The particulars of the Scheme have been prepared in accordance with the Securities and Exchange Board of India(Mutual Funds) Regulations, 1996, (hereinafter referred to as SEBI (MF) Regulations) as amended till date, and filed withSecurities and Exchange Board of India (SEBI) alongwith a Due Diligence Certificate from the AMC. The units beingoffered for public subscription have not been approved or recommended by SEBI nor has SEBI certified the accuracy oradequacy of the Scheme Information Document.

The investors are advised to refer to the Statement of Additional Information (SAI) for details of HSBC Mutual Fund, Taxand Legal issues and general information on www.assetmanagement.hsbc.com/in.

SAI is incorporated by reference (is legally a part of the Scheme Information Document). For a free copy of thecurrent SAI, please contact your nearest Investor Service Centre or log on to www.assetmanagement.hsbc.com/in.

The Scheme Information Document should be read in conjunction with the SAI and not in isolation.

The Scheme Information Document sets forth concisely the information about the scheme that a prospective investor

ought to know before investing. Before investing, investors should also ascertain about any further changes to this

Scheme Information Document after the date of this Document from the Mutual Fund / Investor Service Centres /

Website / Distributors or Brokers.

The Trustees / AMC reserve the right to extend / prepone the closing date of the New Fund Offer Period, subject to the

condition that the subscription to the New Fund Offer shall not be kept open for more than 45 days.

Investors in the Scheme are not being offered any guaranteed / assured returns.

Investors are advised to consult their Legal / Tax and other Professional Advisors in regard to tax/legal implications

relating to their investments in the Scheme and before making decision to invest in or redeem the Units.

This Scheme Information Document is dated 15 September, 2008.

New Fund Offer Opens on 18 September, 2008

New Fund Offer Closes on 25 September, 2008

HSBC Mutual Fund

HSBC Fixed Term Series 66 (HFTS 66) Offer of Units of Rs.10/- per unit during theNew Fund Offer

Sponsor:

Regd. Office: 52/60, Mahatma Gandhi Road,

Fort, Mumbai 400 001

HSBC Securities and Capital Markets

(India) Private Limited

.

Trustee:

Office: 314 D. N. Road,

Fort, Mumbai 400 001.

Board of Trustees

Asset Management Company:

Corp. & Regd. Office: 314 D. N. Road,

Fort, Mumbai 400 001.

HSBC Asset Management (India) Private Limited

Scheme Information Document (SID)

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A close-ended Income SchemeA close-ended Income Scheme

HSBC Fixed Term Series 66 (HFTS 66) 1

Highlights / Summary of the Scheme ....................................... 2

SECTION I

Risk Factors ................................................................................. 3

Standard Risk Factors ............................................................ 3

Scheme Specific Risk Factors ............................................... 3

Requirement of Minimum Investors in the Scheme ............... 4

Special Considerations ................................................................ 4

Definitions .................................................................................... 5

Due Diligence Certificate ............................................................ 7

SECTION II

Information about the Scheme ................................................... 8

Type of the Scheme ....................................................................... 8

Investment Objective ..................................................................... 8

Asset Allocation of the Scheme .................................................... 8

Where will the Scheme Invest? ..................................................... 8

Change in Investment Pattern ........................................................ 8

Trading in Derivatives ................................................................... 8

Exposure to Derivatives ................................................................. 8

Valuation of Derivative Products ................................................... 9

Investment Strategies ..................................................................... 9

Investment Approach and Risk Control ........................................ 9

Derivative Strategies ...................................................................... 9

Portfolio Turnover ........................................................................ 10

Procedure followed for Investment Decisions ............................ 10

Fundamental Attributes ................................................................ 10

Benchmark Index ......................................................................... 10

Fund Manager .............................................................................. 11

Investment Restriction ................................................................. 11

Policy on Offshore Investments by theScheme and the Plans thereunder ................................................ 12

Scheme Performance .................................................................... 12

SECTION III

Units and Offer ........................................................................... 13

New Fund Offer ................................................................... 13

New Fund Offer Period ....................................................... 13

New Fund Offer Price .......................................................... 13

Extension / Preponing of the New Fund Offer Period ....... 13

Minimum Amount for Application ...................................... 13

Minimum Target Amount ..................................................... 13

Maximum Amount to be raised ........................................... 13

Option / Sub-Options offered under the Scheme .............. 13

Allotment and Refund .......................................................... 14

Who Can invest? .................................................................. 14

Submission of Applications ................................................. 14

Bank Accounts Number ....................................................... 14

How to Apply? ..................................................................... 14

Listing ................................................................................... 15

Restriction, if any ................................................................. 15

Fractional Units .................................................................... 15

Right to Limit Redemptions ................................................ 15

Suspension of Sale / Repurchase ......................................... 15

Ongoing Offer Details ............................................................... 15

On-going Subscriptions ........................................................ 15

Sale, Repurchase of Units on Ongoing Basis ..................... 15

Cut off timings for redemptions .......................................... 16

Where can the applications for redemptionsbe submitted? ....................................................................... 16

Minimum Application Amount / Additional Investment .... 16

Minimum Amount for redemption ...................................... 16

Minimum balance to be maintained andconsequences of non maintenance ....................................... 16

Product Add ons ................................................................... 16

Account Statements .............................................................. 16

Receiving Allotment Statement / Correspondenceby email ................................................................................ 17

Redemption / Repurchase proceeds ..................................... 17

Periodic Disclosures ................................................................... 17

NAV Information .................................................................. 17

Half yearly Disclosure: Portfolio / Financial Results ......... 17

Annual Report ...................................................................... 17

Associate Transactions ......................................................... 17

Taxation ................................................................................ 17

Investor Services .................................................................. 18

Computation of NAV ........................................................... 18

Policy on computation of NAV in case offoreign securities .................................................................. 18

SECTION IV

Fees and Expenses ..................................................................... 19

NFO Expenses .............................................................................. 19

Annual Scheme Recurring Expenses ........................................... 19

Load Structure .............................................................................. 19

Waiver of Load for Direct application ........................................ 20

SECTION V

Unitholders' Rights ...................................................................... 21

SECTION VI

Penalties and Pending Litigations ............................................... 21

General Information ..................................................................... 22

TABLE OF CONTENTS

Page No. Page No.

2 Scheme Information Document (SID)

HIGHLIGHTS / SUMMARY OF THE SCHEME

Name of the Scheme HSBC Fixed Term Series 66

Type of Scheme A close ended Income Scheme

Investment Objective To seek generation of returns by investing in a portfolio of fixed income instruments normallymaturing in line with the time profile of the Plan.

Maturity of the Plan HSBC Fixed Term Series 66 will be for a fixed term of 18 months from the date of allotment.

Option(s) / Sub-option(s) Regular & Institutional Option(s) and sub-options of Dividend (reinvestment) & Growth.

Dividend Declaration of dividend and its frequency will inter alia depend upon the distributable surplus.Dividend may be declared from time to time at the discretion of the Trustees.

Minimum Application Amount Regular Option - Rs. 10,000 & Institutional Option - Rs. 1 crore

Minimum Redemption Amount Rs. 1000/-

Benchmark Index CRISIL Short Term Bond Fund Index

New Fund Offer The New Fund Offer Period for HSBC Fixed Term Series 66 will commence from 18September 2008 and close on 25 September 2008.

The New Fund Offer price of Units of the Scheme will be Rs. 10/- per unit.

The AMC / Trustees reserve the right to extend/ prepone the closing date of the New Fund OfferPeriod, subject to the condition that the subscription to the New Fund Offer shall not be keptopen for more than 45 days.

Load structure Entry Load – Nil

Sales Load on issue of Units in lieu of Dividend (dividend reinvestment) – Nil

Repurchase / redemption Load (Exit Load) - 3% if exited before maturity

No Exit Load on redemption / switch out of Units on the maturity date.

Switchover Fee - As per the prevailing load structure of the Scheme.

Liquidity / Ongoing Subscriptions Subscription / Switch ins to the units of the Scheme will be permissible only during the NewFund Offer period. The Scheme will not be open for ongoing subscriptions / switch ins.However, units can be redeemed / switched out on every Business Day at NAV based prices,subject to provisions of exit load, if any. The Fund will, under normal circumstances, endeavourto despatch redemption proceeds within 1 Business Day.

Transparency The AMC will calculate and disclose the first NAVs not later than 30 days from the closureof the New Fund Offer. Subsequently, the NAVs will be calculated and disclosed at the closeof every Business Day. NAV of the Scheme / Option(s) shall be made available at all InvestorService Centres of the AMC. The AMC shall have the NAV published in two daily newspapersand updated on the AMC’s website www.assetmanagement.hsbc.com/in. In addition, the AMCwill disclose details of the portfolio of the Scheme every 6 months.

HSBC Fixed Term Series 66 (HFTS 66) 3

A. RISK FACTORS

Standard Risk Factors:

l Mutual Funds and securities investments are subject to marketrisks and there is no assurance or guarantee that the objectivesof the Scheme will be achieved.

l Investment in Mutual Fund Units involves investment riskssuch as trading volumes, settlement risk, liquidity risk, defaultrisk including the possible loss of principal.

l As the price / value / interest rates of the securities in which thescheme invests fluctuates, the value of your investment in thescheme may go up or down.

l Past performance of the Sponsor/AMC/Mutual Fund does notguarantee future performance of the scheme.

l HFTS 66 is the name of the scheme does not in any mannerindicate either the quality of the scheme or its future prospectsand returns.

l The Sponsor is not responsible or liable for any loss or shortfallresulting from the operation of the Scheme beyond the initialcontribution of Rs 1,00,000 (Rupees One Lakh only) made byit towards setting up the Mutual Fund. The associates of thesponsor are not responsible or liable for any loss or shortfallresulting from the operation of the scheme.

l The present scheme is not a guaranteed or assured return.

l Mutual Funds being vehicles of securities investments are subjectto market and other risks and there can be no guarantee againstloss resulting from investing in the Scheme. The various factorswhich impact the value of the Schemes’ investments include,but are not limited to, fluctuations in the bond markets,fluctuations in interest rates, prevailing political and economicenvironment, changes in government policy, factors specific tothe issuer of the securities, tax laws, liquidity of the underlyinginstruments, settlement periods, trading volumes etc.

l Investment decisions made by the AMC may not always beprofitable.

Scheme Specific Risk Factors

Debt InstrumentsSubject to the stated investment objective, the Scheme proposes toinvest in debt and related instruments.

l Price-Risk or Interest Rate Risk: As with all debt securities,changes in interest rates may affect the NAV of the Scheme asthe prices of securities increase as interest rates decline anddecrease as interest rates rise. Prices of long-term securitiesgenerally fluctuate more in response to interest rate changesthan do short-term securities. Indian debt markets can be volatileleading to the possibility of price movements up or down infixed income securities and thereby to possible movements inthe NAV.

In the case of floating rate instruments, an additional risk couldbe due to the change in the spreads of floating rate instruments.If the spreads on floating rate papers rise, then there could bea price loss on these instruments. Secondly in the case of fixedrate instruments that have been swapped for floating rates, anyadverse movement in the fixed rate yields vis-à-vis swap ratescould result in losses. However, floating rate debt instrumentswhich have periodical interest rate reset, carry a lower interestrate risk as compared to fixed rate debt instruments. In a fallinginterest rate scenario the returns on floating rate debt instrumentsmay not be better than those on fixed rate debt instruments.

l Liquidity or Marketability Risk: This refers to the ease withwhich a security can be sold at or near to its valuation yield-to-maturity (YTM). The primary measure of liquidity risk is thespread between the bid price and the offer price quoted by adealer. Liquidity risk is today characteristic of the Indian fixedincome market.

l Credit Risk: Credit risk or default risk refers to the risk that anissuer of a fixed income security may default (i.e. will be unableto make timely principal and interest payments on the security).Because of this risk, corporate debentures are sold at a yieldabove those offered on Government Securities, which aresovereign obligations. Normally, the value of a fixed incomesecurity will fluctuate depending upon the changes in theperceived level of credit risk as well as any actual event ofdefault. The greater the credit risk, the greater the yield requiredfor someone to be compensated for the increased risk.

l Reinvestment Risk: This risk refers to the interest rate levels atwhich cash flows received from the securities in the Scheme arereinvested. The additional income from reinvestment is the“interest on interest” component. The risk is that the rate atwhich interim cash flows can be reinvested may be lower thanthat originally assumed.

l Benchmark Risk: The floating rate segment of the domestic debtmarket is not very developed. Currently, majority of the issuanceof floating rate papers is linked to NSE MIBOR. As the floatingrate segment develops further, more benchmark rates for floatingpapers may be available in future. The fewer number ofbenchmark rates could result in limited diversification of thebenchmark risk.

Different types of securities in which the scheme would investas given in the Scheme Information Document carry differentlevels and types of risk. Accordingly the scheme’s risk mayincrease or decrease depending upon its investment pattern.E.g. corporate bonds carry a higher amount of risk thanGovernment Securities. Further even among corporate bonds,bonds which are AAA rated are comparatively less risky thanbonds which are AA rated.

l Securitised Debt: Securitised debt papers carry credit risk of theObligors and are dependent on the servicing of the PTC /Contributions etc. However these are offset suitably byappropriate pool selection as well as credit enhancementsspecified by Rating Agencies. In cases where the underlyingfacilities are linked to benchmark rates, the securitised debtpapers may be adversely impacted by adverse movements inbenchmark rates. However this risk is mitigated to an extent byappropriate credit enhancement specified by rating agencies.Securitised debt papers also carry the risks of prepayment bythe obligors. In case of prepayments of securities debt papers,it may result in reduced actual duration as compared to theexpected duration of the paper at the time of purchase, whichmay adversely impact the portfolio yield. These papers alsocarry risk associated with the collection agent who is responsiblefor collection of receivables and depositing them. The Investmentteam evaluates the risks associated with such investments beforemaking an investment decision.

The underlying assets in the case of investment in securitiseddebt could be mortgages or other assets like credit cardreceivables, automobile / vehicle / personal / commercial /corporate loans and any other receivables / loans / debt.

