HSBC GIF Asian Currencies BondNovember 2011HSBC Global Asset Management

For professional clients only

2

Access to the long-term appreciation potential of

Asian currencies

HSBC GIF Asian Currencies Bond A high potential fund managed by an award-winning team

Philippines

Singapore

South Korea

Taiwan

Thailand

China

IndiaMalaysia Indonesia

Hong Kong

Source: HSBC Global Asset Management, as at 27 May 2011. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. For illustrative purposes only.

An attractive, growing asset class with low correlation and good diversification characteristics

The HSBC GIF Asian Currencies Bond Fund is managed by HSBC Global

Asset Management, a leader in Asian Fixed Income and Emerging Markets

3

Content

The Asian economy, currencies and bond markets

Asian Fixed Income Capabilities

Fund Characteristics

Conclusions

Appendix

The Asian economy, currencies and bond markets

5

Asian economies are expected to outperform

Emerging Asia is already one of the

powerhouses of the world economy

Strong growth continues to attract

capital inflows

Strong growth and surpluses are positive for Asian currencies

Real GDP growth (%)

* Asian Emerging Markets = China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Thailand.Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. For illustrative purposes only and does not constitute investment recommendation to buy or sell in the above-mentioned countries.

Asian Emerging

Markets* World

Asian EM as % of

World

Population (m) 3,002 6,768 44%

Labour force (m) 1,533 3,232 47%

GDP PPP (USDbn) 18,381 74,430 25%

Exports (USDbn) 3,491 15,000 23%

Imports (USDbn) 3,257 15,000 22%

Economic fundamentals

9.12

7.71 7.89 7.97

3.63

2.513.00

3.30

0

2

4

6

8

10

2010 2011F 2013F 2015F

Asia Emerging Markets Rest of World

Source: IMG report October 2011, HSBC Global Asset Management.Source: IMG report 2011

6

Asian currencies have lagged behind – is this their time to shine?

Asian currencies have appreciated less than other major currencies

Asian authorities have deliberately kept their

currencies weak to encourage trade

This is changing as authorities seek to

control inflation

Source: Bloomberg; data as at 31 October 2011. Investment involves risk. Past performance is not indicative of future performance.

2.5

20.314.9

43.0

(5.0)

(19.0)

29.3

-30-20-10

01020304050

Asian Currenciesvs USD

AUD CNY JPY EUR GBP CHF

12.1

81.4

(0.6)

37.731.130.2

60.4

-100

102030405060708090

Asian Currenciesvs USD

AUD CNY JPY EUR GBP CHF

Currency appreciation - January 2000 to October 2011 (%)

Currency appreciation - Jan 2008 to October 2011 (%)

7

On a PPP measure, Asian currencies look very undervalued against the dollar

* Source: IMF World Economic Database September 2011 – PPP estimates for 2011.

-175% -75% 25% 125%

VND

INR

TWD

THB

PHP

MYR

CNY

KRW

HKD

IDR

SGD

GBP

EUR

JPY

CHF

% under/over valued versus USD on PPP PPP versus USD* Spot (30 Sep 2011)% under/over

valuedCHF 1.66 1.10 34%

JPY 106.82 77.02 28%

EUR 0.83 0.75 10%

GBP 0.68 0.64 6%

SGD 1.05 1.31 -25%

IDR 6,434 9,085 -41%

HKD 5.43 7.78 -43%

KRW 809 1,184 -46%

CNY 4.05 6.38 -58%

MYR 1.85 3.21 -73%

PHP 25.04 44.03 -76%

THB 17.64 31.20 -77%

TWD 16.51 30.63 -86%

INR 19.57 48.95 -150%

VND 8,242 20,830 -153%

8

The current account positions of Asian economies are generally very strong

-600

-500

-400

-300

-200

-100

0

100

200

300

400

500

Chi

na

Taiw

an

Sin

gapo

re

Mal

aysi

a

Sou

th K

orea

Thai

land

Hon

g K

ong

Philip

pine

s

Indo

nesi

a

Vie

tnam Indi

a

Ger

man

y

Japa

n

Can

ada

UK

Fran

ce

Italy

US

USD

Bn

-10%

-5%

0%

5%

10%

15%

20%

25%

Sin

gapo

re

Mal

aysi

a

Taiw

an

Hon

g K

ong

Chi

na

Thai

land

Phi

lippi

nes

Sou

th K

orea

Indo

nesi

a

Indi

a

Vie

tnam

Current Account Surplus/Deficit as % of GDP Current Account (USDbn)

Source: IMF World Economic Database September 2011

Asia (25% Global GDP) +USD502bn

G7 G7 (39% Global GDP) -USD348bn

9

Developing Asia public finances are in stark contrast to those in other parts of the world

Source: IMF, World Economic Outlook Database, September 2011 Note: Major advanced economies (G7) is composed of 7 countries: Canada, France, Germany, Italy, Japan, United Kingdom, and United States. Developing Asia is composed of 27 countries: Republic of Afghanistan, Bangladesh, Bhutan, Brunei Darussalam, Cambodia, China, Fiji, India, Indonesia, Kiribati, Lao People's Democratic Republic, Malaysia, Maldives, Myanmar, Nepal, Pakistan, Papua New Guinea, Philippines, Samoa, Solomon Islands, Sri Lanka, Thailand, Democratic Republic of Timor-Leste, Tonga, Tuvalu, Vanuatu, and Vietnam.

