issued by hsbc asset management (india) private limited€¦ · abridged annual report 2009 - 2010...

Issued by HSBC Asset Management (India) Private Limited

INDEX HSBC Equity Fund 3 HSBC Progressive Themes Fund 20 HSBC Emerging Markets Fund 37 HSBC Dynamic Fund 54 HSBC Tax Saver Equity Fund 75 HSBC India Opportunities Fund 92 HSBC Midcap Equity Fund 112 HSBC Unique Opportunities Fund 129 HSBC Small Cap Fund 149 HSBC MIP 169 HSBC Income Fund 196 HSBC Floating Rate Fund 225 HSBC Ultra Short Term Bond Fund 252 HSBC Cash Fund 273 HSBC Gilt Fund 294 HSBC Flexi Debt Fund 311 HSBC Fixed Term Series 332

Abridged Annual Report 2009 - 2010

HSBC Equity FundAn open-ended diversified equity Scheme

Equity Fund.indd 1Equity Fund.indd 1 24/07/2010 1:07:19 PM24/07/2010 1:07:19 PM

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Dear Investor,

We thank you for investing with HSBC Mutual Fund.

We are pleased to inform you that HSBC MIP – Savings Plan has been rated CPR1 by CRISIL, in the Open end MIP Aggressive Fund category, among 21 schemes, for its 2 year performance, ended March 31, 2010 (Monthly income is not assured and is subject to availability of distributable surplus). We have also been rated the top performing fund manager for a one year period, on the Employees’ Provident Fund Organisation (EPFO) mandate, which is one of the largest provident funds in India, amongst the 4 fund managers who have been provided with this mandate. (Past performance may or may not be sustained in the future and is no guarantee of future results).

At the global level, HSBC Global Asset Management continues to be one of the leading players in emerging markets with assets of USD 90 bn as at December 31, 2009. The Group continues to be committed to our asset management business in India which is a core market for the Group.

HSBC Asset Management (India) Private Limited through its mutual fund business as well as Portfolio Management Services (PMS) business (including EPFO money deployed till date) manages assets of about Rs. 40,161 Crores as at June 30, 2010.

HSBC Asset Management (India) also offers Portfolio Management Services (PMS) which aims to provide long-term wealth creation for high net-worth individuals through active portfolio management and manages mandates for large institutional clients.

The core to our winning strategy is our endeavour to deliver consistent performance over the medium to long term for our investors in a risk controlled environment and aim for consistent wealth creation under varying market conditions.

We remain committed to our philosophy of aiming for consistent wealth creation and service excellence and look forward to your continued investments in HSBC Mutual Fund.

Yours sincerely,

VikramaadityaChief Executive Offi cerHSBC Asset Management (India) Private Limited

* Please refer Ranking methodology and disclaimers mentioned at the end of the Abridged Annual Report for the year ended March 31, 2010.


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SPONSOR

HSBC Securities and Capital Markets (India) Private LimitedRegd. Offi ce: 52/60, Mahatma Gandhi Road, Fort, Mumbai 400 001.

TRUSTEEBoard of TrusteesOffi ce: 314, D. N. Road, Fort, Mumbai 400 001.

ASSET MANAGEMENT COMPANYHSBC Asset Management (India) Private LimitedCorp. & Regd. Offi ce: 314, D. N. Road, Fort, Mumbai 400 001.

CUSTODIANJP Morgan Chase Bank N.A.Corp. & Regd. Offi ce: J.P. Morgan Tower, C.T.S. No. 5435, Off CST Road,Kalina, Santacruz (East), Mumbai 400 098.

AUDITORS TO THE SCHEMEPrice WaterhouseChartered Accountants252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai – 400 028.

LEGAL ADVISORSBharucha & PartnersHague Building, Sprott Road, Ballard Estate, Mumbai – 400 001

REGISTRAR & TRANSFER AGENTSComputer Age Management Services (P) Ltd. (CAMS)Rayala Towers, Tower I, III Floor, 158 Anna Salai, Chennai – 600 002.

BOARD OF TRUSTEES

Mr. N. P. Gidwani – Chairman

Dr. Rudolf Apenbrink

Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri

Mr. Dilip J. Thakkar

BOARD OF DIRECTORS

Ms. Naina Lal Kidwai – Chairman

Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*

Ms. Kishori J. Udeshi

Mr. Vikramaaditya – Chief Executive Offi cer

* Mr. Ashok Jha has been appointed as a Director with effect from August 20, 2009 andMr. Vithal Palekar has resigned as a Director with effect from August 10, 2009.


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The Trustees present the eighth report and the audited abridged fi nancial statements of the Scheme(s) of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2010.

1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEME

a) Operations and Performance of the Scheme

HSBC Equity Fund (HEF) – an open-ended diversifi ed Equity SchemeTo generate long-term capital growth from an actively managed portfolio of equity and equity related securities. HEF offers investors two Options (1) Growth Option (2) Dividend Option. The Dividend Option offers Dividend Payout and Dividend Reinvestment Facilities.

The net assets of HEF amounted to Rs. 1382.78 crores as at March 31, 2010 as against Rs.1092.07 crores as at March 31, 2009. Around 98.30% of the net assets were invested in equities, 2.45% of the net assets were invested in reverse repos / CBLO and (0.75)% were invested in net current assets as at March 31, 2010.

HEF’s approach is to invest across a range of market capitalizations with a preference for medium and large companies. Income is not a primary consideration in the investment policies of HEF.

HEF underperformed over the past 1 year on a defensive portfolio and relatively higher level of cash in a market that rose signifi cantly. Longer term performance has been in line with benchmarks.

Date of Inception: 10 December, 2002 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception

HSBC Equity Fund – Growth 58.42 11.97 21.37 36.13

BSE 200 92.87 12.19 20.44 26.92

Returns data as on March 31, 2010.

Past performance may or may not be sustained in future. ‘Since inception’ returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs.

b) Market Overview & Outlook

MARKET OVERVIEW(as furnished by HSBC Asset Management (India) Private Limited)

Equity Market OverviewThe fi nancial year ended 31st March, 2010 turned out to be equally eventful as last year. The main difference between the two being that last year marked lot of negative events for the equity markets globally while FY10 was a very positive one with positive events both at global and domestic level for India. Globally, we saw the fi scal / monetary stimuli by various governments to take the credit crisis head on continue thereby leading to economic improvement in most parts of the world. And domestically, we saw the United Progressive Alliance (UPA) sweeping victory in the central elections thereby ensuring stability, policy continuity, and a great degree of space to implement reforms. With the fragmented nature of the opposition leaving it too weak to deter the reform process, everyone expected to see a boost to investment growth and policy initiatives thereby leading to an upward bias to growth. The second budget from the present government continues to underpin on its key focus areas of infrastructure and social sector spending.

For the fi nancial year 2009-2010, BSE SENSEX was up by 80.5%. The BSE Midcap was up by 130.2% and the broader indices like BSE 200, 96.3% and BSE 500, 99.8% also refl ected the sharp up move across the markets.

Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the

Trustees’ ReportFor the year ended March 31, 2010


4

world. And hence there is a fear that this might de-rail the recovery process what we are witnessing over the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.

In another important event, we saw S&P revise its outlook on India’s long-term sovereign credit rating to stable from negative. It affi rmed its ‘BBB-’ long-term and ‘A-3’ short-term sovereign credit ratings on India. The outlook upgrade driven by consolidation in fi scal defi cit and strong growth.

Debt Market OverviewBond yields rose for most of the fi nancial year 2009-2010 as market was hit by a huge borrowing calendar of the government. This was a consequence of the fi scal expansion that was undertaken since 2008 to enhance public expenditure in the face of the global crisis that had hit the economy. Supply fatigue soon set into the market, leading to a gradual rise in bond yields over the year. Domestic economic data started to improve towards late calendar year thus further curbing appetite for bonds. 10 year benchmark sovereign yield rose approximately 80 bps over the fi scal.

System liquidity remained abundant for most of the year on the back of aggressive cuts in Cash Reserve Ratio (CRR) undertaken by the RBI between October 2008 – January 2009. Liquidity was also aided by the open market purchases of government bonds by the RBI done between December 2008 – September 2009. Consequently, system liquidity as measured by excess balances parked by banks under the RBI liquidity adjustment facility (LAF) window averaged approximately INR 100,000 crores during the fi scal. Consequently, short end rates rallied by 150 – 200 bps over the fi scal. Sentiment on short end rates was further aided by the RBI’s stated intention of a ‘calibrated’ exit from the monetary policy accommodation put in place late 2008. It hiked CRR by 75 bps in the policy review in January 2010 and repo, reverse repo rates by 25 bps each in March 2010.

MARKET OUTLOOK(as furnished by HSBC Asset Management (India) Private Limited)

Equity Market OutlookFinancial Year (FY) 2009-10 was a year marked by most of the governments and Central banks around their world doing their best to enable the economies to come out of the sub-prime crisis that had led to credit market freezing and recessionary conditions in developed nations and slowdown in emerging economies. And these efforts led to slow and gradual improvement in the economic recovery process with growth in emerging economies picking up sharply even though the developed economies continued to improve slowly. But over the last few months, we saw the Greek crisis become bigger which eventually culminated in a ~1 trillion Euros headline package by the European Union and International Monetary Fund to support fi scally strained Euro Area member countries, all of which comes with severe austerity measures, has once again brought to the fore issues regarding defi cits and debt sustainability. This led to enormous uncertainty and nervousness in all the asset markets globally thereby leading to contraction in the investors risk appetite. So now apart from concerns on China’s overheated property market focus shifted to the Euro region uncertainty. So overall the next year is going to be very crucial with respect to the direction of the economic environment amidst all this uncertainty.

In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP for FY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons and industry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growth in FY09. India remains a supply-constrained and capital-starved economy with signifi cant latent unmet demand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robust domestic demand, driven by private consumption and investment, may be complemented by improving external demand. The key to track will be the strength of the upturn in the investment cycle. Even though there are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a more gradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed the economic downturn exceptionally well, and is doing the right things to position growth at an elevated level without either fuelling a sustained rise in infl ation or pushing the banks to lend more aggressively. Fiscal consolidation will be credible as the government has little choice but to begin the much-needed process of fi scal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure, infrastructure building and domestic consumption are still intact. The key concerns at this point stem from the uncertainty in the developed economies and any fallout of the same on India and the domestic infl ations which seems to be very high.

The next fi nancial year 2010-2011 is likely to be one where specifi c sectors and company performances may be much better than broader market indices. The challenge will be to pick these stocks and sectors

Trustees’ ReportFor the year ended March 31, 2010 (Contd...)


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ahead of the market. Given that markets valuations have come off the trough seen in early March 2009 with the markets now trading at valuations of around 15-16X FY2011 earnings, in the near term we expect markets to enter a phase of consolidation.

Debt Market OutlookThe interest rate view for the year ahead is set against the following backdrop:

l Domestic non agricultural growth has rebounded sharply led by manufacturing over last 2 quarters. While this has been helped by the fi scal and monetary stimulus in place since early last year, the last few months are showing defi nitive signs of pick up in private sector momentum as well.

l Infl ation has surged largely on the back of rise in food prices. However, with a manufacturing rebound underway demand side pressures are rapidly building. Recent fall in commodity prices, if sustained, along with expectation of normal monsoons domestically may be incrementally benefi cial for supply side infl ation.

l Even after 2 rate hikes of 25 bps each in March and April 2010, current real policy rates of the Reserve Bank of India (RBI) are signifi cantly negative. However, the central bank is showing a decided bias towards ‘calibrated’ rate hikes.

l The recent European crisis has led to weakness in asset markets and a drop in commodity prices globally. Even though domestic rebound remains strong, international linkages from trade, fi nance, and portfolio fl ows have made policy makers more watchful in the near term.

l Gross market borrowing for FY 2010-11 is pegged at INR 4,57,000 crores versus INR 4,51,000 crores in 2009-10. A few demand-supply dynamics for government securities are as follows:

l Demand for government bonds may not be as strong in the year ahead given rising infl ation, lower liquidity, expectations of policy rate rise and relatively better credit growth. However, demand may improve if the European situation were to cause a signifi cant change in market’s growth versus infl ation expectations.

l Absence of RBI OMO and MSS de-sequestering imply that net supply of government securities to the market will be higher than last year by almost INR 1,00,000 crores.

l 3G + BWA auctions may result in more than 3 times budgeted proceeds for GoI. While prospects of additional expenditures (particularly on subsidy) remain, there are tentative expectations of some reduction in second half borrowing.

Overall, while suffi cient risks remain to bond yields, some factors as discussed above have turned bond positive. These, if sustained, could ensure against a very sharp rise in yields thus providing opportunities for select duration plays. Moreover, if market were to get more comfort that the government’s fi scal defi cit would progressively reduce in the year ahead, some of the so-called ‘supply premium’ that has been built on the curve since last year may begin to unwind thus leading to softening of yields later in the year. Also, given that system liquidity is expected to progressively reduce going into the October – December 2009 quarter, we expect the curve to start to fl atten thereon.

2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANYa) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI). The

Sponsor is the Settlor of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.

HSCI is a member of the HSBC Group, one of the largest banking and fi nancial services organisations, in the world. Headquartered in London, HSBC operates through long-established businesses in fi ve regions: Europe, Asia-Pacifi c region, Middle East, America and Africa. Through its global network of some 10,000 offi ces in 83 countries and territories, HSBC provides a comprehensive range of fi nancial services to personal, commercial, corporate, institutional and investment and private banking clients.

HSCI offers integrated investment banking services, securities and corporate fi nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments) and is also a category I merchant banker registered with Securities and Exchange Board of India.

HSCI holds 100% of the paid-up equity share capital of the AMC.



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b) HSBC Mutual Fund HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance

with the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (the AMC) to function as the Investment Manager for all the Schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.

The Trust has been formed for the purpose of pooling of capital from the public for collective investment in securities / any other property for the purpose of providing facilities for participation by persons as benefi ciaries in such properties / investments and in the profi ts / income arising therefrom.

c) Board of Trustees (the Trustees) The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the

benefi t of the unitholders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the Schemes fl oated thereunder are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.

d) Asset Management Company (the AMC) HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private

limited company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 314, D. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide. its letter No. MFD/BC/163/2002 dated May 27, 2002.

The paid-up equity share capital of the AMC is Rs. 9 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.

3. INVESTMENT OBJECTIVE OF THE SCHEMEThe investment objective of the Scheme has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (refer Section 1).

4. SIGNIFICANT ACCOUNTING POLICIESThe accounting policies are in accordance with Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.

5. UNCLAIMED DIVIDENDS & REDEMPTIONS

Summary of number of Investors & corresponding amount as on 31 March 2010

SchemeUnclaimed Dividends Unclaimed Redemptions

Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Equity Fund 2,779,078 617 1,696,434 50

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days



7

from the record date in all schemes. The internal standards on redemption payouts have been consistently met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.

On the distribution front, the number of empanelled distributors increased from 8632 as on 31 March, 2009 to 8859 as of 31 March, 2010. During the year, the Asset Management Company initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 32 (Angel Capital & Dept Market Ltd, Bajaj Capital Ltd, Bonanza Portfolio Ltd., CITIBANK NA, Citigroup Wealth Advisors India Private Limited, DawnayDay AV India Advisors Pvt.Ltd., HDFC Bank Ltd., Hongkong & Shanghai Banking Corporation Ltd., HSBC Corporate Investment Solution Services, ICICI Securities Limited, iFAST Financial India Pvt.Ltd., INDIA INFOLINE LTD., IndusInd Bank Limited, ING Vysya Bank Ltd., Karvy Stock Broking Ltd., Kotak Mahindra Bank Limited, Kotak Securities Limited, Motilal Oswal Securities Limited, NJ India Invest Pvt. Ltd., Reliance Securities Limited, Religare Securities Limited, RR Investors Capital Services Pvt. Ltd., SBICAP Securities Ltd., Sharekhan Limited, Shriram Insight Share Brokers Ltd., SMC Global Securities Limited, Standard Chartered - STCI Capital Markets Ltd., Standard Chartered Bank, Tom Distribution Services Ltd., Yes Bank Limited, IDBI Capital Market Services Ltd., JRG Securities Limited).

Call centre operations have been extended to cover the entire country. The Asset Management Company has outsourced certain back offi ce services including call Centre Services to HSBC Operations and Processing Enterprise (India) Private Limited (HOPE).

7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during 2009-2010 are as follows:

Total Number of Folios: 5,22,334

Comp-laintCode

Type of complaint #

(a) No. of complaints

pending at the

beginning of the year

(b) No. of complaints

received during the

year

Action on (a) and (b)

Resolved Non Actio-nable*

Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months

I A Dividend on Units

1 61 62 0 0 0 0 0 0 0 0

I B Interest on delayed payment of Dividend

0 0 0 0 0 0 0 0 0 0 0

I C Redemption Proceeds

2 57 59 0 0 0 0 0 0 0 0

I D Interest on delayed payment of Redemption

0 0 0 0 0 0 0 0 0 0 0

II A Non receipt of statement of account/ Unit Certifi cate

0 101 101 0 0 0 0 0 0 0 0

II B Discrepancy in Statement of Account

0 0 0 0 0 0 0 0 0 0 0

II C Non receipt of Annual Report/Abridged Summary

0 0 0 0 0 0 0 0 0 0 0

III A Wrong Switch between schemes

0 0 0 0 0 0 0 0 0 0 0



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Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months

III B Unauthorised switch between schemes

0 0 0 0 0 0 0 0 0 0 0

III C Deviation from Scheme attributes

0 3 3 0 0 0 0 0 0 0 0

III D Wrong or excess charges/load

0 1 1 0 0 0 0 0 0 0 0

III E Non updation of changes viz. address, PAN, bank details, nomination etc.

0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0

Note:# including against its authorised persons/distributors/employees, etc.* Non actionable means the complaint which is pending/outside the scope of the mutual fund**includes correction in investor details

8. STATUTORY DETAILSa) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of

the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.b) The price and redemption value of the units, and income from them, can go up as well as down with

fl uctuations in the market value of its underlying investments.c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall

be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the trust deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.

9. ACKNOWLEDGEMENTSThe Trustees wish to thank the Unit holders of the Schemes for their support throughout the year and also thank the Government of India, the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and the Association of Mutual Funds in India (AMFI) for the guidance provided by them. The Trustees also appreciate the service provided by the Registrar and Transfer Agent, Fund Accountant, Custodian, Bankers, Distributors and Brokers. The guidance and services provided by the Auditors and advocates and the ebullience, sincerity and dedication of the employees of HSBC Asset Management (India) Private Limited is also appreciated.

The Trustees look forward to the continued support of everyone.

For and on behalf of the Board of Trustees of HSBC Mutual Fund

Sd/-N. P. GidwaniChairman

MUMBAI

July 20, 2010


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Auditors’ Report

To the Board of Trustees of

HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Equity Fund (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet, Revenue Account and Cash Flow Statement referred to above are in agreement with the books of account of the Scheme.

4. In our opinion and to the best of our information and according to the explanations given to us,

i. The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Equity Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.

ii. The Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.

For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants

Sd/-

Vivek PrasadPartnerMembership No. F-104941

Place : Mumbai Date : July 20, 2010


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Abridged Balance Sheet as at March 31, 2010

Rs. in Lakhs

HSBC EQUITY FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 33,754.33 39,846.26

2 Reserves & Surplus2.1 Unit Premium Reserves (4,983.57) 2,119.082.2 Unrealised Appreciation Reserve 33,567.40 22.032.3 Other Reserves 75,939.39 67,221.65

3 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 2,810.45 1,337.52

TOTAL 141,088.00 110,546.55

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 131,631.74 85,046.831.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –

Total Investments 131,631.74 85,046.83

2 Deposits 4,506.03 6,256.03

3 Other Current Assets3.1 Cash & Bank Balance 55.26 214.243.2 CBLO / Reverse Repo Lending 3,384.73 16,548.573.3 Others 1,510.24 2,480.884 Deferred Revenue Expenditure – –

(to the extent not written off)

TOTAL 141,088.00 110,546.55

Notes to Accounts – Annexure I


11

Rs. in Lakhs

HSBC EQUITY FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 1,581.76 1,130.001.2 Interest 470.71 1,426.941.3 Realised Gain / (Loss) on Foreign Exchange Transactions (10.65) –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of

investments25,786.64 (28,846.88)

1.6 Realised Gains / (Losses) on Derivative Transactions 56.53 1,828.551.7 Other Income 29.70 –

(A) 27,914.69 (24,461.39)

2 EXPENSES2.1 Management fees 1,509.09 697.592.2 Service tax on Management fees** – –2.3 Transfer agents fees and expenses 244.62 215.562.4 Custodian fees 62.63 58.332.5 Trusteeship fees 1.35 0.452.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 828.04 1,205.762.8 Audit fees 7.00 5.502.9 Other operating expenses 248.60 20.45

(B) 2,901.33 2,203.64

3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 25,013.36 (26,665.03)

4 Change in Unrealised Depreciation invalue of investments (D) (4,894.10) 16,683.17

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 29,907.46 (43,348.20)

6 Change in unrealised appreciation inthe value of investments (F) 33,545.37 –

7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 63,452.83 (43,348.20)

7.1 Add: Balance transfer from Unrealised Appreciation Reserve – –

7.2 Less: Balance transfer toUnrealised Appreciation Reserve 33,545.37 –

7.3 Add / (Less): Equalisation (13,771.15) 31,164.97

8 TOTAL 16,136.31 (12,183.23)

9 Dividend appropriation

9.1 Income Distributed during the year 7,418.57 0.259.2 Tax on income distributed during the year – –10 Retained Surplus / (Defi cit)

carried forward to Balance Sheet 8,717.74 (12,183.48)


* Commission to Agents is included in Marketing & Distribution Expenses.** Service Tax on Management Fees is included in Other Operating Expenses.

Abridged Revenue Account for the year ended March 31, 2010


12

HSBC EQUITY FUNDCurrent

Year endedMarch 31, 2010

PreviousYear ended

March 31, 20091. NAV per unit (Rs.): Open Regular Growth Option 60.1737 88.3814 Regular Dividend Option 18.8099 27.6286 High Regular Growth Option 96.0978 97.1612 Regular Dividend Option 29.4924 30.3743 Low Regular Growth Option 60.6698 52.9573 Regular Dividend Option 18.9650 16.5549 End Regular Growth Option 95.3300 60.1737 Regular Dividend Option 27.2661 18.80992. Closing Assets Under Management (Rs. in Lakhs) End 138,278 109,209 Average (AAuM)1 148,727 108,7933. Gross income as % of AAuM2 18.77% -22.48%4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 1.95% 2.03% Regular Dividend Option 1.95% 2.03% b. Management Fee as % of AAuM (planwise) Regular Growth Option 1.01% 0.64% Regular Dividend Option 1.01% 0.64%5. Net Income as a percentage of AAuM3 16.82% -24.51%6. Portfolio turnover ratio4 1.28 1.107. Total Dividend per unit distributed during the year (planwise) Retail Regular Dividend Option 2.50 – Corporate Regular Dividend Option 2.50 –8. Returns (%): a. Last One Year Scheme Regular Growth Option 58.4247 (31.9159) Regular Dividend Option 58.4242 (31.9190) Benchmark BSE 200 92.8700 (40.9800) b. Since Inception Scheme Regular Growth Option 36.1335 32.9007 Regular Dividend Option 36.1895 32.9640 Benchmark BSE 200 26.9200 18.78001 AAuM = Average daily net assets2 Gross income = amount against (A) in the Revenue Account i.e. Income.3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.

Key Statistics for the year ended March 31, 2010


13

HSBC EQUITY FUND

1 Investments: 1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the

benefi t of the Scheme’s unitholders.

1.2. Open Positions of derivatives amount to Rs. 417,045,564 and is 3.02% to Net Assets as of year ended March 31, 2010. Open Positions of derivatives amount to Rs. (123,697,400) and is 1.13% to Net Assets as of year ended March 31, 2009.

1.3. Investments in Associates and Group Companies:

Issuer Instrument Type

Amount(Rs.)

Aggregate Investments

by all schemes

Amount(Rs.)


by all schemes

2010 2009

The Hongkong & Shanghai Banking Corporation Limited

Fixed deposits 430,000,000 1,018,000,000 – 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2010 and March 31, 2009 is NIL.

1.5. NPAs as at years ended March 31, 2010 and March 31, 2009 are NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year 2009-2010 and percentage to net assets are as under:

Company Name Amount(Rs.)

Percentage to Net Assets

Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 3,511,447,614 25.3942% 419,474,916 3.8410%

– Depreciation 154,707,444 1.1188% 921,216,805 8.4354%

Equity Futures

– Appreciation 4,260,464 0.0308% 2,218,589 0.0203%

– Depreciation 16,591,918 0.1200% 15,363 0.0001%

1.7. The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 710,496) and sold during the fi nancial year 2009-2010 is Rs. 12,919,307,271 and Rs. 14,698,914,601 respectively being 86.87% and 98.83% of the average daily net assets.

The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 14,024,158) and sold during the fi nancial year 2008-2009 is Rs. 20,051,454,038 and Rs. 15,984,411,730 respectively being 184.31% and 146.93% of the average daily net assets.

1.8. Non-Traded securities in the portfolio as on March 31, 2010 and March 31, 2009 is Nil.

2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.

During the year 2009-10, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 118,354 and clearing member charges on derivative transactions amounting to Rs. 1,745,886.

During the year 2008-09, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 39,751 and clearing member charges on derivative transactions Rs. 2,429,235.

Notes to Accounts – Annexure ITo the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2010


14

Commission paid to Sponsor / AMC and its associates / related parties / group companies

Name of Sponsor /AMC and its associates / related parties / group companies

Nature of Association /

Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business

received by the Fund

Commission paid[Rs.]

% of Total commission paid by the

Fund

The Hongkong and Shanghai Banking Corporation Limited

Associate 2009 - 2010 154.25 28.82 55,132,417 32.27

HSBC InvestDirect Securities (India) Limited

Associate 2009 - 2010 1.01 0.19 526,980 0.31



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008 - 2009 224.05 10.03 71,596,880 10.65

Brokerage paid to Sponsor / AMC and its associates / related parties / group companies



Nature of relation

Period Covered

Value of Transactions

[Rs. in Crores]

% of total value of

transactionof the Fund

Brokerage paid[Rs.]

% of total brokerage paid by the

Fund

HSBC Securities and Capital Market (India) Private Limited

Sponsor 2009 - 2010 123.77 2.70 922,708 1.63



Nature of Relation

Period Covered


[Rs. in Crores]

% of Total Value of

Transactions of the Fund

Brokeragepaid[Rs.]

(on accrual basis)

% of Total brokerage paid by the

Fund


Associate 2008 - 2009 5.14 0.09 102,367 0.16


Sponsor 2008 - 2009 222.09 4.09 1,993,781 3.17

The brokerage paid was at rates similar to those offered to other brokers / distributors.

3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2010 and March 31, 2009.

Notes to Accounts – Annexure I (Contd...)To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2010


15


4 Unit Capital movement during the years ended March 31, 2010 and March 31, 2009.

Description2009-2010

Opening Units Subscription Redemption Closing Units Face Value

Regular Growth Option

82,822,603.543 31,106,227.231 45,988,828.816 67,940,001.958 679,400,020

Regular Dividend Option

315,640,026.026 105,492,570.593 151,529,305.054 269,603,291.565 2,696,032,916




47,671,381.108 54,767,475.116 19,616,252.681 82,822,603.543 828,226,035


230,018,561.715 146,706,869.491 61,085,405.180 315,640,026.026 3,156,400,260

5 Previous years fi gures have been re-grouped / re-arranged where necessary.

6 No contingent liabilities for the years ended March 31, 2010 and March 31, 2009.

7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.

8 Other income includes exit load collected in excess of 1% of redemption proceeds credited to the Scheme and provision for expenses written back as no longer required.

9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 20, 2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No.IMD/Cir8/132968/2008 dated July 24, 2008.


16

DISCLAIMERSThis content of this report has been prepared by HSBC Asset Management (India) Private Limited (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. The information is for general information only and does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this information. Investments in mutual funds inherently involve risks and investors should read the relevant documents / information for details and risk factors and consult their legal, tax and fi nancial advisors before investing. Investors should understand that statements made herein regarding future prospects may not be realised. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

Investors may obtain Statement of Additional Information, Scheme Information Document and Key Information Memorandums along with application forms from the offi ce of HSBC Mutual Fund, 314 D. N. Road, Fort, Mumbai 400 001. Tel: 022-6666 8819.

Statutory Details: HSBC Mutual Fund has been set up as a trust by HSBC Securities and Capital Markets (India) Private Limited (liability restricted to the corpus of Rs. 1 lakh). The Sponsor / associates of the Sponsor / Asset Management Company (AMC) are not responsible or liable for any loss or shortfall resulting from the operation of the Schemes. The Trustees of HSBC Mutual Fund have appointed HSBC Asset Management (India) Private Limited as the Investment Manager.

Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Equity Fund (HEF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.