The risks associated with the underlying assets can be describedas under:

Credit card receivables are unsecured. Automobile / vehicleloan receivables are usually secured by the underlyingautomobile / vehicle and sometimes by a guarantor. Mortgagesare secured by the underlying property. Personal loans are usuallyunsecured. Corporate loans could be unsecured or secured bya charge on fixed assets / receivables of the company or a letterof comfort from the parent company or a guarantee from abank / financial institution. As a rule of thumb, underlyingassets which are secured by a physical asset / guarantor areperceived to be less risky than those which are unsecured. Byvirtue of this, the risk and therefore the yield in descendingorder of magnitude would be credit card receivables, personalloans, vehicle / automobile loans, mortgages and corporateloans assuming the same rating.

SECTION I - INTRODUCTION

4 Scheme Information Document (SID)

l Prepayment Risk: The risk associated with the early unscheduledreturn of principal on a fixed-income security. The earlyunscheduled return of principal may result in reinvestment risk.

l Short Selling Risk: The risk associated with upward movementin market price of security sold short may result in loss. Thelosses on short position may be unlimited as there is no upperlimit on rise in price of a security.

l Foreign Securities: It is the AMC’s belief that investment inforeign securities offers new investment and portfoliodiversification opportunities into multi-market and multi-currency products. However, such investments also entailadditional risks. Such investment opportunities may be pursuedby the AMC provided they are considered appropriate in termsof the overall investment objectives of the Scheme. Since theScheme would invest only partially in foreign securities, theremay not be readily available and widely accepted benchmarksto measure performance of the Scheme. To manage risksassociated with foreign currency and interest rate exposure, theFund may use derivatives for efficient portfolio managementincluding hedging and in accordance with conditions as may bestipulated by SEBI / RBI from time to time.

Offshore investments will be made subject to any / all approvals,conditions thereof as may be stipulated by SEBI/RBI andprovided such investments do not result in expenses to the Fundin excess of the ceiling on expenses prescribed by and consistentwith costs and expenses attendant to international investing.The Fund may, where necessary, appoint other intermediariesof repute as advisors, custodian/sub-custodians etc. for managingand administering such investments. The appointment of suchintermediaries shall be in accordance with the applicablerequirements of SEBI and within the permissible ceiling ofexpenses. The fees and expenses would illustratively include,besides the investment management fees, custody fees andcosts, fees of appointed advisors and sub-managers, transactioncosts and overseas regulatory costs.

To the extent that the assets of the Scheme will be invested inforeign securities denominated in foreign currencies, the IndianRupee equivalent of the net assets, distributions and incomemay be adversely affected by changes in the value of certainforeign currencies relative to the Indian Rupee. The repatriationof capital to India may also be hampered by changes in regulationsconcerning exchange controls or political circumstances as wellas the application to it of other restrictions on investment.

l Derivatives: The Fund may use derivative instruments likeinterest rate swaps, forward rate agreements or other derivativeinstruments as permitted under the Regulations and guidelines.

As and when the Scheme trade in the derivatives market thereare risk factors and issues concerning the use of derivatives thatinvestors should understand. Derivative products are specialisedinstruments that require investment techniques and risk analysesdifferent from those associated with stocks and bonds. The useof a derivative requires an understanding not only of theunderlying instrument but also of the derivative itself. Derivativesrequire the maintenance of adequate controls to monitor thetransactions entered into, the ability to assess the risk that aderivative adds to the portfolio and the ability to forecast priceor interest rate movements correctly. There is the possibility thata loss may be sustained by the portfolio as a result of the failureof another party (usually referred to as the “counter party”) tocomply with the terms of the derivatives contract. Other risksin using derivatives include the risk of mispricing or impropervaluation of derivatives and the inability of derivatives tocorrelate perfectly with underlying assets, rates and indices.Thus, derivatives are highly leveraged instruments. Even asmall price movement in the underlying security could have alarge impact on their value. Also, the market for derivativeinstruments is nascent in India.

Derivative products are leveraged instruments and can providedisproportionate gains as well as disproportionate losses to theinvestor. Execution of such strategies depends upon the abilityof the fund manger to identify such opportunities. Identification

and execution of the strategies to be perused by the fund managerinvolve uncertainty and decision of fund manager(s) may notalways be profitable. No assurance can be given that the fundmanager(s) will be able to identify or execute such strategies.

The risks associated with the use of derivatives are differentfrom or possibly greater than, the risks associated with investingdirectly in securities and other traditional investments.

l Securities Lending: The risks in lending portfolio securities, aswith other extensions of credit, consist of the failure of anotherparty, in this case the approved intermediary, to comply with theterms of agreement entered into between the lender of securitiesi.e. the Scheme and the approved intermediary. Such failure tocomply can result in the possible loss of rights in the collateralput up by the borrower of the securities, the inability of theapproved intermediary to return the securities deposited by thelender and the possible loss of any corporate benefits accruingto the lender from the securities deposited with the approvedintermediary. The Mutual Fund may not be able to sell such lentsecurities and this can lead to temporary illiquidity.

B. REQUIREMENT OF MINIMUM INVESTORS

IN THE SCHEME

The Scheme(s) and individual Plan(s) under the Scheme(s) shallhave a minimum of 20 investors and no single investor shall accountfor more than 25% of the corpus of the Scheme(s)/Plan(s). Theseconditions will be complied with immediately after the close of theNFO itself i.e. at the time of allotment. In case of non-fulfillmentwith the condition of minimum 20 investors, the Scheme(s)/Plan(s)shall be wound up in accordance with Regulation 39 (2) (c) of SEBI(MF) Regulations automatically without any reference from SEBI.In case of non-fulfillment with the condition of 25% holding by asingle investor on the date of allotment, the application to the extentof exposure in excess of the stipulated 25% limit would be liable tobe rejected and the allotment would be effective only to the extentof 25% of the corpus collected. Consequently, such exposure over25% limits will lead to refund within 6 weeks of the date of closureof the New Fund Offer.

C. SPECIAL CONSIDERATIONS, if any

l From time to time and subject to the Regulations, the Sponsor,their affiliates, associates, subsidiaries, the Mutual Fund and theAMC may invest directly or indirectly in the Scheme. Theseentities may acquire a substantial portion of the Scheme Unitsand collectively constitute a major investor in the Scheme.Accordingly, redemption of Units held by such entities mayhave an adverse impact on the Scheme because the timing ofsuch redemption may impact the ability of other Unitholders toredeem their Units.

l As the liquidity of the Scheme investments could, at times, berestricted by trading volumes and settlement periods, the timetaken by the Fund for redemption of Units may be significantin the event of an inordinately large number of redemptionrequests or of a restructuring of the Scheme portfolio. In viewof this, the Trustees have the right, in their sole discretion tolimit redemptions (including suspending redemption) undercertain circumstances, as described under the section titled“Right to Limit Redemptions”.

l Redemptions due to change in the fundamental attributes of theScheme or due to any other reasons may entail tax consequences.The Trustees, the Mutual Fund, the AMC, their directors or theiremployees shall not be liable for any tax consequences that mayarise.

l The tax benefits described in this Scheme Information Documentare as available under the present taxation laws and are availablesubject to conditions. The information given is included forgeneral purpose only and is based on advice received by theAMC regarding the law and practice in force in India and theinvestors should be aware that the relevant fiscal rules or theirinterpretation may change. As is the case with any investment,there can be no guarantee that the tax position or the proposedtax position prevailing at the time of an investment in the

HSBC Fixed Term Series 66 (HFTS 66) 5

Scheme will endure indefinitely. In view of the individual natureof tax consequences, each investor is advised to consult his/ herown professional tax advisor.

l Neither this Scheme Information Document nor the Units havebeen registered in any jurisdiction. The distribution of thisScheme Information Document in certain jurisdictions may berestricted or totally prohibited and accordingly, persons whocome into possession of this Scheme Information Document arerequired to inform themselves about, and to observe, any suchrestrictions.

l Prospective investors should review / study this SchemeInformation Document carefully and in its entirety and shall notconstrue the contents hereof or regard the summaries containedherein as advice relating to legal, taxation, or financial /investment matters and are advised to consult their ownprofessional advisor(s) as to the legal, tax, financial or any otherrequirements or restrictions relating to the subscription, gifting,acquisition, holding, disposal (sale, switch or redemption orconversion into money) of Units and to the treatment of income(if any), capitalisation, capital gains, any distribution, and othertax consequences relevant to their subscription, acquisition,holding, capitalisation, disposal (sale, transfer, switch orconversion into money) of Units within their jurisdiction ofnationality, residence, incorporation, domicile etc. or under the

laws of any jurisdiction to which they or any managed funds tobe used to purchase / gift Units are subject, and also to determinepossible legal, tax, financial or other consequences ofsubscribing / gifting, purchasing or holding Units before makingan application for Units.

l HSBC Mutual Fund / the AMC have not authorised any personto give any information or make any representations, either oralor written, not stated in this Scheme Information Document inconnection with issue of Units under the Scheme. Prospectiveinvestors are advised not to rely upon any information orrepresentations not incorporated in this Scheme InformationDocument as the same have not been authorised by the Fundor the AMC. Any subscription, purchase or sale made by anyperson on the basis of statements or representations which arenot contained in this Scheme Information Document or whichare inconsistent with the information contained herein shall besolely at the risk of the investor.

l To the best of the knowledge and belief of the Trustees and theAMC, information contained in this Scheme InformationDocument is in accordance with the SEBI regulations and thefacts stated herein are correct and this Scheme InformationDocument does not omit anything likely to have an impact onthe importance of such information.

D. DEFINITIONS

In this Scheme Information Document, the following words and expressions shall have the meaning specified herein, unless the contextotherwise requires:

Asset Management Company or HSBC Asset Management (India) Private Limited, incorporated under the provisions of theAMC or Investment Manager Companies Act, 1956, and approved by SEBI to act as Investment Manager for the Schemes

of HSBC Mutual Fund.

Applicable NAV The Net Asset Value applicable for purchases / redemptions / switches etc., based on theBusiness Day and relevant cut-off times on which the application is accepted at an InvestorService Centre.

Business Day A day other than (1) Saturday and Sunday or (2) a day on which The Bombay Stock ExchangeLimited or National Stock Exchange of India Limited or Reserve Bank of India or banks inMumbai are closed or (3) a day on which there is no RBI clearing / settlement of securitiesor (4) a day on which the sale and / or redemption and / or switches of Units is suspended bythe Trustees / AMC or (5) a book closure period as may be announced by the Trustees / AMC.The AMC reserves the right to change the definition of Business Day(s).

Provided that the days when the banks in any location where the AMC’s Investor ServiceCentres are located, are closed due to a local holiday, such days will be treated as non BusinessDays at such centres for the purposes of accepting fresh subscriptions. However, if the InvestorService Centre in such locations is open on such local holidays, then redemption and switchrequests will be accepted at those centres, provided it is a Business Day for the Scheme onan overall basis. Notwithstanding the above, the AMC may declare any day as a Business Day /Non Business Day.

Custodian JP Morgan Chase Bank, Mumbai, registered under the SEBI (Custodian of Securities)Regulations, 1996, currently acting as global Custodian to the Scheme or any other custodianapproved by the Trustees.

Designated Collection Centre Such centres as may be designated by the AMC for collection of subscriptions and / orredemptions and / or switches in the Scheme.

Depository Depository as defined in the Depositories Act, 1996

Derivatives A financial instrument, traded on or off an exchange, the price of which is directly dependentupon (i.e., “derived from”) the value of one or more underlying securities, equity indices, debtinstruments, commodities, other derivative instruments, or any agreed upon pricing index orarrangement (e.g., the movement over time of the Consumer Price Index or freight rates) etc.is known as a derivative. Derivatives involve the trading of rights or obligations based on theunderlying product, but do not directly transfer property.

Distributor Such persons / firms / companies / corporates as may be appointed by the AMC to distribute /sell / market the Schemes of the Fund.

Dividend Income distributed by Scheme on the Units, where applicable.

FII Foreign Institutional Investors, registered with SEBI under Securities and Exchange Board ofIndia (Foreign Institutional Investors) Regulations, 1995 as amended from time to time.

6 Scheme Information Document (SID)

Floating Rate Instruments Floating rate instruments are debt / money market instruments issued by Central / StateGovernments, Corporates, PSUs etc. with interest rates that are reset periodically. The periodicityof interest reset could be daily, monthly, annually or any other periodicity that may be mutuallyagreed between the issuer and the Fund.

Foreign Securities ADRs / GDRs issued by Indian or Foreign companies, Equity of overseas companies listedon recognized stock exchanges overseas, Initial Public Offer (IPO) and Follow on PublicOfferings (FPO) for listing at recognized stock exchanges overseas, Foreign debt securities inthe countries with fully convertible currencies, with rating not below investment grade byaccredited/registered credit rating agencies, Money market instruments rated not belowinvestment grade, Repos - only as pure investment avenues, where the counterparty is ratednot below investment grade; also repos should not however, involve any borrowing of fundsby mutual funds, Government securities where the countries are rated not below investmentgrade, Derivatives traded on recognized stock exchanges overseas only for hedging andportfolio balancing with underlying as securities, Short term deposits with banks overseaswhere the issuer is rated not below investment grade, Units/securities issued by overseas mutualfunds registered with overseas regulators and investing in approved securities or Real EstateInvestment Units/securities issued by overseas mutual funds registered with overseas regulatorsand investing in approved securities or Real Estate Investment Trusts (REITs) listed in recognizedstock exchanges overseas or unlisted overseas securities or such other security/ instrument asstipulated by SEBI/RBI/ other Regulatory Authority from time to time.

Fund or Mutual Fund HSBC Mutual Fund, a trust set up under the provisions of the Indian Trusts Act, 1882 andregistered with SEBI under the Securities and Exchange Board of India (Mutual Funds)Regulations, 1996 vide Registration No. MF/046/02/5 dated May 27, 2002.

HFTS 66 HSBC Fixed Term Series 66, including the options contained herein.

HSCI or Sponsor or Settlor HSBC Securities and Capital Markets (India) Private Limited, a company incorporated underthe provisions of the Companies Act, 1956.

New Fund Offer or NFO or Offer for purchase of Units of HSBC Fixed Term Series 66 during the New Fund Offer Period.New Fund Offer Period

Investment Management Agreement The Agreement dated February 7, 2002 entered into between the Trustees of HSBC MutualFund and HSBC Asset Management (India) Private Limited as amended from time to time.