Debt levels in developed markets and developing Asia are heading in opposite directions

Government Gross Debt as a % of GDP

0

50

100

150

200

250

Japa

n G7 USSing

apore

Euro ar

ea

UKInd

iaMala

ysia

Philipp

ines

Taiwan

Hong KongKore

aChina

Indon

esia

% o

f GD

P

Asian Countries Non Asian Countries

0

20

40

60

80

100

120

140

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

% o

f GD

PMajor advanced economies (G7) Developing Asia

10

Asian sovereign credit ratings are on an uptrend

The region offers solid and improving fundamentals

Low government debts and high growth rates

are supportive for credit ratings

Most countries have improving credit fundamentalsSource: S&P, August 2011.The above are for illustrative purposes only and do not constitute any investment advice to buy or sell in the above-mentioned countries and its related instruments.

Country/Territory Current rating Most recent rating change

Hong Kong AAA 2009 upgrade

Singapore AAA 1995 upgrade

China AA- 2009 upgrade

Taiwan AA- 2001 downgrade

Malaysia A- 2002 upgrade

South Korea A 2004 upgrade

Thailand BBB+ 2003 upgrade

India BBB- 2006 upgrade

Indonesia BB+ 2010 upgrade

Philippines BB 2009 upgrade

11

¥

The Chinese Renminbi – international currency to reserve currency

The new offshore Chinese market gives investors an opportunity to access renminbi exposure

China is already the world’s second largest economy, and a rising contributor to global growth

A managed appreciation by the People’s Bank of China is likely in the coming years

The RMB is likely to become

a major international currency

International reserves GDP growth (%)

Country Current (USD bn)

% of world

Major currency

US 46.06 0.5 Yes

Eurozone 204.55 2.1 Yes

Japan 1,122.92 11.0 Yes

China 3,201.68 31.3 Not yet

Source: Bloomberg, as at 31 October 2011.

-5

0

5

10

15

20

2007 2008 2009 2010 2011F 2012F

%

World China

Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. For illustrative purposes only and does not constitute investment recommendation to buy or sell in the above-mentioned countries.

Source: International Monetary Fund, World Economic Outlook Database, October 2011

12

Asian bonds have a favourable historical risk/return profile

Since January 2000, Asian bonds have

performed well

Both Asian USD and local currency bonds offered attractive risk

adjusted returns

Surprisingly low volatility

Sources: HSBC Global Asset Management and Bloomberg. Analysis period: January 2000 to December 2010. Asian USD Bonds – HSBC Asian Dollar Bond Index; Asian Local Currency Bonds – HSBC Asian Local Bond Index; USD GEM bonds – JP Morgan EMBI Global Composite; Local GEM bonds – JP Morgan ELMI Plus Composite; US Treasuries – Citigroup US GBI; Global equities – MSCI World Index; Asia Pacific ex Japan equities – MSCI Asia ex Japan equity; USD high yield – ML BoA US High Yield. Investment involves risk. Past performance is not indicative of future performance. Benchmark of USD high yield benchmark is the ML BoA US high yield

0

2

4

6

8

10

12%

0 5 10 15 20 25%Annualised volatility

Ann

ualis

ed re

turn

US Treasuries

USD GEM Bonds

Asia ex Japan Equities

Global Equities

US High Yield

Asian USD BondsAsian Local Currency Bonds

Local GEM Bonds

13

Asian bonds have low correlation to developed western sovereigns...

Asian bonds tend to perform much better when the economy is

doing well

Asian economies will tend to run trade

surpluses, while most western economies will

run deficits

* To end of September 2011. Source: Bloomberg. The above are for illustrative purposes only and do not constitute any investment advice.

Citigroup World Government

Bond IndexUS

TreasuriesAsian USD

BondsAsian Local

Currency Bonds

2002 19.5% 11.3% 14.5% 19.3%

2003 14.9% 2.4% 8.1% 7.0%

2004 10.3% 3.4% 6.1% 10.4%

2005 -6.9% 2.7% 5.8% 2.0%

2006 6.1% 3.5% 7.2% 13.3%

2007 10.9% 8.8% 5.5% 8.2%

2008 10.9% 12.8% -6.5% 1.0%

2009 2.6% -2.6% 25.4% 6.3%

2010 5.2% 5.6% 10.3% 12.2%

YTD 2011* 6.5% 8.2% 1.6% 3.4%

14

Returns can come from capital appreciation, income and currency

Expect currency gains to be a more meaningful return contributor in the future

Return components of Asian Local Currency Bond Index

Source: HSBC, Data as at 31 October 2011. Index is HSBC Asian Local Bond Index. Investment involves risk. Past performance is not indicative of future performance.

Asian Local Currency Bond Index – 2001-2011 YTD

Total Return Income Interest rate Currency

Average Return (pa) 8.4% 6.0% 0.9% 1.6%

7.7

19.3

7.0

10.48.2

1.0

6.3

12.2

6.8

13.3

2.0

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD

Income Interest Rates Currency Index Total Return

15

Asian Local Currency Bonds have outperformed Local Emerging Markets with lower volatility and better ratings since 2005

Total Return

90

100

110

120

130

140

150

160

170

10/3

/200

5

2/3/

2006

6/3/

2006

10/3

/200

6

2/3/

2007

6/3/

2007

10/3

/200

7

2/3/

2008

6/3/

2008

10/3

/200

8

2/3/

2009

6/3/

2009

10/3

/200

9

2/3/

2010

6/3/

2010

10/3

/201

0

2/3/

2011

6/3/

2011

10/3

/201

1

JPMorgan Emerging Local Bond Index HSBC Asian Local Currency Bond Index

Returns 2005-2011 Annualised Daily Volatility

JP Morgan Emerging Local Currency Bonds Index

7.88%

HSBC Asian Local Currency Bond Index

5.32%

Source: HSBC; JPMorgan; Standard and Poors

Index Quality weightings (%)

