schemewise annual reports 201 - 201 - hsbc...the net assets of hef amounted to rs. 453.11 crores as...

Schemewise Annual Reports 2013 - 2014

► INDEX HSBC Equity Fund HSBC India Opportunities Fund HSBC Unique Opportunities Fund HSBC Dynamic Fund HSBC Tax Saver Equity Fund HSBC Progressive Themes Fund HSBC Midcap Equity Fund HSBC Small Cap Fund HSBC Emerging Markets Fund HSBC Brazil Fund HSBC Asia Pacific (Ex Japan) Dividend Yield Fund HSBC MIP HSBC Floating Rate Fund HSBC Ultra Short Term Bond Fund HSBC Cash Fund HSBC Flexi Debt Fund HSBC Income Fund HSBC Gilt Fund HSBC Fixed Term Series 89 HSBC Fixed Term Series 90 HSBC Fixed Term Series 91 HSBC Fixed Term Series 94 HSBC Fixed Term Series 95 HSBC Fixed Term Series 96 HSBC Fixed Term Series 97 HSBC Fixed Term Series 98 HSBC Fixed Term Series 99 HSBC Fixed Term Series 100 HSBC Fixed Term Series 101 HSBC Fixed Term Series 105 HSBC Fixed Term Series 106 HSBC Fixed Term Series 107 HSBC Fixed Term Series 109 HSBC Capital Protection Oriented Fund HSBC Fixed Term Series 86 Annexure I Annexure II

► INDEX HSBC Equity Fund HSBC India Opportunities Fund HSBC Unique Opportunities Fund HSBC Dynamic Fund HSBC Tax Saver Equity Fund

4

HSBC Equity Fund

Trustees’ ReportFor the year ended March 31, 2014

The Trustees present the twelfth report and the audited abridged fi nancial statements of the Schemes of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2014.

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 SchemeHEF seeks to generate long-term capital growth from an actively managed portfolio of equity and equity related securities.

The net assets of HEF amounted to Rs. 453.11 crores as at March 31, 2014 as against Rs. 537.32 crores as at March 31, 2013. Around 97.81% of the net assets were invested in equities, 2.51% of the net assets were invested in reverse repos / CBLO and (- 0.32%) was in the net current assets as at March 31, 2014.

HEF remained invested in a diversifi ed portfolio across large capitalization stocks. The relative overweight in Technology resulted in outperformance against Scheme benchmark for the period 2013-14.

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

Scheme Name & Benchmarks April ‘13 - March ‘14

April ‘12 - March ‘13


Since Inception

HSBC Equity Fund - Growth 16.82 4.20 -8.90 24.34

S&P BSE 200 (Scheme Benchmark) 16.65 5.41 -9.55 18.72

CNX Nifty (Standard Benchmark) 17.53 6.93 -9.13 17.67

Rs. 10,000, if invested in HEF, would have become 11,682 10,420 9,110 118,277

Rs. 10,000, if invested in S&P BSE 200, would have become

11,665 10,541 9,045 69,977

Rs. 10,000, if invested in CNX Nifty, would have become 11,753 10,693 9,087 63,309

Past performance may or may not be sustained in future. Returns data as on March 31, 2014. Data for the period April to March has been considered in all cases, except for Since Inception. ‘Since Inception’ returns are calculated on Rs. 10 invested at inception. Standard benchmark is prescribed by SEBI for long term equity schemes and is used for comparison purposes. Returns on Rs. 10,000 are point-to-point returns for the specifi c time period, invested at the start of the period. The returns provided above have been rounded off and hence there may be a minor difference between point-to-point returns vis-à-vis returns indicated above. Calculations are based on Growth NAVs.

b) Market Overview & Outlook

EQUITY OUTLOOK

The Sensex returned 18.8% for the FY ended March 2014. It is the highest fi scal year return since FY10. While the rally looks strong on annual basis, it wasn’t without its share of ups and downs. In fact, Sensex gave negative returns over the fi rst fi ve months when hopes of economic recovery were completely negated by ballooning current account defi cit and depreciating currency. The market rebounded smartly over the next 7 months of the fi scal to post smart gains. The market gain was largely linked to hope of pro-reform government formation at the center as state election results and opinion poll results poured in through this period. Improvement in current account helped too.

