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Frédéric Leguay Lead Portfolio Manager HSBC Global Asset Management (France) Performance review: June 2017 HSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information contained in this document is not intended as investment advice or recommendation. Non contractual document.

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Page 1: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

Frédéric Leguay

Lead Portfolio Manager

HSBC Global Asset Management (France)

Performance review: June 2017

HSBC GIF Euroland Equity

This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail

Clients. The information contained in this document is not intended as investment advice or recommendation.

Non contractual document.

Page 2: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

2 Non contractual document

Contents

HSBC Global Asset Management: Organisation Section 1

HSBC GIF Euroland Equity: Performance review and positioning Section 2

Euroland market outlook Section 3

HSBC GIF Euroland Equity

– Historical performance review (2007-2016) Section 4

– Investment philosophy and process Section 5

Appendices Section 6

Page 3: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

HSBC Global Asset Management

Organisation

Page 4: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

4 Non contractual document

OrganisationGlobal equity team leadership

Source: HSBC Global Asset Management as at 31.03.2017

Process development and evolution

Research

Portfolio construction

Quantitative tools

Global oversight of processes

Promotes best practice and consistency while maintaining team

ownership of performance

Ties in management of global and regional process and governance

frameworks

Benefits of a global team

Promotion of team approach and values

Common investment approach

Equity leadership team strategyChris Cheetham

Global CIO

Jim HugganCIO [Canada]

Sanjiv DuggalHead of Asian and Indian Equities [HK]

Nick TimberlakeHead of GEM & Latam Equities [London]

Mandy ChanHead of China and HK Equities [HK]

Vis NayarDeputy CIO, Equities. Head of Research &

Systematic Strategies [London]

Frédéric LeguayHead of European Equities [Paris]

Angus ParkerHead of Developed Market

Equities [London]

Tushar PradhanCIO [India]

Chingi ChangCIO [Taiwan]

Yigit OnatHead of Turkey Equities [Istanbul]

Quentin CaoCIO HSBC Jintrust [Shanghai]

Abdullah S. Al HamedCIO [Saudi Arabia]

Joseph MolloyHead of Passive Equities [London]

Bill MaldonadoGlobal CIO, Equities

Page 5: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

5 Non contractual document

Source: HSBC Global Asset Management as at 30.04.2017

HSBC Global Asset Management: Equity specialistManufacturing center: Paris

European equities: Key facts (30.04.2017) Our key strengths

– Integrated: one team/one process “profitability and

valuation”

– Specialised: analysts (6) supporting the large cap team

cover 2-3 sectors each. Manager/analyst role for small

and mid cap segment

– ESG database allows for complete company analysis

– Unique and “repeatable” approach: each investment

case follows predefined steps to decompose profitability

drivers

– Global infrastructure: global database and tools brings

consistency and comparability

– Dedicated Bloomberg application allows teams to

exchange investment cases and meeting notes

EUR 9.6 bn

in equity AUM

~15 equity portfolio

managers

10 large and 5 small and mid cap

~6 large cap equity

analysts

Page 6: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

6 Non contractual document

1. Employees’ Savings Plans

Source: HSBC Global Asset Management as at 30.04.2017

HSBC Global Asset Management: Equity specialistCapabilities managed in Paris

European equities: Assets under management by type Active fundamental stock selection

Long-dated track record

Robust long-term performance

– Consistently in 1st or 2nd quartile; 3 & 5Y periods

– Focus on delivering high risk-adjusted returns

Strategy Geography

Core (large cap) Europe, Europe ex UK, Euroland, France

Volatility Focused Europe, Europe ex UK

Dividend/Income Europe

SMID Europe, Euroland, France

Strategy Launch date Process upgrade

Core (large cap) 1980 2004

Dividend/Income 2003 2012

SMID 1998 2003

Core (large cap):

EUR 6.8 bn

Dividend/Income:

EUR 565.0 ml

SMID: EUR 995.0 ml

Other*: EUR 1.2 bn

Page 7: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

7 Non contractual document

OrganisationParis European equity investment team

An experienced investment team in Paris with an average over 20 years industry experience

Stable and committed teams benefiting from a common investment framework supported by customized tools

ESG (Environmental, Social and Governance) criteria are systematically taken into account1

1. Formal integration of ESG criteria were implemented as of 2012.

Source: HSBC Global Asset Management. As of June 2017. ( x ) Years of industry experience. For illustrative purposes only.

Research and

Development

1 economist

European Equity:

Tony Eagleton (24)

Product

Specialists

Cédric Carpentier (15)

Risk management tools and

strategy research

Investment Process

R&D

Pascal Pierre (19)

Head of Equity

and ESG1 Research

Denis Grandjean (27)

Head of Large Cap

European Equity

Frédéric Leguay (29)

Head of Thematic

Equity

Pascal Pierre (19)

Portfolio Managers Financial and ESG1 AnalystsFinancial engineering

& quantitative research

Head of European Equities - Frédéric Leguay (29)

Equity Traders

4 tradersLaura Fauveau (4)

Materials and Construction,

Healthcare, Business

Services

Aloys Goichon (13)

Utilities, Oil & Gas

and Capital Goods

Guillaume d’Harcourt (38)

Aerospace-Defense, Autos

Eric Hazart (25)

Bank, Insurance and Real

Estate

Benoit Olle-Laprune (23)

Technology, Media and

Telecoms

Florence Tassan (19)

Consumer goods and

services, Transportation

François Chacun (29)

Jeanne Follet (19)

Patrick Gautier (18)

Denis Grandjean (27)

Bénédicte Mougeot (22)

Yann Petel (34)

Jean-Luc Rondet (30)

TBA

SMID Cap Equity

Other Thematic

Abderrahman Belcaid (11)

Frédérique Caron (16)

Christophe Peroni (21)

François Travaillé (30)

Clément Tasseau (18)

Page 8: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

HSBC GIF Euroland Equity

Performance review and positioning

Page 9: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

9 Non contractual document

HSBC GIF Euroland Equity: net performance (IC share class) AUM EUR783.4 million as at 30.06.2017

Net cumulative performance (IC share class)

Over 5 years 29.06.2012 – 30.06.2017

Source: HSBC Global Asset Management as at 30.06.2017.

1. Index given for comparative and illustrative purposes only. The fund has no official benchmark.

2. Morningstar fund quartile - category Eurozone Large-Cap Equity: Data Source - © Copyright 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content

providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this

information.

3. Quartile ranking is based on period from 16.12.2006 to 30.06.2017, as the NAV of Morningstar database start on 16.12.2006.