Asian Fixed Income Capabilities

17

Growth of Assets Under Management(1)

Robust AUM growth in Asian fixed income since 2001

Source: HSBC Global Asset ManagementData as of 30 June 2011; (1) AUM managed by the Asian Fixed Income team based in Hong Kong represented by red bars

6.5

4.66.1

7.5 7.89.4

11.2

13.214.4

20.5

23.024.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (to endJune)

USD billion

18

Product Currency Investment Strategy

Single Currency Fixed Income HKD/SGD/RMB/Others Actively managed single currency portfolios

Pan Asia Fixed Income USD Actively managed Asian bonds, primarily investment grade credit denominated in USD, but with flexibility to invest in local currencies and high- yield

Asian Local Currency Fixed Income Multiple CurrenciesActively managed Asian bonds denominated in local currencies, primarily governments with flexibility to invest in investment grade and high yield credit with an active FX overlay

Asia High Yield USD/Local Actively managed Asia high yield, with flexibility to invest in local currencies and investment grade

Asian Fixed Income Core Product Offering

Source: HSBC Global Asset Management

19

Regional Asian fixed income team

Source: HSBC Global Asset Management. Data as of November 2011[xx] indicates the year of industry experiencesPortfolio manager of the HGIF Asian Currencies Bond is indicated in red bracket

Cecilia Chan [24 yrs]Fixed Income CIO, Asia Pacific

Hong Kong Portfolio Management

Gordon RodriguesHead of Liquidity, Asia Portfolio Manager[20yrs]

Sean ChangPortfolio Manager[18yrs]

Jim VeneauPortfolio Manager [16yrs]

Alfred Mui Portfolio Manager[16yrs]

Olivier FouchetPortfolio Manager[10yrs]

Gregory Suen Portfolio Manager[11yrs]

Honyu FungPortfolio Manager[12yrs]

David GibbPortfolio Manager[14yrs]

Ming LeapPortfolio Manager [7yrs]

Steven WongPortfolio Analyst[2yrs]

Elie KhoueiriDealer[8yrs]

Credit ResearchElizabeth AllenHead of Credit Research, Asia Pacific [17yrs]

Iris ChanCredit Analyst [20yrs]

Jennifer ChangCredit Analyst [14yrs]

Wilson YipCredit Analyst[11yrs]

Taiwan Steven HuangHead of Fixed Income[9yrs]

May KaoPortfolio Manager[14yrs]

Andy YuPortfolio Manager[9yrs]

Joy ChiaoPortfolio Manager[18yrs]

TBCPortfolio Manager

India Sanjay ShahPortfolio Manager [12yrs]

Ruchir Parek Portfolio Manager [14yrs]

Kedar Karni Portfolio Manager [6yrs]

Gaurav Mehrotra Portfolio Manager[7yrs]

Saurabh Bhatia Portfolio Manager [10yrs]

Piyush Harlalka Portfolio Manager[6yrs]

China Michael ZhengHead of Fixed Income[11yrs]

Vivian LiPortfolio Manager[7yrs]

Jackling X J ZhongPortfolio Manager[8yrs]

Cherry WuCredit Analyst [1yrs]

Product Geoff LuntSenior Product Specialist [19yrs]

Catherine TsangProduct Specialist [11yrs]

Experienced Team

Well Resourced

Integrated

20

Our capabilities have been recognised by independent agents

Top Performer in the Asian fixed income space with over USD24 billion AUM

Managing local and regional portfolios for over 16 years

Source: HSBC Global Asset Management (Hong Kong), as of June 2011. Past performance refers to the past and is not a reliable indicator of future returns.

3-Year Award Risk- Adjusted PerformanceAsianInvestor Achievement Awards 2008HSBC Asian Bond Fund

Source: AsianInvestor

Best Fund over 5 Years

Lipper Fund Awards 2009

HSBC Asian Bond Fund

Source: Lipper

Best Fund over 5 Years

Lipper Fund Awards 2010

HSBC Asian Bond Fund

Source: Lipper

Morningstar Fund Awards 2009 HSBC Asian Bond Fund

Source: Morningstar

Best Asian Bond Fund over 1 year 2009HSBC Asian Bond Fund

Asian Bond House 2009Halbis Capital Management

Source: Asia Asset Management

Asian Bond House

Asia Asset Management Best of the Best Awards 2010HSBC Global Asset Management

Source: Asia Asset Management

Fund Characteristics

22

Country Country weighting

Investment grade

High yield

Weighted duration Duration Yield

Indonesia 9.2% 0.00% 9.2% 0.61 6.70 6.80%

Philippines 9.1% 0.00% 9.1% 0.60 6.56 5.11%

Malaysia 17.7% 17.7% 0.00% 0.90 5.07 3.60%

South Korea 25.7% 25.7% 0.00% 1.10 4.27 3.44%

Singapore 23.6% 23.6% 0.00% 1.43 6.08 1.11%

Thailand 14.8% 14.8% 0.00% 0.77 5.20 3.33%

TOTAL 100.0% 81.8% 18.3% 5.41 5.41 3.36%

Benchmark

Source: Markit iBoxx & HSBC; Data as at October 2011. The above are for illustrative purposes only and do not constitute any investment advice.