5

HSBC Equity Fund

Trustees’ ReportFor the year ended March 31, 2014 (Contd...)

Returns (April 1, 2013 - March 31, 2014) 1 Year (%)

NIFTY 18.0

Sensex 18.8

S&P BSE 100 18.1

S&P BSE 200 17.2

S&P BSE 500 17.1

CNX Midcap 15.3

Source: Bloomberg

Our view in respect of key issues facing equity market currently is presented below based upon which we expect continuation of prevailing positive sentiment in the market -

� Macro: We expect improvement in all the macro parameters on YoY basis. GDP growth, Industrial production growth, and Capital formation growth are likely to see recovery from last year. Key risk to our call on growth recovery is weak monsoons.

� Infl ation: While elevated level of infl ation continues to remain a worry for policy makers and somewhat constrain their ability to maneuver the economy on the recovery path, we are also cognizant of the fact that trajectory of infl ation is likely to be downward sloping.

� Interest rates: Our expectation of interest rates is based on infl ation level, their trajectory, and fi scal position of the government. Based upon which we opine that there is limited room for rate reduction in the near term but it is expected to happen in 2015.

� Reforms: The seminal event of FY14 is the General Election and its mandate. We believe, the mandate, which exceeded most optimistic expectations, underlines nation’s desire to shun identity based politics and parochial considerations for development and economic growth. Expectations from the government are high but we are placing our faith in the government’s ability to deliver (albeit over 3-5 years).

� Valuations: (for large Sensex companies) is 16.2x on FY15e and 13.8x on FY16e earnings, which is right in the middle of long-term averages. Despite run-up, a large number of mid-caps are available at a signifi cant discount to large cap peer.

DEBT OUTLOOK

Fixed Income market in FY 2014 faced higher volatility in rates this year as RBI hiked the short end rates substantially in July 2013 to counter pressure on currency. Although the measures were gradually rolled back, long end of the curve remained anchored to 8.75-9% range due to supply and absence of open market operations.

First half of the year saw rate cuts of 75 bps which led to substantial positive sentiments in the fi xed income markets. RBI had been cutting rates despite high infl ation readings largely to support growth impetus carried on by the government. This momentum was carried on till May 2013 as the rates were also supported by FII infl ows in fi xed income markets.

After Federal Reserve meeting in May 2013, which indicated tapering of the quantitative easing in the US, most emerging markets including India faced currency weakness? The fear of withdrawal of excess liquidity caused weakness in all emerging market currency including India. Higher current account defi cit due to higher gold import requirements and inelastic oil imports requirement also accentuated pressure on the currency. Foreign investors especially in fi xed income segment withdrew in large quantum in June, July and August 2013 which pushed INR / USD rates closer to 68.

RBI in order to protect the INR increased the short term operative rates by 300 bps in July 2013. These pressures created highly inverted yield curve and mark to market losses in most of the security. Respite came in after September 2013, when RBI launched FCNR scheme with discounted forward rates. This benefi tted forex situation and the rates came back closer to 62 from 68 levels earlier. Gradually over next 3 months, RBI reduced the overnight rates while hiking the repo rate by 50 bps (till Dec 13).

The resultant volatility due to increase in rates and currency volatility impacted the funds returns in last year.

In the current year, RBI has hiked 25 bps and has targeted infl ation. However, it has also charted a path for the infl ation. If infl ation follows the glide path, rates may not move higher from the current 8% repo rate.

6

HSBC Equity Fund


RBI also took initiative for the liquidity management and has shown proactiveness in managing needs of the market in March and June 2014.

We expect the current stable government will take up many measures to contain infl ation and fi scal consolidation. This would lead to RBI holding on the rates for a while before expectation of rate cuts set in. However, there is a need to focus on key variables in the economy to judge future directions. These are:

� Liquidity: Liquidity will drive short end rates and eventually drive decisions leading to market interventions and CRR cuts.

