HSBC Portfolios. Unaudited Semi-Annual Report for the period ended 31 January 2011

Transcription

1 HSBC Portfolios Unaudited Semi-Annual Report for the period ended 31 January 2011

2 Important Notice for Singapore Shareholders This Semi-Annual Report of HSBC Portfolios ( the Company ) covers the complete range of sub-funds in the Company which are available for distribution in various jurisdictions. Singapore shareholders are advised that the Monetary Authority of Singapore has registered only the following sub-funds of the Company for distribution in Singapore under the Recognised Scheme, pursuant to the Securities and Futures Act: Recognised Schemes 1. HSBC Portfolios World Selection 1 2. HSBC Portfolios World Selection 3 3. HSBC Portfolios World Selection 5 This document is prepared for general information purpose only and the opinions expressed are subject to change without notice. The opinions expressed herein should not be considered to be a recommendation by HSBC Global Asset Management (Singapore) Limited to any reader of this material to buy or sell securities, commodities, currencies or other investments referred to herein. It is published for information only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors may wish to seek advice from a financial advisor before purchasing units in the fund. In the event that the investor chooses not to seek advice from a financial advisor, he should consider whether the fund in question is suitable for him. The past performance of any fund and the manager and any economic and market trends/forecast are not necessarily indicative of the future or likely performance of the fund. Value of investment and units may go down as well as up, and the investor may not get back the original sum invested. Investors and potential investors should read the Singapore prospectus (including the risk warnings) which is available at or our authorised distributors, before investing. Changes in rates of currency exchange may affect significantly the value of the investment.

3 Société d Investissement à Capital Variable (SICAV), Luxembourg R.C.S. B No subscription can be received on the basis of financial reports. Subscriptions are only valid if made on the basis of the current Prospectus accompanied by the latest annual and the most recent semi-annual report, if published thereafter.

4

5 Contents General Information 5 Director s Report 7 Investment Adviser s Report 9 Statement of Net Assets 10 Statement of Operations 11 Statement of Changes In Net Assets 12 Statement of Changes In Shares Issued 13 Statistical Information 14 Notes to the Financial Statements 15 Schedules of Investments and Other Net Assets HSBC Portfolios World Selection 1 22 HSBC Portfolios World Selection 2 23 HSBC Portfolios World Selection 3 24 HSBC Portfolios World Selection 4 25 HSBC Portfolios World Selection 5 26 HSBC Portfolios GOAL 27 Fund Holiday Calendar for

6 General Information Directors Thies Clemenz, Chief Executive Officer HSBC Trinkaus Investment Managers SA 8, Rue Lou Hemmer L-1748 Luxembourg-Findel Luxembourg Didier Deleage, Chief Operating Officer HSBC Global Asset Management (France), Immeuble Ile de France 4, Place de la Pyramide, La Défense 9, Puteaux France David Silvester, Head of Product Management Global Funds HSBC Global Asset Management Limited 8 Canada Square, London E14 5HQ United Kingdom Registered Office Administrator, Custodian, Corporate and Domiciliary Agent 16, boulevard d Avranches L-1160 Luxembourg Grand Duchy of Luxembourg HSBC Securities Services (Luxembourg) S.A. 16, boulevard d Avranches L-1160 Luxembourg Grand Duchy of Luxembourg Paying Agent, Registrar and Transfer Agent RBC Dexia Investor Services Bank S.A. 14, Porte de France L-4360 Esch-sur-Alzette Grand Duchy of Luxembourg Management Company and Global Distributor HSBC Investment Funds (Luxembourg) S.A. 16, boulevard d'avranches L-1160 Luxembourg Grand Duchy of Luxembourg Independent Auditors Legal Advisers Investment Adviser KPMG Audit S.à r.l. 9, Allée Scheffer L-2520 Luxembourg Grand Duchy of Luxembourg Elvinger, Hoss & Prussen 2, Place Winston Churchill L-1340 Luxembourg Grand Duchy of Luxembourg HSBC Global Asset Management (UK) Limited 78 St James's Street London SW1A 1EJ United Kingdom 5

7 General Information (continued) Distributors Austria and Eastern Europe Distributor HSBC Trinkaus & Burkhardt AG Königsallee 21/23 D Düsseldorf Germany Continental Europe Distributor HSBC Global Asset Management (France) Immeuble Ile de France, 4, Place de la Pyramide, La Défense Puteaux France Hong Kong Representative and Distributor HSBC Investment Funds (Hong Kong) Limited HSBC Main Building, 1 Queen's Road Central Hong Kong Jersey Representative and Distributor HSBC Global Asset Management (International) Limited HSBC House, Esplanade, St Helier Jersey JE1 1HS Channel Islands Middle East Distributor HSBC Bank Middle East Limited HSBC House, Esplanade, St Helier Jersey JE1 1HS Channel Islands Singapore Representative and Distributor HSBC Global Asset Management (Singapore) Limited 21 Collyer Quay, #15-02 HSBC Building Singapore Singapore United Kingdom Representative and Distributor HSBC Global Asset Management (UK) Limited 8 Canada Square London E14 5HQ United Kingdom 6

