HSBC Asia Pacific (Ex Japan) Dividend Yield Fund (An open ended Fund of Funds Scheme)

New Fund Offer | 03 February to 17 February 2014

India Outlook

3

India: Outlook is improving

India might be in a cyclical slowdown but structurally it is still one of the fastest growing economies

Currency looks to be stable

─ Current Account Deficit (difference between imports and exports of a country) appears to be in control

─ Increase in Foreign exchange reserves

Corporate performance data is expected to improve on back of rising exports

The valuation differential between cyclical (eg. Financials, consumer discretionary sectors , etc.) and

defensives (FMCG, Pharma, etc.) are high

─ Valuation differential may narrow

─ Volatility in the equity markets provide opportunities

Reasonable valuations - ~14.85x one year forward earnings (as on 30 November 2013)*

Elections are just around the corner

Monetary framework may be reformed by the RBI

─ RBI Governor, Dr. Rajan has more focus on wage-price spiral in inflation

─ Inflation may have peaked already

* Source: Bloomberg

4

However, a long way to go…..

Challenges for Indian Economy

Sluggish Gross Domestic Product (GDP) growth rate

Sticky inflation, weak Index of Industrial Production (IIP) numbers

The cost of capital (long term interest rates) continue to remain high

– Weakening confidence for the investment cycle to resume

FII flows may reverse with the announcement of US Federal Reserve on Quantitative

Easing (QE) tapering

Delicate political situation

– Uncertainty around Indian General Elections

Overall market outlook is improving but uncertainty still remains

5

Offshore Fund of Funds may provide an opportunity

Offshore funds provide geographic and sector diversification

─ Provides opportunities to invest in various themes

─ Helps in diversifying a predominantly domestic portfolio

Investors investing in offshore funds would get access to the global brands, which benefit

from global business and consumption

6

Why Dividend Yield Fund for Indian investors

Dividend Yield funds are a value proposition in volatile markets

– Dividend yield refers to the cash flow received from every rupee invested in shares of a company

– Generally, high dividend yielding companies, do not modify their dividends to reflect trading conditions

– Safeguard against extreme volatility as such companies are considered by many value investors

Dividend yield funds typically invest in blue chip companies which:

– Have a history of paying appealing dividends

– Consistent performers (in terms of earnings) over the long-term

Dividend yield funds typically carry lower risk as compared to growth oriented equity funds

Asia Outlook: Opportunity for stock-pickers

8

We are returning to a stock-picker’s market

The market has moved away from “risk on/risk off”*

Greater return dispersion drives opportunities for active managers

Source: Nomura December 2013

Sector USD performance as at 30

November 2013

Information Technology 13.07%

Consumer Discretionary 12.70%

Health Care 8.83%

Utilities 5.39%

Industrials 3.09%

Financials 3.06%

Consumer Staples 2.32%

Telecommunication Services 0.80%

Materials -5.69%

Energy -9.49%

MSCI Asia (ex Japan) Year to Date performance by sector MSCI Asia (ex Japan) average pair-wise sector correlations

Source: HSBC Global Asset Management December 2013

Investment involves risks. Past performance is not indicative of future performance.

*Risk-on risk-off refers to changes in investment activity in response to global economic patterns. During periods when risk is perceived as low, risk-on risk-

off theory states that investors tend to engage in higher-risk investments and vice-versa.

9

Valuations are attractive – especially given profitability

Asia ex Japan (AxJ) equities almost a standard

deviation cheap

Valuations have collapsed, but profitability has not

Source: Morgan Stanley December 2013

1.50x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

Se

p-9

5S

ep

-96

Se

p-9

7S

ep

-98

Se

p-9

9S

ep

-00

Se

p-0

1S

ep

-02

Se

p-0

3S

ep

-04

Se

p-0

5S

ep

-06

Se

p-0

7S

ep

-08

Se

p-0

9S

ep

-10

Se

p-1

1S

ep

-12

Se

p-1

3

MSCI AxJ Trailing PB

Avera

+1

-1 S.D.

