schemewise annual reports : 2009 - 2010...* mr. ashok jha has been appointed as a director with...

Issued by HSBC Asset Management (India) Private Limited

HSBC Global Asset Management

Schemewise Annual Reports : 2009 - 2010

SPONSOR HSBC Securities and Capital Markets (India) Private Limited Regd. Office: 52/60, Mahatma Gandhi Road, Fort, Mumbai 400 001. TRUSTEE Board of Trustees Office: 314, D. N. Road, Fort, Mumbai 400 001. ASSET MANAGEMENT COMPANY HSBC Asset Management (India) Private Limited Corp. & Regd. Office: 314, D. N. Road, Fort, Mumbai 400 001. CUSTODIAN JP Morgan Chase Bank N.A. Corp. & Regd. Office: J.P. Morgan Tower, C.T.S. No. 5435, Off CST Road, Kalina, Santacruz (East), Mumbai 400 098. AUDITORS TO THE SCHEME Price Waterhouse Chartered Accountants 252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai – 400 028. LEGAL ADVISORS Bharucha & Partners Hague Building, Sprott Road, Ballard Estate, Mumbai – 400 001 REGISTRAR & TRANSFER AGENTS Computer 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 Officer * Mr. Ashok Jha has been appointed as a Director with effect from August 20, 2009 and Mr. Vithal Palekar has resigned as a Director with effect from August 10, 2009.

INDEX Trustees’ Report 4 HSBC Equity Fund 26 HSBC India Opportunities Fund 45 HSBC Midcap Equity Fund 65 HSBC Progressive Themes Fund 85 HSBC Tax Saver Equity Fund 105 HSBC Dynamic Fund 122 HSBC Emerging Markets Fund 141 HSBC Unique Opportunities Fund 157 HSBC Small Cap Fund 175 HSBC MIP 191 HSBC Income Fund 213 HSBC Gilt Fund 233 HSBC Floating Rate Fund 249 HSBC Cash Fund 269 HSBC Ultra Short Term Bond Fund 287 HSBC Flexi Debt Fund 304 HSBC Fixed Term Series 30 321 HSBC Fixed Term Series 66 322 Annexure II 340 Annexure III - Historical Per unit Statistics 2009-10 344

2Trustees’ Report 0For the year ended March 31, 2010 The Trustees present the eighth report and the audited financial statements of the Schemes of HSBC Mutual Fund (the "Fund"), for the year ended March 31, 2010. 1. Scheme Performance, Future Outlook And Operations of the Schemes

a) Operations And Performance of the Schemes

1HSBC Equity Fund (HEF) – an open-ended diversified Equity Scheme To 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 significantly. Longer term performance has been in line with benchmarks.

Date Of Inception : 10 Dec 02

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

BSE200 92.87 12.19 20.44 26.92Returns 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.

HSBC India Opportunities Fund (HIOF) – an open-ended flexi-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 significant portion of its assets towards fixed 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.

Date Of Inception : 24 Feb 04


Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception HSBC India Opportunities Fund – Growth 62.24 6.11 19.69 20.98

BSE 500 96.38 11.75 20.39 20.18Returns 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. HSBC Midcap Equity Fund (HMEF) – an open-ended diversified Equity Scheme HMEF 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 fixed 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 05 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Midcap Equity Fund – Growth 116.01 6.29 17.40

BSE MID CAP 130.23 8.11 16.42Returns 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.

HSBC Progressive Themes Fund (HPTF) – an open-ended flexi-theme Equity scheme HPTF 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 benefit 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 Feb 06 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Progressive Themes Fund – Growth 55.85 3.3808 6.55

BSE200 92.87 12.19 14.12Returns 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. 4HSBC Tax Saver Equity Fund (HTSF) - an open ended Equity linked Savings Scheme HTSF seeks to provide long term capital appreciation by investing in a diversified portfolio of equity & equity related instruments of companies across various sectors and industries, with no capitalisation bias. The Fund may also invest in fixed 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 Jan 07 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years Since

Inception HSBC Tax Saver Equity Fund – Growth 87.14 13.56 10.44

BSE200 92.87 12.19 9.02

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. 5HSBC Dynamic Fund (HDF) - an open-ended Scheme HDF seeks to provide long term capital appreciation by allocating funds in equity and equity related instruments. It also has the flexibility 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 Sep 07 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year Since Inception

HSBC Dynamic Fund – Growth 51.97 (1.66)

BSE 200 92.87 2.42Returns 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. 6HSBC Emerging Markets Fund (HEMF) - an open-ended Scheme HEMF 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 Mar 08 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

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. 7HSBC 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 diversified 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.


Scheme & Benchmark 1 Year 3 Years Since

Inception HSBC Unique Opportunities Fund – Growth 79.92 (0.02) 0.65

BSE200 92.87 12.19 12.50Returns 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. 8HSBC 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 diversified 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.


Scheme & Benchmark 1 Year Since Inception

HSBC Small Cap Fund – Growth 123.83 4.05

BSE Small Cap 161.73 10.47Returns 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. 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-avis the index over the said period. HMIP – Regular Plan


Scheme & Benchmark 1 Year 3 Years 5 Years Since

Inception

HSBC MIP – Regular Plan – Growth 15.23 10.02 9.21 8.38

Crisil MIP Blended Index 14.27 8.48 8.42 7.39Returns 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.

HMIP – Savings Plan



Inception

HSBC MIP – Savings Plan – Growth 22.38 11.93 11.51 10.51

Crisil MIP Blended Index 14.27 8.48 8.42 7.39Returns 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.

HSBC Income Fund (HIF) – an open-ended Income Scheme HIF 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 diversified portfolio of fixed income securities. The AMC’s view of interest rate trends and the nature of the Plans will be reflected 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. 9HIF – IP

Date Of Inception : 10 Dec 02 Compounded Annualized Returns (%)


Inception HSBC Income Fund – IP – Regular - Growth 7.39 8.91 7.01 6.58Crisil Composite Bond Fund Index 5.38 6.98 5.58 5.26

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. HIF-STP mostly ran a conservative duration bias on expectation of heightened volatility in short end rates. 1 0HIF – STP




Inception HSBC Income Fund – STP – Regular - Growth 5.10 8.03 6.82 6.30CRISIL Short-Term Bond Fund Index 5.85 8.14 6.78 6.00

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. 1 1HSBC Gilt Fund (HGF) – an open-ended Gilt Scheme HGF 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 reflected 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.

Date Of Inception : 05 Dec 03 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception

HSBC Gilt Fund – Growth 7.57 1.16 2.41 2.36

I Sec Composite Index 4.42 8.74 7.24 6.07Returns 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.

1 2HSBC Floating Rate Fund (HFRF) – an open-ended Income Scheme HFRF seeks to generate reasonable return with commensurate risk from a portfolio comprised of floating rate debt instruments and fixed rate debt instruments swapped for floating rate returns. The Scheme may also invest in fixed rate money market and debt instruments. There can be no assurance that the Scheme objective can be rganiza. 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 Nov 04 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years Since Inception HSBC FRF – LTP – Regular Plan – Growth 4.52 7.38 6.70

Crisil Liquid Fund Index 3.67 6.65 6.14Returns 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. 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 Nov 04

Simple Annualized Returns (%)


Scheme & Benchmark 3 Months 6 Months 1 Year 3 Years Since

Inception HSBC FRF – STP – Regular Plan – Growth 2.49 2.36 2.24 5.98 5.99Crisil Liquid Fund Index 3.69 3.18 3.68 6.65 6.14

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.

HSBC Cash Fund (HCF) – an open-ended Liquid Scheme HCF 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.


Simple Annualized Returns (%) Compounded 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 5.58Crisil Liquid Fund Index 3.69 3.18 3.68 6.65 6.23 5.63

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. HSBC Ultra Short Term Bond Fund (HUSBF) – an open ended Debt Scheme HUSBF 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 Oct 06 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year 3 Years Since Inception HSBC Ultra Short Term Bond Fund – Regular – Growth 3.74 6.65 6.85

Crisil Liquid Fund Index 3.93 6.80 6.74Returns 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.

HSBC Flexi Debt Fund (HFDF) – an open ended Debt Scheme HFDF 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 Oct 07 Compounded Annualized Returns (%)

Scheme & Benchmark 1 Year Since Inception HSBC Flexi Debt Fund – Growth 6.90 9.25Crisil Composite Bond Fund Index 5.38 6.50

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. HSBC Fixed Term Series (HFTS) – a close-ended Income Scheme HFTS seeks generation of returns by investing in a portfolio of fixed income instruments normally maturing in line with the time profile 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 (%)

Scheme & Benchmark 1 Year Since Inception HSBC Fixed Term Series 30 – Regular – Growth 11.58 9.64Crisil 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 (%)

Scheme & Benchmark 1 Year Since Inception HSBC Fixed Term Series 66 – Regular – Growth 7.62 8.90Crisil 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.

b) Market Overview & Outlook

MARKET OVERVIEW (as furnished by HSBC Asset Management (India) Private Limited) Equity Market Overview The financial 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 fiscal/ 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 financial 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 reflected 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 flowed into the emerging markets and India benefited 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 fiscal 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 affirmed its ‘BBB-‘ long-term and ‘A-3’ short-term sovereign credit ratings on India. The outlook upgrade driven by consolidation in fiscal deficit and strong growth. 3Debt Market Overview Bond yields rose for most of the financial year 2009 – 2010 as market was hit by a huge borrowing calendar of the government. This was a consequence of the fiscal 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 fiscal. 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 fiscal. Consequently, short end rates rallied by 150 – 200 bps over the fiscal. 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 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 fiscally strained Euro Area member countries, all of which comes with severe austerity measures, has once again brought to the fore issues regarding deficits 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. Inspite 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 significant 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 inflation 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 fiscal 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 inflations which seems to be very high. The next financial year 2010 – 2011 is likely to be one where specific 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 The interest rate view for the year ahead is set against the following backdrop: Domestic non agricultural growth has rebounded sharply led by manufacturing over last

2 quarters. While this has been helped by the fiscal and monetary stimulus in place since early last year, the last few months are showing definitive signs of pick up in private sector momentum as well.

Inflation 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 beneficial for supply side inflation.

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 significantly negative. However, the central bank is showing a decided bias towards ‘calibrated’ rate hikes.

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, finance, and portfolio flows have made policy makers more watchful in the near term.

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: o Demand for government bonds may not be as strong in the year ahead given rising

inflation, lower liquidity, expectations of policy rate rise and relatively better credit growth. However, demand may improve if the European situation were to cause a significant change in market’s growth versus inflation expectations.

o 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.

o 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 sufficient 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 fiscal deficit 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 flatten thereon.

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 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 financial services rganizations, in the world. Headquartered in London, HSBC operates through long-established businesses in five regions: Europe, Asia-Pacific region, Middle East, America and Africa. Through its global network of some 10,000 offices in 83 countries and territories, HSBC provides a comprehensive range of financial services to personal, commercial, corporate, institutional and investment and private banking clients. HSCI offers integrated investment banking services, securities and corporate finance & 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.

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 beneficiaries in such properties / investments and in the profits / 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 benefit 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 floated 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 Office 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 Schemes

The 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 Policies:

The accounting policies are in accordance with Securities Exchange Board of India (Mutual Funds) Regulations 1996.

5. Unclaimed Dividends & Redemptions Summary of number of Investors & corresponding amount scheme-wise as on 31 March 2010 Unclaimed Dividends Unclaimed Redemptions

Scheme Amount (Rs.) No. of

Investors Amount (Rs.)

No. of Investors

HSBC Equity Fund 2,779,078 617 1,696,434 50HSBC Progressive Themes Fund 814,640 401 1,409,876 86HSBC India Opportunities Fund 990,245 241 363,145 14HSBC Midcap Equity Fund 366,033 263 584,647 17HSBC Tax Saver Equity Fund - - - -HSBC Unique Opportunities Fund - - 178,696 5HSBC Dynamic Fund - - 263,052 10HSBC Emerging Markets Fund - - - -HSBC Small Cap Fund - - - -HSBC MIP - Regular Plan 157,299 246 58,400 3HSBC MIP – Savings Plan 352,321 318 10,000 1HSBC Income Fund - Investment Plan 203,423 476 238,624 16HSBC Income Fund - Short Term Plan 57,414 23 - -HSBC Gilt Fund 7,396 2 - -HSBC Floating Rate Fund – Long Term 41,564 56 14,800 4

Plan HSBC Floating Rate Fund – Short Term Plan - - - -HSBC Cash Fund - - - -HSBC Ultra Short Term Bond Fund - - - -HSBC Flexi Debt Fund 17 1 - -HSBC Fixed Term Series – 30 5,738 4 - -HSBC Fixed Term Series – 66 - - - -

6. INVESTOR SERVICES During the year, the number of official points of acceptance of transactions increased significantly to about 206 locations. In addition to the offices of the Registrar & Transfer agents, the Asset Management Company has Investor Service Centres in 14 locations at its own offices - 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 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 office services including call centre services to HSBC Operations and Processing Enterprise (India) Private Limited (HOPE). 7. Details of Investor Grievance Redressal The 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

Action on (a) and (b)

Resolved

Non Actionable*

Pending Complaint Code Type of

complaint #

(a) No of complaints pending at the beginning of the year

(b) No of complaints received during the year

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 Certificate 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

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 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 fluctuations 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 Office 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. ACKNOWLEDGEMENTS The 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. Gidwani Chairman MUMBAI July 2010

Disclaimers This 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 specific investment objectives, financial situation and the particular needs of any specific 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 financial 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 office 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), HSBC India Opportunities Fund (HIOF), HSBC Midcap Equity Fund (HMEF), HSBC Progressive Themes Fund (HPTF), HSBC Tax Saver Equity Fund (HTSF), HSBC Dynamic Fund (HDF), HSBC Emerging Markets Fund (HEMF), HSBC Unique Opportunities Fund (HUOF), HSBC Small Cap Fund (HSCF), HSBC Income Fund (HIF), HSBC Gilt Fund (HGF), HSBC Cash Fund (HCF), HSBC Ultra Short Term Bond Fund (HUSBF), HSBC MIP (HMIP), HSBC Floating Rate Fund (HFRF), HSBC Flexi Debt Fund (HFDF) & HSBC Fixed Term Series (HFTS) are the names of the Schemes and do not in any manner indicate the quality of the Schemes or their 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 HTSF 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/SIP Plus, where applicable): HEF, HIOF, HPTF, HMEF, HEMF, HDF & HUOF: Exit: 1% - if redeemed/ switched out within 1 year from date of investment; Otherwise Nil. HTSF - Exit – Nil. HSCF – 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. HMIP Exit: Regular Plan & Savings Plan - 1% - if redeemed/ switched out* within 1 year from date of investment. HIF – Investment Plan: Exit Regular & Institutional Option – 0.5% - if redeemed/ switched out* within 6 months from the date of investment. HIF – Short Term Plan - Regular, Institutional & Institutional Plus Option – Exit: Nil. HFRF – Long Term Plan - Regular & Institutional Option – Exit – Nil. HFDF- Regular & Institutional Option- Exit: 0.25% - if redeemed/ switched out* within 3 months from the date of investment. HUSBF – Exit – Nil. HCF: Exit – Nil. HGF: Exit - 0.5% if redeemed / switched out* with 6 months from date of investment. *No load in case of switches between equity Schemes of HSBC Mutual Fund. HFTS 30 - Exit Load - 2%, if redeemed/switched out before maturity, otherwise Nil. No Exit Load on redemption/ switch out of Units on the maturity date. HFTS 66 - Exit Load – 3% if exited before maturity. No Exit Load on redemption/ switch out of Units on the maturity date. 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.

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 financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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 flows 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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.

For PRICE WATERHOUSE

Firm Registration Number: 301112E Chartered Accountants

Vivek Prasad Partner Membership No. F-104941 Place: Mumbai Date: July 20, 2010

March 31, 2010 March 31, 2009Schedule Rupees Rupees

ASSETS

Investments 1 13,163,173,904 8,504,682,540

Deposits 2 450,603,000 625,603,000

Other Current Assets 3 495,023,146 1,924,369,609

TOTAL 0 14,108,800,050 11,054,655,149

LIABILITIES

Unit Capital 4 3,375,432,935 3,984,626,296

Reserves and Surplus 5 10,452,321,870 6,936,276,496

Current Liabilities and Provisions 6 281,045,245 133,752,357

TOTAL 14,108,800,050 11,054,655,149

March 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2009RECONCILIATION OF NET ASSET VALUE PER UNIT Growth Option Dividend Option Total Growth Option Dividend Option Total

Rupees Rupees Rupees Rupees Rupees Rupees

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions ) (Note 2.6) 6,476,723,017 7,351,031,788 13,827,754,805 4,983,739,761 5,937,163,031 10,920,902,792

Number of Units in Issue 67,940,001.958 269,603,291.565 82,822,603.543 315,640,026.026 Net Asset Value per Unit 95.3300 27.2661 60.1737 18.8099

Notes to the Financial Statements. 8

This is the Balance Sheet referred to in our report of even date.

For PRICE WATERHOUSE For Board of Trustees of For HSBC Asset Management (India)Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants

VIVEK PRASAD VikramaadityaPartner Director and Chief Executive OfficerMembership No. F-104941

Trustee Director

Place: Mumbai Date : Fund Manager(s)

The schedules referred to herein form an integral part of the Financial Statements.

HSBC MUTUAL FUND - HSBC EQUITY FUND

Balance Sheet as at March 31, 2010

0

April 01, 2009 to April 01, 2008 toMarch 31, 2010 March 31, 2009

Schedule Rupees Rupees

INCOME AND GAINS

Dividends (Note 2.4) 158,176,091 112,999,751

Interest and Discount 7 47,071,028 142,694,000

Net Profit on Sale of Investments and Derivatives (Note 2.3 and 2.5) 2,584,317,666 -

Miscellaneous Income (Note 16) 2,969,853 -

TOTAL 2,792,534,638 255,693,751

EXPENSES AND LOSSES

Net Loss on Sale of Investments and Derivatives (Note 2.3 and 2.5) - 2,701,833,666

Realised Loss on Foreign Currency Transactions(Net) (Note 2.10) 1,065,108 -

Investment Management and Advisory Fees (Note 3) 150,909,133 69,759,167

Transfer Agent Fees and Expenses 24,461,820 21,555,633

Trusteeship Fees and Expenses (Note 4) 134,907 44,943

Custodian Fees and Expenses (Note 5) 6,263,467 5,833,469

Audit Fees 700,000 550,000

Selling and Distribution Expenses 82,804,299 120,575,575

Other Operating Expenses 24,859,872 18,911,902

TOTAL 291,198,606 2,939,064,355

Less: Expenses to be Reimbursed by the Investment Manager - 16,866,434

TOTAL 291,198,606 2,922,197,921

Net Realised Gains/(Losses) for the Year 2,501,336,032 (2,666,504,170)

Net Change in Unrealised Depreciation in Value of Investments and Derivatives 489,410,435 (501,741,889)

Net Gains/(Losses) for the Year 2,990,746,467 (3,168,246,058)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives 3,354,536,944 (1,166,575,576)

Net Surplus/(Deficit) including Net change in Unrealised Appreciation in Value of Investments and Derivatives 6,345,283,411 (4,334,821,634)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve (3,354,536,944) 1,166,575,576

Net Surplus/(Deficit) for the Year 0 0.23 2,990,746,467 (3,168,246,058)

April 01, 2009 to April 01, 2009 to April 01, 2009 to April 01, 2008 toMarch 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009

Rupees Rupees Rupees Rupees

Net Surplus/(Deficit) for the Year 1,377,920,817 1,612,825,649 2,990,746,467 (3,168,246,059)

Transfer from Income Equalisation Reserve (Note 2.8) (940,827,312) (436,288,102) (1,377,115,414) 3,116,497,351

Dividend / Distributions - (741,856,835) (741,856,835) -

Dividend / Distributions - Prior Year - (24,610)

Balance Transferred to Reserve Fund 437,093,505 434,680,712 871,774,218 (51,773,318)


This is the Revenue Account referred to in our report of even date.



Trustee Director


The Schedules referred to herein form an integral part of the Financial Statements.


Revenue Account for the year ended March 31, 2010

0

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market/Fair Value Cost Market/Fair Value Cost

(Notes 2.2, 2.3, 7, 8 and 12) Rupees Rupees Rupees Rupees

(Refer to the attached Statement of Portfolio Holding as at March 31, 2010)

Equity Shares 13,163,173,904 9,806,433,735 8,504,682,540 9,006,424,429

TOTAL 13,163,173,904 9,806,433,735 8,504,682,540 9,006,424,429

SCHEDULE 2 March 31, 2010 March 31, 2009Deposits Rupees Rupees

Deposits with Scheduled Bank (Under Lien Towards MarginDeposit for Equity Derivatives Rs. 430,000,000 (2009 : Rs. 330,000,000) 430,000,000 560,000,000

Margin Deposit with Clearing Corporation of India towards Collateralized Borrowing and Lending Obligation 5,603,000 5,603,000

Margin Deposit with Clearing Corporation of India Limitedtowards Reverse Repos and Governement Securities 15,000,000 60,000,000

TOTAL 450,603,000 625,603,000

SCHEDULE 3 March 31, 2010 March 31, 2009Other Current Assets Rupees Rupees

Balances with Banks- in Current Account 5,526,409 20,854,960 - in Dividend Account 11 569,361

Sales Contracts Awaiting Completion - Equity Shares 58,835,923 82,977,090

Collateralised Borrowing and Lending Obligation 127,265,982 846,127,582

Reverse Repos 211,206,537 808,729,589

Unit Subscription Receivable 2,177,000 44,416,733

Inter-Scheme Receivable - For Switch - In 3,679,357 11,615,033 - For Others 1,000 124,604

Derivative Margin Deposit (Note 2.5) 81,000,000 81,000,000

Interest Receivable on :- Deposits 919,038 7,540,189

- Reverse Repos 29,842 104,073 - Collateralised Borrowing and Lending Obligation 12,291 98,672

Receivable from Investment Manager 723 17,002,486

Investment Towards Unclaimed Redemption [(in 117,395.295 Units (2009 : 84,080.727 Units) (Market Value Rs.1,747,922 (2009 : Rs. 12,25,426)) of HSBC Cash Fund - Growth Option) (Note 14)] 1,589,955 1,092,846

Investment Towards Unclaimed Dividend [(in 223,104.424 Units (2009 : 187,986.128 Units) (Market Value Rs.3,321,846 (2009: Rs.2,739,785)) of HSBC Cash Fund - Growth Option) (Note 15)] 2,779,078 2,116,391

TOTAL 495,023,146 1,924,369,609


Schedules forming part of the Balance Sheet as at March 31, 2010and the Revenue Account for the year ended March 31, 2010

2

SCHEDULE 4 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Unit Capital Rupees Units Rupees Units

Growth OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 315,148,602 31,514,860.200 315,148,602 31,514,860.200 Outstanding:At the beginning of the year 828,226,036 82,822,603.543 476,713,812 47,671,381.108 Issued during the year 311,062,272 31,106,227.231 547,674,751 54,767,475.116

1,139,288,308 113,928,830.774 1,024,388,563 102,438,856.224 Redeemed during the year 459,888,288 45,988,828.816 196,162,527 19,616,252.681 At the end of the year 679,400,020 67,940,001.958 828,226,036 82,822,603.543

Dividend OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 36,688,499 3,668,849.900 36,688,499 3,668,849.900 Outstanding:At the beginning of the year 3,156,400,260 315,640,026.026 2,300,185,617 230,018,561.715 Issued during the year 1,054,925,706 105,492,570.593 1,467,068,695 146,706,869.491

4,211,325,966 421,132,596.619 3,767,254,312 376,725,431.206 Redeemed during the year 1,515,293,051 151,529,305.054 610,854,052 61,085,405.180 At the end of the year 2,696,032,915 269,603,291.565 3,156,400,260 315,640,026.026

TOTAL 3,375,432,935 337,543,293.523 3,984,626,296 398,462,629.569

HSBC MUTUAL FUND - HSBC EQUITY FUND Schedules forming part of the Balance Sheet as at March 31, 2010

and the Revenue Account for the year ended March 31, 2010

3

SCHEDULE 5Reserves and Surplus March 31, 2010 March 31, 2009

Rupees Rupees

Unit Premium Reserve (Note 2.7)At the beginning of the year 211,908,323 (151,261,257) Added during the year (710,265,788) 363,169,580 At the end of the year (498,357,465) 211,908,323

Income Equalisation Reserve (Note 2.8)Added during the year (1,377,115,414) 3,116,497,351 Transferred to Revenue Account 1,377,115,414 (3,116,497,351) At the end of the year - -

Unrealised Appreciation ReserveAt the beginning of the year 2,203,226 1,168,778,802

Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) 3,354,536,944 (1,166,575,576) At the end of the year 3,356,740,170 2,203,226

Reserve FundAt the beginning of the year 6,722,164,947 6,773,938,265 Balance Transferred from Revenue Account 871,774,218 (51,773,318) At the end of the year 7,593,939,165 6,722,164,947

TOTAL 10,452,321,870 * 6,936,276,496 *

* The share of the Options of the Reserves and Surplus is as follows : March 31, 2010 March 31, 2009

RupeesGrowth Option 5,797,322,997 4,155,513,725 Dividend Option 4,654,998,873 2,780,762,771 Total 10,452,321,870 6,936,276,496

Rupees

HSBC MUTUAL FUND - HSBC EQUITY FUND Schedules forming part of the Balance Sheet as at March 31, 2010


4

SCHEDULE 6Current Liabilities and Provisions March 31, 2010 March 31, 2009

Rupees RupeesCurrent Liabilities

Investment Management and Advisory Fees 17,809,619 2,486


Custodian Fees and Expenses 725,329 449,438

Audit Fees 700,000 550,000


Purchase Contracts Awaiting Completion - Equity Shares - 57,732,918

Payable on Outstanding Future Contracts 5,746,788 3,534,685

Unit Redemptions Payable 198,973,814 22,030,183

Inter Scheme payable

- For Switch - Out 5,828,946 6,711,146

- For Others 617,970 16,056

Unclaimed Redemption (Note 14) 1,696,434 1,113,098

Unclaimed Dividend (Note 15) 2,779,078 2,686,582

Temporary Book Overdraft 2,693,805 801,764

Load Charges (Note 2.9) 5,670,648 13,830,710

Sundry Payables 7,033,336 3,211,896

TOTAL 281,045,245 133,752,357

SCHEDULE 7 April 01, 2009 to April 01, 2008 toInterest and Discount (Note 2.4) March 31, 2010 March 31, 2009

Rupees Rupees

Debentures / Bonds - 1,352,498

Commercial Paper / Certificate of Deposit - 14,024,158

Reverse Repos 12,592,290 30,814,654

Collateralized Borrowing and Lending Obligation 12,349,480 47,462,389

Deposits 21,418,762 49,040,301

Treasury Bill 710,496 -

TOTAL 47,071,028 142,694,000



5

Description Quantity Market ValueRupees

Equity Shares (100%)Auto (3.75%)

Hero Honda Motors Limited @ 162,000 314,992,800Maruti Suzuki India Limited @ 126,000 178,661,700

493,654,500Banks (20.41%)

HDFC Bank Limited 385,200 744,784,200ICICI Bank Limited 567,000 540,067,500State Bank of India 252,000 523,706,400Punjab National Bank @ 450,000 455,737,500Axis Bank Limited 360,000 420,570,000

2,684,865,600Cement (3.53%)

Jaiprakash Associates Limited 1,755,000 262,460,250Grasim Industries Limited 72,000 202,669,200

465,129,450Construction Project (4.46%)

Larsen & Toubro Limited 360,000 587,106,000587,106,000

Consumer Non Durables (7.62%)ITC Limited @ 1,980,000 520,839,000GlaxoSmithkline Consumer Healthcare Limited 117,000 174,733,650United Spirits Limited 126,000 166,496,400Jubilant Foodworks Limited 450,000 141,120,000

1,003,189,050Finance (3.53%)

Housing Development Finance Corporation Limited 171,000 464,641,200464,641,200

Gas (1.40%)GAIL India Limited 450,000 184,770,000

184,770,000Industrial Capital Goods (5.56%)

Bharat Heavy Electricals Limited 306,000 731,538,900731,538,900

Industrial Products (1.64%)Jain Irrigation Systems Limited 225,000 216,135,000

216,135,000Media & Entertainment (2.63%)

Sun TV Network Limited 810,000 346,680,000346,680,000

Non - Ferrous Metals (2.09%)Sterlite Industries (India) Limited @ 324,000 275,383,800

275,383,800Oil (7.02%)

Oil and Natural Gas Corporation Limited 540,000 593,298,000Cairn India Limited 1,080,000 330,102,000

923,400,000Pesticides (1.53%)

United Phosphorus Limited 1,350,000 201,420,000201,420,000

Petroleum Products (7.49%)Reliance Industries Limited 720,000 773,460,000Indian Oil Corporation Limited 720,000 212,940,000

986,400,000Pharmaceuticals (5.38%)

Cipla Limited 1,080,000 365,418,000Ranbaxy Laboratories Limited 720,000 342,288,000

707,706,000Power (5.85%)

Tata Power Company Limited 234,000 321,434,100Reliance Infrastructure Limited 225,000 224,786,250NTPC Limited 1,080,000 223,830,000

770,050,350Software (9.96%)

Infosys Technologies Limited @ 321,375 840,700,931Mphasis Limited 450,000 279,202,500Wipro Limited @ 210,600 148,883,670Tata Consultancy Services Limited @ 54,000 42,155,100

1,310,942,201Telecom - Services (3.67%)

Bharti Airtel Limited 1,547,068 483,536,103483,536,103

Textiles - Cotton (1.13%)The Bombay Dyeing & Manufacturing Company Limited 270,000 148,689,000

148,689,000Transportation (1.35%)

Container Corporation of India Limited 135,000 177,936,750177,936,750

Total (Cost Rs. 9,806,433,735) 13,163,173,904TOTAL INVESTMENTS (Cost Rs. 9,806,433,735) 13,163,173,904

Equity DerivativesLong Futures (100%)

Sterlite Industries (India) Limited - April 2010 (32.18%) 157,680 134,193,564Tata Consultancy Services Limited - April 2010 (67.82%) 360,000 282,852,000

Total 417,045,564

Deposits (3.11%)^4.8% HSBC Bank 92 180,000,0004.4% HSBC Bank 91 160,000,0004.7% HSBC Bank 91 90,000,000Total Deposits 430,000,000

Confirmation has been received from J P Morgan Chase Bank, Mumbai Branch at the end of the financial year for the investments held by them.

^ Denotes Percentage to Net Assets.


Statement of Portfolio Holding as at March 31, 2010

@ Investment in companies which have invested more than five percent of the net asset value of any scheme of HSBC Mutual Fund.

Referred to in Schedule 1 to the Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended March 31, 2010)

6

Year ended March 31, 2010

Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains/(Losses) for the Year 2,501,336,032 (2,666,504,170)

Adjustments for:- (Increase)/Decrease in Investments at cost (845,923,634) (1,249,031,725) (Increase)/Decrease in Other Current Assets 22,747,334 (19,013,637) Increase/(Decrease) in Current Liabilities 24,860,231 487,658 Net cash generated from/(used in) operations ( A ) 1,703,019,963 (3,934,061,874)

B Cashflow from Financing Activities (Decrease)/Increase in Unit Capital (609,193,361) 1,207,726,867 (Decrease)/Increase in Unit Premium Reserve and Income Equalisation Reserve (2,087,381,202) 3,479,666,931

Adjustments for:- Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors 176,061,432 (40,734,773) (Increase)/Decrease in Sundry Debtors for Units Issued to Investors 50,175,409 16,758,979

Dividend Paid During the Year (741,856,835) (24,610)

Net cash (used in)/generated from financing activities ( B ) (3,212,194,557) 4,663,393,394

Net (Decrease)/Increase in Cash and Cash Equivalents (A+B) (1,509,174,594) 729,331,520

Cash and Cash Equivalents at the beginning of the year 2,382,082,728 1,652,751,208 Cash and Cash Equivalents at the close of the year 872,908,134 2,382,082,728

Notes :

March 31, 2010Rupees

March 31, 2009Rupees

1 Cash and Cash Equivalents include the following :

Balances with Scheduled Banks : - In Current Account 5,526,409 20,854,960 - In Dividend Account 11 569,361 - In Deposit Account 430,000,000 560,000,000

5,603,000 5,603,000

15,000,000 60,000,000 Temporary Book Overdraft (2,693,805) (801,764)

Other Collateralised lendingReverse Repo 211,206,537 808,729,589 Collateralised Borrowing and Lending Obligation 127,265,982 846,127,582 Derivative Margin Deposit 81,000,000 81,000,000

872,908,134 2,382,082,728

2 The above Cash Flow Statement has been prepared under the "Indirect Method" set out in Accounting Standard - 3 on Cash Flow Statements,issued by The Institute of Chartered Accountants of India.

This is the Cash Flow Statement referred to in our report of even date.



Trustee Director


Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities


Cash Flow Statement for the year ended March 31, 2010

Margin Deposit with Clearing Corporation of India towards Collateralized Borrowing and Lending Obligation

1

HSBC MUTUAL FUND-HSBC EQUITY FUND

Schedules forming part of the Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended March 31, 2010

SCHEDULE 8

1Notes to the Financial Statements

1 Organisation

HSBC Equity Fund (the “Scheme”) is an open-ended growth scheme of HSBC Mutual Fund (the “Fund”) and was

launched on November 14, 2002. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital

Markets (India) Private Limited. HSBC Asset Management (India) Private Limited incorporated under the

Companies Act, 1956 has been appointed as the asset management company. The duration of the Scheme is

perpetual. The Scheme closed for initial subscription on December 3, 2002 and reopened for issue and redemption

of units on December 27, 2002. The investment objective of the Scheme is to generate long term capital growth

from an actively managed portfolio of equity and equity related securities. The Scheme has two Options - Growth

Option and Dividend Option. The Scheme will not declare dividend under the Growth Option in normal circumstances. The income earned on

such units will remain invested within the Scheme and will be reflected in the net asset value.

2 Significant Accounting Policies

2.1 Basis of Accounting The Scheme maintains its books of account on an accrual basis. These financial statements have been prepared in

accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and

Exchange Board of India (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments thereto, as

applicable.

2.2 Portfolio Valuation Investments are stated at market / fair value at the Balance Sheet date/date of determination. In valuing the

Scheme ’ s investments:

i. Equity securities listed on a recognized stock exchange are valued at the last quoted closing price on the

National Stock Exchange of India Limited (NSE). If on a particular valuation date, a security is not

traded on NSE, the value at which it is traded on Bombay Stock Exchange Limited (BSE) is used. If no

sale is reported at that time, the last quoted closing price on the principal stock exchange on which the

security is traded is used when it is not more than thirty days prior to the valuation date.

ii. Non-traded and thinly traded equity securities, including those not traded within thirty days prior to the

valuation date are valued at fair value 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 dated September 18, 2000 and amendments

thereto, as applicable, issued by the Securities and Exchange Board of India (SEBI).

iii. Debt securities listed on a recognised stock exchange are valued at the last quoted closing price on the

National Stock Exchange of India Limited (NSE). If no sale is reported at that time, such securities are

valued at fair value as determined in good faith by HSBC Asset Management (India) Private Limited

under procedures approved by the Board of Trustees of HSBC Mutual Fund.



iv. Non-traded and thinly traded debt securities are valued at fair value 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 dated

September 18, 2000 and amendments thereto, as applicable, issued by the Securities and Exchange

Board of India (SEBI).

v. Privately placed debt securities are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund.

vi. Traded money market securities are valued at the yield at which they are traded on the valuation date. If

no sale is reported at that time, such security is valued at the last traded price plus accretion of the

difference between the face value and the last traded price. Non traded money market securities are

valued at cost plus accrued interest. vii. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up

to the date of resale. viii. Units in mutual fund are valued at the net asset value of the investee scheme.

ix. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.

The net unrealised appreciation / depreciation in the value of investments and derivatives is determined

separately for each category of investments and derivatives. In respect of each category of investments and

derivatives, the net change in the unrealised appreciation if any, between two balance sheet dates / valuation

dates is accounted through the Revenue Account and thereafter the net unrealised appreciation is transferred

from the Revenue Account to the Unrealised Appreciation Reserve. The net change in unrealised

depreciation if any, is accounted through the Revenue Account.

Net unrealised appreciation is reduced from the distributable income at the time of income distribution.

2.3 Securities Transaction Investment securities transactions are accounted for on a trade date basis. The Scheme uses the average cost method for determining the realized gain or loss on sale of investments.

2.4 Investment Income Interest income is recorded on accrual basis. Dividend income is recorded on ex date basis.

2.5 Derivatives The Scheme enters into derivative transactions in equity/ index futures for the purpose of hedging and portfolio

balancing. “Derivative margin deposit” representing the margin towards equity derivative contracts entered into by the

Scheme is disclosed under “Other Current Assets”.

Futures

• Futures contracts are marked to market daily at the futures settlement price as determined by the exchange. The variation margin calculated as the difference between the trade price or the previous day’s settlement price, as the case may be, and the current day’s settlement price is recorded as a receivable or payable.



• When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the Revenue Account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss. • As at the Balance Sheet date / date of determination, all open futures positions are valued at the futures settlement price as determined by the exchange where it is traded. The unrealised appreciation / depreciation on all open positions is considered for determining the net asset value.

2.6 Net Asset Value for Growth/Dividend Options

The net asset value of the units of the Scheme is determined separately for the units issued under the Growth and

Dividend Options. For reporting the net asset value for the Options, daily income earned, including realized and

unrealized gain or loss in the value of investments and expenses incurred by the Scheme are allocated to the

Options in proportion to the value of the net assets.

2.7 Unit Premium Reserve

Upon issue and redemption of units, the net premium or discount to the face value of units is adjusted against the

unit premium reserve of the Scheme, after an appropriate portion of the issue proceeds and redemption payout is

credited or debited respectively to the income equalization reserve.

Upto March 15, 2010, the shortfall representing difference between dividend distributions and distributable

surplus available for distribution on the record dates, if any, was utilized from unit premium reserve, except to the

extent it was represented by unrealised net appreciation in the value of investments.

2.8 Income Equalization Reserve

The net distributable income relating to units issued / repurchased is transferred to / from income equalization

reserve for determining the net surplus / deficit, transferred from / to unit premium reserve.

2.9 Load Charges

Load collected up to July 31, 2009 is retained in the Scheme under a separate account and is used to meet

marketing and selling expenses. Pursuant to SEBI circular SEBI/IMD/CIR No. 4/168230/09 dated June 30, 2009,

effective August 1, 2009, of the exit load collected in the Schemes a maximum of 1% of redemption proceeds is

maintained in a separate account and utilized to meet marketing and selling expenses. Any load collected in

excess of 1% is credited to the Schemes.

2.10 Foreign Currency Translation

The books and records of the Fund are maintained in Indian rupees. Amounts denominated in or expected to settle

in foreign currencies are translated into Indian rupees on the following basis.

(i) Market value of investments, other assets and liabilities at the closing rate of exchange on the Balance

Sheet date / valuation date.

(ii) Purchases and sales of investments, income and expense at the rate of exchange prevailing on the

respective date of such transactions.



The Fund does not isolate that portion of the change in investment valuation resulting from changes in the

foreign exchange rates from the fluctuations arising from changes in the local market prices of securities held.

Such fluctuations are included in unrealised appreciation or depreciation on investments.

Net realised foreign exchange gains and losses arise from sales of foreign currency denominated securities,

currency gains or losses realised between trade and settlement dates of foreign currency denominated securities

transactions and the difference between the recorded amounts of foreign currency denominated dividends,

interest and expenses recorded in the Fund’s books and the Indian rupee equivalent amounts actually received

or paid. Net unrealised foreign exchange gains and losses arising from changes in value of assets and liabilities

denominated in foreign currency resulting from changes in foreign exchange rate are included in net unrealised

appreciation or depreciation in value of investments and foreign currency denominated assets and liabilities.

3 Investment Management and Advisory Fees

The Scheme has paid or provided for investment management and advisory fees payable to HSBC Asset

Management (India) Private Limited for managing the Scheme at an average annual rate of 1.01% of the average

daily net asset value recorded by the Scheme. All costs, charges and expenses incurred by HSBC Asset

Management (India) Private Limited in the administration and execution of the activities of the Scheme, except

costs allowed to be charged to the Scheme under the Regulations, are on their own account for which they receive

investment management and advisory fees.

4 Trusteeship Fees

In accordance with the Deed of Trust dated February 7, 2002 between HSBC Securities and Capital Markets

(India) Private Limited (“The Settlor”) and the Board of Trustees of HSBC Mutual Fund, the Fund has paid or

provided for a fee not exceeding Rs.20,000 for each meeting of the Board of Trustees attended by such Trustee

not affiliated with the Settlor.

5 Custodian Fees

J P Morgan Chase Bank provides custodial services to the Scheme for which it receives custody fees including

safekeeping.

6 Income Taxes

No provision for income tax is made as the Scheme qualifies as a recognized mutual fund under Section 10(23D)

of the Income Tax Act, 1961.



7 Aggregate Appreciation and Depreciation In Value of Investments and Derivatives

0Aggregate appreciation and depreciation in value of investments and derivatives are as follows:

March 31, 2010

(Rupees) March 31, 2009

(Rupees)

Equity Shares

-Appreciation 3,511,447,614 419,474,916

-Depreciation 154,707,444 921,216,805

Equity Futures

-Appreciation 4,260,464 2,218,589

-Depreciation 16,591,918 15,363

8 Aggregate Value of Purchases and Sale of Investments

The aggregate value of investments securities purchased and sold during the financial year (excluding accretion of

discount of Rs. 710,496) 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.

9 Income and Expenses

The total income (including net profit on sale of investments, derivatives and foreign currency transactions and net

change in unrealized depreciation in value of investments and derivatives) and expenditure during the year is Rs.

3,280,879,965 and Rs. 290,133,498 respectively being 22.06% and 1.95% of the average daily net assets.

10 Equity Derivatives Disclosure:

Futures

Details of open interest in equity futures as at March 31, 2010

Underlying Asset's Name Number of contracts

Units Outstanding Long/(Short)

Sterlite Industries (India) Limited 360 157,680

Tata Consultancy Services Limited 360 360,000

Notional value of futures contracts bought/ (sold) by the Scheme and outstanding as on March 31, 2010

aggregates to Rs. 417,045,564.

Net Profit on futures transactions recognized in the Revenue Account for the year ended March 31, 2010




11 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds)

Regulation, 1996 as amended and in accordance with Accounting Standard 18 on ‘Related Party

Disclosures’ issued by the Institute of Chartered Accountants of India (ICAI)

The Scheme has entered into transactions with certain related parties. The information required in this regard in

accordance with Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered

Accountants of India and regulation 25(8) of SEBI Regulation, is provided below :

I Related Party Relationships

Name Description of relationship

(i) HSBC Securities and Capital Markets (India) Private Limited Sponsor of the Fund

(ii) HSBC Asset Management (India) Private Limited Investment Manager to the Schemes of

HSBC Mutual Fund

(iii) The Hong Kong and Shanghai Banking Corporation Limited Associate of the Investment Manager

(iv) HSBC InvestDirect Securities (India) Limited Associate of the Investment Manager

(v) PML Mercantile Limited Associate of the Investment Manager

(vi) Schemes of the Fund, Under Common Control of the Sponsor

HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund



HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund

(vii) Key Management Personnel and their relatives:

Nelum Pahlaj Gidwani – Associate Trustee Naina Lal Kidwai – Chairman of the Investment Manager Vikramaditya – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Tustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani – Relative of a Key Management Personnel Rashid K Kidwai – Relative of a Key Management Personnel Kemaya Lal Kidwai – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.

II The following transactions occurred with the related parties during the year in the ordinary course of business:

Refer Annexure I

III 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.

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

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


% of Total



(on accrual basis)


Fund


Brokerage 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

Value of Transactions

[Rs. In Crores]

% of total

value of transacti

on of 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




relation

Period Covered


[Rs. In Crores]

% of total

value of transacti

on of the fund


(on accrual basis)


fund

HSBC InvestDirect Securities (India) Limited Associate 2008-2009 5.14 0.09 102,367 0.16 HSBC Securities and Capital Market (India) Private Limited 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.

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 fixed deposits and enters into reverse repo

transactions from time to time at competitive rates.

12 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 as amended

HSBC Mutual Fund has made investments in companies, which hold/ have held units in excess of 5% of the net

asset value of any Scheme of HSBC Mutual Fund which have been listed in Annexure II.

The investments comprise equity shares, debentures/ bonds, commercial paper, fixed deposits and other debt

instruments and were made solely on the basis of sound fundamentals of these companies.



13 Segment Reporting

The Scheme operates in one segment only viz. to generate long term capital growth from an actively managed

portfolio of equity and equity related securities.

14 Unclaimed Redemptions

As at March 31, 2010, unclaimed redemptions aggregate Rs. 1,696,434 payable to 54 investors.

15 Unclaimed Dividend

As at March 31, 2010, unclaimed dividends aggregate Rs. 2,779,078 payable to 617 investors.

16 Miscellaneous Income

Miscellaneous Income includes Rs.29,60,853 representing exit load collected in excess of 1% of redemption

proceeds and credited to the Scheme and Rs. 9,000 representing provision for expenses written back as no longer

required.

17 Prior Year’s Figures

Previous year’s figures have been re-grouped/re-arranged where necessary.

Signatures to the Schedules 1 to 8 forming part of the Balance Sheet and the Revenue Account.


Firm Registration Number: 301112E

Chartered Accountants

For Board of Trustees of

HSBC Mutual Fund

For HSBC Asset Management

(India) Private Limited

VIVEK PRASAD

Partner

Membership No. F-104941

Vikramaaditya

Director and Chief Executive

Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)

(i) Transactions during the Year

Nature of Transaction Sponsor Investment Manager

Associate of Investment

Manager

Schemes under Common Control of

Sponsor

Key Management Personnel and their

Relatives Total

Purchase of Investments - - - - - - Previous Year - - - 2,652,087,757 - 2,652,087,757

Sale of Investments - - - - - - Previous Year - - - 807,267,640 - 807,267,640

Subscription of Units (including switch in and dividend reinvestment) - - 2,928,000 - 9,476,044 12,404,044 Previous Year - - - - 5,189,000 5,189,000

Redemption of Units (including switch out) - - - - 1,027,654 1,027,654 Previous Year - - - - - -

Dividend Distribution( Including dividend reinvested) - - - - 254,044 254,044 Previous Year - - - - - -

Investment Management and Advisory Fees - 150,909,133 - - - 150,909,133 Previous Year - 69,759,167 - - - 69,759,167

Brokerage/ Commission on Distribution of Units - - 55,659,397 - - 55,659,397 Previous Year - - 72,415,284 - - 72,415,284

Brokerage/ Commission on Purchase/Sale ofInvestments 922,708 - - - - 922,708 Previous Year 1,965,799 - - - - 1,965,799

Clearing Charges - - 1,745,886 - - 1,745,886 Previous Year - - 2,429,235 - - 2,429,235

Fixed Deposits Placed - - 1,130,000,000 - - 1,130,000,000 Previous Year - - - - - -

Reimbursment of Expenses - - - - - - Previous Year - 16,866,434 - - - 16,866,434

Fixed Deposits Matured - - 700,000,000 - - 700,000,000 Previous Year - - - - - -

Charges for Services Provided by Bank - - 118,354 - - 118,354 Previous Year - - 39,751 - - 39,751

(ii) Outstanding As At Year End



Manager


Sponsor


Relatives Total

Investment Management and Advisory Fees Payable - 17,809,619 - - - 17,809,619 Previous Year - 2,486 - - - 2,486

Brokerage/ Commission Payable for Distribution ofUnits - - 12,624,520 - - 12,624,520 Previous Year - - 5,418,954 - - 5,418,954

Units Outstanding As At Year End - - 3,350,021 - 28,812,645 32,162,666 Previous Year - - - - 12,267,725 12,267,725

Other Payables - - - 617,970 - 617,970 Previous Year - - - 16,056 - 16,056

Other Receivables - 723 - 1,000 - 1,723 Previous Year - 17,002,486 - 124,604 - 17,127,090

(iii) Details of material transactions with respect to parties referred to in Note 11 (I)(iii), (iv) and (v) for Associate of Investment Manager of the Sponsor

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividend reinvestment)PML Mercantile Limited 2,928,000 -

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 55,132,417 72,415,284

Brokerage/ Commission Payable for Distribution ofUnitsThe Hongkong and Shanghai Banking Corporation Limited 12,586,674 5,418,954

Clearing ChargesThe Hongkong and Shanghai Banking Corporation Limited 1,745,886 2,429,235

Fixed Deposits PlacedThe Hongkong and Shanghai Banking Corporation Limited 1,130,000,000 -

Fixed Deposits MaturedThe Hongkong and Shanghai Banking Corporation Limited 700,000,000 -

Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 118,354 39,751

Units Outstanding As At Year EndPML Mercantile Limited 3,350,021 -

(iv) Details of material transactions with respect to parties referred to in Note 11 (I)(vi) for Schemes under common control of the Sponsor

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Cash Fund - 1,117,614,922 HSBC Interval Fund - Plan II - 491,845,326 HSBC Ultra Short Term Bond Fund - 486,669,548

Sale of InvestmentsHSBC Fixed Term Series 58 - 281,145,354 HSBC Fixed Term Series 68 - 203,868,852

Other PayablesHSBC India Opportunity Fund - 14,556 HSBC Tax Saver Equity Fund - 1,500 HSBC Income Fund - Investment Plan 617,970 -

Other ReceivablesHSBC Emerging Markets Fund 1,000 - HSBC Cash Fund - 95,000 HSBC Floating Rate Fund - Long Term Plan - 29,604

(v) Disclosures in respect of material transactions with persons referred to in Note 11 (I)(vii) for key management personnel and their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividend reinvestment)Naina Lal Kidwai 6,382,000 2,888,000 Kemaya Lal Kidwai (Relative) 1,910,000 1,500,000 Rashid K Kidwai (Relative) - 672,000

Sale of Mutual Fund Units (including switch out)Rashid K Kidwai(Relative) 1,027,654 -

Dividend Distribution( Including dividend reinvested)Nelum P Gidwani 169,256 - Avan Gidwani (Relative) 84,787 -

Units Outstanding As At Year EndNaina Lal Kidwai 18,965,527 7,343,415 Kemaya Lal Kidwai (Relative 4,594,512 1,185,201


Schedules forming part of the Balance Sheet as at March 31, 2010 and theRevenue Account for the year ended March 31, 2010

Annexure I

0

Auditors' Report To the Board of Trustees of 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 financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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 flows 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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.

(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

For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants

Vivek Prasad Partner Membership No. F-104941 Place : Mumbai Date : July 20, 2010


ASSETS

Investments 1 2,561,551,714 2,337,385,216

Deposits 2 134,902,000 266,152,000

Other Current Assets 3 196,051,716 245,776,099

TOTAL 1 2,892,505,430 2,849,313,315

LIABILITIES

Unit Capital 4 1,429,583,604 2,207,557,533

Reserves and Surplus 5 1,410,839,977 591,732,844


TOTAL 2,892,505,430 2,849,313,315

March 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2009

RECONCILIATION OF NET ASSET VALUE PER UNIT Growth Option Dividend Option Total Growth Option Dividend Option TotalRupees Rupees Rupees Rupees Rupees Rupees

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.6) 1,118,826,000 1,721,597,581 2,840,423,581 1,053,492,324 1,745,798,053 2,799,290,377




For PRICE WATERHOUSE For Board of Trustees of

For HSBC Asset Management (India)

Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants


Trustee Director



HSBC MUTUAL FUND - HSBC INDIA OPPORTUNITIES FUND


0



INCOME AND GAINS

Dividends (Note 2.4) 31,935,866 32,006,277


Net Profit on Sale of Investments and Derivatives (Note 2.3 and 2.5) 839,485,113 -

Miscellaneous Income (Note 17) 52,091

TOTAL 880,553,936 68,804,134

EXPENSES AND LOSSES






Audit Fees 500,000 500,000



TOTAL 74,402,434 1,132,336,259

Net Realised Gains/(Losses) for the Year 806,151,502 (1,063,532,125)


Net Gains/(Losses) for the Year 0.06 1,002,920,366 (1,260,300,989)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives 601,699,384 (481,262,582)

Net Surplus/(Deficit) including Net Change in Unrealised Appreciation in Value of Investments and Derivatives 1,604,619,750 (1,741,563,571)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve (601,699,384) 481,262,582

Net Surplus/(Deficit) for the Year 0.06 1,002,920,366 (1,260,300,989)

April 1, 2009 to April 1, 2009 to April 1, 2009 to April 1, 2008 to April 1, 2008 to April 1, 2008 toMarch 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2009Growth Option Dividend Option Total Growth Option Dividend Option Total


Net Surplus/(Deficit) for the Year 389,746,488 613,173,878 1,002,920,366 (460,294,516) (800,006,474) (1,260,300,989)

Transfer from Income Equalisation Reserve (Note 2.8) (301,142,242) (29,050,451) (330,192,693) (145,348,729) (63,726,148) (209,074,877)

Transfer from Reserve Fund - 380,622,250 380,622,250 - - -

Dividend / Distribution (Net of Reversal of Prior Year Dividend Rs. Nil (Previous Year : Rs. 1,520)) - (122,251,235) (122,251,235) - 1,520 1,520

Balance Transferred to Reserve Fund 88,604,246 842,494,442 931,098,688 (605,643,245) (863,731,102) (1,469,374,346)





Trustee Director





1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 7, 8, 9 and 13) Rupees Rupees Rupees Rupees


Equity Shares 2,561,551,714 1,962,703,329 2,337,385,216 2,534,154,080

TOTAL 2,561,551,714 1,962,703,329 2,337,385,216 2,534,154,080


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives Rs. 130,000,000 (2009 : Rs. 130,000,000)) 130,000,000 250,000,000

Margin Deposit with Clearing Corporation of India Limited towards Collateralized Borrowing and Lending Obligation 1,152,000 1,152,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 3,750,000 15,000,000

TOTAL 134,902,000 266,152,000


Balances with Banks - in Current Account 936,496 710,931 - in Dividend Account - 165,360


Reverse Repos 35,572,976 50,006,264


Unit Subscription Receivable 36,700 1,317,500

Inter-Scheme Receivable:- For 'Switch In' 116,050 10,000 - For 'Others' 1,269 14,556


Receivable on Outstanding Equity Future Contracts 156,856 1,134,530

Interest Receivable on :- Deposits 297,986 4,897,891 - Reverse Repos 5,026 6,435 - Collateralised Borrowing and Lending Obligation 2,910 6,410

Receivable from Investment Manager - 6,185

Investment towards Unclaimed Redemption [(in 24,129.788 Units (2009 : 24,247.669 units) (Market Value Rs. 359,273 (2009 : Rs.353,395)) of HSBC Cash Fund - Growth Option) (Note 15)] 299,813 311,406

Investment towards Unclaimed Dividend [in 75,395.516 Units (2009 : 67,694.416) (Market Value Rs. 1,122,579(2009 : Rs. 986,606) of HSBC Cash Fund - Growth Option (Note 16)] 990,245 948,453

TOTAL 196,051,716 245,776,099



2


Growth Option

Issued and Subscribed :Units of Rs. 10 each fully paid up 705,593,731 70,559,373.092 705,593,731 70,559,373.092

Outstanding:

At the beginning of the year 534,782,092 53,478,209.207 618,443,872 61,844,387.233

Issued during the year 52,153,476 5,215,347.572 80,052,360 8,005,235.991

586,935,568 58,693,556.779 698,496,232 69,849,623.224

Redeemed during the year 237,159,365 23,715,936.535 163,714,140 16,371,414.017

At the end of the year 349,776,203 34,977,620.244 534,782,092 53,478,209.207

Dividend Option

Issued and Subscribed :Units of Rs. 10 each fully paid up 1,900,309,787 190,030,978.748 1,900,309,787 190,030,978.748

Outstanding:

At the beginning of the year 1,672,775,441 167,277,543.980 2,006,429,874 200,642,987.346


1,785,418,412 178,541,841.056 2,178,980,749 217,898,074.802


At the end of the year 1,079,807,401 107,980,739.996 1,672,775,441 167,277,543.980

TOTAL 1,429,583,604 142,958,360.240 2,207,557,533 220,755,753.187

HSBC MUTUAL FUND - HSBC INDIA OPPORTUNITIES FUNDSchedules forming part of the Balance Sheet as at March 31, 2010


3

SCHEDULE 5 March 31, 2010 March 31, 2009Reserves and Surplus Total Total

Rupees Rupees

Unit Premium Reserve (Note 2.7)

At the beginning of the year (496,716,157) (440,200,382)

Added during the year (333,068,689) (56,515,775)

At the end of the year (829,784,846) (496,716,157)

Income Equalisation Reserve (Note 2.8)


Transferred to Revenue Account 330,192,693 209,074,877

At the end of the year - -

Unrealised Appreciation Reserve

At the beginning of the year 1,211,999 482,474,581

Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) 601,699,384 (481,262,582)

At the end of the year 602,911,383 1,211,999

Reserve Fund

At the beginning of the year 1,087,237,002 2,556,611,348

Transferred to Revenue Account (380,622,250) -

Balance Transferred from Revenue Account 931,098,688 (1,469,374,346)

At the end of the year 1,637,713,440 1,087,237,002

TOTAL 1,410,839,977 * 591,732,844 *

* The share of the Options of the Reserves and Surplus is as follows : March 31, 2010 March 31, 2009Rupees Rupees

Growth Option 769,049,797 518,710,232 Dividend Option 641,790,180 73,022,612 Total 1,410,839,977 591,732,844



4

SCHEDULE 6 March 31, 2010 March 31, 2009Current Liabilities and Provisions Rupees RupeesCurrent Liabilities

Investment Management and Advisory Fees 2,726,108 2,462,824

Transfer Agent Fees and Expenses 461,713 364,116


Audit Fees 500,000 500,000


Purchase Contracts Awaiting Completion -Equity Shares - 17,732,522


Inter Scheme Payable for Switch - Out 1,545,364 2,011,628


Unclaimed Redemption (Note 15) 363,145 311,406

Unclaimed Dividend (Note 16) 990,245 1,113,792

Bank Overdraft 403,762 101


TOTAL 52,081,849 50,022,938


Rupees Rupees


Reverse Repos 1,188,783 8,777,697


Deposits 6,813,284 21,538,003

Others - 158

TOTAL 9,080,866 36,797,857



5



Hero Honda Motors Limited @ 31,500 61,248,60061,248,600

Auto Ancillaries (4.20%)Bosch Limited 22,500 107,552,250

107,552,250Banks (16.99%)

HDFC Bank Limited 90,000 174,015,000ICICI Bank Limited 99,000 94,297,500Bank of Baroda 144,000 92,023,200State Bank of India 36,000 74,815,200

435,150,900Cement (2.19%)

Shree Cement Limited 14,022 33,117,861Century Textiles and Industries Limited 45,000 22,900,500



Consumer Non Durables (4.44%)ITC Limited @ 432,000 113,637,600

113,637,600Finance (4.30%)

Housing Development Finance Corporation Limited 40,500 110,046,600110,046,600

Industrial Capital Goods (7.18%)Bharat Heavy Electricals Limited 54,000 129,095,100Areva T&D India Limited 180,000 54,900,000

183,995,100Industrial Products (3.52%)

Jain Irrigation Systems Limited 49,500 47,549,700Sintex Industries Limited 144,000 42,552,000



Minerals/Mining (1.50%)Gujarat Mineral Development Corporation Limited 270,000 38,313,000

38,313,000Non - Ferrous Metals (2.69%)

Sterlite Industries (India) Limited @ 81,000 68,845,95068,845,950

Oil (6.61%)Oil and Natural Gas Corporation Limited 99,000 108,771,300Cairn India Limited 198,000 60,518,700

169,290,000Pesticides (1.57%)

United Phosphorus Limited 270,000 40,284,00040,284,000

Petroleum Products (7.91%)Reliance Industries Limited 144,000 154,692,000Indian Oil Corporation Limited 162,000 47,911,500


Aurobindo Pharma Limited 126,000 120,884,400Cipla Limited 252,000 85,264,200Ranbaxy Laboratories Limited 108,000 51,343,200

257,491,800Software (12.63%)

Infosys Technologies Limited @ 63,000 164,804,850Mphasis Limited 153,000 94,928,850Oracle Financial Services Software Limited 27,000 62,101,350Persistent Systems Limited # 5,303 1,643,930

323,478,980Telecom - Services (2.75%)

Bharti Airtel Limited 225,000 70,323,75070,323,750

Transportation (0.67%)Gateway Distriparks Limited 134,999 17,057,123

17,057,123Total (Cost Rs. 1,962,703,329) 2,561,551,714TOTAL INVESTMENTS (Cost Rs. 1,962,703,329) 2,561,551,714


Bharat Heavy Electricals Limited - April 2010 (8.33%) 6,750 16,160,175Century Textiles and Industries Limited - April 2010 (14.07%) 53,424 27,302,335Punjab National Bank - April 2010 (28.28%) 54,000 54,855,900Sterlite Industries (India) Limited - April 2010 (17.29%) 39,420 33,548,391Tata Power Company Limited - April 2010 (32.03%) 45,000 62,127,000

Total 193,993,801

Deposits (4.58%)^4.8% HSBC Bank 92 80,000,0004.7% HSBC Bank 91 50,000,000Total Deposits 130,000,000


@ Investment in companies which have invested more than five percent of the net asset value of any scheme of HSBC Mutual Fund.