Markit iBoxx ABF Pan Asian ex China and Hong Kong Index

100% government and Quasi-government bond index

The benchmark has a high yield compared to developed markets

Indonesia and Philippines contribute around 20% to non-investment grade benchmark weighting

High weighting to Singapore pulls down the average yield

23

AAA13%

A+2%

A-15%

BBB+13%

Cash2%

NR14%

BBB-1%

A22%

BB+8%

BB10%

HGIF Asian Currencies Bond*

Portfolio Characteristics Fund Benchmark

Modified Duration 6.18 5.34

Yield to Maturity 4.10% 3.29%

Average Rating A2 A2

Current Yield 4.39% 4.45%

AUM (USD Mil) 55.4 -

Asset Quality Portfolio Characteristics

Source: HSBC Global Asset Management & Bloomberg; Data of 31 October 2011 unless otherwise specified; Returns are gross of fees in USD terms. Inception date of the fund: 27 Apr 2011; Returns will be reduced after fees deduction. Benchmark is iBoxx ABF Pan Asia ex CN & HK. Investment involves risks. Past performance is not indicative of future performance. * The Fund is not authorised by the Securities and Future Commission (“SFC”) and is not available to the public in Hong Kong.

24

However, the fund style is unconstrained and high conviction

The fund will take positions in non-benchmark currencies, most specifically RMB and INR (max. 20%)

The fund will invest in Asian local currency and USD corporate bonds when these are expected to outperform

The fund’s yield will usually be higher than that of the benchmark

The fund can avoid rising interest rates by reducing duration in those markets affected

Average duration 6.18 yearsAverage coupon 4.57%Yield to maturity 4.10%Running yield 4.39%Investment grade/High yield 68%/32%Sovereign/Corporate 73%/27%Number of securities 57USD/Non USD 11%/89%Average rating A-

SGD 21.7% -1.9%KRW 18.1% -7.6%THB 14.8% 0.0%MYR 14.7% -3.0%USD 10.6% +10.6%IDR 8.1% -1.1%PHP 7.0% -2.1%CNY 4.7% +4.7%

INR 0.4% +0.4%

Fund characteristics Currency breakdown and versus benchmark *

*As of 31 October 2011; Country positions may be tactical and not representative of long term forecasts.

25

Sources of Alpha- Asian Local Currency Bonds Multiple alpha sources for flexible strategies

Strategy Contribution to Target Alpha Description

Credit Selection 10% to 30%

Fundamental analysis combining macro view on sector/industry with bottom-up credit analysis

Pricing and valuation analysis to select undervalued credits with attractive yield pick-up against comparable peers

Duration Strategy 20% to 40% Formulation of view on monetary policy and interest rates movements

in the US and Asia Comparison with market consensus to decide on duration positioning

Yield Curve Positioning 10% to 30% Assessment of monetary policy and inflation expectations for appropriate yield curve positioning

Currency Exposure 20% to 40%

Tactical approach and small exposures (2%) with strict stop-loss limits and strict profit taking discipline when target return level is hit

Strategic / long-term positions only if justified by strong structural fundamentals

Dynamically managed risk budgeting in various factors/areas according to portfolio guidelines

Focus on areas where we believe our investment processes can add value given prevailing market conditions

Target value added = 2% per annum*

Annualized tracking error = 1% to 4% per annum*

* As an indication only and is not guaranteed, actual performance may vary.

26

Investment vehicle

Fund type and domicile UCITS III Luxembourg SICAV part of the HSBC GIF range

Launch date 18 April 2011

Base currency USD

Benchmark* 100% Markit iBoxx ABF Pan Asian ex China and Hong Kong Index

Liquidity Daily

Minimum investment Institutional Share Class USD 1,000,000 Retail Share Class USD 5,000

Fee structureInstitutional Share Class 0.625% fixed management feeRetail Share Class 1.25% fixed management fee

* This is the current internal benchmark, which may change and is not detailed in the fund's prospectus. This benchmark is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet this benchmark.

Conclusions

28

Conclusions

The HSBC GIF Asian Currencies Bond gives investors

the potential for capital appreciation through exposure to Asian currencies

access to a fast growing and dynamic new market

a fund managed by an experienced, award winning team

HSBC Global Asset Management – experts in emerging markets and Asian fixed income

29

The team has an average industry experience of over 13 years and has been recognised by major industry observers

Award winning, stable team

Local team leverages global resources and extensive global credit research platform

Access to a global network of experts

Three major new Asian fixed income strategies delivered to the market this year

Innovative

HSBC Global Asset Management- experts in Emerging Markets and Asia

Asian fixed income- a core expertise

Decentralised investment process allows regional team to adopt flexible investment strategies with clear and transparent accountability

Responsibility and accountability

Summary of Key Strengths

Data as of June 2011

Appendix I Investment Philosophy and process

31

Asian fixed income markets are under-developed and inefficient. Through a focused and disciplined investment process, we can exploit investment opportunities arising from these inefficiencies to deliver superior risk-adjusted returns for our clients.

Investment philosophy

32

Top-down and bottom-up

fundamental analysisFundamental marketinput Economic analysis Central bank policies Liquidity

Bottom-up creditresearch

Regional outlook Interest rate outlook Currency outlook Credit trend Preferred credit list

Output: market view

Strategyselection

Alpha sources: Duration positioning Yield positioning Country allocation Credit selection Currency

management

Output: trade ideas

Portfolioimplementation

Review investment objective

Determine optimal position sizes (based on risk units)

Portfolio construction

Output: client portfolio

Portfoliomaintenance

Risk management and control

Ongoing fundamental analysis

Constant market monitoring

Ongoing strategy evaluation and adherence to client guidelines

Output: assessmentof portfolio positions

Investment process Focused, disciplined and flexible process

For illustrative purposes only.