8 Director s Report Market review Overview Overall, traditional asset classes, such as equity and fixed income, as well as non-traditional asset classes delivered positive returns during However, independent asset returns varied over the course of the year. Concerns about the sustainability of the global economic recovery and elevated sovereign debt levels caused increased nervousness amongst investors. In the second half of 2010, the economic news-flow from developed countries became more positive. However, concerns about levels of inflation in emerging markets were ongoing, and central banks in the major emerging countries introduced monetary tightening measures. Equities displayed strong returns over the last four months of 2010, whereas fixed income returns lagged those of riskier asset classes in the second half of the year. Alternative asset classes were the most successful asset classes during 2010, with particular strong returns provided by commodities, private equity and property. US Equities During the six-months to 31 January 2011, the US economic recovery continued to build momentum. For example, manufacturing activity was particularly strong during the fourth quarter of However, inherent risks to the economic recovery persist, namely elevated unemployment in both the US and other developed markets. The Federal Reserve Bank kept the Federal funds rate at % and in early November 2010, announced further quantitative easing measures to underpin the economy, which was supportive for the performance of riskier asset classes in general. In addition, equity valuations relative to cash and especially government debt remained attractive. Against this backdrop, the MSCI US Index delivered a strong performance of 18.5% during the period under review. Europe ex-uk Equities During the six-months to 31 January 2011, economic conditions within the European region were mixed. Concerns about sovereign debt levels of some of the eurozone peripheral countries were ongoing in the second half of 2010, of particular focus were Ireland, Spain and Portugal. Consequently, austerity measures are in the process of being rolled out in parts of Europe. However, the economic health of peripheral eurozone countries remains uncertain, whereas the larger economies, such as Germany and France, showed solid economic performance. Furthermore, interest rates and inflation remain generally low in the eurozone and recent corporate earnings news-flow has been encouraging. Against this backdrop, the MSCI EMU Index posted returns of 10.2% during the period under review. UK Equities During the six-months to 31 January 2011, while economic indicators continued to suggest that a recovery was underway in the UK, the slowdown in the pace of improvement became more prevalent. During the third quarter of 2010, the UK economy benefited from positive growth though it lagged the economic performance in the second quarter of Furthermore, levels of inflation in the UK continued to cause concern. Against this backdrop, the MSCI UK Index returned 12.95% during the period under review. Japan Equities During the six-months to 31 January 2011, the Japanese economy continued to recover though deflationary concerns remained. In addition, the Japanese Yen strongly appreciated which could potentially harm export growth, an important driver for the Japanese economy. The performance of Japanese equities lagged other developed equity markets for much of Hence, there may be positive price momentum. Furthermore, valuations of Japanese equities continue to look attractive relative to history in absolute terms and relative to other developed markets. Against this backdrop, the MSCI Japan Index gained 8.53% during the period under review. Global Emerging Market Equities During the six-months to 31 January 2011, emerging countries continued to lead the global economic recovery, as China s fourth quarter 2010 GDP recorded a 9.8% growth compared to 2009 levels. Also for 2011, economists continue to expect solid economic growth in emerging regions. However, risks to the growth scenario remain, particularly inflation levels in emerging markets continue to cause concern, primarily due to increasing food price. During the second half of 2010, central banks in the major emerging markets started to introduce monetary tightening measures to tackle inflation. Further interest rate increases should be expected, which could have a negative impact on growth and hence harm both the economic recovery and market performance. Against this backdrop, the MSCI Emerging Markets Index gained 10.0% during the period under review. 7

9 Director s Report (continued) Global Bonds During the six-months to 31 January 2011, within fixed income, corporate bonds and in particular global high yield bonds performed well relative to other fixed income assets, particularly relative to government bonds as the Citigroup World Government Bond Index fell by 1.2% during the period. Meanwhile, the Bank of America Merrill Lynch Global High Yield Index returned 8.14% during the same period. Collectively, strong corporate earnings results, the view that major central banks will keep interest rates low and strong demand for yield, have boosted investment grade corporate bonds. With momentum likely to remain positive, we continue to be positive on the asset class. However, despite the rise in yields, developed market government bonds are still offering little value relative to history and downside risks remain. Valuations do not look particularly attractive and offer very limited protection against negative surprises. Emerging Market Debt During the six-months to 31 January 2011, on a valuation basis, emerging market debt continues to look less attractive relative to other riskier fixed income markets, in particular global high yield corporate debt. Furthermore, inflation in emerging markets remains of concern and central banks in the major emerging market countries have introduced monetary tightening measures, which have started to weigh on the performance of the asset class. Against this backdrop, the Bank of America Merrill Lynch USD Emerging Sovereign Bond Plus returned 1.6% during the period under review. Commodities During the six-months to 31 January 2011, commodities performed strongly. Gold continued to show a strong performance returning 12.85% during the period, supported by high liquidity in markets, combined with ongoing macroeconomic uncertainty. Looking ahead, we expect the oil price to fluctuate in the US$70-US$90 range, as improved demand is balanced out by a forecast rise in OPEC production. Fluctuation in risk-appetite is likely to contribute to oil price volatility. 8

