HSBC Investment Grade Bond Fund 2013

Important information: The Fund invests in a portfolio of investment grade bonds primarily denominated in USD issued by issuers located in emerging as well as developed markets. Key risks of the product: ? Investing in the Fund may involve credit/counterparty, market, volatility, liquidity, regulatory, downgrading and political risks. The credit quality and liquidity

of the Fund's investment portfolio may deteriorate when any investment held by the Fund falls below investment grade. The Fund continue to hold such investment, and higher risks may result. Investors may suffer substantial loss of their investments in the Fund. ? Unit trust or mutual fund is NOT equivalent to a time deposit. It is NOT protected under the Hong Kong Deposit Protection Scheme and is not protected by the Hong Kong SAR Government's Exchange Fund. The investment decision is yours but you should not invest unless the intermediary sells it to you has advised you that it is suitable for you and has explained why, including how buying it would be consistent with your investment objectives.

HSBC Investment Grade Bond Fund 2013

Greater visibility of potential returns from a quality and transparent portfolio

Initial offer period until 17 April

Global financial markets remain very uncertain

The global financial crisis has resulted in risk aversion and a "flight-to-quality" type of sentiment. This along with an almost zero interest rate has sent US Treasury yields to historically low levels. Risky assets such as equities and high-yield bonds have underperformed significantly. Against the backdrop of global economic uncertainty, risky assets shall continue to face substantial market volatility and their future returns are likely to be unpredictable.

Investment grade bonds show good value

Investment grade bonds have underperformed US Treasuries significantly since August 2007 with the credit spread widening to historically wide levels indicating that the valuations of investment grade bonds are at very attractive levels. This offers an appealing investment opportunity for long-term investors who use a "buy and hold till maturity" strategy, as it can effectively lock in the current level of yield. Unlike non-investment grade or high yield bonds, investment grade bonds have much lower credit default probability, and are likely to deliver more stable future returns.

Yields of Global Corporate Bonds vs US Treasuries

% Yield

10

Global Corporate Bonds

US Treasuries

9

8 7

6

5

4 3

2

1

12/99 06/00 12/00 06/01 12/01 06/02 12/02 06/03 12/03 06/04 12/04 06/05 12/05 06/06 12/06 06/07 12/07 06/08 12/08

Source: Bloomberg. Global Corporate Bonds = Citigroup BIG Corp Index (USD), US Treasuries = Citigroup US Government Bond Index. Data as of 31 January 2009.

Ways to invest in bonds

When it comes to bond investments, investors can choose a single bond or open-ended bond fund. Single bonds offer predictable cash flows in the form of coupon payments, as well as principal at maturity, provided that there is no default. On the other hand, bond funds offer diversification, but not necessarily stable cash flows and future returns are less predictable than a single bond investment.

HSBC Investment Grade Bond Fund 2013

An innovative solution that combines the benefits of a bond fund, with single bond like features.

Objective

The Fund will invest in a diversified portfolio of around 30-40 USD denominated investment grade bonds, primarily using a buy and hold strategy during the 4-year investment tenure and aims to deliver coupon on a semi-annual basis (not guaranteed).

Unique features

? Targets stable income : aims to distribute coupon payment on a semi-annual basis (not guaranteed) ? Diversification : diversified portfolio of local and global issuers ? Transparency : full portfolio holdings to be disclosed1 ? Active management : ongoing risk management, during the 4-year investment tenure, to mitigate credit default ? Investment expertise : to be managed by an award-winning bond fund management team2 ? Low investment amount : minimum US$1,000

Asset allocation

Country allocation reference*

N. America 30% Europe 10%

Asia 60%

Credit rating reference*

BBB 14.3%

AAA 10.4%

A 48.0%

AA 27.3%

Expected minimum credit rating*: BBB- / Baa3 Expected average credit rating*: A- / A3 or above

* As at 1 March 2009. For illustration purposes only, actual portfolio might differ and the portfolio characteristic may vary throughout the life of the Fund vs. at launch period. 1 Full portfolio holdings can be reviewed on assetmanagement.hk. 2 Asia Asset Management 2008 Best of the Best Country Award - Asian Bond House. The team also manages the HSBC Asian Bond Fund.

