Valor Funds decision to split

5 January 2009

Valor Funds : Information regarding the decision to split the 4 Funds Action Valor, Central Valor, Integral Valor and Mod Valor, the justification of this decision and the operational procedure.

By notice dated December 18, 2008, HSBC Private Wealth Managers has announced the temporary suspension of the valuations and of the subscriptions/redemptions of the shares of 4 Valor Funds (hereinafter the Funds) as from the Net Asset Value (hereinafter NAV) dated December 12, 2008 (inclusive), in accordance with article L. 214-30 of the French Financial and Monetary Code and with article 3 of the Fund Regulations.

HSBC Private Wealth Managers, Management Company of the Funds, has taken this decision subsequent to the provision of prior information to the French regulators (Autorité des Marchés Financiers), as it was unable to establish an accurate NAV for the funds. This uncertainty with regards to the valuation is a consequence of the suspension of the publication of the NAV of the sub-fund American Selection of the Luxalpha Fund (hereinafter the Sub-Fund) in which the Funds are partly invested.

From the first announcements disclosing the Madoff alleged fraud, HSBC Private Wealth Managers has placed instructions on December 12, 2008, for the redemption of the entirety of shares of the Sub-Fund held in the portfolios of the Funds. The calculation and the publication of the NAV of the Sub-Fund have been suspended on December 15, 2008. As a consequence, the redemption orders have been registered but not executed. To date, no further information regarding the execution of these redemptions has been obtained by HSBC Private Wealth Managers, despite several initiatives that have been taken with regards to the concerned parties.

In this situation, HSBC Private Wealth Managers is of course determined to act in the best interests of the shareholders of the Funds..

In that respect, HSBC Private Wealth Managers has decided, in accordance with the second paragraph of article L. 214-30 of the French Financial and Monetary Code, to implement the split of the Funds under the scheme set up by Decree N°2008-1312 of December 12, 2008.

This operation will allow :

in the first place, to segregate in Side Pocket Funds (SP Funds) the illiquid assets of the Funds (i.e. the shares of the Sub-Fund)
in the second place, to re-establish the functioning of the Funds by the creation of replica Funds (A Funds), each one collecting the liquid assets of each Fund.

Upon the split, the shareholders of each Fund will then be shareholders of a SP Fund and of an A Fund.

Each A Fund collects the liquid assets of the corresponding Fund, that do not need to be segregated, and is a complete replica of the corresponding Fund in terms of legal form, management objective, investment strategy, risk profile and fees. The A Fund is actively managed. Each shareholder will receive as many shares of the A Fund as he previously held in the corresponding Fund before the split.
Each SP Fund is a contractual Fund, created under the scheme of the article L. 214-30 and following as well as D.214-22-1 of the French Financial and Monetary Code, and 413-41 and following of the AMF General Regulations. The SP Fund collects the “illiquid” assets of the corresponding Fund (i.e. the shares of the Sub-Fund whose valuations have been suspended). The shareholder will receive as many shares of the SP Fund as he previously held in the corresponding Fund prior to the split. In accordance with the last paragraph of article L 214-35-2, the activity of the SP Fund corresponds to a short-lived management type, aimed at selling progressively the assets at conditions in accordance with the interests of the shareholders. The SP Fund will not redeem its shares. When all the assets are sold, a NAV will be calculated and applied to the redemptions of all the shares of the SP Fund and its liquidation procedure.

These splits will take place on January 7, 2009. The subscription and redemption orders regarding the A Funds will be accepted as from January 7 in accordance with the provisions of the prospectuses of the A Funds.

The simplified prospectuses as well as the rules of the SP Funds and the A Funds are available on the website of HSBC Private Wealth Managers or at the office of HSBC Private Bank France at the following address :

Service Marketing
HSBC Private Bank France
117, avenue des Champs-Elysées
75 386 Paris Cedex 08
Tél : 01 49 52 29 00
contact.hsbcprivatebankfrance@hsbc.fr

The Fund auditors will draw up within 8 working days after the split, a report establishing the list of the assets transferred during the split.

Each shareholder who requests in written form the aforementioned documents (simplified prospectuses, rules, reports of the auditors), will receive them within 8 days from the date of reception of his request.