10 Investment Adviser s Report Since inception of the Portfolios on October 19, 2009, until the end of the reporting period the Funds provided the following returns (Class AC, net of fees in USD): HSBC Portfolios - World Selection 1: 7.50% HSBC Portfolios - World Selection 2: 8.89% HSBC Portfolios - World Selection 3: 10.38% HSBC Portfolios - World Selection 4: 11.90% HSBC Portfolios - World Selection 5: 12.56% After a strong performance in July 2010, when all major developed equity markets and the main emerging markets finished the month in positive territory, August was a more challenging month for investors. The increase in risk-aversion was sparked by a number of worse-than-expected economic figures. Against this backdrop, the diversification across various different asset classes was beneficial for the HSBC World Selection Portfolios. For example, gold performed strongly in August, benefiting from its safe haven status, which helped compensate some of the losses the Portfolios more risky assets had experienced. In September, all HSBC World Selection Portfolios delivered strong returns. The market rebound after a rather challenging August was mainly driven by investors expectations of further quantitative easing measures. In early September, the Portfolios tactical allocation towards government bonds and emerging markets debt was reduced to the benefit of global high yield. In addition to the strong performance of riskier asset classes like equities, this increased allocation towards global high yield was beneficial to the performance in September, as global high yield outperformed both government bonds and emerging markets debt. October proved to be a reasonably good month for financial market performance, in particular for riskier asset classes. All major equity markets finished the month in positive territory. The gains in global equity markets generally reflected a good earnings season globally and expectations of a further injection of liquidity by the US Federal Reserve. In global bond markets, corporate credit generally outperformed sovereign debt. Hence, the Portfolio s overweight positions in corporate debt and underweight in government bonds made a strong contribution towards performance in October. Furthermore, the diversification across various different asset classes, such as commodities and private equity, was again beneficial to the Portfolios. November was a rather volatile month for financial markets. Investor sentiment was positive at the beginning of the month and riskier asset classes performed well during the first week. This positive performance was largely driven by confirmation of the US Federal Reserve s plan to inject further liquidity into financial markets. Furthermore, companies third quarter results continued to be positive. Nevertheless, as the month progressed, the developments surrounding the fiscal situation of several eurozone countries started to dominate the news-flow. During November, several tactical asset allocation changes were implemented in the HSBC World Selection Portfolios. For example, the exposure towards equities in both developed and emerging markets was increased to a neutral position at the broad asset class level. In the last month of 2010, the HSBC World Selection Portfolios provided strong returns, largely driven by the performance of riskier asset classes. The major global equity markets performed well in December, supported by positive economic news-flow. The HSBC World Selection Portfolios tactical positions within the asset class equities further enhanced performance, particularly, the recently increased exposure towards Japanese equities - a tactical position within developed market equities opened in early December, which made a strong contribution towards performance, and the regional preference for the Russian equity market over the wider emerging market universe. The broad diversification, including alternative asset classes, remained a key driver of the strong risk-adjusted returns of the HSBC World Selection Portfolios. In December, in particular, the allocations towards commodities and private equity made a strong contribution to overall performance. Global equity markets made a good start in 2011, with the MSCI World Index returning 1.96% during January However, equity performance varied among regions. Within developed markets, eurozone equities provided particularly strong returns, largely driven by positive economic news-flow, whereas emerging market equities had a difficult month, as ongoing concerns about levels of inflation had a negative impact on markets. Furthermore, the political tensions in the Middle East and North Africa impacted investor sentiment in the second half of January Within the HSBC World Selection Portfolios, the exposure towards equities was increased at the broad asset class level in January Generally, the backdrop for equities improved over the last few months, with lower risk of negative corporate earnings surprises in 2011 and still attractive valuation levels. In addition, liquidity in markets and corporate cash balances remain high relative to history, which should be supportive for riskier asset classes, and the improvements in the macroeconomic environment have been beneficial for investor sentiment. Within equities, there was an ongoing tactical preference for the Japanese equity market within developed markets. This tactical position made a positive contribution to the overall Portfolio performance in January 2011, and so did the increased exposure towards global high yield bonds within the fixed income segment of the Portfolios. Looking ahead, we believe the HSBC World Selection Portfolios highly diversified investment approach are in our belief well positioned and to aim to continue to deliver optimal risk-adjusted returns in HSBC Global Asset Management (UK) Limited March

11 Statement of Net Assets as at 31 January 2011 HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios Notes Combined World Selection 1 World Selection 2 World Selection 3 World Selection 4 World Selection 5 GOAL USD USD USD USD USD USD USD ASSETS Investments in securities at cost 603,107, ,842, ,664, ,251,203 59,641,644 73,762,625 1,945,226 Unrealised appreciation 36,836,502 6,893,586 6,674,419 9,302,294 5,499,418 8,279, ,841 Investments in securities at fair value 3 b 639,944, ,735, ,339, ,553,497 65,141,062 82,042,569 2,132,067 Unrealised gain on forward foreign exchange contracts 3 h, 6 9,437,407 3,652,407 2,359,923 1,912, , ,113 - OTHER ASSETS Cash at bank 10,493,384 7,135, ,849 1,135, , ,448 89,206 Amounts receivable on sale of Investments 1,924,513-1,013, , , ,809 Amounts receivable on subscriptions 16,881,886 3,151,237 3,042,266 6,339,444 2,401,474 1,947,465 - Accounts receivable and accrued income 557,528 92,114 95, ,931 85, ,315 7,911 OTHER ASSETS 29,857,311 10,378,602 5,150,641 7,602,550 3,412,863 3,069, ,926 TOTAL ASSETS 679,239, ,766, ,849, ,068,298 69,348,638 85,830,411 2,374,993 LIABILITIES Unrealised loss on forward foreign exchange contracts 3 h, 6 1, ,156 Bank overdraft 7,215,040 2,634, ,025 1,508, ,070 1,726, Amounts payable on purchase of Investments 6,314, , ,248 3,249, , , ,475 Amounts payable on redemptions 557, ,858 54,622 7, , Management fees payable 511, , , ,006 55,504 78, Accounts payable and accrued expenses 266,050 99,419 61,802 56,607 20,742 27, TOTAL LIABILITIES 14,865,670 3,737,914 1,610,506 4,937,957 1,919,015 2,495, ,226 NET ASSETS 664,373, ,028, ,239, ,130,341 67,429,623 83,335,359 2,209,767 The accompanying notes form an integral part of these financial statements. 10

