HSBC Global Asset Management...bn as on December 31, 2010. Following recent leadership changes, our parent company the HSBC Group, has committed to focusing on Wealth Management as

HSBC Global Asset Management

Issued by HSBC Asset Management (India) Private Limited

Schemewise Annual Reports :

2010-2011

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HSBC Equity Fund

Dear Investor,

Greetings from HSBC Asset Management in India. I am delighted to be able to write to you in my capacity as the new CEO of the company, a role that I assumed in March 2011.

Above all else I want to start by expressing my gratitude to you for the faith you have reposed in the company. For this I am truly grateful.

Global Developments: As you are aware HSBC Global Asset Management continues to be a leading player both globally with assets of over USD 443.50 bn as on December 31, 2010 and in the emerging markets, which is a key focus area, with assets of over USD 145 bn as on December 31, 2010.

Following recent leadership changes, our parent company the HSBC Group, has committed to focusing on Wealth Management as a key strategic initiative. This makes the Asset Management business of the Group an even more prominent contributor and we are therefore investing further to play this important role.

New Investment Philosophy: Whilst our core operating principals remain unchanged, several key changes are being made to the business model which will position us strongly for the future. Prominent amongst these is a new global investment philosophy which introduces a more scientifi cally developed approach to stock selection to augment our existing processes. Back testing is underway and indicates this model to be very effective in producing investment performance.

India Operations: India remains a key market for HSBC’s Asset Management business. Our Indian operations are now in their tenth year with a full range of products. This experience has given us a deep insight into India, across investment cycles, that is so necessary for success.

We too are making several changes in our business model so as to be more effi cient and effective. We are very excited about the new global investment philosophy which we are in the process of adopting. It is our belief that, given the rapid progress we are seeing in data transparency, such an approach will prove to be much more benefi cial in the current environment, particularly in the aftermath of the global fi nancial crisis.

Though we are still to receive formal communication, based on our discussions with the Employee Provident Fund Organisation, it pleases me to inform you that recently HSBC Asset Management India edged out some of the major fi nancial players in the country to be amongst the four entities selected to manage a part of the prestigious EPFO’s corpus of about USD 80 bn. This, to me, is a refl ection of the reputation we have developed as a fund house and also a result of our being named the best performing fund manager on basis of the composite scores (which considers the returns, asset quality and maturity profi le) during the last mandate**.

Ladies and Gentlemen, there are now 45 mutual fund houses in India and this has led to investors being presented with multiple choices. Whilst this is a welcome development, it also exposes investors to the risks associated with frequent switches. According to the data* we have reviewed, over the long term such frequent changes do not result in higher benefi ts vis-à-vis staying invested in a well managed fund which follows a disciplined investments approach.

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HSBC Equity Fund

I would therefore encourage you to bear this in mind. Short term volatility in fund performance is natural and should not be the only criteria to judge performance. The long term track record is to me a more important criterion as mutual fund investments are generally held for an extended period of time. Our approach to fund management is in line with this philosophy i.e. we aim to offer consistent wealth generation to our clients over the long term.

HSBC Asset Management also remains committed to bringing to India global best practices, hand-picked from our established expertise across the globe. The recently introduced innovative investment model which has been proven globally is one such example.

In addition to our local offerings, we also aim to bring to our investors world-class product offerings from our global range of products. As you are aware we recently launched the HSBC Brazil Fund which offers our investors an opportunity to benefi t from the strong growth prospects of the Brazilian economy. From an investor perspective, it is a great way to diversify one’s investments outside India and benefi t from the other strong growth stories across the world. I am happy to advise that following its launch, the HSBC Brazil Fund has become one of the largest in its category.

We aim to continue to leverage our global platform to bring many more such offers for our investors in India.

In closing, I thank you once again for choosing us as your trusted partner. We remain committed to our philosophy of aiming for consistent wealth creation and service excellence and I look forward to your continued investments in the HSBC Mutual Fund.

Yours sincerely,

Puneet ChaddhaChief Executive Offi cerHSBC Asset Management (India) Private Limited

* Date source: MutualFundsIndia Explorer software** Source: Employee Provident Fund Organisation (EPFO)

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HSBC Equity Fund

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

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

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

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

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

LEGAL ADVISORSBharucha & PartnersCecil Court, 4th Floor, M. K. Bhushan Marg, Colaba, Mumbai 400 039.

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

BOARD OF TRUSTEES*Mr. N. P. Gidwani - Chairman

Mr. Nasser MunjeeMr. Manu TandonMr. Mehli MistriMr. Dilip J. ThakkarMs. Joanna Munro

* Dr. Rudolf Apenbrink has resigned as a Trustee with effect from October 11, 2010. Further, Ms. Joanna Munro has been appointed as the Trustee of HSBC Mutual Fund with effect from June 16, 2011.

BOARD OF DIRECTORS**

Ms. Naina Lal Kidwai - Chairperson

Mr. S. P. MustafaMr. Ashok JhaMs. Kishori J. UdeshiMr. Puneet Chaddha - Chief Executive Offi cer

Mr. Glenn Berry** Mr. Vikramaaditya & Mr. Ayaz Ebrahim have resigned as Directors with effect from March 11, 2011 and

May 13, 2011 respectively. Further, Mr. Puneet Chaddha and Mr. Glenn Berry have been appointed as the Directors with effect from March 14, 2011 and July 14, 2011 respectively.

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The Trustees present the ninth report and the audited abridged nancial statements of the Scheme(s) of HSBC Mutual Fund (the “Fund”), for the year ended March 31, 2011.

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

a) Operations and Performance of the Scheme

HSBC Equity Fund (HEF) – an open-ended diversifi ed Equity Scheme

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

The net assets of HEF amounted to Rs. 966.68 crores as at March 31, 2011 as against Rs. 1,382.78 crores as at March 31, 2010. Around 90.51% of the net assets were invested in equities, 8.24% of the net assets were invested in reverse repos / CBLO and 1.25% were in the net current assets as at March 31, 2011.

HEF’s approach is to invest across a range of market capitalizations with a preference for large cap companies. The fund follows a growth oriented investment bias. HEF outperformed the benchmark BSE 200 over the past 1 year after underperforming the benchmark in FY10 on high cash and defensive portfolio. Since inception, the fund has beaten its benchmark.

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

Scheme & Benchmark 1 Year 3 Years 5 Years Since Inception

HSBC Equity Fund – Growth 10.43 6.00 11.56 32.75

BSE 200 8.15 7.17 10.98 24.50

Returns data as on March 31, 2011. 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 fl exi-cap Equity Scheme

HIOF seeks long term capital growth through investments across all market capitalisations, including small, mid and large cap stocks. It aims to be predominantly invested in equity and equity related securities. However, it could move a signi cant portion of its assets towards xed income securities if the fund manager becomes negative on equity markets.

The net assets of HIOF amounted to Rs. 189.90 crores as at March 31, 2011 as compared to Rs. 283.80 crores as at March 31, 2010. Around 88.32% of the net assets were invested in equities, 7.37% of the net assets were invested in reverse repos / CBLO and 4.31% were in the net current assets as at March 31, 2011.

HIOF outperformed the benchmark over the past 1 year beating its benchmark BSE 500. Since inception, the fund has beaten its benchmark.

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


HSBC India Opportunities Fund – Growth 11.75 4.75 9.14 19.63

BSE 500 7.48 6.50 10.48 18.30


HSBC Midcap Equity Fund (HMEF) – an open-ended diversifi ed 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 xed income securities if the fund manager becomes negative on the Indian equity markets.

The net assets of HMEF amounted to Rs. 138.69 crores as at March 31, 2011 as compared to Rs. 177.24 crores as at March 31, 2010. Around 88.40% of the net assets were invested in equities, 7.63% of the net assets were invested in reverse repos / CBLO and 3.97% were in the net current assets as at March 31, 2011.

The midcap carnage witnessed in the markets since October 2010, led to underperformance in the fund. The top holdings of the fund fell more than the benchmark in the second half of FY11.

Trustees’ ReportFor the year ended March 31, 2011

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


HSBC Midcap Equity Fund – Growth -9.93 -1.59 1.08 12.22

BSE MID CAP 0.99 2.26 5.14 13.63


HSBC Progressive Themes Fund (HPTF) – an open-ended fl exi-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 bene t from, India’s progress, reform process and economic development.

The net assets of HPTF amounted to Rs. 224.12 crores as at March 31, 2011 as compared to Rs. 391.28 crores as at March 31, 2010. Around 84.77% of the net assets were invested in equities, 12.72% of the net assets were invested in reverse repos / CBLO and 2.51% were in the net current assets as at March 31, 2011.

HPTF’s investments in the Indian infrastructure and economic reforms oriented themes saw the fund underperforming benchmark. Both sectors have seen de-rating over the past years.



HSBC Progressive Themes Fund – Growth -10.05 -7.08 0.65 3.07

BSE 200 8.15 7.17 10.98 12.93

Returns data as on March 31, 2011. 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 Tax Saver Equity Fund (HTSF) - an open-ended Equity Linked Savings Scheme

HTSF seeks to provide long term capital appreciation by investing in a diversi ed portfolio of equity & equity related instruments of companies across various sectors and industries, with no capitalisation bias. The Fund may also invest in xed income securities.

The net assets of HTSF amounted to Rs. 248.29 crores as at March 31, 2011 compared to Rs. 301.54 crores as at March 31, 2010. Around 98.45% of the net assets were invested in equities, 1.59% of the net assets were invested in reverse repos / CBLO and (0.04)% were in the net current assets as at March 31, 2011.

HTSF underperformed the index over the past 1 year on relatively higher weight towards capital goods and autos - both of which underperformed the benchmark in the second half year. However, since inception the fund outperformed the benchmark.

Date of Inception : 05 January, 2007 Compounded Annualized Returns (%)Scheme & Benchmark 1 Year 3 Years Since Inception

HSBC Tax Saver Equity Fund – Growth 5.80 11.44 9.33

BSE 200 8.15 7.17 8.81


HSBC 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 exibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative.

The net assets of HDF amounted to Rs. 114.78 crores as at March 31, 2011 compared to Rs. 238.73 crores as at March 31, 2010. Around 83.38% of the net assets were invested in equities, 10.61% of the net assets were invested in reverse repos / CBLO and 6.01% were in the net current assets as at March 31, 2011.

Trustees’ ReportFor the year ended March 31, 2011 (Contd...)

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HDF outperformed its benchmark over the past 1 year beating its benchmark BSE 200.

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

Scheme & Benchmark 1 Year 3 Years Since Inception

HSBC Dynamic Fund – Growth 9.27 2.72 1.33

BSE 200 8.15 7.17 4.02


HSBC 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. 59.69 crores as at March 31, 2011 compared to Rs. 87.09 crores as at March 31, 2010. Around 98.98% of the net assets were invested in HSBC GEM Equity Fund (overseas mutual fund), 2.73% of the net assets were invested in reverse repos / CBLO and (1.71)% were in the net current assets as at March 31, 2011.

HEMF outperformed its benchmark over past 1 year beating its benchmark, MSCI Emerging Market Index.

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


HSBC Emerging Markets Fund – Growth 13.48 1.75 1.83

MSCI Emerging Markets Index 10.81 1.88 3.55


HSBC Unique Opportunities Fund (HUOF) - an open-ended Equity Scheme

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

The net assets of HUOF amounted to Rs. 96.50 crores as at March 31, 2011 compared to Rs. 214.98 crores as at March 31, 2010. Around 85.68% of the net assets were invested in equities, 11.95% of the net assets were invested in reverse repos / CBLO and 2.37% were in net current assets as at March 31, 2011.

HUOF outperformed its benchmark over past 1 year beating its benchmark BSE 200.



HSBC Unique Opportunities Fund – Growth 9.98 1.36 2.89

BSE 200 8.15 7.17 11.40


HSBC Small Cap Fund (HSCF) – an open-ended Equity Scheme (the Scheme had got converted from a close ended Equity Scheme into an open-ended Equity Scheme with effect from March 25, 2011)

HSCF seeks to provide long-term capital appreciation primarily from a diversi ed portfolio of equity and equity related instruments of small cap companies.


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The net assets of HSCF amounted to Rs. 34.60 crores as at March 31, 2011 compared to Rs. 60.91 crores as at March 31, 2010. Around 99.98% of the net assets were invested in equities, 2.93% of the net assets were invested in reverse repos / CBLO and (2.91%) were in the net current assets as at March 31, 2011.

Correction in the markets in the second half FY11 led to underperformance in the small cap fund after posting good performance in the rst half. Small caps corrected much more than the large caps in the second half. Overall, the performance was better than benchmark for the year.



HSBC Small Cap Fund – Growth 0.04 2.27 2.70

BSE Small Cap -3.78 1.40 5.53


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 which 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 percent of the corpus invested in equities while the Savings Plan can have up to 25 percent invested in equities. The net assets of HMIP – Regular Plan (HMIP – R) amounted to Rs. 222.57 crores as at March 31, 2011 as compared to Rs. 219.32 crores as at March 31, 2010. Around 83.83% of the net assets were invested in debt and money market instruments & 13.51% of the net assets were invested in equities as at March 31, 2011. The net assets of HMIP – Savings Plan (HMIP – S) amounted to Rs. 676.10 crores as at March 31, 2011 as compared to Rs. 358.31 crores as at March 31, 2010. Around 75.78% of the net assets were invested in debt and money market instruments & 23.04% of the net assets were invested in equities as at March 31, 2011.

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 was since reduced.

HMIP – Regular Plan



HSBC MIP – Regular Plan – Growth 4.02 7.23 8.16 7.76

CRISIL MIP Blended Index 6.17 6.82 7.41 7.21


HMIP – Savings Plan



HSBC MIP – Savings Plan – Growth 4.37 8.41 9.49 9.63

CRISIL MIP Blended Index 6.17 6.82 7.41 7.21



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HSBC Income Fund (HIF) – an open-ended Income Scheme

HIF seeks to generate reasonable income through a diversi ed portfolio of xed income securities. The AMC’s view of interest rate trends and the nature of the Plans will be re ected in the type and maturities of securities in which the Short Term and Investment Plans are invested.

The Scheme has two Plans – the Investment Plan and the Short Term Plan. The net assets of HSBC Income Fund – Investment Plan (HIF – IP) amounted to Rs. 21.11 crores as at March 31, 2011 as compared to Rs. 32.66 crores as at March 31, 2010. Around 91% of the net assets were invested in debt and money market instruments, 11.19% of the net assets were invested in reverse repos / CBLO and (2.19)% were in net current assets as at March 31, 2011. The net assets of HSBC Income Fund – Short Term Plan (HIF – STP) amounted to Rs. 164.21 crores as at March 31, 2011 as compared to Rs. 165.26 crores as at March 31, 2010. Around 96.78% of the net assets were invested in debt and money market instruments, 3.92% of the net assets were invested in reverse repos / CBLO and (0.70)% were in net current assets as at March 31, 2011.

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

HIF – IP



HSBC Income Fund – IP – Regular - Growth 5.57 7.33 7.35 6.46

CRISIL Composite Bond Fund Index 5.06 5.94 5.94 5.24


HIF - STP mostly ran a conservative duration bias on expectation of heightened volatility in short end rates but still managed to outperform the benchmark over the past 1 year.

HIF – STP



HSBC Income Fund – STP – Regular - Growth 5.85 6.78 6.99 6.24

CRISIL Short-Term Bond Fund Index 5.12 6.91 7.04 5.89


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

HGF seeks to generate reasonable returns through investments in Government Securities of various maturities. The AMC’s view of interest rate trends will be re ected in the maturities of securities in which the Scheme is invested.

The net assets of HGF amounted to Rs. 0.70 crores as at March 31, 2011 as compared to Rs. 0.42 crores as at March 31, 2010. Around 92.04% of the net assets were invested in reverse repos / CBLO and 0.80% were in net current assets as at March 31, 2011.

HGF underperformed its benchmark index since inception as low assets under management for an extended period had constrained ability to actively manage the Scheme. However, the Scheme had outperformed the benchmark over the last 1 year as the Scheme has taken active calls in line with other duration funds.



HSBC Gilt Fund – Growth 7.81 2.30 3.19 3.09

I Sec Composite Index 6.41 7.83 7.65 6.12



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HSBC Floating Rate Fund (HFRF) – an open-ended Income SchemeHFRF seeks to generate reasonable return with commensurate risk from a portfolio comprised of oating rate debt instruments and xed rate debt instruments swapped for oating rate returns. The Scheme may also invest in xed rate money market and debt instruments.

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. 279.80 crores as at March 31, 2011 as compared to Rs. 597.50 crores as at March 31, 2010. Around 99.39% of the net assets were invested in money market instruments, 0.46% of the net assets were invested in reverse repos / CBLO and 0.16% in net current assets as at March 31, 2011. The net assets of HSBC Floating Rate Fund – Short Term Plan (HFRF – STP) amounted to Rs. 21.23 crores as at March 31, 2011 as compared to Rs. 72.22 crores as at March 31, 2010. Around 89.56% of the net assets were invested in reverse repos / CBLO and 10.44% in net current assets as at March 31, 2011.

HFRF-LTP outperformed its benchmark index since inception, through focus on accruals and investment in shorter end of the curve

HFRF – LTP

Date of Inception :16 November, 2004

Compounded Annualized Returns (%)


HSBC FRF – LTP – Regular Plan – Growth 5.74 6.30 6.90 6.55

CRISIL Liquid Fund Index 6.21 6.22 6.51 6.15


HFRF-STP underperformed its benchmark as incremental investments have been made very conservatively in line with the risk practices for Liquid funds.

HFRF – STP

Date of Inception :16 November, 2004

Simple Annualized Returns (%)


Scheme & Benchmark 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception

HSBC FRF - STP - Regular Plan - Growth

5.84 5.71 4.97 4.91 5.94 5.83

CRISIL Liquid Fund Index 7.96 7.43 6.21 6.22 6.51 6.15


HSBC Cash Fund (HCF) – an open-ended Liquid SchemeHCF aims to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through a portfolio of money market and debt securities.The net assets of HCF amounted to Rs. 270.82 crores as at March 31, 2011 as compared to Rs. 470.59 crores as at March 31, 2010. Around 70.68% were invested in debt and money market instruments, 22.43% of the net assets were invested in reverse repos / CBLO and 6.89% in net current assets as at March 31, 2011.HCF underperformed its benchmark index as incremental investments have been made very conservatively in line with the risk environment and risk practices for liquid funds.

Date of Inception :4 December, 2002

Simple Annualized Returns (%)


Scheme & Benchmark 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception

HSBC Cash Fund – Regular – Growth

7.04 6.47 5.42 4.92 5.87 5.56

CRISIL Liquid Fund Index 7.96 7.43 6.21 6.22 6.51 5.70


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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. 139.76 crores as at March 31, 2011 as compared to Rs. 512.32 crores as at March 31, 2010. Around 73.59% of the net assets were invested in debt and money market instruments, 19.11% were invested in reverse repos / CBLO and 7.30% were in net current assets as at March 31, 2011.

HUSBF underperformed its benchmark index as incremental investments have been made very conservatively in line with the general risk environment.

Date of Inception : 17 October, 2006 Compounded Annualized Returns (%)


HSBC Ultra Short Term Bond Fund – Regular – Growth 5.03 5.56 6.44

CRISIL Liquid Fund Index 6.21 6.22 6.55

Returns data as on March 31, 2011.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. 54.23 crores as at March 31, 2011 as compared to Rs. 102.42 crores as at March 31, 2010. Around 90.46% of the net assets were invested in debt and money market instruments, 8.35% was invested in reverse repos / CBLO and 1.18% were in the net current assets as at March 31, 2011.

HFDF has outperformed its benchmark index through relatively active management of duration.

Date of Inception : 5 October, 2007 Compounded Annualized Returns (%)


HSBC Flexi Debt Fund – Growth 5.77 8.14 8.24

CRISIL Composite Bond Fund Index 5.06 5.94 6.09

Returns data as on March 31, 2011. 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 with three plans namely Series 79, Series 80 and Series 81

HFTS seeks to generate returns by investing in a portfolio of xed income instruments normally maturing in line with the time pro le of the respective plan(s).

The Scheme launched two series i.e. Series 79 and Series 80, each having tenure of 370 days. Series 79 was launched on March 22, 2011 and Series 80 was launched on June 17, 2011. The performance of the plans is benchmarked against CRISIL Short Term Bond Fund Index. Being closed ended xed maturity plans, the performance of the schemes are not provided.

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b) Market Overview & Outlook

EquityFinancial year 2010-2011 was a year of two halves. The rst half saw a euphoric period culminating with the highly successful Coal India IPO. Banks led the way through rst half on buoyant credit growth, soft interest rates, listing of parallel loan origination agencies like micro nance / gold lending rms and an overall improvement in asset quality. However, continuing tightness in monetary policy and a spike in crude oil prices led to Indian markets moving into a corrective phase from November onwards. The surge in commodity prices following the launch of QEII (Quantitative Easing) from the US contributed to India’s de-rating. Second half FY2011 also saw a pronounced tilt towards large caps in the Indian market on the back of two factors.: (a) lack of equity mobilisation in domestic institutional investors (MF’s / Insurance etc.) leading to a market increasingly dominated by FIIs and (b) Within FIIs a shift towards emerging market funds, ETF’s etc. (rather than India centric funds) meant that FIIs were more focussed towards larger Indian stocks. Governments’ attention getting diverted towards corruption (commonwealth, 2G spectrum, bribes for loan, Adarsh housing etc. to name a few) meant fewer of cials taking decisions fearing repurcussions. To add, environment ministry tightening screws on “go, no-go” areas led to slowdown in investments into mining, power and metal sectors. BSE capital goods index ended 6.4% lower for FY11.

The polarisation of the market towards large caps is illustrated below in the table. Performance is skewed towards the large cap indices.

Returns ( April 1, 2010 – March 31, 2011) 1 Year (%)

NIFTY 11.1

Sensex 10.9

BSE 100 8.6

BSE 200 8.2

BSE 500 7.5

CNX Midcap 4.4

Source: Bloomberg

Looking ahead the market continues to witness external risks arising from the US which is still in the threshold of a nascent economic recovery and the lack of a follow up to QEII could well lead to another leg down in economic data. Periphery of Europe remains a mine eld with scal de cits and re nancing needs far in excess of what would be desirable. These have the potential to hurt global growth / commodity prices. As emerging economies battle in ation (refer for details in the xed income market overview) by raising rates, cooling off of growth rates seems inevitable. It is forecasted that the corporate earnings growth would be 15% for FY12, from 18-20% earlier. India is likely to witness a bulk of its downgrade in the rst nancial year 2012 and in post the rate tightening cycle and downgrade of corporate earnings growth, it is expected that India will be a second half story into FY12.

DebtFixed income markets remained pressured under various concern for the year FY2010-11. Starting with rate hikes from the early 2010, liquidity concerns on back of 3G out ows / large IPOs, government’s borrowing requirements and in ation affected the bond market outlook. The market levels for 10 year government securities ranged from 7.50% to 8.20% with more pressure being felt due to supply towards the end of the year.

Liquidity remained major concern for the large part of the year with overnight borrowing of banking system from RBI hitting numbers beyond RBI’s comfort. RBI tried to support the liquidity by conducting Open Market Operations. Domestic economic data started to improve towards late calendar year thus further curbing appetite for bonds.

In ation has remained a major concern for the entire year. Annual Wholesale Price Index eased from double digit level to 9%. However, the easing in in ation was not in line with expectation. This was due to higher


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non food manufacturing in ation. Earlier part of in ation was regarded as supply side in ation. However, it turned to demand push in ation in later part of year. This movement in in ation prompted RBI action during the entire year.

Weakness in global economic data and infusion of further liquidity via QEII remained important considerations for policy makers. Commodity prices (esp. Oil) shot up substantially after the announcement of QEII, which further red up in ation. The market is expected to wait for a pause / end in rate hike cycle as and when in ation plateaus and growth concerns become more alarming. This may take place after the overnight operative rate (repo rate) touches 8% following a series of small step hikes. In ation may remain stubborn till September since the recent fuel price hikes will re ect its impact on the market. In ation also depends on good monsoon leading to reasonable food production. Global concerns over Europe and the US economic recovery may also determine course of RBI’s action, if situation weakens further. Government securities supply continues to remain concern for bond market with continued pressure on rates.

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

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

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

HSCI offers integrated investment banking services, securities and corporate nance & advisory. HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange (capital and derivative market segments). HSCI holds 100% of the paid-up equity share capital of HSBC Asset Management (India) Private Limited.

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

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

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

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

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

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

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


13

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

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

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

5. UNCLAIMED DIVIDENDS & REDEMPTIONSSummary of number of Investors & corresponding amount Scheme-wise as on March 31, 2011:

SchemeUnclaimed Dividends Unclaimed Redemptions

Amount (Rs.)

No. of Investors

Amount (Rs.)

No. of Investors

HSBC Equity Fund 4,077,204.66 1109 2,379,836.99 87

HSBC India Opportunities Fund 1,209,792.27 335 694,180.42 20

HSBC Midcap Equity Fund 458,823.62 341 527,863.88 25

HSBC Progressive Themes Fund 718,704.65 364 2,675,137.34 155

HSBC Tax Saver Equity Fund 596,855.65 428 571,340.80 39

HSBC Dynamic Fund – – 1,348,548.28 35

HSBC Emerging Markets Fund – – 91,845.27 8

HSBC Unique Opportunities Fund – – 1,026,389.98 35

HSBC Small Cap Fund – – 77,708.40 3

HSBC MIP - Regular Plan 303,674.27 312 58,400.28 3

HSBC MIP – Savings Plan 476,626.47 387 12,754.56 4

HSBC Income Fund - Investment Plan 235,932.78 533 325,454.92 17

HSBC Income Fund - Short Term Plan 56,523.18 20 – –

HSBC Gilt Fund 7,395.57 2 – –

HSBC Floating Rate Fund– Long Term Plan

41,563.67 56 14,800.14 4

HSBC Ultra Short Term Bond Fund – – 66,064.60 2

HSBC Flexi Debt Fund 16.59 1 – –

6. INVESTOR SERVICESDuring the year, the number of of cial points of acceptance of transactions increased signi cantly to about 229 locations. In addition to the of ces of the Registrar & Transfer agents, the AMC has Investor Service Centres in 14 locations at its own of ces - namely Mumbai, New Delhi, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad, Indore, Chandigarh, Kochi, Coimbatore, Lucknow and Vadodara. With a view to enhancing customer convenience, the AMC 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.


14

On the distribution front, the number of empanelled distributors increased from 8859 as on 31 March, 2010 to 8985 as of 31 March, 2011. 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 34. Call centre operations have been extended to cover the entire country. The AMC has outsourced certain back of ce services including call centre services to HSBC Operations and Processing Enterprise (India) Private Limited.

7. DETAILS OF INVESTOR GRIEVANCE REDRESSALThe details of the redressal of investor complaints received against HSBC Mutual Fund duringApril 2010- March 2011 are as follows:

Total Number of Folios: 3,75,572

Com-plaintCode

Type of complaint#

(a) No. ofcomplaints

pendingat the

beginningof theyear

(b) No. of com-plaints

receivedduring

theyear

Action on (a) and (b)

Resolved Non Actiona-

ble*

Pending

Within 30 days

30 - 60 days

60 - 180 days

Beyond 180 days

0 - 3 months

3 - 6 months

6 - 9 months

9 - 12 months

I A Non receipt of Dividend on Units

– 7 6 1 – – – – – – –

I B Interest on delayed payment of Dividend

– – – – – – – – – – –

I C Non receipt of Redemption Proceeds

– 13 12 – – – – 1 – – –

I D Interest on delayed payment of Redemption

– 5 5 – – – – – – – –

II A Non receipt of Statement of Account / Unit Certi cate

– 1 1 – – – – – – – –

II B Discrepancy in Statement of Account

– 5 5 – – – – – – – –

II C Non receipt of Annual Report / Abridged Summary

– – – – – – – – – – –

III A Wrong switch between Schemes

– – – – – – – – – – –

III B Unauthorized switch between Schemes

– – – – – – – – – – –

III C Deviation from Scheme attributes

– – – – – – – – – – –

III D Wrong or excess charges / load

– 1 1 – – – – – – – –

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

– 15 15 – – – – – – – –

IV Others ** – 1,114 1,108 3 – – 1 2 – – –Total – 1,161 1,153 4 – – 1 3 – – –

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


15

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

the Fund beyond initial contribution of Rs. 1 lakh for setting up the Fund.

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

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

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

The Trustees look forward to the continued support of everyone.

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

Sd/-

Dilip J. Thakkar

Trustee

MUMBAIJuly 15, 2011


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, 2011, 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, 2011 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, the Revenue Account and the 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, the Revenue Account and the 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, 2011, its net surplus and its cash flows for the year ended on that date.

ii. The Balance Sheet as at March 31, 2011 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 debt securities as at March 31, 2011, 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 and the amendments thereto, are fair and reasonable.

For PRICE WATERHOUSE

Firm Registration Number: 301112E Chartered Accountants

Alpa Kedia Partner Membership No. F/100681 Place : Mumbai Date : July 15, 2011

March 31, 2011 March 31, 2010Schedule Rupees Rupees

ASSETS

Investments 1 8,752,466,029 13,163,173,904

Deposits 2 507,128,588 450,603,000

Other Current Assets 3 563,175,598 495,023,146

TOTAL 1 9,822,770,215 14,108,800,050

LIABILITIES

Unit Capital 4 0.56 2,295,075,839 3,375,432,935

Reserves and Surplus 5 7,371,943,640 10,452,321,870

Current Liabilities and Provisions 6 0.21 155,750,736 281,045,245

TOTAL 9,822,770,215 14,108,800,050

March 31, 2011 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010 March 31, 2010RECONCILIATION 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) 4,796,215,226 4,870,804,253 9,667,019,479 6,476,723,017 7,351,031,788 13,827,754,805

Number of Units in Issue 45,560,628.334 183,946,955.561 67,940,001.958 269,603,291.565 Net Asset Value per Unit 105.2711 26.4794 95.3300 27.2661

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

ALPA KEDIA Puneet ChaddhaPartner Director and Chief Executive OfficerMembership No. F/100681

Trustee Director

Place: Mumbai Date : July 15, 2011 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, 2011

0

April 01, 2010 to April 01, 2009 toMarch 31, 2011 March 31, 2010

Schedule Rupees Rupees

INCOME AND GAINS

Dividends (Note 2.4) 156,588,004 158,176,091

Interest and Discount 7 45,615,206 47,071,028

Net Profit on Sale of Investments and Derivatives (Note 2.3 and 2.5) 2,074,616,411 2,584,317,666

Miscellaneous Income (Note 18) 725,304 2,969,853

TOTAL 2,277,544,925 2,792,534,638

EXPENSES AND LOSSESRealised Loss on Foreign Currency Transactions(Net) (Note 2.10) - 1,065,108

Investment Management and Advisory Fees (Note 3) 117,063,992 150,909,133

Transfer Agent Fees and Expenses 24,467,827 24,461,820

Trusteeship Fees and Expenses (Note 4) 112,375 134,907

Custodian Fees and Expenses (Note 5) 5,972,922 6,263,467

Audit Fees 1,234,646 700,000

Selling and Distribution Expenses 68,731,783 82,804,299

Sebi Inspection fees 670,038

Other Operating Expenses 19,525,956 24,859,872

TOTAL 237,779,539 291,198,606

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 7,292,553 -

TOTAL 230,486,986 291,198,606

Net Realised Gains for the Year 2,047,057,939 2,501,336,032

Net Change in Unrealised Depreciation in Value of Investments and Derivatives 12,331,454 489,410,435

Net Gains for the Year 2,059,389,393 2,990,746,467

Net Change in Unrealised Appreciation in Value of Investments and Derivatives (757,915,128) 3,354,536,944

Net Surplus including Net change in Unrealised Depreciation / Appreciation in Value of Investments and Derivatives 1,301,474,265 6,345,283,411

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve 757,915,128 (3,354,536,944)

Net Surplus for the Year 0.40 2,059,389,393 2,990,746,467

April 01, 2010 to April 01, 2010 to April 01, 2010 to April 01, 2009 toMarch 31, 2011 March 31, 2011 March 31, 2011 March 31, 2010

Rupees Rupees Rupees Rupees

Net Surplus/ for the Year 991,308,583 1,068,080,810 2,059,389,393 2,990,746,467

Transfer from Income Equalisation Reserve (Note 2.8) (1,467,332,926) (760,230,325) (2,227,563,251) (1,377,115,414)

Transfer from Reserve Fund - 765,264,726 765,264,726 -

Dividend / Distributions - (765,264,726) (765,264,726) (741,856,835)

Balance Transferred to Reserve Fund (476,024,343) 307,850,485 (168,173,858) 871,774,218


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, 2011

1

Year ended March 31, 2011

Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 2,047,057,939 2,501,336,032

Adjustments for:- (Increase)/Decrease in Investments at cost 3,742,068,679 (845,923,634) (Increase)/Decrease in Other Current Assets (16,165,622) 22,747,334 Increase/(Decrease) in Current Liabilities (20,051,004) 24,860,231 Net cash generated from operations (A) 5,752,909,992 1,703,019,963

B Cashflow from Financing Activities (Decrease)/Increase in Unit Capital (1,080,357,096) (609,193,361) (Decrease)/Increase in Unit Premium Reserve and Income Equalisation Reserve (3,616,587,769) (2,087,381,202)

Adjustments for:- Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors (175,748,606) 176,061,432 (Increase)/Decrease in Sundry Debtors for Units Issued to Investors (1,096,271) 50,175,409

Dividend Paid During the Year (765,264,726) (741,856,835)

Net cash used in financing activities (B) (5,639,054,468) (3,212,194,557)

Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) 113,855,524 (1,509,174,594)

Cash and Cash Equivalents at the beginning of the year 872,908,134 2,382,082,728 Cash and Cash Equivalents at the close of the year 986,763,658 872,908,134

Notes :

March 31, 2011Rupees


1 Cash and Cash Equivalents include the following :

Balances with Scheduled Banks : - In Current Account 8,695,764 5,526,409 - In Dividend Account 6,234 11 - In Deposit Account 430,000,000 430,000,000

3,514,299 5,603,000

73,614,289 15,000,000 Temporary Book Overdraft (1,002,355) (2,693,805)

Other Collateralised lendingReverse Repo 239,355,224 211,206,537 Collateralised Borrowing and Lending Obligation 124,580,203 127,265,982 Derivative Margin Deposit 108,000,000 81,000,000

986,763,658 872,908,134

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, 2011

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

2

SCHEDULE 1 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 8, 9, 10 and 14) Rupees Rupees Rupees Rupees

(Refer to the attached Statement of Portfolio Holding as at March 31, 2011)

Equity Shares 8,749,553,528 6,172,504,286 13,163,173,904 9,806,433,735

Non Convertible Debentures and Bonds Listed / Awaiting Listing 2,912,501 - - -

TOTAL 8,752,466,029 6,172,504,286 13,163,173,904 9,806,433,735

SCHEDULE 2 March 31, 2011 March 31, 2010Deposits Rupees Rupees

Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives) 430,000,000 430,000,000

Margin Deposit with Clearing Corporation of India towards Collateralized Borrowing and Lending Obligation 3,514,299 5,603,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Reposand Governement Securities 73,614,289 15,000,000

TOTAL 507,128,588 450,603,000

SCHEDULE 3 March 31, 2011 March 31, 2010Other Current Assets Rupees Rupees

Balances with Banks- in Current Account 8,695,764 5,526,409 - in Dividend Account 6,234 11

Sales Contracts Awaiting Completion - Equity Shares 49,990,047 58,835,923

Collateralised Borrowing and Lending Obligation 124,580,203 127,265,982

Reverse Repos 239,355,224 211,206,537

Unit Subscription Receivable 2,259,910 2,177,000

Receivable on Outstanding Future Contracts 4,097,950

Inter-Scheme Receivable - For Switch - In 4,692,718 3,679,357 - For Others - 1,000

Derivative Margin Deposit (Note 2.5) 108,000,000 81,000,000

Dividend Receivable 5,400,000 -

Interest Receivable on :- Debentures / bonds 6,021 - - Deposits 1,963,446 919,038

- Reverse Repos 60,658 29,842 - Collateralised Borrowing and Lending Obligation 23,951 12,291

Receivable from Investment Manager 7,293,460 723

Advances and deposit 520,145 -

Investment Towards Unclaimed Redemption [(in 154,123.672 Units (2010 : 117,395.295 Units ) (Market Value Rs. 2,419,064 (2010 : Rs.1,747,922)) of HSBC Cash Fund - Growth Option) (Note 16)] 2,152,662 1,589,955

Investment Towards Unclaimed Dividend [(in 306,429.244 Units (2010 : 223,104.424 Units) (Market Value Rs. 4,809,591 (2010: Rs. 3,321,846)) of HSBC Cash Fund - Growth Option) (Note 17)] 4,077,205 2,779,078

TOTAL 563,175,598 495,023,146


Schedules forming part of the Balance Sheet as at March 31, 2011and the Revenue Account for the year ended March 31, 2011

3

SCHEDULE 4 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Unit 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 679,400,020 67,940,001.958 828,226,036 82,822,603.543 Issued during the year 111,082,079 11,108,207.872 311,062,272 31,106,227.231

790,482,099 79,048,209.830 1,139,288,308 113,928,830.774 Redeemed during the year 334,875,815 33,487,581.496 459,888,288 45,988,828.816 At the end of the year 455,606,284 45,560,628.334 679,400,020 67,940,001.958

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 2,696,032,915 269,603,291.565 3,156,400,260 315,640,026.026 Issued during the year 356,862,111 35,686,211.094 1,054,925,706 105,492,570.593

3,052,895,026 305,289,502.659 4,211,325,966 421,132,596.619 Redeemed during the year 1,213,425,471 121,342,547.098 1,515,293,051 151,529,305.054 At the end of the year 1,839,469,555 183,946,955.561 2,696,032,915 269,603,291.565

TOTAL 2,295,075,839 229,507,583.895 3,375,432,935 337,543,293.523

HSBC MUTUAL FUND - HSBC EQUITY FUND Schedules forming part of the Balance Sheet as at March 31, 2011

and the Revenue Account for the year ended March 31, 2011

4

SCHEDULE 5Reserves and Surplus March 31, 2011 March 31, 2010

Rupees Rupees

Unit Premium Reserve (Note 2.7)At the beginning of the year (498,357,465) 211,908,323 Added during the year (1,389,024,518) (710,265,788) At the end of the year (1,887,381,983) (498,357,465)

Income Equalisation Reserve (Note 2.8)Added during the year (2,227,563,251) (1,377,115,414) Transferred to Revenue Account 2,227,563,251 1,377,115,414 At the end of the year - -

Unrealised Appreciation ReserveAt the beginning of the year 3,356,740,170 2,203,226

Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 8) (757,915,128) 3,354,536,944 At the end of the year 2,598,825,042 3,356,740,170

Reserve FundAt the beginning of the year 7,593,939,165 6,722,164,947 Transferred to Revenue Account (765,264,726) - Balance Transferred from Revenue Account (168,173,858) 871,774,218 At the end of the year 6,660,500,581 7,593,939,165

TOTAL 7,371,943,640 * 10,452,321,870 *

* The share of the Options of the Reserves and Surplus is as follows : March 31, 2011 March 31, 2010

RupeesGrowth Option 4,340,608,942 5,797,322,997 Dividend Option 3,031,334,698 4,654,998,873 Total 7,371,943,640 10,452,321,870

Rupees

HSBC MUTUAL FUND - HSBC EQUITY FUND Schedules forming part of the Balance Sheet as at March 31, 2011


5

SCHEDULE 6Current Liabilities and Provisions March 31, 2011 March 31, 2010

Rupees RupeesCurrent Liabilities

Investment Management and Advisory Fees 6,979,140 17,809,619


Trusteeship Fees and Expenses 25,854 -

Custodian Fees and Expenses 301,814 725,329

Audit Fees 1,234,646 700,000


Purchase Contracts Awaiting Completion - Equity Shares 77,943,339 -

Payable on Outstanding Future Contracts - 5,746,788

Unit Redemptions Payable 28,300,431 198,973,814

Inter Scheme payable

- For Switch - Out 753,723 5,828,946

- For Others - 617,970

Unclaimed Redemption (Note 16) 2,379,837 1,696,434

Unclaimed Dividend (Note 17) 4,079,037 2,779,078

Temporary Book Overdraft 1,002,355 2,693,805

Load Charges (Note 2.9) - 5,670,648

Sundry Payables 3,010,054 7,033,336

TOTAL 155,750,736 281,045,245

SCHEDULE 7 April 01, 2010 to April 01, 2009 toInterest and Discount (Note 2.4) March 31, 2011 March 31, 2010

Rupees Rupees

Debentures / Bonds 6,021 -

Commercial Paper / Certificate of Deposit 279,250 -

Reverse Repos 11,940,345 12,592,290

Collateralized Borrowing and Lending Obligation 4,845,262 12,349,480

Deposits 28,544,328 21,418,762

Treasury Bill - 710,496

TOTAL 45,615,206 47,071,028



6

Description Quantity Market / Fair ValueRupees

Equity Shares (99.97%)Auto (2.65%)

Tata Motors Limited - DVR 333,000 231,734,700231,734,700

Banks (21.85%)State Bank of India 207,000 572,417,100ICICI Bank Limited 504,000 562,564,800HDFC Bank Limited @ 224,188 525,911,420Punjab National Bank 207,000 251,028,900

1,911,922,220Construction Project (5.61%)

Larsen & Toubro Limited 297,000 490,614,300490,614,300

Consumer Non Durables (8.50%)ITC Limited @ 2,430,000 442,503,000GlaxoSmithkline Consumer Healthcare Limited 108,000 242,584,200Jubilant Foodworks Limited 108,000 58,228,200

743,315,400Engineering Services (1.30%)

Va Tech Wabag Limited 90,351 113,760,944113,760,944

Ferrous Metals (1.92%)Tata Steel Limited 270,000 168,007,500

168,007,500Finance (5.60%)

Housing Development Finance Corporation Limited 585,000 410,202,000Rural Electrification Corporation Limited 315,000 79,915,500

490,117,500Industrial Capital Goods (5.30%)

Bharat Heavy Electricals Limited 225,000 464,096,250464,096,250

Industrial Products (1.66%)Jain Irrigation Systems Limited 810,000 144,909,000

144,909,000Media & Entertainment (1.53%)

Sun TV Network Limited 298,453 134,080,010134,080,010

Minerals/Mining (1.96%)Coal India Limited 495,000 171,517,500

171,517,500Non - Ferrous Metals (3.20%)

Hindustan Zinc Limited 2,030,000 279,734,000279,734,000

Oil (7.32%)Oil and Natural Gas Corporation Limited 1,170,000 340,821,000Cairn India Limited 855,000 300,062,250

640,883,250Pesticides (1.08%)

United Phosphorus Limited 630,000 94,153,50094,153,500

Petroleum Products (8.38%)Reliance Industries Limited 594,000 623,165,400Bharat Petroleum Corporation Limited 179,475 109,811,779

732,977,179Pharmaceuticals (3.07%)

Dr.Reddy's Laboratories Limited 99,000 162,265,950Cadila Healthcare Limited 135,000 106,636,500

268,902,450Software (11.44%)

Infosys Technologies Limited 207,000 670,949,100Tata Consultancy Services Limited 279,000 330,308,100

1,001,257,200Telecom - Services (3.31%)

Bharti Airtel Limited 810,000 289,494,000289,494,000

Textiles Products (4.32%)Grasim Industries Limited 144,000 353,793,600Lovable Lingerie Limited 98,973 24,283,025

378,076,625Total (Cost Rs. 6,172,504,286) 8,749,553,528

Non-Convertible Debentures / Bonds Listed / Awaiting listing (0.03%)Pharmaceuticals (100%)

9.25% Dr. Reddy's Laboratories Limited - Bouns Debentures 2014 $ 594,000 2,912,501Total (Cost Rs. Nil) 2,912,501TOTAL INVESTMENTS (Cost Rs. 6,172,504,286) 8,752,466,029

Equity DerivativesLong Futures (100%)

Housing Development Finance Corporation Limited (0.26) 36,000 25,351,200Rural Electrification Corporation Limited (0.24) 90,000 23,035,500State Bank of India (0.52) 18,000 50,236,200Tata Consultancy Services Limited (3.88) 315,000 375,039,000

Total 473,661,900

Deposits (4.45%)^8.70% The Hongkong and Shanghai Banking Corporation Limited 91 180,000,0008.20% The Hongkong and Shanghai Banking Corporation Limited 91 160,000,0008.30% The Hongkong and Shanghai Banking Corporation Limited 91 90,000,000Total 430,000,000

Derivative disclosurea. Hedging Positions through Futures as on March 31, 2011 is NilFor the year ended March 31, 2011 following hedging transactions through futures which have been squared off/expired

Total Number of contracts where futures were bought

Total Number of contracts where

futures were sold

Gross Notional Value of contracts where futures were

bought


sold

Net Profit/Loss value on all contracts

combined 2,242.00 2,242.00 704,088,388.46 724,090,621.55 20,002,233

b. Other than Hedging Positions through Futures as on March 31, 2011

Underlying Long / Short Futures Price when

purchased Current price of the contract Margin maintained in

Rs. Lakhs State Bank of India Long 2,754.64 2,790.90 78.88 Housing Development Finance Corporation Limited Long 677.52 704.20 39.90 Rural Electrification Corporation Limited Long 255.82 255.95 45.01 Tata Consultancy Services Limited Long 1,135.87 1,190.60 589.08 Total exposure due to futures (non hedging positions) as a percentage of net assets is 4.90%.

For the year ended March 31, 2011 following non-hedging transactions through futures which have been squared off/expired



futures were sold


bought


sold


combined 26,675 27,395 9,118,263,714.30 9,651,826,821.91 104,186,089

c. Hedging Positions through Put Options as on March 31, 2011 is Nil. The scheme has not taken any Hedging Positions through Put Options during the year.d. Other than Hedging Positions through Options as on March 31, 2011 is Nil. The scheme has not taken other than Hedging Positions through Options during the year.e. Hedging Positions through swaps as on March 31, 2011 is Nil

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 Asset Value.

$ Fair value of non traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees in accordance with the guidelines for valuation of securities for Mutual funds as applicable, issued by the Securities and Exchange Board of India.


Statement of Portfolio Holding as at March 31, 2011

@ 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, 2011 and the Revenue Account for the year ended March 31, 2011)

7

April 01, 2010 April 01, 2009 April 01, 2008to March 31, 2011 to March 31, 2010 to March 31, 2009

Rupees Rupees Rupees

(a) Net asset value per unit at the end of the year (Note 2.6)

Growth Option 105.2711 95.3300 60.1737

Dividend Option 26.4794 27.2661 18.8099

(b) Gross Income

(i) income other than profit on sale of investment 0.8842 0.6169 0.6417

(ii) income from profit on inter scheme sales/transfer of investment - - -

(iii) income (net) from profit on sale of investments to third party 9.0394 7.6563 (6.7806)

(iv) transfer of revenue account from past year’s reserve 3.3344 - -

Gross income and gains 13.2579 8.2731 (6.1389)

(c) Aggregate of expenses, writeoff, amortisation and charges 1.0043 0.8627 0.5530

(d) Net income 12.2537 7.4104 (6.6920)

(e) Net change in unrealised depreciation in value of investments 0.0537 1.4499 (1.2592)

(f) Redemption Price

Highest - Growth Option 116.1716 96.0978 97.1612 - Dividend Option 31.3598 29.4924 30.3743

Lowest

- Growth Option 89.1659 60.6698 52.9573 - Dividend Option 24.2236 18.9650 16.5549

(g) Purchase price


Lowest - Growth Option 89.1659 60.6698 52.9573 - Dividend Option 24.2236 18.9650 16.5549

(h) Price earnings ratio NA NA NA

(i) Ratio of expenses (excluding initial issue expenses) to daily average net assets by percentage 2.01% 1.95% 2.03%

(j) Ratio of gross income (including net profit/loss on sale of

investments and net change in unrealised depreciation in value 19.99% 22.06% -27.10% 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*


8

(i) Transactions during the Year

Nature of Transaction Sponsor Investment ManagerAssociate of

Investment Manager

Schemes under Common Control of

Sponsor

Key Management Personnel and their

Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - - - - 12,087,933 12,087,933 Previous Year - - 2,928,000 - 9,476,044 12,404,044

Redemption of Units (including switch out) - - 3,192,855 - 25,399,876 28,592,731 Previous Year - - - - 1,027,654 1,027,654

Dividend Distribution( Including dividend reinvested) - - - - 401,933 401,933 Previous Year - - - - 254,044 254,044

Investment Management and Advisory Fees - 117,063,992 - - - 117,063,992 Previous Year - 150,909,133 - - - 150,909,133

Brokerage/ Commission on Distribution of Units - - 20,216,697 - - 20,216,697 Previous Year - - 55,659,397 - - 55,659,397

Brokerage/ Commission on Purchase/Sale of Investments 811,777 - - - - 811,777 Previous Year 922,708 - - - - 922,708

Clearing Charges - - 1,708,650 - - 1,708,650 Previous Year - - 1,745,886 - - 1,745,886

Fixed Deposits Placed - - 1,720,000,000 - - 1,720,000,000 Previous Year - - 1,130,000,000 - - 1,130,000,000

Reimbursment of Expenses - 7,292,553 - - - 7,292,553 Previous Year - - - - - -

Fixed Deposits Matured - - 1,720,000,000 - - 1,720,000,000 Previous Year - - 700,000,000 - - 700,000,000

Charges for Services Provided by Bank - - 35,506 - - 35,506 Previous Year - - 118,354 - - 118,354

(ii) Outstanding As At Year End


Investment Manager


Sponsor


Relatives Total

Investment Management and Advisory Fees Payable - 6,979,140 - - - 6,979,140 Previous Year - 17,809,619 - - - 17,809,619

Brokerage/ Commission Payable for Distribution of Units - - 12,147,245 - - 12,147,245 Previous Year - - 12,624,520 - - 12,624,520

Fixed Deposits - - 430,000,000 - - 430,000,000 Previous Year - - 430,000,000 - - 430,000,000

Units Outstanding As At Year End - - - - 20,832,557 20,832,557 Previous Year - - 3,350,021 - 31,698,183 35,048,204

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

Other Receivables - 7,293,460 - - - 7,293,460 Previous Year - 723 - 1,000 - 1,723

(iii) Details of material transactions with respect to parties referred to in Note 13 (I) (iii), (iv) and (v) for Associate of Investment Manager of the Sponsor

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

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

Redemption of Units (including switch out)PML Mercantile Limited 3,192,855 -

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 19,868,678 55,132,417

Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 12,147,245 12,586,674

Clearing ChargesThe Hongkong and Shanghai Banking Corporation Limited 1,708,650 1,745,886

Fixed Deposits PlacedThe Hongkong and Shanghai Banking Corporation Limited 1,720,000,000 1,130,000,000

Fixed Deposits MaturedThe Hongkong and Shanghai Banking Corporation Limited 1,720,000,000 700,000,000

Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 35,506 118,354

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

(iv) Details of material transactions with respect to parties referred to in Note 13 (I) (vi) for Schemes under common control of the Sponsor

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Other PayablesHSBC Income Fund - Investment Plan - 617,970

Other ReceivablesHSBC Emerging Markets Fund - 1,000

(v) Disclosures in respect of material transactions with persons referred to in Note 13 (I) (vii) for key management personnel and their relatives

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Naina Lal Kidwai 1,556,000 6,382,000 Kemaya Lal Kidwai (Relative) 8,100,000 1,910,000

Redemption of Mutual Fund Units (including switch out)Naina Lal Kidwai 19,391,525 - Kemaya Lal Kidwai (Relative) 3,485,500 - Rashid K Kidwai (Relative) - 1,027,654

Dividend Distribution( Including dividend reinvested)Nelum P Gidwani 178,693 169,256 Gitanjali Nelum Gidwani (Relative) 44,547 - Avan Gidwani (Relative) 134,145 84,787 Rahul Nelum Gidwani (Relative) 44,547 -

Units Outstanding As At Year EndNaina Lal Kidwai 2,304,344 18,965,527 Kemaya Lal Kidwai (Relative) 9,996,630 4,594,512

HSBC MUTUAL FUND-HSBC EQUITY FUND

Schedules forming part of the Balance Sheet as at March 31, 2011 and theRevenue Account for the year ended March 31, 2011

Annexure I

9


Schedules forming part of the Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended March 31, 2011

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. 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. For money market securities, debt securities and floating rate securities (investments till July 31, 2010):



Traded debt securities are valued at the last quoted closing price on the principal exchange on which the

security is traded.