Allocation is as at the date indicated, may not represent current or future allocation and is subject to change without prior notice.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Net performance

as at 30.06.2017YTD 2017 2016 2015 2014 2013 1 year 3 years 5 years

Since launch

(15.12.2006)

HSBC GIF Euroland Equity

(IC)10.4% 4.7% 11.8% 2.8% 31.6% 31.5% 27.2% 106.6% 48.8%

MSCI EMU (NR)1 8.5% 4.3% 9.8% 4.3% 23.4% 24.8% 22.8% 85.6% 26.0%

Excess Return +1.9% +0.4% +2.0% -1.5% +8.2% +6.7% +4.3% +21.0% +22.7%

Quartile2 1 1 2 2 1 1 1 1 13

Fund

Tracking Error (ex-post 3 years) 3.88%

Number of holdings 55

1st Quartile

2st Quartile

3rd Quartile

4th Quartile

10 Largest holdings (%) Weight

ALLIANZ SE-REG 3.57%

SANOFI 3.35%

ING GROEP NV 3.15%

BAYER AG 3.10%

SOCIETE GENERALE 3.05%

BANCO SANTANDER SA 3.00%

AXA SA 2.69%

DEUTSCHE POST AG 2.61%

UNICREDIT SPA 2.36%

DAIMLER AG 2.35%

Total 26.87%

90100110120130140150160170180190200210220

06/2012 06/2013 06/2014 06/2015 06/2016 06/2017

HSBC GIF EUROLAND EQUITY EN EUR (I) MSCI EMU (NR)*

+106.6%

+85.6%

Page 10: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

10 Non contractual document

HSBC GIF Euroland Equity (YTD)Country allocation and attribution 30.12.2016 to 30.06.2017

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

1. Index given for comparative and illustrative purposes only. The fund has no official benchmark.

Allocation is as at the date indicated, may not represent current or future allocation and is subject to change without prior notice.

The content of this page is historic and contains information that is not current. It is not intended as advice or a recommendation to buy or sell any sector or financial instrument.

The performance figures in the document are gross of fees. Returns would be lower once fees are taken into account.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

10.2% 8.5% 9.0%13.8%

9.4%

31.6%

-9.0%

-30.0%

8.5% 6.9%11.5% 13.7%

6.0%

22.9%

-10.6%

0.0%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

FRANCE GERMANY NETHERLANDS SPAIN ITALY AUSTRIA LUXEMBOURG SWITZERLAND

HSBC GIF EUROLAND EQUITY MSCI EMU (NR)*

Country – average portfolio weight vs comparative index*

Country – portfolio performance vs comparative index*

(YTD) Comparative index

performance: 8.5%

33.6%

25.0%

18.0%

11.1%

4.2% 3.9%

0.6% 0.2%

30.8% 29.7%

12.5%10.5%

6.2%

0.7% 0.6% 0.0%0%

5%

10%

15%

20%

25%

30%

35%

40%

FRANCE GERMANY NETHERLANDS SPAIN ITALY AUSTRIA LUXEMBOURG SWITZERLAND

HSBC GIF EUROLAND EQUITY MSCI EMU (NR)*

Page 11: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

11 Non contractual document

HSBC GIF Euroland Equity (YTD)Sector allocation and attribution 30.12.2016 to 30.06.2017

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

1. Index given for comparative and illustrative purposes only. The fund has no official benchmark.

Allocation is as at the date indicated, may not represent current or future allocation and is subject to change without prior notice.

The content of this page is historic and contains information that is not current. It is not intended as advice or a recommendation to buy or sell any sector or financial instrument.

The performance figures in the document are gross of fees. Returns would be lower once fees are taken into account.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

13.8% 14.9%11.9%

4.5% 6.1%

2.0%3.5%

12.2%

15.3%

6.6%

11.4% 11.0% 11.8%

7.4%8.6%

3.2% 3.3%

-6.4%

13.6% 12.5%

-10%

-5%

0%

5%

10%

15%

20%

Financials Industrials Health Care Cons. Disc. Cons. Staples Telecom. Materials Energy Utilities IT

HSBC GIF EUROLAND EQUITY MSCI EMU (NR)*

Sector – average portfolio weight vs comparative index1

Sector – portfolio performance vs comparative index1

(YTD) Comparative index

performance: 8.5%

24.8%

18.8%

10.8% 10.7%7.6%

5.8% 5.0% 5.0% 4.7%3.4%

21.5%

14.1%

8.0%

14.0%

10.6%

5.5%

8.4%

5.4% 4.7%

7.7%

0%

5%

10%

15%

20%

25%

30%

Financials Industrials Health Care Cons. Disc. Cons. Staples Telecom. Materials Energy Utilities IT

HSBC GIF EUROLAND EQUITY MSCI EMU (NR)*

Page 12: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

12 Non contractual document

Company

Average

weight Performance Contribution

AHOLD (KONINKLIJKE) NV 1.31% -14.42% -0.22%

TOTAL SA 2.03% -8.56% -0.22%

DAIMLER AG 2.56% -7.29% -0.19%

ARYZTA AG 0.18% -29.59% -0.08%

RENAULT 1.73% -2.75% -0.08%

Company

Average

weight Performance Contribution

OMV AG 2.08% 37.85% 0.55%

DEUTSCHE LUFTHANSA AG 1.04% 65.64% 0.51%

BASF SE -2.15% -5.06% 0.31%

UNICREDIT SPA 1.16% 7.16% 0.29%

CREDIT AGRICOLE SA 1.66% 24.73% 0.26%

Company

Average

weight Performance Contribution

OMV AG 2.23% 37.85% 0.79%

DEUTSCHE LUFTHANSA AG 1.14% 65.64% 0.65%

BANCO SANTANDER SA 3.02% 18.62% 0.55%

CREDIT AGRICOLE SA 2.04% 24.73% 0.49%

BAYER AG 3.06% 16.24% 0.47%

Company

Average

weight Performance Contribution

LVMH MOET HENNESSY LOUIS

VUITTON SA -1.52% 21.87% -0.18%

GEMALTO 1.36% -3.58% -0.17%

AHOLD (KONINKLIJKE) NV 0.65% -14.42% -0.17%

RENAULT 1.31% -2.75% -0.15%

DAIMLER AG 0.83% -7.29% -0.15%

HSBC GIF Euroland Equity (YTD)Performance attribution 30.12.2016 to 30.06.2017

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

The content of this page is historic and contains information that is not current. It is not intended as advice or a recommendation to buy or sell any sector or financial instrument.