Investor Service Centres or ISC Such offices as are designated as Investor Service Centres by the AMC from time to time.

Load In case of repurchase / switch out of a Unit, the sum of money deducted from the applicableNAV on the repurchase / switch out (Exit Load) and in the case of sale / switch in of a Unit,a sum of money to be paid by the prospective investor on the sale / switch in of a Unit in additionto the applicable NAV (Entry Load).

Maturity of the Plan HSBC Fixed Term Series 66 will be for a fixed term of 18 months from the date of allotment.

NAV Net Asset Value of the Units of the Scheme, Plan(s) (including Option(s) if any, therein)calculated in the manner provided in this Scheme Information Document or as may beprescribed by the Regulations from time to time.

Scheme Information Document This document issued by HSBC Mutual Fund, Offering units of HSBC Fixed Term Series 66,a Scheme of HSBC Mutual Fund, for subscription.

RBI Reserve Bank of India, established under the Reserve Bank of India Act, 1934, as amendedfrom time to time.

Registrar Computer Age Management Services (P) Ltd. (CAMS), registered under the SEBI (Registrarsto an Issue and Share Transfer Agents) Regulations, 1993, currently acting as Registrar to theScheme or any other registrar appointed by the AMC from time to time.

Repo / Reverse repo Sale / purchase of Government Securities as may be allowed by RBI from time to time withsimultaneous agreement to repurchase / resell them at a later date.

Repurchase / Redemption Repurchase / redemption of Units of the Scheme.

Sale / Subscription Sale / subscription of Units of the Scheme.

Scheme HSBC Fixed Term Series 66

SEBI Securities and Exchange Board of India established under Securities and Exchange Board ofIndia Act, 1992, as amended from time to time.

SEBI Regulations or Regulations Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended fromtime to time, including by way of circulars or notifications issued by SEBI, the Governmentof India or RBI.

Switch Sale of a Unit in one Scheme / Plan / Option against purchase of a Unit in another Scheme /Plan / Option.

HSBC Fixed Term Series 66 (HFTS 66) 7

Trustees The Board of Trustees of HSBC Mutual Fund and approved by SEBI to act as the Trusteesof the Schemes of the Fund or any other Trustee as may be appointed from time to time bythe Sponsor and as approved by SEBI.

Trust Deed The Trust Deed dated 7 February, 2002 made by and between the Sponsor and the Trusteesestablishing HSBC Mutual Fund, as amended from time to time.

Trust Fund Amounts settled / contributed by the Sponsor towards the corpus of the HSBC Mutual Fundand additions / accretions thereto.

Unit The interest of an investor which consists of one undivided share in the net assets of the Scheme.

Unitholder or Investor A holder of Units in the Scheme of HSBC Mutual Fund offered under this Scheme InformationDocument.

DUE DILIGENCE CERTIFICATEIt is confirmed that:

i) The draft Scheme Information Document forwarded to SEBI is in accordance with the SEBI(Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI fromtime to time.

ii) All legal requirements connected with the launching of the scheme as also the guidelines,instructions, etc., issued by the Government and any other competent authority in this behalf,have been duly complied with.

iii) The disclosures made in the Scheme Information Document are true, fair and adequate toenable the investors to make a well informed decision regarding investment in the proposedscheme.

iv) The intermediaries named in the Scheme Information Document and Statement of AdditionalInformation are registered with SEBI and their registration is valid.

For HSBC Asset Management (India) Private Limited(Investment Manager to HSBC Mutual Fund)

Sd/-

O. V. RaviVice President & Head of Compliance

Place : Mumbai

Date : 30 July, 2008

E. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY

8 Scheme Information Document (SID)

HSBC FIXED TERM SERIES 66

A. TYPE OF THE SCHEME

A close ended Income Scheme

B. INVESTMENT OBJECTIVE

To seek generation of returns by investing in a portfolio of fixedincome instruments normally maturing in line with the time profileof the Plan.

C. ASSET ALLOCATION OF THE SCHEME

The assets allocation of the Scheme will be as follows:

S. Type of Security Normal RiskNo. Allocation Profile

(% of Corpus)

1 Money market instruments Up to 100% Low to(including CBLO & reverse repo) Medium

2 Short term and medium term debt Up to 100% Low toinstruments and securitised debt Medium

If the Scheme decides to invest in securitised debt, it is the intentionof the Investment Manager that such investments will not normallyexceed 50% of the corpus of the Scheme / Plan(s). No investmentsshall be made in foreign securitised debt.

The net notional exposure to derivatives in HFTS 66 shall not bemore than 50% of the net assets. Investments in derivatives wouldbe in accordance with the SEBI Regulations.

Under normal circumstances, the scheme shall not have an exposureof more than 50% of its net assets in foreign securities. However, theAMC with a view to protecting the interests of the investors, mayincrease exposure in foreign securities as deemed fit from time totime.

The Scheme may review the above pattern of investments based onviews on the debt markets and asset liability management needs andthe portfolio shall be reviewed and rebalanced on a regular basis.However, at all times the portfolio will adhere to the overall investmentobjective of the Scheme.

D. WHERE WILL THE SCHEME INVEST?

The corpus of the Scheme will be invested primarily in a range ofdebt and money market instruments.

The HSBC Fixed Term Series 66 will invest predominantly in debtand money market instruments where interest rate risk is low tomedium. Subject to the Regulations and other prevailing laws asapplicable, the corpus of the Scheme can be invested in any (but notexclusively) of the following instruments:

l Securities issued / guaranteed by the Central, State and localgovernments (including but not limited to coupon bearing bonds,zero coupon bonds and treasury bills)

l Debt obligations of domestic government agencies and statutorybodies, which may or may not carry a Central / State Governmentguarantee

l Corporate debt (of both public and private sector undertakings)

l Debt obligations of banks (both public and private sector) andfinancial institutions

l Money market instruments permitted by SEBI and / or RBI,having residual maturities of up to 1 year

l Certificate of Deposits (CDs)

l Commercial Paper (CPs)

l Bills of Exchange / Promissory Notes

l Securitised Debt

l CBLO and reverse repos

l Securities with Floating interest rates such as MIBOR relateddebentures / instruments

l Repurchase and reverse repurchase obligations in securities

l Derivatives such as Interest Rate Swaps, Forward RateAgreements or such other instruments, as SEBI / RBI / otherregulations may permit from time to time

l The non-convertible part of convertible securities

l Any other domestic fixed income securities

l Pass through, Pay through or other Participation Certificatesrepresenting interest in a pool of assets including receivables

l Any other instruments as may be permitted by RBI / SEBI / suchother Regulatory Authorities from time to time.

The securities mentioned above could be listed, unlisted, privatelyplaced, secured, unsecured, rated or unrated and of any maturity. Thesecurities may be acquired through Initial Public Offerings (IPOs),secondary market operations and private placement, rights offers ornegotiated deals.

The Scheme may participate in securities lending as permitted underthe Regulations.

Investment in overseas securities shall be made in accordance withthe requirements stipulated by SEBI and RBI from time to time. TheScheme may also enter into repurchase and reverse repurchasesobligations in all securities held by it as per the guidelines andregulations applicable to such transactions.

Change in Investment Pattern

Subject to the Regulations, the asset allocation pattern indicatedabove for the Scheme may change from time to time, keeping in viewmarket conditions, market opportunities, applicable regulations andpolitical and economic factors. It must be clearly understood that thepercentages stated above are only indicative and not absolute andthat they can vary substantially depending upon the perception of theInvestment Manager, the intention being at all times to seek toprotect the interests of the Unitholders, and meet the objective of theScheme. Such changes in the investment pattern will be for shortterm and defensive considerations.

Provided further and subject to the above, any change in the assetallocation affecting the investment profile of the Scheme shall beeffected in accordance with the provisions of sub regulation (15A)of Regulation 18 of the Regulations, as detailed in this SchemeInformation Document.

Trading in Derivatives

SEBI has permitted all mutual funds to participate in derivativestrading subject to observance of guidelines issued by it in this behalf.Pursuant to this, mutual funds may use various derivative productsfrom time to time, as would be available and permitted by SEBI, inan attempt to protect the value of the portfolio and enhanceUnitholders’ interest.

Accordingly, the Fund may use derivative instruments like interestrate swaps, forward rate agreements or such other derivativeinstruments as may be introduced from time to time as permittedunder the Regulations and guidelines.

Exposure to Derivatives

The net notional exposure to derivative shall not be more than 50%of the net assets. Investments in derivatives would be in accordancewith the SEBI Regulations.

The following information provides a basic idea as to the nature ofthe derivative instruments proposed to be used by the Fund and thebenefits and risks attached therewith. Please note that the exampleshave been given for illustration purposes only.

Interest Rate Swaps (IRS) and Forward Rate Agreements (FRA)

Benefits

Bond markets in India are not very liquid. Investors run the risk ofilliquidity in such markets. Investing for short-term periods forliquidity purposes has its own risks. Investors can benefit if the Fundremains in call market for the liquidity and at the same time take

SECTION II - INFORMATION ABOUT THE SCHEME

HSBC Fixed Term Series 66 (HFTS 66) 9

advantage of fixed rate by entering into a swap. It adds certainty tothe returns without sacrificing liquidity.

IRS

An IRS is an agreement between two parties (counter parties) toexchange, on particular dates in the future, one series of cash flows(fixed interest) for another series of cashflows (variable or floatinginterest) in the same currency and on the same principal for an agreedperiod of time. The exchange of cashflows need not occur on thesame date. As floating rate instruments tend to be relatively lessliquid, swapping a fixed rate instrument into floating returns can helpin improving the liquidity of the fund.

FRA

A FRA is an agreement between two counter parties to pay or toreceive the difference between an agreed fixed rate (the FRA rate)and the interest rate prevailing on a stipulated future date, based ona notional amount, for an agreed period. In short, in a FRA, interestrate is fixed now for a future period. The special feature of FRAs isthat the only payment is the difference between the FRA rate and thereference rate and hence are single settlement contracts. As in thecase of IRS, notional amounts are not exchanged.

Basic Structure of a Swap

Assume that the Scheme has a Rs. 20 crore floating rate investmentlinked to MIBOR (Mumbai Inter Bank Offered Rate). Hence, theScheme is currently running an interest rate risk and stands to loseif the interest rate moves down. To hedge this interest rate risk, theScheme can enter into a 6 month MIBOR swap. Through this swap,the Scheme will receive a fixed predetermined rate (assume 12%)and pays the “benchmark rate” (MIBOR), which is fixed by theNational Stock Exchange (NSE) or any other agency such as Reuters.This swap would effectively lock-in the rate of 12% for the next 6months, eliminating the daily interest rate risk. This is usually routedthrough an intermediary who runs a book and matches deals betweenvarious counterparties.

The steps will be as follows :

l Assuming the swap is for Rs. 20 crores June 1, 2001 to December1, 2001. The Scheme is a fixed rate receiver at 12% and thecounterparty is a floating rate receiver at the overnight rate ona compounded basis (say NSE MIBOR).

l On 1 June, 2001 the Scheme and the counterparty will exchangeonly a contract of having entered this swap. This documentationwould be as per International Securities Dealers Association(ISDA).

l On a daily basis, the benchmark rate fixed by NSE will betracked.

l On December 1, 2001 the following will be calculated :

l The Scheme is entitled to receive interest on Rs. 20 crores at12% for 184 days i.e. Rs. 1.21 crores, (this amount is knownat the time the swap was concluded) and will pay the compoundedbenchmark rate.

l The counterparty is entitled to receive daily compounded callrate for 184 days & pay 12% fixed.

l On December 1, 2001, if the total interest on the daily overnightcompounded benchmark rate is higher than Rs. 1.21 crores, theScheme will pay the difference to the counter party. If the dailycompounded benchmark rate is lower, then the counterpartywill pay the Scheme the difference.

l Effectively the Scheme earns interest at the rate of 12% p.a. for6 months without lending money for 6 months fixed, while thecounterparty pays interest @ 12% p.a. for 6 months on Rs. 20crore, without borrowing for 6 months fixed.

The derivative strategy used could be directional views or arbitrageopportunities available. Identification and execution of the strategiesto be pursued by the Fund Manager(s) involve uncertainty anddecision of Fund Manager(s) may not always be profitable.

Valuation of Derivative Products

l The traded derivatives shall be valued at market price inconformity with the stipulations of sub clauses (i) to (v) ofclause 1 of the Eighth Schedule to the Securities and ExchangeBoard of India (Mutual Funds) Regulations, 1996, as amendedfrom time to time.

l The valuation of untraded derivatives shall be done in accordancewith the valuation method for untraded investments prescribedin sub clauses (i) and (ii) of clause 2 of the Eighth Schedule tothe Securities and Exchange Board of India (Mutual Funds)Regulations, 1996 as amended from time to time.

E. INVESTMENT STRATEGIES

Investment Approach and Risk Control

The HSBC Fixed Term Series 66 (HFTS 66) will invest predominantlyin debt and money market instruments where interest rate risk isrelatively low to medium.

The AMC’s view of interest rate trends will be reflected in the typeand the maturity dates of instruments in which funds are invested.In pursuing such a policy it should be recognised that the best overallreturns are achieved by anticipating or reacting to interest rate changesrather than aiming for the highest possible returns at all times. Thebest resultant overall return is therefore achieved through both capitalappreciation and income, which may result in somewhat lower yieldsthan might otherwise normally appear obtainable from the relevantsecurities. The Fund aims to provide investors with well managedportfolios of interest bearing transferable debt and money marketinstruments.

The Scheme may invest in unlisted and / or privately placed and /or unrated debt securities subject to the limits indicated under“Investment Restrictions for the Scheme prescribed in this SchemeInformation Document, from issuers of repute and sound financialstanding. If investment is made in unrated debt securities, the approvalof the Board of the AMC and the Trustees or the InvestmentManagement Committee (within the broad parameters approved bythe Board of the AMC and the Trustees) shall be obtained, as per theRegulations.

