investments in eqity and eqity-eqivalent investments issed by companies which have their registered office in, and with an official listing on a major stock exchange or other Reglated Market of any Asian contry (exclding Japan) as well as companies which carry ot a preponderant part of their economic activities in the Asian region (exclding Japan). These can be both companies with a registered office in and with an official listing in developed markets in the Asian region, and also those in emerging Asian contries. Whilst there are no capitalisation restrictions, it is anticipated that the Underlying Fnd will invest primarily in larger, established companies. At least 60% of the Underlying Fnd s assets will be invested in secrities denominated in crrencies other than the Korean Won. Investment in interest-bearing secrities is also permitted either for short-term cash srplses or in response to nfavorable eqity market conditions, and this is limited to one third of the total assets of the Underlying Fnd. As of 30 Jne 2009, assets of the Underlying Fnd totalled USD million. 4.5 Sspension of redemption from the Underlying Fnd The Management Company of HGIF may limit the nmber of shares in the Underlying Fnd which may be redeemed on any dealing day of the Underlying Fnd to not more than 10% of the total nmber of shares on isse immediately before sch date. Any shares failing to be redeemed on the exercise of this discretion by the Management Company of HGIF will be carried forward to the next dealing day of the Underlying Fnd and will be redeemed pro-rata in priority to any other shares in respect of which a redemption notice has sbseqently been received. A dealing day in the Underlying Fnd sally occrs daily nless the day is declared by the Management Company of HGIF or falls in the definition of a non-dealing day of the Underlying Fnd, or the Underlying Fnd s dealing is sspended. The Management Company of HGIF may also sspend the redemption of shares and the calclation of the net asset vale of the Underlying Fnd in certain circmstances inclding where: trading is sspended or restricted on any market on which a sbstantial part of the Underlying Fnd s assets are normally traded; there are circmstances which in the opinion of the Management Company make it impracticable to ascertain the net asset vale of a sbstantial part of the Underlying Fnd s assets, or realise any sbstantial portion of the Underlying Fnd s investments or effect sch realisation withot nde delay or at normal rates of exchange or otherwise to receive the cash proceeds of sch realisation; or there are circmstances which in the opinion of the Management Company cold reslt in the reprchase of shares in the Underlying Fnd being a violation of any applicable law. Any limitation or sspension of the redemption of shares in the Underlying Fnd cold reslt in a sspension of the Fnd. See section Benefits of Investing in the Fnd The Fnd is an Astralian-domiciled nit trst which invests into the Underlying Fnd. The Fnd enables Astralian investors to gain exposre to a diversified portfolio of investments in eqity and eqity eqivalent investments issed by companies which have their registered office in and with an official listing on a major stock exchange or other Reglated Market of any Asian contry (exclding Japan), as well as companies which carry ot a preponderant part of their economic activities in the Asian region (exclding Japan). The Investment Manager is part of HSBC Global Asset Management, one of the world s largest Emerging Markets asset managers and part of the HSBC Grop, one of the world s largest emerging markets banks. Global Presence, Local Knowledge HSBC Global Asset Management works with instittions, financial intermediaries and private investors worldwide. They combine local knowledge with global reach, drawing pon the strength, stability and capabilities of the HSBC Grop. HSBC Global Asset Management has 180 dedicated Emerging Markets investment professionals based in 16 contries and territories globally. The investment teams are able to call on the research capabilities of the wider HSBC Grop which has a presence in 86 contries and territories in Erope, the Asia-Pacific region, the Americas, the Middle East and Africa. From award winning regional emerging markets eqity and fixed income strategies to long standing single contry eqity fnds, HSBC Global Asset Management have prodcts that cover almost every part of the emerging markets niverse and are able to offer access to some of the world s fastest growing markets in addition to a choice of investment styles and approaches. Leading Prodct Range The HSBC Global Asset Management grop manages some of the world s largest emerging market single contry eqity fnds. The grop manages a range of flagship Emerging Market prodcts that have made them leaders in the management of assets in a wide array of Emerging 8 HSBC01208.indd 8