� Infl ation: Infl ation numbers will determine future course of action for RBI and remains a critical variable for policy. We expect infl ation to ease in second quarter of FY 14-15.

� Growth: GDP growth numbers as well as industrial activity will also determine the decision on policy. GDP will be bottoming out in couple of quarters.

� Fiscal defi cit: Fiscal defi cit and government spending will determine the government borrowing and crowding out in interest rate curve.

� Current account defi cit / BoP situation: CAD determines how the pressure on currency works and effective management of forex reserves

� Currency levels: Level of INR will determine how the central bank reacts to the situation on the global crisis etc.

2. BRIEF BACKGROUND OF SPONSORS, BOARD OF TRUSTEES AND ASSET MANAGEMENT COMPANY

a) Sponsor HSBC Mutual Fund is sponsored by HSBC Securities and Capital Markets (India) Private Limited (HSCI).

The Sponsor is the Settler 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 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). HSCI holds 100% of the paid up equity share capital of HSBC Asset Management (India) Private Limited.

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 (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 unit holders. 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 there under 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 16, V. 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

7

HSBC Equity Fund


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. 61.59 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 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).

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

5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of investors & corresponding amount Scheme-wise as on March 31, 2014 :

SchemeUnclaimed Dividends Unclaimed Redemptions

Amount (Rs)

No. of Investors

Amount (Rs)

No. of Investors

HSBC Equity Fund 5,575,816.87 1274 5,595,376.62 201

6. INVESTOR SERVICESThe number of offi cial points of acceptance of transactions is 198 locations. In addition to the offi ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 5 locations at its own offi ces - namely Mumbai, New Delhi, Kolkata, Bengaluru and Chennai. With a view to enhance customer convenience, the AMC has extended the facility of priority based servicing to key distributors through the enhancement of the Interactive Voice Reponses. Call Center number has now been converted to a single Toll Free number which can be dialed from anywhere in India. The call center service is being managed by the Registrar and Transfer Agents. The AMC continues to retain the outsourced back offi ce services with HSBC Electronic Data Processing India Private Limited.

On the distribution front, the number of empanelled distributors was 664 as on March 31, 2014. During the year, the AMC 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 46.

7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund during April 2013- March 2014 are as follows:

Total Number of Folios: 2,19,898*

Com-plaintCode

Type of complaint#

(a) No. ofcomplaints

pendingat the

beginningof the year

(b) No. of com-plaints

receivedduring

theyear#

Action on (a) and (b)

Resolved Non Actiona-

ble

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 Non receipt of Dividend on Units 0 3 2 1 0 0 0 0 0 0 0

I B Interest on delayed payment of Dividend

0 1 1 0 0 0 0 0 0 0 0

I C Non receipt of Redemption Proceeds

0 44 24 14 0 0 0 6 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 7 7 0 0 0 0 0 0 0 0

8

HSBC Equity Fund


Com-plaintCode

Type of complaint#


pendingat the



receivedduring

theyear#



ble

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

II B Discrepancy in Statement of Account

1 2 3 0 0 0 0 0 0 0 0

II C Data corrections in Investor details

0 132 132 0 0 0 0 0 0 0 0

II D 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 4 4 0 0 0 0 0 0 0 0III B Unauthorized switch between

Schemes0 0 0 0 0 0 0 0 0 0 0

III C Deviation from Scheme attributes 0 0 0 0 0 0 0 0 0 0 0III D Wrong or excess charges / load 0 0 0 0 0 0 0 0 0 0 0III E Non updation of changes viz.

address, PAN, bank detai ls, nomination, etc.

