REG - HSBC ETFs PLC - Notice of EGM

MSCIAnnouncement

18/03/2025 13:45

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RNS Number : 1549B  HSBC ETFs PLC  18 March 2025

 

 

 

 

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

This circular (the "Circular") is sent to you as a Shareholder of HSBC MSCI
USA UCITS ETF (the "Fund"), a sub-fund of HSBC ETFs plc (the "Company"). It is
important and requires your immediate attention.  If you are in any doubt as
to the action you should take you should seek advice from your stockbroker,
bank manager, solicitor, accountant or independent financial adviser.  This
Circular and the changes it proposes have not been reviewed by the Central
Bank of Ireland (the "Central Bank") and it is possible that changes may be
necessary to meet the requirements of the Central Bank.  The Directors accept
responsibility for the information contained in this Circular.

_________________________________________________________________________________

 

HSBC ETFs plc

 

EXTRAORDINARY GENERAL MEETING

OF THE SHAREHOLDERS OF

HSBC MSCI USA UCITS ETF

 

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 17 November 2023 (the "Prospectus"). A copy of the
Prospectus and the supplement for the Fund (the "Supplement") is available
upon request during normal business hours from the Company or from the local
representative of the Company in any jurisdiction in which the Company is
registered for public distribution.

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:       HSBC MSCI USA UCITS ETF

            ISIN: IE00B5WFQ436

 

Notification of an extraordinary general meeting to change the investment
objective of the Fund

 

18 March 2025

Dear Shareholder,

 

1.         INTRODUCTION

 

The Company is authorised by the Central Bank as an open-ended investment
company with variable capital incorporated under the laws of Ireland as a
public limited company pursuant to the Companies Act 2014 and the European
Communities (Undertakings for Collective Investment in Transferable
Securities) Regulations, 2011 (as amended) (the "UCITS Regulations"). The
Company is organised as an umbrella fund with segregated liability between
sub-funds and the Fund is a sub-fund of the Company.

 

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 MSCI USA Index (the "Index"). It is proposed to change the Index so
that the investment objective of the Fund will be to replicate the performance
of the MSCI USA Sector Neutral Quality Index (the "New Index").

 

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 30 May 2025 (the "Effective Date"). As further detailed in
section 3, below, the Non-Material Changes will also take effect on the
Effective Date.

 

Rationale:

 

The Directors, in consultation with the Management Company, have determined to
replace the Index with the New Index for the following reason(s):

 

-     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 15 April 2025 at 12.00pm  (Irish time) and at which an ordinary
resolution to approve the Material Change will be proposed.

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
HSBC Issuer Services Common Depositary Nominee (UK) Limited is the sole
registered Shareholder of Shares in the Fund, investors in the Fund should
submit their voting instructions through the relevant ICSD or the relevant
participant in an ICSD (such as a local central securities depositary, broker
or nominee). If any investor has invested in the Fund through a
broker/dealer/other intermediary, the investor should contact this entity to
provide voting instructions.

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 18
April 2025 at 12.00pm (Irish time).

 

2.5        Publication of Results

 

The result of the EGM will be announced through the regulatory news service on
the London Stock Exchange website and will be published in an appropriate
manner in each of the other jurisdictions in which the Shares of the Fund are
listed on a stock exchange.

 

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 HSBC MSCI USA Quality UCITS ETF to reflect the name of the New Index
in the name of the Fund.

 

 

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 16.00 p.m.
(Irish time) on each Dealing Day.

 

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

HSBC ETFs plc

 

 

 

 

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 MSCI USA Sector Neutral Quality
Index which offers a representation of Large and Mid-Cap stocks in the US
equity markets, as determined by the Index Provider.

 

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 MSCI USA Sector Neutral Quality
Index is equated with the weight of that sector in the Parent index.

 

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 MSCI Inc.

 

 

 

 

 

 

 

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