HSBC MSCI EMERGING MARKETS ISLAMIC SCREENED CAPPED UCITS ETF

The investment objective of the Fund is to replicate the performance of the MSCI EM (Emerging Market) Islamic Universal Screened Select Capped Index (the “Index”), which provides investors the opportunity to gain exposure to large- and mid-cap companies across 24 Emerging Markets1 countries that comply with Shariah investment principles while integrating environmental, social and governance (“ESG”) metrics, while minimising as far as possible the tracking error between the Fund’s performance and that of the Index. In replicating the performance of the Index, the Fund promotes certain environmental, social and/or governance characteristics (as set out in the section titled “The Index”) and has been categorised as an Article 8 fund for the purpose of the SFDR. The Index is constructed from the MSCI Emerging Markets Islamic Index (the “Parent Index”). The Index Provider screens all securities by applying exclusionary criteria and using the MSCI ESG Universal Indexes methodology to select securities from the Parent Index. Further detail is provided under the section titled “Index Description” section of the Supplement. In seeking to achieve its investment objective, the Fund will aim to invest in the constituents of the Index in generally the same proportions in which they are included in the Index. The Fund promotes certain environmental, social and/or governance characteristics (as set out in the section titled “Index Description”) Information on the Index's characteristics and the determination of sustainable investments is set out under the section titled "Index Description” below. However, there may be circumstances when it is not possible or practicable for the Fund to invest in all constituents of the Index. Such circumstances may include (but are not limited to): (i) a limited availability of the Index constituents; (ii) trading suspensions on constituents of the Index; (iii) cost inefficiencies; (iv) if the assets under management of the Fund are relatively small, or (v) where there are internal or regulatory driven trading restrictions (as detailed in the “Investment Restrictions” and “Investment Restrictions – Other Restrictions” sections of the Prospectus) that apply to the Fund or Investment Manager but not the Index. As a result of not investing in some of the Index constituents, the Fund may also invest in assets which are not Index constituents for the purpose of assisting in tracking the Index, namely American Depositary Receipts, European Depositary Receipts and Global Depositary Receipts which are certificates typically issued by a bank or trust company evidencing ownership of shares of a non-US issuer. These assets must be in line with Shariah Investment Guidelines provided by the Shariah Committee and advised to the Investment Manager. The Shariah Investment Guidelines used by the Shariah Committee are the international standards issued by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) (specifically AAOIFI Financial Accounting Standard No. 14 Investment Funds which can be found at: www.aaoifi.com/e-standards/?lang=en) in addition to the independent views of the Shariah Committee. Most of the securities in which the Fund invests will be listed or traded on Recognised Markets, as defined in the Prospectus. Accordingly, the underlying exposure is to the issuers of equity securities included in the Index. The markets in which the issuers are based are considered to be emerging markets and accordingly, are subject to the risks described in the “Investment Risks” section below. The Fund may invest in China A Shares: (a) via the Shanghai-Hong Kong Stock Connect and/or Shenzhen-Hong Kong Stock Connect (subject to applicable quota limitations); or (b) indirectly through CAAP. The indicative net asset value per Share of the Fund is available on at least one major market data vendor terminal such as Bloomberg, as well as on a wide range of websites that display stock market data, including www.reuters.com. If the Fund assets fall below a size whereby the Investment Manager considers it is not possible to maintain a fully replicated strategy, the Investment Manager may reduce exposure to certain securities in the Index, but will aim to ensure that the Fund’s portfolio of assets will replicate the returns of the Index. However, in such circumstances, the Fund may not take exposure to all securities in the Index as the Index contains too many securities to efficiently purchase and, at times, certain securities included in the Index are difficult to purchase on Recognised Markets. In addition to compliance with the UCITS Regulations and the applicable Central Bank requirements, investments in securities which are not constituents of the Index shall only be made if they are in accordance with the Shariah Investment Guidelines. The constituents of the Index are subject to periodic