With the aim of controlling risks, a credit evaluation of the instrumentsproposed to be invested in will be carried out by the Investment Teamof the AMC. The credit evaluation includes a study of the operatingenvironment of the company, the past track record as well as thefuture prospects of the issuer, the short as well as long-term financialhealth of the issuer. The AMC will also be guided by the ratings ofrating agencies such as CRISIL, CARE and ICRA or any other ratingagency as approved by the regulators.

In addition, the Investment Team of the AMC will study the macroeconomic conditions, including the political, economic environmentand factors affecting liquidity and interest rates. The AMC would usethis analysis to attempt to predict the likely direction of interest ratesand position the portfolio appropriately to take advantage of thesame.

The Fund may invest a part of the portfolio in various debt securitiesissued by corporates and / or state and central government. Suchgovernment securities may include securities which are supported bythe ability to borrow from the Treasury or supported only by India’ssovereign guarantee or of the state government or supported byGOI / state government in some other way.

The Scheme may invest in other Schemes managed by the AMC orin the schemes of any other mutual fund, provided it is in conformitywith the investment objectives of the Scheme/Plan and in terms ofthe prevailing Regulations. As per the Regulations, no investmentmanagement fees will be charged for such investments.

Derivative Strategies:

1. Bond – Swap: Under this strategy, the fund manager pays fixedrate on Overnight Indexed Swap (OIS) against an underlyingbond of a similar or greater tenor and receives Mumbai Inter-Bank Offer Rate (MIBOR). This is essentially done for hedging

10 Scheme Information Document (SID)

interest rate risk or for rebalancing portfolio allocation to fixedand floating rate bonds. Effectively, through this trade the fundmanager is able to convert a fixed rate bond into a floating rateMIBOR linked instrument. The trade has exposure to ‘basismovement’ - the relative movement of bond versus OIS.

2. Receive OIS: Here the fund manager receives fixed rate on OISagainst either cash or a floating rate bond of a similar or greatertenor, and pays MIBOR. The objective is to rebalance portfolioin favour of fixed rate exposure.

3. Curve Steepener: This strategy aims to capture a potentialsteepening of the curve between any 2 tenors: say, 1 and 5 years.For example, the fund manager can receive fixed rate on 1 yearOIS (against cash or floating rate bond) and pay fixed rate on5 year OIS (against fixed rate bond). However, apart from therelative spread between the 5 year and 1 year OIS, the trade isalso exposed to relative duration for the 2 tenors as well as basisrisk on the bond-swap (in this example, the 5 year bond-swap).

4. Curve Flattener: This strategy aims to capture a potentialflattening of the curve between any 2 tenors: say 1 and 5 years.For example, the fund manager can pay fixed rate on 1 year OIS(against fixed rate bond) and receive fixed rate 5 year OIS(against cash or floating rate bond). Like mentioned above, thetrade is also exposed to duration as well as basis risk.

Portfolio Turnover

Portfolio turnover is defined as lesser of purchases and sales as apercentage of the average corpus of the Scheme during a specifiedperiod of time. It is expected that there could be a number ofredemptions as prescribed in this Scheme Information Document.Consequently, it is difficult to estimate with any reasonable measureof accuracy, the likely turnover in the portfolio(s). Active assetallocation would impact portfolio turnover.

Procedure followed for Investment Decisions

The Fund Manager(s) of the Scheme are responsible for making buy /sell decisions in respect of the securities in the Scheme’s portfolioand to develop a well diversified portfolio that minimizes liquidityand credit risk. The investment decisions are made on a daily basiskeeping in view the market conditions and all relevant aspects.

The Board of the AMC has constituted an Investment ManagementCommittee that meets at periodic intervals. The InvestmentManagement Committee, at its meetings, reviews investments,including investments in unrated debt instruments. The approval ofunrated debt instruments is based on parameters laid down by theBoard of the AMC and the Trustees. The details of such investmentsare communicated by the AMC to the Trustees in their periodicalreports along with a disclosure regarding how the parameters havebeen complied with. Such reportings shall be in the manner prescribedby SEBI from time to time. The Committee also reviews theperformance of the Scheme and general market outlook and formulatesthe broad investment strategy at their meetings.

It is the responsibility of the AMC to ensure that the investments aremade as per the internal / Regulatory guidelines, Scheme investmentobjectives and in the best interest of the Unitholders of the Scheme.The Fund may follow internal guidelines as approved by the Boardof the AMC and the Trustees from time to time. Internal guidelinesshall be subject to change and may be amended from time to timein the best interest of the Unitholders. The amendments will beapproved by the Board of the AMC and the Trustees of the MutualFund.

The Heads of Fund Management - Equities & Fixed Income presentto the Board of the AMC and the Trustees periodically, the performanceof the Schemes. The performance of the Scheme will be reviewedby the Boards with reference to the appropriate benchmarks.

The performance of HFTS 66, performance of all the Series will bebenchmarked against CRISIL Short Term Bond Fund Index. However,the Plans’ performance may not be strictly comparable with theperformance of the Index due to the inherent differences in theconstruction of the portfolios. The Boards may review the benchmarkselection process from time to time, and make suitable changes as

to use of the benchmark, or related to composition of the benchmark,whenever it deems necessary.

The Heads of Fund Management – Equities & Fixed Income willbring to the notice of the AMC Board, specific factors if any, whichare impacting the performance of the Scheme. The Board onconsideration of all relevant factors may, if necessary, give appropriatedirections to the AMC. Similarly, the performance of the Schemewill be submitted to the Trustees. The Heads of Fund Management- Equities & Fixed Income will explain to the Trustees, the detailson the Schemes’ performance vis-à-vis the benchmark returns.

The AMC will keep a record of all investment decisions.

Investment of Subscription Money

The Fund may invest subscription money received from the investingpublic in bank deposits, or money market instruments beforefinalisation of the allotment of Units. The AMC, on being satisfiedof the receipt of the minimum subscription amount, can commenceinvestment out of the funds received in accordance with the investmentobjectives of the Scheme and as per the existing Regulations. Theincome earned out of such investments would be merged with thecorpus of the Scheme on completion of the allotment of the Units.

Investments by the AMC in the Scheme

The AMC may invest in the Scheme during the NFO subject to theSEBI Regulations & circulars issued by SEBI and to the extentpermitted by its Board of Directors from time to time. As per theexisting SEBI Regulations, the AMC will not charge investmentmanagement and advisory fee on the investment made by it in theScheme.

F. FUNDAMENTAL ATTRIBUTES

The investment objective together with the investment approach andthe investment pattern will comprise the principal fundamentalattributes of the Scheme. Following are the Fundamental Attributesof the scheme, in terms of Regulation 18 (15A) of the SEBI (MF)Regulations:

(i) Type of a scheme: A close ended Income Scheme

(ii) Investment Objective: To seek generation of returns byinvesting in a portfolio of fixed income instruments normallymaturing in line with the time profile of the Plan.

(iii) Terms of Issue to listing, repurchase / redemption, fees,expenses:

In accordance with Regulation 18(15A) of the SEBI Regulations,the Trustees shall ensure that no change in the fundamentalattributes of the Scheme and the Plan(s) / Option(s) thereunderor the trust or fee and expenses payable or any other changewhich would modify the Scheme and the Plan(s) / Option(s)thereunder and affect the interests of Unitholders is carried outunless:

l A written communication about the proposed change is sent toeach Unitholder and an advertisement is given in one Englishdaily newspaper having nationwide circulation as well as in anewspaper published in the language of the region where theHead Office of the Mutual Fund is situated; and

l The Unitholders are given an option for a period of 30 days toexit at the prevailing Net Asset Value without any exit load.

G. BENCHMARK INDEX

The performance of HFTS 66 will be benchmarked against CRISILShort Term Bond Fund Index. However, the Schemes’ performancemay not be strictly comparable with the performance of the Indexdue to the inherent differences in the construction of the portfolios.The Boards may review the benchmark selection process from timeto time, and make suitable changes as to use of the benchmark, orrelated to composition of the benchmark, whenever it deems necessary.

Justification

As per the asset allocation table the Scheme primarily intends toinvest in money market and short term and medium term debtinstruments. The most appropriate Index reflecting the performanceof such instrument is the CRISIL Short Term Bond Fund Index.

HSBC Fixed Term Series 66 (HFTS 66) 11

H. FUND MANAGER

Shailendra Jhingan and Suyash ChoudharyNiren Parekh will be the dedicated Fund Manager for making overseasinvestments as permitted under the Regulations, guidelines andcirculars issued from time to time.

Shailendra Jhingan, Senior Vice President & Head of FundManagement - Fixed Income

36 years

Masters in Management Studies (Finance)

B.A. (Hons) Economics

Experience:

Over 12 years experience in research and fund management

l HSBC Asset Management (India) Private LimitedHead of Fund Management - Fixed Income from October 2007to presentFund Manager from December 2002 to October 2007

l Birla SunLife Mutual FundFund Manager from February 2000 to November 2002

l JM Morgan StanleyEconomist & Fixed Income Analyst from July 1997 to February2000

l Fortress FinancialResearch Analyst from 1995 to June 1997

Suyash Choudhary, Vice President & Fund Manager - Fixed Income

29 years

PGDM, BA (HONS) ECONOMICS

Experience:

Over 7 years experience in research and fund management.

l HSBC Asset Management (India) Private LimitedFund Manager from February 2008 to present

l Standard Chartered AMCFund Manager from November 2002 to January 2008Manager – Pension Funds from November 2001 to October2002

l DB Consulting Group Asia PacificResearch Associate from May 2000 to October 2001

Name of the Schemes of HSBC Mutual Fund and their respectiveFund Managers

Name of Scheme Fund Manager

HSBC Cash Fund Suyash Choudhary &Shailendra Jhingan

HSBC Income Fund - Shailendra Jhingan &Investment Plan Suyash Choudhary

HSBC Income Fund - Suyash Choudhary &Short Term Plan Shailendra Jhingan

HSBC Fixed Term Series Shailendra Jhingan &Suyash Choudhary

HSBC Gilt Fund Suyash Choudhary

HSBC Liquid Plus Fund Shailendra Jhingan &Suyash Choudhary

HSBC Floating Rate Fund Suyash Choudhary &Shailendra Jhingan

HSBC Flexi Debt Fund Suyash Choudhary &Shailendra Jhingan

HSBC Monthly Shailendra Jhingan &Income Plan Suyash Choudhary (for fixed

income portion)

HSBC Dynamic Fund Shailendra Jhingan &Suyash Choudhary (for fixedincome portion)

HSBC Interval Fund Shailendra Jhingan &Suyash Choudhary

I. WHAT ARE THE INVESTMENTRESTRICTIONS?

Investment Restrictions for the Scheme

All investments by the Scheme and the Mutual Fund, will always bewithin the investment restrictions as specified in the SEBI (MutualFunds) Regulations, 1996, as amended from time to time. Pursuantto the Regulations, the following investment and other restrictionsare presently applicable to the Scheme:

l The Scheme shall not invest more than 15% of its NAV in debtinstruments issued by a single issuer, which are rated not belowinvestment grade by a credit rating agency authorised to carryout such activity under the SEBI Act, 1992. Such investmentlimit may be extended to 20% of the NAV of the Scheme withthe prior approval of the Board of Trustees and the Board of theAMC. Provided that, such limit shall not be applicable forinvestments in government securities and money marketinstruments. Provided further that investment within such limitcan be made in mortgage backed securitised debt which arerated not below investment grade by a credit rating agencyregistered with SEBI.

l The Scheme shall not invest more than 10% of its NAV inunrated debt instruments issued by a single issuer and the totalinvestment in such instruments shall not exceed 25% of theNAV of the Scheme. All such investments shall be made withthe prior approval of the Board of Trustees and the Board of theAMC or a Committee constituted in this behalf.

l Transfer of investments from one Scheme to another Schemein the Mutual Fund is permitted provided:

– Such transfers are done at the prevailing market price forquoted instruments on spot basis (spot basis shall have thesame meaning as specified by a Stock Exchange for spottransactions); and

– The securities so transferred shall be in conformity withthe investment objective of the Scheme to which suchtransfer has been made.

l The aggregate inter-scheme investment in line with theinvestment objectives, made by all the Schemes under the samemanagement or in schemes under management of any otherasset management company shall not exceed 5% of the NetAsset Value of the Fund. No investment management fees shallbe charged for investing in other Schemes of the Fund or in theSchemes of any other Mutual Fund.

l The Scheme can not charge initial issue expenses and cannotamortise the same.

l The Fund shall get the securities purchased or transferred in thename of the Fund on account of the concerned Scheme, whereverinvestments are intended to be of a long-term nature.

l The Fund may buy and sell securities on the basis of deliveriesand shall in all cases of purchases take delivery of relativesecurities and in all cases of sale, deliver the securities and willnot make any short sales or engage in carry forward transactionor badla finance. Provided that the Mutual Fund shall enter intoderivative transactions on a recognised stock exchange, inaccordance with the guidelines issued by SEBI. Provided furtherthat the sale of government security already contracted forpurchase shall be permitted in accordance with the guidelinesissued by RBI in this regard.

l Pending deployment of funds of a scheme in terms of investmentobjectives of the scheme, a mutual fund may invest them in

Name of Scheme Fund Manager

12 Scheme Information Document (SID)

short-term deposits of scheduled commercial banks, subject tosuch Guidelines as may be specified by the Board. Therequirements of SEBI Circulars, SEBI/IMD/CIR No. 1/91171/07 dated 16 April, 2007 and SEBI/IMD/CIR No.7/129592/08dated 23 June, 2008 will be adhered to.

l The Scheme shall not make any investment in:

– Any unlisted security of an associate or group company ofthe Sponsor; or

– Any security issued by way of private placement by anassociate or group company of the Sponsor; or the listedsecurities of group companies of the Sponsor which is inexcess of 25% of the net assets of the Scheme of theMutual Fund.

l The Fund shall not borrow except to meet temporary liquidityneeds of the Fund for the purpose of repurchase / redemptionof Units or payment of interest and dividend to the Unitholders.Provided that the Fund shall not borrow more than 20% of thenet assets of any individual Scheme and the duration of theborrowing shall not exceed a period of 6 months.

l The entire Scheme’s investments will be in securities, moneymarkets instruments, privately placed debentures, securitiseddebt instruments which are either asset backed or mortgagebacked securities.

l Debentures, irrespective of any residual maturity period (aboveor below 1 year), shall attract the investment restrictions asapplicable for debt instruments as specified under Clause 1 and1A of the Seventh Schedule to the Regulations or as may bespecified by SEBI from time to time.

l No loans for any purpose shall be advanced by the Scheme.

l The Fund may lend securities in accordance with the securitieslending scheme of SEBI.

l The Scheme shall not invest in a fund of funds scheme.

l The Scheme will comply with any other regulations applicableto the investments of mutual funds from time to time.

l Aggregate value of ‘illiquid securities’ of Scheme, which aredefined as non-traded, thinly traded and unlisted equity shares,shall not exceed 15% of the total assets of the Scheme. As thispercentage is not significant, in the AMC’s view, it will haveno material impact on the ability to meet redemptions within 10days of the date the Scheme’s units are tendered.

