Docstoc

HSBC Chinese Equity Fund

Document Sample
HSBC Chinese Equity Fund Powered By Docstoc
					                                                                             FAQs
HSBC Asset Management
HSBC Chinese Equity Fund
Be part of the emergence of China



      The HSBC Chinese Equity Fund provides                          •   Hong Kong H Shares - mainland companies (registered in
      investors with the potential to enhance returns                    China) that are listed in Hong Kong.
      by diversifying their investment portfolio and                 •   Hong Kong China Plays - companies incorporated in Hong
      by participating in the growth potential of the                    Kong with significant business interests in China.
      Chinese economy.
                                                                     •   Hong Kong Red Chips - companies set up or registered in
      The following are answers to some of the                           Hong Kong with mainland China management.
      frequently asked questions about the HSBC
                                                                     •   Shenzhen B Shares - companies incorporated in mainland
      Chinese Equity Fund.
                                                                         China and listed (in foreign $) on the B-share market of
                                                                         Shenzhen.
      About the Fund
                                                                     •   Shanghai B Shares - companies incorporated in mainland
  1 What are the investment objectives of the HSBC                       China and listed (in foreign $) on the B-share market of
    Chinese Equity Fund?                                                 Shanghai.
      The HSBC Chinese Equity Fund (‘Fund’) aims to provide:             Note: Shenzhen and Shanghai A shares are traded and
                                                                         quoted in local currency (the Renminbi) and are not
  •   long-term capital growth (over a period of at least five            generally available to foreign investors.
      years) by investing primarily in a diversified portfolio
      of equity and equity-related securities of publicly-
                                                                     5 What is the benchmark for the Fund?
      traded companies registered, or with an official listing,
      on a stock exchange in the People’s Republic of China              The benchmark for the HSBC Chinese Equity Fund is the
      (‘China’), as well as investing in securities of public            CLSA China World Index (Credit Lyonnaise Securities
      companies that have a significant business or investment            Asia) – in Australian dollars unhedged over rolling five-
      link with China; and                                               year periods.
  •   net returns above its benchmark, which is the CLSA
      China World Index (Credit Lyonnaise Securities Asia)           6 Why has HSBC chosen the CLSA China World
      – Australian dollar unhedged over rolling five-year               index as the benchmark for the Fund?
      periods.
                                                                         We believe the CLSA China World Index is the most
                                                                         representative index against which the Fund should be
  2 What will the Fund invest in?
                                                                         compared. The index is appropriate because it:
      The Fund will invest primarily in equity and equity-           •   includes all classes of China shares weighted by market
      related securities issued by large, actively traded                capitalisation, which reflects the investment universe of
      companies. It may also include securities in appropriate           our Fund; and
      smaller companies and may invest in Chinese warrants
                                                                     •   excludes Hong Kong blue chip and Taiwan stocks that are
      and similar securities.
                                                                         not in our investment universe.
  3 Will the Fund invest purely in China?                                Other common indices are not appropriate for
                                                                         comparative purposes, for the following reasons:
      The Fund will invest primarily in equity securities of
                                                                     •   MSCI China Free — one stock, China Mobile, accounts
      companies listed on stock exchanges in China, including
                                                                         for 21 per cent of index weighting
      Hong Kong SAR. The Fund will also invest in securities
      of companies listed on other stock exchanges outside           •   MSCI Golden Dragon — China stocks account for only
      of China, but which have a significant business or                  22 per cent of the index, with the balance in Hong Kong
      investment link with China.                                        blue chips (42 per cent) and Taiwan (36 per cent)
      A portion of the Fund’s holdings may be in the form of         •   Hang Seng China Enterprise Index — Includes only H
      cash or cash equivalents.                                          shares
                                                                     •   Hang Seng China Corporate Index — Includes only red
  4 What types of shares can the Fund invest in?                         chips

      The Fund will invest in the five types of Chinese shares that
      are generally available to foreign investors. They are:
          Chinese Equity Fund