# Fair value of equity shares awaiting listing as determined in good faith by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees.



(Referred to in Schedule 1 to the Balance Sheet as at March 31, 2010 and the Revenue Accountfor the year ended March 31, 2010)

6


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains/(Losses) for the Year 806,151,502 (1,063,532,125)

Adjustments for:- (Increase)/Decrease in Investments at cost 555,267,992 1,713,376,170 (Increase)/Decrease in Other current assets 4,594,087 (1,325,644) Increase/(Decrease) in Current liabilities 6,005,215 (16,045,190) Net cash generated from operations (A) 1,372,018,796 632,473,211

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (777,973,929) (417,316,213) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (663,261,382) (265,590,652)

Adjustments for:- Increase/(Decrease) in Sundry creditors for units redeemed by investors 13,382,557 (29,009,980) (Increase)/Decrease in Sundry debtors for units issued to investors 1,174,750 7,127,353

Dividend paid during the year (including reversal of Rs. Nil (Previous Year : Rs. 1,520) for prior year) (122,251,235) 1,520

Net cash used in financing activities (B) (1,548,929,239) (704,787,972)

Net (Decrease) in Cash and cash equivalents (A+B) (176,910,443) (72,314,761)

Cash and Cash Equivalents at the beginning of the year 481,853,215 554,167,976 Cash and Cash Equivalents at the end of the year 304,942,772 481,853,215

Notes :March 31, 2010

Rupees March 31, 2009

Rupees


Balances with Scheduled Banks : - In Current Account 936,496 710,931 - In Dividend Account - 165,360 - In Deposit Account 130,000,000 250,000,000

Margin Deposit with Clearing Corporation of India Limited towards Collateralized Borrowing and Lending Obligation 1,152,000 1,152,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Government Securities 3,750,000 15,000,000 Temporary Book Overdraft (403,762) (101) Other Collaterised LendingReverse Repo 35,572,976 50,006,264 Collateralised Borrowing and Lending Obligation 21,435,062 52,318,761 Derivative Margin Deposit 112,500,000 112,500,000

304,942,772 481,853,215





Trustee Director




0

HSBC MUTUAL FUND-HSBC INDIA OPPORTUNITIES FUND

Schedules forming part of the Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended March 31, 2010.

SCHEDULE 8

1Notes to the Financial Statements 1 Organisation

HSBC India Opportunities Fund (the “Scheme”) is an open-ended growth scheme of HSBC Mutual Fund (the

“Fund”) and was launched on January 22, 2004. HSBC Mutual Fund has been sponsored by HSBC Securities and

Capital Markets (India) Private Limited. HSBC Asset Management (India) Private Limited incorporated under the


perpetual. The Scheme closed for initial subscription on February 13, 2004 and reopened for issue and redemption

of units on March 5, 2004. The investment objective of the Scheme is to seek long-term capital growth through

investments across all market capitalizations, including small, mid and large cap stocks. The Scheme will endeavor

to invest in large cap companies as well as identify mid-cap stocks, which have the potential to become blue chip

large cap stocks over time. The Scheme aims to be predominantly invested in equity and equity related securities.

However, it will move a significant portion of its assets towards fixed income securities if the Scheme becomes

negative on equity markets. The Scheme has two Options - Growth Option and Dividend Option.

The Scheme will not declare dividend under the Growth Option in normal circumstances. The income earned on

such units will remain invested within the Scheme and will be reflected in the net asset value. 2 Significant Accounting Policies 1.0 Basis of Accounting

The Scheme maintains its books of account on an accrual basis. These financial statements have been prepared in


Exchange Board of India (SEBI) (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments thereto,

as applicable. 2.0 Portfolio Valuation

Investments are stated at market / fair value at the Balance Sheet date/date of determination. In valuing the

Scheme’s investments:


National Stock Exchange of India Limited (NSE). If on a particular valuation date, a security is not traded

on NSE, the value at which it is traded on Bombay Stock Exchange Limited (BSE) is used. If no sale is

reported at that time, the last quoted closing price on the principal stock exchange on which the security

is traded is used when it is not more than thirty days prior to the valuation date.


valuation date are valued at fair value 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 dated September 18, 2000 and amendments


iii. Equity shares awaiting listing are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund.

iv. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up

to the date of resale.



v. Traded money market securities are valued at the yield at which they are traded on the valuation date. If


difference between the face value and the last traded price. Non traded money market instruments are

valued at cost plus accrued interest.

iii. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.

The net unrealised appreciation / depreciation in the value of investments and derivatives is determined separately for each category of investments and derivatives. In respect of each category of investments and derivatives, the net change in the unrealised appreciation if any, between two balance sheet dates / valuation dates is accounted through the Revenue Account and thereafter the net unrealised appreciation is transferred from the Revenue Account to the Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted through the Revenue Account.


2.3 Securities Transaction

Investment securities transactions are accounted for on a trade date basis. The Scheme uses the average cost

method for determining the realized gain or loss on sale of investments. 2.4 Investment Income

Interest income is recorded on accrual basis. Dividend income is recorded on ex date basis.

2.5 Derivatives The Scheme enters into derivative transactions in equity / index futures / options for the purpose of hedging and

portfolio balancing.

“Derivative margin deposit” representing the margin towards equity derivative contracts entered into by the Scheme is disclosed under “Other Current Assets”.

Futures


• When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the Revenue Account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss.

• As at the Balance Sheet date / date of determination, all open futures positions are valued at the futures settlement price as determined by the exchange where it is traded. The unrealised appreciation / depreciation on all open positions is considered for determining the net asset value.

















reserve for determining the net surplus / deficit, transferred from / to unit premium reserve. 2.9 Load Charges





excess of 1% is credited to the Schemes. 3 Investment Management and Advisory Fees






investment management and advisory fees. 4 Trusteeship Fees




not affiliated with the Settlor. 5 Custodian Fees

JP Morgan Chase Bank provides custodial services to the Scheme for which it receives custody fees including

safekeeping.



6 Income Taxes



For taxes deducted at source from the investment income, which are recoverable, a receivable is recorded in the

books of account.



March 31, 2010


(Rupees) Equity Shares -Appreciation 619,460,514 216,543,449 -Depreciation 20,612,129 413,312,313 Equity Futures -Appreciation 4,487,301 2,252,115 -Depreciation 424,303 1,040,116

8 Illiquid Securities

As at March 31, 2010 the Scheme held the following illiquid Securities:

Company Name Fair Value

(Rupees)

Percentage of

Fair Value to

Net Assets

Persistent Systems Limited 1,643,930 0.06

9 a) Aggregate Value of Purchase and Sale of Investments

The aggregate value of investments purchased and sold during the financial 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.

b) Aggregate Fair Value of Non-Traded Investments

Aggregate fair value of non traded investments as determined by HSBC Asset Management (India) Private

Limited under the procedures approved by the Board of Trustees as at March 31, 2010 is Rs. 1,643,930. 10 Income and Expenses

The total income (including net profit on sale of investments and derivatives and net change in unrealized

depreciation in the value of investments and derivatives) and expenditure during the year is Rs. 1,077,322,800 and

Rs. 74,402,434 respectively being 32.61% and 2.25% of the average daily net assets.



11 Equity Derivatives Disclosures:

Futures

Details of open interest in equity futures as at March 31, 2010.


Units Outstanding Long

Bharat Heavy Electricals Limited 45 6,750

Century Textiles and Industries Limited 63 53,424

Punjab National Bank 180 54,000


Tata Power Company Limited 225 45,000

Notional value of futures contracts sold by the Scheme and outstanding as on March 31, 2010 aggregates to Rs.

193,993,801.

Net Loss on futures transactions recognized in the Revenue Account for the year ended March 31, 2010

aggregates to Rs. 29,525,484. 12 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds)






I Related party relationships




HSBC Mutual Fund



(v) Schemes of the Fund, Under Common Control of the Sponsor

HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009



HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund

(vi) Key Management Personnel and their relatives:

Nelum Pahlaj Gidwani – Associate Trustee Naina Lal Kidwai – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Refer Annexure I



III 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.






Nature of Relation

Period Covered


% of Total




Fund






Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund



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


relation

Period Covered


[Rs. In Crores]

% of total value of

transaction of the fund


% of total brokerage

paid by the fund




relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund

HSBC InvestDirect Securities (India) Limited Associate 2008-2009 6.70 0.30 134,157 0.60 HSBC Securities and Capital Market (India) Private Limited Sponsor 2008-2009 53.70 2.37 453,714 2.04














The Scheme operates in one segment only viz. to seek long-term capital growth through investments across all

market capitalizations, including small, mid and large cap stocks. 15 Unclaimed Redemptions As at March 31, 2010, unclaimed redemptions aggregate Rs. 363,145 payable to 14 investors. 16 Unclaimed Dividend

As at March 31, 2010, unclaimed dividends aggregate Rs. 990,245 payable to 241 investors. 16 Miscellaneous Income

Miscellaneous income of Rs. 51,909 represents exit load collected in excess of 1% of redemption proceeds and

credited to the Scheme and Rs. 182 representing provision for expenses written back as no longer required.




Previous year’s figures have been re-grouped/re-arranged where appropriate.



Firm Registration Number : 301112E



HSBC Mutual Fund

For HSBC Asset

Management (India)

Private Limited

VIVEK PRASAD

Partner


Vikramaaditya

Director and Chief

Executive Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager




Manager


Sponsor

Key Management Personnel and their Relatives Total

Purchase of Investments - - - - - - Previous Year - - - 383,347,017 - 383,347,017


Subscription of Units (including switch in and dividend reinvestment) - - - - 15,902 15,902 Previous Year - - - - 6,354,026 6,354,026

Redemption of Units (including switch out) - - - - 1,214,270 1,214,270 Previous Year - - - - 350,870 350,870

Dividend Distribution( Including dividend reinvested) - - - - 20,902 20,902 Previous Year - - - - - -


Brokerage/ Commission on Purchase/Sale of Investments 367,945 - - - - 367,945 Previous Year 447,580 - 20,160 - - 467,740


Clearing Charges - - 561,071 - - 561,071 Previous Year - - 1,179,175 - - 1,179,175

Fixed Deposits Placed - - 390,000,000 - - 390,000,000 Previous Year - - - - - -






Manager


Sponsor


Investment Management and Advisory Fees Payable - 2,726,108 - - - 2,726,108 Previous Year - 2,462,824 - - - 2,462,824

Brokerage/ Commission Payable for Distribution of Units - - 2,245,800 - - 2,245,800 Previous Year - - 732,193 - - 732,193

Units Outstanding As At Year End - - - - 20,327,394 20,327,394 Previous Year - - - - 12,929,439 12,929,439

Other Receivables - - - 1,269 - 1,268.80 Previous Year - 6,185 - 14,556 - 20,741

(iii) Details of material transactions with respect to parties referred to in Note 12 (I) (iii) & (iv) for Associates of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Brokerage/ Commission on Purchase/Sale of InvestmentsThe Hongkong and Shanghai Banking Corporation Limited - 20,160


Clearing ChargesThe Hongkong and Shanghai Banking Corporation Limited 561,071 1,179,175

Fixed Deposits PlacedThe Hongkong and Shanghai Banking Corporation Limited 390,000,000 -



Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 2,241,575 732,193


Schedules forming part of the Balance Sheet as at March 31, 2010 and theRevenue Account for the year ended March 31, 2010.

Annexure I

0



Annexure I

0

(iv) Details of material transactions with respect to parties referred to in Note 12 (I)(v) for Schemes under common control ofthe Sponsor.

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 128,663,810HSBC Fixed Term Series 35 - 126,976,981HSBC Floating Rate Fund Long Term Plan - 48,113,031

Sale of InvestmentsHSBC Fixed Term Series 37 - 138,984,631 HSBC Unique Opportunities Fund - 29,342,964 HSBC Equity Fund - 29,032,042

Other ReceivablesHSBC Equity Fund - 14,556 HSBC Progressive Themes Fund 1,269 -

(v) Disclosures in respect of material transactions with persons referred to in Note 12 (I)(vi) for key management personneland their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividend reinvestment)Naina Lal Kidwai 15,902 3,907,026 Kemaya Lal Kidwai (Relative) - 1,500,000 Rashid K Kidwai (Relative) - 747,000 Nelum Pahlaj Gidwani 5,000

Redemption of Units (including switch out)Rashid K Kidwai (Relative) 711,054 350,870 Naina Lal Kidwai (Relative) 503,216 -

Dividend Distribution( Including dividend reinvested)Nelum Pahlaj Gidwani 5,000 - Naina Lal Kidwai 15,902 -

Units Outstanding As At Year EndKemaya Lal Kidwai (Relative) 2,591,445 1,597,327 Naina Lal Kidwai 13,118,131 8,388,928 Nelum Pahlaj Gidwani 2,430,833 1,435,922

Auditors' Report

To the Board of Trustees of

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 financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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 flows 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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.

(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.




.


ASSETS

Investments 1 1,625,594,615 757,965,962

Deposits 2 43,213,000 93,213,000


Deferred Revenue Expenditure 4 549,400 4,333,045

TOTAL (0) 1,795,297,587 952,267,148

LIABILITIES

Unit Capital 5 1,072,580,953 1,183,790,324

Reserves and Surplus 6 699,841,418 (247,085,099)


TOTAL -0.08 1,795,297,587 952,267,148

March 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2009RECONCILIATION OF NET ASSET VALUE PER UNIT Growth Option Divdend Option Total Growth Option Divdend Option Total


Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.6) 867,526,599 904,895,772 1,772,422,371 429,122,356 507,582,869 936,705,225




For PRICE WATERHOUSE For Board of Trustees of For HSBC Asset Management (India)

Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants

VIVEK PRASAD Vikramaaditya

Partner Director and Chief Executive Officer


Trustee Director

Place: Mumbai

Date : Fund Manager(s)

HSBC MUTUAL FUND - HSBC MIDCAP EQUITY FUND



0



INCOME AND GAINS

Dividends (Note 2.4) 18,466,721 17,094,730



Miscellaneous Income (Note 17) 9,303 -

TOTAL 742,290,572 34,260,331

EXPENSES AND LOSSES

Net Loss on Sale of Investments and Derivatives (Note 2.3 and 2.5) - 954,963,644




Custodian Fees and Expenses (Note 5) 976,446 963,666

Audit Fees 100,000 300,000


Amortisation of Deferred Revenue Expenditure (Note 2.10) 3,783,645 3,783,645


TOTAL 36,759,954 994,367,976

Less: Expenses to be Reimbursed by the Investment Manager - 2,909,306

TOTAL 36,759,954 991,458,670

Net Realised Gains/(Losses) for the Year 705,530,618 (957,198,339)


Net Gains/(Losses) for the Year 961,182,041 (1,060,212,132)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives 68,619,871 -


Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve (68,619,871) -

Net Surplus/(Deficit) for the Year (0) -0.19 961,182,041 (1,060,212,132)

April 1, 2009 to April 1, 2009 to April 1, 2009 to April 1, 2008 to April 1, 2008 toMarch 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Rupees Rupees Rupees Rupees Rupees

Net Surplus/(Deficit) for the Year 444,713,310 516,468,731 961,182,041 (460,020,775) (1,060,212,132)

Transfer From Reserve Fund - 86,036,063 86,036,063 - -

Transfer from Income Equalisation Reserve (Note 2.8) (344,060) 13,263,283 12,919,223 (45,838,696) (56,391,540)

Dividend Distributions - (65,740,275) (65,740,275) - -

Balance Transferred to Reserve Fund 444,369,250 550,027,801 994,397,052 (505,859,471) (1,116,603,672)



For PRICE WATERHOUSE For Board of For HSBC Asset Management (India)Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants


Trustee Director





1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Investments Market / Fair Value Cost Market / Fair Value Cost(Notes 2.2, 2.3, 7, 8, 9 and 13) Rupees Rupees Rupees Rupees


Equity Shares 1,625,594,615 1,559,639,181 757,965,962 1,012,946,283

TOTAL 1,625,594,615 1,559,639,181 757,965,962 1,012,946,283


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives Rs. 42,000,000 (2009 : Rs.32,000,000) 42,000,000 92,000,000

Margin Deposit with the Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 1,213,000 1,213,000

TOTAL 43,213,000 93,213,000


Balances with Banks - in Current Account 2,972,413 33,499,281 - in Dividend Account 1,851 48,954


Reverse Repos 36,526,532 350,043

Collateralised Borrowing and Lending Obligation 22,009,672 366,011

Receivable on Outstanding Future Contracts 438,355 807,460

Unit Subscription Receivable 234,500 820,000

Inter-Scheme Receivable - For 'Switch in' 519,060 - - For 'Others' - 5,000


Interest Receivables on:- Reverse Repos 5,161 45 - Collateralised Borrowing and Lending Obligation 2,988 45 - Deposits 33,322 744,338

Dividend Receivable 99,000 37,796

Receivable from Investment Manager 408 2,912,349

Investment towards Unclaimed Redemption [(in 34,120.400 Units (2009: 21,797.439 Units) (Market Value Rs. 508,025) (2009: Rs 317,685) of HSBC Cash Fund - Growth Option) (Note 15)] 482,869 289,412

Investment towards Unclaimed Dividend [(in 28,101.024 Units (2009: 27,353.879 Units) (Market Value Rs. 418,402) (2009: Rs. 398,666) of HSBC Cash Fund - Growth Option) (Note 16)] 364,191 545,692

TOTAL 125,940,572 96,755,141

SCHEDULE 4 March 31, 2010 March 31, 2009Deferred Revenue Expenditure (Note 2.10) Rupees Rupees

Issue and Organisational Costs


Less : Amortised during the year 3,783,645 3,783,645

At the end of the year 549,400 4,333,045



2

SCHEDULE 5 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Unit Capital Rupees Units Rupees Units

Growth OptionIssued and Subscribed :

Units of Rs.10 each fully paid up 1,239,211,232 123,921,123.241 1,239,211,232 123,921,123.241

Outstanding:



562,465,692 56,246,569.210 553,875,566 55,387,556.632



Dividend OptionIssued and Subscribed :

Units of Rs.10 each fully paid up 2,489,694,653 248,969,465.259 2,489,694,653 248,969,465.259

Outstanding:

At the beginning of the year 759,269,654 75,926,965.375 1,000,548,546 100,054,854.569


930,196,385 93,019,638.443 1,060,933,183 106,093,318.291



TOTAL 1,072,580,953 107,258,095.256 1,183,790,324 118,379,032.435

HSBC MUTUAL FUND - HSBC MIDCAP EQUITY FUNDSchedules forming part of the Balance Sheet as at March 31, 2010 and the


3

SCHEDULE 6 March 31, 2010 March 31, 2009Reserves and Surplus Total Total

Rupees RupeesUnit Premium Reserve (Note 2.7)





Added during the year 12,919,223 (56,391,540)

Transferred to Revenue Account (12,919,223) 56,391,540



At the beginning of the year - -

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred from Revenue Account (Note 7) 68,619,871 -

At the end of the year 68,619,871 -

Reserve Fund

At the beginning of the year 156,575,207 1,273,178,879

Transfer to Revenue Account (86,036,063) -


At the end of the year 1,064,936,196 156,575,207

TOTAL 699,841,418 * (247,085,099) *


Rupees

Growth Option 470,220,218 4,601,686

Dividend Option 229,621,200 (251,686,785) Total 699,841,418 (247,085,099)



Rupees

4

SCHEDULE 7 March 31, 2010 March 31, 2009Current Liabilities and Provisions Rupees Rupees

Current Liabilities

Investment Management and Advisory Fees 1,806,342 951,594



Audit Fees 100,000 300,000

Selling and Distribution Expenses 3,532,098 881,716

Purchase Contracts Awaiting Completion -Equity Shares 5,471,709 5,386,586

Inter Scheme Payable for Switch - Out 359,421 2,145,682

Temporary Book Overdraft - 1,239

Unit Redemptions Payable 8,390,247 884,017


Unclaimed Dividend (Note 16) 366,033 594,629

Load Charges (Note 2.9) 973,581 3,078,121

Payable for Initial Issue Expenses 92,372 92,372

Sundry Payables 828,329 779,219

TOTAL 22,875,216 15,561,923

SCHEDULE 8Interest and Discount (Note 2.4) March 31, 2010 March 31, 2009

Rupees Rupees

Deposits 3,247,051 7,074,792

Commercial Paper - 1,777,294

Reverse Repos 842,105 6,688,348

Collateralised Borrowing and Lending Obligation 826,707 1,625,163

Other Income - 4

TOTAL 4,915,863 17,165,601



5


Equity Shares (100%)Auto Ancillaries (7.34%)

Federal-Mogul Goetze (India) Limited 345,204 47,241,167Apollo Tyres Limited 450,000 31,905,000Exide Industries Limited 182,957 22,540,302Wabco - TVS (India) Limited 25,000 17,637,500

119,323,969Banks (15.41%)

Indian Bank 385,000 67,529,000Bank of Maharashtra @ 1,250,000 61,937,500ING Vysya Bank Limited 201,531 55,683,015The Jammu And Kashmir Bank Limited 60,000 40,902,000Dena Bank 312,500 24,468,750

250,520,265Construction (2.19%)

IVRCL Infrastructures & Projects Limited 214,000 35,524,00035,524,000

Consumer Non Durables (8.86%)KRBL Limited 2,496,400 59,414,320Shree Renuka Sugars Limited 666,000 47,485,800Lakshmi Energy and Foods Limited 198,000 24,740,100Balrampur Chini Mills Limited 135,000 12,453,750

144,093,970Ferrous Metals (4.38%)

ISMT Limited 500,000 26,675,000Welspun Gujarat Stahl Rohren Limited 90,000 24,588,000Usha Martin Limited 197,039 20,019,162

71,282,162Finance (1.31%)

Bajaj Holdings and Investment Limited 24,453 14,773,280BF Investment Limited # 37,287 6,514,039

21,287,319Hardware (2.41%)

Allied Digital Services Limited 185,568 39,229,07539,229,075

Hotels (2.51%)Mahindra Holidays and Resorts India Limited 75,000 40,852,500


Numeric Power Systems Limited 146,888 48,252,708Kirloskar Pneumatic Company Limited 78,394 32,568,787BGR Energy Systems Limited 10,832 5,818,409


Sintex Industries Limited 150,900 44,590,950SKF India Limited 85,000 29,622,500

74,213,450Pesticides (2.40%)

Bayer CropScience Limited 60,000 39,084,00039,084,000

Pharmaceuticals (11.03%)Bilcare Limited 120,000 68,862,000Sun Pharma Advanced Research Company Limited 499,561 49,756,276Lupin Limited 18,540 30,171,069Biocon Limited 60,000 17,067,000Glenmark Pharmaceutical Limited 50,000 13,427,500

179,283,845Power (2.85%)

BF Utilities Limited 37,287 31,830,048KEC International Limited 24,684 14,442,608

46,272,656Software (9.82%)

Mphasis Limited 81,593 50,624,377Oracle Financial Services Software Limited 18,000 41,400,900Infotech Enterprises Limited 97,008 35,781,401Polaris Software Lab Limited 100,000 16,390,000Nucleus Software Exports Limited 100,000 13,790,000Persistent Systems Limited # 5,312 1,646,720

159,633,398Telecom - Equipment & Accessories (1.18%)

HCL Infosystems Limited @ 140,734 19,139,82419,139,824

Textile Products (1.43%)Alok Industries Limited 1,050,000 23,310,000

23,310,000Textiles - Cotton (9.79%)

The Bombay Dyeing & Manufacturing Company Limited 150,000 82,605,000Vardhman Textiles Limited 288,570 76,485,479

159,090,479Trading (2.49%)

The State Trading Corporation of India Limited 88,000 40,458,00040,458,000

Transportation (4.70%)Spice Jet Limited 1,012,574 59,033,064Jet Airways (India) Limited 36,074 17,322,735



Chennai Petroleum Corporation Limited - April 2010 (69.01%) 181,800 53,512,830Lupin Limited - April 2010 (9.55%) 4,550 7,404,898Polaris Software Lab Limited - April 2010 (21.44%) 100,800 16,626,960

Total 77,544,688

Deposits (2.37%)^ Tenure Face Value4.45% HSBC Bank 91 32,000,0004.7% HSBC Bank 91 10,000,000Total Deposits 42,000,000

Confirmation has been received from JP Morgan Chase Bank, Mumbai Branch at the end of the financial year for the investments held by them.

@ Investment in companies which have invested more than five percent of the net asset value of any schemes of HSBC Mutual Fund.






6

April 01, 2009 to March 31, 2010

Rupees

April 01, 2008 to March 31, 2009

Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains/(Losses) for the Year 705,530,618 (957,198,339) Initial Issue Expenses Charged to Revenue Account 3,783,645 3,783,645 Operating Profit Before Working Capital Changes 709,314,263 (953,414,694)

Adjustments for:- (Increase)/Decrease in Investments at Cost (523,824,667) 1,208,785,461 (Increase)/Decrease in Other Current Assets 3,546,740 (3,242,222) Increase/(Decrease) in Current Liabilities 1,509,439 (3,128,183) Net cash generated from operating activities (A) 190,545,775 249,000,362

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (111,209,371) (296,854,442) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (17,135,120) (62,238,135)

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors 5,719,969 (12,695,333) (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 66,440 4,350,432

Dividends paid (65,740,275) -

Net cash used in financing activities (B) (188,298,357) (367,437,478)

Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) 2,247,418 (118,437,116)

Cash and Cash Equivalents Beginning of the Year 150,776,050 269,213,166 Cash and Cash Equivalents End of the Year 153,023,468 150,776,050



Rupees 1 Cash and Cash Equivalents include the following :

Balances with Scheduled Banks : - In Current Account 2,972,413 33,499,281 - In Dividend Account 1,851 48,954 - In Deposit Account 42,000,000 92,000,000

1,213,000 1,213,000 Temporary Book Overdraft - (1,239) Other Collateralised LendingReverse Repo 36,526,532 350,043 Collateralised Borrowing and Lending Obligation 22,009,672 366,011 Derivative Margin Deposit 48,300,000 23,300,000

153,023,468 150,776,050

2




Trustee Director




The above Cash Flow Statement has been prepared under the "Indirect Method" set out in Accounting Standard - 3 on Cash Flow Statements, issued by The Institute of CharteredAccountants of India.

Margin Deposit with the Clearing Corporation of India Limited for Collateralised Borrowing and Lending Obligation

0

HSBC MUTUAL FUND-HSBC MIDCAP FUND


SCHEDULE 9


1 Organisation

HSBC Midcap Equity Fund (the “Scheme”) is an open-ended growth scheme of HSBC Mutual Fund (the “Fund”)

and was launched on April 12, 2005. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital



perpetual. The Scheme closed for initial subscription on May 03, 2005 and reopened for issue and redemption of

units on May 24, 2005. The investment objective of the Scheme is to provide 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 fixed income securities if the fund manager becomes negative on equity

market. The Scheme has two Options - Growth Option and Dividend Option.




2.1 Basis of Accounting




as applicable.

2.2 Portfolio Valuation















Mutual Fund.



iv. Traded money market securities are valued at the yield at which they are traded on the valuation date. If




v. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up


iii. Units in mutual fund are valued at the net asset value of the investee scheme.











method for determining the realized gain or loss on sale of investments.

2.4 Investment Income


1.4 Derivatives

The Scheme enters into derivative transactions in equity/ index futures for the purpose of hedging and portfolio

balancing.


Futures


• When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the Revenue Account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss.







unrealised gain or loss in the value of investments and expenses incurred by the Scheme are allocated to the












2.9 Load Charges






1.9 Deferred Revenue Expenditure

Initial issue expenses comprise those costs directly associated with the issue of units of the Scheme and include

advertising, brokerage, business promotion, marketing, printing, distribution and other miscellaneous expenses. Initial

issue expenses upto 2.25% of the amount collected from the investors during the initial offer period have been charged to

the Scheme and are being amortised over a period of five years from the date of allotment of units Balance proportionate

unamortized NFO expenses to be recovered in case of exit within close ended period. Expenses over and above the

amounts debited to the Scheme were borne by the asset management company.










4 Trusteeship Fees





4 Custodian Fees


safekeeping.

6 Income Taxes



7 Aggregate Appreciation and Depreciation in Value of Investments and Derivatives


March 31, 2010 (Rupees) March 31, 2009 (Rupees)

Equity Shares

-Appreciation 152,588,178 33,463,640

-Depreciation 86,632,744 288,443,961

Equity Futures

-Appreciation 3,298,026 575,550

-Depreciation 633,589 1,246,651




As at March 31, 2010 the Scheme held the following illiquid Securities :


(Rupees)

Percentage of

Fair Value to

Net Assets

BF Investment Limited 6,514,039 0.37

Persistent Systems Limited 1,646,720 0.09 9 a) Aggregate Value of Purchases and Sale of Investments

The aggregate value of investments purchased and sold (including matured) during the year 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.



Limited under the procedures approved by the Board of Trustees as at March 31, 2010 is Rs. 8,160,759.


The total income (including net profit on sale of investments and derivatives and net change in unrealised

depreciation in the value of investments and derivatives) and expenditure (excluding deferred revenue

expenditure amortized) during the year is Rs. 997,941,995 and Rs. 32,976,309 respectively being 65.32% and

2.16% of the average daily net assets.


Futures


Underlying Asset's Name Number of contracts Units Outstanding Long

Chennai Petroleum Corporation Limited 101 181,800

Lupin Limited 13 4,550

Polaris Software Lab Limited 36 100,800

Notional value of futures contracts bought by the Scheme and outstanding as on March 31, 2010 aggregates to Rs. 77,544,688.

Net Profit on futures transactions recognized in the Revenue Account for the year ended March 31, 2010 aggregates to Rs. 144,646,333.



12 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds )










HSBC Mutual Fund

(iii) The Hongkong and Shanghai Banking Corporation Limited Associate of the Investment Manager



HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund



HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai*– Chairman of the Investment Manager Vikramaditya – Director and the Chief Executive Officer of the Investment Manager with effect from July 16, 2008 Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Refer Annexure I



on derivative transactions amounting to Rs. 552,472.






Nature of Relation

Period Covered


% of Total




Fund





Name of Sponsor/AMC and its associates/related

parties/group companies


Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund





relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund










HSBC Mutual Fund has made investments in companies, which holds/ has held units in excess of 5% of the net





The Scheme operates in one segment only viz to provide long term capital growth from an actively managed

portfolio of equity and equity related securities primarily being midcap stocks.

15 Unclaimed Redemptions:

As at March 31, 2010, unclaimed redemptions aggregate Rs. 584,647 payable to 17 investors.

16 Unclaimed Dividends:

As at March 31, 2010, unclaimed dividends aggregate Rs. 366,033 payable to 263 investors.

17 Miscellaneous Income :

Miscellaneous income of Rs. 9,303 includes Rs. 9,121 representing exit load collected in excess of 1% of redemption proceeds and credited to the Scheme and Rs. 182 representing provision for expenses no longer required written back.




Previous year’s figures have been re–grouped/re-arranged where appropriate.

Signatures to the Schedules 1 to 9 forming part of the Balance Sheet and the Revenue Account




For Board of

Trustees of HSBC

Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya

Director and Chief Executive Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)




Manager


Sponsor

Key Management Personnel and thier

Relatives Total



Subscription of Units (including switch in and dividend reinvestment) - - - - 270,000 270,000 Previous Year - - - - 150,000 150,000

Redemption of Units (including switch out) - - - - - - Previous Year - - - - 2,230,960 2,230,960



Brokerage/ Commission on Purchase/Sale ofInvestments 351,893 - 14,526 - - 366,419 Previous Year 179,416 - - - - 179,416

Clearing Charges - - 552,472 - - 552,472 Previous Year - - 445,071 - - 445,071


Reimbursment of Expenses - - - - - - Previous Year - 2,909,306 - - - 2,909,306






Manager


Sponsor


Relatives Total

Investment Management and Advisory Fees Payable - 1,806,342 - - - 1,806,342 Previous Year - 951,594 - - - 951,594

Brokerage/ Commission Payable for Distribution ofUnits - - 1,657,692 - - 1,657,692 Previous Year - - 171,485 - - 171,485

Units Outstanding As At Year End - - - - 1,397,820 1,397,820 Previous Year - - - - 505,271 505,271

Other Receivables - 408 - - - 408 Previous Year - 2,912,349 - 5,000 - 2,917,349

(iii) Details of material transactions with respect to parties referred to in Note 12 (I)(iii) & (iv) for Associate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009


Brokerage/ Commission on Purchase/Sale ofInvestmentsThe Hongkong and Shanghai Banking Corporation Limited 14,526 -

Brokerage/ Commission Payable for Distribution ofUnitsThe Hongkong and Shanghai Banking Corporation Limited 1,655,938 160,710

Clearing ChargesThe Hongkong and Shanghai Banking Corporation Limited 552,472 445,071


Fixed Deposits Matured 154,000,000 - The Hongkong and Shanghai Banking Corporation Limited

Charges for Services Provided by Bank 30,945 23,153 The Hongkong and Shanghai Banking Corporation Limited

(iv) Details of material transactions with respect to parties referred to in Note 12 (I)(v) for Schemes under common control of the Sponsor

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Cash Fund - 138,763,130 HSBC Fixed Term Series 52 - 45,296,814

Sale of InvestmentsHSBC Fixed Term Series 68 - 59,931,777 HSBC Equity Fund - 29,862,659 HSBC Income Fund Investment Plan - 25,811,375

Other ReceivablesHSBC Emerging Market Fund - 5,000

(v) Disclosures in respect of material transactions with persons referred to in Note 12 (I)(vi) for key management personnel and their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividend reinvestment)Vikramaaditya 120,000 90,000 Rashid K Kidwai (relative) 150,000 60,000

Redemption of Units (including switch out)Sanjay Prakash - 2,230,960

Units Outstanding As At Year EndNaina Lal Kidwai 585,527 271,059 Vikramaaditya 384,717 110,991 Rashid K Kidwai 427,576 123,221

Revenue Account for the year ended March 31, 2010.Schedules forming part of the Balance Sheet as at March 31, 2010 and the


Annexure I

0

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 financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management, as well as evaluating the overall financial 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 Progressive Themes Fund as at March 31, 2010, its net surplus and its cash flows for the year ended on that date.



Vivek Prasad Partner Membership No. F-104941

Place : Mumbai Date : July 20 , 2010


ASSETS

Investments 1 3,589,996,314 2,850,401,943

Deposits 2 165,000,000 316,250,000


Deferred Revenue Expenditure 4 8,412,466 21,690,228

TOTAL (0) 3,987,901,376 3,641,192,262

LIABILITIES

Unit Capital 5 3,263,373,058 4,657,279,748

Reserves and Surplus 6 652,622,294 (1,081,762,569)


TOTAL -0.41 3,987,901,376 3,641,192,262



Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.6) 2,093,161,027 1,822,834,325 3,915,995,352 1,864,151,788 1,711,365,391 3,575,517,179




For PRICE WATERHOUSE For HSBC Asset Management (India)Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants

VIVEK PRASAD VikramaadityaPartnerMembership No. F-104941

Trustee Director




HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUND (FORMERLY, HSBC ADVANTAGE INDIA FUND)



0



INCOME AND GAINS

Dividends (Note 2.4) 42,959,480 48,328,468


Net Profit on Sale of Investments and Derivatives (Net of Net Loss on Inter-Scheme Sale of Investments Rs. Nil (2009: Rs. 17,574)) (Note 2.3 and 2.5) 901,281,127 -


TOTAL 957,472,352 93,691,516

EXPENSES AND LOSSES






Audit Fees 660,000 550,000


Amortisation of Deferred Revenue Expenditure (Note 2.10) 13,277,762 14,703,871


TOTAL 110,242,812 2,263,902,195




Net Change in Unrealised Appreciation in Value of Investments and Derivatives 651,108,783 (208,822,207)



Net Surplus/(Deficit) for the Year -0.46 1,258,793,815 (2,581,774,954)

April 01, 2009 to April 01, 2009 to April 01, 2009 to April 01, 2008 to April 01, 2008 to April 01, 2008 toMarch 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2009Growth Option Dividend Option Total Growth Option Dividend Option Total


Net Surplus/(Deficit) for the Year 660,938,666 597,855,149 1,258,793,815 (1,305,177,994) (1,276,596,959) (2,581,774,954)

Transfer from Income Equalisation Reserve (Note 2.8) (49,674,310) 175,607,748 125,933,439 (42,345,223) 33,858,021 (8,487,202)

Transfer from Reserve Fund - - - - 1,724,653,808 1,724,653,808

Dividend / Distribution - - - - (268,185,007) (268,185,007)

Balance Transferred to Reserve Fund 611,264,356 773,462,897 1,384,727,254 (1,347,523,217) 213,729,863 (1,133,793,355)



For PRICE WATERHOUSE For Board of Trustees For HSBC Asset Management (India)Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants

VIVEK PRASAD VikramaadityaPartnerMembership No. F-104941

Trustee Director

Place: Mumbai Date :




Fund Manager(s)


1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 7, 8 and 12) Rupees Rupees Rupees Rupees

(Refer to the attached Statement of Portfolio Holding as at March 31, 2010)Equity Shares 3,589,996,314 2,942,037,242 2,850,401,943 3,261,966,217

TOTAL 3,589,996,314 2,942,037,242 2,850,401,943 3,261,966,217

SCHEDULE 2 March 31, 2010 March 31, 2009

Deposits Rupees Rupees

Deposits with Scheduled Bank (Under Lien Towards Margin Deposit For Equity Derivatives Rs 160,000,000) 160,000,000 300,000,000

Margin Deposit with the Clearing Corporation of India Towards Collateralized Borrowing and Lending Obligation 1,250,000 1,250,000

Margin Deposit with the Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 3,750,000 15,000,000

TOTAL 165,000,000 316,250,000


Balances with Banks - in Current Account 3,815,722 2,364,863 - in Dividend Account - 509,002


Reverse Repos 42,436,881 160,862,513


Unit Subscription Receivable - 1,626,606

Inter-Scheme Receivable for Switch-in 304,166 -


Interest Receivable on:

- Deposits 326,966 4,608,058

- Reverse Repos 5,996 20,701

- Collateralised Borrowing and Lending Obligation 3,472 20,619

Receivable from Investment Manager 4,546 5,354

Investment Towards Unclaimed Redemption [(in 94,552.728 Units (2009: 64,121.597 units) (Market Value Rs. 1,407,814 (2009: Rs. 934,534)) of HSBC Cash Fund - Growth Option) (Note 13)] 1,322,016 866,579

Investment Towards Unclaimed Dividend [(in 57,430.671 Units (2009: 32,737.831 units) (Market Value Rs. 855,097 (2009: Rs. 477,134)) of HSBC Cash Fund - Growth Option) (Note 14)] 814,640 448,485

TOTAL 224,492,596 452,850,091


Issue and Organisational Costs


Incurred During the year - -

Less : Amortised during the year : - - NFO Units Reedemed 2,823,419 2,027,047 - Others 10,454,343 12,676,824 At the end of the year 8,412,466 21,690,228


Schedules forming part of the Balance Sheet as at March 31, 2010


2

SCHEDULE 5 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Unit Capital Rupees Units Rupees Units Growth OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 5,972,885,774 597,288,577.365 5,972,885,774 597,288,577.365

Outstanding:At the beginning of the year 2,239,819,819 223,981,981.866 2,364,667,624 236,466,762.306 Issued during the year 156,388,717 15,638,871.735 259,538,337 25,953,833.730

2,396,208,536 239,620,853.601 2,624,205,961 262,420,596.036 Redeemed during the year 783,740,723 78,374,072.268 384,386,142 38,438,614.170 At the end of the year 1,612,467,813 161,246,781.333 2,239,819,819 223,981,981.866

Dividend OptionIssued and Subscribed :

Units of Rs. 10 each fully paid up 10,197,445,867 1,019,744,586.733 10,197,445,867 1,019,744,586.733

Outstanding:At the beginning of the year 2,417,459,929 241,745,992.961 2,758,241,460 275,824,146.002 Issued during the year 213,408,497 21,340,849.708 196,564,120 19,656,412.037

2,630,868,426 263,086,842.669 2,954,805,580 295,480,558.039 Redeemed during the year 979,963,181 97,996,318.076 537,345,651 53,734,565.078 At the end of the year 1,650,905,245 165,090,524.593 2,417,459,929 241,745,992.961

TOTAL 3,263,373,058 326,337,305.926 4,657,279,748 465,727,974.827




3

SCHEDULE 6 March 31, 2010 March 31, 2009Reserves and Surplus

Rupees Rupees

Unit Premium Reserve (Note 2.7 )

At the beginning of the year (2,178,897,123) (2,164,233,326)


At the end of the year (2,480,348,298) (2,178,897,123)






At the beginning of the year 606,429 209,428,636

Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) 651,108,784 (208,822,207)

At the end of the year 651,715,213 606,429

Reserve Fund

At the beginning of the year 1,096,528,125 3,954,975,288

Balance Transferred to Revenue Account - (1,724,653,808)

Balance Transferred from Revenue Account 1,384,727,254 (1,133,793,355)

At the end of the year 2,481,255,379 1,096,528,125

TOTAL 652,622,294 * (1,081,762,569) *


Growth Option 480,693,214 (375,668,031) Dividend Option 171,929,080 (706,094,538) Total 652,622,294 (1,081,762,569)




4


Current Liabilities




Audit Fees 660,000 550,000


Payable on Outstanding Future Contracts 615,250 1,160,450


Unit Redemption Payable 35,765,766 2,349,659

Inter Scheme Payable - For 'Switch-Out 3,784,446 3,824,365 - For 'Others' 1,269 21,786

Load Charges 12,451,660 6,749,459

Unclaimed Redemption (Note 13) 1,409,876 1,018,188


Temporary Book Overdraft 2,916,754 661,334

Deferred Revenue Expenditure Payable 67,101 67,101


TOTAL 71,906,024 65,675,083


Rupees Rupees

Debentures / Bonds - 139,068

Commercial Paper / Certificate of Deposit - 667,794

Reverse Repos 2,185,442 11,175,368


Deposits 9,043,298 26,350,563

Others - 16

TOTAL 13,186,072 45,363,048

HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUND (FORMERLY, HSBC ADVANTAGE INDIA FUND)Schedules forming part of the Balance Sheet as at March 31, 2010


5



Wabco - TVS (India) Limited 1,305 920,678920,678

Banks (20.74%)ICICI Bank Limited 225,000 214,312,500IDBI Bank Limited @ 1,570,000 180,550,000State Bank of India 58,500 121,574,700Punjab National Bank @ 117,000 118,491,750Bank of Baroda 100,000 63,905,000Lakshmi Vilas Bank Limited 569,749 44,241,010Bank of Maharashtra @ 30,737 1,523,018

744,597,978Cement (2.50%)

Jaiprakash Associates Limited 600,000 89,730,00089,730,000

Chemicals (1.85%)Finolex Industries Limited 1,014,312 66,285,289

66,285,289Construction (4.89%)

Maytas Infra Limited 535,800 99,123,000Kajaria Ceramics Limited 600,000 36,720,000The Phoenix Mills Limited 110,000 20,443,500Consolidated Construction Consortium Limited 232,500 19,332,375


Larsen & Toubro Limited 124,000 202,225,400Voltas Limited 117,925 20,807,866

223,033,266Consumer Non Durables (0.98%)

HBL Power Systems Limited 1,043,000 35,357,70035,357,700

Diversified (1.14%)Aditya Birla Nuvo Limited 45,000 40,783,500

40,783,500Finance (0.38%)

Bajaj Financial Services Limited 41,000 13,782,15013,782,150

Hotels (1.14%)Mahindra Holidays and Resorts India Limited 75,000 40,852,500


Bharat Heavy Electricals Limited 76,200 182,167,530BEML Limited 80,000 83,968,000Thermax Limited 117,000 79,788,150Crompton Greaves Limited 303,272 79,138,828Diamond Power Infrastructure Limited 200,000 24,320,000Sunil Hitech Engineers Limited 101,520 22,669,416TIL Limited 5,000 1,656,500


SKF India Limited 70,000 24,395,00024,395,000

Minerals/Mining (2.41%)Hindustan Dorr Oliver Limited 830,532 86,541,434

86,541,434Oil (6.16%)

Oil and Natural Gas Corporation Limited 145,000 159,311,500Hindustan Oil Exploration Company Limited 270,000 61,789,500

221,101,000Petroleum Products (10.47%)

Reliance Industries Limited 138,000 148,246,500Indian Oil Corporation Limited 414,000 122,440,500Hindustan Petroleum Corporation Limited 243,492 77,564,377Essar Oil Limited 200,000 27,640,000


Glenmark Pharmaceutical Limited 100,000 26,855,00026,855,000

Power (4.26%)Gujarat Industries Power Company Limited 1,020,740 123,509,540KEC International Limited 49,990 29,249,149

152,758,689Software (2.96%)

Mphasis Limited 171,000 106,096,950106,096,950

Telecom - Equipment & Accessories (0.55%)OnMobile Global Limited 50,000 19,642,500


Mahanagar Telephone Nigam Limited 1,250,000 91,500,00091,500,000

Textile Products (1.86%)Alok Industries Limited 3,000,000 66,600,000

66,600,000Textiles - Cotton (2.81%)

The Bombay Dyeing & Manufacturing Company Limited 135,000 74,344,500Vardhman Textiles Limited 100,000 26,505,000

100,849,500Trading (2.30%)

The State Trading Corporation of India Limited 179,300 82,433,17582,433,175

Transportation (9.21%)Spice Jet Limited 2,200,000 128,260,000Container Corporation of India Limited 78,359 103,281,080Gateway Distriparks Limited 405,000 51,171,750Balmer Lawrie and Company Limited 80,081 47,948,499



Chennai Petroleum Corporation Limited - April 2010 (12.69%) 126,000 37,088,100Hindustan Construction Company Limited - April 2010 (9.67%) 210,000 28,266,000Polaris Software Lab Limited - April 2010 (9.48%) 168,000 27,711,600Punjab National Bank - April 2010 (36.51%) 105,000 106,664,250Reliance Industries Limited - April 2010 (22.19%) 60,000 64,830,000Tata Power Company Limited - April 2010 (9.45%) 20,000 27,612,000

Total 292,171,950








6


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains/(Losses) for the Year 847,229,540 (2,170,210,679) Initial Issue Expenses Charged to Revenue Account 13,277,762 14,703,871

Adjustments for:- (Increase)/Decrease in Investments at cost 246,551,112 2,807,715,392 (Increase)/Decrease in Other Current Assets 3,492,161 (1,978,398) Increase/(Decrease) in Current Liabilities and Provisions 10,455,664 (3,332,502) Net cash generated from operations ( A ) 1,121,006,238 646,897,684

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (1,393,906,690) (465,629,335) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (175,517,737) (23,150,999)

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors 33,376,189 (3,577,301) (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 1,322,440 3,234,337

Dividend Paid during the Year - (268,185,007)

Net cash used in financing activities ( B ) (1,534,725,798) (757,308,305)

Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) (413,719,560) (110,410,621)


Notes : March 31, 2010


Rupees


Balances with Scheduled Banks :- In Current Account 3,815,722 2,364,863 - In Dividend Account - 509,002 - In Deposit Account 160,000,000 300,000,000


Margin Deposit with the Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 3,750,000 15,000,000 Temporary Book Overdraft (2,916,754) (661,334) Other Collaterised Lending- Reverse Repos 42,436,881 160,862,513 - Collateralised Borrowing and Lending Obligation 25,570,957 168,301,321 Derivative Margin Deposit 80,000,000 80,000,000

313,906,806 727,626,365





Trustee Director





0


Schedules forming part of the Balance Sheet as at March 31, 2010 and the

Revenue Account for the year ended March 31, 2010.

SCHEDULE 9


HSBC Progressive Themes Fund (the “Scheme”) is an open-ended growth scheme of HSBC Mutual Fund (the

“Fund”) and was launched on December 30, 2005. HSBC Mutual Fund has been sponsored by HSBC Securities

and Capital Markets (India) Private Limited. HSBC Asset Management (India) Private Limited incorporated under

the Companies Act, 1956 has been appointed as the asset management company. The duration of the Scheme is

perpetual. The Scheme closed for initial subscription on January 27, 2006, and reopened for issue and redemption

of units on February 24, 2006. The investment objective of the Scheme is 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 benefit from, India’s progress, reform process and economic

development. The Scheme will attempt to take a medium term view when investing in such opportunities and will

endeavour to run a more concentrated portfolio on a limited number of such opportunities. The Scheme has two

Options - Growth Option and Dividend Option. In accordance with the notice-cum-addendum dated June 12, 2009

the name of the Scheme has been changed from HSBC Advantage India Fund to HSBC Progressive Themes Fund.






applicable. 2.2 Portfolio Valuation



























Mutual Fund.



Mutual Fund.

iii. Traded money market securities are valued at the yield at which they are traded on the valuation date. If




iii. Units in mutual fund are valued at the net asset value of the investee scheme.

iii. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up









Net unrealised appreciation is reduced from the distributable income at the time of income distribution. 2.3 Securities Transaction







1.4 Derivatives The Scheme enters into derivative transactions in equity/ index futures for the purpose of hedging and portfolio

balancing.


Futures


• When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the revenue account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss.

• As at the Balance Sheet date / date of determination, all open futures positions are valued at the futures settlement price as determined by the exchange where it is traded. Non-traded futures contracts are valued at fair value as per procedures determined by HSBC Asset Management (India) Private Limited and approved by the Board of Trustees. The unrealised appreciation / depreciation on all open positions is considered for determining the net asset value.





Options in proportion to the value of the net assets. 2.7 Unit Premium Reserve













2.9 Load Charges





excess of 1% is credited to the Schemes. 2.10 Deferred Revenue Expenditure


advertising, brokerage, business promotion, marketing, printing, distribution and other miscellaneous expenses.

Initial issue expenses upto 2.25% of the amount collected from the investors during the initial offer period have

been charged to the Scheme and are being amortised over a period of five years from the date of allotment of

units. Balance proportionate unamortized NFO expenses on redemptions within the close-ended period are

recovered in accordance with the Regulation. Expenses over and above the amounts debited to the Scheme were

borne by the asset management company.







investment management and advisory fees. 4 Trusteeship Fees




not affiliated with the Settlor 4 Custodian Fees


safekeeping. 6 Income Taxes







March 31, 2010


(Rupees)

Equity Shares

-Appreciation 698,236,771 78,574,286

-Depreciation 50,277,699 490,138,560

Equity Futures

-Appreciation 7,092,309 610,412

-Depreciation 3,336,168 3,982

8 Aggregate Value of Purchase and Sale of Investments

The aggregate value of investments securities purchased and sold (including matured) during the year is

4,484,625,154 and 5,700,864,079 respectively being 101.81% and 129.42% of the average daily net assets. 9 Income and Expenses



expenditure amortized) during the year is Rs. 1,369,036,627 and Rs.96,965,050 respectively being 31.08% and



Futures




Chennai Petroleum Corporation Limited 70 126,000

Hindustan Construction Company Limited 100 210,000

Polaris Software Lab Limited 60 168,000

Punjab National Bank 350 105,000

Reliance Industries Limited 200 60,000


Notional value of futures contracts bought/ (sold) by the Scheme and outstanding as on March 31, 2010 aggregates to Rs. 292,171,950.











Accountants of India and regulation 25(8) of SEBI Regulation, is provided below : I Related party relationships




HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund




HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008

* There were no transactions during the year.


Refer Annexure I



on derivative transactions amounting to Rs 328,519.




its associate/related parties/group companies


Nature of Relation

Period Covered


% of Total




Fund


HSBC InvestDirect Securities (India) Limited Associate 2009-2010 - - 69,317 0.23




Name of Sponsor/AMC and its associate/related



Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund



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


relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund



Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel











instruments and were made solely on the basis of sound fundamentals of these companies. 13 Unclaimed Redemption

As at March 31, 2010, unclaimed redemptions aggregate Rs. 1,409,876 payable to 86 Investors.


As at March 31, 2010, unclaimed dividends aggregate Rs. 814,640 payable to 401 investors. 15 Segment Reporting

The Scheme operates in one segment only viz. 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 benefit from, India’s progress, reform process and economic development. 16 Miscellaneous Income

Miscellaneous income of Rs. 45,673 represents exit load collected in excess of 1% of the redemption proceeds and credited to the Scheme.





Previous year’s figures have been re-grouped / re-arranged where appropriate.





For Board of Trustees

of HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)

.



Associate of Investment Manager


Sponsor


Relatives Total



Subscription of Units (including switch in and dividendreinvestment) - - - - 200,000 200,000 Previous Year - - - - - -

Dividend Distribution( Including dividend reinvested - - - - - - Previous Year - - - - 42,601 42,601

Investment Management and Advisory Fees - 45,891,200 - - - 45,891,200Previous Year - 48,441,544 - - - 48,441,544

Brokerage/ Commission on Distribution of Units - - 5,898,222 - - 5,898,222Previous Year - - 7,349,775 - - 7,349,775

Brokerage/ Commission on Purchase/Sale of Investments 642,935 - - - - 642,935Previous Year 776,506 - 13,368 - - 789,874

Clearing Charges - - 328,519 - - 328,519Previous Year - - 1,220,316 - - 1,220,316

Fixed Deposits Placed - - 400,000,000 - - 400,000,000Previous Year - - - - - -

Fixed Deposits Matured - - 240,000,000 - - 240,000,000Previous Year - - - - - -

Charges for Services Provided by Bank - - 15,434 - - 15,434Previous Year - - 2,493 - - 2,493





Sponsor


Relatives Total

Investment Management and Advisory Fees Payable - 3,853,229 - - - 3,853,229Previous Year - 2,987,644 - - - 2,987,644

Brokerage/ Commission Payable for Distribution of Units - - 1,446,247 - - 1,446,247Previous Year - - 416,565 - - 416,565

Units Outstanding As At Year End - - - - 1,214,696 1,214,696Previous Year - - - - 650,879 650,879

Other Payables - - - 1,269 - 1,269Previous Year - - - 21,786 - 21,786

Other Receivables - 4,546 - - - 4,546Previous Year - 5,354 - - - 5,354


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 5,828,905 7,349,775

Brokerage / Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,441,285 416,565






(iv) Details of material transactions with respect to parties referred to in Note 11 (I)(v) for Schemes under common control ofthe Sponsor.

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Flexi Debt Fund - 203,438,659 HSBC Equity Fund - 56,586,475

Sale of InvestmentsHSBC Floating Rate Fund Long Term Plan - 120,491,100 HSBC Fixed Term Series 68 - 62,251,241 HSBC Equity Fund - 49,611,472 HSBC Fixed Term Series 66 - 38,800,005

Other PayablesHSBC India Opportunities Fund 1,269 - HSBC Cash Fund - 21,786

(v) Disclosures in respect of material transactions with persons referred to in Note 11 (I)(vi) for key management personneland their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividendreinvestment)Vikramaaditya 200,000 -

Dividend Distribution( Including dividend reinvestedNelum P Gidwani - 42,601

Units Outstanding As At Year EndNelum P Gidwani 506,960 325,293 Avan Nelum Gidwani 507,419 325,585 Vikramaaditya 200,317 -

Annexure I

HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUND


(Formerly, HSBC ADVANTAGE INDIA FUND)

0

Auditors' Report To the Board of Trustees of 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 financial 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 financial statements based on our audit.


standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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 flows 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. The




ASSETS

Investments 1 2,916,667,269 1,438,561,575

Deposits 2 - 60,000,000


TOTAL 0 3,061,535,078 1,854,390,429

LIABILITIES

Unit Capital 4 2,254,622,773 2,450,513,535



TOTAL 3,061,535,078 1,854,390,429



Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 1,901,388,068 1,114,011,378 3,015,399,446 1,110,158,857 695,695,579 1,805,854,436






Trustee Director



HSBC MUTUAL FUND - HSBC TAX SAVER EQUITY FUND


0

April 1, 2009 April 1, 2008March 31, 2010 March 31, 2009


INCOME AND GAINS

Dividends (Note 2.4) 30,149,094 22,219,056


Net Profit on Sale of Investments (Notes 2.3) 928,380,053 -

TOTAL 961,747,960 47,154,322

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Notes 2.3) - 592,292,072





Audit Fees 175,000 75,000



TOTAL 68,930,031 638,998,662

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 1,923,854 -

TOTAL 67,006,177 638,998,662


Net Change in Unrealised Depreciation in Value of Investments 153,385,779 (113,087,320)

Net Gains/(Losses) for the Year 1,048,127,562 (704,931,660)

Net Change in Unrealised Appreciation in Value of Investments 539,407,000 - Net Surplus/(Deficit) including Net Change in Unrealised Appreciation in Value of Investments 1,587,534,562 (704,931,660)

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve (539,407,000) -

Net Surplus/(Deficit) for the Year (0) 1,048,127,562 (704,931,660)

April 01, 2009 to March 31, 2010 Rupees

April 01, 2008 to March 31, 2009

Rupees

Net Surplus/(Deficit) for the Year 1,048,127,562 (704,931,660)

Transfer from Income Equalisation Reserve (Note 2.7) (29,409,811) (64,285,739)

Dividend Distributions (90,279,141) -

Balance Transferred to Reserve Fund 928,438,610 (769,217,399)





Trustee Director





1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market Value Cost Market Value Cost(Notes 2.2, 2.3, 8, 9, 10 and 13) Rupees Rupees Rupees Rupees


Equity Shares 2,916,667,269 2,377,260,269 1,438,561,575 1,591,947,353

TOTAL 2,916,667,269 2,377,260,269 1,438,561,575 1,591,947,353


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives) - 60,000,000

TOTAL - 60,000,000


Balances with Banks- in Current Account 11,168,386 3,840,417


Reverse Repos 65,158,189 152,132,928



Inter-Scheme Receivable - For 'Switch - In' 299,728 728,911 - For 'Others' - 1,500

Interest Receivable on :- Deposits - 735,287 - Reverse Repos 9,206 19,578 - Collateralised Borrowing and Lending Obligation 5,331 19,500

Dividend Receivable - 57,500

Receivable from Investment Manager 1,926,627 1,027

TOTAL 144,867,809 355,828,854



2


Growth OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 992,369,263 99,236,926.282 992,369,263 99,236,926.282 Outstanding:At the beginning of the year 1,506,466,553 150,646,655.461 1,327,778,680 132,777,868.108 Issued during the year 127,860,969 12,786,096.898 183,360,346 18,336,034.648

1,634,327,522 163,432,752.359 1,511,139,026 151,113,902.756 Redeemed during the year 255,565,934 25,556,593.410 4,672,473 467,247.295 At the end of the year 1,378,761,588 137,876,158.949 1,506,466,553 150,646,655.461

Dividend Option

Issued and Subscribed :Units of Rs. 10 each fully paid up 645,008,528 64,500,852.832 645,008,528 64,500,852.832 Outstanding:At the beginning of the year 944,046,982 94,404,698.350 839,839,854 83,983,985.503 Issued during the year 92,162,343 9,216,234.324 112,490,496 11,249,049.602

1,036,209,325 103,620,932.674 952,330,350 95,233,035.105 Redeemed during the year 160,348,140 16,034,814.035 8,283,368 828,336.755 At the end of the year 875,861,185 87,586,118.639 944,046,982 94,404,698.350

TOTAL 2,254,622,773 225,462,277.588 2,450,513,535 245,051,353.811

SCHEDULE 5 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Reserves and Surplus Dividend Option Total Dividend Option Total

Rupees Rupees Rupees RupeesUnit Premium Reserve (Note 2.6)At the beginning of the year 15,725,331 49,614,884 13,592,022 42,691,871 Added during the year (22,093,204) (62,409,838) 2,133,309 6,923,013 At the end of the year (6,367,873) (12,794,954) 15,725,331 49,614,884

Income Equalisation Reserve (Note 2.7)Added during the year (7,809,848) (29,409,811) (24,316,637) (64,285,739) Transferred to Revenue Account 7,809,848 29,409,811 24,316,637 64,285,739 At the end of the year - - - -

Unrealised Appreciation ReserveAt the beginning of the year - - - - Net Change in Unrealised Appreciation in Value of Investments transferred from Revenue Account (Note 8) 204,757,765 539,407,000 - - At the end of the year 204,757,765 539,407,000 - -

Reserve FundAt the beginning of the year (264,076,735) (694,273,983) 31,982,496 74,943,416

303,837,036 928,438,610 (296,059,230) (769,217,399) At the end of the year 39,760,301 234,164,627 (264,076,735) (694,273,983)

TOTAL 238,150,193 760,776,673 * (248,351,403) (644,659,099) *


Rupees RupeesGrowth Option 522,626,480 (396,307,696) Dividend Option 238,150,193 (248,351,403) Total 760,776,673 (644,659,099)

Balance Transferred from Revenue Account

HSBC MUTUAL FUND - HSBC TAX SAVER EQUITY FUND Schedules forming part of the Balance Sheet as at March 31, 2010


3






Audit Fees 175,000 75,000



Unit Redemptions Payable 21,886,195 -

Inter Scheme Payable for Switch - Out 1,299,107 -

Load Charges (Note 2.8) - 3,475,996

Temporary Book Overdraft 4,500,084 -


TOTAL 46,135,632 48,535,993

SCHEDULE 7 April 1, 2009 April 1, 2008Interest (Note 2.4) March 31, 2010 March 31, 2009

Rupees Rupees

Reverse Repos 1,575,385 8,285,785


Debentures / Bonds - 3,620,612


Deposits 215,669 4,265,589

TOTAL 3,218,813 24,935,266


HSBC MUTUAL FUND - HSBC TAX SAVER EQUITY FUND 4



Tata Motors Limited 78,210 59,259,717Mahindra and Mahindra Limited 85,176 46,110,028

105,369,745Auto Ancillaries (6.90%)

Amara Raja Batteries Limited 440,966 72,406,617Bosch Limited 12,500 59,751,250Exide Industries Limited 300,599 37,033,797Balkrishna Industries Limited 50,000 31,960,000

201,151,664Banks (12.64%)

ICICI Bank Limited 135,000 128,587,500HDFC Bank Limited 54,777 105,911,330Bank of Baroda 116,350 74,353,468Axis Bank Limited 51,294 59,924,216

368,776,514Cement (7.56%)

Jaiprakash Associates Limited 600,400 89,789,820Shree Cement Limited 37,889 89,488,135Century Textiles and Industries Limited 81,000 41,220,900

220,498,855Construction (4.64%)

Sadbhav Engineering Limited 51,961 67,453,172IVR Prime Urban Developers Limited 208,804 36,269,255The Phoenix Mills Limited 170,657 31,716,603



Consumer Non Durables (4.71%)GlaxoSmithkline Consumer Healthcare Limited 60,300 90,055,035ITC Limited @ 180,000 47,349,000

137,404,035Engineering (1.50%)

UB Engineering Limited 330,668 43,730,84343,730,843

Ferrous Metals (2.27%)Usha Martin Limited 652,355 66,279,268

66,279,268Finance (5.11%)

Bajaj Holdings and Investment Limited 88,622 53,540,981Housing Development Finance Corporation Limited 18,000 48,909,600Power Finance Corporation Limited 180,000 46,503,000

148,953,581Gas (3.52%)

GAIL India Limited 150,000 61,590,000Petronet LNG Limited 540,000 41,067,000


Crompton Greaves Limited 525,039 137,008,927Bharat Heavy Electricals Limited 39,000 93,235,350Thermax Limited 105,638 72,039,834McNally Bharat Engineering Company Limited 120,000 35,184,000


Sintex Industries Limited 240,000 70,920,00070,920,000

Media & Entertainment (0.06%)DQ Entertainment International Limited 15,900 1,784,775

1,784,775Non - Ferrous Metals (6.13%)

Sterlite Industries (India) Limited @ 130,000 110,493,500Hindustan Zinc Limited @ 56,683 68,266,171

178,759,671Oil (2.04%)

Oil and Natural Gas Corporation Limited 54,200 59,549,54059,549,540

Petroleum Products (3.98%)Reliance Industries Limited 108,000 116,019,000


Lupin Limited 48,000 78,112,800Aurobindo Pharma Limited 81,000 77,711,400

155,824,200Power (1.97%)

CESC Limited 150,000 57,405,00057,405,000

Software (9.05%)Patni Computer Systems Limited 135,000 72,164,250Infosys Technologies Limited @ 27,000 70,630,650Mphasis Limited 96,472 59,856,052Tata Consultancy Services Limited @ 75,000 58,548,750Persistent Systems Limited # 9,248 2,866,880





@ Investments in companies which have invested more than five percent of the net asset value of any scheme of HSBC Mutual Fund.