12 Statement of Operations for the period ended 31 January 2011 HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios Notes Combined World Selection 1 World Selection 2 World Selection 3 World Selection 4 World Selection 5 GOAL USD USD USD USD USD USD USD INCOME Income from investments 3 c 931, , ,075 93, ,686 Deposit interest 13,597 13, Management fees rebate 314,768 58,413 57,479 80,876 46,941 70, Other Income 53,246 7,821 8,201 8,189 8,222 20, TOTAL INCOME 1,313, , , ,501 55,163 91,529 10,029 EXPENSES Management fees 4 a 2,775, , , , , , Operating, administrative and servicing expenses 4 b 890, , , ,597 88, ,007 2,703 Bank interest and charges 10,547 1,527 1,297 2,027 1,717 3,977 2 TOTAL EXPENSES 3,676,464 1,102, , , , ,164 2,844 NET OPERATING (LOSS) / GAIN FOR THE PERIOD (2,363,291) (410,922) (474,011) (611,910) (344,998) (528,635) 7,185 The accompanying notes form an integral part of these financial statements. 11

13 Statement of Changes in Net Assets for the period ended 31 January 2011 HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios Notes Combined World Selection 1 World Selection 2 World Selection 3 World Selection 4 World Selection 5 GOAL USD USD USD USD USD USD USD Net operating (loss)/gain for the period (2,363,291) (410,922) (474,011) (611,910) (344,998) (528,635) 7,185 Net realised gains/(losses) on: Investments in securities 3 b, 3 e 6,497, ,945 1,136,024 1,264, ,956 2,288,722 - Forward foreign exchange contracts 3 h 10,230,361 4,436,120 2,897,235 2,105, , ,886 (27,552) Foreign exchange transactions 3 d 257,903 17,128 26,810 49,728 43,126 68,398 52,713 NET REALISED GAIN 14,622,969 4,912,271 3,586,058 2,807,362 1,313,561 1,971,371 32,346 Net change in unrealised appreciation/(depreciation) on: - Investments in securities 32,128,077 4,076,824 5,156,974 8,500,121 5,255,110 9,013, ,937 - Forward foreign exchange contracts 3 h, 6 2,166, , , , ,777 29,035 2,220 INCREASE IN NET ASSETS FROM OPERATIONS 48,917,337 9,973,190 9,326,611 11,698,068 6,745,448 11,013, ,503 CAPITAL TRANSACTIONS Received on issue of shares 274,053,613 94,733,568 69,717,968 61,239,617 25,521,012 22,841,448 - Paid on redemptions of shares (61,126,342) (6,647,942) (2,108,232) (6,847,389) (14,190,815) (31,331,964) - TOTAL INCREASE IN NET ASSETS FOR THE PERIOD 261,844,608 98,058,816 76,936,347 66,090,296 18,075,645 2,523, ,503 NET ASSETS Beginning of period 402,528, ,970,102 77,302,995 82,040,045 49,353,978 80,812,358 2,049,264 End of period 664,373, ,028, ,239, ,130,341 67,429,623 83,335,359 2,209,767 The accompanying notes form an integral part of these financial statements. 12

14 Statement of Changes in Shares Issued for the period ended 31 January 2011 HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios World Selection 1 World Selection 2 World Selection 3 World Selection 4 World Selection 5 GOAL Class A (C) (USD) Shares outstanding, beginning of period 1,764, ,515, ,579, ,287, ,092, , Shares issued 776, ,064, ,030, , , Shares redeemed (401,922.70) (135,249.46) (527,444.84) (925,228.02) (2,442,305.84) - Shares outstanding, end of period 2,139, ,444, ,082, ,604, ,932, , Class A (C) (HGBP) Shares outstanding, beginning of period 397, , , , , Shares issued 461, , , , , Shares redeemed (76,307.60) (13,728.07) (12,470.69) (3,280.16) (70,762.25) - Shares outstanding, end of period 783, ,174, ,256, , ,115, Class A (C) (HEUR) Shares outstanding, beginning of period 6,274, ,765, ,845, ,024, ,000, Shares issued 5,408, ,393, ,670, ,165, , Shares redeemed (46,273.64) (29,509.47) (10,037.35) (26,390.82) (32,357.34) - Shares outstanding, end of period 11,636, ,129, ,506, ,163, ,854, Class E (C) (USD) Shares outstanding, beginning of period , Shares issued Shares redeemed Shares outstanding, end of period , Class Z (C) (USD) Shares outstanding, beginning of period 4, , , , , Shares issued - 44, , , Shares redeemed (4,584.92) - (63,600.00) (383,719.98) (371,775.32) - Shares outstanding, end of period - 44, , , , , Class Z (C) (HGBP) Shares outstanding, beginning of period 50, , , , , Shares issued 2, , , Shares redeemed - - (11,593.00) Shares outstanding, end of period 52, , , , , Class Z (C) (HEUR) Shares outstanding, beginning of period 6, , , , , Shares issued - - 1, , Shares redeemed Shares outstanding, end of period 6, , , , , Class S1 (C) (USD) Shares outstanding, beginning of period Shares issued 41, , , Shares redeemed (33,573.10) Shares outstanding, end of period 8, , , The accompanying notes form an integral part of these financial statements. 13