Terms of Issue: Units of the Scheme(s) are being offered at NAV based prices, subject to the prevailing loads. The AMC calculates and publishes NAVs and offers for sale, redemption and switch outs, units of the Scheme(s) on all Business Days, at the Applicable NAV for all Schemes (at least once a week, i.e., every Wednesday and daily during the period of redemption in case of HSCF). HSCF & HFTS will not be open for ongoing subscriptions / switch-ins. HSCF would be available for sale on an ongoing basis (after a period of 3 years from the date of allotment). Conversion of HSCF to an open-ended scheme will be done only after the balance unamortized amount has been fully recovered from the Scheme. Units can be redeemed / switched out on every Business Day at NAV based prices, subject to prevailing exit loads. In case of HSCF, units can be redeemed / switched-out on a monthly basis on the stipulated date i.e. last 3 Business Days of every month at NAV based prices, subject to provisions of exit load, if any, and recovery of balance proportionate unamortized NFO expenses.

Load Structure (includes SIP/STP, where applicable):Exit: 1% - if redeemed / switched out* within 1 year from date of investment; Otherwise Nil.

*No load in case of switches between equity Schemes of HSBC Mutual Fund.

Consult the nearest investor service centre for details. The applicable exit loads (if any) at the time of allotment of the Schemes of HSBC Mutual Fund shall also be charged on investments made by all investors. Bonus units and units issued on reinvestment of dividends shall not be subject to exit load.

The exit load set forth above is subject to change at the discretion of the AMC and such changes shall be implemented prospectively.

Mutual Fund investments are subject to market risks. Read the Scheme Information Document and Scheme Additional Information carefully before investing.

CRISIL Ranking MethodologyCRISIL~CPR 1 Open End MIP Aggressive Schemes, March 2010 *CRISIL~CPR 1 – The composite performance of HSBC MIP - Savings is “Very Good” in the Open End MIP Aggressive Fund Category, and ranks within the top 10% of the 21 schemes ranked in this category. The criteria used in computing the CRISIL Composite Performance Rank are Superior Return Score, based on NAVs over the 2-year period ended March 31, 2010, Concentration, Liquidity, Asset Quality and Average Maturity of the scheme. The methodology does not take into account the entry and exit loads levied by the scheme. The CRISIL CPR is no indication of the performance that can be expected from the scheme in future. Ranking Source: CRISIL FundServices, CRISIL Limited.



HSBC Progressive Themes FundAn open-ended flexi-theme equity Scheme

Progressive Themes Fund.indd 1Progressive Themes Fund.indd 1 24/07/2010 1:10:06 PM24/07/2010 1:10:06 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Progressive Themes Fund (HPTF) – an open-ended fl exi-theme Equity SchemeHPTF seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities by investing primarily in sectors, areas and themes that play an important role in, and / or benefi t from, India’s progress, reform process and economic development.

The net assets of HPTF amounted to Rs. 391.28 crores as at March 31, 2010 as compared to Rs. 357.55 crores as at March 31, 2009. Around 95.84% of the net assets were invested in equities, 1.74% of the net assets were invested in reverse repos / CBLO were invested in reverse repos / CBLO and 2.42% were invested in net current assets as at March 31, 2010.

HPTF underperformed last year on being invested in consumption oriented themes. This was changed w.e.f August 2009 towards economic reforms and infrastructure oriented sectors post the electoral outcome.

Date of Inception: 23 February, 2006 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years Since Inception

HSBC Progressive Themes Fund – Growth 55.85 3.38 6.55

BSE 200 92.87 12.19 14.12

Returns data as on March 31, 2010.Past performance may or may not be sustained in future. ‘Since inception’ returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs.





Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the world. And hence there is a fear that this might de-rail the recovery process what we are witnessing over the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.



4







The next fi nancial year 2010-2011 is likely to be one where specifi c sectors and company performances may be much better than broader market indices. The challenge will be to pick these stocks and sectors ahead of the market. Given that markets valuations have come off the trough seen in early March 2009 with the markets now trading at valuations of around 15-16X FY2011 earnings, in the near term we expect markets to enter a phase of consolidation.



5

Debt Market Outlook

The interest rate view for the year ahead is set against the following backdrop:










2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANYa) Sponsor

HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI). The Sponsor is the Settlor of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.






6














Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Progressive Themes Fund 814,640 401 1,409,876 86

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently



7

met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.





Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010


9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Progressive Themes Fund (Formerly HSBC Advantage India Fund) (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian / others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


4. In our opinion and to the best of our information and according to the explanations given to us;

(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Progressive Themes Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.


Sd/-




10


Rs. in Lakhs

HSBC PROGRESSIVE THEMES FUND(Formerly, HSBC Advantage India Fund)

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 32,633.73 46,572.80

2 Reserves & Surplus2.1 Unit Premium Reserves (24,803.48) (21,788.97)2.2 Unrealised Appreciation Reserve 6,517.15 6.06 2.3 Other Reserves 24,812.55 10,965.28

3 Loans & Borrowings – –

4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – – 4.2 Other Current Liabilities & Provisions 719.06 656.75

TOTAL 39,879.01 36,411.92

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 35,899.96 28,504.02 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – – 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – – 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits – – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –


2 Deposits 1,650.00 3,162.50 3 Other Current Assets3.1 Cash & Bank Balance 38.16 28.74 3.2 CBLO / Reverse Repo Lending 680.08 3,291.64 3.3 Others 1,526.69 1,208.12

4 Deferred Revenue Expenditure 84.12 216.90 (to the extent not written off)

TOTAL 39,879.01 36,411.92



11

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 429.59 483.28 1.2 Interest 131.86 453.63 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme sale of investments – 0.18 1.5 Realised Gains / (Losses) on External sale / redemption of

investments8,963.10 (21,835.57)

1.6 Realised Gains / (Losses) on Derivative Transactions 49.71 453.39 1.7 Other Income 0.46 –

(A) 9,574.72 (20,445.09)

2 EXPENSES2.1 Management fees 458.91 484.42 2.2 Service tax on Management fees ** – – 2.3 Transfer agents fees and expenses 72.22 99.75 2.4 Custodian fees 16.45 29.06 2.5 Trusteeship fees 0.38 0.21 2.6 Commission to Agents * – – 2.7 Marketing & Distribution expenses 338.76 384.25 2.8 Audit fees 6.60 5.50 2.9 Other operating expenses 209.10 253.83

(B) 1,102.42 1,257.02

3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 8,472.30 (21,702.11)

4 Change in Unrealised Depreciation in value of investments (D) (4,115.64) 4,115.64


6 Change in unrealised appreciation inthe value of investments (F) 6,511.09 (2,088.22)


7.1 Add: Balance transfer fromUnrealised Appreciation Reserve – 2,088.22

7.2 Less: Balance transfer to Unrealised Appreciation Reserve 6,511.09 – 7.3 Add / (Less): Equalisation 1,259.33 (84.87)7.4 Transfer from Reserve Fund – 17,246.54 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL 13,847.27 (8,656.08)

9 Dividend Appropriation

9.1 Income Distributed during the year – 2,681.85 9.2 Tax on income distributed during the year – – 10 Retained Surplus / (Defi cit)


Notes to Accounts – Annexure I* Commission to Agents is included in Marketing & Distribution Expenses.** Service Tax on Management Fees is included in Other Operating Expenses.



12


Current Year endedMarch 31, 2010

Previous Year endedMarch 31, 2009

1. NAV per unit (Rs.): Open Regular Growth Option 8.3228 14.5446 Regular Dividend Option 7.0792 13.3555 High Regular Growth Option 13.5597 15.8630 Regular Dividend Option 11.5335 14.5658 Low Regular Growth Option 8.3959 7.4998 Regular Dividend Option 7.1414 6.3796 End Regular Growth Option 12.9811 8.3228 Regular Dividend Option 11.0414 7.0792 2. Closing Assets Under Management (Rs. in Lakhs) End 39,160 35,755 Average (AAuM)1 44,048 49,971 3. Gross income as % of AAuM2 21.74% -40.91%4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 2.20% 2.22% Regular Dividend Option 2.20% 2.22% b. Management Fee as % of AAuM (planwise) Regular Growth Option 1.04% 0.97% Regular Dividend Option 1.04% 0.97%5. Net Income as a percentage of AAuM3 19.24% -43.43%6. Portfolio turnover ratio4 1.41 1.34 7. Total Dividend per unit distributed during the year (planwise) Retail Regular Dividend Option – 1.00 Corporate Regular Dividend Option – 1.00 8. Returns (%): a. Last One Year Scheme Regular Growth Option 55.8478 (42.7774) Regular Dividend Option 55.8467 (42.8257) Benchmark BSE 200 92.8700 (40.9800) b. Since Inception Scheme Regular Growth Option 6.5478 (5.7477) Regular Dividend Option 6.5243 (5.7750) Benchmark BSE 200 14.1200 (3.6400)1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.



13

HSBC PROGRESSIVE THEMES FUND (Formerly, HSBC Advantage India Fund)



1.2. Open Positions of derivatives amount to Rs. 292,171,950 and 7.46% to Net Assets as of year ended March 31, 2010. Open Positions of derivatives amount to Rs. (32,362,600) and 0.91% to Net Assets as of year ended March 31, 2009.

1.3. Investments in Associates and Group Companies (Rupees)


Amount Aggregate Investments

by all schemes


by all schemes

2010 2009


Fixed deposits 160,000,000 1,018,000,000 – 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the scheme as of the years ended March 31, 2010 and March 31, 2009 is NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year 2009-2010 and percentage to net assets are as under:



Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 698,236,771 17.8304% 78,574,286 2.1976%

– Depreciation 50,277,699 1.2839% 490,138,560 13.7082%

Equity Futures

– Appreciation 7,092,309 0.1811% 610,412 0.0171%

– Depreciation 3,336,168 0.0852% 3,982 0.0001%

1.7. The aggregate value of investments securities purchased and sold (including matured) during the fi nancial year 2009-2010 is Rs. 4,484,625,154 and Rs. 5,700,864,079 respectively being 101.81% and 129.42% of the average daily net assets.

The aggregate value of investments securities purchased (excluding accretion of discount ofRs. 667,794) and sold (including matured) during the fi nancial year 2008-2009 is Rs. 7,016,898,573 and Rs. 7,575,919,895 respectively being 140.42% and 151.61% of the average daily net assets.

1.8. Non-Traded securities in the portfolio:

Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is Nil.


During the year 2009-2010, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs.15,434 and clearing member charges on derivative transactions amounting to Rs. 328,519.

Notes to Accounts – Annexure I To the Abridged Balance Sheet and Revenue Account for the year ended March 31, 2010


14

During the year 2008-2009, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 1,220,316, and clearing member charges on derivative transactions Rs. 2,493.

Details of amounts paid to associates in terms of Regulation 25 (8) are as follows :




Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009-2010 7.27 17.92 5,828,905 19.66


Associate 2009-2010 – – 69,317 0.23

Name of Sponsor /AMC and its associate / related parties / group companies


Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008-09 8.53 17.90 7,252,023 6.95




Nature of relation

Period Covered


[Rs. in Crores]

% of total value of

transaction of the Fund

Brokerage paid[Rs.]


Fund


Sponsor 2009-2010 50.35 3.62 642,935 3.07



Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]

(on accrual basis)


Fund


Associate 2008-2009 3.70 0.14 73,827 0.24


Sponsor 2008-2009 78.66 2.89 792,780 2.56




15

Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.

3 None of the Investors held more than 25% of the total net assets of the scheme at the year ended March 31, 2010 and March 31, 2009.

4 Unit Capital movement during the Years ended March 31, 2010 and March 31, 2009.

Description2009 – 2010



223,981,981.866 15,638,871.735 78,374,072.268 161,246,781.333 1,612,467,813


241,745,992.961 21,340,849.708 97,996,318.076 165,090,524.593 1,650,905,245




236,466,762.306 25,953,833.730 38,438,614.170 223,981,981.866 2,239,819,819


275,824,146.002 19,656,412.037 53,734,565.078 241,745,992.961 2,417,459,930

5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.



8 Other income represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme.

9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 20, 2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.



16




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Progressive Themes Fund (HPTF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.










HSBC Emerging Markets FundAn open-ended Scheme

Emerging Markets Fund.indd 1Emerging Markets Fund.indd 1 26/07/2010 4:03:40 PM26/07/2010 4:03:40 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Emerging Markets Fund (HEMF) - an open-ended SchemeHEMF seeks to provide long term capital appreciation by investing in India and in the emerging markets, in equity and equity related instruments, share classes and units / securities issued by overseas mutual funds or unit trusts. The fund may also invest a limited proportion in debt and money market instruments.

The net assets of HEMF amounted to Rs. 87.09 crores as at March 31, 2010 compared to Rs. 84.59 crores as at March 31, 2009. Around 98.70% of the net assets were invested in HSBC GEM Equity Fund (overseas mutual fund), 3.57% of the net assets were invested in reverse repos / CBLO and (2.26)% were invested in net current assets as at March 31, 2010.

HEMF underperformed its benchmark by about 500 bps over the past 1 year period.

Date of Inception: 17 March, 2008 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year Since Inception

HSBC Emerging Markets Fund – Growth 48.85 (3.44)

MSCI Emerging Markets Index 54.67 0.16










4










5

Debt Market Outlook


















6











5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil.

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.

On the distribution front, the number of empanelled distributors increased from 8632 as on 31 March, 2009 to 8859 as of 31 March, 2010. During the year, the Asset Management Company initiated tie-ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 32 (Angel Capital & Dept Market Ltd, Bajaj Capital Ltd, Bonanza Portfolio Ltd., CITIBANK



7

NA, Citigroup Wealth Advisors India Private Limited, DawnayDay AV India Advisors Pvt.Ltd., HDFC Bank Ltd., Hongkong & Shanghai Banking Corporation Ltd., HSBC Corporate Investment Solution Services, ICICI Securities Limited, iFAST Financial India Pvt.Ltd., INDIA INFOLINE LTD., IndusInd Bank Limited, ING Vysya Bank Ltd., Karvy Stock Broking Ltd., Kotak Mahindra Bank Limited, Kotak Securities Limited, Motilal Oswal Securities Limited, NJ India Invest Pvt. Ltd., Reliance Securities Limited, Religare Securities Limited, RR Investors Capital Services Pvt. Ltd., SBICAP Securities Ltd., Sharekhan Limited, Shriram Insight Share Brokers Ltd., SMC Global Securities Limited, Standard Chartered - STCI Capital Markets Ltd., Standard Chartered Bank, Tom Distribution Services Ltd., Yes Bank Limited, IDBI Capital Market Services Ltd., JRG Securities Limited).




Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010


9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Emerging Markets Fund (“The Scheme”) as at March 31, 2010 and the related Revenue Account for the year ended March 31, 2010, both of which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. The Balance Sheet and Revenue Account referred to above are in agreement with the books of account of the Scheme.

4. In our opinion and to the best of our information and according to the explanations given to us;

(i) The Balance Sheet and Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Emerging Markets Fund as at March 31, 2010 and its net surplus for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010 and Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.


Sd/-




10


Rs. in Lakhs

HSBC EMERGING MARKETS FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 9,354.14 13,522.54

2 Reserves & Surplus2.1 Unit Premium Reserves 135.71 259.27 2.2 Unrealised Appreciation Reserve – – 2.3 Other Reserves (780.52) (5,322.96)

3 Loans & Borrowings – – 4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – – 4.2 Other Current Liabilities & Provisions 208.59 56.23

TOTAL 8,917.92 8,515.08

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – – 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – – 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – – 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits – – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities 8,595.69 8,095.42


2 Deposits – –

3 Other Current Assets3.1 Cash & Bank Balance 6.46 199.24 3.2 CBLO / Reverse Repo Lending 310.55 177.27 3.3 Others 5.22 43.15 4 Deferred Revenue Expenditure – –


TOTAL 8,917.92 8,515.08

Notes to Accounts - Annexure I


11

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 58.11 – 1.2 Interest 10.90 57.39 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions (37.26) (0.44)1.4 Realised Gains / (Losses) on Interscheme sale of investments – – 1.5 Realised Gains / (Losses) on External sale / redemption of

investments(513.85) (105.09)

1.6 Realised Gains / (Losses) on Derivative Transactions – – 1.7 Other Income 0.08 –

(A) (482.02) (48.14)

2 EXPENSES2.1 Management fees 5.13 5.02 2.2 Service tax on Management fees** – – 2.3 Transfer agents fees and expenses 12.38 15.71 2.4 Custodian fees 3.94 2.85 2.5 Trusteeship fees 0.09 0.04 2.6 Commission to Agents * – – 2.7 Marketing & Distribution expenses 53.52 82.95 2.8 Audit fees 0.50 0.25 2.9 Other operating expenses 6.45 7.76 2.10 Expenses to be Reimbursed by the Investment Manager (5.03) (39.35)

(B) 76.98 75.23

3 NET REALISED GAINS / (LOSSES) FOR THE YEAR / PERIOD (A - B = C) (559.00) (123.37)

4 Change in Unrealised Depreciation in value of investments *** (D) (4,555.39) 4,975.85

5 NET GAINS / (LOSSES) FOR THE YEAR / PERIOD [E = (C - D)] 3,996.39 (5,099.22)

6 Change in unrealised appreciation in the value of investments (F) – –

7 NET SURPLUS / (DEFICIT) FOR THE YEAR / PERIOD (E + F = G) 3,996.39 (5,099.22)


7.2 Less: Balance transfer toUnrealised Appreciation Reserve – –

7.3 Add / (Less): Equalisation 546.05 (254.85)7.4 Transfer from Reserve Fund – – 7.5 Transfer from Unit Premium Reserve – –

8 TOTAL 4,542.43 (5,354.07)

9 Dividend appropriation9.1 Income Distributed during the year / period – – 9.2 Tax on income distributed during the year / period – – 10 Retained Surplus / (Defi cit)


Notes to Accounts - Annexure I* Commission to Agents is included in Marketing & Distribution Expenses.** Service Tax on Management Fees is included in Other Operating Expenses.*** Includes Unrealised Depreciation in the value of Foreign Currency Transactions.



12


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1. NAV per unit (Rs.):

Open

Regular Growth Option 6.2554 10.0301

Regular Dividend Option 6.2554 10.0301

High



Low



End



2. Closing Assets Under Management (Rs. in Lakhs)

End 8,709 8,459

Average (AAuM)1 10,264 10,030

3. Gross income as % of AAuM2 -4.70% -0.48%

4. Expense Ratio:

a. Total Expense as % of AAuM (planwise)

Regular Growth Option 0.75% 0.75%

Regular Dividend Option 0.75% 0.75%

b. Management Fee as % of AAuM (planwise)



5. Net Income as a percentage of AAuM3 -5.45% -1.23%

6. Portfolio turnover ratio4 0.05 –

7. Total Dividend per unit distributed during the year / period (planwise)

Retail

Regular Dividend Option – –

Corporate




13


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

8. Returns (%):

a. Last One Year

Scheme

Regular Growth Option 48.8450 (37.6300)

Regular Dividend Option 48.8450 (37.6300)

Benchmark

BSE 200 – –

MSCI Emerging Markets Index 54.6700 (38.7900)

b. Since Inception

Scheme

Regular Growth Option (3.4432) (36.3500)

Regular Dividend Option (3.4432) (38.7900)

Benchnmark

BSE 200 – –

MSCI Emerging Markets Index 0.1600 (34.5800)

1 AAuM = Average daily net assets2 Gross income = amount against (A) in the Revenue Account i.e. Income.3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year /

period4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year / period.

Key Statistics for the year ended March 31, 2010 (Contd...)


14




1.2. Open Positions of derivatives as a % to Net Assets as of 2009-10 and 2008-09 is NIL.



Amount(Rs.)


by all schemes

Amount(Rs.)


by all schemes

2010 2009


Fixed deposits – 10,18,000,000 – 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the year ended March 31, 2010 is NIL.

1.5. NPAs as at years ended March 31, 2010 and March 31, 2009 is NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year ended 2009-2010 and their percentages to net assets are as under:

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Units in Mutual Fund

– Appreciation – – – –

– Depreciation 45,518,394 5.2264% 500,876,360 59.2140%

1.7. The aggregate value of investments securities purchased (including matured) and sold during the fi nancial year 2009-2010 is Rs. 48,569,303 and Rs. 402,515,128 respectively being 4.73% and 39.21% of the average daily net assets.

The aggregate value of investments securities purchased (including matured) and sold during the fi nancial year 2008-2009 is Rs. 870,578,912 and Rs. 51,463,615 respectively being 86.76% and 5.13% of the average daily net assets.

1.8. Non-Traded securities in the portfolio as on March 31, 2010 is NIL.

2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended for the year ended March 31, 2010 is as under :




Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009 - 2010 9.08 62.94 4,910,499 62.12


Associate 2009 - 2010 0.10 0.72 19,007 0.24



15



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2008 - 09 47.05 3.83 1.56 25.40

During the year 2009-2010 The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 300.

During the year 2008-2009, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amountingRs. 3,612.


3 None of the Investors held more than 25% of the total net assets of the Scheme at the years ended March 31, 2010 and year ended March 31, 2009.





84,302,484.733 13,367,388.355 35,253,521.112 62,416,351.976 624,163,520


50,922,901.492 3,579,638.005 23,377,459.166 31,125,080.331 311,250,802




61,213,343.633 42,092,615.754 19,003,474.654 84,302,484.733 843,024,847


41,049,858.510 22,057,963.784 12,184,920.802 50,922,901.492 509,229,015





9. The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 20, 2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No.IMD/Cir8/132968/2008 dated July 24, 2008.



16




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Emerging Markets Fund (HEMF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.










HSBC Dynamic FundAn open-ended Scheme

DYNAMIC FUND.indd 1DYNAMIC FUND.indd 1 24/07/2010 2:06:38 PM24/07/2010 2:06:38 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Dynamic Fund (HDF) - an open-ended SchemeHDF seeks to provide long term capital appreciation by allocating funds in equity and equity related instruments. It also has the fl exibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative.

The net assets of HDF amounted to Rs. 238.73 crores as at March 31, 2010 compared to Rs. 234.13 crores as at March 31, 2009. Around 95.17% of the net assets were invested in equities, 1.82% of the net assets were invested in reverse repos / CBLO and 3.01% were invested in net current assets as at March 31, 2010.

HDF underperformed its benchmark on a higher cash call ahead of election results. This was changed in the second half of last year.

Date of Inception: 24 Sepember, 2007 Compounded Annualized Returns (%)


HSBC Dynamic Fund – Growth 51.97 (1.66)

BSE 200 92.87 2.42





Equity Market Overview

The fi nancial year ended 31st March, 2010 turned out to be equally eventful as last year. The main difference between the two being that last year marked lot of negative events for the equity markets globally while FY10 was a very positive one with positive events both at global and domestic level for India. Globally, we saw the fi scal / monetary stimuli by various governments to take the credit crisis head on continue thereby leading to economic improvement in most parts of the world. And domestically, we saw the United Progressive Alliance (UPA) sweeping victory in the central elections thereby ensuring stability, policy continuity, and a great degree of space to implement reforms. With the fragmented nature of the opposition leaving it too weak to deter the reform process, everyone expected to see a boost to investment growth and policy initiatives thereby leading to an upward bias to growth. The second budget from the present government continues to underpin on its key focus areas of infrastructure and social sector spending.


Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the world. And hence there is a fear that this might de-rail the recovery process what we are witnessing over



4

the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.


Debt Market Overview

Bond yields rose for most of the fi nancial year 2009-2010 as market was hit by a huge borrowing calendar of the government. This was a consequence of the fi scal expansion that was undertaken since 2008 to enhance public expenditure in the face of the global crisis that had hit the economy. Supply fatigue soon set into the market, leading to a gradual rise in bond yields over the year. Domestic economic data started to improve towards late calendar year thus further curbing appetite for bonds. 10 year benchmark sovereign yield rose approximately 80 bps over the fi scal.







5


Debt Market Outlook
















6



b) HSBC Mutual Fund

HSBC Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002 with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (the AMC) to function as the Investment Manager for all the Schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.


c) Board of Trustees (the Trustees)

The Board of Trustees is the exclusive owner of the Trust Fund and holds the same in trust for the benefi t of the unitholders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the SEBI (Mutual Funds) Regulations, 1996 and the Trust Deed. The Trustees seek to ensure that the Fund and the Schemes fl oated thereunder are managed by the AMC in accordance with the Trust Deed, the said Regulations, directions and guidelines issued by the SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory agencies.

d) Asset Management Company (the AMC)

HSBC Asset Management (India) Private Limited (the Investment Manager or the AMC) is a private limited company incorporated under the Companies Act, 1956 on December 12, 2001 having its Registered Offi ce at 314, D. N. Road, Fort, Mumbai 400 001. HSBC Asset Management (India) Private Limited has been appointed as the Asset Management Company of the HSBC Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated February 7, 2002 and executed between the Trustees and the AMC. SEBI approved the AMC to act as the Investment Manager of the Fund vide. its letter No. MFD/BC/163/2002 dated May 27, 2002.






Scheme

Unclaimed Dividends Unclaimed Redemptions

Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Dynamic Fund – – 263,052 10



7






Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8

Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0








9





MUMBAI

July 20, 2010



10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Dynamic Fund (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian and others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



i. The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Dynamic Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.

ii. The Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended on that date, together with the notes thereon have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.


Sd/-




11


Rs. in Lakhs

HSBC DYNAMIC FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 24,899.69 37,112.01

2 Reserves & Surplus2.1 Unit Premium Reserves (2,687.00) (437.55)2.2 Unrealised Appreciation Reserve 5,548.39 – 2.3 Other Reserves (3,888.14) (13,261.07)



TOTAL 24,390.90 23,937.48

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 21,260.01 16,557.67 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – 1,580.65 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – – 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits – – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –


2 Deposits 1,460.00 2,610.00 3 Other Current Assets3.1 Cash & Bank Balance 20.13 8.85 3.2 CBLO / Reverse Repo Lending 435.37 1,789.24 3.3 Others 1,215.39 1,391.07

4 Deferred Revenue Expenditure – – (to the extent not written off)

TOTAL 24,390.90 23,937.48



12

Rs. in Lakhs

HSBC DYNAMIC FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 283.90 336.18 1.2 Interest 121.18 673.29 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions (3.74) – 1.4 Realised Gains / (Losses) on Interscheme sale of investments – (76.49)1.5 Realised Gains / (Losses) on External sale / redemption

of investments5,255.18 (16,761.36)

1.6 Realised Gains / (Losses) on Derivative Transactions (363.83) 325.07 1.7 Other Income 0.01 –

(A) 5,292.70 (15,503.31)


(B) 630.54 729.85

3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 4,662.16 (16,233.16)

4 Change in Unrealised Depreciationin value of investments (D) (968.84) (3,026.54)


6 Change in unrealised appreciation in the value of investments (F) 5,548.39 –


7.1 Add: Balance transfer fromUnrealised Appreciation Reserve – –

7.2 Less: Balance transfer to Unrealised Appreciation Reserve

5,548.39 –

7.3 Add / (Less): Equalisation 3,741.94 916.08 7.4 Transfer from Reserve Fund – – 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL 9,372.94 (12,290.55)

9 Dividend Appropriation

9.1 Income Distributed during the year – – 9.2 Tax on income distributed during the year – – 10 Retained Surplus / (Defi cit) carried forward to

Balance Sheet9,372.94 (12,290.55)




13

HSBC DYNAMIC FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open



High



Low



End




End 23,873 23,413

Average (AAuM)1 26,914 31,327

3. Gross income as % of AAuM2 19.67% -49.49%

4. Expense Ratio:







5. Net Income as a percentage of AAuM3 17.32% -51.82%

6. Portfolio turnover ratio4 1.57 1.69

7. Total Dividend per unit distributed during the year (planwise)

Retail


Corporate




14

HSBC DYNAMIC FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

8. Returns (%):

a. Last One Year

Scheme



Benchmark

BSE200 92.8658 (40.9800)

b. Since Inception

Scheme

Regular Growth Option (1.6588) (26.1763)

Regular Dividend Option (1.6588) (26.1763)

Benchmark

BSE200 2.4233 (32.5000)

1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the

year. 4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.



15

HSBC DYNAMIC FUND



1.2. Open Positions of derivatives amount to Rs. 144,098,597 and is 6.04% to Net Assets for the year ended March 31, 2010. Open Positions of derivatives amount to Rs. (47,034,850) and is 2.01% to Net Assets for the year ended March 31, 2009.

1.3. Investments in Associates and Group Companies: (Rupees)



by all schemes


by all schemes

2010 2009


Fixed deposits 146,000,000 1,018,000,000 – 43,000,000

1.4. Open position of Securities Borrowed and / or Lent by the scheme as of the year ended March 31, 2010 and March 31, 2009 are NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year and percentage to net assets.

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 582,644,211 24.4061% 103,451,368 4.4185%

– Depreciation 30,122,536 1.2618% 198,113,243 8.4615%

Non Convertible Debentures and Bonds Listed / Awaiting Listing

– Appreciation – 384,760 0.0164%

– Depreciation – 1,741,120 0.0744%

Equity Futures

– Appreciation 2,622,855 0.1099% – –

– Depreciation 305,068 0.0128% 865,408 0.0370%

1.7. The aggregate value of investments securities purchased and sold during the fi nancial year 2009-2010 is Rs. 2,745,924,605 and Rs. 3,607,759,880 respectively being 102.03% and 134.05% of the average daily net assets.

The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 11,758,508) and sold during the fi nancial year 2008–2009 is Rs. 10,072,387,041 and Rs. 10,882,064,228 respectively being 321.53% and 347.37% of the average daily net assets.