5


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 894,741,783

Adjustments for:- (Increase)/Decrease in Investments at cost (817,725,625) (Increase)/Decrease in Other Current Assets (1,106,772) Increase/(Decrease) in Current Liabilities and Provisions 4,986,202 Net cash generated from operations (A) 80,895,588

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (195,890,762) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (91,819,649)

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors 23,185,302 (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 9,856,134

Dividend Paid during the Year (90,279,141)

Net cash used in financing activities (B) (344,948,116)

Net Decrease in Cash and Cash Equivalents (A+B) (264,052,528)

Cash and Cash Equivalents at the beginning of the year 375,141,090 Cash and Cash Equivalents at the end of the year 111,088,562


Rupees


Balances with Scheduled Banks :- In Current Account 11,168,386 Book Overdraft (4,500,084) Other Collaterised Lending- Reverse Repos 65,158,189 - Collateralised Borrowing and Lending Obligation 39,262,071

111,088,562



3 This is the first year of the applicability of Accounting Standard - 3 - Cash Flow Statement to the Scheme.



Trustee Director




6

HSBC MUTUAL FUND-HSBC TAX SAVER EQUITY FUND


SCHEDULE 8


1 Organisation HSBC Tax Saver Equity Fund (the “Scheme”) is an open ended equity linked savings scheme of HSBC Mutual

Fund (the “Fund”) and was launched on November 20, 2006. HSBC Mutual Fund has been sponsored by HSBC

Securities and Capital Markets (India) Private Limited. HSBC Asset Management (India) Private Limited

incorporated under the Companies Act, 1956 has been appointed as the asset management company. The duration

of the Scheme is perpetual. The Scheme closed for initial subscription on December 14, 2006 and reopened for

issue and redemption of units on January 17, 2007. The Scheme has been prepared pursuant to the notifications

dated November 3, 2005 and December 13, 2005 issued by the Department of Economic Affairs, Ministry of

Finance, Government of India or such other scheme as the Central Government may by notification in the Official

Gazette specify under section 80C of the Income Tax Act, 1961. The investment objective of the Scheme is to

provide long term capital appreciation by investing in a diversified portfolio of equity and equity related

instruments of companies across various sectors and industries, with no capitalisation bias. The Scheme may also

invest in fixed income securities. The Scheme has two Options - Growth Option and Dividend Option. The Scheme will not declare dividend under the Growth Option in normal circumstances. The income earned on






applicable.



















iv. Equity shares awaiting listing are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund.

v. Traded money market securities are valued at the yield at which they are traded on the valuation date. If




vi. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up


vii. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.








2.3 Securities Transaction Investment securities transactions are accounted for on a trade date basis. The Scheme uses the average cost



2.5 Net Asset Value for Growth/Dividend Options The net asset value of the units of the Scheme is determined separately for the units issued under the Growth and













2.7 Income Equalization Reserve The net distributable income relating to units issued / repurchased is transferred to / from income equalization


2.8 Load Charges Load collected up to July 31, 2009 is retained in the Scheme under a separate account and is used to meet












4 Trusteeship Fees




not affiliated with the Settlor

5 Custodian Fees J P Morgan Chase Bank provides custodial services to the Scheme for which it receives custody fees including

safekeeping.

6 Income Taxes No provision for income tax is made as the Scheme qualifies as a recognized mutual fund under Section 10(23D)


7 Limitation on Expenses

The total expenses chargeable to the Scheme are limited to 2.33% of the average daily net assets of the Scheme.

HSBC Asset Management (India) Private Limited has borne Rs. 1,923,854 in respect of the Scheme in excess of

the above mentioned percentage of the average daily net assets to be charged to the Scheme as total expenses for

the year.



8 Aggregate Appreciation and Depreciation in Value of Investments

Aggregate appreciation and depreciation in value of investments are as follows:

March 31, 2010


(Rupees)

Equity Shares

-Appreciation 563,326,418 62,106,058

-Depreciation 23,919,419 215,491,836




(Rupees)

Percentage of

Fair Value to

Net Assets

Persistent Systems Limited 2,866,880 0.10

10 a) Aggregate Value of Purchases and Sale of Investments

The aggregate value of investments purchased and sold (including matured) during the financial year 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.



Limited under the procedures approved by the Board of Trustees as at March 31, 2010 is Rs. 2,866,880.


The total income (including net profit on sale of Investments and net change in unrealized depreciation in the

value of investments) and expenditure during the year is Rs. 1,115,133,739 and Rs. 67,006,177 being 38.85% and

2.33% respectively of the average daily net assets.



Disclosures’ issued by the Institute of Chartered Accountants of India (ICAI) The Scheme has entered into transactions with certain related parties. The information required in this regard in









HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager



Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai – Relative of a Key Management Personnel Kemaya Lal Kidwai – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Refer Annexure I


(India) Private Limited was paid collection/bank charges amounting to Rs. 298,444.






Nature of Relation

Period Covered


% of Total




Fund

The Hongkong and Shanghai Banking Corporation Limited Associate 2009-2010 0.65 2.39 849,881 3.33





Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund







relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund







Regulations, 1996 as amended HSBC Mutual Fund has made investments in companies, which hold / have held units in excess of 5% of the net

asset value of any Scheme of HSBC Mutual Fund which have been listed in Annexure II. The investments comprise equity shares, debentures/ bonds, commercial paper, fixed deposits and other debt



The Scheme operates in one segment only viz. to provide long term capital appreciation by investing in a

diversified portfolio of equity and equity related instruments of companies across various sectors and industries,

with no capitalisation bias.



15 Prior Year’s Figures Previous year’s figures have been re-grouped / re-arranged where appropriate.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)





Sponsor


Relatives Total



Subscription of Units (including switch in and dividendreinvestment) - - - - 160,000 160,000 Previous Year - - - - 101,000 101,000


Brokerage/ Commission on Purchase/ Sale of Investments 552,086 - 36,558 - - 588,645 Previous Year 269,324 - - - - 269,324

Brokerage/ Commission on Distribution of Units - - 915,241 - - 915,241 Previous Year - - 608,172 - - 608,172

Charges for Services Provided by Bank - - 298,444 - - 298,444 Previous Year - - 998 - - 998





Sponsor


Relatives Total


Brokerage/ Commission Payable for Distribution of Units - - 359,702 - - 359,702 Previous Year - - 170,738 - - 170,738

Units Outstanding As At Year End - - - - 353,338 353,338 Previous Year - - - - 90,862 90,862

Other Receivables - 1,926,627 - - - 1,926,627 Previous Year - 1,027 - 1,500 - 2,527


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 849,881 608,172

Brokerage / Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 353,814 170,738

Brokerage/ Commission on Purchase/Sale of InvestmentsHSBC InvestDirect Securities (India) Limited 36,558 -

Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 298,444 998


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 264,866,489 HSBC Cash Fund - 89,204,870

Sale of InvestmentsHSBC Equity Fund - 69,573,024 HSBC Fixed Term Series 68 - 66,378,818 HSBC Floating Rate Fund Long Term Plan - 58,726,695

Other ReceivablesHSBC Equity Fund - 1,500


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividendreinvestment)Rashid K Kidwai (relative) 130,000 101,000 Kemaya Lall Kidwai 30,000 -

Units Outstanding As At Year EndRashid K Kidwai (Relative) 320,714 90,862



Annexure I

0

Auditors' Report To the Board of Trustees of 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 financial 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 financial statements based on our audit.


standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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 Dynamic Fund as at March 31, 2010, its net surplus and its cash flows 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,






ASSETS

Investments 1 2,126,000,919 1,813,832,700

Deposits 2 146,000,000 261,000,000


TOTAL 0 2,439,089,922 2,393,748,218

LIABILITIES

Unit Capital 4 2,489,968,770 3,711,200,832

Reserves and Surplus 5 (102,674,720) (1,369,862,489)


TOTAL 2,439,089,922 2,393,748,218



Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.6) 1,332,727,443 1,054,566,607 2,387,294,050 1,200,245,402 1,141,092,941 2,341,338,343






Trustee Director



HSBC MUTUAL FUND - HSBC DYNAMIC FUND


0



INCOME AND GAINS

Dividends (Note 2.4) 28,390,159 33,617,528



Miscellaneous Income (Note 14) 640 -

TOTAL 529,644,248 100,946,073

EXPENSES AND LOSSES

Realised Loss from Foreign Currency Transactions (Net) (Note 2.10) 374,227 -


(Including Net Loss on Inter-Scheme Sale of Investments Rs. Nil (Previous Year: Rs 7,648,689) (Note 2.3)





Audit Fees 250,000 100,000



TOTAL 63,428,275 1,724,262,899


Net Change in Unrealised Depreciation in Value of Investments and Derivatives 96,883,644 302,654,251

Net Gains/(Losses) for the Year 563,099,617 (1,320,662,575)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives 554,839,462 -

Net Surplus/(Deficit) including Net Change in Unrealised Appreciation in Value of Investments and Derivatives 1,117,939,079 (1,320,662,575)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve (554,839,462) -

Net Surplus/(Deficit) for the Year 563,099,617 (1,320,662,575)


Total TotalRupees Rupees

Net Surplus/(Deficit) for the Year 563,099,617 (1,320,662,575)

Transfer from Income Equalisation Reserve (Note 2.8) 374,193,911 91,608,166 Balance transferred to Reserve Fund 937,293,528 (1,229,054,409)





Trustee Director





1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 7, 8 and 12) Rupees Rupees Rupees Rupees


Equity Shares 2,126,000,919 1,573,479,244 1,655,767,413 1,750,429,287

Non Convertible Debentures and Bonds Listed / Awaiting Listing - - 158,065,287 159,421,648

TOTAL 2,126,000,919 1,573,479,244 1,813,832,700 1,909,850,935


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives Rs. 146,000,000 (2009 : Rs. 146,000,000) 146,000,000 246,000,000

Margin Deposit with Clearing Corporation of India towards Reverse Repos and Governement Securities - 15,000,000

TOTAL 146,000,000 261,000,000


Balances with Banks- in Current Account 2,013,377 884,945



Reverse Repos 27,166,897 87,439,975

Unit Subscriptions Receivable 130,000 915,100

Inter-Scheme Receivable for Switch - in 165,423 4,660,043


Interest Receivable on :- Debentures / Bonds - 5,790,231 - Deposits 282,000 3,488,354 - Reverse Repos 3,838 11,252 - Collateralised Borrowing and Lending Obligation 2,223 11,208

Receivable on Outstanding Equity Future Contracts 95,054 -

Receivable from Investment Manager - 514

Investment Towards Unclaimed Redemption [(in 10,402.779 Units(2009: 9,009.782 Units) (Market Value Rs.154,889 (2009: Rs.1,31,312))of HSBC Cash Fund - Growth Option) (Note 13)] 263,052 127,659

TOTAL 167,089,003 318,915,518




Growth Option


Outstanding:



1,981,650,626 198,165,062.573 2,205,643,813 220,564,381.279



Dividend Option


Outstanding:



1,925,943,606 192,594,360.724 2,269,000,533 226,900,053.400



TOTAL 2,489,968,770 248,996,877.147 3,711,200,832 371,120,083.269

HSBC MUTUAL FUND - HSBC DYNAMIC FUND Schedules forming part of the Balance Sheet as at March 31, 2010


4

SCHEDULE 5 Total TotalReserves and Surplus March 31, 2010 March 31, 2009

Rupees Rupees



Added during the year (224,945,221) (720,852)



Added during the year 374,193,911 91,608,166

Transferred to Revenue Account (374,193,911) (91,608,166)


Unrealised Appreciation ReserveAt the beginning of the year - -

Net Change in Unrealised Appreciation in Value of Investments (Note 7) 554,839,462 -

At the end of the year 554,839,462 -

Reserve Fund

At the beginning of the year (1,326,107,360) (97,052,951)


At the end of the year (388,813,832) (1,326,107,360)

TOTAL (102,674,720) * (1,369,862,489) *


Rupees RupeesGrowth Option (57,319,022) (702,235,607) Dividend Option (45,355,698) (667,626,882) Total (102,674,720) (1,369,862,489)

HSBC MUTUAL FUND - HSBC DYNAMIC FUND Schedules forming part of the Balance Sheet as at March 31, 2010


5






Audit Fees 250,000 100,000




Inter Scheme payable for 'Switch - Out' 807,262 2,013,818

Payable on Outstanding Equity Future Contracts - 988,405


Payable to Investment Manager 5,386 -

Temporary Book Overdraft 1,681,062 7



TOTAL 51,795,872 52,409,875


Rupees Rupees

Debentures / Bonds 2,980,591 17,340,340


Reverse Repos 1,486,082 9,078,272


Government Securities - 2,210,750

Deposits 6,281,745 20,195,466

TOTAL 12,117,883 67,328,545



6



Hero Honda Motors Limited @ 32,400 62,998,56062,998,560

Banks (19.18%)HDFC Bank Limited 73,500 142,112,250ICICI Bank Limited 108,000 102,870,000Bank of Baroda 137,700 87,997,185State Bank of India 36,000 74,815,200

407,794,635Cement (3.89%)

Grasim Industries Limited 18,000 50,667,300Century Textiles and Industries Limited 63,000 32,060,700



Consumer Non Durables (4.45%)ITC Limited @ 360,000 94,698,000

94,698,000Fertilisers (1.47%)

Zuari Industries Limited 50,000 30,465,00030,465,000

Industrial Capital Goods (9.89%)Bharat Heavy Electricals Limited 36,000 86,063,400Bharat Electronics Limited 31,500 69,377,175Areva T&D India Limited 180,000 54,900,000



Oil (7.37%)Oil and Natural Gas Corporation Limited 90,000 98,883,000Cairn India Limited 189,000 57,767,850


Reliance Industries Limited 126,000 135,355,500Hindustan Petroleum Corporation Limited 126,000 40,137,300


Lupin Limited 67,500 109,846,125Ranbaxy Laboratories Limited 180,000 85,572,000Aurobindo Pharma Limited 72,000 69,076,800

264,494,925Power (1.45%)

Tata Power Company Limited 22,500 30,907,12530,907,125

Software (12.58%)Infosys Technologies Limited @ 45,000 117,717,750Oracle Financial Services Software Limited 36,000 82,801,800Mphasis Limited 108,000 67,008,600



Transportation (3.04%)Spice Jet Limited 720,000 41,976,000Gateway Distriparks Limited 180,001 22,743,126



Bharat Heavy Electricals Limited - April 2010 (18.69%) 11,250 26,933,625Century Textiles and Industries Limited - April 2010 (13.53%) 38,160 19,501,668Sterlite Industries (India) Limited - April 2010 (41.91%) 70,956 60,387,104Tata Power Company Limited - April 2010 (25.87%) 27,000 37,276,200

Total 144,098,597








7


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 466,215,973

Adjustments for:- (Increase)/Decrease in Investments at cost 321,731,969 (Increase)/Decrease in Other Current Assets 8,878,105 Increase/(Decrease) in Current Liabilities and Provisions 4,222,270 Net cash generated from operations (A) 801,048,317

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (1,221,232,062) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve 149,248,690

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors 14,716,006 (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 5,279,720

Net cash used in financing activities (B) (1,051,987,646)

Net Decrease in Cash and Cash Equivalents (A+B) (250,939,329)

Cash and Cash Equivalents at the beginning of the year 540,808,438 Cash and Cash Equivalents at the end of the year 289,869,109


Rupees


Balances with Scheduled Banks :- In Current Account 2,013,377 - In Deposit Account 146,000,000 Book Overdraft (1,681,062) Other Collaterised Lending- Reverse Repos 27,166,897 - Collateralised Borrowing and Lending Obligation 16,369,897 - Derivative Margin Deposit 100,000,000

289,869,109


3 This is the first year of the applicability of Accounting Standard - 3 - Cash Flow Statement to the Scheme.




Trustee Director

Place: Mumbai Date : Fund



2

HSBC MUTUAL FUND-HSBC DYNAMIC FUND


SCHEDULE 8


HSBC Dynamic Fund (the “Scheme”) is an open-ended scheme of HSBC Mutual Fund (the “Fund”) and was

launched on August 03, 2007. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital



perpetual. The Scheme closed for initial subscription on August 30, 2007 and reopened for issue and

redemption of units on September 28, 2007. The investment objective of the Scheme is to provide long term

capital appreciation by allocating funds in equity and equity related instruments and also has the flexibility to

move, entirely if required, into debt instruments when the view on equity markets seems negative. The Scheme

has two Options – Growth Option and Dividend Option.



The Scheme maintains its books of account on an accrual basis. These financial statements have been prepared

in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and


applicable. 2.2 Portfolio Valuation



i. Equity securities listed on a recognized stock exchange are valued at the last quoted closing price on

the National Stock Exchange of India Limited (NSE). If on a particular valuation date, a security is not






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 dated September 18, 2000 and

amendments thereto, as applicable, issued by the Securities and Exchange Board of India (SEBI).



Mutual Fund.

iv. Debt securities listed on a recognised stock exchange are valued at the last quoted closing price on the






v. Government securities are valued at prices obtained from The Credit Rating Information Services of

India Limited in accordance with the guidelines for valuation of securities for mutual funds dated

September 18, 2000 and amendments thereto, as applicable, issued by SEBI.

vi. Non-traded and thinly traded debt securities are valued at fair value as determined by HSBC Asset





vii. Privately placed debt securities are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund.

viii. Traded money market securities are valued at the yield at which they are traded on the valuation date.

If no sale is reported at that time, such security is valued at the last traded price plus accretion of the



ix. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest

up to the date of resale.

x. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.

The net unrealised appreciation / depreciation in the value of investments and derivatives is determined separately for each category of investments and derivatives. In respect of each category of investments and derivatives, the net change in the unrealised appreciation if any, between two balance sheet dates / valuation dates is accounted through the Revenue Account and thereafter the net unrealised appreciation is transferred from the Revenue Account to the Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted through the Revenue Account. Net unrealised appreciation is reduced from the distributable income at the time of income distribution.




Interest income is recorded on accrual basis. Dividend income is recorded on ex date basis. 2.5 Derivatives The Scheme enters into derivative transactions in equity/ index futures for the purpose of hedging and portfolio

balancing.


Futures


• When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the Revenue Account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is



outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss.



The net asset value of the units of the Scheme is determined separately for the units issued under the Growth

and Dividend Options. For reporting the net asset value for the Options, daily income earned, including realized

and unrealized gain or loss in the value of investments and expenses incurred by the Scheme are allocated to the

Options in proportion to the value of the net assets. 2.7 Unit Premium Reserve

Upon issue and redemption of units, the net premium or discount to the face value of units is adjusted against

the unit premium reserve of the Scheme, after an appropriate portion of the issue proceeds and redemption

payout is credited or debited respectively to the income equalization reserve.


surplus available for distribution on the record dates, if any, was utilized from unit premium reserve, except to

the extent it was represented by unrealised net appreciation in the value of investments.



reserve for determining the net surplus / deficit, transferred from / to unit premium reserve. 2.9 Load Charges


marketing and selling expenses. Pursuant to SEBI circular SEBI/IMD/CIR No. 4/168230/09 dated June 30,

2009, effective August 1, 2009, of the exit load collected in the Schemes a maximum of 1% of redemption

proceeds is maintained in a separate account and utilized to meet marketing and selling expenses. Any load

collected in excess of 1% is credited to the Schemes.


The books and records of the Fund are maintained in Indian rupees. Amounts denominated in or expected to

settle in foreign currencies are translated into Indian rupees on the following basis.











currency gains or losses realised between trade and settlement dates of foreign currency denominated

securities transactions and the difference between the recorded amounts of foreign currency denominated

dividends, interest and expenses recorded in the Fund’s books and the Indian rupee equivalent amounts

actually received or paid. Net unrealised foreign exchange gains and losses arising from changes in value of

assets and liabilities denominated in foreign currency resulting from changes in foreign exchange rate are

included in net unrealised appreciation or depreciation in value of investments and foreign currency

denominated assets and liabilities. 3 Investment Management and Advisory Fees


Management (India) Private Limited for managing the Scheme at an average annual rate of 1.09% of the

average daily net asset value recorded by the Scheme. All costs, charges and expenses incurred by HSBC Asset


costs allowed to be charged to the Scheme under the Regulations, are on their own account for which they

receive investment management and advisory fees. 4 Trusteeship Fees




not affiliated with the Settlor 5 Custodian Fees


safekeeping. 6 Income Taxes

No provision for income tax is made as the Scheme qualifies as a recognized mutual fund under Section

10(23D) of the Income Tax Act, 1961.




Aggregate appreciation and depreciation in value of investments and derivatives are as follows:

March 31, 2010 (Rupees)


Equity Shares

-Appreciation 582,644,211 103,451,368

-Depreciation 30,122,536 198,113,243

Non Convertible Debentures and Bonds Listed / Awaiting Listing

-Appreciation - 384,760

-Depreciation - 1,741,120

Equity Futures

-Appreciation

2,622,855

-

-Depreciation

305,068

865,408


The aggregate value of investments securities purchased and sold during the financial year 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. 9 Income and Expenses

The total income (net of net loss on sale of investments, derivatives and foreign currency transactions and net

change in unrealized depreciation in the value of investments and derivatives) and expenditure during the year is

Rs. 626,153,665 and Rs. 63,054,048 respectively being 23.26% and 2.34% of the average daily net assets. 10 Equity Derivatives Disclosures:

Futures




Bharat Heavy Electricals Limited 75 11,250

Century Textiles and Industries Limited 45 38,160





Notional value of futures contracts sold by the Scheme and outstanding as on March 31, 2010 aggregates to Rs.

144,098,597.


aggregates to Rs. 36,383,108. 11 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds )










HSBC Mutual Fund




HSBC Cash Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan



HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Tustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Refer Annexure I

III During the year, Hong Kong & 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.








Nature of Relation

Period Covered


% of Total




Fund






Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund





relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund



Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the

panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo









instruments and were made solely on the basis of sound fundamentals of these companies. 13 Unclaimed Redemptions As at March 31, 2010, unclaimed redemptions aggregate Rs. 263,052 payable to 10 investors.


Miscellaneous Income of Rs. 640 represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme.


The Scheme operates in one segment only viz. to provide long term capital appreciation by allocating funds in

equity and equity related instruments and also has the flexibility to move, entirely if required, into debt

instruments when the view on equity markets seems negative.


Previous year’s figures have been re-grouped / re-arranged where appropriate.

Signatures to the Schedules 1 to 8 forming part of the Balance Sheet and the Revenue Account. For PRICE WATERHOUSE




HSBC Mutual Fund

For HSBC Asset

Management (India)

Private Limited

VIVEK PRASAD

Partner


Vikramaaditya

Director and Chief

Executive Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)




Manager


Sponsor Total

Purchase of Investments - - - - - Previous Year - - - 2,285,159,407 2,285,159,407

Sale of Investments - - - - - Previous Year - - - 3,383,370,888 3,383,370,888

Investment Management and Advisory Fees - 29,412,910 - - 29,412,910 Previous Year - 33,826,891 - - 33,826,891

Brokerage/ Commission on Distribution of Units - - 4,935,779 - 4,935,779 Previous Year - - 6,097,974 - 6,097,974

Brokerage/ Commission on Purchase/ Sale of Investments 341,708 - - - 341,708 Previous Year 750,929 - - - 750,929

Clearing Charges - - 530,800 - 530,800 Previous Year - - 1,169,577 - 1,169,577

Fixed Deposits Placed - - 528,000,000 - 528,000,000 Previous Year - - - - -

Fixed Deposits Matured - - 382,000,000 - 382,000,000 Previous Year - - - - -

Charges for Services Provided by Bank - - 168,872 - 168,872 Previous Year - - 1,292 - 1,292




Manager


Sponsor Total

Investment Management and Advisory Fees Payable - 2,379,618 - - 2,379,618 Previous Year - 2,145,701 - - 2,145,701

Brokerage/ Commission Payable for Distribution of Units - - 1,265,036 - 1,265,036 Previous Year - - 593,189 - 593,189

Other Payables - - - - - Previous Year - 204 - - 204

Other Receivables - - - - - Previous Year - 514 - - 514


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009








April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 993,429,891 HSBC Cash Fund - 491,828,135 HSBC Fixed Term Series 46 - 229,242,575

Sale of InvestmentsHSBC Cash Fund - 2,454,382,683 HSBC Ultra Short Term Bond Fund - 535,205,517



Annexure I

0

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 financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable.



March 31, 2010 March 31, 2009

Schedule Rupees RupeesASSETS

Investments 1 859,569,343 809,542,445


TOTAL 0 891,792,091 851,507,514

LIABILITIES

Unit Capital 3 935,414,322 1,352,253,861

Reserves and Surplus 4 (64,480,772) (506,369,086)


TOTAL -0.27 891,792,091 851,507,514

March 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2009

RECONCILIATION OF NET ASSET VALUE PER UNIT Growth Option Dividend Option Total Growth Option Dividend Option Total

Rupees Rupees Rupees Rupees Rupees RupeesNet Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.6) 581,136,608 289,796,942 870,933,550 527,343,177 318,541,598 845,884,775

Number of Units in Issue 62,416,351.976 31,125,080.331 84,302,484.733 50,922,901.492

Net Asset Value per Unit 9.3106 9.3107 6.2554 6.2554





Trustee Director


HSBC MUTUAL FUND - HSBC EMERGING MARKETS FUND



0



INCOME AND GAINS

Dividends (Note 2.5) 5,811,036 -

Interest 6 1,089,955 5,738,739


TOTAL 6,908,949 5,738,739

EXPENSES AND LOSSES

Realised Loss in Foreign Currency Transaction (Note 2.3) 3,725,623 43,989

Net Loss on Sale of Investments (Note 2.4) 51,385,243 10,508,992

Investment Management and Advisory Fees (Note 3) 513,156 501,942




Audit Fees 50,000 25,000


Other Operating Expenses 644,940 775,054

TOTAL 63,311,483 22,010,184

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 503,284 3,934,805

TOTAL 62,808,199 18,075,379

Net Realised Losses for the Year (55,899,249) (55,899,250) (12,336,640)

Net Change in Unrealised Depreciation in Value of Investments and Foreign Currency Denominated Asset and Liabilities 1.49 455,538,850 (497,585,301)

Net Surplus/(Deficit) for the Year (0) -0.21 399,639,600 (509,921,941)

April 01, 2009 to April 01, 2009 to April 01, 2009 to April 01, 2008 to April 01, 2008 toMarch 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009


Net Surplus/(Deficit) for the Year 255,478,959 144,160,641 399,639,600 (280,987,613) (509,921,941)

Transfer from Income Equalisation Reserve (Note 2.8) 24,337,299 30,267,451 54,604,750 (49,101,444) (25,485,078)

Balance Transferred to Reserve Fund 279,816,258 174,428,092 454,244,350 (330,089,057) (535,407,019)




Firm Registration Number : 301112E HSBC Mutual Fund Private Limited





Trustee Director

Place: Mumbai





1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market Value Cost Market Value Cost(Notes 2.2, 2.3, 2.4, 8 and 9) Rupees Rupees Rupees Rupees

(Refer to the attached Statement of Portfolio Holding as at March 31, 2010)Units in Mutual Fund 859,569,343 905,087,737 809,542,445 1,310,418,805

TOTAL 859,569,343 905,087,737 809,542,445 1,310,418,805


Balances with Banks - in Current Account 646,011 19,924,496

Reverse Repos 19,378,225 8,662,658


Unit Subscription Receivable 14,025 314,500

Inter-Scheme Receivable for Switch-in - 61,534

Interest Receivable on:- Reverse Repos 2,738 1,115- Collateralized Borrowing and Lending Obligation 1,585 1,110

Receivable from Investment Manager 503,284 3,936,563

TOTAL 32,222,748 41,965,069

HSBC MUTUAL FUND - HSBC EMERGING MARKETS FUNDSchedules forming part of the Balance Sheet as at March 31, 2010


2


Growth Option

Issued and Subscribed :Units of Rs.10 each fully paid up 612,212,613 61,221,261.269 612,212,613 61,221,261.269

Outstanding:



976,698,731 97,669,873.088 1,033,059,594 103,305,959.387



Dividend Option


Outstanding:



545,025,394 54,502,539.497 631,078,222 63,107,822.294



TOTAL 935,414,322 93,541,432.307 1,352,253,861 135,225,386.225

HSBC MUTUAL FUND - HSBC EMERGING MARKETS FUNDSchedules forming part of the Balance Sheet as at March 31, 2010


3

SCHEDULE 4 Total TotalReserves and Surplus March 31, 2010 March 31, 2009

Rupees Rupees


At the beginning of the year 25,927,317 (37,120)

Added during the year (12,356,036) 25,964,437






Reserve Fund

At the beginning of the year (532,296,403) 3,110,617

Balance Transferred from Revenue Account 454,244,350 (535,407,020)


TOTAL (64,480,772) * (506,369,086) *


Rupees Rupees

Growth Option (43,026,912) (315,681,670)

Dividend Option (21,453,860) (190,687,416)

Total (64,480,772) (506,369,086)



4


Current Liabilities

Investment Management and Advisory Fees 25,730 27,627


Custodian Fees and Expenses 823 50,119

Audit Fees 50,000 25,000



Inter Scheme Payable - For 'Switch-Out 312,982 2,181,084 - For 'Others' 1,000 40,000


Unclaimed Redemption (Note 13) 28,549 -


TOTAL 20,858,541 5,622,739

SCHEDULE 6 April 01, 2009 to April 01, 2008 toInterest (Note 2.5) March 31, 2010 March 31, 2009

Rupees Rupees

Reverse Repos 542,901 5,086,361

Collateralized Borrowing and Lending Obligation 547,054 652,378

TOTAL 1,089,955 5,738,739



5


Mutual Fund Units (100%)HSBC GIF Global Emerging Markets Equity Fund 2,339,183.281 859,569,343

859,569,343Total (Cost Rs. 905,087,737) 859,569,343TOTAL INVESTMENTS (Cost Rs. 905,087,737) 859,569,343





6



SCHEDULE 7


1 Organisation

HSBC Emerging Markets Fund (the “Scheme”) is an open-ended scheme of HSBC Mutual Fund (the “Fund”) and

was launched on January 28, 2008. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital



perpetual. The Scheme closed for initial subscription on February 25, 2008 and reopened for issue and redemption

of units on March 24, 2008. The investment objective of the Scheme is 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 Scheme may also invest a limited proportion in

debt and money market instruments. The Scheme has two Options - Growth Option and Dividend Option. The Scheme will not declare dividend under the Growth Option in normal circumstances. The income earned on






Exchange Board of India (Mutual Funds) Regulations, 1996 (the “Regulation”) and amendments thereto, as

applicable.


Investments are stated at market/fair value at the Balance Sheet date/date of determination. In valuing the


i. Units in mutual fund are valued at the net asset value of the investee scheme.

ii. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up to the

date of resale.

iii. Traded money market securities are valued at the yield at which they are traded on the valuation date. If no sale is

reported at that time such security is valued at the last traded price plus accretion of difference between the face

value and last traded price. Non traded money market instruments are valued at cost price plus accrued interest.

iv. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.

The net unrealised appreciation / depreciation in the value of investments is determined separately for each

category of investments. In respect of each category of investments, the net change in the unrealised appreciation

if any, between two balance sheet dates / valuation dates is accounted through the Revenue Account and

thereafter the net unrealised appreciation is transferred from the Revenue Account to the Unrealised Appreciation

Reserve. The net change in depreciation if any, is accounted through the Revenue Account.





The books and records of the Fund are maintained in Indian rupees. Amounts denominated in or expected to

settle in foreign currencies are translated into Indian rupees on the following basis.









currency gains or losses realised between trade and settlement dates of foreign currency denominated securities

transactions and the difference between the recorded amounts of foreign currency denominated dividends,

interest and expenses recorded in the Fund’s books and the Indian rupee equivalent amounts actually received

or paid. Net unrealised foreign exchange gains and losses arising from changes in value of assets and liabilities

denominated in foreign currency resulting from changes in foreign exchange rate are included in net unrealised

appreciation or depreciation in value of investments and foreign currency denominated assets and liabilities.






2.6 Net Asset Value for Growth / Dividend Options

The net asset value of the units of the Scheme is determined separately for units issued under the Growth and
















2.9 Load Charges













4 Trusteeship Fees



provided for a fee not exceeding Rs. 20,000 for each meeting of the Board of Trustees attended by such Trustee


5 Custodian Fees


safekeeping.

6 Income Taxes


of the Income Tax Act, 1961 of India.


The total expenses chargeable to the Scheme are limited to 0.75 % of the average daily net assets of the Scheme.

HSBC Asset Management (India) Private Limited has borne Rs. 503,284 in respect of the Scheme in excess of

the above mentioned percentage of the average daily net assets to be charged to the Scheme as total expenses for

the year.



8 Aggregate Appreciation and Depreciation In Value of Investments


March 31, 2010


(Rupees) Units in Mutual Fund

- Appreciation - -

- Depreciation 45,518,394 500,876,360


The aggregate value of investments securities purchased and sold (including matured) during the year is

Rs. 48,569,303 and 402,515,128 respectively being 4.73% and 39.21% of the average daily net assets.


The total income (net of net loss on sale of investments, realized loss on foreign currency transactions and net

change in unrealized depreciation in the value of investments and foreign currency transactions) and expenditure

during the year is Rs. 407,336,933 and Rs. 7,697,333 respectively being 39.68% and 0.75% of the average daily

net assets.






Accountants of India and regulation 25(8) of SEBI Regulation, is provided below:





HSBC Mutual Fund



(v) Schemes of the Fund, under common control of the Sponsor

HSBC Cash Fund HSBC Dynamic Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009



HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008





Refer Annexure I.

III During the year, The Hong Kong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset

Management (India) Private Limited was paid collection/bank charges amounting to Rs. 300.






Nature of Relation

Period Covered


% of Total




Fund






Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund













14 Miscellaneous Income:



Miscellaneous income of Rs. 7,958 represents exit load collected in excess of 1% of redemption proceeds and

credited to the Scheme.

15 Prior Year’s Figures Previous year’s figures have been re-grouped/re-arranged where necessary.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)




Manager


Sponsor


Subscription of Units (including switch in and dividend reinvestment) - - - - 90,000 90,000 Previous Year - - - - 36,000 36,000

Investment Management and Advisory Fees - 513,156 - - - 513,156 Previous Year - 501,942 - - - 501,942


Reimbursement of Expenses - 503,284 - - - 503,284 Previous Year - 3,934,805 - - - 3,934,805

Charges for Services Provided by Bank - - 300 - - 300 Previous Year - - 3,612 - - 3,612




Manager


Sponsor


Investment Management and Advisory Fees Payable - 25,730 - - - 25,730 Previous Year - 27,627 - - - 27,627

Brokerage/ Commission Payable on Distribution of Units - - 1,335,194 - - 1,335,194 Previous Year - - 406,698 - - 406,698

Units Outstanding As At Year End - - - - 91,613 91,613 Previous Year - - - - - -

Other Payables - - - 1,000 - 1,000 Previous Year - - - 40,000 - 40,000

Other Receivables - 503,284 - - - 503,284 Previous Year - 3,936,564 - - - 3,936,564

(iii) Details of material transactions with respect to parties referred to in Note 11 (iii)(iv) forAssociate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009


Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,334,938 406,698

Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 300 3,612


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Other PayablesHSBC Small Cap Fund - 35,000 HSBC Midcap Equity Fund - 5,000 HSBC Equity Fund 1,000 -

(v) Disclosures in respect of material transactions with persons referred to in Note 11 (I)(VI) for key management personneland their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividend reinvestment)Sanjay Prakash - 36,000 Vikramaaditya 90,000 -

Units Outstanding As At Year EndVikramaaditya 91,613 -



Annexure I

0

0Auditors’ Report 1To the Board of Trustees of 2HSBC 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 financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management, as well as evaluating the overall financial 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 flows 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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.

For PRICE WATERHOUSE Firm Registration No. 301112E Chartered Accountants Vivek Prasad Partner Membership No. F- 104941 Place: Mumbai Date: July 20, 2010


ASSETS

Investments 1 2,007,759,806 1,762,228,862

Deposits 2 90,000,000 165,000,000


Deferred Revenue Expenditure 4 - 50,255,009

TOTAL 0 2,229,447,110 2,301,564,156

LIABILITIES

Unit Capital 5 2,108,445,065 3,872,448,544

Reserves and Surplus 6 42,602,575 (1,677,447,411)


TOTAL 2,229,447,110 2,301,564,156


Rupees Rupees Rupees Rupees Rupees RupeesNet Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions ) (Note 2.7) 1,015,423,633 1,135,624,007 2,151,047,640 829,418,118 1,365,583,015 2,195,001,133







Trustee Director

Place: Mumbai



HSBC MUTUAL FUND - HSBC UNIQUE OPPORTUNITIES FUND


0



INCOME AND GAINS

Dividends (Note 2.4) 29,155,910 38,414,191



TOTAL 933,689,278 76,945,353

EXPENSES AND LOSSES






Audit Fees 600,000 75,000


Amortization of Deferred Revenue Expenditure (Note 2.6) 41,407,309 57,367,286


TOTAL 104,449,947 2,634,723,445

Less: Expenses to be Reimbursed by the Investment Manager - 660,110

TOTAL 104,449,947 2,634,063,335


Net Change in Unrealised Depreciation in Value of Investments and Derivatives 308,405,245 356,129,960


Net Change in Unrealised Appreciation in Value of Investments and Derivatives 441,712,840 (472,071)


Net change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve (441,712,840) 472,071

Net Surplus/(Deficit) for the Year (0) 1,137,644,576 (2,200,988,022)


Rupees Rupees

Net Surplus/(Deficit) for the Year 1,137,644,576 (2,200,988,022)

Transfer from Income Equalisation Reserve (Note 2.9) 58,190,929 -

Balance transferred to Reserve Fund 1,195,835,505 (2,200,988,022)





Trustee Director

Place: Mumbai Fund Manager(s)Date :




1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 7,8 and 12) Rupees Rupees Rupees Rupees


Equity Shares 2,007,759,806 1,565,636,697 1,762,228,862 2,072,104,037

TOTAL 2,007,759,806 1,565,636,697 1,762,228,862 2,072,104,037


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives Rs.90,000,000 (2009 : Rs.70,000,000) 90,000,000 130,000,000

Margin Deposit with The Clearing Corporation of India Limited towards Collateralized Borrowing and Lending Obligation - 20,000,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities - 15,000,000

TOTAL 90,000,000 165,000,000


Balances with Banks- in Current Account 2,412,208 494,022


Reverse Repos 28,466,966 103,807,591



Receivable on Outstanding Equity / Future Contracts - 413,325

Interest Receivable on :- Deposits 495,014 1,210,795 - Reverse Repos 4,022 13,359 - Collateralized Borrowing and Lending Obligation 2,329 13,306


Investment Towards Unclaimed Redemption [(in 12,070.571 Units (2009: 11,110.293 Units) (Market Value Rs.179,721 (2009: Rs.161,926)) of HSBCCash Fund - Growth Option) (Note 14)] 169,610 155,411

TOTAL 131,687,304 324,080,285


Issue and Organisational Costs (net of exit load)

At the Beginning of the year 50,255,009 126,831,644

Less: Amortized during the year 41,407,309 57,367,286

Less: Recovered during the year 8,847,700 19,209,349

At the end of the year - 50,255,009



2


Growth OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 2,206,433,286 220,643,328.644 2,206,433,286 220,643,328.644 Outstanding:At the beginning of the year 1,463,269,853 146,326,985.344 1,672,424,345 167,242,434.576 Issued during the year 24,699,715 2,469,971.529 29,492,767 2,949,276.671

1,487,969,568 148,796,956.873 1,701,917,112 170,191,711.247 Redeemed during the year 492,657,025 49,265,702.486 238,647,259 23,864,725.903 At the end of the year 995,312,543 99,531,254.387 1,463,269,853 146,326,985.344

Dividend Option

Issued and Subscribed :Units of Rs. 10 each fully paid up 4,165,861,924 416,586,192.440 4,165,861,924 416,586,192.440 Outstanding:At the beginning of the year 2,409,178,691 240,917,869.036 3,158,680,638 315,868,063.747 Issued during the year 94,732,898 9,473,289.843 52,676,333 5,267,633.300

2,503,911,589 250,391,158.879 3,211,356,971 321,135,697.047 Redeemed during the year 1,390,779,067 139,077,906.666 802,178,280 80,217,828.011 At the end of the year 1,113,132,522 111,313,252.213 2,409,178,691 240,917,869.036

TOTAL 2,108,445,065 210,844,506.600 3,872,448,544 387,244,854.380

SCHEDULE 6 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Reserves and Surplus Rupees Rupees Rupees Rupees

Unit Premium Reserve (Note 2.8)At the beginning of the year (109,363,958) (233,450,552) (233,584,063) (384,733,420) Added during the year 70,894,026 82,501,641 124,220,105 151,282,868 At the end of the year (38,469,932) (150,948,911) (109,363,958) (233,450,552)

Income Equalisation Reserve (Note 2.9)Added during the year 45,276,127 58,190,929 - - Transferred to Revenue Account (45,276,127) (58,190,929) - - At the end of the year - - - -

Unrealised Appreciation ReserveAt the beginning of the year 304,965 410,269 593,779 882,340 Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) 275,730,646 441,712,840 (288,814) (472,071) At the end of the year 276,035,611 442,123,109 304,965 410,269

Reserve FundAt the beginning of the year (934,536,683) (1,444,407,128) 476,691,236 756,580,894

719,462,489 1,195,835,505 (1,411,227,919) (2,200,988,022) At the end of the year (215,074,194) (248,571,623) (934,536,683) (1,444,407,128)

TOTAL 22,491,485 42,602,575 * (1,043,595,676) (1,677,447,411) *


Growth Option 20,111,090 (633,851,735) Dividend Option 22,491,485 (1,043,595,676) Total 42,602,575 (1,677,447,411)

Rupees


HSBC MUTUAL FUND - HSBC UNIQUE OPPORTUNITIES FUNDSchedules forming part of the Balance Sheet as at March 31, 2010


Rupees

3






Audit Fees 600,000 75,000




Inter Scheme payable for 'Switch-Out' 4,541,956 823,338

Payable on Outstanding Equity / Future Contracts 1,133,795 -


Load Charges 3,819 -

Temporary Book Overdraft 2,083,823 972


TOTAL 78,399,470 106,563,023


Rupees Rupees

Debentures / Bonds - 442,959


Reverse Repos 1,331,500 11,325,275


Deposits 5,233,947 16,710,582

TOTAL 7,697,932 38,531,162



4



Tata Motors Limited 45,053 34,136,65834,136,658

Auto Ancillaries (4.29%)Motherson Sumi Systems Limited 330,104 40,916,391Exide Industries Limited 195,622 24,100,630Balkrishna Industries Limited 32,953 21,063,558

86,080,579Banks (8.21%)

ICICI Bank Limited 81,000 77,152,500Bank of Baroda 99,200 63,393,760Andhra Bank 225,000 24,345,000

164,891,260Cement (9.54%)

Jaiprakash Associates Limited 450,500 67,372,275Hyderabad Industries Limited 71,607 41,063,034Dalmia Cement (Bharat) Limited 150,000 37,770,000Ultra Tech Cement Limited 39,324 45,413,321

191,618,630Chemicals (1.99%)

Solar Industries India Limited 92,533 39,927,99039,927,990

Construction Project (3.66%)Larsen & Toubro Limited 45,000 73,388,250

73,388,250Consumer Non Durables (9.01%)

Tata Tea Limited 54,000 52,857,900United Spirits Limited 33,000 43,606,200ITC Limited @ 165,000 43,403,250E I D Parry (India) Limited 120,359 41,126,670

180,994,020Finance (4.74%)

Bajaj Holdings and Investment Limited 79,162 47,825,722Shriram Transport Finance Company Limited @ 90,000 47,398,500

95,224,222Gas (2.85%)

Petronet LNG Limited 751,200 57,128,76057,128,760

Industrial Capital Goods (13.68%)Crompton Greaves Limited 270,000 70,456,500Bharat Electronics Limited 30,000 66,073,500Bharat Heavy Electricals Limited 24,000 57,375,600Kirloskar Pneumatic Company Limited 121,395 50,433,553McNally Bharat Engineering Company Limited 103,679 30,398,683


Max India Limited 270,000 55,944,000Jain Irrigation Systems Limited 54,000 51,872,400


DQ Entertainment International Limited 12,417 1,393,8081,393,808

Non - Ferrous Metals (6.94%)Sterlite Industries (India) Limited @ 90,000 76,495,500Hindustan Zinc Limited @ 52,194 62,859,844


Reliance Industries Limited 84,000 90,237,00090,237,000

Pharmaceuticals (13.14%)Lupin Limited 72,596 118,139,101Aurobindo Pharma Limited 63,792 61,202,045Bilcare Limited 90,255 51,792,832Opto Circuits India Limited 150,000 32,602,500

263,736,478Software (5.90%)

Infosys Technologies Limited @ 24,000 62,782,800Mphasis Limited 81,000 50,256,450Patni Computer Systems Limited 10,000 5,345,500



Transportation (2.18%)Spice Jet Limited 750,000 43,725,000



ICICI Bank Limited - April 2010 (11.42%) 21,000 20,049,750Oil and Natural Gas Corporation Limited - April 2010 (18.90%) 30,150 33,199,673Patni Computer Systems Limited - April 2010 (19.90%) 65,000 34,944,000Rural Electrification Corporation Limited - April 2010 (29.65%) 206,700 52,067,730Tata Consultancy Services Limited - April 2010 (20.13%) 45,000 35,356,500

Total 175,617,653

Deposits (4.19%)^4.75% HSBC Bank 180 60,000,0004.3% HSBC Bank 91 20,000,0004.7% HSBC Bank 91 10,000,000Total Deposits 90,000,000







5


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains/(Losses) for the Year 829,239,331 (2,557,117,982) Initial Issue Expenses charged to Revenue Account 41,407,309 57,367,286 Initial Issue Expenses recovered from Redeeming Investors 8,847,700 19,209,349

Adjustments for:- (Increase)/Decrease in Investments at cost 455,314,362 3,006,498,810 (Increase)/Decrease in Other Current Assets 1,386,549 7,197,671 Increase/(Decrease) in Current Liabilities 4,744,980 (7,132,843)

Net cash generated from operations (A) 1,340,940,231 526,022,291

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (1,764,003,480) (958,656,439) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve 140,692,569 151,282,868

Adjustments for:- Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors 62,411,200 (11,429,529)

Net cash (used in) financing activities (B) (1,560,899,711) (818,803,100)

Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) (219,959,480) (292,780,809)

Cash and Cash Equivalents as at the beginning of the Year 407,907,997 700,688,806 Cash and Cash Equivalents as at the end of the Year 187,948,517 407,907,997



Rupees

1 Components of cash and cash equivalents

Balances with banks in current accounts 2,412,208 494,022 Deposits with scheduled banks 90,000,000 130,000,000

- 35,000,000 Temporary Book Overdraft (2,083,823) (972) Reverse Repo 28,466,966 103,807,591 Collateralised Borrowing and Lending Obligation 17,153,166 108,607,356 Derivative Margin Deposit 52,000,000 30,000,000

187,948,517 407,907,997





Trustee Director




Margin Deposit with Clearing Corporation of India Limited

6

HSBC MUTUAL FUND-HSBC UNIQUE OPPORTUNITIES FUND


SCHEDULE 9


HSBC Unique Opportunities Fund (the “Scheme”) was a three year close-ended equity Scheme of HSBC Mutual

Fund (the “Fund”) with automatic conversion into open-ended equity Scheme at the end of three years from the

date of allotment of units. The Scheme was launched on February 2, 2007. HSBC Mutual Fund has been

sponsored by HSBC Securities and Capital Markets (India) Private Limited. HSBC Asset Management (India)

Private Limited incorporated under the Companies Act, 1956 has been appointed as the asset management

company. The Scheme closed for initial subscription on February 26, 2007, and reopened for redemption of units

on March 28, 2007. During the year, with effect from March 22, 2010 at the end of three years from the date of

allotment of units, the Scheme has automatically been converted into an open-ended scheme for the benefit of

providing investors the facility of purchase and redemptions on any business day, without any further reference

from the Fund /Board of Trustees of the Fund, subject to the Securities and Exchange Board of India (Mutual

Funds) Regulations 1996 and amendments thereto as applicable. The investment objective of the Scheme is to

provide long term capital growth from a diversified portfolio of equity and equity related instruments with focus

on investing in stocks of companies facing “out-of-ordinary” conditions. The Scheme has two Options - Growth







applicable.





traded on NSE, the value at which it is traded on the Bombay Stock Exchange Limited (BSE) is used. If

no sale is reported at that time, the last quoted closing price on the principal stock exchange on which the




















Mutual Fund.

vi. Equity securities awaiting listing are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund.

vii. Traded money market securities are valued at the yield at which they are traded on the valuation date. If




viii. Units in mutual fund are valued at the net asset value of the investee scheme.

ix. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up

to the date of resale. x. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.










2.4 Investment Income Interest income is recorded on an accrual basis. Dividend income is recorded on ex date basis.

2.5 Derivatives

The Scheme enters into derivative transactions in equity/ index futures for the purpose of hedging and portfolio balancing. “Derivative margin deposits” representing the margin towards equity derivative contracts entered into by the Scheme are disclosed under “Other Current Assets”



Futures

• Futures contracts are marked to market daily at the futures settlement price as determined by the exchange. The variation margin calculated as the difference between the trade price or the previous day’s settlement price, as the case may be, and the current day’s settlement price is recorded as a receivable or payable. • When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the Revenue Account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss. • As at the Balance Sheet date / date of determination, all open futures positions are valued at the futures settlement price as determined by the exchange where it is traded. The unrealised appreciation / depreciation on all open positions is considered for determining the net asset value.

2.6 Deferred Revenue Expenditure Initial issue expenses comprise those costs directly associated with the issue of units of the Scheme and include


Initial issue expenses upto 4% of the amount collected from the investors during the initial offer period have been

charged to the Scheme and are being amortised over a period of three years from the date of allotment of units.

Balance proportionate unamortized NFO expenses on redemptions within the close-ended period are recovered in

accordance with the Regulation. Expenses over and above the amounts debited to the Scheme were borne by the

asset management company.












2.9 Income Equalization Reserve The net distributable income relating to units issued / repurchased is transferred to / from income equalization




2.10 Load Charges













4 Trusteeship Fees




not affiliated with the Settlor

5 Custodian Fees J P Morgan Chase Bank provides custodial services to the Scheme for which it receives custody fees including

safekeeping.

6 Income Taxes No provision for income tax is made as the Scheme qualifies as a recognized mutual fund under Section 10(23D)





Aggregate appreciation and depreciation in value of investments and derivatives are as follows:

March 31, 2010


(Rupees)

Equity Shares

-Appreciation 476,973,223 125,878,670

-Depreciation 34,850,114 435,753,845

Equity Futures

-Appreciation 636,898 410,269

-Depreciation 2,106,828 -


The aggregate value of investments securities purchased and sold (including matured) during the financial year 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.




expenditure amortized) during the year is Rs. 1,242,094,523 and Rs. 63,042,638 being 44.83% and 2.28%

respectively of the average daily net assets.

10 Equity Derivatives Disclosures: Futures

Details of open interest in equity futures as at March 31, 2010



ICICI Bank Limited 60 21,000

Oil and Natural Gas Corporation Limited 134 30,150

Patni Computer Systems Limited 50 65,000

Rural Electrification Corporation Limited 106 206,700

Tata Consultancy Services Limited 45 45,000

Notional value of futures contracts bought/ (sold) by the Scheme and outstanding as on March 31, 2010

aggregates to Rs. 175,617,653. Net Profit on futures transactions recognized in the Revenue Account for the year ended March 31, 2010













HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund)



HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008



Refer Annexure I









Nature of Relation

Period Covered


% of Total


Commission paid [Rs. ]


Fund








Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund





relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund







Regulations, 1996 as amended HSBC Mutual Fund has made investments in companies, which holds/ has held units in excess of 5% of the net







The Scheme operates in one segment only viz. to provide long term capital growth from a diversified portfolio of

equity and equity related instruments with focus on investing in stocks of companies facing “out-of-ordinary”

conditions.



15 Prior Year’s Figures Previous year’s figures have been re-grouped / re-arranged where appropriate.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)


Nature of Transaction SponsorInvestment

Manager


Manager


Sponsor Total

Purchase of Investments - - - - - Previous Year - - - 640,161,844 640,161,844

Sale of Investments - - - - - Previous Year - - - 193,458,585 193,458,585

Investment Management and Advisory Fees - 29,935,038 - - 29,935,038 Previous Year - 35,627,202 - - 35,627,202

Brokerage/ Commission on Purchase/Sale of Investments 472,954 - - - 472,954 Previous Year 435,189 - 10,488 - 445,677

Brokerage/ Commission on Distribution of Units - - 4,516,472 - 4,516,472 Previous Year - - 6,446,967 - 6,446,967

Clearing Charges - - 759,468 - 759,468 Previous Year - - 565,239 - 565,239

Reimbursment of Expenses - - - - - Previous Year - 660,110 - - 660,110

Fixed Deposits Placed - - 290,000,000 - 290,000,000 Previous Year - - - - -

Fixed Deposits Matured - - 200,000,000 - 200,000,000 Previous Year - - - - -

Charges for Services Provided by Bank - - 122,423 - 122,423 Previous Year - - - - -


Nature of Transaction SponsorInvestment

Manager


Manager


Sponsor Total

Investment Management and Advisory Fees Payable - 2,587,284 - - 2,587,284 Previous Year - 1,830,896 - - 1,830,896

Brokerage/ Commission Payable for Distribution of Units - - 1,317,519 - 1,317,519 Previous Year - - 362,267 - 362,267

Other Receivables - - - - - Previous Year - 664,652 - - 664,652

(iii) Disclosures in respect of material transactions with persons referred to in Note 11 (I)(iii) and (iv) for Associate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009



Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,316,394 362,267




Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 122,423 -


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 198,541,455 HSBC Cash Fund - 89,204,870 HSBC Fixed Term Series 54 - 88,656,850

Sale of InvestmentsHSBC Fixed Term Series 58 - 125,742,234 HSBC Fixed Term Series 44 - 48,185,937 HSBC Fixed Term Series 55 - 19,530,414



Annexure I

0

Auditors' Report To the Board of Trustees of 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 financial 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 financial statements based on our audit.




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.


(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.