11 Markets, not only in India and China bt also in Taiwan and Thailand. HSBC Grop s long standing presence in these markets also provides HSBC Global Asset Management s investment professionals with the local access across the globe, creating exciting investment opportnities from within the emerging markets niverse. Global Qality The mlti-specialist organisation of HSBC Global Asset Management s investment bsinesses means that the investment fnds offered by HSBC Global Asset Management are each managed by specialist teams based where yo wold expect them arond the world. Every single investment strategy showcased within HSBC Global Investment Fnds represents a capability where HSBC Global Asset Management believe they have an edge that makes them the best available in that class. Their expert teams are focsed on achieving the best possible reslts in their discipline. Global Brand HSBC Grop s global asset management bsiness has a recognised global footprint and manages assets totalling USD billion (at 30 Jne 2009) for clients of all types everywhere. When yo have a brand that some consider to be the most valable in the world, yo can be assred that HSBC Global Asset Management will protect it and nrtre it by serving yo with the highest levels of professionalism and integrity. HSBC Global Asset Management fnds are managed sing expertise developed within the specialists capabilities. The specialists investment teams are exploiting investment opportnities and market inefficiencies sing highly original and well tested processes. 6. Risks to Consider Yo shold careflly consider the risk factors otlined in this section, as well as the other information contained in this PDS, before deciding if the Fnd is a sitable investment for yo. Yo shold consider factors sch as (bt not limited to) yor financial targets, investment time frame and what degree of risk yo are prepared to accept in order to achieve yor investment objectives. We recommend that yo seek independent legal, tax and financial advice before investing. Investing in the Fnd involves risks, inclding the risk that yo may lose all of the money yo invest. There is no garantee of the performance of the Fnd, that the Fnd will meet its objective, that capital will be repaid or that there will be any particlar retrn from, or increase in the vale of, the Fnd. Some of the risks of investing in the Fnd are otlined below, however this is not an exhastive list. An investment in the Fnd shold be considered speclative. Emerging Markets risk The Underlying Fnd primarily ndertakes investments in the Asian region (exclding Japan). The eqity and eqityeqivalent investments ndertaken by the Underlying Fnd can inclde those investments issed by companies with a registered office in and with an official listing in developed markets as well as companies which carry ot a preponderant part of the economic activities in the Asian region (exclding Japan). Investments are ndertaken in Emerging Markets in Asia (exclding Japan) and are otside Astralia in contries with different legal systems. While exposre to investments in a nmber of different Emerging Markets provides opportnities for revene and profit growth combined with the advantages of diversification throgh exposre to more established Asian markets, these advantages come with risks. The risks inherent in investing in Emerging Markets are significantly greater than investing in more matre financial markets. Political, legal and economic ncertainties in Emerging Markets may adversely impact on the performance of the Underlying Fnd and the retrn on yor Units. Investing in Emerging Markets has additional risks in comparison to investments in matre financial markets. These risks inclde adverse impact by trade barriers, exchange controls, managed adjstments in crrency vales, potential inconsistent application of laws and retrospective adverse reglatory changes, adverse taxation treatment of foreign investors, potential, nstable and illiqid depreciation of the crrency in which investments are denominated, administrative ncertainties, redced liqidity in realisation of depreciating assets, and ncertain safe-keeping and settlement of secrities. Access to investments in certain Emerging Markets carries significant risks sch as access throgh a limited nmber of brokers and participants, and the interposition of special corporate vehicles to enable exposre to those investments. The above factors make it impossible to anticipate flctations in the vale of the Fnd s investments in Emerging Markets in the Asian region (exclding Japan) via the Underlying Fnd. Considerable losses may be incrred. Exposre to the Underlying Fnd shold be considered speclative becase of the risks involved in investing in Emerging Markets in that region. Chinese eqity risk There are a nmber of special risk factors when investing in markets in China in particlar. For the prposes of this section, China means the People s Repblic of China, bt exclding Hong Kong and Maca. The Underlying Fnd s investments in China are sbject to sbstantial changes in reglations and tax policies going forward as China has recently joined the WTO and engages in contining market liberalisation. The Chinese crrency, the Renminbi, is not a freely convertible crrency. The State Concil s secrities reglation body - the China Secrities Reglation Commission (CSRC) also spervises the two official stock exchanges in China (the Shanghai Stock Exchange and the Shenzhen Secrities Exchange) on which shares of Chinese issers are listed in 9 HSBC01208.indd 9

