Practical Guide to Mutual Funds

The HSBC Group's asset management division, directed by HSBC Global Asset Management, offers a wide range of funds covering most asset classes, geographical regions and management styles.

Global scope, local expertise

With offices in 23 countries all over the world, HSBC Global Asset Management brings together 2,100 asset management professionals and offers a unique chance to benefit from the expertise of four specialist branches:

• Halbis, specialising in active fundamental management, drawing on tightly knit, specialised teams to deliver convincing management and a high added value performance in the long term. Its areas of expertise are European equities, high added value interest rate products, emerging markets and diversified management.
• Liquidity manages 'regular money market' solutions and offers a comprehensive range of funds responding to the constraints of different investment goals, regulations and currencies.
• Multimanager, a multi-management specialist, giving you access to the best global managers, regardless of the asset class, geographical region or management style, chosen through a rigorous selection and monitoring process. Multimanager's multi-management team is one of the biggest in the world, made up of over 40 dedicated professionals, based in 11 offices all over the world.
• Sinopia, specialising in quantitative management, draws on research devoted to the creation of innovative investment strategies and delivering a strong performance in an environment of controlled risk. Sinopia creates sophisticated investment strategies covering all asset classes.

A major player on the emerging markets

By drawing on the historical presence of the HSBC Group, HSBC Global Asset Management has become a global leader on the emerging markets:

• Nearly $100 billion in emerging market assets under management at end-March 2008.
• Over 200 dedicated professionals, based locally in 12 offices all over the world.
• A wide range of award-winning emerging funds.

As of March 31, 2008, HSBC Global Asset Management managed € 251.63 billion.

To find out more: www.assetmanagement.hsbc.com/fr

A comprehensive range of mutual funds with:

• Allocated mutual funds to delegate the management of your portfolio to experts, taking your risk profile into account (Cautious, Balanced, Dynamic) and matching it to a management style (active, protected, multi-management);
• Cash mutual funds for your short-term investments;
• Bond mutual funds for your medium/long-term investments on euro zone and international interest rate markets;
• Equity mutual fund for your more long term investments covering all geographical regions, also including themed equity mutual funds (by cap size, management style, industry, etc);
• Target mutual funds to offer a tailored solution to help fund all your plans, taking into account your projects' timescales.

To view our complete range, click here.

Your choice of mutual fund should not be left to chance...
As with any investment, first of all you need to analyse the situation of your assets, finances and tax.

1 – Define your investment goal

- Receiving regular income.
- Preserving your capital.
- Increasing your capital.

2 – Then specify the:

• Length of the intended investment

To give you the best chance of seizing opportunities to make capital gains, we recommend you invest in bond or equity mutual funds for a sufficiently long period:

3 years for bonds and over 5 years for equity.
For a short period, under 2 years, think about a cash mutual fund.

• Acceptable risk level

A fundamental feature of a mutual fund is the relationship between returns and risk. The higher the risk, the greater the expectation of profits. This is why, before you make your choice, you must decide to what extent you are prepared to invest in mutual funds that offer promising performance prospects, but are exposed to major price fluctuations.

As a guide, refer to the risk scale in the presentations of our mutual funds and the simplified product prospectuses.

How do I interpret the risk scale?

3 – Also be careful to:

• Diversify your portfolio

By diversifying your investments you can reduce the overall risk of your portfolio. Though the basic range of varied-asset mutual funds intrinsically offers this diversification, this is not the case for specialised mutual funds (country, market or industry). They should therefore only make up part of your portfolio.

• Ensure tax-efficient savings

Tax management is also worth bearing in mind when you decide to invest in mutual funds. Your choice will depend on various factors (the securities you already hold, your tax band, etc.), according to which you may choose capitalisation over the distribution of income, for example.

The tax benefits of the PEA after 5 years
The PEA is a tax-friendly investment format that lets you manage your portfolio of European securities under attractive tax conditions.

- Fund switching within the PEA is tax-exempt and does not count towards your annual disposals tax limit.
- Capital gains are tax-free(3), on condition that you hold your assets in the account for at least 5 years without making a withdrawal.
Withdrawals after between 5 and 8 years will bring about the plan's closure.
- Withdrawals after 8 years (total or partial) are free. Capital gains are tax-free⁽³⁾. In the event of partial withdrawal, the PEA will continue to function but you cannot make further deposits.

(3) Excluding social security deductions

Use the financial markets to save at your own pace by choosing between several solutions:
- Make your own equity investments, with total autonomy.
- Build up your PEA by choosing from our range of eligible mutual funds.

• Fund switching

When you decide on an investment in mutual funds, you do so based on your personal situation and the economic, financial and tax climate. It is therefore important to periodically modify your investment choices in line with any market climate changes. Don't forget! You can make trades yourself online by connecting to Ma banque en ligne.

• Understanding the products

Before you invest in a mutual fund, it is vital that you familiarise yourself with its features, using the prospectuses provided. This will allow you to understand how they work and to take stock of the associated risks. The success of your investment depends on how well you understand the product.

Your personal advisor is available to answer any questions you may have about these products.