For PRICE WATERHOUSE Firm Registration No. 301112E Chartered Accountants Vivek Prasad Partner M. No. F-104941 Place: Mumbai Date: July 20, 2010


ASSETS

Investments 1 605,131,931 281,208,992

Deposits 2 - 41,000,000


Deferred Revenue Expenditure 4 11,841,527 30,985,410

TOTAL 0 645,616,885 373,475,029

LIABILITIES

Unit Capital 5 562,117,292 733,395,369



TOTAL 645,616,885 373,475,029



Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions ) (Note 2.5) 417,301,622 191,763,360 609,064,982 213,712,710 141,859,929 355,572,639







Trustee Director




HSBC MUTUAL FUND - HSBC SMALL CAP FUND0



INCOME AND GAINS

Dividends (Note 2.4) 9,838,075 9,569,687




TOTAL 223,685,594 18,834,266

EXPENSES AND LOSSES

Net Loss on Sale of Investments and Derivatives (Note 2.3 and 2.9) - 277,865,618


Transfer Agent Fees and Expenses 976,611 1,042,260



Audit Fees 100,000 50,000


Amortization of Deferred Revenue Expenditure (Note 2.8) 14,001,073 16,866,481


TOTAL 28,011,671 309,037,505


Net Change in Unrealised Depreciation in Value of Investments and Derivatives 0.31 131,627,362 (131,627,362)

Net Gains/(Losses) for the Year 327,301,285 (421,830,601) Net Change in Unrealised Appreciation in Value of Investments and Derivatives 90,137,533 (7,886,733)

Net Surplus/(Deficit) including Net change in Unrealised Appreciation in Value of Investments and Derivatives 417,438,818 (429,717,334)


Net Surplus/(Deficit) for the Year 0.31 0.31 327,301,285 (421,830,601)

April 01, 2009 to April 01, 2009 to April 01, 2009 to April 01, 2008 to April 01, 2008 toMarch 31, 2010 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Growth Option Dividend Option Total Dividend Option Total


Net Surplus/(Deficit) for the Year 202,407,266 124,894,019 327,301,285 (178,029,982) (421,830,601)

Balance transferred to Reserve Fund 202,407,266 124,894,019 327,301,285 (178,029,982) (421,830,601)





Trustee Director



HSBC MUTUAL FUND - HSBC SMALL CAP FUND


1

SCHEDULE 1 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Investments Market Value Cost Market Value Cost(Notes 2.2, 2.3, 7, 8, 9 and 12) Rupees Rupees Rupees Rupees


Equity Shares 605,131,931 514,994,398 281,208,992 412,836,354

TOTAL 605,131,931 514,994,398 281,208,992 412,836,354


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives) - 41,000,000

TOTAL - 41,000,000


Balances with Banks - in Current Account 95,546 14,347,770

Sales Contracts Awaiting Completion - Equity Shares 10,960,216 460,970

Reverse Repos 10,864,546 487,696

Collateralized Borrowing and Lending Obligation 6,546,660 509,576

Unit Subscriptions Receivable 5,000 -

Inter-Scheme Receivable for Others - 35,000

Dividend Receivable 169,035 -

Derivative Margin Deposit (Note 2.9) - 4,000,000

Interest Receivable on :

- Deposits - 369,572 - Reverse Repos 1,535 63 - Collateralized Borrowing and Lending Obligation 889 62


TOTAL 28,643,427 20,280,627

SCHEDULE 4 March 31, 2010 March 31, 2009Deferred Revenue Expenditure (Notes 2.8) Rupees RupeesIssue and Organisational Costs


Less: Amortized during the year 14,001,073 16,866,481

Less: Recovered during the year 5,142,810 3,052,985




2


Growth OptionIssued and Subscribed :Units of Rs.10 each fully paid up 488,496,468 48,849,646.818 488,496,468 48,849,646.818 Outstanding:At the beginning of the year 440,798,404 44,079,840.395 488,496,468 48,849,646.818 Issued during the year 124,664,105 12,466,410.552 535,509 53,550.878

565,462,509 56,546,250.947 489,031,977 48,903,197.696 Redeemed during the year 180,327,659 18,032,765.900 48,233,573 4,823,357.301 At the end of the year 385,134,850 38,513,485.047 440,798,404 44,079,840.395

Dividend OptionIssued and Subscribed :Units of Rs.10 each fully paid up 359,918,124 35,991,812.396 359,918,124 35,991,812.396 Outstanding:At the beginning of the year 292,596,965 29,259,696.530 359,918,124 35,991,812.396 Issued during the year 15,095,405 1,509,540.509 3,518,453 351,845.309


TOTAL 562,117,292 56,211,729.321 733,395,369 73,339,536.925

SCHEDULE 6 Dividend Option Total Dividend Option TotalReserves and Surplus March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009


Unit Premium Reserve (Note 2.6)At the beginning of the year 25,836,803 40,575,387 - - Added during the year 4,029,267 7,331,602 25,836,803 40,575,387 At the end of the year 29,866,070 47,906,989 25,836,803 40,575,387

Unrealised Appreciation ReserveAt the beginning of the year - - 3,345,744 7,886,733

Net change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) 36,594,668 90,137,533 (3,345,744) (7,886,733) At the end of the year 36,594,668 90,137,533 - -

Reserve FundAt the beginning of the year (176,573,839) (418,398,117) 1,456,143 3,432,484

124,894,019 327,301,285 (178,029,982) (421,830,601) At the end of the year (51,679,820) (91,096,832) (176,573,839) (418,398,117)

TOTAL 14,780,918 46,947,690 * * (150,737,036) (377,822,730) *


Growth Option (0) 32,166,772 (227,085,694) Dividend Option (1) 14,780,918 (150,737,036) Total 46,947,690 (377,822,730)


HSBC MUTUAL FUND - HSBC SMALL CAP FUNDSchedules forming part of the Balance Sheet as at March 31, 2010


3






Audit Fees 100,000 50,000

Selling and Distribution Expenses 845,509 348,672

Purchase Contracts Awaiting Completion -Equity Shares - 110,024


Inter Scheme Payables - For Switch-Out 3,407,072 1,241,370

Units Pending Allotment - 64,000

Temporary Book Overdraft 18,498 -



TOTAL 36,551,903 17,902,390

SCHEDULE 8 April 01, 2009 to April 01, 2008 toInterest and Discount(Note 2.4) March 31, 2010 March 31, 2009

Rupees Rupees

Deposits 630,634 3,038,394

Reverse Repos 213,180 5,526,176

Collateralized Borrowing and Lending Obligation 197,954 700,009

TOTAL 1,041,768 9,264,579



4



Amara Raja Batteries Limited 154,500 25,368,900Rico Auto Industries Limited 425,000 10,136,250

35,505,150Banks (7.16%)

The South Indian Bank Limited 99,000 17,636,850Dena Bank 180,000 14,094,000ING Vysya Bank Limited 42,000 11,604,600

43,335,450Cement (2.10%)

Orient Paper and Industries Limited 252,327 12,729,89712,729,897

Chemicals (1.95%)Deepak Nitrite Limited 86,278 11,820,086

11,820,086Construction (3.00%)

Sadbhav Engineering Limited 10,000 12,981,500B L Kashyap and Sons Limited 15,000 5,196,000

18,177,500Consumer Durables (7.59%)

Hitachi Home and Life Solutions India Limited 191,529 45,919,07845,919,078

Consumer Non Durables (10.29%)KRBL Limited 1,000,000 23,800,000Bata India Limited 75,000 17,107,500E I D Parry (India) Limited 35,000 11,959,500Lakshmi Energy and Foods Limited 75,000 9,371,250

62,238,250Ferrous Metals (4.25%)

Godawari Power and Ispat Limited 50,000 13,125,000Usha Martin Limited 80,000 8,128,000VBC Ferro Alloys Limited 14,952 4,437,006

25,690,006Fertilisers (6.38%)

Zuari Industries Limited 40,000 24,372,000Deepak Fertilisers and Petrochemicals Corporation Limited 125,000 14,262,500

38,634,500Hardware (2.42%)

Allied Digital Services Limited 69,356 14,661,85814,661,858

Industrial Capital Goods (16.44%)Indo Tech Transformers Limited 82,650 23,980,898TRF Limited 24,784 21,885,511Ingersoll Rand India Limited 60,000 20,730,000Sanghvi Movers Limited 81,000 16,710,300Kirloskar Pneumatic Company Limited 27,000 11,217,150Kirloskar Electric Company Limited 58,000 4,967,700


FAG Bearings India Limited 29,230 15,336,98115,336,981

Pesticides (4.40%)Rallis India Limited 13,683 17,023,020Excel Crop Care Limited 48,000 9,595,200

26,618,220Power (2.82%)

Jyoti Structures Limited 105,000 17,057,25017,057,250

Software (11.52%)Kale Consultants Limited 435,095 38,288,360Nucleus Software Exports Limited 125,000 17,237,500Spanco Limited 178,115 13,830,630Persistent Systems Limited # 1,009 312,790

69,669,280Telecom - Equipment & Accessories (3.29%)

HCL Infosystems Limited @ 80,000 10,880,000Astra Microwave Products Limited 135,000 9,038,250


Sical Logistics Limited 200,000 15,870,000Balmer Lawrie and Company Limited 22,000 13,172,500Spice Jet Limited 174,767 10,188,916Gateway Distriparks Limited 72,000 9,097,200








5

HSBC MUTUAL FUND-HSBC SMALL CAP FUND


SCHEDULE 9


1 Organisation

HSBC Small Cap Fund (the “Scheme”) is a three year closed-ended equity scheme of HSBC Mutual Fund (the

“Fund”) with automatic conversion into open ended equity scheme at the end of three years from the date of

allotment of units. The Scheme was launched on January 19, 2008. HSBC Mutual Fund has been sponsored by

HSBC Securities and Capital Markets (India) Private Limited. HSBC Asset Management (India) Private Limited

incorporated under the Companies Act, 1956 has been appointed as the asset management company. The duration

of the Scheme is perpetual. The Scheme closed for initial subscription on March 03, 2008. Subscription to the

units of the Plans will be permissible only during the New Fund Offer period. The Plans will not be open for

ongoing subscriptions/ switch-ins. However units can be redeemed/ switched out at the end of every month during

the last three business days of every month. The Scheme opened for redemption on March 31, 2008. The

investment objective of the Scheme is to provide long-term capital appreciation primarily from a diversified

portfolio of equity and equity related instruments of small cap companies. The Scheme has two Options - Growth







as applicable.













iii. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up




ii. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.

The net unrealised appreciation / depreciation in the value of investments and derivatives is determined separately

for each category of investments and derivatives. In respect of each category of investments and derivatives, the

net change in the unrealised appreciation if any, between two balance sheet dates / valuation dates is accounted

through the Revenue Account and thereafter the net unrealised appreciation is transferred from the Revenue

Account to the Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted

through the Revenue Account. Net unrealised appreciation is reduced from the distributable income at the time of income distribution.






unrealised gain or loss in the value of investments and expenses incurred by the Scheme are allocated to the









2.7 Load Charges








2.8 Deferred Revenue Expenditure Initial issue expenses comprise those costs directly associated with the issue of units of the Scheme and include


Initial issue expenses upto 6% of the amount collected from the investors during the initial offer period have been

charged to the Scheme and are being amortised over a period of three years from the date of allotment of units

Balance proportionate unamortized NFO expenses on redemptions within the close ended period are recovered in

accordance with the Regulations. Expenses over and above the amounts debited to the Scheme were borne by the

asset management company.

2.9 Derivatives

The Scheme enters into derivative transactions in equity/ index futures for the purpose of hedging and portfolio balancing. “Derivative margin deposit” representing the margin towards equity derivative contracts entered into by the Scheme is disclosed under “Other Current Assets”.

Futures

• Futures contracts are marked to market daily at the futures settlement price as determined by the exchange. The variation margin calculated as the difference between the trade price or the previous day’s settlement price, as the case may be, and the current day’s settlement price is recorded as a receivable or payable. • When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the Revenue Account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss. • As at the Balance Sheet date / date of determination, all open futures positions are valued at the futures

settlement price as determined by the exchange where it is traded. Non-traded futures contracts are valued at fair

value as per procedures determined by HSBC Asset Management (India) Private Limited and approved by the

Board of Trustees. The unrealised appreciation / depreciation on all open positions is considered for determining

the net asset value.

3 Investment Management and Advisory Fees The Scheme has paid or provided for investment management and advisory fees payable to HSBC Asset






4 Trusteeship Fees







5 Custodian Fees


safekeeping.

6 Income Taxes



7 Aggregate Appreciation and Depreciation in Value of Investments Aggregate appreciation and depreciation in value of investments are as follows:

March 31, 2010


(Rupees)

Equity Shares

- Appreciation 116,064,144 11,913,805

- Depreciation 25,926,611 143,541,167




(Rupees)

Percentage of

Fair Value to

Net Assets

Persistent Systems Limited 312,790 0.05

9 a) Aggregate Value of Purchases and Sale of Investments

The aggregate value of investments purchased and sold during the year is Rs. 816,768,026 and Rs. 917,819,629

respectively being 140.31% and 157.66% of the average daily net assets.



Limited under the procedures approved by the Board of Trustees as at March 31, 2010 is Rs. 312,790.




expenditure amortized) during the year is Rs. 355,312,956 and Rs. 14,010,598 respectively being 61.04% and













HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Tax Saver Equity Fund



HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008



Refer Annexure I

III The Hong Kong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset Management








Nature of Relation

Period Covered


% of Total




Fund


HSBC InvestDirect Securities (India) Limited Associate 2009-2010 - - 1,462 0.04






Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund

The Hongkong and Shanghai Banking Corporation Limited Associate 2008-2009 - - 298,873 2.39




relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund



Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel






Regulations, 1996 as amended HSBC Mutual Fund has made investments in companies, which hold/ have held units in excess of 5% of the net



13 Miscellaneous Income:

Miscellaneous income of Rs. 6,99,590 represents exit load collected in excess of 1% of redemption proceeds and

credited to the Scheme.

14 Prior Year’s Figures Previous year’s figures have been re-grouped / re-arranged where appropriate. Signatures to the Schedules 1 to 9 forming part of the Balance Sheet and the Revenue Account.





HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)




Manager


Sponsor



Brokerage/ Commission on Distribution of Units - - 289,862 - - 289,862 Previous Year - - 311,641 - - 311,641

Brokerage/ Commission on Purchase/Sale of Investments 25,679 - 17,000 - - 42,679 Previous Year 64,968 - - - - 64,968



Fixed Deposits matured - - 22,000,000 - - 22,000,000 Previous Year - - - - - -





Manager


Sponsor


Investment Management and Advisory Fees Payable - 693,532 - - - 693,532 Previous Year - 61,419 - - - 61,419


Other Receivables - - - - - - Previous Year - 69,918 - 35,000 - 104,918

(iii) Details of material transactions with respect to parties referred to in Note 11 (I) (iii) & (iv) for Associate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 288,400 311,641

Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 107,798 17,866

Brokerage/ Commission on Purchase/Sale of InvestmentsThe Hongkong and Shanghai Banking Corporation Limited 17,000 -



Fixed Deposits maturedThe Hongkong and Shanghai Banking Corporation Limited 22,000,000 -

Charges for Services Provided by Bank 42,037 2,001 The Hongkong and Shanghai Banking Corporation Limited


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Other ReceivablesHSBC Emerging Markets Fund - 35,000



Annexure I

0

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

financial 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 financial

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 financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial

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.


(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.

(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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 and amendments thereto as applicable.

(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.



March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009

Schedule Rupees Rupees Rupees RupeesASSETS

Investments 1 1,731,926,578 519,451,547 2,915,311,766 878,023,815

Deposits 2 35,204,000 18,204,000 47,704,000 25,204,000

Other Current Assets 3 469,608,887 41,362,640 662,598,102 143,341,328

TOTAL -0.71 2,236,739,465 579,018,187 -0.08 3,625,613,868 1,046,569,143

LIABILITIES

Unit Capital 4 1,707,293,273 465,877,158 2,613,404,694 854,507,482

Reserves and Surplus 5 485,912,507 106,709,964 969,682,172 179,309,381

Current Liabilities and Provisions 6 43,533,685 6,431,065 42,527,002 12,752,280

TOTAL 2,236,739,465 579,018,187 3,625,613,868 1,046,569,143

RECONCILIATION OF NET ASSET VALUE PER UNIT

Growth Option

Monthly Dividend Option

Quarterly Dividend Option Total

Growth Option

Monthly Dividend Option

Quarterly Dividend Option Total

Net Assets as per Balance Sheet (Total Assets less Current 765,863,105 1,002,714,204 424,628,471 2,193,205,780 1,226,994,609 1,423,133,671 932,958,586 3,583,086,866

Liabilities and Provisions ) (Note 2.6) (288,515,627) (119,982,287) (164,089,208) (572,587,122) (409,920,583) (239,534,317) (384,361,963) (1,033,816,863)

Number of Units in Issue 46,865,391.998 87,365,066.104 36,498,869.190 66,682,194.233 117,679,029.512 76,979,245.665

(20,343,046.918) (11,179,392.387) (15,065,276.417) (27,263,343.045) (22,335,867.542) (35,851,537.631)

Net Asset Value per Unit 16.3418 11.4773 11.6340 18.4006 12.0933 12.1196

(14.1825) (10.7325) (10.8919) (15.0356) (10.7242) (10.7209)

Notes to the Financial Statements. 8 0


Firm Registration Number: 301112E HSBC Mutual Fund Private Limited





Trustee Director


HSBC MUTUAL FUND - HSBC MIP


March 31, 2010 March 31, 2010

Rupees(March 31, 2009)

REGULAR PLAN



REGULAR PLAN SAVINGS PLAN

(March 31, 2009)Rupees

SAVINGS PLAN

0

April 01, 2009 to April 01, 2008 to April 01, 2009 to April 01, 2008 to


Schedule Rupees Rupees Rupees Rupees

INCOME AND GAINS

Dividends (Note 2.4) 1,206,305 696,108 3,466,618 2,382,733

Interest and Discount 7 55,678,489 56,957,092 81,629,907 104,230,936

Net Profit on Sale of Investments and Derivatives (Note 2.3 and 2.5) 74,565,352 - 196,325,524 -

Miscellaneous Income (Note 18) - - 290,141 -

TOTAL 131,450,146 57,653,200 281,712,190 106,613,669

EXPENSES AND LOSSES

Net Loss on Sale of Investments and Derivatives (Net of Net Loss on Inter- Scheme Sale ofInvestments Rs. Nil (Previous Year Loss Rs. 753,579) for Regular Plan and Rs. Nil (Previous YearLoss Rs. 1,103,342) for Savings Plan) (Note 2.3 and 2.5) - 33,855,596 - 115,863,880

Investment Management and Advisory Fees (Note 3) 10,652,261 6,459,806 16,985,048 14,354,901

Trusteeship Fees and Expenses (Note 4) 19,411 2,762 27,486 5,452

Transfer Agent Fees and Expenses 1,030,075 522,534 1,636,319 1,026,616

Custodian Fees and Expenses (Note 5) 189,039 151,370 370,429 329,280

Audit Fees 75,000 50,000 75,000 50,000

Selling and Distribution Expenses 15,232,613 6,362,968 23,282,185 10,888,250

Other Operating Expenses 203,640 286,734 207,756 381,695

TOTAL 27,402,039 47,691,770 42,584,223 142,900,074

Net Realised Gains/(Losses) for the Year 104,048,107 9,961,430 239,127,967 (36,286,405)

Net Change in Unrealised Depreciation in Value of Investments and Derivatives 5,260,327 (3,490,127) 12,493,122 (4,667,140)

Net Gains/(Losses) for the Year 109,308,434 6,471,303 251,621,089 (40,953,545)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives 20,876,507 9,748,431 58,339,014 25,594,689

Net Surplus/(Deficit) including Net Change in Unrealised Appreciation in Value of Investments and Derivatives 130,184,941 16,219,734 309,960,103 (15,358,856)

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve (20,876,507) (9,748,431) (58,339,014) (25,594,689)

Net Surplus for the Year 0.29 109,308,434 6,471,303 3.36 251,621,089 (40,953,545)

REGULAR PLAN REGULAR PLAN SAVING PLAN SAVINGS PLANApril 01, 2009 to March

31, 2010 April 01, 2009 to March

31, 2010 April 01, 2009 to March

31, 2010 April 01, 2009 to March 31,

2010 (April 01, 2008 to

March 31, 2009) (April 01, 2008 to March

31, 2009) (April 01, 2008 to

March 31, 2009) (April 01, 2008 to March

31, 2009)


Net Surplus for the Year 48,886,325 36,469,002 23,953,107 109,308,434 87,738,735 82,356,997 81,525,355 251,621,089

(3,127,174) (1,777,464) (1,566,664) (6,471,303) (-17,257,537) (-10,476,486) (-13,219,522) (-40,953,545)

Transfer from Income Equalisation Reserve (Note 2.8) 135,435,744 82,749,951 24,549,756 242,735,451 267,485,410 99,411,516 43,562,053 410,458,979

(20,914,006) (-4,841,218) (673,976) (16,746,764) (-46,377,469) (752,354) (2,539,411) (-43,085,704)

Transfer from Reserve Fund - - 1,103,921 1,103,921 - - - -

- (14,716,563) (8,231,795) (22,948,358) - (28,149,826) (27,892,026) (56,041,852)

Dividend Distribution - (36,495,323) (19,311,524) (55,806,847) - (56,803,963) (46,918,801) (103,722,764)

- (-5,487,709) (-5,315,674) (-10,803,383) - (-12,965,592) (-17,152,137) (-30,117,729)

Dividend Distribution Tax thereon - (5,765,296) (2,851,626) (8,616,922) - (8,597,693) (6,892,362) (15,490,055)

- (-917,581) (-780,570) (-1,698,150) - (-2,002,561) (-2,495,127) (-4,497,688)

Balance Transferred to Reserve Fund 184,322,069 76,958,334 27,443,634 288,724,037 355,224,145 116,366,857 71,276,244 542,867,249

(24,041,180) (5,247,520) (4,376,191) (33,664,892) (-63,635,005) (3,457,541) (-2,435,350) (-62,612,814)


0

The schedules referred to herein form an integral part of the Revenue Account


For PRICE WATERHOUSE For Board of Trustees of For HSBC Asset Management (India)Firm Registration Number: 301112E HSBC Mutual Fund Private LimitedChartered Accountants


Trustee Director



SAVINGS PLAN REGULAR PLAN


1

SCHEDULE 1Investments

(Notes 2.2, 2.3, 7, 8, 9, 10, 11 and 15) Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees


Equity Shares 277,066,585 250,134,413 16,602,288 18,287,213 736,549,690 660,577,416 54,257,592 60,868,052

Non Convertible Debentures and Bonds Listed / Awaiting Listing 360,064,212 357,190,295 290,516,346 280,983,783 547,857,293 543,745,454 449,441,854 425,244,283

Privately Placed Non Convertible Debentures / Bonds 30,358,470 30,358,470 - - 74,621,157 74,045,108 49,781,695 50,268,393

Asset Backed Securities 66,056,304 64,317,240 167,095,913 165,556,979 91,156,007 88,551,968 207,664,674 206,209,743

Commercial Paper / Certificate of Deposit 969,709,007 969,709,007 - - 1,452,839,619 1,452,839,619 - -

Government of India Securities 28,672,000 28,639,884 45,237,000 48,812,402 12,288,000 12,274,313 116,878,000 122,272,921

TOTAL 1,731,926,578 1,700,349,309 519,451,547 513,640,377 2,915,311,766 2,832,033,878 878,023,815 864,863,392

SCHEDULE 2

Deposits March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives (Rs.10,000,000 (2009 : Rs. 10,000,000) for Regular Plan and Rs. 10,000,000 (2009 : Rs. 10,000,000) for Savings Plan) 10,000,000 18,000,000 10,000,000 25,000,000

Margin Deposit with the Clearing Corporation of India Limited towards Collateralized Borrowingand Lending Obligation 204,000 204,000 204,000 204,000

Margin Deposit with the Clearing Corporation of India Limited towards Reverse Repos andGovernement Securities 25,000,000 - 37,500,000 -

Total 35,204,000 18,204,000 47,704,000 25,204,000

SCHEDULE 3

Other Current Assets March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


Balances with Banks

- in Current Account 8,308,498 947,060 32,847,995 605,135

- in Dividend Account 5,935 3,309 312,625 346,603

Reverse Repos 256,555,003 10,716,550 347,867,150 52,514,442

Collateralised Borrowing and Lending Obligation 154,591,449 11,212,270 209,613,231 54,942,622

Sales Contracts Awaiting Completion - Debentures / Bonds 24,923,647 735,841 24,923,647 2,023,563

Unit Subscription Receivable 12,489,000 555,500 27,055,001 783,000

Receivable on Outstanding Future Contracts - 21,720 - 62,445

Inter Scheme Receivable for :

- For 'Switch- In' 5,264,321 106,381 2,435,825 -

- For 'Others' - - - 10,000

Derivative Margin Deposit (Note 2.5) 2,250,000 2,250,000 10,250,000 10,250,000


- Debentures and Bonds 3,938,247 13,885,967 6,232,578 20,043,107

- Government of India Securities 851,822 453,699 365,067 1,087,892

- Deposits 162,140 281,345 237,592 365,921

- Reverse Repos 36,249 1,379 49,151 6,758

- Collateralised Borrowing and Lending Obligation 20,990 1,374 28,460 6,731

Investment Towards Unclaimed Redemption in 3,558.520 Units (2009: 3,558.520 Units) (Market Value Rs. 52,984 (2009: Rs. 51,863)) of HSBC Cash Fund -Growth Option for Regular Plan (Note 16) 44,427 44,427 - -

Investment Towards Unclaimed Dividend in 12,650.793 Units (2009 : 10,912.725 Units) of HSBC Cash Fund - Growth Option (Market Value Rs. 188,360 (2009 : Rs. 159,046)) for Regular Plan and 25,806.863 Units (2009 : 20,861.160 Units) of HSBC Cash Fund - Growth Option (Market Value Rs. 384,244 (2009 :Rs. 304,039)) for Savings Plan (Note 17) 156,550 134,858 350,615 277,625

Receivable from Investment Manager - 350 14,009 328

Miscellaneous Receivables 10,609 10,610 15,156 15,156

TOTAL 469,608,887 41,362,640 662,598,102 143,341,328



SAVINGS PLAN

SAVINGS PLAN

March 31, 2009 March 31, 2010 March 31, 2010

REGULAR PLAN

REGULAR PLAN

SAVINGS PLAN

March 31, 2009REGULAR PLAN

2

SCHEDULE 4

Unit Capital March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Rupees Units Rupees Units Rupees Units Rupees Units

Growth OptionIssued and SubscribedUnits of Rs. 10 each fully paid up 903,797,314 90,379,731.393 903,797,314 90,379,731.393 783,535,021 78,353,502.035 783,535,021 78,353,502.035 Outstanding:At the beginning of the year 203,430,469 20,343,046.918 149,870,745 14,987,074.518 272,633,431 27,263,343.045 382,875,425 38,287,542.486 Issued during the year 365,091,083 36,509,108.348 112,509,342 11,250,934.216 557,027,163 55,702,716.349 177,355,745 17,735,574.480

568,521,552 56,852,155.266 262,380,087 26,238,008.734 829,660,594 82,966,059.394 560,231,170 56,023,116.966 Redeemed during the year 99,867,633 9,986,763.268 58,949,618 5,894,961.816 162,838,652 16,283,865.161 287,597,739 28,759,773.921 At the end of the year 468,653,919 46,865,391.998 203,430,469 20,343,046.918 666,821,942 66,682,194.233 272,633,431 27,263,343.045

Monthly Dividend Option Issued and SubscribedUnits of Rs. 10 each fully paid up 433,016,292 43,301,629.170 433,016,292 43,301,629.170 452,008,863 45,200,886.283 452,008,863 45,200,886.283 Outstanding:At the beginning of the year 111,793,925 11,179,392.387 244,707,798 24,470,779.653 223,358,675 22,335,867.542 352,899,808 35,289,980.846 Issued during the year 929,187,860 92,918,786.004 109,111,021 10,911,102.092 1,133,096,175 113,309,617.474 97,057,037 9,705,703.652

1,040,981,785 104,098,178.391 353,818,819 35,381,881.745 1,356,454,850 135,645,485.016 449,956,845 44,995,684.498 Redeemed during the year 167,331,123 16,733,112.287 242,024,894 24,202,489.358 179,664,555 17,966,455.504 226,598,170 22,659,816.956 At the end of the year 873,650,662 87,365,066.104 111,793,925 11,179,392.387 1,176,790,295 117,679,029.512 223,358,675 22,335,867.542

Quarterly Dividend Option Issued and SubscribedUnits of Rs. 10 each fully paid up 1,145,953,011 114,595,301.047 1,145,953,011 114,595,301.047 882,420,472 88,242,047.191 882,420,472 88,242,047.191 Outstanding:At the beginning of the year 150,652,764 15,065,276.417 150,120,776 15,012,077.635 358,515,376 35,851,537.631 360,719,983 36,071,998.339 Issued during the year 272,334,499 27,233,449.862 61,366,510 6,136,651.026 505,002,335 50,500,233.466 144,306,842 14,430,684.202


TOTAL 1,707,293,273 170,729,327.292 465,877,158 46,587,715.722 2,613,404,694 261,340,469.410 854,507,482 85,450,748.218




3

SCHEDULE 5Reserves and Surplus


At the beginning of the year (2,167,593) 19,325,365

(2,113,370) (29,515,941)


(-4,280,963) (-10,190,576)At the end of the year 68,538,327 208,491,893

(-2,167,593) (19,325,365)



(16,746,764) (-43,085,704)


(-16,746,764) (43,085,704) At the end of the year - -

(-) (-)



(1,323,845) (57,814)Net change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) 20,876,507 58,339,014

(9,748,431) (25,594,689)

At the end of the year 31,948,783 83,991,517 (11,072,276) (25,652,503)

Reserve Fund


(87,088,746) (252,986,179)

Transfer to Revenue Account (1,103,921) -

(-22,948,357) (-56,041,852)

Balance Transferred from Revenue Account 288,724,037 542,867,249

(33,664,892) (-62,612,814)


(97,805,281) (134,331,513)

TOTAL 485,912,507 * 969,682,172 * (106,709,964) (179,309,381)

* The share of the Options of the Reserves and Surplus is as follows : March 31, 2010 March 31, 2010 ( March 31, 2009) ( March 31, 2009)

Rupees RupeesGrowth Option 297,209,186 560,172,667

(85,085,158) (137,287,152)Monthly Dividend Option 129,063,542 246,343,376

(8,188,362) (16,175,642)Quarterly Dividend Option 59,639,779 163,166,129

(13,436,444) (25,846,587)Total 485,912,507 969,682,172

(106,709,964) (179,309,381)



SAVINGS PLANREGULAR PLAN


Rupees( March 31, 2009)

Rupees( March 31, 2009)

March 31, 2010 March 31, 2010

4

SCHEDULE 6Current Liabilities and Provisions March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009

Rupees Rupees Rupees RupeesCurrent Liabilities

Investment Management and Advisory Fees 5,617,048 2,181,128 9,159,615 5,567,862

Transfer Agent Fees and Expenses 148,631 38,934 235,969 69,119

Custodian Fees and Expenses 51,647 13,572 92,452 23,001

Audit Fees 75,000 50,000 75,000 50,000

Selling and Distribution Expenses 6,665,820 309,185 9,427,663 563,794

Purchase Contracts Awaiting Completion - Debentures / Bonds 30,400,207 1,478,945 20,266,805 4,331,983

Unit Redemption Payable 156,210 - 1,806,099 47,610

Inter Scheme Payable for Switch - Out - - 697,321 9,290

Load Payable (Note 2.9) - 1,623,111 - 1,626,583

Payable on Outstanding Future Contracts 83,922 - 214,807 -

Unclaimed Redemption (Note 16) 58,400 44,427 10,000 10,000

Unclaimed Dividend (Note 17) 157,299 138,003 352,321 313,190

Temporary Book Overdraft - 486,765 11,256 10,001

Sundry Payables 119,501 66,995 177,694 129,847

TOTAL 43,533,685 6,431,065 42,527,002 12,752,280

1

SCHEDULE 7Interest and Discount (Note 2.4) April 01, 2009 to April 01, 2008 to April 01, 2009 to April 01, 2008 to

March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009Rupees Rupees Rupees Rupees

Debentures / Bonds 13,933,982 33,851,404 27,239,893 66,330,027

Asset Backed Securities 9,886,228 16,092,627 10,619,549 20,774,897

Treasury Bills 256,773 - 256,773 -

Commercial Paper / Certificate of Deposits 11,774,260 195,997 15,505,396 3,399,428

Government of India Securities 7,895,140 2,427,202 11,178,751 7,468,240

Reverse Repos 5,433,639 2,665,146 7,601,757 3,373,402

Collateralised Borrowing and Lending Obligation 5,665,904 257,841 8,211,224 921,623

Deposits 832,563 1,466,875 1,016,564 1,963,319

TOTAL 55,678,489 56,957,092 81,629,907 104,230,936





5

Description Quantity Market/ Fair ValueRupees

HSBC MIP REGULAR PLANEquity Shares (16.00%)Auto (2.37%)

Tata Motors Limited 6,000 4,546,200Eicher Motors Limited 3,090 2,012,672


Amara Raja Batteries Limited 160,239 26,311,244Sundram Fastners Limited 63,121 3,257,044Exide Industries Limited 19,250 2,371,600

31,939,888Cement (13.27%)

Jaiprakash Associates Limited 88,550 13,242,653Mangalam Cement Limited 70,000 12,204,500Orient Paper and Industries Limited 125,719 6,342,524Shree Cement Limited 1,250 2,952,313Century Textiles and Industries Limited 4,000 2,035,600

36,777,590Construction (10.40%)

IVR Prime Urban Developers Limited 71,524 12,423,719B L Kashyap and Sons Limited 27,500 9,526,000Housing Development and Infrastructure Limited 24,000 6,872,400


Blue Star Limited 31,871 11,615,38611,615,386

Engineering (3.81%)UB Engineering Limited 79,774 10,550,112

10,550,112Finance (1.90%)

India Infoline Limited 46,000 5,250,9005,250,900

Industrial Capital Goods (11.18%)Crompton Greaves Limited 92,268 24,077,335BGR Energy Systems Limited 7,997 4,295,589Sanghvi Movers Limited 12,666 2,612,996




2,147,904Minerals/Mining (3.90%)

Hindustan Dorr Oliver Limited 103,568 10,791,78610,791,786

Pharmaceuticals (8.19%)FDC Limited 220,000 17,721,000Cadila Healthcare Limited 6,000 4,971,600

22,692,600Power (9.75%)

Tata Power Company Limited 7,300 10,027,645CESC Limited 22,600 8,649,020Jyoti Structures Limited 51,534 8,371,698

27,048,363Software (8.79%)

Mphasis Limited 36,000 22,336,200Persistent Systems Limited # 6,511 2,018,410


Jet Airways (India) Limited 7,425 3,565,4853,565,485

Total (Cost Rs. 250,134,413) 277,066,585

Non-Convertible Debentures / Bonds Listed / Awaiting listing (20.79%)Power (5.59%)

8.90% Power Grid Corporation of India Limited 2020 $ 16 20,135,39220,135,392

Finance & Investments (94.41%)0.00% Housing Development Finance Corporation Limited 2012 $ 150 151,910,7277.35% Housing Development Finance Corporation Limited 2012 50 50,239,5508.80% Rural Electrification Corporation Limited 2019 $ 40 39,915,5528.65% Indian Railway Finance Corporation Limited 2025 25 24,864,4009.80% Power Finance Corporation Limited 2012 $ 21 22,064,6420.00% Kotak Mahindra Prime Limited 2010 $ 21 20,737,8858.90% Power Finance Corporation Limited 2015 $ 20 20,290,2428.70% Power Finance Corporation Limited 2020 $ 10 9,905,822

339,928,820Total (Cost Rs. 357,190,295) 360,064,212

Privately Placed / Unlisted Non-Convertible Debentures / Bonds (1.75%)Finance & Investments (100%)

8.95% Power Finance Corporation Limited 2015 * 30 30,358,47030,358,470

Total (Cost Rs. 30,358,470) 30,358,470

Commercial Papers/Certificate of Deposits (55.99%)Certificate of Deposits (100%)

Union Bank of India 2010 $ @ 1,500 148,317,592Bank of Baroda 2011 $ 1,500 142,127,190Corporation Bank 2010 $ @ 1,000 99,506,958Oriental Bank Of Commerce 2010 $ @ 1,000 99,463,828Oriental Bank Of Commerce 2010 $ @ 1,000 98,851,069Syndicate Bank 2010 $ 1,000 98,786,605State Bank of Travancore 2011 $ 1,000 94,336,479State Bank of Bikaner and Jaipur 2011 $ 1,000 94,263,934Union Bank of India 2011 $ @ 1,000 94,055,352

969,709,007Total (Cost Rs. 969,709,007) 969,709,007

Government of India Securities (1.66%)7.40% GOI Bonds 2012 280,000 28,672,000

28,672,000Total (Cost Rs. 28,639,884) 28,672,000

Asset Backed Securities (3.81%)BHPC Auto Securitisation Trust November 2007 I (Tata Motors Services) PTC 2011 * 6 60,770,671Corporate Loan Securitisation Trust Series 15 Trust 2008 - A1 (L&T Finance ) PTC 2010 * 4 5,285,633

66,056,304Total (Cost Rs. 64,317,240) 66,056,304TOTAL INVESTMENTS (Cost Rs. 1,700,349,309) 1,731,926,578


India Infoline Limited - April 2010 (33.42%) 70,000 8,046,500Sterlite Industries (India) Limited - April 2010 (66.58%) 18,834 16,028,676

Total 24,075,176

Deposits (0.46%)^4.4% HSBC Bank 91 10,000,000Total Deposits 10,000,000




6




6

HSBC MIP SAVINGS PLANEquity Shares (25.26%)Auto (2.52%)

Tata Motors Limited 16,737 12,681,625Eicher Motors Limited 9,041 5,888,855


Amara Raja Batteries Limited 392,738 64,487,580Sundram Fastners Limited 220,218 11,363,249Exide Industries Limited 54,427 6,705,406

82,556,235Cement (16.57%)

Jaiprakash Associates Limited 267,300 39,974,715Shree Cement Limited 13,000 30,704,050Mangalam Cement Limited 148,600 25,908,410Orient Paper and Industries Limited 353,487 17,833,419Century Textiles and Industries Limited 15,000 7,633,500

122,054,094Construction (9.36%)

IVR Prime Urban Developers Limited 188,181 32,687,040B L Kashyap and Sons Limited 55,000 19,052,000Housing Development and Infrastructure Limited 60,000 17,181,000


Blue Star Limited 79,488 28,969,40228,969,402

Engineering (3.85%)UB Engineering Limited 214,350 28,347,788

28,347,788Finance (1.61%)

India Infoline Limited 104,000 11,871,60011,871,600

Industrial Capital Goods (11.01%)Crompton Greaves Limited 249,058 64,991,685BGR Energy Systems Limited 15,394 8,268,887Sanghvi Movers Limited 37,994 7,838,162




5,373,857Minerals/Mining (3.27%)

Hindustan Dorr Oliver Limited 231,138 24,084,58024,084,580

Pharmaceuticals (9.84%)FDC Limited 540,000 43,497,000Cadila Healthcare Limited 35,000 29,001,000

72,498,000Power (10.27%)

CESC Limited 75,100 28,740,770Tata Power Company Limited 19,900 27,335,635Jyoti Structures Limited 120,502 19,575,550

75,651,955Software (8.52%)

Mphasis Limited 96,000 59,563,200Persistent Systems Limited # 10,341 3,205,710


Jet Airways (India) Limited 19,575 9,399,9159,399,915

Total (Cost Rs. 660,577,416) 736,549,690

Non-Convertible Debentures / Bonds Listed / Awaiting listing (18.79%)Power (5.51%)


Finance & Investments (94.49%)0.00% Housing Development Finance Corporation Limited 2012 $ 250 253,184,5468.80% Rural Electrification Corporation Limited 2019 $ 60 59,873,3297.35% Housing Development Finance Corporation Limited 2012 50 50,239,5508.70% Power Finance Corporation Limited 2020 $ 40 39,623,2899.80% Power Finance Corporation Limited 2012 $ 29 30,470,2208.90% Power Finance Corporation Limited 2015 $ 30 30,435,3638.65% Indian Railway Finance Corporation Limited 2025 25 24,864,4007.75% Rural Electrification Corporation Limited 2012 $ 20 20,075,8420.00% Kotak Mahindra Prime Limited 2010 $ 9 8,887,665

517,654,204Total (Cost Rs. 543,745,454) 547,857,293

Privately Placed / Unlisted Non-Convertible Debentures / Bonds (2.57%)Finance & Investments (27.12%)

8.95% Power Finance Corporation Limited 2015 * 20 20,238,98020,238,980

Finance & Term Lending (72.88%)0.00% GE Capital Services India Limited 2010 * 55 54,382,177

54,382,177Total (Cost Rs. 74,045,108) 74,621,157


Bank of Baroda 2011 $ 2,500 236,847,571Union Bank of India 2010 $ @ 2,000 197,759,203Oriental Bank Of Commerce 2010 $ @ 2,000 197,704,901Syndicate Bank 2010 $ 2,000 197,573,210State Bank of Bikaner and Jaipur 2011 $ 1,500 141,395,900HDFC Bank Limited 2011 $ 1,500 141,390,428Canara Bank 2010 $ 1,000 99,519,233Oriental Bank Of Commerce 2010 $ @ 1,000 99,463,828Union Bank of India 2011 $ @ 1,000 94,055,352Canara Bank 2011 $ 500 47,129,993

1,452,839,619Total (Cost Rs. 1,452,839,619) 1,452,839,619

Government of India Securities (0.42%)7.40% GOI Bonds 2012 120,000 12,288,000

12,288,000Total (Cost Rs. 12,274,313) 12,288,000

Asset Backed Securities (3.13%)BHPC Auto Securitisation Trust November 2007 I (Tata Motors Services) PTC 2011 * 9 91,156,007



India Infoline Limited - April 2010 (36.19%) 160,000 18,392,000Sterlite Industries (India) Limited - April 2010 (63.81%) 38,106 32,430,111

Total 50,822,111

Deposits (3.14 %)^4.4% HSBC Bank 91 10,000,000Total Deposits 10,000,000





* Fair value of privately placed debt securities as determined in good faith by HSBC Asset Management (India) Private Limited under procedures approvedby the Board of Trustees.

$ Fair value of non traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board ofTrustees in accordance with the guidelines for valuation of securities for Mutual funds dated September 18, 2000 and amendments thereto, as applicable,issued by the Securities and Exchange Board of India.



SCHEDULE 8


1 Organisation

HSBC MIP (the “Scheme”) is an open-ended income scheme of HSBC Mutual Fund (the “Fund”) and was launched on

January 22, 2004. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital Markets (India) Private

Limited. HSBC Asset Management (India) Private Limited incorporated under the Companies Act, 1956, has been

appointed as the asset management company. The duration of the Scheme is perpetual. The Scheme closed for initial

subscription on February 13, 2004 and reopened for issue and redemption of units on March 5, 2004. The primary

investment objective of the Scheme is to seek generation of reasonable returns through investment in debt and money

market instruments. The secondary objective is to invest in equity and equity related instruments to seek capital

appreciation. The Scheme has two Plans - Regular Plan and Savings Plan, each with a separate portfolio and each

offering three options - Growth Option, Monthly Dividend Option and Quarterly Dividend Option.

The Scheme will not declare dividend under the Growth Options of both the Plans in normal circumstances. The

income earned on such units will remain invested within the Scheme and will be reflected in the net asset value of these

Plans.




accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange

Board of India (SEBI) (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments there to, as applicable.


Investments are stated at market/fair value at the Balance Sheet date/date of determination. In valuing the Scheme’s

investments:

i. Equity securities listed on a recognised stock exchange are valued at the last quoted closing price on the National

Stock Exchange of India Limited (NSE). If on a particular valuation date, a security is not traded on NSE, the

value at which it is traded on Bombay Stock Exchange Limited (BSE) is used. If no sale is reported at that time,

the last quoted closing price of the principal stock exchange on which the security is traded is used when it is not

more than thirty days prior to the valuation date.

ii. Non traded and thinly traded equity securities, including those not traded within thirty days prior to valuation date

are valued at fair value 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 dated September 18, 2000 and amendments thereto, as applicable, issued by the

Securities and Exchange Board of India (SEBI).

iii. Equity shares awaiting listing are valued at fair value as determined in good faith by HSBC Asset Management

(India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund.



iv. Debt securities listed on a recognised stock exchange are valued at the last quoted closing price on the National

Stock Exchange of India Limited (NSE). If no sale is reported at that time , such security is valued at fair value as

determined in good faith by HSBC Asset Management (India) Private Limited under procedures approved by the

Board of Trustees of HSBC Mutual Fund.

v. Non traded and thinly traded debt securities are valued at fair value 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 dated September 18, 2000 and amendments

thereto, as applicable issued by SEBI.

vi. Privately placed debt securities are valued at fair value as determined in good faith by HSBC Asset Management


vii. Traded money market securities are valued at the yield at which they are traded on the valuation date. If no sale is

reported at that time, such security is valued at the last traded price plus accretion of the difference between the

face value and the last traded price. Non traded money market instruments are valued at cost plus accrued interest.

viii. Government securities are valued at prices obtained from The Credit Rating Information Services of India Limited

in accordance with the guidelines for valuation of securities for mutual funds dated September 18, 2000 and

amendments thereto, as applicable, issued by SEBI.

ix. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management (India)

Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund.

x. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest upto the

date of resale.

xi. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.

The net unrealised appreciation / depreciation in the value of investments and derivatives is determined separately

for each category of investments and derivatives. In respect of each category of investments and derivatives, the

net change in the unrealised appreciation if any, between two balance sheet dates / valuation dates is accounted

through the Revenue Account and thereafter the net unrealised appreciation is transferred from the Revenue

Account to the Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted

through the Revenue Account.



Investment securities transactions are accounted for on a trade date basis. The Scheme uses the average cost method

for determining the realized gain or loss on sale of investments.




Interest income is recorded on an accrual basis. Dividend income is recorded on the ex date. 2.5 Derivatives

The Scheme enters into derivative transactions in equity/ index futures for the purpose of hedging and portfolio

balancing.


Futures

• Futures contracts are marked to market daily at the futures settlement price as determined by the exchange. The variation margin calculated as the difference between the trade price or the previous day’s settlement price, as the case may be, and the current day’s settlement price is recorded as a receivable or payable. • When a contract is closed (squared off)/ settled (on expiry), the difference between the final settlement / square-off price and the contract price is recognised in the Revenue Account. If more than one futures contracts in respect of the same stock / index and expiry date, to which the squared off / settled contract pertains, is outstanding at the time of square off / settlement of the contract, the weighted average method is followed for determining the gain or loss. • As at the Balance Sheet date / date of determination, all open futures positions are valued at the futures settlement price as determined by the exchange where it is traded. The unrealised appreciation / depreciation on all open positions is considered for determining the net asset value.



Dividend (Monthly and Quarterly) Options for the Regular and Savings Plans.

For reporting the net asset value for the Options, daily income earned, including realized and unrealized gain or loss in

the value of investments and expenses incurred by the Scheme are allocated to the Options in proportion to the value of

the net assets.


Upon issue and redemption of units, the net premium or discount to the face value of units is adjusted against the unit

premium reserve of the Scheme, after an appropriate portion of the issue proceeds and redemption payout is credited

or debited respectively to the income equalization reserve.

Upto March 15, 2010, the shortfall representing difference between dividend distributions and distributable surplus

available for distribution on the record dates, if any, was utilized from unit premium reserve, except to the extent it

was represented by unrealised net appreciation in the value of investments.


The net distributable income relating to units issued/repurchased is transferred to/from income equalization reserve for

determining the net surplus/deficit, transferred from/to unit premium reserve.



1.0 Load Charges Load collected up to July 31, 2009 is retained in the Scheme under a separate account and is used to meet marketing

and selling expenses. Pursuant to SEBI circular SEBI/IMD/CIR No. 4/168230/09 dated June 30, 2009, effective

August 1, 2009, of the exit load collected in the Schemes a maximum of 1% of redemption proceeds is maintained in a

separate account and utilized to meet marketing and selling expenses. Any load collected in excess of 1% is credited to

the Schemes.


The Scheme has paid or provided for investment management and advisory fees payable to HSBC Asset Management

(India) Private Limited for managing the Scheme at an average annual rate of 0.84% and 0.84% of the average daily

net asset values of the Regular Plan and Savings Plan respectively recorded by the Scheme. All costs, charges and

expenses incurred by HSBC Asset Management (India) Private Limited in the administration and execution of the

activities of the Scheme, except costs allowed to be charged to the Scheme under the Securities and Exchange Board of

India (Mutual Funds) Regulations, 1996 and amendments thereto as applicable, are on their own account for which

they receive investment management and advisory fees.

3 Trusteeship Fees

In accordance with the Deed of Trust dated February 7, 2002 between HSBC Securities and Capital Markets (India)

Private Limited (“The Settlor”) and the Board of Trustees of HSBC Mutual Fund, the Fund has paid or provided for a

fee not exceeding Rs.20,000 for each meeting of the Board of Trustees attended by such Trustee not affiliated with the

Settlor.

4 Custodian Fees


safekeeping.

5 Income Taxes

No provision for income tax is made as the Scheme qualifies as a recognized mutual fund under Section 10 (23D) of

the Income Tax Act, 1961.

For taxes deducted at source from investment income, which are recoverable, a receivable is recorded in the books of

account.



7 Aggregate Appreciation / (Depreciation) In Value of Investments and Derivatives

Aggregate appreciation / (depreciation) in value of investments and derivatives is as follows:

Regular Plan Savings Plan

March 31, 2010

(Rupees)

March 31, 2009

(Rupees)

March 31, 2010

(Rupees)

March 31, 2009

(Rupees)

Equity Shares

-Appreciation 35,159,577 930,850 243,422,390 2,465,476

- Depreciation 8,227,405 2,615,775 167,450,117 9,075,936


- Appreciation 3,093,155 12,106,129 4,437,820 24,617,261

- Depreciation 219,238 2,573,566 325,981 419,690

Privately Placed Non Convertible Debentures / Bonds

- Appreciation - - 576,049 -

- Depreciation - - - 486,698

Asset Backed Securities

- Appreciation 1,739,064 1,988,647 2,604,039 2,586,070

- Depreciation - 449,713 - 1,131,139

Government of India Securities

- Appreciation 32,116 - 13,687 -

- Depreciation - 3,575,402 - 5,394,921

Equity Futures

- Appreciation 485,963 779 983,230 -

- Depreciation 114,450 - 269,600 1,043

8 Registered Securities

In accordance with Regulation 44(1) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,

securities purchased should be held in the name of the Scheme. As at March 31, 2010 Government securities

aggregating to Rs. 28,672,000 and Rs. 12,288,000 (market value) of the Regular Plan and Savings Plan respectively

are held in the name of HSBC Mutual Fund.



9 Aggregate Fair Value of Non-Traded/ Privately Placed Investments

Aggregate fair value of non traded (including private placement)/thinly traded investments as determined by HSBC

Asset Management (India) Private Limited under the procedures approved by the Board of Trustees as at March 31,

2010 is Rs. 1,353,102,453 for the Regular Plan and Rs. 2,094,575,835 for the Saving Plan.


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

Plan Aggregate Purchases Aggregate Sales

Rupees

Percentage of Average Daily Net Assets

Rupees Percentage of Average

Daily 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%



Scheme Name Company Name Fair Value

(Rupees) Percentage

of Fair

Value to

Net Assets

Regular Plan Persistent Systems Limited 2,018,410 0.09 Savings Plan Persistent Systems Limited 3,205,710 0.09


The total income (including net profit on sale of investments and derivatives and net change in unrealized depreciation

in value of investments and derivatives) and expenditure during the year is :

Total Income Total Expenditure

Plan Rupees

Percentage of Average

Daily Net Assets

Rupees

Percentage of

Average Daily Net

Assets

Regular Plan 136,710,473 10.80% 27,402,039 2.16%

Savings Plan 294,205,312 14.63% 42,584,223 2.12%




Futures Details of open interest in equity futures as at March 31, 2010:

Plan Underlying Asset's Name Number of contracts


Regular Plan India Infoline Limited 28 70,000

Regular Plan Sterlite Industries (India) Limited 43 18,834

Savings Plan India Infoline Limited 64 160,000

Savings Plan Sterlite Industries (India) Limited 87 38,106

Notional value of futures contracts bought by the Scheme and outstanding as on March 31, 2010 aggregates to Rs. 24,075,176 and Rs. 50,822,111 for the Regular Plan and Savings Plan respectively. Net Profit/ (Loss) on futures transactions recognized in the Revenue Account for the year ended March 31, 2010 aggregates to Rs. (815,099) and Rs. 1,974,070 for the Regular Plan and Savings Plan respectively.

14 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulation,

1996 as amended and in accordance with Accounting Standard 18 on ‘Related Party Disclosures’ issued by the

Institute of Chartered Accountants of India (ICAI)








HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009



HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager with effect from July 16, 2008 Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.

II The following transactions occurred with the related parties during the year in the ordinary course of business: Refer

Annexure I

III 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.








Nature of Relation

Period Covered


% of Total


Commission paid [Rs. ]


Fund

Fund


HSBC MIP - Regular Plan




HSBC MIP - Savings Plan






Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund

Fund






Name of

Sponsor/AMC and its associates/related



relation

Period Covered


[Rs. In Crores]

% of total value of




fund

Fund











Name of

Sponsor/AMC and its associates/related



relation

Period Covered


[Rs. In Crores]

% of total value of



(on accrual basis)


fund

Fund









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 fixed deposits and enters into reverse repo transactions from

time to time at competitive rates.

15 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds) Regulations,

1996 as amended

HSBC Mutual Fund has made investments in companies, which hold/ have held units in excess of 5% of the net asset

value of any Scheme of HSBC Mutual Fund which have been listed in Annexure II.


instruments and were made solely on the basis of sound fundamentals of these companies


Details of unclaimed redemptions as at March 31, 2010 are as follows:-

Plan Amount (Rupees)

Number of Investors

Regular Plan 58,400 3

Savings Plan 10,000 1

17 Unclaimed Dividends:

As at March 31, 2010, unclaimed dividends payable to investors are:-

Plan Amount (Rupees)

Number of Investors

Regular Plan 157,299 246

Savings Plan 352,321 318




Miscellaneous Income of Rs. 2,90,141 in Savings Plan represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme.


Previous year’s figures have been regrouped/re-arranged where appropriate.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)





Sponsor


Relatives Total




Brokerage/ Commission on Distribution of Units - - 7,667,391 - - 7,667,391 Previous Year - - 559,017 - - 559,017










Sponsor


Relatives Total



Other Receivables - - - - - - Previous Year - 350 - - - 350

(iii) Details of material transactions with respect to parties referred to in Note 14 (I)(iii) & (iv) for Associates of Investment Manag

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 7,582,562 559,017







(iv) Details of material transactions with respect to parties referred to in Note 14 (I)(v) for Schemes under common control of the Sponso

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Flexi Debt Fund - 114,697,623 HSBC Ultra Short Term Bond Fund - 74,845,593 HSBC MIP Savings Plan - 57,434,427 HSBC Cash Fund - 49,481,670

Sale of InvestmentsHSBC Cash Fund - 119,266,517 HSBC Floating Rate Fund Long Term Plan - 39,888,150 HSBC Ultra Short Term Bond Fund - 39,865,004 HSBC Flexi Debt Fund - 14,456,618 HSBC Income Fund Investment Plan - 9,991,836


HSBC MUTUAL FUND - HSBC MIP REGULAR PLAN

Annexure I

0




Manager


Sponsor


Relatives Total










Borrowings taken and repaid - - - - - - Previous Year - - 25,000,000 - - 25,000,000




Manager


Sponsor


Relatives Total



Other Receivables - 14,009 - - - 14,009 Previous Year - 328 - 10,000 - 10,328

(iii) Details of material transactions with respect to parties referred to in Note 14 (I)(iii) & (iv) for Associates of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009









April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 393,647,753 HSBC Floating Rate Fund Long Term Plan - 159,526,986 HSBC Cash Fund - 148,445,009 HSBC Flexi Debt Fund - 132,326,943 HSBC Income Fund Short Term Plan - 108,721,964

Sale of InvestmentsHSBC Ultra Short Term Bond Fund - 539,617,775 HSBC Flexi Debt Fund - 59,695,940 HSBC Floating Rate Fund Long Term Plan - 59,936,467

Other ReceivablesHSBC Cash Fund - 10,000


HSBC MUTUAL FUND - HSBC MIP SAVINGS PLAN

Annexure I

1

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 financial 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

financial 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 financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial

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.


(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.

(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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 and amendments thereto as applicable.

(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.



March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009 Schedule Rupees Rupees Rupees Rupees

ASSETS

Investments 1 1,551,141,505 1,443,729,315 200,197,583 1,074,537,136

Deposits 2 404,000 404,000 18,955,000 205,000


TOTAL 1,661,408,732 1,520,846,707 347,872,103 1,168,117,996

LIABILITIES

Unit Capital 4 1,488,754,052 1,370,032,284 241,814,371 948,899,682



TOTAL -0.06 1,661,408,732 1,520,846,707 -0.60 347,872,103 1,168,117,995


Growth Sub Option

Dividend Sub Option

Weekly Dividend Sub Option Total

Growth Sub Option

Weekly Dividend Sub Option

Monthly Dividend Sub-Option Total

Growth Sub Option

Dividend Sub Option

Weekly Dividend Sub Option Total Total

Growth Sub Option

Dividend Sub Option Total

Growth Sub Option

Dividend Sub Option Total Total

#VALUE!