12 two categories, of which the B shares are qoted and traded in foreign crrencies (crrently Hong Kong Dollars and USD) and are available to non-chinese investors. The China B share market is relatively illiqid so that the choice of investments will be limited by comparison with that of major international stock exchanges. The Underlying Fnd will invest directly in secrities qoted on the reglated stock exchanges in China and also in secrities of companies listed in other stock exchanges which have sbstantial bsiness or investment links in China. For this prpose, the Underlying Fnd will generally only invest in companies listed otside China where those companies are owned or controlled by Chinese interests, or where at least 40% of the earnings, prodction facilities, trnover, assets or investments of sch companies are based in or derived from China. The Underlying Fnd may invest in eqity markets in China other than the Shanghai and Shenzhen exchanges once sch markets have been established and approved by the athorities in China. Eqity investments risk The vale of eqity and eqity eqivalent investments may fall or rise and the original amont invested may increase or decrease in vale. The vale of investments in companies (sch as those made by the Underlying Fnd), in particlar, can be affected by the company s performance, which may be affected by factors sch as management changes, loss of market share, law sits, changes in economic conditions or reglatory regimes, adverse changes in fiscal and monetary policies, political events and changes in interest rates. Credit risk and interest rate risk The Underlying Fnd may invest in bonds and other fixed income secrities, and is sbject to the credit risk of the secrities issers. An isser sffering an adverse change in its financial condition cold lower the credit qality of a secrity, making the secrity more difficlt to sell. Lower credit qality of secrities generally leads to greater price volatility and increased risks of the isser defalting on their payment obligations, particlarly in the event of an insolvency of the isser. Generally, prices of debt secrities rise when interest rates fall, and their prices fall when interest rates rise. Longer term debt secrities are sally more sensitive to interest rate changes. Conterparty and settlement risk Conterparty risk occrs when a party to a contract defalts on its obligations. A fnd which is sbject to these risks can incr considerable losses. Defalt on payments by a conterparty will adversely impact on the Underlying Fnd, and hence impacts on the retrns on yor Units. While the Underlying Fnd may invest in Emerging Markets as well as developed markets in the Asian region (exclding Japan), settlement and cstody systems may not be as well developed in Emerging Markets as they are in more matre financial markets, leading to risks sch as delays and defalts. Derivatives risk The Underlying Fnd may se financial derivative instrments sch as ftres, options, swaps, forward crrency contracts and other strctred prodcts. Transactions in financial derivative instrments carry a high degree of risk. For some financial derivative instrments, the amont of the premim (paid or received) or initial margin is small relative to the economic exposre or nominal vale of the financial derivative instrments so that transactions are leveraged or geared. A relatively small market movement will have a proportionately larger impact which may work for or against the holder. The placing of certain orders which are intended to limit losses to certain amonts may not be effective becase market conditions may make it impossible to execte sch orders. In addition to the above risks, the price of financial derivative instrments can be relatively more volatile becase a small movement in the price of the nderlying instrment may reslt in a sbstantial movement in the price of the financial derivative instrment. Borrowing risk The Fnd is permitted to borrow and the Underlying Fnd may borrow nder limited circmstances on a temporary basis. Leverage will magnify the impact of both positive and negative movements in the vale of the Fnd s interest in the Underlying Fnd and the retrn on yor Units. Secrities lending and reprchase transactions risk The Underlying Fnd may engage in secrities lending and reprchase transactions. These transactions involve risks which cold reslt in delays in the Underlying Fnd meeting redemption reqests from the Fnd