review by the Shariah Committee to ensure compliance of such securities with the Shariah Investment Guidelines. For further information on the treatment of the Fund's investments, please refer to the section below titled “Additional Shariah Fund Information”. The Fund may only use Shariah-compliant foreign exchange contracts (including spot and forward contracts). These FDIs may only be used for hedging purposes Forward contracts may be used to hedge or to gain exposure to an increase in the value of an asset, currency or deposit. Foreign exchange contracts may be used to convert the currency of the underlying investments of each Fund into the Base Currency and to hedge the dividends received in a currency other than the Base Currency between a dividend ex date and the pay date. To the extent that the Fund uses FDI, there may be a risk that the volatility of the Fund may increase. However, the Fund is not expected to have an above average risk profile as a result of its use of or investment in FDI. FDI will be used within the limits stipulated by the Central Bank and as described in "Use of Financial Derivative Instruments" in the Prospectus. Accordingly, although FDI may be inherently leveraged, the primary purpose of the use of FDI is to hedge currency exposure, and, although the Fund will be leveraged as a result of its investments in FDI, the Fund’s global exposure (as prescribed in the Central Bank’s UCITS Regulations) relating to FDI, calculated using the commitment approach, must not exceed 100% of the Fund’s total Net Asset Value. The Fund does not intend to invest in warrants. The Fund will make use of the increased diversification limits available under Regulation 71 of the UCITS Regulations and may be in a position to hold up to 35% of the Fund’s Net Asset Value in one constituent of the Index issued by the same body, where necessitated to ensure accurate tracking of the index or due to exceptional market conditions (i.e. the issuer represents an unusually large portion of this market measured by the Index). The Fund may obtain Shariah-compliant finance in accordance with the ‘Borrowing Policy’ section in the Prospectus. Such borrowing will be temporary and will not exceed 10% of the Net Asset Value of the Fund. The tracking error is the annualised standard deviation of the difference between the monthly (or daily) returns of the Fund and the Index. A series of factors may give rise to tracking error: - Transaction costs, operating expenses, custody costs, taxes, as a result of changes in the investments of the Fund and re-weightings of the Index, corporate actions, currency fluctuations, cash flows into and out of the Fund from dividend/reinvestments and any costs and expenses which are not taken into account in the calculation of the Index. - Internal restrictions, such as the HSBC Global Asset Management Banned Weapons Policy (as detailed in the Prospectus section: INVESTMENT RESTRICTIONS - Other Restrictions) or other market or regulatory driven trading restrictions that apply to a Fund but not the relevant Index. Moreover, in the event of the temporary suspension or interruption of trading in the investments comprising the Index, or of market disruptions, rebalancing the Fund’s investment portfolio may not be possible and may result in deviations from the returns of the Index. The Fund is passively managed. There is no guarantee that the investment objective of the Fund will be achieved. In particular, no financial instrument enables the returns of the Index to be reproduced exactly. The anticipated tracking error is the expected standard deviation of the differences between the returns of the Fund and the Index. As at the date of this Supplement, the anticipated tracking error for the Fund is expected to be up to 0.20% in normal market conditions. Divergences between anticipated and realised tracking error will be explained in the annual report for the relevant period. The anticipated tracking error for the Fund is not a guide to future performance. The volatility level of the Fund will have a strong correlation to the volatility level of the Index. Additional Shariah Fund Information Shariah Committee and Shariah Team HSBC Bank Middle East Limited and the Shariah Committee will provide advice on Shariah principles to the Management Company and the Investment Manager in relation to the Fund and an agreement is in place which governs the terms of these services. The Shariah Committee comprises Islamic scholars with expertise in Islamic investment principles who will advise and guide the Investment Manager and the Management Company on the Fund’s compliance with Shariah. The Shariah Committee’s main duties and responsibilities are to advise the Investment Manager and the Management Company on the Shariah principles that the Fund must comply with, to issue an opinion or guidelines to the Investment Manager as to whether the investments of