The performance figures in the document are gross of fees. Returns would be lower once fees are taken into account.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

5 best contributors – absolute performance 5 worst contributors – absolute performance

5 best contributors – relative performance 5 worst contributors – relative performance

Page 13: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

13 Non contractual document

HSBC GIF Euroland Equity1-year and 3-year factorial performance attribution (30.06.2017)

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

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Page 14: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

14 Non contractual document

HSBC GIF Euroland Equity (gross returns)An illustration of how the fund performs in up and down markets

Source: HSBC Global Asset Management. Performance in EUR, gross of fees. Period: 30.09.2004 to 30.06.2017. For illustrative purposes only.

1. As of end of September 2004, the fund has been fully managed following the profitability and valuation investment process.

2. Index given for comparative and illustrative purposes only. The fund has no official benchmark.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

The performance figures in the document are gross of fees. Returns would be lower once fees are taken into account.

99.4

%

-58.5

%

106.6

%

-33.4

%

28.3

%

-20.1

%

123.5

%

-23.7

%

32.9

%

180.5

%

88.5

%

-60.1

%

85.1

%

-30.5

%

29.1

%

-17.2

%

100.3

%

-23.7

%

24.8

%

109.1

%

10.9

%

1.5

% 21.4

%

-2.8

%

-0.8

%

-2.9

%

23.2

%

0.1

%

8.0

%

71.4

%

-150%

-100%

-50%

0%

50%

100%

150%

200%

09.2004 -07.2007

07.2007 -03.2009

03.2009 -02.2011

02.2011 -09.2011

09.2011 -03.2012

03.2012 -06.2012

06.2012 -04.2015

04.2015 -06.2016

06.2016 -06.2017

09.2004 -06.2017

HSBC GIF Euroland Equity (gross of fees) MSCI EMU (NR)² Excess return

The fund tends to "do better" in rising markets and perform "in line" in down markets

Excess return (gross of fees): +71.4% (from September 20041 to June 2017)

Gross performance in up and down periods (from 30.09.2004 to 30.06.2017)

Page 15: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

15 Non contractual document

HSBC GIF Euroland Equity: factor based competitive positioningBased on weekly NAV between 31.12.2011 and 31.12.2016

Illustration of the fund and its sensitivity to a number of factors (value, size, quality, dividend yield and market beta); these factors

allow you to show the alpha of the fund

140 funds in the Morningstar Euro Large Cap category with AUM > EUR100m and that have a Euroland large cap benchmark

Source: HSBC Global Asset Management. Each dot on the line is the sensitivity of one of 140 funds to the mentioned factors.

Period: 31.12.2011 – 31.12.2016. The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) on the markets, according to the information

available to date. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Alpha Size factor Value factor

Market factor Dividend Yield factor Quality factor

Page 16: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

16 Non contractual document

Allocation effect

+0.58 %

(p.a. on avg.)

Selection

effect

+1.70%

(p.a. on avg.)

HSBC GIF Euroland Equity (gross returns)10Y gross relative performance analysis confirms importance of stock selection and validates fundamental

Source: HSBC Global Asset Management, MSCI. Annualised performance gross of fees over 10 years. Period: 29.12.2006 – 31.12.2016. For illustrative purposes only.

* P/V approach refers to our proprietary tool that filters and identifies all companies within our scope of investment, from which the portfolio manager will analyse and select stocks

The performance figures in the document are gross of fees. Returns would be lower once fees are taken into account.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Relative performance to P/V approach

Selection effect

Finance +0.9

Industrial +0.4

Health +0.4

Telecom -0.3

Allocation effect

Health +0.3

Finance +0.2

Consum. Disc. -0.3

90

95

100

105

110

115

120

125

130

12/06 12/08 12/10 12/12 12/14 12/16

P&V approach in Eurozone*

HSBC GIF Euroland Equity (gross)

Performance attribution

P&V approach

in Eurozone*

+1.00 %

(p.a. on avg.)

Alpha

+1.28%

(p.a. on avg.)

Relative performance comparison

+2.28%

Relative

performance(p.a. on avg.)

MSCI EMU: +1.50%

(p.a. on avg.)

Page 17: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

17 Non contractual document

HSBC GIF Euroland EquityPerformance commentary as at end June 2017

Source: HSBC Global Asset Management (France) as at 30.06.2017. For illustrative purposes only.

1. Index given for comparative and illustrative purposes only. The fund has no official benchmark.

The content of this page is historic and contains information that is not current. It is not intended as advice or a recommendation to buy or sell any sector or financial instrument.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) on the markets, according to the information available to date.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

The fund outperformed the comparative index1 in 2017 with

a net return of +11.2% (I share) vs. +9.2% for the MSCI EMU

index1

The value bias was a slight headwind in an environment that

tended to favor quality over value companies as hopes of

reflation fades especially in the US

Stock selection has constituted most of the total

outperformance this year, with the biggest contributors

coming from a broad range of industrials, energy companies

and banks

In contrast stock selection in software & services, healthcare

equipment and food & staples retailing were the biggest

detractors

In June, the fund continues to accumulate outperformance

due to profit-taking in retail, food and semiconductors and

the ongoing uptrend banks in particular, to which we are

overexposed

We remain overexposed to financials, healthcare and the

fairly diverse industrials segment. Conversely, we are

underexposed to consumer staples and discretionary, as well

as basic industries

Key active positions at 30.06.2017

Positions Rational

Société

Générale

Banks

The stock is still undervalued despite improved solvability (CET1 FL @ 11.5% in 2017). International network is in growth mode with improving profits. France should benefit from a steeper yield curve & restructuring in the network. The stock is trading at 0.8x TBV 2017 for a ROTE of 8.2% vs 0.9x and 7.2% for the Eurozone sector.

OMV

Petroleum

The attractive valuation of this energy group does not reflect the transformation that it is currently experiencing. Its agreement with Gazprom will allow it to strongly grow its resources and improve its profitability per barrel and cash flow generation. The current divestment of certain assets provides a high level of visibility on the dividend payment with a yield in excess of 4%.

Natixis

Banks

The CET1 is strong and improving. The groups’ dividend policy is conservative with a payout ratio of 50%. The CEO reiterated that the excess capital above 10.5% will be returned to shareholders in absence of potential acquisitions. The business model is based on low capital consumption (e.g. asset management) and the dividend story remains intact.

Page 18: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

18 Non contractual document

Portfolio characteristics

Comparative index MSCI EMU (NR)1

CapitalisationBiased to large-cap stocks:

EUR1bn minimum (at purchase)

Style "Relative Value" bias

Typical holdings 50-602

Individual stock holdings 5% max.

Tracking error ex-ante 3 - 5%2

Average annual turnover < 30%2

Regional exposure

Mainly 10 developed Eurozone countries

(Austria, Belgium, Finland, France,

Germany, Ireland, Italy, Netherlands,

Portugal, Spain)

Sector exposure

No sector constraints yet impose a minimum

of 15 to be held at all times

(out of the 24 MSCI industry groups)

Cash weighting 0-5%2

HSBC GIF Euroland EquityFund details and assets under management

Source: HSBC Global Asset Management as at 30.06.2017. For illustrative purposes only.