15 Statistical Information as at 31 January 2011 HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios World Selection 1 World Selection 2 World Selection 3 World Selection 4 World Selection 5 GOAL NUMBER OF SHARES OUTSTANDING: as at 31 January 2011 Class A (C) (USD) 2,139, ,444, ,082, ,604, ,932, , Class A (C) (HGBP) 783, ,174, ,256, , ,115, Class A (C) (HEUR) 11,636, ,129, ,506, ,163, ,854, Class E (C) (USD) , Class Z (C) (USD) - 44, , , , , Class Z (C) (HGBP) 52, , , , , Class Z (C) (HEUR) 6, , , , , Class S1 (C) (USD) 8, , , NET ASSET VALUE PER SHARE: as at 31 January 2011 Class A (C) (USD) USD USD USD USD USD USD Class A (C) (HGBP) GBP GBP GBP GBP GBP Class A (C) (HEUR) EUR EUR EUR EUR EUR Class E (C) (USD) USD Class Z (C) (USD) - USD USD USD USD USD Class Z (C) (HGBP) GBP GBP GBP GBP GBP Class Z (C) (HEUR) EUR EUR EUR EUR EUR Class S1 (C) (USD) USD USD USD NUMBER OF SHARES OUTSTANDING: as at 31 July 2010 Class A (C) (USD) 1,764, ,515, ,579, ,287, ,092, , Class A (C) (HGBP) 397, , , , , Class A (C) (HEUR) 6,274, ,765, ,845, ,024, ,000, Class E (C) (USD) , Class Z (C) (USD) 4, , , , , Class Z (C) (HGBP) 50, , , , , Class Z (C) (HEUR) 6, , , , , NET ASSET VALUE PER SHARE: as at 31 July 2010 Class A (C) (USD) USD USD USD USD USD USD Class A (C) (HGBP) GBP GBP GBP GBP GBP Class A (C) (HEUR) EUR EUR EUR EUR EUR Class E (C) (USD) USD Class Z (C) (USD) USD USD USD USD USD Class Z (C) (HGBP) GBP GBP GBP GBP GBP Class Z (C) (HEUR) EUR EUR EUR EUR EUR

16 Notes to the Financial Statements for the period ended 31 January General Information HSBC Portfolios (the Company ) was incorporated under the laws of the Grand Duchy of Luxembourg as an investment company (Société d'investissement à Capital Variable or "SICAV") on 21 July The capital comprises various classes of shares each relating to a separate sub-fund (hereafter called a "Portfolio") consisting of securities, cash and other sundry assets and liabilities. The accompanying Financial Statements present the assets and liabilities of the individual Portfolios and of the Company taken as a whole. The Financial Statements of each individual Portfolio are expressed in the currency designated in the prospectus for that particular Portfolio and the Financial Statements of the Company are expressed in US Dollar ( USD ). The financial statements have been prepared in accordance with the format prescribed by the Luxembourg authorities for Luxembourg investment companies. The Company is an officially registered investment fund under part I of the law of 20 December 2002 and has been certified as a UCITS fund under the directive 85/611/CEE of the Council of Europe. The Company seeks to provide a comprehensive range of Portfolios with the purpose of spreading investment risk and satisfying the requirements of investors seeking to emphasise income, capital conservation and/or capital growth. The Company offers investors, within the same vehicle, a choice of investments in one or more Portfolios. The Company may issue different classes of shares in one or several Portfolios. Details of the characteristics of such share classes, if and when offered, by one or several Portfolios will be determined by the Directors. As at 31 January 2011, the Company was comprised of the following Portfolios: HSBC Portfolios World Selection 1 HSBC Portfolios World Selection 2 HSBC Portfolios World Selection 3 HSBC Portfolios World Selection 4 HSBC Portfolios World Selection 5 HSBC Portfolios GOAL 2. Share Capital The Company currently offers the following classes of shares: Class Class A Class E Class S* Class Z Description A shares are available to all investors. E Shares are available in certain countries, subject to the relevant regulatory approval, through specific distributors selected by the Distributor. S Shares are available in certain jurisdictions or through certain distributors selected by the Distributor provided that the investors qualify as institutional investors within the meaning of article 129 of the 2002 Law. Z shares are available to investors having entered into a discretionary management agreement with an HSBC Group entity and to investors subscribing via distributors selected by the distributor provided that such investors qualify as institutional investors within the meaning of article 129 of the 2002 Law. * Successive issue of Classes S Shares are numbered 1, 2, 3, etc. and respectively referred to as S 1, S 2, S 3, etc. A series of Class S Shares may be issued in one or more Portfolios and each series may or may not be available in all Porftolios. Within each share class of a Portfolio, the Company is entitled to create different sub-classes, distinguished by their distribution policy (Capital-Accumulation ( C ) and Distribution ( D ) shares), their hedging activity ( H ) and/or by any other criterion to be stipulated by the Board of Directors. Within each share class of a Portfolio, separate currency hedged classes may be issued (suffixed by "H" and the currency into which the Base Currency is hedged e.g. "HEUR" or "HGBP"). Any fees of the Administration Agent relating to the execution of the currency hedging policy will be borne by the relevant currency hedged class. Investment Minima: Class of Shares A and E S 1, S 2 and Z Dealing Currency USD EUR GBP USD EUR GBP Minimum initial investment and minimum holding 5,000 5,000 5,000 1,000,000 1,000,000 1,000,000 Minimum subsequent investment 1,000 1,000 1, , , ,000 15

