HSBC Canadian Money Market Fund. Interim Management Report of Fund Performance for the six months ended June 30, 2017

Transcription

1 HSBC Canadian Money Market Fund Interim Management Report of Fund Performance for the six months ended June 30, 2017

2 HSBC Canadian Money Market Fund Management Discussion of Fund Performance In this document, you and your refer to the unitholder of the Fund; we, us and our refer to HSBC Global Asset Management (Canada) Limited; and the Fund refers to the HSBC Canadian Money Market Fund. We are the manager, trustee and primary investment advisor of the Fund. Introduction This Interim Management Report of Fund Performance contains financial highlights but does not contain the complete annual or semi-annual financial statements of the investment fund. You may obtain a copy of the Fund s annual or semi-annual financial statements at your request, at no cost, by calling us toll-free at , by visiting our website at by visiting the SEDAR website at or by writing to us at: Corporate Secretary HSBC Global Asset Management (Canada) Limited 3 rd Floor, 885 West Georgia Street Vancouver, BC V6C 3E8 You may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly statement of investment portfolio. Results of Operations As of June 30, 2017, the Fund s net assets decreased by 0.7% to $196.2 million from $197.5 million at the end of Of this decrease, a $0.4 million gain was attributable to investment performance and $1.7 million was attributable to net withdrawals from the Fund. Investment Performance The HSBC Canadian Money Market Fund (Investor Series) rose 0.1 for the six months ending June 30, 2017, while the benchmark rose 0.25% over the same period. The benchmark is a weighted composite consisting of the FTSE TMX Canada 30 Day T-Bill Index (5) and the FTSE TMX Canada 60 Day T-Bill Index (5). The Fund took a defensive position to the corporate debt sector over the period, focusing on high-quality issues to minimize credit and liquidity risk. This protected the Fund s primary objectives of preserving capital and providing liquidity. The return from the defensive corporate position compared to that from alternative government notes was modest over the six months, but generally commensurate with the reduced level of risk. An allocation to corporate notes is usually positive for performance due to the higher yields they can offer over government-backed alternatives. However, these notes come with additional risks that may be unsuitable for the Fund at any level of compensation. Working within an extensive network of global credit research analysts, we ensure that a prudent security selection process is in place. The Fund also looks to add value by adjusting the weighted-average maturity (or duration) of the portfolio holdings relative to its benchmark. For the first six months of the year, the Fund s duration was targeted close to its blended 45-day benchmark, mitigating any relative interest rate risk. Recent Developments The Bank of Canada held its policy rate unchanged at 0.5 through the first half of Supportive financial conditions, along with strong employment growth and improving US demand, suggest an improving outlook for the Canadian economy and a reduction of the output gap. Recent economic data has reduced the need for a record low level of policy rate support, and we expect two rate hikes from the Bank of Canada in the second half of this year. We believe that uncertainty around the durability of the household and export sectors, and ongoing financial stability risks (particularly from the housing sector), will warrant the Bank of Canada to be fairly cautious in the pace at which it removes its monetary policy support. The HSBC Canadian Money Market Fund remains focused on high-quality government and corporate issues where liquidity risk and credit risk are minimized. The Fund s primary objectives are to preserve capital and provide liquidity. Related Party Transactions We, on behalf of the Fund, in our role as fund manager, may, from time to time, enter into transactions or arrangements with or involving other members of the HSBC Group or other people or companies related or connected to us or the Fund. To proceed with the transactions, the Fund relies on the positive recommendation of the Fund s Independent Review Committee. A condition of this positive recommendation is that the transactions are performed in accordance with our policy on Related Party Transactions. For more general information on persons related to the Fund and the types of potential transactions, see the Fund s Simplified Prospectus. The following is a summary of current transactions and arrangements with entities that are related to us or the Fund. Manager, Trustee and Investment Advisor We are the manager, trustee and primary investment advisor of the Fund. As manager, we manage the overall business and operations of the Fund. As trustee, we hold legal title to the property of the Fund on your behalf. As primary investment advisor, we provide investment advice and portfolio management services to the Fund. We receive a fee from the Fund for these services based on assets under management, calculated daily and paid monthly. Distribution Services The Fund is distributed through us, HSBC Investment Funds (Canada) Inc. (our wholly owned subsidiary and affiliate) and HSBC Securities (Canada) Inc. (an affiliate) directly or through its division, HSBC InvestDirect. We pay distribution and servicing fees to them based on the amount of assets held in the investor s account, and additionally, in some cases, on the amount of the 1