or a redction in vale of the Fnd. The risks involved with secrities lending transactions inclde: (a) in circmstances where the borrower fails to retrn the secrities, there is a risk that the collateral received may be realised at a vale which is less than the vale of the secrities lent de to external factors (sch as adverse market conditions, a deterioration in the credit rating of the isser of the collateral or changes in the liqidity of the market which the collateral trades); and (b) delays in the retrn of secrities on loan may in trn affect the ability of the Underlying Fnd to meet obligations arising from redemption reqests and reinvestment. The risks involved with reprchase transactions inclde: (a) in circmstances where there is a failre on the conterparty who holds the cash of the Underlying Fnd, there is a risk that collateral received may yield less than the cash placed with that conterparty de to external factors (sch as adverse market conditions, a deterioration in the credit rating of the isser of the collateral or changes in the liqidity of the market which the collateral trades); (b) reprchase transactions frther expose the Underlying Fnd to risks associated with options or forward derivative instrments; and (c) delays in recovering cash placed ot may restrict the ability of the Underlying Fnd to meet payment obligations arising from redemption reqests and reinvestments. 10 HSBC01208.indd 10

13 Investment selection risk The investment personnel of the Underlying Fnd are experienced and professional investment managers. Their capability, the Underlying Fnd s investment objective and the asset allocation strategy of the Investment Manager and its implementation, do not garantee that there will be no poor investment decisions which reslt in loss or poor retrns on yor Units. Many factors can negatively impact on whether the Fnd s investment objectives, and its ability to generate investment retrns, are met. Legal, tax and reglatory changes risk Changes cold occr in relation to the legal, tax and reglatory regimes in any contry in the Asian region, Astralia, or any other jrisdiction in which yor investment may be connected. Sch changes may adversely affect the retrn on yor Units. Underlying Fnd risk The Fnd will invest sbstantially into the Underlying Fnd. Accordingly, any decline in the net asset vale of the Underlying Fnd may reslt in significant losses to the Fnd and the vale of yor Units. In addition to this, the Fnd is also directly exposed to any other risks/isses of the Underlying Fnd ranging from a sspension of a redemption to a drop in the performance as a reslt of changes in fees and expenses of the Underlying Fnd, and the potential change of the Management Company or investment adviser of the Underlying Fnd. In circmstances where there is a sspension of redemptions at the Underlying Fnd level, the Fnd itself may sspend withdrawals and the Fnd may cease to be liqid (as that term is defined in the Corporations Act), which wold mean that a Unitholder wold have no right to withdraw from the Fnd whilst the Fnd remained illiqid and that withdrawals cold only occr in accordance with the Corporations Act. Fnd risk There is a risk that the Fnd cold terminate, the Investment Manager cold be replaced or the investment professionals of the Investment Manager cold change. There is also a risk that investing in the Fnd may give different reslts compared with investing directly in the Underlying Fnd becase of income or capital gains accred in the Fnd, the impact of fees and expenses, and the conseqences of investment and withdrawal by other investors. Foreign exchange risk The Fnd is exposed to crrency risks as it is denominated in Astralian dollars bt will invest in shares of the Underlying Fnd (with USD as the base crrency). The Underlying Fnd may also have assets and liabilities which may be denominated in a crrency other than USD. The vale of the USD and other crrencies may move in different directions to the vale of the Astralian dollar. The Fnd does not se hedging tools (sch as forward foreign crrency contracts) to conter potential adverse movements between crrencies. Conseqently, the retrn on yor Units will flctate in accordance with changes in the foreign exchange rates between the Astralian dollar and the crrencies in which the Fnd and the Underlying Fnd s investments are denominated. Crrency risk The crrencies in which investments of the Underlying Fnd are denominated may be nstable, may be sbject to significant depreciation and may not be freely convertible. Liqidity risk The Underlying Fnd is exposed to the risk that a particlar investment or position cannot be easily nwond or offset de to insfficient market depth or market disrption. This can affect the ability of the Fnd to reqest the redemption of its shares from the Underlying Fnd, and can also have an impact on the vale of the Underlying Fnd which then in trn impacts on the vale of yor Units. Althogh the Underlying Fnd will invest mainly in liqid secrities in which the Fnd is entitled to reqest the redemption of its shares within a reasonable timeframe, there may be exceptional circmstances in which the liqidity of sch secrities cannot be garanteed. Absence of any liqidity may have a determined impact on the Underlying Fnd and the vale of its investments, which then impacts on the vale of yor Units. 