Characteristics and weightings are for illustrative purposes only, are not guaranteed and are subject to change over time, and without prior notice, taking into account any changes in markets.

1. Index given for comparative and illustrative purposes only. The fund has no official benchmark.

2. The above mentioned limits/objectives are to be considered on the recommended minimum investment period; there can be no assurance that the strategy of the fund will achieve this objective.

Net new money and assets under management

(EUR million) as of 30.06.2017

23

9

19

2

-15

5

-14

0

-19

2

-19

44

10

2

-23

0

-27

40

1

92

5

11

18

80

2

75

2

75

3

74

8

88

2

75

5

78

3

-500

-250

0

250

500

750

1 000

1 250

2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017

Net New Money AUM

Page 19: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

19 Non contractual document

HSBC GIF Euroland EquityFund details

Source: HSBC Global Asset Management. The information contained above does not constitute a commitment from HSBC Global Asset Management (France) and is subject to change without prior

notice. For information purposes only, the fund may not be registered for sale in your country. Before subscription, investors should refer to the Key Investor Information Document (KIID) of the fund as

well as its complete prospectus. For more detailed information on the risks associated with this fund, investors should refer to the prospectus of the fund.

Legal Form

Sub-fund of Luxembourg UCITS IV HSBC Global Investment Funds

Valuation

Daily

Dealing

Daily by 10:00 (CET)

Execution

Trade Day

Settlement

Trade Day + 4 business days

Management Company

HSBC Investment Fund (Lux.) SA

Custodian and transfer agent

HSBC Bank Plc. Luxembourg Branch

Recommended investment horizon

Minimum 5 years

Main Risks

Equity risk, Capital loss risk

Launch Date

04 April 2003

Reference Currency

EUR

Dealing currencies

EUR, USD, PLN

Management Fees

1.50% (A) | 0.75% (I)

Performance Fees

None

Subscription/Redemption Fees

5.54% max./None

Minimum Initial Investment

A Share Class: USD5,000 | I Share Class: USD1,000,000

Share Type

Accumulation (C) or Distribution (D)

ISIN Codes

AC: LU0165074666

AD: LU0165074740

IC: LU0165074823

ID: LU0165075127

Publication of Net Asset Value

www.assetmanagement.hsbc.com/fr

Page 20: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

Euroland market outlook“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die

in euphoria”

Sir John Templeton

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21 Non contractual document

European market outlook overview

Source: HSBC Global Asset Management as at 30.06.2017. For illustrative purposes only.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) on the markets, according to the information available to date. They do not

constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global Asset Management (France) will not be held responsible for any investment or

disinvestment decision taken on the basis of the commentary and/or analysis in this document.

Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (France) accepts no liability for any failure to meet such forecast,

projection or target.

Although losing some momentum, the global recovery is lending credibility to projected European corporate

earnings growth of 10% to 15% in 2017 and 2018 from depressed levels. Monetary support remains elevated

although diminishing

Earnings revisions are positive for the first time since 2010 with the biggest contributions coming from financials

and commodities, sectors that suffered the most from a collapse in the earnings bubbles

The liquidity picture for European equities remains positive with both corporates and investors eager to increase

exposure

Although above long-term averages, European valuation multiples are reasonable given a supportive earnings

backdrop and the low returns generated by most other European asset classes

We see the key risks in 2017 as political developments in Europe and globally, the pace of the rise in long-term

interest rate in the US and further US dollar strengthening

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22 Non contractual document

Are there good reasons to be optimistic?Euroland and EM economic momentum remain strong

Citigroup – Economic Surprise Indicators

Period: 30.09.2013 to 30.06.2017

Source: Citigroup – Economic Surprise Indicators as at 30.06.2017. For illustrative purposes only.

* Relative evolution to the Top 10 developed countries: Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, UK and US.

Higher Commodity Prices

Bounce in Manufacturing

Activity

End of Inventory Destocking

Rebound in Capital

Spending

Falling Unemployment

Rising Consumer spending

Global Fiscal Expansion

* * *

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23 Non contractual document

Are there good reasons to be optimistic?Credible acceleration in profit growth in Europe

Earnings revision ratio (30.06.2017)

Source: HSBC Global Asset Management, MSCI, IBES, Factset, Morgan Stanley Research, Consensus Earnings Estimates over time, as at 30.06.2017.

Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (France) accepts no liability for any failure to meet such forecast,

projection or target.

The figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Higher commodity prices

Bounce in global nominal

GDP

Higher inflation

Lower Euro

Lower interest rates

Lower tax rates

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24 Non contractual document

Are there good reasons to be optimistic?4 bubbles and a cycle

Source: MSCI EMU – Consensus Next 12-month Earnings Estimates over time. Sources: Global Asset Management and MSCI, MSCI, IBES, Factset, Morgan Stanley Research as at 31.05.2017.

Note: Data calculated before goodwill and in local currency terms.

Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (France) accepts no liability for any failure to meet such forecast,

projection or target.

The figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Eurozone Consensus Profit Estimates (EURm)

FIN COD COS ENE IND MAT INF TEL HEA UTI MKT

From previous

peak(58.8%) 0.0% (2.6%) (64.3%) (1.9%) (48.3%) (3.2%) (46.8%) 0.0% (54.0%) (30.8%)

Trend growth

1996-200610.2% 4.9% 8.3% 15.2% 6.1% 6.4% 2.8% 11.3% 8.0% 7.9% 8.3%

Trend growth

2007-2016(7.4%) 8.0% 3.7% (7.1%) 1.4% (3.8%) 1.7% (7.4%) 4.9% (7.6%) (1.9%)

High operational

gearing

(net margins at 5%)

High proportion of

financials

(20% earnings)

Large sensitivity to

commodity

(15% earnings)

Large exposure to

emerging

(20% sales)

Domestic pent-up

Positive impact of

lower Euro

(50% of sales)

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25 Non contractual document

Europe Absolute Valuations: above long-term averages

NTM PE in Europe

Period: 31.12.1987 to 30.06.2017

Source: Datastream, Morgan Stanley, MSCI as at 30.06.2017. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

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26 Non contractual document

Trend valuations in Europe: not expensive on conservative growth estimates

Trend PE in Europe

Period: 31.07.1985 to 31.05.2017

Source: Datastream, Morgan Stanley, MSCI as at 31.05.2017. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Actual 3.0% growth

average valuation

At 6.7% trend growth

inexpensive valuation

1985 2017

Europe – Earnings per Share and Trends (Log scale)