3 HSBC Canadian Money Market Fund initial purchase. If you hold units of this Fund and/or other HSBC Mutual Funds in a registered plan with HSBC Investment Funds (Canada) Inc., they may charge you an annual fee to cover the annual administration costs of the plan. We permit HSBC Investment Funds (Canada) Inc. to collect these fees by redeeming sufficient units of the Fund with the highest market value in your registered plan. Purchases of Securities Underwritten by a Related Party The Funds may invest in certain securities that are underwritten, in whole or in part, by entities that are a related party to us. To proceed with these transactions, the Fund relies on the approval of the Fund s Independent Review Committee by way of Standing Instruction. A condition of this approval is that the transactions are performed in accordance with our policy on Purchases of Securities Underwritten by a Related Party. During the period, the Fund did not invest in any such securities. Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the six-month period ended June 30, 2017, and for the last five years ended, as applicable. In the year a fund is established, period represents the period from inception to or June 30 of that fiscal year, as applicable. This information is derived from the Fund s unaudited semi-annual financial statements and the audited annual financial statements. The information in the following tables is based on prescribed regulations, and as a result, is not expected to add due to the increase/decrease in net assets from operations being based on average units outstanding during the period and all other numbers being based on actual units outstanding at the relevant point in time. HSBC Canadian Money Market Fund Investor Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.03) (0.06) (0.07) (0.10) (0.10) (0.10) Realized gains (losses) Unrealized gains (losses) 0.01 Total increase (decrease) from operations (2) $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 From income (excluding dividends) (0.01) (0.01) (0.01) (0.01) (0.01) (0.01) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.01) $(0.01) $(0.01) $(0.01) $(0.01) $(0.01) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $87,641 $94,686 $105,687 $121,931 $144,603 $161,660 Units outstanding (in 000s) (4) 8,764 9,469 10,569 12,193 14,460 16,166 Management expense ratio ( MER ) (5) 0.53% 0.56% 0.73% 0.98% 1.03% 1.02% MER before absorbed or waived fees (5) 0.99% 0.98% 0.98% 0.98% 1.03% 1.02% Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $

4 HSBC Canadian Money Market Fund HSBC Canadian Money Market Fund Advisor Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.03) (0.06) (0.07) (0.10) (0.10) (0.10) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations (2) $0.01 $0.01 $0.01 $ $0.01 $0.01 From income (excluding dividends) (0.01) (0.01) (0.01) (0.01) (0.01) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.01) $(0.01) $(0.01) $ $(0.01) $(0.01) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $255 $286 $140 $123 $445 $886 Units outstanding (in 000s) (4) Management expense ratio ( MER ) (5) 0.53% 0.56% 0.72% 1.02% 1.03% 1.0 MER before absorbed or waived fees (5) 1.38% 1.81% 2.07% 1.02% 1.05% 1.01% Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 HSBC Canadian Money Market Fund Premium Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.02) (0.04) (0.04) (0.04) (0.05) (0.05) Realized gains (losses) Unrealized gains (losses) 0.01 Total increase (decrease) from operations (2) $0.02 $0.03 $0.04 $0.07 $0.06 $0.06 From income (excluding dividends) (0.02) (0.03) (0.04) (0.07) (0.06) (0.06) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.02) $(0.03) $(0.04) $(0.07) $(0.06) $(0.06) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $32,684 $39,046 $30,914 $37,120 $43,608 $46,002 Units outstanding (in 000s) (4) 3,268 3,905 3,091 3,712 4,361 4,600 Management expense ratio ( MER ) (5) 0.46% 0.43% 0.42% 0.43% 0.48% 0.47% MER before absorbed or waived fees (5) 0.46% 0.43% 0.42% 0.43% 0.48% 0.47% Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $

