HSBC Global Asset Management France

FEES AND COMPENSATION

Fee Schedules
Fees are generally charged and collected in accordance with the investment advisory
agreement with the client.

There is currently no HSBC Global Asset Management (France)’ products offered to US
clients.

Deduction of Fees
Generally, unless otherwise specified by the client, fees are charged monthly, quarterly or
annually in arrears. Fees are calculated based on the account’s average market value for the
period. Average market value for the period is the average of the market values, or as of the
first day of the period and the last day of each month within the period, as stated on the
client’s custodian statement. Fees for the initial billing, at the inception of the account, are
prorated accordingly. If, during a period, the client makes a contribution to or withdrawal
from the portfolio, fees will be pro-rated accordingly. The value of securities in the client
account is equal to the market value of the securities or in the absence of a market value, the
fair market value as determined in good faith by the custodian.

In the event the client terminates an account, any fees owed to HSBC Global Asset
Management (France) will be pro-rated accordingly.

Any fees that may have been prepaid previously by the client shall be refunded on a pro-rata
basis based upon the number of calendar days remaining after the termination date in the
period as to which fees may have been prepaid. The client or HSBC Global Asset
Management (France) generally may terminate an investment advisory agreement at such
time as mutually agreed upon in writing by HSBC Global Asset Management (France) and
the client.

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Other Fees and Expenses
Clients will pay brokerage and custody fees, see “Brokerage Practices.”

Clients may elect to have their idle cash balances swept into money market funds including
funds that are managed by HSBC Global Asset Management (France) or an affiliated
company. In the cases where a money market fund is managed by HSBC Global Asset
Management (France), HSBC Global Asset Management (France) may receive a
management fee for its advisory services.

As with all mutual funds, clients, through their investment in the money market fund are
charged their pro-rata share of the fund’s fees and expenses.

In addition, HSBC Global Asset Management (France), in its capacity as investment adviser,
may invest client assets in mutual funds other than money market funds, advised by an
affiliated company. Clients are given an appropriate fee adjustment for any holdings in the
affiliated mutual funds that are not money market investments. The client is responsible for
all other expenses and fees associated with an investment in the funds.

These fees and expenses may include but are not limited to, advisory and custodial fees, and
any sales load incurred with the purchase or sale of the funds. Expenses and fees vary with
each fund. The client should read the fund’s prospectus for a complete description of the
fund’s fee structure.

PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT

HSBC Global Asset Management (France) may charge performance fees based on a share of
capital gains or capital appreciation of the assets.

TYPES OF CLIENTS

HSBC Global Asset Management (France) provides investment advice to banks and thrift
institutions, investment companies, pension and profit sharing plan, corporations, business
entities and others not mentioned here. Client relationships vary in scope and length of
service.

METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

General Description

HSBC Global Asset Management (France)’s approach to portfolio management is rigorous
and consistent and integrates risk management principles at each stage of the process. The
investment philosophy and process rest on three pillars: valuation methods, budgeting and
disciplined portfolio implementation.

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Portfolio management teams supported by research start by assessing the valuation of
securities and asset classes. This is carried using quantitative tools which are supplemented
by in depth qualitative work. HSBC Global Asset Management’s investment philosophy is
that valuation discipline is the key to good long term investment outcomes. This work is then
brought into the context of portfolio objectives. Risk budgeting tools are used to build
portfolios within the relevant contractual guidelines.

Risk Management is a key component of HSBC Global Asset Management (France)’s
investment philosophy and process. On an ongoing basis, HSBC Global Asset Management
(France)’s investment process incorporates the systematic monitoring of portfolio exposures,
absolute or relative risk levels, as well as a strict control of operational risk. In practice, all
teams contribute to risk assessment: from asset allocation analysis and decision (Research
and Asset Management) to implementation (Asset management and Trading) and controls
(Asset Management, Middle Office, Investment Risk and Chief Control Officer (“CCO”)).

The CCO team of HSBC Global Asset Management (France) is responsible for monitoring
the operational risk assessment and executing second level reviews in respect of the Internal
Control plan established on an annual basis. The internal controls may be conducted through
sampling or may consist of a check of the Company process. Where necessary, the review
can focus on a particular type of portfolio or asset.
The CCO team reports to the Chief Executive Officer of HSBC Global Asset Management
(France). The CCO team has also functional connections with the Global functions of HSBC
Continental Europe (Operational & Resilience Risk team - “OR”), HSBC Global Asset
Management Limited (GlobalCCO) and to the Chief Operating Officer of HSBC Global
Asset Management (France).
In addition to the CCO monitoring, the OR team ensures that the HSBC Global Asset
Management (France) Business Units and CCO control capabilities are adequate and
provides an on-going oversight. Furthermore, the Global Internal Audit of HSBC Group
carries out periodic reviews which enable to provide an independent assurance to the Group
Senior Management that the key risks arising from the activities of the business are managed
in an appropriate manner and in accordance with Group standards, and that the controls put in
place by HSBC Global Asset Management (France) are efficient.

The Middle Office is specifically in charge of post market monitoring of all transactions
implemented.

The dedicated Investment Risk Team is responsible for monitoring investment risk
independently from the portfolio managers. The team reports to the Chief Risk Officer.
Under the oversight of HSBC Global Asset Management (France)’s Risk Management
Meeting, the Investment Risk team defines risk policies and controls, selects appropriate risk
measures (e.g., modified duration, tracking-error, Value-at-Risk, stress testing), implements
market risk controls and analysis of the risk over all client accounts, and, when appropriate,
conducts stress scenarios. They communicate the result of their control assessment and the
potential risk that the portfolio managers could face to Senior Management.

In order to ensure that internal guidelines and risk policies are well implemented, the
Investment Risk team collaborates on a daily basis with the investment teams. They are in
constant contact with portfolio managers and traders in order to assist in managing the risk in

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their portfolios, keeping a clear view on the market configuration and potential risks that
could arise.

HSBC Global Asset Management (France) currently does not offer strategies to US
clients.

The strategies described below relate to a Canadian based mutual fund and a
Luxembourg based investment company for which there are restrictions on offers and
sales to U.S. Persons and for which HSBC Global Asset Management (France) does not
offer or solicit U.S. based clients. Nonetheless, as some U.S. persons have in the past
invested in these funds, the strategies are consequently disclosed in this Form ADV Part
2A:

European Equities:

HSBC European Fund
European Equities strategy seeks to achieve long-term capital growth by investing in a broad
range of large European-based companies. These companies are primarily from the United
Kingdom, France, Germany, Italy and other Developed European nations.

HGIF European Equity
European Equities strategy seeks long term capital growth by investing primarily in a
diversified portfolio of investments in equity and equity equivalent securities of companies
which have their registered office in, and with an official listing on a major stock exchange or
other Regulated Market of any developed European country. The portfolio is diversified by
sector and individual stock exposure.

The strategies described in this Brochure should not be considered as an exhaustive list
of the strategies of HSBC Global Asset Management (France), but rather represent the
strategies into which certain investors have been identified as being U.S. Persons.

Material Risks for Investment Strategies:
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