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 143,602,681 5,128,187 312,030,427 460,761,295 - 309,310,334 10,339,016 319,649,350 230,478,405 435,452,300 206,634,237 872,564,942 1,652,975,587 - - - 189,027,209 137,620,445 326,647,654 326,647,654

(103,384,245) (50,525,358) (256,304,498) (410,214,101) (144,024,969) (-) (10,036,162) (154,061,131) (229,757,383) (575,714,802) (145,703,126) (951,175,311) (1,515,450,543) (4,973,234) (106,825,169) (111,798,403) (381,520,828) (655,680,432) (1,037,201,260) (1,148,999,663)

Number of Units in Issue 11,638,971.961 486,140.282 29,906,364.288 - 30,759,481.865 1,018,803.528 14,747,400.770 39,938,792.341 20,379,450.229 - - 11,860,052.788 12,321,384.234 (8,845,986.502) (4,837,013.350) (24,995,115.818) (14,250,000.000) - (1,000,000.000) (15,450,409.839) (53,157,406.512) (14,467,296.399) (519,254.435) (10,013,416.171) (25,707,313.077) (58,649,984.489)

Net Asset Value per Unit 12.3381 10.5488 10.4336 - 10.0558 10.1482 15.6284 10.9030 10.1393 - - 15.9381 11.1692 (11.6871) (10.4456) (10.2542) (10.1070) (-) (10.0362) (14.8706) (10.8304) (10.0712) (9.5776) (10.6682) (14.8409) (11.1795)






TrusteeDirector


HSBC MUTUAL FUND - HSBC INCOME FUND

Investment PlanShort Term Plan


March 31, 2010 Short Term Plan March 31, 2010

Institutional Plus Option

Investment Plan

RupeesInstitutional Option Institutional OptionRegular Option Regular Option

(March 31, 2009) Rupees

(March 31, 2009)

0

April 01, 2009 to April 01, 2008 to April 01, 2009 to April 01, 2008 to Schedule March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


INCOME AND GAINS


27,499,198 3,179,409 23,882,430 -

582,257 - 37,570 -

214,921,145 49,168,001 68,563,151 33,885,223

EXPENSES AND LOSSES

Net Loss on Sale of Investments - - - 9,538,376

(Including Net Loss on Inter - Scheme Sale of Investments Rs. Nil for Investment Plan (Previous year : Net Loss Rs. 3,367,120) (Note 2.3)


Transfer Agent Fees and Expenses 1,755,548 308,457 632,514 341,991



Audit Fees 100,000 50,000 150,000 50,000



TOTAL 39,536,859 6,091,680 13,885,654 22,144,859

Less: Expenses to be Reimbursed by the Investment Manager - 1,441,465 - 5,880,374

TOTAL 39,536,859 4,650,215 13,885,654 16,264,485

Net Realised Gains for the Year 175,384,286 44,517,786 54,677,497 17,620,738

Net Change in Unrealised Depreciation in Value of Investments - - 15,702,399 (15,113,237)

Net Gains for the Year 175,384,286 44,517,786 70,379,896 2,507,501

Net Change in Unrealised Appreciation in Value of Investments (4,593,522) 4,886,296 (2,906,635) 2,562,654

Net Surplus including Net change in Unrealised Appreciation in Value of Investments 170,790,764 49,404,082 67,473,261 5,070,155

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve 4,593,522 (4,886,296) 2,906,635 (2,562,654)

Net Surplus for the Year 0.25 175,384,286 44,517,786 -2.66 70,379,896 2,507,501

0.25 (0.16)

Short Term Plan Short Term Plan Investment Plan Investment Plan

April 01, 2009 to March 31, 2010April 01, 2009 to March

31, 2010 April 01, 2009 to March 31, 2010April 01, 2009 to March

31, 2010

(April 01, 2008 to March 31, 2009)(April 01, 2008 to March

31, 2009) (April 01, 2008 to March 31, 2009)(April 01, 2008 to March

31, 2009)Rupees Rupees Rupees Rupees

Institutional Option

Growth Sub Option


GrowthSub Option

DividendSub Option Total Total

#VALUE! Net Surplus for the Year 12,128,104 18,563,404 82,871,328 175,384,286 3,307,349 37,342,724 61,188,004 70,379,896

(904,177) (2,664,528) (22,401,188) (44,517,786) (13,888) (-7,655,352) (373,864) (2,507,501)

Transfer from Income Equalisation Reserve (Note 2.7) 929,398 372,165 (4,441,615) (1,478,160) 6,248,095 (44,941,255) (107,873,524) (107,849,941)

(13,464,971) (399,256) (43,999,078) (57,364,667) - (53,521,859) (110,687,361) (113,111,335)

Transfer from Reserve Fund - 127,324 681,166 1,018,729 - 40,073,959 40,073,959 42,837,280

- (38,861) (4,862,864) (4,862,864) - (1,778,927) (1,778,927) (1,778,927)

Dividend / Distribution - (16,212,541) (61,985,391) (120,843,715) - (19,732,468) (19,732,468) (21,383,522)

- (-2,530,993) (-19,606,363) (-34,382,853) - (-8,344,919) (-8,344,919) (-10,373,220)

Dividend / Distribution Tax thereon - (2,699,551) (10,032,489) (21,813,453) - (2,928,747) (2,928,747) (3,170,921)

- (-431,501) (-3,105,224) (-6,239,190) - (-1,230,570) (-1,230,570) (-1,555,980)

Balance Transferred to Reserve Fund 13,057,502 150,801 7,093,000 32,267,687 9,555,444 9,814,213 (29,272,776) (19,187,208) (14,369,148) (140,151) (48,551,543) (66,123,274) (13,888) (38,069,945) (103,264,663) (105,468,563)





Trustee Director


Regular Option

TOTAL





Miscellaneous Income (Note 16)

Net Profit on Sale of Investments (Net of net loss on Inter-Scheme Sale of Investments Rs Nil for Short Term Plan (Previous year : Net Loss Rs. 2,75,414) (Note 2.3)

Short Term Plan Investment Plan

1

SCHEDULE 1 Investments

(Notes 2.2, 2.3, 7, 8, 9 ,10 and 13) Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees


Non Convertible Debentures and Bonds Listed / Awaiting Listing 50,065,916 49,721,350 841,576,025 836,637,938 81,303,948 81,359,750 613,929,710 611,023,075

Asset Backed Securities - - - - 6,392,338 6,833,921 7,266,992 8,048,220

Commercial Paper / Certificate of Deposit 1,501,075,589 1,501,075,589 602,153,290 602,153,290 49,732,940 49,732,940 - -

Government of India Securities - - - - 62,768,357 63,195,051 453,340,434 469,185,683

TOTAL 1,551,141,505 1,550,796,939 1,443,729,315 1,438,791,228 200,197,583 201,121,662 1,074,537,136 1,088,256,978

SCHEDULE 2 Deposits March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


Margin Deposit with the Clearing Corporation of India Limited towards Collateralized Borrowing and Lending Obligations 404,000 404,000 205,000 205,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities - - 18,750,000 -

TOTAL 404,000 404,000 18,955,000 205,000

SCHEDULE 3 Other Current Assets March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


Balances with Banks - in Current Account 5,388,181 9,363,021 1,364,502 4,418,475 - in Dividend Account 891 905 59,396 61,486

Reverse Repos 60,984,093 7,965,248 76,410,597 16,912,468


Sales Contracts Awaiting Completion - Government Securities - - - 25,939,291

Unit Subscription Receivable - 5,351,000 - 15,000

Inter-Scheme Receivable - For Switch-In 4,516,399 14,785,792 763,607 92,695 - For Others - 299,000 617,970 -

Interest Receivable on : -Debentures and Bonds 2,155,890 29,117,449 1,415,343 16,075,152 -Government of India Securities - - 1,465,651 5,932,588 -Reverse Repos 8,617 1,025 10,796 2,176 -Collateralised Borrowing and Lending Obligation 4,989 1,021 6,251 2,168 -Deposits 767 1,146 113,567 582

Investment Towards Unclaimed Redemption in 19,620.554 Units of HSBC Cash Fund - Growth Option for Investment Plan (2009 : 19,668.706 Units) Market Value Rs. 292,134 (2009 : Rs. 286,660)) (Note 14) - - 238,624 239,310

Investment Towards Unclaimed Dividend in 4,915.945 Units (2009 : 4,643.099 Units) of HSBC Cash Fund - Growth Option for Short Term Plan (Market Value Rs. 73,194) (2009 : Rs. 67,670) and 16,781.887 Units (2009 : 15,560.526 Units) of HSBC Cash Fund - Growth Option for Investment Plan (Market Value Rs. 249,869) (2009 : Rs. 2,26,785) (Note 15) 56,523 52,508 203,165 101,710

Receivable from Investment Manager - 1,441,587 - 5,880,588

Miscellaneous Receivables - 19 7,579 7,577

TOTAL 109,863,227 76,713,392 128,719,520 93,375,860



Short Term Plan March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Investment Plan



2

SCHEDULE 4 Unit Capital

March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Rupees Units Rupees Units Rupees Units Rupees Units

Institutional Option Growth Sub Option Issued and Subscribed: - - - - - - - - Units of Rs. 10 each fully paid up

Outstanding: At the beginning of the year 88,459,865 8,845,986.502 5,000,000 500,000.000 5,192,544 519,254.435 92,642,621 9,264,262.136 Issued during the year 372,820,682 37,282,068.211 114,118,405 11,411,840.508 110,329,772 11,032,977.203 10,192,544 1,019,254.435

461,280,547 46,128,054.713 119,118,405 11,911,840.508 115,522,316 11,552,231.638 102,835,165 10,283,516.571 Redeemed during the year 344,890,828 34,489,082.752 30,658,540 3,065,854.006 115,522,316 11,552,231.638 97,642,621 9,764,262.136 At the end of the year 116,389,719 11,638,971.961 88,459,865 8,845,986.502 - - 5,192,544 519,254.435

Dividend Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - - - - - - Outstanding: At the beginning of the year 48,370,134 4,837,013.350 - - 100,134,162 10,013,416.171 - - Issued during the year 532,535,163 53,253,516.264 175,327,626 17,532,762.612 186,728 18,672.866 199,989,822 19,998,982.155

580,905,297 58,090,529.614 175,327,626 17,532,762.612 100,320,890 10,032,089.037 199,989,822 19,998,982.155 Redeemed during the year 576,043,893 57,604,389.332 126,957,492 12,695,749.262 100,320,890 10,032,089.037 99,855,660 9,985,565.984 At the end of the year 4,861,404 486,140.282 48,370,134 4,837,013.350 - - 100,134,162 10,013,416.171

Weekly Dividend Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - - - - - - Outstanding: At the beginning of the year 249,951,158 24,995,115.818 - - - - - - Issued during the year 816,937,988 81,693,798.828 830,214,028 83,021,402.762 - - - -

1,066,889,146 106,688,914.646 830,214,028 83,021,402.762 - - - - Redeemed during the year 767,825,504 76,782,550.358 580,262,870 58,026,286.944 - - - - At the end of the year 299,063,642 29,906,364.288 249,951,158 24,995,115.818 - - - -

- - - - TOTAL 420,314,765 42,031,476.531 386,781,157 38,678,115.670 - - 105,326,706 10,532,670.606

Institutional Plus Option Growth Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - - Outstanding: At the beginning of the year 142,500,000 14,250,000.000 - - Issued during the year 657,581,345 65,758,134.542 142,500,000 14,250,000.000

800,081,345 80,008,134.542 142,500,000 14,250,000.000 Redeemed during the year 800,081,345 80,008,134.542 - - At the end of the year - - 142,500,000 14,250,000.000

Weekly Dividend Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - - Outstanding: At the beginning of the year - - - - Issued during the year 2,196,940,388 219,694,038.845 758,047,021 75,804,702.056

2,196,940,388 219,694,038.845 758,047,021 75,804,702.056 Redeemed during the year 1,889,345,570 188,934,556.980 758,047,021 75,804,702.056 At the end of the year 307,594,818 30,759,481.865 - -

Monthly Dividend Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - - Outstanding: At the beginning of the year 10,000,000 1,000,000.000 - - Issued during the year 848,755,374 84,875,537.437 10,000,000 1,000,000.000

858,755,374 85,875,537.437 10,000,000 1,000,000.000 Redeemed during the year 848,567,339 84,856,733.909 - - At the end of the year 10,188,035 1,018,803.528 10,000,000 1,000,000.000

TOTAL 317,782,853 31,778,285.393 152,500,000 15,250,000.000




SCHEDULE 4 Unit Capital

March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Rupees Units Rupees Units Rupees Units Rupees Units




Regular Option Growth Sub Option Issued and Subscribed:

Units of Rs. 10 each fully paid up 1,368,130,625 136,813,062.500 1,368,130,625 136,813,062.500 1,964,242,544 196,424,254.400 1,964,242,544 196,424,254.400 Outstanding: At the beginning of the year 154,504,098 15,450,409.839 46,521,735 4,652,173.505 257,073,131 25,707,313.077 116,715,646 11,671,564.647 Issued during the year 243,528,266 24,352,826.602 196,032,470 19,603,247.004 68,850,224 6,885,022.408 244,822,721 24,482,272.058

398,032,364 39,803,236.441 242,554,205 24,255,420.509 325,923,355 32,592,335.485 361,538,367 36,153,836.705

Redeemed during the year 250,558,357 25,055,835.671 88,050,107 8,805,010.670 207,322,827 20,732,282.697 104,465,236 10,446,523.628

At the end of the year 147,474,007 14,747,400.770 154,504,098 15,450,409.839 118,600,528 11,860,052.788 257,073,131 25,707,313.077

Dividend Sub Option Issued and Subscribed:

Units of Rs. 10 each fully paid up 53,896,150 5,389,615.000 53,896,150 5,389,615.000 108,128,820 10,812,882.000 108,128,820 10,812,882.000

Outstanding: At the beginning of the year 531,574,065 53,157,406.512 41,477,858 4,147,785.788 586,499,845 58,649,984.489 64,413,568 6,441,356.823 Issued during the year 1,633,841,890 163,384,188.969 635,631,889 63,563,188.891 144,555,503 14,455,550.272 595,715,032 59,571,503.172

2,165,415,955 216,541,595.481 677,109,747 67,710,974.679 731,055,348 73,105,534.761 660,128,600 66,012,859.995 Redeemed during the year 1,766,028,031 176,602,803.140 145,535,682 14,553,568.167 607,841,505 60,784,150.527 73,628,755 7,362,875.506 At the end of the year 399,387,924 39,938,792.341 531,574,065 53,157,406.512 123,213,843 12,321,384.234 586,499,845 58,649,984.489

Weekly Dividend Sub Option Issued and Subscribed:

Units of Rs. 10 each fully paid up 704,627 70,462.722 704,627 70,462.722

Outstanding: At the beginning of the year 144,672,964 14,467,296.399 5,053,396 505,339.613 Issued during the year 730,141,149 73,014,114.879 178,835,452 17,883,545.155


TOTAL 750,656,434 75,065,643.340 830,751,127 83,075,112.750 241,814,371 24,181,437.022 843,572,976 84,357,297.566

TOTAL 1,488,754,052 148,875,405.264 1,370,032,284 137,003,228.420 241,814,371 24,181,437.022 948,899,682 94,889,968.172

Note: HSBC Asset Management (India) Private Limited, the investment manager holds 500,000 units (Previous year : 500,000 units) in the HSBC Income Fund - Short Term Plan Institutional Option Growth Sub Option as at March 31,2010.

SCHEDULE 5 Short Term Plan Investment Plan Reserves and Surplus

Total Total


At the beginning of the year 45,099,083 (9,956,035)

(-11,580,047) (-18,822,040)


(56,679,130) (8,866,005)

At the end of the year 37,246,923 (60,291,610)

(45,099,083) (-9,956,035)



(57,364,667) (113,111,335)


(-57,364,667) (-113,111,335)


(-) (-)



(51,791) (343,981)Net change in Unrealised Appreciation in Value of Investments Transferred from Revenue Account (Note 7) (4,593,522) (2,906,635)

(4,886,296) (2,562,654)

At the end of the year 344,565 -

(4,938,087) (2,906,635)

Reserve Fund


(34,120,679) (103,459,745)

Transfer to Revenue Account (1,018,729) (42,837,280)

(-4,862,864) (-1,778,927)

Balance Transferred from Revenue Account 32,267,687 (19,187,208)

(66,123,274) (105,468,563) At the end of the year 126,630,047 145,124,893

(95,381,089) (207,149,381)

TOTAL 164,221,535 * 84,833,283 * (145,418,259) * (200,099,981) *

* The share of the Plans / Options of the Reserves and Surplus is as follows : March 31, 2010 March 31, 2010

(March 31, 2009) (March 31, 2009)

Rupees Rupees

Regular OptionGrowth Sub Option 83,004,398 70,426,681

(75,253,284) (124,447,697)Dividend Sub Option 36,064,376 14,406,602

(44,140,738) (69,180,587)

Weekly Dividend Sub Option 2,839,734 -

(1,030,162) - Total (A) 121,908,508 84,833,283

(120,424,184) (193,628,284)


Growth Sub Option 27,212,962 -

(14,924,379) (-219,310)

Dividend Sub Option 266,783 -

(2,155,223) (6,691,007)

Weekly Dividend Sub Option 12,966,785 -

(6,353,341) - Total (B) 40,446,530 -

(23,432,943) (6,471,697)

Institutional Plus OptionGrowth Sub Option 0

(1,524,969)

Weekly Dividend Sub Option 1,715,516

(1)

Monthly Dividend Sub Option 150,981

(36,162)Total (C) 1,866,497

(1,561,132)

Total (A+B+C) 164,221,535 84,833,283

(145,418,259) (200,099,981)

March 31, 2010

Rupees(March 31, 2009)



Rupees

March 31, 2010(March 31, 2009)

3



Investment Management and Advisory Fees 6,116,155 416,509 2,532,091 304,050



Audit Fees 100,000 50,000 150,000 50,000

Selling and Distribution Expenses 1,009,732 1,597,899 401,567 2,434,277

Purchase Contracts Awaiting Completion - Government securities - - - 14,161,250

Unit Redemption Payable 908,726 2,151,630 8,419,380 28,088

Inter Scheme Payable - For Switch Out - - - 1,272,632 - For Others - - - 299,000

Dividend Payable - 930,882 - -

Dividend Tax Payable 82,704 - - -

Unclaimed Redemption (Note 14) - - 238,624 239,310

Unclaimed Dividend (Note 15) 57,414 53,399 203,423 104,058

Load Payable (Note 2.8) - - 9,142,818 -

Temporary Book Overdraft - 78 - -

Sundry Payables 108,564 101,897 44,660 140,443

TOTAL 8,433,145 5,396,164 21,224,449 19,118,332

SCHEDULE 7 Interest and Discount (Note 2.4) April 01, 2009 to April 01, 2008 to April 01, 2009 to April 01, 2008 to

March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009Rupees Rupees Rupees Rupees


Asset Backed Securities - - 415,856 587,348

Treasury Bills 1,610,771 - 139,808 -

Commercial Paper / Certificate of Deposit 104,072,119 26,611,387 2,660,438 1,184,936

Government of India Securities - - 14,611,543 9,571,632

Reverse Repos 8,637,785 2,911,033 3,180,976 3,826,439

Collateralised Borrowing and Lending Obligations 10,581,286 801,821 3,515,047 573,951

Deposits 2,606 5,157 247,430 2,600

TOTAL 186,839,690 45,988,592 44,643,151 33,885,223


HSBC MUTUAL FUND - HSBC INCOME FUND Schedules forming part of the Balance Sheet as at March 31, 2010 and the



4

Description Quantity Market / Fair ValueRupees

HSBC INCOME FUND - SHORT TERM PLANNon-Convertible Debentures / Bonds Listed / Awaiting listing (3.23%)Power (100%)


Total (Cost Rs. 49,721,350) 50,065,916

Commercial Papers/Certificate of Deposits (96.77%)Certificate of Deposits (84.05%)

Bank of India 2010 $ @ 3,500 349,749,570State Bank of Hyderabad 2010 $ 2,500 248,101,587Bank of Baroda 2010 $ 2,500 239,972,728Canara Bank 2011 $ 2,000 188,519,971Union Bank of India 2011 $ @ 2,000 188,110,705State Bank of Travancore 2011 $ 500 47,168,239

1,261,622,800Commercial Papers (15.95%)

Rural Electrification Corporation Limited 2010 $ 500 239,452,789239,452,789


HSBC INCOME FUND - INVESTMENT PLANNon-Convertible Debentures / Bonds Listed / Awaiting listing (40.62%)Finance & Investments (100%)

9.01% Power Finance Corporation Limited 2011 $ 50 51,190,1847.75% Rural Electrification Corporation Limited 2012 $ 30 30,113,764

81,303,948Total (Cost Rs. 81,359,750) 81,303,948


Oriental Bank Of Commerce 2010 $ @ 500 49,732,94049,732,940

Total (Cost Rs. 49,732,940) 49,732,940

Government of India Securities (31.35%)9.39% GOI Bonds 2011 500,000 52,492,5007.40% GOI Bonds 2012 100,000 10,240,0005.59% GOI Bonds 2016 400 35,857

62,768,357Total (Cost Rs. 63,195,051) 62,768,357

Asset Backed Securities (3.19%)India MBS 2002 Series I-D (LIC Housing Finance) PTC 2017 $ * 5 6,392,338




Referred to in Schedule 1 to the Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended March 31, 2010

Confirmation has been received from JP Morgan Chase Bank, Mumbai Branch at the end of the financial year for the investments held by them and fromThe Hongkong and Shanghai Banking Corporation Limited for the securities held by them in the constituent subsidiary general ledger (CSGL) account.


$ Fair value of non traded and thinly traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approvedby the Board of Trustees in accordance with the guidelines for valuation of securities for Mutual funds dated September 18, 2000 and amendments thereto,as applicable, issued by the Securities and Exchange Board of India.


5



SCHEDULE 8


HSBC Income Fund (the “Scheme”) is an open-ended income scheme of HSBC Mutual Fund (the “Fund”) and

was launched on November 14, 2002. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital


Companies Act, 1956, has been appointed as the asset management company. The duration of the Scheme is

perpetual. The Scheme closed for initial subscription on December 3, 2002 and reopened for issue and redemption

of units on December 27, 2002. The investment objective of the Scheme is to provide a reasonable income whilst

maintaining a prudent policy of capital conservation. The Scheme has two Plans – Short Term Plan and

Investment Plan, each with a separate portfolio each offering Institutional and Regular Option. Both the

Institutional and Regular Options under the Short Term Plan offer Growth, Dividend and Weekly Dividend Sub-

options. Both the Institutional and Regular Options under the Investment Plan offer Growth and Dividend Sub-

Options. The Weekly Dividend Sub-option under the Institutional and Regular Options of the Short Term Plan

was introduced in accordance with the addendum dated October 31, 2006 made to the common offer document

dated November 29, 2004 and units were allotted on November 7, 2006 and November 17, 2006 respectively at

Rs. 10 per unit. The Institutional Option under the Short Term Plan and Investment Plan was introduced during

the year ended March 31, 2004 and units were allotted on September 15, 2003 under the Growth and Dividend

Sub-options at the net asset value of the Growth Sub-option of the Regular Option, while the terms of the

addendum to the offer document dated August 29, 2003 stated that unit holders opting for the Growth or Dividend

Sub-options in Institutional Option would be allotted units at the existing net asset values of the Growth and

Dividend Sub-options respectively, of the Regular Option. However, this has not resulted in any loss or gain to the

unit holders opting for the Sub-options under the Institutional Option nor has it had any impact on the ongoing net

asset values of the respective Sub-options of the Institutional Option. In accordance with the addendum to the

offer document dated April 29, 2008, Institutional Plus Option was introduced with Monthly Dividend, Quarterly

Dividend, Weekly Dividend Re-investment and Growth sub-options with effect from May 05, 2008 under Short

Term Plan and units were allotted on May 05, 2008, February 18, 2009 and March 26, 2009 in Weekly Dividend

Re-investment, Growth and Monthly Dividend sub-options respectively.

The Scheme will not declare dividend under the Growth Sub-Option of both the Plans in normal circumstances.

The income earned on such units will remain invested within the Scheme and will be reflected in the net asset

value of these Plans.






applicable.






. Debt securities listed on a recognized stock exchange are valued at the last quoted closing price on the


valued at fair value as determined in good faith by HSBC Asset Management (India) Private Limited under

procedures approved by the Board of Trustees of HSBC Mutual Fund.

. Non-traded and thinly traded debt securities, are valued at fair value as determined by HSBC Asset



September 18, 2000 and amendments thereto, as applicable, issued by the Securities and Exchange Board

of India (SEBI).

. Privately placed debt securities are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund.

. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management


. Government securities are valued at prices obtained from The Credit Rating Information Services of India

Limited in accordance with the guidelines for valuation of securities for mutual funds dated September 18,

2000 and amendments thereto, as applicable, issued by SEBI.

. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up to

the date of resale.

. Traded money market securities are valued at the yield at which they were traded on the valuation date. If




. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.


category of investments. In respect of each category of investments, the net change in the unrealised

appreciation if any, between two balance sheet dates / valuation dates is accounted through the Revenue

Account and thereafter the net unrealised appreciation is transferred from the Revenue Account to the

Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted through the

Revenue Account. Net unrealised appreciation is reduced from the distributable income at the time of income distribution.





Interest income is recorded on an accrual basis.

1.4 Net Asset Value for Growth / Dividend Sub-Options of Institutional Plus, Institutional and Regular Options


Dividend Sub-options of the Institutional Plus, Institutional and Regular Options for the Short Term Plan and

Institutional and Regular Options for the Investment Plan.



For reporting the net asset value for the Sub-options, daily income earned, including realized and unrealized gain

or loss in the value of investments and expenses incurred by the Scheme are allocated to the Sub-options in

proportion to the value of the net assets.











2.8 Load Charges








Management (India) Private Limited for managing the Scheme at an average annual rate 0.62% and 1.24% of the

average daily net asset values of the Short Term Plan and Investment Plan respectively recorded by the Scheme.

All costs, charges and expenses incurred by HSBC Asset Management (India) Private Limited in the

administration and execution of the activities of the Scheme, except costs allowed to be charged to the Scheme

under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto as

applicable, are on their own account for which they receive investment management and advisory fees.

2 Trusteeship Fees





2 Custodian Fees

JPMorgan Chase Bank provides custodial services to the Scheme for which it receives custody fees.



2 Income Taxes





March 31 ,2010

(Rupees) March 31 ,2009

(Rupees)

Short Term

Plan Investment

Plan Short Term

Plan Investment Plan


- Appreciation 344,566 250,564 5,080,372 6,317,746

- Depreciation - 306,366 142,285 3,411,111


- Appreciation - - - -

- Depreciation - 441,583 - 781,228


- Appreciation - 10,873 - -

- Depreciation - 437,566 - 15,845,249

2 Registered Securities

In accordance with Regulation 44(1) of the Securities and Exchange Board of India (Mutual Funds) Regulations,

1996, securities purchased should be held in the name of the Scheme. As at March 31, 2010 Government

securities aggregating to Rs. 62,768,357 (market value) of the Investment Plan are held in the name of HSBC

Mutual Fund.

2 Aggregate Fair Value of Non-Traded Investments


Limited under the procedures approved by the Board of Trustees as at March 31, 2010 is Rs. 1,551,141,505 for

the Short Term Plan and Rs. 137,429,226 for the Investment Plan.




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

Plan Aggregate Purchases Aggregate Sales


Daily Net Assets Rupees


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

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


The total income (including net profit on sale of investments and net change in the unrealized depreciation in the

value of investments) and expenditure during the year is:

Plan Total Income Total Expenditure


Daily Net Assets (Annualized)


Daily Net Assets(Annualized)

Short Term Plan 214,921,145 5.53% 39,536,859 1.02%

Investment Plan 84,265,550 10.92% 13,885,654 1.80%

12 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual

Funds)Regulation, 1996 as amended and in accordance with Accounting Standard 18 on ‘Related Party




Accountants of India and regulation 25(8) of SEBI Regulation, is provided below:





HSBC Mutual Fund



(v) HSBC Software Development India Pvt Limited Associate of the Investment Manager




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel



Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Refer Annexure I


Management (India) Private Limited was paid collection/bank charges amounting to Rs. 7,865 for the Short Term

Plan and Rs. 22,806 for the Investment Plan.





Nature of Relation

Period Covered


% of Total




Fund

Fund


HSBC Income Fund - Investment Plan

HSBC InvestDirect Securities (India) Limited Associate 2009-2010 0.00~ 0.00~ 5,415 0.11



HSBC Income Fund - Short Term Plan





Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund

Fund







~ Indicates less than 0.01

The brokerage paid was at rates similar to those offered to other distributors. Further, The Hong Kong and

Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC

Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at

competitive rates.






instruments and were made solely on the basis of sound fundamentals of these companies


As at March 31, 2010, unclaimed redemptions aggregate Rs. 238,624 payable to 16 investors of Investment Plan.

15 Unclaimed Dividends

As at March 31, 2010, unclaimed dividends payable to investors are:

Plan Amount

(Rupees)

Number of

Investors

Short Term Plan 57,414 21

Investment Plan 203,423 476


Miscellaneous Income of Rs. 55,381 and Rs. 37,570 in Short Term Plan and Investment Plan respectively

represents provision for expenses written back as no longer required. Miscellaneous Income of Rs. 526,876 in

Short Term Plan represents amount received from Investment Manager as compensation for an operational

incident.









For Board of

Trustees of HSBC

Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)


Nature of Transaction Investment Manager


Manager


Sponsor Total

Purchase of Investments - - - - Previous Year - - 285,228,959 285,228,959

Sale of Investments - - - - Previous Year - - 301,433,033 301,433,033

Investment Management and Advisory Fees 9,570,986 - - 9,570,986Previous Year 1,838,001 - - 1,838,001

Brokerage/ Commission on Distribution of Units - 2,756,238 - 2,756,238Previous Year - 5,263,325 - 5,263,325

Charges for Services Provided by Bank - 22,806 - 22,806Previous Year - 41,395 - 41,395

Reimbursement of Expenses - - - - Previous Year 5,880,374 - - 5,880,374




Manager


Sponsor Total

Investment Management and Advisory Fees Payable 2,532,091 - - 2,532,091Previous Year 304,050 - - 304,050

Brokerage/ Commission Payable on Distribution of Units - 327,114 - 327,114Previous Year - 1,588,037 - 1,588,037

Other Payables - - - - Previous Year - - 299,000 299,000

Other Receivables - - 617,970 617,970Previous Year 5,880,588 - - 5,880,588

(iii) Details of material transactions with respect to parties referred to in Note 12 (I)(iii), (iv) and (v) for Associate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 2,750,823 -


Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 326,728 1,588,037

(iv) Details of material transactions with respect to parties referred to in Note 12 (I)(vi) for Schemes under common control ofthe Sponsor.

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 64,042,434HSBC Fixed Term Series 49 - 50,555,600HSBC Fixed Term Series 61 - 39,364,723HSBC Dynamic Fund - 32,182,656HSBC MIP Regular Plan - 9,991,836

Sale of InvestmentsHSBC Cash Fund - 107,343,911 HSBC MIP Savings Plan - 81,573,833 HSBC Flexi Debt Fund - 40,071,537 HSBC MIP Regular Plan - 27,810,155

Other ReceivablesHSBC Equity Fund 617,970 -

Other PayablesHSBC Income Fund Short Term Plan - 299,000

HSBC MUTUAL FUND - HSBC INCOME FUND - INVESTMENT PLAN


Annexure 1

0





Sponsor


Relatives Total

Purchase of Investments - - - - - Previous Year - - 1,195,459,978 - 1,195,459,978

Sale of Investments - - - - - Previous Year - - 614,136,281 - 614,136,281

Subscription of Units (including switch in and dividendreinvestment) - - - 1,026,263 1,026,263 Previous Year - - - - -

Dividend Distribution (Including dividend reinvested - - - 26,263 26,263 Previous Year - - - - -

Investment Management and Advisory Fees 24,179,425 - - - 24,179,425 Previous Year 1,747,698 - - - 1,747,698

Brokerage/ Commission on Distribution of Units - 11,657,991 - - 11,657,991 Previous Year - 1,678,765 - - 1,678,765

Reimbursement of Expenses - - - - - Previous Year 1,441,465 - - - 1,441,465

Charges for Services Provided by Bank - 7,865 - - 7,865 Previous Year - 3,854 - - 3,854





Sponsor


Relatives Total

Investment Management and Advisory Fees Payable 6,116,155 - - - 6,116,155 Previous Year 416,509 - - - 416,509

Brokerage/ Commission Payable on Distribution of Units - 741,433 - - 741,433 Previous Year - 1,194,539 - - 1,194,539

Units Outstanding As At Year End - 250,523,018 - 1,025,885 251,548,903 Previous Year 5,843,550 - - - 5,843,550

Other Receivables - - - - - Previous Year 1,441,587 - 299,000 - 1,740,587

(iii) Details of material transactions with respect to parties referred to in Note 12 (I)(iii), (iv) and (v) for Associate of Investment Manage

April 01, 2009 to March 31, 2010

April 01, 2008 toMarch 31, 2009



Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 740,129 1,194,539

Units Outstanding As At Year EndHSBC Software Development Private Limited 250,523,018 250,195,855


April 01, 2009 to March 31, 2010

April 01, 2008 toMarch 31, 2009

Purchase of InvestmentsHSBC Cash Fund - 234,790,337 HSBC Ultra Short Term Bond Fund - 508,322,846 HSBC Floating Rate Fund Long Term Plan - 19,576,239 HSBC Flexi Debt Fund - 177,803,163

Sale of InvestmentsHSBC Ultra Short Term Bond Fund - 46,547,344 HSBC Cash Fund - 123,985,965 HSBC Flexi Debt Fund - 180,636,003 HSBC MIP Savings Plan - 108,721,964 HSBC Fixed Term Series 59 - 94,235,109

Other ReceivablesHSBC Income Fund Investment Plan - 299,000

(v) Disclosures in respect of material transactions with persons referred to in Note 12 (I)(vii) for key management personneland their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividendreinvestment)Avan Nelum Gidwani(Relative) 1,026,263 -

Dividend Distribution( Including dividend reinvestedAvan Nelum Gidwani(Relative) 26,263 -

Units Outstanding As At Year EndAvan Nelum Gidwani(Relative) 1,025,885 -

HSBC MUTUAL FUND - HSBC INCOME FUND - SHORT TERM PLAN


Annexure I

1

Auditors' Report To the Board of Trustees of 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 financial 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 financial statements based on our audit.


standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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 flows for the year ended on that date.





ASSETS

Investments 1 - 126,930,000


TOTAL (1) 4,323,236 181,151,811

LIABILITIES

Unit Capital 3 3,802,519 195,268,050

Reserves and Surplus 4 421,928 (15,703,508)

Current Liabilities and Provisions 5 98,789 1,587,269

TOTAL 4,323,236 181,151,811


Growth Option Dividend Option Weekly Dividend Option

Total Growth Option Dividend Option Weekly Dividend Option

Total

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 3,200,009 496,905 527,533 4,224,447 27,518,748 28,853,884 123,191,910 179,564,542

Number of Units in Issue 276,151.441 48,627.589 55,473.174 2,554,537.361 3,037,397.103 13,934,870.718

Net Asset Value per Unit 11.5879 10.2186 9.5097 10.7725 9.4995 8.8405



For PRICE WATERHOUSE For Board of Trustees For HSBC Asset Management (India)Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants


Trustee Director


HSBC MUTUAL FUND - HSBC GILT FUND


March 31, 2009


March 31, 2010Rupees Rupees

0


Schedule Rupees RupeesINCOME AND GAINS


TOTAL 2,578,282 45,899,256

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.3) 341,971 58,067,649

Investment Management and Advisory Fees (Note 3) 177,322 2,283,007


Trusteeship Fees and Expenses (Note 4) 545 3,053

Custodian Fees and Expenses - 57,128

Audit Fees 12,000 5,000

Selling and Distribution Expenses 162,238 2,484,826


TOTAL 737,635 63,562,530



Net Surplus/(Deficit) for the Year -0.26 6,688,813 (22,511,440)

April 01, 2009 to March 31, 2010April 01, 2009 to March 31, 2010 April 01, 2008 to March 31, 2009

April 01, 2008 to March 31, 2009


Net Surplus/(Deficit) for the Year 1,117,207 1,145,072 4,426,534 6,688,813 (3,549,765) 2,539,302 (21,500,977) (22,511,440)

Transfer from Income Equalisation Reserve (Note 2.7) (2,575,906) 5,093,282 11,777,539 14,294,916 4,755,750 2,310,006 28,362,409 35,428,165

Transfer from Reserve Fund - - - - - 2,466 - 2,466

Dividend / Distribution - - - - - (7,361,601) (19,407,453) (26,769,054)

Dividend Distribution Tax thereon - - - - - (1,257,175) (3,528,231) (4,785,406)

Balance Transferred to Reserve Fund (1,458,699) 6,238,355 16,204,073 20,983,729 1,205,985 (3,767,002) (16,074,252) (18,635,269)



For PRICE WATERHOUSE For Board of For HSBC Asset Management (India)Firm Registration Number : 301112E HSBC Mutual Fund Private LimitedChartered Accountants


Trustee Director





1

SCHEDULE 1

Investments March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009(Notes 2.2, 2.3, 6,7 and 10) Market Value Cost Market Value Cost


Government of India Securities - - 126,930,000 131,778,166

TOTAL - - 126,930,000 131,778,166


Balances with Banks - in Current Account 224,096 222,993 - in Dividend Account 7,396 7,372

Sales Contracts Awaiting Completion - Government of India Securities - 4,715,417


Reverse Repos 2,552,817 23,306,994

Unit Subscription Receivable - 10,000

Inter Scheme Receivable for 'Switch-In' - 18,948


Interest Receivable on :- Government of India Securities - 1,549,369

- Reverse Repos 361 2,999

- Collateralised Borrowing and Lending Obligation 209 2,987

TOTAL 4,323,236 54,221,811


Schedules forming part of the Balance Sheet as at March 31, 2010 andRevenue Account for the year ended March 31, 2010

2

SCHEDULE 3Unit Capital

March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009Rupees Units Rupees Units

Growth OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 16,493,000 1,649,300.000 16,493,000 1,649,300.000

Outstanding :At the beginning of the year 25,545,373 2,554,537.361 4,252,972 425,297.259 Issued during the year 935,448 93,544.839 305,879,686 30,587,968.620

26,480,821 2,648,082.200 310,132,658 31,013,265.879 Redeemed during the year 23,719,308 2,371,930.759 284,587,285 28,458,728.518 At the end of the year 2,761,513 276,151.441 25,545,373 2,554,537.361

Dividend OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 5,326,243 532,624.299 5,326,243 532,624.299

Outstanding :At the beginning of the year 30,373,970 3,037,397.103 4,495,718 449,571.839 Issued during the year 4,485,229 448,522.876 1,333,764,295 133,376,429.531

34,859,199 3,485,919.979 1,338,260,013 133,826,001.370 Redeemed during the year 34,372,924 3,437,292.390 1,307,886,043 130,788,604.267 At the end of the year 486,275 48,627.589 30,373,970 3,037,397.103

Weekly Dividend OptionIssued and Subscribed :Units of Rs. 10 each fully paid up - - - -

Outstanding :At the beginning of the year 139,348,707 13,934,870.718 - - Issued during the year 65,538,494 6,553,849.420 4,554,683,008 455,468,300.800

204,887,201 20,488,720.138 4,554,683,008 455,468,300.800 Redeemed during the year 204,332,470 20,433,246.964 4,415,334,301 441,533,430.082 At the end of the year 554,731 55,473.174 139,348,707 13,934,870.718

TOTAL 3,802,519 380,252.204 195,268,050 19,526,805.182

HSBC MUTUAL FUND - HSBC GILT FUNDSchedules forming part of the Balance Sheet as at March 31, 2010 and


3


Rupees Rupees

Reserves and Surplus Unit Premium Reserve (Note 2.6 )At the beginning of the year 2,224,346 333,328 Added during the year (4,858,293) 1,891,018

At the end of the year (2,633,947) 2,224,346

Income Equalisation Reserve (Note 2.7)Added during the year 14,294,916 35,428,165 Transfer to Revenue Account (14,294,916) (35,428,165)


Reserve FundAt the beginning of the year (17,927,854) 709,881 Balance Transferred to Revenue Account - (2,466) Balance Transferred from Revenue Account 20,983,729 (18,635,269)


TOTAL 421,928 * (15,703,508) *


Rupees Rupees

Growth Option 438,496 1,973,375

Dividend Option 10,630 (1,520,086)

Institutional Weekly Dividend Option (27,198) (16,156,797)

Total 421,928 (15,703,508)

HSBC MUTUAL FUND - HSBC GILT FUNDSchedules forming part of the Balance Sheet as at March 31, 2010 and


4

SCHEDULE 5Current Liabilities and Provisions

March 31, 2010 March 31, 2009Current Liabilites Rupees Rupees


Transfer Agent Fees and Expenses 273 18,496

Audit Fees 12,000 5,000

Selling and Distribution Expenses 7,062 54,943

Inter Scheme Payable for Switch Out - 1,000,000


Load Payable (Note 2.8) 26,282 -

Bank Overdraft - 13


TOTAL 98,789 1,587,269


Rupees Rupees

Government of India Securities 1,992,647 5,556,169

Collateralised Borrowing and Lending Obligation 195,564 15,278,348

Treasury Bills 187,184 -

Reverse Repos 202,887 25,103,853

Others - (39,114) TOTAL 2,578,282 45,899,256


Schedules forming part of the Balance Sheet as at March 31, 2010 andRevenue Account for the year ended March 31, 2010

5


- -

HSBC MUTUAL FUND - HSBC GILT FUND (FORMERLY, HSBC GILT FUND - SHORT TERM PLAN)

Statement of Portfolio Holding as at March 31,2010

Confirmation has been received from JP Morgan Chase Bank, Mumbai Branch at the end of the financialyear for the investments held by them.

(Referred to in Schedule 1 to the Balance Sheet as at March 31,2010 and the Revenue Account for the year ended March 31, 2010 )

6


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains/(Losses) for the Year 1,840,647 (17,663,274)

Adjustments for:- (Increase)/Decrease in Investments at Cost 136,493,582 (136,493,583) (Increase)/Decrease in Other Current Assets 1,554,955 (1,553,504) Increase/(Decrease) in Current Liabilities (488,467) 546,539 Net cash generated from / (used in) Operations (A) 139,400,717 (155,163,822)

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (191,465,531) 186,519,360 Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve 9,436,623 37,319,183

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors (1,000,000) 1,000,000 (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 28,948 (28,948)

Dividend Distribution during the year - (26,769,054) Dividend Distribution Tax paid during the year - (4,785,406) Net cash (used in) / generated from financing activities (B) (182,999,960) 193,255,135

Net (Decrease) / Increase in Cash and Cash Equivalents (A+B) (43,599,243) 38,091,313

Cash and Cash Equivalents at the Beginning of the Year 47,921,909 9,830,596 Cash and Cash Equivalents at the End of the Year 4,322,666 47,921,909



Rupees


Balances with Banks :- In Current Account 224,096 222,993 - In Dividend Account 7,396 7,372 Temporary Book Overdraft - (13) Other Collaterised Lending- Reverse Repos 2,552,817 23,306,994 - Collateralised Borrowing and Lending Obligation 1,538,357 24,384,563

4,322,666 47,921,909





Trustee Director





7

HSBC MUTUAL FUND - HSBC GILT FUND Schedules forming part of the Balance Sheet as at March 31, 2010 and the


SCHEDULE 7


HSBC Gilt Fund (the “Scheme”) is an open-ended gilt scheme of HSBC Mutual Fund (the “Fund”) and was

launched on November 28, 2003. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital



perpetual. The Scheme closed for initial subscription on December 2, 2003 and reopened for issue and

redemption of units on December 8, 2003. In accordance with the addendum dated October 06, 2008 a Weekly

Dividend Sub-option was introduced and units were allotted on October 10, 2008 at Rs. 10 per unit. The

investment objective of the Scheme is to generate reasonable returns through investments in Government

securities of various maturities. The Scheme has three options – Growth Option, Dividend Option and Weekly

Dividend Option. In accordance with the notice-cum-addendum dated March 02, 2009 the nomenclature of the

Scheme has been changed from HSBC Gilt Fund – Short Term Plan to HSBC Gilt Fund.


such units will remain invested within the Scheme and will be reflected in the net asset value of the options.

1 Significant Accounting Policies 1.0 Basis of Accounting

The Scheme maintains its books of account on an accrual basis. These financial statements have been prepared

in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and

Exchange Board of India (SEBI) (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments

thereto, as applicable. 2.0 Portfolio Valuation



i. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest

up to the date of resale.

ii. Government securities are valued at prices obtained from The Credit Rating Information Services of

India Limited in accordance with the guidelines for valuation of securities for mutual funds dated

September 18, 2000 and amendments thereto, as applicable, issued by SEBI.

iii. Traded money market securities are valued at the yield at which they are traded on the valuation date.

If no sale is reported at that time, such security is valued at the last traded price plus accretion of the



iv. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.







Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted through

the Revenue Account. 2.3 Securities Transaction



Interest income is recorded on an accrual basis. 2.5 Net Asset Value for Growth/Dividend Options

The net asset value of the units of the Scheme is determined separately for the units issued under the Growth

Option, Dividend Option and Weekly Dividend Option.

For reporting the net asset value for the Options, daily income earned, including realized and unrealized gain or

loss in the value of investments and expenses incurred by the Scheme are allocated to the Options in proportion

to the value of the net assets. 2.6 Unit Premium Reserve








The net distributable income relating to units issued/repurchased is transferred to/from income equalization

reserve for determining the net surplus/deficit, transferred from/to unit premium reserve.

2.8 Load Charges


marketing and selling expenses. Pursuant to SEBI circular SEBI/IMD/CIR No. 4/168230/09 dated June 30,

2009, effective August 1, 2009, of the exit load collected in the Schemes a maximum of 1% of redemption

proceeds is maintained in a separate account and utilized to meet marketing and selling expenses. Any load

collected in excess of 1% is credited to the Schemes.





Management (India) Private Limited for managing the Scheme at an average annual rate of 0.34% of the

average daily net asset value of the options recorded by the Scheme. All costs, charges and expenses incurred by

HSBC Asset Management (India) Private Limited in the administration and execution of the activities of the

Scheme, except costs allowed to be charged to the Scheme under the Regulations and amendments thereto as

applicable, are on their own account for which they receive investment management and advisory fees. 3 Trusteeship Fees




not affiliated with the Settlor. 4 Income Taxes

No provision for income tax is made as the Scheme qualifies as a recognized mutual fund under Section 10

(23D) of the Income Tax Act, 1961 of India. 6 Aggregate Appreciation and Depreciation In Value of Investments


March 31, 2010


(Rupees) Government of India Securities -Appreciation - - -Depreciation - 4,848,166


The aggregate value of investments purchased and sold during the financial year (excluding accretion of

discount of Rs. 187,184) is Rs. 829,684,134 and Rs. 961,307,513 respectively being 1587.15% and 1838.94%

of the average daily net assets. 8 Income and Expenses

The total income (including net loss on sale of investments and net change in unrealized depreciation in value of

investments) and expenditure during the year is Rs. 7,084,477 and Rs. 395,664 respectively being 13.55% and




9 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulation, 1996 as amended and in accordance with Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India (ICAI)








HSBC Mutual Fund


(iv) HSBC InvestDirect (India) Limited Associate of the Investment Manager


HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund




Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Tustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Refer Annexure I.

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





Nature of Relation

Period Covered


% of Total




Fund

The Hongkong and Shanghai Banking Corporation Limited Associate 2009-2010

0.43 6.64 11,295 7.50

HSBC InvestDirect Securities (India) Limited Associate 2009-2010

- - 564

0.37




Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund


53.67

35.34 135,100

1.73




Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom

HSBC Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time

at competitive rates.


Regulations, 1996 as amended HSBC Mutual Fund has made investments in companies, which holds/ has held units in excess of 5% of the net




As at March 31, 2010, unclaimed dividend aggregate to Rs. 7,396 payable to 2 investors.


The Scheme operates in one segment only viz. to generate reasonable returns through investment in Government

securities of various maturities.


Previous year’s figures have been re-grouped/re-arranged where necessary.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)



Associate of Investment Manager Total

Investment Management and Advisory Fees 177,322 - 177,322 Previous Year 2,283,007 - 2,283,007

Brokerage/ Commission on Distribution of Units - 11,859 11,859 Previous Year - 131,578 131,578

Borrowings taken and repaid - - - Previous Year - 124,800,000 124,800,000

Interest Expense on Borrowings - - - Previous Year - 39,114 39,114



Associate of Investment Manager Total

Investment Management and Advisory Fees Payable 43,944 - 43,944 Previous Year 479,653 - 479,653

Brokerage/ Commission Payable on Distribution of Units - 658 658 Previous Year - 3,522 3,522

Other Receivables - - - Previous Year 169 - 169

(iii) Details of material transactions with respect to parties referred to in Note 9 (I)(iii) and (iv) foAssociate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009


Borrowings taken and repaidThe Hongkong and Shanghai Banking Corporation Limited - 124,800,000

Interest Expense on BorrowingsThe Hongkong and Shanghai Banking Corporation Limited - 39,114

Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 658 3,522



Annexure I

0

Auditors' Report To the Board of Trustees of 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 financial 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 financial 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial 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.


(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 flows 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,


(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.



March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009Schedule Rupees Rupees Rupees Rupees

ASSETS

Investments 1 5,895,795,487 4,719,906,538 - -

Deposits 2 5,610,000 2,510,000 5,017,000 5,017,000


TOTAL 0 6,235,337,444 4,883,968,117 (0) 723,354,848 882,935,462

LIABILITIES

Unit Capital 4 5,199,265,393 3,916,019,949 670,636,523 840,583,520



TOTAL 6,235,337,444 4,883,968,117 0.19 723,354,848 882,935,462


Growth Sub Option

Monthly Dividend Sub Option

Daily Dividend Sub Option

Weekly Dividend Sub Option Total Growth Sub Option


Fortnightly Dividend Sub Option


Daily Dividend Sub Option Total Total

Growth Sub Option



Growth Sub Option



Monthly Dividend Sub Option Total

Growth Sub Option


Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions ) (Note 2.5) 132,403,144 244,986,536 27,602,180 195,314,916 600,306,776 808,634,540 4,470,517,364 5,796,676 19,114,479 73,269,388 5,377,332,447 5,977,639,223 67,344,558 203,435,886 233,720,424 504,500,868 34,704,100 1,011,404 - 24,336,219 60,051,723 157,748,828 - 157,748,828 722,301,419

(99,953,268) (431,643,699) (47,243,892) (58,737,752) (637,578,611) (1,215,972,561) (2,447,687,110) (5,575,792) (111,778,767) (125,839,791) (3,906,854,021) (4,544,432,632) (106,504,887) (258,499,809) (269,557,042) (634,561,738) (1,310,282) (69,379,354) (36,130,174) (43,980,898) (150,800,708) (57,150,967) (35,939,175) (93,090,142) (878,452,588)

Number of Units in Issue 9,329,103.605 24,483,247.290 2,756,744.322 19,522,344.489 56,101,800.927 398,091,374.663 568,462.756 1,875,973.986 7,197,487.341 4,927,595.930 20,343,588.524 23,335,871.766 2,512,271.146 99,780.341 - 2,401,290.952 13,443,253.681 -

(7,361,353.037) (43,136,652.841) (4,719,009.792) (5,869,893.642) (88,532,331.128) (217,865,967.972) (545,333.900) (11,109,646.396) (12,461,806.332) (11,316,444.277) (46,612,712.234) (21,330,117.806) (97,055.445) (6,894,975.853) (3,440,995.435) (4,339,496.053) (4,987,332.184) (3,580,547.191)

Net Asset Value per Unit 14.1925 10.0063 10.0126 10.0047 14.4137 11.2299 10.1971 10.1891 10.1799 13.6668 10.0000 10.0155 13.8138 10.1363 - 10.1346 11.7344 -

(13.5781) (10.0064) (10.0114) (10.0066) (13.7348) (11.2348) (10.2245) (10.0614) (10.0980) (12.4236) (10.0000) (10.0079) (13.5003) (10.0623) (10.4999) (10.1350) (11.4592) (10.0373)




Trustee Director


HSBC MUTUAL FUND - HSBC FLOATING RATE FUND

Institutional Plus OptionInstitutional OptionRegular Option

Short Term Plan

Institutional OptionRupees Rupees

Short Term Plan


March 31, 2010(March 31, 2009)



Regular Option

Long Term Plan

Long Term Plan

March 31, 2010(March 31, 2009)

0

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009


INCOME AND GAINS

Interest and Discount 7 581,530,712 222,375,584 21,262,673 109,107,654 Net Profit on Sale of Investments 119,852,512 16,175,615 - 1,231,489

(Including Net Profit on Inter Scheme Sale of Investment Rs. Nil (Previous year: Rs. 589,092) and Rs.Nil (Previous year: Rs. 1,207,840) for Long Term Plan and Short Term Plan respectively) (Note 2.3)

Miscellaneous Income (Note 16) 4,916 (73,429) 832 (615)

TOTAL 701,388,140 238,477,770 21,263,505 110,338,528

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.3) - - 271,975 -


Transfer Agent Fees and Expenses 6,436,007 1,692,031 363,076 620,322


Custodian Fees and Expenses (Note 5) 1,489,270 454,531 10,998 153,208

Audit Fees 25,000 25,000 12,000 150,000



TOTAL 83,436,423 15,953,801 4,057,293 7,971,124

Less: Expenses to be Reimbursed by the Investment Manager - 1,063,282 - -

TOTAL 83,436,423 14,890,519 4,057,293 7,971,124

Net Realised Gains for the Year 617,951,717 223,587,251 17,206,212 102,367,404

Net Change in Unrealised Depreciation in Value of Investments 663,800 (642,490) - -

Net Gains for the Year 618,615,517 222,944,761 17,206,212 102,367,404

Net Change in Unrealised Appreciation in Value of Investments (2,905,361) 2,905,361 - -


Net change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve

2,905,361 (2,905,361) - -

Net Surplus for the Year 618,615,517 222,944,761 17,206,212 102,367,404

0 0

Long Term Plan Short Term Plan

April 01, 2009 to March 31, 2010

April 01, 2009 to March 31, 2010

Rupees Rupees

Net Surplus for the Year 583,639,758 618,615,517 1,856,026 17,206,212

(192,235,462) (222,944,761) (23,107,124) (102,367,404)

Transfer from Income Equalisation Reserve (Note 2.7) (293,491,037) (286,926,670) 14,144,004 (414,099,739)

(245,651,884) (245,075,183) (-4,538,285) (-22,510,017)

Transfer from Reserve Fund 5,271,950 7,162,671 130,552 4,234,698

(613,294) (2,312,954) (1,755,274) (4,870,888)

Dividend / Distribution (304,940,420) (330,020,737) (40,897) (10,374,842)

(-129,949,311) (-149,342,433) (-12,086,049) (-59,058,035)

Dividend / Distribution Tax thereon (64,325,709) (68,267,359) (11,584) (2,938,675)

(-27,005,711) (-29,966,630) (-3,423,373) (-16,728,188)

Balance Transferred to Reserve Fund (73,845,459) (59,436,578) 16,078,100 (405,972,346)

(281,545,617) (291,023,835) (4,814,690) (8,942,052)






Trustee Director





RupeesRupees

1

SCHEDULE 1Investments (Notes 2.2, 2.3, 2.4, 7, 8, 9, and 12) Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost

Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees


Non Convertible Debentures and Bonds Listed / Awaiting Listing - - 53,285,900 53,949,700 - - - -

Privately Placed Non Convertible Debentures / Bonds - - 34,816,277 33,979,200 - - - -

Asset Backed Securities - - 133,157,343 131,089,059 - - - -

Commercial Paper / Certificate of Deposit 5,895,795,487 5,895,795,487 4,498,647,018 4,498,647,018 - - - -

TOTAL 5,895,795,487 5,895,795,487 4,719,906,538 4,717,664,977 - - - -

SCHEDULE 2Deposits March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 5,610,000 2,510,000 5,017,000 5,017,000

TOTAL 5,610,000 2,510,000 5,017,000 5,017,000

SCHEDULE 3Other Current Assets March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


Balance with Banks- in Current Account 372,035 542,660 2,551,400 5,347,453 - in Dividend Account 41,612 42,877 3 3

Sales Contracts Awaiting Completion - Certificate of Deposits 249,197,000 - - -

Reverse Repos 52,136,454 74,283,717 446,379,156 426,365,014


Unit Subscription Receivable 600,000 235,000 325,000 -

Inter-Scheme Receivable - For 'Switch In' 146,979 1,337,662 - - - For 'Others' - 3,000 - -


- Debentures and Bonds - 5,816,192 - -

- Reverse Repos 7,367 9,559 63,072 54,868

- Collateralised Borrowing and Lending Obligation 4,265 9,521 36,520 54,650

- Deposits 10,653 488,598 9,527 -

Receivable from Investment Manager - 1,063,916 - 359

Miscellaneous Receivables - - - 14,228 TOTAL 333,931,957 161,551,579 718,337,848 877,918,462



Long Term Plan Short Term Plan March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009

Short Term Plan

Short Term Plan

Long Term Plan

Long Term Plan

2

SCHEDULE 4Unit Capital March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Rupees Units Rupees Units Rupees Units Rupees Units

Regular OptionGrowth Sub OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 90,733,362 9,073,336.230 90,733,362 9,073,336.230 309,034,416 30,903,441.632 309,034,416 30,903,441.632 Outstanding:At the beginning of the year 73,613,530 7,361,353.037 74,717,056 7,471,705.625 79,674,700 7,967,470.081 113,164,442 11,316,444.277 Issued during the year 290,720,693 29,072,069.318 146,833,860 14,683,385.964 52,129,116 5,212,911.625 205,626,874 20,562,687.385


Daily Dividend Sub Option Issued and Subscribed :Units of Rs. 10 each fully paid up - - - - 629,390,645 62,939,064.483 629,390,645 62,939,064.483 Outstanding:At the beginning of the year 47,190,098 4,719,009.792 - - 258,499,792 25,849,979.215 466,127,122 46,612,712.234 Issued during the year 1,578,874 157,887.379 135,748,548 13,574,854.752 374,287,334 37,428,733.365 575,644,523 57,564,452.273

48,768,972 4,876,897.171 135,748,548 13,574,854.752 632,787,126 63,278,712.580 1,041,771,645 104,177,164.507 Redeemed during the year 21,201,528 2,120,152.849 88,558,450 8,855,844.960 429,351,240 42,935,124.056 783,271,853 78,327,185.292 At the end of the year 27,567,444 2,756,744.322 47,190,098 4,719,009.792 203,435,886 20,343,588.524 258,499,792 25,849,979.215

Monthly Dividend Sub OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 300,945,647 30,094,564.714 300,945,647 30,094,564.714 - - - - Outstanding:At the beginning of the year 431,366,529 43,136,652.841 163,721,838 16,372,183.719 - - - - Issued during the year 330,020,153 33,002,015.276 458,485,585 45,848,558.548 - - - -

761,386,682 76,138,668.117 622,207,423 62,220,742.267 - - - - Redeemed during the year 516,554,208 51,655,420.827 190,840,894 19,084,089.426 - - - - At the end of the year 244,832,474 24,483,247.290 431,366,529 43,136,652.841 - - - -

Weekly Dividend Sub OptionIssued and Subscribed :Units of Rs. 10 each fully paid up - - - - 5,240,627 524,062.745 5,240,627 524,062.745 Outstanding:At the beginning of the year 58,698,937 5,869,893.642 - - 269,005,006 26,900,500.774 213,301,177 21,330,117.806 Issued during the year 699,648,997 69,964,899.678 58,799,125 5,879,912.477 255,267,989 25,526,798.856 452,962,454 45,296,245.444

758,347,934 75,834,793.320 58,799,125 5,879,912.477 524,272,995 52,427,299.630 666,263,631 66,626,363.250 Redeemed during the year 563,124,488 56,312,448.831 100,188 10,018.835 290,914,279 29,091,427.864 397,258,625 39,725,862.476 At the end of the year 195,223,446 19,522,344.489 58,698,937 5,869,893.642 233,358,716 23,335,871.766 269,005,006 26,900,500.774


Growth Sub OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 722,808,862 72,280,886.195 722,808,862 72,280,886.195 2,848,706,983 284,870,698.304 2,848,706,983 284,870,698.304 Outstanding:At the beginning of the year 885,323,310 88,532,331.128 169,206,349 16,920,635.005 970,554 97,055.445 25,588,194 2,558,819.389 Issued during the year 25,132,936,974 2,513,293,697.351 4,596,579,832 459,657,983.206 40,496,961 4,049,696.111 229,314,588 22,931,458.891

26,018,260,284 2,601,826,028.479 4,765,786,181 476,578,618.211 41,467,515 4,146,751.556 254,902,782 25,490,278.280 Redeemed during the year 25,457,242,276 2,545,724,227.552 3,880,462,871 388,046,287.083 16,344,804 1,634,480.410 253,932,228 25,393,222.835 At the end of the year 561,018,008 56,101,800.927 885,323,310 88,532,331.128 25,122,711 2,512,271.146 970,554 97,055.445

Daily Dividend Sub OptionIssued and Subscribed :Units of Rs. 10 each fully paid up - - - - 710,530,691 71,053,069.065 710,530,691 71,053,069.065 Outstanding:At the beginning of the year 124,618,063 12,461,806.332 - - 68,949,761 6,894,975.853 38,299,510 3,829,950.745 Issued during the year 9,792,307 979,230.716 11,132,384,271 1,113,238,427.088 48,406,216 4,840,621.594 310,519,445 31,051,944.545

134,410,370 13,441,037.048 11,132,384,271 1,113,238,427.088 117,355,977 11,735,597.447 348,818,955 34,881,895.290 Redeemed during the year 62,435,497 6,243,549.707 11,007,766,208 1,100,776,620.756 116,358,171 11,635,817.106 279,869,194 27,986,919.437 At the end of the year 71,974,873 7,197,487.341 124,618,063 12,461,806.332 997,806 99,780.341 68,949,761 6,894,975.853


Issued and Subscribed:Units of Rs. 10 each fully paid up 153,001,670 15,300,166.976 153,001,670 15,300,166.976 737,101,461 73,710,146.095 737,101,461 73,710,146.095 Outstanding:At the beginning of the year 2,178,659,681 217,865,967.972 92,871,473 9,287,147.224 34,409,954 3,440,995.435 100,115,188 10,011,518.785 Issued during the year 21,587,636,763 2,158,763,676.331 6,826,364,842 682,636,484.183 97,790 9,778.962 37,334,947 3,733,494.717

23,766,296,444 2,376,629,644.303 6,919,236,315 691,923,631.407 34,507,744 3,450,774.397 137,450,135 13,745,013.502 Redeemed during the year 19,785,382,696 1,978,538,269.640 4,740,576,634 474,057,663.435 34,507,744 3,450,774.397 103,040,181 10,304,018.067 At the end of the year 3,980,913,748 398,091,374.663 2,178,659,681 217,865,967.972 - - 34,409,954 3,440,995.435


Issued and Subscribed :Units of Rs. 10 each fully paid up 82,500,000 8,250,000.000 82,500,000 8,250,000.000 272,425,380 27,242,537.996 272,425,380 27,242,537.996 Outstanding:At the beginning of the year 111,096,463 11,109,646.396 110,750,772 11,075,077.247 43,394,959 4,339,496.053 40,943,653 4,094,365.416 Issued during the year 40,733,341 4,073,334.085 955,854,241 95,585,424.100 509,341 50,934.139 17,306,104 1,730,610.437

151,829,804 15,182,980.481 1,066,605,013 106,660,501.347 43,904,300 4,390,430.192 58,249,757 5,824,975.853 Redeemed during the year 133,070,065 13,307,006.495 955,508,550 95,550,854.951 19,891,392 1,989,139.240 14,854,798 1,485,479.800 At the end of the year 18,759,739 1,875,973.986 111,096,463 11,109,646.396 24,012,908 2,401,290.952 43,394,959 4,339,496.053

Fortnightly Dividend Option

Issued and Subscribed :Units of Rs. 10 each fully paid up - - - - - - - - Outstanding:At the beginning of the year 5,453,338 545,333.900 8,815,539 881,553.972 - - - - Issued during the year 26,522,322 2,652,232.224 1,107,091,215 110,709,121.493 - - - -

31,975,660 3,197,566.124 1,115,906,754 111,590,675.465 - - - - Redeemed during the year 26,291,034 2,629,103.368 1,110,453,416 111,045,341.565 - - - - At the end of the year 5,684,626 568,462.756 5,453,338 545,333.900 - - - -

Institutional Plus Option Growth Sub Option

Issued and Subscribed :Units of Rs. 10 each fully paid up - - - - 472,171,231 47,217,123.087 472,171,231 47,217,123.087 Outstanding:At the beginning of the year - - - - 49,873,322 4,987,332.184 64,003,470 6,400,346.993 Issued during the year - - - - 87,372,179 8,737,217.855 1,177,175,725 117,717,572.514

- - - - 137,245,501 13,724,550.039 1,241,179,195 124,117,919.507 Redeemed during the year - - - - 2,812,963 281,296.358 1,191,305,873 119,130,587.323 At the end of the year - - - - 134,432,538 13,443,253.681 49,873,322 4,987,332.184


Issued and Subscribed :Units of Rs. 10 each fully paid up - - - - 440,058,353 44,005,835.313 440,058,353 44,005,835.313 Outstanding:At the beginning of the year - - - - - - 119,184,385 11,918,438.460 Issued during the year - - - - - - 4,744,780,924 474,478,092.435

- - - - - - 4,863,965,309 486,396,530.895 Redeemed during the year - - - - - - 4,863,965,309 486,396,530.895 At the end of the year - - - - - - - -


Issued and Subscribed :Units of Rs. 10 each fully paid up - - - - 103,234,867 10,323,486.737 103,234,867 10,323,486.737 Outstanding:At the beginning of the year - - - - - - - - Issued during the year - - - - - - - -

- - - - - - - - Redeemed during the year - - - - - - - - At the end of the year - - - - - - - -


Issued and Subscribed :Units of Rs. 10 each fully paid up - - - - - - - - Outstanding:At the beginning of the year - - - - 35,805,472 3,580,547.191 179,205,139 17,920,513.941 Issued during the year - - - - 41,579 4,157.938 5,310,436 531,043.585

- - - - 35,847,051 3,584,705.129 184,515,575 18,451,557.526 Redeemed during the year - - - - 35,847,051 3,584,705.129 148,710,103 14,871,010.335 At the end of the year - - - - - - 35,805,472 3,580,547.191

TOTAL 5,199,265,393 519,926,539.379 3,916,019,949 391,601,995.040 670,636,523 67,063,652.340 840,583,520 84,058,352.231

Note : HSBC Asset Management (India) Private Limited, the investment manager holds 1,066,679.332 units (Previous Year : 1,032,306.247 units) in the Long Term Plan - Institutional Option - Daily Dividend Sub Option and 568,462.756 units

(Previous Year : 545,333.91 units) in the Long Term Plan - Institutional Option - Fortnightly Dividend Sub Option and 4,987,332.176 units (Previous Year : 4,987,332.176 units) in the Short Term Plan - Institutional Plus Option - Growth Sub Option as at March 31, 2010.