Frequently asked questions

7 How does the Fund compare to similar funds?                       11 What advantages does HSBC have when it comes
                                                                       to investing in China?
  As at September 2004, the HSBC Chinese Equity Fund has
  no directly comparable fund in the Australian market. It is the      HSBC Asset Management prides itself on local knowledge.
  only Chinese Equity retail unit trust available in Australia.        We believe our long-standing presence in Asia, proximity
  The closest competitor is the Aberdeen China Opportunities           and access to local companies and skilled investment
  Fund, which is a ‘wholesale’ fund (typically available via           professionals give us an advantage over our competitors. We
  investor master trusts or wrap accounts) with a minimum              are on the ground and intimately involved in the market. The
  investment of A$20,000.                                              HSBC Group has offices in 11 Chinese cities, and our staff of
                                                                       over 1,000 includes more than 70 investment professionals.
                                                                       Over 90 per cent of HSBC staff in China were recruited
  Who manages the Fund?                                                locally, which means they not only know the local market,
                                                                       they also understand the language and culture in which
8 Who manages the HSBC Chinese Equity Fund?                            business is conducted. Because our investment specialists live
  HSBC Asset Management (Australia) Limited is the                     in the markets in which we invest, they can easily visit local
  responsible entity and issuer of units in the Fund.                  companies. Last year, the Asia (ex-Japan) team made over
                                                                       1,000 company visits.
9 Who is the investment adviser for the Fund? What                     Globally, HSBC Asset Management has assets under
  does this mean?                                                      management of over A$254 billion, of which over A$32.4
                                                                       billion is managed by the Asia (ex-Japan) team. Of course,
  The investment adviser for the HSBC Chinese Equity Fund              HSBC didn’t build this portfolio overnight. We have a long
  is HSBC Asset Management (Hong Kong) Limited. This                   history of doing business in China. We trace our roots in
  means that investment decisions are made by HSBC Asset               China back to 1865. And in 1973, HSBC was one of the first
  Management investment specialists located in Hong Kong.              fund managers to open an office in Hong Kong.
  The same team that manages HSBC’s flagship Chinese
  equity fund – the HSBC GIF Chinese Equity Fund – will
  manage HSBC Australia’s Chinese equity fund. The Fund’s              Why invest in China?
  investment objectives and strategy are identical to those of
  the flagship fund, which is an overseas investment vehicle         12 Why should investors consider a long-term
  that is managed by HSBC Asset Management (Hong Kong)                 investment in China? Is China’s growth sustainable?
  Limited. The flagship fund is one of the largest and longest-         Should investors be concerned about China’s
  running Chinese equity funds in the world, with over A$1.8           political environment?
  billion in funds under management (as at 31 July 2004). It
                                                                       For answers to these and other questions you may have about
  commenced in June 1992 and is sold in over 20 countries.
                                                                       investing in China, please refer to the Meet the Manager
                                                                       brochure, featuring an interview with Richard Wong,
10 Who actually manages the Fund’s portfolio? And                      portfolio manager for the HSBC Chinese Equity Fund.
   what are their credentials?
                           The HSBC Chinese Equity Fund’s           13 What type of investor is the HSBC Chinese Equity
                           portfolio manager is Richard Wong.          Fund suitable for?
                           Richard is a Director of HSBC Asset
                                                                       The Fund may be suitable for investors seeking capital
                           Management (Hong Kong) Limited
                                                                       growth over a long-term investment horizon. Investors in this
                           and Director, Asia (ex-Japan)
                                                                       Fund should be willing to accept a high level of volatility in
                           Equities. As Head of the China team,
                                                                       the value of their investment. It is not suitable for those with
                           Richard has overall responsibility for
                                                                       a very low tolerance for risk in their returns, or for those who
                           Chinese equities investment. Richard
                                                                       have a short time horizon for their investments. The minimum
                           manages HSBC’s flagship Chinese
                                                                       suggested time horizon is five years.
                           equity fund, the HSBC GIF Chinese
  Equity Fund, which is one of the largest and longest-running
  Chinese equity funds in the world, with over A$1.8 billion in     14 Who may invest in the HSBC Chinese Equity Fund?
  funds under management (as at 31 July 2004).                         The Fund is open for investment to persons receiving the
  For more information on Richard, please refer to the Meet the        product disclosure statement (PDS) in Australia. The PDS