16


Aggregate Value of Equity, Debt & Money Market Instruments and percentages to net assets are as under :

Security Category

Fair Value(Rs.)


Fair Value(Rs.)


2010 2009

Debt Instruments – – 77,003,317 3.2889%

Total – – 77,003,317 3.2889%


During the year, Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 168,872 and clearing member charges on derivative transactions amounting to Rs. 530,800.

During the year 2008-09, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting toRs. 3,131.





Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009-2010 3.77 22.30 4,906,397 23.50


Associate 2009-2010 0.02 0.12 29,382 0.14



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basisi)


Fund


Associate 2008-2009 7.37 9.3 6,140,776 8.57



17




Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]


Fund


Sponsor 2009-2010 42.48 3.52 341,708 2.51



Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]

(on accrual basis)


Fund


Associate 2008-2009 2.30 0.09 45,867 0.18


Sponsor 2008-2009 114.83 4.68 795,165 3.14


Further,The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.

3 None of the Investors held more than 25% of the total net assets of the scheme at the years ended March 31, 2010 and March 31, 2009.


Description2009–2010



190,248,100.865 7,916,961.708 59,160,416.082 139,004,646.491 1,390,046,465


180,871,982.404 11,722,378.320 82,602,130.068 109,992,230.656 1,099,922,305




205,008,927.831- 15,555,453.448 30,316,280.414 190,248,100.865 1,902,481,009


214,284,442.273 12,615,611.127 46,028,070.996 180,871,982.404 1,808,719,824



18


6 No contingent liabilities for the year ended March 31, 2010 and March 31, 2009.


8 Other income represents exit load collected in excess of 1% of redemption proceeds credited to the Scheme.




19




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Dynamic Fund (HDF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.








20




HSBC Tax Saver Equity FundAn open-ended Equity Linked Savings Scheme

Tax Saver Fund.indd 1Tax Saver Fund.indd 1 24/07/2010 2:04:27 PM24/07/2010 2:04:27 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Tax Saver Equity Fund (HTSF) - an open-ended Equity Linked Savings SchemeHTSF seeks to provide long term capital appreciation by investing in a diversifi ed portfolio of equity & equity related instruments of companies across various sectors and industries, with no capitalisation bias. The Fund may also invest in fi xed income securities.

The net assets of HTSF amounted to Rs. 301.54 crores as at March 31, 2010 compared to Rs. 180.58 crores as at March 31, 2009. Around 96.73% of the net assets were invested in equities, 3.46% of the net assets were invested in reverse repos / CBLO and (0.19)% were invested in net current assets as at March 31, 2010.

HTSF marginally underperformed its benchmark over the past 1 year on a marginal defensive positioning ahead of election results. Longer term, the scheme has outperformed its benchmarks.

Date of Inception: 05 January, 2007 Compounded Annualized Returns (%)


HSBC Tax Saver Equity Fund – Growth 87.14 13.56 10.44

BSE 200 92.87 12.19 9.02










4











5


















6












5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil




7





Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010


9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Tax Saver Equity Fund (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian and others and registrar and transfer agents respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Tax Saver Equity Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.


(iii) The methods used to value equity shares awaiting listing as at March 31, 2010 as determined in good faith by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund are fair and reasonable.


Sd/-




10


Rs. in Lakhs

HSBC TAX SAVER EQUITY FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 22,546.23 24,505.14

2 Reserves & Surplus2.1 Unit Premium Reserves (127.95) 496.142.2 Unrealised Appreciation Reserve 5,394.07 –2.3 Other Reserves 2,341.64 (6,942.74)

3 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 461.36 485.36

TOTAL 30,615.35 18,543.90

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 29,138.00 14,385.621.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares 28.67 –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits – 600.00

3 Other Current Assets3.1 Cash & Bank Balance 111.68 38.403.2 CBLO / Reverse Repo Lending 1,044.20 3,113.013.3 Others 292.80 406.874 Deferred Revenue Expenditure – –


TOTAL 30,615.35 18,543.90



11

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 301.49 222.191.2 Interest 32.19 249.351.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of

investments9,283.80 (5,922.92)

1.6 Realised Gains / (Losses) on Derivative Transactions –1.7 Other Income – –

(A) 9,617.48 (5,451.38)

2 EXPENSES2.1 Management fees 295.01 178.132.2 Service tax on Management fees ** – –2.3 Transfer agents fees and expenses 47.50 38.812.4 Custodian fees 9.29 6.582.5 Trusteeship fees 0.28 0.082.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 282.93 203.512.8 Audit fees 1.75 0.752.9 Other operating expenses 52.54 39.192.10 Expenses to be Reimbursed by the Investment Manager (19.24)

(B) 670.06 467.05



5 NET GAINS / (LOSSES) FORTHE YEAR [E = (C - D)] 10,481.28 (7,049.30)

6 Change in unrealised appreciation inthe value of investments (F) 5,394.07 –

7 NET SURPLUS / (DEFICIT)FOR THE YEAR (E + F = G) 15,875.35 (7,049.30)


7.2 Less: Balance transfer toUnrealised Appreciation Reserve 5,394.07 –

7.3 Add / (Less): Equalisation (294.10) (642.87)7.4 Transfer from Reserve Fund – –7.5 Transfer from Unit Premium Reserve – –

8 TOTAL 10,187.18 (7,692.17)

9 Dividend appropriation9.1 Income Distributed during the year 902.79 –9.2 Tax on income distributed during the year – –10 Retained Surplus / (Defi cit)

carried forward to Balance Sheet 9,284.39 (7,692.17)Notes to Accounts – Annexure I* Commission to Agents is included in Marketing & Distribution Expenses.** Service Tax on Management Fees is included in Other Operating Expenses.



12

HSBC TAX SAVER EQUITY FUNDCurrent


PreviousYear ended

March 31, 20091. NAV per unit (Rs.): Open Regular Growth Option 7.3693 10.5427 Regular Dividend Option 7.3693 10.5427 High Regular Growth Option 13.9333 11.6264 Regular Dividend Option 13.9333 11.6264 Low Regular Growth Option 7.4082 6.6234 Regular Dividend Option 7.4082 6.6234 End Regular Growth Option 13.7906 7.3693 Regular Dividend Option 12.7190 7.36932. Closing Assets Under Management (Rs. in Lakhs) End 30,154 18,059 Average (AAuM)1 28,703 19,6473. Gross income as % of AAuM2 33.51% -27.75%4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Regular Growth Option 2.33% 2.38% Regular Dividend Option 2.33% 2.38% b. Management Fee as % of AAuM (planwise) Regular Growth Option 1.03% 0.91% Regular Dividend Option 1.03% 0.91%5. Net Income as a percentage of AAuM3 31.17% -30.12%6. Portfolio turnover ratio4 1.89 1.697. Total Dividend per unit distributed during the year (planwise) Retail Dividend 1.00 – Corporate Dividend 1.00 –8. Returns (%): a. Last One Year Scheme Regular Growth Option 87.1384 (30.1014) Regular Dividend Option 87.1357 (30.1014) Benchmark BSE 200 92.8700 (40.9800) b. Since Inception Scheme Regular Growth Option 10.4434 (12.7638) Regular Dividend Option 10.4429 (12.7638) Benchmark BSE 200 9.0200 (15.5400)

1 AAuM = Average daily net assets2 Gross income = amount against (A) in the Revenue Account i.e. Income.3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.



13


1 Investments:

1.1. It is confi rmed that investments of the Schemes are registered in the name of the Trustees for the benefi t of the Scheme’s unitholders.

1.2. Open Positions of derivatives as a % to Net Assets as of 2009-2010 and 2008-2009 is Nil.

1.3. Investments in Associates and Group Companies are as under :


Amount(Rs.)


by all schemes

Amount(Rs.)


by all schemes

2010 2009

The Hongkong & Shanghai Banking Corporation Ltd.

Fixed deposits – 1,018,000,000 – 43,000,000

1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of the year ended March 31, 2010 is NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year ended and their percentages to net assets are as under:



Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 563,326,418 18.6817% 62,106,058 3.4392%

– Depreciation 23,919,419 0.7932% 215,491,836 11.9330%

1.7. The aggregate value of investments purchased and sold (including matured) during the fi nancial year 2009-2010 is Rs. 5,435,615,688 and Rs. 5,578,682,825 respectively being 189.38% and 194.36% of the average daily net assets.

The aggregate value of investments purchased (excluding accretion of discount of Rs. 5,489,967) and sold (including matured) during the fi nancial year 2008-2009 is Rs. 5,161,259,484 andRs. 4,934,062,477 respectively being 262.69% and 251.13% of the average daily net assets.



Security Category

Fair Value(Rs.)


Fair Value(Rs.)


2010 2009

Equities 2,866,880 0.10% – –

Total 2,866,880 0.10% – –



14


During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting toRs. 298,444.

During the year 2008-2009, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 998.

Details of amounts paid to associates in terms of Regulation 25 (8) are as follows:




Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009 - 2010 0.65 2.39 849,881 3.33


Associate 2009 - 2010 0.11 0.41 65,360 0.26



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2008 - 2009 1.44 50.14 734,761 1.47




Nature of relation

Period Covered


[Rs. In Crores]

% of total value of


Brokerage paid[Rs. ]


Fund


Associate 2009 - 2010 1.82 0.17 36,558 0.17


Sponsor 2009 - 2010 27.60 2.55 552,086 2.60



15



Nature of relation

Period Covered


[Rs. In Crores]

% of total value of


Brokerage paid[Rs. ]

(on accrual basis)


Fund


Associate 2008 - 2009 6.34 0.92 126,269 0.92


Sponsor 2008 - 2009 14.20 2.07 284,435 2.08







Growth 150,646,655.461 12,786,096.898 25,556,593.410 137,876,158.949 1,378,761,588

Dividend 94,404,698.350 9,216,234.324 16,034,814.035 87,586,118.639 875,861,185



Growth 132,777,868.108 18,336,034.648 467,247.295 150,646,655.461 1,506,466,555

Dividend 83,983,985.503 11,249,049.602 828,336.755 94,404,698.350 944,046,984







16

DISCLAIMERSThis content of this report has been prepared by HSBC Asset Management (India) Private Limited (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. The information is for general information only and does not have regard to specifi c investment objectives, fi nancial situation and the particular needs of any specifi c person who may receive this information. Investments in mutual funds inherently involve risks and investors should read the relevant documents / information for details and risk factors and consult their legal, tax and fi nancial advisors before investing. Investors should understand that statements made herein regarding future prospects may not be realised. Neither this document nor the units of HSBC Mutual Fund have been registered in any jurisdiction. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.Investors may obtain Statement of Additional Information, Scheme Information Document and Key Information Memorandums along with application forms from the offi ce of HSBC Mutual Fund, 314 D. N. Road, Fort, Mumbai 400 001. Tel: 022-6666 8819.


Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Tax Saver Equity Fund (HTSF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.

Terms of Issue:

Units of the Scheme(s) are being offered at NAV based prices, subject to the prevailing loads. The Units purchased under the Scheme shall have a lock in period of three years from the date of allotment of Units. Accordingly, the Units can be redeemed (i.e. sold back to the Fund) on every Business Day, at the Applicable NAV (hereinafter defi ned), on expiry of lock-in period of three years from the date of allotment. The AMC calculates and publishes NAVs and offers for sale, redemption and switch outs, units of the Scheme(s) on all Business Days, at the Applicable NAV for all Schemes (at least once a week, i.e., every Wednesday and daily during the period of redemption in case of HSCF). HSCF & HFTS will not be open for ongoing subscriptions / switch-ins. HSCF would be available for sale on an ongoing basis (after a period of 3 years from the date of allotment). Conversion of HSCF to an open-ended scheme will be done only after the balance unamortized amount has been fully recovered from the Scheme. Units can be redeemed / switched out on every Business Day at NAV based prices, subject to prevailing exit loads. In case of HSCF, units can be redeemed / switched-out on a monthly basis on the stipulated date i.e. last 3 Business Days of every month at NAV based prices, subject to provisions of exit load, if any, and recovery of balance proportionate unamortized NFO expenses.

Load Structure (includes SIP/STP, where applicable):Exit: Nil. *No load in case of switches between equity Schemes of HSBC Mutual Fund. Consult the nearest investor service centre for details. The applicable exit loads (if any) at the time of allotment of the Schemes of HSBC Mutual Fund shall also be charged on investments made by all investors. Bonus units and units issued on reinvestment of dividends shall not be subject to exit load. The exit load set forth above is subject to change at the discretion of the AMC and such changes shall be implemented prospectively. Mutual Fund investments are subject to market risks. Read the Scheme Information Document and Scheme Additional Information carefully before investing.




HSBC India Opportunities FundAn open-ended flexi-cap equity Scheme

INDIA OPPORTUNITIES FUND.indd 1INDIA OPPORTUNITIES FUND.indd 1 24/07/2010 1:10:35 PM24/07/2010 1:10:35 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC India Opportunities Fund (HIOF) – an open-ended fl exi-cap Equity Scheme HIOF seeks long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity and equity related securities. However, it could move a signifi cant portion of its assets towards fi xed income securities if the fund manager becomes negative on equity markets.

The net assets of HIOF amounted to Rs. 283.80 crores as at March 31, 2010 as compared to Rs. 279.93 crores as at March 31, 2009. Around 94.84% of the net assets were invested in equities, 2.01% of the net assets were invested in reverse repos / CBLO and 3.15% were invested in debt and money market instruments as at March 31, 2010.

HIOF underperformed the market in the past 1 year on relatively larger proportion of large caps versus the benchmark and higher levels of cash in the earlier part of the year. Longer term performance has been in line with benchmarks.



HSBC India Opportunities Fund – Growth 62.24 6.11 19.69 20.98

BSE 500 96.38 11.75 20.39 20.18








Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to



4

good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the world. And hence there is a fear that this might de-rail the recovery process what we are witnessing over the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.






Equity Market Outlook

Financial Year (FY) 2009-10 was a year marked by most of the governments and Central banks around their world doing their best to enable the economies to come out of the sub-prime crisis that had led to credit market freezing and recessionary conditions in developed nations and slowdown in emerging economies. And these efforts led to slow and gradual improvement in the economic recovery process with growth in emerging economies picking up sharply even though the developed economies continued to improve slowly. But over the last few months, we saw the Greek crisis become bigger which eventually culminated in a ~1 trillion Euros headline package by the European Union and International Monetary Fund to support fi scally strained Euro Area member countries, all of which comes with severe austerity measures, has once again brought to the fore issues regarding defi cits and debt sustainability. This led to enormous uncertainty and nervousness in all the asset markets globally thereby leading to contraction in the investors risk appetite. So now apart from concerns on China’s overheated property market focus shifted to the Euro region uncertainty. So overall the next year is going to be very crucial with respect to the direction of the economic environment amidst all this uncertainty.

In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP for FY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons and industry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growth in FY09. India remains a supply-constrained and capital-starved economy with signifi cant latent unmet demand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robust domestic demand, driven by private consumption and investment, may be complemented by improving external demand. The key to track will be the strength of the upturn in the investment cycle. Even though there are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a more gradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed the economic downturn exceptionally well, and is doing the right things to position growth at an elevated level without either fuelling a sustained rise in infl ation or pushing the banks to lend more aggressively. Fiscal consolidation will be credible as the government has little choice but to begin the much-needed process



5

of fi scal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure, infrastructure building and domestic consumption are still intact. The key concerns at this point stem from the uncertainty in the developed economies and any fallout of the same on India and the domestic infl ations which seems to be very high.


Debt Market Outlook















6




b) HSBC Mutual Fund












7



Scheme


Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC India Opportunities Fund 990,245 241 363,145 14






Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8

Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0




fl uctuations in the market value of its underlying investments.



9

c) Full Annual Report shall be disclosed on the website at www.assetmanagement.hsbc.com/in and shall be available for inspection at the Head Offi ce of the mutual fund. Present and prospective unit holder can obtain copy of the trust deed, the full Annual Report of the Scheme(s), the Annual Report of HSBC Asset Management (India) Private Limited and the text of the relevant Scheme(s) at a price.





MUMBAI

July 20, 2010



10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC India Opportunities Fund (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian / others and registrar and transfer agents respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC India Opportunities Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.


(iii) The method used to value equity shares awaiting listing as at March 31, 2010 as determined in good faith by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual fund are fair and reasonable


Sd/-




11


Rs. in Lakhs

HSBC INDIA OPPORTUNITIES FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 14,295.84 22,075.58

2 Reserves & Surplus2.1 Unit Premium Reserves (8,297.85) (4,967.16)2.2 Unrealised Appreciation Reserve 6,029.11 12.122.3 Other Reserves 16,377.13 10,872.37


4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 520.82 500.22

TOTAL 28,925.05 28,493.13

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 25,599.08 23,373.851.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares 16.44 –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits 1,349.02 2,661.52

3 Other Current Assets3.1 Cash & Bank Balance 9.36 8.763.2 CBLO / Reverse Repo Lending 570.08 1,023.253.3 Others 1,381.07 1,425.75

4 Deferred Revenue Expenditure – –(to the extent not written off)

TOTAL 28,925.05 28,493.13



12

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 319.36 320.061.2 Interest 90.81 367.981.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption

of investments8,690.11 (11,630.40)

1.6 Realised Gains / (Losses) on Derivative Transactions (295.25) 1,184.491.7 Other Income 0.52 –

(A) 8,805.55 (9,757.87)

2 EXPENSES2.1 Management fees 355.31 407.542.2 Service tax on Management fees ** – –2.3 Transfer agents fees and expenses 54.02 76.412.4 Custodian fees 15.47 24.902.5 Trusteeship fees 0.30 0.162.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 256.82 277.192.8 Audit fees 5.00 5.002.9 Other operating expenses 57.10 86.25

(B) 744.02 877.45


4 Change in Unrealised Depreciation in valueof investments (D) (1,967.69) 1,967.69


6 Change in unrealised appreciation in the value of investments (F) 6,016.99 (4,812.63)


7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 4,812.63

7.2 Less: Balance transfer to Unrealised Appreciation Reserve 6,016.99 –

7.3 Add / (Less): Equalisation (3,301.93) (2,090.75)7.4 Transfer from Reserve Fund 3,806.22 –7.5 Transfer from Unit Premium Reserve – –8 TOTAL 10,533.51 (14,693.76)

9 Dividend Appropriation9.1 Income Distributed during the year 1,222.51 (0.02)9.2 Tax on income distributed during the year – – 10 Retained Surplus / (Defi cit)


Notes to Accounts - Annexure I* Commission to Agents is included in Marketing & Distribution Expenses.** Service Tax on Management Fees is included in Other Operating Expenses.



13


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open



High



Low



End




End 28,408 27,993

Average (AAuM)1 33,032 38,254


4. Expense Ratio:










Retail

Dividend 1.0000 –

Corporate

Dividend 1.0000 –



14


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

8. Returns (%):

a. Last One Year

Scheme



Benchmark

BSE 500 96.3800 (42.7700)

b. Since Inception

Scheme



Benchmark

BSE 500 20.1800 9.1500

1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year /

period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year / period.



15




1.2. Open Positions of derivatives as of March 31, 2010 is Rs. 193,993,801 and is 6.83% to the net assets. Open Positions of derivatives as of March 31, 2009 is Rs. 61,203,450 and is 2.19% to the net assets.




by all schemes


by all schemes

2010 2009


Fixed deposits 130,000,000 1,018,000,000 – 43,000,000

1.4. Open position of Securities Borrowed and / or Lent by the scheme as of fi nancial years ended 2010 and 2009 are NIL.

1.5. The NPAs as on March 31, 2010 and March 31, 2009 are NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2010 and March 31, 2009 are as under:

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 619,460,514 21.8061% 216,543,449 7.7357%

– Depreciation 20,612,129 0.7256% 413,312,313 14.7649%

Equity Futures

– Appreciation 4,487,301 0.1580% 2,252,115 0.0805%

– Depreciation 424,303 0.0149% 1,040,116 0.0372%

1.7. The aggregate value of investments purchased and sold during the fi nancial year is Rs. 2,446,418,500 and Rs. 3,886,879,848 respectively being 74.06% and 117.67% of the average daily net assets.

The aggregate value of investments purchased and sold during the fi nancial year 2008 - 2009 (excluding accretion of discount of Rs. 2,875,943) is Rs. 4,802,419,100 and Rs. 5,302,898,939 respectively being 125.54% and 138.62% of the average daily net assets.


Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets are as under:

Security Category Amount(Rs.)


Amount(Rs.)


2010 2009

Equities 1,643,930.00 0.06% – –

Money Market Instruments – – – –



16

2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended for the year ended March 31, 2010 is as under:

During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges Rs. 25,830 and Clearing member charges on derivative transactions amounting to Rs. 561,071.

During the year 2008-2009, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 23,153 and Clearing member charges on derivative transactions Rs. 445,071.

Commission paid to associates / related parties / group companies of Sponsor / AMC

Name of associate /related parties /group companies of Sponsor / AMC


Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business


Commission paid [Rs.]


Fund


Associate 2009-2010 7.37 22.78 8,081,423 37.27


Associate 2009-2010 0.03 0.09 55,346 0.26

Name of associate /related parties /group companies of Sponsor / AMC


Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008-2009 13.74 10.03 11,739,935 14.22

Brokerage paid to associates / related parties / group companies of Sponsor / AMC

Name of Associate /related parties / group companies of Sponsor / AMC


Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]


Fund


Sponsor 2009-2010 67.32 5.30 367,945 2.78

Name of Associate /related parties / group companies of Sponsor / AMC


Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]

(on accrual basis)


Fund


Associate 2008-2009 6.70 0.30 134,157 0.60


Sponsor 2008-2009 53.70 2.37 453,714 2.04



17


3 No investors held more than 25% of the Net Assets of the scheme for 2009 and 2010.


Description2009 - 2010


Growth 53,478,209.207 5,215,347.572 23,715,936.535 34,977,620.244 349,776,202

Dividend 167,277,543.980 11,264,297.076 70,561,101.060 107,980,739.996 1,079,807,401



Growth 61,844,387.233 8,005,235.991 16,371,414.017 53,478,209.207 534,782,092

Dividend 200,642,987.346 17,255,087.456 50,620,530.822 167,277,543.980 1,672,775,441




8 Other income represents exit load collected in excess of 1% of redemption proceeds credited to the Scheme and provision for expenses written back as no longer required.




18




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC India Opportunities Fund (HIOF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.








19




HSBC Midcap Equity FundAn open-ended diversified equity Scheme

Midcap Equity Fund.indd 1Midcap Equity Fund.indd 1 24/07/2010 1:09:13 PM24/07/2010 1:09:13 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Midcap Equity Fund (HMEF) – an open-ended diversifi ed Equity SchemeHMEF seeks to generate long term capital growth from an actively managed portfolio of equity and equity related securities primarily being midcap stocks. However, it could move a portion of its assets towards fi xed income securities if the fund manager becomes negative on the Indian equity markets.

The net assets of HMEF amounted to Rs. 177.24 crores as at March 31, 2010 as compared to Rs. 93.67 crores as at March 31, 2009. Around 94.09% of the net assets were invested in equities, 3.30% of the net assets were invested in reverse repos / CBLO and 2.61% were invested in debt and money market instruments as at March 31, 2010.

HMEF underperformed the benchmark in the past 1 year on relatively defensive positioning in the earlier part of the year. This was subsequently changed in the second half of the year.

Date of Inception: 19 May, 2005 Compounded Annualized Returns (%)


HSBC Midcap Equity Fund – Growth 116.01 6.29 17.40

BSE MID CAP 130.23 8.11 16.42







Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the



4

world. And hence there is a fear that this might de-rail the recovery process what we are witnessing over the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.










5


Debt Market Outlook


















6














Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Midcap Equity Fund 366,033 263 584,647 17

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently



7

met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.





Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010


9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Midcap Equity Fund (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian and others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Midcap Equity Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.


(iii) The method used to value equity shares awaiting listing and unlisted equity shares in good faith as at March 31, 2010 as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual fund are fair and reasonable.


Sd/-




10


Rs. in Lakhs

HSBC MIDCAP EQUITY FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 10,725.81 11,837.90

2 Reserves & Surplus2.1 Unit Premium Reserves (4,337.15) (4,036.60)2.2 Unrealised Appreciation Reserve 686.20 –2.3 Other Reserves 10,649.36 1,565.75

3 Loans & Borrowings – –4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 228.76 155.62

TOTAL 17,952.98 9,522.67

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 16,174.34 7,579.661.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – –1.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares 16.47 –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares 65.14 –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits 432.13 932.13

3 Other Current Assets3.1 Cash & Bank Balance 29.74 335.483.2 CBLO / Reverse Repo Lending 585.36 7.163.3 Others 644.31 624.914 Deferred Revenue Expenditure 5.49 43.33


TOTAL 17,952.98 9,522.67



11

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 184.67 170.951.2 Interest 49.16 171.661.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption of

investments5,742.53 (9,650.58)

1.6 Realised Gains / (Losses) on Derivative Transactions 1,446.46 100.941.7 Other Income 0.09 –

(A) 7,422.91 (9,207.03)

2 EXPENSES2.1 Management fees 177.23 175.732.2 Service tax on Management fees ** – –2.3 Transfer agents fees and expenses 25.36 30.632.4 Custodian fees 9.76 9.642.5 Trusteeship fees 0.13 0.062.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 87.62 100.182.8 Audit fees 1.00 3.002.9 Other operating expenses 66.50 45.71

(B) 367.60 364.95




6 Change in unrealised appreciation inthe value of investments (F) 686.20 –



7.2 Less: Balance transfer toUnrealised Appreciation Reserve 686.20 –

7.3 Add / (Less): Equalisation 129.19 (563.92)7.4 Transfer from Reserve Fund 860.36 –7.5 Transfer from Unit Premium Reserve – –8 TOTAL 10,601.37 (11,166.04)9 Dividend appropriation9.1 Income Distributed during the year 657.40 –9.2 Tax on income distributed during the year – –10 Retained Surplus / (Defi cit)


Notes to Accounts - Annexure I* Commission to Agents is included in Marketing & Distribution Expenses.** Service Tax on Management Fees is included in Other Operating Expenses.



12

HSBC MIDCAP EQUITY FUNDCurrent


PreviousYear ended

March 31, 20091. NAV per unit (Rs.): Open Growth Option 10.1084 20.6339 Dividend Option 6.6851 13.6463 High Growth Option 22.5346 22.6231 Dividend Option 14.0594 14.9616 Low Growth Option 10.2556 9.0046 Dividend Option 6.7825 5.9551 End Growth Option 21.8352 10.1084 Dividend Option 13.4004 6.68512. Closing Assets Under Management (Rs. in Lakhs) End 17,724 9,367 Average (AAuM)1 15,277 15,1903. Gross income as % of AAuM2 48.59% -60.61%4. Expense Ratio: a. Total Expense as % of AAuM (planwise) Growth Option 2.41% 2.15% Dividend Option 2.41% 2.15% b. Management Fee as % of AAuM (planwise) Growth Option 1.16% 1.16% Dividend Option 1.16% 1.16%5. Net Income as a percentage of AAuM3 46.18% -63.01%6. Portfolio turnover ratio4 4.23 1.727. Total Dividend per unit distributed during the year (planwise) Retail Dividend 1.00 – Corporate Dividend 1.00 –8. Returns (%): a. Last One Year Scheme Growth Option 116.0144 (51.0107) Dividend Option 116.0027 (51.0116) Benchmark BSE MID CAP 130.2300 (54.0100) b. Since Inception Scheme Growth Option 17.3992 0.2791 Dividend Option 17.3338 0.2102 Benchmark BSE MID CAP 16.4200 (2.4000)




13



benefi t of the Scheme’s Unitholders.

1.2. Open Positions of derivatives amount to Rs. 77,544,688 and is 4.38% to Net Assets as at 31 March, 2010. Open Positions of derivatives amount to Rs. 47,250,950 and is 5.04% to Net Assets as at 31 March, 2009.



Amount(Rs.)


by all schemes

Amount(Rs.)


by all schemes

2010 2009


Fixed deposits 42,000,000 1,018,000,000 – 43,000,000

1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of fi nancial years ended 2010 and 2009 are NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2010 and March 31, 2009 are as under :

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 152,588,178 8.6090% 33,463,640 3.5725%

– Depreciation 86,632,744 4.8878% 288,443,961 30.7935%

Equity Futures

– Appreciation 3,298,026 0.1861% 575,550 0.0614%

– Depreciation 633,589 0.0357% 1,246,651 0.1331%

1.7. The aggregate value of investments purchased and sold (including matured) during the year2009-2010 is Rs. 3,222,984,582 and Rs. 3,250,544,036 respectively being 210.97% and 212.77% of the average daily net assets.

The aggregate value of investments purchased (excluding accretion of discount of Rs. 1,777,294) and sold (including matured) during the year 2008-2009 is Rs. 2,819,476,499 andRs. 3,005,664,350 respectively being 185.61% and 197.87% of the average daily net assets.


Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as under:

Security Category

Fair Value(Rs.)


Fair Value(Rs.)


2010 2009

Equities 8,160,759 0.4604% – –

Total 8,160,759 0.4604% – –



14


During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 30,945 and clearing member charges on derivative transactions amounting to Rs. 552,472.

During the year 2008-2009, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 23,153 and clearing member charges on derivative transactions Rs. 445,071.





Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009 - 2010 17.45 35.98 3,962,653 32.02


Associate 2009 - 2010 0.02 0.04 20,184 0.16



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008 - 2009 4.04 13.03 3,643,287 11.05




Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]


Fund


Associate 2009 - 2010 0.73 0.06 14,526 0.11


Sponsor 2009 - 2010 63.01 4.90 351,893 2.65



15




Nature of Relation

Period Covered


[Rs. in Crores]

% of Total Value of

Transactions the Fund

Brokerage paid[Rs.]

(on accrual basis)

% of Total brokerage paid by the

Fund


Associate 2008 - 2009 0.96 0.09 19,157 0.16


Sponsor 2008 - 2009 28.78 2.74 179,809 1.50







Growth 42,452,067.060 13,794,502.150 16,515,931.147 39,730,638.063 397,306,381

Dividend 75,926,965.375 17,092,673.068 25,492,181.250 67,527,457.193 675,274,572



Growth 48,009,622.007 7,377,934.625 12,935,489.572 42,452,067.060 424,520,671

Dividend 100,054,854.569 6,038,463.722 30,166,352.916 75,926,965.375 759,269,654




8 Other income includes exit load collected in excess of 1% of redemption proceeds credited to the Scheme and provision for expenses no longer required written back.

9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 20, 2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No.IMD/Cir8/132968/2008 dated July 24, 2008.


16




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Midcap Equity Fund (HMEF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.










HSBC Unique Opportunities FundAn open-ended equity Scheme*

HUOF was launched as a close-ended equity scheme with automatic conversion into open-ended equity scheme at the end of three years from the date of allotment of units. In accordance with the terms of the Offer Document of HUOF / Combined Scheme Information Document, the scheme was converted from a close-ended equity scheme into open-ended equity scheme with effect from 22 March 2010.

Unique Opportunities Fund.indd 1Unique Opportunities Fund.indd 1 26/07/2010 4:12:29 PM26/07/2010 4:12:29 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Unique Opportunities Fund (HUOF) - an open-ended Equity Scheme(HUOF was launched as a close-ended equity scheme with automatic conversion into open-ended equity scheme at the end of three years from the date of allotment of units. In accordance with the terms of the Offer Document of HUOF / Combined Scheme Information Document, the scheme was converted from a close-ended equity scheme into open-ended equity scheme with effect from 22 March, 2010.)

HUOF seeks to provide long-term capital growth from a diversifi ed portfolio of equity and equity related instruments. The focus would be to invest in stocks of companies facing “out-of-ordinary” conditions.

The net assets of HUOF amounted to Rs. 214.98 crores as at March 31, 2010 compared to Rs. 219.50 crores as at March 31, 2009. Around 97.58% of the net assets were invested in equities, 2.12% of the net assets were invested in reverse repos / CBLO and 0.30% was invested in net current assets as at March 31, 2010.

HUOF underperformed its benchmark over the past 1 year on a relatively defensive posturing in the earlier part of the year.



HSBC Unique Opportunities Fund – Growth 79.92 (0.02) 0.65

BSE 200 92.87 12.19 12.50







Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to



4

good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the world. And hence there is a fear that this might de-rail the recovery process what we are witnessing over the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.






In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP for FY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons and industry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growth in FY09. India remains a supply-constrained and capital-starved economy with signifi cant latent unmet demand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robust domestic demand, driven by private consumption and investment, may be complemented by improving external demand. The key to track will be the strength of the upturn in the investment cycle. Even though there are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a more gradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed the economic downturn exceptionally well, and is doing the right things to position growth at an elevated level without either fuelling a sustained rise in infl ation or pushing the banks to lend more aggressively. Fiscal consolidation will be credible as the government has little choice but to begin the much-needed process of fi scal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure, infrastructure building and domestic consumption are still intact. The key concerns at this point stem from the uncertainty in the developed economies and any fallout of the same on India and the domestic



5

infl ations which seems to be very high.












2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANYa) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).

The Sponsor is the Settlor of the Mutual Fund Trust. The Sponsor has entrusted a sum of Rs. 1,00,000 (Rupees One Lakh only) to the Trustee as the initial contribution towards the corpus of the Mutual Fund.




6



b) HSBC Mutual Fund








3. INVESTMENT OBJECTIVE OF THE SCHEME The investment objective of the Scheme has been provided above under the heading “Scheme

Performance, Future Outlook and Operation of the Scheme” (refer Section 1).

4. SIGNIFICANT ACCOUNTING POLICIES The accounting policies are in accordance with Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996.



Scheme


Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Unique Opportunities Fund – – 178,696 5



7






Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8

Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0








9





MUMBAI

July 20, 2010



10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Unique Opportunities Fund (The “Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2010 by correspondence with the custodian and others and registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management, as well as evaluating the overall fi nancial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. The Balance Sheet, Revenue Account and Cash Flow Statement referred to above are in agreement with the books of account of the Scheme.

4. In our opinion and to the best of our information and according to the explanations given to us ;

(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and the amendments thereto, as applicable, and also give respectively a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Unique Opportunities Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010, and Revenue Account for the year ended on that date, together with the notes thereon, have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.


Sd/-




11


Rs. in Lakhs

HSBC UNIQUE OPPORTUNITIES FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 21,084.45 38,724.49

2 Reserves & Surplus2.1 Unit Premium Reserves (1,509.48) (2,334.51)2.2 Unrealised Appreciation Reserve 4,421.23 4.10 2.3 Other Reserves (2,485.72) (14,444.07)


4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – – 4.2 Other Current Liabilities & Provisions 849.67 1,065.63

TOTAL 22,294.47 23,015.64

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 20,077.60 17,622.29 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – – 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities:1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – – 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits – – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –


2 Deposits 900.00 1,650.00

3 Other Current Assets3.1 Cash & Bank Balance 24.12 4.94 3.2 CBLO / Reverse Repo Lending 456.20 2,124.15 3.3 Others 836.55 1,111.71

4 Deferred Revenue Expenditure – 502.55 (to the extent not written off)

TOTAL 22,294.47 23,015.64



12

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 291.56 384.141.2 Interest 76.98 385.311.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – –1.5 Realised Gains / (Losses) on External sale / redemption

of investments8,968.35 (24,424.79)

1.6 Realised Gains / (Losses) on Derivative Transactions – (575.58)1.7 Other Income – –

(A) 9,336.89 (24,230.92)

2 EXPENSES2.1 Management fees 299.35 356.272.2 Service tax on Management fees ** – –2.3 Transfer agents fees and expenses 45.29 69.822.4 Custodian fees 15.80 17.172.5 Trusteeship fees 0.24 0.152.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 215.27 256.062.8 Audit fees 6.00 0.752.9 Other operating expenses 462.55 646.642.10 Expenses to be Reimbursed by the Investment Manager – (6.60)

(B) 1,044.50 1,340.26

3 NET REALISED GAINS / (LOSSES)FOR THE YEAR / PERIOD (A - B = C) 8,292.39 (25,571.18)

4 Change in Unrealised Depreciationin value of investments (D) (3,084.05) (3,561.30)

5 NET GAINS / (LOSSES) FOR THE YEAR / PERIOD [E = (C - D)] 11,376.44 (22,009.88)

6 Change in unrealised appreciation in the value of investments (F) 4,417.13 (4.72)

7 NET SURPLUS / (DEFICIT) FOR THE YEAR / PERIOD (E + F = G) 15,793.57 (22,014.60)

7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 4.72

7.2 Less: Balance transfer to UnrealisedAppreciation Reserve 4,417.13 –

7.3 Add / (Less): Equalisation 581.91 –7.4 Transfer from Reserve Fund – –7.5 Transfer from Unit Premium Reserve – –8 TOTAL 11,958.35 (22,009.88)

9 Dividend Appropriation9.1 Income Distributed during the year / period – –9.2 Tax on income distributed during the year / period – –10 Retained Surplus / (Defi cit)





13


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open



High



Low



End




End 21,510 21,950

Average (AAuM)1 27,706 34,924


4. Expense Ratio:










Retail

Dividend – –

Corporate

Dividend – –



14


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

8. Returns (%):

a. Last One Year

Scheme



Benchmark

BSE 200 92.8700 (40.9800)

b. Since Inception

Scheme



Benchmark

BSE 200 12.5000 (13.7400)

1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year /

period.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year / period.



15


1 Investments: 1.1. It is confi rmed that Investments of the Schemes are registered in the name of the Trustees for the


1.2. Open Positions of derivatives amount to Rs. 175,617,653 and is 8.16% to Net Assets as at March 31, 2010. Open Positions of derivatives amount to Rs. 10,647,000 and is 0.49% to Net Assets as at March 31, 2009.

1.3. Investments in Associates and Group Companies : (Rupees)



by all schemes


by all schemes

2010 2009


Fixed deposits 90,000,000 1,018,000,000 – 43,000,000

1.4. Open position of Securities Borrowed and / or Lent by the scheme as of the year ended March 31, 2010 is NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year ended and their percentages to net assets are as under:

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 476,973,223 22.1704% 125,878,670 5.7348%

– Depreciation 34,850,114 1.6201% 435,753,845 19.8521%

Equity Futures

– Appreciation 636,898 0.0296% 410,269 0.0187%

– Depreciation 2,106,828 0.0979% – –

1.7. The aggregate value of investments securities purchased and sold (including matured) during the fi nancial period is Rs. 3,386,000,287 and Rs. 4,667,516,230 respectively being 122.21% and 168.47% of the average daily net assets.

The aggregate value of investments securities purchased and sold (including matured) during the fi nancial year end March 31, 2009 (excluding accretion of discount of Rs. 4,156,301) is Rs. 5,878,551,559 and Rs. 6,358,764,847 respectively being 168.32% and 182.07% of the average daily net assets.

1.8. Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is Nil.


During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection/bank charges amounting to Rs. 122,423 and Clearing member charges on derivative transactions amounting to Rs. 759,468.



16

During the year 2008-2009, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid Clearing member charges on derivative transactions amounting to Rs. 565,239.




Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009 – 2010 2.12 18.54 4,502,804 21.67


Associate 2009 – 2010 0.01 0.09 13,668 0.07



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2008 – 2009 0.92 19.66 6,184,249 8.19




Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]


Fund


Sponsor 2009 – 2010 68.98 4.10 472,954 2.55



Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]


Fund


Associate 2008 – 2009 4.86 0.28 96,405 0.42


Sponsor 2008 – 2009 47.47 2.76 460,976 2.00




17






Growth 146,326,985.344 2,469,971.529 49,265,702.486 99,531,254.387 995,312,544

Dividend 240,917,869.036 9,473,289.843 139,077,906.666 111,313,252.213 1,113,132,523



Growth 167,242,434.576 2,949,276.671 23,864,725.903 146,326,985.344 1,463,269,853

Dividend 315,868,063.747 5,267,633.300 80,217,828.011 240,917,869.036 2,409,178,690







18




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Unique Opportunities Fund (HUOF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP/SIP Plus, where applicable):Exit: 1% - if redeemed / switched out* within 1 year from date of investment; Otherwise Nil.






19




HSBC Small Cap FundA close-ended equity Scheme*

Small Cap Fund.indd 1Small Cap Fund.indd 1 24/07/2010 1:11:52 PM24/07/2010 1:11:52 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Small Cap Fund (HSCF) – a close ended equity Scheme with automatic conversion into open–ended Equity Scheme at the end of three years from the date of allotment of units.HSCF seeks to provide long–term capital appreciation primarily from a diversifi ed portfolio of equity and equity related instruments of small cap companies.

The net assets of HSCF amounted to Rs. 60.91 crores as at March 31, 2010. Around 99.35% of the net assets were invested in equities, 2.86% of the net assets were invested in reverse repos / CBLO and (2.21%) were invested in net current assets as at March 31, 2010.

HSCF underperformed its benchmarks on a relatively defensive posturing in the earlier part of the year.



HSBC Small Cap Fund – Growth 123.83 4.05

BSE Small Cap 161.73 10.47











4











5


Debt Market Outlook
















6



b) HSBC Mutual Fund










5. UNCLAIMED DIVIDENDS & REDEMPTIONSNil.

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore,



7

Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.





Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0

Note:

# including against its authorised persons/distributors/employees, etc.

* Non actionable means the complaint which is pending/outside the scope of the mutual fund

**includes correction in investor details

8. STATUTORY DETAILS

a) The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes of the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.

b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.



9






MUMBAI

July 20, 2010


10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Small Cap Fund (“The Scheme”) as at March 31, 2010, and the related Revenue Account for the year ended on that date both of which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.




(i) The Balance Sheet and Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Small Cap Fund as at March 31, 2010 and its net surplus for the year ended on that date.



Sd/-




11


Rs. in Lakhs

HSBC SMALL CAP FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 5,621.17 7,333.95

2 Reserves & Surplus2.1 Unit Premium Reserves 479.07 405.75 2.2 Unrealised Appreciation Reserve 901.38 – 2.3 Other Reserves (910.97) (4,183.98)


TOTAL 6,456.17 3,734.74

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 6,048.19 2,812.09 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – – 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares 3.13 – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – – 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits – – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –


2 Deposits – 410.00

3 Other Current Assets3.1 Cash & Bank Balance 0.96 143.48 3.2 CBLO / Reverse Repo Lending 174.11 9.97 3.3 Others 111.36 49.35 4 Deferred Revenue Expenditure 118.42 309.85


TOTAL 6,456.17 3,734.74



12

Rs. in Lakhs

HSBC SMALL CAP FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 98.38 95.70 1.2 Interest 10.42 92.65 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme sale of investments – – 1.5 Realised Gains / (Losses) on External sale / redemption of

investments2,032.09 (2,785.58)

1.6 Realised Gains / (Losses) on Derivative Transactions 88.97 6.92 1.7 Other Income 7.00 –

(A) 2,236.86 (2,590.31)


(B) 280.12 311.72

3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A – B = C) 1,956.74 (2,902.03)


5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C – D)] 3,273.01 (4,218.30)

6 Change in unrealised appreciation inthe value of investments (F) 901.38 (78.87)

7 NET SURPLUS / (DEFICIT)FOR THE YEAR (E + F = G) 4,174.39 (4,297.17)

7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 78.87

7.2 Less: Balance transfer toUnrealised Appreciation Reserve 901.38 –

7.3 Add / (Less): Equalisation – – 7.4 Transfer from Reserve Fund – – 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL 3,273.01 (4,218.30)9 Dividend Appropriation9.1 Income Distributed during the year – – 9.2 Tax on income distributed during the year – – 10 Retained Surplus / (Defi cit)





13

HSBC SMALL CAP FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open



High



Low



End




End 6,091 3,556

Average (AAuM)1 5,821 6,119


4. Expense Ratio:

a. Total Expense as % of AAuM (Planwise)



b. Management Fee as % of AAuM (Planwise)





7. Total Dividend per unit distributed during the year (Planwise)

Retail

Dividend – –

Corporate

Dividend – –



14

HSBC SMALL CAP FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

8. Returns (%):

a. Last One Year

Scheme



Benchmark

BSE Small Cap 161.7300 (58.6000)

b. Since Inception

Scheme



Benchnmark

BSE Small Cap 10.4700 (52.6100)




15

HSBC SMALL CAP FUND


benefi t of the scheme’s unitholders.

1.2. Open Positions of derivatives as of March 31, 2010 and March 31, 2009 is Nil.



Amount(Rs.)


by all schemes

Amount(Rs.)


by all schemes

2010 2009


Fixed deposits – 1,018,000,000 – 43,000,000

1.4. Open position of Securities Borrowed and / or Lent by the Scheme as of the year ended 31 March, 2010 is NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year and their percentages to net assets are as under:

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Equity Shares

– Appreciation 116,064,144 19.0561% 11,913,805 3.3506%

– Depreciation 25,926,611 4.2568% 143,541,167 40.3690%

1.7. The aggregate value of investments purchased and sold during the fi nancial year 2009-10 isRs. 816,768,026 and Rs. 917,819,629 respectively being 140.31% and 157.66% of the average daily net assets.

The aggregate value of investments purchased and sold during the fi nancial year 2008 – 2009 is Rs. 1,000,285,806 and Rs. 458,524,246 respectively being 163.46% and 74.93% of the average daily net assets.



Security Category

Fair Value(Rs.)


Fair Value(Rs.)


2010 2009

Equities 312,790 0.05% – –

Total 312,790 0.05% – –

2 Disclosure Under Regulation 25(8) of the Securities And Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.

During the year, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 42,037 and clearing member charges on derivative transactions amounting to Rs. 63,638.



16

During the year 2008-09, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting toRs. 2,001, and clearing member charges on derivative transactions Rs. 18,271.





Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009 - 2010 0.13 0.74 288,400 7.41


Associate 2009 - 2010 – – 1,462 0.04



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008 - 2009 – – 298,873 2.39




Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]


Fund


Associate 2009 - 2010 0.88 0.36 17,000 0.48


Sponsor 2009 - 2010 2.36 0.97 25,679 0.73



Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]

(on accrual basis)


Fund


Associate 2008 - 2009 0.22 0.13 4,270 0.15


Sponsor 2008 - 2009 5.55 3.35 64,968 2.25



17





4 Unit Capital movement during the years ended March 31, 2010 and March 31, 2009:



Growth 44,079,840.395 12,466,410.552 18,032,765.900 38,513,485.047 385,134,850

Dividend 29,259,696.530 1,509,540.509 13,070,992.765 17,698,244.274 176,982,442



Growth 48,849,646.818 53,550.878 4,823,357.301 44,079,840.395 440,798,404

Dividend 35,991,812.396 351,845.309 7,083,961.175 29,259,696.530 292,596,965







18




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Small Cap Fund (HSCF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP, where applicable):During close ended period: Exit # : If the investments are redeemed / switched out* within: 1 year - 2%; 2 years - 1.5% and 3 years - 1%.

# Balance proportionate unamortized NFO expenses to be recovered in case of exit within close-ended period.

Upon conversion into an open ended scheme:Exit – Nil.




19






HSBC MIP*

*An open-ended fund. Monthly income is not assured and is subject to theavailability of distributable surplus.

MIP.indd 1MIP.indd 1 26/07/2010 5:07:32 PM26/07/2010 5:07:32 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC MIP (HMIP) – an open-ended Fund(Monthly income is not assured and is subject to availability of distributable surplus.)

HMIP an open-ended fund seeks to generate reasonable returns through investments in Debt and Money Market Instruments. The secondary objective of the Scheme is to invest in equity and equity related instruments to seek capital appreciation. The Scheme offers two Plans: Regular Plan and Savings Plan. The Regular Plan can have up to 15 per cent of the corpus invested in equities while the Savings Plan can have up to 25 per cent invested in equities.

The net assets of HMIP - Regular Plan (HMIP – R) amounted to Rs. 219.32 crores as at March 31, 2010 as compared to Rs. 57.26 crores as at March 31, 2009. Around 87.37% in debt and money market instruments & 12.63% of the net assets were invested in equities as at March 31, 2010.

The net assets of HMIP - Savings Plan (HMIP – S) amounted to Rs. 358.31 crores as at March 31, 2010 as compared to Rs. 103.38 crores as at March 31, 2009. Around 79.44% in debt and money market instruments & 20.56% of the net assets were invested in equities as at March 31, 2010.

The performance of HMIP – R and HMIP – S is benchmarked against CRISIL MIP Blended Index. Both the Plans had higher equity allocation towards mid caps which has led to outperformance vis-a-vis the index over the said period.

HMIP – Regular Plan



HSBC MIP - Regular Plan – Growth 15.23 10.02 9.21 8.38

CRISIL MIP Blended Index 14.27 8.48 8.42 7.39



HMIP – Savings Plan



HSBC MIP - Savings Plan – Growth 22.38 11.93 11.51 10.51

CRISIL MIP Blended Index 14.27 8.48 8.42 7.39





Equity Market OverviewThe fi nancial year ended 31st March, 2010 turned out to be equally eventful as last year. The main difference between the two being that last year marked lot of negative events for the equity markets



4

globally while FY10 was a very positive one with positive events both at global and domestic level for India. Globally, we saw the fi scal / monetary stimuli by various governments to take the credit crisis head on continue thereby leading to economic improvement in most parts of the world. And domestically, we saw the United Progressive Alliance (UPA) sweeping victory in the central elections thereby ensuring stability, policy continuity, and a great degree of space to implement reforms. With the fragmented nature of the opposition leaving it too weak to deter the reform process, everyone expected to see a boost to investment growth and policy initiatives thereby leading to an upward bias to growth. The second budget from the present government continues to underpin on its key focus areas of infrastructure and social sector spending.







MARKET OUTLOOK

(as furnished by HSBC Asset Management (India) Private Limited)


Financial Year (FY) 2009-10 was a year marked by most of the governments and Central banks around their world doing their best to enable the economies to come out of the sub-prime crisis that had led to credit market freezing and recessionary conditions in developed nations and slowdown in emerging economies. And these efforts led to slow and gradual improvement in the economic recovery process with growth in emerging economies picking up sharply even though the developed economies continued to improve slowly. But over the last few months, we saw the Greek crisis become bigger which eventually culminated in a ~1 trillion Euros headline package by the European Union and International Monetary Fund to support fi scally strained Euro Area member countries, all of which comes with severe austerity measures,



5

has once again brought to the fore issues regarding defi cits and debt sustainability. This led to enormous uncertainty and nervousness in all the asset markets globally thereby leading to contraction in the investors risk appetite. So now apart from concerns on China’s overheated property market focus shifted to the Euro region uncertainty. So overall the next year is going to be very crucial with respect to the direction of the economic environment amidst all this uncertainty.














6







b) HSBC Mutual Fund









7






Scheme


Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC MIP - Regular Plan 157,299 246 58,400 3

HSBC MIP – Savings Plan 352,321 318 10,000 1







8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0




9









MUMBAI

July 20, 2010



10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC MIP (“The Scheme”) as at March 31, 2010 and the related Revenue Account for the year ended on that date, both of which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.




(i) The Balance Sheet and Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC MIP as at March 31, 2010 and its net surplus for the year ended on that date.


(iii) The methods used to value non-traded / thinly traded / equity securities awaiting listing as at March 31, 2010, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds issued by the Securities and Exchange Board of India are fair and reasonable.


Sd/-




11


Rs. in Lakhs

HSBC MIP - REGULAR PLAN

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 17,072.93 4,658.77

2 Reserves & Surplus2.1 Unit Premium Reserves 685.38 (21.68)2.2 Unrealised Appreciation Reserve 319.49 110.72 2.3 Other Reserves 3,854.25 978.05



TOTAL 22,367.39 5,790.17

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 2,750.49 166.02 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds 3,600.64 2,905.16 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares 20.18 – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds 303.58 – 1.3.5 Securitised Debt securities 660.56 1,670.96 1.4 Government Securities 286.72 452.37 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits 9,697.10 – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –


2 Deposits 352.04 182.04 3 Other Current Assets3.1 Cash & Bank Balance 83.14 9.50 3.2 CBLO / Reverse Repo Lending 4,111.46 219.29 3.3 Others 501.48 184.83


TOTAL 22,367.39 5,790.17



12

Abridged Balance Sheet as at March 31, 2010 (Contd...)

Rs. in Lakhs

HSBC MIP - SAVINGS PLAN

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 26,134.05 8,545.07

2 Reserves & Surplus2.1 Unit Premium Reserves 2,084.92 193.25 2.2 Unrealised Appreciation Reserve 839.91 256.53 2.3 Other Reserves 6,771.99 1,343.32



TOTAL 36,256.14 10,465.69

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares 7,333.44 542.58 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds 5,478.57 4,494.42 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares 32.06 – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds 746.21 497.82 1.3.5 Securitised Debt securities 911.56 2,076.63 1.4 Government Securities 122.88 1,168.78 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits 14,528.40 – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –


2 Deposits 477.04 252.04 3 Other Current Assets3.1 Cash & Bank Balance 331.61 9.52 3.2 CBLO / Reverse Repo Lending 5,574.80 1,074.57 3.3 Others 719.57 349.33


TOTAL 36,256.14 10,465.69



13

Rs. in Lakhs

HSBC MIP - REGULAR PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 12.06 6.96 1.2 Interest 556.78 569.57 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme

sale of investments – (7.54)

1.5 Realised Gains / (Losses) on External sale / redemption of investments

753.81 (310.48)

1.6 Realised Gains / (Losses) on Derivative Transactions (8.15) (20.53)1.7 Other Income – –

(A) 1,314.50 237.98

2 EXPENSES2.1 Management fees 106.52 64.60 2.2 Service tax on Management fees – – 2.3 Transfer agents fees and expenses 10.30 5.23 2.4 Custodian fees 1.89 1.51 2.5 Trusteeship fees 0.19 0.03 2.6 Commission to Agents * – – 2.7 Marketing & Distribution expenses 152.32 63.63 2.8 Audit fees 0.75 0.50 2.9 Other operating expenses 2.05 2.87

(B) 274.02 138.37 3 NET REALISED GAINS / (LOSSES)

FOR THE YEAR (A - B = C) 1,040.48 99.61 4 Change in Unrealised Depreciation

in value of investments (D) (52.60) 34.90

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 1,093.08 64.71

6 Change in unrealised appreciationin the value of investments (F) 208.77 97.48

7 NET SURPLUS / (DEFICIT)FOR THE YEAR ( E + F = G ) 1,301.85 162.19


7.2 Less: Balance transfer toUnrealised Appreciation Reserve 208.77 97.48

7.3 Add / (Less): Equalisation 2,427.36 167.47 7.4 Transfer from Reserve Fund 11.04 229.48 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL 3,531.48 461.66 9 Dividend Appropriation9.1 Income Distributed during the year 558.07 108.03 9.2 Tax on income distributed during the year 86.17 16.98 10 Retained Surplus / (Defi cit)

carried forward to Balance Sheet 2,887.24 336.65

Notes to Accounts – Annexure I* Commission to Agents is included in Marketing & Distribution Expenses.



14

Rs. in Lakhs

HSBC MIP - SAVINGS PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend 34.67 23.83 1.2 Interest 816.30 1,042.31 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme

sale of investments – (11.03)


1,943.51 (1,076.36)

1.6 Realised Gains / (Losses) on Derivative Transactions 19.74 (71.24)1.7 Other Income 2.90 –

(A) 2,817.12 (92.49)

2 EXPENSES2.1 Management fees 169.85 143.55 2.2 Service tax on Management fees – – 2.3 Transfer agents fees and expenses 16.36 10.27 2.4 Custodian fees 3.70 3.29 2.5 Trusteeship fees 0.27 0.05 2.6 Commission to Agents * – – 2.7 Marketing & Distribution expenses 232.83 108.89 2.8 Audit fees 0.75 0.50 2.9 Other operating expenses 2.08 3.82


FOR THE YEAR (A - B = C) 2,391.28 (362.86)4 Change in Unrealised Depreciation

in value of investments (D) (124.93) 46.67

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 2,516.21 (409.53)

6 Change in unrealised appreciationin the value of investments (F) 583.39 255.95

7 NET SURPLUS / (DEFICIT) FORTHE YEAR ( E + F = G ) 3,099.60 (153.58)


7.2 Less: Balance transfer toUnrealised Appreciation Reserve 583.39 255.95

7.3 Add / (Less): Equalisation 4,104.59 (430.86)7.4 Transfer from Reserve Fund – 560.42 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL 6,620.80 (279.97)9 Dividend Appropriation9.1 Income Distributed during the year 1,037.23 301.18 9.2 Tax on income distributed during the year 154.90 44.98 10 Retained Surplus / (Defi cit)

carried forward to Balance Sheet 5,428.67 (626.13)


Abridged Revenue Account for the year ended March 31, 2010 (Contd...)


15

HSBC MIP – REGULAR PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open



Regular Monthly Dividend Option 10.7325 10.7999

Regular Quarterly Dividend Option 10.8919 10.9470

High





Low





End






End 21,932 5,726

Average (AAuM)1 12,657 6,671

3. Gross income as % of AAuM2 10.39% 3.57%

4. Expense Ratio:




Regular Monthly Dividend Option 2.16% 2.07%

Regular Quarterly Dividend Option 2.16% 2.07%






5. Net Income as a percentage of AAuM3 8.23% 1.49%




16

HSBC MIP – REGULAR PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Retail




Corporate




8. Returns (%):

a. Last One Year

Scheme

Regular Dividend Option N/A N/A




Benchmark

CRISIL MIP Blended Index 14.2700 0.1900

b. Since Inception

Scheme





Benchnmark

CRISIL MIP Blended Index 7.3900 6.0200 1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.



17

HSBC MIP – SAVINGS PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open


Regular Dividend Option – 11.2228

Regular Monthly Dividend Option 10.7242 –


High





Low





End






End 35,831 10,338

Average (AAuM)1 20,112 13,157


4. Expense Ratio:














18


HSBC MIP – SAVINGS PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009



Retail




Corporate




8. Returns (%):

a. Last One Year

Scheme



Regular Monthly Dividend Option 21.1355 (0.7722)

Regular Quarterly Dividend Option 21.1925 (0.8031)

Benchmark


b. Since Inception

Scheme





Benchnmark


1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.


19

HSBC MIP - REGULAR / SAVINGS PLAN



1.2. Open Positions of derivatives in MIP Regular Plan as at March 31, 2010 is Rs. 24,075,176 and is1.10% to net assets. Open Positions of derivatives in MIP Regular Plan as at March 31, 2009 is Rs. 2,412,200 is 0.42% to net assets.