Fund details

Initial offer period

Until 17 April 2009

Class of shares

Class A

Currency

US dollar

Launch date

20 April 2009

Investment tenure

4 years

Maturity date

On or around 17 April 2013

Minimum investment US$1,000

Initial offer price

US$10.310 per share (includes an initial sales charge of 3% of the initial offer price)

Management fee Redemption fee Switching fee Dividend policy First dealing date Dealing day Dealing cut off Investment advisor Fund manager

0.75% p.a. 1% (pay to the Fund, will be reflected in bid price) 1% Semi-annually (not guaranteed) 7 May 2009 1st and 3rd Thursday of each month The Hong Kong business day before a dealing day Halbis Capital Management (Hong Kong) Limited Cecilia Chan

What is investment grade bond?

Debt rated BBB-/Baa3 or above by S&P/Moody's, or senior debt issued by an entity with such rating. In the event of a default, senior debt holders have the priority to claim principal over other subordinated debt holders.

Suitable investors:

? Investors who seek potential regular income and willing to invest for a period of 4 years (the Fund is designed to have an investment tenure of 4 years, early redemption is subject to a redemption fee of 1% (to be paid to the Fund)).

? Investors who seek high investment grade bond investments with transparency but want to avoid concentration risk associated with a single bond.

? Investors who are willing to accept the investment risks set out in "important information" and "other risks".

Other risks:

? Interest-rate risk: bonds are more susceptible to fluctuation in interest rates movement.

? Credit risk : an issuer suffering an adverse change in its financial condition could lower the credit quality of a security.

? Default risk: an issuer's failure to pay interests or repay the principal may lead to greater price volatility of the security.

? Liquidity risk: investment in illiquid securities may reduce the returns of the Fund because it may be unable to sell the illiquid asset at an advantageous time or price.

? The Fund may invest in emerging markets which may subject to higher risks. ? The coupon payment of the Fund is not guaranteed and the realisation price

of the Fund may fall below the subscription price during the investment period and at maturity.

0903(B)_IGB_Brochure_allchannel

Investment involves risks and past performance is not indicative of future performance. Please refer to the offering document for further details including the risk factors. The document has not been reviewed by the Securities and Futures Commission. The document is prepared for general information purposes only. All views expressed cannot be construed as an offer or recommendation by HSBC Global Asset Management (Hong Kong) Limited ("AMHK"). AMHK and HSBC Group shall not be held liable for damages arising out of any person's reliance upon this information. Any person considering an investment should seek independent advice on the suitability or otherwise of the particular investment.

Issued by HSBC Global Asset Management (Hong Kong) Limited

Important information:

The Fund invests in a portfolio of investment grade bonds primarily denominated in USD issued by issuers located in emerging as well as developed markets.

Key risks of the product:

? Investing in the Fund may involve credit/counterparty, market, volatility, liquidity, regulatory, downgrading and political risks. The credit quality and liquidity of the Fund's investment portfolio may deteriorate when any investment held by the Fund falls below investment grade, resulting in higher risk. Investors may suffer substantial loss of their investments in the Fund.

? Unit trust or mutual fund is NOT equivalent to a time deposit. It is NOT protected under the Hong Kong Deposit Protection Scheme and is not protected by the Hong Kong SAR Government's Exchange Fund.

The investment decision is yours but you should not invest unless the intermediary sells it to you has advised you that it is suitable for you and has explained why, including how buying it would be consistent with your investment objectives.

Indicative initial investment universe of HSBC Investment Grade Bond Fund 2013

As at 1st March 2009 (`the Date'), the Investment Adviser of the HSBC Investment Grade Bond Fund 2013 (`the Fund') expects that the initial portfolio of the Fund after the close of the Initial Offer Period will be selected from the issuers set out below.

Please note that the below indicative initial investment universe is for reference only. It is based on information available to the Investment Adviser as at the Date. Investments of the Fund may not include all issuers in the indicative initial investment universe and the actual portfolio of the Fund may be more concentrate than the indicative initial investment universe. The Investment Adviser has full discretion to select investments for the Fund outside the indicative initial investment universe in accordance with the investment objective of the Fund, considering various factors the Investment Adviser consider appropriate.

Due to changes in market situations, the initial portfolio selected by the Investment Adviser may be different from the indicative initial investment universe significantly. The Investment Adviser shall not be in any way bound by the indicative initial investment universe provided below. No notice will be issued to unitholders as regards any change to the indicative initial investment universe thereafter.