7. Fees and Other Costs DID YOU KNOW? Small differences in both investment performance and fees and costs can have a sbstantial impact on yor long term retrns. For example, total annal fees and costs of 2% of yor fnd balance rather than 1% cold redce yor final retrn by p to 20% over a 30 year period (for example, redce it from $100, 000 to $80, 000). Yo shold consider whether featres sch as sperior investment performance or the provision of better member services jstify higher fees and costs. Yo may be able to negotiate to pay lower contribtion fees and management costs where applicable. Ask the fnd or yor financial adviser. TO FIND OUT MORE If yo wold like to find ot more, or see the impact of the fees based on yor own circmstances, the Astralian Secrities and Investments Commission (ASIC) website ( has a managed investment fee calclator to help yo check ot different fee options. 11 HSBC01208.indd 11

14 Fees and other costs This section shows fees and other costs that yo may be charged. These fees and costs may be dedcted from yor money, from the retrns on yor investment or from the Fnd assets as a whole. Yo shold read all the information abot fees and costs becase it is important to nderstand their impact on yor investment. Taxes are set ot in another part of this docment. Please refer to section 8. Type of Fee or Cost Amont How and when paid Fees when yor money moves in or ot of the Fnd Establishment fee The fee to open yor investment. Contribtion fee The fee on each amont contribted to yor investment. Withdrawal fee The fee on each amont yo take ot of yor investment. Termination fee The fee to close yor investment. Management Costs 1 Nil Nil Nil Nil Not applicable Not applicable Not applicable Not applicable The fees and costs for managing yor investment. 1.50% per annm of the Total Gross Asset Vale (TGAV) of the Fnd. Management costs inclde ordinary expenses of the Fnd (inclding bt not limited to the fees paid to the Cstodian, Administrator, Investment Manager and Distribtor and the administration fee and ordinary expenses of the Underlying Fnd) and the fee paid to the Responsible Entity. Management costs are accred daily and paid monthly in arrears from the assets of the Fnd. Management costs redce the net asset vale of the Fnd and are reflected in the Unit price. The amont of management costs can be negotiated. Refer to section 7.8 for frther details. Service Fees Investment Switching fee The fee for changing investment options. Nil Not applicable 1 All amonts in this section are inclsive of GST and anticipated redced inpt tax credits (to the extent either are applicable). Example of annal fees and costs This table gives an example of how the fees and costs for this prodct can affect yor investment over a 1 year period. Yo shold se this table to compare this prodct with other managed investment prodcts. EXAMPLE BALANCE OF $500,000 WITH A CONTRIBUTION OF $50,000 DURING YEAR. Contribtion Fees Nil For every additional $50,000 yo pt in yo will be charged $0. PLUS Management costs 1 EQUALS Cost of Fnd 1.50% of TGAV And, for every $500,000 yo have in the Fnd yo will be charged $7,500 each year. If yo had an investment of $500,000 at the beginning of the year and yo pt in an additional $50,000 dring that year, yo wold be charged fees of $7,500. What it costs yo will depend on the fees yo negotiate with yor fnd or financial advisor (if any). 1 We have assmed a constant investment balance of $500,000 dring the year. This example does not take into accont any abnormal operating expenses of the Fnd or Underlying Fnd. 12 HSBC01208.indd 12

15 Additional Explanation of Fees and Costs 7.1 Management costs The management costs of the Fnd are 1.50% per annm of the TGAV of the Fnd. Management Costs inclde ordinary expenses of the Fnd (inclding bt not limited to the fees paid to the Cstodian, Administrator, Investment Manager and Distribtor and the administration fee and ordinary expenses of the Underlying Fnd) and the fee paid to the Responsible Entity. Under the Constittion, the Responsible Entity is entitled to recover all expenses reasonably and properly incrred in connection with the Fnd. This incldes expenses incrred in the operation, management, compliance and promotion of the Fnd. An amont reflecting ordinary expenses of the Fnd is inclded in the management costs. The management costs do not inclde transactional and operational costs (see section 7.3 and 7.4 below) or abnormal operating expenses (see section 7.2 below). 