HSBC MUTUAL FUND - HSBC FLOATING RATE FUNDSchedules forming part of the Balance Sheet as at March 31, 2010 and the Revenue Account for the year ended March 31, 2010


3

SCHEDULE 5 Short Term PlanReserves and Surplus March 31, 2010

(March 31, 2009)


At the beginning of the year 272,286,492 (5,304,660)

(9,821,983) (346,457)


(262,464,509) (-5,651,117) (-) (-)


(272,286,492) (-5,304,660)



(245,075,183) (-22,510,017)


(-245,075,183) (22,510,017)


(-) (-)


At the beginning of the year 2,905,361 -

(-) (-)

Net change in Unrealised Appreciation in Value of Investments transferred from Revenue Account (Note 7) (2,905,361) -

(2,905,361) -


(2,905,361) -

Reserve Fund


(64,509,949) (39,102,564)


(-2,312,954) (-4,870,888)

Balance Transferred from Revenue Account (59,436,578) (405,972,346)

(291,023,835) (8,942,052)


(353,220,830) (43,173,728)

TOTAL 778,373,830 * 51,664,896 * (628,412,683) (37,869,068)

* The share of the Plans / Options of the Reserves and Surplus is as follows : March 31, 2010 March 31, 2010(March 31, 2009) (March 31, 2009)Rupees Rupees

Regular OptionGrowth Sub Option 39,112,109 18,068,600

(26,339,738) (26,830,187)Monthly Dividend Sub Option 154,062 -

(277,170) - Daily Dividend Sub Option 34,736 -

(53,794) (17)Weekly Dividend Sub Option 91,470 361,708

(38,815) (552,036)Total (A) 39,392,377 18,430,308

(26,709,517) (27,382,240)Institutional OptionGrowth Sub Option 247,616,532 9,581,389

(330,649,251) (339,728)Weekly Dividend Sub Option 489,603,616 -

(269,027,429) (1,720,220)Fortnightly Dividend Sub Option 112,050 -

(122,454) - Monthly Dividend Sub Option 354,740 323,311

(682,304) (585,939)Daily Dividend Sub Option 1,294,515 13,598

(1,221,728) (429,593)Total (B) 738,981,453 9,918,298

(601,703,166) (3,075,480)Institutional Plus OptionGrowth Sub Option - 23,316,290

- (7,277,645)Daily Dividend Sub Option - -

- - Weekly Dividend Sub Option - -

- (133,703)Monthly Dividend Sub Option - -

- -

Total (C) - 23,316,290

- (7,411,348)

Total (A+B+C) 778,373,830 51,664,896

(628,412,683) (37,869,066)



Long Term Plan

Rupees

March 31, 2010(March 31, 2009)

Rupees



Investment Management and Advisory Fees 4,508,635 2,236,155 698,971 690,888


Custodian Fees and Expenses 193,101 150,334 27 360

Audit Fees 25,000 25,000 12,000 150,000

Selling and Distribution Expenses 2,565,165 1,421,429 247,242 213,350

Purchase Contracts Awaiting Completion - Certificate of Deposits 247,435,750 333,240,650 - -

Unit Redemption Payable 1,260,010 1,195,327 - -

Units Pending Allotment - - - 2,775,000

Inter Scheme Payable :

- for Switch-Out - - - 449,986

- for Others - 29,604 - -


Unclaimed Redemption (Note 14) 14,800 - - -

Load Payable (Note2.8) 522,735 - - -

Unclaimed Dividend (Note 15) 41,564 41,564 - -

Temporary Book Overdraft - 110 - -

Dividend Distribution Tax Payable 580,989 14,170 40,501 16,833

Sundry Payables 203,740 198,375 24,727 148,934

TOTAL 257,698,221 339,535,485 1,053,429 4,482,874

Short Term PlanLong Term Plan

5

SCHEDULE 7Interest and Discount (Note 2.4) April 01, 2009 to

March 31, 2010April 01, 2008 toMarch 31, 2009

April 01, 2009 toMarch 31, 2010

April 01, 2008 toMarch 31, 2009


Debentures / Bonds 11,150,069 38,028,954 - 14,204,358

Asset Backed Securities 7,423,020 17,184,293 - 3,285,355

Treasury Bills 15,271,019 - - -

Commercial Paper / Certificate of Deposit 502,560,322 137,169,085 2,730,000 78,555,315

Deposits 22,799 513,604 32,612 64,228

Reverse Repos 20,555,860 19,885,138 9,444,836 8,492,167


TOTAL 581,530,712 222,375,584 21,262,673 109,107,654




6

Description Quantity Market/ Fair ValueRupees

HSBC FLOATING RATE FUND - LONG TERM PLANCommercial Papers/Certificate of Deposits (100%)Certificate of Deposits (83.47%)

UCO Bank 2010 $ @ 5,000 494,070,953Oriental Bank Of Commerce 2010 $ @ 5,000 493,755,521Vijaya Bank 2010 $ @ 5,000 493,295,257State Bank of Hyderabad 2010 $ 5,000 490,635,961HDFC Bank Limited 2011 $ 5,000 471,251,441State Bank of Patiala 2010 $ 2,500 248,836,672State Bank of Hyderabad 2010 $ 2,500 248,318,090Bank of Maharashtra 2010 $ @ 2,500 247,438,750Syndicate Bank 2010 $ 2,500 246,966,512State Bank of Hyderabad 2010 $ 2,500 246,808,320IDBI Bank Limited 2010 $ @ 2,500 246,653,412State Bank of Travancore 2010 $ 2,500 245,149,251Bank of Baroda 2010 $ 2,500 239,963,572Oriental Bank Of Commerce 2010 $ @ 2,500 239,888,552Union Bank of India 2010 $ @ 1,500 148,317,592Punjab National Bank 2010 $ @ 600 59,964,466Vijaya Bank 2010 $ @ 500 49,970,407Canara Bank 2010 $ 100 9,992,900


Tata Capital Limited 2010 $ 1,000 482,621,387Kotak Mahindra Prime Limited 2010 $ 500 249,722,082L&T Finance Limited 2010 $ 500 242,174,389








7


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 617,951,717 223,587,251

Adjustments for:- (Increase)/Decrease in Investments at Cost (1,513,132,410) (3,706,614,121) (Increase)/Decrease in Other Current Assets 7,368,502 (6,588,797) Increase/(Decrease) in Current Liabilities 3,903,061 3,615,096

Net cash used in Operations (A) (883,909,130) (3,486,000,571)

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital 1,283,245,444 3,295,936,922 Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (67,460,912) 507,539,692

Adjustments for:- Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors 64,683 1,041,943 (Increase)/Decrease in Sundry Debtors for Units Issued to Investors 825,683 (1,068,864)

Dividend / Distribution paid during the year (330,020,737) (149,342,433) Dividend / Distribution Tax paid during the year (68,267,359) (29,966,630)

Net cash generated from financing activities (B) 818,386,802 3,624,140,630

Net (Decrease)/Increase in Cash and Cash Equivalents (A+B) (65,522,328) 138,140,059




Rupees


Balances with Banks : - In Current Account 372,035 542,660 - In Dividend Account 41,612 42,877

Margin Deposit with the Clearing Corporation of India Towards Collateralised Borrowing and Lending Obligation 5,610,000 2,510,000 Temporary Book Overdraft - (110) Other Collateralised LendingReverse Repo - 74,283,717 Collateralised Borrowing and Lending Obligation 31,415,592 77,718,877

37,439,239 155,098,021

2




Trustee Director


HSBC MUTUAL FUND - HSBC FLOATING RATE FUND LONG TERM PLAN


The above Cash Flow Statement has been prepared under the "Indirect Method" set out in Accounting Standard - 3 on Cash Flow Statements, issued by The Institute of Chartered Accountants of India.

8



SCHEDULE 8


1 Organisation

HSBC Floating Rate Fund (the “Scheme”) is an open-ended income scheme of HSBC Mutual Fund (the “Fund”)

and was launched on November 01, 2004. HSBC Mutual Fund has been sponsored by HSBC Securities and

Capital Markets (India) Private Limited. HSBC Asset Management (India) Private Limited incorporated under the


perpetual. The Scheme closed for initial subscription on November 8, 2004 and reopened for issue and redemption

of units on November 17, 2004. The investment objective of the Scheme is to generate reasonable return with

commensurate risk from a portfolio comprising of floating rate debt instruments, fixed rate debt instruments

swapped for floating rate returns, fixed rate money market instruments and debt instruments. The Scheme has two

Plans – Long Term Plan and Short Term Plan, each with a separate portfolio. Both the Long Term Plan and Short

Term Plan offers Regular and Institutional Options. The Regular Option under both the plans offers Growth and

Dividend Sub-Options - Monthly Dividend for Long Term Plan and Daily Dividend and Weekly Dividend for

Short Term Plan. The Weekly Dividend Sub- Option under the Regular Option of the Short Term Plan was

introduced during the year ended March 31, 2006 and units were allotted on April 19, 2005 at the net asset value

of Rs. 10 per unit in accordance with the addendum dated April 8, 2005 to the common offer document dated

November 29, 2004. The Institutional Option under both the Plans offer Growth, Weekly Dividend and Monthly

Dividend Sub – Options. The Institutional Option under Short Term Plan further offers a Daily Dividend Sub-

Option. Institutional Plus Option under Short Term Plan was introduced during the year ended March 31, 2006

offering Growth, Daily Dividend, Weekly Dividend and Monthly Dividend Sub-Options. Units were allotted on

November 21, 2005 at the net asset value of Rs. 10 per unit under the Growth, Daily Dividend and Monthly

Dividend Sub-Options in accordance with the addendum dated October 25, 2005 to the common offer document

dated November 29, 2004. A fortnightly dividend sub option and Institutional Option of the Long Term Plan was

launched during the year ended March 31, 2008 in accordance with the addendum dated September 18, 2007 to

the common offer document dated November 29, 2004. In accordance with the addendum to the offer document

dated August 29, 2008, Daily Dividend Reinvestment sub-options were introduced in the Regular and the

Institutional option respectively in Long Term Plan. Further, In accordance with the addendum to the offer

document dated February 12, 2009, Weekly Dividend Reinvestment sub-option was introduced in the Regular

Option with effect from February 20, 2009 in Long Term Plan.

The Scheme will not declare dividend under the Growth Sub-option of both the Plans in normal circumstances.

The income earned on such units will remain invested within the Scheme and will be reflected in the net asset

value of these Plans.






applicable.






. Debt securities listed on a recognised stock exchange are valued at the last quoted closing price on the National

Stock Exchange of India Limited. If no sale is reported at that time such securities are valued at fair value as

determined in good faith by HSBC Asset Management (India) Private Limited under procedures approved by

the Board of Trustees of HSBC Mutual Fund.

. Non-traded and thinly traded debt securities, are valued at fair value 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 dated September 18, 2000

and amendments thereto, as applicable, issued by the Securities and Exchange Board of India (SEBI).

. Privately placed debt securities are valued at fair value as determined in good faith by HSBC Asset

Management (India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual

Fund.

. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management

(India) Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund .

. Traded money market securities are valued at the yield at which they are traded on the valuation date. If no sale

is reported at that time, such security is valued at the last traded price plus accretion of the difference between

the face value and the last traded price. Non traded money market instruments are valued at cost plus accrued

interest.

. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up to the

date of resale.

. Non Traded Treasury Bills are valued at Cost Plus accrued Interest.

. Collateralized Borrowing and Lending Obligations (CBLO) are valued at Cost Plus accrued interest.





Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted through the

Revenue Account.









2.5 Net Asset Value for Growth / Dividend Sub-Options of Regular, Institutional and Institutional Plus Options


Dividend Sub-options of the Regular, Institutional and Institutional Plus Options for the Long Term Plan and

Short Term Plan.

For reporting the net asset value for the Sub-options, daily income earned, including realized and unrealized gain

or loss in the value of investments and expenses incurred by the Scheme are allocated to the Sub-options in

proportion to the value of the net assets.











2.8 Load Charges

Load collected up to July 31, 2009 is retained in the Scheme under a separate account and is used to meet marketing and

selling expenses. Pursuant to SEBI circular SEBI/IMD/CIR No. 4/168230/09 dated June 30, 2009, effective August 1,

2009, of the exit load collected in the Schemes a maximum of 1% of redemption proceeds is maintained in a separate

account and utilized to meet marketing and selling expenses. Any load collected in excess of 1% is credited to the

Schemes.




daily net asset values of Long Term Plan and 0.26% of the average daily net asset value of Short Term Plan

respectively recorded by the Scheme. All costs, charges and expenses incurred by HSBC Asset Management

(India) Private Limited in the administration and execution of the activities of the Scheme, except costs allowed

to be charged to the Scheme under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996

and amendments thereto as applicable, are on their own account for which they receive investment management

and advisory fees.



2 Trusteeship Fees



provided for a fee not exceeding Rs. 20,000 for each meeting of the Board of Trustees attended by such Trustee


2 Custodian Fees

JP Morgan Chase Bank provides custodial services to the Scheme for which it receives custody fees.

2 Income Taxes


of the Income Tax Act, 1961 of India.




March 31,

2010 March 31,

2009 March 31,

2010 March 31,

2009 Non Convertible Debentures and Bonds Listed / Awaiting Listing

- Appreciation - - - -

- Depreciation - 663,800 - -


- Appreciation - 837,077 - -

- Depreciation - - - -


- Appreciation - 2,068,284 - -

- Depreciation - - - -

8 Aggregate Fair Value of Non-Traded/ Privately Placed Investments

Aggregate fair values of non traded (including private placement) investments as determined by HSBC Asset

Management (India) Private Limited under the procedures approved by the Board of Trustees as at March 31,

2010 are Rs. 5,895,795,487 and Rs. Nil for Long Term Plan and Short Term Plan respectively.




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 :

Aggregate Purchases Aggregate Sales

Plan Rupees Percentage of Average


Percentage of AverageDaily Net Assets

Long Term Plan 72,453,262,526 552.03% 71,918,677,941 547.95%

Short Term Plan 797,541,975 103.30% 800,000,000 103.62%


The total income (including net profit on sale of investments and net change in unrealized depreciation in the

value of investments) and expenditure during the year are:

Total Income Total Expenditure

Plan Rupees Percentage of Average



Long Term Plan 702,051,940 5.35% 83,436,423 0.64%

Short Term Plan 20,991,530 2.72% 3,785,318 0.49%











HSBC Mutual Fund


(iv) HSBC Software Development India Private Limited Associate of the Investment Manager

(v) HSBC InvestDirect Securities (India) Limited Associate of the Investment Manager

(vi) PML Mercantile Limited Associate of the Investment Manager



(vii) Schemes of the Fund, Under Common Control of the Sponsor of the Fund

HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund(Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund

(viii) Key Management Personnel and their relatives:

Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai – Relative of a Key Management Personnel Kemaya Lal Kidwai – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel with effect from July 16, 2008 Raaghav Aaditya* – Relative of a Key Management Personnel with effect from July 16, 2008 Rhea Aaditya* – Relative of a Key Management Personnel with effect from July 16, 2008 Gabriele A Apenbrink* – Relative of a Key Management Personnel



Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Refer Annexure I.


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.






Nature of Relation

Period Covered


% of Total




Fund

Plan


Long Term Plan


Long Term Plan


Short Term Plan


Short Term Plan




Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund

Plan


Long Term Plan


Short Term Plan




Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel of bankers with whom HSBC

Mutual Fund places money on fixed deposits and enters into reverse repo transactions from time to time at

competitive rates.








The Scheme operates in one segment only viz. to generate reasonable return with commensurate risk from a

portfolio comprising of floating rate debt instruments, fixed rate debt instruments swapped for floating rate

returns, fixed rate money market instruments and debt instruments.


As at March 31, 2010, unclaimed redemptions aggregate Rs. 14,800 payable to 4 investors for Long Term Plan.


As at March 31, 2010, unclaimed dividend aggregates Rs. 41,564 payable to 56 investors for Long Term Plan.


Miscellaneous income of Rs.4,916 and Rs. 832 in Long Term Plan and Short Term Plan respectively represents

excess provision for brokerage expenses of previous year written back as no longer required.










HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)




Manager


Sponsor


Relatives Total


Sale of Investments - - - - - Previous Year - - 5,736,528,123 - 5,736,528,123

Subscription of Units (including switch in and dividendreinvestment) 585,045 3,039,717 - 9,228,937 12,853,699 Previous Year 10,620,606 331,667,878 - 18,848,546 361,137,030

Redemption of Units (including switch out) - 2,800,000 - 15,266,937 18,066,937 Previous Year - 100,000,000 - 5,414,442 105,414,442

Dividend Distribution (Including dividend reinvested) 585,045 39,858 - 328,937 953,840 Previous Year - 5,519,120 - 138,546 5,657,666


Brokerage/ Commission on Distribution of Units - 4,329,515 - - 4,329,515 Previous Year - 955,380 - - 955,380

Reimbursement of Expenses - - - - - Previous Year 1,063,282 - - - 1,063,282

Charges for Services Provided by Bank - 3,831 - - 3,831 Previous Year - 12 - - 12




Manager


Sponsor


Relatives Total

Investment Management and Advisory Fees Payable 4,508,635 - - - 4,508,635 Previous Year 2,236,155 - - - 2,236,155

Brokerage/ Commission Payable for Distribution of Units - 1,025,639 - - 1,025,639 Previous Year - 357,500 - - 357,500

Units Outstanding As At Year End 16,655,361 515,822,783 - 7,365,776 539,843,920 Previous Year 15,999,995 231,479,342 - 13,385,946 260,865,283

Other Payables - - - - - Previous Year - - 29,604 - 29,604

Other Receivables - - - - - Previous Year 1,063,917 - 3,000 - 1,066,917


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividendreinvestment)PML Mercantile Ltd 3,039,717 - HSBC Software Development India Private Limite - 331,667,878

Redemption of Units (including switch out)PML Mercantile Ltd 2,800,000 - HSBC Software Development India Private Limite - 100,000,000

Dividend Distribution (Including dividend reinvested)PML Mercantile Ltd 39,858 - HSBC Software Development India Private Limite - 5,519,120

Units Outstanding As At Year EndHSBC Software Development India Private Limite 515,579,253 231,479,342

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 3,987,136 955,380 HSBC InvestDirect Securities (India) Limited 342,379 -

Brokerage / Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,025,476 357,500 HSBC InvestDirect Securities (India) Limited 163 -

Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 3,831 12

(iv) Details of material transactions with respect to parties referred to in Note 11 (I)(vii) for Schemes under common control ofthe Sponsor.

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 3,343,392,374 HSBC Cash Fund - 2,883,366,678 HSBC Floating Rate Fund Short Term Plan - 9,380,689

Sale of InvestmentsHSBC Ultra Short Term Bond Fund - 2,045,579,782 HSBC Cash Fund - 814,371,527 HSBC Floating Rate Fund Short Term Plan - 135,287,342

Other PayablesHSBC Equity Fund - 29,604

Other ReceivablesHSBC Cash Fund - 3,000

(v) Disclosures in respect of material transactions with persons referred to in Note 11 (I)(viii) for key management personneland their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividendreinvestment)Naina Lal Kidwai - 15,617,440 Kemaya Lall Kidwai(Relative) 5,612,999 - Rashid K Kidwai(Relative) 3,457,923 -

Redemption of Units (including switch out)Naina Lal Kidwai 11,856,937 3,900,000 Kemaya Lal Kidwai(Relative) 1,910,000 - Rashid K Kidwai - 1,514,442

Dividend Distribution (Including dividend reinvested)Naina Lal Kidwai 158,015 117,440 Kemaya Lall Kidwai 112,999 13,745 Rashid K Kidwai 33,558 - Nelum Pahlaj Gidwani - 7,361

Units Outstanding As At Year EndNaina Lal Kidwai - 11,679,349 Kemaya Lall Kidwai 5,407,717 1,706,569 Rashid K Kidwai 1,958,060 -

HSBC MUTUAL FUND - HSBC FLOATING RATE FUND - LONG TERM PLAN


Annexure I

0


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 financial 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 financial statements based on our audit.




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 Cash Fund as at March 31, 2010, its net surplus and its cash flows 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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.

(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.




ASSETS

Investments 1 2,797,208,928 499,774,250

Deposits 2 206,188,000 282,638,000

Other Current Assets 3 1,835,085,702 4,272,958,069

TOTAL (0.49) 4,838,482,630 5,055,370,319

LIABILITIES

Unit Capital 4 4,536,560,409 4,600,896,332

Reserves and Surplus 5 169,467,314 325,574,756


TOTAL 0.49 4,838,482,630 5,055,370,319 0.00 (0.49)

2,264,104,773 2,264,104,772 2,264,104,772.06RECONCILIATION OF NET ASSET VALUE PER UNIT

Growth Sub Option



Growth Sub Option



Monthly Dividend Sub Option Total

Growth Sub Option

Daily DividendSub Option


Monthly Dividend Sub Option Total Total

Net Assets as per Balance Sheet

(Total Assets less Current Liabilities and Provisions) (Note 2.6) 188,400,494 785,872,414 145,966,586 1,120,239,494 14,078,249 49,893,298 30,646,448 5,840,022 100,458,017 262,524,281 2,964,140,812 216,637,547 42,027,572 3,485,330,212 4,706,027,723

(283,508,670) (1,202,295,068) (172,231,968) (1,658,035,706) (23,867,214) (551,021,885) (114,438,497) (5,840,590) (695,168,186) (619,337,752) (1,623,262,740) (269,729,148) (60,937,556) (2,573,267,196) (4,926,471,088)

Number of Units in Issue 12,653,458.458 77,098,956.869 14,572,031.930 936,912.686 4,778,989.200 2,928,890.719 554,781.271 18,546,884.116 296,248,741.771 21,167,792.999 4,168,600.927

(19,452,526.536) (117,952,996.359) (17,184,208.603) (1,626,747.666) (52,779,357.682) (10,930,233.795) (554,781.289) (44,991,905.273) (162,235,389.474) (26,337,844.437) (6,043,642.284)

Net Asset Value per Unit 14.8892 10.1930 10.0169 15.0262 10.4401 10.4635 10.5267 14.1546 10.0056 10.2343 10.0819 (14.5744) (10.1930) (10.0227) (14.6717) (10.4401) (10.4699) (10.5277) (13.7655) (10.0056) (10.2411) (10.0829)





Trustee Director

Place: Mumbai Fund Manager(s)Date :

HSBC MUTUAL FUND - HSBC CASH FUND

Institutional OptionRegular Option Institutional Plus Option

March 31, 2010(March 31, 2009)

Rupees



0



INCOME AND GAINS

Interest and Discount 7 171,539,560 1,221,211,006 Net Profit on Sale of Investments

(Including Net Profit on Inter-Scheme Sale of Investments Rs. Nil (Previous year: Rs 4,367,930)) (Note 2.4) - 10,818,302

Miscellaneous Income (Note 14) 3,282 39,384

TOTAL 171,542,842 1,232,068,692

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.4) 507,096 -




Custodian Fees and Expenses (Note 5) 238,957 1,684,726

Audit Fees 100,000 300,000


Other Operating Expenses 314,552 1,248,648

TOTAL 30,737,725 60,575,532

Net Realised Gains for the Year 140,805,117 1,171,493,160

Net Change in Unrealised Depreciation in Value of Investments - 7,220

Net Surplus for the Year 0.30 140,805,117 1,171,500,380

April 01, 2009 to March 31, 2010April 01, 2009 to March

31, 2010April 01, 2008 to March

31, 2009

Growth Sub Option Total Total


Net Surplus for the Year 5,750,559 101,428,170 140,805,117 1,171,500,380

(24,334,926) (899,276,013)

Transfer from Income Equalisation Reserve (Note 2.8) (32,716,460) (105,705,579) (172,049,077) (963,276,421)

(-19,847,748) (-826,914,155)

Transfer from Reserve Fund - 3,694,675 34,919,468 62,374,628

(-) (5,940,921)

Dividend / Distribution - (68,470,854) (94,334,993) (554,531,773)

(-) (-373,396,114)

Dividend / Distribution Tax thereon - (19,394,370) (26,720,387) (157,071,123)

(-) (-105,764,447)

Balance Transferred to Reserve Fund (26,965,900) (88,447,958) (117,379,872) (441,004,309)

(4,487,178) (-400,857,782)





Trustee Director





1

SCHEDULE 1

Investments Market /Fair Value Cost Market /Fair Value Cost(Notes 2.2, 2.4, 7, 8, 11 and 13) Rupees Rupees Rupees Rupees(Refer to the attached Statement of Portfolio Holding as at March 31, 2010)

Non Convertible Debentures and Bonds Listed / Awaiting Listing - - 148,333,096 148,333,096 Privately Placed Non Convertible Debentures / Bonds 32,026,000 32,026,000 106,195,000 106,195,000

Commercial Paper / Certificate of Deposit 2,765,182,928 2,765,182,927 245,246,154 245,246,154

TOTAL 2,797,208,928 2,797,208,927 499,774,250 499,774,250


Margin Deposit for National Depository Service 100,000 100,000

Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 22,338,000 42,538,000


TOTAL 206,188,000 282,638,000


Balances with Banks - in Current Account 12,710,132 16,772,748 - in Dividend Account - 33

Reverse Repos 1,135,867,155 2,075,137,335

Collateralised Borrowing and Lending Obligation 684,435,284 2,171,094,275

Inter-Scheme Receivable :- For 'Switch-In' 571,521 1,148,963 - For 'Others' - 21,786

Interest Receivable on :- Debentures / Bonds 21,898 4,806,509 - Deposits 1,126,293 3,286,774 - Reverse Repos 160,490 267,044 - Collateralised Borrowing and Lending Obligation 92,929 265,984


Miscellaneous Receivables 100,000 100,000

TOTAL 1,835,085,702 4,272,958,069



March 31, 2010 March 31, 2009

2


Growth Sub Option

Issued and SubscribedUnits of Rs. 10 each fully paid up 1,087,475,000 108,747,500.000 1,087,475,000 108,747,500.000

Outstanding:



601,552,581 60,155,257.987 932,889,632 93,288,963.121



Dividend Sub Option

Issued and SubscribedUnits of Rs. 10 each fully paid up - - - -

Outstanding:


Issued during the year 1,117,723,956 111,772,395.587 3,085,190,109 308,519,010.875

2,297,253,920 229,725,391.946 4,773,019,719 477,301,971.866

Redeemed during the year 1,526,264,351 152,626,435.077 3,593,489,755 359,348,975.507

At the end of the year 770,989,569 77,098,956.869 1,179,529,964 117,952,996.359


Issued and SubscribedUnits of Rs. 10 each fully paid up 450,000 45,000.000 450,000 45,000.000

Outstanding:



496,551,898 49,655,189.906 958,468,819 95,846,881.955



TOTAL 1,043,244,473 104,324,447.257 1,545,897,315 154,589,731.498


Growth Sub Option

Issued and SubscribedUnits of Rs. 10 each fully paid up 47,916,128 4,791,612.761 47,916,128 4,791,612.761

Outstanding:


Issued during the year 139,277,008 13,927,700.773 3,220,602,750 322,060,275.008

155,544,485 15,554,448.439 3,392,882,575 339,288,257.512

Redeemed during the year 146,175,358 14,617,535.753 3,376,615,098 337,661,509.846

At the end of the year 9,369,127 936,912.686 16,267,477 1,626,747.666



Outstanding:


Issued during the year 2,107,244,563 210,724,456.279 8,456,793,479 845,679,347.939

2,635,038,139 263,503,813.961 9,847,375,133 984,737,513.361

Redeemed during the year 2,587,248,248 258,724,824.761 9,319,581,557 931,958,155.679



Issued and SubscribedUnits of Rs. 10 each fully paid up 9,581,848 958,184.815 9,581,848 958,184.815

Outstanding:



155,232,965 15,523,296.512 430,174,085 43,017,408.509





Outstanding:

At the beginning of the year 5,547,812 554,781.289 21,876,964 2,187,696.477

Issued during the year 5,457,790 545,778.993 58,711,860 5,871,186.049

11,005,602 1,100,560.282 80,588,824 8,058,882.526

Redeemed during the year 5,457,790 545,779.011 75,041,012 7,504,101.237

At the end of the year 5,547,812 554,781.271 5,547,812 554,781.289

TOTAL 91,995,737 9,199,573.876 658,911,203 65,891,120.432


Regular Option


3


HSBC MUTUAL FUND - HSBC CASH FUNDSchedules forming part of the Balance Sheet as at March 31, 2010


3


Growth Sub Option


Outstanding:


Issued during the year 25,434,912,051 2,543,491,205.051 144,407,177,822 14,440,717,782.241

25,884,831,103 2,588,483,110.324 146,472,327,037 14,647,232,703.775

Redeemed during the year 25,699,362,262 2,569,936,226.208 146,022,407,985 14,602,240,798.502




Outstanding:


Issued during the year 508,300,396,457 50,830,039,645.693 464,260,547,339 46,426,054,733.863

509,922,750,351 50,992,275,035.167 470,348,870,995 47,034,887,099.574

Redeemed during the year 506,960,262,934 50,696,026,293.396 468,726,517,101 46,872,651,710.100




Outstanding:


Issued during the year 3,654,915,000 365,491,499.821 11,327,652,704 1,132,765,270.417

3,918,293,445 391,829,344.258 11,509,967,333 1,150,996,733.251

Redeemed during the year 3,706,615,513 370,661,551.259 11,246,588,888 1,124,658,888.814




Outstanding:



158,261,325 15,826,132.504 111,103,546 11,110,354.631



TOTAL 3,401,320,199 340,132,019.812 2,396,087,814 239,608,781.468

GRAND TOTAL 4,536,560,409 453,656,040.945 4,600,896,332 460,089,633.398

Note: HSBC Asset Management (India) Private Limited, the investment manager holds 38,292,626.954 units (Previous year : 5,069,436.298 units) in the Institutional Plus Option - Daily Dividend Sub - Option and 925,345.397 units (Previous year : 905,388.851 units) in the Institutional Plus Option Monthly Dividend Sub -Option as at March 31,2010.

HSBC Securities and Capital Markets (India) Private Limited, the sponsor holds 204,906,377.943 units (Previous year : 111,154,513.048 units) in the Institutional Plus Option - Daily Dividend Sub Option as at March 31,2010.

SCHEDULE 5Reserves and Surplus


At the beginning of the year 8,880,762

(2,088,119)

Added during the year (3,808,102)

(6,792,643)

At the end of the year 5,072,660

(8,880,762)


Added during the year (172,049,077)

(-963,276,421)

Transferred to Revenue Account 172,049,077

(963,276,421)

At the end of the year -

Reserve Fund

At the beginning of the year 316,693,994

(820,072,931)

Transferred to Revenue Account (34,919,468)

(-62,374,628)

Balance Transferred from Revenue Account (117,379,872)

(-441,004,309)

At the end of the year 164,394,654

(316,693,994)

-

TOTAL 169,467,314 *

(325,574,756) *

* The share of the Options of the Reserves and Surplus is as follows :

Regular Option RupeesGrowth Sub-Option 61,865,908

(88,983,404)Daily Dividend Sub-Option 14,882,845

(22,765,104)Weekly Dividend Sub-Option 246,268

(389,883)Total (A) 76,995,021

(112,138,391)

Institutional OptionGrowth Sub-Option 4,709,122


(23,228,309)Weekly Dividend Sub-Option 1,357,541

(5,136,159)Monthly Dividend Sub-Option 292,210

(292,778)Total (B) 8,462,280

(36,256,983)

Institutional Plus OptionGrowth Sub-Option 77,055,440


(908,846)Weekly Dividend Sub-Option 4,959,615

(6,350,703)Monthly Dividend Sub-Option 341,563

(501,133)Total (C) 84,010,013

(177,179,382)

Total (A+B+C) 169,467,314(325,574,756)


March 31, 2010(March 31, 2009)

Rupees


Rupees


March 31, 2010(March 31, 2009)

0

SCHEDULE 6 March 31, 2010 March 31, 2009Current Liabilities and Provisions Rupees RupeesCurrent Liabilities




Audit Fees 100,000 300,000


Unit Redemption Payable 385,142 398,693

Inter Scheme Payable

- For 'Switch-Out' 120,541,246 118,351,291

- For 'Others' - 108,000

Units Pending Allotment 5,000,000 3,890,270

Dividend Payable - 159,253

Dividend Tax Payable 348,411 237,254

Sundry Payables 555,525 1,094,410

TOTAL 132,454,907 128,899,231


Rupees Rupees


Asset Backed Securities - 75,862,467

Commercial Paper / Certificate of Deposit 58,750,519 747,514,935

Reverse Repos 46,338,755 103,872,960


Deposits 4,654,829 61,532,560

Interest Rate Swaps (Net) (Note 2.3 ) - 224,281

TOTAL 171,539,560 1,221,211,006



5


Privately Placed / Unlisted Non-Convertible Debentures / Bonds (1.14%)Construction (100%)

14.00% Unitech Limited 2010 * 478 32,026,00032,026,000

Total (Cost Rs. 32,026,000) 32,026,000

Commercial Papers/Certificate of Deposits (98.86%)Certificate of Deposits (81.94%)

Bank of Maharashtra 2010 $ @ 2,500 249,756,090ICICI Bank Limited 2010 $ 2,500 249,557,608Central Bank of India 2010 $ 2,500 247,569,464Allahabad Bank 2010 $ 2,500 247,251,074ING Vysya Bank Limited 2010 $ 2,500 246,647,567Canara Bank 2010 $ 2,400 239,829,597Vijaya Bank 2010 $ @ 2,000 199,881,629Oriental Bank Of Commerce 2010 $ @ 2,000 197,702,137Syndicate Bank 2010 $ 2,000 197,573,210Punjab National Bank 2010 $ @ 1,900 189,887,477


Kotak Mahindra Prime Limited 2010 $ 500 249,769,199Exim Bank Limited 2010 $ @ 500 249,757,876







$ Fair value of non traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board ofTrustees in accordance with guidelines for valuation of securities for mutual funds dated September 18, 2000 and amendments thereto, as applicable, issuedby the Securities and Exchange Board of India.


6


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 140,805,117 1,171,493,160

Adjustments for:- (Increase)/Decrease in Investments at cost (2,297,434,678) 12,545,547,060 (Increase)/Decrease in Other current assets 7,303,105 42,127,852 Increase/(Decrease) in Current liabilities 1,379,272 4,984,930

Net cash (used in) / generated from operations (A) (2,147,947,184) 13,764,153,002

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (64,335,923) (7,667,258,706) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (175,857,179) (956,483,776)

Adjustments for:- Increase/(Decrease) in Sundry creditors for units redeemed by investors 2,176,404 (113,309,573) (Increase)/Decrease in Sundry debtors for units issued to investors 577,442 4,768

Dividend paid during the year (94,334,993) (554,531,773) Dividend Tax paid during the year (26,720,387) (157,071,123)

Net cash (used in) financing activities (B) (358,494,636) (9,448,650,183)

Net Increase/(Decrease) in Cash and cash equivalents (A+B) (2,506,441,820) 4,315,502,819

Cash and Cash Equivalents at the beginning of the year 4,545,642,391 230,139,572 Cash and Cash Equivalents at the end of the year 2,039,200,571 4,545,642,391



Rupees


Balances with Scheduled Banks : - In Current Account 12,710,132 16,772,748 - In Dividend Account - 33 Margin Deposit for National Depository Service 100,000 100,000


Margin Deposit with the Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 183,750,000 240,000,000 Other Collateralised LendingReverse Repo 1,135,867,155 2,075,137,335 Collateralised Borrowing and Lending Obligation 684,435,284 2,171,094,275

2,039,200,571 4,545,642,391

2 The above Cash Flow Statement has been prepared under the "Indirect Method" set out in Accounting Standard - 3 on Cash Flow Statements, issued by The Institute of Chartered Accountants of India.




Trustee Director



HSBC MUTUAL FUND - HSBC CASH FUND7



SCHEDULE 8


HSBC Cash Fund (the “Scheme”) is an open-ended liquid scheme of HSBC Mutual Fund (the “Fund”) and was launched

on November 14, 2002. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital Markets (India) Private

Limited. HSBC Asset Management (India) Private Limited incorporated under the Companies Act, 1956 has been

appointed as the asset management company. The duration of the Scheme is perpetual. The Scheme closed for initial

subscription on December 3, 2002 and reopened for issue and redemption of units on December 11, 2002. The

investment objective of the Scheme is to provide reasonable returns, commensurate with low risk while providing a high

level of liquidity, through a portfolio of money market and debt securities.

The Scheme has three Options – Regular Option, Institutional Option and Institutional Plus Option. The Regular Option

offers Growth, Daily Dividend and Weekly Dividend sub options. Weekly Dividend sub option was introduced during

the year ended March 31, 2006 and units were allotted on April 19, 2005 at the net asset value of Rs.10 per unit in

accordance with the addendum dated April 8, 2005 made to the common offer document dated November 29, 2004. The

Institutional Option was introduced during the year ended March 31, 2004 offering Growth, Daily Dividend, Weekly

Dividend and Monthly Dividend Sub-Options. Units were allotted on September 14, 2003 under the Growth and

Monthly Dividend Sub-Options and on September 15, 2003 under the Daily and Weekly Dividend Sub-Options. An

Institutional Plus Option was introduced during the year ended March 31, 2005 offering Growth, Daily Dividend,

Weekly Dividend and Monthly Dividend Sub-Options. Units were allotted on June 02, 2004 under the Growth, Daily

Dividend, Weekly Dividend and Monthly Dividend Sub-Options at the net asset value of Rs.10 per unit in accordance

with the addendum dated May 10, 2004 made to the offer document dated October 17, 2002.

The Scheme will not declare dividend under the Growth Sub - Options in normal circumstances. The income earned on


2 Significant Accounting Policies 2.1 Basis of Accounting



Board of India (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments thereto, as applicable. 2.2 Portfolio Valuation


investments:

i. Debt securities listed on a recognised stock exchange are valued at the last quoted closing price on the National

Stock Exchange of India Limited (NSE). If no sale is reported at that time, such securities are valued at fair value

as determined in good faith by HSBC Asset Management (India) Private Limited under procedures approved by


ii. Non-traded and thinly traded debt securities are valued at fair value as determined by HSBC Asset Management




iii. Privately placed debt securities are valued at fair value as determined in good faith by HSBC Asset Management




iv. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management (India)

Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund .

v. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up to the

date of resale.

vi. Traded money market securities are valued at the yield at which they are traded on the valuation date. If no sale is


face value and the last traded price. Non traded money market instruments and bills purchased under

rediscounting schemes are valued at cost plus accrued interest.


The net unrealised appreciation / depreciation in the value of investments is determined separately for each category of investments. In respect of each category of investments, the net change in the unrealised appreciation if any, between two balance sheet dates / valuation dates is accounted through the Revenue Account and thereafter the net unrealised appreciation is transferred from the Revenue Account to the Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted through the Revenue Account.


2.3 Interest Rate Swaps

Interest expense and income are accrued on a net basis daily in respect of interest rate swaps with maturity less than 182

days. 2.4 Securities Transactions

Investment securities transactions are accounted for on a trade date basis. The Scheme uses the average cost method for

determining the realized gain or loss on sale of investments. 2.5 Investment Income


2.6 Net Asset Value for Growth/Dividend Sub- Options


Dividend Sub-Options for the Regular, Institutional and Institutional Plus Options.

For reporting the net asset value for the Sub - Option, daily income earned, including realized and unrealized gain or loss

in the value of investments and expenses incurred by the Scheme are allocated to the Sub - Options in proportion to the

value of the net assets. 2.7 Unit Premium Reserve


premium reserve of the Scheme, after an appropriate portion of the issue proceeds and redemption payout is credited or

debited respectively to the income equalization reserve.


available for distribution on the record dates, if any, was utilized from unit premium reserve, except to the extent it was

represented by unrealised net appreciation in the value of investments.





determining the net surplus/deficit, transferred from/to unit premium reserve. 3 Investment Management and Advisory Fees


(India) Private Limited for managing the Scheme at an average annual rate of 0.40% of the average daily net asset value

recorded by the Scheme. All costs, charges and expenses incurred by HSBC Asset Management (India) Private Limited

in the administration and execution of the activities of the Scheme, except costs allowed to be charged to the Scheme






Settlor. 5 Custodian Fees


6 Income Taxes

No provision for income tax is made as the Scheme qualifies as a recognized mutual fund under Section 10(23D) of the

Income Tax Act, 1961.

7 Aggregate Fair Value of Non-Traded / Privately Placed Investments

Aggregate fair value of non-traded (including private placement) investments as determined by HSBC Asset

Management (India) Private Limited under the procedures approved by the Board of Trustees as at March 31, 2010 is

Rs. 2,797,208,927.


The aggregate value of investment securities purchased (excluding accretion of discount of Rs. 60,417,423) and sold

(including matured) during the financial year 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 total income (including net profit on sale of investments) and expenditure during the year is Rs. 171,035,746 and

Rs. 30,230,629 respectively being 3.13% and 0.55% of average daily net assets.



10 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds ) Regulation,





Accountants of India and regulation 25(8) of SEBI Regulation, is provided below : I Related party relationships



(ii) HSBC Asset Management (India) Private Limited Investment Manager to the Schemes of HSBC

Mutual Fund



(v) Schemes of the Fund, Under Common Control of the Sponsor HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund




Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.

`II The following transactions occurred with the related parties during the year in the ordinary course of business: Refer

Annexure I

III During the year, 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. 99,605.






Nature of Relation

Period Covered


% of Total




Fund








Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund


2,059.63

97.17 5,425,600

13.18

Further, The Hongkong and Shanghai Banking Corporation Limited, an associate of the Sponsor / Investment Manager,

is on the panel of bankers with whom HSBC Mutual Fund places money on fixed deposits and enters into reverse repo

transactions from time to time at competitive rates. 11 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds) Regulations,

1996 as amended

HSBC Mutual Fund has made investments in companies, which holds/ has held units in excess of 5% of the net asset


The investments comprise equity shares, debentures/ bonds, commercial paper, fixed deposits and other debt instruments

and were made solely on the basis of sound fundamentals of these companies. 12 Segment Reporting

The Scheme operates in one segment only viz. to provide reasonable returns, commensurate with low risk while

providing a high level of liquidity, through a portfolio of money market and debt securities. 13 Investment in Unitech Limited

As at March 31, 2010, HSBC Cash Fund had investments in; Secured redeemable debentures of Unitech Limited

aggregating Rs. 3.20 crores were due for redemption on April 08, 2010. Subsequent, to the year end the terms and

conditions of the said debentures were mutually extended vide addendum to the original debenture subscription

agreement dated April 08, 2010 in the interest of the unit holders, such that 75% of the principal amount of the

debentures would be payable in two installments before April 9, 2010 and June 30, 2010 and the final balance amount of

debenture payable in September 2010. The Scheme has received Rs. 1.68 crores on April 12, 2010. The interest on the

debentures has been serviced by Unitech Limited till date. On April 22, 2010 the remaining balance of Rs. 1.52 crores of

secured redeemable debentures was taken over by HSBC Asset Management Company (India) Private Limited and the

full money was received by the scheme for both outstanding principal and interest amount.

In view of the above, in the opinion of the management, no provision is considered necessary as at March 31, 2010.


Miscellaneous Income of Rs. 3,282 represents excess provision of previous year written back which is no longer

required.










HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)

Annexure I





Sponsor

Key Management Personnel & their

Relatives Total


Sale of Investments - - - - - - Previous Year - - - 29,361,608,102 - 29,361,608,102

Subscription of Units (including switch in and dividendreinvestment) 483,685,661,726 685,519,043 4,550,000,000 - 2,904,359 488,924,085,127 Previous Year 287,529,184,635 740,168,608 - - 3,677,678 288,273,030,921

Redemption of Units (including switch out 482,747,618,067 352,900,000 4,304,293,491 - 2,552,431 487,407,363,988 Previous Year 286,647,559,029 1,100,875,040 - - 6,942,693 287,755,376,762

Dividend Distribution (Including dividend reinvested 44,161,726 6,146,743 - - 4,359 50,312,827 Previous Year 70,484,635 14,768,608 - - 103,678 85,356,921








Sponsor

Key Management Personnel & their

Relatives Total



Units Outstanding As At Year End 2,050,211,255 392,469,948 250,138,387 - 417,858 2,693,237,448 Previous Year 1,112,167,596 59,851,697 - - 65,930 1,172,085,223

Other Payables - - - - - - Previous Year - - - 108,000 - 108,000

Other Receivables - - - - - - Previous Year - 56,617 - 21,786 - 78,403


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividendreinvestment)HSBC InvestDirect Securities (India) Limited 4,550,000,000 -

Redemption of Units (including switch outHSBC InvestDirect Securities (India) Limited 4,304,293,491 -


Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 789,258 376,381


Units Outstanding As At Year EndHSBC InvestDirect Securities (India) Limited 250,138,387 -


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Ultra Short Term Bond Fund - 23,172,428,278HSBC Floating Rate Fund Short Term Plan - 482,263,578

Sale of InvestmentsHSBC Ultra Short Term Bond Fund - 19,479,325,593

Other PayablesHSBC Equity Fund - 95,000 HSBC Floating Rate Fund - Long Term Plan - 3,000 HSBC MIP - Saving Plan - 10,000

Other ReceivablesHSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) - 21,786


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividendreinvestment)Sanjay Prakash - 3,341,596Naina Lal Kidwai 2,402,719 - Rashid K Kidwai(Relative) 501,640 -

Redemption of Units (including switch outSanjay Prakash - 6,690,693Naina Lal Kidwai 2,252,431 - Rashid K Kidwai(Relative) 300,000 -

Dividend Distribution (Including dividend reinvestedSanjay Prakash - 91,596Naina Lal Kidwai 2,719 - Rashid K Kidwai(Relative) 1,640 -

Units Outstanding As At Year EndRashid K Kidwai(Relative) 201,639 - Naina Lal Kidwai 216,218 65,930



0


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 financial 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 financial statements based on our audit.




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 flows 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 specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.






ASSETS

Investments 1 3,272,062,567 7,211,438,115

Deposits 2 203,100,000 101,000,000

Other Current Assets 3 1,684,273,656 2,609,082,230

TOTAL 1 5,159,436,223 9,921,520,345

LIABILITIES

Unit Capital 4 4,929,893,278 9,484,826,174



TOTAL 5,159,436,223 9,921,520,345


Growth Sub-Option

Daily Dividend Sub-Option

Weekly Dividend Sub-Option Total

Growth Sub-Option

Daily Dividend Sub-Option

Weekly Dividend Sub-Option

Monthly Dividend Sub-Option Total

Growth Sub-Option

Daily DividendSub-Option

Weekly Dividend Sub-Option

Monthly Dividend Sub-Option Total Total

B A K C D E F G H I J

Net Assets as per Balance Sheet

(Total Assets less Current Liabilities and Provisions) (Note 2.6) 307,025,619 1,846,919,034 655,286,713 2,809,231,366 117,796,781 462,672,173 178,905,447 53,926,670 813,301,071 387,740,082 551,662,235 497,797,346 64,182,326 1,501,381,989 5,123,914,426

(372,084,675) (3,261,196,189) (849,300,045) (4,482,580,909) (231,378,288) (1,494,087,382) (393,863,254) (125,778,751) (2,245,107,675) (1,240,618,472) (1,385,505,887) (396,483,324) (91,642,679) (3,114,250,362) (9,841,938,946)

Number of Units in Issue 24,419,950.558 184,467,080.286 65,312,487.368 9,306,702.799 46,209,439.948 17,829,567.652 5,315,781.230 30,370,722.487 54,569,000.612 48,977,965.510 6,210,629.419

(30,701,774.121) (325,722,386.273) (84,576,307.762) (19,011,827.930) (149,222,257.022) (39,216,714.706) (12,394,879.767) (101,445,807.318) (137,853,200.124) (39,471,878.513) (8,865,584.027)

Net Asset Value per Unit 12.5727 10.0122 10.0331 12.6572 10.0125 10.0342 10.1446 12.7669 10.1094 10.1637 10.3343

(12.1193) (10.0122) (10.0418) (12.1702) (10.0125) (10.0432) (10.1476) (12.2294) (10.0506) (10.0447) (10.3369)

Notes to the Financial Statements. 8 307,025,619 1,846,919,034 655,286,713 2,809,231,366 117,796,781 462,672,173 178,905,447 53,926,670 813,301,071 387,740,082 551,662,235 497,797,346 64,182,326 1,501,381,989 5,123,914,426




Trustee Director



March 31, 2010

HSBC MUTUAL FUND - HSBC ULTRA SHORT TERM BOND FUND



(March 31, 2009)

RupeesInstitutional OptionRegular Option

0


Rupees Rupees

INCOME AND GAINS

Interest and Discount 407,088,405 2,699,741,906

Miscellaneous Income (Note 15) 188,723 258,197

TOTAL 407,277,128 2,700,000,103

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Net of Net Profit on Inter - Scheme Sale of Investments Rs. Nil Previous Year Rs. 1,486,483) (Note 2.4) 5,471,435 17,365,149




Custodian Fees and Expenses (Note 5) 533,900 3,562,294

Audit Fees 50,000 150,000


Other Operating Expenses 272,376 2,602,625

TOTAL 91,093,014 160,017,523

Net Realised Gains for the Year 316,184,114 2,539,982,580

Net Change in Unrealised Appreciation in Value of Investments (4,873,616) 3,350,695

Net Surplus including Net change in Unrealised Appreciation in Value of Investments 311,310,498 2,543,333,275

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve 4,873,616 (3,350,695)

Net Surplus for the Year 316,184,114 2,539,982,580


Rupees Rupees

Net Surplus for the Year 316,184,114 2,539,982,580

Transfer from Income Equalisation Reserve (Note 2.8) (245,974,640) (630,661,094)

Transfer from Reserve Fund 25,883,500 28,922,063

Transferred from Unit Premium Reserve (Note 2.7) - 73,216

Dividend / Distribution (207,516,379) (1,663,214,211)

Dividend / Distribution Tax thereon (34,404,307) (321,867,398)

Balance Transferred to Reserve Fund (145,827,712) (46,764,844)

Notes to the Financial Statements

This is the Revenue Account referred to in our report of even date



Trustee Director





1

SCHEDULE 1

Investments Market / Fair ValueCost

Market /Fair ValueCost

(Notes 2.2, 2.4, 7, 8 , 9, and 12) Rupees Rupees Rupees Rupees(Refer to the attached Statement of Portfolio Holding as at March 31, 2010)

Non Convertible Debentures and Bonds Listed / Awaiting Listing 2,251,375,090 2,251,256,450 3,413,631,765 3,413,078,926 Privately Placed Non Convertible Debentures / Bonds 849,575,247 849,575,247 1,830,888,145 1,830,888,145

Asset Backed Securities 171,112,230 171,110,048 1,808,112,794 1,803,671,197

Commercial Paper / Certificate of Deposit - - 158,805,411 158,805,411

TOTAL 3,272,062,567 3,271,941,745 7,211,438,115 7,206,443,679


Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 40,600,000 1,000,000


TOTAL 203,100,000 101,000,000


Balances with Banks - in Current Account 9,090,116 45,859,266 - in Dividend Account 22 23


Reverse Repos 927,420,970 1,098,790,499

Collateralised Borrowing and Lending Obligation 558,832,774 1,149,601,991

Inter-Scheme Receivable for Switch-In 125,075,464 120,266,655

Interest Receivable on :- Debentures/Bonds 55,441,334 162,643,308 - Asset Backed Securities 444,001 19,353,973 - Deposits 936,204 1,371,727 - Reverse Repos 131,038 141,400 - Collateralised Borrowing and Lending Obligation 75,876 140,840

Receivable from Investment Manager 9,157 14,048

TOTAL 1,684,273,656 2,609,082,230

March 31, 2009March 31, 2010



2


Regular OptionGrowth Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up 14,685,000 1,468,500.000 14,685,000 1,468,500.000 Outstanding:At the beginning of the year 307,017,742 30,701,774.121 129,475,625 12,947,562.502 Issued during the year 645,455,304 64,545,530.369 994,695,166 99,469,516.553

952,473,046 95,247,304.490 1,124,170,791 112,417,079.055 Redeemed during the year 708,273,539 70,827,353.932 817,153,049 81,715,304.934 At the end of the year 244,199,507 24,419,950.558 307,017,742 30,701,774.121

Daily Dividend Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up 42,018,439 4,201,843.898 42,018,439 4,201,843.898 Outstanding:At the beginning of the year 3,257,223,862 325,722,386.273 3,426,086,412 342,608,641.233 Issued during the year 4,070,873,079 407,087,307.877 11,851,448,710 1,185,144,871.026

7,328,096,941 732,809,694.150 15,277,535,122 1,527,753,512.259 Redeemed during the year 5,483,426,139 548,342,613.864 12,020,311,260 1,202,031,125.986 At the end of the year 1,844,670,802 184,467,080.286 3,257,223,862 325,722,386.273

Weekly Dividend Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up 18,656,079 1,865,607.901 18,656,079 1,865,607.901 Outstanding:At the beginning of the year 845,763,078 84,576,307.762 803,266,104 80,326,610.335 Issued during the year 1,217,487,323 121,748,732.303 3,153,435,321 315,343,532.080

2,063,250,401 206,325,040.065 3,956,701,425 395,670,142.415 Redeemed during the year 1,410,125,527 141,012,552.697 3,110,938,347 311,093,834.653 At the end of the year 653,124,874 65,312,487.368 845,763,078 84,576,307.762

TOTAL 2,741,995,183 274,199,518.212 4,410,004,682 441,000,468.156

Institutional OptionGrowth Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up 30,000,000 3,000,000.000 30,000,000 3,000,000.000 Outstanding:At the beginning of the year 190,118,280 19,011,827.930 430,243,167 43,024,316.645 Issued during the year 295,882,140 29,588,213.966 1,305,345,144 130,534,514.385

486,000,420 48,600,041.896 1,735,588,311 173,558,831.030 Redeemed during the year 392,933,391 39,293,339.097 1,545,470,031 154,547,003.100 At the end of the year 93,067,029 9,306,702.799 190,118,280 19,011,827.930

Daily Dividend Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up 198,200,000 19,820,000.000 198,200,000 19,820,000.000 Outstanding:At the beginning of the year 1,492,222,570 149,222,257.022 3,510,923,421 351,092,342.074 Issued during the year 3,108,405,316 310,840,531.571 12,420,883,272 1,242,088,327.212

4,600,627,886 460,062,788.593 15,931,806,693 1,593,180,669.286 Redeemed during the year 4,138,533,486 413,853,348.645 14,439,584,123 1,443,958,412.264 At the end of the year 462,094,400 46,209,439.948 1,492,222,570 149,222,257.022

Weekly Dividend Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up 40,000,000 4,000,000.000 40,000,000 4,000,000.000 Outstanding:At the beginning of the year 392,167,146 39,216,714.706 746,995,047 74,699,504.743 Issued during the year 551,938,228 55,193,822.803 1,957,301,742 195,730,174.224

944,105,374 94,410,537.509 2,704,296,789 270,429,678.967 Redeemed during the year 765,809,699 76,580,969.857 2,312,129,643 231,212,964.261 At the end of the year 178,295,675 17,829,567.652 392,167,146 39,216,714.706

Monthly Dividend Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up - - - - Outstanding:At the beginning of the year 123,948,798 12,394,879.767 151,024,190 15,102,418.972 Issued during the year 47,221,548 4,722,154.825 445,634,888 44,563,488.833


TOTAL 786,614,916 78,661,491.629 2,198,456,794 219,845,679.425

Institutional Plus OptionGrowth Sub-Option Issued and SubscribedUnits of Rs.10 each fully paid up 920,000,000 92,000,000.000 920,000,000 92,000,000.000 Outstanding:At the beginning of the year 1,014,458,073 101,445,807.318 2,584,731,657 258,473,165.696 Issued during the year 5,106,427,561 510,642,756.113 37,338,802,716 3,733,880,271.611


Daily Dividend Sub-Option Issued and SubscribedUnits of Rs.10 each fully paid up 400,038,954 40,003,895.444 400,038,954 40,003,895.444 Outstanding:At the beginning of the year 1,378,532,001 137,853,200.124 12,739,001,938 1,273,900,193.819 Issued during the year 7,732,559,456 773,255,945.564 76,531,584,559 7,653,158,455.898


Weekly Dividend Sub-Option Issued and SubscribedUnits of Rs.10 each fully paid up 50,000,000 5,000,000.000 50,000,000 5,000,000.000 Outstanding:At the beginning of the year 394,718,785 39,471,878.513 2,355,169,090 235,516,908.995 Issued during the year 2,315,044,989 231,504,498.928 12,620,138,952 1,262,013,895.241

2,709,763,774 270,976,377.441 14,975,308,042 1,497,530,804.236 Redeemed during the year 2,219,984,119 221,998,411.931 14,580,589,257 1,458,058,925.723 At the end of the year 489,779,655 48,977,965.510 394,718,785 39,471,878.513

Monthly Dividend Sub-Option Issued and SubscribedUnits of Rs.10 each fully paid up 50,000,000 5,000,000.000 50,000,000 5,000,000.000 Outstanding:At the beginning of the year 88,655,839 8,865,584.027 109,470,693 10,947,069.442 Issued during the year 19,365,740 1,936,573.988 227,151,646 22,715,164.623


TOTAL 1,401,283,179 140,128,318.028 2,876,364,698 287,636,469.982

GRAND TOTAL 4,929,893,278 492,989,327.869 9,484,826,174 948,482,617.563



0

March 31, 2010(March 31, 2009)

RupeesSCHEDULE 5Reserves and Surplus

Unit Premium Reserve (Note 2.7)At the beginning of the year (11,893,157)

(19,829)

Added during the year 13,493,204 (-11,839,770)

Transferred to Revenue Account - (-73,216)

At the end of the year 1,600,047 (-11,893,157)

Income Equalisation Reserve (Note 2.8)Added during the year (245,974,640)

(-630,661,094)

Transferred to Revenue Account 245,974,640 (630,661,094)

At the end of the year - (-)

Unrealised Appreciation ReserveAt the beginning of the year 4,994,438

(1,643,743)

Net Change in Unrealised Appreciation in Value of Investments Transferred from Revenue Account (Note 7) (4,873,616)

(3,350,695)

At the end of the year 120,822 (4,994,438)

Reserve FundAt the beginning of the year 364,011,491

(439,698,398)

Transferred to Revenue Account (25,883,500) (-28,922,063)

Balance Transferred from Revenue Account (145,827,712) (-46,764,844)


TOTAL 194,021,148 *

(357,112,772) *

* The share of the Plans / Options of the Reserves and Surplus is as follows : March 31, 2010

(March 31, 2009)

Regular Option Rupees

Growth Sub-Option 62,826,112

(65,066,933)

Daily Dividend Sub-Option 2,248,232

(3,972,327)

Weekly Dividend Sub-Option 2,161,839

(3,536,967)

Total (A) 67,236,183

(72,576,227)



(41,260,008)

Daily Dividend Sub-Option 577,773

(1,864,812)

Weekly Dividend Sub-Option 609,772

(1,696,108)

Monthly Dividend Sub-Option 768,858

(1,829,953)

Total (B) 26,686,155

(46,650,881)



(226,160,399)

Daily Dividend Sub-Option 5,972,229

(6,973,886)

Weekly Dividend Sub-Option 8,017,691

(1,764,539)

Monthly Dividend Sub-Option 2,076,033

(2,986,840)

Total (C) 100,098,810

(237,885,664)

Total (A+B+C) 194,021,148

(357,112,772)



0


Current Liabilities




Audit Fees 50,000 150,000



Inter Scheme Payable for Switch Out 953,413 16,006,877

Dividend Payable - 715,071

Dividend Tax Payable 374,969 819,507


Sundry Payables 690,705 1,146,798

TOTAL 35,521,797 79,581,399


Rupees Rupees


Asset Backed Securities 79,451,177 524,058,883

Commercial Paper / Certificate of Deposit 1,091,514 1,313,347,174

Reverse Repos 35,756,718 36,907,629


Deposits 2,314,825 48,496,598

Interest Rate Swaps (Net) (Note 2.3) - (16,075,543)

Others - (20,655,039) TOTAL 407,088,405 2,699,741,906



5


Non-Convertible Debentures / Bonds Listed / Awaiting listing (68.81%)Banks (42.20%)

Floating ICICI Bank Limited 2010 $ 500 500,180,970Floating Axis Bank Limited 2012 $ 450 449,928,025

950,108,995Finance & Investments (57.80%)

Floating Housing Development Finance Corporation Limited 2011 $ 500 501,239,461Floating Indian Railway Finance Corporation Limited 2010 $ 500 500,010,510Floating Power Finance Corporation Limited 2010 $ 300 300,016,124

1,301,266,095Total (Cost Rs. 2,251,256,450) 2,251,375,090

Privately Placed / Unlisted Non-Convertible Debentures / Bonds (25.96%)Construction (11.72%)

14.00% Unitech Limited 2010 * 1,486 99,562,00099,562,000

Finance & Investments (88.28%)Floating Tata Sons Limited 2010 * 750 750,013,247

750,013,247Total (Cost Rs. 849,575,247) 849,575,247

Asset Backed Securities (5.23%)BHPC Auto Securitisation Sr A1 (Tata Motors) PTC 2010 * 208 169,790,822Corporate Loan Securitisation Trust Series 15 Trust 2008 - A1 (L&T Finance ) PTC 2010 * 1 1,321,408








6


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 316,184,114 2,539,982,580

Adjustments for:- (Increase)/Decrease in Investments at cost 3,934,501,934 19,694,056,754 (Increase)/Decrease in Other current assets 126,627,686 86,088,341 Increase/(Decrease) in Current liabilities (24,406,196) 13,157,217

Net cash generated from operations (A) 4,352,907,538 22,333,284,892

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (4,554,932,896) (17,501,561,170) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (232,481,436) (642,500,866)

Adjustments for:- Increase/(Decrease) in Sundry creditors for units redeemed by investors (19,585,041) (158,619,844) (Increase)/Decrease in Sundry debtors for units issued to investors (727,009) 271,178,718

Dividend paid during the year (207,516,379) (1,663,214,211) Dividend Tax paid during the year (34,404,307) (321,867,398)

Net cash used in financing activities (B) (5,049,647,068) (20,016,584,771)

Net Decrease in Cash and cash equivalents (A+B) (696,739,530) 2,316,700,121

Cash and Cash Equivalents at the beginning of the year 2,395,183,412 78,483,291 Cash and Cash Equivalents at the close of the year 1,698,443,882 2,395,183,412



Rupees 1 Cash and Cash Equivalents include the following :

Balances with Scheduled Banks : - In Current Account 9,090,116 45,859,266 - In Dividend Account 22 23 - Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 40,600,000 1,000,000 - Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 162,500,000 100,000,000 Bank Overdraft - (68,367) Other Collateralised LendingCollateralised Borrowing and Lending Obligation 558,832,774 1,149,601,991 Reverse Repos 927,420,970 1,098,790,499

1,698,443,882 2,395,183,412

2. The above Cash Flow Statement has been prepared under the "Indirect Method" set out in Accounting Standard - 3 on Cash Flow Statements,issued by The Institute of Chartered Accountants of India.