Issuer

Commonwealth Bank of Australia Telstra Westpac Banking Corp Bank of Nova Scotia Export Development Canada Province of Ontario Canada Province of Quebec Canada Royal Bank of Canada China Merchant CNOOC Export Import Bank of China BNP Paribas Electricite de France France Telecom Societe Financement de l'Economie Francaise Total Capital SA Deutsche Telekom E.ON AG KFW Landwirtschaftliche Rentenbank L-Bank Landeskreditbank BadenWuerttemberg Foerderbank HK & China Gas Hong Kong Airport Authority Hongkong Land Hutchison Whampoa MTRC Sun Hung Kai Properties Swire Pacific Export-Import Bank of Korea Korea Development Bank Korea East-West Power Korea Electric Power Corp Korea Expressway Corp Korea Railroad Corp KT Corp SK Telecom MISC Petronas

Country

Australia Australia Australia Canada Canada Canada Canada Canada China China China France France France

France

France Germany Germany Germany Germany

Germany

Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Hong Kong Korea Korea Korea Korea Korea Korea Korea Korea Malaysia Malaysia

Moody's S&P

Aa1

AA

A2

A

Aa1

AA

Aa1

AA-

Aaa

AAA

Aa1

AA

Aa2

A+

Aaa

AA-

Baa2

BBB

A1

A+

A1

A+

Aa1

AA

Aa3

A+

A3

A-

Aaa

AAA

Aa1 Baa1 A2 Aaa Aaa

AA BBB+ A AAA AAA

Aaa

AA+

A1

A+

Not rated AA+

A3

BBB+

A3

A-

Aa2

AA+

A1

A

A3

A-

A2

A

A2

A

A1

A

A1

A

A2

A

A2

A

A3

A-

A2

A

A2

A-

A1

A-

Issuer

Sarawak Telekom Malaysia Tenaga Rabobank Shell Int'l Energias de Portugal DBS OCBC PSA International Singapore Power Singapore Telecom UOB Roche Holdings Inc PTT Public AstraZeneca Plc British Petrolium HSBC Standard Chartered Plc Tesco Plc AT&T Coca-Cola Co Comcast Corp Dell Inc General Electric Glaxosmithkline Cap Inc Hewlett-Packard Co IBM JPMorgan Chase (FDIC guaranteed) Kellogg Co McDonald's Corp Norfolk Southern Corp Procter & Gamble Co Time Warner Cable Inc Time Warner Inc United Parcel Service Inc Verizon Communications Inc Wal-Mart Stores Inc Walt Disney Co Wells Fargo (FDIC guaranteed)

Country

Malaysia Malaysia Malaysia Netherlands Netherlands Portugal Singapore Singapore Singapore Singapore Singapore Singapore Switzerland Thailand UK UK UK UK UK US US US US US US US US

US

US US US US US US US US US US US

Moody's S&P

Baa1

A-

A3

A-

Baa1

BBB

Aaa

AAA

Aa1

AA+

A2

A-

Aa1

AA-

Aa1

A+

Aaa

AA

Aa3

AA-

Aa2

A+

Aa1

A+

Aa1

AA-

A2

BBB+

A1

AA-

Aa1

AA

Aa1

AA

A3

A

A3

A-

A2

A

Aa3

A+

Baa2

BBB+

A2

A-

Aaa

AAA

A1

A+

A2

A

A1

A+

Aaa

AAA

A3 A3 Baa1 Aa3 Baa2 Baa2 Aa2 A3 Aa2 A2 Aaa

BBB+ A BBB+ AABBB+ BBB+ AAA AA A AAA

During the investment period of the Fund, the portfolio of securities will change from time to time without notice and without making reference to the indicative initial investment universe. Please refer to assetmanagement.hk for regular disclosure of the Fund's full portfolio holding after the launch of the Fund.

Investment involves risks and past performance is not indicative of future performance. Please refer to the offering document for further details including the risk factors. The document has not been reviewed by the Securities and Futures Commission. The document is prepared for general information purposes only. All views expressed cannot be construed as an offer or recommendation by HSBC Global Asset Management (Hong Kong) Limited ("AMHK"). AMHK and HSBC Group shall not be held liable for damages arising out of any person's reliance upon this information. Any person considering an investment should seek independent advice on the suitability or otherwise of the particular investment.

Issued by HSBC Global Asset Management (Hong Kong) Limited

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