8%

9%

10%

11%

12%

13%

14%

15%

16%

1.00x

1.50x

2.00x

2.50x

3.00x

3.50x

Jan-00Jan-02Jan-04Jan-06Jan-08Jan-10Jan-12

MSCI AxJ Trailing PB & 12M Forward ROE

Trailin…

10

2014 earnings expectations are attractive

13.1% Earnings Per Share (EPS) growth expected in 2014, with earnings momentum stable

Source: MSCI, Thomson Reuters Datastream, Consensus Economics, HSBC;

table shows real GDP growth

Sales growth

(%)

EBITDA growth

(%)

EPS growth

(%)

GDP growth (%)

China 7.5 9.6 9.3 7.5

Hong Kong 9.2 11.4 9.3 3.6

India 10.6 16.3 17.9 5.6

Indonesia 11.3 11.9 14.4 5.6

Korea 6.9 14.7 21.1 3.5

Malay sia 7.0 15.2 7.9 5.1

Philippines 10.1 11.1 5.6 6.3

Singapore 8.5 8.6 8.9 3.7

Taiw an 6.1 11.6 11.0 3.4

Thailand 8.3 12.4 14.0 4.4

Asia ex-Japan 7.5 10.9 13.1 4.9

MSCI AxJ earnings momentum Earnings estimates for 2014

Source: MSCI, Thomson Reuters Datastream, HSBC; earnings momentum is change

in 12-month forward EPS forecast

-40

-30

-20

-10

0

10

20

30

40

94 96 98 00 02 04 06 08 10 12

6 mth 3 mth

Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such

forecasts, projections or targets. For illustrative purpose only.

11

Catch-up potential: Emerging vis-à-vis Developed markets?

Developed markets (DM) have outperformed emerging markets (EM) (refer chart below)

Investors are underweight emerging markets

Time for rotation?

Global EM (GEM) allocation in global funds relative to MSCI

World index

DM have outperformed EM

Source: Citi December 2013 Note: All MSCI Indices rebased to 100 as of 1 January 2012

Source: MSCI, Thomson Reuters Datastream, HSBC, November 2013

80

85

90

95

100

105

110

115

Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13

USA EUROPE ASIA

12

Asian equities - Not yet rewarded for recovery

Asia has achieved the best earnings recovery post the global financial crisis, but this is not yet

reflected in valuations

EPS level post pre-GFC peak

Pre-GFC EPS

peak

Source: MSCI, I/B/E/S, Thomson Reuters Datastream, HSBC November 2013

5

7

9

11

13

15

17

19

Nov-03 May-05 Nov-06 May-08 Nov-09 May-11 Nov-12

MSCI AxJ MSCI ACWI

fwd PE

12m forward P/E valuations

13

Where are the opportunities?

Defensives (sectors like FMCG, Pharma, etc.) are priced unreasonably high

Source: Morgan Stanley December 2013

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

May-01

Dec-01

Jul-02 Feb-03

Sep-03

Apr-04 Nov-04

Jun-05

Jan-06

Aug-06

Mar-07

Oct-07 May-08

Dec-08

Jul-09 Feb-10

Sep-10

Apr-11 Nov-11

Jun-12

Jan-13

Aug-13

MSCI AxJ Cyclicals MSCI AxJ Defensives MSCI AC Asia ex JP Financials

12-Month Forward PE Relative to MSCI Asia ex Japan

14

Where are the opportunities?

Cyclicals (sectors like Consumer discretionary, Materials, etc.) present better opportunities

MSCI Asia Pacific ex Japan country Price/Book (PBV) (2012) v Return

on Equity (ROE) (2013)

MSCI Asia Pacific ex Japan sector Price/Book (PBV) (2012) v Return on

Equity (ROE) (2013)

Source: Morgan Stanley December 2013

Consumer Discretionary

Consumer Staples

Energy

Financials

Health Care

Industrials

Information Technology

Materials

Telecom Utilities

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

7% 9% 11% 13% 15% 17% 19%

2013 ROE 2

01

2 P

BV

APxJ

Australia

China

Hong Kong

India

Indonesia

Korea

Malaysia

New Zealand

Philippines

Singapore

Taiwan Thailand

0.5

1.0

1.5

2.0

2.5

3.0

3.5

7% 9% 11% 13% 15% 17% 19% 21% 23%

2013 ROE

20

12

P

BV

Why a High Dividend strategy in Asian equities?

16

Dividend yield strategies work over the long-term because they are disciplined

Typically focusing on well-run companies at attractive valuations

Long-term outperformance

0

200

400

600

800

1,000

1,200

De

c 9

9

De

c 0

0

De

c 0

1

De

c 0

2

De

c 0

3

De

c 0

4

De

c 0

5

De

c 0

6

De

c 0

7

De

c 0

8

De

c 0

9

De

c 1

0

De

c 1

1

De

c 1

2

MSCI APxJ Quintile 1 by div yield MSCI APxJ

(Index)

MSCI Asia Pacific ex Japan: Highest yielding stocks versus broad index

Source: CLSA Asia Pacific, as at November 2013. Equal-weighted US-dollar total return with quarterly rebalancing. Investment involves risks. Past performance is not indicative of

future performance.