Open Positions of derivatives in MIP Savings Plan as at March 31, 2010 is Rs. 50,822,111 and is 1.42% to net assets. Open Positions of derivatives in MIP Savings Plan as at March 31, 2009 isRs. 6,935,075 and is 0.67% to net assets.

1.3. Investments in Associates and Group Companies are as under: (Rupees)

Issuer 2010

Instrument Type

Regular Plan Savings Plan AggregateInvestments

by all schemes


Fixed deposits 10,000,000 10,000,000 1,018,000,000

Issuer 2009

Instrument Type

Regular Plan Savings Plan AggregateInvestments

by all schemes


Fixed deposits 10,000,000 10,000,000 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the MIP Regular Plan as of fi nancial years ended 2010 and 2009 are NIL.

Open positions of Securities Borrowed and / or Lent by the MIP Savings Plan as of fi nancial years ended 2010 and 2009 are NIL.

1.5. The NPAs for MIP Regular Plan as on March 31, 2010 and March 31, 2009 are NIL.

The NPAs for MIP Savings Plan as on March 31, 2010 and March 31, 2009 are NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years 2009 and 2010 and their percentage to net assets are as under :

Security Category

March 31, 2010

Regular Plan Savings Plan

Amount(Rs.)


Amount(Rs.)


Equity Shares

– Appreciation 35,159,577 1.6031% 243,422,390 6.7937%

– Depreciation 8,227,405 0.3751% 167,450,117 4.6733%


– Appreciation 3,093,155 0.1410% 4,437,820 0.1239%

– Depreciation 219,238 0.0100% 325,981 0.0091%



20

Security Category

March 31, 2010


Amount(Rs.)


Amount(Rs.)


Non Convertible Debentures and Bonds Privately Placed

– Appreciation – – 576,049 1.6077%

– Depreciation – – – –

Asset Backed Securities

– Appreciation 1,739,064 0.0793% 2,604,039 0.0727%


Government of India Securities

– Appreciation 32,116 0.0015% 13,687 0.0004%


Equity Futures

– Appreciation 485,963 0.0222% 983,230 0.0274%

– Depreciation 114,450 0.0052% 269,600 0.0075%

Security Category

March 31, 2009


Amount(Rs.)


Amount(Rs.)


Equity Shares

– Appreciation 930,850 0.1626% 2,465,476 0.2385%

– Depreciation 2,615,775 0.4568% 9,075,936 0.8779%


– Appreciation 12,106,129 2.1143% 24,617,261 2.3812%

– Depreciation 2,573,566 0.4495% 419,690 0.0406%



– Depreciation – – 486,698 0.0471%


– Appreciation 1,988,647 0.3473% 2,586,070 0.2501%

– Depreciation 449,713 0.0785% 1,131,139 0.1094%



– Depreciation 3,575,402 0.6244% 5,394,921 0.5218%

Equity Futures

– Appreciation 779 0.0001% – –

– Depreciation – – 1,043 0.0001%



21

1.7. The aggregate value of investment securities purchased and sold (including matured) during the year 2009-2010 (excluding accretion of discount of Rs. 24,603,133 and Rs. 33,480,802 for Regular and Savings Plan respectively) are:

Plan

March 31, 2010

Aggregate Purchases Aggregate Sales

Rupees Percentage of Average Daily

Net Assets


Net Assets

Regular Plan 8,666,663,810 684.74% 7,579,938,462 598.88%

Savings Plan 13,374,285,652 664.99% 11,634,947,422 578.51%

Plan

March 31, 2009



Net Assets


Net Assets

Regular Plan 1,264,636,217 189.56% 1,360,346,341 203.91%

Savings Plan 3,297,754,997 250.65% 3,671,926,696 279.09%



Security Category

Amount(Rs.)


Amount(Rs.)


Regular Plan

2010 2009

Equities 2,018,410 0.0920% – –

Debt Instruments 381,375,038 17.3889% 439,709,739 76.7936%

Money Market Instruments 969,709,005 44.2142% – –

Total 1,353,102,453 61.6952% 439,709,739 76.7936%

Security Category

Amount(Rs.)


Amount(Rs.)


Savings Plan

2010 2009

Equities 3,205,710 0.0895% – –


Money Market Instruments 1,452,839,619 40.5472% – –

Total 2,094,575,835 58.4573% 670,139,321 64.8129%




22


During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid Collection / Bank charges amounting to Rs. 1,202 and Rs. 1,198 for the Regular Plan and Savings Plan respectively and clearing member charges on derivative transactions amounting to Rs. 26,038 and Rs. 65,477 for the Regular Plan and Savings Plan respectively.

During the year 2008-2009, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid Collection/ Bank charges amounting to Rs. 169,266 and Rs. 170,403 for the Regular Plan and Savings Plan respectively, and clearing member charges on derivative transactions amounting to Rs. 33,705 and Rs. 95,235 for the Regular Plan and Savings Plan respectively.



Name of Sponsor / AMC and its associates / related parties / group companies


Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund

Regular Plan


Associate 2009 - 2010 75.06 38.04 7,582,562 31.68


Associate 2009 - 2010 0.72 0.36 84,829 0.35

Savings Plan


Associate 2009 - 2010 93.16 31.40 10,037,894 27.67


Associate 2009 - 2010 0.26 0.09 49,702 0.14



Nature of Relation

Period Covered

Business Given[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund

Regular Plan


Associate 2008 - 2009 3.14 32.25 558,159 2.87

Savings Plan


Associate 2008 - 2009 3.14 50.84 1,097,294 3.44


23




Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.]


Fund

Regular Plan


Associate 2009 - 2010 0.24 0.05 4,760 0.22


Sponsor 2009 - 2010 1.75 0.35 30,556 1.40

Savings Plan


Associate 2009 - 2010 0.71 0.07 14,280 0.26


Sponsor 2009 - 2010 4.16 0.44 70,290 1.29

Name of Sponsor /AMC and its associates /related parties / group companies


Nature of relation

Period Covered


[Rs. in Crores]

% of total value of


Brokerage paid[Rs.](on

accrual basis)


Fund

Regular Plan


Associate 2008-2009 0.35 0.21 6,963 0.92


Sponsor 2008-2009 4.38 2.69 25,017 3.31

Savings Plan


Associate 2008-2009 1.14 0.28 22,791 1.02


Sponsor 2008-2009 12.68 3.07 68,515 3.06

The brokerage paid was at rates similar to those offered to other distributors.


3 None of the Investors held more than 25% of the total net assets of the schemes at the years ended March 31, 2010 and March 31, 2009.



24


Description

Regular Plan


2009-2010

Growth 20,343,046.918 36,509,108.348 9,986,763.268 46,865,391.998 468,653,919

Monthly Dividend

11,179,392.387 92,918,786.004 16,733,112.287 87,365,066.104 873,650,662

Quarterly Dividend

15,065,276.417 27,233,449.862 5,799,857.089 36,498,869.190 364,988,692



Growth 14,987,074.518 11,250,934.216 5,894,961.816 20,343,046.918 203,430,469

Monthly Dividend

24,470,779.653 10,911,102.092 24,202,489.358 11,179,392.387 111,793,924

Quarterly Dividend

15,012,077.635 6,136,651.026 6,083,452.244 15,065,276.417 150,652,764

Description

Savings Plan


2009-2010

Growth 27,263,343.045 55,702,716.349 16,283,865.161 66,682,194.233 666,821,943

Monthly Dividend

22,335,867.542 113,309,617.474 17,966,455.504 117,679,029.512 1,176,790,295

Quarterly Dividend

35,851,537.631 50,500,233.466 9,372,525.432 76,979,245.665 769,792,456



Growth 38,287,542.486 17,735,574.480 28,759,773.921 27,263,343.045 272,633,430

Monthly Dividend

35,289,980.846 9,705,703.652 22,659,816.956 22,335,867.542 223,358,675

Quarterly Dividend

36,071,998.339 14,430,684.202 14,651,144.910 35,851,537.631 358,515,376

5 Prior year amounts have been re-grouped and reclassifi ed, wherever applicable, to confi rm to current year’s presentation.

6 No contingent liabilities for MIP - Regular and MIP - Savings funds for the years ended March 31, 2010 and March 31, 2009.


8 Other income in Savings Plan represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme.




25




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC MIP (HMIP) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP, where applicable):Regular Plan & Savings Plan -

Exit: 1% - if redeemed / switched out within 1 year from date of investment.





26




HSBC Income FundAn open-ended income Scheme

Income Fund.indd 1Income Fund.indd 1 26/07/2010 6:12:48 PM26/07/2010 6:12:48 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Income Fund (HIF) – an open-ended Income SchemeHIF seeks to generate reasonable income for the investor by investing in bonds, debentures, short-term instruments like commercial papers, repos, etc. The Scheme has two Plans - the Investment Plan and the Short Term Plan.

The investment objective of Scheme / Plan(s) is to generate reasonable income through a diversifi ed portfolio of fi xed income securities. The AMC’s view of interest rate trends and the nature of the Plans will be refl ected in the type and maturities of securities in which the Short Term and Investment Plans are invested.

The net assets of HSBC Income Fund - Investment Plan (HIF – IP) amounted to Rs. 32.66 crores as at March 31, 2010 as compared to Rs. 114.90 crores as at March 31, 2009. Around 61.29% in debt and money market instruments, 37.49% of the net assets were invested in reverse repos / CBLO and 1.22% in net current assets as at March 31, 2010.

The net assets of HSBC Income Fund - Short Term Plan (HIF – STP) amounted to Rs. 165.26 crores as at March 31, 2010 as compared to Rs. 151.55 crores as at March 31, 2009. Around 93.86% in debt and money market instruments, 5.91% of the net assets were invested in reverse repos / CBLO and 0.22% in net current assets as at March 31, 2010.

HIF-IP has outperformed its benchmark through relatively active management of duration.

HIF – IP

Date of Inception: 10 Decembwr, 2002 Compounded Annualized Returns (%)


HSBC Income Fund - IP – Regular - Growth 7.39 8.91 7.01 6.58

CRISIL Composite Bond Fund Index 5.38 6.98 5.58 5.26


HIF-STP mostly ran a conservative duration bias on expectation of heightened volatility in short end rates.

HIF – STP



HSBC Income Fund -STP – Regular – Growth

5.10 8.03 6.82 6.30

CRISIL Short-Term Bond Fund Index 5.85 8.14 6.78 6.00




Equity Market OverviewThe fi nancial year ended 31st March, 2010 turned out to be equally eventful as last year. The main difference between the two being that last year marked lot of negative events for the equity markets



4

globally while FY10 was a very positive one with positive events both at global and domestic level for India. Globally, we saw the fi scal / monetary stimuli by various governments to take the credit crisis head on continue thereby leading to economic improvement in most parts of the world. And domestically, we saw the United Progressive Alliance (UPA) sweeping victory in the central elections thereby ensuring stability, policy continuity, and a great degree of space to implement reforms. With the fragmented nature of the opposition leaving it too weak to deter the reform process, everyone expected to see a boost to investment growth and policy initiatives thereby leading to an upward bias to growth. The second budget from the present government continues to underpin on its key focus areas of infrastructure and social sector spending.








Financial Year (FY) 2009-10 was a year marked by most of the governments and Central banks around their world doing their best to enable the economies to come out of the sub-prime crisis that had led to credit market freezing and recessionary conditions in developed nations and slowdown in emerging economies. And these efforts led to slow and gradual improvement in the economic recovery process with growth in emerging economies picking up sharply even though the developed economies continued to improve slowly. But over the last few months, we saw the Greek crisis become bigger which eventually culminated in a ~1 trillion Euros headline package by the European Union and International Monetary Fund to support fi scally strained Euro Area member countries, all of which comes with severe austerity measures, has once again brought to the fore issues regarding defi cits and debt sustainability. This led to enormous



5

uncertainty and nervousness in all the asset markets globally thereby leading to contraction in the investors risk appetite. So now apart from concerns on China’s overheated property market focus shifted to the Euro region uncertainty. So overall the next year is going to be very crucial with respect to the direction of the economic environment amidst all this uncertainty.



Debt Market Outlook












6







b) HSBC Mutual Fund









7






Scheme


Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Income Fund - Investment Plan 203,423 476 238,624 16

HSBC Income Fund - Short Term Plan 57,414 23 – –







8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0




9









MUMBAI

July 20, 2010



10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Income Fund (“The Scheme”) as at March 31, 2010 and the related Revenue Account for the year ended on that date, both of which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.




(i) The Balance Sheet and Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Income Fund as at March 31, 2010 and its net surplus for the year ended on that date.


(iii) The methods used to value non-traded / thinly traded securities as at March 31, 2010 as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds issued by Securities and Exchange Board of India are fair and reasonable.


Sd/-




11


Rs. in Lakhs

HSBC INCOME FUND – INVESTMENT PLAN

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 2,418.14 9,489.00

2 Reserves & Surplus2.1 Unit Premium Reserves (602.92) (99.56)2.2 Unrealised Appreciation Reserve – 29.072.3 Other Reserves 1,451.25 2,071.49



TOTAL 3,478.72 11,681.18

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 813.04 6,139.301.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities 63.92 72.671.4 Government Securities 627.68 4,533.401.5 Treasury Bills – –1.6 Commercial Paper 497.34 –1.7 Certifi cate of Deposits – –1.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits 189.55 2.053 Other Current Assets3.1 Cash & Bank Balance 14.24 44.803.2 CBLO / Reverse Repo Lending 1,224.53 346.073.3 Others 48.42 542.89


TOTAL 3,478.72 11,681.18



12


Rs. in Lakhs

HSBC INCOME FUND – SHORT TERM PLAN

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 14,887.54 13,700.32

2 Reserves & Surplus2.1 Unit Premium Reserves 372.47 450.992.2 Unrealised Appreciation Reserve 3.45 49.382.3 Other Reserves 1,266.30 953.81



TOTAL 16,614.09 15,208.47

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 500.66 8,415.761.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – –1.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper 2,394.53 –1.7 Certifi cate of Deposits 12,616.23 6,021.531.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits 4.04 4.043 Other Current Assets3.1 Cash & Bank Balance 53.89 93.643.2 CBLO / Reverse Repo Lending 977.31 162.993.3 Others 67.43 510.51


TOTAL 16,614.09 15,208.47



13

Rs. in Lakhs




1 INCOME1.1 Dividend – –1.2 Interest 446.43 338.851.3 Realised Gain / (Loss) on Foreign Exchange

Transactions– –

1.4 Realised Gains / (Losses) on Interscheme sale of investments

– (33.67)


238.82 (61.70)

1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.38 –

(A) 685.63 243.48

2 EXPENSES2.1 Management fees 95.71 18.382.2 Service tax on Management fees – –2.3 Transfer agents fees and expenses 6.33 3.422.4 Custodian fees 0.46 0.502.5 Trusteeship fees 0.11 0.022.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 33.75 101.432.8 Audit fees 1.50 0.502.9 Other operating expenses 1.00 1.822.10 Expenses to be Reimbursed by the Investment

Manager– (58.80)

(B) 138.86 67.273 NET REALISED GAINS / (LOSSES)

FOR THE YEAR (A - B = C) 546.77 176.21

4 Change in Unrealised Depreciationin value of investments (D) (157.02) 151.13

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 703.79 25.08

6 Change in unrealised appreciation inthe value of investments (F) (29.07) 25.63

7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 674.72 50.71


7.2 Less: Balance transfer toUnrealised Appreciation Reserve (29.07) 25.63

7.3 Add / (Less): Equalisation (1,078.50) 1,131.117.4 Transfer from Reserve Fund 428.37 17.797.5 Transfer from Unit Premium Reserve – –8 TOTAL 53.66 1,173.98

9 Dividend Appropriation9.1 Income Distributed during the year 213.83 103.739.2 Tax on income distributed during the year 31.70 15.5610 Retained Surplus / (Defi cit)

carried forward to Balance Sheet (191.87) 1,054.69




14

Abridged Revenue Account for the year ended March 31, 2010 (Contd...)

Rs. in Lakhs

HSBC INCOME FUND - SHORT TERM PLAN



1 INCOME1.1 Dividend – –1.2 Interest 1,868.40 459.891.3 Realised Gain / (Loss) on Foreign Exchange

Transactions– –


– 2.75


274.99 29.04

1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 5.82 –

(A) 2,149.21 491.68

2 EXPENSES2.1 Management fees 241.79 17.482.2 Service tax on Management fees – –2.3 Transfer agents fees and expenses 17.55 3.082.4 Custodian fees 4.19 0.962.5 Trusteeship fees 0.51 0.022.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 128.88 38.472.8 Audit fees 1.00 0.502.9 Other operating expenses 1.45 0.412.10 Expenses to be Reimbursed by

the Investment Manager– (14.41)


FOR THE YEAR (A - B = C) 1,753.84 445.17

4 Change in Unrealised Depreciationin value of investments (D) – –



7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,707.90 494.03



7.3 Add / (Less): Equalisation (14.78) 573.657.4 Transfer from Reserve Fund 10.19 48.637.5 Transfer from Unit Premium Reserve – –8 TOTAL 1,749.25 1,067.45

9 Dividend Appropriation9.1 Income Distributed during the year 1,208.44 343.839.2 Tax on income distributed during the year 218.13 62.3910 Retained Surplus / (Defi cit)

carried forward to Balance Sheet 322.68 661.23



15



Previous Year ended March 31, 2009


Open



Regular Weekly Dividend Option

Institutional Growth Option 9.5776 14.1338

Institutional Dividend Option 10.6682 –

Institutional Weekly Dividend Option – –

Institutional Plus Growth Option – –

Institutional Plus Weekly Dividend Option – –

Institutional Plus Monthly Dividend Option – –

High



Regular Weekly Dividend Option – –


Institutional Dividend Option 11.2616 11.6290





Low










End




Institutional Growth Option – 9.5776

Institutional Dividend Option – 10.6682





16








End 3,266 11,490

Average (AAuM)1 7,715 4,163


4. Expense Ratio:





Institutional Growth Option 1.50% 1.06%

Institutional Dividend Option 1.50% 1.06%
















6. Portfolio turnover ratio4 – –


Retail








17





Corporate







8. Returns (%):

a. Last One Year

Scheme


Regular Dividend Option 6.4429 N/A

Regular Weekly Dividend Option N/A N/A


Institutional Dividend Option N/A 8.4667

Institutional Weekly Dividend Option N/A N/A

Institutional Plus Growth Option N/A N/A

Institutional Plus Weekly Dividend Option N/A N/A

Institutional Plus Monthly Dividend Option N/A N/A

Benchmark

CRISIL Composite Bond Fund Index (Investment Plan) 5.3800 7.1600

b. Since Inception

Scheme



Regular Weekly Dividend Option N/A N/A


Institutional Dividend Option N/A 5.8927

Institutional Weekly Dividend Option N/A N/A

Institutional Plus Growth Option N/A N/A


Institutional Plus Monthly Dividend Option N/A N/A

Benchmark

CRISIL Composite Bond Fund Index (Investment Plan) 5.2600 5.2200

1 AAuM = Average daily net assets 2 Gross income = amount against (A) in the Revenue Account i.e. Income. 3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or pur)chase divided by the Average AuM for the year.


18






Open



Regular Weekly Dividend Option 10.0712 10.1026


Institutional Dividend Option 10.4456 –

Institutional Weekly Dividend Option 10.2542 –

Institutional Plus Growth Option 10.1070 –


Institutional Plus Monthly Dividend Option 10.0362 –

High






Institutional Weekly Dividend Option 10.4622 10.4660

Institutional Plus Growth Option 10.6740 10.1070

Institutional Plus Weekly Dividend Option 10.1031 10.0220

Institutional Plus Monthly Dividend Option 10.2315 10.0362

Low










End







Institutional Plus Growth Option – 10.1070


19





Institutional Plus Weekly Dividend Option 10.0558 –



End 16,530 13,614

Average (AAuM)1 38,875 5,472


4. Expense Ratio:




Regular Weekly Dividend Option 1.25% 1.10%



Institutional Weekly Dividend Option 0.80% 0.60%

Institutional Plus Growth Option 0.75% 0.55%

Institutional Plus Weekly Dividend Option 0.75% 0.55%

Institutional Plus Monthly Dividend Option 0.75% 0.55%












6. Portfolio turnover ratio4


Retail








20




Corporate







8. Returns (%):

a. Last One Year

Scheme





Institutional Dividend Option N/A N/A

Institutional Weekly Dividend Option 5.0891 N/A

Institutional Plus Growth Option 5.6258 N/A


Institutional Plus Monthly Dividend Option 4.5414 N/A

Benchmark

CRISIL Short-Term Bond Fund Index (Short Term Plan) 5.8500 6.8500

b. Since Inception

Scheme





Institutional Dividend Option – 3.8703





Benchmark

CRISIL Short-Term Bond Fund Index (Short Term Plan) 6.0000 6.0000




21

HSBC INCOME FUND - INVESTMENT PLAN / SHORT TERM PLAN



1.2. Open Positions of derivatives for Income Fund - Investment Plan is Nil as at March 31, 2010 and as at March 31, 2009.

Open Positions of derivatives for Income Fund - Short Term Plan is Nil as at March 31, 2010 and as at March 31, 2009.



Amount(Rs.)


by all schemes

Amount(Rs.)


by all schemes

2010 2009


Fixed deposits – 1,018,000,000 – 43,000,000

1.4. Open position of Securities Borrowed and / or Lent by the Schemes as of the years ended March 31, 2010 and March 31, 2009 are NIL.

1.5. NPAs for the Schemes for the years ended March 31, 2010 and March 31, 2009 are NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years 2009 and 2010 and their percentages to net assets are as under :

SecurityType

March 31, 2010

INVESTMENT PLAN SHORT TERM PLAN

Amount(Rs.)


Amount(Rs.)



– Appreciation 250,564 0.0767% 344,566 0.0208%

– Depreciation 306,366 0.0938% – –



– Depreciation 441,583 0.1352% – –


– Appreciation 10,873 0.0033% – –

– Depreciation 437,566 0.1340% – –



22

SecurityType

March 31, 2009

INVESTMENT PLAN SHORT TERM PLAN

Amount(Rs.)


Amount(Rs.)



– Appreciation 6,317,746 0.5498% 5,080,372 0.3732%

– Depreciation 3,411,111 0.2969% 142,285 0.0105%



– Depreciation 781,228 0.0680% – –



– Depreciation 15,845,249 1.3790% – –

1.7. The aggregate value of investments purchased (excluding accretion of discount of Rs. 3,669,515 and Rs. 103,649,039 for HSBC Income Fund - Investment Plan and HSBC Income Fund - Short Term Plan respectively) and sold (including matured) during the year are :

2009-2010

Plan Aggregate Purchases Aggregate Sales

Amount(Rs.)

Percentage of Average Daily

Net Assets

Amount(Rs.)


Net Assets

Investment Plan 9,142,476,843 1185.04% 10,057,164,104 1303.60%

Short Term Plan 23,963,152,456 616.42% 23,982,294,982 616.91%

The aggregate value of investments purchased (excluding accretion of discount of Rs. 1,815,499 and Rs. 26,773,795 for HSBC Income Fund - Investment Plan and HSBC Income Fund - Short Term Plan respectively) and sold (including matured) during the year 2008 - 2009 are :

2008-2009

Plan Aggregate Purchases Aggregate Sales

Amount(Rs.)


Net Assets

Amount(Rs.)


Net Assets

Investment Plan 3,159,143,552 762.83% 2,244,998,154 542.10%

Short Term Plan 3,827,871,811 710.63% 2,473,791,637 459.25%


Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets are as under:



23

Security Category

Fair Value(Rs.)


Fair Value(Rs.)


INVESTMENT PLAN

2010 2009


Money market Instruments 49,732,940 15.2253% – –

Total 137,429,225 42.0726% 189,014,345 16.4503%

Security Category

Fair Value(Rs.)


Fair Value(Rs.)


SHORT TERM PLAN

2010 2009


Money market Instruments 1,501,075,589 90.8105% 602,153,291 44.2308%

Total 1,551,141,505 93.8393% 1,138,262,114 83.6103%

2 Disclosure Under Regulation 25(8) of the Securities nnd Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.

During the year 2009-2010, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection/bank charges amounting to Rs. 22,806 for the Investment Plan and Rs. 7,865 for the Short Term Plan.

During the year 2008-2009, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 41,395 for the Investment Plan and Rs. 3,854 for the Short Term Plan .



Name of Sponsor / AMC and its associates /relatedparties / group companies


Nature ofRelation

Period Covered


% of Total Business




Fund

INVESTMENT PLAN


Associate 2009 - 2010 16.97 44.20 2,750,823 55.53


Associate 2009 - 2010 0.00~ 0.00~ 5,415 0.11



24




Nature ofRelation

Period Covered


% of Total Business




Fund

SHORT TERM PLAN


Associate 2009 - 2010 253.25 29.71 11,527,114 58.98


Associate 2009 - 2010 6.76 0.79 130,877 0.67



Nature ofRelation

Period Covered


% of Total Business



(on accrual basis)


Fund

INVESTMENT PLAN


Associate 2008 - 2009 67.67 5.62 6,807,601 18.98

SHORT TERM PLAN


Associate 2008 - 2009 81.63 11.77 2,856,078 24.09



3 None of the Investors held more than 25% of the total net assets of Income Fund - Investment Plan and Income Fund - Short Term Plan as at the years ended on March 31, 2010 and March 31, 2009.


25

4 Unit Capital movement during the years ended March 31, 2010 and March 31, 2009:

INVESTMENT PLAN

Description Opening Units Subscription Redemption Closing Units Face Value

2009-2010

Regular Dividend 58,649,984.489 14,455,550.272 60,784,150.527 12,321,384.234 123,213,843

Regular Growth 25,707,313.077 6,885,022.408 20,732,282.697 11,860,052.788 118,600,528

Regular Weekly Dividend

– – – – –

Institutional Dividend

10,013,416.171 18,672.866 10,032,089.037 – –

Institutional Growth 519,254.435 11,032,977.203 11,552,231.638 – –

Institutional Weekly Dividend

– – – – –

2008 - 2009



Regular Growth 11,671,564.647 24,482,272.058 10,446,523.628 25,707,313.077 257,073,131


– – –


– 19,998,982.155 9,985,565.984 10,013,416.171 100,134,162

Institutional Growth 9,264,262.136 1,019,254.435 9,764,262.136 519,254.435 5,192,544


– – – – –

SHORT TERM PLAN


2009-2010


Regular Growth 15,450,409.839 24,352,826.602 25,055,835.671 14,747,400.770 147,474,007


14,467,296.399 73,014,114.879 67,101,961.049 20,379,450.229 203,794,503


4,837,013.350 53,253,516.264 57,604,389.332 486,140.282 4,861,404

Institutional Growth 8,845,986.502 37,282,068.211 34,489,082.752 11,638,971.961 116,389,719


24,995,115.818 81,693,798.828 76,782,550.358 29,906,364.288 299,063,642

Institutional Plus Option - Growth

14,250,000.000 65,758,134.542 80,008,134.542 – –

Institutional Plus Option - Weekly Dividend

– 219,694,038.845 188,934,556.980 30,759,481.865 307,594,818

Institutional Plus Option - Monthly Dividend

1,000,000.000 84,875,537.437 84,856,733.909 1,018,803.528 10,188,035



26

SHORT TERM PLAN

2008 - 2009


Regular Dividend

4,147,785.788 63,563,188.891 14,553,568.167 53,157,406.512 531,574,065

Regular Growth

4,652,173.505 19,603,247.004 8,805,010.670 15,450,409.839 154,504,098


505,339.613 17,883,545.155 3,921,588.369 14,467,296.399 144,672,964


– 17,532,762.612 12,695,749.262 4,837,013.350 48,370,134

Institutional Growth

500,000.000 11,411,840.508 3,065,854.006 8,845,986.502 88,459,865


– 83,021,402.762 58,026,286.944 24,995,115.818 249,951,158

Institutional Plus Option - Growth

– 14,250,000.000 – 14,250,000.000 142,500,000

Institutional Plus Option - Weekly Dividend

– 75,804,702.056 75,804,702.056 – –

Institutional Plus Option - Monthly Dividend

– 1,000,000.000 – 1,000,000.000 10,000,000


6 No contingent liabilities for Investment Plan and Short Term Plan for the years ended March 31, 2010 and March 31, 2009.


8 Other income in Investment Plan represents provision for expenses written back as no longer required.

Other income in Short Term Plan represents provision for expenses written back as no longer required and amount received from Investment Manager as compensation for an operational incident.




27




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Income Fund (HIF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP where applicable):Investment Plan:

Exit : Regular & Institutional Option - 0.5% if redeemed / switched outwithin 6 months from the date of investment.

Short Term Plan:

Exit: Regular, Institutional & Institutional Plus Option - Nil.




28





HSBC Floating Rate FundAn open-ended income Scheme

Floating Rate Fund.indd 1Floating Rate Fund.indd 1 27/07/2010 4:12:20 PM27/07/2010 4:12:20 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Floating Rate Fund (HFRF) – an open–ended Income SchemeHFRF seeks to generate reasonable return with commensurate risk from a portfolio comprised of fl oating rate debt instruments and fi xed rate debt instruments swapped for fl oating rate returns. The Scheme may also invest in fi xed rate money market and debt instruments. There can be no assurance that the Scheme objective can be realised. The Scheme has two Plans – Long Term Plan and Short Term Plan.