Non-traded / thinly traded debt securities are valued at fair value as per procedures determined by HSBC

Asset Management (India) Private Limited which are approved by the Trustee and are in accordance

with the guidelines for valuation of securities specified in the Regulations.

Floating rate securities comprising MIBOR linked and reset coupons held by the scheme are valued on

amortization basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate

bond is purchased from the market, the ‘purchase price’ is considered as the ‘traded price’ and the

amortization continued from the traded price."

For money market securities, debt securities and floating rate securities, pursuant to SEBI/IMD/CIR

No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir /IMD/DF/4/2010 dated June 21,

2010 with effect from August 01, 2010 :

a) All money market securities, debt securities and floating rate securities with residual maturity of upto

and over 91 days are valued at the weighted average price at which they are traded on the particular

valuation day.

b) Non-traded /thinly traded money market securities, debt securities and floating rate securities with

residual maturity of upto 91 days are valued on amortization basis. Floating rate securities with floor and

caps on coupon rate and residual maturity of upto 91 days are valued on amortization basis taking the

coupon rate as floor.

c) Non-traded /thinly traded money market securities, debt securities and floating rate securities with

residual maturity of over 91 days are valued at fair value as per procedures determined by HSBC Asset

Management (India) Private Limited and approved by the Trustee in accordance with the guidelines for

valuation of securities for mutual funds, issued by Securities and Exchange Board of India (SEBI) from

time to time.

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

to the date of resale. Instruments sold on repo basis are adjusted for the difference between the

repurchase price after deduction of applicable interest upto the date of repurchase.

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

vii. 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 change in 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. The cost of investments includes

brokerage stamp charges and any other charges customarily included in the contract note but excludes custodian

safekeeping fees. Fully paid “Rights” are included in the cost of investments for the purpose of determining

realised gains or losses. Accruals for rights entitlements or partly paid rights are not included in the cost of

investments for the purpose of determining realised gains or losses. Bonus shares entitlement are recognized as

investments on the ex bonus date.

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.

The shortfall if any representing difference between dividend distributions and distributable surplus available for

distribution on the record dates may be utilized from unit premium reserve except to the extent it was represented

by unrealised net appreciation in the value of investments, upto March 15, 2010. With effect from March 15,

2010, pursuant to SEBI circular No. SEBI/ IMDCIR No. 18/198647/2010 unit premium reserve is treated at par

with unit capital and is not utilized for the determination of distributable surplus.

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 was retained in the Scheme under a separate account and is used to meet

marketing & selling expenses. Subsequent 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 & selling expenses. Any load collected in excess

of 1% is credited to the Schemes.

SEBI circular No. CIR /IMD/DF/ 4/2011 dated March 09, 2011 has mandated that there should be segregation of

load accounts into two parts, one to reflect the balance as on July 31, 2009 and the other to reflect accretions since

August 01, 2009. While the unutilized balances can be carried forward, not more than one third of the load

balances lying in the Scheme as on July 31, 2009 can be used in any financial year, starting from financial year

2010-2011. All accretions after July 31, 2009 can be used by the Schemes without any such restriction. Further,

both load balances can be used for marketing and selling expenses including distributor’s /agent’s commission.

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 1.02% 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 Limitation on Expenses The total expenses chargeable to the Scheme are limited to 2.01% of the average daily net assets of the Scheme.

HSBC Asset Management (India) Private Limited has borne Rs. 7,292,553 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 and Derivatives

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

March 31, 2011

(Rupees) March 31, 2010

(Rupees) Equity Shares

-Appreciation 2,662,127,636 3,511,447,614

-Depreciation 85,078,394 154,707,444

Non Convertible Debentures and Bonds Listed / Awaiting Listing

-Appreciation 2,912,501 -

-Depreciation - -

Equity Futures

-Appreciation 18,863,299 4,260,464

-Depreciation - 16,591,918

9 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. 279,250) is Rs. 4,247,546,108 and Rs. 9,832,182,896 respectively being 37.08% and 85.82% of

the average daily net assets.

10 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,

2011 is Rs. 2,912,501.

11 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. 2,289,876,379 and Rs. 230,486,986 respectively being 19.99% and 2.01% of the average daily net assets.



12 Equity Derivatives Disclosure:

Futures

Details of open interest in equity futures as at March 31, 2011

Underlying Asset's Name Number of contracts

Units Outstanding Long

State Bank of India 144 18,000

Housing Development Finance Corporation Limited 72 36,000

Rural Electrification Corporation Limited 90 90,000

Tata Consultancy Services Limited 1260 315,000

Notional value of futures contracts bought/ (sold) by the Scheme and outstanding as on March 31, 2011

aggregates to Rs. 473,661,900

Net Profit on futures transactions recognized in the Revenue Account for the year ended March 31, 2011

aggregates to Rs. 124,188,322

13 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 During The Year

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 of the Fund

HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha*– Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai – Relative of a Key Management Personnel Gitanjali Nelum Gidwani – Relative of a Key Management Personnel Rumaan Nazir Kidwai – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel

Shefali Chaddha* – Relative of a Key Management Personnel with effect from March 14, 2011 * There were no transactions during the year.

II The transactions with the related parties during the year in the ordinary course of business have been listed in

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. 35,506 and clearing member charges

on derivative transactions amounting to Rs. 1,708,650.

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 2010-2011 50.29 22.22 19,868,678 25.79

HSBC InvestDirect Securities (India) Limited Associate 2010-2011 0.77 0.34 348,019 0.45

Name of Sponsor/AMC and

its associates/related parties/group companies


Nature of Relation

Period Covered


% of Total




Fund



Brokerage paid to 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

transaction of the fund

Brokerage paid [Rs.]

% of total

brokerage paid by the fund

HSBC Securities and Capital Market (India) Private Limited Sponsor 2010-2011 121.99 3.79 811,777 2.50



Name of Sponsor/AMC and its

associates/related parties/group companies


relation

Period Covered


[Rs. In Crores]

% of total value of



% of total

brokerage paid by the fund


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.

14 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.

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.

16 Unclaimed Redemptions

As at March 31, 2011, unclaimed redemptions aggregate Rs. 2,379,837 payable to 87 Investors.

17 Unclaimed Dividend As at March 31, 2011, unclaimed dividends aggregate Rs. 4,079,037 payable to 1,111 investors.

18 Miscellaneous Income

Miscellaneous Income of Rs.725,304 represents exit load collected in excess of 1% of redemption proceeds and

credited to the Scheme.



19 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.

For PRICE WATERHOUSE Firm Registration Number: 301112E

Chartered Accountants

For Board of Trustees of HSBC Mutual Fund

For HSBC Asset Management (India) Private Limited

ALPA KEDIA Partner Membership No. F/100681

Puneet Chaddha Director and Chief Executive Officer

Trustee

Director

Place: Mumbai

Date : July 15, 2011

Fund Manager(s)


1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Dynamic Fund ("The Scheme") as at March 31, 2011, 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. Wehave conducted our audit in accordance with auditing standards generally accepted in India. Those






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, 2011, its net surplus and its cash flows for the year ended on that date.



iii. The methods used to value non-traded debt securities as at March 31, 2011, as determined by






ASSETS

Investments 1 957,378,325 2,126,000,919

Deposits 2 96,000,000 146,000,000


TOTAL 0 1,177,903,310 2,439,089,922

LIABILITIES

Unit Capital 4 1,095,630,693 2,489,968,770

Reserves and Surplus 5 0.35 52,285,221 (102,674,720)

Current Liabilities and Provisions 6 -0.44 29,987,396 51,795,872

TOTAL 1,177,903,310 2,439,089,922



Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.6) 737,130,948 410,784,966 1,147,915,914 1,332,727,443 1,054,566,607 2,387,294,050






Trustee Director



HSBC MUTUAL FUND - HSBC DYNAMIC FUND


0



INCOME AND GAINS

Dividends (Note 2.4) 22,485,110 28,390,159


Net Profit on Sale of Investments and Derivatives (Note 2.3 and 2.5) 429,231,041 489,135,566

Miscellaneous Income (Note 15) 2,516 640

TOTAL 460,023,594 529,644,248

EXPENSES AND LOSSES

Realised Loss from Foreign Currency Transactions (Net) (Note 2.10) - 374,227




Custodian Fees and Expenses (Note 5) 994,112 1,348,602

Audit Fees 146,988 250,000


SEBI Inspection Fees 105,893 -


TOTAL 39,822,385 63,428,275

Net Realised Gains for the Year 420,201,209 466,215,973

Net Change in Unrealised Depreciation in Value of Investments and Derivatives - 96,883,644

Net Gains for the Year 420,201,209 563,099,617

Net Change in Unrealised Appreciation in Value of Investments and Derivatives (225,523,361) 554,839,462

Net Surplus including Net Change in Unrealised Appreciation / Depreciation in Value of Investments and Derivatives 194,677,848 1,117,939,079

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve 225,523,361 (554,839,462)

Net Surplus for the Year 420,201,209 563,099,617


Total TotalRupees Rupees


Transfer from Income Equalisation Reserve (Note 2.8) 398,327,629 374,193,911

Balance transferred to Reserve Fund 818,528,838 937,293,528





Trustee Director





1


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 420,201,209 466,215,973

Adjustments for:- (Increase)/Decrease in Investments at cost 956,029,253 321,731,969 (Increase)/Decrease in Other Current Assets (1,038,401) 8,878,105 Increase/(Decrease) in Current Liabilities and Provisions (7,133,997) 4,222,270 Net cash generated from operations (A) 1,368,058,064 801,048,317

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (1,394,338,077) (1,221,232,062) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (39,717,907) 149,248,690

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors (12,993,417) 14,716,006 (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 186,439 5,279,720


Net Decrease in Cash and Cash Equivalents (A+B) (78,804,898) (250,939,329)

Cash and Cash Equivalents at the beginning of the year 289,869,109 540,808,438 Cash and Cash Equivalents at the end of the year 211,064,211 289,869,109

Notes : March 31, 2011

Rupees March 31, 2010

Rupees


Balances with Scheduled Banks :- In Current Account 609,856 2,013,377 - In Deposit Account 96,000,000 146,000,000 Book Overdraft - (1,681,062) Other Collaterised Lending- Reverse Repos 16,740,961 27,166,897 - Collateralised Borrowing and Lending Obligation 8,713,394 16,369,897 - Derivative Margin Deposit 89,000,000 100,000,000

211,064,211 289,869,109


This is the Cash Flow Statement referred to in our report of even date. 0



Trustee Director




2



Equity Shares 957,060,598 633,609,848 2,126,000,919 1,573,479,244

Non Convertible Debentures and Bonds Listed / Awaiting Listing 317,727 - - -

TOTAL 957,378,325 633,609,848 2,126,000,919 1,573,479,244



TOTAL 96,000,000 146,000,000


Balances with Banks- in Current Account 609,856 2,013,377



Reverse Repos 16,740,961 27,166,897

Unit Subscriptions Receivable 62,000 130,000

Inter-Scheme Receivable for Switch - in 46,984 165,423

Dividend Receivable 67,500 -


Interest Receivable on :- Debentures / Bonds 657 - - Deposits 327,452 282,000 - Reverse Repos 4,243 3,838 - Collateralised Borrowing and Lending Obligation 2,024 2,223

Receivable on Outstanding Equity Future Contracts 805,450 95,054

Investment Towards Unclaimed Redemption [(in 70,708.093 Units(2010: 10,402.779 Units) (Market Value Rs. 1,099,918 (2010: Rs.154,889))of HSBC Cash Fund - Growth Option) (Note 14)] 1,187,638 263,052

TOTAL 124,524,985 167,089,003



3


Growth OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 2,243,747,884 224,374,788.387 2,243,747,884 224,374,788.387

Outstanding:At the beginning of the year 1,390,046,465 139,004,646.491 1,902,481,009 190,248,100.865

Issued during the year 30,588,338 3,058,833.813 79,169,617 7,916,961.708

1,420,634,803 142,063,480.304 1,981,650,626 198,165,062.573

Redeemed during the year 717,078,479 71,707,847.937 591,604,161 59,160,416.082

At the end of the year 703,556,324 70,355,632.367 1,390,046,465 139,004,646.491

Dividend OptionIssued and Subscribed :Units of Rs. 10 each fully paid up 2,334,936,263 233,493,626.288 2,334,936,263 233,493,626.288



1,134,178,393 113,417,839.437 1,925,943,606 192,594,360.724



TOTAL 1,095,630,693 109,563,069.356 2,489,968,770 248,996,877.147

SCHEDULE 5 Dividend Option Total Dividend Option TotalReserves and Surplus March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010


Unit Premium Reserve (Note 2.7)At the beginning of the year (156,204,045) (268,700,350) (28,438,828) (43,755,129)

Added during the year (254,698,778) (438,045,536) (127,765,216) (224,945,221)

At the end of the year (410,902,823) (706,745,886) (156,204,045) (268,700,350)

Income Equalisation Reserve (Note 2.8)Added during the year 238,752,702 398,327,629 221,522,303 374,193,911

Transferred to Revenue Account (238,752,702) (398,327,629) (221,522,303) (374,193,911)

At the end of the year - - - -

Unrealised Appreciation Reserve At the beginning of the year 267,940,744 554,839,462 0 - Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) (82,329,107) (225,523,361) 267,940,744 554,839,462 At the end of the year 185,611,637 329,316,101 267,940,744 554,839,462

Reserve FundAt the beginning of the year (157,092,397) (388,813,832) (639,188,053) (1,326,107,360)

Transfer to Revenue Account - - - -

Balance Transferred from Revenue Account 401,094,180 818,528,838 482,095,656 937,293,528

At the end of the year 244,001,783 429,715,006 (157,092,397) (388,813,832)

TOTAL 18,710,597 52,285,221 * (45,355,698) (102,674,720) *

* The share of the Options of the Reserves and Surplus is as follows : March 31, 2011 March 31, 2010Rupees Rupees

Growth Option -49,058.52 33,574,624 (57,319,022) Dividend Option -27,339.23 18,710,597 (45,355,698) Total 52,285,221 (102,674,720)

HSBC MUTUAL FUND - HSBC DYNAMIC FUND Schedules forming part of the Balance Sheet as at March 31, 2011


4



Investment Management and Advisory Fees 965,897 2,379,618

Transfer Agent Fees and Expenses 354,039 390,860



Audit Fees 146,988 250,000



Inter Scheme payable for 'Switch - Out' 1,359,485 807,262

Unclaimed Redemption (Note 14) 1,348,548 263,052

Payable to Investment Manager 5,387 5,386

Temporary Book Overdraft - 1,681,062

Load Charges (Note 2.9) 17,117,796 21,349,505

Sundry Payables 498,360 1,389,870

TOTAL 29,987,396 51,795,872


Rupees Rupees

Debentures / Bonds 657 2,980,591

Reverse Repos 902,095 1,486,082

Collateralized Borrowing and Lending Obligation 426,095 1,369,465

Deposits 6,976,080 6,281,745

TOTAL 8,304,927 12,117,883



5

Description Quantity Market Value / Fair ValueRupees


Tata Motors Limited - DVR 36,000 25,052,40025,052,400

Banks (27.15%)ICICI Bank Limited 72,000 80,366,400State Bank of India 27,000 74,663,100HDFC Bank Limited @ 22,500 52,781,625Bank of Baroda @ 54,000 52,101,900

259,913,025Construction Project (5.58%)


Consumer Non Durables (6.33%)ITC Limited @ 333,000 60,639,300

60,639,300Ferrous Metals (1.23%)

Tata Steel Limited 18,900 11,760,52511,760,525

Finance (2.48%)CRISIL Limited 2,700 17,045,370Housing Development Finance Corporation Limited 9,500 6,661,400



Leisure Facilities (0.22%)Talwalkars Better Value Fitness Limited 9,510 2,079,837


Sun TV Network Limited 38,846 17,451,56617,451,566


12,474,000Oil (9.33%)

Cairn India Limited 135,000 47,378,250Oil and Natural Gas Corporation Limited 144,000 41,947,200

89,325,450Petroleum Products (7.64%)

Reliance Industries Limited 69,750 73,174,72573,174,725

Pharmaceuticals (6.76%)Lupin Limited 81,000 33,748,650Dr.Reddy's Laboratories Limited 10,800 17,701,740Aurobindo Pharma Limited 67,500 13,226,625

64,677,015Software (10.96%)


104,894,550Telecom - Services (4.37%)


Transportation (2.71%)Gujarat Pipavav Port Limited 405,000 25,940,250

25,940,250Textiles Products (4.62%)

Grasim Industries Limited 18,000 44,224,20044,224,200

Total (Cost Rs. 633,609,848) 957,060,598


Dr. Reddy's Laboratories Limited - Bonus Debentures $ 64,800 317,727

Total (Cost Rs. Nil) 317,727TOTAL INVESTMENTS (Cost Rs. 633,609,848) 957,378,325


Housing Development Finance Corporation Limited - April 2011 (2.09) 34,000 23,942,800MphasiS Limited - April 2011 (1.98) 54,000 22,671,900Tata Consultancy Services Limited - April 2011 (6.07) 58,500 69,650,100

Total 116,264,800

Deposits (8.36%)^ Tenure8.30% The Hongkong and Shanghai Banking Corporation Limited 91 50,000,0008.30% The Hongkong and Shanghai Banking Corporation Limited 91 46,000,000Total Deposits 96,000,000




futures were sold


bought

Gross Notional Value of contracts where futures were sold


combined252 252 79,210,092 81,697,545 2,487,453


Underlying Long / ShortFutures Price when

purchasedCurrent price of the

contractMargin maintained

in lakhsHousing Development Finance Corporation Limited Long 677.39 704.20 37.69MphasiS Limited Long 392.38 419.85 65.38Tata Consultancy Services Limited Long 1,136.71 1,190.60 109.40Total exposure due to futures (non hedging positions) as a percentage of net assets is 10.14%.




futures were sold


bought



combined7393 7810 2,342,766,850 2,486,362,529 1,814,868


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

^ Denotes Percentage to Net Assets.

$ Fair value of non traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approved by 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.

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



(Referred to in Schedule 1 to the Balance Sheet as at March 31, 2011 and the Revenue Accountfor the year ended March 31, 2011)

6



(a) Net asset value per unit at the end of the year (Note 2.6)Growth Option 10.4772 9.5876 6.3088 Dividend Option 10.4772 9.5876 6.3088

(b) Gross Income


(ii) income from profit on inter scheme sales/transfer of investment - - (0.0206)


(iv) transfer of revenue account from past year’s reserve - - -



(d) Net income 3.8352 1.8724 (4.3741)

(e) Net change in unrealised depreciation in value of investments - 0.3891 0.8155



Lowest


(g) Purchase Price





(j) Ratio of gross income (including net profit / loss on sale of investments and net change in

unrealised depreciation in value of investments) to daily average net assets by percentage 27.73% 23.26% -39.83%




7



Investment Manager Total

Investment Management and Advisory Fees - 19,087,727 - 19,087,727 Previous Year - 29,412,910 - 29,412,910

Brokerage/ Commission on Distribution of Units - - 1,851,720 1,851,720 Previous Year - - 4,935,779 4,935,779

Brokerage/ Commission on Purchase/ Sale of Investments 209,314 - - 209,314 Previous Year 341,708 - - 341,708

Clearing Charges - - 421,989 421,989 Previous Year - - 530,800 530,800

Fixed Deposits Placed - - 434,000,000 434,000,000 Previous Year - - 528,000,000 528,000,000

Fixed Deposits Matured - - 484,000,000 484,000,000 Previous Year - - 382,000,000 382,000,000

Charges for Services Provided by Bank - - 110 110 Previous Year - - 168,872 168,872




Investment Management and Advisory Fees Payable - 965,897 - 965,897 Previous Year - 2,379,618 - 2,379,618

Brokerage/ Commission Payable for Distribution of Units - - 1,158,001 1,158,001 Previous Year - - 1,265,036 1,265,036

Fixed Deposits - - 96,000,000 96,000,000 Previous Year - - 146,000,000 146,000,000

Other Payables - 5,387 - 5,387 Previous Year - 5,386 - 5,386

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

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,830,420 4,906,397

Brokerage / Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,158,001 1,262,658

Clearing ChargesThe Hongkong and Shanghai Banking Corporation Limited 421,989 530,800

Fixed Deposits PlacedThe Hongkong and Shanghai Banking Corporation Limited 434,000,000 528,000,000

Fixed Deposits MaturedThe Hongkong and Shanghai Banking Corporation Limited 484,000,000 382,000,000

Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited 110 168,872


Schedules forming part of the Balance Sheet as at March 31, 2011 and theRevenue Account for the year ended March 31, 2011.

Annexure I

8B

HSBC MUTUAL FUND-HSBC DYNAMIC FUND


SCHEDULE 8

0Notes to the Financial Statements 1 Organisation

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 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


applicable. 2.2 Portfolio Valuation

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


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. For money market securities, debt securities and floating rate securities (investments till July 31,

2010): Traded debt securities are valued at the last quoted closing price on the principal exchange on which



the security is traded.

Non-traded / thinly traded debt securities are valued at fair value as per procedures determined by HSBC Asset Management (India) Private Limited which are approved by the Trustee and are in accordance with the guidelines for valuation of securities specified in the Regulations. Floating rate securities comprising MIBOR linked and reset coupons held by the scheme are valued on amortization basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate bond is purchased from the market, the ‘purchase price’ is considered as the ‘traded price’ and the amortization continued from the traded price." For money market securities, debt securities and floating rate securities, pursuant to SEBI/IMD/CIR No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir /IMD/DF/4/2010 dated June 21, 2010 with effect from August 01, 2010 : a) All money market securities, debt securities and floating rate securities with residual maturity of upto and over 91 days are valued at the weighted average price at which they are traded on the particular valuation day. b) Non-traded /thinly traded money market securities, debt securities and floating rate securities with residual maturity of upto 91 days are valued on amortization basis. Floating rate securities with floor and caps on coupon rate and residual maturity of upto 91 days are valued on amortization basis taking the coupon rate as floor. c) Non-traded /thinly traded money market securities, debt securities and floating rate securities with residual maturity of over 91 days are valued at fair value as per procedures determined by HSBC Asset Management (India) Private Limited and approved by the Trustee in accordance with the guidelines for valuation of securities for mutual funds, issued by Securities and Exchange Board of India (SEBI) from time to time.

v. Government securities are valued at the average of prices obtained from The Credit Rating Information

Services of India Limited (CRISIL) and ICRA 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 price 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.

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

up to the date of resale. Instruments sold on repo basis are adjusted for the difference between the


vii. 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 change in 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.

“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.


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.

The shortfall if any representing difference between dividend distributions and distributable surplus available

for distribution on the record dates may be utilized from unit premium reserve except to the extent it was

represented by unrealised net appreciation in the value of investments, upto March 15, 2010. With effect from



March 15, 2010, pursuant to SEBI circular No. SEBI/ IMDCIR No. 18/198647/2010 unit premium reserve is

treated at par with unit capital and is not utilized for the determination of distributable surplus.



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


marketing & selling expenses. Subsequent 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 & selling expenses. Any load

collected in excess of 1% is credited to the Schemes.

SEBI circular No. CIR /IMD/DF/ 4/2011 dated March 09, 2011 has mandated that there should be segregation

of load accounts into two parts, one to reflect the balance as on July 31, 2009 and the other to reflect accretions

since August 01, 2009. While the unutilized balances can be carried forward, not more than one third of the load





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.





Management (India) Private Limited for managing the Scheme at an average annual rate of 1.15% 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, 2011 (Rupees)


Equity Shares

-Appreciation 330,488,483 582,644,211

-Depreciation 7,037,733 30,122,536


-Appreciation 317,727 -

-Depreciation - -

Equity Futures

-Appreciation 5,547,624 2,622,855

-Depreciation - 305,068




The aggregate value of investments securities purchased and sold during the financial year is Rs. 244,139,083

and Rs. 1,608,937,198 respectively being 14.72% and 97.00% of the average daily net assets.

9 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, 2011 is Rs. 317,727.


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. 460,023,594

and Rs. 39,822,385 respectively being 27.73% and 2.40% of the average daily net assets. 11 Equity Derivatives Disclosures:

Futures

Details of open interest in equity futures as at March 31, 2011.


Units Outstanding Long/(Short)

Housing Development Finance Corporation Limited

68 34,000

MphasiS Limited 108 54,000


Notional value of futures contracts bought/ (sold) by the Scheme and outstanding as on March 31, 2011

aggregates to Rs. 116,264,800.

Net Profit on futures transactions recognized in the Revenue Account for the year ended March 31, 2011

aggregates to Rs. 4,302,322. 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 Disclosures’ issued by the Institute of Chartered Accountants of India (ICAI)








(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 of the Fund

HSBC Cash Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010



Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



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. 110 and clearing

member charges on derivative transactions amounting to Rs. 421,989.




its associate/related parties/group companies


Nature of Relation

Period Covered


% of Total Business received by the Fund



Fund






Nature of Relation

Period Covered


% of Total




Fund




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


relation

Period Covered


[Rs. In Crores]

% of total value of



% of total brokerage paid by the

fund






relation

Period Covered


[Rs. In Crores]

% of total value of




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

transactions from time to time at competitive rates. 13 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 as amended




instruments and were made solely on the basis of sound fundamentals of these companies. 14 Unclaimed Redemptions As at March 31, 2011, unclaimed redemptions aggregate Rs. 1,348,548 payable to 35 investors.


Miscellaneous Income of Rs. 2,516 represents load collected in excess of 1% of redemption proceeds and credited to the Scheme.

16 Segment Reporting

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.








Trustee

Director

Place: Mumbai


Fund Manager(s)

Auditors' Report To the Board of Trustees of

HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Emerging Markets Fund ("The

Scheme") as at March 31, 2011 and the related Revenue Account for the year ended March 31, 2011, 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 the Revenue Account referred to above are in agreement with the books of account of the Scheme.


(i) The Balance Sheet and the 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, 2011 and its net surplus for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2011 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



ASSETS

Investments 1 590,755,001 859,569,343


TOTAL 0 609,523,650 891,792,091

LIABILITIES

Unit Capital 3 564,884,973 935,414,322

Reserves and Surplus 4 -0.37 31,990,890 (64,480,772)


TOTAL -0.14 609,523,650 891,792,091


Rupees Rupees Rupees Rupees Rupees RupeesNet Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.6) 400,349,273 196,526,590 596,875,863 581,136,608 289,796,942 870,933,550

Number of Units in Issue 37,889,143.533 18,599,353.755 62,416,351.976 31,125,080.331

Net Asset Value per Unit 10.5663 10.5663 9.3106 9.3107





Trustee Director


HSBC MUTUAL FUND - HSBC EMERGING MARKETS FUND





INCOME AND GAINS

Dividends (Note 2.5) - 5,811,036

Interest 6 1,109,197 1,089,955

Realised Gain on Foreign Currency Transactions (Note 2.3) 153,894 -

Miscellaneous Income (Note 14) 140 7,958

TOTAL 1,263,231 6,908,949

EXPENSES AND LOSSESRealised Loss in Foreign Currency Transaction (Note 2.3) - 3,725,623

Net Loss on Sale of Investments (Note 2.4) 8,825,733 51,385,243

Investment Management and Advisory Fees (Note 3) 2,187,348 513,156



Custodian Fees and Expenses (Note 5) 316,681 393,613

Audit Fees 75,929 50,000



Other Operating Expenses 671,332 644,940

TOTAL 17,775,079 63,311,483 Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 1,466,880 503,284

TOTAL 16,308,199 62,808,199 Net Realised Losses for the Year (15,044,968) (55,899,250)

Net Change in Unrealised Depreciation in Value of Investments and Foreign Currency Denominated Asset and Liabilities -0.12 45,518,394 455,538,850

Net Gains for the Year 0 0.12 30,473,426 399,639,600

Net change in Unrealised Appreciation in Value of Investments and Foreign Currency Denominated Asset and Liabilities 48,474,532 -

Net Gains including Net change in Unrealised Appreciation / Depreciation in Value of Investments and Foreign Currency Denominated Asset and Liabilities 78,947,958 399,639,600

Net change in Unrealised Appreciation in Value of Investments and Foreign Currency Denominated Asset and Liabilities transferred to Unrealised Appreciation Reserve (48,474,532) -


April 01, 2010 to April 01, 2010 to April 01, 2010 to April 01, 2009 to April 01, 2009 toMarch 31, 2011 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

Rupees Rupees Rupees Rupees Rupees

Net Surplus for the Year 21,552,613 8,920,812 30,473,426 (280,987,613) 399,639,600

Transfer from Income Equalisation Reserve (Note 2.8) 30,976,768 11,849,287 42,826,055 (49,101,444) 54,604,750

Balance Transferred to Reserve Fund 52,529,381 20,770,099 73,299,481 (330,089,057) 454,244,350




ALPA KEDIA Puneet Chaddha

Partner Director and Chief Executive OfficerMembership No. F/100681

Trustee Director

Place: Mumbai

Date : July 15, 2011 Fund Manager(s)




SCHEDULE 1 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Investments 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, 2011)Units in Mutual Fund 590,755,001 542,280,469 859,569,343 905,087,737

TOTAL 590,755,001 542,280,469 859,569,343 905,087,737

SCHEDULE 2 March 31, 2011 March 31, 2010Other Current Assets Rupees RupeesBalances with Banks in Current Account 934,551 646,011

Reverse Repos 10,731,066 19,378,225


Unit Subscription Receivable 56,000 14,025

Interest Receivable on:- Reverse Repos 2,720 2,738- Collateralized Borrowing and Lending Obligation 1,297 1,585

Receivable from Investment Manager 1,457,693 503,284

TOTAL 18,768,649 32,222,748

HSBC MUTUAL FUND - HSBC EMERGING MARKETS FUNDSchedules forming part of the Balance Sheet as at March 31, 2011



Growth OptionIssued 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:At the beginning of the year 624,163,520 62,416,351.976 843,024,847 84,302,484.733


639,420,365 63,942,036.462 976,698,731 97,669,873.088


At the end of the year 378,891,436 37,889,143.533 624,163,520 62,416,351.976

Dividend OptionIssued and Subscribed :Units of Rs.10 each fully paid up 409,157,986 40,915,798.638 409,157,986 40,915,798.638



375,302,401 37,530,240.108 545,025,394 54,502,539.497



TOTAL 564,884,973 56,488,497.288 935,414,322 93,541,432.307

HSBC MUTUAL FUND - HSBC EMERGING MARKETS FUNDSchedules forming part of the Balance Sheet as at March 31, 2011


SCHEDULE 4 March 31, 2011 March 31, 2010Reserves and Surplus Rupees Rupees

Unit Premium Reserve (Note 2.7)At the beginning of the year 13,571,281 25,927,317

Added during the year (25,302,351) (12,356,036)

At the end of the year (11,731,070) 13,571,281

Income Equalisation Reserve (Note 2.8)Added during the year 42,826,055 54,604,750

Transferred to Revenue Account (42,826,055) (54,604,750)

At the end of the year - -

Unrealised Appreciation ReserveAt the beginning of the year - -

Net change in Unrealised Appreciation in Value of Investments and Foreign Currency Denominated Asset and Liabilities transferred from Revenue Account (Note 8) 48,474,532 -

At the end of the year 48,474,532 -

Reserve FundAt the beginning of the year (78,052,053) (532,296,403)

Balance Transferred from Revenue Account 73,299,481 454,244,350

At the end of the year (4,752,572) (78,052,053)

TOTAL 31,990,890 * (64,480,772) *


Growth Option 21,457,837 (43,026,912)

Dividend Option 10,533,053 (21,453,860)

Total 31,990,890 (64,480,772)



SCHEDULE 5 March 31, 2011 March 31, 2010Current Liabilities and Provisions Rupees Rupees

Current Liabilities

Investment Management and Advisory Fees 393,373 25,730



Custodian Fees and Expenses 20,495 823

Audit Fees 75,929 50,000


Unit Redemption Payable 9,764,376 18,191,134

Inter Scheme Payable - For 'Switch-Out' 20,107 312,982 - For 'Others' - 1,000

Temporary Book Overdraft 5 -

Unclaimed Redemption (Note 13) 91,845 28,549

Sundry Payables 133,479 198,009

TOTAL 12,647,787 20,858,541

SCHEDULE 6 April 01, 2010 to April 01, 2009 toInterest (Note 2.5) March 31, 2011 March 31, 2010

Rupees Rupees

Reverse Repos 790,285 542,901

Collateralized Borrowing and Lending Obligation 318,912 547,054

TOTAL 1,109,197 1,089,955



Description Quantity Market ValueRupees

Mutual Fund Units (100%)HSBC GIF Global Emerging Markets Equity Fund 1,401,514.306 590,755,001

590,755,001Total (Cost Rs. 542,280,469) 590,755,001TOTAL INVESTMENTS (Cost Rs. 542,280,469) 590,755,001





April 01, 2010 April 01, 2009 April 01, 2008 to March 31, 2011 to March 31, 2010 to March 31, 2009


(a) Net asset value per unit at the end of the year (Note 2.6)Growth Plan 10.5663 9.3106 6.2553 Dividend Plan 10.5663 9.3107 6.2553

(b) Gross Income

(i) income other than profit on sale of investment. 0.0196 0.0739 0.0424


(iii) income (net) from profit on sale of investments to third party (0.1535) (0.5892) (0.0780)


Gross income and gains (0.1339) (0.5153) (0.0356)


(d) Net income (0.2663) (0.5976) (0.0912)

(e) Net change in unrealised depreciation in value of investments 0.8058 4.8699 (3.6797)

(f) Redemption price

Highest- Growth Option 10.8410 9.8071 11.8114 - Dividend Option 10.8410 9.8071 11.7554

Lowest- Growth Option 8.1775 6.5362 4.9543 - Dividend Option 8.1775 6.5362 5.0872

(g) Purchase price




(i) Ratio of expenses (excluding initial issue expenses) to average daily net assets by percentage 1.10% 0.75% 0.75%

(j) Ratio of gross income (including net profit / loss on sale of investments and net change in 5.57% 39.68% -50.07%unrealised depreciation in value of investments) to average daily net assets by percentage





Nature of Transaction Investment ManagerAssociate of

Investment Manager


Sponsor

Key Management Personnel and their Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - - - 120,000 120,000 Previous Year - - - 90,000 90,000

Investment Management and Advisory Fees 2,187,348 - - - 2,187,348 Previous Year 513,156 - - - 513,156

Brokerage/ Commission on Distribution of Units - 2,181,009 - - 2,181,009 Previous Year - 4,929,506 - - 4,929,506

Reimbursement of Expenses 1,466,880 - - - 1,466,880 Previous Year 503,284 - - - 503,284

Charges for Services Provided by Bank - - - - - Previous Year - 300 - - 300



Investment Manager


Sponsor

Key Management Personnel and their Relatives Total

Investment Management and Advisory Fees Payable 393,373 - - - 393,373 Previous Year 25,730 - - - 25,730

Brokerage/ Commission Payable on Distribution of Units - 1,466,664 - - 1,466,664 Previous Year - 1,335,194 - - 1,335,194

Units Outstanding As At Year End - - - 235,531 235,531 Previous Year - - - 91,613 91,613

Other Payables - - - - - Previous Year - - 1,000 - 1,000

Other Receivables 1,457,693 - - - 1,457,693 Previous Year 503,284 - - - 503,284

(iii) Details of material transactions with respect to parties referred to in Note 11 (iii) and (iv) forAssociate of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010


Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,466,664 1,334,938

Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited - 300

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

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Other PayablesHSBC 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, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Vikramaaditya 120,000 90,000

Units Outstanding As At Year EndVikramaaditya 235,531 91,613



Annexure I



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



2.1 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 (Mutual Funds) Regulations, 1996 (the “Regulation”) 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


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. Instruments sold on repo basis are adjusted for the difference between the repurchase price after

deduction of applicable interest upto the date of repurchase.

iii. 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 change in 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.





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

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

safekeeping.

6 Income Taxes


of the Income Tax Act, 1961 of India.

7 Limitation on Expenses

The total expenses chargeable to the Scheme are limited to 1.10% of the average daily net assets of the Scheme.



the year.

8 Aggregate Appreciation and Depreciation In Value of Investments

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

March 31, 2011


(Rupees) Units in Mutual Fund

- Appreciation 48,474,532 -

- Depreciation - 45,518,394

9 Aggregate Value of Purchase and Sale of Investments

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

Rs. Nil and Rs. 353,991,928 respectively being 0.00% and 51.90% of the average daily net assets.


The total income (net of net loss on sale of investments and including realised gain in foreign currency

transactions and net change in unrealised depreciation in the value of investments and foreign currency

denominated assets and liabilities) and expenditure during the year is Rs. 37,955,892 and Rs. 7,482,466

respectively being 5.56% and 1.10% of the average daily net assets.




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



I Related Party Relationships During The Year Name Description of relationship (i) HSBC Securities and Capital Markets (India) Private Limited Sponsor of the Fund


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


(v) Schemes of the Fund, under common control of the Sponsor of the Fund

HSBC Cash Fund HSBC Dynamic Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010



Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



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


HSBC InvestDirect Securities (India) Limited Associate 2010-2011 0.00~ 0.01 1,859 0.05

~ Indicates less than 0.01




Nature of Relation

Period Covered


% of Total




Fund








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


HSBC Mutual Fund has made investments in companies, which holds/ has 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



As at March 31, 2011, unclaimed redemptions aggregate Rs. 91,845 payable to 8 investors.


Miscellaneous income of Rs. 140 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.








Trustee

Director

Place: Mumbai


Fund Manager(s)

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, 2011, the related Revenue Account for the year ended on that date and 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, 2011 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, the Revenue Account and the 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, 2011, its net surplus and its cash flows for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2011 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.



Alpa Kedia Partner

Membership No. F- 100681 Place : Mumbai Date : July 15, 2011


ASSETS

Investments 1 1,677,338,748 2,561,551,714

Deposits 2 130,000,000 134,902,000


TOTAL 0 1,937,082,200 2,892,505,430

LIABILITIES

Unit Capital 4 895,763,302 1,429,583,604

Reserves and Surplus 5 0.01 1,003,308,922 1,410,839,977


TOTAL 1,937,082,200 2,892,505,430 -0.21



Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.6) 741,036,892 1,158,035,332 1,899,072,224 1,118,826,000 1,721,597,581 2,840,423,581






Trustee Director



HSBC MUTUAL FUND - HSBC INDIA OPPORTUNITIES FUND




INCOME AND GAINS

Dividends (Note 2.4) 30,410,557 31,935,866



Miscellaneous Income (Note 16) 15,265 52,091

TOTAL 457,890,884 880,553,936

EXPENSES AND LOSSES




Custodian Fees and Expenses (Note 5) 1,323,937 1,547,070

Audit Fees 242,975 500,000


Sebi Inspection fees 136,321 -


TOTAL 54,533,936 74,402,434


Net Change in Unrealised Depreciation in Value of Investments and Derivatives - 196,768,864

Net Gains for the Year 403,356,948 1,002,920,366


Net Surplus including Net Change in Unrealised Depreciation / Appreciation in Value of Investments and Derivatives 285,432,683 1,604,619,750


Net Surplus for the Year 0.06 403,356,948 1,002,920,366

April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 toMarch 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

Dividend Option Total Dividend Option TotalRupees Rupees Rupees Rupees

Net Surplus for the Year 245,806,234 403,356,948 (800,006,474) 1,002,920,366

Transfer from Income Equalisation Reserve (Note 2.8) (32,404,276) (335,455,274) (63,726,148) (330,192,693)

Transfer from Reserve Fund 73,382,507 73,382,507 - 380,622,250

Dividend / Distribution (73,382,507) (73,382,507) 1,520 (122,251,235)

Balance Transferred to Reserve Fund 213,401,958 67,901,674 (863,731,102) 931,098,688





Trustee Director






Rupees


Rupees


Adjustments for:- (Increase)/Decrease in Investments at cost 784,241,667 555,267,992 (Increase)/Decrease in Other current assets (1,722,693) 4,594,087 Increase/(Decrease) in Current liabilities (5,440,154) 6,005,215 Net cash generated from operations ( A ) 1,180,435,768 1,372,018,796

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (533,820,302) (777,973,929) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (619,581,231) (663,261,382)

Adjustments for:- Increase/(Decrease) in Sundry creditors for units redeemed by investors (8,405,872) 13,382,557 (Increase)/Decrease in Sundry debtors for units issued to investors 17,655 1,174,750

Dividend paid during the year (73,382,507) (122,251,235)

Net cash used in financing activities ( B ) (1,235,172,257) (1,548,929,239)

Net Decrease in Cash and cash equivalents (A+B) (54,736,489) (176,910,443)


Notes :March 31, 2011


Rupees


Balances with Scheduled Banks : - In Current Account 978,296 936,496 - In Deposit Account 130,000,000 130,000,000

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

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Government Securities - 3,750,000 Temporary Book Overdraft (177,914) (403,762)

Other Collaterised LendingReverse Repo 6,514,934 35,572,976 Collateralised Borrowing and Lending Obligation 3,390,967 21,435,062 Derivative Margin Deposit 109,500,000 112,500,000

250,206,283 304,942,772





Trustee Director




SCHEDULE 1 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Investments Market 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, 2011)Equity Shares 1,677,338,748 1,195,574,212 2,561,551,714 1,962,703,329

TOTAL 1,677,338,748 1,195,574,212 2,561,551,714 1,962,703,329


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives) 130,000,000 130,000,000 Margin Deposit with Clearing Corporation of India Limited towards Collateralized Borrowing and Lending Obligation - 1,152,000 Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities - 3,750,000

TOTAL 130,000,000 134,902,000


Balances with Banks - in Current Account 978,296 936,496 Sales Contracts Awaiting Completion - Equity Shares 5,186,117 23,700,327 Reverse Repos 6,514,934 35,572,976 Collateralised Borrowing and Lending Obligation 3,390,967 21,435,062 Unit Subscription Receivable 84,505 36,700 Inter-Scheme Receivable:- For 'Switch In' 50,591 116,050 - For 'Others' 1,500 1,269 Derivative Margin Deposit (Note 2.5) 109,500,000 112,500,000 Receivable on Outstanding Equity Future Contracts 718,100 156,856 Interest Receivable on :- Deposits 454,603 297,986 - Reverse Repos 1,651 5,026 - Collateralised Borrowing and Lending Obligation 788 2,910 Dividend Receivable 1,030,500 - Receivable from Investment Manager 290 - Investment towards Unclaimed Redemption [(in 45,102.673 Units (2010 : 24,129.788 units) (Market Value Rs. 707,914 (2010 : Rs. 359,273)) of HSBC Cash Fund - Growth Option) (Note 14)] 620,818 299,813 Investment towards Unclaimed Dividend [in 89,025.964 Units (2010 : 75,395.516) (Market Value Rs. 1,397,316(2010 : Rs. 1,122,579) of HSBC Cash Fund - Growth Option (Note 15)] 1,209,792 990,245

TOTAL 129,743,452 196,051,716




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



366,519,357 36,651,935.657 586,935,568 58,693,556.779



Dividend OptionIssued 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



1,131,678,755 113,167,875.396 1,785,418,412 178,541,841.056



TOTAL 895,763,302 89,576,330.041 1,429,583,604 142,958,360.240

HSBC MUTUAL FUND - HSBC INDIA OPPORTUNITIES FUNDSchedules forming part of the Balance Sheet as at March 31, 2011


SCHEDULE 5 March 31, 2011 March 31, 2010Reserves and Surplus Total Total

Rupees Rupees

Unit Premium Reserve (Note 2.7)At the beginning of the year (829,784,846) (496,716,157) Added during the year (284,125,957) (333,068,689) At the end of the year (1,113,910,803) (829,784,846)

Income Equalisation Reserve (Note 2.8)Added during the year (335,455,274) (330,192,693) Transferred to Revenue Account 335,455,274 330,192,693 At the end of the year - -

Unrealised Appreciation ReserveAt the beginning of the year 602,911,383 1,211,999 Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) (117,924,265) 601,699,384 At the end of the year 484,987,118 602,911,383

Reserve FundAt the beginning of the year 1,637,713,440 1,087,237,002 Transferred to Revenue Account (73,382,507) (380,622,250) Balance Transferred from Revenue Account 67,901,674 931,098,688 At the end of the year 1,632,232,607 1,637,713,440

TOTAL 1,003,308,922 * 1,410,839,977 *


Growth Option 533,549,843 769,049,797 Dividend Option 469,759,079 641,790,180 Total 1,003,308,922 1,410,839,977



SCHEDULE 6 March 31, 2011 March 31, 2010Current Liabilities and Provisions Rupees RupeesCurrent Liabilities

Investment Management and Advisory Fees 1,484,727 2,726,108 Transfer Agent Fees and Expenses 585,098 461,713 Trusteeship Fees and Expenses 5,088 - Custodian Fees and Expenses 57,958 142,741 Audit Fees 242,975 500,000 Selling and Distribution Expenses 3,698,830 4,689,973 Unit Redemptions Payable 9,257,664 16,625,865 Inter Scheme Payable for Switch - Out 507,693 1,545,364 Load Charges (Note 2.9) 19,519,979 22,419,639 Unclaimed Redemption (Note 14) 694,180 363,145 Unclaimed Dividend (Note 15) 1,209,792 990,245 Temporary Book Overdraft 177,914 403,762 Sundry Payables 568,078 1,213,294

TOTAL 38,009,976 52,081,849


Rupees Rupees

Reverse Repos 1,238,321 1,188,783 Collateralised Borrowing and Lending Obligation 511,133 1,078,799 Deposits 8,000,179 6,813,284

TOTAL 9,749,633 9,080,866




Equity Shares (100%)Auto (1.95%)

Eicher Motors Limited 24,300 32,666,49032,666,490

Auto Ancillaries (8.64%)Bosch Limited 21,600 144,903,600

144,903,600Banks (19.28%)

ICICI Bank Limited 81,000 90,412,200State Bank of India 32,400 89,595,720HDFC Bank Limited @ 31,500 73,894,275Bank of Baroda @ 72,000 69,469,200

323,371,395Cement (1.67%)

Shree Cement Limited 13,500 27,945,67527,945,675

Construction Project (5.32%)Larsen & Toubro Limited 54,000 89,202,600

89,202,600Consumer Non Durables (7.86%)

ITC Limited @ 495,000 90,139,500Triveni Engineering & Industries Limited 432,000 41,623,200

131,762,700Fertilisers (1.86%)

Coromandel International Limited 108,000 31,141,80031,141,800

Finance (6.21%)Housing Development Finance Corporation Limited 108,000 75,729,600CRISIL Limited 4,500 28,408,950



Industrial Products (1.92%)Jain Irrigation Systems Limited 180,000 32,202,000

32,202,000Leisure Facilities (1.83%)

Talwalkars Better Value Fitness Limited 140,507 30,728,88130,728,881

Media & Entertainment (1.46%)Sun TV Network Limited 54,691 24,569,932

24,569,932Minerals/Mining (1.30%)

Coal India Limited 63,000 21,829,50021,829,500

Oil (7.11%)Oil and Natural Gas Corporation Limited 225,000 65,542,500Cairn India Limited 153,000 53,695,350

119,237,850Paper (1.14%)

Tamilnadu Newsprint & Papers Limited 145,752 19,144,52519,144,525



Aventis Pharma Limited 18,000 36,215,100Aurobindo Pharma Limited 139,500 27,335,025

63,550,125Software (12.47%)

Infosys Technologies Limited 33,750 109,393,875Tata Consultancy Services Limited 54,000 63,930,600Info Edge (India) Limited 54,000 36,231,300



Textiles Products (0.53%)Lovable Lingerie Limited 36,000 8,832,600

8,832,600Total (Cost Rs. 1,195,574,212) 1,677,338,748TOTAL INVESTMENTS (Cost Rs. 1,195,574,212) 1,677,338,748


Housing Development Finance Corporation Limited - April 2011 (0.67%) ^ 18,000 12,675,600Tata Consultancy Services Limited - April 2011 (3.39%) ^ 54,000 64,292,400

Total 76,968,000

Deposits (6.85%)^ Tenure8.10% The Hongkong and Shanghai Banking Corporation Limited 91 80,000,0008.30% The Hongkong and Shanghai Banking Corporation Limited 91 50,000,000

Total 130,000,000



Total Number of contracts where futures were sold

Gross Notional Value of contracts where futures were bought


Net Profit/Loss value on all contracts combined

290 290 93,517,192.22 97,393,648.86 3,876,456


Underlying Long / ShortFutures Price when purchased Current price of the contract

Margin maintained in Rs. Lakhs

Housing Development Finance Corporation Limited Long 677.37 704.20 19.95Tata Consultancy Services Limited Long 1,139.87 1,190.60 100.99Total exposure due to futures (non hedging positions) as a percentage of net assets 4.05%.







8,617 9,220 2,750,056,231.29 2,953,936,917.05 13,949,883

c. Hedging Positions through Put Options as on March 31, 2011 is Nil. The scheme has not taken any Hedging Positions through Put Options during the year.d. Other than Hedging Positions through Options as on March 31, 2011 is Nil. The scheme has not taken other than Hedging Positions through Options during the year.e. Hedging Positions through swaps as on March 31, 2011 is Nil.

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.@ Investment in companies which have invested more than five percent of the net asset value of any scheme of HSBC Mutual Fund.^ Denotes Percentage to Net Assets.




April 01, 2008to March 31, 2009


(b) Gross Income




(iv) transfer of revenue account from past year’s reserve 0.8192 2.6625 -



(d) Net income 5.3222 8.3015 (4.8177)

(e) Net change in unrealised appreciation / (depreciation) in value - 1.3764 (0.8913)of investments




(g) Purchase price




(i) Ratio of expenses (excluding initial issue 2.36% 2.25% 2.29%expenses) to average daily net assets by percentage

(j) Ratio of gross income (including net profit / loss on sale of investments and net change 19.80% 32.61% -30.65%in unrealised depreciation in value of investments) to average daily net assets by percentage




Rupees

April 01, 2009to March 31, 2010

April 01, 2010to March 31, 2011

Rupees Rupees



Investment Manager


Sponsor


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - - - - 5,000 5,000 Previous Year - - - - 15,902 15,902

Redemption of Units (including switch out) - - - - 19,022,094 19,022,094 Previous Year - - - - 1,214,270 1,214,270

Dividend Distribution( Including dividend reinvested) - - - - 5,000 5,000 Previous Year - - - - 20,902 20,902




Clearing Charges - - 493,792 - - 493,792 Previous Year - - 561,071 - - 561,071

Fixed Deposits Placed - - 520,000,000 - - 520,000,000 Previous Year - - 390,000,000 - - 390,000,000

Fixed Deposits Matured - - 520,000,000 - - 520,000,000 Previous Year - - 260,000,000 - - 260,000,000

Charges for Services Provided by Bank - - 210 - - 210 Previous Year - - 25,830 - - 25,830



Investment Manager


Sponsor


Relatives Total




Units Outstanding As At Year End - - - - 4,104,323 4,104,323 Previous Year - - - - 21,724,197 20,327,394

Other Receivables - 290 - 1,500 - 1,790 Previous Year - - - 1,269 - 1,269


April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010







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

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Other ReceivablesHSBC Equity Fund - - HSBC Progressive Themes Fund - 1,269 HSBC MIP Savings Plan 1,500 -

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

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Naina Lal Kidwai - 15,902 Nelum Pahlaj Gidwani - 5,000

Redemption of Units (including switch out)Kemaya Lal Kidwai 2,746,730 711,054 Naina Lal Kidwai 13,904,202 503,216

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

Units Outstanding As At Year EndKemaya Lal Kidwai - 2,591,445 Naina Lal Kidwai - 13,118,131 Nelum Pahlaj Gidwani 1,142,842 2,430,833 Avan Nelum Gidwani (Relative) 1,071,414 - Rahul Nelum Gidwani 1,640,070 -

HSBC MUTUAL FUND-HSBC INDIA OPPORTUNITIES FUND


Annexure I



SCHEDULE 8


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 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 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 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 (SEBI) (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. 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. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of

applicable interest up to the date of resale. Instruments sold on repo basis are adjusted

for the difference between the repurchase price after deduction of applicable interest

upto the date of repurchase.

v. 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 change in 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.