The Trustees may alter the above restrictions from time to time tothe extent that changes in the Regulations may allow and as deemedfit in the general interest of the Unitholders.

It is the responsibility of the AMC to ensure that the investments aremade as per the internal / Regulatory guidelines, Scheme investmentobjectives and in the best interest of the Unitholders of the Scheme.The Fund may follow internal guidelines as approved by the Boardof the AMC and the Trustees from time to time. Internal guidelinesshall be subject to change and may be amended from time to timein the best interest of the Unitholders. The amendments will beapproved by the Board of the AMC and the Trustees of the MutualFund.

Policy on Offshore Investments by the Scheme andthe Plans thereunder

SEBI Regulations permit mutual funds to invest in certain securities /instruments viz. ADRs / GDRs issued by Indian or Foreign companies,Equity of overseas companies listed on recognized stock exchangesoverseas, Initial public offer (IPO) and Follow on public offerings(FPO) for listing at recognized stock exchanges overseas, Foreigndebt securities in the countries with fully convertible currencies, withrating not below investment grade by accredited/registered creditrating agencies, Money market instruments rated not below investmentgrade, Repos - only as pure investment avenues, where thecounterparty is rated not below investment grade; also repos should

not however, involve any borrowing of funds by mutual funds,Government securities where the countries are rated not belowinvestment grade, Derivatives traded on recognized stock exchangesoverseas only for hedging and portfolio balancing with underlyingas securities, Short term deposits with banks overseas where theissuer is rated not below investment grade, Units/securities issued byoverseas mutual funds registered with overseas regulators andinvesting in approved securities or Real Estate Investment Units/securities issued by overseas mutual funds registered with overseasregulators and investing in approved securities or Real EstateInvestment Trusts (REITs) listed in recognized stock exchangesoverseas or unlisted overseas securities (not exceeding 10% of theirnet assets) subject to the terms and conditions prescribed, subject tomaximum of US$ 300 million. This would be revised in terms ofSEBI approvals/ guidelines from time to time. All the provisions ofSEBI/IMD/CIR No.7/104753/07 dated 26 September 2007 will beadhered to including appointment of dedicated fund manager forinvestment in foreign securities.

It is the Investment Manager's belief that foreign securities offer newinvestment and portfolio diversification opportunities into multi-market and multi-currency products. The Fund would look to investin foreign securities in order to diversify the portfolio in terms ofvariety of instruments held and enhance returns by taking advantageof market movements in global markets, which may or may not bein sync with the Indian markets. Investment in foreign securitieswould only be looked at if they provide a return, liquidity, ease ofsettlement and valuation, transaction costs better than equivalentlocal investments. Hence only if the Fund Manager becomes cautiousor negative on the Indian markets for a reasonably long period oftime, would he consider investing in such securities. The Fund willlook to identify and capture profitable opportunities as and whenthey arise. However, such investments also entail additional risks.Such investment opportunities may be pursued by the InvestmentManager provided they are considered appropriate in terms of theoverall investment objectives of the Scheme. The Scheme may then,if necessary, seek permission from SEBI and RBI to invest abroadin accordance with the investment objectives of the Scheme and inaccordance with any guidelines issued by SEBI / RBI from time totime.

Since the Scheme would invest only partially in foreign securities,there may not be readily available and widely accepted benchmarksto measure performance of the Scheme. To manage risks associatedwith foreign currency, the Fund may use derivatives for efficientportfolio management including hedging and in accordance withconditions as may be stipulated by SEBI / RBI from time to time.

Offshore investments will be made subject to any / all approvals andconditions thereof as may be stipulated by SEBI / RBI being fulfilledand provided such investments do not result in expenses to the Fundin excess of the ceiling, if any, on expenses prescribed by SEBI foroffshore investment, and if no such ceiling is prescribed by SEBI,the expenses to the Scheme(s) shall be limited to the level which, inthe opinion of the Trustees, is reasonable and consistent with costsand expenses attendant to international investing. The Fund may,where necessary, appoint other intermediaries of repute as advisors,sub-custodians, etc. for managing and administering such investments.The appointment of such intermediaries shall be in accordance withthe applicable requirements of SEBI and within the permissibleceilings of expenses. The fees and expenses would illustrativelyinclude, besides the investment management fees, custody fees andcosts, fees of appointed advisors and sub-managers, transaction costsand overseas regulatory costs.

J. SCHEME PERFORMANCE

This Scheme is a new scheme and does not have any performancetrack record.

HSBC Fixed Term Series 66 (HFTS 66) 13

A. NEW FUND OFFER (NFO)

The offer is being made for subscription of Units of HSBC FixedTerm Series 66 which is a close-ended Income Scheme.

New Fund Offer Period

This is the period during which a new scheme sells its units to theinvestors.

The New Fund Offer for HSBC Fixed Term Series 66 will commencefrom 18 September, 2008 and close on 25 September, 2008.

New Fund Offer Price

This is the price per unit that the investors have to pay to investduring the NFO.

The New Fund Offer price of Units of the Scheme will beRs. 10/- per unit.

Extension / Preponing of the New Fund OfferPeriod

The Trustees / AMC reserve the right to extend / prepone the closingdate of the New Fund Offer Period, subject to the condition that thesubscription to the New Fund Offer shall not be kept open for morethan 45 days.

Minimum Amount for Application in the NFO

The minimum application amount per application for each option ofHSBC Fixed Term Series 66 will be Rs. 10,000 for Regular Optionand Rs. 1 crore for Institutional Option. The AMC reserves the rightto change the minimum application amount from time to time.

Minimum Target Amount

This is the minimum amount required to operate the scheme. Theminimum subscription (target) amount for HSBC Fixed Term Series66 shall be Rs. 5 Crores.

In accordance with the SEBI Regulations, if the Mutual Fund failsto collect the minimum subscription amount of Rs. 5 Crores (RupeesFive Crores Only) the Mutual Fund and the AMC shall be liable torefund the subscription amount within a period of 6 weeks from thedate of closure of subscription list to the applicants of the Scheme.

Maximum Amount to be raised

There is no maximum target for the size of the Scheme and therefore,subject to the applications being in accordance with the terms of thisOffer, full and firm allotment will be made to all applicants.

Options / Sub-Options offered under the Scheme

The Scheme offers Regular and Institutional Options under which,investors will have a choice of two Options viz. Growth & Dividendwith the sub-options of Dividend (Reinvestment / Payout).

Dividend sub-optionThe Fund may declare dividends under the Plan of HFTS 66 on suchdates as the Trustees may deem fit. Such declaration will be donesolely at the discretion of the Trustees.

Declaration of dividend, as indicated above is provisional and willdepend on, among other things, the availability of distributable surplusand will entirely be at the discretion of the Trustees.

Unitholders will be entitled for dividend under the Dividendsub-option of the Scheme/Plan as at the close of the business on theRecord Date.

Subsequent to the declaration of Dividend, NAV of the Dividendsub-option and Growth sub-option will be different under each Plan.

Dividend Reinvestment FacilityThis facility is made available to those unitholders who are under theDividend sub-option. Under this, the dividend due and payable to theunitholders will be compulsorily and without any further act by theunitholders, reinvested under the Dividend sub-option of the Plan attheir first ex-dividend NAV.

Growth sub-optionUnder this sub-option, income earned on the Scheme’s corpus willremain invested in the Scheme and will be reflected in the Net AssetValue (NAV). Unitholders who opt for this sub-option will not receiveany dividend in normal circumstances.

Investors should indicate the Scheme and / or Option / sub-optionetc., wherever applicable, for which the subscription is made byindicating the choice in the appropriate box provided for this purposein the Application Form. In case of valid applications received,without indicating the Scheme and / or Option etc. the followingdefaults will be flagged off:

Indication not made Default

Scheme Name As indicated on the Cheque

Regular / Institutional If the amount of subscription isOption more than Rs. 1 Crore –

Institutional, otherwise – Regular

Dividend / Growth Growth sub-optionsub-option

Mode of holding (in cases Jointwhere there are more thanone applicant)

Switching Options

The Plan will not be open for on-going switch-ins. However, theUnitholders shall have the option to switch-out all or part of theirinvestment from HFTS 66 to any of the other Scheme(s) offered bythe Fund, which is available for investment at that time, subject toprevailing load structure. Where an investor seeks to move betweenthe dividend and growth alternatives within an option of the sameScheme / Plan, this will not be construed as a switch. Consequentlyno load will apply to such movements.

To effect a switch, a Unitholder must provide clear instructions. Arequest for a switch may be specified either in terms of amount orin terms of the number of Units of the Scheme from which the switchis sought. Where a request for switch is for both amount and numberof Units, the amount requested will be considered as the definitiverequest. Such instructions may be provided in writing and lodged onany Business Day at any of the Investor Service Centres / DesignatedCollection Centres. An Account Statement / Transaction Confirmationreflecting the new holding will be despatched to the Unitholdersnormally within 3 Business Days of completion of the switchtransaction.

The switch will be effected by redeeming units from the scheme inwhich the units are held and investing the net proceeds in the otherScheme / Plan / Options, subject to the minimum balance, minimumapplication amount and subscription / redemption criteria applicablefor the Scheme / Plan.

Valid requests for ‘switch out’ shall be treated as redemptions, afterconsidering any prevalent exit and entry loads or a combinationthereof for switches.

A switch by NRI / FII Unitholders will be subject to the complianceof procedures and / or final approval of the Reserve Bank of Indiaand / or and any other agency, as may be required.

The AMC reserves the right to charge different (including zero) loadson Applicable NAV on switchover as compared to the sale/repurchaseas the case may be.

In view of the individual nature of tax impact, each investor isadvised to consult with his or her own tax consultant with respectto the capital gains/loss and specific tax implications arising out ofswitches and redemptions.

Dividend Distribution Policy

The Trustees propose to follow the following dividend distributionpolicy:

SECTION III - UNITS AND OFFERThis Section provides details you need to know for investing in the Scheme.

14 Scheme Information Document (SID)

Declaration of dividend for HFTS 66 is subject to the availability ofdistributable surplus. Such dividends if declared, will be paid undernormal circumstances, only to those Unitholders who have opted forDividend sub-options with specified sub-options. Further, no entry/exit load shall be charged for units allotted under dividend reinvestmentoption.

However, it must be distinctly understood that the actual declarationof dividends under the Scheme and the frequency thereof will,inter-alia, depend upon the distributable surplus of the Scheme. TheTrustees reserve the right of dividend declaration and to change thefrequency, date of declaration and the decision of the Trustees in thisregard shall be final. There is no assurance or guarantee to unitholders as to the rate of dividend distribution nor that dividend willbe regularly paid.

The dividend that may be paid out of the net surplus of the Schemewill be paid only to those Unitholders whose names appear in theregister of Unitholders on the notified record date. The dividend willbe at such rate as may be decided by the AMC in consultation withthe Trustees.

The dividend proceeds may be paid by way of dividend warrants /direct credit / EFT / ECS Credit / SEFT / RTGS / Wired Transfer /any other manner through the investor’s bank account specified inthe Registrar’s records. The AMC, at its discretion at a later date, maychoose to alter or add other modes of payment. The AMC shall alsoappropriately intimate the Unitholders about the dividendannouncements / payout / reinvestment within 30 days of the dateof declaration of dividend.

Allotment and Refund

All applicants will receive full and firm allotment of Units, providedthe applications are complete in all respects and are found to be inorder. The Trustees retain the sole and absolute discretion to rejectany application. The process of allotment of Units and mailing ofaccount statements reflecting the allotments will be completed within30 days from the date of closure of the New Fund Offer Period. Inaddition to the above, refund of subscription money to applicantswhose applications are invalid for any reason whatsoever willcommence immediately after the allotment process is completed.

No interest will be payable on any subscription money refundedwithin 6 weeks from the closure of the New Fund Offer Period.Interest on subscription amount will be payable for amounts refundedlater than 6 weeks from the closure of the New Fund Offer Periodat the rate of 15% per annum for the period in excess of 6 weeks andwill be charged to the AMC. Refund orders will be marked “A/c.payee only” and will be in favour of and be despatched to the Sole /First Applicant, by registered post.

Who can invest?

This is an indicative list and you are requested to consult yourfinancial advisor to ascertain whether the scheme is suitable to yourrisk profile.

