THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
This circular (the "Circular") is sent to you as a Shareholder of
_________________________________________________________________________________
HSBC ETFs plc
EXTRAORDINARY GENERAL MEETING
OF THE SHAREHOLDERS OF
ISIN: IE00B5WFQ436
If you have sold or transferred your shares in the Fund, please pass this Circular at once to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee as soon as possible.
Unless otherwise defined herein, all capitalised terms used in this Circular shall bear the same meaning as capitalised terms used in the latest prospectus of the Company dated
The Directors of the Company accept responsibility for the information contained in this Circular. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Circular is in accordance with the facts and does not omit anything likely to affect the import of such information.
RE:
ISIN: IE00B5WFQ436
Notification of an extraordinary general meeting to change the investment objective of the Fund
Dear Shareholder,
1. INTRODUCTION
The Company is authorised by the
The purpose of this Circular is to: (i) notify you of an extraordinary general meeting ("EGM") to consider, and vote on, a proposed amendment to the investment objective of the Fund (the "Material Change"); and (ii) notify you of certain changes to the Supplement in the event the vote to implement the Material Change is successful, including a change to the name of the Fund (the "Non-Material Changes"). Certain Non-Material Changes are not directly linked to the Material Change but, subject to approval of the Material Change, the Non-Material Changes will take effect on the Effective Date (as defined below). For the avoidance of doubt, Shareholders will not be asked to vote on the Non-Material Changes. These will be implemented should the vote on the Material Change be successful.
2. MATERIAL CHANGE
2.1 Index Change
The current investment objective of the Fund is to replicate the performance of the
The New Index is based on the Index and, in the same manner as the Index, includes large and mid-cap US companies. However, unlike the Index, the New Index is designed to represent the performance of securities which exhibit quality characteristics such as high return on equity, stable year-over-year earnings growth and low financial leverage (the "Quality Factor") as determined by the Index Provider A full description of the New Index can be found at Appendix I.
Subject to the Non-Material Changes detailed below, the replacement of the Index with the New Index will have no impact on the manner in which the Fund is managed. The Fund will continue to employ a full replication strategy and may make use of the increased diversification limits available under Regulation 71 of the UCITS Regulations to hold up to 35% of its Net Asset Value in one constituent of the New Index.
Investors should note that:
Shareholders shall incur no additional costs arising from the Material Change. The Material Change shall take effect on a portfolio rebalancing date and, so, the only costs shall be transaction costs payable in the ordinary course of portfolio rebalances.
Shareholders will also not bear any additional legal or administrative costs as a result of the proposed Material Change.
As a result of the Material Change, the Total Expense Ratio will be reduced as follows: (i) for unhedged Share Classes, from 0.30% of the Net Asset Value per Share to 0.15% of Net Asset Value per Share; and (ii) for hedged Share Classes, from 0.33% of the Net Asset Value per Share to 0.16% of Net Asset Value per Share.
The anticipated tracking error and the risk profile of the Fund are expected to remain the same if the Material Change is implemented.
Subject to Shareholder approval being obtained, the Material Change will take effect from the date of issuance of an updated Supplement. This is expected to occur on or around
Rationale:
The Directors, in consultation with the
- in light of the current low level of assets under management; and
to offer the Fund at a lower Total Expense Ratio (as further detailed below).
-
Recommendation:
The Directors believe that the resolution relating to the Material Change to be proposed at the EGM is in the best interests of Shareholders of the Fund and, accordingly, the Directors recommend that Shareholders vote in favour of the resolution.
2.2 Notice of EGM to Consider and Vote on the Material Change
In order to obtain Shareholder approval for the Material Change, the Board has decided to convene an EGM which will be held at the registered office of the Company on
Please note that you are only entitled to attend and vote at the EGM (or any adjournment thereof) if you are a registered Shareholder. As the Company uses the International Central Securities Depositary (ICSD) model of settlement and
2.3 Proxy Form / Shareholders unable to attend the EGM
The form of proxy accompanying this Circular should be completed and returned in accordance with the instructions thereon, so as to be received no later than 48 hours before the time fixed for the holding of the EGM.
2.4 Re-convening the EGM
Should it be necessary to re-convene the EGM, Shareholders should note that the Board has determined that the re-convened meeting would take place on
2.5 Publication of Results
The result of the EGM will be announced through the regulatory news service on the
3. NON-MATERIAL CHANGES
3.1 Name Change
As a result of the Material Change, it is proposed to change the name of the Fund to
3.2 Dealing Deadline for Hedged Share Classes
Following the Material Change, the Fund will no longer need to avail of different Dealing Deadlines between unhedged and hedged Share Classes and so the Dealing Deadline for all Share Classes will be aligned to
3.3 Distribution Frequency
As a result of Material Change, the Fund will generally pay dividends quarterly (rather than semi-annually as currently provided for) in January/February, April/May, July/August and October/November.
4. REDEMPTION OF SHARES
Shareholders who do not wish to remain in the Fund following the implementation of the Material Change and/or the Non-Material Changes (if the ordinary resolution is passed) will have the opportunity to redeem their Shares on any Dealing Day prior to the Effective Date by contacting the Administrator so that a written redemption request is received by the Administrator by the Dealing Deadline for the relevant Dealing Day.
Should you have any questions relating to these matters, you should either contact us at the above address or alternatively you should contact your investment consultant.
Yours sincerely,
________________
Director
for and on behalf of
Appendix I
Description of the New Index
The Fund will aim to replicate the net total return performance of the Index.
The Index is an equity index based on the
The Index aims to provide exposure to securities that exhibit strong quality characteristics, relative to their peers within the same GICS sector by identifying stocks with high quality scores based on three main fundamental variables: high Return-on-Equity (ROE), low leverage and low earnings variability (as defined by the Index Provider in the Index methodology and which may be amended from time to time). Each security's weight is determined by its market cap weight in the Parent index and its quality score, however, weights are then re-adjusted to implement sector neutrality i.e., at each rebalance, the weight of each sector in the
The composition of the Index is rebalanced on a semi-annual basis and carried out according to the published rules governing the management of the Index as set out by
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