Period: 31 July 1985 to 28 April 2017

Shift in trend

growth from 2004

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27 Non contractual document

CAGR Expected total returns for the market are clearly attractive

Europe Trend PE vs. Real total return achieved 10 years later (April 2017)

Period: December 1979 to May 2007

Source: Bloomberg and MSCI as at 31.05.2017. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

On the horizontal axis (left to right) a given dot presents the valuation (trend PE) of the Europe

equity market at a given month over the period (December 1979 to end-April 2007). The same

given dot also shows the historical returns achieved over the following 10 years (December 1989 to

May 2017). It is pretty clear that the dots further to the right which present the market at high

valuations (Trend PE) are generally followed by very low to negative returns over the following 10

years. At the current Trend PE of 16.5x, most of the returns in the following 10 years are

concentrated in a +5% to +15% return range. Months in which Trend PEs are particularly low (far

left) have systematically been followed by 10-year returns in excess of +10% per year.

Historical range of yearly Real Total Return achieved

for 10 years in Europe when the Trend PE is at 16.6x

Trend PE of 16.5x is at 31.05.2017

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28 Non contractual document

Long-term valuation measuresHistorical discount to US equities

Source: Datastream, Morgan Stanley, MSCI as at 31.05.2017. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Relative Long Term Valuation Measures (Europe vs. US) – Z-Score

Period: 31.12.1980 to 31.05.2017

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29 Non contractual document

Improving appetite for the asset class from international investors

Source: Datastream, Morningstar, MSCI as at 31.05.2017. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Monthly net Flows into European Equity Funds – as a percentage of the Assets under Management (€547bn)

Period: 31.01.2007 to 31.05.2017

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30 Non contractual document

"Value" Calling!A typical value rally lasts 2 years & averages +25% relative performance

Source: Datastream, Morgan Stanley, MSCI as at 30.06.2017. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Value Spread (Price to book: expensive/cheapest) – Z-Scored

Period: September 1996 – June 2017

Jun 12

Mar 09Sep 16

Apr 10

Mar 14

Jan 15

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31 Non contractual document

"Value" Calling!Positively correlated to the cycle and reflation

Source: Datastream, Morgan Stanley, MSCI as at 30.06.2017. For illustrative purposes only.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

MSCI Europe Value – Relative performance vs. MSCI Europe Growth and Long term US interest rates

Period: September 2002 – June 2017

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32 Non contractual document

"Value" Calling!Positively correlated to the cycle and reflation

MSCI Europe (Dec. 2016)

6-Month regression between the Industry Group relative performance and the change in the indicator – 20 years

Source: HSBC Global Asset Management, MSCI as at end-December 2016. For illustrative purposes only. The content of this page is historic and contains information that is not current. It is not intended

as advice or a recommendation to buy or sell any sector or financial instrument. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset

Management (France) accepts no liability for any failure to meet such forecast, projection or target.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Relative performance expectations Higher Long term Interest rates Higher Inflation

Diversified Financials

Materials

Banks

Capital Goods

Automobiles & Components

Diversified Financials

Materials

Banks

Energy

Capital Goods

Retailing

Household & Personal Products

Telecommunication Services

Pharmaceuticals Biotechnology & Life Sciences

Food Beverage & Tobacco

Retailing

Pharmaceuticals Biotechnology & Life Sciences

Household & Personal Products

Food Beverage & Tobacco

Telecommunication Services

Relative performance expectations Higher ISM (US) Higher Eurozone Composite PMI

Banks

Semisconductors and equipment

Materials

Consumer Durables & Apparel

Capital Goods

Banks

Semisconductors and equipment

Consumer Durables & Apparel

Capital Goods

Materials

Household & Personal Products

Telecommunication Services

Food & Staples Retailing

Food Beverage & Tobacco

Pharmaceuticals Biotechnology & Life Sciences

Food & Staples Retailing

Telecommunication Services

Household & Personal Products

Food Beverage & Tobacco

Pharmaceuticals Biotechnology & Life Sciences

+

-

+

-

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33 Non contractual document

Risks

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

Bond yields overshoot

US profit cycle weakens

Chinese investment bubble bursts

Excessive currency volatility

Political uncertainties

Structural deflation awakens again

Disruption in economic models accelerates

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HSBC GIF Euroland Equity

Historical performance review: 2007-2016

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35 Non contractual document

2016 in summary

Source: HSBC Global Asset Management in 2016. For illustrative purposes only.

Allocation is as at the date indicated, may not represent current or future allocation and is subject to change without prior notice.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

Performance

Europe < Developed

World (in $)

Government bonds (+)

Commodities (+ +)

Credit (+)

Style

Small / Mid (-)

Large (+)

Value (+)

Beta (+)

Key performance

drivers

Cyclical sensitivity (+)

EM exposure (+)

US exposure (+)

Value (=)

Domestic exposure (-)

Defensive (-)

Rate Sensitive (-)

Sectors

Best (+)

Energy

Materials

Industrials

IT

Worst (-)

Telecoms

Utilities

Health Care

Consumer Staples

Countries

Best (+)

Austria

Netherlands

France

Portugal

Germany

Worst (-)

Italy

Belgium

Ireland

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36 Non contractual document

HSBC GIF Euroland Equity (2015-2016)Historical relative performance commentary (IC share net of fees)

Source: HSBC Global Asset Management. For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above-mentioned sectors and securities.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) on the markets, according to the information available to date. They do not

constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global Asset Management (France) will not be held responsible for any investment or

disinvestment decision taken on the basis of the commentary and/or analysis in this document.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

2016: +4.73%

The fund slightly outperformed year to date with a net return of +4.73% (I share) against +4.33% for the MSCI EMU*. Sector exposure

weighed marginally due to an absence from semi conductors and consumer durables & apparel

Stock selection, on the other hand, had a positive impact in the most cyclical sectors such as banks, capital goods, materials,

commercial services, transportation and autos - but a negative impact in utilities, software & services and food & staples

The value bias of our fund was detrimental until July and the became favourable starting in August

We remained overexposed to financials, transportation, autos and healthcare as well as to the heterogeneous mix of industrial

equipment and services. We are underexposed to consumption, both discretionary and staples, technology and resources

2015: +1.94%

In Q1, the market rallied on signs of a recovery in the euro zone boosted by a decline in commodity prices. This initially boosted

cyclicals and value stocks performed relatively well

However starting in Q2, investors rotated into defensive, quality companies and stocks with a domestic sales bias as news from China

and the Emerging world continued to disappoint. As such, cyclical sectors such as Banks and the Capital Goods that were directly

impacted by the declines of commodity prices underperformed

The fund suffered relative to peers as of end June because of its value and large cap bias. Small caps outperformed large caps by

over 16% in 2015. The fund was also mostly underweight the types of companies that outperformed: outperformers were either small

cap growth companies or defensive companies mainly in Health Care, Retailing & Household Products, Food & Beverages,