7.2 Abnormal operating expenses The Responsible Entity is entitled to be reimbrsed for any abnormal operating expenses reasonably and properly incrred in connection with the Fnd. Abnormal operating expenses are not generally incrred in the day-to-day operation of the Fnd and are de to abnormal events like convening a Unitholders meeting, legal proceedings or amendments to the Constittion. It is not possible to provide an estimate of these expenses and as sch abnormal operating expenses are not inclded in management costs, bt are reimbrsed ot of the assets of the Fnd as and when incrred. 7.3 Transactional and operational costs Certain expenses may be incrred in managing the Fnd s investments, sch as brokerage, bank charges and government dties (transaction costs). These transaction costs are paid directly from the Fnd and reflected in the Unit price. However, crrently the Fnd does not incr significant transaction costs when it invests in either the Underlying Fnd or cash. It is not possible to provide an estimate of these transaction costs and as sch they are not inclded in the management costs, bt are reimbrsed ot of the assets of the Fnd as and when incrred. The Underlying Fnd does recover transaction related expenses (see section 7.4 below). 7.4 Fees in relation to the Underlying Fnd The Underlying Fnd charges the Fnd an administration fee and an amont reflecting the Fnd s share of the Underlying Fnd s ordinary expenses which are reflected in the management costs disclosed in the Fee table above. In addition, the Underlying Fnd incrs transaction expenses which are the costs and expenses of bying and selling portfolio secrities and financial instrments, brokerage fees and commissions, interest, taxes, stock lending charges and other transaction related expenses. These transaction expenses are acconted for on a cash basis and are paid when incrred or invoiced from the net assets of the sbfnd of the Underlying Fnd to which they are attribtable. Transaction expenses are allocated across all share classes nder the Underlying Fnd bt sch costs and expenses are not crrently specifically associated with an application for an interest in, or withdrawal from, the Underlying Fnd. It is not possible to provide an estimate of these expenses and as sch they are not inclded in the management costs. The Underlying Fnd may also incr extraordinary expenses inclding, withot limitation, litigation expenses and the fll amont of any tax, levy, dty or similar charge and any nforseen charges imposed on the Underlying Fnd or its assets. It is not possible to provide an estimate of these expenses and as sch they are not inclded in the management costs. The transaction expenses and extraordinary expenses are dedcted from the assets of the Underlying Fnd, which affects the performance of the Fnd s investment in the Underlying Fnd. 7.5 Increases or alterations to fees Under the Constittion, the Responsible Entity may charge a maximm fee of p to 2.795% per annm of the TGAV, a contribtion fee of p to 4.659% of the application price and a withdrawal fee of p to 4.659% of the withdrawal proceeds. The fees crrently charged are below these maximms. The Responsible Entity can introdce or increase the fees charged p to these maximms withot yor consent, at its discretion, inclding as a reslt of increased costs or significant changes to economic conditions. Unitholders will be given 30 days prior notice of any proposed increase in fees. The Constittion does not impose a limit on the amont that the Responsible Entity can recover from the Fnd as expenses, provided they are reasonably and properly incrred in connection with the Fnd. 7.6 Indirect Investors Indirect Investors that invest throgh an IDPS may be charged additional fees nder the IDPS. Indirect Investors shold contact their IDPS Operator for details. 7.7 Taxation and GST Unless otherwise noted, all fees and management costs specified in this PDS (inclding in the worked example above) are GST inclsive, net of any inpt tax credits (inclding redced inpt tax credits) available to the Fnd. If expenses are recovered from the Fnd, and the Responsible Entity is reqired to pay GST in respect of that expense, the Responsible Entity may recover an amont eqal to the GST from the assets of the Fnd. Please refer to section 8 for more information. 7.8 Differential fee arrangements The Distribtor has the ability to negotiate redced management costs on a case by case basis for Direct Investors who invest large amonts into the Fnd. The Distribtor may also have a rebate arrangement in place 13 HSBC01208.indd 13