0 13 12 0 0 0 0 1 0 0 0

IV Others 0 18 15 2 0 0 0 1 0 0 0Total 1 224 200 17 0 0 0 8 0 0 0

Note:

* active folios

# including against its authorized persons / distributors / employees etc.

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/-

Dilip J. Thakkar

Trustee

MumbaiJuly 15, 2014

9

HSBC Equity Fund

To the Board of Trustees of

HSBC Mutual Fund

Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Equity Fund, (the

“Scheme”), which comprise the Balance Sheet as at March 31, 2014, the related Revenue Account and Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.

Trustee’s and Management’s Responsibility for the Financial Statements2. The Board of Trustees of HSBC Mutual Fund (the “Trustee”) and the Management of HSBC Asset

Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Scheme 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 (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted

our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

4. In making those risk assessments, the auditors consider internal control relevant to the preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our procedures included confi rmation of securities owned and unit capital balances as at March 31, 2014 by correspondence with the custodian/others and registrar and transfer agent, respectively.

5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion6. In our opinion, and to the best of our information and according to the explanations given to us, the

accompanying fi nancial statements give the information required by the Regulations in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2014;

(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.

Report on Other Legal and Regulatory Requirement7. As required by section 55(4) of the Regulations, we report that:

(a) 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; and

(b) In our opinion, the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.

Independent Auditors’ Report

10

HSBC Equity Fund

Independent Auditors’ Report (Contd...)

8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account and Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Scheme.

For PRICE WATERHOUSEFirm Registration Number: 301112EChartered Accountants

Sd/-

Vivek PrasadPartnerMembership Number: 104941

Place : MumbaiDate : July 15, 2014

4

HSBC INDIA OPPORTUNITIES FUND





HSBC India Opportunities Fund (HIOF) - an open-ended fl exi-cap Equity SchemeHIOF 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. 177.60 crores as at March 31, 2014 as compared to Rs. 212.70 crores as at March 31, 2013. Around 98.47% of the net assets were invested in equities, 3.09% of the net assets were invested in reverse repos / CBLO and (-1.56%) were in the net current assets as at March 31, 2014.

HIOF outperformed its benchmark on a 1-year, 3-year basis and since its inception. The overweight in Technology resulted in outperformance against its benchmark for the period 2013-14. In addition, stock selections in sectors like Consumer Discretionary, Healthcare, Industrials, Materials and Utility contributed to the outperformance during this period.

Date of Inception : 24 February 2004 Absolute (%) Compounded Annualized (%)




Since Inception

HSBC India Opportunities Fund - Growth 27.93 0.21 -3.60 15.97



Rs. 10,000, if invested in HIOF, would have become 12,793 10,021 9,640 44,698


11,644 10,414 9,053 36,805




EQUITY OUTLOOK


5




NIFTY 18.0

Sensex 18.8

S&P BSE 100 18.1

S&P BSE 200 17.2

S&P BSE 500 17.1

CNX Midcap 15.3

Source: Bloomberg







DEBT OUTLOOK







6






















7








Amount (Rs)

No. of Investors

Amount (Rs)

No. of Investors

HSBC India Opportunities Fund 1,566,726.04 507 1,894,358.86 70





Com-plaintCode

Type of complaint#


pendingat the



receivedduring

theyear#



ble

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 1 1 0 0 0 0 0 0 0 0


0 44 24 14 0 0 0 6 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 7 7 0 0 0 0 0 0 0 0

8



Com-plaintCode

Type of complaint#


pendingat the



receivedduring

theyear#



ble

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 2 3 0 0 0 0 0 0 0 0

II C Data corrections in Investor details 0 132 132 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0

III A Wrong switch between Schemes 0 4 4 0 0 0 0 0 0 0 0

III B Unauthorized switch between Schemes

0 0 0 0 0 0 0 0 0 0 0

III C Deviation from Scheme attributes 0 0 0 0 0 0 0 0 0 0 0

III D Wrong or excess charges / load 0 0 0 0 0 0 0 0 0 0 0

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

0 13 12 0 0 0 0 1 0 0 0

IV Others 0 18 15 2 0 0 0 1 0 0 0

Total 1 224 200 17 0 0 0 8 0 0 0

Note:* active folios# including against its authorized persons / distributors / employees etc.