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. The cost

of investments includes brokerage stamp charges and any other charges customarily included

in the contract note but excludes custodian safekeeping fees. Fully paid “Rights” are included

in the cost of investments for the purpose of determining realised gains or losses. Accruals for

rights entitlements or partly paid rights are not included in the cost of investments for the

purpose of determining realised gains or losses. Bonus shares entitlement are recognized as

investments on the ex bonus date. 2.4 Investment Income




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

purpose of hedging and portfolio balancing.


Futures





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.


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. The shortfall if any representing difference between dividend distributions and distributable

surplus available for distribution on the record dates may be utilized from unit premium

reserve except to the extent it was represented by unrealised net appreciation in the value of

investments, upto March 15, 2010. With effect from March 15, 2010, pursuant to SEBI

circular No. SEBI/ IMDCIR No. 18/198647/2010 unit premium reserve is treated at par with

unit capital and is not utilized for the determination of distributable surplus.




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 was retained in the Scheme under a separate account and is

used to meet marketing & selling expenses. Subsequent 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 & selling expenses. Any load collected in excess of 1% is credited

to the Schemes.

SEBI circular No. CIR /IMD/DF/ 4/2011 dated March 09, 2011 has mandated that there

should be segregation of load accounts into two parts, one to reflect the balance as on July 31,

2009 and the other to reflect accretions since August 01, 2009. While the unutilized balances

can be carried forward, not more than one third of the load balances lying in the Scheme as on

July 31, 2009 can be used in any financial year, starting from financial year 2010-2011. All

accretions after July 31, 2009 can be used by the Schemes without any such restriction.

Further, both load balances can be used for marketing and selling expenses including

distributor’s /agent’s commission. 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 1.11% 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

JP 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, 2011


(Rupees) Equity Shares -Appreciation 495,568,376 619,460,514 -Depreciation 13,803,840 20,612,129 Equity Futures -Appreciation 3,222,582 4,487,301 -Depreciation - 424,303


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

561,742,276 and Rs. 1,728,760,483 respectively being 24.26% and 74.67% of the average

daily net assets.


The total income (including net profit on sale of investments and derivatives) and expenditure

during the year is Rs. 457,890,884 and Rs. 54,533,936 respectively being 19.78% and 2.36%

of the average daily net assets.

10 Equity Derivatives Disclosures:

Futures Details of open interest in equity futures as at March 31, 2011.

Underlying Asset's Name Number of contracts Units Outstanding Long



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

31, 2011 aggregates to Rs. 76,968,000.



Net Profit on futures transactions recognized in the Revenue Account for the year ended

March 31, 2011 aggregates to Rs. 17,826,339. 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 :


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



HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC Gilt Fund HSBC Midcap Equity Fund HSBC MIP Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* - Relative of a Key Management Personnel Rahul 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 Birjees Kidwai – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel

Shefali Chaddha* - Relative of a Key Management Personnel with effect from March 14, 2011 * There were no transactions during the year.

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

have been listed in 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. 210 and

clearing member charges on derivative transactions amounting to Rs. 493,792.






Nature of Relation

Period Covered





Fund








Nature of Relation

Period Covered





Fund







relation

Period Covered

Value of

Transactions

[Rs. In Crores]

% of total value of

transaction of the

fund


% of total brokerage

paid by the fund





relation

Period Covered

Value of

Transactions

[Rs. In Crores]

% of total value of




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

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.




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. 14 Unclaimed Redemptions As at March 31, 2011, unclaimed redemptions aggregate Rs. 694,180 payable to 20 investors. 15 Unclaimed Dividend

As at March 31, 2011, unclaimed dividends aggregate Rs. 1,209,792 payable to 335 investors. 16 Miscellaneous Income

Miscellaneous income of Rs. 15,265 represents exit load collected in excess of 1% of

redemption proceeds and credited to the scheme. 17 Prior Year’s Figures

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.







Trustee

Director

Place: Mumbai


Fund Manager(s)


1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Midcap Equity Fund ("The Scheme") as at March 31, 2011, 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.







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, 2011, its net deficit 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, 2011, as determined by




Alpa Kedia Partner

Membership No. F/100681 Place : Mumbai Date : July 15, 2011

.


ASSETS

Investments 1 1,225,993,147 1,625,594,615

Deposits 2 32,000,000 43,213,000


Deferred Revenue Expenditure 4 - 549,400

TOTAL (1) 1,401,863,963 1,795,297,587

LIABILITIES

Unit Capital 5 -0.31 978,081,987 1,072,580,953

Reserves and Surplus 6 408,785,051 699,841,418


TOTAL -0.83 1,401,863,963 1,795,297,587

March 31, 2011 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010 March 31, 2010RECONCILIATION 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) 770,733,199 616,133,839 1,386,867,038 867,526,599 904,895,772 1,772,422,371







Trustee Director

Place: Mumbai

Date : July 15, 2011 Fund Manager(s)

HSBC MUTUAL FUND - HSBC MIDCAP EQUITY FUND



0



INCOME AND GAINS

Dividends (Note 2.4) 19,280,708 18,466,721



Miscellaneous Income (Note 18) 4,434 9,303

TOTAL 282,494,598 742,290,572

EXPENSES AND LOSSESInvestment Management and Advisory Fees (Note 3) 19,681,316 17,722,547




Audit Fees 177,360 100,000


Amortisation of Deferred Revenue Expenditure (Note 2.10) 549,400 3,783,645

SEBI Inspection Fees 95,383


TOTAL 41,654,044 36,759,954

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 474,762 -

TOTAL 41,179,282 36,759,954


Net Change in Unrealised Depreciation in Value of Investments and Derivatives (327,119,375) 255,651,423

Net (Losses) / Gains for the Year (85,804,059) 961,182,041


Net (Deficit) / Surplus including Net change in Unrealised Appreciation / Depreciation in Value of Investments and Derivatives (154,423,930) 1,029,801,912


Net (Deficit) / Surplus for the Year 0.09 (85,804,059) 961,182,041

April 1, 2010 to April 1, 2010 to April 1, 2010 to April 1, 2008 to April 1, 2009 toMarch 31, 2011 March 31, 2011 March 31, 2011 March 31, 2009 March 31, 2010


Net (Deficit) / Surplus for the Year (61,405,336) (24,398,723) (85,804,059) (460,020,775) 961,182,041

Transfer From Reserve Fund - 116,199,367 116,199,367 - 86,036,063

Transfer from Income Equalisation Reserve (Note 2.8) 3,177,517 (10,734,482) (7,556,965) (45,838,696) 12,919,223

Dividend / Distributions - (116,199,367) (116,199,367) - (65,740,275)

Balance Transferred to Reserve Fund (58,227,819) -35,133,206 (93,361,024) (505,859,471) 994,397,052



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


Trustee Director





1

April 01, 2010 to March 31, 2011

Rupees

April 01, 2009 to March 31, 2010

Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 241,315,316 705,530,618 Initial Issue Expenses Charged to Revenue Account 549,400 3,783,645 Operating Profit Before Working Capital Changes 241,864,716 709,314,263

Adjustments for:- (Increase)/Decrease in Investments at Cost (9,957,458) (523,824,667) (Increase)/Decrease in Other Current Assets (552,187) 3,546,740 Increase/(Decrease) in Current Liabilities (760,212) 1,509,439 Net cash generated from operating activities (A) 230,594,859 190,545,775

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (94,498,966) (111,209,371) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (20,433,070) (17,135,120)

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors (2,080,472) 5,719,969 (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 530,834 66,440

Dividends / Distributions paid (116,199,367) (65,740,275)

Net cash used in financing activities (B) (232,681,041) (188,298,357)

Net (Decrease)/Increase in Cash and Cash Equivalents (A+B) (2,086,182) 2,247,418

Cash and Cash Equivalents Beginning of the Year 153,023,468 150,776,050 Cash and Cash Equivalents End of the Year 150,937,286 153,023,468



Rupees 1 Cash and Cash Equivalents include the following :

Balances with Scheduled Banks : - In Current Account 2,295,598 2,972,413 - In Dividend Account 12,924 1,851 - In Deposit Account 32,000,000 42,000,000

- 1,213,000 Other Collateralised LendingReverse Repo 48,556,177 36,526,532 Collateralised Borrowing and Lending Obligation 25,272,587 22,009,672 Derivative Margin Deposit 42,800,000 48,300,000

150,937,286 153,023,468

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

2

SCHEDULE 1 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

Investments Market / Fair Value Cost Market / Fair Value Cost(Notes 2.2, 2.3, 8, 9, 10 and 14) Rupees Rupees Rupees Rupees(Refer to the attached Statement of Portfolio Holding as at March 31, 2011)

Equity Shares 1,225,993,147 1,551,532,146 1,625,594,615 1,559,639,181

TOTAL 1,225,993,147 1,551,532,146 1,625,594,615 1,559,639,181



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

TOTAL 32,000,000 43,213,000


Balances with Banks - in Current Account 2,295,598 2,972,413 - in Dividend Account 12,924 1,851


Reverse Repos 48,556,177 36,526,532


Receivable on Outstanding Future Contracts - 438,355

Unit Subscription Receivable 202,906 234,500

Inter-Scheme Receivable '- For 'Switch in' 19,820 519,060


Interest Receivables - Reverse Repos 12,305 5,161 - Collateralised Borrowing and Lending Obligation 5,871 2,988 - Deposits 30,510 33,322

Dividend Receivable 39,599 99,000

Receivable from Investment Manager 474,762 408 Investment towards Unclaimed Redemption [(in 35,720.882 Units (2010: 34,120.400 Units) (Market Value Rs. 560,661) (2010: Rs 508,025) of HSBC Cash Fund - Growth Option) (Note 16)] 518,257 482,869 Investment towards Unclaimed Dividend [(in 33,559.011 Units (2010: 28,101.024 Units) (Market Value Rs. 526,729) (2010: Rs. 418,402) of HSBC Cash Fund - Growth Option) (Note 17)] 458,824 364,191

TOTAL 143,870,816 125,940,572

SCHEDULE 4 March 31, 2011 March 31, 2010Deferred Revenue Expenditure (Note 2.10) Rupees Rupees

Issue and Organisational Costs

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

Less : Amortised during the year 549,400 3,783,645

At the end of the year - 549,400



3


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



618,008,093 61,800,809.271 562,465,692 56,246,569.210



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



902,601,796 90,260,179.624 930,196,385 93,019,638.443



TOTAL 978,081,987 97,808,198.735 1,072,580,953 107,258,095.256

HSBC MUTUAL FUND - HSBC MIDCAP EQUITY FUNDSchedules forming part of the Balance Sheet as at March 31, 2011 and the


4

SCHEDULE 6 March 31, 2011 March 31, 2010Reserves and Surplus Total Total

Rupees RupeesUnit Premium Reserve (Note 2.7)At the beginning of the year (433,714,649) (403,660,306)



Income Equalisation Reserve (Note 2.8)Added during the year (7,556,965) 12,919,223

Transferred to Revenue Account 7,556,965 (12,919,223)


Unrealised Appreciation ReserveAt the beginning of the year 68,619,871 -

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred from Revenue Account (Note 8) (68,619,871) 68,619,871

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

Reserve FundAt the beginning of the year 1,064,936,196 156,575,207

Transfer to Revenue Account (116,199,367) (86,036,063)

Balance Transferred from Revenue Account (93,361,024) 994,397,052

At the end of the year 855,375,805 1,064,936,196

TOTAL 408,785,051 * 699,841,418 *


RupeesGrowth Option 378,831,809 470,220,218 Dividend Option 29,953,242 229,621,200 Total 408,785,051 699,841,418



Rupees

5


Current Liabilities





Audit Fees 177,360 100,000


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

Inter Scheme Payable for Switch - Out 2,863,500 359,421

Payable on Outstanding Future Contracts 434,100 -


Unclaimed Redemption (Note 16) 527,864 584,647

Unclaimed Dividend (Note 17) 458,824 366,033

Load Charges (Note 2.9) - 973,581

Payable for Initial Issue Expenses 92,372 92,372


TOTAL 14,996,925 22,875,216

SCHEDULE 8Interest and Discount (Note 2.4) March 31, 2011 March 31, 2010

Rupees Rupees

Deposits 2,060,312 3,247,051

Reverse Repos 2,116,478 842,105

Collateralised Borrowing and Lending Obligation 773,017 826,707

TOTAL 4,949,807 4,915,863



6

Description Quantity Market Value /Fair Value

RupeesEquity Shares (100%)Auto (0.48%)

Force Motors Limited 7,431 5,918,7925,918,792

Auto Ancillaries (9.38%)Federal-Mogul Goetze (India) Limited 283,529 57,414,623Autoline Industries Limited 253,000 35,875,400Wabco - TVS India Limited 18,592 19,321,736Balkrishna Industries Limited 17,510 2,334,958

114,946,717Banks (16.19%)

The Jammu & Kashmir Bank Limited 84,135 73,533,990Dena Bank @ 554,500 57,668,000Bank of Maharashtra 450,055 26,868,284State Bank of Travancore 27,000 20,098,800State Bank of Bikaner and Jaipur 35,000 18,242,000State Bank of Bikaner and Jaipur - Rights # 14,000 1,836,800Indian Bank 714 166,183


Gammon India Limited 80,506 9,543,9869,543,986

Consumer Durables (5.03%)Hitachi Home & Life Solutions (India) Limited 218,000 48,090,800Tube Investments of India Limited @ 100,000 13,585,000


KRBL Limited 2,672,142 71,613,406Venky's (India) Limited 94,025 59,663,564Gujarat Ambuja Exports Limited 1,429,605 43,602,952Lakshmi Energy and Foods Limited 198,000 8,098,200

182,978,122Ferrous Metals (0.14%)

Vardhman Special Steels Limited # 23,039 1,693,9131,693,913

Finance (0.17%)BF Investment Limited 25,947 2,123,762

2,123,762Hardware (2.40%)

Allied Digital Services Limited 341,568 29,391,92629,391,926

Hotels (3.74%)Asian Hotels (East) Limited 157,200 45,870,960


Numeric Power Systems Limited 96,888 24,188,08924,188,089

Industrial Products (7.97%)Diamond Power Infrastructure Limited 420,000 64,596,000Polyplex Corporation Limited 161,000 33,085,500


Prime Focus Limited 1,323,040 68,070,40868,070,408

Pesticides (3.24%)PI Industries Limited 68,000 39,759,600


Shasun Pharmaceuticals Limited 491,487 25,606,47325,606,473

Power (5.34%)BF Utilities Limited 83,355 65,417,004

65,417,004Software (1.78%)

Nucleus Software Exports Limited 166,843 14,273,419Polaris Software Lab Limited 40,000 7,554,000

21,827,419Textiles - Cotton (2.43%)

Vardhman Textiles Limited 115,193 29,794,66929,794,669

Transportation (5.43%)Jet Airways (India) Limited 149,000 66,617,900

66,617,900Textiles - Synthetic (10.97%)

The Bombay Dyeing & Manufacturing Company Limited 283,000 103,790,250JBF Industries Limited 187,427 30,681,800



Tata Motors Limited - April 2011 (3.04%) 60,000 42,135,000Voltas Limited - April 2011 (2.96%) 225,000 41,028,750Polaris Software Lab Limited - April 2011 (4.13%) 300,000 57,255,000Jet Airways (India) Limited - April 2011 (0.49%) 15,000 6,768,750

Total 147,187,500

Deposits (2.31%)^ Tenure Face Value8.70% The Hongkong and Shanghai Banking Corporation Limited 91 32,000,000

Total Deposits 32,000,000


Total Number of contracts where futures were boughtTotal Number of contracts where futures were sold




49 49 22,659,293.44 24,014,397.67 1,355,105


Underlying Long / ShortFutures Price when purchased Current price of the contract


Tata Motors Limited DVR Long 719.81 702.25 77.50Voltas Limited Long 184.00 182.35 74.00Polaris Software Lab Limited Long 190.51 190.85 98.74Jet Airways (India) Limited Long 468.39 451.25 14.39Total exposure due to futures (non hedging positions) as a percentage of net assets is 10.61%






4,478 4,628 1,411,031,368.87 1,467,864,958.12 (18,046,662)





# 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.




7

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

Rupees Rupees


(b) Gross Income




(iv) transfer of revenue account from past year’s reserve 1.1880 0.8021 -



(d) Net income 3.6553 7.3800 (8.0859)

(e) Net change in unrealised depreciation in value (3.3445) 2.3835 (0.8702) of investments




(g) Purchase Price





(j) Ratio of gross income (including net profit / loss on sale of investments and net change -2.60% 65.32% -67.39%in unrealised depreciation in value of investments) to average daily net assets by percentage




April 01, 2010to March 31, 2011

Rupees

8



Investment Manager


Sponsor

Key Management Personnel and thier

Relatives Total

Subscription of Units (including switch in and dividendreinvestment) - - - - 245,000 245,000 Previous Year - - - - 270,000 270,000

Redemption of Units (including switch out) - - - - 1,342,019 1,342,019 Previous Year - - - - - -



Brokerage/ Commission on Purchase/Sale of Investments 359,886 - - - - 359,886 Previous Year 351,893 - 14,526 - - 366,419



Reimbursment of Expenses - 474,762 - - - 474,762 Previous Year - - - - - -





Investment Manager


Sponsor


Relatives Total



Units Outstanding As At Year End - - - - 809,818 809,818 Previous Year - - - - 1,925,961 1,925,961


Other Receivables - 474,762 - - - 474,762 Previous Year - 408 - - - 408

(iii) Details of material transactions with respect to parties referred to in Note 13 (I) (iii) & (iv) for Associate of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010


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




Fixed Deposits Matured 138,000,000 154,000,000 The Hongkong and Shanghai Banking Corporation Limited

Charges for Services Provided by Bank 586 30,945 The Hongkong and Shanghai Banking Corporation Limited

(iv) Disclosures in respect of material transactions with persons referred to in Note 13 (I) (vi) for key management personnel and their relatives

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividendreinvestment)Vikramaaditya 120,000 120,000 Rashid K Kidwai (relative) 70,000 150,000 Rumaan Nazir Kidwai (relative) 55,000 -

Redemption of Units (including switch out)Birjees Kidwai 261,221 - Naina Lal Kidwai 628,196 - Rumaan Nazir Kidwai (relative) 423,034 -

Units Outstanding As At Year EndBirjees Kidwai - 266,176 Naina Lal Kidwai - 585,527 Rumaan Nazir Kidwai 172,446 528,141 Vikramaaditya 451,208 384,717 Rashid K Kidwai 186,164 -



Annexure I

9

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.







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

as applicable.
















Mutual Fund.



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



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






the Revenue Account.












2.5 Derivatives

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

balancing.


Futures



Formatted: Bullets and Numbering







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





credited or debited respectively to the income equalization reserve. The shortfall if any representing difference between dividend distributions and distributable surplus available for








2.9 Load Charges















2.10 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





5 Custodian Fees


safekeeping.

6 Income Taxes








HSBC Asset Management (India) Private Limited has borne Rs. 474,762 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


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


The aggregate value of investments purchased and sold (including matured) during the year is Rs. 1,784,678,836

and Rs. 2,067,737,077 respectively being 103.87% and 120.35% of the average daily net assets.


Aggregate fair value of non traded (including private placement) investments as determined by HSBC Asset


2011 is Rs. 3,530,713.

Company Name Fair Value (Rupees)

Percentage of Illiquid Securities to Net Assets

Vardhman Special Steels Limited 1,693,913 0.12

State Bank of Bikaner and Jaipur –

Rights

1,836,800 0.13


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. (44,624,777) and Rs. 40,629,882 respectively being (2.60%) and

2.36% of the average daily net assets.

March 31, 2011 (Rupees) March 31, 2010 (Rupees) Equity Shares

-Appreciation 65,529,846 152,588,178

-Depreciation 391,068,845 86,632,744

Equity Futures

-Appreciation 101,128 3,298,026

-Depreciation 1,681,504 633,589




Futures


Underlying Asset's Name Number of contracts Units Outstanding Long

Tata Motors Limited DVR 240 60,000

Voltas Limited 225 225,000

Polaris Software Lab Limited 150 300,000

Jet Airways (India) Limited 30 15,000

Notional value of futures contracts bought / (sold) by the Scheme and outstanding as on March 31, 2011 aggregates to Rs. 147,187,500.

Net Loss on futures transactions recognized in the Revenue Account for the year ended March 31, 2011 aggregates to Rs. 16,691,557.

13 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 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan



HSBC Gilt Fund HSBC India Opportunities Fund HSBC MIP Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



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. 586 and clearing member charges on derivative

transactions amounting to Rs. 254,340.








Nature of Relation

Period Covered


% of Total




Fund






Nature of Relation

Period Covered


% of Total




Fund




Name of Sponsor/AMC and its associates/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




fund

HSBC InvestDirect Securities (India) Limited Associate 2009-2010 0.73 0.06 14,526 0.11 HSBC Securities and Capital Market (India) Private Limited Sponsor 2009-2010 63.01 4.90 351,893 2.65







14 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended.






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.



17 Unclaimed Dividends

As at March 31, 2011, unclaimed dividends aggregate Rs. 458,824 payable to 341 investors.


Miscellaneous income of Rs. 4,434 represents exit load collected in excess of 1% of redemption proceeds and credited to the Scheme.




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







Trustee

Director

Place: Mumbai


Fund Manager(s)

Auditors' Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Progressive Themes Fund ("The

Scheme") as at March 31, 2011, 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.







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, 2011, its net surplus and its cash flows for the year ended on that date.



iii. The methods used to equity shares awaiting listing as at March 31, 2011, 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 and the amendments thereto, are fair and reasonable.



HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUND Schedules forming part of the Balance Sheet as at March 31, 2011 and the


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.







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 change in 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







investments on the ex bonus date. 2.4 Investment Income


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.

• 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











both load balances can be used for marketing and selling expenses including distributor’s /agent’s commission. 2.10 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 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 5 Custodian Fees


safekeeping. 6 Income Taxes


of the Income Tax Act, 1961. 7 Aggregate Appreciation and Depreciation in Value of Investments and Derivatives

March 31, 2011



-Appreciation 152,103,732 698,236,771

-Depreciation 388,521,356 50,277,699

Equity Futures

-Appreciation 1,573,985 7,092,309

-Depreciation 3,089,773 3,336,168


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

2,800,932,603 and 4,428,734,788 respectively being 88.11% and 139.31%of the average daily net assets.





Limited under the procedures approved by the Board of Trustees as at March 31, 2011 is Rs. 3,391,414.


Percentage of Fair Value to Net Assets

Vardhman Special Steels Limited 3,391,414 0.15% 10 Income and Expenses



expenditure amortized) during the year is Rs. 578,621,620 and Rs. 70,658,009 respectively being 18.20% and



Futures



Units Outstanding Long

Ashok Leyland Limited 127 508,000

Maruti Suzuki India Limited 68 17,000

Tata Motors Limited 136 34,000

Dena Bank 140 280,000

Rural Electrification Corporation Limited 150 150,000

IFCI Limited 50 200,000

Polaris Software Lab Limited 115 230,000

Chennai Petroleum Corporation Limited 180 180,000

Jet Airways (India) Limited 343 171,500

Notional value of futures contracts bought / (sold) by the Scheme and outstanding as on March 31, 2011 aggregates to Rs. 314,697,425.

Net Loss on futures transactions recognized in the Revenue Account for the year ended March 31, 2011







Accountants of India and regulation 25(8) of SEBI Regulation, is provided below : I Related party relationships During the Year



HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel



Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



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. 210 and clearing member charges on

derivative transactions amounting to Rs 853,247.






Nature of Relation

Period Covered


% of Total




Fund






Nature of Relation

Period Covered


% of Total




Fund








relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of




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. 14 Unclaimed Redemption

As at March 31, 2011, unclaimed redemptions aggregate Rs. 2,675,137 payable to 155 investors.

15 Unclaimed Dividend

As at March 31, 2011, unclaimed dividends aggregate Rs. 718,705 payable to 364 investors.




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. 17 Miscellaneous Income

Miscellaneous income of Rs. 16,714 represents exit load collected in excess of 1% of the redemption proceeds and credited to the Scheme.










Trustee

Director

Place: Mumbai


Fund Manager(s)


ASSETS

Investments 1 1,899,965,290 3,589,996,314

Deposits 2 160,000,000 165,000,000


Deferred Revenue Expenditure 4 - 8,412,466

TOTAL 1 2,284,238,763 3,987,901,376

LIABILITIES

Unit Capital 5 2,069,957,000 3,263,373,058

Reserves and Surplus 6 0.24 174,591,347 652,622,294


TOTAL 0.71 2,284,238,763 3,987,901,376



Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.6) 1,253,007,011 991,541,336 2,244,548,347 2,093,161,027 1,822,834,325 3,915,995,352




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

ALPA KEDIA Puneet ChaddhaPartnerMembership No. F/100681

Trustee Director


Director and Chief Executive Officer


HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUND


For Board of Trustees of



INCOME AND GAINS

Dividends (Note 2.4) 38,158,506 42,959,480 Interest and Discount 9 17,492,126 13,186,072 Net Profit on Sale of Investments and Derivatives (Note 2.3 and 2.5) 760,887,686 901,281,127 Miscellaneous Income (Note 17) 16,714 45,673

TOTAL 816,555,032 957,472,352

EXPENSES AND LOSSES

Investment Management and Advisory Fees (Note 3) 34,256,013 45,891,200 Transfer Agent Fees and Expenses 6,695,308 7,222,300 Trusteeship Fees and Expenses (Note 4) 28,885 38,482 Custodian Fees and Expenses (Note 5) 2,160,732 1,644,977 Audit Fees 286,527 660,000 Selling and Distribution Expenses 21,675,203 33,875,744 Amortisation of Deferred Revenue Expenditure (Note 2.10) 8,412,464 13,277,762 Other Operating Expenses 5,555,341 7,632,347

TOTAL 79,070,473 110,242,812


Net Change in Unrealised Depreciation in Value of Investments and Derivatives (237,933,412) 411,564,275



Net (Deficit) / Surplus including Net change in Unrealised Appreciation / Depreciation in Value of Investments and Derivatives (152,164,066) 1,909,902,598


Net Surplus for the Year 499,551,147 1,258,793,815

April 01, 2010 to April 01, 2010 to April 01, 2009 toMarch 31, 2011 March 31, 2011 March 31, 2010Growth Option Total Total


Net Surplus for the Year 268,952,255 499,551,147 1,258,793,815 Transfer from Income Equalisation Reserve (Note 2.8) (163,058,491) (93,586,487) 125,933,439 Dividend / Distribution (Including Prior Year Rs. 562 (2010 : Rs. Nil)) - (562) -

Balance Transferred to Reserve Fund 105,893,764 405,964,098 1,384,727,254




ALPA KEDIA Puneet ChaddhaPartnerMembership No. F/100681

Trustee Director

Place: Mumbai Date : July 15, 2011




Fund Manager(s)

Director and Chief


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 737,484,559 847,229,540 Initial Issue Expenses Charged to Revenue Account 8,412,464 13,277,762

Adjustments for:- (Increase)/Decrease in Investments at cost 862,776,852 246,551,112 (Increase)/Decrease in Other Current Assets (1,934,435) 3,492,161 Increase/(Decrease) in Current Liabilities and Provisions (2,730,005) 10,455,664 Net cash generated from operations ( A ) 1,604,009,435 1,121,006,238

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (1,193,416,058) (1,393,906,690) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (325,866,319) (175,517,737)

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors (31,683,220) 33,376,189 (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 267,112 1,322,440

Dividend Paid during the Year (Including Prior Year Rs.562 (2010 : Rs. Nil)) (562) -


Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) 53,310,388 (413,719,560)




Rupees


Balances with Scheduled Banks :- In Current Account 2,893,885 3,815,722 - In Deposit Account 160,000,000 160,000,000

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

Margin Deposit with the Clearing Corporation of India Limited towards Reverse Repos and Governement Securities - 3,750,000 Temporary Book Overdraft (705,035) (2,916,754) Other Collaterised Lending- Reverse Repos 82,229,384 42,436,881 - Collateralised Borrowing and Lending Obligation 42,798,959 25,570,957 Derivative Margin Deposit 80,000,000 80,000,000

367,217,193 313,906,805





Trustee Director





SCHEDULE 1 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3,7, 8, 9 and 13) Rupees Rupees Rupees Rupees(Refer to the attached Statement of Portfolio Holding as at March 31, 2011)Equity Shares 1,899,965,290 2,136,382,914 3,589,996,314 2,942,037,242

TOTAL 1,899,965,290 2,136,382,914 3,589,996,314 2,942,037,242


Deposits with Scheduled Bank (Under Lien Towards Margin for Equity Derivatives) 160,000,000 160,000,000

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

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

TOTAL 160,000,000 165,000,000


Balance with Banks in Current Account 2,893,885 3,815,722


Reverse Repos 82,229,384 42,436,881


Unit Subscription Receivable 37,054 -

Inter-Scheme Receivable- For 'Switch-in' - 304,166 - For 'Others' 1,000 -



Interest Receivable on :

- Deposits 647,913 326,966

- Reverse Repos 20,839 5,996

- Collateralised Borrowing and Lending Obligation 9,942 3,472

Receivable from Investment Manager 25 4,546

Investment Towards Unclaimed Redemption [(in 164,241.611 Units (2010: 94,552.728 units) (Market Value Rs. 2,577,871 (2010: Rs. 1,407,814)) of HSBC Cash Fund - Growth Option) (Note 14)] 2,403,648 1,322,016

Investment Towards Unclaimed Dividend [(in 50,584.571 Units (2010: 57,430.671 units) (Market Value Rs. 793,955 (2010: Rs. 855,097)) of HSBC Cash Fund - Growth Option) (Note 15)] 718,705 814,640

TOTAL 224,273,473 224,492,596


Issue and Organisational Costs

At the beginning of the year 8,412,466 21,690,228 Less: Amortised during the year - NFO Units Reedemed 777,360 2,823,419 - Others 7,635,106 10,454,343 At the end of the year - 8,412,466



SCHEDULE 5 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Unit 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 1,612,467,813 161,246,781.333 2,239,819,819 223,981,981.866 Issued during the year 65,490,754 6,549,075.391 156,388,717 15,638,871.735

1,677,958,567 167,795,856.724 2,396,208,536 239,620,853.601 Redeemed during the year 605,618,785 60,561,878.537 783,740,723 78,374,072.268 At the end of the year 1,072,339,782 107,233,978.187 1,612,467,813 161,246,781.333

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 1,650,905,245 165,090,524.593 2,417,459,929 241,745,992.961 Issued during the year 39,508,621 3,950,862.126 213,408,497 21,340,849.708

1,690,413,866 169,041,386.719 2,630,868,426 263,086,842.669 Redeemed during the year 692,796,648 69,279,664.790 979,963,181 97,996,318.076 At the end of the year 997,617,218 99,761,721.929 1,650,905,245 165,090,524.593

TOTAL 2,069,957,000 206,995,700.116 3,263,373,058 326,337,305.926

Schedules forming part of the Balance Sheet as at March 31, 2011HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUND


SCHEDULE 6 March 31, 2011 March 31, 2010Reserves and Surplus

Rupees Rupees

Unit Premium Reserve (Note 2.7 )At the beginning of the year (2,480,348,298) (2,178,897,123)


At the end of the year (2,712,628,130) (2,480,348,298)

Income Equalisation Reserve (Note 2.8)Added during the year (93,586,487) 125,933,439

Transferred to Revenue Account 93,586,487 (125,933,439)


Unrealised Appreciation ReserveAt the beginning of the year 651,715,213 606,429

Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 7) (651,715,213) 651,108,784


Reserve FundAt the beginning of the year 2,481,255,379 1,096,528,125

Balance Transferred from Revenue Account 405,964,098 1,384,727,254

At the end of the year 2,887,219,477 2,481,255,379

TOTAL 174,591,347 * 652,622,294 *


Growth Option 180,667,229 480,693,214 Dividend Option (6,075,882) 171,929,080 Total 174,591,347 652,622,294

HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUNDSchedules forming part of the Balance Sheet as at March 31, 2011



Current LiabilitiesInvestment Management and Advisory Fees 1,853,855 3,853,229




Audit Fees 286,527 660,000


Payable on Outstanding Future Contracts 5,024,588 615,250

Unit Redemption Payable 7,614,677 35,765,766

Inter Scheme Payable - For 'Switch-Out' 252,315 3,784,446 - For 'Others' - 1,269

Load Charges 14,362,664 12,451,660

Unclaimed Redemption (Note 14) 2,675,137 1,409,876


Temporary Book Overdraft 705,035 2,916,754

Deferred Revenue Expenditure Payable 67,101 67,101

Sundry Payables 1,302,629 2,224,896

TOTAL 39,690,416 71,906,024


Rupees Rupees

Reverse Repos 5,295,934 2,185,442


Deposits 10,157,186 9,043,298

TOTAL 17,492,126 13,186,072

HSBC MUTUAL FUND - HSBC PROGRESSIVE THEMES FUNDSchedules forming part of the Balance Sheet as at March 31, 2011




Tata Motors Limited - DVR 112,000 77,940,800Ashok Leyland Limited 490,000 27,856,500Tata Motors Limited 20,500 25,591,175Maruti Suzuki India Limited @ 20,000 25,243,000Eicher Motors Limited 1,431 1,923,693

158,555,168Banks (24.20%)

The Jammu & Kashmir Bank Limited 186,300 162,826,200ICICI Bank Limited 85,000 94,877,000State Bank of India 25,200 69,685,560IDBI Bank Limited @ 448,000 63,817,600Karnataka Bank Limited 504,000 54,154,800Dena Bank @ 140,000 14,560,000

459,921,160Construction (9.57%)

Kajaria Ceramics Limited 1,787,627 134,697,694Gammon Infrastructure Projects Limited 2,633,654 47,142,406


Gammon India Limited 299,000 35,446,45035,446,450

Consumer Non Durables (1.77%)Gujarat Ambuja Exports Limited 1,100,000 33,550,000


Vardhman Special Steels Limited # 46,126 3,391,4143,391,414

Fertilisers (2.06%)Gujarat State Fertilizers & Chemicals Limited 114,427 39,111,149

39,111,149Finance (7.76%)

IFCI Limited @ 1,560,000 82,056,000Rane Holdings Limited 200,000 50,270,000Rural Electrification Corporation Limited 60,000 15,222,000


Sunil Hitech Engineers Limited 101,520 10,776,34810,776,348

Industrial Products (11.30%)FAG Bearings India Limited 122,000 102,114,000Polyplex Corporation Limited 283,000 58,156,500Diamond Power Infrastructure Limited 355,000 54,599,000


Prime Focus Limited 1,030,111 52,999,21152,999,211

Petroleum Products (8.74%)Hindustan Petroleum Corporation Limited 255,000 90,920,250Indian Oil Corporation Limited 225,600 75,090,960

166,011,210Power (4.54%)

Reliance Infrastructure Limited 125,000 86,243,75086,243,750

Software (2.34%)Polaris Software Lab Limited 235,000 44,379,750



Textiles - Synthetic (5.95%)The Bombay Dyeing & Manufacturing Company Limited 308,000 112,959,000

112,959,000Trading (1.18%)

The State Trading Corporation of India Limited 92,217 22,385,67722,385,677

Transportation (3.70%)Jet Airways (India) Limited 102,000 45,604,200Balmer Lawrie & Company Limited 45,041 24,720,753






Ashok Leyland Limited - April 2011 (1.30%) 508,000 29,159,200Chennai Petroleum Corporation Limited - April 2011 (1.81%) 180,000 40,518,000Dena Bank - April 2011 (1.31%) 280,000 29,288,000IFCI Limited - April 2011 (0.47%) 200,000 10,630,000Jet Airways (India) Limited - April 2011 (3.45%) 171,500 77,389,375Maruti Suzuki India Limited - April 2011 (0.96%) 17,000 21,548,350Polaris Software Lab Limited - April 2011 (1.96%) 230,000 43,895,500Rural Electrification Corporation Limited - April 2011 (1.71%) 150,000 38,392,500Tata Motors Limited - April 2011 (1.07%) 34,000 23,876,500

Total 314,697,425

Deposits (7.14%)^8.10% The Hongkong and Shanghai Banking Corporation Limited 91 80,000,0008.20% The Hongkong and Shanghai Banking Corporation Limited 91 80,000,000








105 105 48,410,754.00 51,492,931.60 3,082,177


Underlying Long / Short Futures Price when purchasedCurrent price of the contract

Margin maintainedin Rs. Lakhs

Ashok Leyland Limited Long 57.82 57.40 54.66Maruti Suzuki India Limited Long 1,250.22 1,267.55 35.55Tata Motors Limited DVR Long 721.61 702.25 43.92Dena Bank Long 104.89 104.60 48.36Rural Electrification Corporation Limited Long 253.69 255.95 75.01IFCI Limited Long 54.77 53.15 18.48Polaris Software Lab Limited Long 187.03 190.85 75.70Chennai Petroleum Corporation Limited Long 225.02 225.10 63.64Jet Airways (India) Limited Long 461.52 451.25 164.54Total exposure due to futures (non hedging positions) as a percentage of net assets 14.04%







15,434 16,314 4,836,629,574 5,060,703,035 (64,342,348)




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





(b) Gross Income




(iv) transfer of revenue account from past year’s reserve - - 3.7031



(d) Net income 3.5628 2.5962 (0.9567)

(e) Net change in unrealised depreciation in value of investments (1.1495) 1.2612 (0.8837)




(g) Purchase price





(j) Ratio of gross income (including net profit / loss on sale of investments and net change in 18.20% 31.08% -49.15%unrealised depreciation in value of investments) to average daily net assets by percentage




.



Investment Manager


Sponsor


Relatives Total

Subscription of Units (including switch in and dividendreinvestment) - - - - - - Previous Year - - - - 200,000 200,000










Investment Manager


Sponsor


Relatives Total




Units Outstanding As At Year End - - - - 1,262,511 1,262,511 Previous Year - - - - 1,403,520 1,403,520

Other Payables - - - - - - Previous Year - - - 1,269 - 1,269

Other Receivables - 25 - 1,000 - 1,025 Previous Year - 4,546 - - - 4,546


April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 2,440,311 5,828,905 HSBC InvestDirect Securities (India) Limited - 69,317





Fixed Deposits OutstandingThe Hongkong and Shanghai Banking Corporation Limited 160,000,000 160,000,000


(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, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Other ReceviableHSBC Unique Opportunities Fund 1,000 -

Other PayablesHSBC India Opportunities 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, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividendreinvestment)Vikramaaditya - 200,000

Units Outstanding As At Year EndAvan Nelum Gidwani 456,434 507,419 Nelum Pahlaj Gidwani 456,033 506,960 Rahul Nelum Gidwani 169,855 188,824 Vikramaaditya 180,189 200,317

Annexure I

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


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, 2011, and the related Revenue Account 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.






i. The Balance Sheet and the 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, 2011 and its net surplus for the year ended on that date.





For PRICE WATERHOUSE Firm Registration Number: 301112E Chartered Accountants Alpa Kedia Partner Membership No. F/100681 Place: Mumbai Date: July 15, 2011


ASSETS

Investments 1 345,939,185 605,131,931


Deferred Revenue Expenditure 3 - 11,841,527

TOTAL 0.16 356,400,230 645,616,885

LIABILITIES

Unit Capital 4 -0.75 327,141,026 562,117,292



TOTAL 356,400,230 645,616,885


Rupees Rupees Rupees Rupees Rupees RupeesNet Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.6) 232,263,646 113,729,130 345,992,776 417,301,622 191,763,360 609,064,982







Trustee Director




HSBC MUTUAL FUND - HSBC SMALL CAP FUND0



INCOME AND GAINS

Dividends (Note 2.4) 9,539,126 9,838,075 Interest and Discount 7 654,235 1,041,768 Net Profit on Sale of Investments (Note 2.3 and 2.5) 215,856,523 212,106,161 Miscellaneous Income (Note 15) (151,751) 699,590

TOTAL 225,898,133 223,685,594

EXPENSES AND LOSSES

Investment Management and Advisory Fees (Note 3) 6,999,382 7,005,299 Transfer Agent Fees and Expenses 1,174,630 976,611 Trusteeship Fees and Expenses (Note 4) 7,471 4,891 Custodian Fees and Expenses (Note 5) 223,034 222,651 Audit Fees 44,125 100,000 Selling and Distribution Expenses 4,400,647 4,572,975 Sebi Inspection Fees 32,141 - Amortization of Deferred Revenue Expenditure (Note 2.10) 9,013,623 14,001,073 Other Operating Expenses 1,117,329 1,128,171 TOTAL 23,012,382 28,011,671


Net Change in Unrealised Depreciation in Value of Investments -0.05 (71,022,192) 131,627,362


Net Change in Unrealised Appreciation in Value of Investments (90,137,533) 90,137,533

Net Surplus including Net change in Unrealised Appreciation / Depreciation in Value of Investments 41,726,026 417,438,818

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve 90,137,533 (90,137,533)Net Surplus for the Year 1.05 131,863,559 327,301,285

April 01, 2010 to April 01, 2010 to April 01, 2010 to April 01, 2008 to April 01, 2009 toMarch 31, 2011 March 31, 2011 March 31, 2011 March 31, 2009 March 31, 2010Growth Option Dividend Option Total Dividend Option Total


Net Surplus for the Year 88,075,774 43,787,784 131,863,559 (178,029,982) 327,301,285 Transfer from Income Equalisation Reserve (Note 2.8) (3,988,811) 2,064 (3,986,747) - - Dividend Distributions - (11,930,939) (11,930,939) - -

Balance transferred to Reserve Fund 84,086,963 31,858,909 115,945,873 (178,029,982) 327,301,285





Trustee Director



HSBC MUTUAL FUND - HSBC SMALL CAP FUND


1

SCHEDULE 1 March 31, 2011 March 31, 2010 March 31, 2010

Investments Market Value /

Fair Value Cost Market Value Cost(Notes 2.2, 2.3, 7, 8, 9 and 12) Rupees Rupees Rupees

(Refer to the attached Statement of Portfolio Holding as at March 31, 2011

March 31, 2011

416,961,377

March 31, 2011

Rupees

Rupees

288,371

)

Equity Shares 345,939,185 605,131,931 514,994,398

TOTAL 345,939,185 605,131,931 514,994,398

SCHEDULE 2 March 31, 2010Other Current Assets Rupees

Balances with Banks - in Current Accoun

416,961,377

t 95,546

Sales Contracts Awaiting Completion - Equity Shares - 10,960,216

Reverse Repos 10,864,546

Collateralized Borrowing and Lending Obligation 6,546,660

Unit Subscriptions Receivable 5,000

Dividend Receivable 169,035

Interest Receivable on : - Reverse Repos 1,535 - Collateralized Borrowing and Lending Obligation 807 889 TOTAL 28,643,427

SCHEDULE 3 March 31, 2010Deferred Revenue Expenditure (Notes 2.10) RupeesIssue and Organisational Costs

At the beginning of the year 30,985,410

Less: Amortized during the year 14,001,073

Less: Recovered during the year 5,142,810




6,673,905

3,473,771

2,500

20,000

1,691

10,461,045

Rupees

March 31, 2011

11,841,527

9,013,623

2,827,904

2

SCHEDULE 4Unit Capital Rupees Units Rupees Units Growth OptionIssued and Subscribed :Units of Rs.10 each fully paid u

March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

p 488,496,468 48,849,646.818 488,496,468 48,849,646.818 Outstanding:At the beginning of the year Issued during the year

Redeemed during the year At the end of the year

Dividend OptionIssued and Subscribed :Units of Rs.10 each fully paid u

385,134,850 38,5 3,534,471

388,669,321 38,8 174,355,039 17,4

13,485.047 4 353,447.144 1 66,932.191 5 35,503.861 1

40,798,404 44,079,840.395 24,664,105 12,466,410.552 65,462,509 56,546,250.947 80,327,659 18,032,765.900

214,314,282 21,4 31,428.330 3 85,134,850 38,513,485.047

p 359,918,124 35,991,812.396 359,918,124 35,991,812.396 Outstanding:At the beginning of the year Issued during the year 1,635,550 163,554.953 15,095,405 1,509,540.509


TOTAL 327,141,026 32,714,102.744 562,117,292 56,211,729.321

Dividend Option Dividend Option

176,982,442 17,698,2 44.274 292,5 96,965 29,259,696.530

178,617,992 17,861,7 65,791,248 6,579,1

ing the year

99.227 307,6 24.813 130,7

92,370 30,769,237.039 09,928 13,070,992.765 Redeemed dur

SCHEDULE 5Reserves and

March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Surplus Total Total


Unit Premium Reserve (Note 2.7)At the beginninAdded during t

g of the year 29,866,070 47,9 he year (20,411,050) (53,9

06,989 25,836,803 40,575,387 04,280) 4,029,267 7,331,602

At the end of the year 9,455,020 (5,9 97,291) 29,866,070 47,906,989

Income EqualAdded during t

isation Reserve (Note 2.8)he year 2,064 (3,9 86,747) - -

Transferred to At the end of t

Revenue Account (2,064) 3,9 he year -

86,747 - - - - -

Unrealised Appreciation ReserveAt the beginning of the year 36,594,668 90,1 37,533 - -

Net change in Unrealised Appreciation in Value of Investments Transferred from Revenue Account (Note 7)At the end of the year

Reserve Fun

(25,326,392) (90,1 11,268,277

37,533) 36,594,668 90,137,533 - 36,594,668 90,137,533

dAt the beginning of the year

At the end of the year

TOTAL 902,386 18,851,750 * * 14,780,918 46,947,690 *

* The share of the Options of the Reserves and Surplus is as follows :

Growth Option 0 17,949,364 32,166,772 Dividend OptionTotal

Balance Transferred from Revenue Account

(51,679,820) (91,096,832) (176,573,839) (418,398,117)

31,858,909 115,945,873 1 24,894,019 327,301,285 (19,820,911) 24,849,041 (51,679,820) (91,096,832)

March 3Rupees

1, 2011 March 31, 2010Rupees

(1) 9 18,8

02,386 14,780,918 51,750 46,947,690

HSBC MUTUAL FUND - HSBC SMALL CAP FUNDSchedules forming part of the Balance Sheet as at March 31, 2011


3



Investment Management and Advisory Fees 72, 484 693,532

Transfer Agent Fees and Expenses 111, 707 101,046

Trusteeship Fees and Expenses 924 -

Load Charges (Note 2.9) 6,769,151 5,035,674


TOTAL



Audit Fees 44, 125 100,000

Selling and Distribution Expenses 686, 837 845,509

Unit Redemptions Payable 2,380, 088 26,039,190

Inter Scheme Payables - For Switch-Out 10, 817 3,407,072

Unclaimed Redemption (Note 13) 77, 708 -

Temporary Book Overdraft - 18,498

10,407,454 36,551,903


Rupees Rupees

Deposits 2,331 630,634

Reverse Repos 472, 214 213,180

Collateralized Borrowing and Lending Obligation 179, 690 197,954

TOTAL 654,235 1,041,768


Schedules forming part of the Balance Sheet as at March 31, 2011

4

Description

E

Quantity

84,60625,000

130,000469,227

15,00015,00022,000

6,000

204,147

64,81375,000

Market ValueRupees

6,603,4981,421,2508,024,748

18,434,0007,624,939

26,058,939

11,166,0007,818,0002,363,900

787,20022,135,100

11,340,36611,340,366

11,445,9769,341,250

20,787,226

14,850,00014,850,000

20,811,40412,905,7509,399,502

43,116,656

24,643,45810,595,242

quity Shares (100%)Auto (2.32%)

Majestic Auto LimitedAshok Leyland Limited

Auto Ancillaries (7.53%)Autoline Industries LimitedPricol Limited

Banks (6.40%)State Bank of TravancoreState Bank of Bikaner and JaipurKarnataka Bank LimitedState Bank of Bikaner and Jaipur - Rights #

Cement (3.28%)Orient Paper & Industries Limited

Chemicals (6.01%)Deepak Nitrite LimitedIndia Glycols Limited

Construction (4.29%

KRBL Limited

Finance (5.74%)

Hardware (1.73%)

Hotels (3.10%)

TIL Limited

Pesticides (6.69%)

Software (4.28%

RSWM Limited

S R F Limited

)Sadbhav Engineering Limited 120,000

94,34095,00067,671

919,532

Consumer Durables (12.46%

IFB Industries Limited

Rane Holdings Limited

Sanghvi Movers Limited

Industrial Products (2.48%Ador Welding Limited

Excel Crop Care LimitedPI Industries Limited

Textiles - Cotton (3.73%

Textiles - Synthetic (3.50%)

Textiles Products (2.49%

Transportation (1.92%Sical Logistics Limited

Total (Cost Rs. 416,961,377)

)

)

)

The Bombay Dyeing & Manufacturing Company Limited

)

There were no derivative transactions during the year.

Hitachi Home & Life Solutions (India) LimitedTube Investments of India Limited @

Consumer Non Durables (11.37%)

Gujarat Ambuja Exports LimitedLakshmi Energy and Foods Limited 0

Allied Digital Services Limited

Asian Hotels (East) Limited

Industrial Capital Goods (10.68%

347,385100,000

79,000

69,356

36,800

4,090,0039,328,700

19,856,65019,856,650

5,968,0845,968,084

10,738,24010,738,240

14,215,00013,832,9106,389,6002,516,250

36,953,760

8,570,3088,570,308

18,213,7504,926,098

23,139,848

14,800,15014,800,150

12,919,50012,919,500

12,102,75012,102,750

8,600,8508,600,850

6,647,3106,647,310

345,939,185345,939,185

)Indo Tech Transformers Limited

Kirloskar Electric Company Limited

100,00027,30056,00055,000

51,105

75,0008,425

173,000

90,000

33,000

27,000

92,068

)Nucleus Software Exports Limited

)

TOTAL INVESTMENTS (Cost Rs. 416,961,377)

ld by them.

er procedures approved by the Board of Trustees.