33

Weekly (top-down) Daily and ad hoc Review weekly performance of Asian local bonds,

currencies and credit markets Highlight particular market movers Cross-check fund manager portfolio strategies

Review overnight market movements and latest news

Discuss tactical positioning (if any) on duration, yield curve or currency strategies

Credit/security recommendation

Discuss any portfolio implementation or client related issues

Ad hoc credit issues/discussion

Monthly Regional economic and

interest rate outlook Duration strategy on Asian

local bond markets Regional yield curve

strategy Currency outlook Regional credit outlook

Output: macro and credit outlook

Output: portfolios strategy

Output:portfolio monitoring

Monthly (bottom-up)

Review Asian credit market performance Highlight recent credit ratings changes Assess credit risk level of all holdings highlight

concerning credits Analyst recommendations on credit strategy

Output: credit selection

Global strategy forum

Global credit forum

Investment process Systematic decision-making framework

For illustrative purposes only.

34

Local insight Fundamental analysis Global website

Dedicated analysts Over 30 credit analysts New York, London, Paris,

Dusseldorf, Hong Kong

Superior access to seniormanagement Investor positioning Supply and issuance Technical model

Extensive coverage 300 global issuers 700 local issuers

Business profile Industry Business position Strategy/management

Financial profile Profitability & cash flow Debt Structuring

Credit Reports Initial review Regular updates Medium-term rating Risk profile Short/medium-term

catalysts

Relative Valuation Model Screen opportunities Quantify target spreads Facilitate market timing

Global holdings Credit positions held by

local teams

Credit analysis Integrated approach

Source: HSBC Global Asset Management. For illustrative purposes only.

35

Credit analysis Rigorous issuer selection

The establishment of the investable universe relies on a questioning procedure

Can I trust the figures? How does the company

make money? Can it justify accounting

changes or above average metrics?

Are internal controls efficient?

Transparency/ Corporate governance

Is the company exposed to legal, reputational, environmental risks?

Is customer concentration particularly high?

External risks

Who owns/controls the company?

Who are the managers? What are their “personnel”

interests? Is the company regularly

delivering on plans (track- record and consistency?)

Is its business/financial structure adequate/optimal (M&A, LBO, spin-off risks)?

How important are ratings for the company?

Visibility/Strategy/ Related interests

Source: HSBC Global Asset Management. For illustrative purposes only.

Relies on fundamental research exclusively

with a focus on qualitative factors

Our goal is to exclude unreliable issuers and identify the ‘sudden’ risks for the others

36

Bus

ines

s pr

ofile

Fina

ncia

lpr

ofile

Dynamic Static

Investment grade High yield

Industry Capital intensity, cyclicality, competition, barriers, technological hurdles. Identification of trends

Phase in the cycle, stability of the environment (competition, technology)

Business position Competitive advantages, product and geographical diversification

Market leader versus second tier player; competitive strategy

Strategy/Management Continuity, vision Management commitment; ability to execute; strategy consistency

Profitability and cash flow

Level and stability, consistency between strategy and financing capacity

Operational free cash flow generation; presence of alternative sources of liquidity

Structuring Analysis of holding companies; possible structural subordination (debt location, securitisation, etc.)

Senior versus subordinated; secured versus unsecured, covenants

Debt Level, stability, diversification of financing, maturity

Leverage and coverage ratios; maturity schedule

Dynamic Static

Credit analysis Fundamental credit analysis

Source: HSBC Global Asset Management. For illustrative purposes only.

37

Credit analysis Comprehensive credit reports

Sample credit report

Source: HSBC Global Asset Management. For illustrative purposes only.

Initial review and regular updates to

ensure due diligence

Objective is to determine medium term rating, risk profile and

short/medium term catalysts

38

Credit analysis Global credit research website

One-stop website to view all research, global holdings, open limits or approvals

Eligible universe; portfolio monitoring

Comprising a daily-fed 10,000+ global bond and CDS database

Secured and efficient for portfolio managers

Allowing analysts to focus on alpha

Source: HSBC Global Asset Management. For illustrative purposes only.

39

Global Fixed Income teams Supported by fixed income specialists around the world

US

Emerging Markets Debt Distressed Debt US Credit Alpha US Liquidity

4 Portfolio Managers3 AnalystsNew York

1 Portfolio Manager3 AnalystsNew York

1 Portfolio Manager2 AnalystsNew York

4 Portfolio Managers4 AnalystsNew York

Europe

Global and UK Fixed Income

Europe Fixed Income

Europe Fixed Income ABS Investments Europe Liquidity

4 Portfolio Managers3 AnalystsLondon

11 Portfolio Managers6 AnalystsParis

6 Portfolio Managers4 AnalystsDusseldorf

6 Portfolio Managers6 AnalystsLondon

5 Portfolio ManagersParis

Asia

Asia Fixed Income Asia Liquidity5 Portfolio Managers3 AnalystsHong Kong

2 Portfolio ManagersHong Kong

Data as of 31 December 2010.Source: HSBC Global Asset Management.

