This document is a second Addendum dated May 2013 to the prospectus of HSBC Global Investment Funds dated January 2013 (the “Prospectus”), and may not be distributed without such Prospectus and its first Addendum dated February 2013. This Addendum details the amendments to the Prospectus. The Prospectus is only valid when read in combination with the first Addendum dated February 2013 and with this second Addendum.
1. Page 11 of the Prospectus
In Section 1.4 “General Information, General Risk Considerations”, the risk consideration for “Non-Investment Grade Debt” is amended to read as follows:
(8) Non-Investment Grade Debt
A sub-fund which invests in Non-Investment Grade fixed-income securities carries higher credit risk (default risk and downgrade risk), liquidity risk and market risk than a sub-fund that invests in investments in Investment Grade fixed-income securities.
Credit risk is greater for investments in fixed-income securities that are rated below Investment Grade or which are of comparable quality than for Investment Grade securities. It is more likely that income or capital payments may not be made when due. Thus the risk of default is greater. The amounts that may be recovered after any default may be smaller or zero and the sub-fund may incur additional expenses if it tries to recover its losses through bankruptcy or other similar proceedings. The market for these securities may be less active, making it more difficult to sell the securities. Valuation of these securities may also be more difficult.
Adverse economic events may have a greater impact on the prices of Non-Investment Grade fixed-income securities. Investors should therefore be prepared for greater volatility than for Investment Grade fixed-income securities, with an increased risk of capital loss, but with the potential of higher returns.
The market liquidity for Non-Investment Grade fixed-income securities can be low and there may be circumstances in which there is no liquidity of Non-Investment Grade fixed-income securities. As a result of significant redemption applications received over a limited period in a sub-fund invested in Non-Investment Grade fixed-income securities, the Board of Directors may invoke the procedure permitting the deferral of shareholder redemptions (See Section 2.4 (6). “Deferral of Redemption”). 2. Page 11 of the Prospectus
In Section 1.4 “General Information, General Risk Considerations”, a new risk consideration “High Yield Debt” is added after (8) “Non-Investment Grade Debt” and the numbering of the following risk considerations throughout the Section is amended accordingly:
(9) High Yield Debt
A sub-fund which invests in high yield fixed-income securities carries higher risks of higher credit risk (default risk and downgrade risk), liquidity risk and market risk than a sub-fund that invests in Investment Grade fixed-income securities. Credit risk is greater for investments in high yield fixed-income securities which include fixed-income securities rated below Investment Grade and higher yielding fixed income securities rated Investment Grade but of comparable quality than for Non-Investment Grade securities. It is more likely that income or capital payments may not be made when due. Thus the risk of default is greater. The amounts that may be recovered after any default may be smaller or zero and the sub-fund may incur additional expenses if it tries to recover its losses through bankruptcy or other similar proceedings. The market for these securities may be less active, making it more difficult to sell the securities. Valuation of these securities may also be more difficult. Adverse economic events may have a greater impact on the prices of high yield fixed-income securities. Investors should therefore be prepared for greater volatility than for Investment Grade fixed-income securities, with an increased risk of capital loss, but with the potential of higher returns.
The market liquidity for high yield securities can be low and there may be circumstances in which there is no liquidity of high yield securities. As a result of significant redemption applications received over a limited period in a sub-fund invested in high yield fixed-income securities, the Board of Directors may invoke the procedure permitting the deferral of shareholder redemptions (See Section 2.4 (6). “Deferral of Redemption”).
3. Page 49 of the Prospectus
In Section 3.2. “Sub-Funds Details”, (2) “Bond Sub-Funds”, the Reference Currency, Profile of the Typical Investor and Investment Adviser sections of HSBC Global Investment Funds – Global Short Duration High Yield Bond remain unchanged, while the Investment Objective, Risk Management, Sub-Investment Adviser and Fees and Expenses sections of this sub-fund are amended to read as follows:
Investment Objective
The sub-fund invests for long term total return in a portfolio of global high yield securities whilst maintaining low interest rate risk. The sub-fund invests (normally a minimum of 90% of its net assets) in Non-Investment Grade and unrated fixed income securities and other higher yielding bonds issued by companies, agencies or governments in developed markets and denominated in or hedged back into US dollars (USD). However, for liquidity and/or risk management purposes, the sub-fund may also invest up to 30% in Investment Grade fixed income securities.
On an ancillary basis, the sub-fund may also invest up to 10% of its net assets in Asset Backed Securities (“ABS”) and in fixed income securities issued in Emerging Markets.
The sub-fund will not invest more than 10% of its net assets in securities issued by or guaranteed by any single sovereign issuer with a credit rating below investment grade.
The sub-fund may achieve its investment policy and limits by investing up to 10% of its net assets in units or shares of UCITS and/or other open-ended funds (including other sub-funds of HSBC Global Investment Funds).
The sub-fund’s primary currency exposure is to the US dollar. However, the sub-fund may also have (up to 10% of its net assets) exposure to non-USD currencies including Emerging Markets local currencies to enhance return.
The sub-fund may also invest in financial derivative instruments such as futures, options, swaps (including, but not limited to, credit default swaps and total return swaps), forward currency contracts and in other currency and credit derivatives. The sub-fund intends to use such financial derivative instruments for, inter alia, the purposes of managing interest and credit risks and currency positioning but also to enhance return when the Investment Adviser believes the investment in financial derivative instruments will assist the sub-fund in achieving its investment objectives.
Risk Management
The global exposure relating to this sub-fund will be calculated using a relative Value-at-Risk approach benchmarked against the BofA Merrill Lynch 1-3 Year BB-B US and Euro Non-Financial High Yield 2% Constrained (USD hedged) index.
The average leverage of the sub-fund, under normal market conditions, calculated as the sum of the notionals of the financial derivative instruments used, is expected to be 100%, although higher levels are possible under certain circumstances, including but not limited to, during high levels of market volatility (when financial derivative instruments are generally used to manage the risk of the portfolio) or stability (when financial derivative instruments are generally used to access the relevant markets or securities in a more cost efficient way).
Sub-Investment Adviser
The Investment Adviser has appointed HSBC Global Asset Management (France) to provide discretionary investment management services in respect of a part of the sub-fund’s portfolio.
Fees and Expenses
Class of Shares* A B E I X Z
Management Fee (%) 0.90 0.45 1.30 0.45 0.40 0.00 Operating, Administrative and Servicing Expenses (%) 0.25 0.25 0.25 0.20 0.15** 0.20
Class of Shares* J P W
Management Fee (%) 0.60 n/a 0.00 Operating, Administrative and Servicing Expenses (%) 0.20 n/a 0.00
* For further details regarding the Dealing Currencies or Share Class Reference Currencies of the different Class of Shares, please refer to Section 1.3. “Share Class Information” of the Prospectus.