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

@ Investments 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 und




5




(iii) income (net) from profit on sale of investments to third party 6.5983

Growth Option 10.8375 10.8352 4.8483 Dividend Option 10 .0800 10.8352 4.8483

(b) Gross Income



3.7733 (3.7888)




(d) Net income 6.2018 3.4810 (3.9570)

(e) Net change in unrealised depreciation in value of investments (2.1710)

15.9015

- Dividend Option 9.6443

(g)

- Dividend Option 15.2023

- Growth Option 10.4853

(h)

(i)

*

2.3416 (1.7948)


Highest - Growth Option 10.9873 10.8088 - Dividend Option 15.6429 10.9873 10.6538

Lowest - Growth Option 10 .4252 5.5423 4.3742

5.5274 4.3742

Purchase price

Highest - Growth Option 15 .9015 10.9873 10.8088

10.9873 10.3496

Lowest5.6068 4.3742

- Dividend Option 9.6443 5.5274 4.3742

Price earnings ratio NA NA NA

Ratio of expenses (excluding initial issue expenses) to daily average net assets by percentage 2.48% 2.41% 2.34%

(j) Ratio of gross income (including net profit / loss on sale of investments and net change in unrealised depreciation in value of investments) to daily average net assets by percentage 27.43% 61.04% -63.84%



The above per unit calculations are based on the number of units in issue at the end of the financial year

6


Nature of Transaction Sponsor Investment Manager InAssociate of

vestment Manager Relatives Total


Investment Management and Advisory FeesPrevious Year

Previous Year

Brokerage/ Commission on Purchase/Sale of Investments Previous Year

Clearing ChargesPrevious Year - - 63,638 - 63,638

Previous Year - - 11,000,000 - 11,000,000

Previous Year - - 22,000,000 - 22,000,000

Charges for Services Provided by BankPrevious Year


Investment Management and Advisory Fees Payable - 72,484 - - 72,484 Previous Year

Brokerage/ Commission Payable for Distribution of UnitsPrevious Year

Units Outstanding As At Year EndPrevious Year


252,414 288,400

Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 177,608 107,798

Clearing ChargesThe Hongkong and Shanghai Banking Corporation Limited

Fixed Deposits PlacedThe Hongkong and Shanghai Banking Corporation Limited - 11,000,000

Fixed Deposits maturedThe Hongkong and Shanghai Banking Corporation Limited - 22,000,000

Charges for Services Provided by Bank - 42,037 The Hongkong and Shanghai Banking Corporation Limited

Schedules forming part of the Balance Sheet as at March 31, 2011 and the

Annexure I

- 6,999,382 - - 6,999,382 - 7,005,299 - - 7,005,299

Brokerage/ Commission on Distribution of Units - - 253,609 - 253,609 - - 289,862 - 289,862

77,768 - - - 77,768 25,679 - 17,000 - 42,679

- - - - -

Fixed Deposits Placed - - - - -

Fixed Deposits matured - - - - -

- -

- -

- - 7 -

42,03

- 42,037


Investment ManagerPersonnel and their

Relatives Total

Key Management

- 693,532 - - 693,532

- - 177,608 - 177,608 - - 107,948 - 107,948

- - - 1,950,876 1,950,876 - - - 1,950,156 1,950,156

April 01, 2010 to April 01, 2009 to March 31, 2011 March 31, 2010

BrTh

okerage/ Commission on Distribution of Unitse Hongkong and Shanghai Banking Corporation Limited


- 63,638

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

April 01, 2010 to April 01, 2009 to March 31, 2011 March 31, 2010

Units Outstanding As At Year EndPuneet Chaddha 1,950,876 1,950,156


HSBC MUTUAL FUND-HSBC SMALL CAP FUND7

HSBC MUTUAL FUND-HSBC SMALL CAP FUND


SCHEDULE 8


1 Organisation

HSBC Small Cap Fund (the “Scheme”) was 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 and opened for

redemption on March 31, 2008. During the year, with effect from March 24, 2011 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 appreciation primarily from a diversified portfolio of equity and equity related

instruments of small cap companies. 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 (SEBI) (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














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


Mutual Fund.





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 change in 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







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

2.5 Derivatives


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. 2.6 Net Asset Value for Growth/Dividend Options



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














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













2.10 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.

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




not affiliated with the Settlor. 5 Custodian Fees


safekeeping.

6 Income Taxes





7 Aggregate Appreciation and Depreciation in Value of Investments


March 31, 2011


(Rupees)

Equity Shares

- Appreciation 24,489,795 116,064,144

- Depreciation 95,511,987 25,926,611


The aggregate value of investments purchased and sold during the year is Rs. 448,034,444 and Rs. 761,923,988

respectively being 79.24% and 134.92% of the average daily net assets.


Aggregate fair value of non traded (including private placement) investments as determined by HSBC Asset


2011 is Rs. 787,200.


Percentage of Illiquid securities

to Net Assets State Bank of Bikaner and Jaipur – Rights 787,200 0.23




expenditure amortized) during the year is Rs. 154,875,941 and Rs. 13,998,759 respectively being 27.43% and


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








HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Tustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010



Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel


II The transactions occurred 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





Nature of Relation

Period Covered


% of Total Business

received by the Fund

Commission paid

[Rs.]


Fund

The Hongkong and Shanghai Banking Corporation Limited Associate 2010-2011 0.05 3.55 252,414 7.56

HSBC InvestDirect Securities (India) Limited Associate 2010-2011 0.00~ 0.00~ 1,195 0.04




Nature of Relation

Period Covered


% of Total Business

received by the Fund

Commission paid

[Rs.]


Fund







relation

Period Covered

Value of

Transactions

[Rs. In Crores]

% of total value of




fund

HSBC InvestDirect Securities (India) Limited Associate 2010-2011 - - - - HSBC Securities and Capital Market (India) Private Limited Sponsor 2010-2011 3.88 3.22 77,768 3.42





relation

Period Covered


[Rs. In Crores]

% of total value of




fund




Further, The Hong Kong and Shanghai Banking Corporation Limited, an associate of the Sponsor, is on the panel



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






Miscellaneous income of Rs. (151,751) represents reversal of excess load booked as income for previous year.



15 Prior Year’s Figures 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.







Trustee

Director

Place: Mumbai


Fund Manager(s)

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"), 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.






(i) The Balance Sheet, the Revenue Account and the 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, 2011, its net surplus and its cash flows for the year ended on that date.



(iii) The methods used to value:

a) equity shares awaiting listing b) non-traded debt securities as at March 31, 2011, 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 and the amendments thereto, are fair and reasonable.


Alpa Kedia Partner Membership No. F/100681 Place: Mumbai Date: July 15, 2011


ASSETS

Investments 1 2,445,260,754 2,916,667,269 Other Current Assets 2 60,269,793 144,867,809

TOTAL 1 2,505,530,547 3,061,535,078

LIABILITIES

Unit Capital 3 1,753,585,987 2,254,622,773 Reserves and Surplus 4 729,384,777 760,776,673 Current Liabilities and Provisions 5 22,559,783 46,135,632

TOTAL 2,505,530,547 3,061,535,078



Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 1,584,557,092 898,413,672 2,482,970,764 1,901,388,068 1,114,011,378 3,015,399,446 Number of Units in Issue 108,597,937.100 66,760,661.908 137,876,158.949 87,586,118.639 Net Asset Value per Unit 14.5910 13.4572 13.7906 12.7190





Trustee Director



HSBC MUTUAL FUND - HSBC TAX SAVER EQUITY FUND


April 1, 2010 April 1, 2009March 31, 2011 March 31, 2010


INCOME AND GAINS

Dividends (Note 2.4) 31,976,367 30,149,094


Net Profit on Sale of Investments (Notes 2.3) 345,379,814 928,380,053

TOTAL 380,200,689 961,747,960

EXPENSES AND LOSSES




Custodian Fees and Expenses (Note 5) 1,098,757 929,037

Audit Fees 317,186 175,000


Sebi Inspection Fees 156,274 -


TOTAL 65,214,205 68,930,031

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 834,676 1,923,854

TOTAL 64,379,529 67,006,177


Net Change in Unrealised Depreciation in Value of Investments - 153,385,779


Net Change in Unrealised Appreciation in Value of Investments (126,353,168) 539,407,000 Net Surplus including Net Change in Unrealised Appreciation / Depreciation in Value of Investments 189,467,992 1,587,534,562

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve 126,353,168 (539,407,000)

Net Surplus for the Year 0 315,821,160 1,048,127,562

April 01, 2010 to March 31, 2011 Rupees

April 01, 2009 to March 31, 2010

Rupees

Net Surplus for the Year 315,821,160 1,048,127,562

Transfer from Income Equalisation Reserve (Note 2.7) (61,616,804) (29,409,811)

Dividend Distributions - (90,279,141)

Balance Transferred to Reserve Fund 254,204,356 928,438,610





Trustee Director






Rupees


Rupees


Adjustments for:- (Increase)/Decrease in Investments at cost 353,514,651 (817,725,625) (Increase)/Decrease in Other Current Assets (1,907,180) (1,106,772) Increase/(Decrease) in Current Liabilities and Provisions (8,976,560) 4,986,202 Net cash generated from operations (A) 658,452,071 80,895,588

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (501,036,786) (195,890,762) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (220,859,888) (91,819,649)

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors (17,777,989) 23,185,302 (Increase)/Decrease in Subscription Receivable for Units Issued to Investors 10,602,305 9,856,134

Dividend Paid during the Year - (90,279,141)

Net cash used in financing activities (B) (729,072,358) (344,948,116)





Rupees


Balances with Scheduled Banks :- In Current Account 2,856,290 11,168,386 Book Overdraft (937,947) (4,500,084) Other Collaterised Lending- Reverse Repos 25,353,738 65,158,189 - Collateralised Borrowing and Lending Obligation 13,196,194 39,262,071

40,468,275 111,088,562





Trustee Director




SCHEDULE 1 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

Investments Market Value /

Fair Value CostMarket Value /

Fair Value Cost(Notes 2.2, 2.3, 8, 9, 10 and 13) Rupees Rupees Rupees Rupees


Equity Shares 2,444,378,178 2,032,206,922 2,916,667,269 2,377,260,269

Non-Convertible Debentures / Bonds Listed / Awaiting Listing 882,576 - - -

TOTAL 2,445,260,754 2,032,206,922 2,916,667,269 2,377,260,269


Balances with Scheduled Banks in Current Account 2,856,290 11,168,386


Reverse Repos 25,353,738 65,158,189


Unit Subscription Receivable 1,621,000 12,086,500 Inter-Scheme Receivable for 'Switch - In' 162,923 299,728

Interest Receivable on :- Debentures/bonds 1,825 - - Reverse Repos 6,425 9,206 - Collateralised Borrowing and Lending Obligation 3,065 5,331

Dividend Receivable 1,923,023 -

Receivable from Investment Manager 835,989 1,926,627 Investment Towards Unclaimed Redemption [(in 30,674.760 Units (2010 : Nil Units) (Market Value Rs. 481,459 (2010 : Rs. Nil)) of HSBC Cash Fund - Growth Option) (Note 15)] 481,161 - Investment Towards Unclaimed Dividend [(in 39,265.257 Units (2010 : Nil Units) (Market Value Rs. 616,292 (2010 : Rs. Nil)) of HSBC Cash Fund - Growth Option) (Note 16)] 596,856 -

TOTAL 60,269,793 144,867,809




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 1,378,761,588 137,876,158.949 1,506,466,553 150,646,655.461 Issued during the year 87,453,960 8,745,396.032 127,860,969 12,786,096.898

1,466,215,548 146,621,554.981 1,634,327,522 163,432,752.359 Redeemed during the year 380,236,179 38,023,617.881 255,565,934 25,556,593.410 At the end of the year 1,085,979,369 108,597,937.100 1,378,761,588 137,876,158.949

Dividend OptionIssued 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 875,861,185 87,586,118.639 944,046,982 94,404,698.350 Issued during the year 34,472,986 3,447,298.637 92,162,343 9,216,234.324

910,334,171 91,033,417.276 1,036,209,325 103,620,932.674 Redeemed during the year 242,727,553 24,272,755.368 160,348,140 16,034,814.035 At the end of the year 667,606,618 66,760,661.908 875,861,185 87,586,118.639

TOTAL 1,753,585,987 175,358,599.008 2,254,622,773 225,462,277.588

SCHEDULE 4 March 31, 2011 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Reserves and Surplus Growth Option Dividend Option Total Dividend Option Total

Rupees Rupees Rupees Rupees RupeesUnit Premium Reserve (Note 2.6)At the beginning of the year (6,427,081) (6,367,873) (12,794,954) 15,725,331 49,614,884 Added during the year (95,431,431) (63,811,653) (159,243,084) (22,093,204) (62,409,838) At the end of the year (101,858,512) (70,179,526) (172,038,038) (6,367,873) (12,794,954)

Income Equalisation Reserve (Note 2.7)Added during the year (48,022,686) (13,594,118) (61,616,804) (7,809,848) (29,409,811) Transferred to Revenue Account 48,022,686 13,594,118 61,616,804 7,809,848 29,409,811 At the end of the year - - - - -

Unrealised Appreciation ReserveAt the beginning of the year 334,649,235 204,757,765 539,407,000 - - Net Change in Unrealised Appreciation in Value of Investments transferred from Revenue Account (Note 8) (79,591,302) (46,761,866) (126,353,168) 204,757,765 539,407,000 At the end of the year 255,057,933 157,995,899 413,053,832 204,757,765 539,407,000

Reserve FundAt the beginning of the year 194,404,326 39,760,301 234,164,627 (264,076,735) (694,273,983)

150,973,976 103,230,380 254,204,356 303,837,036 928,438,610 At the end of the year 345,378,302 142,990,681 488,368,983 39,760,301 234,164,627

TOTAL 498,577,723 230,807,054 729,384,777 * 238,150,193 760,776,673 *


Rupees RupeesGrowth Option 498,577,723 522,626,480 Dividend Option 230,807,054 238,150,193 Total 729,384,777 760,776,673


HSBC MUTUAL FUND - HSBC TAX SAVER EQUITY FUND Schedules forming part of the Balance Sheet as at March 31, 2011




Investment Management and Advisory Fees 1,997,112 2,764,340 Transfer Agent Fees and Expenses 761,364 485,284 Trusteeship Fees and Expenses 6,642 - Custodian Fees and Expenses 84,433 160,183 Audit Fees 317,186 175,000 Selling and Distribution Expenses 4,165,143 13,120,842 Purchase Contracts Awaiting Completion - Equity Shares 6,740,837 - Unit Redemptions Payable 5,222,343 21,886,195 Inter Scheme Payable for Switch - Out 184,970 1,299,107 Unclaimed Redemption (Note 15) 571,341 - Unclaimed Dividend (Note 16) 596,856 - Temporary Book Overdraft 937,947 4,500,084 Sundry Payables 973,609 1,744,597

TOTAL 22,559,783 46,135,632

SCHEDULE 6 April 1, 2010 April 1, 2009Interest (Note 2.4) March 31, 2011 March 31, 2010

Rupees Rupees

Reverse Repos 1,991,130 1,575,385 Collateralized Borrowing and Lending Obligation 749,128 1,427,759 Debentures / Bonds 1,825 - Deposits 102,425 215,669

TOTAL 2,844,508 3,218,813





Tata Motors Limited - DVR 90,000 62,631,000Mahindra & Mahindra Limited @ 75,000 52,526,250

115,157,250Auto Ancillaries (7.06%)

Bosch Limited 10,500 70,439,250Motherson Sumi Systems Limited 245,000 52,626,000Exide Industries Limited 345,000 49,490,250

172,555,500Banks (18.20%)

ICICI Bank Limited 129,617 144,678,495HDFC Bank Limited @ 42,000 98,525,700State Bank of India 33,000 91,254,900Bank of Baroda @ 84,350 81,385,098Punjab National Bank 24,000 29,104,800

444,948,993Cement (2.58%)

Shree Cement Limited 30,426 62,983,34162,983,341

Construction (2.74%)Sadbhav Engineering Limited 540,530 66,890,588


Larsen & Toubro Limited 54,300 89,698,170U B Engineering Limited 280,596 25,379,908


ITC Limited @ 500,000 91,050,000GlaxoSmithkline Consumer Healthcare Limited 24,000 53,907,600Mcleod Russel India Limited 150,356 37,979,926



Ferrous Metals (2.09%)Tata Steel Limited 78,532 48,866,537Vardhman Special Steels Limited # 30,071 2,210,941

51,077,478Fertilisers (1.77%)

Coromandel International Limited 150,000 43,252,50043,252,500

Finance (4.74%)Housing Development Finance Corporation Limited 102,000 71,522,400Rural Electrification Corporation Limited 175,000 44,397,500


Crompton Greaves Limited 180,039 49,105,637Bharat Heavy Electricals Limited 17,500 36,096,375Thermax Limited 39,220 23,645,738





Hindustan Zinc Limited 540,830 74,526,37474,526,374

Oil (2.17%)Oil and Natural Gas Corporation Limited 182,000 53,016,600

53,016,600Petroleum Products (6.28%)

Reliance Industries Limited 120,000 125,892,000Bharat Petroleum Corporation Limited 45,000 27,533,250


Lupin Limited 150,230 62,593,330Dr.Reddy's Laboratories Limited 30,000 49,171,500Aurobindo Pharma Limited 244,667 47,942,499

159,707,329Software (11.99%)




Textiles - Cotton (1.59%)Vardhman Textiles Limited 150,353 38,888,803



Total (Cost Rs. 2,032,206,922) 2,444,378,178


9.25% Dr. Reddy's Laboratories Limited - Bouns Debentures 2014 $ 180,000 882,576Total (Cost Rs. Nil) 882,576TOTAL INVESTMENTS (Cost Rs. 2,032,206,922) 2,445,260,754







$ Fair value of non traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approved by 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.




Growth Option 14.5910 13.7906 7.3693 Dividend Option 13.4572 12.7190 7.3693

(b) Gross Income







(d) Net income 1.8010 3.9685 (2.4152)

(e) Net change in unrealised depreciation in value of investments - 0.6803 (0.4615)



Lowest


(g) Purchase Price





(j) Ratio of gross income (including net loss on sale of

investments and net change in unrealised depreciation in value 13.82% 38.85% -33.50% of investments) to daily average net assets by percentage






Investment Manager


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - - - - - Previous Year - - - 160,000 160,000

Reimbursment of Expenses - 834,676 - - 834,676 Previous Year - 1,923,854 - - 1,923,854

Investment Management and Advisory Fees - 30,002,013 - - 30,002,013 Previous Year - 29,500,838 - - 29,500,838

Brokerage/ Commission on Purchase/ Sale of Investments 408,432 - - - 408,432 Previous Year 552,086 - 36,558 - 588,645

Brokerage/ Commission on Distribution of Units - - 656,090 - 656,090 Previous Year - - 915,241 - 915,241

Charges for Services Provided by Bank - - 1,831 - 1,831 Previous Year - - 298,444 - 298,444



Investment Manager


Relatives Total

Investment Management and Advisory Fees Payable - 1,997,112 - - 1,997,112 Previous Year - 2,764,340 - - 2,764,340

Brokerage/ Commission Payable for Distribution of Units - - 406,455 - 406,455 Previous Year - - 359,702 - 359,702

Units Outstanding As At Year End - - - 465,292 465,292 Previous Year - - - 439,774 439,774

Other Receivables - 835,989 - - 835,989 Previous Year - 1,926,627 - - 1,926,627

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

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 599,532 849,881

Brokerage / Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 406,455 353,814

Brokerage/ Commission on Purchase/Sale of InvestmentsHSBC InvestDirect Securities (India) Limited - 36,558



April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Rashid K Kidwai - 130,000 Kemaya Lal Kidwai - 30,000

Units Outstanding As At Year End (at Net Asset Value)Birjees Kidwai 261,417 247,080Rashid K Kidwai 77,907 73,634Rumaan Nazir Kidwai 91,451 86,436

Revenue Account for the year ended March 31, 2011Schedules forming part of the Balance Sheet as at March 31, 2011 and the

HSBC MUTUAL FUND-HSBC TAX SAVER EQUITY FUND

Annexure I



SCHEDULE 7


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 capitalization 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.















Mutual Fund.





security is traded.


Asset Management (India) Private Limited which are approved by the Trustee and are in accordance

with the guidelines for valuation of securities specified in the Regulations.










valuation day.









time to time.

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



vi. 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 change in unrealised appreciation is transferred from the Revenue Account to the Unrealised Appreciation Reserve. The net change in unrealized depreciation if any is accounted through the Revenue Account.












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














2.7 Income Equalization Reserve The net distributable income relating to units issued / repurchased is transferred to / from income equalization






















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)





year.





March 31, 2011 (Rupees) March 31, 2010 (Rupees) Equity Shares

-Appreciation 469,428,451 563,326,419

-Depreciation 57,257,195 23,919,419


-Appreciation 882,576 -

-Depreciation - -


The aggregate value of investments purchased (excluding accretion of discount of Rs. 3,345,299) and sold

(including matured) during the financial year is Rs. 2,937,507,052 and Rs. 3,624,594,914 respectively being

106.81% and 131.79% of the average daily net assets.


Aggregate fair value of non traded (including private placement) investments in HSBC Tax Saver Equity Fund as

determined by HSBC Asset Management (India) Private Limited under the procedures approved by the Board of

Trustees as at March 31, 2011 is Rs. 3,093,517.


Percentage of Illiquid securities to Net Assets

Vardhman Special Steels Limited 2,210,941 0.09


The total income (including net profit on sale of Investments and net change in unrealised depreciation in value of

investments) and expenditure during the year is Rs. 380,200,689 and Rs. 64,379,529 being 13.82% and 2.34%

respectively of the average daily net assets.



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 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




Name Description of relationship

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


HSBC Mutual Fund




HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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



Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



Annexure I


(India) Private Limited was paid collection/bank charges amounting to Rs. 1,831.






Nature of Relation

Period Covered


% of Total




Fund






Nature of Relation

Period Covered


% of Total




Fund








relation

Period Covered


[Rs. In Crores]

% of total value of




fund




relation

Period Covered


[Rs. In Crores]

% of total value of




fund





transactions from time to time at competitive rates. 13 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




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 Unclaimed Redemptions As at March 31, 2011, unclaimed redemptions aggregate Rs. 571,341 payable to 39 investors. 16 Unclaimed Dividend

As at March 31, 2011, unclaimed dividends aggregate Rs. 596,856 payable to 428 investors. 17 Prior Year’s Figures









Trustee

Director

Place: Mumbai


Fund Manager(s)


1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Unique Opportunities Fund ("The Scheme") as at March 31, 2011, 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.






i. The Balance Sheet, the Revenue Account and the 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 Unique Opportunities Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date.








ASSETS

Investments 1 826,848,813 2,007,759,806 Deposits 2 90,000,000 90,000,000 Other Current Assets 3 59,334,389 131,687,304

TOTAL 1 976,183,202 2,229,447,110

LIABILITIES

Unit Capital 5 -0.69 860,393,286 2,108,445,065 Reserves and Surplus 6 104,663,056 42,602,575 Current Liabilities and Provisions 7 11,126,860 78,399,470

TOTAL 976,183,202 2,229,447,110


Rupees Rupees Rupees Rupees Rupees RupeesNet Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.7) 512,482,909 452,573,433 965,056,342 1,015,423,633 1,135,624,007 2,151,047,640







Trustee Director



HSBC MUTUAL FUND - HSBC UNIQUE OPPORTUNITIES FUND




INCOME AND GAINS

Dividends (Note 2.4) 19,917,899 29,155,910



TOTAL 512,921,397 933,689,278

EXPENSES AND LOSSES




Custodian Fees and Expenses (Note 5) 844,585 1,579,684

Audit Fees 123,493 600,000


Sebi Inspection Fees 84,089 -

Amortization of Deferred Revenue Expenditure (Note 2.6) - 41,407,309


TOTAL 34,496,646 104,449,947


TOTAL 34,048,409 104,449,947


Net Change in Unrealised Depreciation in Value of Investments and Derivatives 1,469,930 308,405,245



Net Surplus including Net change in Unrealised Appreciation in Value of Investments and Derivatives 182,402,640 1,579,357,416

Net change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve 297,940,278 (441,712,840)

Net Surplus for the Year 1 480,342,918 1,137,644,576

April 01, 2010 to April 01, 2010 to April 01, 2010 toMarch 31, 2011 March 31, 2011 March 31, 2010


Net Surplus for the Year 246,783,364 480,342,918 1,137,644,576

Transfer from Income Equalisation Reserve (Note 2.9) 59,426,264 183,204,034 58,190,929

Balance transferred to Reserve Fund 306,209,628 663,546,952 1,195,835,505





Trustee Director

Place: Mumbai Fund Manager(s)Date : July 15, 2011





Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 478,872,988 829,239,331 Initial Issue Expenses charged to Revenue Account - 41,407,309 Initial Issue Expenses recovered from Redeeming Investors - 8,847,700

Adjustments for:- (Increase)/Decrease in Investments at cost 909,306,939 455,314,362 (Increase)/Decrease in Other Current Assets (1,435,887) 1,386,549 Increase/(Decrease) in Current Liabilities (5,004,725) 4,744,980

Net cash generated from operations (A) 1,381,739,315 1,340,940,231

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (1,248,051,779) (1,764,003,480) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (120,342,159) 140,692,569

Adjustments for:- Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors (59,379,101) 62,411,200 (Increase)/Decrease in Sundry Debtors for Units Issued to Investors (60,000) -



Cash and Cash Equivalents as at the beginning of the Year 187,948,517 407,907,997 Cash and Cash Equivalents as at the end of the Year 141,854,793 187,948,517



Rupees

1 Components of cash and cash equivalents

Balances with banks in current accounts 890,921 2,412,208 Deposits with scheduled banks 90,000,000 90,000,000 Temporary Book Overdraft (328,834) (2,083,823) Reverse Repo 16,634,648 28,466,966 Collateralised Borrowing and Lending Obligation 8,658,058 17,153,166 Derivative Margin Deposit 26,000,000 52,000,000

141,854,793 187,948,517





Trustee Director






Equity Shares 826,848,813 684,166,824 2,007,759,806 1,565,636,697

TOTAL 826,848,813 684,166,824 2,007,759,806 1,565,636,697



TOTAL 90,000,000 90,000,000


Balances with Banks- in Current Account 890,921 2,412,208


Reverse Repos 16,634,648 28,466,966

Unit Subscriptions Receivable 60,000 -




Receivable on Outstanding Equity / Future Contracts 1,706,500 -

Interest Receivable on :- Deposits 891,425 495,014 - Reverse Repos 4,216 4,022 - Collateralized Borrowing and Lending Obligation 2,011 2,329

Receivable from Investment Manager 448,237 -

Investment Towards Unclaimed Redemption [(in 47,749.904 Units (2010: 12,070.571 Units) (Market Value Rs. 749,463 (2010: Rs.179,721)) of HSBCCash Fund - Growth Option) (Note 16)] 715,973 169,610

TOTAL 59,334,389 131,687,304


Issue and Organisational Costs (net of exit load)

At the Beginning of the year - 50,255,009

Less: Amortized during the year - 41,407,309

Less: Recovered during the year - 8,847,700





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 995,312,543 99,531,254.387 1,463,269,853 146,326,985.344 Issued during the year 14,609,981 1,460,998.153 24,699,715 2,469,971.529

1,009,922,524 100,992,252.540 1,487,969,568 148,796,956.873 Redeemed during the year 553,019,589 55,301,958.928 492,657,025 49,265,702.486 At the end of the year 456,902,935 45,690,293.612 995,312,543 99,531,254.387

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 1,113,132,522 111,313,252.213 2,409,178,691 240,917,869.036 Issued during the year 21,491,562 2,149,156.298 94,732,898 9,473,289.843

1,134,624,084 113,462,408.511 2,503,911,589 250,391,158.879 Redeemed during the year 731,133,733 73,113,373.333 1,390,779,067 139,077,906.666 At the end of the year 403,490,351 40,349,035.178 1,113,132,522 111,313,252.213

TOTAL 860,393,286 86,039,328.790 2,108,445,065 210,844,506.600

SCHEDULE 6 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Dividend Option Total Dividend Option Total

Reserves and Surplus Rupees Rupees Rupees Rupees

Unit Premium Reserve (Note 2.8)At the beginning of the year (38,469,932) (150,948,911) (109,363,958) (233,450,552) Added during the year (188,179,755) (303,546,193) 70,894,026 82,501,641 At the end of the year (226,649,687) (454,495,104) (38,469,932) (150,948,911)

Income Equalisation Reserve (Note 2.9)Added during the year 123,777,770 183,204,034 45,276,127 58,190,929 Transferred to Revenue Account (123,777,770) (183,204,034) (45,276,127) (58,190,929) At the end of the year - - - -

Unrealised Appreciation ReserveAt the beginning of the year 276,035,611 442,123,109 304,965 410,269 Net Change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 8) (142,565,972) (297,940,278) 275,730,646 441,712,840 At the end of the year 133,469,639 144,182,831 276,035,611 442,123,109

Reserve FundAt the beginning of the year (215,074,194) (248,571,623) (934,536,683) (1,444,407,128)

357,337,324 663,546,952 719,462,489 1,195,835,505 At the end of the year 142,263,130 414,975,329 (215,074,194) (248,571,623)

TOTAL 49,083,082 104,663,056 * 22,491,485 42,602,575 *


Growth Option 0.13 55,579,974 20,111,090 Dividend Option -0.17 49,083,082 22,491,485 Total 104,663,056 42,602,575

Rupees


HSBC MUTUAL FUND - HSBC UNIQUE OPPORTUNITIES FUNDSchedules forming part of the Balance Sheet as at March 31, 2011


Rupees



Investment Management and Advisory Fees 824,610 2,587,284 Transfer Agent Fees and Expenses 298,398 382,445 Trusteeship Fees and Expenses 2,586 - Custodian Fees and Expenses 28,644 118,209 Audit Fees 123,493 600,000 Selling and Distribution Expenses 2,596,504 4,438,429 Unit Redemptions Payable 5,377,962 60,267,397 Inter Scheme payable - For 'Switch - Out' 52,290 4,541,956 - For 'Others' 1,000 - Payable on Outstanding Equity / Future Contracts - 1,133,795 Unclaimed Redemption (Note 16) 1,026,390 178,696 Load Charges (Note 2.10) - 3,819 Temporary Book Overdraft 328,834 2,083,823 Sundry Payables 466,149 2,063,617 TOTAL 11,126,860 78,399,470


Rupees Rupees

Reverse Repos 909,572 1,331,500 Collateralized Borrowing and Lending Obligation 383,903 1,132,485 Deposits 5,446,304 5,233,947 TOTAL 6,739,779 7,697,932



Description Quantity Market Value/ Fair ValueRupees


Tata Motors Limited - DVR 39,000 27,140,100Mahindra & Mahindra Limited @ 30,000 21,010,500


Motherson Sumi Systems Limited 126,987 27,276,808Exide Industries Limited 111,000 15,922,950Steel Strips Wheels Limited 57,000 14,594,850

57,794,608Banks (21.20%)

ICICI Bank Limited 54,000 60,274,800Bank of Baroda @ 42,000 40,523,700State Bank of India 12,000 33,183,600The Jammu & Kashmir Bank Limited 27,500 24,035,000Allahabad Bank 75,000 17,231,250



Consumer Non Durables (0.45%)JHS Svendgaard Laboratories Limited 50,935 3,680,054



Ferrous Metals (2.14%)Tata Steel Limited 27,000 16,800,750Vardhman Special Steels Limited # 12,623 928,135

17,728,885Fertilisers (2.31%)

Gujarat State Fertilizers & Chemicals Limited 56,000 19,140,80019,140,800

Finance (7.18%)Rural Electrification Corporation Limited 90,000 22,833,000Shriram Transport Finance Company Limited @ 27,000 21,492,000Housing Development Finance Corporation Limited 21,500 15,075,800

59,400,800Gas (2.39%)

Petronet LNG Limited 162,000 19,731,60019,731,600

Industrial Capital Goods (6.73%)Crompton Greaves Limited 75,000 20,456,250McNally Bharat Engineering Company Limited 90,000 19,705,500Bharat Heavy Electricals Limited 7,500 15,469,875

55,631,625Industrial Products (4.66%)

Greaves Cotton Limited 300,000 28,770,000Jain Irrigation Systems Limited 54,430 9,737,527





Hindustan Zinc Limited 210,600 29,020,68029,020,680



Lupin Limited 72,000 29,998,800Aurobindo Pharma Limited 99,833 19,562,276

49,561,076Software (9.57%)




Textiles - Synthetic (2.38%)JBF Industries Limited 120,100 19,660,370


Lovable Lingerie Limited 39,000 9,568,6509,568,650

Total (Cost Rs. 684,166,824) 826,848,813TOTAL INVESTMENTS (Cost Rs. 684,166,824) 826,848,813


Tata Consultancy Services Limited - April 2011 (4.44%) 36,000 42,861,600Sun TV Network Limited - April 2011 (1.67%) 36,000 16,070,400MphasiS Limited - April 2011 (1.04%) 24,000 10,076,400ITC Limited - April 2011 (2.85%) 150,000 27,457,500Housing Development Finance Corporation Limited - April 2011 (0.88%) 12,000 8,450,400Grasim Industries Limited - April 2011 (2.57%) 10,000 24,787,000

Total 129,703,300

Deposits (9.33%)^ Tenor8.10% The Hongkong and Shanghai Banking Corporation Limited 91 60,000,0008.20% The Hongkong and Shanghai Banking Corporation Limited 91 20,000,0008.30% The Hongkong and Shanghai Banking Corporation Limited 91 10,000,000


Derivative disclosurea. Hedging Positions through Futures as on March 31, 2011 is NilFor the period ended March 31, 2011 following hedging transactions through futures which have been squared off/expired





68 68 27,129,418.44 27,862,776.69 733,358


Underlying Long / Short Futures Price when purchasedCurrent price of the contract


ITC Limited Long 182.83 183.05 43.19Sun TV Network Limited Long 442.56 446.40 25.50Grasim Industries Limited Long 2,552.90 2,478.70 39.05Housing Development Finance Corporation Limited Long 677.14 704.20 13.30MphasiS Limited Long 427.77 419.85 29.06Tata Consultancy Services Limited Long 1,136.80 1,190.60 67.32Total exposure due to futures (non hedging positions) as a percentage of net assets is 13.44%.

For the period ended March 31, 2011 following non-hedging transactions through futures which have been squared off/expired





6,294 6,689 1,955,967,890.20 2,149,205,815.25 16,150,343

c. Hedging Positions through Put Options as on March 31, 2011 is Nil. The scheme has not taken any Hedging Positions through Put Options during the year.d. Other than Hedging Positions through Options as on March 31, 2011 is Nil. The scheme has not taken other than Hedging Positions through Options during the year.e. Hedging Positions through swaps as on March 31, 2011 is Nil.



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








(b) Gross Income







(d) Net income 5.5657 3.9329 (6.6034)

(e) Net change in unrealised depreciation in value of investments 0.0171 1.4627 0.9197




(g) Purchase Price




(i) Ratio of expenses (excluding initial issue expenses) to daily average net assets by percentage

(j) Ratio of gross income (including net profit / loss on sale of investments and net change inunrealised depreciation in value of investments) to daily average net assets by percentage 36.69% 44.83% -59.18%






Investment Manager


Sponsor Total


Brokerage/ Commission on Purchase/Sale of Investments 363,455 - - - 363,455 Previous Year 472,954 - - - 472,954

Brokerage/ Commission on Distribution of Units - - 1,463,328 - 1,463,328 Previous Year - - 4,516,472 - 4,516,472

Clearing Charges - - 354,783 - 354,783 Previous Year - - 759,468 - 759,468

Reimbursment of Expenses - 448,237 - - 448,237 Previous Year - - - - -

Fixed Deposits Placed - - 300,000,000 - 300,000,000 Previous Year - - 290,000,000 - 290,000,000

Fixed Deposits Matured - - 300,000,000 - 300,000,000 Previous Year - - 200,000,000 - 200,000,000




Investment Manager


Sponsor Total

Investment Management and Advisory Fees Payable - 824,610 - - 824,610 Previous Year - 2,587,284 - - 2,587,284

- Brokerage/ Commission Payable for Distribution of Units - - 823,851 - 823,851 Previous Year - - 1,317,519 - 1,317,519

- Fixed Deposits - - 90,000,000 - 90,000,000 Previous Year - - 90,000,000 - 90,000,000

Other Payables - - - 1,000 1,000 Previous Year - - - - -

Other Receivables - 448,237 - - 448,237 Previous Year - - - - -

(iii) Disclosures in respect of material transactions with persons referred to in Note 13 (I)(iii) and (iv) for Associate of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010


Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 823,851 1,316,394




Fixed Deposits OutstandingThe Hongkong and Shanghai Banking Corporation Limited 90,000,000 90,000,000


(iv) Details of material transactions with respect to parties referred to in Note 13 (I)(v) for Schemes under common control of the Sponsor

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Other PayablesHSBC Progressive Themes Fund 1,000 -

Revenue Account for the year ended March 31, 2011Schedules forming part of the Balance Sheet as at March 31, 2011 and the

HSBC MUTUAL FUND-HSBC UNIQUE OPPORTUNITIES FUND

Annexure I



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 previous 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

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






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







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


Mutual Fund.





security is traded.


Asset Management (India) Private Limited which are approved by the Trustee and are in accordance with

the guidelines for valuation of securities specified in the Regulations.






No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir /IMD/DF/4/2010 dated June 21, 2010

with effect from August 01, 2010 :



valuation day.









time to time.

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

the date of resale. Instruments sold on repo basis are adjusted for the difference between the repurchase

price after deduction of applicable interest upto the date of repurchase.

vi. Collateralized Borrowing and Lending Obligations (CBLO) are valued at cost plus accrued interest.




Account and thereafter the net change in 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.












2.4 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


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.

2.7 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



































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)





year.


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

9

Aggregate Value of Purchase and Sale of Investments

March 31, 2011



-Appreciation 174,104,630 476,973,223

-Depreciation 31,422,641 34,850,114

Equity Futures

-Appreciation 2,432,851 636,898

-Depreciation 932,009 2,106,828

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

Rs. 1,098,866,929 and Rs. 2,449,716,820 respectively being 78.37% and 174.71% of the average daily net assets.



Limited under the procedures approved by the Board of Trustees as at March 31, 2011 is Rs. 928,135.


Percentage of Illiquid securities to Net Assets

Vardhman Special Steels Limited 928,135 0.10




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 during the year is Rs. 514,391,327 and

Rs. 34,048,409 being 36.60% and 2.43% respectively of the average daily net assets.

12 Equity Derivatives Disclosures: Futures

Details of open interest in equity futures as at March 31, 2011


Units Outstanding Long/(Short)

ITC Limited 75 150,000

Sun TV Network Limited 72 36,000

Grasim Industries Limited 80 10,000


Mphasis Limited 48 24,000

Tata Consultancy Services Limited 144 36,000 Notional value of futures contracts bought/ (sold) by the Scheme and outstanding as on March 31, 2011

aggregates to Rs. 129,703,300. Net Profit on futures transactions recognized in the Revenue Account for the year ended March 31, 2011


13 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






HSBC Mutual Fund






HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



Annexure I




(India) Private Limited was paid collection/bank charges amounting to Rs. 2,618 and clearing member charges on derivative transactions amounting to Rs. 354,783.






Nature of Relation

Period Covered



Commission paid [Rs. ]


Fund


HSBC InvestDirect Securities (India) Limited Associate 2010-2011 - - 9,721 0.10




Nature of Relation

Period Covered





Fund







relation

Period Covered

Value of

Transactions [Rs. In Crores]

% of total value of




fund







relation

Period Covered

Value of

Transactions [Rs. In Crores]

% of total value of




fund






14 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





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.


As at March 31, 2011, unclaimed redemptions aggregate Rs. 1,026,390 payable to 35 investors.












Trustee

Director

Place: Mumbai


Fund Manager(s)

Auditors' Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Cash Fund (“The Scheme"), 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.






(i) The Balance Sheet, the Revenue Account and the 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 Cash Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date.



(iii) The methods used to value non-traded debt securities as at March 31, 2011, as determined by





ASSETS

Investments 1 1,914,107,954 2,797,208,928

Deposits 2 235,017,487 206,188,000

Other Current Assets 3 625,197,926 1,835,085,702

TOTAL 0.37 2,774,323,367 4,838,482,630

LIABILITIES

Unit Capital 4 0.16 2,598,855,242 4,536,560,409



TOTAL 2,774,323,367 4,838,482,630

RECONCILIATION OF NET ASSET VALUE PER UNIT

Growth Sub Option

Daily Dividend Sub Option

Weekly Dividend Sub Option Total

Growth Sub Option


Weekly Dividend 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 2.5) 161,052,264 589,411,740 71,838,479 822,302,483 5,030,142 452,364,968 14,497 5,844,921 463,254,528 50,105,538 1,265,974,268 570,151 106,017,581 1,422,667,538 2,708,224,549

Number of Units in Issue 10,260,999.241 57,825,150.324 7,171,727.950 316,772.289 43,329,563.958 1,383.633 554,781.271 3,336,269.249 126,526,575.032 55,630.501 10,506,670.626Net Asset Value per Unit 15.6956 10.1930 10.0169 15.8794 10.4401 10.4777 10.5355 15.0184 10.0056 10.2489 10.0905

Growth Sub Option



Growth Sub Option



Monthly Dividend Sub Option Total

Growth Sub Option



Monthly Dividend Sub Option Total Total

Net Assets as per Balance Sheet

(Total Assets less Current Liabilities and Provisions) (Note 2.5) 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

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

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





Trustee Director

Place: Mumbai Fund Manager(s)Date : July 15, 2011

Rupees


Regular Option Institutional Option Institutional Plus Option



HSBC MUTUAL FUND - HSBC CASH FUND

Institutional OptionRegular Option Institutional Plus Option

March 31, 2011

0



INCOME AND GAINS

Interest and Discount 7 238,179,019 171,539,560 Net Profit on Sale of Investments (Note 2.3) 67,286 -

Miscellaneous Income - 3,282

TOTAL 238,246,305 171,542,842

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.3) - 507,096





Audit Fees 38,968 100,000




TOTAL 20,286,950 30,737,725


April 01, 2010 to March 31, 2011April 01, 2010 to March

31, 2011April 01, 2009 to March

31, 2010Regular Option

Growth Sub Option Total Total


Net Surplus for the Year 8,919,123 217,959,355 140,805,117

Transfer from Income Equalisation Reserve (Note 2.7) (12,299,689) (162,891,808) (172,049,077)

Transfer from Reserve Fund - 9,375,104 34,919,468

Dividend / Distribution - (143,119,780) (94,334,993)

Dividend / Distribution Tax thereon - (39,693,673) (26,720,387)

Balance Transferred to Reserve Fund (3,380,566) (118,370,802) (117,379,872) B






Trustee Director





1


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Surplus for the Year 217,959,355 140,805,117

Adjustments for:- (Increase)/Decrease in Investments at cost 883,100,973 (2,297,434,678) (Increase)/Decrease in Other current assets (1,830,243) 7,303,105 Increase/(Decrease) in Current liabilities 54,570,301 1,379,272

Net cash generated / (used in) from operations (A) 1,153,800,386 (2,147,947,184)

B Cashflow from Financing Activities Increase/(Decrease) in Unit capital (1,937,705,167) (64,335,923) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (95,243,910) (175,857,179)

Adjustments for:- Increase/(Decrease) in Sundry creditors for units redeemed by investors (120,926,389) 2,176,404 (Increase)/Decrease in Sundry debtors for units issued to investors 571,521 577,442

Dividend paid during the year (143,119,780) (94,334,993) Dividend Tax paid during the year (39,693,673) (26,720,387)

Net cash used in financing activities (B) (2,336,117,398) (358,494,636)

Net (Decrease) / Increase in Cash and cash equivalents (A+B) (1,182,317,012) (2,506,441,820)

Cash and Cash Equivalents at the beginning of the year 2,039,200,571 4,545,642,391 Cash and Cash Equivalents at the end of the year 856,883,559 2,039,200,571



Rupees


Balances with Scheduled Banks : - In Current Account 14,498,980 12,710,132 Margin Deposit for National Depository Service 100,000 100,000

Margin Deposit with the Clearing Corporation of India Towards Collateralized Borrowing and Lending Obligation 19,176,939 22,338,000

Margin Deposit with the Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 215,740,548 183,750,000

Other Collateralised LendingReverse Repo 399,456,940 1,135,867,155 Collateralised Borrowing and Lending Obligation 207,910,152 684,435,284

856,883,559 2,039,200,571

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




2

SCHEDULE 1Investments Fair Value Cost Fair Value Cost(Notes 2.2, 2.3, 7, 8, and 11) Rupees Rupees Rupees Rupees(Refer to the attached Statement of Portfolio Holding as at March 31, 2011)

Privately Placed Non Convertible Debentures / Bonds - - 32,026,000 32,026,000

Commercial Paper / Certificate of Deposit 1,914,107,954 1,914,107,954 2,765,182,928 2,765,182,927

TOTAL 1,914,107,954 1,914,107,954 2,797,208,928 2,797,208,927


Margin Deposit for National Depository Service 100,000 100,000

Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 19,176,939 22,338,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 215,740,548 183,750,000

TOTAL 235,017,487 206,188,000


Balances with Banks '- in Current Account 14,498,980 12,710,132

Reverse Repos 399,456,940 1,135,867,155


Inter-Scheme Receivable - For 'Switch-In' - 571,521

Interest Receivable on :- Debentures / Bonds 868 21,898 - Deposits 3,081,457 1,126,293 - Reverse Repos 101,232 160,490 - Collateralised Borrowing and Lending Obligation 48,297 92,929

Miscellaneous Receivables 100,000 100,000

TOTAL 625,197,926 1,835,085,702 3,331,854



March 31, 2011 March 31, 2010


Growth Sub OptionIssued 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



382,539,317 38,253,931.524 601,552,581 60,155,257.987



Dividend Sub OptionIssued and SubscribedUnits of Rs. 10 each fully paid up - - - -

Outstanding:At the beginning of the year 770,989,569 77,098,956.869 1,179,529,964 117,952,996.359

Issued during the year 750,435,411 75,043,541.112 1,117,723,956 111,772,395.587

1,521,424,980 152,142,497.981 2,297,253,920 229,725,391.946

Redeemed during the year 943,173,477 94,317,347.657 1,526,264,351 152,626,435.077


Weekly Dividend Sub OptionIssued and SubscribedUnits of Rs. 10 each fully paid up 450,000 45,000.000 450,000 45,000.000



248,965,714 24,896,571.579 496,551,898 49,655,189.906



TOTAL 752,578,775 75,257,877.515 1,043,244,473 104,324,447.257

Institutional OptionGrowth Sub OptionIssued and SubscribedUnits of Rs. 10 each fully paid up 47,916,128 4,791,612.761 47,916,128 4,791,612.761

Outstanding:At the beginning of the year 9,369,127 936,912.686 16,267,477 1,626,747.666


59,654,776 5,965,477.555 155,544,485 15,554,448.439


At the end of the year 3,167,723 316,772.289 9,369,127 936,912.686

Daily Dividend Sub OptionIssued and SubscribedUnits of Rs. 10 each fully paid up 257,272,623 25,727,262.274 257,272,623 25,727,262.274


Issued during the year 1,692,902,432 169,290,243.216 2,107,244,563 210,724,456.279

1,740,692,323 174,069,232.416 2,635,038,139 263,503,813.961

Redeemed during the year 1,307,396,685 130,739,668.458 2,587,248,248 258,724,824.761


Weekly Dividend Sub OptionIssued and SubscribedUnits of Rs. 10 each fully paid up 9,581,848 958,184.815 9,581,848 958,184.815



58,810,335 5,881,033.557 155,232,965 15,523,296.512


At the end of the year 13,836 1,383.633 29,288,907 2,928,890.719


Regular Option


4


HSBC MUTUAL FUND - HSBC CASH FUNDSchedules forming part of the Balance Sheet as at March 31, 2011


4

Monthly Dividend Sub OptionIssued and SubscribedUnits of Rs. 10 each fully paid up 239,580,638 23,958,063.805 239,580,638 23,958,063.805

Outstanding:At the beginning of the year 5,547,812 554,781.271 5,547,812 554,781.289

Issued during the year - - 5,457,790 545,778.993

5,547,812 554,781.271 11,005,602 1,100,560.282

Redeemed during the year - - 5,457,790 545,779.011


TOTAL 442,025,009 44,202,501.151 91,995,737 9,199,573.876

Institutional Plus OptionGrowth Sub Option Issued and SubscribedUnits of Rs. 10 each fully paid up 2,144,728,860 214,472,885.980 2,144,728,860 214,472,885.980


Issued during the year 17,841,900,927 1,784,190,092.699 25,434,912,051 2,543,491,205.051

18,027,369,768 1,802,736,976.815 25,884,831,103 2,588,483,110.324

Redeemed during the year 17,994,007,076 1,799,400,707.566 25,699,362,262 2,569,936,226.208


Daily Dividend Sub Option Issued and SubscribedUnits of Rs. 10 each fully paid up 1,925,006,580 192,500,657.950 1,925,006,580 192,500,657.950


Issued during the year 225,658,817,175 22,565,881,717.451 508,300,396,457 50,830,039,645.693

228,621,304,592 22,862,130,459.222 509,922,750,351 50,992,275,035.167

Redeemed during the year 227,356,038,842 22,735,603,884.190 506,960,262,934 50,696,026,293.396

At the end of the year 1,265,265,750 126,526,575.032 2,962,487,417 296,248,741.771

Weekly Dividend Sub Option Issued and SubscribedUnits of Rs. 10 each fully paid up 1,202,494,851 120,249,485.090 1,202,494,851 120,249,485.090


Issued during the year 1,306,286,406 130,628,640.430 3,654,915,000 365,491,499.821

1,517,964,338 151,796,433.429 3,918,293,445 391,829,344.258

Redeemed during the year 1,517,408,029 151,740,802.928 3,706,615,513 370,661,551.259

At the end of the year 556,309 55,630.501 211,677,932 21,167,792.999

Monthly Dividend Sub Option Issued and SubscribedUnits of Rs. 10 each fully paid up 854,214,106 85,421,410.558 854,214,106 85,421,410.558



171,436,109 17,143,610.851 158,261,325 15,826,132.504



TOTAL 1,404,251,458 140,425,145.408 3,401,320,199 340,132,019.812

GRAND TOTAL 2,598,855,242 259,885,524.074 4,536,560,409 453,656,040.945

Note: HSBC Asset Management (India) Private Limited, the investment manager holds 25,605,636.126 units (Previous year : 38,292,626.954 units) in the Institutional Plus Option - Daily Dividend Sub - Option and NIL units (Previous year : 925,345.397 units) in the Institutional Plus Option Monthly Dividend Sub -Option as at March 31,2011.

HSBC Securities and Capital Markets (India) Private Limited, the sponsor holds 52,420,451.628 units (Previous year : 204,906,377.943 units) in the Institutional Plus Option - Daily Dividend Sub Option as at March 31,2011.