the Fund comply with Shariah principles and to make recommendations or issue guidance to the Investment Manager as to how the Fund is managed in order to be Shariah compliant. The Shariah Team will facilitate communication between the Shariah Committee and the Investment Manager and the Management Company; periodically assess and review the Fund’s activities and investments to assess compliance with Shariah principles; and provide any reports or assistance to the Fund, the Investment Manager and the Management Company on an ad-hoc basis. The Investment Manager and the Management Company will ensure that any provisions or references to investment methods or techniques in the Prospectus which would otherwise be available to the Fund in pursuing its investment policy are not availed of to the extent they are not Shariah compliant. The Shariah Committee will advise on alternative investments for the Fund which comply with the Fund’s investment policy and are Shariah compliant. The Shariah Team will review and screen the details of the Index constituents on a periodic basis and as requested to ensure compliance with the Shariah Investment Guidelines. Subject to the Fund's compliance with Shariah, as determined by the Shariah Committee, the Shariah Committee will issue an annual Shariah compliance certificate for the Fund. The remuneration of HSBC Bank Middle East Limited and any reasonable and properly vouched out of pocket expenses will be paid by the Management Company out of the assets of the Sub-Fund in accordance with the section of this Supplement titled “Fees and Expenses”. HSBC Bank Middle East Limited will remunerate the Shariah Committee for the services it provides in respect of the Fund. No separate fee will be payable out of the assets of the Fund to the Shariah Committee. Banking Arrangements Bank deposits shall be placed in Shariah-compliant accounts issued by licensed Islamic financial institutions or non-interest bearing accounts. The Fund is prohibited from investing in interest bearing deposits and recognising any interest income. Dividend Purification Some Shariah-compliant investments may yield small percentages of income inconsistent with Shariah principles that will then need to be “purified”. Such amounts will be calculated by the Index Provider. On an annual basis, following the approval of the Shariah Committee of the calculation of the nonpermissible income for the previous financial year, the Company will donate any such non-permissible income to one or more charities selected by the Investment Manager and approved by the Shariah Committee. The allocation of non-permissible income or gains between charities, in the event of there being more than one charity, shall be at the Investment Manager's sole discretion. Any charity identified for purification purposes may be changed by the Investment Manager from time to time with the approval of the Shariah Committee (where necessary) and provided that any such replacement charity meets the requirements of the Central Bank. Any such change will be notified in advance to the Central Bank and the Shareholders. The current charity selected in respect of the Fund is: • Children In Need, registered with the Charities Commission for England and Wales having registration number 802052. Capital gains in respect of the Fund arising out of non-Shariah-compliant investments Where an investment is Shariah-compliant at the time of investment but subsequently ceases to be compliant with Shariah for any reason any capital gains arising from the reversal of the non-Shariahcompliant investments arising on or prior to the date on which the investment is classified by the Investment Manager, in consultation with the Shariah Committee, as non-Shariah compliant (the "Decision Date") may be retained by the Fund. However, any capital gains made on such investment after the Decision Date shall be paid to one or more charities for dividend purification purposes (selected by the Investment Manager from time to time and approved by the Shariah Committee). Valuations will be undertaken in accordance with the valuation policy of the Company as detailed in the Prospectus. Further details on how the Investment Manager and Shariah Committee consider whether to continue holding or dispose of such investments are available to Shareholders upon request. Subscription Monies Cleared funds must be received by the Company in the appropriate Share Class currency, not later than by the settlement time detailed in the section titled “Subscriptions”. If timely settlement is not made by the applicant the subscription may lapse and be cancelled at the cost of the applicant. If the applicant does not settle the subscription price in a timely manner, no Shares will be issued to the defaulting applicant. Investors are advised to refer to the terms and conditions applicable to subscriptions which are detailed in the application form.