5 HSBC Canadian Money Market Fund HSBC Canadian Money Market Fund Manager Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.02) (0.05) (0.07) (0.07) (0.07) (0.07) Realized gains (losses) Unrealized gains (losses) 0.01 Total increase (decrease) from operations (2) $0.02 $0.02 $0.01 $0.04 $0.04 $0.04 From income (excluding dividends) (0.02) (0.02) (0.01) (0.04) (0.04) (0.04) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.02) $(0.02) $(0.01) $(0.04) $(0.04) $(0.04) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $748 $747 $871 $1,161 $1,398 $1,639 Units outstanding (in 000s) (4) Management expense ratio ( MER ) (5) 0.47% 0.51% 0.68% % 0.71% MER before absorbed or waived fees (5) 0.82% 0.78% 0.74% % 0.71% Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 HSBC Canadian Money Market Fund Institutional Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.01) (0.01) (0.01) Realized gains (losses) Unrealized gains (losses) 0.01 Total increase (decrease) from operations (2) $0.04 $0.07 $0.08 $0.09 $0.10 $0.10 From income (excluding dividends) (0.04) (0.07) (0.08) (0.09) (0.10) (0.10) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.04) $(0.07) $(0.08) $(0.09) $(0.10) $(0.10) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $74,836 $62,727 $58,187 $55,543 $51,187 $42,681 Units outstanding (in 000s) (4) 7,484 6,273 5,819 5,554 5,119 4,268 Management expense ratio ( MER ) (5) 0.07% 0.04% 0.05% 0.06% % MER before absorbed or waived fees (5) 0.07% 0.04% 0.05% 0.06% % Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 (1) This information is derived from the Fund s unaudited semi-annual financial statements and audited annual financial statements. 2016, 2015, 2014 and 2013 balances are stated in IFRS balances are stated in accordance with Canadian GAAP. For 2012 the net assets per unit presented in the financial statements may differ from the net asset value calculated for Fund pricing purposes. Thereafter, under IFRS, the net assets per unit presented in the financial statements is the same as the net asset value calculated for Fund pricing purposes. (2) Net assets per unit and distributions per unit are based on the actual number of units outstanding for the relevant series at the relevant 4

6 HSBC Canadian Money Market Fund time. The increase/decrease in net assets from operations per unit is based on the weighted average number of units outstanding for the relevant series over the financial period. (3) Distributions are automatically reinvested in additional units of the Fund, unless the unitholder withdraws from the automatic reinvestment plan by providing written notice to us. (4) This information is provided as at period-end of the year shown. (5) Management expense ratio is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period. In the year a series is established, the MER is annualized from the date of inception to the end of the period. The MER may vary from one mutual fund to another and from one series of units to another. In the period, we waived certain fees and expenses otherwise payable by this Fund. We will continue to waive management and operating fees until such timeasmarketyieldsriseabovethemerofthefund. (6) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 10 is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the period. The higher the Fund s portfolio turnover rate in a period, the greater the trading costs payable by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. The rate is calculated based on the lesser of purchases or sales of securities divided by the average weighted market value of the portfolio securities, excluding short-term securities. (7) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the financial period. Management Fees For the six months ended June 30, 2017, the Fund paid us management fees of $449,727. The management fee for each series is calculated as a percentage of the daily net asset value for that series. The fees are reduced, where required, so that these fees do not duplicate fees payable by mutual funds in which the Fund invests for the same service. The Fund s management fees were used by us to pay costs for managing the investment portfolio, providing investment analysis and recommendations, making investment decisions, making brokerage arrangements for the purchase and sale of the investment portfolio and providing other services. The management fees also funded commission payments and other compensation to sales representatives and registered dealers and brokers (collectively distribution costs ), including HSBC Bank Canada, for units of the Fund bought and held by unitholders. Finally, we used management fees to pay for additional marketing and distribution services to the Fund. Past Performance The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund. The performance information does not take into account sales, redemption, distribution, optional charges or expenses you may be charged outside of the Fund or the effect of any income tax you may have to pay as a result of your investment in the Fund that would have reduced returns or performance. The Fund s past performance does not necessarily indicate how it will perform in the future. Year-by-Year Returns The following bar charts show the Fund s performance for the six-month, and for each of the previous 12-month periods ended. In percentage terms, the bar charts show how much an investment made on the first day of each financial period would have grown or decreased by the last day of each financial period. Returns Investor Series For the 12-month periods ended and the six-month 1 5% 3.4% 2.3% 0.1% % 0.1% 0.1% 0.1% 0.1% 0.2% 0.1% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun Returns Advisor Series For the 12-month periods ended and the six-month 1 5% 3.4% 2.3% 0.1% % 0.1% 0.1% 0.1% 0.1% 0.2% 0.1% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun For the six months ended June 30, 2017, approximately 46% of the total management fees collected from all HSBC Mutual Funds were used to fund distribution costs. In comparison, for the Fund, such distribution costs represented 41% of the management fees collected. This may vary by series, depending on the assets invested in each of the series. 5