The net assets of HSBC Floating Rate Fund – Long Term Plan (HFRF – LTP) amounted to Rs. 597.50 crores as at March 31, 2010 as compared to Rs. 454.44 crores as at March 31, 2009. Around 98.68% were invested in money market instruments, 1.40% of the net assets were invested in reverse repos / CBLO and (0.02)% in net current assets as at March 31, 2010.

The net assets of HSBC Floating Rate Fund - Short Term Plan (HFRF – STP) amounted to Rs. 72.22 crores as at March 31, 2010 as compared to Rs. 87.85 crores as at March 31, 2009. Around 99.05% of the net assets were invested in reverse repos/ CBLO and 0.95% in net current assets as at March 31, 2010.

HFRF - LTP has outperformed its benchmark index through active calls at the short end of the curve based on outlook for liquidity and RBI policy rates, among other factors.

HFRF – LTP

Date of Inception: 16 November, 2004

Compounded Annualized Returns (%)


HSBC FRF – LTP – Regular Plan – Growth 4.52 7.38 6.70

CRISIL Liquid Fund Index 3.67 6.65 6.14



HFRF–STP has underperformed its benchmark as incremental investments have been made very conservatively in line with the general risk environment.

HFRF – STP

Date of Inception:16 November, 2004

Simple Annualized Returns (%)


Schemes (P2P) 3 Months 6 Months 1 Year 3 Years Since Inception

HSBC FRF – STP – Regular Plan – Growth

2.49 2.36 2.24 5.98 5.99

CRISIL Liquid Fund Index 3.69 3.18 3.68 6.65 6.14





4





For the fi nancial year 2009–2010, BSE SENSEX was up by 80.5%. The BSE Midcap was up by 130.2% and the broader indices like BSE 200, 96.3% and BSE 500, 99.8% also refl ected the sharp up move across the markets.

Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the world. And hence there is a fear that this might de–rail the recovery process what we are witnessing over the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.

In another important event, we saw S&P revise its outlook on India’s long–term sovereign credit rating to stable from negative. It affi rmed its ‘BBB–’ long–term and ‘A–3’ short–term sovereign credit ratings on India. The outlook upgrade driven by consolidation in fi scal defi cit and strong growth.


Bond yields rose for most of the fi nancial year 2009–2010 as market was hit by a huge borrowing calendar of the government. This was a consequence of the fi scal expansion that was undertaken since 2008 to enhance public expenditure in the face of the global crisis that had hit the economy. Supply fatigue soon set into the market, leading to a gradual rise in bond yields over the year. Domestic economic data started to improve towards late calendar year thus further curbing appetite for bonds. 10 year benchmark sovereign yield rose approximately 80 bps over the fi scal.




5




In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP for FY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons and industry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growth in FY09. India remains a supply–constrained and capital–starved economy with signifi cant latent unmet demand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robust domestic demand, driven by private consumption and investment, may be complemented by improving external demand. The key to track will be the strength of the upturn in the investment cycle. Even though there are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a more gradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed the economic downturn exceptionally well, and is doing the right things to position growth at an elevated level without either fuelling a sustained rise in infl ation or pushing the banks to lend more aggressively. Fiscal consolidation will be credible as the government has little choice but to begin the much–needed process of fi scal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure, infrastructure building and domestic consumption are still intact. The key concerns at this point stem from the uncertainty in the developed economies and any fallout of the same on India and the domestic infl ations which seems to be very high.

The next fi nancial year 2010–2011 is likely to be one where specifi c sectors and company performances may be much better than broader market indices. The challenge will be to pick these stocks and sectors ahead of the market. Given that markets valuations have come off the trough seen in early March 2009 with the markets now trading at valuations of around 15–16X FY2011 earnings, in the near term we expect markets to enter a phase of consolidation.

Debt Market Outlook







6


l Gross market borrowing for FY 2010–11 is pegged at INR 4,57,000 crores versus INR 4,51,000 crores in 2009–10. A few demand–supply dynamics for government securities are as follows:


l Absence of RBI OMO and MSS de–sequestering imply that net supply of government securities to the market will be higher than last year by almost INR 1,00,000 crores.


Overall, while suffi cient risks remain to bond yields, some factors as discussed above have turned bond positive. These, if sustained, could ensure against a very sharp rise in yields thus providing opportunities for select duration plays. Moreover, if market were to get more comfort that the government’s fi scal defi cit would progressively reduce in the year ahead, some of the so–called ‘supply premium’ that has been built on the curve since last year may begin to unwind thus leading to softening of yields later in the year. Also, given that system liquidity is expected to progressively reduce going into the October – December 2009 quarter, we expect the curve to start to fl atten thereon.



HSCI is a member of the HSBC Group, one of the largest banking and fi nancial services organisations, in the world. Headquartered in London, HSBC operates through long–established businesses in fi ve regions: Europe, Asia–Pacifi c region, Middle East, America and Africa. Through its global network of some 10,000 offi ces in 83 countries and territories, HSBC provides a comprehensive range of fi nancial services to personal, commercial, corporate, institutional and investment and private banking clients.


HSCI holds 100% of the paid–up equity share capital of the AMC.

b) HSBC Mutual Fund





7





The paid–up equity share capital of the AMC is Rs. 9 crores. HSBC Securities and Capital Markets (India) Private Limited holds 100% of the paid up equity share capital of the AMC.





Scheme


Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Floating Rate Fund – Long Term Plan 41,564 56 14,800 4

HSBC Floating Rate Fund – Short Term Plan – – – –

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces – namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.

On the distribution front, the number of empanelled distributors increased from 8632 as on 31 March, 2009 to 8859 as of 31 March, 2010. During the year, the Asset Management Company initiated tie–ups for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number



8


of such tie–ups to 32 (Angel Capital & Dept Market Ltd, Bajaj Capital Ltd, Bonanza Portfolio Ltd., CITIBANK NA, Citigroup Wealth Advisors India Private Limited, DawnayDay AV India Advisors Pvt.Ltd., HDFC Bank Ltd., Hongkong & Shanghai Banking Corporation Ltd., HSBC Corporate Investment Solution Services, ICICI Securities Limited, iFAST Financial India Pvt.Ltd., INDIA INFOLINE LTD., IndusInd Bank Limited, ING Vysya Bank Ltd., Karvy Stock Broking Ltd., Kotak Mahindra Bank Limited, Kotak Securities Limited, Motilal Oswal Securities Limited, NJ India Invest Pvt. Ltd., Reliance Securities Limited, Religare Securities Limited, RR Investors Capital Services Pvt. Ltd., SBICAP Securities Ltd., Sharekhan Limited, Shriram Insight Share Brokers Ltd., SMC Global Securities Limited, Standard Chartered – STCI Capital Markets Ltd., Standard Chartered Bank, Tom Distribution Services Ltd., Yes Bank Limited, IDBI Capital Market Services Ltd., JRG Securities Limited).


7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during 2009–2010 are as follows:


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


9


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010


10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Floating Rate Fund (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.




(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Floating Rate Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.


(iii) The methods used to value non-traded / thinly traded securities as at March 31, 2010, as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund in accordance with the guidelines for valuation of securities for mutual funds issued by the Securities and Exchange Board of India are fair and reasonable.


Sd/-




11


Rs. in Lakhs

HSBC FLOATING RATE FUND – LONG TERM PLAN

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 51,992.65 39,160.20

2 Reserves & Surplus2.1 Unit Premium Reserves 4,917.52 2,722.862.2 Unrealised Appreciation Reserve – 29.052.3 Other Reserves 2,866.22 3,532.21


4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 2,576.98 3,395.36

TOTAL 62,353.37 48,839.68

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – 532.861.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds – 348.161.3.5 Securitised Debt securities – 1,331.571.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper 9,745.17 44,790.021.7 Certifi cate of Deposits 49,212.78 196.451.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits 56.10 25.103 Other Current Assets3.1 Cash & Bank Balance 4.14 5.863.2 CBLO / Reverse Repo Lending 835.52 1,520.033.3 Others 2,499.66 89.634 Deferred Revenue Expenditure

(to the extent not written off) – –

TOTAL 62,353.37 48,839.68



12

Rs. in Lakhs

HSBC FLOATING RATE FUND – SHORT TERM PLAN

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 6,706.37 8,405.84

2 Reserves & Surplus2.1 Unit Premium Reserves 4,186.98 (53.05)2.2 Unrealised Appreciation Reserve – – 2.3 Other Reserves (3,670.33) 431.74 3 Loans & Borrowings – – 4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – – 4.2 Other Current Liabilities & Provisions 10.53 44.82

TOTAL 7,233.55 8,829.35

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – – 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – – 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – – 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits – – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –

Total Investments – –

2 Deposits 50.17 50.17 3 Other Current Assets3.1 Cash & Bank Balance 25.51 53.47 3.2 CBLO / Reverse Repo Lending 7,153.52 8,724.47 3.3 Others 4.35 1.24 4 Deferred Revenue Expenditure

(to the extent not written off) – –

TOTAL 7,233.55 8,829.35




13


Rs. in Lakhs

HSBC FLOATING RATE FUND – LONG TERM PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend – –1.2 Interest 5,815.31 2,223.761.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – 5.891.5 Realised Gains / (Losses) on External sale /

redemption of investments1,198.53 155.87

1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 0.05 (0.74)

(A) 7,013.88 2,384.78

2 EXPENSES2.1 Management fees 496.32 80.662.2 Service tax on Management fees – –2.3 Transfer agents fees and expenses 64.36 16.922.4 Custodian fees 14.89 4.552.5 Trusteeship fees 1.19 0.112.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 253.18 54.982.8 Audit fees 0.25 0.252.9 Other operating expenses 4.17 2.072.10 Expenses to be Reimbursed by the Investment Manager – (10.63)


FOR THE YEAR (A – B = C) 6,179.52 2,235.874 Change in Unrealised Depreciation in

value of investments (D) (6.64) 6.42

5 NET GAINS / (LOSSES)FOR THE YEAR [E = (C–D)] 6,186.16 2,229.45


7 NET SURPLUS / (DEFICIT)FOR THE YEAR (E + F = G) 6,157.11 2,258.50



7.3 Add / (Less): Equalisation (2,869.27) 2,450.757.4 Transfer from Reserve Fund 71.62 23.137.5 Transfer from Unit Premium Reserve – –8 TOTAL 3,388.51 4,703.33

9 Dividend Appropriation9.1 Income Distributed during the year 3,300.21 1,493.429.2 Tax on income distributed during the year 682.67 299.6710 Retained Surplus / (Defi cit)

carried forward to Balance Sheet (594.37) 2,910.24



14

Rs. in Lakhs

HSBC FLOATING RATE FUND – SHORT TERM PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend – – 1.2 Interest 212.63 1,091.08 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme

sale of investments– 12.08


(2.72) 0.24

1.6 Realised Gains / (Losses) on Derivative Transactions – – 1.7 Other Income 0.01 (0.01)

(A) 209.92 1,103.39

2 EXPENSES2.1 Management fees 20.29 42.45 2.2 Service tax on Management fees – – 2.3 Transfer agents fees and expenses 3.63 6.20 2.4 Custodian fees 0.11 1.53 2.5 Trusteeship fees 0.07 0.06 2.6 Commission to Agents * – – 2.7 Marketing & Distribution expenses 13.07 26.30 2.8 Audit fees 0.12 1.50 2.9 Other operating expenses 0.57 1.68 2.10 Expenses to be Reimbursed by the Investment Manager – –


FOR THE YEAR (A – B = C) 172.06 1,023.67 4 Change in Unrealised Depreciation in

value of investments (D) – –

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C – D)] 172.06 1,023.67


7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 172.06 1,023.67


7.2 Less: Balance transfer toUnrealised Appreciation Reserve – –

7.3 Add / (Less): Equalisation (4,141.00) (225.10)7.4 Transfer from Reserve Fund 42.36 48.71 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL (3,926.58) 847.28

9 Dividend Appropriation 9.1 Income Distributed during the year 103.75 590.58 9.2 Tax on income distributed during the year 29.39 167.28 10 Retained Surplus / (Defi cit)

carried forward to Balance Sheet (4,059.72) 89.42




15


HSBC FLOATING RATE FUND

LONG TERM PLAN SHORT TERM PLAN

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open

Regular Growth Option 13.5781 12.4936 13.3675 12.4236

Regular Daily Dividend Option 10.0114 – 10.0000 10.0000

Regular Weekly Dividend Option 10.0066 – 10.0205 10.0079

Regular Monthly Dividend Option 10.0064 10.0069 – –

Institutional Growth Option 13.7348 12.5862 13.5003 12.5158

Institutional Daily Dividend Option 10.0980 – 10.0623 10.0368

Institutional Weekly Dividend Option 11.2348 11.2291 10.4999 10.0562

Institutional Fortnightly Dividend Option 10.2245 10.0332 – –

Institutional Monthly Dividend Option 10.0614 10.0346 10.1350 10.0658

Institutional Plus Growth Option – – 11.4592 10.6182

Institutional Plus Daily Dividend Option – – – 10.0262

Institutional Plus Weekly Dividend Option – – 10.0373 10.0098

Institutional Plus Monthly Dividend Option – – – –

High


Regular Daily Dividend Option 10.0136 10.0114 10.0000 10.0000

Regular Weekly Dividend Option 10.0240 10.0121 10.0222 10.0330



Institutional Daily Dividend Option 10.1799 10.0980 10.1360 10.0623








Low





16




CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009











End







Institutional Weekly Dividend Option 11.2299 11.2348 – 10.4999




Institutional Plus Daily Dividend Option – – – –

Institutional Plus Weekly Dividend Option – – – 10.0373



End 59,776 45,444 7,223 8,785

Average (AAuM)1 131,250 27,867 7,720 13,315

3. Gross income as % of AAuM2 5.34% 8.56% 2.72% 8.29%

4. Expense Ratio:


Regular Growth Option 1.00% 0.93% 0.51% 0.70%

Regular Daily Dividend Option 1.00% 0.93% 0.51% 0.70%

Regular Weekly Dividend Option 1.00% 0.93% 0.51% 0.70%


17




CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

Regular Monthly Dividend Option 1.00% 0.93% – –

Institutional Growth Option 0.61% 0.45% 0.44% 0.45%

Institutional Daily Dividend Option 0.61% 0.45% 0.44% 0.45%

Institutional Weekly Dividend Option 0.61% 0.45% 0.44% 0.45%

Institutional Fortnightly Dividend Option 0.61% 0.45% – –

Institutional Monthly Dividend Option 0.61% 0.45% 0.44% 0.41%

Institutional Plus Growth Option – – 0.37% 0.41%

Institutional Plus Daily Dividend Option – – – –

Institutional Plus Weekly Dividend Option – – 0.37% 0.41%




Regular Daily Dividend Option 0.38% 0.26% 0.26% 0.33%

Regular Weekly Dividend Option 0.38% 0.26% 0.26% 0.33%

Regular Monthly Dividend Option 0.38% 0.26% – 0.33%


Institutional Daily Dividend Option 0.38% 0.23% 0.26% 0.33%

Institutional Weekly Dividend Option 0.38% 0.23% 0.26% 0.33%

Institutional Fortnightly Dividend Option 0.38% 0.23% – 0.33%

Institutional Monthly Dividend Option 0.38% 0.23% 0.26% 0.33%

Institutional Plus Growth Option – 0.23% 0.26% 0.27%

Institutional Plus Daily Dividend Option – 0.23% – 0.27%

Institutional Plus Weekly Dividend Option – 0.23% 0.26% 0.27%

Institutional Plus Monthly Dividend Option – 0.23% – 0.27%

5. Net Income as a percentage of AAuM3 4.71% 8.02% 2.23% 7.69%

6. Portfolio turnover ratio4 – – – –


Retail







18




CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009






Corporate











8. Returns (%):

a. Last One Year

Scheme


Regular Daily Dividend Option 3.9436 – 1.7359 5.8884

Regular Weekly Dividend Option 3.9506 – 1.7298 5.9603



Institutional Daily Dividend Option 4.4107 – 1.9645 6.1162









19



CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

Benchmark

CRISIL Liquid Fund Index 3.6700 8.7800 3.6800 8.8000

b. Since Inception

Scheme














Benchmark

CRISIL Liquid Fund Index 6.1400 6.7000 6.1400 6.7000




20

HSBC FLOATING RATE FUND - LONG TERM PLAN / SHORT TERM PLAN

1 Investments:


1.2. Open Positions of derivatives for Floating Rate Fund - Long Term Plan and Floating Rate Fund - Short Term Plan as of March 31, 2010 are NIL.

Open Positions of derivatives for Floating Rate Fund - Long Term Plan and Floating Rate Fund - Short Term Plan as of March 31, 2009 are NIL.



Amount(Rs.)


by all schemes

Amount(Rs.)


by all schemes

2010 2009


Fixed deposits – 1,018,000,000 – 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2010 and March 31, 2009 are NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year and percentage to net assets are:

Asset Class

LONG TERM PLAN

Amount(Rs.)


Amount(Rs.)


2010 2009

Non-Convertible Debentures and Bonds Listed / Awaiting Listing


– Depreciation – – 663,800 0.0146%

Non-Convertible Debentures and Bonds Privately Placed

– Appreciation – – 837,077 0.0184%



– Appreciation – – 2,068,284 0.0455%


Aggregate Unrealised Gain / Loss at the end of the Financial years ended March 31, 2010 and March 31, 2009 for Floating Rate Fund - Short Term Plan are Nil.

1.7. The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 523,693,413 and Rs. 2,730,000 for Long Term and Short Term Plan respectively) are :



21

2009-2010

Plan


Amount(Rs.)

Percentage ofAverage Daily

Net Assets

Amount(Rs.)


Net Assets

Long Term Plan 72,453,262,526 552.03% 71,918,677,941 547.95%

Short Term Plan 797,541,955 103.30% 800,000,000 103.62%

The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 135,102,262 and Rs. 81,656,313 for Long Term and Short Term Plan respectively)

2008-2009

Plan


Amount(Rs.)


Net Assets

Amount(Rs.)


Net Assets

Long Term Plan 27,141,086,721 794.97% 23,252,509,827 681.08%

Short Term Plan 2,241,718,740 167.79% 3,687,513,072 276.00%

1.8. Non -Traded securities in the portfolio:

Aggregate Value of Equity, Debt & Money Market Instruments and their percentages to Net assets are as under :

2009-2010

Security Category

Fair Value(Rs.)


Fair Value(Rs.)



Money market Instruments

5,895,795,487 98.63% – –

Total 5,895,795,487 98.63% – –

2008-2009

Security Category

Fair Value(Rs.)


Fair Value(Rs.)



Debt Instruments 167,973,620 3.70% – –


4,498,647,018 98.99% – –

Total 4,666,620,638 102.69% – –

2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended for the year ended March 31, 2010 is as under.



22


During the year 2009-10, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 3,831 and Rs. 6,386 in Long Term Plan and Short Term Plan respectively.

During the year 2008-09, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 12 and Rs. 1,385 in Long Term Plan and Short Term Plan respectively.




Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund

LONG TERM PLAN


Associate 2009 - 2010 271.44 4.44 3,987,136 13.90


Associate 2009 - 2010 83.70 1.37 342,379 1.19

SHORT TERM PLAN


Associate 2009 - 2010 27.75 30.58 810,250 64.35


Associate 2009 - 2010 2.51 2.76 1,542 0.12



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund

LONG TERM PLAN


Associate 2008 - 2009 304.72 26.50 1,206,401 8.05

SHORT TERM PLAN


Associate 2008 - 2009 193.08 12.34 1,529,580 19.46

The brokerage paid was at rates similar to those offered to other distributors. Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC Mutual Fund places money on fi xed deposits and enters into reverse repo transactions from time to time at competitive rates.



23



Description

LONG TERM PLAN

2009-2010


Regular Growth 7,361,353.037 29,072,069.318 27,104,318.750 9,329,103.605 93,291,035

Regular Daily Dividend

4,719,009.792 157,887.379 2,120,152.849 2,756,744.322 27,567,444


5,869,893.642 69,964,899.678 56,312,448.831 19,522,344.489 195,223,446

Regular Monthly Dividend

43,136,652.841 33,002,015.276 51,655,420.827 24,483,247.290 244,832,474


88,532,331.128 2,513,293,697.351 2,545,724,227.552 56,101,800.927 561,018,008

Institutional Daily Dividend

12,461,806.332 979,230.716 6,243,549.707 7,197,487.341 71,974,873

Institutional Fortnightly Dividend

545,333.900 2,652,232.224 2,629,103.368 568,462.756 5,684,626


217,865,967.972 2,158,763,676.331 1,978,538,269.640 398,091,374.663 3,980,913,748

Institutional Monthly Dividend

11,109,646.396 4,073,334.085 13,307,006.495 1,875,973.986 18,759,739

Description

SHORT TERM PLAN

2009-2010


Regular Growth 7,967,470.081 5,212,911.625 8,252,785.776 4,927,595.930 49,275,958


25,849,979.215 37,428,733.365 42,935,124.056 20,343,588.524 203,435,885


26,900,500.774 25,526,798.856 29,091,427.864 23,335,871.766 233,358,716

Institutional Growth 97,055.445 4,049,696.111 1,634,480.410 2,512,271.146 25,122,711


6,894,975.853 4,840,621.594 11,635,817.106 99,780.341 997,806


3,440,995.435 9,778.962 3,450,774.397 – –


4,339,496.053 50,934.139 1,989,139.240 2,401,290.952 24,012,908

Institutional Plus Growth

4,987,332.184 8,737,217.855 281,296.358 13,443,253.681 134,432,537

Institutional Plus Daily Dividend

– – – – –

Institutional Plus Weekly Dividend

3,580,547.191 4,157.938 3,584,705.129 – –


24

Description

LONG TERM PLAN

2008-2009

Opening Units

Subscription Redemption Closing Units Face Value

Regular Growth 7,471,705.625 14,683,385.964 14,793,738.552 7,361,353.037 73,613,530


– 13,574,854.752 8,855,844.960 4,719,009.792 47,190,098


– 5,879,912.477 10,018.835 5,869,893.642 58,698,936

Regular Monthly Dividend

16,372,183.719 45,848,558.548 19,084,089.426 43,136,652.841 431,366,528


16,920,635.005 459,657,983.206 388,046,287.083 88,532,331.128 885,323,311


– 1,113,238,427.088 1,100,776,620.756 12,461,806.332 124,618,063


881,553.972 110,709,121.493 111,045,341.565 545,333.900 5,453,339


9,287,147.224 682,636,484.183 474,057,663.435 217,865,967.972 2,178,659,680


11,075,077.247 95,585,424.100 95,550,854.951 11,109,646.396 111,096,464

Description

SHORT TERM PLAN

2008-2009

Opening Units

Subscription Redemption Closing Units Face Value

Regular Growth 11,316,444.277 20,562,687.385 23,911,661.581 7,967,470.081 79,674,701


46,612,712.234 57,564,452.273 78,327,185.292 25,849,979.215 258,499,792


21,330,117.806 45,296,245.444 39,725,862.476 26,900,500.774 269,005,008

Institutional Growth 2,558,819.389 22,931,458.891 25,393,222.835 97,055.445 970,554


3,829,950.745 31,051,944.545 27,986,919.437 6,894,975.853 68,949,759


10,011,518.785 3,733,494.717 10,304,018.067 3,440,995.435 34,409,954


4,094,365.416 1,730,610.437 1,485,479.800 4,339,496.053 43,394,961


6,400,346.993 117,717,572.514 119,130,587.323 4,987,332.184 49,873,322


11,918,438.460 474,478,092.435 486,396,530.895 – –


17,920,513.941 531,043.585 14,871,010.335 3,580,547.191 35,805,472

5 Prior year’s amounts have been re-grouped and re-classifi ed, wherever applicable, to confi rm to current year’s presentation.



25

6 No contingent liabilities for Floating Rate Fund - Long Term Plan and Floating Rate Fund - Short Term Plan for the years ended March 31, 2010 and March 31, 2009.


8 Miscellaneous income in Long Term Plan and Short Term Plan represents excess provision for brokerage expenses of previous year written back as no longer required.




26




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Floating Rate Fund (HFRF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP, where applicable):Long Term Plan and Short Term Plan:

Exit: Nil.







HSBC Ultra Short Term Bond FundAn open ended debt Scheme

Ultra Short Term Bond Fund.indd 1Ultra Short Term Bond Fund.indd 1 26/07/2010 3:58:35 PM26/07/2010 3:58:35 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Ultra Short Term Bond Fund (HUSBF) - an open ended Debt SchemeHUSBF seeks to provide liquidity and reasonable returns by investing primarily in a mix of short term debt and money market instruments.

The net assets of HUSBF amounted to Rs. 512.32 crores as at March 31, 2010 as compared to Rs. 984.19 crores as at March 31, 2009. Around 63.87% of the net assets were invested in debt and money market instruments, 29.01% were invested in reverse repos / CBLO and 7.12% was invested in net current assets as at March 31, 2010.

HUSBF has underperformed its benchmark index as incremental investments have been made very conservatively in line with the general risk environment.

Date of Inception: 17 October, 2006 Compounded Annualized Returns (%)


HSBC Ultra Short Term Bond Fund -Regular – Growth

3.74 6.65 6.85

CRISIL Liquid Fund Index 3.93 6.80 6.74










4










5

Debt Market Outlook


















6













On the distribution front, the number of empanelled distributors increased from 8632 as on 31 March, 2009 to 8859 as of 31 March, 2010. During the year, the Asset Management Company initiated tie-ups



7

for online distribution of the Mutual Fund’s schemes with several channel partners taking the total number of such tie-ups to 32 (Angel Capital & Dept Market Ltd, Bajaj Capital Ltd, Bonanza Portfolio Ltd., CITIBANK NA, Citigroup Wealth Advisors India Private Limited, DawnayDay AV India Advisors Pvt.Ltd., HDFC Bank Ltd., Hongkong & Shanghai Banking Corporation Ltd., HSBC Corporate Investment Solution Services, ICICI Securities Limited, iFAST Financial India Pvt.Ltd., INDIA INFOLINE LTD., IndusInd Bank Limited, ING Vysya Bank Ltd., Karvy Stock Broking Ltd., Kotak Mahindra Bank Limited, Kotak Securities Limited, Motilal Oswal Securities Limited, NJ India Invest Pvt. Ltd., Reliance Securities Limited, Religare Securities Limited, RR Investors Capital Services Pvt. Ltd., SBICAP Securities Ltd., Sharekhan Limited, Shriram Insight Share Brokers Ltd., SMC Global Securities Limited, Standard Chartered - STCI Capital Markets Ltd., Standard Chartered Bank, Tom Distribution Services Ltd., Yes Bank Limited, IDBI Capital Market Services Ltd., JRG Securities Limited).




Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0

TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010


9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Ultra Short Term Bond Fund (The “Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.


3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. The Balance Sheet, Revenue Account and Cash Flow Statement referred to above are in agreement with the books of account of the Scheme.


(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and the amendments thereto, as applicable, and also give respectively a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Ultra Short Term Bond Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010 and Revenue Account for the year ended on that date, together with the notes thereon, have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.



Sd/-




10


Rs. in Lakhs

HSBC ULTRA SHORT TERM BOND FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 49,298.93 94,848.26

2 Reserves & Surplus2.1 Unit Premium Reserves 16.00 (118.93)2.2 Unrealised Appreciation Reserve 1.21 49.942.3 Other Reserves 1,923.00 3,640.11


4 Current Liabilities & Provisions4.1 Provision for doubtful Income/Deposits – –4.2 Other Current Liabilities & Provisions 355.22 795.82

TOTAL 51,594.36 99,215.20

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds 22,513.75 34,136.321.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities:1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds 8,495.75 18,308.881.3.5 Securitised Debt securities 1,711.12 18,081.131.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper – –1.7 Certifi cate of Deposits – 1,588.051.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits 2,031.00 1,010.00

3 Other Current Assets3.1 Cash & Bank Balance 90.90 458.593.2 CBLO / Reverse Repo Lending 14,862.54 22,483.923.3 Others 1,889.30 3,148.31


TOTAL 51,594.36 99,215.20



11

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend – –1.2 Interest 4,070.88 26,997.421.3 Realised Gain / (Loss) on Foreign Exchange Transactions – –1.4 Realised Gains / (Losses) on Interscheme sale of investments – (14.86)1.5 Realised Gains / (Losses) on External sale /

redemption of investments(54.71) (158.79)

1.6 Realised Gains / (Losses) on Derivative Transactions – –1.7 Other Income 1.88 2.58

(A) 4,018.05 26,826.35

2 EXPENSES2.1 Management fees 701.07 885.112.2 Service tax on Management fees – –2.3 Transfer agents fees and expenses 37.33 147.672.4 Custodian fees 5.34 35.622.5 Trusteeship fees 0.72 1.292.6 Commission to Agents * – –2.7 Marketing & Distribution expenses 108.53 329.312.8 Audit fees 0.50 1.502.9 Other operating expenses 2.72 26.03

(B) 856.21 1,426.53

3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 3,161.84 25,399.82

4 Change in Unrealised Depreciation in value of investments (D) – –

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C-D)] 3,161.84 25,399.82

6 Change in unrealised appreciation in the value of investments (F) (48.74) 33.51

7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 3,113.10 25,433.33


7.2 Less: Balance transfer toUnrealised Appreciation Reserve

(48.74) 33.51

7.3 Add / (Less): Equalisation (2,459.75) (6,306.61)7.4 Transfer from Reserve Fund 258.83 289.227.5 Transfer from Unit Premium Reserve – 0.738 TOTAL 960.92 19,383.16

9 Dividend Appropriation9.1 Income Distributed during the year 2,075.16 16,632.149.2 Tax on income distributed during the year 344.04 3,218.67

10 Retained Surplus / (Defi cit)carried forward to Balance Sheet (1,458.28) (467.65)




12


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open


Regular Daily Dividend Option 10.0122 10.0122



Institutional Daily Dividend Option 10.0125 10.0125


Institutional Monthly Dividend Option 10.1476 10.0834


Institutional Plus Daily Dividend Option 10.0506 10.0126



High












Low














13



CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

End













End 51,239 98,419

Average (AAuM)1 79,681 308,140


4. Expense Ratio:



Regular Daily Dividend Option 1.30% 0.84%



Institutional Daily Dividend Option 1.05% 0.60%


Institutional Monthly Dividend Option 1.05% 0.60%


Institutional Plus Daily Dividend Option 0.67% 0.31%













14


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009







Retail









Corporate









8. Returns (%):

a. Last One Year

Scheme














15


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

Benchmark

CRISIL Liquid Fund Index 3.9300 8.7800

b. Since Inception

Scheme












Benchmark





16




1.2. Open Positions of derivatives as of March 31, 2010 is NIL. Open Positions of derivatives as of March 31, 2009 end is NIL.




by all schemes


by all schemes

2010 2009


Fixed deposits – 1,018,000,000 – 43,000,000



1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial years March 31, 2010 and March 31, 2009 are as under :



Amount(Rs.)