Consumer Durables and Insurance; however a handful of cyclicals outperformed due to their domestic bias, notably Autos,

Commercial Services and Media

Fortunately, the fund net of fees was still able to outperform the gross total return benchmark because of good stock selection: this

offset sector allocation exposures such as being overweight Banks and underweight Food, Beverages and Tobacco

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37 Non contractual document

HSBC GIF Euroland Equity (2012-2014)Historical relative performance commentary (IC share net of fees)

Source: HSBC Global Asset Management. For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above-mentioned sectors and securities.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) on the markets, according to the information available to date. They do not

constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global Asset Management (France) will not be held responsible for any investment or

disinvestment decision taken on the basis of the commentary and/or analysis in this document.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

2013: +8.23%

“Value" stocks in Europe outperformed due to a combination of increased investor appetite for risk in the eurozone as well as an

improving economic outlook. During the year, we continued to shift the portfolio’s positioning towards stocks with low profitability

(cyclical and financial stocks) as we anticipated their normalisation over the medium-long term

At a sector level, the fund benefited from the favourable impact of stock-picking in banks, business services, utilities, IT services,

basic industries and automotive. The fund also benefited from positive contribution coming from allocation, notably an underweight to

companies in basic industries, durable consumer goods and the food industry

Geographically, the fund had positive contribution from our selection of stocks in France (Natixis, Société Générale), Germany

(Deutsche Post, Daimler), Italy (Unicredit, Autogrill) and Spain (ACS, Telecinco)

2012: -0.93%

Value bias was detrimental particularly in the first half of the year but returns of the strategy started to rebound in June as the

historically deep discount of value to growth companies closed slightly

At the sector level, the adverse impact came from lack of emerging market exposure through Germany autos (Volkswagen), retail and

luxury goods (Inditex), chemicals (BASF) and beverages (ABI Inbev); Moreover, holdings with European domestic exposure in

defensive sectors suffered: telecoms (KPN) food retail (Delhaize) and utilities (GDF Suez). We were also penalized holdings in

Repsol, Peugeot and absence from SAP. Strong performance in the second half of the year came about from stock selection in

financials eg Société Générale and BNP Paribas, foods (Kerry), household (Henkel), pharmaceuticals (Grifols) and transportation

(Deutsche Post, Lufthansa)

2014: -1.18%

The fund has had a slightly cyclical orientation given our positioning to a gradual recovery in the global and European economies. This has been slightly negative given the strong run of defensives year to date

Our long standing position in undervalued European domestic companies such as Peugeot in autos and Natixis in banking paid off due to restructuring efforts; However, other cyclicals with high domestic exposure such as ArcelorMittal, Randstad and Prysmianunderperformed because of their “too early in the cycle” status

Our cheap defensive growth companies such as Bayer in Healthcare and Delhaize in Food retailing, and Heineken contributed positively. The fund’s underweighting in utilities was costly: the sector rebounded in anticipation of an earnings trough and lower long term interest rates. Our investments in in oil sensitive companies such as CGG, OMV and Vallourec were a negative

Country allocation was slightly negative, particularly underweighting in Belgium and Finnish stocks, up +18% and 14% respectively

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38 Non contractual document

HSBC GIF Euroland Equity (2007-2011)Historical relative performance commentary (IC share net of fees)

Source: HSBC Global Asset Management. For illustrative purposes only and does not constitute any investment recommendation to buy or sell the above-mentioned sectors and securities.

The commentary and analysis presented in this document reflect the opinion of HSBC Global Asset Management (France) on the markets, according to the information available to date. They do not

constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global Asset Management (France) will not be held responsible for any investment or

disinvestment decision taken on the basis of the commentary and/or analysis in this document.

The performance figures displayed in the document relate to the past and past performance should not be seen as an indication of future returns.

2011: -2.84%

After outperforming in the 1st half of the year on the back of the energy sector (good stock selection), healthcare (overweight & stock selection) and the financials (good stock selection), the fund started to underperform in the 2nd half

Our slight overweighting in financials was slightly negative but it was stock exposure within French banks that was our single most negative contributor. Stocks with a value bias, particularly in the financial and cyclical sectors were pushed downwards because the market had very little confidence in consensus earnings forecasts, due to a deteriorating geopolitical environment

2010: -0.52% The fund performed in line with the comparative index. In spite of a very tough period for value oriented strategies, returns were

resilient due to 1) partial shift into higher profitability companies and 2) the fact that selected stocks outperformed their peers on average in both cyclical and non cyclical categories, mainly in financials and industrials

2009: +10.92% Strong out performance due to increased exposure to transitory profitability companies in 2008 with a view that distressed valuations

were being driven by sentiment and not fundamentals. The strategy benefited from owning companies benefitting from economic normalization. By year end, the exposure to the cyclicals diminished somewhat

2008: +0.68% Small out performance of the strategy is mainly due to the positions taken on stocks with more stable profitability profiles. While

strategy remained relatively defensive, we gradually increased exposure to cyclical companies because the valuation discount widened. In terms of stock selection, our absence from Volkswagen was the most costly contributor over the year

2007: +2.25% Almost all of the outperformance was generated by stock selection. The sectors where stock selection was especially strong are

capital goods, healthcare equipment, software and services, technology hardware and pharmaceuticals. This was also a year in which a ROE/Price to Book - Profitability and valuation model unperformed the market

Page 39: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

HSBC GIF Euroland Equity

Philosophy and process

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40 Non contractual document

Investment philosophy

Source: HSBC Global Asset Management. For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or market conditions.

We believe that markets are inefficient at times; hence, underlying profitability fundamentals are

not always reflected by valuation

We seek to determine whether a company’s current valuation is valid or not by evaluating its

structural and sustainable level of profitability

We focus on the long term believing that the short term is not fundamentally driven

We also believe that ESG factors can impact financial returns so that it is essential we reflect on

them when we make investment decisions

"Fundamental valuation as a framework"

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41 Non contractual document

Investment process1. Investment case identification

Source: HSBC Global Asset Management. For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or market conditions.

Illustration of investment universe

"Quantimental"

Universe screened

Relative valuation bias

Quality neutral

Contrarian

Va

lua

tio

n

1st Quintile – the most attractive

2nd Quintile – attractive

3rd Quintile – Fair value

4th Quintile – Not attractive

5th Quintile – the least attractive

Profitability

Attractive

Expensive

"Exploiting the strong relationship that exists between profitability and valuation"

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42 Non contractual document

Investment process 2. Fundamental analysis

Source: HSBC Global Asset Management. For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or market conditions.