7 HSBC Canadian Money Market Fund Returns Premium Series For the 12-month periods ended and the six-month 1 Summary of Investment Portfolio As at June 30, 2017 Asset Mix Percentage of NAV 5% 0.3% 0.2% 0.7% 0.6% 0.6% 0.6% 0.3% 0.3% 0.1% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun Returns Manager Series For the 12-month periods ended and the six-month 1 5% 3.7% 2.6% 0.2% 0.1% 0.4% 0.4% 0.3% 0.4% 0.1% 0.2% 0.1% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun Returns Institutional Series For the 12-month periods ended and the six-month 1 5% 4.3% 3.2% 0.6% 0.6% % 0.7% 0.3% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun Corporate Bonds 63.05% Government Bonds 36.74% Cash & Equivalents 0.21% Total Top 25 Holdings Percentage of NAV Bank of Nova Scotia, 0.45% 07/04/ Royal Bank of Canada, 0.45% 07/04/ % City of Toronto, 5.05% 07/18/ % Canada Housing Trust No. 1, 0.96% 03/15/ % Canada Housing Trust No. 1, 1.02% 09/15/ % Province of Ontario, 1.14% 11/23/ % Imperial Oil Limited, 0.76% 07/13/ % Mizuho Bank, /27/ % PSP Capital Inc., 0.58% 08/16/ % Sumitomo Mitsui Banking Corporation, /04/ % Metropolitan Life Global Funding I, 1.98% 09/25/ % Province of Ontario, 1.01% 05/30/ % Ontario Teachers Finance Trust, 0.82% 10/20/ % City of Vancouver, /01/ % Municipal Finance Authority of British Columbia, /01/ % National Bank of Canada, 0.79% 07/25/ % Province of Ontario, 1.14% 09/22/ % Province of Quebec, 0.57% 09/05/ % Royal Bank of Canada, 0.67% 07/04/ % Alberta Capital Finance Authority, 5.15% 06/01/ % Bank of Nova Scotia, 2.37% 01/11/ % Royal Bank of Canada, 2.36% 09/21/ % Toronto-Dominion Bank, 2.17% 04/02/ % Municipal Finance Authority of British Columbia, 0.61% 07/05/ % Municipal Finance Authority of British Columbia, 0.61% 07/12/ % Total oftop 25 Holdings 49.45% The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund, and is available quarterly. 6

8 For more information You can find more information about HSBC Mutual Funds in the Fund s Simplified Prospectus, Annual Information Form, Annual and Semi-Annual Report and Fund Facts. You can get a copy of these documents at no cost by calling us toll-free at , contacting your authorized dealer or visiting our website at These documents and other information about the Fund, such as information circulars and material contracts, are also available at Copies of the Annual Report and Semi-Annual Report, Simplified Prospectus, Annual Information Form, Annual and Interim Management Report of Fund Performance and Fund Facts are available on our website at How to reach us HSBC Global Asset Management (Canada) Limited Vancouver 3 rd Floor, 885 West Georgia Street Vancouver, BC V6C 3E8 Toronto Suite 300, 70 York Street Toronto, ON M5J 1S9 Toll-free: Fax: global_asset_management@hsbc.ca Website: A NOTE ON FORWARD-LOOKING STATEMENTS This report may contain forward-looking statements about the Fund, including its strategy, expected performance and condition. Forward-looking statements include statements that are predictive in nature that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. We stress that the above-mentioned list of important factors is not exhaustive. We encourage you to consider these and other factors carefully before making any investment decisions and we urge you to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements, whether as a result of new information, future events or otherwise. Sources: HSBC Global Asset Management (Canada) Limited, FTSE TMX Global Debt Capital Markets Inc. FTSE TMX Global Debt Capital Markets Inc. ( FTDCM ), FTSE International Limited ( FTSE ), the London Stock Exchange Group companies (the Exchange ) or TSX Inc. ( TSX and together with FTDCM, FTSE and the Exchange, the Licensor Parties ). The Licensor Parties make no warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE TMX Canada Index and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTDCM and all copyright in the Index values and constituent lists vests in FTDCM. The Licensor Parties shall not be liable (whether in negligence or otherwise) to any person for any error in the Index and the Licensor Parties shall not be under any obligation to advise any person of any error therein. TMX is a trade mark of TSX Inc. and is used under licence. FTSE is a trade mark of FTSE International Limited and is used by FTDCM under licence. Unauthorized reproduction, distribution, transmission or publication without our prior written consent is strictly prohibited. Issued by HSBC Global Asset Management (Canada) Limited ( ) DFS