2010 2009


– Appreciation 118,650 0.0023% 552,846 0.0056%

– Depreciation 10 0.0000% 7 0.0000%





– Appreciation 2,182 0.0000% 4,506,181 0.0458%

– Depreciation – – 64,584 0.0007%

1.7. The aggregate value of investment securities purchased (excluding accretion of discount ofRs. 16,855,956) and sold (including matured) during the fi nancial year 2009-2010 are Rs. Nil and Rs. 3,945,886,455 respectively being 0.00% and 49.52% of the average daily net assets.

The aggregate value of investment purchased (excluding accretion of discount of Rs. 1,434,575,544) and sold (including matured) during the fi nancial year 2008-2009 is Rs. 215,473,358,101 andRs. 236,584,673,590 respectively being 699.27% and 767.78% of the average daily net assets.


Aggregate Value of Equity, Debt & Money Market Instruments and their percentages to Net assets are as under:



17

Security Category Fair Value(Rs.)

% to Net Assets

Fair Value(Rs.)

% to Net Assets

2010 2009

Debt Instruments 3,272,062,567 63.8586 7,052,632,706 71.6590


– – 158,805,411 1.6136

Total 3,272,062,567 63.8586 7,211,438,117 73.2725


During the year 2009-2010, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 62,633.






Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009-2010 632.82 23.69 6,055,879 49.19


Associate 2009-2010 26.40 0.99 26,101 0.21



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008-2009 2,226.38 20.00 12,246,089 11.01






18




Regular Growth 30,701,774.121 64,545,530.369 70,827,353.932 24,419,950.558 244,199,507


325,722,386.273 407,087,307.877 548,342,613.864 184,467,080.286 1,844,670,802


84,576,307.762 121,748,732.303 141,012,552.697 65,312,487.368 653,124,874



149,222,257.022 310,840,531.571 413,853,348.645 46,209,439.948 462,094,400


39,216,714.706 55,193,822.795 76,580,969.857 17,829,567.652 178,295,675


12,394,879.767 4,722,154.825 11,801,253.362 5,315,781.230 53,157,812


101,445,807.318 510,642,756.113 581,717,840.944 30,370,722.487 303,707,225


137,853,200.124 773,255,945.564 856,540,145.076 54,569,000.612 545,690,006


39,471,878.513 231,504,498.928 221,998,411.931 48,977,965.510 489,779,655

Institutional Plus Monthly Dividend

8,865,584.027 1,936,573.988 4,591,528.596 6,210,629.419 62,106,293



Regular Growth 12,947,562.502 99,469,516.553 81,715,304.934 30,701,774.121 307,017,741


342,608,641.233 1,185,144,871.026 1,202,031,125.986 325,722,386.273 3,257,223,863


80,326,610.335 315,343,532.080 311,093,834.653 84,576,307.762 845,763,078



351,092,342.074 1,242,088,327.212 1,443,958,412.264 149,222,257.022 1,492,222,570


74,699,504.743 195,730,174.224 231,212,964.261 39,216,714.706 392,167,147


15,102,418.972 44,563,488.833 47,271,028.038 12,394,879.767 123,948,798


258,473,165.696 3,733,880,271.611 3,890,907,629.989 101,445,807.318 1,014,458,073


1,273,900,193.819 7,653,158,455.898 8,789,205,449.593 137,853,200.124 1,378,532,001


235,516,908.995 1,262,013,895.241 1,458,058,925.723 39,471,878.513 394,718,785

Institutional Plus Monthly Dividend

10,947,069.442 22,715,164.623 24,796,650.038 8,865,584.027 88,655,840



19

5 Prior year amounts have been re-grouped and reclassifi ed, wherever applicable, to confi rm to current year’s presentation.



8 Other income represents write back of excess provision of prior years as they are no longer required and compensation from an external party for an operational accident.




20




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Ultra Short Term Bond Fund (HUSBF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP, where applicable):Exit: Nil.







HSBC Cash FundAn open-ended liquid Scheme

CASH FUND.indd 1CASH FUND.indd 1 27/07/2010 3:19:30 PM27/07/2010 3:19:30 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Cash Fund (HCF) – an open-ended Liquid SchemeHCF aims to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities. However, there can be no assurance that the scheme objective can be realised.

The net assets of HCF amounted to Rs. 470.59 crores as at March 31, 2010 as compared to Rs. 492.65 crores as at March 31, 2009. Around 59.44% were invested in debt and money market instruments, 38.68% of the net assets were invested in reverse repos / CBLO and 1.88% in net current assets as at March 31, 2010.

HCF has underperformed its benchmark index as incremental investments have been made very conservatively in line with the general risk environment.

Date of Inception: 04 December, 2002

Simple Annualized Returns (%)


Scheme & Benchmark 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception

HSBC Cash Fund – Regular – Growth

2.66 2.36 2.16 5.68 5.86 5.58

CRISIL Liquid Fund Index 3.69 3.18 3.68 6.65 6.23 5.63








Economic data points coming out globally remained positive thereby indicating the sustainability of the global recovery process. This led to improving risk appetite globally and investors buying most of the riskier



4

asset classes hence lot of money fl owed into the emerging markets and India benefi ted as it was one of the few economies which grew very well even in the downturn thereby indicating the broad strength of the country. The second half of last year saw improvement in most of the economic indicators leading to good performance by equity markets globally. But over the last couple of months, we are seeing investor focus globally shift to monetary and fi scal tightening by the Central Bank’s and Government’s around the world. And hence there is a fear that this might de-rail the recovery process what we are witnessing over the last few months thereby leading to correction in most of the asset classes like commodities, equities around the world.








In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP for FY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons and industry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growth in FY09. India remains a supply-constrained and capital-starved economy with signifi cant latent unmet demand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robust domestic demand, driven by private consumption and investment, may be complemented by improving external demand. The key to track will be the strength of the upturn in the investment cycle. Even though



5

there are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a more gradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed the economic downturn exceptionally well, and is doing the right things to position growth at an elevated level without either fuelling a sustained rise in infl ation or pushing the banks to lend more aggressively. Fiscal consolidation will be credible as the government has little choice but to begin the much-needed process of fi scal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure, infrastructure building and domestic consumption are still intact. The key concerns at this point stem from the uncertainty in the developed economies and any fallout of the same on India and the domestic infl ations which seems to be very high.


Debt Market Outlook













6






b) HSBC Mutual Fund











7



6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.





Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0

Note:

# including against its authorised persons/distributors/employees, etc.

* Non actionable means the complaint which is pending/outside the scope of the mutual fund

**includes correction in investor details


the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.

b) The price and redemption value of the units, and income from them, can go up as well as down with fl uctuations in the market value of its underlying investments.



9






MUMBAI

July 20, 2010


10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Cash Fund (The “Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.


3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. The Balance Sheet, Revenue Account and Cash Flow Statement referred to above are in agreement with the books of account of the Scheme.


(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and the amendments thereto, as applicable, and also give respectively a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Cash Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010, and Revenue Account for the year ended on that date, together with the notes thereon, have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.



Sd/-




11


Rs. in Lakhs

HSBC CASH FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 45,365.60 46,008.96

2 Reserves & Surplus2.1 Unit Premium Reserves 50.73 88.812.2 Unrealised Appreciation Reserve – –2.3 Other Reserves 1,643.95 3,166.94


4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – –4.2 Other Current Liabilities & Provisions 1,324.55 1,288.99

TOTAL 48,384.83 50,553.70

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – –1.1.2 Preference Shares – –1.1.3 Equity Linked Debentures – –1.1.4 Other Debentures & Bonds – 1,483.331.1.5 Securitised Debt securities – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – –1.2.2 Preference Shares – –1.2.3 Equity Linked Debentures – –1.2.4 Other Debentures & Bonds – –1.2.5 Securitised Debt securities – –1.3 Unlisted Securities1.3.1 Equity Shares – –1.3.2 Preference Shares – –1.3.3 Equity Linked Debentures – –1.3.4 Other Debentures & Bonds 320.26 1,061.951.3.5 Securitised Debt securities – –1.4 Government Securities – –1.5 Treasury Bills – –1.6 Commercial Paper 4,995.27 2,259.191.7 Certifi cate of Deposits 22,656.56 193.281.8 Bill Rediscounting – –1.9 Units of Domestic Mutual Fund – –1.10 Foreign Securities – –


2 Deposits 2,061.88 2,826.383 Other Current Assets3.1 Cash & Bank Balance 127.10 167.733.2 CBLO / Reverse Repo Lending 18,203.02 42,462.323.3 Others 20.74 99.52


TOTAL 48,384.83 50,553.70



12

Rs. in Lakhs

HSBC CASH FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend – – 1.2 Interest 1,715.40 12,212.11 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme sale of investments – 43.68 1.5 Realised Gains / (Losses) on External sale / redemption of

investments(5.07) 64.51

1.6 Realised Gains / (Losses) on Derivative Transactions – – 1.7 Other Income 0.03 0.39

(A) 1,710.36 12,320.69

2 EXPENSES2.1 Management fees 216.06 360.50 2.2 Service tax on Management fees – – 2.3 Transfer agents fees and expenses 25.74 73.27 2.4 Custodian fees 2.39 16.85 2.5 Trusteeship fees 0.47 0.63 2.6 Commission to Agents * – – 2.7 Marketing & Distribution expenses 53.49 139.02 2.8 Audit fees 1.00 3.00 2.9 Other operating expenses 3.16 12.49 2.10 Expenses to be Reimbursed by the Investment Manager – –

(B) 302.31 605.76

3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 1,408.05 11,714.93

4 Change in Unrealised Depreciation invalue of investments (D) – (0.07)

5 NET GAINS / (LOSSES)FOR THE YEAR [E = (C - D)] 1,408.05 11,715.00


7 NET SURPLUS / (DEFICIT)FOR THE YEAR (E + F = G) 1,408.05 11,715.00


7.2 Less: Balance transfer to Unrealised Appreciation Reserve – –

7.3 Add / (Less): Equalisation (1,720.49) (9,632.76)7.4 Transfer from Reserve Fund 349.19 623.75 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL 36.75 2,705.99

9 Dividend Appropriation9.1 Income Distributed during the year 943.35 5,545.32 9.2 Tax on income distributed during the year 267.20 1,570.71 10 Retained Surplus / (Defi cit)

carried forward to Balance Sheet (1,173.80) (4,410.04)


* Commission to Agents is included in Marketing & Distribution Expenses.



13

HSBC CASH FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open












High












Low












14

HSBC CASH FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009



End













End 47,060 49,265

Average (AAuM)1 54,692 151,680


4. Expense Ratio:



















15


HSBC CASH FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009












Retail









Corporate









8. Returns (%):

a. Last One Year

Scheme




16

HSBC CASH FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009










Benchmark


b. Since Inception

Scheme












Benchnmark

CRISIL Liquid Fund Index 5.6300 5.9400 1 AAuM = Average daily net assets2 Gross income = amount against (A) in the Revenue Account i.e. Income.3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year .



17

HSBC CASH FUND







by all schemes


by all schemes

2010 2009


Fixed deposits – 1,018,000,000 – 43,000,000



1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year March 31, 2010 and March 31, 2009 are as under :

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009




1.7. The aggregate value of investment securities purchased (excluding accretion of discount of Rs. 60,417,423) and sold (including matured) during the fi nancial year 2009-2010 are Rs. 15,263,572,550 and Rs. 13,026,048,200 respectively being 279.08% and 238.17% of the average daily net assets.

The aggregate value of investment securities purchased (excluding accretion of discount of Rs.765,499,693) and sold (including matured) during the fi nancial year 2008 - 2009 is Rs. 113,034,775,451 and Rs. 126,356,785,527 respectively being 745.22% and 833.05% of the average daily net assets.



Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Debt Instruments 32,026,000.00 0.68% 254,528,096.23 5.17%


2,765,182,927.91 58.76% 245,246,153.84 4.98%

Total 2,797,208,927.91 59.44% 499,774,250.07 10.14%



18


During the year 2009-2010, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 99,605.






Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009 - 2010 176.35 0.32 2,93,023 60.11


Associate 2009 - 2010 549.21 0.99 157,182 3.22



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008 - 2009 2,059.63 97.17 5,425,600 13.18


3 Large Holdings in the Scheme (i.e. in excess of 25% of the net assets):

Name of the Scheme

No. ofholders

% Holdings No. ofholders

% Holdings

2010 2009

HSBC Cash Fund 1 43.56% – –




Regular Growth Option 19,452,526.536 40,702,731.451 47,501,799.529 12,653,458.458 126,534,586

Regular Daily Dividend Option

117,952,996.359 111,772,395.587 152,626,435.077 77,098,956.869 770,989,569

Regular Weekly Dividend Option

17,184,208.603 32,470,981.303 35,083,157.976 14,572, 031.930 145,720,318

Institutional Growth Option

1,626,747.666 13,927,700.773 14,617,535.753 936,912.686 9,369,127



19



Institutional Daily Dividend Option

52,779,357.682 210,724,456.279 258,724,824.761 4,778,989.200 47,789,891

Institutional Weekly Dividend Option

10,930,233.795 4,593,062.717 12,594,405.793 2,928,890.719 29,288,907

Institutional Monthly Dividend Option

554,781.289 545,778.993 545,779.011 554,781.271 5,547,813

Institutional PlusGrowth Option

44,991,905.273 2,543,491,205.051 2,569,936,226.208 18,546,884.116 185,468,841

Institutional Plus Daily Dividend Option

162,235,389.474 50,830,039,645.693 50,696,026,293.396 296,248,741.771 2,962,487,418

Institutional Plus Weekly Dividend Option

26,337,844.437 365,491,499.821 370,661,551.259 21,167,792.999 211,677,932

Institutional Plus Monthly Dividend Option

6,043,642.284 9,782,490.220 11,657,531.577 4,168,600.927 41,686,009


Opening Units Subscription Redemption Closing Units Face ValueRegular Growth Option 23,543,346.007 69,745,617.114 73,836,436.585 19,452,526.536 194,525,264

Regular Daily Dividend Option

168,782,960.991 308,519,010.875 359,348,975.507 117,952,996.359 1,179,529,964

Regular WeeklyDividend Option

31,459,108.549 64,387,773.406 78,662,673.352 17,184,208.603 171,842,086

Institutional Growth Option

17,227,982.504 322,060,275.008 337,661,509.846 1,626,747.666 16,267,477

Institutional DailyDividend Option

139,058,165.422 845,679,347.939 931,958,155.679 52,779,357.682 527,793,577

Institutional Weekly Dividend Option

7,110,328.509 35,907,080.000 32,087,174.714 10,930,233.795 109,302,338

Institutional Monthly Dividend Option

2,187,696.477 5,871,186.049 7,504,101.237 554,781.289 5,547,813

Institutional Plus Growth Option

206,514,921.534 14,440,717,782.241 14,602,240,798.502 44,991,905.273 449,919,053

Institutional Plus Daily Dividend Option

608,832,365.711 46,426,054,733.863 46,872,651,710.100 162,235,389.474 1,622,353,895

Institutional Plus Weekly Dividend Option

18,231,462.834 1,132,765,270.417 1,124,658,888.814 26,337,844.437 263,378,444

Institutional Plus Monthly Dividend Option

3,867,165.460 7,243,189.171 5,066,712.347 6,043,642.284 60,436,423

5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.6 No contingent liabilities for the years ended March 31, 2010 and March 31, 2009.7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.8 Miscellaneous Income represents excess provision of previous year written back which is no longer

required.9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and

standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 20, 2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No.IMD/Cir8/132968/2008 dated July 24, 2008.



20




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Cash Fund (HCF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP, where applicable):Exit: Nil.







HSBC Gilt FundAn open-ended gilt Scheme

GILT FUND.indd 1GILT FUND.indd 1 27/07/2010 3:17:53 PM27/07/2010 3:17:53 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Gilt Fund (HGF) – an open-ended Gilt SchemeHGF seeks to generate reasonable returns through investments in Government Securities (G-Secs) of various maturities. The AMC’s view of interest rate trends and the nature of the plans will be refl ected in the maturities of securities in which the Plans are invested.The net assets of HGF amounted to Rs. 0.42 crores as at March 31, 2010 as compared to Rs. 17.96 crores as at March 31, 2009. Around 96.85% of the net assets were invested in reverse repos / CBLO and 3.15% was invested in net current assets as at March 31, 2010.HGF underperformed its benchmark index as low assets under management for an extended period had constrained ability to actively manage the scheme. However, as active duration management started with some growth in assets over recent years, the scheme has outperformed the benchmark over the last 1 year.



HSBC Gilt Fund – Growth 7.57 1.16 2.41 2.36

I Sec Composite Index 4.42 8.74 7.24 6.07









4







Financial Year (FY) 2009-10 was a year marked by most of the governments and Central banks around their world doing their best to enable the economies to come out of the sub-crisis that had led to recession in developed nations and slowdown in emerging economies. And these efforts led to slow and gradual improvemnet in the economic recovery process with growth in emerging economics picking up sharply even though the developed economies continued to improve slowly. But over the last few months, we saw the Greek crisis become bigger which eventually culminated in a ~1 trillion Euros headline package by the European Union and International Monetary Fund to support fi scally strained Euro Area member countries, all of which comes with severe austerity measures, has once again brought to the fore issues regarding defi cits and debt sustainability. This led to enormous uncertainty and nervousness in all the asset markets globally thereby leading to contraction in the investors risk appetite. So now apart from concerns on China’s overheated property market focus shifted to the Euro region uncertainty. So overall the next year is going to be very crucial with respect to the direction of the economic environment amidst all this uncertainty.


The next fi nancial year 2010-2011 is likely to be one where specifi c sectors and company performances may be much better than broader market indices. The challenge will be to pick these stocks and sectors ahead of the market. Given that markets valuations have come off the trough seen in early March 2009



5

with the markets now trading at valuations of around 15-16X FY2011 earnings, in the near term we expect markets to enter a phase of consolidation.


















6









3. INVESTMENT OBJECTIVE OF THE SCHEMESThe investment objective of the respective Schemes has been provided above under the heading “Scheme Performance, Future Outlook and Operation of the Scheme” (refer Section 1).





Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Gilt Fund 7,396 2 – –

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently met,



7

with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.





Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8

Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010



9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Gilt Fund (“The Scheme”) as at March 31, 2010, the related Revenue Account for the year ended on that date and the Cash Flow Statement for the year ended on that date which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of unit capital balances as at March 31, 2010 by correspondence with the registrar and transfer agent. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



(i) The Balance Sheet, Revenue Account and Cash Flow Statement together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable, and also give respectively, a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Gilt Fund as at March 31, 2010, its net surplus and its cash fl ows for the year ended on that date.



Sd/-




10


Rs. in Lakhs

HSBC GILT FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 38.03 1,952.68

2 Reserves & Surplus2.1 Unit Premium Reserves (26.34) 22.24 2.2 Unrealised Appreciation Reserve – – 2.3 Other Reserves 30.56 (179.28)



TOTAL 43.23 1,811.52

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – – 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds – – 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds – – 1.3.5 Securitised Debt securities – – 1.4 Government Securities – 1,269.30 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits – – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –

Total Investments – 1,269.30

2 Deposits – –

3 Other Current Assets3.1 Cash & Bank Balance 2.31 2.30 3.2 CBLO / Reverse Repo Lending 40.91 476.92 3.3 Others 0.01 63.00


TOTAL 43.23 1,811.52



11

Rs. in Lakhs

HSBC GILT FUND

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend – – 1.2 Interest 25.78 458.99 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme sale of investments – – 1.5 Realised Gains / (Losses) on External sale / redemption of

investments(3.42) (580.67)

1.6 Realised Gains / (Losses) on Derivative Transactions – – 1.7 Other Income – –

(A) 22.36 (121.68)

2 EXPENSES2.1 Management fees 1.77 22.83 2.2 Service tax on Management fees – – 2.3 Transfer agents fees and expenses 0.41 6.07 2.4 Custodian fees – 0.57 2.5 Trusteeship fees 0.01 0.03 2.6 Commission to Agents * – – 2.7 Marketing & Distribution expenses 1.62 24.85 2.8 Audit fees 0.12 0.05 2.9 Other operating expenses 0.02 0.55

(B) 3.95 54.95

3 NET REALISED GAINS / (LOSSES) FOR THE YEAR (A - B = C) 18.41 (176.63)

4 Change in Unrealised Depreciation in value of investments (D) (48.48) 48.48

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 66.89 (225.11)

6 Change in unrealised appreciation inthe value of investments (F) – –

7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 66.89 (225.11)


7.2 Less: Balance transfer toUnrealised Appreciation Reserve

– –

7.3 Add / (Less): Equalisation 142.95 354.28 7.4 Transfer from Reserve Fund – 0.02 7.5 Transfer from Unit Premium Reserve – – 8 TOTAL 209.84 129.19

9 Dividend Appropriation9.1 Income Distributed during the year – 267.69 9.2 Tax on income distributed during the year – 47.85

10 Retained Surplus / (Defi cit)carried forward to Balance Sheet

209.84 (186.35)




12

HSBC GILT FUNDCurrent


PreviousYear ended

March 31, 2009


Open


Monthly Dividend Option 9.4995 10.7428

Weekly Dividend Option 8.8405 –

High



Weekly Dividend Option 9.5097 10.1128

Low




End





End 42.24 1,796

Average (AAuM)1 522.75 7,314


4. Expense Ratio:



Monthly Dividend Option 0.75% 0.75%

Weekly Dividend Option 0.75% 0.75%



Monthly Dividend Option 0.34% 0.31%

Weekly Dividend Option 0.34% 0.31%




Retail

Monthly Dividend Option – 0.4071

Weekly Dividend Option – 0.1046



13


HSBC GILT FUNDCurrent


PreviousYear ended

March 31, 2009

Corporate

Monthly Dividend Option – 0.1278

Weekly Dividend Option – 0.0974

8. Returns (%):

a. Last One Year

Scheme

Monthly Dividend Option 7.5699 (8.1709)


Weekly Dividend Option 7.5697 –

Benchmark

I-Sec Composite Index 4.4200 12.8300

b. Since Inception

Scheme



Weekly Dividend Option (2.6716) (22.6382)

Benchmark

I-Sec Composite Index 6.0700 6.3800 1 AAuM = Average daily net assets2 Gross income = amount against (A) in the Revenue Account i.e. Income.3 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year.4 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year.


14

HSBC GILT FUND






Amount Aggregate Investments by

all schemes


by all schemes

2010 2009


Fixed deposits – 1,018,000,000 – 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the scheme as of the years ended March 31, 2010 and March 31, 2009 are NIL.


1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year and their percentages to net assets are as under:

Security Category Amount(Rs.)


Amount(Rs.)


2010 2009



– Depreciation – – 4,848,166 2.70%

1.7. The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 187,184) and sold during the fi nancial year 2009-2010 is Rs. 829,684,134 and Rs. 961,307,513 respectively being 1587.15% and 1838.94% of the average daily net assets.

The aggregate value of investments securities purchased (excluding accretion of discount of Rs.NIL) and sold during the fi nancial year 2008-2009 is Rs. 1,184,011,556 and Rs. 994,165,715 respectively being 161.74% and 135.80% of the average daily net assets.

1.8. Non-Traded securities in the portfolios as at March 31, 2010 and March 31, 2009 are NIL.


During the year 2008-09, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 23.



Name of Sponsor / AMC and its associate / related parties / group companies


Nature of Relation

Period Covered


% of Total Business received by the

Fund

Commissionpaid[Rs.]

% of Total commission paid

by the Fund


Associate 2009-2010 0.43 6.64 11,295 7.50


Associate 2009-2010 – – 564 0.37



15


Nature of Association /Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008 - 2009 53.67 35.34 135,100 1.73



3 Large Holdings in the Scheme (i.e. in excess of 25% of the net assets).

Name of Scheme No. of holders % Holding No. of holders % Holding

2010 2009

HSBC Gilt Fund – – 1 31.12%





2,554,537.361 93,544.839 2,371,930.759 276,151.441 2,761,513

Monthly Dividend Option

3,037,397.103 448,522.876 3,437,292.390 48,627.589 486,275

Weekly Dividend Option

13,934,870.718 6,553,849.420 20,433,246.964 55,473.174 554,731




425,297.259 30,587,968.620 28,458,728.518 2,554,537.361 25,545,374

Monthly Dividend Option

449,571.839 133,376,429.531 130,788,604.267 3,037,397.103 30,373,971

Weekly Dividend Option

– 455,468,300.800 441,533,430.082 13,934,870.718 139,348,707




8 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 20, 2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No. IMD/Cir8/132968/2008 dated July 24, 2008.



16




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Gilt Fund (HGF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP, where applicable):Exit: 0.5% if redeemed / switched out with 6 months from date of investment.







HSBC Flexi Debt FundAn open ended debt Scheme

Flexi Debt Fund.indd 1Flexi Debt Fund.indd 1 26/07/2010 4:45:39 PM26/07/2010 4:45:39 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3




HSBC Flexi Debt Fund (HFDF) - an open ended Debt SchemeHFDF seeks to deliver returns in the form of interest income and capital gains, along with high liquidity, commensurate with the current view on the markets and the interest rate cycle, through active investment in debt and money market instruments.

The net assets of HFDF amounted to Rs. 102.42 crores as at March 31, 2010 as compared to Rs. 316.84 crores as at March 31, 2009. Around 96.32% of the net assets were invested in debt and money market instruments, 4.10% were invested in net current assets and (0.42)% was invested in reverse repos / CBLO as at March 31, 2010.

HFDF has outperformed its benchmark index through relatively active management of duration.

Date of Inception: 05 October, 2007 Compounded Annualized Returns (%)


HSBC Flexi Debt Fund – Growth 6.90 9.25

CRISIL Composite Bond Fund Index 5.38 6.50










4










5

















with the provisions of the Indian Trusts Act, 1882 (2 of 1882) vide a Trust Deed dated February 7, 2002



6

with HSBC Securities and Capital Markets (India) Private Limited, as the Sponsor and the Board of Individual Trustees. The Trustee has entered into an Investment Management Agreement dated February 7, 2002 with HSBC Asset Management (India) Private Limited (the AMC) to function as the Investment Manager for all the Schemes of the Fund. The Fund was registered with SEBI vide registration number MF/046/02/5 dated May 27, 2002.












Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Flexi Debt Fund 17 1 – –




7





Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAI

July 20, 2010


9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Flexi Debt Fund (The “Scheme”) as at March 31, 2010 and the related Revenue Account for the year ended on that date both of which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.


3. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. The Balance Sheet and Revenue Account referred to above are in agreement with the books of account of the Scheme.


(i) The Balance Sheet and Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and the amendments thereto, as applicable, and also give respectively a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Flexi Debt Fund as at March 31, 2010 and its net surplus for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended on that date, together with the notes thereon, have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.