Global Credit ResearchOver 30 analysts

Dusseldorf, London, Hong Kong, New York, Paris

40

Sector and geographic specialisation

Emerging Market Debt

Automotives/ Transportation

Telecom/ Media/ Technology Utilities Consumer/

RetailFinancials and Covered Industrials Asset Backed

Securities1

L. Chua (US) P. Coumes (EU) A. Pongs (EU) S. Muhr (EU) S. Atwell (EU) C. Berger (EU) S. Atwell (EU) N. Ventham (EU)

M. Karner (US) S. Pettit (US) E. Allen (Asia) F. Tassan (EU) A. Pongs (EU) D. Doetsch (EU) T. Radovic (EU) N. Murphy (US)

B. Liu (US) W. Gausselmann (EU) T. Radovic (EU) J. Leblanc (US) P. Coumes (EU) M. Milby (US) W. Gausselmann (EU) K. Thakkar (EU)

C. Lima (BR) J. Chang (Asia) R. Deutsch (US) R. Deutsch (EU) S. Pettit (US) D. Ginsburg (US) I. Chan (Asia) M. Huang (EU)

C. Uema (BR) J. Chang (Asia) W. Yip (Asia) F. Rodrigues (EU) F. Tassan (EU) M. Kimberley (EU)

E. Goes (BR) I. Chan (Asia) O. Magis (EU) L. Walewska (EU)

H. Zachem (US)2 F. Joachim (EU) F. Rodrigues (EU)

W. Yip (Asia) C. Martin-Glinel (EU)

Global List Local List

Global credit research platform

More than 30 seasoned sector-specialist analystsStreamlined procedures and common tools for a flexible local approach in a global context

* The table presenting analysts by speciality is not exhaustive/ ** Frequent, large and often multi-currency issuers/Source: HSBC Global Asset Management – as of 28 February 2011.(1) ABS analysts specialise in a sector and cover various geographies. (2) H. Zachem is also head of Supra-nationals and Sovereigns.

Identified coverage

and service

Monitoring of 300 Global Issuers **Maintenance of in-house ratings, outlooks, investment

approvals and investment recommendationsInitial full report followed by comments on earnings

and credit events

Monitoring of ~700 Local IssuersIf held in local portfolios or on PM’s request

Communication maintained mostly on an oral basis (except formal approvals or limits on investments)

Investment teamsSystematic coverage On-Demand coverage/Market opportunities

Reliable, committed,

reactive and flexible

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Investment teamPortfolio mangers,

Credit research and Quant analysts

Ex-Ante Risk calibration

Definition of alpha sources and risk units

Validation of investment and credit

guidelines

Customisation of front office risk report

Portfolio ManagerRisk guidelines and Portfolio Constraints

Market risks

Credit ResearchCredit events

Eligible Universe

Dealing DeskCoherence of ordersCounterparty risks

Risk Control TeamClients’ guidelinesIn-house risk limits

Regulatory guidelines pre and

post trade

Management Assistance

Operational risk control

Valuation ControlDaily matching of stocks and flows

Internal Control team/

Compliance team

Process and regulatory control

HSBC’s Risk Management and Audit

Control of processes (including Risk Control

Processes)Follow up of risk control

activities

RiskBudgeting Auto Control Second

Level

Front Office Middle Office/Investment Risk/ORIC/Compliance HSBC Group

Risk ManagementDefinition and analysis of our risk management

frameworkDetermination of risk indicators to monitor

(TE, volatility, VaR, etc.) Quantitative monitoring (performance, risk

indicators) Monitoring investment decisions coherence with

portfolios’ objectiveRisk Control

Analysis of portfolio constraints Pre and post trade checks ensuring consistency with

in-house risk limits, clients’ guidelines and regulatory guidelines

Operational risk controlDaily monitoring and reporting

Valuation ControlDaily control of securities and derivatives using

multiple data sources

A rigorous approach to risk budgeting + 3 independent levels of risk control

First Level Third Level

A rigorous risk management process

A solid chain of independent risk controls at the Front Office, Middle Office and at the Group level

Source: HSBC Global Asset Management – For illustrative purposes only.

Appendix II Biographies

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Cecilia Chan Fixed Income CIO, Asia PacificCecilia Chan is the Fixed Income CIO, Asia Pacific and she heads up fixed income investment management within the region and has been specializing in management of fixed income portfolios since 1994 when joining HSBC. She has been working in the financial industry covering markets in Asia Pacific since 1987. Prior to joining HSBC, Cecilia worked as a fixed income fund manager at Sun Alliance & Royal Insurance Company in Australia and a senior quantitative analyst in Baring Securities (Hong Kong), (Japan) and (Australia) Ltd. She holds a (first honors) bachelor's degree in Commerce from the University of New South Wales (Australia); a master’s degree in Economics from the Australia National University; a master’s degree in Applied Finance and a MA in Business Research Studies, both from Macquarie University (Australia).

Gordon Rodrigues Investment Director, Fixed Income and Head of Liquidity, AsiaGordon Rodrigues is an Investment Director in the Asian Fixed Income team and is also the Head of Liquidity Asia. Gordon has been working in the industry since 1992. Gordon joined HSBC Global Markets, India in 1994 as a Treasury Sales Specialist covering Corporate and Institutional Clients. He traded Credit Products on the Fixed Income Trading Desk from 1998-2002. He moved to HSBC Asset Management India in 2002 to setup the Fixed Income Investment Team and headed the team till 2007 before re-locating to Hong Kong. Prior to joining HSBC, Gordon worked as a Foreign Exchange & Fixed Income Dealer at Merwanjee Securities in Mumbai. He holds a Bachelor’s degree in Electronics Engineering and a Master’s degree in Finance, both from the University of Mumbai (India).

Sean Chang Investment Director, Fixed IncomeSean Chang is an investment director in the Asian fixed income team and has been working in the industry since 1994. Prior to joining HSBC in 2007, Sean was Head of Regional Fixed Income at Mirae Asset Global Investment Management, where he led the regional investment team in investment, portfolio and asset allocation management, as well as research and analysis. Sean holds a Bachelor of Commerce from Bond University and a Master of Finance from the Royal Melbourne Institute of Technology University (Australia).