17 Notes to the Financial Statements for the period ended 31 January 2011 (continued) 3. Accounting Policies The following accounting policies have been used consistently in dealing with items which are considered material in relation to the Company s financial statements. a) Accounting convention The financial statements have been prepared under the historical cost convention modified by the revaluation of investments. b) Assets and Portfolio securities valuation Securities are initially recognised at cost, being the fair value of the consideration given. Shares or units in open-ended undertakings for collective investment, which do not have a price quotation on a regulated market, will be valued at the actual net asset value for such shares or units as of the relevant dealing day, failing which they shall be valued at the last available net asset value which is calculated prior to such dealing day. In the case where events have occurred which have resulted in a material change in the net asset value of such shares or units since the last net asset value was calculated, the value of such shares or units may be adjusted at their fair value in order to reflect, in the reasonable opinion of the Board of Directors, such change. The value of securities (including a share or unit in a closed-ended undertaking for collective investment) and/or financial derivative instruments which are listed and with a price quoted on any official stock exchange or traded on any other organised market is the last available stock price. Where such securities or other assets are quoted or dealt in or on more than one stock exchange or other organised markets, the Board of Directors shall select the principal of such stock exchanges or markets for such purposes. All purchases and sales of securities are recognised on the trade date, i.e. the date the Company commits to purchase or sell the security. c) Income and Expenses Interest is accrued on a day-to-day basis. Dividends are accounted for on an ex-dividend basis. Expenses are recognised on an accrual basis. d) Foreign Exchange The cost of investments, income and expenses in currencies other than the fund relevant reporting currency have been recorded at the rate of exchange ruling at the time of the transaction. The market value of the investments and other assets and liabilities in currencies other than the relevant reporting currency have been converted at the rates of exchange ruling at the date of these financial statements. e) Realised Profit/(Loss) on Sale of Investments Realised profit/(loss) on sale of investments is the difference between the historical average cost of the investment and the sale proceeds. f) Segregated Liability The Company has segregated liability between its Portfolios; meaning, the assets of a Portfolio are exclusively available to satisfy the rights of shareholders in relation to that Portfolio and the rights of creditors whose claims have arisen in connection with the creation, operation and liquidation of that Portfolio. g) Dividends payable Dividends payable by the Company are recorded on the ex-date. h) Forward Foreign Exchange Contracts Outstanding forward currency contracts are valued at the closing date by reference to the forward rate of exchange applicable to the outstanding life of the contract. The realised and unrealised gain or loss is shown in the Statement of Net Assets. i) Net Asset Value per Share The Net Asset Value per Share is calculated by dividing the net assets of the relevant Class of Shares in a Portfolio included in the Statement of Net Assets by the number of Shares of the relevant class in that Portfolio in issue at the period end. j) Formation Expenses The costs and expenses for the formation of the Company and the initial issue of its shares will be borne by the Portfolios and amortized over a period not exceeding 5 years. Any additional Portfolios which may be created in the future shall bear their own formation expenses to be amortized over a period not exceeding 5 years. 4. Charges and Expenses a) Management Fee The Company pays to the Management Company an annual management fee calculated as a percentage of the Net Asset Value of each Portfolio or Share Class ( Management Fee ). The Management Fee is accrued daily and payable monthly in arrears. The fee rate per annum actually charged and applicable to each Class of Shares is set below: HSBC Portfolios World Selection 1 Class A Shares 1.00% Class S 1 Shares 0.50% Class Z Shares 0.00% 16

18 Notes to the Financial Statements for the period ended 31 January 2011 (continued) 4. Charges and Expenses (continued) a) Management Fee (continued) HSBC Portfolios World Selection 2 Class A Shares 1.00% Class S 1 Shares 0.50% Class Z Shares 0.00% HSBC Portfolios World Selection 3 Class A Shares 1.20% Class S 1 Shares 0.60% Class Z Shares 0.00% HSBC Portfolios World Selection 4 Class A Shares 1.20% Class S 1 Shares 0.60% Class Z Shares 0.00% HSBC Portfolios World Selection 5 Class A Shares 1.30% Class S 1 Shares 0.65% Class Z Shares 0.00% HSBC Portfolios GOAL Class A Shares 1.15% Class E Shares 1.45% Class S 2 Shares 0.35% Class Z Shares 0.00% The Management Fee covers management and distribution services provided in relation to the relevant Portfolio of the Company by the Management Company, the Investment Advisers and the Share Distributors. The Management Company is responsible for discharging, out of such fee, the fees of the Investment Advisers and the Share Distributors and may pay part of such fee to recognised intermediaries or such other person as the Management Company may determine, at its discretion. The Management Company may instruct the Company to pay a portion of the Management Fee directly out of the assets of the Company to any of such service providers. In such case the Management Fee due to Management Company is reduced accordingly. The Management Company is also acting as a management company for other investment funds, namely HSBC Global Investment Funds, HSBC International Select Fund, HSBC Amanah Funds and Sinopia Multi Index Fund. Management Fees Rebate The Directors endeavor to reduce duplication of management charges by negotiating rebates where applicable in favour of the Company with the collective investment schemes or their managers. These rebates amount to USD 314,768 for the period ended 31 January b) Operating, Administrative and Servicing Expenses The Company pays to the Management Company a fee to cover certain Operating, Administrative and Servicing Expenses. The Management Company is responsible for discharging out of this fee, the expenses described below, inter alia, payable to the Custodian, the Administration Agent and the Transfer Agent. This fee is set, for each Portfolio or Share Class, at a fixed percentage of the Net Asset Value of the relevant Portfolio or Share Class specified in the Company s prospectus. Such fee is accrued daily and payable monthly in arrears. The rate for class A, E, Z, S 1 and S 2 Shares is 0.25%. However, the Board of Directors reserves the right to amend the fixed level of the Operating, Administrative and Servicing Expenses applicable to each Portfolio or Class of Shares. Operating, Administrative and Servicing Expenses cover the ongoing custody fees and safekeeping charges payable to the Custodian and its correspondent banks, fees for fund accounting and administration services (including domiciliary services) payable to the Administrative Agent and transfer agency fees for registrar and transfer agency services payable to the Transfer Agent. Operating, Administrative and Servicing Expenses also cover expenses relating to the creation of new Portfolio; the Luxembourg assetbased taxe d abonnement; attendance fees and reasonable out-of-pocket expenses incurred by the Board of Directors; legal, auditing fees and expenses; ongoing registration and listing fees, including translation expenses; the costs and expenses of preparing, printing, and distributing the Company s Prospectus, simplified prospectuses, financial reports, statements and other documents made available directly or through intermediaries to its shareholders. 17