The content of this page is historic and contains information that is not current. It is not intended as an advice or recommendation to buy or sell any sector or financial instrument.

"Acquiring a conviction on the company's structural level of profitability"

Profitability analysis Fundamental valuation ESG analysis

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43 Non contractual document

Investment process3. Portfolio construction

Source: HSBC Global Asset Management (France). For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or market conditions.

1. Global Industry Classification Standard (GICS) developed by MSCI

2. Tracking error targets are not a regulatory obligation and are given for information purposes only. These objectives and guidelines do not constitute a commitment from the asset manager. HSBC

accepts no liability for any failure to meet such forecasts, projections or targets. Tracking error targets are not a regulatory obligation and are given for information purposes only.

Conviction-based

25% average Turnover

Market cap >€1bn

Avg. Daily Volume > €2m

50-60 stocks

15 Industry Group

minimum1

3-5% T/E

60% active share

"Adapting the valuation bias of a conviction-based portfolio to the cycle"

10%

60%

30%

30%

50%

20%

Average profitability

Recessionary phase Expansionary phase

Time

Profitability profiles of

companies in strategy …

…high and stable

Pro

fita

bilit

y (

%)

Cost of capital

…average but growing

Pro

fita

bilit

y (

%)

Cost of capital

…weak but recovering

Pro

fita

bilit

y%

Cost of capital

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44 Non contractual document

Investment process4. Understand and manage the risk embedded in the portfolio

Source: HSBC Global Asset Management. For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or market conditions.

The content of this page is historic and contains information that is not current. It is not intended as an advice or recommendation to buy or sell any sector or financial instrument.

Tools

"Guided by governance and focused on performance"

Resources

First line

Front and Middle office

Second line

Invest. risk and compliance

Third line

Internal audit

Identifying

Recording

Reporting

Managing

Controlling

Setting policy and guidelines

Providing advise and guidance

Risk management

Independently ensures the effective

management of risk

Pre-trade / Trade

Risk metrics calibration

Investment process analysis

Orders and counterparties

In-house, clients, regulatory guidelines

Post-trade

Trade and position controls

Risk guidelines, portfolio constraint and

market risk monitoring

Economic and credit events

Post-trade checks for consistency with

guidelines

Monitoring coherence with portfolio's

objectives

Daily monitoring of investment guidelines

and restrictions

Portfolio analytics including performance,

risk and attribution

Investment and market risk

Risk management

Determination and monitoring of key risk

metrics

Validate front office models

Monitor performance and return volatility

Pre- and Post-trade checks

Define liquidity framework for all funds

Approval of all counterparties and control

of exposure limits

Risk and compliance

Advising on and setting policies and

procedures

Providing business with advise and

support

Oversight of business activity

Helping business to meet changing

regulations

Defining the overall policy for operational

risk management

Thematic audits

Regular on-site audits

Follow-up on audit recommendations

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45 Non contractual document

Investment process Combining financial and ESG analysis

Source: HSBC Global Asset Management. For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or market conditions.

Risk management

Ste

p 4

Focus on 1st and 2nd quintile companies

Proprietary modellingCompanies’ current

profitability

Market

valuations

Ste

p 1

Identify key profitability drivers/structural profitability/qualitative profitability drivers and ESG assessment

Europe 800 companies or EMU 500 companies

Market-cap > EUR1bn

Company profitability profiles

Proprietary research

templateProfitability analysis

Detailed company

valuation

Ste

p 2

Maintain adequate diversification & level of relative risk

50 – 60 holdings

High conviction

top picks selection

Optimal

diversification

Relative risk

(level and composition)

and ESG criteria

Ste

p 3

Ownership

Proprietary

valuation tools

Profitability & valuation

analysis

Portfolio construction

Equity Analysts

Financial engineer

Portfolio Manager

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46 Non contractual document

Integration of ESG criteria is key in our stock selection

Source: HSBC Global Asset Management. As at end of April 2017. For illustrative purposes only. Representative overview of the investment process, which may differ by product, client mandate or

market conditions.

For additional information related to the voting policy and the exercise of voting rights is available in the annual report, please refer to the following website:

http://www.assetmanagement.hsbc.com/fr/footer/politique.html

In addition to financial analysis,

each investment case

undergoes ESG analysis:

1. Absolute: how the company

conforms to the 10 principles of

the UN Global Compact:

– «High Risk» : proven breach

– «Medium Risk» : alleged breach

– «Low Risk»: no breach

2. Relative: company ranking

relative to our 30 proprietary ESG

sector ratings (derived from

MSCI GICS):

– «High Risk» : 0 to 5th percentile

– «Medium Risk» : 5th to 20th

percentile

– «Low Risk»: 20th to 100th

percentile)

The two rating outcomes are

combined to create a final ESG

risk rating: Low, Medium or

High

Combined

approach:

absolute

and relative

We rely on external providers

for our database:

– Equity and Fixed Income: MSCI

ESG Research, GMI, Ethix,

Sustainalytics

– Country analysis and SOE

(State Owned Enterprises; not

listed): Oekom

– Carbon: Trucost Research

Our Global ESG intranet

platform is used by portfolio

managers and analysts. Here

they find:

– Company reports from data

providers Internal

– "Executive Summary" reports

– Company risk ratings (High,

Medium and Low)

– Portfolio level ESG ratings and

carbon footprints calculations

Company

Coverage

All companies considered for

purchase are subject to ESG

analysis

Companies held in the portfolio

are monitored and should be

challenged at all times

Market events will change the

risk profile (low, medium, high)

of a company over time

Holding or investing in a «High

Risk» company requires:

– An enhanced «Due Diligence»

– Senior management approval:

Local CIO for Equities; Committee

chaired by the Global Head of

Credit Research for Fixed income

– This is included in the FIM

Ownership

Our voting policy aims to favour

good governance practice with

an objective to meet HSBC

Group values

We publish an annual report

which includes summarised

voting decisions and if

applicable, reasons for which

we are not supportive with

resolutions

It’s framed around global

guidelines and local

supplements

Europe voting policy was made

fully homogeneous during Q1

2017

Voting

policy

We employ a dedicated

"Engagement" team who is

responsible to meet with

companies we are invested in.