  Manager brochure, featuring an interview with Richard Wong.          has not been registered as an investment offer in any other
                                                                       country.
FAQs
15 How does the HSBC Chinese Equity Fund fit into a                    20 Why have an ‘initial offer period’ and ‘minimum
   client’s existing portfolio?                                           fundraising’?
   For investors with an appropriate tolerance for risk, the              The reason for the initial offer period is to encourage
   HSBC Chinese Equity Fund should represent only a small                 investors to invest in the Fund. If the minimum fundraising
   part of their diversified international equity holdings.                amount is not raised, the Fund will not proceed. This decision
   Investors should consult their financial adviser regarding the          has been made in the best interests of investors, as it would
   suitability of the HSBC Chinese Equity Fund as part of their           be very difficult to closely mirror the investment strategy of
   total investment portfolio.                                            the flagship HSBC GIF Chinese Equity Fund with a smaller
                                                                          fund size. If the Fund does not proceed, investors will miss
16 How should investors approach China?                                   the opportunity of accessing the investment capability and
                                                                          skill of the HSBC Asia (ex Japan) investment team, who
   The greater the opportunity, the greater the risk - China is           are experts in the market. HSBC has a long and successful
   no exception to this investment rule. Despite the wonderful            history in Asia – we trace our roots back to 1865 – and
   opportunities it offers, investing in China is not for short-term      the portfolio manager of the HSBC Chinese Equity Fund,
   or conservative investors. The investment horizon should be            Richard Wong, currently manages one of the world’s largest
   at least five years. It’s a volatile market and many investors          and longest-running Chinese equity funds.
   may be tempted to time the market. This is a risky strategy
   with China. Instead, it’s much wiser to make a long-term
                                                                       21 When and why will the Fund close? What if I miss
   commitment so investors can ride out the ups and downs.
                                                                          out?
   Because of its inherent volatility, for most investors China
   should represent only a small percentage of a high-risk                The Fund will temporarily close to new investors at 5.00pm
   investor’s equity exposure.                                            AEDT on Friday, 17 December 2004.
                                                                          If an investor misses out on investing in the HSBC Chinese
                                                                          Equity Fund during the initial offer period, we anticipate
   What is the ‘initial offer period’ and
                                                                          re-commencing accepting applications from as early as April
   what does this mean?                                                   2005, providing the minimum fundraising amount is raised.
                                                                          However, by not investing during the initial offer period,
17 What is the ‘initial offer period’?
                                                                          investors run the risk of the Fund not proceeding at all, and
   The HSBC Chinese Equity Fund will be open to receive                   thus missing out on the opportunity to invest with HSBC
   applications for an initial offer period, between 1 October            – experts in the Chinese equity market.
   2004 and 5.00pm on 17 December 2004. The Fund will be
   temporarily closed to new investors at 5.00pm AEDT on               22 Will the Fund re-open after the initial offer period?
   17 December 2004, although we anticipate that we will re-              If so, for how long?
   commence accepting applications in April 2005. We reserve
   the right to accept applications for other classes of units in         At this stage, we anticipate that we will re-commence
   the Fund after 17 December 2004.                                       accepting applications in the Fund in April 2005, provided
                                                                          that the minimum fundraising is reached by the end of the
                                                                          initial offer period. We anticipate that the Fund will remain
18 What does ‘minimum fundraising’ mean?
                                                                          open from this time onwards.
   The minimum fundraising is a dollar amount that the Fund
   needs to raise in order to be viable. The minimum fundraising       23 Why should I invest in the HSBC Chinese Equity
   amount is needed so that HSBC Australia’s Chinese Equity               Fund now, during the initial offer period, rather
   Fund can mirror the Group’s flagship Chinese Equity Fund                than after the Fund re-opens?
   – the HSBC GIF Chinese Equity Fund. The aim is to raise
   total applications of at least A$20 million (although we               If investors hold off investing during the initial offer period,
   will proceed with a lower amount where the Fund is able to             the risk is that the minimum fundraising amount will not
   mirror the flagship fund). If we do not receive the minimum             be reached, and the Fund will not proceed. Investors will
   fundraising amount by the end of the initial offer period, the         miss the opportunity of investing in a Chinese equity fund
   Fund will not proceed. In this case, application money will            managed by the same team of experts that manage one of the
   be returned to investors as soon as is practicable.                    world’s largest and longest-running Chinese equity funds.