The following persons are eligible and may apply for subscriptionto the Units of the Scheme (subject, wherever relevant, to purchaseof units of mutual funds being permitted and duly authorised undertheir respective constitutions, charter documents, corporate / otherauthorisations and relevant statutory provisions etc.):

l Indian resident adult individuals either singly or jointly

l Minor through parent / lawful guardian

l Companies, bodies corporate, public sector undertakings,association of persons, bodies of individuals, societies registeredunder the Societies Registration Act, 1860, mutual fund schemes(so long as the purchase of units is permitted under the respectiveconstitutions)

l Religious and Charitable Trusts, Wakfs or endowments of privatetrusts (subject to receipt of necessary approvals as required) andPrivate Trusts authorised to invest in mutual fund schemesunder their trust deeds

l Partnership Firms

l Karta of Hindu Undivided Family (HUF)

l Banks (including Co-operative Banks and Regional Rural Banks)& Financial Institutions

l Non-resident Indians (NRIs) / Persons of Indian Origin on fullrepatriation basis (subject to RBI approval, if required) or onnon-repatriation basis

l Foreign Institutional Investors (FIIs) registered with SEBI onfull repatriation basis (subject to RBI approval, if required)

l Army, Air Force, Navy and other para-military funds and eligibleinstitutions

l Scientific and Industrial Research Organisations

l Provident / Pension / Gratuity and such other Funds as and whenpermitted to invest

l International Multilateral Agencies approved by the Governmentof India / RBI

l Other Schemes of HSBC Mutual Fund subject to the conditionsand limits prescribed in SEBI Regulations

l Trustees, AMC or Sponsor or their associates (if eligible andpermitted under prevailing laws), may subscribe to the Unitsunder the Scheme.

l There is no restriction on a foreign national from acquiringIndian securities provided such Foreign National meets testslaid down by the Foreign Exchange Management Act, 1999.

l Sale proceeds of securities acquired by a foreign national maybe remitted by him outside India without approval of RBI if: (a)such proceeds are remitted by a foreign national on his retirementfrom an employment in India and (b) such proceeds are not inexcess of US $ 1 million in any calendar year. If either (a) and(b) above is not met, approval of RBI will be necessary for theremittance. These requirements originate from the FEMARemittance of Assets Regulations, 2000 which restrict a person,whether resident in India or not, from making a remittance ofany asset (“remittance of asset” includes remittance outsideIndia of funds representing, amongst others, sale proceeds ofshares/securities) held by him or by any other person exceptwith the approval of RBI or in certain specific cases listed inRegulation 4. One such case is the remittance of upto US $ 1million by a foreign national on his retiring from employmentin India.

Note :Subscriptions from residents in the United States of America andCanada shall not be accepted by the Schemes of HSBC Mutual Fund.

The Fund reserves the right to include / exclude new / existingcategories of investors to invest in the Scheme from time to time,subject to SEBI Regulations and other prevailing statutory regulations,if any.

Submission of Applications

Computer Age Management Services Private Limited (CAMS),Spencer Plaza, Phase II, S49A, 172, Anna Salai, Chennai 600 002have been appointed as Registrar for the Scheme. The Registrar isregistered with SEBI under registration no: INR000002813. Investorscan also subscribe and redeem units from the official website ofAMC i.e. www.assetmanagement.hsbc.com/in Details of officialpoints of acceptance of CAMS and Branches of AMC are providedon inside back cover page.

Bank Account Numbers

In order to protect the interest of investors from fraudulent encashmentof cheques, cheques specify the name of the Unitholder and the bankname and account number where payments are to be credited. SEBIRegulations make it mandatory for an investor to mention the detailsof his / her / its bank account. It is important for applicants to mentiontheir bank name, bank account number, branch address, account typein their applications for subscription or repurchase of Units.Applications without this information shall be rejected.

How to apply?

Please refer to the Statement of Additional Information and Applicationform for the instructions.

HSBC Fixed Term Series 66 (HFTS 66) 15

Listing

The Regulations require that every close-ended Scheme be listed ina recognised stock exchange within six months of the closure of thesubscription period unless the Scheme provides for periodic repurchasefacility to all the Unitholders with restriction, if any, on the extentof repurchase; or if the details of such repurchase facility are clearlydisclosed in the Scheme Information document; or if the Schemeopens for repurchase within a period of six months from the closureof the subscription period.

Listing of the Scheme is not currently envisaged. The AMC reservesthe right to list the units of the Scheme in future, if deemed necessary.

Product Add Ons

As the Scheme is a close ended Scheme, there is no product add onsoffered by the Scheme.

The policy regarding reissue of repurchased units, including themaximum extent, the manner of reissue, the entity (the schemeor the AMC) involved in the same:

Presently the AMC does not intend to reissue the repurchased units.The trustee reserves the right to reissue the repurchased units at alater date after issuing adequate public notices and taking approvals,if any, from SEBI.

Restrictions, if any, on the right to freely retain or dispose of unitsbeing offered:

Fractional Units

Since a request for redemption or purchase is generally made inrupee amounts and not in terms of number of Units of the Scheme,an investor may be left with fractional Units. Fractional Units willbe computed and accounted for up to three decimal places for theScheme. However, fractional Units will in no way affect the investor’sability to redeem the Units, either in part or in full, standing to theUnitholder’s credit.

Right to Limit Redemptions

The Trustees may, in the general interest of the Unitholders of theScheme offered under this Scheme Information Document, andkeeping in view the unforeseen circumstances / unusual marketconditions, limit the total number of Units which may be redeemedon any Business Day to 5% of the total number of Units then in issue,under the Scheme and Plan(s) thereof, or such other percentage asthe Trustees may determine. Any Units, which by virtue of theselimitations are not redeemed on a particular Business Day, will becarried forward for redemption to the next Business Day, in order ofreceipt. Redemptions so carried forward will be priced on the basisof the Applicable NAV (subject to the prevailing load) of the BusinessDay on which redemption is made. Under such circumstances, to theextent multiple redemption requests are received at the same time ona single Business Day, redemptions will be made on pro-rata basis,based on the size of each redemption request, the balance amountbeing carried forward for redemption to the next Business Day. Inaddition, the Trustees reserve the right in their sole discretion, to limitredemptions with respect to any single account to an amount of Rs.1 crore (Rupees One Crore Only) in a single day.

Suspension of Sale / Repurchase / Switch of Units

The Mutual Fund at its sole discretion reserves the right to withdrawsale and / or repurchase and / or switch of the Units in the Scheme(including any one of the Plan of any of the Scheme) temporarily orindefinitely, if in the opinion of the AMC, the general market conditionsare not favourable and / or suitable investment opportunities are notavailable for deployment of funds. However, the suspension of sale /repurchase / switch either temporarily or indefinitely will be with theapproval of the Trustees.

The sale / repurchase / switch of the Units may be suspended underthe following conditions:

l When one or more stock exchanges or markets, which providebasis for valuation for a substantial portion of the assets of theScheme is closed otherwise than for ordinary holidays.

l When, as a result of political, economic or monetary events orany circumstances outside the control of the Trustees and the

AMC, the disposal of the assets of the Scheme is not reasonable,or would not reasonably be practicable without being detrimentalto the interests of the Unitholders.

l In the event of breakdown in the means of communication usedfor the valuation of investments of the Scheme, without whichthe value of the securities of the Scheme cannot be accuratelycalculated.

l During periods of extreme volatility of markets, which in theopinion of the AMC are prejudicial to the interests of theUnitholders of the Scheme.

l In case of natural calamities, strikes, riots and bandhs.

l In the event of any force majeure or disaster that affects thenormal functioning of the AMC, ISC or the Registrar.

l If so directed by SEBI.

In the above eventualities, the time limits indicated above, forprocessing of requests for purchase, switch and redemption of Unitswill not be applicable. Further, an order to purchase Units is notbinding on and may be rejected by the Trustees, the AMC or theirrespective agents, until it has been confirmed in writing by the AMCor its agents and payment has been received.

Suspension or restriction of repurchase / redemption facility underany Scheme / Plan of the Mutual Fund shall be made applicable onlyafter the approval from the Board of Directors of the AMC and theTrustees. The approval from the AMC Board and the Trustees givingdetails of circumstances and justification for the proposed actionshall also be informed to SEBI in advance.

B. ONGOING OFFER DETAILS

On-going Subscriptions

The Plan will not be open for ongoing subscriptions / switch ins.

Sales, Repurchase and Switches of Units onOn-going Basis

Though the Scheme will not be open for ongoing subscriptions /switch ins, units can be redeemed / switched out on every BusinessDay at NAV based prices, subject to provisions of exit load, if any.

Sale of Units / Repurchase of Units

The repurchase request can be made on a pre-printed form or by suchother method(s) as may be acceptable to the Fund / AMC from timeto time. Such request should be submitted at any of the InvestorService Centres / Designated Collection Centres.

The repurchase would be permitted to the extent of credit balancein the Unitholder’s account. The repurchase request can be made byspecifying the rupee amount or the number of Units to be repurchased.Repurchase requests can be made for a minimum amount of Rs.1000/-(Rupees One Thousand Only). Where a request for a repurchase isfor both amount and number of Units, the amount requested forrepurchase will be considered as the definitive request.

If the balance in the Unitholder’s account does not cover the amountof repurchase request, then the Mutual Fund is authorised to closethe account of the Unitholder and send the entire such (lesser)balance to the Unitholder.

Unitholders may also request for redemption of their entire holdingand close the account by indicating the same to the Fund / AMC.

Where however, the Unitholder wishes to redeem Units for a specifiedamount, then the amount to be paid on redemption will be dividedby the redemption price, and the resultant number of Units will beredeemed.

In case the Units are standing in the names of more than one Unitholder,where mode of holding is specified as ‘Jointly’, redemption requestswill have to be signed by ALL joint holders. However, in cases ofholding specified as ‘Anyone or Survivor’, any one of the Unitholderswill have the power to make redemption requests, without it beingnecessary for all the Unitholders to sign. However, in all cases, theproceeds of the redemption will be paid to the first-named holderonly.

16 Scheme Information Document (SID)

Sales Price / Repurchase Price

This is the price you will receive for redemptions/switch outs.

While calculating the repurchase price, the Fund shall be at libertyto charge a load as permitted under SEBI Regulations. The RepurchasePrice of the Units as per current SEBI Regulations shall not be lowerthan 95% of the Applicable NAV. The Fund also has the right tocharge a different load and therefore a different repurchase price forinvestors who want to switch over to other eligible Schemes of theFund.

The repurchase price of the Units, on an ongoing basis, is based onthe Applicable NAV. As per SEBI Regulations, an exit load upto amaximum of 5% may be charged for all redemptions under the Plan / Options available under the Scheme, provided that the differencebetween the repurchase price and the sale price of the Units shall notexceed the permissible limit of 5% calculated on the sale price.

The AMC reserves the right to impose different exit loads under thevarious Plan / Options available under the Scheme.Repurchase Price = Applicable NAV x

(1 - Exit Load, if any)ExampleIf the Applicable NAV is Rs.15 and the exit load applicable is 0.5%,the repurchase price is calculated as follows:

Repurchase Price = 15 x (1 - 0.005)= 15 x 0.995= 14.925

Applicable NAV for Repurchase of UnitsApplicable NAV for HFTS 66 would be the Net Asset Value per Unitat the close of the Business Day on which a valid request forredemption is accepted.

Cut off timings for redemption / switch-out

This is the time before which your application (complete in allrespects) should reach the official points of acceptance.

The cut off timings for determining Applicable NAVs for redemptionsand switch-outs to be made at the Investor Service Centres / DesignatedCollection Centres (designated as ‘Official Points of Acceptance’from time to time) are as per the following table :

Scheme Redemption Switch-in Switch-out

HFTS 66 3.00 p.m. 3.00 p.m. 3.00 p.m.

Where a request for subscription / redemption / switch is receivedafter the cut-off time as mentioned above, the request will be deemedto have been received on the next Business Day.

Where can the applications redemption / switchesbe submitted?

The details of official points of acceptance etc. are provided on insideback cover page. Please note that the AMC has not appointed anycollecting bankers for this NFO.

Minimum Application Amount / Minimum AdditionalInvestment

Not Applicable

Minimum Amount for Redemption

The minimum amount for redemption per application will be Rs.1,000. The AMC reserves the right to change the minimum redemptionamount from time to time.

Minimum balance to be maintained and consequencesof non maintenance

The Fund may close a Unitholder’s account if as a consequence ofa redemption, the balance falls below Rs. 1000/-. In such a case,entire Units to the Unitholder’s account will be redeemed at theApplicable NAV with the applicable Load, if any, and the accountwill be closed.

Product Add Ons

As the Scheme is a close ended Scheme, there is no product add onsoffered by the Scheme.

Account Statements

An account statement will be sent by ordinary post / courier / e-mailto each Unitholder, stating the number of units allotted, not later than30 Business Days from the close of the New Fund Offer Period. Asunits of the Scheme will be non-transferable, the Account Statementsshall be non-transferable. If the Unitholder so desires, non-transferableunit certificates will be issued within 6 weeks of the receipt of requestfor the certificate.

An Account Statement reflecting the net balance of the Unitholderwill under normal circumstances be mailed to the Unitholder byordinary post / courier after every purchase, redemption and switchtransaction is effected except in case of dividend reinvestment, issueof bonus units transactions. The transaction advice for DividendReinvestments and Bonus units will be dispatched within the SEBIstipulated timelines.

The Account Statement will be provided to the Unitholders who havenot transacted during the last six months, prior to the date of generationof account statements. The account statements in such cases may begenerated and issued along with the Portfolio Statement or AnnualReport of the scheme. The Account Statement shall reflect the latestclosing balance and value of the Units prior to the date of generationof the account statement. Alternately, soft copy of the accountstatements shall be mailed to the investors’ e-mail address, whereprovided instead of physical statement, if so mandated. The AccountStatement shall not be construed as a proof of title and is only acomputer-printed statement indicating the details of transactionsunder the Scheme.

For Dividends paid out, investors will receive a transaction advicein case of dividends paid along with instrument, where applicable.The Unitholders can also obtain an Account Statement on requestfrom any of the ISCs.

The Account Statement is a record of the transaction in the schemeof HSBC Mutual Fund. Investors are requested to review the accountstatement carefully and contact their nearest Investor Service Centrein case of any discrepancy.

Also, an Account Statement reflecting the net balance of the Unitholderwill be mailed to the Unitholder by ordinary post / courier after everyfinancial transaction (other than dividend declaration) is effected,except in exceptional circumstances. The Account Statement shallnot be construed as a proof of title and is only a computer-printedstatement indicating the details of transactions under the Scheme.

Under normal circumstances on an on-going basis, account Statementswill be mailed to the investor within 3 Business Days of acceptanceof the redemption, switch request for the Scheme, provided that theFund reserves the right to reverse the transaction of crediting unitsin the Unitholder’s account, in the event of non-realisation of anycheque or other instrument remitted by the investor. The Unit balanceshown on the account statement is subject to realisation of cheque,fulfilment of regulatory requirements, fulfilment of requirements ofthe Scheme Information Document(s) / Addendum(s) and furnishingnecessary information to the satisfaction of the Mutual Fund.