Trustee Director



CashFlow Statement for the year ended March 31, 2010

7

HSBC MUTUAL FUND - HSBC ULTRA SHORT TERM BOND FUND Schedules forming part of the Balance Sheet as at March 31, 2010 and the


SCHEDULE 8


HSBC Ultra Short Term Bond Fund (Formerly, HSBC Liquid Plus Fund) (the “Scheme”) is an open-ended debt scheme

of HSBC Mutual Fund (the “Fund”) and was launched on October 11, 2006. HSBC Mutual Fund has been sponsored by

HSBC Securities and Capital Markets (India) Private Limited. HSBC Asset Management (India) Private Limited

incorporated under the Companies Act, 1956 has been appointed as the asset management company. The duration of the

Scheme is perpetual. The Scheme closed for initial subscription on October 12, 2006 and reopened for issue and

redemption of units on October 18, 2006. The investment objective of the Scheme is to provide liquidity and reasonable

returns by investing primarily in a mix of short term debt and money market instruments.

The Scheme has three Options – Regular Option, Institutional Option and Institutional Plus Option. The Regular Option

offers Growth, Daily Dividend and Weekly Dividend sub options. The Institutional Option and the Institutional Plus

Option offer Growth, Daily Dividend, Weekly Dividend and Monthly Dividend Sub-Options. In accordance with the

notice-cum-addendum dated February 16, 2009 the nomenclature of the Scheme has been changed from HSBC Liquid

Plus Fund to HSBC Ultra Short Term Bond Fund.





Board of India (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments thereto, as applicable. 2.2 Portfolio Valuation


investments:











iv. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management (India)

Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund .

v. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up to the

date of resale.







The net unrealised appreciation / depreciation in the value of investments is determined separately for each category

of investments. In respect of each category of investments, the net change in the unrealised appreciation if any,

between two balance sheet dates / valuation dates is accounted through the Revenue Account and thereafter the net

unrealised appreciation is transferred from the Revenue Account to the Unrealised Appreciation Reserve. The net

change in unrealised depreciation if any, is accounted through the Revenue Account.

Net unrealised appreciation is reduced from the distributable income at the time of income distribution. 2.3 Interest Rate Swaps Interest expense and income are accrued on a net daily basis in respect of interest rate swaps with maturity

less than 182 days. 2.4 Securities Transactions


determining the realized gain or loss on sale of investments. 2.5 Investment Income

Interest income is recorded on an accrual basis. 2.6 Net Asset Value for Growth/Dividend Sub- Options


Dividend Sub-Options for the Regular, Institutional and Institutional Plus Options.



value of the net assets. 2.7 Unit Premium Reserve












2.9 Load Charges





Schemes. 3 Investment Management and Advisory Fees


(India) Private Limited for managing the Scheme at an average annual rate of 0.88% of the average daily net asset value

recorded by the Scheme. All costs, charges and expenses incurred by HSBC Asset Management (India) Private Limited

in the administration and execution of the activities of the Scheme, except costs allowed to be charged to the Scheme






Settlor. 5 Custodian Fees

JP Morgan Chase Bank provides custodial services to the Scheme for which it receives custody fees. 6 Income Taxes


Income Tax Act, 1961. 7 Aggregate Appreciation and Depreciation In Value of Investments

Aggregate appreciation and depreciation in value of investments is as follows:

March 31, 2010


(Rupees) Non Convertible Debentures and Bonds Listed / Awaiting Listing

- Appreciation 118,650 552,846

- Depreciation 10 7


- Appreciation 2,182 4,506,181

- Depreciation - 64,584 8 Aggregate Fair Value of Non-Traded / Privately Placed Investments

Aggregate fair value of non traded (including private placement) investments as determined by HSBC Asset


Rs. 3,272,062,567.




The aggregate value of investment securities purchased and sold (including matured) during the financial year

(excluding accretion of discount of Rs. 16,855,956) are Rs. Nil and Rs. 3,945,886,455 respectively being 0.00% and

49.52% of the average daily net assets. 10 Income and Expenses

The total income (net of net loss on sale of investments) and expenditure during the year is Rs. 401,805,693 and Rs.

85,621,579 respectively being 5.04% and 1.07% of average daily net assets.

11 Related party Disclosures

Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds ) Regulation,





Accountants of India and regulation 25(8) of SEBI Regulation, is provided below I Related party relationships




HSBC Mutual Fund



(v) PML Mercantile Limited Associate of the Investment Manager


HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Flexi Debt Fund



HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager with effect from July 16, 2008 Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008



Annexure I

III During the year, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset








Nature of Associati

on / Nature of Relation

Period Covered


% of Total




Fund


632.82 23.69 6,055,879 49.19

HSBC InvestDirect Securities (India) Limited Associate 2009-2010

26.40 0.99 26,101

0.21



Nature of Associati

on / Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund


2,226.38 20.00 12,246,089

11.01

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 fixed deposits and enters into reverse repo transactions from time to time at competitive rates. 12 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds) Regulations,

1996 as amended




and were made solely on the basis of sound fundamentals of these companies.


The Scheme operates in one segment only viz. to provide liquidity and reasonable returns by investing primarily in a mix

of short term debt and money market instruments.



14 Investment in Unitech Limited

As at March 31, 2010, HSBC Ultra Short Term Bond Fund had investments in;

Secured redeemable debentures of Unitech Limited aggregating Rs. 9.95 crores were due for redemption on April 08,

2010. Subsequent, to the year end the terms and conditions of the said debentures were mutually extended vide

addendum to the original debenture subscription agreement dated April 08, 2010 in the interest of the unit holders, such

that 75% of the principal amount of the debentures would be payable in two installments before April 9, 2010 and June

30, 2010 and the final balance amount of debenture payable in September 2010. The Scheme has received Rs. 5.21

crores and Rs. 2.37 crores on April 12, 2010 and June 10, 2010, respectively. The interest on the debentures has been

serviced by Unitech Limited till date. The debenture holders are secured against immovable property mortgaged by the

company.

In view of the above, in the opinion of the management, no provision is considered necessary as at March 31, 2010.


Miscellaneous income of Rs. 125,025 represents write back of excess provision for bank charges of previous years as

they are no longer required and Rs. 63,698 represents amount received from an external party as compensation for an

operational incident.


Prior year’s figures have been regrouped/ rearranged where appropriate.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)





Sponsor


Relatives Total


Sale of Investments - - - - - - Previous Year - - - 45,303,677,976 - 45,303,677,976

Subscription of Units (including switch in and dividendreinvestment) - 2,762,303 22,775,176 - 15,501,994 41,039,473 Previous Year 496,098,463 529,579,294 - - 39,700,060 1,065,377,816

Redemption of Units (including switch out - 176,820,898 24,146,481 - - 200,967,378 Previous Year 496,098,463 357,900,000 - - 35,672,163 889,670,626

Dividend Paid/Payable( Including dividend reinvested - 2,762,303 46,676 - 1,994 2,810,973 Previous Year 98,463 10,617,568 - - 615,100 11,331,130




Borrowings taken and repaid - - - - - - Previous Year - - 41,150,700,000 - - 41,150,700,000

Interest Expense on Borrowings - - - - - - Previous Year - - 6,328,829 - - 6,328,829





Sponsor


Relatives Total


Brokerage/ Commission Payable on Distribution of Units - - 1,560,857 - - 1,560,857 Previous Year - - 738,064 - - 738,064

Units Outstanding As At Year End - - - - 15,581,225 15,581,225 Previous Year - 173,517,174 - - 2,061,798 175,578,972

Other Receivables - 9,157 - - - 9,157 Previous Year - 14,048 - - - 14,048

(iii) Disclosures in respect of material transactions with persons referred to in Note 11 (I)(iii), (iv) & (v) for Associate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March31, 2009

Subscription of Units (including switch in and dividendreinvestment)PML Mercantile Limited 22,775,176 -

Redemption of Units (including switch outPML Mercantile Limited 24,146,481 -

Dividend Paid/Payable( Including dividend reinvestedPML Mercantile Limited 46,676 -



Borrowings taken and repaidThe Hongkong and Shanghai Banking Corporation Limited - 41,150,700,000

Interest Expense on BorrowingsThe Hongkong and Shanghai Banking Corporation Limited - 6,328,829



April 01, 2009 to March 31, 2010

April 01, 2008 to March31, 2009

Purchase of InvestmentsHSBC Cash Fund - 19,479,325,593

Sale of InvestmentsHSBC Cash Fund - 23,172,428,278

(v) Disclosures in respect of material transactions with persons referred to in Note 11 (I)(vii) for key management personneland their relatives

April 01, 2009 to March 31, 2010

April 01, 2008 to March31, 2009

Subscription of Units (including switch in and dividendreinvestment)Sanjay Prakash - 7,196,336 Naina Lal Kidwai - 10,344,788 Kemaya Lal Kidwai (relative) 15,501,994 21,338,525

Redemption of Units (including switch outNaina Lal Kidwai - 13,688,796 Kemaya Lal Kidwai (relative) - 21,407,575

Dividend Paid/Payable( Including dividend reinvestedSanjay Prakash - 190,376 Naina Lal Kidwai - 204,788 Kemaya Lal Kidwai (relative) 1,994 208,525

Units Outstanding As At Year EndKemaya Lal Kidwai (relative) 15,501,994 Nelum P Gidwani - 2,061,798



Annexure I

0


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 financial 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 financial statements based on our audit.




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.



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.


date, together with the notes thereon, have been prepared in all material respects in accordance with the accounting policies and standards specified in the Ninth Schedule of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and amendments thereto, as applicable.



For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Vivek Prasad Partner Membership No. F-104941 Place : Mumbai Date : July 20, 2010


ASSETS

Investments 1 986,459,480 2,922,421,151


TOTAL (0) 1,030,106,205 3,211,257,106

LIABILITIES

Unit Capital 3 930,732,648 2,986,843,230



TOTAL 1,030,106,205 3,211,257,106


GrowthSub Option

Monthly DividendSub Option

FortnightlyDividend

Sub OptionQuarterly Dividend

Sub Option

Half YearlyDividend

Sub Option Total Growth

Sub Option Monthly Dividend

Sub Option

FortnightlyDividend

Sub Option Quarterly Dividend

Sub Option Total TotalGrowth


Sub Option

FortnightlyDividend

Sub OptionQuarterly Dividend

Sub OptionHalf Yearly Dividend

Sub Option Total Growth

Sub Option Fortnightly Dividend


Sub Option Quarterly Dividend

Sub Option Total Total

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 60,099,391 32,224,570 7,695,242 35,556,432 13,750,948 149,326,583 282,409,779 124,018,488 343,840,928 125,148,789 875,417,984 1,024,744,567 131,859,184 229,491,741 29,563,162 71,717,007 1,934,452 464,565,546 907,194,754 649,109,621 973,614,215 173,905,602 2,703,824,192 3,168,389,738

Number of Units in Issue 4,826,443.715 3,124,675.360 716,902.735 3,198,586.047 1,341,015.203 22,483,472.275 11,761,922.583 34,181,810.440 11,438,436.190 11,320,074.613 22,377,892.041 2,851,879.905 6,647,539.396 197,382.137 77,479,560.708 61,694,176.890 99,822,416.031 16,293,401.195

Net Asset Value per Unit 12.4521 10.3129 10.7340 11.1163 10.2541 12.5608 10.5441 10.0592 10.9411 11.6483 10.2553 10.3662 10.7885 9.8005 11.7088 10.5214 9.7535 10.6734

60,099,391 32,224,570 7,695,242 35,556,432 13,750,948 149,326,583 282,409,779 124,018,488 343,840,928 125,148,789 875,417,984 1,024,744,567 Notes to the Financial Statements 7



Trustee Director


RupeesRegular Option Institutional Option



Regular OptionRupees


March 31, 2010

HSBC MUTUAL FUND - HSBC FLEXI DEBT FUND


March 31, 2009

0


INCOME AND GAINS

Interest and Discount 6 85,956,149 137,817,674 Net Profit on Sale of Investments (Note 2.3) 84,862,915 - Miscellaneous Income (Note 14) 31,349 -

TOTAL 170,850,413 137,817,674

EXPENSES AND LOSSES

Net Loss on Sale of investments (Including Net Loss on Inter-Scheme Sale of Investments Rs. Nil(Previous period: Rs. 2,830,646)) (Note 2.3) - 27,041,105





Audit Fees 50,000 100,000



TOTAL 25,458,756 52,840,618

Net Realised Gains for the Year 145,391,657 84,977,056


Net Gains for the Year 184,537,460 54,796,523

Net Change in Unrealised Appreciation in Value of Investments (13,549,735) 12,881,525

Net Surplus for the Year including Net change in Unrealised Appreciation in Value of Investments

170,987,725 67,678,048

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve

13,549,735 (12,881,525)

Net Surplus for the Year 184,537,460 54,796,523

April 01, 2009 to March 31, 2010

April 01, 2008to March 31, 2009

Rupees Rupees

Net Surplus for the Year 184,537,460 54,796,523

Transfer from Income Equalisation Reserve (Note 2.7) (87,661,300) 82,196,992

Transfer from Unit Premium Reserve (Note 2.6) - 662,064

Transfer from Reserve Fund 1,364,646 10,828,217

Dividend / Distribution (54,619,776) (87,678,606)

Dividend / Distribution Tax thereon (8,941,065) (17,082,507)

Balance Transferred to Reserve Fund 34,679,965 43,722,683






Trustee Director




April 01, 2009to March 31, 2010

April 01, 2008to March 31, 2009

1

SCHEDULE 1

Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 7, 8, 9 and 12) Rupees Rupees Rupees Rupees


Non Convertible Debentures and Bonds Listed / Awaiting Listing 159,754,560 159,162,214 1,739,136,506 1,725,365,366 Privately Placed Non Convertible Debentures / Bonds 988,767 981,155 20,693,775 20,315,222

Certificate of Deposit 825,716,153 825,716,153 - -

Government of India Securities - - 1,162,590,870 1,201,736,673

TOTAL 986,459,480 985,859,522 2,922,421,151 2,947,417,261


Balance with Banks- in Current Account 645,758 800,238 - in Dividend Account 26 9

Reverse Repos 26,202,279 72,747,433


Sales Contracts Awaiting Completion - Government of India Securities - 63,668,625

Unit Subscription Receivable - 1,530,000

Inter-Scheme Receivable for Switch In 10,345 207,481

Interest Receivable on :- Debentures and Bonds 789,840 60,426,134 - Government of India Securities - 13,313,253 - Reverse Repos 3,702 9,362 - Collateralised Borrowing and Lending Obligation 2,144 9,325 - Deposits 191,816 -


Miscellaneous Receivables 12,124 12,124

TOTAL 43,646,725 288,835,955





2

SCHEDULE 3Unit Capital March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009

Rupees Units Rupees Units

Regular Option

Growth Sub Option

Issued and Subscribed :Units of Rs.10 each fully paid up 25,001 2,500.100 25,001 2,500.100

Outstanding:

At the beginning of the year 113,200,746 11,320,074.613 6,359,354 635,935.451


164,618,985 16,461,898.488 132,271,962 13,227,196.243




Issued and Subscribed :Units of Rs.10 each fully paid up 7,941,351 794,135.124 7,941,351 794,135.124

Outstanding:



243,916,716 24,391,671.663 297,717,003 29,771,700.370




Issued and Subscribed :Units of Rs.10 each fully paid up 1,469,757 146,975.683 1,469,757 146,975.683

Outstanding:


Issued during the year 5,030,190 503,018.935 38,945,177 3,894,517.663

33,548,990 3,354,898.840 78,672,450 7,867,244.886


At the end of the year 7,169,029 716,902.735 28,518,800 2,851,879.905

Quarterly Dividend Sub Option

Issued and Subscribed :Units of Rs.10 each fully paid up - - - -

Outstanding:

At the beginning of the year / period 66,475,394 6,647,539.396 - -

Issued during the year / period 15,009,414 1,500,941.400 71,808,103 7,180,810.305

81,484,808 8,148,480.796 71,808,103 7,180,810.305

Redeemed during the year / period 49,498,947 4,949,894.749 5,332,709 533,270.909

At the end of the year / period 31,985,861 3,198,586.047 66,475,394 6,647,539.396

Half Yearly Dividend Sub Option


Outstanding:

At the beginning of the year / period 1,973,821 197,382.137 - -

Issued during the year / period 13,410,152 1,341,015.203 1,973,821 197,382.137

15,383,973 1,538,397.340 1,973,821 197,382.137

Redeemed during the year / period 1,973,821 197,382.137 - -

At the end of the year / period 13,410,152 1,341,015.203 1,973,821 197,382.137


Growth Option


Outstanding:



866,847,157 86,684,715.595 2,154,090,670 215,409,066.928





Outstanding:



774,791,079 77,479,107.932 1,243,468,239 124,346,823.929





Outstanding:



1,018,712,244 101,871,224.442 3,733,181,694 373,318,169.383



Quarterly Dividend Sub Option


Outstanding:

At the beginning of the year / period 162,934,012 16,293,401.195 - -

Issued during the year / period 46,530,409 4,653,040.877 214,432,560 21,443,255.956

209,464,421 20,946,442.072 214,432,560 21,443,255.956

Redeemed during the year / period 95,080,059 9,508,005.882 51,498,548 5,149,854.761

At the end of the year / period 114,384,362 11,438,436.190 162,934,012 16,293,401.195

Half Yearly Dividend Sub Option


Outstanding:

Issued during the period - - 28,194,751 2,819,475.063

- - 28,194,751 2,819,475.063

Redeemed during the period - - 28,194,751 2,819,475.063

At the end of the period - - - -

TOTAL 930,732,648 93,073,264.548 2,986,843,230 298,684,322.916


HSBC MUTUAL FUND - HSBC FLEXI DEBT FUND3


Rupees Rupees




Transferred to Revenue Account - (662,064)

At the end of the year (5,818,471) 101,481,702



Transferred to Revenue Account 87,661,300 (82,196,992)




Net Change in Unrealised Appreciation in Value of Investments transferred from Revenue Account (Note 7) (13,549,735) 12,881,525

At the end of the year 599,958 14,149,693

Reserve Fund





TOTAL 94,011,919 *. 181,546,508 *


Regular Option

Growth Sub Option 11,834,954 18,658,438

Monthly Dividend Sub Option 977,817 5,712,821

Fortnightly Dividend Sub Option 526,213 1,044,362

Quarterly Dividend Sub Option 3,570,571 5,241,613

Half Yearly Dividend Sub Option 340,796 (39,369)

Total (A) 17,250,351 30,617,865


Growth Sub Option 57,575,055 132,399,146

Monthly Dividend Sub Option 6,399,262 32,167,852

Fortnightly Dividend Sub Option 2,022,824 (24,609,945)

Quarterly Dividend Sub Option 10,764,427 10,971,590

Half Yearly Dividend Sub Option - -

Total (B) 76,761,568 150,928,643

Total (A+B) 94,011,919 181,546,508



4



Investment Management and Advisory Fees 1,775,684 6,060,409 Transfer Agent Fees and Expenses 47,635 140,479 Custodian Fees and Expenses 19,977 43,759 Audit Fees 50,000 100,000 Purchase Contracts Awaiting Completion - Government of India Securities - 33,042,917 Selling and Distribution Expenses 2,279,035 3,242,038 Unit Redemption Payable 23,247 24,472 Dividend Distribution Tax Payable 80,647 - Load Payable (Note 2.8) 1,064,656 - Unclaimed Dividend (Note 13) 17 - Sundry Payables 20,740 213,294

TOTAL 5,361,638 42,867,368

SCHEDULE 6Interest and Discount (Note 2.4) April 01, 2009

to March 31, 2010April 01, 2008

to March 31, 2009Rupees Rupees


Treasury Bills 743,571 -

Commercial Paper / Certificate of Deposit 11,158,860 5,253,288

Government of India Securities 22,077,045 41,113,448

Reverse Repos 7,442,143 8,046,750


Deposits 492,456 -

TOTAL 85,956,149 137,817,674

0 0


HSBC MUTUAL FUND - HSBC FLEXI DEBT FUND5


Non-Convertible Debentures / Bonds Listed / Awaiting listing (16.19%)Finance & Investments (100%)

0.00% Housing Development Finance Corporation Limited 2012 $ 100 101,273,8188.65% Rural Electrification Corporation Limited 2019 $ 50 49,593,0770.00% Kotak Mahindra Prime Limited 2010 $ 9 8,887,665

159,754,560Total (Cost Rs. 159,162,214) 159,754,560

Privately Placed / Unlisted Non-Convertible Debentures / Bonds (0.10%)Finance & Term Lending (100%)

0.00% GE Capital Services India Limited 2010 * 1 988,767988,767

Total (Cost Rs. 981,155) 988,767


Bank of India 2010 $ @ 1,500 149,897,605Canara Bank 2010 $ 1,500 149,278,849Corporation Bank 2010 $ @ 1,500 149,260,437Bank of Baroda 2011 $ 1,000 94,627,145State Bank of Travancore 2011 $ 1,000 94,336,479HDFC Bank Limited 2011 $ 1,000 94,260,286Union Bank of India 2011 $ @ 1,000 94,055,352









6



SCHEDULE 7


HSBC Flexi Debt Fund (the “Scheme”) is an open-ended debt scheme of HSBC Mutual Fund (the “Fund”) and was

launched on October 03, 2007. HSBC Mutual Fund has been sponsored by HSBC Securities and Capital Markets (India)

Private Limited. HSBC Asset Management (India) Private Limited incorporated under the Companies Act, 1956 has

been appointed as the asset management company. The duration of the Scheme is perpetual. The Scheme closed for

initial subscription on October 3, 2007 and reopened for issue and redemption of units on October 8, 2007. The

investment objective of the Scheme is to deliver returns in the form of interest income and capital gains along with high

liquidity commensurate with the current view on the market and the interest rate cycle through active investment in debt

and money market instruments.

The Scheme was launched with two Options – Regular Option and Institutional Option; each offering Growth and

Monthly Dividend sub Options. During the earlier years, the Scheme introduced fortnightly dividend sub Options in both

the Regular and Institutional Options with effect from 8th October 2007 and 15th October 2007 respectively. In

accordance with the addendum to the Offer Document dated October 5, 2007 and February 22, 2008 respectively the

Scheme has introduced quarterly dividend sub Options in both the Regular and Institutional Options with effect from

April 09, 2008 and October 01, 2008 and half yearly dividend sub Options in Regular Option with effect from December

16, 2008.







Board of India (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments thereto, as applicable.



investments:













iv. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable interest up to the

date of resale.

v. Government securities are valued at prices obtained from The Credit Rating Information Services of India

Limited in accordance with the guidelines for valuation of securities for mutual funds dated September 18, 2000

and amendments thereto, as applicable, issued by SEBI. If no sale is reported at that time, such security is valued

at fair value as determined in good faith by HSBC Asset Management (India) Private Limited under procedures

approved by the Board of Trustees of HSBC Mutual Fund.





The net unrealised appreciation / depreciation in the value of investments is determined separately for each category of

investments. In respect of each category of investments, the net change in the unrealised appreciation if any, between

two balance sheet dates / valuation dates is accounted through the Revenue Account and thereafter the net unrealised

appreciation is transferred from the Revenue Account to the Unrealised Appreciation Reserve. The net change in

unrealised depreciation if any, is accounted through the Revenue Account.


2.3 Securities Transactions


determining the realized gain or loss on sale of investments.



2.5 Net Asset Value for Growth/Dividend Sub- Options


Dividend Sub-Options for the Regular and Institutional Options.



value of the net assets.













2.8 Load Charges





Schemes.



(India) Private Limited for managing the Scheme at an average annual rate of 0.73% of the average daily net asset values

of the Regular and Institutional Option recorded by the Scheme. All costs, charges and expenses incurred by HSBC

Asset Management (India) Private Limited in the administration and execution of the activities of the Scheme, except

costs allowed to be charged to the Scheme under the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 and amendments thereto as applicable, are on their own account for which they receive investment

management and advisory fees.

4 Trusteeship Fees




Settlor.

5 Custodian Fees




6 Income Taxes


Income Tax Act, 1961.


Aggregate appreciation and depreciation in value of investments is as follows:




- Appreciation 592,346 19,512,641

- Depreciation - 5,741,501




- Appreciation 7,612 403,039

- Depreciation - 24,486


- Appreciation - -

- Depreciation - 39,145,803

8 Aggregate Fair Value of Non-Traded / Privately Placed Investments

Aggregate fair value of non-traded (including private placement) investments as determined by HSBC Asset


Rs. 986,459,480.


The aggregate value of investment securities purchased (excluding accretion of discount of Rs. 13,501,279) and sold

(including matured) during the financial year are Rs. 19,227,187,601 and Rs. 21,287,109,534 respectively being

1185.45% and 1312.46% of the average daily net assets respectively.


The total income (including net profit on sale of investments and net change in unrealized depreciation in the value of

investments) and expenditure during the year is Rs. 209,996,216 and Rs. 25,458,756 respectively being 12.95% and

1.57% of average daily net assets.



11 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds) Regulation,










HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 HSBC Fixed Term Series 41 upto April 20, 2009 HSBC Fixed Term Series 42 upto June 08, 2009 HSBC Fixed Term Series 44 upto April 14, 2009 HSBC Fixed Term Series 45 upto April 02, 2009 HSBC Fixed Term Series 46 upto April 02, 2009 HSBC Fixed Term Series 49 upto April 02, 2009 HSBC Fixed Term Series 50 upto May 04, 2009 HSBC Fixed Term Series 52 upto May 07, 2009 HSBC Fixed Term Series 53 upto June 03, 2009 HSBC Fixed Term Series 54 upto June 17, 2009 HSBC Fixed Term Series 56 upto August 12, 2009 HSBC Fixed Term Series 57 upto August 27, 2009 HSBC Fixed Term Series 59 upto July 16, 2009 HSBC Fixed Term Series 61 upto July 30, 2009 HSBC Fixed Term Series 62 upto August 26, 2009 HSBC Fixed Term Series 63 upto September 10, 2009 HSBC Fixed Term Series 66 HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Income Fund Investment Plan HSBC Income Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Regular Plan HSBC MIP Savings Plan HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund) HSBC Small Cap Fund HSBC Tax Saver Equity Fund



HSBC Ultra Short Term Bond Fund HSBC Unique Opportunities Fund


Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai – Relative of a Key Management Personnel Kemaya Lal Kidwai – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008 * There were no transactions during the year.


Annexure I.

III During the year, The Hongkong and Shanghai Banking Corporation Limited, an associate entity of HSBC Asset







Nature of Relation

Period Covered


% of Total




Fund








Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund



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 fixed deposits and enters into reverse repo transactions from

time to time at competitive rates.

12 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds) Regulations,

1996 as amended




and were made solely on the basis of sound fundamentals of these companies.

13 Unclaimed Dividends

As at March 31, 2010, unclaimed dividends aggregate Rs. 17 payable to 1 investor.


Miscellaneous Income of Rs. 31,349 represents excess expense provision of previous years written back which are no

longer payable.




Previous year’s figures have been re–grouped/re-arranged where appropriate.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)





Sponsor


Relatives Total


Sale of Investments - - - - - Previous Year - - 1,814,345,614 - 1,814,345,614

Subscription of Units (including switch in and dividend reinvestment) - - - 38,314 38,314 Previous Year - 329,926,684 - 8,106,755 338,033,439

Redemption of Units (including switch out - - - 8,413,895 8,413,895 Previous Year - 274,827,489 - - 274,827,489

Dividend Distribution (Including dividend reinvested - - - 38,314 38,314 Previous Year - 5,343,204 - 6,755 5,349,959


Brokerage/ Commission on Distribution of Units - 7,648,890 - - 7,648,890 Previous Year - 3,796,113 - - 3,796,113

Charges for Services Provided by Bank - 1,680 - - 1,680 Previous Year - - - - -





Sponsor


Relatives Total

Investment Management and Advisory Fees Payabl 1,775,684 - - - 1,775,684 Previous Year 6,060,409 - - - 6,060,409

Brokerage/ Commission Payable on Distribution of Units - 2,078,199 - - 2,078,199 Previous Year - 935,851 - - 935,851

Units Outstanding As At Year End - - - - Previous Year 322,563,745 - 8,085,971 330,649,716

Other Receivables - - - - - Previous Year 403 - - - 403

(iii) Details of material transactions with respect to parties referred to in Note 11 (I) (iii) & (iv) for Associate of Investment Manager

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividend reinvestment)The Hongkong and Shanghai Banking Corporation Limited - 329,926,684

Redemption of Units (including switch outThe Hongkong and Shanghai Banking Corporation Limited - 274,827,489

Dividend Paid/Payable( Including dividend reinvestedThe Hongkong and Shanghai Banking Corporation Limited - 5,343,204

Units Outstanding As At Year EndHSBC InvestDirect Securities (India) Limited - 322,563,745


Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 1,680 -



April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Purchase of InvestmentsHSBC Floating Rate Fund Long Term Plan - 288,517,316 HSBC Fixed Term Series 46 - 229,242,575 HSBC Income Fund Short Term Plan - 180,636,003 HSBC Ultra Short Term Bond Fund - 112,018,162

Sale of InvestmentsHSBC Ultra Short Term Bond Fund - 425,775,781 HSBC Cash Fund - 258,246,595 HSBC Advantage India Fund - 203,438,659


April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Subscription of Units (including switch in and dividend reinvestment)Kemaya Lal Kidwai (Relative) - 5,600,000 Naina Lal Kidwai 38,314 2,006,755

Redemption of Units (including switch outKemaya Lal Kidwai (Relative) 5,837,483 - Naina Lal Kidwai 2,048,482 -

Dividend Distribution (Including dividend reinvestedNaina Lal Kidwai 38,314 6,755

Units Outstanding As At Year EndKemaya Lal Kidwai (Relative) - 5,606,080 Naina Lal Kidwai - 1,973,766



Annexure I

0

0Auditors’ Report

1To the Board of Trustees of

2HSBC 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 financial 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 financial statements based on our audit.







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




For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Vivek Prasad Partner Membership No. F-104941

Place : Mumbai Date : July 20, 2010

Auditors’ Report 0To the Board of Trustees of 1HSBC 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 financial 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 financial statements based on our audit.


standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation 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 significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.





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.



For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Vivek Prasad Partner Membership No. F-104941 Place : Mumbai Date : July 20, 2010

Fixed Term Series 30 Fixed Term Series 30 Fixed Term Series 66 Fixed Term Series 66


Schedule Rupees Rupees Rupees RupeesASSETS

Investments 1 893,044,686 870,636,238 - 628,322,625


Deferred Revenue Expenditure 3 783,671 5,098,329 - -

TOTAL 0.20 922,288,660 879,541,013 0.62 697,689,061 659,124,885

LIABILITIES

Unit Capital 4 735,445,449 769,337,349 615,994,087 625,957,075



TOTAL 922,288,660 879,541,013 697,689,061 659,124,885

RECONCILIATION OF NET ASSET VALUE PER UNITRegular Option

Growth Sub OptionRegular Option

Dividend Sub OptionInstitutional OptionGrowth Sub Option Total

Regular OptionGrowth Sub Option

Regular OptionDividend Sub Option

Institutional OptionGrowth Sub Option Total

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 648,279,933 142,565,833 122,012,194 912,857,960 448,465,747 59,664,636 183,379,848 691,510,231

(616,803,190) (144,619,474) (109,353,582) (870,776,246) (431,549,543) (56,011,468) (170,392,287) (657,953,298)

Number of Units in Issue 50,073,231.564 14,047,075.621 9,424,237.930 39,495,732.233 5,953,676.401 16,150,000.000

(53,156,931.064) (14,352,566.066) (9,424,237.930) (40,902,819.241) (5,542,888.156) (16,150,000.000)

Net Asset Value per Unit 12.9466 10.1491 12.9466 11.3548 10.0215 11.3548 (11.6034) (10.0762) (11.6034) (10.5506) (10.1051) (10.5506)






Trustee Director


HSBC FIXED TERM SERIES 30 and HSBC FIXED TERM SERIES 66


Rupees

March 31, 2010

(March 31, 2009)

March 31, 2010

Fixed Term Series 30 Fixed Term Series 66

Rupees

(March 31, 2009)

0

April 01, 2009 to April 01, 2008 to April 01, 2009 to September 18, 2008 toMarch 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009


INCOME AND GAINS


Net Profit on Sale of Investments (Note 2.3) 2,277,229 - 2,483,969 1,190,628

Miscellaneous Income (Note 15) 349,022 - 69,207 718,497

TOTAL 92,019,360 101,080,493 60,312,994 34,072,976

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Including Net Loss on Inter-Scheme Sale of Investments Rs.Nil for Fixed Term Series 30 (Previous year: Rs. 1,908,328 for Fixed Term Series 30)) (Note2.3) - 9,044,455 - -

Investment Management and Advisory Fees (Note 3) 10,935,720 4,573,322 6,013,670 514,044




Audit Fees 12,000 10,000 12,000 5,000

Selling and Distribution Expenses 934,994 1,001,240 3,766,023 2,629,512

Initial Issue Expenses Amortised 4,159,359 5,447,599 - -


TOTAL 16,339,484 20,400,108 10,007,358 3,270,531

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 46,780 - 3,108,998 -

TOTAL 16,292,704 20,400,108 6,898,360 3,270,531

Net Realised Gains for the Year/Period 75,726,656 80,680,385 53,414,634 30,802,445

Net Change in Unrealised Depreciation in Value of Investments 16,666,465 (16,666,465) - -

Net Gains for the Year/Period 92,393,121 64,013,920 53,414,634 30,802,445

Net Change in Unrealised Appreciation in Value of Investments 6,211,966 (14,447,597) (4,036,618) 4,036,618


Net Change in Unrealised Appreciation in the Value of Investments transferred to Unrealised Appreciation Reserve (6,211,966) 14,447,597 4,036,618 (4,036,618)

Net Surplus for the Year/Period 92,393,121 64,013,920 53,414,634 30,802,445

0.44 (0.04)


April 01, 2009 to March 31, 2010

April 01, 2009 to March 31, 2010

(April 01, 2008 to March 31, 2009)

(September 18, 2008 to March 31, 2009)

Rupees RupeesInstitutional Option

Dividend Sub Option TotalInstitutional Option

Dividend Sub Option Total

Net Surplus for the Year / Period - 92,393,121 - 53,414,634

(254,119) (64,013,919) (14,846) (30,802,445)

Transfer from Reserve Fund 3,604,112 - 267,638

(397,576) (5,604,839) (-) (-)

Dividend / Distribution - (12,938,508) - (4,133,915)

(-964,244) (-14,592,820) (-) (-2,241,183)

Dividend / Distribution Tax thereon - (1,855,726) - (600,187)

(-136,562) (-2,125,152) (-) (-325,742)

Balance Transferred to Reserve Fund - 81,202,999 - 48,948,170

(-449,110) (52,900,786) (14,846) (28,235,520)




Trustee Director







1

SCHEDULE 1

Investments

Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 8, 9, 10, and 13) Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees(Refer to the attached Statement of Portfolio Holding as at March 31, 2010)

Non Convertible Debentures and Bonds Listed / Awaiting Listing 197,086,541 195,499,590 255,425,223 262,012,616 - - 202,707,639 201,932,100

Privately Placed Non Convertible Debentures / Bonds 488,450,827 484,327,574 427,433,850 437,512,922 - - - -

Commercial Paper / Certificate of Deposit - - - - - - 314,886,920 314,886,920

Asset Backed Securities 207,507,318 206,259,684 187,777,165 187,031,293 - - 110,728,066 107,466,986

TOTAL 893,044,686 886,086,848 870,636,238 886,556,831 - - 628,322,625 624,286,006

SCHEDULE 2 March 31, 2010 March 31, 2009 March 31, 2010 March 31, 2009Other Current Assets Rupees Rupees Rupees Rupees

Balances with Banks

- in Current Account 106,633 1,262,299 2,061,445 57,089

- in Dividend Account 5,748 124,704 - -

Reverse Repos 17,657,418 1,181,820 432,070,802 11,920,782



- Debentures / Bonds - - - 6,349,316

- Reverse Repos 2,495 152 61,049 1,534

- Collateralised Borrowing and Lending Obligation 1,445 152 35,349 1,528

Receivable from Investment Manager 46,780 220 3,108,998 148

TOTAL 28,460,303 3,806,446 697,689,061 30,802,260

SCHEDULE 3Deferred Revenue Expenditure (Note 2.8)

At the beginning of the year / period 5,098,329 12,489,078 - -

Less : Amortised during the year / period 4,159,359 - - -

Less : Recovered during the year / period 155,299 (7,390,749) - -

At the end of the year / period 783,671 5,098,329 - -

March 31, 2010 March 31, 2010


Schedules forming part of the Balance Sheet as at March 31, 2010and the Revenue account for the year ended March 31, 2010

Fixed Term Series 66Fixed Term Series 30March 31, 2009March 31, 2009

RupeesRupees RupeesRupees

2

March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009 March 31, 2010 March 31, 2010 March 31, 2009 March 31, 2009SCHEDULE 4 Rupees Units Rupees Units Rupees Units Rupees Units Unit Capital

Regular Plan

Growth Option

Issued and SubscribedUnits of Rs. 10 each fully paid up 709,293,717 70,929,371.725 709,293,717 70,929,371.725 418,275,321 41,827,532.076 418,275,321 41,827,532.076

Outstanding

Initial Issue and Subscription - - - - - - 418,275,321 41,827,532.076

At the Beginning of the year / period 531,569,310 53,156,931.064 666,592,793 66,659,279.315 409,028,193 40,902,819.241 - -

Issued during the year / period 25,210,000 2,521,000.000 5,130,000 513,000.000 19,344,127 1,934,412.712 17,200,000 1,720,000.000

556,779,310 55,677,931.064 671,722,793 67,172,279.315 428,372,320 42,837,231.953 435,475,321 43,547,532.076

Redeemed during the year / period 56,046,995 5,604,699.500 140,153,483 14,015,348.251 33,414,997 3,341,499.720 26,447,128 2,644,712.835

At the end of the year / period 500,732,315 50,073,231.564 531,569,310 53,156,931.064 394,957,323 39,495,732.233 409,028,193 40,902,819.241

Dividend Option


Outstanding



Issued during the year / period 11,075,900 1,107,590.021 10,130,523 1,013,052.321 4,219,199 421,919.944 17,456,888 1,745,688.784

154,601,560 15,460,156.087 181,415,914 18,141,591.472 59,648,081 5,964,808.100 82,633,585 8,263,358.455

Redeemed during the year / period 14,130,805 1,413,080.466 37,890,254 3,789,025.406 111,317 11,131.699 27,204,703 2,720,470.299


Institutional Plan

Institutional Growth Option


Outstanding



Issued during the year / period - - - - 10,000,000 1,000,000.000 10,000,000 1,000,000.000

94,242,379 9,424,237.930 114,000,000 11,400,000.000 171,500,000 17,150,000.000 161,500,000 16,150,000.000

Redeemed during the year / period - - 19,757,621 1,975,762.070 10,000,000 1,000,000.000 - -


Institutional Dividend Option


Outstanding


At the Beginning of the year / period - - 20,000,000 2,000,000.000 - - - -

Issued during the year / period - - - - - - - -

- - 20,000,000 2,000,000.000 - - 10,000,000 1,000,000.000

Redeemed during the year / period - - 20,000,000 2,000,000.000 - - 10,000,000 1,000,000.000

At the end of the year / period - - - - - - - -

TOTAL 735,445,449 73,544,545.115 769,337,349 76,933,735.060 615,994,087 61,599,408.634 625,957,075 62,595,707.397




3

SCHEDULE 5

Reserves and Surplus Total Total


At the beginning of the year / period (17,034,551) (275,915)

(-4,451,118) (-)

Added during the year / period (7,837,234) (1,123,993)

(-12,583,437) (-275,915)

At the end of the year / period (24,871,785) (1,399,908)

(-17,034,555) (-275,915)


At the beginning of the year / period 745,872 4,036,618

(15,193,469) (-)Net change in Unrealised Appreciation in Value of Investments Transferred from Revenue Account (Note 8) 6,211,966 (4,036,618)

(-14,447,597) (4,036,618)

At the end of the year / period 6,957,838 -

(745,872) (4,036,618)

Reserve Fund

At the beginning of the year / period 117,727,571 28,235,520

(70,431,629) (-)

Transfer to Revenue Account (3,604,112) (267,638)

(-5,604,839) (-)


(52,900,786) (28,235,520)

At the end of the year / period 195,326,458 76,916,052

(117,727,576) (28,235,520)

TOTAL 177,412,511 * 75,516,144 *

(101,438,893) * (31,996,223) *

* The share of the Plans / Options of the Reserves and Surplus is as follows : March 31, 2010 March 31, 2010

(March 31, 2009) (March 31, 2009)

Regular OptionRupees Rupees

Growth Option 147,547,618 53,508,424 (85,233,880) (22,521,350)

Dividend Option 2,095,078 127,872 (1,093,812) (582,586)

Total (A) 149,642,696 53,636,296

(86,327,692) (23,103,936) Institutional Option Growth Option 27,769,815 21,879,848

(15,111,201) (8,892,287) Dividend Option - -

(-1) (0) Total (B) 27,769,815 21,879,848

(15,111,201) (8,892,287)

Total (A+B) 177,412,511 75,516,144

(101,438,893) (31,996,223)

March 31, 2010(March 31, 2009)



and the Revenue account for the year ended March 31, 2010

Fixed Term Series 66Fixed Term Series 30March 31, 2010

(March 31, 2009)

Rupees Rupees

4

SCHEDULE 6

Current Liabilities and Provisions


Current Liabilities Rupees Rupees Rupees Rupees

Investment Management and Advisory Fees 2,231,999 600,286 5,093,890 119,744



Audit Fees 12,000 10,000 12,000 5,000

Selling and Distribution Expenses 629,427 554,241 14,404 374,383

Redemption Payable 253,524 452,032 - -

Load Payable (Note 2.7) 6,254,543 5,746,188 1,027,464 640,027


Unclaimed Dividend (Note 14) 5,738 - - -

Bank Overdraft - 1,229,574 - -

Sundry Payables 10,316 15,566 9,135 8,562

TOTAL 9,430,700 8,764,767 6,178,830 1,171,587

SCHEDULE 7

Interest and Discount (Note 2.4) April 1, 2009 to April 1, 2008 to April 1, 2009 to September 18, 2008 to




Asset Backed Securities 19,228,390 19,228,390 12,533,014 6,196,490

Commercial Paper / Certificate of Deposit - 51,399 24,150,848 15,948,728

Reverse Repos 296,361 171,542 384,599 288,846

Collateralised Borrowing and Lending Obligation 295,164 51,934 259,851 245,410

Others - (313,041) - -

TOTAL 89,393,109 101,080,493 57,759,818 32,163,851



and the Revenue account for the year ended March 31, 2010



5


HSBC FIXED TERM SERIES 30Non-Convertible Debentures / Bonds Listed / Awaiting listing (22.06%)Consumer Finance (100%)

0.00% CitiFinancial Consumer Finance India Limited 2010 $ 200 197,086,541197,086,541

Total (Cost Rs. 195,499,590) 197,086,541

Privately Placed / Unlisted Non-Convertible Debentures / Bonds (54.70%)Finance & Term Lending (100%)

0.00% GE Money Financial Services Limited 2010 * 250 247,191,7140.00% GE Capital Services India Limited 2010 * 195 192,809,5370.00% GE Money Financial Services Limited 2010 * 25 24,719,1710.00% GE Capital Services India Limited 2010 * 24 23,730,405

488,450,827Total (Cost Rs. 484,327,574) 488,450,827

Asset Backed Securities (23.24%)Corporate Loan Securitisation Trust Series 15 Trust 2008 - A2 (L&T Finance ) PTC 2010 * 15 207,507,318








6

HSBC MUTUAL FUND - HSBC FIXED TERM SERIES 30 & HSBC FIXED TERM SERIES 66.


SCHEDULE 8


HSBC Fixed Term Series (the “Scheme”) is a closed-ended income scheme of HSBC Mutual Fund (the

“Fund”) offering a series of fixed maturity plans. HSBC Mutual Fund has been sponsored by HSBC

Securities and Capital Markets (India) Private Limited. HSBC Asset Management (India) Private Limited

incorporated under the Companies Act, 1956 has been appointed as the asset management company. The

Scheme has a series of close ended plans (the “plan”) having fixed maturity. The investment objective of

the Scheme and the plans launched thereunder is to seek generation of reasonable returns by investing in a

portfolio of fixed income instruments normally maturing in line with the time profile of the respective

Scheme(s). The key features of the fixed term series presented in these financial statements are mentioned

below.

Scheme

Name

New Fund

Offering

(NFO) Open

Date

NFO Close

Date

Date of

Allotment

Tenure of

the Scheme

Options Offered

Fixed Term

Series 30 May 03, 2007 May 31, 2007 June 11, 2007

3 years from

the date of

allotment

Regular and Institutional

Options - Growth and

Dividend Sub Options

Fixed Term

Series 66

September

18, 2008

September

25, 2008

October 03,

2008

18 months

from the date

of allotment

Regular and Institutional

Options - Growth and

Dividend Sub Options

The Scheme will not declare dividend under the Growth Option\ Sub- Option of any of the Plans in normal

circumstance. The income earned on such units will remain invested within the Scheme and will be

reflected in the net asset value of these Plans. 2 Significant Accounting Policies 2.1 Basis of Accounting

The Schemes maintain their books of account on an accrual basis. These financial statements have been

prepared in accordance with the accounting policies and standards specified in the Ninth Schedule of the

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 (the “Regulations”) and

amendments thereto, as applicable. 2.2 Portfolio Valuation


Schemes investments:

i. Debt securities listed on a recognised stock exchange are valued at the last quoted closing price on

the National Stock Exchange of India Limited (NSE). If no sale is reported at that time, such

securities are valued at fair value as determined in good faith by HSBC Asset Management (India)

Private Limited under procedures approved by the Board of Trustees of HSBC Mutual Fund.

ii. Non-traded and thinly traded debt securities, are valued at fair value as determined by HSBC Asset







iii. Privately placed debt securities are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund.

iv. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset


Mutual Fund .

v. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable

interest up to the date of resale.

vi. Traded money market securities are valued at the yield at which they are traded on the valuation

date. If no sale is reported at that time, such security is valued at the last traded price plus accretion

of the difference between the face value and the last traded price. Non traded money market

instruments are valued at cost plus accrued interest.


The net unrealised appreciation / depreciation in the value of investments is determined separately for each category of investments. In respect of each category of investments, the net change in the unrealised appreciation if any, between two balance sheet dates / valuation dates is accounted through the Revenue Account and thereafter the net unrealised appreciation is transferred from the Revenue Account to the Unrealised Appreciation Reserve. The net change in unrealised depreciation if any, is accounted through the Revenue Account.

Net change in unrealised appreciation is reduced from the distributable income at the time of income distribution.

2.3 Securities Transactions



Interest income is recorded on an accrual basis. 2.5 Net Asset Value

The net asset value of the units of the Scheme is determined separately for the units issued under the

Growth and Dividend Options/ Sub-Options.

For reporting the net asset value for the Options/ Sub-Options, daily income earned, including realized and


Options / Sub - Options in proportion to the value of the net assets.










2.7 Load Charges





excess of 1% is credited to the Schemes. 2.8 Initial Issue Expenses



Initial issue expenses upto 6% of the amount collected from the investors during the initial offer period have

been charged to the Scheme and are being amortised over tenure of the Scheme from the date of allotment of

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

period. Expenses over and above the amounts debited to the Scheme were borne by the asset management

company.


The Schemes have paid or provided for investment management and advisory fees payable to HSBC Asset

Management (India) Private Limited for managing the Schemes at an average annual rate of the average daily

net asset values recorded by the respective Scheme as follows.

Name of the Scheme

Investment Management and Advisory fees as a

percentage of the average daily net asset value

Fixed Term Series – 30 1.21%

Fixed Term Series – 66 0.89%

All costs, charges and expenses incurred by HSBC Asset Management (India) Private Limited in the

administration and execution of the activities of the Scheme, except costs allowed to be charged to the

Scheme under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and

amendments thereto as applicable, are on their own account for which they receive investment management

and advisory fees.



4 Trusteeship Fees





5 Custodian Fees

JP Morgan Chase Bank provides custodial services to the Schemes for which it receives custody fees. 6 Income Taxes

No provision for income tax is made as the Schemes qualify as a recognized mutual fund under Section

10(23D) of the Income Tax Act, 1961.


The total expenses chargeable to the Schemes HSBC Fixed Term Series 30 and HSBC Fixed Term Series 66

are limited to 1.34% and 1.02% of the average daily net assets of the Scheme respectively. HSBC Asset

Management (India) Private Limited has borne Rs. 46,780 and Rs. 3,108,998 in respect of HSBC Fixed Term

Series 30 and HSBC Fixed Term Series 66 respectively in excess of the above mentioned percentage of the

average daily net assets to be charged to the Scheme as total expenses for the year.

8 Aggregate Appreciation and Depreciation In Value of Investments Aggregate appreciation and depreciation in value of investments is as follows:

March 31, 2010

March 31, 2009

Non Convertible Debentures and Bonds Listed /

Awaiting Listing

Privately Placed Non Convertible Debentures /

Bonds


Non Convertible Debentures and Bonds Listed /

Awaiting Listing

Privately Placed Non Convertible

Debentures / Bonds


Fixed Term Series 30

- Appreciation 1,586,951 4,123,253 1,247,635 - - 745,872

- Depreciation - - - 6,587,393 10,079,072 -

Fixed Term Series 66

- Appreciation - - - 775,539 - 3,261,080

- Depreciation - - - - - -



9 Aggregate Fair Value of Non-Traded / Thinly Traded Investments

Aggregate fair value of non traded (including private placement)/ thinly traded investments as determined by

HSBC Asset Management (India) Private Limited under the procedures approved by the Board of Trustees as at

March 31, 2010 is as follows:

Name of the Scheme Fair value (Rupees) Fixed Term Series 30 893,044,686


The aggregate value of investment securities purchased and sold (including matured) during the year

(excluding accretion of discount) are as follows:

Name of the Scheme Accretion of Discount

Aggregate Purchase Aggregate Sale

Rupees Rupees

Percentage of Average Daily Net

Assets Rupees

Percentage of Average Daily Net

Assets Fixed Term Series 30 88,801,585 - - 91,548,797 10.12% Fixed Term Series 66 36,683,862 775,886,624 114.81% 1,439,340,461 212.99%


The total income (net of net loss on sale of investments and net change in unrealized depreciation in the value

of investments) and expenditure (excluding initial issue expenses amortised) during the year are as follows:

Total Income Total Expenses Name of the Scheme Rupees Percentage of

Average Daily Net Assets

Rupees Percentage of Average Daily Net

Assets

Fixed Term Series 30 108,685,825 12.02% 12,133,345 1.34% Fixed Term Series 66 60,312,994 8.92% 6,898,360 1.02%

12 Disclosure Under Regulation 25(8) of the Securities and Exchange Board of India (Mutual Funds )










HSBC Mutual Fund






HSBC Cash Fund

HSBC Dynamic Fund

HSBC Emerging Markets Fund

HSBC Equity Fund

HSBC Fixed Term Series 41 upto April 20, 2009

HSBC Fixed Term Series 42 upto June 08, 2009





HSBC Fixed Term Series 50 upto May 04, 2009

HSBC Fixed Term Series 52 upto May 07, 2009



HSBC Fixed Term Series 56 upto August 12, 2009


HSBC Fixed Term Series 59 upto July 16, 2009

HSBC Fixed Term Series 61 upto July 30, 2009


HSBC Fixed Term Series 63 upto September 10, 2009

HSBC Flexi Debt Fund

HSBC Floating Rate Fund Long Term Plan

HSBC Floating Rate Fund Short Term Plan

HSBC Gilt Fund

HSBC Income Fund Investment Plan

HSBC Income Fund Short Term Plan

HSBC India Opportunities Fund

HSBC Midcap Equity Fund

HSBC MIP Regular Plan

HSBC MIP Savings Plan

HSBC Progressive Themes Fund (Formerly, HSBC Advantage India Fund)

HSBC Small Cap Fund

HSBC Tax Saver Equity Fund

HSBC Ultra Short Term Bond Fund

HSBC Unique Opportunities Fund

(vi) Key Management Personnel and their relatives: Nelum Pahlaj Gidwani* – Associate Trustee Naina Lal Kidwai* – Chairman of the Investment Manager Vikramaditya* – Director and the Chief Executive Officer of the Investment Manager Dr. Rudolf Apenbrink* – Associate Trustee Ayaz Ebrahim* – Director of the Investment Manager Sanjay Prakash* – Director and the Chief Executive Officer of the Investment Manager upto July 16, 2008 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rashid K Kidwai* – Relative of a Key Management Personnel Kemaya Lal Kidwai* – Relative of a Key Management Personnel



Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel Raaghav Aaditya* – Relative of a Key Management Personnel Rhea Aaditya* – Relative of a Key Management Personnel Gabriele A Apenbrink* – Relative of a Key Management Personnel Christian R Apenbrink* – Relative of a Key Management Personnel Katharina S Apenbrink* – Relative of a Key Management Personnel Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Nilufer Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Tara Prakash* – Relative of a Key Management Personnel upto July 16, 2008 Anahita Prakash* – Relative of a Key Management Personnel upto July 16, 2008


II The transactions with the related parties during the year in the ordinary course of business have been listed in

Annexure I.

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


Name of Sponsor/AMC and its

associates/related parties/group companies


Nature of Relation

Period Covered


% of Total




Fund

Fund



HSBC InvestDirect Securities (India) Limited Associate 2009-2010 0.00~ 0.01 5,905 0.63


The Hongkong and Shanghai Banking Corporation Limited Associate 2009-2010 1.18 25.41 - -


HSBC InvestDirect Securities (India) Limited Associate 2009-2010 0.02 0.42 - -


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

companies


Nature of Relation

Period Covered


% of Total



(on accrual basis)


Fund

Fund





~ Indicates less than 0.01









instruments and were made solely on the basis of sound fundamentals of these companies. 14 Unclaimed Dividends

As at March 31, 2010, unclaimed dividends aggregate Rs. 5,738 payable to 4 investors.


Miscellaneous Income of Rs. 3,49,022 and Rs. 69,207 in Fixed Term Series 30 and 66 respectively represents

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


Previous year / period’s figures have been re-grouped/re-arranged where necessary. As the financial for Fixed

Term Series 66 for the previous year was for a period from September 18, 2008 to March 31, 2009, the figures

are not comparable with the current year figures which are for the full year.