Here, the engagement team

will raise controversies and

issues

The aim of the team’s

engagement actions is to

create awareness and

increase comprehension on

HSBC’s concerns and

expectations

In accordance with the results

of this engagement activity,

voting decisions or decisions to

sell the company may be taken

Engagement

Page 47: HSBC GIF Euroland EquityHSBC GIF Euroland Equity This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The information

Appendices

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48 Non contractual document

Materials

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

One-on-One’sFund overview(s)Standard presentation(s)

4-page reporting

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49 Non contractual document

Large Cap: global equity or a separate allocation to Europe-Eurozone?

Source: Global Asset Management and MSCI, as of December 2015. For illustrative purposes only.

The content of this page is historic and contains information that is not current. It is not intended as advice or a recommendation to buy or sell any sector or financial instrument.

MSCI Europe: 15 countries MSCI EMU: developed eurozone (10 countries)

Comparison of global sector biases by region

How to read the table? For example, Europe has a larger portion of energy companies in comparison to the Eurozone

Global Markets

2,500 companies

European Markets

1,000 companies

Eurozone Markets

500 companies

Technology Energy Consumer discretionary

Health Care Pharmacy Financials

Energy Consumer staples Industrials

« Growth » bias « Defensive » bias « Cyclical » bias

Eurozone member countries

NB: there are currently 19 Eurozone countries that share the common currency yet only the

developed Eurozone countries are in the MSCI indices.

On January 1st 2015, Lithuania became the 19th member state

Denmark and UK have « opt-out » clauses

Norway is not a member of the EU but belongs to the European Economic Area

Sweden is an EU member yet has still not yet chosen to join the 2 year currency mechanism to

tie its exchange rate to the Euro

Switzerland is neither a member of the EU nor the European Economic Area

Austria, Belgium, Denmark, Finland, France,

Germany, Ireland, Italy, Netherlands, Norway,

Portugal, Spain, Sweden, Switzerland, UK

Austria, Belgium, Finland, France,

Germany, Ireland, Italy, Netherlands,

Portugal, Spain

239 large and mid size companies

USD3,742bn market cap

446 large and mid size companies

USD7,952bn market cap

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50 Non contractual document

Important information

This presentation is distributed in France, Italy, Spain and Sweden by HSBC Global Asset Management (France), in Switzerland by HSBC Global Asset Management (Switzerland) Ltd and is only intended for professional investors as

defined by MIFID. All non-authorised reproduction or use of this commentary and analysis will be the responsibility of the user and will be likely to lead to legal proceedings. This document has no contractual value and is not by any

means intended as a solicitation, nor an investment advice for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The commentary and analysis presented in this document reflect the

opinion of HSBC Global Asset Management on the markets, according to the information available to date. They do not constitute any kind of commitment from HSBC Global Asset Management (France). Consequently, HSBC Global

Asset Management (France) will not be held responsible for any investment or disinvestment decision taken on the basis of the commentary and/or analysis in this document. The performance figures displayed in the document relate

to the past and past performance should not be seen as an indication of future returns. It is important to remember that the value of investments and any income from them can go down as well as up and is not guaranteed. Capital is

not guaranteed. Fluctuations in the rate of exchange of currencies may have a significant impact on fund performance. Funds that invest in securities listed on a stock exchange or market could be affected by general changes in the

stock market. The value of investments can go down as well as up due to equity markets movements. Please note that the strategies are authorised to invest in small and mid-cap stocks, which can present a greater risk for the

investor.

HSBC GIF Euroland Equity is a sub-fund of HSBC Global Investment Funds, a Luxemburg domiciled SICAV. Shares of the Company may not be offered or sold for sale or sold to any "U.S. Person within the meaning of the Articles of

Incorporation, i.e. a citizen or resident of the United States of America (the "United States"), a partnership organised or existing under the laws of any state, territory or possession of the United States, or a corporation organised or

existing under the laws of the United States or of any state, territory or possession thereof, or any estate or trust, other than an estate or trust the income of which from sources outside the United States is not includible in gross income

for purposes of computing United States income tax payable by it. This material is solely for the attention of institutional, professional, qualified or sophisticated investors and distributors. It is not to be distributed to the general public,

private customers or retail investors in any jurisdiction.

Funds that invest in securities listed on a stock exchange or market could be affected by general changes in the stock market. The value of investments can go down as well as up due to equity markets movements. Investment in

Financial Derivative Instrumetns (FDI) may result in losses in excess of the amount invested. This is because a small movement in the price of the underlying financial instrument may result in a substantial movement in the price of the

FDI.

Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or

indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis

should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made

of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without

limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall

any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www.mscibarra.com).

All data come from HSBC Global Asset Management (France) unless otherwise specified. Any third party information has been obtained from sources we believe to be reliable, but which we have not independently verified. The funds

presented in this document may not be registered and/or authorised for sale in your country.

Before subscription. investors should refer to the Key Investor Document (KIID) of the fund as well as its complete prospectus. For more detailed information on the risks associated with this fund. investors should refer to the complete

prospectus of the fund. Funds that invest in securities listed on a stock exchange or market could be affected by general changes in the stock market. The value of investments can go down as well as up due to equity markets

movements.

Important information for Luxembourg investors: HSBC entities in Luxembourg are regulated and authorised by the Commission de Surveillance du Secteur Financier (CSSF).

Important information for Swiss investors: This presentation is intended exclusively towards qualified investors in the meaning of Art. 10 para 3, 3bis and 3ter of the Federal Collective Investment Schemes Act (CISA).

HSBC Global Asset Management is the brand name for the asset management business of HSBC Group. The above document has been produced by HSBC Global Asset Management (France) and has been approved for

distribution/issue by the following entities:

HSBC Global Asset Management (France)

HSBC Global Asset Management (France) - 421 345 489 RCS Nanterre. Portfolio management company authorised by the French regulatory authority AMF (no. GP99026) with capital of 8.050.320 euros.

Offices: HSBC Global Asset Management (France) - Immeuble Coeur Défense - 110, esplanade du Général Charles de Gaulle - 92400 Courbevoie - La Défense 4 – France.

(Website: www.assetmanagement.hsbc.com/fr).

HSBC Global Asset Management (Switzerland) Limited

Gartenstrasse 26, P.O. Box, CH-8002 Zurich. Paying agent: HSBC Private Bank (Suisse) S.A., Quai des Bergues 9-17, P. O. Box 2888, CH-1211 Geneva 1 In respect of the units distributed in Switzerland, the competent courts shall

have exclusive venue at the registered office of the Representative in Switzerland. The official documents as per Art. 13a CISO as well as the (Semi-)Annual Report of the Fund may be obtained free of charge at the office of the

Representative in Switzerland.

(Website: www.assetmanagement.hsbc.com/ch)

Copyright © 2017, HSBC Global Asset Management (France). All rights reserved.

Updated in July 2017.

AMFR_Ext_430_2017 Exp. Q3.2018