19 Notes to the Financial Statements for the period ended 31 January 2011 (continued) 4. Charges and Expenses (continued) c) Directors Fees, Expenses and Interests None of the Directors are an executive of the Company. A Director may be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is interested, provided that he has disclosed to the other Directors, prior to the conclusion of any such transaction or arrangement, the nature and extent of any interest of his therein. A Director may vote in respect of any contract or arrangement or any proposal whatsoever in which he has an interest, having first disclosed such interest. He shall not be disqualified by his office from contracting with the Company. If a Director declares his interest in any contract which the Company is considering entering into, he may be counted in the quorum of any meeting to consider the contract and may vote on any resolution to enter into such contract. 5. Taxation The Company is liable in Luxembourg to a tax (taxe d abonnement) of 0.05% per annum of its net assets, such tax being payable quarterly and calculated on the Net Asset Value of the Company at the end of the relevant calendar quarter. The taxe d abonnement is levied at a rate of 0.01% per annum on Portfolios or Classes reserved to Institutional Investors. Under current law and practice, the Company is not liable to Luxembourg taxes on income or capital gains, nor are dividends paid by the Company liable to any Luxembourg withholding tax. Interest, dividends and capital gains on securities may be subject to withholding or capital gains taxes in certain countries. The Taxe d abonnement is paid out of the operating, administrative and servicing expenses fees. 6. Forward Foreign Exchange Contracts Maturity Date Currency Bought Currency Sold Unrealised Bought Amount Sold Amount Gain / (Loss) USD HSBC Portfolios - World Selection 1 2 February 2011 EUR 121,079,253 USD 162,423,944 3,552,922 2 February 2011 GBP 8,064,551 USD 12,780, ,749 2 February 2011 EUR 70,898 USD 95,107 2,081 2 February 2011 GBP 577,603 USD 915,377 9,723 2 February 2011 USD 1,482 GBP 927 (3) 2 February 2011 USD 2,272 GBP 1,420 (3) 2 February 2011 EUR 2,998,611 USD 4,100,757 9,809 2 February 2011 GBP 340,400 USD 538,467 6,724 2 February 2011 USD 13,400,888 GBP 8,404,951 (60,632) 2 February 2011 USD 170,422,808 EUR 124,077, ,992 2 February 2011 USD 97,379 EUR 70, February 2011 USD 917,191 GBP 575,256 (4,150) 9 February 2011 GBP 576,415 USD 918,992 4,159 9 February 2011 EUR 124,828,194 USD 171,438,043 (335,981) 9 February 2011 GBP 8,450,569 USD 13,472,946 60,980 9 February 2011 EUR 70,747 USD 97,164 (190) 15 February 2011 USD 3,304,990 GBP 2,074,320 (16,979) 15 February 2011 USD 6,744,512 EUR 4,914,221 9, February 2011 USD 4,747,364 JPY 393,406,947 (55,090) 3,652,407 18

20 Notes to the Financial Statements for the period ended 31 January 2011 (continued) 6. Forward Foreign Exchange Contracts Maturity Date Currency Bought Currency Sold Unrealised Bought Amount Sold Amount Gain / (Loss) USD HSBC Portfolios - World Selection 2 2 February 2011 EUR 75,686,017 USD 101,530,369 2,220,902 2 February 2011 GBP 12,834,452 USD 20,339, ,040 2 February 2011 EUR 72,149 USD 96,786 2,118 2 February 2011 GBP 66,727 USD 105,748 1,123 2 February 2011 USD 142,973 GBP 89,440 (276) 2 February 2011 USD 84,695 GBP 52,943 (100) 2 February 2011 USD 750 GBP 469 (1) 2 February 2011 USD 691 EUR 505 (2) 2 February 2011 USD 105,643 GBP 66,258 (478) 2 February 2011 USD 103,955,879 EUR 75,686, ,731 2 February 2011 USD 98,404 EUR 71, February 2011 USD 20,236,285 GBP 12,692,068 (91,559) 9 February 2011 EUR 77,632,450 USD 106,619,786 (208,951) 9 February 2011 GBP 66,378 USD 105, February 2011 GBP 12,795,130 USD 20,399,582 92,330 9 February 2011 EUR 71,774 USD 98,574 (193) 15 February 2011 USD 3,327,786 GBP 2,088,628 (17,096) 15 February 2011 USD 5,892,033 JPY 488,263,951 (68,373) 15 February 2011 USD 7,434,186 EUR 5,416,734 10,036 2,359,923 HSBC Portfolios - World Selection 3 2 February 2011 EUR 57,751,570 USD 77,471,883 1,694,652 2 February 2011 GBP 13,472,552 USD 21,351, ,781 2 February 2011 EUR 586,962 USD 787,391 17,230 2 February 2011 GBP 4,432,566 USD 7,024,664 74,613 2 February 2011 USD 3,997 EUR 2,944 (38) 2 February 2011 USD 35,309 GBP 22,088 (68) 2 February 2011 USD 37,556 GBP 23,476 (44) 2 February 2011 USD 4,204 EUR 3,076 (12) 2 February 2011 EUR 1,716,499 USD 2,350,754 2,263 2 February 2011 GBP 397,598 USD 631,732 5,068 2 February 2011 USD 797,934 EUR 580,943 1,564 2 February 2011 USD 22,114,622 GBP 13,870,150 (100,057) 2 February 2011 USD 6,994,653 GBP 4,387,002 (31,647) 2 February 2011 USD 81,680,284 EUR 59,468, ,076 9 February 2011 EUR 581,709 USD 798,914 (1,566) 9 February 2011 EUR 60,106,950 USD 82,550,404 (161,781) 9 February 2011 GBP 13,861,817 USD 22,100, ,027 9 February 2011 GBP 4,393,086 USD 7,004,002 31, February 2011 USD 5,152,210 GBP 3,233,697 (26,469) 15 February 2011 USD 12,501,672 EUR 9,109,032 16, February 2011 USD 8,351,986 JPY 692,116,565 (96,919) 1,912,251 19