9 HSBC U.S. Dollar Money Market Fund Interim Management Report of Fund Performance for the six months ended June 30, 2017

10 HSBC U.S. Dollar Money Market Fund Management Discussion of Fund Performance In this document, you and your refer to the unitholder of the Fund; we, us and our refer to HSBC Global Asset Management (Canada) Limited; and the Fund refers to the HSBC U.S. Dollar Money Market Fund. We are the manager, trustee and primary investment advisor of the Fund. Introduction This Interim Management Report of Fund Performance contains financial highlights but does not contain the complete annual or semi-annual financial statements of the investment fund. You may obtain a copy of the Fund s annual or semi-annual financial statements at your request, at no cost, by calling us toll-free at , by visiting our website at by visiting the SEDAR website at or by writing to us at: Corporate Secretary HSBC Global Asset Management (Canada) Limited 3 rd Floor, 885 West Georgia Street Vancouver, BC V6C 3E8 You may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly statement of investment portfolio. Results of Operations As of June 30, 2017, the Fund s net assets decreased by 7.9% to $30.2 million from $32.8 million at the end of Of this decrease, a $0.04 million loss was attributable to investment performance and $2.6 million was attributable to net withdrawals from the Fund. Investment Performance The HSBC U.S. Dollar Money Market Fund (Investor Series) rose 0.12% for the six months ending June 30, 2017, while its benchmark, the Citigroup 1-Month Treasury Bill Index (75%) and Citigroup 3-Month Treasury Bill Index (25%), rose 0.3 over the same period. A defensive position to the corporate debt sector was taken over the period, with a focus on high-quality issues to minimize credit and liquidity risk. This protected the Fund s primary objectives of preserving capital and providing liquidity. The return from the defensive corporate position was modest over the six months, but generally commensurate with the reduced level of risk. An allocation to corporate notes is usually positive for performance due to the higher yields they can offer over government-backed alternatives. However, these notes come with additional risks that may be unsuitable for the Fund at any level of compensation. We work within an extensive network of global credit research analysts to ensure that a prudent security selection process is in place. We also look to add value by adjusting the weighted-average maturity (or duration) of the portfolio holdings relative to its benchmark. For the first six months of the year, the Fund s duration was targeted to its blended 45-day benchmark, mitigating any relative interest rate risk. Recent Developments In the first half of 2017, the Federal Open Market Committee (FOMC) continued its gradual removal of monetary policy support by twice raising its target range for the federal funds rate by 0.25% to end the period at %. While no longer at historic lows, the current target range remains highly supportive of continued progress towards full employment and stable inflation. Although the labour market continues to improve and wage pressures are showing some signs of firming, labour force participation and wage growth are still low, indicating underutilization of labour resources that require continued monetary policy support. Inflation readings remain generally muted. However, FOMC members continue to expect downward pressures to be transitory and economic conditions to evolve in a manner that warrants gradual increases in the federal funds rate and the start of the normalization of their balance sheet later this year. Our base-case scenario is for improving growth and wage trends to keep the FOMC s tightening bias intact, which should warrant another 25 basis point hike before year-end. Related Party Transactions We, on behalf of the Fund, in our role as fund manager, may, from time to time, enter into transactions or arrangements with or involving other members of the HSBC Group or other people or companies related or connected to us or the Fund. To proceed with the transactions, the Fund relies on the positive recommendation of the Fund s Independent Review Committee. A condition of this positive recommendation is that the transactions are performed in accordance with our policy on Related Party Transactions. For more general information on persons related to the Fund and the types of potential transactions, see the Fund s Simplified Prospectus. The following is a summary of current transactions and arrangements with entities that are related to us or the Fund. Manager, Trustee and Investment Advisor We are the manager, trustee and primary investment advisor of the Fund. As manager, we manage the overall business and operations of the Fund. As trustee, we hold legal title to the property of the Fund on your behalf. As primary investment advisor, we provide investment advice and portfolio management services to the Fund. We receive a fee from the Fund for these services based on assets under management, calculated daily and paid monthly. Distribution Services The Fund is distributed through us, HSBC Investment Funds (Canada) Inc. (our wholly owned subsidiary and affiliate) and HSBC Securities (Canada) Inc. (an affiliate) directly or through its division, HSBC InvestDirect. We pay distribution and servicing 1