All Units will rank pari passu among Units within the same Option /Sub-Option, i.e. either the Dividend Sub-Option or the Growth Sub-Option, as to assets, earnings and the receipt of dividend distributions,if any, as may be declared by the Trustees. Allotment of Units anddespatch of Account Statements to NRIs / FIIs will be subject toRBI’s general permission dated 30 March, 1999 to mutual funds, interms of Notification no. FERA.195/99-RB or such other notifications,guidelines issued by RBI from time to time.

The AMC shall endeavour to mail / email Account Statements /Transaction Confirmations within 3 Business Days for purchases,redemptions and switches. In the event an account has more than oneregistered owner, the first-named holder (as determined by referenceto the original Application Form) shall receive all Account Statements,notices and correspondence with respect to the account, as well asthe proceeds of any redemption requests or dividends or otherdistributions.

HSBC Fixed Term Series 66 (HFTS 66) 17

Receiving Account Statement / Correspondence by e-mail

The Mutual Fund will encourage the investors to provide their e-mailaddresses for all correspondence. The Mutual Fund’s website mayfacilitate request for Account Statement by Unitholders. The MutualFund will endeavour to send Account Statements and any othercorrespondence including Annual Reports using e-mail as the modefor communication as may be decided from time to time.

The Unitholder will be required to download and print the AccountStatement after receiving the e-mail from the Mutual Fund. Shouldthe Unitholder experience any difficulty in accessing the electronicallydelivered Account Statement, the Unitholder shall promptly advisethe Mutual Fund to enable the Mutual Fund to make the deliverythrough alternate means. Failure to advise the Mutual Fund of suchdifficulty within 24 hours after receiving the e-mail will serve as anaffirmation regarding the acceptance by the Unitholder of the AccountStatement.

In case an investor who has provided an e-mail address and optedfor electronic mode of receipt of account statements and other updateswishes to change over to the physical mode, he would need toprovide a written request to any of our official points of acceptance.Please note that such a request will be treated as a non financialtransaction and processed within 3 - 5 Business Days from the dateof submission.

It is deemed that the Unitholder is aware of all security risks includingpossible third party interception of the Account Statements andcontent of the Account Statements becoming known to third parties.

Under no circumstances, including negligence, shall the MutualFund or anyone involved in creating, producing, delivering ormanaging the Account Statements of the Unitholders, be liable forany direct, indirect, incidental, special or consequential damages thatmay result from the use of or inability to use the service or out ofthe breach of any warranty. The use and storage of any informationincluding, without limitation, the password, account information,transaction activity, account balances and any other informationavailable on the Unitholder’s personal computer is at the risk andsole responsibility of the Unitholder.

Dividends and Distributions

The dividend proceeds may be paid by way of dividend warrants /direct credit / EFT / ECS Credit / SEFT / RTGS / Wired Transfer /any other manner through the investor’s bank account specified inthe Registrar’s records. The AMC, at its discretion at a later date, maychoose to alter or add other modes of payment. The AMC shall alsoappropriately intimate the Unitholders about the dividendannouncements / payout / reinvestment within 30 days of the dateof declaration of dividend.

Redemption / Repurchase proceeds

As per the Regulations, the Fund shall despatch the redemptionproceeds within 10 Business Days from the date of acceptance ofredemption request at any of the Investor Service Centres. In theevent of failure to despatch the redemption proceeds within theabove time, interest @ 15% per annum or such rate as may bespecified by SEBI, would be paid to the unitholders for the periodof delay.

Under normal circumstances, the Fund will endeavour to despatchthe redemption proceeds within 1 Business Day from the date ofreceiving a valid redemption request.

C. PERIODIC DISCLOSURES

NAV Information

This is the value per unit of the scheme on a particular day. You canascertain the value of your investments by multiplying the NAV withyour unit balance.

The AMC will calculate and disclose the first NAVs not later than30 days from the closure of the New Fund Offer Period. On anongoing basis, NAVs will be calculated and published for everyBusiness Day. The Unitholders may obtain the information on NAVof the prescribed days by calling the office of the AMC or any of theInvestor Service Centres or on the website of the AMC atwww.assetmanagement.hsbc.com/in. The Fund will publish NAVsin at least two daily newspapers. Further, the AMC shall publish thepurchase and redemption prices of Units on a weekly basis in anewspaper with all India circulation.

The AMC shall update the NAVs on the website of Association ofMutual Funds in India - AMFI (www.amfiindia.com) and the AMCby 9.00 p.m. on every Business Day. In case of any delay, the reasonsfor such delay would be explained to AMFI by the next day. If theNAVs are not available before commencement of business hours onthe following day due to any reason, the Fund shall issue a pressrelease providing reasons and explaining when the Fund would beable to publish the NAVs.

Half yearly Disclosures: Portfolio / Financial Results

This is a list of securities where the corpus of the scheme is currentlyinvested. The market value of these investments is also stated inportfolio disclosures.

As presently required by the SEBI Regulations, the Fund shall beforethe expiry of 1 month from the close of each half year, that is as on31 March and 30 September, publish its unaudited financial resultsin one English daily newspaper circulating in the whole of India andin a newspaper published in the language of the region where theHead Office of the Fund is situated and update the same on theAMC’s website at www.assetmanagement.hsbc.com/in and onAMFI’s website at www.amfiindia.com, within 1 month from theclose of each half year, in the formats as prescribed by SEBI.

The AMC will disclose the NAV of each Plan of every Scheme ofthe Fund on every Business Day.

The Fund shall before the expiry of 1 month from the close of eachhalf year (31 March and 30 September) send to the Unitholders acomplete statement of the Scheme’s portfolios or if such statement isnot sent to the Unitholders, it will be published by way of anadvertisement in one English daily newspaper circulating in the wholeof India and in a newspaper published in the language of the regionwhere the Head Office of the Mutual Fund is situated. The Scheme’sportfolios shall also be displayed on the AMC’s website atwww.assetmanagement.hsbc.com/in, 1 month from the close of eachhalf year. The statement shall be in the format as prescribed by SEBI.

Annual Report

A schemewise Annual Report of the Fund or an abridged summarythereof shall be mailed to all Unitholders as soon as may be but notlater than 6 months from 31 March of each year. The abridged annualreport shall contain such details as are required under the Regulations.A full copy of the annual report shall be made available for inspectionat the Head Office of the Fund and a copy shall be made availableto the Unitholders on request, on payment of nominal fees if any.

Associate Transactions

For details of Associate transactions including dealing with associatecompanies, Investors are advised to please refer Statement ofAdditional Information.

Taxation

The information is provided for general information only. However,in view of the individual nature of the implications, each investor isadvised to consult his or her own tax advisors/authorised dealers withrespect to the specific amount of tax and other implications arisingout of his or her participation in the schemes.

18 Scheme Information Document (SID)

Resident Investors Mutual Fund

Debt FundTax on Dividend Nil @12.50% plus

surcharge andEducation cess

Capital Gains:Debt Fund

Long Term 10%** without CostInflation Index benefitor 20%** with CostInflation Index benefit

Short Term Taxable as perrelevant tax slab**

**Plus surcharge @ 10% (where total income exceeds Rs. 10 lacs)and education cess of 3% in all cases.

The scheme shall bear the dividend distribution tax as per section115R of Income Tax Act 1961. As per extant Income Tax regulations,dividends distributed by mutual funds are tax free in the hands of theinvestor. Any additional tax liability due to demand raised on thefund by the IT authorities and deemed payable would be borne bythe scheme.Any additional tax liability due to demand raised on theInvestor by the IT authorities and deemed payable would be borneby the respective investor.

For further details on Taxation, Investors are requested to referStatement of Additional Information.

Investor Services

The Fund will follow-up with the Investor Service Centres and theRegistrar on complaints and enquiries received from investors withan endeavour to resolve them promptly.

For this purpose, Ms. Lata Krishnamohan/Mr. Vivek Kamat arecurrently designated as the Investor Relations Officer. They can becontacted at the Corporate Office of the AMC. The address andphone numbers are:

314 D.N. Road, Fort, Mumbai 400 001.Tel.: (91) (22) 66668819Fax : (91) (22) 40029600E-mail: hsbcmf@hsbc.co.in

D. COMPUTATION OF NAV

NAV of Units under the Scheme shall be calculated as shown below:

Market or Fair Value of Scheme'sinvestments (+) Current Assets (-)Current Liabilities and Provisions

NAV (Rs.) = ____________________________________

No. of Units outstanding under Scheme

The first NAV will be calculated and announced not later than 30days from the close of the NFO. Subsequently, the NAVs will becalculated and disclosed as of the close of every Business Day. NAVsof the Scheme shall be disclosed up to 4 decimal places. The valuationof the Scheme’ assets and calculation of the Scheme’ NAV shall besubject to audit on an annual basis and such regulations as may beprescribed by SEBI from time to time.

Since a request for redemption or purchase is generally made inrupee amounts and not in terms of number of Units of the Scheme,an investor may be left with fractional Units. Fractional Units willbe computed and accounted for up to three decimal places for theScheme. However, fractional Units will in no way affect the investor’sability to redeem the Units, either in part or in full, standing to theUnitholder’s credit.

Policy on computation of NAV in case of investmentin foreign securities

In case of investment in foreign securities the last available tradedprice at 6 p.m. IST and forex conversion rate at close of Indian forexmarket shall be taken from a reliable source for NAV computationpurposes. In case of non availability of price for a period upto or lessthan 30 days the AMC shall fair value such securities supported byquotes from brokers/market makers.

HSBC Fixed Term Series 66 (HFTS 66) 19

A. NEW FUND OFFER (NFO) EXPENSES

These expenses are incurred for the purpose of various activitiesrelated to NFO like Sales & Distribution Fees paid, Marketing &Advertising, Registrar Expenses, Printing and Stationery, BankCharges etc.

In accordance with the SEBI circular no. SEBI/IMD/CIR No. 11/115723 /08 dated 31 January, 2008, all the mutual fund schemes shallmeet the sales, marketing and other such expenses connected withsales and distribution of the scheme from the entry load, if any. Asthere will be no entry load in HFTS 66, the NFO expenses shall beborne by the AMC.

B. ANNUAL SCHEME RECURRING EXPENSES

These are the fees and expenses for operating the scheme. Theseexpenses include Investment Management and Advisory Fee chargedby the AMC, Registrar and Transfer Agents’ fee, marketing andselling costs etc. as is given in the table below:

The AMC has estimated that upto 2.25% of the weekly average netassets of the scheme will be charged to the scheme as expenses. Forthe actual average expenses being charged, the investor should referto the Fact Sheet on website of the Fund.

HFTS 66

Description Regular InstitutionalOption Option

(% per annum ofaverage net assets)

Investment Management & 1.25% 1.25%Advisory Fees

Additional Fees (if any) – –

Trustee Fees 0.01% 0.01%

Custodian Fees 0.12% 0.12%

Marketing & Selling Exp. 0.50% 0.25%

Registrar & Transfer Agent Fees 0.12% 0.12%

Transaction costs 0.02% 0.02%

Audit Fee 0.04% 0.04%

Costs related to investor 0.01% 0.01%communications

Cost of funds transfer 0.02% 0.02%

Cost of providing allotment 0.05% 0.05%statements, dividend, redemptionwarrants etc.

Cost of statutory advertisements 0.05% 0.05%

Other Expenses 0.06% 0.06%

Total Annual Recurring Expenses 2.25% 2.00%

The purpose of the above table is to assist the investor in understandingthe various costs and expenses that an investor in the Scheme /Plan(s) will bear directly or indirectly.

The above expenses are subject to change and may increase / decreaseas per actual and / or any change in the Regulations. These estimateshave been made in good faith as per information available to theAMC and the total expenses may be more than as specified in thetable above. However, as per the Regulations, the total recurringexpenses that can be charged to the Scheme in this Scheme InformationDocument shall be subject to the applicable guidelines. Expensesover and above the permitted limits will be borne by the AMC.

The recurring expenses of the Scheme, and the additional managementfee shall be as per the limits prescribed under sub-regulation 6 ofRegulation 52 of the SEBI Regulations and shall not exceed thelimits prescribed thereunder. Currently, as per the Regulations, themaximum recurring expenses that can be charged to an incomeScheme shall be subject to a percentage limit of average weekly netassets as in the table below:

First Next Next OverRs. 100 crores Rs. 300 crores Rs. 300 crores Rs. 700 crores

2.25% 2.00% 1.75% 1.50%

Subject to Regulations and this Scheme Information Document,expenses over and above the prescribed ceiling will be borne by theAMC, Trustees or the Sponsor.

As per SEBI regulations, the AMC is entitled to an investmentmanagement and advisory fee at the rate of 1.25% per annum of theweekly average net assets outstanding in each accounting year forthe scheme concerned, as long as the net assets do not exceed Rs.100 crores (rupees one hundred crores only) and 1.00% of the excessamount over Rs. 100 crores (rupees one hundred crores only), wherenet assets so calculated exceed Rs. 100 crore (rupees one hundredcrores only). For schemes launched on a no load basis, the AMC isentitled to collect an additional management fee not exceeding 1%of the weekly average net assets outstanding in each financial year.

C. LOAD STRUCTURE

Load is an amount which is paid by the investor to subscribe to theunits or to redeem the units from the scheme. This amount is usedby the AMC to pay commissions to the distributor and to take careof other marketing and selling expenses. Load amounts are variableand are subject to change from time to time. For the current applicablestructure, please refer to the website of the AMC atwww.assetmanagement.hsbc.com/in or may call at ISC.

Load Structure

Particulars (as % of NAV) HSBC Fixed Term Series 66

Sales Load (Entry Load) Nil

Sales Load on issue of NilUnits in lieu of Dividend(dividend reinvestment)

Repurchase / redemption 3% - if exited before maturity.Load (Exit Load) No Exit Load on redemption /

switch out of Units on the maturitydate.

Switchover Fee As per the prevailing load structureof the Scheme

Bonus units and units issued on reinvestment of dividends shall notbe subject to entry and exit load.

The load collected from the Unitholders under the Scheme will becredited to a separate account in the Plan accounts and will be offsetagainst distribution and marketing expenses in accordance with SEBIRegulations. Surplus of load, if any, charged over planned marketingand distribution expenses to be defrayed will be credited to the Planwhenever felt appropriate by the AMC.