Portfolio Management

44

Alfred Mui CFA Investment Director, Fixed Income

Alfred Mui is an investment director in the Asian fixed income team and has been working in the industry since 1996. Prior to re-joining HSBC in 2010, Alfred worked as a director of credit trading at Myo Capital and Director at UBS Global Credit Strategies Group. Before first joining HSBC in 2000, Alfred worked as an investment advisor at Matheson InvestNet Ltd. and Jardine Fleming Holdings Ltd. and market risk management at Daiwa Securities (HK) Ltd and Chase Manhattan Bank. Alfred holds a BSc with "Distinction" from the University of Toronto and an MBA from the University of Ottawa. He is also a CFA Charterholder.

Jim Veneau CFA Investment Director, Fixed IncomeJim Veneau is an investment director in the Asian Fixed Income Team focusing on management of credit portfolios. Prior to the recent role, he worked as a senior credit analyst on the team, as well as the US Fixed Income team in New York where he specialized in the telecom, media and technology sectors. Prior to joining HSBC in 2005, Jim worked as a senior telecom analyst at Moody’s Investors Service. Jim has been working in the industry since 1995. He holds a Master of International Affairs and a Bachelor of Arts degree from Columbia University and is a CFA charterholder.

Olivier Fouchet Associate Director, Fixed IncomeOlivier Fouchet is an associate director in the Asian Fixed Income team and has been working in the industry since 2001 when he joined HSBC in Paris. Olivier was relocated to Hong Kong in January 2008 working in the quantitative investment team, responsible for managing fixed income portfolios as well as developing Asian fixed income and currencies strategy. He joined the Asian fixed income in May 2011. Olivier holds a master’s degree in Finance and Banking, and a Bachelor of Science in Economics, both from the University of Paris IX Dauphine.

.

Portfolio Management

45

Portfolio Management

Gregory Suen CFA, CPA Associate Director, Fixed IncomeGregory Suen is an associate director in the Asian fixed income team and has been working in the industry since 2000. Prior to joining HSBC in 2007, Gregory worked as an investment manager at PCI Investment Management Limited. He holds a master’s degree from the University of Hong Kong, a bachelor’s degree from the University of British Columbia (Canada).He is also a CFA charterholder and a Certified Public Accountant (CPA).

Honyu Fung CFA Senior Investment Manager, Fixed IncomeHonyu Fung is a senior investment manager in the Asian fixed income team and has been working in the industry since 2000. Prior to joining HSBC in 2003, Honyu worked for Goldman Sachs as a treasury analyst. He holds a Bachelor of Science degree on the Dean's list from the University of Toronto (Canada), an MBA in Finance from York University (Canada), and is a CFA charterholder.

David Gibb Senior Investment Manager, Fixed IncomeDavid Gibb is a senior investment manager in the Asian fixed income team and has been working in the industry since 1998. Prior to joining HSBC in 2008, David worked as an investment manager at FuturePlus Financial Services in Australia. He holds a bachelor's degree (Honours) in Economics from the University of New England (Australia) and a master's degree in Applied Finance from Macquarie University (Australia) and.

Ming Leap Investment Manager, Fixed IncomeMing Leap is an investment manager in the Asian Fixed Income team and has been working in the industry since 2005. Prior to joining HSBC in 2007, Ming worked as assistance dealer at AXA Investment Managers in Paris. He holds a master’s degree in Finance and a bachelor’s degree in Economics from the University of Paris IX Dauphine.

46

Elizabeth Allen Director and Head of Credit Research, Asia PacificElizabeth Allen (Hong Kong) is a Director and Head of Credit Research in the Asia Pacific Fixed Income Team. She has over 15 years of credit experience in the region. Prior to joining HSBC in 2011, Elizabeth worked as a Senior Credit Officer at Moody’s Investor Service’s corporate rating team. She holds a Masters in Finance from London Business School and a Bachelor of Commerce from the University of Western Australia. She is a member of CPA Australia.

Iris Chan PhD Associate Director, Senior Credit Analyst, Fixed IncomeIris Chan is a senior credit analyst in the Asia Fixed Income Team and has been working in the industry since 1990. Prior to joining HSBC in 2007, Iris worked as a senior manager at Mitsubishi UFJ Securities and Standard & Poor's. She holds a bachelor's degree from the Chinese University of Hong Kong, a master's degree from the University of Tsukuba (Japan), and a Ph.D in Economics from the University of Sussex (United Kingdom).

Jennifer Chang CFA, FRM Senior Credit Analyst, Fixed IncomeJennifer Chang is a senior credit analyst in the Asian fixed income team and has been working in the industry since 1996. Prior to joining HSBC in 2010, Jennifer was a high yield credit analyst at Western Asset Management Company (WAMCO) covering homebuilders, packaging, drug stores, and supermarket sectors. She holds a bachelor’s degree in Economics from the University of California, Irvine and an MBA from the University of Southern California. Jennifer is a CFA charterholder and a Financial Risk Manager.

Credit Research

47

Wilson Yip CFA Credit Analyst, Fixed IncomeWilson Yip is a credit analyst in the Asian fixed income team and has been working in the industry since 2000. Prior to joining HSBC in 2011, Wilson worked as vice president at Sumitomo Mitsui Banking Corporation, Hong Kong Branch. He holds a bachelor’s degree in Business Administration (General Finance) from The Chinese University of Hong Kong, and is a CFA charterholder.

Steven Wong Portfolio Analyst, Fixed IncomeSteven Wong is a portfolio analyst in the Asian Fixed Income Team and has been working in the industry since 2009. Prior to joining HSBC in 2009, Steven worked as a quality assurance analyst at Societe Generale and JPMorgan in Hong Kong. He holds a Master of Science degree in Computer Science from the University of Hong Kong and a Bachelor of Science degree in Computer Science from The Chinese University of Hong Kong.