11 HSBC U.S. Dollar Money Market Fund fees to them based on the amount of assets held in the investor s account, and additionally, in some cases, on the amount of the initial purchase. If you hold units of this Fund and/or other HSBC Mutual Funds in a registered plan with HSBC Investment Funds (Canada) Inc., they may charge you an annual fee to cover the annual administration costs of the plan. We permit HSBC Investment Funds (Canada) Inc. to collect these fees by redeeming sufficient units of the Fund with the highest market value in your registered plan. Purchases of Securities Underwritten by a Related Party The Funds may invest in certain securities that are underwritten, in whole or in part, by entities that are a related party to us. To proceed with these transactions, the Fund relies on the approval of the Fund s Independent Review Committee by way of Standing Instruction. A condition of this approval is that the transactions are performed in accordance with our policy on Purchases of Securities Underwritten by a Related Party. During the period, the Fund did not invest in any such securities. Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the six-month period ended June 30, 2017, and for the last five years ended, as applicable. In the year a fund is established, period represents the period from inception to or June 30 of that fiscal year, as applicable. This information is derived from the Fund s unaudited semi-annual financial statements and the audited annual financial statements. The information in the following tables is based on prescribed regulations, and as a result, is not expected to add due to the increase/decrease in net assets from operations being based on average units outstanding during the period and all other numbers being based on actual units outstanding at the relevant point in time. All figures are stated in US dollars. HSBC U.S. Dollar Money Market Fund Investor Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.03) (0.04) (0.01) (0.01) (0.01) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations (2) $0.02 $0.01 $0.01 $ $ $0.01 From income (excluding dividends) (0.02) (0.01) (0.01) (0.01) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.02) $(0.01) $(0.01) $ $ $(0.01) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $18,585 $21,759 $39,480 $41,155 $40,566 $32,414 Units outstanding (in 000s) (4) 1,858 2,176 3,948 4,115 4,057 3,241 Management expense ratio ( MER ) (5) 0.65% 0.41% 0.13% 0.11% 0.12% 0.15% MER before absorbed or waived fees (5) 1.36% 1.18% 1.18% 1.23% 1.24% 1.26% Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $

12 HSBC U.S. Dollar Money Market Fund HSBC U.S. Dollar Money Market Fund Advisor Series Net Assets per Unit (1) June 30, * Net assets per unit, beginning of period (2) $ $ $ $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.01) (0.01) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations (2) $ $ $ $ $ $0.01 From income (excluding dividends) (0.01) From dividends From capital gains From return of capital Total annual distributions (2,3) $ $ $ $ $ $(0.01) Net assets per unit, end of period (2) $ $ $ $ $10.00 $10.00 June 30, * NAV (in 000s) (4) $ $ $ $ $220 $292 Units outstanding (in 000s) (4) Management expense ratio ( MER ) (5) % 0.15% MER before absorbed or waived fees (5) 1.36% 1.26% 1.23% Portfolio turnover rate (6) n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a NAV per unit (4) $ $ $ $ $10.00 $10.00 * The Advisor Series was fully redeemed during 2014; however, it remains in offer as at period-end. HSBC U.S. Dollar Money Market Fund Premium Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.03) (0.04) (0.01) (0.01) (0.01) (0.01) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations (2) $0.02 $0.02 $0.01 $ $ $0.01 From income (excluding dividends) (0.02) (0.02) (0.01) (0.01) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.02) $(0.02) $(0.01) $ $ $(0.01) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $11,515 $11,028 $8,772 $11,277 $10,774 $21,700 Units outstanding (in 000s) (4) 1,151 1, ,128 1,077 2,170 Management expense ratio ( MER ) (5) 0.57% 0.38% 0.13% % 0.15% MER before absorbed or waived fees (5) % 0.58% 0.58% 0.56% 0.58% Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $

13 HSBC U.S. Dollar Money Market Fund HSBC U.S. Dollar Money Market Fund Manager Series Net Assets per Unit (1) June 30, ** Net assets per unit, beginning of period (2) $ $ $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.01) (0.01) (0.01) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations (2) $ $ $ $ $ $0.01 From income (excluding dividends) (0.01) From dividends From capital gains From return of capital Total annual distributions (2,3) $ $ $ $ $ $(0.01) Net assets per unit, end of period (2) $ $ $ $10.00 $10.00 $10.00 June 30, ** NAV (in 000s) (4) $ $ $ $32 $327 $4,327 Units outstanding (in 000s) (4) Management expense ratio ( MER ) (5) 0.09% % 0.15% MER before absorbed or waived fees (5) 2.95% 0.91% 0.92% 0.94% Portfolio turnover rate (6) n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a NAV per unit (4) $ $ $ $10.00 $10.00 $10.00 ** The Manager Series was fully redeemed during 2015; however, it remains in offer as at period-end. HSBC U.S. Dollar Money Market Fund Institutional Series Net Assets per Unit (1) June 30, Net assets per unit, beginning of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Increase (decrease) from operations: Total revenue Total expenses (0.01) (0.02) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations (2) $0.04 $0.03 $0.01 $0.01 $0.01 $0.02 From income (excluding dividends) (0.04) (0.03) (0.01) (0.01) (0.01) (0.02) From dividends From capital gains From return of capital Total annual distributions (2,3) $(0.04) $(0.03) $(0.01) $(0.01) $(0.01) $(0.02) Net assets per unit, end of period (2) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 June 30, NAV (in 000s) (4) $70 $36 $201 $6,757 $6,103 $8,563 Units outstanding (in 000s) (4) Management expense ratio ( MER ) (5) 0.28% 0.22% (0.03)% (0.01)% (0.02)% (0.01)% MER before absorbed or waived fees (5) 0.83% 0.29% 0.18% 0.17% 0.14% 0.15% Portfolio turnover rate (6) n/a n/a n/a n/a n/a n/a Trading expense ratio (7) n/a n/a n/a n/a n/a n/a NAV per unit (4) $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 (1) This information is derived from the Fund s unaudited semi-annual financial statements and audited annual financial statements. 2016, 2015, 2014 and 2013 balances are stated in IFRS balances are stated in accordance with Canadian GAAP. For 2012 the net assets per unit presented in the financial statements may differ from the net asset value calculated for Fund pricing purposes. Thereafter, under IFRS, the net assets per unit presented in the financial statements is the same as the net asset value calculated for Fund pricing purposes. (2) Net assets per unit and distributions per unit are based on the actual number of units outstanding for the relevant series at the relevant time. The increase/decrease in net assets from operations per unit is based on the weighted average number of units outstanding for the relevant series over the financial period. (3) Distributions are automatically reinvested in additional units of the Fund; cash distributions are not available. (4) This information is provided as at period-end of the year shown. (5) Management expense ratio is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) for 4

14 HSBC U.S. Dollar Money Market Fund the stated period and is expressed as an annualized percentage of daily average net asset value during the period. In the year a series is established, the MER is annualized from the date of inception to the end of the period. The MER may vary from one mutual fund to another and from one series of units to another. In the period, we waived certain fees and expenses otherwise payable by this Fund. We will continue to waive management and operating fees until such timeasmarketyieldsriseabovethemerofthefund. (6) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 10 is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the period. The higher the Fund s portfolio turnover rate in a period, the greater the trading costs payable by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. The rate is calculated based on the lesser of purchases or sales of securities divided by the average weighted market value of the portfolio securities, excluding short-term securities. (7) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the financial period. Management Fees For the six months ended June 30, 2017, the Fund paid us management fees of $120,603. The management fee for each series is calculated as a percentage of the daily net asset value for that series. The fees are reduced, where required, so that these fees do not duplicate fees payable by mutual funds in which the Fund invests for the same service. The Fund s management fees were used by us to pay costs for managing the investment portfolio, providing investment analysis and recommendations, making investment decisions, making brokerage arrangements for the purchase and sale of the investment portfolio and providing other services. The management fees also funded commission payments and other compensation to sales representatives and registered dealers and brokers (collectively distribution costs ), including HSBC Bank Canada, for units of the Fund bought and held by unitholders. Finally, we used management fees to pay for additional marketing and distribution services to the Fund. For the six months ended June 30, 2017, approximately 46% of the total management fees collected from all HSBC Mutual Funds were used to fund distribution costs. In comparison, for the Fund, such distribution costs represented 34% of the management fees collected. This may vary by series, depending on the assets invested in each of the series. Past Performance The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund. The performance information does not take into account sales, redemption, distribution, optional charges or expenses you may be charged outside of the Fund or the effect of any income tax you may have to pay as a result of your investment in the Fund that would have reduced returns or performance. The Fund s past performance does not necessarily indicate how it will perform in the future. Year-by-Year Returns The following bar charts show the Fund s performance for the six-month, and for each of the previous 12-month periods ended. In percentage terms, the bar charts show how much an investment made on the first day of each financial period would have grown or decreased by the last day of each financial period. Returns Investor Series For the 12-month periods ended and the six-month 1 5% 4.1% 1.6% 0.1% % 0.1% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun Returns Advisor Series For the 12-month periods ended and the six-month 1 5% 4.1% 1.6% 0.1% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun * 2015* 2016* 2017* * The Advisor Series was fully redeemed during There were no unitholders for the full calendar year during 2015 and 2016; however, it remains in offer at period-end. Returns Premium Series For the 12-month periods ended and the six-month 1 5% 0.2% % 0.2% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun

15 HSBC U.S. Dollar Money Market Fund Returns Manager Series For the 12-month periods ended and the six-month 1 5% 4.4% 1.9% 0.1% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun * 2016* 2017* * The Manager Series was fully redeemed during There were no unitholders for the full calendar year during 2016; however, it remains in offer at period-end. Returns Institutional Series For the 12-month periods ended and the six-month 1 5% 5.2% 2.7% 0.4% 0.2% 0.2% 0.2% 0.1% 0.1% 0.2% 0.3% 0.3% Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Jun Top 25 Holdings Percentage of NAV Royal Bank of Canada, /05/ % Bank of Nova Scotia, 1.15% 07/05/ Export Development Corp., 1.04% 09/06/ % Province of British Columbia, 0.96% 09/06/ % NRW Bank, 1.26% 09/21/ % Province of Quebec, 1.06% 11/01/ % Export Development Corp., 0.95% 07/11/ % KfW International Finance Inc., 1.16% 09/11/ % Province of Ontario, 0.93% 07/12/ % Caisse des Depots et Consignations, 1.09% 08/02/ Export Development Corp., 0.99% 07/24/ Government of Canada, 1.13% 11/30/ NRW Bank, 1.14% 08/17/ Province of British Columbia, /25/ KfW International Finance Inc., 1.07% 08/08/ % Westpac Banking Corp., /04/ % Farm Credit Corp., 0.91% 07/07/ % Bank of Tokyo-Mitsubishi UFJ Ltd., 1.35% 09/01/ % Toronto-Dominion Bank, 1.53% 03/20/ % Canadian Imperial Bank of Commerce, 1.14% 08/16/ % Province of Quebec, 0.86% 07/24/ % Cooperative Centrale, /02/ % Norinchukin Bank/New York, 1.18% 08/14/ % JPMorgan Chase & Co., /05/ % OMERS Finance Trust, 1.19% 07/14/ % Total oftop 25 Holdings 79.22% Summary of Investment Portfolio As at June 30, 2017 Asset Mix Percentage of NAV Corporate Bonds 77.41% Government Bonds 22.3 Cash & Equivalents 0.29% Total The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund, and is available quarterly. 6

16 For more information You can find more information about HSBC Mutual Funds in the Fund s Simplified Prospectus, Annual Information Form, Annual and Semi-Annual Report and Fund Facts. You can get a copy of these documents at no cost by calling us toll-free at , contacting your authorized dealer or visiting our website at These documents and other information about the Fund, such as information circulars and material contracts, are also available at Copies of the Annual Report and Semi-Annual Report, Simplified Prospectus, Annual Information Form, Annual and Interim Management Report of Fund Performance and Fund Facts are available on our website at How to reach us HSBC Global Asset Management (Canada) Limited Vancouver 3 rd Floor, 885 West Georgia Street Vancouver, BC V6C 3E8 Toronto Suite 300, 70 York Street Toronto, ON M5J 1S9 Toll-free: Fax: global_asset_management@hsbc.ca Website: A NOTE ON FORWARD-LOOKING STATEMENTS This report may contain forward-looking statements about the Fund, including its strategy, expected performance and condition. Forward-looking statements include statements that are predictive in nature that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. We stress that the above-mentioned list of important factors is not exhaustive. We encourage you to consider these and other factors carefully before making any investment decisions and we urge you to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements, whether as a result of new information, future events or otherwise. Sources: HSBC Global Asset Management (Canada) Limited, Bloomberg. Unauthorized reproduction, distribution, transmission or publication without our prior written consent is strictly prohibited. Issued by HSBC Global Asset Management (Canada) Limited ( ) DFS