The investor is requested to check the prevailing load structure of thescheme before investing. For any change in load structure AMC willissue an addendum and display it on the website/Investor ServiceCentres.

Subject to the Regulations, the Trustees reserve the right to modify /alter the load structure and may decide to introduce a differential loadstructure on the Units redeemed on any Business Day. Such changeswill be applicable prospectively. The Addendum detailing the changesin load structure will be attached to Scheme Information Document.

SECTION IV - FEES AND EXPENSESThis section outlines expenses that will be charged to the Scheme.

20 Scheme Information Document (SID)

The Addendum will also be circulated to all the distributors / brokersso that the same can be attached to all the Scheme InformationDocuments in stock. The Trustees / AMC shall arrange to display anotice in the Investor Service Centers of the AMC before the changeof the then prevalent load structure. Changes in the load structuremay be stamped in the acknowledgement slip issued by the Fundafter the changes in load structure. The changes may also be disclosedin the Statements of Account issued after the introduction of suchload

D. WAIVER OF LOAD FOR DIRECTAPPLICATIONS

No entry load shall be charged in case of direct applications receivedby the AMC i.e. application received through internet, submitted toAMC or Collection Centre / Investor Service Centre and are notrouted through any distributor / agent / broker. It shall also be

applicable in case of switch-in to the Scheme from other Schemesif such a transaction is done directly by the investor. Investors arerequired to note that where the application is routed through adistributor / agent / broker, they shall mention the broker code on theapplication form or transaction slip, as the case may be, and wherethe application is not so routed, they shall mark the field for distributor /agent / broker code as ‘Direct’. In other words, investors shall ensurethat the field for broker code is not left blank; if the field is left blank,the application will be treated as ‘Direct’. Investors, who intend toinvest directly by using an application form / transaction slip witha pre-printed distributor / agent / broker code, shall either strike offthe code or replace the code with ‘Direct’, so that in both the casestheir application is treated as ‘Direct’.

Further, no entry / exit load shall be charged for units allotted underbonus / dividend reinvestment option and also for redemptions madeby existing untiholders.

HSBC Fixed Term Series 66 (HFTS 66) 21

1. All disclosures regarding penalties and action(s) taken againstforeign Sponsor(s) may be limited to the jurisdiction of thecountry where the principal activities (in terms of income /revenue) of the Sponsor(s) are carried out or where theheadquarters of the Sponsor(s) is situated. Further, only top 10monetary penalties during the last three years shall be disclosed.

The Sponsor of HSBC Mutual Fund is HSBC Securities andCapital Markets (India) Private Limited, a company incorporatedunder the provisions of the Companies Act, 1956. Hence, thissection is not applicable to an Indian Sponsor.

2. In case of Indian Sponsor(s), details of all monetary penaltiesimposed and / or action taken during the last three years orpending with any financial regulatory body or governmentalauthority, against Sponsor(s) and / or the AMC and / or theBoard of Trustees / Trustee Company; for irregularities or forviolations in the financial services sector, or for defaults withrespect to share holders or debenture holders and depositors,or for economic offences, or for violation of securities law.Details of settlement, if any, arrived at with the aforesaidauthorities during the last three years shall also be disclosed.

Penalties imposed by a financial regulatory body or governmentauthority against the Sponsor and / or the AMC and / or theBoard of the Trustees, for irregularities / violations in the financialservices sector, or for defaults with respect to share holders ordebenture holders and depositors, or for economic offences, orfor violation of securities law, during the last three years:

– The Sponsor was acting as a merchant banker under theSEBI (Substantial Acquisitions of Shares and Takeovers)Regulations, 1997 for an open offer made by Global GreenCompany Limited for the shares of Saptarishi AgroIndustries Limited in the year 2000. Some of the shares ofthe target company were not listed at the time of the openoffer but were stated as listed in the letter of offer. Anenquiry is in progress under SEBI (Procedure for HoldingEnquiry by Enquiry Officer and Imposing Penalty)Regulations, 2002 for alleged contravention of SEBI(Substantial Acquisitions of Shares and Takeovers)Regulations, 1997 and SEBI (Merchant Bankers)Regulations, 1992. The Sponsor has submitted that therehas been no failure on the part of the Sponsor to complywith its obligations as a merchant banker. Subsequent tothe enquiry officer’s recommendation of a minor penaltyi.e. the Sponsor be censured, a show cause notice has beenissued by SEBI requiring the Sponsor to show cause as towhy the said penalty should not be imposed. The Sponsorhas reiterated its earlier stand and submitted that there hasbeen no failure on the part of the Sponsor to comply withits obligations as a merchant banker. The Sponsor hadsought a personal hearing before the Whole-Time Member,SEBI; submissions were made by Sponsor’s counsel at thehearing held on 5 September, 2006. Subsequent to thehearing, an order dated 7 March, 2007 was passed by SEBIimposing a minor penalty of censure on the Sponsor.Thereafter, Sponsor appealed against the said order beforethe Securities Appellate Tribunal, Mumbai on 23rd April

2007 which was admitted by the Securities AppellateTribunal and the next date of hearing was scheduled for 11December, 2007. The Securities Appellate Tribunal heardthe arguments of both Parties on the 11 and 12th ofDecember, 2007 respectively and has further sought writtenarguments from both parties, which have been submittedto the Securities Appellate Tribunal on 14 December, 2007.Subsequent to the hearing held before SAT and submissionof written arguments, an order dated 20 February, 2008was passed by SAT upholding SEBI’s minor penalty ofcensure on Sponsor.

– On the Sponsor: Fines of Rs. 5000 each for 4 quartersduring 2002 to 2003, for 3 quarters in 2004 and for 2quarters in 2005 by the Bombay Stock Exchange Limited,Rs. 10,000 each for 5 quarters during 2001 to 2002 and Rs.5000 for 4 quarters during 2003 and 2004 and for 2 quartersin 2005 by National Stock Exchange for not fully complyingwith the requirements of collecting margins from all non-institutional clients. Exchanges / depository levy fines fromtime to time on matters inherent to the stock brokingbusiness. Fines levied by National Stock Exchange inAugust 2006: Rs. 5000/- notice board required to bedisplayed by NSE trading members, was not permanent innature and Rs. 5000/- for issuing Contract notes with tradedata on a weighted average traded price basis.

– Sponsor, as a SEBI registered Stock Broker, has beenmentioned as a party defendant in some litigationsconnected with the securities market. Sponsor has initiatedaction against RIL and the registered shareholders of 1587shares restraining RIL from transferring the shares to theregistered holders and directing the registered holders totransfer the shares in favour of Sponsor. Vide an orderdated 24th August, 2007 the Hon’ble High Court passedan oder in favour of Sponsor declaring Sponsor as thebeneficial owner of the shares as well as any benefitsincluding dividends for the years 1995-96 and 1996-97and bonus shares and right shares that may have accruedthereon.

3. Details of all enforcement actions taken by SEBI in the last threeyears and / or pending with SEBI for the violation of SEBI Act,1992 and Rules and Regulations framed thereunder includingdebarment and / or suspension and / or cancellation and / orimposition of monetary penalty/adjudication/enquiryproceedings, if any, to which the Sponsor(s) and / or the AMCand/ or the Board of Trustees / Trustee Company and / or anyof the directors and / or key personnel (especially the fundmanagers) of the AMC and Trustee Company were / are a party.The details of the violation shall also be disclosed.

– On the Sponsor: Fines levied by National Stock Exchangein August 2006: Rs 5000/- NCFM certification for personsoperating the dealing system of the exchange had expiredin two cases.

4. Any pending material civil or criminal litigation incidental tothe business of the Mutual Fund to which the Sponsor(s) and /

SECTION VRIGHTS OF UNITHOLDERS

For details of Rights on Unitholders, please refer Statement of Additional Information.

SECTION VIPENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF INSPECTIONS ORINVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN TAKEN OR IS IN THE PROCESS OF BEINGTAKEN BY ANY REGULATORY AUTHORITY

or the AMC and / or the Board of Trustees / Trustee Companyand / or any of the directors and / or key personnel are a partyshould also be disclosed separately.

There is no pending material civil or criminal litigation incidentalto the business of the Mutual Fund to which the Sponsor of theMutual Fund and / or the AMC and / or the Board of Trusteesand / or any of the directors and / or key personnel is a party.

5. Any deficiency in the systems and operations of the Sponsor(s)and / or the AMC and / or the Board of Trustees/Trustee Companywhich SEBI has specifically advised to be disclosed in the SID,or which has been notified by any other regulatory agency, shallbe disclosed.

There are no deficiencies in the systems and operations of theSponsor of the Mutual Fund and / or the AMC and / or the Boardof Trustees which SEBI has specifically advised to be disclosedin the SID, or which has been notified by any other regulatoryagency to be disclosed in SID.

The above information has been disclosed in good faith as per theinformation available to the AMC.

Notwithstanding anything contained in this Scheme InformationDocument, the provisions of the SEBI (Mutual Funds)Regulations, 1996 and the guidelines thereunder shall beapplicable.

Note:The Trustees approved the Scheme Information Document of HFTS66 to 74 vide resolution passed on 25 July, 2008.

22 Scheme Information Document (SID)

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INVESTOR SERVICE CENTRES AND OFFICIAL POINTS OF ACCEPTANCE FOR TRANSACTIONS

HSBC MUTUAL FUND CENTRES

Ahmedabad : Mardia Plaza, C.G. Road, Ahmedabad 380 006. Tel : 98983 77319. Bengaluru : No. 7, HSBC Centre, M. G. Road, Bengaluru 560 001.Tel : 080 - 4118 6519. Chandigarh : SCO - 1, Sector-9D, Madhya Marg, Chandigarh 160 017. Tel : 0172 - 500 8119. Chennai : 96, RadhakrishnanSalai, 2nd Floor, Mylapore, Chennai 600 004. Tel : 044 - 4200 8719. Coimbatore : 108, "Srivari Gokul Towers", Race Course Road,Coimbatore 641 018. Tel : 98944 77319. Hyderabad : 6-3-1107 & 1108, Raj Bhavan Road, Somajiguda, Hyderabad 500 082. Tel : 040 - 6667 4719.Indore : Darshan Mall, 15 / 2, Race Course Road, Indore 452 001. Tel : 98934 77319. Jaipur : Vasanti, 61 - A, Sardar Patel Marg, C-Scheme,Jaipur 302 001. Tel : 99280 37319. Kochi : II Floor, Pulikkal Estate, Pallimukku, M. G. Road, Kochi 682 016. Tel : 98954 77319. Kolkata : JasmineTower, 1st Floor, 31, Shakespeare Sarani, Kolkata 700 017. Tel : 033 - 2213 9919. Lucknow : C/o. Business Bridge, 2nd Floor, Saran Chambers - 2,5, Park Road, Lucknow 226 001. Tel : 99367 97319. Mumbai : 314 D. N. Road, Fort, Mumbai 400 001. Tel : 022 - 6666 8819. New Delhi : 3rd Floor,East Tower, Birla Tower, 25, Barakhamba Road, New Delhi 110 001. Tel : 011 - 4149 0719. Pune : Amar Avinash Corporate City, Bund Garden Road,Pune 411 001. Tel : 020 - 26001119. Vadodara : Sheel Building, 1/2 Kalpana Society, Inox Multiplex Road, Race Course Circle,Vadodara 390 007. Tel : 98983 77319.

CAMS INVESTOR SERVICE CENTRES, CAMS TRANSACTION POINTS

AND CAMS COLLECTION CENTRES : TEL.: 1-800-200-2267

CAMS (Investor Service Centres) : l Ahmedabad l Bangalore l Bhubaneswar l Coimbatore l Cochin l Chandigarh l Chennail New Delhi l Durgapur l Goa l Hyderabad l Indore l Jaipur l Kanpur l Kolkata l Lucknow l Ludhiana l Mangalore l Mumbail Madurai l Nagpur l Pune l Patna l Surat l Vadodara l Visakhapatnam l Vijayawada

CAMS (Transaction Points) : l Agra l Ahmednagar l Ajmer l Akola l Allahabad l Aligarh l Alwar l Amaravati l Amritsarl Anand l Angul l Ankleshwar l Ananthpur l Asansol l Aurangabad l Bagalkot l Balasore l Bareilly l Belgaum l Bellaryl Berhampur l Bhagalpur l Bhatinda l Bhavnagar l Bhilwara l Bhilai l Bhopal l Bhuj l Bikaner l Bilaspur l Bokaro l Burdwanl Calicut l Cuttack l Davangere l Dehradun l Deoghar l Dhanbad l Dhule l Erode l Faridabad l Gazhiabad l Gorakhpurl Gulbarga l Guntur l Gurgaon l Guwahati l Gwalior l Hazaribagh l Himatnagar l Hissar l Hosur l Hubli l Jabalpur l Jalandharl Jalgaon l Jamnagar l Jamshedpur l Jammu l Jhansi l Jodhpur l Junagadh l Kadapa l Kalyani l Kakinada l Kannurl Karimnagar l Karur l Kestopur l Kolhapur l Kollam l Kota l Kottayam l Kumbakonam l Kurnool l Latur l Malda l Manipall Margao l Mathura l Meerut l Mehsana l Moradabad l Muzzafarpur l Mysore l Nasik l Navsari l Nellore l Palakkad l Panipatl Patiala l Pondicherry l Porbander l Raichur l Raipur l Rajahmundry l Rajkot l Ranchi l Ratlam l Ratnagiri l Rohtakl Rourkela l Sagar l Salem l Sambalpur l Satna l Satara l Shimla l Shimoga l Siliguri l Solapur l Sri Ganganagarl Surendranagar l Tirunelveli l Tirupati l Thiruppur l Trichur l Trichy l Trivandrum l Udaipur l Valsad l Varanasi l Vashil Vellore l Yamuna Nagar l Warangal

CAMS (Collection Centres) : l Bharuch l Howrah l Karnal l Kolkatta l Mumbai l Sangli l Vizianagaram

HSBC Asset Management (India) Private LimitedRegistered Office314, D. N. Road, Fort, Mumbai 400 001.Tel.: (91) (22) 66668819. Fax : (91) (22) 40029600E-mail : hsbcmf@hsbc.co.in Website : (www.assetmanagement.hsbc.com/in)

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