17

4.7

3.63.3

2.7

2.11.9

4.3

2.9

2.4

3.0

1.9

0.7

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

MSCI A

ustra

lia

MSCI E

urop

e

MSCI A

PxJ

MSCI W

orld

MSCI U

SA

MSCI J

apan

Aus

tralia

US

HK

UK

Ger

man

y

Japa

n

Dividend yield remains a good source of income

Comparative yields

Yie

ld %

Source: HSBC, Bloomberg, Goldman Sachs as at January 2014

Equity dividend yield 10 Year government bond yield

18

Asia is not just about growth

Dividends remain a key driver of long-term total shareholder return in Asia.

Total equity return since 1998

Source: CLSA Asia Pacific Research, November 2013. Returns are based on MSCI indices. Investment involves risk. Past performance is not indicative of future performance.

AxJ delivers 2nd highest dividend return

since 1998. Australia is the highest.

(50)

0

50

100

150

200

Europe Australia USA Japan AsiaxJP

Price Return

Dividend Return

(%)

19

There is structural support for the asset class

Asian dividend funds not historically popular. This is changing.

Source: Citi, as at November 2013

Demand illustrated in strong inflows… …but the market is not saturated.

Source: Macquarie, as at November 2013

AxJ dividend funds

double, but remain a

fraction of total AUM

Source: Citi as at November 2013

20

Why? A recognition of improved fundamentals

Asia already had its financial crisis – in 1997

Subsequent improvement in management, governance and focus on shareholder return

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Source: Citi, as at September 2012

MSCI Asia (ex Japan) free cash flow/sales

…better care of the shareholder Better corporate management…

Dividends per share index rebased to 100

Source: CLSA, November 2013

50

100

150

200

250

300

350

Asia ex Japan

Europe

USA

21

2.8

3.3

4.7

4.3

3.7 3.7

3.03.3

3.1 3.0

2.3

1.7

1.2

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

MSCI A

xJ

MSCI A

PxJ

Aus

tralia

Thaila

nd

China

Singa

pore

Hon

g Kon

g

Taiwan

Malay

sia

Indo

nesia

Philip

pine

sIn

dia

Kor

ea

A wide universe of opportunities for yield

2013 estimated dividend yield

Div

idend Y

ield

%

Source: Goldman Sachs Global ECS Research, January 2014. Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed

in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets. For illustrative purposes only.

Australia: traditionally

a strong source of

dividend yield

China also a good

source

India/Korea: Low

payout ratios

22

In developed markets, yield concentrated in financials and utilities

There are interesting opportunities for “cyclical yield” in Asia Pacific ex Japan

Source: Citi Research November 2013,

Cyclical Yields refer to high dividend yielding stocks in the cyclical sectors like Technology, Discretionary, Industrials, energy, Materials etc.

Asian yield lies in non-traditional sectors

Highest-yielding dividend stocks by sector

Sector US EU Asia Pacific ex

Japan

Consumer Discretionary 7.7 11.9 12.8

Consumer Staples 5.3 2.5 4.1

Energy 2.7 3.8 3.5

Financials 48.2 31.3 27.2

Health Care 2.4 1.9 0.6

Industrials 8.9 12.5 19.0

Information Technology 5.3 3.8 19.6

Materials 5.2 10.0 7.6

Telecommunications 1.9 8.8 2.7

Utilities 12.4 13.1 2.5

Less

concentration

in financials…

…and greater

exposure here

Why HSBC Asia Pacific (Ex Japan) Dividend

Yield Fund for Indian investors

24

Why Indian investors should consider HSBC Asia Pacific (Ex Japan) Dividend Yield Fund?

Diversification: Provides opportunity to diversify in a fast growing region (Asia Pacific -

excluding Japan) and helps to reduce the risk of over-owning a single country equity (India)

Unique: By its objective, the fund will invest into the underlying fund which invests into

profitable companies with strong track record of paying dividends, making it the first equity-

income (Dividend Yield) focus offshore fund offer in India

Preference for Dividend Yield segment: Indian investors have demonstrated a preference

for equity income strategies

– Dividend yield funds have grown faster than most other equity fund segments over the past 5 years along with

relatively better performance track record in a volatile market (Source: MFIE)

Underlying fund overview

26

HGIF Asia Pacific Ex Japan Equity High Dividend Fund

Source: HSBC Global Asset Management.

Objectives and performance characteristics are not guaranteed. Data as at 31 October 2013.