March 31, 2011 March 31, 2010

SCHEDULE 5Reserves and Surplus

Unit Premium Reserve (Note 2.6)

At the beginning of the year 5,072,660 8,880,762

Added during the year 67,647,899 (3,808,102)

At the end of the year 72,720,559 5,072,660

Income Equalisation Reserve (Note 2.7)


Transferred to Revenue Account 162,891,808 172,049,077


Reserve FundAt the beginning of the year 164,394,654 316,693,994


Balance Transferred from Revenue Account (118,370,802) (117,379,872)


TOTAL 109,369,307 * 169,467,314 *

* The share of the Options of the Reserves and Surplus is as follows :March 31, 2011 March 31, 2010

Regular Option RupeesGrowth Sub-Option 58,442,270 61,865,908

Daily Dividend Sub-Option 11,160,237 14,882,845

Weekly Dividend Sub-Option 121,201 246,268

Total (A) 69,723,708 76,995,021

Institutional OptionGrowth Sub-Option 1,862,419 4,709,122


Weekly Dividend Sub-Option 661 1,357,541

Monthly Dividend Sub-Option 297,109 292,210

Total (B) 21,229,519 8,462,280

Institutional Plus OptionGrowth Sub-Option 16,742,846 77,055,440

Daily Dividend Sub-Option 708,518 1,653,395

Weekly Dividend Sub-Option 13,842 4,959,615


Total (C) 18,416,080 84,010,013

Total (A+B+C) 109,369,307 169,467,314

Rupees



Rupees

5

SCHEDULE 6 March 31, 2011 March 31, 2010Current Liabilities and Provisions Rupees RupeesCurrent Liabilities





Audit Fees 38,968 100,000


Unit Redemption Payable - 385,142

Inter Scheme Payable - For 'Switch-Out' - 120,541,246

Units Pending Allotment 60,700,000 5,000,000

Dividend Tax Payable 518,222 348,411


TOTAL 66,098,818 132,454,907


Rupees Rupees

Debentures / Bonds 190,573 14,369,821

Commercial Paper / Certificate of Deposit 153,913,398 58,750,519

Reverse Repos 53,844,288 46,338,755


Deposits 8,146,384 4,654,829

TOTAL 238,179,019 171,539,560



6


Commercial Papers/Certificate of Deposits (100.00%)Certificate of Deposits (76.90%)

State Bank of Bikaner and Jaipur 2011 $ 2,500 249,748,930Central Bank of India 2011 $ 2,400 235,461,036State Bank of Patiala 2011 $ 2,000 199,719,691State Bank of Travancore 2011 $ 2,000 199,717,980Union Bank of India 2011 $ @ 2,000 199,709,289IDBI Bank Limited 2011 $ @ 2,000 197,829,280Axis Bank Limited 2011 $ 1,900 189,670,535

1,471,856,741Commercial Papers (23.10%)

Tata Capital Limited 2011 $ 500 244,930,814ICICI Securities Primary Dealership Limited 2011 $ 400 197,320,399






$ 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 issued by the Securities and Exchange Board of India.


7


Rupees Rupees Rupees(a) Net asset value per unit at the end of the year (Note 2.5)

Regular Option

Growth Sub Option 15.6956 14.8892 14.5744 Daily Dividend Sub Option 10.1930 10.1930 10.1930

Weekly Dividend Sub Option 10.0169 10.0169 10.0227

Institutional Option

Growth Sub Option 15.8794 15.0262 14.6717 Daily Dividend Sub Option 10.4401 10.4401 10.4401

Weekly Dividend Sub Option 10.4777 10.4635 10.4699 Monthly Dividend Sub Option 10.5355 10.5267 10.5277

Institutional Plus Option

Growth Sub Option 15.0184 14.1546 13.7655 Daily Dividend Sub Option 10.0056 10.0056 10.0056 Weekly Dividend Sub Option 10.2489 10.2343 10.2411 Monthly Dividend Sub Option 10.0905 10.0819 10.0829

(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 0.0003 (0.0011) 0.0140

(iv) transfer of revenue account from past year’s reserve 0.0361 0.0770 0.1356

Gross income and gains 0.9528 0.4540 2.8135


(d) Net income 0.8747 0.3874 2.6818

(e) Net change in unrealised depreciation in value of investments - - 0.0000 ~ - (f) Redemption price

Highest- Regular Option Growth Sub Option 15.6921 14.8892 14.5744 - Regular Option Daily Dividend Sub Option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub Option 10.0287 10.0246 10.0307 - Institutional Option Growth Sub Option 15.5206 14.9727 14.6674 - Institutional Option Daily Dividend Sub Option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub Option 10.4763 10.4690 10.4739 - Institutional Option Monthly Dividend Sub Option 10.5832 10.5437 10.5701 - Institutional Plus Option Growth Sub Option 15.0148 14.1527 13.7655 - Institutional Plus Option Daily Dividend Sub Option 10.0056 10.0056 10.0056 - Institutional Plus OptionWeekly Dividend Sub Option 10.2474 10.2425 10.2478 - Institutional Plus Option Monthly Dividend Sub Option 10.1066 10.1028 10.1122

Lowest- Regular Option Growth Sub Option 14.8955 14.5761 13.5936 - Regular Option Daily Dividend Sub Option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub Option 10.0184 10.0173 10.0071 - Institutional Option Growth Sub Option 15.0978 14.6806 13.6569 - Institutional Option Daily Dividend Sub Option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub Option 10.4680 10.4650 10.4540 - Institutional Option Monthly Dividend Sub Option 10.5213 10.5301 10.4905 - Institutional Plus Option Growth Sub Option 14.1616 13.7674 12.7736 - Institutional Plus Option Daily Dividend Sub Option 10.0056 10.0056 10.0056 - Institutional Plus OptionWeekly Dividend Sub Option 10.2367 10.2354 10.0442 - Institutional Plus Option Monthly Dividend Sub Option 10.0818 10.0774 10.0507

(g) Purchase priceHighest

- Regular Option Growth Sub Option 15.6921 14.8892 14.5744 - Regular Option Daily Dividend Sub Option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub Option 10.0286 10.0239 10.0308 - Institutional Option Growth Sub Option 15.8757 14.9514 14.6594 - Institutional Option Daily Dividend Sub Option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub Option 10.4700 10.4669 10.4715 - Institutional Option Monthly Dividend Sub Option 10.5832 10.5354 10.5345 - Institutional Plus Option Growth Sub Option 15.0075 14.1527 13.7629 - Institutional Plus Option Daily Dividend Sub Option 10.0056 10.0056 10.0056 - Institutional Plus OptionWeekly Dividend Sub Option 10.2459 10.2401 10.2469 - Institutional Plus Option Monthly Dividend Sub Option 10.1312 10.1018 10.1110

Lowest- Regular Option Growth Sub Option 14.8955 14.5761 13.5936 - Regular Option Daily Dividend Sub Option 10.1930 10.1930 10.1930 - Regular Option Weekly Dividend Sub Option 10.0169 10.0169 10.0038 - Institutional Option Growth Sub Option 15.2380 14.6785 13.6569 - Institutional Option Daily Dividend Sub Option 10.4401 10.4401 10.4401 - Institutional Option Weekly Dividend Sub Option 10.4635 10.4635 10.4494 - Institutional Option Monthly Dividend Sub Option 10.5213 10.5354 10.5027 - Institutional Plus Option Growth Sub Option 14.1616 13.7674 12.7736 - Institutional Plus Option Daily Dividend Sub Option 10.0056 10.0056 10.0056 - Institutional Plus OptionWeekly Dividend Sub Option 10.2343 10.2343 10.0401 - Institutional Plus Option Monthly Dividend Sub Option 10.0762 10.0762 10.0083


(i) Ratio of expenses (excluding initial issue expenses) to average daily net assets by percentageRegular Option 1.00% 1.00% 0.79%Institutional Option 0.75% 0.75% 0.57%Institutional Plus Option 0.35% 0.35% 0.30%

(j) Ratio of gross income (including net profit / loss on sale of investments and net change in 6.33% 3.13% 8.12%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~ Less than 0.0001 per unit



8

Annexure I



Investment Manager

Key Management Personnel & their

Relatives Total

Subscription of Units (including switch in and dividend reinvestment) 203,668,490,046 - 10,947,352,906 9,748,340 214,625,591,292 Previous Year 483,685,661,726 685,519,043 4,550,000,000 2,904,359 488,924,085,127

Redemption of Units (including switch out) 205,194,203,231 - 10,987,319,966 7,440,614 216,188,963,811 Previous Year 482,747,618,067 352,900,000 4,304,293,491 2,552,431 487,407,363,988

Dividend Distribution (Including dividend reinvested) 37,990,046 - 26,664,406 73,340 64,727,792 Previous Year 44,161,726 6,146,743 - 4,359 50,312,827


Brokerage/ Commission on Distribution of Units - - 1,777,537 - 1,777,537 Previous Year - - 3,090,205 - 3,090,205




Investment Manager

Key Management Personnel & their

Relatives Total

Investment Management and Advisory Fees Payable - 2,549,845 - - 2,549,845 Previous Year - 4,158,779 - - 4,158,779

Brokerage/ Commission Payable for Distribution of Units - - 928,935 - 928,935 Previous Year - - 810,640 - 810,640

Units Outstanding As At Year End 524,498,071 - 648,543,901 2,726,585 1,175,768,558 Previous Year 2,050,211,255 392,469,948 250,138,387 417,858 2,693,237,448

(iii) Details of material transactions with respect to parties referred to in Note 10 (I)(iii) & (iv) for Associate of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)HSBC InvestDirect Securities (India) Limited 3,222,500,000 4,550,000,000 Investsmart Financial Services Limited 6,018,500,000 -

Redemption of Units (including switch out)HSBC InvestDirect Securities (India) Limited 3,230,788,981 4,304,293,491 Investsmart Financial Services Limited 6,277,432,183 -

Dividend Paid/Payable( Including dividend reinvested)HSBC Asset Management India Private Limited 20,587,269 -

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,539,396 2,933,023 HSBC InvestDirect Securities (India) Limited 238,141 -

Brokerage/ Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 928,935 789,258


Units Outstanding As At Year EndHSBC InvestDirect Securities (India) Limited - 250,138,387 HSBC Asset Management India Private Limited 256,199,753 -

(iv) Disclosures in respect of material transactions with persons referred to in Note 10 (I)(vi) for key management personnel and their relatives

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Kemaya Lal Kidwai 5,029,074 - Naina Lal Kidwai 1,691,608 2,402,719 Rashid K Kidwai(Relative) 2,426,585 501,640

Redemption of Units (including switch out)Kemaya Lal Kidwai 3,625,574 - Naina Lal Kidwai 1,397,345 2,252,431 Rashid K Kidwai(Relative) 2,115,725 300,000

Dividend Distribution (Including dividend reinvested)Kemaya Lal Kidwai 29,074 - Naina Lal Kidwai 16,608 2,719 Rashid K Kidwai(Relative) 26,585 1,640

Units Outstanding As At Year EndKemaya Lal Kidwai 1,403,500 - Rashid K Kidwai(Relative) 512,499 201,639 Naina Lal Kidwai 510,481 216,218 Rumaan Nazir Kidwai 300,106 -



0


Schedules forming part of the Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended March 31, 2011.

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, 2005 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




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. For money market securities, debt securities and floating rate securities (investments till July 31, 2010):

Traded debt securities are valued at the last quoted closing price on the principal exchange on which the security is

traded.

Non-traded / thinly traded debt securities are valued at fair value as per procedures determined by HSBC Asset

Management (India) Private Limited which are approved by the Trustee and are in accordance with the guidelines

for valuation of securities specified in the Regulations.

Floating rate securities comprising MIBOR linked and reset coupons held by the scheme are valued on amortization

basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate bond is purchased from the

market, the ‘purchase price’ is considered as the ‘traded price’ and the amortization continued from the traded

price."




No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir /IMD/DF/4/2010 dated June 21, 2010 with

effect from August 01, 2010 :

a) All money market securities, debt securities and floating rate securities with residual maturity of upto and over 91

days are valued at the weighted average price at which they are traded on the particular valuation day.

b) Non-traded /thinly traded money market securities, debt securities and floating rate securities with residual

maturity of upto 91 days are valued on amortization basis. Floating rate securities with floor and caps on coupon

rate and residual maturity of upto 91 days are valued on amortization basis taking the coupon rate as floor.

c) Non-traded /thinly traded money market securities, debt securities and floating rate securities with residual

maturity of over 91 days are valued at fair value as per procedures determined by HSBC Asset Management (India)

Private Limited and approved by the Trustee in accordance with the guidelines for valuation of securities for mutual

funds, issued by Securities and Exchange Board of India (SEBI) from time to time.

ii. 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.

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

of resale. Instruments sold on repo basis are adjusted for the difference between the repurchase price after deduction

of applicable interest upto the date of repurchase.

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

unrealised depreciation if any, is accounted through the Revenue Account.


2.3 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. The cost of investments includes brokerage stamp charges

and any other charges customarily included in the contract note but excludes custodian safekeeping fees.


Interest income is recorded on an accrual basis.



2.5 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. 2.6 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. The shortfall if any representing difference between dividend distributions and distributable surplus available for

distribution on the record dates may be utilized from unit premium reserve except to the extent it was represented by

unrealized net appreciation in the value of investments, upto March 15, 2010. With effect from March 15, 2010,

pursuant to SEBI circular No. SEBI/ IMDCIR No. 18/198647/2010 unit premium reserve is treated at par with unit

capital and is not utilized for the determination of distributable surplus.


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. 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 0.36% 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 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

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

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



Management (India) Private Limited under the procedures approved by the Board of Trustees as at March 31, 2011 is

Rs. 1,914,107,954.


The aggregate value of investment securities purchased (excluding accretion of discount of Rs. 153,913,398) and sold

(including matured) during the financial year are Rs. 10,749,615,862 and Rs. 11,786,697,520 respectively being

285.82% and 313.39% of the average daily net assets.


The total income (including net profit on sale of investments) and expenditure during the year is Rs. 238,246,305 and

Rs. 20,286,950 respectively being 6.33% and 0.54% of average daily net assets.

10 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)



Accountants of India and regulation 25(8) of SEBI Regulation, is provided below : I Related party relationships During the Year


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

Mutual Fund



(v) HSBC Investsmart Financial Services Limited Associate of the Investment Manager

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

HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel


`II The transactions with the related parties during the year in the ordinary course of business have been listed in

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. 92,768.




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



Nature of Relation

Period Covered


% of Total




Fund






Nature of Relation

Period Covered


% of Total




Fund



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

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. 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.










ALPA KEDIA Partner Membership No. F-100681


Trustee

Director

Place: Mumbai


Fund Manager(s)

Auditors' Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Flexi Debt Fund (“The Scheme") and

the related Revenue Account 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.






(i) The Balance Sheet and the 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 Flexi Debt Fund as at March 31, 2011 and its net surplus for the year ended on that date.








ASSETS

Investments 1 490,562,910 986,459,480

Deposits 2 8,901,454 -


TOTAL 551,300,296 1,030,106,205

LIABILITIES

Unit Capital 4 -0.52 457,934,533 930,732,648



TOTAL 0.02 551,300,296 1,030,106,205


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

Half YearlyDividend

Sub Option Total TotalGrowth


Sub Option

FortnightlyDividend

Sub OptionQuarterly Dividend

Sub OptionHalf Yearly Dividend

Sub Option Total Growth


Sub Option

FortnightlyDividend

Sub Option Quarterly Dividend

Sub Option Total Total

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 13,449,665 16,122,850 1,131,557 11,721,915 10,244 42,436,231 275,948,768 12,164,238 69,917,333 84,982,060 56,820,190 499,832,589 542,268,820 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

Number of Units in Issue 1,021,203.630 1,559,063.997 105,430.553 1,052,037.191 966.352 20,698,292.233 1,150,495.664 6,951,450.006 7,728,094.909 5,526,418.415 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

Net Asset Value per Unit 13.1704 10.3414 10.7327 11.1421 10.6003 13.3320 10.5730 10.0579 10.9965 10.2816 12.4521 10.3129 10.7340 11.1163 10.2541 12.5608 10.5441 10.0592 10.9411

13,449,665 16,122,850 1,131,557 11,721,915 10,244 42,436,231 275,948,768 12,164,238 69,917,333 84,982,060 443,012,399 485,448,630 Notes to the Financial Statements 8

(-)

(-) 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


Regular Option Institutional Option




HSBC MUTUAL FUND - HSBC FLEXI DEBT FUND


March 31, 2010RupeesRupees

March 31, 2011


INCOME AND GAINSInterest and Discount 7 57,898,790 85,956,149 Net Profit on Sale of Investments (Note 2.3) 3,022,247 84,862,915 Miscellaneous Income - 31,349

TOTAL 60,921,037 170,850,413

EXPENSES AND LOSSES





Audit Fees 20,000 50,000


SEBI Inspection fees 3,316 -


TOTAL 14,439,848 25,458,756

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) 1,422,604 -

TOTAL 13,017,244 25,458,756


Net Change in Unrealised Depreciation in Value of Investments (9,881) 39,145,803


Net Change in Unrealised Appreciation in Value of Investments 231,850 (13,549,735)

Net Surplus for the Year including Net change in Unrealised Appreciation / Depreciation in Value of Investments 48,125,762 170,987,725

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve

(231,850) 13,549,735


April 01, 2010 to March 31, 2011

April 01, 2009to March 31, 2010

Rupees Rupees


Transfer from Income Equalisation Reserve (Note 2.7) (19,837,764) (87,661,300)

Transfer from Reserve Fund 16,892,325 1,364,646

Dividend / Distribution (23,443,985) (54,619,776)

Dividend / Distribution Tax thereon (3,515,073) (8,941,065)

Balance Transferred to Reserve Fund 17,989,415 34,679,965


The schedules referred to herein form an integral part of the Revenue Account

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



Trustee Director




April 01, 2010to March 31, 2011

April 01, 2009to March 31, 2010

SCHEDULE 1

Investments Market/Fair Value Cost Market/Fair Value Cost(Notes 2.2, 2.3, 8, 9, 10, 11 and 14) Rupees Rupees Rupees Rupees


Non Convertible Debentures and Bonds Listed / Awaiting Listing 146,202,108 145,846,475 159,754,560 159,162,214

Privately Placed Non Convertible Debentures / Bonds - - 988,767 981,155 Commercial Papers/Certificate of Deposit 333,366,577 332,890,402 825,716,153 825,716,153

Government of India Securities 10,994,225 11,004,106 - -

TOTAL 490,562,910 489,740,983 986,459,480 985,859,522

SCHEDULE 2Deposits March 31, 2011 March 31, 2010

Rupees RupeesMargin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 726,648 - Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 8,174,806 -

TOTAL 8,901,454 -


Balance with Banks- in Current Account 423,134 645,758 - in Dividend Account 26 26

Reverse Repos 29,796,160 26,202,279


Inter-Scheme Receivable for Switch In - 10,345

Interest Receivable on :- Debentures and Bonds 4,442,361 789,840 - Government of India Securities 151,020 - - Reverse Repos 7,551 3,702 - Collateralised Borrowing and Lending Obligation 3,603 2,144 - Deposits 69,038 191,816

Receivable from Investment Manager 1,422,604 -

Miscellaneous Receivables 12,123 12,124

TOTAL 51,835,932 43,646,725





SCHEDULE 4Unit Capital March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

Rupees Units Rupees Units Regular OptionGrowth Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up 25,001 2,500.100 25,001 2,500.100



62,200,513 6,220,051.293 164,618,985 16,461,898.488



Monthly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up 7,941,351 794,135.124 7,941,351 794,135.124


Issued during the year 2,311,013 231,101.295 20,137,796 2,013,779.622

33,557,766 3,355,776.655 243,916,716 24,391,671.663



Fortnightly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up 1,469,757 146,975.683 1,469,757 146,975.683

Outstanding:At the beginning of the year 7,169,029 716,902.735 28,518,800 2,851,879.905

Issued during the year 4,855,007 485,500.659 5,030,190 503,018.935

12,024,036 1,202,403.394 33,548,990 3,354,898.840



Quarterly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up - - - -


Issued during the year 2,398,605 239,860.492 15,009,414 1,500,941.400

34,384,466 3,438,446.539 81,484,808 8,148,480.796



Half Yearly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up - - - -

Outstanding:At the beginning of the year 13,410,152 1,341,015.203 1,973,821 197,382.137

Issued during the year - - 13,410,152 1,341,015.203

13,410,152 1,341,015.203 15,383,973 1,538,397.340

Redeemed during the year 13,400,489 1,340,048.851 1,973,821 197,382.137

At the end of the year 9,663 966.352 13,410,152 1,341,015.203

Institutional Option Growth OptionIssued and Subscribed :Units of Rs.10 each fully paid up 20,000,000 2,000,000.000 20,000,000 2,000,000.000



346,615,974 34,661,597.278 866,847,157 86,684,715.595



Monthly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up 752,458,640 75,245,864.000 752,458,640 75,245,864.000



140,095,211 14,009,521.068 774,791,079 77,479,107.932



Fortnightly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up 513,896,416 51,389,641.560 513,896,416 51,389,641.560



352,640,048 35,264,004.797 1,018,712,244 101,871,224.442



Quarterly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up - - - -


Issued during the year 6,353 635.302 46,530,409 4,653,040.877

114,390,715 11,439,071.492 209,464,421 20,946,442.072



Half Yearly Dividend Sub OptionIssued and Subscribed :Units of Rs.10 each fully paid up - - - -

Outstanding:At the beginning of the year - - - -

Issued during the year 55,264,184 5,526,418.415 - - 55,264,184 5,526,418.415 - -

Redeemed during the year - - - -

At the end of the year 55,264,184 5,526,418.415 - -

TOTAL 457,934,533 45,793,452.950 930,732,648 93,073,264.548




Rupees Rupees

Unit Premium Reserve (Note 2.6) At the beginning of the year (5,818,471) 101,481,702



Income Equalisation Reserve (Note 2.7) Added during the year (19,837,764) (87,661,300)



Unrealised Appreciation Reserve

At the beginning of the year 599,958 14,149,693

Net Change in Unrealised Appreciation in Value of Investments transferred from Revenue Account (Note 8) 231,850 (13,549,735)

At the end of the year 831,808 599,958

Reserve Fund At the beginning of the year 99,230,432 65,915,113


Balance Transferred from Revenue Account 17,989,415 34,679,965


TOTAL 84,334,287 *. 94,011,919 *


Regular OptionGrowth Sub Option 3,237,629 11,834,954

Monthly Dividend Sub Option 532,211 977,817

Fortnightly Dividend Sub Option 77,249 526,213

Quarterly Dividend Sub Option 1,201,542 3,570,571

Half Yearly Dividend Sub Option 581 340,796

Total (A) 5,049,212 17,250,351

Institutional OptionGrowth Sub Option 68,965,844 57,575,055

Monthly Dividend Sub Option 659,281 6,399,262

Fortnightly Dividend Sub Option 402,833 2,022,824

Quarterly Dividend Sub Option 7,701,111 10,764,427

Half Yearly Dividend Sub Option 1,556,006 -

Total (B) 79,285,075 76,761,568

Total (A+B) 84,334,287 94,011,919





Investment Management and Advisory Fees 488,203 1,775,684 Transfer Agent Fees and Expenses 32,346 47,635 Trusteeship Fees and Expenses 2,626 - Custodian Fees and Expenses 7,736 19,977 Audit Fees 20,000 50,000 Purchase Contracts Awaiting Completion - Government of India Securities 5,070,700 - Selling and Distribution Expenses 2,927,449 2,279,035 Unit Redemption Payable - 23,247 Dividend Distribution Tax Payable 46,518 80,647 Load Payable (Note 2.8) 411,370 1,064,656 Unclaimed Dividend (Note 16) 17 17 Sundry Payables 24,511 20,740

TOTAL 9,031,476 5,361,638

SCHEDULE 7Interest and Discount (Note 2.4) April 01, 2010

to March 31, 2011April 01, 2009

to March 31, 2010Rupees Rupees

Debentures / Bonds 13,989,442 35,595,609

Treasury Bills - 743,571


Government of India Securities 12,894,712 22,077,045

Reverse Repos 5,767,163 7,442,143


Deposits 546,669 492,456

TOTAL 57,898,790 85,956,149

0 0



SCHEDULE 7Unrealised Depreciation/Appreciation in Value of Investmentsand Derivatives (Note 7)

(Rupees) (Rupees)

(a) Non Convertible Debentures and Bonds Listed / Awaiting Listing

- Appreciation 483,692 592,346

- Depreciation 128,059 -

(b) Privately Placed Non Convertible Debentures / Bonds

- Appreciation - 7,612

- Depreciation - -

(c) Government Securities

- Appreciation - -


(d) Money market

- Appreciation 826,721 -


April 01, 2010to March 31, 2011

April 01, 2009 to March 31, 2010



April 01, 2010to March 31, 2011

April 01, 2009to March 31, 2010

April 01, 2008 to March 31, 2009


(a) Net asset value per unit at the end of the year (Note 2.5)Regular Option - Growth Sub Option 13.1704 12.4521 11.6483 Regular Option - Monthly Dividend Sub Option 10.3414 10.3129 10.2553 Regular Option - Fortnightly Dividend Sub Option 10.7327 10.7340 10.3662 Regular Option - Quarterly Dividend Sub Option 11.1421 11.1163 10.7885 Regular Option - Half Yearly Dividend Sub Option 10.6003 10.2541 9.8005 Institutional Option - Growth Sub Option 13.3320 12.5608 11.7088 Institutional Option - Monthly Dividend Sub Option 10.5730 10.5441 10.5214 Institutional Option - Fortnightly Dividend Sub Option 10.0579 10.0592 9.7535 Institutional Option - Quaterly Dividend Sub Option 10.9965 10.9411 10.6734 Institutional Option - Half Yearly Dividend Sub Option 10.2816 NA NA

(b) Gross Income


(ii) income from profit on inter scheme sales/transfer of investment - - (0.0095)


(iv) transfer to revenue account from past year’s reserve 0.3689 0.0147 0.0363



(d) Net income 1.4150 1.5768 0.3208

(e) Net change in unrealised depreciation in value of investments (0.0002) 0.4206 (0.1010)


Highest - Regular Option - Growth Sub Option 13.1489 12.4465 12.6161 - Regular Option - Monthly Dividend Sub Option 10.3577 10.9247 11.2275 - Regular Option - Fortnightly Dividend Sub Option 10.7562 10.8078 11.0908 - Regular Option - Quarterly Dividend Sub Option 11.2877 11.3698 11.3690 - Regular Option - Half Yearly Dividend Sub Option 10.5858 10.2388 10.6149 - Institutional Option - Growth Sub Option 13.0456 12.5212 12.2140 - Institutional Option - Monthly Dividend Sub Option 10.5941 10.2659 10.5087 - Institutional Option - Fortnightly Dividend Sub Option 10.0902 11.0906 11.2806 - Institutional Option - Quaterly Dividend Sub Option 10.9336 11.0757 11.4401 - Institutional Option - Half Yearly Dividend Sub Option 10.2862 NA 10.1428

Lowest - Regular Option - Growth Sub Option 12.4693 11.7127 10.4257 - Regular Option - Monthly Dividend Sub Option 10.2910 10.4529 10.0055 - Regular Option - Fortnightly Dividend Sub Option 10.7105 10.3083 9.9371 - Regular Option - Quarterly Dividend Sub Option 11.0611 11.0710 10.0888 - Regular Option - Half Yearly Dividend Sub Option 10.4074 10.2107 9.6569 - Institutional Option - Growth Sub Option 12.7801 12.0408 10.4499 - Institutional Option - Monthly Dividend Sub Option 10.5382 9.9534 9.6848 - Institutional Option - Fortnightly Dividend Sub Option 10.0396 10.5203 10.0934 - Institutional Option - Quaterly Dividend Sub Option 10.9336 10.7633 10.7348 - Institutional Option - Half Yearly Dividend Sub Option 10.0000 NA 10.1428

(g) Purchase price

Highest - Regular Option - Growth Sub Option 13.1201 12.4465 12.6161 - Regular Option - Monthly Dividend Sub Option 10.3245 10.8701 11.2275 - Regular Option - Fortnightly Dividend Sub Option 10.7734 10.8078 11.1826 - Regular Option - Quarterly Dividend Sub Option 11.1454 11.3698 11.7939 - Regular Option - Half Yearly Dividend Sub Option 10.6654 10.3482 10.5525 - Institutional Option - Growth Sub Option 13.1362 12.4930 12.4932 - Institutional Option - Monthly Dividend Sub Option 10.5475 10.0980 10.7002 - Institutional Option - Fortnightly Dividend Sub Option 10.0592 10.9638 11.4083 - Institutional Option - Quaterly Dividend Sub Option 10.9511 11.0921 11.6126 - Institutional Option - Half Yearly Dividend Sub Option 10.2262 NA 10.0000

Lowest - Regular Option - Growth Sub Option 12.4693 11.7457 10.4173 - Regular Option - Monthly Dividend Sub Option 10.3019 10.7326 10.0213 - Regular Option - Fortnightly Dividend Sub Option 10.7327 10.3033 9.9361 - Regular Option - Quarterly Dividend Sub Option 11.0575 10.8482 10.0000 - Regular Option - Half Yearly Dividend Sub Option 10.2683 10.1616 10.0000 - Institutional Option - Growth Sub Option 12.7659 12.4930 10.5359 - Institutional Option - Monthly Dividend Sub Option 10.5321 10.0592 9.8850 - Institutional Option - Fortnightly Dividend Sub Option 10.0579 10.5337 10.0867 - Institutional Option - Quaterly Dividend Sub Option 10.9511 10.9032 10.0000 - Institutional Option - Half Yearly Dividend Sub Option 10.0000 NA 10.0000


(i) Ratio of expenses to average daily net assets by percentageRegular 1.85% 1.86% 1.77%Institutional 1.50% 1.51% 0.72%

(j) Ratio of gross income (including net profit / loss on sale of investments and net change in 7.22% 12.95% 4.79%unrealised depreciation in value of investments) to average daily net assets by percentage





Non-Convertible Debentures / Bonds Listed / Awaiting listing (29.80%)Finance & Investments (100%)

9.95% State Bank of India 2026 $ 5,000 52,319,7207.60% LIC Housing Finance Limited 2012 $ @ 50 48,978,4229.75% Housing Development Finance Corporation Limited 2014 $ 40 40,003,5008.70% Power Finance Corporation Limited 2015 $ 5 4,900,466

146,202,108Total (Cost Rs. 145,846,475) 146,202,108


UCO Bank Limited 2011 $ 500 49,410,299Axis Bank Limited 2011 $ 500 49,100,678State Bank of Patiala 2011 $ 500 47,921,708Indian Overseas Bank 2012 $ 500 45,985,295Corporation Bank 2012 $ @ 500 45,974,405Andhra Bank 2012 $ 500 45,757,696

284,150,081Commercial Papers (14.76%)

Kotak Mahindra Prime Limited 2011 $ 100 49,216,49649,216,496

Total (Cost Rs. 332,890,402) 333,366,577

Government of India Securities (2.24%)8.08% Government Stock-M-02-Aug-2022 110,000 10,994,225



$ 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 as applicable issued by the Securities and Exchange Board of India.





Rupees(i) Transactions during the Year


Investment Manager


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - - - - Previous Year - - 38,314 38,314

Redemption of Units (including switch out) - - - - Previous Year - - 8,413,895 8,413,895

Dividend Distribution (Including dividend reinvested - - - - Previous Year - - 38,314 38,314

Investment Management and Advisory Fees 8,450,081 - - 8,450,081 Previous Year 11,765,547 - - 11,765,547

Reimbursement of Expenses - 1,422,604 - 1,422,604 Previous Year - - - -

Brokerage/ Commission on Distribution of Units - 3,767,457 - 3,767,457 Previous Year - 7,648,890 - 7,648,890

Charges for Services Provided by Bank - - - - Previous Year - 1,680 - 1,680



Investment Manager


Relatives Total

Investment Management and Advisory Fees Payable 488,203 - - 488,203 Previous Year 1,775,684 - - 1,775,684

Brokerage/ Commission Payable on Distribution of Units - 2,515,550 - 2,515,550 Previous Year - 2,078,199 - 2,078,199

Other Receivables 1,422,604 - - 1,422,604 Previous Year - - - -

(iii) Details of material transactions with respect to parties referred to in Note 11 (I) (iii) & (iv) for Associate of Investment Manage

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010


Charges for Services Provided by BankThe Hongkong and Shanghai Banking Corporation Limited - 1,680


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

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Kemaya Lal Kidwai (Relative) - - Naina Lal Kidwai - 38,314

Redemption of Units (including switch out)Kemaya Lal Kidwai (Relative) - 5,837,483 Naina Lal Kidwai - 2,048,482

Dividend Distribution (Including dividend reinvestedNaina Lal Kidwai - 38,314



Annexure I



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



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 October 8, 2007 and October 15, 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 22, 2008.

The Scheme will not declare dividend under the Growth Sub - Options in normal circumstances. The income

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






applicable.






security is traded.


Asset Management (India) Private Limited which are approved by the Trustee and are in accordance with the

guidelines for valuation of securities specified in the Regulations.


amortization basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate bond

is purchased from the market, the ‘purchase price’ is considered as the ‘traded price’ and the amortization

continued from the traded price."






a) All money market securities, debt securities and floating rate securities with residual maturity of upto and

over 91 days are valued at the weighted average price at which they are traded on the particular valuation

day.


maturity of upto 91 days are valued on amortization basis. Floating rate securities with floor and caps on

coupon rate and residual maturity of upto 91 days are valued on amortization basis taking the coupon rate as

floor.


maturity of over 91 days are valued at fair value as per procedures determined by HSBC Asset Management

(India) Private Limited and approved by the Trustee in accordance with the guidelines for valuation of

securities for mutual funds, issued by Securities and Exchange Board of India (SEBI) from time to time.

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

the date of resale. Instruments sold on repo basis are adjusted for the difference between the repurchase price

after deduction of applicable interest upto the date of repurchase.

iii. Government securities are valued at the average of prices obtained from The Credit Rating Information

Services of India Limited (CRISIL) and ICRA 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 price 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.







Account.














2.5 Net Asset Value for Growth/Dividend Sub- Options


Dividend Sub-Options for the Regular and Institutional 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.









with unit capital and is not utilized for the determination of distributable surplus


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







load accounts into two parts, one to reflect the balance as on July 31, 2009 and the other to reflect accretions









Management (India) Private Limited for managing the Scheme at an average annual rate of 1% 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





5 Custodian Fees

JP Morgan Chase Bank provides custodial services to the Scheme for which it receives custody fees. 6 Income Taxes






the year.




Aggregate appreciation and depreciation in value of investments is as follows:




- Appreciation 483,692 592,346


Privately Placed Non Convertible Debentures / Bonds


- Depreciation - -

Government of India Securities

- Appreciation - -


Certificate of Deposit

- Appreciation 826,721 -


9 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, 2011, Government

securities aggregating to Rs. 10,994,225 (market value) are held in the name of HSBC Mutual Fund.




2011 is Rs. 479,568,685.


The aggregate value of investment securities purchased (excluding accretion of discount of Rs. 22,591,940) and

sold (including matured) during the financial year are Rs. 16,110,602,047 and Rs. 16,632,334,773 respectively

being 1906.56% and 1968.30% 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. 60,911,156 and Rs. 13,017,244 respectively being

7.21% and 1.54% of average daily net assets.



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











HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Tustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel



Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Shefali Chaddha* - Relative of a Key Management Personnel with effect from March 14, 2011 * There were no transactions during the year.


Annexure I.






Nature of Relation

Period Covered


% of Total




Fund


HSBC InvestDirect Securities (India) Limited Associate 2010-2011 - - - -




Nature of Relation

Period Covered


% of Total




Fund



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












15 Transition to New valuation norms

SEBI circular no. SEBI/IMD/CIR No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir

/IMD/DF/4/2010 dated June 21, 2010 required Mutual Funds to implement revised valuation norms for debt

securities, floating rate securities and money market securities with effect from August 01, 2010. As a measure of

best practice and in order to ensure a non disruptive transition from old valuation norms to the new valuation

norms applicable with effect from August 01, 2010, non-traded debt securities, floating rate securities and money

market securities were progressively so valued that the impact due to transition was spread out from June 11,

2010 to July 31, 2010 to reflect the valuations fairly as per the new regulatory norms by July 31, 2010. The

aforesaid has been approved by the Board of Trustees of HSBC Mutual Fund. Further, the same has also been

intimated to SEBI vide letter dated June 10, 2010 and June 23, 2010.


As at March 31, 2011, unclaimed dividends aggregate Rs. 17 payable to 1 investor.




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








Trustee

Director

Place: Mumbai


Fund Manager(s)

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"),

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.






(i) The Balance Sheet, the Revenue Account and the 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, 2011, its net surplus and its cash flows for the year ended on that date.








ASSETS

Investments 1 2,780,796,406 5,895,795,487

Deposits 2 - 5,610,000


TOTAL 0 2,809,268,284 6,235,337,444

LIABILITIES

Unit Capital 4 -0.29 2,497,308,513 5,199,265,393



TOTAL -0.44 2,809,268,284 6,235,337,444


Growth Sub Option



Weekly Dividend Sub Option Total Growth Sub Option

Weekly DividendSub Option

Fortnightly DividendSub Option


Daily Dividend SubOption Total Total

Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.5) 103,578,732 98,853,051 1,124,146 264,095,502 467,651,431 57,612,004 2,240,006,755 16,903,054 15,789,749 - 2,330,311,562 2,797,962,993

Number of Units in Issue 6,902,722.295 9,872,507.205 111,803.369 26,396,693.202 3,751,043.829 199,473,167.069 1,690,340.648 1,532,573.674 -

Net Asset Value per Unit 15.0055 10.0130 10.0547 10.0049 15.3589 11.2296 9.9998 10.3028

Growth Sub Option



Weekly Dividend Sub Option Total Growth Sub Option

Weekly DividendSub Option

Fortnightly DividendSub Option


Daily Dividend SubOption Total Total

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 -

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 # #

Net Asset Value per Unit 14.1925 # 10.0063 # 10.0126 10.0047 # - # 14.4137 # 11.2299 # 10.1971 # 10.1891 # 10.1799 # - # - #


0



Trustee Director


HSBC MUTUAL FUND - HSBC FLOATING RATE FUND


Long Term Plan

March 31, 2011Long Term Plan

Rupees



Regular Option

March 31, 2010



Rupees

ScheduleASSETS

Investments 1

Deposits 2

Other Current Assets 3

TOTAL

LIABILITIES

Unit Capital 4

Reserves and Surplus 5

Current Liabilities and Provisions 6

TOTAL


Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.5)

Number of Units in Issue

Net Asset Value per Unit

Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.5)

Number of Units in Issue

Net Asset Value per Unit


For PRICE WATERHOUSEFirm Registration Number : 301112EChartered Accountants

ALPA KEDIAPartnerMembership No. F/100681

Place: Mumbai Date : July 15, 2011



March 31, 2011 March 31, 2010Rupees Rupees

- -

20,299,179 5,017,000

192,731,089 718,337,848

213,030,268 723,354,848

202,621,717 670,636,523

9,783,864 51,664,896

624,687 1,053,429

213,030,268 723,354,848

Growth Sub Option


Weekly DividendSub Option Total

Growth Sub Option


Monthly DividendSub Option Total


31,593,649 88,561,246 92,023,202 212,178,097 227,484 - - 227,484 - - 212,405,581

2,202,290.790 8,856,124.361 9,188,078.749 15,677.851 - - -

14.3458 10.0000 10.0155 14.5099 - - -

Growth Sub Option


Weekly DividendSub Option Total

Growth Sub Option


Monthly DividendSub Option Total


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

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 # # #

13.6668 # 10.0000 # 10.0155 # - # 13.8138 # 10.1363 # # 10.1346 # - # 11.7344 # # - # -

For Board of Trustees of For HSBC Asset Management (India)HSBC Mutual Fund Private Limited

VikramaadityaDirector and Chief Executive Officer

Trustee Director

Fund Manager(s)

March 31, 2011



Short Term Plan

Short Term Plan

Rupees


Regular Option Institutional Plus OptionInstitutional Option



Schedule

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010


INCOME AND GAINS

Interest and Discount 7 361,183,958 581,530,712 19,684,535 21,262,673 Net Profit on Sale of Investments (Note 2.3) 1,071,281 119,852,512 - - Miscellaneous Income (Note 16) 7,901 4,916 - 832

TOTAL 362,263,140 701,388,140 19,684,535 21,263,505

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.3) - - 175,630 271,975

Investment Management and Advisory Fees (Note 3) 8,402,662 49,631,529 1,011,147 2,029,284

Transfer Agent Fees and Expenses 3,045,043 6,436,007 194,281 363,076

Trusteeship Fees and Expenses (Note 4) 39,866 119,260 3,087 6,934

Custodian Fees and Expenses (Note 5) 973,283 1,489,270 - 10,998

Audit Fees 31,231 25,000 20,000 12,000

Selling and Distribution Expenses 7,360,741 25,317,992 571,048 1,307,036

SEBI Inspection Fees 17,327 - 1,408 -

Other Operating Expenses 297,643 417,365 35,947 55,990

TOTAL 20,167,796 83,436,423 2,012,548 4,057,293

Less: Expenses to be Reimbursed by the Investment Manager - - - -

TOTAL 20,167,796 83,436,423 2,012,548 4,057,293

Net Realised Gains for the Year 342,095,344 617,951,717 17,671,987 17,206,212

Net Change in Unrealised Depreciation in Value of Investments - 663,800 - -

Net Gains for the Year 342,095,344 618,615,517 17,671,987 17,206,212

Net Change in Unrealised Appreciation in Value of Investments - (2,905,361) - -

Net Surplus including Net change in Unrealised Appreciation / Depreciation in Value of Investments 342,095,344 615,710,156 17,671,987 17,206,212

Net change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve

- 2,905,361 - -

Net Surplus for the Year 342,095,344 618,615,517 17,671,987 17,206,212

(0)

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010


Net Surplus for the Year 12,952,283 29,993,316 88,988,036 215,690,614 342,095,344 618,615,517 2,185,772 17,671,987 17,206,212

Transfer from Income Equalisation Reserve (Note 2.7) 185,709 (12,607,141) (309,760,954) (652,667) (322,247,337) (286,926,670) (25,486,691) 374,291,898 (414,099,739)

Transfer from Reserve Fund 57,695 1,692,327 - - 2,496,945 7,162,671 - 1,925,762 4,234,698

Dividend / Distribution (11,349,469) (18,994,890) - (177,833,253) (202,637,478) (330,020,737) - (9,676,232) (10,374,842)

Dividend / Distribution Tax thereon (1,778,369) (2,954,853) - (37,205,731) (41,034,149) (68,267,359) - (2,684,446) (2,938,675)

Balance Transferred to Reserve Fund 67,849 (2,871,241) (220,772,918) (1,038) (221,326,675) (59,436,578) (23,300,918) 381,528,969 (405,972,346)

(39,652) (9,478,217) (276,825,335) (1,532,292) (4,814,690)

Notes to the Financial Statements. K 0.00 8 E 0.00

The schedules referred to herein form an integral part of the Revenue Accoun

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



Trustee Director


Short Term Plan

Rupees



Long Term Plan

April 01, 2009 to March 31, 2010

Long Term Plan

Short Term PlanLong Term Plan

RupeesRupees


Rupees


Rupees


Adjustments for:- (Increase)/Decrease in Investments at Cost 3,124,757,038 (1,513,132,410) (Increase)/Decrease in Other Current Assets 21,118 7,368,502 Increase/(Decrease) in Current Liabilities (5,748,317) 3,903,061

Net cash generated from / (used in) Operations (A) 3,461,125,183 (883,909,130)

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (2,701,956,880) 1,283,245,444 Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (576,143,067) (67,460,912)

Adjustments for:- Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors (1,205,571) 64,683 (Increase)/Decrease in Sundry Debtors for Units Issued to Investors (255,049) 825,683

Dividend / Distribution paid during the year (202,637,478) (330,020,737) Dividend / Distribution Tax paid during the year (41,034,149) (68,267,359)

Net cash (used in) / generated from financing activities (B) (3,523,232,194) 818,386,802





Rupees


Balances with Banks : - In Current Account 14,685,945 372,035 - In Dividend Account 41,611 41,612

Margin Deposit with the Clearing Corporation of India Towards Collateralised Borrowing and Lending Obligation - 5,610,000 Other Collateralised LendingReverse Repo 3,120,287 52,136,454 Collateralised Borrowing and Lending Obligation 9,620,839 31,415,592

27,468,682 89,575,693

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.

SCHEDULE 1Investments (Notes 2.2, 2.3, 7, 8, 11 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


Commercial Paper / Certificate of Deposit 2,780,796,406 2,780,796,406 5,895,795,487 5,895,795,487 - - - -

TOTAL 2,780,796,406 2,780,796,406 5,895,795,487 5,895,795,487 - - - -

SCHEDULE 2Deposits March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010


Margin Deposit for Repo and Government of India Securities - - 18,642,103 -

Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation - 5,610,000 1,657,076 5,017,000

TOTAL - 5,610,000 20,299,179 5,017,000

SCHEDULE 3Other Current Assets March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010


Balance with Banks- in Current Account 14,685,945 372,035 2,080,395 2,551,400 - in Dividend Account 41,611 41,612 2 3

Sales Contracts Awaiting Completion - Certificate of Deposits - 249,197,000 - -

Reverse Repos 3,120,287 52,136,454 125,063,290 446,379,156

Collateralised Borrowing and Lending Obligation 9,620,839 31,415,592 65,093,300 268,973,170

Unit Subscription Receivable 850,002 600,000 - 325,000

Inter-Scheme Receivable for 'Switch In' 152,026 146,979 - -


- Reverse Repos 791 7,367 31,694 63,072

- Collateralised Borrowing and Lending Obligation 377 4,265 15,121 36,520

- Deposits - 10,653 9,527

- Margin Deposit for Repo and Government of India Securities 447,287 - TOTAL 28,471,878 333,931,957 192,731,089 718,337,848



Long Term Plan Short Term Plan

Short Term Plan

Short Term Plan

Long Term Plan

Long Term Plan

March 31, 2010 March 31, 2011 March 31, 2010 March 31, 2011

SCHEDULE 4Unit Capital March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010

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 93,291,035 9,329,103.605 73,613,530 7,361,353.037 49,275,958 4,927,595.930 79,674,700 7,967,470.081 Issued during the year 231,287,965 23,128,796.559 290,720,693 29,072,069.318 17,465,004 1,746,500.354 52,129,116 5,212,911.625

324,579,000 32,457,900.164 364,334,223 36,433,422.355 66,740,962 6,674,096.284 131,803,816 13,180,381.706 Redeemed during the year 255,551,779 25,555,177.869 271,043,188 27,104,318.750 44,718,055 4,471,805.494 82,527,858 8,252,785.776 At the end of the year 69,027,221 6,902,722.295 93,291,035 9,329,103.605 22,022,907 2,202,290.790 49,275,958 4,927,595.930

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 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 Issued during the year 410,980 41,097.983 1,578,874 157,887.379 159,478,379 15,947,837.886 374,287,334 37,428,733.365

27,978,424 2,797,842.305 48,768,972 4,876,897.171 362,914,265 36,291,426.410 632,787,126 63,278,712.580 Redeemed during the year 26,860,389 2,686,038.936 21,201,528 2,120,152.849 274,353,019 27,435,302.049 429,351,240 42,935,124.056 At the end of the year 1,118,035 111,803.369 27,567,444 2,756,744.322 88,561,246 8,856,124.361 203,435,886 20,343,588.524

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 244,832,474 24,483,247.290 431,366,529 43,136,652.841 - - - - Issued during the year 125,986,517 12,598,651.715 330,020,153 33,002,015.276 - - - -

370,818,991 37,081,899.005 761,386,682 76,138,668.117 - - - - Redeemed during the year 272,093,918 27,209,391.800 516,554,208 51,655,420.827 - - - - At the end of the year 98,725,073 9,872,507.205 244,832,474 24,483,247.290 - - - -

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 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 Issued during the year 776,975,855 77,697,585.540 699,648,997 69,964,899.678 21,516,596 2,151,659.614 255,267,989 25,526,798.856



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 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 Issued during the year 7,195,770,207 719,577,020.650 25,132,936,974 2,513,293,697.351 - - 40,496,961 4,049,696.111

7,756,788,215 775,678,821.577 26,018,260,284 2,601,826,028.479 25,122,711 2,512,271.146 41,467,515 4,146,751.556 Redeemed during the year 7,719,277,777 771,927,777.748 25,457,242,276 2,545,724,227.552 24,965,933 2,496,593.295 16,344,804 1,634,480.410 At the end of the year 37,510,438 3,751,043.829 561,018,008 56,101,800.927 156,778 15,677.851 25,122,711 2,512,271.146

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 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 during the year 9,142,258 914,225.760 9,792,307 979,230.716 - - 48,406,216 4,840,621.594

81,117,131 8,111,713.101 134,410,370 13,441,037.048 997,806 99,780.341 117,355,977 11,735,597.447 Redeemed during the year 81,117,131 8,111,713.101 62,435,497 6,243,549.707 997,806 99,780.341 116,358,171 11,635,817.106 At the end of the year - - 71,974,873 7,197,487.341 - - 997,806 99,780.341


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 3,980,913,748 398,091,374.663 2,178,659,681 217,865,967.972 - - 34,409,954 3,440,995.435 Issued during the year 9,352,577,823 935,257,782.344 21,587,636,763 2,158,763,676.331 - - 97,790 9,778.962

13,333,491,571 1,333,349,157.007 23,766,296,444 2,376,629,644.303 - - 34,507,744 3,450,774.397 Redeemed during the year 11,338,759,899 1,133,875,989.938 19,785,382,696 1,978,538,269.640 - - 34,507,744 3,450,774.397 At the end of the year 1,994,731,672 199,473,167.069 3,980,913,748 398,091,374.663 - - - -

Monthly Dividend Sub Option

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 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 Issued during the year 253,428,115 25,342,811.494 40,733,341 4,073,334.085 97,403 9,740.143 509,341 50,934.139

272,187,854 27,218,785.480 151,829,804 15,182,980.481 24,110,311 2,411,031.095 43,904,300 4,390,430.192 Redeemed during the year 256,862,118 25,686,211.806 133,070,065 13,307,006.495 24,110,311 2,411,031.095 19,891,392 1,989,139.240 At the end of the year 15,325,736 1,532,573.674 18,759,739 1,875,973.986 - - 24,012,908 2,401,290.952

Fortnightly Dividend Option

Issued and Subscribed :Units of Rs. 10 each fully paid up - - - - - - - -

Outstanding:At the beginning of the year 5,684,626 568,462.756 5,453,338 545,333.900 - - - - Issued during the year 17,011,281 1,701,128.066 26,522,322 2,652,232.224 - - - -

22,695,907 2,269,590.822 31,975,660 3,197,566.124 - - - - Redeemed during the year 5,792,502 579,250.174 26,291,034 2,629,103.368 - - - - At the end of the year 16,903,405 1,690,340.648 5,684,626 568,462.756 - - - -

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 - - - - 134,432,538 13,443,253.681 49,873,322 4,987,332.184 Issued during the year - - - - - - 87,372,179 8,737,217.855

- - - - 134,432,538 13,443,253.681 137,245,501 13,724,550.039 Redeemed during the year - - - - 134,432,538 13,443,253.681 2,812,963 281,296.358 At the end of the year - - - - - - 134,432,538 13,443,253.681



Outstanding:At the beginning of the year - - - - - - - - Issued during the year - - - - - - - -

- - - - - - - - Redeemed during the year - - - - - - - - At the end of the year - - - - - - - -

Monthly Dividend Sub Option


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 Issued during the year - - - - - - 41,579 4,157.938

- - - - - - 35,847,051 3,584,705.129 Redeemed during the year - - - - - - 35,847,051 3,584,705.129 At the end of the year - - - - - - - -

TOTAL 2,497,308,513 249,730,851.291 5,199,265,393 519,926,539.379 202,621,717 20,262,171.751 670,636,523 67,063,652.340

HSBC MUTUAL FUND - HSBC FLOATING RATE FUNDSchedules forming part of the Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended March 31, 2011


Note : HSBC Asset Management (India) Private Limited, the investment manager holds Nil units (Previous Year : 1,066,679.332 units) in the Long Term Plan - Institutional Option - Daily Dividend Sub Option and Nil units(Previous Year : 568,462.756 units) in the Long Term Plan - Institutional Option - Fortnightly Dividend Sub Option and Nil units (Previous Year : 4,987,332.176 units) in the Short Term Plan - Institutional Plus Option - Growth Sub Option as at March 31, 2011.