Sd/-

Dilip J. Thakkar

Trustee

MumbaiJuly 15, 2014

9



HSBC Mutual Fund

Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC India Opportunities

Fund (the “Scheme”), which comprise the Balance Sheet as at March 31, 2014 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.


Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme 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 (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility3. Our responsibility is to express an opinion on these fi nancial statements based on our audit. We

conducted our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.





(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2014; and

(b) in the case of the Revenue Account, of the net surplus for the year ended on that date.



(b) In our opinion, the Balance Sheet and Revenue Account dealt with by this report have been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.


10


8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet and Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.


Sd/-




4

HSBC UNIQUE OPPORTUNITIES FUND





HSBC Unique Opportunities Fund (HUOF) - an open ended Equity Scheme*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. 46.12 crores as at March 31, 2014 compared to Rs. 51.50 crores as at March 31, 2013. Around 98.93% of the net assets were invested in equities, 1.64% of the net assets were invested in reverse repos / CBLO and (-0.57%) were in net current assets as at March 31, 2014.

During the period 2013 - 2014, HUOF was slightly overweight in cyclical sectors like Financials and Materials and hence outperformed the Scheme benchmark driven by a cyclical rally towards the end of the fi nancial year.

Date of Inception : 21 March 2007 Absolute (%) Compounded Annualized (%)




Since Inception

HSBC Unique Opportunities Fund - Growth 17.03 4.82 -9.79 3.31



Rs. 10,000, if invested in HUOF, would have become 11,703 10,482 9,021 12,572

Rs. 10,000, if invested in S&P BSE 200, would have become 11,665 10,541 9,045 17,422



*HUOF is undergoing a change in its investment objective, investment strategy etc. and will be re-named as the HSBC Dividend Yield Equity Fund. The changes being in the nature of fundamental attribute changes, the investors have been notifi ed of the same giving then an option to redeem from the Fund. The change will be effective from July 18, 2014. Kindly refer the notice dated May 26, 2014 (published in Financial Express and Navshakti newspapers dated May 27, 2014 and available on www.assetmanagement.hsbc.com/in) for more details.


EQUITY OUTLOOK


5




NIFTY 18.0

Sensex 18.8

S&P BSE 100 18.1

S&P BSE 200 17.2

S&P BSE 500 17.1

CNX Midcap 15.3

Source: Bloomberg







DEBT OUTLOOK







6






















7








Amount (Rs)

No. of Investors

Amount (Rs)

No. of Investors

HSBC Unique Opportunities Fund – – 1,795,620.43 71





Com-plaintCode

Type of complaint#


pendingat the



receivedduring

theyear#



ble

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 1 1 0 0 0 0 0 0 0 0


0 44 24 14 0 0 0 6 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 7 7 0 0 0 0 0 0 0 0

8



Com-plaintCode

Type of complaint#


pendingat the



receivedduring

theyear#



ble

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 2 3 0 0 0 0 0 0 0 0

II C Data corrections in Investor details 0 132 132 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0

III A Wrong switch between Schemes 0 4 4 0 0 0 0 0 0 0 0

III B Unauthorized switch between Schemes

0 0 0 0 0 0 0 0 0 0 0

III C Deviation from Scheme attributes 0 0 0 0 0 0 0 0 0 0 0

III D Wrong or excess charges / load 0 0 0 0 0 0 0 0 0 0 0

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

0 13 12 0 0 0 0 1 0 0 0

IV Others 0 18 15 2 0 0 0 1 0 0 0

Total 1 224 200 17 0 0 0 8 0 0 0

Note:* active folios# including against its authorized persons / distributors / employees etc.








Sd/-

Dilip J. Thakkar

Trustee

MumbaiJuly 15, 2014

9




HSBC Mutual Fund

Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Unique

Opportunities Fund, (the “Scheme”), which comprise the Balance Sheet as at March 31, 2014 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.


Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and of the Scheme 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 (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.