Sd/-




10


Rs. in Lakhs

HSBC FLEXI DEBT FUND

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 9,307.33 29,868.43

2 Reserves & Surplus2.1 Unit Premium Reserves (58.18) 1,014.82 2.2 Unrealised Appreciation Reserve 6.00 141.50 2.3 Other Reserves 992.29 659.15


TOTAL 10,301.06 32,112.57

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – – 1.1.2 Preference Shares – – 1.1.3 Equity Linked Debentures – – 1.1.4 Other Debentures & Bonds 1,597.55 17,391.36 1.1.5 Securitised Debt securities – – 1.2 Securities Awaited Listing:1.2.1 Equity Shares – – 1.2.2 Preference Shares – – 1.2.3 Equity Linked Debentures – – 1.2.4 Other Debentures & Bonds – – 1.2.5 Securitised Debt securities – – 1.3 Unlisted Securities1.3.1 Equity Shares – – 1.3.2 Preference Shares – – 1.3.3 Equity Linked Debentures – – 1.3.4 Other Debentures & Bonds 9.89 206.94 1.3.5 Securitised Debt securities – – 1.4 Government Securities – 11,625.91 1.5 Treasury Bills – – 1.6 Commercial Paper – – 1.7 Certifi cate of Deposits 8,257.15 – 1.8 Bill Rediscounting – – 1.9 Units of Domestic Mutual Fund – – 1.10 Foreign Securities – –


2 Deposits – –

3 Other Current Assets3.1 Cash & Bank Balance 6.46 8.00 3.2 CBLO / Reverse Repo Lending 419.91 1,488.59 3.3 Others 10.10 1,391.77 4 Deferred Revenue Expenditure – –


TOTAL 10,301.06 32,112.57



11

Rs. in Lakhs


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend – – 1.2 Interest 859.56 1,378.18 1.3 Realised Gain / (Loss) on Foreign Exchange Transactions – – 1.4 Realised Gains / (Losses) on Interscheme sale of investments (28.31) 1.5 Realised Gains / (Losses) on External sale / redemption of

investments848.63 (242.09)

1.6 Realised Gains / (Losses) on Derivative Transactions – – 1.7 Other Income 0.31 –

(A) 1,708.50 1,107.78

2 EXPENSES2.1 Management fees 117.66 103.23 2.2 Transfer agents fees and expenses 8.56 9.58 2.3 Custodian fees 4.27 2.14 2.4 Trusteeship fees 0.25 0.07 2.5 Commission to Agents* – – 2.6 Marketing & Distribution expenses 122.76 140.36 2.7 Audit fees 0.50 1.00 2.8 Other operating expenses 0.59 1.61

(B) 254.59 257.99

3 NET REALISED GAINS / (LOSSES)FOR THE YEAR (A - B = C) 1,453.91 849.79

4 Change in Unrealised Depreciation in value of investments (D) (391.46) 301.81



7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 1,709.87 676.80



7.3 Add / (Less): Equalisation (876.61) 821.97 7.4 Transfer from Reserve Fund 13.65 108.28 7.5 Transfer from Unit Premium Reserve – 6.62 8 TOTAL 982.41 1,484.85 9 Dividend Appropriation9.1 Income Distributed during the year 546.20 876.79 9.2 Tax on income distributed during the year 89.41 170.83 10 Retained Surplus / (Defi cit)

carried forward to Balance Sheet 346.80 437.23




12


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open


Regular Fortnightly Dividend Option 10.3662 10.0315


Regular Quarterly Dividend Option 10.7885 –

Regular Half Yearly Dividend Option 9.8005 –


Institutional Fortnightly Dividend Option 9.7535 10.0302


Institutional Quarterly Dividend Option 10.6734 –

Institutional Half Yearly Dividend Option – –

High





Regular Half Yearly Dividend Option 10.3551 10.6149




Institutional Quarterly Dividend Option 11.2508 11.6816

Institutional Half Yearly Dividend Option – 10.1428

Low













13


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

End












End 10,247 31,684

Average (AAuM)1 16,219 16,822


4. Expense Ratio:



Regular Fortnightly Dividend Option 1.86% 1.77%



Regular Half Yearly Dividend Option 1.86% 1.77%


Institutional Fortnightly Dividend Option 1.51% 0.72%


Institutional Quarterly Dividend Option 1.51% 0.72%

Institutional Half Yearly Dividend Option 1.51% 0.72%



Regular Fortnightly Dividend Option 0.73% 0.61%



Regular Half Yearly Dividend Option 0.73% 0.61%


Institutional Fortnightly Dividend Option 0.73% 0.61%



14



CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Institutional Quarterly Dividend Option 0.73% 0.01

Institutional Half Yearly Dividend Option 0.73% 0.01




Retail









Corporate









8. Returns (%):

a. Last One Year

Scheme




Regular Quarterly Dividend Option 6.4166 –





15


CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Institutional Quarterly Dividend Option 6.6757 –


Benchmark


b. Since Inception

Scheme

Regular Growth 9.2478 10.8635




Regular Half Yearly Dividend Option 3.4705 (6.9350)

Institutional growth 9.6314 11.2524





Benchmark





16

HSBC FLEXI DEBT FUND1 Investments:


1.2. Open Positions of derivatives as a % to Net Assets as of year ended March 31, 2010 is Nil. Open Positions of derivatives as a % to Net Assets as of year ended March 31, 2009 is NIL.

1.3. Investments made in Associates and Group Companies:


Amount(Rs.)


by all schemes

Amount(Rs.)


by all schemes

2010 2009


Fixed deposits – 1,018,000,000 – 43,000,000

1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of the years ended March 31, 2010 and March 31, 2009 is NIL.

1.5. NPAs as at years ended March 31, 2010 and March 31, 2009 is NIL.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year 2009-10 and percentages to net assets.

Security Category

Amount(Rs.)


Amount(Rs.)


2010 2009

Non-Convertible Debentures and Bonds Listed / Awaiting Listing

– Appreciation 592,346 0.0578% 19,512,641 0.6159%

– Depreciation – – 5,741,501 0.1812%

Non-Convertible Debentures and Bonds Privately Placed

– Appreciation 7,612 0.0007% 403,039 0.0127%

– Depreciation – – 24,486 0.0008%



– Depreciation – – 39,145,803 1.2355%

1.7 The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 13,501,279) and sold during the fi nancial year 2009-2010 is Rs. 19,227,187,601 andRs. 21,287,109,534 respectively being 1185.45% and 1312.46% of the average daily net assets.

The aggregate value of investments securities purchased (excluding accretion of discount of Rs. 7,919,570) and sold during the fi nancial year 2008-2009 is Rs. 15,365,196,103 andRs. 14,298,039,929 respectively being 869.38% (annualized) and 809.00% (annualized) of the average daily net assets.



17



Security Category

Fair Value(Rs.)

% to Net Assets

Fair Value(Rs.)

% to Net Assets

2010 2009Equities – – – –Debt Instruments 160,743,327 15.6862% 1,057,584,131 33.3792%Money market Instruments

825,716,153 80.5778% – –

Total 986,459,480 96.2639% 1,057,584,131 33.3792%

2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended, for the year ended March 31, 2010 is as under :

During the year 2009-10, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management (India) Private Limited was paid collection / bank charges amounting to Rs. 1,680.





Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business




Fund


Associate 2009 - 2010 20.83 43.85 7,355,753 54.76


Associate 2009 - 2010 0.30 0.63 293,137 2.18



Nature of Relation

Period Covered

Business Given

[Rs. in Crores]

% of Total Business



(on accrual basis)


Fund


Associate 2008 - 2009 231.60 7.80 4,721,864 11.66



3 Large Holdings in the Scheme (i.e. in excess of 25% of the net assets).

Name of Scheme No. of holders % Holding No. of holders % Holding

2010 2009

HSBC Flexi Debt Fund 2 57.03% – –



18



2009-2010Description Opening Units Subscription Redemption Closing Units Face ValueRegular Growth 11,320,074.613 5,141,823.875 11,635,454.773 4,826,443.715 48,264,437

Regular Monthly Dividend 22,377,892.041 2,013,779.622 21,266,996.303 3,124,675.360 31,246,753

Regular Fortnightly Dividend

2,851,879.905 503,018.935 2,637,996.105 716,902.735 7,169,028

Regular QuarterlyDividend Option

6,647,539.396 1,500,941.400 4,949,894.749 3,198,586.047 31,985,860

Regular Half Yearly Dividend Option

197,382.137 1,341,015.203 197,382.137 1,341,015.203 13,410,152



61,694,176.890 15,784,931.042 65,717,185.349 11,761,922.583 117,619,226


99,822,416.031 2,048,808.411 67,689,414.002 34,181,810.440 341,818,104

Institutional Quarterly Dividend Option

16,293,401.195 4,653,040.877 9,508,005.882 11,438,436.190 114,384,362

Institutional Half Yearly Dividend Option

– – – – –

2008 - 2009Description Opening Units Subscription Redemption Closing Units Face ValueRegular Growth 635,935.451 12,591,260.792 1,907,121.630 11,320,074.613 113,200,746

Regular Monthly Dividend 6,654,260.050 23,117,440.320 7,393,808.329 22,377,892.041 223,778,920

Regular Fortnightly Dividend

3,972,727.223 3,894,517.663 5,015,364.981 2,851,879.905 28,518,799

Regular Quarterly Dividend Option

– 7,180,810.305 533,270.909 6,647,539.396 66,475,394

Regular Half Yearly Dividend Option

– 197,382.137 – 197,382.137 1,973,821



7,868,437.619 116,478,386.310 62,652,647.039 61,694,176.890 616,941,769


143,490,168.848 229,828,000.535 273,495,753.352 99,822,416.031 998,224,160

Institutional Quarterly Dividend Option

– 21,443,255.956 5,149,854.761 16,293,401.195 162,934,012

Institutional Half Yearly Dividend Option

– 2,819,475.063 2,819,475.063 – –

5 Previous year’s fi gures have been re-grouped / re-arranged where appropriate.6 No contingent liabilities for the years ended March 31, 2010 and March 31, 2009.7 Expenses other than Management Fees are Inclusive of Service Tax where applicable.8 Other income represents excess expense provision of previous year written back as the same are no

longer payable.9 The Annual Accounts of the Schemes prepared in accordance with the accounting policies and

standards specifi ed in the Ninth Schedule of The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 has been approved by the Board of Directors of HSBC Asset Management (India) Private Limited and The Board of Trustees of HSBC Mutual Fund at their meeting held on July 20, 2010. The audit report attached herewith refers to the said Annual Accounts. The aforesaid abridged accounts are an extract of the Annual Accounts and are prepared in accordance with SEBI Circular No.IMD/Cir8/132968/2008 dated July 24, 2008.


19




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Flexi Debt Fund (HFDF) is the name of the Scheme and does not in any manner indicate the quality of the Scheme or its future prospects or returns.


Load Structure (includes SIP/STP, where applicable):Regular & Institutional Options -

Exit: 0.25% if redeemed / switched out within 3 months from the date of investment.





20




HSBC Fixed Term SeriesA close-ended income Scheme

FTS 30 & 66.indd 1FTS 30 & 66.indd 1 29/07/2010 6:47:11 PM29/07/2010 6:47:11 PM

1

Dear Investor,








Yours sincerely,




2

SPONSOR








BOARD OF TRUSTEES



Mr. Nasser Munjee

Mr. Manu Tandon

Mr. Mehli Mistri


BOARD OF DIRECTORS


Mr. Ayaz Ebrahim

Mr. S. P. Mustafa

Mr. Ashok Jha*





3


1. SCHEME PERFORMANCE, FUTURE OUTLOOK AND OPERATIONS OF THE SCHEMES

a) Operations and Performance of the Schemes

HSBC Fixed Term Series (HFTS) – a close-ended Income SchemeHFTS seeks generation of returns by investing in a portfolio of fi xed income instruments normally maturing in line with the time profi le of the respective plan(s). The Plans which matured during the year were HSBC Fixed Term Series 41, HSBC Fixed Term Series 42, HSBC Fixed Term Series 44, HSBC Fixed Term Series 45, HSBC Fixed Term Series 46, HSBC Fixed Term Series 49, HSBC Fixed Term Series 50, HSBC Fixed Term Series 52, HSBC Fixed Term Series 53, HSBC Fixed Term Series 54, HSBC Fixed Term Series 56, HSBC Fixed Term Series 57, HSBC Fixed Term Series 59, HSBC Fixed Term Series 61, HSBC Fixed Term Series 62, HSBC Fixed Term Series 63.

The Fixed Term Series as on 31 March, 2010 are as follows:

Scheme Name Date of Launch (NFO Open date)

Tenure Date of Maturity

Net Assets as on 31 March, 2010(in Rs. Crores)

HSBC Fixed Term Series 30 03-May-2007 3 years 10-June-2010 91.31

HSBC Fixed Term Series 66 18-September-2008 18 months 05-April-2010 69.15

Date of Inception : 11 June, 2007 Compounded Annualized Returns (%)


HSBC Fixed Term Series 30 – Regular - Growth 11.58 9.64

CRISIL Short Term Bond Fund Index 5.88 7.93

Returns data as on March 31, 2010. Past performance may or may not be sustained in future. ‘Since inception’ returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs.

Date of Inception : 03 October, 2008 Compounded Annualized Returns (%)


HSBC Fixed Term Series 66 – Regular - Growth 7.62 8.90

CRISIL Short Term Bond Fund Index 5.88 8.67

Returns data as on March 31, 2010. Past performance may or may not be sustained in future. ‘Since inception’ returns are calculated on Rs. 10 invested at inception. Calculations are based on Growth NAVs.







4







In spite of the uncertainty in other parts of the globe, India continued to do very well with the GDP for FY10 growing at 7.4%. Agriculture posted below trend growth rate of 0.2% due to bad monsoons and industry grew 9.3% with services growing by 8.5%. IIP grew by a strong 10.4% versus 2.7% growth in FY09. India remains a supply-constrained and capital-starved economy with signifi cant latent unmet demand. GDP growth is likely to accelerate to 8.0% and 8.5% in FY11 and FY12, respectively. Robust domestic demand, driven by private consumption and investment, may be complemented by improving external demand. The key to track will be the strength of the upturn in the investment cycle. Even though there are concerns on monetary tightening, we feel RBI may not derail the growth upturn and adopt a more gradual tightening process keeping in view the recovery is still fragile. We believe the RBI managed the economic downturn exceptionally well, and is doing the right things to position growth at an elevated level without either fuelling a sustained rise in infl ation or pushing the banks to lend more aggressively. Fiscal consolidation will be credible as the government has little choice but to begin the much-needed process of fi scal consolidation. Overall, the broad themes that are driving domestic growth viz. capital expenditure,



5

infrastructure building and domestic consumption are still intact. The key concerns at this point stem from the uncertainty in the developed economies and any fallout of the same on India and the domestic infl ations which seems to be very high.

















6















SchemeUnclaimed Dividends Unclaimed RedemptionsAmount

(Rs.)No. of

InvestorsAmount

(Rs.)No. of

InvestorsHSBC Fixed Term Series – 30 5,738 4 – –

HSBC Fixed Term Series – 66 – – – –

6. INVESTOR SERVICESDuring the year, the number of offi cial points of acceptance of transactions increased signifi cantly to about 206 locations. In addition to the offi ces of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore,



7

Lucknow and Vadodara. With a view to enhancing customer convenience, the Asset Management Company has extended the facility of crediting investor bank accounts directly by way of NEFT / RTGS (for credit of redemption and dividend proceeds). Dividend payouts are normally done within 5 working days from the record date in all schemes. The internal standards on redemption payouts have been consistently met, with very few exceptions. The number of locations for the ECS Auto Debit facility for investments through Systematic Investment Plan also increased to about 87 by March 2010.



7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during 2009-2010 are as follows:Total Number of Folios: 5,22,334

Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


1 61 62 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


2 57 59 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 101 101 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0



8


Comp-laintCode

Type of complaint #


pending at the



received during the

year



Pending

Within 30

days

30-60 days

60-180 days

Beyond 180 days

0-3 months

3-6 months

6-9 months

9-12 months


0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 3 3 0 0 0 0 0 0 0 0


0 1 1 0 0 0 0 0 0 0 0


0 2 2 0 0 0 0 0 0 0 0

IV Others** 10 1621 1631 0 0 0 0 0 0 0 0TOTAL 13 1846 1859 0 0 0 0 0 0 0 0










MUMBAIJuly 20, 2010


9

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Fixed Term Series 30 (The “Scheme”) as at March 31, 2010 and the related Revenue Account for the year ended on that date both of which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.




(i) The Balance Sheet and Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and the amendments thereto, as applicable, and also give respectively a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Fixed Term Series 30 as at March 31, 2010 and its net surplus for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010, and the Revenue Account for the year ended on that date, together with the notes thereon, have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.



Sd/-Vivek Prasad PartnerMembership No. F-104941



10

Auditors’ Report


HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Fixed Term Series 66 (The “Scheme”) as at March 31, 2010 and the related Revenue Account for the year ended on that date both of which we have signed under reference to this report. These fi nancial statements are the responsibility of the Board of Trustees of HSBC Mutual Fund and the Management of HSBC Asset Management (India) Private Limited (the “Management”). Our responsibility is to express an opinion on these fi nancial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. Our procedures included confi rmation of unit capital balances as at March 31, 2010 by correspondence with the registrar and transfer agent respectively. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



(i) The Balance Sheet and Revenue Account together with the notes thereon give the information required by the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and the amendments thereto, as applicable, and also give respectively a true and fair view of the state of affairs of HSBC Mutual Fund – HSBC Fixed Term Series 66 as at March 31, 2010 and its net surplus for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended on that date, together with the notes thereon, have been prepared in all material respects in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.


Sd/-Vivek Prasad PartnerMembership No. F-104941



11


Rs. in Lakhs

HSBC FIXED TERMSERIES 30


As atMarch 31, 2010

As atMarch 31, 2009

As atMarch 31, 2010

As atMarch 31, 2009

LIABILITIES

1 Unit Capital 7,354.45 7,693.37 6,159.94 6,259.57

2 Reserves & Surplus2.1 Unit Premium Reserves (248.72) (170.35) (14.00) (2.76)2.2 Unrealised Appreciation Reserve 69.58 7.46 – 40.372.3 Other Reserves 1,953.26 1,177.28 769.16 282.36

3 Loans & Borrowings – – – –

4 Current Liabilities & Provisions4.1 Provision for doubtful Income / Deposits – – – –4.2 Other Current Liabilities & Provisions 94.32 87.65 61.79 11.71

TOTAL 9,222.89 8,795.41 6,976.89 6,591.25

ASSETS1 Investments1.1. Listed Securities:1.1.1 Equity Shares – – – –1.1.2 Preference Shares – – – –1.1.3 Equity Linked Debentures – – – –1.1.4 Other Debentures & Bonds 1,970.87 2,554.25 – 2,027.081.1.5 Securitised Debt securities – – – –1.2 Securities Awaited Listing:1.2.1 Equity Shares – – – –1.2.2 Preference Shares – – – –1.2.3 Equity Linked Debentures – – – –1.2.4 Other Debentures & Bonds – – – –1.2.5 Securitised Debt securities – – – –1.3 Unlisted Securities1.3.1 Equity Shares – – – –1.3.2 Preference Shares – – – –1.3.3 Equity Linked Debentures – – – –1.3.4 Other Debentures & Bonds 4,884.51 4,274.34 – –1.3.5 Securitised Debt securities 2,075.07 1,877.77 – 1,107.281.4 Government Securities – – – –1.5 Treasury Bills – – – –1.6 Commercial Paper – – – –1.7 Certifi cate of Deposits – – – 1,968.221.8 Bill Rediscounting – – – 1,180.651.9 Units of Domestic Mutual Fund – – – –1.10 Foreign Securities – – – –

Total Investments 8,930.45 8,706.36 – 6,283.23

2 Deposits – – – –3 Other Current Assets3.1 Cash & Bank Balance 1.12 13.87 20.61 0.573.2 CBLO / Reverse Repo Lending 282.97 24.19 6,924.22 243.933.3 Others 0.51 0.01 32.06 63.524 Deferred Revenue Expenditure

(to the extent not written off) 7.84 50.98 – –

TOTAL 9,222.89 8,795.41 6,976.89 6,591.25



12


Rs. in Lakhs



CurrentYear ended

March 31, 2010

CurrentYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

1 INCOME1.1 Dividend – – – –1.2 Interest 893.93 1,010.80 577.60 321.641.3 Realised Gain / (Loss) on Foreign Exchange

Transactions– – – –


– (19.08) – –


22.77 (71.36) 24.84 11.91

1.6 Realised Gains / (Losses) on Derivative Transactions – – – –1.7 Other Income 3.49 – 0.69 7.18

(A) 920.19 920.36 603.13 340.732 EXPENSES2.1 Management fees 109.36 45.73 60.14 5.142.2 Service tax on Management fees – – – –2.3 Transfer agents fees and expenses 2.00 1.97 1.37 0.722.4 Custodian fees 0.83 1.18 0.70 0.362.5 Trusteeship fees 0.08 0.04 0.06 0.032.6 Commission to Agents * – – – –2.7 Marketing & Distribution expenses 9.35 10.01 37.66 26.302.8 Audit fees 0.12 0.10 0.12 0.052.9 Other operating expenses 41.66 54.53 0.03 0.112.10 Expenses to be Reimbursed by the Investment Manager (0.48) – (31.09) –

(B) 162.92 113.56 68.99 32.713 NET REALISED GAINS / (LOSSES)

FOR THE YEAR (A - B = C) 757.27 806.80 534.14 308.024 Change in Unrealised Depreciation in

value of investments (D) (166.66) 166.66 – –

5 NET GAINS / (LOSSES) FOR THE YEAR [E = (C - D)] 923.93 640.14 534.14 308.02

6 Change in Unrealised Appreciation in the value of investments (F) 62.12 (144.48) (40.37) 40.37

7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 986.05 495.66 493.77 348.39

7.1 Add: Balance transfer from Unrealised Appreciation Reserve – 144.48 40.37 –

7.2 Less: Balance transfer to Unrealised Appreciation Reserve 62.12 – – 40.37

7.3 Add / (Less): Equalisation – – – –7.4 Transfer from Reserve Fund 36.04 56.05 2.68 –7.5 Transfer from Unit Premium Reserve – – – –8 TOTAL 959.97 696.19 536.82 308.02

9 Dividend Appropriation9.1 Income Distributed during the year 129.38 145.93 41.34 22.419.2 Tax on income distributed during the year 18.56 21.25 6.00 3.2610 Retained Surplus / (Defi cit)

carried forward to Balance Sheet 812.03 529.01 489.48 282.35



13




CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Open

Regular Growth Option 11.6034 10.9311 10.5506 –

Regular Dividend Option 10.0762 10.4450 10.1051 –

Institutional Growth Option 11.6034 10.9311 10.5506 –

Institutional Dividend Option – 10.4346 – –

High


Regular Dividend Option 10.4523 10.5824 10.3393 10.3455


Institutional Dividend Option – 10.5719 – 10.0166

Low




Institutional Dividend Option – 9.5131 – 10.0064

End




Institutional Dividend Option – – – –


End 9,129 8,708 6,915 6,580

Average (AAuM)4 9,046 9,630 6,759 6,497

3. Gross income as % of AAuM1 10.17% 9.56% 8.92% 10.58%

4. Expense Ratio:



Regular Dividend Option 1.80% 1.18% 1.02% 1.02%


Institutional Dividend Option 1.80% 1.18% 1.02% 1.02%



Regular Dividend Option 1.21% 0.47% 0.89% 0.16%


14




CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009

CurrentYear ended

March 31, 2010

PreviousYear ended

March 31, 2009


Institutional Dividend Option 1.21% 0.47% 0.89% 0.16%

5. Net Income as a percentage of AAuM2 8.37% 8.38% 7.90% 9.56%

6. Portfolio turnover ratio3 – – – –


Individual / HUF



Corporate – –



8. Returns (%):

a. Last One Year

Scheme

Regular Growth Option 11.5759 6.1503 7.62 NA

Regular Dividend Option 10.1850 4.9175 6.55 NA

Institutional Growth Option 11.5759 6.1503 7.62 NA

Institutional Dividend Option – – NA NA

Benchmark

CRISIL Short-Term Bond Fund Index 5.8800 9.7900 5.8800 NA

CRISIL Liquid Fund Index NA NA NA NA

b. Since Inception

Scheme




Institutional Dividend Option – – NA NA

Benchmark

CRISIL Short-Term Bond Fund Index 7.93 9.0800 8.67 6.7900

CRISIL Liquid Fund Index NA NA NA NA

1 Gross income = amount against (A) in the Revenue Account i.e. Income. 2 Net income = amount against (C) in the Revenue Account i.e. Net Realised Gains / (Losses) for the year / period3 Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year / period. 4 AAuM = Average daily net assets


15

HSBC FIXED TERM SERIES

1 Investments: 1.1. It is confi rmed that investments of the Scheme are registered in the name of the Trustees for the


1.2. Open Positions of derivatives amount is NIL as at March 31, 2010 and March 31, 2009.

1.3. Investments in Associates and Group Companies as of March 31, 2010 and March 31, 2009 is NIL.

1.4. Open positions of Securities Borrowed and / or Lent by the Scheme as of years ended 2010 and 2009 are NIL.

1.5. No NPAs as at March 31, 2010 and March 31, 2009.

1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial year 2009 - 10 and percentage to net assets are:

Security Category

HSBC FIXED TERM SERIES 30

Amount(Rs.)


Amount(Rs.)


2010 2009


– Appreciation 1,586,951 0.17% – –

– Depreciation – – 6,587,393 0.76%


– Appreciation 4,123,253 0.45% – –

– Depreciation – – 10,079,072 1.16%


– Appreciation 1,247,634 0.14% 745,872 0.09%


Security Category


Amount(Rs.)


Amount(Rs.)


2010 2009


– Appreciation – – 775,539 0.12%






– Appreciation – – 3,261,080 0.50%




16

1.7 Aggregate Value of Purchase and Sale of Investments

The aggregate value of investment securities purchased and sold (including matured) during the year / period (excluding accretion of discount) are as follows:

2010

Name of the Scheme

Accretion of Discount

Aggregate Purchase Aggregate Sale

Rupees Rupees

Percentage of Average Daily Net

Assets

Rupees


Assets

HSBC Fixed Term Series 30

88,801,584 – – 91,548,798 10.12%


36,683,862 775,886,624 114.81% 1,439,340,461 212.99%

2009

Name of the Scheme

Accretion of Discount

Aggregate Purchase Aggregate Sale

Rupees Rupees


Assets

Rupees


Assets


101,170,058 11,907,733 1.24% 243,259,449 25.26%

HSBC Fixed Term Series 66*

22,172,816 1,552,743,929 484.59% 951,822,774 297.05%

* Annualized

1.8. Non-Traded securities in the portfolio: Aggregate Value of Equity, Debt & Money Market Instruments and percentage to net assets is as

under :


Security Category Fair Value (Rs.) % to Net Assets Fair Value (Rs.)

% to Net Assets

2010 2009


Total 893,044,686 97.83% 870,636,238 99.98%


Security Category Fair Value (Rs.) % to Net Assets

Fair Value (Rs.)

% to Net Assets

2010 2009

Debt Instruments – – 313,435,704 47.64%


– – 314,886,920 47.86%

Total – – 628,322,624 95.50%



17


2 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended, for the year ended March 31, 2010.




Nature of Relation

Period Covered

Business Given [Rs. in Crores]

% of Total Business




Fund



Associate 2009 - 2010 0.13 3.13 53,174 5.72


Associate 2009 - 2010 0.00 ~ 0.01 5,905 0.63



Associate 2009 - 2010 1.18 25.41 – –


Associate 2009 - 2010 0.02 0.42 – –



Nature of Relation

Period Covered

Business Given [Rs. in Crores]

% of Total Business



(on accrual basis)


Fund



Associate 2008 - 2009 0.03 2.00 54,620 5.44



Associate 2008 - 2009 28.92 7.12 2,549,041 12.61

~ Indicates less than 0.01




18



Description


2009 - 2010


Regular Growth 53,156,931.064 2,521,000.000 5,604,699.500 50,073,231.564 500,732,315



9,424,237.930 – – 9,424,237.930 94,242,379


– – – – –



Regular Growth 66,659,279.315 513,000.000 14,015,348.251 53,156,931.064 531,569,311



11,400,000.000 – 1,975,762.070 9,424,237.930 94,242,379


2,000,000.000 – 2,000,000.000 – –

Description


2009 - 2010


Regular Growth 40,902,819.241 1,934,412.712 3,341,499.720 39,495,732.233 394,957,322

Regular Dividend 5,542,888.156 421,919.944 11,131.699 5,953,676.401 59,536,764


16,150,000.000 1,000,000.000 1,000,000.000 16,150,000.000 161,500,000


– – – – –



Regular Growth – 43,547,532.076 2,644,712.835 40,902,819.241 409,028,192

Regular Dividend – 8,263,358.455 2,720,470.299 5,542,888.156 55,428,882


– 16,150,000.000 – 16,150,000.000 161,500,000


– 1,000,000.000 1,000,000.000 – –






19




Risk Factors:All investments in mutual funds and securities are subject to market risks and the Net Asset Value (NAV) of the Scheme(s) may go up or down depending on the factors and forces affecting the securities markets. There can be no assurance that the objectives of the Scheme(s) will be achieved. Past performance of the Sponsor, AMC, Mutual Fund or any associates of the Sponsor/AMC does not indicate the future performance of the Scheme(s) of the Mutual Fund. HSBC Fixed Term Series 30 and HSBC Fixed Term Series 66 (HFTS) are the names of the Schemes and does not in any manner indicate the quality of the Schemes or their future prospects or returns.


Load Structure (includes SIP/STP, where applicable):For HFTS 30:

Exit Load: 2% if exited before maturity. No Exit Load on redemption / switch out of Units on the maturity date.

For HFTS 66:

Exit Load: 3% if exited before maturity. No Exit Load on redemption / switch out of Units on the maturity date.




20




issued by hsbc asset management (india) private limited€¦ · abridged annual report 2009 - 2010...

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