SCHEDULE 5Reserves and Surplus March 31, 2010 March 31, 2011 March 31, 2010

Unit Premium Reserve (Note 2.6) At the beginning of the year 491,752,249 272,286,492 418,698,212 (5,304,660)

Added during the year (253,895,730) 219,465,757 (421,484,239) 424,002,872 (-) (-)

At the end of the year 237,856,519 491,752,249 (2,786,027) 418,698,212

Income Equalisation Reserve (Note 2.7) Added during the year (322,247,337) (286,926,669) 374,291,898 (414,099,739)

Transferred to Revenue Account 322,247,337 286,926,669 (374,291,898) 414,099,739

At the end of the year - - - -

Unrealised Appreciation Reserve At the beginning of the year - 2,905,361 - -

Net change in Unrealised Appreciation in Value of Investments transferred from Revenue Account - (2,905,361) - - At the end of the year - - - -

Reserve Fund At the beginning of the year 286,621,581 353,220,830 (367,033,316) 43,173,728

Transferred to Revenue Account (2,496,945) (7,162,671) (1,925,762) (4,234,698)

Balance Transferred from Revenue Account (221,326,675) (59,436,578) 381,528,969 (405,972,346)

At the end of the year 62,797,961 286,621,581 12,569,891 (367,033,316)

TOTAL 300,654,480 * 778,373,830 * 9,783,864 * 51,664,896 *

* The share of the Plans / Options of the Reserves and Surplus is as follows : March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010Rupees Rupees Rupees Rupees

Regular OptionGrowth Sub Option 34,551,511 39,112,109 9,570,742 18,068,600Monthly Dividend Sub Option 127,978 154,062 - - Daily Dividend Sub Option 6,111 34,736 - - Weekly Dividend Sub Option 128,569 91,470 142,416 361,708

Total (A) 34,814,169 39,392,377 9,713,158 18,430,308

Institutional OptionGrowth Sub Option 20,101,566 247,616,532 70,706 9,581,389Weekly Dividend Sub Option 245,275,083 489,603,616 - - Fortnightly Dividend Sub Option (351) 112,050 - - Monthly Dividend Sub Option 464,013 354,740 - 323,311Daily Dividend Sub Option 0 1,294,515 - 13,598

Total (B) 265,840,311 738,981,453 70,706 9,918,298

Institutional Plus OptionGrowth Sub Option - - - 23,316,290

Total (C) - - - 23,316,290

Total (A+B+C) 300,654,480 778,373,830 9,783,864 51,664,896



RupeesRupees

March 31, 2011Long Term Plan Short Term Plan

SCHEDULE 7Interest and Discount (Note 2.4) April 01, 2010 to

March 31, 2011April 01, 2009 toMarch 31, 2010

April 01, 2010 toMarch 31, 2011

April 01, 2009 toMarch 31, 2010


Debentures / Bonds 347,945 11,150,069 - -

Asset Backed Securities - 7,423,020 - -

Treasury Bills - 15,271,019 - -

Commercial Paper / Certificate of Deposit 331,617,903 502,560,322 - 2,730,000

Deposits 316,818 22,799 1,241,943 32,612

Reverse Repos 19,063,872 20,555,860 13,118,853 9,444,836


Bills Discounted 2,639,726 - - -

TOTAL 361,183,958 581,530,712 19,684,535 21,262,673




Description Quantity Market/ Fair ValueRupees

HSBC FLOATING RATE FUND - LONG TERM PLANCommercial Papers/Certificate of Deposits (100%)Certificate of Deposits (78.82%)

Canara Bank 2011 $ 4,700 461,626,361Andhra Bank 2011 $ 2,500 249,755,548IDBI Bank Limited 2011 $ @ 2,500 249,754,179Canara Bank 2011 $ 2,500 249,693,578HDFC Bank Limited 2011 $ @ 2,500 245,515,497ING Vysya Bank Limited 2011 $ 2,500 245,480,772Oriental Bank of Commerce 2011 $ 2,500 244,420,294Punjab National Bank 2011 $ 2,000 195,572,121State Bank of Travancore 2011 $ 500 49,929,495


Tata Capital Limited 2011 $ 800 392,182,579Kotak Mahindra Prime Limited 2011 $ 400 196,865,982




$ 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 as applicable issued by the Securities and Exchange Board of India.




H35858 H35859

April 01, 2010 toMarch 31, 2011

April 01, 2009 toMarch 31, 2010

April 01, 2008 toMarch 31, 2009

April 01, 2010 toMarch 31, 2011

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 15.0055 14.1925 13.5781 14.3458 13.6668 13.3675 Regular Option – Dividend Sub Option $ 10.0130 10.0063 10.0064 10.0000 10.0000 10.0000 Regular Option - Weekly Dividend Sub Option 10.0049 10.0047 10.0066 10.0155 10.0155 10.0205 Regular Option - Daily Dividend Sub Option 10.0547 10.0126 10.0114 N.A. N.A. N.A. Institutional Option – Growth Sub Option 15.3589 14.4137 13.7348 14.5099 13.8138 13.5003 Institutional Option - Daily Dividend Sub Option - 10.1799 10.0980 N.A. 10.1363 10.0623 Institutional Option - Weekly Dividend Sub Option 11.2296 11.2299 11.2348 - - 10.4999 Institutional Option - Monthly Dividend Sub Option 10.3028 10.1891 10.0614 - 10.1346 10.1350 Institutional Option - Fortnightly Dividend Sub Option 9.9998 10.1971 10.2245 N.A. N.A. N.A.Institutional Plus Option - Growth Sub Option N.A. N.A. N.A. N.A. 11.7344 11.4592 Institutional Plus Option - Daily Dividend Sub Option N.A. N.A. N.A. - - - Institutional Plus Option - Weekly Dividend Sub Option N.A. N.A. N.A. - - 10.0373 Institutional Plus Option - Monthly Dividend Sub Option N.A. N.A. N.A. N.A. N.A. N.A.

(b) Gross Income

(i) income other than profit on sale of investment 1.4463 1.1185 0.5266 0.9715 0.3171 1.2980

(ii) income from profit on inter scheme sales/transfer of investment - - 0.0015 - - 0.0144

(iii) income (net) from profit on sale of investments to third party 0.0043 0.2305 0.0398 (0.0087) (0.0041) 0.0003

(iv) transfer to revenue account from past year’s reserve 0.0100 - 0.0059 0.0950 - 0.0579

Gross income and gains 1.4606 1.3490 0.5738 1.0579 0.3130 1.3706

(c) Aggregate of expenses, writeoff, amortisation and charges 0.0808 0.1605 0.0380 0.0993 0.0564 0.0948

(d) Net income 1.3799 1.1885 0.5358 0.9585 0.2566 1.2758

(e) Net change in unrealised depreciation in value of investments of investments - 0.0013 (0.0016) - - -


Highest - Regular Option - Growth Sub Option 15.0072 14.1906 13.5746 14.3427 13.6650 13.3675 - Regular Option - Dividend Sub Option $ 10.0621 10.0688 10.0897 N.A. 10.0000 10.0000 - Regular Option - Weekly Dividend Sub Option 10.0199 10.0240 10.0062 10.0261 10.0208 10.0316 - Regular Option - Daily Dividend Sub Option 10.0260 10.0126 10.0114 10.0000 N.A. N.A. - Institutional Option - Growth Sub Option 15.3438 14.4095 13.7348 13.9992 13.7015 13.4985 - Institutional Option - Daily Dividend Sub Option 10.5135 10.1787 10.0955 10.5801 10.1309 10.0623 - Institutional Option - Weekly Dividend Sub Option 11.2487 11.2550 11.2523 N.A. 10.4979 10.4459 - Institutional Option - Monthly Dividend Sub Option 10.3461 10.1818 10.1498 10.5322 10.1535 10.1395 - Institutional Option - Fortnightly Dividend Sub Option 10.2135 10.1782 10.0515 N.A. N.A. N.A. - Institutional Plus Option - Growth Sub Option N.A. N.A. N.A. 12.0334 11.7314 10.9706 - Institutional Plus Option - Daily Dividend Sub Option N.A. N.A. N.A. N.A. N.A. 10.0262 - Institutional Plus Option - Weekly Dividend Sub Option N.A. N.A. N.A. N.A. 10.0385 10.0392 - Institutional Plus Option - Monthly Dividend Sub Option N.A. N.A. N.A. N.A. N.A. N.A.

Lowest - Regular Option - Growth Sub Option 14.2014 13.5915 12.4964 13.6742 13.3689 12.4265 - Regular Option - Dividend Sub Option $ 10.0031 10.0027 10.0038 N.A. 10.0000 10.0000 - Regular Option - Weekly Dividend Sub Option 10.0073 10.0070 10.0062 10.0169 10.0159 10.0047 - Regular Option - Daily Dividend Sub Option 10.0126 10.0114 10.0024 10.0000 N.A. N.A. - Institutional Option - Growth Sub Option 14.4550 13.7977 12.5920 13.8266 13.5195 12.5217 - Institutional Option - Daily Dividend Sub Option 10.1799 10.1056 10.0156 10.1554 10.0623 10.0392 - Institutional Option - Weekly Dividend Sub Option 11.2330 11.2333 11.2298 N.A. 10.4964 10.0599 - Institutional Option - Monthly Dividend Sub Option 10.1616 10.0692 10.0392 10.1622 10.1513 10.0770 - Institutional Option - Fortnightly Dividend Sub Option 10.2062 10.1632 10.0116 N.A. N.A. N.A. - Institutional Plus Option - Growth Sub Option N.A. N.A. N.A. 11.7455 11.7314 10.6789 - Institutional Plus Option - Daily Dividend Sub Option N.A. N.A. N.A. N.A. N.A. 10.0000 - Institutional Plus Option - Weekly Dividend Sub Option N.A. N.A. N.A. N.A. 10.0355 10.0154 - Institutional Plus Option - Monthly Dividend Sub Option N.A. N.A. N.A. N.A. N.A. N.A.

(g) Purchase price

Highest - Regular Option - Growth Sub Option 15.0072 14.1888 13.5781 14.2996 13.6650 13.3644 - Regular Option - Dividend Sub Option $ 10.0580 10.0688 10.0879 N.A. 10.0000 10.0000 - Regular Option - Weekly Dividend Sub Option 10.0185 10.0240 10.0121 10.0257 10.0216 10.0292 - Regular Option - Daily Dividend Sub Option 10.0260 10.0126 10.0114 10.0000 N.A. N.A. - Institutional Option - Growth Sub Option 15.3477 14.4036 13.7253 14.5096 13.7584 12.9939 - Institutional Option - Daily Dividend Sub Option 10.4858 10.1799 10.0980 10.5801 10.0770 10.0623 - Institutional Option - Weekly Dividend Sub Option 11.2487 11.2550 11.2518 N.A. 10.4943 10.4975 - Institutional Option - Monthly Dividend Sub Option 10.3713 10.1497 10.1899 10.1296 10.1296 10.1296 - Institutional Option - Fortnightly Dividend Sub Option 10.1969 10.2344 10.2109 N.A. N.A. N.A. - Institutional Plus Option - Growth Sub Option N.A. N.A. N.A. 12.0334 11.6859 10.9340 - Institutional Plus Option - Daily Dividend Sub Option N.A. N.A. N.A. N.A. N.A. 10.0262 - Institutional Plus Option - Weekly Dividend Sub Option N.A. N.A. N.A. N.A. 10.0319 10.0319 - Institutional Plus Option - Monthly Dividend Sub Option N.A. N.A. N.A. N.A. N.A. N.A.

Lowest - Regular Option - Growth Sub Option 14.2014 13.5915 12.4964 13.6742 13.3689 12.4357 - Regular Option - Dividend Sub Option $ 10.0000 10.0000 10.0000 N.A. 10.0000 10.0000 - Regular Option - Weekly Dividend Sub Option 10.0044 10.0009 10.0000 10.0155 10.0155 10.0004 - Regular Option - Daily Dividend Sub Option 10.0126 10.0114 10.0000 10.0000 N.A. N.A. - Institutional Option - Growth Sub Option 14.4291 13.7486 12.5920 13.8208 13.6191 12.5594 - Institutional Option - Daily Dividend Sub Option 10.1799 10.0990 10.0000 10.1411 10.0623 10.0597 - Institutional Option - Weekly Dividend Sub Option 11.2293 11.2282 11.2227 N.A. 10.4943 10.0508 - Institutional Option - Monthly Dividend Sub Option 10.1521 10.0613 10.0380 10.1296 10.1296 10.0607 - Institutional Option - Fortnightly Dividend Sub Option 10.0000 10.1575 10.0022 N.A. N.A. N.A. - Institutional Plus Option - Growth Sub Option N.A. N.A. N.A. 10.0000 11.6843 10.6208 - Institutional Plus Option - Daily Dividend Sub Option N.A. N.A. N.A. N.A. N.A. 10.0000 - Institutional Plus Option - Weekly Dividend Sub Option N.A. N.A. N.A. N.A. 10.0319 10.0042 - Institutional Plus Option - Monthly Dividend Sub Option N.A. N.A. N.A. N.A. N.A. N.A.

(h) Price earnings ratio NA NA NA NA NA NA

(i) Ratio of expenses to average daily net assets by percentage

Regular 0.98% 1.00% 0.93% 0.50% 0.51% 0.70%Institutional 0.28% 0.61% 0.45% 0.43% 0.44% 0.45%Institutional Plus NA NA NA 0.35% 0.37% 0.41%

(j) Ratio of gross income (including net profit on sale of investments and net change in 6.32% 5.35% 6.97% 5.04% 2.72% 8.26%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$ Long Term Plan – Monthly Dividend Sub Option

Short Term Plan – Daily Dividend Sub Option

LONG TERM PLAN SHORT TERM PLAN





Investment Manager


Sponsor


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) 150,625 371,070,169 - 725,000 371,945,794 Previous Year 585,045 3,039,717 - 9,228,937 12,853,699

Redemption of Units (including switch out) 17,032,780 894,674,792 - 9,527,760 921,235,332 Previous Year - 2,800,000 - 15,266,937 18,066,937

Dividend Distribution (Including dividend reinvested) 150,625 21,057,176 - 45,402 21,253,202 Previous Year 585,045 39,858 - 328,937 953,840

Investment Management and Advisory Fees 8,402,662 - - - 8,402,662 Previous Year 49,631,529 - - - 49,631,529

Brokerage/ Commission on Distribution of Units - 1,105,445 - - 1,105,445 Previous Year - 4,329,515 - - 4,329,515

Charges for Services Provided by Bank - - - - - Previous Year - 3,831 - - 3,831



Investment Manager


Sponsor


Relatives Total

Investment Management and Advisory Fees Payable 803,820 - - - 803,820 Previous Year 4,508,635 - - - 4,508,635

Brokerage/ Commission Payable for Distribution of Units - 472,690 - - 472,690 Previous Year - 1,025,639 - - 1,025,639

Units Outstanding As At Year End - - - - - Previous Year 16,655,361 515,822,783 - 7,365,776 539,843,920

(iii) Details of material transactions with respect to parties referred to in Note 10 (I) (iii),(iv),(v),(vi) and (vii) for Associates of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)PML Mercantile Ltd - 3,039,717Multi Commodity Exchange of India Limited 352,139,307 -

Redemption of Units (including switch out)PML Mercantile Ltd - 2,800,000HSBC Software Development India Private Limited 542,316,669 - Multi Commodity Exchange of India Limited 352,113,281

Dividend Distribution (Including dividend reinvested)PML Mercantile Ltd - 39,858HSBC Software Development India Private Limited 18,930,038 - Multi Commodity Exchange of India Limited 2,126,314 -

Units Outstanding As At Year EndHSBC Software Development India Private Limited - 515,579,253

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,105,014 3,987,136 HSBC InvestDirect Securities (India) Limited - 342,379

Brokerage / Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 472,690 1,025,476 HSBC InvestDirect Securities (India) Limited 163


(iv) Disclosures in respect of material transactions with persons referred to in Note 10 (I)(viii) for key management personnel and their relatives

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Kemaya Lal Kidwai - 5,612,999 Rashid K Kidwai 725,000 3,457,923 Rumaan Nazir Kidwai - -

Redemption of Units (including switch out)Naina Lal Kidwai - 11,856,937 Kemaya Lal Kidwai 5,440,924 1,910,000 Rashid K Kidwai 2,169,880 - Rumaan Nazir Kidwai 1,234,808 -

Dividend Distribution (Including dividend reinvested)Naina Lal Kidwai - 158,015 Kemaya Lal Kidwai 26,163 112,999 Rashid K Kidwai 10,585 33,558 Rumaan Nazir Kidwai 6,332 -

Units Outstanding As At Year EndNaina Lal Kidwai - - Kemaya Lal Kidwai - 5,407,717 Rashid K Kidwai - 1,432,989 Rumaan Nazir Kidwai - 1,226,639

HSBC MUTUAL FUND - HSBC FLOATING RATE FUND - LONG TERM PLAN


Annexure I


Nature of Transaction Investment ManagerAssociate of Investment

Manager Total

Redemption of Units (including switch out) 59,996,217 - 59,996,217 Previous Year - - -

Investment Management and Advisory Fees 1,011,147 - 1,011,147 Previous Year 2,029,284 - 2,029,284

Brokerage/ Commission on Distribution of Units - 312,245 312,245 Previous Year - 811,793 811,793

Charges for Services Provided by Bank - - - Previous Year - 6,386 6,386



Manager Total

Investment Management and Advisory Fees Payable 284,639 - 284,639 Previous Year 698,971 - 698,971

Brokerage/ Commission Payable for Distribution of Units - 196,738 196,738 Previous Year - 204,699 204,699

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Brokerage / Commission for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 311,663 810,250 HSBC InvestDirect Securities (India) Limited - 1,542

Brokerage / Commission Payable for Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 196,738 204,631 HSBC InvestDirect Securities (India) Limited 68


(iii) Details of material transactions with respect to parties referred to in Note 10 (I) (iii),(iv),(v),(vi) and (vii) for Associates of Investment Manager

HSBC MUTUAL FUND - HSBC FLOATING RATE FUND - SHORT TERM PLAN


Annexure I



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 and

Monthly Dividend Sub-Options. 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 under 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. There are no unit

holders in the daily dividend re-investment sub-option of Institutional Option of Long Term Plan as at March 31,

2011. Further, there are no unit holders in the daily dividend, monthly dividend, weekly dividend sub-options of

Institutional Option and Growth, daily dividend, monthly dividend, weekly dividend sub-options of Institutional

Plus option of Short term plan as at March 31, 2011.

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.







Traded debt securities are valued at the last quoted closing price on the principal exchange on which the security

is traded.





amortization basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate bond is

purchased from the market, the ‘purchase price’ is considered as the ‘traded price’ and the amortization continued

from the traded price."




a) All money market securities, debt securities and floating rate securities with residual maturity of upto and over

91 days are valued at the weighted average price at which they are traded on the particular valuation day.






(India) Private Limited and approved by the Trustee in accordance with the guidelines for valuation of securities

for mutual funds, issued by Securities and Exchange Board of India (SEBI) from time to time.

ii. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management (India)


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











Account.






safekeeping fees.



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














2.8 Load Charges

















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.

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

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

6 Income Taxes


of the Income Tax Act, 1961 of India.

7 Aggregate Fair Value of Non-Traded/ Privately Placed Investments



Aggregate fair values of non traded (including private placement) investments as determined by HSBC Asset


2011 is Rs. 2,780,796,406 for Long Term Plan.


The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 334,133,769 and Rs. Nil for Long Term and Short Term Plan respectively) are:

Aggregate Purchases Aggregate Sales

Plan Rupees Percentage of Average Daily Net Assets Rupees Percentage of Average

Daily Net Assets

Long Term Plan 26,359,357,313 460.25% 29,809,561,444 520.49%

Short Term Plan - - - -


The total income (including net profit on sale of investments / net of net loss on sale of investments) and

expenditure during the year are:

Total Income Total Expenditure

Plan Rupees Percentage of Average Daily Net Assets Rupees Percentage of Average

Daily Net Assets

Long Term Plan 362,263,140 6.33% 20,167,796 0.35%

Short Term Plan 19,508,905 5.04% 1,836,918 0.47%











(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) Multi commodity Exchange of India 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 (upto June 10, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan HSBC Gilt Fund HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010



Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



Annexure I.



Name of Sponsor/AMC and its associate/related



Nature of Relation

Period Covered


% of Total




Fund

Plan


Long Term Plan

HSBC InvestDirect Securities (India) Limited Associate 2010-2011 0.00~ 0.00~ 431 0.01

Long Term Plan


Short Term Plan

HSBC InvestDirect Securities (India) Limited Associate 2010-2011 1.17 5.70 582 0.12

Short Term Plan





Nature of Relation

Period Covered


% of Total




Fund

Plan


Long Term Plan


Long Term Plan


Short Term Plan


Short Term Plan



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.


















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, 2011, unclaimed redemptions aggregate Rs. 14,800 payable to 4 investors for Long Term Plan.


As at March 31, 2011, unclaimed dividend aggregates Rs. 41,564 payable to 56 investors for Long Term Plan.




Miscellaneous income of Rs. 7,901 in Long Term Plan represents compensation received from HSBC Asset

Management India Private Limited for non utilization of funds. 17 Prior Year’s Figures









Trustee

Director

Place: Mumbai


Fund Manager(s)

0Auditors’ Report 1To the Board of Trustees of 2HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – Fixed Term Series 79 (The “Scheme”) as at March 31, 2011, the related Revenue Account for the period March 22, 2011 to March 31, 2011 and the Cash Flow Statement for the period March 22, 2011 to March 31, 2011, 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.





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


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 – Fixed Term Series 79 as at March 31, 2011, its net surplus and its cash flows for the period March 22, 2011 to March 31, 2011.

(ii) The Balance Sheet as at March 31, 2011, and the Revenue Account for the period March 22,

2011 to March 31, 2011, 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 non-traded debt securities as at March 31, 2011, as determined by




March 31, 2011Schedule Rupees

ASSETS

Investments 1 5,230,219,099

Other Current Assets 2 10,535,203

TOTAL 5,240,754,302

LIABILITIES

Unit Capital 3 0.00 5,198,472,049

Reserves and Surplus 4 41,904,776

Current Liabilities and Provisions 5 0.85 377,477

TOTAL 0.65 5,240,754,302


Growth Option

Dividend Option Total

Net Assets as per Balance Sheet(Total Assets less Current Liabilities and Provisions) (Note 2.5) 5,124,741,468 115,635,357 5,240,376,825

Number of Units in Issue 508,376,134.932 11,471,069.991

Net Asset Value per Unit 10.0806 10.0806

5,124,741,468 115,635,357 5,240,376,825 Notes to the Financial Statements. 7



Trustee Director


HSBC MUTUAL FUND - HSBC FIXED TERM SERIES 79





Regular Option

0

Schedule Rupees

INCOME AND GAINSInterest and Discount 6 8,564,333

TOTAL 8,564,333

EXPENSES AND LOSSES

Net Loss on Sale of investments (Note 2.3) 16,025

Investment Management and Advisory Fees (Note 3) 109,801

Transfer Agent Fees and Expenses 21,631

Custodian Fees and Expenses (Note 4) 6,203

Audit Fees 20,000

Other Operating Expenses 10,657

TOTAL 184,317

Less: Expenses to be Reimbursed by the Investment Manager (Note 6) 18,564

TOTAL 165,753

Net Realised Gains for the Period 8,398,580

Net Unrealised Appreciation in Value of Investments 33,506,196

Net Surplus for the Period including Net Unrealised Appreciation in Value of Investments 41,904,776

Net Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve

(33,506,196)

Net Surplus for the Period 0 8,398,580

March 22, 2011 to March 31, 2011

Rupees

Net Surplus for the Period 8,398,580

Balance Transferred to Reserve Fund 8,398,580






Trustee Director



Revenue Account for the period ended March 22, 2011 to March 31, 2011

March 22, 2011to March 31, 2011

1

Period March 22, 2011 to March 31, 2011

Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Period 8,398,580

Adjustments for:- (Increase)/Decrease in Investments at cost (5,196,712,903) (Increase)/Decrease in Other current assets (20,970) Increase/(Decrease) in Current liabilities 184,337

Net cash used in operations (A) (5,188,150,956)

B Cashflow from Financing Activities Increase in Unit capital 5,198,472,049

Adjustments for:- Increase/(Decrease) in Sundry creditors for units redeemed by investors 193,140 Net cash generated from financing activities (B) 5,198,665,189

Net Increase in Cash and cash equivalents (A+B) 10,514,233

Cash and Cash Equivalents at the beginning of the period - Cash and Cash Equivalents at the end of the period 10,514,233


Rupees

1 Cash and Cash Equivalents include the following :Balance with Banks in Current Account 739,248 Other Collateralised LendingReverse Repo 6,428,866 Collateralised Borrowing and Lending Obligation 3,346,119

10,514,233

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



Cash Flow Statement for the period ended March 31, 2011

2

SCHEDULE 1

Investments Fair Value Cost(Notes 2.2, 2.3, 7, 8, 9 and 12) Rupees Rupees


Commercial Papers / Certificate of Deposit 5,230,219,099 5,196,712,903

TOTAL 5,230,219,099 5,196,712,903

SCHEDULE 2 March 31, 2011Other Current Assets Rupees

Balance with Scheduled Banks in Current Account 739,248


Collateralised Borrowing and Lending Obligation 3,346,119

Interest Receivable on :- Reverse Repos 1,629 - Collateralised Borrowing and Lending Obligation 777

Receivable from Investment Manager 18,564

TOTAL 10,535,203


Schedules forming part of the Balance Sheet as at March 31, 2011 and the Revenue Account for the period March 22, 2011 to March 31, 2011


3

SCHEDULE 3Unit Capital March 31, 2011 March 31, 2011

Rupees Units Regular OptionGrowth OptionIssued and Subscribed :Units of Rs.10 each fully paid up 5,083,761,349 508,376,134.932

Outstanding:Initial Issue and Subscription 5,083,761,349 508,376,134.932

5,083,761,349 508,376,134.932

Redeemed during the period - -

At the end of the period 5,083,761,349 508,376,134.932

Dividend OptionIssued and Subscribed :Units of Rs.10 each fully paid up 114,710,700 11,471,069.991

Outstanding:Initial Issue and Subscription 114,710,700 11,471,069.991

114,710,700 11,471,069.991

Redeemed during the period - -

At the end of the period 114,710,700 11,471,069.991

TOTAL 5,198,472,049 519,847,204.923



HSBC Securities and Capital Markets (India) Private Limited, the sponsor holds 15,000,000.000 units in the Growth Option as at March 31,2011.

4

SCHEDULE 4Reserves and Surplus March 31, 2011

Rupees Unrealised Appreciation Reserve Net Change in Unrealised Appreciation in Value of Investments transferred from Revenue Account (Note 7) 33,506,196

At the end of the period 33,506,196

Reserve Fund Balance Transferred from Revenue Account 8,398,580

At the end of the period 8,398,580

TOTAL 41,904,776 *

* The share of the Options of the Reserves and Surplus is as follows : March 31, 2011Rupees

Regular OptionGrowth Option 40,980,119

Dividend Option 924,657

Total (A) 41,904,776



5

SCHEDULE 5Current Liabilities and Provisions March 31, 2011

RupeesCurrent Liabilities

Investment Management and Advisory Fees 109,801 Transfer Agent Fees and Expenses 21,631 Custodian Fees and Expenses 6,203 Audit Fees 20,000 Inter Scheme Payable for Switch-Out 193,140 Sundry Payables 26,702

TOTAL 377,477

SCHEDULE 6Interest and Discount (Note 2.4) March 22, 2011

to March 31, 2011Rupees

Commercial Paper / Certificate of Deposit 5,554,108


Collateralised Borrowing and Lending Obligation 733,623

TOTAL 8,564,333

0



Description Quantity Fair ValueRupees

Commercial Papers/Certificate of Deposits (100%)Certificate of Deposits (100%)

Central Bank of India 2012 $ 7,500 686,365,460Corporation Bank 2012 $ @ 7,500 686,365,460Oriental Bank of Commerce 2012 $ 7,500 686,042,082ICICI Bank Limited 2012 $ 7,000 640,688,001State Bank of Patiala 2012 $ 5,000 458,105,902Canara Bank 2012 $ 5,000 457,469,156IDBI Bank Limited 2012 $ @ 5,000 457,469,156IDBI Bank Limited 2012 $ @ 2,500 228,950,366Vijaya Bank 2012 $ @ 2,500 228,847,873Bank of India 2012 $ @ 2,500 228,734,578Syndicate Bank 2012 $ 2,500 228,734,578Canara Bank 2012 $ 2,500 228,680,694State Bank of Patiala 2012 $ 150 13,765,793

5,230,219,099Total (Cost Rs. 5,196,712,903) 5,230,219,099TOTAL INVESTMENTS (Cost Rs. 5,196,712,903) 5,230,219,099

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


$ 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 as applicable, issued by the Securities and Exchange Board of India.



(Referred to in Schedule 1 to the Balance Sheet as at March 31, 2011 and the Revenue Accountfor the period March 22, 2011 to March 31, 2011)

7

March 22, 2011to March 31, 2011

Rupees

(a) Net asset value per unit at the end of the period (Note 2.5)Growth Option 10.0806 Dividend Option 10.0806

(b) Gross Income

(i) income other than profit on sale of investment 0.0165

(ii) income from profit on inter scheme sales/transfer of investment -

(iii) income (net) from profit on sale of investments to third party (0.0000) ~

(iv) transfer to revenue account from past year’s reserve -

Gross income and gains 0.0164

(c) Aggregate of expenses, writeoff, amortisation and charges 0.0003

(d) Net income 0.0161

(e) Net change in unrealised depreciation in value of investments -


Highest - Growth Option 10.0000 - Dividend Option 10.0000

Lowest - Growth Option 10.0000 - Dividend Option 10.0000

(g) Purchase price

Highest - Growth Option 10.0806 - Dividend Option 10.0806

Lowest - Growth Option 10.0000 - Dividend Option 10.0000

(h) Price earnings ratio NA

(i) Ratio of expenses to average daily net assets by percentage 0.15% #

(j) Ratio of gross income (including net profit / loss on sale of investments and net change in 8.55% #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# Annualised~ Less than 0.0001 per unit



8

(i) Transactions during the Period


Investment Manager


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) 150,000,000 - 900,000,000 7,000,000 1,057,000,000

Redemption of Units (including switch out) - - - 2,000,000 2,000,000

Investment Management and Advisory Fees - 109,801 - - 109,801

Reimbursement of Expenses - 18,564 - - 18,564

(ii) Outstanding As At Period End


Investment Manager


Relatives Total

Investment Management and Advisory Fees Payable - 109,801 - - 109,801

Units Outstanding As At Period End 151,209,000 - 907,254,000 5,040,300 1,063,503,300

Other Receivables - 18,564 - - 18,564

March 22, 2011to March 31, 2011

Subscription of Units (including switch in and dividend reinvestment)HSBC Software Development India Private Limited 850,000,000

Units Outstanding As At Period EndHSBC Software Development India Private Limited 856,851,000


March 22, 2011to March 31, 2011

Subscription of Units (including switch in and dividend reinvestment)Puneet Chaddha 5,000,000 Vikramaaditya 2,000,000

Redemption of Units (including switch out)Vikramaaditya 2,000,000

Units Outstanding As At Period EndPuneet Chaddha 5,040,300




Annexure I

9



SCHEDULE 7


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 returns by investing in a portfolio of

fixed income instruments maturing within the time profile of the Scheme. The key features of the fixed

term series presented in these financial statements are mentioned below.

Scheme Name

New Fund Offering

(NFO) OpenDate

NFO Close Date

Date of Allotment

Tenure of the Scheme

Options Offered

HSBC Fixed

Term Series

79

March 22,

2011

March 24,

2011

March 25,

2011

370 days

from the date

of allotment

Growth and Dividend

Options

The Scheme will not declare dividend under the Growth Option 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 options. 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. For money market securities, debt securities and floating rate securities, pursuant to SEBI/IMD/CIR


2010 :

a) All money market securities, debt securities and floating rate securities with residual maturity of

upto and over 91 days are valued at the weighted average price at which they are traded on the

particular valuation day.


residual maturity of upto 91 days are valued on amortization basis. Floating rate securities with floor

and caps on coupon rate and residual maturity of upto 91 days are valued on amortization basis taking



the coupon rate as floor.


residual maturity of over 91 days are valued at fair value as per procedures determined by HSBC

Asset Management (India) Private Limited and approved by the Trustee in accordance with the

guidelines for valuation of securities for mutual funds, issued by Securities and Exchange Board of

India (SEBI) from time to time.

ii. Instruments bought on ‘repo’ basis are valued at the resale price after deduction of applicable 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 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 change in 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.




method for determining the realized gain or loss on sale of investments. The Schemes uses the average cost

method for determining the realised gain or loss on sale of investments. The cost of investments includes

brokerage stamp charges and any other charges customarily included in the contract note but excludes

custodian safekeeping fees. Fully paid “Rights” are included in the cost of investments for the purpose of

determining realised gains or losses. Accruals for rights entitlements or partly paid rights are not included

in the cost of investments for the purpose of determining realised gains or losses. Bonus shares entitlement

are recognized as investments on the ex bonus date. 2.4 Investment Income


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.

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





The Schemes have 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 0.11% (annualised)

of the average daily net asset values 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 Custodian Fees


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.



HSBC Asset Management (India) Private Limited has borne Rs. 18,564 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 period.

7 Aggregate Appreciation and Depreciation In Value of Investments Aggregate appreciation and depreciation in value of investments is as follows:

March 31, 2011

Certificate of Deposit

- Appreciation 33,506,196

- Depreciation - 8 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, 2011 is Rs. 5,230,219,099.




The aggregate value of investment securities purchased and sold (including matured) during the period

(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 79 5,554,108 5,691,174,820 109.21% 500,000,000 9.59%


The total income (net of net loss on sale of investments) and expenditure during the period 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 79 8,548,308 8.55%* 149,728 0.15%*

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





I Related Party Relationships During the Period Name Description of relationship (i) HSBC Securities and Capital Markets (India) Private Limited Sponsor of the Fund


HSBC Mutual Fund


(iv) HSBC Software Development India Private Limited Associate of the Investment Manager


HSBC Cash Fund HSBC Dynamic Fund HSBC Emerging Markets Fund HSBC Equity Fund HSBC Fixed Term Series 30 (upto June 10, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha – Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel Shefali Chaddha* – Relative of a Key Management Personnel with effect from March 14, 2011

* There were no transactions during the period.

II The transactions with the related parties during the period in the ordinary course of business have been listed in

Annexure I.





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

companies


Nature of Relation

Period Covered


% of Total


Commission paid [Rs.]*


Fund

The Hongkong and Shanghai Banking Corporation Limited Associate 2010-2011 185.95 35.77 - -

* Borne by HSBC Asset Management (India) Private Limited

The brokerage paid was at rates similar to those offered to other distributors. 12 Disclosure under Regulation 25(11) of the Securities and Exchange Board of India (Mutual Funds)








13 Prior Year Figures

As these are the first financial statements of the Scheme since the date of its commencement, there are no

comparative figures.








Trustee

Director

Place: Mumbai


Fund Manager(s)

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"), 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.







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, 2011, its net surplus and its cash flows for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2011 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.



HSBC MUTUAL FUND - HSBC GILT FUND Schedules forming part of the Balance Sheet as at March 31, 2011 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.


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. 2.2 Portfolio Valuation



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



ii. Government securities and Treasury Bills are valued at the average of prices obtained from The Credit

Rating Information Services of India Limited (CRISIL) and ICRA 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 price 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.

iii. For money market securities, debt securities and floating rate securities (investments till July 31,

2010):

Traded debt securities are valued at the last quoted closing price on the principal exchange on which

the security is traded.

Non-traded / thinly traded debt securities are valued at fair value as per procedures determined by



HSBC Asset Management (India) Private Limited which are approved by the Trustee and are in

accordance with the guidelines for valuation of securities specified in the Regulations.








a) All money market securities, debt securities and floating rate securities with residual maturity of

upto and over 91 days are valued at the weighted average price at which they are traded on the

particular valuation day.


residual maturity of upto 91 days are valued on amortization basis. Floating rate securities with floor

and caps on coupon rate and residual maturity of upto 91 days are valued on amortization basis taking

the coupon rate as floor.





time to time.

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 change in 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











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

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. The shortfall if any representing difference between dividend distributions and distributable surplus available

for distribution on the record dates may be utilized from unit premium reserve except to the extent it was

represented by unrealised net appreciation in the value of investments, upto March 15, 2010. With effect from

March 15, 2010, pursuant to SEBI circular No. SEBI/ IMDCIR No. 18/198647/2010 unit premium reserve is

treated at par with unit capital and is not utilized for the determination of distributable surplus.


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






SEBI circular No. CIR /IMD/DF/ 4/2011 dated March 09, 2011 has mandated that there should be segregation

of load accounts into two parts, one to reflect the balance as on July 31, 2009 and the other to reflect accretions









Management (India) Private Limited for managing the Scheme at an average annual rate of 0.26% 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.

4 Trusteeship Fees




not affiliated with the Settlor. 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 of India. 6 Limitation on Expenses




year.



March 31, 2011


(Rupees) Government of India Securities -Appreciation 214 - -Depreciation - -


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

discount of Rs. 26,154) is Rs. 254,752,780 and Rs. 254,427,671 respectively being 3,147.15 % and 3,143.13%

of the average daily net assets.




The total income (including net profit on sale of investments) and expenditure during the year is Rs. 663,301

and Rs. 60,712 respectively being 8.19% and 0.75% of the average daily net assets. 10 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 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan HSBC Floating Rate Fund Long Term Plan HSBC Floating Rate Fund Short Term Plan HSBC India Opportunities Fund HSBC Midcap Equity Fund HSBC MIP Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Tustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



Annexure I.






Nature of Relation

Period Covered


% of Total




Fund


HSBC InvestDirect Securities (India) Limited Associate 2010-2011 0.02 2.36 25 0.12




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


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.



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



12 Litigations Pending

Pursuant to the Compliant Filed by certain investors (the “appellants”), SEBI issued a Show Cause notice dated

August 7, 2009 to the Board of Trustees of the Fund, the Fund, HSBC Asset Management (India) Private

Limited and the CEO of the HSBC Asset Management (India) Private Limited, (together the “respondents”)

pertaining to changes made in the Scheme Information Document of HSBC Gilt Fund via the addendums dated

January 05, 2009 and March 02, 2009. However, after considering the submissions made by the respondents,

SEBI, vide its order dated April 23, 2010 disposed off the show cause notice dated August 7, 2009. The matter

was then referred to the Securities Appellate Tribunal (SAT) by the appellants. The SAT issued an order dated

May 03, 2011 directing the respondents to comply with Regulation 18(15A) of the SEBI Regulations and

provide an exit option to the appellants of the case.

HSBC Asset Management (India) Private Limited has reviewed the SAT order and has filed an appeal against

the same in the Supreme Court. Any liability that may arise as a result of the Supreme Court order will be borne

by HSBC Asset Management (India) Private Limited.

Further, HSBC Asset Management (India) Private Limited has also received complaints from Consumer

Disputes Redressal Forum in December 2010, filed by investors, pertaining to changes made in the Scheme

Information Document of HSBC Gilt Fund via the addendums. The matters are under litigation and have been

adjourned to later date(s) for further hearing.


As at March 31, 2011, unclaimed dividend aggregate to Rs. 7396 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.








Trustee

Director

Place: Mumbai


Fund Manager(s)


ASSETS

Investments 1 499,738 -


TOTAL (1) 7,054,463 4,323,236

LIABILITIES

Unit Capital 3 0.25 5,832,956 3,802,519

Reserves and Surplus 4 1,147,340 421,928 Current Liabilities and Provisions 5 0.43 74,167 98,789

TOTAL -0.82 7,054,463 4,323,236 (1)


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) 5,502,898 489,160 988,238 6,980,296 3,200,009 496,905 527,533 4,224,447

Number of Units in Issue 440,491.793 44,402.584 98,401.449 276,151.441 48,627.589 55,473.174

Net Asset Value per Unit 12.4926 11.0165 10.0429 11.5879 10.2186 9.5097



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



0


Schedule Rupees RupeesINCOME AND GAINS

Interest and Discount 6 515,040 2,578,282

Net Profit on Sale of Investments (Note 2.3) 148,261 -

TOTAL 663,301 2,578,282

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.3) - 341,971

Investment Management and Advisory Fees (Note 3) 20,642 177,322


Trusteeship Fees and Expenses (Note 4) 57 545

Audit Fees 20,000 12,000

Selling and Distribution Expenses - 162,238

SEBI Inspection Fees 31 -


TOTAL 62,914 737,635


TOTAL 60,712 737,635

Net Realised Gains for the Year 602,589 1,840,647

Net Change in Unrealised Depreciation in Value of Investments - 4,848,166

Net Gains for the Year 0.65 602,589 6,688,813 Net Change in Unrealised Appreciation in Value of Investments 214 -

Net Surplus including Net Change in Unrealised Appreciation / Depreciation in Value of Investments 602,803 6,688,813

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve(214) -

Net Surplus for the Year 602,589 6,688,813

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Rupees Rupees

Net Surplus for the Year 168,178 65,987 602,589 6,688,813

Transfer from Income Equalisation Reserve (Note 2.7) (2,155,786) (15,033) (1,878,871) 14,294,916

Transfer from Reserve Fund - 20,201 20,201 -

Dividend / Distribution - (17,745) (17,745) -

Dividend Distribution Tax thereon - (2,456) (2,456) -

Balance Transferred to Reserve Fund (1,987,608) 50,954 (1,276,282) 20,983,729



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


Trustee Director





1


Rupees


Rupees

A. Cashflow from Operating ActivitiesNet Realised Gains for the Year 602,589 1,840,647

Adjustments for:- (Increase)/Decrease in Investments at Cost (499,524) 136,493,582 (Increase)/Decrease in Other Current Assets (9,835) 1,554,955 Increase/(Decrease) in Current Liabilities (24,622) (488,467) Net cash generated from Operations (A) 68,608 139,400,717

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital 2,030,437 (191,465,531) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve 142,810 9,436,623

Adjustments for:- Increase/(Decrease) in Redemption Payable for Units Redeemed by Investors - (1,000,000) (Increase)/Decrease in Subscription Receivable for Units Issued to Investors - 28,948

Dividend / Distribution during the year (17,745) - Dividend / Distribution Tax paid during the year (2,456) - Net cash generated / (used in) from financing activities (B) 2,153,046 (182,999,960)

Net Increase / (Decrease) in Cash and Cash Equivalents (A+B) 2,221,654 (43,599,243)

Cash and Cash Equivalents at the Beginning of the Year 4,322,666 47,921,909 Cash and Cash Equivalents at the End of the Year 6,544,320 4,322,666



Rupees


Balances with Banks :- In Current Account 111,969 224,096 - In Dividend Account 7,396 7,396 Other Collaterised Lending- Reverse Repos 4,225,606 2,552,817 - Collateralised Borrowing and Lending Obligation 2,199,349 1,538,357

6,544,320 4,322,666





Trustee Director





2

SCHEDULE 1

Investments March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010(Notes 2.2, 2.3, 7, 8 and 11) Market Value Cost Market Value Cost


Government of India Securities 499,738 499,524 - -

TOTAL 499,738 499,524 - -


Balances with Banks - in Current Account 111,969 224,096 - in Dividend Account 7,396 7,396


Reverse Repos 4,225,606 2,552,817

Interest Receivable on :- Government of India Securities 6,621 -

- Reverse Repos 1,071 361

- Collateralised Borrowing and Lending Obligation 511 209

Receivable from Investment Manager 2,202 - TOTAL 6,554,725 4,323,236


Schedules forming part of the Balance Sheet as at March 31, 2011 andRevenue Account for the year ended March 31, 2011

3

SCHEDULE 3Unit Capital

March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Rupees 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 2,761,513 276,151.441 25,545,373 2,554,537.361 Issued during the year 3,383,028 338,302.775 935,448 93,544.839

6,144,541 614,454.216 26,480,821 2,648,082.200 Redeemed during the year 1,739,624 173,962.423 23,719,308 2,371,930.759 At the end of the year 4,404,917 440,491.793 2,761,513 276,151.441

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 486,275 48,627.589 30,373,970 3,037,397.103 Issued during the year 3,801,122 380,112.209 4,485,229 448,522.876

4,287,397 428,739.798 34,859,199 3,485,919.979 Redeemed during the year 3,843,372 384,337.214 34,372,924 3,437,292.390 At the end of the year 444,025 44,402.584 486,275 48,627.589

Weekly Dividend OptionIssued and Subscribed :Units of Rs. 10 each fully paid up - - - -

Outstanding :At the beginning of the year 554,731 55,473.174 139,348,707 13,934,870.718 Issued during the year 483,590 48,358.958 65,538,494 6,553,849.420

1,038,321 103,832.132 204,887,201 20,488,720.138 Redeemed during the year 54,307 5,430.683 204,332,470 20,433,246.964 At the end of the year 984,014 98,401.449 554,731 55,473.174

TOTAL 5,832,956 583,295.826 3,802,519 380,252.204

HSBC MUTUAL FUND - HSBC GILT FUNDSchedules forming part of the Balance Sheet as at March 31, 2011 and


4

SCHEDULE 5Current Liabilities and Provisions

March 31, 2011 March 31, 2010Current Liabilites Rupees Rupees

Investment Management and Advisory Fees 5,064 43,944

Transfer Agent Fees and Expenses 444 273

Audit Fees 20,000 12,000

Selling and Distribution Expenses 18,222 7,062


Load Payable (Note 2.8) 14,045 26,282

Dividend Tax Payable 72 -


TOTAL 74,167 98,789


Rupees Rupees

Government of India Securities 247,295 1,992,647

Collateralised Borrowing and Lending Obligation 66,537 195,564

Treasury Bills 26,154 187,184

Reverse Repos 175,054 202,887

TOTAL 515,040 2,578,282


Schedules forming part of the Balance Sheet as at March 31, 2011 andRevenue Account for the year ended March 31, 2011

5


Rupees Rupees

Reserves and Surplus Unit Premium Reserve (Note 2.6 )At the beginning of the year (2,633,947) 2,224,346 Added during the year 2,021,681 (4,858,293) At the end of the year (612,266) (2,633,947)

Income Equalisation Reserve (Note 2.7)Added during the year (1,878,871) 14,294,916 Transfer to Revenue Account 1,878,871 (14,294,916) 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 7) 214 - At the end of the year 214 -

Reserve FundAt the beginning of the year 3,055,875 (17,927,854) Balance Transferred to Revenue Account (20,201) - Balance Transferred from Revenue Account (1,276,282) 20,983,729 At the end of the year 1,759,392 3,055,875

TOTAL 1,147,340 * 421,928 *


Growth Option 1,097,981 438,496 Dividend Option 45,135 10,630 Weekly Dividend Option 4,224 (27,198)

Total 1,147,340 421,928

HSBC MUTUAL FUND - HSBC GILT FUNDSchedules forming part of the Balance Sheet as at March 31, 2011 and


6


Government of India Securities (100.00%)8.08% Government Stock-M-02-Aug-2022 5,000 499,738

Total (Cost Rs. 499,524) 499,738 TOTAL INVESTMENTS (Cost Rs. 499,524) 499,738


Statement of Portfolio Holding as at March 31,2011

(Referred to in Schedule 1 to the Balance Sheet as at March 31,2011 and the Revenue Account for the year ended March 31, 2011 )

7

April 01, 2008to March 31, 2009


Growth Option 12.4926 11.5879 10.7725Dividend Option 11.0165 10.2186 9.4995Weekly Dividend Option 10.0429 9.5097 8.8405

(b) Gross Income



(iii) income (net) from profit on sale of investments to third party 0.2542 (0.8993) (2.9737)

(iv) transfer to revenue account from past year’s reserve 0.0346 - 0.0001

Gross income and gains 1.1718 5.8811 (0.6230)(c) Aggregate of expenses, writeoff, amortisation and charges 0.1041 1.0405 0.2814

(d) Net income 1.0677 4.8406 (0.9044)

(e) Net change in unrealised depreciation in value of investments - 12.7499 (0.2483)


- Growth Option 12.4932 11.5829 12.2999 - Dividend Option 10.8536 10.2175 10.8077 - Weekly Dividend Option 9.8522 9.4048 10.1128

Lowest- Growth Option 11.5936 10.8152 10.6929 - Dividend Option 10.2236 9.5372 9.4672 - Weekly Dividend Option 9.8522 8.9398 8.9203

(g) Purchase price

Highest- Growth Option 12.4932 11.5829 12.2999 - Dividend Option 10.8422 9.9065 10.8077 - Weekly Dividend Option 10.0429 9.1551 10.0940

Lowest- Growth Option 11.6058 10.9315 10.6929 - Dividend Option 10.2820 9.5405 9.7429 - Weekly Dividend Option 9.6583 8.9398 9.1385


(i) Ratio of expenses to average daily net assets by percentage 0.75% 0.76% 0.75%

(j) Ratio of gross income (including net profit / loss on sale of investments and net change in unrealised depreciation in value of investments) to average daily net assets by percentage 8.19% 13.55% -2.32%




Highest

April 01, 2010to March 31, 2011

April 01, 2009to March 31, 2010

8




Investment Management and Advisory Fees 20,642 - 20,642 Previous Year 177,322 - 177,322

Brokerage/ Commission on Distribution of Units - 2,101 2,101 Previous Year - 11,859 11,859




Investment Management and Advisory Fees Payable 5,064 - 5,064 Previous Year 43,944 - 43,944

Brokerage/ Commission Payable on Distribution of Units - 1,643 1,643 Previous Year - 658 658

Other Receivables 2,202 - 2,202 Previous Year - - -

(iii) Details of material transactions with respect to parties referred to in Note 10 (I)(iii) and (iv) for Associate of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 2,076 11,295

Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 1,643 658



Annexure I

9B

Auditors' Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Income Fund (“The Scheme") and

the related Revenue Account 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.






(ii) The Balance Sheet and the 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, 2011 and its net surplus for the year ended on that date.