(a) in the case of the Balance Sheet, of the state of affairs of the Scheme as at March 31, 2014;

(b) in the case of the Revenue Account, of the net surplus for the year ended on that date; and



(b) In our opinion, the Balance Sheet, Revenue Account dealt with by this report has been prepared in accordance with the accounting policies and standards specifi ed in the Ninth Schedule of the Regulations.

10



8. As required by clause 5 (ii)(2) of the Eleventh Schedule to the Regulations, we report that the Balance Sheet, Revenue Account dealt with by this Report are in agreement with the books of account of the Scheme.


Sd/-



4

HSBC DYNAMIC FUND





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. 76.12 crores as at March 31, 2014 compared to Rs. 132.97 crores as at March 31, 2013. Around 80.16% of the net assets were invested in equities, 21.01% of the net assets were invested in reverse repos / CBLO and (-1.17%) were in net current assets as at March 31, 2014.

HDF has underperformed its benchmark over the period 2013-14 due to high cash balance. The Scheme allocates capital across equity and debt securities dynamically. In a year when equity market was rising, thus becoming more expensive, and debt market being cheap, the dynamic allocation to cash kept on rising through the year. An average cash balance of approx. 14% through the year was the main reason of underperformance.

Date of Inception : 24 September 2007 Absolute (%) Compounded Annualized (%)




Since Inception

HSBC Dynamic Fund - Growth 13.20 1.59 -8.24 1.70



Rs. 10,000, if invested in HDF, would have become 11,320 10,159 9,176 11,160


11,665 10,541 9,045 12,950




EQUITY OUTLOOK


5

HSBC DYNAMIC FUND



NIFTY 18.0

Sensex 18.8

S&P BSE 100 18.1

S&P BSE 200 17.2

S&P BSE 500 17.1

CNX Midcap 15.3

Source: Bloomberg







DEBT OUTLOOK







6

HSBC DYNAMIC FUND





















7

HSBC DYNAMIC FUND







Amount (Rs)

No. of Investors

Amount (Rs)

No. of Investors

HSBC Dynamic Fund – – 2,217,484.91 90





Com-plaintCode

Type of complaint#


pendingat the



receivedduring

theyear#



ble

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 1 1 0 0 0 0 0 0 0 0


0 44 24 14 0 0 0 6 0 0 0


0 0 0 0 0 0 0 0 0 0 0


0 7 7 0 0 0 0 0 0 0 0

8

HSBC DYNAMIC FUND


Com-plaintCode

Type of complaint#


pendingat the



receivedduring

theyear#



ble

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 2 3 0 0 0 0 0 0 0 0

II C Data corrections in Investor details

0 132 132 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0

III A Wrong switch between Schemes 0 4 4 0 0 0 0 0 0 0 0III B Unauthorized switch between

Schemes0 0 0 0 0 0 0 0 0 0 0

III C Deviation from Scheme attributes 0 0 0 0 0 0 0 0 0 0 0III D Wrong or excess charges / load 0 0 0 0 0 0 0 0 0 0 0III E Non updation of changes viz.

address, PAN, bank detai ls, nomination, etc.

0 13 12 0 0 0 0 1 0 0 0

IV Others 0 18 15 2 0 0 0 1 0 0 0Total 1 224 200 17 0 0 0 8 0 0 0

Note:

* active folios# including against its authorized persons / distributors / employees etc.








Sd/-

Dilip J. Thakkar

Trustee

MumbaiJuly 15, 2014

9

HSBC DYNAMIC FUND


HSBC Mutual Fund

Report on the Financial Statements1. We have audited the accompanying fi nancial statements of HSBC Mutual Fund - HSBC Dynamic Fund

(the “Scheme”), which comprise the Balance Sheet as at March 31, 2014 and the related Revenue Account for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, which we have signed under reference to this report.


Management (India) Private Limited (the “Management”) are responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position and fi nancial performance of the Scheme 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 (the “Regulations”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


our audit in acco

schemewise annual reports 201 - 201 - hsbc...the net assets of hef amounted to rs. 453.11 crores as...

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