Credit Research

48

Domestic India Investment Team

Sanjay Shah CFA Vice President and Fund manager, Fixed IncomeSanjay Shah is a vice president and a fund manager in the Indian Fixed Income Team and has been working in the industry since 1999. Prior to joining HSBC in 2008, Sanjay worked at a global investment bank on their Asian convertible bonds desk. He holds a bachelor’s degree in Commerce and he is also a Chartered Accountant.

Ruchir Parekh Vice President and Fund manager, Fixed IncomeRuchir Parekh is a vice president and a fund manager in the Indian Fixed Income Team and has been working in the industry since 1997. Prior to joining HSBC in 2011, Ruchir worked at AIG Mutal Fund, where he was responsible for the fixed income products. He holds a bachelor’s degree in Commerce from University of Mumbai and a MBA from the University of Hartford.

Saurabh Bhatia Vice President and Fund manager, Fixed IncomeSaurabh Bhatia is a vice president and a fund manager in the Indian Fixed income Team and has been working in the industry since 2002. Prior to joining HSBC in 2009, Saurabh worked at the fund management team of Sahara India Financial Corporation. He holds a bachelor’s degree at Commerce and a Post Graduate Diploma in Business Management, both from Wigan and Leigh College.

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Domestic Taiwan Investment Team

Steven Huang CFA Assistant Vice President, Taiwan Fixed Income TeamSteven Huang is an Assistant Vice President in the Taiwan Fixed Income team and has been working in the industry since 2003. Prior to joining HSBC in February 2011, Steven worked as a portfolio manager of Fixed Income Department at Hontai Life Insurance. He holds a MBA degree in Finance from National Taiwan University and is a CFA charter holder.

May Kao Assistant Vice President, Taiwan Fixed Income TeamMay Kao is an Assistant Vice President and a Portfolio Manager in the Taiwan Fixed Income team and has been working in the industry since 1997. Prior to joining HSBC in December 2006, May worked as a portfolio manager of Discretionary Management Department at Jardine Fleming Asset Management. She holds a bachelor’s degree in Economics from Chengchi University.

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Product Specialists

Geoff Lunt Senior Product Specialist, Fixed Income Geoff Lunt (Hong Kong) is a senior product specialist responsible for Asian fixed income products and has been working in the industry since 1992. Prior to joining HSBC in 2003, Geoff worked as a fund manager at Investec Asset Management where he manages bond funds for insurance companies, Building Societies and UK local authorities. Previously, he was a director of Plough Court Fund Management. He holds a degree in Classics from the University of London.

Catherine Tsang CFA, CPA Product Specialist, Equity and Fixed Income

Catherine Tsang (Hong Kong) is a product specialist responsible for equity and Asian fixed income products and has been working in the industry since 2001. Prior to joining HSBC in 2010, Catherine worked as investment specialist at Fidelity. She holds a Master of Commerce Degree from the University of New South Wales and a Bachelor Degree in Commerce from the University of Auckland and is a CFA and CPA (Australia).

Appendix III Disclosures

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Important Information

This presentation is intended for professional clients only and should not be distributed to or relied upon by Retail Clients.

The material contained herein is for information only and does not constitute investment advice or a recommendation to any reader of this material to buy or sell investments. HSBC Global Asset Management (UK) Limited has based this presentation on information obtained from sources it believes to be reliable but which it has not independently verified. HSBC Global Asset Management (UK) Limited and HSBC Group accept no responsibility as to its accuracy or completeness.

This presentation is intended for discussion only and shall not be capable of creating any contractual or other legal obligations on the part of HSBC Global Asset Management (UK) Limited or any other HSBC Group company. Care has been taken to ensure the accuracy of this presentation but HSBC Global Asset Management (UK) Limited accepts no responsibility for any errors or omissions contained therein.

The views expressed above were held at the time of preparation and are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK) Limited accepts no liability for any failure to meet such forecast, projection or target.

The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in established markets. Stockmarket investments should be viewed as a medium to long term investment and should be held for at least five years. Any performance information shown refers to the past and should not be seen as an indication of future returns. The value of the underlying assets is strongly affected by interest rate fluctuations and by changes in the credit ratings of the underlying issuer of the assets.

HSBC GIF Asian Currencies Bond is a sub-fund of the HSBC Global Investment Funds (GIF) (The Company), a Luxembourg-domiciled SICAV. The Company is recognised in the United Kingdom by the Financial Services Authority under section 264 of the Act. UK based investors in HSBC Global Investment Funds are advised that they may not be afforded some of the protections conveyed by the provisions of the Financial Services and Markets Act 2000. HSBC Global Investment Funds is recognised in the United Kingdom by the Financial Services Authority under section 264 of the Act. The shares in HSBC Global Investment Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States Persons. All applications are made on the basis of the current HSBC Global Investment Funds Prospectus, Key Investor Information Document and most recent annual and semi-annual reports, which can be obtained upon request free of charge from HSBC Global Asset Management (UK) Limited, 8 Canada Square, Canary Wharf, London, E14 5HQ. UK, or the local distributors. Investors and potential investors should read and note the risk warnings in the prospectus and relevant Key Investor Information Document.

This presentation is approved for issue in the UK by HSBC Global Asset Management (UK) Limited, who are authorised and regulated by the Financial Services Authority. Copyright © HSBC Global Asset Management (UK) Limited 2011. All rights reserved. 21564/112011/FP11-1999