(iii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that


(iv) The methods used to value non-traded debt securities as at March 31, 2011, as determined by




March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010 Schedule Rupees Rupees Rupees Rupees

ASSETS

Investments 1 1,589,272,885 1,551,141,505 192,121,772 200,197,583

Deposits 2 - 404,000 - 18,955,000

Other Current Assets 3 110,819,254 109,863,227 31,247,352 128,719,520

TOTAL 1,700,092,139 1,661,408,732 223,369,124 347,872,103

LIABILITIES

Unit Capital 4 1,479,671,730 1,488,754,052 -0.20 141,060,482 241,814,371

Reserves and Surplus 5 162,408,400 164,221,535 70,060,689 84,833,283

Current Liabilities and Provisions 6 0.67 58,012,009 8,433,145 0.00 12,247,953 21,224,449

TOTAL -0.43 1,700,092,139 1,661,408,732 0.00 223,369,124 347,872,103


Growth Sub Option

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 Total

#VALUE! Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 26,383,060 30,810,925 5,910,684 63,104,669 108,301,267 50,757,680 159,058,947 231,475,803 590,169,403 598,271,308 1,419,916,514 1,642,080,129 162,528,943 48,592,228 211,121,171 211,121,171

Number of Units in Issue 2,014,163.598 3,012,332.350 564,532.171 10,770,517 5,048,530.923 13,993,341.142 53,760,417.065 58,803,339.171 9,659,776.707 4,446,271.358

Net Asset Value per Unit 13.0988 10.2283 10.4701 10.0553 10.0540 16.5419 10.9778 10.1741 16.8253 10.9288

Growth Sub Option

Dividend Sub Option




Growth Sub Option

Dividend Sub Option

Weekly Dividend Sub Option Total 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

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

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






TrusteeDirector


March 31, 2011 Short Term Plan March 31, 2011

HSBC MUTUAL FUND - HSBC INCOME FUND

Investment PlanShort Term Plan



Investment Plan

RupeesInstitutional Option Regular Option Regular Option

Rupees

Regular Option

March 31, 2010 March 31, 2010 Rupees Rupees

Institutional Option Institutional Plus Option Regular Option

April 01, 2010 to April 01, 2009 to April 01, 2010 to April 01, 2009 to Schedule March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010


INCOME AND GAINS

Interest and Discount 7 93,937,713 186,839,690 20,600,718 44,643,151 - 27,499,198 - 23,882,430 - 582,257 - 37,570

93,937,713 214,921,145 20,600,718 68,563,151

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.3) 4,466,850 - 1,525,123 - Investment Management and Advisory Fees (Note 3) 6,590,648 24,179,425 3,514,110 9,570,986 Transfer Agent Fees and Expenses 866,338 1,755,548 223,845 632,514 Trusteeship Fees and Expenses (Note 4) 14,052 50,679 12,051 11,418 Custodian Fees and Expenses (Note 5) 278,514 418,644 24,221 46,398 Audit Fees 20,000 100,000 20,000 150,000 Selling and Distribution Expenses 6,916,715 12,887,836 1,187,184 3,374,692 SEBI Inspection fees 5,941 - 1,024 - Other Operating Expenses 4,724 144,727 73,319 99,646

TOTAL 19,163,782 39,536,859 6,580,877 13,885,654

Less: Expenses to be Reimbursed by the Investment Manager ( Note 7) 2,392,457 - - -

TOTAL 16,771,325 39,536,859 6,580,877 13,885,654

Net Realised Gains for the Year 77,166,388 175,384,286 14,019,841 54,677,497

Net Change in Unrealised Depreciation in Value of Investments (1,500) - 440,327 15,702,399


Net Change in Unrealised Appreciation in Value of Investments 4,142,990 (4,593,522) 484,523 (2,906,635)

Net Surplus including Net change in Unrealised Appreciation / Depreciation in Value of Investments 81,307,878 170,790,764 14,944,691 67,473,261

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve (4,142,990) 4,593,522 (484,523) 2,906,635 Net Surplus for the Year 77,164,888 175,384,286 14,460,168 70,379,896

0.08

Short Term Plan

April 01, 2010 to MarchApril 01, 2010 to March

31, 2011April 01, 2009 to March

31, 2010April 01, 2010 to March

31, 2011April 01, 2009 to March

31, 2010(April 01, 2009 to March 31, 2010)Rupees Rupees Rupees Rupees Rupees Institutional Option

GrowthSub Option Total Total Total

Net Surplus for the Year 3,934,660 77,164,888 175,384,286 12,320,534 14,460,168 70,379,896

Transfer from Income Equalisation Reserve (Note 2.7) (25,018,243) (37,426,037) (1,478,160) (15,408,845) (17,372,022) (107,849,941)

Transfer from Reserve Fund - 11,376,100 1,018,729 5,408,535 5,408,535 42,837,280

Dividend / Distribution - (50,896,943) (120,843,715) (4,741,097) (4,741,097) (21,383,522)

Dividend / Distribution Tax thereon - (9,391,616) (21,813,453) (667,438) (667,438) (3,170,921)

Balance Transferred to Reserve Fund (21,083,583) (9,173,608) 32,267,687 (3,088,312) (2,911,854) (19,187,208) (14,369,148) ###########





Trustee Director


Regular Option

TOTAL


Short Term Plan Investment Plan



Miscellaneous Income Net Profit on Sale of Investments (Note 2.3)

Investment PlanShort Term Plan

SCHEDULE 1 Investments

(Notes 2.2, 2.3, 8, 9 ,10,11,14 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

(Refer to the attached Statement of Portfolio Holding as at March 31, 2011)Non Convertible Debentures and Bonds Listed / Awaiting Listing 51,772,250 51,773,750 50,065,916 49,721,350 91,357,072 91,281,864 81,303,948 81,359,750

Asset Backed Securities - - - - 5,043,740 5,520,964 6,392,338 6,833,921 Commercial Paper / Certificate of Deposit 1,537,500,635 1,533,013,079 1,501,075,589 1,501,075,589 93,186,340 92,777,025 49,732,940 49,732,940 Government of India Securities - - - - 2,534,620 2,541,147 62,768,357 63,195,051

TOTAL 1,589,272,885 1,584,786,829 1,551,141,505 1,550,796,939 192,121,772 192,121,000 200,197,583 201,121,662

SCHEDULE 2 Deposits March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010


Margin Deposit with the Clearing Corporation of India Limited towards Collateralized Borrowing and Lending Obligations - 404,000 - 205,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities - - - 18,750,000

TOTAL - 404,000 - 18,955,000

SCHEDULE 3 Other Current Assets March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010


Balances with Banks - in Current Account 44,035,543 5,388,181 1,389,401 1,364,502 - in Dividend Account 891 891 75,016 59,396 Reverse Repos 42,301,043 60,984,093 15,541,894 76,410,597 Collateralised Borrowing and Lending Obligation 22,016,963 36,746,877 8,089,218 46,042,472 Sales Contracts Awaiting Completion - Government Securities - - 2,026,480 -

Unit Subscription Receivable - - 100,001 - Inter-Scheme Receivable - For Switch-In - 4,516,399 - 763,607 - For Others - - - 617,970 Interest Receivable on : -Debentures and Bonds - 2,155,890 3,433,693 1,415,343 -Government of India Securities - - 32,742 1,465,651 -Reverse Repos 10,720 8,617 3,939 10,796 -Collateralised Borrowing and Lending Obligation 5,114 4,989 1,879 6,251 -Deposits - 767 - 113,567

Investment Towards Unclaimed Redemption in 25,067.053 Units of HSBC Cash Fund - Growth Option for Investment Plan (2010 : 19,620.554 Units) Market Value Rs. 393,442 (2010 : Rs. 292,134)) (Note 16) - - 325,455 238,624 Investment Towards Unclaimed Dividend in 4,915.945 Units (2010 : 4,915.945 Units) of HSBC Cash Fund - Growth Option for Short Term Plan (Market Value Rs. 77,159) (2010 : Rs. 73,194) and 17,869.307 Units (2010 : 16,781.887 Units) of HSBC Cash Fund - Growth Option for Investment Plan (Market Value Rs. 280,469) (2010 : Rs. 249,869) (Note 17) 56,523 56,523 220,055 203,165

Receivable from Investment Manager 2,392,457 - - - Miscellaneous Receivables - - 7,579 7,579

TOTAL 110,819,254 109,863,227 31,247,352 128,719,520

March 31, 2010 March 31, 2010Investment Plan



Short Term Plan March 31, 2011 March 31, 2011



SCHEDULE 4 Unit Capital

March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Rupees 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 116,389,719 11,638,971.961 88,459,865 8,845,986.502 - - 5,192,544 519,254.435 Issued during the year 20,141,636 2,014,163.598 372,820,682 37,282,068.211 50,000,000 5,000,000.000 110,329,772 11,032,977.203

136,531,355 13,653,135.559 461,280,547 46,128,054.713 50,000,000 5,000,000.000 115,522,316 11,552,231.638 Redeemed during the year 116,389,720 11,638,971.961 344,890,828 34,489,082.752 50,000,000 5,000,000.000 115,522,316 11,552,231.638 At the end of the year 20,141,635 2,014,163.598 116,389,719 11,638,971.961 - - - -

Dividend Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - - - - - -

Outstanding: At the beginning of the year 4,861,404 486,140.282 48,370,134 4,837,013.350 - - 100,134,162 10,013,416.171 Issued during the year 132,386,819 13,238,681.916 532,535,163 53,253,516.264 - - 186,728 18,672.866

137,248,223 13,724,822.198 580,905,297 58,090,529.614 - - 100,320,890 10,032,089.037 Redeemed during the year 107,124,898 10,712,489.848 576,043,893 57,604,389.332 - - 100,320,890 10,032,089.037 At the end of the year 30,123,325 3,012,332.350 4,861,404 486,140.282 - - - -

Weekly Dividend Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - - - - - -

Outstanding: At the beginning of the year 299,063,642 29,906,364.288 249,951,158 24,995,115.818 - - - - Issued during the year 25,906,720 2,590,672.001 816,937,988 81,693,798.828 - - - -

324,970,362 32,497,036.289 1,066,889,146 106,688,914.646 - - - - Redeemed during the year 319,325,042 31,932,504.118 767,825,504 76,782,550.358 - - - - At the end of the year 5,645,320 564,532.171 299,063,642 29,906,364.288 - - - -

- - - - TOTAL 55,910,280 5,591,028.119 420,314,765 42,031,476.531 - - - -

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 502,649,581 50,264,958.110 657,581,345 65,758,134.542

502,649,581 50,264,958.110 800,081,345 80,008,134.542 Redeemed during the year 502,649,581 50,264,958.110 800,081,345 80,008,134.542 At the end of the year - - - -

Weekly Dividend Sub Option Issued and Subscribed: Units of Rs. 10 each fully paid up - - - -

Outstanding: At the beginning of the year 307,594,818 30,759,481.865 - - Issued during the year 183,992,946 18,399,294.635 2,196,940,388 219,694,038.845

491,587,764 49,158,776.500 2,196,940,388 219,694,038.845 Redeemed during the year 383,882,598 38,388,259.734 1,889,345,570 188,934,556.980 At the end of the year 107,705,166 10,770,516.766 307,594,818 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 10,188,035 1,018,803.528 10,000,000 1,000,000.000 Issued during the year 151,084,243 15,108,424.310 848,755,374 84,875,537.437

161,272,278 16,127,227.838 858,755,374 85,875,537.437 Redeemed during the year 110,786,969 11,078,696.915 848,567,339 84,856,733.909 At the end of the year 50,485,309 5,048,530.923 10,188,035 1,018,803.528

TOTAL 158,190,475 15,819,047.689 317,782,853 31,778,285.393




SCHEDULE 4 Unit Capital

March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Rupees 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 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 Issued during the year 251,327,230 25,132,723.022 243,528,266 24,352,826.602 7,452,608 745,260.856 68,850,224 6,885,022.408


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 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 Issued during the year 1,032,760,866 103,276,086.586 1,633,841,890 163,384,188.969 13,330,712 1,333,071.168 144,555,503 14,455,550.272

1,432,148,790 143,214,878.927 2,165,415,955 216,541,595.481 136,544,555 13,654,455.402 731,055,348 73,105,534.761 Redeemed during the year 894,544,618 89,454,461.862 1,766,028,031 176,602,803.140 92,081,840 9,208,184.044 607,841,505 60,784,150.527 At the end of the year 537,604,172 53,760,417.065 399,387,924 39,938,792.341 44,462,715 4,446,271.358 123,213,843 12,321,384.234

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 203,794,503 20,379,450.229 144,672,964 14,467,296.399 Issued during the year 767,939,393 76,793,939.250 730,141,149 73,014,114.879


TOTAL 1,265,570,975 126,557,097.378 750,656,434 75,065,643.340 141,060,482 14,106,048.065 241,814,371 24,181,437.022

TOTAL 1,479,671,730 147,967,173.186 1,488,754,052 148,875,405.264 141,060,482 14,106,048.065 241,814,371 24,181,437.022

Note: HSBC Asset Management (India) Private Limited, the investment manager holds NIL units (Previous year : 500,000 units) in the HSBC Income Fund - Short Term Plan Institutional Option Growth Sub Option as at March 31,20

SCHEDULE 5 Reserves and Surplus March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010

Unit Premium Reserve (Note 2.6) At the beginning of the year 37,246,923 45,099,083 (60,291,610) (9,956,035) Added during the year 14,593,581 (7,852,160) (6,936,728) (50,335,575) At the end of the year 51,840,504 37,246,923 (67,228,338) (60,291,610)

Income Equalisation Reserve (Note 2.7) Added during the year (37,426,037) (1,478,160) (17,372,022) (107,849,941) Transferred to Revenue Account 37,426,037 1,478,160 17,372,022 107,849,941 At the end of the year - - - -

Unrealised Appreciation Reserve At the beginning of the year 344,566 4,938,087 - 2,906,635 Net change in Unrealised Appreciation in Value of Investments Transferred from Revenue Account (Note 8) 4,142,990 (4,593,521) 484,523 (2,906,635) At the end of the year 4,487,556 344,566 484,523 -

Reserve Fund

At the beginning of the year 126,630,048 95,381,089 145,124,893 207,149,381 Transfer to Revenue Account (11,376,100) (1,018,729) (5,408,535) (42,837,280) Balance Transferred from Revenue Account (9,173,608) 32,267,687 (2,911,854) (19,187,208) At the end of the year 106,080,340 126,630,047 136,804,504 145,124,893

TOTAL 162,408,400 * 164,221,535 * 70,060,689 * 84,833,283 *

* The share of the Plans / Options of the Reserves and Surplus is as follows : March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010

Regular OptionGrowth Sub Option 91,542,393 83,004,398 65,931,176 70,426,681 Dividend Sub Option 52,565,231 36,064,376 4,129,513 14,406,602 Weekly Dividend Sub Option 10,237,915 2,839,734 - - Total (A) 154,345,539 121,908,508 70,060,689 84,833,283

Institutional OptionGrowth Sub Option 6,241,425 27,212,962 - - Dividend Sub Option 687,600 266,783 - - Weekly Dividend Sub Option 265,364 12,966,785 - - Total (B) 7,194,389 40,446,530 - -

Institutional Plus OptionGrowth Sub Option - - Weekly Dividend Sub Option 596,101 1,715,516 Monthly Dividend Sub Option 272,371 150,981 Total (C) 868,472 1,866,497

Total (A+B+C) 162,408,400 164,221,535 70,060,689 84,833,283

Rupees Rupees Total

Rupees Rupees

Total




SCHEDULE 6Current Liabilities and Provisions March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010

Rupees Rupees Rupees RupeesCurrent Liabilities

Investment Management and Advisory Fees 560,706 6,116,155 220,712 2,532,091 Transfer Agent Fees and Expenses 82,442 7,981 18,859 88,065 Trusteeship Fees and Expenses 378 - 2,548 - Custodian Fees and Expenses 25,569 41,869 3,061 3,821 Audit Fees 20,000 100,000 20,000 150,000 Selling and Distribution Expenses 4,070,838 1,009,732 255,603 401,567 Purchase Contracts Awaiting Completion - Non Convertible Debenture 51,772,250 - - - - Government securities - - 2,028,280 - Unit Redemption Payable 165,177 908,726 5,256 8,419,380 Units Pending Allotment 1,000,000 - - - Dividend Tax Payable 200,006 82,704 - - Unclaimed Redemption (Note 16) - - 325,455 238,624 Unclaimed Dividend (Note 17) 57,414 57,414 235,933 203,423 Load Payable (Note 2.8) - - 9,092,910 9,142,818 Sundry Payables 57,229 108,564 39,336 44,660

TOTAL 58,012,009 8,433,145 12,247,953 21,224,449

SCHEDULE 7 Interest and Discount (Note 2.4) April 01, 2010 to April 01, 2009 to April 01, 2010 to April 01, 2009 to

March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010Rupees Rupees Rupees Rupees

Debentures / Bonds 58,494 61,935,123 6,190,263 19,872,053 Asset Backed Securities - - 310,032 415,856 Treasury Bills - 1,610,771 36,512 139,808 Commercial Paper / Certificate of Deposit 89,754,342 104,072,119 2,952,271 2,660,438 Government of India Securities - - 6,991,136 14,611,543 Reverse Repos 2,864,736 8,637,785 2,614,100 3,180,976 Collateralised Borrowing and Lending Obligations 1,205,239 10,581,286 1,043,785 3,515,047 Deposits 1,017 2,606 3,496 247,430

Margin Deposit with the Clearing Corporation of India Limited 53,885 - 459,123 -

TOTAL 93,937,713 186,839,690 20,600,718 44,643,151


HSBC MUTUAL FUND - HSBC INCOME FUND Schedules forming part of the Balance Sheet as at March 31, 2011 and the




HSBC INCOME FUND - SHORT TERM PLANNon-Convertible Debentures / Bonds Listed / Awaiting listing (3.26%)Finance & Investments (100%)

0.00% Housing Development Finance Corporation Limited 2012 50 51,772,25051,772,250

Total (Cost Rs. 51,773,750) 51,772,250


Corporation Bank 2011 $ @ 1,500 147,524,309Canara Bank 2011 $ 1,500 147,441,262Union Bank of India 2011 $ @ 1,500 143,941,067Indian Overseas Bank 2012 $ 1,500 137,955,884UCO Bank Limited 2011 $ 1,400 137,955,564Punjab National Bank 2012 $ 1,500 137,890,564Central Bank of India 2012 $ 1,500 137,727,533State Bank of Patiala 2012 $ 1,400 128,480,734Bank of India 2012 $ @ 1,100 100,738,161Allahabad Bank 2011 $ 1,000 98,296,567Oriental Bank of Commerce 2012 $ 1,000 91,905,285


Tata Capital Limited 2011 $ 200 98,045,645ICICI Securities Primary DealershipLimited 2011 $ 60 29,598,060


HSBC INCOME FUND - INVESTMENT PLANNon-Convertible Debentures / Bonds Listed / Awaiting listing (47.55%)Finance & Investments (100%)

7.55% National Housing Bank 2013 27 25,979,7789.95% State Bank of India 2026 $ 2,000 20,927,8889.75% Housing Development Finance Corporation Limited 2014 $ 20 20,001,7507.60% LIC Housing Finance Limited 2012 $ @ 20 19,591,3698.45% Export Import Bank of India 2015 $ @ 5 4,856,287

91,357,072Total (Cost Rs. 91,281,864) 91,357,072


Indian Overseas Bank 2012 $ 200 18,394,118Corporation Bank 2012 $ $ @ 200 18,389,762State Bank of Patiala 2012 $ 200 18,354,391Bank of India 2012 $ @ 200 18,316,029

73,454,300Commercial Papers (21.17%)

ICICI Securities Primary DealershipLimited 2011 $ 40 19,732,04019,732,040

Total (Cost Rs. 92,777,025) 93,186,340

Government of India Securities (1.32%)8.08% Government Stock-M-02-Aug-2022 25,000 2,498,6885.59% Government Stock M 04-Jun-2016 400 35,932

2,534,620Total (Cost Rs. 2,541,147) 2,534,620

Asset Backed Securities (2.63%)India MBS 2002 Series I-D (LIC Housing Finance) PTC 2017 * @ 5 5,043,740


$ 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.




Referred to in Schedule 1 to the Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended March 31, 2011


* 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.

April 01, 2010 April 01, 2009 April 01, 2008 April 01, 2010 April 01, 2009 April 01, 2008to March 31,2011 to March 31,2010 to March 31,2009 to March 31,2011 to March 31,2010 to March 31,2009


(a) Net asset value per unit at the end of the period (Note 2.6)Institutional Option Growth Sub-Option 13.0988 12.3381 11.6871 - - 9.5776 Institutional Option Dividend Sub-Option 10.2283 10.5488 10.4456 - - 10.6682 Institutional Option Weekly Dividend Sub-Option 10.4701 10.4336 10.2542 NA NA NAInstitutional Plus Option Growth Sub-Option - - 10.1070 NA NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0553 10.0558 NA NA NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.0540 10.1482 10.0362 NA NA NARegular Option Growth Sub-Option 16.5419 15.6284 14.8706 16.8253 15.9381 14.8409 Regular Option Dividend Sub-Option 10.9778 10.9030 10.8304 10.9288 11.1692 11.1795 Regular Option Weelky Dividend Sub-Option 10.1741 10.1393 10.0712 NA NA NA

(b) Gross Income

(i) income other than profit on sale of investment. 0.6349 1.2589 0.3357 1.4604 1.8477 0.3571

(ii)income from profit on inter scheme sales/transfer of investment. - - (0.0020) - - (0.0355)

(iii)income (net) from profit on sale of investments to third party (0.0302) 0.1847 0.0252 (0.1081) 0.9876 (0.0650)

(iv) transfer of revenue account from past year’s reserve 0.0769 0.0068 0.0355 0.3834 1.7715 0.0187


(c) Aggregate of expenses, writeoff, amortisation and charge 0.0832 0.2656 0.0339 0.3584 0.5742 0.0709

(d) Net income 0.5984 1.1849 0.3604 1.3773 4.0326 0.2044

(e) Net unrealised appreciation / (depreciation) in value of investments (0.0000) - 0.6764 0.0312 0.6494 (0.1593)


-HighestInstitutional Option Growth Sub-Option 12.9027 12.1808 11.6618 10.3921 10.2801 14.3048 Institutional Option Dividend Sub-Option 10.6000 10.6092 10.4796 - 11.2044 11.2325 Institutional Option Weekly Dividend Sub-Option 10.4525 10.4411 10.3725 - NA NA Institutional Plus Option Growth Sub-Option 10.0607 10.6740 10.1070 - NA NA Institutional Plus Option Weekly Dividend Sub-Option 10.0704 10.0765 10.0220 - NA NA Institutional Plus Option Monthly Dividend Sub-Option 10.1487 10.1984 10.0362 - NA NA Regular Option Growth Sub-Option 16.5177 15.6284 14.8706 16.8050 15.9383 16.0096 Regular Option Dividend Sub-Option 10.9854 11.0232 11.4886 11.3363 11.7989 12.1899 Regular Option Weekly Dividend Sub-Option 10.1714 10.2091 10.1189 - NA NA-LowestInstitutional Option Growth Sub-Option 12.4292 11.9325 11.2862 10.3921 9.8969 10.0133 Institutional Option Dividend Sub-Option 10.0796 10.5478 10.0320 - 10.9358 9.9339 Institutional Option Weekly Dividend Sub-Option 10.3895 10.3173 10.0207 - NA NAInstitutional Plus Option Growth Sub-Option 10.0607 10.3020 10.0000 - NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0553 10.0515 10.0069 - NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.1471 10.1454 10.0000 - NA NARegular Option Growth Sub-Option 15.6474 14.9072 13.5894 15.9587 14.9264 13.6122 Regular Option Dividend Sub-Option 10.8452 10.8570 10.6693 10.8842 11.1456 10.5192 Regular Option Weekly Dividend Sub-Option 10.1248 10.0960 10.0144 - NA NA

(g) Purchase price

-HighestInstitutional Option Growth Sub-Option 12.4121 12.0502 11.6871 10.0000 10.0001 10.0000 Institutional Option Dividend Sub-Option 10.1000 10.6486 10.4468 - 10.8994 11.5164 Institutional Option Weekly Dividend Sub-Option 10.4402 10.4547 10.4561 - NA NAInstitutional Plus Option Growth Sub-Option 10.0000 10.5512 10.0000 - NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0645 10.0875 10.0000 - NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.1478 10.2147 10.0000 - NA NARegular Option Growth Sub-Option 16.5419 15.6249 14.8706 16.8254 15.9383 16.0096 Regular Option Dividend Sub-Option 10.9879 11.0379 11.4947 11.3363 11.7989 12.1899 Regular Option Weekly Dividend Sub-Option 10.1886 10.2224 10.1024 - NA NA

-LowestInstitutional Option Growth Sub-Option 12.4121 11.8147 11.2524 10.0000 9.9403 10.0000 Institutional Option Dividend Sub-Option 10.0000 10.5422 10.0000 - 10.8660 10.0000 Institutional Option Weekly Dividend Sub-Option 10.3792 10.2648 10.0000 - NA NAInstitutional Plus Option Growth Sub-Option 10.0000 10.1322 10.0000 - NA NAInstitutional Plus Option Weekly Dividend Sub-Option 10.0553 10.0000 10.0000 - NA NAInstitutional Plus Option Monthly Dividend Sub-Option 10.0000 10.1429 10.0000 - NA NARegular Option Growth Sub-Option 15.6474 14.9072 13.6243 15.9587 14.9264 13.6140 Regular Option Dividend Sub-Option 10.8405 10.8570 10.6604 10.8669 11.1454 10.5024 Regular Option Weekly Dividend Sub-Option 10.1202 10.0844 10.0075 - NA NA


(i) Ratio of expenses (excluding initial issue expenses ) to daily average net assets by percentage

Regular Plan 1.01% 1.25% 1.10% 1.85% 1.86% 1.69%Institutional Plan 0.70% 0.80% 0.60% 1.50% 1.50% 1.06%Institutional Plus Plan 0.60% 0.75% 0.55% NA NA NA

(j) Ratio of gross income (including net loss on sale of investments and net unrealised depreciation in value 5.98% 5.53% 8.93% 6.94% 10.92% 2.23% of investments) to daily average net assets by percentage


SHORT TERM PLAN INVESTMENT PLAN





Investment Manager


Sponsor Total

Investment Management and Advisory Fees 3,514,110 - - 3,514,110Previous Year 9,570,986 - - 9,570,986

Brokerage/ Commission on Distribution of Units - 562,285 - 562,285Previous Year - 2,756,238 - 2,756,238

Charges for Services Provided by Bank - 33,644 - 33,644Previous Year - 22,806 - 22,806



Investment Manager


Sponsor Total

Investment Management and Advisory Fees Payable 220,712 - - 220,712Previous Year 2,532,091 - - 2,532,091

Brokerage/ Commission Payable on Distribution of Units - 152,601 - 152,601Previous Year - 327,114 - 327,114

Other Receivables - - - - Previous Year - - 617,970 617,970

(iii) Details of material transactions with respect to parties referred to in Note 13 (I)(iii), (iv) and (v) for Associate of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 556,576 2,750,823


Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 152,601 326,728

(iv) Details of material transactions with respect to parties referred to in Note 13 (I)(vi) for Schemes under common control ofthe Sponsor.

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Other ReceivablesHSBC Equity Fund - 617,970

HSBC MUTUAL FUND - HSBC INCOME FUND - INVESTMENT PLAN


Annexure 1



Investment Manager


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - 111,469,640 8,107,279 119,576,919 Previous Year - - 1,026,263 1,026,263

Redemption of Units (including switch out) 6,304,967 361,231,844 - 367,536,811 Previous Year - - - -

Dividend Distribution (Including dividend reinvested) - 11,461,392 107,279 11,568,671 Previous Year - - 26,263 26,263



Reimbursement of Expenses 2,392,457 - - 2,392,457 Previous Year - - - -

Charges for Services Provided by Bank - 9,188 - 9,188 Previous Year - 7,865 - 7,865



Investment Manager


Relatives Total

Investment Management and Advisory Fees Payable 560,706 - - 560,706 Previous Year 6,116,155 - - 6,116,155

Brokerage/ Commission Payable on Distribution of Units - 3,477,065 - 3,477,065 Previous Year - 741,433 - 741,433

Units Outstanding As At Year End - - 9,171,191 9,171,191 Previous Year - 250,523,018 1,025,885 251,548,903

Other Receivables 2,392,457 - - 2,392,457 Previous Year - - - -

(iii) Details of material transactions with respect to parties referred to in Note 13 (I)(iii), (iv) and (v) for Associate of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Multi Commodity Exchange Of India Ltd 102,084,526 - HSBC Software Development India Pvt Ltd 9,385,115

Redemption of Units (including switch out)HSBC Software Development India Pvt Ltd 259,153,100 - Multi Commodity Exchange Of India Ltd 102,078,744 -

Dividend Distribution (Including dividend reinvested)HSBC Software Development India Pvt Ltd 9,385,115 - Multi Commodity Exchange Of India Ltd 2,076,277 -

Brokerage/ Commission on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 4,767,298 11,527,114 HSBC InvestDirect Securities (India) Limited 3,382


Brokerage/ Commission Payable on Distribution of UnitsThe Hongkong and Shanghai Banking Corporation Limited 3,477,065 740,129

Units Outstanding As At Year EndHSBC Software Development Private Limited - 250,523,018

(iv) Disclosures in respect of material transactions with persons referred to in Note 13 (I)(vii) for key management personneland their relatives

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Avan Nelum Gidwani(Relative) - 1,026,263 Puneet Chaddha 8,061,315 -

Dividend Distribution( Including dividend reinvested)Avan Nelum Gidwani(Relative) 45,964 26,263 Puneet Chaddha 61,315

Units Outstanding As At Year EndPuneet Chaddha 8,091,903 - Avan Nelum Gidwani(Relative) 1,079,288 1,025,885

HSBC MUTUAL FUND - HSBC INCOME FUND - SHORT TERM PLAN


Annexure I



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, 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. There are no unit holders in the growth and quarterly

dividend sub-options of Institutional Option of Investment Plan as at March 31, 2011.

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.








security is traded.


Asset Management (India) Private Limited which are approved by the Trustee and are in accordance with the

guidelines for valuation of securities specified in the Regulations.


amortization basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate bond

is purchased from the market, the ‘purchase price’ is considered as the ‘traded price’ and the amortization

continued from the traded price."






valuation day.









time to time

ii. 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.

iii. Government securities are valued at the average of prices obtained from The Credit Rating Information

Services of India Limited (CRISIL) and ICRA 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 price 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.



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

the date of resale. Instruments sold on repo basis are adjusted for the difference between the repurchase

price after deduction of applicable interest upto the date of repurchase.







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





safekeeping fees.



2.5 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
















2.8 Load Charges














Management (India) Private Limited for managing the Scheme at an average annual rate 0.44% and 1.25% 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


applicable, are on their own account for which they receive investment management and advisory fees.

4 Trusteeship Fees





5 Custodian Fees

JPMorgan Chase Bank provides custodial services to the Scheme for which it receives custody fees.

6 Income Taxes






The total expenses chargeable to the Scheme are limited to 0.82% of the average daily net assets of Short Term

Plan. HSBC Asset Management (India) Private Limited has borne Rs. 2,392,457 in respect of the Short Term

Plan 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



March 31 ,2011

(Rupees) March 31 ,2010

(Rupees)

Short Term

Plan Investment

Plan Short Term

Plan Investment Plan


- Appreciation - 215,076 344,566 250,564

- Depreciation 1,500 139,868 - 306,366 Certificate of Deposits / Commercial Papers - Appreciation 4,487,556 409,315 - - - Depreciation - - - - Asset Backed Securities

- Appreciation - - - -

- Depreciation - 477,224 - 441,583


- Appreciation - - - 10,873

- Depreciation - 6,527 - 437,566


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, 2011 Government

securities aggregating to Rs. 2,534,620 (market value) of the Investment Plan are held in the name of HSBC

Mutual Fund.


Aggregate fair value of non (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, 2011 is Rs. 1,537,500,635 for the Short Term Plan and Rs. 163,607,374 for the Investment Plan.




The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 8,9754,342 and Rs. 3,298,815 for Short Term Plan and Investment Plan respectively) is :

Plan Aggregate Purchases Aggregate Sales

Rupees Percentage of Average Daily Net Assets Rupees Percentage of Average

Daily Net Assets

Short Term Plan 4,513,345,293 301.88% 4,564,642,895 305.32%

Investment Plan 5,342,626,089 1900.42% 5,353,400,443 1900.25%


The total income (including net profit net of net loss 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

Rupees Percentage of Average

Daily Net Assets

Rupees Percentage of Average Daily Net Assets

Short Term Plan 89,469,363 5.98% 12,304,475 0.82%

Investment Plan 19,515,922 6.94% 5,055,754 1.80%

13 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)



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

I Related Party Relationships During the Year



HSBC Mutual Fund



(v) HSBC Software Development India Pvt Limited Associate of the Investment Manager

(vi) Multi commodity Exchange of India 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 Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



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. 33,644 for the Short

Term Plan and Rs. 9,188 for the Investment Plan.


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 Relation

Period Covered


% of Total




Fund

Fund


HSBC Income Fund - Investment Plan




HSBC Income Fund - Short Term Plan





Nature of Relation

Period Covered


% of Total




Fund

Fund











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, 2011, unclaimed redemptions aggregate Rs. 325,455 payable to 17 investors of Investment Plan.


As at March 31, 2011, unclaimed dividends payable to investors are:

Plan Amount (Rupees)

Number of Investors

Short Term Plan 57,414 23

Investment Plan 235,933 533










ALPA KEDIA Partner Membership No. F-100681


Trustee

Director

Place: Mumbai


Fund Manager(s)

Auditors' Report

To the Board of Trustees of

HSBC MUTUAL FUND

1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC MIP Fund ("The Scheme") as at March 31, 2011 and the

related Revenue Account 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,

2011 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 and the Revenue Account referred to above are in agreement with the books of

account of the Scheme.


(i) The Balance Sheet and the 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 Fund as at

March 31, 2011 and its net surplus for the year ended on that date.

(ii) The Balance Sheet as at March 31, 2011 and the Revenue Account for the year ended on that date,


(iii) The methods used to value:

a) equity shares awaiting listing b) non-traded debt securities as at March 31, 2011, 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 and the amendments thereto, are fair and reasonable.



March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010Schedule Rupees Rupees Rupees Rupees

ASSETS

Investments 1 2,145,390,413 1,731,926,578 6,651,525,779 2,915,311,766

Deposits 2 47,706,407 35,204,000 37,195,653 47,704,000

Other Current Assets 3 73,060,654 469,608,887 167,162,863 662,598,102

TOTAL -0.39 2,266,157,474 2,236,739,465 -0.20 6,855,884,295 3,625,613,868

LIABILITIES

Unit Capital 4 1,831,340,592 1,707,293,273 -0.15 5,057,634,353 2,613,404,694

Reserves and Surplus 5 394,391,792 485,912,507 -0.35 1,703,381,916 969,682,172

Current Liabilities and Provisions 6 40,425,090 43,533,685 94,868,026 42,527,002

TOTAL 2,266,157,474 2,236,739,465 6,855,884,295 3,625,613,868


Growth Option

Monthly Dividend Option

QuarterlyDividend Option Total

Growth Option


Quarterly DividendOption Total

Net Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 632,676,739 1,034,948,344 558,107,301 2,225,732,384 2,355,688,011 2,807,947,330 1,597,380,928 6,761,016,269

Number of Units in Issue 37,218,578.212 96,169,739.670 49,745,741.293 122,661,084.280 246,665,614.503 136,436,736.579


Growth Option


QuarterlyDividend Option Total

Growth Option


Quarterly DividendOption 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)

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



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


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

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

REGULAR PLAN SAVINGS PLAN

Rupees Rupees

March 31, 2010 March 31, 2010Rupees Rupees

HSBC MUTUAL FUND - HSBC MIP FUND


March 31, 2011 March 31, 2011


April 01, 2010 to April 01, 2009 to April 01, 2010 to April 01, 2009 to March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010

Schedule Rupees Rupees Rupees Rupees

INCOME AND GAINS

Dividends (Note 2.4) 3,904,959 1,206,305 12,563,793 3,466,618

Interest and Discount 7 145,274,851 55,678,489 318,911,016 81,629,907

Net Profit on Sale of Investments and Derivatives (Note 2.3 and 2.5) 30,880,462 74,565,352 51,914,127 196,325,524

Miscellaneous Income (Note 19) - - 82,988 290,141

TOTAL 180,060,272 131,450,146 383,471,924 281,712,190

EXPENSES AND LOSSES

Investment Management and Advisory Fees (Note 3) 26,718,280 10,652,261 59,534,135 16,985,048

Trusteeship Fees and Expenses (Note 4) 35,465 19,411 56,944 27,486

Transfer Agent Fees and Expenses 2,056,282 1,030,075 4,911,245 1,636,319

Custodian Fees and Expenses (Note 5) 462,507 189,039 1,314,970 370,429

Audit Fees 24,928 75,000 75,643 75,000

Selling and Distribution Expenses 21,470,288 15,232,613 48,189,370 23,282,185

Sebi Inspection Fees 9,126 - 15,866 -

Other Operating Expenses 159,683 203,640 358,105 207,756

TOTAL 50,936,559 27,402,039 114,456,278 42,584,223

Less: Expenses to be Reimbursed by the Investment Manager (Note 7) - - 2,488,006 -

TOTAL 50,936,559 27,402,039 111,968,272 42,584,223

Net Realised Gains for the Year 129,123,713 104,048,107 # 271,503,652 239,127,967

Net Change in Unrealised Depreciation in Value of Investments and Derivatives (8,869,403) 5,260,327 # (37,495,183) 12,493,122


Net Change in Unrealised Appreciation in Value of Investments and Derivatives (26,881,770) 20,876,507 (77,651,763) 58,339,014

Net Surplus including Net Change in Unrealised Appreciation / Depreciation in Value of Investments and Derivatives 93,372,540 130,184,941 156,356,706 309,960,103

Net Change in Unrealised Appreciation in Value of Investments and Derivatives transferred to Unrealised Appreciation Reserve 26,881,770 (20,876,507) 77,651,763 (58,339,014)

Net Surplus for the Year 120,254,310 109,308,434 234,008,469 251,621,089

SAVING PLANApril 01, 2010 to March 31, 2011

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

(April 01, 2009 to March 31, 2010)

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Rupees Rupees Rupees Rupees Rupees Growth Option

Net Surplus for the Year 120,254,310 109,308,434 78,300,659 234,008,469 251,621,089

(-17,257,537)

Transfer (to) / from Income Equalisation Reserve (Note 2.8) (29,941,647) 242,735,451 432,430,737 601,616,610 410,458,979

(-46,377,469)

Transfer from Reserve Fund 76,545,901 1,103,921 - 98,663,270 -

-

Dividend / Distribution (141,383,054) (55,806,847) - (307,135,862) (103,722,764)

-

Dividend / Distribution Tax thereon (20,916,142) (8,616,922) - (45,939,679) (15,490,055)

-

Balance Transferred to Reserve Fund 4,559,368 288,724,037 510,731,396 581,212,808 542,867,249

(-63,635,005)




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


SCHEDULE 1Investments

(Notes 2.2, 2.3, 8, 9, 10, 11 and 15) Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value Cost Market/Fair Value CostRupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees


Equity Shares 300,695,211 296,758,771 277,066,585 250,134,413 1,557,498,091 1,573,481,937 736,549,690 660,577,416

Non Convertible Debentures and Bonds Listed / Awaiting Listing 454,113,258 462,964,567 360,064,212 357,190,295 1,294,867,566 1,316,326,103 547,857,293 543,745,454

Privately Placed Non Convertible Debentures / Bonds - - 30,358,470 30,358,470 - - 74,621,157 74,045,108

Asset Backed Securities - - 66,056,304 64,317,240 - - 91,156,007 88,551,968

Commercial Paper / Certificate of Deposit 1,368,593,494 1,367,462,921 969,709,007 969,709,007 3,735,193,722 3,728,853,968 1,452,839,619 1,452,839,619

Government of India Securities 21,988,450 22,006,544 28,672,000 28,639,884 63,966,400 64,019,200 12,288,000 12,274,313

TOTAL 2,145,390,413 2,149,192,803 1,731,926,578 1,700,349,309 6,651,525,779 6,682,681,208 2,915,311,766 2,832,033,878

SCHEDULE 2Deposits March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010


Deposits with Scheduled Bank (Under Lien Towards Margin Deposit for Equity Derivatives) 10,000,000 10,000,000 22,000,000 10,000,000

Margin Deposit with the Clearing Corporation of India Limited towards Collateralized Borrowingand Lending Obligation 1,843,463 204,000 6,073,311 204,000

Margin Deposit with the Clearing Corporation of India Limited towards Reverse Repos andGovernement Securities 35,862,944 25,000,000 9,122,342 37,500,000

Total 47,706,407 35,204,000 37,195,653 47,704,000

SCHEDULE 3Other Current Assets March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010


Balances with Banks

- in Current Account 519,444 8,308,498 3,579,266 32,847,995

- in Dividend Account 26,674 5,935 363,372 312,625

Reverse Repos 7,332,629 256,555,003 4,874,357 347,867,150


Sales Contracts Awaiting Completion

- Equity Shares 10,476,125 - 43,574,527 -

- Government of India Securities 14,691,980 - 33,943,540 -

- Debentures / Bonds - 24,923,647 24,923,647

Unit Subscription Receivable 13,626,000 12,489,000 4,853,000 27,055,001

Inter Scheme Receivable for :- For 'Switch- In' 178,450 5,264,321 746,759 2,435,825

Derivative Margin Deposit (Note 2.5) 2,500,000 2,250,000 15,500,000 10,250,000


- Debentures and Bonds 18,843,206 3,938,247 51,563,759 6,232,578

- Government of India Securities 301,204 851,822 878,027 365,067

- Deposits 23,973 162,140 90,893 237,592

- Reverse Repos 1,858 36,249 1,235 49,151

- Collateralised Borrowing and Lending Obligation 887 20,990 589 28,460

- Margin Deposit with the Clearing Corporation of India Limited 258,223 - 867,009 -

Dividend Receivable 113,700 - 842,450 -

Investment Towards Unclaimed Redemption in 4,489.591 Units (2010 : 3,558.520 Units) (Market Value Rs. 70,467 (2010: Rs. 52,984)) of HSBC Cash Fund -Growth Option for Regular Plan (Note 17) 58,400 44,427 - -

Investment Towards Unclaimed Dividend in 20,552.465 Units (2010 : 12,650.793 Units) of HSBC Cash Fund - Growth Option (Market Value Rs. 322,112 (2010 : Rs. 188,360)) for Regular Plan and 31,367.063 Units (2010 : 25,806.863 Units) of HSBC Cash Fund - Growth Option (Market Value Rs. 492,325 (2010 :Rs. 384,244)) for Savings Plan (Note 18) 280,599 156,550 436,931 350,615

Receivable from Investment Manager 120 - 2,494,936 14,009

Miscellaneous Receivables 10,609 10,609 15,156 15,156

TOTAL 73,060,654 469,608,887 167,162,863 662,598,102

March 31, 2010 March 31, 2011 March 31, 2011

REGULAR PLAN

March 31, 2010




SAVINGS PLANREGULAR PLAN

SAVINGS PLAN

SCHEDULE 4

Unit Capital March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010 March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010Rupees 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 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 Issued during the year 313,538,052 31,353,805.237 365,091,083 36,509,108.348 1,105,044,427 110,504,442.735 557,027,163 55,702,716.349

782,191,971 78,219,197.235 568,521,552 56,852,155.266 1,771,866,369 177,186,636.968 829,660,594 82,966,059.394 Redeemed during the year 410,006,190 41,000,619.023 99,867,633 9,986,763.268 545,255,527 54,525,552.688 162,838,652 16,283,865.161 At the end of the year 372,185,781 37,218,578.212 468,653,919 46,865,391.998 1,226,610,842 122,661,084.280 666,821,942 66,682,194.233

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 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 Issued during the year 963,449,278 96,344,927.811 929,187,860 92,918,786.004 2,542,677,139 254,267,713.904 1,133,096,175 113,309,617.474

1,837,099,940 183,709,993.915 1,040,981,785 104,098,178.391 3,719,467,434 371,946,743.416 1,356,454,850 135,645,485.016 Redeemed during the year 875,402,542 87,540,254.245 167,331,123 16,733,112.287 1,252,811,289 125,281,128.913 179,664,555 17,966,455.504 At the end of the year 961,697,398 96,169,739.670 873,650,662 87,365,066.104 2,466,656,145 246,665,614.503 1,176,790,295 117,679,029.512

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 364,988,692 36,498,869.190 150,652,764 15,065,276.417 769,792,457 76,979,245.665 358,515,376 35,851,537.631 Issued during the year 365,513,593 36,551,359.322 272,334,499 27,233,449.862 1,078,847,512 107,884,751.165 505,002,335 50,500,233.466

730,502,285 73,050,228.512 422,987,263 42,298,726.279 1,848,639,969 184,863,996.830 863,517,711 86,351,771.097 Redeemed during the year 233,044,872 23,304,487.219 57,998,571 5,799,857.089 484,272,603 48,427,260.251 93,725,254 9,372,525.432 At the end of the year 497,457,413 49,745,741.293 364,988,692 36,498,869.190 1,364,367,366 136,436,736.579 769,792,457 76,979,245.665

TOTAL 1,831,340,592 183,134,059.175 1,707,293,273 170,729,327.292 5,057,634,353 505,763,435.362 2,613,404,694 261,340,469.410




SCHEDULE 5Reserves and Surplus March 31, 2010 March 31, 2011 March 31, 2010


Unit Premium Reserve (Note 2.7)At the beginning of the year 68,538,327 (2,167,593) 208,491,893 19,325,365

Added during the year 7,347,589 70,705,920 328,801,969 189,166,528 At the end of the year 75,885,916 68,538,327 537,293,862 208,491,893

Income Equalisation Reserve (Note 2.8)Added during the year (29,941,647) 242,735,451 601,616,610 410,458,979

Transferred to Revenue Account 29,941,647 (242,735,451) (601,616,610) (410,458,979) At the end of the year - - - -

Unrealised Appreciation ReserveAt the beginning of the year 31,948,783 11,072,276 83,991,517 25,652,503 Net change in Unrealised Appreciation in Value of Investments and Derivatives Transferred from Revenue Account (Note 8) (26,881,771) 20,876,507 (77,651,763) 58,339,014

At the end of the year 5,067,012 31,948,783 6,339,754 83,991,517

Reserve FundAt the beginning of the year 385,425,397 97,805,281 677,198,762 134,331,513

Transfer to Revenue Account (76,545,901) (1,103,921) (98,663,270) -

Balance Transferred from Revenue Account 4,559,368 288,724,037 581,212,808 542,867,249

At the end of the year 313,438,864 385,425,397 1,159,748,300 677,198,762

TOTAL 394,391,792 * 485,912,507 * 1,703,381,916 * 969,682,172 *

* The share of the Options of the Reserves and Surplus is as follows : March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010Rupees Rupees Rupees Rupees

Growth Option 260,490,958 297,209,186 1,129,077,169 560,172,667 Monthly Dividend Option 73,250,946 129,063,542 341,291,185 246,343,376 Quarterly Dividend Option 60,649,888 59,639,779 233,013,562 163,166,129 Total 394,391,792 485,912,507 1,703,381,916 969,682,172




RupeesMarch 31, 2011

SCHEDULE 6Current Liabilities and Provisions March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010

Rupees Rupees Rupees RupeesCurrent Liabilities

Investment Management and Advisory Fees 3,542,981 5,617,048 6,721,907 9,159,615

Transfer Agent Fees and Expenses 191,605 148,631 586,808 235,969

Custodian Fees and Expenses 39,848 51,647 134,793 92,452

Trusteeship Fees and Expenses 3,022 - 4,084 -

Audit Fees 24,928 75,000 75,643 75,000

Selling and Distribution Expenses 5,011,738 6,665,820 15,764,339 9,427,663

Purchase Contracts Awaiting Completion :

- Debentures / Bonds - 30,400,207 - 20,266,805

'- Government of India Securities 25,860,570 - 68,454,450 -

Unit Redemption Payable 713,426 156,210 2,300,489 1,806,099

Inter Scheme Payable for :

- For 'Switch Out' 3,299,873 - - 697,321

- For 'Others' - - 1,500 -

Load Payable (Note 2.9) 1,272,678 - - -

Payable on Outstanding Future Contracts - 83,922 - 214,807

Unclaimed Redemption (Note 17) 58,427 58,400 12,755 10,000

Unclaimed Dividend (Note 18) 307,109 157,299 476,870 352,321

Temporary Book Overdraft - - 140,476 11,256

Sundry Payables 98,885 119,501 193,912 177,694

TOTAL 40,425,090 43,533,685 94,868,026 42,527,002

0

SCHEDULE 7Interest and Discount (Note 2.4) April 01, 2010 to April 01, 2009 to April 01, 2010 to April 01, 2009 to

March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010Rupees Rupees Rupees Rupees

Debentures / Bonds 35,733,184 13,933,982 70,877,692 27,239,893

Asset Backed Securities 3,043,269 9,886,228 4,514,548 10,619,549

Treasury Bills 1,281,545 256,773 19,660 256,773

Commercial Paper / Certificate of Deposits 64,829,242 11,774,260 149,803,707 15,505,396

Government of India Securities 25,502,296 7,895,140 58,022,395 11,178,751

Reverse Repos 9,397,030 5,433,639 22,001,315 7,601,757


Deposits 2,092,495 832,563 5,496,446 1,016,564

TOTAL 145,274,851 55,678,489 318,911,016 81,629,907





Schedules forming part of the Balance Sheet as at March 31, 2011


HSBC MIP REGULAR PLANEquity Shares (14.02%)Auto (11.66%)

Tata Motors Limited - DVR 18,506 12,878,325Mahindra & Mahindra Limited @ 17,500 12,256,125Bajaj Auto Limited 5,000 7,316,250TVS Motor Company Limited 44,000 2,633,400


Amara Raja Batteries Limited 54,237 10,291,471Exide Industries Limited 48,531 6,961,772

17,253,243Banks (17.21%)

State Bank of India 5,600 15,485,677ICICI Bank Limited 8,000 8,929,600HDFC Bank Limited @ 3,800 8,914,230Bank of Baroda @ 9,039 8,721,279Punjab National Bank 5,050 6,124,135Karur Vysya Bank Limited 6,750 2,693,588Karur Vysya Bank Limited - Partly Paid Shares# 2,700 874,935

51,743,444Cement (3.78%)

Shree Cement Limited 3,555 7,359,028Orient Paper & Industries Limited 72,079 4,003,988

11,363,016Construction (2.48%)

IVRCL Assets & Holdings Limited 89,190 5,244,372Ahluwalia Contracts (India) Limited 20,000 2,218,000



11,162,210Consumer Durables (0.96%)

Hitachi Home & Life Solutions (India) Limited 13,021 2,872,4332,872,433

Consumer Non Durables (4.93%)Titan Industries Limited 2,633 10,035,548GlaxoSmithkline Consumer Healthcare Limited 2,130 4,784,300


Hindustan Dorr Oliver Limited 72,486 5,639,4115,639,411

Ferrous Metals (2.39%)Tata Steel Limited 11,200 6,969,200Vardhman Special Steels Limited # 2,941 216,252

7,185,452Finance (3.37%)

Rural Electrification Corporation Limited 40,000 10,148,00010,148,000

Industrial Capital Goods (1.57%)Crompton Greaves Limited 12,000 3,273,000Sanghvi Movers Limited 12,666 1,445,191


Sun TV Network Limited 12,636 5,676,723HT Media Limited 30,405 4,544,027



Non - Ferrous Metals (4.15%)Sterlite Industries (India) Limited 37,000 6,426,900Hindalco Industries Limited 29,000 6,065,350

12,492,250Oil (2.71%)

Oil and Natural Gas Corporation Limited 28,000 8,156,4008,156,400

Petroleum Products (1.63%)Bharat Petroleum Corporation Limited 8,000 4,894,800


Aurobindo Pharma Limited 57,470 11,261,247Lupin Limited 16,632 6,929,723

18,190,970Software (11.98%)

Tata Consultancy Services Limited 17,000 20,126,300Infosys Technologies Limited 4,900 15,882,370






Transportation (1.31%)SpiceJet Limited 103,074 3,947,734

3,947,734Total (Cost Rs. 296,758,771) 300,695,211






Non-Convertible Debentures / Bonds Listed / Awaiting listing (21.17%)Power (9.19%)

8.64% Power Grid Corporation of India Limited 2015 $ 18 21,993,2938.90% Power Grid Corporation of India Limited 2015 $ 16 19,753,462

41,746,755Finance & Investments (90.81%)

8.45% Export Import Bank of India 2015 $ @ 140 135,976,0328.70% Power Finance Corporation Limited 2015 $ 120 117,611,1789.95% State Bank of India 2021 $ 9,000 94,175,4959.75% Housing Development Finance Corporation Limited 2014 $ 50 50,004,3768.48% LIC Housing Finance Limited 2013 $ @ 15 14,599,422

412,366,503Total (Cost Rs. 462,964,567) 454,113,258


Andhra Bank 2012 $ 2,000 183,030,789State Bank of Patiala 2011 $ 1,800 172,518,148Corporation Bank 2012 $ @ 1,800 165,507,860Syndicate Bank 2012 $ 1,500 137,694,974Bank of India 2011 $ @ 1,400 136,825,792Axis Bank Limited 2011 $ 1,200 117,841,627Punjab National Bank 2011 $ 1,000 97,968,079Punjab National Bank 2011 $ 1,000 97,797,433State Bank of Travancore 2011 $ 1,000 95,797,382Oriental Bank of Commerce 2011 $ 700 68,437,682UCO Bank Limited 2011 $ 500 49,410,299ICICI Bank Limited 2012 $ 500 45,763,429

1,368,593,494Total (Cost Rs. 1,367,462,922) 1,368,593,494


21,988,450Total (Cost Rs. 22,006,544) 21,988,450TOTAL INVESTMENTS (Cost Rs. 2,149,192,804) 2,145,390,413

Deposits (0.45%)^ Tenure8.75% The Hongkong and Shanghai Banking Corporation Limited 91 10,000,000Total Deposits 10,000,000

Derivative disclosurea. Hedging Position through Futures as on March 31, 2011 is NilFor the year ended March 31, 2011 following hedging transactions through futures which have been squared off/expired






15 15 4,749,298.46 4,606,872.50 (142,426)

b. Other than Hedging Positions through Futures as on March 31, 2011 is Nil.For the year ended March 31, 2011 following non-hedging transactions through futures which have been squared off/expired






652 723 186,295,873.54 205,924,623.85 (4,074,911)






$ Fair value of non traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees inaccordance with the guidelines for valuation of securities for Mutual funds as applicable issued by the Securities and Exchange Board of India.