HGIF Asia Pacific Ex Japan Equity High Dividend Fund

Named managers Michael Dillon

Sanjiv Duggal

Benchmark MSCI AC Asia Pacific ex Japan

Style bias Dividend Yield

Strategy AUM USD 1.7 billion

Fund AUM USD168 million

Strategy inception 5 November 2004

Fund Domicile Luxembourg

Invests in companies that meet two

criteria

– Attractive according to our core

profitability/valuation process

– Delivers a sustainable dividend yield above

the market average

Medium-to-long term horizon; looking

to exploit short-term swings in

sentiment

Alpha typically driven by stock

selection

27

HGIF Asia Pacific Ex Japan Equity High Dividend – Current portfolio

Asset allocation – By sector Country exposure

Source: HSBC Global Asset Management, as at 31 December 2013. The information provided is based on un-audited data and is for reference only.

Financials , 42.52%

Information Technology,

14.93%

Consumer Discretionary,

8.47%

Materials, 7.92%

Telecommunication Services,

7.51%

Industrials , 5.16%

Energy , 4.54%

Consumer Staples, 4.13%

Utilities , 2.86% Cash, 1.97%

Australia, 26.42%

China, 19.55%

Taiwan, 10.53%

Korea, 10.12%

Hong Kong, 9.68%

Singapore, 6.63%

India, 5.14%

Malaysia, 4.34%

Thailand, 3.27% Indonesia, 2.35%

Cash, 1.97%

28

Investor sentiment may be susceptible to macro concerns, including the Eurozone debt

Investor should be reminded that investment in some of the developing Asian countries may

involve special considerations and risks. Below could affect adversely the economies of such

countries or the value of the investment

– Political changes

– Government regulation

– Global economic development

Emerging markets can be significantly more volatile than developed markets, so that the

value of investments may be subject to larger fluctuations

Currency movement and market condition may affect the value of investments

Key risks - HSBC Asia Pacific (Ex Japan) Dividend Yield Fund

29

International Fund of Funds – Opportunity to diversify

High Dividend Yield Funds - Good investment option in volatile markets

Asia (ex Japan) – Attractive valuations given earnings expectations

Asia (ex Japan) High dividend strategy – One of the highest dividend yielding strategies in the

world

HSBC Global Asset Management – One of the largest Emerging Markets assets manager

To conclude

HSBC Asia (Ex Japan) Dividend Yield Fund provides an opportunity to diversify

one’s portfolio across high dividend yielding markets and stocks

30

Key Features

Investment Objective

The primary investment objective of the Scheme is to provide long term capital appreciation by investing predominantly in units of HSBC Global Investment Funds (HGIF) Asia Pacific Ex Japan Equity High Dividend Fund (HEHDF). The Scheme may also invest a certain proportion of its corpus in money market instruments and/or units of liquid mutual fund schemes, in order to meet liquidity requirements from time to time.

Benchmark Index

MSCI AC Asia Pacific ex Japan

Minimum Application Amount

INR 10,000

Options Growth, Dividend (Payout & Dividend Reinvestment)

Load Structure

Entry Load – Nil; Exit Load – Nil

SIP/STP/SEP SIP available during NFO

STP/SEP available during continuous offer, not available during NFO period.

Underlying Scheme

HSBC GIF Asia Pacific Ex Japan Equity High Dividend

31

This product is suitable for investors who are seeking*:

To create wealth over long term

Investment in equity and equity related securities of Asia Pacific countries

(excluding Japan) through fund of funds route

High risk (BROWN)

* Investors should consult their financial advisers if in doubt about whether the

product is suitable for them.

Note: Risk may be represented as:

(BLUE) investors understand that their principal will be at low risk

(YELLOW) investors understand that their principal will be at medium risk

(BROWN) investors understand that their principal will be at high risk

32

Disclaimer

This document has been prepared by HSBC Asset Management (India) Private Limited (HSBC) for information purposes only and

should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information

contained in this document (including that sourced from third parties), is obtained from sources HSBC, the third party believes to be

reliable but which it has not independently verified and HSBC, the third party makes no guarantee, representation or warranty and

accepts no responsibility or liability as to the accuracy or completeness of such information. The information and opinions contained

within the document are based upon publicly available information and rates of taxation applicable at the time of publication, which are

subject to change from time to time. Expressions of opinion are those of HSBC only and are subject to change without notice. It does

not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive

this document. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment

strategies that may have been discussed or recommended in this report and should understand that the views regarding future

prospects may or may not be realized. Neither this document nor the units of HSBC Mutual Fund have been registered in any

jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons

who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

© Copyright. HSBC Asset Management (India) Private Limited 2014, ALL RIGHTS RESERVED.

HSBC Asset Management (India) Private Limited, 16, V.N. Road, Fort, Mumbai-400001 Email: hsbcmf@hsbc.co.in

Mutual fund investments are subject to market risks, read all scheme related documents carefully.