21 Notes to the Financial Statements for the period ended 31 January 2011 (continued) 6. Forward Foreign Exchange Contracts (continued) Maturity Date Currency Bought Currency Sold Unrealised Bought Amount Sold Amount Gain / (Loss) USD HSBC Portfolios - World Selection 4 2 February 2011 EUR 22,823,627 USD 30,617, ,729 2 February 2011 GBP 8,572,693 USD 13,585, ,303 2 February 2011 EUR 843,160 USD 1,131,072 24,751 2 February 2011 GBP 390,371 USD 618,654 6,571 2 February 2011 USD 26,127 EUR 19,241 (249) 2 February 2011 USD 7,031 EUR 5,178 (67) 2 February 2011 USD 3,809 GBP 2,383 (7) 2 February 2011 USD 8,262 EUR 6,044 (23) 2 February 2011 USD 4,519 GBP 2,825 (5) 2 February 2011 EUR 718,281 USD 983, February 2011 USD 32,308,736 EUR 23,522,667 63,318 2 February 2011 USD 1,142,679 EUR 831,938 2,239 2 February 2011 USD 13,668,336 GBP 8,572,693 (61,842) 2 February 2011 USD 614,105 GBP 385,163 (2,779) 9 February 2011 EUR 23,636,425 USD 32,462,077 (63,619) 9 February 2011 EUR 833,267 USD 1,144,403 (2,243) 9 February 2011 GBP 385,785 USD 615,066 2,784 9 February 2011 GBP 8,641,667 USD 13,777,617 62,359 9 February 2011 EUR 711,073 USD 968,436 6,232 9 February 2011 GBP 182,851 USD 289,604 3, February 2011 USD 2,858,133 GBP 1,793,858 (14,683) 15 February 2011 USD 6,899,480 EUR 5,027,134 9, February 2011 USD 4,787,568 JPY 396,738,574 (55,556) 794,713 HSBC Portfolios - World Selection 5 2 February 2011 GBP 12,329,057 USD 19,538, ,533 2 February 2011 EUR 577,126 USD 774,196 16,942 2 February 2011 GBP 70,269 USD 111,361 1,183 2 February 2011 EUR 19,956,208 USD 26,770, ,638 2 February 2011 USD 6,261 EUR 4,611 (60) 2 February 2011 USD 893 GBP 559 (2) 2 February 2011 USD 1,209 GBP 756 (1) 2 February 2011 USD 8,415 EUR 6,156 (24) 2 February 2011 EUR 556,374 USD 760,871 1,820 2 February 2011 GBP 254,450 USD 404,289 3,243 2 February 2011 USD 109,942 GBP 68,955 (497) 2 February 2011 USD 777,903 EUR 566,360 1,525 2 February 2011 USD 20,063,195 GBP 12,583,508 (90,775) 2 February 2011 USD 28,174,339 EUR 20,512,582 55,216 9 February 2011 GBP 12,583,262 USD 20,061,797 90,801 9 February 2011 EUR 567,515 USD 779,420 (1,528) 9 February 2011 EUR 20,812,879 USD 28,584,242 (56,019) 9 February 2011 GBP 69,096 USD 110, February 2011 USD 3,755,666 GBP 2,357,179 (19,294) 15 February 2011 USD 12,797,216 EUR 9,324,372 17, February 2011 USD 8,217,925 JPY 681,007,108 (95,363) 718,113 20

22 Notes to the Financial Statements for the period ended 31 January 2011 (continued) 6. Forward Foreign Exchange Contracts (continued) Maturity Date Currency Bought Currency Sold Unrealised Bought Amount Sold Amount (Loss) / Gain USD HSBC Portfolios - GOAL 15 February 2011 USD 281,206 JPY 23,290,460 (2,658) 15 February 2011 EUR 1,283 USD 1,763 (4) 15 February 2011 USD 401,745 EUR 292, February 2011 GBP 472 USD 753 (2) 15 February 2011 USD 122,027 GBP 76, February 2011 JPY 1,709,085 USD 20, February 2011 GBP 2,075 USD 3, February 2011 EUR 5,624 USD 7,704 7 (1,156) 7. Soft Commission Arrangements The Investment Adviser of the Portfolios may from time to time receive goods and services which are paid for out of broker commissions provided that they relate to execution and research services which meet the criteria laid down by United Kingdom s Financial Services Authority Rules. There were no soft commissions paid or accrued during the period. 8. Transactions with connected persons Transaction costs such as brokerage fees have no impact on the Company as these fees are paid out of Operating, Administrative and Servicing Expenses, which is set, for each Portfolio or Share Class, at a fixed percentage of the Net Asset Value of the relevant Portfolio or Share Class. No additional transaction costs have been paid out of the assets of the Company. 9. Publication of TER (Total Expense Ratio) - Information concerning the Swiss Investors Total Expense Ratio (%) for the period ended 31 January 2011: HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios HSBC Portfolios World Selection 1 World Selection 2 World Selection 3 World Selection 4 World Selection 5 GOAL Class A (C) (USD) Class A (C) (HGBP) Class A (C) (HEUR) Class E (C) (USD) Class Z (C) (USD) Class Z (C) (HGBP) Class Z (C) (HEUR) Class S1 (C) (USD) Subsequent events There were no subsequent events. 21