HSBC MIP SAVINGS PLANEquity Shares (23.42%)Auto (11.87%)

Tata Motors Limited - DVR 108,548 75,538,554Mahindra & Mahindra Limited @ 84,500 59,179,575Bajaj Auto Limited 24,300 35,556,975TVS Motor Company Limited 244,000 14,603,400


Amara Raja Batteries Limited 235,407 44,668,478Exide Industries Limited 257,343 36,915,853

81,584,331Banks (17.73%)

State Bank of India 27,600 76,322,280Bank of Baroda @ 55,385 53,438,218HDFC Bank Limited @ 22,500 52,781,625ICICI Bank Limited 42,000 46,880,400Punjab National Bank 24,000 29,104,800Karur Vysya Bank Limited 33,250 13,268,413Karur Vysya Bank Limited - Partly Paid Shares# 13,300 4,309,865

276,105,601Cement (3.93%)

Shree Cement Limited 21,905 45,344,446Orient Paper & Industries Limited 284,995 15,831,472

61,175,918Construction (2.14%)

IVRCL Assets & Holdings Limited 311,159 18,296,150Ahluwalia Contracts (India) Limited 135,000 14,971,500



52,975,984Consumer Durables (0.59%)

Hitachi Home & Life Solutions (India) Limited 41,743 9,208,5069,208,506

Consumer Non Durables (5.57%)Titan Industries Limited 13,284 50,631,302GlaxoSmithkline Consumer Healthcare Limited 16,069 36,093,384


Tata Steel Limited 55,000 34,223,750Vardhman Special Steels Limited # 23,529 1,729,999

35,953,749Finance (3.37%)

Rural Electrification Corporation Limited 207,000 52,515,90052,515,900

Industrial Capital Goods (2.15%)Crompton Greaves Limited 65,000 17,728,750Sanghvi Movers Limited 137,994 15,745,115


Sun TV Network Limited 44,721 20,090,909HT Media Limited 117,179 17,512,402



Non - Ferrous Metals (4.24%)Sterlite Industries (India) Limited 210,000 36,477,000Hindalco Industries Limited 141,000 29,490,150

65,967,150Oil (2.47%)

Oil and Natural Gas Corporation Limited 132,000 38,451,60038,451,600

Petroleum Products (1.41%)Bharat Petroleum Corporation Limited 36,000 22,026,600


Aurobindo Pharma Limited 274,400 53,768,680Lupin Limited 85,817 35,755,653

89,524,333Software (11.93%)

Tata Consultancy Services Limited 80,000 94,712,000Infosys Technologies Limited 28,100 91,080,530






Transportation (2.17%)Spice Jet Limited 524,924 20,104,589Jet Airways (India) Limited 30,500 13,636,550


Hindustan Dorr Oliver Limited 249,533 19,413,66719,413,667

Total (Cost Rs. 1,573,481,937) 1,557,498,091




Non-Convertible Debentures / Bonds Listed / Awaiting listing (19.46%)Power (11.91%)

8.64% Power Grid Corporation of India Limited 2015 $ 102 124,628,6598.90% Power Grid Corporation of India Limited 2015 $ 24 29,630,194

154,258,853Finance & Investments (88.09%)

8.45% Export Import Bank of India 2015 $ @ 405 393,359,2359.95% State Bank of India 2021 $ 24,000 251,134,6548.70% Power Finance Corporation Limited 2015 $ 175 171,516,3019.75% Housing Development Finance Corporation Limited 2014 $ 140 140,012,2537.60% LIC Housing Finance Limited 2012 $ @ 80 78,365,4759.40% National Bank for Agriculture and Rural Development 2014 $ @ 50 50,024,5578.48% LIC Housing Finance Limited 2013 $ @ 35 34,065,3167.55% National Housing Bank 2013 23 22,130,922

1,140,608,713Total (Cost Rs. 1,316,326,103) 1,294,867,566


Central Bank of India 2012 $ 3,500 321,364,245State Bank of Patiala 2012 $ 3,250 298,258,847State Bank of Patiala 2011 $ 2,700 258,777,222Indian Overseas Bank 2012 $ 2,800 257,517,651Indian Overseas Bank 2011 $ 2,500 234,028,366Syndicate Bank 2012 $ 2,500 228,950,366Corporation Bank 2011 $ @ 2,000 196,699,079Punjab National Bank 2011 $ 2,000 195,589,179Oriental Bank of Commerce 2011 $ 1,800 175,982,612UCO Bank Limited 2011 $ 1,500 148,230,896Allahabad Bank 2011 $ 1,500 147,444,851Punjab National Bank 2011 $ 1,500 146,954,243State Bank of Travancore 2011 $ 1,500 143,696,073Oriental Bank of Commerce 2012 $ 1,500 137,857,927Bank of India 2012 $ @ 1,200 109,896,176UCO Bank Limited 2011 $ 1,100 108,393,657Bank of India 2011 $ @ 1,100 107,505,980Punjab National Bank 2011 $ 1,000 99,904,907Union Bank of India 2011 $ @ 1,000 95,960,711Punjab National Bank 2012 $ 1,000 91,927,043Syndicate Bank 2012 $ 1,000 91,796,649Axis Bank Limited 2011 $ 800 78,561,085Axis Bank Limited 2011 $ 600 59,895,958

3,735,193,722Total (Cost Rs. 3,728,853,968) 3,735,193,722


63,966,400Total (Cost Rs. 64,019,200) 63,966,400TOTAL INVESTMENTS (Cost Rs. 6,682,681,208) 6,651,525,779

Deposits (0.33 %)^ Tenure8.75% The Hongkong and Shanghai Banking Corporation Limited 91 12,000,0008.85% The Hongkong and Shanghai Banking Corporation Limited 91 10,000,000Total Deposits 22,000,000







92 92 37,448,353.00 39,282,343.30 1,833,990

b. Other than Hedging Positions through Futures as on March 31, 2011 is Nil.For the year ended February 28, 2011 following non-hedging transactions through futures which have been squared off/expired






2,821 2,972 843,959,401.71 887,604,459.08 (6,463,424)

c. Hedging Positions through Put Options as on March 31, 2011 is Nil. The scheme has not taken other than Hedging Positions through Options during the year.d. Other than Hedging Positions through Options as on March 31, 2011 is Nil. The scheme has not taken other than Hedging Positions through Options during the year.e. Hedging Positions through swaps as on March 31, 2011 is Nil





$ Fair value of non traded debt securities as determined by HSBC Asset Management (India) Private Limited under procedures approved by the Board of Trustees inaccordance with the guidelines for valuation of securities for Mutual funds as applicable issued by the Securities and Exchange Board of India.

H32872 H32873

April 1, 2010 April 1, 2009 April 1, 2008 April 1, 2010 April 1, 2009 April 1, 2008to March 31, 2011 to March 31, 2010 to March 31, 2009 to March 31, 2011 to March 31, 2010 to March 31, 2009


(a) Net asset value per unit at the end of the year (Note 2.5)Growth 16.9989 16.3418 14.1825 19.2049 18.4006 15.0356 Monthly Dividend 10.7617 11.4773 10.7325 11.3836 12.0933 10.7242 Quarterly Dividend 11.2192 11.6340 10.8919 11.7079 12.1196 10.7209

(b) Gross Income

(i) income other than profit on sale of investment 0.8146 0.3332 1.2375 0.6556 0.3267 1.2477

(ii) income from profit on inter scheme sales/transfer of investment - - (0.0162) - - (0.0129)

(iii) income (net) from profit on sale of investments to third party 0.1686 0.4367 (0.7105) 0.1026 0.7512 (1.3430)

(iv) transfer to revenue account from past year’s reserve 0.4180 0.0065 0.4926 - - 0.6558


(c) Aggregate of expenses, writeoff, amortisation and charges 0.2781 0.1605 0.2970 0.2214 0.1629 0.3164

(d) Net income 1.1231 0.6159 0.7064 0.5368 0.9150 0.2312

(e) Net unrealised appreciation/depreciation in value of investments (0.0484) 0.0308 (0.0749) (0.0741) 0.0478 (0.0546)


Highest - Growth Option 17.1649 16.3418 14.4007 19.7189 18.4223 15.6254 - Monthly Dividend Option 11.6488 11.7633 10.9894 12.3278 12.4013 11.4078 - Quarterly Dividend Option 11.8078 12.0062 11.1518 12.4651 12.4927 11.5104

Lowest - Growth Option 16.3363 14.2534 13.1115 18.2706 15.1489 13.9333 - Monthly Dividend Option 10.5779 10.7861 10.0428 11.0752 10.8050 10.0953 - Quarterly Dividend Option 11.0584 10.9463 10.1535 11.4551 10.8017 10.0478

(g) Purchase price

Highest - Growth Option 17.1649 16.3418 14.4007 19.7189 18.4223 15.6254 - Monthly Dividend Option 11.6488 11.7633 10.9894 12.3278 12.4013 11.4078 - Quarterly Dividend Option 11.8078 12.0062 11.1518 12.4651 12.4927 11.5104

Lowest

- Growth Option 16.3363 14.2534 13.1115 18.2706 15.1840 13.9333

- Monthly Dividend Option 10.5908 10.8696 10.0599 11.0752 10.8301 10.0953 - Quarterly Dividend Option 11.0713 10.9724 10.1535 11.4551 10.8017 10.0478


(i) Ratio of expenses to average daily net assets by percentage2.10% 2.16% 2.07% 1.96% 2.12% 2.05%

(j) Ratio of gross income (including net loss on sale of investments and net change in 7.07% 10.80% 3.04% 6.06% 14.63% -1.06%unrealised depreciation in value of investments) to average daily net assets by percentage



Regular Plan Savings Plan





Investment Management and Advisory Fees - 26,718,280 - 26,718,280 Previous Year - 10,652,261 - 10,652,261

Brokerage/ Commission on Distribution of Units - - 5,713,594 5,713,594 Previous Year - - 7,667,391 7,667,391

Brokerage/ Commission on Purchase/ Sale of Investments 87,784 - - 87,784 Previous Year 30,556 - 4,760 35,316

Clearing Charges - - 33,223 33,223 Previous Year - - 26,038 26,038

Fixed Deposits Placed - - 40,000,000 40,000,000 Previous Year - - 20,000,000 20,000,000

Fixed Deposits Matured - - 40,000,000 40,000,000 Previous Year - - 10,000,000 10,000,000

Charges for Services Provided by Bank - - 640 640 Previous Year - - 1,202 1,202




Investment Management and Advisory Fees Payable - 3,542,981 - 3,542,981 Previous Year - 5,617,048 - 5,617,048

Brokerage/ Commission Payable for Distribution of Units - - 3,546,536 3,546,536 Previous Year - - 3,794,095 3,794,095

Fixed Deposits 10,000,000 10,000,000 Previous Year 10,000,000 10,000,000

Other Receivables - 120 - 120 Previous Year - - - -

(iii) Details of material transactions with respect to parties referred to in Note 14 (I)(iii) & (iv) for Associates of Investment Manager

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010








Revenue Account for the year ended March 31, 2011.Schedules forming part of the Balance Sheet as at March 31, 2011 and the

HSBC MUTUAL FUND - HSBC MIP REGULAR PLAN

Annexure I



Investment Manager


Sponsor


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - - - - 4,000,000 4,000,000 Previous Year - - - - -


Reimbursement of Expenses - 2,488,006 - - - 2,488,006 Previous Year - - - - - -


Brokerage/ Commission on Purchase/ Sale of Investments 420,296 - - - - 420,296 Previous Year 70,290 - 14,280 - - 84,570




Charges for Services Provided by Bank - - 1,086 - - 1,086 Previous Year - - 1,198 - - 1,198



Investment Manager


Sponsor


Relatives Total




Units Outstanding As At Year End - - - - 4,093,394 4,093,394 Previous Year - - - - - -

Other Payables - - - 1,500 - 1,500 Previous Year - - - - - -

Other Receivables - 2,494,936 - - - 2,494,936 Previous Year - 14,009 - - - 14,009

(iii) Details of material transactions with respect to parties referred to in Note 14 (I)(iii) & (iv) for Associates of Investment ManagerApril 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010








(iv) Details of material transactions with respect to parties referred to in Note 14 (I)(v) for Schemes under common control of the SponsorApril 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Other PayablesHSBC India Opportunities Fund 1,500 -

(v) Disclosures in respect of material transactions with persons referred to in Note 14 (I)(vi) for key management personnel and their relativesApril 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Kemaya Lal Kidwai 3,000,000 - Vikramaaditya 1,000,000 -

Units Outstanding As At Year EndVikramaaditya 1,032,039 - Kemaya Lal Kidwai 3,061,355 -

Revenue Account for the year ended March 31, 2011.Schedules forming part of the Balance Sheet as at March 31, 2011 and the

HSBC MUTUAL FUND - HSBC MIP SAVINGS PLAN

Annexure I



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.





Board of India (SEBI) (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments there to, as applicable.



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.





traded.





amortization basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate bond is

purchased from the market, the ‘purchase price’ is considered as the ‘traded price’ and the amortization continued

from the traded price."




a) All money market securities, debt securities and floating rate securities with residual maturity of upto and over

91 days are valued at the weighted average price at which they are traded on the particular valuation day.






(India) Private Limited and approved by the Trustee in accordance with the guidelines for valuation of securities

for mutual funds, issued by Securities and Exchange Board of India (SEBI) from time to time.

v. Government securities and Treasury Bills are valued at the average of prices obtained from The Credit Rating

Information Services of India Limited (CRISIL) and ICRA 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 price 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.

vi. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management (India)


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



viii. 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 change in 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. The cost of investments includes brokerage stamp

charges and any other charges customarily included in the contract note but excludes custodian safekeeping fees. Fully

paid “Rights” are included in the cost of investments for the purpose of determining realised gains or losses. Accruals

for rights entitlements or partly paid rights are not included in the cost of investments for the purpose of determining

realised gains or losses. Bonus shares entitlement are recognized as investments on the ex bonus date.


Interest income is recorded on an accrual basis. Dividend income is recorded on the ex date. 2.5 Derivatives


balancing.


Futures




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.






debited respectively to the income equalization reserve.



unrealised net appreciation in the value of investments, upto March 15, 2010. With effect from March 15, 2010,

pursuant to SEBI circular No. SEBI/ IMDCIR No. 18/198647/2010 unit premium reserve is treated at par with unit

capital and is not utilized for the determination of distributable surplus



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

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

& selling expenses. Subsequent 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 & selling expenses. Any load collected in excess of 1% is credited to

the Schemes.

SEBI circular No. CIR /IMD/DF/ 4/2011 dated March 09, 2011 has mandated that there should be segregation of load

accounts into two parts, one to reflect the balance as on July 31, 2009 and the other to reflect accretions since August

01, 2009. While the unutilized balances can be carried forward, not more than one third of the load balances lying in

the Scheme as on July 31, 2009 can be used in any financial year, starting from financial year 2010-2011. All

accretions after July 31, 2009 can be used by the Schemes without any such restriction. Further, both load balances can

be used for marketing and selling expenses including distributor’s /agent’s commission.



(India) Private Limited for managing the Scheme at an average annual rate of 1.10% and 1.04% 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.

4 Trusteeship Fees




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.

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

account.

7 Limitation on Expenses The total expenses chargeable to the Scheme are limited to 1.96% of the average daily net assets of Savings Plan.

HSBC Asset Management (India) Private Limited has borne Rs. 2,488,006 in respect of the Savings Plan 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 / (Depreciation) in Value of Investments and Derivatives

Aggregate appreciation / (depreciation) in value of investments and derivatives is as follows:


March 31, 2011

(Rupees)

March 31, 2010

(Rupees)

March 31, 2011

(Rupees)

March 31, 2010

(Rupees)

Equity Shares

-Appreciation 22,867,095 35,159,577 101,566,533 243,422,390

- Depreciation 18,930,655 8,227,405 117,550,379 167,450,117


- Appreciation 510,002 3,093,155 1,854,290 4,437,820

- Depreciation 9,361,311 219,238 23,312,827 325,981

Privately Placed Non Convertible Debentures / Bonds

- Appreciation - - - 576,049

- Depreciation - - - -

Asset Backed Securities

- Appreciation - 1,739,064 - 2,604,039

- Depreciation - - - -




March 31, 2011

(Rupees)

March 31, 2010

(Rupees)

March 31, 2011

(Rupees)

March 31, 2010

(Rupees)


- Appreciation - 32,116 - 13,687

- Depreciation 18,094 - 52,800 -

Equity Futures

- Appreciation - 485,963 - 983,230

- Depreciation - 114,450 - 269,600

Commercial Paper / Certificate of Deposit

- Appreciation 3,094,307 - 9,114,954 -

- Depreciation 1,963,734 - 2,775,200 -


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, 2011, Government securities

aggregating to Rs. 21,988,450 and Rs. 63,966,400 (market value) of the Regular Plan and Savings Plan respectively

are held in the name of HSBC Mutual Fund.

10 Aggregate Fair Value of Non-Traded/ Privately Placed Investments

Aggregate fair value of non traded / 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, 2011 is Rs. 1,823,797,939 for

the Regular Plan and Rs. 5,036,101,152 for the Saving Plan.

Company Name Regular Plan Savings Plan

Fair Value (Rupees)


Fair Value (Rupees)


Vardhman Special Steels Limited 216,252 0.01% 1,729,999 0.03%

Karur Vysya Bank Limited – Partly Paid Shares

874,935 0.04% 4,309,865 0.06%




The aggregate value of investments purchased and sold (including matured) during the year (excluding accretion of discount of Rs. 69,304,417 and Rs. 155,284,947 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 18,102,936,980 747.47% 17,758,495,702 733.25%

Savings Plan 40,066,934,889 701.44% 36,428,116,067 637.74%


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 171,190,869 7.07% 50,936,559 2.10%

Savings Plan 345,976,741 6.06% 111,968,272 1.96%


Futures

Net Loss on futures transactions recognized in the Revenue Account for the year ended March 31, 2011 aggregates to

Rs. 4,217,337 in MIP Regular Plan and Rs. 4,629,434 in MIP Saving Plan.

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)




I Related Party Relationships During the Year



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 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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 Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



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. 640 and Rs. 1,086 for the Regular Plan and



Savings Plan respectively and clearing member charges on derivative transactions amounting to Rs. 33,223 and Rs.

149,601 for the Regular Plan and Savings Plan respectively.






Nature of Relation

Period Covered


% of Total




Fund

Fund


HSBC MIP Fund - Regular Plan




HSBC MIP Fund - Savings Plan






Nature of Relation

Period Covered


% of Total




Fund

Fund












Name of Sponsor/AMC and its

associates/related parties/group companies


relation

Period Covered

Value of

Transactions

[Rs. In Crores]

% of total

value of transacti

on of the fund



fund

Fund








relation

Period Covered

Value of

Transactions

[Rs. In Crores]

% of total

value of transacti

on of the fund



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.


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



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





/IMD/DF/4/2010 dated June 21, 2010 required Mutual Funds to implement revised valuation norms for debt securities,

floating rate securities and money market securities with effect from August 01, 2010. As a measure of best practice

and in order to ensure a non disruptive transition from old valuation norms to the new valuation norms applicable with

effect from August 01, 2010, non-traded debt securities, floating rate securities and money market securities were

progressively so valued that the impact due to transition was spread out from June 11, 2010 to July 31, 2010 to reflect

the valuations fairly as per the new regulatory norms by July 31, 2010. The aforesaid has been approved by the Board

of Trustees of HSBC Mutual Fund. Further, the same has also been intimated to SEBI vide letter dated June 10, 2010

and June 23, 2010.

17 Unclaimed Redemptions:

Details of unclaimed redemptions as at March 31, 2011 are as follows:-

Plan Amount (Rupees) Number of Investors

Regular Plan 58,427 4

Savings Plan 12,755 4

18 Unclaimed Dividends:

As at March 31, 2011, unclaimed dividends payable to investors are:-

Plan Amount (Rupees) Number of Investors

Regular Plan 307,109 313

Savings Plan 476,870 389


Miscellaneous Income of Rs. 82,988 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.








Trustee

Director

Place: Mumbai


Fund Manager(s)

Auditors' Report To the Board of Trustees of HSBC MUTUAL FUND 1. We have audited the Balance Sheet of HSBC Mutual Fund – HSBC Ultra Short Term Bond Fund (“The

Scheme"), 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.






(i) The Balance Sheet, the Revenue Account and the 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 Ultra Short Term Bond Fund as at March 31, 2011, its net surplus and its cash flows for the year ended on that date.







HSBC MUTUAL FUND - HSBC ULTRA SHORT TERM BOND FUND Schedules forming part of the Balance Sheet as at March 31, 2011 and the


SCHEDULE 8


HSBC Ultra Short Term Bond 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.

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




Board of India (Mutual Funds) Regulations, 1996 (the “Regulations”) and amendments thereto, as applicable. 2.2 Portfolio Valuation


investments: i. For money market securities, debt securities and floating rate securities (investments till July 31, 2010):


traded.




Floating rate securities comprising MIBOR linked and reset coupons held by the scheme are valued on amortization

basis till put/ call or maturity date, whichever is earlier. Effectively, when a floating rate bond is purchased from the

market, the ‘purchase price’ is considered as the ‘traded price’ and the amortization continued from the traded

price."




a) All money market securities, debt securities and floating rate securities with residual maturity of upto and over 91

days are valued at the weighted average price at which they are traded on the particular valuation day.







maturity of over 91 days are valued at fair value as per procedures determined by HSBC Asset Management (India)

Private Limited and approved by the Trustee in accordance with the guidelines for valuation of securities for mutual

funds, issued by Securities and Exchange Board of India (SEBI) from time to time.

iii. Asset backed securities are valued at fair value as determined in good faith by HSBC Asset Management (India)


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

of resale. Instruments sold on repo basis are adjusted for the difference between the repurchase price after deduction

of applicable interest upto the date of repurchase.


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 change in

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. The cost of investments includes brokerage stamp charges

and any other charges customarily included in the contract note but excludes custodian safekeeping fees.


Interest income is recorded on an accrual basis. 2.5 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.






debited respectively to the income equalization reserve.



unrealised net appreciation in the value of investments, upto March 15, 2010. With effect from March 15, 2010, pursuant

to SEBI circular No. SEBI/ IMDCIR No. 18/198647/2010 unit premium reserve is treated at par with unit capital and is

not utilized for the determination of distributable surplus.



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

2.8 Load Charges

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

selling expenses. Subsequent 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 & selling expenses. Any load collected in excess of 1% is credited to the

Schemes.

SEBI circular No. CIR /IMD/DF/ 4/2011 dated March 09, 2011 has mandated that there should be segregation of load

accounts into two parts, one to reflect the balance as on July 31, 2009 and the other to reflect accretions since August 01,

2009. While the unutilized balances can be carried forward, not more than one third of the load balances lying in the

Scheme as on July 31, 2009 can be used in any financial year, starting from financial year 2010-2011. All accretions

after July 31, 2009 can be used by the Schemes without any such restriction. Further, both load balances can be used for

marketing and selling expenses including distributor’s /agent’s commission.



(India) Private Limited for managing the Scheme at an average annual rate of 0.71% 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


applicable, are on their own account for which they receive investment management and advisory fees. 4 Trusteeship Fees




Settlor.



5 Custodian Fees


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 is as follows:

March 31, 2011


(Rupees) Non Convertible Debentures and Bonds Listed / Awaiting Listing


- Depreciation 5,761,295 10

Asset Backed Securities


- Depreciation - - 8 Aggregate Fair Value of Non-Traded / Privately Placed Investments

Aggregate fair value of non traded (including privately placed) investments as determined by HSBC Asset Management

(India) Private Limited under the procedures approved by the Board of Trustees as at March 31, 2011 is Rs.

1,028,464,796. 9 Aggregate Value of Purchase and Sale of Investments

The aggregate value of investment securities purchased and sold (including matured) during the financial year

(excluding accretion of discount of Rs. 72,103,737) are Rs. 9,336,124,545 and Rs. 11,641,776,343 respectively being

274.89% and 342.78% of the average daily net assets. 10 Income and Expenses

The total income (net of net loss on sale of investments and including net change in unrealized depreciation in the value

of investments) and expenditure during the year is Rs. 200,510,304 and Rs. 31,218,171 respectively being 5.90 % and

0.92 % 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, 1996 as amended and in accordance with Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India (ICAI)



Accountants of India and regulation 25(8) of SEBI Regulation, is provided below I Related party relationships During The year Name Description of relationship (i) HSBC Securities and Capital Markets (India) Private Limited Sponsor of the Fund


HSBC Mutual Fund



(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 Equity Fund HSBC Fixed Term Series 30 (upto June 30, 2010) HSBC Fixed Term Series 66 (upto April 05, 2010) HSBC Fixed Term Series 79 (with effect from March 25, 2011) HSBC Flexi Debt Fund HSBC Income Fund Short Term Plan HSBC Income Fund Investment Plan 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 Fund Regular Plan HSBC MIP Fund Savings Plan HSBC Progressive Themes 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 upto March 11, 2011 Dr. Rudolf Apenbrink* – Associate Trustee upto October 11, 2010 Ayaz Ebrahim* – Director of the Investment Manager Puneet Chaddha* - Director and the Chief Executive Officer of the Investment Manager with effect from March 14, 2011 Avan Nelum Gidwani* – Relative of a Key Management Personnel Rahul 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



Birjees Kidwai* – Relative of a Key Management Personnel Gitanjali Nelum Gidwani* – Relative of a Key Management Personnel Rumaan Nazir Kidwai* – Relative of a Key Management Personnel Amrita Vikramaaditya* – Relative of a Key Management Personnel upto March 11, 2011 Raaghav Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Rhea Aaditya* – Relative of a Key Management Personnel upto March 11, 2011 Gabriele A Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Christian R Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Katharina S Apenbrink* – Relative of a Key Management Personnel upto October 11, 2010 Yasmin Ebrahim* – Relative of a Key Management Personnel Daanyal Ebrahim* – Relative of a Key Management Personnel



Annexure I III During the year, The Hongkong & Shanghai Banking Corporation Limited, an associate entity of HSBC Asset

Management (India) Private Limited was paid collection/bank charges amounting to Rs. 600.





Nature of Associati

on / Nature of Relation

Period Covered


% of Total




Fund





Nature of Associati

on / Nature of Relation

Period Covered


% of Total




Fund

The Hongkong and Shanghai Banking Corporation Limited Associate 2009-2010

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


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.




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.


SEBI circular no. SEBI/IMD/CIR No.16/193388/2010 dated February 02, 2010 and SEBI Circular Cir /IMD/DF/4/2010

dated June 21, 2010 required Mutual Funds to implement revised valuation norms for debt securities, floating rate

securities and money market securities with effect from August 01, 2010. As a measure of best practice and in order to

ensure a non disruptive transition from old valuation norms to the new valuation norms applicable with effect from

August 01, 2010, non-traded debt securities, floating rate securities and money market securities were progressively so

valued that the impact due to transition was spread out from June 11, 2010 to July 31, 2010 to reflect the valuations

fairly as per the new regulatory norms by July 31, 2010. The aforesaid has been approved by the Board of Trustees of

HSBC Mutual Fund. Further, the same has also been intimated to SEBI vide letter dated June 10, 2010 and June 23,

2010.


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.

15. Unclaimed Redemptions





Prior year’s figures have been regrouped/ rearranged where appropriate.








Trustee

Director

Place: Mumbai


Fund Manager(s)


ASSETS

Investments 1 1,028,464,796 3,272,062,567 Deposits 2 95,851,232 203,100,000 Other Current Assets 3 280,751,902 1,684,273,656

TOTAL 0 1,405,067,930 5,159,436,223

LIABILITIES

Unit Capital 4 -0.34 1,357,766,696 4,929,893,278 Reserves and Surplus 5 39,864,879 194,021,148 Current Liabilities and Provisions 6 -0.31 7,436,355 35,521,797

TOTAL 1,405,067,930 5,159,436,223


Growth Sub-Option

Daily Dividend Sub-Option

Weekly Dividend Sub-Option Total

Growth Sub-Option


Weekly Dividend Sub-Option


Growth Sub-Option

Daily DividendSub-Option


Monthly Dividend Sub-Option Total Total

B A K C D E F G H I JNet Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 105,430,829 520,226,170 191,621,758 817,278,757 33,165,667 107,465,512 31,652,427 9,264,707 181,548,313 - 307,043,694 82,477,695 9,283,116 398,804,505 1,397,631,575

Number of Units in Issue 7,984,305.488 52,011,700.314 19,098,955.547 2,488,652.870 10,745,587.459 3,154,454.216 912,366.627 - 30,368,330.439 8,114,927.965 897,388.548

Net Asset Value per Unit 13.2048 10.0021 10.0331 13.3268 10.0009 10.0342 10.1546 - 10.1107 10.1637 10.3446

Growth Sub-Option


Weekly Dividend Sub-Option Total

Growth Sub-Option




Growth Sub-Option

Daily DividendSub-Option


Monthly Dividend Sub-Option Total Total

B A K C D E F G H I JNet Assets as per Balance Sheet (Total Assets less Current Liabilities and Provisions) (Note 2.5) 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

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

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





Trustee Director



March 31, 2011

HSBC MUTUAL FUND - HSBC ULTRA SHORT TERM BOND FUND



Regular Option Institutional Option Institutional Plus Option

Institutional Plus OptionRupees

Institutional OptionRegular Option



INCOME AND GAINS

Interest and Discount 7 210,439,192 407,088,405 Miscellaneous Income - 188,723

TOTAL 210,439,192 407,277,128

EXPENSES AND LOSSES

Net Loss on Sale of Investments (Note 2.3) 4,167,593 5,471,435 Investment Management and Advisory Fees (Note 3) 23,998,835 70,106,629 Transfer Agent Fees and Expenses 1,697,634 3,733,245 Trusteeship Fees and Expenses (Note 4) 25,538 72,462 Custodian Fees and Expenses (Note 5) 331,779 533,900 Audit Fees 20,000 50,000 Selling and Distribution Expenses 4,885,702 10,852,967 SEBI Inspection fees 19,067 - Other Operating Expenses 239,616 272,376

TOTAL 35,385,764 91,093,014


Net change in Unrealised Depreciation in Value of Investments (5,761,295) -


Net Change in Unrealised Appreciation in Value of Investments (120,822) (4,873,616)

Net Surplus including Net change in Unrealised Appreciation / Depreciation in Value of Investments 169,171,311 311,310,498

Net Change in Unrealised Appreciation in Value of Investments transferred to Unrealised Appreciation Reserve 120,822 4,873,616


April 01, 2009 to March 31, 2010(April 01, 2008 to March 31, 2009)

Growth Sub-OptionB



Net Surplus for the Year 10,734,327 169,292,133 316,184,114 Transfer from Income Equalisation Reserve (Note 2.7) (47,437,395) (180,988,298) (245,974,640) Transfer from Reserve Fund - 18,775,343 25,883,500 Dividend / Distribution - (119,621,437) (207,516,379) Dividend / Distribution Tax thereon - (20,895,580) (34,404,307)

Balance Transferred to Reserve Fund (36,703,068) (133,437,839) (145,827,712) (48,595,383)





Trustee Director





Regular Option


Rupees


Rupees


Adjustments for:- (Increase)/Decrease in Investments at cost 2,237,715,654 3,934,501,934 (Increase)/Decrease in Other current assets 49,292,645 126,627,686 Increase/(Decrease) in Current liabilities (3,223,695) (24,406,196)

Net cash generated from operations ( A ) 2,458,838,032 4,352,907,538

B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (3,572,126,582) (4,554,932,896) Increase/(Decrease) in Unit Premium Reserve and Income Equalisation Reserve (182,810,563) (232,481,436)

Adjustments for:- Increase/(Decrease) in Sundry creditors for units redeemed by investors (24,861,747) (19,585,041) (Increase)/Decrease in Sundry debtors for units issued to investors 128,654,082 (727,009)

Dividend paid during the year (119,621,437) (207,516,379) Dividend Tax paid during the year (20,895,580) (34,404,307)


Net Decrease in Cash and cash equivalents (A+B) (1,332,823,795) (696,739,530)

Cash and Cash Equivalents at the beginning of the year 1,698,443,882 2,395,183,412 Cash and Cash Equivalents at the end of the year 365,620,087 1,698,443,882



Rupees 1 Cash and Cash Equivalents include the following :

Balances with Scheduled Banks : - In Current Account 2,690,291 9,090,116 - In Dividend Account 22 22 - Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 7,008,263 40,600,000 - Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 88,842,969 162,500,000 Other Collateralised LendingCollateralised Borrowing and Lending Obligation 91,424,759 558,832,774 Reverse Repos 175,653,783 927,420,970

365,620,087 1,698,443,882

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, 2011

SCHEDULE 1

Investments Fair ValueCost

Market /Fair ValueCost

(Notes 2.2, 2.3, 7, 8 , 9, 12 and 13) Rupees Rupees Rupees Rupees(Refer to the attached Statement of Portfolio Holding as at March 31, 2011)

Non Convertible Debentures and Bonds Listed / Awaiting Listing 444,197,669 449,958,964 2,251,375,090 2,251,256,450 Privately Placed Non Convertible Debentures / Bonds - - 849,575,247 849,575,247

Asset Backed Securities - - 171,112,230 171,110,048

Commercial Paper / Certificate of Deposit 584,267,127 584,267,127 - -

TOTAL 1,028,464,796 1,034,226,091 3,272,062,567 3,271,941,745


Margin Deposit with Clearing Corporation of India Limited towards Collateralised Borrowing and Lending Obligation 7,008,263 40,600,000

Margin Deposit with Clearing Corporation of India Limited towards Reverse Repos and Governement Securities 88,842,969 162,500,000

TOTAL 95,851,232 203,100,000


Balances with Banks - in Current Account 2,690,291 9,090,116 - in Dividend Account 22 22

Unit Subscription Receivable 400,000 6,816,700

Reverse Repos 175,653,783 927,420,970


Inter-Scheme Receivable for Switch-In 2,838,082 125,075,464

Interest Receivable on :- Debentures/Bonds 6,742,870 55,441,334 - Asset Backed Securities - 444,001 - Deposits 903,782 936,204 - Reverse Repos 44,515 131,038 - Collateralised Borrowing and Lending Obligation 21,238 75,876

Receivable from Investment Manager 32,560 9,157

TOTAL 280,751,902 1,684,273,656

March 31, 2010March 31, 2011




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 244,199,507 24,419,950.558 307,017,742 30,701,774.121 Issued during the year 276,554,657 27,655,465.709 645,455,304 64,545,530.369


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 1,844,670,802 184,467,080.286 3,257,223,862 325,722,386.273 Issued during the year 935,313,349 93,531,334.910 4,070,873,079 407,087,307.877

2,779,984,151 277,998,415.196 7,328,096,941 732,809,694.150 Redeemed during the year 2,259,867,148 225,986,714.882 5,483,426,139 548,342,613.864 At the end of the year 520,117,003 52,011,700.314 1,844,670,802 184,467,080.286

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 653,124,874 65,312,487.368 845,763,078 84,576,307.762 Issued during the year 253,670,032 25,367,003.139 1,217,487,323 121,748,732.303

906,794,906 90,679,490.507 2,063,250,401 206,325,040.065 Redeemed during the year 715,805,350 71,580,534.960 1,410,125,527 141,012,552.697 At the end of the year 190,989,556 19,098,955.547 653,124,874 65,312,487.368

TOTAL 790,949,615 79,094,961.349 2,741,995,183 274,199,518.212

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 93,067,029 9,306,702.799 190,118,280 19,011,827.930 Issued during the year 96,208,477 9,620,847.685 295,882,140 29,588,213.966


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 462,094,400 46,209,439.948 1,492,222,570 149,222,257.022 Issued during the year 1,054,295,686 105,429,568.629 3,108,405,316 310,840,531.571

1,516,390,086 151,639,008.577 4,600,627,886 460,062,788.593 Redeemed during the year 1,408,934,211 140,893,421.118 4,138,533,486 413,853,348.645 At the end of the year 107,455,875 10,745,587.459 462,094,400 46,209,439.948

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 178,295,675 17,829,567.652 392,167,146 39,216,714.706 Issued during the year 58,454,589 5,845,458.880 551,938,228 55,193,822.803


Monthly Dividend Sub-OptionIssued and SubscribedUnits of Rs.10 each fully paid up - - - - Outstanding:At the beginning of the year 53,157,812 5,315,781.230 123,948,798 12,394,879.767 Issued during the year 20,204,160 2,020,415.996 47,221,548 4,722,154.825

73,361,972 7,336,197.226 171,170,346 17,117,034.592 Redeemed during the year 64,238,306 6,423,830.599 118,012,534 11,801,253.362 At the end of the year 9,123,666 912,366.627 53,157,812 5,315,781.230

TOTAL 173,010,612 17,301,061.172 786,614,916 78,661,491.629

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 303,707,225 30,370,722.487 1,014,458,073 101,445,807.318 Issued during the year 3,615,898,125 361,589,812.464 5,106,427,561 510,642,756.113

3,919,605,350 391,960,534.951 6,120,885,634 612,088,563.431 Redeemed during the year 3,919,605,350 391,960,534.951 5,817,178,409 581,717,840.944 At the end of the year 0.00 - 303,707,225 30,370,722.487

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 545,690,006 54,569,000.612 1,378,532,001 137,853,200.124 Issued during the year 5,581,708,087 558,170,808.662 7,732,559,456 773,255,945.564


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 489,779,655 48,977,965.510 394,718,785 39,471,878.513 Issued during the year 1,407,906,036 140,790,603.624 2,315,044,989 231,504,498.928


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 62,106,293 6,210,629.419 88,655,839 8,865,584.027 Issued during the year - - 19,365,740 1,936,573.988

62,106,293 6,210,629.419 108,021,579 10,802,158.015 Redeemed during the year 53,132,409 5,313,240.871 45,915,286 4,591,528.596 At the end of the year 8,973,884 897,388.548 62,106,293 6,210,629.419

TOTAL 393,806,469 39,380,646.952 1,401,283,179 140,128,318.028

GRAND TOTAL 1,357,766,696 135,776,669.473 4,929,893,278 492,989,327.869



March 31, 2011 March 31, 2010

SCHEDULE 5Reserves and Surplus

Unit Premium Reserve (Note 2.6)At the beginning of the year 1,600,047 (11,893,157)

Added during the year (1,822,265) 13,493,204

At the end of the year (222,218) 1,600,047

Income Equalisation Reserve (Note 2.7)Added during the year (180,988,298) (245,974,640)



Unrealised Appreciation ReserveAt the beginning of the year 120,822 4,994,438

Net Change in Unrealised Appreciation in Value of Investments Transferred from Revenue Account (Note 7) (120,822) (4,873,616)

At the end of the year - 120,822

Reserve FundAt the beginning of the year 192,300,279 364,011,491


Balance Transferred from Revenue Account (133,437,839) (145,827,712)


TOTAL 39,864,879 * 194,021,148

* The share of the Plans / Options of the Reserves and Surplus is as follows : March 31, 2011 March 31, 2010Regular Option

Growth Sub-Option 25,587,773 62,826,112

Daily Dividend Sub-Option 109,167 2,248,232

Weekly Dividend Sub-Option 632,202 2,161,839

Total (A) 26,329,142 67,236,183


Growth Sub-Option 8,279,137 24,729,752

Daily Dividend Sub-Option 9,637 577,773

Weekly Dividend Sub-Option 107,886 609,772


Total (B) 8,537,701 26,686,155


Growth Sub-Option - 84,032,857


Weekly Dividend Sub-Option 1,328,415 8,017,691

Monthly Dividend Sub-Option 309,232 2,076,033

Total (C) 4,998,036 100,098,810

Total (A+B+C) 39,864,879 194,021,148

Rupees

Rupees




Current Liabilities





Audit Fees 20,000 50,000


Unit Redemption Payable 239,590 24,255,711

Inter Scheme Payable for Switch Out 107,787 953,413

Load Charges (Note 2.8) 343,506 -

Dividend Tax Payable 288,956 374,969

Unclaimed Redemption (Note 15) 66,065 -


TOTAL 7,436,354 35,521,797


Rupees Rupees

Debentures / Bonds 93,370,258 253,824,852

Asset Backed Securities 3,771,973 79,451,177


Reverse Repos 25,298,897 35,756,718


Deposits 5,935,174 2,314,825 TOTAL 210,439,192 407,088,405



Description Quantity Fair ValueRupees

Non-Convertible Debentures / Bonds Listed / Awaiting listing (43.19%)Banks (100%)

Axis Bank Limited 2012 $ 450 444,197,669Total (Cost Rs. 449,958,964) 444,197,669


Punjab National Bank 2011 $ 1,500 149,857,360Corporation Bank 2011 $ @ 1,500 147,524,309Canara Bank 2011 $ 1,000 98,294,175State Bank of Patiala 2011 $ 500 49,929,923Union Bank of India 2011 $ @ 500 49,927,322IDBI Bank Limited 2011 $ @ 500 49,457,320Canara Bank 2011 $ 300 29,465,842Central Bank of India 2011 $ 100 9,810,876

Total (Cost Rs. 584,267,127) 584,267,127TOTAL INVESTMENTS (Cost Rs. 1,034,226,091) 1,028,464,796



$ 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 issued by the Securities and Exchange Board of India.






Regular Option

Growth Sub Option 13.2048 12.5727 12.1193 Daily Dividend Sub Option 10.0021 10.0122 10.0122 Weekly Dividend Sub Option 10.0331 10.0331 10.0418


Growth Sub Option 13.3268 12.6572 12.1702 Daily Dividend Sub Option 10.0009 10.0125 10.0125 Weekly Dividend Sub Option 10.0342 10.0342 10.0432 Monthly Dividend Sub Option 10.1546 10.1446 10.1476


Growth Sub Option - 12.7669 12.2294 Daily Dividend Sub Option 10.1107 10.1094 10.0506 Weekly Dividend Sub Option 10.1637 10.1637 10.0447 Monthly Dividend Sub Option 10.3446 10.3343 10.3369

(b) Gross Income


(ii) income from profit on inter scheme sales/transfer of investment - - 0.0016

(iii) income (net) from profit on sale of investments to third party (0.0307) (0.0111) (0.0199)

(iv) transfer of revenue account from past year’s reserve 0.1383 0.0525 0.0305


(c) Aggregate of expenses, writeoff, amortisation and charge 0.2299 0.1737 0.1504

(d) Net income 1.4276 0.6939 2.7084

(e) Net change in unrealised depreciation in value of investments (0.0424) (0.0099) -


HighestB - Regular Option Growth Sub Option 13.2048 12.5727 12.1193 A - Regular Option Daily Dividend Sub Option 10.0122 10.0122 10.0122 K - Regular Option Weekly Dividend Sub Option 10.0516 10.0461 10.0511 C - Institutional Option Growth Sub Option 13.3056 12.6572 12.1702 D - Institutional Option Daily Dividend Sub Optio 10.0125 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub Optio 10.0532 10.0477 10.0518 F - Institutional Option Monthly Dividend Sub Option 10.1867 10.1780 10.2016 G - Institutional Plus Option Growth Sub Option 13.4962 12.7630 12.2155 H - Institutional Plus Option Daily Dividend Sub Optio 10.1256 10.1078 10.0506 I - Institutional Plus OptionWeekly Dividend Sub Optio 10.1781 10.1661 10.0534 J - Institutional Plus Option Monthly Dividend Sub Optio 10.3708 10.3556 10.3783

LowestB - Regular Option Growth Sub Option 12.5802 12.1235 11.2299 A - Regular Option Daily Dividend Sub Option 9.9963 10.0122 10.0122 K - Regular Option Weekly Dividend Sub Option 10.0315 10.0345 10.0306 C - Institutional Option Growth Sub Option 12.6694 12.1852 11.2603 D - Institutional Option Daily Dividend Sub Optio 10.0003 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub Optio 10.0351 10.0358 10.0314 F - Institutional Option Monthly Dividend Sub Option 10.1420 10.1415 10.0828 G - Institutional Plus Option Growth Sub Option 12.7990 12.2416 11.2764 H - Institutional Plus Option Daily Dividend Sub Optio 10.1062 10.0506 10.0126 I - Institutional Plus OptionWeekly Dividend Sub Optio 10.1680 10.0385 10.0320 J - Institutional Plus Option Monthly Dividend Sub Optio 10.3321 10.3330 10.2678

(g) Purchase price

HighestB - Regular Option Growth Sub Option 13.2023 12.5727 12.1193 A - Regular Option Daily Dividend Sub Option 10.0122 10.0122 10.0122 K - Regular Option Weekly Dividend Sub Option 10.0516 10.0461 10.0511 C - Institutional Option Growth Sub Option 13.3056 12.6189 12.1550 D - Institutional Option Daily Dividend Sub Option 10.0125 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub Option 10.0462 10.0468 10.0515 F - Institutional Option Monthly Dividend Sub Option 10.1858 10.1764 10.1776 G - Institutional Plus Option Growth Sub Option 13.1588 12.7517 12.2294 H - Institutional Plus Option Daily Dividend Sub Option 10.1256 10.1094 10.0506 I - Institutional Plus OptionWeekly Dividend Sub Option 10.1725 10.1707 10.0523 J - Institutional Plus Option Monthly Dividend Sub Option 10.3865 10.3411 10.3706

LowestB - Regular Option Growth Sub Option 12.5802 12.1235 11.2299 A - Regular Option Daily Dividend Sub Option 9.9975 10.0122 10.0122 K - Regular Option Weekly Dividend Sub Option 10.0315 10.0331 10.0269 C - Institutional Option Growth Sub Option 12.6875 12.1746 11.2578 D - Institutional Option Daily Dividend Sub Option 10.0008 10.0125 10.0125 E - Institutional Option Weekly Dividend Sub Option 10.0342 10.0342 10.0275 F - Institutional Option Monthly Dividend Sub Option 10.1385 10.1385 10.0761 G - Institutional Plus Option Growth Sub Option 12.7760 12.2416 11.2798 H - Institutional Plus Option Daily Dividend Sub Option 10.1062 10.0506 10.0126 I - Institutional Plus OptionWeekly Dividend Sub Option 10.1637 10.0352 10.0278 J - Institutional Plus Option Monthly Dividend Sub Option 10.3271 10.3271 10.2601


(i) Ratio of expenses (excluding initial issue 'expenses) to average daily net assets by percentage

Regular Option 1.27% 1.30% 0.84%Institutional Option 1.02% 1.05% 0.60%Institutional Plus Option 0.37% 0.67% 0.31%

(j) Ratio of gross income (including net profit / loss on sale of investments and net change in unrealised depreciation in value of investments) to average daily net assets by percentage 5.90% 5.04% 8.71%






Manager


Relatives Total

Subscription of Units (including switch in and dividend reinvestment) - - 132,864 132,864 Previous Year 2,762,303 22,775,176 15,501,994 41,039,473

Redemption of Units (including switch out - - 15,631,371 15,631,371 Previous Year 176,820,898 24,146,481 - 200,967,378

Dividend Paid/Payable( Including dividend reinvested - - 132,864 132,864 Previous Year 2,762,303 46,676 1,994 2,810,973



Charges for Services Provided by Bank - 600 - 600 Previous Year - 62,633 - 62,633



Manager


Relatives Total

Investment Management and Advisory Fees Payabl 4,143,241 - - 4,143,241 Previous Year 6,823,308 - - 6,823,308

Brokerage/ Commission Payable on Distribution of Units - 1,146,041 - 1,146,041 Previous Year - 1,560,857 - 1,560,857

Units Outstanding As At Year End - - 82,719 82,719 Previous Year - - 15,581,225 15,581,225

Other Receivables 32,560 - - 32,560 Previous Year 9,157 - - 9,157

(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, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)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




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

April 01, 2010 to March 31, 2011

April 01, 2009 to March 31, 2010

Subscription of Units (including switch in and dividend reinvestment)Kemaya Lal Kidwai (relative) 129,377 15,501,994

Redemption of Units (including switch outKemaya Lal Kidwai (relative) 15,631,371 -

Dividend Paid/Payable( Including dividend reinvestedKemaya Lal Kidwai (relative) 129,377 1,994 Nelum P Gidwani 3,487

Units Outstanding As At Year EndKemaya Lal Kidwai (relative) - 15,501,994 Nelum P Gidwani 82,719 79,276



Annexure I

DISCLAIMERS The 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, Combined Scheme Information Document and Common 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 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, HSBC India Opportunities Fund, HSBC Midcap Equity Fund, HSBC Progressive Themes Fund, HSBC Tax Saver Equity Fund, HSBC Unique Opportunities Fund, HSBC Dynamic Fund, HSBC Small Cap Fund, HSBC MIP, HSBC Income Fund, HSBC Floating Rate Fund, HSBC Gilt Fund, HSBC Cash Fund, HSBC Ultra Short Term Bond Fund, HSBC Flexi Debt Fund, HSBC Fixed Term Series 79 and HSBC Emerging Markets Fund are only the names of the Schemes do not in any manner indicate the quality of the Schemes or its future prospects or returns. HFTS 79 will also be affected by risks associated with trading on stock exchange(s). Please read the Scheme Information Document and Statement of Additional Information carefully before investing. NSE disclaimer: It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that the SID has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the draft SID. The investors are advised to refer to the SID for the full text of the ‘Disclaimer Clause of NSE’.

If undelivered please return to:

Computer Age Management Services Private Limited (CAMS)Unit: HSBC Mutual Fund514A, Sathy Main Road, Lakshmipuram, Coimbatore - 641 006

HSBC MUTUAL FUND INVESTOR SERVICE CENTRES

City Telephone No.Andhra Pradesh 9849677319Bengaluru 080-41186519Bihar 9931397319Chandigarh 017-25008119Chennai 044-42008719Coimbatore 9894477319Delhi 011-41490719Gujarat 9898377319Hyderabad 040-66674719Karnataka 9980927319Kerala 9895477319Madhya Pradesh & Chhattisgarh 9893477319Maharashtra & Goa 9960077321Mumbai 022-66668819Nagpur 9860827319NCR 9910797319Pune 020-26134283, 26001119Punjab 9876937319Rajasthan 9928037319Uttar Pradesh 9936797319West Bengal 033-22139919

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