19 What interest will I earn during the initial offer period?
   Applications received during the initial offer period will
   be held in a non-interest bearing trust account, in line with
   standard industry practice. This means investors will not
   receive any interest during the initial offer period.
                                                                                               FAQs
  HSBC Asset Management




      24 From what date will the Fund’s investment                                       the Australian dollar falls in relation to foreign currencies,
         performance be calculated?                                                      the Australian dollar value of foreign securities will rise
                                                                                         because selling them will bring investors a higher amount
          Provided that the minimum fundraising amount is reached
                                                                                         in Australian dollars.
          by the end of the initial offer period, we anticipate the
          Fund’s performance will be calculated from Monday,                             Conversely, when the value of the Australian dollar rises,
          20 December 2004.                                                              the Australian dollar value of foreign securities falls
                                                                                         because their sale would earn fewer Australian dollars.
                                                                                         The currency in China is the yuan, which is currently
          Managing risks                                                                 pegged to the US dollar.

      25 What are the significant risks associated with
         investing in the HSBC Chinese Equity Fund?                                      Product details
          The following are the main risks associated with investing                 27 What are the key features of the Fund?
          in the Fund:
                                                                                         Minimum investment                                            $5,000
      •   Individual investment risk
                                                                                         Minimum additional investment                                 $1,000
      •   Market risk
      •   Interest rate risk                                                             Minimum withdrawal                                            $1,000
      •   Currency risk                                                                  Minimum balance                                               $5,000
      •   Derivative risk                                                                Income distribution frequency                         Yearly, after
      •   Foreign market risk                                                                                                              the end of June
      •   Concentration risk                                                             Unit prices and performance information for all
      •   Fund risk                                                                      HSBC funds can be found on our website at
                                                                                         www.assetmanagement.hsbc.com.au or by calling the
          For more information, please refer to page 5 of the HSBC
                                                                                         HSBC Client Services team on 1800 331 613.
          Chinese Equity Fund product disclosure statement dated
          1 October 2004.                                                                You will find more detailed information on
                                                                                         the HSBC Chinese Equity Fund in the product
      26 How will currency fluctuations affect the Fund’s                                disclosure statement (PDS) issued 1 October 2004.
         performance?                                                                    For a copy of the PDS, speak to your financial
                                                                                         adviser, contact the HSBC Client Services Team
          Funds that hold investments in foreign securities are
                                                                                         on 1800 331 613 or visit our website at
          subject to currency risk to the extent that this exposure
                                                                                         www.assetmangement.hsbc.com.au.
          is not directly hedged by foreign exchange contracts.
          Simply put, changes in the currency exchange rates
          between Australia and a country where a Fund holds an
          investment will affect the Australian dollar value of that
          investment, because it must be bought and sold with a
          foreign currency. Ignoring other risks, when the value of




This publication is issued by HSBC Asset Management (Australia) Limited (ABN 34 004 778 545, AFSL 232594) (‘HSBC’) who is the responsible entity of the
HSBC Chinese Equity Fund. Units in the HSBC Chinese Equity Fund are issued by HSBC. Copies of the product disclosure statement are available from HSBC
at Level 29, 140 William Street, Melbourne Victoria 3000. You should consider the product disclosure statement in deciding whether to acquire or continue to hold
units in the fund. HSBC, its officers, employees and agents believe that the information in this document is correct at the time of compilation but do not warrant the
accuracy of that information. Forecasts in this publication are predictive in character, based on numerous assumptions including the forecast outlook for key variables
and may be affected by various factors including inaccurate assumptions, risks and unforeseen events. Accordingly, actual results may differ materially from those
forecast. This publication provides general information only and is not intended to constitute general or personal financial product advice or a recommendation.
It has not been prepared taking into account your particular objectives, financial situation or needs. Therefore, before making an investment decision based on any
information contained in this publication, you should assess whether the information is appropriate to your particular objectives, financial situation and needs. You
can either assess the information yourself or seek the help of an adviser. You should obtain and consider the product disclosure statement relating to a financial
product before making any decision about whether to acquire the product. Save for statutory liability which cannot be excluded, HSBC disclaims all responsibility
for any loss or damage which any person may suffer from reliance on information in this document whether the loss or damage is caused by any fault or negligence
on the part of HSBC or otherwise.

				
DOCUMENT INFO