HSBC Mutual Fund



VIVEK PRASAD

Partner


Vikramaaditya


Officer

Trustee

Director

Place: Mumbai

Date :

Fund Manager(s)


Nature of Transaction Investment Manager Associate of Investment

Manager


Sponsor

Total

Sale of Investments - - - - Previous Year - - 111,603,734 111,603,734

Investment Management and Advisory Fees 10,935,720 - - 10,935,720 Previous Year 4,573,322 - - 4,573,322

Reimbursement of Expenses 46,780 - - 46,780 Previous Year - - - -

Brokerage/ Commission on Distribution of Units - 59,080 - 59,080 Previous Year - 54,938 - 54,938

Borrowings taken and repaid - - - - Previous Year - 839,700,000 - 839,700,000

Interest Expense on Borrowings - - - - Previous Year - 313,041 - 313,041


Nature of Transaction Investment Manager Associate of Investment

Manager


Sponsor

Total

Investment Management and Advisory Fees Payable 2,231,999 - - 2,231,999 Previous Year 600,286 - - 600,286

Brokerage/ Commission Payable on Distribution of Units - 18,647 - 18,647 Previous Year - 4,798 - 4,798

Other Receivables 46,780 - - 46,780 Previous Year 220 - - 220

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009


Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 18,129 4,798

Borrowings taken and repaidThe Hongkong and Shanghai Banking Corporation Limited - 839,700,000

Interest Expense on BorrowingsThe Hongkong and Shanghai Banking Corporation Limited - 313,041

(iv) Details of material transactions with respect to parties referred to in Note 12 (I)(v) for Schemes under common control ofthe Sponsor

April 01, 2009 to March 31, 2010

April 01, 2008 to March 31, 2009

Sale of InvestmentsHSBC MIP Savings Plan - 66,762,439 HSBC Flexi Debt Fund - 28,629,992 HSBC MIP Regular Plan - 12,242,186


HSBC MUTUAL FUND - HSBC FIXED TERM SERIES 30 FUND


Annexure I

0


Nature of Transaction Investment Manager Schemes under Common Control of

Sponsor

Total

Purchase of Investments - - - Previous Year - 647,484,185 647,484,185

Investment Management and Advisory Fees 6,013,670 - 6,013,670 Previous Year 514,044 - 514,044

Reimbursement of Expenses 3,108,998 - 3,108,998

Previous Year - - -


Nature of Transaction Investment Manager Schemes under Common Control of

Sponsor

Total

Investment Management and Advisory Fees Payable 5,093,890 - 5,093,890 Previous Year 119,744 - 119,744

Other Receivables 3,108,998 - 3,108,998 Previous Year 148 - 148

(iii) Details of material transactions with respect to parties referred to in Note 12 (I)(v) for Schemes under common control of the Sponsor.

April 01, 2009 to March 31, 2010

September 18, 2008 to March 31,

2009Purchase of Investments - HSBC Ultra Short Term Bond Fund - 240,758,392 HSBC Fixed Term Series 63 - 158,098,442 HSBC Floating Rate Fund Long Term Plan - 121,469,231

HSBC MUTUAL FUND - HSBC FIXED TERM SERIES 66 FUND


Annexure I

1

Company NameSchemes

invested in by the Company

Investment made by schemes of HSBC

Mutual Fund in the company/subsidiary

Aggregate cost of acquisition during the year ended March 31,

2010

Outstanding as at March 31, 2010

( At Market / Fair Value)

(Rupees in Lakhs) (Rupees in Lakhs)

Bank of India HCF HCF 4,479.50 - HFDF 4,435.66 1,498.98 HFRF 42,500.05 - HIF 25,492.13 3,497.50 HMIP 3,444.07

Bank of Maharashtra HCF HCF 2,476.32 2,497.56 HFRF 4,935.04 2,474.39 HMEF 645.76 619.38 HPTF 16.92 15.23

Corporation Bank HCF HCF 2,992.02 - HFRF HFDF 1,477.01 1,492.60

HFRF 11,438.20 - HFTS55 999.04 - HFTS59 2,496.56 - HFTS63 1,498.19 - HIF 10,466.69 - HMIP 984.67 995.07

Exim Bank Limited HCF HCF 21,513.49 2,497.58 HUSBF HFDF 6,663.53 - HFRF HFRF 26,785.31 -

HFTS50 2,111.56 - HFTS52 1,456.51 - HFTS53 64.90 - HFTS63 1,204.11 - HIF 11,217.27 - HMIP 3,450.76 - HUSBF 16,206.72 -

HCL Infosystems Limited HUSBF HMEF 324.85 191.40 HSCF 123.75 108.80

Hero Honda Motors Limited HFRF HDF 832.16 629.99 HEF 2,767.41 3,149.93 HIOF 1,051.26 612.49 HMIP 191.53 - HSCF 108.56 - HTSEF 472.03 - HUOF 801.05 -

Hindalco Industries Limited HFTS44 HIOF 451.17 - HMEF 244.40 - HSCF 101.83 -

Hindustan Zinc Limited HFTS44 HEF 207.31 - (Subsidiary company of Sterlite Industries (India) Limited) HMIP 491.72 -

HTSEF 420.44 682.66 HUOF 1,146.33 628.60

IDBI Bank Limited HFRF HCF 4,487.43 - HDF 761.22 - HFDF 1,458.71 - HFRF 39,031.32 - HFTS30 69.83 - HFTS41 706.10 - HFTS52 219.48 - HFTS66 1,257.91 - HIF 17,193.24 - HMIP 972.47 - HTSEF 328.76 - HPTF 2,912.02 1,805.50

Industrial Finance Corporation of India HCF HEF 2,037.27 - HIOF 509.32 -

Infosys Technologies Limited HFRF HDF 1,205.83 1,177.18 HEF 4,034.06 8,407.01 HIOF 893.21 1,648.05 HMEF 264.87 - HMIP 243.75 - HTSEF 1,423.87 706.31 HUOF 792.83 627.83 HPTF 491.92 -

Annexure II

Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended HSBC Mutual Fund has made the following investments in companies, which hold units in excess of 5% of the net asset value of any Scheme of HSBC Mutual Fund.

0

Company NameSchemes





2010



(Rupees in Lakhs) (Rupees in Lakhs)ITC Limited HUSBF HDF 491.67 946.98

HCF HEF 3,435.80 5,208.39 HIOF 473.22 1,136.38 HMIP 144.81 - HTSEF 471.60 473.49 HUOF 1,382.95 434.03 HPTF 788.39 -

M R F Limited HIF HMIP 77.08 -

Mahindra & Mahindra Limited HFTS54 HMIP 74.17 - HCF HTSEF 1,681.24 461.10 HFRF HUOF 785.07 -

Mahindra & Mahindra Financial Services Limited HCF 19,399.53 - (Subsidiary company of Mahindra & Mahindra Limited) HFRF 5,000.00 -

HFTS59 1,600.00 - HUSBF 59,130.87 -

Mahindra Finance Limited HCF 88,000.00 - (Subsidiary company of Mahindra & Mahindra Limited) HFRF 2,900.00 -

HFTS56 2,000.00 - HFTS57 500.00 - HFTS58 4,500.00 - HFTS59 7,000.00 - HFTS62 12,500.00 - HINF 2,000.00 - HMIP 500.00 - HUSBF 89,400.00 -

Mahindra Holidays & Resorts HDF 82.01 - (Subsidiary company of Mahindra & Mahindra Limited) HMEF 344.34 408.53

HUOF 28.52 - HPTF 331.07 408.53

Maruti Suzuki India Limited HUSBF HEF 2,520.62 1,786.62 HCF HMIP 560.42 - HFRF HTSEF 1,673.90 -

HUOF 586.47 - HPTF 108.14 -

NABARD HCF HFRF 12,388.95 - HFTS59 2,494.91 - HIF 7,555.35 -

Oriental Bank of Commerce HUSBF HCF 21,714.89 1,977.02 HCF HFRF 28,699.31 7,336.44

HFTS44 99.70 - HFTS57 897.59 - HFTS58 7,368.55 - HFTS59 2,964.57 - HFTS61 1,976.38 - HFTS62 8,079.02 - HFTS63 4,272.40 - HFTS66 188.93 - HFTS68 2,882.91 - HIF 10,924.54 497.33 HINF 893.94 - HIOF 480.90 - HMIP 8,075.63 4,954.84 HUSBF 5,106.20 -

Punjab National Bank HCF HCF 17,337.46 1,898.87 HDF 786.34 - HEF 8,793.37 4,557.38 HFDF 1,866.41 - HFRF 80,704.86 599.64 HFTS44 2,171.29 - HFTS46 4,488.21 - HFTS49 4,993.44 - HFTS53 1,392.71 - HFTS55 297.95 - HFTS56 1,914.31 - HFTS63 2,730.77 - HFTS66 728.47 - HFTS68 4,537.13 - HIF 28,045.99 - HINF 1,465.09 - HIOF 1,059.76 - HMIP 3,954.66 - HTSEF 700.33 - HUOF 886.68 - HUSBF 6,647.01 - HPTF 1,563.02 1,184.92

(Holding company of Mahindra Lifespace Developers Limited, Mahindra & Mahindra Financial Services Limited, Mahindra Finance Limited, Tech Mahindra Limited, Punjab Tractors Limited)

Company NameSchemes





2010



(Rupees in Lakhs) (Rupees in Lakhs)

Shriram Transport Finance Company Limited HFRF HDF 450.72 - HUOF 446.65 473.99

Sterlite Industries (India) Limited HDF 629.53 - (Holding company of Hindustan Zinc Limited) HEF 6,768.84 2,753.84

HIOF 1,742.19 688.46 HMEF 845.55 - HMIP 134.44 - HTSEF 1,812.91 1,104.94 HUOF 1,276.79 764.96 HUSBF 10,600.00 -

Sterlite Technologies Limited HIOF 56.55 - (Subsidiary company of Sterlite Industries (India) Limited) HSCF 263.07 -

Sundaram Finance Limited HFTS41 HFDF 684.23 - HFRF 9,417.44 - HFTS52 1,486.39 - HFTS54 936.54 - HFTS56 2,100.00 - HFTS59 650.00 - HFTS61 2,250.00 - HFTS63 991.04 - HIF 635.70 - HMIP 459.26 - HUSBF 5,489.52 -

Tata Chemicals Limited HCF HMEF 115.28 -

Tata Consultancy Services Limited HFTS44 HDF 636.30 - HEF 2,225.50 421.55 HIOF 838.04 - HMIP 92.41 - HTSEF 2,360.71 585.49

The Great Eastern Shipping Company HCF HDF 1,567.43 - HFRF HEF 1,616.90 - HFDF HIOF 476.00 -

HMEF 703.02 - HMIP 97.95 - HTSEF 809.86 - HUOF 1,335.17 -

UCO Bank HFRF HCF 12,981.30 - HEF 578.49 - HFDF 578.20 - HFRF 9,703.30 4,940.71 HFTS58 4,452.89 - HFTS66 998.15 - HINF 6,360.04 - HUSBF 16,725.99 -

Union Bank of India HCF HCF 4,486.81 - HUSBF HFDF 938.42 940.55

HFRF 25,640.62 1,483.18 HFTS42 9,852.00 - HIF 2,375.59 1,881.11 HMEF 774.60 - HMIP 8,392.44 5,341.87 HSCF 113.30 - HTSEF 1,692.60 - HUOF 719.50 -

United Bank of India HUSBF HMIP 15.11 - HCF HTSEF 42.14 - HFRF HUOF 21.28 -

Vijaya Bank HCF HCF 9,430.64 1,998.82 HFDF 98.35 - HFRF 24,331.67 5,432.66 HFTS37 98.47 - HFTS44 382.28 - HFTS55 1,441.73 - HFTS58 4,851.38 - HFTS63 97.67 - HFTS66 1,735.48 - HFTS68 3,291.75 - HIF 4,087.68 - HINF 879.00 - HMIP 2,489.91 - HUSBF 1,933.81 -

Company NameSchemes





2010



(Rupees in Lakhs) (Rupees in Lakhs)Vardhman Textiles Limited HFDF HMEF 710.61 764.85

HPTF 230.75 265.05

Wipro Limited HFTS61 HDF 767.21 - HEF 2,033.51 1,488.84 HIOF 381.68 -

The above investments comprise equity shares, debentures / bonds, commercial paper, fixed deposits and other debt instruments. These investments have been made on account of their high credit quality and competitive yield for the investment in fixed income/ moneymarket instruments and in case of equity shares because of attractive valuations of these companies.

HEF - HSBC Equity FundHIOF - HSBC India Opportunities FundHIF - HSBC Income FundHCF - HSBC Cash FundHMIP - HSBC Monthly Income PlanHFRF - HSBC Floating Rate FundHMEF - HSBC Midcap Equity FundHPTF - HSBC Progressive Themes Fund*HFTSI - HSBC Fixed Term Series IHFTSIV - HSBC Fixed Term Series IVHFTSV - HSBC Fixed Term Series VHFTSVI - HSBC Fixed Term Series VIHFTSIX - HSBC Fixed Term Series IXHFTS13 - HSBC Fixed Term Series 13HFTS14 - HSBC Fixed Term Series 14HFTS15 - HSBC Fixed Term Series 15HFTS21 - HSBC Fixed Term Series 21HUSBF - HSBC Ultra Short Term Bond Fund **HTSEF - HSBC Tax Saver Equity FundHFTS22 - HSBC Fixed Term Series 22HFTS23 - HSBC Fixed Term Series 23HFTS24 - HSBC Fixed Term Series 24HFTS25 - HSBC Fixed Term Series 25HFTS26 - HSBC Fixed Term Series 26HFTS27 - HSBC Fixed Term Series 27HFTS29 - HSBC Fixed Term Series 29HUOF - HSBC Unique Opportunities FundHFTS28 - HSBC Fixed Term Series 28HFTS30 - HSBC Fixed Term Series 30HFTS31 - HSBC Fixed Term Series 31HFTS32 - HSBC Fixed Term Series 32HFTS33 - HSBC Fixed Term Series 33HFTS34 - HSBC Fixed Term Series 34HFTS35 - HSBC Fixed Term Series 35HDF - HSBC Dynamic FundHFDF - HSBC Flexi Debt FundHINF - HSBC Interval FundHFTS41 - HSBC Fixed Term Series 41HFTS42 - HSBC Fixed Term Series 42HFTS44 - HSBC Fixed Term Series 44HFTS46 - HSBC Fixed Term Series 46HFTS36 - HSBC Fixed Term Series 36HFTS37 - HSBC Fixed Term Series 37HFTS45 - HSBC Fixed Term Series 45HFTS47 - HSBC Fixed Term Series 47HFTS49 - HSBC Fixed Term Series 49HFTS48 - HSBC Fixed Term Series 48HFTS50 - HSBC Fixed Term Series 50HFTS51 - HSBC Fixed Term Series 51HFTS52 - HSBC Fixed Term Series 52HFTS53 - HSBC Fixed Term Series 53HFTS54 - HSBC Fixed Term Series 54HFTS55 - HSBC Fixed Term Series 55HFTS56 - HSBC Fixed Term Series 56HFTS57 - HSBC Fixed Term Series 57HFTS58 - HSBC Fixed Term Series 58HFTS59 - HSBC Fixed Term Series 59HFTS60 - HSBC Fixed Term Series 60HFTS61 - HSBC Fixed Term Series 61HFTS62 - HSBC Fixed Term Series 62HFTS63 - HSBC Fixed Term Series 63HFTS66 - HSBC Fixed Term Series 66HFTS68 - HSBC Fixed Term Series 68HSCF - HSBC Small Cap FundHGF - HSBC Gilt Fund ***

* Formerly known as HSBC Advantage India Fund** Formerly known as HSBC Liquid Plus Fund***Formerly known as HSBC Gilt Fund - Short Term

Annexure III- Historical Per unit Statistics 2009-10 HSBC Equity Fund HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC Progressive Themes Fund HSBC Tax Saver Equity Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Unique Opportunities Fund HSBC Small Cap Fund HSBC MIP HSBC Income Fund HSBC Gilt Fund HSBC Floating Rate Fund HSBC Cash Fund HSBC Ultra Short Term Bond Fund HSBC Flexi Debt Fund HSBC Fixed Term Series 30 and HSBC Fixed Term Series 66

April 01, 2009 April 01, 2008 April 01, 2007

to March 31,2010 to March 31,2009 to March 31,2008Rupees Rupees Rupees

(a) Net asset value per unit at the end of the year (Note 2.6)Growth Option 95.3300 60.1737 88.3814 Dividend Option 27.2661 18.8099 27.6286

(b) Gross Income

(i)income other than profit on sale of investment 0.6169 0.6417 0.4927

(ii) income from profit on inter scheme sales/transfer of investment - - -

(iii) income (net) from profit on sale of investments to third party 7.6563 (6.7806) 10.9181

(iv) transfer of revenue account from past year’s reserve - - -

Gross income and gains 8.2731 (6.1389) 11.4108

(c) Aggregate of expenses, writeoff, amortisation and charges 0.8627 0.5530 0.8193

(d) Net income 7.4104 (6.6920) 10.5915

(e) Net change in unrealised depreciation in value of investments 1.4499 (1.2592) -

(f) Redemption Price

-HighestGrowth Option 96.0978 97.1612 118.1166 Dividend Option 29.4924 30.3743 48.9584

-Lowest

Growth Option 60.6698 52.9573 64.9581 Dividend Option 18.9650 16.5549 26.3571

(g) Purchase Price


-LowestGrowth Option 60.6698 52.9573 64.9581 Dividend Option 18.9650 16.5549 26.3571

(h) Price earnings ratio NA NA NA

(i) Ratio of expenses (excluding initial issue expenses) to daily average net assets by percentage 1.95% 2.03% 2.02%

(j) Ratio of gross income (including net profit on sale of

investments and net unrealised depreciation in value 22.06% -27.10% 28.07% of investments) to daily average net assets by percentage

* The above per unit calculations are based on the number of units in issue at the end of the financial year

HISTORICAL PER UNIT STATISTICS*


0

Rupees Rupees Rupees


(b) Gross Income

(i)income other than profit on sale of investment. 0.2873 0.3117 0.2173

(ii) income from profit on inter scheme sales/transfer of investment. - - -


(iv) transfer of revenue account from past year’s reserve 2.6625 NA 0.4770



(d) Net income 8.3015 (4.8177) 6.9687

(e) Net change in unrealised depreciation in value 1.3764 (0.8913) - of investments


Highest- Growth Option 32.7859 34.4126 46.2473 - Dividend Option 17.0045 18.2294 26.0871

Lowest- Growth Option 19.8927 17.4783 25.7935 - Dividend Option 10.5389 9.2599 15.6657

(g) Purchase Price




(i) Ratio of expenses (excluding initial issue 2.25% 2.29% 2.18%expenses) to average daily net assets by percentage

(j) Ratio of gross income (including net loss/profit on sale of 32.61% -30.65% 26.91%investments and net change in unrealised appreciation /depreciation in valueof investments) to average daily net assets by percentage

* The above per unit calculations are based on the number of units in issue at the end of the financial year.



April 01,2008

to March 31, 2009

April 01, 2007

to March 31, 2008

April 01,2009

to March 31, 2010

1

April 01,2008 April 01,2007to March 31,2009 to March 31,2008



(b) Gross Income



(iii) income (net) from profit on sale of investmentsto third party 6.7025 (8.0670) 5.8952

(iv) transfer of revenue account from past year’s reserve 0.8021 NA 1.5645



(d) Net income 7.3800 (8.0859) 7.1829

(e) Net change in unrealised depreciation in value 2.3835 (0.8702) (1.0309) of investments




(g) Purchase Price





(j) Ratio of gross income (including net loss on sale of 65.32% -67.39% 24.32%investments and net change in unrealised depreciation in valueof investments) to average daily net assets by percentage




April 01,2009to March 31,2010

2

April 01, 2009 to April 01, 2008 to April 01, 2007 toMarch 31, 2010 March 31, 2009 March 31, 2008Rupees Rupees Rupees


(b) Gross Income




(iv) transfer of revenue account from past year’s reserve - 3.7031 2.0117



(d) Net income 2.5962 (0.9567) 7.9470





(g) Purchase Price





(j) Ratio of gross income (including net loss on sale of 31.08% -49.15% 34.80%investments and net change in unrealised depreciation in value of investments) to average daily net assets by percentage




3

April 01, 2009 to April 01, 2008 to April 01, 2007 to

March 31, 2010 March 31, 2009 March 31, 2008Rupees Rupees Rupees


(b) Gross Income

(i) income other than profit on sale of investment 0.1480 0.1924 0.1069



(iv) transfer of revenue account from past year’s reserve NA NA NA



(d) Net income 3.9685 (2.4152) 0.4806

(e) Net change in unrealised depreciation in value of investments 0.6803 (0.4615) 0.3444



-Lowest


(g) Purchase Price





(j) Ratio of gross income (including net loss on sale of

investments and net change in unrealised depreciation in value 38.85% -33.50% 9.80% of investments) to daily average net assets by percentage




4

April 01, 2009 to April 01, 2008 to August 03, 2007 to



(b) Gross Income


(ii) income from profit on inter scheme sales/transfer of investment - (0.0206) -





(d) Net income 1.8724 (4.3741) 0.7479

(e) Net change in unrealised depreciation in value of investments 0.3891 0.8155 (0.9529)



-Lowest


(g) Purchase Price






investments and net change in unrealised depreciation in value 23.26% -39.83% -1.02% of investments) to daily average net assets by percentage




5

April 01, 2009 to April 01, 2008 to January 28, 2008 toMarch 31, 2010 March 31, 2009 March 31, 2008



(b) Gross Income



(iii) income (net) from profit on sale of investments to third party (0.5892) (0.0780) 0.0098



(d) Net income (0.5976) (0.0912) 0.0640

(e) Net change in unrealised depreciation in value 4.8699 (3.6797) (0.0340) of investments




(g) Purchase Price




(i) Ratio of expenses (excluding initial issue 0.75% 0.75% 0.26% #expenses ) to average daily net assets by percentage

(j) Ratio of gross income (including net loss on sale of 39.68% -50.07% 2.47% #investments and net change in unrealised depreciation in value of investments) to average daily net assets by percentage

* The above per unit calculations are based on the number of units in issue at the end of the financial year# Annualized



6

April 01, 2009 April 01, 2008 April 01, 2007



(b) Gross Income







(d) Net income 3.9329 (6.6034) 2.8173

(e) Net change in unrealised depreciation in value of investments 1.4627 0.9197 (1.3786)



-Lowest


(g) Purchase Price






investments and net change in unrealised depreciation in value 44.83% -59.18% 13.31% of investments) to daily average net assets by percentage




7

April 01, 2009 to April 01, 2008 to January 19, 2008

March 31, 2010 March 31, 2009 to March 31,2008Rupees Rupees Rupees


(b) Gross Income







(d) Net income 3.4810 (3.9570) 0.0405




-Lowest


(g) Purchase Price




(i) Ratio of expenses (excluding initial issue expenses ) to daily average net assets by percentage 2.41% 2.34% 1.03% #


investments and net change in unrealised depreciation in value 61.04% -63.84% 24.50% # of investments) to daily average net assets by percentage

#




Annualized

8

H32872 H32873

April 1, 2009 April 1, 2008 April 1, 2007 April 1, 2009 April 1, 2008 April 1, 2007to March 31, 2010 to March 31, 2009 to March 31, 2008 to March 31, 2010 to March 31, 2009 to March 31, 2008


(a) Net asset value per unit at the end of the year (Note 2.6)Growth 16.3418 14.1825 13.7856 18.4006 15.0356 15.0714 Monthly Dividend 11.4773 10.7325 10.7999 12.0933 10.7242 11.2228 Quarterly Dividend 11.6340 10.8919 10.9470 12.1196 10.7209 11.2540

(b) Gross Income

(i)income other than profit on sale of investment. 0.3332 1.2375 0.6649 0.3267 1.2477 0.5377

(ii) income from profit on inter scheme sales/transfer of investment. - (0.0162) (0.0011) - (0.0129) (0.0195)

(iii) income (net) from profit on sale of investments to third party 0.4367 (0.7105) 0.4426 0.7512 (1.3430) 0.3785

(iv) transfer to revenue account from past year’s reserve 0.0065 0.4926 0.0998 - 0.6558 0.1443

Gross income and gains 0.7764 1.0034 1.2061 1.0780 0.5476 1.0409

(c) Aggregate of expenses, writeoff, amortisation and charges 0.1605 0.2970 0.1827 0.1629 0.3164 0.1560

(d) Net income 0.6159 0.7064 1.0234 0.9150 0.2312 0.8849

(e) Net change in unrealised depreciation in value 0.0308 (0.0749) 0.1021 0.0478 (0.0546) 0.0247 of investments

(f) Redemption price

-HighestGrowth Option 16.3418 14.4007 14.2855 18.4223 15.6254 15.9888 Monthly Dividend Option 11.7633 10.9894 11.3866 12.4013 11.4078 12.1357 Quarterly Dividend Option 12.0062 11.1518 11.4847 12.4927 11.5104 12.2598 -LowestGrowth Option 14.2534 13.1115 12.2162 15.1489 13.9333 13.0229 Monthly Dividend Option 10.7861 10.0428 10.3461 10.8050 10.0953 10.5670 Quarterly Dividend Option 10.9463 10.1535 10.3862 10.8017 10.0478 10.6714

(g) Purchase price

-HighestGrowth Option 16.3418 14.4007 14.2855 18.4223 15.6254 15.9888 Monthly Dividend Option 11.7633 10.9894 11.3866 12.4013 11.4078 12.1357 Quarterly Dividend Option 12.0062 11.1518 11.5004 12.4927 11.5104 12.2598

-Lowest

Growth Option 14.2534 13.1115 12.2457 15.1840 13.9333 13.0229

Monthly Dividend Option 10.8696 10.0599 10.3461 10.8301 10.0953 10.5670 Quarterly Dividend Option 10.9724 10.1535 10.3873 10.8017 10.0478 10.6714

(h) Price earnings ratio NA NA NA NA NA NA

(i) Ratio of expenses to average daily net 2.16% 2.07% 1.95% 2.12% 2.05% 1.95%

(j) Ratio of gross income (including net profit on sale of 10.80% 3.04% 12.91% 14.63% -1.06% 11.49%investments and net change in unrealised depreciation in valueof investments) to average daily net assets by percentage



assets by percentage

Regular Plan Savings Plan


0

April 01, 2009 April 01, 2008 April 01, 2007 April 01, 2009 April 01, 2008 April 01, 2007

to March 31,2010 to March 31,2009 to March 31,2008 to March 31,2010 to March 31,2009 to March 31,2008Rupees Rupees Rupees Rupees Rupees Rupees

(a) Net asset value per unit at the end of the period (Note 2.5)Institutional Option Growth Sub-Option 12.3381 11.6871 10.6310 - 9.5776 14.1338 Institutional Option Dividend Sub-Option 10.5488 10.4456 - - 10.6682 - Institutional Option Weekly Dividend Sub-Option 10.4336 10.2542 NA NA NA NAInstitutional Plus Option Growth Sub-Option - 10.1070 NA NA NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0558 NA NA NA NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.1482 10.0362 NA NA NA NARegular Option Growth Sub-Option 15.6284 14.8706 13.5866 15.9381 14.8409 13.6093 Regular Option Dividend Dividend Sub-Option 10.9030 10.8304 11.3355 11.1692 11.1795 10.7078 Regular Option Weelky Dividend Sub-Option 10.1393 10.0712 10.1026 NA NA -

(b) Gross Income

(i) income other than profit on sale of investment 1.2589 0.3357 1.6061 1.8477 0.3571 0.7273

(ii) income from profit on inter scheme sales/transfer of investment - (0.0020) (0.3434) - (0.0355) (0.0219)

(iii)income (net) from profit on sale of investments to third party 0.1847 0.0252 (0.1096) 0.9876 (0.0650) 0.1019

(iv) transfer of revenue account from past year’s reserve 0.0068 0.0355 0.9044 1.7715 0.0187 0.1023



(d) Net income 1.1849 0.3604 1.8906 4.0326 0.2044 0.7797

(e) Net change in unrealised depreciation in value of investments - - 0.6764 0.6494 (0.1593) 0.1842


-HighestInstitutional Option Growth Sub-Option 12.1808 11.6618 10.0024 10.2801 14.3048 14.1338 Institutional Option Dividend Sub-Option 10.6092 10.4796 10.0707 11.2044 11.2325 NAInstitutional Option Weekly Dividend Sub-Option 10.4411 10.3725 10.1079 NA NA NAInstitutional Plus Option Growth Sub-Option 10.6740 10.1070 NA NA NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0765 10.0220 NA NA NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.1984 10.0362 NA NA NA NARegular Option Growth Sub-Option 15.6284 14.8706 13.5485 15.9383 16.0096 13.6093 Regular Option Dividend Dividend Sub-Option 11.0232 11.4886 11.3037 11.7989 12.1899 10.8844 Regular Option Weekly Dividend Sub-Option 10.2091 10.1189 10.1009 NA NA NA

-LowestInstitutional Option Growth Sub-Option 11.9325 11.2862 10.0024 9.8969 10.0133 12.6755 Institutional Option Dividend Sub-Option 10.5478 10.0320 10.0149 10.9358 9.9339 NAInstitutional Option Weekly Dividend Sub-Option 10.3173 10.0207 10.1010 NA NA NAInstitutional Plus Option Growth Sub-Option 10.3020 10.0000 NA NA NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0515 10.0069 NA NA NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.1454 10.0000 NA NA NA NARegular Option Growth Sub-Option 14.9072 13.5894 12.3991 14.9264 13.6122 12.3022 Regular Option Dividend Dividend Sub-Option 10.8570 10.6693 10.3448 11.1456 10.5192 10.2717 Regular Option Weekly Dividend Sub-Option 10.0960 10.0144 10.0835 NA NA NA

(g) Purchase price

-HighestInstitutional Option Growth Sub-Option 12.0502 11.6871 10.0000 10.0001 10.0000 14.0831 Institutional Option Dividend Sub-Option 10.6486 10.4468 10.0842 10.8994 11.5164 NAInstitutional Option Weekly Dividend Sub-Option 10.4547 10.4561 10.1074 NA NA NAInstitutional Plus Option Growth Sub-Option 10.5512 10.0000 NA NA NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0875 10.0000 NA NA NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.2147 10.0000 NA NA NA NARegular Option Growth Sub-Option 15.6249 14.8706 13.5728 15.9383 16.0096 13.6032 Regular Option Dividend Dividend Sub-Option 11.0379 11.4947 11.3257 11.7989 12.1899 10.8714 Regular Option Weekly Dividend Sub-Option 10.2224 10.1024 10.1003 NA NA NA

-LowestInstitutional Option Growth Sub-Option 11.8147 11.2524 10.0000 9.9403 10.0000 14.0776 Institutional Option Dividend Sub-Option 10.5422 10.0000 10.0000 10.8660 10.0000 NAInstitutional Option Weekly Dividend Sub-Option 10.2648 10.0000 10.0000 NA NA NAInstitutional Plus Option Growth Sub-Option 10.1322 10.0000 NA NA NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0000 10.0000 NA NA NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.1429 10.0000 NA NA NA NARegular Option Growth Sub-Option 14.9072 13.6243 12.3991 14.9264 13.6140 12.3022 Regular Option Dividend Dividend Sub-Option 10.8570 10.6604 10.3807 11.1454 10.5024 10.2841 Regular Option Weekly Dividend Sub-Option 10.0844 10.0075 10.0000 NA NA NA


(i) Ratio of expenses (excluding initial issue expenses ) to daily average net assets by percentage

Regular Plan 1.25% 1.10% 1.06% 1.86% 1.69% 1.50%Institutional Plan 0.80% 0.60% 0.40% 1.50% 1.06% 0.70%Institutional Plus Plan 0.75% 0.55% NA NA NA NA

(j) Ratio of gross income (including net loss on sale of 5.53% 8.93% 10.20% 10.92% 2.23% 10.43%investments and net change in unrealised depreciation in valuof investments) to daily average net assets by percentage

* The above per unit calculations with the exception of the net asset value are based on the number of units at the year end

SHORT TERM PLAN INVESTMENT PLAN



10


(a) Net asset value per unit at the end of the year/period (Note 2.5)Growth Option 11.5879 10.7725 11.6677Dividend Option 10.2186 9.4995 10.7428Weekly Dividend Option 9.5097 8.8405 NA

(b) Gross Income



(iii) income (net) from profit on sale of investments to third party (0.8993) (2.9737) (0.0034)

(iv) transfer to revenue account from past year’s reserve - 0.0001 0.0043

Gross income and gains 5.8811 (0.6230) 0.4926 (c) Aggregate of expenses, writeoff, amortisation and charges 1.0405 0.2814 0.0984

(d) Net income 4.8406 (0.9044) 0.3942

(e) Net change in unrealised depreciation in value 12.7499 (0.2483) - of investments


- Growth Option 11.5829 12.2999 11.6405 - Dividend Option 10.2175 10.8077 10.7764 - Weekly Dividend Option 9.4048 10.1128 NA

Lowest- Growth Option 10.8152 10.6929 11.2128 - Dividend Option 9.5372 9.4672 10.7266 - Weekly Dividend Option 8.9398 8.9203 NA

(g) Purchase price

Highest- Growth Option 11.5829 12.2999 11.6677 - Dividend Option 9.9065 10.8077 10.7787 - Weekly Dividend Option 9.1551 10.0940 NA

Lowest- Growth Option 10.9315 10.6929 11.2150 - Dividend Option 9.5405 9.7429 10.7289 - Weekly Dividend Option 8.9398 9.1385 NA


(i) Ratio of expenses to average daily net assets by percentage 0.76% 0.75% 1.00%


investments and net change in unrealised appreciation / 13.55% -2.32% 4.95%depreciation in value of investments) to average daily net assets by percentage

* The above per unit calculations are based on the number of units in issue at the end of the financial year/period

Highest

April 01, 2009 to

March 31, 2010

April 01, 2007 to

March 31, 2008

April 01, 2008 to

March 31, 2009



11

H35858 H35859

April 01, 2009 toMarch 31, 2010

April 01, 2008 toMarch 31, 2009

April 01, 2007 toMarch 31, 2008

April 01, 2009 toMarch 31, 2010

April 01, 2008 toMarch 31, 2009

April 01, 2007 toMarch 31, 2008


(a) Net asset value per unit at the end of the period (Note 2.5)Regular Option – Growth Sub-option 14.1925 13.5781 12.4936 13.6668 13.3675 12.4236 Regular Option – Dividend Sub-option $ 10.0063 10.0064 10.0069 10.0000 10.0000 10.0000 Regular Option - Weekly Dividend Plan Sub-option 10.0047 10.0066 N.A. 10.0155 10.0205 10.0079 Regular Option - Daily Dividend Plan Sub-option 10.0126 10.0114 N.A. N.A. N.A. N.A.

Institutional Option – Growth Sub-option 14.4137 13.7348 12.5862 13.8138 13.5003 12.5158 Institutional Option - Daily Dividend Sub-option 10.1799 10.0980 N.A. 10.1363 10.0623 10.0368 Institutional Option - Weekly Dividend Sub-option 11.2299 11.2348 11.2291 - 10.4999 10.0562 Institutional Option - Monthly Dividend Sub-option 10.1891 10.0614 10.0346 10.1346 10.1350 10.0658 Institutional Option - Fortnightly Dividend Sub-option 10.1971 10.2245 10.0332 N.A. N.A. N.A.Institutional Plus Option - Growth Sub-option N.A. N.A. N.A. 11.7344 11.4592 10.6182 Institutional Plus Option - Daily Dividend Sub-option N.A. N.A. N.A. - - 10.0262 Institutional Plus Option - Weekly Dividend Sub-option N.A. N.A. N.A. - 10.0373 10.0098 Institutional Plus Option - Monthly Dividend Sub N.A. N.A. N.A. N.A. N.A. N.A.

(b) Gross Income

(i) income other than profit on sale of investment 1.1185 0.5266 1.5411 0.3171 1.2980 1.5731

(ii) income from profit on inter scheme sales/transfer ofinvestment. - 0.0015 0.0036 - 0.0144 0.0037

(iii)income (net) from profit on sale of investments to third party 0.2305 0.0398 0.0388 (0.0041) 0.0003 0.0224

(iv) transfer to revenue account from past year’s reserve - 0.0059 0.0516 - 0.0579 0.0397



(d) Net income 1.1885 0.5358 1.4753 0.2566 1.2758 1.5388

(e) Net change in unrealised depreciation in value of investments 0.0013 (0.0016) (0.0003) - - 0.0006 of investments


-HighestRegular Option – Growth Sub-option 14.1906 13.5746 12.4936 13.6650 13.3675 12.4236 Regular Option – Dividend Sub-option $ 10.0688 10.0897 10.0854 10.0000 10.0000 10.0000 Regular Option - Weekly Dividend Plan Sub-option 10.0240 10.0062 N.A. 10.0208 10.0316 10.0207 Regular Option - Daily Dividend Plan Sub-option 10.0126 10.0114 N.A. N.A. N.A. N.A. Institutional Option – Growth Sub-option 14.4095 13.7348 12.5774 13.7015 13.4985 12.5007 Institutional Option - Daily Dividend Sub-option 10.1787 10.0955 N.A. 10.1309 10.0623 10.0343 Institutional Option - Weekly Dividend Sub-optio 11.2550 11.2523 11.2469 10.4979 10.4459 10.0591 Institutional Option - Monthly Dividend Sub-option 10.1818 10.1498 10.1196 10.1535 10.1395 10.1152 Institutional Option - Fortnightly Dividend Sub-optio 10.1782 10.0515 10.0297 N.A. N.A. N.A. Institutional Plus Option - Growth Sub-option N.A. N.A. N.A. 11.7314 10.9706 10.6054 Institutional Plus Option - Daily Dividend Sub-optio N.A. N.A. N.A. N.A. 10.0262 10.0262 Institutional Plus Option - Weekly Dividend Sub-optio N.A. N.A. N.A. 10.0385 10.0392 10.0117 Institutional Plus Option - Monthly Dividend Sub N.A. N.A. N.A. N.A. N.A. N.A.

-LowestRegular Option – Growth Sub-option 13.5915 12.4964 11.4787 13.3689 12.4265 11.4927 Regular Option – Dividend Sub-option $ 10.0027 10.0038 10.0057 10.0000 10.0000 10.0000 Regular Option - Weekly Dividend Plan Sub-option 10.0070 10.0062 N.A. 10.0159 10.0047 10.0048 Regular Option - Daily Dividend Plan Sub-option 10.0114 10.0024 N.A. N.A. N.A. N.A. Institutional Option – Growth Sub-option 13.7977 12.5920 11.6516 13.5195 12.5217 11.5889 Institutional Option - Daily Dividend Sub-option 10.1056 10.0156 N.A. 10.0623 10.0392 10.0132 Institutional Option - Weekly Dividend Sub-optio 11.2333 11.2298 10.6196 10.4964 10.0599 10.0343 Institutional Option - Monthly Dividend Sub-option 10.0692 10.0392 10.0195 10.1513 10.0770 10.0262 Institutional Option - Fortnightly Dividend Sub-optio 10.1632 10.0116 10.0076 N.A. N.A. N.A. Institutional Plus Option - Growth Sub-option N.A. N.A. N.A. 11.7314 10.6789 10.0125 Institutional Plus Option - Daily Dividend Sub-optio N.A. N.A. N.A. N.A. 10.0000 10.0262 Institutional Plus Option - Weekly Dividend Sub-optio N.A. N.A. N.A. 10.0355 10.0154 10.0117 Institutional Plus Option - Monthly Dividend Sub N.A. N.A. N.A. N.A. N.A. N.A.

(g) Purchase price

-HighestRegular Option – Growth Sub-option 14.1888 13.5781 12.4936 13.6650 13.3644 12.4236 Regular Option – Dividend Sub-option $ 10.0688 10.0879 10.0854 10.0000 10.0000 10.0000 Regular Option - Weekly Dividend Plan Sub-option 10.0240 10.0121 N.A 10.0216 10.0292 10.0190 Regular Option - Daily Dividend Plan Sub-option 10.0126 10.0114 N.A N.A. N.A. N.A. Institutional Option – Growth Sub-option 14.4036 13.7253 12.4944 13.7584 12.9939 12.4949 Institutional Option - Daily Dividend Sub-option 10.1799 10.0980 N.A 10.0770 10.0623 10.0343 Institutional Option - Weekly Dividend Sub-optio 11.2550 11.2518 11.2387 10.4943 10.4975 10.0501 Institutional Option - Monthly Dividend Sub-option 10.1497 10.1899 10.1485 10.1296 10.1296 10.0764 Institutional Option - Fortnightly Dividend Sub-optio 10.2344 10.2109 10.0340 N.A. N.A. N.A. Institutional Plus Option - Growth Sub-option N.A. N.A. N.A 11.6859 10.9340 10.6156 Institutional Plus Option - Daily Dividend Sub-optio N.A. N.A. N.A N.A. 10.0262 10.0262 Institutional Plus Option - Weekly Dividend Sub-optio N.A. N.A. N.A 10.0319 10.0319 10.0061 Institutional Plus Option - Monthly Dividend Sub N.A. N.A. N.A N.A. N.A. N.A.

-LowestRegular Option – Growth Sub-option 13.5915 12.4964 11.4787 13.3689 12.4357 11.4927 Regular Option – Dividend Sub-option $ 10.0000 10.0000 10.0000 10.0000 10.0000 10.0000 Regular Option - Weekly Dividend Plan Sub-option 10.0009 10.0000 N.A. 10.0155 10.0004 10.0008 Regular Option - Daily Dividend Plan Sub-option 10.0114 10.0000 N.A. N.A. N.A. N.A. Institutional Option – Growth Sub-option 13.7486 12.5920 11.7711 13.6191 12.5594 11.5655 Institutional Option - Daily Dividend Sub-option 10.0990 10.0000 N.A. 10.0623 10.0597 10.0132 Institutional Option - Weekly Dividend Sub-optio 11.2282 11.2227 10.5931 10.4943 10.0508 10.0295 Institutional Option - Monthly Dividend Sub-option 10.0613 10.0380 10.0056 10.1296 10.0607 10.0193 Institutional Option - Fortnightly Dividend Sub-optio 10.1575 10.0022 10.0000 N.A. N.A. N.A. Institutional Plus Option - Growth Sub-option N.A. N.A. N.A. 11.6843 10.6208 10.0000 Institutional Plus Option - Daily Dividend Sub-optio N.A. N.A. N.A. N.A. 10.0000 10.0262 Institutional Plus Option - Weekly Dividend Sub-optio N.A. N.A. N.A. 10.0319 10.0042 10.0000 Institutional Plus Option - Monthly Dividend Sub N.A. N.A. N.A. N.A. N.A. N.A.


(i) Ratio of expenses to average daily net

Regular 1.00% 0.93% 0.80% 0.51% 0.70% 0.70%Institutional 0.61% 0.45% 0.55% 0.44% 0.45% 0.45%Institutional Plus NA NA NA 0.37% 0.41% 0.40%

(j) Ratio of gross income (including net profit on sale of 5.35% 6.97% 9.13% 2.72% 8.26% 8.45%investments and net change in unrealised depreciation in valuof investments) to average daily net assets by percentage

* The above per unit calculations are based on the number of units in issue at the end of the financial year.$ Long Term Plan – Monthly Dividend Sub-Option

Short Term Plan – Daily Dividend Sub-Option


LONG TERM PLAN SHORT TERM PLAN



12

April 01,2009 April 01,2008 April 01,2007


(a) Net asset value per unit at the end of the year (Note 2.6)

Regular Option

Growth Sub Option 14.8892 14.5744 13.5906 Daily Dividend Sub Option 10.1930 10.1930 10.1929

Weekly Dividend Sub Option 10.0169 10.0227 10.0103


Growth Sub Option 15.0262 14.6717 13.6538 Daily Dividend Sub Option 10.4401 10.4401 10.4400

Weekly Dividend Sub Option 10.4635 10.4699 10.4564 Monthly Dividend Sub Option 10.5267 10.5277 10.4598


Growth Sub-option 14.1546 13.7655 12.7705 Daily Dividend Sub-option 10.0056 10.0056 10.0055 Weekly Dividend Sub-option 10.2343 10.2411 10.0439 Monthly Dividend Sub-option 10.0819 10.0829 10.0153

(b) Gross Income

(i) income other than profit on sale of investment. 0.3781 2.6544 1.5280

(ii)income from profit on inter scheme sales/transfer of investment. - 0.0095 0.0002

(iii)income (net) from profit on sale of investments to third party (0.0011) 0.0140 0.0329

(iv) transfer of revenue account from past year’s reserve 0.0770 0.1356 0.0360

Gross income and gains 0.4540 2.8135 1.5971


(d) Net income 0.3874 2.6818 1.5207

(e) Net change in unrealised depreciation in value - ~ 0.0000 0.0006of investments


Highest- Regular Option Growth Sub-option 14.8892 14.5744 13.5907 - Regular Option Daily Dividend Sub-option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub-option 10.0246 10.0307 10.0243 - Institutional Option Growth Sub-option 14.9727 14.6674 13.6509 - Institutional Option Daily Dividend Sub-option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub-option 10.4690 10.4739 10.5025 - Institutional Option Monthly Dividend Sub-option 10.5437 10.5701 10.5030 - Institutional Plus Option Growth Sub-option 14.1527 13.7655 12.7707 - Institutional Plus Option Daily Dividend Sub-option 10.0056 10.0056 10.0056 - Institutional Plus OptionWeekly Dividend Sub-option 10.2425 10.2478 10.0459 - Institutional Plus Option Monthly Dividend Sub-option 10.1028 10.1122 10.0726

Lowest

- Regular Option Growth Sub-option 14.5761 13.5936 12.6248 - Regular Option Daily Dividend Sub-option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub-option 10.0173 10.0071 10.0068 - Institutional Option Growth Sub-option 14.6806 13.6569 12.6646 - Institutional Option Daily Dividend Sub-option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub-option 10.4650 10.4540 10.4528 - Institutional Option Monthly Dividend Sub-option 10.5301 10.4905 10.4786 - Institutional Plus Option Growth Sub-option 13.7674 12.7736 10.0056 - Institutional Plus Option Daily Dividend Sub-option 10.0056 10.0056 11.8249 - Institutional Plus OptionWeekly Dividend Sub-option 10.2354 10.0442 10.0093 - Institutional Plus Option Monthly Dividend Sub-option 10.0774 10.0507 10.2890

(g) Purchase price

Highest

- Regular Option Growth Sub-option 14.8892 14.5744 13.5877 - Regular Option Daily Dividend Sub-option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub-option 10.0239 10.0308 10.0221 - Institutional Option Growth Sub-option 14.9514 14.6594 13.6509 - Institutional Option Daily Dividend Sub-option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub-option 10.4669 10.4715 10.4961 - Institutional Option Monthly Dividend Sub-option 10.5354 10.5345 10.4872 - Institutional Plus Option Growth Sub-option 14.1527 13.7629 12.7677 - Institutional Plus Option Daily Dividend Sub-option 10.0056 10.0056 10.0056 - Institutional Plus OptionWeekly Dividend Sub-option 10.2401 10.2469 10.0439 - Institutional Plus Option Monthly Dividend Sub-option 10.1018 10.1110 10.0672

Lowest- Regular Option Growth Sub-option 14.5761 13.5936 12.6248 - Regular Option Daily Dividend Sub-option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub-option 10.0169 10.0038 10.0038 - Institutional Option Growth Sub-option 14.6785 13.6569 12.6646 - Institutional Option Daily Dividend Sub-option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub-option 10.4635 10.4494 10.4494 - Institutional Option Monthly Dividend Sub-option 10.5354 10.5027 10.4744 - Institutional Plus Option Growth Sub-option 13.7674 12.7736 11.8249 - Institutional Plus Option Daily Dividend Sub-option 10.0056 10.0056 10.0056 - Institutional Plus OptionWeekly Dividend Sub-option 10.2343 10.0401 10.0060 - Institutional Plus Option Monthly Dividend Sub-option 10.0762 10.0083 10.0083


(i) Ratio of expenses (excluding initial issue

expenses ) to average daily net assets by percentage @

Regular Option 1.00% 0.79% 0.68%Institutional Option 0.75% 0.57% 0.56%Institutional Plus Option 0.35% 0.30% 0.30%

(j) Ratio of gross income (including net profit on sale of 3.13% 8.12% 7.96%investments and net change in unrealised depreciation in value of investments) to average daily net assets by percentage


~ less than 0.0000



13

April 01, 2009 to April 01, 2008 to April 01, 2007 to March 31, 2010 March 31, 2009 March 31, 2008


(a) Net asset value per unit at the end of the year (Note 2.6)

Regular Option

Growth Sub-option 12.5727 12.1193 11.2274 Daily Dividend Sub-option 10.0122 10.0122 10.0122 Weekly Dividend Sub-option 10.0331 10.0418 10.0340





(b) Gross Income

(i) income other than profit on sale of investment. 0.8261 2.8467 1.5692

(ii) income from profit on inter scheme sales/transfer of investment. - 0.0016 0.0726

(iii) income (net) from profit on sale of investments to third party (0.0111) (0.0199) (0.0214)

(iv) transfer of revenue account from past year’s reserve 0.0525 0.0305 0.0006



(d) Net income 0.6939 2.7084 1.5452

(e) Net change in unrealised appreciation / (depreciation) in value (0.0099) - 0.0001 of investments


HighestB - Regular Option Growth Sub-option 12.5727 12.1193 11.2274 A - Regular Option Daily Dividend Sub-option 10.0122 10.0122 10.0122 K - Regular Option Weekly Dividend Sub-option 10.0461 10.0511 10.0487 C - Institutional Option Growth Sub-option 12.6572 12.1702 11.2519 D - Institutional Option Daily Dividend Sub-option 10.0125 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub-option 10.0477 10.0518 10.0471 F - Institutional Option Monthly Dividend Sub-option 10.1780 10.2016 10.1493 G - Institutional Plus Option Growth Sub-option 12.7630 12.2155 11.2737 H - Institutional Plus Option Daily Dividend Sub-option 10.1078 10.0506 10.0126 I - Institutional Plus OptionWeekly Dividend Sub-option 10.1661 10.0534 10.0507 J - Institutional Plus Option Monthly Dividend Sub-option 10.3556 10.3783 10.2921

LowestB - Regular Option Growth Sub-option 12.1235 11.2299 10.3716 A - Regular Option Daily Dividend Sub-option 10.0122 10.0122 10.0122 K - Regular Option Weekly Dividend Sub-option 10.0345 10.0306 10.0323 C - Institutional Option Growth Sub-option 12.1852 11.2603 10.3812 D - Institutional Option Daily Dividend Sub-option 10.0125 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub-option 10.0358 10.0314 10.0330 F - Institutional Option Monthly Dividend Sub-option 10.1415 10.0828 10.0827 G - Institutional Plus Option Growth Sub-option 12.2416 11.2764 10.3837 H - Institutional Plus Option Daily Dividend Sub-option 10.0506 10.0126 10.0126 I - Institutional Plus OptionWeekly Dividend Sub-option 10.0385 10.0320 10.0336 J - Institutional Plus Option Monthly Dividend Sub-option 10.3330 10.2678 10.0851

(g) Purchase price

HighestB - Regular Option Growth Sub-option 12.5727 12.1193 11.2274 A - Regular Option Daily Dividend Sub-option 10.0122 10.0122 10.0122 K - Regular Option Weekly Dividend Sub-option 10.0461 10.0511 10.0487 C - Institutional Option Growth Sub-option 12.6189 12.1550 11.2438 D - Institutional Option Daily Dividend Sub-option 10.0125 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub-option 10.0468 10.0515 10.0497 F - Institutional Option Monthly Dividend Sub-option 10.1764 10.1776 10.1405 G - Institutional Plus Option Growth Sub-option 12.7517 12.2294 11.2737 H - Institutional Plus Option Daily Dividend Sub-option 10.1094 10.0506 10.0126 I - Institutional Plus OptionWeekly Dividend Sub-option 10.1707 10.0523 10.0507 J - Institutional Plus Option Monthly Dividend Sub-option 10.3411 10.3706 10.3224

LowestB - Regular Option Growth Sub-option 12.1235 11.2299 10.3716 A - Regular Option Daily Dividend Sub-option 10.0122 10.0122 10.0122 K - Regular Option Weekly Dividend Sub-option 10.0331 10.0269 10.0269 C - Institutional Option Growth Sub-option 12.1746 11.2578 10.3840 D - Institutional Option Daily Dividend Sub-option 10.0125 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub-option 10.0342 10.0275 10.0275 F - Institutional Option Monthly Dividend Sub-option 10.1385 10.0761 10.0761 G - Institutional Plus Option Growth Sub-option 12.2416 11.2798 10.3890 H - Institutional Plus Option Daily Dividend Sub-option 10.0506 10.0126 10.0126 I - Institutional Plus OptionWeekly Dividend Sub-option 10.0352 10.0278 10.0278 J - Institutional Plus Option Monthly Dividend Sub-option 10.3271 10.2601 10.0761


(i) Ratio of expenses (excluding initial issue expenses ) to average daily net assets by percentage @

Regular Option 1.30% 0.84% 0.65%Institutional Option 1.05% 0.60% 0.50%Institutional Plus Option 0.67% 0.31% 0.36%

(j) Ratio of gross income (including net loss on sale of 5.04% 8.71% 8.52%investments and net change in unrealised depreciation in valueof investments) to average daily net assets by percentage




14

Flexi Debt

April 01, 2009to March 31, 2010

April 01, 2008 toMarch 31, 2009

October 03, 2007 to March 31, 2008


(a) Net asset value per unit at the end of the period (Note 2.5)Regular Option – Growth Sub-option 12.4521 11.6483 10.4155

Regular Option – Monthly Dividend Sub-option 10.3129 10.2553 10.0065

Regular Option - Fortnightly Dividend Plan Sub-option 10.7340 10.3662 10.0315

Regular Option – Quarterly Dividend Sub-option 11.1163 10.7885 NA Regular Option – Half Yearly Dividend Sub-option 10.2541 9.8005 NA Institutional Option - Growth Sub-option 12.5608 11.7088 10.4333

Institutional Option - Monthly Dividend Sub-option 10.5441 10.5214 10.0706

Institutional Option - Fortnightly Dividend Sub-option 10.0592 9.7535 10.0302

Institutional Option - Quaterly Dividend Sub-option 10.9411 10.6734 NA

(b) Gross Income


(ii)income from profit on inter scheme sales/transfer of investment - (0.0095) -

(iii)income (net) from profit on sale of investments to third party 0.9118 (0.0811) 0.0541

(iv) transfer to revenue account from past year’s reserve 0.0147 0.0363 -



(d) Net income 1.5768 0.3208 0.3981

(e) Net change in unrealised depreciation in value of investments 0.4206 (0.1010) (0.0387)

of investments


-HighestRegular Option – Growth Sub-option 12.4465 12.6161 10.4015


Regular Option - Monthly Dividend Plan Sub-option 10.8078 11.0908 10.2267

Regular Option – Quarterly Dividend Sub-option 11.3698 11.3690 NA Regular Option – Half yearly Dividend Sub-option 10.2388 10.6149 NA Institutional Option – Growth Sub-option 12.5212 12.2140 10.4226

Institutional Option - Daily Dividend Sub-option NA NA 10.0000



Institutional Option - Quarterly Dividend Sub-option 11.0757 11.4401 NA Institutional Option – Half yearly Dividend Sub-option NA 10.1428 NA

-LowestRegular Option – Growth Sub-option 11.7127 10.4257 10.1776







Institutional Option - Quarterly Dividend Sub-option 10.7633 10.7348 NA Institutional Option – Half yearly Dividend Sub-option NA 10.1428 NA

(g) Purchase price

-HighestRegular Option – Growth Sub-option 12.4465 12.6161 10.4298





Institutional Option - Fortnightly Dividend Sub-option 10.0980 10.7002 10.0775 Institutional Option - Monthly Dividend Sub-option 10.9638 11.4083 10.2491 Institutional Option - Quarterly Dividend Sub-option 11.0921 11.6126 NA Institutional Option – Half yearly Dividend Sub-option NA 10.0000 NA

-LowestRegular Option – Growth Sub-option 11.7457 10.4173 10.0000





Institutional Option - Fortnightly Dividend Sub-option 10.0592 9.8850 9.9818 Institutional Option - Monthly Dividend Sub-option 10.5337 10.0867 10.0000 Institutional Option - Quarterly Dividend Sub-option 10.9032 10.0000 NA Institutional Option – Half yearly Dividend Sub-option NA 10.0000 NA


(i) Ratio of expenses to average daily net

Regular 1.86% 1.77% 1.14% #Institutional 1.51% 0.72% 0.76% #

(j) Ratio of gross income (including net profit on sale of 12.95% 4.79% 8.51%investments and net change in unrealised depreciation in valueof investments) to average daily net assets by percentage

* The above per unit calculations are based on the number of units in issue at the end of the financial year.# Annualized


Flexi Debt



0

April 01, 2009 to April 01, 2008 to May 03, 2007 to April 01, 2009 to September 18, 2008 toMarch 31,2010 March 31,2009 March 31,2008 March 31,2010 March 31,2009


(a) Net asset value per unit at the end of the year/ period (Note 2.5)

Regular Option Growth Sub-Option 12.9466 11.6034 10.9311 11.3548 10.5506

Regular Option Dividend Sub-Option 10.1491 10.0762 10.4450 10.0215 10.1051

Institutional Option Growth Sub-Option 12.9466 11.6034 10.9311 11.3548 10.5506

Institutional Option Dividend Sub-Option N.A. N.A. 10.4346 N.A. N.A. (b) Gross Income

(i) income other than profit on sale of investment 1.2202 1.3139 0.9039 0.9388 0.5253

(ii) income from profit on inter scheme sales/transfer of investment - (0.0248) - - -

(iii) income (net) from profit on sale of investments to third party 0.0310 (0.0928) 0.0235 0.0403 0.0190

(iv) transfer of revenue account from past year’s reserve 0.0490 0.0729 N.A. 0.0043 N.A.

Gross income and gains 1.3002 1.2692 0.9274 0.9835 0.5443

(c) Aggregate of expenses, writeoff, amortisation and charges 0.2215 0.1476 0.1061 0.1120 0.0522

(d) Net income 1.0787 1.1216 0.8213 0.8715 0.4921

(e) Net change in unrealised depreciation in value of investments 0.2266 (0.2166) - - -

(f) Redemption Price ₤

Regular Option Growth Sub-Option- Highest 12.9466 11.6034 10.8891 11.3390 10.5190 - Lowest 11.6348 10.5148 10.3661 10.6554 10.0417

Regular Option Dividend Sub-Option- Highest 10.4475 10.5767 10.7218 10.1502 10.1949 - Lowest 10.0373 9.5309 10.2448 10.1502 10.0477

Institutional Option Growth Sub-Option- Highest 12.9466 10.5539 10.7548 11.1472 10.5506 - Lowest 11.6348 10.5472 10.7548 11.1472 10.0000

Institutional Option Dividend Sub-Option- Highest N.A. 9.6530 10.7218 N.A. 10.0166 - Lowest N.A. 9.6530 10.0000 N.A. 10.0166

(g) Purchase Price ₤

Regular Option Growth Sub-Option- Highest 12.9435 11.5584 10.6982 11.3246 10.5190 - Lowest 11.6788 10.6014 10.0000 10.7675 10.0000

Regular Option Dividend Sub-Option- Highest 10.3227 10.4808 10.2311 10.1193 10.1949 - Lowest 10.0000 9.5914 10.0000 10.0000 10.0000

Institutional Option Growth Sub-Option- Highest 12.9466 11.6034 10.0000 11.1472 10.0166 - Lowest 11.6348 10.5148 10.0000 11.1472 10.0000

Institutional Option Dividend Sub-Option- Highest N.A. 10.5719 10.0000 N.A. 10.0000 - Lowest N.A. 9.5131 10.0000 N.A. 10.0000

(h) Price earnings ratio N.A. N.A. N.A. N.A. N.A.

(i) Ratio of expenses (excluding initial issue expenses) to average daily net assets by percentage 1.34% 0.61% 1.12% ** 1.02% 1.02% ^^

(j) Ratio of gross income (including net of net loss on sale of 12.02% 7.83% 9.75% ** 8.92% 10.63% ^^investments and net change in unrealised depreciation in value of investments) to average daily net assets by percentage

* The above per unit calculations are based on the number of units in issue at the end of the financial period₤ The redemption and purchase price does not take into consideration prices on account of inter-scheme switches and dividend reinvestments.** The ratio of expenses and gross income to average daily net assets by percentage have been annualised for the period May 03, 2007 to March 31, 2008^^ The ratio of expenses and gross income to average daily net assets by percentage have been annualised for the period September 18, 2008 to March 31, 2009



HISTORICAL PER UNIT STATISTICS *

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schemewise annual reports : 2009 - 2010...* mr. ashok jha has been appointed as a director with...

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