16 with some Direct Investors. Please contact HSBC Investor Inqiries (see section 12) if yo are a Direct Investor and wish to discss a redction in management costs. 7.9 Payments to Operators The Distribtor may make payments to Operators from its fees (and not from the assets of the Fnd) if the Operators offer the Fnd on their investment mens. The amont of these payments may change dring the life of this PDS. There will be no commissions or trail fees paid by the Fnd to financial advisers in relation to this Fnd. 8. Tax Considerations This smmary of taxation matters affecting the Fnd and its Astralian resident Unitholders is intended as an otline of the general tax position and not as tax advice. It does not take into accont the specific circmstances of each Unitholder that may invest in the Fnd and mst not be sed as the basis pon which potential investors shold make an investment decision. As Astralian tax law is complex and changes freqently, the tax conseqences of investing in the Fnd may be different for different taxpayers at different times. This smmary is based on Astralian tax laws in force and administrative practices generally accepted as at the date of this PDS. Any of these may change in ftre withot notice and legislation introdced to give effect to annoncements may contain provisions that are crrently not contemplated. Ftre changes in taxation laws, their interpretation or associated administrative practices cold affect the tax treatment of the Unitholders investments. All references in this smmary to legislative provisions are to provisions of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 (together, the Tax Act). This smmary does not deal with the position of Unitholders who are assessed on disposal of their Units in the Fnd otherwise than nder the Astralian capital gains tax provisions, sch as Unitholders who are in the bsiness of trading or dealing in nits or secrities. It is recommended that all potential investors seek their own independent taxation advice regarding the tax conseqences of an investment in the Fnd, taking into accont their particlar circmstances, before making any investment or other decision in relation to the Fnd. The financial year of the Fnd begins on 1 Jly each year and ends on 30 Jne of the following calendar year. Any statements referred to in this section will be provided only to Direct Investors of the Fnd (inclding Operators), bt Indirect Investors will not receive sch statements. 8.1 Taxation of the Fnd Under the Constittion, the distribtable income (as that term is defined in the Constittion) of the Fnd in respect of a financial year will be allocated to Unitholders. Accordingly, no Astralian income tax shold be payable by the Responsible Entity on behalf of the Fnd, provided there is an amont of distribtable income. The taxable income of the Fnd will form part of a Unitholder s assessable income for that year, in proportion to their entitlement to distribtable income, even thogh distribtable income may not be paid ntil some time later or may be reinvested. As a reslt, Unitholders may be sbject to tax on more than they receive. 8.2 Astralian tax conseqences of distribtions from the Fnd Unitholders who receive distribtions in a financial year will be provided with an annal distribtion statement detailing relevant taxation information, inclding any foreign taxes withheld and retrns of capital. The tax conseqences for Unitholders depend on the components of the distribtable income of the Fnd to which Unitholders have become entitled. 8.3 The controlled foreign company (CFC) regime It is not expected that the Fnd wold have an interest in a CFC. However, this may change if the Fnd, other Astralian entities and their associates hold 50% or more of the dividend, voting or capital interests in the Underlying Fnd. 8.4 The foreign investment fnd (FIF) regime The Fnd may be sbject to the FIF regime in respect of the shares in the Underlying Fnd (Shares) held by the Fnd. As a reslt of the manner in which the Responsible Entity intends to manage the Fnd, the Fnd shold not be sbject to the FIF regime, as it is nlikely that the Fnd will hold FIF assets at the end of each financial year. It is expected that the Shares will be disposed of before the end of each financial year and re-acqired again immediately in the following financial year. If the Shares are disposed of before the end of each financial year, the income of the Fnd for the financial year will inclde any gain arising for the Fnd from that disposal. To the extent to which there is any distribtable income arising from the disposal of Shares in this manner, that amont will be distribted, bt the Unitholders will be reqired to re-invest that amont in additional nits. The main conseqences for Unitholders shold be that: (a) (b) each Unitholder wold be assessed on his or her proportionate share of any income arising to the Fnd pon the disposal of the Shares (bt discont capital gains concessional treatment shold not be available); and each Unitholder shold obtain a cost or cost base for his or her additional nits eqal to their isse price at that time. However, if it shold happen that the Fnd holds Shares on the last day of a financial year and the FIF regime applies to these Shares, Unitholders may be assessed on their portion of any gains in the vale of these Shares at the end of the financial year, even thogh those gains are nrealised. 14 HSBC01208.indd 14